The opinion that a concurrent circulation is not possible has led

several of the leading nations of Europe (and, at the time of writing

such is still the system of the United States) to adopt the plan of a

permanently false rating of gold and silver, so as to use silver as a

subsidiary coinage. Silver is permanently overrated, so that it obtains

currency above its bullion value. If the civilized nations want to use

silver for money, so that the total amount of metallic money in the

Western world shall be greater than the amount of gold, and if they

are not satisfied with the use of it as subsidiary, then there is only

one way left, and that is for some nations to use gold and some to use

silver. This was the solution of the bimetallic difficulty which China

was forced to adopt a thousand years ago. Some provinces used iron and

some copper. The question then arises as to who will take silver. This

brings me to the last point of which I have to speak.

I have discussed my subject as if gold and silver stood on the same

level of desirability for money, and as if there were no choice of

convenience between them. Such is not the case in fact. It will be

observed that gold and silver never have been used together. Gold has

generally been subsidiary, being employed for large transactions. With

the advance of prices and the increase in variety of commodities,

as well as in the magnitude of transactions, nations have passed

from copper money to silver and from silver to gold. This advance is

dictated by convenience. Silver is no longer as convenient a money for

civilized industrial and commercial nations as gold. We therefore see

them gradually abandoning silver, and we saw the Latin Union set up a

bar against silver so soon as the operation of the double legal tender

threatened to take away gold and give it silver. Whether this movement

from silver to gold can be accomplished without financial convulsions

I am not prepared to say, especially in view of the extent to which

the nations have depreciated gold by paper issues, but I regard the

movement as one which must inevitably go forward. The nations which

step into the movement first will lose least on the silver they have

to sell. The nations which use silver until the last will lose most

upon it, because they will find no one to take it off their hands. If

we now abandon the gold standard and buy the cast-off silver of the

nations which have been using it and are now anxious to get rid of

it, we voluntarily subject ourselves to that loss, which we are in no

respect called upon to share. The Dutch at New York kept up the use

of wampum longer than the English in New England. When the Yankees

were trying to get rid of it, they carried it to New York, adding some

which they manufactured for the purpose, and they carried the goods

of the Dutchmen away. The latter then found that they held a currency

which they could only get rid of at great loss and delay to the Indians

north and west of them. The Yankees thus early earned a reputation

for smartness. The measure now proposed is a complete parallel, only

that now this nation proposes to take the rôle of the Dutch. We shall

have to give our capital for silver, and after we have suffered from

years of experience with a tool of exchange inferior to that which

our neighbors are using, we shall have to get rid of it and buy the

best. Then we shall incur the loss--to all those who have anything--of

the difference between the capital we gave and that which we can get

for the silver. The dreams of getting silver and keeping gold too,

so as to have a concurrent circulation, are all vain. At the rating

proposed there is no difference of opinion on this point amongst any

persons at all qualified to give an opinion. The real significance of

the propositions before the country is to make us one of the nations

to take silver in the distribution I have described. The notion of

a coinage union is impracticable. It would be easier to get up an

international union to do away with war. England is perfectly satisfied

with her money. She appreciates the peril of monetary experiments

and will make none. Germany, Sweden, Finland, Denmark, and Holland

have just changed from silver to gold, and will not enter on any new

changes for a long period, if ever. The coinage union is therefore out

of the question. The issue before us is simply whether we, being a

gold nation, will, under these circumstances, abandon gold and take up

silver. No doubt the nations which want gold would be very glad to have

us do it. We should render them a great service; we should, however, do

ourselves great harm, as much so as if we should buy a lot of cast-off

machinery from them. They are waiting to see whether we are ignorant

and foolish enough to put ourselves in this position; and when they

have seen, we shall hear no more of the coinage union.

I have now presented the views to which my study of this question

has led me. It will be perceived that I direct my attack against

the postulate of all the bimetallic theories. I have carefully

discriminated between the alternate standard and bimetallism. I have

said little about the former. It is very much a matter of opinion

whether it would work or not. I do not believe that it would, under

a coinage union, but I should not feel forced to take strong ground

against any one who held the contrary opinion. My subject has been

a concurrent circulation of gold and silver, and I have tried to

controvert the notion that any such thing is possible, with or without

a coinage union, because that notion contradicts the first great law

of economic science. If that notion is true, then there is no science

of political economy at all; there are no laws to be found out, a

professional economist has nothing to teach, and he might better try

to find some useful occupation. If that notion is true, we have no

ground on which to criticize the Congressmen who are trying to pass the

silver bill. We cannot predict any consequences or draw any inferences

from past experience. If legislation can control value for definite

results, then the whole matter is purely empirical. In that case, the

Congressional experiment may turn out well for all the grounds we have

to assert the contrary; its success would only be questionable, not

impossible; if it failed it would not be because its supporters had

attempted the impossible, but because they had not used sufficient

means. They could go on to try the experiment again and again in other

forms and with other means, and they would indeed be doing right to

proceed with their experiments, like the old alchemists, in the hope

of hitting it at last. No economist would have any ground upon which

to step in and define the limits of the possible, or to prescribe

the conditions of success, or to set forth the methods which must be

pursued--if he could not appeal with confidence to the laws of his

science as something to which legislature as well as individuals must

bend. Therefore one who holds the views I have expressed in regard to

economic forces, laws, and phenomena is compelled, as well by his faith

in his science as by the public interests now at stake in the question,

to maintain that a concurrent circulation of gold and silver, either

with or without a coinage union, is impossible.

THE INFLUENCE OF COMMERCIAL CRISES ON OPINIONS ABOUT ECONOMIC DOCTRINES

[1879]

Any one who follows the current literature about economic subjects

will perceive that it is so full of contradictions as to create a

doubt whether there are any economic laws, or whether, if there are

any, we know anything about them. No body of men ever succeeded in

molding the opinions of others by wrangling with each other, and that

is the present attitude in which the economists present themselves

before the public. Like other people who engage in wrangling, the

economists have also allowed their method to degenerate from argument

to abuse, contempt, and sneering disparagement of each other. The

more superficial and self-sufficient the opinions and behavior of the

disputants, the more absolutely they abandon sober arguments and devote

themselves to the method I have described. As I have little taste for

this kind of discussion and believe that it only degrades the science

of which I am a student, I have taken no part in it. In answer to your

invitation, now, what I propose to do is to call your attention to some

features of the economic situation of civilized nations at the present

time with a view to establish two points:

1. To explain the vacillation and feebleness of opinions about economic

doctrine which mark the present time, and

2. To show the necessity, just at this time, of calm and sober

apprehension of sound doctrine in political economy.

At the outset let me ask you to notice the effects which have been

produced during the last century by the developments of science and

of the industrial arts. Formerly, industry was pursued on a small

scale, with little or no organization. Markets were limited to small

districts, and commerce was confined to raw materials and colonial

products. Producer and consumer met face to face. The conditions of

the market were open to personal inspection. The relations of supply

and demand were matters of personal experience. Production was carried

on for orders only in many branches of industry, so that supply

and demand were fitted to one another, as we may say, physically.

Disproportionate production was, therefore, prevented and the necessity

of redistributing productive effort was made plain by the most direct

personal experience. Under such a state of things, much time must

elapse between the formation of a wish and its realization.

Within a century very many and various forces have been at work to

produce an entire change in this system of industry. The invention

of the steam engine and of the machines used in the textile fabrics

produced the factory system, with a high organization of industry,

concentrated at certain centers. The opening of canals and the

improvement of highways made possible the commerce by which the

products were distributed. The cheapening of printing and the

multiplication of means of advertising widened the market by

concentrating the demand which was widely dispersed in place, until

now the market is the civilized world. The applications of steam power

to roads and ships only extended further the same development, and the

telegraph has only cheapened and accelerated the means of communicating

information to the same end.

What have been the effects on industry?

1. The whole industry and commerce of the world have been built up into

a great system in which organization has become essential and in which

it has been carried forward and is being carried forward every day to

new developments. Industry has been growing more and more impersonal

as far as the parties to it are concerned. Our wants are satisfied

instantaneously and regularly by the coöperation of thousands of people

all over the world whom we have never seen or heard of; and we earn

our living daily by contributing to satisfy the wants of thousands

scattered all over the world, of whom we know nothing personally. In

the place of actual contact and acquaintance with the persons who are

parties to the transactions, we now depend upon the regularity, under

the conditions of earthly life, of human wants and human efforts. The

system of industry is built upon the constancy of certain conditions of

human existence, upon the certainty of the economic forces which thence

arise, and upon the fact that those forces act with perfect regularity

under changeless laws. If we but reflect a moment, we shall see that

modern industry and commerce could not go on for a day if we were not

dealing here with forces and laws which may properly be called natural

because they come into action when the conditions are fulfilled,

because the conditions cannot but exist if there is a society of human

beings collected anywhere on earth, and because, when the forces come

into action, they work themselves out, according to their laws, without

possible escape from their effects. We can divert the forces from one

course to another; we can change their form; we can make them expend

themselves upon one person or interest instead of upon another. We do

this all the time, by bad legislation, by prejudice, habit, fashion,

erroneous notions of equity, happiness, the highest good, and so on;

but we never destroy an economic force any more than we destroy a

physical force.

2. Of course it follows that success in the production of wealth under

this modern system depends primarily on the correctness with which

men learn the character of economic forces and of the laws under

which those forces act. This is the field of the science of political

economy, and it is the reason why it is a science. It investigates

the laws of forces which are natural, not arbitrary, artificial, or

conventional. Some communities have developed a great hatred for

persons who held different religious opinions from themselves. Such a

feeling would be a great social force, but it would be arbitrary and

artificial. Many communities have held that all labor, not mental, was

slavish and degrading. This notion, too, was conventional, but it was

a great social force where it existed. Such notions, either past or

present, are worth studying for historical interest and instruction,

but they do not afford the basis for a science whose object is to find

out what is true in regard to the relations of man to the world in

which he lives. The study of them throws a valuable sidelight on the

true relations of human life, just as the study of error always throws

a sidelight upon the truth, but they have no similarity to the law

that men want the maximum of satisfaction for the minimum of effort,

or to the law of the diminishing return from land, or to the law of

population, or to the law of supply and demand. Nothing can be gained,

therefore, by mixing up history and science, valuable as one is to the

other. If men try to carry on any operation without an intelligent

theory of the forces with which they are dealing, they inevitably

become the victims of the operation, not its masters. Hence they always

do try to form some theory of the forces in question and to plan the

means to the end accordingly. The forces of nature go on and are true

only to themselves. They never swerve out of pity for innocent error

or well-intentioned mistakes. This is as true of economic forces as of

any others. What is meant by a good or a bad investment, except that

one is based on a correct judgment of forces and the other on incorrect

judgment? How would sagacity, care, good judgment, and prudence meet

their reward if the economic forces swerved out of pity for error? We

know that there is no such thing in the order of nature.

I repeat, then, that the modern industrial and commercial system,

dealing as it does with vast movements which no one mind can follow

or compass in their ramifications and which are kept in harmony by

natural laws, demands steadily advancing, clear, and precise knowledge

of economic laws; that this knowledge must banish prejudices and

traditions; that it must conquer baseless enthusiasms and whimsical

hopes. If it does not accomplish this, we can expect but one

result--that men will chase all sorts of phantoms and impossible hopes;

that they will waste their efforts upon schemes which can only bring

loss; and that some will run one way and some another until society

loses all coherence, all unanimity of judgment as to what is to be

sought and how to attain to it. The destruction of capital is only the

least of the evils to be apprehended in such a case. I do not believe

that we begin to appreciate one effect of the new civilization of

the nineteenth century, _viz._, that the civilized world of to-day

is a unit, that it must move as a whole, that with the means we have

devised of a common consent in regard to the ends of human life and

the means of attaining them has come also the _necessity_ that we

should move onward in civilization by a common consent. The barriers of

race, religion, language, and nationality are melting away under the

operation of the same forces which have to such an extent annihilated

the obstacles of distance and time. Civilization is constantly becoming

more uniform. The conquests of some become at once the possession of

all. It follows that our scientific knowledge of the laws which govern

the life of men in society must keep pace with this development or we

shall find our social tasks grow faster than our knowledge of social

science, and our society will break to pieces under the burden. How,

then, is this scientific knowledge to grow? Certainly not without

controversy, but certainly also not without coherent, steady, and

persistent effort, proceeding on the lines already cut, breaking new

ground when possible, correcting old errors when necessary.

3. It is another feature of the modern industrial system that, like

every high organization, it requires men of suitable ability and

skill at its head. The qualities which are required for a great

banker, merchant, or manufacturer are as rare as any other great

gifts among men, and the qualities demanded, or the degree in which

they are demanded, are increasing every day with the expansion of the

modern industrial system. The qualities required are those of the

practical man, properly so called: sagacity, good judgment, prudence,

boldness, and energy. The training, both scientific and practical,

which is required for a great master of industry is wide and various.

The great movements of industry, like all other great movements,

present subordinate phenomena which are apparently opposed to, or

inconsistent with their great tendencies and their general character.

These phenomena, being smaller in scope, more directly subject to

observation and therefore apparently more distinct and positive, are

well calculated to mislead the judgment, either of the practical

man or of the scientific student. In nothing, therefore, does the

well-trained man distinguish himself from the ill-trained man more than

in the balance of judgment by which he puts phenomena in their true

relative position and refuses to be led astray by what is incidental

or subsidiary. If, now, the question is asked, whether we have

produced a class of highly trained men, competent to organize labor,

transportation, commerce, and banking, on the scale required by the

modern system, as rapidly as the need for them has increased, I believe

no one will answer in the affirmative.

4. Another observation to which we are led upon noticing the character

of the modern industrial system is that any errors or follies committed

in one portion of it will produce effects which will ramify through

the whole system. We have here an industrial organism, not a mere

mechanical combination, and any disturbance in one part of it will

derange or vitiate, more or less, the whole. The phenomena which here

appear belong to what has been called fructifying causation. One

economic error produces fruits which combine with those of another

economic error, and the product of the two is not their sum, nor even

their simple product, but the evil may be raised to a very high power

by the combination. If a number of errors fall together the mischief

is increased accordingly. Currency and tariff errors constantly react

upon each other, and multiply and develop each other in this way.

Furthermore, the errors of one nation will be felt in other nations

through the relations of commerce and credit which are now so close.

There is no limit to the interest which civilized nations have in

each other’s economic and political wisdom, for they all bear the

consequences of each other’s follies. Hence when we have to deal with

that form of economic disease which we call a commercial crisis, we

may trace its origin to special errors in one country and in another,

and may trace out the actions and reactions by which the effects have

been communicated from one to another until shared by all; but no

philosophy of a great commercial crisis is adequate nowadays unless it

embraces in its scope the whole civilized world. A commercial crisis

is a disturbance in the harmonious operation of the parts of the

industrial organism. During economic health, the system moves smoothly

and harmoniously, expanding continually, and its health and vigor

are denoted by its growth, that is, by the accumulation of capital,

which stimulates in its turn the hope, energy, and enterprise of

men. Industrial disease is produced by disproportionate production,

a wrong distribution of labor, erroneous judgment in enterprise, or

miscalculations of force. These all have the same effect, _viz._, to

waste and destroy capital. Such causes disturb, in a greater or less

degree, the harmonious working of the system, which depends upon the

regular and exact fulfillment of the expectations which have been

based on coöperative effort throughout the whole industrial body. The

disturbance may be slight and temporary, or it may be very serious.

In the latter case it will be necessary to arrest the movement of the

whole system and to proceed to a general liquidation, before starting

again. Such was the case from 1837 to 1842, and such has been the case

for the last five years. It is needless to add that this arrest and

liquidation cannot be accomplished without distress and loss to great

numbers of innocent persons, and great positive loss of capital, to say

nothing of what might have been won during the same period but must be

foregone.

The financial organization is the medium by which the various parts of

the industrial and commercial organism are held in harmony. It is by

the financial organization that capital is collected and distributed,

that the friction of exchanges is reduced to a minimum, and that time

is economized, through credit, between production and consumption.

The financial system furnishes three indicators--prices, the rate

of discount, and the foreign exchanges--through which we may read

the operation of economic forces now that their magnitude makes it

impossible to inspect them directly. Hence the great mischief of

usury laws which tamper with the rate of discount, and of fluctuating

currencies which falsify prices and the foreign exchanges. They destroy

the value of the indicators, and have the same effect as tampering with

the scales of a chemist or the steam-gauge of a locomotive.

In the matter of prices we have another difficulty to contend with,

which is inevitable in the nature of things. We must choose some

commodity to be the denominator of value. We can find no commodity

which is not itself subject to fluctuation in its ratio of exchange

with other things. Great crises have been caused in past times by

fluctuations in the value of the commodities chosen as money, and such

an element is, no doubt, at hand in the present crisis, although it had

nothing to do with bringing it about. It follows that any improvement

in the world’s money is worth any sacrifice which it can possibly cost,

if it tends to secure a more simple, exact, and unchanging standard of

value.

The next point of which I wish to speak is easily introduced by the

last remark; that point is the cost of all improvement. The human

race has made no step whatever in civilization which has not been won

by pain and distress. It wins no steps now without paying for them

in sacrifices. To notice only things which are directly pertinent to

our present purpose: every service which we win from nature displaces

the acquired skill of the men who formerly performed the service;

every such step is a gain to the race, but it imposes on some men the

necessity of finding new means of livelihood, and if those men are

advanced in life, this necessity may be harsh in the extreme. Every new

machine, although it saves labor, and because it saves labor, serves

the human race, yet destroys a vested interest of some laborers in the

work which it performs. It imposes on them the necessity of turning to

a new occupation, and this is hardly ever possible without a period of

distress. It very probably throws them down from the rank of skilled to

that of unskilled labor. Every new machine also destroys capital. It

makes useless the half-worn-out machines which it supersedes. So canals

caused capital which was invested in turnpikes and state coaches to

depreciate, and so railroads have caused the capital invested in canals

and other forms to depreciate. I see no exception to the rule that the

progress won by the race is always won at the expense of some group of

its members.

Any one who will look back upon the last twenty-five years cannot

fail to notice that the changes, advances, and improvements have been

numerous and various. We are accustomed to congratulate each other

upon them. There can be no doubt that they must and will contribute

to the welfare of the human race beyond what any one can now possibly

foresee or measure. I am firmly convinced, for my opinion, that the

conditions of wealth and civilization for the next quarter of a century

are provided for in excess of any previous period of history, and that

nothing but human folly can prevent a period of prosperity which we,

even now, should regard as fabulous. We can throw it away if we are

too timid, if we become frightened at the rate of our own speed, or if

we mistake the phenomena of a new era for the approach of calamity,

or if the nations turn back to mediæval darkness and isolation, or if

we elevate the follies and ignorances of the past into elements of

economic truth, or if, instead of pursuing liberty with full faith and

hope, the civilized world becomes the arena of a great war of classes

in which all civilization must be destroyed. But, such follies apart,

the conditions of prosperity are all provided.

We must notice, however, that these innovations have fallen with great

rapidity upon a vast range of industries, that they have accumulated

their effects, that they have suddenly altered the currents of trade

and the methods of industry, and that we have hardly learned to

accommodate ourselves to one new set of circumstances before a newer

change or modification has been imposed. Some inventions, of which the

Bessemer steel is the most remarkable example, have revolutionized

industries. Some new channels of commerce have been opened which have

changed the character and methods of very important branches of

commerce. We have also seen a movement of several nations to secure a

gold currency, which movement fell in with a large if not extraordinary

production of silver and altered the comparative demand and supply of

the two metals at the same time. This movement had nothing arbitrary

about it, but proceeded from sound motives and reasons in the interest

of the nations which took this step. There is here no ground for

condemnation or approval. Such action by sovereign nations is taken

under liberty and responsibility to themselves alone, and if it is

taken on a sufficiently large scale to form an event of importance to

the civilized world, it must be regarded as a step in civilization.

It can only be criticized by history. For the present, it is to be

accepted and interpreted only as an indication that there are reasons

and motives of self-interest which can lead a large part of the

civilized world to this step at this time.

The last twenty-five years have also included political events which

have had great effects on industry. Our Civil War caused an immense

destruction of capital and left a large territory with millions of

inhabitants almost entirely ruined in its industry, and with its labor

system exposed to the necessity of an entire re-formation. Part of the

expenditures and losses of the war were postponed and distributed by

means of the paper currency which, instead of imposing industry and

economy to restore the losses and waste, created the foolish belief

that we could make war and get rich by it. The patriotic willingness

of the nation to be taxed was abused to impose taxes for protection,

not for revenue, so that the industry of the country was distorted and

forced into unnatural development. The collapse of 1873, followed by

a fall in prices and a general liquidation, was due to the fact that

every one knew in his heart that the state of things which had existed

for some years before was hollow and fictitious. Confidence failed

because every one knew that there were no real grounds for confidence.

The Franco-Prussian war had, also, while it lasted, produced a period

of false and feverish prosperity in England. It was succeeded by great

political changes in Germany which, together with the war indemnity,

led to a sudden and unfounded expansion of speculation, amounting to

a mania. Germany undoubtedly stands face to face with a new political

and industrial future, but she has postponed it by a headlong effort to

realize it at once. In France, too, the war was followed by a hasty,

and, as we are told, unwise extension of permanent capital, planned

to meet the extraordinary demand of an empty market. In England the

prosperity of 1870–1872 has been followed as usual by developments of

unsound credit, bad banking, and needless investments in worthless

securities.

Here then we have, in a brief and inadequate statement, circumstances

in all these great industrial nations peculiar to each, yet certainly

sufficient to account for a period of reaction and distress. We have

also before us great features of change in the world’s industry and

commerce which must ultimately produce immeasurable advantages,

but which may well, operating with local causes, produce temporary

difficulty; and we have to notice also that the local causes react

through the commercial and credit relations of nations to distribute

the evil.

It is not surprising, under such a state of things, that some people

should lose their heads and begin to doubt the economic doctrines

which have been most thoroughly established. It belongs to the

symptoms of disease to lose confidence in the laws of health and to

have recourse to quack remedies. I have already observed that certain

phenomena appear in every great social movement which are calculated

to deceive by apparent inconsistency or divergence. Hence we have seen

the economists, instead of holding together and sustaining, at the

time when it was most needed, both the scientific authority and the

positive truth of their doctrines, break up and run hither and thither,

some of them running away altogether. Many of them seem to be terrified

to find that distress and misery still remain on earth and promise to

remain as long as the vices of human nature remain. Many of them are

frightened at liberty, especially under the form of competition, which

they elevate into a bugbear. They think that it bears harshly on the

weak. They do not perceive that here “the strong” and “the weak” are

terms which admit of no definition unless they are made equivalent to

the industrious and the idle, the frugal and the extravagant. They

do not perceive, furthermore, that if we do not like the survival of

the fittest, we have only one possible alternative, and that is the

survival of the unfittest. The former is the law of civilization; the

latter is the law of anti-civilization. We have our choice between the

two, or we can go on, as in the past, vacillating between the two,

but a third plan--the socialist desideratum--a plan for nourishing

the unfittest and yet advancing in civilization, no man will ever

find. Some of the crude notions, however, which have been put forward

surpass what might reasonably have been expected. These have attached

themselves to branches of the subject which it is worth while to notice.

1. As the change in the relative value of the precious metals is by

far the most difficult and most important of the features of this

period, it is quite what we might have expected that the ill-trained

and dilettante writers should have pounced upon it as their special

prey. The dabblers in philology never attempt anything less than the

problem of the origin of language. Every teacher knows that he has to

guard his most enthusiastic pupils against precipitate attempts to

solve the most abstruse difficulties of the science. The change in the

value of the precious metals which is going on will no doubt figure in

history as one of the most important events in the economic history of

this century. It will undoubtedly cost much inconvenience and loss to

those who are in the way of it, or who get in the way of it. It will,

when the currency changes connected with it are accomplished, prove a

great gain to the whole commercial world. The nations which make the

change do so because it is important for their interests to do it.

Now, suppose that it were possible for those who are frightened at the

immediate and temporary inconveniences, to arrest the movement--the

only consequence would be that they would arrest and delay the

inevitable march of improvement in the industrial system.

2. The second field, which is an especial favorite with the class of

writers which I have described, is that of prognostications as to what

developments of the economic system lie in the future. Probably every

one has notions about this and every one who has to conduct business or

make investments is forced to form judgments about it. There is hardly

a field of economic speculation, however, which is more barren.

3. The third field into which these writers venture by preference is

that of remedies for existing troubles. The popular tide of medicine is

always therapeutics, and the less one knows of anatomy and physiology

the more sure he is to address himself exclusively to this department,

and to rely upon empirical remedies. The same procedure is followed

in social science, and it is accompanied by the same contempt for

scientific doctrine and knowledge and remedies. To bring out the points

which here seem to me important, it will be necessary to go back for a

moment to some facts which I have already described.

One of the chief characteristics of the great improvements in

industry, which have been described, is that they bring about new

distributions of population. If machinery displaces laborers engaged

in manufactures, these laborers are driven to small shopkeeping, if

they have a little capital; or to agricultural labor, if they have no

capital. Improvements in commerce will destroy a local industry and

force the laborers to find a new industry or to change their abode.

When forces of this character coöperate on a grand scale, they may

and do produce very important redistributions of population. In like

manner legislation may, as tariff legislation does, draw population to

certain places, and its repeal may force them to unwelcome change. We

may state the fact in this way: let us suppose that, in 1850, out of

every hundred laborers in the population, the economical distribution

was such that fifty should be engaged in agriculture, thirty in

manufacturing, and the other twenty in other pursuits. That is to

say that, with the machinery and appliances then available, thirty

manufacturing laborers could use the raw materials and food produced

by fifty agricultural laborers so as to occupy all to the highest

advantage. Now suppose that, by improvements in the arts, twenty men

could, in 1880, use to the best advantage the raw materials and food

produced by sixty in agriculture. It is evident that a redistribution

would be necessary by which ten should be turned from manufacturing to

land. That such a change has been produced within the last thirty years

and that it has reached a point at which is setting in the counter

movement to the former tendency from the land to the cities and towns,

seems to me certain. There are even indications of great changes going

on in the matter of distribution which will correct the loss and waste

involved in the old methods of distribution long before any of the

fancy plans for correcting them can be realized, and which are setting

free both labor and capital in that department. Now if we can economize

labor and capital in manufacturing, transportation, and distribution,

and turn this labor and capital back upon the soil, we must vastly

increase wealth, for that movement would enlarge the stream of wealth

from its very source.

Right here, however, we need to make two observations.

1. The modern industrial system which I have described, with its high

organization and fine division of labor, has one great drawback. The

men, or groups of men, are dissevered from one another, their interests

are often antagonistic, and the changes which occur take the form of

conflicts of interest. I mean this: if a shoemaker worked alone, using

a small capital of his own in tools and stock, and working for orders,

he would have directly before him the facts of the market. He would

find out without effort or reflection when “trade fell off,” when there

was risk of not replacing his capital, when the course of fashion or

competition called upon him to find other occupation, and so on. When a

journeyman shoemaker works for wages, he pays no heed to these things.

The employer, feeling them, has no recourse but to lower wages. It is

by this measure that, under the higher organization, the need of new

energy, or of a change of industry, or of a change of place is brought

home to the workman. To him, however, it seems an arbitrary and cruel

act of the master. Hence follow trade wars and strikes as an especial

phenomenon of the modern system. It is just because it is a system,

or more properly still, an organism, that the readjustments which are

necessary from time to time in order to keep its parts in harmonious

activity, and to keep it in harmony with physical surroundings, are

brought about through this play of the parts on each other.

2. A general movement of labor and capital towards land, throughout the

civilized world, means a great migration towards the new countries.

This does not by any means imply the abandonment or decay of older

countries, as some have seemed to believe. On the contrary, it means

new prosperity for them. When I read that the United States are about

to feed the world, not only with wheat and provisions, but with meat

also, that they are to furnish coal and iron to mankind, that they

are to displace all the older countries as exporters of manufactures,

that they are to furnish the world’s supply of the precious metals,

and I know not what all besides, I am forced to ask what is the rest

of the world going to do for us? What are they to give us besides

tea, coffee, and sugar? Not ships, for we will not take them and are

ambitious to carry away all our products ourselves. Certainly this is

the most remarkable absurdity into which we have been led by forgetting

that trade is an exchange. Neither can any one well expect that all

mankind are to come and live here. The conditions of a large migration

do, however, seem to exist. A migration of population is still a very

unpopular idea in all the older states. The prejudice against it is

apparent amongst Liberals and Tories, economists and sentimentalists.

There is, however, a condition which is always suppressed in stating

the social problem as it presents itself in hard times. That problem,

as stated, is: “How are the population to find means of support?” and

the suppressed condition is: “if they insist on staying and seeking

support where they are and in pursuits to which they are accustomed.”

The hardships of change are not for one moment to be denied, but

nothing is gained by sitting down to whine about them. The sentimental

reasons for clinging to one’s birthplace may be allowed full weight,

but they cannot be allowed to counterbalance important advantages. I do

not see that any but land owners are interested to hold population in

certain places, unless possibly we add governing classes and those who

want military power. When I read declamations about nationality and the

importance of national divisions to political economy (observe that I

do not say to political science), I never can find any sense in them,

and I am very sure that the writers never put any sense into them.

We may now return to consider the remedies proposed for hard times. We

shall see that although they are quack remedies, and although they set

at defiance all the economic doctrines which have been so laboriously

established during the last century, they are fitted to meet the

difficulty as it presents itself to land owners, governments, military

powers, socialists, and sentimentalists. The tendency is towards an

industrial system controlled by a natural coöperation far grander than

anybody has ever planned, towards a community of interest and welfare

far more beneficent than any universal republic or fraternity of labor

which the Internationalists hope for, and towards a free and peaceful

rivalry amongst nations in the arts of civilization. It is necessary to

stop this tendency. What are the means proposed?

1. The first is to put a limit to civil liberty. By civil liberty (for

I feel at once the need of defining this much-abused word) I mean the

status which is created for an individual by those institutions which

guarantee him the use of his own powers for his own development. For

three or four centuries now, the civilized world has been struggling

towards the realization of this civil liberty. Progress towards it has

been hindered by the notion that liberty was some vague abstraction,

or an emancipation from some of the hard conditions of human life,

from which men never can be emancipated while they live on this earth.

Civil liberty has also been confused with political activity or share

in civil government. Political activity itself, however, is only a

means to an end, and is valuable because it is necessary to secure to

the individual free exercise of his powers to produce and exchange

according to his own choice and his own conception of happiness, and

to secure him also that the products of his labor shall be applied

to his satisfaction and not to that of any others. When we come to

understand civil liberty for what it is, we shall probably go forward

to realize it more completely. It will then appear that it begins and

ends with freedom of production, freedom of exchange, and security of

property. It will then appear also that governments depart from their

prime and essential function when they undertake to transfer property

instead of securing it, and it may then be understood that legal tender

laws, and protective tariffs as amongst the last and most ingenious

devices for transferring one man’s product to another man’s use, are

gross violations of civil liberty. At present the attempt is being

made to decry liberty, to magnify the blunders and errors of men in

the pursuit of happiness into facts which should be made the basis of

generalizations about the functions of government, and to present the

phenomena of the commercial crisis as reasons for putting industry once

more in leading strings. It is only a new foe with an old face. Those

who have held the leading strings of industry in time past have always

taken rich pay for their services, and they will do it again.

2. The second form of remedy proposed is quite consistent with the

last. It consists in rehabilitating the old and decaying superstition

of government. It is called the state, and all kinds of poetical and

fanciful attributes are ascribed to it. It is presented, of course,

as a superior power, able and ready to get us out of trouble. If

an individual is in trouble, he has to help himself or secure the

help of friends as best he can, but if a group of persons are in

trouble together, they constitute a party, a power, and begin to make

themselves felt in the state. The state has no means of helping them

except by enabling them to throw the risks and losses of their business

upon other people who already have the burdens and losses of their

own business to bear, but who are less well organized. The “state”

assumes to judge what is for the public interest and imposes taxes or

interferes with contracts to force individuals to the course which

will realize what it has set before itself. When, however, all the fine

phrases are stripped away, it appears that the state is only a group

of men with human interests, passions, and desires, or, worse yet,

the state is, as somebody has said, only an obscure clerk hidden in

some corner of a governmental bureau. In either case the assumption of

superhuman wisdom and virtue is proved false. The state is only a part

of the organization of society in and for itself. That organization

secures certain interests and provides for certain functions which are

important but which would otherwise be neglected. The task of society,

however, has always been and is yet, to secure this organization,

and yet to prevent the man in whose hands public power must at last

be lodged from using it to plunder the governed--that is, to destroy

liberty. This is what despots, oligarchs, aristocrats, and democrats

always have done, and the latest development is only a new form of the

old abuse. The abuses have always been perpetrated in the name of the

public interest. It was for the public interest to support the throne

and the altar. It was for the public interest to sustain privileged

classes, to maintain an established church, standing armies, and the

passport and police system. Now, it is for the public interest to have

certain industries carried on, and the holders of the state power

apportion their favor without rule or reason, without responsibility,

and without any return service. In the end, therefore, the high

function of the state to regulate the industrial organization in the

public interest is simply that the governing group interferes to make

some people give the products of their labor to other people to use

and enjoy. Every one sees the evils of the state meddling with his

own business and thinks that he ought to be let alone in it, but he

sees great public interests which would be served if the state would

interfere to make other people do what he wants to have them do.

Now if these two measures could be carried out--if liberty

could be brought into misapprehension and contempt, and if the

state-superstition could be saved from the decay to which it is doomed,

the movements of population and the changes in industry, commerce, and

finance, could be arrested. The condemnation of all such projects is,

once and for all, that they would arrest the march of civilization. The

joy and the fears which have been aroused on one side and on the other

by the reactionary propositions which have been made during the last

five years are both greatly exaggerated. Such reactionary propositions

are in the nature of things at such a time. It must be expected

that the pressure of distress and disappointed hopes will produce

passionate reaction and senseless outcries. From such phenomena to

actual practical measures is a long step. Every step towards practical

realization of any reactionary measures will encounter new and

multiplying obstacles. A war of tariffs at this time would so fly in

the face of all the tendencies of commerce and industry that it would

only hasten the downfall of all tariffs. Purely retaliatory tariffs are

a case of what the children call “cutting off your nose to spite your

face.” Some follies have become physically impossible for great nations

nowadays. Germany has been afflicted: first, by too eager hopes,

second, by the great calamity of too many and too pedantic doctors,

third, by a declining revenue, and fourth, by socialistic agitation

amongst the new electors. It appears that she is about to abandon the

free-trade policy although she does not embrace protection with much

vigor. The project already comes in conflict with numerous and various

difficulties which had not been foreseen, and, in its execution,

it must meet with many more. The result remains to be studied.

France finds that the expiration of each treaty of commerce produces

consequences upon her industry which are unendurable, and while the

task of adjusting rival and contending interests so as to create a

new system drags along, she is compelled to ward off, by temporary

arrangements, the revival of the general tariff which the treaties had

superseded. In the meantime her economists, who are the most sober and

the best trained in the world, are opening a vigorous campaign on the

general issue. If England should think of reviving protection, she

would not know what to protect. If she wanted to retaliate, she could

only tax raw materials and food. The proposition, as soon as it is

reduced to practical form, has no footing. As for ourselves we know

that our present protective system never could have been fastened upon

us if it had not been concealed under the war legislation, and if its

effects had not been confused with those of the war. It could not last

now if the public mind could be freed from its absorption in sectional

politics, so that it would be at liberty to turn to this subject.

In conclusion, let me refer again to another important subject on

which I have touched in this paper--what we call the silver question.

It would, no doubt, be in the power of civilized nations to take

some steps which would alleviate the inconveniences connected with

the transition of several important nations from a silver to a gold

currency. For one nation, which has no share in the trouble at all,

to come forward out of “magnanimity” or any other motive to save

the world from the troubles incident to this step, is quixotic and

ridiculous. It might properly leave those who are in the trouble to

deal with it amongst themselves. Either they or all might, however, do

much to modify the effects of the change. The effort to bring about an

international union to establish a bimetallic currency at a fixed ratio

is quite another thing. It will stand in the history of our time as

the most singular folly which has gained any important adherence. As a

practical measure the international union is simply impossible. As a

scientific proposition, bimetallism is as absurd as perpetual motion.

It proposes to establish perpetual rest in the fluctuations of value of

two commodities, to do which it must extinguish the economic forces of

supply and demand of those commodities upon which value depends. The

movement of the great commercial nations towards a single gold currency

is the most important event in the monetary history of our time, and

one which nothing can possibly arrest. It produces temporary distress,

and the means of alleviating that distress are a proper subject of

consideration; but the advantages which will be obtained for all time

to come immeasurably surpass the present loss and inconvenience.

I return, then, to the propositions with which I set out. Feebleness

and vacillation in regard to economic doctrine are natural to a period

of commercial crisis, on account of the distress, uncertainty, and

disorder which then prevail in industry and trade; but that is just

the time also when a tenacious grasp of scientific principles is of

the highest importance. The human race must go forward to meet and

conquer its problems and difficulties as they arise, to bear the

penalties of its follies, and to pay the price of its acquisitions. To

shrink from this is simply to go back and to abandon civilization. The

path forward, as far as any human foresight can now reach, lies in a

better understanding and a better realization of liberty, under which

individuals and societies can work out their destiny, subject only to

the incorruptible laws of nature.

THE PHILOSOPHY OF STRIKES[41]

The progress in material comfort which has been made during the last

hundred years has not produced content. Quite the contrary: the men

of to-day are not nearly so contented with life on earth as their

ancestors were. This observation is easily explainable by familiar

facts in human nature. If satisfaction does not reach to the pitch of

satiety, it does not produce content, but discontent; it is therefore

a stimulus to more effort, and is essential to growth. If, however,

we confine our study of the observation which we have made to its

sociological aspects, we perceive that all which we call “progress”

is limited by the counter-movements which it creates, and we also see

the true meaning of the phenomena which have led some to the crude and

silly absurdity that progress makes us worse off. Progress certainly

does not make people happier, unless their mental and moral growth

corresponds to the greater command of material comfort which they win.

All that we call progress is a simple enlargement of chances, and the

question of personal happiness is a question of how the chances will

be used. It follows that if men do not grow in their knowledge of life

and in their intelligent judgment of the rules of right living as

rapidly as they gain control over physical resources, they will not win

happiness at all. They will simply accumulate chances which they do not

know how to use.

The observation which has just been made about individual happiness has

also a public or social aspect which is important. It is essential that

the political institutions, the social code, and the accepted notions

which constitute public opinion should develop in equal measure with

the increase of power over nature. The penalty of failure to maintain

due proportion between the popular philosophy of life and the increase

of material comfort will be social convulsions, which will arrest

civilization and will subject the human race to such a reaction toward

barbarism as that which followed the fall of the Roman Empire. It is

easy to see that at the present moment our popular philosophy of life

is all in confusion. The old codes are breaking down; new ones are not

yet made; and even amongst people of standing, to whom we must look to

establish the body of public opinion, we hear the most contradictory

and heterogeneous doctrines about life and society.

The growth of the United States has done a great deal to break up the

traditional codes and creeds which had been adopted in Europe. The

civilized world being divided into two parts, one old and densely

populated and the other new and thinly populated, social phenomena have

been produced which, although completely covered by the same laws of

social force, have appeared to be contradictory. The effect has been

to disturb and break up the faith of philosophers and students in the

laws, and to engender numberless fallacies amongst those who are not

careful students. The popular judgment especially has been disordered

and misled. The new country has offered such chances as no generation

of men has ever had before. It has not, however, enabled any man to

live without work, or to keep capital without thrift and prudence;

it has not enabled a man to “rise in the world” from a position of

ignorance and poverty, and at the same time to marry early, spend

freely, and bring up a large family of children.

The men of this generation, therefore, without distinction of class,

and with only individual exceptions, suffer from the discontent of an

appetite excited by a taste of luxury, but held far below satiety. The

power to appreciate a remote future good, in comparison with a present

one, is a distinguishing mark of highly civilized men, but if it is

not combined with powers of persevering industry and self-denial, it

degenerates into mere day-dreaming and the diseases of an overheated

imagination. If any number of persons are of this character, we

have morbid discontent and romantic ambition as social traits. Our

literature, especially our fiction, bears witness to the existence

of classes who are corrupted by these diseases of character. We find

classes of persons who are whining and fault-finding, and who use the

organs of public discussion and deliberation in order to put forth

childish complaints and impossible demands, while they philosophize

about life like the _Arabian Nights_. Of course this whole tone of

thought and mode of behavior is as far as possible from the sturdy

manliness which meets the problems of life and wins victories as much

by what it endures as by what it conquers.

Our American life, by its ease, exerts another demoralizing effect

on a great many of us. Hundreds of our young people grow up without

any real discipline; life is made easy for them, and their tastes and

wishes are consulted too much; they grow to maturity with the notion

that they ought to find the world only pleasant and easy. Every one

knows this type of young person, who wants to find an occupation which

he would “like,” and who discusses the drawbacks of difficulty or

disagreeableness in anything which offers. The point here referred

to is, of course, entirely different from another and still more

lamentable fact, that is, the terrible inefficiency and incapability

of a great many of the people who are complaining and begging. If any

one wants a copyist, he will be more saddened than annoyed by the

overwhelming applications for the position. The advertisements which

are to be found in the newspapers of widest circulation, offering

a genteel occupation to be carried on at home, not requiring any

previous training, by which two or three dollars a day may be earned,

are a proof of the existence of a class to which they appeal. How many

thousand people in the United States want just that kind of employment!

What a beautiful world this would be if there were any such employment!

Then, again, our social ambition is often silly and mischievous. Our

young people despise the occupations which involve physical effort or

dirt, and they struggle “up” (as we have agreed to call it) into all

the nondescript and irregular employments which are clean and genteel.

Our orators and poets talk about the “dignity of labor,” and neither

they nor we believe in it. Leisure, not labor, is dignified. Nearly

all of us, however, have to sacrifice our dignity, and labor, and it

would be to the purpose if, instead of declamation about dignity, we

should learn to respect, in ourselves and each other, work which is

good of its kind, no matter what the kind is. To spoil a good shoemaker

in order to make a bad parson is surely not going “up”; and a man who

digs well is by all sound criteria superior to the man who writes ill.

Everybody who talks to American schoolboys thinks that he does them

and his country service if he reminds them that each one of them has

a chance to be President of the United States, and our literature is

all the time stimulating the same kind of senseless social ambition,

instead of inculcating the code and the standards which should be

adopted by orderly, sober, and useful citizens.

The consequences of the observations which have now been grouped

together are familiar to us all. Population tends from the country

to the city. Mechanical and technical occupations are abandoned,

and those occupations which are easy and genteel are overcrowded.

Of course the persons in question must be allowed to take their

own choice, and seek their own happiness in their own way, but it

is inevitable that thousands of them should be disappointed and

suffer. If the young men abandon farms and trades to become clerks

and bookkeepers, the consequence will be that the remuneration of the

crowded occupations will fall, and that of the neglected occupations

will rise; if the young women refuse to do housework, and go into

shops, stores, telegraph offices and schools, the wages of the crowded

occupations will fall, while those of domestic servants advance. If

women in seeking occupation try to gain admission to some business like

telegraphing, in competition with men, they will bid under the men.

Similar effects would be produced if a leisure class in an old country

should be compelled by some social convulsion to support themselves.

They would run down the compensation for labor in the few occupations

which they could enter.

Now the question is raised whether there is any remedy for the low

wages of the crowded occupations, and the question answers itself:

there is no remedy except not to continue the causes of the evil. To

strike, that is, to say that the workers will not work in their chosen

line, yet that they will not leave it for some other line, is simply

suicide. Neither can any amount of declamation, nor even of law-making,

force a man who owns a business to submit the control of it to a man

who does not own it. The telegraphers have an occupation which requires

training and skill, but it is one which is very attractive in many

respects to those who seek manual occupation; it is also an occupation

which is very suitable, at least in many of its branches, for women.

The occupation is therefore capable of a limited monopoly. The demand

that women should be paid equally with men is, on the face of it,

just, but its real effect would be to keep women out of the business.

It was often said during the telegraphers’ strike that the demand

of the strikers was just, because their wages were less than those

of artisans. The argument has no force at all. The only question was

whether the current wages for telegraphing were sufficient to bring

out an adequate supply of telegraphers. If the growing boys prefer to

be artisans, the wages of telegraphers will rise. If, even at present

rates, boys and girls continue to prefer telegraphing to handicraft or

housework, the wages of telegraphers will fall. Could, then, a strike

advance at a blow the wages of all who are now telegraphers? There was

only one reason to hope so, and that was that the monopoly of the trade

might prove stringent enough and the public inconvenience great enough

to force a concession--which would, however, have been speedily lost

again by an increased supply of telegraphers.

Now let us ask what the state of the case would be if it was really

possible for the telegraphers to make a successful strike. They

have a very close monopoly; six years ago they nearly arrested the

transportation of the country for a fortnight; but they were unable to

effect their object. More recently the freight-handlers struck against

the competition of a new influx of foreign unskilled laborers, and

in vain. The printers might make a combination, and try to force an

advance in wages by arresting the publication of all the newspapers on

a given day, but there are so many persons who could set type, in case

of need, that such an attempt would be quite hopeless. In any branch of

ordinary handicraft there would be no possibility of creating a working

monopoly or of producing a great public calamity by a strike. If we go

on to other occupations we see that bookkeepers, clerks, and salesmen

could not as a body combine and strike; much less could teachers do

so; still less could household servants do so. Finally, farmers and

other independent workers could not do it at all. In short, a striker

is a man who says: “I mean to get my living by doing this thing and

no other thing as my share of the social effort, and I do not mean to

do this thing except on such and such terms.” He therefore proposes to

make a contract with his fellow-men and to dictate the terms of it. Any

man who can do this must be in a very exceptional situation; he must

have a monopoly of the service in question, and it must be one of which

his fellow-men have great need. If, then, the telegraphers could have

succeeded in advancing their wages fifteen per cent simply because they

had agreed to ask for the advance, they must have been far better off

than any of the rest of their fellowmen.

Our fathers taught us the old maxim: Cut your coat according to your

cloth; but the popular discussions of social questions seem to be

leading up to a new maxim: Demand your cloth according to your coat.

The fathers thought that a man in this world must do the best he

could with the means he had, and that good training and education

consisted in developing skill, sagacity, and thrift to use resources

economically; the new doctrine seems to be that if a man has been

born into this world he should make up his mind what he needs here,

formulate his demands, and present them to “society” or to the “state.”

He wants congenial and easy occupation, and good pay for it. He does

not want to be hampered by any limitations such as come from a world

in which wool grows, but not coats; in which iron ore is found, but

not weapons and tools; in which the ground will produce wheat, but

only after hard labor and self-denial; in which we cannot eat our

cake and keep it; in which two and two make only four. He wants to be

guaranteed a “market,” so as not to suffer from “overproduction.” In

private life and in personal relations we already estimate this way of

looking at things at its true value, but as soon as we are called upon

to deal with a general question, or a phenomenon of industry in which

a number of persons are interested, we adopt an entirely conventional

and unsound mode of discussion. The sound gospel of industry, prudence,

painstaking, and thrift is, of course, unpopular; we all long to be

emancipated from worry, anxiety, disappointment, and the whole train

of cares which fall upon us as we work our way through the world. Can

we really gain anything in that struggle by organizing for a battle

with each other? This is the practical question. Is there any ground

whatever for believing that we shall come to anything, by pursuing

this line of effort, which will be of any benefit to anybody? If a

man is dissatisfied with his position, let him strive to better it in

one way or another by such chances as he can find or make, and let

him inculcate in his children good habits and sound notions, so that

they may live wisely and not expose themselves to hardship by error or

folly; but every experiment only makes it more clear that for men to

band together in order to carry on an industrial war, instead of being

a remedy for disappointment in the ratio of satisfaction to effort, is

only a way of courting new calamity.

STRIKES AND THE INDUSTRIAL ORGANIZATION[42]

Anyone who has read with attention the current discussion of labor

topics must have noticed that writers start from assumptions, in regard

to the doctrine of wages, which are as divergent as notions on the same

subject-matter well can be. It appears, therefore, that we must have

a dogma of wages, that we cannot reason correctly about the policy or

the rights of the wages system until we have such a dogma, and that, in

the meantime, it is not strange that confusion and absurdity should be

the chief marks of discussion carried on before this prime condition is

fulfilled.

Some writers assume that wages can be raised if the prices of products

be raised, and that no particular difficulty would be experienced

in raising prices; others assume that wages could be raised if the

employers would be satisfied with smaller profits for themselves;

still others assume that wages could be raised or lowered according

as the cost of living rises or falls. These are common and popular

assumptions, and have nothing to do with the controversies of

professional economists about the doctrine of wages. The latter are a

disgrace to the science, and have the especial evil at this time that

the science cannot respond to the chief demand now made upon it.

If the employer could simply add any increase of wages to his prices,

and so recoup himself at the expense of the consumer, no employer would

hold out long against a strike. Why should he? Why should he undertake

loss, worry, and war, for the sake of the consumers behind him? If

an employer need only submit to a positive and measurable curtailment

of his profits, in order to avoid a strike and secure peace, it is

probable that he would in almost every case submit to it. But if the

employees should demand five per cent advance, and the employer should

grant it, adding so much to his prices, they would naturally and most

properly immediately demand another five per cent, to be charged to

the consumers in the same way. There would be no other course for men

of common sense to pursue. They would repeat this process until at

some point or other they found themselves arrested by some resistance

which they could not overcome. Similarly, if wages could be increased

at the expense of the employer’s gains, the employer who yielded one

increase would have to yield another, until at some point he decided to

refuse and resist. In either case, where and what would the limit be?

Whenever the point was reached at which some unconquerable resistance

was encountered, the task of the economist would begin.

There is no rule whatever for determining the share which any one ought

to get out of the distribution of products through the industrial

organization, except that he should get all that the market will

give him in return for what he has put into it. Whenever, therefore,

the limit is reached, the task of the economist is to find out the

conditions by which this limit is determined.

Now it is the character of the modern industrial system that it becomes

more and more impersonal and automatic under the play of social forces

which act with natural necessity; the system could not exist if they

did not so act, for it is constructed in reliance upon their action

according to ascertainable laws. The condition of all social actions

and reactions is therefore set in the nature of the forces which we

have learned to know on other fields of scientific investigation, and

which are different here only inasmuch as they act in a different field

and on different material. The relations of parties, therefore, in the

industrial organism is such as the nature of the case permits. The case

may permit of a variety of relations, thus providing some range of

choice.

A person who comes into the market, therefore, with something to sell,

cannot raise the price of it because he wants to do so, or because

his “cost of production” has been raised. He has already pushed the

market to the utmost, and raised the price as high as supply and demand

would allow, so as to win as large profits as he could. How, then,

can he raise it further, just because his own circumstances make it

desirable for him so to do? If the market stands so that he can raise

his price, he will do it, whether his cost of production has increased

or not. Neither can an employer reduce his own profits at will; he will

immediately perceive that he is going out of business, and distributing

his capital in presents.

The difficulty with a strike, therefore, is, that it is an attempt to

move the whole industrial organization, in which all the parts are

interdependent and intersupporting. It is not, indeed, impossible to

do this, although it is very difficult. The organization has a great

deal of elasticity in its parts--an aggressive organ can win something

at the expense of others. Everything displaces everything else;

but if force enough is brought to bear, a general displacement and

readjustment may be brought about. An organ which has been suffering

from the aggression of others may right itself. It is only by the

collision of social pressure, constantly maintained, that the life of

the organism is kept up, and its forces are developed to their full

effect.

Strikes are not necessarily connected with violence to either persons

or property. Violence is provided for by the criminal law. Taking

strikes by themselves, therefore, it may be believed that they are not

great evils; they are costly, but they test the market. Supply and

demand does not mean that the social forces will operate of themselves;

the law, as laid down, assumes that every party will struggle to the

utmost for its interests--if it does not do so, it will lose its

interests. Buyers and sellers, borrowers and lenders, landlords and

tenants, employers and employees, and all other parties to contracts,

must be expected to develop their interests fully in the competition

and struggle of life. It is for the health of the industrial

organization that they should do so. The other social interests are in

the constant habit of testing the market, in order to get all they can

out of it. A strike, rationally begun and rationally conducted, only

does the same thing for the wage-earning interest.

The facts stare us plainly in the face, if we will only look at them,

that the wages of the employees and the price of the products have

nothing to do with each other; that the wages have nothing to do with

the profits of the employer; that they have nothing to do with the

cost of living or with the prosperity of the business. They are really

governed by the supply and demand of labor, as every strike shows us,

and by nothing else.

Turning to the moral relations of the subject, we are constantly

exhorted to do something to improve the relations of employer and

employee. I submit that the relation in life which has the least bad

feeling or personal bitterness in it is the pure business relation, the

relation of contract, because it is a relation of bargain and consent

and equivalence. Where is there so much dissension and bitterness as

in family matters, where people try to act by sentiment and affection?

The way to improve the relation of employer and employee is not to get

sentiment into it, but to get sentiment out of it. We are told that

classes are becoming more separated, and that the poor are learning to

hate the rich, although there was a time when no class hatreds existed.

I have sought diligently in history for the time when no class hatreds

existed between rich and poor. I cannot find any such period, and I

make bold to say that no one can point to it.

TRUSTS AND TRADES-UNIONS[43]

I have attempted to show, in foregoing essays,[44] what an immense rôle

is played by monopoly throughout the whole social life of mankind in

all its stages. There would not be any struggle for existence if it

were not true that the supply in nature of the things necessary for

human existence is niggardly. The struggle for existence consists in

a contest against the constraints by which human life is surrounded;

the process by which men have won something in that contest, in the

course of time, has consisted in playing off one of nature’s monopolies

against another--the process, namely, which we call “employing natural

agents.” On its social and political side, the advance has consisted in

securing for the individual a chance in some degree to control his own

destiny; not to be at the sport of natural and social forces, but to

bring his own energy to bear to enlarge his own conditions of enjoyment

and survival.

At every stage of history, however, the natural monopolies have formed

the basis of social and political monopolies. The possession of those

powers which, under the circumstances, were most efficient for the

acquisition of what men want has always given superiority and dominion

in human society, whether those powers were physical force, beauty,

learning, virtue, capital, or anything else. Where does any one find

ground to believe that the fact will ever be different, and that those

who have the powers which are most potent in the society in which they

live will use those powers, not to get the things which all men want

for themselves, but to get those same things for other people?

The fashion has always been in the past for those who possessed the

essential powers to take control of the state and realize their

monopoly in that way. If plutocracy should now prevail it would be

simply a repetition of that experience. The only device which has

ever given promise of wider and more humane organization of the state

is constitutional liberty, which compels, by the intervention of

institutions created to serve this purpose, the ruling class, whoever

they were, to respect the recognized and defined rights of all the rest.

Now, democracy having sapped and dissolved all the inherited forms

of social organization and reduced the social body to atoms, it is

most interesting to observe the inevitable recurrence of all the old

tendencies, in new forms fitted to the times. Some of us thought

that liberty was won forever, and that the race was nevermore to be

disturbed by its old problems, but it is already apparent that, when a

society is resolved into its constituent atoms, the question under what

forces, and upon what nuclei, it will crystallize into new forms, has

acquired an importance never known before.

Just now public attention is all absorbed by the new name “trust”

applied to one of these phenomena. I can see nothing new in a trust as

compared with the rings, pools, etc., with which we have been familiar

during this generation, except the guarantee which the trust secures to

all the members of the same that no one inside of it shall play traitor

to the rest. The greatest difficulty with modern combinations has been

that there have been no sanctions by which the members could be bound,

and that the profits of the insider who turned against his comrades

have always been an irresistible temptation. In the mediæval guilds,

which were “trusts” of the most solid construction, the sanctions were

of the sternest kind--religious, political, and social--and yet they

never succeeded in their purpose. In modern times, as is well known to

all who are acquainted with the attempts which have been made, inside

of various branches of industry, to arrange agreements which have not

been large enough or public enough to get into the newspapers the

difficulty of enforcing loyalty against those who felt strong enough

to beat the rest if they should go alone, or against those who saw a

chance to sell out on the rest, or against those who were in desperate

straits for cash, has been the constant stumbling-block. Fifty years

ago, in the last days of the United States Bank, Nicholas Biddle

organized a cotton trust, to try to control the cotton market of the

world. It was a complete failure. In general, combinations of this

character are in constant dilemma: they must always grow bigger and

bigger, in order to encompass a sufficient area to constitute a unit;

but the bigger they grow, the less is their internal cohesion. The

exception to this must be noted in a moment.

The great expansion of the market by modern inventions in

transportation has broken up all the former local and petty monopolies,

and is rapidly making of the industry and commerce of mankind a

whole which cannot be divided by geographical lines. The conditions

of competition in such a system are no doubt onerous to the last

degree. The conditions that must be taken into account to win success

are numerous and complicated. The nerve-strain of comprehending and

of justly estimating the factors, and of following their constant

variations, is too great for any one to endure. Foresight must be used,

yet there are so many unknown quantities that foresight is impossible;

if the attempt is made to master all the unknown quantities, then the

task is so enormous that it cannot be accomplished. Furthermore, the

relations with other persons in the industrial system are necessarily

close. It is impossible to escape such relations, and it is impossible

to avoid a share in the consequences of the mistakes and incompetence

of the others. It must be added that, at a time when the advance in

the arts has forced the whole industry of the globe into intimate

relations which nothing can possibly cut off, legislative interferences

have produced artificial and erratic currents in the industrial

and commercial relations of all countries. The consequences are

disappointing and disastrous incidents in the history of industry. At

the same time the improvements in the communication of intelligence

have made it possible for men farthest apart in space, language, and

nationality, if they have confidence in each other’s business ability

and command of capital, to coöperate by personal agreements.

Trusts are an attempt to deal with this state of things. It is, of

course, a jest when the makers of a trust affirm that they make it for

the benefit of consumers, and it may very well be doubted whether a

trust is a feasible and beneficial device in the interest of either

party; but it is wrong to overlook the fact that the trust, in its

efforts to deal with the case, and to secure orderly and rational

development, instead of heats and chills in industry, has a real and

legitimate task on hand. It is certain that there is room for the

introduction of intelligent method into modern industry, under forms

which shall be germane to modern conditions, and it is certain that

this will never be done properly by legislation, but only by the

voluntary and intelligent coöperation of the parties interested. It

is also by no means certain that this systematization of industry,

under intelligent coöperation of the parties conducting it, would cost

consumers anything, provided always that there was no legislation to

prevent the recourse at any time to any other sources of supply which

might be available. The economies of management under intelligent

administration are a source from which gains may be made which will

cost the consumer nothing. The expenses of industrial war constitute a

big fund for dividends to which the consumer does not contribute.

It is worth while to notice, by some familiar examples, what the

motive of a trust is; it will be found a far more everyday matter

than most people suppose. A man who owns a house and lot buys the

vacant lot adjacent in order to control it. He and his neighbors buy

up all the vacant lots on the street in order to prevent undesirable

contact with anything which would deteriorate their property. They

have already fallen victims to the spirit of monopoly, and are subject

to all the denunciations heaped upon aristocrats and exclusivists.

In their case already the practical difficulty of defining the unit

to be comprehended, in order to attain the object and no more, is

apparent. Examples are furnished every day in which capital is refused

for certain enterprises because it is seen that the investment might

no sooner be made than its profits might be destroyed by another

enterprise parallel with it. The thing cannot be done at all until it

is done on a scale sufficiently large to constitute a complete unit.

We are familiar enough with the dilemma offered to us when, on the

one hand, railroads which consolidate put themselves in a position to

serve us far more efficiently, yet on the other hand, railroads which

consolidate cease to compete with each other for our benefit. Which

do we want them to do? The railroads themselves are familiar with

the experience that they are constantly forced to make extensions in

order to secure a certain territory, that is, to establish a closed

unit, and that every extension, instead of attaining a finality, only

makes further extension unavoidable. This is the class of facts in the

industrial development of our time which has produced the trusts, and

it is certain that they offer another motive than that of simple desire

to secure means of extortion.

I am not yet able to see that any trust can succeed unless it is

founded on a natural or legislative monopoly, and furthermore on a

monopoly whose product cannot be produced in an amount exceeding the

demand at the price which has been customary before the formation of

the trust; and I cannot see any chance for legislation to do any good

unless it is in the repeal of all such laws as are found to furnish a

basis for the organization of an artificial monopoly.

It cannot have escaped the attention of the reader that trades-unions

are a monopolistic organization on the side of labor entirely parallel

with the trusts on the side of capital, “a product of the same age and

of the same forces,” and an endeavor to deal with the same problem

from the standpoint of another interest. The motives of coercion,

discipline, and strict internal organization are the same in both

cases, and some of the sanctions are the same; for the pools and rings

have tried the boycott until they have proved its worthlessness. There

is a notion afloat that the modern trades-union is a descendant of

the mediæval gild. It might, with equal truth, and equal futility,

be asserted that the modern college, stock exchange, and joint stock

company, are descended from the mediæval gild. The nineteenth-century

trades-union is a nineteenth-century institution, as much or more

so than the ring, pool, corner, or trust. They are all products of

the same facts in the industrial development, and one is just as

inevitable, and, in that sense, legitimate, as the other. There are

some who, while vehemently denouncing trusts, offer us, with great

complacency and satisfaction, as a solution of the “labor question,”

the assertion that the employers and employees ought to combine or

coöperate in some way; they do not appear to see at all that if any

such thing should be brought about it would be the most gigantic

“trust” that could possibly be conceived.

AN OLD “TRUST”[45]

In the year 1579, Conrad Roth, a merchant of Augsburg, who had been

interested in the trade in spices between Lisbon and Germany, proposed

to an officer of the treasury of the Elector of Saxony a scheme for a

company to monopolize the pepper trade. The Elector was one of the most

enterprising and enlightened princes of his time, and the proposition

was really intended to be made to him as the only person who could

command the necessary capital and had, at the same time, courage and

energy to undertake the enterprise.

A company was formed of officers of the treasury, called the Thuringian

Company, and a warehouse was prepared at Leipzig. It was reckoned

that if the company could raise the price of pepper one groschen per

pound, the profits would be over 38,000 florins per annum. Roth and the

Thuringian Company were to participate in the enterprise equally, but

the Prince was to put up all the capital, and Roth was to do all the

work. The latter also owned a very valuable contract with the King of

Portugal, according to which he was, for five years, to send to India

money enough to buy up all the pepper produced, so that none could come

into Europe through Egypt and Italy. Before that time the Portuguese

officers had illegally sold some of it, so that it did get into Europe

that way; but by buying in India this was now to be stopped.

Roth proposed to divide Europe into three sections: Portugal, Spain,

and the West; Italy and the South; Germany and the North. The Saxon

company was to have the last as its share of the monopoly. It was hoped

that the gains might be forced up to a much higher figure than the one

above given, if only all pepper then in Frankfort, Venice, Nuremberg,

and Hamburg could be bought up.

No sooner was the plan formed, however, than Roth began to reach out

after extensions to it. He wanted to include the trade in other spices.

He also proposed that the Elector should provide the capital for an

exchange bank to do the exchange business between Leipzig and Lisbon.

Next he found that the existing postal arrangements were entirely

inadequate to the requirements of his business, and he proposed to the

Elector a complete plan for a postal service between Italy, Germany,

France, Spain, and Portugal. Then, having found the shipping facilities

unsatisfactory, he proposed that the Elector should enter into a

contract with the King of Denmark, by which the latter, who owned

ships, should provide a regular service between Lisbon and the Elbe.

These plans all show the grand energy of this projector, and the

Elector entered into them all. He could not carry out the postal

service without the consent of the Emperor, and this he was unable to

get. Roth and the Elector were ahead of their time; the Emperor was

not; he said that the plan proposed “something new, which had never

been in use in the time of their ancestors.” The attempt to unite

private merchants in the speculation also failed at Leipzig, and

elsewhere the attitude toward it was extremely unfriendly.

When the stock of pepper began to accumulate at Leipzig, it was found

that the article did not begin to be scarce elsewhere. Although the

advances of the Prince were already far greater than he had promised

when the plan was formed, it was found impossible to begin sales until

all the pepper on the European market elsewhere could be bought up;

and at the same time reports came that, in spite of Roth’s contract,

any one who had money could buy all the pepper he wanted in India,

and that it was coming into Europe freely through Egypt and Venice.

In the spring of 1580 the supply in the cities of Holland and Germany

was ample. It appeared that Roth could not prevent the contractors

for other parts of Europe from shipping to Germany, and the price

was falling there; instead of being at fifteen groschen, where the

speculators hoped to hold it, it was below twelve. At this point Roth’s

creditors began to put attachments on his property. All this led the

Elector to say: “We fear that there has been a great mistake in Roth’s

original and still repeated assertion that all the pepper which comes

into Europe comes through Lisbon.”

In April Roth committed suicide upon hearing of the death of the King

of Portugal. It was known that the King of Spain intended to claim the

succession, and that the Portuguese would resist; this war and the

possibility of a Spanish succession meant ruin to the speculation. The

Elector was obliged to send agents in every direction to get possession

of the assets of the company, in order to recover his funds. In the

end it appears that he escaped without very serious loss; he sold

the whole stock to a syndicate of South German merchants, at a price

which restored all his capital. After moralizing on his experience he

declared: “Inasmuch as I am now weary and sick, and am anxious to pass

the remaining time which God vouchsafes me in quiet, I have firmly

determined to have done with commerce, whether it would bring me gain

or loss.” “I have,” he says again, “strengthened my head and I will

have done with false commerce.”[46]

This enterprise was plainly an attempt to exploit a natural monopoly,

and to do it by an operation which should embrace the whole world;

it was a purely money-making scheme, unrelieved by any social or

industrial advantage. It shows how erroneous it is to suppose that

the merchants of the fifteenth and sixteenth centuries were inferior

in boldness to those of to-day, or superior to them in disposition

to sacrifice themselves for the public good; it would be easy to

accumulate any amount of evidence that they were, on the contrary,

entirely unscrupulous in the pursuit of gain, and that they were

bold beyond anything known to modern merchants. They might well be

so. This story shows what great risks, dangers, perplexities, and

disappointments they were subject to. The risk element was plainly

enormous, but the gains corresponded, of course, and hence we find some

of these men enormously rich; but it is plain that there was no routine

to help the man who had less natural ability. There was no regularity

in any of the contributory operations, such as shipping lines and

post-office; there were no regular and adequate banking facilities. If

by “trust” we mean a combination to exploit a monopoly, either natural

or artificial, the men of that period had made an art of that sort

of undertaking, and had a skill in it of which the moderns have no

conception.

One cannot help admiring the courage and energy of this Roth. He had

everything to contend with; he was far in advance of his age. If he had

lived in our time he would have been a great captain of industry--we

could have given him something better to do than making a corner on

pepper.

In our current social discussions there is a special kind of fallacy

which consists in quasi-historical assertions. For instance, it is said

that the power of capital is increasing and is greater than it ever has

been. This is in form an historical assertion, but those who make it

never expect to be held to an historical responsibility for it. They

throw it out with a kind of risk, because they are not very accurately

informed as to the power of capital in former times, and have not

heard that it used to act as it does now. Capitalists never had less

_irresponsible_ power than now. It is said that monopoly is growing

evil; that it never was so great. If people choose to pass laws to make

monopolies, they must, of course, take the consequences; but there

never was a time when the control of natural monopolies was so rational

as now, and there never was a time when the efforts of cliques to make

artificial monopolies could be so easily frustrated as now. It is said

that trusts embracing the whole world are a new and threatening danger,

never heard of before. It has seemed to me that, if we are to have

history, it might be well for once to see some facts which illustrate

“the good old times” as they really were. Of course nothing is thereby

proved as to the good or ill of trusts; but something is proved as to

the fallacy of that class of quasi-historical assertions which I have

described.

SHALL AMERICANS OWN SHIPS?[47]

Since the war, public attention has been drawn more or less to the

marked decline in American shipping. It has been generally assumed

and conceded that this was a matter for regret, and some discussion

has arisen as to remedies--what to do, in fact, in order to bring it

about that Americans should own ships. In these discussions, there

has generally been a confusion apparent in regard to three things

which ought to be very carefully distinguished from each other:

ship-building, the carrying trade, and foreign commerce.

1. As to ship-building--Americans began to build ships, as an industry,

within fifteen years after the settlement at Massachusetts Bay. Before

the Revolution they competed successfully as ship-builders with the

Dutch and English, and they sold ships to be used by their rivals.

Tonnage and navigation laws played an important part in the question

of separation between the colonies and England, and the same laws took

an important place in the formation of the Federal Constitution. One

generation was required for the people of this country to get over

the hard logical twist in the notion that laws which were pernicious

when laid by Great Britain were beneficial when laid by ourselves. The

vacillation which has marked the history of our laws about tonnage and

navigation is such that it does not seem possible to trace the effects

of legislation upon ship-building. In the decade 1850–1860 a very great

decline in the number of ships built, especially for ocean traffic,

began to be marked. Sails began to give way to steam, but the building

of steamships required great advantages of every kind in the production

of engines and other apparatus--that is, it required the presence,

in a highly developed state, of a number of important auxiliary and

coöperating industries. As iron was introduced into ship-building, of

course the ship-building industry became dependent upon cheap supplies

of iron as it had before been dependent on cheap supplies of wood.

No doubt these changes in the conditions of the industry itself have

been the chief cause of the decline in ship-building in this country,

and legislation has had only incidental effects. It is a plain fact

of history that the decline in ship-building began before the war and

the high tariff. Of course the effects produced by changes in the

conditions of an industry are inevitable; they are not to be avoided

by any legislation. They are annoying because they break up acquired

habits and established routine, and they involve loss in a change from

one industry to another, but legislation can never do anything but

cause that loss to fall on some other set of people instead of on those

directly interested. Within the last few years it has become certain

that steel is to be the material of ocean vessels--a new improvement

which will not tend to bring the industry back to this country. On the

whole, therefore, the decline in ship-building of the last twenty-five

years seems to indicate that somebody else than ourselves must build

the world’s ships for the present. We have, by legislative devices,

forced the production of a few ocean steamers, but these cases prove

nothing to the contrary of our inference. If this nation has a hobby

for owning some ships built in this country, and is willing to pay

enough for the gratification of that hobby, no doubt it can secure

the pleasure it seeks. A fisherman who has caught nothing sometimes

buys fish at a fancy price; he saves himself mortification and gets

a dinner, but the possession of the fish does not prove that he has

profitably employed his time or that he has had sport.

2. The carrying trade differs from ship-building as carting differs

from wagon-building. Carrying is the industry of men who own ships;

their interests are more or less hostile to those of the ship-builders.

Ship owners want to buy new ships at low prices; they want the number

of competing ships kept small; they want freights high. In all these

points the interest of the ship-builder is the opposite: the ship

owner is indifferent where he gets his ships; he only wants them cheap

and good. There is no sentiment in the matter any more than there is

in the purchase of wagons by an express company, or carriages by a

livery-stable keeper.

3. Foreign commerce is still another thing. It consists in the exchange

of the products of one country for those of another. The merchant wants

plenty of ships to carry all the goods at the lowest possible freights,

but it is of no importance to him where the ships were built, or who

owns and sails them.

A statement and definition of these three industries suffices to show

what confusion must arise in any discussion in which they are not

properly distinguished. It is plain that there are three different

questions: (1) Can the farmer build a vehicle? (2) Can he get his crop

carried to market? (3) Can he sell his crop? It is evident that a

country which needs a protective tariff on iron and steel must give up

all hopes of building ships for ocean traffic. For the country which,

by the hypothesis, needs a protective tariff on iron and steel cannot

produce those articles as cheaply as some other country. Its ships,

however, must compete upon the ocean with those of the country which

has cheap iron and steel. The former embody a larger capital than the

latter, and they must be driven from the ocean. If, then, subsidies

are given to protect the carrying trade, when prosecuted in ships

built of protected iron, the loss is transferred from the ship owners

to the people who pay taxes on shore. These taxes, however, add to the

cost of production of all things produced in the country, and thereby

lessen the power of the country to compete in foreign commerce. This

lessens the amount of goods to be carried both out and in, lowers

freights, throws ships out of use, and checks the building of ships;

and the whole series of legislative aids and encouragements must be

begun over again, with a repetition and intensification of the same

results. As long as the system lasts it works down, and the statistics

show, very naturally, that fewer and fewer ships are built in the

country, and that less and less of the carrying trade is carried on

under the national flag. In view of the three different and sometimes

adverse interests which are connected by their relation to the shipping

question, it is not strange that when the representatives of those

interests meet to try to consider that question, there should simply

be a scramble between them to see which can capture the convention.

The last convention of this sort was captured by the owners of a lot

of unsalable and unsailable old hulks, who had hit upon the brilliant

idea of getting the nation to pay them an annual bounty for the use

of their antiquated and dilapidated property. Strange to say, in a

country which is charged with being too practical and hardheaded, this

proposition received respectful attention and consideration. It is also

strange that our people should believe that taxing farmers to force the

production of iron, taxing farmers again to force the production of

ships out of protected iron, and taxing farmers again to pay subsidies

to enable protected ships to do business, is a way to make this country

rich.

So soon as the three different industries, or departments of business,

which I have described are distinguished from each other, it is

apparent that the fundamental one of the three is foreign commerce.

If we have no commerce we need no carrying, and it would be absurd to

build ships; if we have foreign commerce its magnitude determines the

amount of demand there is for freight and for ships. The circle of

taxation which I have mentioned, and which is obviously only a kind of

circuit, described from and upon the farmer as a center and fulcrum to

bear the weight of the whole, is necessarily and constantly vicious,

because it presses down on the foreign commerce, which is the proper

source of support for carrying and ship-building. On the other hand,

the emancipation of foreign commerce from all trammels of every sort

is the only means of increasing the natural, normal, and spontaneous

support of carrying and ship-building, assuming that the carrying trade

and ship-building are ends in themselves.

It is, however, no object at all for a country to have either

ship-building industry, or carrying trade, or foreign commerce; herein

lies the fundamental fallacy of all the popular and Congressional

discussions about ships and commerce. It is only important that the

whole population should be engaged in those industries which will

pay the best under the circumstances of the country. For the sake of

exposing the true doctrine about the matter, we may suppose (what is

not conceivable as a possible fact) that a country might not find

greater profit in the exportation of any part of any of its products

than in the home use of the same. If this could be true, and if it were

realized, the proof of it would be that no foreign trade would exist.

There would be no ground for regret since the people would be satisfied

and better off than as if they had a foreign trade. Carrying trade and

ship-building would not exist.

If a country had a foreign trade of any magnitude whatever, it would

not be any object for that country to do its own carrying. The figures

which show the amount paid by the people of the United States to

non-American ship owners for freight, and the figures which show the

small percentage of our foreign commerce which is carried under the

American flag, in themselves prove nothing at all. The only question

which is of importance is this: are the people of the United States

better employed now than they would be if engaged in owning and sailing

ships? If they were under no restraints or interferences, that question

also would answer itself. If Americans owned no ships and sailed no

ships, but hired the people of other countries to do their ocean

transportation for them, it would simply prove that Americans had some

better employment for their capital and labor. They would get their

transportation accomplished as cheaply as possible. That is all they

care for, and it would be as foolish for any nation to insist on doing

its own ocean transportation, devoting to this use capital and labor

which might be otherwise more profitably employed, as it would be for a

merchant to insist on doing his own carting, when some person engaged

in carting offered him a contract on more advantageous terms than those

on which he could do the work.

Furthermore, the people of a country which had little foreign commerce

might find it very advantageous to prosecute the carrying trade. In

history, the great trading nations have been those which had a small

or poor territory at home: the Dutch were the great carriers of the

seventeenth and eighteenth centuries, when the foreign commerce of

their own territory was insignificant; the New Englanders of the last

century and of the first quarter of this century became the carriers

of commodities to and fro between all parts of the world, especially

between our middle and southern states and the rest of the world. They

took to the sea because their land did not furnish them with products

which could remunerate their capital and labor so well as the carrying

trade did. They won a high reputation for the merchant service, which

was in their hands, and they earned fortunes by energy, enterprise,

promptitude, and fidelity. The carrying trade is an industry like any

other; it is neither more nor less desirable in itself than any other.

In any natural and rational state of things it would be absurd to be

writing essays about it. If any one thought he could make more profit

in that business than in some other he would set about it. When the

census was taken he would be found busy at that business, would be so

reported, and that would be the end of the matter as a phenomenon of

public interest.

If a nation had foreign commerce, and some of its citizens found the

carrying trade an advantageous employment for their labor and capital

as compared with other possible industries in the country, it would

not follow that some other citizens of that country ought to engage

in ship-building. It is no object to build ships, but only to get

such ships as are wanted, in the most advantageous manner. If a man

should refuse to carry on a carting business unless he could make

his own wagons, it would be such a reflection on his good sense that

his business credit would be very low. If some Americans could buy

and sail ships so as to make profits, what is the sense of saying

that they shall not do it because some other Americans cannot build

ships at a profit? Only one answer to this question has ever been

offered by anybody, and that is the prediction that, some day, if we

go without ships long enough, we shall, by the mere process of going

without, begin to get some--a prediction for which the prophets give no

guarantee, in addition to their personal authority, save the fact that

we have fewer ships and worse ones every year.

I have said above that, if there were no restraints or interferences,

we should simply notice whether any Americans took to the carrying

trade or not, and should thence infer that they might or might not

be better employed in some other industry. It is impossible, now,

to say whether, if all restrictions were removed, the carrying

trade or ship-building would be a profitable industry in the United

States or not. Any opinion given by anybody on that point is purely

speculative. The present state of the iron and steel industries, and

of the manufacture of engines and machinery, is so artificial that

no one can judge what would be the possibilities of those industries

under an entirely different state of things. It is, however, just

because the present state of things prevents a free trial that it is

indefensible; we are working in the dark and on speculation all the

time and have none of the natural and proper tests and guarantees for

what we are doing. We are controlled by the predictions of prophets,

the notions of dogmatizers, the crude errors of superficial students

of history, the wrong-headed inferences of shallow observers, and the

selfish machinations of interested persons. We can distinguish many

forces which are at work on our ship-building and on our carrying

trade, but none of them are genuine or respectable. We are submitting

to restraints and losses, and we have no guarantee whatever that we

shall ever win any compensation. The teaching of economic science

is distinctly that we never shall win any. We are expending capital

without any measurement or adjustment of the _quid pro quo_; we are

spending without calculation, and receiving something or nothing--we

do not know which. The wrong of all this is not in the assumption that

we have not certain industries which we would have (for we cannot

tell whether that is so or not), but the wrong is in the arbitrary

interference which prevents us from having them, if any man wants to

put his capital into them, and which prevents us from obtaining the

proper facts on which to base a judgment about the state and relations

of industries in the country.

Whenever the question of ships is raised, the clamor for subsidies

and bounties is renewed, and we are told again that England has

established her commerce by subsidies. It would be well if we could

have an understanding, once for all, whether England’s example is a

good argument or not. As she has tried, at some time or other, nearly

every conceivable economic folly, and has also made experiment of

some sound economic principles, all disputants find in her history

facts to suit them, and it needs only a certain easily acquired skill

in misunderstanding things to fashion any required argument from the

economic history of England. Some of our writers and speakers seem to

be under a fascination which impels them to accept as authoritative

examples the follies of English history, and to reject its sound

lessons. In the present case, however, the matter stands somewhat

differently. England is a great manufacturing area; it imports food

and raw materials, and exports finished products; it has, therefore,

a general and public interest in maintaining communication with all

parts of the world. The analogy in our case is furnished by the

subsidized railroads in our new states, or, perhaps even better, by

the mail routes which we sustain all over our territory, from general

considerations of public advantage, although many such routes do not

pay at all. Subsidies to ships for the mere sake of having ships, or

ocean traffic, when there is no business occasion for the subsidized

lines, would have no analogy with English subsidies.

If then the question is put: Shall Americans own ships? I do not see

how any one can avoid the simple answer: Yes, if they want them.

Universally, if an American wants anything, he ought to have it if he

can get it, and if he hurts no one else by getting it. To enter on the

question whether he is going to make it or buy it, and whether he is

going to buy it of A or of B, is an impertinence. We boast a great deal

of having a free country; our orators shout themselves hoarse about

liberty and freedom. Stop one of them, however, and ask him if he means

free trade and free ships, and he will demur. No; not that; that will

not do. He is in favor of freedom for himself and his friends in those

respects in which they want liberty against other people, but he is

not in favor of freedom for other people against restraints which are

advantageous to him and his political allies. He is in favor of freedom

for those who are being oppressed--by somebody else; not for those who

are being oppressed by himself. I heard it asserted not long ago that

we have no monopolies in this country, _because_ it is a free country.

It is not a free country, because there are more artificial monopolies

in it than in any other country in the world. The popular notion that

it is free rises from the fact that there are fewer natural monopolies

in it than in any other great civilized country. It is necessary,

however, to go to Turkey or Russia to find instances of legislative and

administrative abuses to equal the existing laws and regulations of the

United States about ships, the carrying trade, and foreign commerce.

These laws have been brought to public attention again and again, but

apparently with little effect in awakening popular attention, while the

newspapers carry all over the country details about abuses in Ireland,

Russia, and South Africa. We should stop bragging about a free country

and about the enlightened power of the people in a democratic republic

to correct abuses, while laws remain which treat the buying, importing,

owning, and sailing of ships as pernicious actions, or, at least, as

doubtful and suspicious ones. I have no conception of a free man or a

free country which can be satisfied if a citizen of that country may

not own a ship, if he wants one, getting it in any legitimate manner in

which he might acquire other property; or may not sail one, if he finds

that a profitable industry suited to his taste and ability; or may not

exchange the products of his labor with that person, whoever he may be,

who offers the most advantageous terms.

POLITICS IN AMERICA, 1776–1876[48]

When the Continental Congress met in 1774, few persons in the colonies

perceived that the ties to the mother country were about to be severed,

and few, if any, were republicans in theory, or contemplated a

“revolution” in the political system. The desire for independence was

developed during 1775, and the question as to the form of government

to be adopted came up by consequence. It presented no real difficulty.

The political organization of some of the colonies was such already

that there were no signs of dependence except the arms and flag, the

form of writs, and a responsibility to the Lords of Trade which sat

very lightly upon them. Necessary changes being made in these respects,

those colonies stood as complete republics. The others conformed to

this model.

In bringing about these changes great interest was developed in

political speculations, an interest which found its first direction

from Paine’s “Common Sense,” and was sustained by diligent reading of

Burgh’s “Political Disquisitions,” and Macaulay’s “History of England.”

The same speculations continued to be favorite subjects of discussion

for twenty-five years afterwards. The journals of the time were largely

made up of long essays by writers with fanciful _noms de plume_, who

discussed no simple matters of detail, but the fundamental principles

of politics and government. The method of treatment was not historical,

unless we must except crude and erroneous generalizations on classical

history, and it seemed to be believed that the colonial history of this

country was especially unfit to furnish guidance for the subsequent

period; but the disquisitions in question pursued an _a priori_ method,

starting from the broadest and most abstract assumptions. The same

method has marked American political philosophy, so far as there has

been any such thing, ever since. It is very much easier than the method

which requires a laborious study of history.

The natural effect of the war, but still more of the doctrines in

regard to liberty taught by Paine, and of the deplorable policy of

local terrorism pursued by the Committees of Safety against Tories

and Refugees, was to produce and bring into prominence a class of

active, shallow men, who felt their new powers and privileges but not

the responsibility which ought to go with these. The old colonial

bureaucracy, which had enjoyed all the social preëminence that colonial

life permitted, was gone. Office was open to many who, before the war,

had little chance of attaining it. They sought it eagerly, expecting to

enjoy the social advantages they had formerly envied. In the northern

states a class of eager office-seekers arose who gained a great

influence, saw their arena in the states especially, and jealously

opposed the power of the Confederation. This class made hatred to

England almost a religion, and testified to their political virtues by

persecuting Tories and Refugees. They found popular grievances also

ready to their hand as a means of advancement. The mass of the people

had been impoverished by the war. The attempts at commercial war had

reacted upon the nation with great severity. The paper issues of the

Congress and the states had wrought their work to derange values,

violate contracts, inflate credit, and destroy confidence. On the

return of peace the industries which had been sustained only by war

ceased to be profitable; the reduction of prices spread general ruin

and left thousands indebted and impoverished. The consequence was

discontent and disorder. All this was heightened by the contrast with

another class which had been enriched by privateering, contracts, and

“financiering.” The soldier who returned in rags, bringing only a few

bits of scrip worth fifteen or twenty cents on the dollar, found his

family in want, and some of his neighbors, who had borne few of the

sacrifices of the war, enriched by it and now enjoying its fruits. It

seemed to this whole class that they had not yet got liberty, or that

they did not know what it was. They did not look for it to a closer

union.

This party, for it soon became a party, found an alliance in a quarter

where it would hardly have been expected, in the slave-owning planters

of the South--an alliance which has been of immense importance in our

political history. The planters, at the outbreak of the war, had been

heavily indebted to English capitalists and merchants. They now feared

that they would be compelled to pay their debts, and they saw in the

treaty-making power of the general government the source from which

this compulsion would come. They therefore opposed any union which

would strengthen and give vigor to that power. To this party were added

those who had adopted, on theoretical and philosophical grounds, the

enthusiasm for liberty which was then prevalent in both hemispheres.

It should be added to the characteristics of this party that it looked

with indifference upon foreign commerce, cared little for foreign

opinion, would have been glad to be isolated from the Old World, and

had very crude opinions as to the status and relations of European

nations.

This party naturally went on to confound liberty with equality, and

political virtue with tenacity of rights. It furthermore confounded

power with privilege, and thought that it must allow no civil power

or authority to exist if it meant really to exterminate aristocratic

privilege. It was not so clear in its conception of political duties,

and certainly failed to see that the best citizen is not the one who

is most tenacious of his political rights, but the one who is most

faithful to his political duties; that envy and jealousy are not

political virtues; and that equality can be attained only by cutting

off every social advance and setting up as the standard, not what is

highest, but what is a low average.

An opposing party gradually formed itself of men of wider information

and superior training. These men understood the institutions of Great

Britain and their contrast to those of any other country in Europe.

They understood just what the war had done for the Colonies. They did

not consider that it had altered the internal institutions inherited

from the mother country, or set the Colonies adrift upon a sea of

political speculation to try to find a political utopia. Some of them

joined for a time in the prevalent opinion that the Americans were

better and purer than the rest of mankind, but experience soon taught

them their error. Tradition and experience still had weight with

them; and in making innovations they sought development rather than

destruction and reconstruction. They were conservative by property,

education, and character.

To this party it was evident that the colonies had lost much by falling

out of the place in the family of nations which they had filled as part

of the British Empire, and they believed that a similar place must

now be won on an independent footing. They understood the necessity

of well-regulated foreign relations, of foreign commerce, and of

public credit. Their general effort was, therefore, to secure order

and peace in the internal relations of the country by establishing

liberty indeed, but liberty under law; and to secure respectability and

respect abroad by fidelity to treaties and pecuniary engagements, by a

reputation for commercial integrity, and by a development of the arts

of peace. The first requisite to all this was a more perfect union.

The two parties, therefore, formed about the issue of a revision of the

Articles of Confederation, but it was not until the absolute necessity

of the objects aimed at by the Federalists--objects which are in their

nature less directly obvious and tangible--had been demonstrated by

experience, that this revision was brought about. The Union was not

the result of a free and spontaneous effort, but was “extorted from

the grinding necessity of a reluctant people.” A political party which

resists a proposed movement by predicting calamitous results to flow

from it must abide by the verdict of history. Tried by this test, the

anti-Federalists are convicted of resisting the most salutary action

in our political history. The victory was won, not by writing critical

essays about the movement and the relations of parties, but by the

direct and energetic activity of those men of that generation who had

enjoyed the greatest advantages of education and culture.

Three evils were inherited under the new Constitution from the old

system: slavery (which the framers of the Constitution tolerated,

thinking it on the decline), paper money (which they thought they had

eradicated), and the mercantile theories of political economy. These

three evils, in their single or combined development, have given

character to the whole subsequent political history of the country. One

of them has been eliminated by a civil war. The other two confront us

as the great political issues of to-day.

The framers of the Constitution, without having any precise definition

of a republic in mind, knew well that it differed from a democracy.

No one of them was a democrat. They were, at the time of framing the

Constitution, under an especial dread of democracy, on account of the

rebellion in Massachusetts. They meant to make a Constitution in order

to establish organized or articulated liberty, giving guarantees for it

which should protect it from popular tyranny as much as from personal

despotism. Indeed, they recognized the former as a great danger, the

latter as a delusion. They therefore established a constitutional

republic. The essential feature of such a system of government (for

it is a system of government, and not a political theory) is that

political power be conferred under a temporary and defeasible tenure.

That it be conferred by popular election is not essential, although

it is convenient in many cases. This method was the one naturally

indicated by the circumstances of the United States. The system which

was established did not pretend to give direct effect to public opinion

according to its fluctuations. It rather interposed delays and checks

in order to secure deliberation, and it aimed to give expression to

public opinion only after it was matured. It sought to eliminate

prejudice and passion by prescribing beforehand methods which seemed

just in themselves, independently of conflicting interests, in order

that, when a case arose, no advantage of procedure might be offered to

either party; and it aimed to subject action to organs whose operation

should be as impersonal as it is possible for the operation of

political organs to be.

Democracy, on the other hand, has for its essential feature equality,

and it confers power on a numerical majority of equal political units.

It is not a system of government for a state with any but the narrowest

limits. On a wider field it is a theory as to the depositary of

sovereignty. It seizes upon majority rule, which is only a practical

expedient for getting a decision where something must be done and a

unanimous judgment as to what ought to be done is impossible, and it

makes this majority the depositary of sovereignty, under the name of

the sovereignty of the people. This sovereign, however, is as likely

as any despot to aggrandize itself, and to promulgate the unformulated

doctrines of the divine right of the sovereign majority to rule, the

duty of passive obedience in the minority, and that the majority can do

no wrong.

Opposition to the Federal Constitution died out in a year or two,

and no one could be found who would confess that he had resisted its

adoption. Parties divided on questions of detail and of interpretation,

and the points on which they differed were those by which the

Constitution imposed delays and restraints upon the popular will. The

administrations of Washington and Adams threw continually increasing

weight in favor of constitutional guarantees, as the history of the

French Revolution seemed to the Federalists to furnish more and more

convincing proofs of the dangers of unbridled democracy. The opposition

saw nothing in that history save the extravagant ebullitions of a

people new to freedom--saw rather examples to be imitated than dangers

to be shunned. Sympathy and gratitude came in to exercise a weighty

influence on political issues. The personal executive and the judiciary

were the chief subjects of dislike, and General Washington himself

finally incurred abuse more wanton and severe than any President since,

except the elder Adams, has endured, because the fact was recognized

that Washington’s personality was the strongest bulwark which the

system possessed at the outset.

Democracy, however, was, and still is, so deeply rooted in the

physical and economic circumstances of the United States, that the

constitutional barriers set up against it have proved feeble and vain.

Fears of monarchy have now almost ceased or are ridiculed. Monarchist

and aristocrat are now used only as epithets to put down some over-bold

critic of our political system; but in the early days of the Republic

the mass of the people believed that the supporters of the first two

administrations desired aristocracy and monarchy. In a new country,

however, with unlimited land, the substantial equality of the people

in property, culture, and social position is inevitable. Political

equality follows naturally. Democracy is given in the circumstances of

the case. The yeoman farmer is the prevailing type of the population.

It is only when the pressure of population and the development of a

more complex social organization produce actual inequality in the

circumstances of individuals, that a political aristocracy can follow

and grow upon a social aristocracy. The United States are far from

having reached any such state as yet. These facts were felt, if not

distinctly analyzed and perceived, even by those who might on theory

have preferred monarchical institutions; and, as Washington said, there

were not ten men in the country who wanted a monarchy.

The Federalists repaid their opponents with a no less exaggerated

fear of their principles and intentions, regarding them as Jacobins

and _sans culottes_, who desired to destroy whatever was good and to

produce bloodshed and anarchy. Party spirit ran to heights seldom

reached since. Partisan abuse outstripped anything since. It was

an additional misfortune that the questions at issue were delicate

questions of foreign policy and international law. It is a great evil

in a republic that parties should divide by sympathy with two foreign

nations, and it is the greatest evil possible that they should not

believe in each other’s loyalty to the existing constitution.

The deeper movement which was stirring to affect the general attitude

or standpoint from which the Constitution was viewed (a matter, of

course, of the first importance under a written constitution), and

which was changing the constitutional republic into a democratic

republic, did not escape the observation of the most sagacious men of

the earliest days. Fisher Ames wrote to Wolcott in 1800: “The fact

really is, that over and above the difficulties of sustaining a free

government, and the freer the more difficult, there is a want of

accordance between our system and the state of our public opinion. The

government is republican; opinion is essentially democratic. Either

events will raise public opinion high enough to support our government,

or public opinion will pull down the government to its own level.” The

fact was that the government could not, under the system, long remain

above the level of public opinion. The Federalists, assisted by the

prestige of Washington’s name, held it there for twelve years; but they

probably never, on any of the party issues, even with a restricted

suffrage, had a majority of the voters. Dating the rise of parties

from the time of Jay’s Treaty, they had a majority of the House of

Representatives only under the excitement of French insult in 1798.

The leading men of 1787–1788, as has been said, worked industriously

and energetically for political objects. The first decade of the

Republic had not passed by, however, before men began to estimate

the cost and sacrifices of public life and the worry of abuse and

misrepresentation, to compare this with what they could accomplish

in politics, and to abandon the contest. To the best public men

professions and other careers offered fame, fortune, honorable and

gratifying success. In public life they struggled against, and were

defeated by, noisy, active men who could not have competed with them

in any other profession. Their best efforts were misunderstood and

misrepresented. They had no reward but the consciousness of fulfilling

a high public duty. Furthermore they lacked, as a class, the tact and

sagacity which the system indispensably requires. The leaders of the

Federal party committed a political blunder of the first magnitude in

quarrelling with John Adams, whatever may have been his faults. They

thereby separated themselves from the mass of their own party, and at

a time when parties were so evenly balanced that they required harmony

for any chance of success; and they put themselves in the position

of a junto or cabal, trying to dictate to the party without guiding

its reason. Those of them who had withdrawn from, or had been thrown

out of political life by the causes above mentioned were most active

in this work of disorganization. They had abandoned that sort of task

which they had engaged in at the outset, and which, difficult as it is,

is permanently incumbent on the cultured classes of the country--to

make the culture of the nation homogeneous and uniform by imparting

and receiving, by living in and of and for the nation, contributing to

its thought and life their best stores, whatever they are. A breach

was opened there which has gone on widening ever since, and which has

been as harmful to our culture as to our politics. On the one side

it has been left to anti-culture to control all which is indigenous

and “American”; and on the other hand American culture has been like

a plant in a thin soil, given over to a sickly dilettantism and the

slavish imitation of foreign models, ill understood, copied for matters

of form, and, as often as not, imitated for their worst defects.

An actual withdrawal of the ablest men from political life, such as

we have come to deplore, began, then, at this early day. Many others

were thrown out for too great honesty and truth in running counter to

the popular notions of the day. John Adams incurred great unpopularity

for having said that the English Constitution was one of the grandest

achievements of the human race--an assertion which Callender disputed,

with great popular success, by dilating upon the corruption of the

English administration under George III, but an assertion which, in

the sense in which it was made, no well-informed man would question.

Sedgwick laid down the principle that the government might claim the

last man as a soldier and the last dollar in taxation--an abstract

proposition which is unquestionable, but which Callender disputed,

once more with great popular success, by arguing as if it were a

proposition to take the last man and the last dollar. Dexter lost a

reëlection by opposing a clause of the naturalization law, that a

foreign nobleman should renounce his titles on being naturalized. It

was opposed as idle and frivolous, and favored as if every foreign

nobleman would otherwise become by naturalization a member of

Congress. Hamilton and Knox abandoned the public service on account

of the meagerness of their salaries. Pickering, who left office

really insolvent, and with only a few hundred dollars in cash, was

pursued by charges of corruption on the ground of unclosed accounts.

Wolcott, at the end of long and faithful service, was charged with the

responsibility for a fire which broke out in his office, as if he had

sought to destroy the records of corrupt proceedings.

It is no wonder that these men abandoned public life, and that their

examples deterred others, unless they were men born to it, who could

not live out of the public arena; but it is true now, as it was then,

that men of true culture, high character, and correct training can

abandon public political effort only by the surrender of some of the

best interests of themselves and their posterity. The pursuit of

wealth, which is the natural alternative, has always absorbed far

too much of the ambition of the nation, and under such circumstances

there could be no other result than that a wealthy class should arise,

to whom wealth offers no honorable social power, in whom it awakens

no intellectual or political ambition, to whom it brings no sense of

responsibility, but for whom it means simply the ability to buy what

they want, men or measures, and to enjoy sensual luxury. A class of men

is produced which mocks at the accepted notions while it uses them, and

scorns the rest of us with a scorn which is so insulting only because

it is so just. It is based on the fact that we will not undergo the

sacrifices necessary to self-defense. This pursuit of wealth was

almost the only pursuit attractive to able men who turned their backs

on the public service in the early days. In later years professional

careers and scientific and literary pursuits have disputed to a great

and greater extent the dominion of wealth over the energies of the

nation; but politics have not yet won back their due attraction for

able and ambitious men.

The Federalists also held a defective political philosophy. They did

not see that the strength of a constitutional republic such as they

desired must be in the intelligent approval and confidence of the

citizens. Adams and Hamilton agreed in supposing that some artificial

bond must be constructed to give strength to the system. Hamilton

looked for it in the interest of the wealthy class, which he wanted

to bind up in the system--a theory which would have changed it into

a plutocracy. Adams sought the bond in ambition for social eminence,

and did not see that, where such eminence sprang only from wealth or

official rank, the very principle of human nature which he invoked

would, under the form of envy, counteract his effort.

The presidential election of 1801 having been thrown into the House of

Representatives, the Federalists added to their former blunder another

far more grave. Abandoning their claims to principle and character,

they took to political intrigue and bargaining, in the attempt to elect

Burr over Jefferson. Their exit from power might otherwise have been

honorable, and they might, as an opposition party, have made a stand

for inflexible principle and political integrity; but it was hard for

them after this to talk of those things, especially as Burr went on to

develop the character which Hamilton had warned them that he possessed.

They fell into the position of “independent voters,” throwing their

aid now with one and now with the other faction of the majority; but

history does not show that they ever forced either one or the other

to “adopt good measures,” for the obvious reason that the majority

possessed the initiative. The purchase of Louisiana seemed to them to

transfer the power of the Union to the southern and frontier states,

the seat of the political theories which they regarded as reckless

and lawless. They feared that the power of the Union would be used

to sacrifice commerce and to put in operation wild theories by which

the interests of the northern and eastern states would be imperiled,

and the inherited institutions of constitutional liberty, which they

valued as their best possessions, would be overthrown. The Embargo and

Non-intercourse Acts seemed only the fulfillment of these fears. The

recourse of a minority has always been to invoke the Constitution and

to insist upon the unconstitutionality of what they could not resist

by votes, each party in turn thereby bearing witness to the truth that

the Constitution is the real safeguard of rights and liberty. In the

last resort also the minority, if it has been local, and has seen the

majority threatening to use the tremendous power of the Confederation

to make the interests of the minority subservient to the interests

of the rest, has felt its loyalty to the Union decline. How far the

Federalists went in this direction it is difficult to say, but they

certainly went farther than they were afterwards willing to confess

or remember. They gradually faded out of view as a political power

after the second war and in the twenties “Federalist” became a term of

reproach.

The opposite party, called by themselves Republicans after 1792, took

definite form in opposition to Washington’s administration on the

question of ratifying Jay’s Treaty. They were first called Democrats in

1798, the name being opprobrious. They adopted it, however, first in

connection with the former name; and the joint appellation, Democratic

Republicans, or either separately, was used indifferently down to the

middle of this century. Jefferson was the leader of this party. He

did not write any political disquisitions or aid in the attempts which

have been mentioned to form public opinion; but his expressions in

letters and fugitive writings struck in with the tide of Democracy so

aptly and exactly that he seemed to have put into people’s mouths just

the expression for the vague notions which they had not yet themselves

been able to get into words. Jefferson, in fact, was no thinker.

He was a good specimen of the _a priori_ political philosopher. He

did not reason or deduce; he dogmatized on the widest and most rash

assumptions, which were laid down as self-evident truths. He did not

borrow from the contemporaneous French schools, for his democracy is

of a different type; but both sprang from the same germs and pursued

the same methods of speculation. Freneau, Bache, Callender, and Duane

wrought continually upon public opinion, and Jefferson entered into

the leadership of the party they created, by virtue of a certain skill

in giving watchwords and dogmatic expressions for the ideas which they

disseminated.

The dogmas which Jefferson taught, or of which he was the exponent,

were not without truth. Their fallacy consisted in embracing much

falsehood, and also in excluding the vast amount of truth which

lay outside of them. For instance, the dogma that the voice of the

people is the voice of God is not without truth, if it means that the

enlightened and mature judgment of mankind is the highest verdict on

earth as to what is true or wise. This is the truth which is sought

to be expressed in the ecclesiastical dogma of Catholicity, but the

political and the ecclesiastical dogma have the same limitation. This

verdict of mankind cannot be obtained in any formal and concrete

expression, and is absolutely unattainable on grounds of speculation

antecedent to experiment. It is in history only; or, rather, it

constitutes history. In Jefferson’s doctrine and practice it resolved

itself simply into this practical rule: the test of wisdom for the

statesman and of truth for the philosopher is popularity. When the

statesman has a difficult practical question before him as to what to

do, according to this theory he puts forward what seems to him best

as a proposition. If, then, the return wave of popular sympathy comes

back to him with promptitude and with the intensity to which he is

accustomed, he infers that he has proposed wisely, and goes forward.

If there is delay or uncertainty in the response, he draws back. The

actual operation of this theory is that, if the statesman in question

is the idol of a popular majority, the approving response is quick and

sure, because the proposition comes from him, not because the tribunal

of appeal has considered or can consider the question. If an unpopular

man endeavors to use the same test, the answer is doubtful, feeble,

hesitating, or impatient, because those to whom he appeals have not the

necessary preparation, or time, or interest to judge in the matter.

In general, the theory is popular, because it flatters men that they

can decide anything offhand, by the light of nature, or by some prompt

application of assumptions as to “natural rights,” or by applying the

test of a popular dogma or prejudice. It tramples study and thought and

culture under foot and turns their boasts to scorn. On the other hand,

it makes statesmanship impossible. Study and thought go for nothing.

There can be no authority derived from information or science or

training, and no leadership won by virtue of these. If the decision is

to come from a popular vote, why not abandon useless trouble and trust

to that alone?

Such has been the outcome in history, as will appear further on,

of the doctrines which are associated with the name of Jefferson,

although they really had their origin in the great social tendencies

of the time and in the circumstances of the American people. The love

of philosophizing about government was a feature in the life of the

second half of the eighteenth century. The method of philosophizing

on assumptions was the only one employed. The Americans, with meager

experience and high purposes, readily took refuge in abstractions.

The habit of pursuing two or three occupations at once destroyed

respect for special or technical knowledge. There seemed to be nothing

unreasonable in referring a question of jurisprudence or international

law to merchants, farmers, and mechanics, for them to give an opinion

on it as a mere incident in their regular occupations. Jefferson

himself could sit down and develop out of his own consciousness a plan

for fortifications and a navy, for a nation in imminent danger of

war, with no more misgivings, apparently, than if he was planning an

alteration on his estate.

“The further democracy was pushed, first in theory, then in practice,

the more completely was the belief in the equality of all [in rights

and privileges] converted, in the minds of the masses, into the

belief in the equal ability of all to decide political questions of

every kind. The principle of mere numbers gradually supplanted the

principle of reflection and study.” This tendency reaches its climax

in the popular doctrines that every man has a right to his opinion

and that one man’s opinion is as good as another’s. We have abundant

illustration of the might which it gives to “the phrase.”

It has been well said that “men can reason only from what they know”--a

doctrine which would reduce the amount of reasoning to be done by

anybody to a very little. The common practice is to reason from what we

do not know, which makes every man a philosopher.

Jefferson’s election was the first triumph of the tendency towards

democracy--a triumph which has never yet been reversed. The old

conservatism of the former administrations died out, and it is

important to observe that, from this time on, we have in conflict not

the same two parties as before, but only factions or subdivisions of

the one party which, under Washington and Adams, was in opposition to

the administration.

The event did not justify the fears which were entertained before

the election. Jefferson did not surrender any of the power of the

executive. He aggrandized it as neither of his predecessors would have

dared to do. He did not surrender the central power in favor of states’

rights; and his foreign policy, governed by sympathy to France and

hatred to England, was only too sharp and spirited. It seldom happens

to an opposition party, coming into power, to have the same question

proposed to it as to its predecessor, and to put its own policy to

trial. This happened to Jefferson. Jay’s Treaty was hesitatingly

signed by Washington, and it gave the country ten years of peace and

neutrality. Pinckney and Monroe’s Treaty was rejected by Jefferson, and

in six years the country was engaged in a fruitless war.

Madison’s administration revived many of the social usages which

Jefferson had ostentatiously set aside, in consistency with the general

spirit of preference, on the ground of republican simplicity, for what

is common over what is elegant and refined. The natural tendency of

the party in power to think that what is is right, and that while they

are comfortable other people ought to be so, was apparent here. It

went on so far during Madison’s first term, that the leaders thought

it necessary to break the monotony and to secure again, in some way,

the readiness and activity of political life which had prevailed under

Jefferson. They forced Madison into the war with England--a war which

brought disturbance into the finances and spread distress amongst

the people, which won some glory at sea only by vindicating the old

Federalist policy in regard to a navy, but which was marked by disaster

on land until the battle of New Orleans. At the return of peace in

Europe, England was left free to deal with the United States, and a

peace was hastily made in which the question of impressment, the only

question at issue, was left just where it had been at the beginning.

There ensued in our internal politics an “era of good feeling.” The

old parties no longer had any reason to exist. Some of the Federal

doctrines had been adopted. The navy was secure in its popularity.

The Federal financial system had been adopted by the party in power.

They had contracted a debt, laid direct taxes, and enlisted armies.

When confronted by problems of war and debt, they had found no better

way to deal with them than the ways which had been elaborated by

the older nations, and which they had blamed the Federalists for

adopting. The questions of neutrality had disappeared with the return

of peace in Europe. The fears of Jacobinism on the one hand and of

monarchy on the other were recognized as ridiculous. If, however, any

one is disposed to exaggerate the evils of party, he ought to study

the history of the era of good feeling. Political issues were gone,

but personal issues took their place. Personal factions sprang up

around each of the prominent men who might aspire to the Presidency,

and, in their struggles to advance their favorites and destroy their

rivals, they introduced into politics a shameful series of calumnies

and personal scandals. Every candidate had to defend himself from

aspersions, from attacks based upon his official or private life. The

newspapers were loaded down with controversies, letters, documents,

and evidence on these charges. The character of much of this matter

is such as to awaken disgust and ridicule. Mr. A. tells Mr. B that,

when in Washington, he was present at a dinner at the house of Mr.

C at which Mr. D said that he came on in the stage with Mr. E, who

told him that Mr. F had seen a letter from Mr. G, a supposed friend

of one candidate, to Mr. H, the friend of another candidate, making

charges against the first candidate, which he (Mr. G) felt bound

in honor to make known. Mr. B publishes his information, and then

follow long letters from all the other gentlemen, with explanations,

denials, corroborative testimony, and so on, in endless reiteration

and confusion. It was another noteworthy feature of this period, that

every public man seemed to stand ready to publish a “vindication” at

the slightest provocation, and that in these vindications a confusion

between character and reputation appears to be universal.