never lost an opportunity to give vent to his utter contempt for the
liberals, and for constitutional government—_ce bátard du régime
féodal et du régime industriel_; and to counsel the crown, after the
example of Louis XI. to place itself at the head of the working
class, and in opposition to the middle class. (Oeuvres de _Saint
Simon_, éd. 1841, 44, 148, 209.) _Bazard_, Exposition, 76, demanded
that all antagonism between the temporal and spiritual powers, all
opposition for the sake of freedom, _méfiance organisée_ of
parliaments, and all competition, should cease. Even education he
would have bestowed according to _capacité_, which he would have
determined by the _chefs légitimes de la société_ (280). To the
criminal court should be referred all cases of _delicts_, that is,
all inopportune acts, even in the scientific and artistic
departments. They should be tried after the manner of the “courts of
trade;” that is, in a summary way, without appeal, and by experts
(317 ff). All the relations of property should be determined by the
_décision arbitrale des chefs d’industrie_ (326). _Bazard_
everywhere insists that the reign of genius and of self-sacrifice on
the one hand, and on the other of confidence and obedience, is the
only true policy (330). Saint Simonism was nearly related to
Bonapartism.
_ 509 Schäffle_, Nat. Œk., III, Aufl., I, 61.
510 If we remove in thought, all injurious elements from a community of
goods, and add to it all the incentives and restraints necessary to
be added, we shall have a state of things entirely similar to that
in a nation whose public and private affairs are carried on in
accordance with the principles of a healthy system of Political
Economy as understood to-day. (Edinburgh Review, January, 1851.)
511 How true freedom is accompanied by what _Bastiat_ calls “true Saint
Simonism and true communism,” see _infra_, § 210.
512 The experiments of a community of goods, which have proved
successful in practice, were all based on the more or less complete
celibacy of the members of the societies. Compare _Hermann_,
Staatsw. Unters., II, Aufl., 45.
513 Thus _Proudhon_ (Contradictions, ch. 5) says that the many
socialists, who would construct their societies after the type of
the family, as the _molscule organique_, are all wrong. The family
has a “monarchical, patriarchal” character. In it, the principle of
authority is formed and preserved. On it, ancient and feudal society
was based; and “precisely against this old patriarchal constitution,
modern democracy protests and revolts.” _Fourier_ calls marriage,
_un groupe essentiellement faux: faux par le nombre borné à deux,
par l’absence de liberté et par les dissidences du goṅt, qui
éclatent dès le premier jour_. (Nouveau Monde, 57.)
514 On the Indians of North America, see _Schoolraft_, Information
respecting the Indian Tribes of the United States, II, 194; on the
South American _d’Orbigny_, Voyage, IV, 220, and passim, on the
South Sea Islanders, the Novara-Reise, II, 418; on the ancient
Albanians, _Strabo_, XI, 503.
515 The hereditary transmission of property to posterity has an obvious
tendency to make a man a good citizen. It ranges his passions on the
side of duty, and induces him to make himself profit the common
good, and it assures him that his reward shall not die with himself,
but that it shall be handed down to those to whom he is joined by
the dearest and most tender feelings. (See _Blackstone’s_
Commentaries, II, 11.) Without the right of inheritance, credit is
scarcely possible, since with the death of the debtor the only stay
of the creditor would cease.
516 Testamentary freedom (which obtained in places there about the
beginning of the eighteenth century) prevails completely in England
at present, contrary to the principle of the Roman law requiring an
obligatory portion (_la légitime_) to be left to the heirs, which is
still binding in France, but in a very much developed form. The
consequence is that last testaments are as frequent in England as
they are rare in France. There were, in Paris, in 1825, 7,649
judicial, and only 1,081 testamentary partitions of property.
(_Monnier_.) In Great Britain, in 1838, the number of testamentary
alienations of property taxed stood to those in which there was no
will, in the proportion of 8:3; and the values of the alienated
property as 10:1. (_Porter_.) Among a people noted for their high
moral tone, testamentary freedom is a powerful means of
strengthening paternal authority on the one hand, and of keeping
alive, in the minds of parents, on the other, a sense of
responsibility for the future of their children. Compare
_Helferich_, Tübinger Zeitschr., 1854, 143, ff.
_ 517 Polyb._, XX, 6. Hence it was, that all (?) the wealth of Thebes,
when it was destroyed by Alexander the Great, was only 440 talents.
(Athen., IV, 148.) _Drumann_, Gesch. Roms. etc., VI, 333 ff.
_Cicero_, Phil., II, 16. _Hoeck_, Röm. Gesch., I, 2, 118. _Sueton._,
Octav., 66. An especially scandalous instance in _Petron._, 140. For
a masterly theory of legacy-hunting, see _Horat._, Sat., II, 5.
Compare _Lucian_, Dialogues of the Dead, 5-9. _Petronius_ speaks of
a _turba hæredipetarum_. (124.)
518 Even the revolutionary shibboleth, _paternité_, really means nothing
more than the equal right of inheritance of all, i.e., the abolition
of the right of inheritance! (_R. Meyer_.) The strongest attack,
from a scientific point of view, made on the right of inheritance in
more recent times, comes from Saint Simonism. The founder himself,
after a life rich in experience but poor in action, spent in the
search of much but in the finding of little, succeeded only in
arraying the industrial and proprietary classes against each other,
in declaring the poorest class to be the most important of all, and
in basing the new _religion of love_ on the emancipation of labor.
His disciples went further. In order to abolish all the privileges
of birth, _Bazard_, Exposition de la Doctrine de Saint Simon, 1831,
p. 172, ff., taught that it was not enough to distribute public
employments according to merit, and in the interest of the people
generally, but that the distribution of property should be made in
accordance with the same principle. The inequality of ownership
should correspond with the inequality of merit. Every one may,
during his life, keep what he had acquired himself, but give it to
the state at death. Thus would a reconciliation be effected between
the general interest and private interest; and the public revenue,
supplied in this way, might easily be employed in place of the
revenue raised by such taxation as weighs most heavily on the
inferior classes. _F. Huet_, also, Le Regne social du Christianisme,
1853, III, 5, would have all private property, after the death of
the owner, fall _également à tous les jeunes travailleurs_. The
practical consequences of this system may now be seen in Turkey.
There, the principal military fiefs are held in this way. Hence it
is, that the Turkish owner of such a fief builds as little as
possible. When one of his walls threatens to fall, it is kept
standing by means of props. If it falls in fact, the only
consequence is that there are fewer rooms in the house, and the
owner settles beside the ruins. (_Denon_, I, p. 193.) In the Butan,
there exists a species of practical Saint Simonism. _Robinson_,
Descriptive Account of Assan, 1841.
519 It was chiefly fear of the consequences of the declamations of the
socialists and their declamation against “monopoly” that induced
_Bastiat_ to reduce all the value of landed property to that of the
capital employed in its manuring, improvement etc. (Harmonies, ch.
9.) We may, however, unreservedly grant him that, as a rule, until
the time of its original possession by man, land had no _valeur_
whatever (278).
_ 520 Kant_ thinks the very contrary: Metaph. Anfangsgründe der
Rechtslehre, (Werke, IX, 72 ff). _Contra_, _Grotius_, J. B. et P.,
II, 2. _Graswinkel_, in his Schriften für die Freiheit des Meeres,
1652 ff., in _Laspeyres_, Geschichte der niederländischen N. Œk.,
12. _Hufeland_, Neue Grundlegung, I, 307.
521 “A district of Tartary of ten square miles, in which several hordes
pasture their flocks, may contain between 400 and 500 shepherds, who
find employment in this mode of production.” In Brie, in France, on
the same area, 50,000 peasants who own no land, live and draw their
sole income from their labors in the fields (_J. B. Say_).
_ 522 Schubert_, Reise durch Frankreich und Italien, I, 188.
523 “Without labor, the earth bestows nothing on man but a stopping
place. Hence, the reasons for private property do not extend so far
as to prove that the great land and water highways should not be
reserved as common property, and as a home to every man.”
(_Zachariä_, vom Staate, VII, 43.)
524 This is the practice in Taway. _Ritter_, Erdkunde, V, 130. And so in
ancient Germany. _J. Grimm_, Rechtsalterthümer, 92. Right of the
“dead fire” in Spain and Portugal during the middle ages. _S. Rosa
de Viterbo_: Elucidario das Palavras etc., I, 470. In many parts of
Persia, the land belongs to anyone who has provided it with water by
canals or wells. (_Fraser_, Journey in Chorasan, ch. 7.) Especially
after the Mongolian devastation about the beginning of the
fourteenth century, it was decreed that land which had remained
uncultivated for a long time should belong to the person who made it
productive. (_d’Ohsson_, Hist. des Mongols, IV, 418.) Similarly, in
the time of the ancient Persians (_Polyb._, X, 28, 3), the harvest
for the first five years belonged to the person who first irrigated
the land. On the upper Euphrates, likewise, the land is very often
neither sold nor leased. Anyone who will till it and pay one-tenth
of the produce to the bey may have it for nothing. (_Ritter_, X,
669; compare VIII, 468; IX, 900.) So, too, among the Fulah and
Mandingo negroes, and even among the Tscherkessans. (_Klemm_,
Kulturgeschichte, III, 337 ff.) As the latest stages of development
so often present instances of a reversion to the earliest, we find
that Theodosius and Valentinian decreed that the _agri deserti_
should, after two years’ cultivation, belong to the possessor. L. 8,
Cod. Just., XI, 58.
525 Thus anyone may burn his own coat or throw it in the water; but no
one may set fire to his own house or drown his land by the
destruction of a dam. Even the non-user of a large area, in a
thickly populated region, would scarcely be permitted. The taking of
property by the state, at the present day in times of peace, is
confined almost exclusively to land.
526 Thus _P. v. Arnim_, in a work entitled “Ideen zu einer vollständigen
landwirthschaftlichen,” Buchführung, 1805, a treatise on
“agricultural book-keeping,” considers the farmer as a state
official who should cultivate whatever he believed in conscience, or
what the state declared to be, most necessary. He suggests that the
state should subject all new purchasers of land to an examination to
ascertain whether they are rich and noble enough to act in this way.
527 Thus, for instance, _Herbert Spencer_, Social Statics, 1851, 114
ff., and to some extent _Spinoza_, Tract. polit., VI, 2. There are
now in England several Land-Tenure-Reform-Associations, some of
which would “expropriate” all land and vest the title in the state.
The programme of the others embraces not only opposition to the
right of primogeniture, to family _fidei commissa_ and the assertion
of the right of freedom of trade in land, and of a more democratic
use of common lands, but also the appropriation by the state of the
increase in the rent of land which is caused by no labor of the
landlord, but solely by the increase of population and of the wealth
of the community or of the nation. _Newmarch_, on the other hand,
very correctly remarks, that since it is impossible to draw a line
of demarkation showing the increase of the value of land growing out
of the increase of population etc., the owner of land in making
improvements would never know whether he made them for himself or
for the state. (Statist. Journal, 1871, 488 ff.) Compare _Wolkoff_,
Sur la Rente foncière, 1854, and _H. H. Gossen_, Entwickelung der
Gesetze des menschlichen Verkehrs (1854).
528 In Congo and on the gold coast of Guinea the land, in whole
villages, is tilled in common and the harvest distributed among the
families per capita. Wherever absolutism reigns, the prince is also
the owner of all the land. (_Klemm_, III, 337.) In China, where the
original tenure in common of the land by all was broken through in
the third century before Christ, all the land of the country now
belongs, strictly speaking, to the state; and the possessor of land
who permits it to go untilled is punished. (_Plath._ in the
phil.-hist. Sitzungsberichten der Münchener Akad., 1873, 793 ff.) In
Corea, private property in land is unknown; arable land is divided
by the state according to the number in a family. (_Ritter_, IV,
633.) The example, on the largest scale, of a country without
private property in land is the British East Indies. Compare the
paper by _Ch. Campbell_, in the Essays published by the Cobden Club;
System of Land Tenure in various Countries, 1870.
529 The legal and economic difference between property in land and
property in capital is well defined by _J. S. Mill_, Principles, II,
ch. 2, 6. “The reasons which form the justification, in an
economical point of view, of property in land, are only valid in so
far as the proprietor of the land is its improver. In no sound
theory of private property was it ever contemplated that the
proprietor of land should be merely a sinecurist quartered on it.”
He here alludes specially to Ireland. The Fourierist, _Considérant_,
distinguishes accurately between the capital produced by labor and
saving, and the increase of the value of land caused by capital and
labor, and its original value. Only the first two elements can
justly be made property. But as, for prudential reasons, it is
necessary to grant individuals the right of private property in
land, those who are not such proprietors must, as a compensation for
the common property which they have lost, be guaranteed the right to
labor. (Théorie du Droit de Propriété et du Droit au Travail.) In
England, the opinion that the compulsory support of the poor was
introduced in compensation to them for the establishment of private
property in land has met with considerable favor. _Bishop Woodward_,
On the Expediency of a Regular Plan for the Maintenance of the Poor
in Ireland, 1775. Compare _Eden_, State of the Poor, I, 413.
However, the poor rates, in a country like England, are much more
than an equivalent of what its soil could produce without the
assistance of capital.
530 The principal classical work on this subject is _Nebenius_, Der
öffentliche Credit, 1820, 2d ed., 1829. Previously, _Salmasius_, De
Modo Usurarum, 1639; and even _Demosthenes_, adv. Dionysiod, 1283.
Compare further _Schäffle_, in the Deutsch. Vierteljahrsschrift, No.
106, II, 289 ff.
531 Compulsory loans by the state, for instance, occupy an intermediate
position between taxes and credit-operations, properly so called.
532 Besides loans proper, all payments in advance, or delays made in the
payments of earnest-money, all leases and lettings, which
_Courcelle-Seneuil_ calls _un médiocre degré de crédit_, insurances
and even all contracts for wages where the payment is delayed for a
long period of time, are species of credit. For a nice distinction
between leasing (_Pacht_) and letting (_Miethe_), see _Knies_,
Tübinger Ztschr., 1860, 180 ff., and the Freiburger Univ. Programm.,
9. September, 1862. _D. Wakefield_, Essay upon Political Economy,
1804, 35, distinguishes between “loan-credit” which is given to a
poor man in the hope of his paying it by means of his labor, and
“exchange-credit,” or credit between property owners.
_Cieszkowski’s_ definition: _le crédit c’est la métamorphose des
capitaux stables et engagés en capitaux circulants et dégagés_. (Du
Crédit et de la Circulation, 2d ed., 1847.) According to _Knies_,
Tübinger Ztschr., 1859, 568, every credit-operation is an exchange
or sale of services, one of which is to be performed in the present,
and the counter-service of the other party in the future. According
to _Macleod_, it is “a sale of debts.”
533 Personal credit, of course, preponderates in commerce. Hence it is,
that in mercantile life, information concerning the personal status,
reputation etc. of his colleagues, plays so important a part with
the merchant. This information was made more accessible in England
by the Lloyd institution. On similar North American institutions,
see _Tellkampf_, Beiträge, I, 51. Credit given on security is a
modification, sometimes of personal and sometimes of real credit.
Compare, _infra_, the theory on bankers, brokers etc.
534 In despotisms, credit is almost entirely personal. _Montesquieu_
Esprit des Lois, L.V., 15. In New York, says _M. Chevalier_, a
merchant with resources worth 200,000 francs, can do a business of
from 1,000,000 to 1,500,000 francs. In Paris, under similar
circumstances, the same man would find it difficult to be credited
to the extent of 500,000 francs. In Holland, two hundred years ago,
a person who hypothecated his property was obliged to pay a higher
rate of interest than in business (_Becher_, Polit. Discurs, 1763,
699), while the stationary period, one hundred years ago, made
personal credit extremely difficult. In Zurich, it was encouraged by
the prohibition of loaning money out of the country. (_Büsch_,
Geldumlauf, III, 40.)
_ 535 Schäffle_, Nat. Œk., II, Aufl., 112.
_ 536 Schäffle_, according to the purpose which it is intended to
subserve, divides credit into production-credit (investment of loans
in immoveable property and in moveable property engaged in
industrial operations), consumption-credit and clearing-credit, or
loans made to pay respited purchase and earnest money, inheritances
etc. (Kapitalismus und Socialismus, 552.)
_ 537 Pinto_, Traité de la Circulation et du Crédit, 1771, considers
loans bearing interest as new portions of the resources of a country
(p. 161), and that government loans not made in excess of its powers
are _une alchymie réalisée dont souvent eux mêmes qui l’ opèrent n’
entendent pas tout le mystère_, (p. 338.) Similarly and earlier, _v.
Schröder_, F. Schatz-und Rentkammer, 238 ff; _Mélon_, Essai
politique sur le Commerce, 1734, ch. 6; next, _Hamilton_, Report to
the House of Representatives on the subject of Manufactures, Dec. 5,
1791; _Von Struensee_, Abhandlungen, 1800, I, 259. See infra, § 210.
More recently, _St. Chamans_, Nouvel Essai sur la Richesses des
Nations, 1824, 83 ff. To some extent, even _Dietzel_, System der
Staatsanleihen, 1855, 200. This is a dangerous error, since to every
credit there is a set-off in the nature of a debit of an equal
amount; and the evidences of debt are nothing but claims on the
future revenue of the state. This was fully recognized by
_Cantillon_, 291 ff. One of the principal advocates of that view
among writers on Political Economy is the vivacious, acute and
practically not unskillful, but sophistically superficial _Macleod_.
(Elements of Political Economy, 1858, ch. 3, Dictionary, 1862, v.
Credit.) The creditor’s assignable right of demand, he considers
immaterial capital. While bills of lading, warehouse receipts, dock
yard receipts etc., only represent goods, the bank note is new
goods. Even metallic money has only a credit-value, inasmuch as it
can be used only to effect exchanges. To the - of the creditor may
correspond a + of the debtor; but the latter is negative only in the
sense that we speak of negative electricity, a negative
thermometrical degree. When an estate is leased, the owner has, in
his demand for rent, a vendible _plus_; but the lessee no
corresponding _minus_. (Not so. To the same extent that the
proprietor has his future payments on the lease discounted, the
present sale-value of his estate is diminished; or if it is not
sold, the last party obtaining the discount has made his available
capital as much less by the advance as that of the lessor has been
increased.) The “discounting of the future,” that is, the apparent
capitalization of hopes, so much in vogue at the present time, may
be a great spur to production as it may also be to baseless
extravagance.
538 Many theoreticians ascribe a direct creation of new capital to
credit, in so far as the capacity of the evidences of debt to
circulate as a medium of exchange effects a real saving, and permits
the former very costly and intrinsically valuable instruments of
exchange to be used in some other way. (§ 123.) Compare _Ricardo_,
Proposals for a secure and economical Currency (1817). _J. S. Mill_,
Principles, II, 174 and 36. _McCulloch_, Commercial Dictionary, art.
Credit. And so it was in the first four editions of this book of
mine. But here, too, there is, immediately, only a transfer of
already existing capital. The person, for instance, who accepts a
bank note for payment, loans a part of his capital to the bank; and
the advantage to the whole community of such credit-operations
consists chiefly in this: that so large a quantity of cash-capital
which lay idle in banks etc., may be used more productively.
539 When _Roesler_ says that credit is capital, the product of saving,
and very serviceable in further production (_Grands._, 300), he
confounds credit itself with the foundations of credit, which are,
indeed, in large part material or moral capital.
540 Compare Discourse on Trade, Coyn and Paper-Credit, London, 1697, 72
ff.
541 Compare _Buron_, Guerre au Crédit, 1868. _Schäffle_, Tüb. Ztsch.,
1869, 296 ff. With a thorough understanding of its
politico-economical bearing, _O. Michaelis_, (Berliner V. Jahrsschr.
1863, IV, 121,) says: The capital-value of my credit is not equal to
the nominal value of my evidences of indebtedness [notes etc.], but
to the capitalized amount of the extra surplus which I have obtained
in my business by means of credit, after deduction is made of the
costs and of the risk-premium.
542 We shall, in the books to follow this, inquire with great care, what
are the means best calculated to remedy this dangerous tendency. We
need only remark here, that it is to be found in a judicious
association of small capitalists, and also in the capitalization, so
to speak, of personal qualities. A well organized society of
work-men, without capital, may indeed obtain credit, as for
instance, the Schultze-Delitsch societies, the Russian
_artel-schnicks_ (market-aid societies) etc. prove. (_Frühauf_, Die
russ. Artels in _Faucher’s_ Vierteljahrsschrift, 1868, I, 106 ff.)
We may also mention the greater credit accorded to a land-owner the
moment he becomes a member of a land-loan association as compared
with what he could obtain before he had joined it. The popular
belief of the ancient Egyptians afforded them a very great
instrument of credit in the pledging of the remains of their
ancestors. (_Herodot._, II, 136.)
_ 543 B. Hildebrand_ is of opinion that the Political Economy of the
future may be characterized as credit-economy, in the same way as
the Economy of the present may be called money-economy, and that of
the past as barter-economy of barter. (National Œkonomie der
Gegenwart und Zukunft, I, 276 ff.) _Hildebrand’s_ view is correct in
so far as that, with every advance in civilization, credit comes to
have absolutely and relatively an ever increasing importance,
although in the middle ages, especially under feudal forms
(_Lehensformen_), there were numberless operations in credit.
Otherwise, however, _Hildebrand’s_ three kinds of economy are, by no
means, coördinated. While barter and purchase through the
instrumentality of money, in every instance, entirely exclude each
other, it is impossible to imagine a credit-transaction of which the
promise of a barter-performance or of a money-performance does not
constitute the base. During a “money-economical
(_geldwirthschaftlichen_) period” [i.e., one during which money is
the medium of exchange, and not notes; and when barter does not
obtain.—_Translator_.] the service rendered by money as a medium of
exchange may, for the most part, be supplanted by credit. Money, as
a measure of value, still remains the substratum of credit itself.
(See _Knies_ in the Tübinger Ztschr., 1860, 154 ff.; and in the
Freiburger Programm, 9 Sept., 1862, 19.) Earlier yet, _A. Wagner_,
Beitr. zur Lehre von den Banken, 1857 ff. Among the most practical
propositions of Saint Simonism is that of a _système genéral des
banques_, intended to administer all the goods of the nation, and to
loan them to individuals engaged, in production. (_Bazard_, 205 ff.)
544 It is destructive of credit to allow the debtor to await several
decrees or judgments before his liability is established; to allow
him, on easy terms, delays, reversals of judgment, the costs of the
case etc. The term within which a creditor might bring in his claim
before the meeting of creditors in the Amsterdam Boedel-chamber was
formerly thirty-three and a third years. (_Büsch_, Darst. der
Handlung, Zusatz, 82.) In the presidency of Bengal there were, in
1819, 81,000 cases in arrears, and in 1829, 140,000. Westminister
Review, XIX, 142.
545 And yet _Melon_ is of opinion that the state should favor the debtor
as much as possible. (Essai politique sur le Commerce, ch. 12, 18.)
This was the view entertained on this subject by the older
practitioners. In Bengal, the _dhura_, a species of “judgment of
God,” in which the party who could hold out longest against hunger
was declared the victor, was the only means to compel a debtor to
pay his debt. As a consequence, the Bengal peasant could not borrow
money at less than 60 per cent. per annum. Edinburgh Review, XXII,
67. On the damages attending the credit-laws and credit-courts of
Russia, by which all foreign goods are rendered exceedingly dear,
see _v. Sternberg_, Bemerkungen über R., 100 ff. In a country in
which a great many powerful personages are above the laws, an
incorporated loaning bank may be an indispensable necessity.
(_Storch_, Handbuch, II, p. 23 ff.) In Naples, even as recently as
1804, no debtor could be arrested during the last six months of the
queen’s pregnancy. At a previous period, one might fail in business
there and escape all punishment by exposing the hindermost part of
himself in a nude state publicly before a column of the _Vicaria_.
(_Rehfues_, Gemälde von Neapel, I, p. 203 seq., 222.) In Schwytz,
the rate of interest is so high, because the law allows the debtor
to pay his creditor, whether the latter will or not, in articles of
household furniture, clothes etc., estimated at a very high value.
(_Hermann_, Staatsw. Untersuchungen, 202.) It has now become quite
usual in the United States, on account of the many delays granted to
the debtor by “democratic” laws introduced there, instead of mere
mortgage, to give full warranty deeds when capital is loaned. By
this means, the creditor is in danger, when misfortune overtakes
him, to see himself compelled to let his property go at one-fourth
of its value.
546 See the Heliast oath in _Demosth._, adv. Timocr., 746. The Roman
system of credits in the time of Polybius was much better than the
Carthaginian. _Polyb._, VI, 56, XXXII, 13.
547 Sachsenspiegel, III, 39. _J. Grimm_, Deutsche Rechtsalterthümer, 612
ff. _Dahlmann_, Dänische Gesch., II, 245, 339. _Hermann_, Russ.
Gesch., III, 357. On slavery for debt among the Malays, see Ausland,
1845, No. 157.
_ 548 Beaujour_, Tableau du Commere en Grèce, II, 176.
549 C. 2 X. De Pignor. An appropriate provision in a priestly
government. _Diodor._, I, 79.
550 Staying in a place by the debtor until the creditor is satisfied,
and other degrading stipulations, which, however, were prohibited by
the police regulations of the Empire in 1548, art. 17.
_ 551 Marten’s_ Ursprung des Wechselrechts, 1797. Statuta Mediol., 1480,
fol. 238 ff. The municipal law of Florence unconditionally
imprisoned the father or grandfather for the debt of the son, when
the latter engaged in industrial pursuits with their consent. (Stat.
Flor., I, 201.) In Bologna, the brothers of a bankrupt who had
constituted one household with him were held responsible for his
debts. (Statuti dell’ Università de Mercantati della Città di B.,
1550, fol. 110.) The law of Geneva excluded from all positions of
honor the son who had left his father’s debts unpaid. _Montesquieu_,
E. des Lois, XX, 16. The consequence was, that among the higher
classes not a creditor lost anything for centuries. (_K. L. v.
Haller_, Restauration der Staatswissenschaften, VI, 519.) Compare
the “Nurenberger Reformation” of 1479, fol. 61 and 68 of the edition
of 1564.
552 Compare the R. P. O. of 1548, art. 22. And so, by the Code de
Commerce, III, 4, I, even the simple bankrupt in contradistinction
to the fraudulent bankrupt is punished, and every person unable to
pay his debts is declared a _simple_ bankrupt, who, among other
things, has made excessive household expenses, or lost considerable
sums by play etc. Compare _Sully_, Mémoires, Livre XXVI, who
declares it to be his most wholesome law, that fraudulent bankrupts
should, like thieves, be punished with death, and that all their
fraudulent assignments, gifts, etc., should be declared void.
Further, Ordonn. de Louis XIV., sur les Failletes, art. 11; _J. de
Wit_, Mémoires, 77 ff; _v. den Heuvel_, Sur le Commerce de la
Hollande, 110 ff. Frederick William I., in 1715, threatened with the
galleys all light-headed bankrupts, and, in 1723, all those who,
knowing their insolvent condition, should effect further loans.
_Mylius_, Corp. Const. March. II, 2, 31, 40. For China, see _Davis_,
The Chinese, I, 247 ff. _Gr. Soden_, Nat. Oek., III, 231, demands
that, in case of doubt, the guilt of the bankrupt should always be
presumed.
553 In England only one-tenth of the number of bankrupts are considered
innocent. _Elliot_, Credit the Life of Commerce, 1845, 50 ff.
554 The _contrainte par corps_ of debtors was abolished in France in
1792, but restored in 1797. Even _Turgot_ remarked that since
slavery had ceased there was no further fear (?) that the poor would
be oppressed by imprisonment for debt. (Sur le Prêt d’ argent, §
31.) According to _Droz_, the question is not one of weighing
“freedom” against “miserable money,” but the deprivation of a few of
that freedom and the non-fulfillment of obligations entered into,
that is against the destruction of public confidence.
555 A similar development among the Greeks:
A. Rigorous slavery for debt, which Kypselos moderated at Corinth.
(_Pausan._, V. 17, 2), and Solon abolished in Athens. (_Plutarch_,
Sol., 15. _Demosth._, de fals. Legat., 412.)
B. The reckless creation of debts as seen in Aristophanes; while
outside of Athens slavery for debt lasted yet a long time.
(_Hermann_, Griech. Privatalterth., § 57, 20.) In the time of
Demosthenes, the merchant in arrears in the payment of his debts was
cast into prison, and the bottomry-debtor who deprived his creditor
of his security might be punished with death, (_Demosth._ adv.
Pharm., 922, 958), and this although the _cessio honorum_ was
introduced. _Hermann_, § 70, 3. Compare _Xenoph._, Vectigg., 3,
_Demosth._ adv. Apat., 892; adv. Lacrit., and adv. Dionys. In
Corinth, the state superintended expenses made by parties. This was
part of its credit-policy. (_Athænæus_, VI, 227.) For a remarkable
Rhodian law relating to debts, see _Sext._ Emp., Hypot. I, 149.
In Rome:
A. The chief characteristic of the ancient law in this matter was
the eventual sale of the person of the debtor on the getting of the
loan (_nexum_); the power of the creditor to put the _addictus_ to
death or to sell him in foreign parts; finally, the _in partes
secanto_, in the concourse of creditors. Without these rigorous
provisions, the borrower might easily have evaded his debts, by the
emancipation of his son and turning over his property to him.
(_Niebuhr_, Rom. Gesch., II, 770 ff; _Savigny_ in the Abb. der
Berliner Acad., 1833. _Zimmern_, Gesch. des röm. Privatrechts, III,
131 ff.)
B. Later, we find nothing of the execution of the debtor, or of the
sale of his person; but he might be compelled to do slave labor for
his creditor without any protection against ill-treatment. Slavery
for debt was restricted by the Lex Poetelia. (_Niebuhr_, III, p.
178; _Mommsen_, III, 494.) The Prætorian law introduced the custom
of putting the creditor in possession of the goods of the debtor,
with power of sale, which proceeding rendered the debtor infamous.
See several passages in _Walter._, Röm Rechtsgesch, 763 ff;
_Tertull._, Apol., 4; Tab. Herac. I, 115 ff. Later, Cæsar’s Lex
Julia permitted the honest debtor to escape imprisonment by the
assignment of his goods.
C. The moneyed oligarchy which prevailed in Rome caused the adoption
of exceedingly severe measures against delinquent debtors. (_Plut._,
Lucull., 20. _Cic._, ad. Att. V. 21, VI.), although its members
themselves incurred debts in the most reckless manner. Cæsar, in the
year A.C. 62, excluding his active (_activen_), owed debts to the
amount of 25,000,000 sesterces; M. Antonius, in the year 24,
6,000,000; in the year 38, 40,000,000; Curio, 60,000,000; Milon,
70,000,000. (_Mommsen_, Römische Geschichte, III, 486.) Compare
_Gellius_, XX, 1, XV, 14.
556 Whenever a new shop-keeper, who sells goods on monthly credits,
settles in a district, the number of poor persons invariably
increases. (_McCulloch_, Commercial Dictionary.) The ruinous credit
given by the Jews to the Westphalian peasants begins with an account
for the goods which they have succeeded in pressing upon them, after
five or six years have elapsed. The Jew seldom sues accounts at law;
but he besieges the debtor and discovers where his last head of
cattle and his last little supply of provisions are to be found. As
he is willing to accept everything that has any value, sometimes in
payment of arrears, and sometimes in payment for some new piece of
trash, he is sure to obtain his dues in the end, but not until his
victim, who is sunk deeper and deeper in the abyss of debt by every
“accommodation,” is entirely ruined. (_Schmerz_, Rheinish-Westphäl.
L.W., 396 ff.)
557 In the lower and middle stages of civilization, we find a multitude
of laws by which minors, students etc., but especially land-owners
are limited to a minimum of credit, which, however, varies very much
with the person, and is subjected to a number of embarrassing forms,
the consent of a third person, for instance etc. (Compare Bayerische
L.O. von 1553, fol. 83.) Such laws, however, give as much room to
the play of dishonesty as they take away from that of want of
reflection.
558 On the municipal regulations (_Städteordnungen_) of the 14th and
15th centuries, which compelled Jewish creditors especially to have
their evidences of indebtedness redeemed within from every two to
five years, see _Stobbe_, Juden im Mittelalter, 129. Compare further
the Würtemberg L. O. of 1515, Statut. Ferrar, ed. 1650, lib. II,
rub. 37, 289. According to the other provisions of the laws in North
America, some book accounts were required to be sued on within six
and others within seventeen years. (_Ebeling_, Gerchichte und
Erdberschreibung der v. Staaten, II, 247, 298.) The Prussian law of
March 31, 1838, provides a period of limitation of three years for
all ordinary commercial debts. A similar law was passed in the
Kingdom of Saxony, in 1846. In London, there has been found a great
number of hatters, tailors, boot and shoe dealers etc., whose books
showed credits of more than £4,000, most of them not to exceed over
£10. How much of all this must be lost entirely, and how that loss
must increase the sums paid for boots, shoes and hats by the prompt
payer! (_McCulloch_, v. Credit.) We find, even in Athens, that the
period of limitation was shortened in the interest of credit, and
that in the case of minors, it did not exceed five years.
(_Demosth._ adv. Nausim., 989.) Security for a debtor not over one
year. (_Demosth._, adv. Apatur., 901.) The prohibition of Zaleukos
to issue any evidences of debt whatever goes much farther.
(_Zenob._, Proverb. V, 4.)
559 Compare the report of the Dresden Handelskammer, 1864, 11.
_ 560 A. Mayer_, in _Faucher’s_ Vierteljahrsschrift, 1865, IV, 65.
561 We learn from the debates in the English parliament of February 9,
1827, that, in two years and a half, there were, in London and its
environs, 70,000 cases of imprisonment for debt, the costs of which
were from £150,000 to £200,000. In 1831, there were in one debtors’
prison 1,120 prisoners, who owed on an average £2 3s. 2d.
(_McCulloch_, l. c.) There was, in 1792, a case of a woman who, for
a debt of £19, remained in prison 45 years, and others like it. (See
_Archenholtz_, Annalen, IX, 87 ff; X, 169 ff, XIII, 125.) In England
in 1844, arrest for sums less than £19 was prohibited. _Johnson_ had
already proposed a similar provision. (Idler, 1758, Nos. 22 and 38.)
Imprisonment for debt was abolished in France, England and Austria
in 1867; in the North German Confederation, on the 29th of May,
1868, but arrest for security’s sake was retained. _Sismondi_ finds
fault with nearly all laws in the premises, because they attack the
person of the debtor rather than his personal property, and his
personal, rather than his immovable, property. He would have all
this just the contrary of what it is. The first interferes with the
very source of wealth, the productive power of labor; the second
causes goods to be sold much below their value. Neither of these
evils attends the last. (_N. Principes_, I, 250.)
562 A law of the North German Confederation allows the pledging of
future wages, only in the case of public officers, and those holding
permanent places in the service of private parties, whose salaries
are over 400 thalers per annum. The original draft had excepted only
the things necessary to workmen and those directly depending on
them; while the law as passed makes the prohibition general. This
was undoubtedly done for the convenience of employers as well as of
courts; as for instance in the circuit of Dortmund, there were, in
one year, 10,000 cases in which wages were garnisheed. (Annalen des
N.D. Bundes und Zollvereins, 1869, 1071 ff.) But the recklessness of
those workmen whose wages are below the average, might have been
just as well guarded against without dragging those whose wages are
above the average down to their level, if a distinction had been
made between production-credit and consumption-credit, and the
latter had been limited by providing that no suit should be
instituted for supplies made to public houses, taverns etc.
563 In the second book of _Moses_, 22, 25 ff., and the fifth, 24, 6. A
very old Norman law provides that in actions for debt, execution
should not issue against effects of the debtor which are
indispensably necessary to him to maintain his position, such as the
horses of a count or the armor of a knight. (Dialog. de Scaccario.)
Magna Charta extended this provision so as to include the
agricultural implements and cattle of the peasantry. The moment
these laws, in consequence of a false principle of humanity, except
anything but what is absolutely necessary, they injure credit. Thus,
for instance, in Brazil, a law of 1758, providing that nothing
immediately employed in or directly necessary to the production of
sugar should be seized on execution, caused great injury to the
production of sugar. (_Koster_, Travels in B., 1816, 356 ff.)
564 § 2, Cod. De Prec. Imper. Off., I, 19. The diets of the Empire had
granted such letters in the fourteenth century. (_Wachsmuth_, Europ.
Sittengesch., IV, 690.) They were granted, as a rule, only with the
previous knowledge of the Emperor, by the police ordinances of the
Empire of 1548, art. 22.
565 So in Austria, Saxony, Brunswick, the electorates of Hesse and
Baden. In Prussia, they could be granted only after a juridical
decree to that effect; and an appeal to a superior court was allowed
to reverse or affirm it. Compare _Mittermaier_ in the Archiv. für
civilist. Praxis, XVI, and also _P. de la Court_, Aanwysing der
politike Gronden en Maximen van Holland etc., 1669, I, ch. 25.
Nürnberg obtained as a privilege, in 1495, that no _moratorium_
should be valid as against its citizens. (_Roth_, Geschichte des
Nürnb. Handels, I, 86.)
566 Compare the discussions in the French National Assembly, in the
month of August, 1848. It is much less disadvantageous in times of
great commotion, when all business is brought to a stand still, to
extend the time in which bills of exchange etc. are payable. Such a
measure prevents a number of bankruptcies which the real balance of
debts due to one and owing by him does not render necessary.
567 In the persecution of the Jews in the middle ages, the so-called
_Brief-todten_ (letter-killing), or the destruction of titles, was
very common. In 1188, the French government released all crusaders
from the payment of interest on their debts, and granted them an
extension of three years’ time to pay off the principal.
(_Sismondi_, Hist. des Français, VI, 82.) Similar compulsory
measures were provided against the Jews and usurers in 1223 (Ibid,
VI, 539 ff.); and in 1299 (Ordonnances, I, 1331), on the formal
request of the nobility. (Ordonnances, II, 59.) Again, in 1594,
there was a release of one-third of the interest on all national and
private debts. (_Sismondi_, XXI, 318.) The general _moratorium_ of
the Milanese for a term of eight years, introduced in 1251, after
their war with France, was of an essentially different character.
(_Sismondi_, Geschichte der italienischen Republiken, III, 155.) The
same is true of the general _indult_ granted by Philip II. in
Belgium. (_Boxhorn_, Disquisitt. politicæ, 241 ff.)
568 The abolition or release of debts, so frequent in ancient
revolutionary times, reminds us, in many ways, of the crises
precipitated in modern times by paper money and produced by the
state. The ancestors of Alcibiades and Hipponikos laid the
foundation of an immense fortune, in Solon’s time, by purchasing
land in large quantities with money borrowed from several citizens,
a short time before the abolition of debts. (_Plutarch_, Sol., 15.)
569 Enormous consumption of wax in the churches of the middle ages. In
the cathedral of Wittenberg alone, a short time before the
Reformation, more than 35,000 pounds of wax candles etc. were burned
yearly. At the same time, honey was generally used instead of sugar.
How much more important, therefore, at that time must bee-culture
have been, considered from the point of view of circulation as
compared with what it is to-day. And so in Catholic countries, a
difference in the external manifestation of religion causes the
relative importance of the consumption of fish to increase and
decrease. In 1803 there was little demand in France for ivory
crucifixes, rosaries etc. In 1844, the demand for them and for
_prie-Dieu_ for the bed-room etc. was increased. (_Mohl_,
Gewerbwissenschafliche Reise, 101.) To engage successfully in the
sale of sugar in Persia, it is necessary to know that in that
country it is liked only in little hat-shaped lumps, which are used
only as semi-voluntary gifts; and that, in such case, custom fixes
the number of lumps. (_Steinhaus_, Russlands commercielle etc.
Verhh., 151.) In the Levant, workmen prefer bars of iron which are
small and of varied form because they find it difficult to
manipulate the large ones. The English bear this in mind much better
than the Russians. (_Steinhaus._) A merchant sending wood to
Southern France must be acquainted with the form of the staves used
in the manufacture of barrels there. Compare _Büsch_, Geldumlauf,
VI, 2, 2.
570 The circulation of goods compared to the circulation of the blood:
by _Mirabeau_, Philosophie Rurale, ch. 3. _Turgot_, Sur la Formation
etc. § 69. _Canard._, Principes, ch. 6.
_ 571 Eiselen_, Volkswirthschaftslehre, 98 ff. If in ancient times
commerce played a much less important part than it does among the
moderns, it was, as _Montesquieu_ says, because the whole commercial
world was then more uniform in climate and the character of its
products than it is now. (Esprit des Lois, XXI, 4.)
572 Of the successive steps, sheaves, corn, flour, bread,—flour has the
greatest capacity for circulation. And, indeed, the last operation
of labor on a great many goods, because of their consequent more
narrowly specialized utility, is accompanied by a decrease in their
capacity for circulation. As an illustration, we may mention
ready-made clothing as compared with cloth. The capacity for
circulation of a commodity is very much advanced when the demand is
wont to increase with the supply, as is the case with gold and
silver, but not with learned books, optical instruments etc. Many
commodities have but little circulating capacity, because no one
desires to purchase them but at first hand. See _Menger_,
Grundsätze, I, 245 ff.
_ 573 Knies._, Die Eisenbahnen und ihre Wirkungen, 1853, 79.
574 Compare _Schmitthenner_, I, who calls attention and with reason to
the importance of loans on chattel mortgages. But _Berkeley_,
Querist, No. 265, remarks that a squire with a yearly income of
£1000 can, “upon an emergency,” do less good or evil than a merchant
with £20,000 ready money.
575 A very important difference between Russia and England.
_ 576 Storch_, Handbuch, I, 273 ff. There is also a useless circulation
which is not calculated to promote the division of labor, but to
employ idle time or idle capital, as in the case of games of hazard,
speculation in stocks, wheat etc. Even impoverishing consumption may
produce rapidity of circulation, as in Germany during the war years
1812 and 1813. (_F. G. Schulze_, N. Œkonomie, 1856, 667.) Relying on
this fact, _Hume_ (1752) on Public Credit, Discourses, No. 8, argues
in favor of the old opinion, that all circulation is wholesome and
to be encouraged. _Boisguillebert_, Traité des Grains, I, 6, went so
far as to laud war because it accelerated the circulation of wealth.
On the necessity of a _circulation sans repos_, see ibid., II, 10.
In a similar way _Law_, Trade and Money, 1705, and _Dutos_,
Réflexions Politiques sur le Commerce, over-valued the circulation
of wealth as such. Concerning the Mercantile System, see § 116.
_Darjes_, Erste Gründe der Cameralwissenschaft, 1768, 531. And even
_Büsch_, Geldumlauf, I, 29, 32 ff., III, 96, who in other places
nearly always overlooks real production and sees only the
circulation of money caused thereby. Thus he calls the poor when
they are helped in money, and spend it, useful members of society!
(IV, 32, 39. Similarly, _v. Struensee_, Abhandlungen, 1800, I, 282
ff., 400 ff.)
577 As, for instance, happened in France in 1577, when all commerce, and
in 1585 all industry, were declared to be _de droit domanial_. Louis
XIV. was of opinion that the king was absolute master of all private
property of priests and people. (Mémoires histor. de Louis XIV., II,
121.) Compare _Duclos_, Mémoires, I, 14 ff.
578 Compare Theod. Cod., V, 9, 1; Just. Cod., X, 19, 8; XI, 47, 21, 23;
XI, 50, 51, 52, 55, 58. How full the really classic period of the
Roman jurists was of the idea of freedom of competition, we see in
_Paullus_: L. 22, § 3, Dig. XIX, 2. The provisions concerning _lœsio
enormis_ appear first in the time of Diocletian. (Just. Cod., IV,
44, 2.)
_ 579 Benjamin Franklin_ says that the freer the form of government is,
the more the people show themselves in their true aspect. Ancient
Rome, with the early development of its rational disposition, soon
learned to favor freedom of commercial intercourse. Compare
_Mommsen_, Römische Geschichte, I, passim. This was, certainly, an
element of its greatness, but also of the proletarian evils
developed in it an early date, and which were weighed down only by
the absolute growth of the state and the development of its economic
interests during centuries.
580 Nor must it be forgotten that competition raises prices as well as
lowers them. The expressions higher price and lower price denote
only different sides of the same relation. _M. Chevalier_ is of
opinion that our present breathless competition is characteristic
only of a period of transition prolific in new inventions, a
competition soon to be followed by peace. (Cours, II, 450 ff.)
581 Ἀγαθὴ ἔρις: Hesiod., Opp., 10 ff.
582 “Whoever speaks of competition suppresses the existence of a common
aim,” says _Proudhon_, although he adds, after _Bileam’s_ way, that
to cure the evils of competition by competition, is as absurd as to
lead men to liberty by liberty, or to cultivate the mind by
cultivation of the mind.
583 Compare _Bastiat_, Harmonies économiques, ch. 10.
584 If all classes were protected against competition, no class would
derive any advantage from it, since a “universal privilege” is an
absurdity. If only certain classes or individuals are protected, it
is done at the cost of all others.
585 The question should not be formulated thus: “Caprice or rule?” but
“Rule of morals, or rule of law?” _Schmoller_ against _v.
Treitschke_ in _Hildebrand’s_ Jahrbb.
586 Concerning the arguments by which the commercial restrictions of the
middle ages were defended, see below. They were, for the most part,
well founded for the age in which they were advanced. A judicious
education will often be compelled to provide limitations, but always
with the intention, by this means, of making possible a really
greater independence. Thus the current of commerce may be too weak
in a poor and thinly settled country in order that supply and demand
should always and everywhere meet and be satisfied. Under such
circumstances, their artificial concentration at certain points is
among the most efficient means of promoting the economy of the whole
people. The policy of freedom of commerce was recommended even in
the seventeenth century by _J. Child_, by _North_ and _Davenant. W.
Roscher_, Zur Geschichte der englisch. Volkswirthschaftslehre, 65
ff., 85 ff., 113 ff., 142 ff. And earlier yet, in Holland, by
_Salmasius_, De Usurus, 1638, 583 and _de la Court_. Compare
Tübinger Ztschr., 330 ff. Thus _Boisguillebert_ says: _Il n’y avait
qu’à laisser faire la nature et la libertê, qui est le
commissionaire de cette même nature_. (Factum de la France, 1707,
ch. 5.) See, also, Dissertation sur la Nature des Richesses, ch. VI;
Détail de la France, 1697, II, ch. 13; Tr. des Grains, II, 8. For
the most part dictated by a reaction against Colbertism.
See further, _Mélon_, Essai Politique sur le Commerce, 1734, ch. 2.
_M. Decker_, Essay on the Causes of the Decline of Foreign Trade,
1744, 31 ff, 106 ff. _J. Tucker_, Essay on the advantages and
disadvantages which respectively attend France and Great Britain
with regard to Trade, 1750. _Forbonnais_, Elémens du Commerce, 1754,
I, 63. _Genovesi_, c. I, 17, 3, is of opinion that at least in case
of doubt, commerce stood more in need of freedom than of protection.
_Verri_, in his Meditazioni, goes still farther. The Physiocrates,
with their _laissez aller_ and _laissez faire_ recommend competition
as the best means to increase the net income of a people. According
to _Dupont_, 147 ff, éd. Daire, the province of legislation is
confined to declaring the laws of nature. His motto is: _liberté and
propriété_. _Adam Smith_ asks that the state should do only three
things: insure protection against foreign states, the administration
of justice at home, the establishment and maintenance of certain
institutions of advantage to the whole community, but which private
interest could not establish for want of means to cover the expenses
attending them. (Wealth of Nations, V, ch. I, 2.) Hence he demands
(III, ch. 2) the abolition of all kinds of _fidei commissa_, of
royalty in mines (I, ch. 11, 2), of all corporate and exclusive
privileges, of all protective duties etc. (IV, ch. I ff), but
especially of the colonial policy hitherto in vogue. (IV, ch. 8.)
The attacks of the Socialists on freedom of competition were begun
by _Fichte_, Geschlossener Handelsstaat, 126, in which it is called
a robber-system or system of spoliation. He would have the state
have more solicitude for human industry than if men were so many
swallows. See further, _Sismondi_, N. Principes, passim, who
everywhere demands the protection of the government for the weaker.
_Fourier_, N. Monde industriel, 396, who thinks that _le monopole
général_ is always a _preservatif contre le commerce_. _Bastiat_,
Harmonies économiques, ch. 10, has a very valuable refutation of
these follies. Recently, _Rodbertus_, Hildebrand’s Jahrbücher, 1865,
II, 272, is of opinion that “social individualism” has ever had in
history the task of dissolving decaying societies, as, for instance,
under the Cæsars.
587 Whoever would sell to others must purchase of them. (_Child._,
Discourse of Trade, 358.) Similarly _Temple_, Works III, 19, and
_Becher_, Polit. Discurs, 1547. This view seems to have become the
national one first in Holland. Compare also _Quesnay_, 71 and
_Mirabeau_, Philosophie rurale, 1763, ch. 2.
588 We often hear it said: “nothing sells because there is no money.”
But the real cause here is, in most instances, not a want of money,
but a want of other goods which might serve as a counter-value. In
bad times, for instance, there is many a weaver who would consider
himself fortunate, even if he could get no money for his cloth, to
obtain instead, meat, bread, wood, raw material etc. If money only
were wanting, that might easily be as favorable a symptom in
commerce, as when there are not enough shops, steamers etc., to
carry on the business of the country. Compare _North._, Discourses
upon Trade, 1691, 11 seq., but especially _J. B. Say’s_ celebrated
theory of Markets, traité I, ch. XV.
589 See _Humboldt’s_ observations as to how, in Spanish America,
agriculture in the vicinity of the mines increases and decreases
with the wealth of the latter. (N. Espagne, III, 11 ff.) See also
_Harrington_ (ob. 1677), On the Prerogative of a Popular Government,
I, ch. 11; _Cantillon_, Nature du Commerce, 16. And so _Stein._,
Lehrbuch, 122 seq., points out how great enterprises produce
especially for the consumption of the small householder without
capital, and how, therefore, the flourishing condition of the one
determines that of the other.
590 Those indeed who live by the spoliation of others, as robbers,
deceivers etc. are interested in the economic prosperity of the
latter only so long as their spoliation of them is not endangered.
Only to this extent can it be claimed with _Fr. List_ that the
nobility of the Middle Ages, in obeying the selfish calculation
which led to the oppression of the peasantry, engaged in as bad a
speculation as a manufacturer of our day would who should feed his
steam-engine with nothing but saw-dust or scraps of old paper. The
cities of the middle ages had a much more undoubted economic
interest in the emancipation of the peasantry as a class than the
nobles or the clergy.
591 Such exceptions there certainly are, even if it were not true “that
the most godly cannot rest in peace unless he is acceptable to his
ungodly neighbor.” Nations that furnish the same products as we do
may, indeed, “spoil our market,” just as at home the selfish
shoemaker may desire the prosperity of all wearers of shoes, that is
of all other industries, but not that of all other producers of
shoes. The view that long prevailed, that one man’s gain was always
some other man’s loss (_Th. Morus_, Utopia 79, ed. Colon. 1555;
_Baco._, Sermones fideles, cap. 15; _quid-quid alicubi adiicitur,
alibi detrahitur_; _M. Montaigne, Essais_ I, 21: _les prouficit de
l’un est le dommage de l’autre_) prevailed much longer in
international affairs where observation is much more difficult than
in national affairs; although even here, _P. de la Court_, Maximes
politiques, 1658, contrasts the economic interest of Holland with
that of the rest of the Netherlands and prefers it to theirs. Even
_Voltaire_ says: “The desire of the greatness of the Fatherland
includes the desire of evil to our neighbor. Evidently no country
can gain except what another loses.” (Dict. philosophique, v.
Patrie.) Compare, however, the _peut-être_ in his Histoire de la
Russie, I, 1, on the occasion of the English-Russian treaty of
commerce. Similarly, _Galiani_, Della Moneta, I, 1, IV, 1; _Verri_,
Opuscoli, 335, and recently _v. Cancrin_ who says that “in every-day
life, property is acquired only at some other person’s expense.”
(Weltreichthum, 1821, 119. Oekonomie der menschl. Gesellschaft,
1845, 23.) The cosmopolitan view (_Xenoph._, Cyrop., III, 2, 17.
Hier., 10) which prevails in Adam Smith’s school was introduced by
_Hume_, Essays, 1752, On the Jealousy of Trade. _Quesnay_,
Encyclopédie, v. Grains, 294, ed. Daire; _A. Smith_, Theory of moral
Sentiments, 1759, p. 6, sec. 2, ch. 2. _Pinto_, Lettre sur la
Jalousie de Commerce, 1771, and _J. Tucker_, Four Tracts on
commercial and political Subjects, 1776, 34 ff and 42 ff. “The
system of states exercises no influence whatever on the world’s
commerce.” (_Lotz_, Handbuch I, 11.) More recently, _R. Cobden_, in
his Russia, Edinb., 1836, among others argued, that the conquest of
Turkey by the Russians would be useful to England, because then more
(?) English products would probably be sold there. Russia would
become no stronger thereby, as conquests always injure the conqueror
more than they benefit him. The idea of European equilibrium is
therefore a chimera, because no state can be prevented from having
an internal growth, as great as may be. Thus, in the summer of 1853,
we heard the London Times sometimes preach that every cannon-shot
fired by the English at the Russians might kill an English debtor or
an English customer. The Venetians entertained a similar view at the
beginning of the fifteenth century. Compare _M. Sanudo_ in
_Muratori_, Scriptores, XXII, 950 ff. See above, § 12.
Moreover, Malthus had recognized that there were natural rivalries
between nations which produced exceptions to Tucker’s laws.
(Principles, Preface.) Similarly _Garve_, in Cicero’s Pflichten
(1783), III, 146 ff.
_ 592 B. Franklin_, Works, vol. III, 49. _Sismondi_ claims for all
civilized nations the right of interfering with the governments of
other nations with whom they have or might have commercial
relations, and of insisting that they shall have a good government
under which commerce may freely develop. (N. P. VII, ch. 4.)
593 As for instance when the _ami des hommes_ says that he felt towards
an Englishman or a German as he did towards a Frenchman with whom he
was not acquainted. _Mirabeau_, Philosophie rurale, ch. 6.
594 Thus, for instance, the Stoic, Zeno: _Plutarch._ De Alex, fort, 1,
6.
595 Compare even _Lauderdale_, Inquiry, 274 ff.
596 How well, for instance, the English sustained Napoleon’s continental
blockade, the evils produced by which were intensified by several
bad harvests. Its worst time did not, indeed, coincide with that of
the struggle with the United States. The ancient Athenians, during
their contest with Philip of Macedon, considered the question of the
supplies from the Bosphorus etc. as one of life and death. But this
can be looked upon only as a cogent proof of the small development
which their commercial talents had received at the time. How easily
might they not, according to our ideas, have obtained corn from
Sicily or Egypt.
597 According to the acute analysis of language made by _F. J. Neumann_,
Tübinger Ztschr., 1872, 317 ff., the word “price” has reference to
an actual purchase or sale, while the expression “value in
exchange,” generally called simply value, is based upon a valuation,
or intimates in a general way that an object possesses value; value
in exchange is, so to speak, the average of several
price-determinations. Price, according to _Schäffle_, is the
external consequence of value in exchange, a means of representing
the latter. (N. Œk., III, Aufl., I, 218.) Only through the
difference between value in exchange (universal possibility) and
price (special reality) is the _laesio enormis_ of the jurists
possible. (_Schmitthenner_, Staatswissenschen, I, 416.)
598 By market price, _prix courant_, is meant the money-price of
commodities, determined by competition.
599 A problem very similar to that of the motion of bodies in space.
_ 600 Lotz_, Handbuch, 50 ff., calls those commodities costly which are
obtained only at a high cost of production, and dear, those whose
price is above the cost of production.
601 Compare _Canard_, Principes d’Economie politique, ch. 3. Almost
simultaneously, _H. Thornton_, 1802, Paper-Credit of Great Britain.
602 See _Jackson’s_ Account of Morocco, 284, for cases in which, in the
Sahara, when the burning winds of the desert had dried up the water
in the leathern bottles of the caravan, a drink of water cost from
$10 to $500.
603 The North American aborigines very frequently consent, in their
exchanges, to take any offer made to them by their equals, however
insufficient it may be, because they fear revenge. _Schoolcraft_,
Information etc., II, 178. As to the effects of cunning, the
Tungusi, when they get a glass of brandy from the Russians, grow
almost idiotic, and give away their goods at mock-prices in drink.
(_v. Wrangell_, Nachrichten, I, 233.) In the higher stages of
civilization, on the other hand, very distinguished people are, by
no means, privileged because of their position, in the struggle for
prices. In modern times, claims (_reclamen_) have taken the place of
greater physical or political power. Compare _E. Hermann_, Leitfaden
der Wirthschaftslehre 1870, 91 ff.
604 Thus _Galiani_ says, that before one of the two parties has
expressed his want to buy or to sell, the pans of the scales are in
equilibrium. The first that speaks breathes on one of them, and it
drops. (Dialogue sur le Commerce des Bleds, 1770, No. 6.) This has
been verified in a striking manner in California, where the most
valuable commodities were often purchased at auction at the lowest
prices, while when purchased from merchants and even the most
wretched shopkeepers, they were sold enormously dear. (_Gerstäcker_,
in the Allg. Zeitg., May, 1850.) Thus there were harvested in
France, in 1817, 48,000,000 hectolitres of wheat, valued at
2,046,000,000 francs, in 1820, 44,500,000 hectolitres valued at
895,000,000 francs. (_Cordier._) This vast difference in price
existed, because in 1817, the whole world was still trembling under
the impression made by the failure of the crops in 1816, while in
1820, the feeling of comfort and security caused by the rich year
1819, still prevailed. Low prices at forced sales under decree etc.
See below, § 5. That travelers are so frequently taken advantage of
in effecting changes of money is explainable partly by their urgent
wants, which are well known to the opposite party, and partly by
their supposed ignorance in the matter. And so, at auction sales,
out-bidding one another has something very seductive in it for
ignorant or hot-headed purchasers.
605 It was considered immoral by his contemporaries, when William the
Conqueror introduced the custom of farm-letting to the highest
bidder. (_A. Thierry_, Conquête de l’Angleterre, II, 116, éd.
Bruxelles.) It is repugnant to poetic and delicate minds to think
that everything has a price exactly fixed. (§ 2.) I need only refer
to the picture of Helen which Zeuxis exhibited for money, which act
of his was characterized, by his cotemporaries, as a species of
prostitution. _Val. Mac_, III, 7. _Ælian_, V, 4, IV, 12. _Socrates_
judgment on the payment of the sophists. _Xenoph._, Memor., I, 6,
13.
606 Competition has only a negative influence on prices, inasmuch as it
modifies the extreme operation of the other grounds of their
determination. _Thornton_, Paper Credit. _Lotz_, Revision, 1811, I,
74 ff, 241 ff.
607 The expression, “intensity of demand,” in _Malthus_, Principles, ch.
2, sec. 2. As early a writer as _Sir J. Stewart_ calls attention to
the difference between large and high and small and low demand. A
high demand will always raise the price, as when, for instance, two
wealthy virtuosi compete at an auction. _Paucorum furore pretiosa_,
as Seneca says. An English penny of the time of Henry VII, once
sold, on such an occasion, for £600. In 1868, at the Lafitte
auction, seven bottles of wine sold to Rothschild at 235 francs a
piece after the _Maison dorée_ had offered 233. (N. freie Presse,
Dec. 17, 1868.) A great demand has frequently no result but to
increase the supply, and the price rises only in so far as the
demand is too sudden to permit a parallel growth of the supply.
(Principles, Book II, ch. 2, 10.) The present price of tea could not
remain unaffected, if ten different private merchants, competing one
with another, or the agent of a privileged commercial society,
should send orders to China for an equal quantity of tea. (_Verri_,
Meditazioni, IV, 8 ff.)
608 Immense weight laid on the _æqualitas permutationis_ (after
_Aristot._, Eth. Nicom., V. 7,) in the ethics and economics of the
scholastic middle ages, and in the time of the Reformation. Compare
_Melancthon_, in Corp. Ref., XVI, 495 ff, XXII, 230.
609 A very barbarous theory of price in _Xenoph._, De Vectigg., 4. The
ancients made little progress in this respect, although there are
not wanting ingenious observations on certain phenomena of prices.
(See _Aristot._, (?) Oecon. II; _Cicero_, De Off. III, 12 ff.)
_Mariana_, De Rege et Regis Institutione, 1598, III, explains price
as the relation of value to quantity. According to _Locke_, the
price of a thing is determined by the relation between “quantity”
and “vent”: the increase or diminution of its useful qualities
influences it only so far as it alters that relation.
(Considerations on the Consequences of the Lowering of Interest etc,
1691, Works II, 20 ff.) _Law_, on the contrary, says that the “vent”
can never be greater than the “quantity,” but that the “demand” may
be. Wherefore, he proposes the formula: quantity in proportion to
the demand. (Trade and Commerce considered, 1705, ch. 1.) In chap.
6, _Law_ distinguishes three elements in price: quality, quantity
and demand. The expression “quantity” is, certainly, very
unsatisfactory. How many examples does not _Tooke_ (Thoughts and
Details, on the high and low Prices of the last thirty Years, 1823,
part IV) give to illustrate how, when the supply was smallest,
prices were lowest and _vice versa_! It was so almost always after
the market was over-filled, when a great many speculators had lost
and no one dared to purchase anew. _Montanari_ (ob. 1687) furnishes
us with an excellent theory of prices. (Della Moneta, 64 ff.,
Custodi.) And a still better one, _Sam. Pufendorf_, Jus Naturæ et
Gentium, 1672, V. 1, who must be considered the best authority on
the laws of prices before _Stewart_. _Boisguillebert_, Traité des
Grains, II, 1, 10. _Galiani_, Della Moneta, I, 2, knows only the
factors _utilità_, and _rarità_, although in his exposition of the
latter, he discusses many points which would be called the cost of
production in our time. The wisdom of Providence has granted us the
most useful things in the greatest abundance to make them cheap.
_Stewart_, Principles II, 2, 4, rendered a great service to the
theory of prices, tracing back supply to the cost of production,
demand to want and ability to pay; and his deserves to be called the
immediate predecessor of _Hermann’s_ remarkable theory. (_Hermann_,
Staatsw. Untersuchungen, 66 ff.) For a peculiar theory of prices,
see _Paganini_, Saggio sopra il giusto Pregio delle Cose, 189 ff.
_Neri_, Osservazioni, 1751, 127. _Gust. Menger_, Grundsätze, I, 179
ff., has made an interesting attempt to explain the formation of
prices in its simplest shape, in the supposition of a monopoly in
the seller, and by then going over to the subsequent modifications
introduced by the competition of many sellers.
610 “Instead of separating, in the same matter, the points of view of
the buyer and seller, we may distinguish the consideration of the
thing to be acquired and the thing to be given by one and the same
person.” (_Rau._) The possessor of the more current commodity
appears especially as demanding, that of the less current as
offering or supplying, (_v. Mangoldt._)
611 This is for free goods=0, for monopolized goods=1/0.
612 The obvious fact that every price supposes a comparison of two
commodities, and that every buyer is, at the same time, a seller,
has been overlooked by only too many writers. And hence _Dutot’s_
opinion, that, as all men buy and few only sell, the state, in case
of doubt, should favor the buyer. (Réflexions sur le Commerce et les
Finances, 1738, 962, éd. Daire.) And so the often-mooted question
whether universal dearness or cheapness is more useful: the latter
advocated, for instance, by _Herbert_, Police générale des Grains,
1755; _Verri_, Meditazioni, V; the former by _Boisguillebert_,
Traité des Grains, I, 7, II, 9; and by the Physiocrates. (_Quesnay_,
Maximes générales, Nr. 18 ff., I, Problème Économique; also by _A.
Young_, Polit. Arithmetics, ch. 8.) The laity in Political Economy
understand by dearness only the general cheapness of the medium of
circulation or exchange, and _vice versa_.
613 Thus, even a poor man in Naples sometimes requires a glass of
ice-water. The introduction of the extensive use of snow into Sicily
improved the condition of the public health. (_Rehfues_, Gemälde von
Neapel, I, 37 ff.) On the other hand, furs, in the far north, are
articles of prime necessity. Newspapers in a free country satisfy a
want much more urgent than in countries which are not free. And so,
_Senior_ says that shoes are “necessaries” to all Englishmen, since
without them, their health would suffer. To the lower classes of
Scotland they are “luxuries.” Custom permits them to go barefoot
without hardship or degradation. For the middle classes of the same
country, they are “decencies.” Shoes are worn there, not to protect
the feet but one’s civil position. In Turkey, tobacco is a decency
and wine a luxury. The reverse is the case in England. (Outlines, 36
ff.)
614 As to the relativity of the opposites of “temperance” and “excess,”
every person should attend to the following points: a, not to exceed
one’s income; b, to provide for one’s self and one’s family; c, to
lay by something for a rainy day; d, to place one’s self in a
position to care for the poor; e, to indulge in no pleasure
injurious to body or mind; f, to give no bad example. (_Tucker_, Two
Sermons, 29 ff.) _Menger_, Grundsätze, I, 92 ff., endeavors to
compare the value in use of different commodities from the point of
view, that the means of gratification of a less urgent want, when
the more urgent wants of the present are satisfied completely,
should be preferred to the means of over-gratifying the latter.
615 Thus the price of many dark articles of apparel rises in a moment of
unexpected universal mourning. A very remarkable case in Paris, at
the death of Henry II. (_Montanari_, Delia Moneta, 85, Custodi.) On
the other hand, a change of fashion may greatly depress the price of
many commodities. Such a change may take place even in the case of
precious stones; as, for instance, now in London, a perfect emerald
is most highly prized. (_King_, Precious Stones and Metals, 1871.)
The rise of many drugs in times of cholera, and of leeches, for
example, in Paris, 600 per cent. Rise of the price of powder, horses
etc. at the outbreak of a war, and of the price of iron caused by
extensive railroad building. In Circassia, a good shirt of mail was
formerly worth from 10 to 200 oxen: but since it was discovered not
to be a protection against cannon balls, its price fell 50 per cent.
(_Bell_, Journal of a Residence in Circassia, I, 403.)
616 On “connected” (_connexen_) goods, the use of one of which supposes
the use of the other, as, for instance, sugar and coffee, wood and
stone used in the construction of buildings, see _Schäffle_,
Nat.-Oek, II. Aufl., 179.
617 Observed by _Necker_, Sur la Législation et le Commerce des Grains,
1776. Compare _Roscher_, Ueber Kornhandel und Theuerungspolitik,
1853, 1 ff. In Athens, for instance, the _medimnos_ of wheat cost
ordinarily five drachmas, but during the siege by Sulla it rose to
1000 drachmas. (_Demosth._ adv. Phorm., 918. _Plutarch_, Sulla, 13.)
Compare II. Kings, 6, 25, 7, 1. In Paris during the siege by Henry
IV. it rose to 5000 per cent. of the ordinary price. (_Lauderdale_,
Inquiry, 60 ff.) During the siege of Breisach, in 1638, a mouse was
finally worth 1 florin, the quarter of a dog, 7 florins, a quarter
of wheat, 80 thalers. (_Röse_, Leben H. Bernhards, M., 11, 269.)
Compare _Strabo_, V, 248 seq.
618 Wheat is still more indispensable than meat. Hence, in the ten
principal markets of Prussia, the price of rye rose much more from
1811 to 1860 than the price of beef; the former between 0.32 and
1.03 silver groschens and the latter between 2.32 and 4.94 silver
groschens. (Annalen der preussischen Landwirthschaft, 1869, No. 9.)
And so in the Rhine district, the wine harvests have undergone much
greater changes in price than the prices of must, although the years
differed very largely in the quality of the yield. Thus the crop of
1830 was only 225, that of 1868, 10,845 pieces, and yet the minimum
price between 1831 and 1865 was only from 3 to 58 flr. per ome.
(_Engel_, Preuss. Statist., Ztschr., 1871, 168 ff.)
619 In England, the price of wheat has not unfrequently risen from 100
to 200 per cent. when the harvest was from one-sixth to one-third
under the average, and when a supply from abroad had modified even
this condition of things. (_Tooke_, History of Prices, I, 10 ff.)
_Tooke_ is of opinion that in a country with poor-laws like those of
England, a deficit of one-third in the wheat crop, if there were no
stores remaining and no importation from abroad, would cause the
price of wheat to rise, 500, 600, and even 1000 per cent (p. 15.)
620 See _Davenant_, Political and Commercial Works, London, 1771, II,
224. Tooke was somewhat acquainted with Davenant. According to this
law, a deficit in the harvest of 10 per cent. would raise the price
of corn 30 per cent.; one of 20 per cent. would raise the price of
corn 80 per cent.; one of 30 per cent. would raise the price of corn
160 per cent.; one of 40 per cent. would raise the price of corn 280
per cent.; one of 50 per cent. would raise the price of corn 450 per
cent.
621 In England, it is 38.8 per cent. of the supply that comes to the
market. (Quart. Review, XXXVI, 425.) In Belgium 40, and in Saxony at
least 50 per cent. (_Engel_, Jahrb. der Statistik etc. von Sachsen,
I, 276.) In Germany, the farmers consume on an average two-thirds
themselves. (_v. Viebahn_, Zoll.-v-Statist., II, 958.) With this
_Plato_, De Legg., VIII, agrees remarkably well.
622 On the difference in this respect between England, Germany and
northwestern Norway, see _Hermann_, p. 71.
623 Hence it not unfrequently happens that grain grows dear not from any
real want of it, but because it is generally supposed that such want
exists. For an explanation of why it is that wheat and similar
commodities have an almost invariable price, when the average is
taken of a long series of years, see _infra_ § 129.
624 Case in Naples in which after a poor harvest the price of corn
remained very low, because the oil-harvest had also failed, and the
poor could earn nothing in that industry in which they were largely
employed, and _vice versa_. (_Galliani_, Della Moneta, II, 2.) Thus
_Adam Smith_, Wealth of Nations, I, ch. 7, distinguishes between
“effectual” and “absolute” demand. Similarly _J. Steuart_,
Principles I, ch. 18. Care should be taken to distinguish in this
respect between desire and demand.
625 Thus, in the famine in Ireland in 1821, during which potatoes rose
to fabulous prices, but wheat scarcely at all, and had therefore to
be exported.
626 In _Tooke_, History of Prices (2d edition of the Thoughts and
Details etc.), we meet repeatedly with the assertion that when the
price of wheat rises, the price of colonial products and
manufactured articles sinks, and _vice versa_. Thus, in England, the
price of the evidences of national debt increases from two to three
per cent. in fruitful years above what it is after a bad harvest.
(_Lauderdale_, Inquiry, 93.) The British nation paid for the cotton
it needed for their own consumption in 1845 over £19,500,000; in
1847 only £9,500,000. (_Banfield_, Organization of Industry, 162.)
627 Hence _J. B. Say_ has said that the disposable wealth of a people is
like a pyramid, with the scale of prices of the various commodities
inscribed on its side. The higher a commodity is in this scale of
prices, the smaller is the corresponding section of the pyramid.
Compare _Sir W. Temple_, Essay on the Origin and Nature of
Government, Works I, 23 ff.
628 This fact, in connection with the preceding, explains the well known
puzzle, why the remnant of a piece of goods is comparatively cheaper
than the whole piece, while a small share in the public debt is
dearer than a large one. (_Lauderdale_, ch. 1.)
629 Rhode Island was, it is said, bought from the Indians in 1638 for a
pair of spectacles. (_B. Franklin_, Political ... Pieces, 1707.)
According to _Chalmers_, it was bought for 50 threads of coral, 12
hatchets and 12 overcoats. (Political Annals of the U. States.)
Compare _Ebeling_, II, 108. Holland cloths and opium were exchanged
for a long time at Sumatra for gold dust worth ten times their
value. (_Saalfeld_, Geschichte des holl. Kolonialwesens, I, 260.)
The Hudson Bay Company realized, it is said, at the beginning of
this century, in trading with the Indians, a profit of 2000 per
cent. (_Anderson_, Origin of Commerce, a. 1751.) When Altai was
discovered, the natives gave as many sable-skins for a Russian
kettle or boiler as could be crammed into it. With 10 rubles in iron
it was an easy easy matter to gain 500-660 rubles. _Storch_, Gemälde
des russ., R., II, 16; _K. Ritter_, Erdkunde, II, 557. Similar cases
among the Germans: _Tacit._, Germ., 5.
630 A seller not actually engaged in the business of selling for a
livelihood, and who has not purchased or produced with the intention
of selling, is apt to consider instead of this the market price,
towards the determination of which those actually engaged in trade
have coöperated. Somewhat inaccurately, the amount of the cost of
production is called by _Adam Smith_ and _Ricardo_, “natural price,”
by _J. B. Say_, _prix naturel_, also _prix originaire_, because the
commodity at its first entrance into the world cost so much.
_Sismondi_ and _Storch_ call it _prix nécessaire_, and _Lotz,
Kostenpreis. P. Cantillon_, Nature de Commerce, 33 ff., understands
by the _prix intrinsique_ of a commodity, the amount of land and
labor, taking the quality of both also into consideration, necessary
to its production.
631 The cheapest cotton thread is numbered from 60 to 80. The coarser is
dearer on account of the quantity of raw material in it, and the
finer because of the greater amount of labor in it. (_Babbage._) For
similar reasons, the Venetian chains cost per _braccio_, No. 0, the
finest, 60 francs; No. 1, 40 francs; Nos. 2 and 3, 20 francs; No.
24, coarsest, 60 francs. (_Rau._)
632 If a person engaged in production has himself furnished certain of
the elements of production; if, for instance, he has worked with his
own hands, employed his own capital etc., he is wont to charge as
much for these as they would be worth, if he hired himself out or
loaned his capital.
633 The greater number of political economists consider the cost of
production only from the standpoint of the individual engaged in
production. Thus _Darjes_, Erste Gründe, 218 seq.; _Ad. Smith_,
Wealth of Nations, I, ch. 6. _J. B. Say_ calls even production an
exchange in which the productive services of natural forces, of
labor and of capital are parted with in order to obtain products.
The estimate put upon the value of these services is the cost of
production. For some interesting examples as to how the cost of
production, in this sense, is calculated, see _Hermann_, I ed., 136
ff.
_ 634 Jacob_ translated by _Say_, 1807, II, 450. _Hufeland_, N.
Grundelgung, I, 309.
635 Compare _L. Lauderdale_, Inquiry, 124, against the Physiocrates.
(_Riedel_, Nat.-Oekonomie, 1838, I, 68.) A country which possesses
advantages over other countries, in respect to the cost of
production of a commodity, can offer it in the market cheapest.
Where, for instance, with the employment of the same amount of
capital, a specially large quantity of wheat can be produced,
whether it be because of the unusual fertility of the soil, or
because of the _extensiveness_ of agriculture (farming over a large
area), wheat will, the demand being the same, be specially cheap,
whatever the proportion of the three branches of income may have
been. If relatively a great number of workmen have been employed in
its cultivation, each will receive smaller wages, and _vice versa_.
636 Copper and steel engraving affords an example of the different kinds
of wear of fixed capital, and the influence it may have on prices.
_Canard_, Principes, ch. IV, considers that one of the most
important elements in the cost of production is the length of time
that capital must “stagnate” for the sake of production.
637 On this risk depends, for instance, the high price of vanilla
(_Humboldt_, N. Espagne, IV, 10,), sparkling wines and articles of
fashion.
_ 638 Mangoldt_, Lehre vom Unternehmergewinn, 1855, 81 ff. Compare _v.
Thünen_, Der isolirte Staat, II, 1, 80 ff.
639 Wool and mutton, brandy and fattened cattle, calves and milk, honey
and wax, gas and coke, hens and eggs etc.
_ 640 Adam Smith_ himself remarked that all artificial lowering of the
price of skins or wool must necessarily raise the price of the meat,
and _vice versa_. (Wealth of Nations, I, ch. 11, 3.) For a very
elaborate theory on this subject, see _J. S. Mill_, Principles, III,
ch. 16, § 1. Thus Australian wool did not rise as much in price as
the production of gold there might have led us to suppose, for the
reason that mutton rose to an exceedingly high price.
641 It is an important and correct remark of _Carey’s_, that the price
of a commodity depends much more on the cost of producing its like
than on its own cost of production, which already belongs to the
past.
642 Compare _J. S. Mill_, III, ch. 3, § 1. A much too high price, caused
by speculation, or a much too low one, by depreciation, is regularly
followed by an ebb or flow just as much too great. (_Tooke_, History
of Prices, III, 55.) And _Law_, Trade and Money, 41, remarks that
the price of a commodity always tends to coincide with the “first
cost.” This fact _Adam Smith_ expresses by saying that the cost of
production is the center about which the market price always
gravitates. (I, ch. 7.) But here there is still the error lurking,
that the producer’s profit is a part of the cost of production.
Compare _Malthus_, Definitions, ch. 6.
643 The English view, one very characteristic of the people, is that the
equilibrium of prices depends on this, that all commodities should
have a value equal to that of the labor they have cost. (Compare
_Aristot._, Eth. Nicom., V, 5.) The same doctrine is to be found in
its germinal state in _Hobbes_, Leviathan, 24, 1651, and _Rice
Vaughan_, Discourse of Coin and Coinage, 1675. More exhaustively in
_Petty_, Treatise of Taxes and Contributions, 1679, 24, 31, 67.
(Compare _Locke_, Civil government, II, § 40 ff.; _B. Franklin_,
Inquiry into the Nature and Necessity of a paper Currency, 1729;
Works, ed. Sparks, vol. II.) _Adam Smith_ admits this to be true
only of the first beginnings of society, before the origin of
property in land and in capital. (Wealth of Nations, I, ch. 5.) Most
largely developed in _Ricardo_, Principles, ch. I, 4, 30. _Marx_,
Zur Kritik der polit. Œkonomie, 1859, 6, endeavors to improve on
this by calling all values in exchange “a determinate quantity of
thickly curdled working-time,” meaning by work an averaged
_qualitätslose_, social work of production. _Per contra_, compare
_Hufeland_, N. Grundlegung, I, 134, 156 ff.; and _Malthus_,
Principles, ch. 2, secs. 2, 3, who claims very earnestly that price
is not determined by the cost of production, but by the relation
existing between demand and supply, the cost of production
influencing it only to the extent that it influences this relation.
He calls attention to the poor-rates by which the cost of production
of labor is raised, but its wages decreased; also to the case of
bank notes etc. (_Tooke_, History of Prices, V, 49 ff; _J. S. Mill_,
Principles, III, ch. 16, 2.) For a very marked case of reaction
against Adam Smith and Ricardo, see _Macleod_, Elements, ch. 2, who,
however, is much too one-sided in considering only the amount
necessary to the purchaser, and his means. Even _Condillac_ had
said: _une chose n’a pas une valeur, parcequ’elle coûte, mais elle
coûte (du travail ou de l’argent), parcequ’elle a une valeur_.
(Commerce et Gouvernement, 16.) _Ricardo’s_ doctrine is more tenable
than appears at first blush. We need only to interline his theory of
rent, admit that capital is accumulated labor, subtract all objects
constituting a natural monopoly, and not forget that the intrinsic
value of labor is one of the causes of the difference of price of
different sorts of labor. _Ricardo_ does justice to value in use
even _en passant_. A strange effort by _McCulloch_ to make labor the
cause of the non-use of capital. (Principles, III, ch. 6, 2.)
_McCulloch_ has not unfrequently exaggerated the half-truths of his
doctrines to such an extent as to produce unwittingly a _reductio ad
absurdum_. According to _Torrens_, before any separation of
capitalists from workmen, price depends entirely on the work done,
and afterwards on the capital expended, inasmuch as wages, rent etc.
are covered by the capital of the person who engages in the
enterprise. (Production of Wealth, ch. 1.)
_ 644 Ce que l’ on appelle chereté, c’est l’ unique remède à la chereté._
(_Dupont de Nemours._) Tenders of division in common, in England,
increase and decrease according to the higher or lower price of corn
during the preceding year. (_Tooke_, Thoughts and Details, III, 105
ff.) The cotton famine after 1861 increased the price of flax-yarn
in a short time fifty per cent., although the raw material of flax
did not rise in price, but only because care was not taken to
increase the number of flax-spinners. (_Ausland_, I, 1865.) However,
there were in 1864, 490,000 flax-machine spindles in course of
erection. (Report of the Chemnitz Chamber of Commerce, 1864, 101.)
645 By the discovery, for instance, of new natural forces, the invention
of machines, improved division of labor, improved roads etc. In
France, in consequence of technic improvement, a quintal of
saltpeter fell from 100 to 9 francs. See a similar instance in
_Chaptal_, De l’ Industrie française, II, 64, 70, 434.
_ 646 Hermann_, Staatsw. Untersuchungen, 212.
647 The highest but unattainable ideal of such progress would consist in
this, that all products should be obtained without cost. If this
ideal were attainable, every one would be infinitely rich and all
wealth would be free, like the air and the sunshine. (Compare _J. B.
Say_, Traité, II, 2.) The complete victory of mankind over nature
would consist in that all men should be free and all the forces of
nature the slaves of man. (_Smitthenner._) _Carey_ intimates
something similar when he says that, with the advance of
civilization the tendency is for men to become more and more
valuable and commodities to have less of “value.”
648 We might here speak of an aristocratic and democratic principle of
the determination of prices. The greater utility of the latter is
advocated in the Discourse of Trade, Coyn and Credit, London, 1697.
_Bacon_ has a good word to say for the maxim: “Light gains make
heavy purses; for light gains come thick, whereas great come now and
then.” Similarly, _Gurnay_ in _Cliquot de Blervache_, Considérations
sur le Commerce etc., 1758, 48, 54. As to how Morrison, the
celebrated merchant, became rich by adhering to the principles: “to
sell cheap as well as to buy cheap,” and “always tell the truth,”
see _Chadwick_, in the Statistical Journal, 1862, 503. Compare the
related opinion of _Adam Smith’s_ continuator in an ethical
direction, _Garve_, zu Cicero’s Pflichten, III, 100. The contrary
principle, the cunning of the Judæans, according to _Strabo_, XVII,
800, was followed by the Dutch East India Company, when it, in 1652,
caused the greater number of the vegetable roots on the Moluccas to
be destroyed. _Saalfeld_, Geschichte des holländischen
Kolonialwesens, I, 272. Also, when great quantities of roots were
destroyed by burning in the East Indies. (_Huysers_ Beschryving der
Oostindischen Etablissmenten, 1789, 22.) For a clever argument
against such practice, see _de la Court_, Anwysing der heilsame
Gronden, 1663. The principle similar to that of the patent,
mentioned in the text, works at the same time democratically and
aristocratically, both words understood in their best sense.
649 This is true, first of all, in those industries which are intimately
connected with one another, or of those which are carried on with
scarcely any fixed capital; also in lower stages of civilization,
where the lights and shades caused by a highly developed division of
labor are not very intense. On the numerous difficulties overlooked
by Ricardo in every other case, see _Sismondi_, N. P., II, ch. 2.
The workman thereby loses his former skill, that is his principal
capital, and can certainly not wait until he has acquired other and
different skill.
650 When a lowering of prices is expected, demand is less than
consumption: “postponed demand;” whereas, an expectation that the
price will rise, produces “anticipated demand.” _Tooke_, History of
Prices, II, 155.
651 Thus, for instance, if the workmen were exposed to starvation, or
were likely to take their departure; if great stores of raw material
were in danger of spoiling; if fixed capital of great value were
engaged in one industry and could not be easily transferred to
another. The first and third causes are frequently met with in
mining, and give rise to the mode of carrying on the operation known
as _Zubusgruben_, that is, a species of working mines upon shares.
In England, after the spring of 1862, cotton yarn was not so much
dearer than raw cotton, that the loss caused by the decline could be
made up. (_Ausland_, 24 Sept., 1862.)
652 Besides, in the time immediately following, the price lowered by too
great a supply, may produce a species of desperation among
producers, which would lead them, in the hope of covering their
losses, to increase the supply still more, until many of them were
ruined. Generally, when a time of high prices is followed by a time
of low prices, we find an interval during which sellers endeavor to
defend themselves against the decline, and during which, as a
consequence, scarcely any business is transacted, while high prices
are nominally continued. And so _vice versa_. _Tooke_, History of
Prices, II, 62.
653 Thus, for instance, when the change of fashion brought about the
disuse of long periwigs in every-day life, their price did not cease
to fall until they had entirely disappeared. But, if a person wishes
to have one made to-day for a masquerade, for the stage, etc., he
would pay as much for it as its former price. On the other hand, the
price of whalebone has never been again as high as it was in the
time when hooped petticoats were worn.
654 The great plague in the time of Edward III. caused during the first
year, on account of the decreased consumption, an extraordinary
cheapness of provisions. In the following year, however, they became
alarmingly dear, because there were few producers, especially among
the humble classes. A quarter of wheat cost in 1348, 4s. 2d.; in
1349, 5s. 5d.; in 1350, 8s. 3d.; in 1351, 10s. 2d.; while in 1346
and 1347, its average price was 6s. 8-7/8d. _Rogers_, History of
Agriculture and Prices, I, 232.
655 As for instance when new taxes or excises are imposed. Generally
when the cost of production has largely increased, purchasers do not
wait until a decrease of competition among sellers compels them to
exact higher prices, but meet them half way, especially when many
greatly desire the commodity, and the increase of the cost is only
small. (_Rau_, Handbuch, I, § 163.)
656 Under this rule fall, according to § 33, most products of industry
properly so called. “If we lose a market for a year, we generally
lose it for all time,” said an experienced manufacturer before the
parliamentary hand-loom weavers’ committee, 1840-42. Of course the
cost of transportation as far as the market must be estimated as
part of the cost of production. In consequence of this, as well as
of the difference of taxation duties etc., the superiority of one
producer to another may be more than overcome. In the case of
colonial commodities, which go into the interior of a country from
different sea-ports, the territory supplied from each port is
determined for the most part by these data. Thus, in Switzerland,
for instance, we find the districts supplied by Havre, Genoa and
Rotterdam; in Austria, the districts supplied by Hamburg and Triest
contiguous, but the boundary line subject to many changes. (_Rau_,
Lehrbuch, I, § 164.) It must be understood that we do not here speak
of abnormal expenses made by producers individually, whether in
consequence of want of skill or because of accident.
657 This is true especially of agricultural production, in which, as a
rule, beside the most fertile and most advantageously situated land,
the worse must be used. What _Whately_ calls “surplus-profit”
appears here in the form of rent, whereas, in other cases, it takes
the shape of unusually high wages, or profit on capital. This is
very beautifully and systematically developed by _Schäffle_, N. Œk.,
II; Aufl., 192 ff. According to _Senior_, Outlines, 15, the
price-relation of two commodities to each other depends not on the
quantities of them which come to market, but on the relative power
of the difficulties which stand in the way of an increase in these
quantities. If the same producers can pursue the cheaper mode of
production which does not suffice to supply the market, as well as
the dearer, we have, generally, a price which is the mean between
the two costs of production. The same is true in the case of
“smuggled” goods which ought to have paid duty. (_Hermann_, loc.
cit., 83, seq.)
658 To this section belong the secrets of production which may be taken
advantage of either _ad libitum_ or within certain limits. In
agriculture, advantages of production can seldom remain secret.
Compare, however, the case mentioned in _Garnier’s_ translation of
_Adam Smith_, V, 119, and that of the orchards which yielded £1,000
yearly for every 32 acres, and which were a result of the recent
introduction of the culture of the cherry in Kent, in the reign of
Henry VIII. (_Anderson_, Origin of Commerce, a, 1540.) There is
therefore, a certain odium attached by agricultural producers to
keeping secret a means of agricultural improvement.
659 Compare _Boisguillebert_, Traité des Grains, II, ch. 2. _John Stuart
Mill_ speaks of an equation: the price of a commodity in a given
market is always high enough to produce a demand corresponding to
the present supply, or to an expected supply. The price of such
commodities only which may not be increased to any desirable extent
depends on supply and demand. In the case of all others, on the
other hand, demand and supply depend on the price, and this on the
cost of production. Supply and demand always tend to an equilibrium
which is never really attained where the price is high enough to
cover the cost of production (?). (Principles, III, ch. 2, § 4; ch.
3, § 2.) _Schäffle’s_ theory of prices is topped by the proposition
that all competing sellers and all competing buyers, after an
economic fashion, do not wish to sell below individual cost-value,
nor to rise above individual value in use, in purchasing. Hence, in
a throng of competition of supply the costliest productions step out
of the field of competition in a descending cost-value series; and
in a throng of competition of demand, the most wearied cravings in
an ascending value-in-use series; until the quantities offered in
supply and asked for cover each other without loss, and have placed
each other in quantitative equilibrium. (N. Œk. Aufl., I, 188 ff.;
compare 173, 185.) It is, however, to say the least, an instance of
baseless solicitude, when _Wade_, History of the middle and working
Classes, 214, says that one unemployed workman might depress the
aggregate wages of labor, almost _ad infinitum_.
_ 660 Hufeland_, N. Grundlegung, I, 78; _Ricardo_, Principles, ch. 31.
_ 661 Dunoyer_, Liberté du Travail, VIII, ch. 4; _Rau_, Lehrbuch, I, §
158.
662 For a good classification of monopolies, see _Senior_, Outlines, 103
ff. _Menger_, Grundsätze, I, 195, shows that no monopolist can
arbitrarily determine the extent of the market for his
monopoly-product when the price is fixed, nor when the extent of the
market is known, the height of the price. Moreover, the price may
remain longer above than under the cost of production, for the
reason that it is easier to abandon a business than to begin one,
and that the fear of loss is more frequently an incentive to action
than the hope of gain. Hence the price of corn, when everything else
is very dear, is more apt to vary from the average price, than in
times when everything is very cheap. For instance, the Munich prices
from 1750 to 1800 show that its highest price was 147 per cent.
above, and its lowest 47 per cent. below the average of twenty
years. (_Rau_, Lehrbuch, § 162, 182.)
663 Chance plays a great part here. Thus, Murillo’s Conception which
Marshal Soult had offered several times for 150,000 francs, but in
vain, was sold in May, 1852, for 586,000 francs. Paul Potter’s young
bull at the Hague, which cost 625 florins in 1748, was valued before
the middle of the nineteenth century at 200,000 florins.
(_Dethmar._)
664 The purchaser resolves to do so because it would, in all
probability, cost him more to go to India or Brazil in search of
precious stones. Besides after the working of the Brazilian mines in
1728, and again after the French Revolution, the price of diamonds
fell greatly; in the one case, from an increase of the supply, in
the other from a decrease of the demand. (_Ritter_, VI, 355, 365.)
665 Thus, the Champagne and Johannisberg grapes, when transplanted to
the Crimea, lost most of their native taste. On China’s practical
monopoly of tea culture, and Ceylon’s, especially in its
southwestern part, of cinnamon, at least so far as the peculiar
aroma is concerned, compare _Ritter_, Erdkunde, VI, 123 ff. The
small deer of Angora no sooner leave the little district of Asia
Minor to which they belong, than they are in danger of degenerating.
(Revue des deux Mondes, May 15, 1850.) Indian birds-nests cost no
more than 11 per cent. to gather, dry etc., of the market price.
(_Crawfurd_, East India Archipelago, III, 432 ff.; _Hogendorp_, Sur
l’Ile de Java, 201.)
666 Poor material for fuel, poor day-laborer work—dwellings, medical
attendance. (_Menger_, Grundsätze, I, 116.)
667 Thus sea fish, oysters etc. were formerly much cheaper during the
summer than during the winter, at Ostend and Scheveningen, because
during winter they could be sent to a distance. At Billingsgate
market, in the mackerel season, fish cost per hundred 48 to 50
shillings at 5 o’clock in the morning, 36 shillings at 10 o’clock,
and 24 shillings in the afternoon. (_H. Schulze_, Nat-Œkonomische
Bilder aus England, 1853, 241.) In the Rhine country, the price of
fruit does not vary so much as in Saxony, because it is customary
there to employ the surplus in the manufacture of cider, of
preserves etc., thus making it transportable and durable.
Frequently, after a very abundant crop of grapes or olives,
under-prices prevail, sometimes on account of a want of vessels,
cellar-room etc.; they must, therefore, be sold rapidly.
668 Compare _Adam Smith_, Wealth of Nations, I, ch. 7.; _Tooke_, History
of Prices, I, 97. Furs vary very much in price, sometimes 300 per
cent. in a year, because, in the case of this entirely natural
product, every thing depends on the stores of them, on the
temperature etc. (_McCulloch_, Commerc. Dict., s.v.) On the other
hand, the price of coffee usually varies only after periods of a
number of years, because new plantations produce only after a lapse
of years. (_Ibid._) Pigs vary much more than cattle in price,
because the former may be made ready for the slaughter house in
one-third of the time required for the latter. (_Thaer_, Rationelle
Landwirthschaft, IV, 374.)
669 Thus the rent of farms, where a numerous proletarian population will
live exclusively from agriculture, depends on scarcely anything but
the number of people and the extent of the land. (_J. S. Mill_,
Principles, III, ch. 2.) In retail trade, where personal want comes
in question, prices are much more subject to be modified by small
circumstances, than in wholesale trade, where both parties are only
intent on “doing business.” (_J. S. Mill_, III, ch. 1, § 5. _Tooke_,
II, 72 f.)
670 Hucksters, butchers, dealers in corn, inn-keepers etc. A remarkable
case where Parisian dealers in hare-skins attempted to ruin the new
fashion in silk hats by distributing a great number of them among
the rabble, at mock-prices. (_Hermann_, 1st ed., 91.) The author
witnessed a similar but unsuccessful attempt in Berlin in 1838-39,
by the tailors against the so-called Macintosh coat. On the
conspiracy of the English dealers in second-hand goods against
auctions, see Athæneum, Dec. 5, 1863. It is one of _McCulloch’s_
characteristic exaggerations, that he says that conspiracies to
raise the price of a commodity by artificial means, are broken just
as soon as they begin to obtain their object by the interest of the
individual members to profit by the advanced prices. (Edition of
_Adam Smith_, Edinb., 1863, p. 59.)
_ 671 J. S. Mill_, Principles, II, ch. 4.
672 Monopolies universally prohibited: L. un. C. De Monopol. (IV, 59.)
Police-order of the Empire, 1548, tit. 18.
673 Privileges which the purchaser voluntarily accords to the seller are
wont to be useful to both parties. (_Hermann_, loc. cit. 155, 158.)
674 Besides, guilds, castes, corporations etc. may, when the vent
diminishes, produce under-prices as readily as they may
monopoly-prices when the vent is very good. (See _Adam Smith_,
Wealth of Nations, I, ch. 7.)
675 Thus, for instance, the traveler who wanted to cross a stream, would
find himself delivered over to the tender mercies of the ferry-man,
without protection of any kind against his demands. But repeated
impositions in the matter of prices would have for effect to bring a
point into disrepute as a place of crossing, and would induce the
public to seek another. Similarly in the case of hackney-coachmen
and carriers in large cities, and in that of innkeepers, at hotels
and postal termini etc.
676 Fixed prices by governmental authority were soonest attempted after
bad harvests, but, indeed, with a strange ignorance of the natural
grounds of the increase in price of bread-stuffs. Thus in the time
of Charlemagne. (Capitul. a, 805; _Baluz_, I, 423.) Similarly in the
case of other articles of universal necessity, when oppressively but
necessarily dear. (See § 175.) During the last centuries of the
middle ages, with their multitude of actual monopolies, and at the
beginning of the modern era, fixed prices became more and more
general. The earliest instance in the history of England of a fixed
price for bread was in 1202 (_v. Raumer_, Hohenstaufen, V, 372), and
in 1266, 51 Henry III. The earliest in Prussia was in 1393.
(_Voigt_, Geschichte von Preussen, II, 659.) Many instances of fixed
prices in the Rhine provinces of Austria in 1530. In _Mylius_, Corp.
Const. March, V, 2, 587 ff., we find an ordinance of 1653 fixing
prices in Berlin, and including 72 industries. There is a very
complicated system of fixed prices in the police ordinance of the
electorate of Saxony of 1612, and in the decree concerning the coin
of 1822. As to how, in Saxony in 1578, an attempt was made to
ascertain the cost of the production of shoes by shoemakers, see
_Joh. Falke_, Gesch. des Kurf. August in volkswirthschaft.
Beziehung, 1868, 252. There was an enormous extension of
governmental fixing of prices under Philip II.; one of the principal
causes why Castile was so far behind Aragon economically.
(_Townsend_, Journey through Spain, II, 221.) Sometimes these
measures were adopted to prevent distress-prices; as in Hochheim, in
favor of the vintners. (_Becher_, Polit. Discurs, II, 1652.) The
predilection especially of German authorities for the fixing of
prices by governmental power, in the sixteenth and seventeenth
centuries is very remarkable. Thus _Luther_, vom Kaufhandel und
Wucher, 1524; _Calvin_, Leben Calvins, by _Henry_, II, Beilage, 3,
23; _Bornitz_, De Rerum Sufficientia, 1625, 246; _Seckendorff_,
Teutscher Fürstenstaat, 5th ed., 1776, 210; _Becher_, II, 1823 ff.;
_Horneck_, Oesterrich über Alles, wenn es will, 1684, 123; _Leibniz
ed. Dutens_, VI, I, 250; _Thomasius_, Göttl. Rechtsgelahrtheit,
1709, 209; even _Frederick_ the Great, _Mylius_, N. Corp. Const.
March, I, 190. Similarly, _Mariana_, De Rege et Regis Institutione,
III, c. 9. Compare, however, III, c. 8, and _Bacon_, Serm., 15;
Historia Henrici, 1037, 1040. On the other hand, _Child_, 1690, and
_North_, 1691, reprove all such measures. _Roscher_, Zur Geschichte
der englischen Volkswirthschaftslehre, 65, 90 f. Earlier yet,
_Salmasius_, who would allow the free _fori ratio_ to govern. (De
Usuris, 1638, 583.) For a very rigorous price-tariff in the old
Indian laws, by which, _inter alia_, the price of provisions was to
be fixed anew every fourteen days, see _Menu_, Laws, VIII, ch. 401
ff.
677 Where trade is free, the _filet de boeuf_, for instance, is worth
four times as much as the flesh of the ox’s neck or throat; but
prices fixed by a government can scarcely take cognizance of the
difference. How easily might not a fixed price for beer, for
instance, be evaded by diluting that beverage with water, or fixed
prices for inn-keepers by dealing out portions smaller in quantity
or of an inferior quality. Moreover, as early a writer as _De la
Court_, Polit. Discoursen, 1662, c. 4, remarks that the
establishment of fixed prices by governmental authority raises the
average price of all commodities rather than lowers it, for the
reason that the few who are sellers by trade can do more to
influence the authorities than the many buyers, whose interests are
divided among numberless different commodities.
_ 678 Schäffle_, Nat.-Œkonomie, II, 384 f.
_ 679 Banfield_, Organization of Industry, 120. “Where the economic life
of a people is still undeveloped, and the production of one
enterprise is not from the first based on the estimated consumption
of another, the circulation of goods brings with it great profits
and great losses; whereas, profits and losses grow smaller, but at
the same time more uniform and regular, in proportion as the
circulation of goods increases in rapidity and regularity.”
(_Stein_, Lehrbuch, 212.)