The Price Of Gold As Compared With That Of Silver. (Continued.)
If the gold-production of California should be attended(895) by a notable
depression of the value of that metal, it becomes a question whether or
not silver would be necessarily depreciated with it. Senior claims that it
would not, for the reason that the two precious metals do not, for most
purposes, act as substitutes each of the other. If a country needed 1,000
pounds of gold and 15,000 pounds of silver as money,(896) and these two
sums of metal were equal in value, an increase of gold by one-half, which
would depreciate its price in relation to silver to 10:1, would not
overflow the channels of circulation. The 1,500 pounds of gold are now
also equal to only 15,000 pounds of silver, and _vice versa_.
I would put very important limitations to this assertion. Even a moderate
depreciation of gold would drive out the silver from all those countries
which had a mixed coinage made up of the two metals; and hence the supply
of silver would be increased in the other countries. And so it is quite
possible, up to a certain point, that the larger silver coin should be
replaced by small gold ones, ten and five franc pieces etc. Rau is
certainly right in his surmise that a general rise in the price of
commodities as compared with coin, the result of a great increase of gold,
would go farthest in countries in which the gold is the medium of
circulation, begin later in those which had a mixed circulation, and
continue for the the shortest time in those countries which, by force of
law, had a silver circulation only.(897)(898)
Appendix I.
Paper Money.
Section I.
Paper Money And Money-Paper.
Paper money must be distinguished from other value-paper or
money-paper,(899) which may also run to the possessor or holder, and not
unfrequently serve as a medium of payment. In the case of these bonds or
obligations,(900) their circulating capacity is a secondary matter, and
the principal thing the authentication of an economic legal relation;
whereas paper money is intended principally, if not exclusively, to act as
money.(901) Money-paper appears in a great many different forms, but it
nearly always bears interest. Its value depends in great part on the rate
and certainty of its interest. On the other hand, the endeavor to insure a
more favorable reception for paper money by the promise of interest has
been exceedingly seldom successful.(902) And in reality, good prospects as
to interest (_Zinsaussichten_) and ease of transfer from one hand to
another are two qualities which lie in very different directions.(903)
The many recent writers who claim for paper money the marks of
irredeemableness and forced circulation, confound the unfortunately too
frequent degeneration of an institution with its real nature. They
contradict, too, usage of speech, which, in countries where silver is the
standard, unhesitatingly calls gold coins money, although they cannot be
forced on any one.(904) The paper money issued by the state deserves,
indeed, the appellation in the fullest measure; but starting from this
point we find a number of grades in a downward direction, which may still
be called money;(905) and we shall see especially that the differences
between state paper money and bank notes so widely asserted are, in great
measure, differences not of kind but of degree.
The idea of replacing the precious metals as a medium of circulation by a
less costly material, even the ancients were acquainted with; but with the
exception of the Carthaginians, they scarcely ever made any use of it
except in cases of need and transitorily.(906)
Similarly, the middle ages in Europe; as in general all greater
development of the credit-system—and all paper money is credit-money—has a
natural growth only in the higher stages of civilization.(907)(908)
Section II.
Advantages And Disadvantages Of Paper Money.
Where it is at all possible to give paper money the same purchasing power
as metallic money possesses, it is unquestionable that the former must
have many advantages over the latter. True, paper money is very
inconvenient for small amounts;(909) but all the more convenient for large
amounts, as well for purposes of counting as for purposes of the storing
up of values and for transmission from place to place; a matter of greater
importance in proportion to the badness of a country’s means of
transportation, and to the cheapness of the metal of its currency
hitherto.(910) It seems a still more important matter to most people that
paper money dispenses with the use of a great quantity of the precious
metals for purposes of circulation, which can now either be turned into
utensils, etc. in the country itself or used in foreign countries to make
investments of capital there, or in the purchase of commodities.(911) In
national economies whose commerce is a growing one, the same advantage
finds a negative expression in this, that they are not compelled to
satisfy the increasing demand for money by procuring costly metals.(912)
Of the individual members of the nation, all these advantages of
convenience will be experienced by those who employ the paper money. The
economical or saving advantages of paper money are appropriated by the
issuers to themselves, in the form of a non-interest bearing loan, which
they make to those owners of money or to those who are entitled to a
money-claim and to whom the paper money is acceptable instead of cash
money.(913) A diminution for instance of the number of bank notes or of
state paper money does not diminish the available capital of the people.
Its only effect is that a smaller portion of it is at the disposal of the
bank or of the government.
But in contrast with these advantages are the great disadvantages, since
paper money is wanting in most of those properties which originally made
the precious metals the best instruments of exchange and the best measures
of value. In addition to this, paper money may be increased at pleasure,
and at almost no cost; and an occasional surplus of it cannot flow either
into other branches of employment (as a surplus of metallic money may into
utensils, ornamentation, etc.) nor into other countries. And thus the
constancy of value of paper money, that is, one of the chief requisites of
all good money, is imperiled in the highest degree. True, the
payment-power, or “legal tender” character given such money by the state
may certainly supplement in some way its matter and form-value. But this
supplement or addition constitutes, in the case of large amounts(914) a
small quota; or else the quantity of money as compared with the amount of
money needed for commerce would have to be fixed very accurately; a thing
of peculiar difficulty in the case of paper money, which is almost
costless.(915)
Section III.
Kinds Of Redemption.
While precious metal money carries, so to speak, by far the greater
portion of its value in itself, and this to such an extent that it appears
on the inscription found on its face, the inscription found on paper money
is almost the only reason of its value.(916) (Credit-value.) The issuer
promises in one form or another, expressly or tacitly, that he intends to
redeem the note, almost valueless in itself, in real goods; and the value
of this promise depends on the probability of its fulfillment.(917) The
only fully satisfactory kind of redemption consists in this, that every
holder of the paper money may, immediately on demand, obtain its nominal
value in good current metallic money. This only can, in the long run, keep
paper money up to its full nominal value. But experience teaches that even
with less perfect modes of redemption, paper money may maintain a part of
its nominal value, and a part greater in proportion as the following
conditions are approximated to: freedom from personal considerations, the
immediateness of the redemption, and currency of the goods by means of
which redemption is effected. Thus, for instance, the acceptance of paper
money for all debts due the state, in countries where taxation is heavy,
where there are large state industries etc.; where the lands of the state
are farmed out etc., has a great influence on its course of exchange.
Redemption in parcels of land is a very imperfect one, not only on account
of the great differences in the value of pieces of land according to
quality, situation, the times etc., but also because only a very small
number of men, especially where money is the usual medium of exchange, are
in a condition to accept parcels of land.(918) It is a question whether
the threat of punishing the refusal to accept paper money, or to accept it
at its full nominal value, can be called a negative mode of redemption.
Certain it is, however, that it is the most barbarous and in the long run
the least efficient mode, one in which the issuer calculates only on the
fear of those who accept it; and, what is most demoralizing, on the hope
they entertain that they in turn shall be able to dispose of it to others
as timid.(919)(920)
Section IV.
Compulsory Circulation.
When paper money which is not completely redeemable—and it is scarcely
possible that in the long run it should be thus redeemable—has sunk below
its nominal value, the result in the case of all private paper money is
the bankruptcy (_Vermögensbruch_) of the individual issuing it; in the
case of state paper money, the legal provision that it shall have a
compulsory circulation (_Zwangcourse_; _cours forcé_).(921) To what extent
the real rate of exchange of paper money shall fall in any case depends
not only on the amount issued as compared with the wants of trade, but
also and still more on the degree of confidence which the state of public
affairs inspires.(922) The first consequence attending a depreciated
currency is, that the good precious metal money is withdrawn from
circulation and even from the country; for the reason that it cannot
maintain its true value side by side with the paper money; the usual
effect in all untenable mixed standards or currencies.(923) A second, and
worse consequence is the unrightful revolution produced in so many income
and property relations, based on old contracts, to the advantage of the
debtor, to the disadvantage of the creditor, and of those who receive
nominally fixed salaries.(924) These consequences are in kind similar to
those produced by the clipping of the coin; but in degree they are much
more dangerous.(925) Besides, the depreciation of paper produces, by no
means, an equal rise in the prices of all commodities. The prices of those
commodities, the sellers of which are most favorably situated in the
struggle for prices, rise earliest and highest. This is true especially of
foreign commodities, also of those inland commodities which can be easily
exported, and most particularly of those commodities which have the
greatest capacity for circulation, for instance, gold and silver.(926)
Hence, it would be a great mistake in countries where there is an
irredeemable paper currency with compulsory circulation, to measure its
purchasing power at a special discount as compared with the precious
metals. Therefore, a depreciated paper currency has transitorily an effect
on industry similar to that of a protective tariff, and even as the
payment of export premiums; inasmuch as it enables manufacturers to permit
a part of their cost of production, viz.: that which they have to pay
their workmen, their older creditors, and in part, also, their furnishers
of raw material, to rise in a less degree than the paper money has
declined in value.(927) This is indeed a very inequitable advantage
accorded to private individuals in the face of the universal distress of
the country.(928)(929) And these bad consequences are aggravated by the
downward-path principle which a depreciated paper money always involves.
The state whose financial distress introduced the evil, sees a great
portion of its revenues melt away before its eyes;(930) while in what
concerns its outlay, nothing is more calculated to mislead it than such an
imagined creation out of nothing. And a thing which greatly contributes to
this its the frightful sensitiveness of a depreciated paper currency in
the presence of complications of foreign politics, a quality which may
cause the government as many inconveniences from without as the issue of
its paper money produced conveniences to it at home.(931) Hence recourse
is had to additional issues of paper, which are easily increased in the
same measure as the rate of exchange (_Cours_) has declined.(932) Great
private interests operate in the same direction. Between the increase of
the volume of the paper currency in circulation and its consequent
depreciation, some time always elapses; and in the mean time, either the
purchasing power of the money-owner or his loaning capital is really
greater than before. The former increases the demand for commodities, the
latter facilitates their coming into existence. However, the flight of
speculation with which the increase of paper money is wont to be
accompanied(933) in the beginning depends on an error shared by many men
as to its true value. Hence it does not last long, and the critical
shriveling up of the inflated bubbles is greater in proportion to what the
previous dimensions of these bubbles were. And now many believe that the
nation’s business or economy might be kept on its course by new emissions
of paper money; and the wise ones hope, at least, to be able thereby to
postpone the catastrophe long enough to enable themselves to get their
property into a safe condition. And in fact, the restoration of a
depreciated currency is accompanied by crises entirely similar to those
which followed its first decline; only they are in an opposite
direction.(934) And hence conscientious statesmen are frequently deterred
from seeking to effect such a restoration. Yet the darkest side of a paper
currency severed of due connection with precious metal-money consists in
the frequent and violent fluctuations of value to which it is
subject.(935) The consequence of these fluctuations is, that every
commercial transaction, every credit-transaction, and even every act of
saving, in which money plays any part, is made to bear the impress of a
game of chance;(936) a consequence of far and deep reaching influence,
especially in the higher stages of civilization, where the importance of
commerce, of the credit-system, and of money-economy as
contradistinguished from barter-economy is so great; producing there a
state of uncertainty which is otherwise peculiar only to barbarous
medieval times.(937) All this discourages the best business men and the
best husbandmen more than it does any other class of people, and
demoralizes the whole economy of a nation; and demoralizes it the more in
proportion as it is easier for the state to influence the value of paper
money as compared with specie, and as its influence is more
irresistible.(938) The compulsory circulation of paper money is a much
more powerful and yet a much more simple screw by means of which to
practice extortion than is the most burdensome taxation or forced loan,
and at the same time the most comprehensive power which a government can
possess to carry out both these measures. (_Ad. Wagner._)
All the horrors of the later Roman republic, the draining of the provinces
by robber-governors with their publicans and sinners, the building up of
monstrous fortunes without any production proper, but through usury and
rapine alone: all this is made to revive again through the instrumentality
of the national-economic disease called a paper crisis, in a less violent
form, indeed, but in one which is much more insidious and scarcely less
pernicious.
Section V.
Resumption Of Specie Payments.
The healing of such a paper-money disease as we have described, it has
been endeavored to effect in three ways more particularly.
A. By the reduction or bringing back of the depreciated paper money to its
full nominal value. And this is best done by gradually drawing paper money
into the state treasury by means of taxation or by loans, and refusing to
allow such paper money to be again issued. The consequent rise in the rate
at which the outstanding paper money notes exchange against specie is
produced not only by the diminution of the quantity of paper in
circulation, but also by the increasing confidence in the future which
such a governmental measure inspires.(939) While this mode of procedure
has in the abstract most in its favor, yet it is not to be recommended in
practice except where the depreciation of paper money has either not gone
very far or where it has existed only a short time.(940) Otherwise the
revolution in all property-relations and the disturbance of all rightful
speculation—always dangerous and easily abused—produced by the
depreciation would be repeated by the restoration of values, with this
difference only that the disturbance would be produced the second time in
an opposite direction. And that those who were previously injured should
now be compensated for the damage sustained in the first instance is
impossible in proportion as the depreciation has been of longer duration.
Many of the sufferers from the effects of depreciation are now compelled,
even as tax-payers, to contribute to the enrichment of the speculators who
have accumulated the depreciated paper into their own hands.
B. The extreme opposite of such a course would consist in this, that the
depreciated paper should be allowed to go on sinking lower and lower until
it was practically worthless, whereupon a new currency, whether of metal
or paper, would have to appear like a new world after the waters of a
deluge had been abated. Hence, therefore, one of two things: universal
bankruptcy entered into with the clearest purpose, or the resignation of
despair!(941)
C. The middle course between these two has, therefore, been most
frequently pursued, viz.: _the legal reduction_ of the value of the coin
(_gesetzliche Devalvirung_), which consists in reducing the nominal value
of paper money to its current value at the moment the law goes into force,
and by redeeming it either in specie or in other paper to be issued in
smaller quantities.(942) Although this has been not seldom based on the
false principle that the value of every separate amount of money is
inversely as the aggregate amount of all the money in circulation; yet it
cannot be questioned that it is only the open declaration of the state
bankruptcy which the whole measure involves, and which in most instances
has already happened beyond repair. Here there is no new and dangerous
disturbance of the nation’s economy whatever; and the fluctuations of
value in the future which are inseparable from the gradual contraction of
the volume of paper, continued until it has reached its nominal value, are
avoided: this last, of course, only on the supposition that either the
pure metallic or the redeemable paper currency is rigidly adhered to.(943)
But the problem, how to protect both parties(944) to contracts entered
into at a rate of the currency different from that under which they are to
be performed, from all damage, is one which will never be perfectly
solved. Hence, of the different measures to economically preserve a state
in cases of extraordinary need, the emission of paper money with
compulsory circulation is much more universally disastrous to the people
than the effecting of loans at the very highest rate of interest, and even
than being in arrears in the matter of paying the officials and creditors
of the state.(945)
Section VI.
Paper Money—A Curse Or A Blessing?
Considering the double-edged-sword character of this mighty
instrument,(946) and the frightful consequences which its abuse produces,
it is easy to conceive why so many political economists have expressed
such serious doubts as to whether, on the whole, the invention of paper
money has been more of a curse or of a blessing to mankind. The
controversy is an idle one to a certain extent, since no mature nation (or
individual), and no nation which considers itself mature will renounce the
possibility of a brilliant growth simply because it fears that it may not
be able to withstand the temptations to dangerous abuse connected
therewith. Politically, the best safeguard against such temptation is a
so-called moderate constitution, which compels the supreme power in the
state by wise and appropriate counterweights, to allow all rightful
interests to assert themselves, or at least to find expression; and itself
to make use not only of the most skillful but also of the most highly
esteemed instruments and measures. Such a constitution, indeed, cannot be
made; it must be the ripe fruit of a long continued and well conducted
national life.(947) Of the extremes of forms of government, unlimited
monarchy and democracy are about equally exposed to the paper-money
disease.(948) Aristocracies are less exposed to it, for the reason that
from their very nature they eschew centralization; and the paper-money
system is intimately connected with the latter. Nothing so strengthens the
central authority as the paper-prerogative with an unlimited power over
the prices of all commodities; and, on the other hand, whenever paper
money is to have a wide field for action, there is supposed(949) a
far-reaching and intimate interwearing of the different members of the
nation’s economy with one another. And in what concerns the various
economic stages, paper money is far removed from all medieval times; and
for the same reasons that make external commerce here preponderant and
condense all commerce into caravans, staple-towns, fairs, and recommend
the collection of treasure etc.(950) Later, on the other hand, we find two
stages especially adapted to paper money. We have first, as yet
undeveloped but intellectually active (and therefore desirous of progress)
colonial countries, possessed in abundance of natural means of production
without however being able to concentrate them into the hands of an
undertaker (_Unternehmer_) for want of money.(951) Here both the saving of
the precious metals and the facilitation of transportation effected by
means of paper money are of greatest utility. And then we have very highly
developed and rich countries; not only because their economic popular
education may protect them against the dangers of paper money, but because
the rich man has relatively least need of money and may dispense with
stores of specie most readily, because of his influence over the supply of
others.(952)
FOOTNOTES
1 The author’s preface to the twelfth edition is confined to pointing
out the improvements etc., made in the eleventh. There is no new
preface to the thirteenth edition of the original, which appeared in
1877.—TRANSLATOR.
2 “We shall never thoroughly understand the reason of customary law
unless we also have a knowledge of that which is not customary. The
one is connected and bound to the other. We have no slaves; why vex
ourselves with questions about slaves?—Words worthy of a novice.”
3 “I am a man; I think nothing foreign to me that pertains to man.”
4 “That excellent and glorious philosophy.”
5 Introduction to the Civilistisches Magazin.
_ 6 Dunoyer_, De la Liberté du Travail.
_ 7 Cicero_, De Leg., I.
8 Discours Préliminaire du Code Civil.
_ 9 Cicero_, De Leg., II, 4. “Legem neque hominum ingeniis excogitatam,
nec scitum aliquod esse populorum, sed æternum quiddam quod
universum mundum regeret, imperandi, prohibendique sapientia.”
_Ibid._
10 Revue de Législ. et de Jurispr. (1841, XIII, p. 39.) _Montesquieu_
says: “The relations of justice and equity are anterior to all
positive laws.”
11 Mr. Wolowski translated the second edition of Roscher’s Principles
into French, and prefixed the present essay thereto as a preface.
Since Wolowski’s translation appeared, the original work has gone
through eleven editions, been largely increased in size, and
enriched with new notes, the result of nearly twenty additional
years of research and thought. The thirteenth German edition, from
which the present translation is made, is larger than the first by
one hundred and seventy pages.—_Translator’s note._
12 And he adds: “Animals which yield only to an impulse or blind
instinct, come together only fortuitously or periodically and in a
manner destitute of all morality. But in the case of men, reason is
mixed up more or less with every act of their lives. Sentiment is
found side by side with desire, and right succeeds instinct. I
discover a real contract in the union of the two sexes.”
It would be impossible to present a more complete or eloquent
refutation of the definition of the Roman jurisconsults which
debases marriage to the level of the promiscuous coming together of
animals, and which limits the natural law to the law common to man
and beast. “Jus naturale est quod natura omnia animalia docuit; nam
jus istud non humani generis proprium, sed omnium animalium quæ in
terra, quæ in mare nascuntur, avium quoque commune est. Hinc
descendit maris atque feminæ conjunctio, quam nos matrimonium
appellamus, hinc liberorum procreatio, hinc educatio; videmus etenim
cætera quoque animalia, feras etiam, istius juris peritia censeri.”
D. L. I. De Just. et Jure.
13 Comment. in tit. Dig., De Just. et Jure, VII, 11th Naples edition.
The ingenious argument of the great jurisconsult falls to the ground
under the beautiful words of Cicero: “Ut justitia, ita jus sine
ratione non consistit; soli ratione utentes jure ac lege vivunt.” De
Natura Deorum, II, 62. “Virtus ratione constat, brutæ ratione non
utuntur, cujus sunt expertia, ergo jure non vivunt, et ut rationis,
sic jures sunt expertia.” Besides, Cujas himself recognizes how
faulty and incomplete was the definition he was defending: “At ne
jus quidem naturale, de quo agimus, est commune omnium animalium
quatenus rationale, est, sed quatenus sensible est, sensui congruit.
Tullius participare hominem cum brutis eo quod sentit, sed ratione
ab eo differre. Et alio loco: jus naturale esse commune omnium
Quiritium, veluti ut se velint tueri: sed hoc distare hominem a
bellua, quod bellua sensu moveatur, homo etiam ratione.”
_ 14 Rossi._
15 Politics, I, ch. I, II.
16 Ueber die Nothwendigkeit eines Allgemeinen burgerlichen Rechts fur
Deutschland.
17 Vom Beruf unserer Zeit für Gesetzgebung etc.
18 In one of his latest productions (Ueber die sogennante historische
und nicht historische Rechtsschule, Archives du Droit Civil,
Heidelberg, XXI 1838) the veteran of the philosophical school,
resuming a debate begun a quarter of a century before, energetically
defends himself against the erroneous interpretations which it was
sought to give to his thoughts. “Does it follow,” he inquires, “that
because a man is desirous of reform, he must surrender the study of
the past? And if there be new laws to construe, how could his evil
genius deter him from the necessary knowledge of ancient laws? Is
there a single jurisconsult, who, in the hope of a better future,
despises the meaning and spirit of that which still exists? I do not
know even one.... And when I am accused of passing by the
institutions of the past with coldness and hatred in my heart,
because I was one of the first to express the hope of a better
future, a charge is laid at my door which is perfectly
incomprehensible ... I am reproached with despising the history of
law. It is a slander on me. Although I have only laughed at these
reports, one man’s mistake grieved me; for that man’s name was
Niebuhr.... When he [Niebuhr] returned from Italy to devote himself
entirely to science, in his retreat at Bonn, he passed through
Heidelberg, where he remained five or six days. During a great part
of that time we came frequently together. He was at first a little
cold; but Cicero made us friends. After a happy word let drop
concerning that writer, he asked me what I thought of him. I
answered laconically: ‘If they were burning all the Latin authors,
and I were permitted to grant a pardon to one of them, I should say,
without hesitation: Spare the works of Cicero.’ He joyfully
exclaimed: ‘I have at last found a man who judges rightly of Cicero.
I share your admiration for him, and that is the reason I have given
my boy the name of Marcus.’ The ice was now broken, and he frankly
told me that he could not understand how I could be an inveterate
enemy of Roman law and of the history of law. I gave him to
understand that I had simply been slandered, and I added, that, in
order to live entirely with the classics, I had always refused to
give legal advice, or act as a counsellor, although I might have
made a fortune in that way. I told him that I owed my gayety and
vigor, in great part, to my love for the classics of all ages, even
those outside the domain of jurisprudence; but that I held, above
all things, to the good qualities of the German nation, and that I
did not hesitate to say with Facciolatus: ‘Expedit omnes gentes
Romanis legibus operam dare, suis vivere.’
“When he heard those words of mine, he exclaimed with his usual
energy and vivacity: ‘Habes me consentientem, labes me
consentientem.’ From that moment all coldness between us was at an
end, and we approached, without any embarrassment, a host of
questions in one conversation in which I endeavored, as I had
before, to learn from him.
“Thus I receive with sincere gratitude, all the works, both useful
and profound, which have appeared in our day on the history of law.
It would be folly in me to deny the impetus which the study of
positive law has received. New sources have been discovered. Their
newness and importance have excited the zeal of many scholars who
have studied them profoundly; a fact which made a review of the
older sources, still by far the most important, necessary. These two
circumstances soon rendered it imperative to proceed to the making
of scrupulous dogmatic researches. Thus there now is a new life
among jurisconsults, and a great activity, which, it is my hope, may
continue long.”
19 Revue de Législ. et de Jurisprudence, 1834-35.
_ 20 Rossi._
_ 21 M. de Bonald._
_ 22 M. Cousin_ has brought this out in an admirable manner in his
lectures on Adam Smith. Cours de Philosophie Moderne.
_ 23 Channing._
_ 24 Knies._ Die politische Œkonomie vom Standpunkte der geschichtlichen
Methode, Braunschweig, 1853.
25 Cours Complet d’ Economie politique, II, 540, éd. Guillaumin.
_ 26 Cousin._
27 We here append an extract from _Heinrich Contzen’s_ Geschichte,
Literatur, und Bedeutung der Nationalökonomie, Cassel und Leipzig,
1876, p. 7: “Roscher ... is rightfully considered the real founder
and the principal representative of the historical school. This
school is continually gaining in extent, and has found, both in
Germany and in France, the most distinguished disciples—men who
honor Roscher as their teacher and master, the leader whose beacon
light they follow. Roscher combines the richest positive learning
with rare clearness and plastic beauty in the presentation of his
thought. These are conceded to him on every hand; and it does not
detract from him, or alter the fact that he possesses them, that,
here and there, an ill-humored or maliciously snappish critic calls
them in question.” It should be borne in mind here that Wolowski
wrote in 1857; Contzen, like Wolowski, a politico-economical writer
of mark, in 1876.—_Translator’s note._
28 Leben, Werk und Zeitalter des Thukydides.
_ 29 Rau’s_ Archiv., Heidelberg. This remarkable essay has since
appeared in Roscher’s Ansichten der Volkswirthschalt vom
geschichtlichen Standpunkte, 1861.—_Translator’s note._
30 Grundriss zu Vorlesungen über die Staatswirthschaft nach
geschichtlichen Methode.
31 Berliner Zeitschrift für allgem Geschichte.
32 Ueber Kornhandel und Theuerungspolitik, 3d ed., 1852.
33 Untersuchungen über das Kolonialwesen.
34 Umrisse zur Naturlehre der drei Staatsformen (Berliner Zeitschrift,
1847-1848).
35 Ueber das Verhältniss der Nationalökonomie zum klassischen
Alterthume (K. Sachs Akademie der Wissenschaft, 1849). Also to be
found in Roscher’s Ansichten etc.—_Translator._
36 Zur Geschichte der englischen Volkswirthschaftslehre im 16 und 17
Jahrh.
37 Ein nationalökonom. Princep der Forstwirthschaft.
_ 38 Roscher’s_ complete work he calls “A System of Political Economy.”
It embraces the four parts above referred to; but each of these
parts constitutes an independent work. The first part, or the
Principles of Political Economy, covers the ground generally covered
by English treatises on Political Economy.
Besides the works above mentioned, _Professor Roscher_ has written
Ansichten der Volkswirthschaft aus dem geschichtlichen Standpunkte,
2d ed., Leipzig, 1861; Die deutche Nationalökonomik an der
Grenzscheide des sechszehnten und siebenzehnten Jahrhunderts,
Leipzig, 1862; Gründungsgeschichte des Zollvereins, Berlin, 1870;
Betrachtungen über die geographische Lage der grossen Städte,
Leipzig, 1871; Bertrachtungen über die Währungsfrage der deutschen
Münzreform, Berlin, 1872; Geschichte der Nationalökonomik in
Deutschland, Munich, 1874; Nationalökonomik des Ackerbaues, 8th ed.,
Stuttgart, 1875.—_Translator’s note._
39 Die politische Œkonomie vom Standpunkte der geschichtlichen Methode.
40 Die National Œkonomie der Gegenwart und Zukunft.
41 Recherches sur les Finances de France.
_ 42 Frédéric Passy_, de la Contrainte et de la Liberté.
43 Poor peasantry, poor kingdom; poor kingdom, poor sovereign.
44 Cours d’ Econ. polit., 2e., Leçon I, p. 33.
45 This would be: Propter vitiam, vitæ perdere causas.
_ 46 Cousin_, loc. cit., p. 276.
_ 47 Ibid._, 274.
_ 48 Frédéric Passy_: De la Contrainte et de la Liberté.
_ 49 Schäffle_, Deutsche Vierteljahrsschrift (1861), emphasizes this.
_Adam Smith_, Wealth of Nations (1776), very characteristically,
begins with the yearly labor of the nation; _J. B. Say_ (Traité
d’Economie Politique, 1802), with _richesses_; _Ricardo_ (Principles
of Political Economy and Taxation, 1817), with the idea of value.
50 The sum total of the wants (_Bedarf_) of the Bavarian people, for a
whole year, is estimated by _Hermann_, Staatswirthschaftliche
Untersuchungen (2d ed., 1870, p. 81), at 177,000,000 florins for
food (77 millions for wheat and potatoes, 69 millions for meat, 15
millions for milk etc., 16 millions for eggs, vegetables, salt and
spices); 50 millions for clothing, 45 millions for shelter, 37.5
millions for fuel, 60 millions for beverages.
51 The original adds: _deren Gesammtheit sein Bedarf heisst_; the
aggregate of which is called his [man’s] Requisite (_Bedarf_). There
being no exact equivalent in English for the word _Bedarf_ in this
connection, this note is appended.—_Translator._
52 According to _Boisguillebert_ (ob. 1714) Traité des Grains, I., c.
4, the wants _nécessaire_, _commode_, _délicat_, _superflu_,
_magnifique_, arise in successive order with increasing welfare or
prosperity, and are surrendered in a reverse order, with increasing
need. _Tucker_ distinguishes necessaries, comforts, and conveniences
of the respective conditions, elegancies and refinements, and
lastly, “grand and magnificent.” (Two Sermons, 1774, 29 ff.); _F. B.
W. Hermann_, loc. cit, 1st, ed., 1832, 68; necessary goods (Güter
der Nothdurft), goods that contribute to pleasure and recuperation,
to culture and splendor.
53 Compare _Tucker_, On the Naturalization Bill (1751 seq.), IV, note.
54 No people without fire (Prometheus!); and it seems that broiling was
the earliest mode of preparing food; then followed baking in heated
cavities, and lastly came boiling in vessels. (_Klemm_, Allgemeine
Kulturgeschichte, I, 180, 343.)
55 There is an interesting attempt by _Faucher_, in the
Vierteljahrsschrift für Volkswirthschaft und Kulturgeschichte, 1868,
III, 148 ff., to determine the relative place of our various wants
according to their capacity for extension or contraction.
56 The qualification “true,” excludes from the circle of goods, not
only all those things which might satisfy only irrational or immoral
wants (compare _Mischler_, Grundsätze der Nationalökonomie, 1856, I,
187), but also vindicates the fundamental idea of the whole system
of Political Economy, as a subject of moral as well as of
psychological investigation.
57 Even _Aristotle_ (Eth. nicom. V, 8), considers that all things
intended to enter into commerce, should be susceptible of comparison
with one another, and that the measure of this comparison is _want_,
which is the foundation of all association among men.
58 An Arab helped pillage a caravan, and carried away, as his share of
the booty, a chest of pearls. He thought it a box of rice, and gave
them to his wife to cook, but finding they did not boil tender, he
threw them away. (_Niebuhr_, Beschreibung von Arabien, 383). See a
similar anecdote in _Ammian. Marcell._, _XXII_. Compare _Strabo_,
_VIII_, 381.
59 As soon as the Persians renounce the superstition that the daily
contemplation of a turquoise is a talisman against the "evil eye"
(_K. Ritter_, Erdkunde, VIII, 327), that precious stone will lose
much of its value. On the other hand, the amulets of antiquity,
although they have long lost the quality of goods as objects of
superstition, have now a real value for the archæologist.
60 Since observation shows, that, as time runs on, matter tends more
and more to become _goods_, the blind forms of motion in nature to
become useful labor and useful sustenance, impersonal and objectless
existence to be transformed into personal property and personal
culture, _Schäffle_ inclines to the belief that the whole mechanism
of unconsciously governing nature is destined ultimately to aid in
the realization of moral good, which alone is really valuable. Das
gesellschaftliche System der menschlichen Wirthschaft, III, Auff.,
1873, I, 3.
_ 61 Hermann_, loc. cit, 1st ed., I, calls internal goods whatever each
of us finds in himself, the free gift of nature; also that which we
develop in ourselves by our own free action; and external, whatever
we create or obtain, through the external world, as a means of
satisfying our wants. The internal goods of one man may be external
goods to another, as, for instance, when the former conveys them
directly to the latter to be enjoyed, by words, demeanor, etc., or
indirectly, in combination with other external goods.
62 The exclusion of all else, has, indeed, been called one-sidedness
and materialism. But, as _Senior_ says, no one blames the writer on
tactics, because he confines his attention to military subjects; nor
is the objection raised, that by so doing, he is encouraging eternal
war. On the other hand, _J. B. Storch_ (1815) devoted a special
division of his work to the consideration of “internal goods”
(health, knowledge, morality, security, leisure,.etc.). See _Rau’s_
translation of his Manual, II, 337 ff. Compare _Gioja_, Nuovo
Prospetto delle Scienze economiche, 1815 ff. VIII.
63 The inclination to exchange is, according to _Adam Smith_, one of
the most important marks which distinguish man from the brute.
(Wealth of Nations, I, ch. 2). But see _Büsch_, Geldumlanf (1780),
I, § 29, on exchange among the lower animals.
64 Observed by _Aristot._ Polit. I, ch. 6.
65 The efforts of political economists to select from among the
infinite number of goods, those which should constitute the subject
of their investigations, have taken two directions in recent times.
_Bastiat_ here confines himself too exclusively to commerce. The
political economist should concern himself only with wants and
satisfactions, where the labor, which is the connecting link between
them, is undertaken by some other person for a consideration. Thus
the ordinary act of respiration lies outside the circle, that of the
diver, which is paid for, does not. (Harmonies économiques, 1850, 68
ff.) But even Robinson Crusoe had his own system of economy. Are the
products which the farmer consumes in his own home, the work he does
himself, any the less matters of economic moment than the products
he sells, or the labors of his servants? _Schäffle_ is right when he
says that ordinary respiration is no economic function, because it
is an unconscious necessity of nature. But his definition is too
broad, inasmuch as he places the essence of the economic character
of goods or of an act, in the conscious adaptation of means to human
ends. (Tübinger Progr. z. 27 Sept. 1862, 9, 24 seq.) To take a walk
is no economic operation, although it may be the best means to a
very important end,—health. The same goods or the same act may have,
frequently, according to the end proposed, an economic or
non-economic character. The beauty of the human body, for instance,
however systematically made use of for purposes of vanity, is not
economic _goods_. But it is an economic speculation, base though it
be, when a man relies on his handsome figure to secure a wealthy
wife, or, for purposes of gain, allows her to pose as a model to
artists or to take part in _tableaux vivants_. According to _C.
Menger_, Grundsätze der Volkswirthschaftslehre (1871) I, 51 ff.,
there are no economic goods, but those the disposable supply of
which is, at most, equal to the quantity that is required. But is
not the largest navigable stream, even in the most thinly populated
country, an economic good?
_ 66 Hegel_, Rechtsphilosophie, § 67. Even the use of a corpse as
manure, or for any mercantile purpose, is repugnant to our feelings,
“because of the dignity of personality.” (_Schäffle_, National
Œkonomie, 1860, 28.) In this respect, prostitution is a remnant of
slavery. _Schäffle_ is right, when he says that to repay personal
services with material commodities which do not afford as much food
etc., as the former have cost in expenditure of vital energy, is a
slow and frequently a very cruel kind of cannibalism. (Kapitalismus
und Socialismus, 1870, 18).
_ 67 Bornitz_, De rerum Sufficientia in Republica procuranda, 1625,
gives in this encyclopædia of political science, together with a
dissertation on agriculture, commerce and manufactures, a complete
survey of the _ministeria_. Several modern writers refuse to look
upon personal services, or the ability to render such services, as
elements of wealth: compare _Kaufmann_, Untersuchungen im Gebiete
der politischen Œkonomie, 1830, II, Heft I. They demonstrate,
however, no more than this, that that class of goods has something
very peculiar. Thus _Malthus_, Principles of Political Economy
(1820), chap. I, sect. I, objects that they cannot be inventoried or
taxed; but can material goods be so completely? Can all the parts of
the wealth of a nation be so inventoried and taxed? _Rau_, Lehrbuch
der pol. Œkonomie (1826) I, § 46, remarks that the personal aptitude
to perform services dies with the person, and that personal services
cannot be stored up (?), etc. I appeal simply to the definition I
have given above of economic goods, and which applies equally to
services of every kind which can be performed for other people.
Besides, those who oppose this view are unable to give a
satisfactory explanation of all the phenomena of commerce. Of
course, the qualification “recognized as useful” is of the utmost
importance as a mark to determine what is goods. But a prima donna,
or a world-renowned physician, cast naked by shipwreck on the shores
of North America, is certainly, better off than a blind beggar, his
fellow sufferer. Compare _Storch_, Handbuch II, 335 ff. and his
Considérations sur la Nature du Revenu National.
_ 68 Ad. Müller_ compares persons, so far as they render any kind of
service, to things, and, so far as they are required to be preserved
in their individuality, to persons. The children in the “status” of
a country gentleman, for instance, are treated more as persons, and
domestics, more like things; the land partakes of a species of
personality, but not the implements of labor. (Nothwendigkeit einer
theolog. Grundlage der Staatswissenschaft, 1819, 48.)
69 The privilege of selling refreshments in the garden of the Palais
Royal was formerly let for 38,000 francs a year.
70 See the cases cited by _Hermann_, Staatswirtsch. Untersuchungen, 6
ff. and by _Bernoulli_, Schweiz. Archiv. für Statistik und N. Œkon.
II, 55. Think of the firm of J. M. Farina! In Athens, good stands
were leased at a very high rent, even where there was no investment
of the lessee’s capital. (_Demosthenes_, pro. Phorm., 948; adv.
Steph. I, iiii.) There is, again, the sale of inventions, while they
are still “mere ideas.” According to _Schäffle_, Theorie der
ausschliessendnen Verhältnisse, 1857, II ff., the value in exchange
of these relations depends on the extra income which is assured in
fact, or in law, against diminution, by the exclusion of
competition. He, therefore, recommends, instead of the word
“relations,” “custom,” or “publicum.” But these words, by no means,
exhaust the meaning expressed by “relation.” Thus, the good
administration of public affairs, although it has no value in
exchange, is one of the most valuable economic goods which a people
can possess.
71 The relation mentioned above of a general to an army may even have
great value in exchange. Instance, the Italian condottieri in the
fifteenth century!
72 Relations which take from one man, as much as they afford to their
possessor, are of value as components of a man’s private fortune,
but not of the wealth of the nation. To this class belong debts due
from persons or from things, compulsory custom or good-will of every
description; as for instance, the seventy-two places of the _agents
de change_ in Paris, each of which was worth more than a million of
francs; or the right of navigating the Elbe as far as Magdeburg,
which, about the beginning of this century, was worth in every
instance about 10,000 thalers. (_Krug_, Abriss. der St. Œkonomie,
62.)
_ 73 Schäffle_, N. Œkonomie, 10. In the German language, this same word
is used to designate utility, and sometimes useful objects (so
called values). A clear distinction, however, should be made between
utility and value in use. Utility is a quality of things themselves,
in relation, it is true, to human wants. Value in use is a quality
imputed to them, the result of man’s thought, or of his view of
them. Thus, for instance, in a beleagured city, the stores of food
do not increase in utility, but their value in use does. Compare
_Schäffle_, System, III, I, 170.
_ 74 Genovesi_, Economia civile (1869), II, I, 7. _L. Say_, De la
Richesse individuelle et de la Richesse publique (1827), 29,
estimates the value of goods according to the degree of discomfort
attendant on the privation of them.
_ 75 Friedländer_ has, however, made a general attempt in this
direction. Theorie des Werthes (Dorpat, 1852). But says _Th. Fix_
(Journal des Economistes, 1844, IX, 12): “It is as impossible to
establish a scale of values, as it is to find an exact mathematical
and permanent measure of our wants, passions, desires, tastes and
fancies.”
76 Compare _Knies_, Geld und Credit, 1873, I, 126 ff. The very
respectable attempt made by _A. Samter_, Sociallehre (1875), with
the idea society-value (_Gesellschaftswerth_) covers too nearly the
idea of value in exchange. Further research will here have to be
made, with the idea of “impotent need,” inasmuch as, from a high
ethical, national-dietetical point of view, the question is asked
whether, to what extent, and how, “impotent need” may be made a
potent one.
_ 77 Friedländer_, loc. cit, 50. If too many copies of the very best
book be published, there is a certainty that a number of them will
remain little better than waste paper.
_ 78 Schäffle_, System, II, aufl., 55. See also his Kapitalismus und
Socialismus, 1870, 31, 35, 43.
79 Thus _Kleinwächter_ (Hildebrand’s Jahrbücher für N. Oek. und
Statistik, 1867, II, 318), defines value in exchange=value in use +
costliness. According to Schäffle, it is “a covert comparison
between the cost-value and the value in use of the two kinds of
goods to be exchanged.” (Kapitalismus und Socialismus, 35.)
80 An intermediate dealer can, so far as he is himself concerned,
attribute value in exchange to goods only to the extent that they
have use for the last person who has acquired them. Hence, _Storch_
calls _value in use_ immediate, and _value in exchange_, mediate
value. As the English are always wont to express the immediate in
words of Germanic origin, and the mediate in words borrowed from the
Latin, _Locke_ calls value in use “worth,” and value in exchange,
simply “value.” (_K. Marx_, Das Kapital. Kritik der politischen
Œkonomie, 1867, I, 2.)
81 It is, of course, otherwise when, for instance, a beautiful sea
view, or a desirable position as regards air and sunshine, is
connected with a piece of land.
82 In Ravenna a cistern had greater value in exchange than a vineyard:
_Martial_, III, 56. In Paris, too, drinking water, which is
transported only with considerable trouble, costs 1-1/3 thalers per
cubic meter. We may also mention snow and ice in summer, which last
sells in the capitals of southern Europe at 0.34, silber groschens
per pound. According to _Carey_, “utility” is the measure of man’s
power over nature, “value,” the measure of nature’s power over man.
He very inaccurately adds, that both are always in an opposite
direction. (Principles of Social Science, 1861, VI, ch. 9.)
83 Hence _Ad. Müller_ calls value in use, individual value, and value
in exchange, social value. The Germans call the value of goods whose
value in use is recognized by only one person, _Affectionswerth_,
(affection-value) a value which influences its value in exchange
only when the individual who holds it in high esteem is not himself
the possessor of the goods. An instance of this latter is a piece of
paper covered with notes, intelligible only to the maker of them.
84 The very important difference between value in use and value in
exchange was recognized oven by Aristotle. _Aristot._ Pol. I, 9.
_Hutchinson_, System of Moral Philosophy (1755), II, 53 ff. The
Physiocrates speak very frequently of _valeur usuelle_ and _vénale_,
on which, according to _Dupont_, Physiocratie, CXVIII, the
difference between _biens_ and _richesses_ is based. _La valeur d’un
septicr de blé, considéré comme richesse ne consiste que dans son
prix._ (_Quesnay_, éd. Daire, 300.) _Turgot_ distinguishes between
“_valeur estimative_” and “_échangeable_ or _appréciative_;” the
former designating the relation between the amount of energy,
physical and mental, which one is willing to spend in order to
obtain the goods, to the sum total of his energies, physical and
mental; the latter the relation between the aggregate like energy of
two persons which they are willing to spend in order to procure each
of the goods to be exchanged, and the sum total of their energies in
general. (Valeurs et Monnaies, p. 87, seq., éd. Daire.) _Ad. Smith_,
in his Wealth of Nations, I, ch. 4, shows that he knew the
difference between value in use and value in exchange; but he
afterwards drops the consideration of the former, altogether. In
this respect he has had only too faithful and one-sided followers
among his countrymen, so that _Ricardo_, Principles, ch. 28, asks
what value in exchange can have in common with the capacity of
commodities to serve as food or clothing. (See, however, ch. XIX
seq.) Many “free traders” would have no objection to interpose, if a
people should abandon the cultivation of wheat, etc., to devote
themselves exclusively to the manufacture of point lace, provided
the latter had a greater value in exchange. The two degrees of the
idea of value have been examined with much thoroughness by
_Hufeland_ in his Neue Grundlegung der Staatswirthschaftskunst
(1807), I, 118 ff.; _Lotz_, Revision der Grundbegriffe (1811 ff.),
I, 31, ff.; _Storch_, Handbuch, I; _Rau_, Lehrbuch, I, 56, ff.;
_Thomas_, Theorie des Verkehrs, I, p. 11; _Knies_, Tübing. Zeitschr.
1855; _Bastiat’s_ declaration (Harmonies, p. 171 ff.): that
“_valeur_” (by which Bastiat means only value in exchange), = _le
raport de deux services échangés_, contains a two-fold error: the
ambiguity of the word _services_, which applies equally to a
yielding or affording of utility, as to useful labor, and the error
that the labor necessary to produce a commodity, and of which the
purchaser is relieved, alone determines its value in exchange.
Compare _infra_ §§ 47, 107, 110, 115 ff., and _Knies_, loc. cit., p.
644 ff.
_ 85 Proudhon_, Système des Contradictions économiques, 1846, ch. 2.
86 In France, according to _Cordier_ (Mémoire sur l’Agriculture de la
Flandre Française), the wheat harvest yielded, in
1817, forty-eight million hectolitres, with a value in exchange of
two thousand and forty-six million francs; in
1818, fifty-three million hectolitres, with a value in exchange of
one thousand and four hundred and forty-two million francs; in
1819, sixty-four million hectolitres, with a value in exchange of
one thousand and one hundred and seventy million francs.
A rise in the value in exchange of wheat, such as was witnessed in
1817, is synonymous with a decline in the value in exchange of
money, and of all those goods whose money price has not risen. It is
no objection to the views here advocated, that when the necessaries
of life are very scarce, the want of clothing, furniture, articles
of luxury etc., is not felt so keenly as at other times, and that
the value in use of these commodities really falls; and _vice
versa_.
87 Compare _B. Hildebrand_, N. Œkonomie der Gegenwart und Zukunft,
1848, I, p. 316 ff. _Knies_, loc. cit.
88 The greater importance attached, in our days, to value in exchange,
than to value in use, is seen especially in the attitude which the
buyer, who is possessed of the more current commodity (money),
assumes toward the seller,—an attitude not unlike that of a patron
towards his client. In the interior of Africa, the possessor of
money, as such, would scarcely look down on the possessor of the
means of subsistence. The South American Indians are ready to render
an amount of service for a little brandy, which it would be in vain
to ask them to perform for ten times its value in gold. (Ausland,
Jan. 15, 1870.) The miser estimates the possibility of being able to
procure for himself, for one dollar, a hundred different articles
worth a dollar each, to be worth one hundred dollars.
89 When the wants of a person or of a people change, it is possible for
the value in use of one kind of goods, which had the greater
prominence before, to take the place occupied previously by its
value in exchange; and _vice versa_. Thus, the youth sells the
plaything he used in childhood; the man, the educational apparatus
of his earlier years; the old man, the implements that enabled him
to acquire wealth, and which he can no longer use except with great
effort. (_Menger_, Grundsätze, I, 220 ff.)
_ 90 Rau_ (Lehrbuch, I, § 61 ff.) distinguishes between the concrete or
quantitative value which a certain kind of goods may have for a
certain person, under certain circumstances, and the abstract or
species-value which a whole class of commodities may have for men in
general.
But _F. J. Neumann_, (Tübinger Zeitschrift, 1872, p. 288 ff.)
objects, that even the abstract value of a commodity always suggests
the relation of a definite number of concrete men to a definite
quantity of goods; else, by the expression, value of goods, is to be
understood not what it is generally meant to signify, but only the
capacity to satisfy a single want.
_ 91 Storch_, Ueber die Natur des Nationaleinkommens (1824, 1825), 5,
defines (_Vermögen_) thus: a source of income, permanent in its
nature, and capable of being transmitted, the possessor of which
does not need to work, on its account. Hence he does not approve of
the expression “the people’s resources” (_Volksvermögen_).
92 See especially _Lord Lauderdale_, Inquiry into the Nature and Origin
of Public Wealth, 1804, ch. 2. _Storch_, loc. cit.
_ 93 Moreau de Jonnès_, Le Commerce au 19. Siècle (1825) I, 114 ff.,
says that the United States imported from abroad 9.6, France 6, and
Great Britain 5.8 per cent. of their annual consumption; and
exported respectively 10.4, 6.2, 9.8 per cent. of their annual
production. The recent free trade tendencies, and the improvement in
the international means of transportation, have certainly increased
the relative importance of foreign commerce. In the kingdom of
Saxony (1853), _Engel_ estimates that 10/47 of the whole production
of the country was destined for foreign countries, and that 10/47 of
the consumption was imported.
94 When the land of a country becomes dearer, simply on account of the
increase of population, or goods, the quantity of which is
susceptible of increase, because the cost of production has been
increased, this cannot be considered an increase in the wealth of
the people, (_v. Mangoldt._)
95 Neither is value in exchange a quality inherent in goods, but only a
relation between them and other goods. Hence it is absurd to speak
of a rise or fall of all values in exchange. If the goods A lose in
capacity to be exchanged against goods B, goods B of course increase
in exchange power as compared with A, and _vice versa_. It is
necessary to guard against being misled here by the intervention of
money, that is, by the custom universal among men of employing a
definite kind of goods as a medium of exchange for all others. Yet
there are many writers who have been thus misled. Thus _Galiani_,
Delia Moneta (1750), II, p. 2, who regards the lasting increase of
the prices of all commodities as an infallible sign of national
prosperity. To the same effect is the motto of the Physiocrates:
_Abondance et cherté c’est opulence_. In its coarsest form, in
_Saint Chamans_, Nouv. Essai sur la Richesse des Nations (1824),
456, who would have that which is now the free gift of nature, to
come to us or be produced only as the reward of toil. _Verri_, on
the other hand, Meditazioni sull. econ. pol. (1771), ch. V, thinks
that the number of buyers in a country should be as small as
possible, and that of sellers as great as possible, in order that
thus prices might be low; (as if every buyer was not, _eo ipso_,
also a seller.)
_ 96 Kaufmann_, Untersuchungen, I, p. 165 seq. Also, _Verri_,
Meditazioni, XVII, 2.
97 The differences characteristic of poverty, indigence, managing to
live, fortune and wealth, cleverly treated by _von Justi_,
Staatswirthschaft, I, p. 449, seq. _Rau_, Lehrbuch I, § 76, seq.,
establishes the following gradation: privation and wretchedness,
poverty, indigence, “getting on,” comfort, wealth, superfluity. _L.
Say_ calls those who can satisfy the wants of luxury rich;
well-to-do, those who can command the comforts of life; and
wretched, those who cannot obtain a sufficiency of the objects of
prime necessity. In France, the limits of these situations are
marked by an income of respectively 60,000, 6,000 and 900 francs per
family, so that a family with an income of only 300 francs per year
is in a condition of wretchedness. (Traité de la Richesse, 1827, I
ff., 71 ff.)
_ 98 Palmieri_, Ricchezza nazionale, Introd. The greater number of the
definitions of wealth are rather onesided than false. _Socrates_,
for instance, looks only at the relation existing between means and
their owner’s wants. (_Xenoph._ Memor., IV, 2, 37, seq. Œconom. II,
2 ff.). _Plato_, on the other hand, as the socialists are wont to
do, looks to the excess over that possessed by others. (Legg. V,
742, seq.). _Xenophon’s_ observations, Hiero, 4, on the nature of
wealth, are many-sided and beautiful. _Aristotle_ distinguishes
between natural and artificial wealth: πλῆθος ὀργάνων οἰκονομακῶν
καὶ πολιτικῶν—πλῆθος νομίσματος. (Polit, I, 3, 9, 16.) Compare
_Cicero_, Parad. VI. The dominant idea of the so-called Mercantile
System is thus expressed in a Saxon pamphlet of 1530
(Müntzbelangende Antwort, etc.): “Money is the real watchword; where
there is much money, there is wealth, it is clear.” Compare
_Luther_, Werke, Irmisch edition, XXII, p. 200 seq. See some
excellent remarks in opposition hereto, in the Saxon pamphlet,
Gemeyne Stimmen von der Müntz, 1530. _Schröder_, Fürstliche
Schatz-und Rentkammer, 1686, ch XXIX. “A country grows rich in
proportion as it draws gold or money, either from the earth or from
other countries; poor, in proportion as money leaves it. The wealth
of a country must be estimated by the quantity of gold and silver in
it.” See a very passionate argument against this view in
_Boisguillebert_, Dissertation sur la Nature des Richesses, written
sometime between 1697 and 1714. _Berkeley_, Querist (1735), Nos.
562, 542. Among Englishmen, the correct view was prevalent much
earlier, especially among the founders of the American colonial
empire. See _Hachluyt_, Voyages (1600) III, 22 ff. 45 ff. 152 ff.
165 ff. 182 ff. 266 ff; but especially the work “Virginia’s Verger”
in “Purchas Pilgrims” (1625), IV, p. 809 ff. However, several
Spaniards were led by hard experience to adopt a view opposed to the
Midas-view (compare _Aristotle_, Polit. I, ch. 3, 16), by which the
first American explorers were carried away: _Garcilasso de la Vega_
(1609), Comment. reales II, ch. 6; _Saavedra Faxardo_, Idea
Principis christiani (1640) Symb. 69: _potissimæ divitiæ ac opes
terræ fructus sunt, nec ditiores in regnis fodinæ, quam agricultura;
plus emolumenti, acclivia montis Vesuvii latera adverunt, quam
Potosus mons_. Contemporary with those Englishmen, was the Italian,
_Giov. Botero_, who called attention to the fact, that France and
Italy were the countries of Europe richest in gold, although they
possessed no mines of the precious metal themselves: Della Ragion di
Stato (1591) p. 88 ff. Also _Sully_, who called agriculture and
cattle-breeding the breasts of the state, the real mines and pearls
of Peru. (Economies royales I, ch. 81. See however, II, p. 381).
_Montchrêtien_, Traité d’Économie politique (1615) 81, 172 seq.
According to _Sir D. North’s_ Discourses upon Trade, 1691, wealth is
synonymous with freedom from want, and the ability to procure many
comforts, while _Temple_ (ob. 1700, Works I, 140 seq.) looks
entirely at the subjective side of wealth. _Pollexfen_, “England and
East India inconsistent in their Manufactures” (1697), considers
gold and silver as the only real wealth. To this definition Davenant
(ob. 1714), opposes another. Wealth, according to him, is whatever
places prince or people in a condition of superabundance, peace and
security. See his Works, I, p. 381 seq. He even reckons intellectual
powers, alliances etc., among the national wealth. Compare _W.
Roscher_, Zur Geschichte der englischen Volkswirthschaftslehre 1851,
in the acts of the royal Saxon Academy of Sciences, vol. III.
_Vauban_ (Dime royale 1707), Daire’s edition, says: “The real wealth
of a people consists in an abundance of those things, the use of
which is so necessary to sustain the life of man, that they cannot
at all be dispensed with.” By the wealth of a people _Galiani_,
Della Moneta II, c. 2, understands the aggregate of all lands,
houses, movable property, money, etc. which belong to them, but,
that the chief element of wealth, and the condition precedent of all
others, is men themselves. Hence, the process of the impoverishment
of a people in their decline, takes the following course: money
first emigrates, next, population diminishes, afterwards, the houses
fall in ruin, finally, the land itself becomes a waste. According to
_Broggia_, wealth is _un avanzo osia valore di tutto cio che avanza
al proprio consumo e bisogno_, Delle Monete, 1743, IV, 307, 314;
Cust. _Palmieri_ (ob. 1794), also says: _il superfluo constituisce
la richezza_. (Publica Felicità.) According to _Turgot_, Sur la
Formation et Distribution des Richesses 1771, § 90, the wealth of a
nation consists in the net proceeds of landed property capitalized
at the ordinary price of land, and then of the aggregate of all the
movable property of the country. _Büsch_, Geluumlauf III, § 27,
considers a certain duration of the produce or revenue as an
essential element in the idea of wealth. _Lauderdale_, Inquiry, ch.
II, distinguishes national wealth and private wealth; the former
embracing all that man covets as agreeable or desirable; while it is
one of the marks of the latter, that there should be no general
superfluity of it on hand. Several modern English economists call
wealth only that, the production of which cost human labor. Thus,
_Malthus_, Definitions (1827) p. 234. _Torrens_, Production of
Wealth, 1821, ch. I. When _Rossi_, Cours d’Economie politique, 1835,
L. 2, says: _tout chose propre à satisfaire aux besoins de l’homme
est richesse_, he demonstrates how the frequent inaccuracy of the
French language stands in the way of a close analysis. The greater
number of more recent definitions are true of resources rather than
of wealth. _Bastiat_ distinguishes between _richesse effective_ and
_relative_, the former being based on _utilité_, the latter on
_valeur_. (Harmonies, ch. 6.)
99 The national wealth of Athens, at the time of the hundredth
Olympiad, is estimated by _Böckh_ (Staatshaushalt der Athen, I, p.
636, 2d ed.) to have been from thirty to forty thousand talents,
besides the non-taxable property of the state. That of Great Britain
is estimated at about 8,000 million pounds sterling. (Athenæum 5
March, 1853.) _Wolowski_ estimated that of France at, at least, 116
milliards of francs, with an annual increase of 1-½ milliards, (L’or
et l’Argent, 1870. Enquête, 59.) _David A. Wells_ estimated that of
the United States, in 1860, slaves not included, at 14,183 million
dollars, or $451.20 per capita, whereas in England, the per capita
wealth was about $1,000. (_Hildebrand’s_ Jahib., 1870, I, 431.) The
national wealth of the kingdom of Saxony is equal to 600 million
thalers immovable, and 600 million movable, property. (_Engel_,
Statist. Zeitschr. August, 1856). That of Würtemberg=2,710 million
florins, of which 700 millions represent movable goods, and 100
million, claims on foreign countries. (Statistisches Handbuch,
1863.) Of course all these estimates are very inexact.
_ 100 Ch. Dupin_, Forces productives, p. 82. See _infra_, § 230.
101 Compare _Meidinger_, Das britische Reich in Europa, pp. 79, 238,
261.
_ 102 Davenant_ considers an increase in the number of houses, ships and
stocks of goods, as the surest sign of an increase in the national
wealth; and on the other hand, a high rate of interest, a low price
of land, small wages, a decrease of population, and an increase of
uncultivated land, as the signs of national impoverishment. (Works,
I, pp. 354, seq. II, p. 283.) _Sir M. Decker_, Essay on the Causes
of Decline of Foreign Trade (1744), 3, gives as the signs of
impoverishment, the following: a wretched condition of the poor and
of manufactures, a low price of wool, long credit to retail dealers,
frequent cases of bankruptcy, exportation of the metals, unfavorable
exchange, few new coins, many cases of unpaid rent of leased land,
and high poor rates.
_ 103 Storch_, Handbuch, I, 45. Compare _infra_, § 187.
104 On the difference between human and animal economy, see _Schön_,
Neue Untersuchungen der N. Œkonomie, (1835), 4.
105 Compare _Schäffle_, System, III, Aufl. I, 2, 28.
_ 106 Knies_, in his Polit. Œkonomie vom geschichtl. Standpunkte, 1853,
p. 160 ff., shows, very happily, how the love of one’s self,—which
must, indeed, be distinguished from self-seeking—is not in conflict
with the love of one’s neighbor; but that, in healthy natures, it is
found allied with a feeling of equity, and of the common good. See,
also, _F. Fuoco_, Saggi economici, Pisa, 1825, Nr. 7. _Schutz_, Das
sittliche Element in der Volswirthschaft: Tübinger Zeitschrift für
Staatswissensch. 1844, p. 132, ff.
107 “That they should seek the Lord if haply they might feel after him.”
(Acts, 17, 27. Compare Matthew, 6:33, also I. Timothy, 5:8.) _Adam
Müller_ in his Nothwendigkeit einer theolog. Grundlage, 49 seq., is
a strong advocate of all this, but a rather narrow one. The farmer,
he says, should first work for the love of God, then for the fruit,
that is, for the gross product, and lastly for the net product. His
work is a trust. _Müller_ considers the business relations of men,
as they exist at present, as “the comfortless mutual slavery of
all.” (Nothwendigkeit einer theolog. Grundlage, 49 ff.) The
economist, _Ch. Perin_, who writes from the Catholic
politico-economical standpoint, substitutes for conscience,
_renoncement_, as the force antagonistic to _intérêt_, an expression
inappropriate, because merely negative, although in perfect harmony
with the ascetic religiousness of the middle ages. (De la Richesse
dans les Sociétiés chrêtiennes, 1861, II vol., passim) Compare
_Roscher_ in _Gelzer’s_ Protestant. Monatsblättern, Jan. 1863.
_Puchta_, Institutionen, I, f. 8, opposes to individualism—or the
impulse to distinguish ourselves from others, and which, when
uncontrolled, leads to egotism, pride and hate—love and right, which
are controlling powers over the former.
108 Even the ancients conceived Eros as a world-building principle.
According to _Schön’s_ expression, loc. cit., which it is not
difficult to misconstrue, the feeling of the common interest
manifests itself, both as law and force. And, in reality, it is
necessary that, in order not to permit the drowsy conscience to fall
too far behind self-interest, which is always awake, it should
create lasting institutions and regulations above and beyond the
caprice of the individual or of the moment; for instance, in the
family, marriage, education etc.
109 The more private interest ceases to be momentary, and becomes
life-long and even hereditary, the better does it harmonize with the
feeling of the common interest.
_ 110 Perin_ says (1, 93), that the conflict of interest is reconciled in
the seeking for the attainment of the supreme good, that is God,
“who gives himself to all in equal measure, and yet always remains
the same, and out of whose fulness all may draw, and yet no one’s
share grows less.” But the same is true of all ideal goods, and of
every form of the feeling for the common interest, the highest of
which is, indeed, religiousness.
111 According to _Kant_, Anthropologie, p. 239, the desire of comfort
and well-being, and the inclination to virtue, when the former is
properly restrained by the latter, produce the highest degree of
moral, united to the highest degree of physical, good. It is well
known, that during the middle ages, in all countries except Italy
and, even up to the seventeenth century, the moral sciences were
under a one-sided theological influence, whose ascetic condemnation
of self-interest may have been well enough during a period of
violence. By virtue of a very natural reaction, and as a protest of
individualism against the constraint of absolute monarchy, the
materialists of the eighteenth century endeavored to discover, even
in the most exalted phenomena of human society, only the expression
of an enlightened self-interest. See _Mandeville’s_ Fable of the
Bees, or private Vices public Virtues (1723), but especially,
_Helvétius_, De l’Esprit (1758). _Voltaire_ says, that, in all the
celebrated maxims of _De Rochefoucauld_ (1665) there is but one
truth contained, _que l’amour propre est le mobile de toutes nos
actions_. (But see, per contra, _Pufendorf_, Jus Naturæ et Gentium,
1672, II, 3, 15.) This tendency was opposed, especially by the
English, who could not be blind to the influence exerted in public
life by the feeling for the common good. _David Hume_, Treatise on
Human Nature (1739), III, 54, is of opinion that the interests of
others are, on the whole, in the case of nearly every man stronger
than even his own self interest. _Hutcheson_, System of Moral
Philosophy (1755), speaks of the innate principle of benevolence.
Man is not a perfect whole; a part belongs to his own person, part
to his family, part to the nation, part even to all humanity.
_Burke_, Inquiry into the Origin of our Ideas of the Sublime and
Beautiful (1756), distinguishes two fundamental principles of
action, that of self-preservation and that of society. On the former
is based the sense of the sublime; on the latter, of the beautiful.
According to _Ferguson_, History of Civil Society, (1767), I, 3, 4,
the “sense of union” is frequently strongest where the advantage
drawn from the connection is smallest; for instance, it is weakest
in highly cultured commercial countries. _Adam Smith_, Theory of
Moral Sentiments (1768), has been as one-sided in reducing
everything to “sympathy,” as he has been in his Wealth of Nations in
reducing everything to “self-interest;” but not without the
consciousness, that to explain the reality, it is necessary to take
both into consideration (_Buckle_). It would, indeed, be just as
preposterous to base economy on self-interest alone, as to base
marriage merely on the sexual appetite. Recently, _Hermann_,
Staatswirthschaftliche Untersuchungen, 1st ed., part 1st, discovers
in self-interest, and in the feeling for the common good, the two
springs of all economy. He would even base the so-called theoretic
Political Economy, on the study of self-interest, its practice in
that of the common good. _M. Chevalier_, Cours d’Economie politique,
1844, II, 412 ff., understands something very like this by the
contrast between liberty and centralization. The _antagonisme_ and
_association_ of _Bazard_, Exposition de la Doctrine de Saint Simon
(1829), p. 144 ff. Closer investigation will show, however, that
self-interest, which must not be confounded with egotism, and the
common interest, are neither coördinate nor exhaustive opposites.
Compare the beautiful contrast drawn by _Goethe_ (Pocket edition of
1833, vol. 46, 97), between “Pietät” and “Egoisterei.”
_ 112 Paul_, I. Corinth. 12, gives the most beautiful model description
of a social organism. Compare, however, the fable of Menenius
Agrippa in _Livy_, II, 32.
113 Excellent beginnings of a general theory of economies in common in
_Schäffle_, N. Œkonomie, II, Aufl., 62 ff., 331 ff.
114 The French and English, with their strong political bias, use the
expressions respectively _economie politique_ and Political Economy.
In Germany, where the terms the people (_Volk_) and the state
(_Staat_) are much less nearly coextensive, the words
_Volkswirthschaft_ and _Nationalökonomie_ are preferred. But even
_Hufeland_, who first gave currency to the term _Volkswirthschaft_
(Grundlegung, I, 14), called attention to the peculiarity “that the
term economy suggests that there is one who economizes and guides,
an economist in chief, and that such a one is, even according to the
most correct opinion, wanting in the public economy of a people.”
115 According to _Th. Cooper_, Lectures on the Elements of Political
Economy, (1726), 1, 15 ff. 117, the wealth of society is nothing but
the aggregate wealth of all the individuals that compose it. Each
individual looks out best for his own interests, and, hence, that
nation must be the richest, in which each individual is most
completely left to himself. (If this were so, savage nations would
be the richest!) _Cooper_ goes so far as to disapprove of the
protection afforded to commerce on the high seas by a national navy;
no naval war is worth what it costs, and merchants should protect
themselves. He says, too, that the word “nation” is an invention of
the grammarians, made to save the trouble of circumlocution, a
nonentity! _Adam Smith_ is, as might be expected, far removed from
such absurdities. (Compare Wealth of Nations, IV, ch. 2, and the end
of the fourth book.) But, even he is of opinion that men, in the
study of their own advantage are led “naturally, or rather
necessarily” (IV, ch. 2), to the employment which is most useful to
society. But here _Adam Smith_ overlooks the fact, that every
individual nation strives after earthly immortality, and is, in
consequence, frequently compelled to make immediate sacrifices for
the sake of a distant future, a thing which can never be to the
private interest of the mortal individuals who compose it. And thus,
_D. North_, Discourses upon Trade (1691), 13 seq., says, that in
commercial matters, different nations stand in precisely the same
relation to the whole world, that individual cities do to the
kingdom, and individual families to the city. Similarly,
_Boisguillebert_, Factum de la France, ch. 10, 327, Daire’s edition.
_Benjamin Franklin_ (ob. 1790), Political Papers, § 4. And _J. B.
Say_, Traité d’Economie politique (1802) I, 15: every nation is, in
relation to neighboring nations, in the situation of a province in
relation to neighboring provinces. Unfortunately, such doctrine is
only too palpably refuted by every war! _J. Bentham’s_ saying: _Les
intérêts individuels sont les seuls intérêts réels_ (Traité de
Législation, I, 229). _Infra_ § 98.
Among those who, in antiquity, most energetically maintained that
the idea of national economy is not a merely nominal one, is _Plato_
(De Republ., IV, 420, I, 462); more recently, _Fichte_ (Der
geschlossene Handelstaat, 1800), although, in general, the
socialists attach as little importance to nationality as their most
decided opponents. Adam Müller is a writer who deserves recognition
for his advocacy of national economy, and of the state as a whole,
paramount to individuals, and even generations. He gives war the
credit of causing the scientific knowledge of the state to cast
deeper roots, and of enlightening individuals in the most forcible
way, that they are parts of one great whole. (Elemente der
Staatskunst, 1809, I, 7, 113). He calls public economy, as a whole,
the product of all products. What, he inquires, is the use of all
wealth, if it does not guarantee itself? And this, it can do, only
through the organization of the whole people, that is, through the
nation (I, 202). _Adam Smith’s_ theory of labor would be correct if
it considered the entire national life of a people itself as one
huge piece of labor. (II, 265). And so, Müller directs his polemics
against Adam Smith’s premise of a merely mercantile world-market.
(II, 290). Similarly, the protective tariff theoreticians, _Ganieh_,
Théorie de l’Economie politique (1822), II, 198 ff. and _Fr. List_,
Nationales System der politischen Oek. (1842), I, 240 ff. _Colton_,
Political Economy of the United States, 1853. _Sismondi_, Nouveaux
Principes (1819), I, 197, ridicules the opinion which resolves the
public interest into merely private interests: It is A’s interest to
rob B; B, the weaker, is equally interested to let himself be
robbed, that he may fare no worse. But the state—?!
116 National wars are really no mere operations of the will of the
state! Since 1800, Ireland, and, since 1858, even British India,
constitute one state with England, and yet how different are the
economic tendencies of these different countries of which the
individual husbandman or business man must take cognizance!
117 One might also deny the reality of a stream, considered as a whole,
since its bed, no one calls a stream, and its watery contents change
every moment. And yet, it is well known to scientific geography that
every stream has its own individual character.
118 This would be to be guilty of explaining _ignotum_ per _ignotius_.
And yet, there are a great many modern writers who imagine that they
have said something all-sufficient, when they have told us that the
state is an organism. As early a writer as _Hufeland_ (N.
Grundlegung, I, 113), enters his protest against such abuses. The
person who would operate with this notion, should, at least, have
read the acute observations, so well calculated to dissipate
preconceived opinions, made by _Lotze_, in his Allgemeine
Physiologie des körperlichen Lebens, 1-165. The organic conception
of national life, the life of a whole people, where the individual
organs are free and rational beings, is evidently a much more
difficult one to form than that of the animal or human body.
119 I first called attention, in my work on the life-work and age of
_Thucydides_, to the fact that that great historian always accounts
for causes in the following manner: A. is produced by B., and B. by
A. (_Roscher_, Leben Work und Zeitalter des Thukydides, 199 ff.;
compare especially _Thucyd._, I, 2, 7, seq.) Such a circle is not a
vicious one. All first class historians have thus explained
historical phenomena. The one-sided deduction of A. from B., and B.
from C., etc., which the so-called pragmatic writers like
_Polybius_, for instance, is the result of overlooking all
reciprocal action. _Scialoja_, Principii (1840), p. 60, makes a
somewhat similar observation for Political Economy.
120 Whether we call the unknown and inexplicable ground back of all
analysis, and which our analysis cannot reach, vital force, generic
form, spirit of the nation, or God’s thought, is for the present a
matter of scientific indifference. All the more necessary are the
self-knowledge and honesty, in general, which admit the existence of
this background, and which do not, by denying it, deny the
connection of the whole, which is, for the most part, much more
important than the analyzed parts. But I must at the same time,
enter my energetic protest against the imputations of heresy made by
those who do not comprehend the sacred duty of science, by never
ceasing investigation, to push farther back the bounds of this
inexplicable background.
121 When _Hildebrand_, for instance, objects to the application of the
expression “natural law” to the economic actions of man, for the
reason that it conflicts with human freedom and man’s capacity for
progress (Jahrbücher der N. Œek. und Statistik., 1863, Heft., I), I
cannot agree with him. I use the expression “natural law” wherever I
observe uniformity, explicable in its broader connections, and not
dependent on human design. That there are such uniformities there
can be no question. I need only mention the philological law of the
so-called “permutation of consonants,” which individuals follow when
speaking—certainly not through compulsion,—and, by means of which,
the progress of the speaking aggregate is made manifest. Or, I might
call attention to the well known fact, that, in populous countries
marriages and crimes, which are for the most part free, are divided
among the different age-classes in a proportion much more uniform,
from year to year, than are deaths, which are not free. I adhere all
the more firmly to the expression “natural law,” because no one
takes offense at or objects to the expression, “nature of the human
soul.” But to this very nature of the human soul belong the freedom
and responsibility of the individual, as well as the capacity of the
species for progress. Compare _A. Wagner_, on Law in the Apparently
capricious Actions of Man (_Die Gesetzmässigkeit in den scheinbar
willkürlichen menschlichen Handlungen_, 1864, p. 63 seq.), in which,
however, he only goes so far as to show that law and freedom coexist
side by side as indubitable facts, while the seeming contradiction
between the two remains. _Drobisch’s_ Moralische Statistik und die
menschliche Willensfreiheit, 1867, is an important contribution to
the literature of this question.
_ 122 Whately_, in his fourth lecture (Lectures, 1831), shows in a very
clear way, how London is supplied and provisioned by men with no
object in view but their own personal interest, each of whom is
possessed of but a very limited knowledge of the aggregate wants of
its inhabitants, and yet they work into one another’s hands, in the
interests of the whole, purely instinctively, and infinitely better,
perhaps, than the operations of the most skillful governmental
commission, organized for the same purpose.
123 Alphonsus of Castile, the king astrologer of the thirteenth century,
is reported to have said, that the universe would have been much
better constituted, if the Creator had asked his advice beforehand.
Astronomers like Newton and Gauss have, certainly, judged otherwise.
_ 124 MacCulloch_ remarks, that there is an essential difference between
the physical and the moral and political sciences in this, that the
principles of the former apply in all cases, those of the latter,
only in the greater number of cases—a thought very ably developed by
_Knies_, loc. cit., _passim_. If, with _Newmarch_, (London
Statistical Journal, 1861, p. 460 seq.), we could grant, that there
is no “law,” except where it is possible to predict each individual
occurrence under it, there would be no such thing even as the “laws”
of the probability of life. The word “element,” also, means
something very different in Political Economy from what it does in
chemistry: a combination which might be broken up, but which that
science leaves it to other sciences to do. The “element” of
Political Economy is Man. Compare _Pickford_, Einleitung in die
politische Œk., 1860, 17.
125 It is in this sense that _Aristotle_ (Polit., I, p. 1, 9 Schn.)
says: φανερὸν, ὅτι τῶν φύσει ἡ πόλις ἐστὶ, καὶ ὅτι ἄνθρωπος φύσει
πολιτικὸν ζῶον. According to _L. Stein, Lehrbuch der
Volkswirthschaft_, 1858, 33, the political economy of a people
begins at the point where the overplus of individuals begins.
126 Compare _K. L. von Haller_, Restauration der Staatswissenchaft, I,
p. 446 ff.
127 As _Sallust_ characterizes the political apogee of the Romans:
_Optimis moribus et maxima concordia egit populus Romanus inter
secundum atque postremum bellum Carthaginiense._ See _Augustin_
(Civ. Dei II, 18). _Puchta_ (Institutionen, I, f. 83), with a great
deal of good sense, distinguishes in every people their individual
character from that which they share in common with all mankind. The
latter exists among savage nations, only as a germ buried under the
overpowering weight of that which is special to them. The period of
the perfect equilibrium of both elements is coincident with that of
a people’s real culture. In the further course of development, the
latter, more general element becomes gradually over-powerful,
destroys the individual, and thus dissolves nationality.
128 Thus formulated, the principles of the two great parties, evidently,
no more contradict one another than their ordinary watchwords,
“freedom” and “order,” are in contrast with one another. Hence all
the great statesmen of the best periods of history have adopted the
middle course recommended by Aristotle.
129 See _Lotze_, Allgemeine Pathologie, 1842. _Ruete_, Lehrbuch der
allgemeinen Therapie, 1852. These analogies, obviously, should not
be pushed too far. One of the most essential differences between the
two consists in this, that in the diseases of the body politic,
physicians and nurses are themselves part of the diseased organism.
130 See _Ahren’s_ very beautiful exposition, Organische Staatslehre,
1850, I, 77. National economy (_Nationalökonomie_=public economy);
national economics (_Nationalökonomik_=the science of public
economy). The latter term was first proposed, in Germany, in 1849,
by _Uhde_; the former was naturalized therein 1805: _v. Soden_,
Nationalökonomie, 1805; _Jacob_, Grundsätze der N. Œk., 1806. In
Italy, _G. Ortes_ used it as early as 1774, in his Dell Economia
nazionale, and in England it was employed, even in 1867, by
_Ferguson_, History of Civil Society, III, p. 4. Holland.
Volkshuyshoudkunde. As a rule, outside of Germany, the term
political economy, _économie politique_, one which is somewhat
calculated to mislead the student, is used. (Thus _Montchrêtien
sieur de Vatteville_, Traité de l’Economie _politique_, 165; later
_J. J. Rousseau_, Discours sur l’Economie politique, later yet the
Traités d’E. p., _Maillardère_, _Page_ and _J. B. Say_, 1801-1803).
Political Economy (_Sir J. Stewart_, Inquiry into the principles of
P. E., 1767); also Public Economy (_Petty_, several Essays, 1682,
35); _Economia politica_ or _pubblica_ (the latter by _Verri_ and
_Beccaria_). The title _Economia civile_ (_Genovesi_, Lezioni, d’Ec.
civ. 1769), has found few adherents. It has, however, been used
recently by _Cernuschi_: Illusions des Sociétés coöperatrices
(1866). The term, _Economie sociale_ has been used all the more in
France (Dunoyer, Nouveau Traité d’Ec. soc., 1830), since recommended
by _J. B. Say_, and employed by _Buat_ (Des vrais Principes de
l’Origine et de la Filiation du Mot Economie politique, in the
Journal des Economistes, 1852.)
_ 131 Stein_, Lehrbuck der V. W., prefaces his “Science of Public
Economy” (pp. 329-358), by a “Science of Economy” (pp. 96-328),
which, however, treats individual economies only as the elements of
the national economy. A science of household or isolated individual
economy could, of course, treat only of the economic relations of
anchorites. Those who object that Political Economy is not a real
whole will be satisfied with the definition of it given by _F. I.
Neumann_: “The Science of the bearing of household or separate
economies to one another, and to the state as a whole.” (Tüb.
Zeitschr., 1872, 267.)
132 In so far as these various institutions are concerned, with objects
beyond the human, or supernatural, only the manner in which they are
accepted, or in which they are made use of, is an expression of
national life.
133 Thus, _J. Tucker_ thinks that religion, the state and commerce, are
only the parts of one same general plan: no institution, therefore,
can be called appropriate, within the limits of the province of any
one of these, if it be clearly in opposition to the other two,
because the harmony of God’s work can not be broken up. (Four Tracts
and two Sermons on political and commercial Subjects, 1774, Serm.
I.)
_ 134 Riedel_ (National Œkonomie, 1838, I, p. 178 seq.), gives a good
illustration of the difference between the manner in which law and
Political Economy look at the same question. The law (to avoid
strife, or to settle controversies) looks upon the debtor as the
owner of the capital, and lets him run all the risk; Political
Economy, on the other hand, looking deeper into the nature of the
contract, reaches an entirely opposite result. The mere jurist has a
dangerous tendency to undervalue the reign of the laws of nature;
the mere political economist, just as readily, undervalues the
element of free will. (_Arnold_, Cultur und Recht I, 97.) In this
respect, the two sciences complement each other very well. _Roesler_
(_Hildebrand’s_ Jahrb., 1868, II, and 1869, I.) shows, and he does
not exaggerate the fact, that political economists have made
altogether too little use of the results of the science of law.
135 Jurists will always experience the want of divesting their isolated
ideas of their purely accidental character, by grouping them
together in such a manner as to make them constitute a complete and
independent whole. One must be possessed of profound knowledge to
perceive their necessary connection from an historico-juridical
point of view. Political Economy, with its characteristic accuracy
and practical utility, can best take its place, at the present time.
It is in the greater number of legal questions, the systematically
elaborated science of “the nature of the thing.” See the able
beginnings of a policy of legislation and higher history of law,
based on Political Economy, by _H. Dankwardt_: N. Œk. und
Jurisprudenz, 3 Hefte, 1857, and my preface to _Dankwardt’s_
Nationalökonomisch-civilistischen Studien, 1862.
136 The intellectual power of a people depends upon the vigorous and
harmonious development of all seven spheres of life.
_ 137 Montecuccoli_, Besondere und geheime Kriegsnachrichten (Leipzig,
1736). A very similar judgment by Cæsar in _Dio Cass._, XLII, 49.
_ 138 Bülan_, Handbuch der Staatswirthschaftslehre, 1835.
139 Thus _v. Justi_, Staatswirthschaft 1755. _Kraus_, Staatswirthschaft,
published by Auerswald, 1808; _Schmalz_, Handbuch der
Staatswirthschaft, 1808. More recently, _Hermann_,
Staatswirthschaftliche Untersuchungen, 1832. In France, the
expression _économie de l’état_, is very seldom used. _Gavard_,
Principes del’E. d’Etat, 1796.
_ 140 Pölitz_, Staatswissenschaften im Lichte unserer Zeit, II, 3.
Compare _Lotz_, Handbuch der Staatswirthschaft (2d ed., 1837), I, 10
ff.
141 Our view of Political Economy holds a middle place between opposed
extremes. The view expressed by _Whately_, Lectures on Political
Economy (1831), No. 1, and covered by the proposed term
“catalactics,” is by far too narrow. Similarly, _Macleod_, Elements
of Political Economy, 1858, I, 11. A like objection may be raised to
the earlier title of _Pritzwitz’s_ book: Die Kunst reich zu
werden,—the art of growing rich. On the other hand, _Dunoyer_,
Liberté du Travail (1845), L. IX, ch. I, goes too far altogether:
“not only in what manner a nation grows rich, but according to what
laws it best succeeds, in the execution of all its functions.” And
so _Storch_, Handbuch, translated into German by _Rau_, I, 9. Many
modern writers define Political Economy simply as the theory of
society; for instance, _Scialoja_, Principj. dell’Economia sociale,
1840. _Cibrario_, E. polit. del medio Evo, III, 1842.
142 For the many and various definitions of the police power, see _von
Berg_, Handbuch des Polezeirechts, I, 1-12; _Butte_, Versuch der
Begründung eines System der Polezei (1807), 6 ff.; _Rosshirt_, Ueber
den Begriff der Staatspolizoi (1817), 34 ff. One of the principal
difficulties is, that the practical domain of the police power is,
in consequence of the successive grades of civilization through
which a people passes, subject to greater modifications than any
other state power. We call attention especially to the expressions
“without mediation, to prevent,” and “external order,” in our
definition. The church, the school, the administration of justice
etc., act mediately towards the prevention of such disturbances; and
there are many other institutions which offer immediate protection
to order of a higher and more intellectual nature.
143 See the great number of earlier definitions collected in _R. von
Mohl_, Gesch. und Literatur der Staatswissenschaften III, pp. 637
ff. There are two principal groups of them, the one of which
considers it as the science of things of political note, the other
as the science of actual or past conditions.
144 See _Dufau_, Traité de Statistique, 1840; _Moreau de Jonnès_,
Elements de Statistique, 1847; _Knies_, Die Statistik als
selbstständige Wissenschaft, 1850. _B. Hildebrand_, in his
Jahrbüchern, 1866, I etc., but especially _Quetelet’s_ works. For
the contrary view, see _Fallati_, Einleitung in die Wissenschaft der
Statistik der St., 1843; _Jonak_, Theorie der Statistik, 1856, and
_Heeren_, in the Gött. Gelehrten Anzeigen, 1806, No. 84, 1807, 1302.
145 So thinks _v. Rümelin_ (Tübinger Zeitschr., 1863, 653 ff.); and he
recommends in place of statistics an independent branch of learning
bordering on history and geography, to be called demography. His
statistics is a science auxiliary to all the experimental sciences
of man, just as criticism and hermeneutics are a methodological
science auxiliary to many sciences, otherwise different. It would be
difficult to justify the use of the name statistics for such a
science, as such a science corresponds to neither of the two
meanings of the word _status_ (state—condition).
146 The ancients understood by the term καμάρα _camera_, covered places
such especially as were vaulted, also vaults of the most varied
kind. Compare _Herod_, I, 199; _Diod._, II, 9; _Strabo_, XI, 495;
_Arrian_, Exp. _Alex._, VII, 5, 55; _Dio Cass_. XXXVI, 32;
_Sallust_, B. C., 55; _Cicero_, ad Q. fratrem III, 1; _Plin._, H. N.
XXX, 27; _Seneca_, Epist., 86; _Tacit._ Hist. III, 47; _Sueton_,
Nero, 34. During the middle ages, the meaning treasure-chamber
(_Schatzkammer_) became predominant: _camera est locus, in quem
thesaurus recoilligitur, vel conclave, in quo pecunia reservatur_
(_Ocham_, Cap. Quid sit Scaccarium). It gradually became synonymous
with finance,—from the time of Charlemagne, or at least since Louis
II. (Charter of 874). See _Ducange_, Glossarium, v. Camera, and
_Muratori_ Antiquitt. Ital., I, 932 ff.
147 “A husbandman must plow and manure his land if he would reap a
harvest from it. He must fatten his cattle if he would slaughter
them; and furnish his cows with good fodder if he would have them
give good milk. In like manner, a prince should begin by assuring
his subjects healthy and abundant food, if he would take anything
from them.” _von Schröder_, Fürstl. Schatz-und Rentkammer (1686),
preface, § 11. _Von Horneck_ before him, Oesterreich über alles wann
es nur will, p. 220, ed. of 1707, had expressed the idea that the
watchful solicitude for the public economy of the country was no
_parergon_, no _appendix_, to the council (_Kammer_), but its real
basis, and that it embraced many subjects which had nothing in
common with the cameralia (“_Cameralien_”).
_ 148 Morhof_, Polyhistor (1688), III. _Thomasius_, 1728, Cautelæ circa
præcognita Jurisprudentiæ (1710), ch. 17. (Cautelæ circa studium
œconomicum.) Also, in his lectures on _Seckendorff’s_ “Teutschen
Fürstenstaat.” Compare _Roscher_, Gesch. der N. Œk. in Deutschland,
328 ff.
149 While _Dithmar_ (1731) distinguishes economy-police and cameralistic
sciences and restricts the latter to finance and taxation; _Darjes_
(1756) comprises under the name of cameralistic science, economy
(municipal and rural), and police, as well as cameralistic subjects
in the strict sense of the term, that is, the public, domain and
regal rights. While _Nau_ (1791), in his “Ersten Linien der C.,”
treats only of the branches of private economy, _Schmalz_, (1797)
treats also of national or public economy, and _Rössig_ (1792)
divides cameralistic science into the doctrine of the public demesne
and regal rights (cameralistic science in the narrower sense), and
the doctrine of taxation and police.
150 Thus, for instance, all that concerns domestic economy, book-keeping
and private financial administration.
_ 151 John Stuart Mill_, Principles of Political Economy (1848), I, p.
25, draws a distinction between the physical conditions which
influence the economic situation of a people, and the moral and
psychological conditions; which last have their origin in social
institutions or in the fundamental principles of human nature. Only
the latter belong to the domain of Political Economy. According to
_J. B. Say_, Traité, Introd., this science embraces at once
agriculture, manufactures and commerce, but only in their relation
to the increase or diminution of wealth, and does not concern itself
with the means employed to reach the desired end. As a rule, says
_Arndt_ (Naturgemässe Volkswirthschaft, 1851, p. 16), it takes into
consideration not so much things themselves as their exchange value.
_Lotz_ (Handbuch, I, p. 6 seq.), in like manner, defines Political
Economy—the science of the one activity which constitutes the basis
of all industries etc. _F. G. Schulze_ (Ueber volkswirthschaftliche
Begründung der Gewerbswissenschaften, 1826), characterizes Political
Economy as the science of the fundamental conditions of the
well-being of a people, in so far as they lie in human nature.
When _Adam Smith_ (book IV, c. II) says that the government in
respect to matters of economy is inferior to the first best person
engaged in industrial pursuits, he is right only from a technic
point of view. And when _Stewart_, on the other hand, vindicates for
the state the office of a pater-familias (book II, ch. 13), he
evidently means only in national economical matters.
152 See also _Rau_ (Ueber die Cameralwissenschaft, Entwickelung ihres
Wesens und ihrer Theile, 1825); _Baumstark_ (Cameralistische
Enclycopädie, 1835).
_ 153 Xenoph._ Œconom. I, 8 ff. Cyrop. VIII; 2, 23. He saw with equal
clearness the moral light and shade of wealth. (Œcon. XI. 9. Conviv.
4. Memor. I, 6. Cyrop. VIII, 3, 35 ff. Hiero 4.)
_ 154 Thomas Aquinas_ values earthly goods according to the end they are
made to serve; when used for a good purpose, they have a mediately
true value. Hence it was an error of the stoics to despise them
under all circumstances. (Summa Theol. II, 2. Qu., 50, 3. 58, 2. 59,
3. 125, 4.)
_ 155 Whateley_ considers the savage much beneath the materialist,
instead of superior to him. The latter possesses, although he
frequently abuses it, the faculty of self-control and forethought,
which is entirely wanting in the former. (Lectures, No. 6.)
_Dunoyer_, De la Liberté du Traväil, liv. IV, ch. I, 8, an apology
for the moral wholesomeness of civilization, since promotive of
military prowess, favorable to the development of the sciences, and
even poetical. _Baudrillart_, Manual d’Œkonomie politique, 1857, 24.
See _Fallati_, Ueber die sogennannte materiellen Tendenz der
Gegenwart, 1842.
156 See the inscription on the tomb of Sardanapalus: ταῦτ᾽ ἔχω, ὄσσ᾽
ἔφαγον καὶ ἐφύβρισα καί μετ᾽ ἔδωτος τέδπν ἔπαθον. (Strabo, XIV,
672.) _Isaiah_, 122, 13, 56, 12, and the book of wisdom (2)
characterizes the view of the fallen Jewish people. In Greece, the
Cynic and Epicurean schools were only different phases of the same
degeneration. “Thirst, for money, and nothing else, will be the ruin
of Sparta!” (_Cicero_, De Offic, II, 22, 77.) See the magnificent
description by Demosthenes, in which he shows the over-estimation of
material things to be the principal cause of the decline of Athens,
and in which he lays great stress on the fact, that Athens, on its
decay, had a larger population, more wealth, ships, and evidences of
external power, than in its golden age. (Phil., III, 120 seq.) Also
Phil., IV, 144, cautions us against the Manchester criterion of
national prosperity. See _Plato_, De Rep., VIII. In Rome, the
principle _ommia venalia esse_ was a chief element in the total
decline and fall of the republic. (_Sallust_, Cat., 10 ff., Jug., 8
ff.) In an age when people think they can do everything with money,
the ruin of all things is the last end of mercantile, financial and
political speculation. (_Condillac_, Le Commerce et le Gouverment,
1776, II, 18.)
157 Under Pericles, the Athenian treasury of the state contained at most
9,700 talents. (_Thucyd._ II, 13.) On the other hand, Alexander the
Great had a treasure of 180,000 talents accumulated in the citadel
of Ecbatana. (_Strabo_, XV, 731); Ptolomy II. left after him 740,000
talents. (_Appian._ præf. 10, _Droysen_, Geschichte des Hellenismus
II, 44 ff.) In Nero’s time there was many a freedman’s daughter who
owned a looking glass worth a greater sum than the senate had
appropriated as a dowry to the daughter of the great Scipio.
(_Seneca_, Quæst. Natur. I, 17. Compare Cons, ad Helviam, 12.)
_McCulloch_ says that an intelligent despotism can enrich a nation
as well as freedom. (In his Discourse on the Rise, etc. of Polit.
Econ., 1825, 77 seq.)
_ 158 Bacon_ (Sermones, 56) says that youthful states distinguish
themselves specially by their warlike instincts; mature states in
literature; old and decaying ones in industry and commerce.
_Davenant_ very happily remarks, that the development of commerce
among a people has an ambiguous value. It, indeed, increases wealth,
but, at the same time, it may introduce luxury, covetousness and
fraud, destroy virtue, do away with simplicity of manners and
customs, and then it inevitably ends in internal or external
slavery. (Works II, 275.) The simplicity of the patriarchal state,
however, cannot last always, if for no other reason, because of the
emulation of foreign nations. (1, 348, ff.) The impoverishment of
even the wealthiest nation is certainly inevitable when its morality
declines. It is especially true, that the public economy of a people
can be prosperous only where political liberty obtains, and this,
independent of the fact that wealth without freedom has no value.
(II, 336 ff., 380, ff., 285.) According to _Ferguson_, private
wealth, honestly acquired, used rightly and with moderation, managed
with a sense of independence, may be to those who possess it, an
element of self-confidence and of liberty, provided they loosen
their purse strings not through vanity or for their personal
gratification, but for commendable party purposes. But in periods of
decay, even a greater amount of wealth is very far from producing
these results. (History of Civil Society, VI, 5.) _Whately_, on the
contrary, maintains that only personal wealth—never national
wealth—has a disastrous influence on morals. Lectures, No. 2.
159 “The method of a science is of much greater importance than any
individual discovery, however wonderful.” (_Cuvier._)