Principles of Political Economy with some of their Applications to Social Philosophy

John Stuart Mill
Mill, John Stuart
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William J. Ashley, ed.
First Pub. Date
London; Longmans, Green and Co.
Pub. Date
7th edition.

Notes to the Electronic Edition:

* The Library of Economics and Liberty electronic edition is taken from that prepared by W. J. Ashley in 1909, based on Mill's 7th edition, 1870. Footnote references in the text are color coded according to authorship as follows:

14* Mill's original notes, color-coded green in the text, are unbracketed and unlabeled in the footnote file.
14* [Ashley's's notes, color-coded gold in the text, are bracketed in the footnote file.]
* Occasional website (Library of Economics and Liberty) Editor's notes, color-coded red in the text, are unbracketed and indicated by asterisks without numbers in the text.

Book III. Chapter I. Section 4

1. [The remaining words of the sentence were added in the 6th ed. (1865).]

Book III. Chapter II. Section 1

2. Logic of Political Economy, p. 13.

Book III. Chapter II. Section 3

3. Adam Smith, who introduced the expression "effectual demand," employed it to denote the demand of those who are willing and able to give for the commodity what he calls its natural price, that is the price which will enable it to be permanently produced and brought to market.—See his chapter on Natural and Market Price (book i. ch. 7).

Book III. Chapter II. Section 4

4. "The price of corn in this country has risen from 100 to 200 per cent and upwards, when the utmost computed deficiency of the crops has not been more than between one-sixth and one-third below an average, and when that deficiency has been relieved by foreign supplies. If there should be a deficiency of the crops amounting to one-third, without any surplus from a former year, and without any chance of relief by importation, the price might rise five, six, or even tenfold."—Tooke's History of Prices, vol. i. pp. 13-5.

5. See Tooke, and the Report of the Agricultural Committee of 1821.

Book III. Chapter III. Section 1

6. Supra, p. 412.

Book III. Chapter III. Section 2

7. Logic of Political Economy, pp. 230-1.

Book III. Chapter IV. Section 1

8. Supra, pp. 29-31.

9. Principles of Political Economy and Taxation, ch. i. sect. 3.

Book III. Chapter IV. Section 6

10. [1862] Some of these quarries, I believe, have been rediscovered, and are again worked.

Book III. Chapter VI. Section 3

11. Esprit des Lois, liv. xi. ad finem. [See Appendix S. The Theory of Value.]

Book III. Chapter VII. Section 1

12. Montesquieu, Esprit des Lois, liv. xxii. oh. 8.

Book III. Chapter VII. Section 2

13. [I.e. the Napoleonic war.]

14. [So from the 3rd ed. (1852). In the 1st ed. (1848): "so abundant as the mines of the Ural mountains and of Siberia." In the 2nd ed. (1849): "to which may now be added California."]

15. ["As yet" added in 2nd ed. (1849).]

Book III. Chapter VIII. Section 1

16. Infra, chap. xxiii.

Book III. Chapter VIII. Section 4

17. ["Invested" substituted for "employed" in 3rd ed. (1852).]

18. Fullarton, Regulation of Currencies, 2nd edit. pp. 87-9.

19. [The rest of the sentence was added in the 4th ed. (1857), and the proposition described as "a totally incorrect expression of the fact." In the 5th ed. (1862) "extremely" was substituted for "totally."]

Book III. Chapter IX. Section 1

20. The effect of the prohibition cannot, however, have been so entirely insignificant as it has been supposed to be by writers on the subject. The facts adduced by Mr. Fullarton, in the note to page 7 of his work on the Regulation of Currencies, shows that it required a greater percentage of difference in value between coin and bullion than has commonly been imagined, to bring the coin to the melting-pot.

21. In England, though there is no seignorage on gold coin, (the Mint returning in coin the same weight of pure metal which it receives in bullion,) there is a delay of a few weeks after the bullion is deposited, before the coin can be obtained, occasioning a loss of interest, which, to the holder, is equivalent to a trifling seignorage. From this cause, the value of coin is in general slightly above that of the bullion it contains. An ounce of gold, according to the quantity of metal in a sovereign, should be worth 3l. 17s. 10½d.; but it was usually quoted at 3l. 17s. 6d., until the Bank Charter Act of 1844 made it imperative on the Bank to give its notes for all bullion offered to it at the rate of 3l. 17s. 9d.

Book III. Chapter IX. Section 2

22. [The final sentence of this paragraph was added in the 3rd ed. (1852).]

Book III. Chapter IX. Section 3

23. From some printed, but not published, Lectures of Mr. Senior: in which the great differences in the business done by money, as well as in the rapidity of its circulation, in different states of society and civilization, are interestingly illustrated.

24. [See Appendix T. The Value of Money.]

Book III. Chapter X. Section 2

25. [The following passage, which occurred in the original ed. (1848) at this point, was omitted in the 3rd ed. (1852):

"This is the case in France. Silver alone is (I believe) a legal tender, and all sums are expressed and accounts kept in francs, a silver coin. Gold is also coined, for convenience, but does not pass at a fixed valuation: the twenty francs marked on a napoleon are merely nominal, napoleons being never to be bought for that sum, but always bearing a small premium, or agio as it is called; though, as the agio is very trifling, (the bullion value differing very little from twenty francs), it is seldom possible to pass a napoleon for more than that sum in ordinary retail transactions. Silver, then, is the real money of the country, and gold coin only a merchandise; but, though not a legal tender, it answers all the real purposes of one, since no creditor is at all likely to refuse receiving it at the market price, in payment of his debt."]

26. [See Appendix U. Bimetallism.]

Book III. Chapter XI. Section 1

27. [1865] To make the proposition in the text strictly true, a corrective, though a very slight one, requires to be made. The circulating medium existing in a country at a given time, is partly employed in purchases for productive, and partly for unproductive consumption. According as a larger proportion of it is employed in the one way or in the other, the real capital of the country is greater or less. If, then, an addition were made to the circulating medium in the hands of unproductive consumers exclusively, a larger portion of the existing stock of commodities would be bought for unproductive consumption, and a smaller for a productive, which state of things, while it lasted, would be equivalent to a diminution of capital; and on the contrary, if the addition made be to the portion of the circulating medium which is in the hands of producers, and destined for their business, a greater portion of the commodities in the country will for the present be employed as capital, and a less portion unproductively. Now an effect of this latter character naturally attends some extensions of credit, especially when taking place in the form of bank notes, or other instruments of exchange. The additional bank notes are, in ordinary course, first issued to producers or dealers, to be employed as capital; and though the stock of commodities in the country is no greater than before, yet as a greater share of that stock now comes by purchase into the hands of producers and dealers, to that extent what would have been unproductively consumed is applied to production, and there is a real increase of capital. The effect ceases, and a counter-process takes place, when the additional credit is stopped, and the notes called in.

Book III. Chapter XI. Section 4

28. Enquiry into the Nature and Effects of the Paper Credit of Great Britain, p. 24. This work, published in 1802, is even now [1848] the clearest exposition that I am acquainted with, in the English language, of the modes in which credit is given and taken in a mercantile community.

29. Pp. 29-33.

30. P. 40.

31. [So from the 4th ed. (1857). The original (1848) ran: "Up to twenty years ago."]

Book III. Chapter XI. Section 6

32. [The concluding clause of this sentence was added in the 4th ed. (1857).]

33. According to Mr. Tooke (Inquiry into the Currency Principle, p. 27) the adjustments of the Clearing-house "in the year 1839 amounted to 954,401,600l., making an average amount of payments of upwards of 3,000,000l. of bills of exchange and cheques daily effected through the medium of little more than 200,000l. of bank notes."—[1862] At present a very much greater amount of transactions is daily liquidated, without bank notes at all, cheques on the Bank of England supplying their place.

Book III. Chapter XII. Section 3

34. [1865] The commercial difficulties, not however amounting to a commercial crisis, of 1864, had essentially the same origin. Heavy payments for cotton imported at high prices, and large investments in banking and other joint stock projects, combined with the loan operations of foreign governments, made such large drafts upon the loan market as to raise the rate of discount on mercantile bills as high as nine per cent.

Book III. Chapter XII. Section 5

35. Tooke, History of Prices, vol. iv. pp. 125-6.

36. Inquiry into the Currency Principle, pp. 79 and 136-8.

37. The most approved estimate is that of Mr. Leatham, grounded on the official returns of bill stamps issued. The following are the results:—

Year. Bills created in Great Britain
and Ireland, founded on
returns of Bill Stamps
issued from the Stamp Office.
Average amount in
circulation at one time
in each year.
1832 £356,153,409 £89,038,352
1833 383,659,585 95,914,896
1834 379,155,052 94,788,763
1835 405,403,051 101,350,762
1836 485,943,473 121,485,868
1837 455,084,445 113,771,111
1838 465,504,041 116,376,010
1839 528,493,842 132,123,460

"Mr. Leatham," says Mr. Tooke, "gives the process by which, upon the data furnished by the returns of stamps, he arrives at these results; and I am disposed to think that they are as near an approximation to the truth as the nature of the materials admits of arriving at."—Inquiry into the Currency Principle, p. 26.—[1862] Mr. Newmarch (Appendix No. 39 to Report of the Committee on the Bank Acts in 1857, and History of Prices, vol. vi, p. 587) shows grounds for the opinion that the total bill circulation in 1857 was not much less than 180 millions sterling, and that it sometimes rises to 200 millions.

Book III. Chapter XII. Section 6

38. On the Regulation of Currencies, p. 41.

Book III. Chapter XII. Section 7

39. [This section was added in the 4th ed. (1857).]

Book III. Chapter XII. Section 8

40. [This and the preceding sentence replaced in the 4th ed. (1857) the following sentence of the original text: "I can see no reason for the doctrine, that according as there are more or fewer bank notes, there will be more or less of other descriptions of credit."]

Book III. Chapter XIII. Section 3

41. [Until the 6th ed. (1865) the paragraph ended with "five hundred francs to pay for a cup of coffee."]

42. Among the schemes of currency to which, strange to say, intelligent writers have been found to give their sanction, one is as follows: that the state should receive, in pledge or mortgage, any kind or amount of property, such as land, stock, &c., and should advance to the owners inconvertible paper money to the estimated value. Such a currency would not even have the recommendations of the imaginary assignats supposed in the text; since those into whose hands the notes were paid by the persons who received them, could not return them to the government, and demand in exchange land or stock which was only pledged, not alienated. There would be no reflux of such assignats as these, and their depreciation would be indefinite.

43. [In the 2nd ed. (1849) was inserted the following section, which did not disappear till the 5th ed. (1862):

"§ 4. One of the most transparent of the fallacies by which the principle of the convertibility of paper money has been assailed, is that which pervades a recent work by Mr. John Gray, Lectures on the Nature and Use of Money: the author of the most ingenious, and least exceptionable plan of an inconvertible currency which I have happened to meet with. This writer has seized several of the leading doctrines of political economy with no ordinary grasp, and among others, the important one, that commodities are the real market for commodities, and that Production is essentially the cause and measure of Demand. But this proposition, true in a state of barter, he affirms to be false under a monetary system regulated by the precious metals, because if the aggregate of goods is increased faster than the aggregate of money, prices must fall, and all producers must be losers; now neither gold nor silver, nor any other valuable thing, 'can by any possibility be increased ad libitum, as fast as all other valuable things put together:' a limit, therefore, is arbitrarily set to the amount of production which can take place without loss to the producers: and on this foundation Mr. Gray accuses the existing system of rendering the produce of this country less by at least one hundred million pounds annually, than it would be under a currency which admitted of expansion in exact proportion to the increase of commodities.

"But, in the first place, what hinders gold, or any other commodity whatever, from being 'increased as fast as all other valuable things put together?' If the produce of the world, in all commodities taken together, should come to be doubled, what is to prevent the annual produce of gold from being doubled likewise? for that is all that would be necessary, and not (as might be inferred from Mr. Gray's language) that it should be doubled as many times over as there are other 'valuable things' to compare it with. Unless it can be proved that the production of bullion cannot be increased by the application of increased labour and capital, it is evident that the stimulus of an increased value of the commodity will have the same effect in extending the mining operations, as it is admitted to have in all other branches of production.

"But, secondly, even if the currency could not be increased at all, and if every addition to the aggregate produce of the country must necessarily be accompanied by a proportional diminution of general prices; it is incomprehensible how any person who has attended to the subject can fail to see that a fall of price, thus produced, is no loss to producers: they receive less money; but the smaller amount goes exactly as far, in all expenditure, whether productive or personal, as the larger quantity did before. The only difference would be in the increased burthen of fixed money payments; and of that (coming, as it would, very gradually) a very small portion would fall on the productive classes, who have rarely any debts of old standing, and who would suffer almost solely in the increased onerousness of their contribution to the taxes which pay the interest of the National Debt."]

Book III. Chapter XIII. Section 6

44. [Until the 5th ed. (1862) the text ran: "from 1819 to the present time, it has been... contended," and "the answer" was spoken of in the present tense.]

Book III. Chapter XIV. Section 1

45. Supra, pp. 66-8.

Book III. Chapter XIV. Section 4

46. Infra, book iv. chap. 4.

Book III. Chapter XVII. Section 2

47. Essays on some Unsettled Questions of Political Economy, Essay I.

48. [1862] I at one time believed Mr. Ricardo to have been the sole author of the doctrine now universally received by political economists, on the nature and measure of the benefit which a country derives from foreign trade. But Colonel Torrens, by the republication of one of his early writings, The Economists Refuted, has established at least a joint claim with Mr. Ricardo to the origination of the doctrine, and an exclusive one to its earliest publication.

49. Third ed. p. 120.

Book III. Chapter XVII. Section 5

50. Vide supra, book i. chap. ix. § 1.

Book III. Chapter XVIII. Section 4

51. Supra, book iii. chap. ii. § 4.

Book III. Chapter XVIII. Section 5

52. [Here was omitted in the 3rd ed. (1852) the following passage of the original: "Several of those consequences were indicated in the Essay already quoted; and others have been pointed out in the writings of Colonel Torrens, who appears to me substantially correct in his general view of the subject, and who has supported it with great closeness and consecutiveness of reasoning, though his conclusions are occasionally pushed much beyond what appear to me the proper limits of the principle on which they are grounded."]

Book III. Chapter XVIII. Section 6

53. [§§ 6-8 were inserted in the 3rd ed. (1852).]

Book III. Chapter XVIII. Section 7

54. It may be asked, why we have supposed the number n to have as its extreme limits, m and 2m (or p/q m.)? why may not n be less than m, or greater than 2m; and if so, what will be the result? [The intended term is: (p/q) × m.—Econlib Ed.]

This we shall now examine; and, when we do so, it will appear that n is always, practically speaking, confined within these limits.

Suppose, for example, that n is less than m; or, reverting to our former figures, that the million yards of cloth, which England can make, will not satisfy the whole of Germany's pre-existing demand; that demand being (let us suppose) for 1,200,000 yards. It would then, at first sight, appear that England would supply Germany with cloth up to the extent of a million; that Germany would continue to supply herself with the remaining 200,000 by home production: that this portion of the supply would regulate the price of the whole; that England therefore would be able permanently to sell her million of cloth at the German cost of production (viz. for two millions of linen) and would gain the whole advantage of the trade, Germany being no better off than before.

That such, however, would not be the practical result, will soon be evident. The residuary demand of Germany for 200,000 yards of cloth furnishes a resource to England for purposes of foreign trade of which it is still her interest to avail herself; and though she has no more labour and capital which she can withdraw from linen for the production of this extra quantity of cloth, there must be some other commodities in which Germany has a relative advantage over her (though perhaps not so great as in linen): these she will now import, instead of producing, and the labour and capital formerly employed in producing them will be transferred to cloth, until the required amount is made up. If this transfer just makes up the 200,000, and no more, this augmented n will now be equal to m; England will sell the whole 1,200,000 at the German values: and will still gain the whole advantage of the trade. But if the transfer makes up more than the 200,000, England will have more cloth than 1,200,000 yards to offer; n will become greater than m, and England must part with enough of the advantage to induce Germany to take the surplus. Thus the case, which seemed at first sight to be beyond the limits, is transformed practically into a case either coinciding with one of the limits or between them. And so with every other case which can be supposed.

Book III. Chapter XVIII. Section 8

55. The increase of demand from 800,000 to 900,000, and that from a million to 1,440,000, are neither equal in themselves, nor bear an equal proportion to the increase of cheapness. Germany's demand for cloth has increased one-eighth, while the cheapness is increased one-fourth. England's demand for linen is increased 44 per cent, while the cheapness is increased 60 per cent.

Book III. Chapter XVIII. Section 9

56. Three Lectures on the Cost of Obtaining Money.

57. [See Appendix V. International Values.]

Book III. Chapter XIX. Section 3

58. [In the 1st and 2nd editions here followed: "(as has been done in the controversies called forth by the recent publications of Colonel Torrens)."]

Book III. Chapter XX. Section 2

59. [1862] Written before the change in the relative value of the two metals produced by the gold discoveries. The par of exchange between gold and silver currencies is now variable, and no one can foresee at what point it will ultimately rest.

Book III. Chapter XX. Section 3

60. On the news of Bonaparte's landing from Elba, the price of bills advanced in one day as much as ten per cent. Of course this premium was not a mere equivalent for cost of carriage, since the freight of such an article as gold, even with the addition of war insurance, could never have amounted to so much. This great price was an equivalent not for the difficulty of sending gold, but for the anticipated difficulty of procuring it to send; the expectation being that there would be such immense remittances to the Continent in subsidies and for the support of armies, as would press hard on the stock of bullion in the country (which was then entirely denuded of specie), and this, too, in a shorter time than would allow of its being replenished. Accordingly the price of bullion rose likewise, with the same suddenness. It is hardly necessary to say that this took place during the Bank restriction. In a convertible state of the currency, no such thing could have occurred until the Bank stopped payment.

Book III. Chapter XXI. Section 1

61. The subjoined extract from the separate Essay previously referred to, will give some assistance in following the course of the phenomena. It is adapted to the imaginary case used for illustration throughout that Essay, the case of a trade between England and Germany in cloth and linen.

"We may, at first, make whatever supposition we will with respect to the value of money. Let us suppose, therefore, that before the opening of the trade, the price of cloth is the same in both countries, namely six shillings per yard. As ten yards of cloth were supposed to exchange in England for 15 yards of linen, in Germany for 20, we must suppose that linen is sold in England at four shillings per yard, in Germany at three. Cost of carriage and importer's profit are left, as before, out of consideration.

"In this state of prices, cloth, it is evident, cannot yet be exported from England into Germany: but linen can be imported from Germany into England. It will be so; and, in the first instance, the linen will be paid for in money.

"The efflux of money from England, and its influx into Germany, will raise money prices in the latter country and lower them in the former. Linen will rise in Germany above three shillings per yard, and cloth above six shillings. Linen in England, being imported from Germany, will (since cost of carriage is not reckoned) sink to the same price as in that country, while cloth will fall below six shillings. As soon as the price of cloth is lower in England than in Germany, it will begin to be exported, and the price of cloth in Germany will fall to what it is in England. As long as the cloth exported does not suffice to pay for the linen imported, money will continue to flow from England into Germany, and prices generally will continue to fall in England and rise in Germany. By the fall, however, of cloth in England, cloth will fall in Germany also, and the demand for it will increase. By the rise of linen in Germany, linen must rise in England also, and the demand for it will diminish. As cloth fell in price and linen rose, there would be some particular price of both articles at which the cloth exported and the linen imported would exactly pay for each other. At this point prices would remain, because money would then cease to move out of England into Germany. What this point might be, would entirely depend upon the circumstances and inclinations of the purchasers on both sides. If the fall of cloth did not much increase the demand for it in Germany, and the rise of linen did not diminish very rapidly the demand for it in England, much money must pass before the equilibrium is restored; cloth would fall very much, and linen would rise, until England, perhaps, had to pay nearly as much for it as when she produced it for herself. But if, on the contrary, the fall of cloth caused a very rapid increase of the demand for it in Germany, and the rise of linen in Germany reduced very rapidly the demand in England from what it was under the influence of the first cheapness produced by the opening of the trade; the cloth would very soon suffice to pay for the linen, little money would pass between the two countries, and England would derive a large portion of the benefit of the trade. We have thus arrived at precisely the same conclusion, in supposing the employment of money, which we found to hold under the supposition of barter.

"In what shape the benefit accrues to the two nations from the trade is clear enough. Germany, before the commencement of the trade, paid six shillings per yard for broadcloth: she now obtains it at a lower price. This, however, is not the whole of her advantage. As the money prices of all her other commodities have risen, the money-incomes of all her producers have increased. This is no advantage to them in buying from each other, because the price of what they buy has risen in the same ratio with their means of paying for it; but it is an advantage to them in buying anything which has not risen, and, still more, anything which has fallen. They, therefore, benefit as consumers of cloth, not merely to the extent to which cloth has fallen, but also to the extent to which other prices have risen. Suppose that this is one-tenth. The same proportion of their money incomes as before will suffice to supply their other wants; and the remainder, being increased one-tenth in amount, will enable them to purchase one-tenth more cloth than before, even though cloth had not fallen: but it has fallen; so that they are doubly gainers. They purchase the same quantity with less money, and have more to expend upon their other wants.

"In England, on the contrary, general money-prices have fallen. Linen, however, has fallen more than the rest, having been lowered in price by importation from a country where it was cheaper; whereas the others have fallen only from the consequent efflux of money. Notwithstanding, therefore, the general fall of money-prices, the English producers will be exactly as they were in all other respects, while they will gain as purchasers of linen.

"The greater the efflux of money required to restore the equilibrium, the greater will be the gain of Germany, both by the fall of cloth and by the rise of her general prices. The less the efflux of money requisite, the greater will be the gain of England; because the price of linen will continue lower, and her general prices will not be reduced so much. It must not, however, be imagined that high money-prices are a good, and low money-prices an evil, in themselves. But the higher the general money-prices in any country, the greater will be that country's means of purchasing those commodities which, being imported from abroad, are independent of the causes which keep prices high at home."

In practice, the cloth and the linen would not, as here supposed, be at the same price in England and in Germany: each would be dearer in money-price in the country which imported than in that which produced it, by the amount of the cost of carriage, together with the ordinary profit on the importer's capital for the average length of time which elapsed before the commodity could be disposed of. But it does not follow that each country pays the cost of carriage of the commodity it imports; for the addition of this item to the price may operate as a greater cheek to demand on one side than on the other; and the equation of international demand, and consequent equilibrium of payments, may not be maintained. Money would then flow out of one country into the other, until, in the manner already illustrated, the equilibrium was restored: and, when this was effected, one country would be paying more than its own cost of carriage, and the other less.

Book III. Chapter XXI. Section 2

62. Principles of Political Economy and Taxation, 3rd ed. p. 143.

Book III. Chapter XXII. Section 2

63. [1862] I am here supposing a state of things in which gold and silver mining are a permanent branch of industry, carried on under known conditions; and not the present state of uncertainty, in which gold-gathering is a game of chance, prosecuted (for the present) in the spirit of an adventure, not in that of a regular industrial pursuit.

Book III. Chapter XXII. Section 3

64. Supra, pp. 525-7.

Book III. Chapter XXIII. Section 1

65. Supra, book ii. ch. xv. § 1.

Book III. Chapter XXIII. Section 2

66. I do not include in the general loan fund of the country the capitals, large as they sometimes are, which are habitually employed in speculatively buying and selling the public funds and other securities. It is true that all who buy securities add, for the time, to the general amount of money on loan, and lower pro tanto the rate of interest. But as the persons I speak of buy only to sell again at a higher price, they are alternately in the position of lenders and of borrowers: their operations raise the rate of interest at one time, exactly as much as they lower it at another. Like all persons who buy and sell on speculation, their function is to equalize, not to raise or lower, the value of the commodity. When they speculate prudently, they temper the fluctuations of price; when imprudently, they often aggravate them.

Book III. Chapter XXIII. Section 3

67. [This paragraph and the accompanying note were added in the 6th ed. (1865).]

68. [1865] To the cause of augmentation in the rate of interest, mentioned in the text, must be added another, forcibly insisted on by the author of an able article in the Edinburgh Review for January, 1865; the increased and increasing willingness to send capital abroad for investment. Owing to the vastly augmented facilities of access to foreign countries, and the abundant information incessantly received from them, foreign investments have ceased to inspire the terror that belongs to the unknown; capital flows, without misgiving, to any place which affords an expectation of high profit; and the loan market of the whole commercial world is rapidly becoming one. The rate of interest, therefore, in the part of the world out of which capital most freely flows, cannot any longer remain so much inferior to the rate elsewhere, as it has hitherto been.

Book III. Chapter XXIII. Section 4

69. [The first three paragraphs of this section were added in the 6th ed. (1865).]

70. [The text of this and the next seven paragraphs is an expansion in the 6th ed. (1865) of two paragraphs of the earlier editions.]

71. Inquiry into the Currency Principle, ch. xiv.

Book III. Chapter XXIV. Section 1

72. [So from the 7th ed. (1871). In the original (1848): "a temporary suspension" &c.; in the 5th ed. (1862): "two temporary suspensions."]

73. Regulation of Currencies, p. 85.

Book III. Chapter XXIV. Section 2

74. [Sentence inserted in 5th ed. (1862).]

Book III. Chapter XXIV. Section 3

75. [1857] I think myself justified in affirming that the mitigation of commercial revulsions is the real, and only serious, purpose of the Act of 1844. I am quite aware that its supporters insist (especially since 1847) on its supreme efficacy in "maintaining the convertibility of the Bank note." But I must be excused for not attaching any serious importance to this one among its alleged merits. The convertibility of the Bank note was maintained, and would have continued to be maintained, at whatever cost, under the old system. As was well said by Lord Overstone in his evidence, the Bank can always, by a sufficiently violent action on credit, save itself at the expense of the mercantile public. That the Act of 1844 mitigates the violence of that process, is a sufficient claim to prefer in its behalf. Besides, if we suppose such a degree of mismanagement on the part of the Bank, as, were it not for the Act, would endanger the continuance or convertibility, the same (or a less) degree of mismanagement, practised under the Act, would suffice to produce a suspension of payments by the Banking Department; an event which the compulsory separation of the two departments brings much nearer to possibility than it was before, and which, involving as it would the probable stoppage of every private banking establishment in London, and perhaps also the non-payment of the dividends to the national creditor, would be a far greater immediate calamity than a brief interruption of the convertibility of the note; insomuch that, to enable the Bank to resume payment of its deposits, no Government would hesitate a moment to suspend payment of the notes, if suspension of the Act of 1844 proved insufficient.

76. A conditional increase of this maximum is permitted, but only when by arrangement with any country bank the issues of that bank are discontinued, and Bank of England notes substituted; and even then the increase is limited to two-thirds of the amount of the country notes to be thereby superseded. Under this provision the amount of notes which the Bank of England is now [1871] at liberty to issue against securities, is about fifteen millions.

77. [Paragraph inserted in 4th ed. (1857).]

78. [The present text of the remainder of this paragraph dates only from the 6th ed. (1865). The original simply ran: "If, instead of lending their notes, the banks allow the demand of their customers for disposable capital to act on the deposits, there is the same increase of currency, (for a short time at least,) but there is not an increase of loans. The rate of interest, therefore, is not prevented from rising at the first moment when the difficulties consequent on excess of speculation begin to be felt. Speculative holders," &c. No change was made in this before 1865, except the insertion of the words "On the contrary... interest" before the last sentence in the 4th ed. (1857).]

79. [From the 6th ed. (1865) disappeared the following lines and the accompanying footnote, which had remained since 1848:

"If the restrictions of the Act of 1844 were no obstacle to the advances of banks in the interval preceding the crisis, why were they found an insuperable obstacle during the crisis? an obstacle which nothing less could overcome than a suspension of the law, through the assumption by the Government of a temporary dictatorship? Evidently they were an obstacle."

Footnote.—"It would not be to the purpose to say, by way of objection, that the obstacle may be evaded by granting the increased advance in book credits, to be drawn against by cheques, without the aid of bank notes. This is indeed possible, as Mr. Fullarton has remarked, and as I have myself said in a former chapter. But this substitute for bank note currency certainly has not yet been organised; and the law having clearly manifested its intention that, in the case supposed, increased credits should not be granted, it is yet a problem whether the law would not reach what might be regarded as an evasion of its prohibitions, or whether deference to the law would not produce (as it has hitherto done), on the part of banking establishments, conformity to its spirit and purpose, as well as to its mere letter."]

Book III. Chapter XXIV. Section 4

80. P. 106.

81. [1857] True, the Bank is not precluded from making increased advances from its deposits, which are likely to be of unusually large amount, since, at these periods, every one leaves his money in deposit in order to have it within call. But, that the deposits are not always sufficient was conclusively proved in 1847, when the Bank stretched to the very utmost the means of relieving commerce which its deposits afforded, without allaying the panic, which however ceased at once when the Government decided on suspending the Act.

82. [1862] This prediction was verified on the very next occurrence of a commercial crisis, in 1857; when Government were again under the necessity of suspending, on their own responsibility, the provisions of the Act.

83. ["Wholly" inserted in 4th ed. (1857).]

84. It is known, from unquestionable facts, that the hoards of money at all times existing in the hands of the French peasantry, often from a remote date, surpass any amount which could have been imagined possible; and even in so poor a country as Ireland, it has of late been ascertained that the small farmers sometimes possess hoards quite disproportioned to their visible means of subsistence.

85. Regulation of Currencies, pp. 71-4.

86. Regulation of Currencies, pp. 139-42.

87. [The rest of this paragraph replaced in the 6th ed. (1865) the following passage of the original text:

"The machinery, however, of the new system insists upon bringing about by force, what its principle not only does not require, but positively condemns. Every drain for exportation, whatever may be its cause, and whether under a metallic currency it would affect the circulation or not, is now compulsorily drawn from that source alone. The bank-note circulation, and the discounts or other advances of the Bank, must be diminished by an amount equal to that of the metal exported, though it be to the full extent of seven or ten millions. And this, be it remembered," &c.]

88. [From this point to the end of the section the text was largely rewritten in the 4th ed. (1857), and the note added in the 5th (1862).]

89. [1862] This, which I have called "the double action of drains," has been strangely understood as if I had asserted that the Bank is compelled to part with six millions' worth of property by a drain of three millions. Such an assertion would be too absurd to require any refutation. Drains have a double action, not upon the pecuniary position of the Bank itself, but upon the measures it is forced to take in order to stop the drain. Though the Bank itself is no poorer, its two reserves, the reserve in the banking department and the reserve in the issue department, have each been reduced three millions by a drain of only three. And as the separation of the departments renders it necessary that each of them separately should be kept as strong as the two together need be if they could help one another, the Bank's action on the money market must be as violent on a drain of three millions, as would have been required on the old system for one of six. The reserve in the banking department being less than it otherwise would be by the entire amount of the bullion in the issue department, and the whole amount of the drain falling in the first instance on that diminished reserve, the pressure of the whole drain on the half reserve is as much felt, and requires as strong measures to stop it, as a pressure of twice the amount on the entire reserve. As I have said elsewhere,* "it is as if a man having to lift a weight were restricted from using both hands to do it, and were only allowed to use one hand at a time; in which case it would be necessary that each of his hands should be as strong as the two together."

    * Evidence before the Committee of the House of Commons on the Bank Acts, in 1857.

Book III. Chapter XXIV. Section 5

90. Pp. 89-92.

Book III. Chapter XXIV. Section 6

91. [The remainder of this paragraph replaced in the 4th ed. (1857) the following sentences of the original (1848) text:

"The numerous joint-stock banks since established have, by furnishing a more trustworthy currency, made it almost impossible for any private banker to maintain his circulation, unless his capital and character inspire the most complete confidence. And although there has been in some instances very gross mismanagement by joint-stock banks (less, however, in the department of issues than in that of deposits) the failure of these banks is extremely rare, and the cases still rarer in which loss has ultimately been sustained by any one except the shareholders. The banking system of England is now almost as secure to the public, as that of Scotland (where banking was always free) has been for two centuries past; and the legislature might without any bad consequences, at least of this kind, revoke its interdict (which was never extended to Scotland) against one and two pound notes. I cannot, therefore, think it at all necessary, or that it would be anything but vexatious meddling, to enforce any kind of special security in favour of the holders of notes. The true protection to creditors of all kinds is a good law of insolvency (a part of the law at present shamefully deficient), and, in the case of joint-stock companies at least, complete publicity of their accounts: the publicity now very properly given to their issues being a very small portion of what a state has a right to require in return for their being allowed to constitute themselves, and be recognised by the law, as a collective body."]

92. [See Appendix W. The Regulation of Currency.]

Book III. Chapter XXV. Section 2

93. [Until the 6th ed. (1865) the concluding clause ran: "as is proved by the fact that the general rate of profits and of interest is very much higher."]

Book III. Chapter XXV. Section 3

94. [The concluding clause of this sentence was added in the 7th ed. (1871); the following sentences changed from the present to the past tense; and the sentence about the price of American cotton was inserted.]

95. Historisch-geographisch-statistisches Gemälde der Schweiz. Erstes Heft, 1834, p. 105.

Book III. Chapter XXV. Section 4

96. Supra, book iii. oh. iv.

Book III. Chapter XXV. Section 5

97. [So since 6th ed. (1865); replacing "ten or twelve" in 1st ed. (1848).]

98. ["Some of" inserted in 5th ed. (1862).]

Book III. Chapter XXVI. Section 1

99. [So since 3rd ed. (1852). The original text ran: "the commodities without which they will not consent to continue the race."]

Book III. Chapter XXVI. Section 3

100. Supra, book iii. eh. iv. § 2, and eh. xxv, § 4.

101. [The words "as at present in the United States" were omitted at this point from the 6th ed. (1865).]

102. Essay IV. on Profits and Interest.

Book IV. Chapter I. Section 2

1. ["Usually" inserted in 4th ed. (1857)]

2. [The remaining words of the sentence were added in the 6th ed. (1865).]

Book IV. Chapter II. Section 2

3. [The following passage of the original (1848) text was omitted in the 5th ed. (1862): "The former, indeed, so far as present foresight can extend, does not seem to be susceptible to improved processes to so great a degree as some branches of manufacture; but inventions may be in reserve for the future which may invert this relation."]

Book IV. Chapter II. Section 3

4. [The "fifteen or twenty" of the 1st ed. (1848) was replaced in the 6th ed. (1865) by "twenty or twenty-five," and in the 7th (1871) by "twenty or thirty."]

5. [Written in 1848.]

6. [1852] A still better criterion, perhaps, than that suggested in the text, would be the increase or diminution of the amount of the labourer's wages estimated in agricultural produce.

7. [See Appendix X. Prices in the 19th Century.]

Book IV. Chapter II. Section 5

8. ["Or good fortune" added in 3rd ed. (1852).]

9. [See Appendix Y. Commercial Cycles.]

Book IV. Chapter III. Section 4

10. Supra, pp. 183-4.

Book IV. Chapter III. Section 5

11. [Parenthesis added in 2nd ed. (1849).]

12. [See Appendix Z. Rents in the 19th Century.]

13. [See Appendix AA. Wages in the 19th Century.]

Book IV. Chapter IV. Section 1

14. Wealth of Nations, book i. ch. 9.

Book IV. Chapter IV. Section 2

15. [1862] Now so much better known through his apostolic exertions, by pen, purse, and person, for the improvement of popular education, and especially for the introduction into it of the elements of practical political economy.

Book IV. Chapter IV. Section 4

16. Book iii. ch. 14.

Book IV. Chapter IV. Section 5

17. [So since the 6th ed. (1865). The original (1848) ran: "the condition of the labourers certainly is not on the whole declining."]

Book IV. Chapter IV. Section 7

18. [So from the 5th ed. (1862). In the 1st ed. (1848) the parenthesis had been: "(which is now very nearly, and will soon be entirely, our own case)."]

19. [See Appendix BB. The Importation of Food.]

Book IV. Chapter IV. Section 8

20. [See Appendix CC. The Tendency of Profits to a Minimum.]

Book IV. Chapter V. Section 2

21. Supra, p. 94.

22. [The present form of this sentence dates from the 6th ed. (1865). The original [1848] text ran: "the great sums in process of being sunk," and "I cannot agree."]

23. [1852] It is hardly needful to point out how fully the remarks in the text have been verified by subsequent facts. The capital of the country, far from having been in any degree impaired by the large amount sunk in railway construction, was soon again overflowing.

Book IV. Chapter VI. Section 2

24. [This and the preceding sentence replaced in the 6th ed. (1865) the following passage of the original [1848] text: "The northern and middle states of America are a specimen of this stage of civilization in very favourable circumstances; having, apparently, got rid of all social injustices and inequalities that affect persons of Caucasian race and of the male sex, while the proportion of population to capital and land is such as to ensure abundance to every able-bodied member of the community who does not forfeit it by misconduct. They have the six points of Chartism, and they have no poverty: and all that these advantages seem to have done for them is that the life of the whole of one sex is devoted to dollar-hunting, and of the other to breeding dollar-hunters." Into this, however, had been inserted since the 2nd ed. (1849), after "done for them," the parenthesis "(notwithstanding some incipient signs of a better tendency)."]

25. ["Permanently" inserted in 2nd ed. (1849); "of themselves" in 3rd (1852).]

26. Supra, pp. 227-9.

Book IV. Chapter VII. Section 1

27. [This paragraph replaced in the 3rd ed. (1852) the following paragraph of the original (1848) text:

"The economic condition of that class, and along with it of all society, depends therefore essentially on its moral and intellectual, and that again on its social, condition. In the details of political economy, general views of society and politics are out of place; but in the more comprehensive inquiries it is impossible to exclude them; since the various leading departments of human life do not develop themselves separately, but each depends on all, or is profoundly modified by them. To obtain any light on the great economic question of the future, which gives the chief interest to the phenomena of the present—the physical condition of the labouring classes—we must consider it, not separately, but in conjunction with all other points of their condition."]

28. [Parenthesis inserted in 3rd ed. (1852).]

29. [Carlyle's Past and Present appeared in 1843.]

30. [In the 3rd ed. (1852) "qualities" replaced "virtues," and the next sentence was omitted: "That the most beautiful developments of feeling and character often grow out of the most painful, and in many respects the most hardening and corrupting, circumstances of our condition, is now, and probably will long be, one of the chief stumbling-blocks both in the theory and in the practice of morals and education."]

31. ["Whether... women" inserted in 3rd ed.]

32. [So since the 3rd ed. The original text ran: "The laws protect them: where laws do not reach, manners and opinion shield them." The reference to police reports and atrocities later in the paragraph was introduced in the 3rd ed., and "the protection of the law" was expanded into the protection which the law "ought to give."]

33. [The last clause inserted in 3rd ed. (1852).]

Book IV. Chapter VII. Section 2

34. [This and the following sentence were inserted in the 6th ed. (1865).]

35. [Here was omitted from the 2nd ed. (1849) the following passage of the 1st (1848): "It is of little importance that some of them may, at a certain stage of their progress, adopt mistaken opinions. Communists are already numerous, and are likely to increase in number; but nothing tends more to the mental development of the working classes than that all the questions which Communism raises should be largely and freely discussed by them; nothing could be more instructive than that some should actually form communities, and try practically what it is to live without the institution of property."]

Book IV. Chapter VII. Section 3

36. [The original (1848) text ran: "that there should be no other carrière possible... is one of those social injustices which call loudest for remedy. Among the salutary consequences of correcting it, one of the most probable would be a great diminution," &c.

In the 2nd ed. (1849) the following sentence was inserted after "remedy": "The ramifications of this subject are far too numerous and intricate to be pursued here. The social and political equality of the sexes is not a question of economical detail, but one of principle, so intimately connected with all the more vital points of human improvement, that none of them can be thoroughly discussed independently of it. But for this very reason it cannot be disposed of by way of parenthesis, in a treatise devoted to other subjects. It is sufficient for the immediate purpose, to point out, among the probable consequences of the industrial and social independence of women, a great diminution," &c.

This was replaced in the 3rd ed. (1852) by the present text, and a note attached: "It is truly disgraceful that in a woman's reign not one step has been made by law towards removing even the smallest portion of the existing injustice to women. The brutal part of the populace can still maltreat, not to say kill, their wives, with the next thing to impunity; and as to civil and social status, in framing a new reform bill for the extension of the elective franchise, the opportunity was not taken for so small a recognition of something like equality of rights, as would have been made by admitting to the suffrage women of the same class and the same householding and tax-paying qualifications as the men who already possess it."

Further comments were added to the note in the 4th ed. (1857): "Mr. Fitzroy's Act for the Better Protection of Women and Children against Assaults, is a well-meant though inadequate attempt to wipe off the former reproach. The second is more flagrant than ever, another Reform Bill having been since presented, largely extending the franchise among many classes of men, but leaving all women in their existing state of political as well as social servitude."

The whole note disappeared in the 5th ed. (1862).]

Book IV. Chapter VII. Section 4

37. [At this point was omitted from the 3rd ed. (1852) the following passage of the original (1848) text: "To work at the bidding and for the profit of another, without any interest in the work—the price of their labour being adjusted by hostile competition, one side demanding as much and the other paying as little as possible—is not, even when wages are high, a satisfactory state to human beings of educated intelligence, who have ceased to think themselves naturally inferior to those whom they serve."]

38. [The rest of the paragraph, with the exception of the two sentences indicated in the next note, replaced in the 3rd ed. (1852) the following single sentence of the original text: "But something else is required when wealth increases slowly, or has reached the stationary state, when positions, instead of being more mobile, would tend to be much more permanent than at present, and the condition of any portion of mankind could only be desirable, if made desirable from the first."]

39. [This and the following sentence are an expansion in the 4th ed. (1857) of the clause in the 3rd: "while the return given in the shape of service is sought to be reduced to the lowest minimum."]

40. [The remainder of this paragraph (subjected subsequently to verbal alterations) replaced in the 3rd ed. (1852) the following original (1848) text: "The problem is, to obtain the efficiency and economy of production on a large scale, without dividing the producers into two parties with hostile interests, employers and employed, the many who do the work being mere servants under the command of the one who supplies the funds, and having no interest of their own in the enterprise, except to fulfil their contract and earn their wages."]

41. [3rd ed. (1852), "five"; 4th (1857), "ten"; 6th (1865), "twenty"; 7th (1871), "thirty."]

42. [So since 5th ed. (1862). In the 3rd and 4th, "Unless the military despotism now triumphant on the Continent should succeed in its nefarious attempts to throw back the human mind."]

43. [In 3rd ed.: "temporarily and in some cases..., in other cases and finally in all." In 5th ed. (1862): "perhaps finally in all." In 6th ed. (1865), "temporarily" omitted.]

Book IV. Chapter VII. Section 5

44. [The following passage, inserted at this point in the 2nd ed. (1849) disappeared from the 3rd (1852).

"§ 5. It is this feeling, of the nature of the problem" (see supra, p. 761, n. 1), "almost as much as despair of the improvement of the condition of the labouring masses by other means, which has caused so great a multiplication of projects for the 'organization of industry' by the extension and development of the co-operative or joint stock principle: some of the more conspicuous of which have been described and characterized in an early chapter of this work. It is most desirable that all these schemes should have opportunity and encouragement to test their capabilities by actual experiment. There are, in almost all of them, many features, in themselves well worth submitting to that test; while, on the other hand, the exaggerated expectations entertained by large and growing multitudes in all the principal nations of the world, concerning what it is possible, in the present state of human improvement, to effect by such means, have no chance of being corrected except by a fair trial in practice. The French Revolution of February 1848, at first seemed to have opened a fair field for the trial of such experiments, on a perfectly safe scale, and with every advantage that could be derived from the countenance of a government which sincerely desired their success. It is much to be regretted that these prospects have been frustrated, and that the reaction of the middle class against anti-property doctrines has engendered for the present an unreasoning and undiscriminating antipathy to all ideas, however harmless or however just, which have the smallest savour of Socialism. This is a disposition of mind, of which the influential classes, both in France and elsewhere, will find it necessary to divest themselves. Socialism has now become irrevocably one of the leading elements in European politics. The questions raised by it will not be set at rest by merely refusing to listen to it; but only by a more and more complete realization of the ends which Socialism aims at, not neglecting its means so far as they can be employed with advantage."]

45. This passage is from the Prize Essay on the Causes and Remedies of National Distress, by Mr. Samuel Laing. The extracts which it includes are from the Appendix to the Report of the Children's Employment Commission.

46. Economy of Machinery and Manufactures, 3rd edition, ch. 26.

47. [The long quotation from Babbage, which appeared in the 1st and 2nd eds. (1848, 1849), disappeared from the 3rd (1852): "I venture to quote the principal part of his observations on the subject.

'The general principles on which the proposed system is founded, are—1st. That a considerable part of the wages received by each person employed, should depend on the profits made by the establishment; and 2nd. That every person connected with it should derive more advantage from applying any improvement he might discover, to the factory in which he is employed, than he could by any other course.

'It would be difficult to prevail on the large capitalist to enter upon any system, which would change the division of the profits arising from the employment of his capital in setting skill and labour in action; any alteration, therefore, must be expected rather from the small capitalist, or from the higher class of workmen, who combine the two characters; and to these latter classes, whose welfare will be first affected, the change is most important. I shall therefore first point out the course to be pursued in making the experiment; and then, taking a particular branch of trade as an illustration, I shall examine the merits and defects of the proposed system as applied to it.

'Let us suppose, in some large manufacturing town, ten or twelve of the most intelligent and skilful workmen to unite, whose characters for sobriety and steadiness are good, and are well known among their class. Such persons will each possess some small portion of capital; and let them join with one or two others who have raised themselves into the class of small master-manufacturers, and therefore possess rather a larger portion of capital. Let these persons, after well considering the subject, agree to establish a manufactory of fire-irons and fenders; and let us suppose that each of the ten workmen can command forty pounds, and each of the small capitalists possesses two hundred pounds: thus they have a capital of 800l. with which to commence business, and for the sake of simplifying, let us further suppose the labour of each of these twelve persons to be worth two pounds a week. One portion of their capital will be expended in procuring the tools necessary for their trade, which we shall take at 400l., and this must be considered as their fixed capital. The remaining 400l. must be employed as circulating capital, in purchasing the iron with which their articles are made, in paying the rent of their workshops, and in supporting themselves and their families until some portion of it is replaced by the sale of the goods produced.

'Now the first question to be settled is, what proportion of the profit should be allowed for the use of capital, and what for skill and labour? It does not seem possible to decide this question by any abstract reasoning: if the capital supplied by each partner is equal, all difficulty will be removed; if otherwise, the proportion must be left to find its level, and will be discovered by experience; and it is probable that it will not fluctuate much. Suppose it to be agreed that the capital of 800l. shall receive the wages of one workman. At the end of each week, every workman is to receive one pound as wages, and one pound is to be divided amongst the owners of the capital. After a few weeks the returns will begin to come in; and they will soon become nearly uniform. Accurate accounts should be kept of every expense and of all the sales; and at the end of each week the profit should be divided. A certain portion should be laid aside as a reserved fund, another portion for repair of the tools, and the remainder being divided into thirteen parts, one of these parts would be divided amongst the capitalists and one belong to each workman. Thus each man would, in ordinary circumstances, make up his usual wages of two pounds weekly. If the factory went on prosperously, the wages of the men would increase; if the sales fell off, they would be diminished. It is important that every person employed in the establishment, whatever might be the amount paid for his services, whether he act as labourer or porter, or as the clerk who keeps the accounts, or as book-keeper employed for a few hours once a week to superintend them, should receive one-half of what his service is worth in fixed salary, the other part varying with the success of the undertaking.

'The result of such arrangements in a factory would be,

'1. That every person engaged in it would have a direct interest in its prosperity; since the effect of any success, or falling off, would almost immediately produce a corresponding change in his own weekly receipts.

'2. Every person concerned in the factory would have an immediate interest in preventing any waste or mismanagement in all the departments.

'3. The talents of all connected with it would be strongly directed to improvement in every department.

'4. None but workmen of high character and qualifications could obtain admission into such establishments, because when any additional hands were required, it would be the common interest of all to admit only the most respectable and skilful, and it would be far less easy to impose upon a dozen workmen than upon the single proprietor of a factory.

'5. When any circumstance produced a glut in the market, more skill would be directed to diminishing the cost of production; and a portion of the time of the men might then be occupied in repairing and improving their tools, for which a reserved fund would pay, thus checking present, and at the same time facilitating future, production.

'6. Another advantage, of no small importance, would be the total removal of all real or imaginary causes for combinations. The workmen and the capitalist would so shade into each other—would so evidently have a common interest, and their difficulties and distresses would be mutually so well understood, that instead of combining to oppress one another, the only combination which could exist would be a most powerful union between both parties to overcome their common difficulties.

'One of the difficulties attending such a system is, that capitalists would at first fear to embark in it, imagining that the workmen would receive too large a share of the profits: and it is quite true that the workmen would have a larger share than at present: but at the same time, it is presumed the effect of the whole system would be, that the total profits of the establishment being much increased, the smaller proportion allowed to capital under this system would yet be greater in actual amount, than that which results to it from the larger share in the system now existing.

'A difficulty would occur also in discharging workmen who behaved ill, or who were not competent to their work; this would arise from their having a certain interest in the reserved fund, and perhaps from their possessing a certain portion of the capital employed; but without entering into detail, it may be observed, that such cases might be determined on by meetings of the whole establishment; and that if the policy of the laws favoured such establishments, it would scarcely be more difficult to enforce just regulations than it now is to enforce some which are unjust, by means of combinations either amongst the masters or the men.' "]

48. [In the original ed. (1849) this paragraph began thus: "In this imaginary case" described by Babbage, see supra, p. 766, n. 1, "it is supposed that each labourer brings some small portion of capital into the concern: but the principle is equally applicable to the ordinary case in which the whole capital belongs to an individual capitalist. An application of it to such a case is actually in progress by a Paris tradesman," &c. The present text, but with "about ten years ago," dates from the 3rd ed. (1852). The 4th, 5th, and 6th eds. (1857, 1862, 1865) have "about sixteen years ago"; the 7th (1871) "above thirty."]

49. His establishment is 11, Rue Saint Georges.

50. [1849] It appears, however, that the workmen whom M. Leclaire had admitted to this participation of profits, were only a portion (rather less than half) of the whole number whom he employed. This is explained by another part of his system. M. Leclaire pays the full market rate of wages to all his workmen. The share of profit assigned to them is, therefore, a clear addition to the ordinary gains of their class, which he very laudably uses as an instrument of improvement, by making it the reward of desert, or the recompense for peculiar trust.

51. For September 27, 1845.

52. [Added in 2nd ed. (1849).]

53. Lettres sur l'Organisation du Travail, by Michel Chevalier, lettre xiv.

54. [The concluding sentence of this paragraph, together with the next paragraph and the examples quoted in the note, were added in the 5th ed. (1862).]

55. Nouveau Traité d'Economie Politique.

56. [1865] At the present time M. Leclaire's establishment is conducted on a somewhat altered system, though the principle of dividing the profits is maintained. There are now three partners in the concern: M. Leclaire himself, one other person (M. Defournaux), and a Provident Society (Société de Secours Mutuels), of which all persons in his employment are the members. (This Society owns an excellent library, and has scientific, technical, and other lectures regularly delivered to it.) Each of the three partners has 100,000 francs invested in the concern; M. Leclaire having advanced to the Provident Society as much as was necessary to supply the original insufficiency of their own funds. The partnership, on the part of the Society, is limited; on that of M. Leclaire and M. Defournaux, unlimited. These two receive 6000 francs (240l.) per annum each as wages of superintendence. Of the annual profits they receive half, though owning two-thirds of the capital. The remaining half belongs to the employés and workpeople; two-fifths of it being paid to the Provident Society, and the other three-fifths divided among the body. M. Leclaire, however, now reserves to himself the right of deciding who shall share in the distribution, and to what amount; only binding himself never to retain any part, but to bestow whatever has not been awarded to individuals, on the Provident Society. It is further provided that in case of the retirement of both the private partners, the goodwill and plant shall become, without payment, the property of the Society.

57. "In March 1847, M. Paul Dupont, the head of a Paris printing-office, had the idea of taking his workmen into partnership by assigning to them a tenth of the profits. He habitually employs three hundred; two hundred of them on piece work, and a hundred by the day. He also employs a hundred extra hands, who are not included in the association. The portion of profit which falls to the workmen does not bring them in, on the average, more than the amount of a fortnight's wages; but they receive their ordinary pay according to the rates established in all the great Paris printing offices; and have, besides, the advantage of medical attendance in illness at the expense of the association, and a franc and a half per day while incapacitated for work. The workmen cannot draw out their share of profit except on quitting the association. It is left at interest (sometimes invested in the public funds), and forms an accumulating reserve of savings for its owners.

"M. Dupont and his partners find this association a source of great additional profit to them: the workmen, on their side, congratulate themselves daily on the happy idea of their employer. Several of them have by their exertions caused the establishment to gain a gold medal in 1849, and an honorary medal at the Universal Exhibition of 1855: some even have personally received the recompense of their inventions and of their labours. Under an ordinary employer, these excellent people would not have had leisure to prosecute their inventions, unless by leaving the whole honour to one who was not the author of them: but, associated as they were, if the employer had been unjust, two hundred men would have obliged him to repair the wrong.

"I have visited this establishment, and have been able to see for myself the improvement which the partnership produces in the habits of the workpeople.

"M. Gisquet, formerly Prefect of Police, has long been the proprietor of an oil manufactory at St. Denis, the most important one in France next to that of M. Darblay, of Corbeil. When in 1848 he took the personal management of it, he found workmen who got drunk several days in the week, and during their work sung, smoked, and sometimes quarrelled with one another. Many unsuccessful attempts had been made to alter this state of things: he accomplished it by forbidding his workmen to get drunk on working days, on pain of dismissal, and at the same time promising to share with them, by way of annual gratuity, five per cent of his net profits, in shares proportioned to wages, which are fixed at the current rates. From that time the reformation has been complete, and he is surrounded by a hundred workmen full of zeal and devotion. Their comforts have been increased by what they have ceased to spend in drink, and what they gain by their punctuality at work. The annual gratuity has amounted, on the average, to the equivalent of six weeks' wages.

"M. Beslay, a member of the Chamber of Deputies from 1830 to 1839, and afterwards of the Constituent Assembly, has founded an important manufactory of steam engines at Paris, in the Faubourg of the Temple. He has taken his workpeople into partnership ever since the beginning of 1847, and the contract of association is one of the most complete which have been made between employers and workpeople."

The practical sagacity of Chinese emigrants long ago suggested to them, according to the report of a recent visitor to Manilla, a similar constitution of the relation between an employer and labourers. "In these Chinese shops" (at Manilla) "the owner usually engages all the activity of his countrymen employed by him in them, by giving each of them a share in the profits of the concern, or in fact by making them all small partners in the business, of which he of course takes care to retain the lion's share, so that while doing good for him by managing it well, they are also benefiting themselves. To such an extent is this principle carried that it is usual to give even their coolies a share in the profits of the business in lieu of fixed wages, and the plan appears to suit their temper well; for although they are in general most complete eye-servants when working for a fixed wage, they are found to be most industrious and useful ones when interested even for the smallest share."—McMicking's Recollections of Manilla and the Philippines during 1848, 1849, and 1850, p. 24.

58. [This paragraph was added in the 6th ed. (1865); and it was said that Messrs. Briggs "have issued a proposal to work"; changed to "They now work" &c., in the 7th ed. (1871).]

59. [For the abandonment of the Briggs experiment in 1875 see Schloss, Methods of Industrial Remuneration (2nd ed.), p. 282.]

Book IV. Chapter VII. Section 6

60. [The opening paragraphs of this section and the account of French cooperative societies which follows were added in the 3rd ed. (1852). At the same time the following paragraph and section of the original (1848) text were removed:

"Under this system," of M. Leclaire, "as well as under that recommended by Mr. Babbage, the labourers are, in reality, taken into partnership with their employer. Bringing nothing into the common concern but their labour, while he brings not only his labour of direction and superintendence but his capital also, they have justly a smaller share of the profits; this, however, is a matter of private arrangement in all partnerships; one partner has a large, another a small share, according to their agreement, grounded on the equivalent which is given by each. The essence, however, of a partnership is obtained, since each benefits by all things that are beneficial to the concern, and loses by all which are injurious. It is, in the fullest sense, the common concern of all.

"§ 6. To this principle, in whatever form embodied, it seems to me that futurity has to look for obtaining the benefits of co-operation, without constituting the numerical majority of the co-operators an inferior caste. The objections that apply to a 'co-operative society,' in the Communist or Owenite sense, in which, by force of giving to every member of the body a share in the common interest, no one has a greater share in it than another, are not applicable to what is now suggested. It is expedient that those, whose performance of the part assigned to them is the most essential to the common end, should have a greater amount of personal interest in the issue of the enterprise. If those who supply the funds, and incur the whole risk of the undertaking, obtained no greater reward or more influential voice than the rest, few would practise the abstinence through which those funds are acquired and kept in existence. Up to a certain point, however, the principle of giving to every person concerned an interest in the profits is an actual benefit to the capitalist, not only (as M. Leclaire has testified) in point of ease and comfort, but even in pecuniary advantage. And after the point of greatest benefit to the employers has been attained, the participation of the labourers may be carried somewhat further without any material abatement from that maximum of benefit. At what point, in each employment of capital, this ultimatum is to be found, will one day be known and understood from experience; and up to that point it is not unreasonable to expect that the partnership principle will be, at no very distant time, extended.

"The value of this 'organization of industry,' for healing the widening and embittering feud between the class of labourers and the class of capitalists, must, I think, impress itself by degrees on all who habitually reflect on the condition and tendencies of modern society. I cannot conceive how any such person can persuade himself that the majority of the community will for ever, or even for much longer, consent to hew wood and draw water all their lives in the service and for the benefit of others; or can doubt, that they will be less and less willing to co-operate as subordinate agents in any work, when they have no interest in the result, and that it will be more and more difficult to obtain the best work-people, or the best services of any work-people, except on conditions similar in principle to those of M. Leclaire. Although, therefore, arrangements of this sort are now in their infancy, their multiplication and growth, when once they enter into the general domain of popular discussion, are among the things which may most confidently be expected."]

61. [So since 4th ed. (1857). Originally, in 3rd ed. (1852), "a few months ago."]

62. ["Strengthened" &c., added in 5th ed. (1862).]

63. P. 112.

64. Pp. 113-6.

65. "The last two items consisted of safe securities, nearly all of which have since been realized."

66. "These adherents are workmen of the trade, who subscribed small sums to the association at its commencement: a portion of them were reimbursed in the beginning of 1851. The sum due to creditors has also been much reduced: on the 23rd of April it only amounted to 113 francs 59 centimes."

67. Article by M. Cherbuliez on "Operative Associations," in the Journal des Economistes for November 1860.

I subjoin, from M. Villiaumé and M. Cherbuliez, detailed particulars of other eminently successful experiments by associated workpeople.

"We will first cite," says M. Cherbuliez, "as having attained its object and arrived at a definitive result, the Association Remquet, of the Rue Garancière, at Paris, whose founder, in 1848, was a foreman in M. Renouard's printing establishment. That firm being under the necessity of winding up, he proposed to his fellow-workmen to join with him in continuing the enterprise on their own account, asking a subvention from the government to cover the purchase-money of the business and the first expenses. Fifteen of them accepted the proposal, and formed an association, whose statutes fixed the wages for every kind of work, and provided for the gradual formation of a working capital by a deduction of 25 per cent from all wages and salaries, on which deduction no dividend or interest was to be allowed during the ten years that the association was intended to last. Remquet asked and obtained for himself the entire direction of the enterprise, at a very moderate fixed salary. At the winding up, the entire profits were to be divided among all the members, proportionally to their share in the capital, that is, to the work they had done. A subvention of 80,000 francs was granted by the State, not without great difficulty, and on very onerous conditions. In spite of these conditions, and of the unfavourable circumstances resulting from the political situation of the country, the association prospered so well, that on the winding up, after repaying the advance made by the State, it was in possession of a clear capital of 155,000 francs [6200l.], the division of which gave on the average between ten and eleven thousand francs to each partner; 7000 being the smallest and 18,000 the largest share.

"The Fraternal Association of Working Tinmen and Lampmakers had been founded in March 1848 by 500 operatives, comprising nearly the whole body of the trade. This first attempt, inspired by unpractical ideas, not having survived the fatal days of June, a new association was formed of more modest proportions. Originally composed of forty members, it commenced business in 1849 with a capital composed of the subscriptions of its members, without asking for a subvention. After various vicissitudes, which reduced the number of partners to three, then brought it back to fourteen, then again sunk it to three, it ended by keeping together forty-six members, who quietly remodelled their statutes in the points which experience had shown to be faulty, and their number having been raised by successive steps to 100, they possessed, in 1858, a joint property of 50,000 francs, and were in a condition to divide annually 20,000 francs.

"The Association of Operative Jewellers, the oldest of all, had been founded in 1831 by eight workmen, with a capital of 200 francs [8l.] derived from their united savings. A subvention of 24,000 francs enabled them in 1849 greatly to extend their operations, which in 1858 had already attained the value of 140,000 francs, and gave to each partner an annual dividend equal to double his wages."

The following are from M. Villiaumé:—

"After the insurrection of June 1848, work was suspended in the Faubourg St. Antoine, which, as we know, is principally occupied by furniture-makers. Some operative arm-chair makers made an appeal to those who might be willing to combine with them. Out of six or seven hundred composing the trade, four hundred gave in their names. But capital being wanting, nine of the most zealous began the association with all that they possessed; being a value of 369 francs in tools, and 135 francs 20 centimes in money.

"Their good taste, honesty, and punctuality having increased their business, they soon numbered 108 members. They received from the State an advance of 25,000 francs, reimbursable in 14 years by way of annuity, with interest at 3¾ per cent.

"In 1857 the number of partners is 65, the auxiliaries average 100. All the partners vote at the election of a council of eight members, and a manager whose name represents the firm. The distribution and superintendence of all the works is entrusted to foremen chosen by the manager and council. There is a foreman to every 20 or 25 workmen.

"The payment is by the piece, at rates determined in general assembly. The earnings vary from 3 to 7 francs a day, according to zeal and ability. The average is 50 francs [2l.] a fortnight, and no one gains much less than 40 francs per fortnight, while many earn 80. Some of the carvers and moulders make as much as 100 francs, being 200 francs [8l.] a month. Each binds himself to work 120 hours per fortnight, equal to ten per day. By the regulations, every hour short of the number subjects the delinquent to a penalty of 10 centimes [one penny] per hour up to thirty hours, and 15 centimes [1½d.] beyond. The object of this rule was to abolish Saint Monday, and it succeeded in its effort. For the last two years the conduct of the members has been so good, that fines have fallen into disuse.

"Though the partners started with only 359 francs, the value of the plant (Rue de Chavonne, Cour St. Joseph, Faubourg St. Antoine) already in 1851 amounted to 5713 francs, and the assets of the association, debts due to them included, to 24,000 francs. Since then the association has become still more flourishing, having resisted all the attempts made to impede its progress. It does the largest business, and is the most considered, of all the houses in Paris in the trade. Its business amounts to 400,000 francs a year." Its inventory in December 1855 showed, according to M. Villiaumé, a balance of 100,398 francs 90 centimes in favour of the association, but it possessed, he says, in reality, 123,000 francs.

But the most important association of all is that of the Masons. "The Association of Masons was founded August 10th, 1848. Its address is Rue St. Victor, 155. Its number of members is 85, and its auxiliaries from three to four hundred. There are two managers, one for the building department, the other for the pecuniary administration: these are regarded as the ablest master-masons in Paris, and are content with a moderate salary. This association has lately constructed three or four of the most remarkable mansions in the metropolis. Though it does its work more economically than ordinary contractors, yet as it has to give long credits, it is called upon for considerable advances: it prospers, however, as is proved by the dividend of 56 per cent which has been paid this year on its capital, including in the payment those who have associated themselves in its operations. It consists of workmen who bring only their labour, of others who bring their labour and a capital of some sort, and of a third class who do not work, but contribute capital only.

"The masons, in the evening, carry on mutual instruction. They, as well as the arm-chair makers, give medical attendance at the expense of the association, and an allowance to its sick members. They extend their protection over every member in every action of his life. The arm-chair makers will soon each possess a capital of two or three thousand francs, with which to portion their daughters or commence a reserve for future years. Of the masons, some have already 4000 francs, which are left in the common stock.

"Before they were associated, these workmen were poorly clad in jackets and blouses; because, for want of forethought, and still more from want of work, they had never 60 francs beforehand to buy an overcoat. Most of them are now as well dressed as shopkeepers, and sometimes more tastefully. For the workman, having always a credit with the association, can get whatever he wants by signing an order; and the association reimburses itself by fortnightly stoppages,making him save as it were in spite of himself. Some workmen who are not in debt to the concern, sign orders payable to themselves at five months date, to resist the temptation of needless expense. They are put under stoppages of 10 francs per fortnight, and thus at the end of five months they have saved the amount."

The following table, taken by M. Cherbuliez from a work (Die gewerblichen und wirthschaftlichen Genossenschaften der arbeitenden Classen in England, Frankreich und Deutschland), published at Tübingen in 1860, by Professor Huber (one of the most ardent and high-principled apostles of this kind of cooperation) shows the rapidly progressive growth in prosperity of the Masons' Association up to 1858:—

Year Amount of
business done.
1852 45,530 1,000
1853 297,208 7,000
1854 344,240 20,000
1855 614,694 46,000
1856 998,240 80,000
1857 1,330,000 100,000
1858 1,231,461 130,000

"Of this last dividend," says M. Cherbuliez, "30,000 francs were taken for the reserve fund, and the remaining 100,000, divided among the shareholders, gave to each from 500 to 1500 francs, besides their wages or salaries, and their share in the fixed capital of the concern."

Of the management of the associations generally, M. Villíaumé says, "I have been able to satisfy myself personally of the ability of the managers and councils of the operative associations. The managers are far superior in intelligence, in zeal, and even in politeness, to most of the private masters in their respective trades. And among the associated workmen, the fatal habit of intemperance is gradually disappearing, along with the coarseness and rudeness which are the consequence of the too imperfect education of the class."

68. Even the association founded by M. Louis Blane, that of the tailors of Clichy, after eighteen months' trial of this system, adopted piece-work. One of the reasons given by them for abandoning the original system is well worth extracting. "Besides the vices I have mentioned, the tailors complained that it caused incessant disputes and quarrels, through the interest which each had in making his neighbours work. Their mutual watchfulness degenerated into a real slavery; nobody had the free control of his time and his actions. These dissensions have disappeared since piece-work was introduced."—Feugueray, p. 88. One of the most discreditable indications of a low moral condition given of late by part of the English working classes, is the opposition to piece-work. When the payment per piece is not sufficiently high, that is a just ground of objection. But dislike to piece-work in itself, except under mistaken notions, must be dislike to justice and fairness; a desire to cheat, by not giving work in proportion to pay. Piece-work is the perfection of contract; and contract, in all work, and in the most minute detail—the principle of so much pay for so much service, carried out to the utmost extremity—is the system, of all others, in the present state of society and degree of civilization, most favourable to the worker; though most unfavourable to the non-worker who wishes to be paid for being idle.

69. [This paragraph dates from the 5th ed. (1862), and replaced the following passages of the 3rd (1852): "It is painful to think that these bodies, formed by the heroism and maintained by the public spirit and good sense of the working people of Paris, are in danger of being involved in the same ruin with everything free, popular, or tending to improvement in French institutions. The unprincipled adventurer who has for the present succeeded in reducing France to the political condition of Russia, knows that two or three persons cannot meet together to discuss, though it be only the affairs of a workshop, without danger to his power. He has therefore already suppressed most of the provincial associations, and many of those of Paris, and the remainder, instead of waiting to be dissolved by despotism, are, it is said, preparing to emigrate. Before this calamity overtook France, the associations could be spoken of not with the hope merely, but with positive evidence, of their being able to compete successfully with individual capitalists. 'The associations,' says M. Feugueray," &c., as in the present text, supra, p. 781.

"Though the existing associations may be dissolved, or driven to expatriaté, their experience will not be lost. They have existed long enough to furnish the type of future improvement: they have exemplified the process for bringing about a change in society, which would combine the freedom and independence of the individual," &c., as in the present text, infra, p. 791.

To the 4th ed. (1857) was added this note: "It appears however from subsequent accounts that in 1854 twenty-five associations still existed in Paris and several in the provinces, and that many of these were in a most flourishing condition. This number is exclusive of Co-operative Stores, which have greatly multiplied, especially in the South of France, and are not understood to be discouraged by the Government."]

70. [1865] In the last few years the co-operative movement among the French working classes has taken a fresh start. An interesting account of the Provision Association (Association Alimentaire) of Grenoble has been given in a pamphlet by M. Casimir Périer (Les Sociétés de Co-opération); and in the Times of November 24, 1864, we read the following passage:—"While a certain number of operatives stand out for more wages, or fewer hours of labour, others, who have also seceded, have associated for the purpose of carrying on their respective trades on their own account, and have collected funds for the purchase of instruments of labour. They have founded a society, 'Société Générale d'Approvisionnement et de Consommation.' It numbers between 300 and 400 members, who have already opened a 'co-operative store' at Passy, which is now within the limits of Paris. They calculate that by May next, fifteen new self-supporting associations of the same kind will be ready to commence operations; so that the number will be for Paris alone from 50 to 60."

71. [This paragraph and the subsequent account of the Rochdale Pioneers date from the 5th ed. (1862), though the reference to the Zürich society and to Mr. Plummer in the footnote were added in the 6th ed. (1865). From the 4th (1857) disappeared the following footnote:

"Though this beneficent movement has been so seriously checked in the country in which it originated, it is rapidly spreading in those other countries which have acquired, and still retain, any political freedom. It forms already an important feature in the social improvement which is proceeding at a most rapid pace in Piedmont. In England also, under the impulse given by the writings and personal exertions of a band of friends, chiefly clergymen and barristers, the movement has made some progress. On the 15th of February, 1856, there had been registered under the Industrial and Provident Societies' Act, thirty-three associations, seventeen of which were industrial societies, the remainder being associations for co-operative consumption only: without reckoning Scotland, where, also, these associations were rapidly spreading. It is believed that all such societies are now registered under the Limited Liabilities Act. From later information it appears that the productive associations (excluding the flour mills, which partake more of the nature of stores) have fallen off in number since their first start; and their progress, in the present moral condition of the bulk of the population, cannot possibly be rapid. But those which subsist, continue to do as much business as they ever did: and there are in the North of England instances of brilliant and steadily progressive success. Co-operative stores are increasing both in number and prosperity, especially in the North; and they are the best preparation for a wider application of the principle."]

72. Self-help by the People—History of Co-operation in Rochdale. An instructive account of this and other co-operative associations has also been written in the Companion to the Almanack for 1862, by Mr. John Plummer, of Kettering; himself one of the most inspiring examples of mental cultivation and high principle in a self-instructed working man.

73. "But it is not," adds Mr. Holyoake, "the brilliancy of commercial activity in which either writer or reader will take the deepest interest; it is in the new and improved spirit animating this intercourse of trade. Buyer and seller meet as friends; there is no overreaching on one side, and no suspicion on the other.... These crowds of humble working men, who never knew before when they put good food in their mouths, whose every dinner was adulterated, whose shoes let in the water a month too soon, whose waistcoats shone with devil's dust, and whose wives wore calico that would not wash, now buy in the markets like millionaires, and as far as pureness of food goes, live like lords." Far better, probably, in that particular; for assuredly lords are not the customers least cheated in the present race of dishonest competition. "They are weaving their own stuffs, making their own shoes, sewing their own garments, and grinding their own corn. They buy the purest sugar and the best tea, and grind their own coffee. They slaughter their own cattle, and the finest beasts of the land waddle down the streets of Rochdale for the consumption of flannel weavers and cobblers. (Last year the Society advertised for a Provision Agent to make purchases in Ireland, and to devote his whole time to that duty.) When did competition give poor men these advantages? And will any man say that the moral character of these people is not improved under these influences? The teetotallers of Rochdale acknowledge that the Store has made more sober men since it commenced than all their efforts have been able to make in the same time. Husbands who never knew what it was to be out of debt, and poor wives who during forty years never had sixpence uncondemned in their pockets, now possess little stores of money sufficient to build them cottages, and go every week into their own market with money jingling in their pockets; and in that market there is no distrust and no deception; there is no adulteration, and no second prices. The whole atmosphere is honest. Those who serve neither hurry, finesse, nor flatter. They have no interest in chicanery. They have but one duty to perform—that of giving fair measure, full weight, and a pure article. In other parts of the town, where competition is the principle of trade, all the preaching in Rochdale cannot produce moral effects like these.

"As the Store has made no debts, it has incurred no losses; and during thirteen years' transactions, and receipts amounting to 303,852l., it has had no law-suits. The Arbitrators of the Societies, during all their years of office, have never had a case to decide, and are discontented that nobody quarrels."

74. [1865] The latest report to which I have access is that for the quarter ending September 20, 1864, of which I take the following abstract from the November number of that valuable periodical the Co-operator, conducted by Mr. Henry Pitman, one of the most active and judicious apostles of the Co-operative cause:—"The number of members is 4580, being an increase of 132 for the three months. The capital or assets of the society is 59,536l. 10s. 1d., or more than last quarter by 3687l. 13s. 7d. The cash received for sale of goods is 45,806l. 0s. 10½d., being an increase of 2283l. 12s.d. as compared with the previous three months. The profit realized is 5713l. 2s.d., which, after depreciating fixed stock account 182l. 2s.d., paying interest on share capital 598l. 17s. 6d., applying 2½ per cent to an educational fund, viz. 122l. 17s. 9d., leaves a dividend to members on their purchases of 2s. 4d. in the pound. Non-members have received 261l. 18s. 4d., at 1s. 8d. in the pound on their purchases, leaving 8d. in the pound profit to the society, which increases the reserve fund 104l. 15s. 4d. This fund now stands at 1352l. 7s. 11½d., the accumulation of profits from the trade of the public with the store since September 1862, over and above the 1s. 8d. in the pound allowed to such purchasers."

75. [This paragraph added in 6th ed. (1865).]

76. [This paragraph is from the 5th ed. (1862), and so is the explanation, in the next paragraph but one, of the increase in the productiveness of industry. The argument as to the limitation of the number of distributors was inserted in the 6th ed. (1865).]

77. [The present text from this point to the point indicated in the next paragraph but two dates from the 6th ed. (1865).]

78. [The rest of this paragraph dates from the 3rd ed. (1852).]

79. [1865] In this respect also the Rochdale Society has given an example of reason and justice, worthy of the good sense and good feeling manifested in their general proceedings. "The Rochdale Store," says Mr. Holyoake, "renders incidental but valuable aid towards realizing the civil independence of women. Women may be members of this Store, and vote in its proceedings. Single and married women join. Many married women become members because their husbands will not take the trouble, and others join it in self-defence to prevent the husband from spending their money in drink. The husband cannot withdraw the savings at the Store standing in the wife's name unless she signs the order."

Book IV. Chapter VII. Section 7

80. [This section added in 3rd ed. (1852).]

81. P. 90.

82. ["Of their class" was inserted in 4th ed. (1857); and the words of the 3rd ed. (1852), "so unjustly and illiberally railed at—as if they were one iota worse in their motives or practices than other people, in the existing state of society,—" were omitted.]

83. [See Appendix DD. The Subsequent History of Co-operation.]

Book V. Chapter I. Section 1

1. [This explanation added in 2nd ed. (1849).]

Book V. Chapter I. Section 2

2. [So since the 4th ed. (1857). The original text ran: "he has a claim to do as he likes, without being molested or restricted by judges and legislators."

Book V. Chapter II. Section 1

3. Wealth of Nations, book v. ch. ii.

Book V. Chapter II. Section 3

4. [1865] This principle of assessment has been partially adopted by Mr. Gladstone in renewing the income-tax. From 100l., at which the tax begins, up to 200l., the income only pays tax on the excess above 60l.

[For the subsequent history of the Income Tax see Appendix EE.]

5. [Added in 5th ed. (1862). The original (1848) text ran: "An income of 100l. a year would, as it seems to me, obtain all the relief it is entitled to," &c.]

6. [This last sentence replaced in the 3rd ed. (1852) the following sentence of the original text: "To tax all incomes in an equal ratio, would be unjust to those the greater part of whose income is required for necessaries; but I can see no fairer standard of real equality than to take from all persons, whatever may be their amount of fortune, the same arithmetical proportion of their superfluities."]

7. [So since the 3rd ed. (1852). The original text ran: "but not so as to impair the motives on which society depends for keeping up (not to say increasing) the produce of its labour and capital.]

8. [This sentence replaced in the 3rd ed. a sentence of the original: "It is partial taxation, which is a mild form of robbery."]

9. [This sentence replaced in the 3rd ed. the original sentence: "A just and wise legislation would scrupulously abstain from opposing obstacles to the acquisition of even the largest fortune by honest exertion."]

10. [So since 3rd ed. Originally: "and not that, whether they were swift or slow, all should reach the goal at once."]

11. [So since 3rd ed. Instead of the second half of this sentence the original ran: "and it is the part of a good government to provide, that, as far as more paramount considerations permit, the inequality of opportunities shall be remedied. When all kinds of useful instruction shall be as accessible as they might be made, and when the cultivated intelligence of the poorer classes, aided so far as necessary by the guidance and co-operation of the state, shall obviate, as it might so well do, the major part of the disabilities attendant on poverty, the inequalities of fortune arising," &c.]

12. [At this point were omitted in the 3rd ed. (1852) the following words of the original text: "is as much a part of the right of property as the power of using: that is not in the fullest sense a person's own, which he is not free to bestow on others. But this is," &c.]

13. Supra, book ii. ch. 2.

14. [So since 3rd ed. Originally: "the most eligible mode."]

15. [So since 3rd ed. Originally: "would be a violation of first principles."]

16. [So since 3rd ed. Originally: "is quite unobjectionable."]

17. [The principle of graduation has been applied to inheritance and legacy duties since 1894. See Bastable, Public Finance, 3rd ed. p. 599; Book iv. ch. 9, § 6. For its application to the Income Tax see Appendix EE.]

Book V. Chapter II. Section 4

18. [The rest of this paragraph,—with the exception of the last sentence, added in the 4th ed. (1857),—was inserted in the 2nd ed. (1849).]

19. [This paragraph inserted in 5th ed. (1862).]

20. [Added in 2nd ed. (1849).]

21. [Added in 3rd ed. (1852) with "greater wants": changed to "greater necessities" in 5th ed.]

22. [This paragraph was inserted in the 3rd ed. (1852), in the place of the following passage which was made a footnote, but disappeared from the 5th ed. (1862):

"I say really applied, because (as before remarked in the case of an income not more than sufficient for subsistence) an exemption grounded on an assumed necessity ought not to be claimable by any one who practically emancipates himself from the necessity. One expedient might be, that the Income-Tax Commissioners should allow, as a deduction from income, all bonâ fide payments for insurance on life. This, however, would not provide for the case which most of all deserves consideration, that of persons whose lives are not insurable; nor would it include the case of savings made as a provision for age. The latter case might, perhaps, be met by allowing as a deduction from income all payments made in the purchase of deferred annuities; and the former by remitting income-tax on sums actually settled, and on sums paid into the hands of a public officer, to be invested in securities, and repaid only to the executor or administrator: the tax so remitted, with interest from the date of deposit, being retained (for the prevention of fraud) as a first debt chargeable on the deposit itself, before other debts could be paid out of it; but not demanded if satisfactory proof were given that all debts had been paid from other resources. I throw out these suggestions for the consideration of those whose experience renders them adequate judges of practical difficulties."]

23. [This paragraph inserted in 5th ed. (1862).]

24. [Here the text again dates from the 3rd ed. (1852) down to the proposal of "two different rates of assessment," from which point the text becomes that of the original edition (1848).]

25. [1862] Mr. Hubbard, the first person who, as a practical legislator, has attempted the rectification of the income tax on principles of unimpeachable justice, and whose well-conceived plan wants little of being as near an approximation to a just assessment as it is likely that means could be found of carrying into practical effect, proposes a reduction not of a fourth but of a third, in favour of industrial and professional incomes. He fixes on this ratio, on the ground that, independently of all consideration as to what the industrial and professional classes ought to save, the attainable evidence goes to prove that a third of their incomes is what on an average they do save, over and above the proportion saved by other classes. "The savings" (Mr. Hubbard observes) "effected out of incomes derived from invested property are estimated at one-tenth. The savings effected out of industrial incomes are estimated at fourtenths. The amounts which would be assessed under these two classes being nearly equal, the adjustment is simplified by striking off one-tenth on either side, and then reducing by three-tenths, or one-third, the assessable amount of industrial incomes." Proposed Report (p. xiv. of the Report and Evidence of the Committee of 1861). In such an estimate there must be a large element of conjecture; but in so far as it can be substantiated, it affords a valid ground for practical conclusion which Mr. Hubbard founds on it.

[1848] Several writers on the subject, including Mr. Mill in his Elements of Political Economy, and Mr. M'Culloch in his work on Taxation, have contended that as much should be deducted as would be sufficient to insure the possessor's life for a sum w which would give to his successors for ever an income. equal to what he reserves for himself; since this is what the possessor of heritable property can do without saving at all: in other words, that temporary incomes should be converted into perpetual incomes of equal present value, and taxed as such. If the owners of life-incomes actually did save this large proportion of their income, or even a still larger, I would gladly grant them an exemption from taxation on the whole amount, since, if practical means could be found of doing it, I would exempt savings altogether. But I cannot admit that they have a claim to exemption on the general assumption of their being obliged to save this amount. Owners of life-incomes are not bound to forego the enjoyment of them for the sake of leaving to a perpetual line of successors an independent provision equal to their own temporary one; and no one ever dreams of doing so. Least of all is it to be required or expected from those whose incomes are the fruits of personal exertion, that they should leave to their posterity for ever, without any necessity for exertion, the same incomes which they allow to themselves. All they are bound to do, even for their children, is to place them in circumstances in which they will have favourable chances of earning their own living. To give, however, either to children or to others, by bequest, being a legitimate inclination, which these persons cannot indulge without laying by a part of their income, while the owners of heritable property can; this real inequality in cases where the incomes themselves are equal, should be considered, to a reasonable degree, in the adjustment of taxation, so as to require from both, as nearly as practicable, an equal sacrifice.

26. [The remainder of this paragraph dates from the 3rd ed. (1852). In the original it was said, "Of the net profits of persons in business one half may perhaps be considered as interest on capital... and the other half as remuneration" &c.; and the paragraph ended thus: "For profits, therefore, an intermediate rate might be adopted, one half of the net income being taxed on the higher scale and the other half on the lower."]

27. [Between the last revision of this chapter and the present edition (1909), important changes have been made in the Income Tax:—

    (1) The extension of the system of abatements has made the tax in effect progressive up to incomes of £700.
    (2) It has been made allowable to deduct life insurance premiums actually paid, up to one sixth of the income.
    (3) A distinction has been introduced between "earned" and "unearned" incomes, and a lower rate charged on the former. See Appendix EE].

28. [See Appendix FF. The Taxation of Land.]

Book V. Chapter II. Section 6

29. [1849] The same remarks obviously apply to those local taxes, of the peculiar pressure of which on landed property so much has been said by the remnant of the Protectionists. As much of these burthens as is of old standing, ought to be regarded as a prescriptive deduction or reservation, for public purposes, of a portion of the rent. And any recent additions have either been incurred for the benefit of the owners of landed property, or occasioned by their fault: in neither case giving them any just ground of complaint.

Book V. Chapter III. Section 2

30. [Remaining words of the paragraph added in 4th ed. (1857).]

Book V. Chapter III. Section 4

31. Supra; pp. 79-88.

Book V. Chapter III. Section 5

32. [So since the 4th ed. (1857). The original ran: "on the ground that some taxes on necessaries are still kept up, and that almost all the existing taxes on indulgences press more heavily" &c.]

33. [The third condition was altered in its wording in the 3rd ed. (1852), to give effect to the arguments introduced in that edition in the preceding chapter.]

34. [So since the 3rd ed. The original ran: "The objection to it, which, with much regret I cannot help regarding as insuperable" &c.]

35. ["Cannot" replacing in the 3rd ed. (1852) "can never" of the original text.]

36. A Percentage Tax on Domestic Expenditure to supply the whole of the Public Revenue. By John Revans. Published by Hatchard, in 1847.

Book V. Chapter III. Section 6

37. [The remainder of this paragraph, together with the next, appeared first in the 4th ed. (1857), and the following passage of the original (1848) was removed: "There is thus no difference between the two component elements of house-rent, in respect to the incidence of the tax. Both alike fall ultimately on the occupier: while, in both alike, if the occupier in consequence reduces his demand by contenting himself with inferior accommodation, that is, if he prefers saving his tax from house-rent to saving it from other parts of his expenditure, he indirectly lowers ground-rent, or retards its increase; just as a diminished consumption of agricultural produce, by making cultivation retrograde, would lower ordinary rent."]

38. [1852] Another common objection is that large and expensive accommodation is often required, not as a residence, but for business. But it is an admitted principle that buildings or portions of buildings occupied exclusively for business, such as shops, warehouses, or manufactories, ought to be exempted from house-tax. The plea that persons in business may be compelled to live in situations, such as the great thoroughfares of London, where house-rent is at a monopoly rate, seems to me unworthy of regard; since no one does so but because the extra profit, which he expects to derive from the situation, is more than an equivalent to him for the extra cost. But in any case, the bulk of the tax on this extra rent will not fall on him, but on the ground-landlord.

[1848] It has been also objected that house-rent in the rural districts is much lower than in towns, and lower in some towns and in some rural districts than in others: so that a tax proportioned to it would have a corresponding inequality of pressure. To this, however, it may be answered, that in places where house-rent is low persons of the same amount of income usually live in larger and better houses, and thus expend in house-rent more nearly the same proportion of their incomes than might at first sight appear. Or if not, the probability will be, that many of them live in those places precisely because they are too poor to live elsewhere, and have therefore the strongest claim to be taxed lightly. In some cases, it is precisely because the people are poor that house-rent remains low.

Book V. Chapter IV. Section 2

39. [1865] It is true, this does not constitute, as at first sight it appears to do, a case of taking more out of the pockets of the people than the state receives; since, if the state needs the advance, and gets it in this manner, it can dispense with an equivalent amount of borrowing in stock or exchequer bills. But it is more economical that the necessities of the state should be supplied from the disposable capital in the hands of the lending class, than by an artificial addition to the expenses of one or several classes of producers or dealers.

Book V. Chapter IV. Section 4

40. [The reference to "free admission," &c., inserted in 4th ed. (1857).]

Book V. Chapter IV. Section 6

41. Probably the strongest known instance of a large revenue raised from foreigners by a tax on exports, is the opium trade with China. The high price of the article under the government monopoly (which is equivalent to a high export duty) has so little effect in discouraging its consumption, that it is said to have been occasionally sold in China for as much as its weight in silver.

Book V. Chapter V. Section 1

42. [So since the 3rd ed. (1852). The original text ran: "and when the contract relates to property the tax rises, though in an irregular manner, with the pecuniary value of the property."]

43. [1865] The statement in the text requires modification in the case of countries where the land is owned in small portions. These, being neither a badge of importance, nor in general an object of local attachment, are readily parted with at a small advance on their original cost, with the intention of buying elsewhere; and the desire of acquiring land even on disadvantageous terms is so great as to be little checked by even a high rate of taxation.

44. [The long footnote in the original edition illustrating the higher rate of stamp duties on smaller contracts, disappeared from the 3rd ed. (1852).]

45. [At this point the following passage remained, with an unimportant verbal alteration, through the first six editions and disappeared in 1871: "In the case of fire insurances, the tax is exactly double the amount of the premium of insurance on common risks; so that the person insuring is obliged by the government to pay for the insurance just three times the value of the risk. If this tax existed in France, we should not see, as we do in some of her provinces, the plate of an insurance company on almost every cottage or hovel. This, indeed, must be ascribed to the provident and calculating habits produced by the dissemination of property through the labouring class: but a tax of so extravagant an amount would be a heavy drag upon any habits of providence."]

Book V. Chapter V. Section 2

46. ["Is not" until the 7th ed. (1871).]

47. [The next sentence of the original text disappeared from the 3rd ed. (1852): "In this country the amount of the duty is moderate, and the abuse of advertising, which is quite as conspicuous as the use, renders the abolition of the tax, though right in principle, a matter of less urgency than it might otherwise be deemed."]

48. [The parenthesis added in 7th ed. (1871).]

Book V. Chapter V. Section 4

49. [See Appendix GG. The Incidence of Taxation.]

Book V. Chapter VI. Section 1

50. [So since the 3rd ed. (1852). According to the original text, the expenditure on civil and military establishments was "still in many cases unnecessarily profuse, but though many of the items will bear great reduction, others certainly require increase," and the hope was not held out, as in the parenthesis also inserted further on in the paragraph in the 3rd ed., that retrenchment would provide sufficient means for the new purposes.]

51. [The present text of the first two sentences of this paragraph dates from the 3rd ed. (1852). The original (1848) ran:

"The decisive objection, however, to raising the whole or the greater part of a large revenue by direct taxes, is the impossibility of assessing them fairly. In the case of an income-tax, I have pointed out that the burthen can never be apportioned with any tolerable approach to fairness upon those whose incomes are derived from a business or profession."]

52. [So since the 3rd ed. (1852). The original ran: "in disregarding the inequality and unfairness inseparable from every practicable form of income tax."]

Book V. Chapter VI. Section 2

53. Some argue that the materials and instruments of all production should be exempt from taxation; but these, when they do not enter into the production of necessaries, seem as proper subjects of taxation as the finished article. It is chiefly with reference to foreign trade that such taxes have been considered injurious. Internationally speaking, they may be looked upon as export duties, and, unless in cases in which an export duty is advisable, they should be accompanied with an equivalent drawback on exportation. But there is no sufficient reason against taxing the materials and instruments used in the production of anything which is itself a fit object of taxation.

54. "Were we to suppose that diamonds could only be procured from one particular and distant country, and pearls from another, and were the produce of the mines in the former, and of the fishery in the latter, from the operation of natural causes, to become doubly difficult to procure, the effect would merely be that in time half the quantity of diamonds and pearls would be sufficient to mark a certain opulence and rank, that it had before been necessary to employ for that purpose. The same quantity of gold or some commodity reducible at last to labour, would be required to produce the now reduced amount, as the former larger amount. Were the difficulty interposed by the regulations of legislators... . . it could make no difference to the fitness of these articles to serve the purposes of vanity." Suppose that means were discovered whereby the physiological process which generates the pearl might be induced ad libitum, the result being that the amount of labour expended in procuring each pearl came to be only the five-hundredth part of what it was before. "The ultimate effect of such a change would depend on whether the fishery were free or not. Were it free to all, as pearls could be got simply for the labour of fishing for them, a string of them might be had for a few pence. The very poorest class of society could therefore afford to decorate their persons with them. They would thus soon become extremely vulgar and unfashionable, and so at last valueless. If however we suppose that instead of the fishery being free, the legislator owns and has complete command of the place, where alone pearls are to be procured; as the progress of discovery advanced, he might impose a duty on them equal to the diminution of labour necessary to procure them. They would then be as much esteemed as they were before. What simple beauty they have would remain unchanged. The difficulty to be surmounted in order to obtain them would be different, but equally great, and they would therefore equally serve to mark the opulence of those who possessed them." The net revenue obtained by such a tax "would not cost the society anything. If not abused in its application, it would be a clear addition of so much to the resources of the community."—Rae, New Principles of Political Economy, pp. 369-71. [Sociological Theory of Capital, pp. 286-88.]

55. [So since the 5th ed. (1862). The original (1848) ran: "Among the excise and custom duties now existing in this country, some must, on the principles we have laid down, be altogether condemned."]

Book V. Chapter VI. Section 3

56. [The footnote added to the 6th ed. (1865) was omitted from the 7th (1871): "Except the shilling per quarter duty on corn, ostensibly for registration, and scarcely felt as a burthen."]

57. [So since 5th ed. (1862). In the original: "enormous."]

Book V. Chapter VII. Section 1

58. Supra, pp. 77-8.

59. [The concluding words of this paragraph were added in the 4th ed. (1857). At the same time the parenthesis "(in every respect... the tax)" was inserted above; and the words "by the whole of that great fact" were omitted after "was therefore worse."]

Book V. Chapter VIII. Section 1

60. Supra, p. 114.

Book V. Chapter VIII. Section 3

61. [Added in 4th ed. (1857).]

62. [1865] Lord Westbury's recent Act is a material mitigation of this grievous defect in English law, and will probably lead to further improvements.

63. Supra, pp. 110-2.

Book V. Chapter IX. Section 2

64. Principles of Political Economy, ed. 1843, p. 264. There is much more to the same effect in the more recent treatise by the same author, On the Succession to Properly vacant by Death.

Book V. Chapter IX. Section 3

65. [The concluding words of this paragraph took the place in the 5th ed. (1862) of the following words of the original text: "and English entails are not, in point of fact, much less injurious than those of other countries."]

Book V. Chapter IX. Section 5

66. [1852] Mr. Cecil Fane, the Commissioner of the Bankruptcy Court, in his evidence before the Committee on the Law of Partnership, says: "I remember a short time ago reading a written statement by two eminent solicitors, who said that they had known many partnership accounts go into Chancery, but that they never knew one come out.... Very few of the persons who would be disposed to engage in partnerships of this kind" (co-operative associations of working men) "have any idea of the truth, namely, that the decision of questions arising amongst partners is really impracticable.

"Do they not know that one partner may rob the other without any possibility of his obtaining redress?—The fact is so; but whether they know it or not, I cannot undertake to say."

This flagrant injustice is, in Mr. Fane's opinion, wholly attributable to the defects of the tribunal. "My opinion is, that if there is one thing more easy than another, it is the settlement of partnership questions, and for the simple reason, that everything which is done in a partnership is entered in the books; the evidence therefore is at hand; if therefore a rational mode of proceeding were once adopted, the difficulty would altogether vanish."—Minutes of Evidence annexed to the Report of the Select Committee on the Law of Partnership (1851), pp. 85-7.

67. Report, ut supra, p. 167.

68. [So since the 3rd ed. (1852). In the original: "this necessity is done away, and the formalities which have been substituted for it are not sufficiently onerous to be very much of an impediment to such undertakings."]

69. [The comment: "and this liberty, in England, they cannot now be fairly said not to have," ("though they have had it but for a little more than three years," omitted in 2nd ed. 1849), was dropt out of the 3rd ed.]

70. ["Though less, I believe, owing to the defects of the law than to those of the courts of judicature"; omitted in 3rd ed.]

Book V. Chapter IX. Section 6

71. [So since 4th ed. (1857). In the original: "which it absolutely disallows, and which can still be only" &c. "Until lately" was inserted in the 3rd ed. in the next paragraph.]

72. See the Report already referred to, pp. 145-158.

73. [So since the 5th ed. (1862). The addition, as made in the 3rd ed. (1852), began: "It has however been proved by the evidence of several experienced witnesses before a late committee of the House of Commons that associations" &c. The original text, after "improper hazards" went on: "Admitting that this is one of the disadvantages of such associations, it is a consideration of more importance" &c.]

74. The quotation is from a translation published by Mr. H. C. Carey, in an American periodical, Hunt's Merchant's Magazine, for May and June 1845.

Book V. Chapter IX. Section 7

75. [They have been allowed since 1908. See Appendix HH. Company and Partnership Law.]

76. [1852] "There has been a great deal of commiseration professed," says Mr. Duncan, solicitor, "towards the poor inventor; he has been oppressed by the high cost of patents; but his chief oppression has been the partnership law, which prevents his getting any one to help him to develop his invention. He is a poor man, and therefore cannot give security to a creditor; no one will lend him money; the rate of interest offered, however high it may be, is not an attraction. But if by the alteration of the law he could allow capitalists to take an interest with him and share the profits, while the risk should be confined to the capital they embarked, there is very little doubt at all that he would frequently get assistance from capitalists; whereas at the present moment, with the law as it stands, he is completely destroyed, and his invention is useless to him; he struggles month after month; he applies again and again to the capitalists without avail. I know it practically in two or three cases of patented inventions; especially one where parties with capital were desirous of entering into an undertaking of great moment in Liverpool, but five or six different gentlemen were deterred from doing so, all feeling the strongest objection to what each one called the cursed partnership law."—Report, p. 155.

Mr. Fane says, "In the course of my professional life, as a Commissioner of the Court of Bankruptcy, I have learned that the most unfortunate man in the world is an inventor. The difficulty which an inventor finds in getting at capital involves him in all sorts of embarrassments, and he ultimately is for the most part a ruined man, and somebody else gets possession of his invention."—Ib. p. 82.

77. [1865] It has been found possible to effect this through the Limited Liability Act, by erecting the capitalist and his workpeople into a Limited Company; as proposed by Messrs. Briggs (supra, p. 771).

78. [1862] By an Act of the year 1852, called the Industrial and Provident Societies Act, for which the nation is indebted to the public-spirited exertions of Mr. Slaney, industrial associations of working people are admitted to the statutory privileges of Friendly Societies. This not only exempts them from the formalities applicable to joint-stock companies, but provides for the settlement of disputes among the partners without recourse to the Court of Chancery. There are still some defects in the provisions of this Act, which hamper the proceedings of the Societies in several respects; as is pointed out in the Almanack of the Rochdale Equitable Pioneers for 1861.

79. In a note appended to his translation of M. Coquelin's paper.

80. [This sentence replaced in the 6th ed. (1865) the comment of the original: "and I concur in thinking that to this conclusion science and legislation must ultimately come."]

Book V. Chapter IX. Section 8

81. [The original parenthesis "(and is indeed little better than a timid shrinking from the infliction of anything like pain, next neighbour to the cowardice which shrinks from unnecessary endurance of it)" was omitted from the 3rd ed. (1852).]

82. [So since the 5th ed. (1862). The original ran: "Everything... has been gradually relaxed and much of it entirely got rid of. Because insolvency was formerly treated as if it were necessarily a crime, everything is now done to make it, if possible, not even a misfortune." The present reference to an opposite movement "by a recent enactment" was introduced in the 3rd ed. (1852), and spoken of as "partial but very salutary."]

83. [So since the 3rd ed. (1852). The original ran: "In depriving creditors of this instrument, the law has not furnished them with a sufficient equivalent": and went on as follows: "And it is seldom difficult for a dishonest debtor, by an understanding with one or more of his creditors, or by means of pretended creditors set up for the purpose, to abstract a part, perhaps the greatest part, of his assets, from the general fund, through the forms of the law itself. The facility and frequency of such frauds are a subject of much complaint, and their prevention demands a vigorous effort of the legislature, under the guidance of judicious persons practically conversant with the subject."]

84. [So since the 3rd ed. The original ran: "The humanitarians do not deny that what is technically... pay, may reasonably, when detected, be" &c.]

85. From a volume published in 1845, entitled, Credit the Life of Commerce, by J. H. Elliott.

86. Pp. 50-1.

87. The following extracts from the French Code de Commerce (the translation is that of Mr. Fane) show the great extent to which the just distinctions are made, and the proper investigations provided for, by French law. The word banqueroute, which can only be translated by bankruptcy, is, however, confined in France to culpable insolvency, which is distinguished into simple bankruptcy and fraudulent bankruptcy. The following are cases of simple bankruptcy:—

"Every insolvent who, in the investigation of his affairs, shall appear chargeable with one or more of the following offences, shall be proceeded against as a simple bankrupt:—

"If his house expenses, which he is bound to enter regularly in a day-book, appear excessive:

"If he had spent considerable sums at play, or in operations of pure hazard:

"If it shall appear that he has borrowed largely, or resold merchandize at a loss, or below the current price, after it appeared by his last account-taking that his debts exceeded his assets by one-half:

"If he has issued negotiable securities to three times the amount of his available assets, according to his last account-taking.

"The following may also be proceeded against as simple bankrupts:—

"He who has not declared his own insolvency in the manner prescribed by law:

"He who has not come in and surrendered within the time limited, having no legitimate excuse for his absence:

"He who either produces no books at all, or produces such as have been irregularly kept, and this although the irregularities may not indicate fraud."

The penalty for "simple bankruptcy" is imprisonment for a term of not less than one month, nor more than two years. The following are cases of fraudulent bankruptcy, of which the punishment is travaux forcés (the galleys) for a term:—

"If he has attempted to account for his property by fictitious expenses and losses, or if he does not fully account for all his receipts:

"If he has fraudulently concealed any sum of money or any debt due to him, or any merchandize or other movables:

"If he has made fraudulent sales or gifts of his property:

"If he has allowed fictitious debts to be proved against his estate:

"If he has been entrusted with property, either merely to keep, or with special directions as to its use, and has nevertheless appropriated it to his own use:

"If he has purchased real property in a borrowed name:

"If he has concealed his books.

"The following may also be proceeded against in a similar way:—

"He who has not kept books, or whose books shall not exhibit his real situation as regards his debts and credits:

"He who, having obtained a protection (sauf-conduit), shall not have duly attended."

These various provisions relate only to commercial insolvency. The laws in regard to ordinary debts are considerably more rigorous to the debtor.

Book V. Chapter X. Section 1

88. Supra, pp. 79 et seqq.

89. [The "will" of the original (1848) text was changed into "might" in the 7th ed. (1871), and "it is essential that" was inserted in the next sentence.]

90. [The next three paragraphs were added in the 6th ed. (1865).]

91. To this Mr. Carey would reply (indeed he has already so replied in advance) that of all commodities manure is the least susceptible of being conveyed to a distance. This is true of sewage, and of stable manure, but not true of the ingredients to which those manures owe their efficiency. These, on the contrary, are chiefly substances containing great fertilizing power in small bulk; substances of which the human body requires but a small quantity, and hence peculiarly susceptible of being imported; the mineral alkalics and the phosphates. The question indeed mainly concerns the phosphates, for of the alkalies, soda is procurable everywhere; while potass, being one of the constituents of granite and the other feldspathic rocks, exists in many subsoils, by whose progressive decomposition it is renewed, a large quantity also being brought down in the deposits of rivers. As for the phosphates, they, in the very convenient form of pulverized bones, are a regular article of commerce, largely imported into England; as they are sure to be into any country where the conditions of industry make it worth while to pay the price.

92. [See Appendix II. Protection.]

Book V. Chapter X. Section 2

93. [See Appendix JJ. Usury Laws.]

Book V. Chapter X. Section 4

94. [The remainder of this paragraph was added in the 5th ed. (1862).]

Book V. Chapter X. Section 5

95. [So since 7th ed. (1871). Originally (1848) "not much more than twenty years ago, and is in full vigour at this day in some other countries."]

96. [This and the preceding sentence replaced, but not until the 7th ed. (1871), the following sentence of the original (1848) text: "But if they aimed at obtaining actually higher wages than the rate fixed by demand and supply—the rate which distributes the whole circulating capital of the country among the entire working population—this could only be accomplished by keeping a part of their number permanently out of employment."]

97. [So since 3rd ed. (1852). Originally: "ought to be regarded as a benefit."]

98. [This and the following paragraph were added in the 3rd ed. (1852); and the sentence of the original text, "Combinations to keep up wages are therefore not only permissible but useful, wherever really calculated to have that effect," was removed at this point.]

99. [This paragraph was added in the 5th ed. (1862). The second sentence, however, then ran: "I grant that a strike is wrong whenever it is foolish, and it is foolish whenever it attempts to raise wages above that market rate which is rendered possible by supply and demand. But demand and supply are not physical agencies," &c. The present text dates from the 7th ed. (1871).]

100. Supra, book v. chap. vii.

101. [At this point the following passage of the original text was omitted from the 3rd ed. (1852): "and a limitation of the number of persons in employment may be a necessary condition of these. Combinations, therefore, not to work for less than certain wages, or for more than a certain number of hours, or even not to work for a master who employs more than a certain number of apprentices, are, when voluntary on the part of all who engage in them, not only unexceptionable, but would be desirable, were it not that they almost always fail of their effect."]

102. [This sentence was inserted in the 3rd ed.]

103. [So since the 5th ed. (1862). In the earlier editions: "avowed object."]

104. [The rest of this paragraph dates from the 3rd ed. The first edition (1848) read: "Every society which exacts from its members obedience to rules of this description, and endeavours to enforce compliance with them on the part of employers by refusal to work, is a public nuisance. Whether the law would be warranted in making the formation of such associations illegal and punishable, depends upon the difficult question of the legitimate bounds of constitutional liberty. What are the proper limits to the right of association? To associate for the purpose of violating the law could not of course be tolerated under any government. But among the numerous acts which, although mischievous in themselves, the law ought not to prohibit from being done by individuals, are there not some which are rendered so much more mischievous when people combine to do them, that the legislature ought to prohibit the combination, though not the act itself? When these questions have been philosophically answered, which belongs to a different branch of social philosophy from the present, it may be determined whether the kind of associations here treated of can be a proper subject of any other than merely moral repression."

But in the 2nd ed. (1849) this had already been replaced by: "Any society which exacts from its members obedience to rules of this description, and endeavours to enforce compliance with them on the part of employers by refusal to work, incurs the inconveniences of Communism, without getting rid of any of those of individual property. It does not follow, however, that the law would be warranted" &c., as at present.]

105. [1862] Whoever desires to understand the question of Trade Combinations as seen from the point of view of the working people, should make himself acquainted with a pamphlet published in 1860, under the title Trades Unions and Strikes, their Philosophy and Intention, by T. J. Dunning, Secretary to the London Consolidated Society of Bookbinders. There are many opinions in this able tract in which I only partially, and some in which I do not at all, coincide. But there are also many sound arguments, and an instructive exposure of the common fallacies of opponents. Readers of other classes will see with surprise, not only how great a portion of truth the Unions have on their side, but how much less flagrant and condemnable even their errors appear, when seen under the aspect in which it is only natural that the working classes should themselves regard them.

Book V. Chapter X. Section 6

106. [So in 7th ed. (1871). In 1st (1848): "two or three."]

Book V. Chapter XI. Section 1

107. Supra, book v. ch. 1.

Book V. Chapter XI. Section 2

108. The only cases in which government agency involves nothing of a compulsory nature, are the rare cases in which, without any artificial monopoly, it pays its own expenses. A bridge built with public money, on which tolls are collected sufficient to pay not only all current expenses, but the interest of the original outlay, is one case in point. The government railways in Belgium and Germany are another example. The Post Office, if its monopoly were abolished and it still paid its expenses, would be another.

Book V. Chapter XI. Section 5

109. [So since 5th ed. (1862). Originally: "and."]

Book V. Chapter XI. Section 7

110. De la Liberté du Travail, vol. i. pp. 353-4.

111. I quote at second hand, from Mr. Carey's Essay on the Rate of Wages, pp. 195-6.

Book V. Chapter XI. Section 8

112. In opposition to these opinions, a writer, with whom on many points I agree, but whose hostility to government intervention seems to me too indiscriminate and unqualified, M. Dunoyer, observes, that instruction, however good in itself, can only be useful to the public in so far as they are willing to receive it, and that the best proof that the instruction is suitable to their wants is its success as a pecuniary enterprise. This argument seems no more conclusive respecting instruction for the mind, than it would be respecting medicine for the body. No medicine will do the patient any good if he cannot be induced to take it; but we are not bound to admit as a corollary from this, that the patient will select the right medicine without assistance. Is it not probable that a recommendation, from any quarter which he respects, may induce him to accept a better medicine than he would spontaneously have chosen ? This is, in respect to education, the very point in debate. Without doubt, instruction which is so far in advance of the people that they cannot be induced to avail themselves of it, is to them of no more worth than if it did not exist. But between what they spontaneously choose, and what they will refuse to accept when offered, there is a breadth of interval proportioned to their deference for the recommender. Besides, a thing of which the public are bad judges may require to be shown to them and pressed on their attention for a long time, and to prove its advantages by long experience, before they learn to appreciate it, yet they may learn at last; which they might never have done, if the thing had not been thus obtruded upon them in act, but only recommended in theory. Now, a pecuniary speculation cannot wait years, or perhaps generations for success; it must succeed rapidly, or not at all. Another consideration which M. Dunoyer seems to have overlooked, is, that institutions and modes of tuition which never could be made sufficiently popular to repay, with a profit, the expenses incurred on them, may be invaluable to the many by giving the highest quality of education to the few, and keeping up the perpetual succession of superior minds, by whom knowledge is advanced, and the community urged forward in civilization.

113. [The paragraph originally went on: "but which it might be proper to demand, merely in recognition of a principle: the remainder of the cost to be defrayed, as in Scotland, by a local rate, that the inhabitants of the locality might have a greater interest in watching over the management, and checking negligence and abuse." These words were omitted in the 4th ed. (1857).]

Book V. Chapter XI. Section 9

114. [1852] The practice of the English law with respect to insane persons, especially on the all-important point of the ascertainment of insanity, most urgently demands reform. At present no persons, whose property is worth coveting, and whose nearest relations are unscrupulous, or on bad terms with them, are secure against a commission of lunacy. At the instance of the persons who would profit by their being declared insane, a jury may be impanelled and an investigation held at the expense of the property, in which all their personal peculiarities, with all the additions made by the lying gossip of low servants, are poured into the credulous ears of twelve petty shopkeepers, ignorant of all ways of life except those of their own class, and regarding every trait of individuality in character or taste as eccentricity, and all eccentricity as either insanity or wickedness. If this sapient tribunal gives the desired verdict, the property is handed over to perhaps the last persons whom the rightful owner would have desired or suffered to possess it. Some recent instances of this kind of investigation have been a scandal to the administration of justice. Whatever other changes in this branch of law may be made, two at least are imperative: first, that, as in other legal proceedings, the expenses should not be borne by the person on trial, but by the promoters of the inquiry, subject to recovery of costs in case of success: and secondly, that the property of a person declared insane should in no case be made over to heirs while the proprietor is alive, but should be managed by a public officer until his death or recovery.

115. ["Acts" since 7th ed. (1871). Originally (1848): "the recent Factory Act."]

116. [See Appendix KK. The Factory Acts.]

Book V. Chapter XI. Section 10

117. [This last sentence added in 3rd ed. (1852).]

Book V. Chapter XI. Section 11

118. A parallel case may be found in the distaste for politics, and absence of public spirit, by which women, as a class, are characterized in the present state of society, and which is often felt and complained of by political reformers, without, in general, making them willing to recognise, or desirous to remove, its cause. It obviously arises from their being taught, both by institutions and by the whole of their education, to regard themselves as entirely apart from politics. Wherever they have been politicians, they have shown as great interest in the subject, and as great aptitude for it, according to the spirit of their time, as the men with whom they were contemporaries; in that period of history (for example) in which Isabella of Castile and Elizabeth of England were, not rare exceptions, but merely brilliant examples of a spirit and capacity very largely diffused among women of high station and cultivation in Europe.

Book V. Chapter XI. Section 12

119. [The original "twelve to ten" (1848) was changed to the present text, and the consequent alterations made in the rest of the paragraph, in the 5th ed. (1862).]

120. ["Which has never... recommend" was added in the 5th ed. (1862). A Nine Hours Movement made its appearance in the 70's. The hours of labour for women, young persons and children in textile factories were reduced to 56½ per week by the Act of 1874, and to 55½ by the Act of 1901. A Miners' Eight Hours Act was passed in 1908.]

Book V. Chapter XI. Section 13

121. [The remark in the original, "and to get rid of this is important, even as a matter of justice," was omitted from the 3rd ed. (1852).]

122. [See Appendix LL. The Poor Law.]

Book V. Chapter XI. Section 14

123. [The exception was added in the 5th ed. (1862). In the next line "cannot have" had been changed into "rarely has" in the 3rd (1852).]

124. ["The price of land being generally fixed too low and" omitted from 3rd ed. (1852).]

125. [1857] The objections which have been made, with so much virulence, in some of these colonies, to the Wakefield system, apply, in so far as they have any validity, not to the principle, but to some provisions which are no part of the system, and have been most unnecessarily and improperly engrafted on it; such as the offering only a limited quantity of land for sale, and that by auction, and in lots of not less than 640 acres, instead of selling all land which is asked for, and allowing to the buyer unlimited freedom of choice, both as to quantity and situation, at a fixed price.

126. [From the 3rd ed. was omitted the following passage of the original (1848): "The oldest of the Wakefield colonies, South Australia, is scarcely" (in 2nd ed. (1849), "little more than") "twelve years old; Port Philip" (Victoria) "is still more recent; and they are probably at this moment the two places, in the known world, where labour on the one hand, and capital on the other, are the most highly remunerated."]

127. [The reference to Irish emigration was added in the 3rd ed. (1852), and concluded with this sentence: "While the stream of this emigration continues flowing, as broad and deep as at present, the principal office required from government would be to direct a portion of it to quarters (such as Australia) where, both for local and national interests, it is most of all required, but which it does not sufficiently reach in its spontaneous course." This was replaced in the 4th ed. (1857) by the reference to emigration to the gold fields. The slackening of the stream was noticed in the 5th ed. (1862), and the partial revival of Irish emigration in the 6th ed. (1865).]

Book V. Chapter XI. Section 16

128. [See Appendix MM. Limits of the Sphere of Government.]

End of Notes.
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