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 SELECTIONS 
 
 ILLUSTRATING 
 
 ECONOMIC HISTORY 
 
 1 w 
 
 SINCE THE SEVEN YEARS’ WAR 
 
 COMPILED BY 
 
 ■"v 
 
 BENJAMIN RAND, Ph.D. 
 
 EDITOR OF “ LIFE, LETTERS AND PHILOSOPHICAL REGIMEN OF THE THIRD EARL 
 OF SHAFTESBURY,” “BIBLIOGRAPHY OF PHILOSOPHY,” ETC., ETC. 
 
 jFourtf) IStutfon 
 
 REVISED AND ENLARGED 
 
 Nefo fork 
 
 THE MACMILLAN COMPANY 
 
 LONDON: MACMILLAN & CO., Ltd. 
 
 1903 
 
 All rights reserved 
 
Jt 
 
 Copyright, 1892,1895, 
 
 By Benjamin Rand. 
 
 
 i 
 
 UNIVERSITY PRESS • JOHN WILSON 
 AND SON • CAMBRIDGE, U. S. A. 
 
PREFATORY NOTE 
 
 TO THE SECOND EDITION. 
 
 HTHE first edition of these selections was published 
 as a text-book of required reading to accom¬ 
 pany a course of lectures on economic history given 
 at Harvard College. It was also adopted for a 
 similar purpose by other American Universities. A 
 continued demand for the work has led to the 
 
 v 
 
 preparation of the present revised and enlarged 
 edition. The design of the book has been to ex¬ 
 hibit in a series of articles of permanent value 
 
 different phases of economic thought, and to pre- 
 
 / 
 
 sent in chronological order a narrative of some of 
 the more important events and influences of modern 
 economic history. 
 
 In this edition one chapter contained in the 
 former edition has been omitted and five new 
 selections have been introduced. Appendices have 
 also been added as the most convenient form in 
 which to place laws, purely statistical material, and 
 
IV 
 
 PREFATORY NOTE . 
 
 very recent economical data. A bibliography has 
 likewise been inserted, which it is hoped may be 
 of service in the formation of special libraries of 
 economic history. The present edition moreover 
 contains an index. 
 
 The names of publishers, to whose courtesy is due 
 the permission to reprint a number of the selections, 
 will be found at the beginning of the respective 
 chapters. 
 
 B. R. 
 
 Cambridge, December, 1891. 
 
 PREFATORY NOTE TO THE FOURTH EDITION. 
 
 Five new selections have been added to the present 
 edition of the Economic History, thereby bringing it 
 down to the end of the nineteenth century. More 
 recent material also has been substituted for the fifth 
 Appendix. The Select Bibliography of Economics, 
 which appeared in the third edition, has been omitted, 
 as it has been reprinted in a separate volume. The 
 names of the authors and publishers, through whose 
 kindness the reprints have been allowed to be made, 
 are placed, as in former editions, at the opening of 
 the several chapters. 
 
 B. R. 
 
 Cambridge, Mass., September, 1903 . 
 
CONTENTS. 
 
 Chapter Page 
 
 I. The Colonial Policy of Europe. 1 
 
 From Adam Smith’s Wealth of Nations. 
 
 II. The Great Inventions.31 
 
 From Spencer Walpole’s History of England. 
 
 III. Economic Causes of the French Revolution . 55 
 
 From Heinrich Yon Sybel's French Revolution. 
 
 IV. The Edicts of Stein and Hardenberg: 
 
 The Emancipating Edict of Stein .... 86 
 
 From J. R. Seeley’s Life and Times of Stein. 
 
 The Agrarian Legislation of Hardenberg . 98 
 
 From R. B. D. Morier’s “The Agrarian Legislation 
 of Prussia in the Present Century ” in Systems of 
 Land Tenure in Various Countries. 
 
 I , 
 
 V. The Orders in Council.109 
 
 From Leone Levi’s History of British Commerce. 
 
 VI. The Finances of England, 1793-1815 .... 126 
 
 From G. R. Porter’s Progress of the Nation. 
 
 VII. La Politique Commerciale de la Restauration 148 
 
 From E. Levasseur’s Histoire des Classes Ouvrieres 
 en France depuis 1789 jusqu’k nos Jours. 
 
 VIII. The Zollverein. ,170 
 
 From John Bowring’s Report on the Prussian Com¬ 
 mercial Union, Pari, Doc., 1840. 
 
 Le Zollverein.196 
 
 From A. Legoyt’s La France et l’Etranger. 
 
vi 
 
 CONTENTS. 
 
 Chapteuj Page 
 
 IX. The Corn Laws, 1801-1849 207 
 
 From Leone Levi’s History of British Commerce. 
 
 X. The New Gold. 242 
 
 From J. E. Cairnes’ Essays in Political Economy. 
 
 XI. France sous le Second Empire. 284 
 
 From E. Levasseur’s Histoire cles Classes Ouvrieres 
 en France depuis 1789 jusqu’a nos Jours. 
 
 XII. Recent Changes in Transportation and Pro¬ 
 duction . 298 
 
 From David A. Wells’ Recent Economic Changes. 
 
 XIII. The French Indemnity: 
 
 The Payment of the Five Milliards . . . 326 
 
 From, Blackwood’s Edinburgh Magazine, 1875. 
 
 The Application of the Indemnity . . . 350 
 
 From G. Fr. Kolb’s The Condition of Nations 
 (Trans. Mrs. Brewer). 
 
 XIV. The Liquidations of 1873-76. 355 
 
 From Robert Giffen’s Essays in Finance. 
 
 XV. The United States in 1880: 
 
 The Increase of Population from 1790 to 
 
 1880 375 
 
 From Francis A. Walker and Henry Gannett’s Re¬ 
 port on the Progress of the Nation, Tenth Census. 
 
 The Factory System.400 
 
 From Carroll D. Wright’s Report on the Factory 
 System of the United States, Tenth Census. 
 
 The Cotton Manufactures.410 
 
 From Edward Atkinson’s Report on the Cotton 
 Manufactures, Tenth Census. 
 
 The Iron and Steel Industries.435 
 
 From James M. Swank’s Statistics of the Iron and 
 Steel Production, Tenth Census. 
 
CONTENTS. 
 
 Chapter 
 
 XVI. 
 
 XVII. 
 
 XVIII. 
 
 XIX. 
 
 XX. 
 
 XXI. 
 
 XXII. 
 
 I. 
 
 II. 
 
 « • 
 Til 
 
 Page 
 
 Les Dettes Publiques.; 450 
 
 From Alfred Neymarck’s Les Dettes Publiques 
 Europ^ennes. 
 
 The World’s Progress in Trade and Industry 469 
 
 From F. X. von Neumann-Spallart’s Uebersichten 
 der Weltwirthschaft (Translated in Journal of the 
 Statistical Society). 
 
 English Finances, 1837-1887 . 511 
 
 By Leonard H. Courtney. From the Reign of Queen 
 Victoria, edited by T. II. Ward. 
 
 L’Essor Industriel de L’Allemagne .... 533 
 
 From G. Blondel’s L’Essor Industriel et Commercial 
 du Peuple Allemand. 
 
 The American Legal Tender Paper .... 546 
 
 By Charles F. Dunbar. From the Quarterly Journal 
 
 of Economics, 1897. 
 
 The American Iron Industry .568 
 
 By F. W. Taussig. From the Quarterly Journal of 
 Economics, 1900. 
 
 Le XIX e SikcLE. 591 
 
 By G. de Molinari. From Journal des Economistes, 
 
 1901. 
 
 APPENDICES. 
 
 Leading Sections from the English Navigation 
 
 Acts.607 
 
 From English Statutes at Large. 
 
 Important Sections of American Navigation 
 
 Acts.611 
 
 From United States Statutes at Large. 
 
CONTENTS. 
 
 viii 
 
 Chapter Page 
 
 III. The American Civil War: 
 
 Cost of the Civil War.616 
 
 From David A. Wells’ Report as Special Commissioner 
 of the Revenue, 1869. 
 
 The Payment of the War Debt .618 
 
 From Hugh McCulloch’s Report as Secretary of the 
 Treasury, 1884. 
 
 IV. The Growth of Canada, 1867-1900 .... 621 
 
 From George Johnson’s Graphic Statistics of Canada. 
 
 V. American Progress in Manufactures . . . . 622 
 
 By S. N. D. North. From Twelfth Census, vii. 
 
 Index 
 
 637 
 
ECONOMIC HISTORY. 
 
 i. 
 
 THE COLONIAL POLICY OF EUROPE. 
 
 From Adam Smith’s Wealth of Nations, Book IV., Ch. VII.,. 
 
 Part II. 
 
 'HE colony of a civilized nation which takes possession; 
 
 J- either of a waste country or of one so thinly inhabited 
 that the natives easily give place to the new settlers, ad¬ 
 vances more rapidly to wealth and greatness than any other 
 human society. 
 
 The colonists carry out with them a knowledge of agri¬ 
 culture and of other useful arts, superior to what can grow 
 up of its own accord in the course of many centuries among 
 savage and barbarous nations. They carry out with them, 
 too, the habit of subordination, some notion of the regular 
 government which takes place in their own country, of the 
 system of laws which supports it, and of a regular adminis¬ 
 tration of justice; and they naturally establish something of 
 the same kind in the new settlement. But among savage 
 and barbarous nations the natural progress of law and gov¬ 
 ernment is still slower than the natural progress of arts, 
 after law and government have been so far established as is 
 necessary for their protection. Every colonist gets more 
 land than he can possibly cultivate. He has no rent, and 
 scarce any taxes to pay. No landlord shares with him in 
 its produce, and the share of the sovereign is commonly but 
 a trifle. He has every motive to render as great as possible 
 a produce which is thus to be almost entirely his own. But 
 
 l 
 
9 
 
 ECONOMIC HISTORY. 
 
 his land is commonly so extensive that with all his own 
 industry, and with all the industry of other people whom he 
 can get to employ, he can seldom make it produce the tenth 
 part of what it is capable of producing. He is eager, there¬ 
 fore, to collect laborers from all quarters, and to reward 
 them with the most liberal wages. But those liberal wages, 
 joined to the plenty and cheapness of land, soon make those 
 laborers leave him, in order to become landlords themselves, 
 and to reward, with equal liberality, other laborers, who 
 soon leave them for the same reason that they left their first 
 master. The liberal reward of labor encourages marriage. 
 The children, during the tender years of infancy, are well 
 fed and properly taken care of, and when they are grown 
 up the value of their labor greatly overpays their mainten¬ 
 ance. When arrived at maturity the high price of labor 
 and the low price of land enable them to establish them¬ 
 selves in the same manner as their fathers did before them. 
 
 In other countries rent and profit eat up wages, and the 
 two superior orders of people oppress the inferior one. But 
 in new colonies the interest of the two superior orders obliges 
 them to treat the inferior one with more generosity and 
 humanity; at least, where that inferior one is not in a state 
 of slavery. Waste lands, of the greatest natural fertility, 
 are to be had for a trifle. The increase of revenue which 
 the proprietor, who is always the undertaker, expects from 
 their improvement, constitutes his profit; which in these 
 circumstances is commonly very great. But this great profit 
 cannot be made without employing the labor of other people 
 in clearing and cultivating the land; and the disproportion 
 between the great extent of the land and the small number 
 of the people, which commonly takes place in new colonies, 
 makes it difficult for him to get this labor. He does not, 
 therefore, dispute about wages, but is willing to employ 
 labor at any price. The high wages of labor encourage 
 population. The cheapness and plenty of good land encour¬ 
 age improvement, and enable the proprietor to pay those 
 high wages. In those wages consists almost the whole price 
 of the land; and though they are high, considered as the 
 
COLONIAL POLICY OF EUROPE. 
 
 3 
 
 wages of labor, they are low, considered as the price of what 
 is so very valuable. What encourages the progress of popu¬ 
 lation and improvement encourages that of real wealth and 
 greatness. 
 
 The progress of many of the ancient Greek colonies 
 towards wealth and greatness seems accordingly to have 
 been very rapid. In the course of a century or two several 
 of them appear to have rivalled, and even to have surpassed, 
 their mother cities. Syracuse and Agrigentum in Sicily, 
 Tarentum and Locri in Italy, Ephesus and Miletus in Lesser 
 Asia, appear by all accounts to have been at least equal to 
 any of the cities of ancient Greece. Though posterior in 
 their establishment, yet all the arts of refinement, philoso¬ 
 phy, poetry, and eloquence, seem to have been cultivated as 
 early, and to have been improved as highly in them as in 
 any part of the mother country. The schools of the two old¬ 
 est Greek philosophers, those of Thales and Pythagoras, were 
 established, it is remarkable, not in ancient Greece, but the 
 one in an Asiatic, the other in an Italian colony. All those 
 colonies had established themselves in countries inhabited 
 by savage and barbarous nations, who easily gave place to 
 the new settlers. They had plenty of good land, and as they 
 were altogether independent of the mother city, they were 
 at liberty to manage their own affairs in the way that they 
 judged was most suitable to their own interest. 
 
 The history of the Roman colonies is by no means so bril¬ 
 liant. Some of them, indeed, such as Florence, have in the 
 course of many ages, and after the fall of the mother city, 
 grown up to be considerable States. But the progress of no 
 one of them seems ever to have been very rapid. They were 
 all established in conquered provinces, which in most cases 
 had been fully inhabited before. The quantity of land as¬ 
 signed to each colonist was seldom very considerable, and, 
 as the colony was not independent, they were not always at 
 liberty to manage their own affairs in the way that they 
 judged was most suitable to their own interest. 
 
 In the plenty of good land the European colonies estab¬ 
 lished in America and the West Indies resemble, and even 
 
4 
 
 ECONOMIC HISTORY. 
 
 greatly surpass, those of ancient Greece. In their depend¬ 
 ency upon the mother State they resemble those of ancient 
 Rome; but their great distance from Europe has in all of 
 them alleviated more or less the effects of this dependency. 
 Their^ situation has placed them less in the view and less in 
 the power of their mother country. In pursuing their inter¬ 
 est their own way, their conduct has, upon many occasions, 
 been overlooked, either because not known or not under¬ 
 stood in Europe; and upon some occasions it has been fairly 
 suffered and submitted to, because their distance rendered 
 it difficult to restrain it. Even the violent and arbitrary 
 government of Spain has, upon many occasions, been obliged 
 to recall or soften the orders which had been given for the 
 government of her colonies, for fear of a general insurrection. 
 The progress of all the European colonies in wealth, popula¬ 
 tion, and improvement, has accordingly been very great. 
 
 The crown of Spain, by its share of the gold and silver, 
 derived some revenue from its colonies from the moment of 
 their first establishment. It was a revenue, too, of a nature 
 to excite in human avidity the most extravagant expectations 
 of still greater riches. The Spanish colonies, therefore, 
 from the moment of their first establishment, attracted very 
 much the attention of their mother country; while those of 
 the other European nations were for a long time in a great 
 measure neglected. The former did not, perhaps, thrive 
 the better in consequence of this attention, nor the latter the 
 worse in consequence of this neglect. In proportion to the 
 extent of the country which they in some measure possess, 
 the Spanish colonies are considered as less populous and 
 thriving than those of almost any other European nation. 
 The progress even of the Spanish colonies, however, in popu¬ 
 lation and improvement, has certainly been very rapid and 
 very great. The city of Lima, founded since the conquest, 
 is represented in Ulloa as containing fifty thousand inhabit¬ 
 ants near thirty years ago. Quito, which had been but a 
 miserable hamlet of Indians, is represented by the same 
 author as in his time equally populous. Geinelli Carreri, a 
 pretended traveller, it is said, indeed, but who seems every- 
 
COLONIAL POLICY OF EUROPE. 
 
 5 
 
 where to have written upon extreme good information, 
 represents the city of Mexico as containing a hundred thou¬ 
 sand inhabitants, — a number which, in spite of all the exag¬ 
 gerations of the Spanish writers, is probably more than five 
 times greater than what it contained in the time of Monte¬ 
 zuma. These numbers exceed greatly those of Boston, New 
 York, and Philadelphia, the three greatest cities of the 
 English colonies. Before the conquest of the Spaniards 
 there were no cattle fit for draught either in Mexico or Peru. 
 The lama was their only beast of burden, and its strength 
 seems to have been a good deal inferior to that of a common 
 ass. The plough was unknown among them. They were 
 ignorant of the use of iron. They had no coined money, nor 
 any established instrument of commerce of any kind. Their 
 commerce was carried on by barter. A sort of wooden spade 
 was their principal instrument of agriculture. Sharp stones 
 served them for knives and hatchets to cut with; fish-bones 
 and the hard sinews of certain animals served them for 
 needles to sew with; and these seem to have been their 
 principal instruments of trade. In this state of things, it 
 seems impossible, that either of those empires could have 
 been so much improved or so well cultivated as at pres¬ 
 ent, when they are plentifully furnished with all sorts of 
 European cattle, and when the use of iron, of the plough, 
 and of many of the arts of Europe, has been introduced 
 among them. But the populousness of every country must 
 be in proportion to the degree of its improvement and culti¬ 
 vation. In spite of the cruel destruction of the natives 
 which followed the conquest, these two great empires are, 
 probably, more populous now than they ever were before: 
 and the people are surely very different; for we must ac¬ 
 knowledge, I apprehend, that the Spanish creoles are in 
 many respects superior to the ancient Indians. 
 
 After the settlements of the Spaniards, that of the Portu¬ 
 guese in Brazil is the oldest of any European nation in Amer¬ 
 ica. But as for a long time after the first discovery neither 
 gold nor silver mines were found in it, and as it afforded 
 upon that account little or no revenue to the crown, it was 
 
6 
 
 ECONOMIC HISTORY. 
 
 for a long time in a great measure neglected; and during 
 this state of neglect it grew up to be a great and powerful 
 colony. While Portugal was under the dominion of Spain, 
 Brazil was attacked by the Dutch, who got possession of 
 seven of the fourteen provinces into which it is divided. 
 They expected soon to conquer the other seven, when Portu¬ 
 gal recovered its independency by the elevation of the family 
 of Braganza to the throne. The Dutch then, as enemies to 
 the Spaniards, became friends to the Portuguese, who were 
 likewise the enemies of the Spaniards. They agreed, there¬ 
 fore, to leave that part of Brazil which they had not con¬ 
 quered to the king of Portugal, who agreed to leave that part 
 which they had conquered to them, as a matter not worth 
 disputing about with such good allies. But the Dutch 
 government soon began to oppress the Portuguese colonists, 
 who, instead of amusing themselves with complaints, took 
 arms against their new masters, and by their own valor and 
 resolution, with the connivance indeed, but without any 
 avowed assistance from the mother country, drove them out 
 of Brazil. The Dutch, therefore, finding it impossible to keep 
 any part of the country to themselves, were contented that 
 it should be entirely restored to the crown of Portugal. In 
 this colony there are said to be more than six hundred thou¬ 
 sand people, either Portuguese or descended from Portuguese, 
 creoles, mulattoes, and a mixed race between Portuguese and 
 Brazilians. No one colony in America is supposed to contain 
 so great a number of people of European extraction. 
 
 Towards the end of the fifteenth, and during the greater 
 part of the sixteenth century, Spain and Portugal were the 
 two great naval powers upon the ocean; for though the com¬ 
 merce of Venice extended to every part of Europe, its fleets 
 had scarce ever sailed beyond the Mediterranean. The Span¬ 
 iards, in virtue of the first discovery, claimed all America 
 as their own; and though they could not hinder so great a 
 naval power as that of Portugal from settling in Brazil, such 
 was at that time the terror of their name that the greater 
 part of the other nations of Europe were afraid to establish 
 themselves in any other part of that great continent. The 
 
COLONIAL POLICY OF EUROPE. 
 
 7 
 
 French who attempted to settle in Florida were all mur¬ 
 dered by the Spaniards. But the declension of the naval 
 power of this latter nation, in consequence of the defeat or 
 miscarriage of what they called their Invincible Armada, 
 which happened towards the end of the sixteenth century, 
 put it out of their power to obstruct any longer the settle¬ 
 ments of the other European nations. In the course of the 
 seventeenth century, therefore, the English, French, Dutch, 
 Danes, and Swedes, all the great nations who had any ports 
 upon the ocean, attempted to make some settlements in the 
 new world. 
 
 The Swedes established themselves in New Jersey; and 
 the number of Swedish families still to be found there suffi¬ 
 ciently demonstrates that this colony was very likely, to 
 prosper had it been protected by the mother country. But 
 being neglected by Sweden it was soon swallowed up by the 
 Dutch colony of New York, which again, in 1674, fell under 
 the dominion of the English. 
 
 The small islands of St. Thomas and Santa Cruz are the 
 only countries in the new world that have ever been pos¬ 
 sessed by the Danes. These little settlements too were 
 under the government of an exclusive company, which had 
 the sole right both of purchasing the surplus produce of the 
 colonists and of supplying them with such goods of other 
 countries as they wanted, and which, therefore, both in its 
 purchases and sales, had not only the power of oppressing 
 them, but the greatest temptation to do so. The government 
 of an exclusive company of merchants is, perhaps, the worst 
 of all governments for any country whatever. It was not, 
 however, able to stop altogether the progress of these colo¬ 
 nies, though it rendered it more slow and languid. The 
 late king of Denmark dissolved this company, and since that 
 time the prosperity of these colonies has been very great. 
 
 The Dutch settlements in the West, as well as those in the 
 East Indies, were originally put under the government of an 
 exclusive company. The progress of some of them, there¬ 
 fore, though it has been considerable, in comparison with 
 that of almost any country that has been long peopled and 
 
8 
 
 ECONOMIC HISTORY. 
 
 established, has been languid and slow in comparison with 
 that of the greater part of new colonies. The colony of 
 Surinam, though very considerable, is still inferior to the 
 greater part of the sugar colonies of the other European 
 nations. The colony of Nova Belgia, now divided into the 
 two provinces of New York and New Jersey, would probably 
 have soon become considerable too, even though it had re¬ 
 mained under the government of the Dutch. The plenty and 
 cheapness of good land are such powerful causes ot prosper¬ 
 ity that the very worst government is scarce capable of 
 checking altogether the efficacy of their operation. The 
 great distance too from the mother country would enable the 
 colonists to evade more or less, by smuggling, the monopoly 
 which the company enjoyed against them. At present the 
 company allows all Dutch ships to trade to Surinam upon 
 paying two and a half per cent upon the value of their cargo 
 for a license; and only reserves to itself exclusively the di¬ 
 rect trade from Africa to America, which consists almost 
 entirely in the slave trade. This relaxation in the exclu¬ 
 sive privileges of the company is probably the principal cause 
 of that degree of prosperity which that colony at present 
 enjoys. Curagoa and Eustatia, the two principal islands 
 belonging to the Dutch, are free ports open to the ships of 
 ail nations; and this freedom, in the midst of better colo¬ 
 nies whose ports are open to those of one nation only, has 
 been the great, cause of the prosperity of those two barren 
 islands. 
 
 The French colony of Canada was, during the greater 
 part of the last century, and some part of the present, under 
 the government of an exclusive company. Under so unfav¬ 
 orable an administration its progress was necessarily very 
 slow in comparison with that of other new colonies; but it be¬ 
 came much more rapid when this company was dissolved after 
 the fall of what is called the Mississippi scheme. When the 
 English got possession of this country they found in it near 
 double the number of inhabitants which Father Charlevoix 
 had assigned to it between twenty and thirty years before. 
 That Jesuit had travelled over the whole country, and had 
 
COLONIAL POLICY OF EUROPE. 
 
 9 
 
 no inclination to represent it as less considerable than it 
 really was. 
 
 The French colony of St. Domingo was established by 
 pirates and freebooters, who for a long time neither re¬ 
 quired the protection nor acknowledged the authority of 
 France; and when that race of banditti became so far citi¬ 
 zens as to acknowledge this authority, it was for a long time 
 necessary to exercise it with very great gentleness. During 
 this period the population and improvement of this colony 
 increased very fast. Even the oppression of the exclusive 
 company, to which it was for some time subjected, with all 
 the other colonies of France, though it no doubt retarded, 
 had not been able to stop its progress altogether. The 
 course of its prosperity returned as soon as it was relieved 
 . from that oppression. It is now the most important of the 
 sugar colonies of the West Indies, and its produce is said to 
 be greater than that of all the English sugar colonies put to¬ 
 gether. The other sugar colonies of France are in general 
 all very thriving. 
 
 But there are no colonies of which the progress has been 
 more rapid than that of the English in North America. 
 
 Plenty of good land and liberty to manage their own 
 affairs their own way, seem to be the two great causes of the 
 prosperity of all new colonies. 
 
 In the plenty of good land, the English colonies of North 
 America, though no doubt very abundantly provided, are, 
 however, inferior to those of the Spaniards and Portuguese, 
 and not superior to some of those possessed by the French 
 before the late war. But the political institutions of the 
 English colonies have been more favorable to the improve¬ 
 ment and cultivation of this land than those of any of the 
 other three nations. 
 
 First, the engrossing of uncultivated land, though it has 
 
 by no means been prevented altogether, has been more re- 
 
 _ * 
 
 strained in the English colonies than in any other. The 
 colony law which imposes upon every proprietor the obliga¬ 
 tion of improving and cultivating, within a limited time, a 
 certain proportion of his lands, and which, in case of failure, 
 
10 
 
 ECONOMIC HISTORY. 
 
 t 
 
 declares those neglected lands grantable to any other person, 
 though it has not, perhaps, been very strictly executed, has, 
 however, had some effect. 
 
 Secondly, in Pennsylvania there is no right of primogeni¬ 
 ture, and lands, like movables, are divided equally among 
 all the children of the family. In three of the provinces of 
 New England the oldest has only a double share, as in the 
 Mosaical law. Though in those provinces, therefore, too 
 great a quantity of land should sometimes be engrossed by 
 a particular individual, it is likely, in the course of a genera¬ 
 tion or two, to be sufficiently divided again. In the other 
 English colonies, indeed, the right of primogeniture takes 
 place, as in the law of England. But in all the English 
 colonies the tenure of the lands, which are all held by free 
 socage, facilitates alienation, and the grantee of any exten¬ 
 sive tract of land generally finds it for his interest to alien¬ 
 ate, as fast as he can, the greater part of it, reserving only 
 a small quit-rent. In the Spanish and Portuguese colonies, 
 what is called the right of Majorazzo 1 takes place in the 
 succession of all those great estates to which any title of 
 honor is annexed. Such estates go all to one person, and 
 are in effect entailed and unalienable. The French colonies, 
 indeed, are subject to the custom of Paris, which, in the in¬ 
 heritance of land, is much more favorable to the younger 
 children than the law of England. But, in the French colo¬ 
 nies, if any part of an estate held by the noble tenure of 
 chivalry and homage is alienated, it is for a limited time 
 subject to the right of redemption, either by the heir of the 
 superior or by the heir of the family; and all the largest 
 estates of the country are held by such noble tenures, which 
 necessarily embarrass alienation. But in a new colony a 
 great uncultivated estate is likely to be much more speedily 
 divided by alienation than by succession. The plenty and 
 cheapness of good land, it has already been observed, are the 
 principal causes of the rapid prosperity of new colonies. 
 The engrossing of land, in effect, destroys this plenty and 
 cheapness. The engrossing of uncultivated land, besides, is 
 
 1 Jus Majorat us. 
 
COLONIAL POLICY OF EUROPE. 
 
 11 
 
 the greatest obstruction to its improvement. But the labor 
 that is employed in the improvement and cultivation of land 
 affords the greatest and most valuable produce to the society. 
 The produce of labor in this case pays not only its own 
 wages, and the profit of the stock which employs it, but the 
 rent of the land too upon which it is employed. The labor 
 of the English colonists, therefore, being more employed in 
 the improvement and cultivation of land, is likely to afford 
 a greater and more valuable produce than that of any of 
 the other three nations, which by the engrossing of land is 
 more or less diverted toward other employments. 
 
 Thirdly, the labor of the English colonists is not only 
 likely to afford a greater and more valuable produce, but, in 
 consequence of the moderation of their taxes, a greater pro¬ 
 portion of this produce belongs to themselves, which they 
 may store up and employ in putting into motion a still greater 
 quantity of labor. The English colonists have never yet 
 contributed anything towards the defence of the mother coun¬ 
 try, or towards the support of its civil government. They 
 themselves, on the contrary, have hitherto been defended al¬ 
 most entirely at the expense of the mother country. But the 
 expense of fleets and armies is out of all proportion greater 
 than the necessary expense of civil government. The ex¬ 
 pense of their own civil government has always been very 
 moderate. It has generally been confined to what was neces¬ 
 sary for paying competent salaries to the governor, to the 
 judges, and to some other officers of police, and for main¬ 
 taining a few of the most useful public works. The expense 
 of the civil establishment of Massachusetts Bay, before the 
 commencement of the present disturbances, used to be but 
 about £18,000 a year; that of New Hampshire and Rhode 
 Island, £8,500 each; that of Connecticut, £4,000; that of 
 New York and Pennsylvania, £4,500 each; that of New 
 Jersey, £1,200; that of Virginia and South Carolina, £8,000 
 each. The civil establishments of Nova Scotia and Georgia 
 are partly supported by an annual grant of Parliament. 
 But Nova Scotia pays, besides, about £7,000 a year to¬ 
 wards the public expenses of the colony; and Georgia about 
 
12 
 
 ECONOMIC HISTORY. 
 
 <£2,500 a year. All the different civil establishments in 
 North America, in short, exclusive of those of Maryland and 
 North Carolina, of which no exact account has been got, did 
 not, before the commencement of the present disturbances, 
 cost the'inhabitants above £64,700 a year, — an ever-memo- 
 rable example at how small an expense three millions of 
 people may not only be governed, but well governed. The 
 most important part of the expense of government, indeed, 
 that of defence and protection, has constantly fallen upon 
 the mother country. The ceremonial, too, of the civil gov¬ 
 ernment in the colonies, upon the reception of a new gov¬ 
 ernor, upon the opening of a new assembly, etc., though 
 sufficiently decent, is not accompanied with any expensive 
 pomp or parade. Their ecclesiastical government is con¬ 
 ducted upon a plan equally frugal. Tithes are unknown 
 among them; and their clergy, who are far from being 
 numerous, are maintained either by moderate stipends, or by 
 the voluntary contributions of the people. The power of 
 Spain and Portugal, on the contrary, derives some support 
 from the taxes levied upon their colonies. France, indeed, 
 has never drawn any considerable revenue from its colonies, 
 the taxes which it levies upon them being generally spent 
 among them. But the colony government of all these three 
 nations is conducted upon a much more expensive plan, and 
 is accompanied with a much more expensive ceremonial. The 
 sums spent upon the reception of a new viceroy of Peru, for 
 example, have frequently been enormous. Such ceremonials 
 are not only real taxes paid by the rich colonists upon those 
 particular occasions, but they serve to introduce among them 
 the habit of vanity and expense upon all other occasions. 
 They are not only very grievous occasional taxes, but they 
 contribute to establish perpetual taxes of the same kind still 
 more grievous, — the ruinous taxes of private luxury and ex¬ 
 travagance. In the colonies of all those three nations, 
 too, the ecclesiastical government is extremely oppressive. 
 Tithes take place in all of them, and are levied with the 
 utmost rigor in those of Spain and Portugal. All of them, 
 besides, are oppressed with a numerous race of mendicant 
 
COLONIAL POLICY OF EUROPE. 
 
 13 
 
 friars, whose beggary, being not only licensed but consecrated 
 by religion, is a most grievous tax upon the poor people, 
 who are most carefully taught that it is a duty to give, and 
 a very great sin to refuse them their charity. Over and 
 above all this, the clergy are, in all of them, the greatest 
 engrossers of land. 
 
 Fourthly, in the disposal of their surplus produce, or of 
 what is over and above their own consumption, the English 
 colonies have been more favored, and have been allowed a 
 more extensive market, than those of any other European na¬ 
 tion. Every European nation has endeavored, more or less, 
 to monopolize to itself the commerce of its colonies, and upon 
 that account has prohibited the ships of foreign nations from 
 trading to them, and has prohibited them from importing Eu¬ 
 ropean goods from any foreign nation. But the manner in 
 which this monopoly has been exercised in different nations 
 has been very different. 
 
 Some nations have given up the whole commerce of their 
 colonies to an exclusive company, of whom the colonies were 
 obliged to buy all such European goods as they wanted, and 
 to whom they were obliged to sell the whole of their own 
 surplus produce. It was the interest of the company, there¬ 
 fore, not only to sell the former as dear, and to buy the latter 
 as cheap as possible, but to buy no more of the latter, even 
 at this low price, than what they could dispose of for a very 
 high price in Europe. It was their interest not only to 
 degrade in all cases the value of the surplus produce of the 
 colony, but in many cases to discourage and keep down the 
 natural increase of its quantity. Of all the expedients that 
 can well be contrived to stunt the natural growth of a new 
 colony, that of an exclusive company is undoubtedly the 
 most effectual. This, however, has been the policy of Hol¬ 
 land, though their company, in the course of the present 
 century, has given up in many respects the exertion of their 
 exclusive privilege. This, too, was the policy of Denmark 
 till the reign of the late king. It has occasionally been the 
 policy of France, and of late, since 1T55, after it had been 
 abandoned by all other nations on account of its absurdity, 
 
14 
 
 ECONOMIC HISTORY. 
 
 it has become the policy of Portugal with regard at least to 
 two of the principal provinces of Brazil, Pernambuco and 
 Marannon. 
 
 Other nations, without establishing an exclusive company, 
 have confined the wdiole commerce of their colonies to a par¬ 
 ticular port of the mother country, from whence no ship was 
 allowed to sail but either in a fleet, and at a particular sea¬ 
 son, or, if single, in consequence of a particular license, 
 which in most cases was very well paid for. This policy 
 opened, indeed, the trade of the colonies to all the natives of 
 the mother country, provided they traded from the proper port, 
 at the proper season, and in the proper vessels. But as all 
 the different merchants who joined their stocks in order to fit 
 out those licensed vessels would find it for their interest to 
 act in concert, the trade which was carried on in this manner 
 would necessarily be conducted very nearly upon the same 
 principles as that of an exclusive company. The profit of 
 those merchants would be almost equally exorbitant and op¬ 
 pressive. The colonies would be ill supplied and would be 
 obliged both to buy very dear and to sell very cheap. This, 
 however, till within these few years, had always been the pol¬ 
 icy of Spain; and the price of all European goods, accordingly, 
 is said to have been enormous in the Spanish West Indies. 
 At Quito, we are told by Ulloa, a pound of iron sold for about 
 four and sixpence, and a pound of steel for about six and nine- 
 pence sterling. But it is chiefly in order to.purchase Euro¬ 
 pean goods that the colonies part with their own produce. 
 The more, therefore, they pay for the one, the less they really 
 get for the other, and the dearness of the one is the same thing 
 with the cheapness of the other. The policy of Portugal is 
 in this respect the same as the ancient policy of Spain, with 
 regard to all its colonies except Pernambuco and Marannon, 
 and with regard to these it has lately adopted a still worse. 
 
 Other nations leave the trade of their colonies free to all 
 their subjects, who may carry it on from all the different ports 
 of the mother country, and who have occasion for no other li¬ 
 cense than the common dispatches of the custom-house. In 
 this case the number and dispersed situation of the different 
 
COLONIAL POLICY OF EUROPE . 
 
 15 
 
 traders render it impossible for them to enter into any gen¬ 
 eral combination, and their competition is sufficient to hinder 
 them from making very exorbitant profits. Under so liberal a 
 policy the colonies are enabled both to sell their own produce 
 and to buy the goods of Europe at a reasonable price. But 
 since the dissolution of the Plymouth company, when our col¬ 
 onies were but in their infancy, this has always been the pol¬ 
 icy of England. It has generally too been that of France, and 
 has been uniformly so since the dissolution of what, in Eng¬ 
 land, is commonly called their Mississippi company. The 
 profits of the trade, therefore, which France and England 
 carry on with their colonies, though no doubt somewhat 
 higher than if the competition was free to all other nations, 
 are, however, by no means exorbitant; and the price of Eu¬ 
 ropean goods accordingly is not extravagantly high in the 
 greater part of the colonies of either of those nations. 
 
 In the exportation of their own surplus produce too, it is 
 only with regard to certain commodities that the colonies of 
 Great Britain are confined to the market of the mother coun¬ 
 try. These commodities, having been enumerated in the act 
 of navigation and in some other subsequent acts, have upon 
 that account been called enumerated commodities. The rest 
 are called non-enumerated; and may be exported directly to 
 other counties, provided it is in British or Plantation ships, 
 of which the owners and three fourths of the mariners are 
 British subjects. 
 
 Among the non-enumerated commodites are some of the 
 most important productions of America and the West Indies: 
 grain of all sorts, lumber, salt provisions, fish, sugar, and 
 rum. 
 
 Grain is naturally the first and principal object of the 
 culture of all new colonies. By allowing them a very exten¬ 
 sive market for it, the law encourages them to extend this 
 culture much beyond the consumption of a thinly inhabited 
 country, and thus to provide beforehand an ample subsist¬ 
 ence for a continually increasing population. 
 
 In a country quite covered with wood, where timber conse¬ 
 quently is of little or no value, the expense of clearing the 
 
16 
 
 ECONOMIC HISTORY . 
 
 ground is the principal obstacle to improvement. By allow¬ 
 ing the colonics a very extensive market for their lumber, the 
 law endeavors to facilitate improvement by raising the price 
 of a commodity which would otherwise be of little value, and 
 thereby-enabling them to make some profit of what would 
 otherwise be mere expense. 
 
 In a country neither half-peopled nor half-cultivated, cattle 
 naturally multiply beyond the consumption of the inhabi¬ 
 tants, and are often upon that account of little or no value. 
 But it is necessary, it has already been shown, that the price 
 of cattle should bear a certain proportion to that of corn 
 before the greater part of the lands of any country can be 
 improved. By allowing to American cattle, in all shapes, 
 dead and alive, a very extensive market, the law endeavors to 
 raise the value of a commodity of which the high price is so 
 very essential to improvement. The good effects of this 
 liberty, however, must be somewhat diminished by the 4th 
 of George III., c. 15, which puts hides and skins among the 
 enumerated commodities, and thereby tends to reduce the 
 valuation of American cattle. 
 
 To increase the shipping and naval power of Great 
 Britain by the extension of the fisheries of our colonies is 
 an object which the legislature seems to have had almost 
 constantly in view. Those fisheries upon this account have 
 had all the encouragement which freedom can give them, and 
 they have flourished accordingly. The New England fishery 
 in particular was, before the late disturbances, one of the 
 most important, perhaps, in the world. The whale-fishery, 
 which, notwithstanding an extravagant bounty, is in Great 
 Britain carried on to so little purpose that, in the opinion 
 of many people (which I do not, however, pretend to war¬ 
 rant), the whole produce does not much exceed the value of 
 the bounties which are annually paid for it, is in New Eng¬ 
 land carried on without any bounty to a very great extent. 
 Fish is one of the principal articles with which the North 
 Americans trade to Spain, Portugal, and the Mediterranean. 
 
 Sugar was originally an enumerated commodity which 
 could be exported only to Great Britian. But in 1731, upon 
 
COLONIAL POLICY OF EUROPE. 
 
 IT 
 
 a representation of the sugar-planters, its exportation was 
 permitted to all parts of the world. The restrictions, how¬ 
 ever, with which this liberty was granted, joined to the high 
 price of sugar in Great Britain, have rendered it in a great 
 measure ineffectual. Great Britain and her colonies still 
 continue to be almost the sole market for all the sugar pro¬ 
 duced in the British plantations. Their consumption in¬ 
 creases so fast that, though in consequence of the increasing 
 improvement of Jamaica, as well as of the Ceded Islands, 
 the importation of sugar has increased very greatly within 
 these twenty years, the exportation to foreign countries is 
 said to be not much greater than before. 
 
 Rum is a very important article in the trade which the 
 Americans carry on to the coast of Africa, from which they 
 bring back negro slaves in return. 
 
 If the whole surplus produce of America in grain of all 
 sorts, in salt provisions, and in fish, had been put into the 
 enumeration, and thereby forced into the market of Great 
 Britain, it would have interfered too much with the produce 
 of the industry of our own people. It was probably not so 
 much from any regard to the interest of America, as from 
 a jealousy of this interference, that those important com¬ 
 modities have not only been kept out of the enumeration, 
 but that the importation into Great Britain of all grain, ex¬ 
 cept rice, and of all salt provisions, has, in the ordinary 
 state of the law, been prohibited. 
 
 The non-enumerated commodities could originally be ex¬ 
 ported to all parts of the world. Lumber and rice, hav¬ 
 ing been once put into the enumeration, when they were 
 afterwards taken out of it were confined, as to the European 
 market, to the countries that lie south of Cape Finisterre. 
 By the 6th of George III., c. 52, all non-enumerated com¬ 
 modities were subjected to the like restriction. The parts of 
 Europe which lie south of Cape Finisterre are not manufac¬ 
 turing countries, and we were less jealous of the colony ships 
 carrying home from them any manufactures which could 
 interfere with our own. 
 
 The enumerated commodities are of two sorts: first, such 
 
 2 
 
18 
 
 ECONOMIC HISTORY. 
 
 as are either the peculiar produce of America, or as cannot 
 be produced, or at least are not produced, in the mother 
 country. Of this kind are molasses, coffee, cocoanuts, to¬ 
 bacco, pimento, ginger, whale-fins, raw silk, cotton-wool, 
 beaver ^and other peltry of America, indigo, fustic, and 
 other dyeing woods. Secondly, such as are not the peculiar 
 produce of America, but which are and may be produced in 
 the mother country, though not in such quantities as to sup¬ 
 ply the greater part of her demand, which is principally sup¬ 
 plied from foreign countries. Of this kind are all naval 
 stores, masts, yards, and bowsprits, tar, pitch, and turpen¬ 
 tine, pig and bar iron, copper ore, hides and skins, pot and 
 pearl ashes. The largest importation of commodities of the 
 first kind could not discourage the growth or interfere with 
 the sale of any part of the produce of the mother country. 
 By confining them to the home market, our merchants,/it 
 was expected, would not only be enabled to buy them cheaper 
 in the Plantations, and consequently to sell them with a 
 better profit at home, but to establish between the Planta¬ 
 tions and foreign countries an advantageous carrying trade, 
 of which Great Britain was necessarily to be the centre or 
 emporium, as the European country into which those com¬ 
 modities were first to be imported. The importation of 
 commodities of the second kind might be so managed too, it 
 was supposed, as to interfere, not with the sale of those of 
 the same kind which were produced at home, but with that 
 of those which were imported from foreign countries; be¬ 
 cause, by means of proper duties, they might be rendered 
 always somewhat dearer than the former, and yet a good 
 deal cheaper than the latter. By confining such commod¬ 
 ities to the home market, therefore, it was proposed to dis¬ 
 courage the produce, not of Great Britain, but of some 
 foreign countries with which the balance of trade was be¬ 
 lieved to be unfavorable to Great Britain. 
 
 The prohibition of exporting from the colonies to any 
 other country but Great Britain masts, yards, and bow¬ 
 sprits, tar, pitch, and turpentine naturally tended to lower 
 the price of timber in the colonies, and consequently to in- 
 
COLONIAL POLICY OF EUROPE. 
 
 19 
 
 crease the expense of clearing their lands, the principal 
 obstacle to their improvement. But about the beginning of 
 the present century, in 1703, the pitch and tar company of 
 Sweden endeavored to raise the price of their commodities 
 to Great Britain by prohibiting their exportation, except in 
 their own ships, at their own price, and in such quantities as 
 they thought proper. In order to counteract this notable 
 piece of mercantile policy, and to render herself as much as 
 possible independent, not only of Sweden, but of all the other 
 northern powers, Great Britain gave a bounty upon the im¬ 
 portation of naval stores from America, and the effect of 
 this bounty was to raise the price of timber in America 
 much more than the confinement to the home market could 
 lower it; and as both regulations were enacted at the same 
 time, their joint effect was rather to encourage than to dis¬ 
 courage the clearing of land in America. 
 
 Though pig and bar iron too have been put among the 
 enumerated commodities, yet as, when imported from Amer¬ 
 ica, they are exempted from considerable duties to which 
 they are subject when imported from any other country, the 
 one part of the regulation contributes more to encourage the 
 erection of furnaces in America, than the other to discourage 
 it. There is no manufacture which occasions so great a con¬ 
 sumption of wood as a furnace, or which can contribute so 
 much to the clearing of a country overgrown with it. 
 
 The tendency of some of these regulations to raise the 
 value of timber in America, and thereby to facilitate the 
 clearing of the land, was neither, perhaps, intended nor 
 understood by the legislature. Though their beneficial 
 effects, however, have been in this respect accidental, they 
 have not upon that account been less real. 
 
 The most perfect freedom of trade is permitted between 
 the British colonies of America and the West Indies, both 
 in the enumerated and in the non-enumerated commodities. 
 Those colonies are now become so populous and thriving 
 that each of them finds in some of the others a great and ex¬ 
 tensive market for every part of its produce. All of them 
 taken together, they make a great internal market for the 
 produce of one another. 
 
20 
 
 ECONOMIC HISTORY. 
 
 The liberality of England, however, towards the trade of 
 her colonies has been confined chiefly to what concerns the 
 market for their produce, either in its rude state, or in what 
 may be called the very first stage of manufacture. The more 
 advanced or more refined manufactures even of the colony 
 produce, the merchants and manufacturers of Great Britain 
 choose to reserve to themselves, and have prevailed upon the 
 legislature to prevent their establishment in the colonies, 
 sometimes by high duties, and sometimes by absolute 
 prohibitions. * 
 
 While, for example, Muscovado sugars from the British 
 plantations pay upon importation only 6s. 4 d. the hundred 
 weight; white sugars pay XI, Is. Id. ; and refined, either 
 double or single, in loaves, X4, 2s. 5d. When those high 
 duties were imposed Great Britain was the sole, and she 
 still continues to be the principal market to which the 
 sugars of the British colonies could be exported. They 
 amounted, therefore, to a prohibition, at first of claying or 
 refining sugar for any foreign market, and at present of clay¬ 
 ing or refining it for the market, which takes off, perhaps, 
 more than nine tenths of the whole produce. The manufac¬ 
 ture of claying or refining sugar accordingly, though it has 
 flourished in all the sugar colonies of France, has been little 
 cultivated in any of those of England, except for the market 
 of the colonies themselves. While Grenada was in the 
 hands of the French there was a refinery of sugar, by clay¬ 
 ing at least, upon almost every plantation. Since it fell 
 into those of the English, almost all works of this kind have 
 been given up, and there are at present, October, 1773, I am 
 assured, not above two or three remaining in the island. At 
 present, however, by an indulgence of the custom-house, 
 clayed or refined sugar, if reduced from loaves into powder, 
 is commonly imported as Muscovado. 
 
 While Great Britain encourages in America the manufac¬ 
 tures of pig and bar iron, by exempting them from duties 
 to which the like commodities are subjected when imported 
 from any other country, she imposes an absolute prohibition 
 upon the erection of steel furnaces and slit-mills in any of 
 
COLONIAL POLICY OF EUROPE. 
 
 21 
 
 her American plantations. She will not suffer her colonists 
 to work in those more refined manufactures, even for their 
 own consumption; but insists upon their purchasing of her 
 merchants and manufacturers all goods of this kind which 
 they have occasion for. 
 
 She prohibits the exportation from one province to another 
 by water, and even the carriage by land upon horseback or 
 in a cart, of hats, of wools and woollen goods, of the produce 
 of America, — a regulation which effectually prevents the 
 establishment of any manufacture of such commodities for 
 distant sale, and confines the industry of her colonists in 
 this way to such coarse and household manufactures as a 
 private family commonly makes for its own use, or for that 
 of some of its neighbors in the same province. 
 
 To prohibit a great people, however, from making all that 
 they can of every part of their own produce, or from employ¬ 
 ing their stock and industry in the way that they judge most 
 advantageous to themselves, is a manifest violation of the 
 most sacred rights of mankind. Unjust, however, as such 
 prohibitions may be, they have not hitherto been very hurtful 
 to the colonies. Land is still so cheap, and, consequently, 
 labor so dear among them, that they can import from the 
 mother country almost all the more refined or more advanced 
 manufactures cheaper than they could make them for them¬ 
 selves. Though they had not, therefore, been prohibited 
 from establishing such manufactures, yet in their present 
 state of improvement a regard to their own interest would, 
 probably, have prevented them from doing so. In their 
 present state of improvement those prohibitions, perhaps, 
 without cramping their industry, or restraining it from any 
 employment to which it would have gone of its own accord, 
 are only impertinent badges of slavery imposed upon them, 
 without any sufficient reason, by the groundless jealousy of 
 the merchants and manufacturers of the mother country. In 
 a more advanced state they might be really oppressive and 
 insupportable. 
 
 Great Britain too, as she confines to her own market some 
 of the most important productions of the colonies, so in 
 
22 
 
 ECONOMIC HISTORY. 
 
 compensation she gives to some of them an advantage in that 
 market; sometimes by imposing higher duties upon the like 
 productions when imported from other countries, and some¬ 
 times by giving bounties upon their importation from the 
 colonies'". In the first way she gives an advantage in the 
 home market to the sugar, tobacco, and iron of her own 
 colonies, and in the second to their raw silk, to their hemp 
 and flax, to their indigo, to their naval stores, and to their 
 building-timber. This second way of encouraging the colony 
 produce, by bounties upon importation, is, so far as I have 
 been able to learn, peculiar to Great Britain. The first is 
 not. Portugal does not content herself with imposing higher 
 duties upon the importation of tobacco from any other coun¬ 
 try, but prohibits it under the severest penalties. 
 
 With regard to the importation of goods from Europe, 
 England has likewise dealt more liberally with her colonies 
 than any other nation. 
 
 Great Britain allows a part, almost always the half, gener¬ 
 ally a larger portion, and sometimes the whole of the duty 
 which is paid upon the importation of foreign goods, to be 
 drawn back upon their exportation to any foreign country. 
 No independent foreign country, it was easy to foresee, would 
 receive them if they came to it loaded with the heavy duties 
 to which almost all foreign goods are subjected on their im¬ 
 portation into Great Britain. Unless, therefore, some part 
 of those duties was drawn back upon exportation, there was 
 an end of the carrying trade, — a trade so much favored by 
 the mercantile system. 
 
 Our colonies, however, are by no means independent for¬ 
 eign countries; and Great Britain, having assumed to her¬ 
 self the exclusive right of supplying them with all goods 
 from Europe, might have forced them (in the same manner 
 as other countries have done their colonies) to receive such 
 goods loaded with all the same duties which they paid in the 
 mother country. But, on the contrary, till 1763, the same 
 drawbacks were paid upon the exportation of the greater part 
 of foreign goods to our colonies as to any independent for¬ 
 eign country. In 1763, indeed, by the 4th of George III., 
 
COLONIAL POLICY OF EUROPE. 
 
 23 
 
 c. 15, this indulgence was a good deal abated, and it was 
 enacted, “That no part of the duty called the old subsidy 
 should be drawn back for any goods of the growth, produc¬ 
 tion, or manufacture of Europe or the East Indies, which 
 should be exported from this kingdom to any British colony 
 or plantation in America; wines, white calicoes, and muslins 
 excepted. ” Before this law many different sorts of foreign 
 goods might have been bought cheaper in the plantations 
 than in the mother country; and some may still. 
 
 Of the greater part of the regulations concerning the 
 colony trade, the merchants who carry it on, it must be ob¬ 
 served, have been the principal advisers. We must not 
 wonder, therefore, if, in the greater part of them, their in¬ 
 terest has been more considered than either that of the 
 colonies or that of the mother country. In their exclusive 
 privilege of supplying the colonies with all the goods which 
 they wanted from Europe, and of purchasing all such parts 
 of their surplus produce as could not interfere with any of 
 the trades which they themselves carried on at home, the in¬ 
 terest of the colonies was sacrificed to the interest of those 
 merchants. In allowing the same drawbacks upon the re¬ 
 exportation of the greater part of European and East India 
 goods to the colonies, as upon their re-exportation to any 
 independent country, the interest of the mother country was 
 sacrificed to it, even according to the mercantile ideas of 
 that interest. It was for the interest of the merchants to pay 
 as little as possible for the foreign goods which they sent to 
 the colonies, and consequently, to get back as much as pos¬ 
 sible of the duties which they advanced upon their importa¬ 
 tion into Great Britain. They might thereby be enabled to 
 sell in the colonies, either the same quantity of goods with 
 a greater profit, or a greater quantity with the same profit, 
 and, consequently, to gain something either in the one way 
 or the other. It was likewise for the interest of the colonies 
 to get all such goods as cheap and in as great abundance as 
 possible. But this might not always be for the interest of 
 the mother country. She might frequently suffer both in 
 her revenue, by giving back a great part of the duties which 
 
24 
 
 ECONOMIC HISTORY. 
 
 had been paid upon the importation of such goods; and in 
 her manufactures, by being undersold in the colony market, 
 in consequence of the easy terms upon which foreign manu¬ 
 factures could be carried thither by means of those draw¬ 
 backs. - The progress of the linen manufacture of Great 
 Britain, it is commonly said, has been a good deal retarded 
 by the drawbacks upon the re-exportation of German linen to 
 the American colonies. 
 
 But though the policy of Great Britain with regard to the 
 trade of her colonies has been dictated by the same mercan¬ 
 tile spirit as that of other nations, it has, however, upon the 
 whole, been less illiberal and oppressive than that of any of 
 them. 
 
 In everything, except their foreign trade, the liberty of 
 the English colonists to manage their own affairs their own 
 way is complete. It is in every respect equal to that of 
 their fellow-citizens at home, and is secured in the same 
 manner, by an assembly of the representatives of the people, 
 who claim the sole right of imposing taxes for the support of 
 the colony government. The authority of this assembly 
 overawes the executive power, and neither the meanest nor 
 the most obnoxious colonist, as long as he obeys the law, 
 has anything to fear from the resentment, either of the gov¬ 
 ernor, or of any other civil or military officer in the province. 
 The colony assemblies, though, like the house of commons in 
 England, they are not always a very equal representation of 
 the people, yet they approach more nearly to that character; 
 and as the executive power either has not the means to cor¬ 
 rupt them, or,'on account of the support which it receives 
 from the mother country, is not under the necessity of doing 
 so, they are perhaps in general more influenced by the incli¬ 
 nations of their constituents. The councils, which, in the 
 colony legislatures, correspond to the house of lords in Great 
 Britain, are not composed of an hereditary nobility. In 
 some of the colonies, as in three of the governments of New 
 England, those councils are not appointed by the king, but 
 chosen by the representatives of the people. In none of the 
 English colonies is there any hereditary nobility. In all of 
 
COLONIAL POLICY OF EUROPE. 
 
 25 
 
 them, indeed, as in all other free countries the descendant 
 of an old colony family is more respected than an upstart of 
 equal merit and fortune; but he is only more respected, and 
 he has no privileges by which he can be troublesome to his 
 neighbors. Before the commencement of the present dis¬ 
 turbances, the colony assemblies had not only the legislative, 
 but a part of the executive power. In Connecticut and 
 Rhode Island they elected the governor. In the other colo¬ 
 nies they appointed the revenue officers who collected the 
 taxes imposed by those respective assemblies, to whom those 
 officers were immediately responsible. There is more equal¬ 
 ity, therefore, among the English colonists than among the 
 inhabitants of the mother country. Their manners are more 
 republican, and their governments, those of three of the 
 provinces of New England in particular, have hitherto been 
 more republican too. 
 
 The absolute governments of Spain, Portugal, and France, 
 on the contrary, take place in their colonies; and the dis¬ 
 cretionary powers which such governments commonly dele¬ 
 gate to all their inferior officers are, on account of the great 
 distance, naturally exercised there with more than ordinary 
 violence. Under all absolute governments there is more 
 liberty in the capital than in any other part of the country. 
 The sovereign himself can never have either interest or in¬ 
 clination to pervert the order of justice, or to oppress the 
 great body of the people. In the capital his presence over¬ 
 awes more or less all his inferior officers, who in the remoter 
 provinces, from whence the complaints of the people are less 
 likely to reach him, can exercise their tyranny with much 
 more safety. But the European colonies in America are 
 more remote than the most distant provinces of the greatest 
 empires which had ever been known before. The govern¬ 
 ment of the English colonies is perhaps the only one which, 
 since the world began, could give perfect security to the in¬ 
 habitants of so very distant a province. The administration 
 of the French colonies, however, has always been conducted 
 with more gentleness and moderation than that of the Span¬ 
 ish and Portuguese. This superiority of conduct is suitable 
 
26 
 
 / 
 
 ECONOMIC HISTORY. 
 
 both to the character of the French nation, and to wliat 
 forms the character of every nation, the nature of their gov¬ 
 ernment, which, though arbitrary and violent in comparison 
 with that of Great Britain, is legal and free in comparison 
 with those of Spain and Portugal. 
 
 It is in the progress of the North American colonies, how¬ 
 ever, that the superiority of the English policy chiefly 
 appears. The progress of the sugar colonies of France has 
 been at least equal, perhaps superior, to that of the greater 
 part of those-of England; and yet the sugar colonies of Eng¬ 
 land enjoy a free government nearly of the same kind with 
 that which takes place in her colonies of North America. 
 But the sugar colonies of France are not discouraged, like 
 those of England, from refining their own sugar; and, what 
 is of still greater importance, the genius of their government 
 naturally introduces a better management of their negro 
 slaves. 
 
 In all European'colonies the culture of the sugar-cane is 
 carried on by negro slaves. The constitution of those who 
 have been born in the temperate climate of Europe could not, 
 it is supposed, support the labor of digging the ground under 
 the burning sun of the West Indies; and the culture of the 
 sugar-cane, as it is managed at present, is all hand labor, 
 though, in the opinion of many, the drill plough might be 
 introduced into it with great advantage. But, as the profit 
 and success of the cultivation which is carried on by means 
 of cattle depend very much upon the good management of 
 those cattle, so the profit and success of that which is car¬ 
 ried on by slaves must depend equally upon the good man¬ 
 agement of those slaves; and in the good management of 
 their slaves the French planters, I think it is generally 
 allowed, are superior to the English. The law, so far as it 
 gives some weak protection to the slave against the violence 
 of his master, is likely to be better executed in a colony 
 where the government is in a great measure arbitrary than 
 in one where it is altogether free. In every country where 
 the unfortunate law of slavery is established, the magistrate, 
 when he protects the slave, intermeddles in some measure in 
 
 s 
 
COLONIAL POLICY OF EUROPE . 
 
 27 
 
 the management of the private property of the master; and 
 in a free country, where the master is perhaps either a mem¬ 
 ber of the colony assembly or an elector of such a member, 
 he dare not do this but with the greatest caution and circum¬ 
 spection. The respect which he is obliged to pay to the 
 master renders it more difficult for him to protect the slave. 
 But in a country where the government is in a great measure 
 arbitrary, where it is usual for the magistrate to intermeddle 
 even in the management of the private property of individ¬ 
 uals, and to send them, perhaps, a lettre de cachet if they do 
 not manage it according to his liking, it is much easier for 
 him to give some protection to the slave; and common hu¬ 
 manity naturally disposes him to do so. The protection of 
 the magistrate renders the slave less contemptible in the 
 eyes of his master, who is thereby induced to consider him 
 with more regard, and to treat him with more gentleness. 
 Gentle usage renders the slave not only more faithful, but 
 more intelligent, and therefore, upon a double account, more 
 useful. He approaches more to the condition of a free ser¬ 
 vant, and may possess some degree of integrity and attach¬ 
 ment to his master’s interest,— virtues which frequently 
 belong to free servants, but which never can belong to a 
 slave who is treated as slaves commonly are in countries 
 where the master is perfectly free and secure. 
 
 That the condition of a slave is better under an arbitrary 
 than under a free government is, I believe, supported by the 
 history of all ages and nations. In the Roman history, the 
 first time we read of the magistrate interposing to protect 
 the slave from the violence of his master is under the em¬ 
 perors. When Vedius Pollio, in the presence of Augustus, 
 ordered one of his slaves, who had committed a slight fault, 
 to be cut into pieces, and thrown into his fish-pond in order 
 to feed his fishes, the emperor commanded him, with indig¬ 
 nation, to emancipate immediately, not only that slave, but 
 all the others that belonged to him. Under the republic no 
 magistrate could have had authority enough to protect the 
 slave, much less to punish the master. 
 
 The stock, it is to be observed, which has improved the 
 
28 
 
 ECONOMIC HISTORY. 
 
 sugar colonies of France, particularly the great colony of St. 
 Domingo, has been raised almost entirely from the gradual 
 improvement and cultivation of those colonies. It has been 
 almost altogether the produce of the soil and of the industry 
 of the colonists, or, what comes to the same thing, the price 
 of that produce, gradually accumulated by good management, 
 and employed in raising a still greater produce. But the 
 stock which has improved and cultivated the sugar colonies 
 of England has, a great part of it, been sent out from Eng¬ 
 land, and has by no means been altogether the produce of 
 the soil and industry of the colonists. The prosperity of the 
 English sugar colonies has been, in a great measure, owing 
 to the great riches of England, of which a part has over¬ 
 flowed, if one may say so, upon those colonies. But the 
 prosperity of the sugar colonies of France has been entirely 
 owing to the good conduct of the colonists, which must there¬ 
 fore have had some superiority over that of the English; and 
 this superiority has been remarked in nothing so much as in 
 the good management of their slaves. 
 
 Such have been the general outlines of the policy of the 
 different European nations with regard to their colonies. 
 
 The policy of Europe, therefore, has very little to boast of, 
 either in the original establishment, or. so far as concerns 
 their internal government, in the subsequent prosperity of 
 the colonies of America. 
 
 Folly and injustice seem to have been the principles which 
 presided over and directed the first project of establishing 
 those colonies; the folly of hunting after gold and silver 
 mines, and the injustice of coveting the possession of a coun¬ 
 try whose harmless natives, far from having ever injured the 
 people of Europe, had received the first adventurers with 
 every mark of kindness and hospitality. 
 
 The adventurers, indeed, who formed some of the later 
 establishments, joined to the chimerical project of finding 
 gold and silver mines other motives more reasonable and 
 more laudable; but even these motives do very little honor 
 to the policy of Europe. 
 
 The English Puritans, restrained at home, fled for free- 
 
COLONIAL POLICY OF EUROPE. 
 
 29 
 
 dom to America, and established there the four governments 
 of New England. The English Catholics, treated with much 
 greater injustice, established that of Maryland; the Quakers, 
 that of Pennsylvania. The Portuguese Jews, persecuted by 
 the Inquisition, stripped of their fortunes, and banished to 
 Brazil, introduced, by their example, some sort of order 
 and industry among the transported felons and strumpets, 
 by whom that colony was originally peopled, and taught 
 them the culture of the sugar-cane. Upon all these differ¬ 
 ent occasions, it was, not the wisdom and policy, but the 
 disorder and injustice, of the European governments, which 
 peopled and cultivated America. 
 
 In effectuating some of the most important of these estab¬ 
 lishments, the different governments of Europe had as little 
 merit as in projecting them. The conquest of Mexico was 
 the project, not of the council of Spain, but of a governor of 
 Cuba; and it was effectuated by the spirit of the bold adven¬ 
 turer to whom it was entrusted, in spite of everything which 
 that governor, who soon repented of having trusted such a 
 person, could do to thwart it. The conquerors of Chili and 
 Peru, and of almost all the other Spanish settlements upon 
 the continent of America, carried out with them no other 
 public encouragement, but a general permission to make 
 settlements and conquests in the name of the king of Spain. 
 Those adventures were all at the private risk and expense 
 of the adventurers. The government of Spain contributed 
 scarce anything to any of them. That of England contrib¬ 
 uted as little towards effectuating the establishment of some 
 of its most important colonies in North America. 
 
 When those establishments were effectuated, and had be¬ 
 come so considerable as to attract the attention of the mother 
 country, the first regulations which she made with regard to 
 them had always in view to secure to herself the monopoly of 
 their commerce,— to confine their market, and to enlarge her 
 own at their expense, and, consequently, rather to damp and 
 discourage, than to quicken and forward, the course of their 
 prosperity. In the different ways in which this monopoly 
 has been exercised, consists one of the most essential differ- 
 
30 
 
 ECONOMIC HISTORY . 
 
 ences in the policy of the different European nations with 
 regard to their colonies. The best of them all, that of Eng¬ 
 land, is only somewhat less illiberal and oppressive than 
 that of any of the rest. 
 
 In what way, therefore, has the policy of Europe contrib¬ 
 uted either to the first establishment or to the present 
 grandeur of the colonies of America ? In one way, and in 
 one way only, it has contributed a good deal. Magna virum 
 Mater! It bred and formed the men who were capable of 
 achieving such great actions, and of laying the foundation of 
 so great an empire; and there is no other quarter of the 
 world of which the policy is capable of forming, or has ever 
 actually and in fact formed, such men. The colonies owe to 
 the policy of Europe the education and great views of their 
 active and enterprising founders; and some of the greatest 
 and most important of them, so far as concerns their internal 
 government, owe to it scarce anything else. 
 
THE GREAT INVENTIONS. 
 
 81 
 
 II. 
 
 THE GREAT INVENTIONS. 
 
 From Walpole’s History of England , 1 Yol. I. pp. 50-76. 
 HE manufacturing industries of the country had never 
 
 A previously experienced so marvellous a development. 
 The hum of the workshop was heard in places which had pre¬ 
 viously only been disturbed by the whirr of the grouse; and 
 new forces, undreamed of a century before, were employed to 
 assist the progress of production. The trade of the United 
 Kingdom acquired an importance which it had never pre¬ 
 viously enjoyed, and the manufacturing classes obtained an 
 influence which they had never before known. The- land- 
 owners were slowly losing the monopoly of power which they 
 had enjoyed for centuries. Traders and manufacturers were 
 daily obtaining fresh wealth and influence. A new England 
 was supplanting the old country; and agriculture, the sole 
 business of our forefathers, was gradually becoming of less 
 importance than trade. In 1798, the first year of the war, 
 the official value of all the imports into Britain was less than 
 <£20,000,000. In 1815, the year of Waterloo, it exceeded 
 £31,000,000. In 1792 the official value of British and Irish 
 exports was only £18,000,000; it rose in 1815 to £41,000,000. 
 The official values, however, give only a very imperfect idea of 
 the extent of our export trade. They are based on prices fixed 
 so far back as 1696, and afford, therefore, an inaccurate test 
 of the extent of our trade. No attempt was made to ascertain 
 the declared or real value of the exports till the year 1798, 
 when it slightly exceeded £33,000,000. The declared value 
 of the exports of British and Irish produce in 1815 exceeded 
 £49,000,000. The rise in the value of the exports and im¬ 
 ports was attributable to many causes. The predominance 
 
 1 London: Longmans, Green, & Co., 1878. 
 
32 
 
 ECONOMIC HISTORY . 
 
 of the British at sea had driven every enemy from the ocean, 
 and had enabled British merchants to ply their trade in 
 comparative safety. The numerous possessions which the 
 British had acquired in every quarter of the globe had pro¬ 
 vided them with customers in all parts of the w r orld; and 
 the most civilized, as well as the most savage, of nations 
 were purchasing the produce of the looms of Manchester and 
 of the factories of Birmingham. Even the taxation which the 
 war had necessitated had stimulated the manufacturers to 
 fresh exertions. The merchants were continually discover¬ 
 ing fresh outlets for British trade; the manufacturers were 
 constantly encouraged to increase their produce. 1 
 
 Wool was the most ancient and most important of English 
 manufactures. Custom seemed to point to the permanent 
 superiority of the woollen trade. The Chancellor of Eng¬ 
 land sat on a sack of wool; and when men spoke of the 
 staple trade, they always referred to the trade in wool. For 
 centuries British sovereigns and British statesmen had, after 
 their own fashion, and according to their own ideas, actively 
 promoted this particular industry. Edward III. had induced 
 Flemish weavers to settle in this country. The Restoration 
 Parliament prohibited the exportation of British wool, and 
 had ordered that the very dead should be interred in woollen 
 shrouds. The manufacturers spread over the entire king¬ 
 dom. Wherever there was a running stream to turn their 
 mill, there was at any rate the possibility of a woollen fac¬ 
 tory. Norwich, with its contiguous village of Worsted, was 
 the chief seat of the trade. But York and Bradford, Worces¬ 
 tershire and Gloucestershire, Manchester and Kendal, were 
 largely dependent on it. 
 
 The steps which Parliament took to promote this particu¬ 
 lar industry were not always very wise; in one point they 
 were not very just. Ireland, in many respects, could have 
 competed on advantageous terms with the woollen manufac¬ 
 turers of England. English jealousy prohibited in conse- 
 
 1 McCulloch’s “ Commercial Dictionary,” imports and exports; cf., however, 
 Porter’s “ Progress of the Nation,” p. 357, where the figures are slightly differ¬ 
 ent. Nothing is more difficult than to ascertain the correct figures. 
 
THE GREAT INVENTIONS. 
 
 33 
 
 quence the importation of Irish manufactured woollen goods. 
 The result hardly answered the sanguine anticipations of the 
 selfish senators who had secured it. The Irish, instead of 
 sending their fleeces to be worked up in Great Britain, 
 smuggled them, in return for contraband spirits, to France. 
 England failed to obtain any large addition to her raw mate¬ 
 rial ; and Ireland was driven into closer communication with 
 the hereditary foe of England. The loss of the Irish fleeces 
 was the more serious from another cause. The home supply 
 of wool had originally been abundant and good; but its pro¬ 
 duction, at the commencement of the century, was not in¬ 
 creasing as rapidly as the demand for it; the quality of 
 home grown wool was rapidly deteriorating. The same 
 sheep do not produce both wool and mutton in the greatest 
 perfection. Every improvement in their meat is effected at 
 the cost of their fleece. English mutton was better than it 
 had ever been; but English manufacturers were compelled to 
 mix foreign with native wool. Had trade been free this 
 result would have been of little moment. The English could 
 have easily obtained an ample supply of raw material from 
 the hills of Spain and other countries. But, at the very 
 time at which foreign wool became indispensable, the necessi¬ 
 ties of the country, or the ignorance of her financiers, led to 
 the imposition of a heavy import duty on wool. Addington, 
 in 1802, levied a duty upon it of 5s. 3 d. the cwt. ; Yansittart, 
 in 1813, raised the tax to 6s. 8 d. The folly of the protec¬ 
 tionists had done much to ruin the wool trade. But the evil 
 already done was small in comparison with that in store. 
 
 Notwithstanding, however, the restrictions on the wool 
 trade, the woollen industry was of great importance. In 
 1800, Law, as counsel to the manufacturers, declared, in an 
 address to the house of lords, that 600,000 packs of wool, 
 worth £6,600,000 were produced annually in England and 
 Wales, and that 1,500,000 persons were employed' in the 
 manufacture. But these figures, as McCulloch has shown, 
 are undoubtedly great exaggerations. 1 Bather more than 
 
 1 McCulloch, ad verb. Wool; Porter’s “Progress of the Nation,” pp. 170- 
 175. 
 
 3 
 
34 
 
 ECONOMIC HISTORY. 
 
 \ 
 
 400,000 packs of wool were available for manufacturing pur¬ 
 poses at the commencement of the century; more than nine 
 tenths of these were produced at home; and some 350,000 
 or 400,000 persons were probably employed in the trade. 
 The gVeat woollen industry still deserved the name of our 
 -staple trade; but it did not merit the exaggerated descrip¬ 
 tions which persons who should have known better applied 
 to it. 
 
 If the staple trade of the country had originally been in 
 woollen goods at the commencement of the present century, 
 cotton was rapidly gaining upon wool. Cotton had been 
 used in the extreme East and in the extreme West from the 
 earliest periods of which we have any records. The Span¬ 
 iards, on their discovery of America, found the Mexicans 
 clothed in cotton. “There are trees,” Herodotus had writ¬ 
 ten, nearly two thousand years before, “which grow wild 
 there [in India], the fruit whereof is a wool exceeding in 
 beauty and goodness that of sheep. The natives make their 
 clothes of this tree wool. ” 1 But though the use of cotton 
 had been known from the earliest ages, both in India and 
 America, no cotton goods were imported into Europe; and 
 in the ancient world both rich and poor were clothed in silk, 
 linen, and wool. The industrious Moors introduced cotton 
 into Spain. Many centuries afterwards cotton was imported 
 into Italy, Saxony, and the Low Countries. Isolated from 
 the rest of Europe, with little wealth, little industry, and no 
 roads; rent by civil commotions, — the English were the last 
 people in Europe to introduce the manufacture of cotton 
 goods into their own homes. 
 
 Towards the close of the sixteenth century, indeed, cotton 
 goods were occasionally mentioned in the statute book, and 
 the manufacture of the cottons of Manchester was regulated 
 by acts passed in the reigns of Henry VIII., Edward VI., 
 and Elizabeth. But there seem to be good reasons for con¬ 
 cluding that Manchester cottons, in the time of the Tudors, 
 were woollen goods, and did not consist of cotton at all. 
 
 1 Rawlinson’s “ Herodotus,” vol. ii. p. 411. The German name for cotton is 
 Baumwolle — tree wool. 
 
THE GREAT INVENTIONS. 
 
 35 
 
 More than a century elapsed before any considerable trade in - 
 cotton attracted the attention of the legislature. The woollen 
 manufacturers complained that people were dressing their 
 children in printed cottons; and Parliament was actually 
 persuaded to prohibit the introduction of Indian printed 
 calicoes. Even an act of Parliament, however, was unable 
 to extinguish the growing taste for Indian cottons. The 
 ladies, according to the complaint of an old writer, expected 
 “ to do what they please, to say what they please, and wear 
 what they please.” The taste for cotton led to the introduc¬ 
 tion of calico-printing in London; Parliament, in order to 
 encourage the new trade, was induced to sanction the impor¬ 
 tation of plain cotton cloths from India under a duty. The 
 demand which was thus created for calicoes probably pro¬ 
 moted their manufacture at home; and Manchester, Bolton, 
 Frome, and other places, gradually acquired fresh vitality 
 from the creation of a new industry. 
 
 Many years, however, passed before the trade attained 
 anything but the slenderest proportions. In the year 1697 
 only 1,976,359 pounds of cotton wool were imported into the 
 United Kingdom. In the year 1751 only 2,976,610 pounds 
 were imported. The official value of cotton goods exported 
 amounted in the former year to only <£5,915; in the latter 
 year to only £45,986. At the present time Britain annually 
 purchases about 1,500,000,000 pounds of cotton wool. She 
 annually disposes of cotton goods worth £60,000,000. The 
 import trade is five hundred times as large as it was in 
 1751; the value of the exports has been increased 1,300 fold. 
 The world has never seen, in any similar period, so prodi¬ 
 gious a growth of manufacturing industry. But the trade 
 has not merely grown from an infant into a giant; its con¬ 
 ditions have been concurrently revolutionized. Up to the 
 middle of the last century cotton goods were really never 
 made at all. The so-called cotton manufactures were a 
 combination of wool, or linen, and cotton. No Englishman 
 had been able to produce a cotton thread strong enough for 
 the warp; and even the cotton manufacturers themselves 
 appear to have despaired of doing so. They induced Parlia- 
 
36 
 
 ECONOMIC HISTORY. 
 
 ment in 1736 to repeal the prohibition which still encum¬ 
 bered the statute book, against wearing printed calicoes; 
 but the repeal was granted on the curious condition “that 
 the warp thereof be entirely linen yarn.” Parliament no 
 doubt intended by this condition to check the importation of 
 Indian goods without interfering with the home manufac¬ 
 turers. The superior skill of the Indian manufacturers 
 enabled them to use cotton for a warp; while clumsy work¬ 
 manship made the use of cotton as a warp unattainable at 
 home. 
 
 In the middle of the eighteenth century, then, a piece of 
 cotton cloth, in the true sense of the term, had never been 
 made in England. The so-called cotton goods were all made 
 in the cottages of the weavers. The yarn was carded by 
 hand; it w r as spun by hand; it was worked into cloth by a 
 hand-loom. The weaver was usually the head of the family; 
 his wife and unmarried daughters spun the yarn for him. 
 Spinning was the ordinary occupation of every girl, and the 
 distaff was, for countless centuries, the ordinary occupation 
 of every woman. The occupation was so universal that the 
 distaff was occasionally used as a synonym for woman. 
 “Le royaume de France ne tombe point en quenouille . ” 
 
 “ See my royal master murdered, 
 
 His crown usurped, a distaff in the throne.” 
 
 *ff?-r 3 Q 2 *^. 
 
 To this day every unmarried girl is commonly described as 
 a “ spinster. ” 
 
 The operation of weaving was, however, much more rapid 
 than that of spinning. The weaver consumed more weft 
 than his own family could supply him with; and the weavers 
 generally experienced the greatest difficulty in obtaining 
 sufficient yarn. About the middle of the eighteenth century 
 the ingenuity of two persons, a father and a son, made this 
 difference more apparent. The shuttle had originally been 
 thrown by the hand from one end of the loom to the other. 
 John Kay, a native of Bury, by his invention of the fly- 
 shuttle, saved the weaver from this labor. The lathe in 
 which the shuttle runs was lengthened at both ends; two 
 
THE GREAT INVENTIONS. 
 
 37 
 
 strings were attached to its opposite ends; the strings were 
 held by a peg in the weaver’s hands, and by plucking the 
 peg the weaver was enabled to give the necessary impulse 
 to the shuttle. Robert Kay, John Kay’s son, added the 
 drop-box, by means of which the weaver was able “to use 
 any one of the three shuttles, each containing a different 
 colored weft, without the trouble of taking them from and 
 replacing them in the lathe. ” By means of these inventions 
 the productive power of each weaver was doubled. Each 
 weaver was easily able to perform the amount of work which 
 had previously required two men to do; and the spinsters 
 found themselves more hopelessly distanced than ever in 
 their efforts to supply the weavers with weft. 
 
 The preparation of weft was entirely accomplished by 
 manual labor, and the process was very complicated. Card¬ 
 ing and roving were both slowly performed with the aid of 
 the clumsy implements which had originally been invented 
 for the purpose. - “ Carding is the process to which the 
 cotton is subjected after it has been opened and cleaned, 
 in order that the fibres of the wool may be disentangled, 
 straightened, and laid parallel with each other, so as to ad¬ 
 mit of being spun. This was formerly effected by instru¬ 
 ments called hand-cards, which were brushes made of short 
 pieces of wire instead of bristles, the wires being stuck into 
 a sheet of leather at a certain angle, and the leather fast¬ 
 ened on a flat piece of wood about twelve inches long and 
 five wide, with a handle. The cotton being spread upon one 
 of the cards, it was repeatedly combed with another till all 
 the fibres were laid straight, when it was stripped off the 
 card in a fleecy roll ready for the rover. In 4 roving ’ the 
 spinner took the short fleecy rolls in which the cotton was 
 stripped off the hand-cards, applied them successively to the 
 spindle, and while with one hand she turned the wheel and 
 thus made the spindle revolve, with the other she drew out 
 the cardings, which, receiving a slight twist from the spin¬ 
 dle, were made into thick threads called rovings, and wound 
 upon the spindle so as to form cops.” In spinning, “the 
 roving was spun into yarn; the operation was similar, but 
 
38 
 
 ECONOMIC HISTORY. 
 
 the thread was drawn out much finer and received much 
 more twist. It will be seen that this instrument only ad¬ 
 mitted of one thread being spun at a time by one pair of 
 hands, and the slowness of the operation and consequent 
 expensiveness of the yarn formed a great obstacle to the 
 establishment of a new manufacture.” 
 
 The trade was in this humble and primitive state when a 
 series of extraordinary and unparalleled inventions revolu¬ 
 tionized the conditions on which cotton had been hitherto 
 prepared. A little more than a century ago John Har¬ 
 greaves, a poor weaver in the neighborhood of Blackburn, 
 was returning home from a long walk in which he had been 
 purchasing a further supply of yarn for his loom. As he 
 entered his cottage, his wife Jenny accidentally upset the 
 spindle which she was using. Hargreaves noticed that the 
 spindles, which were now thrown into an upright position, 
 continued to revolve, and that the thread was still spinning 
 in his wife’s hand. The idea immediately occurred to him 
 that it would be possible to connect a considerable number 
 of upright spindles with one wheel, and thus multiply the 
 productive power of each spinster. “ He contrived a frame, 
 in one part of which he placed eight rovings in a row, and 
 in another part a row of eight spindles. The rovings, when 
 extended to the spindles passed between two horizontal bars 
 of wood, forming a clasp which opened and shut somewhat 
 like a parallel ruler. When pressed together this clasp held 
 the threads fast; a certain portion of roving being extended 
 from the spindles to the wooden clasp, the clasp was closed, 
 and was then drawn along the horizontal frame to a consid¬ 
 erable distance from the spindles, by which the threads were 
 lengthened out and reduced to the proper tenuity; this was ' 
 done with the spinner’s left hand, and his right hand at the 
 same time turned a wheel which caused the spindles to re¬ 
 volve rapidly, and thus the roving was spun into yarn. By 
 returning the clasp to its first situation and letting down a 
 piercer wire, the yarn was wound upon the spindle. ” 
 
 Hargreaves succeeded in keeping his admirable invention 
 secret for a time; but the powers of his machine soon be- 
 
THE GREAT INVENTIONS. 
 
 39 
 
 came known. His ignorant neighbors hastily concluded 
 that a machine which enabled one spinster to do the work 
 of eight would throw multitudes of persons out of employ¬ 
 ment. A mob broke into his house and destroyed his ma¬ 
 chine. Hargreaves himself had to retire to Nottingham, 
 where, with the friendly assistance of another person, he was 
 able to take out a patent for the spinning-jenny, as the 
 machine, in compliment to his industrious wife, was called. 
 
 The invention of the spinning-jenny gave a new impulse to 
 the cotton manufacture. But the invention of the spinning- 
 jenny, if it had been accompanied by no other improvements, 
 would not have allowed any purely cotton goods to be manu¬ 
 factured in England. The yarn spun by the jenny, like that 
 which had previously been spun by.hand, was neither fine 
 enough nor hard enough to be employed as warp, and linen 
 or woollen threads had consequently to be used for this pur¬ 
 pose. In the very year, however, in which Hargreaves 
 moved from Blackburn to Nottingham, Richard Arkwright 
 took out a patent for his still more celebrated machine. It 
 is alleged that John Wyatt, of Birmingham, thirty years 
 before the date of Arkwright’s patent, had elaborated a 
 machine for spinning by rollers. But in a work of this 
 description it is impossible to analyze the conflicting claims 
 of rival inventors to the credit of discovering particu¬ 
 lar machinery; and the historian can do no more than 
 record the struggles of those whose names are associated 
 with the improvements which he is noticing. Richard 
 Arkwright, like John Hargreaves, had a humble origin. 
 Hargreaves began life as a poor weaver; Arkwright, as a 
 barber’s assistant. Hargreaves had a fitting partner in his 
 industrious wife Jenny. Mrs. Arkwright is said to have 
 destroyed the models which her husband had made. But 
 Arkwright was not deterred from his pursuit by the poverty 
 of his circumstances or the conduct of his wife. “ After 
 many years’ intense and painful application,” he invented 
 his memorable machine for spinning by rollers; and laid the 
 foundations of the gigantic industry which has done more 
 than any other trade to concentrate in this country the wealth 
 
40 
 
 ECONOMIC HISTORY. 
 
 of the world. The principle of Arkwright’s great invention 
 is very simple. He passed the thread over two pairs of rol¬ 
 lers, one of which was made to revolve much more rapidly 
 than the other. The thread, after passing over the pair 
 revolving slowly, was drawn into the requisite tenuity by the 
 rollers revolving at a higher rapidity. By this simple but 
 memorable invention Arkwright succeeded in producing 
 thread capable of employment as warp. From the circum¬ 
 stance that the mill at which his machinery was first erected 
 was driven by water power, the machine received the some¬ 
 what inappropriate name of the water-frame; the thread 
 spun by it was usually called the water-twist. 
 
 The invention of the fly-shuttle by John Kay had enabled 
 the weavers to consume more cotton than the spinsters had 
 been able to provide; the invention of the spinning-jenny 
 and the water-frame would have been useless if the old sys¬ 
 tem of hand-carding had not been superseded by a more 
 efficient and more rapid process. Just as Arkwright applied 
 rotatory motion to spinning, so Lewis Paul introduced 
 revolving cylinders for carding cotton. Paul’s machine 
 consisted of “a horizontal cylinder, covered in its whole 
 circumference with parallel rows of cards with intervening 
 spaces, and turned by a handle. Under the cylinder was a 
 concave frame, lined internally with cards exactly fitting 
 the lower half of the cylinder, so that when the handle was 
 turned, the cards of the cylinder and of the concave frame 
 worked against each other and carded the wool.” “The 
 cardings were of course only of the length of the cylinder, 
 but an ingenious apparatus was attached for making them 
 into a perpetual carding. Each length was placed on a flat 
 broad ribbon which was extended between two short cylin¬ 
 ders and which wound upon one cylinder as it unwound from 
 the other. ” 1 
 
 This extraordinary series of inventions placed an almost 
 unlimited supply of yarn at the disposal of the weaver. But 
 the machinery which had thus been introduced was still 
 
 1 Baines’ “History of the Cotton Manufacture,” p. 173, from which work 
 the preceding quotations are also taken. 
 
THE GREAT INVENTIONS . 
 
 41 
 
 incapable of providing yarn fit for the finer qualities of cot¬ 
 ton cloth. “The water-frame spun twist for warps, but it 
 could not be advantageously used for the finer qualities, as 
 thread of great tenuity has not strength to bear the pull of 
 the rollers when winding itself on the bobbin. ” This defect, 
 however, was removed by the ingenuity of Samuel Crompton, a 
 young weaver residing near Bolton. Crompton succeeded in 
 combining in one machine the various excellences of “Ark¬ 
 wright’s water-frame and Hargreaves’ jenny.” Like the for¬ 
 mer, his machine, which from its nature is happily called the 
 mule, “ has a system of rollers to reduce the roving; and, like 
 the latter, it has spindles without bobbins to give the twist, 
 and the thread is stretched and spun at the same time by the 
 spindles after the rollers have ceased to give out the rove. 
 The distinguishing feature of the mule is that the spindles, 
 instead of being stationary, as in both the other machines, 
 are placed on a movable carriage, which is wheeled out to 
 the distance of fifty-four or fifty-six inches from the roller 
 beam, in order to stretch and twist the thread, and wheeled 
 in again to wind it on the spindles. In the jenny, the clasp 
 which held the rovings was drawn back by the hand from the 
 spindles; in the mule, on the contrary, the spindles recede 
 from the clasp, or from the roller beam, which acts as a 
 clasp. The rollers of the mule draw out the roving much 
 less than those of the water-frame, and they act like the 
 clasp of the jenny by stopping and holding fast the rove, 
 after a certain quantity has been given out, while the spin¬ 
 dles continue to recede for a short distance farther, so that 
 the draught of the thread is in part made by the receding of 
 the spindles. By this arrangement, comprising the advan¬ 
 tages both of the roller and the spindles, the thread is 
 stretched more gently and equably, and a much finer quality 
 of yarn can therefore be produced. ” 1 
 
 The effects of Crompton’s great invention may be stated 
 epigrammatically. Before Crompton’s time it was thought 
 impossible to spin eighty hanks to the pound. The mule 
 
 1 Baines’s “History of the Cotton Manufacture,” pp. 107, 198. 
 
42 
 
 ECONOMIC HISTORY. 
 
 has spun three hundred and fifty hanks to the pound! The 
 natives of India could spin a pound of cotton into a thread 
 one hundred and nineteen miles long. The English suc¬ 
 ceeded in spinning the same thread to a length of one hun¬ 
 dred and sixty miles. 1 Yarn of the finest quality was at 
 once at the disposal of the weaver, and an opportunity was 
 afforded for the production of an indefinite quantity of cotton 
 yarn. But the great inventions which have been thus enu¬ 
 merated would not of themselves have been sufficient to 
 establish the cotton manufacture on its present basis. The 
 ingenuity of Hargreaves, Arkwright, and Crompton had 
 been exercised to provide the weaver with yarn. Their in¬ 
 ventions had provided him with more yarn than he could by 
 any possibility use. The spinster had beaten the weaver, 
 just as the weaver had previously beaten the spinster, and 
 the manufacture of cotton seemed likely to stand still be¬ 
 cause the yarn could not be woven more rapidly than an 
 expert workman with Kay’s improved fly-shuttle could 
 weave it. 
 
 Such a result was actually contemplated by some of the 
 leading manufacturers, and such a result might possibly have 
 temporarily occurred if it had not been averted by the inge¬ 
 nuity of a Kentish clergyman. Edmund Cartwright, a clergy¬ 
 man residing in Kent, happened to be staying at Matlock in 
 the summer of 1784, and to be thrown into the company of 
 some Manchester gentlemen. The conversation turned on 
 Arkwright’s machinery, and “ one of the company observed 
 that as soon as Arkwright’s patent expired so many mills 
 would be erected and so much cotton spun that hands would 
 never be found to weave it.” Cartwright replied that “Ark¬ 
 wright must then set his wits to work to invent a weaving 
 mill.” The Manchester gentlemen, however, unanimously 
 agreed that the thing was impracticable. Cartwright “con¬ 
 troverted the impracticability by remarking that there had 
 been exhibited an automaton figure which played at chess; ” 
 it could not be “ more difficult to construct a machine that 
 
 1 Baines’s “History of the Cotton Manufacture, p. 200, and “Colchester,” 
 vol. ii. p. 75. 
 
THE GREAT INVENTIONS . 
 
 43 
 
 shall weave than one which shall make all the variety of 
 moves which are required in that complicated game.” 
 Within three years he had himself proved that the invention 
 w^as practicable by producing the power-loom. Subsequent 
 inventors improved the idea which Cartwright had origi¬ 
 nated, and within fifty years from the date of his memorable 
 visit to Matlock there were not less than 100,000 power- 
 looms at work in Great Britain alone. 1 
 
 The inventions which have been thus enumerated are the 
 most remarkable of the improvements which stimulated the 
 development of the cotton industry. But other inventions, 
 less generally-remembered, were hardly less wonderful or 
 less beneficial than these. Up to the middle of last century 
 cotton could only be bleached by the cloth being steeped in 
 alkaline lyes for several days, washed clean, and spread on 
 the grass for some weeks to dry. The process had to be re¬ 
 peated several times, and many months were consumed before 
 the tedious operation was concluded. Scheele, the Swedish 
 philosopher, discovered in 1774 the bleaching properties of 
 chlorine, or oxymuriatic acid. Berthollet, the French 
 chemist, conceived in 1785 the idea of applying the acid to 
 bleaching cloth. Watt, the inventor of the steam-engine, 
 and Henry of Manchester, respectively introduced the new 
 acid into the bleach-fields of Macgregor of Glasgow and 
 Ridgway of Bolton. The process of bleaching was at once 
 reduced from months to days, or even hours. 2 
 
 In the same year in which Watt and Henry were introdu¬ 
 cing the new acid to the bleacher, Bell, a Scotchman, was 
 laying the foundations of a trade in printed calicoes. “ The 
 old method of printing was by blocks of sycamore, about ten 
 inches long by five broad, on the surface of which the pat¬ 
 tern was cut in relief in the common method of wood en¬ 
 graving. ” As the block had to be applied to the cloth by 
 hand, a no more of it could be printed at once than the block 
 could cover, and a single piece of calico, twenty-eight yards 
 in length, required the application of the block four hundred 
 
 1 Baines’s “Cotton,” pp. 229, 235. 
 
 2 Ibid., pp. 247-249. 
 
44 
 
 ECONOMIC HISTORY. 
 
 and forty-eight times. ” 1 This clumsy process was superseded 
 by cylinder printing. “A polished copper cylinder, several 
 feet in length and three or four inches in diameter, is en¬ 
 graved with a pattern round its whole circumference and from 
 end to end. It is then placed horizontally in a press, and, as it 
 revolves, the lower part of the circumference passes through 
 the coloring matter, which is again removed from the whole 
 surface of the cylinder, except the engraved pattern, by an 
 elastic steel blade placed in contact with the cylinder, and 
 reduced to so-fine and straight an edge as to take off the- 
 color without scratching the copper. The color being thus 
 left only in the engraved pattern, the piece of calico or 
 muslin is drawn tightly over the cylinder, which revolves 
 in the same direction, and prints the cloth.” The sav¬ 
 ing of labor “ effected by the machine” is “ immense; one 
 of the cylinder machines, attended by a man and a boy, 
 is actually capable of producing as much work as could 
 be turned out by one hundred block printers, and as many 
 tear boys. ” 2 
 
 Such are the leading inventions which made Great Britain 
 in less than a century the wealthiest country in the world. 
 “When we undertook the cotton manufacture we had com¬ 
 paratively few facilities for its prosecution, and had to 
 struggle with the greatest difficulties. The raw material 
 was produced at an immense distance from our shores, and 
 in Hindustan and in China the inhabitants had arrived at 
 such perfection in the arts of spinning and weaving that the 
 lightness and delicacy of their finest cloths emulated the 
 web of the gossamer, and seemed to set competition at defi¬ 
 ance. Such, however, has been the influence of the stupen¬ 
 dous discoveries and inventions of Hargreaves, Arkwright, 
 Crompton, Cartwright, and others, that we have overcome 
 all these difficulties, — that neither the extreme cheapness of 
 labor in Hindustan, nor the excellence to which the natives 
 had attained, has enabled them to withstand the competition 
 of those who buy their cotton, and who, after carrying it 
 
 1 Baines’s “ Cotton,” pp. 264, 265. 
 
 2 Ibid., pp. 265, 266. 
 
THE GREAT INVENTIONS. 
 
 45 
 
 five thousand miles to be manufactured, carry back the goods 
 to them. ” 1 
 
 If Great Britain entirely monopolized the woollen and the 
 cotton trades, she had done her best, in her own way, to 
 promote the manufacture of linen in Ireland. In 1698 Par¬ 
 liament, while rigorously prohibiting the exportation of 
 Irish woollen goods, sedulously attempted to encourage the 
 linen manufacture in Ireland. Bounties were paid on all 
 linen goods imported into this country from the sister 
 island; and the great linen trade acquired, especially in 
 Ulster, the importance which it still retains. In 1800 
 81,978,039 yards of linen were exported from Ireland to 
 Great Britain, and 2,585,829 yards to other countries. In 
 1815 the export trade had risen to 37,986,359 and 5,496,206 
 yards respectively. A formidable rival to Ulster was, how¬ 
 ever, slowly rising in another part of the kingdom. At the 
 close of the great French war Dundee was still an insignifi¬ 
 cant manufacturing town, but the foundations were already 
 laid of the surprising supremacy which she has since ac¬ 
 quired in the linen trade. Some three thousand tons of flax 
 were imported into the Scotch port in 1814. But the time 
 was rapidly coming when the shipments of linen from this 
 single place were to exceed those from all Ireland, and Dun¬ 
 dee was to be spoken of by professed economists as the Man¬ 
 chester of the linen trade. 2 
 
 The silk manufacturers of Britain have never yet succeeded 
 in acquiring the predominance which the woollen, cotton, 
 and linen factors have virtually obtained. The worm by 
 which the raw material is produced has never been accli¬ 
 matized on a large scale in England; and the trade has natu¬ 
 rally flourished chiefly in those countries where the worm 
 could live and spin, or where the raw material could be the 
 most easily procured. Insular prejudice, moreover, should 
 not induce the historian to forget another reason which has 
 materially interfered with the development of this particular 
 trade. The ingenuity of the British was superior to that of 
 
 1 McCulloch’s “ Commercial Diet.,” ad verb. Cotton. 
 
 2 McCulloch, ad verb. Linen; Porter’s “ Progress of the Nation,” p. 230. 
 
46 
 
 ECONOMIC HISTORY. 
 
 every other nation; but the taste of the British was inferior 
 to that of most people. An article which was only worn by 
 the rich, and which was only used for its beauty and deli¬ 
 cacy, was naturally produced most successfully by the most 
 artistic people. English woollen goods found their way to 
 every continental jiation; but the wealthy English imported 
 their finest lustrings and a les modes from Italy and France. 
 The silk trade would, in fact, have hardly found a home in 
 England at all had it not been for the folly of a neighboring 
 potentate. Louis XIV., in a disastrous hour for France, 
 revoked the Edict of Nantes; and the French Huguenots, to 
 their eternal honor, preferring their consciences to their 
 country, sought a home among a more liberal people. The 
 silk weavers of France settled in Spitalfields, and the British 
 silk trade gained rapidly on its foreign rivals. Parliament 
 adopted the usual clumsy contrivances to promote an indus¬ 
 try whose importance it was no longer possible to ignore. 
 Prohibitory duties, designed to discourage the importation 
 of foreign silk, were imposed by the legislature; monopolies 
 were granted to successful throwsters, and every precaution 
 was taken which the follies of protection could suggest, to 
 perpetuate the supremacy which Great Britain was gradually 
 acquiring in the silk trade. The usual results followed this 
 short-sighted policy. Prohibitory duties encouraged smug¬ 
 gling. Foreign silk found its way into England, and the 
 revenue was defrauded accordingly. The English trade 
 began to decline, and Parliament again interfered to pro¬ 
 mote its prosperity. In that unhappy period of English 
 history which succeeds the fall of Chatham and the rise of 
 Pitt, Parliament adopted fresh expedients to promote the 
 prosperity of the silk trade. Prohibitory duties were re¬ 
 placed with actual prohibition, and elaborate attempts were 
 made to regulate the wages of the Spitalfields weavers. The 
 natural consequences ensued. Smuggling, which had been 
 created by prohibitive duties, flourished with fresh vitality 
 under the influence of actual prohibition. The capitalists 
 transferred their mills from Spitalfields, where the labors 
 of their workmen were fixed by law, to Macclesfield and 
 
THE GREAT INVENTIONS. 
 
 47 
 
 other places, where master and workmen were free to make 
 their own terms. 
 
 The silk trade was hardly being developed with the same 
 rapidity as the three other textile industries. But silk, 
 like wool, cotton, and linen, was affording a considerable 
 amount of employment to a constantly growing population. 
 The textile industries of this country could not indeed have 
 acquired the importance which they have since obtained, if 
 the inventions of Hargreaves, Arkwright, Crompton, and 
 Cartwrigfit had not been supplemented by the labors of ex¬ 
 plorers in another field. Machinery makes possible what 
 man by manual labor alone would find it impossible to per¬ 
 form. But machinery would be a useless incumbrance were 
 it not for the presence of some motive power. From the 
 earliest ages men have endeavored to supplement the brute 
 force of animals with the more powerful forces which nature 
 has placed at their disposal. The ox was not to be perpetu¬ 
 ally used to tread out the corn; women were not always to 
 pass their days laboriously grinding at a mill. The move¬ 
 ment of the atmosphere, the flow of running water, were to 
 be taken into alliance with man; and the invention of wind¬ 
 mills and water-mills was to mark an advance in the onward 
 march of civilization. But air and water, mighty forces as 
 they are, proved but fickle and uncertain auxiliaries. When 
 the wind was too low its strength was insufficient to turn the 
 cumbrous sails of the mill; when it was too high it deranged 
 the complicated machinery of the miller. The miller who 
 trusted to water was hardly more fortunate than the man 
 who relied upon air. A summer drought reduced the power 
 of his wheel at the very time when long days and fine 
 weather made him anxious to accomplish the utmost possi¬ 
 ble amount of work. A flood swept away the dam on which 
 his mill depended for its supply of water. An admirable 
 auxiliary during certain portions of each year, water was 
 occasionally too strong, occasionally too weak, for the pur¬ 
 poses of the miller. 
 
 The manufacturing industry of the country stood, there¬ 
 fore, in need of a new motive power; and invention, which 
 
48 
 
 ECONOMIC HISTORY. 
 
 is supposed by some thinkers to depend like other commod¬ 
 ities on the laws of demand and supply, was busily elaborat¬ 
 ing a new problem, — the use of a novel power, which was to 
 revolutionize the world. The elasticity of hot water had 
 long been noticed, and for a century and a half before the 
 period of this history a few advanced thinkers had been 
 speculating on the possibility of utilizing the expansive 
 powers of steam. The Marquis of Worcester had described, 
 in his “Century of Inventions,” “an admirable and most 
 forcible way to drive up water by means of fire.” Steam 
 was actually used early in the eighteenth century as a mo¬ 
 tive power for pumping water from mines; and Newcomen, 
 a blacksmith in Dartmouth, invented a tolerably efficient 
 steam-engine. It was not, however, till 1769 that James 
 Watt, a native of Greenock, and a mathematical instrument- 
 maker in Glasgow, obtained his first patent for “ methods of 
 lessening the consumption of steam, and consequently of 
 fuel, in fire-engines.” James Watt was born in 1736. His 
 father was a magistrate, and had the good sense to encour¬ 
 age the good turn for mechanics which his son displayed at 
 a very early age. At the age of nineteen Watt was placed 
 with a mathematical instrument-maker in London. But 
 feeble health, which had interfered with his studies as a 
 boy, prevented him from pursuing his avocations in England. 
 Watt returned to his native country. The Glasgow body of 
 Arts and Trades, however, refused to allow him to exercise 
 his calling within the limits of their jurisdiction; and had it 
 not been for the University of Glasgow, which befriended 
 him in his difficulty, and appointed him their mathematical 
 instrument-maker, the career of one of the greatest geniuses 
 whom Great Britain has produced would have been stinted 
 at its outset. 
 
 There happened to be in the University a model of New¬ 
 comen’s engine. It happened, too, that the model was 
 defectively constructed. Watt, in the ordinary course of 
 his business, was asked to remedy its defects, and he soon 
 succeeded in doing so. But his examination of the model 
 convinced him of serious faults in the original. Newcomen 
 
THE GREAT INVENTIONS . 
 
 49 
 
 had injected cold water into the cylinder in order to con¬ 
 dense the steam and thus obtain a necessary vacuum for the 
 piston to work in. Watt discovered that three fourths of 
 the fuel which the engine consumed was required to reheat 
 the cylinder. “ It occurred to him that if the condensation 
 could be performed in a separate vessel, communicating with 
 the cylinder, the latter could be kept hot while the former 
 was cooled, and the vapor arising from the injected water 
 could also be prevented from impairing the vacuum. The 
 communication could easily be effected by a tube, and the 
 water could be pumped out. This is the first and the grand 
 invention by which he at once saved three fourths of the fuel, 
 and increased the power one fourth, thus making every pound 
 of coal produce five times the force formerly obtained from 
 it.” 1 But Watt was not satisfied with this single improve¬ 
 ment. He introduced steam above as well as below the 
 piston, and thus again increased the power of the machine. 
 He discovered the principle of parallel motion, and thus 
 made the piston move in a true straight line. He regulated 
 the supply of water to the boiler by the means of “floats,” 
 the supply of steam to the cylinder by the application 
 of “the governor,” and, by the addition of all these discov¬ 
 eries, “satisfied himself that he had almost created anew 
 engine, of incalculable power, universal application, and in¬ 
 estimable value.” 2 It is unnecessary to relate in these 
 pages the gradual introduction of the new machine to the 
 manufacturing public. Watt was first connected with Dr. 
 Roebuck, an iron-master of Glasgow. But his name is per¬ 
 manently associated with that of Mr. Boulton, the proprietor 
 of the Soho Works near Birmingham, whose partner he be¬ 
 came in 1774. Watt and Boulton rapidly supplemented the 
 original invention with further improvements. Other in¬ 
 ventors succeeded in the same field, and by the beginning of 
 the present century steam was established as a. new force; 
 advanced thinkers were considering the possibility of apply¬ 
 ing it to purposes of locomotion. 
 
 1 Lord Brougham’s “ Men of Letters and Science,” p. 367. 
 
 , 2 Ibid., p. 371. 
 
 4 
 
50 
 
 ECONOMIC HISTORY. 
 
 The steam-engine indeed would not have been invented in 
 the eighteenth century, or would not at any rate have been 
 discovered in this country, if it had not been for the vast 
 mineral wealth with which Great Britain lias fortunately 
 been provided. Iron, the most useful of all metals, presents 
 greater difficulties than any other of them to the manufac¬ 
 turer, and iron was probably one of the very last minerals 
 which was applied to the service of man. Centuries elapsed 
 before the rich mines of our own country were even slightly 
 worked. The Homans indeed established iron works in 
 Gloucestershire, just as they obtained tin from Cornwall or 
 lead from Wales. But the British did not imitate the ex. 
 ample of their earliest conquerors, and the little iron which 
 was used in this country was imported from abroad. Some 
 progress was, no doubt, made in the southern counties, — the 
 smelters naturally seeking their ores in those places where 
 wood, then the only available fuel, was to be found in abun¬ 
 dance. The railings which but latelv encircled our metro- 
 politan cathedral were cast in Sussex. But the prosperity 
 of the trade involved its own ruin. Iron could not be made 
 without large quantities of fuel. The wood gradually dis¬ 
 appeared before the operations of the smelter, and the coun¬ 
 try gentlemen hesitated to sell their trees for fuel when the 
 increase of shipping was creating a . growing demand for 
 timber. Nor were the country gentlemen animated in this 
 respect by purely selfish motives. Parliament itself shared 
 their apprehensions and endorsed their views. It regarded 
 the constant destruction of timber with such disfavor that it 
 seriously contemplated the suppression of the iron trade as 
 the only practical remedy. “Many think,” said a contem¬ 
 porary writer, “that there should be no works anywhere, 
 they so devour the woods. ” 1 Fortunately, so crucial a rem¬ 
 edy was not necessary. At the commencement of the seven¬ 
 teenth century, Dud Dudley, a natural son of Lord Dudley, 
 had. proved the feasibility of smelting iron with coal; but 
 the prejudice and ignorance of the work-people had pre¬ 
 vented the adoption of his invention. In the middle of the 
 
 1 Srailes’s “ Industrial Biography,” p. 43. 
 
 
 BUSI 
 
THE GREAT INVENTIONS. 
 
 51 
 
 eighteenth century attention was again drawn to his pro¬ 
 cess, and the possibility of substituting coal for wood was 
 conclusively established at the Darby’s works at Coalbrook 
 Dale. The impetus which was thus given to the iron trade 
 was extraordinary. The total produce of the country 
 amounted at the time to only eighteen thousand tons of iron 
 a year, four fifths of the iron used being imported from 
 Sweden. In 1802 Great Britain possessed one hundred and 
 sixty-eight blast-furnaces, and produced 170,000 tons of 
 iron annually. In 1806 the produce had risen to 250,000 
 tons; it had increased in 1820 to 400,000 tons. Fifty years 
 afterwards, or in 1870, 6,000,000 tons of iron were produced 
 from British ores. 1 
 
 The progress of the iron trade indicated, of course, a cor¬ 
 responding development of the supply of coal. Coal had 
 been used in England for domestic purposes from very early 
 periods. Sea coal had been brought to London; but the 
 citizens had complained that the smoke was injurious to 
 their health, and had persuaded the legislature to forbid the 
 use of coal on sanitary grounds. The convenience of the 
 new fuel triumphed, however, over the arguments of the sani¬ 
 tarians and the prohibitions of the legislature, and coal 
 continued to be brought in constantly though slowly increas- 
 - ing quantities to London. Its use for smelting iron led to 
 new contrivances for ensuring its economical production. 
 Before the commencement of the present century there were 
 two great difficulties which interfered with the operations of 
 the miner. The roof of the mine had necessarily to be 
 propped, and, as no one had thought of using wood, and coal 
 itself was employed for the purpose, only sixty per cent of 
 the produce of each mine was raised above ground. About 
 the beginning of the nineteenth century timber struts were 
 gradually substituted for the pillars of coal, and it became 
 consequently possible to raise from the mine all the coal 
 
 won by the miner. A still more important discovery was 
 
 * 
 
 1 “Diet. Hist.” vol. iv. p. 680; McCulloch, “Diet, of Commerce,” ad verb. 
 Iron; Porter’s “Progress of the Nation,” p. 520; Statistical Abstract of the 
 United Kingdom. 
 
52 
 
 ECONOMIC HISTORY. 
 
 \ 
 
 made at the exact period at which this history commences. 
 The coal-miner in his underground calling was constantly 
 exposed to the dangers of fire-damp, and was liable to be 
 destroyed without a moment’s notice by the most fearful 
 catastrophe. In the year in which the great French war 
 was concluded, Sir Humphrey Davy succeeded in perfecting 
 his safety-lamp, an invention which enabled the most dan¬ 
 gerous mines to be worked with comparative safety, and 
 thus augmented to an extraordinary extent the available 
 supplies of coal. 1 
 
 Humphrey Davy was the son of a wood-carver of Pen¬ 
 zance, and early in life was apprenticed to a local apothe¬ 
 cary. Chance — of which other men would perhaps have 
 failed to avail themselves — gave the lad an opportunity of 
 cultivating his taste for chemistry. A French surgeon, 
 wrecked on the coast, to whom Davy had shown some kind¬ 
 ness, gave him a case of surgical instruments, and “the 
 means of making some approximation to an exhausting 
 engine.” Watt’s son, Gregory Watt, was ordered to winter 
 in Cornwall for his health, and happened to take apartments 
 in the house of Davy’s mother. “Another accident threw 
 him in the way of Mr. Davies Giddy, a cultivator of natural 
 as well as mathematical science. ” Giddy “ gave to Davy 
 the use of an excellent library;” he “introduced him to Dr. 
 Beddoes,” who made his young friend the head of “a pneu¬ 
 matic institution for the medical use of gases,” which he 
 was then forming. The publication, soon afterwards, of a 
 fanciful paper on light and heat gave Davy a considerable 
 reputation. He was successively chosen assistant lecturer 
 in chemistry, and sole chemical professor of the Royal In¬ 
 stitution. While he held this office his inquiries induced 
 him to investigate the causes of the fearful explosions which 
 continually took place in coal mines. He soon satisfied 
 himself that carburetted hydrogen is the cause of fire-damp; 
 and that it will not explode unless mixed with atmospheric 
 air “in proportions between six and fourteen times its 
 bulk; ” and “ he was surprised to observe in the course of 
 
 1 Porter’s “Progress of the Nation,” p. 277; McCulloch, ad verb. Coal. 
 
THE GREAT INVENTIONS. 
 
 53 
 
 his experiments, made for ascertaining how the inflamma¬ 
 tion takes place, that the flames will not pass through tubes 
 of a certain length and smallness of bore. He then found 
 that, if the length be diminished and the bore also reduced, 
 the flames will not pass; and he further found that by mul¬ 
 tiplying the number of the tubes this length may be safely 
 diminished, provided the bore be proportionally lessened. 
 Hence it appeared that gauze of wire, whose meshes were 
 only one twenty-second of an inch in diameter, stopped the 
 flame and prevented the explosion. ” 1 These successive 
 discoveries, the results of repeated experiments and careful 
 thought, led to the invention of the safety-lamp. The first 
 safety-lamp was made in the year 1815. There is some sat¬ 
 isfaction in reflecting that the very year which was memo¬ 
 rable for the conclusion of the longest and most destructive 
 of modern wars, was also remarkable for one of the most 
 beneficial discoveries which have ever been given to- man¬ 
 kind. Even the peace of Paris did not probably save more 
 life or avert more suffering than Sir Humphrey Davy’s in¬ 
 vention. The gratitude of a nation properly bestowed titles 
 and pensions, lands and houses, stars and honors, on the 
 conqueror of Napoleon. Custom and precedent only allowed 
 inferior rewards to the inventor of the safety-lamp. Yet 
 Hargreaves and Arkwright, Crompton and Cartwright, Watt 
 and Davy, did more for the cause of mankind than even 
 Wellington. Their lives had more influence on their coun¬ 
 try’s future than the career of the great general. His 
 victories secured his country peace for rather more than a 
 generation. Their inventions gave Great Britain a commer¬ 
 cial supremacy which neither war nor foreign competition 
 has yet destroyed. 
 
 A series of extraordinary inventions, at the commence¬ 
 ment of the present century, had supplied Great Britain 
 with a new manufacturing vigor. Hargreaves, Arkwright, 
 Crompton, and Cartwright had developed, to a remarkable 
 
 degree, the producing power of man; Watt had given a new 
 * 
 
 1 See Brougham’s “Men of Letters and Science,” p 4G2. The life of Davy 
 is admirably told by Lord Brougham. 
 
54 
 
 ECONOMIC HISTORY. 
 
 significance to their inventions by superseding the feeble 
 and unequal forces which had hitherto been used, with the 
 most tractable and powerful of agents. And Davy, by his 
 beneficent contrivance, had enabled coal to be won with 
 less danger, and had relieved the miner’s life from one 
 of its most hideous perils. The ingenuity of these great 
 men had been exercised with different objects; but the in¬ 
 ventions of each of them had given fresh importance to the 
 discoveries of the others. The spinning-jenny, the water- 
 frame, and the* mule would have been deprived of half their 
 value if they had not been supplemented with the power- 
 loom; the power-loom would, in many places, have been 
 useless without the steam-engine; the steam-engine would 
 have been idle, had it not been for coal; the coal would 
 not have been won without danger, had it not been for Sir 
 H. Davy. Coal, then, was the commodity whose extended 
 use was gradually revolutionizing the world; and the popu¬ 
 lation of the world, as the first consequence of the change, 
 gradually moved towards the coal fields. The change was 
 just commencing at the beginning of the present century; 
 it was proceeding with rapid strides at the period at which 
 this history opens; its ultimate effects will be seen later 
 on in this work. The time was to come when the coal meas¬ 
 ures of England were to draw away the population of Ire¬ 
 land, to weaken the power of the southern agricultural 
 counties, to give predominance to the north of England, 
 and by these results to involve a political revolution. 
 
CAUSES OF THE FRENCH REVOLUTION. 
 
 55 
 
 III. 
 
 ECONOMIC CAUSES OF THE FRENCH 
 
 REVOLUTION. 
 
 From Von Sybel’s French Revolution , 1 Vol. I. pp. 21-53. 
 
 I N order to bring this matter, in its details, more clearly 
 before us, we may pass in review the three great classes 
 into which the French people were divided according to their 
 occupation. 2 By far the most important of these occupa¬ 
 tions at that period was agriculture. Nearly 21,000,000 
 out of 25,000,000 of inhabitants were employed in tilling the 
 soil. Of the 51,000,000 hectares of which the whole king¬ 
 dom is composed, 35,000,000 were destined for cultivation, 
 that is, rather less than at the present day, but more than 
 twice as much as is now under cultivation in England. It 
 has often been imagined that the property of these great 
 masses of land was almost entirely in the hands of the 
 church, the monasteries, the nobility, and the financiers; 
 and that before 1789 only large estates ^existed, while the 
 class of small proprietors was created by the Revolution. 
 Some consider this supposed change as the highest glory, 
 and others as the greatest calamity of modern times; but 
 all are agreed as to the fact, and the more so, because it was 
 continually proclaimed in the debates of "the revolutionary 
 assemblies. But on closer examination we shall find that 
 the effects of the feudal system upon agriculture are not to 
 
 1 London: J. Murray, 1867. 
 
 2 In drawing up the following statement we have chiefly consulted the 
 “ Statistique ministerielle de la France,” and the admirable works of Moreau 
 de Yonne; and also Lavergne, “ Lconomie rurale.” The latter gives much 
 information respecting the earlier state of things, which now and then, however, 
 requires examination and correction. 
 
56 
 
 ECONOMIC HISTORY. 
 
 be looked for in Ibis direction. We cannot rank the author¬ 
 ity of the revolutionary orators very high, both because they 
 had a political interest in breaking up the large estates for 
 the advantage of the city proletaries, and because they 
 always showed themselves fabulously ignorant of statistics. 
 If we examine the state of things before 1789 we shall find 
 that — apart from the feudal tenures and the church property 
 — even the old French law of inheritance by no means 
 favored the accumulation of estates. The nobility, indeed, 
 were often heard to complain that the roturiers were con¬ 
 stantly getting possession of land; which is intelligible 
 enough, since the moneyed classes were continually gaining 
 ground on the ancient aristocracy. It follows that there was 
 nothing in the circumstances of the age to render the division 
 of land impossible; and one of the most credible witnesses, 
 after three years’ investigation in all the French provinces, 
 
 { tells us, as the result of his observations, that about a third 
 of the land was held by small proprietors, who were suffi¬ 
 ciently prosperous in Flanders, Alsace, Bearn, and the north 
 of Bretagne; but in other parts, especially in Lorraine and 
 Champagne, poor and miserable. The division of property, 
 he observes, is carried to too great an extent: “ I have fre¬ 
 quently seen properties of ten roods with a single fruit-tree; 
 excessive division ought to be forbidden by law.” The wit¬ 
 ness is Arthur Young, one of the first agriculturists of the 
 period in Europe, who gave this testimony after indefati¬ 
 gable inquiry; and his report is confirmed by native author¬ 
 ities. “The subdivision of land,” says Turgot, “is carried 
 to such an extent that a property only just sufficient for 
 one family is divided among five or six children.” “The 
 landed estates,” writes an intendcint, “are broken up syste¬ 
 matically to a very alarming degree; the fields are divided 
 and subdivided ad infinitum ,” 1 Such was the case among 
 the small proprietors; the other two thirds of the soil was 
 entirely in the possession of the great land-owners, —consist¬ 
 ing partly of the nobility and clergy, and partly of magis¬ 
 trates and financiers. We shall presently inquire in what 
 1 Quoted by Tocqueville, “ L’Ancien Regime,” p. GO. 
 
CAUSES OF THE FRENCH REVOLUTION. 
 
 57 
 
 i panne j^JJ^jjt urned the ir Jandsjbo profit : but we may first 
 of all observe that a middle class of proprietors, substantial 
 enough to derive from their land a sufficient livelihood, and 
 yet humble enough to be bound to constant and diligent labor, 
 was entirely wanting. In the present day the landed pro¬ 
 prietors of France may be divided into three sections, each 
 of which possesses about one third of the productive soil of 
 the country. Eighteen million hectares belong to 183,000 
 great landed owners; fourteen millions to 700,000 proprie¬ 
 tors of the middle class, and fourteen millions to not quite 
 four millions of peasant owners. 1 When we compare these 
 figures with those of the pre-revolutionary period we find the 
 number of poor possessors exactly corresponding to one an¬ 
 other ; and, what is very remarkable, they are almost exactly 
 the same in 1831 as in 1815. The most fearful storms pass 
 over the surface of the land without producing any change in 
 these relations. But what the movement of 1.789—The eman¬ 
 cipation of the soil, and~^!vn~equility — did produce is this 
 middle class of proprietors, which now possesses one third of 
 the land. It must be confessed that this is a most remark¬ 
 able result. How often has it been announced by feudalists 
 and socialists that entire freedom of trade would inevitably 
 lead to the annihilation of the middle classes, and leave 
 nothing but millionnaires and proletaries! We here see 
 the very contrary proved by one of the grandest historical 
 facts. The feudal system, by its restrictions, crushed the 
 agricultural middle class; the rule of freedom created it 
 afresh. Let us, however, consider the position of these lords 
 of the soil and their dependents more closely. 
 
 The first fact which meets us in this investigation is an 
 unhappy one. It was only an excessively small minority of 
 the great land-owners who concerned themselves about their 
 estates and tenants. All who were at all able to do so 
 hurried away to the enjoyments of the court or the capital,. 
 and only returned to their properties to fill the purse which 
 had been emptied by their excesses. There they lived in 
 
 1 Cochut, “ Revue de Deux Mondes,” September, 1848; Rossi, “ Iiconomie 
 politique,” p. 325, et seq. 
 
58 
 
 ECONOMIC HISTORY. 
 
 miserly and shabby retirement; sometimes in wretchedly 
 furnished castles, shunned by the peasants as pitiless credi¬ 
 tors ; sometimes in the midst of forests and wastes, that they 
 might have the pleasures of the chase close at hand. They 
 took as little interest in intellectual subjects as in agricul¬ 
 tural affairs, and cherished little or no intercourse with 
 / 
 
 their neighbors, — partly from parsimony, and partly from the 
 entire want of local roads. When the period of fasting was 
 over, they rushed eagerly back to the alluring banquets of 
 Paris and Versailles. The number of exceptions to this 
 melancholy rule was so small as to exercise no influence on 
 the general condition of the country. 
 
 While these gentlemen were squandering the produce of 
 their estates in aristocratic splendor, their fields were let out 
 in parcels of ten or, at most, fifteen hectares , to the so-called 
 mStayers , who did not pay a fixed rent, but generally half 
 the gross produce, and received from the owner, in return, 
 their first seed-corn, their cattle, and agricultural imple¬ 
 ments. 1 This system yielded a wretched existence for the 
 tenants themselves, and reduced the estates to a miserable 
 condition, but it brought the owners a large though uncertain 
 income. The latter, who only saw their estates as travellers, 
 were accustomed to farm out the collection of their dues, 
 generally to a notary or an advocate, who treated the tenants 
 with merciless severity. 
 
 The peasants, in their turn, neglected the cultivation of 
 corn — of which they had to give up a moiety — for any 
 chance occupation the whole profit of which fell to them¬ 
 selves ; they used their oxen rather for purposes of trans¬ 
 port than for ploughing, fattened their geese in their own 
 wheat fields, and, above all, introduced the system of alter¬ 
 nating crop and fallow, in order to get a greater extent of 
 pasture, and consequently a larger number of cattle. This 
 was a personal gain to themselves, but evidently brought no 
 advantage to the estate. A system of tillage, in short, pre¬ 
 vailed without industry, without science, and, above all,' 
 
 1 Quesnay in Daire, “ Physiocrates,” p. 219, et seq.; Young’s “ Travels,” 
 2d ed. vol. i. p. 355; Lullin de Chateauvieux, vol. i. p. 270. 
 
CAUSES OF THE FRENCH REVOLUTION . 
 
 59 
 
 without capital. It has been calculated that the average 
 amount of capital employed at that period in the French 
 metairies was from forty to sixty francs to the hectare ; 
 while in England, at the same time, the average amounted to 
 two hundred and forty francs. 1 The result was, of course, a 
 wretched one; they only reckoned upon a crop of from seven 
 to eight hectolitres of wheat to the hectare , —the increase 
 being from five to six fold; while the English farmer of that 
 time obtained a twelve-fold increase.. It was impossible for 
 the peasant under such circumstances to gain a livelihood; 
 the produce of ten hectares was scarcely sufficient to support 
 his family, and sale and profit were out of the question. 
 The man who is thus condemned to pass his life in starva- f 
 tion soon learns to fold his hands in idleness. A con¬ 
 stantly increasing extent of country lay uncultivated, which 
 Quesnay, in 1750, estimated at a quarter of the arable land 
 of France, and Arthur Young, in 1790, at more than 
 9,000,000 hectares. Millions of rural dwellings had no 
 aperture in them but the door, or at most one window; 2 the 
 people had no clothing but a home-made, coarse, and yet not 
 thick, woollen cloth; in many provinces every one went 
 barefoot, and in others only wooden shoes were known. The 
 food of the people was gruel with a little lard; in the even¬ 
 ing a piece of bread, and on great occasions a little bacon; 
 but besides this no meat for months together, and in many 
 districts no wine at all. 3 The mental condition of the peo¬ 
 ple was in accordance with their external circumstances. 
 Books and newspapers were as little known in the villages as 
 reading and writing. The peasants depended for instruction 
 on their pastors and parish clerks, proletaries like themselves, 
 who very seldom got beyond the horizon of the church steeple. 
 The Church was, after all, the onl y instituti on that threw an 
 intellectual spark into their wretched life; but unfortunately 
 their religious impulses were strongly mixed with barbarism 
 
 1 Arthur Young, vol. i. p. 435. The elder Mirabeau reckons for the whole 
 of France, 66 francs to the arpent. 
 
 2 This is still the case. 
 
 3 Reports of the Prefects to the Ministry, 1803. 
 
60 
 
 ECONOMIC HISTORY. 
 
 and superstition. In many large districts of the south the 
 peasants had no other idea of a Protestant than as -of a dan¬ 
 gerous magician who ought to be knocked on the head. Their 
 own faith, moreover, was interwoven with a multitude of the 
 strangest images of old Celtic heathenism. Of the world 
 outside they heard nothing, for there was next to no traffic 
 or travelling in the country. There were some royal roads, 
 magnificently made, and sixty feet in breadth, — splendid 
 monuments of monarchical ostentation. On these, however, 
 up to 1776, only two small coaches ran, 1 throughout the 
 whole of France; and the traveller might pass whole days 
 without getting sight of any other vehicle. 2 Only few vil¬ 
 lages, in the most favored provinces, possessed cross-roads 
 to these great highways, or to the nearest market town. 
 And thus the whole existence of these people was passed in 
 toil and privation; without any pleasures except the sight 
 of the gaudy decorations of a few church festivals; without 
 any change, save when hunger drove an individual, here and 
 there, to seek day-labor in the towns, or into military ser¬ 
 vice. It was seldom that such a one ever returned to his 
 father’s house, so that his fellow-villagers gained no advan¬ 
 tage from his wider experience. 
 
 Under these circumstances the relation between peasant 
 and lord was naturally a deplorable one. What we have 
 already said sufficiently characterizes a community in which 
 all the enjoyments fell to the rich, and all the burdens were 
 heaped upon the poor. In aristocratic England at this 
 period, a quarter of the gross proceeds was considered a 
 high rent for a farm, and the owner, moreover, paid large 
 tithes and poor-rates. 3 In France, half the proceeds was the 
 usual rent; and the owners were exempted by their privileges 
 from many public burdens, which fell with double weight 
 upon the wretched metayers. Thus, the produce of the 
 French land, as compared with the English, was nine to 
 fourteen, while the rents of 'an English land-owner were at 
 
 1 E. Daire, “ Introduction aux CEuvres de Turgot.” 
 
 2 Young’s “ Travels.” 
 
 8 Yvernois, “ Tableau des Pertes,” etc. 
 
CAUSES OF THE FRENCH REVOLUTION. 
 
 61 
 
 the rate of two and three fourths per cent, and those of the 
 French land-owner three and three fourths per cent. 1 
 
 The deficiency in the product of the land, therefore, 
 affected the gains of the little farmer doubly. In addition 
 to this he was burdened by a nufuber of feudal services, by 
 forced labor on the lands of his lord, by tithes to the Church, 
 and by the obligation to make roads for the State. The 
 landlord, who tried to sell his rent in kind as dearly as pos¬ 
 sible, wished for high prices of corn; the peasant, who, after 
 paying his dues, did not raise enough for his own family, 
 longed, like the city proletary, for low prices. In short,! 
 these two classes, so intimately connected with one another,? 
 had nothing at all in common; in education, in interests 
 and enjoyments, they were as widely separated as the in¬ 
 habitants of different quarters of the globe, and regarded 
 each other respectively with contempt and hatred. When 
 the peasant looked upon the towers of his lord’s castle the 
 dearest wish of his heart was to burn it down, with all its 
 registers of debt. Here and there a better state of things 
 existed; but we can only bring forward two exceptions to 
 the melancholy rule, extending over large tracts of country. 
 In Anjou the system of metairie prevailed, as in Lower 
 Bretagne and Guienne; and yet in the former province the 
 peasants were prosperous, and the noblemen beloved. Lower 
 Poitou was the only province from which the nobles had not 
 allowed themselves to be enticed into the whirlpool of court 
 life. The nobleman dwelt in his own castle, the real lord 
 of his domains, the cultivator of his fields, the guardiah of 
 his peasants. He advanced them money to purchase the 
 necessary stock, and instructed them in the management of 
 their cattle; 2 the expulsion of a tenant was a thing unheard 
 of; the laborer was born on the estate, and the landlord was 
 the godfather of all his farmers’ children. He was often 
 seen going to market with his peasants, to sell their oxen 
 for them as advantageously as possible. His mental horizon, 
 however, did not extend beyond these honorable cares; he 
 
 1 Young. 
 
 2 Sauvegrain, “ Considerations sur la Population,” etc. Paris, 1806. 
 
62 
 
 ECONOMIC HISTORY. 
 
 honored God and the King, labored in his own fields, was a 
 good sportsman and toper, and knew as little of the world 
 and its civilization as his tenants. 
 
 In the north of the kingdom a more modern state of things 
 had grown up. There, wealthy farmers were to be seen, 
 who held their land on lease at a fixed money rental,— 
 which was settled according to the amount of the taxes to 
 which they were liable, — and who brought both skill and 
 capital to the management of their land. This was the 
 regular practice in Flanders, Artois, Picardy, Normandy, 
 the Isle of France, and other smaller districts. In these 
 parts the landlords had a certain revenue, and their land 
 yielded twice as much as that which was in the hands of the 
 metayers. The whole country wore the appearance of a gar¬ 
 den, and the poorer neighbors found lucrative employment 
 at the stately farmhouses. These were the same provinces 
 in which Arthur Young met with small proprietors in a tol¬ 
 erable condition. If a peasant in this part of the country 
 possessed a small strip of land near his cottage, large enough 
 to grow some vegetables, food for a goat, or a few vines, he 
 earned sufficient to supply the rest of his wants, in day 
 wages, from the farmers, or, as a weaver, from the neighbor¬ 
 ing manufacturers. 
 
 His was a condition similar to the normal one of the peas¬ 
 ant proprietors in France at the present day; who are not 
 reduced farmers, but laborers who have invested their sav¬ 
 ings in land. 1 It was more difficult for these people to make 
 a livelihood at that time than now, because there w r ere fewer 
 manufacturers and wealthy agriculturists. Except in the 
 above-mentioned provinces, these petty proprietors were 
 equally wretched and hopeless with the metayers by whom 
 they were surrounded; their only object was to rent a 
 metairie in addition to their own pittance of land. They 
 were in fact entirely lost sight of among the metayers ; and 
 this is the reason that French writers, in their descriptions 
 of the so-called petite culture (plot farming), never make any 
 special mention of them, but always confound them with the 
 
 1 Rossi, 1. c. 
 
CA USES OF THE FRENCH REVOLUTION. 
 
 68 
 
 more numerous class by which they were surrounded. All 
 authorities are agreed in estimating the amount of land culti¬ 
 vated in small parcels at 27,000,000 hectares , while only 
 9,000,000 were held at a-money rent. The former, there¬ 
 fore, was nearly equally divided between the small owners 
 and the metayers , who paid their rent in kind. 
 
 In France, at the present day, nearly 28,000,000 hectares 
 are cultivated by small proprietors and metayers; about 
 8,000,000 1 (the same as in 1780) by tenants paying a money 
 rent; and rather more than nine and a half millions by 
 wealthy landlords. 2 Hence we can clearly see what the 
 French Revolution has done for French agriculture. Not 
 only did it create the middle class of land-owners, but 
 greatly promoted a more rational system, of tillage. • About 
 four million hectares have been rescued from the petite cul¬ 
 ture, and an equal number redeemed from utter barrenness. 
 The breadth of land standing at a money rent is exactly the 
 same as before the Revolution. The increase is entirely in 
 the properties of rich or substantial land-owners, who man¬ 
 age their own estates, — which indicates a change to more 
 zealous industry, coupled with the employment of greater 
 capital. The extent occupied by the metayers is still very 
 great, and the condition of those who are subject to it but 
 little improved, notwithstanding the abolition of socage and 
 seigniorial rights. It will be one of our most important 
 tasks to examine The several events and tendencies of 
 the Revolution in relation to their effects on the rural 
 population. 
 
 If we turn our attention to the towns of ancient France we 
 find that similar causes produced effects corresponding to 
 those we have just described. The civic offices, to which 
 persons had formerly been elected by the districts or the 
 guilds, had been frequently filled up by the crown in the 
 seventeenth century; and in the eighteenth, the great major¬ 
 ity of them were sold in hereditary possession to fill the ex- 
 
 1 Quesnai, Turgot, Young. 
 
 2 On this point Lullinde, Chateauvieux, and Cochut are in the main agreed. 
 Lavergne’s figures are somewhat different, but the general result is the same. 
 
64 
 
 ECONOMIC HISTORY. 
 
 chequer. 1 The government of the towns, therefore, was in 
 the hands of a close corporation consisting of a few families, 
 who, generally speaking, allowed themselves to be infected 
 with the indolent and self-seeking spirit of the central gov¬ 
 ernment. Associated with these were the families of the 
 moneyed aristocracy, the members of the great financial 
 companies, the farmers of the indirect, and the collectors of 
 the direct, taxes, the shareholders of the trading monopolies, 
 and the great bankers. These circles, too, were either le¬ 
 gally or virtually closed to the general world. The bourse 
 was ruled by an aristocracy, to which only birth, or the per¬ 
 mission of government, could give access. Their activity 
 was of course necessarily centred in Paris. Indeed, they 
 stamped their own character on this city to a degree which 
 would be impossible in our age, notorious though it be as 
 the epoch of the rule of paper. Every one knows to what 
 a dizzy and ruinous height stock-jobbing was carried by Law 
 in the beginning of the century; and from that time forward 
 its operations were never suspended, and all who had wealth 
 or credit engaged in it with reckless greediness. Kings, 
 nobles, ministers, clergy, and parliaments, one and all, took 
 part in these transactions; and the chronic deficit, and in¬ 
 creasing debts, of the treasury afforded constant opportuni¬ 
 ties of involving the State, and making a profit out of its 
 embarrassments. We may confidently assert that, as com¬ 
 pared with the present day, the speculative swindling of that 
 age was as prevalent and as shameless as its immorality. 
 Paris was not at that time a manufacturing town, and its 
 wholesale trade was insignificant; with few exceptions, 
 therefore, the industry of the city consisted in retail trade 
 and the negotiation of bills of exchange. It is not the least 
 characteristic feature of the indolent and selfish licentious¬ 
 ness into which the higher classes of a great nation had 
 fallen, that of all securities, life annuities were most in 
 favor; by means of which the purchaser procured high inter¬ 
 est for himself, while he robbed his children of the capital. 
 
 1 Depping, “ Correspondance administrative de Louis XIV.,” vol. ii., Intro¬ 
 duction. 
 
CAUSES OF THE FRENCH REVOLUTION. 
 
 65 
 
 , 
 
 The trade and commerce of the whole empire was fettered! 
 by the restrictions of guilds and corporations. The princi¬ 
 ples on which they were conducted dated from Henry III. r 
 who was the first to promulgate the proposition that the king 
 alone can grant the right to labor, — a maxim which con¬ 
 tains the whole doctrine of the socialists from a monarchical 
 point of view. The masters of every handicraft managed 
 its internal affairs, allowed no one to practise it who did 
 not belong to their guild, and admitted no one to their 
 privileges until he had passed an examination of his quali¬ 
 fication before themselves. Originally many trades were 
 free from this organization, until these too were injuriously 
 affected by the financial necessities of the State, — when the 
 exclusive rights of a guild were sold to the artisans, as their 
 offices were to the judges. The government soon further 
 proceeded to divide each trade into several guilds, and made 1 
 an exclusive corporation of the most insignificant occupa¬ 
 tion. Thus the workers in ebony were distinguished from' 
 the carpenters, the sellers of old clothes from the tailors, 
 and the pastry-cooks from the bakers. The fruit-women and 
 flower-girls formed separate exclusive associations, regulated 
 by formal and binding statutes. In the guilds of the seam¬ 
 stresses, embroiderers, and dress-makers, only men were 
 admitted to the privileges of masters. A number of these 
 statutes, by imposing excessive fees and duties, rendered it 
 doubly difficult for an apprentice, however capable, to obtain 
 the rank of master. Other enactments only admitted the 
 sons of masters, or the second husbands of the widows of 
 masters, to the privileges of the guild. In short, the power \ 
 of the State was abused in the most glaring manner for the \ 
 furtherance of exclusive class interests. Those who did not 
 belong to this aristocracy of trade, could only support them¬ 
 selves by the labor of their hands, in a state of eternal servi¬ 
 tude. Despair and famine drove the peasants from the 
 country into the towns, where they found no employment 
 open to them but that of day-laborers. The important influ¬ 
 ence which this system exercised over the State was clearly 
 understood, both by the privileged and the excluded classes. 
 
 5 
 
66 
 
 ECONOMIC HISTORY. 
 
 When Turgot abolished the guilds in 1776, the parliament of 
 Paris, the princes, peers, and doctors, unanimously declared 
 that all Frenchmen were divided into close corporations, the 
 links of a mighty chain extending from the throne to the 
 meanest handicraft; and that this concatenation was indis¬ 
 pensable to the existence of the State and of social order. It 
 was not long before the guilds were re-established in accord¬ 
 ance with this declaration; we shall see how the journeymen 
 and apprentices replied to this unctuous manifesto some 
 fifteen years later. 
 
 The great manufacturing interests of the country were 
 confined by the same narrow restrictions. Since the time of 
 Colbert, who was the real creator of them, manufactures had 
 been the darling child of the government; and, as is usually 
 the case with darling children, had been petted and tyran¬ 
 nized over at the same time. When Colbert began his oper¬ 
 ations France produced neither the finer kinds of cloth nor 
 stockings, neither silks nor glass, neither tar nor soap. 
 The previously existing handicraft, which had been for a 
 century in the fetters of the guild, had done so little to de¬ 
 velop the native manufacturing talent of the country that the 
 minister was obliged to introduce German, Swedish, and 
 Italian workmen. To secure a sale in foreign countries he 
 prescribed with great exactness the sort of fabric which he 
 wished to be produced; and to prevent competition from 
 without, he enacted a number of prohibitory and protective 
 duties. Here, again, the power of the State intruded itself 
 into the sphere of private business, to the advantage of the 
 manufacturer and the injury of the consumer. The same 
 system was continued by his successors with still worse 
 effects, because it was carried out with all the fickleness and 
 irregularity of Louis XV. ’s government. It is true that 
 manufacturers made great progress, and increased their 
 annual products six-fold from the time of Colbert to that of 
 Necker. 1 But the statutes became more oppressive every 
 year; every new invention and improvement was excluded 
 by them; and after 1760 no legislation could keep pace with 
 
 1 This was the proportion in the woollen manufacture. 
 
CAUSES OF THE FRENCH REVOLUTION. 
 
 67 
 
 the progress of machinery. Manufacturers, therefore, as is 
 everywhere the case under such circumstances, no longer 
 adapted themselves to the natural wants and capacities of 
 men, but immediately took an artificial and aristocratic 
 direction. During Colbert’s ministry, while only 60,400 
 hands were employed in the manufacture of wool, no less 
 than 17,300 were engaged in lace-making; and a hundred 
 years later, while the manufacture of soap only produced 
 18,000,000 of francs a year, that of hair-powder was esti¬ 
 mated at not less than 24,000,000. The contrast between 
 the aristocratic luxury of the rich and the uncleanly in¬ 
 digence of the populace can hardly be more glaringly 
 displayed. Agriculture experienced in every way the dis¬ 
 advantages of a system which crippled communication with 
 foreign countries, raised the price of farming implements, 
 and injuriously affected the home trade. In their eagerness 
 to protect manufactures the government had learned to look 
 on the interests of agriculture as of secondary importance. 
 They accustomed themselves, like the modern socialists, to 
 apply the word people exclusively to the manufacturing 
 classes in the towns; and though they sacrificed the interests 
 of the latter in a thousand ways to the privileged monopolist, 
 yet philanthropy and love of quiet co-operated in inducing 
 them to supply the necessities of the poorer artisans, at the 
 cost of the agricultural population. As supplements to the 
 protective and prohibitory duties in favor of manufactures, 
 decrees were issued forbidding the exportation of corn and \ 
 other raw agricultural products. By these artifices the price 
 of the hectolitre of wheat, which on the average is at present 
 nineteen to twenty francs, was in 1764 forced down to less 
 than eight francs. 1 Choiseul then opened the trade, and the 
 price rose to more than fifteen francs. A similar result 
 followed the same measure in 1775, during the ministry of 
 Turgot; but a return to protection reduced the price once 
 more to twelve and three fourths francs, until the Revolu¬ 
 tion. The city artisans had tolerably cheap bread, but \ 
 nowhere in the kingdom were the farmers prosperous. In 
 
 1 Melier, in vol. x. of the “ Memoires de l’Academie royale de Medecine.” 
 
68 
 
 ECONOMIC HISTORY. 
 
 spite of the most violent complaints from all the provinces, 
 the cause of the evil, and consequently the evil itself, re¬ 
 mained unchanged. The government adhered to the convic¬ 
 tion that it was their immediate duty to provide for the 
 maintenance of the population of the towns. It seemed to 
 them a matter of course that the State should use its political 
 power for the advantage of its rulers and their favorites. 
 No one considered the remoter consequences of such a prin¬ 
 ciple ; no one asked the question, 44 What if this power should 
 fall into democratic hands ? ” 
 
 Let us endeavor to obtain a general view of the wealth of 
 France at this period. From the imperfection of official 
 information the task is a difficult one, and its results uncer¬ 
 tain. Even an approximation to the truth, however, will not 
 be without interest, since, in order not to bring forward un¬ 
 meaning figures, we shall constantly institute a comparison 
 with the now existing state of things. 
 
 The well-informed Tolosan, the only authority on this sub¬ 
 ject, estimates the total produce of manufactures at nine hun¬ 
 dred and thirty-one million francs ; that of handicraft at 
 sixty millions. At the present day 1 the manufactures of 
 Eastern France alone, not reckoning handicraft, produce 
 2,282 millions; the sum total therefore has been at least 
 quadrupled. At the former period it amounted to thirty- 
 nine francs per head of the whole population; at present we 
 might unhesitatingly place it at more than one hundred per 
 head. The emancipation of the internal trade since 1789 has 
 not raised the amount of property produced, but — what has 
 so often been called in question — has favorably influenced 
 the manner in which it is distributed. The daily wages of the 
 manufacturing laborers in 1788, according to a rather high 
 estimate, were for men twenty-six sous, and for women fif¬ 
 teen. 2 They are now, according to the most numerous and 
 trustworthy observation, forty-two sous for men, and twenty- 
 six for women. The daily wages of the agricultural laborers, 
 
 1 In 1853. In 1860 a total of five milliards was reached. Boiteau, “£tat 
 de la France en 1789,” pr. 506. 
 
 2 Boiteau thinks 19 to 20 sous. 
 
CAUSES OF THE FRENCH REVOLUTION. 
 
 69 
 
 too, can certainly not be reckoned at more than fifteen 
 sous 1 for the year 1789, or less than twenty-five 2 in the 
 present day. If we further take into account the very con¬ 
 siderable increase in the number of working days, arising 
 from the abolition of thirty holidays, we shall find the annual 
 wages of the earlier period to be little more than half what 
 they now are, namely, three hundred and fifty-one francs for 
 the manufacturing, and one' hundred and fifty-seven for the 
 agricultural laborer, against six hundred and thirty, and three 
 hundred at the present day. To appreciate the significance 
 of these results we must compare the prices of provisions at 
 these two periods. It appears, then, that before 1789 bread 
 was considered very cheap at three sous per pound, and it 
 was only in Paris that this rate was a common one; in the 
 provinces the price was generally higher. In our own times 
 the average price for the whole of France from 1820 to 1840 
 was seventeen centimes, while at Paris, in 1851, it was four¬ 
 teen cents, — less, therefore, than the old rate of three sous. 
 This seems out of proportion to the price of corn, since the 
 hectolitre of wheat in 1780 cost from twelve to thirteen 
 francs, and in 1840 from nineteen to twenty. This apparent 
 incongruity, however, is accounted for by the improvement 
 in the method of grinding and baking, by which a third, or 
 even a half, more weight of bread is now obtained from the 
 same quantity of corn than in the former period. 3 We find, 
 therefore, that the laborer received for his wages little more 
 than half the quantity of bread which the modern workman 
 can obtain for what he earns. The same proportion holds 
 good in other kinds of food, and in regard to clothing the 
 comparison is still more unfavorable to the ante-revolutionary 
 period. 
 
 We shall discover the determinate cause of these differ¬ 
 ences when we come to consider the main wealth of the 
 French empire,— the produce of the soil in the widest sense 
 
 1 Lavergne says 30 sous (p. 57). 
 
 2 Before 1789 the septier (240 pounds) of wheat yielded only 180 pounds of 
 bread. — Moniteur, 12 July, 1792, supplement. 
 
 8 Young, “ Assembled Nationale,” 15th Jan., 1790, lltli Aug., 1791. 
 
70 
 
 ECONOMIC HISTORY . 
 
 of the word. It would carry us too far if we were to examine 
 every branch of the subject, and discuss all the difficulties 
 connected with it; it will be sufficient to dwell on a few of 
 the principal points of interest. Of wheat, the great staff 
 of life, the soil of France produced before the Revolution 
 about 40,000,000 hectolitres , or one hundred and sixty-seven 
 litres per head of the population; and in 1840, 70,000,000, or 
 two hundred and eight litres per head. At the former period 
 the number of cattle was calculated at 83,000,000 head, and 
 at the present day at 49,000,000; and there is an equal in¬ 
 crease in the number of the other domestic animals. The 
 vineyards formerly yielded 27,000,000 hectolitres , and at 
 present 37,000,000, so that the proportion per head is at any 
 rate not lower than it was. 1 And if we take into considera¬ 
 tion that a number of useful agricultural products were at 
 that time unknown, that a violent controversy was carried 
 on about the wholesomeness of potatoes, that the forests 
 were allowed to run to waste far more than at the present 
 day, 2 we shall not be astonished that the best statist of 
 modern France estimates the vegetable product of the French 
 soil (which now exceeds in value the sum of 6,000 millions) 
 at not more than 2,000 millions at the period before the Revo¬ 
 lution. 3 The importance of this fact is sufficiently evident; 
 and we may gain an idea of the state of the population before 
 1789 by remembering that even now the total consumption 
 of food in France is not greater in proportion to the popula¬ 
 tion than in Prussia, and much less than in England. 4 
 
 Respecting commerce, the third great branch of national 
 wealth, I have but little to say. I am not aware that any 
 statistical data exist of the internal traffic of France before 
 
 1 Moreau de Yonnes, from contemporary sources. I have followed him 
 because space does not allow me to give my reasons for thinking a much more 
 unfavorable state of things in 1770 highly probable. 
 
 2 “ Memoire remis aux Notables, 1781;” Young’s “ Travels,” 2d ed. vol. ii. 
 p. 106; Moreau, “Agriculture,” 366. 
 
 8 The calculation of Young agrees with this. Tolosan, Dedeley d’Agier, 
 Lavoisier, make amounts higher. (Boiteau, “ £tat de la France en 1789,” 
 p. 481, compares their statements.) But the uncertainty of their calculations 
 is very perceptible. 
 
 i Communications from the Prussian Statistical Bureaus, 1851. 
 
CAUSES OF THE FRENCH REVOLUTION . 
 
 71 
 
 the Revolution; it was, no doubt, smaller than at the pres¬ 
 ent day, in consequence of the multitude of inland duties. 
 And with regard to the foreign commerce of the earlier 
 period, we have no means of dividing the sum totals which 
 lie before us into the value of the raw materials and the cost 
 of manufacture, on the one hand, and the clear profits of 
 trade, on the other. It must suffice us to gain a general idea 
 of the relation between the two periods from the summary 
 
 \ 
 
 statement that in the custom-house registers immediately 
 before the Revolution the annual imports are stated at 
 576,000,000, and the exports at 540,000,000, while as early 
 as 1836 the former amounted to 905,000,000, and the latter 
 to 961,000,000, and in 1857 both imports and exports had 
 risen to a value of more than 1,800,000,000. Taking all in 
 all, therefore, France under the old monarchy was four times 
 as poor in manufactures, three times as poor in agriculture, 
 and more than three times as poor in commerce, as it is in 
 the present day. We must bear this result well in mind 
 when we try to form a judgment respecting the finances of 
 the ancien regime . A budget of six hundred millions 
 weighed as heavily upon the resources of the country at that 
 period as a budget of 1,800,000,000 would now, and conse¬ 
 quently a deficit of 100,000,000 was equivalent to one of 
 300,000,000 in our own times. Such a deficit actually 
 existed when Louis XVI. mounted the throne. It is there¬ 
 fore easy to conceive that his attention should be strongly 
 turned to the restoration of the balance between income and 
 expenditure, and that his vain endeavors in this direction 
 should shake the fabric of the State to its very foundation. 
 
 A whole volume would be necessary to detail the different 
 schemes of reform which were brought forward between the 
 accession of Louis XVI. and the outbreak of the Revolution. 
 It will be sufficient for our purpose to notice the chief points, 
 which have an important bearing on the antecedents and the 
 actual events of that mighty movement. 
 
 Louis XVI. himself, as no one can doubt who has ap¬ 
 proached the sources of the history of this period, entered 
 on the task of government with a heart full of piety, philan- 
 
72 
 
 ECONOMIC HISTORY. 
 
 thropy, and public spirit. He was earnest and pure-minded, 
 penetrated by a sense of his own dignity and the responsi¬ 
 bilities attached to it; and firmly resolved to close forever 
 the infamous paths in which his predecessor had walked. 
 
 But unhappily, his capacity bore no proportion to his good¬ 
 will. He was incapable of forming a decision; his education 
 was deficient; he was awkward both in person and speech, 
 and slow of comprehension. As he had a very limited knowl¬ 
 edge both of the people and the condition of his empire, 
 the selection of his ministers was, from the very outset, de¬ 
 termined by accident, the influence of his aunts, his queen, 
 or the contending court factions; and as he was immovable 
 wherever morality was concerned, but utterly helpless in the 
 practical execution of his ideas, his was just a case in which 
 almost everything depended on the aid of his nearest ad¬ 
 visers. He possessed just sufficient sense of justice and 
 benevolence to encourage every effort for useful reforms, but 
 lacked entirely that firmness of an enlightened judgment 
 which knows how to bring about a positive result in spite of 
 the opposition of existing interests. The inevitable conse¬ 
 quences soon showed themselves. Anarchy, which under 
 Louis XV. had reigned in the minds of men, now broke 
 forth into overt acts. The sufferings of the people, which 
 individuals had hitherto borne in silent apathy, now occupied 
 the attention of the masses. 
 
 The same chance which in his reign directed the manage¬ 
 ment of public business had given him, .as his first minister, 
 Turgot, the greatest reformer of the day. 
 
 This great minister’s strokes fell heavily on the existing 
 system in every direction. Among his measures we find free 
 trade in corn, abolition of the corvee in the country districts, 
 liberation of trade from the trammels of the guilds, the erec¬ 
 tion of the caisse d’escompte, 1 a number of improvements and 
 alleviations in the mode of raising the public taxes, and a 
 prospect held out to all possessors of property, of a gradual 
 increasing share in political rights; and it is under these 
 
 1 An institution for lending money for the furtherance of manufactures and 
 commerce. 
 
CAUSES OF THE FRENCH REVOLUTION . 
 
 73 
 
 heads that the restless activity of this liberal statesman may 
 be best arranged. We may easily conceive that there was 
 scarcely one of the privileged classes which did not consider 
 its previous existence imperilled. 
 
 Opposition rose in every quarter; the courtiers, the parlia¬ 
 ments, the landed aristocracy, and the members of the guilds 
 all threw themselves into an attitude of defence with noisy 
 zeal. The contest penetrated into the royal family itself,— 
 Louis’s younger brother, Count Charles of Artois, abused 
 the minister, who, he said, was undermining the aristocracy, 
 the prop and rampart of the throne; and a cousin of the king, 
 the rich and abandoned Philip, Duke of Orleans, began, 
 amid the general excitement, to play the demagogue on his 
 own account. Then for the first time a spectacle was seen 
 in Paris which was subsequently repeated in ever darker 
 colors, — the spectacle of the police authorities of the capital 
 stirring up the mob against the crown, and on this occasion 
 in the interest of the privileged classes. 
 
 At first Louis XVI. declared that he and Turgot were the 
 only friends of the people, and stood firm against the parlia* 
 ment of Paris and the street rioters; but he was not proof 
 against the feebleness of his own character and the wearing 
 influence of those by whom he was daily surrounded. After 
 an administration of nearly a year and a half Turgot was 
 obliged to yield to the reaction of the ancien regime , and 
 almost all his creations collapsed at once. Then followed a 
 long period of experiments and palliatives; the successors 
 of Turgot would gladly have gone on in the broad track of 
 traditional privileges if their increasing financial difficul¬ 
 ties had left them any peace. It was just at this time that 
 Louis resolved to support the North Americans against Eng¬ 
 land, which he really did against his own will and the views 
 of his ministers, who dreaded the expense of a great war, and 
 clearly saw that the emancipation of the colonies would not 
 weaken England. But the undefined longing for freedom, 
 and the liberal political doctrines which had taken root far 
 and wide in the land prevailed over the scruples of the 
 king and his counsellors. The Marquis of Lafayette, then a 
 
74 
 
 ECONOMIC HISTORY. 
 
 tall, light-haired youth, full of vanity and ambition, who, on 
 account of his ungraceful manners, had no success at court, 
 fitted out a ship at his own expense and sailed across the 
 Atlantic. A number of influential persons cried out for 
 vengeance upon England for the humiliation sustained in the 
 Seven Years’ War; in a word, the warlike party carried 
 their point, and war was declared against England. The 
 consequence to France was a rapid spread of democratic 
 sentiments on the American pattern. The followers of 
 Rousseau were triumphant; here, they said, might be seen the 
 possibility of a democracy on a broad basis, — the construc¬ 
 tion of a State on the foundation of the natural rights of 
 man. Another consequence of the war was to throw fresh 
 burdens on the public exchequer. The minister of finance 
 at this time was Necker, a native of Geneva. Having come 
 to Paris as a poor clerk, he had risen by his talents and skill 
 in business to the position of a rich banker, and with great 
 self-complacency had made his house the rendezvous of the 
 more distinguished members of the liberal party. By his 
 influence with the bourse he procured a certain degree of 
 credit for the State, and raised loan after loan to the amount 
 of five hundred millions, without any increase of the taxes, 
 or any provision for a liquidation of the debt incurred. 
 This was evidently sacrificing the future to the present, since 
 the deficit became larger every year, as the interest of the 
 public debt increased. Necker had the real merit of bring¬ 
 ing some of the departments of finance into better order; he 
 enjoyed for the time being unbounded popularity, and basked 
 with delight in the universal acknowledgment that he was 
 the greatest statesman in Europe. Public confidence was 
 freely given to a minister who endeavored to found his ad¬ 
 ministration on credit alone, — that is, on the confidence of 
 mankind. He was looked on as a perfect hero when he 
 introduced, with good results, provincial assemblies into 
 Berry and Guienne, and soon afterwards, breaking through 
 all the traditions of the ancient monarchy, published a de¬ 
 tailed, but unfortunately very inexact and highly colored 
 report on the state of the finances. But as he nowhere laid 
 
CAUSES OF THE FRENCH REVOLUTION. 
 
 75 
 
 the axe to the root of the evil, he only roused a number of 
 powerful interests by his attempts at innovation, but was 
 utterly unable to close the source of financial confusion. 
 He, too, soon saw no other means of recovery but limitation 
 of the budget, and economy in the expenses of the court; by 
 avowing which he made himself hateful to all the grandees 
 of the antechamber, and was deprived of his office in May, 
 1781. After two insignificant and inexperienced ministers 
 had exhausted their strength in the years immediately 
 following, the intendant of Lille, the gifted but frivolous 
 Calonne, was called to the helm. He began with the propo¬ 
 sition that whoever wished for credit must cultivate luxury; 
 and he renewed the prodigality of the court in the style of 
 Louis XV. After matters had gone on in this jubilant 
 course for some years, and the public debt had been increased 
 by four hundred millions, and the taxation by twenty-one 
 millions, the ruin of the country became palpable at the be¬ 
 ginning of the year 1787, and the catastrophe inevitable. 
 
 Let us here cast a glance at the budget of the ancien 
 regime , the disorder of which was to give the signal of con¬ 
 vulsion to every quarter of the civilized world. After 
 Necker and Calonne, the Notables and the Revolution, have 
 quarrelled about its contents with equal mendacity, this 
 budget now lies in its most secret details before the eyes of 
 the historical inquirer. 1 
 
 And first, with regard to the national income, which, as 
 is well known, amounted to about five hundred millions be¬ 
 fore 1789, nearly eight hundred under Napoleon, and then 
 increased during the period between 1815 and 1848 to 1,500 
 million francs. However definite these figures may appear, 
 we can by no means draw a conclusion from them as to the 
 cheapness of the respective modes of government above- 
 mentioned. We have already observed that in proportion to 
 the national wealth a taxation of five hundred millions be¬ 
 fore 1789 would be about equivalent to one of 1,500 millions 
 at the present day. In the next place, we must make several 
 additions to the round sum of five hundred millions. 
 
 1 Bailly, “ Hist, financ. de la France,” ii. 278. 
 
76 
 
 ECONOMIC HISTORY. 
 
 The income of the State in the year 1785 was calculated 
 at five hundred and fifty-eight millions, to which were added 
 forty-one millions more for the local administration of the 
 provinces, a sum which was never paid into the treasury, but 
 immediately expended in the different places where it was 
 raised. Thus we find that the nation was bearing an annual 
 burden of from five hundred and ninety-nine to six hundred 
 millions. At the same time the Church, whose expenses now 
 figure in the budget of the State, raised one hundred and 
 thirty-three millions in tithes, and sixteen millions in other 
 dues and offerings. 1 The fees, which served as a complement 
 to the judicial salaries, amounted to twenty-nine millions; 2 
 the seigniors raised about 2,500,000 in tolls of various kinds, 
 and at least 37,000,000 in stamp duties. 3 I pass over the 
 feudal rents and services, the valuation of which is quite 
 impossible. These, from their very nature, cannot be taken 
 into account in speaking of the public burdens, and may very 
 well be set off against the mortgage debts of the modern 
 peasant proprietors. 
 
 The items already mentioned, however, in addition to 
 some of a similar character, amounted to two hundred and 
 eighty millions, so that the French people had at that period 
 to bear a total annual taxation of eight hundred and eighty 
 millions. If we compare this sum with the national wealth, 
 we may unhesitatingly set it down as equivalent to an 
 amount of 2,400 millions at the present day; it follows, 
 therefore, that from the time of Louis XV. to that of Napo¬ 
 leon III. there existed but one government in France which 
 appropriated to itself a still larger proportion to the public 
 income than the ancien regime , and that one was the govern¬ 
 ment of the Jacobins during the Reign of Terror. The 
 Empire, the Restoration, and Louis Philippe contented them- 
 
 1 Louis Blanc, b. iii. c. 3, estimates them, according to other authorities, 
 not at 16, but at 30 millions. 
 
 2 According to other estimates, 42 millions. Boiteau, “Ltat de la France en 
 1781.” Paris, 1861. 
 
 3 For the sake of brevity I use this term to denote all the fees paid on change 
 of property, e. g., lods, relods, quints, etc. 
 
77 
 
 CA USES OF THE FRENCH REVOLUTION^ 
 
 selves with far smaller sums; here, too, feudalism finds its 
 counterpart among the socialists. 
 
 When we inquire into the distribution of these taxes 
 among the different classes of the people, we discover a glar¬ 
 ing inequality. The higher ranks were not indeed exempt 
 from taxation, but they were in many respects favored. Of 
 the taxes on consumption, which were valued at three hun¬ 
 dred and eight millions, they bore of course a full share; but 
 of the land and capitation taxes (one hundred and seventy- 
 one millions) they ought, as was discovered during the 
 Revolution, to have paid, on a fair distribution, thirty-three 
 millions more than they actually did. In the next place 
 the maintenance of the public roads, which were entirely 
 kept up by means of the corvee , at a cost of twenty millions, 
 and further, the expenses of the provincial militia, about six 
 and one fourth millions, rested entirely on the shoulders of 
 the lower classes. If we take into consideration the forty 
 millions quoted above, which the seigniors received from the 
 peasants, the fact that the poorer classes of every town were 
 responsible for the taxes of their commune , even when their 
 rich fellow-citizens escaped payment by the purchase of 
 privileged offices, and lastly, the scandalous unfairness in 
 the imposition of the taxes on consumption to which the 
 helpless multitude was subjected by their superiors, we shall 
 easily understand the triumphant fury with which, in 1789, 
 the peasants more especially received the joyful intelligence 
 of the utter destruction of the system above described. 
 
 Great as was the proportion which it exacted of the national 
 income, the government found itself, nevertheless, in a state 
 of ever-increasing need and embarrassment. Disorder on the 
 one side and selfishness on the other scattered its treasures 
 to the wind. The case was the same in the financial admin¬ 
 istration as in that of justice; no one had ever tried to or¬ 
 ganize it on any grand principle of wise adaptation to the 
 end in view; on the contrary, a number of isolated jurisdic¬ 
 tions, distinguished from one another according to provinces 
 or sources of income or the destination of the funds in ques¬ 
 tion, existed side by side, interfering with each other’s 
 
78 
 
 ECONOMIC HISTORY. 
 
 operations and destroying all responsibility. The amount of 
 arrears due the treasury, equal perhaps to half the annual 
 budget, not even the Revolution has been able to ascertain, 
 and it could only get hold of the profits of the farmers of the 
 revenue by means of the guillotine. When once familiarized 
 with deficits the government soon fell into the stream of 
 floating debts. The anticipation of the revenue of future 
 years, at a usurious discount paid to the collectors them¬ 
 selves, the putting off the payment of debts which had fallen 
 due, and the Omission of expenditure prescribed by law, 
 were the cause of equally enormous losses, when the day for 
 liquidation at last arrived. How widely this confusion 
 spread may be gathered from the actual cash accounts of the 
 year 1785. By the side of the regular income of the treas¬ 
 ury, of not quite three hundred and fifty-seven millions, 
 there is another account of four hundred and ninety-three 
 millions income and four hundred and seven millions ex¬ 
 penditure, consisting of items which belong either to the 
 earlier or later years of the period between 1781 and 1787; 
 so that the sum total amounts to nearly eight hundred and 
 fifty millions. We see what a field was opened to specula¬ 
 tors and the lovers of plunder, and to what a state such pro¬ 
 ceedings had reduced the prosperity of an empire which, a 
 hundred years earlier and twenty years later, dictated its 
 will to Europe as a law. 
 
 The last feature in this State economy which reveals to us 
 its character is the kind of expenditure in which these treas¬ 
 ures collected with so much difficulty were employed. The 
 expenses of the court were stated in the official budget at 
 thirty-three or thirty-five millions, but they were in reality 
 forty millions, which did not include the royal hunting ex¬ 
 peditions and journeys, the salaries of the great officers of 
 the court, or the maintenance of the royal palaces. The war 
 office, the cost of which Necker states at ninety-nine millions 
 and Calonne at one hundred and fourteen millions, received 
 one hundred and thirty-one millions, of which rather more 
 than thirty-nine millions went to the administration, forty- 
 four millions for the pay and commissariat of the troops, 
 and forty-six millions for the salaries of the officers. 
 
CAUSES OF THE FRENCH REVOLUTION. 
 
 79 
 
 Entirely removed from all ministerial calculation were the 
 money orders of the king himself “for presents, etc., to 
 courtiers, to the minister of finance and magistrates; repay¬ 
 ment of foreign loans; interest and discount to the treasury 
 officials; remission of certain personal taxes, and unforeseen 
 expenses of every kind. ” This class of expenditure, which is 
 well characterized by the above heading, amounted in 1T85 
 to one hundred and thirty-six millions; in other years the 
 sum was rather smaller; but we may fairly assume that the 
 annual average was more than one hundred millions. 1 And 
 while we thus see nothing but abundance and superfluity 
 among the highest classes of society, the bridges and roads 
 are only set down at four millions; the public buildings at 
 scarcely two millions, and the scientific institutions at 
 rather more than one million; for which objects the budget 
 of 1832 and the following years granted fifty-nine millions! 
 The hospitals and foundling institutions received six millions 
 from the State, six from the Church, and had a revenue of 
 twenty-four millions of their own; while the benevolent in¬ 
 stitutions of modern France (1832) had an annual sum of one 
 hundred and nineteen millions at their disposal. In short, 
 whatever portion of the financial affairs of this feudal state 
 we investigate, we arrive at the same result, and find the 
 people separated into two great classes, one of which was 
 enriched at the cost of the other. 
 
 But as every such draining of the wealth of a nation bears 
 within itself the germs of ruin, by drying up on the one 
 hand the sources of income, and increasing on the other the 
 passion for extravagance, the government found itself at the 
 end of 1T86 in the following condition: the regular annual 
 income was three hundred and twenty-seven millions; the 
 annual expenditure according to the treasury accounts 
 amounted to three hundred and forty millions; in addition 
 to this there were twenty-seven millions for pensions and 
 seventy-two millions of urgent arrears from former years; 
 
 1 We arrive at this result from the debates of the “Assemblee Constitu- 
 ante” (in April, 1790) on the pensions, the ordonnances a comptant, and the litre 
 rouge. Louis Blanc gives a number of details from these in b iv., c. 6. 
 
80 
 
 ECONOMIC HISTORY. 
 
 and lastly, in the year 1787 there was a loss of twenty-one 
 millions from the cessation of a tax which had only been 
 imposed for a period ending with that year. The deficit, 
 therefore, amounted to one hundred and ninety-eight mil¬ 
 lions. Up to this time the government had helped itself by 
 all the artifices, both bad and good, of a credit strained to the 
 very utmost and now utterly exhausted. An increase of the 
 taxes was not to be thought of on account of the enormous 
 burdens by which the nation was already crushed. Under 
 these circumstances Calonne, with genial frivolity, recurred 
 to the serious and noble plans of Turgot. 
 
 He had hitherto lived on the favor of the privileged 
 classes; he now endeavored by sacrificing them to relieve 
 the commonwealth. He congratulated the State on having 
 within it so many great abuses, by the removal of which new 
 sources of prosperity might be opened. 
 
 The opposition which Turgot had met with was of course 
 directed with redoubled fury against Calonne. A closely 
 crowded throng of privileges rose tumultuously against his 
 plans. The court nobility, the provincial estates, the tax- 
 collectors, the courts of law, the police officers, the council¬ 
 lors of the commune , and the heads of the guilds, took up 
 the contest against the will of the king and his ministers. 
 But the development of modern ideas had made such progress 
 that the parties competed with one another for the power of 
 public opinion. The ministry itself emancipated the press 
 in order to expose the advocates of the old system to the na¬ 
 tional contempt. The young nobles of the court and in the 
 provinces armed the mob of Paris and the peasants of 
 Auvergne against the ministers, and instigated them to vio¬ 
 lent excesses. An assembly of aristocratic notables, to 
 whom Calonne submitted his schemes of reform, refused 
 their assent, claimed the right of inspecting and superin¬ 
 tending every department of the public service, and ended by 
 declaring that, as they were nominees of the king and not 
 representatives of the nation, they were not competent to 
 make new grants. Immediately after their dismissal the 
 parliament of Paris, which next to the ministry was the 
 
CAUSES OF THE FRENCH REVOLUTION. 
 
 81 
 
 highest authority in the State, brought forward, as a positive 
 demand, what the notables had only negatively suggested. 
 In a formal decree they demanded that an Assembly of 
 the States-general should be called,— an Assembly which 
 the monarchy had dispensed with for two hundred years. 
 The ministry at first received this proposal with great dis¬ 
 favor ; but as the want of money grew more and more urgent, 
 the alluring hope arose in their minds of finding in the 
 States-general, which was chiefly composed of burghers, a 
 powerful support against the privileged classes. We shall 
 never understand the extraordinary success of the first revo¬ 
 lutionary movements, unless we bear in mind what a large 
 share in the government of the country was possessed by 
 the higher orders and the corporations, and how they now 
 mutually sought each other’s destruction. 
 
 Calonne was not long able to make head against this noisy 
 opposition. The last of the many blows which caused his 
 fall was dealt by the queen, whom he afterwards persecuted 
 with inextinguishable hatred. His successor, Brienne, after 
 a violent contest with the parliaments, resigned his office 
 when the convocation of the States-general had already been 
 determined on, and the national bankruptcy virtually pro¬ 
 claimed. Louis had recourse to Necker again, who really 
 relieved the financial embarrassment for the moment, and 
 recognizing the necessity of a liberal policy, fixed the meeting 
 of the States-general for the 27th of April, 1789. The fer¬ 
 ment, which owing to the preceding disputes had for the first 
 time since the religious wars penetrated the mass of the peo¬ 
 ple, increased from hour to hour. The agitation was princi¬ 
 pally caused by the question whether the States-general should 
 meet as before in three separate chambers, or form a single 
 assembly, in which the tiers etat should have a double number 
 of votes. On this point the hitherto allied opposition parties 
 differed, the aristocrats advocating the separation, the liberals 
 the union of the three estates. Necker, with great want of 
 tact, betrayed his own views by assigning the double number 
 of votes to the tiers etat , while he induced the government to 
 observe an obstinate silence on the main point in question. 
 
 6 
 
82 
 
 ECONOMIC HISTORY. 
 
 The public debates on this subject were all the more violent in 
 consequence of this reticence, and in Bretagne it came to an 
 open civil war between the nobility and the burghers. 
 
 The radical elements in France saw that their time for ac¬ 
 tion was come, and the great dearness of provisions which 
 prevailed during the winter months placed a large number of 
 desperate men at the disposal of every conspirator. In Paris 
 the revolutionary demagogues gathered round the agents 
 of the Duke of Orleans, and at the end of April tried their 
 strength in a sanguinary street riot, which was professedly 
 directed against the usurious avarice of a rich manufacturer, 
 but really had no other object than to intimidate the mod¬ 
 erate party before the impending election of the States- 
 general. 1 In other respects external quiet still prevailed 
 in the provinces; but the feverish agitation of men’s minds 
 increased with every day, and in this state of things the 
 elections by almost universal suffrage began to be held. 
 Every electoral college was to intrust its instructions and 
 complaints to its deputies, according to mediaeval custom. 
 In every district, therefore, a long list of abuses was drawn 
 up and examined and brought home to the minds of the 
 people at large by means of discussion. A modern historian 
 has justly observed that these complaints do not leave a sin¬ 
 gle particle of the ancien regime untouched, that everything 
 was rejected by the restless desire of innovation, and that 
 unfortunately neither the possibility nor the method of in¬ 
 troducing reforms is anywhere pointed out. Revolution, 
 universal and radical revolution, speaks in every line of 
 these documents. There was but one thought through the 
 whole of France, that thenceforward a new era was to com¬ 
 mence for the people and the empire, and that the work be¬ 
 gun must be completed in spite of every opposition. 
 
 While the millions in every part of the country were thus 
 emancipating themselves from the bonds of traditional law, 
 uncertain about their future, but firm in their resolution to 
 proceed, the government was daily sinking more and more 
 
 1 This has been clearly anil concisely shown by Croker in his “ Essays on 
 the French Revolution,” p. 60. 
 
CAUSES OF TEE FRENCH REVOLUTION. 
 
 83 
 
 into utter helplessness. It had indeed a presentiment of the 
 dangers which would accompany the breaking out of the 
 new epoch, but its destitution was so complete that it eagerly 
 longed for the commencement of the crisis. Money, one of 
 the great factors of material power, was not to be found in 
 its coffers, and even the other, the army, was already 
 affected by the general process of dissolution. This is per¬ 
 haps the most important circumstance with respect to the 
 subsequent course of the French Revolution, and its difference 
 from all those which have since taken place in Europe. The 
 reason is simple enough: the French army was in the main 
 organized according to the same principles as the other de¬ 
 partments of the State, and like them had been thoroughly 
 unhinged by the contests between the crown and the feudal 
 orders long before the breaking out of the Revolution. The 
 nobility alone were eligible for commissions in the army, 
 and though single exceptions to this rule really occurred, yet 
 the monopoly was actually limited by a law of 1781 to noble¬ 
 men of four descents. Twenty-seven regiments belonged to 
 foreign or native grandees, and in these the owner of each 
 regiment appointed the colonel from a list drawn up by the 
 minister at war, and the colonel appointed the other officers. 
 The influence of the king’s government, therefore, in the 
 selection of officers, was limited to the composition of the 
 list of candidates for the single office of colonel. In the other 
 divisions of the army, indeed, the highest rank was in the gift 
 of the king alone, but of the other commissions only one half 
 were bestowed by the king and the other half by the colonel. 
 The officer moreover received his commission, after giving 
 proofs of his fitness, on payment of a sum of money; it was a 
 purcha se for life, as in the case of thejcpu_rta_of law it was a 
 purchase of an heredit ary right. The duty of unconditional 
 obedience was not indeed abrogated by this system, but it 
 was inevitable, especially under a weak government, that the 
 corps ©f officers should feel itself, what it really was, a part 
 of that great aristocracy which shared with the king the 
 ruling power of France in every department of public life. 
 .The contest between this nobility and the ministry, by which 
 
84 
 
 ECONOMIC HISTORY. 
 
 the last years „of the ancien regime were filled, must, there¬ 
 fore, have had a deep effect upon the army. It frequently 
 occurred that the officers, like the judges, with their colonels 
 at their head, refused obedience. And as in the rural dis¬ 
 tricts the opposition of the aristocracy was followed by ex¬ 
 citement among the peasants, and the opposition of the 
 towns by excitement among the artisans, so in the case of 
 the army the popular movement found its way into the minds 
 of the soldiers, and operated side by side with the class re¬ 
 sistance of the officers. The common soldiers had felt the 
 oppression of the ancien regime perhaps more deeply than the 
 peasants themselves, for they were starving on a pay of ten 
 sous, while countless sums were employed in rich endow¬ 
 ments for 1,171 generals. They suffered all the insolence 
 of the nobility towards the canaille , embittered by the weight 
 of a severe and often brutal discipline, and, like their fellow- 
 citizens, they looked forward to the meeting of the States- 
 general as the signal of liberation from intolerable slavery. 
 The number of regiments on which the government could 
 reckon was extremely small. The bands of discipline were' 
 loosened in every rank; the officers inveighed against the 
 despotism of the ministers, and the soldiers promised one 
 another to do nothing against the people. 
 
 The ancient polity, therefore, was destroyed by its own 
 internal discord and dissolution before a single revolutionary 
 word had been uttered. The government was destitute of money 
 and troops to defend its position, and the feudal seigniors, 
 though they had important individual rights, had no general 
 organization which could enable them to replace the govern¬ 
 ment. As soon as public opinion, which, guided by radical 
 theories, emphatically rejected both the government and the 
 aristocracy, obtained an organ of power in the States-general 
 it only needed to declare its will, nay, only to give expres¬ 
 sion to the facts before them, and the old system hopelessly 
 collapsed in its own rottenness. What was to follow no man 
 at that time was able to foresee. As most men were ex¬ 
 tremely ill-informed respecting the condition of the country, 
 they indulged in hopes which were all the more ardent in 
 
CAUSES OF THE FRENCH REVOLUTION . 
 
 85 
 
 proportion as they were undefined. But there were many 
 who knew the poverty and brutality of the masses, the bitter 
 hatred between rich and poor, and the selfish immorality of 
 the upper classes, and looked, some with ambitious pleas¬ 
 ure, others with patriotic anxiety towards a stormy future. 
 
86 
 
 ECONOMIC HISTORY. 
 
 IV. 
 
 THE EDICTS OF STEIN AND HARDENBERG. 
 
 THE EMANCIPATING EDICT OF STEIN. 
 
 From Seeley’s Life and Times of Stein , 1 Vol. I. pp. 287-297. 
 
 1807. 
 
 T CALL by this name the great edict which was signed on 
 the 9th of October, that is, only five days after Stein had 
 received his powers, not solely because it contains the provi¬ 
 sion that from a certain date there shall be only free persons 
 in the States of the King of Prussia. It is indeed to be re¬ 
 marked that the principal authors of the measure are so 
 intoxicated with the pride of being the bestowers of freedom 
 upon bondsmen that they forget to remark how much more 
 and how many other emancipations they accomplished by 
 the same act. Stein’s own account of the edict of October 
 runs as follows: — 
 
 “The measures adopted to reach the above-mentioned general 
 object were: — 
 
 “ (1) Abolition of personal serfdom in the Prussian Monarchy: 
 by an Edict of October, 1807, it was decreed that from October 
 8th, 1809 (sic; it should be 1810), personal serfdom with its con¬ 
 sequences, especially the very oppressive obligation of menial ser¬ 
 vice, should be abolished; but the obligations of the peasant, as 
 far as they flowed from his possession of property, remained unal¬ 
 tered. It was reserved for the Chancellor Hardenberg’s love of 
 innovation (on the advice of a H. Scharrenweber, a dreamer who 
 died in a madhouse at Eberbach in 1820) to transform in 1811 the 
 relations of the landlord to the peasant class, and its inner family 
 relations in a manner pernicious to it; in this I had no share. 
 
 “ (2) The transformation of the peasants on the Domain in East 
 and West Prussia into free proprietors.” 
 
 1 University Press, Cambridge, Eng., 1870. 
 
EDICTS OF STEIN AND HARDENBERG. 
 
 87 
 
 Here not a word is said of any changes made by the Edict 
 of October except those which affected the peasant. It is 
 the same aspect of the edict which interests Schon. This 
 edict, he says, “has made the figure of the king stand 
 higher, since he is henceforth no longer a king of slaves, but 
 of free men. ” And again: — 
 
 “Thus came into existence the law of Oct. 9th, 1807, that 
 Habeas Corpus Act of our State. The idea of freedom had begun 
 to live. With ninety-nine hundredths of the people it made a 
 deep and elevating impression; the few friends of slavery intrigued 
 and murmured no doubt a good deal, so that, according to Bhedi- 
 ger’s story, a prejudiced man said at the Berlin Casino after read¬ 
 ing the law, ‘ Bather three battles of Auerstadt than such a law! ’ 
 But the king stood firm, and God maintained the right.’’ 
 
 In stating pretty strongly his claims to be considered the 
 real author of the law, Schon uses language which shows that 
 he is thinking almost exclusively of this part of it. “All 
 else that I did in life, ” he says, “ was as nothing compared 
 to calling into life the idea of freedom.” Only from one 
 casual expression do we learn that he even knew that the 
 measure had another side, where he says, “ I represented that 
 hereditary serfdom, that scourge of our country, must be 
 brought to an end, and that a proclamation of free trade in 
 landed property would be sufficient to promote material 
 interests. ” 
 
 Here we are suddenly introduced to something quite new, 
 and very different from the abolition of serfdom, namely, 
 free trade in landed property. 
 
 Up to a certain point it is true that these two things coin¬ 
 cide. One part of the burden of serfdom lay in the incapac¬ 
 ity of the serf to alienate his land, but this is a small matter. 
 The proclamation of free trade in land affected all classes of 
 society at once, and the upper and middle classes much more 
 than the peasantry. When, therefore, we observe that the 
 edict of the 9th of October, at the same time that it abolished 
 personal serfdom, removed all the principal restrictions that 
 interfered with traffic in land, we see that it is in fact not a 
 
88 
 
 ECONOMIC HISTORY. 
 
 single law, but two laws in one, and two laws of such mag¬ 
 nitude that each by itself might be considered equivalent to 
 a social revolution. 
 
 But when we look closer still we discover that the edict 
 goes even" further, and should be rather described as three¬ 
 fold than as twofold. Englishmen are only too familiar with 
 the notion of a depressed class of agricultural laborers; but 
 such depression may be of two kinds, and may spring from 
 two very different causes. We are not to suppose that the 
 peasantry of Prussia were in a condition resembling that of 
 our own laborers any further than as it was bad. The evils 
 afflicting the Prussian peasantry were those arising out of 
 status ; those which afflict English laborers arise mainly out 
 of contract. The English laborer is nominally free and at 
 liberty to carry his industry to the best market; he is re¬ 
 duced to real dependence by his inability to make a favorable 
 bargain for himself. The Prussian peasant was nominally 
 a serf, but in reality some very important rights were se¬ 
 cured to him. We are not to suppose, for instance, that cruel 
 punishments were allowed, or that he was subject to the ca¬ 
 price of the landlord. He was far more of a proprietor than 
 the English laborer, for, though on a degrading tenure, he 
 did for practical purposes own land. Nor were his interests 
 neglected as those of a freeman, who is supposed able to take 
 care of himself, may be neglected. Not only was he a mem¬ 
 ber of an ancient and organized village community, but the 
 Government also took, and was obliged to take, the greatest 
 possible interest in his class; for these serfs were neither 
 more nor less than the Prussian army. 
 
 Now it might very plausibly be maintained that the pro¬ 
 clamation of free trade in land would not create a happy 
 peasant class, but would simply substitute for a peasantry 
 laboring under certain evils that class of famished drudges 
 whom we know in England, and who if they cannot be called 
 serfs can still less be called peasants, for a peasant properly 
 so called must have a personal interest in the land. Hence 
 the conservative opponents of Stein, such as Marwitz, actually 
 declare that there existed no slavery or serfdom in the land- 
 
EDICTS OF STEIN AND HARDENBERG. 
 
 89 
 
 when he professed to abolish it, but “ that it then for the 
 first time began to appear, namely, the serfdom of the small 
 holder towards the creditor, of the poor and sick towards the 
 police and the work-houses; ” and again, “ that with the pro¬ 
 clamation of free trade disappeared the previous security of 
 the peasantry in their holdings. Every rich landowner could 
 now buy them out and send them off; fortunately, scarcely 
 anybody was rich any longer! ” 
 
 These were the criticisms of the conservative party, which 
 might have been very truly applicable to a simple measure 
 of free trade in land. But the edict of October had in fact 
 taken account of the danger, and contained an express pro¬ 
 vision to meet it. Hence, as I have said, it was actually a 
 threefold enactment, for not only did it first abolish serfdom, 
 and secondly, establish free trade in land, but, thirdly, it 
 endeavored to guard the peasantry against the danger, which 
 in so many countries has proved serious, of being gradually 
 driven out or turned from proprietors into wage-receivers by 
 the effects of the unequal competition to which they are 
 exposed. 
 
 At the same time that we carefully distinguish these 
 different enactments all included in one* legislative edict, 
 let us be as careful to remark what was not included in it. 
 Englishmen are apt to attribute to the legislation of Stein all 
 the innovations introduced in this period. In particular it 
 has been supposed that he created the peasant-proprietorship 
 of modern Prussia, But this he did not do, except, as he 
 says in the passage quoted above, on the Domain Lands of 
 West and East Prussia. Proprietors in a certain sense, the 
 peasantry were before this edict, that is, they cultivated 
 land for themselves, and with a considerable sense of secur¬ 
 ity ; proprietors in the full sense they were not, because they 
 held of a landlord to whom they owed various dues and 
 services. Now Stein’s edict altered the nature of these ser¬ 
 vices, and abolished the most oppressive; but it did not 
 destroy the rights of the landlord or leave the peasant sole 
 master of the land he cultivated. It was reserved for 
 Hardenberg to do this by an edict issued on Sept. 14, 1811, 
 
90 
 
 ECONOMIC HISTORY. 
 
 and it should be noticed that Stein expressly declines to ac¬ 
 cept any responsibility for this innovation. Again, it is not 
 to be supposed that the provision just mentioned, by which 
 Stein tried to prevent the absorption of the small holdings by 
 the great' proprietors, has actually proved the means of pre¬ 
 serving the peasant class in Prussia; for all this passed away 
 with the legislation of Hardenberg, and it has been by its 
 own vitality, and not by State interference, that peasant- 
 proprietorship has maintained itself. 
 
 Further, it is to be remarked that Stein is quite accurate 
 when he describes his Land Reform as not consisting solely 
 in the edict of October, but as including also another quite 
 distinct act of legislation, which applied only to the prov¬ 
 inces of East and West Prussia. This act belongs to July, 
 ^-1808, and is confined not simply to the peasants of these two 
 provinces, but to a particular class of peasants, namely, 
 those sometimes called immediate peasants, or in other words 
 those who, living on the Royal Domains, had no other land¬ 
 lord but the king. It is evident that the Government could 
 deal with these more easily than with those peasants whose 
 condition it could not improve without meddling with the 
 rights of another class. The extreme distress in which 
 these two provinces lay, and which the Government was in 
 no condition to relieve directly, was the justification for 
 granting privileges to these particular immediate peasants, 
 which for the moment were not extended to those of the 
 other provinces. 
 
 Such then, defined in general terms, was the extent of 
 this reform. It needs, however, a much closer description. 
 In the first place the reader must guard against a misappre¬ 
 hension of the phrase “free trade in land ” into which he is 
 likely to be led by his English experience. Free trade in 
 land is also a cry of our own reformers; but we must beware 
 of supposing that what they call for is the same thing that 
 was granted in Prussia by Stein’s edict. The complaint in 
 England is that a number of practical obstructions prevent 
 land from being the object of such free purchase and sale as 
 other commodities. Much of the land of the country, it is 
 
EDICTS OF STEIN AND HARDENBERG. 
 
 91 
 
 said, is in the hands of persons who in family settlements 
 have given up the right to alienate it; the system under 
 which landed property is conveyed is so cumbrous and ex¬ 
 pensive as to deter people from transactions of the kind; 
 and lastly by recognizing the principle of primogeniture with 
 respect to land and not with respect to personal property in 
 cases of intestacy, the law itself countenances the notion that 
 landed property stands in a class by itself, and is not to be 
 dealt with or transferred as if it were purely a commodity. 
 Now it is an instance of the confusing and misleading in¬ 
 accuracy of our party cries, when the removal of these 
 restrictions is called free trade in land. Free trade in other 
 cases means the removal of restrictions imposed by the law 
 or by the government; but these restrictions are of quite an¬ 
 other kind. Only the last mentioned is the work of the law, 
 and it cannot in any proper sense be called a restriction, for 
 the only way in which it operates restrictingly is by lending 
 the moral influence of the law to the support of a restrictive 
 system. The cumbrousness of our conveyancing is merely 
 the result of the gradual way in which our land system has 
 been formed, and as to the system of settlements, so far 
 from being a restriction of freedom, it is the direct result of 
 freedom of contract,—so much so that the reformers them¬ 
 selves demand an interference of the law to prevent it; in 
 other words, wish to promote what they call free trade by a 
 new legal prohibition. 
 
 Now when Stein is said to have established free trade in 
 land the expression is to be understood literally. The hin¬ 
 drances to the sale and purchase of land which he removed 
 were not accidental practical obstacles, but formal legal pro¬ 
 hibitions. In the old law of Prussia and in the Code of 
 Frederick or Allgemeines Landrecht, which came into force 
 in 1T94, it is laid down that noble estates (adelige Giiter) 
 can only be held by nobles, and that persons of civic origin 
 (biirgerlicher Herkunft) can only acquire them by express 
 permission of the sovereign. In the same way peasant-land 
 could, as a rule, only be held by peasants, and land belong¬ 
 ing to towns only by citizens. We are familiar with the 
 
92 
 
 ECONOMIC HISTORY. 
 
 idea of caste as applied to human beings, that is, of an unal¬ 
 terable status stamped upon a man from his birth; in Prussia 
 it may be said that caste extended actually to the land, so 
 that every rood of soil in the country was of a definite and 
 unalterable rank, and, however it might change its owners, 
 always remained either noble or citizen or peasant land. 
 Now the first innovation contained in Stein’s edict consisted 
 in cancelling in the fewest and simplest words all the regu¬ 
 lations which established caste in land. 
 
 When the edict is examined more closely it will be seen 
 to be much more comprehensive even than it was represented 
 above when I pointed out how much more comprehensive it 
 was than was commonly supposed, or than Stein himself 
 described it. For at the same time that it abolishes caste 
 in land it accomplishes another act of emancipation, which 
 is in no way expressed in the phrase free trade in land; it 
 removes another quite distinct set of restrictions and abol¬ 
 ishes caste in persons. The Code of Frederick prohibited 
 the nobleman from engaging in any occupation properly 
 belonging to the citizen, and only allowed under certain 
 conditions the citizen to pass into the class of peasants or 
 the peasant into the class of citizens. The Nobles, the Citi¬ 
 zens, the Peasants ;>these were the three castes into which 
 the Prussian population outside the professions was divided; 
 into one or other of them each person was born, and in the 
 same, as a rule, he died. To each caste was assigned its 
 special pursuit. The Noble cultivated his estate and exer¬ 
 cised jurisdiction over the peasantry who held under him, 
 though he could not himself hold or cultivate peasant-land; 
 he also served the king in civil or military office. The 
 Peasant cultivated his plot of ground rendering fixed services 
 to the lord and subject to his jurisdiction, and belonged at 
 the same time to the rank and file of the army. Between 
 them stood the Citizen, holding a monopoly of trades and 
 industries which by law were confined, with few exceptions, 
 to the towns. It is remarkable that the military profession 
 was, for the most part, closed to him. This must be borne 
 in mind when we compare the Seven Years’ War with the 
 
EDICTS OF STEIN AND HARDENBERG . 
 
 93 
 
 War of Liberation. We have read of the fearful consump¬ 
 tion of men caused by the Seven Years’ War, and of the 
 desperate shifts of Frederick to procure recruits; but we 
 must understand that no levee en masse took place then, and 
 that the citizen class had scarcely any share in what was 
 going forward. This is the more to be noted because the 
 connection between the citizen class and the learned class 
 was closer than in other countries. The learning, litera¬ 
 ture, and philosophy, which flourished so remarkably in that 
 age took the tone of the middle class, and a curious result 
 followed. In the most military of all modern States, litera¬ 
 ture, because it sprang from a class which enjoyed an ex¬ 
 emption from military service, and as a consequence, the 
 tone of public feeling which is determined by literature, 
 was in an especial degree wanting in the military spirit,— 
 Scharnhorst describes the army as being generally hated 
 and despised, and Kant speaks with contempt of a man of 
 education who had embraced a military life, — and this fact 
 goes some way to explain that phenomenon of a military 
 State fighting exceptionally ill which we have so long had 
 before us. 
 
 This state of society is very foreign to our ideas, and may 
 perhaps, because we have no experience of it, fascinate some 
 imaginations. No laissez faire here; every man’s place is 
 assigned to him from his birth; his occupations are pre¬ 
 scribed, and a great taskmaster or earthly Providence stands 
 at the head of the whole society, which may be called army 
 or nation at pleasure, since even the unmilitary citizens were 
 regarded by the State principally as a sort of commissariat 
 department. And for the immediate purpose of Frederick 
 William I. and Frederick the Great the system was well 
 adapted, for that purpose was simply military. A place for 
 every man, and every man in his place; the “productive 
 forces of the country perfectly inventoried and a debtor and 
 creditor account of its resources kept;” 1 by such a system 
 the rulers could wield the whole force of the country most 
 easily and certainly. Nevertheless, the destruction of this 
 
 1 Morier. 
 
94 
 
 ECONOMIC HISTORY. 
 
 whole system by a stroke of Stein’s pen was now regarded as 
 the greatest of reforms and the commencement of the resto^ 
 ration of Prussia. For it will be evident that the same sys¬ 
 tem which concentrated so powerfully and measured so ex¬ 
 actly the forces of the country at the same time entirely 
 prevented them from growing, not to mention the intellect¬ 
 ual stagnation, outside the university world, which was pro¬ 
 duced by such rigid uniformity of life. A country in which 
 no man can follow his natural bent, take to agriculture if he 
 does not like trade, or to trade if he does not succeed in agri¬ 
 culture, is evidently not an industrial country. Its material 
 resources under such a system will remain undeveloped, and 
 if it be a poor country, as Prussia was, the system will actu¬ 
 ally in the end defeat its own object, for such a country from 
 mere poverty will be weak in war. 
 
 As the first section of the edict abolished what I have 
 called “caste in land,” so the second, consisting of about 
 three lines, abolished caste in persons. And here it may 
 perhaps be observed that I omitted above one principal cir¬ 
 cumstance which made such sweeping changes so easy to 
 Stein. Before the Peace of Tilsit it would have been scarcely 
 possible to carry out such reforms, however much the rulers 
 might have been convinced of their necessity. Frederick 
 had shrunk from the emancipation of the serfs because he 
 felt that it would introduce disorder into his army, and for 
 the same reason these reforms also would have been scarcely 
 practicable so long as the army existed. The disasters 
 brought with them the compensation that they destroyed for 
 a moment this incubus. The necessity of maintaining a 
 great position in Europe, the necessity even of defending the 
 country, ceased when the country actually fell into French 
 occupation; and thus, as we may say, the building being down 
 it was for the first time possible to mend a defect in the 
 foundations. 
 
 These reforms, favored as they were by circumstances and 
 requiring but few lines in the edict, were yet much more 
 fundamental and pregnant with consequences than any such 
 practical reforms as may be called for in England to make 
 
EDICTS OF STEIN AND HARDENBERG. 
 
 95 
 
 the purchase of land more easy. They were a sort of Magna 
 Charta to the Prussians, and Schon might well have applied 
 to them the enthusiastic expressions which he keeps for the 
 sections which emancipated the serf. In v. Ronne’s stand¬ 
 ard text-book of Prussian Constitutional Law I find in the 
 chapter on Rights, under the first title, Freedom or Security 
 of the Person, that this freedom is composed of three rights: 
 a) the right of movement and free choice of abode (Freizii- 
 gigkeit); (2) the right of emigration (Auswanderungsrecht); 
 (8) the right of choosing a calling or trade (Freie Wahl von 
 Beruf und Gewerbe); and this third right, we are informed, 
 was given to the Prussians by the edict of October, 1807. 
 The same is said of the first of the rights which go to make 
 up the second title; namely, free right to the acquisition 
 and possession of property (Freies Recht zum Erwerbe und 
 Besitze des Eighenthums). 
 
 I proceed to give the text of this edict, the vast impor¬ 
 tance of which will have by this time become clear. The 
 less important sections are printed in a smaller type, and of 
 §§ III. and V., as purely technical, only the heading is 
 given. 
 
 Edict concerning the facilitation of possession and the free use of 
 landed property, as well as the personal relations of the inhabi¬ 
 tants of the country. 
 
 We, Frederick William, by the grace of God King of Prussia, &c., &c., 
 Make known hereby and give to understand. Since the beginning of the 
 peace We have been before all things occupied with the care for the de¬ 
 pressed condition of Our faithful subjects, and the speediest restoration 
 and greatest improvement of it. We have herein considertd that in the 
 universal need it passes the means at Our command to furnish help to each 
 individual, and yet We could not attain the object; and it accords equally 
 , with the imperative demands of justice and with the principles of a proper 
 national economy, to remove all the hindrances which hitherto prevented 
 the individual from attaining the prosperity which, according to the 
 measure of his powers, he was capable of reaching; further, We have 
 considered that the existing restrictions, partly on the possession and en¬ 
 joyment of landed property, partly on the personal condition of the agri¬ 
 cultural laborer, specially thwart Our benevolent purpose and disable a 
 great force which might be applied to the restoration of cultivation, the 
 
96 
 
 ECONOMIC HISTORY. 
 
 former by their prejudicial influence on the value of landed property and 
 the credit of the proprietor, the latter by diminishing the value of labor. 
 We purpose, therefore, to reduce both within the limits required by the 
 common well-being, and accordingly ordain as follows: — 
 
 § I. Freedom of Exchange in Land. 
 
 Every inhabitant of our States is competent, without any limita¬ 
 tion on the part of the State, to possess either as property or pledge 
 landed estates of every kind: the nobleman therefore to possess not 
 only noble but also non-noble, citizen, and peasant lands of every 
 kind, and the citizen and peasant to possess not only citizen, peas¬ 
 ant, and other non-noble, but also noble, pieces of land, without 
 either the one or the other needing any special permission for any 
 acquisition of land whatever, although, henceforward as before, 
 each change of possession must be announced to the authorities. 
 
 § II. Free Choice of Occupation. 
 
 Every noble is henceforth permitted without any derogation from 
 his position, to exercise citizen occupations; and every citizen or 
 peasant is allowed to pass from the peasant into the citizen class, 
 or from the citizen into the peasant class. 
 
 § III. How far a legal right of Pre-emption and a First Claim still 
 exist. 
 
 § IV. Division of Lands. 
 
 Owners of Estates and Lands of all kinds, in themselves alienable either 
 in Town or Country, are allowed, after due notice given to the provincial 
 authority, with reservation of the rights of Direct Creditors and of those 
 who have the right of pre-emption (§ III.), to separate the principal estate 
 and its parts, and in general to alienate piecemeal. In the same way Co¬ 
 proprietors may divide among them property owned in common. 
 
 § V. Granting of Estates under Leases for a Long Term. 
 
 § VI. Extinction and Consolidation of Peasant Holdings. 
 
 When a landed proprietor believes himself unable to restore or 
 keep up the several peasant holdings existing on an estate which 
 are not held by a hereditary tenure, whether of a long lease or of 
 copyhold, he is required to give information to the government of 
 the province, with the sanction of which the consolidation, either 
 of several holdings into a single peasant estate, or with demesne 
 land, may be allowed as soon as hereditary serfdom shall have 
 ceased to exist on the estate. The provincial Authorities will be 
 provided with a special instruction to meet these cases. 
 
 § VII. If, on the other hand, the peasant tenures are hered¬ 
 itary, whether of long lease or of copyhold, the consolidation or 
 
EDICTS OF STEIN AND HARDENBERG. 
 
 97 
 
 other alteration of the condition of the lands in question, is not 
 admissible until the right of the actual possessor is extinguished*, 
 whether by the purchase of it by the lord or in some other legal, 
 way. In this case the regulations of § VI. also apply. 
 
 § VIII. Indebtedness of Feudal and Entailed Estates in consequence: 
 of the Ravages of War. 
 
 Every possessor of feudal or entailed property is empowered to raise the 
 sums required to replace the losses caused by war, by mortgaging the sub¬ 
 stance of the Estates themselves, as well as the revenues of them, provided 
 the application of the money is attested by the Administrator (Landrath) 
 of the Circle or the Direction of the Department. At the end of three 
 years from the contracting of the debt the possessor and his successor are 
 bound to pay off at least the fifteenth part of the capital itself. 
 
 § IX. Extinction of Feudal Relations, Family Settlements, and En¬ 
 tails, by Family Resolution. 
 
 Every feudal connection not subject to a Chief Proprietor, every family 
 settlement and entail may be altered at pleasure or entirely abolished by a 
 Family Resolution, as is already enacted with reference to the East Prus¬ 
 sian Fiefs (except those of Ermeland) in the East Prussian Provincial Law, 
 Appendix 36. 
 
 § X. Abolition of Villainage. 
 
 From the date of this Ordinance no new relation of villainage, 
 whether by birth, or marriage, or acquisition of a holding, or by 
 contract, can come into existence. 
 
 § XI. With the publication of the present Ordinance the exist¬ 
 ing condition of villainage of those villains with their wives and 
 children who possess their peasant-holdings by hereditary tenures 
 of whatever hind ceases entirely both with its rights and duties. 
 
 § XII. From Martinmas, 1810, ceases all villainage in Our 
 entire States. From Martinmas, 1810, there shall be only free per¬ 
 sons, as this is already the case upon the Domains in all Our prov¬ 
 inces; free persons, however, still subject, as a matter of course, to 
 all the obligations which bind them as free persons by virtue of 
 the possession of an estate or by virtue of a special contract. 
 
 To this declaration of Our royal Will every man whom it may concern, 
 and in particular Our provincial and other governments, are exactly and 
 loyally to conform themselves, and the present Ordinance is to be made 
 universally known. 
 
 Authentically, under Our royal Signature. Given at Memel, Oct. 9th, 
 1807. 
 
 Friedrich Wilhelm, 
 Schrotter, Stein, Sckrbtter II. 
 -7 
 
98 
 
 ECONOMIC HISTORY. 
 
 The elder Schrotter was at this time minister for the prov¬ 
 ince of Prussia, and he with his brother was entrusted with 
 the task of publishing the Ordinance in the province where 
 it had received the king’s signature. It is for this reason 
 that their names are affixed to it along with Stein’s. 
 
 That threefold character of the edict which was pointed 
 out above will appear very visibly by observing the three 
 groups of sections, which on account of their especial impor¬ 
 tance have been printed in large type. The abolition of caste 
 both in land and in persons is accomplished in the first two 
 sections; the abolition of villainage in the last three, which 
 it is evident might as well have composed a separate edict. 
 Sections six and seven are introduced to prevent the system 
 of free trade in land from bearing too hard on the peasant 
 and making the proprietorship of land a monopoly of the 
 richer classes. . . . 
 
 THE AGRARIAN LEGISLATION OF HARDENBERG. 
 
 From Morier’s “The Agrarian Legislation of Prussia during 
 the present Century,” in “Systems of Land Tenure in vari¬ 
 ous Countries .” 1 pp. 306-316. 
 
 1811 . 
 
 The edict of 1807, great and incisive as had been its 
 operation, was of a negative kind. It removed disabili¬ 
 ties, undid the shackles which bound the peasant to the 
 glebe, allowed such rights as existed to be used freely, and 
 pulled down the walls which separated from each other the 
 different classes of society. But it created no new forms of 
 property; it proclaimed freedom of exchange, but it did not 
 provide the title-deeds required as the first condition of ex¬ 
 change. Peasants’ land could now be held indiscriminately 
 by all the citizens of the State; but it was still held under 
 the old forms of tenure; there were still two “dominia.” 
 The lord was still owner of the peasants’ land, but had no 
 
 1 London: Macmillan & Co., 1870. 
 
EDICTS OF STEIN AND HARDENBERG. 
 
 99 
 
 right to its possession. The peasant was free but was not 
 master of his labor. 
 
 The legislation of 1811 stepped in to remedy this state of - 
 things, and applying to the monarchy generally the princi¬ 
 ples which during the last three years had proved in the 
 highest degree successful when applied to the State domains, 
 it set itself to substitute allodial ownership for feudal ten- k 
 ure. Its work was in the highest degree positive. 
 
 The legislation of 1811 mainly consists of two great 
 edicts, both bearing the same date, that of the 14th of Sep¬ 
 tember,— the one entitled “Edict for the Regulation of the 
 Relations between the Lords of the Manor and their Peas¬ 
 ants ; ” the other, “ Edict for the better Cultivation of the 
 Land. ” 
 
 The first is concerned with the creation of new title-deeds 
 for the peasant holders, and with the commutation of the 
 services rendered in virtue of the old title-deeds. 
 
 The second surveys the whole field of agrarian reform, and 
 introduces general measures of amelioration. 
 
 The preamble to the “ Edict for the Regulation of the Re¬ 
 lations between Landlord and Tenant” recites how “We, 
 Frederick William, by the grace of God, King of Prussia, hav¬ 
 ing convinced ourselves, both by personal experience in our 
 own domains, and by that of many lords of manors, of the 
 great advantages which have accrued both to the lord and to 
 the peasant by the transformation of peasant holdings into 
 property, and the commutation of the services and dues on 
 the basis of a fair indemnity, and having consulted, in re¬ 
 gard to this weighty matter, experienced farmers, and skilled 
 persons of all kinds belonging to all our provinces, and to 
 all ranks of our subjects, ordain and decree as follows: ” 
 
 The edict then branches off into two main parts, — the 
 first dealing with peasant holdings in which the tenant has 
 hereditary rights; the second with holdings in which the 
 tenant has no hereditary rights. 
 
100 
 
 ECONOMIC HISTORY. 
 
 PART I. 
 
 All tenants of hereditary holdings, that is, holdings which 
 are inherited according to the common law, or in which the 
 lord of the manor is bound to select as tenant one or other 
 of the heirs of the last tenant, whatever the size of the holding , 
 shall by the present edict become the proprietors of their 
 holdings, after paying to the landlord the indemnity fixed 
 by this edict. On the other hand, all claims of the peasant 
 on the manor, for the keeping in repair of his farm-buildings, 
 etc., shall cease. 
 
 We desire that landlords and tenants should of themselves 
 come to terms of agreement, and give them two years from 
 the date of the edict to do so. If within that time the work 
 is not done, the State will undertake it. 
 
 The rights to be commuted may be thus generally classed: — 
 
 I. Rights of the landlord. 
 
 1. Right of ownership (“ dominium directum ”). 
 
 2. Claim to serviQes. 
 
 3. Dues in money and kind. 
 
 4. Dead stock of the farms. 
 
 5. Easements or servitudes on the land held. 
 
 II. Rights of the tenant. 1 
 
 1. Claim to assistance in case of misfortune. 
 
 2. Right to gather wood and other forest rights in the 
 
 forest of the manor. 
 
 3. Claim upon the landlord for repairs of buildings. 
 
 4. Claim upon the landlord in case tenant is unable to 
 
 pay public taxes. 
 
 5. Pasturage rights on demesne lands or forests. 
 
 Of these different rights only a few, namely, the dues paid 
 in kind or money, the dead stock and the servitudes, are capa- 
 
 1 It is worthy of remark that the tenant’s “ dominium utile,” or right of pos¬ 
 session, is not recorded as a set-off against the dominium directum of the lord 
 of the manor. The fact is, this right of possession is something so self-under¬ 
 stood, that it never seems present to the mind of the legislator. The “ domin¬ 
 ium directum ” is something quite different, for it represents an aggregation of 
 all kinds of different rights. These rights he has to sell to the peasant, and 
 the peasant buys them with the only thing he possesses, viz., the land. 
 
EDICTS OF STEIN AND HA11DENBERG . 
 
 101 
 
 ble of exact valuation. The others can only be approxi¬ 
 mately estimated. 
 
 To obtain, therefore, a solid foundation for the work of 
 commutation, and not to render it nugatory by difficulties im¬ 
 possible to be overcome, we deem it necessary to lay down 
 certain rules for arriving at this estimate, and to deduce 
 those rules from the general principles laid down by the laws 
 of the State. These principles are: — 
 
 1. That in the case of hereditary holdings, neither the 
 
 services nor the dues can, under any circumstances, 
 
 be raised. 
 
 2. That they must, on the contrary, be lowered if the holder 
 
 cannot subsist at their actual rate. 
 
 3. That the holding must be maintained in a condition 
 
 which will enable it to pay its dues to the State. 
 
 From these three constitutional principles, as well as 
 from the general principligof public law, it follows that the 
 right of the State, both tlWrdinary and extraordinary taxes, 
 takes precedence of #very other right, and that the services 
 to the manor are limited by the obligation which the latter 
 is under to leave the tenant sufficient means and to pay 
 taxes. 
 
 We consider that both these conditions are fulfilled when 
 the sum-total of the dues and services rendered to the 
 manor do not exceed one-third of the total revenue de¬ 
 rived by an hereditary tenant from his holding. Therefore, 
 with the exceptions to be hereafter described, the rule shall 
 obtain: 
 
 That in the case of hereditary holdings the lords of the 
 manor shall be indemnified for their rights of ownership in 
 the holding, and for the ordinary services and dues attached 
 to the holding, when the tenants shall have surrendered one 
 third portion of all the lands held by them, and shall have 
 renounced their claims to all extraordinary assistance, as 
 well as to the dead stock, to repairs, and to the payment on 
 their behalf of the dues to the State when indSpable of 
 doing so. 
 
102 
 
 ECONOMIC HISTORY. 
 
 The edict then goes on to lay down the rules to be ob¬ 
 served in applying this principle. 
 
 These rules presuppose the existence of the agricultural 
 community referred to in the earlier part of this paper, 
 namely, equal allotments in an arable mark; the division 
 of the arable mark in which these several allotments are 
 situated into three u Commonable Fields , ” or “Fluren;” a 
 common system of cultivation obligatory on the community, 
 in order to secure the community’s right of pasture on 
 the fallow and stubbles; and common rights of property in 
 common lands occupied “de indiviso,” mostly pasture lands, 
 woods, etc., but sometimes also in arable common lands. 
 As the rule, the lord of the manor is to acquire possession 
 of one of the three Fields, or of one third portion of each 
 field, and of one third portion of the common lands. 
 
 We have no space to enter into the details of the ar¬ 
 rangements which provide for the cases differing from 
 these. 
 
 As noted above, the lords and the peasants are left free to 
 make what arrangements they please, as long as the propor¬ 
 tion of one third is maintained; that is, the indemnity may 
 take the form of a payment of capital, or of a corn or money 
 rent. Yet the rule to be followed (and a departure from this 
 rule must have a distinct motive) is that the indemnity must 
 be paid in land where the holdings are over fifty “morgen,” 1 
 but in the shape of a corn-rent where the holdings are under 
 that size. 
 
 As a matter of practical convenience to both parties, the 
 absolute separation of proprietary rights suffers some few 
 exceptions; the first and most important is that the lord 
 retains the right of pasturing the manorial sheep on two 
 thirds of the fallow and stubbles of the arable mark; 2 the 
 peasant also continues to enjoy the right of collecting as 
 much firewood in the demesne as he requires for his per- 
 
 1 The Prussian acre is about equal to two thirds of an English acre, an 
 hundred English acres being equal to 158| Prussian acres. 
 
 2 Compare Rogers’ “ History of Agriculture and Prices in England,” vol. i. 
 p. 31. 
 
EDICTS OF STEIN AND IIARDENBERG. 
 
 103 
 
 sonal use. For this right and for the acquisition of his house 
 and farm-buildings as well as his garden-plot (his allot¬ 
 ment in the mark of the township) he continues to render 
 services to the lord of the manor at times (for example, har¬ 
 vest) when extra hands are wanted. These services are 
 however restricted to a maximum of ten days of team¬ 
 work, and ten days of hand-labor for a team-peasant, and 
 ten days’ man’s-work and ten days’ woman’s-work for a hand 
 peasant. 
 
 Several paragraphs of the edict are taken up with provi¬ 
 sions for so apportioning the burdens on the holdings thajb 
 nothing shall prevent their dismemberment, and being sold 
 or exchanged in single parcels. Among these provisions is 
 one preventing the peasant from mortgaging his estate above 
 one fourth of its value. Where corn-rents are not paid 
 punctually the lord of the manor can exact services instead. 
 
 PART II. 
 
 The class of holdings treated of in the second part are 
 those held at will, or for a term of years or for life. In 
 these cases the landlord gets an indemnity of one half of the 
 holdings under much the same conditions as in the case of 
 the hereditary holdings. When the conditions differ they 
 do so in favor of the lord of the manor. 
 
 By the edict, of which the above are the main provisions, 
 entirely new conditions of land occupation were inaugurated, 
 and corresponding changes became necessary in the other 
 branches of the agricultural system. 
 
 The “Edict for the better Cultivation of the Land,” pub¬ 
 lished on the same day, had these changes in view. 
 
 Fully to understand what these changes were, and what 
 was the nature of the agricultural reforms to be introduced 
 into Prussia, the picture of the peasant community as a mi- 
 crocosmic reproduction of the old community of the mark 
 must be kept in mind. The peasant occupier’s tenement is 
 situated apart from his land in a village or township; his 
 estate is made up of a number of single lots or parcels 
 (Grundstiicke) distributed over the three main divisions or 
 
104 
 
 ECONOMIC HISTORY. 
 
 
 Fields (Fluren, Campi) into which the arable mark is di¬ 
 vided. Often intermixed with these peasant parcels, and 
 subject to the same obligatory cultivation, are parcels of de¬ 
 mesne lands. In addition to his individual rights of posses¬ 
 sion in the arable mark, controlled by the common rights of 
 pasturage on the stubbles, he has common rights in the 
 common pasture, which common rights he shares with the 
 lord of the manor. Besides these rights he has rights of 
 pasture, etc., in the forest lands of the demesne proper. The 
 sum total of these individual and common rights make up 
 the peasant holding, correlative to which are the services to 
 be rendered to the manor. As long as these services were 
 calculated on the sum total of the rights enjoyed by the 
 tenant, it was of paramount importance that no dismember¬ 
 ment should take place. Consequently, even in the case of 
 freeholders, none but exceptional dismemberments were 
 allowed. 
 
 Apart then from the relations between landlord and ten¬ 
 ant, or rather inseparably implicated in those relations, and 
 therefore requiring simultaneous regulation are the common 
 rights of the peasants themselves, and the impediments 
 which these common rights throw in the way of individual 
 cultivation, and the free use of the rights of property to be 
 granted. 
 
 The ruling idea of the “ Edict for the better Cultivation of 
 the Land,” as of its predecessor, and indeed of the whole 
 legislation connected with the names of Stein and Harden- 
 berg, is to enfranchise not the owner of land merely, but 
 likewise the land owned by him, and to remove every im¬ 
 pediment in the way of the soil finding its way out of hands 
 less able to cultivate it into those better able to cultivate 
 it. Conformably to these principles, the edict in question, 
 in the first place, removes all restrictions still existing in 
 the way of free exchange in land, in so far as private rights 
 (namely, rights arising from entails, servitudes, etc.) are 
 not affected. By this proviso the restrictions contained in 
 paragraphs six and seven of the edict of 1807 were removed, 
 the difference between tenant’s lands and demesne land 
 
EDICTS OF STEIN AND HARDENBERG. 
 
 105 
 
 ceased, and the lord of the manor could freely acquire the 
 former without the previous sanction of the State. On the 
 other hand, by the perfect liberty granted for dismemberment 
 (the maxim being laid down that it was better both for the 
 cultivator and for the land cultivated that the former should 
 administer a small unencumbered estate rather than a large 
 encumbered one), the advocates of the “ petite culture ” were 
 conciliated. The passage in the edict is worth quoting in ex - 
 tenso , as it contains very explicitly what we have described as 
 the ruling idea of the legislation we are discussing; an idea, 
 it is true, which only attained its full development forty 
 years later, but which, nevertheless, in spite of the obstacles 
 thrown in its way by the successors of Stein and Hardenberg, 
 took sufficient root even at this early period to enable us to 
 judge of its fruits. It is the idea of ownership versus ten¬ 
 ancy ', and of absolute freedom of exchange and disposal; 
 and special importance attaches to it as representing princi¬ 
 ples opposed both to the French system of compulsory divi¬ 
 sion and to the English system of tenancy, primogeniture, 
 and strict settlement. The passage we refer to runs on as 
 follows: — 
 
 “The proprietor shall henceforth (excepting always where the 
 rights of third parties are concerned) be at liberty to increase his 
 estate, or diminish it by buying or selling, as may seem good to 
 him. He can leave the appurtenances thereof (the i grund- 
 stiicke, ’ or parcels distributed in the three Fields ) to one heir or to 
 many, as he pleases. He may exchange them or give them away, 
 or dispose of them in any and every legal way, without requiring 
 any authorization for such changes. 
 
 “This unlimited right of disposal has great and manifold advan¬ 
 tages. It affords the safest and best means for preserving the pro¬ 
 prietor from debt, and for keeping alive in him a lasting and lively 
 interest in the improvement of his estate, and it raises the general 
 standard of cultivation. 
 
 “The first of these results is obtained by the power it gives to 
 the actual proprietor, or to an heir upon entering on his estate, to 
 sell such portions as will enable him to provide for his heirs or co¬ 
 heirs, as the case may be, or for any other extraordinary emer- 
 
106 
 
 ECONOMIC HISTORY . 
 
 gency, leaving what remains of the property unencumbered with 
 mortgages or settlements. 
 
 “The interest in the estate is kept alive by the freedom left to 
 parents to divide their estate among their children as they think 
 fit, knowing that the benefit of every improvement will be reaped 
 by them. 
 
 “Lastly the higher standard of cultivation will be secured by 
 land—which in the hands of a proprietor without means would 
 necessarily deteriorate — getting into the hands of a proprietor 
 with means, and therefore able to make the best of it. Without 
 this power of selling portions of his property, the proprietor is apt 
 to sink deeper and deeper into debt, and in proportion as he does 
 so the soil is deprived of its strength. By selling, on the other 
 hand, he becomes free of debt and free of care, and obtains the 
 means of properly cultivating what remains to him. By this un¬ 
 hindered movement in the possession of land, the whole of the 
 soil remains in a good state of cultivation; and this point once 
 attained, increased industry and exertion wil 1 make it possible to 
 attain a yet higher point; whereas a backward movement, except 
 as the result of extraordinary mischances from without, is not to 
 be apprehended. 
 
 “But there is yet another advantage springing from this power 
 of piecemeal alienation which is well worthy of attention, and 
 which fills our paternal heart with especial gladness. It gives, 
 namely, an opportunity to the so-called small folk (kleine Leute), 
 cottiers, gardeners, boothmen, and day laborers, to acquire landed 
 property, and little by little to increase it. The prospect of such 
 acquisition will render this numerous and useful class of our sub¬ 
 jects industrious, orderly, and saving, inasmuch as thus only will 
 they be enabled to obtain the means necessary to the purchase of 
 land. Many of them will be able to w^ork their way upwards, and 
 to acquire property, and to make themselves remarkable for their 
 industry. The State will acquire a new and valuable class of in¬ 
 dustrious proprietors; by the endeavor to become such, agriculture 
 will obtain new hands, and by increased voluntary exertion, more 
 work out of the old ones.” 
 
 The edict next exacts as a supplementary measure to the 
 “Edict for the Regulation of the Relations between Lords 
 of the Manor and their Peasants,” that in the case of heredi- 
 
EDICTS OF STEIN AND HARDENBERG. 
 
 107 
 
 tary leaseholds (Erbpachte) the services and fines may be 
 commuted into rent-charges, and these rent-charges redeemed 
 by a capital payment calculated at four per cent. 
 
 - It next proceeds to deal with the common rights of the peas¬ 
 ants and of the lords; and here it fairly owns its inability to 
 carry out the principle of the free owner on the free soil. 
 The great mass of the peasant holdings are dispersed in 
 small, open, “ commonable, ” intermixed fields over the area 
 of the arable mark; and the common rights of pasturage over 
 the arable mark necessarily chain down the individual culti¬ 
 vator to the modes of cultivation compatible with these com¬ 
 mon rights. To disentangle this complicated web must be 
 the work of time and of special legislation. The edict there¬ 
 fore announces a future law on the subject, and for the pres¬ 
 ent confines itself to making provisions by which one third 
 part of such “ commonable ” fields can be freed from the com¬ 
 mon rights of pasturage and placed at the absolute disposal 
 of individual proprietors. The rights of pasturage in the 
 forest lands of the manor are more easily disposed of. The 
 advantageous terms on which full rights of property are 
 obtainable by the peasants render it possible to make strin¬ 
 gent regulations in regard to the exercise of those rights, 
 in the interest of the landlord and for the preservation of 
 the forests. 
 
 To guard against the possibility of a return to the double 
 ownership system, the edict lays down the rule that though a 
 landed proprietor may settle laborers on his estate, and pay 
 for their services in land, such contracts are never to be 
 made for more than twelve years. 
 
 The edict concludes by expressing it to be his Majesty’s 
 wish and will that agricultural societies should be formed in 
 every part of the country for the purpose of collecting and 
 diffusing knowledge. The expenses of these societies and 
 the salaries of their secretaries will be paid out of the 
 exchequer, and the societies themselves will be placed in 
 communication with a central office in the capital, whose 
 business it will also be to establish and maintain model 
 farms in various parts of the country for the diffusion of 
 
108 
 
 ECONOMIC HISTORY. 
 
 agricultural knowledge. Besides this more or less unofficial 
 machinery, provision is made for official agricultural boards 
 to be established in each district; but these arrangements, 
 having been superseded by subsequent legislation need not 
 be referred to. 
 
 The two edicts of the 14th of September, 1811, may be 
 considered as the culminating point of the legislation which 
 goes by the name of Stein and Hardenberg. 
 
THE ORDERS IN COUNCIL. 
 
 109 
 
 V. 
 
 THE ORDERS IN COUNCIL. 
 
 From Levi’s History of British Commerce 1 (2ded.), pp. 101-113. 
 
 ' I A HE political horizon was ominously dark at the com- 
 mencement of the nineteenth century. While griev¬ 
 ously suffering from the high prices of corn and provisions 
 and oppressed by the burden of a contest already sufficiently 
 prolonged, England was threatened by the renewal of an¬ 
 other armed neutrality on the part of the Northern powers,— 
 a neutrality based on a new code of maritime law then 
 deemed utterly inconsistent with the rights of this country. 
 The Northern powers wished to proclaim that free ships 
 should make free goods; but England was determined that 
 the trade of the enemy should not be carried on by neutrals. 
 The Northern powers asserted that only contraband goods 
 should be excluded from the trade of neutrals, and these of 
 certain definite and known articles. England did not wish 
 the enemy to obtain timber, hemp, and other articles, which, 
 though not contraband of war, are still essential for warfare. 
 The Northern powers declared that no blockade should be 
 held valid unless real. England had already assumed the 
 right to treat whole coasts as blockaded in order to prevent 
 the enemy receiving supplies from any quarter. And when 
 the Northern powers added that a merchant vessel accompa¬ 
 nied and protected by a belligerent ship ought to be safe from 
 the right of search, England was not prepared to recognize 
 the authority of such ships, and would place no limit to the 
 action of her cruisers. When, therefore, Russia, Denmark, 
 and Sweden entered into a convention to enforce the princi- 
 
 1 London: John Murray, 1880. 
 
110 
 
 ECONOMIC HISTORY. 
 
 pies of the armed neutrality, and in pursuance of the same 
 Russia caused an embargo to be laid on all British vessels in 
 her ports, the British Government, ill-disposed to bear with 
 such provocation, issued a proclamation on Jan. 14, 1801, 
 authorizing reprisals, and laying an embargo on all Russian, 
 Swedish, and Danish vessels in British ports. What fol¬ 
 lowed is well known, and with the battle of Copenhagen 
 the Northern confederacy was completely dissolved. By this 
 time Mr. Pitt had given in his resignation, and a change of 
 government took place, which led to a change of policy 
 towards France, and to negotiations which ended with the 
 conclusion of the treaty of Amiens. 1 
 
 But, alas! from whatever cause it was, that peace was of 
 short duration, and more than ever the patriotic spirit of the 
 people was evoked to defend British soil against Britain’s 
 inveterate enemies. 2 From class to class the national enthu¬ 
 siasm spread and increased, and even the merchants, setting 
 aside their books and business, issued a declaration promis¬ 
 ing in a solemn manner to use every exertion to rouse the 
 spirit and to assist the resources of the kingdom; to be ready 
 with their services of every sort and on every occasion in its 
 defence, and rather to perish altogether than live to see the 
 honor of the British name tarnished, or that sublime inheri¬ 
 tance of greatness, glory, and liberty destroyed, which de¬ 
 scended to them from their forefathers, and which they were 
 determined to transmit to their posterity. Again was Mr. 
 Pitt called to be prime minister, as the only man who could 
 really be trusted in times of so much anxiety and peril. 
 And then it was that that continental system was inaugu¬ 
 rated which made of oceans and seas one vast battle-field of 
 strife and bloodshed. 
 
 Fully to understand the policy of this country as regards 
 
 1 Peace was ratified on October 10, 1801; and the treaty of Amiens was 
 concluded March 25, 1802. 
 
 2 On May 16, 1803, an order in council was made, issuing letters of marque 
 and reprisals against France, and another laying an embargo on all ships be¬ 
 longing to the French and Batavian republics. Reprisals against Spain were 
 ordered December 19, 1805; against Prussia on May 14, 1806; and against 
 Russia on December 18, 1807. 
 
THE ORDERS IN COUNCIL. 
 
 Ill 
 
 these orders in council, we must briefly retrace our steps by 
 examining the measures taken in previous wars. During the 
 Seven Years’ War, which ended in 1768, France, hemmed in 
 on all sides by England and hindered by the British naval 
 force from carrying on any trade with her West India colo¬ 
 nies, adopted the plan of relaxing her colonial monopoly, and 
 allowing neutral ships to carry the produce of those islands 
 to French or foreign ports in Europe. The produce being 
 thus carried really or ostensibly on neutral account, it was 
 assumed that no danger of capture could be incurred. But 
 the prize courts of England condemned such vessels as were 
 captured while engaged in the trade, and the rule was then 
 adopted, called the rule of 1756, 1 that a neutral has no right 
 to deliver a belligerent from the pressure of his enemy’s 
 hostilities by trading with his colonies in time of war in a 
 way that was prohibited in time of peace. As Sir William 
 Scott said, “ The general rule is that the neutral has a right 
 to carry on in time of war his accustomed trade to the 
 utmost extent of which that accustomed trade is capable. 
 Yery different is the case of a trade which the neutral has 
 never possessed; which he holds by no title of use and habit 
 in time of peace; and which, in fact, he can obtain in war 
 by no other title than by the success of the one belligerent 
 against the other, and at the expense of that very belligerent 
 under whose success he sets up his title.” During the 
 American war this principle did not come practically into 
 action, because, although then also the French government 
 opened the ports of her West India islands to the ships of 
 neutral powers, it had the wisdom to do so before hostilities 
 were commenced, and not after. 
 
 In accordance with these principles, when the war of the 
 French Revolution commenced, instructions were given on 
 
 1 The rule of 1756 had been acted upon even by France on previous occa¬ 
 sions. See Note 1, On the practice of the British Prize Courts with regard to 
 the Colonial trade of the Enemy during the American War, in 6 Rob. Rep. 
 App.; and Considerations sur /’Admission des Navires neutres aux Colonies fran - 
 poises de. I'Amerique en Terns da Guerre, p. 13, 1779; and see the Wilhelmina, 
 4 Rob. Rep., p. 4; and the Immanuel Tudor — Leading Cases of Mercantile 
 Law, p 814. 
 
112 
 
 ECONOMIC HISTORY. 
 
 Nov. 6, 1793, to the commanders of British ships of war and 
 privateers, ordering them “to stop and detain for lawful 
 adjudication all vessels laden with goods, the produce of any - 
 French colony, or carrying provisions or other supplies for 
 the use of any such colony. ” And this order was the more 
 necessary from the fact that American ships were crowding 
 the ports of the French West Indies, where the flag of the 
 United States was made to protect the property of the French 
 planters. Great numbers of ships under American colors 
 were thus taken in the West Indies and condemned, the 
 fraudulent pretences of neutral property in the cargoes being 
 too gross to be misunderstood. Complaints were, however, 
 made of the hardships of this practice on the bona fide 
 American trader, and in January, 1794, the instructions 
 were so far amended that the direction was to seize “ such 
 vessels as were laden with goods the produce of the French 
 West India Islands, and coming directly from any ports of 
 the said islands to Europe . ” This rule continued in force 
 till 1798, when again it was relaxed by ordering that vessels 
 should be seized “ laden with the produce of any island or 
 settlement of France, Spain, or Holland, and coming di¬ 
 rectly from any port of the said island or settlement to any 
 port in Europe, not being a port of this kingdom, or of the 
 country to which the vessel, being neutral, should belong.” 
 European neutrals were thus permitted to bring the produce 
 of the hostile colonies from thence to ports of their own coun¬ 
 tries ; and European or American neutral ships might carry 
 such produce direct to England. But when the war was re¬ 
 sumed in 1803 the rule of 1798 was again put in force, and 
 instructions were given “not to seize any neutral vessels 
 which should be found carrying on trade directly between 
 the colonies of the enemy and the neutral country to which 
 the vessel belonged, and laden with property of the inhabi¬ 
 tants of such neutral country, provided that such neutral 
 vessel should not be supplying nor should have on the out¬ 
 ward voyage supplied the enemy with any articles of contra¬ 
 band of war, and should not be trading with any blockaded 
 ports. ” 
 
THE ORDERS IN COUNCIL. 
 
 113 
 
 By thus allowing, however, neutrals to trade safely to and 
 from neutral ports, means were opened to them to clear out 
 for a neutral port, and under cover of that pretended desti¬ 
 nation to make a direct voyage from the colony to the par¬ 
 ent State, or really to proceed to some neutral country, 
 and thence re-export the cargo in the same or a different 
 bottom to whichever European market, neutral or hostile, 
 they might prefer. The former, on an assumed voyage to 
 the parent State, being the shortest and most convenient 
 method, was chiefly adopted by the Dutch on their homeward 
 voyages, because a pretended destination for Prussian, Swed¬ 
 ish, or Danish ports in the North Sea or the Baltic was a 
 plausible mask, even in the very closest approach the ship 
 might make to the Dutch coast down to the moment of her 
 slipping into port. The latter method, or the stopping at an 
 intermediate neutral country was commonly preferred by the 
 Spaniards and French in bringing home their colonial pro¬ 
 duce, because no pretended neutral destination could be given 
 that would consist with the geographical position and course 
 of a ship coming directly from the West Indies, if met with 
 near the end of her voyage in the latitude of their principal 
 ports. The American flag in particular was a cover that 
 could scarcely ever be adapted to the former method of elud¬ 
 ing our hostilities, but it was found peculiarly convenient in 
 the latter. Such is the position of the United States, and 
 such was the effect of the trade-winds that European vessels, 
 homeward bound from the West Indies, could touch at their 
 ports with very little inconvenience or delay; and such was 
 also the case, though in a less degree with regard to vessels 
 coming from the remotest parts of South America or the 
 East Indies. The passage from the Gulf of Mexico, espe¬ 
 cially, runs so close along the North American shore that 
 ships bound from the Havannah, from Yera Cruz, and other 
 great Spanish ports bordering on that gulf to Europe could 
 touch at certain ports in the United States with scarcely 
 any deviation. On an outward voyage to the East and West 
 Indies the proper course would be more to the southward 
 than would well consist with touching on North America; 
 
 8 
 
114 
 
 ECONOMIC HISTORY . 
 
 yet the deviation for that purpose was not a very formidable 
 inconvenience. From these causes the protection given by 
 the American flag to the intercourse between our European 
 enemies-and their colonies was chiefly in the way of a double 
 voyage, in which America was the half-way house or central 
 point of communication. The fabrics and commodities of 
 France, Spain, and Holland were brought under American 
 colors to ports in the United States, and from thence re¬ 
 exported under the same flag for the supply of the hostile 
 colonies. Again, the produce of these colonies was brought 
 in a like manner to the American ports and thence reshipped 
 to Europe. But the Americans went still farther. The 
 ports of this kingdom having been constituted by the royal 
 instructions of 1798, legitimate places of destination for 
 neutrals coming with cargoes of produce directly from the 
 hostile colonies, the American merchants made a pretended 
 destination to British ports a convenient cover for a voyage 
 from the hostile colonies to Europe, which their flag could 
 not otherwise give, and thus rivalled the neutrals of the old 
 world in this method of protecting the West India trade of 
 the enemy, while they nearly engrossed the other. As the 
 war advanced, after the Peace of Amiens, the neutrals be¬ 
 came bolder and more aggressive. American ships were 
 constantly arriving at Dutch and French ports with sugar, 
 coffee, and other productions of the French and Spanish 
 West Indies. And East India goods were imported by them 
 into Spain, Holland, and France. 
 
 By these and other means Hamburgh, Altona, Emden, 
 Gottenburgh, Copenhagen, Lisbon, and other neutral mar¬ 
 kets were glutted with the produce of the West Indies and 
 the fabrics of the East, brought from the prosperous colonies 
 of powers hostile to this country. By the rivers and canals 
 of Germany and Flanders these were floated into the ware¬ 
 houses of the enemy or circulated for the supply of his cus¬ 
 tomers in neutral countries. He rivalled the British planter 
 and merchant throughout the continent of Europe, and in 
 all ports of the Mediterranean, and even supplanted the 
 manufacturers of Manchester, Birmingham, and Yorkshire, 
 
THE ORDERS IN COUNCIL. 
 
 115 
 
 and by these means the hostile colonies derived benefit, and 
 not inconvenience, from the enmity of Great Britain. What 
 moreover, especially injured the commerce of this country 
 was the increase in the cost of importation into this country 
 from the British colonies, from freight, insurance, and other 
 charges, which taken together were as much as, if not supe¬ 
 rior to, those to which the enemy was subjected in his covert 
 and circuitous trade. It was a general complaint, therefore, 
 that the enemy carried on colonial commerce under the 
 neutral flag cheaply, as well as safely; that he was enabled 
 not only to elude our hostilities, but to rival our mer¬ 
 chants and planters in the European markets; that by the 
 same means the hostile treasuries were filled with a copious 
 stream of revenue; and that by this licentious use of the 
 neutral flag, the enemy was enabled to employ his whole 
 military marine for purposes of offensive war, without being 
 obliged to maintain a squadron or a ship for the defence of 
 his colonial ports. It was, moreover, contended that, since 
 neutral States have no right, but through our own gratuitous 
 concession, to carry on the colonial trade of the enemy, we 
 might after a reasonable notice withdraw that ruinous in¬ 
 dulgence ; that the neutral did not require such principles; 
 that the comparative cheapness of his navigation gives him 
 in every open market a decisive advantage; that in the com¬ 
 merce of other neutral countries he could not fail to sup¬ 
 plant the belligerent; and that he obtained an increase of 
 trade by purchasing from one belligerent and selling to his 
 enemies the merchandise for which, in time of peace, they 
 depended on each other. 
 
 Such complaints made against neutral States found a pow¬ 
 erful echo by the publication of a work entitled “War in 
 Disguise and the Frauds of the Neutral Flag,” supposed to 
 have been written by Mr. James Stephen, the real author of 
 the orders in council. The British government did not see 
 its way at. once to proceed in the direction of prohibiting to 
 neutral ships the colonial trade, which they had enjoyed for 
 a considerable time; but the first step was taken to paralyze 
 the resources of the enemy, and to restrict the trade of neu- 
 
116 
 
 ECONOMIC HISTORY. 
 
 trals by the issue of an order in council in May, 1806, de¬ 
 claring that all the coasts, ports, and rivers from the Elbe to 
 Brest should be considered blockaded, though the only por¬ 
 tion of -those coasts rigorously blockaded was that included 
 between Ostend and the mouth of the Seine, in the ports of 
 which preparations were made for the invasion of England. 
 The northern ports of Germany and Holland were left partly 
 open, and the navigation of the Baltic altogether free. 
 
 Napoleon, then in the zenith of his power, saw in this order 
 in council a fresh act of wantonness, and he met it by the is¬ 
 sue of the Berlin decree of Nov. 21, 1806. In that document, 
 remarkable for its boldness and vigor, Napoleon charged Eng¬ 
 land with having set at naught the dictates of international 
 law, with having made prisoners-of-war of private individu¬ 
 als, and with having taken the crews out of merchant ships. 
 He charged this country with having captured private prop¬ 
 erty at sea, extended to commercial ports the restrictions 
 of blockade applicable only to fortified places, declared as 
 blockaded places which were not invested by naval forces, 
 and abused the right of blockade in order to benefit her own 
 trade at the expense of the commerce of continental States. 
 He asserted the right of combating the enemy with the same 
 arms used against himself, especially when such enemy ig¬ 
 nored all ideas of justice, and every liberal sentiment which 
 civilization imposes. He announced his resolution to apply 
 to England the same usages which she had established in her 
 maritime legislation. He laid down the principles which 
 France was resolved to act upon until England should recog¬ 
 nize that the rights of war are the same on land as on sea, 
 that such rights should not be extended either against pri¬ 
 vate property or against persons not belonging to the mili¬ 
 tary or naval forces, and that the right of blockade should 
 be restricted to fortified places truly invested by sufficient 
 forces. And upon these premises the decree ordered: 1st, 
 that the British islands should be declared in a state of 
 blockade; 2d, that all commerce and correspondence with 
 the British islands should be prohibited, and that letters 
 addressed to England or Englishmen written in the English 
 
THE ORDERS IN COUNCIL. 
 
 117 
 
 language should be detained and taken; 3d, that every Brit¬ 
 ish subject found in a country occupied by French troops or 
 by those of their allies should be made a prisoner-of-war; 
 4th, that all merchandise and property belonging to British 
 subjects should be deemed a good prize; 5th, that all com¬ 
 merce in English merchandise should be prohibited, and 
 that all merchandise belonging to England or her colonies, 
 and of British manufacture, should be deemed a good prize; 
 and 6th, that no vessel coming direct from England or her 
 colonies be allowed to enter any French port or any port 
 subject to French authority; and that every vessel which, by 
 means of a false declaration, should evade such regulations 
 should at once be captured. 
 
 The British government lost no time in retaliating against 
 France for so bold a course; and on Jan. 7, 1807, an order 
 in council was issued, which, after reference to the orders 
 issued by France, enjoined that no vessel should be allowed 
 to trade from one enemy’s port to another, or from one port 
 to another of a French ally’s coast shut against English ves¬ 
 sels ; and ordered the commanders of the ships of war and pri¬ 
 vateers to warn every neutral vessel coming from any such 
 port, and destined to another such port, to discontinue her 
 voyage, and that any vessel, after being so warned which 
 should be found proceeding to another such port should be 
 captured and considered as lawful prize. This order in coun¬ 
 cil having reached Napoleon at Warsaw, he immediately 
 ordered the confiscation of all English merchandise and co¬ 
 lonial produce found in the Hanseatic Towns. Bourrienne, 
 Napoleon’s commissioner at Hamburg, declared that all who 
 carried on trade with England supported England; that it 
 was to prevent such trading that France took possession of 
 Hamburg; that all English goods should be produced by the 
 Hamburghers for the purpose of being confiscated; and that 
 in forty-eight hours, domiciliary visits would be paid and 
 military punishments inflicted on the disobedient. But 
 Britain in return went a step further, and by order in coun¬ 
 cil, Nov. 11,1807, declared all the ports and places of France, 
 and those of her allies and of all countries where the English 
 
118 
 
 ECONOMIC HISTORY . 
 
 flag was excluded, even though they were not at war with 
 Britain, should be placed under the same restrictions for com¬ 
 merce and navigation as if they were blockaded; and conse- 
 quentlyThat ships destined to those ports should be liable to 
 the visit of British cruisers at a British station, and there 
 subjected to a tax to be imposed by the British Parliament. 1 
 
 Napoleon was at Milan when this order in council was 
 issued, and forthwith, on December 17, the famous decree 
 appeared by which he imposed on neutrals just the contrary 
 of what was prescribed to them by England, and further de¬ 
 clared that every vessel, of whatever nation, that submitted 
 to the order in council of November 11 should by that very 
 act become denationalized, considered as British property, 
 and condemned as a good prize. The decree placed the Brit¬ 
 ish islands in a state of blockade, and ordered that every 
 ship, of whatever nation, and with whatever cargo, proceed¬ 
 ing from English ports or English colonies to countries 
 occupied by English troops, or going to England, should be a 
 good prize. This England answered by the order in council 
 of April 26, 1809, which revoked the order of 1807 as re¬ 
 gards America, but confirmed the blockade of all the ports 
 of France and Holland, their colonies and dependencies. 
 And then France, still further incensed against England, 
 issued the tariff of Trianon, dated Aug 5, 1810, completed by 
 the decree of St. Cloud of September 12 and of Fontainebleau 
 of October 19, which went the length of ordering the seizure 
 and burning of all British goods found in France, Germany, 
 
 1 One of the fruits of the great blockade was the introduction of beet-root 
 sugar. In 1810, the price of sugar being very high, experiments were made to 
 make sugar from the beet-root, and the results were encouraging. In 1811 and 
 1812 the Government put at the disposal of the Minister of Agriculture 100,000 
 arpents of land and l,000,000f., as well as the exemption from all taxes on 
 native sugar, and works for the purpose were constructed all over the country. 
 But as soon as the blockade was removed native sugar could no longer com¬ 
 pete with foreign sugar, and most of the works were abandoned. In 1812 
 Benjamin Delessert found the way of making the grains of beet-root sugar as 
 fine as those of cane sugar. And Vilmorin was able to make a kind of white 
 beet-root very nearly as rich as the beet-root of Silesia. In 1829 there were 
 100 sugar factories, which produced 5,000,000 kilos of sugar. In 1832 beet 
 production was double. In 1837 there were 436 sugar works, and now the beet¬ 
 root enters largely in the sugar industry all over the Continent. 
 
THE ORDERS IN COUNCIL. 
 
 119 
 
 Holland, Italy, Spain, and in every place occupied by French 
 troops. Strange infatuation! and how many States took 
 part in this mad act of vindictiveness! The princes of the 
 Ehenish Confederation hastened to execute it, some for the 
 purpose of enriching themselves by the wicked deed, some 
 out of hatred towards the English, and some to show their 
 devotion towards their master. From Carlsruhe to Munich, 
 from Cassel to Dresden and Hamburg, everywhere, bonfires 
 were made of English goods. And so exacting were the 
 French that when Frankfort exhibited the least hesitation in 
 carrying out the decree French troops were sent to execute 
 the order. 
 
 By means such as these the commerce of the world was 
 greatly deranged, if not destroyed altogether; and none suf¬ 
 fered more from it than England herself. Was it not enough 
 to be effectually shut out from all commerce with French 
 ports, that we should have provoked the closing of neutral 
 ports also ? Was it politic, at a time when our relations with 
 the principal powers were in a condition so critical, to alien¬ 
 ate from us all the neutral States of Europe ? Was it wise 
 to inflict so grievous an injury upon neutral States, as to 
 force them to make common cause with the enemy ? It is 
 scarcely possible to describe at what peril the commerce of 
 the world was carried on. The proceedings of the Court of 
 Admiralty are full of the most romantic incidents. An 
 American ship 1 with a cargo of tobacco was sent from Amer¬ 
 ica to Vigo, or to a market for sale. At Vigo the tobacco 
 was sold under contract to deliver it at Seville at the master’s 
 risk, and the vessel was going to Seville to deliver the cargo 
 when she was captured. A British vessel 2 was separated 
 from her convoy during a storm and brought out by a French 
 lugger which came up and told the master to stay by her till 
 the storm moderated when they would send a boat on board. 
 The lugger continued alongside sometimes ahead and some¬ 
 times astern and sometimes to windward for three or four 
 hours. But a British frigate coming in sight gave chase to 
 
 1 The “ Atlas,” 3 Rob. Rep., p. 299. 
 
 2 The “Edward and Mary,” 3 Rob. Rep., p. 305. 
 
120 
 
 ECONOMIC HISTORY. 
 
 the lugger and captured her, during which time the ship 
 made her escape, rejoined the convoy and came into Poole. 
 Ships were taken because they were sailing to false destina¬ 
 tions under false papers, false flags, false certificates of 
 ownership, and false bills of sale. They were seized for 
 running the blockade, and for escaping from blockaded ports. 
 They were arrested for carrying despatches, military men, 
 and contraband of war. In every way, at every point of the 
 ocean, the pursuit was carried on, till the seas were cleared of 
 merchant ships, and the highway of nations, the widest and 
 freest arena for trade, was converted into an amphitheatre 
 for the display of the wildest and worst excesses of human 
 cupidity and passions. 
 
 But a greater evil than even this extreme derangement of 
 maritime commerce was that which flowed from the system 
 of licenses, 1 an evil which undermined the first principles of 
 commercial morality. It was forcibly stated by the Marquis 
 of Lansdowne that the commerce of the country was one 
 mass of simulation and dissimulation; that our traders crept 
 along the shores of the enemy in darkness and silence, wait¬ 
 ing for an opportunity of carrying into effect the simulative 
 means by which they sought to carry on their business; that 
 such a system led to private violation of morality and honor 
 of the most alarming description; and that instead of bene¬ 
 fiting our commerce, manufactures, and resources, the orders 
 in council diminished our commerce, distressed our manu¬ 
 factures, and lessened our resources. Yet all these warnings 
 and expostulations were unheeded. The national mind was 
 preoccupied by the one thought of compelling France and her 
 military leader to a complete submission; and no considera¬ 
 tion of a commercial or pecuniary character, no regard to the 
 bearing of her measures upon other countries were sufficient 
 to induce a reversal of this military and naval policy. 
 
 Upwards of fifteen years had elapsed since the first shot 
 was fired between England and France after the great revolu- 
 
 1 The number of commercial licenses granted for imports and exports was 
 68 in 1802, 836 in 1803, 1,141 in 1804, 791 in 1805, 1,620 in 1806, 2,606 in 1807, 
 4,910 in 1808, 15,226 in 1809, 18,356 in 1810, and 7,602 in 1811 
 
THE ORDERS IN COUNCIL. 
 
 121 
 
 tion, and yet the two nations* were as intent as ever on 
 securing their mutual destruction. England had indeed 
 learned by this time to make light of all such decrees, and 
 she had found by experience that British "goods found their 
 way to the Continent in spite of all vindictive measures. 
 But the attitude of the United States became more and more 
 threatening, and the nations saw an absolute necessity for 
 revising the policy of the orders in council. For years past 
 Lord Temple, Lord Castlereagh, Mr. Perceval, and Sir John 
 Nichols had brought the subject before the House, and many 
 a long discussion had taken place on the subject. In their 
 opinion this country had, without any alleged provocation 
 from the United States of America, interrupted nearly the 
 whole of their commerce with Europe, and they held that 
 such orders in council were unjust and impolitic, and that 
 the issuing of them at the time and under the circumstances 
 was an act of the utmost improvidence and rashness. Yet 
 the nation was disposed to be guided by the government; and 
 when Lord Grenville moved resolutions of similar import in 
 1809 he met with no better response. When, however, the 
 United States, after having passed the Non-intercourse Act, 
 proceeded still further in the way of preparation for open 
 hostilities, the merchants began to speak their mind on the 
 subject; and from London, Hull, Bristol, and all the chief 
 ports petitions came to the legislature praying for the revoca¬ 
 tion of the obnoxious orders. The merchants of London 
 represented that trade was in a miserable condition, chiefly 
 from the want of the customary intercourse with the conti¬ 
 nent of Europe; that employment was very scarce, and the 
 wages of labor very low; that the aspect of affairs threatened 
 additional suffering to those then experienced; that since all 
 the evils then suffered were owing to the continuance of the 
 war, it was all-important to obtain if possible an early res¬ 
 toration of the blessings of peace; that it was not from any 
 dread of the enemy that they made such a request, but from 
 a desire that no opportunity might be lost of entering into 
 negotiations for the purpose; that in their opinion it was a 
 great error to suppose that the policy of the orders of the 
 
122 
 
 ECONOMIC HISTORY. 
 
 council could in any way be beneficial to trade; but that, on 
 the contrary, they regarded with extreme apprehension its 
 effect on our relations with the United States of America. 
 The merchants of Hull complained that the system of license 
 sapped public morals; those of Bristol represented that they 
 suffered intensely in their general trade; and riots occurred 
 in Lancashire, Yorkshire, and Cheshire. 
 
 On April 28, 1812, the House of Commons agreed without 
 a division to hear evidence in support of these petitions; and 
 on June 16 Mr., afterwards Lord, Brougham moved “That 
 an humble address be presented to his Royal Highness the 
 Prince Regent, representing to his Royal Highness that this 
 House has for some time past been engaged in an inquiry 
 into the present depressed state of the manufactures and 
 commerce of the country, and the effects of the orders in 
 council issued by his Majesty in the years 180T and 1809; 
 assuring his Royal Highness that this House will at all times 
 support his Royal Highness to the utmost of its powers, in 
 maintaining those just maritime rights which have essen¬ 
 tially contributed to the prosperity and honor of the realm; 
 but beseeching his Royal Highness that he would be graciously 
 pleased to recall or suspend the said orders, and to adopt such 
 measures as may tend to conciliate neutral powers without 
 sacrificing the right and dignity of his Majesty’s crown.” In 
 the most graphic manner Lord Brougham depicted the dis¬ 
 tress of the country, showed how erroneous was the idea that 
 what we lost in the European trade we gained in any other 
 quarter, and warned the country of the certainty of a war with 
 America if the orders were not at once rescinded. “I know,” 
 he said, “ I shall be asked whether I would recommend any 
 sacrifice for the mere purpose of conciliating America. I rec¬ 
 ommend no sacrifice of honor for that or for any purpose; but 
 I will tell you that I think we can well and safely for our 
 honor afford to conciliate America. Never did we stand so 
 high since we were a nation in point of military character. 
 We have it in abundance and even to spare. This unhappy 
 and seemingly interminable war, lavish as it has been in 
 treasure, still more profuse of blood and barren of real ad- 
 
THE ORDERS IN COUNCIL . 
 
 123 
 
 y 
 
 vantage, has at least been equally lavish of glory. Its feats 
 have not merely sustained the warlike fame of the nation, 
 which would have been much; they have done what seemed 
 scarcely possible, — they have greatly exalted it. They have 
 covered our arms with immortal renown. Then, I say, use 
 this glory, —use this proud height on which we now stand, 
 for the purpose of peace and conciliation with America. Let 
 this and its incalculable benefits be the advantage which we 
 reap from the war in Europe, for the fame, of that war enables 
 us safely to take it. And who, I demand, give the most dis¬ 
 graceful counsels, — they who tell you we are in military char¬ 
 acter but of yesterday, we yet have a name to win, we stand 
 on doubtful ground, we dare not do as we list for fear of be¬ 
 ing thought afraid, we cannot without loss of name stoop to 
 pacify our American kinsmen ? or I, who say we are a great, 
 a proud, a warlike people; we have fought everywhere and 
 conquered wherever we have fought; our character is eter¬ 
 nally fixed; it stands too firm to be shaken, and on the faith 
 of it we may do towards America safely for our honor that 
 which we know our interests require ? This perpetual jeal¬ 
 ousy of America! Good God! I cannot with temper ask on 
 what it rests! It drives me to a passion to think of it! 
 Jealousy of America! I should as soon think of being jeal¬ 
 ous of the tradesman who supplies me with necessaries, or 
 the client who entrusts his suits to my patronage. Jealousy 
 of America! whose armies are as yet at the plough, or mak¬ 
 ing, since your policy has willed it, so awkward (though im¬ 
 proving) attempts at the loom; whose assembled navies could 
 not lay siege to an English harbor! Jealousy of a power 
 which is necessarily peaceful as well as weak, but which if 
 it had all the ambition of France and her armies to back it, 
 and all the navy of England to boot,— nay, had it the lust of 
 conquest which marks your enemies, and your own army as 
 well as navy to gratify it, — is placed at so vast a distance as 
 to be perfectly harmless! And this is the nation of which 
 for our honor’s sake we are desired to cherish a perpetual 
 jealousy for the ruin of our best interests! I trust, sir, that 
 no such phantom of the brain will scare us from the path of 
 
124 
 
 ECONOMIC HISTORY . 
 
 our duty. The advice which I tender is not the same which 
 has at all times been offered to this country. There is one 
 memorable era in our history when other uses were made of 
 our triumphs from those which I recommend. By the treaty 
 of Utrecht, which the reprobation of ages has left inade¬ 
 quately censured, we were content to obtain, as the whole 
 price of Ramillies and Blenheim, an additional share of the 
 accursed slave trade. I give you other counsels. I should 
 have you employ the glory which you have won at Talavera 
 and Corunna ih restoring your commerce to its lawful, open, 
 honest course, and rescue it from the mean and hateful 
 channels in which it has lately been confined. And if 
 any thoughtless boaster in America or elsewhere should 
 vaunt that you have yielded through fear, I would not bid 
 him wait until some new achievement of our arms put him 
 to silence, but I would counsel you in silence to disregard 
 him.” 
 
 The effect of such an appeal was fatal to the whole system. 
 The government saw that resistance was no longer possible, 
 and on April 21 the Prince Regent made a declaration that 
 the orders in council would be revoked as soon as the Berlin 
 and Milan decrees should be repealed. But it was too late. 
 America had by this time ceased to maintain a neutral atti¬ 
 tude. And having made a secret treaty with Napoleon, she 
 issued an embargo on all British vessels in American ports, 
 declared war against England, and proceeded to make an in¬ 
 effectual attack upon Canada. The political condition of 
 Europe, however, at this stage happily assumed a brighter 
 aspect. The long-desired peace began to dawn on the hori¬ 
 zon, and in rapid succession the news came of the battle of 
 Leipzig, the entry of the Allies into Paris, and the abdication 
 of Bonaparte. Negotiations then commenced in earnest, and 
 they issued in the treaty of peace and Congress of Vienna, 
 which once more restored order and symmetry in the politi¬ 
 cal organization of Europe. 1 On Dec. 24, 1814, a treaty of 
 
 1 The total cost of the war with France, from 1793 to 1815 (the war expen¬ 
 diture continued till 1817), was £831,446,449. The national debt, which, in 
 1793, amounted to £247,874,434, rose in 1815 to £861,039,049. 
 
THE ORDERS IN COUNCIL . 
 
 125 
 
 peace was signed between the United Kingdom and the 
 United States. On June 9, 1815, 1 the principal act of the 
 Congress of Vienna was signed, which established the future 
 political relations of the European States, and laid down the 
 regulations for the free navigation of rivers. And on July 
 27 of the same year a Treaty of Commerce was concluded 
 between Great Britain and the United States of America. 
 
 1 The treaties of Vienna had to deal with the financial as well as with the 
 political condition of States. By agreement dated August 10, 1815, France be¬ 
 came bound to pay 185,840,130f. to the Allied Powers for the maintenance of 
 the 1,135,000 men, the army of occupation. And by the treaty of November 
 15, France undertook to pay 700,000,000f. to the Allied Powers as war contribu¬ 
 tion, to pay all legitimate debts, and also the expense of occupation of 150,000 
 men for five years. Numerous claims were, moreover, made by the Banks of 
 Hamburg, Amsterdam, Genoa, the Swiss bankers, and many merchants for 
 losses and destruction of their property, amounting in all to 2,700,000,000f., and 
 all these claims were settled by means of loans contracted with the banking 
 houses of Baring and Hope. 
 
126 
 
 ECONOMIC HISTORY . 
 
 VI. 
 
 THE FINANCES OF ENGLAND, 1793-1815. 
 
 From Porter’s Progress of the Nation , 1 Section IY. 
 
 CHAPTER I. 
 
 TN order to give an intelligible account of the financial 
 state of the kingdom at The beginning of the present 
 century, it is necessary to explain briefly the system which 
 had been brought into operation by Mr. Pitt during the pre¬ 
 ceding three years. 
 
 In November, 1797, that minister had recourse to what he 
 was pleased to call “a perfectly new and solid system of 
 finance.” The public expenditure of that year amounted to 
 twenty-five and a half millions, of which sum only six and a 
 half millions were provided for by existing unmortgaged 
 taxes, leaving nineteen millions to be raised by extraordinary 
 means. In the then condition of the money market it was 
 felt to be impossible to borrow such an amount in the ordi¬ 
 nary manner, that is, providing by new taxes for the pay¬ 
 ment of only the permanent annual burden occasioned by 
 the increased debt; and a new impost, calculated to produce 
 seven millions, was sanctioned by parliament, which impost 
 was to be continued until it should in conjunction with the 
 produce of the sinking-fund, repay the twelve millions that 
 would be still deficient. This new system of finance might 
 have been entitled to the character given of it by Mr. Pitt, if 
 it had not been probable,— nay, certain, that in the follow¬ 
 ing years an equal expenditure must be met by similar means, 
 until the seven millions would prove inadequate even for the 
 payment of the annual interest of the sums for which the tax 
 
 1 London: John Murray, 1851. 
 
FINANCES OF ENGLAND. 
 
 127 
 
 was imposed, when it would become part of the permanent 
 burdens of the country. This new impost, to which the 
 name of “ triple assessment ” was given, was in fact an addi¬ 
 tion made to the assessed taxes, “ in a triplicate proportion 
 to their previous amount,— limited, however, to the tenth of 
 each person’s income.” 
 
 The adoption of this or some similar plan of financial 
 arrangement was hardly a matter of choice with the minister 
 by whom the funding system, as ordinarily practised, could 
 not have been any further pursued at that time. Unfortu¬ 
 nately for the success of the principle which it was thus 
 sought to establish, the mode in which it was proposed to 
 raise the seven millions of additional revenue was highly 
 unpopular; and indeed it has always excited dissatisfaction 
 on the part of the public to be called on for the payment of 
 any tax from which they have not the power to protect them¬ 
 selves by abstaining from the use of the taxed commodity. 
 It is this consideration which has always made our finance 
 ministers prefer indirect to direct taxation, and which led, 
 during the progress of a long and expensive war, to the im¬ 
 position of duties that weighed with destructive force upon 
 the springs of industry. The financial difficulties by which 
 the government was then embarrassed may be known from the 
 fact that a loan of three millions was raised in April, 1798, 
 at the rate of <£200 three per cent stock, and 5s. long an¬ 
 nuity for each £100 borrowed, being at the rate of six and a 
 quarter per cent, and that the “triple assessment,” which 
 was calculated to produce seven millions yielded no more 
 than four and a half millions. In the following December 
 the triple assessment was repealed, and in lieu of it an in¬ 
 come-tax was imposed at the rate of ten per cent upon all 
 incomes amounting to £200 and upwards, with diminishing 
 rates upon smaller incomes, down to sixty pounds per annum, 
 below which rate the tax was not to apply. This tax was 
 estimated to produce ten millions: it was called a war tax; 
 but when the minister proceeded to mortgage its produce to 
 defray the interest of loans to a large amount such a name 
 appeared to be little better than a delusion. Like the triple 
 
128 
 
 ECONOMIC HISTORY. 
 
 assessment, the produce of the income-tax fell greatly short 
 of its estimated amount and yielded no more than seven 
 millions, a large part of which was quickly absorbed to de¬ 
 fray the interest of loans for which it was successively 
 pledged. In 1801, after deducting the sums thus chargeable 
 on it, this tax produced only four millions towards the na¬ 
 tional expenditure. In proposing a loan of twenty-five and 
 a half millions for the service of that year, it was considered 
 inexpedient to mortgage the income-tax any further, and 
 new taxes were imposed estimated to yield XI, 800,000 per 
 annum. In March, 1802, peace was made with France, and 
 in the same month notice was given by the Chancellor of the 
 Exchequer, Mr. Addington, of his intention to repeal the 
 income-tax, which was felt to be highly oppressive, and had 
 become more and more odious to the people. In effecting 
 this repeal, and at the same time to keep faith with the pub¬ 
 lic creditors to whom its produce had been mortgaged to the 
 extent of fifty-six and a half millions of three per cent stock, 
 additional taxes were imposed upon beer, malt, and hops, 
 and a considerable increase was made to the assessed taxes; 
 besides which an addition under the name of a modification 
 was made to the tax on imports and exports previously known 
 under the name of the convoy duty. 
 
 At this time the aggregate amount of permanent taxes 
 was thirty-eight and a half millions, exactly double what it 
 had been at the breaking out of the war in 1798. During 
 those nine years taxes to the amount of X 280,000,000 ex¬ 
 clusive of the cost of collection had been levied from the peo¬ 
 ple ; and a few words are necessary in order to account for the 
 seeming contradiction implied in the fact that, notwithstand¬ 
 ing this ruinous rate of expenditure, many of the great inter¬ 
 ests throughout the country wore the outward appearance of 
 prosperity. A nation engaged in an expensive war, which 
 calls for the systematic expenditure of large sums beyond its 
 income may be likened to an individual spendthrift during 
 his career of riot and extravagance; all about him wears 
 the aspect of plenty and prosperity, and this appearance will 
 continue until his means begin to fail, and those who have 
 
FINANCES OF ENGLAND. 
 
 129 
 
 fattened upon his profusion are at length sent away empty. 
 The enormous expenditure of the government joined to the 
 state of the currency (as already explained) necessarily caused 
 a general and great rise of prices; as regarded agricultural 
 produce, this effect was exaggerated by the ungenial nature of 
 the seasons. Rents had risen throughout the country in a far 
 greater degree than the necessary expenditure of the land- 
 owners, who thence found their situations improved, notwith¬ 
 standing the additional load of taxation. The great number 
 of contractors and other persons dealing with the government 
 had derived a positive benefit from the public expenditure, 
 and being chiefly resident at the seat of government, they 
 were enabled greatly to influence the tone of public opinion. 
 The greater command of money thus given to considerable 
 classes occasioned an increased demand for luxuries of for¬ 
 eign and domestic production, from which the merchants and 
 dealers derived advantage. There were besides other classes 
 of persons who profited from the war expenditure. These 
 were the producers of manufactured goods and those who/ 
 dealt in them, and who found their dealings greatly in¬ 
 creased by means of the foreign expenditure of the govern¬ 
 ment in subsidies and expeditions, the means for # which were 
 furnished through those dealings; the manufacturers were at 
 the same time beginning to reap the advantages that have 
 since been experienced in a more considerable degree from 
 the series of inventions begun by Hargreaves and Arkwright, 
 and which acted in some degree as palliatives to the evil 
 effects of the government profusion. 
 
 As in the case of the spendthrift, while all these causes 
 were in operation there was an appearance of prosperity, and 
 those who were profiting from this state of things were anx¬ 
 ious to keep up the delusion. That it was no more than delu¬ 
 sion will be at once apparent to all who examine below the 
 surface, and who inquire as to the condition of poverty and 
 wretchedness into which the great mass of the people were 
 then plunged. In some few cases there had been an advance 
 of wages; but this occurred only to skilled artisans, and 
 
 even with them the rise was wholly incommensurate with the 
 
 9 
 
130 
 
 ECONOMIC HISTORY. 
 
 increased cost of all the necessaries of life. The mere laborer 
 — he who had nothing to bring to market but his limbs and 
 sinews— did not participate in this partial compensation 
 for high prices, but was in most cases an eager competitor 
 for employment at the same or nearly the same wages as had 
 been given before the war. Nor could it well be otherwise, 
 since the demand for labor can only increase with the in¬ 
 crease of the capital destined for the payment of wages; and 
 we have seen that capital, so far from being suffered to 
 accumulate, Was dissipated by the government expenditure 
 more rapidly than it could be accumulated by individuals. 
 In London and its vicinity the rates of wages are necessarily 
 higher because of the greater expense of living than in coun¬ 
 try districts; and it is asserted from personal knowledge of 
 the fact that at the time in question there was a superabund¬ 
 ant supply of laborers constantly competing for employment 
 at the large government establishments, where the weekly 
 wages did not exceed 15s., while the price of the quartern 
 loaf was Is. 10 d., and the other necessary outgoings of a 
 laborer’s family were nearly as high in proportion. If we 
 contrast the weekly wages at the two periods of 1790 and 
 1800, of husbandry laborers and of skilled artisans, measur¬ 
 ing them both by the quantity of wheat which they could 
 command, it will be seen that the former could in 1790 pur¬ 
 chase eighty-two pints of wheat, and in 1800 could procure 
 no more than fifty-three pints, while the skilled artisan, who 
 in 1790 could buy one hundred and sixty nine pints, could 
 procure in 1800 only eighty-three pints. To talk of the pros¬ 
 perous state of the country under such a condition of things 
 involves a palpable contradiction. It would be more correct 
 to liken the situation of the community to that of the inhabi¬ 
 tants of a town subjected to a general conflagration, in which 
 some became suddenly enriched by carrying off the valuables, 
 while the mass were involved in ruin and destitution. 
 
 It may be objected to the view here taken, but which is 
 founded upon facts that hardly admit of controversy, that 
 had the condition of the country been such as is represented, 
 we must have sunk under the greater efforts we were so soon 
 
FINANCES OF ENGLAND. 
 
 131 
 
 after called on to sustain; and there is every reason to be¬ 
 lieve that but for the invention of the spinning-jenny and the 
 improvements in the steam-engine, which have produced such 
 almost magical effects upon the productive energies of this 
 kingdom, it would have been impossible to have withstood 
 the combination with which single-handed we were called 
 upon to contend. The manner and degree in which these 
 powerful agents have enabled us to withstand and to triumph 
 over difficulties unparalleled in the history of the world have 
 been shown in a preceding section of this inquiry. 
 
 CHAPTER II. 
 
 The public expenditure of England during the war which 
 was begun in 1793 and continued (with short intermissions 
 in 1801 and 1814) until the final overthrow of Napoleon in 
 1815, was conducted throughout upon a truly gigantic scale. 
 In 1792, the last year of peace, the entire public expenditure 
 of the kingdom was <£19,859,123, which sum included 
 £9,767,333 interest upon the public debt. In 1814 the cur¬ 
 rent expenditure amounted to £76,780,895, and the interest 
 upon the debt to £30,051,365 making an aggregate sum of 
 £106,832,260 paid out of the public exchequer for the dis¬ 
 bursements of that one year. This is the largest annual 
 outlay ever made; that of the previous year was within one 
 million of the same amount. 
 
 It is hardly possible to conceive that the public expendi¬ 
 ture could have been long continued upon this scale of mag¬ 
 nitude. The state of exhaustion under which the country 
 was made to suffer, during the first few years of the peace 
 that followed, sufficiently attests the truth of this opinion. 
 The financial efforts of the government had been made for 
 several preceding years with a degree of lavish profusion 
 that was continually augmented until it reached the height 
 above mentioned; the expenditure, including interest upon 
 the debt, during the ten years from 1806 to 1815 inclusive, 
 averaged £84,067,761 per annum, sums which, until the 
 
132 
 
 ECONOMIC HISTORY. 
 
 years in which they were actually expended it would have 
 been considered wholly chimerical to expect to raise. The 
 experience of that period has shown how impossible a thing 
 it is ta judge correctly from the past as to the growing re¬ 
 sources of our country, or it might be confidently affirmed 
 that during the concluding years of this series we had 
 assuredly reached the limit of possibility. Without that 
 experience for their guidance, our ancestors, in former but 
 not very remote times, gave way to gloomy forebodings as to 
 their future prospects, at which we cannot but smile when 
 thinking of the comparatively pygmy efforts which called 
 them forth. Some of those forebodings have been recorded 
 by Sir John Sinclair in his work on the public revenue of 
 this kingdom. A few passages upon the subject taken from 
 that work, and with the dates at which they were written, 
 may not be without interest to the reader at the present 
 moment. 
 
 1736. “The vast load of debt under which the nation still 
 groans is the true source of all those calamities and gloomy prospects 
 of which we have so much reason to complain. To this has been 
 owing that multiplicity of burdensome taxes which have more than 
 doubled the price of the common necessaries of life within a few 
 years past, and thereby distressed the poor laborer and manufac¬ 
 turer, disabled the farmer to pay his rent, and put even gentlemen 
 of plentiful estates under the greatest difficulties to make a toler¬ 
 able provision for their families.” 1 
 
 At the time this gloomy picture was drawn the public debt 
 did not exceed £50,000,000, and the annual charge on that 
 account was somewhat under £2,000,000, being considerably 
 below the sums added to the public burdens in the single 
 year 1814. 
 
 1749. “Our parliamentary aids, from the year 1740, exclu¬ 
 sively, to the year 1748, inclusively, amount to £55,522,159 16s. 
 3d., a sum that will appear incredible to future generations, and is 
 so almost to the present. Till we have paid a good part of our 
 debt, and restored our country in some measure to her former 
 
 1 The Craftsman, No. 502,14th February, 1736. 
 
FINANCES OF ENGLAND. 
 
 133 
 
 wealth and power, it will be difficult to maintain the dignity of 
 Great Britain, to make her respected abroad, and secure from 
 injuries or even affronts on the part of her neighbors. ” 1 
 
 The debt, to the effects of which so much evil is here at¬ 
 tributed, was still under £ 80,000,000, and the annual inter¬ 
 est scarcely more than <£3,000,000. 
 
 1756. “It has been a generally received notion among political 
 arithmeticians, that we may increase our debt to £100,000,000, 
 but they acknowledge that it must then cease, by the debtor 
 becoming bankrupt.” 2 
 
 In the few years that preceded the publication of Mr. 
 Hannay’s letters the debt had been somewhat diminished, 
 so that it amounted to about £75,000,000, and the annual 
 charge on the country to £2,400,000. 
 
 1761. “The first instance of a debt contracted upon parliamen¬ 
 tary security occurs in the reign of Henry VI. The commence¬ 
 ment of this pernicious practice deserves to be noted, — a practice 
 the more likely to become pernicious the more a nation advances in 
 opulence and credit. The ruinous effects of it are now become 
 apparent, and threaten the very existence of the nation.” a 
 
 The public burdens had by this time so far exceeded the 
 possible limit assigned by Mr. Hannay, that the debt 
 amounted to nearly £150,000,000, and the annual interest 
 to £4,800,000. The amount was somewhat reduced between 
 that period and the breaking out of the American war, when 
 a succession of loans again became necessary. On winding 
 up the accounts of that contest, the debt amounted to 
 £268,000,000, and the annual charge to £9,500,000. On 
 the 5th of January, 1793, just before the beginning of the 
 war of the French Revolution, the debt continued nearly the 
 same as at the beginning of the peace (the exact amount of 
 funded and unfunded debt, including the value of terminable 
 
 1 Some Reflections on the Present State of the Nation, by Henry St. John, 
 Lord Bolingbroke. 
 
 2 Letters by Samuel Hannay, Esq. 
 
 8 Hume’s History of England, 8vo edition, 1778, vol. iii. p. 215. 
 
134 
 
 ECONOMIC HISTORY , 
 
 ABSTRACT OF PUBLIC INCOME AND EXPENDITURE IN THE UNITED KINGDOM 
 
 IN EACH YEAR, FROM 1792 TO 1849. 
 
 Income. 
 
 Expenditure 
 
 Years. 
 
 1792. 
 
 1793. 
 1794 
 
 1795. 
 
 1796. 
 
 1797. 
 
 1798. 
 
 1799. 
 
 1800. 
 1801. 
 1802. 
 
 1803. 
 
 1804. 
 
 1805. 
 
 1806. 
 
 1807. 
 
 1808. 
 
 1809. 
 
 1810. 
 1811. 
 1812. 
 1813 
 
 1814. 
 
 1815. 
 
 1816. 
 
 1817. 
 
 1818. 
 1819 
 1820. 
 1821. 
 1822 
 1823 
 1824. 
 
 1825 
 
 1826 
 1827. 
 1S28. 
 1829 
 1830. 
 1831 
 1832. 
 1833 
 1834. 
 1835 
 
 1836. 
 
 1837. 
 
 1838. 
 
 1839. 
 
 1840. 
 
 1841 
 
 1842 
 
 1843. 
 
 1844. 
 
 1845. 
 
 1846. 
 
 1847. 
 
 1848 
 
 1849 
 
 £19,258,814 
 
 19.845.705 
 20,193,074 
 19,883,520 
 21,454,728 
 23,126,940 
 31,035,363 
 35,602,444 
 34,145,584 
 34,113,146 
 36,368,149 
 38,609,392 
 46,176,492 
 
 50.897.706 
 55,796,086 
 59,339,321 
 
 62.998.191 
 63,719,400 
 67,144,542 
 
 65.173.545 
 65,037,850 
 68,748,363 
 71,134,503 
 72,210,512 
 
 62.264.546 
 52,055,913 
 53,747,795 
 52,648,847 
 54,282,958 
 
 55.834.192 
 55,663,650 
 57,672,999 
 59,362,403 
 57,273.869 
 54,894,989 
 54,932,518 
 55,187,142 
 50,786,682 
 50,056,616 
 46,424,440 
 46,988,755 
 46,271,326 
 46,425.263 
 45,893,369 
 48,591.180 
 46,475,194 
 47,333,460 
 47,844,899 
 47,567,565 
 48,084,360 
 46,965,631 
 62.582,817 
 54,003,754 
 53,060,354 
 53.790,138 
 61,546,265 
 53,388,717 
 52,951,749 
 
 a « 
 ° § 
 
 a! >3 
 > 
 
 »rH , 
 
 0) 
 
 a © 
 © 
 
 a 
 
 m ^ 
 
 © 
 
 a 
 
 &T3 O) 
 0) n-O 
 “ « 
 -P O (H 
 o ►*» 
 
 H Jj *3 
 
 W g 
 
 *2 2 : 
 
 a ns a 
 
 S3 & o3 . 
 
 4,877,956 
 
 6,998,389 
 
 30,464,831 
 
 22,244,982 
 
 30,356,873 
 
 16,858,503 
 
 21,714,863 
 
 23,030,529 
 
 27,305,271 
 
 14.638,254 
 
 8,752,761 
 
 14,570,763 
 
 16,849,801 
 
 13,035,344 
 
 10,432,934 
 
 12,095,044 
 
 12,298,379 
 
 7,792,444 
 
 19,143,953 
 
 24,790,697 
 
 39,649,282 
 
 34,563,603 
 
 20,241,807 
 
 514,059 
 
 333,989 
 
 853,037 
 
 1,614,359 
 
 7,476,353 
 
 1,593,945 
 
 374,568 
 
 , ta 
 
 OQ 
 
 1 
 
 00 
 4> 
 OQ 
 
 a 3 
 P.2 
 © ^ 
 a-2 
 
 3.s 
 
 o 
 
 EH 
 
 £19,258,814 
 
 24.723.661 
 27,191,463 
 50,348,351 
 43,699,710 
 53,483,813 
 47,893,866 
 57,317,307 
 57,176,113 
 61,418,417 
 51,006,403 
 47,362,153 
 
 60.747.255 
 67,747,507 
 71,831,430 
 
 69.772.255 
 75,093,235 
 76,017,779 
 74,936,986 
 84,317,498 
 89,828,547 
 
 108,397.645 
 
 105,698,106 
 
 92,452,319 
 
 62,778,605 
 
 52,055,913 
 
 53,747,795 
 
 52,648,847 
 
 54,282,958 
 
 55,834,192 
 
 55,663,650 
 
 57,672,999 
 
 59,362,403 
 
 57,273,869 
 
 54,894,989 
 
 54,932,518 
 
 55,187,142 
 
 50,786,682 
 
 50,056,616 
 
 46,424,440 
 
 47,322,744 
 
 ' 46,271,326 
 46,425,263 
 45,893,369 
 48,591,180 
 46,475,194 
 47,333,460 
 47,844,899; 
 47,567,565 
 48,937,3971 
 48,580,026 
 52,582,817 
 54,003,754 
 53,060.^54 
 53,790,138 
 59,022.617 
 
 54.982.662 
 53,326,317 
 
 5 53 
 ^rs 
 P iS 
 
 ■S'2'g 
 
 & c3 
 
 CO © ^ 
 
 S o 3 
 a- 3 
 
 -S 5 § 
 
 o 3 © 
 
 ■goo's 
 
 ~ a ^ 
 
 P< O ,0 ■*= 
 
 ® a ,Q 
 g ®. ® 
 
 T3 T3 
 
 a fl 
 a 
 
 o - 
 
 a« 
 
 £9,767,333 
 9,437,862 
 9,890,904 
 10,810,728 
 11,841,204 
 14,270,616 
 17,585,518 
 17,220,983 
 17,381,561 
 19,945,624 
 19.855,588 
 20,699,864 
 20,726,772 
 22,141,426 
 23,000,006 
 23,362,685 
 23,158,982 
 24,213,867 
 24,246,946 
 24,977,915 
 25,546,508 
 28,030,239 
 30,051,365 
 31,576,074 
 
 32.938.751 
 31,436,245 
 30,880,244 
 30,807,249 
 
 31.157.846 
 31,955,304 
 29,921,493 
 29,215,905 
 29,066,350 
 28,060,287 
 28,076,957 
 
 28.239.847 
 28,095,506 
 29,155,612 
 29,118,858 
 28,341,416 
 
 28.323.751 
 28,522,507 
 28,504,096 
 28,514,610 
 29,243,598 
 29,489.571 
 29 260,238 
 29,454,062 
 29,381,718 
 29,450,145 
 29,428,120 
 29,269,160 
 30,495,459 
 28,253,872! 
 28,077,987 
 28,141,531: 
 28,563,517 
 28,323,961 
 
 £2,421,681 
 
 1,826,814 
 
 1,624,606 
 
 3,163,130 
 
 1,918,019 
 
 4,104,457 
 
 2,962,564 
 
 5.261.725 
 6,456,559 
 
 9.900.725 
 1,195,531 
 2,023,028 
 4,667,965 
 2,760,003 
 1,935,465 
 2,673,858 
 
 5,696 
 
 1,023,784 
 
 1,776,378 
 
 1,270,050 
 
 1,590,727 
 
 1,985,885 
 
 7,496 
 
 8,016 
 
 8,741 
 
 1,563,361 
 
 4,143,891 
 
 21,074 
 
 £7,670,109 
 
 14,769,208 
 
 17,851,213 
 
 37.603.449 
 30,334,087 
 36,469,993 
 
 33.541.727 
 38,403,421 
 39,439,706 
 41,383,555 
 
 29.693.619 
 28,298,366 
 38,649,436 
 45,027,892 
 45,941,205 
 44,250,357 
 
 49.984.105 
 52,352,146 
 52,618,602 
 58,757,308 
 63,210,816 
 77,913,488 
 76,780,895 
 
 60.704.106 
 32,231,020 
 22,018,179 
 
 20.843.728 
 21,436,130 
 
 21.381.382 
 21,070,825 
 20,826,567 
 21,746,110 
 23,708,252 
 23,559,741 
 25,808,585 
 25,560,446 
 21,407,670 
 19,919.522 
 18,024,085 
 18.781,882 
 18,050,245 
 16,235,735 
 16,397,605 
 15,884,649 
 17,258,871 
 
 17.641.383 
 
 18.418.449 
 19,903,629 
 19,779,818 
 20,735,584 
 21,517,049 
 21,870,353 
 20,152,189 
 20,988,840 
 22,865,843 
 26,361,416 
 
 25.621.619 
 22,529,661 
 
 *».§ 
 2 p 
 2 ® 
 
 O Q. , 
 
 a * s 
 § * § 
 
 _i ■a a> 
 a p ja 
 ■g cais 
 
 Eh 
 
 £19,859,123 
 
 24,197,070 
 
 27,742,117 
 
 48,414,177 
 
 42,175,291 
 
 50,740,609 
 
 51,127,245 
 
 55,624,404 
 
 56,821,267 
 
 61.329.179 
 
 49.549.207 
 48,998,230 
 
 59.376.208 
 67,169,318 
 68,941,211 
 67,613,042 
 73,143,087 
 76,566,013 
 76,865,548 
 83,735,223 
 88,757,324 
 
 105,943,727 
 
 106,832,260 
 
 92.280.180 
 65,169,771 
 55.281,238 
 53j348.578 
 55,406,509 
 54,457,247 
 57,130,586 
 53,710,624 
 56.223,740 
 59,231,161 
 61,520,753 
 55,081,073 
 55,823,321 
 54,171,141 
 51,835,137 
 49,078,108 
 49,797,156 
 46,379,692 
 45,782,026 
 46,678,079 
 45,669.309 
 48,093,196 
 49,116,839 
 47,686,183 
 49,357,691 
 49,169,552 
 50,185,729 
 50,945,169 
 51,148,254 
 52,211,009 
 59,386,603 
 50,943,830 
 54,502,947 
 54,185,136 
 50,874,696 
 
STATEMENTS SHOWING THE AMOUNT OF MONEY RAISED BY LOANS AND THE FUNDING OF EXCHEQUER BILLS, WITH THE AMOUNT AND 
 DESCRIPTION OF STOCK CREATED, AND THE ANNUAL CHARGE THEREON IN THE YEARS UNDERMENTIONED. 
 
 FINANCES OF ENGLAND , 
 
 135 
 
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136 
 
 ECONOMIC HISTORY. 
 
 annuities was £261,735,059, and the annual charge was 
 £9,471,675). From that time to the peace of Amiens 
 hardly a year passed without witnessing some increase to the 
 national.burdens, so that at midsummer, 1802, the capital 
 of the funded and unfunded debt amounted to £637,000,000. 
 On the 5th of January, 1816, the capital was £885,186,323, 
 and the annual charge was £32,457,141. The preceding 
 statements exhibit the progressive state of the public income 
 and expenditure from 1792 to 1849, including the annual 
 charge on account of the public debt; and the amount of 
 money raised by loans, and the funding of Exchequer Bills, 
 with the amount and description of stock created, and the 
 annual charge in respect of the same in each year from the 
 beginning of the present century. 
 
 An extraordinary degree of delusion is observable in the 
 proceedings of the different finance ministers by whom the 
 support of the sinking-fund was advocated during the war. 
 It has been pretended that the purchases made by means of 
 that fund had the effect of keeping up the market value of 
 the public debt, and thereby enabled the minister to con¬ 
 tract loans upon more advantageous terms than, without 
 this machinery, would have been possible. It may well be 
 doubted, however, whether the repurchase in this manner, 
 from time to time, of parts only of that surplus portion of 
 the public debt which was created for the express purpose of 
 such operations, had any real effect in raising the price 
 of the remaining portion of the public securities; in other 
 words, whether the price thus factitiously acted upon, of the 
 larger amount of debt, was at any time greater than the 
 price would have been of the smaller amount of debt that 
 would have existed if the sinking-fund had not been created, 
 the purchases of the commissioners never having in fact 
 accomplished more than the repurchase of the so needlessly 
 created part of the debt. It has been further urged in de¬ 
 fence of the sinking-fund that the prospect which it enabled 
 the minister to hold out of the speedy redemption of the 
 whole debt had the effect of reconciling the people to the 
 payment of a larger amount of taxes than they would other- 
 
FINANCES OF ENGLAND. 
 
 13T 
 
 wise have been willing to pay. Allowing that the effect 
 here stated was produced, we may still doubt the wisdom of 
 that government which is obliged to resort to a juggle in 
 order to reconcile the people to its measures, and especially 
 when, as in the case under examination, the delusion was so 
 expensive and likely to prove so permanently injurious in its 
 nature. 
 
 The average rate at which three per cent stock was cre¬ 
 ated between 1793 and 1801 was £57 7s. 6d. of money for 
 <£100 stock, and the average market price during that period 
 was £6117s. 5d. for £100 stock. The loss to the public upon 
 the additional sum borrowed in order that it might be re¬ 
 deemed during that period, which was £49,655,531, amounted 
 to four and a half per cent, or £2,234,500. Between 1803 
 and the termination of the war the average price at which 
 loans were contracted was £60 7s. 6d. per £100 stock, and 
 the average market price during that time was £62 17s. 6d. 
 per £100. The loss was, therefore, two and a half per cent 
 upon the sum redeemed during that time, £176,173,240 or 
 £4,404,331, making together an amount of £6,638,831 abso¬ 
 lutely lost to the public by these operations. This amount, 
 reckoned at the average price of the various lo'ans, is equiva¬ 
 lent to a capital of more than eleven millions of three per 
 cent stock, with which the country is now additionally bur¬ 
 dened through the measure of borrowing in a depressed 
 market more money than was wanted in order to its being 
 repaid when the market for public securities was certain to 
 be higher. The fallacy attending this system is now so 
 fully recognized that it is not likely any minister will in 
 future make a show of redeeming debt at the moment when 
 circumstances compel him actually to increase its amount 
 for that purpose. 
 
 Another error, of a still more important nature, involved in 
 this system remains to be noticed. The absurdity of borrow¬ 
 ing money in order to extinguish debt could never have been 
 seriously adopted but with the anticipation of the good effects 
 that might be drawn from such a course after the necessity 
 for further borrowing should cease, when it might be bench- 
 
138 
 
 ECONOMIC HISTORY. 
 
 cial to apply towards the redemption of the debt the high 
 scale of taxation w r hich that system rendered practicable. 
 There never could have existed any doubt of the fact that 
 whenever the necessity for borrowing should cease the mar¬ 
 ket value of the public funds would advance greatly, and 
 would therefore in an equal degree limit the redeeming 
 power of the surplus income, however arising. The knowl¬ 
 edge of this fact should have led the ministers by whom 
 successive additions were made to the public debt to the 
 adoption of a course which would have enabled them to turn 
 this rise of prices to the advantage of the public, instead of 
 its being, as it has proved, productive of loss; and this end 
 would certainly have been accomplished if, at the expense of 
 a small present sacrifice, the loans had been contracted at a 
 high rate of interest, instead of their having been contracted, 
 as for the most part they were, in three per cent annuities. 
 It is presumable that if the borrowing had been restricted to 
 the sums actually wanted from time to time, without thought 
 of a sinking-fund, the public might possibly have had to pay 
 at the outside a quarter per cent more of annual interest 
 than they actually paid. At this rate the deficiency of in¬ 
 come compared with expenditure between 1793 and 1815, 
 which amounted, as will be shown in the next table, to 
 £425,482,761 would have occasioned an addition to the 
 capital of the debt to the amount of £455,266,554 of five per 
 cent stock, the annual interest of which would have been 
 £22,763,327, instead of a nominal capital of £547,292,764, 
 with the annual additional charge of £20,690,871. At the 
 close of the war the nominal capital of the debt would have 
 then amounted to £724,285,729, and the annual charge 
 to £32,530,660, instead of £816,311,939 of capital, and 
 £30,458,204 of annual charge, which was the state of the 
 unredeemed public debt on the 5th of January, 1816. The 
 government would then have been in the most favorable posi¬ 
 tion for taking advantage of the lowering of the rate of inter¬ 
 est which was certain to follow, and many years before the 
 present time the whole of the five per cent annuities might 
 have been converted without any addition to the capital into 
 
FINANCES OF ENGLAND. 
 
 139 
 
 annuities of the same amount bearing interest at the rate of 
 three and a half per cent or perhaps lower. Assuming, how¬ 
 ever, that the reduction would not have gone lower than 
 three and a half per cent, and taking into consideration the 
 surplus revenue which has been actually applied to the re¬ 
 demption of debt between 5th January, 1816, and 5th Janu¬ 
 ary, 1849, which, as will be seen, amounted to £45,779,046, 
 the funded debt existing on 5th of January, 1837, would 
 have amounted to £678,506,683, and the annual charge to 
 £23,747,734, instead of its actual amount, £773,168,316, 
 and its actual annual charge £27,686,458; showing that the 
 loss entailed on the country by the plan pursued, of funding 
 the debt in stock bearing a nominal low rate of interest, is 
 £94,661,633 of capital, and £3,938,724 of annual charge. 
 It is not possible to calculate with certainty the further 
 benefits that must have resulted from the repeal of five mil¬ 
 lions and a half of annual taxes, which would have been 
 practicable beyond the amount actually repealed; but it is 
 probably much under-estimating those benefits to state that 
 among their results the amount of public income over expen¬ 
 diture would have been so far augmented that the unredeemed 
 debt would not at this time have exceeded six hundred mil¬ 
 lions, while the annual charge upon the same would have 
 been twenty-One millions, a state of things at which, if the 
 peace of Europe should continue undisturbed, and if our pro¬ 
 gress should only equal our past experience, we may possibly 
 hope to arrive in about half a century. 
 
 The charge of inconsistency on the part of our finance 
 ministers is fully deserved by their adoption of two measures 
 having for their objects results exactly opposed to each 
 other. These measures are, first, the creation of what is 
 called the dead-weight annuity; and, secondly, the conver¬ 
 sion of perpetual annuities into annuities for lives or for 
 terms of years; the effect of the first being to bring present 
 relief at the expense of future years, while the second in¬ 
 creases the present burden with the view of relieving pos¬ 
 terity. When the measure for commuting the half-pay and 
 pensions was brought forward in May, 1822, the charge upon 
 
140 
 
 ECONOMIC HISTORY. 
 
 the country on that account was estimated at about five 
 millions. This was necessarily a decreasing charge, and 
 from year to year the public would have been relieved by the 
 falling in of lives until at the end of forty-five years the 
 whole, according to probability, would have been extin¬ 
 guished. In order to turn to present advantage this prospec¬ 
 tive diminution of burden, it was attempted to commute the 
 whole of those annually diminishing payments into an un¬ 
 varying annuity to last during the whole probable term of 
 forty-five years; and it was computed that, by the sale of a 
 fixed annuity of £2,800,000, funds might be obtained in 
 order to meet the diminishing demands of the quarterly 
 claimants. This scheme was only partially carried into 
 execution by means of an arrangement made with the Bank 
 of England, under which that corporation advanced to the 
 government, in nearly equal payments, during the six years 
 from 1828 to 1828, the sum of £18,089,419 as the purchase 
 money of an annual annuity of £585,740 to be paid until 
 1867. The result of this operation has been to save the 
 immediate payment, during the years in which it was in 
 progress, of £9,574,979, and in return to fix upon the coun¬ 
 try the annual payment for thirty-nine years thereafter of 
 £585,740. 
 
 In the prosecution of the opposite plan of converting per¬ 
 petual annuities into annuities terminable at stated periods 
 or upon the occurrence of certain natural contingencies, 
 the amount of terminable annuities has advanced from 
 £1,888,835, at which it stood at the end of the war, to 
 £3,755,099 at the beginning of the year 1850. It would 
 occupy considerable space to exhibit the progress of this con¬ 
 version from year to year, and it will probably suffice to 
 exemplify the result of the operation during one year (1834). 
 In that year the perpetual annuities received in exchange 
 amounted to £6,500,169 of capital, bearing an annual 
 charge of £202,831, and there were granted in lieu of 
 the same,— 
 
FINANCES OF ENGLAND. 
 
 141 
 
 Annuities for lives . . .■.£195,337 
 
 “ for terms of years.313,138 
 
 Deferred annuities. 2,871 
 
 Together.£511,346 
 
 making a present annual increase of £308,514 to the public 
 burdens in order to ensure the earlier extinction of the 
 charge of £202,831. 
 
 It is not necessary here to inquire which of these two 
 inodes of proceeding is preferable. Under different circum¬ 
 stances either of them might be wise or prudent, but it is 
 quite impossible that at the same time, and consequently un¬ 
 der the same circumstances, both could be either wise or pru¬ 
 dent; and the minister and legislators by whom the plans 
 were proposed and sanctioned must be allowed to have stulti¬ 
 fied themselves by the operations. Of the two courses that 
 is assuredly the most generous under which the parties by 
 whom it is adopted subject themselves to additional burden 
 in order to lighten the load for their successors; and indeed 
 it would seem no more than an act of justice on the part of 
 those by whom the debt was contracted to adopt every means 
 within their power for its extinction. 
 
 It is singular that, with so much experience and so much 
 of scientific acquirement that could have been brought to the 
 correct elucidation of this subject, the tables adopted for the 
 creation of terminable annuities were incorrect to a degree 
 which entailed a heavy loss upon the public. The system 
 was established in 1808, and during the first year of its 
 operation annuities were granted to the amount of £58,506 
 10.s. per annum. Of that amount there continued payable 
 £23,251 per annum at the beginning of 1827, when, to adopt 
 the calculation of the actuary of the national debt, as given 
 in a report to the Chancellor of the Exchequer, the public 
 had already sustained a loss of more than £10,000 by the 
 transactions, besides having the above annual sum of £23,251 
 still to pay for an indefinite term. In this report of Mr. 
 Finlaison he states that the loss to the public through mis¬ 
 calculation in these tables was then (April, 1827) proceeding 
 
142 
 
 ECONOMIC HISTORY. 
 
 at the rate of <£8,000 per week, and during the three preced¬ 
 ing months had exceeded £95,000. The discovery of this 
 blunder had been made and pressed upon the attention of the 
 finance minister as early as 1819, but no active steps were 
 taken to remedy it until 1828, and even then the rates at 
 which annuities were granted upon the lives of aged persons 
 were, after a time, found to be so unduly profitable to the 
 purchasers, that the government was again obliged to inter¬ 
 fere and to limit the ages upon which life annuities could be 
 obtained. 
 
 It is quite impossible that any similar series of blunders 
 could have been committed by any private persons or asso¬ 
 ciation of individuals whose vigilance would have been 
 sufficiently preserved by their private interest, and it is dis¬ 
 graceful that the government, which could at all times com¬ 
 mand the assistance of the most accomplished actuaries, 
 should have fallen into them. It is yet more disgraceful 
 that after the evil had been discovered and pressed upon its 
 notice, so many years were suffered to elapse before any step 
 was taken to put a stop to the waste of public money. 
 
 It would require a voluminous account to explain all the 
 financial operations of the government during the period 
 embraced in the foregoing statements. In the earlier years 
 of that time, while on the one hand the minister was an¬ 
 nually borrowing immense sums for the public servicej an 
 expensive machinery was, as we have seen, employed to keep 
 up a show of diminishing the debt, and by this means the 
 people were brought to view with some degree of compla¬ 
 cency the most ruinous addition to their burdens under the 
 expectation of the relief which, through the magical effect of 
 the sinking-fund, was to be experienced by them in [future 
 years. The establishment and support of this sinking-fund 
 was long considered as a master-stroke of human wisdom. 
 Having since had sufficient opportunity for considering its 
 effects, we have arrived at a different conclusion, and can no 
 longer see any wisdom in the plan of borrowing larger sums 
 than were wanted, and paying in consequence more dearly 
 for the loan of what was actually required in order to lay 
 
FINANCES OF ENGLAND. 
 
 143 
 
 out the surplus to accumulate into a fund for buying up the 
 debt at a higher price than that at which it was contracted. 
 
 In the fourth report of the Select Committee on Public 
 Income and Expenditure, which was printed by order of the 
 House of Commons in 1828, there are three statements 
 showing the difference between the public receipts and dis¬ 
 bursements in the ten years ended 5th January, 1802; the 
 fourteen years ended 5th January, 1816; and the twelve 
 years ended 5th January, 1828, an abstract of which is here 
 given; and the statement is further continued for the twenty- 
 two years ended 5th January, 1850: — 
 
 BALANCES OF INCOME AND EXPENDITURE. 
 
 Ten Years ended 5th January, 1802. 
 
 Expenditure . £447,812,773 
 Income . . 258,659,322 
 
 E x p e nditure 
 more than 
 
 income . . £189,153,451 
 
 Raised by creation of 
 
 debt. 
 
 Applied to redemption 
 
 of debt.£180,346,440 
 
 Money raised for Aus¬ 
 tria ...... 4,600,000 
 
 Discount and charges 
 of receipt .... 2,416,497 
 
 £380,997,380 
 
 Balance 5th January, 
 
 1802 .£9,027,021 
 
 Balance 5tli January, 
 
 1792 . 4,546,029 
 
 187,362,937 
 £193,634,443 
 
 4,480,992 
 £189,153,451 
 
 Fourteen Years ended 5th January, 1816. 
 
 Expenditure £1,059,683,370 
 Income . . 823,354,060 
 
 Expenditure 
 more than 
 
 income . . £236,329,310 
 
 Raised by creation ^of 
 
 debt. 
 
 Applied to redemption 
 
 of debt.£651,952,651 
 
 Raised for East India 
 Company .... 2,500,000 
 
 Discount, etc. . . . 2,887,199 
 
 £900,107,717 
 
 Balance 5th January, 
 
 1816.£15,466,578 
 
 Balance 5th January, 
 
 1802 . 9,027,021 
 
 657,339,850 
 £242,767,867 
 
 6,438,557 
 £236,329,310 
 
144 
 
 ECONOMIC HISTORY. 
 
 Twelve Years ended 5th January, 1828. 
 
 Income . . £670,198,286 
 Expenditure. 640,966,521 
 
 Income more 
 than expen¬ 
 diture . . 
 
 £29,231,765 
 
 Applied to redemption 
 
 of debt . 
 
 Discount and charges 
 of receipt .... 
 
 Raised by creation of 
 debt. 
 
 Balance 5th January, 
 
 1816.£15,465,578 
 
 Balance 5th January, 
 
 1828 . 4,228,753 
 
 £580,454,422 
 
 544,588 
 
 £580,999,040 
 
 540,530,450 
 
 £40,468,590 
 
 11,236,825 
 
 £29,231,765 
 
 Twenty-two Years ended 5th January, 1850. 
 
 Income . £1,092,219,672 
 
 Expenditure. 1,0 7 5,645,391 
 
 Income more 
 than expen¬ 
 diture . . £16,574,281 
 
 Applied to redemption 
 of debt, beyond the 
 amount of debt cre¬ 
 ated . . v . . . . 
 
 Balance 5th January, 
 
 1850 .£9,748,539 
 
 Balance 5th January, 
 
 1828 . 4,228,753 
 
 £11,054,495 
 
 5,519,786 
 
 £16,574,281 
 
 It appears from this statement that during the ten years 
 from 5th Jan., 1792 to 5th Jan., 1802: — 
 
 The public expenditure exceeded the income . £189,153,451 
 
 Between 1802 and 1816 the excess of expendi¬ 
 ture was. 236,329,310 
 
 Excess of expenditure during twenty-four years 
 
 of war.£425,482,761 
 
 During thirty-four years of peace, between 
 1816 and 1850, the excess of income over 
 expenditure has been. 
 
 • • 
 
 45,779,046 
 
 At this rate it would require three hundred and sixteen 
 years of peace to cancel the debt incurred during twenty-four 
 years of war, or thirteen years for one; but the comparison is 
 even more unfavorable than this, because at the time of bor¬ 
 rowing the rate of interest is high and the value of public 
 
FINANCES OF ENGLAND. 
 
 145 
 
 securities low, whereas at the time of liquidation the reverse 
 of these circumstances is experienced; so that on the most 
 favorable supposition it requires fifteen years of saving in 
 peace to repair the evil consequences of one year of war ex¬ 
 penditure ; at which rate our successors who may be living 
 about the close of the twenty-second century might, if during 
 all that time the nation should remain at peace, find them¬ 
 selves relieved from that portion of the public debt which 
 has been contracted since 1T92. On the other hand, this 
 period would be somewhat hastened through the extinction 
 of that part of our public debt which consists of terminable 
 and life annuities. 
 
 It is necessary here to explain briefly the financial plans 
 which have at different times within the present century been 
 proposed by the Government and sanctioned by Parliament. 
 
 At the breaking out of the war in 1803 it became neces¬ 
 sary to meet as far as possible the increased expenditure of 
 the country by the imposition of new taxes, among which 
 was included the income-tax under the name of a property- 
 tax. The greater part of these taxes were declared to be of 
 a temporary character, and were to cease in six months after 
 the re-establishment of peace. It soon became apparent, 
 however, that to adhere to this stipulation would be impos¬ 
 sible, since the exigencies of the country required the con¬ 
 traction of loans, the interest of which could not be provided 
 except by the gradual appropriation of one portion after 
 another of the proceeds of the war taxes. Under these cir¬ 
 cumstances it was proposed in 180T by Lord Henry Petty, 
 then Chancellor of the Exchequer, to depart from the usual 
 practice of confining the financial arrangements to the cur¬ 
 rent year, and to determine at once, as far as was possible, 
 the amount which it would be necessary to raise during each 
 one of a series of years, providing beforehand the means for 
 meeting the increasing burden. It was assumed that the 
 loans to be raised in 1807 and the two following years 
 should be each <£12,000,000; that for 1810 was stated at 
 £14,000,000, and during each of the ten ensuing years the 
 
 amount was assumed at £16,000,000. It was calculated 
 
 10 
 
146 
 
 ECONOMIC HISTORY. 
 
 that the interest upon those loans would be met, up to that 
 for the year 1811, by the falling in of annuities, after which 
 the war taxes were to be pledged at the rate of ten per cent 
 upon each loan; five per cent to pay the interest, and five per 
 ccut to accumulate as a sinking-fund for discharging the 
 principal. The deficiency that would be occasioned by this 
 appropriation year by year of the war taxes was to be met by 
 supplementary loans, for the interest on which, and to pro¬ 
 vide a sinking-fund for their redemption, it would be neces¬ 
 sary to impose new taxes. By these means it was expected 
 that the country would have been able to meet the charges of 
 an expensive war during a series of years with only a moder¬ 
 ate addition to the public burdens. The ministry, of which 
 Lord Henry Petty formed a part, having gone out of office 
 before the next annual finance arrangement was brought for¬ 
 ward, his plan was abandoned, and no attempt has since been 
 made by any minister to form financial arrangements em¬ 
 bracing the circumstances of future years. 
 
 The explanations offered each year in the House of Com¬ 
 mons by the Chancellor of the Exchequer concerning the 
 financial condition of the country are not given in such a 
 form as to be readily understood. In the accounts by which 
 the statements are accompanied, the interest of the debt and 
 other permanent charges are not included, and on the other 
 hand nothing is stated regarding the produce of the perma¬ 
 nent taxes, forming what is called the consolidated fund, 
 except the amount of its surplus or deficiency, as the case 
 may be, after providing for the permanent charge upon it. 
 The Budget , as it is the practice to call this annual Exposi¬ 
 tion, explains on the one hand the sums required for the 
 public service during the year under the different heads of 
 Navy, Army, Ordnance, and Miscellaneous Services, to¬ 
 gether with any incidental charges which may apply to the 
 year; and on the other hand are given the ways and means 
 for meeting the same. These ways and means consist of the 
 surplus (if any) of the consolidated fund, the annual duties, 
 and such incidental receipts as come in aid of the national 
 resources. 
 
FINANCES OF ENGLAND. 
 
 147 
 
 The detail of these budgets would consequently throw but 
 little light upon the financial condition of the country, if 
 even they had been preserved in an authentic form, which has 
 not been done. Any statements of the kind that could be 
 offered must be drawn from unauthorized publications, in 
 which they have been given without regard to methodical 
 arrangement, while, as respects some years of the series, we 
 should seek in vain for any statement whatever. 
 
148 
 
 ECONOMIC HISTORY. 
 
 VII. 
 
 LA POLITIQUE COMMERCIALS DE LA 
 
 RESTAURATION. 
 
 From Levasseur’s Histoire des Classes Ouvrieres en France 
 depuis 1789 jusqu’a nos Jours . 1 — Vol I. pp. 405-428. 
 
 L ES lois commerciales qui devraient etre principalement 
 fondees sur les besoins de la consommation, sont sub- 
 ordonn^es en realite a la politique. Eaites par des hommes, 
 il leur arrive trop souvent de porter l’empreinte des passions, 
 et de representer moins la nature des rapports economiques 
 d’une nation, que les intdrets particuliers et les pr6juges de 
 ceux qui la gouvernent. 
 
 II n’est pas de lois humaines qui soient a l’abri de ce 
 d^faut; mais il n’en est peut-etre pas qui en soient plus 
 ordinairement affectties que les lois relatives au commerce 
 ext^rieur. La Republique et l’Empire s’etaient acharnes a 
 la lutte contre les Anglais ; la legislation douaniere fut alors 
 armde en guerre et herissee de prohibitions belliqueuses: le 
 but 6tait d’ecarter l’ennemi de la place. La Restauration fut 
 pacifique, mais obligee de se concilier les grands propridtaires 
 et les grands manufacturers qui formaient la majority de la 
 Chambre; la legislation douaniere se pliant a leurs exigences, 
 continua a se hdrisser de prohibitions mercantiles et dgoi'stes: 
 le but, cette fois, dtait de rdserver le marche 5- ceux qui fai- 
 saicnt la loi. 
 
 Le systeme continental dtait devenu odieux aux populations. 
 Il dtait certain que le nouveau gouvernement commencerait 
 par le renier. D’ailleurs la force des choses y poussait. A la 
 suite des armies dtrangeres, dtaient entrees, dans nos ports 
 
 1 Paris: L. Hachette et Cie, 1867. 
 
LA POLITIQUE BE LA RESTAURAT10N. 
 
 149 
 
 et par toutes nos frontieres, les denrees coloniales et les 
 marcliandises anglaises. Les prix avaient eprouve une revo¬ 
 lution soudaine, et l’on voyait se produire cette bizarrerie, que 
 le sucre, par exemple, se yendait communement 38 sous la 
 livre au moment ou la loi le frappait encore, en droit, d’une 
 taxe de 44 sous, et empechait ainsi les negotiants de retirer 
 les approvisionnements qu’ils avaient dans les entrepots : il 
 etait impossible de maintenir la loi. Les Anglais d’ailleurs, 
 donts les desirs etaient alors des ordres, en sollicitaient le 
 rappel. Peu de jours apres son entree a Paris, le comte 
 d’Artois signa deux ordonnances, l’une qui supprimait les 
 Cours prevStales, 1 Pautre, qui levait les obstacles mis au com¬ 
 merce maritime. 2 Les taxes prohibitives furent remplacees 
 par un droit tres modere sur le sucre, 3 et le cafe et par un 
 simple droit de balance sur les cotons en laine. 
 
 Cette mesure se heurta contre une double opposition. 
 L’administration imperiale, formee a l’ecole de la prohibition, 
 s’etait habitude depuis treize ans a en pratiquer les maximes ; 
 elle etait en general imbue de l’esprit du systeme et d’autant 
 moins disposee a y renoncer que l’ingdrence de l’Etat dans 
 les affaires commerciales lui donnait plus d’importance. De 
 leur c6te, les grands industriels etaient ddsireux, comme tou- 
 jours, de privileges et partisans des restrictions douanieres. 
 Mais ils etaient peut-etre plus excusables qu’a d’autres 
 6poques, parce que leurs interets etaient plus que jamais 
 ancres sur le fond de la prohibition. Grace a leurs richesses, 
 ils dtaient appeles ar repr^senter l’industrie fran^aise, et, par 
 une illusion assez ordinaire, disposes a prendre leurs interets 
 pour les siens. Ils allaient, avec les grands propri^taires, 
 dieter leurs conditions aux ministres. 
 
 La Restauration se trouva placee entre les deux pouvoirs 
 de l’epoque, l’administration et la Chambre, qui voulaient la 
 protection, Pune par habitude, Pautre par calcul. La protec¬ 
 tion triompha; les tarifs prirent un nouveau caract^re non 
 moins exclusif sur certains points que celui de PEmpire, et 
 
 1 Ord. du 26 avril, 1814. 
 
 - 2 Ord. du 23 avril, 1814. Yoir le Moniteur de 1814, p. 451. 
 
 8 Le sucre fut taxe a 6 sous la livre. 
 
150 
 
 ECONOMIC HISTORY. 
 
 d’ailleurs beaucoup plus dangereux; parce qu’on pr^tendit 
 6riger en un systeme commercial regulier, ce qui n’avait dte 
 jusque-la qu’une consequence regrettee de l’etat de guerre. 
 
 La reforme du comte d’Artois souleva une tempete de recla¬ 
 mations. On aurait pu croire que les manufaeturiers seraient 
 satisfaits de se procurer la matiere premiere a bon marclie. 
 II n’en fut rien. L’interet du present les aveuglait assez sur 
 l’interet de l’avenir, pour que les cotonniers de l’ouest et du 
 nord, se pretendissent ruines, parce que l’abaissement des 
 droits sur le coton allait diminuer d’autant la valeur des 
 etoffes qu’ils avaient en magasin. Ils petitionnerent, 6cri- 
 virent qu’une “ immense population serait reduite au deses- 
 poir,” que “ la prohibition ^st de droit politique et social,” et 
 que, depuis le fabricant jusqu’a l’ouvrier, tous ont “ le droit 
 de fournir exclusivement a la consommation du pays qu’ils 
 liabitent.” 1 Ils demandaient 30 millions d’indemnite, et la 
 prohibition des fils et des tissus de coton : ils obtinrent la 
 prohibition. 
 
 Les maitres de forges elevaient d’autres pretentions. L’Em- 
 pire n’avait impose, il est vrai, qu’une taxe modique de 44 
 francs par tonne (1000 kilog.) sur les fers en barre. Mais la 
 guerre formait une barriere plus difficile a franchir que les 
 douanes et durant vingt ans les hauts fourneaux du conti¬ 
 nent n’avaient pas eu a redouter les fers anglais. Apres la 
 paix, ils se trouverent tout a coup surpris par une concur¬ 
 rence qui livrait ses produits a 30 ou 40 pour 100 au-dessous 
 des prix ordinaires, et par une crise commerciale qui paraly- 
 sait la vente. Vives reclamations. Les maitres de forges 
 voulaient sinon une indemnite, au moins le sdquestre immd- 
 diat des fers qui £taient encore en entrepot et la prohibition 
 des fers dtrangers; ils obtinrent le quadruplement du droit 
 qui, d^cime compris, fut porte a 165 francs, taxe reprdsen- 
 tant environ 50 pour 100 de la valeur de la marchandise en 
 entrepot. 2 
 
 Le baron Louis n’avait pu resister a l’orage. Cependant il 
 ne dissimula pas que le gouvernement approuvait peu l’esprit 
 
 1 Voir aux Arch, de l’Emp., l’original d’une de ces petitions (25 avril, 1814). 
 
 2 Voir M. Ame, Tar ifs des douanes, chap, xviii. 
 
LA POLITIQUE DE LA RES TA UR A TI ON. 
 
 151 
 
 de monopole des manufacturers. “ Les prohibitions absolucs 
 detruisent l’dmulation. Aussi esp6rons-nous,” ajoutait-il v 
 “ pouvoir, aux sessions prochaines, demander la reduction suc¬ 
 cessive du tarif que nous proposons aujourd’hui sur les fers.” 1 
 II se faisait illusion. Les interets sont plus tenaces. Ils se 
 prdcipiterent a la curee, reclamant a l’envi, qui pour les. 
 colons, qui pour les 61eveurs, qui pour les manufacturers ; 
 et ce que chacun d’eux obtint a titre de faveur passagere, il 
 pretendit le conserver comme une propriete, il s’en fit meme 
 un titre pour obtenir de nouveaux avantages. C’est ainsi que 
 les lois protectionistes se succed£rent et s’aggraverent de 
 session eii session. 
 
 Le gouvernement songeait a faire une refonte generate du 
 tarif. Il n’en eut pas le loisir en 1814, et se contenta de pre¬ 
 senter un projet par lequel il autorisait le transit, donnait au 
 pavilion frangais la faveur d’une surtaxe, et relevait, mais a 
 un taux encore tres modere, certains droits abaisses par l’or- 
 donnance du 28 avril. 2 Il s’excusait de ne pas faire plus, 
 parce que les douanes venaient a peine d’etre rdtablies, et il 
 hasardait timidement, que “ d’ailleurs le bon march6 provo- 
 quait la consommation.” Tel n’etait pas l’avis de la Cham- 
 bre, qui vota la loi, 3 mais en donnant une legon aux ministres. 
 “ En principe d’^conomie politique,” disait le rapporteur, “ les 
 douanes sont etablies pour assurer la prosp^rite des manufac¬ 
 tures, pour faire fleurir l’industrie nationale. Elies sauvent 
 le commerce en donnant aux fabricants frangais, par des pro¬ 
 hibitions ou des droits sur les productions de l’industrie 
 dtrangere, l’avantage de la concurrence dans le march6 in- 
 tdrieur; elles sont utiles au consommateur en lui assurant a 
 moindre prix les marchandises qui se fabriquent ext^rieure- 
 ment avec des matieres premieres indigenes, que l’etranger 
 , accaparerait, sans la prohibition a la sortie. . . . L’institution 
 deviendra reellement nationale, lorsque la combinaison des dif- 
 ferents reglements sera parvenue au point d’activer dans les 
 
 1 M. Ame, Tarifs des douanes, p. 62. 
 
 2 De 40 & 60 francs par quintal mctrique sur le sucre brut, 
 
 60 “ “ “ . “ sur le cafe, 
 
 100 “ “ “ “ sur le cacao. 
 
 8 Loi du 17 decembre, 1814. 
 
152 
 
 ECONOMIC HISTORY. 
 
 mains d’un million d’ouvriers l’instrument qui les nourrit, 
 lorsque cette combinaison repoussera par des prohibitions 
 necessaires les marchandises Etrangeres dont l’entree porterait 
 prejudice aux marchandises de meme espece qui se fabriquent, 
 se vendent et se consomment dans l’interieur.” 1 
 
 Le ministere comprit la legon, promit de rEdiger ses lois de 
 douane en vue de la protection, 2 et presenta, en 1816, un nou¬ 
 veau projet pour refondre le tarif de 1806, qui, jusque-la, 
 n’avait subi que des modifications de detail. II proposait des 
 droits plus forts. La Chambre les renforga encore, 3 accep- 
 tant, sans en peser la valeur, les arguments quelquefois singu- 
 liers que suggeraient les interets ou les prEjuges. Un depute 
 declarait la ceruse de Clichy excellente pour la consomma- 
 tion, superieure meme, de l’avis de tout le monde, a celle de 
 Hollande; mais, ajoutait-il, le vulgaire veut le cachet des 
 manufactures Etrangeres ; “ pour l’en degouter, il demandait, 
 et il obtint un droit enorme sur la ceruse etrangere.” 4 Un 
 autre voulait qu’on imposat fortement le thE, parce que les 
 Anglais le fournissent, et que “ c’est autant de numeraire qui 
 sort de France.” 5 Sur la demande des agriculteurs, la pro¬ 
 hibition des peaux, a, la sortie, fut levee d’une part, et d’autre 
 part, l’entree des eaux-de-vie, autres que de vin, fut proliibee. 
 On retablit, en pleine paix, les rigueurs de la legislation prE- 
 vStale, et l’on autorisa la recherche et la saisie a rinterieur 
 des etoffes prohibees. 6 
 
 La Chambre introuvable fut dissoute. Mais le cabinet eut 
 besoin, en 1817 comme en 1816, de s’appuyer sur une ma- 
 jorite qui, si elle ne professait pas les memes sentiments poli- 
 tiques, avait en agriculture et en industrie les memes interets 
 
 1 Rapport de Magnic-Grandprez, Moniteur de 1814, p. 1253. 
 
 2 Moniteur de 1815, p. 1253. 
 
 3 Le gouvernement, par exemple, proposait de creer un entrepot a Lille. 
 Les deputes des ports de mer se recrierent et firent, apres un long debat, sup- 
 primer l’article. 
 
 4 Moniteur de 1816, p. 440. 
 
 6 Ibid., p. 439. 
 
 6 Loi du 28 avril, 1816. — Art. 59. A dater de la publication de la presente 
 loi, les cotons files, les tissus et tricots de coton et de laine et tous autres tissus 
 de fabriques etrangeres prohibes seront recherches et saisis dans toute l’etendue 
 du royaume. 
 
LA POLITIQUE DE LA RE ST A UR A TION. 
 
 153 
 
 et les memes exigences. 1 La legislation commerciale se sentit 
 done peu da souffle liberal qui inspirait alors le gouverne- 
 ment. Lorsque la question des tarifs se produisit a la session 
 de 1817, le directeur general des douanes se contenta de 
 glisser timidement un eioge platonique de la liberte des 
 echanges, 2 tout en declarant aussifflt ne vouloir porter aucune 
 atteinte au syst£me prohibitif, “ qu’il est,” ajoutait-il, “ sage de 
 respecter aussi longtemps que nos manufactures se croiront 
 fondees a le considerer comme leur plus solide appui.” 
 
 Les deputes voulaient non-seulement le respecter, mais le 
 fortifier. Les proprietaires, en faveur des maitres de forges 
 auxquels ils vendaient leur bois, cherchaient a ecarter la con¬ 
 currence des fers etrangers, et ne prenaient guere la peine de 
 dissimuler le mobile qui les faisait agir. 3 Les industriels, 
 pensant que “ la prosperite des manufactures peut seul pro¬ 
 curer des consommateurs utiles a l’agriculture,” 4 voulaient 
 qu’on supprimat tout droit d’entree sur les matures premieres, 
 et le directeur general avait quelque peine a defendre les in- 
 t^rets du fisc. La loi du 27 mars, 1817, ajouta quelques re¬ 
 strictions nouvelles au commerce extdrieur. 
 
 Celle du 21 avril 1818 fut le sujet d’un curieux ddbat. 
 Avant 1789, les provinces d’etranger effectif n’^tant pas 
 comprises dans la circonference des douanes, commergaient 
 librement avec les pays voisins; 1’Alsace etait du nombre, et 
 avait gagn6 cinq millions par an au transport des marchan- 
 dises entre l’Allemagne et la Suisse. La Revolution, en por- 
 tant la ligne des douanes a la fronti£re, avait interrompu ces 
 
 1 Cependant le rapporteur, Morgan de Belloy, parla avec moderation et fit 
 des veeux pour l’entier affranchis'sement des matieres premieres que les cireon- 
 stances ne permettaient pas de degrever. — Moniteur de 1816, p. 291; voir aussi 
 la loi qui fut promulguee le 28 avril, 1816. 
 
 2 Sans doute il est louable d’annoncer, hautement le dcsir de cette heureuse 
 revolution dans le systeme commercial du monde; mais nous n’aurons pas la 
 liardiesse de vous conseiller d’en devancer i’epoque. — Moniteur de 1817, 
 p. 146. 
 
 8 Le general Augier proposait un amendement pour porter de 20 a 30 fr. par 
 100 kil. le droit impose par la loi du 21 decembre, 1814, sur les fers lamines, que 
 les etrangers fabriquaient par des procedes economiques. — Moniteur de 1817, 
 
 p. 286. 
 
 4 Moniteur de 1817, p. 278. Discours du comte Beugnot. 
 
154 
 
 ECONOMIC HISTORY. 
 
 relations; l’Empire, par ses prohibitions contre le commerce 
 
 maritime, les avait en partie renouees; mais, depuis 1815, le 
 
 benefice en avait passe au grand-duchd de Bade. L’Alsace 
 
 reclamait. 1 Le projet de loi donnait enfin satisfaction, 2 en 
 
 autorisant par divers bureaux le transit de certaines mar- 
 
 chandises et surtout dcs denrees coloniales. Aussit6t les 
 
 * 
 
 ports de mer, defenseurs ordinaires de la liberty commerciale 
 quand elle servait les intdrets particuliers de leurs armateurs, 
 s’ecrierent qu’en permettant le passage des denrees coloniales, 
 on facilitait les ventes des Hollandais en Suisse, au detriment 
 de la marine frarigaise qui avait la pretention de fournir seule 
 le sucre et le caf6 a la R^publique helvdtique. En vain rad- 
 ministration prouva-t-elle surabondamment qu’il s’agissait 
 seulement de faire prendre aux marchandises la rive gauche 
 du Bhin au lieu de la rive droitc, et que les Hollandais n’en 
 vendraient pas une caisse de plus a la Suisse, ni nos ports 
 une caisse de moins. 3 La commission rejeta Particle; et la 
 Chambre, malgr6 les protestations des representants de l’Al- 
 sace, vota sa commission. Ce fut seulement un an plus tard, 
 a la suite d’une enquete, que le ministere, persistant dans son 
 dessein, parvint a faire voter le transit par PAlsace, a la faible 
 majority de 17 voix sur 195 votants. 4 
 
 C’est par le memo ministere que fut pr^sentde la premiere 
 loi constituant en France, a l’image de l’Angleterre, le systeme 
 de Veclielle mobile. “ L’intdret de la propridt^ et de l’industrie 
 agricole” l’avait dictee. Pour la premiere fois, les restrictions 
 douanieres relatives au commerce des c^r^ales furent dirig^es, 
 non plus contre l’exportation comme on Pavait fait par le 
 passd, mais contre Pimportation; 5 il fallait que les marclids 
 
 1 Voir les voeux du Bas-Rhin, sessions des Conseils generaux de 1817 et de 
 1818. En 1819, le Conseil general se plaignit que les conditions faites au tran¬ 
 sit fussent trop onereuses. Dans les annees suivantes, ce fut le tour des departe- 
 ments de Tancienne Lorraine qui re'clamerent de meme benefice que l’Alsace. 
 
 2 Article 34 du projet. 
 
 3 Voir M. Ame, Etude €conomique sur le tarif des douanes , p. 84, et le Moniteur 
 de 1818, p. 333. Le rapporteur Morgan de Belloy parle “des alarmes des nego- 
 ciants des ports qui ont a se prevaloir de la possession et des lois solennelles.” 
 
 4 Loi du 26 mai, 1819. 
 
 5 Cette loi du 10 juillet, 1819, ctablissait a l’importation un double droit; 
 droit fixe de 25 centimes par quintal de grains pour les navires fran 9 ais, de 1 fr. 
 
LA POLITIQUE DE LA RES TA UR A T1 ON. 
 
 155 
 
 restassent aux fermiers nationaux, dut le peuple payer cher 
 sa subsistance. 
 
 La nature dejoua les calculs des legislateurs. La r^colte 
 fut abondante, et les prix, que la disette de 1816 avait fort 
 exageres, baisserent. De nouvelles reclamations se firent 
 entendre, d’autant plus vives qu’elles etaient plus sures d’etre 
 favorablement ^coutees sous l’administration du comte de 
 Villele. On accusait l’importation. Verification faite, il se 
 trouva que cette importation avait a peine excede Fexpor- 
 tation de 700,000 hectolitres. On se rejeta sur l’effet moral 
 des arrivages qui intimidaient, disait-on, la hausse. 
 
 II fallut une nouvelle loi, qui donnat de nouvelles facilites 
 a 1’exportation et mit plus obstacles a Fimportation. Pre¬ 
 sentee dans la session de 1821, par le ministere, remaniee et 
 considerablement aggravde par la commission, elle fut votee 
 par une nombreuse majorite. 1 
 
 On se felicitait de mettre ainsi les agriculteurs a l’abri de la 
 concurrence. On n’oubliait qu’une chose ; l’interet des masses 
 dont le pain est le principal aliment. II est vrai qu’un depute 
 etait venu soutenir que la cherte du pain etait un bien pour 
 les ouvriers, parce qu’elle les obligeait a travailler avec plus 
 d’ardeur pour vivre. Mais cette singuli£re theorie trouva peu 
 d’echo; les proprietaires n’avaient aucune intention d’affamer 
 la classe ouvriere : seulement ils songeaient a eux-memes. 
 Benjamin Constant le leur fit sentir. “ Je me bornerai,” s’ecri- 
 ait-il, interrompu par les murmures de l’assembl^e, “ je me 
 
 25 pour les navires etrangers; droit variable de 1 franc par chaque franc de 
 baisse des qu’on descendait dans les trois regions de la France audessous des 
 prix normaux de 23, 21, et 18 francs; a la limite de 20, 18, et 16 francs, toute 
 importation etait interdite. La loi fut votee a une majorite de 234 voix 
 contre 28. 
 
 1 Par 282 voix contre 54. Dans cette loi du 4 juillet 1821, la taxe variable 
 commen^ait a etre per 9 ue quand les prix etaient a 26 francs dans la premiere 
 classe, k 20 dans la derniere, et les importations cessaient au taux de 22 et de 
 18 francs. L’echelle mobile k, l’importations fonctionnait entre 26 et 18 francs, 
 c’est-a-dire qu’elle fut elevee de 2 francs au-dessus de la limite de 1819. L’ex- 
 portation, au contraire, permise seulement jusqu’a 23 fr. par la loi de 1819, eut 
 25 francs pour limite en 1821: double avantage pour les agriculteurs, qui pou- 
 vaient exporter plus longtemps, et qui e'taient plus tot a l’abri de la concurrence 
 etrangkre. 
 
156 
 
 ECONOMIC HISTORY. 
 
 bornerai a vous dire qu’il est facheux de voir que vous faites 
 rencherir les denrees que vos terres produisent et dont vos 
 greniers sont remplis.” 1 
 
 Cepetfdant les effets ne repondirent pas a l’attente des pro- 
 prietaires. Le ble baissa pour ainsi dire d’annee en annee: 
 il tomba a 14 fr. 80 cent., en 1825. Les tarifs n’y faisaient 
 rien. Pourtant ils etaient rigoureux; car durant les neuf 
 annees qui s’ecoulerent de la publication de la loi a la revolu¬ 
 tion de juilletj l’importation ne fut permise que pendant un 
 seul mois, en fevrier, 1828. On ne pouvait aggraver le tarif. 
 Mais a pour calmer l’opinion,” on porta, en 1825, une loi qui 
 supprimait l’entrepot fictif des grains. 
 
 L’evenement qui avait precipit^ la chute du ministere, deja 
 chancelant, dans lequel le comte Decazes avait tente un rap¬ 
 prochement entre les convictions royalistes et les principes 
 liberaux, n’etait pas de nature adoucir le regime douanier. 
 Les grands proprietaires prirent une influence plus decisive et 
 le systeme protecteur se consolida: temoin la loi de 1821 sur 
 les cereales. Les int^ress^s ne se lassaient pas de demander, 
 et chaque concession faisait naitre de nouvelles exigences 
 qui se produisaient a la tribune, dans les petitions, dans les 
 voeux des conseils generaux. Tout argument leur dtait bon. 
 L’industrie languissait-elle ; ils declaraient, comme les maitres 
 de forges de la Haute-Saone, qu’ils etaient menaces de ruine 
 par Pintroduction trop facile des fers etrangers et deman- 
 daient qu’on renforgat les barrieres. 2 L’industrie prosp£rait- 
 elle; ils declaraient, comme les fabricants de Saint-Quentin, 
 qu’il importait 66 au progres de l’industrie manufacturiere de 
 la rassurer completement sur le maintien des lois prohibi- 
 tives.” 3 Pour la vente a l’intdrieur, les departements postu- 
 laient a l’envi les fournitures de l’Etat, 4 et l’esprit d’exclusion 
 etait tel que quelques-uns eussent volontiers relevd les barri¬ 
 eres du moyen Sge au profit des manufactures provinciates: 
 le Loir-et-Cher voulait qu’on fit exclusivement a habiller les 
 
 1 Moniteur du 30 avril, 1821. 
 
 2 Haute Saone. — Voeux des Conseils generaux en 1819. 
 
 8 Aisne. — Voeux des Conseils generaux en 1825. 
 
 4 Voir Herault en 1818, Pyrenees-Orientales en 1821, Aveyron en 1825, etc. 
 
LA POLITIQUE DE LA LIES TA UR A TI ON. 
 
 157 
 
 soldats de la legion de Loir-et-Cher, avec des draps et autres 
 etoffes de la fabrique de Romorantin. 1 
 
 Dans une telle disposition des esprits, le tarif ne satisfaisait 
 jamais toutes les cupidites. II fut remanie par des lois pres- 
 que consecutives rendues en 1820, en 1822, en 1826, 2 sans 
 compter les projets, qui n’aboutirent pas et les ordonnances 
 qui, dans l’intervalle des sessions, aggraverent plusieurs taxes. 
 L’administration elle-meme se fatigua, et, en 1822, le direc- 
 teur general osa feliciter ironiquement les deputes de n’avoir 
 apporte aucun changement a la loi des douanes dans le cours 
 de l’annee pr^cedente. “ C’est, disait-il, un avantage que nous 
 aimerions a voir se rdpeter. Les lois de douanes veulent etre 
 stables.” 3 Les deputes pensaient autrement. 4 
 
 Apres les grains, la question principale a la Chambre etait 
 celle des fers, qui reunissait dans un meme interefc les direc- 
 teurs des usines et les proprietaires des bois. La loi du 17 
 decembre, 1814, avait eleve les droits sur les fers de toute 
 espece; mais dans la repartition des faveurs du tarif, les aciers 
 avaient 6te les moins favorises. Ils reclam&rent, au nom 
 meme de leurs progres, 5 et la loi du 7 juin, 1820, fit droit a 
 leurs plaintes en augmentant les taxes de 45 a 60 pour 100: 
 c’etait frapper directement les instruments indispensables au 
 travail, limes, faux, outils. Mais il entrait dans le systeme 
 de la Chambre de pr^ferer I’interet du produeteur, interet 
 imm^diat, exigeant, calculant son profit par grosses sommes, 
 a l’int^ret du consommateur, dont la perte semblait legere 
 parce qu’elle se repartissait sur un grand nombre de tetes. 
 
 La mgme loi facilita la sortie des laines indigenes et mit un 
 droit a l’entr^e des laines etrang&res. Les fabricants de draps 
 firent une opposition vive. Mais cette fois encore la cause de 
 
 * 
 
 1 Session de 1819. 
 
 2 Loi du 7 juin, 1820; loi du 27 juillet, 1822 ; loi du 17 mai, 1826. 
 
 8 Mon iteur de 1822, p. 86. 
 
 4 “ Soumettre les douanes a une regie invariable, c’est leur interdire les pro¬ 
 gres qu’une louable emulation aspire sans cesse favoriser.” — Moniteur de 1820, 
 p. 526, Rapport de Morgan de Belloy. 
 
 5 Le jury des arts leur a rendu les plus honorables temoignages et la 
 grande majorite de votre Commission a pense qu’il convenait de leur accorder 
 l’encouragement de nouveaux droits. — Moniteur de 1820, p. 56. 
 
158 
 
 ECONOMIC HISTORY. 
 
 la production, fortifi^e de l’interet agricole, l’emporta sur 
 l’interet des consommateurs; 1 et, lorsqu’apres une longue 
 discussion qui avait eu, comme toujours, pour resultat d’ag- 
 graver'les taxes primitives, le vote d’ensemble eut lieu, il se 
 trouva dans l’urne 185 boules blanches contre une seule boule 
 noire. 2 Les deputes ne purent s’empecher de rire; il y avait 
 alors sur la question du systeme protecteur une parfaite en¬ 
 tente entre les partis. 
 
 L’accord 6tait devenu moins unanime en 1822. Le prix 
 des fers fabriques au bois et au marteau avait baisse par un 
 de ces accidents frequents du marche, dont on doit s’applaudir 
 quand ils ont pour cause une production plus 6conomique. 3 
 Nouvelles doleances des maitres de forges qui s’en prirent 
 a Fimportation, et obtinrent une ordonnance augmentant les 
 droits. Aussitot des reclamations de tout genre assaillirent 
 le ministere qui, bien que peu dispose a remanier les tarifs, dut 
 ceder, en declarant que l’int^ret du fisc 6tait cette fois tout 
 a fait stranger a la mesure. 4 Il prdsenta un projet qui, comme 
 le disait le baron de Saint-Cricq, dans l’expos^ des motifs, 
 avait pour but “ de prot^ger et pour cela d’encourager par de 
 forts droits sur les produits du dehors, de defendre meme 
 par des prohibitions toutes les exploitations du sol, tous les 
 efforts de l’industrie.” Vouloir proteger tout, c’eut 6t6 ne 
 rien proteger. 
 
 Ndanmoins, la Chambre, trouvant le projet insufhsant, le 
 refondit. Le rapporteur de la commission etait Bourienne. 
 Celui-ci professait comme principe 6conomique que le peuple 
 
 1 Le projet ministeriel avait mis un droit de 20 pour 100, au lieu de la pro¬ 
 hibition, pour les chales cachemires, parceque cette prohibition etait tout k fait 
 illusoire. L’assemblee retablit la prohibition; cette fois les fabricants de lai- 
 nage appuyerent, et la Chambre vote a Tunanimite'. — Moniteur de 1820, p. 5G7. 
 
 2 .Moniteur de 1820, p. 626. 
 
 3 Les fers au bois ou au marteau etaient tombes de 400 a 500 francs la tonne 
 par suite de la concurrence des fers a la houille ou la laminoir. 
 
 4 “ Les autres,” disait le baron de Saint-Cricq, “ modifient quelques articles du 
 tarif, non dans l’interet du Tresor; car plusieurs taxes subissent une reduction, 
 et l’augmentation proposee sur quelques autres aura pour effet d’attenuer les 
 recettes en restreignant l’importation des objets qui en seront greves, mais 
 dans la seule vue de satisfaire a des interets nouveaux ou mieux constates. ,, — 
 Moniteur de 1822, p. 79. 
 
LA POLITIQUE DE LA RE ST AURA TION. 
 
 159 
 
 “ le plus riche etait toujours celui qui exportait le plus et qui 
 importait le moins.” II en developpait les consequences par 
 des arguments que l’Assemblee eut sans doute moins approu- 
 v£s, si elle eut ete plus desinteressee. “ Les lois de houanes,” 
 disait-il, “ en favorisant et en satisfaisant un grand nombre 
 d’intdrets generaux, blessent quelques interets particuliers ; 
 mais c’est un mal inevitable, et lorsqu’il est bien demontre 
 qu’une mesure est utile au grand nombre, il faut la prendre. 
 Dans les soci£t£s humaines, tout se resout par des majorites. 
 Le marchand en general repousse les droits qui diminuent ses 
 profits. Force de s’adresser a l’industrie interieure il gagnera 
 peut-etre moins, mais le pays y gagnera plus. Tout ce qu’un 
 peuple consomme est un element d’aisance et de prosperity 
 nationales; tout ce qu’il consomme par echange est encore 
 favorable; tout ce qu’il achete avec de l’argent pour sa con- 
 sommation, l’appauvrit.” 
 
 Les vieilles erreurs de la balance du commerce dtaient en¬ 
 core vivaces. Mais il etait au moins singulier d’invoquer 
 l’interet general, quand les objets frappes de droits dtaient 
 de ceux que tout le monde consomme, quand on faisait en- 
 cherir le sucre, la viande, et le fer au profit de trois categories 
 de producteurs. Le comte de Laborde ne craignit pas de le 
 leur reprocher. “La loi que vous allez rendre,” dit-il, “est 
 essentiellement privilegiaire ; c’est une prime que toute la 
 France va payer aux colons, aux maitres de forges, aux nour- 
 risseurs de bestiaux de la Normandie.” En effet la loi du 27 
 juillet, 1822, portait principalement sur ces trois points. 
 
 La loi du 28 avril, 1816, avait mis sur les sucres etrangers 
 une taxe sup^rieure de 33 pour 100 a celle des sucres de nos 
 colonies: grande faveur, qui en peu d’annees doubla le chiffre 
 des importations coloniales et permit, en 1821, a nos planteurs 
 de placer en France 50 millions de kilogrammes de sucre, 
 tandis que les Strangers n’en vendaient que 2,600,000 kilo¬ 
 grammes. Cependant, les planteurs se trouvaient gends par 
 cette concurrence; ils obtinrent que la surtaxe fut 61ev£e a 50 
 pour 100. Les interess^s auraient voulu plus encore. Ils 
 tomberent de Charybde en Scylla; car, si les sucres strangers 
 ne vinrent plus, le sucre de betterave, sollicite par les hauls 
 
160 
 
 ECONOMIC HISTORY. 
 
 prix, les remplaga et disputa bient6t le marchd aux produits 
 des Antilles. 
 
 Les boeufs entraient en franchise sous 1’Empire ; ils avaient 
 6te sounds au droit modere de 3 francs a partir de 1816, et ils 
 continuaient a entrer. Les ^leveurs reclamerent et le ministre 
 dut proposer, dans son projet, de decupler la taxe sur les 
 boeufs gras. C’dtait enorme surtout un pays ou “ la viande 
 est un objet de luxe pour les classes inferieures,” comme disait 
 un depute. La Chambre ne le jugeait pas ainsi; elle demanda 
 beaucoup plus, et finit par obtenir 50 francs. En meme temps, 
 malgre le ministere, elle augmenta les taxes d’entree sur les 
 laines, sur les suifs, sur les viandes fraiches et salees. 
 
 Les maitres de forges declaraient le droit de 165 fr. tout a 
 fait insuffisant, et le directeur general, soutenant leurs preten¬ 
 tions, annongaitavec effroi que 1’importation des fontes s’etait 
 elevee, en six ans, de 800,000 kilogrammes a 7,000,000. “ C’e- 
 tait,” ajoutait-il, “ un avertissement pour l’administration.” 1 
 Le droit sur les fers a la houille fut porte a 275 fr., represen- 
 tant 120 pour 100 de la valeur des marchandises anglaises 
 qu’on voulait ecarter. On reussit; car la production du gros 
 fer doubla, et rimportation anglaise devint presque nulle. 
 Mais le fer, qui sous Louis XVI. valait 350 fr., monta a 650 
 fr. la tonne. C’etait un triste progres. Encore les forges ne re- 
 cueillirent-elles pas le profit de ce lourd impot preleve sur l’in- 
 dustrie nationale. u Nous faisions quelques bdnefices,” disait 
 en 1828 un propri^taire d’usine, “ quand nous vendions a 450 
 fr., et nous perdons aujourd’hui en vendant a 500 fr.; la cause 
 en est qu’en 1819 la banne de charbon revenait a 18 fr. 05 c., 
 tandis qu’elle revient a 37 fr. 50 c.” L’avantage restait aux 
 proprietaires fonciers. 
 
 Les plus clairvoyants ou les moins engages dans les interets 
 prohibitionnistes commengaient a entrevoir le danger du sys- 
 teme. Ternaux le signalait: u L’Espagne,” disait-il, “ a repondu 
 par une prohibition de nos produits manufactures a l’inipot mis 
 sur les laines, et le ralentissement de la draperie a fait baisser 
 les laines frangaises.” 2 Plusieurs s’etonnaient qu’une matiere 
 
 1 Voir le Moniteur de 1822, p. 940. 
 
 3 Moniteur de 1822, p. 399. 
 
LA POLITIQUE DE LA EESTAURATION. 
 
 161 
 
 premiere, telle que la fonte, fut pour ainsi dire proscrite, 1 et 
 le comte de Laborde s’indignait, au nom du progres industriel, 
 qu’il eut fallu payer 7,000 fr. de droit pour introduire a Saint- 
 Etienne une machine a vapeur. 2 Mais les prohibitionnistes 
 montraient en perspective, au moindre relachement des ri- 
 gueurs, le marcli6 fran^ais envahi, nos ateliers fermes, nos 
 ouvricrs sans travail, et obtenaient sans peine un vote favor¬ 
 able, en evoquant le fantdme de la mine et de la mis£re uni- 
 verselles pour r^torquer l’argument de leurs adversaires en 
 faveur des consommateurs. 3 
 
 Meme apres la loi de 1822, ils reclamaient encore. Ladroite 
 trouvait que le ministdre n’avait pas assez fait pour l’agricul- 
 ture et pour le commerce. Elle provoqua, en 1823, la creation 
 d’un comite d’enquete qui devait “ s’attacher surtout a recher- 
 cher si les objets etrangers importes en France y sont d’une 
 necessity indispensable comme mature premiere.” 4 
 
 Yivement attaque a ce sujet par le comte de Vaublanc, 
 ancien ministre, 5 le baron de Saint-Cricq, qui, depuis le com¬ 
 mencement de la Restauration, occupait le poste de directeur 
 general des douanes, se d^fendit par une lettre inseree au 
 Moniteur , professant hautement la doctrine protectionniste, 6 
 qu’il avait, disait-il defendue avant M. de Vaublanc, mais 
 declarant que pour la rendre pratique il fallait se garder de 
 la pousseur a l’extreme, et rappelant les faveurs dont le gou- 
 
 1 Entre autres, Duvergier de Hauranne et Laine. 
 
 2 Moniteur de 1822, pp. 939 et 940. 
 
 3 “ Laissez entrer les tissus de coton, les draps, les faiences, les fers, les 
 fontes, les sucres, et une foule d’autres articles que vous ne pouvez encore fab- 
 riquer ou produire au prix de nos voisins, la consequence immediate sera la 
 ruine de vos colonies, de vos manufactures, la misere de deux millions d’ou- 
 vriers, Importation rapide de votre numeraire et la diminution plus rapide 
 encore de vos contributions.” — Discours de Bourienne, rapporteur, en reponse 
 a Labbey de Pompieres; Moniteur de 1822, p. 902. 
 
 4 Moniteur de 1823, seance du 15 mars, p. 310. Le ministere posa la question 
 d’Ltat, declarant qu’il serait dangereux que la Chambre empietat sur les at¬ 
 tributions de la puissance executive, et la proposition fut rejetee; la droite 
 murmura. C’est a ce propos que furent publies les premiers tableaux du com¬ 
 merce exterieur; l’attaque eut au moins de ce cote un bon resultat. 
 
 5 Du Commerce de la France en 1820 et 1821, brochure. 
 
 6 “II n’est pas de bon tarif pour la France que celui qui reserve aux Fran- 
 <jais le plus de travail possible.” 
 
 11 
 
162 
 
 ECONOMIC HISTORY . 
 
 vernement avait combl£ les agriculteurs et les manufacturers, 
 trop oublieux des services passes. Cette lettre peut $tre 
 regardee comme le manifeste de l’administration douaniere du- 
 rant cette p^riode : “ Depuis la Restauration,” disait le baron 
 de Saint-Cricq, “ les lois de douanes se sont appliqu^es con- 
 stamment a concilier, dans la vue d’nne protection commune, 
 les interets souvent opposes, toujours distincts, de l’agricul- 
 ture, de l’industrie et du commerce. . . . Je demandefai a 
 1’agriculture . si ce n’est pas a ces lois qu’elle doit et les 
 taxes d’importation qui la protegent eontre un nombre in- 
 fini de produits etrangers, tels que les bles, les bestiaux, les 
 laines, les garances, les cbanvres, les lins, les houblons, que 
 le systeme constant des tarifs anterieurs etait d’attirer par 
 une entiere immunite, et les franchises d’exportation qui 
 ouvrent un facile 6coulement h des produits que les lois an- 
 ciennes ne s’etaient jamais appliqu^es qu’a retenir? Je de- 
 manderai a notre industrie manufacturiere si ce n’est pas dans 
 ces memes lois qu’elle a trouve et le maintien des garanties 
 que le travail national avait prec^demment obtenues et les 
 garanties nouvclles sans lesquelles nos forges, nos fabriques 
 de faux, de limes, de ceruse, de minium, de zinc, et de cuivre 
 lamin^s, et beaucoup d’autres encore, seraient loin du haut 
 degr6 de prospdrite auquel elles sont parvenues ? Je deman- 
 derai enfin au commerce maritime si ce n’est pas grace a ces 
 lois, et je ne craindrai pas d’ajouter, grace a leur liberate ap¬ 
 plication, qu’il a pu donner l’essor a ses armements, protdg^s 
 pour la premiere fois par des droits diffdrentiels, gradues 
 suivant le pavilion et la longueur de la course, entreprendre 
 avec s6curit6 des speculations lointaines, que les taxes post£- 
 rieures a l’entreprise out constamment respect^es, jouir, quant 
 aux entrepots, au transit, au cabotage, et meme au reglement 
 des droits, de toutes les franchises, de toutes les facility, 
 de toutes les exceptions rigoureusement compatibles avec l’ac- 
 complissement des lois g^ndrales et de la surety des per¬ 
 ceptions ? ” 1 
 
 Les intdress^s ne se payerent pas du souvenir de bienfaits 
 
 1 Moniteur de 1823, p. 155. 
 
LA POLITIQUE BE LA RE ST A UR, A TI ON. 
 
 163 
 
 qu’ils avaient pour la plupart escompt^s. Ils en voulurent et 
 ils en arracherent d’autres, d’abord par des ordonnances; 
 puis, sous Charles X., par la loi du 17 mai, 1826, qui diminua 
 les droits d’exportation, et aggrava encore dans une pro¬ 
 portion considerable les droits d’entree sur la plupart des 
 produits agricoles. Les laines brutes dtrangCes, par exemple, 
 qui payaient 10 fr. au tarif de la loi' de 1820, avaient ete 
 imposes par ordonnance a 30 fr. en 1823, a 40 en 1824, et la 
 loi de 1826, sanctionna cette derniCe taxe: c’Cait en quelque 
 sorte exclure enticement les importateurs de nos marches 
 ruraux. Autre aggravation sur les boeufs qui, maigres ou 
 gras, payerent 50 fr.; meme droit pour les chevaux. Sur les 
 couvertures de laine, l’acier fondu, les cordages, les plumes 
 a ecrire et d’autres articles, les taxes furent doubiees. Elies 
 furent quadrupiees sur la plupart des tissus de fil. Des sur¬ 
 taxes nombreuses furent imposees sur les marchandises im- 
 portees par navires etrangers; des primes d’exportation 
 accordees aux manufacturiers. 1 
 
 La loi de 1826, compieta le syst^me restrictif de le Restau- 
 ration. Quelques-uns de ses plus habiles defenseurs, le comte 
 de Yillele entre autres, le considCaient “ comme un moyen 
 temporaire, mais indispensable, offert a la production fran- 
 §aise, de se mettre autant que la nature des choses le permet, 
 en 6quilibre avec la production etrangCe.” Mais ces pro¬ 
 hibitions temporaires, loin de tendre a disparaitre, devaient 
 fatalement se multiplier, s’aggraver, se consolider. 
 
 Le gouvernement 6tait plus sage que les partis. Toutefois, 
 s’il avait sur ces questions plus de lumieres que la Chambre, 
 parce qu’il Cait moins aveugl4 par des interets particuliers, il 
 n’avait ni des convictions assez fortes ni une puissance assez 
 ind^pendante pour rdsister victorieusement: peu des ministres 
 auraient consenti a jouer leur portefeuille sur une question de 
 douanes, surtout avec tant de chances de perte. Le gouverne¬ 
 ment se contentait done de modCer les ardeurs inconsidCCs 
 des protectionnistes, tout en se proclamant ouvertement le 
 d6fenseur du syst£me. De temps a autre, il faisait entendre 
 
 1 Voir le Moniteur de 1826, pp. 177 et 807. 
 
164 
 
 ECONOMIC HISTORY . 
 
 a la tribune quelque avertissement, comme le baron Louis en 
 1814. Le baron de Saint-Cricq lui-meme, dans l’expose des mo¬ 
 tifs de la loi du 28 avril, 1816, s’dtait ex prime avec beaucoup de 
 mesure : “ Nous aurions moins de progres a faire,” disait-il, “ si 
 une trop longue interruption dans nos relations commerciales 
 n’eut constitue une prohibition a l’abri de laquelle on a pu ne- 
 gliger, sans danger, des moyens de perfectionnement qu’une 
 heureuse rivalitd n’aurait pas manque de ddvelopper.” . . . 
 Pour admettre cette rivalite, “ nous avons du,” ajoutait-il, “at- 
 tendre que les temps et les progres d’une opinion qui s’eclaire 
 tous les jours davantage aient resolu cette grande question.” 
 Malheureusement, c’etait liors du palais Bourbon que les 
 lumieres se faisaient peu a peu ; dans 1’Assemblee, l’evene- 
 ment prouva que d’ordinaire les interets s’obstinent et ne 
 s’eclairent pas. Ainsi le veut la nature humaine. Ouvrez la 
 porte du privilege, la foule s’y precipitera, et on s’y etouffcra 
 bien longtemps avant de comprendre que l’on cut dte plus a 
 l’aise en plein air que dans une enceinte rdservee, mais ou. tout 
 le monde a voulu entrer. 
 
 Cet encombrement finissait par devenir genant pour les pro- 
 tectionnistes eux-memes, qui dtaient obliges de rudoyer les 
 trop nombreux pretendants, et d’invoquer contre eux la the- 
 orie du salut public. “ Ne sait-on pas,” disaient-ils, “ que les 
 societes ne subsistent et ne prosperent que par les sacrifices 
 individuels ?” 1 Ils vantaient, et avec raison, la prospdrite 
 industrielle de la France sous le governement des Bourbons ; 2 
 mais c’etait a tort qu’ils en rapportaient l’honneur aux taxes 
 prohibitives. Ils ne comprenaient pas que, sous de bonnes 
 comme sous de mauvaises lois, une socidtd peut se developper, 
 quand elle a en elle de puissantes causes de vitality, et qu’en 
 pareil cas, les details de l’administration qu’il ne faut pourtant 
 jamais dedaigner, facilitent ou retardent le progres, mais sans 
 l’etouffer. Or la France du dix-neuvieme siecle dtait anim^e 
 par deux principes sup^rieurs qui la faisaient alors grandir, 
 malgrd les obtacles : la science et la libertd. 
 
 1 Rapport de M. Fouquier-Long, Moniteur de 1816, p. 406. 
 
 2 Sous ses rois legitimes, ce beau royaume jouit de tous les bienfaits de la 
 paix; chaque jour ses riehesses s’accroissent, la grande masse de la population 
 les partage, le cercle des jouissances individuelles s’etend. — Ibidem. 
 
LA POLITIQUE BE LA RES TA UR A TI ON. 
 
 165 
 
 A l’exterieur, le systeme prohibitif devait necessairement 
 amener, comme a l’^poque de la lutte de Colbert contre les 
 Hollandais, des m^contentements, et par suite des represailles 
 et des capitulations. La Restauration ceda d’abord devant les 
 menaces des Etats-Unis, et signa la convention de 1822, qui 
 etablissait entre les deux marines le principe de la recipro¬ 
 city ; 1 puis elle ceda devant l’Angleterre, 2 et bientdt elle 
 traita sur pied d’egality avec les fitats-Unis. 3 
 
 Le spectacle de la richesse croissante, non-seulement en 
 France, mais dans la plupart des Etats de l’Europe, ou la 
 paix favorisait Lessor des entreprises, avait pourtant stimule 
 les etudes d’economie politique. L’Angleterre commen^ait a 
 fixer son attention sur le sort de classes laborieuses, et Hus- 
 kisson venait de la faire resolument entrer dans les voies de la 
 liberte commerciale. L’Allemagne ecoutait la voix de List 
 proclamant les bienfaits d’une union douaniere, et organisait 
 le Zollverein. 
 
 La France, qui avait eu, au dix-huitieme si£cle, le myrite 
 de poser avec Quesnay les premiers fondements de la science 
 economique, la retrouvait transformee par Adam Smith, et en 
 rassemblait, avec J. B. Say, les elements en un corps de doc¬ 
 trine methodique. Le Traite <TEconomic Politique , publie 
 pour la premiere fois sous le Consulat, remanie et amyiiory 
 dans cliacune des editions successives, 4 rypandait de justes idyes 
 sur les lois de la production et de la distribution des richesses, 
 
 1 “ Art. 1. Les produits naturels ou manufactures des Ltats-Unis importes 
 en France sur batiments des Etats-Unis, payeront un droit additionel qui n’ex- 
 eedera pas 20 fr. par tonneau de marchandises, en sus des droits payes sur les 
 memes produits naturels ou manufactures des Ltats-Unis, quand ils sont im¬ 
 portes par navires fran 9 ais.—Art. 2. Les produits naturels ou manufactures 
 de France, importes aux Etats-Unis sur batiments fran 9 ais, payeront un droit 
 additionnel qui n’excedera pas 3 dollars 75 cents par tonneau de marchandise, 
 en sus des droits payes sur les memes produits naturels ou manufactures de 
 France, quand ils sont importes par navires des fCtats-Unis.” — Convention de 
 navigation et de commerce conclue entre la France et les Etats-Unis le 24 juin 
 1822. 
 
 2 Traite de navig. avec l’Angleterre, du 8 fevrier, 1826. 
 
 3 Traite de comm, et de navig. du 7 juin, 1826. 
 
 4 La premiere edition est de 1803. Quatre autres editions ont etc publiees, 
 a un grand nombre d’exemplaires, pendant la Restauration, en 1814, 1817, 1819, 
 et 1826. 
 
166 
 
 ECONOMIC HISTORY. 
 
 et rauteur les avait lui-meme, depuis 1819, propagees au Con¬ 
 servatoire des arts et metiers dans l’enseignement dont l’avait 
 charge le comte Decazes. 1 
 
 Non-seulement il montrait, comme Adam Smith, la source 
 des richesses dans le travail; mais le premier par une th^orie 
 neuve 2 autant que simple, il faisait apercevoir les liens de 
 solidarity qui unissent les differentes industries et dans une 
 meme nation et entre des nations diverses. “ De toute 
 njani^re,” disait-il avec la rectitude du bons sens, “ 1’achat 
 d’un produit ne peut etre fait qu’avec la valeur d’un autre. — 
 La premiere consequence qu’on peut tirer de cette importante 
 v^rite, c’est que, dans tout Etat, plus les producteurs sont 
 nombreux et les produits multiplies, et plus les debouches sont 
 faciles, varies, et vastes. — Une seconde consequence du meme 
 principe, c’est que chacun est intyresse a la prosperity de tous, 
 et que la prospyrite d’un genre d’industrie est favorable a la 
 prosperity de tous les autres.—Une troisieme consyquence 
 de ce principe fecond, c’est que l’importation des produits 
 ytrangers est favorable a la vente des produits indigenes; 
 car nous ne pouvons acheter les marchandises ytrangeres 
 qu’avec des produits de notre industrie, de nos terres et 
 
 de nos capitaux, auxquels ce commerce, par consyquent, 
 
 % 
 
 procure un debouche.” 3 
 
 Ces principes ytaient bien diffyrents de ceux qu’on pro- 
 fessait a la Chambre des Dyputys. Us constituaient un 
 remarquable progres dans la maniere non-seulement de com- 
 prendre les questions commerciales, mais d’envisager la 
 politique tout entiere. L’opposition apparente des intyrets 
 avait rendu nationale la haine de l’ytranger et placy les 
 peuples vis-a-vis les uns des autres dans un ytat permanent 
 d’hostility secrete ou avouee; les sages eux-memes le pro- 
 clamaient. “Telle est la condition humaine,” ycrivait Vol¬ 
 taire, “ que souhaiter la grandeur de son pays, c’est souhaiter 
 du mal a ses voisins. . . . Il est clair qu’un pays ne peut 
 
 1 Publie sous le titre de Cours complet d’Economic politique pratique. 
 
 2 Autant que peuvent etre neuves les observations du bons sens. Un doge 
 de Venise parlait au quinzieme siecle comme J. B. Say au dix-neuvieme. Voir 
 la lepon d’ouverture de M. Bandrillart au College de France, annee 1866. 
 
 3 Traits d’Economie politique, edition de 1841, pp. 141, 144, 145. 
 
LA POLITIQUE DE LA RESTAURATION. 
 
 167 
 
 gagner sans qu’un autre perde.” 1 De cette opinion d^rivait 
 naturellement la balance du commerce et l’esprit du systeme 
 proliibitif. La theorie des debouches de J. B. Say ouvrait un 
 horizon bien autrement large an commerce et a la philosophic 
 politique. Mais, quoique produite a la tribune, avec beaucoup 
 de reserve, par quelques orateurs de la gauche, elle ne pouvait 
 avoir Tagrement de la majority : les interets comprennent dif- 
 ficilement les theories qui les genent. 
 
 Cependant le minist£re Yillele, devant l’hostilite manifeste 
 de la bourgeoisie parisienne, avait fait appel a l’opinion de la 
 France; les Elections luiavaient et6 contraires, et il s’^tait 
 retire pour faire place au cabinet le plus liberal qui ait dirige 
 les affaires sous la Restauration. Martignac crea un ministere 
 du commerce et y appela le baron de Saint-Cricq. C’etait 
 le moment de tenter une reforme ; la gauche appuyait le 
 cabinet, et, dans son adresse, la Chambre proclama “ que 
 le premier besoin de l’industrie et du commerce etait la 
 liberty,” Une commission d’enquete fut nommee par le 
 gouvernement en 1828. 2 La conclusion, qui etait loin de 
 donner pleine satisfaction au voeu de l’adresse, fut que 
 “ dans l’dtat de l’industrie en France en presence des interets 
 qui s’y trouvent engages, on doit s’en tenir a un systeme rai- 
 sonn£ de protection, c’est-a-dire, d’une part, proteger efficace- 
 ment le travail du pays, et de l’autre, etudier soigneusement, 
 pour chaque industrie, la quotite de la protection necessaire 
 en presence des dommages que pouvait cr^er une protection 
 excessive.” 3 Le baron de Saint-Cricq pouvait, comme tout 
 l’administration, l’accepter sans renoncer a ses propres idees ; 
 il d^clara a la tribune avoir toujours pense et professe qu’il 
 ne fallait “ni tout permettre ni tout interdire,” et que, pourvu 
 qu’on admit le principe de la protection, il admettait tr&s-bien, 
 de son c6t£, la controverse sur la limite a fixer. Or, le projet 
 qu’il pr^senta, sans changer l’esprit des tarifs, adoucissait les 
 
 1 Voltaire, Diet, pkilos., \o partie. 
 
 2 II y eut des commissaires dans la plupart des grandes villes et pour les 
 grandes industries. Voir, passim, le Momteur de 1828. 
 
 8 Moniteur de 1829, p. 810. Expose des motifs par le baron de Saint-Cricq. 
 Cependant deux enquetes seulement furent faites methodiquement et publiees. 
 L’Enquete sur les fers, 1828, 1 vol. in-4, et I’Enquete sur les sucres, 1828, 1 vol. in-4. 
 
168 
 
 ECONOMIC HISTORY. 
 
 taxes de certains produits exotiques, et annongait que, cinq ans 
 aprds la publication de la loi, le droit sur les fers serait di- 
 minuti d’un cinquieme. C’etait un commencement de reforme 
 qui, par-son extreme moderation, avait l’avantage de ne pas 
 froisser trop rudement les intdrets, et la chance d’etre adopte. 
 II ne fut pas meme discutd. Le ministere Martignac tomba, 
 et son successeur se garda bien de reprendre un projet des- 
 agreable a la droite. 
 
 Le systeme prohibitif qui caracterise la legislation douaniere 
 de la Restaurationdemeura intact. Constitue par les lois de 1819 
 et de 1821 pour les cereales, par les lois de 1816, de 1817, de 
 1818, de 1820, de 1822, et de 1826 pour les produits de l’agri- 
 culture et des grandes fabriques, il s’etait propose comme but 
 de rdserver aux seuls producteurs frangais le marcbd frangais. 
 But bien difficile a atteindre dans un etat de civilisation ou 
 les rapports des peuples sont si frequents; impossible et il- 
 logique, des qu’on avait en meme temps la pretention de favor- 
 iser et d’etendre le commerce extdricur. Pour reussir, sans 
 commettre de trop grandes injustices, il aurait fallu pouvoir 
 isoler la France comme le Japon s’est longtemps isold au 
 milieu de l’Ocean ; le travail qa’on se plaisait a appeler na¬ 
 tional aurait seul pourvu, taut bien que mal, aux besoins des 
 nationaux, et tous auraient subi la condition commune. Mais 
 des que la barriere ne s’dlevait que pour quelques-uns, il y 
 avait necessairement un privilege en faveur de ceux, quels 
 qu’ils fussent, qui aA^aient le droit, comme producteurs, d’im- 
 poser leurs marchandises a leurs concitoyens et le droit, 
 comme consommateurs, de choisir entre les marchandises de 
 leurs concitoyens et celles des strangers. Il devait y avoir, 
 par suite, une ardente competition pour etre admis a la 
 jouissance de ce privilege. 
 
 Pour assurer a l’interieur Fexecution des lois prohibitives, 
 il fallut etendre encore a de nouveaux objets la surveillance 
 administrative, — ordonner, par exemple, que les tissus et 
 tricots de la nature de ceux qui etaient prohib^s ne fussent 
 mis en vente qu’avec une marque particuliere, 1 prescrire le 
 
 1 Ord. des 8-14 aoftt, 181G. 
 
LA POLITIQUE DE LA RE ST A UR A TI ON. 
 
 169 
 
 mode de devidage et d’enveloppe de cotons files en France, 1 
 faire de visites domiciliaires, saisir les marchandises suspectes, 
 exciter des m4contentements et des reclamations. 2 Un mal 
 conduisait a un autre mal. 
 
 II faut dire, pour mieux faire comprendre les causes de la 
 politique commerciale en France, que dans toute l’Europe le 
 vent 6tait alors a la protection. Apres les rudes secousses de 
 l’Empire, les nationality s’etant reconstitutes, les gouverne- 
 ments avaient favorist dans une certaine limite cette tendance 
 qui semblait assurer leur independance politique, et chacun 
 s’etait garde d’autant plus de ses voisins que les evenements 
 Favait, quelque temps auparavant, lie plus etroitement a eux. 
 Partout on avait repousst les produits etrangers, et parti- 
 culierement les produits anglais, dont ^introduction a bas 
 prix avait fort dtconcerte les manufacturers du continent. 
 La France, il est vrai, avait donne Fexemple aux Pays-Bas, 
 h l’Allemagne, a l’Espagne; mais ceux-ci s’etaient empresses 
 de le suivre, et parfois 1’avaient depasse. L’Angleterre elle- 
 meme etait restee, jusqu’en 1824, herissee de prohibitions, 
 qu’elle avait meme aggravtes au profit de ses proprietaires 
 fonciers. 
 
 La protection ttait au pouvoir en Europe. Toutefois l’eco- 
 nomie politique, patronne de la liberte commerciale, lui livrait 
 deja de rudes combats dans le domaine de la science; elle tri- 
 omphait dans le domaine des faits; elle donnait Huskisson 
 h l’Angleterre et en France elle commen§ait a miner, avec le 
 double argument de la consommation et des debouclies, la 
 forteresse tlevee par des inttrets privts et soutenue par des 
 prejugcs : mais la forteresse 6tait (inergiquement d^fendue. 
 
 1 Loi du 21 avril, 1818; loi du 26 mai, 1819; ord. du 16 juin, 1819; des 1-15 
 dec. 1819; des 8-24 avril, 1829. 
 
 2 Prenant en consideration les representations adressees de la part d’un 
 grand nombre de manufacturers et de marchands de bonneterie, soit sur l’insuf- 
 fisance, en ce qui les concerne, des delais precedemment accordes, soit sur les 
 difficultes qui s’opposent k ce que la marque puisse etre separement appliquee St 
 chacun des objets provenant de leur industrie. — Ord. des 23-30 sept. 1818. 
 
170 
 
 ECONOMIC HISTORY . 
 
 * 
 
 VIII. 
 
 THE ZOLLVEREIN. 
 
 From Bowring’s Report on the Prussian Commercial Union, 
 Parl. Doc. 1840, Yol. XXI. pp. 1-17. 
 
 I N compliance with the instructions which I had the honor 
 to receive from your lordship, dated Foreign Office, July 
 14,1839,1 proceed to report on the progress, present state, 
 and future prospects of the Prussian Commercial League. 
 
 No doubt this great Union, which is known in Germany by 
 the name of the Zollverein , or Zollverbande (Toll Associa¬ 
 tion or Alliance), derived its first and strongest influence from 
 a desire to get rid of those barriers to intercommunication 
 which the separate fiscal legislation of the various States of 
 Germany raised among a people whom natural and national 
 feelings, as well as common interests, would otherwise have 
 connected more intimately and permanently together. 
 
 The Zollverein represents, in Germany, the operation of 
 the same opinions and tendencies which have already effected 
 so many changes in the commercial legislation of other coun¬ 
 tries. In the United Kingdom the custom-house laws which 
 separated Scotland and Ireland from England have been 
 superseded by a general system applicable to the whole. In 
 France the local barriers and the local tariff's have given way 
 to a general and uniform system of taxation. Even before 
 the Commercial League associated so many States in a com¬ 
 mon union, several less extensive combinations had prepared 
 the way for a more diffusive intercourse. Between the States 
 which do not form part of the Prussian League — as, for 
 example, between Hanover and Brunswick and Oldenburgh,— 
 the same tariffs have been adopted, and the payment of duties 
 
THE ZOLLVEREIN . 
 
 1T1 
 
 in one of the States is sufficient to secure free sale or transit 
 in the other. 
 
 The Commercial League is, in fact, the substantial repre¬ 
 sentative of a sentiment widely, if not universally, spread in 
 Germany, — that of national unity. It has done wonders in 
 breaking down petty and local prejudices, and has become 
 a foundation on which future legislation, representing the 
 common interests of the German people, may undoubtedly be 
 hereafter raised. If well directed in its future operation, the 
 Zollverein will represent the fusion of German interests in" 
 one great alliance. The peril to its beneficial results will 
 grow out of the efforts which will be made, and which are 
 already made, to give by protections and prohibitions an undue 
 weight to the smaller and sinister interests of the Yerein. But 
 if its tariffs be so moderate and so judicious as to allow full 
 play to the interests of the consumers in the field of competi¬ 
 tion ; if there should be no forcing of capital into regions of 
 unproductiveness or of less productiveness; if the claims of 
 manufacturers to sacrifices in their favor from the community 
 at large be rejected; if the great agricultural interests of Ger¬ 
 many recover that portion of attention from the commercial 
 union to which they are justly entitled; if the importance of 
 foreign trade and navigation be duly estimated, — the Zoll¬ 
 verein will have the happiest influence on the general prosper¬ 
 ity. And that the League has been much strengthened by the 
 experience of its benefits; that its popularity is extending; 
 that its further spreading may be confidently anticipated, 
 — appears to be indubitable. In fact, the Zollverein has 
 brought the sentiment of German nationality out of the 
 regions of hope and fancy into those of positive and material 
 interests'; and representing, as it does, the popular feeling of 
 Germany, it may become, under enlightened guidance, an 
 instrument not only for promoting the peace and prosperity 
 of the States that compose it, but of extending their friendly 
 relations through the world. 
 
 Considerations both of morality and economy were not 
 wanting to recommend the Commercial Union to the German 
 people. Not only were the numerous barriers and various 
 
172 
 
 ECONOMIC HISTORY. 
 
 legislation of tlie German States great impediments to trade, 
 but they created a considerable amount of contraband traffic, 
 and caused the country to swarm with petty smugglers, who 
 lived upon the profits which the varieties of the tariffs placed 
 within their reach. The custom-house administration was 
 costly, and generally inefficient, from the extent of frontier 
 to be guarded; so that the establishment of one large, instead 
 of a variety of small circles, has led at the same time to a 
 great diminution of cost and a great increase of efficiency, 
 
 while it has removed from all the interior of Germanv that 
 
 — */ 
 
 demoralizing influence which the presence of multitudes of 
 illicit traders and smugglers always brings with it. 
 
 The ^ollverein was not, as it has been often asserted to be, 
 a union formed in hostility to the commercial interests of 
 other States ; it was not intended prematurely to create a 
 manufacturing population in rivalry with or opposition to the 
 manufacturing aptitudes of Great Britain; it was by no 
 means the purpose of its founders to misdirect capital to 
 unprofitable employment, to sacrifice agriculture to trade, 
 or to encourage less the field than the factory. The Zoll- 
 verein was the substantial expression and effect of a general 
 desire among a great nation, split into many small States, 
 but still of common origin, similar manners, speaking the 
 same language, educated in the same spirit, to communicate, 
 to trade, to travel, without the annoyance and impediments 
 which the 1 separate fiscal regulations of every one of their 
 governments threw in the way. If, in the natural process of 
 things, the tariffs of the Zollverein have become hostile to 
 the importation of foreign, and especially of British produce, 
 it is because our laws have prevented the greater extension of 
 commercial relations with Germany. We have rejected the 
 payments they have offered ; we have forced them to manu¬ 
 facture what they were unable to buy ; and we have put in 
 their hands the means of manufacturing cheaply, by refusing 
 to take the surplus of their agricultural produce, the non-ex¬ 
 portation of which has kept their markets so low that small 
 wages have been sufficient to give great comforts to their 
 laborers. 
 
THE ZOLLVEREIN. 
 
 173 
 
 There can be no doubt that the hostile tariffs of other 
 nations, and especially the corn and timber laws of Great 
 Britain, served greatly to strengthen the arguments in favor 
 of commercial union. It was felt necessary to extend the 
 home market while foreign markets were closed, or only 
 partially and irregularly opened, to the leading articles of 
 German production. 
 
 “ We should not have complained,” says a distinguished 
 German writer, in 1835, “ that all our markets were overflow¬ 
 ing with English manufactures, — that Germany received in 
 British cotton goods alone more than the hundred millions 
 of British subjects in the East Indies, — had not England, 
 while she was inundating us with her productions, insisted on 
 closing her markets to ours. Mr. Robinson’s Resolutions in 
 1815 had, in fact, excluded our corn from the ports of Great 
 Britain; she told us we were to buy, but not to sell. We 
 were not willing to adopt reprisals; we vainly hoped that 
 a sense of her own interest would lead to reciprocity. But 
 we were disappointed, and we were compelled to take care of 
 ourselves.” 1 
 
 Thus, while on the one hand, the Zollverein was advo¬ 
 cated as a measure of self-defence against the hostile legis¬ 
 lation of foreign nations, it should not be forgotten that, as 
 respects the confederated States, it represented the principles 
 of unrestricted intercommunication. 
 
 As between more than twenty-six millions of Germans, it 
 was the establishment of free trade ; restrictions, duties, pro¬ 
 hibitions, custom-houses, there are none, as far as regards the 
 various States that comprise the Commercial Union. What¬ 
 ever impediments the tariffs create to commercial communi¬ 
 cation with foreign lands, the League has thrown down every 
 barrier which stood in the way of trading intercourse between 
 the different branches of the great German family, which the 
 League represents. And, as the conception of the League was 
 popular and national, so it cannot be denied that its workings 
 have been, on the whole , favorable to the prosperity and to the 
 
 1 Kanke’s “ Historisch-politische Zeitschrift.” 
 
1T4 
 
 ECONOMIC HISTORY. 
 
 happiness of the German community. Tariffs less hostile to 
 the manufactures and foreign commerce of nations would, as 
 I conceive, have greatly added to the beneficial effects of the 
 Union. Jts more extended communications with other coun¬ 
 tries would have given greater energy, and opened a wider 
 field to the increased activity of the home trade. There is no 
 reason why foreign commerce should not have been benefited 
 to the same or even a wider extent than internal industry, 
 by the overthrow of that local legislation which impeded in¬ 
 tercourse, and by the introduction of a uniform and liberal 
 system of custom-house legislation. 
 
 The Zollverein now represents the interests (well or ill 
 understood) of more than twenty-six millions of inhabitants 
 of the most civilized and opulent parts of Europe, and has 
 accomplished one important result, namely, of exciting the 
 attention and of awakening the apprehensions of more than 
 one neighboring nation. What the Zollverein is to become 
 may depend as much upon others as upon themselves; and, 
 should its course be guided by enlightened economy and 
 sound commercial policy, it may become an instrument of 
 incalculable and boundless good. 
 
 Long before the Zollverein came into operation, the same 
 spirit which led to its formation had been exhibited in various 
 parts of Germany, leading to sundry local and even national 
 reforms in the commercial policy of the German States. 
 
 Some steps had been taken in Prussia, during the years 
 1816 and 1817, by sundry ordinances to introduce a general 
 and simple system of custom-house legislation, 1 and on the 
 26th May, 1818, a new tariff was published, which is, in fact, 
 the groundwork of the existing arrangements. Before this 
 period a different fiscal system prevailed in different parts 
 of the Prussian kingdom. The imposts in Brandenburg 
 amounted to 69 groschen — 7s. 4 d. per individual; in Silesia 
 they were only 22 groschen — 2s. 3^. The new law allowed 
 the unrestricted circulation of all foreign products which had 
 
 1 See especially the ordinance of 11th June, 1816 — “Zur Aufhebung der 
 Wasser-Binnen und Provinzialzolle zunachst in den alten Provinzen der 
 Monarchic.” 
 
THE ZOLLVEREIN. 
 
 175 
 
 once passed the frontier, and the free transit of all home pro¬ 
 ductions. The intention of this tariff of 1818 was to establish 
 10 per cent as the maximum of protection; and, had the 
 intention of the Prussians been carried into effect, there 
 would have been no grounds for complaint. 
 
 In speaking of the Prussian tariff to the House of Com¬ 
 mons, on the 7th May, 1827, Mr. Huskisson stated “that the 
 duties on the internal consumption of British goods are what 
 we should consider very low upon most articles, fluctuating 
 from 5 to 10 per cent — upon no one article, I believe, ex¬ 
 ceeding 15 per cent; ” but this was undoubtedly an incorrect 
 view of things, for it will appear, on the investigation of the 
 matter, that the duties on many articles of British manufac¬ 
 ture vary from 20 to 100 per cent upon the value; and 
 though no doubt the duty (being levied on the weight) has 
 much increased in ad valorem amounts since 1827, it was, 
 even then, from 20 to 60 per cent on various low-priced manu¬ 
 factures; nor was Mr. Huskisson warranted in saying that, 
 “ in the whole Prussian tariff, there is not a single prohibi¬ 
 tion,” inasmuch as imports of salt and playing-cards are 
 wholly prohibited, except for government account. 
 
 The most important step by which evidence was given of 
 the tendency of the different States of Germany to amalga¬ 
 mate their interests and to establish, instead of many tariffs, 
 one single system, was the union of Bavaria, Wiirtemberg, 
 Hohenzollern-Sigmaringen, and Hohenzollern-Hechingen, in 
 the commercial league of 28th July, 1824. Baden, the two 
 Hesses, and Saxony were afterwards invited to join the 
 League. The government of Prussia, alive to the state of 
 public opinion, had entered by various treaties, from 1819 to 
 1830, into a commercial league with Grand Ducal Hesse, 
 Lippe Detmold, and some smaller states, and in December, 
 1826, the enclaves (such portions of the territory as are sur¬ 
 rounded by another State) of Mecklenburg-Schwerin, Ripen- 
 Hesseland, Schoenberg, Anhalt-Kothen, Anhalt-Dessau, Hesse- 
 Homburg, and other States, joined the Prusso-Hessian Union; 
 while, in 1831, Saxony, Electoral Hesse, Saxe Weimar, Saxe 
 Meiningen, Saxe Coburg, Saxe Altenburg, and other united 
 
176 
 
 ECONOMIC HISTORY. 
 
 themselves to the Bavaro-Wurtemberg league. Each of these 
 two great branches naturally sought to extend its influence, 
 and each prepared the way for a fusion of the whole in one 
 great association. 
 
 On the 22d March, 1838, a treaty was concluded between 
 Prussia, Bavaria, Wurtemberg, Electoral and Ducal Hesse; 
 on the 30th March of the same year, Saxony joined the asso¬ 
 ciation ; on the 11th of May, Anhalt and Ducal Saxony united, 
 themselves. The ratifications were exchanged on the lltli of 
 May. This treaty is the basis of the Zollverein, or Com¬ 
 mercial League. It will be found at length in the Appendix 
 I. (Pari. Doc. pp. 73-78). In 1835 Baden united itself to the 
 League, and Nassau and Frankfort-on-the-Maine have also 
 become parties. 
 
 The first Prusso-Hessian Union, taking the name of the 
 Preussisch-IIessischen Zoll Verbande , comprising many smaller 
 States, such as Anhalt Dessau, Anhalt Neuberg, Saxe Coburg 
 Gotha, Anhalt Kotlien, Schwarzburg Sondershausen, Hesse 
 Homburg, Schwarzburg Rudolstadt, etc., represented, accord¬ 
 ing to the census of 1831, a population of 13,936,087 souls, 
 and contained a territory of 5,278 square German miles. 
 In 1833 it had, by the union of Electoral Hesse and the 
 increase of population, augmented the number of souls to 
 14,827,418, and the territory to 5,460 square German miles. 
 The States of Thuringia, containing about 900,000 inhabi¬ 
 tants, had also their commercial and toll union before they 
 joined the Prussian League in 1833, while Bavaria, Wurtem¬ 
 berg, Saxony, and Baden, brought between 8 and 9 millions 
 of population, and nearly 2,500 square German miles of terri¬ 
 tory into the confederation. 
 
 The following table exhibits the population of the States 
 now comprising the German Custom-house Union, to serve as 
 a basis for the Division of the Receipts at Triennial Periods: 
 
THE Z OLL VERE IN. 
 
 177 
 
 No. in Order. 
 
 Designation of the States which 
 have given their assent in 
 their own name. 
 
 Extent of ter¬ 
 ritorial su¬ 
 perficies in 
 square miles. 
 
 Extent of 
 the Custom¬ 
 house fron¬ 
 tier in miles. 
 
 Population according to the 
 Census agreed upon on 
 the 31st of December, in 
 
 1834. 1837. 
 
 1 
 
 Prussia, and the States 
 
 
 
 
 
 
 which have come to 
 an agreement with 
 her. 
 
 6,1573k 
 
 7743k 
 
 13,692,889 
 
 14,318,250 
 
 2 
 
 Bavaria. 
 
 1,4773k 
 
 1513k 
 
 4,251,118 
 
 4,319,887 
 
 3 
 
 Saxony . 
 
 2713k 
 
 58 
 
 1,595,668 
 
 1,652,114 
 
 4 
 
 Wiirtemberg .... 
 
 385 T b 5 o 
 
 9 10 
 °100 
 
 1,627,122 
 
 1,667,901 
 
 5 
 
 Grand Duchy of Baden. 
 
 2793k 
 
 60- 5 - 0 - 
 uv i 0 0 
 
 1,237,657 
 
 1,264,614 
 
 6 
 
 Electorate of Hesse . . 
 
 1 CO 10 
 10 Z 1QO 
 
 179 t 2 S 
 
 1 A 40 
 
 JL«I00 
 
 640,674 
 
 652,761 
 
 7 
 
 Grand Duchy of Hesse . 
 
 • • • • 
 
 769,691 
 
 791,736 
 
 8 
 
 Thuringian States . . 
 
 2833k 
 
 • • • • 
 
 908,478 
 
 931,340 
 
 9 
 
 Duchy of Nassau . . . 
 
 823k 
 
 • • • • 
 
 373,601 
 
 383,730 
 
 
 Total for Division 
 
 
 
 25,090,898 
 
 25,982,333 
 
 10 
 
 Frankfort 1 . 
 
 433 
 
 *100 
 
 • • • • 
 
 60,000 
 
 60,000 
 
 
 Total for Population. 
 
 8,2623k 
 
 1,0643k- 
 
 25,150,898 
 
 26,042,333 
 
 The Zollverein had to contend with a strong opposition in 
 its origin, not only from some of the States whose local posi¬ 
 tion forced them into the union, but from other German 
 States that continued independent, for the tariff pressed 
 equally on all, not parties to the League, whether neighbors 
 or foreigners. The Prussian tariffs of 1818 had been strongly 
 resisted by Electoral Hesse, Cassel, and other States. Saxony 
 denounced them as hostile, nay, fatal to her manufacturing 
 and commercial interests. Yet it cannot be denied that the 
 tariffs of 1818 were a great improvement upon the previously 
 existing legislation, for they replaced multitudes of prohibi¬ 
 tions and prohibitory duties by moderate imports. In 1826 
 the question of a union between Prussia and Hesse Darm¬ 
 stadt was discussed, and an inquiry was made, in case Hesse 
 Darmstadt should unite with Bavaria and Wurtemberg, 
 whether Prussia would be willing to entertain the subject 
 
 1 The population of Frankfort is not taken into the Division of the Reve¬ 
 nues, as this town receives an inalienable and invariable sum calculated on the 
 basis of a population of 60,000 souls (63,936). 
 
 12 
 
178 
 
 ECONOMIC HISTORY. 
 
 of a commercial treaty. The first answer of Prussia was 
 unfavorable, but the difficulties were at last surmounted, and 
 the League before referred to was formed between Prussia 
 and Hesse Darmstadt, of which the Prussian tariff of 1818 
 was the basis, the custom-houses between the two countries 
 being wholly removed, — each State, however, reserved the 
 right to establish duties of consumption on sundry articles of 
 food and drink; and Prussia was allowed to maintain the 
 monopoly of salt and playing-cards. 
 
 The objects proposed by the Zollverein were the removal 
 of all restrictions to communication and transit, the abolition 
 of all internal custom-houses, the establishment of a common 
 tariff and system of collection, and the repartition of the 
 receipts on all imports and exports according to the popu¬ 
 lation among all the members of the League. The States 
 reserved to themselves the right of introducing any local 
 arrangements which did not interfere with the general princi¬ 
 ples, — of nominating the functionaries of their own districts, 
 and of examining the accountancy of any part of the League. 
 The League is bound not to interfere with matters of local 
 revenue, such as port-dues, turnpikes, tolls, etc. The Prussian 
 tariff of 1818 was recognized as establishing the maximum of 
 duties. It was determined that a common system of moneys, 
 weights, and measures, should replace, as soon as possible, 
 the various complicated and discordant usages of the dif¬ 
 ferent States of the union, and that the whole influence of 
 the union should be directed towards the extension of its 
 commercial relations with other States. The intention of 
 the tariff is to admit raw materials without any, or on merely 
 a nominal duty. The lightest duty levied is on silk goods, 
 amounting to 110 dollars per cwt., or about 8 shillings ster¬ 
 ling per lb. 1 The common rate of duty is half a dollar, or 
 Is. 6d. per cwt. on all articles not specially excepted. The 
 tariff, as fixed by the Congress which has just closed its 
 labors, will be found in the Appendix II. (Pari. Doc., p. 78). 
 
 It would ill become me, in this report, to discuss — though 
 
 1 The duty levied by the English tariff on silk goods is from 11s. to 27s. 6(/. 
 per lb. 
 
THE ZOLLVEREIN. 
 
 179 
 
 I cannot pass over in absolute silence — the probable political 
 consequences of the establishment of the Zollverein. They 
 certainly were not lost sight of by its founders. The intimate 
 connection between commercial and political interests is obvi¬ 
 ous ; and the advocates of the League did not fail to perceive 
 that no political alliance would be so strong as that based 
 upon a community of pecuniary and social interests. The 
 jarring of differently constituted institutions, the local jeal¬ 
 ousies which still exert their influences, the clashing of 
 personal and privileged interests with the public weal, have 
 prevented, to a certain extent, the fusion which would other¬ 
 wise have taken place, so that the political and the commercial 
 policy are not always identified; but it cannot be denied that 
 under a wise direction the machinery of the Zollverein would 
 become a very mighty political engine, which would be 
 brought to bear with great power upon the future concerns 
 of Europe and the world at large. 
 
 The general feeling in Germany towards the Zollverein is, 
 that it is the first step towards what is called the Crerman- 
 ization of the people. It has broken down some of the 
 strongest holds of alienation and hostility. By a community 
 of interests on commercial and trading questions it has pre¬ 
 pared the way for a political nationality, — it has subdued 
 much* local feeling, prejudice, and habit, and replaced them 
 by a wider and stronger element of German nationality. 
 
 The Zollverein, by directing capital to internal, in prefer¬ 
 ence to external trade, has already had a great influence 
 in improving the roads, the canals, the means of travelling, 
 the transport of letters, — in a word, in giving additional im¬ 
 pulse to inland communications of every sort. The isolation 
 of the several German States, with separate fiscal interests, 
 and often hostile legislation, prevented those facilities from 
 being given to intercourse which are alike the evidence and 
 the means of civilization. On every side beneficial changes 
 are taking place. Railways are being constructed in many 
 parts of the German territory, steamboats are crowding the 
 German ports and coasting along the German shores; every¬ 
 thing is transported with greater cheapness and rapidity. 
 
180 
 
 ECONOMIC HISTORY. 
 
 But whatever opinions may be formed as to the effect of 
 the Commercial League upon British interests, it is now too 
 late to discuss them beneficially. The League exists, and is 
 not likely to be broken up; the separate interests of the 
 different States are blended in the common interests of the 
 Zollverein; all the topics of comparison between the general 
 tariff and the tariffs which previously existed in the various 
 independent States of the union are now removed; whatever 
 existed of local fiscal influence is merged in the common alli¬ 
 ance, and the League must now be accepted and treated with 
 as a body more influential than were any of its members, — 
 capable of controlling the smaller influences of its component 
 parts by the concentrated influence of the whole. 
 
 It is natural that a body so powerful as the Commercial 
 League should seek to extend its influence. More coasts, 
 more ports, and more shipping are the three desiderata which 
 are put forward by its advocates and members. For the 
 coasts and the ports of the Baltic belonging to the union are 
 so much cramped and prejudiced by the Sound dues that they 
 cannot meet, in any of the great emporiums of trade out of 
 the Baltic, the competition of the ports and coast south of the 
 Baltic; while the ports, such as Hamburg, Rotterdam, etc., 
 which are the natural outlets of the great rivers which run 
 through the provinces of the League, all belong to States not 
 associated with it. The subject has been discussed of giving 
 a flag to the Zollverein, as it has already a coinage; but to 
 possess a marine, both warlike and commercial, in order to 
 compete with the growing squadrons of Russia, and to be on 
 a level with the Hanse Towns and with Holland, is an object 
 much insisted on, but which does not seem to present any 
 immediate prospects of realization. 
 
 On the 30th of July, 1838, an arrangement was made 
 (Appendix III., Pari. Doc., p. 95) for introducing a unity of 
 currency, to take effect from the 1st of January, 1841, the 
 unity to consist of the mark, weighing 233 grammes. 
 
 The mark to be represented by fourteen dollars; the dollar 
 by If florins; and the florin to be ^ of a dollar. 
 
 The accounts to be kept either in dollars (Prussian crowns) 
 or florins (guilders). 
 
THE ZOLLVEREIN. 
 
 181 
 
 Two millions of pieces of two dollars each are to be coined 
 before the 1st of January, 1842. The coinage has already 
 been introduced; it bears the effigies of the King of Prussia, 
 and has on the reverse the inscription of Vereins Miinze , or 
 “ Association’s Money.” 
 
 The future influences and direction of the Zollverein will 
 be determined not alone by the growing strength of the inter¬ 
 ests it represents, but by the direction which foreign nations 
 trading with Germany may be able or willing to give to their 
 own commercial legislation; for, however enlightened may 
 be the policy, and however sincere the purpose, of the states¬ 
 men of Germany to prevent the League becoming an in¬ 
 strument for advancing the minor interests of certain classes 
 of producers, as opposed to the major interests of greater 
 producers, and to the general interests of the whole body 
 of consumers, all experience shows that the minor interest, 
 being more youthful, vigorous, and concentrated, weighs in 
 the balance for much more than its real value. The agricul¬ 
 tural interest, for example, which in the States of the union 
 is the most diffused, the most important, and the most pro¬ 
 ductive, will not, in the contest with the rising manufacturing 
 interest, obtain its full share of power, dependent as it must 
 naturally be to a great extent on the demands of foreign 
 markets. For it is to foreign markets alone it can look for 
 the sale of that surplus produce which home demand does not 
 consume, and which, as long as it remains without vent, must 
 create a depression in the price of the whole quantity pro¬ 
 duced. Hitherto the operation of the Zollverein has been to 
 strengthen the manufacturing interest at the expense of the 
 agricultural. As the foreign demand for agricultural produce 
 has been uncertain and capricious, the low average prices 
 have operated, on the one hand, in forcing capital out of 
 agricultural into manufacturing channels; while the cheap 
 price of food has given to the German artisan great advan¬ 
 tages in his competition with the labor of countries in which 
 the price of food is relatively higher. 
 
 Were foreign markets accessible to the German agricul¬ 
 turist, there is no doubt the flow of capital towards manu- 
 
182 
 
 ECONOMIC HISTORY. 
 
 factures would be checked, first by the increased demand for 
 agricultural labor, and, secondly, by the loss of the advantage 
 which the German artisan now possesses in the comparative 
 cheapness of food. For the prices of the countries which 
 would be importers of German corn, for example, would deter¬ 
 mine the prices of corn in the German markets for the Ger¬ 
 man consumer. In his own market he must give the same 
 price as the foreign buyer who comes into that market. 
 
 One of the great difficulties with which sound commercial 
 principles have had to contend, in Germany as elsewhere, is 
 the too general adoption of a phraseology which has grown 
 out of a vicious legislation, and has to a great extent popu¬ 
 larized error. High duties on imported articles are justified 
 by the plea that it is necessary to afford protection to the 
 producer , while the substantial fact of the consequent sacrifice 
 of the consumer is wholly kept out of view. For one case in 
 which the loss to the many is put forward, there are a thousand 
 in which the profits to the feiv are urged as sufficient sanction 
 to perverse legislation. 
 
 Dieterici 1 gives a very curious table (p. 127), showing the 
 operation of the Zollverein during the years 1833 to 1835, on 
 imported articles. 
 
 On foreign articles of consumption not coming into compe¬ 
 tition with German articles the increase in the three years is 
 as fifty-four to forty-six ; in foreign articles of consumption 
 competing with German articles the decrease is as twenty- 
 four to twenty-nine ; in half-manufactured articles serving for 
 further labor the increase is only from 9,161 to 9,520; while 
 in wholly manufactured articles the decrease is from thirteen 
 to ten. . . . 
 
 The facilities created for communication by the improve¬ 
 ment of roads, canals, etc., have greatly aided the inland 
 trade of Germany. At the close of the last war there were no 
 
 1 I have had occasion constantly to consult Dieterici’s “ Statistische Ueber- 
 sicht der wichtigsten Gegenstande des Verkehrs und Verbrauchs im Preussi- 
 schen Staate und im Deutschen Zollverbande, von 1831 bis 1836, aus amtlichen 
 Quellen dargestellt,” Berlin, 1838. The valuable facts he has collected will be 
 found scattered over the whole of this report. 
 
THE ZOLL VEREIN. 
 
 183 
 
 roads of the first class either in Pomerania, Posen, or Prussia 
 proper. In 1816 the number of German miles laid down in 
 Chausdes was 523f = 2,408 English; in 1828 it w r as l,062|- = 
 4,889 ; and in 1831,1,228-^ = 5,610 ; and this amount has been 
 greatly increased at the present time. 
 
 Of the activity of communication, the following official 
 returns of the quantities of goods which passed through Prieg- 
 nitz will furnish remarkable evidence : — 
 
 Years. 
 
 Saxony and 
 Bohemia. 
 
 Magdeburg. 
 
 Berlin. 
 
 Cottbus. 
 
 Breslau. 
 
 Halle. 
 
 Warsaw. 
 
 Other places. 
 
 Total in 
 Cwt. 
 
 
 Cwt. 
 
 Cwt. 
 
 Cwt. 
 
 Cwt. 
 
 Cwt. 
 
 Cwt. 
 
 Cwt. 
 
 Cwt. 
 
 
 1830 . . . 
 
 246,934 
 
 683,020 
 
 446,. 557 
 
 48,322 
 
 138,813 
 
 
 
 153,314 
 
 1,716,963 
 
 1831 . . . 
 
 229,412 
 
 595,610 
 
 519,086 
 
 45,574 
 
 158,196 
 
 46,988 
 
 . . . 
 
 34,088 
 
 1,628,954 
 
 1832 . . . 
 
 246,145 
 
 720,289 
 
 540,246 
 
 53,297 
 
 147,617 
 
 57,213 
 
 18,489 
 
 94,899 
 
 1,878,199 
 
 1833 . . . 
 
 260,564 
 
 700,858 
 
 477,979 
 
 32,962 
 
 132,612 
 
 50,948 
 
 9,694 
 
 80,595 
 
 1,746,196 
 
 1834 . . . 
 
 307,087 
 
 927,764 
 
 755,038 
 
 26,575 
 
 221,623 
 
 70,728 
 
 11,067 
 
 906,112 
 
 3,225,998 
 
 It must not be forgotten that Great Britain had long enjoyed 
 peculiar advantages in the facilities of communication; and to 
 these facilities much of the activity and success of her manu¬ 
 facturing and commercial industry is attributable. • For many 
 years her progress in this respect created almost a monopoly 
 of benefit; but the advantages she enjoyed are now partici¬ 
 pated in by other nations; and in Germany especially great 
 advances have been made, and continue to be made, in all 
 those improvements which facilitate intercourse. 
 
 It is obvious that England cannot long maintain exclusive 
 possession of advantages which civilized man is everywhere 
 successfully struggling to obtain. Railroads are now being 
 introduced between the principal towns in the Zollverein,— 
 those between Dresden and Leipzig and between Berlin and 
 Potsdam are completed, many others are begun, and a still 
 greater number are projected; and in these enterprises the 
 undertakers have all the advantages of our experience. The 
 
184 
 
 ECONOMIC HISTORY. 
 
 number of canals has considerably increased ; steamers are 
 giving great development to river navigation; and even in 
 those branches of industry in which our superiority is the 
 most marked, such as the manufacture of machinery, com¬ 
 petition is marching after us with rapid strides. 
 
 But, independently of the progress of Germany towards a 
 participation in the advantages which for a series of years 
 have been almost exclusively possessed by Great Britain, she 
 has aptitudes and facilities of her own which must greatly aid 
 her in the development of her industry. The frugal and 
 economical habits of the German people enable them to pro¬ 
 cure a far greater proportion of comforts for the same pro¬ 
 portional rate of wages than are generally obtained by the 
 English laborer; added to which a simpler mode of life, a 
 smaller consumption of animal food, and a less costly class of 
 garments, leave out of their smaller earnings a larger amount 
 of savings. Their savings are, for the most part, invested in 
 the purchase of the house in which they dwell, and the garden 
 which they cultivate, — whose cultivation is alike a source of 
 health, enjoyment, and profit, being in most cases a valuable 
 auxiliary to manufacturing industry. Nor ought the general, 
 the almost universal education of the population, be forgotten 
 as immensely contributory to the public prosperity. Elemen¬ 
 tary instruction is provided for all, and special instruction for 
 those who, in any department of art or industry, exhibit any 
 particular aptitude. I have given in the Appendix (IV., Pari. 
 Doc., pp. 96-97), a short account of the Gewerbe-Schule at 
 Berlin, which under the admirable superintendence of M. 
 Banth (whose services to his country are beyond all estimate, 
 and above all praise), has first gathered from every part of 
 the kingdom the youths best fitted for scientific training; and, 
 after a thorough course of education, has again dispersed them 
 over the country. The gradual diffusion of a knowledge and 
 a taste for art over the whole field of German industry, its 
 happy influence upon all manufactures, exhibited in a thou¬ 
 sand evidences of improvement, are obvious to every observer. 
 Manual skill and experience, more and more intimately asso¬ 
 ciated with scientific instruction, have been long preparing 
 
THE ZOLLVEREIN. 
 
 185 
 
 the most important results; and when the rising generation 
 of intelligent artisans bring their information and taste into 
 the wide region of manufacturing and commercial competi¬ 
 tion, there can be no doubt of their contributing largely to 
 the general wealth and weal. 
 
 The tariff of the Zollverein has no other prohibitions than 
 those of salt and playing-cards, which are monopolies in 
 Prussia; and the principle of the tariff is to admit raw 
 material, and materials serving the ends of agriculture and 
 manufactures, either on very low, or without any duties. 
 Thus, raw cotton, wool, coals, pig-iron, ores, raw hides, and 
 skins, hare and rabbit skins, potashes, common pottery, tur¬ 
 pentine, common furniture, chalk, rags, raw refuse of sundry 
 manufactures, trees for planting, manure, earths, fish, grass 
 
 and hay, garden produce, birds, blacklead, worn clothes, 
 
 * 
 
 precious metals, wood, turf, fresh fruit, milk, seeds, etc., pay 
 no duties at all. 
 
 The objections to the tariff of the Zollverein are twofold; 
 they refer to the amount of duties levied, and to the manner 
 in which they are levied. 
 
 The duties are far higher than the Prussian government 
 professed its intention to levy. They were intended to repre¬ 
 sent the tariffs of Prussia. Now, in the communication of 
 Baron Maltzahn to Mr. Canning, dated Dec. 25, 1825, and 
 laid before Parliament, by order of Her Majesty, in answer 
 to the address of the House of Commons of 1st July, 1839, 
 the words of the Prussian minister are as follows: — 
 
 “ No one of the duties on imports is sufficiently high to 
 prevent the importation of foreign products, as is proved by 
 their extensive sale in all parts of the monarchy. The duties 
 levied on the products of foreign fabrics or manufactures 
 are generally only ten per cent on their value; on some they 
 amount to fifteen per cent, but there are many which are 
 more moderate.” 
 
 But these representations are certainly not borne out by 
 facts; for, not only do the duties levied on manufactures vary 
 from twenty to eighty per cent (instead of from ten to fifteen 
 per cent), but there are great varieties of goods which are 
 
186 
 
 ECONOMIC HISTORY. 
 
 wholly excluded from the Prussian markets in consequence 
 of the elevation of the tariff. 
 
 The manner in which the duties are levied is such as to 
 press most severely, with reference to their cost, on coarse, 
 inferior and heavy articles; those least able to bear a high 
 rate of duty are most imposed, the same amount of duty being 
 taken on all species of goods made of the same raw material, 
 — the finest qualities pay the least, and the lowest qualities 
 the highest amount. The ad valorem principle, which is in 
 its nature the fairest, because it distributes taxation by the 
 measure of wealth and expenditure, is wholly lost sight of, 
 and the goods employed by the poor are visited by a much 
 heavier rate of taxation than those by the opulent. The 
 richest muslin and the coarsest calico, the cloth of Sedan and 
 the serge of Devon pay the same amount per cwt. Hence 
 articles of low quality — such as are used by the many, such 
 as would have the largest sale — are wholly excluded from 
 the markets of the League. 
 
 It cannot be disputed that the ad valorem system, as applied 
 to manufactures, has many inconveniences and difficulties. It 
 is not easy always to ascertain even the approximative value ; 
 and with the number of custom-houses by which goods are 
 allowed to be imported through a frontier, both of sea and 
 land, so various and extensive as that of the Commercial 
 League, it would be out of the question to seek for a sufficiency 
 of custom-house functionaries, with knowledge and experience 
 competent to the protection of the revenue against fraud. 
 There is no system so simple as that of weight; it is intelli¬ 
 gible to everybody; it is, too, a generally popular system, as 
 it affords no latitude for the caprice of the officer, and opens 
 no door to the frauds of the importer. It might probably 
 be associated with some classification of articles, if not too 
 detailed or complicated, into a few great divisions; but the 
 desirableness of a thorough change in the system itself may 
 well be doubted, and such a proposal is not likely to be 
 entertained. 
 
 The Americans have strongly objected to the system of 
 levying duties by weight, instead of on value. They have 
 
THE ZOLLVEREIN. 
 
 187 
 
 represented that the duty of 5J dollars on their tobacco, being 
 the same as that levied on the tobaccos of the Havana and 
 the Spanish colonies, is, in fact, a discriminating duty on 
 their produce, even to the extent of two hundred to three 
 hundred dollars per cent. They complain that while the 
 duties in the United States on the articles imported from 
 Germany do not upon the whole amount pay more than an 
 average of 5§ per cent, the imports from the United States 
 into the Zollverein pay forty-six per cent duty. They re¬ 
 present that -Prussia levies on American produce a gross 
 revenue of 776,606 dollars; and while the United States 
 receive only 159,668 dollars from imports of the Zollverein. 
 Of about four millions of dollars exported from the Com¬ 
 mercial League to the United States three millions (one and 
 one-half millions of linens, one million of silk, and half a mil¬ 
 lion merino and other similar articles) pay no duty at all. 
 The remaining million is principally composed of glass, hard¬ 
 ware, hosiery, etc., paying from twenty to twenty-five per 
 cent. 
 
 The original intention of the Prussian tariff has certainly 
 been much departed from, and the general principle which 
 was put forward has not been carried out in its details. For 
 not only did the Prussian government, in its official corre¬ 
 spondence, declare that it was its purpose not to lay duties 
 exceeding from ten to fifteen per cent, but the Commercial 
 League itself professed to make the Prussian tariff tho basis 
 of the legislation of the union; and the maximum intended 
 to be established by the Prussian tariff was an ad valorem 
 ten per cent on manufactures; for that tariff provides that 
 “The duty on consumption in foreign fabrics and manufac¬ 
 tured goods shall not exceed ten per cent; and it shall be 
 less, whenever a smaller duty can be imposed without injury 
 to the national industry.” 1 But the duties levied being, on 
 cotton manufactures, £7 10s. per cwt.; on woollens, <£4 10s.; 
 on hardware, £8 5s.; on common linens, 33s.; on fine linens, 
 £3 6s.; and on silks, £16 10s., per cwt., — do, on the whole, 
 
 1 “ Allgemeine Zeitung,” 2d December, 1834. 
 
188 
 
 ECONOMIC HISTORY. 
 
 greatly exceed the proposed ten per cent. The system of 
 imposing the duty by weight has the advantage of great sim¬ 
 plicity, but it acts in complete hostility to the ad valorem 
 principle, as the duty increases, instead of diminishing, with 
 the lowness and coarseness of the article; so that the oper¬ 
 ation of the tariff is as complete an exclusion of every low- 
 priced manufacture as if it were absolutely prohibited. Under 
 the influence of this state of things, the duty on cotton goods 
 varies from three and one half to one hundred and twenty 
 per cent. 
 
 It has been remarked that this system fails in the very ends 
 proposed, namely, to distribute the amount of protection in 
 proportion to the backwardness of the manufacture. On cer¬ 
 tain articles the amount of duty is so heavy as completely to 
 exclude foreign competition, where the home production re¬ 
 quires no such encouragement as that afforded by the tariff; 
 and on others, where a protecting duty is required by the con¬ 
 dition of the home production, the duty on the foreign article 
 is small, and insufficient to check its introduction. But the 
 general result of the tariff is to exclude the foreign articles of 
 low quality and general consumption, and thus to keep the 
 lar^e demand exclusivelv for the home manufacturers. One 
 baneful effect is, however, that the increased price is levied 
 on those who are least able to pay, and levied on articles of 
 the lowest value, for the piece goods which are consumed by 
 the opulent are precisely those upon which the smallest amount 
 of duty is collected. 
 
 It has, indeed, been argued that the levying heavy duties 
 upon manufactures of ordinary quality, so as to exclude them 
 from the markets of the league, is, in fact, to create a demand 
 for superior articles, and so confer a benefit upon the German 
 consumer; but to the immense multitude of consumers, cost 
 is the all-important consideration; and to deny access to low- 
 priced articles — or by prohibitory duties on foreign fabrics, 
 considerably to elevate the price of the home-made article — 
 is, in all cases, to levy an unfair and unequal contribution on 
 the poor, and in many cases wholly to exclude them from the 
 enjoyment of what would otherwise be accessible to them. In 
 
THE ZOLL VERB IN. 
 
 189 
 
 fact, to exclude the ordinary manufactures of foreign countries 
 is to give a special premium to the production of ordinary 
 manufactures at home, is to create for the least advanced, 
 the least intelligent industry, a field of peculiar favor; and 
 it may be well doubted if the monopoly thus established for 
 the manufacture of low articles is beneficial to them. That 
 it is prejudicial to the consumers is obvious, but some of the 
 ablest writers on the Zollverein have expressed their convic¬ 
 tion that the uncontrolled power given to the German manu¬ 
 facturer of low articles in the German market is baneful as 
 well to his own as to the public interest. 1 
 
 The tendency of opinion in Germany is towards free trade. 
 Almost every author of reputation represents the existing 
 system as an instrument for obtaining changes in favor of 
 commercial liberty. One of the most distinguished writers 
 on the Commercial League, in cautioning the capitalist from 
 embarking his wealth in the protected branches of industry, 
 says, u You are building ships which are not prepared for the 
 storm. You are creating interests which cannot make their 
 way through a crisis; you are erecting edifices upon sand.” 2 
 
 It should be borne in mind, however, that the tariffs of the 
 Zollverein are far more liberal than the old tariffs of Prussia, 
 which were intended wholly to exclude foreign manufactures. 
 But diminished duties have not injured her own manufactures. 
 No man is found to deny that they have made a much greater 
 progress under a less protection than they made when the 
 home market was, by a greater protection, closed against for¬ 
 eign competition. 
 
 The Prussian tariff of 1818 was a great improvement on 
 preceding legislation, but it contained many incongruities, 
 which were changed by the tariff of 1822. On many articles 
 the duties varied between the eastern and western provinces. 
 Common cloths, which paid 26 rix-d. 22 \ gr., and fine cloths 
 paying 47 rix-d. 10J gr. in the eastern provinces, paid only 
 22 rix-d. 18| gr., and 43 rix-d. 7J gr. in the western; cotton 
 
 1 See Osiander, “ Betrachtungen iiber den Zoll Preussischen Tarif.” Stut- 
 gart, 1837, pp. 89, 90. 
 
 2 See Osiander, “ Betrachtungen,” p. 97. 
 
190 
 
 ECONOMIC HISTORY. 
 
 twist paid 2 rix-d. 10 gr. in the eastern, and only half that 
 amount in the western provinces; while dyed twist paid 
 6 rix-dr 17 \ gr. in the former, and 5 rix-d. 17 J gr. in the 
 latter. White and colored woven cottons and cottons mixed 
 with thread paid the same duties as fine woollens, namely, 
 47 rix-d. 10| gr. and 43 rix-d. 7J gr.; and printed and fine 
 cottons, 61 rix-d. 3J- gr. in eastern, and 57 rix-d. in western 
 districts; gray linens 2 rix-d. and 1 rix-d. 22J gr., and 
 bleached, 12 rix-d. 6| and 8 rix-d. 8^ gr.; silks, 171 rix-d. 
 3J gr. in the eastern, and 167 rix-d. in the western depart¬ 
 ment; half silks, 79 rix-d. 13 J gr., and 75 rix-d. 10 gr. 
 Common iron goods paid 6 rix-d. 17 \ gr. in the east, and 
 
 5 rix-d. 2J gr. in the west; fine iron goods, 24 rix-d. 12J gr., 
 and 20 rix-d. 10 gr.; and cutlery and fine hardware, 79 rix-d. 
 13J gr., and 75 rix-d. 10 gr. The tariff of 1822 left the 
 distinction only existing on cotton twist; introduced a uni¬ 
 form duty of 30 rix-d. on woollens, and 6 rix-d. on dyed twist; 
 50 rix-d. on cottons generally, but reduced the duty on cot¬ 
 tons mixed with thread to 10 rix-d., which it also levied on 
 bleached linens; lowered the duties on silks to 100 rix-d., 
 and on half-silks to 50 rix-d.; on common iron goods levied 
 
 6 rix-d.; on fine, 10 rix-d.; and on cutlery and hardware, 
 50 rix-d. 
 
 Thus the tariff of 1822 was in every respect an improve¬ 
 ment on that of 1818. In 1825 the duties on woollen warps 
 were reduced from 30 rix-d. to 10 rix-d.; and those on car¬ 
 pets of wool and thread from 30 rix-d. to 20 rix-d.; those on 
 fine linens and cottons mixed with flax were raised from 
 10 rix-d. to 20 rix-d. In 1828 the duties on flannels, mol- 
 tons, etc., were reduced from 30 rix-d. to 10 rix-d., and on 
 woollen carpets from 30 to 20 rix-d. 
 
 Up to this period half the duty was payable in friederichs 
 d'or, which was an augmentation of about six per cent upon 
 the tariff. In 1832 the duty on woollen yarn was lowered 
 from 6 rix-d. to 15 silver gr.; on carpets in general it was 
 lowered from 30 rix-d. to 22 rix-d.; on woollens it was raised 
 from 30 rix-d. to 33 rix-d.; on cotton yarns 2 rix-d. were 
 established as a general duty; 55 rix-d. on cottons and cut- 
 
THE Z0LLVERE1N. 
 
 191 
 
 lery, instead of 50, which 50 continued to be levied on cotton 
 and flax manufacturers; and the duties on silk were raised 
 from 100 rix-d. to 110 rix-d. The tariff of the Zollverein, 
 in 1831, reduced the duty on carpets from 32 rix-d. to 
 
 20 rix-d.; and on woollens generally from 33 rix-d. to 
 
 .30 rix-d.; on cottons from 55 rix-d. to 50 rix-d. The duty 
 on linen thread was raised, in 1837, from 6 rix-d. to 8 rix-d.; 
 and on twisted cotton to the same amount. The tariff of 
 1840 has lowered the duties on cutlery and hardware from 
 55 rix-d. to 50 rix-d. 
 
 The changes introduced by the Congress of 1839 into the 
 tariffs of 1837-39, are not very considerable. The adoption 
 of the unity of 50 kil. as the cwt. of the tariff, operates as 
 
 an elevation of per cent, in all cases, when it applies to 
 
 articles, the duty on which is charged by weight, as is the 
 case with the major part of the goods mentioned in the tariff. 
 The system of tarification has been simplified throughout by 
 the cutting off all fractions of lbs. The most important 
 change is the reduction of the sugar, rice, and hardware du¬ 
 ties. . . . The standard of the florin is altered from 24 gold 
 standard to 24J gold standard; so that, under the new tariff, 
 the rix dollar is now represented by If fl., instead of If, as 
 in the former tariff. Thus, the general rate of import duty 
 (when there is no special exception) was, in 1837-39, one- 
 lialf Prussian dollar, or 15 silver gr., represented by 50 kreut- 
 zers; but at present the general import duty of one-half 
 Prussian dollar is represented by 52i krs. 
 
 Attached to the custom-house tariff will be found the va¬ 
 rious regulations under which the transit duties are leAfied in 
 the States of the Prussian Union. 
 
 The legislature of Prussia has generally made the transit 
 of goods through her provinces a source of revenue; and it 
 has not been wholly unproductive, as a large portion of Po¬ 
 land and southern Russia import and export through the 
 Prussian ports in the Baltic. The difficulties which Russian 
 legislation has always thrown in the way of transit may, per¬ 
 haps, have had some influence on the councils of Prussia; in 
 fact, the heavy transit-duty imposed on goods imported through 
 
192 
 
 ECONO Ml C HIS TOR Y. 
 
 the ports of the Baltic could hardly be maintained were the 
 Prussian transit-system a wise and liberal one. The South¬ 
 ern States of the union have, for the most part, endeavored 
 to secure through their territories a cheap transit for com¬ 
 modities intended for other countries. The general princi¬ 
 ples of the transit law are, that,— 
 
 1. All articles admitted without duty shall transit without 
 duty through the Zollverein. 
 
 2. All articles upon which the export and import duties, 
 separate or together, do not amount to i dol. or 52i kr. per 
 cwt., are to pay the amount of the said duties. 
 
 3. All articles upon which the export and import duties 
 exceed J dol., or 52J kr. per cwt., shall pay on transit i dol. 
 per cwt. 
 
 But there are many exceptions. The exceptional transit 
 duties levied by the tariffs of the Zollverein are : On cotton 
 and other goods, coming or going through Baltic ports, 4 dol. 
 (12s.) per cwt.; through other roads, 2 dol. (6s.) per cwt.; on 
 cotton twist and dyed woollen yarn, 2 dol.; on copper, coffee, 
 etc., 1 dol. per cwt.; on raw sugar, 20s. gr. (2s.). 
 
 But goods going from the Oder mouth on the left bank of 
 the Oder, westward, towards the Rhine, and through the 
 frontier between Neu-Benin, in Silesia, to Thorn, in Bavaria; 
 or, entering the right bank of the Rhine again, to traverse 
 the Rhine for export, cottons, woollens, and many other 
 articles, 1 dol. (3s.) per cwt. 
 
 Goods conveyed by the left bank, or on the Rhine, or on 
 the Moselle, and over the southern frontier between Hamburg 
 and Freilassing, or over the northern frontier between the 
 Rhine and the Elbe, 10 sq. (Is.) per cwt. 
 
 Goods conveyed over the southern frontier, or from the 
 Rhine to the Danube, sq. (5£d.) per cwt. 
 
 The details will be found in the Appendix (III. Pari. Doc. 
 p. 95) attached to the Tariff. 
 
 The transit system of the Zollverein is somewhat compli¬ 
 cated, and inconsistent with the general and simple character 
 of the legislation. The tables in the Appendix (V. Pari. Doc. 
 pp. 99-112) will exhibit the amount of goods passing through 
 
THE ZOLL V ERE IN. 
 
 193 
 
 the various provinces of the League. One general transit 
 duty, of low amount, would certainly be very favorable to the 
 carrying trade of the union ; nor are the reasons quite ob¬ 
 vious why, in the recognition of a principle of equality, the 
 conveyance of goods through certain States of the union 
 should be loaded with much heavier fiscal charges than 
 through others. It would seem more accordant with sound 
 principles to encourage transit through the districts which 
 geographically present the greatest facilities, rather than to 
 give advantages, by lower duties, to districts less conveniently 
 situated. 
 
 Perhaps the wisest course, in the common interest of the 
 Zollverein, would be to completely disassociate all fiscal con¬ 
 siderations from the question of transit, and to levy no other 
 duty than is necessary for paying the expenses of collection 
 and control. The prohibitory tariffs of Russia, Poland, and 
 Austria, certainly require no new charge or impediment to be 
 added by a heavy transit duty to the cost of the articles im¬ 
 ported through the States of the League. And, even with the 
 high rate of duty levied (or perhaps rather on account of the 
 high rate of duty levied), the pecuniary interest to preserve 
 the present system is small,—far too small to counterbalance 
 the disadvantages and detriments which the system creates. 
 
 Another obvious inconvenience and loss accrues to the Zoll¬ 
 verein from the motives which the lower transit dues of 
 France, Holland, and Belgium create for transporting goods 
 through the ports of those countries instead of the ports of 
 Germany; added to which, a habit of forwarding articles by 
 a particular line creates new interests and motives, which 
 make it difficult to revert to a former state of things. When 
 business has been forced out of its natural channel into a 
 novel course it does not promptly resume its old direction, 
 and the ground lost is often not again to be won. 
 
 The lowest transit duty levied in the Zollverein, with the 
 exception of the road from Mayence to the southern frontier, 
 is 4J silver gr. (5JcL) per cwt.; but on the main roads of 
 Austria transit is free from charge, while in France the charge 
 is less than half the amount of the minimum Prussian duty. 
 
 13 
 
194 
 
 ECONOMIC HISTORY. 
 
 At the same time, the advantages which the railroads of 
 Belgium offer, and the free navigation of the principal rivers 
 of Germany, as established by the Vienna Congress, would 
 all seem to co-operate in showing how much it is for the in¬ 
 terest of the League to facilitate transit by every possible 
 means. 1 The attention which has been of late years so suc¬ 
 cessfully given in Germany to the improvement of the roads, 
 and all other means of communication, cannot receive a 
 greater recompense than by encouragement given to the tran¬ 
 sit trade by a low rate of duty levied. The profits deposited 
 by the transport of merchandise, are, from their diffusion, apt 
 to escape attention ; but perhaps there are none which give a 
 greater activity to agricultural industry, nor which are more 
 intimately connected with the public prosperity and the gen¬ 
 eral progress of improvement and civilization. 
 
 There is considerable difficulty in estimating the amount ' 
 of the imports from Great Britain into the States of the Zoll- 
 verein, as they penetrate through so many channels, — not 
 only through German ports, but from the ports of Holland 
 and Belgium and the ILanse Towns. From Hamburg and 
 the Elbe especially a large part of the wants of the Verein 
 are supplied; there are also large importations through Rot¬ 
 terdam and the Rhine, as well as through Bremen and the 
 Weser. But, by a comparison of the returns of our imports 
 from and exports to the various circumjacent countries, 
 which have been prepared with bis accustomed accuracy and 
 diligence by Mr. Young (Appendix VI. to IX. Pari. Doc. 
 pp. 113-139), with the very detailed statements given me by 
 the Prussian government, all of which documents will be 
 found in the Appendix (XI. to XVII., Pari. Doc. pp. 143- 
 226), an approximate estimate of the general amount, and 
 of the special details of our commercial intercourse will be 
 obtained. 
 
 Though the strong and irresistible tendency of an organ¬ 
 ization like that of the Commercial League is to blend the 
 separate interests of its component parts into the common 
 
 1 Osiander, pp. 115-117. 
 
THE Z OLL VERE IN. 
 
 195 
 
 and paramount interests of the whole, and to give to the 
 Union, as a body, an influence sufficiently powerful to pre¬ 
 dominate over the local and partial influences of the various 
 elements of which that Union is composed, still much time 
 and much judicious legislation will be required, in order that 
 the Union may fairly represent the various interests which 
 are comprehended in its action. Happily the greater interests 
 are and must long continue intimately connected with the 
 foreign trade of Germany, — for though the manufacturing 
 tendencies of a portion of the States of the Union, associated 
 as such tendencies are with a restless activity, — a spirit of 
 association, a unity of purpose, a combined action, which give 
 them more than their fair and full importance in the struggle 
 for what is called “ protective legislation,” yet it cannot be 
 denied that there is in Germany such a general diffusion of 
 intelligence as will check the sinister interests in their de¬ 
 mand for prohibitory duties on foreign manufacture. And at 
 the present moment the agricultural interests, taking in the 
 whole of the confederated States, represent a vastly greater 
 amount of capital and labor than the manufacturing. The 
 agricultural interest exists everywhere and in many extensive 
 provinces of the Union without any counterbalancing manu¬ 
 facturing interest, while the manufacturing interest is to a 
 great extent of modern growth, and confined to a limited 
 portion of the field of production. And even that manufac¬ 
 turing interest can only safely rest upon a system of moderate 
 duties; for as soon as it is able to supply the markets of Ger¬ 
 many, it must, for its surplus produce be thrown into compe¬ 
 tition with the manufacturers of other lands, and can only 
 compete successfully by cheap production, to which a protec¬ 
 tive and prohibitory system is in its very nature opposed ; for 
 its object and its essence are to promise and to secure high 
 prices to the home manufacturer. And if the interest of 
 Prussia for example be considered, — Prussia, whose popula- 
 lation comprises two thirds of the whole population of the 
 Commercial Union, — it is certain that not only are her true 
 interests hostile to any system which prohibits the introduc¬ 
 tion of foreign manufactures, her capital engaged in manufac- 
 
196 
 
 ECONOMIC HISTORY. 
 
 tares being inconsiderable ; but the general conviction of the 
 heads of departments in Prussia is opposed to a protecting 
 legislation. 
 
 The financial necessities of Prussia have frequently been 
 put forward as the reason for the high rate of duties estab¬ 
 lished by the tariff of the Zollverein ; 1 but it is clear that 
 many of the rates are far too high to be productive; some of 
 them are wholly prohibitory ; and the revenue would certainly 
 be benefited by a considerable reduction. The Zollverein, 
 however, has never been regarded by the contracting States 
 with a view solely to the financial question; its social and 
 political consequences would reconcile many of its members 
 even to considerable pecuniary sacrifices. . . . 
 
 LE ZOLLVEREIN. 
 
 (Resume Statistique.) 
 
 From Legoyt’s La France et l’Ltranger , 2 Vol. I. pp. 250-5. 
 
 L E ZOLLVEREIN (des deux mots allemands Zoll , 
 douane, et Verein , association) est le nom donn<3 <\ 
 l’association douaniere qui existe aujourd’hui entre tous les 
 membres de la Confederation germanique, moins rAutriche, 
 les trois villes Ans^atiques (Breme, Hambourg, et Llibeck), 
 le Mecklembourg, les duch^s de Holstein et du Lauenbourg, 
 et la principality de Lichtenstein. La Prusse y figure meme 
 pour ses provinces placdes en dehors de la Confederation. 
 
 Le principe de cette association se trouve dans l’article 19 du 
 traite qui a fonde la Confederation germanique et qui est ainsi 
 coiiqu : “ Ses membres se reservent, a la premiere reunion de 
 leurs pienipotentiaires a Francfort, de deliberer sur un projet 
 
 1 Osiander. 
 
 2 Paris: Veuve Berger-Levrault et fils, 18G5. 
 
LE ZOLLVEREIN. 
 
 197 
 
 de douanes et de navigation pour toute l’Allemagne.” Mais 
 elle trouvait surtout sa raison d’etre dans 1’organisation terri- 
 toriale et politique de l’Allemagne, composee de quarante Etats 
 presque tous enclaves les uns dans les autres, ayant chacun 
 ses barrieres fiscales et son tarif. On a comte que, pour par- 
 venir de la frontiere au centre du pays, soit du nord au sud, 
 soit de l’ouest a Test, sur un espace de 3T0 a 445 kilometres, 
 les marchandises n’avaient pas moins de seize lignes de dou¬ 
 anes a traverser, non compris les lignes interieures appar- 
 tenant a l’Etat, aux communes et meme aux particuliers! 
 De la, des frais et des pertes de temps enormes, qui, en les 
 grevant outre mesure, arretaient a la fois la production et 
 la consommation. 
 
 La Prusse, dont les provinces orientales etaient separdes du 
 reste de la monarchie par le Hanovre, le Brunswick, et la 
 Hesse-Cassel, etqui souffrait le plus, peut-etre, de ce morcelle- 
 ment de son territoire, prit l’initiative des negotiations qui 
 devaient conduire au Zollverein actuel. Ses ouvertures furent 
 d’abord accueillies par le Schwarzbourg-Sondershausen, Tune 
 de ses enclaves; puis, de 1819 a 1828, l’association naissante 
 vit successivement venir a elle les principautes ou duchds de 
 Hesse-Darmstadt, Schwarzbourg-Rudolstadt, Saxe-Weimar, 
 Anhalt-Bernbourg, Anhalt-Dessau, et Anhalt-Coethen, soit 
 pour la totalite, soit pour une partie de leur territoire. Un 
 certain nombre d’Etats du second ordre, ayant a leur tete la 
 Baviere et le Wiirtemberg, tenterent d’enrayer ce mouvement 
 dans lequel ils voyaient un agrandissement indirect de l’influ- 
 ence politique de la Prusse; mais, convaincus de l’inutilite 
 de leurs efforts pour constituer une ligne douaniere de quelque 
 importance, ils se reunirent au Zollverein, le 23 mars 1833. 
 La Saxe suivit leur exemple, le 30 mars de la meme ann6e, 
 et entraina a sa suite les Etats de la Thuringe, la branche 
 Ernestine de Saxe, Schwarzbourg et Reuss. Apres de longues 
 hesitations, Bade se dedara pour le Zollverein le 12 mai 1835; 
 Nassau, le 10 d^cembre 1835; Francfort-sur-le-Mein, le 25 
 janvier 1836; la principautd de Lippe-Detmold, le 18 octobre; 
 le Brunswick, le 19 octobre; la Hesse-Electorale et le comte 
 de Schaumbourg, le 13 novembre; le comte de Waldeck, le 11 
 
198 
 
 ECONOMIC HISTORY. 
 
 decembre 1841; le duclie de Luxembourg, le 8 fevrier 1842; 
 enfm, le l er janvier 1854, les derniers Etats restes fideles a 
 l’association du Steuerverein , c’est-a-dire le Hanovre et le 
 duclie d’Oldenbourg. 
 
 D’apres le receiisement de decembre 1861, la population de 
 chaque Etat associe s’elevait aux nombres ci-apres: — 
 
 Prusse. . . 18,867,061 
 Luxembourg 197,731 
 Baviere . . 4,695,424 
 Saxe royale . 2,225,244 
 Thuringe . 1,069,821 
 Hanovre . . 1,908,631 
 
 Wiirtemberg . 1,720,708 
 Bade . . . 1,365,732 
 Iiesse-Cassel . 710,680 
 
 Hesse-D a r m- 
 stadt . . . 874,231 
 
 Brunswick . 257,624 
 
 Oldenbourg . 238,562 
 
 Nassau . . 454,326 
 
 Francfort . 84,506 
 
 Total. . . 34,670,277 
 
 Ces 34.6 millions d’habitants occupent une superficie de 
 502,260 kilometres carres. 
 
 Le Zollverein n’est pas reste commercialement isoiy. Des 
 sa formation, il s’est efforce d’agrandir ses debouches par des 
 traites avec les principaux Etats de l’ancien et du nouveau 
 monde. 
 
 Ces traites de commerce se sont succede dans Fordre ci- 
 apres: avec la Hollande, les 21 janvier 1839 et 31 decembre 
 1851; avec la Porte, le 19/22 octobre 1840; avec l’Angle- 
 terre, les 2 mars 1841 et 11 novembre 185T; avec la Belgique, 
 les l er septembre 1844, 2 janvier 1851, et 18 fevrier 1852; 
 avec la Sardaigne, les 23 juin 1845,20 mai 1851, et 28 octobre 
 1859; avec l’Autriche, le 19 fevrier 1853 (d’abord avec la 
 Prusse settlement, puis avec le Zollverein, et plus tard, avec 
 les ducli^s de Parme et de Modene); avec le Mexique, le 30 
 juillet 1855; avec Breme, le 26 janvier 1856; avec la Sicile, 
 le 10 aout 1856; avec le Danemark, le 14 mars 1857 ; avec 
 l’Autriche et la principality de Lichtenstein (convention mon^- 
 taire), le 24 janvier 1857; avec la Perse, le 25 juin 1857; 
 avec la confederation Argentine, le 19 septembre 1857. 
 
 L’influence de ces traitds stir le commerce du Zollverein est 
 clairement indiqu^e par le tableau suivant, qui en fait con- 
 naitre, de 1834 a 1860, la valeur moyenne annuelle absolue 
 et par tete d’habitant. Pour la periode 1834-1846, cette va¬ 
 leur a 6t6 ccilcuUe par M. O. Hiibner (Jahrbuch pour 1860 et 
 
LE Z OLL VERB IN. 
 
 199 
 
 1861 1 ), d’apres des prix invariables; pour les autres annees, 
 d’apres les prix reels. Les sommes sont en millions de 
 francs. 
 
 P£riodes et annees. 
 
 Importations. 
 
 Exportations. 
 
 Transit. 
 
 Importations et 
 
 exportations 
 
 reunies. 
 
 Population 
 
 moyenne en 
 
 millions. 
 
 Valeur par tete. 
 
 1834-1838 . . . 
 
 477.0 
 
 591.0 
 
 219.0 
 
 1,068.0 
 
 24.6 
 
 43.4 
 
 1839-1843. . . 
 
 677.2 
 
 662.6 
 
 207.4 
 
 1,339.9 
 
 26.7 
 
 50.2 
 
 1844-1846 . . . 
 
 813.4 
 
 655.1 
 
 260.6 
 
 1,468.5 
 
 29.0 
 
 50.6 
 
 1850-1852 . . . 
 
 704.6 
 
 670.5 
 
 314.6 
 
 1,375.1 
 
 30.2 
 
 45.5 
 
 1853 . 
 
 764.6 
 
 942.7 
 
 3956 
 
 1,707.3 
 
 32.5 
 
 52.5 
 
 1854 . ‘ . . 
 
 1,009.1 
 
 1,252.9 
 
 457.5 
 
 2,262.0 
 
 32.6 
 
 69.2 
 
 1855. .... 
 
 1,184.2 
 
 1,157.2 
 
 626.2 
 
 2,341.4 
 
 32.7 
 
 71.5 
 
 1856 . 
 
 1,312.9 
 
 1,195.5 
 
 550.9 
 
 2,508.4 
 
 33.0 
 
 76.0 
 
 1857 . 
 
 1,327.5 
 
 1,324.1 
 
 541.5 
 
 2,651.6 
 
 33.2 
 
 79.9 
 
 1858 . 
 
 1,205.6 
 
 1,315.5 
 
 419.2 
 
 2,521.1 
 
 33.5 
 
 75.2 
 
 D’apres ce tableau, l’histoire commercialc du Zollverein a 
 eu trois phases tr&s-distinctes. La premiere comprend la 
 pdriode 1834-1846; c’est peut-etre la plus brillante. La 
 seconde embrasse les annees de crise 1847 a 1852. La troi- 
 sieme, commencee en 1853, se continue en ce moment; 1857 
 en est le point culminant. Yient ensuite une reaction assez 
 sensible, qui, quoique perdant chaque jour de son intensite, 
 n’a pas encore fait place a une recrudescence bien caracter- 
 isee. — Les deux colonnes, importations et exportations , in- 
 diquent la correlation intime qui existe toujours et partout 
 entre ces deux elements du commerce. Inferieures pendant 
 assez longtemps aux premieres, les secondes ne tardent pas a 
 les dgaler et meme a les depasser dans certaines amides. C’est 
 la preuve du rapide developpement manufacturier de l’associa- 
 tion. Par suite de l’extension graduelle de son rdseau de 
 voies ferrdes, de l’amelioration de ses voies navigables et de 
 la rdduction des droits de transit (aujourd’hui supprimds), 
 son territoire est, en outre, empruntd par une valeur (calculde) 
 
 1 On sait que les droits de douane du Zollverein sont etablis au poids. Les 
 publications officielles ne font done pas connaitre la valeur du commerce de 
 l’association. 
 
200 
 
 ECONOMIC HISTORY. 
 
 sans cesse croissante de marchandises. Ne perdons pas de 
 vue toutefois que la valeur, surtout la valeur actuelle , ne 
 saurait donner, particulierement dans ces dernieres anndes 
 ou les prix ont ete l’objet d’une hausse si soudaine et si 
 rapide, la mesure exacte du mouvement des ^changes et du 
 transit du Zollverein. L’indication des quantity serait un 
 document plus precis; mais elle exigerait des ddveloppements 
 qui ne sauraient trouver place ici. 
 
 Designation des Articles. 
 
 Importations. 
 
 Exportations. 
 
 1834 . 
 
 1844 . 
 
 1857 . 
 
 1834 . 
 
 1844 . 
 
 1857 . 
 
 
 88.9 
 
 61.5 
 
 78.4 
 
 44.2 
 
 46.5 
 
 100.9 
 
 Toiles de fil. 
 
 84.1 
 
 8.6 
 
 16.9 
 
 88.1 
 
 57.0 
 
 55.5 
 
 Soieries pures. 
 
 Soieries melangees. 
 
 12.4 
 
 14.6 
 
 33.0 
 
 27.4 
 
 40.1 
 
 85.1 
 
 2.6 
 
 8.2 
 
 7.1 
 
 7.9 
 
 13.5 
 
 18.0 
 
 La in ages. 
 
 4.9 
 
 13.1 
 
 22.5 
 
 67.1 
 
 96.0 
 
 158.6 
 
 Fourrures et pelleteries . . . 
 
 0.2 
 
 0.1 
 
 0.4 
 
 0.4 
 
 0.7 
 
 1.9 
 
 Habits d’enfants. 
 
 0.1 
 
 0.3 
 
 0.2 
 
 0.7 
 
 1.5 
 
 1.9 
 
 Objets en fer. 
 
 2.2 
 
 5.2 
 
 10.9 
 
 12.7 
 
 13.9 
 
 18.0 
 
 Objets en cuivre et laiton . . 
 
 0.7 
 
 2.2 
 
 3.0 
 
 3.4 
 
 3.0 
 
 6.7 
 
 Objets en plorab. 
 
 0.04 
 
 0.04 
 
 0.03 
 
 — 
 
 — 
 
 0.4 
 
 Objets en zinc. 
 
 — 
 
 — 
 
 0.1 
 
 0 04 
 
 0.1 
 
 6.0 
 
 Objets en etain. 
 
 0.1 
 
 0.1 
 
 0.1 
 
 01 
 
 0.1 
 
 0.4 
 
 Quincaillerie. 
 
 1.9 
 
 3.7 
 
 1.4 
 
 18.4 
 
 45.4 
 
 52.5 
 
 Objets en pierre, marbre, et 
 autres mineraux. 
 
 0.4 
 
 0.4 
 
 0.03 
 
 0.3 
 
 1.1 
 
 0.3 
 
 Vaisselle et porcelaine .... 
 
 1.5 
 
 1.5 
 
 0.1 
 
 3.7 
 
 7.5 
 
 20.2 
 
 Verre et verrerie. 
 
 2.6 
 
 5.6 
 
 7.1 
 
 6.0 
 
 3.7 
 
 18.0 
 
 Objets en bois. 
 
 1.1 
 
 2.6 
 
 4.5 
 
 7.9 
 
 9.4 
 
 22.9 
 
 Objets en cuir. 
 
 0.7 
 
 1.5 
 
 3.0 
 
 3.7 
 
 1.9 
 
 7.1 
 
 Brosserie et boissellerie . . . 
 
 0.1 
 
 — 
 
 0.04 
 
 0.04 
 
 0.1 
 
 0.2 
 
 Objets en paille, en ecorce, etc. 
 
 0.4 
 
 0.7 
 
 1.9 
 
 0.04 
 
 0.1 
 
 0.3 
 
 Papiers, jeux de cartes, papier 
 de tenture, cartons .... 
 
 0.4 
 
 0.4 
 
 1.1 
 
 4.5 
 
 1.5 
 
 7.5 
 
 Produits chimiques. 
 
 1.9 
 
 2.6 
 
 6.0 
 
 3.4 
 
 4.9 
 
 16.9 
 
 Poudre a tirer. 
 
 — 
 
 — 
 
 — 
 
 0.1 
 
 0.1 
 
 0.4 
 
 Savons . 
 
 0.1 
 
 0.2 
 
 0.1 
 
 .0.1 
 
 0.04 
 
 0.2 
 
 Bougies et chandelles .... 
 
 0.1 
 
 0.1 
 
 0.1 
 
 0.1 
 
 0.1 
 
 1.9 
 
 Farines et produits farineux . . 
 Sucre raffine. 
 
 0.1 
 
 0.1 
 
 4.9 
 
 1.5 
 
 1.1 
 
 13.5 
 
 0.3 
 
 0.2 
 
 0.1 
 
 1.1 
 
 1.9 
 
 7.1 
 
 Eau-de-vie. 
 
 0.3 
 
 30.4 
 
 22 
 
 1.1 
 
 1.9 
 
 35.2 
 
 Tabac . . . .. 
 
 1.5 
 
 13.1 
 
 9.0 
 
 5.2 
 
 5.6 
 
 18.7 
 
 Livres . 
 
 4.9 
 
 7.1 
 
 8.6 
 
 4.5 
 
 6.0 
 
 16.9 
 
 Instruments. 
 
 0.4 
 
 0.4 
 
 1.1 
 
 1.5 
 
 6.7 
 
 5.7 
 
 Valeur totale. 
 
 164.9 
 
 184.5 
 
 223.9 
 
 315.2 
 
 365.4 
 
 698.9 
 
 Le tableau prdcddent fait connaitre la valeur des produits 
 fabriquds que le Zollverein a imports et exportds en 1834, 
 
LE Z OLL VERB IN. 
 
 201 
 
 1844, et 1857. II n’a d’autre but que d’indiquer ceux de ces 
 produits qui sont le plus habituellement consommes ou fab- 
 riques dans les Etats de l’Union,les quantites ayant du neces- 
 sairement s’elever avec le chiffre de la population. Cependant 
 il fournit ce renseigncment important et independant du 
 mouvement de la population, que, tandis que les importations 
 ne se sont accrues, de 1834 a 1857, que de 36 p. 100, les 
 exportations ont plus que double. C’est, comme nous le 
 aisons plus haut, le signe certain des progres remarquables 
 de Findustrie manufacturiere dans l’association. 
 
 La signature recente d’un traite de commerce et de naviga¬ 
 tion entre la France et la Prusse, traite en ce moment soumis 
 a l’examen des autres Etats de l’association, donne un interet 
 particulier au tableau ci-apr£s, relatif a nos relations com- 
 merciales avec le Zollverein. II a ete dresse d’apres les docu¬ 
 ments fran^ais, et indique les valeurs actuelles (en millions 
 de francs). II se rapporte au commerce special. 
 
 Anndes. 
 
 Importa¬ 
 tions en 
 France. 
 
 Exporta¬ 
 tions de 
 France. 
 
 Annees 
 
 Importa¬ 
 tions en 
 France. 
 
 Exporta¬ 
 tions de 
 France. 
 
 1847 . 
 
 52.7 
 
 46.2 
 
 1853 .... 
 
 69.9 
 
 49.0 
 
 1848 . 
 
 23.0 
 
 29.6 
 
 1854 .... 
 
 75.7 
 
 54.6 
 
 1849 . 
 
 32.3 
 
 38.0 
 
 1855 .... 
 
 108.1 
 
 65.5 
 
 1850 . 
 
 36.2 
 
 44.7 
 
 1856 .... 
 
 110.3 
 
 89.7 
 
 1851. 
 
 38.1 
 
 44.1 
 
 1857 .... 
 
 120.7 
 
 117.7 
 
 1852 . 
 
 48.3 
 
 42.3 
 
 1858 .... 
 
 r 
 
 106 8 
 
 147.7 
 
 Les importations du Zollverein en France portent princi- 
 palement sur des matures premieres de Findustrie (laines, 
 bestiaux, houille, coke, bois, peaux brutes, poils). Les soie- 
 ries et les lainages y figurent cependant pour un chiffre assez 
 elevd. 
 
 Les exportations de la France pour le Zollverein ont, au 
 contraire, pour objets principaux des produits fabriquds, 
 comme les soieries, les lainages, les vetements et lingeries, 
 les cotonnades imprimees, les peaux ouvrees, les fils de laine, 
 les outils et instruments, etc. La France exp^dic en outre 
 dans le Zollverein, quand la r^colte est bonne, des quantities 
 assez considerables de vins ordinaircs. 
 
202 
 
 ECONOMIC HISTORY. 
 
 S’il fallait juger, d’apres le mouvement de la navigation 
 dans les ports prussiens, de l’importance relative du com¬ 
 merce du Zollverein avec les divers Etats europeens, c’est 
 avec FAngleterre qu’il entretiendrait le mouvement d’affaires 
 le plus considerable. Yiendraient ensuite, par ordre decrois¬ 
 sant de trade, les trois royaumes scandinaves, la Hollande, 
 les portes anseatiques, la France, la Russie, etc. Mais il ne 
 faut pas perdre de vue qu’en ce qui concerne la France, la 
 plus grande partie de son commerce avec le Zollverein se 
 fait par la voie de terre. 
 
 Les recettes des douanes du Zollverein out oscille ainsi 
 qu’il suit de 1834 a 1859 (nombres en millions de francs). 
 
 Annees. 
 
 Importa¬ 
 
 tion. 
 
 Exporta¬ 
 
 tion. 
 
 Transit. 
 
 Annees. 
 
 Importa¬ 
 
 tion. 
 
 Exporta¬ 
 
 tion. 
 
 Transit. 
 
 1834 
 
 • • 
 
 52.1 
 
 1.5 
 
 1.9 
 
 1847 
 
 • • 
 
 100.9 
 
 3.0 
 
 1.5 
 
 1835 
 
 • • 
 
 59.6 
 
 1.9 
 
 1.9 
 
 1848 
 
 • • 
 
 85.5 
 
 1.5 
 
 1.1 
 
 1836 
 
 • • 
 
 65.6 
 
 1.9 
 
 1.9 
 
 1849 
 
 • • 
 
 88.9 
 
 1.5 
 
 1.9 
 
 1837 
 
 • • 
 
 63.7 
 
 1.5 
 
 2.2 
 
 1850 
 
 • • 
 
 86.2 
 
 1.1 
 
 1.9 
 
 1838 
 
 # * 
 
 72.4 
 
 1.9 
 
 1.9 
 
 1851 
 
 • • 
 
 87.0 
 
 1.1 
 
 1.5 
 
 1839 
 
 • • 
 
 73.9 
 
 1.9 
 
 2.6 
 
 1852 
 
 , # 
 
 91.1 
 
 1.1 
 
 1.5 
 
 1840 
 
 • • 
 
 76.9 
 
 1.9 
 
 26 
 
 1853 
 
 • • 
 
 82.5 
 
 1.1 
 
 1.9 
 
 1841 
 
 • • 
 
 80.2 
 
 1.5 
 
 2.2 
 
 1854 
 
 • • 
 
 86.2 
 
 0.7 
 
 1.5 
 
 1842 
 
 • • 
 
 85.5 
 
 1.5 
 
 2.2 
 
 1855 
 
 • • 
 
 97.5 
 
 0.7 
 
 2.2 
 
 1843 
 
 • • 
 
 92.6 
 
 1.5 
 
 2.2 
 
 1856 
 
 • • 
 
 98.6 
 
 0.7 
 
 1.5 
 
 1844 
 
 • • 
 
 96.0 
 
 1.9 
 
 2.6 
 
 1857 
 
 • • 
 
 99.0 
 
 0.7 
 
 1.5 
 
 1845 
 
 • • 
 
 101.6 
 
 1.5 
 
 1.5 
 
 1858 
 
 • • 
 
 106.1 
 
 0.7 
 
 1.5 
 
 1846 
 
 • 
 
 99.5 
 
 1.9 
 
 1.1 
 
 1859 
 
 • 
 
 88.1 
 
 0.7 
 
 1.5 
 
 Les faibles oscillations du produit des douanes depuis 1844 
 constituent le trait saillant de ce tableau. Toutefois, cet etat 
 a peu pres stationnaire des recettes ne saurait etre intcrprdtd, 
 en presence des documents qui precedent, commc le signe 
 d’un mouvement d’affaires peu progressif. II ne faut pas 
 perdre de vue, d’aillcurs, que les plus grand nombre des ma- 
 tieres premieres ont dte, en 1851 et depuis, ou completement 
 affrancliies ou considerablement degrees. Les droits de 
 transit ont 6galement 6te l’objet d’importantes reductions 
 jusqu’au moment de leur suppression en 1861. . . . 
 
 En 1858 et 1859, les recettes a l’importation (seulement), 
 ramendes a 100,000, se sont rdparties ainsi qu’il suit entre les 
 Etats qui precedent (Francfort-sur-le-Mein non compris) : — 
 
203 
 
 LE ZOLLVEREIN. 
 
 i 
 
 
 1S58. 
 
 1859. 
 
 Prusse . 
 
 50,920 
 
 54,021 
 
 Baviere. 
 
 13,188 
 
 * 13,022 
 
 Hanovre. 
 
 10,062 
 
 10,321 
 
 Saxe. 
 
 5,194 
 
 5,980 
 
 Wiirtemberg. 
 
 4,843 
 
 4,769 
 
 Bade. 
 
 3,808 
 
 4,759 
 
 Thuringe.. . 
 
 2,975 
 
 2,941 
 
 Hesse (Grand-duche). 
 
 2,400 
 
 2,431 
 
 Hesse (Electorate). 
 
 2,058 
 
 1,972 
 
 Oldenbourg . 
 
 1,268 
 
 1,310 
 
 Nassau. 
 
 1,242 
 
 1,228 
 
 Brunswick. 
 
 713 
 
 704 
 
 Luxembourg. 
 
 549 
 
 542 
 
 Totaux. 
 
 100,000 
 
 100,000 
 
 Yoici quelle a ete la repartition de la recette nette entre 
 les divers Etats, de 1857 a 1859 (valeurs en millions de 
 francs) : — 
 
 
 1857. 
 
 1858. 
 
 1859. 
 
 Pour 
 
 100. 
 
 Prusse. 
 
 45,330,221 
 
 49,468,492 
 
 39,776,546 
 
 50.77 
 
 Baviere. 
 
 11,635,260 
 
 12,689,373 
 
 10,055,831 
 
 12.84 
 
 Hanovre. 
 
 9,156,903 
 
 9,704,025 
 
 7,969,578 
 
 10.18 
 
 Saxe. 
 
 5,282,801 
 
 5,762,655 
 
 4,677,101 
 
 5.97 
 
 Wiirtemberg. . . . 
 
 4,273,155 
 
 4,667,726 
 
 3,679,368 
 
 4.70 
 
 Bade. 
 
 3,359,430 
 
 . 3,070,278 
 
 2,902,875 
 
 3.71 
 
 Ltats de Thuringe . . 
 
 2,657,085 
 
 2,898,435 
 
 2,300,415 
 
 2.94 
 
 Hesse (Grand-duche) . 
 
 2,147,583 
 
 2,370,881 
 
 1,877,872 
 
 2.40 
 
 Hesse (Electorale) . . 
 
 1,815,843 
 
 1,983,858 
 
 1,522,751 
 
 1.94 
 
 Oldenbourg .... 
 
 1,154,006 
 
 1,223.058 
 
 1,011,798 
 
 1.29 
 
 Nassau. 
 
 1,096,125 
 
 1,197,142 
 
 948,247 
 
 1.21 
 
 Francf o r t-s ur-le- Mein 
 
 717,188 
 
 781,402 
 
 667,983 
 
 0.85 
 
 Brunswick .... 
 
 633,926 
 
 691,882 
 
 548,051 
 
 0.70 
 
 Luxembourg .... 
 
 484,833 
 
 529,695 
 
 418,218 
 
 0.50 
 
 Totaux .... 
 
 89,744,369 
 
 97,938,902 
 
 78,356,634 
 
 100.00 
 
 La colonne des rapports cent^simaux des deux tableaux 
 qui precedent,^ appelle tout particulierement l’attention en 
 indiquant les Etats qui gagnent ou perdent a l’association. 
 Ainsi, par exemple, la Prusse, qui encaisse 58.82 p. 100 des 
 recettes totales, ne figure que pour 50.77 dans la repartition, 
 
204 
 
 ECONOMIC HISTORY. 
 
 tandis que, pour la Baviere, ces rapports sont respectivement 
 de 5.15 a la recette et de 12.84 a la repartition. En resume, 
 les EtatS gagnants sont les suivants : Baviere, Hanovre, Wiir- 
 temberg, les deux Hesses, la Thuringe, Oldenbourg, et Nassau. 
 La Prusse, le Luxembourg, la Saxe, Bade, Brunswick, et 
 Francfort-sur-le-Mein composent la serie des perdants. Les 
 parts du Zollverein sont ceux de la Prusse, du duclie d’Olden- 
 bourg et du Hanovre. Les documents qui suivent indiquent 
 le mouvement de la navigation de ces ports de 1856 a 1859 
 (grand et petit cabotage non compris). 
 
 PORTS PRUSSIENS. 
 
 Annkes. 
 
 Batiments. 
 
 Tonneaux . * 1 
 
 Batiments 
 
 SUR LEST . 2 
 
 Tonneaux. 
 
 Entres. 
 
 Sortis. 
 
 Entres. 
 
 Sortis. 
 
 Entres. 
 
 Sortis. 
 
 Entres. 
 
 Sortis. 
 
 1859 . . . 
 
 1.S68 . . . 
 
 1857 . . . 
 
 1856 . . . 
 
 9,116 
 
 8,922 
 
 8 533 
 7,582 
 
 9,197 
 
 9,032 
 
 8,441 
 
 7,684 
 
 1,471,522 
 
 1,401,560 
 
 1,584.622 
 
 1,337,746 
 
 1,414,602 
 
 1,469,582 
 
 1,564,384 
 
 1,374,416 
 
 2,668 
 
 2,599 
 
 3,052 
 
 1,994 
 
 1,743 
 
 1,939 
 
 1,229 
 
 2,111 
 
 452,846 
 
 433,788 
 
 561,130 
 
 381,850 
 
 319.458 
 
 401,614 
 
 254,432 
 
 380,310 
 
 Dans le duch6 d’Oldenbourg, la navigation a 6t6 en 1859: 
 a l’entree, de 933 navires charges, jaugeant 78,484 lasts et 
 de 11 sur lest, jaugeant 879 lasts; a la sortie, de 311 navires 
 charges, jaugeant 38,295 lasts et de 502 sur lest avec 37,821 
 lasts. 
 
 PORTS HANOVRIENS. 
 
 
 
 Navires Charges. 
 
 Navires 
 
 SUR LEST. 
 
 
 
 Nombre. 
 
 Lasts. 
 
 Nombre. 
 
 Lasts. 
 
 1859 . . ■ 
 
 Entree . . 
 
 1,141 
 
 36,850 
 
 782 
 
 21,004 
 
 Sortie 
 
 1,092 
 
 29,270 
 
 899 
 
 32,964 
 
 1858 . 
 
 Entree . . 
 
 Sortie . . 
 
 3,016 
 
 1,194 
 
 112,931 
 
 36,459 
 
 592 
 
 2,470 
 
 21,858 
 
 100,281 
 
 Les avantages purement matdriels du Zollverein pour les 
 fitats int6ress6es peuvent se resume r ainsi qu’il suit: 1° re- 
 
 1 Le tonneau de mer prussien = 968 k .80. 
 
 2 Compris dans les totaux precedents. 
 
LE ZOLL VERE IN. 
 
 205 
 
 duction des frais de perception et d’administration, par suite 
 de la suppression des rayons de douanes entre les Etats asso- 
 cies; 2° rapide developpement industriel, par suite de l’ap- 
 plication d’un tarif modere; 3° elevation du chiffre primitif 
 des recettes de douane, par suite de l’accroissement de con- 
 sommation resultant de Implication de ce tarif; 4° conclu¬ 
 sion de traites de commerce avantageux avec l’etranger, plus 
 dispose a faire des concessions a un Etat qui lui off re un de- 
 bouche considerable qu’a des pays sans importance; 5° usage 
 gratuit ou a des conditions tres moderees des grandes voies 
 de communication, terrestres, fluviales, ou maritimes, qui n’ex- 
 istaient auparavant qu’au profit d’un ou de quelques-uns d’entre 
 eux; 6° rapide essor de certaines industries indigenes, aux- 
 quelles la libre ouverture d’un marche interieur de 33 mil¬ 
 lions d’habitants, 1 ainsi que l’usage en franchise de matures 
 premieres fournies par l’un ou l’autre des Etats associes et 
 autrefois frappees de droits de douane, permettent de pro- 
 duire plus economiquement; 7° creation d’une forte marine 
 marchande. 
 
 L’institution du Zollverein a eu des avantages correspond- 
 ants pour le commerce etranger. Au lieu d’avoir a traverser 
 40 lignes douanieres, defendues par des droits plus ou moins 
 compliques, plus ou moins eleves, et appliques par des ad¬ 
 ministrations plus ou moins tracassieres, il s’est trouve en 
 face d’un pays unique, recevant ses produits a des conditions 
 relativement moderees. Au lieu d’avoir a traiter avec des 
 consommateurs peu aises, restreignant leurs depenses au plus 
 strict neccssaire, il a profits du developpement de la richesse 
 publique dans le Zollverein devenu, apres quelques annees, 
 un grand pays, non-seulement par le territoire et la popula¬ 
 tion, mais encore par le bien-etre croissant de sa population. 
 
 Le Zollverein n’est cependant pas, dans son organisation 
 et ses resultats actuels, la formule la plus complete, la plus 
 heureuse du principe de l’association commerciale. Le mode 
 compliqud de ses deliberations ; 2 la difficulte, pour ses membres, 
 
 1 D’aprcs le denombrement de 1861 dont les resultats officiels nous arrivent 
 en ce moment, de 34,705,604 habitants. 
 
 2 On sait que toutes les deliberations du Zollverein, pour etre valables, 
 
206 
 
 ECONOMIC HISTORY. 
 
 d’arriver, sur les questions les plus graves, a une solution favo¬ 
 rable aux interets souvent tres opposes qu’ils represented; 
 les influences politiques qui s’agitent dans son sein et l’em- 
 pechent de discerner toujours clairement la voie a suivre 
 pour tirer de l’union les resultats economiques les plus con¬ 
 siderables, telles sont les justes critiques dont il a souvent 
 ete l’objet. On peut encore lui reprocher de maintenir, 
 malgre l’exemple de l’Angleterre et de la France, des droits 
 qui, pour certains produits fabriques, depassent tres-sensible- 
 ment, par le fait de la diminution considerable, depuis la 
 formation du Zollverein, du prix des produits greves, cette 
 moyenne de 10 p. 100 de la valeur, destinee, d’apres le pro¬ 
 gramme de Tassociation a son debut, a devenir la base de son 
 tarif. Cette protection exageree est une double faute, d’abord 
 parce que les consommateurs de l’association, moins ais^s que 
 ceux des deux pays que nous venons de citer, sont moins en 
 etat de payer des prix Aleves; puis, parce que le Zollverein, 
 par les perfectionnements introduits dans ses procedes de 
 fabrication et le bas prix de la main-d’ceuvre, est aujourd’hui 
 tout a fait en mesure de lutter efficacement contre la con¬ 
 currence etrangere. 1862. 
 
 doivent etre prises a l’unanimite. Ainsi, dans ces deliberations, la Prusse 
 ne pese pas d’un plus grand poids que Francfort-sur-le-Mein avec ses 80,000 
 habitants! . . . 
 
THE CORN LAWS. 
 
 207 
 
 IX. 
 
 THE CORN LAWS, 1801-1849. 
 
 From Levi’s History of British Commerce, 1 2d Ed. 
 
 PART III. —CHAP. 7. 
 
 HE corn laws had long been a bone of contention in 
 
 A England. Maintained for the interest of a class who 
 clung to them as their anchor of safety, they had always been 
 attacked as an obstacle to the well-being of the middle and 
 lower classes. In the opinion of their advocates, protection 
 was necessary in order to keep certain poor lands in cultiva¬ 
 tion, and to encourage the cultivation of as much land as 
 possible in order to provide for the wants of the country. 
 Let the cultivation of such lands cease, they said, and we 
 shall be dependent on foreigners for a large portion of the 
 people’s food. Such dependence, moreover, may be fraught 
 with immense danger, inasmuch as, in the event of war, the 
 supplies may be stopped or our ports may be blockaded, the 
 result of which may be famine, disease, or civil war. Ac¬ 
 cording to the defenders of protection it was the advantage 
 gained by the corn laws that enabled landed proprietors and 
 their tenants to encourage manufactures and trade. Abolish 
 the corn laws and half the country shopkeepers will be 
 ruined, mills and factories will be stopped, large numbers of 
 the working-classes will be thrown out of work, disturbances 
 will ensue, capital will be withdrawn, and no one dare ven¬ 
 ture to say what may be the fatal consequences. 
 
 In 1801 the price of wheat reached the high limit of 155s. 
 a quarter, and we may well imagine what sufferings that 
 price entailed among the people, at a time especially when 
 
 1 London: John Murray, 1880. 
 
208 
 
 ECONOMIC HISTORY. 
 
 trade and manufacture were so much paralyzed by the Con¬ 
 tinental war. Happily, for two or three years afterwards, a 
 succession of good harvests changed the condition of things, 
 and in March, 1804, the price of wheat fell to 49s. 6d. per 
 imperial quarter. But what was anxiously desired by the 
 people was regarded a great disaster by the agricultural in¬ 
 terest. They complained that with the high cost of produc¬ 
 tion, in consequence of high wages, high rate of interest, 
 and the heavy cost of implements of husbandry, they could 
 not afford to sell at such prices. Meetings were held 
 throughout the country to consider the case of the farmers. 
 Mr. Western brought the state of agriculture before the 
 House of Commons, and a committee was appointed on the 
 subject. The farmers contended that at a time when all 
 foreign supplies were shut out from our markets, and when 
 we were more than ever depending on home production, it 
 was the bounden duty of the legislature to pass laws which 
 would encourage the production of grain at home, so that 
 the nation might *be as much as possible independent as re¬ 
 gards the first necessaries of life. Unfortunately all the 
 measures hitherto taken for the protection of the farmers 
 resulted only in the aggravation of the sufferings of the 
 people. It was easy by means of prohibitions and bounties 
 to raise the price of corn and to give an artificial stimulus to 
 agricultural prosperity, but the people were not able to buy 
 bread at famine prices, especially at a time when taxes were 
 so heavy. The report of the committee of the House of 
 Commons, presented the same session in 1804, was to the 
 effect that the price of corn from 1791 to the harvest of 1808 
 had been very irregular, but that upon an average it had in¬ 
 creased in a great degree in consequence of the years of 
 scarcity, and had in general yielded a fair profit to the 
 grower. It appeared to the committee, moreover, that high 
 prices had the effect of stimulating agricultural industry in 
 bringing into cultivation large tracts of waste lands, and 
 that this fact combined with the abundance of the two last 
 productive seasons, and other causes, occasioned such a de¬ 
 pression in the value of grain as would tend to the discour- 
 
THE CORN LAWS. 
 
 209 
 
 agement of agriculture, unless maintained by the support of 
 Parliament. Nor was there much difficulty in persuading 
 the legislature to give heed to such recommendations. Very 
 soon after the presentation of the report a corn law was 
 passed, 1 which imposed a duty of 24s. 3 d. per quarter on 
 wheat so long as the price of the home market should be 
 under 63s. ; of 2s. 6<i. so long as the price should be at or 
 above that rate, and under 66s. ; and of 6d. a quarter when 
 the price should be above that rate. It does not appear, 
 however, that the fear entertained by the farmers and the 
 agricultural interest had been very substantial, for in the 
 same year the harvest was deficient in quantity and inferior 
 in quality, and all apprehensions that bread might become 
 too cheap were entirely out of the question. A proposal, in¬ 
 deed, was made to encourage the growth of corn in Great 
 Britain, and yet to diminish the price thereof for the benefit 
 of the people by exempting farmers from all direct taxes. 
 But such a plan would have only transferred the burden from 
 one class to another. The time had not yet arrived for 
 acting on the “ laissez-faire ” principle. Artificial aid 
 was sought for on all sides, and that always ended in 
 disappointment. 
 
 At the conclusion of the French war, in 1815, precisely the 
 same state of matters arose as in 1804. By the opening of 
 the ports, wheat which hitherto averaged £5 10s. a quarter 
 suddenly fell to £3 5s., and immediately the farmers raised 
 a cry of distress. Again a committee of the House of Com¬ 
 mons was appointed to inquire into the state of the law 
 affecting the corn trade, and once more the legislature was 
 engaged in framing a corn law, 2 which resulted in an act 
 prohibiting the importation of wheat when the price was 
 under 80s., and rendering it free when above 80s. Yet 
 serious misgivings existed as to the ultimate effect of the 
 restrictive legislation respecting corn in the minds of many, 
 and in the very House of Lords, which traditionally stood 
 in bold defence of a protective policy, protests were lodged, 
 
 1 44 Geo. III. c. 109. 
 
 2 55 Geo. III. c. 26. 
 
 14 
 
210 
 
 ECONOMIC HISTORY. 
 
 wliich indicated the existence of a more enlightened opinion 
 on the real bearings of the whole question. Lord Grenville 
 and his "compeers protested against this new corn law, be¬ 
 cause they were adverse in principle to all new restraints in 
 commerce, deeming it most advantageous to public prosper¬ 
 ity to leave uncontrolled the free current of national indus¬ 
 try. In their opinion “the great practical rule of leaving 
 all commerce • unfettered applied more peculiarly, and on 
 still stronger grounds of justice as well as of policy, to the 
 corn trade than to any other. Irresistible, indeed, must be 
 that necessity which could, in their judgment, authorize the 
 legislature to tamper with the sustenance of the people, and 
 to impede the free purchase and sale of that article on 
 which depends the existence of so large a portion of the 
 community. They thought that expectations of ultimate 
 benefit from any corn law were founded on a delusive theory. 
 They could not persuade themselves that such a law would 
 ever contribute to produce plenty, cheapness, or steadiness 
 of price. So long as it operated at all, its effects must be 
 the opposite of these. Monopoly is the parent of scarcity, 
 dearness, and uncertainty. To cut off any of the sources of 
 supply can only tend to lessen its abundance. To close 
 against ourselves the cheapest market for any commodity 
 must enhance the price at which we purchase it. 4nd to 
 confine the consumer of corn to the produce of his own coun¬ 
 try is to refuse ourselves the benefit of that provision which 
 Providence itself has made for equalizing to man the varia¬ 
 tions of climate and of seasons. But whatever might be the 
 future consequences of that law at some distant and uncer¬ 
 tain period, they were convinced that these hopes must be pur¬ 
 chased at the expense of a great and present evil. To compel 
 the consumer to purchase corn dearer at home than it might 
 be imported from abroad was the immediate practical effect 
 of the law just passed. In this way alone could it operate. 
 Its present protection, its promised extension of agriculture 
 must result (if at all) from the profits which it created by 
 keeping up the price of corn to an artifical level. These fut¬ 
 ure benefits were the consequences expected, though they con- 
 
THE CORN LAWS . 
 
 211 
 
 fidently believed erroneously expected, from giving a bounty 
 to the grower of corn by a tax levied on its consumers. ” 
 Such were the reasons urged against the corn law of 1815, 
 and certainly they do honor to those who recorded them in 
 the journal of the House. But many a year was to pass ere 
 the protests of the few did become the deliberate conviction 
 of the entire community. 
 
 For twelve years nothing further occurred on the subject 
 of the corn laws except the emission of repeated cries of 
 distress by the agricultural classes, especially in the House 
 of Lords. The country was indeed learning by bitter ex¬ 
 perience how direct is the relation between dear bread and 
 bad trade, and the time arrived when the working of the 
 corn law was to be laid before the legislature. “ The corn 
 laws,” said Mr. Whitmore, “have inflicted the greatest in¬ 
 jury upon the general trade of the world that ever perhaps 
 was produced by injudicious legislation. They have de¬ 
 ranged its course, stagnated its current, and caused it to 
 flow in new and far less beneficial channels than it formerly 
 occupied.” To the corn laws he attributed the great and 
 ruinous fluctuation of prices, which is the inevitable result 
 of a system of restriction. “ The more the basis from whence 
 your supplies are drawn is widened, the greater the steadi¬ 
 ness of prices; the more it is narrowed the more constant and 
 the more fatal is their effect on the fluctuations to which you 
 are subject. In the early times, when there was a difficulty 
 in the conveyance of bulky commodities from one part of the 
 country to another, arising from want of roads, when there 
 existed a prejudice as well as a legal penalty against what was 
 called forestalling and regrating, the fluctuations in prices 
 were immense. And the same holds good as regards other 
 times and other countries. ” Lord Lauderdale himself, while 
 entertaining considerable fear of foreign competition, clearly 
 showed what are the solid and what are the fictitious ways 
 to agricultural prosperity. “I will take upon myself,” he 
 said, “ to assert that if there is any one proposition in politi¬ 
 cal economy which may be affirmed, it is this, that the 
 interests of landlords properly understood are absolutely 
 
212 
 
 ECONOMIC HISTORY. 
 
 identified with the general interests of the country. Land¬ 
 lords have no interest in high prices; high prices raise rents 
 nominally and in appearance; and now and then some tem¬ 
 porary advantage may be obtained from them, for which 
 landlords will always pay afterwards with more than com¬ 
 pound interest; but rents can only be raised largely, perma¬ 
 nently, and beneficially to landlords by one of two causes, 
 both of which ‘are equally conducive to the prosperity of all 
 other classes; first, by improvements in agriculture, which 
 leave a larger surplus produce after the expenses of cultiva¬ 
 tion are defrayed; and secondly, by improved and extended 
 markets. Now all improvements of agriculture which in¬ 
 crease the surplus produce of the country are obviously a 
 direct addition to the public wealth. And how are markets 
 improved and extended ? By new communication, — roads, 
 railways, canals, — but principally by the continual rise 
 and increase of large towns within our own empire, rendered 
 rich and prosperous by thriving manufactures, and by all the 
 improvements in skill and machinery connected with such 
 establishments. The best job for the landlord is the pros¬ 
 perity of trade in all its branches, as the best job for trade 
 is a prosperous state of agriculture. There is nothing to 
 make the inhabitant of the town and the cultivator of the 
 soil jealous of each other; quite the contrary, for the more 
 each produces, the more he will have to exchange for the 
 other; and this is the foundation of the great internal trade 
 which is worth one hundred times more than all the foreign 
 commerce of the country put together.” 
 
 Yet notwithstanding the enunciation of these truths the 
 farmers clung tenaciously to protection; and it was not 
 without a great struggle that they allowed the corn laws to 
 be relaxed to a small extent. In the session of 1827 resolu¬ 
 tions were passed in the House of Commons to the effect 
 that corn should be allowed to be imported free of duty, in 
 order to be warehoused, and that it should be admissible for 
 home consumption at a shilling per quarter duty when the 
 price of wheat should be 70s., and at two shillings more for 
 every shilling that the price fell below 70s. per quarter. 
 
THE CORN LA WS. 
 
 218 
 
 These resolutions, however, made no progress in conse¬ 
 quence of the change of government. The following session 
 the House of Commons passed other resolutions to the effect 
 of imposing a sliding scale from 23s. per quarter when the 
 price of wheat should be 64s., and 16s. 8c?. when the price 
 should be 69s., to one shilling per quarter when the price 
 should be at and above 73s. per quarter. And upon these 
 bases a new corn law was passed, 1 which, like its predeces¬ 
 sors, did not long remain in force. 
 
 It was ten years after the passing of this first sliding 
 scale, or on March 15, 1838, that Mr. Villiers, seconded by 
 Sir William Molesworth, first commenced his attack on the 
 policy of the com laws in the House of Commons, though 
 with little effect. In those days political economists were 
 simply allowed to speak and complain. Their opinions 
 were received as mere speculative theories, their recom¬ 
 mendations were deemed as far beyond the reach of practical 
 statesmanship. There was only one minister present when 
 Mr. Villiers’ motion was made, and as might have been ex¬ 
 pected, it was lost by an overwhelming majority. But about 
 that time a lecture was advertised to be delivered at Bolton, 
 the birthplace of Arkwright and Crompton, on the corn 
 laws, by a person quite a stranger to the town. It was a 
 new subject for a lecture, and as the public mind was di¬ 
 rected to the question, the lecture drew a fair number of 
 hearers. The lecturer, however, found only when it was too 
 late that it was not easy to deal with economic questions 
 before a mixed audience, and he completely broke down. 
 The audience, not prepared for the disappointment, became 
 impatient and vociferous, and a riot was impending, when a 
 youth, a medical student, rushed to the platform, and on the 
 spur of the moment addressed the people on the subject in a 
 vigorous and manly manner. The people were delighted at 
 this turn, and Mr. Paulton won for himself enthusiastic 
 admiration. On the news of such an event travelling to the 
 neighboring towns, the volunteer lecturer was overwhelmed 
 
 i 9 Geo. IV. c. 38. 
 
214 
 
 ECONOMIC HISTORY. 
 
 with invitations to redeliver his address, and everywhere he 
 captivated the audience with his eloquent attacks on monop¬ 
 oly and” monopolists. 
 
 As the interest in the question of the corn laws grew and 
 extended, it became evident that a special and more popular 
 agency was wanted for the purpose, and thus in October of 
 1888 eight 1 men first united themselves with a view to estab¬ 
 lish an Anti-Corn Law Association. The list of the provi¬ 
 sional committee was afterwards increased to thirty-seven, 
 conspicuous among them being John Bright, George Wilson, 
 and Richard Cobden. And the object of the association was 
 declared to be to form a fund in order to diffuse information 
 by lectures or pamphlets on the bearing of the corn laws, to 
 defray the expense of petitioning, and above all to create an 
 organization to bring numbers together in such force and 
 with such energy of purpose as to secure the great object, 
 namely, the complete freedom of trade and the destruction 
 not only of the corn monopoty, but of all the other monopolies 
 bolstered up by this monster grievance. Small was the sup¬ 
 port at first obtained by this new association. Very few then 
 appreciated its great moral importance. “ For the first two 
 or three years'of our agitation, ” said Mr. Cobden, “it was a 
 very hopeless matter, and there was no dclat nor applause. 
 . . . We sat in a small room, and we had a dingy red curtain 
 drawn across the room that we might not be chilled by the 
 paucity of our numbers. Two or three were all that were 
 here (Newall’s Buildings) on one occasion, and I recollect 
 saying to my friend Prentice, 4 What a lucky thing it is 
 the monopolists cannot draw aside that curtain and see how 
 many of us there are, for if they could they would not be 
 much frightened. ’ ” It was not long, however, ere the 
 small association began to manifest its power and influence, 
 and when, aided by the powerful support of some at least of 
 the leading journals, its voice resounded through the length 
 
 1 The original founders of the League were John Benjamin Smith, Archi¬ 
 bald Prentice, Richard Cobden, Thomas Bazley, William Rawson, W. R. Cal¬ 
 lender, Ilenry and Edmund Ashworth. (See “ Cobden and the League/’ by 
 Henry Ashworth, Esq.) 
 
THE CORN LAWS. 
 
 215 
 
 and breadth of the land. Meetings and conferences then suc¬ 
 ceeded each other. From the manufacturing districts the 
 movement spread to the metropolis, and with a clearly defined 
 purpose in view, and with the highest economic authorities 
 to appeal to in support of their principles, the Anti-Corn Law 
 agitators made everywhere a profound and lasting impression. 
 
 On March 12, 1839, Mr Villiers again brought the subject 
 of the corn laws before the House of Commons, now, how¬ 
 ever, backed by a strong party both inside and outside the 
 House. His motion was, “That this House resolve itself 
 into a committee of the whole House, to take into considera¬ 
 tion the act 9 George IY., regulating the importation of for¬ 
 eign grain.” Mr. Yilliers showed that the corn laws were 
 not beneficial to the agricultural interest, and that neither 
 the agricultural laborer nor the farmer reaped from them 
 any benefit. He asserted that the community at large suf¬ 
 fered a loss through the corn laws, equal to a poll tax of 8s. 
 a head, or a tax of £2 on each family in the kingdom, and 
 he demonstrated that commerce and shipping were greatly 
 injured by them. Mr. Yilliers’ motion was seconded by Sir 
 George Strickland, and on his side spoke Mr. Poulett 
 Thomson, Sir William Molesworth, Mr. Grote, Mr. Clay, 
 Lord Howick, Sir Henry Parnell, Mr. Ward, Lord John 
 Russell, Mr. Hume, Mr. Fielden, and Mr. O’Connell; while 
 
 v 
 
 against him were Sir James Graham, Sir Robert Peel, and 
 a host of Conservatives. The discussion was animated and 
 well sustained, and after five whole nights’ debate the votes 
 were taken and the motion was lost by 195 to 342. In the 
 House of Lords too a discussion was commenced on the sub¬ 
 ject. On March 14 the Earl of Fitzwilliam moved, “ That 
 the act 9 George IY. c. 60, entitled ‘An Act to amend the 
 law relating to the importation of corn, ’ has failed to secure 
 that steadiness in the price of grain which is essential to 
 the best interests of the country;” but the motion was lost 
 by 24 against 224. A day after Lord Brougham moved, 
 “ That this House do immediately resolve itself into a com¬ 
 mittee of the whole House, to take into consideration the 
 importation of foreign corn. ” But the motion met a similar 
 
216 
 
 ECONOMIC HISTORY . 
 
 fate, only T having voted for it, and 61 against it. Slow is 
 the progress of any measure in the House of Commons when 
 \ any substantial reform is contemplated, but slower still is 
 its advance in the House of Lords. Coming less in contact 
 with the mass of the people, comparatively strangers to their 
 feelings and wants, conservative by interest and hereditary 
 policy, the peers of the realm are necessarily the last to ad¬ 
 mit the need of change, and the last to make concessions to 
 the altered exigencies of the times. Nevertheless, there have 
 never been wanting enlightened members in the Upper House 
 who sought the maintenance and preservation of their order 
 from that same law of progress on which all the institutions 
 of the realm depend, and who, far from regarding their in¬ 
 terests as antagonistic to those of other classes of society, had 
 the wisdom to discern that we are all subject to the same 
 laws, influenced by the same circumstances, and alike bound 
 to obey those laws of nature which, more than any human con¬ 
 trivance, determine the progress and prosperity of States. 
 
 The result of Mr. Yilliers’ motion in the House of Com¬ 
 mons was not likely to discourage the Anti-Corn Law Asso¬ 
 ciation. On the contrary, it imparted to it a new life and 
 a fresh impulse. Determined to persevere till the end, the 
 agitators saw in the strength of their opponents only an ad¬ 
 ditional cause for more energetic labors. A meeting was 
 accordingly organized in London, and the same voice which 
 first gave strength and vivacity to the Manchester gathering 
 was now heard exclaiming, “ We are the representatives of 
 three millions of people, —a far greater number of constitu¬ 
 ents than the House ever could boast of. We well know that 
 no great principle was ever indebted to Parliament for success; 
 the victory must be gained out of doors. The great towns of 
 Britain have extended the right hand of fellowship to each 
 other, and their alliance will be a Hanseatic league against 
 the feudal corn-law plunderers. ” The Anti-Corn Law 
 League was never a political organization. For years its 
 members went on lecturing, distributing tracts, and acting 
 as a peripatetic university in instructing the people on the 
 evil of commercial monopoly. Never did they allow them- 
 
THE CORN LAWS. 
 
 217 
 
 selves to be tempted to other political topics. The League 
 did not even wish to interfere with the system of taxation 
 further than extinguishing at once and forever the principle 
 of maintaining taxes for the benefit of a particular class. “ If 
 it be asked,” said Mr. Cobden, “why it is that we, profess¬ 
 ing to be free-traders in everything, should restrict the 
 title of our association to that of the ‘National Anti-Corn 
 Law League,’ I will explain the reason. We advocate the 
 abolition of the corn law because we believe that to be the 
 foster-parent of all other monopolies; and if we destroy that, 
 — the parent, the monster monopoly, — it will save us the 
 trouble of destroying all the rest.” 
 
 PART IV.— CHAP. 1. 
 
 The day arrived when the government of the country had 
 to be confided to the great Conservative party in the House. 
 For some time past the administration of Lord Melbourne 
 had shown unmistakable signs of inherent weakness, and its 
 opponents, counting among them such men as Sir Robert 
 Peel, Lord Stanley, Mr. Gladstone, and Mr. Disraeli, were 
 decidedly gaining strength and influence. The Conservative 
 party has been charged with thwarting and opposing the 
 liberal tendencies of the nation, and they certainly resisted 
 the passing of the Reform Bill, the repeal of the Test and 
 Corporation Acts, and the Emancipation of Roman Catho¬ 
 lics. Yet a memorable Conservative administration is be¬ 
 fore us, which inaugurated an era of great prosperity, and 
 one which, under the presiding genius of Sir Robert Peel, 
 has ever since been held in grateful remembrance for the prac¬ 
 tical wisdom which it displayed, and the bold and vigorous 
 commercial and financial policy it carried into effect. Sir 
 Robert Peel had already gained for himself a high reputation 
 as a statesman. 1 As a member of the Bullion Committee 
 
 1 Sir Robert Peel’s first administration was a short one. He formed his 
 Cabinet on December 9, 1834, and forthwith dissolved Parliament. A new 
 Parliament was summoned to meet on February 19, 1835, but an amendment to 
 the address was carried in the House of Commons on February 2G, by a ma- 
 
218 
 
 ECONOMIC HISTORY. 
 
 of 1810, as under-secretary for the colonies during the most 
 trying years of the Continental War, as Secretary for Ireland, 
 in all these capacities lie proved himself an able minister 
 and an economist of much practical wisdom; and it was a 
 good omen for the country when, in September, 1841, at a 
 time of much financial anxiety, Sir Robert Peel was once 
 more called to take the helm of the State. 
 
 There was something novel and encouraging in the speech 
 from the throne which opened the labors of the new admin¬ 
 istration. “ Her Majesty is anxious that this object, namely, 
 the increase of the public revenue, should be effected in the 
 manner least burdensome to her people; and it has appeared 
 to Her Majesty, after full deliberation, that you may, at this 
 juncture, properly direct your attention to the revision of 
 duties affecting the productions of foreign countries. It will 
 be for you to consider whether some of the duties are not so 
 trifling in amount as to be unproductive to the revenue, while 
 they are vexatious to commerce. You may further examine 
 whether the principle of prohibition in which others of these 
 duties are founded, be not carried to an extent injurious alike 
 to the income of the State and the interest of the people. Her 
 Majesty is desirous that you should consider the laws which 
 regulate the trade in corn. It will be for you to determine 
 whether those laws do not aggravate the natural fluctuation 
 of supply, whether they do not embarrass trade, derange cur¬ 
 rency, and by their operation diminish the comfort and in¬ 
 crease the privations of the great body of the community. ” 
 Surely this was a programme more liberal than could have 
 been expected from a Conservative ministry; but the temper 
 of the people and the exigencies of the time demanded that 
 and a great deal more. Gloom and discontent prevailed ex¬ 
 tensively throughout the manufacturing districts. The Anti- 
 Corn-Law League had by this time become formidable. The 
 demand was loud and imperious for cheap food, and the total 
 repeal of the corn laws. And on the day fixed for the an- 
 
 jority of 309 to 302. Other adverse divisions immediately thereafter took 
 place, and Sir Robert Peel announced his resignation of the ministry on 
 April 8. 
 
THE CORN LAWS. 
 
 219 
 
 nouncement of the ministerial measure some five hundred 
 deputies from the Anti-Corn-Law Associations in the me¬ 
 tropolis and provinces went in procession to the House of 
 Commons, but were refused admittance. Yet with all this 
 the government was not disconcerted, and with imperturba¬ 
 ble gravity on February 9, 1842, Sir Robert Peel exposed 
 the policy of the cabinet on the corn laws. 
 
 At first Sir Robert Peel did not attach much weight to the 
 influence of these laws. In his speech in the House he said 
 that to his mind the question was not so much what was the 
 price of food as what was the command which the laboring 
 classes of the population had of all that constituted the en¬ 
 joyments of life. His belief and the belief of his colleagues 
 was that it was important for the country to take care that 
 the main source of the supply of corn should be derived from 
 domestic agriculture. And he contended that a certain 
 amount of protection was absolutely required for that indus¬ 
 try. But he made a most important avowal, one which no 
 Protectionist ministry had ever made, that protection should 
 not be retained for the special benefit of any particular class, 
 but only for the advantage of the nation at large, and in so 
 far only as was consistent with the general welfare of all 
 classes of society. Sir Robert Peel then entered on the ex¬ 
 tent of such protection, and having taken 54s. to 58s. per 
 quarter as the price at which corn should range for a fair - 
 remuneration to the agriculturist, he asked, Shall the corn 
 laws be based on a sliding scale, or on a fixed duty ? Much 
 might be said for the one and for the other. A sliding scale 
 was introduced in France in 1819, one had been adopted 
 in Belgium, the Netherlands, and other countries, and it 
 seemed to have the advantage of adapting itself to every 
 circumstance. But experience did not confirm the hopes 
 entertained of its working. It did not hinder prices rising 
 higher than was desirable in years of scarcity; and it had the 
 same prejudicial effect as every corn law of causing the cul¬ 
 tivation of land to be regulated, not by its inherent capacity, 
 but by the amount of forced stimulus given to it by the 
 Legislature. Besides these radical defects the objections 
 
220 
 
 ECONOMIC HISTORY . 
 
 urged against the sliding scale were, that the reduction of 
 duty was so rapid as to hold out temptation to fraud; that 
 it operated as an inducement to retain corn, or combine for 
 the purpose of influencing the averages; that the rapid de¬ 
 cline of. the duty was injurious to the consumer, the pro¬ 
 ducer, the revenue, and the commerce of the country; that 
 ihwas injurious to the consumer because when corn was at a 
 high price, say between 66s. and 70s. and just when it would 
 be for the public advantage that corn should be liberated for 
 the purpose of consumption, the joint operation of increased 
 price and diminished duty induced the holders to keep it 
 back in the hope of realizing the price of upwards of 70s. 
 and so paying only Is. duty; that it operated injuriously to 
 the agricultural interest, because it held out a temptation to 'V 
 keep back corn until it could be suddenly entered for con¬ 
 sumption at the lowest amount of duty, when agriculture 
 lost the protection which the law intended it should possess; 
 that it was injurious to the revenue because instead of corn 
 being entered for home consumption when it arrived, it was 
 retained until it could be introduced at Is. the revenue los¬ 
 ing the difference between Is. and the amount of duty which 
 would otherwise have been levied; that it was injurious to 
 commerce because when corn was grown at a distance, in 
 America, for instance, the grower was subject to the disad¬ 
 vantage that before his cargo arrived in this country the 
 sudden entries of wheat at Is. duty from countries nearer 
 England might have so diminished the price and increased 
 the duty as to cause his speculation to prove not only a fail¬ 
 ure but ruinous. These were formidable objections to any 
 sliding scale, but between a gradual and a fixed rate of duty 
 there was not a material difference. On the other hand, a 
 fixed duty of 8s. per quarter was too low as a protection in 
 time of abundance, and was in effect a prohibitory duty in 
 time of scarcity. Nor was it possible to maintain more than 
 a nominal duty when prices began to rise. It was indeed 
 difficult to strike the balance of advantage and inconvenience 
 between the sliding scale and the fixed duty. So, on the 
 whole, Sir Robert Peel favored the principle of the sliding 
 
THE CORN LAWS. 
 
 221 
 
 scale, that is, of making the duty upon corn vary inversely 
 with the price in the home market, taking the average of the 
 market prices from returns collected by excise officers. 
 Having, therefore, decided on charging 20s. duty when the < 
 average price of wheat was 50s. and 51s. per quarter, he 
 proposed to make that duty fall by a reduction of Is. a 
 quarter as the average price rose Is., with some slight modi¬ 
 fications, so that the duty should be only Is. per quarter 
 when the price of wheat rose to 73s. a quarter and upwards, 
 and a bill so framed he presented to the House of Commons. 
 The House was not prepared at the time for a very liberal 
 measure. Lord John Russell made a motion in favor of a 
 fixed duty, but it was not popular; and notwithstanding a 
 few expressions of dissatisfaction, the Government proposal 
 was well received. Lord John Russell’s amendment was 
 lost by 226 to 349, and Sir Robert Peel's bill passed into 
 law. 1 But the country was not satisfied. Meetings con¬ 
 tinued to be held in the manufacturing districts, and Mr. 
 Yilliers, stimulated by the representations and efforts of the 
 Anti-Corn-Law League, again brought forward his motion 
 for the total repeal of the corn laws, which was again lost 
 by the enormous majority of 90 to 393. The battle of the 
 corn laws had by this time become violent both in and out of 
 Parliament, and Mr. Villiers was not likely to be dispirited 
 by the result of this division. 
 
 It is not, however, by the vain attempt to render a corn 
 law acceptable that the commercial administration of Sir 
 Robert Peel will be remembered. That was at best a tem¬ 
 porary and transitory measure. It is when we consider his 
 financial policy as a whole, and more especially the plan 
 which he devised for improving the state of the finances 
 and imparting new life to commerce and industry, that we 
 recognize the breadth of view, the sound wisdom, and practi¬ 
 cal knowledge which Sir Robert Peel possessed. For years 
 past the finances of the country had fallen into complete dis¬ 
 order. An annual deficiency of one or two millions had 
 
 1 5 & G Viet. c. 14. [Table omitted.] 
 
222 
 
 ECONOMIC HISTORY. 
 
 become a chronic evil, and no means of escape presented 
 itself. 1 With a disaffected people and frequent riots in the 
 manufacturing districts, with a paralyzed trade and wages 
 reduced to a very low scale, any idea of imposing new taxes 
 or making those existing heavier was out of the question. 
 A temporary and casual deficiency might have been met by 
 an issue of exchequer bills; but what would have been the 
 use of resorting to such expedient when there was no 
 ground whatever for expecting any immediate improvement ? 
 On the other hand, to have recourse to loans in times of 
 peace in order to balance the revenue and expenditure was 
 equally inadmissible. Sir Robert Peel knew that a timely 
 and moderate reduction of taxes is favorable rather than 
 injurious to the revenue. He knew that though for the 
 moment such a reduction might show a loss, nevertheless, 
 by the stimulus it affords to increasing consumption, the 
 revenue would soon recover itself, and probably exceed the 
 amount previously produced. Yet, unfortunately* the few 
 precedents he had for such an operation, attempted in times 
 not very prosperous, were not encouraging. In 1825 the 
 revenue from wine amounted to £2,153,000. The duty was 
 then reduced from 9s. 1 \d. to 4s. 2| d. per gallon; and what 
 was the result ? The year after the revenue was <£1,400,000; 
 it afterwards increased to £1,700,000, but it fell again to 
 £1,400,000. The duty on tobacco had been reduced from 
 4s. to 3s. per pound. Before the reduction the revenue was 
 £3,378,000, immediately after it fell to £2,600,000; and 
 though it rose somewhat from that point, it did not reach 
 the previous amount. -Of course the consumption of articles 
 of luxury, such as wine and tobacco, is not so affected by a 
 reduction of duty as that of tea, sugar, and other necessaries 
 of life. Moreover, the resources of the country were at that 
 time comparatively undeveloped, to admit of any large in¬ 
 crease of consumption. Still, such experience did not war¬ 
 rant the expectation that a reduction of taxes would have 
 the effect of filling the exchequer. 
 
 1 The deficiency in the year ended April 5, 1841, was £1,157,601; in the 
 year ended April 5, 1842, £117,627; and 1843, £2,704,510. 
 
THE CORN LAWS . 
 
 223 
 
 But the circumstances of trade required instant relief, 
 and the tariff needed a thorough reform and simplification. 
 Two years before, in 1840, on the motion of Mr. Hume, a 
 committee of the House of Commons was appointed to in¬ 
 quire into the duties levied on imports, and to determine 
 how far they were imposed for purposes of revenue; and in 
 their report the committee said: “The tariff of the United 
 Kingdom presents neither congruity nor unity of purpose; 
 no general principles seem to have been applied. The tariff 
 often aims at incompatible ends; the duties are sometimes 
 meant to be both productive of revenue and for protection, 
 objects which are frequently inconsistent with each other. 
 Hence they sometimes operate to the complete exclusion of 
 foreign produce, and in so far no revenue can of course be 
 received; and sometimes when the duty is inordinately high 
 the amount of revenue is in consequence trifling. They do 
 not make the receipt of revenue the main consideration, but 
 allow that primary object of fiscal regulations to be thwarted 
 by the attempt to protect a great variety of particular inter¬ 
 ests at the expense of revenue, and of the commercial in¬ 
 tercourse with other countries. While the tariff has been 
 made subordinate to many small producing interests at home 
 by the sacrifice of revenue in order to support their interest, 
 the same principle of interference is largely applied by the 
 various discriminating duties to the produce of our colonies, 
 by which exclusive advantages are given to the colonial in¬ 
 terests at the expense of the mother country. ” Such were 
 the general features of the tariff, the result of years of care¬ 
 less legislation on the subject. The fact was indeed too 
 evident that it was necessary to prune the over-burdened 
 tariff, and to liberate a large variety of articles from the 
 needless trammels of legislation. 
 
 But how to accomplish this without a handsome surplus 
 revenue ? Fortunately Sir Robert Peel, undeterred by the 
 state of the revenue, determined to do what was neces¬ 
 sary for trade. And he acted wisely. Untrammel indus¬ 
 try from the bonds of legal restrictions, open the avenue 
 to wealth and prosperity,— that is the right policy. Pur- 
 
224 
 
 ECONOMIC HISTORY. 
 
 sue this course and there is no fear but the revenue will 
 set itself speedily right. Some slight reductions he made 
 in 1841, but on March 11, 1842, in his famous financial 
 statement, he proposed to. reduce considerably all the 
 duties on the raw materials of manufacture, all duties 
 on goods partially or wholly manufactured, as well as 
 the duties on timber, and all export duties, together 
 producing XI, 500,000; and to make up this loss, and to 
 provide for the original deficit in the revenue, amount¬ 
 ing to X 2,570,000, by an income and property tax of 
 Id. in the pound, which he expected would produce 
 £3,700,000 ; J by the equalization of the stamp and spirit 
 duties, which would give X400,000; and by a small tax on 
 the exportation of coals, which would give X200,000,— mak¬ 
 ing in all X4,310,000. It was a very simple plan; yet 
 there was profound wisdom in Sir Robert Peel’s budget. 
 The value of the reductions proposed far exceeded the 
 amount of relief in taxation they each and collectively 
 afforded. The removal of the taxes on raw materials was a 
 great boon, inasmuch as they had the effect of putting our 
 manufactures in a disadvantageous position in the markets 
 of the world, and restricting the field for the employment of 
 capital and labor. As was said in the discussion on the 
 budget, suppose 50,000 head of cattle were to be annually 
 imported in consequence of such remissions, such importa¬ 
 tion would produce but a small effect on the price of meat, 
 but it would create an import trade to the amount of half a 
 million of money, a trade which, in its nature, would tend 
 to produce an export trade in return of an equal amount. 
 Our export trade is measured and limited by our import 
 trade. If an individual merchant cannot afford to send his 
 goods to other countries without obtaining any return, 
 neither can all merchants collectively, and the country as a 
 whole afford to export commodities to foreign countries, if 
 
 1 The amount of duty assessed, in 1843, was £5,608,348. The amount of 
 property assessed was: Schedule A, £95,284,497; Schedule B, £46,769,915; 
 Schedule C, £27,909,793; Schedule D, £71,330,344; Schedule E, £9,718,454. 
 Total, £251,013,003. [Additional note omitted.] 
 
THE CORN LAWS. 
 
 225 
 
 in some shape or other imports are not received from those 
 countries in return. Reduce the duties on imports, and you 
 thereby promote the export of our produce and manufactures. 
 Remove those taxes which burden our manufactures and you 
 promote the importation of those articles which are neces¬ 
 sary to the comfort and welfare of the nation. The income 
 tax might be odious, “inquisitorial, intolerable,” yet it was 
 at that time the only means by which the necessary reforms 
 in the tariff could be attempted. And the nation, having 
 balanced the evil and the good of the proposal, and having 
 found that the advantages preponderated, cheerfully accepted 
 the government proposal, and gave to the proposal its hearty 
 consent. 
 
 The commercial policy thus inaugurated by Sir Robert 
 Peel, being in perfect accord with sound economic princi¬ 
 ples, could not fail to be successful. From 1841 to 1843, as 
 we have seen, there was a yearly deficit in the budget. In 
 the year ending April 5, 1844, Sir Robert Peel found him¬ 
 self in possession of a handsome surplus of <£2,600,000, 
 which was exceeded in the following year, and continued at 
 a high point for four consecutive years. 1 - The exports of 
 British produce, which in 1842 had fallen to £47,000,000 
 increased to £52,000,000 in 1843; to £58,000,000 in 1844; 
 and £60,000,000 in 1845. The shipping entered and cleared 
 increased from 9,000,000 tons in 1842 to 12,000,000 tons in 
 
 s 
 
 1845. In every way, financially and commercially, the re¬ 
 sults fully realized the anticipations formed, and Sir Robert 
 was encouraged to advance still further in the same direc¬ 
 tion. Nothing important was attempted in the budget of 
 1843, 2 but in 1844 the duty on wool was abolished, the 
 duties on currants and coffee were reduced, and a great 
 change was made on the duties on marine insurance. And 
 then, as we have seen in the previous chapter, the differential 
 duties against foreign-grown sugar were relaxed by permit¬ 
 ting the importation of sugar, the growth of China, Java, or 
 
 & 
 
 1 The surplus in the year ended April 5, 1844, was £2,685,125; 1845, 
 £3,027,615; 1846, £1,647,324; and in 1847, £2,823,762. 
 
 2 [Foot-note on “ Taxes Reduced or Repealed,” omitted.] 
 
226 
 
 ECONOMIC HISTORY. 
 
 Manilla, or of any other countries which Her Majesty in 
 council shall have declared to be admissible at moderate 
 rates. In 1845 another still more important series of re¬ 
 forms was introduced. The duty on cotton wool, which, 
 however slight and inappreciable on the coarser material, 
 pressed rather heavily on the finer muslin, was abolished. 
 The export duty on coals, which had been found vexatious 
 and injurious was removed. The timber duties were further 
 reduced. The duty on glass was removed from the tariff, 
 and also the duties on four hundred and thirty articles, 
 which produced little or no revenue, including fibrous mate¬ 
 rials such as silk, hemp, and flax, furniture, woods, cabinet¬ 
 makers’ materials, animal and vegetable oil, ores and 
 minerals, etc. In 1846 the liberal policy was further ex¬ 
 tended. Hitherto our manufacturers had been benefited 
 by the free access granted to the raw materials. It 
 was right to ask of them to relinquish some, at least, of 
 the protecting duties still in existence. And the duties 
 on linen, woollen, and cotton manufactures were reduced 
 from 20 to 10 per cent. The silk duties then at 30 per 
 cent were also reduced to 15 per cent. A reduction was 
 made on the duties on stained paper, on manufactures of 
 metals, earthenware, on carriages, and on manufactures 
 of leather; and the duties on butter, cheese, and hops were 
 further reduced. 1 
 
 But was it right to effect all these reforms without asking 
 for reciprocity on the part of foreign countries ? For years 
 past it was known that Her Majesty’s government had used 
 every effort to enter into treaties with several States, such 
 as Brazil, Portugal, Spain, and France, with a view to 
 the adoption of mutual concessions. In 1843 and 1844 
 Mr. Ricardo brought the subject before the House of Com¬ 
 mons, and moved for an address to Her Majesty, praying 
 that Her Majesty be pleased to give directions to her ser¬ 
 vants not to enter into any negotiations with foreign powers 
 
 1 In 1842 there were 1,090 articles and subdivisions of articles charged with 
 distinct rates of import duty in the customs tariff. In 1846 the number was 
 reduced to 424. 
 
THE CORN LAWS. 
 
 227 
 
 which would make any contemplated alterations of the tariff 
 of the United Kingdom contingent on the alterations of the 
 tariff of other countries; and expressing to Her Majesty the 
 opinion of the House, that the great object of relieving 
 the commercial intercourse between this country and foreign 
 nations from all injurious restrictions would be best promoted 
 by regulating our own customs duties, as might be most 
 suitable to the financial and commercial interests of this 
 country, without reference to the amount of duties which 
 foreign powers might think it expedient for their own in¬ 
 terest to levy on British goods. But the government opposed \ 
 the motion, and Mr. Ricardo was defeated. Mr. Gladstone 
 especially defended the policy of endeavoring to obtain such 
 treaties. He did not wish, he said, “ to be trammelled by 
 an abstract proposition, and unless Mr. Ricardo could show 
 that there were no possible circumstances in which a com¬ 
 mercial treaty could be aught other than evil, he had no 
 right to call upon the House to affirm his resolution. ” The 
 government, however, now practically acted on the policy 
 advocated by Mr. Ricardo, and Sir Robert Peel avowed it 
 frankly. 
 
 “I have no guarantee,” he said, 1 “to give you that other 
 countries will immediately follow our example. I give you 
 that advantage in the argument. Wearied with our long 
 and unavailing efforts to enter into satisfactory commercial 
 treaties with other nations, we have resolved at length to con¬ 
 sult our interests, and not to punish other countries for the 
 wrong they do us in continuing their high duties upon the 
 importation of our products and manufactures, by continu¬ 
 ing high duties ourselves, encouraging unlawful trade. We 
 have had no communication with any foreign government 
 upon the subject of these reductions. We cannot promise 
 that France will immediately make a corresponding reduction 
 in her tariff. I cannot promise that Russia will prove her 
 gratitude to us for our reduction of duty on her tallow by 
 any diminution of her duties. You may, therefore, say in 
 
 1 Hansard’s Debates, Jan. 27, 1846. 
 
228 
 
 ECONOMIC HISTORY. 
 
 opposition to the present plan, 4 What is this superfluous 
 liberality, that you are going to do away with all these 
 duties, and yet you expect nothing in return ? ’ I may per¬ 
 haps be told that many foreign countries since the former 
 relaxation of duties on our part, — and that would be per¬ 
 fectly consistent with the fact,—'foreign countries which 
 have been benefited by our relaxations, have not followed our 
 example; nay, have not only not followed our example, but 
 have actually applied to the importation of British goods 
 higher rates of duties than formerly. I quite admit it. I 
 give you all the benefit of that argument. I rely upon that 
 fact as conclusive proof of the policy of the course we are 
 pursuing. It is a fact that other countries have not followed 
 our example, and have levied higher duties in some cases upon 
 our goods. But what has been the result upon the amount 
 of your exports ? You have defied the regulations of these 
 countries. Your export trade is greatly increased. Now, 
 why is that so ? Partly because of your acting without wish¬ 
 ing to avail yourselves of their assistance, partly because of 
 the smuggler, not engaged by you, in so many continental 
 countries, whom the strict regulations and the triple duties 
 which are to prevent the ingress of foreign goods have raised 
 up, and partly perhaps because these very precautions against 
 the ingress of your commodities are a burden, and the taxa¬ 
 tion increasing the cost of production disqualify the foreigner 
 from competing with you. But your exports, whatever be 
 the tariff of other countries, or however apparent the ingrati¬ 
 tude with which they have treated you, your export trade 
 has been constantly increasing. By the remission of your 
 duties upon the raw material, by inciting your skill and in¬ 
 dustry, by competition with foreign goods you have defied 
 your competitors in foreign markets, and you have been 
 enabled to exclude them. Notwithstanding their hostile 
 tariffs the declared value of British exports has increased 
 above £ 10,000,000 during the period which has elapsed since 
 the relaxation of duties on your part. I say, therefore, to 
 you that these hostile tariffs, so far from being an objection 
 to continuing your policy, are an argument in its favor. But, 
 
THE CORN LAWS. 
 
 229 
 
 depend upon it, your example will ultimately prevail. When 
 your example could bn quoted in favor of restriction, it was 
 quoted largely. When your example can be quoted in favor 
 of relaxation as conducive to your interest, it may, perhaps, 
 excite at first in foreign governments, in foreign boards of 
 trade but little interest or feeling; but the sense of the peo¬ 
 ple of the great body of consumers will prevail, and in spite 
 of the desire of government and boards of trade to raise 
 revenue by restrictive duties, reason and common sense will 
 induce relaxation of high duties. That is my firm belief. ” 
 
 PART IV. —CHAP. 4. 
 
 The Anti-Corn-Law agitation was one of those movements 
 which, being founded on right principles, and in harmony 
 with the interest of the masses, was sure to gather fresh 
 strength by any event affecting the supply of food. It was 
 popular to attempt to reverse a policy which aimed almost 
 exclusively to benefit one class of society. It was well 
 known that the League wanted to outset an economic fallacy, 
 and that they wished to relieve the people from a great bur¬ 
 den. And as time elapsed and the soundness of the princi¬ 
 ples propounded by the League at their public meetings was 
 more and more appreciated, their triumph became certain, 
 and Her Majesty’s government itself began to see that it was 
 no longer possible to treat the agitation either by a silent 
 passiveness or by expressed contempt. The economic theo¬ 
 rists had the mass of the people with them. Their gather¬ 
 ings were becoming more and more enthusiastic. And even 
 amidst Conservative landowners there were not a few enlight¬ 
 ened and liberal minds who had already, silently at least, 
 espoused the new ideas. No change certainly could be ex¬ 
 pected so long as bread was cheap and labor abundant. But 
 when a deficient harvest and a blight in the potato-crop crip¬ 
 pled the resources of the people and raised grain to famine 
 prices, the voice of the League acquired greater power and 
 influence. Hitherto they had received hundreds of pounds. 
 Now thousands were sent in to support the agitation. A 
 
230 
 
 ECONOMIC HISTORY. 
 
 quarter of a million was readily contributed. Nor were the 
 contributors Lancashire mill-owners exclusively. Among 
 them were merchants and bankers, \men of heart and men of 
 mind, jbhe poor laborer and the peer of the realm. The fer¬ 
 vid oratory of Bright, the demonstrative and argumentative 
 reasoning of Cobden, the more popular appeals of Fox, 
 Rawlins, and other platform speakers, filled the newspaper 
 press and were eagerly read. And when Parliament dis¬ 
 solved in August, 1845, even Sir Robert Peel showed some 
 slight symptoms of a conviction that the days of the corn 
 laws were numbered. Every day in truth brought home to 
 his mind a stronger need for action, and as the ravages of 
 the potato disease progressed he saw that all further resist¬ 
 ance would be absolutely dangerous. 
 
 A cabinet council was held on October 81 of that year to 
 consult as to what was to be done, and at an adjourned meet¬ 
 ing on November 5 Sir Robert Peel intimated his intention 
 to issue an order in council remitting the duty on grain in 
 bond to one shilling, and opening the ports for the admission 
 of all species of grain at a smaller rate of duty until a day to 
 be named in the order; to call Parliament together on the 
 27th inst., in order to ask for an indemnity and a sanction of 
 the order by law; and to submit to Parliament, immediately 
 after the recess, a modification of the existing law, includ¬ 
 ing the admission, at a nominal duty, of Indian corn and of 
 British colonial corn. A serious difference of opinion, how¬ 
 ever, was found to exist in the cabinet on the question 
 brought before them, — the only ministers supporting such 
 measures being the Earl of Aberdeen, Sir James Graham, 
 and Mr. Sidney Herbert. Nor was it easy to induce the 
 other members to listen to reason. And though, at a subse¬ 
 quent meeting held on November 28, Sir Robert Peel so far 
 secured a majority in his favor, it was evident that the cabi¬ 
 net was too divided to justify him in bringing forward his 
 measures, and he decided upon resigning office. 
 
 His resolution to that effect having been communicated to 
 the Queen, Her Majesty summoned Lord John Russell to 
 form a cabinet; and to smooth his path, Sir Robert Peel, 
 
THE CORN LAWS. 
 
 281 
 
 with characteristic frankness, sent a memorandum to Her 
 Majesty embodying a promise to give him his support. But 
 Lord John Russell failed in his efforts, and the Queen had 
 no alternative but to recall Sir Robert Peel and give him 
 full power to carry out his measures. It was under such 
 circumstances that Parliament was called for January 22, 
 1846, and on January 2T the government plan was pro¬ 
 pounded before a crowded House. It was not an immediate 
 repeal of the corn laws that Sir Robert Peel recommended. 
 He proposed a temporary protection for three years till Feb- 
 rurary 1, 1849, imposing a scale during that time ranging 
 from 4s. when the price of wheat should be 50s. per quarter 
 and upward, and 10s. when the price should be under 48s. 
 per quarter, and that after that period all grain should be 
 admitted at the uniform duty of Is. per quarter. The meas¬ 
 ure, as might have been expected, was received in a very 
 different manner by the political parties in both Houses of 
 Parliament. There was treason in the Conservative camp, 
 it was said, and keen and bitter was the opposition offered 
 to the ehief of the party. For twelve nights speaker after 
 speaker indulged in personal recriminations. They recalled 
 to Sir Robert Peel’s memory the speeches he had made in 
 defence of the corn laws. And as to his assertion that he 
 had changed his mind, they denied his right to do so. Mr. 
 Colquhoun “wondered that Sir Robert could say, 4 I have 
 changed my opinion, and there is an end of it.’ But there 
 was not an end of it. His right honorable friend must not 
 forget the laws by which the words of men of genius, whether 
 orators or poets, are bound up with them. His right honor¬ 
 able friend’s words could not thus pass away. They were 
 winged shafts that pierced many minds. They remained 
 after the occasion which produced them passed away. His 
 right honorable friend must remember that the words which 
 he had used adhered to the memory, moulded men’s senti¬ 
 ments, guided public opinion. He must recollect that the 
 armor of proof which he had laid aside, and the lance which 
 he had wielded, and with which he had pierced many an 
 encumbered opponent, remained weighty and entire. Greatly 
 
232 
 
 ECONOMIC HISTORY. 
 
 did he wish that his right honorable friend were again on 
 this side to wield them, that he were here to lead their ranks 
 and guide them by his prowess. But if not, they retained at 
 least his arms; these lay at their feet, strewed all around 
 them, an arsenal of power.” Petulant remonstrances like 
 these were of course of little avail. Sir Robert Peel and 
 Mr. Cobden were ready to meet every challenge, and to re¬ 
 fute every argument with their unanswerable logic of facts. 
 And when the opposition endeavored to throw all the respon¬ 
 sibility of a measure of such a character on the prime minis¬ 
 ter, Mr. Cobden besought them to turn from the will of one 
 individual to those laws economic and divine which seemed 
 to impose the duty of laying wide open the door for the im¬ 
 portation of food. “ Oh, then divest the future prime minis¬ 
 ter of this country of that odious task of having to reconcile 
 rival interests; divest the office, if ever you would have a 
 sagacious man in power as prime minister, divest it of the re¬ 
 sponsibility of having to find food for the people! May you 
 never find a prime minister again to undertake that awful 
 responsibility! That responsibility belongs to the law of na¬ 
 ture. As Burke said, 4 it belongs to God alone to regulate the 
 supply of the food of nations.’ ... We have set an example 
 to the world in all ages; we have given them the representa¬ 
 tive system. The very rules and regulations of this House 
 have been taken as the model for every representative assem¬ 
 bly throughout the whole civilized world; and having besides 
 given them the example of a free press, and civil and relig¬ 
 ious freedom, and every institution that belongs to freedom 
 and civilization, we are now about giving a still greater ex¬ 
 ample ; we are going to set the example of making industry 
 free, to set the example of giving the whole world every ad¬ 
 vantage of clime and latitude and situation, relying ourselves 
 on the freedom of our industry. Yes, we are going to teach 
 the world that other lesson. Don’t think there is anything 
 selfish in this, or anything at all discordant with Christian 
 principles. I can prove that we advocate nothing but what 
 is agreeable to the highest behests of Christianity. To buy 
 in the cheapest market and sell in the dearest. What is the 
 
THE CORN LAWS. 
 
 233 
 
 meaning of the maxim ? It means that you take the article 
 which you have in the greatest abundance, and with it 
 obtain from others that of which they have the most to 
 spare, so giving to mankind the means of enjoying the full¬ 
 est abundance of earth’s goods, and in doing so carrying out 
 to the fullest extent the Christian doctrine of ‘ Do ye to all / 
 men as ye would they should do unto you. ’ ” The passing 
 of the measure was, however, more than certain, and after a 
 debate of twelve nights’ duration on Mr. Miles’s amendment, 
 the government obtained a majority of 97, 337 having voted 
 for the motion, and 240 against it. And from that evening 
 the corn law may be said to have expired. 1 Not a day too 
 soon certainly, when we consider the straitened resources 
 of the country as regards the first article of food, caused not 
 only by the bad crop of grain, but by the serious loss of the 
 potato crop, especially in Ireland. 
 
 Ireland has often grievously suffered from social and 
 political wrongs, from absenteeism and repeal cries, from 
 Protestant and Roman Catholic' bigotry, from Orangeism 
 and Ribbon ism, from threatening notices and mid-day assas¬ 
 sinations, but seldom has her cup of adversity been so brim¬ 
 ful as in 1845 and 1846, from the failure of the potato crop. 
 Though comparatively of recent introduction, the first potato 
 root having been imported by Sir Walter Raleigh in 1610, 
 potatoes had for years constituted a large proportion of the 
 food of the people of Ireland. A considerable acreage of 
 land was devoted to that culture, and an acre of potatoes 
 would feed more than double the number of individuals that 
 can be fed from an acre of wheat. Such cultivation was, 
 moreover, very attractive to small holders of land. It cost 
 little labor. It entailed scarcely any expense, and little or 
 no care was bestowed on it, since the people were quite 
 satisfied with the coarsest and most prolific kind, called 
 lumpers or horse potatoes. Nor was it the food of the people 
 only in Ireland. Pigs and poultry shared the potatoes with 
 the peasant’s family, and often became the inmates of his 
 
 1 9 and 10 Viet. c. 22, suspended by 10 and 11 Yict. c. 1. 
 
234 
 
 ECONOMIC HISTORY. 
 
 cabin also. One great evil connected with potato culture is 
 4 that, while the crop is precarious and uncertain, it cannot 
 be stored up. The surplus of one abundant year is quite un¬ 
 fit to use in the next, and owing to its great bulk it cannot 
 even be transported from place to place. Moreover; once 
 used to a description of food so extremely cheap, no retrench¬ 
 ment is possible, and when blight comes and the crop is 
 destroyed the people seem doomed to absolute starvation. 
 This, unfortunately, was the case in 1822 and 1831. In 
 those years public subscriptions were got up, kings letters 
 issued, balls and bazaars held, and public money granted. 
 But in 1845 and 1846 the calamity was greater than any 
 previously experienced. 
 
 The potato disease first manifested itself in 1845. The 
 early crop, dug in September and October, which consists of 
 one sixth of the whole, nearly escaped; but the whole of the 
 late crop, the people’s crop, dug in December and January, 
 was tainted before arriving at maturity. In that year there 
 was a full average crop of wheat. Oats and barley were 
 abundant, and turnips, carrots, and greens, including hay, 
 were sufficient. Yet on the continent the rye crop failed, 
 and the potato disease appeared in Belgium, Holland, 
 France, and the west of Germany. On the whole the supply 
 of grain was fair during the year 1845, and prices ruled mod¬ 
 erately high. In 1846, however, the blight attacked the 
 potatoes with even greater fury and suddenness in the month 
 of July, and it attacked both the early crop and the people’s 
 crop at the same time that the wheat crop proved'under an 
 average. Barley and oats were also deficient, and the rye 
 crop again failed on the Continent. In the previous year 
 some counties in Ireland escaped the potato disease, but this 
 year the whole country suffered alike. The loss was indeed 
 very great. Probably £13,000,000 was a low estimate, and 
 from 4,000,000 to 5,000,000 quarters of grain at least would 
 be required to replace it. As might be expected the news 
 of such a disaster had a fearful effect throughout the coun¬ 
 try, and the utter helplessness of many millions of our 
 fellow-subjects became a subject of the greatest anxiety. 
 
THE CORN LAWS. 
 
 235 
 
 As soon as the potato disease appeared in 1845, govern¬ 
 ment took the step of appointing professors Kane, Lindley, 
 and Playfair to inquire into the nature of the disease, and to 
 suggest means for preserving the stock, but this was of little 
 avail. Urged by necessity, the government even stepped 
 out of its province and sent orders to the United States for 
 the purchase of £100,000 worth of Indian corn, established 
 depots in different parts, and formed relief committees. 
 But this was nothing compared with what became necessary 
 to be done in 1846. Public works were then commenced on 
 a large scale, giving employment to some five hundred thou- \ 
 sand persons. The poor law was put in action with unparal¬ 
 leled vigor, so that in July, 184T, as many as three millions 
 of persons were actually receiving separate rations. A loan 
 of <£8,000,000 was contracted by the government, expressly 
 to supply such wants, and every step was taken by two suc¬ 
 cessive administrations — Sir Robert Peel’s and Lord John 
 Russell’s — to alleviate the sufferings of the people. Nor 
 was private benevolence lacking. The Society of Friends, 
 always ready in acts of charity and love, was foremost in the 
 good work. A British Association was formed for the 
 relief of Ireland, including Jones Loyd (Lord Overstone), 
 Thomas Baring, and Baron Rothschild. A Queen's letter 
 was issued. A day of general fast and humiliation was held, 
 and subscriptions were received from almost every quarter 
 of the world. The Queen’s letter alone produced £171,533. 
 The British Association collected £263,000; the Society of 
 Friends, £43,000; and £168,000 more were intrusted to the 
 Dublin Society of Friends. The Sultan of Turkey sent 
 £1,000. The Queen gave £2,000 and £500 more to the 
 British Ladies’ clothing fund. Prince Albert gave £500. 
 The National Club collected £17,930. America sent two 
 ships of war, the “ Jamestown ” and “ Macedonian ” full of 
 provisions; and the Irish residents in the United States sent 
 upwards of £200,000 to their relatives to allow them to emi¬ 
 grate. But with all this, the people passed through a most 
 eventful catastrophe. One third of the people at least was 
 reduced to destitution. A large number died by fever and 
 
236 
 
 ECONOMIC HISTORY. 
 
 pestilence. Such as could raise the recpiisite funds emi¬ 
 grated to America. Crowds of emaciated and famished 
 people flocked by every available means to English ports. 
 The rest were kept alive by employment on public works, by 
 private local charity, by local subscriptions, by contribu¬ 
 tions from all parts of the world, and by the most extensive 
 system of gratuitous distribution of food which history 
 affords any record of. 
 
 The price of wheat and other grain did not rise much at 
 first. Indeed for a lengthened time but faint conception was 
 entertained of any want of foreign grain. The potato failure 
 was comparatively a new thing, and few imagined that it 
 would act powerfully on the consumption of grain. In 1845 
 the average price of wheat was no more than 50s. lid. per 
 imperial quarter, it having risen from a minimum of 45s. 
 3d. in March to 58s lOd. in November; while the average 
 price of barley was 31s. 8d. and of oats 22s. 6d. In 1846, 
 also the average price of wheat was 54s. 8d., the price having 
 ruled first 55s. 6d., falling to 46s. 3d. in August, and rising 
 to 60s. 7d. in November, while the average price of barley 
 was 32s. 8d. and of oats 23s. 8d. But in 1847 a sudden great 
 rise took place. The price of wheat rose from an average of 
 69s. lid. in January to an average of 92s. lOd. in June; the 
 price of barley was 50s. 2d. in January, 53s. 5d. in Febru¬ 
 ary, and 52s. lid. in May and June; and oats, commencing 
 at 29s. 6d. in January, rose to 34s. 2d. in June. In July, 
 however, a sudden change took place by the concurrent ac¬ 
 tion of large importations and excellent prospects of the 
 approaching harvest. From June to December wheat fell 
 from 92s. lOd. to 52s. 3d. ; barley from 52s. lid. to 30s. 
 9d. ; and oats from 34s. 2d. to 21s. lOd. per imperial 
 quarter. The importation of grain had never been so large 
 as in this year. In former years 1,000,000 or 2,000,000 
 quarters was the maximum, but in 1846 the imports 
 amounted to 4,752,174 quarters of grain and meal, and in 
 1847 to as much as 11,912,864 quarters, the greatest in¬ 
 crease having taken place from Russia and America. Then, 
 indeed, the nation realized that the corn law could not be 
 
THE CORN LA WS. 
 
 237 
 
 maintained any longer. Our dependence on foreign grain 
 became very great, and thankful indeed we were that by the 
 wisdom and foresight of our legislators, the last corn law and 
 the navigation law were alike suspended, and our ports were 
 opened to the supply of food from any quarter of the globe. 
 
 Another important consequence of the potato disease was 
 an enormous stimulus to emigration. Great is the change in 
 the state of public opinion and law as respects emigration. 
 In olden, yet not very remote times, an absolute prohibition 
 existed against the departure of artisans from this country, 
 and we would have regarded as a dire misfortune the depart¬ 
 ure of hundreds and thousands of families from our shores 
 in quest of happier homes and more fruitful sources of indus¬ 
 try. Now we see whole fleets of emigrant ships carrying 
 away many of the ablest and most industrious of our work¬ 
 ing population, without a murmur of complaint or a feeling 
 of sorrow. And why ? because we feel that they only obey 
 the law of nature, which is always foreseeing and beneficent. 
 Even savages are impelled by their economical condition to 
 be always moving in quest of food; and when civilization 
 created new wants, a still greater impulse w T as given to 
 migrations from place to place. Sometimes religious and 
 political dissensions have been the causes of great emigra¬ 
 tion. But motion is a law of human society, and endless 
 processions are always moving, now from south to north, 
 and anon from north to south; at one time from west to east, 
 and at another from aast to west. As for this country the 
 constant alternation of times of prosperity and distress in 
 commerce and manufactures renders it the more necessary 
 for our working people to have other outlets for their indus¬ 
 tries than are afforded within these circumscribed islands, 
 and it is fortunate that the colonies are ever open for the 
 employment of any number of laborers. As early as 1826 
 and 1827 the subject of emigration engaged the attention of 
 the House of Commons, and their recommendation was that 
 the emigrants should be settled upon land granted by the 
 State, and that whatever fund be advanced for their benefit 
 should be subject to repayment. In 1831 a royal commis- 
 
238 
 
 ECONOMIC HISTORY. 
 
 sion inquired into the subject, and while it did not approve 
 of an} r direct grant of money for emigration to Canada and 
 other North American colonies, it recommended that as re¬ 
 spects New South Wales and Yan Diemen’s Land the pro¬ 
 ceeds of public land sold should he devoted as loans of £20 
 and upwards towards the passage money of families of me¬ 
 chanics and agricultural laborers, and as bounties of, and 
 towards the conveyance of, young unmarried females. This 
 recommendation was subsequently adopted and carried out 
 by the colonial office, and then a loan for the Australian 
 emigrants was converted into a free gift and increased to 
 £30, the bounty to single females being also increased to 
 £30. But notwithstanding tliese encouragements, the emi¬ 
 gration from the United Kingdom continued very limited for 
 a long time. For sixteen years, from 1815 to 1830, the 
 average number of emigrants was only 23,000 per annum, 
 most of whom went to the North American colonies and the 
 United States of America. From 1831 to 1840 the average 
 number of emigrants increased to 70,000 per annum, Aus¬ 
 tralia then commencing to attract great attention; and from 
 1841 to 1846 the average still further increased to 100,000. 
 But in 1847 and subsequent years the stream of emigration 
 flowed in a most rapid manner. Ireland sent forth the 
 greater part of her laboring population, and in the decennium 
 from 1847 to 1856 the number of emigrants actually in¬ 
 creased to 280,000 per annum. It was a pitiful sight to see 
 those crowds of worn-out Irish embarking in rags and penni¬ 
 less for a foreign shore. But they went away from a place 
 of sorrow and suffering to a country which seemed to open 
 a boundless held for the exercise of honest industry. Nor 
 was the benefit of emigration limited to the emigrants them¬ 
 selves. The advantage was quite as great to the mother 
 country. Here they added nothing to national wealth. 
 They constituted the mortified part of the social system 
 which needed amputation. There, not only they ceased to 
 trench upon the labor of others, but, after providing food 
 for themselves they became large-customer^ for our produce 
 and manufactures. 
 
THE CORN LAWS. 
 
 289 
 
 Ere we pass from the repeal of the corn law and its conse¬ 
 quences, reference must be made to an achievement certainly 
 not less important in relation to the economic policy of the 
 country, the repeal of the navigation law. In 1845 these 
 laws were consolidated, and it seemed as if they were to 
 continue for many a year in existence, but the necessity for 
 suspending their operation in 1846 and 1847, and the pro¬ 
 gress of public opinion in matters of free trade suggested 
 an inquiry into the operation and policy of such laws in 
 1847. Of that committee Mr. Milner Gibson was chairman, 
 and during the year they published five reports on the 
 subject containing valuable evidence, tending to show the ob¬ 
 jections to such laws and the injury which they caused, not¬ 
 withstanding their restricted operation,— a large portion of 
 the trade being no longer protected by them. Evidence was 
 given to the effect that, looking to the geographical position 
 of this country, and to the peculiar energy of her people, the 
 extent of her trade, her great capital, and her success in 
 maritime enterprise, there need be no limit to the prosperity 
 of her shipping were it not for the restrictions and unneces¬ 
 sary charges imposed on it by the Navigation Act, the Regis¬ 
 try Act, and several other acts. It was urged that if we 
 could reduce the cost of ships and consequently of freights, 
 we should increase trade to an enormous extent; that the 
 immense traffic which railways occasioned in this country 
 was the strongest proof that cheap conveyance on the sea 
 would be attended with similar results, and that we should 
 not only obtain a much larger quantity of goods than have 
 hitherto come to market, but that w r e should find new ex¬ 
 changeable commodities which did not then come here; that 
 we should bring the timber of India or Australia at half its 
 present cost; and that we should carry on the fisheries to a 
 much greater extent, and be enabled to increase every branch 
 of industry in this and other countries to a very large extent. 
 Shipowners certainly prognosticated all manner of evil 
 likely to arise from the repeal of the navigation laws. They 
 warned the nation that such laws had raised it to the station 
 it held, and that without them it would as rapidly go down 
 
240 
 
 ECONOMIC HISTORY . 
 
 as it had risen. They were certain that the repeal of such 
 laws would reduce shipping property fully 30 per cent in 
 value, and introduce the cheap navigation of other countries 
 in competition with the costly navigation of this country, 
 and that, despairing of success, the British shipowner must 
 retire from the contest. Really, however, the advocates of 
 the navigation laws had little to say in their favor based on 
 substantial facts. The committee made no report in 1847, 
 but the general impression was that the repeal of such laws 
 would benefit trade, and that the necessity for action had 
 become imminent. 
 
 Accordingly, in 1848, as soon as public attention could be 
 given to the subject, Mr. Labouchere, in committee of the whole 
 house, moved a resolution to the effect, “ That it is expedient 
 to remove the restrictions which prevent the carriage of goods 
 by sea to and from the United Kingdom and the British pos¬ 
 sessions abroad, and to amend the laws regulating the coast¬ 
 ing trade of the United Kingdom, subject, nevertheless, to 
 such control as may be necessary, and also to amend the laws 
 for the registration of ships and seamen.” But a concerted 
 opposition was made to such proposition, and Mr. Herries 
 moved a counter resolution, “That it is essential to the 
 national interest of the country to maintain the fundamental 
 principles of the navigation laws, subject to such modifica¬ 
 tions as may be best calculated to obviate any proved incon¬ 
 venience to the commerce of the United Kingdom and its 
 dependencies, and without danger to our national strength.” 
 The discussion was long and animated, and the two oppos¬ 
 ing views were fully enforced and illustrated; but it ended, 
 as might have been expected, in the defeat of Mr. Herries’ 
 amendment by a majority of 294 against 177. But the ses¬ 
 sion was lost, and the subject had to be deferred to another 
 year. Again, however, in 1849 Mr. Labouchere proposed 
 the same resolution, only adding that provision should be 
 made giving power to the Queen in council to re-enact these 
 laws, wholly or in part, with regard to any countries as to 
 which the government might think fit that they should he 
 preserved. Power was given to him to bring in a bill, and 
 
THE CORN LA WS. 
 
 241 
 
 
 it was read a second time by a majority of 266 to 210. As 
 originally proposed the bill was intended to throw open the 
 coasting trade as well as the foreign trade, but the govern¬ 
 ment of the United States having notified their refusal to 
 reciprocate this concession, and some objection having been 
 raised by the department of customs because of the difficulty 
 of enforcing effectual regulations to guard the revenue from 
 danger, the clauses relating to the coasting trade were with¬ 
 drawn, and the bill passed into law. 1 But even the restric¬ 
 tion of the coasting trade was ultimately relinquished, and 
 both the navigation on the coast of the United Kingdom and 
 the manning of British ships were left entirely free. 2 
 
 1 12 and 13 Viet. c. 29. 
 
 2 16 and 17 Viet. c. 107, and 17 and 18 Viet. c. 120. 
 
212 
 
 ECONOMIC HISTORY. 
 
 X. 
 
 THE NEW GOLD. 
 
 From ‘Cairnes’ Essays in Political Economy . 1 
 
 ESSAY II. —THE COURSE OF DEPRECIATION. 
 
 0 one, I think, who has attended to the discussions 
 
 1 N occasioned by the recent gold discoveries, can have 
 failed to observe, on the part of a large number of those 
 who engage in them, a strange unwillingness to recognize, 
 among the inevitable consequences of those events, a fall 
 in the value of money. I say, a strange unwillingness, be¬ 
 cause we do not find similar doubts to exist in anv corre- 
 
 4 / 
 
 sponding case. With respect to all other commodities, it 
 is not denied that whatever facilitates production promotes 
 cheapness; that less will be given for objects when they can 
 be attained with less trouble and sacrifice. It is not denied, 
 for example, that the steam-engine, the spinning-jenny, and 
 the mule have lowered the value of our manufactures; that 
 railways and steamships have lessened the expense of travel¬ 
 ling, or that the superior agricultural resources of foreign 
 countries, made available through free trade, keep down the 
 price of our agricultural products. It is only in the case of 
 the precious metals that it is supposed that a diminution of 
 cost has no tendency to lower value, and that, however 
 rapidly supply may be increased, a given quantity will con¬ 
 tinue to command the same quantity of other things as before. 
 
 Among persons unacquainted with economic science, the 
 prevalence of this opinion is doubtless principally due to 
 those ambiguities of language, and consequent confusion of 
 ideas, with which our monetary phraseology, unfortunately, 
 
 1 London : McMillan and Co., 1873. 
 
THE NEW GOLD. 
 
 243 
 
 abounds, many of which tend to encourage the notion of some 
 peculiar and constant stability in the value of the precious 
 metals. Thus, the expression “ a fixed price of gold ” has led 
 some people to imagine that the possibility of a depreciation 
 of this metal is precluded by our mint regulations. The 
 double sense, again, of the phrase, “ value of money,” has 
 countenanced the same error ; for people, perceiving the rate 
 of interest (which is the measure of the value of money, in 
 one sense of the phrase) remaining high, while the supply of 
 gold was rapidly increasing, — perceiving money still scarce 
 according to this criterion, notwithstanding the increase in its 
 production, — have asked whether this did not afford a pre¬ 
 sumption that its value would be permanently preserved from 
 depreciation, a bank rate of discount at 6, 8, or 10 per cent, 
 as they remarked, affording small indication of money becom¬ 
 ing too abundant. 
 
 It appears to me, however, that misconceptions respecting 
 the influence of an increased supply of gold upon its value, 
 and upon general prices, are by no means confined to the class 
 who could be misled by such fallacies, but that even among 
 economists (at least among economists in this country) we may 
 observe the same indisposition to believe in an actual and pro¬ 
 gressive depreciation of this metal. It is not, indeed, denied 
 — at least, I presume it is not denied — by any one pretend¬ 
 ing to economic knowledge, that the enlarged production of 
 gold now taking place has a tendency to lower its value; but 
 it seems to be very generally supposed that the same cause — 
 the increased gold production — has the effect, through its 
 influence on trade, of calling into operation so many tenden¬ 
 cies of a contrary nature that, on the whole, the depreciation 
 must proceed with extreme slowness, the results being dis¬ 
 persed over a period so great as to take from them any prac¬ 
 tical importance, and that, at all events, up to the present 
 time no sensible effect upon prices proceeding from this cause 
 lias become perceptible. 
 
 The existence of this opinion among economists is, I appre¬ 
 hend, to be attributed in some degree to the circumstance that 
 so few have taken the pains to compare the actual prices of 
 
244 
 
 ECONOMIC HISTORY. 
 
 the present time with those of the period previous to the gold 
 discoveries, but much more to the fact that the character of 
 the new agency and the mode of its operation are not, in 
 general^ correctly conceived. I believe the most general 
 opinion with reference to the action of an increased supply 
 of money upon its value is, that it is uniform, takes place, 
 that is to say, in the same degree in relation to all commodi¬ 
 ties and services, and that therefore prices, so far as they are 
 influenced by an increase of money, must exhibit a uniform 
 advance; 1 and, no such uniformity being observed in the 
 actual movement of prices, the inference has not unnaturally 
 been drawn that such enhancement as has taken place is not 
 due to this cause; that it is not money which has fallen, but 
 commodities which have risen in value. 
 
 Now I am quite prepared to admit that an increase of 
 money tends ultimately, where the conditions of production 
 remain in other respects the same, to affect the prices of all 
 commodities and services in an equal degree; but before this 
 result is attained a period of time, longer or shorter according 
 to the amount of the augmentation and the general circum¬ 
 stances of commerce, must elapse. In the present instance 
 the additions which are being made to the monetary systems 
 of the world are upon an enormous scale, and the disturbance 
 effected in the relation of prices is proportionally great. 
 Under such circumstances it is very possible that the inequali¬ 
 ties resulting may not find their correction throughout the 
 whole period of progressive depreciation, — a period which, 
 even with our present facilities of production and distribution, 
 may easily extend over some thirty or forty years. During 
 this transitionary term the action of the new gold will not be 
 uniform, but partial. Certain classes of commodities and 
 services will be affected much more powerfully than others. 
 Prices generally will rise, but with unequal steps. Neverthe- 
 
 1 “ In relation to the influence of the gold discoveries on the prices of agri¬ 
 cultural produce, it is plain that it could be only the same upon them as upon 
 those of any other class of commodities. If it has caused a rise of 20 per cent in 
 their favor , it must have caused a rise of 20 per cent in everything else.” (“ Times,” 
 City article, August 6, 1852.) And the same assumption, either expressed or im¬ 
 plied, runs through most of the reasoning which I have seen on this question. 
 
THE NEW GOLD. 
 
 245 
 
 less there will be in these apparent irregularities nothing 
 either capricious or abnormal. The movement will be gov¬ 
 erned throughout its course by economic laws; and it is the 
 purpose of the present inquiry to ascertain the nature of 
 these laws and the mode of their operation. 
 
 The process by which an increased production of gold oper¬ 
 ates in depreciating the value of the metal and raising general 
 prices appears to be twofold: it acts, first, directly through 
 the medium of an enlarged money demand, and secondly, 
 indirectly through a contraction of supply. 1 
 
 When an increased amount of money comes into existence, 
 there is, of course, an increased expenditure on the part of 
 those into whose possession it comes, the immediate effect of 
 which is to raise the prices of all commodities which fall under 
 its influence. It is obvious, however, that the advance in 
 price which thus occurs will be, in its full extent, temporary 
 only; since it is immediately followed by an extension of pro¬ 
 duction to meet the increased demand, and this must again 
 lead to a fall in price. Some writers who have treated this 
 question, observing this effect, have somewhat hastily con¬ 
 cluded that under the operation of this principle the level of 
 prices would never permanently be altered, since, as they 
 have urged, each addition to the circulating medium forming 
 the basis of a corresponding increase of demand, gives a 
 corresponding impetus to production ; every increase of 
 money thus calls into existence an equivalent augmentation 
 in the quantity of things to be circulated; and the proportion 
 between the two not being ultimately disturbed, prices, it may 
 be presumed, will return to their original level. 2 The least 
 
 1 According to Mr. Newmarch (“History of Prices,” vol. iv., pp. 224-225), 
 the depreciation of money may occur by a process which is neither of these, 
 when money operates upon prices neither through demand nor yet through 
 supply, but “by reason of augmented quantity.” I must confess myself wholly 
 unable to conceive the process here indicated. 
 
 2 [It may be worth while to preserve a specimen of the sort of Political 
 Economy that was talked and written on this subject some fifteen years ago. 
 A leading article in the Examiner (December 13, 1856) contains the following: 
 “The additional supply of the precious metals has stimulated the industry of 
 the world, and in fact produced an amount of wealth in representing which 
 they have been themselves, as it were, absorbed. . . . But the produce of 
 
246 
 
 ECONOMIC HISTORY. 
 
 reflection, however, will show that this doctrine has been 
 suggested by a very superficial view of the phenomena. 
 
 For — not to press the obvious reductio ad absurdum to 
 which this argument is liable — how is this extension of pro¬ 
 duction to be carried out ? In the last resort it is only possible 
 through a more extended employment of labor. But, when 
 once all the hands in a community are employed, the effect of 
 a further competition for labor can only be to raise wages ; 
 and, wages once being generally raised, it is plain (supposing 
 all other things to remain the same) that profits can only be 
 maintained by a corresponding elevation of prices. When, 
 therefore, the influence of the new money has once reached 
 wages, it is evident that there will be no motive to continue 
 production to that point which would bring prices to their 
 former level, and that consequently an elevation of price must, 
 at this stage of the proceeding, be permanently established. 
 
 So far as regards articles which fall directly under the 
 action of the new money. With respect to those which do 
 not happen to come within the range of the new demand, 
 price is, I conceive, in their case raised by an indirect action 
 of the new money in curtailing supply. 
 
 We have seen that the effect of the efforts to extend pro¬ 
 duction in the directions indicated by the new expenditure 
 must be to raise wages; but it is plainly impossible that wages 
 should continue to advance in any of the principal depart¬ 
 ments of industry without affecting their rates in the rest; 
 whence it will happen that, under the operation of the new 
 monetary influence, some departments of industry will expe¬ 
 rience a rise of w r ages before any advance takes place in the 
 prices of the new commodities produced by the laborers whose 
 w r ages have risen. It is evident that in all departments of 
 industry which may be thus affected — in which prices will 
 not have shared the advance which has affected wages — 
 
 the Australian and Californian gold, as well as that of silver which has accom¬ 
 panied it, is likely to go on ; and it may be asked if this must not in course of 
 time produce depreciation. We think it certainly is not likely to do so; . . . 
 on the contrary, it will surely be absorbed by increasing wealth and population 
 as fast as it is.produced.”] 
 
THE NEW GOLD. 
 
 247 
 
 profits will fall below the general average ; the effect of which 
 must be to discourage production until, by a contraction in 
 the supply of the articles thus furnished, the price shall be 
 raised up to that point which will place the producers on the 
 same footing of advantage as those in other walks of industry. 
 
 An increased supply of money thus tends, by one mode of 
 its operation, to raise prices in advance of wages, and thus to 
 stimulate production; by another, to raise wages in advance 
 of prices, and thus to check it; in both, however, to raise 
 wages, and thus ultimately to render necessary, in order to 
 the maintenance of profits, a general and permanent elevation 
 of price. 1 
 
 This being the process by which increased supplies of 
 money operate in raising prices, in order to ascertain the 
 laws of their advance, we must attend, first, to the direction 
 of the new expenditure; secondly, to the facilities for extend¬ 
 ing the supply of different kinds of commodities ; and, thirdly, 
 to the facilities for contracting it. 
 
 With regard to the first point, — the direction of the new 
 expenditure, — this will naturally be determined by the habits 
 and tastes of the persons into whose possession the new money 
 comes. These persons are the inhabitants of the gold coun¬ 
 tries, and, after them, those in other countries who can best 
 supply their wants. Speaking broadly, we may say that the 
 persons who will chiefly benefit by the gold discoveries belong 
 to the middle and lower ranks of society; in a large degree to 
 the lowest rank, the class of unskilled laborers. The direction 
 of the new expenditure will consequently be that indicated by 
 the habits and tastes of these classes, and the commodities 
 
 1 It must not be supposed that this is inconsistent with the fundamental doc¬ 
 trine maintained by Ricardo, that “high wages do not make high prices/' 
 That doctrine assumes the value of money to be constant. Ricardo was quite 
 aware of the exception to the general principle, and points it out in the follow¬ 
 ing passage: — 
 
 “ Money, being a variable commodity, the rise of money wages will be fre¬ 
 quent^ occasioned by a fall in the value of money. A rise of wages from this 
 cause will, indeed, be invariably accompanied by a rise in the price of commod¬ 
 ities; but in such cases it will be found that labor and all commodities have 
 not varied in regard to each other, and that the variation has been confined to 
 money." (Ricardo’s Works, second edition, p. 31.) 
 
248 
 
 ECONOMIC HISTORY. 
 
 which will be most affected by it will be those which fall most 
 largely within their consumption. 
 
 With respect, secondly, to facilities for extending supply, 
 these will be found to depend principally upon two circum¬ 
 stances : first, on the extent to which machinery is employed 
 in production; and, secondly, on the degree in which the pro¬ 
 cess of production is independent of natural agencies which 
 require time for accomplishing their ends. The distinction 
 marked by these two conditions, it will be found, corresponds 
 pretty accurately with two other distinctions,— with the dis¬ 
 tinction, namely, between raw and manufactured products; 
 and, among raw products, with that between those derived from 
 the animal and those derived from the vegetable kingdom. An 
 article of finished manufacture, in the production of which ma¬ 
 chinery bears a principal part, and which is independent, or 
 nearly so, of natural processes, may after a short notice be 
 rapidly multiplied to meet any probable extension of demand. 
 An article of raw produce, being in a less degree under the do¬ 
 minion of machinery, and depending more upon natural pro¬ 
 cesses which require time for their accomplishment, cannot 
 be increased with the same facility; and production will con¬ 
 sequently, in this case, be comparatively slow in overtaking 
 an extension of demand. But of raw products, those derived 
 from the animal are still less under the dominion of machinery 
 than those derived from the vegetable kingdom, and still more 
 dependent on the slow processes of nature, and, consequently, 
 production must, in their case, be still more tardy in over¬ 
 taking demand. Supposing, then, the extension of demand to 
 be in all three cases the same, the immediate rise of price 
 will, cceteris paribus, be in all the same; but in the case of 
 articles of finished manufacture, this rise will be quickly cor¬ 
 rected by the facilities available for increased production, 
 while in raw vegetable products the correction will take place 
 more slowly, and in raw animal products more slowly still. 1 
 
 1 The following passage occurs in the “History of Prices,” vol. vi., p. 170: 
 “ The groups of commodities which exhibit the most important instances of a 
 rise of price are the raw materials most extensively used in manufactures, and 
 the production of which does not admit of rapid extension; and, second, the 
 
THE NEW GOLD. 
 
 249 
 
 But, thirdly, I said that the progress of prices under the 
 influence of the gold supplies would be governed by the facil¬ 
 ity with which supply can be contracted. Every one who has 
 practical experience of manufacturing operations is aware 
 that, when capital has once been embarked in any branch of 
 production, it cannot at once be removed to a different one 
 the moment the needs of society may require a change; 
 whence it happens that, on any sudden change taking place 
 in the direction of a nation’s expenditure, or when from mis¬ 
 calculation production has been extended beyond existing 
 wants, producers frequently choose to continue their business 
 at diminished profits or even at a positive loss, rather than 
 incur still greater damage by suffering their capital to lie idle, 
 or by attempting to transfer it suddenly into some new branch 
 of production. The supply of a commodity is not therefore 
 always, or generally, at once contracted on the demand for it 
 falling off, or on its production becoming less profitable, and, 
 where this is so, it is evident that prices must at times 
 continue depressed below the normal level; the duration of 
 the depression depending on the length of time required to 
 effect a transference of the unproductive capital to some more 
 lucrative investment. Now, the difficulty of accomplishing 
 this will generally be in direct proportion to the amount of 
 
 groups of commodities in which there is little, if any, rise of price in 1857, as 
 compared with 1851, are articles of colonial and tropical produce, the supply 
 of which, drawn from a variety of sources, does admit of being considerably 
 and expeditiously enlarged.” The fact of the rise of price in raw materials is 
 here admitted, though, in ascribing that rise, as by implication the passage 
 does, to the paucity of the sources of supply, the explanation is, as I conceive, 
 erroneous. The sources, for example, from which tea and sugar are drawn are 
 not more various than, nor indeed so various as, those from which beef and mut¬ 
 ton, butter and provisions, timber, tallow, and leather are drawn; yet all these 
 latter articles have very considerably advanced in price. Again, among 
 colonial and tropical produce Mr. Newmarch includes rum and tobacco, and he 
 might also have included cotton ; yet these articles, though falling within the 
 class which he says admits of being expeditiously enlarged, and which, there¬ 
 fore, according to his theory, should not have risen in price, have in fact risen in 
 a very marked manner. It appears to me that these phenomena can only be 
 understood by reference to the principle which I have endeavored to explain 
 further on — namely, the efficacy of the currency of different countries in 
 determining local prices. 
 
250 
 
 ECONOMIC HISTORY. 
 
 fixed capital employed; and the principal form in which fixed 
 capital exists is that of machinery. It is, therefore, in articles 
 in the production of which machinery is extensively employed 
 — that is to say, in the more highly finished manufactures — 
 that the contraction of supply will be most difficult; and this, 
 it will be observed, is also the kind of commodities for extend¬ 
 ing the supply of which the facilities are greatest. While, 
 therefore, manufactured articles can never be very long in 
 advance of the general movement of prices, they may, of all 
 commodities, be the longest in arrear of it. 
 
 The operation of this principle will be shown chiefly in that 
 class of articles which feels the effect of the new gold only 
 through its indirect action — that is to say, through its action 
 upon wages. With respect to such article there is no exten¬ 
 sion of demand, and the price consequently can only be raised 
 through a contraction of supply. It is evident that of all 
 commodities this is the class in which the rise of price must 
 proceed most slowly. 
 
 From the foregoing considerations, then, I arrive at the fol¬ 
 lowing general conclusions : — 
 
 First. — That the commodities the price of which may be 
 expected first to rise under the influence of the new money are 
 those which fall most extensively within the consumption of 
 the productive classes, but more particularly within the con¬ 
 sumption of the laboring and artisan section of these. 
 
 Secondly. — That of such commodities, that portion which 
 consists of finished manufactures, though their price may in 
 the first instance be rapidly raised, cannot continue long in 
 advance of the general movement, owing to the facilities 
 available for rapidly extending the supply; whereas, should 
 the production, from over-estimation of the increasing require¬ 
 ments, be once carried to excess, their prices, in consequence 
 of the difficulty of contracting supply, may be kept for some 
 considerable time below the normal level. 
 
 Thirdly .—That such raw products as fall within the con¬ 
 sumption of the classes indicated, not being susceptible of the 
 same rapid extension as manufactures, may continue for some 
 time in advance of the general movement, and that, among raw 
 
THE NEW GOLD. 
 
 251 
 
 ft 
 
 products, the effects will be more marked in those derived from 
 the animal than in those derived from the vegetable kingdom. 
 
 Fourthly. — That the commodities last to feel the effects of 
 the new money, and which may be expected to rise most 
 slowly under its influence, are those articles of finished manu¬ 
 facture which do not happen to fall within the range of the 
 new expenditure; such articles being affected only by its 
 indirect action, and this action being in their case obstructed 
 by impediments to the contraction of supply. 
 
 This is one class of laws by which I conceive the ascending 
 movement in prices will be governed ; and up to this point I 
 have the satisfaction of finding my conclusions very fully 
 corroborated by the independent investigations of a French 
 economist, M. Levasseur, who, in some articles lately con- 
 tributed by him to the Journal des Economistes , has, by an 
 entirely different line of investigation from that which I have 
 followed, — namely, by generalizing on the statistics of prices 
 in France during the period of 1847 to 1856, — arrived at 
 conclusions in the main points identical with those which I 
 have now advanced. 1 
 
 There is, however, another principle to which I venture to 
 call attention, which has not, so far as I know, been noticed 
 by any of the economists who have treated this question, but 
 which, it appears to me, must exercise a powerful influence on 
 the course of the movement. The principle to which I refer 
 is that efficacy which resides in the currency of each country, 
 into which any portion of the new money may be received, 
 for determining the effect of this infusion on the range of 
 local prices. 
 
 It is evident that the quantity of metallic money necessary 
 to support any required advance of prices throughout a given 
 range of business will vary with the character of the currency 
 into which it is received; that the quantity required will be 
 greater in proportion as the metallic element of the currency 
 is greater; and, on the other hand, less in proportion as the 
 credit element prevails. If the currency of a country be 
 
 1 See Cairnes, Appendix, p. 360, for a summary of M. Levasseur’s con¬ 
 clusions. 
 
252 
 
 ECONOMIC HISTORY. 
 
 purely metallic, a given addition of coin will increase the ag¬ 
 gregate medium of exchange in that country only by the same 
 amount; if, on the other hand, the currency consists largely 
 of credit contrivances, each addition to its coin becomes the 
 basis of a new superstructure of credit in the form of bank- 
 notes and credits, bills of exchange, checks, etc., and the ag¬ 
 gregate circulation is increased, not simply by the amount of 
 the added coin, but by the extent of the new fabric of credit 
 of which this coin is made the foundation. Applying this 
 principle to the different countries of the world, it follows that 
 a given addition to the metallic stock of Great Britain or the 
 United States, in whose monetary systems credit is very effi¬ 
 cacious, will cause a greater expansion of the total circulation, 
 and therefore will support a greater advance in general prices, 
 than the same addition to the currency of countries like France, 
 in which credit is less active; and that, again, the effect in 
 countries like France will be greater than in countries like 
 India or China, in which the currencies are almost purely 
 metallic, and where credit is comparatively little used. 
 
 Now, this being so, if we consider further that the coun¬ 
 tries which receive in the first instance the largest share of 
 the new money — namely, England and the United States — 
 are also those in which, from the character of their curren¬ 
 cies, a given amount of coin will produce the greatest effect; 
 and, on the other hand, that Asiatic communities, in which, 
 from the weakness of the credit element, the currencies are 
 least expansible, receive but a small portion of their share of 
 the new money direct from the gold countries; 1 being com- 
 
 1 [From statistics recently furnished by the Economist, I learn that the facts 
 have not been as I here assumed, at least since 1858 (the date from which full 
 returns of specie imports have been published by the Board of Trade); and it is 
 probable I was mistaken in my supposition with regard to what had occurred 
 before that time. Since 1858, of £90,000,000 of gold received and retained by 
 India and the East, some £40,000,000, more than a half of the whole, appear 
 to have gone there directly from Australia, the remainder only having come 
 through Europe. This error as to matter of fact will, no doubt, affect to some 
 extent the conclusion contended for. The causes tending to a divergence of 
 European from Asiatic prices have not been, it seems, as powerful as I had 
 supposed; and, in point of fact, this feature in the movement has been less 
 marked than I sketched it; but for this, other causes besides that noticed here 
 have been responsible (1872). See Introductory Chapter, p. 12.] 
 
I 
 
 THE NEW GOLD. 253 
 
 I - v ( | 
 
 pelled to wait for the remainder till it has flowed through the 
 principal markets of Europe and America, affecting prices in 
 its transit, — if, I say, we consider these facts in connection 
 with the principle to which I have adverted, I think we must 
 recognize in that principle — in the influence of the currency 
 of each country on the range of its local prices — an agency 
 which must modify in no small degree the general character 
 of the movement which is now in progress. 
 
 In speaking of the influence of the currency of a country on 
 the range of its local prices, I should explain that I use the 
 words “ local prices ” in a somewhat restricted sense ; namely, 
 with reference to the locality in which commodities are pro¬ 
 duced , not to that in which they are sold, their price in the 
 latter place being always determined by their price in the 
 former. Thus, when I speak of Australian, English, or In¬ 
 dian prices, I shall be understood to mean the prices of their 
 several products in Australia, England, or India. 
 
 Understanding the words, then, in this sense, let us see 
 how far local prices are likely to be affected by the cause to 
 which I have adverted. 
 
 In the first place, then, let it be observed that a very re¬ 
 markable divergence of local prices from the range previously 
 obtaining in the international scale has already taken place. 1 
 The prices of all articles produced in Australia and California 
 are at present on an average from two to three times higher 
 than those wdiich prevailed previous to the gold discoveries; 
 these rates have now been maintained for several years, and 
 are likely to continue ; but, while this advance has taken place 
 in the gold countries, in no part of the world external to those 
 regions have prices advanced by so much as one third. The 
 possibility of a divergence of local prices is thus, as a matter 
 of fact, established ; and the explanation of the phenomenon 
 I take to be this. The sudden cheapening of gold in Australia 
 and California quickly led, through the action of competition 
 among the different departments of industry, to a corre¬ 
 sponding advance in the prices of everything produced in 
 those countries; this advance being in their case possible , be- 
 
 1 See Cairnes, pp. 24, 25. 
 
254 
 
 ECONOMIC HISTORY. 
 
 cause, from the limited extent of the transactions, the local 
 circulation was quickly raised to the point sufficient to sustain 
 a double or triple elevation; but it was impossible that the 
 currencies of all countries should be expanded in the same 
 proportions in the same time; and, consequently, prices in 
 other countries have not risen with the same rapidity. The 
 cause, therefore, of this divergence of local prices — the cir¬ 
 cumstance which keeps general prices in arrear of that ele¬ 
 vation which they have attained in Australia and California — 
 is the difficulty of expanding the currencies of the world to 
 those dimensions which such an advance would require. This 
 expansion, however, is being gradually effected by the process 
 we are now witnessing, — the increased production of the pre¬ 
 cious metals, and their diffusion throughout the world. But, 
 as I have said, the diffusion is not uniform over the various 
 currencies, nor are the currencies receiving the new supplies 
 of uniform susceptibility; and the inequalities are such as to 
 aggravate each other; the currencies which are the most sen¬ 
 sitive to an increase of the precious metals receiving in the 
 first instance nearly the whole of the new gold; while the 
 least sensitive currencies are the last to receive their share. 
 And these, it appears to me, are grounds for expecting among 
 other countries further examples of that phenomenon of local 
 divergence, of which one has already been afforded by the gold 
 countries. 
 
 To judge, however, of the extent to which such local vari¬ 
 ations of price can be carried, we must advert to the corrective 
 influences which the play of international dealings calls into 
 action; and these appear to me to resolve themselves into the 
 two following: namely, first, the corrective, which is supplied 
 by the competition of different nations, producers of the same 
 commodities, in neutral markets; and secondly, that which 
 exists in the reciprocal demand of the different commercial 
 countries for each other’s productions. 
 
 The first form of the corrective is obviously the most pow¬ 
 erful, and must, so far as its operation extends, at once im¬ 
 pose a check upon any serious divergence. Thus it is evident 
 that prices in England and the United States could not pro- 
 
THE NEW GOLD . 
 
 255 
 
 ceed very much in advance of prices on the continent of Europe, 
 since the certain effect of such an occurrence would be to send 
 consumers from the dearer to the cheaper markets, and thus 
 to divert the tide of gold from the currencies of England and 
 America to the currencies of France, Germany, and other con¬ 
 tinental States,— a process which would be continued until 
 prices were restored to nearly the same relative level as before. 
 But it is only among nations which are competitors in the 
 same description of commodities that this equalizing process 
 comes into operation. As between countries like England and 
 America on the one hand, and India and China on the other, 
 — in which the climate, soil, and general physical conditions 
 differ widely, in which, consequently, the staple industries are 
 different, and whose productions do not, therefore, come into 
 competition in the markets of the world, — this corrective in¬ 
 fluence would be felt slightly or not at all. The only check 
 which could be counted on in this case would be that far 
 weaker one which is furnished by the action of reciprocal de¬ 
 mand in international dealings. Thus, supposing prices to 
 rise more rapidly in England than in India, this must lead, on 
 the one hand, to an increased expenditure in England on In¬ 
 dian commodities, and, on the other, to a diminished expendi¬ 
 ture in India on English commodities, with this result,— a 
 steady efflux of the precious metals from the former to the 
 latter country. Such an efflux, as commercial men are well 
 aware, has long been a normal phenomenon in our Eastern 
 trade, but it has lately assumed dimensions which constitute 
 it a new fact needing a special explanation. I believe that 
 explanation is to be found in the circumstances to which I am 
 calling attention. 
 
 English and American prices, and with them money incomes 
 in England and America, have, under the action of the new 
 gold, been advancing more rapidly than prices and incomes in 
 Oriental countries; and the result has been a change in the 
 relative indebtedness of those two parts of the world, leading 
 to a transfer to the creditor country of corresponding amounts 
 of that material which forms the universal equivalent of com¬ 
 merce. It is true, indeed, that other causes have also contrib- 
 
256 
 
 ECONOMIC HISTORY. 
 
 uted to this result, and in particular I may mention the failure 
 of the silk crop in Europe, which has largely thrown us upon 
 China, as a means of supplementing our deficient supplies. 
 But the main cause of the phenomenon in its present propor¬ 
 tions is, I conceive, to be found, not in any such mere tempo¬ 
 rary disturbances, but in the natural overflowing (consequent 
 upon the increase of the precious metals) of the redundant 
 currencies of Europe and America into the more absorbent 
 and impassive systems of Asia. 1 This, then, I say, is the only 
 substantial corrective afforded to the advance of prices in 
 Europe and America beyond their former and normal level in 
 relation to prices in the East; and the question is, will this 
 corrective be sufficient to neutralize the tendency to a diver¬ 
 gence ? Will the flow of the precious metals from West to 
 East suffice to keep prices in England and America within the 
 range prescribed by the inelastic metallic systems of Asia ? I 
 do not conceive that the corrective will be adequate to this 
 end, and I rest this conclusion upon the facts and principles 
 which I have stated, — the vast proportion of the whole gold 
 production which finds its way in the first instance into the 
 markets of England and America, the comparatively small 
 portion which goes direct to the markets of Asia, 2 the highly 
 elastic and expansible currencies of the former countries, and 
 the extremely impassive and inexpansible currencies of the 
 latter. 
 
 We find, therefore, two sets of laws by which the progress 
 of prices, or (which comes to the same thing) the deprecia- 
 
 1 Accordingly we find that the drain which, during the revulsion of trade 
 following on the commercial crisis of 1857, had fora while ceased, has with 
 the revival of trade, recommenced. As a proof how little mere practical sagacity 
 is to be trusted in a question of this kind, it may be worth while to mention that, 
 only three months since, mercantile writers were confidently predicting the turn¬ 
 ing of the. tide of silver from the East to England. The following is from a circu¬ 
 lar of Messrs. Ellisen & Co., quoted in the Times City article, July 28, 1858, 
 apparently with the editor’s approval: “ The time is rapidly approaching when 
 silver will also be shipped from here [China] to England.” So far from this 
 being the case, the drain to the East has again set in, and gives every indica¬ 
 tion of assuming its former dimensions. Every mail to India during the pres¬ 
 ent month (November, 1858) has taken out large amounts of silver. 
 
 2 See ante, p. 252, note. 
 
THE NEW GOLD. 
 
 25.7 
 
 tion of gold under the action of an increased supply, is regu¬ 
 lated : first, those which I explained in the earlier portion of 
 this paper, which depend chiefly on the facility with which 
 the supply of commodities can be adjusted to such changes in 
 demand as the new money expenditure may occasion; and, 
 secondly, those which result from the action of the new money 
 on the currencies into which it is received. According to the 
 former principle, the rise in price follows the nature of the 
 commodity affected; thus it will in general be greater in ani¬ 
 mal than in vegetable productions — in raw produce than in 
 finished manufactures. According to the latter principle, the 
 advance follows the economic conditions of the locality in 
 which the commodity is produced. Thus the rise in price has 
 been most rapid in commodities produced in the gold coun¬ 
 tries ; having in these at a single bound reached its utmost 
 limit, — the limit set by the cost of procuring gold. After 
 commodities produced in the gold regions, the advance I con¬ 
 ceive will proceed most rapidly in the productions of England 
 and the United States; after these, at no great interval, in 
 the productions of the continent of Europe; while the com¬ 
 modities the last to feel the effects of the new money, and 
 which will advance most slowly under its influence, are the 
 productions of India and China, and, I may add, of tropical 
 countries generally, so far as these share, as regards their 
 economic conditions, the general character of the former 
 countries. 
 
 Such appear to be the general principles according to which 
 a depreciation of the precious metals, under the action of an 
 increased supply, tends to establish itself. With a view to 
 ascertain how far, in the progress of prices up to the present 
 time (1858), any trace of their operation can be discerned, I 
 have drawn up some statistical tables; 1 and although, from 
 the imperfect nature of the materials which I have been able 
 to collect, I cannot claim for the result a complete verification 
 of the theoretic conclusions which I have ventured to ad¬ 
 vance, I think they are such as to justify me in placing some 
 confidence in the general soundness of those views. Before, 
 
 1 See Cairnes, Appendix. 
 
 17 
 
258 
 
 ECONOMIC HISTORY. 
 
 however, stating the results of the tables, two or three re¬ 
 marks must be premised. 
 
 First, I would crave attention to this fact, that the present 
 time [1858] is one singularly free from disturbing influences, 
 and that such as do exist are of a kind rather to conceal than 
 exaggerate the effects of depreciation. Thus, we have had 
 three harvests in succession of, I believe, more than average 
 productiveness (the last year of deficiency being 1855); and 
 this cause of abundance has been assisted by free-trade, which 
 has opened our ports to the produce of all quarters of the 
 world. Again, although in the period under review we have 
 passed through a European war, yet we have now enjoyed two 
 years and a half of peace, during which, I think, the economic 
 influences of the war may be taken to have exhausted them¬ 
 selves. It is true, indeed, that we have an Indian revolt still 
 on our hands, besides having but just concluded some hostile 
 operations in China. But these disturbances have not been 
 of a kind to interfere seriously with the general course of 
 trade, except in some few Oriental commodities in which their 
 effects are slightly apparent. 
 
 But what renders the present time peculiarly important as 
 a point of comparison with former periods, is its being in im¬ 
 mediate sequence to a severe commercial crisis. The effect 
 of the crisis of last winter has been effectually to eliminate 
 one great disturbing element from those causes to which a 
 rise of price might be attributed,— the element of credit. 
 Trade is now suffering depression in almost all its branches; 
 and prices, after a period of undue inflation, have, through an 
 ordeal of bankruptcy, been brought to the test of real value. 
 In the fluctuations of commerce we have reached the lowest 
 point of the wave; whatever, therefore, be the range of prices 
 at the present time, we may at least be sure that no commer¬ 
 cial convulsion is likelv to lower it. 
 
 We have further to remember that in an age like the pres¬ 
 ent, in which science and its applications to the arts are in all 
 civilized countries making rapid strides, there exists in most 
 articles of general consumption (but more particularly in the 
 more finished manufactures) a constant tendency to a decline 
 
THE NEW GOLD. 
 
 259 
 
 of price, through the employment of more efficient machinery 
 and improved processes of production. Now, taking all these 
 circumstances together, — the propitiousness of the seasons, 
 the action of free-trade, the absence of war, the contraction of 
 credit, and the general tendency to a reduction of cost pro¬ 
 ceeding from the progress of knowledge, — it appears to me 
 that, were there no other cause in operation, we should have 
 reason to look for a very considerable fall of prices at the 
 present time, as compared with, say, eight or ten years ago. 
 Prices, however, as the following tables 1 will show, have not 
 fallen; they have, on the contrary, very decidedly risen, and 
 the advance has, moreover, as the same tables will also show, 
 on the whole proceeded in conformity with the principles 
 which I have in this paper endeavored to establish. And this 
 is my ground for asserting that the depreciation of our stan¬ 
 dard money is already, under the action of the new gold, an 
 accomplished fact. „ . * 
 
 ESSAY III. —INTERNATIONAL RESULTS. 2 
 
 In a former essay 3 it was attempted, from a review of the 
 industrial history of Australia since the late discovery of gold, 
 to make some general deductions respecting the character 
 of that. event, and of its influence upon national interests. 
 Among other conclusions it was maintained that the tendency 
 of the gold discoveries, or, to speak with more precision, the 
 tendency of the increased production of gold, was rather to 
 alter the distribution of real wealth in the world than to 
 increase its amount; the benefit derived by some countries 
 and classes from the event being for the most part obtained at 
 the expense of others. It was shown, for example, that the^ 
 gain to Australia and California from their gold-fields accrued 
 to them exclusively through their foreign trade, — their cheap 
 gold enabling them to command on easier terms than for¬ 
 merly all foreign productions; while, on the other hand, the 
 only result to foreign nations of the traffic thence arising was 
 
 1 See Cairnes, Appendices. 2 Fraser’s Magazine, January, 1860. 
 
 3 Essay I. of this series. 
 
260 
 
 ECONOMIC HISTORY. 
 
 an increase in their stock of money, — a result rendered nec¬ 
 essary indeed by the new conditions of raising gold introduced 
 by the gold discoveries, but in itself destitute of any real 
 utility. It was shown, in short, that, as regards commercial 
 nations, the effect of the gold discoveries was to place them 
 under the necessity of enlarging their currencies, compelling 
 them to pay for the requisite increase by an increased export 
 of their productions. 
 
 To this conclusion I was led by direct inference from the 
 facts presented in the gold countries. In the present paper it 
 is proposed to follow up the inquiry, with a view to a more 
 particular ascertainment of the consequences formerly de¬ 
 scribed ; the object being to discover in what manner the loss 
 arising from the gold movement is likely to be distributed 
 among commercial nations, and how far this loss may in par¬ 
 ticular cases be neutralized or compensated by other influences 
 which the same movement may develop. 
 
 In the discussions which have hitherto taken place upon 
 this question, the inquiry into the consequences of the gold 
 discoveries has been confined almost exclusively to that as¬ 
 pect of the event in which it is regarded as affecting fixed 
 contracts through a depreciation of the monetary standard . 1 
 As soon as the probability of depreciation is settled, and the 
 effects of this upon the different classes of society, according 
 as they happen to be debtors or creditors under fixed con¬ 
 tracts, explained, the subject for the most part js considered 
 as exhausted. I venture, however, to think that this mode 
 of treatment is very far from exhausting the question. It 
 seems to me that, independently altogether of the existence 
 of fixed contracts, independently even of gold being a stand¬ 
 ard of value, the increased production of this metal which is 
 now taking place will be attended, indeed has already been 
 
 1 See Stirling’s “Gold Discoveries and their probable Consequences;” 
 Chevalier “ On the Probable Fall in the Value of Gold; ” Levasseur’s contribu- 
 tions to the “Journal des Economistes,” 1858; M’Culloch’s article “Precious 
 Metals,” in the “ Encyclopaedia Britannica.” In all these, and in many other 
 minor productions on the same subject, almost the only consequences of the 
 gold discoveries which are taken account of are those which occur in fixed 
 contracts through a depreciation of the standard. 
 
THE NEW GOLD . 
 
 261 
 
 attended, with very important results. Let us observe for 
 a moment the movement which is now in progress. Austra¬ 
 lia and California have, during the last eight or ten years, 
 sent into general circulation some two hundred millions 
 sterling of gold. Of this vast sum portions have penetrated 
 to the most remote quarters of the world; but the bulk of 
 it has been received into the currencies of Europe and the 
 United States from which it has largely displaced the silver 
 formerly circulating; the latter metal, as it has become free, 
 flowing off into Asia, where it is permanently absorbed. 
 Viewing the effect as it occurs in the mass of the two metals 
 combined, it may be said that the stream which rises in the 
 gold regions of Australia and California flows through the 
 currencies of the United States and Europe, and after saturat¬ 
 ing the trade of these countries, finally loses itself in the 
 hoards of China and Hindostan. The tide which comes to 
 light in the sands and rocks of the auriferous regions disap¬ 
 pears in the accumulations of the East. In conjunction, 
 however, with this movement, there has been a counter one. 
 With every advance in the metallic tide a stream of com¬ 
 modities has set in in the opposite direction along the same 
 course, — a stream which, issuing from the ports of Europe, 
 America, and Asia, and depositing as it proceeds a portion 
 of the wealth with which it is charged, finds its termination 
 in the markets of the gold countries. Here, then, we find a 
 vast disturbance in the conditions of national wealth, — a 
 disturbance originating in the gold discoveries, and result¬ 
 ing in a transfer, on an enormous scale of consumable goods 
 — the means of well-being — from one side of the globe to the 
 other. This disturbance, it is evident, is entirely independ¬ 
 ent of the accident that gold happens to be in some countries 
 a standard of value, as well as of the existence of fixed money- 
 contracts; for it includes within the range of its influence 
 countries in which gold is not, no less than those in which 
 it is, the monetary standard; and it affects alike persons 
 whose bargains are made from day to day, and those who 
 engage in contracts extending over centuries. The fact is, 
 the movement in question is the result, not of gold’s being a 
 
262 
 
 ECONOMIC HISTORY. 
 
 standard of value, but of its being a source of purchasing 
 power; and the influence of the gold discoveries having been 
 hitherto regarded almost exclusively with reference to the 
 former function, the vast effects which they are producing 
 through the action of the latter, — that is to say, by altering 
 the distribution of purchasing power in the world, — have 
 been almost wholly overlooked. It has indeed been per¬ 
 ceived that a great influx of the precious metals is taking 
 place, accompanied with certain consequences on the trade 
 of the world; but so far as I know, beyond some general 
 phrases respecting the stimulus given to production by an 
 increase of money, and the great development of commerce 
 which it is causing, no attempt has yet been made to state 
 the principles by which the movement is governed, or the 
 effects which may flow from it. It is to these questions, 
 then, that I would now solicit the reader’s attention, and 
 towards their solution the following remarks are offered 
 'as a contribution. 
 
 Those who have followed the course of this controversy are 
 aware that, by most persons who have taken part in it, it has 
 been assumed, almost as an axiom, that no depreciation of 
 gold in consequence of the gold discoveries has, up to the 
 present time, taken place . 1 As a matter of fact, however, 
 we know that the gold prices of all commodities produced in 
 Australia and California have risen in at least a twofold pro¬ 
 portion ; 2 while we have seen that (so long as the conditions 
 of producing gold remain as at present) this rise must be per¬ 
 manent. To express the same thing differently: in the pur¬ 
 chase of every commodity raised in the gold countries two 
 sovereigns are now required, and (the above conditions being 
 fulfilled) will continue to be required, where one was formerly 
 
 1 The principal exceptions to this statement are M. Levasseur (who, in an ar- 
 
 * 
 
 tide in the “Journal ties Economistes,” March, 1858, estimates the rise of prices 
 in France since 1847 at 20 per cent on all commodities), and Dr. Soetbeer, of 
 Hamburg, who, in his table of prices given in his “ Contributions to the Statis¬ 
 tics of Prices in Hamburg,” arrives at a similar result (see Appendix). Many 
 other writers, indeed, acknowledge that prices have risen, but the rise is always 
 attributed to causes distinct from the increased production of gold. 
 
 2 See Cairnes, p. 24. 
 
THE NEW GOLD. 
 
 263 
 
 sufficient; and if this does not amount to a fall in the value 
 of gold, I must confess myself unable to understand the mean¬ 
 ing of that expression. It is not to be supposed that so re¬ 
 markable a fact as this should have escaped the attention of 
 those who have written on this question; it seems to me 
 rather that the ignoring of it in the discussion is to be 
 attributed to a want of definite ideas respecting value in the 
 precious metals, as well as respecting the mode in which 
 changes in their value are accomplished. The language 
 which is commonly used on the subject would seem to imply 
 that gold and silver possess throughout the world a uniform 
 value, and that all changes therein proceed in a uniform 
 manner, showing themselves at the same time in all coun¬ 
 tries, and in respect to all commodities. But nothing can 
 be further from the truth than such a notion. Gold and 
 silver, like all other things which are the subjects of inter¬ 
 national exchange, possess local values ; 1 and it is by a 
 succession of operations on the local values of gold of an 
 unequal and fluctuating character that its depreciation is 
 being effected, and that (the conditions of production re¬ 
 maining as at present) its value will continue to decline. 
 The twofold rise of prices in the gold countries forms the 
 first step in this progress; and it will be through a series of 
 similar partial advances in other countries, and not by any 
 general movement, that the depreciation of the metal 
 throughout the world will be accomplished, if that consum¬ 
 mation is indeed to take place. With the question of de¬ 
 preciation, however, I am at present no further concerned 
 than may be necessary to show the bearing of these changes 
 in the local values of gold upon the movements of trade, and 
 through these upon national interests. 
 
 There is no need here to resort to argument to prove that 
 a general rise or a general fall of prices, provided it be 
 simultaneous and uniform, can be attended, always exclud¬ 
 ing the case of fixed incomes and contracts already entered 
 
 1 See on the subject of the local values of the precious metals, Ricardo’s 
 “ Works,” pp. 77-86, and Mill’s “Principles of Political Economy,” Book iii., 
 chaps, xix. and xxi. 
 
264 
 
 ECONOMIC HISTORY. 
 
 into, with no important consequences either to nations or to 
 individuals. It is evident that such a change would merely 
 alter the terms in which transactions are carried on, not the 
 transactions themselves. But when the rise or fall of prices 
 is not general, in other words, when the change in the values 
 of the precious metals is merely local, it will he seen that 
 important consequences must result. Supposing, for exam¬ 
 ple, the prices of all commodities produced in England to be 
 doubled, while prices throughout the rest of the world re¬ 
 mained unchanged, it is evident that half the commodities 
 exported from England would, under these circumstances, 
 be sufficient to discharge our foreign debts. With half the 
 capital and labor now employed in producing goods for the 
 foreign markets, we should attain the same result as at pres¬ 
 ent,— the procuring of our imports; while the remaining 
 half would be set free to be applied to other purposes, —to 
 the further augmentation of our wealth and well-being. 
 England would, therefore, in the case we have supposed, be 
 benefited in all her foreign dealings to the full extent of the 
 rise in price. On the other hand, foreign countries would, 
 in exchange for the commodities which they send us, receive 
 in return of our commodities but half their present supply. 
 Their labor and capital would go but half as far as at pres¬ 
 ent in commanding our productions, and they would be 
 losers in proportion. It is evident, therefore, that while 
 nations have not, any more than individuals, any interest in 
 the positive height which prices may attain, every nation, as 
 well as every individual trader, is interested in raising, in 
 relation to others , the price of its own productions. The 
 lower the local value, therefore, of the precious metals in 
 any country, the greater will be the advantage to that coun¬ 
 try in foreign markets. 
 
 This being the manner in which nations are interested in 
 changes in the value of gold, let us now observe the effect 
 which the gold discoveries are producing in this respect. 
 As has been already stated, the local value of gold in Aus¬ 
 tralia and California has fallen to one-half, the prices of 
 
THE NEW GOLD. 
 
 2 65 
 
 their productions having risen in a twofold proportion ; 1 and 
 prices in other parts of the world having undergone no cor¬ 
 responding change, these countries realize the position which 
 we have just been considering in our hypothetical case. A 
 given quantity of their capital and labor goes twice as far as 
 formerly in commanding foreign productions, while a given 
 quantity of foreign labor and capital goes only one-half as 
 far in commanding theirs. The world has thus, through the 
 gold discoveries, been placed in its dealings with California 
 and Australia at a commercial disadvantage; and from this 
 disadvantage it can only escape (always supposing the pres¬ 
 ent conditions of producing gold to'continue) by raising the 
 prices of its productions in a corresponding degree. Every 
 country, therefore, is interested in raising as rapidly as pos¬ 
 sible the prices of its productions, — in other words, in the 
 most rapid possible depreciation in the local value of its 
 gold . 2 The sooner this is effected, the sooner will the coun¬ 
 try be restored to its natural commercial footing in relation 
 to Australia and California; while in relation to countries 
 where prices do not rise with the same rapidity, it will pos¬ 
 sess the same kind of advantage which is now enjoyed by 
 the gold countries. 
 
 This conclusion, I find, is directly at variance with the 
 opinion of some economists of eminence. Mr. M’Culloch, 
 for example, in his recent contribution to the “ Encyclopaedia 
 Britannica,” 3 maintains “that the mischievous influence 
 resulting from a fall in the value of the precious metals de¬ 
 pends in a great measure on the rapidity with which it is 
 brought about.” But I apprehend the difference between 
 
 1 This statement is not given as strictly accurate. On the whole, the ad¬ 
 vance of local prices in the gold countries is at present (1859) considerably 
 more than this, — some leading articles, as house-rent, meat, etc., having risen in 
 a fourfold proportion and upwards. I adopt the proportion of two to one, be¬ 
 cause money wages have risen in about this ratio, and money wages, under a 
 depreciation of the precious metals, ultimately govern money prices. 
 
 2 For the general ground of this assertion the reader is referred to Mr. Mill’s 
 chapters on International Values, and on Money as an Imported Commodity, 
 in his “Principles of Political Economyalso to Mr. Senior’s essay “On the 
 Cost of Obtaining Money.” 
 
 8 Article “ Precious Metals.” 
 
266 
 
 ECONOMIC HISTORY. 
 
 Mr. M’Culloch and myself arises from liis attending exclu¬ 
 sively to a single class of consequences, — those, namely, 
 which result in the case of fixed contracts, from a deprecia¬ 
 tion of the standard. With respect to this class of effects, 
 it is quite true that the evils which they involve will be 
 increased by the rapidity of the depreciation; but as I have 
 shown, the new gold is producing effects quite independently 
 of its operation upon fixed contracts; and it is to those other 
 effects that the statement I have just made is intended to 
 apply. The distinction which I have in view will be best 
 exemplified by recurring to the experience of the gold coun¬ 
 tries. In these the value of gold fell by more than 50 per 
 cent in a single year, the depreciation involving a propor¬ 
 tional loss to creditors with a corresponding gain to debtors 
 and entailing in addition those numerous incidental evils 
 which always result from a sudden disturbance of social 
 relations. No one, however, on this account, will say that 
 the sudden depreciation of gold in Australia and California 
 was not for these countries a great gain. The nature and 
 extent of that gain I endeavored on a former occasion to 
 estimate. 1 It consisted, as I showed, in the increased com¬ 
 mand conferred by the cheapness of their gold over mar¬ 
 kets in which gold prices had not proportionally risen. 
 With every rise in the price of Australian and Californian 
 products, or, what comes to the same thing, with every fall 
 in the local value of their gold, their power of purchase in 
 foreign markets increased,— an increase of purchasing power 
 which, as we know, was immediately followed by a sudden 
 and extraordinary influx of foreign goods. Now, precisely 
 the same principle applies in the case of other countries. A 
 fall in the value of gold will, where gold is the standard, 
 lead to a disturbance in fixed contracts, with the concomi¬ 
 tant evils; but it will at the same time, as in the case just 
 considered, place the countries in which it occurs in a better 
 position commercially in the markets of the world. Suppos¬ 
 ing, for example, a rise in prices to take place in all com¬ 
 mercial countries equivalent to that which has occurred in 
 
 1 See Cairnes, p. 39. 
 
THE NEW GOLD. 
 
 267 
 
 California and Australia, the consequence would be what I 
 endeavored to explain in the paper just referred to; the 
 export of gold from California and Australia, at least on its 
 present scale, would at once cease, and the world would re¬ 
 ceive instead an increased supply of agricultural and pastoral 
 products, and of other commodities which those countries 
 are fitted to produce, —a result which, I ventured to think, 
 would be a gain for the world. On the other hand, suppos¬ 
 ing the rise in price to be confined to a single country,— say 
 to England, — then England would at once be placed on a 
 footing of commercial equality with California and Austra¬ 
 lia, while as regards other countries she would occupy the 
 same vantage-ground which California and Australia now 
 possess. She would, in short, obtain her gold at half its 
 present cost (for she would receive twice as much as at pres¬ 
 ent in return for the same expenditure of labor and capital), 
 while the gold thus obtained would be expended on foreign 
 commodities, of which, according to the hypothesis, the 
 prices had not risen. Notwithstanding, therefore, the evils 
 which undoubtedly attend variations in the standard of 
 value, more especially in an old and highly artificial com¬ 
 munity like ours, it is nevertheless, I maintain, for the in¬ 
 terest of every country, that, a fall in the cost of gold having 
 been effected, the progress of depreciation should in it be as 
 rapid as possible. Until by a depreciation of gold corres¬ 
 ponding to that which has occurred in California and Aus¬ 
 tralia, the value of that metal is brought into harmony with 
 its cost, we must continue to receive from those countries 
 little more than a barren addition to our stock of money. 
 But with each successive step in the progress of deprecia¬ 
 tion, there will be for the nation in which it occurs, a nearer 
 approach to the footing of commercial equality with the gold 
 countries from which it has been temporarily displaced, 
 while in its dealings with other places where the decline 
 has been less rapid, the nation so circumstanced will, during 
 the period of transition, enjoy a commercial superiority. 
 As a general conclusion, therefore, we may say that in 
 proportion as in any country the local depreciation of gold 
 
263 
 
 ECONOMIC HISTORY. 
 
 is more or less rapid than the average rate elsewhere, the 
 effect of the monetary disturbance will be for that country 
 beneficial or injurious. 
 
 This conclusion, I may in passing remark, throws light 
 upon a practical question of some interest at the present 
 time, — I mean the question of introducing a gold currency 
 into India. The measure has been advocated by Mr. 
 M’Culloch, on the ground that, by providing a new market 
 for the increased supplies of gold, its effect would be “to 
 counteract that fall in its value which is so generally appre¬ 
 hended.” 1 There can be no doubt that the effect of the 
 measure would be what Mr. M’Culloch describes; but, if 
 the above reasoning be sound, this circumstance, instead of 
 being a reason for introducing gold into the currency of In¬ 
 dia, affords (so far as the interests of India are concerned) a 
 strong reason against the adoption of this course. Mr. 
 M’Culloch does not state whether the effect which he antici¬ 
 pates upon the value of gold would be general or local; 
 whether extending over the whole commercial world or con¬ 
 fined to the markets of India, —a point of vital importance 
 in determining the character of the result. If the effect were 
 general, — if while counteracting depreciation in India, it 
 influenced the value of gold 'proportionately in other parts 
 of the world, — then it must be conceded that the result 
 would be entirely beneficial. The evils incident to a dis¬ 
 turbance of fixed contracts would be avoided, and no others 
 would be incurred. But this is just the point which I ven¬ 
 ture to deny. The adoption of gold as the monetary stand¬ 
 ard of India would certainly not affect the local value of 
 gold in Australia and California; for, as 1 proved on a for¬ 
 mer occasion, the value of gold in these countries is deter¬ 
 mined by its cost, and its cost depends on the productiveness 
 of the gold-fields. Nor, for reasons which will be hereafter 
 stated, would it influence more than in a slight degree the 
 range of gold prices in England and the United States. 
 The operation, therefore, of the measure would be to depress 
 
 1 “ Encyclopaedia Britannica,” article “ Precious Metals/’ p. 473. 
 
 t 
 
THE NEW GOLD. 
 
 269 
 
 gold prices in India, or at least to prevent them from rising 
 in that quarter as rapidly as they otherwise would; while in 
 California and Australia, in England and the United States, 
 it left their course substantially unaffected. Now this re¬ 
 sult would tend undoubtedly to the advantage of California 
 and Australia, of England and the United States, but, as 
 it seems to me, would as clearly be injurious to India. The 
 purchasing power of the former countries over the markets 
 of India would, through the relative superiority of their 
 prices, be increased, but the purchasing power of India over 
 their markets would, for the opposite reason, be diminished. 
 An English or American merchant, instead of discharging 
 his debts, as at present, through the medium of silver which 
 he has to purchase with gold at 62d. per ounce (and may 
 soon have to purchase at a higher rate), might discharge the 
 same debts with gold directly; and gold being by hypothesis 
 more valuable in India than before, the same amount would 
 of course go farther. But an Indian purchaser of English or 
 American commodities would have the same sum in gold to 
 pay as if no change had taken place in the currency of In¬ 
 dia; while the gold prices of his native productions being 
 lower, his ability to pay would of course be less. It seems 
 to me, therefore (and the considerations here adduced are 
 entirely independent of the reasons which exist on the score 
 of good faith, — the Indian debt having been contracted in a 
 silver currency), that, viewing the matter from the side of 
 Indian interests, the introduction of a gold currency into 
 India must be regarded as a measure decidedly detrimental. 1 
 
 1 Referring to the adoption of a silver standard by Holland in 1851, Mr. 
 M’Culloch characterizes it as a measure “ in opposition to all sound principles.” 
 I confess I am at a loss to conjecture what sound principle was violated in pre¬ 
 ferring as the standard of value that metal the value of which there was every 
 reason to believe would be the steadier of the two. [I may say now (1872) 
 that I am disposed to assign much less importance to this question of a change 
 in the monetary standard of India than I did when the above passage was 
 written. The reasoning assumes the possibility of a serious divergence in the 
 relative values of gold and silver; but I now believe that such a divergence is 
 practically out of the question, the grounds for which opinion will be found 
 farther on [ Cairnes , p. 141]. This circumstance, however, does not affect the theo¬ 
 retic point argued with Mr. M’Culloch. Jf the exchange of the existing silver 
 
/ 
 
 270 E CONOMIC HIS TOR Y. 
 
 Returning once more to the general question we may con¬ 
 sider the following conclusions as established: 1st, that the 
 effect of the cheapening of gold upon commercial countries 
 being to compel them to enlarge their metallic currencies, 
 for which enlargement they must pay by an export of their 
 productions, each country will endure a loss upon this head 
 to the extent of the additional sum which may be requisite 
 for each; and 2dly, that while there will be a general loss 
 from this cause, yet the progress of depreciation over the 
 world not being uniform or simultaneous, the primary loss 
 may, through the disturbance in international values thence 
 arising in particular cases, be compensated or even con- 
 / verted into a positive gain; the loss or gain upon the dis¬ 
 turbance being determined according as the rise of prices in 
 any country is in advance or in arrear of the general average. 
 To ascertain, therefore, the effect of the movement upon any 
 particular nation, we must consider the manner in which, 
 in its case, these two principles will operate. 
 
 With respect to the first, I am aware that, in speaking of 
 the loss imposed on a country by the necessity of enlarging 
 its currency,—by the necessity of receiving and keeping 
 increased supplies of gold and silver,— I am using language 
 which, notwithstanding what was said on a former occasion 
 in its justification, and notwithstanding that it is merely in 
 strict conformity with the most elementary principles of 
 economic science, will still appear .paradoxical to many. I 
 would, therefore, before proceeding farther with this branch 
 of the argument, ask the reader to consider the case of a 
 private merchant who is compelled to increase the stock of 
 cash with which he carries on his business. The metallic 
 circulation of a country performs in relation to the com¬ 
 munity functions precisely analogous to those which are dis- 
 
 for a gold standard in India were calculated to produce the effects Mr. M’Cul- 
 loch expected from it, the measure, it still seems to me, would be open to the 
 objections I have urged against it. But I do not believe that the effects in 
 question would result; and I can well conceive that, having regard to the 
 general convenience of commerce, the change might, on the whole, be 
 advantageous.] 
 
THE NEW GOLD. 
 
 271 
 
 charged for a merchant by his cash reserve. If a merchant 
 can safely dispense with a portion of his ready cash, he is 
 enabled, with the money thus liberated, either to add to his 
 productive capital or to increase his private expenditure. 
 On the other hand, if he finds it necessary to increase his 
 reserve of cash,, his productive capital must be proportionally 
 encroached upon, or his private expenditure proportionally 
 curtailed. And precisely the same may be said of the cur¬ 
 rency of a nation. Where a country does not itself yield 
 gold or silver, 1 every increase of its metallic circulation 
 must be obtained — can only be obtained — by parting with 
 certain elements of real wealth, — elements which, but for 
 this necessity, might be made conducive to its well-being. 
 It is in enabling a nation to reduce within the narrowest 
 limits this unproductive portion of its stock that the chief 
 advantage of a good banking system consists; and if the 
 augmentation of the metallic currency of a country be not 
 an evil, then it is difficult to see in what way the institution 
 of banks is a good. In regarding, therefore, the necessity 
 imposed upon commercial countries of enlarging their metal¬ 
 lic currencies as injurious to their interests, I make no as¬ 
 sumption which is not in perfect keeping with the best 
 known and most generally recognized facts of commercial 
 experience. 
 
 An increase in the metallic currency of a country, then, 
 being an evil, let us consider what the circumstances are by 
 which the augmentation rendered necessary by the gold 
 discoveries will be determined. This, it is evident, will 
 principally depend — the amount of business to be carried on 
 
 A 
 
 being given — on the extent to which substitutes for metal¬ 
 lic money are in use; in other words, on the degree of 
 perfection which the banking system of each country has 
 attained. To illustrate this, let us suppose a given sum of 
 metallic money, say a million sterling, to be introduced 
 
 1 Even where it does yield these metals, the necessity of augmenting the 
 currency is not the less an evil, since the operation will occupy, with no result 
 but that of avoiding an inconvenience, a portion of the labor and capital of 
 the country, which, but for this, might have contributed to its positive welfare. 
 
272 
 
 ECONOMIC HISTORY. 
 
 into two countries in which the currencies are differently 
 constituted,—for example, into England and India. In 
 India coin is the principal medium of circulation 1 — in 
 many parts the only one, and consequently a million sterling 
 introduced into the currency of India would represent only 
 an equal, or little more than an equal, addition to its total 
 medium of circulation,—to the whole monetary machinery 
 by which the exchange of commodities is effected and prices 
 maintained. But in England, where the currency is differ¬ 
 ently constituted, the result would be different. The great 
 bulk of the circulating medium of this country consists of 
 
 1 [The reader will bear in mind that this was written in 1859. The state of 
 the Indian currency at that time may be gathered from the following extracts 
 from a paper on “ The Trade and Commerce of India,” read before the British 
 Association in 1859.] “ Intimately connected with Indian trade and commerce 
 
 is a sound system of banking. At present there are only three banks of impor¬ 
 tance in India, — the banks of Bengal, Bombay, and Madras. These have no 
 branches, the absence of which constitutes one of the main defects of the sys¬ 
 tem. The few other banks in India do not issue notes, and employ their capi¬ 
 tal in making advances on bills of lading, in exchange operations, and in some 
 instances in loans to members of the Service, at high rates of interest; but 
 afford no banking facilities for conducting the internal trade of the country.” 
 The writer then refers to a table, showing the state of the three leading banks 
 (Bengal, Bombay, and Madras) in the preceding June, from which it appears 
 that the bullion at that time in the coffers of the banks was in excess of the 
 notes in circulation, the amount of these latter being, for the whole of India, 
 £2,241,471, or about one-tenth of the amount issued by the Bank of England 
 alone; while the total amount of “accounts current” was only £1,855,000,— 
 about one-sixth of those held by some of the private banks of London, and not 
 one-fifteenth of those of the Bank of England. The total amount of commer¬ 
 cial bills discounted in these three leading banks of India is set down at £278,- 
 906! “ And this,” it is observed, “ in a country where the gross annual revenue 
 is £34,000,000; the export trade, on an average of the last five years, £24,000- 
 000; the import trade, on the same average, £23,000,000, with an internal trade 
 to an extent almost impossible to estimate.” (“The Trade and Commerce of 
 India,” by J. T. Mackenzie, read before the British Association, 1859, pp. 15, 
 16.) In the evidence taken before the late Committee “ On Colonization and 
 Settlement in India,” Mr. Alexander Forbes, when questioned with reference to 
 the large absorption of silver in India, expressed his opinion that the silver was 
 all required for current coin. “ It has often been said that the natives hoard 
 silver. Now my experience is that they do not hoard silver; they hoard gold; 
 and that the silver is actually required for the commerce of the country.” And 
 this he traces (Answers 2,222, 2,223, 2,372-80) to the want of banking accom¬ 
 modation and the imperfect means of communication generally in the country. 
 See also the evidence of Mr. Mangles (Answers 1,625-1,633). 
 
THE NEW GOLD. 
 
 273 
 
 certain forms of credit; and the amount of these credit 
 media standing in a certain large proportion to the coin in 
 the country, the effect of introducing a million sterling into 
 our currency would be to increase the medium of circulation 
 by an amount very much greater than that of the added coin. 
 Let us consider for a moment what becomes of a sum of coin 
 or bullion received into England. I do not now speak of 
 that moving mass of metal which passes (so to speak) through 
 the currency of the country, — which, received to-day into 
 the vaults of the Bank of England, is withdrawn to-morrow 
 for foreign remittance, —but of gold which is permanently 
 retained to meet our genuine monetary requirements. Of 
 such gold a portion, greater or less, according to circum¬ 
 stances, will always find its way into the channels of retail 
 trade; and so far as it follows this course, its effect in aug¬ 
 menting the circulation will be, as in India, only to the 
 extent of its actual amount. But a portion will also be 
 received into the banks of the country, where, either in the 
 form of coin, or of notes issued against coin, it will consti¬ 
 tute an addition to their cash reserves. The disposable cash 
 of the banks being thus increased, an increase of credit 
 operations throughout the country would in due time follow. 
 The new coin would become the foundation of new credit 
 advances, against which new checks would be drawn, and new 
 bills of exchange put in circulation, and the result would be 
 an expansion of the whole circulating medium greatly in 
 
 excess of the sum of coin bv which the new media were 
 
 •/ 
 
 supported. Now, credit, whatever be the form which it 
 assumes, so long as it is credit , will operate in purchases, 
 and affect prices in precisely the same way as if it were 
 actually the coin which it represents. So far forth, there¬ 
 fore, as the new money enables the country to support an 
 increase of such credit media, — to support them, I mean, by 
 cash payments, — so far it extends the means of sustaining 
 gold prices in the country; and this extension of the cir¬ 
 culating medium being much greater than in proportion to 
 the amount of added coin, the means of sustaining gold 
 prices will be in the same degree increased. Thus, suppos- 
 
 18 
 
274 
 
 ECONOMIC HISTORY . 
 
 ing the ratio of the credit to the coin circulation of the 
 country to be as four to one (and the proportion is greatly in 
 excess of this), the addition of one million sterling of coin 
 would be equivalent to an increase in the aggregate circula¬ 
 tion of four millions sterling, 1 and one million sterling of 
 gold would consequently, in England, for a given extent of 
 business, support the same advance in gold prices as four 
 times that amount in India. It follows from these consid¬ 
 erations, that in order to raise prices throughout a given 
 range of transactions to any required level, the quantity of 
 metallic money which will be necessary will vary in differ¬ 
 ent countries, according to the constitution of their curren¬ 
 cies; the requirements of each increasing generally in an 
 inverse ratio with the efficiency of its banking institutions. 
 
 We may thus see how very unequal will be the operation 
 of the gold discoveries with respect to commercial com¬ 
 munities. The reduction in the cost of gold to which they 
 have led has, as we have seen, produced in the gold countries 
 a twofold rise of gold prices; and supposing the present con¬ 
 ditions of raising gold to continue, the same cause must 
 ultimately lead to the same result throughout the world, 
 imposing upon each country the necessity of so enlarging 
 its currency as to admit of this advance. But we have 
 seen that the quantity requisite for this purpose varies ac¬ 
 cording to the monetary status of the country for which it is 
 required; and inasmuch as the new money must be paid for 
 by commodities, the abstraction of commodities, and there¬ 
 fore the loss of the means of well-being, to which each coun¬ 
 try must submit, will vary with the same circumstance. On 
 
 1 Strictly speaking, this conclusion would not follow on the above supposi¬ 
 tion, the efficiency of different forms of credit in performing the work of circu¬ 
 lation being (as pointed out by Mr. Mill, “Principles of Political Economy,” 
 vol. ii., pp. 58-61) different, and only some of them being in this respect equal 
 to coin. But such distinctions do not affect the general truth of the principle 
 contended for in the text, that the necessity for coin varies inversely with the 
 use of credit. Besides, as I intimated, the proportion of credit to coin in our 
 circulation is much greater than I have assumed; and a million of coin taken 
 into our currency would really be equivalent to more than four millions added 
 to a purely metallic one. 
 
THE NEW GOLD. 
 
 275 
 
 the supposition, therefore, on which we are arguing, the 
 quantity of new money which England would require would 
 he, when compared with the extent of her business, ex¬ 
 tremely small, and her loss of real wealth small proportion¬ 
 ally. The same would be true of the United States, where 
 credit institutions have also attained a high degree of 
 efficiency, and whose paper consequently forms a large pro¬ 
 portion of the whole circulation. In France, the use of 
 credit being more restricted, the requirements for coin 
 would be greater, and consequently also the loss of consum¬ 
 able commodities; while in India and China, and indeed in 
 Asiatic communities generally, the circulating medium be¬ 
 ing almost purely metallic, the requirements for coin would, 
 in proportion to the business in which it was employed, 
 attain their maximum, with a corresponding maximum of 
 loss in the elements of well-being. 1 
 
 The operation of this principle is indeed, in the actual 
 circumstances of the world, in some degree concealed by the 
 complex conditions under which it comes into play. Thus 
 Great Britain and the United States, instead of obtaining 
 the smallest shares, receive in the first instance nearly the 
 whole of the new gold. On the other hand, the quantity 
 which goes to India and China from the gold countries is 
 comparatively trifling; 2 and although a large drain of treas¬ 
 ure has set in thither from Europe, yet this consists chiefly 
 of silver. If, however, passing by the accidents of the 
 
 1 It is curious to observe the contradictions in which persons are involved 
 who, still under the influence of the mercantile theory of wealth (and there are 
 few even among professed economists who are free from its influence), are 
 nevertheless sensible from experience of the advantages of a system with which 
 it is incompatible. Tims several witnesses before the late Committee on Indian 
 Colonization refer to the large influx of silver into India in recent years as a sure 
 indication of the increasing prosperity of that country ; yet, almost in the same 
 breath, they speak of the deficiency of banking accommodation as among its 
 most pressing wants. Now, it is certain that, just in proportion as banking ac¬ 
 commodation is extended, the absorption of silver by India will decline; whence 
 it would follow, if the reasoning of the witnesses be sound, that the effect of 
 the extension of barks would be to check the growing prosperity of the coun¬ 
 try. See “ Minutes of Evidence,” Questions 1,625-1,633; 2,221-2,223. 
 
 2 This order in the diffusion of the new gold has not been sustained. See 
 ante, p. 252, note. 
 
276 
 
 ECONOMIC HISTORY. 
 
 movement, we attend to its essentials we sliall find that the 
 results are entirely conformable to the principle I have en¬ 
 deavored to describe. For though the bulk of the new gold 
 comes in the first instance to England and the United States, 
 
 — determined thither by the course of international demand, 
 
 — yet England and the United States do not form its ulti¬ 
 mate destination. The monetary requirements of these coun¬ 
 tries being easily satisfied, the mass of the metal on reaching 
 these markets becomes immediately disposable for foreign 
 purchases, by which means the United States and England are 
 enabled to transfer to other countries this unprofitable stock, 
 the commodities with which in the first instance they parted 
 being replaced by others which they more require. So also, 
 although the metallic drain to the East is composed princi¬ 
 pally of silver, the efflux, at least in its present proportions, 
 is not the less certainly the consequence of the increased pro¬ 
 duction of gold, for the silver of which it consists has been 
 displaced from the currencies of Europe and America by the 
 gold of Australia and California; and the drain to the East is 
 only not a golden one, because silver alone is in that region 
 the recognized standard. As the final result of the whole 
 movement, we find that, while the metallic systems of Eng¬ 
 land and the United States are receiving but small perma¬ 
 nent accessions, those of India and China are absorbing 
 enormous supplies. The former countries, though the first 
 recipients of the treasure, yet, not requiring it for domestic 
 purposes, are enabled to shift the burden to others, whose 
 real wealth they command in exchange, while the latter, 
 requiring what they receive, are compelled to retain it. 
 Having parted with their commodities for the new money, 
 they are unable afterwards to replace them. As their stock 
 of coin increases, their means of well-being decline, and 
 they become the permanent victims of the monetary 
 disturbance. 
 
 But, secondly, we conclude that the loss of real wealth 
 resulting from the augmentation of their currencies would 
 in particular countries be compensated, and might in some 
 be even converted into positive gain, by the disturbance 
 
THE NEW GOLD. 
 
 277 
 
 which, during the period of transition, would take place in 
 international values. As has been already remarked, a 
 general rise of prices in all countries, if simultaneous and 
 uniform, since it leaves the proportions in which .commod¬ 
 ities are exchanged undisturbed, leads to no change in inter¬ 
 national values, and produces no effect upon national inter¬ 
 ests. But where prices rise unequally, international values, 
 and through these, national interests are affected. We have 
 therefore to consider how far, in the actual circumstances of 
 the world, a rise of prices in particular countries, unaccom¬ 
 panied by a corresponding advance in others, is possible, 
 and, in so far as it is possible, in what order the several 
 changes may be expected to occur. 
 
 As regards the question of possibility, this is placed be¬ 
 yond controversy by the example of California and Austra¬ 
 lia. It is a matter of fact that prices in those regions have 
 advanced in a twofold proportion, while no corresponding 
 rise of prices has occurred throughout the world. The cir¬ 
 cumstances, however, of the gold countries will probably be 
 thought of too exceptional a character to form the basis of 
 any general conclusion; and it will therefore be desirable to 
 advert for a moment to the causes which produced in Cali¬ 
 fornia and Australia that local elevation of price, with a 
 view to consider how far the same conditions are capable of 
 being realized elsewhere. 
 
 These causes, as was formerly shown, 1 were the special 
 facilities for producing gold enjoyed by California and Aus¬ 
 tralia, combined with the limited range of their domestic 
 transactions. The sudden cheapening of gold, involving a 
 corresponding increase in money earnings, placed an extra¬ 
 ordinary premium on the production of the metal, while the 
 limited range of their domestic trade rendered the necessary 
 enlargement of their monetary systems an easy task. On 
 the other hand, the immense extent of the aggregate com¬ 
 merce of the world required, in order to secure a similar 
 advance, a proportional increase in its aggregate stock of 
 
 1 See Cairnes, pp. 25, 26. 
 
278 
 
 ECONOMIC HISTORY. 
 
 money, an augmentation which could only be accomplished 
 after the lapse of a considerable time. Prices therefore rose 
 rapidly in the gold countries, while over the area of general 
 commerce the rise had been but slow. 
 
 Such being the circumstances which produced the local 
 divergence of prices to which I have called attention, it will 
 at once be seen that of the two conditions which I have 
 stated, the latter — the necessary enlargement of the local 
 currency — may in most countries, though not in all at the 
 same time, be fulfilled, if not with the same rapidity as in 
 Australia and California, still after no very long delay. It 
 has been computed, 1 for example, that the total quantity 
 of gold coin circulating in Great Britain amounts to 
 <£75,000,000 sterling. Assuming this to be correct, it 
 would follow (all other conditions being supposed identical) 
 that an addition of <£75,000,000 would be sufficient to effect 
 an elevation of our local prices equivalent to that which has 
 occurred in Australia. Now at the present rate of produc¬ 
 tion, the quantity of gold which arrives annually in Great 
 Britain cannot fall much short of £30,000,000 sterling; 2 so 
 that were we merely to retain all that we receive, we should 
 at the end of two years and a half be in a position, so far as 
 the augmentation of our currency is concerned, to maintain 
 the same advance in price as has occurred in the gold coun¬ 
 tries. If, then, prices in Great Britain have not risen in 
 the same degree, the result, it is evident, cannot be due to 
 the difficulty of procuring the supply of gold necessary 
 for the enlargement of our currency. It remains, therefore, 
 to be considered how far those special facilities for procuring 
 gold which have operated in the gold countries may come 
 into play in other parts of the world. 
 
 The extraordinary facilities for procuring gold enjoyed 
 
 1 “ History of Prices/’ vol. vi., App. xxii. This also is Mr. M’Culloch’s es¬ 
 timate : “ Encyclopaedia Britannica,” article “ Precious Metals,” p. 465. [It 
 will be borne in mind that these estimates apply to the period immediately 
 preceding the first publication of these Essays (1859-60).] 
 
 2 [£20,000,000 would have been nearer the mark, but at the time this paper 
 was written no trustworthy statistics of gold imports existed. Either amount, 
 however, answers equally well the purpose of the argument (1872).] 
 
THE NEW GOLD. 
 
 279 
 
 by Australia and California depend, of course, on the posses¬ 
 sion of their gold mines; and this being so, it might seem 
 as if all countries, not being like them auriferous, were by 
 the nature of the case precluded from fulfilling this condition 
 of the problem; but this by no means necessarily follows, 
 as will be evident if we reflect that there are other modes of 
 obtaining gold than by direct production, of which modes 
 the efficiency enjoyed by different countries differs almost 
 as much as the degrees of fertility in different gold mines. 
 Where countries do not themselves produce gold, the mode 
 by which they obtain it is through their foreign trade. 
 Now, it is a fact well known to economists 1 that, with refer¬ 
 ence to the cost of commodities the terms on which foreign 
 trade is carried on differ greatly in different countries, the 
 labor of some going much farther in commanding foreign 
 productions than that of others. According, however, to 
 the conditions on which foreign productions generally are 
 obtainable, will be those on which gold may be obtained. 
 If a country possess special facilities for supplying markets 
 where gold can be given in exchange, it will obtain its gold 
 more cheaply, at a less sacrifice of labor and capital, than 
 countries which do not share these facilities; and among 
 such countries it will therefore occupy precisely the same 
 position as an auriferous country whose mines are of more 
 than the usual richness among the countries which yield 
 gold. It is thus possible for a non-auriferous, no less than 
 for an auriferous country, to possess exceptional facilities in 
 the means of procuring gold, and therefore to fulfil the sec¬ 
 ond of the conditions by which a divergence of local prices 
 from the ordinary level of the world may be effected. 
 
 Now it appears to me there are two countries which pos¬ 
 sess in an eminent degree the qualifications requisite for 
 attaining this result, I mean Great Britain and the United \ 
 States, the former, as being par excellence the great manu¬ 
 facturer among civilized nations, —the manufacturer more 
 
 1 See Ricardo’s “Works,” chap, vii., on Foreign Trade. Mill’s “Principles 
 of Political Economy,” chaps, xvii., xix. Also, Senior’s Essay, “ On the Cost 
 of Obtaining Money.” 
 
280 
 
 ECONOMIC HISTORY. 
 
 particularly of descriptions of goods, — as cotton, woollen, 
 linen, and iron, which enter largely into the consumption of 
 the classes by whom chiefly the gold countries are peopled; 
 and the latter, as the principal producer of raw material, as 
 well as of certain commodities, — as grain, tobacco, sugar, 
 and rice, — which are also largely consumed by the same 
 classes. In these circumstances Great Britain and the United 
 States enjoy peculiar advantages in the markets of the gold 
 countries, and these advantages are extended and confirmed 
 by other important incidents of their position. Thus they 
 possess the greatest mercantile marine in the world, by which 
 they are enabled to give the fullest scope to their manufac¬ 
 turing and agricultural superiority, while by race, language, 
 and religion they are intimately connected with the produc¬ 
 ers of the new gold, — a connection from which spring ties, 
 moral, social, and political, to strengthen and secure those 
 which commerce creates. Great Britain and the United 
 States thus possess in their foreign trade a rich mine, 1 
 worked by their manufacturers, planters, and farmers, tended 
 by their mercantile marine, and protected by their naval 
 power, — a mine by means of which they are enabled to ob¬ 
 tain their gold on terms more favorable than other nations. 
 The effect of this in ordinary times is shown by a scale of 
 money rates, wages, salaries, and incomes, permanently 
 higher than that which elsewhere prevails; but in times of 
 monetary disturbance like the present, when the cost of 
 gold having been reduced its value is falling, these advan¬ 
 tages, it seems to me, must tell, as analogous advantages 
 have told in the gold countries, in a more rapid realization 
 of the results which are in store, — in a quicker ascent 
 towards that higher level of prices and income which the 
 cheapened cost of gold is destined ultimately to produce. 
 
 There is reason, therefore, on considerations of theory, to 
 expect a repetition in England and America of that phe- 
 
 1 The mine worked by England is the general market of the world; the 
 miners are those who produce those commodities by the exportation of which 
 the precious metals are obtained. — Senior’s Essay “ On the Cost of Obtaining 
 Money,” p. 15. 
 
THE NEW GOLD - 
 
 281 
 
 nomenon which has been already exhibited in Australia and 
 California, — a divergence of local monev-rates from the 
 average level of surrounding countries. On a future occa¬ 
 sion I shall endeavor to-ascertain how far, in the case of 
 Great Britain, these a priori conclusions are supported by 
 facts,—how far prices and incomes have here, under the 
 influence of the gold discoveries, outstripped the correspond¬ 
 ing movement in other countries. 1 Having settled this 
 point, we shall be in a position to form a general estimate of 
 the benefit which may thence accrue to us. Meanwhile, 
 however, I may in conclusion point out the mode in which 
 the advantages incident to the monetary position we shall 
 occupy are likely to be realized. 
 
 And here it may be well to call the reader’s attention to 
 the distinction, sometimes overlooked, between a fall in the 
 value of gold and a rise in the price of commodities. A rise 
 in the price of commodities if general, implies commonly a 
 fall in the value of money; but, according to the ordinary 
 use of language, alike by economists and common speech, 
 money would, I apprehend, in certain circumstances, be said 
 to have fallen in value, even though the prices of large 
 classes of commodities remain unaffected. For example, 
 supposing improvements to have been effected in some 
 branch of production resulting in a diminished cost of the 
 commodity, the value of money remaining the same, prices 
 would fall; if under such circumstances prices did not fall, 
 that could only be because money had not remained the 
 same, but had fallen in value. The continuance of prices 
 unaltered would, therefore, under such circumstances, amount 
 to proof of a fall in the value of gold. Now, when in con¬ 
 nection with this consideration, we take account of the fact 
 
 1 [Some evidence on the point will be found in the Appendix (see Cairnes); 
 but the inquiry here contemplated was never carried into effect. A very inter¬ 
 esting and carefully prepared paper on the subject, however, was read some 
 years later by my friend Professor Jevons, before the London Statistical Society, 
 when I had the satisfaction to find that the results of his entirely independent 
 investigations to a very large extent corroborated the conclusions at which I 
 had arrived, mainly by way of deduction from the general principles of the 
 science.] 
 
282 
 
 ECONOMIC HISTORY. 
 
 that over the greater portion of the field of British industry 
 improvement is constantly taking place, it is obvious that 
 the mere movements of prices here, taken without reference 
 to the conditions of production, are no sure criteron of 
 changes in the value of gold. 
 
 The truth is, in a large class of commodities, in all those 
 to which mechanical or chemical inventions are extensively 
 applicable, even on the supposition of a very great deprecia¬ 
 tion of gold, no considerable advance in price is probable. 
 Gold, for example, might have fallen since the beginning of 
 the present century to the extent of 75 per cent, that is to 
 say, four sovereigns now might be equal to no more than 
 one sovereign at the commencement of the period, and yet 
 in a large class of manufactured goods no advance in price 
 would be apparent, the reduction in the cost of production 
 being in more than an equal proportion. In ordinary times 
 agricultural operations escape in a great degree the influence 
 of industrial progress; but within the last ten years, that is 
 to say, since the repeal of the Corn Laws, which nearly 
 synchronized with the gold discoveries,—the spirit of im¬ 
 provement has been as busy in agriculture as in any other 
 department of industry, and in conjunction with importa¬ 
 tions from foreign countries has acted, and must for some 
 time at least continue to act powerfully upon the price of raw 
 products in this country. 
 
 The depreciation of gold, therefore, may be realized either 
 in a corresponding advance of prices, or in the neutraliza¬ 
 tion of a fall which, in the absence of depreciation, would 
 have occurred; but in whatever form it may come to us, our 
 gain or loss as a nation will be the same, and will depend 
 upon the condition I have stated, —the more or less rapid 
 depreciation of our currency as compared with the curren¬ 
 cies (convertible, like ours, into gold) of other countries. 
 Whether, the conditions of production remaining unaltered, 
 the depreciation be indicated by a corresponding advance of 
 prices, or, those conditions undergoing improvement, the 
 fall in the value of gold merely operates in neutralizing, as 
 regards price, the effects of the cheapened cost of commodi- 
 
THE NEW GOLD. 
 
 283 
 
 ties,— in either case the gold price of the products of English 
 labor and abstinence will rise. A given exertion of English 
 industry will reap a larger gold reward than before; and 
 foreign commodities not rising in price in the same degree, 
 the larger gold reward will indicate, over so much of our 
 expenditure as is directed to foreign productions , a real aug¬ 
 mentation of well-being. As regards that portion of our 
 expenditure which falls upon the products of our own indus¬ 
 try, individuals and classes will, according to circum¬ 
 stances, 1 be benefited or injured by the change; but as a 
 nation, we shall neither gain nor lose, since here the in¬ 
 creased cheapness of gold will be exactly neutralized, either 
 by a corresponding advance in price, or by the prevention in 
 the same degree of a fall which would otherwise have taken 
 place. It is in this way, by the increased command which 
 she obtains over foreign markets by her cheap gold, — and 
 not, as is commonly supposed, by finding an outlet for her 
 wares in California and Australia, that England will benefit 
 by the gold discoveries. That outlet for her productions, — 
 were the movement to stop here, — however it might benefit 
 individuals, would for the country at large be an injury and 
 not a boon; it would deprive her of that which might con¬ 
 duce to her comfort and happiness, and would give her a 
 “breed of barren metal” in exchange. But the movement 
 does not stop here. The money which she obtains from the 
 gold countries, instead of absorbing, like India or China, she 
 employs in purchasing the goods of other nations. It is in 
 the enlarged command which she acquires over such goods 
 that her gain consists, and it is thus that she indemnifies 
 herself, though at the expense of the nations who ultimately 
 retain the new gold for the loss, the indubitable loss, which 
 she is called on in the first instance to sustain. 
 
 1 On this point see Cairnes, p. 147, et seq. 
 
284 
 
 ECONOMIC HISTORY. 
 
 XI. 
 
 FRANCE SOUS LE SECOND EMPIRE. 
 
 From Levasseur’s IIistoire des Classes Ouvrieres en France 
 depuis 1789, jusqu’a nos jours . 1 Vol. ii. pp. 307-321. 
 
 T~\EPUIS quinze ans, trois grand fails dconomiques ont 
 exerce en France une influence considerable sur la 
 production manufacturiere; le ddveloppement du credit, la 
 multiplication des chemins de fer et la rdforme douaniere. 
 
 11 entrait dans les vues du gouvernement de provoquer 
 l’esprit d’entreprise. L’annde 1852 vit se former deux dtab- 
 lissements d’une nature tres-diverse, mais qui tous deux de- 
 vaient concourir au meme but, celui de fournir des capitaux 
 au travail: le Credit foncier, et le Credit mobilier. 
 
 Le premier, depuis longtemps reclame par M. Wolowski, 
 se proposait de venir en aide a l’agriculture en avan^ant sur 
 premiere hypotlieque a la propriete fonciere des sommes rem- 
 boursables par annuites; en realite, les prets agricoles, qui 
 augmentent aujourd’hui, ont dte les plus lents a se developper, 
 et la nature de sa clientele l’a fait servir plus a la construc¬ 
 tion des maisons et aux travaux publics dans les communes 
 qu’a la culture proprement dite: a ce titre, il appartient a 
 l’histoire de l’industrie. Le second, crdd et dirigd par M. E. 
 Pdreire, est une puissante banque de commandite et de spec¬ 
 ulation, non sans analogic avec celles que recommendait le 
 saint-simonisme. II etait destind par ses statuts a fonder ou 
 a soutenir de grandes entreprises, et il a, en effet, donnd nais- 
 sance aux chemins de fer du Midi, a la compagnie immobiliere 
 de Paris, au gaz de Marseille, aux paquebots transatlantiques; 
 il devait etre, en raison meme de son caractere, tres-vivement 
 
 1 Paris : Libraire de L. Hachette et Cie, 1867. 
 
FRANCE SOUS LE SECOND EMPIRE. 
 
 285 
 
 affects par toutes les influences de hausse et de baisse, et sa 
 fortune ddpendait entierement de l’habilete de ses directeurs. 
 
 La Banque de France, dont le gouvernement avait le droit 
 de suspendre le privilege en 1855, fut affranchie de cette 
 crainte et autorisee a faire des avarices sur depot d’actions et 
 d’obligations de cliemin de fer: 1 la speculation en usa large- 
 ment. Quelques anndes apres, la Banque obtenait par une 
 loi la prorogation de son privilege jusqu’en 1897, aux prix de 
 100 millions pretds a l’Etat et fournis par une emission de 
 nouvelles actions; la Banque pouvait Clever le taux de son 
 escompte au-dessus de 6 pour 100, et le gouvernement pouvait 
 exiger, dix ans aprds la promulgation de la loi, qu’elle eut au 
 moins une succursale par departement. 2 
 
 “Les operations de la Banque se sont considerablement 
 ameliorees,” disait le gouverneur, en parlant de la situation en 
 1852; “ le commerce et l’industrie out repris leur essor.” En 
 effet, le montant des operations s’dtait dleve d’un milliard et 
 demi, chiffre de 1851, a deux milliards et demi. Le produit 
 des impdts indirects s’dtait notablement accru; la rente avait 
 depasse le pair; toutes les valeurs de bourse avaient ete em- 
 portees dans le meme mouvement, et les marcliandises, sous 
 la triple impulsion de l’abondance de l’or, d’une consommation 
 plus active, et d’une speculation audacieuse, encherissaient 
 cliaque jour. 
 
 Ce fut l’age d’or de la Bourse. Londres, qui avait ete 
 depuis le commencement du sidcle le principal marche des 
 capitaux et des grandes entreprises en Europe, cdda le pas a 
 Paris. L’elan dtait tel qu’il permit au commerce de francliir 
 le cholera, la disette, la guerre d’Orient, et a l’Etat d’emprun- 
 ter un milliard et demi sans briser le ressort du credit. Les 
 capitaux, a peine formes, etaient absorbes; les travaux pub¬ 
 lics, les emprunts, la disette elle-meme, tout y contribuait; 
 on speculait a la hausse, et les cours s’elevaient. 
 
 Cependant les affaires etaient devenues plus difficiles en 
 1856: le gouvernement crut utile d’enrayer lui-meme la spd- 
 culation 3 et de fane une loi restrictive sur les socidtds en com- 
 
 1 Decret du 28 mars, 1852. 2 Loi du 9 juin, 1857. 
 
 3 Voir au Mon., la note du 9 mars, 1856. 
 
286 
 
 ECONOMIC HISTORY. 
 
 mandite par actions. 1 La langueur continua cependant en 
 1857, et l’abondance de la r^colte rcndait inevitable la baisse 
 des denrees, lorsque, vers le mois d’aout, la crise eclata avec 
 violence aux Etats-Unis. Elle se communiqua rapidement a 
 Londres, a Hambourg, a Paris. Quoique moins rudement 
 6prouvee que ses voisines, la France vit, comme elles, les 
 sources du credit tarir; la speculation dut liquider, et Fannie 
 1858 fut marquee par une baisse gendrale des marcliandises 2 
 et par un ralentissement des transactions. 
 
 La guerre d’ltalie qui survint l’annee suivante, et ses con¬ 
 sequences qui se firent sentir jusqu’en 1862, empeclierent les 
 affaires de reprendre leur essor jusqu’au jour ou le combat 
 d’Aspromonte fit croire a la consolidation du trone de Yictor- 
 Emmanuel. Les cours se releverent alors, et l’esprit d’entre- 
 prise se ranima. Mais une autre cause de malaise pesait 
 deja sur le marche: la guerre d’Amerique privait l’Europe 
 de coton et reduisait a la misere les districts manufacturiers 
 de l’Angleterre et de la France. Une crise monetaire s’en- 
 suivit; en 1864, l’escompte de la Banque de France monta 
 a 8 pour 100, 3 et le gouvernement, sollicite par une petition 
 de trois cents ndgociants et par une contrep^tition de la 
 Banque, ordonna une enquete sur le regime du credit. Cette 
 crise s’apaisait a son tour, lorsque eclata la guerre du Dane- 
 mark, puis la guerre d’Allemagne. Les agitations de la po¬ 
 litique, dans le vieux et dans le nouveau monde, contrarient 
 frequemment, depuis dix ans, le ddploiement pacifique des 
 forces du travail marchant a la conquete de la matiere. 
 
 Une ville a particulierement souffert, et souffre aujourd’hui 
 plus que les autres, de la langueur des affaires dont se plaint 
 le commerce. C’est Lyon, dont la nombreuse population 
 ouvriere, dependant presque tout entiere, pour sa subsistance, 
 d’une seule industrie de luxe, est toujours la premiere a 
 s’affaisser sous le coup des crises et la derniere a se relever. 
 
 1 Loi da 17 juillet, 1850. II s’etait forme, en 1852, 21 societes de ce genre ; 
 en 1853, 25; en 1854, 36; en 1855, 18; en 1850, 17. II s’en forma,,en 1857, 6; 
 13 en 1858, et 12 en 1859. 
 
 2 Voir, sur cette crise, la Question de Vor, par E. Levasseur. 
 
 3 Au mois de mai. 
 
FRANCE SOUS LE SECOND EMPIRE. 
 
 287 
 
 Elle avait developpe ses relations ext^rieures; la guerre 
 d’Am^rique lui a ete funeste; de 84 millions en 1858, Im¬ 
 portation de la soierie est tornbee a 11 millions en I 860. 1 Le 
 meilleur remede pour elle serait, a cdte de son industrie de 
 luxe, soumise aux caprices de la mode et aux variations de 
 la fortune, la creation d'une industrie commune ayant un 
 large debouche. 
 
 Neanmoins, malgr 6 les obstacles, le travail a brillamment 
 deploy^ ses forces . 2 La Banque de France, dont les escomptes, 
 a Paris, avaient une seule fois atteint 1,329 millions, sous le 
 regne de Louis-Philippe, atteignit de nouveau et depassa ce 
 
 chiffre en 1856; en 1865, elle faisait 2,458 millions. Elle 
 
 ♦ 
 
 6 tait alors devenue la seule banque d’emission et la regula- 
 trice souveraine du credit en France; les operations de ses 
 succursales, jointes au chiffre des affaires de Paris, formaient, 
 a la meme epoque, un total de 7,422 millions, tandis qu’en 
 1847 les banques departementales et la Banque de France 
 n’atteignaient que 2,075 millions. Bans le meme temps, sans 
 que le commerce des banques privecs parut diminuer , 3 se fon- 
 daient d’autres grands etablissements, comme la Society gene- 
 rale de credit industriel et commercial , 4 la Society de depots 
 et de comptes courants , 5 la Soci^te generale pour favoriser 
 le commerce et l’industrie en France . 6 L’usage des cheques, 
 autrement dit l’habitude de deposer en banque ses fonds de 
 caisse et de faire ses paiements en mandats, commence, quoique 
 trop lentement, a se naturaliser en France et a mettre une plus 
 grande masse de capitaux a la disposition du credit. 
 
 Parmi les entreprises qui devaient obtenir la faveur, les 
 chemins de fer etaient au premier rang. On avait souvent 
 reproche a la France de s’etre laisse devancer par ses voisins, 
 et l’activite imprimee aux constructions durant la seconde 
 moithi du regne de Louis-Philippe par la loi de 1842, s’^tait 
 
 1 Lettre de M. Arles Dufour a 1 'Opinion nationale da 18 octobre, 1866. 
 
 2 Le progres des impots indirects, qui a continue en 1866, est, avec le progres 
 du commerce exterieur, une preuve que la situation, conside'ree dans son ensem¬ 
 ble, n’a pas empire depuis un an, malgre la langueur des affaires dans diverses 
 industries. 
 
 3 On pre'tend toutefois qu’il n’augmente pas. 
 
 6 6 juillet, 1863. 
 
 4 7 mai, 1859. 
 6 4 mai, 1864. 
 
288 
 
 ECONOMIC HISTORY. 
 
 amortie sous la Republique. Le nouveau gouverneraent la 
 ranima. 1 Les capitaux etaient confiants. On en profita pour 
 inaugurer un autre mode de concession. A la construction 
 de la voie par EEtat, on substitua la construction par les 
 compagnies que l’on encouragea par une longue jouissance; 
 les baux, avec les nouvelles compagnies et meme avec les 
 anciennes, furent la plupart passes ou revises pour quatre- 
 vingt-dix-neuf ans. 2 On engageait sans doute un plus loin- 
 tain avenir; mais on faisait immediatement peser toute la 
 charge sur les capitaux appeles a recueillir les benefices les 
 plus directs de l’entreprise; la combinaison etait evidemment 
 preferable. Elle n’eut pas ete possible dix ans plus tdt. 
 
 Les concessions multiples, creant des int^rets divers et 
 parfois hostiles sur un meme parcours, dtaient un obstacle a 
 la circulation. On les reunit, de maniere a former de vastes 
 compagnies qui se partagerent le domaine du reseau fran§ais : 
 ce ne fut pas sans quelques tatonnements qui fournirent des 
 armes a la speculation. 3 Mais dans l’espace de la premiere 
 annde, 3,000 kilometres trouvaient des concessionnaires; et, 
 a la fin de la quatrieme annee, sur une longueur d’environ 
 5,000 kilometres, les trains circulaient. 
 
 Les grandes arteres dtaient dessinees et allaient se terminer 
 en peu d’anndes. Le gouvernement resolut hardiment d’abor- 
 der la construction des lignes secondaires et de faire pdndtrer 
 la vie commerciale dans tout le corps de la nation, comme les 
 petits vaisseaux font pdndtrer le sang jusque dans les chairs 
 de 1’homme. Cette fois, le profit ne semblait pas pouvoir de 
 longtemps rdmundrer la ddpense et d’ailleurs la crise de 1857 
 avait rendu plus timides les entreprises. Le gouvernement 
 intervint, et, par deux lois successives, 4 donna des subventions 
 
 1 Le cliemin de ceinture avait ete ecrete des le 11 decembre 1851. Dans la 
 seule annee 1852, 46 decrets furent rendus relativement aux chemins de fer, et 
 267 kilom. furent livres a la circulation. 
 
 2 Les concessions etaient faites pour 99 ans, avec garantie, pour le capital 
 engage par les Compagnies, d’un minimum d’interet de 4% pendant la moitie de 
 ce temps. Quelques concessions furent meme faites sans garantie. Cette ga- 
 rantie fut d’ailleurs supprimee pour le premier reseau, lorsque la loi du 11 juin, 
 1859, accorda une garantie particuliere au second reseau. 
 
 3 Decrets du 17 janvier, 19 fevrier, 20, 27 mars, 1852. 
 
 4 Lois du 11 juin, 1859, et du 11 juin, 1863. 
 
FRANCE SOUS LE SECOND EMPIRE. 
 
 289 
 
 ou ga ran tit aux capitaux du second reseau, lesquels devaient 
 etre fournis par des obligations, un interet de 4 pour 100 et l’a- 
 mortissement en cinquante ans. 
 
 C’est ainsi qu’a la fin de l’ann^e 1866, la longueur totals 
 des concessions definitives atteignait 21,050 kilom., et celle' 
 des lignes exploitees, 14,506; la depense faite s’elevait a pres 
 de 7 milliards. 1 
 
 Les canaux, quoique relegues au second plan, ont 6te ter- 
 mines sur plusieurs points, entrepris sur quelques autres, 2 et 
 sont rentes, pour la plupart, dans le domaine de l’Etat, 3 qui 
 s’est empress^ d’abaisser presque partout les droits au niveau 
 des frais d’entretien. La navigation des rivieres a ete ame- 
 lioree. 4 Les grandes routes, paralleles aux voies de fer, se 
 trouvaient delaissecs ; mais les routes transversales, emportant 
 ou apportant vojageurs et marchandises, que les trains re- 
 cueillent ou sement sur leur route, s’animaient. 5 On a en 
 consequence redouble de zele dans l’application de la loi de 
 1836 sur les cliemins vicinaux, 6 et une loi nouvelle a encou¬ 
 rage les conseils g&ieraux aconstruire, aux meines conditions, 
 des cliemins de fer, qui, a Pexemple de ceux de l’Alsace, for- 
 meront un troisi^me reseau. 7 
 
 La teiegraphie eiectrique, qui etait a ses debuts en 1851, 
 a commence a envelopper de son reseau la France, a la suite du 
 
 1 On se rappelle qu’a la fin du regne de Louis-Philippe, la depense effectuee 
 etait d’environ 1 milliard et le nombre de kilometres exploites de 1830. 
 
 2 La France possedait 4,200 kilom. de canaux en 1848, et, en 1866, 4,500; 
 de plus, 6,900 kil. de rivieres navigables. De grands travaux ont ete poursuivis. 
 Yoir Exp. de la sit. de I’Emp., 1867, Mon., p. 450 et 451. 
 
 3 Decret du janvier, 1852, et loi du 28 juillet, 1860. 
 
 4 Voir, entre autres, la loi du 14 juillet, 1861. 
 
 5 De 1848 a 1866 exclusivement, l’Ltat a depense pour routes, canaux, 
 ponts, phares, etc., 627 millions. 
 
 6 Relativement aux chemins de fer, routes, canaux, etc. M. P. Boiteau. 
 Voir Fortune publique et finances de la France, t. I. Le chemins vicinaux ont 
 coftte en 1866, 120 millions, dont un tiers en prestations, en nature. 
 
 7 C’est en 1859 et 1860 que le conseil general du Bas-Rhin, M. Migneret 
 etant prefet, classa les premiers cliemins de ce genre. — La loi rendue sur la 
 mature est du 12 juillet, 1865. Deux departements (Eure, Saone et Loire), inde- 
 pendamment du Haut et du Bas-Rhin ont deja entrepris des chemins de ce 
 genre. 29 autres departements ont decide en principe des creations du meme 
 genre. 
 
 19 
 
290 
 
 ECONOMIC HISTORY. 
 
 d£cret du 6 janvier, 1852; elle couvre aujourd’hui l’Europe; 1 
 elle fait communiquer les deux mondes et transmet, en France 
 seulement, pres de trois millions de depeches pour le compte 
 des particuliers. 2 La poste, dont le service a regu a diverses 
 reprises de notables ameliorations, transportait trois fois plus 
 de lettres ou d’imprimes, en 1865 qu’en 1847 ; 3 de nombreuses 
 conventions postales et des conventions monetaires ont 
 signees avec les pays voisins. 4 Les regions lointaines de l’Asie 
 et de l’Amerique ont 6te mises en relations regulieres avec 
 nos ports par la Compagnie des messageries imperiales, qui 
 s’est habilement transform^ devant la concurrence des che- 
 mins de fer, et par la Compagnie des paquebots transatlan- 
 tiques dont, vingt ans auparavant, un ministre aurait ddja 
 voulu doter la France. 5 
 
 Les homines, leurs pensees et leurs produits circulent au¬ 
 jourd’hui en beaucoup plus grande nombre, 6 avec plus de 
 rapidite et a moins de frais: cette mobility qui a sensiblement 
 modifie l’^conomie de la vie privee, et qui modihe les rapports 
 des nations, restera un des caracteres distinctifs de la seconde 
 moitie du dix-neuvieme siecle. 
 
 Avec de pareilles conditions, le commerce extdrieur ne 
 pouvait manquer de s’accroitre. En 1850, 6poque a laquelle 
 
 1 Grace & la convention telegraphique du 17 mai, 1865, “le reseau telegra¬ 
 phique du continent europeen est adjourd’hui, dans toutes ses parties sans excep¬ 
 tion, soumis a des principes et a des regies uniformes.” Exp. de la sit. de VEmp., 
 1867. 
 
 2 2,367,991 depeches dans les 10 premiers mois de 1866, ce qui suppose envi¬ 
 ron 2,480,000 pour l’annee. Au l cr dec., 1866, il y avait 2,091 bureaux telegra- 
 phiques. Des lignes souterraines ont ete etablies dans quelques grandes villes 
 et des tils d’un diametre superieur sur les principales lignes pour prevenir les 
 interruptions de service. 
 
 8 En 1847, 216 millions; en 1865, 590 millions. 
 
 4 La convention monetaire du 23 dec., 1865, a £tabli une monnaie uniforme 
 (mais critiquable a certain egard) entre la France, la Belgique, la Suisse, Tltalie, 
 et commence a constituer ce que M. de Parieu nomme le Miinzverein latin. 
 
 5 Plusieurs autres services ont ete etablis, Exp. de la sit. de I’Emp., 1867. 
 
 6 Le nombre des voyageurs des chemins de fer e'tait de 37 millions en 1857, 
 de 84‘millions en 1866. Dans cette derniere annee, les 84 millions de voyageurs 
 ont fait 3,361 millions de kilometres, et 34 millions de tonnes ont fait 5,171 mil¬ 
 lions de kil. Le produit brut a etc de 184 millions de francs pour les voyageurs 
 et de 314 millions pour les marchandises. Depuis 1855, le prix moyen kilome- 
 trique du transport de la tonne a baisse de 0 fr. a 1,117. 
 
FRANCE SOUS LE SECOND EMPIRE. 
 
 291 
 
 il avait a peu pres retrouvd le niveau de l’ann^e la plus pros- 
 pere du regne de Louis-Philippe, il etait de 2,555 millions. 
 En 1864, il s’^levait a 7,329 millions, c’est-a-dire qu’il a pres- 
 que triple dans l’espace de quinze ans. 
 
 Si l’on prend la moyenne de chacun des trois lustres qui 
 composent cette periode, on constate, non-seulement un pro¬ 
 gres, mais une progression constante, a n’envisager que les 
 marchandises importees ou exportees au commerce special. 
 La moyenne de 1850-1854 est de 2,294 millions; celle de 
 1855-1859, de 3,626 millions, et celle de 1860-1864, periode 
 pendant laquelle l’abaissement des tarifs frangais a provoque 
 la concurrence etrangere, de 4,701 millions et le progres 
 continue. 1 
 
 Il a 6t6 plus rapide qu’aux deux epoques precedentes de 
 notre histoire contemporaine. Durant les quinze annees de 
 la Restauration, notre commerce ext^rieur avait a peu pres 
 double ; durant les dix-sept annees du regne de Louis-Phi¬ 
 lippe, il avait fait un peu plus que doubler. 2 
 
 Ce progres tient a des causes generates et n’est pas un 
 privilege particulier a la France. Dans les etablissements 
 de credit c’est elle qui a donnd des exemples a une partie de 
 FEurope, mais elle n’a fait que suivre a distance l’Angleterre; 
 dans la construction des chemins de fer, elle avait 6te devan- 
 
 s 
 
 cee par plusieurs Etats. Cependant aucune nation, la Bel¬ 
 gique exceptee, 3 n’a, depuis quinze ans, plus largement que 
 la France, etendu ses relations ext^rieures. Pendant qu’elle 
 
 1 Ces chiffres, il est vrai, sont ceux des valeurs actuelles, c’est-a-dire des prix 
 du marche, et, comrae la valeur de l’argent a diminue, ils ne represented pas 
 une quantite triple de marchandises. L’annee 1865, dont on ne connait encore 
 que le commerce special, aproduit 5,981 millions, l’annee-1866 produira environ 
 6,360 millions (a produit 5,308 millions pour les 10 premiers mois); le com¬ 
 merce special de 1864 etait de 5,452 millions. La navigation s’est accrue 
 comme le reste; 12, 531,504 tonnes en 1854; 17,638,900 tonnes en 1866. La 
 principale augmentation a ete pour les ports de Marseille, du Havre, et de 
 Bordeaux. 
 
 2 En 1815 (tres-mauvaise annee d’ailleurs), 621 millions; en 1830, 1,211 mil¬ 
 lions; en 1847, 2,437 millions. 
 
 3 Belgique, en 1835, 358 millions de francs, et, en 1847, 584; en 1850, 618 
 millions, et, en 1861, 2,432 millions; ce qui fait environ 500 fr. par habitant. 
 En France, la proportion n’est pas tout h fait de 200 fr. par habitant. Elle est 
 en Angleterre de 366 fr. 
 
292 
 
 ECONOMIC HISTORY. 
 
 en triplait le chiffre, la plupart des pays commergants, et 
 l’Angleterre en particular, doublaient seulement lc leur; il 
 est juste de noter toutefois que ce doublement, en Angleterre, 
 portait son chiffre a 11 milliards. 1 
 
 II reste a dire quelles lois out favorise cette extension du 
 commerce et regissent aujourd’hui le travail. 
 
 LES TRAIT^S DE COMMERCE. 
 
 Quelques jours apres la proclamation de l’Empire, le sdnav 
 tus-consulte du 25 decembre 1852 interpretait et etendait les 
 prerogatives du souverain en matiere de traites de commerce, 
 en declarant qu’ils auraient “ force de loi pour les modifica¬ 
 tions de tarif qui y sont stipulees,” c’est-a-dire que le Corps 
 legislatif n’aurait plus le droit de les ratifier ou de les annuler 
 par son vote. Ce pouvoir, remis au chef de l’Etat, pouvait, 
 en dehors des considerations politiques, inquieter certains 
 interets; le president du Senat, dans son rapport, s’appliqua 
 a les rassurer en se pronongant contre les theories de la liberty 
 commerciale. 
 
 Cependant la r^colte de 1858 fut mauvaise. L’importation 
 seule pouvait combler le deficit. Le gouvernement, pour Ten- 
 couragcr, n’hdsita pas a abaisser toutes les barrieres de la 
 douane; il decr^ta la suspension de l’dchelle mobile, 2 l’exemp- 
 tiou du droit de tonnage et de la surtaxe de pavilion pour les 
 navi res charges de substances alimentaires, 3 1’abaissement du 
 droit sur les bestiaux. 4 Ce n’^taient que des mesures tempo- 
 raires; mais elles semblaient indiquer un esprit nouveau. 
 
 1 En 1854 (premiere annee oil la statistique ait donne les valeurs), 268 millions 
 de livres sterling, et, en 1864, 435 millions (soit environ 10 milliards, 900 mil¬ 
 lions). En 1830, une statistique anglaise (voir les Annales du commerce exterieur) 
 donnait 120 millions: il y aurait done eu a peu pres doublement de 1830 a, 1850. 
 Pays-Bas, en 1832, 471 millions de francs; en 1850, 1,079; en 1864, 1,904. 
 Russie, en 1850, 192 millions de roubles; en 1863, 306 millions. £tats-Unis, en 
 1831, environ 184 millions de dollars ; en 1851, 412 millions en 1860, 762 
 millions. 
 
 2 Decret du 18 aout, 1853. Cette reforme etait alors demandee par le conseil 
 municipal de Marseille et par le conseil gene'ral de l’llerault que presidait M. 
 Michel Chevalier. 
 
 8 Dec. du 8 aoftt, 1853. 
 
 4 Dec. du 14 septembre, 1853. — Les droits sur boeufs et taureaux etaient 
 reduits de 50 fr. a 3 fr. 
 
FRANCE SOUS LE SECOND EMPIRE. 
 
 293 
 
 Dans les deux camps opposes on s’emut. M. Jean Dollfus 
 entreprit une campagne contre la prohibition des fils de coton. 
 Le debat fut port6 successivement devant la Soci^te indus- 
 trielle de Mulhouse, devant le Conseil superieur du commerce, 
 et dans le cabinet de l’Empereur: M. Dollfus attaqua, M.M. 
 Feray d’Essonne et Seilliere defcndirent le systeme protecteur. 
 Le tarif des cotons lie subit qu’une modification leg£re; 1 mais 
 deja un decret, plus significatif, changeait les zones d’entr^e 
 pour la houille et diminuait, de moitid environ, le droit sur 
 les fers. 2 Deux ans apres, nouvelle reduction, et, comme con¬ 
 sequence, abaissement du droit sur le fer-blanc, le fil de fer, la 
 vieille ferraille, et les machines. 3 * L’annee 1855 6tait marquee, 
 en outre, par le retranchement de pres de 200 articles sans 
 importance, tels que les yeux d’dcrevisse ou le gui de chene, 
 qui allongeaient le tarif sans profit pour le Tresor, 4 et par 
 une diminution importante du droit sur les laines et les peaux 
 brutes. 5 La tendance du gouvernement s’accusait avec plus 
 de nettetd 
 
 L’Exposition universelle de Paris venait d’avoir lieu et l’in- 
 dustrie frangaise y avait brille au premier rang parmi les 
 nations. Dans le but d’epargner aux exposants etrangers la 
 la couteuse necessity de remporter leurs produits, et peut-etre 
 aussi de tenter une experience, le prince Napoleon, president 
 de la Commission, avait fait decider que tous les objets ex¬ 
 poses, qu’ils fussent prohibes ou non, pourraient £tre vendus 
 et admis exceptionnellement en France en payant un droit de 
 22 p. 100. 6 Or, sur un total d’environ 22 millions de richesses 
 dtrang£res, qui avaient 6t6, pendant plusieurs mois, etalees 
 sous les yeux d’un public si nombreux, 2 millions | seulement 
 avaient trouv6 des acheteurs frangais. 7 L’industrie frangaise 
 n’etait done pas aussi incapable de lutter contre la concur¬ 
 rence du dehors que le proclamaient les parties int6ress6es. 
 
 1 Voir le decret du 28 decembre, 1853. 
 
 2 Dec. du 22 novembre, 1853. — La diminution sur l’acier fondu etait merae 
 beaucoup plus forte : de 132 fr. a 3 fr. 
 
 3 Dec. du septembre, 1855. ' 4 Dec. du 16 juillet, 1855. 
 
 5 Dec. du 17 janvier et du 10 decembre, 1855. 
 
 6 Dec. du 6 avril, 1854. 
 
 1 Voir Journ. des Econ., 2 e serie, t. xi. p. 471. 
 
294 
 
 ECONOMIC HISTORY. 
 
 44 L’observation qui m’a frapp6 tout d’abord,” disait le prince 
 Napoleon dans son rapport, 44 c’est que de ces grands concours 
 jaillit une fois de plus la preuve que les soci6t6s modernes 
 marchent vers la liberte.” Deja le gouvernement, desireux de 
 developper “ les relations internationales qui pr^parent le 
 progres de la civilisation,” avait presente au Corps legislatif 
 44 un projet levant toutes les prohibitions.” Pour la premiere 
 fois peut-etre, il avait rencontr^ une resistance qui l’avait 
 d’autant plus etonne qu’elle etait plus rare et qu’elle cherchait 
 a prendre son point d’appui, hors de l’assemblee, dans l’agita- 
 tion des villes manufacturieres. II retira le projet, en annon- 
 ^ant qu’une nouvelle loi etait mise a l’etude, et que la lev^e 
 des prohibitions n’aurait lieu qu’a partir du l er juillet, 1861. 
 44 L’industrie frangaise, prevenue des intentions bien arretdes 
 du gouvernement, ajoutait le Moniteur, aura tout le temps 
 n^cessaire pour se preparer a un nouveau regime commercial. 1 
 
 Durant trois ans, le silence se fit sur cette grave question. 2 
 D’ailleurs vers la fin de 185T, une crise terrible avait desar- 
 §onne la speculation et fait momentanement refluer en baisse le 
 prix, sans cesse montant depuis 1852, des denrees, des matieres 
 premieres, et, par suite, des objets manufactures; la reprise dcs 
 travaux avait ete suspendue en 1859 par la guerre d’ltalie. 
 
 Le commerce commengait a peine a retrouver son £quilibre, 
 lorsque, le 15 janvier 1860, le Moniteur publia la lettre que 
 l’Empereur avait, quelques jours auparavant, ecrite a son 
 ministre des finances. 3 C’etait un vaste programme dcono- 
 mique dont le but etait u d’imprimer un grand essor aux di- 
 verses branches de la richesse nationale,” et que son auteur 
 r^sumait en ces termes : — 
 
 44 Suppression des droits sur la laine et les cotons ; 
 
 44 Reduction successive sur les sucres et les cafes; 
 
 44 Amelioration dnergiquement poursuivie des voies de com¬ 
 munication. 
 
 “ Reduction des droits sur les canaux, et, par suite, abaisse- 
 ment g£n6ral des frais de transport; 
 
 1 Moniteur du 17 octobre, 1856. 
 
 2 Cependant plusieurs decrets importants furent rendus. 
 
 8 Lettre du 5 janvier, 1860. 
 
FRANCE SOUS LE SECOND EMPIRE. 
 
 295 
 
 44 Prets k 1’agriculture et a l’industrie ; 
 
 44 Suppression des prohibitions ; 
 
 44 Traite de commerce avec les puissances ^trangeres.” 
 
 “ Par ces mesures,” ajoutait l’Empereur, 44 l’agriculture 
 trouvera l’^coulement de ses produits; l’industrie, affranchie 
 d’entraves exterieures, aidee par le gouvernement, stimulee 
 par la concurrence, luttera avantageusement avec les produits 
 etrangers, et notre commerce, au lieu de languir, prendra un 
 nouvel essor.” 
 
 La pensee du gouvernement, sur ce point, se relevait tout 
 entiere. II £tait Impossible qu’issu du suffrage universel et 
 degage des liens qui avaient arrete ses predecesseurs, il con¬ 
 sents a maintenir dans son integrity le systeme prohibitif que 
 les gouvernements precedents eux-memes n’avaient cree ou con¬ 
 serve aussi rigoureux que par la necessite de compter avec de 
 puissantes influences; mais il eut pu se faire qu’un autre sou- 
 verain embrassat moins resolument un moins vaste ensemble. 
 Quoi qiril en soit, depuis le ddcret de Berlin, aucun fait 
 aussi considerable ne s’6tait produit dans l’histoire de notre 
 legislation douaniere. 
 
 Deja etaient arretes les articles du plus important traite de 
 commerce que put signer la France, de celui qui devait la lier 
 a sa rivale la plus redoutee. Le lmros de la ligue anglaise, 
 Richard Cobden, et M. Michel Chevalier, qui, depuis 1852, 
 faisait a cliaque session du Conseil general de PHerault, voter 
 un manifeste en faveur de la liberty commerciale, en avaient 
 eu les premiers la pensee, et avaient trouve des disposi¬ 
 tions favorables dans le ministere anglais et a la cour 
 des Tuileries. Au lendemain de la paix de Yillafranca et a 
 la veille du traite de Turin, l’Empereur, desireux de serrer 
 les nceuds pacifiques de la France et de l’Angleterre, approuva 
 un projet qui repondait aux besoins de sa politique exterieure 
 comme a ses vues de reformes economiques, et des la fin de 
 novembre, 1859, les negociations preliminaires, conduites avec 
 le plus grand secret par M. Rouher, ministre du commerce, et 
 par les deux dconomistes, Etaient termindes. Ce fut par la 
 lettre du 5 janvier que la France apprit qu’elle entrait dans 
 une nouvelle ere industrielle. Le 23 du meme mois, le traite 
 dtait signd. 
 
296 
 
 ECONOMIC HISTORY. 
 
 Lcs prohibitions dtaient supprimdes. Les marchandises 
 anglaises entreraicnt en France en payant un droit ad valorem , 
 qui serait bientot converti en droit sp^citique, et qui n’excdde- 
 rait pas 30 pour 100 au debut, 25 pour 100 a partir de l’anndc 
 1864. La Grande-Bretagne, de son cotd, admettait en pleine 
 franchise nos produfts, qui payaient encore pour la plupart un 
 droit de 10 pour 100, et ne prelevait plus qu’une taxe variable 
 de 1 a 2 scliellings sur nos vins, et de 8 schellings 5 pence sur 
 nos eaux-de-vie. 1 
 
 Le traite du 23 janvier dtait un type sur lequel on se propo¬ 
 sal de reformer toute notre legislation douaniere, et de rdgler 
 les rapports commerciaux de la France avec ses voisins. Des 
 negociations furent presque aussitot entamdes ; elles ont 
 amcne la conclusion de plusieurs traitds, d’abord, avec la 
 Belgique, 2 puis avec la Prusse et le Zollverein, 3 puis avec 
 l’ltalie et la Suisse, 4 'enfin, en 1865 et 1866, avec les Pays-Bas, 
 les villes hansdatiques, le Mecklembourg, la Suede, l’Espagne, 
 le Portugal, le Perou, l’Autriche. 5 
 
 Le Corps legislatif ne fut saisi de ces reformes qu’apres le 
 fait accompli. 6 Cet usage des droits conferds au souverain 
 par le senatus-consulte du 25-30 decembre, 1852, eut le regret¬ 
 table effet de donner a une transformation liberate l’apparence 
 d’un coup d’Etat commercial, et preta aux partisans de la 
 protection leur plus solide argument. Le gouvernemcnt tint 
 bon. Dans les discussions successives qu’ont amenees les 
 traites, il s’esfc applique constamment a £tablir des droits de 
 plus en plus mod6r6s, afin de rendre toujours plus faciles les 
 relations internationales, 7 et quoique la politique ait rendu 
 
 1 Le traite portait 8 sell. 2 pence; mais le taux fut trouve insuffisant en 
 Angleterre et porte a 8 sell. 5 p. par un art. addit. du 20 fevrier. 
 
 2 10 mai, 1861. 
 
 3 24 mars et 2 aout, 1862, 10 mai, 1865. 
 
 4 17 janvier, 1864, et 30 juin, 1864. 
 
 6 7 juin, 1865, 11 mars, 1865, 9 juin, 1865, 4 et 30 juin, 18 juin, 1865, 11 juil- 
 let, 1866; 2 dec., 11 dec., 1866. Voir M. Boiteau, Les TraitSs de commerce et 
 Expos / de la sit. de VEmpire. (}fon. de janv., 1866 et de fev. 1867.) 
 
 6 La discussion sur les modifications de tarif du traite du 23 janvier ne 
 recoramen 9 a au Corps legislatif que le 28 avril. 
 
 7 Ainsi, par exemple, les moderations de droits porttfes dans le traite avec 
 l’ltalie, ont et£, par de'eret du 20 janvier, 1864, appliquees a la Belgique et a 
 l’Angleterre. 
 
FRANCE SOUS LE SECOND EMPIRE . 29T 
 
 \ m 
 
 vaine durant plusieurs amides la Convention avecle Zollverein, 
 la France communique aujourd’hui avec toutes les nations 
 limitrophes de son territoire, sans rencontrer 1’obstacle iusur- 
 montable de la prohibition, et sans avoir, dans la majority 
 des cas, a payer autre chose qu’un simple droit de consomma- 
 tion, assez leger en fait, et legitime en principe. 
 
 Ces traites avaient fait disparaitre les prohibitions. Le 
 systeme protecteur qu’elles etayaient, et dans lequel de si 
 larges breches etaient ouvertes, devait necessairement crou- 
 ler. II ne restait au Corps legislatif qu’a deblayer le ter¬ 
 rain et a rdtablir 1’harmonie dans les diverses parties de 
 notre Code douanier, en votant les projets que lui presentait 
 le gouvernement. . . . 
 
298 
 
 ECONOMIC HISTORY. 
 
 XII. 
 
 * 
 
 RECENT CHANGES IN TRANSPORTATION AND 
 
 PRODUCTION. 
 
 From Wells’ Recent Economic Changes, pp. 27-65. 
 
 W HEN the historian of the future writes the history of 
 the nineteenth century he will doubtless assign to the 
 period embraced by the life of the generation terminating in 
 1885 a place of importance, considered in its relations to the 
 interests of humanity, second to but very few, and perhaps to 
 none, of the many similar epochs of time in any of the centu¬ 
 ries that have preceded it; inasmuch as all economists who 
 have specially studied this matter are substantially agreed that, 
 within the period named, man in general has attained to such 
 a greater control over the forces of Nature, and has so com¬ 
 passed their use, that he has been able to do far more work in 
 a given time, produce far more product measured by quantity 
 in ratio to a given amount of labor, and reduce the effort nec¬ 
 essary to insure a comfortable subsistence in a far greater 
 measure than it was possible for him to accomplish in any 
 previous generation. In the absence of sufficiently complete 
 data, it is not easy, and perhaps not possible, to estimate accu¬ 
 rately, and specifically state the average saving in time and 
 labor in the world’s work of production and distribution 
 that has been thus achieved. In a few departments of indus¬ 
 trial effort the saving in both of these factors has certainly 
 amounted to seventy or eighty per cent; in not a few to more 
 than fifty per cent. 1 Mr. Edward Atkinson, who has made 
 
 1 According to the United States Bureau of Labor (report for 1886), the 
 gain in the power of production in some of the leading industries of the United 
 States “ during the past fifteen or twenty years,” as measured by the displace¬ 
 ment of the muscular labor formerly employed to effect a given result (i. e. 
 
CHANGES IN TRANSPORTATION . 
 
 299 
 
 this matter a special study, considers one third as the mini¬ 
 mum average that can be accepted for the period above speci¬ 
 fied. 1 Other authorities are inclined to assign a considerably 
 higher average. The deductions of Mr. William Fowler, Fel¬ 
 low of University College, London, are to the effect that the 
 saving of labor since 1850 in the production of any given arti¬ 
 cle amounts to forty per cent; 2 and the British Royal Com¬ 
 mission (minority report, 1886) characterizes the amount of 
 labor required to accomplish a given amount of production 
 and transport at the present time as incomparably less than 
 was requisite forty years ago, and as u being constantly 
 reduced.” 
 
 But be this as it may, out of such results as are definitely 
 known and accepted have come tremendous industrial and 
 social disturbances, the extent and effect of which — and 
 more especially of the disturbances which have culminated, 
 
 amount of product) has been as follows : In the manufacture of agricultural 
 implements, from fifty to seventy per cent; in the manufacture of shoes, 
 eighty per cent; in the manufacture of carriages, sixty-five per cent; in the 
 manufacture of machines and machinery, forty per cent; in the silk-manufac¬ 
 ture, fifty per cent; and so on. 
 
 1 In a print-cloth factory in New England, in which the conditions of pro¬ 
 duction were analyzed by Mr. Atkinson, the product per hand was found by 
 him to have advanced from 26,531 yards, representing 3,382 hours’ work in 
 1871, to 32,391 yards, representing 2,695 hours’ work, in 1884, — an increase of 
 twenty-two per cent in product, and a decrease of twenty per cent in hours of 
 labor. Converted into cloth of their own product, the wages of the operatives 
 in this same mill would have yielded them 6,205 yards in 1871, as compared 
 with 9,737 yards in 1884, — an increase of 56 t 9 q 2 o per cent. During the same 
 period of years the prices of beef, pork, flour, oats, butter, lard, cheese, and 
 wool in the United States declined more than twenty-five per cent. 
 
 A like investigation by the same authority of an iron-furnace in Pennsyl¬ 
 vania showed that, comparing the results of the five years from 1860 to 1864 
 with the five years from 1875 to 1879, the product per hand advanced from 776 
 tons to 1,219 tons; that the gross value of the product remained about the 
 same; that the number of hands was reduced from seventy-six to seventy-one; 
 and that consumers gained a benefit of reduction in price from $27.95 per ton 
 to $19.08. 
 
 2 Wages have greatly increased, but the cost of doing a given amount of 
 work has greatly decreased, so that five men can now do the work which 
 would have demanded the labor of eight men in 1850. If this be correct, the 
 saving of labor is forty per cent in producing any given article. — Appreciation 
 of Gold, William Fowler, Fellow of University College, London, 1886. 
 
800 
 
 ECONOMIC HISTORY. 
 
 as it were, in later years — it is not easy to appreciate with¬ 
 out the presentation and consideration of certain typical and 
 specific examples. To a selection of such examples, out of a 
 large number that are available, attention is accordingly next 
 invited. 
 
 Let us go back, in the first instance, to the year 1869, when 
 an event occurred which was probably productive of more im¬ 
 mediate and serious economic changes — industrial, commer¬ 
 cial, and financial — than any other event of this century, a 
 period of extensive war excepted. That was the opening of 
 the Suez Canal. Before that time, and since the discovery by 
 Yasco da Gama, in 1498, of the route to India by the Cape of 
 Good Hope, all the trade of the Western hemispheres with the 
 Indies and the East toiled slowly and uncertainly around the 
 Cape, at an expenditure in time of from six to eight months 
 for the round voyage. The contingencies attendant upon such 
 lengthened voyages and service, as the possible interruption 
 of commerce by war, or failure of crops in remote countries, 
 which could not easily be anticipated, required that vast stores 
 of Indian and Chinese products should be always kept on hand 
 at the one spot in Europe where the consumers of such com¬ 
 modities could speedily supply themselves with any article they 
 required; and that spot, by reason of geographical position 
 and commercial advantage, was England. Out of this condi¬ 
 tion of affairs came naturally a vast system of warehousing 
 in and distribution from England, and of British banking and 
 exchange. Then came the opening of the canal. What were 
 the results ? The old transportation had been performed by 
 ships, mainly sailing-vessels, fitted to go round the Cape, and, 
 as such ships were not adapted to the Suez Canal, an amount 
 of tonnage, estimated by some authorities as high as two mil¬ 
 lion tons, and representing an immense amount of wealth, 
 was virtually destroyed. 1 The voyage, in place of occupying 
 
 1 “The canal may therefore be said to have given a death-blow to sailing- 
 vessels, except for a few special purposes.” — From a paper by Charles Mag- 
 niac, indorsed by the “ London Economist ” as a merchant of eminence and 
 experience, entitled to speak with authority, read before the Indian Section of 
 the London Society of Arts, February, 1876. 
 
CHANGES IN TRANSPORTATION. 
 
 301 
 
 from six to eight months, has been so greatly reduced that 
 steamers adapted to the canal now make the voyage from 
 London to Calcutta, or vice versa, in less than thirty days. 
 The notable destruction or great impairment in the value of 
 ships consequent upon the construction of the canal did not, 
 furthermore, terminate with its immediate opening and use ; 
 for improvements in marine engines, diminishing the con¬ 
 sumption of coal, and so enabling vessels to be not only sailed 
 at less cost, but to carry also more cargo, were, in consequence 
 of demand for quick and cheap service, so rapidly effected 
 that the numerous and expensive steamer constructions of 
 1870-73, being unable to compete with the constructions of 
 the next two years, were nearly all displaced in 1875-76, 
 and sold for half, or less than half, of their original cost. 
 And within another decade these same improved steamers 
 of 1875-76 have, in turn, been discarded and sold at small 
 prices, as unfit for the service of lines having an established 
 trade, and replaced with vessels fitted with the triple-expansion 
 engines, and saving nearly fifty per cent in the consumption 
 of fuel. And now a quadruple-expansion ” engines are begin¬ 
 ning to be introduced, and their tendency to supplant the 
 “ triple expansion ” is “ unmistakable.” 
 
 In all commercial history, probably no more striking illus¬ 
 tration can be found of the economic principle that nothing 
 marks more clearly the rate of material progress than the 
 rapidity with which that which is old and has been considered 
 wealth is destroyed by the results of new inventions and 
 discoveries. 1 
 
 Again, with the reduction of the time of the voyage to the 
 East by the Suez Canal to thirty days or less, and with tele¬ 
 graphic communication between India and China and the 
 markets of the Western world, permitting the dealers and 
 consumers of the latter to adjust to a nicety their supplies 
 
 1 In the last analysis it will appear that there is no such thing as fixed 
 capital; there is nothing useful that is very old except the precious metals, 
 and all life consists in the conversion of forces. The only capital which is of 
 permanent value is immaterial, — the experience of generations and the devel¬ 
 opment of science. — Edward Atkinson. 
 
302 
 
 ECONOMIC HISTORY. 
 
 of commodities to varying demands, there was no longer any 
 necessity of laying up great stores of Eastern commodities in 
 Europe ; and with the termination of this necessity, the India 
 warehouse and distribution system of England, with all the 
 labor and all the capital and banking incident to it, substan¬ 
 tially passed away. Europe, and to some extent the United 
 States, ceased to go to England for its supplies. If Austria 
 wants anything of Indian product, it stops en route , by the 
 Suez Canal, at Trieste; if Italy, at Venice or Genoa; if 
 France, at Marseilles ; if Spain, at Cadiz. How great has 
 been the disturbance thus occasioned in British trade is shown 
 by the following figures: In 1871 the total exports of India 
 w r ere £57,556,000, of which £30,737,000 went to the United 
 Kingdom ; but in 1885, on a total Indian export of £85,087,000, 
 the United Kingdom received only £31,882,000. During the 
 same time the relative loss on British expgrts to India was 
 less than a million and a half sterling. 
 
 As a rule, also, stocks of Indian produce are now kept, not 
 only in the countries, but at the very localities of their pro¬ 
 duction, and are there drawn upon as they are wanted for im¬ 
 mediate consumption, with a greatly reduced employment of 
 the former numerous and expensive intermediate agencies. 1 
 Thus a Calcutta merchant or commission agent at any of .the 
 world’s great centres of commerce contracts through a clerk 
 and the telegraph with a manufacturer in any country — it 
 may be half round the globe removed — to sell him jute, cot¬ 
 ton, hides, spices, cutch, linseed, or other like Indian produce. 
 An inevitable steamer is sure to be in an Eastern port, ready 
 
 1 In illustration of this curious point, attention is asked to the following 
 extract from a review of the trade of British India, for the year 1886, from the 
 “Times,” of India, published at Bombay: “What the mercantile commu¬ 
 nity”— i. e., of Bombay — “has suffered and is suffering from, is the very nar¬ 
 row margin which now exists between the producer and consumer. Twenty 
 years ago the large importing houses held stocks, but nowadays nearly every¬ 
 thing is sold to arrive, or bought in execution of native orders, and the bazaar 
 dealers, instead of European importers, have become the holders of stocks. 
 The cable and canal have to answer for the transformation; while the ease 
 with which funds can be secured at home by individuals absolutely destitute 
 of all knowledge of the trade, and minus the capital to work it, has resulted in 
 the diminution of profits both to importers and to bazaar dealers.” 
 
CHANGES IN TRANSPORTATION. 
 
 303 
 
 to sail upon short notice; the merchandise wanted is bought 
 bj telegraph, hurried on board the ship, and the agent draws 
 for the price agreed upon, through some bank, with the ship¬ 
 ping documents. In four weeks, in the case of England, and 
 a lesser time for countries intermediate, the shipment arrives ; 
 the manufacturer pays the bill, either with his own money or 
 his banker’s; and, before another week is out, the cotton and 
 the jute are going through the factory; the linseed has been 
 converted into oil, and the hides in the tannery are being 
 transformed into leather. 
 
 Importations of East Indian produce are also no longer con¬ 
 fined in England and other countries to a special class of 
 merchants; and so generally has this former large and 
 special department of trade been broken up and dispersed 
 that extensive retail grocers in the larger cities of Europe and 
 the United States are now reported as drawing their supplies 
 direct from native dealers in both China and India. 
 
 Another curious and recent result of the Suez Canal con¬ 
 struction, operating in a quarter and upon an industry that 
 could not well have been anticipated, has been its effect on an 
 important department of Italian agriculture, — namely, the 
 culture of rice. This cereal has for many years been a staple 
 crop of Italy, 'and a leading article of Italian export, — the 
 total export for the year 1881 having amounted to 83,598 
 tons, or 167,196,000 pounds. Since the year 1878, however, 
 rice grown in Burmah, and other parts of the far East, has 
 been imported into Italy and other countries of Southern 
 Europe in such enormous and continually increasing quanti¬ 
 ties, and at such rates, as to excite great apprehensions among 
 the growers of Italian rice, and largely diminish its exporta¬ 
 tion,— the imports of Eastern rice into Italy alone having 
 increased from 11,957 tons in 1878 to 58,095 tons in 1887. 
 For France, Italy, and other Mediterranean ports east, the 
 importation of rice from Southern Asia (mainly from Burmah) 
 was 152,147 tons in 1887, as compared with about 20,000 
 tons in 1878. 
 
 That the same causes are also exerting a like influence upon 
 the marketing of the cereal crops of the United States is 
 
304 
 
 ECONOMIC HISTORY. 
 
 shown by the circumstance that the freight rates on the trans¬ 
 port of grain from Bombay to England, by way of the Suez 
 Canal, declined from 32.5 cents per bushel in 1880, to 16.2 
 cents in 1885 ; and, to the extent of this decline, the ability of 
 the Indian ryot to compete with the American grain-grower, 
 in the markets of Europe, was increased. 
 
 How great was the disturbance occasioned in the general 
 prices of the commodities that make up Eastern commerce by 
 the opening of the Suez Canal, and how quickly prices re¬ 
 sponded to the introduction of improvements in distribution, 
 is illustrated by the following experience : The value of the 
 total trade of India with foreign countries, exclusive of its 
 coasting-trade, was estimated, at the time of the opening of 
 the canal in 1869, at £105,500,000 ($527,500,000). In 1874, 
 however, the value was estimated at only £95,500,000, or at 
 a reduction of ten per cent; and the inference might naturally 
 have been that such a large reduction as ten millions sterling 
 ($50,000,000) in five years, with a concurrent’increase in the 
 world’s population, could only indicate a reduction of quanti¬ 
 ties. But that such was not the case was shown by the fact 
 that 250,000 tons more shipping (mainly steam, and there¬ 
 fore equivalent to at least 500,000 more tons of sail) was em¬ 
 ployed in transporting commodities between India and foreign 
 countries in 1874 than in 1869; or, that while the value of 
 the trade, through a reduction of prices had notably declined 
 during this period, the quantities entering into trade had so 
 greatly increased during the same time that 250,000 tons 
 more shipping were required to convey it. 
 
 In short, the construction of the Suez Canal completely 
 revolutionized one of the greatest departments of the world’s 
 commerce and business ; absolutely destroying an immense 
 amount of what had previously been wealth, and displacing or 
 changing the employment of millions of capital and thousands 
 of men; or, as the London “ Economist ” has expressed it, 
 “ so altered and so twisted many of the existing modes and 
 channels of business as to create mischief and confusion ” to 
 an extent sufficient to constitute one great general cause 
 for a universal commercial and industrial depression and 
 disturbance. 
 
CHANGES IN TRANSPORTATION. 
 
 805 
 
 The deductions from the most recent tonnage statistics of 
 Great Britain come properly next in order for consideration. 
 During the ten years from 1870 to 1880, inclusive, the British 
 mercantile marine increased its movement, in the matter of 
 foreign entries and clearances alone, to the extent of 22,000,- 
 000 tons ; or, to put it more simply, the British mercantile 
 marine exclusively engaged in foreign trade did so much more 
 work within the period named ; and yet the number of men 
 who were employed in effecting this great movement had de¬ 
 creased in 1880, as compared with 1870, to the extent of about 
 three thousand (2,990 exactly). What did it ? The intro¬ 
 duction of steam-hoisting machines and grain-elevators upon 
 the wharves and docks, and the employment of steam-power 
 upon the vessels for steering, raising the sails and anchors, 
 pumping, and discharging the cargo ; or, in other words, the 
 ability, through the increased use of steam and improved ma¬ 
 chinery, to carry larger cargoes in a shorter time, with no 
 increase — or, rather, an actual decrease — of the number of 
 men employed in sailing or managing the vessels. 
 
 Statistical investigations of a later date furnish even more 
 striking illustrations to the same effect from this industrial 
 specialty. Thus, for 1870, the number of hands (exclusive of 
 masters) employed to every one thousand tons capacity, en¬ 
 tered or cleared of the British steam mercantile marine, is 
 reported to have been forty-seven, but in 1885 it was only 
 27.7; or seventy per cent more manual labor was required in 
 1870 than in 1885 to do the same work. In sailing-vessels 
 the change, owing to a lesser degree of improvement in the 
 details of navigation, has been naturally smaller, but never¬ 
 theless considerable ; twenty-seven hands being required in 
 1885 as against thirty-five in 1870 for the same tonnage en¬ 
 tered or cleared. 1 Another fact of interest is, that the recent 
 increase in the proportion of large vessels constructed has so 
 
 1 The official statistics do not show in the British mercantile marine whether 
 the economy of labor which was effected prior to 1886 has continued to be pro¬ 
 gressive; inasmuch as the totals for 1886-88 include Lascars and Asiatics 
 under Asiatic articles of agreement; allowing for this, however, the proportion 
 of men employed to every one thousand tons of shipping was considerably 
 smaller in the years 1886-87 than in 1884-85. 
 
 20 
 
806 
 
 ECONOMIC HISTORY . 
 
 greatly increased the efficiency of shipping, and so cheapened 
 the cost of sea-carriage, to the advantage of both producers 
 and consumers, that much business that was before impossible 
 has become quite possible. Of the total British tonnage con¬ 
 structed in 1870, only six per cent was of vessels in excess of 
 two thousand tons burden; but in 1884 fully seventeen per 
 cent was of vessels of that size, or larger. Meanwhile, the 
 cost of new iron (or steel) ships has been greatly reduced; 
 from |90 per ton in 1872-74 to $65 in 1877, $57 in 1880, 
 while in 1887 first-class freighting screw-steamers, constructed 
 of steel, fitted with triple compound engines, with largely 
 increased carrying capacity (in comparison with former iron 
 construction) and consequent earning power, and capable of 
 being worked at less expense, could have been furnished for 
 $83.95 per ton. 1 
 
 1 The following is a copy of a circular issued in October, 1887, by the rep¬ 
 resentatives in New York of a well-known iron-ship-building firm at Newcastle- 
 on-Tyne, England: — 
 
 “Inviting your attention to the inclosed particulars of two steel screw 
 freight steamers building to our order, by the well-known builders, Messrs. 
 -, of Newcastle-on-Tyne, we beg to give you some additional details: 
 
 “The contract price is £34,250 each, which is just about £G 17s. (six pounds 
 seventeen shillings sterling) a ton dead-weight capacity, and including all ex¬ 
 penses up to time of delivery, will not exceed £7 a ton dead weight, or at 
 present rate of exchange, $33.95 American money. 
 
 “ Thus it will be seen that as regards the cost of these vessels, while of large 
 carrying capacity and consequent earning power, and fitted as they will be with 
 engines of the newest type and with all modern appliances which have been 
 tried and found conducive to quick and economical working (while avoiding all 
 innovations of an experimental character), the present price of not over £7 per 
 ton, dead-weight capacity, as against £12 to £13 a few years ago, renders the 
 difference in values relatively even greater than appears at first sight.” 
 
 A brief examination of what is embraced in the construction of these vessels 
 is not a little interesting and instructive, especially to those who recall what 
 was deemed but a comparatively few years ago the very best conditions for 
 ocean steam navigation : Triple-expansion engines — three cylinders — of the 
 latest and most approved type. Horse-power, 1,700. Propeller shifting blades 
 and spare set; each part of engines interchangeable. Two double-ended steel 
 boilers, in the corrugated furnaces, to work at one hundred and fifty pounds 
 pressure. Four steam winches of most approved pattern and large power. 
 Steam steering-gear forward, and powerful hand-gear aft. Patent stockless 
 anchors, working direct into hawser pipes, effecting great saving in time, labor, 
 and gear. Water-ballast in double.bottom. Lighthouses on forecastle. Decks 
 of steel throughout; height, seven feet, nine inches, being the suitable height 
 
CHANGES IN TRANSPORTATION. 
 
 807 
 
 Prior to about the year 1875 ocean steamships had not been 
 formidable as freight-carriers. The marine engine was too 
 (heavy, occupied too much space, consumed too much coal. 
 For transportation of passengers, and of freight having large 
 value in small space, they were satisfactory; but for perform¬ 
 ing a general carrying-trade of the heavy and bulky articles 
 of commerce they were not satisfactory. A steamer of the 
 old kind, capable of carrying three thousand tons, might sail 
 on- a voyage so long that she would be compelled to carry 
 twenty-two hundred tons of coal, leaving room for only eight 
 hundred tons of freight; whereas, at the present time, a 
 steamer with the compound engines and all other modern 
 improvements can make the same voyage and practically 
 reverse the figures, — that is, carry twenty-two hundred tons 
 of freight with a consumption of only eight hundred tons of 
 coal. The result of the construction and use of compound 
 engines in economizing coal has been illustrated by Sir Lyon 
 Playfair by the statement that “ a small cake of coal, which 
 would pass through a ring the size of a shilling when burned 
 in the compound engine of a modern steamboat would drive a 
 ton of food and its proportion of the ship two miles on its way 
 from a foreign port.” Another calculator, says -the London 
 “ Engineer,” has computed that half a sheet of note-paper will 
 develop sufficient power, when burned in connection with the 
 triple-expansion engine, to carry a ton a mile in an Atlantic 
 steamer. How, under such circumstances, the charge for sea- 
 freights on articles of comparatively high value has been re¬ 
 duced, is shown by the fact that the ocean transport of fresh 
 meats from New York to Liverpool does not exceed one cent 
 Qc?.) per pound; and including commissions, insurance, and 
 all other items of charge, does not exceed two cents (lc?.) per 
 
 for passengers, horses and cattle. Ventilation of holds specially provided 
 through automatic exhaustion by means of the funnel. Hatches of large 
 dimensions capable of taking in locomotives or other large pieces of machinery. 
 Six steel bulkheads, with longitudinal bulkheads throughout holds and between 
 decks. Coal consumption twenty-two tons per day. Coal-bunkers sufficient 
 for forty days’ steaming; outfit in sails, steel hawsers, oil and water tanks, load¬ 
 ing and discharging gear, cutlery, plate, china, and glass, and optician’s stores — 
 all of the best makers and full supply. 
 
308 
 
 ECONOMIC HISTORY. 
 
 pound. Boxed meats have also been carried from Chicago to 
 London as a regular business for fifty cents per 100 pounds. 
 In 1860 6<Y (twelve cents) per bushel was about the lowest 
 rate charged for any length of time for the transportation of 
 bulk grain from New York to Liverpool, and for a part of that 
 year the rate ran up as high at 13J<L (twenty-seven cents) per 
 bushel. But for the year 1886 the average rate for the same 
 service was 2 \d. (five cents) per bushel; while in April, 1888, 
 the rate on grain from New York to Liverpool by steam de¬ 
 clined to as low a figure as \d, per bushel of sixty pounds ; 
 | d. to Antwerp, and \d . to Glasgow. It seems almost need¬ 
 less to add that these rates were much below the actual cost 
 of carriage. In like manner, the cost of the ocean transpor¬ 
 tation of tea from China and Japan, or sugar from Cuba, 
 or coffee from Brazil, has been greatly reduced by the same 
 causes. 
 
 The above are examples on a large scale of the disturbing 
 influence of the recent application of steam to maritime in¬ 
 dustries. The following is an example drawn from compara¬ 
 tively one of the smallest of the world’s industries, prosecuted 
 in one of the most out-of-the-way places : The seal-fishery is a 
 most important industrial occupation and source of subsis¬ 
 tence to the poor and scant population of Newfoundland. 
 Originally it was prosecuted in small sailing-vessels, and up¬ 
 ward of a hundred of such craft, employing a large number of 
 men, annually left the port of St. John’s for the seal-hunt. 
 Now few or no sailing-vessels engage in the business; steam¬ 
 ers have been substituted, and the same number of seals are 
 taken with half the number of men that were formerly needed. 
 The consequence is, a diminished opportunity for a population 
 of few resources, and to obtain “ a berth for the ice,” as it is 
 termed, is considered as a favor. 
 
 Is it, therefore, to be wondered at that the sailing-vessel is 
 fast disappearing from the ocean ; 1 that good authorities esti- 
 
 1 The statistics of the world’s shipping show that in 1885 there were 25,706 
 sailing-vessels, of 11,216,618 tons; in 1886 there were 25,155, of 10,411,807 tons; 
 and in 1887 there were 23,310, of 9,820,492. The decrease in two years was 
 therefore, 1,396,123, or 12.4 per cent. 
 
CHANGES IN TRANSPORTATION. 
 
 309 
 
 mated in 1886 tliat the tonnage then afloat was about twenty- 
 five per cent in excess of all that was needed to do the then 
 carrying-trade of the world ; and that ship-owners everywhere 
 were unanimously of the opinion that the depression of indus¬ 
 try was universal ? 
 
 [During the year 1888, from causes that must be regarded as 
 exceptional (and which will be hereafter noticed), an increased 
 demand for shipping accommodation suddenly sprang up, and 
 which, not being readily supplied, was followed by an almost con¬ 
 tinued advance in freight rates, until in many directions — i. e., 
 in the Russian grain and Eastern trade — the rise was equal to one 
 hundred per cent advance upon the rates current in 1887 and the 
 early months of 1888. This condition of affairs in turn gave a 
 great impulse to ship-building, especially in Great Britain, where 
 the construction for 1888 amounted to 903,687 tons, as against 
 637,000 in 1887; an extent of annual increase that, except in two 
 instances, has never been exceeded. The additional tonnage thus 
 supplied proving in excess of the world’s demand, the advance in 
 freights in 1888 was in a great measure lost in the first six months 
 of 1889.] 
 
 Great, however, as has been the revolution in respect to 
 economy and efficiency in the carrying-trade upon the ocean, 
 the revolution in the carrying-trade upon land during the same 
 period has been even greater and more remarkable. Taking 
 the American railroads in general as representative of the rail¬ 
 road system of the world, the average charge for moving one 
 ton of freight per mile has been reduced from about 2.5 cents 
 in 1869 to 1.06 in 1887; or, taking the results on one of the 
 . standard roads of the United States (the New York Central), 
 from 1.95 in 1869 to 0.68 in 1885. 1 To grasp fully the mean¬ 
 ing and significance of these figures, their method of presen¬ 
 tation may be varied by saying that two thousand pounds of 
 coal, iron, wheat, cotton, or other commodities, can now be 
 
 1 On certain of the railroads of the United States an even lower average 
 rate of freight has been reported. Thus, for the year 1886 the Michigan Cen¬ 
 tral Railroad reported 0.56 cent as their average rate per ton per mile for that 
 year, and the Lake Shore and Michigan Southern Railroad 0.55 cent for like 
 service. 
 
310 
 
 ECONOMIC HISTORY. 
 
 carried on the best managed railways for a distance of one 
 mile for a sum so small that outside of China it would be 
 difficult to find a coin of equivalent value to give to a boy as a 
 reward for carrying an ounce package across a street, even if 
 a man or boy could be found in Europe or the United States 
 willing to give or accept so small a compensation for such a 
 service. 
 
 The following ingenious method of illustrating the same re¬ 
 sults has been also suggested : The number of miles of rail¬ 
 road in operation in various parts of the world in 1885 was 
 probably about 300,000. 1 Reckoning their capacity for trans¬ 
 portation at a rate not greater than the results actually 
 achieved in that same year in the United States, it would 
 appear that the aggregate railroad system of the world could 
 easily have performed work in 1885 equivalent to transporting 
 120,000,000,000 tons one mile. “ But if it is next considered 
 that it is a fair day’s work for an ordinary horse to haul a 
 ton 6.7 miles, year in and year out, it further appears that the 
 railways have added to the power of the human race, for the 
 satisfaction of its desires by the cheapening of products, a 
 force somewhat greater than that of a horse working twelve 
 days yearly for every inhabitant of the globe.” 
 
 In the year 1887 the freight-transportation by the railroads 
 of the United States (according to Poor’s “ Manual ”) was 
 equivalent to 60,061,069,996 tons carried one mile ; while the 
 population for that year was somewhat in excess of 60,000,000. 
 The railroad freight service of the United States for 1887 was 
 therefore equivalent to carrying a thousand tons one mile for 
 every person, or every ton a thousand miles. The average 
 cost of this service was about $10 per annum for every person. 
 But if it had been entirely performed by horse-power, even 
 under the most favorable of old-time conditions, its cost would 
 have been about $200 to each inhabitant, which in turn would 
 represent an expenditure greater than the entire value of the 
 then annual product of the country; or, in other words, all 
 
 1 The world’s railway mileage for January, 1889, was probably in excess of 
 370,000 miles. At the same date the telegraph system of the world comprised 
 at least 1,000,000 miles of length of line. 
 
CHANGES IN TRANSPORTATION. 
 
 311 
 
 that the people of the United States earned in 188T would not 
 pay the cost of transportation alone of the amount of such 
 service rendered in that year, had it been performed by horse¬ 
 power exclusively. 1 
 
 Less than half a century ago, the railroad was practically 
 unknown. 2 It is, therefore, within that short period that this 
 enormous power has been placed at the disposal of every in¬ 
 habitant of the globe for the cheapening of transportation to 
 him of the products of other people and countries, and for 
 enabling him to market or exchange to better advantage the 
 results of his own labor or services. As the extension of 
 the railway system has, however, not been equal in all parts 
 of the world — less than thirty thousand miles existing, at 
 the close of 1887, in Asia, Africa, and Australia combined — 
 its accruing benefits have not, of course, been equal. And 
 while all the inhabitants of the globe have undoubtedly been 
 profited in a degree, by far the greater part of the enormous 
 additions that have been made to the world’s working force 
 through the railroad since 1840, have accrued to the benefit 
 of the people of the United States, and of Europe, — exclusive 
 of Russia, Turkey, and the former Turkish provinces of south¬ 
 eastern Europe, — a number not much exceeding two hundred 
 millions, or not a quarter part of the entire population of the 
 globe. The result of this economic change has therefore 
 been to broaden and deepen rather than diminish the line 
 of separation between the civilized and the semi-civilized and 
 barbarous nations. 
 
 Now, while a multiplicity of inventions and of experiences 
 have contributed to the attainment of such results under this 
 railroad system of transportation, the discovery of a method 
 
 1 One further interesting corollary of this exhibit is that the average return, 
 in the form of interest and dividends, on the enormous amount of capital which 
 lias been actually expended in order that the present railway service in the 
 United States may be performed, cannot be estimated as in excess of four per 
 cent per annum as a maximum. 
 
 2 As late as 1840 there were in operation only about 2,860 miles of railway 
 in America, and 2,130 in Europe, or a total of 4,990 miles. For practical pur¬ 
 poses, it may therefore be said that the world’s railway system did not then 
 exist; while its organization and correspondence for doing full and efficient 
 work must be referred to a much later period. 
 
812 
 
 ECONOMIC HISTORY. 
 
 of making steel cheap was the one thing which was absolutely 
 essential to make them finally possible ; inasmuch as the cost 
 of frequently replacing rails of iron would have entailed such 
 a burden of expenditure as to have rendered the present 
 cheapness of railway transportation utterly unattainable. 
 Note, therefore, how rapidly improvements in processes have 
 followed the discovery of Bessemer, until, on the score of rel¬ 
 ative first cost alone, it has become economical to substitute 
 steel for iron in railroad construction. In 1873 Bessemer 
 steel in England, where its price has not been enhanced by 
 protective duties, commanded $80 per ton ; in 1886 it was 
 profitably manufactured and sold in the same country for less 
 than $20 per ton I 1 Within the same time the annual pro¬ 
 ducing capacity of a Bessemer converter lias been increased 
 fourfold, with no increase but rather a diminution of the in¬ 
 volved labor; and, by the Gilchrist-Thomas process, four men 
 can now make a given product of steel in the same time and 
 with less cost of material than it took ten men ten years ago 
 to accomplish. A ton of steel rails can now also be made 
 with five thousand pounds of coal, as compared with ten 
 thousand pounds in 1868. 
 
 “The importance of the Bessemer invention of steel can be best 
 understood by looking at tlie world’s production of that metal in 
 1887. The production of Bessemer steel in tlie eight chief iron 
 and steel producing countries of the world amounted in that year 
 to 7,269,767 tons, as compared with 6,034,115 tons in 1886, show¬ 
 ing an increase of 1,260,094 tons, or twenty per cent. The sav¬ 
 ing effected by railway companies by the use of Bessemer metal 
 and the additional security gained thereby is shown by the fact 
 that a locomotive on the Great Northern Bailway has accom- 
 
 1 The average price of iron rails in Great Britain for the year 1883 was £5 
 per ton; steel rails in the same market sold in 18G6 for £4 5s. per ton ; and in 
 1887 sales of steel rails were made in Belgium for £3 16s. (§18.75) per ton, de¬ 
 liverable at the works. The average price of steel rails in Pennsylvania (U. S.) 
 at the works, for 1886, with a tariff on imports of §17 per ton, was $34^ per 
 ton. Since the beginning of 1883 the manufacture of iron rails in the United 
 States has been almost entirely discontinued, and during the years from 1883 
 to 1888 there were virtually no market quotations for them. The last recorded 
 average price for iron rails was §45£ per ton in 1882. 
 
CHANGES IN TRANSPORTATION. 
 
 313 
 
 plished, with a moderate train-load of passenger coaches, a statute 
 mile in fifty seconds, or at the rate of seventy-two miles per hour, 
 and makes a considerable continuous run at a speed of one mile per 
 minute, —a rate of railway travelling almost beyond the dreams or 
 anticipations of the renowned George Stephenson.’ 7 The use of 
 steel in place of iron in ship-construction may he said to date from 
 1878, and the rapidity with which the former has replaced the lat¬ 
 ter metal is very remarkable. Thus, in 1878 u the percentage of 
 steel used in the construction of steamships in Great Britain was 
 only 1*09 hut in 1887 the percentage of iron used in proportion to 
 steel was only 0-93; or, in other words, in 1878 there was ninety 
 times as much iron as steel used for steamers, hut in 1887 there 
 was more than eight times the quantity of steel used as compared 
 with iron for the same purpose, and, as regards sailing-ships, the 
 quantity of steel used in 1887 amounted to practically one half 
 that of iron.”— Address of the President ( Mr . Adamson ) of the 
 British Iron and Steel Association , May , 1888. 
 
 The application and use of steam alone up to date (1889) 
 has accordingly more than trebled man’s working power, and 
 by enabling him to economize his physical strength has given 
 him greater leisure, comfort, and abundance, and also greater 
 opportunity for that mental training which is essential to a 
 higher development. And yet it is certain that four fifths of 
 the steam-engines now working in the world have been con- 
 structed during the last quarter of a century, or since 1865. 
 
 One of the most momentous and what may be called human¬ 
 itarian results of the recent great extension and cheapening 
 of the world’s railway system and service is that there is 
 now no longer any occasion for the people of any country 
 indulging in either excessive hopes or fears as to the results 
 of any particular harvest; inasmuch as the failure of crops 
 in any one country is no longer, as it was, no later than 
 twenty years ago, identical with high prices of grain; the 
 prices of cereals being at present regulated, not within any 
 particular country, but by the combined production and con¬ 
 sumption of all countries made mutually accessible by rail¬ 
 roads and steamships. As a matter of fact, indeed, the 
 granaries for no small portion of the surplus stock of the 
 
314 
 
 ECONOMIC HISTORY. 
 
 world's cereals are at the present time ships and railroad- 
 cars in the process of movement to the points of greatest 
 demand for consumption. Hence it is that, since 18T0, years 
 of locally bad crops in Europe have generally witnessed con¬ 
 siderably lower prices than years when the local crops were 
 good, and there was a local surplus for export. 1 
 
 In short, one marked effect of the present railroad and 
 steamship system of transportation has been to compel a uni¬ 
 formity of prices for all commodities that are essential to life, 
 and to put an end forever to what, less than half a century 
 ago, was a constant feature of European commercial experi¬ 
 ence, namely, the existence of local markets, with widely 
 divergent prices for such commodities. 
 
 How much of misery and starvation a locally deficient har¬ 
 vest entailed under the old system upon the poorer classes, 
 through the absence of opportunity of supplying the deficiency 
 through importations from other countries and even from 
 contiguous districts, is shown by the circumstance that in the 
 English Parliamentary debates upon the corn laws, about the 
 year 1840, it was estimated upon data furnished by Mr. Tooke, 
 in his “ History of Prices,” that a deficiency of one-sixth in 
 the English harvest resulted in a rise of at least one hundred 
 per cent in the price of grain; and another estimate by 
 
 1 A century ago every nation of Europe raised in ordinary years enough 
 grain to supply the needs of its own population, and the circulation of food 
 from country to country, and from province to province, was restricted and 
 even generally prohibited. After the middle of the eighteenth century there 
 were indications that the domestic growth of wheat in England was falling 
 below the consumption of the people; but this unpleasant fact was studiously 
 concealed — by the enormously expensive corn laws, which on the one hand 
 artificially stimulated agriculture and kept poor lands in cultivation, and, on 
 the other, restricted through high prices the consumption of bread — and was 
 not openly recognized for nearly half a century later. Subsequently the other 
 nations of Europe, with the exception of Russia and Austria-Hungary, have 
 experienced the same alteration in their food-producing capacity — in part due 
 to natural influences, and in part to artificial factors — which have turned the 
 attention of the people away from the cultivation of cereals into employments 
 that promised to be more profitable; and they have found it cheaper to import 
 food than to grow it themselves. So that there are now no countries in Europe 
 save the two above mentioned that have a surplus product of wheat available 
 for export. 
 
CHANGES IN TRANSPORTATION. 
 
 315 
 
 Davenant and King, for the close of the seventeenth century, 
 corroborates this apparently excessive statement. The esti¬ 
 mate of these latter authorities was as follows: — 
 
 For a deficit 
 equal to — 
 
 1-10 . 
 
 2-10 , 
 
 3- 10 . 
 
 4- 10 , 
 
 5- 10 . 
 
 There will be a 
 rise in price of— 
 
 . 3-10 
 
 . 8-10 
 . 16-10 
 . 28-10 
 . 45-10 
 
 As late as 1817 the difference in France between the highest 
 and the lowest prices of grain in different parts of the country 
 was 45 francs per hectolitre. In 1847 the average difference 
 was 26 francs. Since 1870 the greatest difference at any 
 time has not been in excess of 3.55 francs. The following 
 table, given on German authority, and representing the price 
 (in silver gulden per hectolitre) of grain for various pe¬ 
 riods, exhibits a like progress of price equalization between 
 nations : — 
 
 Period. 
 
 England. 
 
 France. 
 
 Belgium. 
 
 Prussia. 
 
 1821-’30. 
 
 10 25 
 
 735 
 
 644 
 
 5-65 
 
 1831-’40. 
 
 9 60 
 
 7-61 
 
 7 31 
 
 5-27 
 
 1841-’50. 
 
 9-15 
 
 7 89 
 
 7-99 
 
 6-41 
 
 i85i-’eo. 
 
 9-40 
 
 7-84 
 
 965 
 
 8-07 
 
 1861-70 ....... 
 
 8-80 
 
 8-59 
 
 924 
 
 779 
 
 For grain henceforth, therefore, the railroad and the steam¬ 
 ship have decided that there shall be but one market — the 
 world; and that the margin for speculation in this commodity, 
 so essential to the well-being of humanity, shall he restricted 
 to very narrow limits ; the speculator for a rise in wheat in 
 any one country finding himself practically in competition 
 with all wheat-producing countries the moment he undertakes 
 to advance prices; while abnormal values in one country or 
 market, or excessive reserves at one centre or another, are 
 certain to be speedily neutralized and controlled by the 
 influence of all countries and markets. 
 
316 
 
 ECONOMIC HISTORY. 
 
 The movement and prices of wheat for the year 1888 fur¬ 
 nish a most remarkable illustration and confirmation of the 
 above statements, and also (as Sir James Caird has pointed 
 out) “ of the smoothness (at the present time) of the opera¬ 
 tions of trade under natural conditions.” During the eleven 
 months of 1888, ending November 30th, Great Britain im¬ 
 ported a little more than sixty-seven million hundred-weight 
 of wheat and flour. In the corresponding eleven months of 
 1887 the foreign supply was practically the same. There 
 was, however, a very great change in the sources of supply. 
 Thus, in 1887, North and South America furnished forty-nine 
 million hundred-weight out of the sixty-seven million hundred¬ 
 weight that Great Britain required; but in 1888 the harvests 
 of America were comparatively meagre, and supplied Great 
 Britain with but tiventy-nine million hundred-weight, leaving 
 a deficiency of twenty millions to be obtained from other 
 sources. Eastern Europe, and especially Russia, which were 
 favored during the year 1888 with splendid weather and enor¬ 
 mous crops, were able to promptly make good the missing 
 twenty millions ; but the market changes and vicissitudes of 
 trade consequent on such an extensive transfer of the British 
 supplies of wheat were something extraordinary. Twenty 
 years ago, had Russia in any one year harvested a surplus of 
 wheat as large as she did in 1888, such surplus, through an 
 inability to cheaply and promptly move it to a market, would 
 have been not only of little monetary value to the producer, 
 but would probably by its unsalable presence in the country 
 have considerably lowered the market price of so much of the 
 crop as was required for home consumption. Under existing 
 conditions, however, great gain accrued to the Russian farmer 
 and to all the interests and nationalities employed in the 
 movements of his product. A demand for shipping for this 
 special trade, which could not at once be fully supplied, also 
 occasioned a quick advance in ocean freights in all quarters 
 of the globe, in some instances to the extent of one hundred 
 per cent, and concurrently a revival of the industry of ship¬ 
 building. On the other hand, this transfer of the wheat- 
 supply of Great Britain represented an immense change in 
 
CHANGES IN TRANSPORTATION. 
 
 317 
 
 the carrying-trade and business of the United States; while 
 the American speculator, recognizing the local deficiency of 
 the wheat-crop for 1888, and assuming that the American 
 supply of this cereal was the prime factor in determining its 
 European price, largely advanced prices (the average price of 
 No. 2 red winter wheat in New York for the six months 
 ending December, 1888, having been $1.01 per bushel, as com¬ 
 pared with 84.2 cents for the corresponding period of 1887). 
 But in this they were disappointed. The European prices did 
 not materially advance ; 1 and as a consequence, while the 
 American public suffered, “ the British consumer was enabled 
 to eat his loaf at the same price or a less price than he did in 
 the previous year.” And if the consumer was not a student 
 of statistics, he would not have been in the least conscious 
 that it was Russian rather than American grain from which 
 his bread was manufactured. In short, under the system of 
 commercial freedom which Great Britain has established, all 
 the farming interests on the earth grow with an eye to the 
 possible advent of the British people as customers; while 
 the latter, on their part, have so provided themselves with the 
 best equipment for annihilating time and distance, that it is a 
 matter of indifference to them whether the wheat-fields which 
 for the time being shall have their preference are located in 
 India, Russia, Dakota, South America, or Australia. 
 
 The changes effected by the cheapened means of transpor¬ 
 tation have moreover been equalled, if not surpassed, by those 
 wrought through the lessened cost and increased amount of 
 production. The world’s total product of pig-iron increased 
 slowly and regularly from 1870 to 1879, at the rate of about 
 2J per cent per annum, but after 1879 production increased 
 enormously, until in 1883 the advance among all nations was 
 82.2 per cent in excess of the make of 1870, the increase in 
 the product of the United Kingdom being 43 per cent, and 
 that of other countries 139.1 per cent ( Testimony of /Sir Low - 
 thian Bell , British Commission , 1886). Such an increase 
 
 1 English wheat sold December 25, 1888, at £1 11s. 3c?. a quarter, against 
 £1 11s. 2 d. y or cents a bushel more than at the corresponding date in 1887, 
 and Is. 10c?. less than in December, 1886. 
 
318 
 
 ECONOMIC HISTORY. 
 
 (after 1879), justified perhaps at the moment, was far in 
 excess of the ratio of increase in the world’s population, and 
 for a term of years greatly disproportionate to any increase in 
 the world’s consumption, and finally resulted as has been 
 before shown (see Wells, Chapter I.), in an extreme depres¬ 
 sion of the business, and a remarkable fall of prices. 
 
 By reason largely of the cheapening of iron and steel, the 
 cost of building railroads has also in recent years been greatly 
 reduced. In 1870-71, one of the leading railroads of the 
 Northwestern United States built 126 miles, which with some 
 tunnelling, was bonded for about 140,000 per mile. The same 
 road could now (1889) be constructed, with the payment of 
 higher wages to laborers of all classes, for about $20,000 per 
 mile. 
 
 The power to excavate earth, or to excavate and blast rock, 
 is from five to ten times as great as it was when operations 
 for the construction of the Suez Canal were commenced, in 
 1859-60. The machinery sent to the Isthmus of Panama, 
 for the excavation of the canal at that point was computed 
 by engineers as capable of performing the labor of half a 
 million of men. 
 
 The displacement of muscular labor in some of the cotton 
 mills of the United States, within the last ten years, by im¬ 
 proved machinery, has been from thirty-three to fifty per cent, 
 and the average work of one operative, working one year, in 
 the best mills of the United States, will now, according to 
 Mr. Atkinson, supply the annual wants of 1,600 fully clothed 
 Chinese, or 3,000 partially clothed East Indians. In 1840 
 an operative in the cotton-mills of Rhode Island, working 
 thirteen to fourteen hours a day, turned off 9,600 yards of 
 standard sheeting in a year; in 1886 the operative in the 
 same mill made about 30,000 yards, working ten hours a day. 
 In 1840 the wages were $176 a year; in 1886 the wages were 
 $285 a year. 
 
 The United States census returns for 1880 report a very 
 large increase in the amount of coal and copper produced 
 during the ten previous years in this country, with a very 
 large comparative diminution in the number of hands em- 
 
CHANGES IN TRANSPORTATION. 
 
 319 
 
 ployed in these two great mining industries ; in anthracite 
 coal the increase in the number of hands employed having 
 been 33.2 per cent, as compared with an increase of product 
 of 82.7; while in the case of copper the ratios were 15.8 and 
 70.8, respectively. For such results, the use of cheaper and 
 more powerful blasting agents (dynamite), and of the steam- 
 drill, furnish an explanation. And, in the way of further 
 illustration, it may be stated that a car-load of coal, in the 
 principal mining districts of the United States, can now 
 (1889) be mined, hoisted, screened, cleaned, and loaded in 
 one-half the time that it required ten years previously. 
 
 The report of the United States Commissioner of Labor for 
 
 1886 furnishes the following additional illustrations : — 
 
 • 
 
 “In the manufacture of agricultural implements, specific evi¬ 
 dence is submitted, showing that six hundred men now do the 
 work that, fifteen or twenty years ago, would have required 2,145 
 men, —a displacement of 1,545. 
 
 “The manufacture of hoots and shoes offers some very wonder¬ 
 ful facts in this connection. In one large and long-established 
 manufactory the proprietors testify that it would require five hun¬ 
 dred persons, working by hand processes, to make as many women’s 
 boots and shoes as a hundred persons now make with the aid of 
 machinery, —a displacement of eighty per cent. 
 
 “Another firm, engaged in the manufacture of children’s shoes, 
 states that the introduction of new machinery within the past 
 thirty years has displaced about six times the amount of hand- 
 labor required, and that the cost of the product has been reduced 
 one half. 
 
 “On another grade of goods, the facts collected by the agents 
 of the bureau show that one man can now do the work which 
 twenty years ago required ten men. 
 
 “In the manufacture of flour there has been a displacement of 
 nearly three fourths of the manual labor necessary to produce the 
 same product. In the manufacture of furniture, from one half to 
 three fourths only of the old number of persons is now required. 
 In the manufacture of wall-paper, the best evidence puts the dis¬ 
 placement in the proportion of one hundred to one. In the manu¬ 
 facture of metals and metallic goods, long-established firms testify 
 that machinery has decreased manual labor 33^ per cent.” 
 
320 
 
 ECONOMIC HISTORY. 
 
 In 1845 the boot and shoe makers of Massachusetts made 
 an average production, under the then existing conditions of 
 manufacturing, of 1.52 pairs of boots for each working day. 
 In 1885 each employe in the State made on an average 4.2 
 pairs daily, while at the present time in Lynn and Haverhill 
 the daily average of each person is seven pairs per day, 
 “ showing an increase in the power of production in forty 
 years of four hundred per cent.” 1 . . . 
 
 But in respect to no other one article has change in the 
 conditions of production and distribution been productive of 
 such momentous consequences as in the case of wheat. On 
 the great wheat-fields of the State of Dakota, where machinery 
 is applied to agriculture to such an extent that the require¬ 
 ment for manual labor has been reduced to a minimum, the 
 annual product of one man’s labor, working to the best advan¬ 
 tage, is understood to be now equivalent to the production of 
 5,500 bushels of wheat. In the great mills of Minnesota, the 
 labor of another one man for a year, under similar conditions 
 as regards machinery, is in like manner equivalent to the 
 conversion of this unit of 5,500 bushels of wheat into a thou¬ 
 sand barrels of flour, leaving 500 bushels for seed-purposes; 
 and, although the conditions for analysis of the next step in 
 the way of results are more difficult, it is reasonably certain 
 that the year’s labor of one and a half men more — or, at 
 the most, two men — employed in railroad transportation, is 
 equivalent to putting this thousand barrels of flour on a dock 
 in New York ready for exportation, where the addition of a 
 fraction of a cent a pound to the price will further transport 
 and deliver it at almost any port of Europe. 2 
 
 1 Address by Mr. F. W. Norcross, November, 1888, before the Boston Boot 
 and Shoe Club. 
 
 2 When the wheat reaches New York city, and comes into the possession 
 of a great baker, who has established the manufacture of bread on a large 
 scale, and who sells the best of bread to the working-people of New York at 
 the lowest possible price, we find that one thousand barrels of flour can be con¬ 
 verted into bread and sold over the counter by the work of three persons for 
 one year. Let us add to the six and a half men already named the work of 
 another man six months, or half a man one year, to keep the machinery in re¬ 
 pair, and our modern miracle is that seven men suffice to give one thousand 
 persons all the bread they customarily consume in one year. If to these we 
 
CHANGES IN TRANSPORTATION. 
 
 321 
 
 Here, then, we have the labor of three men for one year, 
 working with machinery, resulting in the producing all the 
 flour that a thousand other men ordinarily eat in a year, 
 allowing one barrel of flour for the average consumption of 
 each adult. Before such a result the question of wages paid 
 in the different branches of flour production and transporta¬ 
 tion becomes an insignificant factor in determining a market; 
 and, accordingly, American flour grown in Dakota, and ground 
 in Minneapolis, from a thousand to fifteen hundred miles from 
 the nearest seaboard, and under the auspices of men paid from 
 a dollar and a half to two dollars and a half per day for their 
 labor, is sold in European markets at rates which are deter¬ 
 minative of the prices which Russian peasants, Egyptian 
 “ fellahs, : ” and Indian “ ryots,” can obtain in the same mar¬ 
 kets for similar grain grown by them on equally good soil, 
 and with from fifteen to twenty cents per day wages for their 
 labor. 
 
 On the wheat-farms of the Northwestern United States it 
 was claimed in 1887 that, with wages at twenty-five dollars 
 per month and board, for permanent employes, wheat could be 
 produced for forty cents per bushel; while in Rhenish Prussia, 
 with wages at six dollars per month, the cost of production 
 was reported to be eighty cents per bushel. . . . 
 
 A great number of other similar and equally remarkable 
 experiences, derived from almost every department of indus¬ 
 try except the handicrafts, might be presented; but it would 
 seem that enough evidence has been offered to prove abun¬ 
 dantly that, in the increased control which mankind has 
 acquired over the forces of Nature, and in the increased utili¬ 
 zation of such control — mainly through machinery — for the 
 work of production and distribution, is to be found a cause 
 sufficient to account for most if not all the economic disturb¬ 
 ance which, since the year 1873, has been certainly universal 
 in its influence over the domain of civilization,— abnormal to 
 the extent of justifying the claim of having been unprece- 
 
 add three for the work of providing fuel and other materials to the railroad 
 and the baker, our final result is that ten men working one year serve bread 
 to one thousand. — Edward Atkinson, Distribution of Products. 
 
 21 
 
 * 
 
 * 
 
322 
 
 ECONOMIC HISTORY. 
 
 dented in character, and which bids fair in a greater or less 
 degree to indefinitely continue. Other causes may have and 
 doubtless have contributed to such a condition of affairs, but 
 in this one cause alone (if the influences referred to can be 
 properly considered as a unity) it would seem there has been 
 sufficient of potentiality to account not only for all the 
 economic phenomena that are under discussion, but to occa¬ 
 sion a feeling of wonder that the world has accommodated 
 itself so readily to the extent that it has to its new con¬ 
 ditions, and that the disturbances have not been very much 
 greater and more disastrous. 
 
 A question which these conclusions will naturally suggest 
 may at once be anticipated. Have not these same influences, 
 it may be asked, been exerted during the whole of the present 
 century, and in fact ever since the inception of civilization; 
 and are there any reasons for supposing that this influence 
 has been different during recent years in kind and degree 
 from what has been heretofore experienced ? The answer is, 
 Certainly in kind, but not in degree. The world has never 
 seen anything comparable to the results of the recent system 
 of transportation by land and water, never experienced in so 
 short a time such an expansion of all that pertains to what is 
 called business, and has never before, as was premised at the 
 outset of this argument, been able to accomplish so much in 
 the way of production with a given amount of labor in a 
 given time. Thus it is claimed in respect to the German 
 Empire, where the statistics of production and distribution 
 have doubtless been more carefully studied by experts than 
 elsewhere, that during the period from 18T2 to 1885 there 
 was an expansion in the railroad traffic of this empire of 
 ninety per cent; in marine tonnage, of about a hundred and 
 twenty per cent; in the general mercantile or commercial 
 movement, of sixty-seven per cent; in postal matter carried, 
 of a hundred and eight per cent; in telegraphic despatches, 
 of sixty-one per cent; and in bank discounts, of two hun¬ 
 dred and forty per cent. During the same period popula¬ 
 tion increased about eleven and a half per cent; and from 
 such data there has been a general deduction that, “ if one 
 
CHANGES IN TRANSPORTATION. 
 
 323 
 
 unit of trade was the ratio to one unit of population in 
 Germany in 1872, the proportion in 1885 was more than 
 ten units of trade to one of population.” But, be this as it 
 may, it can not be doubted that whatever has been the in¬ 
 dustrial expansion of Germany in recent years, it has been 
 at least equalled by England, approximated to by France, 
 and certainly surpassed by the United States. 1 
 
 There is very much that contributes to the support of the 
 idea which has been suggested by M. Laveleye, editor of the 
 “ Moniteur des Interets Mat^riels,” at Brussels, that the 
 industrial activity of the greater part of this century has 
 been devoted to fully equipping the civilized countries of 
 the world with economic tools, and that the work of the fu¬ 
 ture in this same sphere must be necessarily that of repair 
 and replacements rather than of new constructions. But a 
 more important inference from this same idea, and one that 
 fully harmonizes with and rationally explains the phenomena 
 of the existing situation is that, the equipment having at last 
 been made ready, the work of using it for production has in 
 turn begun, and has been prosecuted so efficiently that the 
 world has within recent years, and for the first time, become 
 saturated, as it were, under existing conditions for use and 
 consumption, with the results of these modern improvements. 
 
 Again, although the great natural labor-saving agencies 
 had been recognized and brought into use many years prior 
 to 1870, their powers were long kept, as it were, in abeyance ; 
 because it required time for the instrumentalities or methods, 
 by which the world’s work of production and distribution was 
 carried on, to adjust themselves to new conditions; and until 
 this was accomplished, an almost infinite number and variety 
 of inventions which genius had produced for facilitating and 
 
 1 A statistical exhibit of the growth of British industrial interests during 
 the reign of Queen Victoria (fifty years), published in 1887, in connection with 
 the “Queen’s Jubilee,” showed that the production of coal has increased in 
 Great Britain during this period from 36,000,000 tons to 147,000,000 tons per 
 annum; and that manuff.ctures had increased in about an equal ratio with the 
 output of coal — that is to say, had about quadrupled (four hundred per cent). 
 Meanwhile, the population of the United Kingdom increased only thirty-three 
 per cent. 
 
324 
 
 ECONOMIC HISTORY. 
 
 accelerating industrial evolution were matters of promise 
 rather than of consummation. But, with the extension of 
 popular education and the rapid diffusion of intelligence, all 
 new achievements in science and art have been brought in 
 recent years so much more rapidly “ within the sphere of the 
 every-day activity of the people ” — as the noted German in¬ 
 ventor, Dr. Werner Siemens, has expressed it — “ that stages 
 of development which ages ago required centuries for their 
 consummation, and which at the beginning of our times 
 required decades, now complete themselves in years, and 
 not unfrequently present themselves at once in a state of 
 completeness.” 
 
 It should also be remembered that fifty years ago the 
 “ sciences ” were little more than a mass of ill-digested facts 
 or u unassorted laws,” and that in the departments of physics 
 and chemistry comparatively little had been accomplished 
 in the way of industrial application and direction. To say, 
 indeed, what the world did not have half a century ago is 
 almost equivalent to enumerating all those things which in 
 their understanding, possession, and common use the world 
 now regards as constituting the dividing lines between civili¬ 
 zation and barbarism. Thus, fifty years ago the railroad and 
 the locomotive were practically unknown. The ocean steam 
 marine dates from 1838, when the Sirius and Great West¬ 
 ern— the two pioneer vessels — crossed the Atlantic to New 
 York. Electricity had then hardly got “ beyond the stage of 
 an elegant amusement,” and the telegraph was not really 
 brought into practical use before 1844. The following is a 
 further partial list of the inventions, discoveries, and applica¬ 
 tions whose initial point of “ being ” is not only more recent 
 than the half-century, but whose fuller or larger development 
 in a majority of instances is also referable to a much more 
 recent date: the mechanical reapers, mowing and seeding 
 machines, the steam plough, and most other eminently labor- 
 saving agricultural devices ; the Bessemer process and the 
 steel rail (185T) ; the submarine and trans-oceanic telegraph 
 cables (1866); photography and all its adjuncts ; electro-plating 
 and the electrotype; the steam-hammer, repeating and breech- 
 
CHANGES IN TRANSPORTATION. 
 
 825 
 
 loading fire-arms, and rifled and steel cannon; gun-cotton 
 and dynamite; the industrial use of India-rubber and gutta¬ 
 percha ; the steam-excavator and steam-drill; the sewing- 
 machine ; the practical use of the electric light; the applica¬ 
 tion of dynamic electricity as a motor for machinery ; the 
 steam fire-engine ; the telephone, microphone, spectroscope, 
 and the process of spectral analysis; the polariscope; the 
 compound steam-engine; the centrifugal process of refining 
 sugar; the rotary printing-press ; hydraulic lifts, cranes, and 
 elevators ; the “ regenerative ” furnace, iron and steel ships, 
 pressed glass, wire rope, petroleum and its derivatives, and 
 aniline dyes ; the industrial use of the metal nickel, cotton¬ 
 seed oil, artificial butter, stearine-candles, natural gas, cheap 
 postage, and the postage-stamp. Electricity, which a very 
 few years ago was regarded as something wholly immaterial, 
 has now acquired a sufficiently objective existence to admit of 
 being manufactured and sold the same as pig-iron or leather. 
 In short, to one whose present memory and life-experiences 
 do not extend over a period of time more extensive than 
 what is represented by a generation, the recital of the econ¬ 
 omic experiences and industrial conditions of the generation 
 next preceding is very'much akin to a recurrence to ancient 
 history. . . . 
 
 
326 
 
 ECONOMIC HISTORY . 
 
 XIII. 
 
 THE FRENCH INDEMNITY. 
 
 THE PAYMENT OF THE FIVE MILLIARDS. 
 Blackwood’s Edinburgh Magazine, Feb. 1875, pp. 172-187. 
 
 S soon as it became known, five years ago, that France had 
 
 -lx- to hand over <£200,000,000 to Germany, it was generally 
 predicted that the financial equilibrium of Europe would be up¬ 
 set by the transfer of so vast a sum from one country to another, 
 and that the whole system of international monetary relation¬ 
 ship would be thrown into confusion. Apprehensions of an 
 analogous nature were abundantly expressed when the two 
 French loans successively came out. Wise bankers shook 
 their heads in Frankfort, London, Amsterdam, and Brussels, 
 and assured their listeners that, though the money would prob¬ 
 ably be subscribed, it could not possibly be paid up under five 
 years at least. And yet the whole of this vast transaction 
 was carried out between 1st June, 1871, and 5th September, 
 1873 ; twenty-seven months sufficed for its completion ; and 
 not one single serious difficulty or disorder was produced by 
 it. The fact was that the commercial world had no idea of 
 its own power; it thought itself much smaller than it really 
 is ; it failed altogether to suspect that its own current opera¬ 
 tions were already so enormous that even the remittance of 
 five milliards from France to Germany could be grafted on to 
 them without entailing any material perturbation. Such, 
 however, has turned out to be the case ; and of all the les¬ 
 sons furnished by the war, no other is more practical or more 
 strange. The story of it is told, in detail, in a special report 
 which has recently been addressed by M. Leon Say to the 
 Commission of the Budget in the French Chamber. It is so 
 
THE FRENCH INDEMNITY. 
 
 327 
 
 curious and instructive that it is well worth while to analyze 
 it. It may, however, be mentioned, that the order of exposi¬ 
 tion adopted by M. Say is not followed here. To render the 
 tale clear to English readers, the form of it is changed. 
 
 But before explaining the processes by which the war in¬ 
 demnity was paid, it will be useful to recall the principal 
 features of the position in which France was placed by 
 her defeat. It is now computed that the entire cost of 
 the campaign amounted, directly and indirectly, to about 
 £416,000,000; and this outlay may be divided into five sec¬ 
 tions,— the first three of which were declared officially by 
 the Minister of Finance in his report of 28th October, 1873, 
 while the two others have been arrived at by a comparison 
 of various private calculations. They are composed as 
 follows: — 
 
 1. Sums paid by France for her own military operations — 
 
 War expenses to the end of 1872 . £76,480,000 
 
 Food bought for Paris before the siege .... 6,781,000 
 
 Assistance to families of soldiers, etc. 2,000,000 
 
 Balance of war expenses payable out of the Liquida¬ 
 tion Account . 21,942,000 
 
 Total of French expenses proper . , . £107,203,000 
 
 2. Sums paid to Germany — 
 
 Indemnity .£200,000,000 
 
 Interest on unpaid instalments of indemnity . . 12,065,000 
 
 Maintenance of German army of occupation . . 9,945,000 
 
 Taxes levied by the Germans ....... 2,468,000 
 
 Total paid to Germany.£224,478,000 
 
 3. Collateral expenses — 
 
 Cost of issue of the various war loans, rebates of 
 interest, exchange, and cost of remitting the 
 
 indemnity. £25,247,000 
 
 Loss or diminution of taxes and revenue in conse¬ 
 quence of the war .. „ . 14,567,000 
 
 Total of collateral expenses. £39,814,000 
 
328 
 
 ECONOMIC HISTORY. 
 
 4. Requisitions in cash or objects — 
 
 Supplied by towns or individuals, including the 
 
 £8,000,000 paid by Paris, estimated at . . £15,000,000 
 
 5. Loss of profts consequent upon the suspension of trade — 
 
 Estimated at. £30,000,000 
 
 Resume. 
 
 1 . £107,203,000 
 
 2 . 224,478,000 
 
 3 . 39,814,000 
 
 4 . 15,000,000 
 
 5 . 30,000,000 
 
 General Total . £416,495,000 
 
 Now, what has France to show against this ? 
 
 Her annual gains before the war were put by M. Maurice Block 
 (“ Europe, Politique et Sociale,” p. 317) at £900,000,000; un¬ 
 fortunately he does not tell us how much of this she spends, 
 and how much she lays by ; but there is a prevalent impres¬ 
 sion in France that her annual savings amount to £80,000,000. 
 We shall mention presently a calculation which seems to in¬ 
 dicate that, during the later period of the Empire, they must 
 have amounted to a considerably larger sum than this ; but if 
 we admit it, for the moment, as correct, it ‘would follow that 
 the cost of the war, in capital, represented five years’ ac¬ 
 cumulation of the net profits of the country. It is not, how¬ 
 ever, in that form that a proportion can be established 
 between liabilities and resources; the measurement must be 
 made, not in capital,but in interest; for it is,of course, in the 
 latter form alone — that is to say, in new taxation to pay in¬ 
 terest on loans — that France now feels the pressure. That 
 new taxation, when completed (it is not all voted yet), will 
 amount to about £26,000,000 a year; and that is the real 
 sum which is to be deducted from the annual profits of the 
 country in consequence of the war. Now, if those profits 
 were only £80,000,000, and if they are not progressing, but 
 standing still at their previous rate, this deduction would ab¬ 
 sorb almost a third of them; but as they are continually ad- 
 
THE FRENCH INDEMNITY. 
 
 329 
 
 vancing — as eyerv branch of trade in France is active — as 
 foreign commerce, which is generally accepted as a safe test of 
 national prosperity, was one fifth larger in 1873 than in 1869 
 — it may fairly be supposed that, after paying the £26,000,000 
 of war taxes, France is effectively laying by as much as she 
 did in the best years before the war, whatever that really was. 
 
 After this rough indication of the situation, we shall better 
 understand the story of the five milliards. It is scarcely pos¬ 
 sible to disassociate it from the general attendant circum¬ 
 stances of the position as a whole ; the two should be kept in 
 view together. 
 
 The payment of the indemnity, and the detailed conditions 
 under which that payment was to be made, were stipulated in 
 the three treaties or conventions signed successively at Ver¬ 
 sailles, Ferrieres, and Frankfort, in January, March, and May, 
 1871. It was determined by the last-named treaty that “ pay¬ 
 ments can be made only in the principal commercial towns of 
 Germany, and shall be effected in gold or silver, in English, 
 Prussian, Dutch, or Belgian bank-notes, or in commercial 
 bills of the first class.” The rates of exchange on coin were 
 fixed at 3f. 75c. per thaler, or at 2f. 15c. per Frankfort florin; 
 and it was agreed that the instalments should be paid as 
 follows: — 
 
 30 days after the suppression of the Commune . £20,000,000 
 
 During 1871 40,000,000 
 
 1st May, 1872 . 20,000,000 
 
 2d March, 1874 120,000,000 
 
 Total ' . £200,000,000 
 
 The last £120,000,000 were to bear interest at 5 per cent. 
 
 It must be particularly observed that no currency was to 
 be “ liberative ” excepting coin, German thalers, or German 
 florins. The other forms of money which the German Gov¬ 
 ernment consented to accept did not constitute a definite pay¬ 
 ment ; it was not until those other forms were converted into 
 their equivalent value in thalers or in florins that the pay¬ 
 ment became “ liberative.” This was the essential basis of 
 the bargain. 
 
330 
 
 ECONOMIC HISTORY. 
 
 Furthermore, it was declared that the instalments must be 
 paid at the precise dates fixed, neither before nor afterwards ; 
 and that no payments on account should be allowed. It was 
 not till July, 1872, that leave was given to make partial pay¬ 
 ments, but only then with the express reservation that such 
 partial payments should never be for less than <£4,000,000 at 
 a time, and that one month’s notice of them should be given 
 on each occasion. Under no circumstances, from first to last, 
 was any payment permitted on account. 
 
 Two main conditions,therefore, governed the operation: the 
 first, that all payments made in anything but coin or a proper 
 German form were to be converted into a German form at 
 the expense of France; the second, that the proceeds of all 
 bills or securities which fell due prior to the date fixed for 
 an instalment, were to be held over until that date. The 
 dates themselves were ultimately changed,—the last payment 
 was advanced six months ; but, with two special exceptions, 
 those conditions were rigorously enforced throughout the 
 entire business. 
 
 As the annexation of Alsace-Lorraine to the German 
 Empire obliged the Eastern Railway Company of France to 
 abandon all its lines within those provinces, it was agreed 
 that Germany should pay for them, that the price should be 
 £13,000,000, and that this sum should be deducted from the 
 indemnity. This was the first exception. The second was 
 that Germany consented, as a favor, to accept £5,000,000 in 
 French bank-notes. By these two means the £200,000,000 
 were reduced to £182,000,000. But thereto must be added 
 £12,065,000 for interest which accrued successively during 
 the transaction, and which carried the total for payment in 
 coin or German money to £191,065,000. And even this 
 was not quite all, for France had to furnish a further sum of 
 about £580,000 for exchange, and for expenses in the con¬ 
 version of foreign securities into German value. This last 
 amount does not appear to be finally agreed between the two 
 Governments; there is a dispute about it; but as the differ¬ 
 ence extends only to a few thousand pounds, the final 
 sum remitted may be taken at about £191,615,000 or at 
 
THE FRENCH INDEMNITY. 
 
 331 
 
 £199,645,000, if we include the £5,000,000 of French bank¬ 
 notes. The £13,000,000 credited for the railways carried 
 the entire total of the indemnity, with interest and ex¬ 
 penses, to £212,645,000. 
 
 The first payment (in French bank-notes) was made on 
 June 1, 1871. As the first loan was not brought out until 
 the end of the same month, £5,000,000 were taken for the 
 purpose from the Bank of France; hut with that exception 
 and subject to temporary advances (as will be seen hereafter), 
 the funds for the entire outgoing were provided by the two 
 great loans; the interest was, however, charged separately 
 to the budget. Consequently, the money was derived suc¬ 
 cessively from the following sources : — 
 
 The value of the Alsace-Lorraine railways . . 
 
 Loan from the Bank of France. 
 
 Out of the first loan for two milliards . . . 
 
 Out of the second loan for three milliards . . 
 
 Out of the budgets of 1872 and 1873 (interest) 
 
 £13,000,000 
 
 5,000,000 
 
 62,478,000 
 
 120,102,000 
 
 12,065,000 
 
 Total 
 
 £212,645,000 
 
 It is not necessary to go into the details of the dealings 
 with the Bank of France, of the subscription of the loans, or 
 of the dates and proportions of the payments made upon 
 them. It will suffice to observe, as regards those elements 
 of the subject, that though the payments on the loans came 
 in, nominally, before the dates fixed for the delivery of the 
 corresponding instalments to Germany, they, practically, 
 were not always available in time. The reason was that, 
 though the actual handing over to Berlin took place at fixed 
 periods, the remittances themselves were necessarily both 
 anterior and continuous, their proceeds being accumulated 
 by French agents until wanted. The result was that the 
 French Ministry of Finance was under the necessity of mak¬ 
 ing almost constant advances on account of those remit¬ 
 tances. Each time a payment was coming due, the means 
 of effecting it had to be arranged long beforehand. It is 
 not possible to collect or carry £20,000,000 at a week’s 
 notice, so the Treasury was of course obliged to keep on 
 
332 
 
 ECONOMIC HISTORY. 
 
 buying bills as fast as it could get them, in order to have a 
 stock in hand for future needs. That stock fluctuated a 
 good deal, and there is some contradiction in M. Leon Say’s 
 report as to its amount ; but it appears, at one period, to 
 have ranged for months as high as £30,000,000, part of the 
 cash to pay for it being provided temporarily, until the loan 
 moneys came in, either by Exchequer bills or by the Bank 
 of France in notes. 
 
 There was, moreover, towards the end of the operation, an 
 advance made specially in gold by the Bank of France; and, 
 as the circumstances under which it was effected present a 
 certain interest, it will be worth while to state them. In 
 May, 1873, the French Treasury had before it the obligation 
 of providing £40,000,000 between 5th June and 5th Septem¬ 
 ber; £24,000,000 of bills were in hand for the purpose, and 
 about £10,000,000 of instalments were coming due on the 
 loan; but there was, at the best, a clear deficit of about 
 £6,000,000 in the resources available. The Bank of France 
 agreed to supply that sum; but as, at that very moment, the 
 circulation of its notes had reached £112,000,000, and as it 
 had, consequently, only a margin of £16,000,000 between 
 that figure and its total authorized issue of £128,000,000, it 
 seemed dangerous to withdraw £6,000,000 of that margin in 
 notes, and it was decided to effect the loan by preference in 
 gold. It is worth remarking that this is probably the first 
 example, in the history of national banks, of a bank electing 
 to make an advance in gold, as being less “ dangerous ” than 
 the delivery of its own notes. The French Treasury was of 
 course well pleased to obtain bullion, which was immedi¬ 
 ately “ liberative,” instead of notes, which would have had 
 to be converted into bills at various dates. But, after all, 
 this aid did not suffice; the incomings from the loan did not 
 arrive, practically, in time for use, and the Treasury had to 
 supply a further final balance of £9,760,000 to enable the 
 concluding payment to Germany to be regularly effected. 
 
 Finally, it may be noted that there were thirty-three de¬ 
 liveries to Germany, the component parts of each of which 
 were so scrupulously verified by the representatives of the 
 
THE FRENCH INDEMNITY. 
 
 333 
 
 Berlin Finance Department that several days were occupied 
 by the counting, on each occasion. Indeed, when thalers 
 had to be told up, the maximum got through in a day never 
 exceeded £32,000. 
 
 After these preliminary explanations we can now begin to 
 show the means by which the transfer was performed. We 
 will divide them, in the first instance, into four categories: — 
 
 1. German bank-notes and money collected in 
 
 France after the war. £4,201,000 
 
 2. French gold and silver. 20,492,000 
 
 3. French Bank-notes. 5,000,000 
 
 4. Bills. 169,952,000 
 
 Total.£199,645,000 
 
 The first observation to be made here is that the German 
 money found in France amounts to a singularly large sum; 
 indeed, if this proof of its importance had not been furnished 
 no one could possibly have suspected that the invaders, for 
 their personal and private necessities, had spent anything 
 like so much. Their wants, as soldiers, were supplied dur¬ 
 ing the war, either by stores sent from Germany or by requi¬ 
 sitions levied in France; until peace was signed they paid 
 for no objects of public or official need; all this cash repre¬ 
 sented, therefore, individual expenditure. And manifestly 
 the real total must have been still larger. It cannot be 
 supposed that the whole of the German money spent in 
 France was reserved by its French proprietors for sale to 
 their own Government; it may be taken for granted that a 
 considerable portion of it went back straight to Germany 
 through ordinary channels; and it may be guessed that the 
 entire sum expended by the conquerors, out of their individ¬ 
 ual resources, in German money, was at least a half more 
 than the amount here shown, and that it consequently at¬ 
 tained £6,000,000. The question is curious, and this is the 
 first time that any official information bearing on it has been 
 published. It remains to add, as regards this element of 
 the payment, that, as might have been expected, the German 
 money was included, almost entirely, in the earlier instal- 
 
334 
 
 ECONOMIC HISTORY. 
 
 ments, and that scarcely any of it appeared in the later 
 remittances. 
 
 The X 20,492,000 of French money was composed of 
 £ 10,920,000 in gold and £ 9,572,000 in silver. But it 
 should be said at once that these figures express only the 
 amounts transmitted by the French Government officially, 
 and do not comprise the quantities of French gold bought by 
 Germany or forwarded by private bankers to cover their own 
 bills; these other quantities will be referred to presently. 
 £6,000,000 of the Government gold were supplied by the 
 Bank of France; the rest was bought from dealers or fur¬ 
 nished by the Treasury. Of the silver <£5,840,000 were 
 obtained in France, and £3,732,000 were drawn, in bars, 
 from Hamburg, and coined in Paris. 
 
 But these direct remittances of German and French cash 
 represented after all only about one eighth of the entire pay¬ 
 ment; the other seven eighths were transferred by bills, and 
 it is in this section of the matter that its great interest lies. 
 It will at once be seen that, as no remittance in paper became 
 “ liberative ” until it was converted into an equivalent value 
 in thalers or in florins, the French Treasury could obtain no 
 receipt for an instalment until all its various elements had 
 been so converted; its object, therefore, was to obtain the 
 largest possible amount of bills on Germany, so that, at tlicir 
 maturity, their proceeds might be at once available in the 
 prescribed form. But at the same time it was quite im¬ 
 possible to collect in France alone, within the time allowed, 
 anything approaching to the quantity of German bills re¬ 
 quired. The result was that it was found necessary not 
 only to hand in a large amount of bills on other countries, 
 which had to be converted into German values at the cost 
 of France, but also, as regards the purchase of direct bills 
 on Germany, to effect it frequently in two stages. In the 
 first stage bills were bought in Paris, as they offered, on 
 England, Belgium, or Holland; in the second, a portion 
 of the proceeds of those bills was reinvested, in those coun¬ 
 tries, in other bills on Germany itself. Of course the 
 French Government was very anxious to employ every sort 
 
THE FRENCH INDEMNITY. 
 
 335 
 
 of means to increase the quantity of German bills, and to 
 avoid leaving to the German Treasury the right of convert¬ 
 ing foreign paper into German value at French expense. At 
 the origin of the operation the importance of this element of 
 it was not fully realized; but by degrees the French minister 
 discovered that it was far more advantageous to effect his 
 conversions himself than to leave them to be carried out 
 anyhow at Berlin. The result of this discovery was that, 
 while £454,000 were paid to Germany for the cost of con¬ 
 version on the first two milliards, only £11,000 were paid to 
 her under the same head on the remaining three milliards. 
 After the experience of the first twelve months, France sought 
 for bills on Germany wherever she could get them all over 
 Europe; and it may be added that she was somewhat aided 
 in the effort by the special position of Germany, who, at the 
 moment, was in debt considerably to England not only for 
 the war loans she had issued there, but also on commercial 
 account as well. But, as has just been mentioned, a good 
 many of these bills were substitutions for each other, and 
 consequently the amount of paper shown as bought is con¬ 
 siderably larger than the real sum paid to Germany, the 
 reason being that a good deal of it appears in the account 
 twice over. The following table gives the composition of 
 the total quantity of bills bought bj r France: — 
 
 Bills on Germany, bought direct, in thalers . £62,550,000 
 
 “ “ “ “ “ in florins . 9,548,000 
 
 “ “ “ bought, in thalers, with the 
 
 proceeds of other bills . 42,218,000 
 
 “ “ “ in reichsmarcs..... 3,172,000 
 
 “ “ England, in sterling. 61,780,000 
 
 “ “ Hamburg, in marcs-banco .... 21,432,000 
 
 “ “ Belgium, in francs. 20,856,000 
 
 “ u Holland, in florins. 12,952,000 
 
 Total.£234,508,000 
 
 * 
 
 s 
 
 These bills were paid for mainly in French bank-notes; 
 and the average rates of exchange at which they were bought 
 came out as follows, for the entire operation: -— 
 
336 
 
 ECONOMIC HISTORY. 
 
 Francs. 
 
 Thalers.3.7910 
 
 Pounds sterling. 25.4943 
 
 Marcs-banco. 1.9089 
 
 Belgian francs. 1.0061 
 
 Dutch florins.2.1500 
 
 Frankfort florins. 2.1637 
 
 Reichsmarcs. 1.2528 
 
 * 
 
 Every one at all acquainted with exchanges will recognize 
 how low, under such circumstances, these prices are; and 
 will ask, with wonder, how they can have been kept down to 
 such averages on so large an undertaking. 
 
 But though the foregoing table shows the quantities of 
 bills, of each kind, that were bought by the French Govern¬ 
 ment as vehicles of transmission, it in no way indicates the 
 form in which the money was in reality handed over to the 
 German Treasury. Most of the above figures were largely 
 modified by conversions and substitutions'; and when all the 
 bills had been cashed, when the whole payment had been 
 effected, it appeared that the real totals of each sort of cur¬ 
 rency which had been finally delivered to Germany were as 
 follows: — 
 
 French bank-notes. £5,000,000 
 
 “ gold. 10,920,000 
 
 “ silver. 9,572,000 
 
 German notes and cash. 4,201,000 
 
 Bills — Thalers. 99,412,000 
 
 “ —Frankfort florins. 9,404,000 
 
 “ —Marcs-banco. 10,608,000 
 
 “ —Reichsmarcs. 3,190,000 
 
 “ —Dutch florins. 10,020,000 
 
 “ —(and in silver) — Belgian francs . . 11,828,000 
 
 “ —Pounds sterling. 25,490,000 
 
 Total.£199,645,000 
 
 This catalogue shows at last in what shape the bills were 
 really utilized and made “ liberative, ” either in German 
 money direct, or by the equivalent of foreign value in thalers 
 or florins. The differences of composition between this defi- 
 
837 
 
 THE FRENCH INDEMNITY. 
 
 nitive list and that of the bills originally bought are only 
 partially explained by M. Leon Say; it is not, however, 
 necessary, nor would it be interesting, to follow out precisely 
 the various conversions which took place; we will only men¬ 
 tion, as an illustration, that out of the <£61,780,000 of original 
 bills in England £31,687,000 were converted here into other 
 bills on ^Germany, that £25,490,000 were sent to Berlin in 
 sterling bill, and that the balance remains unexplained. As 
 regards the direct delivery by France herself, of English, 
 Belgian, or Dutch bullion, the report says nothing; it is 
 only stated incidentally that £720,000 of Belgian francs 
 were sent to Berlin in metal, and that the London agency of 
 the French Treasury bought £1,132,000 here in gold and 
 silver, which probably was also shipped to Berlin; but these 
 are the sole allusions to the subject. It is probable, as in¬ 
 deed has always been supposed, that the bullion which was 
 withdrawn, during the operation, from London, Brussels, 
 and Amsterdam, was not taken for French account, but by 
 Germany out of the sums at her disposal in each place after 
 the bills on that place had matured. 
 
 We have now before us, in a condensed form, the main 
 elements of this prodigious operation; we see now what were 
 the conditions which regulated it, where the money came 
 from to realize it, how that money was successively employed, 
 and in what shapes the payments were at last effected. 
 
 We recognize that France herself provided, in 
 
 her own notes and coin . . . £25,492,000 
 
 “ “ that German money and bills on 
 
 Germany produced .... 126,815,000 
 
 “ “ that bills on England, Belgium, 
 
 and Holland contributed . . 47,338,000 
 
 Total.£199,645,000 
 
 Here, however, we must repeat that the Paris bankers who 
 sold drafts on Germany were obliged to some extent to remit 
 cash to meet them. On this point M. Leon Say goes into 
 calculations which we will mention presently; for the mo¬ 
 ment it will suffice to say that, according to his view, the 
 
 22 
 
838 
 
 ECONOMIC HISTORY. 
 
 effective transmission of bullion from France to Germany, 
 through private hands, from 1871 to 1873, did not exceed 
 <£8,000,000 for the purposes in view here. He acknowledges, 
 as will be seen, that the entire exportation of French gold 
 during the three years reached (probably) £40,000,000; but 
 still he expresses the opinion that £8,000,000 were all that 
 was required, as a balance, to cover the French bills on 
 Berlin. Of course this is a question which nobody can de¬ 
 cide ; but, to lookers on, it does seem somewhat contrary to 
 the probabilities of such a case that this sum can have been 
 sufficient. It may, perhaps, have been enough, as M. Say 
 says, to balance accounts in the long run, but it is difficult 
 to believe that it was not considerably exceeded while the 
 operation was under execution. Furthermore, M. Leon Say 
 makes a mistake of £10,000,000 in his account, as we shall 
 show, and for that reason, we believe that £18,000,000 
 instead of £8,000,000 were required, so putting the whole 
 total of French bullion temporarily used, including the 
 £20,000,000 of the Government, at about £38,000,000, or 
 a little more than one-sixth of the entire sum to pay. As 
 this is certainly a maximum, it follows that France got out 
 of this great debt with a payment of only 18 per cent of it, 
 at the outside, in her own money. And there is good rea¬ 
 son to suppose that all the gold exported by her has come 
 back, and that her reserves of bullion are reconstituted at 
 present as they were before the war. 
 
 And now we can approach the most important and inter¬ 
 esting point in the whole transaction. How came it that 
 £170,000,000 of bills could be got at all ? We have given a 
 general answer to the question at the commencement of this 
 article; we will now consider it more in detail, partly with 
 the aid of M. Leon Say’s report, partly by reference to other 
 sources of information. It appears, as might have been ex¬ 
 pected, that various measures were employed by the French 
 Government in order to render possible the collection of 
 such a huge mass of paper. In the first place, particular 
 facilities and temptations were offered to foreigners to in¬ 
 duce them to subscribe to the two loans; commissions vary- 
 
THE FRENCH INDEMNITY. 
 
 339 
 
 ing from £ to 1 per cent were offered to them, the object be¬ 
 ing to acquire the power of drawing on them for the amount 
 of their instalments. Secondly, everything was done to en¬ 
 courage anticipated payments of those instalments, so as to 
 hasten the dates at which they could be drawn for. Thirdly, 
 as some fear was felt that the second loan might possibly not 
 be eagerly subscribed, coming as it did so immediately after 
 a previous issue which was not quite paid up, it was thought 
 desirable to get a portion of it guaranteed by bankers. But 
 in order not to risk giving to those bankers a large commis¬ 
 sion for nothing, it was stipulated with them, as a part of 
 the arrangement, that they should supply the Treasury with a 
 fixed quantity of foreign bills. By the two former plans of 
 action the immense amount of X70,920,000 of drafts on 
 other countries was obtained, X15,960,000 of which were on 
 account of the first loan, and X54,960,000 on account of the 
 second; and it may be remarked at once, before we proceed, 
 that though this figure supplies decisive evidence of the fact 
 that at least one third of the two great loans was paid up- 
 by foreign subscribers, it is certain that nearly the entire 
 amount has been bought back since, and that almost the 
 whole of the new stocks is, at the present moment, in French 
 hands. By the third plan the bankers who formed the syn¬ 
 dicate, and it may be mentioned that fifty-five of the first 
 houses in Europe were associated for the purpose, engaged 
 to supply X28,000,000 of paper. Consequently, by these 
 admirably devised schemes, X 98,920,000 of drafts were 
 successively procured, and the exact quantity to be bought 
 in the open market was reduced to X 71,032,000. 
 
 It must, however, be observed that, though we can regard 
 these drafts on foreign countries for loan instalments as a 
 special product of the occasion, and are therefore justified in 
 counting them apart, the same cannot anyhow be said of the 
 X 28,000,000 of bills furnished by the syndicate of bankers. 
 The latter were evidently composed of ordinal commer¬ 
 cial paper, and consequently must be added to the total 
 which had to be supplied from commercial sources proper, 
 so putting that total at X99,032,000. Now bills of this 
 
340 
 
 ECONOMIC HISTORY. 
 
 sort necessarily imply an effective counter-value of some 
 kind; so, as we have already seen that at the outside only 
 £18,000,000 of that counter-value was supplied in bullion, 
 there remained at least £81,032,000 of bills which must 
 necessarily have been based on ordinary trading or financial 
 operations. What were those operations? Very often the 
 general character of a hill is indicated on its face; but in 
 this case a test of that kind could not be applied, not only 
 because there were so many hills to handle that a serious ex¬ 
 amination of their nature was impracticable (there were in 
 all one hundred and twenty thousand of them, of every con¬ 
 ceivable amount, from £40 to £200,000), but also because 
 every possible kind of business transaction must have been 
 represented in that accumulation of securities from all parts 
 of the world. Bank credits, circulation bills, settlements for 
 goods delivered, remittances on account of future purchases, 
 drafts against the coupons of shares and stocks, special paper 
 created for the occasion,— all these forms, and many others, 
 too, were, according to M. Leon Say, included in the collec¬ 
 tion. It was not possible to seek out in detail the origins and 
 meanings of such a varied mass; but we may take M. Say’s 
 general description of it to be true, not only because it cor¬ 
 responds with probabilities and experience, but also because 
 he was himself Minister of Finance during a part of the 
 operation, and has therefore, a personal knowledge of its 
 main circumstances. Researches, liow r ever, which could not 
 be attempted with the bills themselves, may be practically 
 and usefully pursued if they are directed towards the general 
 signs and symptoms of the financial state of France. It is 
 probable that a relatively small amount of bills was created 
 specially to be sold to the French Government. We may, 
 indeed, take the supposed £18,000,000 of exported bullion 
 as indicating the approximate extent of uncovered or 
 manufactured paper; all the rest was evidently based on 
 mercantile transactions. Now, we know that mercantile 
 transactions imply the delivery of property of some kind, 
 and that the two main forms of property, commercially, are 
 merchandise and stocks. It is therefore necessary, in order 
 
THE FRENCH INDEMNITY. 
 
 341 
 
 to arrive at an idea upon the question, to glance at the ac¬ 
 tual position of France in her dealings with other nations in 
 these two values. 
 
 We have already alluded to the development of French 
 trade, and to the general influence of that development on 
 the payment of the war indemnity as a whole; but we must 
 go into a few figures here in order to make the bearings 
 of the subject clear. The value of the foreign commerce 
 of France — importations and exportations together — 
 was <£257,000,000 in 1871, £293,000,000 in 1872, and 
 £301,000,000 in 1873. Now it will be at once recognized 
 that the amount of bills necessitated by this quantity of 
 commerce supplied a solid foundation for carrying the addi¬ 
 tional paper whose origin we are now seeking to discover. 
 M. Say is of opinion that scarcely any part of the indemnity 
 bills was furnished by the current commercial trade of the 
 country; but, as we have just seen that the quantity required 
 from trading sources was £81,000,000, or about £40,000,000 
 per annum, it does seem to be possible, notwithstanding his 
 contrary impression, that some portion of that relatively 
 reduced quantity may have been found in the ordinary com¬ 
 mercial movement. For instance, it may reasonably be 
 argued — as indeed M. Say himself admits — that bills 
 drawn against French exports to Germany or England would 
 be included, to some extent, among those which were offered 
 to the Government. There seems to be no reason why this 
 should not have been so. 
 
 But if M. Say considers that the habitual commercial 
 paper of France has not been of much service to the Treas¬ 
 ury in its conduct of this operation, he holds a totally differ¬ 
 ent opinion with reference to the influence of the foreign 
 investments of the French people. What he says on this 
 subject is new and curious, and is well worth repeating. 
 
 He begins by stating, with an appearance of much truth 
 and reason, that for many years before the war, French 
 capital was being continuously invested in foreign securities; 
 that the sums so placed have been estimated by different 
 economists at from £30,000,000 to £60,000,000 a year. 
 
342 
 
 ECONOMIC HISTORY. 
 
 Here, however, before we follow out his argument, we must 
 open a parenthesis, and observe that if even the smaller of 
 these figures is exact, the computation of £80,000,000 of 
 annual savings, which was alluded to at the commencement 
 of this article, must be altogether wrong. It is manifestly 
 inadmissible that France can have been investing in foreign 
 countries three eighths of her whole net yearly profits. 
 Consequently, we may legitimately suppose that the popular 
 impression about the £80,000,000 is a delusion, and that 
 France is in reality laying by a vast deal more than that. 
 If so, the ease and speed with which she has recovered from 
 the war would be comprehensibly explained. M. L6on Say 
 goes on to tell us that French investments in foreign stocks 
 amounted in 1870 to so large a total that the dividends on 
 them represented, at that date, about £25,000,000 a year, 
 for which sum drafts on other countries were of course put 
 into circulation by its French proprietors. Furthermore, 
 the revenues of the strangers who live in France come to 
 them principally from their own country; and it is estimated 
 that before the war £10,000,000 or £12,000,000 of such 
 incomes were drawn for annually in the same way. Conse¬ 
 quently, on this showing it would appear that somewhere 
 about £35,000,000 or £40,000,000 of French drafts on for¬ 
 eign countries were created every year from those two 
 sources. It is, however, certain that this quantity has 
 diminished since the war, by the departure of some of the 
 strangers who used to live in France, and also by the sale, 
 in order to provide funds for subscription to the two new 
 loans, of some of the foreign securities held in France. But 
 M. Ldon Say considers that the annual diminution, on both 
 heads together docs not exceed £4,000,000, and that at least 
 £30,000,000 of paper, representing cash due to France on 
 account of incomes from abroad, irrespective of commerce 
 properly so called, were drawn in 1871 and 1872. In sup¬ 
 port of these considerations, he mentions, among other 
 facts, that in 1868 and 1869 the coupons paid in Paris on 
 Italian stock alone amounted to £3,400,000; while in 1872 
 and 1873 they fell to £2,400,000. On this one security, 
 
THE FRENCH INDEMNITY. 
 
 343 
 
 therefore, which is, however, probably held in France in 
 - larger proportions than any other foreign stock, the diminu¬ 
 tion of income since the war amounts to £1,000,000. With 
 these figures and probabilities before him, he concludes by 
 expressing the confident opinion that, as French purchases 
 of foreign stocks have ceased, to a great extent at least, since 
 18T0, and as remittances of French money to pay for such 
 purchases have consequently ceased as well, the drafts on 
 other countries for coupons and revenues became entirely 
 disposable for transmission to Berlin, and that it is here that 
 the main explanation lies of the facility with which the 
 bills were found. This theory is ingenious, and it is proba¬ 
 bly in great part true. 
 
 The movement of the precious metals forms a separate 
 element of the subject, and one that is not easy to trace out; 
 for in France, as in most other countries, the public returns 
 of the international trade in specie are very incomplete. 
 We know how much gold and silver are raised from mines, 
 and how much thereof is coined by each country; but we are 
 very ill informed as to what becomes of them when once they 
 have issued from the mint. On this head also, however, M. 
 Leon Say has collected some valuable facts. The Custom¬ 
 house Reports inform us that during the three years from 
 18T1 to 1873 <£53,400,000 of bullion were exported, and 
 £50,480,000 were imported; on this showing, therefore, the 
 loss of bullion was only £2,920,000. But as private infor¬ 
 mation gave good reason to believe that the amounts must 
 have been in reality considerably larger, calculations have 
 been made in order to arrive at a more correct conclusion. 
 It appears, from official publications, that the stock of gold 
 and silver in the Christian world is supposed to have in¬ 
 creased by £371,000,000 from 1849 to 1867; but the aug¬ 
 mentation has not occurred in both the metals, it has taken 
 place in gold only; the quantity of gold is greater by 
 £428,000,000, while, in consequence of exportations to 
 Asia, the quantity of silver has diminished by £57,000,000. 
 Now out of this £428,000,000 of new gold, France alone, in 
 the first instance, received more than half; at least we are 
 
344 
 
 ECONOMIC HISTORY. 
 
 justified in supposing so, from the fact that, during the same 
 period the Paris mint converted <£230,000,000 of bar gold 
 into French coin. Of course this quantity of gold did not re¬ 
 main permanently in France; its whole value was not added 
 in reality to the general French stock of metal; as gold 
 arrived in France silver went away; indeed it is imagined 
 that, out of the £200,000,000 of silver which have been coined 
 in France since the year 1800 only £40,000,000 remained 
 in the country in 1869. It is, however, calculated that the 
 £100,000,000 of hard cash, gold and silver together, which 
 were said to really belong to France in 1848, have doubled 
 since; and M. Wolowski, who is regarded as an authority 
 on such questions, declared in the French Chamber, on 4tli 
 February last that, in his opinion, the national stock now 
 ranges between £200,000,000 and £250,000,000. 
 
 But whatever be the interest of these computations, and 
 useful as it may be to count up the amount of bullion which 
 has come into France, we must look elsewhere for informa¬ 
 tion as to the quantity of it which the consequences of the 
 war took out. We know that the German mint melted 
 down, for its own coinage, £33,880,000 of French napoleons. 
 It is also known, says M. Leon Say, that the Bank of Eng¬ 
 land bought nearly £8,000,000 of the same sort of money 
 between 1870 and 1873. Here, therefore, we can trace the 
 passage out of France, since the war, of nearly £42,000,000 
 of her gold. But, as Germany drew from London £1,680,000 
 of the napoleons which she put into the furnace, it may be 
 that that sum was included in the £8,000,000 of the Bank 
 of England, and is therefore counted twice. For this reason 
 the amount really sent to Germany and England may be put 
 at £40,000,000. M. Ldon Say adds, that the Bank of Am¬ 
 sterdam bought a further £3,600,000 of French gold; but, 
 as he fancies that this may not have come direct from 
 France, he does not add it to the total, and he holds to 
 £40,000,000 as representing probably the effective loss of 
 gold which France had to support after the war. Of this 
 sum £10,920,000 were exported to Berlin, as we have al¬ 
 ready shown, by the French Government itself; the other 
 
THE FRENCH INDEMNITY. 
 
 345 
 
 £29,080,000 were consequently carried out by private firms 
 for transmission to Berlin, and for various other purposes. 
 Silver, however, arrived in considerable quantities to replace 
 the gold. <£9,500,000 of silver were coined in Paris be¬ 
 tween 1870 and 1873; and the Custom-house returns, which 
 are almost always below the truth, show an importation of 
 <£12,160,000 of it. From all this, M. Say concludes that 
 <£40,000,000 of gold left France; that £12,000,000 of silver 
 came to her; and that the X28,000,000 of difference between 
 the two represents the real total loss of bullion which the 
 war entailed. 
 
 But in making this calculation M. Leon Say commits a 
 most wonderful mistake; he entirely omits to take account 
 of the <£9,572,000 of silver which the French Government 
 sent to Berlin, and which must, of course, be added to the 
 out-going. When this strange error is corrected, the loss 
 becomes, not £28,000,000, but £38,000,000, of which the 
 Government exported £20,000,000, leaving apparently 
 £18,000,000 instead of £8,000,000, as the sum contributed 
 by private bankers. This difference of £10,000,000 in the 
 issue of the calculation gives some value to another com¬ 
 putation which M. Ldon Say has made, but which would 
 have had no foundation if this error had not existed. He 
 says, probably with some truth, that the quantity of money 
 in circulation in a country remains usually at the same 
 general total during the same period, whatever be the nature 
 of the various elements which compose it. He then goes 
 on to argue that as the issue of French bank-notes was 
 £44,000,000 higher in September, 1873, than in June, 1870, 
 that increase ought to approximately indicate the amount of 
 metal withdrawn in the interval from circulation, and re¬ 
 placed by notes. But according to his theory, that amount 
 of metal did not exceed £28,000,000, leaving an excess of 
 £16,000,000 of notes, which excess he explains by saying 
 that it represents an equal sum in gold which the French 
 people had hidden away. Now everybody knows that the 
 lower classes of the French people do hide money, do 
 “thesaurise,” as they say; but such an explanation of the 
 
346 
 
 ECONOMIC HISTORY. 
 
 missing <£16,000,000 is so purely imaginary that it cannot 
 merit any serious credit. The theory assumes, however, a 
 very different form when the error of the £10,000,000 
 is corrected. In that case we have an extra issue of 
 £44,000,000 in bank-notes, corresponding to a loss of 
 £88,000,000 in gold and silver; and there the two figures 
 get sufficiently close to each other for it to be possible that 
 there really is some relationship between them, without be¬ 
 ing forced to resort to the possible but improbable solution 
 of thesaurising. 
 
 Consequently, with all these various considerations be¬ 
 fore us, it seems reasonable to suppose that the natures of 
 the bills employed to pay the war indemnity were of three 
 main classes, and were grouped approximately in the follow¬ 
 
 ing proportions: — 
 
 Drafts for foreign subscriptions to the loans . £70,920,000 
 
 Bills against French bullion specially exported 18,000,000 
 Commercial bills and drafts for dividends and 
 revenues from abroad. 81,032,000 
 
 General total of bills.£169,952,000 
 
 Before we proceed to sum up the case, and to try to draw 
 from it the teaching it contains, there is one more detail 
 which is worth explaining. 
 
 We have alluded to the coining in Paris of a certain quan¬ 
 tity of Hamburg silver. To make the story of it clear, it is 
 necessary to remind our readers that, according to the con¬ 
 stitution of the Bank of Hamburg, which dates from 1619, 
 accounts were kept by it in a money called marc-banco, and 
 credits were opened by it in that money on the deposit of 
 silver, coined or uncoined, the value of that silver being 
 calculated pure. By degrees the marc-banco, though only an 
 imaginary money, grew to be the universal denominator em¬ 
 ployed in the home and foreign business of Hamburg; it ac¬ 
 quired an importance greater than that of the effective money 
 of many German States. But when the Empire was estab¬ 
 lished, and it was decided to introduce a gold standard into 
 Germany, it became essential to suppress the marc-banco, 
 
THE FRENCH INDEMNITY. 
 
 847 
 
 for it had the double defect of representing silver and of form¬ 
 ing a separate value outside German monetary unity. So it 
 was abolished by law and ordered to disappear, — the plan 
 adopted being that the Bank of Hamburg should liquidate 
 its deposits by paying off, in pure silver, the marcs-banco in 
 circulation. It was, however, stipulated that this right 
 should cease on 15th February, 1873, and that after that 
 day, all persons who held securities in marcs-banco should 
 lose the old right of receiving pure silver, and should only be 
 entitled to half a thaler for each marc-banco, that being the 
 value of the silver represented by the latter. Now the 
 French Treasury had bought, as we have seen, £ 21,000,000 
 of bills in marcs-banco, and consequently possessed the right 
 of claiming silver for such of them as fell due before loth 
 February, 1873, while all the rest from that date were paya¬ 
 ble in thalers. The thaler was “ liberative, ” while the 
 marc-banco was not; but the pure silver which the marc- 
 banco represented could be coined into five-franc pieces, and 
 be delivered to the German Government at the rate of 3 
 francs 75 centimes per thaler. The result was that, being 
 by far the largest holder of marcs-banco paper, the French 
 Treasury was able for a time to control the Hamburg market, 
 and it naturally used for its own advantage the power which 
 this position gave it. The Hamburg Bank was utterly una¬ 
 ble to deliver the quantity of silver for which France held 
 acceptances in marcs-banco; it was absolutely in the hands 
 of the French Minister of Finance; that functionary appears, 
 however, to have acted very fairly, — to have only asked for 
 silver in moderation, and to have profited by his power 
 solely to obtain conversions into thalers on good condi¬ 
 tions. The result was, as we have said, that <£3,732,000 of 
 Hamburg silver came to the Paris mint, partly through Gov¬ 
 ernment importations on marcs-banco bills, partly through 
 private speculators, who followed the example of the Treas¬ 
 ury, and pressed the Hamburg Bank for metal. 
 
 Such are, in a condensed form, the essential features of 
 the history of this extraordinary operation; and now that we 
 have completed the account, we need no longer delay the 
 
348 
 
 ECONOMIC HISTORY. 
 
 expression of our admiration of the consummate ability with 
 which it was conducted. Its success may be said to have 
 been, in every point, complete; we cannot detect one sign of 
 a grave hitch or of a serious error in it. It does the highest 
 honor to the officials of the French Treasury, and proves that 
 they possess a perfect knowledge of exchange and bank¬ 
 ing both in their minutest details and in their largest 
 applications. 
 
 When we look back upon the subject as a whole, three 
 great facts strike us in it: the first, that France is vastly 
 rich; the second, that the trade of Europe has attained such 
 a magnitude that figures are ceasing to convey its measure ; 
 the third, that the aggregate commercial action of nations is 
 a lever which can lift any financial load whatever. As we 
 see the transaction now, with these explanations of its com¬ 
 position before us, we cannot fail to recognize that it has 
 been rather European than purely French. All purses 
 helped to provide funds for it; all trades supplied bills for it. 
 In every previous state of the world’s commerce such an 
 operation would have been impossible; fifty, thirty, twenty 
 years ago, it would have ruined France and have disordered 
 Europe; in our time it has come and gone without seriously 
 disturbing any of the economic conditions under which we 
 live. France, out of her own stores, has quietly transported 
 to Berlin a quantity of bullion larger than the whole ordi¬ 
 nary stock of the Bank of England; and yet she shows no 
 sign of having lost a sovereign. She has paid in her bank¬ 
 notes for £170,000,000 of transmission paper, and yet the 
 quantity of her bank-notes in circulation is now steadily 
 diminishing. Such realtities as these would be altogether 
 inconceivable if we did not see their cause behind them; 
 that cause is simple, natural, indisputable; its name is the 
 present situation of the world’s trade. The vastness of that 
 trade explains the mystery. 
 
 But yet with these advantages to help it, the operation 
 had, in addition to its enormous size, certain special diffi¬ 
 culties to contend with. As one example it may be men¬ 
 tioned that among the elements of perturbation and of 
 
THE FRENCH INDEMNITY. 
 
 349 
 
 consequent impediments to remittance, the French Govern¬ 
 ment had to keep in view the fact that, at the very moment 
 when it needed all the monetary facilities it could obtain, 
 the German Government was locking up gold in its cellars, 
 in order to provide metal for the new coinage it was pre¬ 
 paring. This was a most unlucky coincidence; but it ex¬ 
 isted, and it had to be met. The German plan was to hold 
 back the issue of the new money until £30,000,000 of it 
 were ready to be exchanged for the old silver currency; con¬ 
 sequently, no silver could be expected to leave Germany 
 until some months after the date at which the gold had been 
 brought in there; and during the interval France knew that 
 she must suffer from the withdrawal of so much bullion from 
 the general market. But she found assistance in an unex¬ 
 pected way; silver did flow back to her at once from Ger¬ 
 many, without waiting for the issue of the new gold currency. 
 France paid Germany £9,572,000 in French silver; but this 
 was of no use to the latter; on the contrary, it was an em¬ 
 barrassment to her, for she was on the point of exporting a 
 quantity of her own silver, which would become superfluous 
 as soon as the new gold got into circulation. So, for this 
 reason, a considerable portion of the French five-franc pieces 
 came back immediately to France, and helped to reconstitute 
 her store. 
 
 And all the other difficulties were, more or less, like this 
 one. At first sight they looked grave and durable, but they 
 diminished or disappeared as soon as they were seriously 
 attacked; the whole thing turned out to be an astonishing 
 example of obstacles overrated. The unsuspected wealth of 
 France, assisted by an extent of general commercial dealings 
 which was more unsuspected still, managed to get the better 
 of all the stumbling-blocks and impossibilities which seemed 
 to bar the road. France has lost £400,000,000, one half of 
 which she has delivered to her enemy, and yet she is going 
 on prospering materially as if nothing at all had happened. 
 But it is now quite clear that she never could have managed 
 all this alone; she could have found the money, but never 
 could she, single-handed, have carried it to Germany. It is 
 
850 
 
 ECONOMIC HISTORY. 
 
 there, far more than in subscriptions to her loans, that the 
 world has really helped her; she has bought back the stock 
 that foreigners subscribed for her, but she could not do so 
 without the bills they sold her. If she had been left to her 
 • own resources for the transport of the indemnity to Berlin 
 she would probably have been forced to send two thirds of it 
 in bullion, and to empty her people’s pockets for the pur¬ 
 pose; the vastness ~of the world’s trade and the unity of in¬ 
 terests which commerce has produced, permitted her to use 
 other nations’ means of action instead of her own. 
 
 Viewed in this light, the payment of the five milliards 
 becomes an enormous piece of admirably well-arranged in¬ 
 ternational banking, in which nearly all the counting-houses 
 of Northern Europe took a share. That definition of it is 
 worth knowing, and we may be glad that the information 
 given in M. Say’s report has enabled us to arrive at it. 
 
 APPLICATION OF THE INDEMNITY. 
 
 From Kolb’s “ The Condition of Nations ” (Trans, by Mrs. 
 
 Brewer), pp. 290-299. 1 
 
 When the North German Confederacy was formed, not¬ 
 withstanding the transfer of the proceeds of the customs and 
 of other indirect imposts to the Confederacy, and in spite of 
 considerable contributions by the different States, the reve¬ 
 nues did not suffice to cover the expenditure, especially that 
 of the establishment of a larger sea force. A deficit was the 
 result, and loans had to be raised. 
 
 In the year 1868 the debt of the Confederacy 
 
 amounted to.£540,000 
 
 In 1809 to. ' .1,312,338 
 
 And in 1870 it rose to. 1,735,743 
 
 While in 1871 it was. 1,988,882 
 
 The war made the contraction of a further debt unavoida¬ 
 ble, both for the States of the North German Confederacy 
 
 1 London: George Bell & Co., 1880. 
 
THE FRENCH INDEMNITY. 
 
 851 
 
 as well as for those of South Germany. The sum immedi¬ 
 ately expended on the war must have amounted to about 
 <£51,000,000. The result of the war led to a complete revo¬ 
 lution in the condition of finance. We extract the following 
 data from the memorandum which was laid before the Diet 
 by the Imperial Chancellor on February 18, 1874, with 
 regard to the application of the French war contribution: — 
 The Receipts amounted to — 
 
 1. War contribution by France.£200,000,000 
 
 2. Interest upon this till the payment of the 
 
 debt. 12,047,678 
 
 Total.£212,047,678 
 
 3. Added to this, contribution of the City of 
 
 Paris. 8,025,879 
 
 4. Customs levied in France and local contri¬ 
 
 butions, less cost of collection, so far as 
 these sums were not employed for special 
 military purposes, about. 2,609,133 
 
 Total receipts.£222,682,690 
 
 Of this sum £12,999,999 must be deducted for the acqui¬ 
 sition of railways belonging to a private company in Alsace- 
 Lorraine, the remainder being, therefore, £209,682,691. 
 
 Expenditures. 
 
 1st. Expenses for which fixed sums were granted by Im¬ 
 
 perial decrees, namely: — 
 
 For the Imperial Invalid Fund.£28,050,000 
 
 For the completion of German fortresses . . . 10,800,000 
 
 For fortresses in Alsace-Lorraine . . . . . 6,037,642 
 
 For railroads in the Imperial Dominions, par¬ 
 ticularly the Wilhelm-Luxembourg line . . 8,210,883 
 
 For Imperial war treasures, to be kept in the 
 Julius tower of the fortress of Spandau . . 6,000,000 
 
 Compensation for the decrease in the revenue 
 caused by alterations in the management of 
 
 the customs and taxes. 2,968,907 
 
 Imperial Treasury fund, for the administration 
 of the marine, and for unredeemable advances 
 for the management of the Imperial army . . 
 
 1,503,000 
 
352 
 
 ECONOMIC HISTORY. 
 
 For gratuities to generals for distinguished ser¬ 
 vices . 600,000 
 
 For aid to Germans banished from France . . 300,000 
 
 For exercise ground for the Artillery-trial Com¬ 
 mission . 206,250 
 
 Expenditure for general purposes defrayed by 
 the Imperial Treasury in 1870 and 1871, and 
 the additional outlay for troops garrisoned- in 
 Alsace-Lorraine till the end of 1872 . . . 1,249,500 
 
 Lastly, £6,195,181 granted by an Imperial decree of July 
 8, 1873;- for marine, £4,206,783; buildings for the Diet, 
 £1,200,000. Supplemental expenses of war, including 
 various other grants, making total of £72,116,704. 
 
 To this must be added those outlays the amount of which 
 depends on the sum required for the attainment of the object 
 in view. They may be estimated as follows: — 
 
 1. Compensation for damages by war and for 
 
 war. 
 
 2. Compensation to German ship-owners . . 
 
 3. For war medals. 
 
 4. Invalid pensions in consequence of the war of 
 
 1870, 1871, and 1872 . 
 
 5. Additional for payment of invalid pensions, 
 
 payable out of the Imperial Invalid Fund 
 during the time that that fund was not per¬ 
 fectly established. 
 
 6. War expenses connected with the French War 
 
 costs indemnification, which, according to 
 Art. 5 of the decree of July 8, 1872, are to 
 be treated as common charges, viz.: — 
 
 £5,655,000 
 
 840,000 
 
 45,000 
 
 1,513,466 
 
 897,000 
 
 (a) For arming and disarming of fortresses . 1,477,078 
 
 ( b) For siege material. 1,409,223 
 
 (c) For marine administration. 1,402,876 
 
 (d) For temporary arrangements for coast de¬ 
 
 fence, etc. 148,121 
 
 ( e) For laying down and repairing railroads, 
 
 etc., necessary for prosecuting the war 718,797 
 
 (/) For the establishment and working of 
 telegraphs outside the limit of the tele¬ 
 graph system. 30,418 
 
THE FRENCH INDEMNITY. 353 
 
 (g) For temporary civil administration in 
 France, especially for management of 
 railways in Alsace-Lorraine, till the 
 end of 1871. £563,057 
 
 Further for services which from July, 1, 
 
 1871, were in connection with the war, 
 viz.:— 
 
 (h) Management of the post.. 33,750 
 
 (i) Management of telegraphs. 88,500 
 
 (E) Increased expenditure in the manage¬ 
 ment of the army, over and above that 
 
 in time of peace, consequent upon the 
 
 occupation of French territory . . . 3,150,000 
 
 (l) Further estimates for general expenses 
 to be defrayed by the Imperial Treas¬ 
 ury, about. 37,500 
 
 The total amount of expenditure fund to be deducted from 
 the revenue amounts therefore to <£ 90,125,544, leaving a 
 remainder of <£119,057,197 to be divided. It is, however, 
 desirable to retain a moderate reserve for possible deficien¬ 
 cies in the estimated receipts, in expectation of greater 
 requirements in the expenditure. 
 
 The sum to be divided may, therefore, be estimated in 
 round numbers at <£118,900,000. Three fourths of this 
 were, in accordance with Article 6 of the statute of the 8th 
 of July, 1873, set apart for military purposes, in the propor¬ 
 tion specified in the above Article 6, and one fourth to be 
 divided according to a fixed standard of 1871. The sum for 
 division is shared as follows: — 
 
 1. Bavaria. 
 
 2. Wiirtemberg.. 
 
 3. North German Confederation. 
 
 4. Baden. 
 
 5. Hesse. 
 
 For the payment of expenses. 
 
 About £ 22,500,000 of the entire war contribution were, 
 in obedience to Imperial decrees, applied to civil objects, 
 
 23 
 
 £13,380,061 
 4,275,130 
 79,517,407 
 5,019,977 
 1,400,051 
 < 917,850 
 
 ( 16,289,521 
 
854 
 
 ECONOMIC HISTORY. 
 
 the rest for purposes of war. The sums which fell to the 
 separate States in the division were also mostly expended 
 in defraying the costs of war, and the repayment of loans for 
 war. 
 
 According to the statute of 2d of July, 1873, £16,027,021 
 of the sum to he divided were set apart for restoring the 
 army to a war-footing and increasing its general efficiency. 
 
 We find from a report of the Commission on the State debt, 
 under date April, 1874, that the Imperial Invalid Fund pos¬ 
 sessed paper of nominal value — 
 
 In thalers.£23,081,742 
 
 In South German guldens. 933,187 
 
 In Dutch guldens. 213,333 
 
 In English pounds sterling. 918,760 
 
 In dollars. 3,556,800 
 
 And in banks. 393 
 
 The fortress building fund possessed at the same time a 
 nominal value of £5,229,795 in effects, and a capital of 
 £2,789,913 in the Prussian bank. . . . 
 
THE LIQUIDATIONS OF 1873-1876. 
 
 355 
 
 XIV. 
 
 - • 
 
 THE LIQUIDATIONS OP 18T3-T6. 
 
 From Giffen’s Essays in Finance,* pp. 107-131. 
 
 V\7HAT are the characteristic marks of the great depres- 
 * ^ sion of trade during the last three or four years ? It 
 is now ascertained that such depressions are periodical. They 
 recur at tolerably regular intervals, following in the wake of 
 equally regular periods of great prosperity in trade, when 
 everybody makes profits or seems to make them. The alter¬ 
 nation has no doubt its roots in human nature, which lends 
 itself to an ebb and flow, an action and reaction in affairs. 
 The depressions, like the periods of prosperity coming before 
 them, have also many features in common. Just as the pros¬ 
 perity is shown by the prevalence of good credit, an active 
 money market, and a high range of prices for both securities 
 and commodities, so the depression is marked by a low range 
 of prices, heavy failures, bad credit, and consequently a slug¬ 
 gish money market. But each has likewise its own special 
 features and incidents. The crisis in which it begins, or 
 which it produces, indicates some special development of 
 trade at the time, or some special disease in it, — the favorite 
 business of a country changing from time to time, and a con¬ 
 stant tendency existing to go to an extreme with the momen¬ 
 tary fashion. We propose, then, to inquire what are these 
 special features in the recent depression, — this proceeding 
 being likely, it is obvious, to be more instructive than a mere 
 examination and record of those features which most depres¬ 
 sions have in common. There is an additional reason for 
 this course. An impression prevails that the present stagna¬ 
 tion of trade is unprecedented in intensity and duration, and 
 
 1 London: George Bell and Sons, 1880. 
 
856 
 
 ECONOMIC HISTORY. 
 
 that it is likely to be permanent. A similar impression has 
 often been found to prevail at such times, and it will be inter¬ 
 esting to inquire whether it is now, for once, well founded, or 
 whether in reality the depression is not much less than those 
 to which trade has often been subject, and is not as likely as 
 any other to terminate in a new period of prosperity. 
 
 I. 
 
 Endeavoring to answer the question we have put, wdiat v r c 
 are first struck with, in a general survey of the last three or 
 four years, is the universality of the depression. Almost 
 every civilized country has been affected. The beginning was 
 in 1873, with the great Vienna panic and crash in May of 
 that year, — a crash which w r as accompanied by immense 
 agitation throughout Germany and in England, and the occur¬ 
 rence of incidents on almost every European Bourse, wdiich 
 only stopped short of panic. Next came a great panic and 
 crash in the autumn of 1873 in the United States, perhaps the 
 greatest event of the kind to which that country, though it 
 has had many great panics, has ever been subject. This was 
 accompanied by a renewal of agitation in England, as w r ell as 
 generally on the Continent, as the rates of discount in Novem¬ 
 ber, 1873, significantly prove. At that date the minimum bank 
 rate of discount was in London no less than nine per cent, the 
 maximum being two and three per cent higher; the minimum 
 in Paris and Brussels was seven per cent; in Berlin and Frank¬ 
 fort, five per cent; Vienna, five per cent; and Amsterdam, 
 six and a half per cent. The following year was comparatively 
 quiet, but it w T as marked by great monetary disturbances in 
 South America, and by a great fall in prices both at home, on 
 the Continent, and in the United States. In 1875 came re¬ 
 newed disturbances in South America, a renewal of agitation 
 in the United States and Germany; and then the Im Thurn, 
 Aberdare, Collie, Sanderson, and other failures, constituting 
 the commercial crisis of that year in England. This w r as in 
 turn succeeded by a great collapse in foreign loans, which had 
 been heralded and partly rehearsed in 1873, on the occasion 
 
THE LIQUIDATIONS OF 1873-1876. 
 
 357 
 
 of the bankruptcy of Spain, and of which the conspicuous 
 incident now was the non-payment of the Turkish debt inter¬ 
 est. To all these events succeeded renewed depression and 
 stagnation in trade at home, as well as on the Continent, the 
 crisis in Russia in 1876 being very marked, and the whole 
 continuing till it seemed to have a fresh cause in the appre¬ 
 hension and actual outbreak of the present war. Thus the 
 depression has been widespread and general, — Italy, Spain, 
 and France perhaps escaping with little hurt, but Austria, 
 Germany, Russia, the United States, and the South American 
 countries having all been in deep distress. 
 
 This universality, on a comparison with former periods of 
 crisis, may be in fact apparent only, arising from the greatly 
 increased facilities of observation at the present day. There 
 never was a time, probably, since commerce was sufficiently 
 advanced in more countries than one to admit of crises, in 
 which the commercial misfortunes of one country did not re¬ 
 act on countries with which it did business. At such periods 
 as 1825, 1837-39, 1857-58, 1861-62, and 1866-68, it is un¬ 
 doubtedly the case that the crisis in England has been accom¬ 
 panied by more or less severe crises elsewhere, — France, 
 America, England, Holland, and the German towns on the 
 Elbe, having shared each other’s misfortunes more or less 
 during the whole period. Now the crisis is felt to be more 
 extended, because we are immediately informed of the events 
 in most distant places, because we see at once the association 
 of failures at centres remote from each other, and because we 
 also see at once the effect in one place of the call upon it to 
 render assistance at another disturbed centre of business. But 
 it is also true that commercial relations are themselves far 
 more extended than was the case before railways and tele¬ 
 graphs ; that there are wide regions — in the United States, 
 for instance — which could not have been the subject of crisis 
 twenty or thirty years ago, because they were unpeopled ; that 
 such countries as Austria and Russia have lately shared more 
 largely than before in industrial development; and that Ger¬ 
 many has also advanced farther in the path which makes it 
 possible for it to be the subject of a commercial crisis. There 
 
358 
 
 ECONOMIC HISTORY. 
 
 is consequently a real reason for the greater extension of the 
 commercial depression of the last three years as compared 
 with anything before witnessed, while it is equally true that 
 steam and telegraphs, by facilitating communication, have 
 destroyed the natural barriers between the different coun¬ 
 tries of the commercial world. The London money market 
 appears to be the great equalizer of markets, because it re¬ 
 ceives the shock of every important business event through¬ 
 out the world, and transmits the shock of what it feels to 
 every other centre. But whatever the nature of the connec¬ 
 tion, it is certain that there is a connection between com¬ 
 mercial crises in different parts of the world, and that the 
 wider range of business increases the possible area of dis¬ 
 aster when once disaster has set in. 
 
 II. 
 
 The next important characteristic of the depression, and 
 perhaps the most important characteristic of all, appears to 
 be that the conspicuous industry which has failed is that of 
 the “exploitation” of new countries with little surplus capital, 
 and whose business is mainly that of producing raw materials 
 and food for export, by old countries which have large surplus 
 capital, and are largely engaged in manufacturing; in other 
 words, the investment in new countries by the capitalists of 
 old countries. Much bad business is brought to light in every 
 depression; but it is the peculiarity of the commercial cycle, 
 as we have noticed, that there is a change from time to time 
 in the favorite business, so that every period has its special 
 trade development, and special trade disease. The favorite 
 business for many years before 18T3 had become that of 
 foreign investment, and now the depression occurs where 
 there was the greatest expansion. Direct evidence in such 
 matters is difficult; it would hardly be possible to measure 
 precisely the extent of the various descriptions of disaster 
 which combine to make a crisis; but there are many facts and 
 circumstances which can leave little doubt in the mind that 
 the direct evidence, if it could be obtained, would wholly con¬ 
 firm the conclusion stated. 
 
THE LIQUIDATIONS OF 1873-1876. 
 
 359 
 
 The order of events in the crisis affords of itself a very 
 striking confirmation of the assumption. The difficulties com¬ 
 menced in the countries more or less farmed by the capital 
 of England and other old countries; whose industries are 
 nourished by public loans from England, and by the invest¬ 
 ment of private English capitalists within their territories, 
 principally in the form of English iron and manufactures. 
 The crisis in Austria, which was the first in the whole series, 
 was a crisis in a country answering this description to some 
 extent. To the United States, where the next crash occurred, 
 the description is still more applicable. The South American 
 countries, whose prolonged suffering was the special feature 
 of 1874, are almost a domain of England; and Russia, too, 
 is largely “ developed ” by English capital. Some of these 
 countries, especially Austria and Russia, have not been ex¬ 
 clusively dependent on English capital. They have also bene¬ 
 fited by the accumulation of capital in Holland/Belgium, and 
 France, which had been drawn largely to Germany before 
 1873, through the French indemnity, and had overflowed 
 thence into Austria and Russia; but the indemnity payments, 
 though they helped to precipitate and aggravate the crisis in 
 Austria, did not alter the power of the crisis to react on Eng¬ 
 land. No doubt, in 1873, as already noticed, the collapse of 
 the foreign loan financing had been foreshadowed; but the 
 anticipatory events of that year were in themselves compara¬ 
 tively unimportant, so that down to 1875 what chiefly hap¬ 
 pened was a succession of monetary and commercial crises in 
 countries dependent on England, but from which England by 
 comparison escaped. In 1875 these crises were succeeded by 
 a crisis in England itself of very great intensity, naturally 
 leading to a renewal of crisis and distress elsewhere, though 
 not of actual panic, and the whole culminating in the finan¬ 
 cial disorders of the foreign loan collapses, which will prob¬ 
 ably form, in after years, the most conspicuous feature of the 
 whole series of liquidations. There appears to have been a 
 natural order, therefore, in the successive crises to which the 
 countries dependent on England have been subjected, leading 
 to a crisis in England itself, and finally to a financial as well 
 as a commercial collapse. 
 
360 
 
 ECONOMIC HISTORY. 
 
 We have next to adduce in evidence the fact of the great 
 expansion of the business of investment in foreign countries 
 previous to the depression. The great multiplication of for¬ 
 eign loans in the period is now familiar. Not to speak of 
 Turkish and other loans, which were so largely mere borrow¬ 
 ings to pay interest, there was a loan of <£32,000,000 for Egypt, 
 after there had been large loans in 1868 and 18TO ; Chili 
 in the same time (1867-73) borrowed £5,250,000; Peru, 
 £24,000,000; Brazil, £10,000,000; Russia, £77,000,000 ; and 
 Hungary, £22,000,000, — exclusive of minor borrowings by 
 guaranteed companies and otherwise. These were the nominal 
 amounts of the loans, and the real money or money’s worth 
 ever transmitted to those countries in respect of them must 
 have been much less; but, making all deductions, they indi¬ 
 cate an immense direct credit opened up in this country in 
 favor of the States named. The minor borrowings we have 
 referred to were equally important, if not more important, 
 and, especially in the case of the United States, the aggregate 
 of small loans for railways and other purposes was immense. 
 All this direct borrowing likewise implied a great investment 
 of capital privately in foreign countries. Merchants and 
 traders were induced to set up establishments abroad to facili¬ 
 tate the business which the loans brought into existence, and 
 accommodate the wants of emigrants to the new fields of in¬ 
 dustry. The result was a luxuriant industrial growth in the 
 new countries by means of this vast direct and indirect credit 
 which old countries were giving. Thus in the United States, 
 immediately before 1873, the length of the whole railway 
 system had been doubled in seven years; in Russia almost the 
 entire system of 12,000 miles has been created since 1868; in 
 Austria there had been an increase from 2,200 miles in 1865, 
 to over 6,000 miles in 1873; and in South America, Brazil, 
 the River Plate republics, Chili, and Peru, had all been en¬ 
 dowed with railways in a very few years, — the loans for 
 these countries above enumerated, and especially the above 
 loan of £24,000,000 for Peru, being avowedly all for railways. 
 And never was there a more rapid development of the foreign 
 trade of the United Kingdom. The total import and export 
 
THE LIQUIDATIONS OF 1873-1876. 
 
 361 
 
 trade, which was <£500,986,000 in 1867, had risen in 1873, or 
 in six years only, to £682,292,000, or thirty-six per cent; and 
 the trade per head from £16 Is. 3t?. to £21 4s. 9 d., or thirty- 
 two per cent. The exports of British produce alone, to take 
 the two extreme years, had risen from £179,678,000 in 1868 
 to £256,257,000 in 1872, or forty-two per cent in four years, 
 the increase per head being in the same period from £5 17s. 
 4c?. to £8 Is., or thirty-seven per cent. All this had followed 
 a rapid rise in previous years; for the panic of 1866 was 
 chiefly the collapse of a home company mania, and had not 
 brought with it discredit of foreign loans, or a collapse of the 
 business of lending to foreign countries. And in one or two 
 trades the increase of business was even greater than the 
 general increase. Thus the quantity of our iron and steel ex¬ 
 ports rose from 2,042,000 tons in 1868 to 3,383,000 tons in 
 1872, or sixty-six per cent in four years, while there was sim¬ 
 ultaneously a rise of price which made the increase in values 
 immense, not only in these, but in other articles where there 
 was no such increase of quantity. It is sometimes said that 
 the burst of trade which culminated in 1872-73, was largely 
 due to the extra demand for our manufactures created by 
 the Franco-German War. This war checked manufacturing 
 on the Continent for nearly a twelvemonth, besides causing 
 a war demand for certain of our manufactures. But the 
 comparison we have made is of a year when the war was long 
 over, with a year quite before the war, while the most con¬ 
 spicuous instance of increase in our exports was in iron and 
 steel, which was clearly in connection with increased railway 
 construction abroad. The expansion of our foreign trade was 
 thus manifestly in connection with the general expansion of 
 our foreign investment business, and not the result of the 
 accidental or temporary causes which have been assigned. 
 
 That there has been a most disproportionate stoppage of 
 the foreign investment business, which would go far to ac¬ 
 count for the present depression, is also very obvious. I do 
 not refer so much to the notorious stoppage of the issues of 
 foreign loans, small and great; after every great crisis new 
 issues of almost every kind come to a standstill, as frequent 
 
362 
 
 ECONOMIC HISTORY. 
 
 experience lias shown. It was so after 1866, and had been so 
 after similar years of crisis, although I doubt if foreign issues, 
 as distinguished from home enterprises, have ever been so com¬ 
 pletely stopped as they are now. Quite apart from this, we 
 have unmistakable evidence of the decline in foreign invest¬ 
 ment business in the financial and industrial embarrassments 
 in new countries, of which, as I write, the grea_t railway strikes 
 in the United States furnish a new illustration. There has also 
 been a diminution of singular magnitude in our export trade. 
 That trade has frequently fallen off in times of general de¬ 
 pression, but never to such an extent as has lately been wit¬ 
 nessed. The diminution altogether in the exports of home 
 produce and manufactures has been from £256,257,000 in 
 1872 to £200,639,000 in 1876, the change being partly due, 
 as usual, and perhaps rather more than usual, to a fall in 
 price, but only partially to that cause. There has not since 
 the free trade period been such a decline in our foreign trade, 
 just as there had been no previous example of so greal an 
 expansion. The decline has also been mainly in the exports 
 to such countries as the United States, which had been our 
 great borrowers, — the falling off to the United States alone 
 being from £40,737,000 in 1872 to £16,834,000 in 1876, this 
 latter figure being the lowest since 1864. It has also been 
 mainly in such articles as iron and steel; the exports of which 
 diminished from 3,383,000 tons and £35,996,000 in value in 
 1872, to 2,224,000 tons and £20,737,000 in value in 1876; 
 while the exports to the United States alone fell from 975,000 
 tons in 1872 to only 160,000 tons in 1876. The recent dimi¬ 
 nution in our export trade is therefore not only unusual, but 
 it is a diminution of the exports to new countries, and a 
 diminution of those articles which we send abroad for the 
 purpose of new works in such countries. So great a change 
 in one great branch of our business would go far to account 
 for the general depression now prevailing, which is thus once 
 more traced to the failure of our foreign investments. 
 
 The embarrassments in the new countries were also con¬ 
 nected with the excessive development of their capabilities 
 which had been attempted. A very considerable amount of 
 
THE LIQUIDATIONS OF 1873-1876 . 
 
 863 
 
 the railway and other speculation during the last few years 
 has been proved to have, been wholly in anticipation of the 
 wants of the world, the evidence of this being an overpro¬ 
 duction of raw materials and food, the characteristic pro¬ 
 ducts of the new countries. Of this over-production the most 
 significant sign was the low price of wheat in 1875, notwith¬ 
 standing the bad harvest of that year in several countries. 
 There had previously been complaint of low prices in the 
 United States, — in 1873, for instance, — and of inability 
 to “ keep back ” crops. Similar complaints had also been 
 received from Russia in ‘1874. Even in 1876 the price of 
 wheat was slow in rising in the autumn, notwithstanding a 
 generally bad harvest, and the extreme war rise the follow¬ 
 ing spring was only maintained a few days. In other words, 
 the assumption as regards wheat that new countries might be 
 settled indefinitely has proved to be erroneous. The result of 
 what appears to be excessive cultivation is an unremunerative 
 price, which leaves merely agricultural communities in dis¬ 
 tress, and disturbs their whole system of industry. It has 
 been the same with other raw materials, such as cotton, 
 although perhaps not to the same extent. But in general 
 the business of producing raw materials and food had been 
 overdone, and the crises in Austria and the United States in 
 1873, followed as they have since been by the similar crises 
 in South America and Russia, were evidence that the power 
 to support the financing of the previous two or three years, 
 which was based on the business of investment in new coun¬ 
 tries, had ceased. 
 
 The uglier features of the collapse of foreign loans also 
 furnish evidence of the characteristic mark of the crisis with 
 which we have been dealing. In addition to the issue of loans, 
 which involved the investment of capital in a fixed form to an 
 extravagant extent, so that immediate loss and ruin could not 
 but ensue, there had taken place in a few years before 1872 
 frequent issues of loans in foreign countries so-called, which 
 were only disguises to plunder the public. We refer to the 
 loans for Honduras, Paraguay, San Domingo, and Costa Rica, 
 which were investigated by the Foreign Loans Committee, 
 
364 
 
 ECONOMIC HISTORY. 
 
 and to a numerous class of which these were perhaps the 
 most flagrant specimens. These were simply issues by knots 
 of speculators, usually on the plea that they were for some 
 public work, — to which a small portion of the money raised 
 was perhaps, in fact, devoted, — but really with the design, as 
 carried out by those concerned, to pay themselves large sums 
 in commissions and otherwise, so long as the public could be 
 got to believe in such things by the payment of interest out 
 of the funds they had themselves advanced. All this was 
 very natural. The peculiarity of the time being the develop¬ 
 ment of foreign countries by loans, it was only natural that 
 the illegitimate financing of the time should also consist of so- 
 called loans. As there had been bogus companies in the days 
 of the company mania, so now there were bogus loans. 
 
 These are all circumstances tending to show how much the 
 bad business brought to light in the recent depression was 
 connected with the business of investment in new countries, 
 and its accessories, which had previously just received so 
 great an expansion. As we have already remarked, there 
 was much bad business besides. In the set of failures con¬ 
 nected with that of Messrs. Collie, what seemed to be shown 
 especially was a peculiar disorder in the trade with India,— 
 the result, it is probable, of the undue investment of capital 
 in that trade at a date as far back as the cotton mania in 
 1863 and 1864. But the bad business of foreign investment 
 and financing has certainly been far the most prominent. 
 
 III. 
 
 A third distinguishing mark of the crisis appears to be the 
 singular lightness of its effects on English industry and 
 wages. As has been hinted already, such is not the com¬ 
 mon impression regarding it. On the contrary, the depres¬ 
 sion of trade is spoken of in common speech as something 
 entirely unprecedented both in intensity and duration. But 
 a careful examination must prove that, as far as matters 
 have yet gone, the common impression is wrong, and the 
 facts are entirely the other way. 
 
THE LIQUIDATIONS OF 1873-1876. 
 
 365 
 
 The common impression appears to be due to a misinter¬ 
 pretation of two undoubted facts; first, the evident magnir 
 tude of the financial collapse in foreign loans, which has 
 been productive of great social distress among the classes 
 who have most ample opportunities of proclaiming their 
 grievances; and next, the magnitude of the decline of the 
 foreign trade of the country, which is identified with a de¬ 
 cline in its whole trade. But it is easv to see that there is 
 
 4 / 
 
 a misinterpretation. The magnitude of the financial collapse 
 is, of course, very serious. The novelty of the deception of 
 the public by bogus loans has increased the evil as compared 
 with the evil of a company mania, while the opportunities of 
 fraud were really more favorable to the conspirators than in 
 the manufacture of bubble companies. A State loan sounds 
 more respectable than a company issue. On the whole, the 
 securities of States for a long period had also answered 
 better than the shares of companies, and although also in 
 former years many State loans had proved the source of loss 
 to English investors, — several South American States, 
 Greece, Spain, and one or two States of the American Union 
 having all proved defaulters, — yet there had been no flagrant 
 instances of loans which were merely cloaks to let promoters 
 and financiers have commissions. The agents and institu¬ 
 tions connected with States also controlled larger resources 
 than had been controlled by the financiers of companies. 
 The inability of investors, therefore, to form a good judg¬ 
 ment on the investments submitted to them, their disposition 
 to rely on market price, and other extraneous or irrelevant 
 circumstances, was never experimented on so widely, or 
 with more unfortunate results. Hence the magnitude of the 
 bad business and the ensuing collapse. In the loans for 
 Turkey, Egypt, and Peru alone, the depreciation of securities 
 within a year after the Turkish collapse amounted to about 
 <£150,000,000, while there is a total destruction or suspen¬ 
 sion of income from tainted securities exceeding £20,000,000 
 a year. But great as this collapse is, it has probably affected. 
 very little the accumulation or real wealth of the country. 
 Many people feel themselves poorer than they were before, but 
 
366 
 
 ECONOMIC HISTORY. 
 
 the community as a whole is not really poorer by the pricking 
 of all these bladders. A certain number of people are simply 
 prevented from continuing any longer the process of living 
 on their capital, for that is what they were doing when they 
 were spending the so-called interest paid them, which was 
 really only a return of what they had themselves advanced. 
 But the whole of the so-called interest was not so spent, a 
 great deal of it, as is the case with the interest of every de¬ 
 scription of investment, being reinvested, and in this way 
 the collapse really changes nothing, except to let many peo¬ 
 ple know that their accumulations were imaginary. The 
 direct economic effect is consequently nil, although the so¬ 
 cial effects and individual disasters are of the most serious 
 kind. The depression of trade attending a financial col¬ 
 lapse ought not, therefore, to be measured by the seeming 
 magnitude of the financial collapse itself, which last may be 
 very great without the ordinary industry of a country being 
 seriously checked. 
 
 As regards the second fact which is misinterpreted, — 
 namely, the decline of the foreign trade, —the common im¬ 
 pression only requires to be challenged to prove its unsound¬ 
 ness. We have probably a larger proportion of foreign trade 
 than any other great nation. Our workmen and capitalists 
 have gradually come to exchange a larger proportion of the 
 products of their industry for foreign products than any other 
 people. But even yet we are very far from exchanging more 
 than a small part of what we produce. Our whole agriculture 
 is for home consumption; our coal and iron mining, our cot¬ 
 ton and wool spinning and weaving, our manufactures gener¬ 
 ally are also mainly for home consumers. A decline in our 
 foreign trade, therefore, is only a decline in a branch of our 
 whole trade, and should by no means be identified with a gen¬ 
 eral depression in business. The recent decline in the foreign 
 trade, moreover, is almost entirely a decline in “optional” 
 business. It is a decline in our exports of such articles as 
 we have been in the habit of exporting as a means of invest¬ 
 ing our capital abroad. When we stop such exports, certain 
 branches of home industry, which have been fitted to this 
 
THE LIQUIDATIONS OF 1873-1876. 36 7 
 
 peculiar trade suffer; but the capital which would otherwise 
 have been sent abroad, and the means of producing that 
 capital, are not destroyed. In the course of time if the taste 
 for foreign investment does not revive, the capital and labor 
 employed in making articles for export will be turned to the 
 production of articles for consumption and investment at 
 home. Instead of merely looking at the foreign trade, then, 
 we should look at our aggregate trade in such times of de¬ 
 pression, and not suffer our opinions to be distorted by one 
 or two conspicuous facts. 
 
 Coming to the subject in this way, we do not see how it 
 can be doubted that the recent depression, although it is 
 very protracted, is as yet singularly light in degree. Our 
 imports of the chief articles of popular consumption, to begin 
 with, have not diminished but increased. Indeed, one of the 
 favorite complaints about the depression of trade is the old 
 cry of the excess of imports over exports, which is certainly 
 greater than usual because our investments in new countries 
 have ceased for a time, but which is the permanent charac¬ 
 teristic of English trade. It is quite certain, however, that 
 no country sends us any goods on credit; it is England which 
 always gives credit in the trade of the world. Whatever 
 increase of imports there may be, then, is a sign of real abil¬ 
 ity to pay for them, and pro tanto of the undiminished pros¬ 
 per^ of the country. To the same effect we have the fact 
 of an increase of railway traffic year after year during the 
 depression. The increase in 1874 and 1876, and again in 
 1877 has been small; but in 1875, the very year of the great 
 commercial and financial collapse, it was considerable. Evi¬ 
 dence in the same sense is also supplied by the non-increase 
 of pauperism all through the depression, and by the steady 
 augmentation of the national revenue until the present year, 
 and by the increase of the savings-bank deposits. The non¬ 
 increase of pauperism is no doubt partly due to our improved 
 administration, but no improvement of administration could 
 have prevented such an increase of paupers and decline of 
 revenue as followed the panics of 1847, 1857, and 1866, not 
 to speak of the awful convulsions and distress which marked 
 
368 
 
 ECONOMIC HISTORY . 
 
 the depression of trade in still earlier periods. To any one 
 who has even glanced at the economic history of England 
 during the present century, the common talk now about the 
 “ unusual ” depression of our trade appears simply ludicrous. 
 The people who indulge in it have simply never thought of 
 what depression of trade is. There has probably never been 
 a great commercial crisis hi England which caused so little 
 suffering to the mass of the nation. 
 
 When we think of the matter a little it seems reasonable 
 enough also that the depression should be a mild one. 
 Severe as the crisis has been, we were lucky enough to es¬ 
 cape an actual panic, with the shock to credit and other 
 lamentable incidents which a panic invariably produces. It 
 is probable also that we were really befriended by the pecu¬ 
 liar events in the money market in connection with the 
 German coinage. The withdrawals of gold for Germany 
 had the effect of anticipating the stringency in the money 
 market which a period of great expansion ends in. The ex¬ 
 pansion was thus hindered from reaching the extreme it 
 would otherwise have reached, and the reaction is less 
 severe. Some good judges are of opinion that we have to 
 thank yet another cause, —the high normal wages of our 
 workmen and their independence of abundant harvests and 
 cheap wheat, as compared with what was formerly the case, 
 so that all our staple industries are steadier than they were. 
 But I should doubt the effect of this cause without greater 
 experience than we have yet had. Workmen will suffer, it 
 is to be feared, in a way in which they have not lately suf¬ 
 fered, if another time of expansion such as there was in 1872 
 should reach its full term and industry be subjected to the 
 strain of the inevitable reaction. But without this cause, the 
 actual facts of the absence of a panic during all this depres¬ 
 sion, and of the successive stringencies in the money market 
 which checked the exuberant growth of 1872 and 1873, ap¬ 
 pear quite sufficient to account for the comparative mildness 
 of the effects of the depression we are witnessing. 
 
THE LIQUIDATIONS OF 1873-1876. 
 
 369 
 
 IV. 
 
 The marks of the present depression which we have enu¬ 
 merated are thus its universality, its origin in the breaking 
 down of the bad business of foreign investment, and its 
 mildness in the United Kingdom as compared with former 
 periods of depression. Is there anything in these peculiari¬ 
 ties, or in any other circumstances of the depression, to lead 
 us to anticipate that it will be unusually protracted or that its 
 effects will be permanent ? Is the depression, in other words, 
 the beginning of anything unusual or unprecedented ? 
 
 To put the questions thus explicitly is perhaps to answer 
 them. Although there is much vague talk about existing 
 depression,— which is really based on an assumption that it 
 is something unheard of and must be lasting, — it is not so 
 easy to assert explicitly what is so confidently assumed. To 
 suppose the permanence of almost any depression would, in 
 fact, be to suppose a change in human nature itself. Uni¬ 
 versal dulness and poverty are, in fact, contradictions in 
 terms, unless it is supposed that all people will voluntarily 
 be idle when they have the strongest motives to work. 
 Whatever awkwardness there may be in the distribution of 
 labor and capital at certain times, the power to produce and 
 the wish to consume ensure that with the means of production 
 unimpaired,— and there is no allegation that the means of 
 production in the present case are impaired, — production 
 will go on and increase with the increase of population and 
 with every species of chemical and mechanical improvement. 
 It is thus morally certain that if at any time the industrial 
 machine, as a whole, is partially disused and times are dull, 
 a period of full employment and prosperity will return. 
 
 And short of the depression being permanent, its effects 
 will not, we think, be worse than usual, if indeed the worst 
 is not already past. The disorder has been very general 
 throughout the world, because industrially the world is get¬ 
 ting to be more and more one country; but there is mani¬ 
 festly nothing in the extent of a depression to alter its 
 character or the power of the communities affected to re- 
 
 24 
 
370 
 
 .ECONOMIC HISTORY. 
 
 cover. So far as England is concerned, moreover, all that 
 lias happened is that a particular part of our trade, —our 
 exports of domestic produce and manufactures, —is mo¬ 
 mentarily weak, just as in former times the home trade 
 dependent on railway contractors or bubble companies was 
 weak. Our new investments in a particular direction have 
 failed, but that is all. There is clearly no reason in this for 
 any prolonged stoppage or diminished use of the industrial 
 machine for all the miscellaneous purposes of life, although 
 it will only be by degrees that new outlets for our surplus 
 capital can be found. All the reasons assigned to account 
 for the lightness of the depression until now, —the absence 
 of panic, the fact that the collapse is so much a merely finan¬ 
 cial one, and the circumstance that the expansion previous 
 to the depression was arrested in its natural development,— 
 are also reasons why it should not be more protracted than 
 usual. Some new mischief may of course arise, but there is 
 nothing on the face of the facts, according to all former ex¬ 
 perience, to lead us to expect an aggravation of the present 
 evils. 
 
 Nor do the special causes sometimes assigned for expect¬ 
 ing an unusual degree and continuance of depression appear 
 to be entitled to much weight. The British workman, it is 
 said, drives business away by his misconduct and his de¬ 
 mands for excessive wages. Foreign nations are increasing 
 their manufactures of the very articles of which England till 
 lately had a monopoly. Every import of a foreign manu¬ 
 facture into England, at a time like this, gives occasion 
 for a new exclamation that English industry is threatened. 
 The changes are constantly rung upon such facts as the in¬ 
 creased capacity of the United States for the production and 
 manufacture of iron; the importation of certain descriptions 
 of American cotton manufactures into England; the appear¬ 
 ance of Belgian and German manufactures in our markets at 
 a cheaper price than the articles can be made by ourselves. 
 But those who use this language appear to fail altogether in 
 measuring the extent of the mischief they point out. A 
 great deal of the apparent competition of foreign manufac- 
 
THE LIQUIDATIONS OF 1873-1876. 
 
 371 
 
 tures is due to the search for a market which occurs in every 
 time of depression, and which furnishes no sure indication 
 whatever of any real change in the currents of trade. All 
 we know for certain is that on the other side the complaints 
 abroad of the competition of English manufactures are loud¬ 
 est at such a time, and that facts as to foreign competition, 
 similar to those now alleged, have been brought forward in 
 every time of depression for the last half-century, without 
 any serious permanent result on English trade being trace¬ 
 able. That trade, on the contrary, as, for example, after 
 the year 1869, when a great noise was made about similar 
 facts, always makes a more rapid advance than ever after each 
 depression. No one can dispute, indeed, that English work¬ 
 men are often foolish for their own interest, or that some 
 English trades have diminished, and others may yet dimin¬ 
 ish or may become stationary, while foreign trades of the 
 same kind increase. Still the question here is of the general 
 prosperity, and it is easy to recognize the strength of the 
 influences which are likely, and, we believe, are certain to 
 limit the evils feared, as, in fact, they always have limited 
 them. Our workmen do, in fact, succeed in getting higher 
 wages, as a rule, than foreign workmen; they do not migrate, 
 and pauperism does not, on an average of years, increase, — 
 all signs that manufacturing, as a whole, whatever may hap¬ 
 pen to particular trades, increases in England. It is because 
 there is so much more profitable manufacturing here than 
 elsewhere that our workmen can enforce the higher wages. 
 As we certainly cannot expect that foreign countries should 
 manufacture nothing at all, but must rather desire their 
 manufacturing to increase, there is really nothing in all that 
 is said of foreign competition to concern us in an inquiry as 
 to the permanence of the present depression. 
 
 The fallacy in the use of these alleged facts as to foreign 
 competition consists, indeed, very largely in the forgetful¬ 
 ness of other facts which are equally material: that our for¬ 
 eign trade itself is not everything to us, but is, after all, 
 only a fraction of our whole business; that long before com¬ 
 petition can diminish that trade materially it must produce 
 
372 
 
 ECONOMIC HISTORY. 
 
 a fall of wages, while wages abroad will rise if foreign trade 
 increases; and that although foreign countries increase their 
 manufactures, we are not necessarily ruined, — probably we 
 are greatly gainers. To take what seems as formidable a 
 case of possible competition with us as any that is threat¬ 
 ened, namely, v the increase of the American iron and coal 
 industries under natural conditions. It seems probable 
 enough that in course of time these industries will be very 
 largely developed in the United States. The people have 
 natural aptitude and skill, and other advantages, and they 
 may produce iron manufactures cheaper than they can buy 
 them abroad. In time they may export them to other coun¬ 
 tries. But how is England necessarily the poorer for that, 
 and how much ? We may come to export a smaller quantity 
 of our iron manufactures to the United States than in the 
 years before 1872; but at most we shall only lose the profit 
 on so much trade, not the whole value of what we sold to the 
 United States, which was, in comparison with our whole 
 trade, by no means a large sum. Nor shall we even lose the 
 whole profit. We can only lose the difference of profit be¬ 
 tween what was derived from that trade and the return on 
 the less profitable trade, into which a portion of our capital 
 and labor are diverted. Possibly, also, the growth of the 
 world may be such that the expansion of American industry 
 will not be exclusive of, but will be coincident with a simi¬ 
 lar expansion of our own, —there may be room for both of 
 us. In that case, there would be no reduction of the profits 
 on our own trade at all, although America had become an 
 exporter of iron manufactures. Ex hypothesi the increase of 
 the American iron trade would also mean that America be¬ 
 comes richer, and consequently a better customer to the 
 world generally for other things, —thus causing an increase 
 of the general prosperity in which, with our extended and 
 various trade, we could not but participate. Worse things 
 may thus happen to us than a natural extension of the Amer¬ 
 ican iron trade; and if it is extended by protection only, it 
 can of course do us still less harm. There is something 
 essentially unsound, therefore, in the continual references to 
 
THE LIQUIDATIONS OF 1873-1876. 
 
 373 
 
 the increase of manufacturing abroad. Our concern should 
 rather be to have that manufacturing increase. To antici¬ 
 pate that the world outside England is to be merely agricul¬ 
 tural or mining, is to anticipate the maintenance throughout 
 the world of the least productive forms of applying human 
 industry, and of low purchasing power among other coun¬ 
 tries. What mankind require for the greater efficiency of 
 their labor is that the proportion of people employed in 
 agriculture and mining should diminish, and more and more 
 attention should be given to other forms of industry. How 
 England should grow poorer as this transformation is being 
 effected, it is difficult to imagine. It appears to be as clear 
 as any proposition, that the general increase of production, 
 leading to still greater varieties and subdivisions of manu¬ 
 facturing than those which now obtain, must benefit most of 
 all the countries like England, which have got the start of 
 others, and possess all the best manufacturing appliances. 
 
 We should fully expect, then, when the liquidations which 
 have been in progress are over, to see once more a great 
 revival of prosperity. Still more, according to all former 
 experience, the prosperity to come must be even greater than 
 anything yet seen. Ever since 1844 there has been an 
 ascending scale in the rate of our industrial advance. The 
 years after 1848-49 were more prosperous than any before, 
 but the prosperity of 1863-65 exceeded that of 1850-53, just 
 as the prosperity of 1870-73 exceeded that of 1863-65. In 
 like manner the next period of prosperity will probably ex¬ 
 hibit a fuller development than 1870-73, and for a similar 
 reason, namely, that the productive capacity of civilized 
 nations, in proportion to their numbers, is annually increas¬ 
 ing,— being capable of almost indefinite increase. More 
 railways and more machinery, the improved knowledge of 
 chemical and other arts, imply that, one year with another, 
 in proportion to their population, civilized communities can 
 produce more real wealth than they did before. Depression 
 comes at times because mistakes have been made, and the 
 wrong things are produced; but when the mistakes are cor¬ 
 rected, or some new favorable influence operates, such as a 
 
374 
 
 ECONOMIC HISTORY. 
 
 good harvest, the tide flows again, industrial communities 
 work up to their full power, and they are all richer than be¬ 
 fore. Possibly the workmen at a given place may take out 
 their share of the increased production in the privilege of 
 working fewer hours; but the prosperity is there, however 
 it may be enjoyed. The great extension of railways through¬ 
 out the world in anticipation of real wants, which was the 
 mistake of the period of inflation, should, now that the mis¬ 
 take has been paid for, contribute to a more rapid advance of 
 general prosperity than would take place if the world had 
 fewer railways. . . . [1877. 2 ] 
 
 1 It is obvious that if I were now writing I should have to speak of the liqui¬ 
 dations, not of those years only [1873-76], but of 1873-79, and have to explain 
 more points than I could possibly take up when writing in 1877. But I see no 
 reason to doubt the general soundness of the view I have expressed on the course 
 of the present depression and its origin ; although, subsequent to the date of my 
 writing, bad harvests and other accidents have aggravated that depression 
 [1879].—R. G. 
 
 
INCREASE OF POPULATION. 
 
 8 < 5 
 
 XV. 
 
 THE UNITED STATES IN 1880. 
 
 • v . 
 
 THE INCREASE OF POPULATION FROM 1790 TO 1880. 
 
 From Walker and Gannett’s Report on the Progress of the 
 Nation. Tenth Census, Yol. I., pp. xii-xx. 
 
 / 
 
 1790 . 
 
 T HE first Census of the United States, taken as of the 
 first Monday in August, 1T90, under the provisions of 
 the second section of the first article of the Constitution 
 showed the population of the thirteen States then existing 
 and of the unorganized territory to be, in the aggregate, 
 8,929,214. 
 
 This population was distributed almost entirely on the 
 Atlantic seaboard extending from the eastern boundary of 
 Maine nearly to Florida, and in the region known as the 
 Atlantic plain. Only a very small proportion of the inhabi¬ 
 tants of the United States, not, indeed, more than five per 
 cent, was then to be found west of the system of the Appala¬ 
 chian mountains. The average depth of settlement, in a 
 direction at right angles to the coast, was 255 miles. The 
 densest settlement was found in eastern Massachusetts, 
 Rhode Island, and Connecticut, and about New York City, 
 whence population had extended northward up the Hudson, 
 and was already quite dense as far as Albany. The settle¬ 
 ments in Pennsylvania, which had started from Philadelphia, 
 on the Delaware, had extended northeastward and formed a 
 solid body of occupation from New York through Phila¬ 
 delphia down to the upper part of Delaware. 
 
 The Atlantic coast, as far back as the limits of tide¬ 
 water, was well settled at that time from Casco Bay south- 
 
876 
 
 ECONOMIC HISTORY. 
 
 ward to the northern border of North Carolina. In what 
 was then the District of Maine, sparse settlements extended 
 along the whole seaboard. The southern two thirds of New 
 Hampshire and nearly all of Vermont were covered by popu¬ 
 lation. In New York, branching off from the Hudson at the 
 mouth of the Mohawk, the line of population followed up a 
 broad gap between the Adirondacks and the Catskills, and 
 even reached beyond the centre of the State, occupying the 
 whole of the Mohawk valley and the country about the inte¬ 
 rior New York lakes. In Pennsylvania population had 
 spread northwestward, occupying not only the Atlantic plain, 
 but with sparse settlements the region traversed by the 
 numerous parallel ridges of the eastern portion of the Appa¬ 
 lachians. The general limit of settlement was at that time 
 the southeastern edge of the Allegheny plateau, but beyond 
 this, at the junction of the Allegheny and Monongahela 
 rivers, a point early occupied for military purposes, consid¬ 
 erable settlements had been established prior to the War of 
 the Revolution. In Virginia settlements had extended west¬ 
 ward beyond the Blue Ridge, and into what is now West 
 Virginia, on the western slope of the Allegheny mountains, 
 though very sparsely. From Virginia also a narrow tongue 
 of settlement had penetrated down to the head of the Ten¬ 
 nessee River, in the great Appalachian valley. In North 
 Carolina the settlements were abruptly limited by the base of 
 the Appalachians. The State was occupied with remarkable 
 uniformity, except in its southern and central portion, where 
 population was comparatively sparse. In South Carolina, on 
 the other hand, there was evidence of much natural selection 
 apparently with reference to the character of soils. Charles¬ 
 ton was then a city of considerable magnitude, and about it 
 was grouped a comparatively dense population; but all along 
 a belt running southwestward across the State near its cen¬ 
 tral part the settlement was very sparse. This area of sparse 
 settlement joined with that of central North Carolina, and 
 ran eastward to the coast near the junction of the two States. 
 Further westward in the “up country ” of South Carolina, 
 the density of settlement was noticeably due to the improve- 
 
INCREASE OF POPULATION. 
 
 377 
 
 ment in soil. At this date settlements were almost entirely 
 agricultural, and the causes for variation in their density 
 were general ones. The movements of population at this 
 epoch may be traced in almost every case to the character of 
 the soil, and to facility of transportation to the seaboard; 
 and as the inhabitants were then dependent mainly upon 
 water transportation, we find the settlements also conform¬ 
 ing themselves very largely to the navigable streams. 
 
 Outside the area of continuous settlement, which we have 
 attempted to sketch, were found in 1790 a number of smaller 
 settlements of greater or less extent. The principal of these 
 lay in northern Kentucky, bordering upon the Ohio River, 
 comprising an area of 10,900 square miles. Another in 
 western Virginia lay upon the Ohio and Kanawha rivers, 
 and comprised 750 square miles. A third in Tennessee, 
 upon the Cumberland River, embraced 1,200 square miles. 
 
 In addition to these, there were a score or more of small 
 posts, or incipient settlements, scattered over what was then 
 an almost untrodden wilderness, such as Detroit, Vincennes, 
 Kaskaskia, Prairie du Chien, Mackinac, and Green Bay, 
 besides the humble beginnings of Elmira and Binghamton, 
 in New York, which, even at that time lay outside the body 
 of continuous settlement. 
 
 Following the line which limits this great body of settle¬ 
 ment in all its undulations, we find its length to be 3,200 
 miles. In this measurement no account has been made of 
 slight irregularities, such as those in the ordinary meander- 
 ings of a river which forms the boundary line of population; 
 but we have traced all the ins and outs of this frontier line, 
 which seem to indicate a distinct change in the settlement of 
 the country for any cause, whether of progression or of retro¬ 
 gression. The area of settlement, thus, is the area embraced 
 between the frontier line and the coast, diminished by such 
 unsettled areas as may lie within it, and increased by such 
 as lie without it. These are not susceptible of very accurate 
 determination, owing to the fact that our best maps are, to a 
 certain extent, incorrect in boundaries and areas; but all 
 the accuracy required for our present purpose can be secured. 
 
3T8 
 
 ECONOMIC HISTORY . 
 
 The settled area of 1790, as indicated by the line traced, is 
 226,085 square miles. The entire body of continuously set¬ 
 tled area lay between 31° and 45° north latitude and 67° 
 and 83° west longitude. 
 
 Outside of this body of continuous settlement are the 
 smaller areas mentioned above, which, added to the main 
 body of settled area, give as a total 239,935 square miles, 
 the aggregate population being 3,929,214, and the average 
 density of settlement 16.4 to the square mile. 
 
 In 1790 the District of Maine belonged to Massachusetts. 
 Georgia comprised not only the present State of that name, 
 but nearly all of what are now the States of Alabama and Mis¬ 
 sissippi. The States of Kentucky and Tennessee were then 
 known as the “Territory south of the Ohio River,” and the 
 present States of Ohio, Indiana, Illinois, Michigan, Wisconsin, 
 and part of Minnesota, as the “ Territory northwest of the Ohio 
 River.” Spain claimed possession of what is now Florida, 
 with a strip along the southern border of Alabama, Missis¬ 
 sippi, and all of the region west of the Mississippi River. 
 
 An inspection of the maps relating to the earlier census 
 years will show that the progress of population westward 
 across the Appalachian system has taken place, in the main, 
 along four lines. The northernmost of these, which was the 
 first to be developed, runs through Central New York, fol¬ 
 lowing up, generally, the Mohawk River. This line has, 
 throughout our history, been one of the principal courses 
 of population in its westward flow. The second crosses 
 southern Pennsylvania, western Maryland, and northern 
 Virginia, parallel to and along the course of the upper 
 Potomac. The third runs through Virginia, passing south- 
 westward down the great Appalachian valley, crossing thence 
 over into Kentucky and Tennessee. South of this, the prin¬ 
 cipal movement westward has been around the end of the 
 Appalachian chain, through Georgia and Alabama. 
 
 1800 . 
 
 At the Second Census, that of 1800, the frontier line, as 
 it appears on the map, has been rectified, so that while it 
 
INCREASE OF POPULATION. 
 
 379 
 
 embraces 282,208 square miles, it describes a course, when 
 measured in the same manner as that of 1790, of only 2,800 
 lineal miles. The advancement of this line has taken place 
 in every direction, though in some parts of the country much 
 more markedly than in others. 
 
 In Maine and New Hampshire there is apparent only a 
 slight northward movement of settlement; in Vermont, on 
 the other hand, while the settled area has not decidedy in¬ 
 creased, its density has become greater. Massachusetts 
 shows but little change, but in Connecticut the settlements 
 along the lower course of the Connecticut River have appre¬ 
 ciably increased. 
 
 In New York settlement has poured up the Hudson to the 
 mouth of the Mohawk, and thence through the great natural 
 roadway westward. The narrow tongue which before ex¬ 
 tended out beyond the middle of the State has now widened 
 until it spreads from the southern border of the State to Lake 
 Ontario. A narrow belt of settlement even stretches down 
 the St. Lawrence, and along all the northern border of the 
 State, to Lake Champlain, completely surrounding what 
 may be characteristically defined as the Adirondack region. 
 
 In Pennsylvania settlements have extended up the Susque- 
 hanna and joined the New York groups, leaving as yet an 
 unsettled space in the northeast corner of the State, which 
 comprises a body of rugged mountain country. With the 
 exception of a little strip along the western border of Penn¬ 
 sylvania, the northern part of the State, west of the Susque¬ 
 hanna, is as yet entirely without inhabitants. Population 
 has streamed across the southern half of the State, and set¬ 
 tled in a dense body about the forks of the Ohio River, at the 
 present site of Pittsburgh, and thence extended slightly into 
 the State of Ohio. In Virginia we note but little change, 
 although there is a general extension of settlement, with an 
 increase in density, especially along the coast. North Caro¬ 
 lina is now almost entirely covered with population; the 
 mountain region has, generally speaking, been nearly all 
 reclaimed to the service of man. In South Carolina there 
 is a general increase in density of settlement, while the 
 
880 
 
 ECONOMIC HISTORY. 
 
 southwestern border has been carried down until now the 
 Altamaha River is its limit. The incipient settlements, in 
 northern Kentucky have spread southward across the State, 
 and even into Tennessee, forming a junction with the little 
 settlement, noted at the date of the last census, on the Cum¬ 
 berland River. The group thus formed has extended down 
 the Ohio, nearly to its junction with the Tennessee and the 
 Cumberland, and across the Ohio River into the present State 
 of Ohio, where we note the beginning of Cincinnati. Other 
 infant settlements appear at this date. On the east side of 
 the Mississippi River, in the present State of Mississippi, is 
 a strip of settlement along the bluffs below the Yazoo 
 bottom. Besides the settlement on the present site of St. 
 Louis, not at this time within the United States, is an adja¬ 
 cent settlement in what is now Illinois, while all the pioneer 
 settlements previously noted have grown to a greater or less 
 extent. 
 
 From the region embraced between the frontier line and 
 the Atlantic must be deducted the Adirondack tract, in 
 northern New York, and the unsettled region in northern 
 Pennsylvania already referred to; so that the actual area of 
 settlement, bounded by a continuous line, is to be taken at 
 271,908 square miles. All this lies between 80° 45' and 
 45° 15' north latitude, and 67° and 88° west longitude. 
 
 To this should be added the aggregate extent of all settle¬ 
 ments lying outside of the frontier line, which collectively 
 amount to 88,800 square miles, making a total area of settle¬ 
 ment of 305,708 square miles. As the aggregate population 
 is 5,308,483, the average density of settlement is 17.4. 
 
 The infant settlements of this period have been much re¬ 
 tarded at many points by the opposition of the Indian tribes; 
 but in the neighborhood of the more densely settled portions 
 of the northern part of the country these obstacles have been 
 of less magnitude than farther south. In Georgia, espe¬ 
 cially, the large and powerful tribes of Creeks and Cherokees 
 have stubbornly opposed the progress of population. 
 
 During the decade just past Vermont, formed from a part 
 of New York, has been admitted to the Union; also Ken- 
 
INCREASE OF POPULATION. 
 
 381 
 
 tucky and Tennessee, formed from the “Territory south of 
 the River Ohio; ” Mississippi Territory, having however very 
 different boundaries from the present State of that name, 
 has been organized; while the “territory northwest of the 
 River Ohio” has been divided and Indiana Territory organ¬ 
 ized from the western portion. 
 
 1810 . 
 
 At 1810 we note great changes, especially the extension of 
 the sparse settlements of the interior. The hills of western 
 New York have become almost entirely covered with popula¬ 
 tion, which has spread along the south shore of Lake Erie 
 well over into Ohio, and has effected a junction with the 
 previously existing body of population about the forks of the 
 Ohio River, leaving unsettled an included heart-shaped area 
 in northern Pennsylvania, which comprises the rugged coun¬ 
 try of the Appalachian plateau. The occupation of the Ohio 
 River has now become complete, from its head to its mouth, 
 with the exception of small gaps below the mouth of the 
 Tennessee. Spreading in every direction from the “ dark 
 and bloody ground ” of Kentucky, settlement covers almost 
 the entire State, while the southern border line has been 
 extended to the Tennessee River, in northern Alabama. In 
 Georgia settlements are still held back by the Creek and the 
 Cherokee Indians, although in 1802 a treaty with the former 
 tribe relieved the southwestern portion of the State of their 
 presence, and left the ground open for occupancy by the 
 whites. In Ohio settlements, starting from the Ohio River 
 and from southwestern Pennsylvania, have worked northward 
 and westward, until they cover two thirds of the area of the 
 State. Michigan and Indiana are still virgin territory, with 
 the exception of a little strip about Detroit, in the former 
 State, and a small area in the southwestern part of the lat¬ 
 ter. St. Louis, from a fur-trading post, has become an 
 important centre of settlement, population having spread 
 northward above the mouth of the Missouri and southward 
 along the Mississippi to the mouth of the Ohio. At the 
 mouth of the Arkansas, in what is now the State of Arkan- 
 
382 
 
 ECONOMIC HISTORY. 
 
 sas, is a similar body of settlement. The transfer of the 
 Territory of Louisiana to our jurisdiction, which was effected 
 in 1803, has brought into the country a large body of popula¬ 
 tion, which stretches along the Mississippi River from its 
 mouth nearly up to the present northern limit of the State of 
 Louisiana, up the Red River and the St. Francis, in general 
 occupying the alluvial regions. The incipient settlements 
 noted on the last map in Mississippi have effected a junction 
 with those of Louisiana, while in Lower Alabama and Mis¬ 
 sissippi a similar patch appears upon the Mobile and the 
 Pearl rivers. 
 
 In this decade large additions have been made to the terri¬ 
 tory of the United States, and many changes have been 
 effected in the lines of interior division. The purchase of 
 Louisiana has added 1,124,685 square miles, an empire in it¬ 
 self, to the United States and has given to us absolute control 
 of the Mississippi and its navigable branches. Georgia, dur¬ 
 ing the same period, has ceded to the United States the por¬ 
 tion of its territory which now constitutes the larger part of 
 the States of Alabama and Mississippi. The State of Ohio 
 has been formed from a portion of what previously was known 
 as the “ Territory north of the Ohio River. ” Michigan Terri¬ 
 tory has been erected, comprising what is now the lower pen¬ 
 insula of Michigan; Indiana Territory has been restricted to 
 the present limits of the State of that name; Illinois Terri¬ 
 tory comprises all of the present State of Illinois, with that of 
 Wisconsin and apart of Minnesota; while from the Louisiana 
 purchase has been carved under the name of the “ Territory 
 of Orleans ” all that part of the present State of Louisiana 
 which lies west of the Mississippi river, the remainder of the 
 great territory so cheaply acquired from France being known 
 by the name of the “ Louisiana Territory. ” 
 
 At this date the frontier line is 2,900 miles long and in¬ 
 cludes between itself and the Atlantic 408,895 square miles. 
 From this must be deducted several large areas of unsettled 
 land; first, the area in northern New York, now somewhat 
 smaller than ten years before, but still bvno means inconsid- 
 erable'in extent; second, the heart-shaped area in north- 
 
INCREASE OF POPULATION. 
 
 383 
 
 western Pennsylvania embracing part of the Allegheny pla¬ 
 teau, in size about equal to the unsettled area in New York; 
 third, a strip along the central part of what is now West Vir¬ 
 ginia, extending from the Potomac southward, taking in what 
 is now a part of eastern Kentucky and southwestern Virginia, 
 and extending nearly to the border line of Tennessee; fourth, 
 a comparatively small area in northern Tennessee upon the 
 Cumberland plateau. These tracts together comprise 26,050 
 square miles, making the actual area of settlement included 
 within the frontier line 382,845 square miles. All this lies 
 between latitude 29° 30' and 45° 15' north, and between the 
 meridians of 67° and 88° 30' west. 
 
 Beyond the frontier there are, in addition to the steadily 
 increasing number of outposts and minor settlements, several 
 considerable bodies of population, which have been above 
 noted. The aggregate extent of these, and of the numerous 
 small patches of population scattered over the West and 
 South, may be estimated at 25,100 square miles, making the 
 total area of settlement in 1810 407,945 square miles; the 
 aggregate population being 7,239,881, and the average density 
 of settlement 17.7 to the square mile. 
 
 Between 1800 and 1810 the principal territorial changes 
 have been as follows: Ohio has been admitted, and the 
 Territories of Illinois and Michigan have been formed from 
 parts of Indiana Territory. 
 
 1820 . 
 
 The decade from 1810 to 1820 has witnessed several terri¬ 
 torial changes. Florida at this date (1820) is a blank upon 
 the map. The treaty with Spain, which gives her to us, is 
 signed, but the delivery has not yet taken place. Alabama 
 and Mississippi, made from the Mississippi Territory, have 
 been organized and admitted as States. Indiana and Illinois 
 appear as States with their present limits. The Territory of 
 Louisiana has been admitted as a State. The District of 
 Maine has also been erected into a State. Arkansas Terri¬ 
 tory has been cut from the southern portion of the Territory 
 of Louisiana. The Indian Territory has been constituted to 
 
884 
 
 ECONOMIC HISTORY. 
 
 serve as a reservation for the Indian tribes. Michigan 
 Territory has been extended to include all of the present 
 States of Michigan, Wisconsin, and part of Minnesota. 
 That part of the old Louisiana Territory remaining, after 
 cutting out Arkansas and Indian Territory, has received the 
 name of “Missouri Territory.” 
 
 Again, in 1820, we note a great change in regard to the 
 frontier line. It has become vastlv more involved and com- 
 
 t 
 
 plex, extending from southeastern Michigan, on Lake St. 
 Clair, soutliAvestward into what is now Missouri; thence 
 making a great semicircle to the eastward, it sweeps west 
 again around a body of population in Louisiana, and ends on 
 the Gulf coast in that State. The area included by it has 
 immensely increased, but much of this increase is balanced 
 by the great extent of unsettled land included within it. 
 
 Taking up the changes in detail, we note, first, the great 
 increase in the population of central New York, a belt of 
 increased settlement having swept up the Mohawk valley to 
 Lake Ontario, and along its shore nearly to the Niagara 
 River. A similar increase is seen about the forks of the 
 Ohio River, while in northern Pennsylvania the unsettled 
 region on the Appalachian plateau has sensibly decreased in 
 size. The unsettled area in western Virginia and eastern 
 Kentucky has very greatly diminished, population having 
 extended almost entirely over the Allegheny region in these 
 States. The little settlements about Detroit have extended 
 and spread along the shore of Lake Erie, until they have 
 joined those in Ohio. The frontier line in Ohio has crept 
 northward and westward, leaving only the northwestern 
 corner of the State unoccupied. Population has spread 
 northward from Kentucky and westward from Ohio into 
 southern Indiana, covering sparsely the lower third of that 
 State. The groups of population around St. Louis, which at 
 the time of the previous census were enjoying a rapid 
 growth, have extended widely, making a junction with the 
 settlements of Kentucky and Tennessee, along a broad belt 
 in southern Illinois; following the main watercourses, popu¬ 
 lation has gone many scores of miles up the Mississippi and 
 
INCREASE OF POPULATION. 
 
 385 
 
 the Missouri rivers. The settlements in Alabama, which 
 up to this time had been very much retarded by the Creeks, 
 were rapidly re-enforced and extended, in consequence of the 
 victory of General Jackson over this tribe and the subse¬ 
 quent cession of portions of this territory. Immigration to 
 Alabama has already become considerable, and in a short 
 time the whole central portion of the State, embracing a 
 large part of the region drained by the Mobile River and its 
 branches, will be covered by settlements, to extend north¬ 
 ward and effect a junction with the Kentucky and Tennessee 
 settlements, and westward across the lower part of Missis¬ 
 sippi until they meet the Louisiana settlements. In Georgia 
 the Cherokees and the Creeks still hold settlement back 
 along the line of the Altamaha River. There are, however, 
 scattered bodies of population in various parts of the State, 
 though of small extent. In Louisiana we note a gradual 
 increase of the extent of redeemed territory, which appears 
 to have been limited almost exactly by the borders of the 
 alluvial region. In Arkansas the settlements, which we saw 
 at 1810 at the mouth of the Arkansas River, have extended 
 up the bottom lands of that river and of the Mississippi, form¬ 
 ing a body of population of considerable size. Besides these 
 a small body is found in the southern central part of the 
 State, at the southeastern base of the hill region, and another 
 in the prairie region in the northern part. 
 
 The frontier line now has a length of 4,100 miles, em¬ 
 bracing an area, after taking out all the unsettled regions 
 included between it, the Atlantic, and the Gulf, of 504,517 
 square miles, all lying between 29° 30' and 45° 30' north 
 latitude, and between 67° and 93° 45' west longitude. Out¬ 
 side the frontier line are some bodies of population on the 
 Arkansas, White, and Washita rivers, in Arkansas, as before 
 noted, as well as some small bodies in the Northwest. Com¬ 
 puting these at 4,200 square miles in the aggregate, we have 
 a total settled area of 508,717 square miles; the aggregate 
 population being 9,633,822, and the average density of set¬ 
 tlement 18.9 to the square mile. 
 
 25 
 
386 
 
 ECONOMIC HISTORY. 
 
 1830 . 
 
 In the decade from 1820 to 1830 other territorial changes 
 have occurred. In the early part of the decade the final 
 transfer of Florida from Spanish jurisdiction was effected, 
 and it became a Territory of the United States. Missouri 
 has been carved from the southeastern part of the old Mis¬ 
 souri Territory, and admitted as a State. Otherwise the 
 States and Territories have remained nearly as before. 
 Settlement during the decade has again spread greatly. 
 The westward extension of the frontier does not appear to 
 have been so great as in some former periods, the energies 
 of the people being mainly given to filling up the included 
 areas. In other words, the decade from 1810 to 1820 seems 
 to have been one rather of blocking out work which the suc¬ 
 ceeding decade has been largely occupied in completing. 
 
 During this period the Indians, especially in the South, 
 have still delayed settlement to a great extent. The Creeks 
 and the Cherokees in Georgia and Alabama, and the Choc¬ 
 taws and the Chickasaws in Mississippi, occupy large areas 
 of the best portions of those States and successfully resist 
 encroachment upon their territory. Georgia, however, has 
 witnessed a large increase in settlement during the decade. 
 The settlements which have heretofore been stayed on the line 
 of the Altamaha spread westward across the central portion 
 of the State to its western boundary, where they have struck 
 against the barrier of the Creek territory. Stopped at this 
 point, they have moved southward down into the southwest 
 corner, and over into Florida, extending even to the Gulf 
 coast. Westward they have stretched across the southern 
 part of Alabama, and joined that body of settlement which 
 was previously formed in the drainage-basin of the Mobile 
 River. The Louisiana settlements have but slightly in¬ 
 creased, and no great change appears to have taken place in 
 Mississippi, owing largely to the cause above noted, namely, 
 the occupancy of the soil by Indians. In Arkansas the spread 
 of settlement has been in a strange and fragmentary way. 
 A line reaches from Louisiana up the Arkansas River to the 
 
INCREASE OF POPULATION. 
 
 387 
 
 State line, where it is stopped abruptly by the boundary of 
 the Indian Territory. It extends up the Mississippi, and 
 joins the great body of population in Tennessee. A branch 
 extends northeastward from near Little Rock to the northern 
 portion of the State. All these settlements within Arkansas 
 Territory are as yet very sparse. In Missouri the principal 
 extension of settlement has been in a broad belt up the Mis¬ 
 souri River, reaching to the present site of Kansas City, at 
 the mouth of the Kansas River, where quite a dense body of 
 population appears. Settlement has progressed in Illinois, 
 from the Mississippi River eastward and northward, covering 
 more than half the State. In Indiana it has followed up the 
 Wabash River, and thence has spread until it reaches nearly 
 to the north line of the State. But little of Ohio remains 
 unsettled. The sparse settlements about Detroit, in Michi¬ 
 gan Territory, have broadened out, extending into the inte¬ 
 rior of the State, while isolated patches have appeared in 
 various other localities. 
 
 Turning to the more densely settled parts of the country, 
 we find that settlement is slowly making its way northward 
 in Maine, although discouraged by the poverty of the soil 
 and the severity of the climate. The unsettled tract in 
 northern New York is decreasing, but very slowly, as is 
 also the case with the unsettled area in northern Pennsylva¬ 
 nia. In western Virginia the unsettled tracts are reduced 
 to almost nothing, while the vacant region in eastern Ten¬ 
 nessee, on the Cumberland plateau, is rapidly diminishing. 
 
 At this date, 1830, the frontier line has a length of 5,300 
 miles, and the aggregate area now embraced between the 
 ocean, the Gulf, and the frontier line is 725,406 square 
 miles. Of this, however, not less than 97,389 square miles 
 are comprised within the included vacant tracts, leaving 
 only 628,017 square miles as the settled area within the 
 frontier line, all of which lies between latitude 29° 15' and 
 46° 15 ; north, and between longitude 67° and 95° west. 
 
 Outside the body of continuous settlement are no longer 
 found large groups, but several small patches of population 
 appear in Ohio, Indiana, Illinois, Michigan, and Wisconsin, 
 
388 
 
 ECONOMIC HISTORY . 
 
 \ 
 
 aggregating 4,700 square miles, making a total settled area, 
 in 1830, of 632,717 square miles. As the aggregate popula¬ 
 tion is 12,866,020, the average density of settlement is 20.3 
 to the square mile. 
 
 1840 . 1 
 
 „ During the decade ending in 1840 the State of Michigan 
 has been created with its present limits, the remainder of the 
 old territory being known as Wisconsin Territory. Iowa 
 Territory has been created from a portion of Missouri Terri¬ 
 tory, embracing the present State of Iowa and the western 
 part of Minnesota, and Arkansas has been admitted to the 
 Union. 
 
 In 1840 we find, by examining the map of population that 
 the process of filling up and completing the work blocked 
 out between 1810 and 1820 has been carried still farther. 
 From Georgia, Alabama, and Mississippi the Cherokee, 
 Creek, Choctaw, and Chickasaw Indians, who, at the time 
 of the previous census, occupied large areas in these States, 
 and formed a very serious obstacle to settlement, have been 
 removed to the Indian Territory, and their country has been 
 opened up to settlement. Within the two or three years 
 which have elapsed since the removal of these Indians the 
 lands relinquished by them have been entirely taken up, 
 and the country has been covered with a comparatively dense 
 settlement. In northern Illinois, the Sac and Fox and 
 Pottawatomie tribes having been removed to the Indian 
 Territory, their country has been promptly taken up, and 
 we find now settlements carried over the whole extent of In¬ 
 diana, Illinois, and across Michigan and Wisconsin as far 
 north as the forty-third parallel. Population has crossed 
 the Mississippi River into Iowa Territory, and occupies a 
 broad belt up and down that stream. In Missouri the settle¬ 
 ments have spread northward from the Missouri River nearly 
 to the boundary of the State, and southward till they cover 
 most of the southern portion, and make connection in two 
 places with the settlements of Arkansas. The unsettled area 
 found in southern Missouri, together with that in north- 
 
INCREASE OF POPULATION. 
 
 889 
 
 western Arkansas, is due to the hilly and rugged nature of 
 the country, and to the poverty of the soil, as compared with 
 the rich prairie lands all around. In Arkansas the settle¬ 
 ments remain sparse, and have spread widely away from the 
 streams, covering much of the prairie parts of the State. 
 There is, besides the area in northwestern Arkansas just 
 mentioned, a large area in the northeastern part of the 
 State, comprised almost entirely within the alluvial regions 
 of the St. Francis River, and also one in the southern portion, 
 extending over into northern Louisiana which is entirely in 
 the fertile prairie section. The fourth unsettled region lies 
 in the southwest part of the State. 
 
 In the older States we note a gradual decrease in the unset¬ 
 tled areas, as in Maine and in New York. In northern Penn¬ 
 sylvania the unsettled section has entirely disappeared. A 
 small portion of the unsettled patch on the Cumberland 
 plateau still remains. In southern Georgia the Okeefenokee 
 swamp and the pine barrens adjacent have thus far repelled 
 settlement, although population has increased in Florida, 
 passing entirely around this area to the south. The greater 
 part of Florida, however, including nearly all the peninsula 
 and several large areas along the Gulf coast, still remains 
 without settlement. This is doubtless due, in part, to the 
 nature of the country, being alternately swamp and hum¬ 
 mock, and in part to the hostility of the Seminole Indians, 
 who still occupy nearly all of the peninsula. 
 
 The frontier line in 1840 has a length of 3,300 miles. 
 This shrinking in its length is due to its rectification on the 
 northwest and southwest, owing to the filling out of the entire 
 interior. It encloses an area of 900,658 square miles, all 
 lying between latitude 29° and 46° 30' north, and longitude 
 67° and 95° 30' west. The vacant tracts have, as noted 
 above, decreased, although they are still quite considerable 
 in Missouri and Arkansas. The total area of the vacant 
 tracts is 95,516 square miles. The settled area outside the 
 frontier line is notably small, and amounts, in the aggregate, 
 to only 2,150 miles, making the entire settled area 807,292 
 square miles in 1840. The aggregate population being 
 17,069,453, the average density is 21.1 to the square mile. 
 
890 
 
 ECONOMIC HISTORY. 
 
 1850 . 
 
 Between 1840 and 1850 the limits of our country have 
 been further extended by the annexation of the State of 
 Texas and of territory acquired from Mexico by the treaty of 
 Guadalupe Hidalgo. The States of Iowa, Wisconsin, and 
 Florida have been admitted to the Union, and the Terri¬ 
 tories of Minnesota, Oregon, and New Mexico have been 
 created. An examination of the maps shows that the fron¬ 
 tier line has changed very little during this decade. At the 
 western border of Arkansas the extension of settlement is 
 peremptorily limited by the boundary of the Indian Terri¬ 
 tory; but curiously enough also, the western boundary of 
 Missouri puts almost a complete stop to all settlement, not¬ 
 withstanding that some of the most densely populated por¬ 
 tions of the State lie directly on that boundary. In Iowa 
 settlements have made some advance, moving up the Mis¬ 
 souri, the Des Moines, and other rivers. The settlements 
 in Minnesota at and about St. Paul, which appeared in 1840, 
 are greatly extended up and down the Mississippi River, 
 while other scattering bodies of population appear in north¬ 
 ern Wisconsin. In the southern part of the State settlement 
 has made considerable advance, especially in a northeastern 
 direction, towards Green Bay. In Michigan the change has 
 been very slight. 
 
 Turning to the southwest we find Texas, for the first time 
 on the map of the United States, with a considerable extent 
 of settlement; in general, however, it is very sparse, most 
 of it lying in the eastern part of the State, and being largely 
 dependent upon the grazing industry. 
 
 The included unsettled areas now are very small and few 
 in number. There still remains one in southern Missouri, 
 in the hilly country; a small one in northeastern Arkansas, in 
 the swampy and alluvial region; and one in the similar 
 country in the Yazoo bottom-lands. Along the coast of 
 Florida are found two patches of considerable size, which are 
 confined to the swampy coast regions. The same is the case 
 along the coast of Louisiana. The sparse settlements of 
 
INCREASE OF POPULATION. 
 
 391 
 
 Texas are also interspersed with several patches devoid of 
 settlement. In southern Georgia the large vacant space 
 heretofore noted, extending also into northern Florida, has 
 entirely disappeared, and the Florida settlements have al¬ 
 ready reached southward to a considerable distance in the 
 peninsula, being now free to extend without fear of hostile 
 Seminoles, the greater part of whom have been removed to 
 the Indian Territory. 
 
 The frontier line, which now extends around a considerable 
 part of Texas and issues on the Gulf coast at the mouth of the 
 Nueces River, is 4,500 miles in length. The aggregate area in¬ 
 cluded by it is 1,005,213 square miles, from which deduction 
 is to be made for vacant spaces, in all, 64,339 square miles. 
 The isolated settlements lying outside this body in the west¬ 
 ern part of the country amount to 4,775 square miles. 
 
 But it is no longer by a line drawn around from the St. 
 Croix River to the Gulf of Mexico that we embrace all the 
 population of the United States, excepting only a few outly¬ 
 ing posts and small settlements. We may now, from the 
 Pacific, run a line around 80,000 miners and adventurers, 
 the pioneers of more than one State of the Union soon to 
 arise on that coast. This body of settlement has been 
 formed, in the main, since the acquisition of the territory by 
 the United States, and, it might even be said, within the 
 last year (1849-50), dating from the discovery of gold in 
 California. These settlements may be computed rudely at 
 33,600 square miles, making a total area of settlement at 
 that date of 979,249 square miles, the aggregate population 
 being 23,191,876 and the average density of settlement 23.7 
 to the square mile. 
 
 I 860 . 
 
 Between 1850 and 1860 the territorial changes noted are 
 as follows: the strip of Arizona and New Mexico south of 
 the Gila River has been acquired from Mexico by the Gads¬ 
 den purchase (1853); Minnesota Territory has been admitted 
 as a State; Kansas and Nebraska Territories have been 
 formed from parts of Missouri Territory; California and 
 
392 
 
 ECONOMIC HISTORY. 
 
 Oregon have been admitted as States, while, in the unsettled 
 parts of the Cordilleran region, two new Territories (Utah 
 and Washington) have been formed out of parts of that terra 
 incognita which we bought from France as a part of Louisi¬ 
 ana, and of that which we acquired by conquest from Mexico. 
 At this date we note the first extension of settlements beyond 
 the line of the Missouri River. The march of settlement up 
 the slope of the great plains has begun. In Kansas and Ne¬ 
 braska population is now found beyond the 97th meridian. 
 Texas has filled up even more rapidly, its extreme settle¬ 
 ments reaching to the lOOtli meridian, while the gaps noted 
 at the date of the last census have all been filled by popula¬ 
 tion. The incipient settlements about St. Paul, in Minnesota, 
 have grown like Jonah’s gourd, spreading in all directions, 
 and forming a broad band of union with the main body of set¬ 
 tlement down the line of the Mississippi River. In Iowa set¬ 
 tlements have crept steadily northwestward along the course 
 of the, drainage, until the State is nearly covered. Following 
 up the Missouri, population has reached out into the south¬ 
 eastern corner of the present area of Dakota. In Wisconsin 
 the settlements have moved at least one degree farther north, 
 wdiile in the lower peninsula of Michigan they have spread up 
 the lake shores, nearly encircling it on the side next Lake 
 Michigan. On the upper peninsula the little settlements 
 which appeared in 1850 in the copper region on Keeweenaw 
 Point have extended and increased greatly in density as that 
 mining interest has developed in value. In northern New 
 York there is apparently no change in the unsettled area. In 
 northern Maine we note, for the first time, a decided move¬ 
 ment towards the settlement of its unoccupied territory, in 
 the extension of the settlements on its eastern and northern 
 border up the St. John River. The unsettled regions in south¬ 
 ern Missouri, northeastern Arkansas, and northwestern Mis¬ 
 sissippi have become sparsely covered by population. Along 
 the Gulf coast there is little or no change. There is to be 
 noted a slight extension of settlement southward in the pen¬ 
 insula of Florida. 
 
 The frontier line now measures 5,300 miles, and cm- 
 
INCREASE OF POPULATION. 
 
 393 
 
 braces 1,126,518 square miles, lying between latitude 28° 30' 
 and 47° 30' north, and between longitude 67° and 99° 30' 
 west. From this deduction should be made on account of 
 vacant spaces, amounting to 39,139 square miles, found 
 mainly in New York and along the Gulf coast. The outly¬ 
 ing settlements beyond the 100th meridian are now numer¬ 
 ous. They include, among others, a strip extending far up 
 the Rio Grande in Texas, embracing 7,475 square miles (a 
 region given over to the raising of sheep), while the Pacific 
 settlements, now comprising one sovereign State, are nearly 
 three times as extensive as .at 1850, embracing 99,900 
 square miles. The total area of settlement in 1860 is thus 
 1,194,754 square miles; the aggregate population is now 
 31,443,321, and the average density of settlement 26.3 to 
 the square mile. 
 
 1870 . 
 
 During the decade from 1860 to 1870 a number of territo¬ 
 rial changes have been effected in the extreme West. Ari¬ 
 zona, Colorado, Dakota, Idaho, Montana, Nevada, and 
 Wyoming have been organized as Territories. Kansas, 
 Nebraska, and Nevada have been admitted as States. West 
 Virginia has been cut off from the mother Commonwealth 
 and made a separate State. 
 
 In 1870 we note a gradual and steady extension of the fron¬ 
 tier line westward over the great plains. The unsettled areas 
 in Maine, New York, and Florida have not greatly dimin¬ 
 ished, but in Michigan the extension of the lumber interests 
 northward and inward from the Lake shore has reduced con¬ 
 siderably the unsettled portion. On the upper peninsula 
 the settlements have increased somewhat, owing to the dis¬ 
 covery of the rich iron deposits destined to play so important 
 a part in the manufacturing industry of the country. 
 
 Settlement has spread westward to the boundary of the 
 State in southern Minnesota, and up the Big Sioux River in 
 southeastern Dakota. Iowa is entirely reclaimed, excepting 
 a small area of perhaps a thousand square miles in its north¬ 
 western corner. Through Kansas and Nebraska the frontier 
 
394 
 
 ECONOMIC HISTORY . 
 
 line lias moved steadily westward, following in general the 
 courses of the larger streams and of the newly constructed 
 railroads. The frontier in Texas has changed but little, 
 that little consisting of a general westward movement. In 
 the Cordilleran region settlements have extended but slowly. 
 Those upon the Pacific coast show little change, either in 
 extent or in density. In short, we see everywhere the 
 effects of the war in the partial stoppage of the progress of 
 development. 
 
 The settlements in the West, beyond the frontier line have 
 arranged themselves mainly in three belts. The most east¬ 
 ern of these is located in central Colorado, New Mexico, 
 and Wyoming, along the eastern base of and among the 
 Pocky mountains. To this region settlement was first at¬ 
 tracted in 1859 and 1860 by discovery of mineral deposits, 
 and has been retained by the richness of the soil and by 
 the abundance of water for irrigation, which have promoted 
 the agricultural industry. 
 
 The second belt of settlement is that of Utah, settled in 
 184T by the Mormons fleeing from Illinois. This community 
 then differed, and still differs, radically from that of the 
 Rocky mountains, being essentially agricultural, mining 
 having been discountenanced from the first by the church 
 authorities, as tending to fill the “ Promised Land ” with 
 Gentile adventurers, and thereby imperil Mormon institu¬ 
 tions. The settlements of this group, as seen on the map for 
 1870, extend from southern Idaho southward through cen¬ 
 tral Utah, and along the eastern base of the Wahsatch range 
 into northern Arizona. They consist mainly of scattered 
 hamlets and small towns, about which are grouped the farms 
 of the communities. 
 
 The third strip is that in the Pacific States and Territo¬ 
 ries, extending from Washington Territory southward to 
 southern California and eastward to the system of “sinks,” 
 in western Nevada. This group of population owes its ex¬ 
 istence to the mining industry, the moving cause in nearly 
 all westward migrations. Originated in 1849 by a “stam¬ 
 pede ” the like of which the world had never before seen, it 
 
INCREASE OF POPULATION. 
 
 395 
 
 has grown by successive impulses as new fields for rapid 
 money-getting have been developed. Latterly, however, the 
 value of this region to the agriculturist has been recognized, 
 and the character of the occupations of the people is under¬ 
 going a marked change. 
 
 These three great Western groups comprise nine tenths of 
 the population west of the frontier line. The remainder is 
 scattered about in the valleys and the mountains of Montana, 
 Idaho, and Arizona, at military posts, isolated mining 
 camps, and on cattle ranches. 
 
 The frontier line in 1870 embraces 1,178,068 square 
 miles, all between 27° 15' and 47° 30' north latitude, and 
 between 67° and 99° 45' west longitude. From this, how¬ 
 ever, deduction is to be made of 37,739 square miles, on 
 account of interior spaces containing no population. To 
 what remains we must add 11,810 square miles on account 
 of settled tracts east of the 100th meridian, lying outside of 
 the frontier line, and 120,100 square miles on account of 
 settlements in the Cordilleran region and on the Pacific 
 coast, making the total area of settlement for 1870 not less 
 than 1,272,239 square miles, the aggregate population being 
 38,558,371, and the average density of settlement 30.3 to 
 the square mile. 
 
 1880. 
 
 In tracing the history of the settlement of our country we 
 are now brought down to the latest census, that of 1880. 
 During the decade just passed Colorado has been added to 
 the sisterhood of States. The first point that strikes us in 
 examining the map showing the areas of settlement at this 
 date, as compared with previous ones, is the great extent of 
 territory which has been brought under occupation during 
 the past ten years. Not only has settlement spread west¬ 
 ward over large areas in Dakota, Nebraska, Kansas, and 
 Texas, thus moving the frontier line of the main body of 
 settlement westward many scores of miles, but the isolated 
 settlements of the Cordilleran region and of the Pacific coast 
 show enormous accessions of occupied territory. 
 
396 
 
 ECONOMIC HISTORY. 
 
 The migration of farming population to the northeastern 
 part of Maine has widened the settled area to a marked ex¬ 
 tent, probably more than has been done during any previous 
 decade. The vacant space in the Adirondack region of 
 northern New York has been lessened in size, and its limits 
 reduced practically to the actual mountain tract. The most 
 notable change, however, in New England and the Middle 
 States, including Ohio and Indiana, has been the increase 
 in density of population and the migration to cities, with 
 the consequent increase of the urban population, as indicated 
 by the number and the size of the spots representing these 
 cities upon the map. Throughout the Southern States there 
 is to be noted not only a general increase in the density of 
 population and a decrease of unsettled areas, but a greater 
 approach to uniformity of settlement throughout the whole 
 region. The unsettled area of the peninsula of Florida has 
 decreased decidedly while the vacant spaces heretofore seen 
 along the upper coast of Florida and Louisiana have entirely 
 disappeared. Although the Appalachian mountain system is 
 still distinctly outlined by its general lighter color on the 
 map, its density of population more nearly approaches that 
 of the country on the east and on the west. In Michigan 
 there is seen a very decided increase of the settled region. 
 Settlements have not only surrounded the head of the lower 
 peninsula, but they leave only a very small body of unsettled 
 country in the interior. In the upper peninsula the copper 
 and the iron interests, and the railroads which subserve them, 
 have peopled quite a large extent of territory. In Wisconsin 
 the unsettled area is rapidly decreasing as railroads stretch 
 their arms out over the vacant tracts. In Minnesota and in 
 eastern Dakota the building of railroads, and the develop¬ 
 ment of the latent capabilities of this region in the cultiva¬ 
 tion of wheat, have caused a rapid flow of settlement, and 
 now the frontier line of population, instead of returning to 
 Lake Michigan, as it did ten years ago, meets the boundary 
 line of the British possessions west of the 97th meridian. 
 The settlements iii Kansas and Nebraska have made great 
 strides over the plains, reaching at several points the boun- 
 
INCREASE OF POPULATION. 
 
 397 
 
 clary of the humid region, so that their westward extension 
 beyond this point is to be governed hereafter by the supply 
 of water in the streams. As a natural result, we see settle¬ 
 ments following these streams in long ribbons of population. 
 In Nebraska these narrow belts have reached the western 
 boundary of the State at two points: one upon the South 
 Platte, and the other upon the Republican River. In Kansas, 
 too, the settlements have followed the Kansas River and its 
 branches and the Arkansas nearly to the western boundary 
 of the State. Texas also has made great strides, both in the 
 extension of the frontier line of settlement and in the in¬ 
 crease in the density of population, due both to the building 
 of railroads and to the development of the cattle, sheep, and 
 agricultural interests. The heavy population in the prairie 
 portions of the State is explained by the railroads which now 
 traverse them. In Dakota, besides the agricultural region 
 in the eastern part of the Territory, we note the formation 
 of a body of settlement in the Black Hills, in the southwest 
 corner, which, in 1870, was a part of the reservation of the 
 Sioux Indians. This settlement is the result of the discov¬ 
 ery of valuable gold deposits. In Montana there appears a 
 great extension of the settled area, which, as it is mainly 
 due to agricultural interests, is found chiefly along the 
 courses of the streams. Mining has, however, played not a 
 small part in this increase in settlement. Idaho, too, shows 
 a decided growth from the same causes. The small settle¬ 
 ments which, in 1870, were located about Bois6 City, and 
 near the mouth of the Clearwater, have now extended their 
 areas to many hundreds of square miles. The settlement in 
 the southeastern corner of the Territory is almost purely of 
 Mormons, and has not made a marked increase. 
 
 Of all the States and Territories of the Cordilleran region 
 Colorado has made the greatest stride during the decade. 
 From a narrow strip of settlement, extending along the im¬ 
 mediate base of the Rocky Mountains, the belt has increased 
 so that it comprises the whole mountain region, besides a 
 great extension outward upon the plains. This increase is 
 the result of the discovery of very extensive and very rich 
 
398 
 
 ECONOMIC HISTORY. 
 
 mineral deposits about Leadville, producing a “ stampede ” 
 second only to that of ’49 and ’50 to California. Miners 
 have spread over the whole mountain region till every range 
 and ridge swarms with them. New Mexico shows but little 
 change, although the recent extension of railroads in the 
 Territory and the opening up of mineral resources will, no 
 doubt, in the near future, add largely to its population. 
 Arizona, too, although its extent of settlement has increased 
 somewhat, is but just commencing to enjoy a period of rapid 
 development, owing to the extension of railroads and to the 
 suppression of hostile Indians. Utah presents us with a 
 case dissimilar to any other of the Territories, a case of 
 steady, regular growth, due almost entirely to its agricul¬ 
 tural capabilities, as was noted above. This is due to the 
 policy of the Mormon Church, which has steadily discounte¬ 
 nanced mining and speculation in all forms, and has encour¬ 
 aged in every way agricultural pursuits. Nevada shows a 
 slight extension of settlement, due mainly to the gradual 
 increase in the agricultural interest. The mining industry 
 is probably not more flourishing at present in this State than 
 it was ten years ago, and the population dependent upon it 
 is, if anything, less in number. In California, as the atten¬ 
 tion of the people has become devoted more and more to 
 agricultural pursuits, at the expense of the mining and cattle 
 industries, we note a tendency to a more even distribution 
 of the inhabitants. The population in some of the mining 
 regions has decreased, while over the area of the great val¬ 
 ley, and in the fertile valleys of the Coast ranges, it has 
 increased. In Oregon the increase has been mainly in the 
 section east of the Cascade range, a region drained by the 
 Des Chutes and the John Day rivers, and by the smaller 
 tributaries of the Snake, — a region which, with the corres¬ 
 ponding section in Washington Territory, is now coming to 
 the front as a wheat-producing district. In most of the set¬ 
 tled portions here spoken of irrigation is not necessary for 
 the cultivation of crops, and consequently the possibilities of 
 the region in the direction of agricultural development are 
 very great. In Washington Territory, which in 1870 had 
 
INCREASE OF POPULATION 
 
 399 
 
 been scarcely touched by immigration, we find the valley west of 
 the Cascade Mountains tolerably well settled throughout, while 
 the stream of settlement has poured up the Columbia into the 
 valleys of the Walla Walla and the Snake rivers and the great 
 plain of the Columbia, induced thither by the facilities for 
 raising cattle and by the great profits of wheat cultivation. 
 
 The length of the frontier line in 1880 is 3,337 miles. The 
 area included between the frontier line, the Atlantic and the 
 Gulf coast, and the northern boundary is 1,398,945 square 
 miles, lying between 26° and 49° north latitude and 67° and 102° 
 west longitude. From this must be deducted, for unsettled 
 areas, 89,400 square miles, leaving 1,309,545 square miles. 
 
 To this must be added the isolated areas of settlement in 
 the Cordilleran region and the extent of settlement on the 
 Pacific coast, which amount in the aggregate to 260,025 
 square miles, making a total settled area of 1, 569,570 square 
 miles. The population is 50,155,783, and the average den¬ 
 sity of settlement 32 to the square mile. 
 
 [ 1890 . 
 
 “The population of the United States, exclusive of all 
 persons in Indian Territory and Alaska, and Indians on reser¬ 
 vations, according to the Eleventh Census was 62,622,250; 
 including these persons the entire population of the country 
 was 62,979,766. In 1880 the population for the states and 
 recognized territories was 50,155,783. The absolute increase 
 of the population in the ten years intervening was 12,466,467 
 and the percentage of increase was 24.86. 
 
 1900 . 
 
 The population of the United States, including that of 
 Alaska, Hawaii, Indian Territory, and Indian reservations, 
 according to the Twelfth Census was 76,303,387. The total 
 population in 1890, with which the aggregate population of 
 this census should be compared,was 63,069,756, as Hawaii with 
 a population of 89,990 in 1890 was annexed August 12,1898. 
 The increase of the population during the decade between 
 1890 and 1900 was therefore 13,233,631, or 21 per cent.”] 
 
400 
 
 ECONOMIC HISTORY . 
 
 THE FACTORY SYSTEM. 
 
 From Wright’s Report on the Factory System of the United 
 States, Tenth Census, Vol. II. pp. 537-541. 
 
 At the time of the agitation of their independence the 
 desire to plant the mechanic arts in this country became 
 almost a passion, — certainly a feature of the patriotism of 
 the day. Hon. Edward Everett, in an address on American 
 manufactures, in New York, in 1831, stated: — 
 
 “The first measures of the patriots aimed to establish their in¬ 
 dependence on the basis of the productive industry and laborious 
 arts of the country. They began with a non-importation agree¬ 
 ment nearly two years before the Declaration of Independence. 
 That agreement, . . . with the exception of the Address to the 
 People of America and Great Britain, was the only positive act of 
 
 the first Congress. 
 
 « 
 
 In this country, as well as in England, the germ of the 
 textile factory existed in the fulling and carding mills; the 
 former, dating earlier, being the mills for finishing the coarse 
 cloths woven by hand in the homes of our ancestors; in the 
 latter, the carding-mill, the wool was prepared for the hand- 
 wheel. At the close of the Revolution the domestic system 
 of manufactures prevailed throughout the States. 
 
 The first attempts to secure the spinning machinery which 
 had come into use in England were made in Philadelphia 
 early in the year 1775, when probably the first spinning- 
 jenny ever seen in America was exhibited in that city. Dur¬ 
 ing the war the manufacturers of Philadelphia extended their 
 enterprises, and even built and run mills which writers often 
 call factories, but they can hardly be classed under that term. 
 Similar efforts, all preliminary to the establishment of the 
 factory system, were made in Worcester, Massachusetts, in 
 1780. In 1781 the British Parliament, determined that the 
 textile machinery by which the manufactures of England were 
 
THE FACTORY SYSTEM. 
 
 401 
 
 being rapidly extended, and which the continental producers 
 were anxious to secure, should not be used by the people of 
 America, re-enacted and enlarged the scope of the statute of 
 1774 against its exportation. By 21 George III., c. 37, it 
 was provided that any person who packed or put on board, 
 or caused to be brought to any place in order to be put on 
 any vessel for exportation, any machine, engine, tool, press, 
 paper, utensil, or implement, or any part thereof, which now 
 is or hereafter may be used in the woollen, cotton, linen, or 
 silk manufacture of the kingdom, or goods wherein wool, 
 cotton, linen, or silk are used, or any model or plan of such 
 machinery, tool, engine, press, utensil, or implement, should 
 forfeit every such machine, etc., and all goods packed there¬ 
 with,' and £200, and suffer imprisonment for one year. In 
 1782 a law was enacted which prohibited, under penalty of 
 £500, the exportation or the attempt to export a blocks, 
 plates, engines, tools, or utensils used in or which are proper 
 for the preparing or finishing of the calico, cotton, muslin, or 
 linen printing manufactures, or any part thereof.” The 
 same act prohibited the transportation of tools employed in 
 the iron and steel manufactures. Acts were also passed in¬ 
 terdicting the emigration of artificers. All these laws were 
 enforced with great vigilance, and were of course serious 
 obstacles to the institution of the new system of manufacture 
 in America. 
 
 The manufacturers of this country were thus compelled 
 either to smuggle or to invent their machinery. Both 
 methods were practised until most of the secrets of the 
 manufacture of common goods were made available here. 
 
 The planting of the mechanic arts in this country became 
 a necessity during the War of the Revolution, and after¬ 
 wards the spirit of American enterprise demanded that New 
 England and the Middle States should utilize the water- 
 powers which they possessed, and by such utilization supply 
 the people with home manufactures. 
 
 When the people of the States saw that the Treaty of 
 Paris had not brought industrial independence, a new form 
 of expression of patriotism took the place of military service; 
 
 26 
 
402 
 
 ECONOMIC HISTORY. 
 
 and associations were formed, the object of which was to 
 discourage the use of British goods; and as the Articles of 
 Confederation did not provide for the regulation of com¬ 
 merce, the Legislatures of the States were besought to pro¬ 
 tect home manufactures. The Constitution of 1789 remedied 
 the defects of the articles in this respect, and gave Congress 
 the power to legislate on commercial affairs. The Consti¬ 
 tution was really the outcome of the industrial necessities of 
 the people, because it was on account of the difficulties and 
 the irritations growing out of the various commercial regula¬ 
 tions of the individual States that a convention of commis¬ 
 sioners from the various States was held in Annapolis in Sep¬ 
 tember, 1786, which convention recommended the one that 
 framed the new or present Constitution of the United States. 
 
 Of course those industries whose products were called for 
 by the necessities of the war were greatly stimulated, but with 
 peace came reaction and the flooding of our markets with 
 foreign goods. 
 
 The second act under the Constitution was passed July 4, 
 1789, with this preamble: — 
 
 “ Whereas it is necessary for the support of the government, for 
 the discharge of the debts of the United States, and for the encour¬ 
 agement and the protection of manufactures, that duties be laid on 
 goods, wares, and merchandise imported; 
 
 “Be it enacted , etc.” 
 
 Patriotism and statute law thus paved the way for the 
 importation of the factory system of industry, and so its 
 institution here, as well as in England, was the result of 
 both moral and economical forces. 
 
 As early as 1786, before the adoption of the Constitution 
 of the United States, the Legislature of Massachusetts 
 offered encouragement for the introduction of machinery for 
 carding and spinning by granting to Robert and Alex¬ 
 ander Barr the sum of £200 to enable them to complete a 
 roping-macliine, and also to “ construct such other machines 
 as are necessary for the purpose of carding, roping, and 
 spinning of sheep’s wool, as well as of cotton wool. ” The 
 
THE FACTORY SYSTEM. 
 
 403 
 
 next year these parties were granted six tickets in a land- 
 lottery, — others engaged in the invention and construction 
 of cotton-spinning machines at Bridgewater, being associ¬ 
 ated with the Barrs, who came to Massachusetts from Scot¬ 
 land at the invitation of Hon. Hugh Orr, of Bridgewater, 
 and for the purpose of constructing spinning-machines. 
 There is no doubt that the machinery built by them was the 
 first in this country which included the Arkwright devices; 
 the first factory, however, in America expressly for the 
 manufacture of cotton goods was erected at Beverly, Massa¬ 
 chusetts, in 1787. This enterprise was aided by the Legis¬ 
 lature. The factory at Beverly was built of brick, was 
 driven by horse-power, and was continued in operation for 
 several years, but its career as a cotton-mill was brief, and 
 no great success attended it. About the same time other 
 attempts had been made in Rhode Island, New York, and 
 Pennsylvania, but principally in Rhode Island and that part 
 of Massachusetts contiguous to Rhode Island. 
 
 The honor of the introduction of power-spinning machines 
 in this country, and of their early use here, is shared by 
 these last-named States; for while Massachusetts claims to 
 have made the first experiments in embodying the principles 
 of Arkwright’s inventions and the first cotton factory in 
 America, Rhode Island claims the first factory in which 
 perfected machinery, made after the English models, was 
 practically employed. This was the factory built by Samuel 
 Slater, in 1790, in Pawtucket, Rhode Island, which still 
 stands in the rear of Mill Street in that city, and the hum 
 of cotton machinery can still be heard within its walls. 
 Previous to 1790 the common jenny and stock-card had been 
 in operation upon a small scale in various parts of the 
 United States, but principally in Pennsylvania, New York, 
 Rhode Island, and Massachusetts; but every endeavor to in¬ 
 troduce the system of spinning known as water-frame spin¬ 
 ning, or Arkwright’s method, had failed. The introduction 
 of this system was the work of Slater, whom President 
 Jackson designated “ the father of American manufactures. ” 
 Samuel Slater was born in Belper, Derbyshire, England, 
 
404 
 
 ECONOMIC HISTORY. 
 
 June 9, 1768, and at fourteen years of age was bound as an 
 apprentice to Jedediah Strutt, Esq., a manufacturer of 
 cotton machinery at Milford, near Belper. Strutt was for 
 several years a partner of Sir Richard Arkwright in the 
 cotton-spinning business; so young Slater had every oppor¬ 
 tunity to master the details of the construction of the cotton 
 machinery then in use in England; for during the last four 
 or five years of his apprenticeship he served as general over¬ 
 seer, not only in making machinery, but in the manufactur¬ 
 ing department of Strutt’s factory. Near the close of his 
 term his attention was drawn to the wants of the States by 
 accidentally seeing a notice in an American paper of the 
 efforts various States were making by way of offering 
 bounties to parties for the production of cotton machinery. 
 Slater knew well that under the laws of England he could 
 carry neither machines nor models or plans of machines out 
 of the country; so, after completing his full time with Mr. 
 Strutt, he continued some time longer with him, superin¬ 
 tending some new works Mr. Strutt was erecting. This he 
 did that he might so perfect his knowledge of the business 
 in every department that he could construct machinery from 
 memory without taking plans, models, or specifications. 
 With this knowledge Slater embarked at London, September 
 13, 1789, for New York, where he landed November 17, and 
 at -once sought parties interested in cotton manufactures. 
 Finding the works of the New York Manufacturing Com¬ 
 pany, to whom he was introduced, unsatisfactory, he corres¬ 
 ponded with Messrs. Brown & Almy, of Providence, who 
 owned some crude spinning-machines, some of which came 
 from the factory at Beverly, Massachusetts. In January, 
 1790, Slater made arrangements with Brown & Almy to 
 construct machinery on the English plan. This he did at 
 Pawtucket, making the machinery principally with his own 
 hands, and on the 20tli of December, 1790, he started three 
 cards, drawing and roving, together with seventy-two spin¬ 
 dles, working entirely on the Arkwright plan, and being the 
 first of the kind ever operated in America. 
 
 It is generally supposed that the course of the progress of 
 
THE FACTORY SYSTEM. 
 
 405 
 
 the manufacture of cotton goods in this country is quite 
 clearly marked; yet a careful study of the subject seems 
 rather to dissipate the line of advancement instead of bring¬ 
 ing it into clearer view. Dr. Leander Bishop, in his exceed¬ 
 ingly valuable work, “ A History of American Manufactures, ” 
 in speaking of the clothing manufacture, states that a corres¬ 
 pondent of the “American Museum,” writing from Charles¬ 
 ton, South Carolina, in July, 1T90, refers to a gentleman 
 who “had completed and had in operation on the High Hills 
 of the Santee near Statesburg, ginning, carding, and other 
 machines driven by water, and also spinning-machines, with 
 eighty-four spindles each, with every necessary article for 
 manufacturing cotton. If this information be correct, the 
 attempt to manufacture by machinery the cotton which they 
 were then beginning to cultivate extensively was nearly as 
 early as those of the Northern States.” 
 
 Certainly this bit of history of attempts in Southern 
 States, of the efforts of Samuel Wetherell, of Philadelphia, 
 of the Beverly Company in Massachusetts, of Moses Brown 
 at Providence, R. I., all before Slater’s coming, to introduce 
 spinning by power, illustrates the difficulty of locating the 
 origin of an institution when a country of such proportions 
 as our own constitutes the field. It is safe, historically, to 
 start with Slater as the first to erect cotton machinery on the 
 English plan, and to give the factory system 1790 as its 
 birthday. 
 
 The progress of the system has been uninterrupted from 
 1790, save by temporary causes and for brief periods; but 
 these interruptions only gave an increased impetus to its 
 growth. In 1792, by the invention of the cotton-gin, an 
 American, Eli Whitney, of Massachusetts, residing tempo¬ 
 rarily in Georgia, contributed as much toward the growth of 
 the factory system as England had contributed by the splen¬ 
 did series of inventions which made the cotton-manufacturing 
 machinery of the system. 
 
 The alarm of the people at the increase in the demand for 
 foreign goods took shape again in 1794 and the decade fol¬ 
 lowing, and by patriotic appeals to all classes, societies and 
 clubs were formed pledged to wear only home-made goods. 
 
406 
 
 ECONOMIC HISTORY. 
 
 Congress was called upon to restrict importations. The re- 
 
 « 
 
 suit of all these efforts and influences stimulated the manu¬ 
 facture of cotton and other textiles. The water privileges of 
 New England and the Middle States offered to enterprising 
 men the inducement to build factories for the spinning of 
 yarn for the household manufacture of cloth. At the close 
 of 1809, according to a report made by Mr. Albert Gallatin, 
 Secretary of the Treasury in 1810, eighty-seven cotton fac¬ 
 tories had been erected in the United States, which, when in 
 operation, would employ 80,000 spindles. 
 
 The perfect factory, the scientific arrangement of parts for 
 the successive processes necessary for the manipulation of the 
 raw material till it came out finished goods, had not yet 
 been constructed. As I have said, the power-loom did not 
 come into use in England till about 1806, while in this coun¬ 
 try it was not used at all till after the war of 1812. In Eng¬ 
 land even it had not been used in the same factory with the 
 spinning-machines. In fact, for many years the custom of 
 spinning the yarn under one management and weaving the 
 cloth under another has prevailed in England. 
 
 In 1811 Mr. Francis C. Lowell, of Boston, visited England 
 and spent much time in inspecting cotton factories, for the 
 purpose of obtaining all possible information relative to cot¬ 
 ton manufacture, with a view to the introduction of improved 
 machinery in the United States. The power-loom was being- 
 introduced in Great Britain at this time, but its construction 
 was kept very secret, and public opinion was not very favor¬ 
 able to its success. Mr. Lowell learned all he could regard¬ 
 ing the new machine, and determined to perfect it himself. 
 He returned to the States in 1814, and at once began his 
 experiments on Broad Street, Boston. His first move was 
 to secure the skill of Paul Moody, of Amesbury, Mass., a 
 well-known mechanic. By and through the encouragement 
 of Mr. Nathan Appleton, a company had been organized by 
 Mr. Lowell and Mr. Patrick T. Jackson, with Mr. Appleton 
 as one of its directors, for the establishment of a cotton 
 manufactory, to be located in Waltham, Mass., on a water 
 privilege they had purchased. This factory was completed 
 in the autumn of 1814, and in it was placed the loom per- 
 
THE FACTORY SYSTEM. 
 
 407 
 
 fected by Mr. Lowell, which differed much from the English 
 looms. Mr. Lowell had neither plans nor models for his 
 factory and looms, but in the year named the company set 
 up a full set of machinery for weaving and spinning, there 
 being 1,700 spindles; and this factory at Waltham was the 
 first in the world, so far as record shows, in which all the 
 processes involved in the manufacture of goods, from the raw 
 material to the finished product, were carried on in one 
 establishment by successive steps, mathematically consid¬ 
 ered, under one harmonious system. Mr. Francis C. Lowell, 
 aided by Mr. Jackson, is unquestionably entitled to the 
 credit of arranging this admirable system; and it is remarka¬ 
 ble how few changes have been made in the arrangements 
 established by him in this factory at Waltham. 
 
 So America furnished the stone which completed the in¬ 
 dustrial arch of the factory system of manufactures. 
 
 The growth of the factory system [is well] illustrated by 
 the cotton manufacture. After the success of the power- 
 loom, the cotton manufacture took rapid strides, both in 
 Europe and America. The hand-loom and the hand-weaver 
 were rapidly displaced. Factories sprung up on all the 
 streams of Yorkshire and Lancashire, in England, while in 
 this country the activity of the promoters of the industry 
 won them wealth, and won cities from barren pastures. 
 They erected Lowell, Lawrence, Holyoke, Fall River, and 
 many other thriving cities and towns, and now in this gener¬ 
 ation the industry is taking root upon the banks of Southern 
 streams. The progressive steps of this great trade are shown 
 by the tables which follow. The facts for Great Britain for 
 the year 1833 are taken from Baines’ “History of Cotton 
 Manufacture, ” and have been corroborated as far as possible 
 from other sources; they constitute the most reliable data 
 obtainable for that period. For 1831, for the United States, 
 we have the census returns and other sources, none of them 
 very accurate, yet they give the best approximate figures. 
 
 It will be observed that the number of cotton factories in 
 this country was 801 in 1831, 1,240 in 1840, 1,074 in 1850, 
 and that since 1850 there has been a constant decrease in 
 the number of establishments. This is the result of consoli- 
 
408 
 
 ECONOMIC HISTORY. 
 
 elation and the establishment of large works, the smaller 
 factories being closed or united with the large ones. 1 While 
 the number of factories has decreased, the consumption of 
 cotton and the production of goods has steadily increased. 
 Perhaps the best gauge for the progress of the industry is to 
 be found in the quantity of cotton consumed per capita of 
 the population. In Great Britain, in 1881, the home con¬ 
 sumption of cotton per capita (excluding the proportion for 
 the export trade) was 6.62 pounds; in 1881 it was T.75 
 pounds; in the United States, for 1880, it was 5.9 pounds; 
 in 1880 it was 18.91 pounds. That is, the clothing of the 
 people of this country in 1830 required 5.9 pounds of cotton 
 per annum and now it requires 13.91 pounds. 
 
 If we take the per capita consumption of the factories, 
 including -exports and home consumption, the proportion for 
 Great Britain in 1831 was 16.15 pounds; in 1881, 40.8 
 pounds; for the United States, in 1831, it was, on this basis, 
 6.1 pounds; in 1880 it had risen to 14.96 pounds. The 
 ratios given as to spindles to persons employed, capital to 
 spindles, product to spindles, capital to product, product to 
 persons employed, while in some sense fallacious, and more 
 valuable to the expert than to the general reader, yet are 
 true for the time given and the existing circumstances, and 
 certainly show the change of circumstances. The ratio of 
 consumption to spindles is of course influenced largely by the 
 number of the yarn produced, and many of the British mills 
 spin finer numbers than do the mills of this country; but 
 whatever may be the cause, the ratio stands as given, and 
 shows that the attendant circumstances, either of machinery 
 or kind of product, or of some other matter, vary as to the 
 two countries. 
 
 1 The number of cotton factories for 1880 should be increased by the num¬ 
 ber of mills engaged in working raw cotton, waste, or cotton yarn into hosiery, 
 webbing, tapes, fancy fabrics, or mixed goods, or other fabrics which are not 
 sold as specific manufactures of cotton or of wool; some of these work both 
 fibres, but belong more in the class of cotton manufactures than in any other. 
 These establishments, 249 in all, in 1880, have without doubt been included in 
 the list of cotton-mills heretofore; so that now the total number, to correspond 
 with the past, should be 1,005 cotton factories in the United States in 1880. 
 
TIIE FOLLOWING TABLE SHOWS TIIE CONDITION OF THE COTTON MANUFACTURES OF GREAT BRITAIN AND THE UNITED STATES IN THE 
 
 YEARS NAMED: — 
 
 THE FACTORY SYSTEM. 
 
 409 
 
 
 —I 
 
 8 
 
 8 
 
 CO 
 
 rH 
 
 rH 
 
 OO 
 
 ° d 
 
 
 O 
 
 
 CO 
 
 
 rS O 
 
 i 
 
 I 
 
 CO 
 
 8 
 
 t— 
 
 iO 
 
 of 
 
 oo 
 
 3 o 
 
 <M 
 
 oT 
 
 
 cT 
 
 O w 
 
 o 
 
 CO 
 
 CO 
 
 
 kO 
 
 ft 
 
 Q 
 
 <M 
 
 
 
 b- 
 
 Value of 
 Product. 
 
 1 C CO o 
 
 CO CO . rH 
 
 CO^ rH 
 
 co co' .o' 
 
 O rH O 
 
 cq^ <3 
 
 CO ^ * of 
 
 to b- O 
 
 rH ^ • rH 
 
 Number of 
 Employes, 
 Including 
 Children. 
 
 237,000 
 
 482,903 
 
 57,466 
 
 172,544 
 
 Number of 
 Looms. 
 
 100,000 
 
 514,911 
 
 33,433 
 
 225,759 
 
 Number of 
 Spinning 
 Spindles. 
 
 9,333,000 
 
 39,527,920 
 
 1,246,703 
 
 10,653,435 
 
 Capital 
 
 Invested. 
 
 $170,000,000 
 
 374,720,500 
 
 40,612,984 
 
 208,280,346 
 
 Number of 
 Establishments. 
 
 1,151 
 
 2,671 
 
 801 
 
 756 
 
 3 
 
 CO oo 
 
 rH 
 
 O 
 
 00 00 
 
 S§ 
 
 
 rH rH 
 
 rH 
 
 
 •d 
 
 CO 
 
 1 
 
 iS 
 
 
 
 •3 
 
 
 •p 
 
 « 
 
 
 
 2 
 
 ’3 
 
 
 O 
 
 ft 
 
 oo 
 
 ft 
 
 W 
 
 EH 
 
 ft 
 
 53 
 
 H 
 
 Average 
 
 Consumption 
 
 of Cotton 
 
 (exclusive of 
 
 exports) 
 
 per Capita of 
 
 Total 
 
 Population. 
 
 Pounds. 
 
 6-62 
 
 7-75 
 
 5-90 
 
 13 91 
 
 Total Average 
 
 Consumption 
 
 of Cotton 
 
 per Year 
 
 per Capita of 
 
 Total 
 
 Population. 
 
 Pounds. 
 
 1615 
 
 40-80 
 
 6-10 
 
 14 96 
 
 Total Annual 
 Consumption 
 
 of Cotton. 
 
 Pounds. 
 
 262,700,000 
 
 1,439,393,000 
 
 77,457,316 
 
 750,343,981 
 
 Years. 
 
 1831 
 
 1881 
 
 1830 
 
 1880 
 
 Ratio of 
 Product to 
 Persons 
 Employed. 
 
 $661.15 to 1 
 
 983.46 to 1 
 
 1,113.28 to 1 
 
 Ratio of 
 Capital to 
 Product. 
 
 $1.00 to $0.92 
 
 1.00 to 1.27 
 
 1.00 to 0.92 
 
 Ratio of 
 Product to 
 Spindles. 
 
 $16.79 to 1 
 
 12.01 to 1 
 
 • • • • 
 
 18.03 to 1 
 
 Ratio of 
 Capital to 
 Spindles. 
 
 $18.21 to 1 
 
 9.48 to 1 
 
 32.58 to 1 
 
 19.55 to 1 
 
 Ratio of 
 Spindles to 
 Persons 
 Employed. 
 
 39 to 1 
 
 82 to 1 
 
 22 to 1 
 
 62 to 1 
 
 | 
 
 £ 
 
 •3 
 
 § 
 
 • • • • 
 
 • • • • 
 
 • • • ♦ 
 
 CO OO rH O 
 
 CO l"- CO co 
 
 OO CO OO GO 
 
 rH rH rH rH 
 
 8 
 
 4B 
 
 9 
 
 o 
 
 Great Britain ! 
 
 1 
 
 1 
 
 United States • 
 
 1 
 
410 
 
 ECONOMIC HISTORY. 
 
 THE COTTON MANUFACTURES. 
 
 From Atkinson’s Report on the Cotton Manufactures, Tenth 
 
 Census, Vol. II. pp. 946-955. 
 
 The cotton manufacture of the United States may be now 
 considered more firmly established than ever before. The 
 method on which the business is conducted in the United 
 States varies greatly from that of any other country; and 
 this difference arises mainly from a difference not only in 
 the habits and customs of the people, but also in their con¬ 
 dition and intelligence. 
 
 The home market is the most important one, and may long 
 continue to be so, although the export demand for our fabrics 
 now takes from 7 to 8 per cent of our annual product, and is 
 likely to increase. 
 
 In contrast with the cotton manufacturer of Great Britain, 
 our principal rival, we are therefore called upon to meet the 
 demands of an intelligent class of customers, living under 
 substantially uniform conditions, and varying but little in 
 their requirements. Hence we are not called upon for the 
 great variety of fabrics that must be supplied by Great 
 Britain. In consequence of this demand for a great variety 
 of fabrics the work of the cotton manufacturer of England is 
 much more divided than with us. With the exception of a 
 few large establishments, working mainly to supply the home 
 market, few goods are known in England by the name of the 
 factory in which they are made, nor are they sold under the 
 naim of the manufacturer; but to a very large extent the 
 yarn is spun in one establishment, woven in another, and # 
 finished in a third. The gray cloth is sold to the ware¬ 
 houseman, or to the merchant, to be stamped and packed by 
 him, or to be dyed, bleached, or printed under his direction. 
 If English goods had been sold under the name and stamp of 
 the manufacturer, as cotton goods are in the United States, 
 
THE COTTON MANUFACTURES . 
 
 411 
 
 perhaps the substitution of clay for cotton might not have 
 been carried to so great an extent. In the United States 
 cotton goods are spun and woven in the same factory, and 
 whether sold 'in the gray or bleached, they are almost all 
 stamped and marketed under the name of the factory in 
 which they are made. Each factory, therefore, has its repu¬ 
 tation to sustain, and whether the fabric be coarse or fine 
 it is the effort of every one to make it good of its kind. 
 
 The same rule applies to printed calicoes. These are 
 marketed under the name of the works in which they have 
 been printed, and the reputation and permanent existence of 
 these works rest upon uniformity in quality, excellence in 
 color and style, and constant progress in the art of design. 
 
 We may not claim to be more honest than our rivals, 
 but it is a great error to suppose that it is permanently profit¬ 
 able to make an article that is not what it purports to be. 
 A cotton fabric may be of a low grade, and may be intended 
 to sell at a low price, but yet it is not profitable to substitute 
 clay for cotton; the fabric, whatever it is, has its name and 
 reputation, and must be true to them, or else the demand for 
 it will sooner or later cease. Even goods that are made for 
 linings, and that need to be starched and stiffened in order 
 to be used, must have a uniform quality in the fabric itself 
 to hold a permanent place in our market. Dyed goods that 
 require to be woven on heavily-sized warps cannot, except by 
 rule, be loaded with sizing. If an attempt is made to intro¬ 
 duce an article in which clay has been added to make it 
 heavier, it is immediately detected, because the use of 
 sewing-machines is almost universal, and the clay in the 
 fabric heats the needle and exposes the fraud. 
 
 In stating those conditions under which the manufacture 
 of cotton is conducted in the United States for the home de¬ 
 mand, it is not intended to imply that the use of a foreign 
 substance to give additional weight to a cotton fabric is, of 
 necessity, a fraud. For instance, there is a very large de¬ 
 mand in China for materials for the grave-clothes of corpses, 
 and for this use “ earth to earth, and dust to dust ” may be 
 considered a legitimate rule, even if the earth is conveyed in 
 
412 
 
 ECONOMIC HISTORY . 
 
 the fabric which is nominally made of cotton. Some of the 
 finest cotton fabrics yet made in the United States, which 
 closely resemble silk, are used mainly for lining coffins. 
 
 The principal market for our own fabrics is found among 
 the thrifty working-people, who constitute the great mass of 
 our population. 
 
 It has therefore happened that, although we have not until 
 recently undertaken the manufacture of very fine fabrics, the 
 average quality of the fabrics that we do make is better 
 than that of any other nation, with the possible exception of 
 France. It is for the wants of the million that our cotton 
 factories are mainly worked, and we have ceased to import 
 staple goods, and shall never be likely to resume their im¬ 
 port. On the other hand, we may for a long period continue 
 to import the finer goods that depend mainly on fashion and 
 style for their use, and that are purely articles of luxury. 
 As has been stated, the substantial fabrics that constitute 
 the main part of our cotton manufacture, and that are used 
 by the masses of the people, are of the best of their kind, 
 with the possible exception of those made in France. The 
 French peasantry are a sagacious and truly economical race, 
 and will not buy a poor fabric if they can get a good one; 
 hence, the cotton fabrics for their use are of a very substan¬ 
 tial kind, and are much more free from adulteration than 
 those of any other country in Europe. The common cotton 
 fabrics of England, Belgium, and Germany could hardly be 
 sold in the United States at any price. 
 
 The finest printed calicoes of France and England may be 
 the best of their kind; but the printed calicoes for the use 
 of the multitude, and which constitute the really important 
 branch of this department of the manufacture, are of much 
 better quality in the United States than in Europe, and arc 
 also of finer colors and of more varied styles. 
 
 In fact, one of the chief obstacles that it has been neces¬ 
 sary to overcome in the introduction of unbleached American 
 cotton fabrics in the English market, and in other markets 
 heretofore supplied by England, has been their apparently 
 open texture, owing to the absence of heavy sizing. In the 
 
THE COTTON MANUFACTURES. 
 
 413 
 
 United States the sizing used upon the warp, and which is 
 necessary in order to weave it, is made from corn or potato 
 starch, free from any substance intending to make it heavier. 
 In the gray cloth the sizing, therefore, constitutes only 2J 
 to 5 per cent of the weight, and when the fabric is washed 
 it shrinks more in measure than it loses in weight; hence a 
 square yard washed and dried without stretching will be 
 heavier than a square yard taken directly from the loom. 
 
 In England, on the other hand, even the pure sizing is 
 made from wheat flour, which is very glutinous; and the 
 fabrics thus woven, even where no adulteration is intended, 
 lose from 10 to 12 per cent of their weight on the first wash¬ 
 ing. These pure goods are, however, made chiefly for the 
 home consumption of the richer classes of England. The 
 greater part of the English cotton fabrics, exported or used 
 by the working-classes, are loaded with from 10 to 40 per 
 cent of clay and other substances. The art of sizing has 
 been highly perfected in England, and has been made the 
 subject of very numerous patents; and, as the use of clay 
 and flour to the extent of 100 pounds to each 100 pounds of 
 cotton-warp yarn involves great danger of mildew, many 
 ingenious chemical applications have also been patented to 
 serve as antiseptics, such as chloride of zinc, chloride of 
 calcium, common salt, white vitriol, etc. These various 
 antiseptics are compounded with flour, gypsum, soapstone, 
 china clay, and other heavy substances in various ways. 
 The English text-books upon the art of sizing are instructive 
 and suggestive, especially in respect to the rules for the pur¬ 
 chase of the most glutinous kinds of flour, and for the 
 detection of adulteration in flour, it being obvious that un¬ 
 less the flour is pure and well adapted to the purpose, it 
 would be necessary to use cotton instead of clay to make up 
 the weight of the fabric. 
 
 It will, of course, take a good deal of time to accustom 
 buyers to the more open texture of cotton fabrics in which 
 no clay is used; but as time passes American fabrics are 
 being steadily substituted for those previously used by for¬ 
 eign nations, especially in China. 
 
414 
 
 ECONOMIC HISTORY. 
 
 Since the year 1860 the cotton manufacture of the United 
 States has been exposed to greater vicissitudes than any 
 other important branch of the national industry, and the 
 wonder is, not that there should have been some disasters, 
 but that it should have survived at all in the hands of its 
 original owners. In 1860 the whole number of spindles in 
 the United States was 5,285,000. From 1857 to 1860 the 
 cost of constructing a spinning and weaving factory on the 
 medium fabrics woven of No. 25 yarn was from $16 to $20 
 per spindle (the number designates the number of skeins of 
 840 yards of yarn each in one pound). The value of a bale 
 of cotton of 480 pounds was from $40 to $50. Then came 
 the combined effects of war, paper money, and scarcity of 
 cotton. At one period more than two thirds of the cotton 
 machinery of the United States was stopped; the value of 
 a bale of cotton rose to over $900, and the price of some 
 kinds of goods was seven to eight times the present price. 
 A little later new mills were constructed which cost from 
 $80 to $40 per spindle. 
 
 At the date of the census the number of spindles operated 
 in the specific manufacture of cotton fabrics was 10,653,435; 
 but the spindle has changed in its productive power, and each 
 spindle of 1880 was much more effective than that of 1860. 
 The value of the bale of cotton was again from $40 to $50; 
 the standard printing-cloth, which reached 33 cents a yard 
 during the war, was worth 4 cents; the No. 25 mill for 
 spinning and weaving could be built for from $14 to $18 
 per spindle; our export of cotton fabrics was more in value 
 and much more in quantity than in 1860, and the only 
 check to its steady and profitable increase was the renewal 
 of the home demand. Such have been the changes and fluc¬ 
 tuations; yet, despite them all, not one spindle in ten has 
 passed from the ownership of the person, firm, or corpora¬ 
 tion in whose possession it was in 1860, except in the regu¬ 
 lar process of bequest or voluntary sale. 
 
 During the period of inflation or of great vicissitude, the 
 attention of the managers of the property was of necessity 
 devoted to other matters than the improvements and minute 
 
THE COTTON MANUFACTURES. 
 
 415 
 
 savings in which the profit of the business now consists; but 
 during the last few years very great improvements have been 
 made, and the lesson of economy and saving has been 
 learned. The best example that can be cited may be found 
 in the record of one great factory working upon coarse and 
 substantial fabrics, and consuming more than 20,000 bales 
 of cotton a year. Sixty per cent of its products are sold for 
 export to various parts of the world. The proportion of 
 operatives to each 1,000 spindles has been decreased 43 per 
 cent, or from 26 £ to 15. The wages of women, who consti¬ 
 tute more than two thirds of the operatives, have been in¬ 
 creased 33 per cent. The cost of making the cloth, aside 
 from the material used, has been decreased 21 per cent. 
 
 In 1860 the average product of one operative, working 
 one year was 5,317 pounds; in 1880, 7,928 pounds of drill, 
 such as is exported to China. Assuming 5 pounds, or about 
 16 yards, as the annual requirement of a Chinaman for 
 dress, in 1860 one Lowell operative working one year clothed 
 1,063 Chinese; in 1880 one could supply 1,586. It will be 
 obvious that no hand spinning and weaving can compete 
 with this product of machinery; * yet the machine-made 
 fabrics of Europe and America combined have as yet reached 
 only six or eight in a hundred of the Chinese. How soon, the 
 rest will be clothed in cotton fabrics made by machinery from 
 American cotton, therefore, depends but little on whether 
 the wages of the Lowell factory girl be $4 or $6 per week, 
 but rather on what exchangeable products the Chinese can 
 produce better or cheaper than we can. The more tea, silk, 
 sugar, and other commodities we buy from them, the more 
 cotton fabrics and other products in which we excel will they 
 buy from us. 
 
 It has been held that the cotton of America must be more 
 and more used both in America and elsewhere, and that, as 
 time goes on, almost every other kind, with the exception of 
 the cotton of Egypt, must give place to it. To what extent 
 may the same pre-eminence be secured for the cotton fabrics 
 of the United States in the markets of the world that we 
 have secured in respect to the cotton fibre ? 
 
416 
 
 ECONOMIC HISTORY . 
 
 In the consideration of this branch of the subject, our 
 attention must be given to the present condition of competi¬ 
 tion between the mills of the Middle and Eastern States with 
 the mills of Great Britain. 
 
 In respect to the Eastern States the cotton factories of 
 Lowell in Massachusetts, Manchester in New Hampshire, Bid- 
 deford and Lewiston in Maine, may be considered in their re¬ 
 lation to the factories of Manchester, Stockport, Preston, and 
 Bolton in England. For the purposes of this comparison it 
 may be assumed that there can be no permanent advantage of 
 one set of mills over the other in respect to the quality and 
 perfection of the machinery. At any given time some ad¬ 
 vantage may be claimed and admitted on either side in some 
 special department of the mill; but every invention or im¬ 
 provement will sooner or later be adopted on both sides, and 
 the supremacy in the art of converting cotton into cloth must 
 ultimately fall to that country or section which possesses the 
 advantage in respect to the conditions offered to the oper¬ 
 atives, and in proximity to the source of the raw material. 
 
 The best conditions of life for the operatives, and the best 
 prospects of improving their condition and that of their 
 children, are of the gravest importance. The factors in this 
 problem are education, shelter, subsistence, and opportunity 
 for other kinds of work. In respect to education, the 
 common-school system of the United States assures a thor¬ 
 ough training free of cost, and in the principal towns and 
 cities free education is carried to the point of preparing the 
 pupil to enter a university. 
 
 In respect to subsistence, the factories of New England 
 are 3,000 miles nearer the wheat-fields and grazing-grounds 
 of the West than those of Lancashire; and so long as Europe 
 buys food of America our own mills must have the advantage 
 of proximity to the Western prairids. In respect to the 
 rents of dwelling-houses there cannot long be any difference, 
 if there is any at present, because the materials for construc¬ 
 tion are most abundant in America. Opportunity for other 
 work than that of the factory must continue for many gen¬ 
 erations, and until this continent is peopled. 
 
THE COTTON MANUFACTURES . 
 
 417 
 
 In comparing our power to compete with England we may 
 claim advantages of one kind, and in comparing with the 
 nations of continental Europe we may claim advantages of 
 another kind, in some respects of a different order. In 
 competition with England, it is often claimed that our chief 
 advantage lies in a certain alleged versatility and power of 
 adapting means to ends, and in great quickness of perception 
 on the part of working-people in respect to the advantages 
 to be gained by the adoption of new processes or inventions. 
 If we have this advantage, there must be special causes for 
 it in the influences that are brought to bear upon the opera¬ 
 tives and artisans who do the work; for a very large propor¬ 
 tion of them are foreign-born, or are the children of foreign 
 immigrants. Why should they work with any more zeal or 
 judgment here than in the countries whence they have come ? 
 Why are Irish and French-Canadian factory hands to be re¬ 
 lied on for more steady work, larger product, better disci¬ 
 pline, and more cleanly and wholesome conditions of life 
 than the operatives of England, Belgium, and Germany ? 
 To me it appears evident that these advantages, so far as they 
 exist, are due mainly to the following circumstances: — 
 
 First. Our system of common and purely secular schools, 
 attended by the children of rich and poor alike. 
 
 Second. Manhood suffrage. 
 
 Third. The easy acquisition of land. 
 
 Fourth. The habit of saving small sums induced by the 
 establishment of savings-banks throughout the manufacturing 
 States. 
 
 Fifth. The absence of a standing army, and the applica¬ 
 tion of the revenue derived from taxes on the whole to useful 
 purposes. 
 
 In respect to the first of these influences, the public-school 
 system, the foreign observer generally takes notice only of 
 the quality of the instruction given, and though he may find 
 something to praise, he finds also much to blame. He finds 
 in many cases the instruction bad and the subjects often ill- 
 chosen, and he wonders at the misdirection of a force that 
 might be so much more wisely applied. What he fails to 
 
 27 
 
418 
 
 ECONOMIC HISTORY. 
 
 notice is that the school itself, entirely apart from its instruc¬ 
 tion, is the great educator of the children who attend it. 
 The school is, first of all, no respecter of persons; the stupid 
 son of a rich man, led in every class by the son of a me¬ 
 chanic, cannot in after-life look down on him as an inferior, 
 whatever the conventional position of the two may be; or, if 
 the rich man’s son has brains as well as fortune, the poor 
 man’s son can never attribute to fortune only the lead that 
 he may take in after-life. The school is thoroughly demo¬ 
 cratic, and each pupil learns in it that it depends on himself 
 alone what place he may take in after-life, and that, al¬ 
 though society may be divided into planes, there is no 
 system of caste and no barrier in the way of social success 
 except the want of character and ability to attain it. The 
 associations of the common school utterly prevent anything 
 like servility in the relation of classes in after-life; and 
 although it is sometimes made a little too manifest that 
 “ one man is as good as another, and a little better, ” on the 
 part of those who are more eager than discreet in their effort 
 to rise, yet on the whole the relation of the various classes, 
 which must in the nature of things always and everywhere 
 exist, is that of mutual respect, and anything like the old- 
 world distinctions of caste and rank would seem about as 
 absurd to one as to the other. The common school is the 
 solvent of race, creed, nationality, and condition. 
 
 In another way the discipline of the school affects the pro¬ 
 cesses of manufacture. In the schools, cleanliness, order, 
 and regular habits are enforced, with deference to the 
 teachers and respect for authority; and in these later years, 
 this is coupled with the teaching of music and drawing in 
 all the principal towns and cities. When children thus 
 trained are removed to the mill or the workshop, habits of 
 order and cleanliness, with some aesthetic taste, are already 
 established. Nothing strikes an American manufacturer 
 with so much surprise, as the extreme untidiness of the 
 large textile mills of England and the dreariness of the fac¬ 
 tory towns. In this respect, however, it must be confessed 
 that the managers of the New England mills are greatly 
 
THE COTTON MANUFACTURES. 
 
 i. 
 
 419 
 
 aided by the absence of smoke, the coal commonly used 
 being anthracite. Much surprise is often expressed by our 
 foreign visitors, at the amount of decoration permitted in 
 the fitting of stationary and locomotive engines and in much 
 of our machinery; but, bad as the taste displayed may some¬ 
 times be, it is nevertheless a fact that such engines or 
 machines are better cared for and kept in better repair than 
 where no individuality, so to speak, is permitted. On one 
 of our great railways the attempt was not long since made 
 to dispatch the locomotives as they happened to arrive at the 
 central station, sometimes with one and sometimes with an¬ 
 other engine-driver; but the immediate and great increase 
 in the repair account caused the corporation to return very 
 soon to the customary plan of giving each driver a particu¬ 
 lar locomotive, with which he may be identified. 
 
 The instruction of the school also gives every pupil a 
 superficial knowledge, if no more, of the geography and re¬ 
 sources of the country, which the universal habit of reading 
 newspapers keeps up. Hence comes the almost entire ab¬ 
 sence of any fixed character in the labor of the country; 
 every boy believes that he can achieve success somewhere 
 else, if not at home. No congestion of labor can last long. 
 The war and the succeeding railway mania combined con¬ 
 centrated population at certain points to a greater extent 
 than ever happened before, and it has taken more than five 
 years to overcome the difficulty; but within these five years 
 a million or more new inhabitants in Texas, half a million 
 or more in Kansas, and probably two or three millions 
 added to the population of Nebraska, Colorado, Minnesota, 
 and the far Northwest, indicate that the evil has already 
 found a remedy. 
 
 It is already apparent that a very slight increase in the 
 demand for skilled workmen in certain branches of employ¬ 
 ment would not easily be met in the Eastern States except 
 by drawing upon England and Germany. During the years 
 of depression, the cessation of railway building and the use 
 of the excess of railway plant existing in 1873 has caused 
 the dispersion of a large portion of the trained mechanics 
 
420 
 
 ECONOMIC HISTORY. 
 
 and artisans who then did the work of supplying this de¬ 
 mand ; but these are not the men who have crowded the East¬ 
 ern cities and caused the apparent excess of laborers out of 
 work. Such men have gone back to the land, or in the new 
 States and Territories have found other ways in which to 
 apply their skill and energy, and they will not return. It 
 may be that the greatest danger to the manufacturers of 
 England will not be in our competition in the sale of goods 
 in neutral markets, but in our competition for the skilled 
 workmen and artisans who make these goods, when we offer 
 them equal or higher wages and better conditions of life in 
 the work that will very soon need to be done to supply the 
 increasing demand in our own country. 
 
 The patent system may here be cited also as a factor in 
 our industrial system. It has been carried to an almost ab¬ 
 surd extreme, so that it is not safe for any one to adopt a 
 new method, machine, or part of a machine, and attempt to 
 use it quietly and without taking out a patent, lest some sharp 
 person, seeing it in use and not published, shall himself 
 secure a patent and come back to the real inventor with a 
 claim for royalty. 
 
 Manhood suffrage, subject as it is to great abuses, and 
 difficult as it has made the problem of the self-government of 
 great cities, where voters do not meet each other, as in the 
 town-meeting, face to face, but where the powers of govern¬ 
 ment are of necessity delegated to men of whom the voters 
 can have little personal knowledge, yet works distinctly in 
 the direction of the safety, stability, and order of the com¬ 
 munity. Outside of two or three of the very largest cities, 
 where there are concentrated great masses of illiterate citi¬ 
 zens,, it would be difficult to find a case of serious abuse of 
 the power of taxation except in the South since the war, and 
 even there the evil is now mainly abated. 
 
 The easy acquisition of land throughout the country under 
 simple forms of conveyance, registered in every county, gives 
 a motive to economy, and induces habits of saving that are 
 of supreme importance in their effect on society. In the 
 town in which I live, —- and in which I can remember the 
 
THE COTTON MANUFACTURES. 
 
 421 
 
 coming of the first Irishman who became a land-owner,— out 
 of about one thousand owners of real estate, over two hun¬ 
 dred are of Irish birth or extraction. The richest one among 
 them came from Ireland in 1846, a steerage passenger. He 
 now pays taxes on property of the value of $50,000, almost 
 all in real estate. His son is superintendent of the repairs 
 of highways, and is one of the most efficient members of the 
 school committee. 
 
 During the last thirty years the factory population of New 
 England has passed through three phases. First came the 
 sons and daughters of the New England farmer; but as the 
 sewing-machine and other inventions opened new demands 
 for women’s work, women of American birth passed out to 
 easier or better-paid employment, while the men took up 
 other branches requiring more individual skill. These 
 places were taken mainly by Irish, with a few Germans and 
 English. But as the Irish saved their earnings, and as the 
 New England yeomen emigrated to the richer lands of the 
 great West, they passed out of the mills to buy up the de¬ 
 serted farms of the poorer Northeastern States, where, by 
 their persistent industry and manual labor, they achieved 
 success, and gained a position which satisfied them, but 
 with which the native New Englander is no longer contented. 
 Their places in the mills are now being more and more taken 
 by the French Canadians, who, in their new conditions and 
 surroundings, show little of the stolid and unprogressive 
 character which has kept them so long contented on their 
 little strips of land on the Saint Lawrence River. In the 
 very air they breathe they seem to imbibe a new and restless 
 energy, while the intelligence shown by their children in 
 the schools augurs well for their future progress. On the 
 whole the simplicity of our system of land tenure, and the 
 ease with which small parcels may be obtained, must be 
 rated among the most important factors in considering our 
 possible advantage over other countries. 
 
 Next in our list comes the savings-bank. In 1875, out of 
 the 1,652,000 inhabitants of Massachusetts, 720,000 were 
 depositors in savings-banks to the amount of $238,000,000. 
 
422 
 
 ECONOMIC HISTORY. 
 
 During the late years of depression the deposit has decreased 
 somewhat in amount, but the decrease has been chiefly owing 
 to the withdrawal of money for other investment, especially 
 in United States bonds. There have been some failures of 
 banks and some losses, as might well have been expected, 
 but they have been less than in any other branch of business; 
 and the savings-bank system stands firmly based on well- 
 earned confidence, and offers an easy means of saving the 
 smallest sums to every man, woman, and child in the State. 
 At the present time the deposits in the savings-banks of 
 Massachusetts amount to about $240,000,000, owned by 
 about 750,000 persons. 
 
 To these causes of quick adaptation to any conditions that 
 may arise, or to any necessity for the application of new 
 methods or devices, may be added the custom, which has 
 almost the force of law, of an equal distribution of estates 
 among the children of the testator. Tools to him who can 
 use them is the unwritten law; and neither land nor capital 
 can remain long in the possession of him who cannot direct 
 or use them wisely. Liberty to distribute is esteemed as 
 important a factor in our body-politic as liberty to accumu¬ 
 late, even though the liberty may sometimes lead to the 
 apparent waste of great fortunes. 
 
 Finally, it must be held that our freedom from the blood- 
 tax of a standing army, and the fact that the proceeds of 
 taxation are, on the whole, usefully and productively ex¬ 
 pended, are among our greatest advantages; and this is 
 asserted with confidence, notwithstanding the misgovern- 
 ment of some great cities and of several of the Southern 
 States. What are these failures but proofs of the general 
 confidence of the people in local self-government ? Great 
 frauds and great abuses can only happen where integrity is 
 the common rule; and where each man distrusts his neigh¬ 
 bor, or each town, city, or State, distrusts the next, the 
 opportunity for fraud or breach of trust cannot occur. The 
 use of inconvertible paper money during many years has not 
 been without its necessary malign result upon the character 
 of the people, and the newspapers are filled with the fraud 
 
THE COTTON MANUFACTURES . 
 
 423 
 
 and corruption that have come to light; but no newspaper 
 has ever yet recorded one fact that offsets many frauds. In 
 the great Boston fire, one of the Boston banks lost not only 
 every book of account but every security and note that was 
 in its vaults, amounting to over $1,250,000. On the morn¬ 
 ing after the fire its officers had no evidence or record by 
 which any of the persons or corporators who owed it money 
 could be held to their contracts; yet within a very short 
 time, duplicate notes were voluntarily brought in by its 
 debtors, many of whom knew not whether they could ever 
 pay them because the fire had destroyed their own property, 
 and the known ultimate loss of that bank from the burning 
 of its books and securities was less than $10,000. 
 
 Our army is but a border police. Although its officers are 
 held in honor and esteem, military life is not a career that 
 very many seek, and as time goes on it will become an occu¬ 
 pation less and less to be desired. Thus we are spared not 
 only the tax for its support, but the worse tax of the with¬ 
 drawal of its members from useful and productive pursuits. 
 It is in this respect that we claim our greatest advantage 
 over the nations of continental Europe. What have we to 
 fear from the competition of Germany if we really undertake 
 to beat her in the neutral markets, which we can reach as 
 readily as she can ? For a little while, the better instruction 
 of the merchants in her technical and commercial schools 
 may give her advantage; but that can be overcome in a single 
 generation, or as soon as the need is felt with us, as it is 
 now beginning to be felt. After we shall have supplied our 
 present want of technical education, the mere difference be¬ 
 tween the presence of a great army on her soil and its neces¬ 
 sary support, and the absence of such a tax on us, will 
 constitute the difference on which modern commerce turns. 
 When traffic of the world turns on half a cent a yard, a cent 
 a bushel, or a half-penny a pound on the great staples, no 
 nation can long succeed in holding a traffic that is handi¬ 
 capped with a standing army. The protection of Germany 
 from our competition in neutral markets may be offset in 
 our yet more dangerous competition for men. The German 
 
424 
 
 ECONOMIC HISTORY . 
 
 already knows Texas, and in the one block of 60,000 square 
 miles of land by which the State of Texas exceeds the area 
 of the German empire, we offer room and healthy conditions 
 of life for millions of immigrants; and if they come in suffi¬ 
 cient numbers, they can raise on that single square of land 
 as much cotton as is now raised in the whole South, that is 
 to say, 5,000,000 bales; and as much wheat as is now raised 
 in the whole North, that is to say, 400,000,000 bushels, and 
 yet subsist themselves beside on what is left of this little 
 patch that will not be needed for these two crops. 
 
 It will be obvious that even the least imaginative cannot 
 but be moved by the influences that have been designated, 
 and that versatility and readiness to adopt every labor-saving 
 device will not only be promoted, but will be absolutely 
 forced into action, wdien such vast areas are to be occupied, 
 and when even the dullest boy is educated in the belief that 
 he also is to be one of those who are to build up this nation 
 to the full measure of its high calling. We may not dare 
 to boast, in view of all we have passed through; but we know 
 that slavery has been destroyed, and that the nation lives 
 stronger, truer, and more vigorous than ever before. We 
 know that it has been reserved for a democratic republic to 
 be the first among nations that, having issued government 
 notes and made them a legal tender, has resumed payment 
 in coin without repudiation or reduction of the promise. 
 We know that we have paid nearly a half of our great na¬ 
 tional debt already, and that the rest is now mainly held by 
 our own citizens. We believe that within the lives of men 
 of middle age now living, the nation will number one hun¬ 
 dred millions, and that, in whatever else we may be found 
 wanting, we cannot long be kept back in our career of mate¬ 
 rial prosperity, which shall be shared with absolute certainty 
 by every one who brings to the work health, integrity, and 
 energy. 
 
 If there is any force in this reasoning, our competition 
 with other manufacturing countries, in the supplying of neu¬ 
 tral markets with manufactured goods, will not be compassed 
 by the low rates of wages paid to our factory operatives or to 
 
THE COTTON MANUFACTURES. 
 
 425 
 
 the working-people engaged in our metal works and other 
 occupations, but first by obtaining and keeping such an ad¬ 
 vanced position in the application and use of improved tools 
 and machinery as shall make high wages consistent with a 
 low cost of production; secondly, by our ability to obtain the 
 raw materials at low cost. Every employer knows that 
 among employes who are paid by the piece, it is the opera¬ 
 tive that gains the largest earnings whose production costs 
 the least, because under the control of such operatives the 
 machinery is most effectively guided during working hours. 
 As it is with single operatives, so it is with large masses; if 
 well instructed and working under the incentives to industry 
 and frugality that have been named, their large product will 
 earn for them ample wages, and yet result in a low cost of 
 labor to the employer. Such workmen never have any “ blue 
 Monday. ” The workman who in this country habitually be¬ 
 comes intoxicated is soon discharged, and his place is filled 
 by one who respects himself and values his place too much 
 to risk his position in dissipation. 
 
 Competition with England in supplying the markets of 
 Asia, Africa, and South America with cotton goods, is now 
 perhaps the best criterion by which to gauge our ability to 
 compete in other branches of manufacture. It has been 
 often assumed in England that the increasing shipments of 
 cotton goods from this country have been forced by necessity, 
 and merely consisted of lots sold below cost, as a means of 
 obtaining ready money; but there is no ground whatever for 
 this general assumption, even though some small shipments 
 may have been made at first with this view. Our export of 
 cotton fabrics amounts as yet to but 7 or 8 per cent of our 
 production, and is but a trifle compared to that of Great 
 Britain; but it is not made at a loss, and it constitutes a 
 most important element in the returning prosperity of our 
 cotton-mills. The goods exported are mostly made by strong 
 and prosperous corporations, paying regular dividends, and 
 consist mainly of coarse sheetings and drills, which are sold 
 by the manufacturers to merchants, who send them to China, 
 Africa, and South America in payment for tea, silk, ivory, 
 
426 
 
 ECONOMIC HISTORY. 
 
 sugar, gums, hides, and wool. They are not made by oper¬ 
 atives who earn less than the recent or present rates of wages 
 in England, but in most departments of the mills by those 
 who earn equal wages, or even more. This competition had 
 been fairly begun before the late war in this country, but it is 
 now continued under better conditions. The mills of New 
 England, owing to through connections by rail, are now 
 relatively much nearer the cotton-fields than they were then. 
 Prior to 1860 substantially all the cotton went to the sea¬ 
 ports of the cotton States, and from there the cost of moving 
 it to the North or to Liverpool varied but little; but at the 
 present day a large and annually increasing portion of the 
 cotton used in the North is bought in the interior markets, 
 and is carried in covered cars directly to the mills, where 
 the bales are delivered clean, and much more free from 
 damage and waste than those which are carried down the 
 Southern rivers on boats and barges dumped upon the 
 wharves, and then compressed to the utmost for shipment 
 by sea. 
 
 In proof that this advantage is an actual one, the following 
 example may be cited: A contract has just been made for the 
 transportation of a large quantity of cotton from Texas to 
 Liverpool at the rate of $1.10 per 100 pounds, the proportion 
 assigned to the land carriage being TO cents, to transship¬ 
 ment in Boston and to the steamship 40 cents; the rate of 
 marine insurance is three eighths of 1 per cent, and the cost 
 of handling in Liverpool and transportation to Manchester, 
 not less than a quarter of a cent per pound. Bargains may 
 be made to bring cotton from the same point in Texas to the 
 principal factory cities of New England at the rate assigned 
 to the land carriage, namely, 70 cents per 100 pounds. This 
 cotton is brought from the interior towns of Texas to Boston 
 and cannot be carried to Liverpool by way of Galveston or 
 New Orleans so cheaply, else it would not come this way, 
 Assuming the bale to weigh 500 pounds, at 10 cents a pound, 
 we have the following comparative cost: — 
 
) 
 
 THE COTTON MANUFACTURES. 427 
 
 LOWELL. 
 
 Per Bale. Per Cwt. 
 
 Cost of cotton in Texas, 500 pounds, at 10 
 cents, including all local charges . . . $50 00 
 
 Freight to Lowell in a covered locked car in 
 which the cotton is protected from rain, 
 mud, and other causes of waste, at 70 
 cents per 100 pounds. 3 50 
 
 Total.$53 50 $10 70 
 
 LANCASHIRE. 
 
 500 pounds, at 10 cents, including all local 
 
 charges.$50 00 
 
 Freight from Texas to Liverpool, at $1.10 
 
 per 100 pounds. 5 50 
 
 Insurance at three eighths of one per cent on 
 
 $56. 21 
 
 Transshipment in Liverpool, and freight to 
 Lancashire, one fourth of a cent ... 1 25 
 
 Total.$56 96 
 
 % 
 
 Advantage of Lowell over Lancashire . . $3 46 
 
 11 39 
 
 $0 69 
 
 There may be changes in the rates, but it does not seem 
 probable that the relation of the land to the ocean rate can 
 be much changed, and it would therefore appear that the 
 New England manufacturer will have a permanent advantage 
 in the price of American cotton of any given grade, varying 
 from 6 to 8 per cent as the price of cotton may vary from 
 12 to 9 cents per pound; and this advantage may be equal to 
 15 or 25 per cent in ability to pay wages, as the cost of labor 
 varies from a quarter to a third in the total cost of coarse 
 and medium goods, such as constitute the chief part of the 
 demand of the world. 
 
 It may be said that this proves too much, and that the 
 cotton spinners of the Southern States will have the same 
 relative advantage over New England. Let this be freely 
 admitted. We are treating the question of the future 
 supremacy of the United States in the manufacture as well 
 as in the growth of cotton, and if the future changes in 
 
428 
 
 ECONOMIC HISTORY. 
 
 population, wealth, and condition of the different sections of 
 this country shall, in the future, cause the increase of spin¬ 
 dles especially in coarse fabrics, to be planted in the healthy 
 hill country of northern Georgia, eastern Tennessee, and the 
 Carolinas, it will simply be the greater evidence that natural 
 laws are paramount. If Georgia has twice the advantage 
 over Lancashire that New England now possesses it will 
 only be the fault of the people of Georgia if they do not 
 reap the benefit of it. 
 
 It has been stated that our present rates of wages in our 
 cotton factories are higher than they were in 1860, and with 
 our increasing prosperity they will tend to advance; but at 
 the same time the cost of the labor in the finished fabric has 
 been reduced by the greater productive power of the machinery. 
 The fabrics upon which by far the largest part of the spin¬ 
 dles and looms of the country are operated may be divided 
 substantially into the following classes: — 
 
 1. The printing-cloth, 28 inches wide and 7 yards to the pound. 
 The cost of mill labor in making this fabric, including the salaries, 
 wages, or earnings of every one employed, is now less than one 
 cent, or a half-penny, a yard. 
 
 2. The heavy sheeting, 36 inches wide and the heavy drill, 30 
 inches wide, each weighing from 2f to 3 yards to the pound. The 
 cost of mill labor in making these fabrics is about 1\ cents per 
 yard. 
 
 3. Shirtings and sheetings, 30 to 36 inches wide, Nos. 20 to 30 
 yarns, each weighing from 3 to 4 yards to the pound. The cost of 
 mill labor in these goods is from to 2 cents per yard. 
 
 4. The fine sheeting or shirting, from 30 to 40 inches wide, 
 Nos. 30 to 40 yarns, weighing from 3 to 4 yards to the pound. 
 The cost of mill labor in these goods is from to 3 cents per 
 yard. 
 
 5. Fabrics of a similar kind to the above, from 1 to 3 yards 
 wide. 
 
 6. Heavy cotton duck, cotton grain-bags, cotton hose, and other 
 special articles. 
 
 7. Blue denims, stripes, tickings, brown denims and duck, and 
 other heavy colored goods, substantial ginghams, cottonades, and 
 other fancy woven fabrics of medium or heavy weight. 
 
THE COTTON MANUFACTURES . 
 
 429 
 
 These seven classes comprise more than 95 per cent of our 
 cotton fabrics in weight; to them are to be added lawns, 
 woven fabric of light weight for dresses, and spool-cotton. 
 
 In respect of one half of these fabrics, being those of the 
 heavier grade, our proximity to the cotton-field, computed at 
 not less than half a cent per pound, oftener three quarters 
 will enable the New England manufacturer to pay from 15 to 
 20 per cent higher wages and yet to make the goods, other 
 things being equal, at the same cost as his competitor in 
 Lancashire. On a large portion of the other kinds this ad¬ 
 vantage in the cost of cotton would be from 10 to 15 per 
 cent. 
 
 The natural advantages cannot work immediate results; 
 the ways and means of a great commerce cannot be impro¬ 
 vised in a year, hardly in a generation. Much depends on 
 the wisdom of our legislators in framing the acts under 
 which our taxes are collected, whether customs or excise, 
 and yet more upon our adherence to a specie basis in our 
 currency; but in the long run the only reason why we shall 
 not assume a constantly increasing share in the cotton manu¬ 
 facture of the world will be the free choice that our country 
 offers for other occupations of a more profitable or more 
 desirable kind. 
 
 Reference has been made to the small proportion of fine 
 spinning in the United States. Within the last few years 
 great progress has been made in spinning and weaving 
 fabrics of Nos. 60 to 100, such as lawns and fine dress goods, 
 and also in spinning fine yarn for spool-cotton. In the latter 
 direction yarns as fine as No. 120 are now spun on the ring 
 spinning-frame, a machine invented in this country and 
 more used than any other for warp spinning, and now being 
 adopted in Europe. Yarns as fine as 550 are spun on mules 
 for three-cord sewing-cotton, and for experiment much finer 
 counts have been reached. It has often been alleged that 
 fine yarns could not be as well spun in the United States as 
 in England, owing to the dry and electrical conditions of the 
 atmosphere during a considerable part of the year. This 
 difficulty has existed in some degree, although not so as to 
 
430 
 
 ECONOMIC HISTORY. 
 
 preclude fine work if it had been profitable to undertake it; 
 but as far as this difficulty existed it has lately been entirely 
 removed by the invention of a very simple and inexpensive 
 apparatus for moistening the air with the finest spray of pure 
 cold water, by which method the air of a spinning or weav¬ 
 ing-room may be kept at any desired degree of humidity in 
 the driest day, so that the adverse effect of electricity is 
 entirely overcome. 
 
 Whenever the condition and extension of our market will 
 warrant the undertaking, there is now no obstacle to our 
 manufacturing any variety of cotton fabric that is in de¬ 
 mand, either coarse or fine. 
 
 While it may not be worth while to give historical statistics 
 in relation to the cotton manufacture of this country in the 
 present report, a few words may well be devoted to changes 
 in the work, which have conduced not only to the welfare of 
 the people, but to the welfare of the operatives also. 
 
 When the cotton manufacture was first established in the 
 United States water-power was considered essential to the 
 work, and, as a rule, the location of mills was limited to 
 narrow valleys, or places where there was room only for 
 mills of several stories in height. The first mills built were 
 very considerable structures for their time, but they were 
 low-studded, badly lighted, and were heated by stoves; and 
 in these mills the operatives were compelled to work under 
 arduous conditions (owing to the imperfection of the machin¬ 
 ery) thirteen to fourteen hours a day. These narrow struc¬ 
 tures were in some places built seven stories in height. All 
 the plans were made with reference to this form of structure, 
 whether the mill was to be operated by water-power or by 
 steam, until quite a recent period. In 1860 the “ normal ” 
 cotton-mill (so to speak) had become a factory four or five 
 stories high, about 60 feet wide, varying in length according 
 to the amount of machinery, high-studded, well lighted, 
 thoroughly well ventilated, and heated by radiation from 
 steam-pipes. 
 
 In 1866 the machine for sizing yarn, known as the 
 “ slasher ” was first imported, displacing the machine known 
 
THE COTTON MANUFACTURES. 
 
 431 
 
 as the a dresser. ” In the use of the slasher one man and a 
 boy working in a thoroughly well-ventilated room, at a 
 moderate degree of heat, took the place of seven or eight 
 men who had been previously employed in the same work in 
 a room which was of necessity kept at over 100° F., the at¬ 
 mosphere saturated with sour starch. This change removed 
 the only really objectionable kind of work from the cotton 
 factory. In the earlier mills the apparatus for the removal 
 of dust from the factory was very imperfect, but to-day every 
 room even including those in which the cotton is opened, is 
 substantially free from dust; and it happens that the degree 
 of heat and of humidity required for the best work of the 
 cotton factory is one which conduces in great measure to the 
 health of the operative^ perhaps a little warmer than may be 
 desirable. 
 
 At the present time another change is in progress. The 
 use of water-power is becoming less, its development for the 
 purpose of sale having never proved profitable. The power 
 thus developed has been a valuable auxiliary in the working 
 of the factory, but as a matter of investment the development 
 of land and water-power together have almost without ex¬ 
 ception failed to be profitable. 
 
 The great progress in the construction of the steam-engine 
 and in the economy of fuel is steadily working towards a 
 change to steam as the principal motive-power for the cotton 
 factory. An incidental advantage in this change is that the 
 factory may be placed nearer to the principal markets, where 
 it can be more conveniently supervised and more easily 
 reached. The use of steam also renders a choice of location 
 perfectly feasible; and the model factory, one or two stories 
 high, may be placed upon a level plain, and can be more 
 easily lighted and ventilated and more economically operated 
 than when any other form of building is used. Under these 
 new conditions, better dwellings for the operatives, less 
 crowded, can also be provided, and in every respect the work 
 can be conducted under better conditions. 
 
 At the present time the hours of labor in New England, 
 where most of the cotton manufacturing is done, vary from 
 
432 
 
 ECONOMIC HISTORY. 
 
 ten to eleven hours per day. This great change has been 
 brought about by a gradual comprehension of the best con¬ 
 ditions both for the laborer and for the capitalist, and with¬ 
 out much regard to legislation. It is probable that ere long 
 ten hours will be the limit of factory work throughout New 
 England, either by process of legislation or through the 
 conviction on the part of employers that any longer hours 
 are not profitable, — a conclusion to which many have al¬ 
 ready come. 
 
 A great change has also in the progress of time been 
 effected in the dwellings in which the factory operatives 
 live, in part tending towards better conditions, in part to 
 worse conditions. On the whole there has been less average 
 progress in this direction than in the construction and opera¬ 
 tion of the mills themselves. The choice of position, how¬ 
 ever, which is now given by the greater use of steam, gives 
 better opportunities for scattering the dwelling-houses over 
 a wider area at little cost. 
 
 A more abundant supply and choice of food has been 
 effected in this as in all other branches of work, to the great 
 benefit of the operatives, by the consolidation and more 
 effective service of railroads. The average work of a male 
 operative over sixteen years of age in a textile factory will 
 earn enough in a day to pay for the transportation of meat 
 and bread for one year, one thousand miles, or from Chi¬ 
 cago to Lowell, Lawrence, or Fall River. So far as cost is 
 concerned, the great fields of the West and the factories of 
 the East are in closer proximity than if the factory depended 
 for its food upon its own immediate neighborhood, when 
 served only by wagon-roads. The same changes which have 
 so greatly reduced the railway charges between East and 
 West are now taking place between North and South. The 
 charge for moving cotton is becoming less year by year, and 
 it will soon matter little where the cotton factory is placed, 
 so far as distance between the field and the factory is con¬ 
 cerned. The choice may be made so as to secure the stimu¬ 
 lus of a moderately cold climate, in which in-door labor is 
 more to be desired than out-door, in which the humidity of 
 
THE COTTON MANUFACTURES. 
 
 433 
 
 the atmosphere is measurably uniform or is not subject to 
 extremes, and where facilities for repairs on machinery are 
 close at hand, and the population is sufficiently dense to 
 assure an adequate and constant supply of operatives,— mills 
 which are much isolated always working at a disadvantage. 
 
 Great changes of a beneficial kind can now be foreseen in 
 the application of electricity to the lighting of the factory. 
 The developments in this direction are also such, that, what¬ 
 ever the relative cost of the electric light as compared to gas 
 may be, it is yet so beneficial in other respects, that no fac¬ 
 tory manager can well afford to dispense with it, not only 
 because of the more perfect work which its use assures, but 
 because the choice of the operative in selecting the place in 
 which to work will render the use of the electric light almost 
 a matter of necessity. 
 
 In conclusion, it may be said that the progress in the art 
 of manufacturing cotton fabrics in the last forty years has 
 been very great, distinctly sustaining the rule which affects 
 all the arts to which modern machinery can be applied, 
 namely, that, in proportion to the effectiveness of capital in 
 the form of machinery and the freedom with which it may 
 be applied, the cost of production is lessened and the con¬ 
 sumer is served more cheaply; while, on the other hand, the 
 wages of the operatives are increased, the conditions of work 
 made better, and the identity of interests between labor and 
 capital are established. 
 
 It may be said that in the absence of any artificial obstruc¬ 
 tions to traffic between States or nations, the truest guide to 
 the place where the lowest cost of production is compassed 
 may be found by ascertaining where the wages of labor are 
 the highest, and the conditions of life the best; that at that 
 point the lowest cost of production must be found for this 
 reason: both wages and profits are derived from the sale of 
 the thing produced; hence it follows that where the natural 
 conditions of production are best, the machinery most ef¬ 
 fective, and the labor the most intelligent and skilful, the 
 product will be largest at the least effort to those who do the 
 work, and when the division of this product is made under 
 
 28 
 
434 
 
 ECONOMIC HISTORY. 
 
 the conditions of absolutely free competition, the relative 
 proportion which capital can secure to itself will be least, 
 even though its absolute share be greater and greater as the 
 years go on; but the share which the laborer will receive 
 will increase year by year, both absolutely and relatively. 
 As capital increases the absolute sum of profits is greater, 
 but the relative share of the product secured by capital be¬ 
 comes less. The increase of capital and its effective use by 
 skilled laborers assure a larger production, and the workman 
 obtains a larger share of a larger product, measured in kind 
 or in wages paid in money. In the cotton-mill, as well as 
 in many other arts, special skill is required, but perhaps 
 less general intelligence; therefore a lower grade of opera¬ 
 tives may be employed from time to time as the machinery 
 becomes more automatic, but at a steadily increasing rate of 
 wages. Invention may, therefore, be said to enable all con¬ 
 ditions of men to attain a higher plane of material welfare, 
 and as one class passes from the factory to other occupations 
 which offer better conditions of life, new improvements ena¬ 
 ble those who could not do the factory work before, to under¬ 
 take and carry it on. Thus it has been in the past, since 
 the farmers’ daughters of New England left the factory, in 
 which, with much longer hours of work, they earned only 
 about one half the wages now paid; but those who have suc¬ 
 ceeded them could not then have been capable of doing the 
 work at all which they now so easily accomplish. 
 
THE IRON AND STEEL INDUSTRIES. 
 
 435 
 
 THE IRON AND STEEL INDUSTRIES. 
 
 From Swank’s Statistics of the Iron and Steel Production, 
 Tenth Census, Yol. II. pp. 886-890. 
 
 Important Uses of Iron and Steel. 
 
 The people of the United States are the largest per capita 
 consumers of iron and steel in the world, and of all nations 
 they are also the largest aggregate consumers of these pro¬ 
 ducts. Great Britain makes more iron than we do, but she 
 exports about one half of all that she makes. She exports 
 more than one half of the steel that she makes, and yet makes 
 but little more than this country. No other European coun¬ 
 try equals Great Britain either in the per capita or aggregate 
 consumption of iron and steel. This country is not now 
 producing as much iron and steel as it consumes, but imports 
 large quantities of both products, Great Britain being the 
 principal source of our foreign supply. Our exports of iron 
 and steel are only nominal. 
 
 A simple enumeration of some of the more important uses 
 to which iron and steel are applied by our people will show 
 how prominent is the part these metals play in the develop¬ 
 ment of American civilization and in the advancement of 
 our greatness and power as a nation.. 
 
 We have built almost as many miles of railroad as the 
 whole of Europe, and consequently have used in their con¬ 
 struction almost as many rails, and now use almost as 
 many railroad cars and locomotives. At the close of 1881 
 this country had 100,000 miles of railroad, Europe had 
 about 106,000 miles, and all the rest of the world had about 
 45,000 miles. The United States had nineteen miles of 
 railroad to every 10,000 of population, while Europe had a 
 little more than three miles to the same population. Rail¬ 
 roads, it is well known, annually consume more than one 
 half of the world’s production of iron and steel, — rails, 
 
436 
 
 ECONOMIC HISTORY. 
 
 bridges, cars, and locomotives being impossible without 
 these metals. The street railway is an American invention 
 which also consumes large quantities of iron and steel, and 
 we are far in advance of every other nation in its use. We 
 were also the first nation in the world to introduce elevated 
 railways especially to facilitate travel in large cities. In the 
 construction of our New York elevated railways beauty of 
 design, fitness of parts, and strength of materials have been 
 so perfectly combined as to excite the admiration of all who 
 behold them. We are the foremost of all nations in the use 
 of iron and steel in bridge-building for railroads and ordinary 
 highways, and the lightness and gracefulness of our bridges 
 are nowhere equalled, while their strength and adaptability 
 to the uses to which they are required are nowhere surpassed. 
 In the use of iron for water-pipes and gas-pipes we are prob¬ 
 ably in advance of every other nation. We make more iron 
 stoves for heating halls and dwellings and for the purposes 
 of the kitchen than all the rest of the world, and in the use 
 of heaters and ranges we are behind no other nation. Our 
 household stoves, both for heating and cooking, are works of 
 real art as well as of utility. They are ornaments of Ameri¬ 
 can homes, instead of being conveniences simply. Our heat¬ 
 ing stoves are especially handsome, bright, cheerful, health¬ 
 ful, and clean. In all respects they form the best combination 
 of desirable qualities yet devised for the heating of private 
 dwellings. Cooking and other domestic utensils of iron have 
 always, even in colonial days, been freely used in American 
 households. We make liberal use both of cast and wrought 
 iron in the construction of public and private buildings. Our 
 use of iron for these purposes has in late years been quite 
 marked, and in no respect more so than in the truly artistic 
 effects which we give to this metal. We probably excel all 
 nations in the use of iron for ornamental purposes in connec¬ 
 tion with masonry,brick-work,and wood-work. Fine illustra¬ 
 tions of the artistic combination of iron with other materials 
 may be seen in the interior of the new State Department 
 building at Washington and in the interior of the new passen¬ 
 ger depot of the Pennsylvania railroad at Philadelphia. We 
 
THE IRON AND STEEL INDUSTRIES. 
 
 437 
 
 lead the world in the use of iron and steel wire for fencing 
 purposes, and we have more miles of telegraph wire in use 
 than any other country. Barbed-wire fencing is an Ameri¬ 
 can invention. We have made creditable progress in the con¬ 
 struction of iron ships, and we would have made much greater 
 progress if the same encouragement that has • been given by 
 other nations to their shipping interests had been given to 
 ours. We use immense quantities of plate-iron in the stor¬ 
 age, transportation, and refining of petroleum, in the produc¬ 
 tion of which nature has given us almost a monopoly. The 
 oil-wells themselves yearly require thousands of tons of iron 
 pipes for tubing. We make liberal use of plate and sheet iron 
 in the construction of the chimneys of steamboats on our lakes 
 and rivers, and in the construction of factory, rolling-mill, 
 and blast-furnace chimneys, and the stacks of blast-furnaces. 
 American planished sheet-iron has almost entirely super¬ 
 seded Russia sheet-iron in our markets. We use it for loco¬ 
 motive jackets, in the manufacture of stoves and stove-pipe, 
 and for many other purposes. We are the largest consumers 
 of tin plates in the world, — Great Britain, their principal 
 manufacturer, sending us annually more than one half of her 
 whole product. Portable and stationary engines consume 
 large quantities of iron and steel. Our beautiful steam fire- 
 engines are the product of American taste and skill, if they 
 are not strictly an American invention, and we annually 
 make large numbers of them for home use and for exporta¬ 
 tion. Anchors and chains, cotton-presses and cotton-ties, 
 sugar-pans and salt-pans, and general foundry and machine 
 work annually require large quantities of either iron or steel. 
 We make our own cotton and woollen manufacturing machin¬ 
 ery, and nearly all the other machinery that we use. The 
 manufacture of the printing-presses of the country consumes 
 immense quantities of iron and steel. No other country 
 makes such free use of the printing-press as this country. 
 We are the leading agricultural nation of the world, and 
 hence are the largest consumers of agricultural implements; 
 but we are also in advance of every other nation in the use 
 of agricultural machinery. Our use of iron and steel in 
 
438 
 
 ECONOMIC HISTORY. 
 
 agriculture takes rank next to their use in the construction 
 and maintenance of railroads. We lead all nations in the 
 manufacture of cut-nails and spikes. Having a larger and 
 more rapidly increasing population than any other country 
 that is noted for its consumption of iron, we are consequently 
 the largest consumers of nails and spikes in the construction 
 of dwellings and public buildings, stores, warehouses, offices 
 and similar structures. Our extended and varied mining 
 operations consume iron and steel in large quantities. So 
 do our manufactures of scales and balances, letter-presses, 
 burglar-proof and fire-proof safes, sewing-machines, and 
 wagons and carriages. Sewing-machines are an American 
 invention. Considerable quantities of iron or iron and 
 steel are used for sewer and other gratings, street-crossings, 
 iron pavements, lamp-posts, posts for awnings, all sorts of 
 small hardware, horseshoes and horseshoe nails, wire-rope, 
 iron hoops, iron cots and bedsteads, woven-wire mattresses, 
 iron screens, iron railings, and fire-arms. In the manufac¬ 
 ture of machine and hand tools and general cutlery we are 
 excelled by no other nation, and in the use of machine tools 
 we are in advance of every other nation. In general cutlery 
 our saws and axes especially enjoy a world-wide reputation. 
 Not the least important use to which iron and steel are put 
 in this country is in the extension of the iron industry itself, 
 — every blast-furnace, rolling-mill, or steel works that is 
 erected first devouring large quantities of these products 
 before contributing to their general supply. 
 
 In the substitution of steel for iron this country is rapidly 
 progressing, especially in the construction and equipment of 
 its railroads. During the past few years fully two thirds of 
 all the rails that have been laid on American railroads have 
 been made of Bessemer steel, and at present a still larger 
 proportion of steel rails is required by our railroad com¬ 
 panies. On several American railroads the boilers of all 
 new locomotives are now required to be made of steel, and 
 the tendency is toward the exclusive use of steel for locomo¬ 
 tive boilers, and its general use for stationary and marine 
 boilers. The tires of American locomotives are now made 
 
THE IRON AND STEEL INDUSTRIES. 
 
 439 
 
 exclusively of steel, and the fire-boxes of our locomotives are 
 generally made of steel. The steel used in the construction 
 of American locomotives is now chiefly produced by the open- 
 hearth process. We have built a few steel bridges, but there 
 is no marked tendency to substitute steel for iron in bridge¬ 
 building. Steel is, however, largely used in the manufacture 
 of wire, including wire-fencing, and for car and carriage 
 axles, carriage tires, fire-arms, screws, and many other pur¬ 
 poses. But little steel has yet been used in this country for 
 nails and horse-shoes. 
 
 Mention has been made of the artistic finish of some of our 
 iron-work; but the subject seems worthy of further notice. 
 It is not only in stove-founding, in the graceful designs of 
 bridges and elevated railways, and in the delicate combina¬ 
 tion of iron with other materials in the construction and 
 ornamentation of buildings that American iron-workers have 
 displayed an exquisite taste and a bold and dexterous touch. 
 The fine arts themselves are being enriched by the achieve¬ 
 ments of our iron-working countrymen. An iron foundry 
 at Chelsea, in Massachusetts, has recently reproduced, in 
 iron castings, various works of art with all the fidelity and 
 delicacy of Italian iron-founders. The most delicate antique 
 patterns have been successfully copied. Shields representing 
 mythological groups and classic events, medallions contain¬ 
 ing copies of celebrated portraits, panels containing flowers 
 and animals, an imitation of a Japanese lacquer-tray one 
 sixteenth of an inch thick, and a triumphal procession repre¬ 
 sented on a large salver comprise some of the work of the 
 Chelsea foundry. Some of the castings have been colored to 
 represent bronze, and others to represent steel, while others 
 again preserve the natural color of the iron. The bronzed 
 castings resemble beaten work in copper. Only American 
 iron is used. The ornamental uses to which art castings of 
 iron may be put are many, and as they can be cheaply pro¬ 
 duced it may be assumed that a demand will ere long be 
 created for them that will be in keeping with the artistic 
 taste which has been so generally developed in our country 
 during the past few years. 
 
440 
 
 ECONOMIC HISTORY. 
 
 We conspicuously fall behind many other nations in the 
 use of iron and steel for military purposes. We maintain 
 only a small standing army and a small navy, and hence have 
 but little use for iron or steel for the supply of either of these 
 branches of the public service. We are also behind many 
 other nations in the use of iron and steel sleepers for rail¬ 
 way tracks. We yet have an abundance of timber for railway 
 cross-ties, and hence do not need to substitute either iron or 
 steel cross-ties. Except possibly as an experiment, there is 
 not an iron or steel cross-tie in use in this country. It is a 
 singular fact that we still import many blacksmith’s anvils, 
 their manufacture being a branch of the iron business to 
 which we have not yet given adequate attention. Anvils of 
 the best quality are, however, made in this country. A far 
 more serious hiatus in our iron industry is found in the al¬ 
 most total absence of the manufacture of tin plates, the basis 
 of which is sheet-iron, as is well known. As we can import 
 the crude tin as easily as we import other commodities, our 
 failure thus far to manufacture tin plates must be ascribed to 
 the only true cause, —our inability to manufacture sheet-iron 
 and coat it with tin as cheaply as is done by British manu¬ 
 facturers. It is not improbable that tin ore may be yet dis¬ 
 covered in our own country in sufficiently large quantities to 
 supply any domestic demand that maj^ be created for its use. 
 
 Conclusion. — In reviewing the historical pages of this 
 report the most striking fact that presents itself for consid¬ 
 eration is the great stride made by the world’s iron and steel 
 industries in the last hundred years. In 1788 there were 
 only eighty-five blast-furnaces in Great Britain, most of 
 which were small, and their total production was only 68,800 
 tons of pig-iron. In 1880 Great Britain had 967 furnaces, 
 many of which were very large, and their production was 
 7,749,238 tons. A hundred years ago there were no rail¬ 
 roads in the world for the transportation of freight and pas¬ 
 sengers. Iron ships were unknown, and all the iron bridges 
 in the world could be counted on the fingers of one hand. 
 Without railroads and their cars and locomotives, and with¬ 
 out iron ships and iron bridges, the world needed but little 
 
THE IRON AND STEEL INDUSTRIES. 
 
 441 
 
 iron. Steel was still less a necessity, and such small quan¬ 
 tities of it as were made were mainly used in the manufac¬ 
 ture of tools with cutting edges. 
 
 The great progress made by the world’s iron and steel 
 industries in the last hundred years is as marked in the 
 improvement of the processes of manufacture as in the in¬ 
 creased demand for iron and steel products. A hundred 
 years ago all bar-iron was laboriously shaped under the trip- 
 hammer; none of it was rolled. Nor was iron of any kind 
 refined at that time in the puddling furnace; it was all refined 
 in forges, and much of it was made in primitive bloomary 
 forges directly from the ore. Nearly all of the blast-furnaces 
 of a hundred years ago were blown with leather or wooden 
 bellows by water-power, and the fuel used in them was chiefly 
 charcoal. Steam-power, cast-iron blowing-cylinders, and the 
 use of bituminous coal had just been introduced. Less than 
 sixty years ago heated air had not been used in the blowing 
 of blast-furnaces, and fifty years ago anthracite coal had not 
 been used in them, except experimentally. Thirty years ago 
 the Bessemer process for the manufacture of steel had not 
 been heard of, and the open-hearth process for the manufac¬ 
 ture of steel had not been made a practical success. Thirty 
 years ago the regenerative gas furnace had not been invented. 
 The nineteenth century has been the most prolific of all the 
 centuries in inventions which have improved the methods of 
 manufacturing iron and steel, and which have facilitated 
 their production in large quantities. 
 
 The next most important fact that is presented in the 
 historical chapters of this report is the astonishing prog¬ 
 ress which the iron and steel industries of the United States 
 have made within the last twenty years. During this 
 period we have not only utilized all contemporaneous im¬ 
 provements in the manufacture of iron and steel, but we have 
 shown a special aptitude, or genius, for the use of such im¬ 
 provements as render possible the production of iron and 
 steel in large quantities. Enterprising and courageous as 
 the people of this country have always been in the manu¬ 
 facture of iron and steel, they have shown in the last 
 
442 
 
 ECONOMIC HISTORY. 
 
 twenty years that they have in all respects been fully alive 
 to the iron and steel requirements of our surprising national 
 development. If we had not applied immense blowing- 
 engines and the best hot-blast stoves to our blast-furnaces 
 our present large production of pig-iron would have been im¬ 
 possible. If we had not built numerous large rolling-mills 
 we could not have had 'a sufficient supply of plate-iron for 
 locomotives and other boilers, the hulls of iron ships, oil- 
 tanks, nails and spikes, and other important uses; nor of 
 sheet-iron for stoves and domestic utensils; nor of tee, angle, 
 and channel iron for bridge-building and general construc¬ 
 tion purposes; nor of iron rails for our railroads; nor of bar- 
 iron and rod-iron for a thousand uses. If we had not promptly 
 introduced the Bessemer process the railroads of the country 
 could not have been supplied with steel rails, and without the 
 four and a half million tons of American steel rails that have 
 been laid down in the past twelve years our trunk railroads 
 could not have carried their vast tonnage of agricultural and 
 other products, for iron rails could not have endured the wear 
 of this tonnage. If we had not established the manufacture 
 of crucible steel and introduced the open-hearth process there 
 would have been a scarcity of steel in this country for the 
 manufacture of agricultural implements, springs for railway 
 passenger-cars, tires for locomotives, etc. Foreign countries 
 could not in late years have supplied our extraordinary wants 
 for pig-iron, rolled iron, iron and steel rails, and crucible 
 and open-hearth steel, for, if there were no other reasons, 
 the naturally conservative character of their people would 
 have prevented them from realizing the magnitude of those 
 wants. If our iron and steel industries had not been devel¬ 
 oped in the past twenty years as they have been it is clear 
 that our railroad system could not have been so wonderfully 
 extended and strengthened, and without this extension of 
 our railroads we could not have produced our large annual 
 surplus of agricultural products for exportation, nor could 
 our population have been so largely increased by immigration 
 as it has been. 
 
 We cannot fully comprehend the marvellous nature of the 
 
THE IRON AND STEEL INDUSTRIES. 
 
 443 
 
 changes which have taken place in the iron and steel indus¬ 
 tries of this country in recent years, unless we compare the 
 early history of those industries with their present devel¬ 
 opment. 
 
 In Alexander Hamilton’s celebrated “ Report on the Sub¬ 
 ject of Manufactures,” presented to Congress on the 5th of 
 December, 1791, just ninety years ago, it was stated with 
 evident satisfaction that “the United States already in a 
 great measure supply themselves with nails and spikes, ” so 
 undeveloped and primitive was her iron industry at that time. 
 In the preceding year, 1790, “Morse’s Geography” claimed, 
 in a description of New Jersey, that “ in the whole State it 
 is supposed there is yearly made about 1,200 tons of bar- 
 iron, 1,200 ditto of pigs, and 80 of nail rods;” and in 1802 
 it was boastingly declared in a memorial to Congress that 
 there were then 150 forges in New Jersey, “which at a 
 moderate calculation would produce twenty tons of bar-iron 
 each annually, amounting to 3,000 tons.” In 1880 there 
 were several rolling-mills in New Jersey and several hundred 
 in the United States which could each produce much more 
 bar-iron in a year than all of the 150 forges of New Jersey 
 would produce in 1802. 
 
 Less than fifty years ago the American blast-furnace which 
 would make four tons of pig-iron in a day, or twenty-eight 
 tons in a week, was doing good work. We had virtually 
 made no progress in our blast-furnace practice since colonial 
 days. In 1831 it was publicly proclaimed with some exulta¬ 
 tion that “ one furnace erected in Pennsylvania in 1830 will 
 in 1831 make 1,100 tons of pig-iron.” But, as George 
 Asmus has well said, “a time came when men were no 
 longer satisfied with these little smelting-pots, into which a 
 gentle stream of air was blown through one nozzle, which 
 received its scanty supply from a leather bag, squeezed by 
 some tired water-wheel.” After 1840 our blast-furnace prac¬ 
 tice gradually improved, but it was not until about 1865 that 
 any furnace in the country could produce 150 tons of pig-iron 
 in a week. Ten years later, in 1875, we had several furnaces 
 which could each make 700 tons of pig-iron in a week; in 
 1880 we had several which could each make 1,000 tons in a 
 
444 
 
 ECONOMIC HISTORY. 
 
 week; and in 1881 we had one furnace which made 224 tons 
 in a day, 1,857 tons in a week, and 5,598 tons in a month. 
 
 In 1810, seventy years ago, we produced only 917 tons of 
 steel, none of which was crucible steel. In 1881, fifty years 
 ago, we produced only about 2,000 tons of steel, not one 
 pound of which was crucible steel of the best quality. So 
 imperfect were our attainments as steelmakers in 1881 that 
 we considered it a cause of congratulation that “American 
 competition had excluded the British common blister steel 
 altogether.” In 1880 we had virtually ceased to make even 
 the best blister steel, better steel having taken its place and 
 in that year we produced 1,247,835 gross tons of steel of all 
 kinds, 64,664 tons of which were crucible steel. Our produc¬ 
 tion of Bessemer steel and Bessemer steel rails in 1880 was 
 larger than that of Great Britain. 
 
 It was not until 1844 that we commenced to roll any 
 other kind of rails than strap rails for our railroads, and not 
 even in that year were we prepared to roll a single ton of T 
 rails. In 1880 we rolled 1,305,212 gross tons of rails, nearly 
 two thirds of which were steel rails, and nearly all of which 
 were T rails. 
 
 The growth of the iron and steel industries of the United 
 States during the present century is perhaps best exemplified 
 in the statistics of the production of our blast-furnaces at 
 various periods. In 1810 we produced 53,908 gross tons of 
 pig-iron and cast-iron; in 1840 we produced 315,000 gross 
 tons; in 1860 we produced 821,223 gross tons; and in 1880 
 we produced 3,835,191 gross tons. Our production in 1881 
 will be about 4,500,000 gross tons. 
 
 The position of the United States among iron and steel 
 producing countries in 1880 is correctly indicated in the fol¬ 
 lowing table of the world’s production of pig-iron and steel 
 of all kinds, which we have compiled from the latest and 
 most reliable statistics that are accessible. This table places 
 the world’s production of pig-iron in 1880 at 17,688,596 
 gross tons, and the world’s production of steel in the same 
 year at 4,343,719 gross tons. The percentage of pig-iron 
 produced by the United States was nearly 22, and its per¬ 
 centage of steel was nearly 29. 
 
THE IRON AND STEEL INDUSTRIES. 
 
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446 
 
 ECONOMIC HISTORY. 
 
 Although this country cannot produce iron and steel as 
 cheaply as European countries which possess the advantages 
 of cheap labor and proximity of raw materials, it is not ex¬ 
 celled by any other country in the skill which it displays or 
 the mechanical and scientific economies which it practises in 
 any branch of their manufacture, while in certain leading 
 branches it has displayed superior skill and shown superior 
 aptitude for economical improvements. Our blast-furnace 
 practice is the best in the world, and it is so chiefly because 
 we use powerful blowing-engines and the best liot-blast stoves, 
 possess good fuel, and carefully select our ores. The excel¬ 
 lent quality of our pig-iron is universally conceded. Our 
 Bessemer steel practice is also the best in the world. We 
 produce much more Bessemer steel and roll more Bessemer 
 steel rails in a given time by a given amount of machinery, 
 technically termed a “ plant, ” than any of our European 
 rivals. No controversy concerning the relative wearing 
 qualities of European and American steel rails now exists, 
 and no controversy concerning the quality of American Bes¬ 
 semer steel ever has existed. We experience no difficulty in 
 the manufacture of open-hearth steel in the Siemens-Martin 
 furnace, and our steel which is thus produced is rapidly com¬ 
 ing into general use side by side with crucible steel. In 
 the manufacture of crucible steel our achievements are in 
 the highest degree creditable. In only one respect can it be 
 said that in its manufacture we fall behind any other coun¬ 
 try; we have not paid that attention to the manufacture of 
 fine cutlery steel which Great Britain has done. This is, 
 however, owing to commercial and not to mechanical reasons. 
 American crucible steel is now used, without prejudice, in 
 the manufacture of all kinds of tools, and in the manufacture 
 of carriage-springs and many other articles for which the best 
 kinds of steel are required. In the quantity of open-hearth 
 and crucible steel produced in a given time by a given plant, 
 we are certainly abreast of all rivals. The largest crucible 
 steel-works in the world are those of Park, Brother, & Co., 
 at Pittsburg, Penn. Our rolling-mill practice is fully equal 
 to the best in Europe, except in the rolling of heavy armor 
 
THE IRON AND STEEL INDUSTRIES. 
 
 447 
 
 plates, for which there has been but little demand, and in 
 the production of which we have, consequently, had but little 
 experience. The quality of our rolled iron, including bar- 
 iron, plate-iron, sheet-iron, iron hoops, and iron rails, is 
 uniformly superior to that of foreign rolled iron. In the 
 production of heavy forgings and castings, as well as all 
 lighter products of the foundry and machine-shop, this coun¬ 
 try has shown all the skill of the most advanced iron-working 
 countries in Europe. In the production of steel castings we 
 have exhibited creditable skill and enterprise, and we are in 
 advance of all countries in the regular use of the Bessemer 
 converter for this purpose. 
 
 All of our leading iron and steel works, and indeed, very 
 many small works, are now supplied with systematic chemi¬ 
 cal investigations by their own chemists, who are often men 
 of eminence in their profession. The managers of our blast¬ 
 furnaces, rolling-mills, and steel-works are themselves fre¬ 
 quently well-educated chemists, metallurgists, geologists, or 
 mechanical engineers, and, sometimes, all of these combined. 
 Our rapid progress in increasing our production of iron and 
 steel is not merely the result of good fortune or the possession 
 of unlimited natural resources, but is largely due to the pos¬ 
 session of accurate technical knowledge by our iron-masters, 
 and by those who are in charge of their works, combined 
 with the characteristic American dash which all the world 
 has learned to respect and admire. The “ rule of thumb ” 
 no longer governs the operations of the iron and steel works 
 of this country. 
 
 A feature of our iron and steel industries which has at¬ 
 tended their marvellous productiveness in late years is the 
 aggregation of a number of large producing establishments 
 in districts, or, “centres,” in lieu of the earlier practice of 
 erecting small furnaces and forges wherever sufficient water¬ 
 power, iron ore, and charcoal could be obtained. This ten¬ 
 dency to concentration is, it is true, not confined to our iron 
 and steel industries, but it is to-day one of the most powerful 
 elements that influence their development. It had its begin¬ 
 ning with the commencement of our distinctive rolling-mill 
 
448 
 
 ECONOMIC HISTORY. 
 
 era, about 1830. In colonial days and long after the Revo¬ 
 lution our iron-making and steel-making establishments be¬ 
 longed to the class of manufacturing enterprises described by 
 Zachariah Allen, in his “Science of Mechanics,” in 1829. 
 “The manufacturing operations in the United States are all 
 carried on in little hamlets, which often appear to spring up 
 in the bosom of some forest, gathered around the waterfall 
 that serves to turn the mill-wheel. These villages are scat¬ 
 tered over a vast extent of country, from Indiana to the 
 Atlantic, and from Maine to North Carolina, instead of being 
 collected together, as they are in England, in great manu¬ 
 facturing districts. ” While these primitive and picturesque, 
 but unproductive, methods could not forever continue, it is 
 greatly to be regretted that our manufactures of iron and 
 steel and other staple products could not have grown to their 
 present useful and necessary proportions unattended by the 
 evils which usually accompany the collection of large manu¬ 
 facturing populations in small areas. 
 
 Upon the future prospects of iron and steel industries it is 
 unnecessary for us to dwell. Our resources for the increased 
 production of iron and steel for an indefinite period are 
 ample, and all other essential conditions of continued growth 
 are within our grasp. We are to-day the second iron-mak¬ 
 ing and steel-making country in the world. In a little while 
 we shall surpass even Great Britain in the production of steel 
 of all kinds, as we have already surpassed her in the pro¬ 
 duction of Bessemer steel and in the consumption of all iron 
 and steel products. The year 1882 will probably witness this 
 consummation. We are destined also to pass Great Britain 
 in the production of pig-iron. These conditions and results 
 are certainly gratifying to our national pride, for, of them¬ 
 selves, they assure the ultimate pre-eminence of the United 
 States among all civilized countries. If it be true, as recorded 
 in the second chapter of Daniel, that “ iron breaketh in pieces 
 and subdueth all things,” the country which produces and 
 consumes the most iron and steel must hold the first rank. 
 When the United States takes the position which it is des¬ 
 tined soon to take, as the leading iron and steel producing 
 
I 
 
 THE IRON AND STEEL INDUSTRIES. 449 
 
 as well as consuming country, the saying of Bishop Berkeley, 
 that “Westward the course of empire takes its way,” will 
 receive a new interpretation; for the iron industry, which 
 had its beginning in Asia, and then passed successively to 
 the countries along the Mediterranean, upon the Rhine, and 
 in the north of Europe, will then have made the circuit of 
 the world. 
 
 / 
 
450 
 
 ECONOMIC HISTORY. 
 
 XVI. 
 
 LES DETTES PUBLIQUES. 
 
 From Neymarck’s Les Dettes Publiques Europeennes, pp. 86-102. 
 
 I. —AUGMENTATION DES DETTES PUBLIQUES DEPUIS 1870. 
 
 yVANS cette longue enumeration de chiffres, ce qui frappe 
 -*-^tout d’abord l’esprit, c’est l’augmentation considerable 
 de la dette publique des Etats Europ^ens depuis 1870. Cette 
 dette s’elevait a 75 milliards en 1870 environ; elle atteint 
 115 milliards en 1886. L’augmentation n’est pas moindre 
 de 40 milliards. 1 
 
 Nous avons pris a dessein cette date de 1870 qui nous 
 rappelle les plus grands malheurs que notre pays ait jamais 
 supports, les lourdes charges qui ont ete la consequence de 
 
 1 D’apres le journal de la “ Societe de statistique ” (avril, 1867), la dette 
 publique d’Europe s’elevait, en 1865-1866, aux chiffres suivants: — 
 
 D'penses totales des budgets.10 milliards 508 millions. 
 
 Capitalisation des dettes.66 “ 013 “ 
 
 Int6ret et amortissement.2 “ 438 “ 
 
 La population de l’Europe etait evalue a 291,738,379 habitants; la dette par 
 habitant representait 226 fr. 30. \ 
 
 M. Paul Boiteau, dans son article sur le budget general de l’Ltat, insere dans 
 le Dictionnaire des finances de M. Leon Say, a reuni sous le titre de: “ Budgets 
 Europeens” la plupart des budgets du continent, et pour en faciliter l’etude, il 
 a place en regard du montant des depensefe prevues pour Texercice 1885, le 
 montant des dettes consolidees et autres qui grevent l’actif des differents Etats 
 ainsi que le montant des depenses militaires et celles du service de la Dette et 
 de l’amortissement. II obtient les chiffres suivants : — 
 
 Provisions totales des dOpenses budgOtaires annuelles . 18 milliards 848 millions. 
 Capitalisation des dettes consolidOes, des dettes amortis- 
 
 sables, annuitOs diverses, etc.108 431 “ 
 
 DOpenses du service des dettes et de l’amortissement . 4 “ 864 “ 
 
 DOpenses militaires, guerre et marine.4 “ 439 “ 
 
 On pourra comparer ces chiffres it ceux que nous donnons plus loin. 
 
LES DETTES PUBL1QUES. 
 
 451 
 
 la guerre, le fardeau qui pese sur nous tous. La guerre de 
 18T0 a coute a la France plus de 10 milliards; sans elle nous 
 ne serions pas groves d’impots ecrasants, et aucun peuple ne 
 supporterait plus facilement que nous le poids de sa dette 
 publique. 
 
 Aucun pays n’a, en effet, subi des desastres aussi grands 
 que les nOtres; aucun n’a eu une indemnite de 5 milliards a 
 payer a l’etranger; aucun n’a du reconstituer sa puissance 
 militaire, son materiel de guerre; aucun n’a eu a refaire, pour 
 ainsi dire, la patrie elle-meme tout entiere. Et cependant que 
 voyons-nous ? A l’exception de l’Angleterre qui, par suite 
 de divers remboursements d’annuit^s, a pu diminuer sa dette 
 de 1,350 millions ; a l’exception du Danemarck qui, par suite de 
 conversions heureusement effectuees, a pu reduire sa dette 
 de 20 millions, tous les pays se sont endettes depuis 1870 
 dans des proportions dnormes. Yoici sur ce point quelques 
 chiffres precis. Nous rangeons les Etats par ordre d’accroisse- 
 ment de leurs dettes depuis 1870. 
 
 AUGMENTATION DU CAPITAL NOMINAL DE PLUSIEURS 
 DETTES PUBLIQUES DEPUIS 1870. 
 
 France . 
 
 Russie 1 . 
 
 Prusse. 
 
 .... 11 
 
 .... 3 
 
 217 millions. 
 
 Italie. 
 
 
 it 
 
 132 
 
 Hongrie. 
 
 
 it 
 
 249 
 
 Autriche. 
 
 .... 1 
 
 it 
 
 770 
 
 Espagne . 
 
 .... 1 
 
 it 
 
 300 
 
 Belgique. 
 
 .... 1 
 
 a 
 
 89 
 
 Roumanie . . 
 
 
 
 701 
 
 Allemagne. 
 
 
 
 526 
 
 Saxe. 
 
 
 
 388 
 
 Grece. 
 
 
 
 270 
 
 Serbie. 
 
 
 
 244 
 
 Wiirtemberg. 
 
 
 
 194 “ 
 
 Suede. ' . . 
 
 
 
 181 “ 
 
 Hambourg. 
 
 
 
 24 
 
 Finlande. 
 
 
 
 20 
 
 Cette augmentation du capital nominal des dettes publiques 
 europ^ennes qui atteint, depuis 1870, 40 milliards environ, 
 
 1 Augmentation depuis 1866. 
 
452 
 
 ECONOMIC HISTORY. 
 
 a eu pour consequence l’augmentation des interets et des 
 amortissements annuels pour les emprunts contractes, l’ac- 
 croissement des depenses totales des budgets, une surcharge 
 dans les impots. Combien ne serions-nous pas alleges si 
 nous n’avions pas a payer chaque annee les lourds impots qui 
 grevent notre commerce et notre industrie, et qui, s’ajoutant 
 aux frais de production, ont rendu la concurrence a nos 
 produits d’autant plus facile ? Toutes proportions gardees, 
 les pays d’Europe souffrent, comme nous, de ces lourdes 
 charges qui, dans tous les pays, oberent les contribuables. 
 C’est la guerre, toujours la guerre* qui redoit aux budgets. 
 Depuis seize ans, les budgets de la guerre et de la marine ont 
 coute a la France plus de 11 milliards, c’est-a-dire plus de 700 
 millions par an; l’Allemagne et la Russie n’ont pas d^pense 
 moins de 10 millards, chacun pendant la meme p^riode, 
 l’Autriche et l’ltalie presque le meme chiffre. Voila done 
 cinq grands pays qui, en vue d’une guerre probable, d^pensent 
 tous les ans de 500 a 900 millions, depuis seize ans. Que 
 couterait done la guerre elle-meme ? 
 
 Les Etats europ^ens paient annuellement pour leurs depenses 
 de la guerre et de la marine a peu pres les memes sommes que 
 pour l’intdret et l’amortissement de leurs dettes. D’apres les 
 derniers budgets, ainsi que le prouvent les chiffres que nous 
 publions plus loin, la guerre et la marine coutent a l’Europe 
 4 milliards 528 millions, alors que l’intdret et l’amortissement 
 des dettes publiques r^clament 5 milliards 343 millions. En 
 voici le relev6 : — 
 
LES DETTES PUBLIQUES. 
 
 453 
 
 II. — DISPENSES DE LA GUERRE, DE LA MARINE, CAPITAL 
 NOMINAL ET INT^R^TS DES DETTES. 
 
 Etats. 
 
 
 
 Exercices financiers. 
 
 Capital 
 nominal de 
 la dette. 
 
 IntGrets 
 et amort, 
 ann. 
 
 Depenses 
 
 ann. 
 
 Guerre et 
 marine. 
 
 Prusse . . 
 
 
 
 • 
 
 ler avril, 1886 . . 
 
 Milliards- 
 
 Millions. 
 
 4.814 
 
 Millions. 
 
 220 I 
 
 Millions. 
 
 539.1 
 
 Allemagne. 
 
 
 
 
 31 decembre, 1886 . 
 
 526 
 
 20.1 ( 
 
 Autriche . 
 
 
 
 
 31 decembre, 1884 . 
 
 9.288 
 
 389.9 [ 
 
 342 
 
 Hongrie 
 
 
 
 
 31 decembre, 1884 . 
 
 3.178 
 
 206.8 J 
 
 Wiirtemberg 
 
 
 
 
 31 decembre, 1885 . 
 
 525 
 
 21.5 
 
 
 Saxe. . . 
 
 
 
 
 31 decembre, 1885 . 
 
 800 
 
 33.2 
 
 
 Hambourg. 
 
 
 
 
 31 decembre, 1883 . 
 
 178 
 
 8.7 
 
 
 Baviere. . 
 
 
 
 
 ler avril, 1886 . . 
 
 1.790 
 
 61.1 
 
 
 Bade. . . 
 
 
 
 
 31 decembre, 1885 . 
 
 53 
 
 2.1 
 
 
 Etats allemands. 
 
 
 
 31 decembre, 1885 . 
 
 268 
 
 11 
 
 
 Italie . . 
 
 
 
 
 31 decembre, 1885 . 
 
 11.131 
 
 532 
 
 342.5 
 
 Suede . . 
 
 
 
 
 31 decembre, 1885 . 
 
 345 
 
 16.4 
 
 35.5 
 
 Norwege . 
 
 
 
 
 30 juin, 1885 . . . 
 
 151 
 
 6 
 
 18.3 
 
 Danemark 
 
 
 
 
 31 decembre, 1885 . 
 
 274 
 
 12.4 
 
 23 
 
 Pays-Bas . 
 
 
 
 
 31 decembre, 1885 . 
 
 2.260 
 
 69.5 
 
 69.5 
 
 Belgique . 
 
 
 
 
 31 decembre, 1885 . 
 
 1.771 
 
 86.5 
 
 45.6 
 
 Espagne . 
 
 
 
 
 ler juillet, 1886 . . 
 
 6.042 
 
 274.1 
 
 200.3 
 
 Portugal . 
 
 
 
 
 ler juillet, 1886 . . 
 
 2.821 
 
 89.3 
 
 39.3 
 
 Angleterre * 1 
 
 
 
 
 31 mars, 1885 . . 
 
 17.829 
 
 737.5 
 
 740.2 
 
 Suisse . . 
 
 
 
 
 ler janvier, 1886 . 
 
 32 
 
 1.8 
 
 17.1 
 
 Serbie . . 
 
 
 
 
 13 juin, 1886 . . . 
 
 244 
 
 13.7 
 
 16.2 
 
 Roumanie . 
 
 
 
 
 ler avril, 1887 . . 
 
 729 
 
 59.2 
 
 28.5 
 
 Grece . . 
 
 
 
 
 ler janvier, 1886 . 
 
 348 
 
 33 
 
 23 
 
 Turquie 
 
 
 
 
 1880-1881 .... 
 
 2.622 
 
 55.4 
 
 200 
 
 Bulgarie 
 
 
 
 
 ler janvier, 1885 . 
 
 • • • • 
 
 2.1 
 
 
 Finlande . 
 
 
 
 
 31 de'cembre, 1885 . 
 
 65 
 
 5.9 
 
 6.1 
 
 Russie . . 
 
 
 
 
 31 decembre, 1885 . 
 
 18.028 
 
 1.038 
 
 982.4 
 
 France . . 
 
 
 
 
 31 decembre, 1886 . 
 
 31.000 
 
 1.336 
 
 859.5 
 
 Totaux . 
 
 
 
 
 
 117.112 
 
 5.343.2 
 
 4.528.1 
 
 Dans quelles proportions 6normes les dettes publiques de 
 toute l’Europe ne pourraient-elles pas etre rdduites si les 
 depenses de la guerre n’absorbaient pas tous les ans plus de 
 85% de ces memes dettes ? Toutes les puissances euro- 
 peennes ont des embarras financiers ; toutes ou presque toutes 
 augmentent ou ont besoin d’augmenter leurs impbts. Toutes, 
 sans exception, font des armements considerables. Cette 
 
 1 D’apres une note de l’honorable M. Hangcosck, de la Societe de statistique 
 de Londres, de fin mars, 1884, a fin mars, 1885, l’Angleterre paie comme inter^t 
 22,000,000 £, et 7,000,000 £ comme amortisseinent, soit au total 29,500,000 £. 
 
454 
 
 ECONOMIC HISTORY . 
 
 situation presente les plus graves dangers et plus que jamais 
 .cependant, le maintien de la paix est n^cessaire a l’Europe 
 pour consolider son credit, am&iorer l’etat de ses finances, 
 donner de l’essor et de la confiance au commerce et a 
 l’industrie. 
 
 III.—LES CONVERSIONS DE RENTES A L’LtR ANGER ET EN 
 
 FRANCE. 
 
 Et cependant, malgre les charges de toute nature qui pesent 
 sur les Etats, les rentes de ces memes pays se sont negocides 
 pendant l’annee 1886 presque toutes aux plus hauts cours 
 qu’elles aient cotes depuis 1870. Non seulement, gr&ce a 
 l’abondance des capitaux et a l’abaissement du taux de 
 l’intdret, les fonds publics ont haussd, mais il a ete realise, 
 en matiere de finances, des progress considerables. 
 
 Les Etats, non plus que les villes et les societes industrielles 
 ou financi^res, n’hesitent pas a effectuer, sur une tres large 
 echelle, des operations qu’on eut a peine osd concevoir il y a 
 moins de trente ans. 
 
 Aujourd’hui des Etats, dontla puissance financi^re a toujours 
 ete relativement restreinte, peuvent contracter des emprunts 
 qui ddpassent de beaucoup ceux que naguere encore des 
 nations riches n’eussent tenths qu’avec apprehension. 
 
 Toutes les combinaisons auxquelles peuvent preter les fi¬ 
 nances d’fitat qui etaient si longtemps restees dans le domaine 
 de la theorie, sont pleinement entrees dans la pratique et se 
 realisent couramment. Bien des prejuges economiques et 
 financiers se sont dissipes ; bien des principes, encore contestes 
 naguere, ont triomphe et se sont imposes. 
 
 Le credit a acquis une force d’expansion inou'ie; les fonds 
 publics, les valeurs mobilieres se sont de plus eh plus repan- 
 dues, vulgarisees, democratisees en quelque sorte. Leur 
 grande facilite de circulation, leur mobilite, leur diffusion, 
 leur accessibilite a toutes les fortunes, petites ou grandes, leur 
 ont assure une favour que l’on pout trouver excessive, mais 
 qui est, a divers points de vue, tres justifiee. Cet essor de la 
 fortune mobiliere a determine une veritable revolution dans 
 les conditions financieres de Texistence des peuples. 
 
LES DETTES PUBLIQUES. 
 
 455 
 
 Emprunts, unifications de dettes, conversions, sont dcs 
 operations devenues familieres meme aux moindres Etats. 
 Et, chose assez etrange, c’est la France qui, apres avoir dtd, 
 avec l’Angleterre, l’initiatrice des grandes reformes finan- 
 cieres, a 6t6 depuis quelques anndes, parmi les nations, la plus 
 timide a realiser les combinaisons heureuses, legitimes, profi- 
 tables, que la puissance et la solidite de son credit lui rendent 
 si faciles. 
 
 Rien, en effet, de plus curieux a observer, autour de nous, 
 que les nombreuses operations de conversion deja accomplies 
 avec succes ou en voie de preparation. Si on peut reprocher 
 a certains Etats une propension trop grande a emprunter, il 
 faut bien reconnaitre qu’ils se preoccupent aussi, pour la 
 plupart, de n’emprunter qu’au plus bas prix possible. Des 
 que leur credit s’etend et s’ameliore, ils s’efforcent de rem- 
 placer les anciennes dettes couteuses, onereuses, par des 
 dettes plus legeres, contractees a un taux moins Meve. Ce 
 sont maintenant des puissances financieres de second et de 
 troisieme ordre qui nos donnent l’exemple. Dans cet ordre 
 d’iddes et de faits, il n’est certainement pas inutile d’examiner 
 comment se sont effectuees les conversions recentes et d’in- 
 diquer les divers proced^s jusqu’ici employes. 
 
 Depuis 1870, deux fonds d’Etats fran^ais ont dte l’objet 
 d’une conversion : l’emprunt Morgan, et la rente 5%. On se 
 rappelle comment elles s’effectuerent: on offrit aux porteurs 
 d’obligations Morgan 6%, le meme revenu en rente 3^, 
 moyennant une soulte de 124 fr. par obligation. Les porteurs 
 de rentes 5% eurent a opter entre le remboursement a 100 fr. 
 de leurs rentes et l’^change contre un nouveau titre de 
 rente 4J% non-convertible avant un delai de 10 ans qui 
 expire en 1893. 
 
 La Belgique a op^rd trois conversions : son 4J est devenu 
 du 4%, puis du 3%. Pour la premiere operation, elle eut 
 immediatement recours a un syndicat de banquiers, qui se 
 cliargeait du placement de la rente nouvelle, tandis que l’Etat 
 operait le retrait de la rente convertie. Pour la seconde con¬ 
 version, le gouvernement beige voulut operer seul et emettre 
 directement sa rente nouvelle; il n’obtint pas tout le succes 
 
456 
 
 ECONOMIC HISTORY. 
 
 desir6 et dut, apres des essais peu favorables, accepter le 
 concours qui lui avait 6t6 donnd pr^cddemment. 
 
 Tout recemment, ainsi qu’on l’a vu dans le cours de cette 
 etude, la Belgique a realise une troisieme conversion en con- 
 vertissant ses rentes 4% contre du 3J%. Cette operation, 
 effectu^e directement par le Tr^sor, obtint un plein succes. 
 
 La Suede a, elle aussi, transform^ successivement son 4| en 
 4% et en 3|% en recourant a l’intermddiaire des grandes 
 maisons de banque. Celles-ci ^mettaient sur les marches 
 etrangers la nouvelle rente suedoise, tandis que 1^’tat restait 
 charge du retrait des anciens titres. 
 
 On conQoit que l’intervention des syndicats et des groupes 
 
 financiers soit, pour ainsi dire, l’unique moyen des petits 
 / 
 
 Etats qui n’ont pas de marcbe national. II est certain que la 
 Roumanie, par exemple, n’a pu effectuer la conversion de sa 
 dette 6% que grace au concours de puissantes maisons aux- 
 quelles elle s’est adressde. Ce sont ces derniSres qui plagaient 
 la nouvelle rente tandis que l’fitat remboursait l’ancienne. 
 
 L’Espagne, lors de la r^cente conversion de ses emprunts 
 de Tile de Cuba, s’est adress^e a un groupe de banquiers: elle 
 s’entendait avec eux pour le prix de la nouvelle rente a crder, 
 et avec le produit du nouvel emprunt remboursait des dettes 
 anciennes contracts a plus gros int^ret. 
 
 Les grands Etats qui ont, presque tous, d’importants 
 marches financiers ne se croient cependant pas toujours 
 assez surs de leurs propres forces pour d^daigner le concours 
 des banques et des institutions de credit. Sans ces hautes 
 influences, aucune operation de credit importante ne pourrait, 
 sans doute, acqu^rir un caractere international et obtenir la 
 participation des marches extdrieurs. Aussi toutes les con¬ 
 versions opdr^es dans de larges proportions ne l’ont-elles 6t6 
 qu’avec la participation des syndicats. 
 
 La Hongrie a effects la conversion de sa rente 6% en rente 
 4 °lo en or, et elle prepare, en ce moment meme, une opera¬ 
 tion du meme genre sur d’autres dettes. Ici, les banquiers, 
 groupes en vue de cette transformation, se sont charges k la 
 fois et du placement de la rente nouvelle et du retrait de 
 la rente ancienne. Le remboursement au pair n’est devenu 
 
LES DETTES PUBLIQUES. 
 
 457 
 
 obligatoire pour les porteurs de 6% hongrois qu’a Tissue de 
 Top4ration qui s’est effectu^e par fractions ^chelonnees. La 
 loi, qui a fix£ les conditions dans lesquelles cette conversion 
 fut autoris^e, etait con^ue presque dans les memes termes que 
 le projet que nous formulions nous-meme d£s le rnois d’aout, 
 1876, 1 en vue de la conversion 6ventuelle du 5% fran§ais. 
 
 En Allemagne, les conversions de fonds prussiens, bavarois, 
 et wurtembergeois se sont op^r^es par remission d’emprunts 
 dont le produit a servi au remboursement des anciennes 
 rentes. 
 
 A Tdtranger, il nous reste a citer, au-dessus de tous, l’ex- 
 emple des Etats-Unis qui ont accompli avec une habilete et un 
 esprit de suite merveilleux des conversions suceessives dans 
 les conditions les plus heureuses et les plus favorables, sans 
 que les particuliers aient jamais eu a souffrir des conse¬ 
 quences de ces transformations r^p^tees. Grace a la pr^voy- 
 ance avec laquelle l’Am^rique du Nord avait cre£ ses rentes 
 par series, des conversions partielles ont pu se succeder 
 rapidement; et Ton a vu en peu d’annees du 6% se trans¬ 
 former en 5%, puis en 4^, puis en Zoj 0 . Ces operations 
 nombreuses, les fitats-Unis les ont effectuees directement sur 
 leurs propres marches et a l’exterieur avec le concours de 
 grandes maisons de banque. 
 
 Mais, en dehors des exemples que nous ont donnes les 
 autres nations, nous pourrions rappeler ceux que, sous des 
 formes diverses, nous ont offerts nos departements fran§ais et 
 nos propres villes. La encore, nous trouvons des efforts tr£s 
 
 louables et des combinaisons tr£s varies. Nous avons vu des 
 
 \ 
 
 villes recourir au remboursement au pair d’anciennes dettes et 
 a des emprunts plus avantageux pour alldger leurs charges, 
 les unes s’adressant au public, les autres s’assurant Tappui de 
 syndicats, d’autres enfin traitant, sans autre intermediate, 
 avec le Credit Foncier de France qui leur garantissait un 
 taux maximum les capitaux dont elle avaient besoin pour 
 rembourser la dette ant^rieure contracts a un taux plus eiev£. 
 
 Nous avons vu enfin, plus pr£s de nous encore, le Credit 
 Foncier de France profiter, pour son propre compte, et au 
 
 1 Voir notre £tude : La Conversion de la Rente 6%. Paris, Dentu, edit., 1870. 
 
458 
 
 ECONOMIC HISTORY. 
 
 grand profit de sa vaste clientele d’emprunteurs, de l’abaisse- 
 ment du prix de l’argent, et convertir des obligations entrai- 
 nant une annuity 61evde par des titres n’exigeant qu’une 
 annuity notablement inferieure. On sait avec quelle simpli¬ 
 city s’est effectuee cette operation: les porteurs des obliga¬ 
 tions a convertir avaient un droit de preference dans la 
 souscription des obligations nouvelles ; ils restaient libres de 
 n’en pas user, mais etaient dument avertis du remboursement 
 prochain et obligatoire des titres anciens. 
 
 Ainsi les nations qui nous entourent et, chez nous-memes, 
 les provinces, les villes, les institutions de credit, out pratique 
 avec empressement et avec succes, sous les formes les plus 
 diverses, des conversions qui, toutes, ont ete profitables. En 
 ce moment meme, de grandes operations de ce genre sont a 
 prevoir. II n’est pas douteux, en effet, que l’Angleterre ne se 
 prepare a une nouvelle conversion de ses Consol ides dont les 
 cours sont au-dessus du pair; des que l’occasion sera propice, 
 la transformation sera faite. En Italie, la conversion de la 
 rente 5% est a l’ordre du jour, et il ne s’ecoulera pas beaucoup 
 de temps avant qu’elle ne soit rdalisee. Deja le gouverne- 
 ment a prepare un projet pour convertir plusieurs dettes 
 rachetables et off re du 4£ a la place du 5%. 
 
 II est a remarquer que toutes ces conversions de rentes, qui 
 ont diminue l’intdret paye par les Etats a leurs preteurs, n’ont 
 nullement diminue les charges de ces divers pays. Pour etre 
 juste, equitable, toute conversion de rentes doit avoir pour 
 consequence une diminution d’impots. II n’en a rien ete. 
 Prenez tous les budgets des pays qui ont effectud des conver¬ 
 sions ; comparez les chiffres des depenses publiques et des 
 impdts h ceux qui etaient inscrits avant et apr£s les conver¬ 
 sions, vous trouverez partout des augmentations de depenses 
 et d’impdts. 
 
 II faut remarquer, d’autre part, que presque toutes ces 
 conversions n’ont pu etre realisees avec succes qu’autant que 
 la liaute banque est intervenue et leur a donnd son concours. 
 II convient enfm de dire que toutes ces operations ont ete 
 facilities par l’abondance toujours croissante des capitaux 
 
LES DETTES PUBLIQUES. 
 
 459 
 
 disponibles, et par la baisse du taux de l’int^ret, consequence 
 de cette abondance des capitaux. 
 
 IV. —ABAISSEMENT DU TAUX DE LTNT&RET DE L’ARGENT 
 
 DEPUIS 1870. 
 
 Depuis 1870, et surtout depuis le jour ou, pour la premiere 
 fois depuis la guerre, la rente 5.% fut cote au pair, c’est-a-dire 
 a 100, le 4 septembre, 1874, des changements profonds se sont 
 produits sur- les marches frangais et etrangers dans le taux de 
 capitalisation. Successivement, d’annee en annee, lentement 
 d’abord, puis par etapes vigoureusement franchies, les valeurs 
 de premier ordre, de premiere surety, descendirent de 5% 
 d’interet a 4J% ; les valeurs de second ordre, qui rapportaient 
 6J, 7, et 8%, descendirent a 5% et meme au-dessous. A 
 mesure que le capital de ces valeurs augmentait, leur revenu 
 devenait naturellement moins eieve. 
 
 Au lendemain de la guerre, un capital de 100,000 place en 
 rentes 5% aurait produit 5.500 a 6.000 fr. de rentes. Le 
 meme capital, plac6 aujourd’hui en rentes frangaises 3% pro- 
 duirait a peine 3.700 francs. 
 
 Depuis 1870, le 6% Audricain a disparu; converti d’abord 
 en 5%, puis en 4%, le voila maintenant en 3 % en attendant 
 une nouvelle conversion en 2J. 
 
 Le 4J Beige, les fonds Allemands, tels que les 5 % Badois, 
 Bavarois, Wiirtembergeois, etc., ont, sur la cote, c6de la place 
 a des titres de moindre rapport, a des rentes de 3J et de 3%, 
 qui atteignent le pair. 
 
 Dans l’Europe entiere, les rentes 4% qui ont £t£ erodes en 
 remplacement de rentes 5% sont au pair et meme au-dessus, 
 ou ont £te 6chang6es contre du ^ ou du 3%. 
 
 Des fonds strangers, exotiques, comme Ton dit en Bourse, 
 arrivent maintenant au taux moyen auquel se n^gociaient 
 anciennement de bons credits europdens de second ordre. 
 Les cotes anglaises nous donnent a cet £gard, de curieux 
 exemples. 
 
 II y a dix ans seulement, void, notamment, le 1 % Japonais 
 qui valait 100 fr. fin 1876 et qui maintenant vaut 113 ; a 
 
460 
 
 ECONOMIC HISTORY. 
 
 pareille date,le 6% Argentin 1868, cote aujourd’hui 101 a 102, 
 valait 60; le 5% Br^silien valait, fin 1876,87 a 88; il est 
 maintenant a 103, trois points au-dessus du pair. 
 
 Le 5% Italien qui ne donne netque 434, valait, fin 1867, 72 
 fr. : il etait dans ces derniers temps a 102 fr. et meme au- 
 dessus, c’est-a-dire 20 fr. plus cher que le prix auquel nous 
 dmettions en 1871 notre rente frangaise 5%. 
 
 Le 5% Roumain, qui valait 40 fr. fin 1876, et qui rapportait 
 cons^quemment 8c/ 0 , se n^gocie au-dessus de 90. On lvalue 
 done aujourd’hui le credit de la Roumanie a un taux bien 
 sup^rieur a celui auquel notre propre credit etait estinV en 
 1871 et 1872, puisque, dans ces deux ann^es, la France 
 emettait ses rentes 5% a 82,50 et 84 fr. 50. 
 
 La rente Autrichienne 4 cj Q or, cotee 89 a 90 fr. et qui, il y a 
 peu de temps, s’est negocVe meme a 96 et 97 fr., est encore 
 plus haut que nos rentes frangaises en 1871. La rente Hon- 
 groise 4 oj Q or, a valu jusqu’a 88 dans ces derniers mois, alors 
 que nous avons 6mis du 5% frangais 5 et 6 francs plus bas. 
 
 Yoici, pour les principaux fonds d’Etats, la difference des 
 cours cotes au 31 ddeembre, 1869, et au 31 d4cembre, 1886 : — 
 
 
 31 dec., 1869. 
 
 31 d«5c., 1886. 
 
 3% Frarnpais. 
 
 . . . 70,05 
 
 82,20 
 
 4,34 Italien. 
 
 . . . 67,30 
 
 101,85 
 
 6% Americain. 
 
 
 134 (le 4%). 
 
 41 Beige. 
 
 . . . 102^ 
 
 95,40 (le 3%). 
 
 5% Russe 1862 . 
 
 ... 85 
 
 96 
 
 3% Consolides anglais . . . 
 
 ... 92f 
 
 1011 
 
 V. —MODES DEMISSION ET TYPES DE RENTES EMPLOYES 
 PAR LES GOUVERNEMENTS EMPRUNTEURS. 
 
 Nous venons de montrer comment les conversions de rentes 
 effectives par les principaux Etats avaient 6t6 rdalis^es et 
 comment la baisse du taux de l’interet et l’abondance des 
 capitaux avaient facility ces operations. Il n’est pas sans 
 utility de faire remarquer aussi comment les divers pays 
 effectuent leurs emprunts. On voit, d’apres cette etude 
 comparative des dettes europeennes, combien est varVe la 
 diversite des types de rentes emises. L’Angleterre a du 3%, 
 
LES DETTES PUBLIQUES. 
 
 461 
 
 du 2J%, des annuity terminables; l’Autriche, du 4.20% m£- 
 tallique, du 4% or, du 5% papier, du 5% argent, des lots a 
 primes sans interets. La Belgique a eu du 4J, du 4%, du 3%. 
 La Russie a 6mis des emprunts sous forme de rentes 6%, 5%, 
 4% ; la Hollande a des rentes 3|, 3%, 2 \oj 0 ; l’ltalie a du 5%, 
 du 3%, et vient de d^cr^ter du 4 \°f 0 \ la Norwege a du 4J, du 
 4%, du 3 \°/o ; le Portugal a du 5% et du 3% ; la Prusse a du 4% 
 et du 3 \°J 0 ; laRoumanie a du7%,du 6%,du 5%; la Saxe,du3J 
 etdu3%; la Suede, du 4J%, du 4%, du 3J% ; le Wurtemberg, 
 du 4J, du 4%, du 3J%, etc. Parmi les fonds coloniaux, nous 
 trouvons du 5% de la Nouvelle Z^lande, du 5% Quebec, du 
 6% Queensland, du 4J, 4% et 3J% des Indes, du 4% du Canada, 
 de la Jama'ique, de Tasmanie, du 5%, 4J%, 4% Victoria. 
 Quel enseignement tirer de ces faits ? C’est qu’on ne peut 
 dire d’une fagon absolue, c’est qu’il n’est pas scientifiquement 
 ni pratiquement prouv6 qu’il soit preferable pour un Etat de 
 n’emprunter que sous un meme type de rentes, et que la 
 diversity de ces types de rentes peut nuire a leur plus-value. 
 La verity est qu’il en est des Etats comme des particulars : le 
 meilleur mode d’emprunt est celui qui coute le moins cher et 
 procure la plus grande somme des capitaux. II peut etre 
 utile d’einprunter sous forme d’obligations ou sous forme de 
 rentes; en 4% ou en 3% ; en 5% ou en 4J%. C’est une 
 question d’opportunit^ et depreciation. Tous les gouverne- 
 ments ont choisi la forme d’emprunt la plus avantageuse aux 
 interets de tous, sans s’astreindre a n’emettre qu’un type de 
 rentes determine a l’avance. 
 
 II en est de meme pour le mode demission des emprunts. 
 C’est la France qui, lors de la guerre de Crimee, generalisa le 
 systeme des souscriptions publiques. Avant 1852 les em¬ 
 prunts d’Etat etaient soumissionnes par de grandes maisons 
 de banque qui plagaient ensuite les titres de rentes dans 
 leur clientele: plus tard, les gouvernements firent appel 
 directement aux capitaux du public sans se servir de 
 l’interm^diaire des banquiers. Cependant, des modifications 
 s^rieuses se sont produites dans le systeme des souscrip¬ 
 tions. Nous voyons l’Angleterre pour ses emprunts coloniaux, 
 pour ses emprunts de villes, effectuer des appels au credit 
 
462 
 
 ECONOMIC HISTORY. 
 
 sous forme d’adjudication publique. Elle offre 4% d’int^ret, 
 
 par exemple ; elle s’engage a servir d’abord les demandes de 
 
 ceux qui se contentent d'un int^ret moindre. Ce systeme 
 
 favorise les souscripteurs les moins exigeants, ne ddcourage 
 
 pas le public par des m^comptes imm6rit6s a la repartition et 
 
 permet a l’emprunteur d’obtenir les conditions les plus favor- 
 
 ables; ce genre de souscription rend les emprunts moins 
 
 on^reux pour les emprunteurs. Les autres modes d’emprunts 
 
 employes par les gouvernements sont des ventes fermes ou h 
 
 option a des banquiers et a des ^tablissements de credit. 
 / 
 
 Plusieurs Etats se sont bornes a charger des maisons de 
 banque d’emettre les emprunts qu’ils desiraient effectuer, 
 moyennant une commission. A l’exception de l’Angleterre 
 et de la France, presque tous les gouvernements europ^ens 
 traitent encore avec des syndicats de banquiers pour leurs 
 Emissions. 
 
 VI. —DE LA REPARTITION DES FONDS PUBLICS ETRANGERS 
 DANS LES PORTEFEUILLES FRANQAIS. 
 
 Dans le cours de cette dtude, nous avons essayd de connaitre 
 le montant approximate des valeurs dtrangeres appartenant 
 a nos nationaux. Les chiffres que nous avons cites nous 
 ont dt4 donnas par les ministres des finances et les directeurs 
 de statistique des gouvernements strangers; mais ils auraient 
 besoin d’etre completes, et aucune autorite ne pourrait mieux 
 que notre conseil sup^rieur de statistique obtenir et grouper 
 des indications plus nombreuses sur ce sujet important. 
 
 A de rares exceptions pres, et sauf des circonstances particu- 
 lieres telles que la hausse ou la baisse du prix du change sur 
 des valeurs internationales, les capitalistes frangais qui pos- 
 skdent des valeurs Strange res ne font pas recevoir le montant 
 de leurs coupons d’int^ret a l’4tranger: ils s’adressent & des 
 banquiers et des dtablissements de credit frangais, pour 
 encaisser leurs coupons dchus. 
 
 Nous sommes convaincus que MM. de Rothschild, la Banque 
 de Paris, la Socidt£ Gdndrale, le Comptoir d’Escompte, le 
 Credit Lyonnais, le Crddit industriel et tous les banquiers — 
 
LES DETTES PUBLICITIES. 
 
 468 
 
 qui paient une patente speciale comme effectuant des paie- 
 ments de coupons strangers, — repondraient sans difficultes a 
 un questionnaire que le Conseil superieur de statistique leur 
 adresserait. 
 
 Ce n’est pas par simple curiosite que des documents 
 semblables auraient besoin d’etre mis au jour. Les questions 
 financi&res et fiscales doivent, plus que jamais, prendre le pas 
 sur les questions politiques. Or, ce que nos legislateurs et la 
 plupart de nos homines politiques connaissent le moins, c’est 
 l’exacte situation de la fortune publique de la France, le 
 montant et la puissance de son epargne, la nature et le chiffre 
 de ses placements soit sur des valeurs fran^aises, soit sur des 
 valeurs etrangeres. C’est a ce defaut de connaissances qu’il 
 faut attribuer, pour beaucoup, les erreurs fiscales economiques 
 et financieres qui ont £te commises dans l’etablissement, 
 1’augmentation et la suppression de tel ou tel impot de 
 preference a tel ou tel autre. A une epoque ou il est ques¬ 
 tion d’impfit sur les rentes, d’impbt sur les valeurs etrangeres 
 appartenant a des Fran^ais, d’imp6t sur le revenu, etc., ces 
 renseignements sont indispensables si l’on veut eviter de dan- 
 gereuses erreurs. Le Conseil superieur ne doit pas liesiter, a 
 notre avis, a faire la lumiere sur ces questions speciales : c’est 
 du c6te des statistiques financieres, nous ne saurions trop in¬ 
 sister sur ce point, que doivent porter les efforts et les travaux 
 des hommes eminents qui font partie de la Commission. 
 
 VII. —DE LA COTE ET DE LA NfiGOCIATION DES RENTES 
 ERANgAISES AUX BOURSES ETRANGERES. 
 
 Nous devons aussi signaler une r£forme que nous avons 
 bien souvent reclamee et qui paraitra sans doute utile a 
 obtenir quand on se sera rendu compte de l’importance des 
 emprunts Strangers contractes en France. A l’exception des 
 fonds allemands, tous les fonds d’Etat etrangers, toutes les 
 principales valeurs etrangeres sont cotes a notre bourse; tous 
 les gouvernements dtrangers ont fait appel aux capitaux fran- 
 ^ais. Or, aucune de nos rentes fran§aises n’est cotee ni a Vi¬ 
 enne, ni a Saint-Petersbourg, ni ^ Stockolm, ni a Christiania, 
 
464 
 
 ECONOMIC HISTORY. 
 
 ni a Rome, ni a Florence, ni a Madrid, ni a Lisbonne, ni a Ath- 
 enes. Notre 2>°/ 0 est cote a Londres, Bruxelles,et Amsterdam. 
 Et e’est tout. Cette situation merite qu’on y porte attention. 
 
 L’affluence des fonds d’Etat etrangers sur le marchd 
 frangais, la facility avec laquelle ils s’y placent et s’y nego- 
 cient, sont des faits financiers qui r^velent une tendance des 
 capitaux contre laquelle il serait peut-etre a la fois tr&s 
 difficile de tenter une reaction soudaine et violente. 
 
 II est certainement regrettable que nos nationaux deviennent 
 les creanciers d’Etats dont la solvability et le credit sont 
 douteux. II est non moins facheux qu’aux capitaux lente- 
 ment formes par les hommes d’^pargne de notre pays se sub¬ 
 stituent des titres etrangers depourvus de garantie sdrieuse. 
 
 Mais, d’autre part, il ne saurait etre mauvais et il est meme 
 nycessaire et utile, au point de vue financier et yconomique, 
 que les nations honnetes et notoirement solvables soient 
 dybitrices de la notre. Il ne saurait etre mauvais qu’a un 
 moment donny il y ait entre les mains des capitalistes frangais 
 une certaine quantity de bon papier etranger, bien et duinent 
 garanti, et facilement ryalisable. 
 
 On congoit cependant qu’il y a un certain yquilibre financier 
 international que ne saurait etre rompu sans inconvynient. On 
 congoit le peril qu’il y aurait pour la France a ne compter au 
 dehors que des dybiteurs et point de cryanciers, a toujours 
 absorber le papier et ne jamais en cyder, a se saturer de 
 valeurs etrangeres tandis qu’elle ne placerait point dans les 
 autres pays une quantity a peu pres yquivalente de valeurs 
 frangaises. On peut enfin mesurer le danger que notre pays 
 pourrait courir le jour ou les nations qui nous entourent 
 gagneraient plus a notre ruine qu’a notre prospyrity. Meme 
 au point de vue politique, ces considyrations ne sont pas sans 
 consistance. 
 
 Politiquement, aussi bien que financierement, il est done 
 sage et dysirable d’intyresser l’Europe a nos progres, a notre 
 dyveloppement national, a notre avenir yconomique. 
 
 Un des moyens les plus efficaces d’atteindre ce but est de 
 placer parmi les capitalistes ytrangers la plus grande quantity 
 possible de rentes et de valeurs frangaises. 
 
LES DETTES PUBLTQUES. 
 
 465 
 
 Mais, dira-t-on, cette expansion des titres frangais s’operera 
 naturellement, grace a la confiance si grande que le credit de 
 la France inspire aux autres peuples. Si bien qu’il n’y aurait 
 qu’a laisser faire au temps, aux capitaux strangers et a la 
 sagesse des nations pour assurer un resultat si souliaitable 
 pour notre avenir. 
 
 Ce raisonnement est d’une logique excellente, et peut pa- 
 raitre tr£s solidement fonde en thdorie. II est absolument 
 vain, s’il n’est pas justify par la pratique. Or, il ne Test 
 malheureusement pas. 
 
 Ce n’est pas tout de dire aux autres nations : “ Moi, France, 
 j’&nets de la rente, offrant toutes garanties, pleine securite. 
 Prenez-la; il n’y a rien de meilleur. Yous connaissez ma 
 richesse, ma puissance de production, mon amour du travail, 
 ma probity reconnue. Yous savez que j’ai toujours pay£ et 
 bien pay£; vous savez combien, meme dans les circonstances 
 les plus critiques, j’ai ponctuelle a remplir mes engage¬ 
 ments. Prenez de ma rente ! Quels meilleurs titres avez- 
 vous chez vous ? Quels meilleurs placements ? Quel emploi 
 plus productif et plus sur ? ” 
 
 Un tel discours n’aurait rien que de juste et d’exact. Tout 
 le monde est p£n6tr4 de ces v6rit6s et nous n’aurions h pr6cher 
 que des convertis. 
 
 Mais, pour que l’dtranger prenne beaucoup de nos fonds 
 d’Etat, encore faut-il qu’il sache ou aller les prendre, ou aller 
 les acheter, et meme ou aller les vendre, le besoin ech&mt. Il 
 faut les rendre accessibles a tous les capitalistes de l’Europe, 
 et n^gociables facilement partout. 
 
 Or, c’est ce dont on ne nous parait pas s’etre suffisamment 
 occupy. 
 
 Comme nous l’avons dit plus haut, nos rentes frangaises ne 
 sont pas cot4es aux bourses etrangeres. Dans ces derni&res 
 ann6es, de grands emprunts ont 4t4 effectues chez nous notam- 
 ment en rente 3% amortissable. On peut dire qu’a l’heure 
 oh nous sommes, cette rente est presque inconnue sur les 
 grandes places financi^res de l’Europe. Il y a lh une faute 
 commise, une grave negligence qu’il faut se hater de rdparer. 
 On doit faire pour nos rentes ce que les autres nations font 
 
 30 
 
466 
 
 ECONOMIC HISTORY. 
 
 pour leurs fonds d’Etat qu’elles prennent tant de soin de nous 
 faire connaitre et auquels elles ouvrent acces sur tous les 
 grands marches europeens. 
 
 VIII. —GUERRE, RUINE, OU REVOLUTION INDUSTRIELLE ET 
 
 Economique. 
 
 Mais ce qui, a notre avis, ressort jusqu’a l’^vidence du tra¬ 
 vail auquel nous nous sommes livr^s, c’est que 1’Europe 
 entiere, avec le poids de ses depenses militaires, avec la sur¬ 
 charge des dettes publiques et d’imp6ts qui l’dcrasent, marclie, 
 si elle persevere dans cette voie, a la guerre, a la mine, a une 
 veritable revolution industrielle et economique. Quel que 
 soit le pessimisme d’une telle conclusion, nous ne pouvons 
 taire nos impressions. La paix de l’Europe n’est, a vrai dire, 
 qu’un etat de guerre latent, et cette situation qui semble la 
 condition ordinaire du vieux continent p£se de deux manieres 
 sur le monde civilise: elle lui enl&ve, d’une part, une bonne 
 partie des capitaux constitues par l’epargne annuelle, par le 
 travail de tous, pour entretenir des soldats, acheter des fusils, 
 des canons, des munitions, construire des forteresses, des 
 navires ; d’autre part, elle l’empeche de se servir de ces capi¬ 
 taux enormes pour developper le commerce, l’industrie, le 
 materiel de la production, diminuer les frais generaux de la 
 nation. L’apprehension et les preparatifs de guerre deviennent 
 aussi nuisibles et aussi couteux que la guerre elle-meme. Les 
 finances de l’Europe sont tellement oberees qu’on peut craindre 
 qu’elles ne conduisent fatalement les gouvernements a se de- 
 mander si la guerre, avec ses eventualites terribles, ne doit 
 pas etre prdfdr^e au maintien d’une paix prdcaire et couteuse. 
 Si ce n’est point a la guerre que doivent aboutir les prdpara- 
 tifs militaires et les armements de l’Europe, ce pourrait bien 
 etre, ainsi que le disait, il y a vingt ans, lord Stanley, a “ la 
 hanqueroute des Etats.” Si ce n’est ni & la guerre ni & la 
 mine que doivent conduire de semblables folies, c’est assur6- 
 ment a une revolution industrielle et dconomique. 
 
 La vieille Europe lutte contre la concurrence de pays jeunes, 
 riches, produisant a meilleur compte. II est, au-delil de 
 
LES DETTES PUBLIQUES. 
 
 467 
 
 l’Oc^an, une republique puissante, l’Amdrique, qui a su 
 dteindre une dette que les ndcessites d’une grande cause lui 
 avaient fait contracter ; elle offre au monde entier le spectacle 
 d’une prospdrit6 sans exemple. Tout r^cemment, le message 
 du president Cleveland a l’ouverture du CongrSs a traduit le 
 sentiment d’un veritable embarras de richesses. En Asie, 
 tous les peuples commencent a proliter des decouvertes et des 
 progres que l’Europe a accomplis, et comme dans ces pays le 
 prix de la main-d’oeuvre et les charges publiques sont presque 
 nuls, l’Europe entire 6prouvera chaque annee, de plus en 
 plus, les effets de l’apparition sur la scene commerciale et 
 industrielle, de tous ces peuples qui n’ont pas a payer, tous les 
 ans, ni quatre milliards et demi pour les d^penses de la guerre, 
 ni plus de cinq milliards pour les interets de leurs dettes 
 publiques. 
 
 Le marechal de Moltke disait recemment au Reichstag 
 “ qu’a la longue les peuples ne pourront plus supporter les 
 charges militaires.” II aurait pu ajouter que le jour ou les 
 peuples se rendront compte de tout ce que leur coute la guerre, 
 me me lorsqu’elle demeure a l’6tat de simple risque, lorsqu’ils 
 consid^reront la masse croissante d’interets que le progres 
 jette chaque jour du cdt6 de la paix, les gouvernes sauront ce 
 jour-la dieter leurs volont^s a leurs gouvernants. Les 41 
 milliards d’augmentation des dettes publiques de 1’Europe, 
 depuis 1870, mis en regard des milliards de diminution de la 
 dette de l’Am^rique offrent un puissant enseignement. Non, 
 les peuples ne pourront plus a la longue supporter de tels 
 fardeaux ; non, ils ne pourront plus continuer a travailler, a 
 peiner, a souffrir, a elever pdniblement leurs families pour 
 que leurs biens, leurs ressources, leurs ^pargnes, les etres qui 
 leurs sont chers, soient sacrifids et detruits par la guerre dans 
 des luttes gigantesques. Ils veulent la paix, profiter des 
 bienfaits qu’elle procure, dchanger paisiblement leurs produits, 
 commercer, travailler; ils veulent tous une administration 
 6conome, des diminutions d’impdts. 
 
 A ces ddsirs, les gouvernements r^pondent en augmentant 
 tous les ans les charges militaires, les prdparatifs de guerre, 
 les charges publiques. 
 
468 
 
 ECONOMIC HISTORY. 
 
 Les peuples finiront par se lasser du maintien d’un tel dtat 
 de clioses qui nous ramene aux temps barbares: la civilisation 
 qui a abattu les barrieres entre les pays et les individus, rendu 
 les comunications plus rapides et plus faciles, dtabli des 
 cbemins de fer et des routes, creus6 des canaux, perc6 des 
 montagnes et des isthmes, imposera la paix aux socidtds 
 modernes d’une fagon aussi irresistible que la guerre s’im- 
 posait aux sauvages et aux society anciennes. — Janvier , 
 1887. 
 
PROGRESS IN TRADE AND INDUSTRY. 
 
 469 
 
 XVII. 
 
 THE WORLD’S PROGRESS IN TRADE AND 
 
 INDUSTRY. 
 
 From Neumann-Spallart’s “ Uebersichten der Weltwirth- 
 
 SCHAFT ,” 1 TRANSLATED 2 IN THE “JOURNAL OF THE STATISTICAL 
 
 Society,” Vol. XLV. pp. 82-114. 
 
 T HE latter part of the present century has witnessed 
 many changes in the economic and industrial condi¬ 
 tions of the majority of the civilized countries of the world. 
 Industries, arts, and manufactures have acquired a remark¬ 
 able development; the more striking when we consider how 
 rapidly the change has been effected. The progress made by 
 individual States is easily traced by their degree of refinement 
 and a study of their statistics; and from these it will be seen 
 how quickly this transformation advances. Little less than 
 a century ago the industries of certain countries and States 
 were isolated and estranged; at the present time they are to 
 a great extent united. It is not so long since that burden¬ 
 some restraints were placed upon internal intercourse by 
 reason of monopolies which were in the hands of guilds and 
 corporations. In addition to this, staple rights and traffic 
 rights, privileges which were granted to certain townships, 
 had also the effect of restricting the progress of national, 
 and in a far greater degree of individual, industries and 
 trades. In some of the central European countries this state 
 of affairs continued until very recently, and even when the 
 horizon gradually began tq widen among some of the more 
 enlightened nations, this isolation still continued, though 
 within extended boundaries. It was, however, not so much 
 
 1 Jahrgang, 1880, Stuttgart. Julius Maier, 1881. 
 
 2 The edition of the “ Uebersichten ” for 1887 has necessitated a number 
 of clianges in this translation. —B. R. 
 
470 
 
 ECONOMIC HISTORY. 
 
 an isolation of town from town as province from province, 
 and many European countries formed the type of a narrow 
 minded policy of seclusion in their economic life. It was 
 only during the decade from 1870 to 1880 that those admin¬ 
 istrative reforms were introduced which had the effect of 
 causing the whole State to be recognized as a unit in respect 
 of economic questions affecting the entire population. Soon 
 after this important epoch in the history of economic pro¬ 
 gress, people became more sensible of the pressing need that 
 existed of freeing commerce throughout the land from the 
 burdensome restraints which had hitherto fettered it. As 
 soon as the political horizon began to clear, the German States 
 banded together and formed the Zollverein. Great Britain 
 then proceeded to abolish protective tariffs; the continental 
 States also, after a little time, reduced the existing high 
 duties, repealed the guild and corporation laws, which until 
 then had so paralyzed trade, and endeavored to enter into a 
 species of political trades union with each other. It was 
 not long before the European Governments, following the 
 example set them by England and France in 1860, concluded 
 a series of international commercial treaties, by which they 
 reciprocally guaranteed to each other “ most favored ” treat¬ 
 ment ; and the subsequent modifications of the treaties thus 
 contracted in the period 1860-68 were generally in a favor¬ 
 able direction, and tended to minimize the domain of cus¬ 
 toms’ exclusion. 
 
 After the expiration of the treaty-period in 1877 we enter 
 again upon a time of economic retrogression. The treaties 
 during later years were not collectively renewed, and although 
 in some cases the duties had been raised, yet there was no 
 actual return to the old system of restrictive and prohibitive 
 tariffs. The force of circumstances imperatively demands that 
 commercial relations should remain undisturbed, and not suf¬ 
 fer from restraints placed upon free importation into the re¬ 
 spective countries. In connection with the close economic 
 combinations of all civilized nations, there has in our time 
 been an increasing effort to attain a similarity of conditions 
 with reference to industry, justice, and administration. The 
 
PROGRESS IN TRADE AND INDUSTRY. 
 
 471 
 
 unity of the most complex State relationships depends on the 
 contents of numerous economic treaties. At first in Germany, 
 and afterward in certain other European States, railroad or¬ 
 ganizations were formed. By means of these enterprises 
 goods and personal property were transported throughout the 
 whole length and breadth of the land. Even in a far greater 
 degree than railways, have the postal and telegraphic systems 
 been the means of uniting not only the State but the entire 
 world, and of making people of all nations neighbors in spite 
 of distance. The world’s postal union, which extends nearly 
 1,300,000 square miles, and unites approximately 760 mil¬ 
 lions of people, is one of the happiest results of the develop¬ 
 ment of commercial industries. In the same way, in 1865, 
 the first steps were taken to establish an international tele¬ 
 graphic union, and the results in 1880 went far to prove that 
 this union had been the means of breaking down the barriers 
 of international commercial intercourse. Railway con¬ 
 gresses, assemblies of a thoroughly cosmopolitan character, 
 the postal congress, and the international telegraphic confer¬ 
 ence,— all enjoying official authority,— have been the means 
 of extending still further commercial relations. What they 
 accomplish in the region of intellectual and material culture 
 is recorded in golden characters in the history of the world. 
 They have proved, in a far greater degree than was antici¬ 
 pated, the means of promoting still further advancement in 
 the economic conditions of the world. To them we owe the 
 unity of the weights and measures on the basis of the metri¬ 
 cal system, the international system of goods transportation, 
 and the adoption by entire groups of States of the same 
 monetary standard, of which we have an example, first, in 
 the Austro-German monetary conference, then in the con¬ 
 ference of 1865, known as the Great Latin Conference, and 
 lastly in the Scandinavian monetary union. The adoption 
 of a complete international system of weights and measures 
 is a question the settlement of which cannot be long de¬ 
 ferred; the only point upon which controversy is likely to 
 arise is the settlement of the basis which is to be taken. 
 
 There has already been established a similarity in the inter- 
 
472 
 
 ECONOMIC HISTORY. 
 
 national laws of banking and exchange. This has been the 
 means of affording greater security for the protection of in¬ 
 ternational rights, and given also an impetus to the distri¬ 
 bution of capital. As may be easily credited, at no period 
 of the world’s history has there been a time when the rapid 
 circulation of capital between one nation and another has 
 been more easily and expeditiously effected than at present. 
 The movement of milliards now occasions no surprise, and it 
 is perfectly consistent that in the case of English or French 
 capital which circulates in Austria, Germany, Russia, 
 Egypt, or in South America, or Asiatic countries, any ex¬ 
 cess or deficiency may be provided for by credit drawn on 
 Europe, in America, or India. Thus in the same way all 
 commercial enterprises combine to assist in the development 
 of cosmopolitan economy,— railways, posts, and telegraphs 
 being the outward sign of this union. With these goes hand 
 in hand the division of labor which conveys the production 
 of the masses to its proper place in the world. With the 
 ever-increasing masses, the necessity of the world’s produc¬ 
 tion being considerablv extended becomes a matter of the 
 first importance, and there are now no barriers sufficiently 
 strong to resist this universal demand. Administrative in¬ 
 stitutions must be so adapted that this century’s legislation 
 may be fixed on a firm and lasting basis. 
 
 International relations have had the effect of creating a new 
 order of life, in which the industries of individual States, 
 without detriment to their independence or individuality, 
 must perform their share of the functions of the whole, of 
 which they constitute a unit. The part then which in the 
 world’s economy is taken by individual States is of the 
 greatest value; and though the present economic conditions 
 of the world are not yet fully developed, they are sufficiently 
 advanced to enable us to form an idea of their ultimate im¬ 
 portance. Wonderful progress has been already made, and 
 even if it be found that the improvements which have so far 
 manifested themselves in these economic conditions will not 
 be further advanced by the present generation, still there can 
 be no question as to the excellent results of which they have 
 
PROGRESS IN TRADE AND INDUSTRY. 
 
 473 
 
 already been productive. In all parts of the civilized world 
 the growth of capital has made rapid progress, and even 
 during the commercial crisis of 1873, and the consequent 
 depression, this progress, though certainly interrupted, was 
 not wholly checked. It again received a powerful impulse 
 in 1880-82, and has by no means come to a standstill in the 
 relatively unfavorable years 1883-85. Adequate employment 
 for these accumulated millions has been possible in large 
 economic undertakings. Thus, for instance, when sufficient 
 profit was not obtainable in Europe by reason of a fall in the 
 rates of interest, capital was diverted into other channels, 
 and employed in foreign investments in far distant countries, 
 which, though remote, yet offer a fair field for investment. 
 In this manner inventions and enterprise have been univer¬ 
 sally stimulated. 
 
 All these considerations lead us confidently to predict that 
 though there may be interruptions and checks to the ever 
 increasing progress in the improvements (5f the world’s 
 economic conditions, these interruptions are of a purely 
 temporary character, and must eventually be overcome. In¬ 
 dustries and commerce which have advanced with such rapid 
 strides, and the vast amount of labor and capital which have 
 been expended upon railroads, shipping, telegraphs, etc., 
 have all given an impetus to the world’s progress, and can¬ 
 not fail to make a lasting impression upon it. 
 
 In order thoroughly to appreciate the changes which the 
 world’s economic conditions have experienced under the dif¬ 
 ferent natural political and social influences, as well as to 
 estimate the reaction caused by crises, or periods of specu¬ 
 lation, favorable or unfavorable harvests, wars, or revolu¬ 
 tions, protection or free trade, and other important factors in 
 determining the national prosperity, it will be necessary to 
 arrange a broad and comprehensive system of statistics ex¬ 
 tending over a lengthened period. We have to deal with 
 such a mass of complex individual elements, that only the 
 consideration of the most important will lead us to any logi¬ 
 cal deduction. Social economy, commercial policy, finance, 
 changes of administration, as also the specific influences of 
 
474 
 
 ECONOMIC HISTORY. 
 
 good or bad years, must be taken into account. In the in¬ 
 vestigation of a subject so complicated as the present, we 
 must be satisfied with very crude information, and as it is im¬ 
 possible to obtain accurate and reliable data, we are obliged 
 to depend in a very great measure upon inference and deduc¬ 
 tion. As a means of approximately estimating the extent of 
 increase or decrease in material prosperity, it is advisable to 
 take as a basis for the calculation, the income-tax returns, 
 affording as they do a certain indication of the position of 
 national wealth. 
 
 Among the nations which have contributed so enormously to 
 increase the world’s prosperity, Great Britain takes the fore¬ 
 most place, the growth of her national capital having since the 
 commencement of the present century made very rapid strides. 
 A reference to the income-tax returns will show how great 
 this annual increase has been. Mr. Dudley Baxter gives the 
 income for the year 1814-15 as 146 millions sterling (accord¬ 
 ing to the income-tax assessments); in 1843 it amounted to 
 251 millions, while in 1865 it rose to 396 millions, and in 
 1875 to 571 millions; and according to the estimates formed 
 by one of the most distinguished statisticians, Mr. Robert 
 Giffen, the national wealth of Great Britain, which in 1865 
 amounted to 6,113 millions, rose in 1875 to 8,548 millions; 
 thus exhibiting for the decennial period an increase of 2,435 
 million sterling. Latterly, on account of the general depres¬ 
 sion which has prevailed, the annual increase of wealth is 
 estimated only at 90 millions. Thus the progress for the en¬ 
 tire period may be presented in the following statements: — 
 
 Years. 
 
 Authority. 
 
 National Wealth. 
 
 1800 .... 
 
 Beck and Pulteney. 
 
 £1,800,000,000 
 
 1840 .... 
 
 Porter. 
 
 4,000,000,000 
 
 1800 .... 
 
 Leone Levi . 
 
 6,000,000,000 
 
 1875 .... 
 
 Giffen. 
 
 8,550,000,000 
 
 1880 .... 
 
 
 about 9,000,000,000 
 
 And it will be readily conceded that the latter figures are 
 rather under than over estimated, when we consider the fact 
 that the amount of British capital invested in Government 
 
PROGRESS IN TRADE AND INDUSTRY. 
 
 475 
 
 securities and different companies, in railway and other in¬ 
 dustrial enterprises, is estimated by Mr. Giffen, in his paper 
 on the accumulation of capital in the United Kingdom, at 
 2,788 millions, and by the “Banker’s Magazine” (March, 
 1881) at 3,465 millions. According to the income-tax re¬ 
 turns, the exempted incomes in 1845 were at the rate of £7, 
 in 1855 £11, and in 1875 £17 per head. According to the 
 most recent calculations (1884), however, the amount is esti¬ 
 mated at about £36 per head of the community. These 
 figures will show at what an extraordinary rate the wealth 
 of the country is increasing, and we may repeat that the 
 estimates are rather below than above the mark. 
 
 As regards the progress of the national wealth in France, 
 it appears from the examination of the data that the accumu¬ 
 lation of capital has increased in the period 1848-71 from 
 50 to 60 per cent. M. L. Wolowski estimated the national 
 wealth in 1871 at 150 to 200 milliards of francs, of which 
 120 milliards consisted of property in land and houses, so 
 that this latter description of property has absorbed since 
 1851 about 20 milliards, or yearly one milliard of francs. 
 This view of the national prosperity of France has also been 
 taken by M. de Foville, after a critical examination of the 
 estimates formed by M. Block, S. Mony, A. Amelin, Yacher, 
 and other well-known writers. He estimates the national 
 wealth, after the loss of Alsace and Lorraine, at from 200 
 to 216 milliards of francs; these estimates are also forti¬ 
 fied by the authority of Fehler, who agrees in the main with 
 De Foville as regards the increase in the accumulation of 
 wealth, which may be estimated at 1,500 millions of francs 
 yearly. 
 
 There are so many insurmountable difficulties in the way 
 of approximately estimating the increase in the national 
 wealth of Germany, that a comparative statement is almost 
 out of the question. The many political, administrative, and 
 territorial changes which of late years have taken place, ren¬ 
 der it almost impossible to produce a comparison between 
 its present position and that of earlier years; an idea, how¬ 
 ever, may be formed of the great progress made by this nation 
 
476 
 
 ECONOMIC HISTORY. 
 
 \ 
 
 by a study of the value of the exports, which increased from 
 1,060 million marks in the year 1850 to 6,554 million marks 
 in 1884. Another method of arriving at an approximate idea 
 of the increase of public wealth is to take the amount of duties 
 levied on all steam industries. Dr. Engel computes the actual 
 assessed capital in the German Empire employed in these 
 industries at 11,104 million of marks. Dr. Soetbeer, in his 
 valuable work on the extent and distribution of wealth, though 
 taking a somewhat pessimistic view of the situation, states 
 that in the kingdom of Prussia alone during the period 
 1872-78 — a period of industrial stagnation — there was 
 found to be a sensible increase in the national wealth, as 
 the following table will show: — 
 
 Years. 
 
 National Income. 
 
 Per Head of 
 Population. 
 
 
 Marks. 
 
 Marks. 
 
 1872 . 
 
 6,969,000,000 
 
 293 
 
 1873 . 
 
 7,195,000,000 
 
 299 
 
 1874 . 
 
 7,532,000,000 
 
 307 
 
 1875 . 
 
 7,628,000,000 
 
 311 
 
 1876 . 
 
 7,857,000,000 
 
 316 
 
 1877 . 
 
 7,992,000,000 
 
 315 
 
 1878 . 
 
 8,069,000,000 
 
 323 
 
 As an indication of the increase of national income, if we 
 estimate it simply from the income-tax assessments, it will 
 be seen that the tax-paying income, which amounted in 1854 
 to 802 million marks, rose in 1878 to 957 millions, —an in¬ 
 crease of 800 per cent. It is evident, therefore, from an 
 examination of Soetbeer’s that there has been a very consid¬ 
 erable increase in the national wealth of Prussia. 
 
 The remaining western European countries also afford 
 valuable materials for researches into the question of the 
 growth of economic power. Thus in the case of Austro- 
 Hungary, C. von Czoernig, basing his calculations upon 
 various statistical returns, estimates roughly the income 
 derivable from land, mining, and other industries in 1859 
 at about 3,860 million florins; an unofficial publication 
 issued in 1868 estimates it at 4,300 millions ; and the 
 
PROGRESS IN TRADE AND INDUSTRY. 
 
 477 
 
 figures for the year 1874, taking the very lowest estimate, 
 may be reckoned at from 5,500 to 6,000 million florins. 
 M. Falbe Hansen is of opinion that the national wealth of 
 Denmark amounted in 1878 to 2 million reichthalers, and 
 M. Massalski estimates that of Belgium at 29 milliard 
 francs; and as regards Sweden, it appears from a work 
 which has been issued by an anonymous statistician, who 
 has evidently devoted much care and attention to the subject, 
 that its national wealth in the year 1876 amounted to four 
 and one half milliards kroners, or five milliards marks. 
 
 Still more interesting than this review of Europe is a study 
 of the remarkable progress which has been made in the eco¬ 
 nomic conditions of the United States. This country pos¬ 
 sesses the data of regular valuations at every census, and 
 from them we find that in 1790 the wealth of the then three 
 millions of inhabitants was estimated at 1750,000,000 or an 
 average of $187 to each person. The decennial increase since 
 that date is shown in the following table: — 
 
 Year. 
 
 Population. 
 
 Wealth. 
 
 Decennial 
 Percentage 
 Increase of 
 Population. 
 
 Decennial 
 Percentage 
 Increase of 
 Wealth. 
 
 Average 
 Property to 
 each 
 Person. 
 
 1790. . . 
 
 3,929,827 
 
 $750,000,000 
 
 Per cent. 
 
 Per cent. 
 
 $187 
 
 1800. . . 
 
 5,305,937 
 
 1,072,000,000 
 
 3502 
 
 4300 
 
 202 
 
 1810. . . 
 
 7,239,814 
 
 1,500,000,000 
 
 36*43 
 
 3900 
 
 207 
 
 1820. . . 
 
 9,638,191 
 
 1,882,000,000 
 
 3313 
 
 25-40 
 
 195 
 
 1830. . , 
 
 12,866,020 
 
 2,653,000,000 
 
 33-40 
 
 41-00 
 
 206 
 
 1840. . . 
 
 17,069,453 
 
 3,764,000,000 
 
 32-67 
 
 41-70 
 
 220 
 
 1850. . . 
 
 23,191,876 
 
 7,136,000,000 
 
 35-87 
 
 89-60 
 
 307 
 
 1860. . . 
 
 31,500,000 
 
 16,159,000,000 
 
 35-59 
 
 126-42 
 
 514 
 
 1870. . . 
 
 38,558,000 
 
 30,069,000,000 
 
 2200 
 
 86-13 
 
 780 
 
 1880. . . 
 
 50,155,783 
 
 43,642,000,000 
 
 3000 
 
 4500 
 
 870 
 
 Here also the progress of national wealth, as in England, 
 was very slow prior to the year 1840, after which a much 
 more rapid increase was made. The remarkable difference 
 between the figures of 1850 and 1860 is attributed in the 
 census-volume itself to an undervaluation for the year 1850. 
 It is, however, affirmed that a sufficient improvement in sta¬ 
 tistical methods has taken place since 1860 to permit of a 
 
478 
 
 ECONOMIC HISTORY. 
 
 correct comparison of the figures of that year with those of 
 1870 and 1880, and to establish statistically a rapid growth, 
 particularly in the decade from 1860 to 1870. Especially in 
 1880 was an exact and comprehensive method employed in 
 order to ensure the greatest possible accuracy. The com¬ 
 parative slowness in the increase of wealth from 1870 to 1880 
 is explained by the census commissioner by two considera¬ 
 tions. In the first place the valuation in 1870 was made 
 upon the basis of a depreciated currency, but in 1880 upon 
 a gold basis; and in the second place there has been an in¬ 
 creasing tendency of personal property to escape assessment. 
 In any event the depression in the years 1874 to 1879 has 
 also exerted an appreciable influence. 
 
 The aggregate of the national wealth for 1880 is made up 
 from the following particular valuations: — 
 
 Mill. Doll. 
 
 Farms.10,197 
 
 Residences and business real-estate, including water¬ 
 power . 9,881 
 
 Railroads and equipment.5,536 
 
 Telegraphs, shipping, and canals. 419 
 
 Live stock, farming-tools, and machinery .... 2,406 
 
 Household furniture, paintings, jewelry, books, etc. . 5,000 
 
 Mines and quarries, together with \ the annual pro¬ 
 duct . 781 
 
 Three-quarters of the annual product of agriculture 
 and manufacture and of the annual importation of 
 
 foreign goods.6,160 
 
 Churches, schools, asylums, public buildings . . . 2,000 
 
 Specie. 612 
 
 Miscellaneous items, including tools of mechanics . 650 
 
 Total.43,612 
 
 In this summary of national wealth, which appears not to 
 have been based upon the assessed valuation of property, as 
 that amounted only to $16,908,000,000, but upon 25,000 
 replies to inquiries and upon numerous local estimates, the 
 public debt of the Union has not been taken into considera¬ 
 tion, although it is chargeable in some manner to the total 
 national wealth pro rata parte ; but allowance has been made 
 
PROGRESS IN TRADE AND INDUSTRY. 
 
 479 
 
 for private indebtedness, the debts of the various States, 
 corporations, insurance companies, mortgages, etc. The cor¬ 
 rectness of the data has, however, been established with 
 greater accuracy as regards the details, and under any cir¬ 
 cumstance we have here to do with one of the most inter¬ 
 esting direct valuations of modern times. 
 
 For the completion of the foregoing data concerning the 
 national wealth of the United States certain figures from the 
 annual reports of the Treasury Department will serve, as they 
 likewise tend to show both the rapid increase of national 
 prosperity in recent years and in particular the remarkable 
 fluctuations since 1879. 
 
 [Millions omitted.] 
 
 For Fiscal Years Ending 
 30th June. 
 
 1875. 
 
 1880. 
 
 1881. 
 
 1883. 
 
 1883. 
 
 1884. 
 
 Ordinary national rev¬ 
 enue . 
 
 2840 
 
 333-5 
 
 360-8 
 
 403-5 
 
 398-3 
 
 348-5 
 
 Ordinary national ex¬ 
 penditure (exclu¬ 
 sive of sinking fund 
 and interest on 
 debt). 
 
 171-5 
 
 169-1 
 
 1771 
 
 186-9 
 
 206-2 
 
 189-5 
 
 Net public debt . . 
 
 2,1287 
 
 1,942-2 
 
 1,840-6 
 
 1,688-9 
 
 1,5511 
 
 1,4500 
 
 Interest on public 
 debt. 
 
 1031 
 
 95-8 
 
 82-5 
 
 711 
 
 59-2 
 
 54-6 
 
 It would be impossible to find in the financial position of 
 any other State such striking evidence of the increase of 
 national wealth as is discernible in the above figures. 
 
 The figures which we have already quoted will be sufficient 
 to convince every one of the very remarkable universal in¬ 
 crease which has taken place in national wealth during the 
 latter part of the present century, both incomes and capital 
 having increased in a much more noticeable degree during 
 this period than in any other. We will therefore proceed to 
 a statement of the causes which have contributed to this 
 vast increase of wealth,— and this is a subject which cannot 
 be dismissed in a few words, but requires, in order to make 
 it thoroughly clear and comprehensive, to be dealt with some¬ 
 what exhaustively. It will here, however, be practicable only 
 
480 
 
 ECONOMIC HISTORY. 
 
 to enumerate in as clear and concise a manner as possible 
 what have been the most important factors in determining 
 this remarkable development of national wealth. One of the 
 chief points to be considered is the influence exercised on the 
 economic conditions of the world by the introduction of 
 machinery and its substitution for manual labor, which is 
 one of the growths of the present century. The importance of 
 the wonderful inventions and improvements which have taken 
 place is visible in the effect which they have had upon the in¬ 
 crease of capital invested in machinery, and which as an in¬ 
 vestment has far exceeded in profit that employed in manual 
 labor. Then too the application of steam, which has wrought 
 so complete a change in locomotion must be recognized. As 
 an indication of the vast amount of the world’s capital which 
 is invested in steam undertakings, we may mention that Dr. 
 Engel, in one of his interesting publications, estimates the 
 capital so invested, in round numbers, at 133 milliard marks, 
 distributed as follows: eighty milliards in railways, forty 
 milliards in various steam undertakings, five milliards in 
 sea-going steamships, and the remainder in river steamers. 
 The part, then, taken by steam as a motive power, and the 
 introduction of machinery in the improvement of the eco¬ 
 nomic conditions of the world, are of the very greatest impor¬ 
 tance. These inventions have been the means of causing a 
 very large increase in the accumulation of national, and in a 
 corresponding degree of the world’s wealth. Another impor¬ 
 tant element to which we must direct attention is the devel¬ 
 opment of the credit system, which has in all civilized parts 
 of the world taken place during the last twenty-five years. 
 This does not necessarily produce fresh capital, but it has 
 the effect of facilitating the better application of capital 
 which is anywhere disposable; floating capital is collected 
 and is brought into more permanent forms of investment. 
 Deposit banks, savings banks, and credit institutions, and 
 above all the general employment of bills of exchange, which 
 have now become universally adopted, have all been the 
 means of supplying what was in earlier years a want much 
 felt, and have become important factors in determining the 
 
PROGRESS IN TRADE AND INDUSTRY. 
 
 481 
 
 augmentation of capital. The judicious operations of bank¬ 
 ing are mainly instrumental in rendering capital active and 
 productive. It will be seen by reference to the international 
 savings bank statistics, published by the Italian Statistical 
 Bureau in 1876, how vast the operations of savings banks 
 were. From this work it appears that although these insti¬ 
 tutions were only established some forty or fifty years ago, 
 yet in the year 1875 in Europe alone about 6,400,000,000 
 marks, and in the United States about 3,500,000,000 marks, 
 making in round numbers a total of 10 milliard marks, had 
 been invested. This is a sufficient indication of the influence 
 exercised over the accumulation of capital by other and simi¬ 
 lar institutions, and tends to show how by this credit system 
 activity and usefulness have been given to accumulations 
 which without these benefits would have become mere hoards. 
 And lastly, we come to the question of the maintenance of 
 the working population; and here we cannot lay too much 
 stress upon the necessity which exists of increasing and 
 maintaining a national working population, this population 
 in itself representing so much living capital. 
 
 We will now turn to another method of estimating wealth, 
 namely, an attempt to determine the economic condition of a 
 country during a fixed period of time. This is a labor analo¬ 
 gous to that which the science of meteorology has to set 
 before itself in determining the peculiarities of weather in a 
 certain neighborhood. As climate depends on a great com¬ 
 plexity of individual elements, so what we call the world’s 
 economy is the result of various factors, which act upon the 
 material processes of life in a given population with greater or 
 less power. In both cases, in the statistics of meteorology and 
 economy, a similar analytical examination of the causes of a 
 total impression have to be the object of investigation; but 
 while meteorology deals with actual elements or factors of the 
 present, such as atmospheric pressure, temperature, humidity, 
 direction and force of wind, etc., while it possesses exact 
 measuring instruments for the determination of these, and 
 finally can supply itself with an endless series of exact obser¬ 
 vations, economic statistics must be satisfied with surrogates 
 
 31 
 
482 
 
 ECONOMIC HISTORY. 
 
 of the methods of natural science. In order to calculate upon 
 the real elements of economic conditions when frequently re¬ 
 maining concealed, our investigation must often be satisfied 
 with such appearances as lie upon the surface, and which in 
 their nature are merely symptoms, and actually have them¬ 
 selves no ultimate effect on the sources and action of things. 
 Besides this, even these symptoms cannot in the real signifi¬ 
 cance of the word be measured or exactly expressed, but only 
 individually employed for computations and numerical com¬ 
 parisons. And finally, the same primary causes in the mate¬ 
 rial life of culture have not the same effects among all nations 
 and at all times. Thus even if we are able to point to more 
 than mere symptoms, we shall have to be careful in forming 
 our conclusions, and cannot afford to overlook that almost 
 all such results must in their very nature be empirical, that 
 is to say, must depend upon laws which are only binding 
 upon the given circumstances of space and time, and in no 
 way permit us to generalize. The desired object, though 
 comparatively limited, is nevertheless a difficult one to 
 attain; it presents an array of operations which as regards 
 physical science are superfluous, but are here indispensable. 
 One of these operations consists in the choice of the most 
 important, and of a study of the remainder of the accessible 
 symptoms of the economic situation which are capable of 
 being estimated. The symptoms, then, of the world’s econ¬ 
 omy will be dealt with in the following pages. Another, 
 which is an exact operation of measurement, consists, accord¬ 
 ing to our theory, in the endeavor to deduce the type or nor¬ 
 mal course of the groups of facts or observations chosen as 
 symptoms of the economic situation, which embrace definite 
 periods. The establishment of the type will result in many 
 cases in the choice of normal years as the point of compari¬ 
 son, and of the mean, in many other cases, by choosing the 
 commencement or the end of the series, and taking the 
 average of an entire period as the mean. 
 
 There is scarcely any period which has been so character¬ 
 ized by a series of powerful reactions as that comprised be¬ 
 tween the years 1870-85. From 1870 until the middle of 
 
PROGRESS IN TRADE AND INDUSTRY. 
 
 488 
 
 1873 almost everywhere the progress of economic life could 
 be clearly traced, and this was a period marked by a com¬ 
 mercial crisis which made itself universally felt. There 
 followed then a time of depression lasting until the year 
 1879, when a reaction set in. This revival was experienced 
 in the United States about the end of 1879, and at the com¬ 
 mencement of 1880 was felt in the countries of western 
 Europe, Great Britain, the Netherlands, Belgium, France, 
 and Germany. The effects of this reaction were somewhat 
 slow in manifesting themselves in European countries, those 
 first experiencing them being Holland, England, Belgium, 
 and France, while the German States, Italy and Austro- 
 Hungary were among the last. It will be impossible in a 
 work of this description to pursue a complete analytical in¬ 
 vestigation into all the symptoms which are likely to afford 
 any indication of the position of economic progress. These 
 symptoms must be considered in groups, which we shall 
 classify as follows,—primary symptoms, secondary symp¬ 
 toms, and reflective symptoms. 
 
 Under primary symptoms we proceed first to deal with the 
 question of the extent of production. There is no more re¬ 
 liable basis on which to determine the real economic condi¬ 
 tion during a fixed period of time than that which lies in the 
 activity manifested in producing power; but in considering 
 this subject we must not lose sight of the fact that great dis¬ 
 crimination is necessary to distinguish between the relative 
 importance of these symptoms of increased production. For 
 instance, we must inquire whether that particular branch of 
 industry in which such expansion is visible affects articles 
 which are liable to extremes of activity and depression, and 
 whether by this the decline of great industries is regulated; 
 and again we must satisfy ourselves to what extent the im¬ 
 provements or the reverse are affected by the prevailing con¬ 
 ditions of administration or government. As affording a 
 certain indication of the position of economic progress, we 
 will take the case of mining industries. Activity, or stag¬ 
 nation here are certain symptoms of favorable or unfavorable 
 position. On the other hand, if we take the case of harvests 
 
484 
 
 ECONOMIC HISTORY. 
 
 and the wheat productions of good and bad years, as these 
 are affected by the weather, and are entirely dependent for 
 their abundance upon the rain and sun in due season, they 
 have only a casual, and not what we should call a sympto¬ 
 matic character. 
 
 Let us now draw our deductions from the symptoms as 
 manifested in the extent of production during the period 
 1870-85. All of the more important industries of the world 
 experienced from 1870 to 1878 a wonderful extension, and 
 as affecting the world’s prosperity, this may be regarded 
 as a token of the most favorable economic conditions. We 
 will take as an example the enormous increase in cotton 
 industries and in mines and iron works. As regards the 
 former, the number of spindles and looms have everywhere 
 increased very considerably, and the quantity of yarn and 
 woven goods exported from England, which amounted in 
 1870 to 942 million pounds, rose in 1878 to 1,078 millions. 
 The value of cotton goods in the same period increased from 
 ninety-three millions sterling to 104 millions, — similar 
 symptoms are everywhere visible in the industries of the 
 world for the same period. As regards iron works, there 
 was a considerable increase in the number of furnaces set 
 up, and the total production of pig iron in the world rose 
 from twelve million tons in 1870 to nearly fifteen millions 
 in 1878. Everything during this period in fact tended to 
 prove that the world’s prosperity was making very rapid 
 strides. A change, however, was wrought by the commer¬ 
 cial crisis of 1878, and the effect of this crisis was to para¬ 
 lyze both the textile and iron industries, the statistics of the 
 amount of production in each case showing a gradual but 
 steady diminution. In the chief centres of the iron industry 
 there were, at the end of 1876, 2,537 furnaces in existence, 
 which were approximately capable of producing at the lowest 
 estimate twenty million tons of iron; there were, however, 
 but 1,329 of these furnaces at work, while 1,208 were at a 
 standstill, and the quantity of iron produced amounted to 
 only 280 million centners. 
 
 Again in 1878 we have very good authority for stating that 
 
PROGRESS IN TRADE AND INDUSTRY. 
 
 485 
 
 it was a time of almost universal depression. To demonstrate 
 this more clearly, we will take the case of the most impor¬ 
 tant of the great industries, namely, the cotton industries, 
 which in Great Britain, under favorable circumstances, give 
 employment to some four millions of people. 1 In the years 
 1876 and 1877, though there were large sales owing to a great 
 amount of stock having accumulated, the prices obtained 
 were considerably below the market value. In 1878 there 
 set in a complete cotton crisis, and the effects of this were 
 more severe than any which had been experienced by the 
 preceding generation. In the more firmly established houses 
 the hours of labor were shortened, while in others business 
 was entirely suspended, and there ensued a period of de¬ 
 pression, not only as regards England, but in fact the whole 
 world, unparalleled in commercial history. According to 
 Ellison’s cotton reports the depression reached its climax 
 during the first three months of 1879, when there was appar¬ 
 ent an indication of a grand revival of trade. The same 
 features which characterized the cotton trade were apparent 
 in woollen, silk, and linen industries, — the depression in 
 the two latter being more marked than in the former. 
 
 It was only in the latter part of 1879 and in the beginning 
 of 1880 that a marked improvement was to be seen in most 
 of the important industries. It was particularly noticeable 
 in the coal trade, the increase in the production of which in 
 Great Britain, Germany, France, Belgium, and more espe¬ 
 cially in America (from fifty-two million tons in 1878 to sixty- 
 nine millions in 1880), may be assuredly taken as a certain 
 indication of a steady improvement in the world’s economic 
 conditions. Soon afterwards, in the autumn of 1879, a stim¬ 
 ulus was given to the production of iron in America, followed 
 in a few months by renewed activity in the iron industries 
 of Great Britain and most of the European countries. The 
 fires which had been for some time extinguished were once 
 more kindled, and the production of iron increased in one 
 year at the rate of between twelve and twenty-one per cent. 
 There was also renewed activity in the smelting and puddling 
 
 1 This seems a great over-estimate. — Editor of “Journal.” 
 
486 
 
 ECONOMIC HISTORY. 
 
 works, and in fact towards the end of 1880 there was not 
 only a marked but a widespread improvement of trade. The 
 cotton industries of the world particularly exhibited signs 
 of revival, and this may be accepted as a certain symptom of 
 an amelioration of the economic position. Taking the case 
 of spun yarn, the weekly production, which in Great Britain 
 amounted in the year 1878-79 to 50,026 pounds, and on the 
 Continent to 47,352 pounds, rose in 1879-80 to 58,038 and 
 50,344 pounds respectively, thus showing an increase in this 
 one article of 572,200 pounds, or nearly twelve per cent in 
 this year alone. The other branches of textile industries did 
 not in the same degree exhibit such an improvement, yet it 
 was evident that toward the close of 1880 unmistakable signs 
 of revival were not wanting. This revival continued during 
 the years 1881-82, but was not however destined to be per¬ 
 manent. The capacity of the markets of the world was 
 everywhere overestimated, and the extent of production in 
 the principal industries soon exceeded the demand. Al¬ 
 though in 1883 an extension in some of the branches of pro¬ 
 duction was still noticeable, yet the prices of the various 
 products had commenced to decline. During the years 1884- 
 85 the decline in the production of all the industries to which 
 we have here called attention was most clearly marked; and 
 as these industries comprise three-quarters of the value of 
 the entire production of the world, depression or activity in 
 them forms an excellent indication of the actual prosperity 
 of the world. 
 
 Again, the extent of consumption is of symptomatic im¬ 
 portance in regard to the condition of national wealth. 
 The increase or decrease in the consumption of articles 
 which may be termed necessaries, such as breadstuffs, provi¬ 
 sions, and clothing, are not such reliable signs of an im¬ 
 provement or the reverse in national prosperity as the same 
 fluctuations which may be observed in those articles which 
 are not indispensable to man, and come under the heading of 
 luxuries, as it is obvious that in a time of depression there 
 would be a far more restricted consumption in the latter than 
 would be found if trade and industries were flourishing and 
 
PROGRESS IN TRADE AND INDUSTRY. 
 
 487 
 
 prosperous. Although the data are of a somewhat meagre 
 description, we will again take the period of 1870- 85 in 
 which to form our conclusions as to the position of national 
 wealth, judging from the extent of consumption. If we look 
 first at the consumption of coffee, tea, sugar, and tobacco, 
 it would appear that the same indications are shown of 
 material prosperity during the period of 1870-78, and that 
 the effect of the commercial depression which followed this 
 period did not so seriously affect the national wealth as 
 might have been expected, the consumption being certainly 
 to some extent limited, but in most countries only in a very 
 slight degree. From 1878 to the end of 1879 seems to have 
 been the most unfavorable time of the whole period. On 
 the other hand, in the year 1880 a revival is perceptible 
 throughout the economic world, which continued with vigor 
 during the years 1881-82, and was again checked in the years 
 1883-84. As an example of the consumption of coffee, the 
 supply received in Europe in 1871 amounted to 2.47 million 
 centners, in 1875 to 3.30 millions, but in 1880 it fell as low 
 as 2.74 million centners. From 1880 the consumption stead¬ 
 ily increased until 1883, when it reached 4.39 million cent¬ 
 ners. It then again declined to 4.09 million centners in 1884, 
 and to 4.31 in 1885. The great increase in the consumption 
 of tea in 1870-74 was almost universal; it was only in 1878- 
 79 that the consumption was first checked; and in the years 
 1880-83 it again distinctly increased. The same may be said 
 as regards tobacco. A study of these articles in individual 
 countries also reveals similar economic indications. In 
 America, for instance, in the fiscal year 1879-80 the quan¬ 
 tity of coffee imported amounted to sixty-nine million pounds, 
 or 1.4 pounds per head of the community; that of tea to 
 twelve million pounds, or 0.25 pounds per head; tobacco 
 leaf to three millions ; wine 6,394 million gallons and 
 1,303,356 bottles; and the American people retained in this 
 year for home consumption about 130 million pounds more 
 of refined sugar than they had done in previous years. In 
 England, though this was a favorable year, yet the increase 
 in luxuries was small, only cocoa, wine, and tobacco being 
 
488 
 
 ECONOMIC HISTORY . 
 
 consumed in greater quantities, whereas there was a decrease 
 in tea, coffee, and sugar. An examination, however, of the 
 return of taxes for the last nine months of the year 1880 
 point conclusively to the fact that the economic position was 
 substantially ameliorated. In France the signs of increas¬ 
 ing prosperity were more apparent than in England, a very 
 considerable augmentation in the imports of coffee, sugar, 
 and tea being perceptible in 1880, and although this year 
 was not a very favorable one as regards the wine production, 
 yet as a set-off against this there were in 1880, 852,000 
 hectolitres more beer consumed than in 1879, and about 
 9,468 kilograms (valued at nine million francs) of tobacco 
 and cigars than in the previous years, and there are not 
 wanting signs to show that this increase of material prosper¬ 
 ity was not of a spasmodic character. A similar progress was 
 also to be seen in Belgium. And finally we will take the 
 case of Germany, where in the year 1878 about 8.7 million 
 marks more duty was paid on luxuries, such as sugar, to¬ 
 bacco, brandy, and beer, than in previous years, and this in 
 connection with the information already given with regard 
 to the imports of foreign produce, effectually removes all 
 doubt as to the improvement at that time in its economic 
 position. Only in Italy was there to be found a slight indi¬ 
 cation of an unfavorable tendency, and in Austria there was 
 an inference of the maintenance of the status quo , the revival 
 in both instances having taken place since 1880. 
 
 No one who has studied the commercial statistics of the 
 decade 1870-1880 can fail to be impressed with the enormous 
 increase which has taken place in the consumption of textile 
 fabrics, iron, steel rails, and the production of other staple in¬ 
 dustries. To follow these in all their details would be out of 
 place here; it will only be necessary to remark that they ex¬ 
 perienced a moderate rise dating from the year 1873, and a 
 partial decline in 1880. As an American writer forcibly put 
 it, the poor man in the time of depression wore his coat twice 
 as long as he otherwise would, the rich man entertained less, 
 and in many instances disposed of his horses and carriages; 
 the tailor and the shoemaker complained that they had much 
 
PROGRESS IN TRADE AND INDUSTRY. 
 
 489 
 
 to mend and but little to make. As an illustration of this, 
 we may mention that in England in 1878 about twenty-six 
 million pounds less wool and 897,588 pounds less silk were 
 consumed than in 1877, and besides this, all the warehouses 
 were full of stock. The universal decrease in the consump¬ 
 tion of these staple articles continued during the gloomy 
 period 1874-79. The depression was of such a lasting char¬ 
 acter, and carried such disheartening effects in its train, 
 that one hardly cared to inquire how it happened that such 
 an unfavorable state of affairs, unbroken by any prospect of 
 a speedy revival, could exist in central Europe and America. 
 With this restriction in consumption was associated a cur¬ 
 tailment of profits and a consequent lessening of income; 
 and when in 1879 the horizon commenced to clear, and the 
 first ray of hope was to be seen, it was welcomed with a 
 feeling of intense relief by all classes of the community. 
 
 We will now see from the extent of commercial facilities 
 what conclusions may be formed as to the actual economic 
 position; and it appears to us, after many years of patient 
 observation, that the increased activity in commercial enter¬ 
 prises should assuredly be placed in the front rank of what we 
 have called the primary symptoms. If one follows the im¬ 
 provements which have during the last few years been made 
 in railways, postal systems, telegraphs, banking, etc., one 
 cannot fail to be impressed with their very vast importance 
 as factors in determining the condition of the world’s pros¬ 
 perity. Thus, in all civilized parts of the world, railways, 
 one of the most important of these factors, showed a very 
 rapid increase from 1870 to 1878 or 1874, both in the number 
 of passengers carried and in the quantity of goods conveyed, 
 and as a natural consequence the receipts from both sources 
 greatly increased. From 1874 to 1878, and in many countries 
 until 1879, there ensued a period of stagnation in railroad 
 enterprise, and in fact to such an extent that not only were 
 the effects very disastrous as regards industry, but great social 
 dangers were apprehended. 
 
 As an example of the stagnation of industrial life in North 
 America, we may state that the loss to holders of scrip in 
 
490 
 
 ECONOMIC HISTORY. 
 
 bankrupt or worthless railways in 18TT is estimated in round 
 numbers at 1000 million dollars, and that they were power¬ 
 less to prevent the fearful strike which happened on the Balti¬ 
 more and Ohio Railway on 16th July, 1877. It was only in 
 1879, or the beginning of 1880, that an improvement mani¬ 
 fested itself in railway enterprise, and the revival was first 
 experienced in the United States. In Great Britain, France, 
 Belgium, and Austro-Hungary the traffic receipts began then 
 gradually to increase ; while in Italy alone a similar impulse 
 does not appear to have been given until the autumn of 1881. 
 From 1881 to 1888 great activity in railway construction and 
 large increase of traffic were manifested in all countries of 
 western civilization. There appeared, however, in the United 
 States symptoms of a reaction in 1883, which led to an actual 
 crisis in 1884. In European countries also a stagnation in 
 commerce began in 1884, which continued in 1885, and caused 
 a dangerous diminution in the dividends of railways. 
 
 In shipping, the same features are to be seen as those which 
 characterized railway enterprise. During the same period we 
 notice similar peculiarities in this particular branch of indus¬ 
 try. The fluctuations in the number and tonnage of vessels 
 built, the increase or decrease in the tonnage entering or 
 clearing, and the amount of freight, — all these will show the 
 condition of the world’s prosperity. 
 
 The postal and telegraphic statistics are not of such valu¬ 
 able assistance as symptoms of the periodically favorable or 
 unfavorable condition of economic progress. We will, how¬ 
 ever, give the following figures, as they tend to show, in a 
 slight degree, which were the favorable and unfavorable 
 periods. The number of newspapers and books sent through 
 the British post-office rose from 202 millions in 1871 to 254 
 millions in 1878, that is, about twenty-six millions annually; 
 from 1873 to 1874, however, the number rose to only 258 
 millions, that is, about four millions annually. With the revi¬ 
 val of trade this number again rose from 328 millions in 
 1879 to 412 millions in 1882, that is, about twenty-eight 
 millions annually, the same as before the crisis; and from 
 1882 to 1885, to 464 m., indicating a slight retrogression. The 
 
PROGRESS IN TRADE AND INDUSTRY. 
 
 491 
 
 number of telegrams, which in 1870 amounted to 8.6 mil¬ 
 lions, increased in 1874 to 17.8 millions, showing a yearly 
 increase of 2.8 millions; from 1874 to 1878 the number 
 only increased to 22.5 millions, an annual increase of 0.8 
 million. On the other hand in 1881 the telegrams amounted 
 in round numbers to thirty millions, showing an average in¬ 
 crease for three years of 2.6 millions, as before the crisis ; 
 but after that date there occurred a diminution, as in 1885 
 the number had reached only 83.2 millions. 
 
 Let us now take another of the primary symptoms of 
 economic progress ; viz., the state of the money market. If 
 we look at the value of paper currency as the substitute for 
 cash payments, we find that it increased during the period 
 1869-73 about 1,679 million marks, and declined from that 
 date till 1879, to the extent of 2,350 million marks. At this 
 time there was a larger amount of uninvested capital lying idle 
 than had ever before been known. The bank hoards accumu¬ 
 lated, from the commencement of the period of stagnation, 
 at least 1,100 to 1,200 millions of marks in gold and silver. 
 If we take the returns of the two greatest financial institu¬ 
 tions in the world, the clearing houses of London and of New 
 York, we find that they show an increase from 190 milliard 
 marks in 1870-71, to approximately 256 milliards in 1873-74 ; 
 and on the other hand in 1878-79 they stood at 188 milliards, 
 which, taken in conjunction with the increase of population, 
 must be regarded as an unusual depression. How great was 
 the revival of trade in 1880 may be gathered from the returns 
 of both clearing houses, which show an increase from 203 
 milliard marks in 1878-79 to 266 milliards in 1880. 
 
 The condition of foreign commerce, though of course af¬ 
 fected by the state of industrial enterprise, also furnishes in 
 itself an important symptom of the economic situation, as 
 by it one can compare the rise and fall in the purchasing 
 power of nations. The wonderful fluctuations in national 
 wealth are nowhere more clearly shown than in the statistical 
 trade returns of the last decade. The figures, although they 
 cannot be said to be in any case strictly accurate, still point 
 conclusively to progress or retrogression in material pros- 
 
492 
 
 ECONOMIC HISTORY. 
 
 perity. In almost all countries the export returns are less 
 reliable than the statistics of imports. It must be borne in 
 mind also that the volume of foreign trade is determined not 
 by quantities but by value, and this is to a certain extent 
 misleading, as changes must take place from time to time in 
 the aggregate values of imports and exports; and one ought 
 to consider how far these changes, which are due to fluctua¬ 
 tions in average prices of commodities, affect the total import 
 and export trade. We find, then, from an examination of the 
 trade returns of the most important countries of the earth, 
 that the total import and export trade increased from 1865 
 to 1872 annually 2,166 million marks; from 1872 to 1873 
 about 1,620 million marks; while from 1873 to 1877 it expe¬ 
 rienced a sudden and rapid decline. The year 1878 witnessed 
 the inauguration of a brighter era, trade improving to the 
 extent of nearly 1,400 million marks; and this revival con¬ 
 tinued to make progress throughout the years 1879 and 1880. 
 To avoid misconception, we cannot insist too much upon the 
 influence exercised over these remarkable fluctuations by the 
 rise and fall in prices ; these, of course, being very material 
 elements in determining the general totals of imports and 
 exports; but even making due allowance for the effect of the 
 changes in prices, these fluctuations are none the less remark¬ 
 able, and must be accepted as unmistakable symptoms of 
 the economic situation. From the trade volumes of the vari¬ 
 ous countries, we find that the value of the foreign trade of 
 the United States in 1880 exceeded by 308 million dollars 
 that of the preceding year. Great Britain, for the same 
 period, showed an increase of seventy-nine millions sterling, 
 France 482 million francs, and Austro-Ilungary 55 million 
 florins. These four countries, then, will serve as an illustra¬ 
 tion of the increasing growth of economic power, having in 
 one year alone raised the value of the world’s foreign trade 
 to the extent of about 3,300 million marks. 
 
 We will now proceed to an examination of those symptoms 
 of economic progress which we have designated above as 
 secondary symptoms, and will consider first the prices of 
 commodities and wages. The favorable period, comprised 
 
PROGRESS IN TRADE AND INDUSTRY. 
 
 493 
 
 between 1870 and 1873, was characterized by a general rise 
 in the prices of commodities and in wages, by reason of the 
 demand for industrial power far exceeding the supply. If 
 we look at the trade circulars of London, Hamburg, and 
 New York, which contain regularly the same staple commodi¬ 
 ties, we find that the highest prices as regards textile fabrics, 
 iron, tin, copper, most articles of food, and colonial produce, 
 were quoted in 1873 and 1874. The tables published by M. 
 Bodio, the statements of Mr. Giffen in the Commercial His¬ 
 tory of the “ Statist” (1881), the quotations of the New York 
 commercial papers and of the Hamburg lists, all point to 
 the existence of this symptom in the economic situation. 
 Laspeyres has conclusively shown that at hardly any period 
 had the prices of commodities attained such a high rate as 
 during the year 1871. The decline was first apparent in 
 Hamburg in 1872; in New York and London, owing to the 
 enormous supply on hand, it was experienced in 1874 or 1875. 
 This decline, though gradual at first, began rapidly to assume 
 larger proportions, and continuing until the middle or end of 
 1879, points to the existence of a distinct commercial depres¬ 
 sion. Laspeyres states, on the authority of Hamburg quota¬ 
 tions, that the fall in prices of commodities in Germany from 
 1873 to 1877 had been greater than after an experience of 
 forty years had been thought possible. As regards England 
 the “ Economist,” in its annual review, gives a very interest¬ 
 ing statement showing the prices of staple commodities in 
 1870, as compared with 1845-50, the years for which the 
 index number of 100 may be taken. From this it appears 
 that, taking twenty-two categories whose total index number 
 is originally 2,200, the prices stood in 1870 at 2,689, and in 
 1873 had increased to 2,947, and declined in 1879 as low as 
 2,202; that is, had fallen to the prices of 1845-50. Mr. 
 Giffen points out in an exhaustive review that, with but few 
 exceptions, the English heavy goods in the period comprised 
 between 1873-79 became from 26 to 66 per cent cheaper. In 
 1878 lower prices ruled than had ever been quoted in London 
 since 1850. M. A. de Foville, in a series of comparative state¬ 
 ments, gives some interesting details of trade values; from 
 
494 
 
 ECONOMIC HISTORY. 
 
 these we gather that in 1877 the values of imports into France 
 were 14.5 per cent, and of exports 27.1 per cent lower than 
 in 1862. The same decline was experienced everywhere, and 
 it was a period of such universal commercial depression that 
 many industrial establishments had to forsake all branches of 
 their business. Many important woollen firms in England and 
 America failed, owing to the ruinous prices which prevailed. 
 The decline in the prices of coal and iron caused a loss in 
 these industries in Great Britain of from 60 to 70 per cent. 
 
 The enhancement of prices was first observable in the 
 United States, and was noticeable in the case of pig iron, silk, 
 and steel, at the end of 1878, and this upward tendency con¬ 
 tinued till the middle of 1879. For example, Pennsylvania 
 pig iron rose in 1878 from 16.5 to 18.5 dollars, and in 1879 
 from 28 to 82.5; it continued to rise, until in 1880 it attained 
 the average price of 88 dollars per ton, approximately the 
 same rate as was quoted in 1878; in the same way the Glas¬ 
 gow warrants, whicli were quoted in 1879 at 40s. per ton, 
 reached the high price of 73s. in the year 1880; and this 
 favorable impulse was not wholly confined to England and 
 America, but was visible throughout the commercial world. 
 The twenty-two goods categories of the “ Economist,” which 
 we mentioned above, ascended from the lowest index num¬ 
 ber in 1879; viz., 2,202, in one year, to 2,538, an increase of 
 about 16 per cent. Heavy goods, such as wool, cotton, yarn, 
 twist, and manufactures, experienced during the course of 
 1880 a still greater enhancement of prices. According to the 
 published statistics also of Germany, the rise of wholesale 
 prices in 1880, as compared with 1879, was of a more marked 
 character than was apparent in the returns of the majority of 
 the other European countries. 
 
 In connection with the variation in prices, we ought at the 
 same time to study the influence they exercised over wages. 
 These constitute an important symptom as regards industrial 
 condition, and are instrumental in determining the degree of 
 the material prosperity of various classes in the community. 
 The old axiom of political economists, that wages only fol¬ 
 lowed slowly in the wake of prices, has of late years suffered 
 
PROGRESS IN TRADE AND INDUSTRY. 
 
 495 
 
 very considerable modifications. The effect of the sinking of 
 prices upon wages during the period of depression between 
 1874 and 1878 was clearly apparent, and the same marked 
 influence exercised by the impulse given to commercial ac¬ 
 tivity and the improvement of the industrial condition was 
 particularly noticeable in the augmentation of wages dating 
 from the year 1879. It would be impossible in this review to 
 enter into minute details of the fluctuations during the vari¬ 
 ous periods of depression and commercial activity; but to 
 show how high wages had risen before the crisis of 1878, we 
 may mention that a special brand of champagne was ordered 
 for the Belgian mining districts, and thousands of bottles 
 consumed. In England the wages of coal miners rose from 
 4s. 9 d. a day in 1871 to 7s. 3 d. in 1873, and in Scotland to 
 8s. 6i.; whereas in October, 1878, these wages had been re¬ 
 duced to 2s. 9c?. a day, a decrease to nearly one third. Fur¬ 
 nace men who were receiving in 1869 only 3s. 9c?. a day, in 
 1872 were paid 7s. 6c?., and in 1873 as much as 8s. 6c?.; but 
 in 1876 they had to be content with 4s. 6c?., and in 1878 with 
 only 2s. 9c?. a day. Puddlers were in 1868 in the receipt of 
 8s. per ton, in 1873 13s. 3c?., in 1874 11s. 6c?., and in 1878-79 
 between 7s. and 7s. 6c?. During this latter period wages in 
 the textile industries also suffered a very considerable diminu¬ 
 tion. For instance, in one single year (1877-78) the spinners 
 and weavers of northeast Lancashire suffered a reduction in 
 wages to the extent of 10 per cent, and those of Oldham 15 
 per cent. It has been stated in the “ Times ” that the actual 
 difference of miners’ wages between 1873 and 1878 amounted 
 to as much as twenty-six millions sterling. The reduction of 
 wages was not confined to England alone, but extended also 
 to America. We find there that after a period of commercial 
 prosperity and high wages, there ensued a time of such un¬ 
 paralleled depression (in 1876) in the mining districts of 
 Pennsylvania that it had the most disastrous results, one 
 being a series of sanguinary riots, which necessitated for a 
 time the establishment of martial law. The statistics of 
 England, America, Belgium, and Germany, clearly show the 
 increase in wages from the commencement of 1880. Accord- 
 
496 
 
 ECONOMIC HISTORY. 
 
 ing to the estimates of Mr. Fallows, it would appear that the 
 Scotch miners in 1879 received on an average 6c?., and in 1880 
 9c?. a day, more than they earned in 1878. And as regards 
 the cotton industries, we gather from Ellison’s well-known 
 reports that out of the total value of British production, in 
 1879 only forty-four millions sterling, while on the other 
 hand in 1880 forty-six millions sterling were put by for wages 
 and profit. From America we have abundant information re¬ 
 specting the increase of wages in agricultural, mining, and 
 other industrial enterprises, and these clearly show the im¬ 
 provement which had already taken place in 1880 in the in-' 
 dustrial condition. According to more recent statistics wages 
 continued to increase during the years 1880-88, and again 
 declined in 1884-85. 
 
 We will now turn to the subject of the rates of discount, as 
 also affording an indication of the economic progress. During 
 the period 1870-79 there were very many fluctuations in the 
 rates of discount. The Bank of England, we find, previous 
 to the commencement of the period on which we have made 
 our calculations, only changed its rate two or three times, or 
 at the most seven times yearly. In 1870 and 1871 it was 
 altered ten times, in 1872 fourteen times, and in 1873 twenty- 
 four times,— in this year the bank rate was raised thirteen 
 times. The rate of discount stood during a period of fifty- 
 seven days at 6 per cent, during twenty-two days at 7 per 
 cent, and during thirteen days at 8 and 9 per cent. The 
 Bank of France in 1870 and 1874 changed its rate four times, 
 and in the three years 1871,1872, and 1873, the rates were 
 established at 5 per cent for 735 days, 6 per cent during 349 
 days, and 7 per cent during twelve days. Similar fluctuations 
 were also experienced in Germany. In 1874 the commercial 
 depression commenced to be universally felt, and from then 
 until the middle of 1878 there were a greater number of 
 changes in the rate of interest. The Bank of England altered 
 its rate five times during one year, the Bank of France once 
 only, and the rate was everywhere so reduced that it aver¬ 
 aged — taking the chief financial centres, London, Paris, 
 Amsterdam, Berlin, Vienna, Frankfort, and Brussels — only 
 
PROGRESS IN TRADE AND INDUSTRY . 
 
 497 
 
 4.01 per cent in 1875, 3.52 per cent in 1876, and 3.55 per cent 
 in 1877. In making up this average, the higher rates which 
 prevailed in Vienna, Frankfort, and Berlin (4J to 5| per cent) 
 are taken into account, as well as the lower ones of London 
 (2.47 per cent), Amsterdam (3 per cent), and Paris (2.31 per 
 cent), although these last determine with greater accuracy 
 the industrial position, as they experienced the first fall; for 
 in 1876 the bank rate in London stood at 2 per cent for 255 
 days, in 1877 again for 170 days, and it was only towards the 
 end of 1877 that there was a rise. In 1878 the Bank of 
 England rate of discount was scarcely more than 3| and 4J 
 per cent, but in the open markets short bills were discounted 
 at If and 1\ per cent. In Paris, the rate was at the most 1J 
 and If per cent, and it stood at 2 per cent only once, in March, 
 and from October to December at 2J. The rates at Berlin, 
 Amsterdam, and Brussels exhibited greater regularity in their 
 fluctuations between 2J, 3f, and 4J per cent. The unproduc¬ 
 tiveness of floating capital, and the absence of speculative 
 spirit, cannot be said to afford such unfailing symptoms of 
 material prosperity as these fluctuations in the bank rates. 
 To pursue our investigations still further, we find that dur¬ 
 ing the latter part of 1878, and also in 1879, a greater os¬ 
 cillation was to be found than in 1880; again the increases 
 in the rate were also more important in 1878 and 1879 than 
 in 1880, and clearly indicated a stimulus which was want¬ 
 ing in 1880. The alterations in the Bank of England rate 
 amounted in 1878 to 11, in 1879 to 6, and in 1880 to 2 only; 
 but in 1880, taking six of the most important financial circles 
 of Europe, these alterations only amounted to 17, of which, as 
 we have already shown, 2 occurred in London, 3 in Paris, 5 in 
 Berlin, 2 in Brussels, 3 in Amsterdam, and 2 in Vienna. 
 These symptoms tend to show that the lowering of rates of 
 discount is a distinct voucher for the excess of the supply of 
 lending capital over the demand. Economists agree in re¬ 
 garding them as indications of the approach of a lasting 
 period of cheap money. 
 
 As regards investments, these are mainly dependent upon 
 
 favorable or unfavorable economic conditions, as during a 
 
 32 
 
498 
 
 ECONOMIC HISTORY. 
 
 period of commercial prosperity there would naturally be a 
 larger amount of available capital to invest than would be the 
 case were depression prevailing. The amount of capital in¬ 
 vested in the formation of new industrial establishments and 
 various forms of investment would afford an insight into the 
 condition of the industrial position. It appears from a state¬ 
 ment in the “ Moniteur des Int^rets Materiels,” in an article 
 devoted to the consideration of the subject of investments, 
 that they averaged during the ten years ending 1879, 6,109 
 million marks, the amounts for the years 1871-73 being very 
 considerably above the average, thus clearly indicating the 
 existence of a period of excessive speculation. The following 
 statement shows the amount invested each year, and the 
 character of the investments : — 
 
 [Millions omitted.] 
 
 Years. 
 
 In State and 
 City Loans. 
 
 In Credit 
 Institutions. 
 
 In Railways 
 and other In¬ 
 dustrial Enter¬ 
 prises. 
 
 Total. 
 
 Above or below 
 the Decennial 
 Averages. 
 
 1870 
 
 • • 
 
 Murks. 
 
 ? 
 
 Marks. 
 
 'I 
 
 Marks. 
 
 1 
 
 Marks. 
 
 4560 
 
 — 1549 
 
 1871 
 
 • • 
 
 9360 
 
 1200 
 
 2000 
 
 12560 
 
 + 6451 
 
 1872 
 
 • • 
 
 4380 
 
 1564 
 
 4166 
 
 10110 
 
 4 - 4001 
 
 1873 
 
 • • 
 
 3470 
 
 1396 
 
 3856 
 
 8722 
 
 4 2613 
 
 1874 
 
 • • 
 
 1268 
 
 236 
 
 1864 
 
 3368 
 
 — 2741 
 
 1875 
 
 • • 
 
 372 
 
 350 
 
 646 
 
 1368 
 
 — 4741 
 
 1876 
 
 • • 
 
 2356 
 
 66 
 
 498 
 
 2920 
 
 — 3189 
 
 1877 
 
 • • 
 
 4618 
 
 320 
 
 1384 
 
 6322 
 
 4 213 
 
 1878 
 
 • • 
 
 2896 
 
 126 
 
 622 
 
 3644 
 
 — 2465 
 
 1879 
 
 • • 
 
 4406 
 
 1902 
 
 1212 
 
 7520 
 
 4 1411 
 
 1880 
 
 • • 
 
 1747 
 
 1035 
 
 1644 
 
 4426 
 
 — 1683 
 
 1881 
 
 • • 
 
 2395 
 
 1033 
 
 2315 
 
 5743 
 
 — 366 
 
 1882 
 
 • • 
 
 1075 
 
 409 
 
 2256 
 
 3740 
 
 — 2369 
 
 1883 
 
 • • 
 
 1253 
 
 374 
 
 1741 
 
 3368 
 
 — 2741 
 
 1884 
 
 • • 
 
 1446 
 
 318 
 
 2193 
 
 3957 
 
 — 2152 
 
 1885 
 
 • • 
 
 1181 
 
 151 
 
 1332 
 
 2664 
 
 — 3445 
 
 In this comparison the proportion of investments in credit 
 institutions, banks, railway and industrial enterprises, to public 
 loans is of special significance, and we therefore present it 
 by per centage in the following table: — 
 
PROGRESS IN TRADE AND INDUSTRY. 
 
 499 
 
 Years. 
 
 Public 
 
 Loans. 
 
 Credit 
 
 Institutions. 
 
 Railways, 
 
 etc. 
 
 
 Percent 
 
 Per cent. 
 
 Per cent. 
 
 1871 . . 
 
 74*5 
 
 9-5 
 
 160 
 
 1872 . . 
 
 43-5 
 
 15-5 
 
 410 
 
 1873 . . 
 
 400 
 
 160 
 
 440 
 
 1874 . . 
 
 380 
 
 7-0 
 
 650 
 
 1875 . . 
 
 27-5 
 
 25-75 
 
 46-75 
 
 1876 . . 
 
 80-75 
 
 2-25 
 
 170 
 
 1877 . . 
 
 7325 
 
 50 
 
 21-75 
 
 1878 . . 
 
 7925 
 
 3-50 
 
 17-25 
 
 Years. 
 
 Public 
 
 Loans. 
 
 Credit 
 
 Institutions. 
 
 Railways, 
 
 etc. 
 
 
 Percent. 
 
 Per cent. 
 
 Per cent. 
 
 1879 . 
 
 58-75 
 
 2525 
 
 160 
 
 1880 . 
 
 39-45 
 
 23-38 
 
 3717 
 
 1881 . 
 
 41-70 
 
 17-99 
 
 40-34 
 
 1882 . 
 
 28-74 
 
 10-93 
 
 60-31 
 
 1883 . 
 
 37-20 
 
 11-10 
 
 51-80 
 
 1884 . 
 
 36-54 
 
 803 
 
 55-43 
 
 1885 . 
 
 44-33 
 
 5-67 
 
 5000 
 
 Here we perceive that in the early period of speculation 
 private^ enterprises, and in the subsequent period of depres¬ 
 sion public loans received the larger proportion of invest¬ 
 ments. After the revival in 1879 the relation between these 
 two classes of investments is once more reversed, especially 
 for the year 1882; on the other hand, since that date there 
 would appear again to be an increase of public loans. 
 
 In the invested capital for the same period of the several 
 individual countries, peculiarities similar to those which char¬ 
 acterize the preceding tables are likewise to be found. Of cap¬ 
 ital invested in the English market, the “ Economist ” gives 
 the following statement: — 
 
 Years. 
 
 Nominal. 
 
 Actual. 
 
 Years. 
 
 Nominal. 
 
 Actual. 
 
 1870 .... 
 
 Million £. 
 
 92-25 
 
 Million £. 
 
 80 00 
 
 1879 .... 
 
 Million £. 
 
 56-47 
 
 Million £. 
 
 47-46 
 
 1872 .... 
 
 151-55 
 
 113-10 
 
 1880 .... 
 
 122-20 
 
 77-60 
 
 1873 .... 
 
 154-70 
 
 101-15 
 
 1881 .... 
 
 189-40 
 
 115-25 
 
 1874 .... 
 
 114-15 
 
 110-55 
 
 1882 .... 
 
 145-55 
 
 94-65 
 
 1875 .... 
 
 62-65 
 
 60-85 
 
 1883 .... 
 
 8115 
 
 76-90 
 
 1876 .... 
 
 43-20 
 
 42-85 
 
 1884 .... 
 
 10903 
 
 90-60 
 
 1877 .... 
 
 51-50 
 
 38-60 
 
 1885 .... 
 
 77-97 
 
 77-87 
 
 1878 .... 
 
 69-20 
 
 50-40 
 
 
 
 - 
 
 These figures may be taken as more strictly accurate than 
 those affecting the total investments, as they relate only to 
 a single stock market; they indicate, moreover, the increase 
 of invested capital up to the year 1874, the decrease from 
 this period till 1878, and the rapid recovery since 1879; like- 
 
500 
 
 ECONOMIC HISTORY. 
 
 wise the character of the recent phase from 1881 to 1885. 
 This statement is the more interesting, as we can estimate 
 very nearly, by the proportion between the nominal and effect¬ 
 ive capital, whether the investments were of a purely specu¬ 
 lative or real character. In France, capital invested during 
 the first six months of 1879 amounted to only 350 million 
 francs, as compared with 1,748 million francs in the corre¬ 
 sponding period of 1880. For the whole year, ending 30th 
 June, 1880, it amounted in round numbers to 4,000 million 
 francs, and this is exclusive of the Belgian, Austrian, and 
 Russian loans, which were not directly floated on the Parisian 
 market. There were established in Paris, in the year 1881, 
 432 new companies, with 1,929 million francs of capital; in 
 the year 1882, 328 companies,with 798 million francs; in the 
 year 1883, 230 companies, with 251.5 million francs; and 
 in the year 1884, only 143 companies, with 91.9 million 
 francs. In Germany during the first half of 1879, capital to 
 the extent of only 142 million marks was invested, against 
 659 million marks in the corresponding period of the ensuing 
 year, of which twenty-five million marks only were in railways 
 and other companies, and the remainder in foreign loans. In 
 Austria it is estimated that the total amount of invested cap¬ 
 ital in 1880 was only 170 million florins, compared with 271 
 million florins in 1879; but great stress is here laid upon the 
 fact that, after a lengthened period of inaction, in 1880 money 
 was for the first time largely invested in railways and commer¬ 
 cial enterprises, in preference to foreign loans, — the amount 
 represented by the former being fifty-four million florins. 
 Thus, as may be gathered from the preceding observations, 
 statistics of invested capital afford an important symptom of 
 greater or less commercial activity. 
 
 Again w r e can discover, by reference to financial journals, 
 the fluctuations which have appeared in the dividends paid 
 by railways and other commercial enterprises. The influence 
 of good and bad years exercised over these dividends is clearly 
 shown in the comparative statements which they have from 
 time to time published. For example, the depreciation of 
 foreign stocks on the London Exchange amounted in July, 
 
PROGRESS IN TRADE AND INDUSTRY. 
 
 501 
 
 1873, to 49.2 millions sterling; and in October, 1875, the loss 
 was estimated by the Foreign Loan Committee of the Stock 
 Exchange to amount to as much as 157.8 millions sterling. 
 There was in addition the loss by the joint-stock banks, four¬ 
 teen of whieh alone, in 1878, suffered, according to the 
 “ Economist,” a diminution in the value of their stock of ten 
 million pounds sterling. As regards the chief industrial estab¬ 
 lishments of England it is admitted that the depreciation in 
 the shares of the cotton spinning and weaving industries of 
 Oldham from January, 1877, to 1879, represented a total loss 
 of £1,360,000. The foregoing figures, however, convey only 
 an approximate idea of the general loss of capital in Great 
 Britain and Ireland, the actual extent being statistically un- 
 ascertainable. In 1880, on the other hand, a decided improve¬ 
 ment took place in the United Kingdom, which, when compared 
 with the period of depression of 1879, is all the more clearly 
 marked. 1 
 
 As Mr. Giffen points out in the Financial and Commercial 
 History of 1880, published in the “ Statist,” the increase of 
 selling value of the mass of securities in the United King¬ 
 dom would probably amount to not less than 600 millions 
 sterling. In the United States the loss in railway shares, 
 from 1873 to 1877, amounted to nearly one milliard of dollars, 
 but the improvement which took place after September, 1879, 
 to a great extent made up this loss, as in May, 1880, it was 
 already reduced to 200 million dollars, and was soon after¬ 
 wards almost entirely removed. A similar improvement in 
 the value of securities was also to be found in the case of 
 Austria. There it appeared that the value of the different 
 description of securities, which amounted in 1873 (May) to 
 1,589 million florins fell to 755 in 1876; in 1877 it was only 
 879, and in 1878, 906 million florins ; but a steady improve¬ 
 ment then set in, until in 1880 the total increase in the value 
 of all securities amounted approximately to 300 million 
 florins. This favorable tendency continued in both countries, 
 as in Great Britain, until the close of 1881, after which a 
 general decline in securities took place until 1885. 
 
 i See “ Statist,” Dec. 11, 1880, for full details. 
 
502 
 
 ECONOMIC HISTORY. 
 
 Statistics of bankruptcies and failures may likewise be 
 taken as unfailing symptoms of the industrial position. But 
 our information as regards this subject is by no means com¬ 
 plete, owing to the scarcity of official data. The following 
 table, which has been carefully compiled by R. Seyd, serves, 
 however, to indicate the economic phases from 1870-1884 in 
 the United Kingdom by the number of failures : — 
 
 Tears. 
 
 Number. 
 
 Years. 
 
 Number. 
 
 1870 . 
 
 8,151 
 
 1878 . 
 
 15,059 
 
 1871. 
 
 8,164 
 
 1879 . 
 
 16,637 
 
 1872 . 
 
 8,112 
 
 1880 . 
 
 13,147 
 
 1873 . 
 
 9,064 
 
 1881. 
 
 12,005 
 
 1874 . 
 
 9,250 
 
 1882 . 
 
 11,019 
 
 1875 . 
 
 9,194 
 
 1883 . 
 
 10,599 
 
 1876 . 
 
 10,848 
 
 1884 . 
 
 14,394 
 
 1877 . 
 
 11,022 
 
 1885 . 
 
 5,089 
 
 It is noteworthy that the extreme depression of the large 
 industries in Great Britain was already relieved in 1878, 
 whereas of the smaller trades not until 1879. As regards the 
 United States the periods of commercial activity and of depres¬ 
 sion are clearly perceptible in the statistics of failures pub¬ 
 lished by Messrs. Dun, Wiman, & Co. According to these 
 returns, the smallest number of failures in the Union is to be 
 found in the years 1869-1872; a depression begins in the 
 latter half of 1878, which steadily increases until 1878; and 
 the years 1879-1881 witness a genuine revival. The yearly 
 average of the number of failures, and the amount of liability, 
 in the different periods is as follows : — 
 
 Yearly Average. 
 
 Number of 
 Failures. 
 
 Amount of 
 Liabilities. 
 
 1866-1872 . 
 
 2,889 
 
 $83,000,000 
 
 1873-1878 . 
 
 7,886 
 
 200,000,000 
 
 1879-1884 . 
 
 7,311 
 
 124,000,000 
 
 1 The years 1884 and 1885. cannot be compared with the preceding years, 
 owing to the enactment, on 25th Aug., 1883, of a new and more stringent bank¬ 
 ruptcy act. 
 
PROGRESS IN TRADE AND INDUSTRY. 
 
 503 
 
 In France the movement is not so strikingly accentuated, as 
 that country was less affected by the crisis of 1873; yet the 
 fluctuations were considerable. Thus in 1872 the number of 
 declared bankrupts amounted to 5,306, and the extent of their 
 failures was represented by a total of 215 million francs ; in 
 1873, 5,508, liabilities 218 millions; in 1874, 5,596, liabil¬ 
 ities 241 millions; in 1875, 5,361, liabilities 246 millions, and 
 in 1876, 5,193, liabilities 298 millions. It was not until 1877 
 that any real improvement was visible; and in 1881, though 
 there were 6,795 failures, the amount of liabilities was only 
 236 million francs. Finally, in Austria, according to the pub. 
 lished returns, the number of insolvents in 1875 was 1,381; in 
 1876, 1,777; in 1877, 1,377; in 1878, 1,334; in 1879,1,048; 
 and in 1880 only 971 failures. The amount of debt in 1876 
 was established at nearly twenty-six million florins; in 1877 
 at thirteen millions, and in 1878 at about fourteen millions. 
 
 The intimate connection between the economic and social 
 conditions demands no extended proof. The bonds of union 
 between these two phases of life are so numerous that we 
 proceed directly to a statistical presentation of a series of 
 phenomena which we have termed reflective symptoms, inas¬ 
 much as they reveal the reactions of a greater or lesser degree 
 of economic prosperity in a nation or period. 
 
 We here look first into the condition of the working classes, 
 and we find that during the favorable period, 1870-73, com¬ 
 plaints of want of employment were almost unknown, whereas 
 the demand for labor, on the contrary, was great and wages 
 were high; but in 1874 there came a change, the hours of 
 labor were reduced, and workmen were discharged in great 
 numbers. This was particularly exemplified in the years 
 1876-77, when the conditions of trade were most unfavorable, 
 and it was especially noticeable in England and the majority 
 of the continental countries. In America, moreover, in the 
 beginning of 1877, it is estimated that the number of work¬ 
 men totally unemployed amounted to half a million, and 
 about an equal number worked only one or two days a week. 
 At the end of 1877 the trades union committee gave the num¬ 
 ber of unemployed workmen as two millions. These com- 
 
504 
 
 ECONOMIC HISTORY. 
 
 plaints began to cease about the middle of 1879, first in the 
 United States and soon afterwards in England and Western 
 Europe. From the data respecting the condition of labor 
 in mining, textile, and other industries for 1880 it may be 
 safely affirmed that the state of labor had then everywhere 
 again materially improved. In the American Union, in par¬ 
 ticular, there was a great demand for laborers, which contin¬ 
 ued throughout the years 1881-88, and then again declined. 
 
 Strikes, likewise, afford a characteristic symptom of the 
 state of the labor market, not only by their numbers and 
 duration, but also by the manner in which they terminate, 
 whether in favor of the employers or the employed. On this 
 general subject English, American, French, and Belgian sta¬ 
 tistics afford valuable information. As regards Great Britain, 
 Mr. G. Phillips Be van, in a very interesting report, has given 
 a comparative statement, as follows, showing the number of 
 strikes which took place in the years 1870-79: — 
 
 Years. 
 
 Number of 
 Strikes. 
 
 Years. 
 
 p 
 
 Number of 
 Strikes. 
 
 1870 . 
 
 30 
 
 1875 . 
 
 245 
 
 1871. 
 
 98 
 
 1876 . 
 
 229 
 
 1872 . 
 
 343 
 
 1877 . 
 
 180 
 
 1873 . 
 
 365 
 
 1878 . 
 
 268 
 
 1874 . 
 
 286 
 
 1879 . 
 
 308 
 
 The greatest number of strikes during this period occurred 
 in 1872-78, and happened at a time when industry was at its 
 highest. There was then a very large demand for labor, and 
 a great inflation in prices, and although men were getting 
 good wages, yet they were not satisfied. Though the gener¬ 
 ality of them were earning more than they had ever earned 
 before, they struck for a reduction of working hours. This was 
 the reason for very many of the strikes which occurred at that 
 time. The effort, on the other hand, of the masters to win 
 back the extra hour they were obliged to concede in 1872-78, 
 affords an explanation of the large number of strikes in 1879. 
 In that year the greatest number of strikes occurred in the 
 building trade (598), the metal trades (890), mining indus- 
 
PROGRESS IN TRADE AND INDUSTRY. 
 
 505 
 
 tries (339), and textile industries (440), which establishes be¬ 
 yond a doubt their symptomatic connection with the economic 
 situation. The improvement in the economic condition, and 
 the extension of raw production, increased, beyond what could 
 otherwise have been expected, the demands for higher wages, 
 and the number of strikes in 1881-82. In America, as well 
 as in England, the years in which the activity in commercial 
 enterprises was greatest, were characterized by the largest 
 number of strikes, — for example, 1871-72. During this 
 period there was a cessation of work in the anthracite coal 
 mines of Pennsylvania, by which 90,000 workmen were put 
 on half time. Strikes in the coal regions continued, indeed, 
 in the years 1874 and 1875; but the second period of their 
 occurrence in remarkable numbers was not reached until 
 1876-77. This was a period of great distress, during which 
 wages were reduced, and hands were discharged. There 
 resulted in consequence one of the most unfortunate strikes 
 that ever took place in America. It occurred in the State of 
 Pennsylvania, and culminated in open revolt and bloodshed. 
 Then followed the strike on the Baltimore and Ohio Rail¬ 
 way, which was also of a very serious nature. From 1870 
 to 1880 the social tension was again relaxed; and with the 
 revival in the years 1881 and 1882 the strikes also increased, 
 especially among the laborers in the coal mines, iron works, 
 and kindred industries of the Southeast. Both at this time 
 and in 1883 the ends of the workmen were thereby attained. 
 In 1884 and 1885, however, the strikes in America have been 
 chiefly characterized by their futility. In France, Belgium, 
 and Germany similar symptoms of the economic situation 
 are not lacking, but they appear in a less marked degree. 
 The recent phases of socialism and social-communism in those 
 countries are an expression of the changing situation and a 
 reflex of their economic condition. With the improvement of 
 the latter the influence of socialistic leaders must diminish. 
 
 In connection with the subject of strikes and workmen’s 
 wages we must not omit to give a passing glance at the effect 
 which the peculiar conditions of the labor market have upon 
 immigration and emigration. In consequence of the increased 
 
506 
 
 ECONOMIC HISTORY. 
 
 facilities for emigration this is a subject which has attained 
 a vast importance, and may be classed as one of the relevant 
 symptoms of the economic position. The great centre of at¬ 
 traction for those leaving the more densely populated of the 
 European countries appears to be the United States. As we 
 have already pointed out there have been very many changes 
 in the conditions of commercial activity during the period 
 under our consideration. The effect these changes have had 
 upon immigration into the United States may first be seen in 
 the speculative era from 1871 to 1878, when there was a very 
 great influx of immigrants. Then in 1874-78 the powerful 
 attractions which induced such vast numbers to migrate were 
 wanting; consequently we find at that time a considerable 
 decrease in these numbers. In 1879, with the return of pros¬ 
 perity, there again appeared an increase in immigration. This 
 attained its maximum in 1881-82, after which occurred a 
 decline, owing to the diminishing opportunities of labor and a 
 more critical state of affairs in the New World. The official 
 statistics of the movement are as follows: — 
 
 Years Ending 30th June. 
 
 Number of 
 Immigrants. 
 
 Years Ending 30th June. 
 
 Number of 
 Immigrants. 
 
 1870-71 
 
 321,350 
 
 1878-79 . 
 
 177,826 
 
 1871-72 . 
 
 404,806 
 
 1879-80 . 
 
 457,257 
 
 1872-73 . 
 
 459,803 
 
 1880-81 . 
 
 669,431 
 
 1873-74 . 
 
 313,339 
 
 1881-82 . 
 
 788,992 
 
 1874-75 . 
 
 227,498 
 
 1882-83 . 
 
 603,322 
 
 1875-76 . 
 
 169,986 
 
 1883-84 . 
 
 518,592 
 
 1876-77 . 
 
 141,857 
 
 1884-85 . 
 
 395,346 
 
 1877-78 . 
 
 0 
 
 138,469 
 
 
 
 In this stream of American immigration the largest num¬ 
 ber of persons is uniformly supplied by Germany, and next 
 to it by Great Britain and Ireland. By reference also to 
 the emigration returns of the other European countries we 
 discover a uniformity of movement in corresponding years 
 that can only be explained upon similar economic grounds. 
 According to these statistics it can thus be affirmed in gen¬ 
 eral of Europe, as has been demonstrated by Mr. Giffen for 
 Great Britain in particular, that an increase of emigration 
 
PROGRESS IN TRADE AND INDUSTRY. 
 
 507 
 
 is to be regarded as characteristic of a period of economic 
 prosperity, and the reverse as- indicative of a period of 
 economic depression. 
 
 Another and very interesting symptom of the conditions of 
 material prosperity lies in the movement (Bewegung) of the 
 population. The variations in the number of births, deaths, 
 and marriages afford clear indications of the favorable or un¬ 
 favorable conditions of the years in which they occur. Mar¬ 
 riages especially would appear to be a most important element 
 in determining the economic condition in different years. It 
 will readily be conceded that an increase or decrease in the 
 number of these point conclusively to the existence of mate¬ 
 rial ease or the reverse. In dealing with this subject for the 
 assigned period we find that the years 1870-73 were char¬ 
 acterized by a very marked increase in the number of mar¬ 
 riages, thereby indicating the existence of favorable conditions 
 and confidence in a time of increased prosperity. This in¬ 
 crease was particularly noticeable in Great Britain, Germany, 
 France, Belgium, Austro-Hungary, and Holland. With the 
 unfavorable reaction of 1873 and 1874, on the other hand, the 
 number of marriages in all these countries began to decrease. 
 In Italy, Switzerland, Norway, and Denmark, the economic 
 reaction was likewise similarly manifested; but corresponding 
 to a later maximum in the frequency of marriages, the de¬ 
 crease occurred not until 1877-78. At the close of 1879 
 increasing confidence was here and there again slightly per¬ 
 ceptible in the number of marriages. In their greater fre¬ 
 quency, however, during the years 1880 and 1881, in England, 
 France, Austria, and Italy, we discover decided and powerful 
 symptoms of the improved economic and social conditions. 
 In the United States, where as a whole this relation ought to 
 be most apparent, it is only to be proven statistically in 
 particular States; but this detached evidence from Massa¬ 
 chusetts, Connecticut, and Rhode Island, shows the most strik¬ 
 ing effects of the changing prosperity of the last twelve years 
 upon the frequency of marriages. The favorable and unfavor¬ 
 able conditions of life are not so strikingly manifested in the 
 “movement” of population as regards births and deaths as in 
 
508 
 
 ECONOMIC HISTORY. 
 
 the case of marriages. In the births, however, a considerable 
 diminution is to be found, beginning with the year 1877 or 
 1878 and continuing until the year 1881 or 1882. In the 
 majority of European countries the death rate was likewise 
 highest in those years in which the birth rate was lowest. 
 The years of depression thus appear not to have seriously 
 affected at the time the entire growth of the population, but 
 the after effects were undoubtedly felt in 1879-80. The crisis 
 of 1873, however, had a direct and unmistakable influence on 
 the number of suicides. M. Jocliniek states that in twenty-two 
 European countries the number of suicides increased from 99 
 in every million of inhabitants during the quinquennial period 
 1871-75 to 119 per million in the period 1876-80. M. A. von 
 Oettingen, taking another group of twenty European countries, 
 gives also the following statement of the increase of suicides 
 in successive quinquennial periods between 1870 and 1878 : — 
 
 Years. 
 
 Number 
 
 of 
 
 Suicides. 
 
 Proportion 
 per Million 
 Inhabitants. 
 
 1870-1874 . 
 
 20,306 
 
 80 
 
 1871-1875 . 
 
 20,208 
 
 80 
 
 1872-1876 . 
 
 21,638 
 
 85 
 
 1873-1877 . 
 
 23,654 
 
 92 
 
 1874-1878 . 
 
 24,910 
 
 97 
 
 The fact, however, must not be overlooked that statistics re¬ 
 lating to suicides must necessarily be incomplete, as on this 
 subject it is almost impossible to obtain reliable data, owing to 
 omissions. Statistics of mendicity and crime likewise afford 
 abundant proof that good and bad times make their influence 
 felt in a very perceptible manner in the domain of social life. 
 They are consequently an additional and corroborative symp¬ 
 tom of economic progress or retrogression. 
 
 It is, then, by all the symptoms which we have enumerated 
 that we have endeavored to estimate the world’s prosperity; 
 and these have unquestionably proved that in the period from 
 1870 to 1885 economic conditions have been exposed to 
 greater and more varying fortunes than they had ever before 
 
PROGRESS IN TRADE AND INDUSTRY. 
 
 509 
 
 experienced. At the commencement of the period there were 
 unmistakable signs of an increase in wealth almost without 
 parallel in commercial annals; afterwards for a number of 
 years there were apparent a sensible decline in wealth and 
 an enormous reduction of profit; and again, dating from 
 the middle of 1879, there were signs of renewed commercial 
 activity, a fresh impetus was given to trade, investments were 
 found for capital hitherto unemployed, workmen were in 
 greater demand, wages were good, a very marked improve¬ 
 ment was to be seen not only in the European but also on the 
 American exchanges, and in fact there was a general revival 
 in all branches of trade and industry. This revival continued 
 until the close of 1882 or the middle of 1883, after which 
 economic symptoms again indicated a period of depression 
 for 1884 and 1885. The recent years of economic advance 
 must be a convincing proof to those pessimists who took such 
 a desponding view of the situation, that their fears as to the 
 ultimate improvement in material prosperity were altogether 
 groundless. Who is there who still believes in the hypothesis 
 that the depression of 1874-78 marked the termination of 
 commercial and industrial prosperity ? Who now believes 
 that the crisis of 1873 marked a new era, and that the highest 
 point which improvements in trade and industry could reach 
 had been attained ? Who in like manner will now share the 
 pessimist view of the present depression that in the future a 
 very great decrease of prosperity is to be looked for before the 
 increase is to be expected ? Past experience must give ground 
 for confidence in a new revival in the economic life of the 
 present, and in a still greater increase of prosperity for the 
 future. Who can predict what wonderful inventions may yet 
 be in store for us, — what improvements electricity, for in¬ 
 stance, may effect in the future ? Who can gainsay the im¬ 
 provements which are continually being brought to bear 
 upon machinery ? In looking at the wonderful strides with 
 which cultivation and improvement have been advancing, 
 who can fail to be impressed with a sense of their vast¬ 
 ness and of their very great importance ? All these point 
 to the inauguration of a new and even brighter era in econ- 
 
510 
 
 ECONOMIC HISTORY. 
 
 omic life. And although we are of the opinion that the 
 characteristics of the ensuing economic period may differ ma¬ 
 terially from those which marked the preceding one, yet after 
 a patient study of the facts in connection with the present 
 situation, we can by no means look forward to a period of con¬ 
 tinued depression. While it may readily be concluded from 
 the symptoms of the existing depression that the next revival 
 is not to be expected with great precipitancy, yet the more 
 slowly and more gradually the disturbed equilibrium between 
 production and consumption, between prices and wages, and 
 between interest upon capital and profits of investments is 
 adjusted, so much the greater is the guarantee for the perma¬ 
 nent consolidation of economic life. 
 
ENGLISH FINANCES. 
 
 511 
 
 XVIII. 
 
 ENGLISH FINANCES, 1887-1887. 
 
 LEONARD H. COURTNEY. 
 
 From the Reign of Queen Victoria . 1 Edited by Thomas 
 Humphry Ward. Vol. I., pp. 330-354. 
 
 A SURVEY of the financial experiences of the first years 
 of the reign of the Queen must afford some comfort 
 to those who have to deal with the finances of the kingdom 
 to-day. As those years passed the prospect was not indeed 
 inspiriting. On the contrary, it was calculated to develop 
 the deepest gloom. The first, the essential, condition of 
 good finance was wanting. Every successive year was 
 marked by a deficiency of income to meet the demands of 
 the public service. This was not due to any indulgence in 
 extraordinary expenditure. No large works of a permanent 
 character were undertaken, such as might justify the post¬ 
 ponement of payment of part of their cost to later years. 
 No sudden necessity of war or warlike preparation compelled 
 a Chancellor of the Exchequer to consent to immediate outlay, 
 and to bethink himself afterwards how it should be met. 
 The calls of this nature which arose were such as must 
 always be expected in an extended empire, and ought not 
 to have embarrassed a Finance Minister. The annual expen¬ 
 diture of the nation was normal and ordinary. It was, 
 moreover, moderate — not by comparison with the totals of 
 later years, but when set beside the burden of the generation 
 immediately preceding. The functions of the national Gov¬ 
 ernment were narrowly restricted. The spirit of economy 
 animated successive Administrations. If there was any ten- 
 
 1 London: Smith, Elder & Co., 1887, 
 
512 
 
 ECONOMIC HISTORY. 
 
 dency to outlay on the part of his colleagues — and it is 
 believed there was then very little — the Chancellor of the 
 Exchequer curbed it, and provided, as he hoped, sufficient 
 means of revenue to meet the anticipated expenditure. Yet 
 the following is the record of the results of these years: 
 
 
 
 Income 
 
 Expenditure 
 
 
 
 £ 
 
 £ 
 
 Year to Jan. 5, 1838 . 
 
 . . 50,419,134 
 
 51,145,304 
 
 u 
 
 1839 . 
 
 . . 51,310,006 
 
 51,654,000 
 
 u 
 
 1840 . 
 
 . . 51,850,139 
 
 53,381,258 
 
 (( 
 
 1841 . 
 
 . . 51,684,766 
 
 53,244,494 
 
 u 
 
 1842 . 
 
 . . 52,228,320 
 
 54,314,844 
 
 We have here a perpetually recurring deficit as the first evil 
 fact of financial administration at the commencement of 
 the reign. If we proceed to inquire how the income, inade¬ 
 quate as it was, was raised, we may light upon what we now 
 believe to be an explanation, more or less complete, of the 
 recurring deficiency in the revelation of the characteristics 
 of the existing taxing system. Taking the middle year of 
 the five of which the figures have been given — that ending 
 on January 5, 1840 — we find the income thus imposed: 
 
 £ 
 
 Customs. 23,387,269 
 
 Excise . 14,871,597 
 
 Stamps. 7,353,819 
 
 Land and Assessed Taxes, &c. . 4,164,877 
 
 Post Office. 1,324,342 
 
 Crown Lands. 167,500 
 
 Miscellaneous. 415,362 
 
 From which it appears that almost exactly three-fourths of 
 the revenue raised in the year were derived from the duties 
 of customs and excise. This is enough to suggest a doubt 
 of the justice of the financial system as regards the reparti¬ 
 tion of the national burden among the different classes of 
 the community. Although the pressure of indirect taxes 
 becomes shifted and adjusted in the process of distribution, 
 
 so that it is alwavs difficult to trace the ultimate incidence of 
 
 •> 
 
 the levy — and there is some plausibility in the suggestion 
 
ENGLISH FINANCES. 
 
 513 
 
 that in the end the burden reaches each back according to its 
 capacity to bear it — yet we cannot doubt that of the amount 
 thus annually raised, even if we regarded for the moment 
 nothing but the sums actually extracted from the taxpayers, 
 too large a share came from those who consumed the mass 
 of dutiable articles, whether of customs or excise. But a 
 statement of the proportion of the revenue derived from 
 indirect taxation is an extremely partial revelation of the 
 truth. We must inquire upon what commodities duties of 
 excise and customs were levied. The excise still extended 
 to such articles as soap, glass, bricks, and paper, and included 
 a newspaper duty. To protect the revenue thus raised con¬ 
 stant supervision of each trade was necessary, restricting the 
 exercise and limiting the development of all of them, whilst 
 tending to foster monopolies in the hands of those engaged 
 in each industry. Strict regulations directed the processes 
 of manufacture, and improvements were hampered by the 
 necessity of inducing the co-operation of the excise depart¬ 
 ment in any transformation of the mode of production. The 
 duties on bricks and glass may be especially instanced as 
 far-reaching in their effects on other trades besides those 
 primarily concerned, and architecture itself suffered from 
 limited and stereotyped forms of manufacture. But the 
 customs duties were worse. Upwards of 1,200 articles were 
 included in the tariff, and many of them not for the purpose 
 of bringing money into the Exchequer, but in order to com¬ 
 pel people to buy dearly at home what they could have got 
 cheaply from abroad. The express object of many of the 
 duties was an absolute prohibition of importation; and, even 
 where some foreign trade survived, it was on a reduced and 
 limited scale, and potential consumers were debarred the 
 cheap satisfaction of their desires without any gain either 
 to the Exchequer or to a home manufacture. The unpro¬ 
 ductiveness of many, or rather of most, of the customs duties 
 was in truth their recommendation to those who approved 
 of them. 
 
 Out of the 1^200 articles in the tariff, nine did in fact 
 
 contribute seven-eights of the revenue received. Tea, sugar, 
 
 33 
 
514 
 
 ECONOMIC HISTORY. 
 
 tobacco, spirits, wine, timber, corn, coffee, and cotton wool 
 made up the large proportion of the whole. Out of these, 
 five, tea, sugar, tobacco, spirits, and corn, were the most pro¬ 
 ductive, yielding just two-thirds of the total customs revenue 
 — all articles of practically universal consumption; while in 
 the case of corn, the effect of the duty was, and was intended 
 to be, the raising of the price of the corn produced at home 
 for the benefit not of the Exchequer, but of the persons in 
 possession of the prime material of its production, corn¬ 
 growing land. In the same way differential duties on sugar 
 and on timber taxed the home consumer in order to confer 
 a bonus on colonial producers. The tariff was tainted 
 with injustice in its most lucrative items, and, apart from 
 injustice, it was almost everywhere open to the charge 
 of impolicy. The import duty, or rather import duties, 
 on wood burdened all industries. It is scarcely intelligible 
 upon what grounds an import duty on cotton was defended. 
 
 No manufacture was too insignificant to escape the notice 
 of the officers of the customs, and, although it was a primary 
 object to prevent the importation of the manufactures of 
 other nations, the hand of the collector was heavy upon raw 
 materials, so as to weigh down the development of manu¬ 
 factures at home. And, to crown all, the prospect of a 
 better policy seemed to recede rather than to advance. In 
 the unreformed Parliament before 1832 there had been a 
 strong demand for fiscal improvement. The petition of the 
 London merchants had been presented to Parliament as early 
 as 1821, and Lord Liverpool had expressed an abstract 
 approval of its principles. Mr. Huskisson had shown a 
 readiness to carry abstract approval into practice. In 1828 
 Sir Henry Parnell had obtained a Committee on financial 
 reform, and, although it never reported, he himself tabulated 
 the conclusions to which its inquiries led in favor of large 
 remissions of taxation, including the abolition of all taxes on 
 the raw materials of manufactures, and the imposition of a prop¬ 
 erty and income tax to make good any consequent deficiency. 
 But the reform of Parliament did not apparently develop 
 any further movement towards fiscal reform and the libera- 
 
ENGLISH FINANCES. 
 
 515 
 
 tion of trade. The new electors were restive under direct 
 taxes, and agitated for an abolition of house duties and win¬ 
 dow tax, but acquiesced in indirect taxation. 
 
 The recovery of strength by the Conservative party boded 
 no good, bound up as that party was with the maintenance 
 of the Corn Duties; nor could those who remembered Sir 
 Robert Peel’s strenuous opposition to Lord Althorp’s attempt 
 to reduce the timber duties expect much assistance from 
 him towards financial reform. Such was the situation in the 
 earlier years of the reign. An inadequate revenue; a system 
 of taxation pressing disproportionately upon the means of 
 the poor, but injuring the industrial classes still more in the 
 way it tied and bound the processes of manufacture and 
 restricted the exchanges of commerce; and an increasing 
 certainty of the approaching accession to power of the politi¬ 
 cal party whose bond of union was the maintenance of those 
 import duties which had the worst characteristics of civic 
 injustice and financial impolicy. 
 
 Sir Robert Peel entered into office immediately after the 
 reassembling of Parliament upon the general election of 
 1841; but he spent the winter in elaborating his plans and 
 in familiarizing his colleagues with them, and it was not 
 until the session of 1842 that he explained his policy to the 
 House of Commons. He dealt first with the Corn Laws, pro¬ 
 posing to substitute a less severe sliding scale for that in exist¬ 
 ence. Lord John Russell and the Whig party had adopted 
 the policy of a moderate fixed duty ; and against them Sir 
 Robert argued that such a duty could not be maintained if 
 the price of corn became high, and that, once withdrawn in 
 deference to pressure, it could not be reimposed. His own 
 sliding duty would vanish and reappear automatically without 
 recourse to legislation, and without the intervention of the 
 Executive Government. Against Mr. Yilliers, Mr. Cobden, 
 and the advocates of unconditional repeal, he urged the policy 
 of maintaining such a supply of corn at home as could, in 
 circumstances of visitation, be expanded without great diffi¬ 
 culty into a sufficiency for the whole population. It is note¬ 
 worthy that of pure Protection he spoke little ; nor did he 
 
516 
 
 ECONOMIC HISTORY. 
 
 dwell on the supposed sufferings of the ill-used race of men 
 that cleave (or own) the soil; and the sturdier advocates of 
 Protection were justified in suspecting his steadfastness. 
 Their suspicions must have increased when the Budget was 
 unfolded. Sir Robert Peel proposed the reimposition of the 
 income tax for a limited period, and he appealed strongly to 
 persons of means to emulate the civic zeal of their fathers by 
 accepting cheerfully a sacrifice necessary for the re-establish- 
 ment of public credit. His adjurations to his hearers to re¬ 
 store the equilibrium of income and expenditure were so 
 earnest that this aim has been sometimes represented as the 
 sole motive of his policy. It is not easy to say with decision 
 how far his mind had advanced in the spring of 1842 — most 
 probably he did not know, and certainly he did not tell him¬ 
 self—but his Budget contained two perfectly independent 
 branches, and besides proposing the income tax as a means 
 of equilibrium, he recommended a large reform of the tariff 
 in the interest of trade. His reductions affected 750 
 articles out of the 1,200 in the tariff, and his aim was to 
 make the duties on raw materials nearly nominal and to re¬ 
 duce those on partially manufactured materials, while on 
 fully manufactured articles the duty was not to exceed 20 per 
 cent. 
 
 The income tax was imposed for three years; but 1842 was 
 already too far spent to allow the attainment within it of the 
 equilibrium Sir Robert Peel desired. The experience of the 
 years that immediately followed attested his success, although 
 further remissions had been made : 
 
 Expenditure 
 
 Income 
 
 £ 
 
 £ 
 
 Year to Jan. 5, 1844 . . . 56,806,081 
 “ 1845 . . . 58,302,812 
 
 55,360,511 
 
 54,840,518 
 
 and when he met Parliament in 1845, he was encouraged to 
 essay a further flight. The period of the tax was expiring; 
 but he asked leave to renew it for another three years, and, 
 this time, avowedly in the interests of an invigorated com¬ 
 merce. His recommendations prevailed. The tariff was 
 absolutely cleared of 450 items, chiefly raw materials ; all ex- 
 
ENGLISH FINANCES. 
 
 517 
 
 port duties were swept away, and the excise on glass abolished. 
 There could no longer be any doubt as to the meaning of Sir 
 Robert Peel’s policy, but the year 1845 was to be signalized 
 by an open abandonment of the Corn Duties themselves. The 
 failure of the potato crop precipitated a famine in Ireland, 
 before which the necessity of maintaining a measure of self¬ 
 subsistence in respect of food within the United Kingdom 
 crumbled away, and in the spring of 1846 Sir Robert Peel 
 proposed to Parliament, Lord John Russell having found 
 himself forced to decline the task, the virtual repeal of the 
 Corn Laws. This determined the course of fiscal policy for 
 several subsequent years. The finances of the country were 
 temporarily disarranged by the necessity of a famine loan for 
 Ireland in 1847, when 8,000,000/. were granted to the relief 
 of its starving inhabitants, and the year of revolution (1848) 
 dislocated for the time the trade with the Continent, but the 
 progress of remission of duties was practically uninterrupted. 
 The excise on bricks followed the excise on glass; the 
 abolition of the Navigation Laws, which Cromwell had 
 instituted and Adam Smith defended, followed that of the 
 Corn Laws; the differential duties on slave-grown sugar 
 disappeared ; and the income tax was renewed for varying 
 terms as the instrument which made all these reforms 
 practicable. It had never, however, been accepted as a 
 permanent element of our financial system; and in 1853, 
 when Mr. Gladstone was for the first time at the Exchequer, 
 as Chancellor in Lord Aberdeen’s Ministry, he made its 
 definite extinction a primary object of a far-reaching and 
 elaborate Budget. 
 
 The situation in the spring of 1853 appeared favourable to 
 large financial schemes. The peace of Europe had remained 
 practically unbroken since 1815. The revenge of Waterloo, 
 often threatened, had never arrived, and the fear of it had 
 so passed away that not even the installation of another 
 Napoleon in power in France provoked anxiety. We our¬ 
 selves were unmistakably pacific. Free-trade had been 
 accepted as the forerunner, and had come to be regarded 
 as the hostage, of Peace. If Sir Robert Peel’s first motive 
 
518 
 
 ECONOMIC HISTORY. 
 
 had been simply the restoration of the national credit, he had 
 amply succeeded, for the Three per Cents, were above par. 
 With peace assured, with an elastic revenue, and with the 
 national credit firmly established, Mr. Gladstone was easily 
 allured into submitting to the House of Commons a Budget 
 providing for the reduction of interest on the National Debt, 
 a removal of the last of the evil excise duties, a further re¬ 
 duction and simplification of the tariff, an important advance 
 towards the establishment of an identical system of taxation 
 throughout the United Kingdom, the extension of duties on 
 devolution by death to settled property, real and personal, and 
 the extinction of the income tax. This last achievement, 
 approached by steps, was to be consummated in 1860, when 
 the expiration of the Long Annuities would facilitate the 
 accomplishment of the full design. The scheme was large 
 and generous; and if it be objected that a financial system 
 minus the income tax would press too severely on the con¬ 
 suming masses, even though rectified by a succession duty 
 producing as much as its creator anticipated, this is a criticism 
 which could have been dealt with subsequently, had experience 
 proved its force. But Mr. Gladstone’s plans were baulked 
 almost as soon as they were formulated. He did happily 
 succeed in abolishing the excise on soap, in bringing nearer 
 equality the spirit duties in the three kingdoms, in extending 
 the income tax to Ireland, and in instituting the succession 
 duty; but the interest on the National Debt remained un¬ 
 reduced, and the income tax, instead of being continuously 
 diminished in successive years until it vanished, was raised to 
 unheard-of rates, and, surviving 1860, has endured to this 
 day. The truth is that what appeared to be the crown of a 
 period of peace was the commencement of a period of war. 
 In 1858 began the movement which has made Europe an 
 armed camp for a generation. When not actually at war the 
 nations have been watching and preparing for war. Military 
 budgets have absorbed the energies of financiers, and the 
 nations which have remained at peace have been drawn along 
 the course of warlike expenditure. And in 1853 the United 
 Kingdom was a principal in the first European struggle. It 
 
ENGLISH FINANCES . 
 
 519 
 
 was Mr. Gladstone’s cruel fate to be called upon within a few 
 months to demolish his own constructions. When the evil 
 day came he struggled to limit the duration of the derange¬ 
 ment of the national finances at the cost of making it more 
 severe. He laid down the counsel of perfection that the ex¬ 
 penditure upon war should be defrayed as incurred out of the 
 supplies of each year. It is indisputable that warlike expendi¬ 
 ture, save so far as it is met by loans from outsiders, is with¬ 
 drawn from the existing wealth of the belligerent nation; and 
 if each taxpayer could be got to contribute his share the 
 total drain would be no greater than when the total is bor¬ 
 rowed, whilst there would be no collective debt to be borne by 
 later generations. But there are classes of taxpayers who, 
 though possessing the necessary wealth, would rather borrow 
 than diminish what they profitably employ, while there are 
 many more who, though rightly called upon to contribute, 
 have no assets beyond their natural energies, which they 
 would be constrained to mortgage. The Chancellor of the 
 Exchequer, in making a loan, borrows en bloc what these 
 taxpayers should, but never could, borrow for themselves ; 
 and his financial administration is justified if he is sustained 
 in the policy of compelling these thriftless units to repay 
 within a reasonable period the loan so contracted. Mr. 
 Gladstone himself left the Exchequer before the necessity of 
 borrowing was completely developed; but he supported his 
 successor, Sir George Cornewall Lewis, in frankly following 
 the previous practice, and he himself so far departed from 
 his higher doctrine as to anticipate the taxes of future years 
 by the issue of Exchequer bonds. 
 
 The episode of the Crimean war was the first serious 
 check of the financial progress which dated from the Budget 
 of Sir Robert Peel in 1842. The National Debt, exclusive 
 of terminable annuities, had declined from 792,209,685L 
 on January 5,1841, to 769,082,549^. on April 5, 1854; but 
 it rose to 808,108,722L by April 5, 1857; while a further 
 addition of 8,000,000^. was involved in an increase of the 
 terminable annuities. The income tax, which had been 
 maintained at the uniform rate of Id. from the time it 
 
520 
 
 ECONOMIC HISTORY. 
 
 was reimposed, was raised during the war to Is. 4^. in the 
 pound. The reduction of the tea duty, which Mr. Gladstone 
 had arranged in 1853 to proceed by steps, reaching Is. the 
 pound in 1856, was arrested and reversed, so that in 1856 
 it was Is. 9 d. instead of Is. The coffee duty, the sugar 
 duties, the malt duty, were all raised for war purposes, and 
 occasion was taken to raise the spirit duties to a level from 
 which they were not allowed to recede. One fact, however, 
 of great significance must be noted in connection with the 
 financial administration of the Crimean war. No indirect 
 tax which had been previously abandoned was reimposed. 
 Any suggestion to revive a tax, whether of excise or customs, 
 was mentioned only to be rejected. There had been an 
 addition made to the total of national indebtedness; the 
 tax on incomes, and the existing taxes on consumption, 
 had been sharply increased, but there had been no recur¬ 
 rence to any discarded engine of finance — least of all to 
 those taxes which, while offering some revenue to the 
 Exchequer, inflict a disproportionate amount of injury on 
 taxpayers, commerce, and industry. So it might be said 
 that the war left no lasting effects on our financial system. 
 The war taxes disappeared; the question of debt was at a 
 later date seriously grappled with; all became as before, 
 save that the military expenditure of the country has never 
 recovered its old proportions. This may be matter of con¬ 
 gratulation or regret. It may be that the experience of 
 the Crimea revealed a dangerous weakness which we have 
 wisely abated ; or it may be that the new circumstances of 
 Europe have compelled preparations which were not wanted 
 in the earlier years of the reign. It is enough here to recog¬ 
 nize the fact of that development of military and naval 
 expenditure which, obtaining a great start in the years 
 1854-5T, has never since been arrested. We have never 
 returned to the moderate scale of army and navy estimates 
 which prevailed before the Crimean war, and it may now 
 be admitted that it was inevitable that a higher level should 
 be maintained. These estimates had been rising before the 
 peace was broken, and it is inconceivable that the expe- 
 
ENGLISH FINANCES. 
 
 521 
 
 riences of war should have caused what would have been a 
 reversal of a movement already in progress. But it may be 
 questioned how far this inevitable increase of military ex¬ 
 penditure should have been recognized and confessed at 
 the time; and upon the answer to this doubtful question 
 must depend our judgment of the conduct of the most 
 eminent political persons of the day. Notice has been taken 
 of Mr. Gladstone’s argument — it can scarcely be called more 
 — at the inception of the Crimean war in favor of meeting 
 the expenditure of war by increased taxation, and it has been 
 shown how this excellent counsel was abandoned. Debt was 
 created, but simultaneously with it taxes were imposed which 
 would, within a definite period, suffice to extinguish the 
 additional debt. The establishment of a sinking fund, what¬ 
 ever its form, is nothing more than a solemn resolution on 
 the part of the representatives of the nation to practise some 
 degree of self-denial in the future, which resolution may be 
 kept or broken like the resolutions of separate mortals. At 
 the commencement of 1857 the war had ceased, but war 
 taxes were still legally in force, and the income tax in par- 
 ticular was by law leviable at the rate of Is. 4 d. in the pound 
 up to April 5, 1858. It had been provided that this rate 
 should last for a year after the April 5 first following the 
 ratification of peace, and the Treaty of Paris was ratified on 
 April 27,1856. A month’s delay in the settlement of peace 
 had fastened the higher rate on the nation for another year; 
 but this was scarcely to be regretted by those who desired 
 peace to make good the expenses of war. Some popular 
 impatience was natural; it remained to be seen what states¬ 
 men would do. In the debate on the Address, Mr. Disraeli 
 gave notice that he would move resolutions against the con¬ 
 tinuance of war taxes in time of peace, and he would do this 
 4 as an impetus to salutary economy,’ and as a declaration 
 against England becoming 4 a great military nation.’ Mr. 
 Gladstone, also in Opposition, held a similar view in favor 
 of enforcing economy by cutting down income, and hankered 
 also after that extinction of the income tax in 1860 which he 
 had planned in 1853. When Sir George Lewis opened his 
 
522 
 
 ECONOMIC HISTORY. 
 
 Budget ten days later, he proposed to meet his critics by re¬ 
 ducing the income tax at once from Is. 4 d. to 7 d., and by 
 making small immediate reductions in the tea duty and the 
 sugar duties, with successive reductions in the following 
 years; and he argued that the engagements that had been 
 made to repay the war debt necessarily required a rearrange¬ 
 ment of Mr. Gladstone’s plans of 1853. But his proposals 
 were contested. After a preliminary debate on Mr. Disraeli’s 
 abstract resolution, in which he received Mr. Gladstone’s 
 support, the latter, in Committee on the Budget resolutions, 
 moved for a further immediate reduction of the tea and 
 sugar duties, and Mr. Disraeli for a reduction of the income 
 tax to 5d. in the pound. These motions were unsuccessful; 
 but the combined action of these statesmen had modified Sir 
 George Lewis’s Budget in advance, and produced further 
 fruit in the following year. Mr. Disraeli was then Chancellor 
 of the Exchequer at the head of a minority in the House of 
 Commons, and the outlook was unpromising. The estimates 
 for the services, to which the new Government had succeeded, 
 were not diminished; and if the arrangement for the repay¬ 
 ment of the war debt was to be maintained, the contemplated 
 further reduction of the income tax must be abandoned, and 
 some additional revenue sought from that or other sources. 
 In this dilemma the Government decided that the reduction 
 of the income tax was a more sacred engagement than the 
 repayment of war debt, and Mr. Gladstone, with the ulti¬ 
 mate extinction of the tax in 1860 ever in his mind, sup¬ 
 ported the Conservatives against a vigorous argument of 
 Sir George Lewis. The Budget was otherwise noteworthy 
 only because it equalized the spirit duties in Ireland with 
 those in Great Britain, and thus established uniform taxa¬ 
 tion in the kingdom. 
 
 The extinction of the income tax in 1860 must have seemed 
 a dream to many in 1858. Mr. Gladstone himself, returning 
 to the charge of the finances in 1859, had to propose no less 
 addition than 8 d. to the income tax for the first half of the 
 financial year, making it 136?. in the pound for that half, to 
 meet the very large addition to the army and navy estimates, 
 
ENGLISH FINANCES. 
 
 523 
 
 due to the anxieties provided by the state of Europe; and 
 when 1860 came the income tax was still wanted, aided 
 though the Exchequer was by the falling in of the Long 
 Annuities, to enable that last great revision of the tariff to be 
 effected which was consequent upon the commercial treaty 
 with France. Instead of the long-contemplated extinction, 
 the income tax, which had been IZd. in the pound in the first 
 half and 3d. in the second half of 1859, was raised to 10 d. for 
 the year 1860. 
 
 With or without the treaty there was ample ground for 
 retaining the income tax in 1860. Had no such contract 
 been made with the Emperor of the French, and apart from 
 the question whether the income tax or some equivalent direct 
 impost is not necessary to the justice of our financial system, 
 the reasons which led Sir Robert Peel to renew the tax in 
 1845, if not those which led him to reimpose it in 1842, would 
 have justified its maintenance in 1860. To get rid entirely 
 of customs duties, such as those on silks, gloves, flowers, 
 watches, and all manufactured articles; to set free the impor¬ 
 tation of such articles of food as butter, cheese, eggs; to reduce 
 the articles in the tariff from 419 to 48, of which 15 only were 
 significant factors, were further steps in the progress of 
 liberation of commerce and of the removal of protective 
 duties that were most advantageously secured by the retention 
 of the income tax. If Sir Robert Peel was right in 1845, the 
 apology of a treaty was not wanted in 1860. Even if atten¬ 
 tion is confined to the reduction of the wine duties, the sum 
 levied by the income tax to enable this to be made is advan¬ 
 tageously balanced. The fact that action, which might have 
 been judiciously taken unilaterally, was made the considera¬ 
 tion of a bipartite exchange, did without doubt double the 
 immediate advantage, and the temptation to throw the trans¬ 
 action into the form of a treaty was enormous; but it must be 
 recognized that this making the reduction or abolition of 
 customs duties a matter of bargain has had prejudicial after¬ 
 consequences in strengthening the delusion that protective 
 duties are a source of gain, and their abolition a sacrifice. 
 It would be too much to put down the recrudescence of protec- 
 
524 
 
 ECONOMIC HISTORY. 
 
 tive ideas on the Continent to this cause, but they have almost 
 insensibly been instilled in the minds of men by the use of 
 language and of forms of bargain and exchange having no 
 meaning except as the expression of Protectionist principles. 
 Happily we have not ceased in subsequent practice to falsify 
 the attitude of negotiation assumed in reference to the French 
 treaty; and, indeed, whilst we obtained a reduction of import 
 duties upon our goods in France by the reduction or abolition 
 of duties in our own tariffs, we refused to restrict these modi¬ 
 fications to goods of French import, and extended them to 
 the produce of all markets. Of the fifteen significant articles 
 retained in the tariffs of 1860, six have since been entirely 
 removed (three of them, sugar, corn, 1 and timber, being 
 highly productive of revenue) without any attempt to make 
 the removal of any one of them a means of producing correla¬ 
 tive reductions in other countries. 
 
 The financial year 1860-61 ended with a deficit, chiefly 
 though the effect of a bad harvest; and the year 1861-62 had 
 the same unpleasant experience, too large reductions of taxa¬ 
 tion having been made upon too sanguine estimates of revenue; 
 but with the next year began a period of financial prosperity, 
 which, despite a severe commercial crisis in 1866, may be 
 • said to have continued up to 1874, or even through that year. 
 It is not intended to dwell upon the incidents of each succes¬ 
 sive twelvemonth, but the Budget of 1866 demands attention 
 on account of the serious effort Mr. Gladstone then made to 
 deal with the National Debt. The years that had passed since 
 Sir Robert Peel began his fiscal reforms had left this perma¬ 
 nent burden but slightly reduced. The period before the 
 Crimean war had closed with a sensible diminution of the 
 total, but that war had undone all that had been effected, and 
 we have seen how the resolution to pay off the addition con¬ 
 tracted under its pressure had melted away. It seemed as if 
 the temptation to purchase popularity by reducing taxation 
 
 1 Corn had remained, under Sir Robert Peel’s Act, liable to a duty of Is. 
 the quarter, which he regarded as nominal and retained for registration pur¬ 
 poses; but the tax produced nearly 1,000,000/. sterling when Mr. Lowe abolished 
 it in 1869, and it undoubtedly contributed a still larger bonus for the production 
 of corn in the United Kingdom. 
 
ENGLISH FINANCES. 
 
 525 
 
 must always prevail. Thus the tea duties had been brought 
 down to Is. in 1863, and Mr. Gladstone then spoke of this 
 reduced rate as one that would be maintained; but in 1865, 
 on the eve of a general election, the rate was again brought 
 down to 6d. in the pound, while the income tax was reduced 
 to 4 d. But in the year 1866 Mr. Jevons published a re¬ 
 markable book, “The Coal Question,” in which he pointed 
 out that the progressive increase in the extraction and con¬ 
 sumption of our coal could not be maintained, and that as 
 our superiority in respect of the cheapness and accessibility 
 of this spring of power declined, the development of our 
 national prosperity must be arrested; and, unless men were 
 wise in time, dangerous embarrassments might arise between 
 swollen needs and attenuated resources. The book fell into 
 Mr. Gladstone’s hands. His receptive and impressionable 
 intellect was strongly affected by it, and in his Budget of 
 1866 he proposed to the House of Commons to make use 
 of our time of prosperity to pay off as much debt as possible, 
 so that in respect of it the national energies of the future 
 might not be unduly handicapped. Mr. Jevons’s position has 
 often been derided by critics whose language proves that they 
 have not understood it, and many suppose that his warnings 
 have been discredited by the/ falsification of prophecies they 
 attribute to him which he never uttered. His wisdom re¬ 
 ceived a sharp practical illustration in 1873, and, if the 
 evidence of its truth has not since been so acute, it has been 
 abiding. Mr. Gladstone carried Parliament with him in his 
 main proposal, though he had to drop part of his machinery. 
 His plan, stripped of all disguises, was nothing more than 
 this — to apply to the service of the debt a sum exceeding 
 what was required to pay the annual interest on its capital, 
 and with this excess and its accumulations to purchase and 
 extinguish capital up to a fixed date — in this case 1885. 
 This is no more than the principle of every sinking fund, but 
 the merit of Mr. Gladstone’s proposal lay in the thoroughness 
 of the disguise in which it was wrapped. It was thought at 
 the time that he had succeeded in clouding it from himself; 
 and, indeed, the gravity of the respect he paid to his own 
 
526 
 
 ECONOMIC HISTORY. 
 
 machinery supported this suspicion. 1 A few years later, 
 Sir Stafford Northcote, when Chancellor of the Exchequer, 
 following up Mr. Gladstone’s desire to promote a reduction 
 of debt, needlessly varied the form of procedure; and a 
 strenuous debate arose, remarkable because both sides shirked 
 the true test of relative merit, viz. which plan best concealed 
 from the ordinary politician, and best prevented the ordinary 
 politician from explaining to the ordinary elector, that a large 
 and increasing sum was annually applied to the redemption 
 of debt which might at any moment be shifted to the reduc¬ 
 tion of taxation. Judged by this criterion, Mr. Gladstone’s 
 plan was incomparably superior — its excellence, as we have 
 said, going so far that perhaps it shrouded the truth from 
 himself; and it was not, indeed, until many years later that 
 the mask was removed from the real character of the opera¬ 
 tion. 2 The disguise was so well maintained that the State 
 was for two or three years paying off debts through one 
 agency and contracting it anew through another without the 
 nation being conscious of the process. 
 
 Mr. Gladstone obtained, as has been said, the assent of 
 Parliament to his proposal, to which Mr. Disraeli made an 
 addition on precisely the same lines in 1867 ; but the period 
 of prosperity of which we have spoken enabled these efforts 
 
 1 It may be as well to explain the machinery. The State owes a capital 
 of (say) 750,000,000/., on which, through Department A, it pays an annual 
 interest of 22,500,000/. But the State, as banker of the Savings Bank 
 and the Post Office, holds in Department B (say) 50,000,000/. stock, part 
 of 750,000,000/., on which Department A pays Department B annually 
 1,500,000/. interest. Department A says to Department B, “Instead of 
 paying you 1,500,000/. for ever, we will pay you 2,500,000/. for a sufficient 
 number of years to insure you the same capital at the end of it.” Depart¬ 
 ment B agrees, and during this period of years Department A pays annually 
 in respect of debt 23,500,000/., while Department B invests in the first year 
 1,000,000/., and increasing sums in each successive year, so that at the end 
 of the term it is reinstated in the possession of 50,000,000/. of stock purchased 
 from other holders. It will be seen that, putting aside the solemnity of formal 
 interdepartmental action, made more solemn because expressed in an Act of 
 Parliament, the State has simply decided, and can at any time revoke, vary, or 
 suspend its decision, to put aside a sinking fund, beginning at 1,000,000/., for a 
 defined number of years for the redemption of 50,000,000/. of debt. 
 
 2 See post y pp. 530-1. 
 
ENGLISH FINANCES. 
 
 527 
 
 for the redaction of debt to be made concurrently with re¬ 
 ductions of taxation. 
 
 Mr. Lowe was the most fortunate of finance ministers, 
 a d if the “leaps and bounds” of industry and commerce 
 c lg his tenure of office as Chancellor of the Exchequer 
 ra sed some foreboding of reaction in the minds of forelookers, 
 he was spared the necessity of meeting the ebb. He began 
 his financial administration with a coup of dazzling success. 
 He reformed and simplified the assessed taxes, and took 
 occasion of this change to call for their collection and that 
 of the income tax — in short, the direct taxes — in the quarter 
 •January to March, and by this acceleration of payment 
 provided himself at once with a surplus. The following 
 years produced more legitimate surpluses, through largely 
 increased consumption of dutiable commodities, especially 
 of beer and spirits; but an increase of expenditure may 
 always outrun an increase of income, and the army esti¬ 
 mates of 1871, being much swollen through the influence of 
 the Franco-German war, compelled Mr. Lowe to anticipate 
 and provide for a deficiency. What followed is worth 
 attention as illustrating the ordinary limits of financial 
 action. Indirect taxes had been repealed and reduced until 
 they had become very few in number though affluent in 
 produce, and no attempt had been made to impose a new 
 indirect tax or (except in respect of spirits) to increase an 
 existing tax since the Crimean war. Successive Chancellors 
 had been tempted to meet emergent necessities by addi¬ 
 tional pence in the income tax, so that any fresh adventure 
 involved a call on a limited class of citizens. Mr. Lowe 
 courageously tried to depart from this practice by the intro¬ 
 duction of a new tax on matches ; but the developed opinion 
 of the time was too strong for him, and the proposal was 
 abandoned, along with others 1 which might perhaps have 
 been adopted had they stood alone, and the ambitious 
 Chancellor had to fall back upon the simple policy of his 
 predecessors — twopence more in the income tax. This was 
 
 1 Proposals to make the income tax move by percentages instead of by 
 jumps of pence in the pound, and to alter the rates of legacy and succession 
 duties. 
 
528 
 
 ECONOMIC HISTORY. 
 
 the only check in Mr. Lowe’s good fortune. Surpluses 
 allowed reductions, and reductions were followed by sur¬ 
 pluses, and when Mr. Gladstone resigned in deference to the 
 adverse verdict of the general election of February 1874, 
 the surplus to be dealt with by the incoming Chancello of 
 the Exchequer was no less than 6,000,000/. 
 
 The election of 1874 was perhaps unique in the atten.pt 
 made to decide it upon a purely financial issue. Mr. Glad¬ 
 stone offered, if maintained in office, to abolish the income 
 tax. The offer was coupled with some plan of taxation the 
 nature of which has never been explained, and upon which 
 it may be imagined no stress whatever was laid by Mr. 
 Gladstone’s supporters at the hustings. Yet upon the 
 character of this plan the whole question of the acceptance 
 or rejection of Mr. Gladstone’s offer ought to have depended. 
 An abolition of the income tax, unbalanced by some strong 
 proposals of taxation of property and some means of 
 assessing the more lucrative trades and professions, would 
 have left our financial system flagrantly unjust. It is not 
 surprising that contemporary continental critics should have 
 been amazed at such a proposal coming from a democratic 
 Minister. Mr. Disraeli was not slow to appear with a counter 
 declaration that his policy no less favored the abolition 
 of the income tax. Fortunately the electors paid extremely 
 little regard to these rival professions, and, when the elec¬ 
 tion was over, nothing more was heard of the abolition of 
 the income tax. With Mr. Gladstone it had been in former 
 years a constant aim. He had planned for it in his great 
 Budget of 1858. He had kept it in view in the years after the 
 Crimean war. But 1860, the promised year, came, and other 
 objects pushed it aside, and from that time it seemed to be 
 dormant in Mr. Gladstone’s mind until 1874. The response 
 of the general election put it to sleep once more, and it has 
 since rested in peace. 
 
 The financial record of Lord Beaconsfield’s Administra¬ 
 tion (1874-80) is not brilliant. After the distribution of 
 the surplus to which it succeeded (which involved the dis¬ 
 appearance from the tariff of the sugar duties) came years 
 
ENGLISH FINANCES. 
 
 529 
 
 of increased expenditure, due, among other causes, to war 
 in South Africa and warlike demonstrations in south-eastern 
 Europe, and of stagnant revenue owing to an extraordinary- 
 series of bad harvests. The last three years ended in large 
 deficiencies. The attempts made to supply the wants of the 
 Exchequer were insufficient, but Sir Stafford Northcote de¬ 
 serves credit for having been the first for many years to raise 
 an indirect tax other than that on spirits. In 1877 lie 
 increased the tobacco duties, and, though the result proved 
 unequal to his anticipation, the courage of the attempt must 
 not be overlooked. 
 
 The leading feature of the financial history of the later 
 years of the reign must be briefly noticed. Mr. Gladstone 
 began his second Administration by transforming the malt 
 duty into a beer duty. The suggestion of this change had 
 often been made, but as generally dismissed by the experts 
 of the excise as impracticable. Mr. Gladstone, however, 
 succeeded easily in accomplishing the impossible, and, by 
 transferring to the finished product the tax before imposed 
 at an earlier stage of manufacture, he took another step in 
 his life work of liberating industry from the influence of 
 the tax gatherer. Financially the change has been most 
 successful, and the only complaint raised has been because 
 the freedom of brewing has been too fully established. It 
 appears that excellent beer can be made from maize and 
 rice as well as from barley or sugar, and the growers of 
 barley are displeased at the discovery. 
 
 All the good counsels of Mr. Gladstone’s second Adminis¬ 
 tration were, however, neutralized by its excessive expendi¬ 
 ture, mainly on the army and navy, and almost entirely 
 due to complications in Egypt and on the Afghan frontier. 
 The expenditure on the forces in 1885-86 did not fall far 
 short of 40,000,000/., and the average of the six years 
 1881-86 just exceeded 30,000,000/. These sums are un¬ 
 paralleled in the expenditure of years nominally years of 
 peace. It is no part of this sketch to trace the political 
 spring of this drain. Whether it was due to the evil policy 
 
 of Lord Beaconsfield or originated with Mr. Gladstone, or 
 
 34 
 
530 
 
 ECONOMIC HISTORY. 
 
 whether, if started by the former, it might not have been 
 stopped by the latter, or whether, again, it flowed from 
 external causes which neither could prevent, and against 
 which both were bound to provide, are hypotheses that are 
 arguable and have been argued. All that is to be noticed 
 here is that under the strain of this expenditure perished 
 excellent financial designs, just financial principles, and 
 ultimately Mr. Gladstone’s Administration itself. 
 
 At the beginning of Mr. Gladstone’s Government, the 
 course of redemption of debt, which had practically been 
 almost destroyed in the later years of Lord Beaconsfield, 
 was merrily resumed. Stock was absorbed under the 
 operation of the plan of terminable annuities, and the 
 price of the 3 per cents, was steadily maintained at and 
 above par. Mr. Childers, in 1884, gallantly attempted a 
 further conversion of the 3 per cents, into 2J and 2J per 
 cents., and he obtained the sanction of Parliament to his 
 plans, to which at first a sufficient number of holders of 
 stock seemed prepared to assent; but the political horizon 
 became clouded even while the details of the scheme were 
 under discussion. The suggestion of a considerable loan 
 in connection with the Suez Canal deranged the money 
 market, and the design proved practically abortive. 
 
 A more serious occurrence befell in 1885. It will be 
 remembered that the terminable annuities, which had been 
 created as a means of reducing debt, came to an end in that 
 year, and those who had at heart the policy of diminishing 
 the national burden were concerned as to what might happen 
 when the opportunity would be openly presented of diminish¬ 
 ing taxation by some 6,000,000Z. at a stroke. It was felt 
 that this temptation must somehow be averted ; and, accord¬ 
 ingly, when in 1883 Mr. Childers anticipated the future by 
 proposing a further conversion of about 70,000,000Z. of stock 
 into terminable annuities, to take the place of those soon 
 about to expire, thus preventing the occasion of temptation, 
 his invitation was sanctioned and the danger seemed past. 
 But what happened was, perhaps, worse than what had been 
 guarded against: 1885 came, and with it the enormous, the 
 
ENGLISH FINANCES. 
 
 531 
 
 unparalleled expenditure to which reference has been made; 
 and a general election was nigh at hand, disinclining both 
 Government and Opposition from any suggestion of increased 
 taxation. In these circumstances the Chancellor of the 
 Exchequer proposed to balance, or approximately balance, 
 his yearly accounts by suspending the payment of terminable 
 annuities for the twelve months to the extent of 4,600,000Z., 
 leaving a still uncovered deficiency to be met in a similar 
 manner next year. The proposal was accepted, and the 
 superstition of the sacredness of terminable annuities was 
 gone for ever. 
 
 Yet another sinister circumstance must be mentioned in 
 connection with the year 1885-86. Mr. Childers did not 
 content himself with a suspension of terminable annuities. 
 His proposals included 3 d. more on the income tax, an 
 increase in the beer and spirit duties, and a revision of death 
 duties. He avowed himself anxious not to throw the whole 
 of the increase upon direct taxation, and he therefore 
 suggested additions to the beer and spirit duties. Against 
 this last resistance was raised. Wholly neglecting the effect 
 of the additional 3 d. on the income tax, a vulgar outcry 
 was made that the Budget taxed the luxuries of the poor 
 without touching those of the rich, and upon this issue the 
 Conservative Opposition, reinforced by the partisans of beer 
 and whiskey, defeated the Government. The proposal was 
 withdrawn by the new Administration which was formed, 
 and the revision of the death duties was reduced to an 
 extension of the principle of the succession duty to a small 
 class of corporations, so that the taxing part of the Budget 
 practically became an unbalanced addition to the income 
 tax. Thus Sir Stafford Northcote’s action in 1878 in re¬ 
 spect of the tobacco duties remains the solitary instance 
 of an indirect tax raised, and none has been imposed 
 since the Crimean war; and usage has almost consecrated 
 the principle that every new demand for expenditure must 
 be met by a levy on the limited class of payers of income tax. 
 
 A review of the financial history of the reign shows that 
 there has been accomplished in its course: 
 
532 
 
 ECONOMIC HISTORY. 
 
 (1) A removal from the national system of taxation of 
 all imposts which, operating as protective duties in favor 
 of the home or colonial producer, imposed taxes on the 
 nation greatly in excess of the receipt at the Exchequer. 
 
 (2) The abolition of all excise duties on domestic manu¬ 
 factures other than intoxicating liquors* 
 
 (3) A reduction and simplification of taxes of all kinds, 
 so that instead of a multiplicity of imposts of which many 
 were very slightly renumerative, we have now a few taxes 
 cheap in collection and reaching all classes. 
 
 (4) The establishment of identical taxation throughout the 
 United Kingdom, except in respect of minor assessed taxes. 
 
 (5) The reimposition and maintenance of the income 
 tax, which must now be defended as a necessary corrective, 
 in default of a substitute, of what would otherwise be a dis¬ 
 proportionate taxation of the less wealthy classes; but against 
 this there is 
 
 (6) A tendency to make the income tax the sole resource 
 of the Chancellor of the Exchequer when additional demands 
 are made upon him; the discovery of a new tax a^id the re¬ 
 imposition of a discontinued tax appearing to be practically 
 impossible. 
 
 (7) A deliberate policy to reduce the permanent burden 
 of the National Debt, steadily maintained through the 
 machinery of terminable annuities from 1866 to 1885, and 
 we may hope capable of being maintained in future though 
 now impaired in authority. 
 
 (8) A system always declared to be temporary, but as 
 constantly increasing in dimensions, and now of long stand¬ 
 ing, of alleviating the difficulties of local taxation by making 
 grants from the Exchequer in relief of the cost of local ad¬ 
 ministration ; and lastly, 
 
 (9) The years subsequent to the Crimean war have been 
 characterized by an almost continuous growth in naval and 
 military expenditure, due to an apprehension, well or ill 
 founded, of danger from the military ambition of now one 
 and then another continental Power during that period. 
 
L’ESSOR INDUSTRIEL DE L’ALLEMAGNE. 533 
 
 XIX. 
 
 L’ESSOR INDUSTRIEL DE L’ALLEMAGNE. 
 
 From Blondel’s L’Essor Industriel et Commercial du 
 Peuple Allemand , 1 pp. 1-35. 
 
 L ORSQU’ON embrasse d’un regard d’ensemble revolution 
 de l’Europe contemporaine, on arrive bien vite a cette 
 conviction que nulle part cette evolution n’a 6t6 plus impor- 
 tante qu’en Allemagne. De tous les Etats europdens, le nouvel 
 Empire crde a la suite des victoires de 1870 est celui que 
 nous avons aujourd’hui le plus d’intdret a £tudier et le plus 
 de profit a connaitre. 
 
 La race germanique tient sans doute depuis longtemps une 
 place considerable dans l’histoire du monde. Ce sont an v e 
 siecle des invasions germaniques qui coincidant avec l’expan- 
 sion du christianisme, ont detruit la socidte paienne et sub- 
 stitud au monde antique une organisation nouvelle. C’est 
 encore la pensde germanique qui, mille ans plus tard, par la 
 R^forme coincidant avec la Renaissance, a contribu^ & trans¬ 
 former la societe du moyen age et & faire germer des principes 
 nouveaux. Le role de P Allemagne n’est pas moins conside¬ 
 rable maintenant. C’est en vain que journaux, brochures, 
 livres a succds, cherchent quelquefois a nous faire illusion, a 
 nous amuser ou a nous rassurer. L’influence germanique se 
 fait partout sentir. L’Allemagne joue un role plus important 
 que jamais dans la vie gdnerale de Phumanitd. 
 
 II ne sera question ici que de son essor industriel et com¬ 
 mercial, qu’il nous importe beaucoup de connaitre et de 
 mesurer. Cet essor nous l’dtudierons, quels que puissent etre 
 
 1 Paris: L. Larose, 3 dd. 1900. 
 
584 
 
 ECONOMIC HISTORY. 
 
 nos griefs a regard de PAllemagne, avec toute Pimpartialit^ 
 possible. C’est une erreur de s’attarder aujourd’hui a dire du 
 mal des Allemands : ils ont, comrae tous les peuples, leurs 
 quality et leurs ddfauts. II importe beaucoup plus de se 
 rendre un compte exact de la somme d’efforts fait par eux 
 depuis quelques ann^es dans toutes les directions que peut 
 suivre V esprit liumain. 
 
 “ II y a en France,” 4crivait dernierement le philosophe 
 russe Novicow,“ une phrase qui court les rues et qui m’indigne 
 toujours: ‘La guerre est l’industrie nationale de la Prusse!’ 
 Ce n’est pas que je tienne la Prusse pour pacifique et pour un 
 champion du droit. Non, mais la guerre est l’^ducation 
 nationale de tous les peuples; Russes et Frangais en ont us4 
 et abus4 autant, sinon plus, que les Prussiens.” A mon tour, 
 je n’hdsite pas a dire que je suis beaucoup plus frapp4 des 
 progrbs 4conomiques de l’Allemagne que de ses succks mi- 
 litaires. Les Allemands semblent penser aujourd’hui que la 
 premibre p^riode de leur Education, la p^riode guerriere, est 
 achev^e, et qu’il faut completer cette oeuvre imparfaite par 
 le d4veloppement de toutes les ressources 4conomiques du 
 pays. 
 
 Le soir de la reddition de Metz, le prince Fr4d4ric-Charles 
 aurait, dit-on, adress^ aux officiers qui Pentouraient ces 
 paroles : “ Nous venons, Messieurs, de vaincre sur le terrain 
 militaire; il s’agit maintenant de combattre et de vaincre sur 
 le terrain industriel.” 
 
 Que ces paroles aient 4td ou non prononc6es (on m’a assur4 
 qu’elles 6taient apocryphes), on peut dire qu’elles ont 
 vraiment un programme. Les Allemands ne se sont pas en- 
 dormis sur leurs lauriers; ils ont compris que la prosp£rit4 
 commerciale 4tait le soutien n^cessaire de leur gloire, la fin 
 logique de leurs efforts. Youlant devenir victorieux par 
 l’outil comme ils l’avaient 6t6 par le canon, ils ont inaugur^ 
 depuis 1870 une bre industrielle nouvelle. Surexcit^s par le 
 succfes, mais non pas enivres par lui, ils ont besogn£ comme 
 l’eut fait un peuple vaincu qui aurait voulu se relever, et n’ont 
 recul4 devant aucun labour pour conqu4rir de haute lutte la 
 premibre place. 
 
DESS OR INDUSTRIEL DE L'ALLEMAGNE. 535 
 
 II faut aujourd’hui s’incliner devant les faits: les victoires 
 gagnEes sur les champs de bataille ont leur pendant sur le 
 terrain economique. MEthodiquement, FAllemagne est en 
 •train de dEloger les autres peuples des places ou ceux-ci 
 s’Etaient sEculairement Etablis et de conquErir pacifiquement 
 par son industrie et son commerce les marches du monde. . . 
 
 L’essor Economique de FAllemagne fut longtemps ralenti 
 par le morcellement politique du pays. En 1872, au lende- 
 main de nos dEfaites,nous Etions encore dansune situation meil- 
 leure que le nouvel Empire. Le mouvement gEnEral de notre 
 commerce avec l’Etranger et les colonies Etait alors de plus de 
 7 milliards et demi (3 milliards 949 millions aux importa¬ 
 tion ; 3 milliard 676 millions aux exportations). Pour FAlle¬ 
 magne, le premier rapport annuel de l’office impErial de 
 statistique (qui fonctionne depuis cette Epoque) n’indique 
 qu’un total de 5 milliards 960 millions de marcs, ce qui fait 
 moins de 7 milliards et demi de francs. 
 
 Combien depuis cette Epoque les choses ont changE! 
 
 Le commerce spEcial de l’Empire allemand a augmentE des 
 3/5 en valeur depuis 1872, et de 1/3 depuis 1881, malgrE la 
 diminution notable du prix de beaucoup de marchandises. 
 L’Allemagne a maintenant sur nous une avance de plus de 
 2 milliards et demi. 
 
 Ces chiffres mEritent d’autant plus de fixer Fattention que, 
 d’aprEs les travaux du statisticien Juraschek, le commerce 
 gEnEral du monde n’a augmentE que de 24 depuis 1873, 
 que de 8 % depuis 1883. Le commerce de l’Empire alle¬ 
 mand se dEveloppe done actuellement beaucoup plus vite que 
 le commerce gEnEral du monde. Aussi FAllemagne, qui 
 n’occupait quo le quatriEme rang en 1871, est dEj& passEe au 
 second. 
 
 Les rEsultats dEja connus pour 1’annEe 1899 sont excellents 
 et attestent une augmentation notable du chiffre des affaires 
 par rapport h 1898 et 1897. 1 
 
 1 Deutsche Industrie Zeitung, 28 septembre, 1899, p. 585. Rapport de M. Boutiron, 
 Moniteur officiel du commerce , 14 septembre, 1899, p. 353. Cf. on more recent 
 years Blond el’s La situation Economique de Vempire allemand au debut du xx e 
 siecle in Revue d'Economique politique, mai, 1901, pp. 537-544. 
 
536 
 
 ECONOMIC HISTORY. 
 
 Yoici le tableau de ses progres depuis 1889. 
 
 Annies. 
 
 Commerce G^n^ral. 
 
 Commerce Special. 
 
 _ A_ 
 
 r 
 
 Importations. 
 
 Exportations. 
 
 «< - 
 
 Importations. 
 
 Exportations. 
 
 
 Tonnes de 
 
 Tonnes de 
 
 
 Millions 
 
 
 Millions 
 
 
 1,000 kilog. 
 
 1,000 kilog. 
 
 Tonnes. 
 
 de marcs. 
 
 Tonnes. 
 
 de marcs. 
 
 1889 . . 
 
 29.995.642 
 
 21.446.922 
 
 26.611.896 
 
 4.087 0 
 
 18.292.587 
 
 3.256 4 
 
 1890 . . 
 
 31.732.876 
 
 22.444.247 
 
 28.142.803 
 
 4.272 9 
 
 19.365.081 
 
 3.409 5 
 
 1891 . . 
 
 32.687.214 
 
 23.338.635 
 
 29.012.719 
 
 4.403 4 
 
 20.139.376 
 
 3.339 7 
 
 1892 . . 
 
 32.156.491 
 
 22.677.490 
 
 29.509.912 
 
 4.227 0 
 
 19.891.615 
 
 3.150 1 
 
 1893 . . 
 
 33.198.655 
 
 24.262.851 
 
 29.815.557 
 
 4.134 1 
 
 21.361.544 
 
 3.244 6 
 
 1894 . . 
 
 35.167.327 
 
 25918.436 
 
 32.022.502 
 
 4.285 5 
 
 22.883.715 
 
 3.055 1 
 
 1895 . . 
 
 35.682.929 
 
 26.953.924 
 
 32.536.976 
 
 4.246 1 
 
 23.829.658 
 
 3.422 1 
 
 1896 . . 
 
 39.934.449 
 
 29.223.577 
 
 36.410.257 
 
 4.557 9 
 
 25.719.876 
 
 3.753 8 
 
 1897 . . 
 
 45.890.670 
 
 32.206.040 
 
 40.162.316 
 
 4.832 9 
 
 28.019.948 
 
 3.816 2 
 
 1898 . . 
 
 45.900.000 
 
 33.400 000 
 
 42.718.075 
 
 5.440 1 
 
 30.086.228 
 
 4.010 7 
 
 La progression des exportations allemandes est d’autant 
 plus significative que telle n’est pas la note dominante dans 
 les autres Etats europ^ens. a Les vieux peuples de l’Occident,” 
 ^crivait nagukre M. Ren£ Lavollde, “ d^clinent h ce point de 
 vue (il s’agit du mouvement des exportations de 1886 a 1896) 
 h peu pres tous ou ne progressent que tr&s lentement. Nous 
 subissons cette loi; la Belgique, la Suisse, Tltalie ^galement, 
 l’Angleterre elle-meme est sdrieusement menacde. L’Alle- 
 magne avec les Pays-Bas, fait seule exception. Mais si en 
 Europe le chiffre des exportations est en diminution ou mar¬ 
 que k peine un progrks, la marche en avant des peuples nou- 
 veaux se poursuit et s’accentue. Dans cette mOme p^riode 
 de 10 ans, l’exportation des Etats-Unis a pass6 de 3.330 k 
 3.96T millions de francs, celle du Canada de 389 a 515 mil¬ 
 lions, celle de la R^publique argentine de 350 a 510, celle de 
 la Chine de 423 a 705, celle du Jabon de 260 k 728, celle de 
 l’lnde de 2.125 h 3.930, enfin celle de l’figypte de 275 k 
 424. L’avenir est k ces peuples jeunes que la vieille Europe 
 a imprudemment (!) r£veill£s de leur sommeil s^culaire et qui 
 sous le ciel le plus clement, avec des richesses naturelles pour 
 ainsi dire illimit^es, avec un sol fertile, avec les inventions, 
 les machines et les capitaux du vieux monde, semblent 
 appclds a devenirles pacifiques dominateurs et pour ainsi dire 
 les rois commerciaux du sikcle prochain.” Le d4veloppe- 
 
L’ESSOR INDUSTRIEL BE L’ALLEMA GNE. 537 
 
 ment continu des exportations allemandes en presence d’une 
 telle Evolution n’en est que plus remarquable. 
 
 Les progres de notre commerce exterieur sont loin d’etre 
 aussi brillants. Nos importations ont passe, il est vrai, en 
 1898 h 4 milliards 376 millions 195 mille francs, mais nos 
 exportations sont descendues a 3 milliards 603 millions 167 
 mille francs. 
 
 Si nos importations ont augmente c’est surtout parce que 
 nous avons, dans ces dernikres anndes, d^pensd davantage 
 pour nous procurer des objets d’alimentation, 1 et parce que 
 nous avons fait venir un plus grand nombre d’objets manu¬ 
 factures de l’etranger, par exemple un grand nombre de 
 machines anglaises, americaines et allemandes. Ce n’est pas 
 parce que nos recettes se sont eiev4es. Nous trouvons en 
 effet aux importations a c6t4 d’une augmentation pour les 
 objets fabriqu^s, une diminution en ce qui concerne les 
 matures n^cessaires k l’industrie, ce qui indique un ralentisse- 
 ment dans la vie industrielle de la nation. 
 
 Mais c’est aux exportations surtout que les chiffres sont 
 peu favorables. Depuis 1891 nous n’avons fait aucun pro- 
 gr£s, et si m§me nous remontons d’une vingtaine d’anndes en 
 arri£re nous constatons que nos exportations sont en diminu¬ 
 tion par rapport aux chiffres de cette epoque-lk de pr£s de 200 
 millions. 
 
 Les chiffres deja connus pour l’annde 1899 sont heureuse- 
 ment plus satisfaisants, ils attestent une augmentation notable 
 de nos exportations. Puisse-t-elle se maintenir! Puisse 
 l’ann^e 1900 surtout ne pas nous ^server trop de surprises! 
 La periodicity des crises commerciales nous permet de comp¬ 
 ter en ce moment sur une reprise des affaires. 2 Mais en 
 definitive il faut reconnaitre que nos produits ne sont plus 
 recherches comme ils l’etaient jadis sur les grands marches 
 du monde. Beaucoup de ceux-ci se sont fermes peu a peu 
 k nos marchandises. 
 
 A cet egard le contraste avec l’Allemagne est grand. C’est 
 en 1877 que le jeune Empire nous a depasses. Son mouve- 
 
 1 Ainsi nos achats aux £tats*Unis ont pass6 en 1897 de 57.955.000 dollars h 
 95.452.000. 
 
 2 V. C. Juglar, Les crises commerciales 2 e ddit., 1892. 
 
538 
 
 ECONOMIC HISTORY. 
 
 ment d’affaires surpasse maintenant le nOtre de 4 milliards 
 de francs. Nous ne venons plus maintenant qu’au quatrieme 
 rang, apres l’Angleterre, l’Allemagne et les Etats-Unis. . . 
 
 Si, a cotE du mouvement gEnEral du commerce, nous 
 plagons les chiffres qui concernent le commerce maritime, 
 nous sommes en presence de constatations encore plus 
 caractEristiques. 
 
 L’Allemagne n’avait encore enl870 qu’une modeste marine 
 marchande, comptant seulement 179 vapeurs, et ayant une 
 capacitE totale de 642.000 tonnes. Elle a maintenant (chiffres 
 de 1898) 3.693 navires (dont 1171 a vapeur), jaugeant 
 1.555.371 tonnes (dont 969.800 pour les vapeurs), 1 et months 
 par 42.488 hommes d’Equipage. » 
 
 D’apres le mEmoire qu’adressaient naguere au Reichstag les 
 armateurs du port de Hambourg pour lui demander de voter 
 en faveur de l’augmentation des forces navales, dans la pEriode 
 1873 a 1895, c’est-a-dire dans une pEriode de 23 annEes, la 
 progression de la marine marchande a EtE pour l’Allemagne 
 de 100 a 265, tandis que pour la France elle n’a EtE que de 
 100 a 132. 
 
 De tous les chiffres qu’on peut citer, les plus attristants, 
 ceux qui en expliquent d’ailleurs beaucoup d’autres, ce sont 
 ceux qui concernent la population. Yers 1840 la France avait 
 plus d’habitants que l’ensemble des pays formant l’Empire 
 actuel. En dEpit d’une forte Emigration la population de 
 l’Empire allemand a, de 1872 k 1897, augments de 12.300.000 
 individus, c’est-^-dire de prEs de 30 . Elle est aujourd’hui 
 de pres de 55 millions. 
 
 Tandis qu’en France l’augmentation annuelle de la popula¬ 
 tion n’a EtE en moyenne pendant la derniEre pEriode dEcen- 
 nale que de 29.000 individus, et parait toujours s’abaisser, 
 elle est aujourd’hui de plus de 700.000 chez nos voisins. En 
 1896 il y a eu 816,000 naissances de plus que de dEcEs! 
 1.000 mariages donnent en Allemagne 270 enfants, tandis 
 qu’ils n’en donnent en France que 163. Le nombre des mar¬ 
 iages est en outre plus faible en France qu’en Allemagne. Sur 
 100 personnes en situation de se marier, la statistique ne relEve 
 
 1 Et il faut tenir compte de ce fait que la tonne de registre pour les navires 
 & vapeur est triple de la tonne de registre pour les voiliers. 
 
L'ESSOR INDUSTRIEL DE L'ALLEMA ONE. 539 
 
 pour la France que 45 manages contre 53 en Allemagne. II 
 n’est que trop facile de pressentir dans ces conditions ce que 
 sera la situation respective des deux pays dans vingt-cinq ou 
 trente ans. 1 
 
 Les anndes 1896,1897 et 1898 ont 4t4 au point de vue du 
 mouvement de la population particuli^rement satisfaisantes. 
 II y a eu augmentation du nombre des manages et diminution 
 du nombre des d4cks. Immigration a fortement baiss4: elle 
 n’a 6td que de 32.114 personnes en 1896, que de 24.220 en 1897 
 et que de 20.966 en 1898. Cette diminution est un indice de 
 prospdritd. 
 
 Et l’Allemagne, a en juger par son magnifique essor 4co- 
 nomique, est loin d’etre “ saturde.” Quand on la compare a 
 la Belgique, qui a 213 habitants par kilometre carr£, il est 
 permis de penser que les progres qu’y fait aujourd’hui l’indus- 
 trie lui permettront dans quelques ann4es de nourrir 100 mil¬ 
 lions d’habitants plus aisdment qu’elle ne r^ussit aujourd’hui 
 a en nourrir 54. L’Allemagne, au commencement de ce 
 sikcle, avec une population de 22 millions d’habitants, n’4tait- 
 elle pas in liniment plus pauvre qu’elle ne l’est maintenant avec 
 une population plus que double ? Nous pleurons avec raison 
 la perte de 1’Alsace-Lorraine qui nous a enlev4 un million et 
 demi d’habitants. Mais nous oublions volontiers que depuis 
 1870 notre faible natality nous a priv4 d’une population huit 
 a neuf fois sup^rieure ? Perte d’autant plus deplorable que ce 
 
 1 Cf. Fitger, Die Zunahme der Brdlkerung Deutschlands und die Handelsvertrag- 
 spolitik, 1897. Progres de la population de l’Allemagne, depuis 20 ans : 
 
 1875 
 
 1880 
 
 1885 
 
 1890 
 
 1895 
 
 1896 
 
 42.728.000 
 
 45.234.000 
 
 46.850.000 
 
 49.428.000 
 
 52.000.000 
 
 53.324.000 
 
 L’Allemagne a maintenant 16 millions d’habitants de plus que la France. La 
 seule cause de cette croissance rapide est le grand nombre des naissances, car 
 l’emigration depasse toujours l’immigration. C’est en partie parce que nous 
 avons peu d’enfants qu’on dit que la France est un pays riche. L’abondance 
 d’argent est en effet accrue par le fait d’une economie d’enfauts qui diminue in- 
 contestablement notre puissance de travail. Le pere de famille qui a 5 ou 6 en- 
 fants quelle que soit sa fortune, travaille certainement plus et par suite contribue 
 plus au developpement de la richesse publique que celui qui n’en a que 2 ou 3. 
 
540 
 
 ECONOMIC HISTORY. 
 
 supplement de naissances qui nous fait ddfaut aurait formd 
 prdcis^ment la partie de la population qui, stimuli par le 
 besoin, etit le mieux su jouer des coudes dans la mel£e £cono- 
 mique, celle qui se fut r^pandue dans le monde pour cliercher 
 des debouches, et qui eut contribue le plus au rayonnement et 
 a la grandeur du pays. On l’a dit avec raison: la France 
 manque de cadets. 1 II y a un rapport etroit entre les faits 
 qui touchent a la population et ceux qui concernent l’in- 
 dustrie et le commerce. Le developpement du commerce 
 entraine celui de l’industrie et comme consequence l’accroisse- 
 ment de la population a laquelle l’industrie fournit du travail. 
 
 Ce sont surtout les villes et les centres industriels qui 
 grandissent en Allemagne rapidement. II n’y avait encore, 
 vers 1840, que deux villes (Berlin et Hambourg) ayant plus 
 de 100.000 habitants. II y en a une trentaine aujourd’hui! 
 La croissance des villes en Allemagne est un des faits qui 
 caracterisent les vingt-cinq dernieres annees, et c’est un indice 
 sur du developpement 4conomique du pays. 
 
 En vingt ans, deux des 28 grandes villes allemandes (Mann¬ 
 heim et Diisseldorf) out augment^ de plus de 100 %, huit de 
 80 h 100 %, quatorze de 58 & 80 %, quatre de 28 a 50 %. 
 La ville frangaise qui enregistre l’augmentation maximum 
 (Roubaix) ne viendrait en Allemagne qu’au vingt-cinquikme 
 rang. Pour trouver l’exemple d’une pouss^e aussi rapide il 
 faut aller jusqu’aux Etats-Unis, et encore doit-on chercher 
 dans les parties neuves de la grande R^publique, pour y con- 
 stater le croit monstrueux de Chicago (281 %) ou l’dclosion 
 de villes de 150.000 ames comme Kansas ou Omaha. Sur 
 les cOtes de l’Atlantique ou dans la valine inf^rieure du 
 Mississippi, les villes ne progressent pas plus vite qu’en 
 Allemagne. 2 
 
 1 Frary, Le pfril national, p. 265. 
 
 2 Accroissement compare de Berlin et de New-York. 
 
 Berlin. New-York. 
 
 Noyau seul.76 O/O 61 O/O 
 
 Banlieue comprise. 90 0/0 76 0/0 
 
 V. sur ces divers points le bel ouvrage de M. Paul Meuriot, Des Agglomerations 
 urbaines, Paris (Belin), 1897, p. 168 et suiv., et l’article de Franz Oppenheimer 
 dans la Neue Deutsche Rundschau, juin 1899. 
 
L'ESSOR INDUSTRIEL DE VALLEMAGNE. 541 
 
 L’augmentation de la population a particulierement 
 sensible depuis quelques ann4es dans le royaume de Prusse. 
 L’accroissement normal, c’est-a-dire l’exc4dent des naissances 
 sur les ddces, y a dtd, en 1894, de 463.828 personnes; en 1895 
 de 478.358; en 1896 de 518.650 ; en 1897 de 510.000. 
 
 L’accroissement de la population en Allemagne profite sur- 
 tout aux classes industrielles, les classes agricoles restant a 
 peu prds stationnaires. 
 
 II suffit de rapprocher l’un de l’autre les recensements de 
 1882 et de 1895 pour avoir une id£e de l’importance crois- 
 sante que prennent les premieres: 
 
 
 
 1895. 
 
 1882. 
 
 A. 
 
 Agriculture. — Forets. — Peche .... 
 
 35,74 
 
 42,51 % 
 
 B. 
 
 Exploitation des mines.— Industrie . . . 
 
 39,12 
 
 33,51 
 
 C. 
 
 Commerce. 
 
 11,52 
 
 10,02 
 
 D. 
 
 Services domestiques. 
 
 1,71 
 
 2,07 
 
 C. 
 
 Armee. — Fonctions publiques. — Carrieres 
 
 
 
 
 liberales. 
 
 5,48 
 
 4,92 
 
 D. 
 
 Sans profession . 
 
 6,43 
 
 4,67 1 
 
 L’augmentation est encore plus sensible en Prusse que dans 
 le reste de l’Empire. L’un des derniers rapports de notre 
 ambassadeur a Berlin, le marquis de Noailles, nous donne a 
 cet 4gard des renseignements significatifs. 
 
 Le nombre des entreprises industrielles s’&evait en Prusse 
 en 1882 k 1.955.253 ; il atteignait en 1895 1.990.244. Ce 
 n’est sans doute qu’une augmentation de 1,79 %; mais 
 l’accroissement du nombre des ouvriers (qui est pass£ de 
 4.257.944 a 5.861.589) est de 37,66 %. 
 
 Cet 4cart s’explique par la depression qu’a subie la petite 
 industrie au profit de la grande. Le nombre des industries 
 exercdes par des ouvriers isoMs, sans collaborates et sans 
 moteur, qui etait en 1882 de 1.288.380, est en effet descendu 
 a 1.171.727, tandis que celui des industries exerc^es par des 
 collectivity ou avec l’aide de moteurs est montd de 666.873 a 
 818.517. 
 
 1 Vierteljahreshefle zur Statistik des Deutschen Reiches, 1896, III, Erganzung - 
 sheft. Cf. le Dictionnaire du commerce de Yves Guyot et Raffalovich, t. I, v° 
 Allemagne. 
 
542 
 
 ECONOMIC HISTORY. 
 
 Le critErium du dEveloppement de l’industrie n’est pas le 
 nombre des Etablissements industries mais bien le nombre 
 des ouvriers. Or, depuis 1875, celui-ci s’est accrudans la pro¬ 
 portion de 61,66 %, alors que l’ensemble de la population ne 
 prEsentait qu’un accroissement de 23,5 %. . . 
 
 Est-il besoin d’ajouter que le dEveloppement de la produc¬ 
 tion a une importance capitale dans la situation Economique 
 de l’Allemagne. Comme il y a encore insuffisance de con- 
 sommation chez les masses populaires, cette production in¬ 
 tense ambnerait, si l’on ne trouvait des debouches au dehors, 
 une sorte d’encombrement bien autrement dangereux pour le 
 pays que celui dont on se plaint dEja aujourd’hui. 
 
 Les Economistes prEtendent que plus le marchE est Etendu, 
 plus les conditions de production sont compliquEes, plus les 
 crises gEnErales sont par suite frEquentes et profondes. Et 
 pourtant malgrE l’extension de son marchE, l’Allemagne n’a 
 point depuis un certain temps dEja, de crise vraiment grave a 
 supporter. Avec cette disposition a l’Etude scientifique des 
 questions qui les caractErise, les Allemands ont su embrasser 
 d’un coup d’oeil assez juste la consommation et la production 
 pour ne plus s’engager, comme ils l’avaient fait dans la pEriode 
 du Grunclerthnm , de la fibvre d’affaires, dans des entreprises 
 exagErEes. Et il s’est en somme Etabli entre la production et 
 la consommation un Equilibre que constatent les rapports con¬ 
 sulates, fran§ais et Strangers. 
 
 “ Il serait malaisE,” lit-on dans un des derniers rapports du 
 consul de Belgique a Leipzig, “ d’assigner une durEe dEterminEe 
 a Vexcellent etat de choses actuel. Gr&ce a la bonne marclie des 
 affaires, plusieurs branches ont pris une extension telle qu’il 
 y a lieu de craindre les effets de la surproduction dans un 
 avenir peu EloignE. . . Un rEel optimisme continue a rEgner 
 dans les cercles compEtents ; on semble admettre que les circon- 
 stances actuelles doivent durer encore une sErie d’annEes, et 
 l’on envisage un revirement sous ce rapport comme une loin- 
 taine Eventuality.” 1 
 
 MEme note dans les rapports anglais qui se demandent avec 
 inquietude quelies sont les causes de cette Etonnante pros- 
 
 1 Recueil consulaire du royaume de Belgique , t. XCVI, 1897, p 45. 
 
L'ESSOR INDUSTRIEL DE VALLEMAGNE. 543 
 
 p^ritA L’expos4 des motifs sur lequel le gouvernement im¬ 
 perial appuie sa demande de credits pour raugmentation de 
 la flotte renferme aussi d’int4ressants details sur le developpe- 
 ment du commerce allemand a l’^tranger, et notamment dans 
 les pays d’outre-mer. 1 C’est m§me l’extension des int^rets 
 allemands sur toute la surface du globe qui forme le principal 
 argument invoqu£ en faveur de l’accroissement de la marine 
 de guerre. 
 
 Tandis que la population de l’Allemagne a depuis 1871 
 augment4 de 30 %, le commerce ext^rieur a augments dans 
 le meme temps de 60 %. Dans ce mouvement ascensionnel 
 c’est la navigation maritime qui figure pr£cis4ment au premier 
 rang. Le commerce maritime forme h lui seul 66 % de 
 tout le commerce ext4rieur. De 1873 a 1895 le tonnage de la 
 marine marchande allemande a augment^ de 124 %. Et si 
 Ton examine l’augmcntation au point de vue des pays de 
 destination on constate que c’est surtout le commerce avec les 
 pays d’outre-mer qui a prosp4r4 : c’est ainsi que l’augmentation 
 pour les Etats-Unis est de 128 % ; pour le Mexique, 1’Anti¬ 
 que centrale et l’Am^rique du Sud, elle est de 317 %; pour 
 les Indes et l’Extreme-Orient, de 480 %; pour l’Australie, 
 de 475 %. En Europe meme la progression est de 119 % 
 pour les pays du Nord, de 88 % pour la Grande-Bretagne, 
 de 60 % pour le Sud-ouest du continent. 2 
 
 Les ann^es 1897 et 1898 qui ont 4td fort troubles dans 
 beaucoup de pays ont 4te en somme tres bonnes pour le com¬ 
 merce allemand. Toutes les grandes industries, sauf l’indus- 
 trie textile, ont fait das progrks. Si les benefices ont 4t4 un 
 peu moindres en 1898, c’est par suite d’une augmentation 
 notable des salaires, et aussi du rench4rissement des prix d’un 
 certain nombre de matures premieres, mais en somme la vie 
 commerciale a dt4 tres intense. Tous les rapports consulates, 
 et la plupart de ceux des chambres de commerce sont d’accord 
 a cet dgard. On ne peut donner de meilleure preuve de la 
 
 1 M. Eugene Cor en donne un excellent resume dans le Moniteur officiel du, 
 commerce, du 6 janvier 1898. 
 
 2 Sur le mouvement maritime et commercial en France a la meme epoque, v. 
 l’article de M. d’Outrevienne, Revue politique et parlementaire , 10 novembre 1897, 
 p. 378. 
 
544 
 
 ECONOMIC HISTORY. 
 
 prosp6rit4 dconomique en 1898 que les chiffres concernant la 
 fondation des socidtes industrielles. II lie s’en est pas cree 
 moins de 329 avec un capital-actions de 463.620.000 marcs. 
 Aucune annde antdrieure n’avait fourni jusqu’a present un 
 contingent aussi dlevd. Ce sont les socidtds mdtallurgiques 
 (au nombre de 53) qui occupent le premier rang. 1 
 
 Les chiffres ddja connus pour la prdsente annde (1899) sont 
 trds satisfaisants et attestent un nouveau progrds. Ainsi en 
 1898 il avait dtd crdd pour 343 millions de marcs de valeurs 
 industrielles, correspondant (car les Emissions sont faites 
 naturellement au-dessous du pair) a un total de 477 millions 
 de marcs. Or pendant le l er semestre 1899 il y a ddja eu des 
 Emissions pour 275 millions de marcs correspondant a un capi¬ 
 tal nominal de 453 millions de marcs! Ces chiffres sont ddj& 
 quintuples de ceux de 1894. 2 
 
 Cet essor dconomique de l’Empire allemand doit nous frap- 
 per d’autant plus que pendant longtemps PAllemagne ne fut 
 pas un pays industriel. Les villes allemandes eurent sans 
 doute au moyen age leurs jours de prospdritd et de gloire, 
 mais au siecle dernier, a la suite des bouleversements que la 
 guerre de Trente ans avait occasion's dans tout le pays, 
 l’industrie y etait dans une complete decadence. Les guerres 
 de la Revolution et de l’Empire comprimerent ensuite les 
 tentatives de insurrection. Apres 1815, la renaissance des 
 id^es particularistes fut un autre obstacle; les barrieres et les 
 douanes interieures ne s’abaisserent que lentement; la legis¬ 
 lation surtout ne fut guere favorable au progres economique. 
 
 C’est depuis que l’oeuvre d’unification s’est accomplie, c’est- 
 a-dire depuis un quart de siecle, court espace de temps dans 
 la vie d’un peuple, que l’essor industriel et commercial de 
 PAllemagne s’est brusquement accentud. Bismarck n’avait 
 
 1 Rapport de M. Pingaud, Moniteur officiel du commerce , 9 mars 1899, p. 376, 
 d’apres les statistiques reunies par le Deutscher (Ekonomist. 
 
 2 “ Nous avons en ce moment,” me disait, il y a quelque mois, un ingenieur 
 allemand, “ une telle quantite de commandes, particulierement de la part de 
 l’etranger, que pour longtemps encore notre production peut s’accroitre en toute 
 confiance.” V. sur les progres nouveaux qui se sont accomplis en 1899 les Volks- 
 virthschafViche Chroniken des JaKrbucher fur Nationalcekonomie und Stutistik, t. 
 XVII, 1899, pp. 67, 97 ; t. XVIII, p. 227, et le Deutsches Handelsarchiv. 
 
L'ESSOR INDUSTRIEL DE L’ALLEMAGNE. 545 
 
 pas manqu4 de se faire ministre du commerce et de declarer 
 qu’aprks les victoires militaires il entendait bien donner a son 
 pays les victoires 4conomiques. Depuis 1870 le nouvel Em¬ 
 pire s’est couvert d’usines, de fabriques, de manufactures de 
 toute sorte. Quelle que doive §tre au xx e si&ele la place que 
 prendra d^finitivement l’Allemagne dans le monde, l’essor 
 industriel et commercial du peuple allemand ne restera pas 
 moins l’un des traits saillants de la fin du xix e . 
 
 
 
 35 
 
 
 X 
 
 » - - 
 
546 
 
 ECONOMIC HISTORY . 
 
 XX. 
 
 THE AMERICAN LEGAL TENDER PAPER. 
 
 CHARLES F. DUNBAR. 
 
 From Quarterly Journal of Economics, XI, April 1897, 
 
 pp. 223-247. 
 
 HE legal tender notes of the United States present now, 
 
 as they always have presented, an appearance of great 
 simplicity. There are still but two such issues, the United 
 States notes of the Civil War and the coin notes of 1890: 
 their legal tender power has few exceptions, and the obliga¬ 
 tion for their redemption is to be read in a few lines. Take 
 away the confusing element introduced by the silver agitation, 
 which is quite extraneous to the original conception of the 
 legal tender paper, and what is in itself better suited for easy 
 comprehension or has more prima facie attractions than a sys¬ 
 tem of government notes, established by the authority and 
 resting on the credit of the nation ? 
 
 But, simple as the notes themselves may appear, it is by no 
 simple process that the conditions under which they are now 
 issued have been arrived at. Our legislation on this subject 
 now covers a period of thirty-five years. During that time 
 there has been a rapid succession of important legislative acts 
 bearing upon the legal tender paper and some administrative 
 acts of equally serious import. The system, as we have it 
 to-day, is, therefore, a product, not of any compact declara¬ 
 tion by the law-making power, but of a singularly complex 
 series of laws and executive orders. It is to some aspects of 
 this series, — or, in other words, to some aspects of the history 
 of the legal tender issues, — and to some considerations flow¬ 
 ing therefrom, that I desire to direct the attention of readers of 
 
THE AMERICAN LEGAL TENDER PAPER . 547 
 
 / 
 
 this article. Accepting the constitutionality of the legal ten¬ 
 der acts, as settled by the repeated decisions of the Supreme 
 Court, and waiving all questions as to the necessity of the 
 acts or of either of them, as foreign to my present subject, 
 I wish to inquire what inferences are to be drawn from the 
 manner in which the authority of Congress has been exer¬ 
 cised, and how far the prima facie attractions of our paper 
 legal tender are thereby affected. For this purpose, it will 
 be necessary to make a short recapitulation of the chief legis¬ 
 lative and executive acts which mark the period opened by 
 the first Legal Tender Act and relate to the same subject- 
 matter, and to do this even at the risk of stating much with 
 which the reader must be supposed to be familiar. 
 
 1. The leading advocates of the act of February 25, 1862, 
 pressed that measure upon Congress as a temporary expedient 
 forced upon the country by the stress of war (1861-62, ch. 
 33). They also pressed it as a measure which had its place 
 in a large scheme of legislation, by which they expected to 
 provide a permanent paper currency exclusively of bank notes. 
 To meet the urgent needs of the Treasury, a limited amount 
 of legal tender notes were to be issued, exchangeable at the 
 pleasure of the holder for United States bonds, and the bonds 
 were to be made the basis of a bank currency. Issued, ex¬ 
 changed, and reissued, the notes were expected to open a 
 market for a large amount of bonds, and finally to be absorbed 
 and disappear. It may be doubted whether the majority in 
 Congress were then ready to accept the whole of this com¬ 
 prehensive scheme, but there is no doubt that the majority 
 agreed to the issue as something not intended long to survive 
 the exigency which called it into being. Even with this re¬ 
 stricted view of the scope of the legislation, the provision 
 making the notes exchangeable for bonds was plainly a matter 
 of prime importance. It was looked upon as offering a possible 
 outlet for the notes in case the circulation were over-loaded 
 with them, and it provided the means for their withdrawal when 
 the present need should have passed by and the public credit 
 should have begun to advance. The bonds having been made 
 
548 
 
 ECONOMIC HISTORY. 
 
 coin bonds, the exchangeability of the notes was the ground 
 of hope for their present credit and ultimate redemption. 
 
 2. But the expectations of the advocates of the first Legal 
 Tender Act were disappointed. Although some sanguine 
 leaders had predicted that the whole of the first issue would 
 not be used, a second issue was called for by the Treasury, 
 and a third. It was also discovered that, so long as notes 
 could be exchanged for bonds at par, the price of bonds could 
 not rise above that point, and that with this limitation of pos¬ 
 sible profit the present inducement for exchange was too small 
 to invite large operations. At the instance of the Treasury, 
 therefore, and in order to facilitate the sale of bonds, Con¬ 
 gress, in the Ways and Means Act of March 8, 1863, declared 
 that the right to exchange the notes should cease from the 
 first day of the following July (1862-63, ch. 73, § 3). One 
 year, therefore, saw the central provision of the original sys¬ 
 tem abolished, and without debate in either House. “ This 
 act,” says Mr. Sherman, in one of his numerous references to 
 the subject, “though convenient in its temporary results, was 
 a most fatal step, and for my part in acquiescing in and vot¬ 
 ing for it I have felt more regret than for any other act of my 
 official life.” 1 
 
 3. The summer of 1864 saw the worst fears as to a resort 
 to a paper legal tender fully justified. At the end of June the 
 outstanding United States notes were $431,000,000 ; there 
 were also in circulation $168,000,000 of interest-bearing notes 
 which were a legal tender for their face ; and, in response to 
 the urgent demand of the Treasury, authority for an addi¬ 
 tional issue of $200,000,000 of similar interest-bearing legal 
 tender notes was to be embodied in the Ways and Means Act. 
 Gold, which in April stood at 180, was starting on the rapid 
 ascent which carried it to 240 on the 1st of July. Congress 
 was engaged in an unsuccessful effort to prevent time-sales of 
 gold and of foreign exchange, by means of what has been 
 known as “ The Gold Bill; ” and confusion, distrust, and dis¬ 
 credit were rapidly gaining ground. As a reassuring measure, 
 therefore, to quiet public alarm, a clause was incorporated in 
 
 1 Speech in the Senate, March 6, 1876 ; to be found in his “ Speeches p. 496. 
 
THE AMERICAN LEGAL TENDER PAPER. 549 
 
 the Ways and Means Act declaring that the total amount of 
 United States notes should never exceed $400,000,000, and 
 a possible temporary addition of $50,000,000, if required for 
 the payment of private deposits then held by the Treasury 
 (1863-64, ch. 172, § 2). This limitation of the issue of 
 United States notes was a wise concession to public opinion, 
 and without doubt had its influence in the next few months 
 in raising the public credit; but the ability of Congress to 
 maintain such a restriction under the pressure of any great 
 exigency was never put to a severe test, and the happy ending 
 of the war nine months later abruptly introduced an entirely 
 new order of questions relating to the legal tender issues. 
 
 4. So far as the temper of the public was concerned, the 
 first months of peace were remarkably favorable for measures 
 looking towards specie payment and the withdrawal of the 
 legal tenders ; and it was probably a misfortune that Congress 
 was not then in session to improve a moment which in other 
 respects was opportune, and to do this before the apprehen¬ 
 sion of contraction or any of the real dangers of that process 
 should be seriously felt. But when Congress met in Decem¬ 
 ber, 1865, — after the announcement of his policy by Secretary 
 McCulloch, — the strength of feeling was still such that, by a 
 vote of 144 to 6, the House of Representatives adopted a reso¬ 
 lution of cordial concurrence u in the views of the Secretary of 
 the Treasury in relation to the necessity of a contraction of 
 the currency with a view to as early a resumption of specie 
 payments as the business interests of the country will permit,” 
 and pledged its co-operation to that end. 
 
 5. A secretary gifted with tact in dealing with other men, 
 and standing aloof from the political contests of the time, 
 might perhaps have made this proffer of concerted effort the 
 basis of a successful policy; but Mr. McCulloch had not that 
 tact, and was so far identified with the reconstruction policy 
 of President Johnson as to share the odium incurred by the 
 latter in his struggle with Congress. Four months after the 
 declaration of December, 1865, Congress, in making provision 
 for the retirement of Treasury notes, forbade the Secretary 
 to retire more than $10,000,000 of United States notes within 
 
550 
 
 ECONOMIC HISTORY. 
 
 the next six months, or more than $4,000,000 in any one 
 month thereafter (1865-66, ch. 28). 
 
 6. The Secretary did not use to its full extent the authority 
 allowed him by Congress. The Commercial revulsion which 
 began in London in 1866 was followed by continued depression 
 in this country, the public mind became more and more sen¬ 
 sitive on the subject of contraction, and wild demands began 
 to be made for the payment of the five-twenty bonds in legal 
 tender notes. The Finance Committee of the Senate in 
 December, 1867, reported a bill providing for the exchange 
 of these bonds for a five per cent, coin bond, the offer resting 
 upon the avowed calculation that the right of the public 
 creditor was doubtful, and that he would find it for his 
 advantage to take a bond bearing a lower rate of interest 
 and free from cloud. In the discouraged state of mind 
 indicated by this proposition, Congress, in February, 1868, 
 u suspended ” altogether the authority previously given to 
 the Secretary “ to make any reduction of the currency by 
 retiring or cancelling United States notesand thus the 
 first movement for a return towards specie was peremptorily 
 closed (1867-68, ch. 6). The notes outstanding had been 
 reduced from about $400,000,000 to $356,000,000; but this 
 reduction had been offset by an increase of national bank 
 notes during the same months. 
 
 7. Happily, the Republican National Convention in July, 
 1868, planted itself on firm ground as to the payment of the 
 five-twenty bonds, and in its platform denounced “ all forms 
 of repudiation ” and called for the payment of all creditors, 
 “ not only according to the letter, but the spirit of the laws.” 
 The Democratic party a few weeks later gave its support to 
 what was supposed to be the popular craze of the day, and 
 upon this issue and others was badly beaten. General Grant 
 was elected after an excited canvass; and the popular verdict 
 was registered in an “ Act to strengthen the Public Credit,” 
 approved in March, 1869, being the first act passed under the 
 new administration. This law declared the faith of the United 
 States to be pledged to the payment of both notes and bonds 
 in coin, except when the law under which they were issued 
 
THE AMERICAN LEGAL TENDER PAPER. 551 
 
 had expressly provided for payment otherwise, and closed by 
 further pledging the faith of the United States “to make 
 provision at the earliest practicable period for the redemption 
 of the United States notes in coin” (1869, ch. 1). 
 
 8. Nothing was done towards giving effect to this pledge. 
 Secretary Bout well in December, 1869, suggested that authority 
 should be given for reducing the circulation, as occasion might 
 offer, by an amount not exceeding $2,000,000 in any one 
 month; but it was clear that he did not regard the matter 
 as of any present importance, arid no action was taken. 
 Congress had apparently acquiesced in the policy of allowing 
 the country to “grow up” to a currency admitted to be 
 excessive. A year or two later, however, it appeared that 
 the Treasury had on more than one occasion issued legal 
 tender notes in lieu of a part of those “ retired and cancelled ” 
 by Secretary McCulloch. The question as to the legality of 
 any such reissue was referred by the Senate to its Finance 
 Committee; and the majority of that committee, headed by 
 Mr. Sherman, reported a resolution that the Secretary “ has 
 not the power under existing law” to issue notes for any 
 portion of those retired under the act of 1866. The question 
 involved was of moment; for, if $5,000,000 could be issued 
 by the Secretary at his discretion, so could $44,000,000, and 
 the whole of the ground supposed to have been gained by the 
 payment of this form of debt might thus be lost. The resolu¬ 
 tion, however, was not called up for action, and at the end of 
 the session the Secretary might easily have felt that his action 
 had the tacit acquiescence of Congress. 
 
 9. Mr. Boutwell’s successor, Secretary Richardson, having 
 paid out in the revulsion of 18T3 a large part of his cash 
 balance in the vain effort to relieve the money market by the 
 purchase of bonds, soon found himself so crippled by the 
 decline of revenue that in October, 1873, he began paying out 
 the retired notes for ordinary expenses; and this reissue was 
 continued until at the beginning of February, 1874, when 
 the revenue had recovered from its collapse, $26,000,000 
 of the notes were again in circulation, raising the total to 
 $382,000,000. 
 
552 
 
 ECONOMIC HISTORY . 
 
 10. At the long session of 1874 Congress first passed the 
 so-called inflation bill, vetoed by President Grant, by which 
 the issue of legal tender notes was to be increased to 
 8400,000,000 and the possible issue of national bank notes 
 was to be raised to the same point, and then adopted the 
 Compromise Act of June, 1874, by which, among other pro¬ 
 visions, it was declared that the amount of legal tender notes 
 should be fixed at 8382,000,000 (1873-74, ch. 343, § 6). The 
 amount reissued by Secretary Richardson was thus made a part 
 of the permanent currency, and so remained until the work of 
 withdrawal began anew under the Resumption Act of 1875. 
 
 11. The Resumption Act was not prepared with open 
 doors; and, doubtless, there is much in its secret history 
 which would be of great interest. Certainly, its public 
 history, if we view it as a measure for financial reform, is 
 unique. The bill, introduced by the Finance Committee 
 of the Senate, was admitted to be the work of a party caucus, 
 in which no agreement could be reached except by consenting 
 to leave a principal point unexplained. Whether legal tender 
 notes, when “ redeemed ” in the language of the bill, could be 
 reissued or not, Mr. Sherman, who had charge of the measure, 
 steadily refused to say, knowing well that any explicit answer 
 would drive off one wing or the other of his expected majority, 
 and deeming it his business to carry the bill through by what¬ 
 ever means. It was passed by the Senate, therefore, with an 
 obstinate refusal on the part of its chief advocate to state the 
 meaning and effect of its leading provision. In the House 
 all risk of explanation was avoided, by forcing the bill through 
 without debate under the operation of the previous question; 
 and thus the great work of resumption was entered upon, 
 with absolutely no authoritative determination of the main 
 question whether redemption would end the legal tender 
 currency or not (1874-75, ch. 15). It was only certain that, 
 when the measure should finally be interpreted for purposes 
 of administration, one section or the other of its supporters 
 would meet with bitter disappointment. 
 
 12. As a preparation for actual specie payment in 1879, 
 the Resumption Act provided for a gradual reduction of out- 
 
THE AMERICAN LEGAL TENDER PAPER. 553 
 
 standing legal tender notes from $382,000,000 to $300,000,000, 
 so far as such a reduction could be offset by the issue of 
 national bank notes by new banks, or by old ones increasing 
 their circulation. This device for avoiding a contraction in 
 the total currency was defeated by an unexpected surrender 
 of bank circulation under the pressure of the times ; and the 
 consequent net reduction of legal tender notes and bank notes 
 came to be regarded in some parts of the Union as the cause 
 of the depression, which deepened in this country in 1876 
 and 1877 as it did in the greater part of Europe. When 
 Congress came together in October, 1877, a bill was at once 
 reported to the House by the Committee on Banking and 
 Currency to repeal the third section of the Resumption Act, 
 this section containing all the provisions as to the redemption 
 of the United States notes. With an amendment exempting 
 from repeal the provision for free banking, this bill was 
 passed in the House and went to the Senate. That body 
 amended the House bill so as to make it simply a bill for 
 making United States notes receivable in payment for the 
 four per cent, bonds and also for customs duties, and finally 
 passed it in this form in the following June by a vote of 45 
 to 15. But, while this measure was pending in the Senate, 
 and in view of the probable disagreement of the two Houses, 
 the mover of the House bill introduced there a short bill to 
 forbid the further retirement of legal tender notes; and this 
 was hurriedly passed through both House and Senate, and 
 became a law May 31,1878 (1877-78, ch. 146). This moment¬ 
 ous act, which finally settled the question as to the meaning 
 of “ redemption ” in the Resumption Act and completed the 
 conversion of the United States notes into a permanent cur¬ 
 rency, — an act scarcely inferior in its importance to the 
 Resumption Act itself,— was adopted almost without debate. 
 The issue at that moment stood, as it stands at present, at 
 $346,681,016. 
 
 13. The reserve of gold, accumulated for the redemption 
 of legal tender paper under these changed conditions, received 
 a tardy recognition from Congress in 1882, when, under the 
 act for extending the charters of the national banks, it was 
 
554 
 
 ECONOMIC HISTORY. 
 
 provided that the issue of gold certificates by the Treasury 
 should be suspended “ whenever the amount of gold coin or 
 gold bullion in the Treasury reserved for the redemption of 
 United States notes falls below one hundred millions of 
 dollars” (1881-82, ch. 290, § 12). No means of replenishing 
 this reserve have ever been provided, except those named in 
 the Resumption Act, — surplus revenues and bonds of the de¬ 
 scriptions authorized by the Refunding Act (1869-70, ch. 256). 
 
 14. The winter of 1889 and 1890 brought a fresh outburst 
 of agitation for the free coinage of silver, at a time when the 
 compulsory coinage of silver dollars under the Bland Act of 
 1878 was finally submerging the Treasury. The result of 
 several months of debate in Congress was the passage of the 
 Silver Purchase Act of 1890, by which Congress required 
 the purchase of 4,500,000 ounces of silver per month, pay¬ 
 ment therefor to be made in “ coin notes,” which were to be 
 a legal tender and to be withdrawn from circulation only 
 when replaced by an equal amount of the silver dollars (1889- 
 90, ch. 708). This provision for adding to the legal tender 
 paper is the only part of the act which there is occasion to 
 consider here. The reduction of legal tender circulation had 
 been made impossible by the act of 1878; and Congress now 
 ordered its periodical increase, by such an amount as should 
 be required by the stated purchases of silver, without limit, 
 and with no discretionary power of suspension in any exigency. 
 It was declared to be the policy of the United States to 
 maintain the “ parity ” of gold and silver; but no provision 
 was made for an increase of the gold reserve established for 
 the protection of the United States notes, in case “ parity ” 
 meant the maintenance of the gold standard. It was provided 
 on the other hand that the coin notes might be redeemed in 
 silver at the pleasure of the Secretary, so that the decline to 
 the silver standard appeared to be a matter of probable 
 ultimate necessity. The new measure was, therefore, a sur¬ 
 prising sequel to the long effort made to place the legal tender 
 notes on the solid footing of gold. 
 
 15. Not many months had passed before the saturation of 
 the currency with legal tender paper and silver was proved by 
 
THE AMERICAN LEGAL TENDER PAPER. 555 
 
 the slackening of gold payments for customs duties. In the 
 spring of 1893 the new coin notes outstanding had risen to 
 $140,000,000, and the increase then going on was not far 
 . short of $4,000,000 per month; gold receipts at New York 
 were nearly dried up, and the gold reserve in the Treasury 
 was falling below the prescribed $100,000,000. The visible 
 danger of the suspension of gold payments precipitated the 
 violent monetary panic which culminated in July. Congress 
 was called together in August to provide the means of financial 
 safety, and the repeal of the clause in the act of 1890 re¬ 
 quiring the purchase of silver was carried, after a parliamen¬ 
 tary contest which lasted for eighty-two days (1893, ch. 8). 
 
 These are the leading points in the history of a currency 
 now old enough to have had its trial in every variety of 
 national fortune, — in prosperity and in adversity, in war 
 and in peace. As an exhibition of unsteady purpose, the 
 record appears to me to be without a parallel, considering 
 the gravity of the subject-matter. This is the manner in 
 which the nation has dealt with the paper legal tender which 
 practically lies at the base of the great mass of its credit 
 transactions, — used concurrently with gold no doubt at 
 present, but for many years used almost exclusively, and 
 possibly in some contingency destined to be so used again. 
 The customary paper circulation, which should rest on a bed¬ 
 rock of law as unchangeable as anything of human institution 
 can be, has lain upon a quicksand. Instability has been the 
 leading characteristic of our legislation on this subject for a 
 third of a century. 
 
 If we consider the course pursued by the other leading 
 nations in their management of currency and kindred matters, 
 the contrast is remarkable. England has made no important 
 change in her currency system for over fifty years, and, not¬ 
 withstanding the inviting field which it presents for the 
 reformer, still prefers not to risk her reputation for absolute 
 safety upon possible, but still uncertain, improvements. 
 France has kept her system without substantial change, 
 except in the scale of its operations, ever since the absorption 
 
556 
 
 ECONOMIC HISTORY. 
 
 of the departmental banks by the Bank of France in 1848. 
 The war with Germany, suspension of specie payments, revolu¬ 
 tion, invasion, and defeat tried the strength of her legislation 
 and of her confidence in it; but it stands to-day nearly as it 
 stood before 18T0, except for the legal tender power then 
 given to the notes of the Bank of France. Germany laid her 
 course in her coinage and bank acts of 1871 to 1875, and has 
 followed it from that day without deviation, her occasional 
 legislation upon this subject being directed steadily to the 
 completion of the system as originally planned. These nations 
 now have an unfailing confidence in the steadiness, perma¬ 
 nence, and soundness of their own monetary arrangements ; 
 and a chief element in that confidence is the certainty that 
 serious change is not within the range of probability. 
 
 This contrast, though still disadvantageous, would be less 
 painful if in the rapid succession of changes made by our 
 government there were discernible any approach to continuity 
 of purpose. A consistent policy might be developed or a 
 system might grow up by a succession of short stages, and 
 the wisdom of the process might be justified as regards its 
 intention, if not as regards its skill. But no such continuity 
 is to be found in the series of measures recapitulated above. 
 Fundamental principles are adopted at one time and aban¬ 
 doned at another. The automatic absorption of notes by 
 bonds, their systematic retirement and cancellation by the 
 discretionary authority of the Treasury, the payment of them 
 as a debt, the idea of fixity of amount, and that of an adequate 
 reserve in proportion to the amount, — such conceptions as 
 these have been held for a time, then dropped, and succeeded 
 by others, perhaps equally short-lived. The series of acts, as 
 a whole, points to no particular end, its several parts have no 
 systematic tendency or common direction. The steps taken 
 have been without logical order, and the important con¬ 
 sequences following have often been neither expected nor 
 desired. The line traced by these measures is in fact a 
 legislative zigzag, not a line of development. 
 
 When we inquire for the cause of such a mortifying result 
 from thirty-five years of constantly renewed financial anxiety 
 
THE AMERICAN LEGAL TENDER PAPER . 557 
 
 and debate, we must find it in the general absence of any 
 sense of responsibility for the formation and maintenance 
 of a consistent policy. Not many of our Secretaries of the 
 Treasury have found it worth while to plan and act for any 
 distant future, they knowing well that executive initiative 
 counts for but little in the end; and, moreover, whatever 
 secretaries may desire, no Congress can be relied upon to 
 carry out the purposes of a predecessor. Inspection of the 
 list of acts shows that usually some accidental conjuncture 
 or some supposed popular demand has been the real spring 
 of action in each case, and that for the individual legislator 
 a supposed mandate for the passing moment has generally 
 been enough to discharge him from all personal responsibility. 
 
 Consistency in the popular demand is not a characteristic 
 of our politics. The American people can be relied upon with 
 confidence in a sufficiently alarming crisis, finally and after 
 great travail, to rally in support of the honest and wise course 
 in any matter of high policy; but this result is often reached 
 only after a season of painful doubt and seeming vacillation, 
 and after much mischief. The last year, for example, wit¬ 
 nessed the latest of a series of occasional appeals to the sound 
 common sense of the plain people, in which the result was 
 fortunate, to be sure, and emphatic, but was obviously too 
 long left in uncertainty. How should we expect the sense of 
 legislative responsibility for a continuous course of action 
 to be developed under such conditions ? How can we wonder 
 that the congressman is too anxiously mindful of the shifting 
 mass of opinion behind him, on which his political future 
 depends, to resist the passing demand for change ? Or why 
 should our financial legislation be less changeable and incon¬ 
 sistent than our tariff legislation, in which we are now expect¬ 
 ing the third radical alteration, not to say revolution, effected 
 in the space of seven years ? 
 
 Is it even surprising that, on the whole, the net result of 
 conflicting financial acts should be a general weakening of our 
 system and a loosening of the grip upon hard money ? The 
 fact is indubitable. For proof of it we need only compare, 
 first, the condition of things in 1865, when there was a general 
 
558 
 
 ECONOMIC HISTORY. 
 
 consensus of opinion that the return to specie payment was 
 a manageable problem for early solution; second, the condi¬ 
 tion in 1875, when, after a year of painful tergiversation, 
 a Resumption Act was finally carried through in deference 
 to a manifest public opinion, although by means of an agree¬ 
 ment that its terms should be unintelligible; and, third, the 
 recent state of affairs, when the country has repeatedly found 
 itself brought dangerously near the verge of afresh suspension, 
 and has still found it impossible to obtain a line of legislation 
 demanded for the better protection of the national honor and 
 well being. The reason for this irregular, but on the whole 
 progressive, relaxation on the side of political morals, at the 
 same time that we have secured specie payment, is not far to 
 seek. In any debate where the fateful words “ contraction ” 
 and “ relief” are heard, the fears and demands of a sufficiently 
 noisy minority have extraordinary potency, especially in the 
 even years which witness the national elections; and ground 
 once lost by any weakness in this part of the field of politics 
 is regained with great difficulty. The country is now and 
 then roused to the fact that it is slipping down a dangerous 
 declivity; but, after all, even under a government of and for 
 and by the people, it is not always easy for the clear will of 
 the majority to find expression in law. 
 
 It is not to be assumed that the cause of this legislative 
 incapacity to deal firmly with a subject of the gravest impor¬ 
 tance is to be found in special defects of character, intellectual 
 force, or proper purpose among the men who make up the 
 Congress of the United States. The parliamentary bodies 
 in other countries as well as our own suffer from the follies 
 of individual members, often fail to do their duty, and are the 
 objects of criticism and satire. Under their forms of parlia¬ 
 mentary government, however, they are in a measure protected 
 from what might prove to be their own incapacity, — some¬ 
 times by traditional modes of procedure, sometimes by positive 
 rules, and generally by established forms of political organiza¬ 
 tion and leadership. Without the defences of this kind which 
 time and habit have thrown around the House of Commons, 
 
THE AMERICAN LEGAL TENDER PAPER. 559 
 
 that body might easily find its action as much a matter 
 of chance, and as little to be relied upon under the strain 
 of an unsettled public opinion, as that of the House of 
 Representatives. Add to the differences in customary pro¬ 
 cedure the fact that it is our usual practice to elect to Congress 
 no one who is not a resident of the district to be represented, 
 — so that disagreement with local opinion often means for 
 the member not merely failure at a new election, but political 
 death, — and there are reasons enough why Congress should 
 have failed so conspicuously to frame and defend any consistent 
 line of policy as to the paper currency. 
 
 A few words should also be said here as to a phase of 
 popular opinion with which members of Congress have long 
 had to reckon, — a phase of opinion singularly persistent and 
 general, showing itself in an extreme dread of “ contraction.” 
 The long depreciation following the great issues of United 
 States notes during the war impressed upon the public mind 
 the consequences of inflation, so deeply that the lesson is 
 nearly as vivid to-day as it was thirty years ago. The majority, 
 no doubt, have a wholesome dread of any tendency in that 
 direction; and a minority, perhaps, desire such a tendency 
 in some form or other, with more or less crude notions as to 
 controlling the results. But, whether resisting inflation or 
 favoring it, the great mass of our people clearly have a strong 
 belief in the effect of quantity upon the value of a circulation; 
 and this appears to make up the greatest part of their simple 
 creed as to money. To hold the currency where it is becomes 
 the ideal of steady management; and contraction becomes an 
 evil in itself, and perhaps more dreaded even than inflation, 
 because its earlier stages are more painful. 
 
 The dread of contraction was the one argument against 
 resumption which had any strength with the public; and 
 it has not lost its power since, although we plainly have 
 the whole world upon which to draw, if our own supply is 
 below our needs. A morbid anxiety as to the sufficiency 
 of the currency to-day possesses the public mind, as is shown 
 by the copious statistics with which the government publica¬ 
 tions constantly strive to reassure the people, and by the 
 
560 
 
 ECONOMIC HISTORY . 
 
 frequent efforts of Presidents and Secretaries to satisfy public 
 opinion as to the care with which the supply of currency 
 is insured. No other country of importance shows this 
 hypochondriac anxiety as to its symptoms, or gives a tithe 
 of the attention given by ours to the mere quantity of its 
 money; and no one of the leading commercial countries, 
 it must be said, is either so favored by fortune or so con¬ 
 stantly in trouble in this respect. But our excessive sensi¬ 
 tiveness on this point is obstinate: it has apparently been 
 increased by the course of the discussion as to silver, and we 
 are still absolutely unwilling to trust to the operation of 
 natural laws for the adjustment of the amount of our active 
 currency. 
 
 The necessary conclusion from our experience with the 
 legal tender notes plainly is that a government currency, 
 under our conditions, is an unfit subject for national legisla¬ 
 tion. Many subjects required legislation in the heat of civil 
 war, which are recognized as having no place in time of peace; 
 many powers were then called into use from stern necessity, 
 which have been laid aside, like disused weapons consigned to 
 the arsenal. A system which makes the usual legal tender 
 of the country a subject of current legislation risks too much 
 upon the chances of mistake, attack, and uncertainty. It is a 
 familiar and useful practice in our legislative bodies to recog¬ 
 nize some subjects as fitted for treatment by general laws, in 
 order that they may be freed from the uncertainties and may 
 not add to the temptations which beset the work of every 
 legislature. The case of the paper currency of the country is * 
 analogous to this, in that for safety it requires to be placed 
 upon such a basis as shall reduce to the minimum the chances 
 of its coming up for action and shall prevent a constantly 
 recurring anxiety as to its future. 
 
 What happens with a paper legal tender is far different 
 from the course of legislation as to the legal tender coin. 
 With regard to the latter the government fixed its standard 
 and established its system of coinage in 1792, and then found 
 at the most only two occasions for legislation as to other 
 
THE AMERICAN LEGAL TENDER PAPER. 561 
 
 matters than mere detail, until the silver question presented 
 itself in 1878. But the paper legal tender never has been, 
 and it is safe to say never can be, put upon a basis where it 
 can have a like course of freedom from change. Resting 
 purely upon credit, and regarded as a creation of money by 
 mere act of Congress, it steadily invites alteration, the removal 
 of this limit or that, the increase of its amount, or the altera¬ 
 tion of its coin basis. The reserve to be held in the Treasury 
 under any safe adjustment can never fail, from its magnitude/ 
 to attract the covetous gaze of the schemers who throng 
 around the great source of government bounty. In addition 
 to these risks to which the paper legal tender is exposed, 
 it has also to meet those arising from the silver controversy 
 and now threatening the coin. It was well recognized six 
 months ago that in the event of Mr. Bryan’s election the 
 legal tender paper might be suddenly lowered to the silver 
 standard, by the mere substitution of silver redemption for 
 gold, and by mere executive order. It is not fit that the 
 paper currency of the country should thus be kept adrift, 
 or that the people of the country should be called upon period¬ 
 ically to rally for the safety of something which fails of one of 
 its main purposes, if it is not kept free from any suspicion 
 of danger. 
 
 The passage of the Silver Purchase Act of 1890 is a strik¬ 
 ing illustration of the peril of the present situation. Two 
 explanations have been given of the causes which united 
 a majority of both Houses in favor of an act which proposed 
 a steady dilution of the paper currency, involving the ultimate 
 suspension of gold payments and final degradation of our 
 standard to the level of silver. One explanation, current at 
 the time and long afterwards, was to the effect that a majority 
 of both Houses favored the free coinage of silver, that Presi¬ 
 dent Harrison could not be relied upon to veto a bill framed 
 for that purpose, and that the Insane “ experiment ” of buying 
 the domestic product of silver by new issues of paper annually 
 was resorted to as a compromise, in dread of a more rapidly 
 working measure and one which would leave no locus peni- 
 tentice. The other explanation — given in the Senate nearly 
 
562 
 
 ECONOMIC HISTORY. 
 
 a year ago by Senator Teller — was to the effect that the 
 Silver Purchase Act was the consideration for which the 
 silver interest, holding the balance of power in the Senate, 
 was induced to give its support to the Tariff Act of 1890, then 
 on its passage. This statement of the transaction, made by 
 one who did not hesitate to declare himself one of the con¬ 
 tracting parties in the case, has the greater intrinsic proba¬ 
 bility ; but, be that as it may, let the one account or the other 
 be the correct statement, it is true in either case that legisla¬ 
 ture and executive were alike ready to cut the paper currency 
 adrift from the solid standard and to let it float towards 
 depreciation. In the one case this would be for the reason 
 that a sound currency was doomed in any event; and in the 
 other case for the reason that neither Congress nor President 
 regarded its sacrifice as anything more than a proper make¬ 
 weight, to be thrown in for the sake of securing a higher scale 
 of customs duties. 
 
 Is there another country in the world, outside of South 
 America, in which a paper legal tender, with all the pos¬ 
 sibilities implied in its misuse, would be dealt with in this 
 fashion ? The election of 1896 and all that has followed 
 inspires confident hope of a less troubled future ; but, after 
 all, what guarantee have we that the amazing defection of 
 1890 may not be repeated within half a dozen years ? Such 
 an untoward result would mean no greater revolution than 
 that which took place in the half-dozen years ending with 
 1890: indeed, it may be doubted whether in the minds of 
 most men the assurance of safety is not sensibly weaker now 
 than it was before that year. 
 
 The case of 1890 shows the peril that may come from 
 positive action by Congress, and the last three years have 
 shown with equal distinctness the dangers to be feared from 
 its inaction. Since the beginning of 1894 there has been a 
 necessity for the periodical replenishment of the gold reserve. 
 Withdrawals, sometimes for export and sometimes from pre¬ 
 caution, have brought the stock of gold down to the danger 
 point; and it has been filled up by the proceeds of successive 
 loans, amounting to over 8260,000,000. It is immaterial 
 
THE AMERICAN LEGAL TENDER PAPER . 563 
 
 whether the cause of this steady borrowing for the payment 
 of a debt which is not thereby diminished, is to be found in 
 what has been called the 44 endless chain ” of notes redeemed, 
 reissued, again redeemed and again issued, or is to be found 
 in a deficiency of revenue. In either case the evil was fla¬ 
 grant, and it was the business of Congress to apply an appro¬ 
 priate remedy, — by fresh taxation in the one case, or by 
 modifying the system of reissue under the act of 1878 in the 
 other. But it will be within the recollection of every reader 
 that Congress found itself absolutely unable to act. Four 
 times the necessity for borrowing has presented itself, with 
 a suspension of gold payments as the only alternative. On 
 three occasions out of the four Congress was in session at the 
 critical moment; but it uniformly appeared that action was 
 out of the question. Grant that the responsibility for failure 
 lay with a factious few and not with the majority, and the 
 fact still remains that the Congress of the United States was 
 unable to act in an emergency created by its own legislation. 
 It was even unable to apply the palliative of providing for 
 the issue of shorter bonds, bearing a lower rate of interest 
 than those to be issued under the act of 1870, a bill for that 
 purpose passed by the House in 1896 having been converted 
 by the Senate into a bill for the free coinage of silver. For 
 three years, therefore, the credit of the government and the 
 standard of prices and payments have remained, not without 
 defence, — for the executive still performed its duty with the 
 means afforded by the half-forgotten provision in the Re¬ 
 sumption Act, — but so shaken at intervals as to cause constant 
 dread, sometimes nearly degenerating into panic. 
 
 A currency which is exposed to such dangers as these can¬ 
 not be called safe in any proper sense of the word. The 
 wealth of the promissor of the note is unspeakable, but from 
 time to time the application of that wealth in fulfilment of 
 the promise is not beyond question. The power to enforce 
 the legal tender of the note at its face in payment of debt 
 is absolute, but the standard of its value has never been made 
 secure. For thirty-five years the policy of the law in regard 
 to this currency has been uncertain, and the causes of this 
 
564 
 
 ECONOMIC HISTORY. 
 
 uncertainty have gained in strength and multiplied as time 
 has gone on. One ingenious expedient and another is sug¬ 
 gested for regulating the use and redemption of the notes, in 
 the hope of giving them steadiness and securing somewhere 
 a power of control; but there is no escape from the fatal 
 objection, that the direct power of legislation is not only 
 paramount but is beyond the controlling force of any steady 
 political influence. In short, not only is there no guarantee, 
 but there is no probability that the history of these issues, if 
 they continue for another generation, will be any less checkered 
 than it has been in the last. Without dwelling upon such 
 forebodings, however, it is enough to say here that, while the 
 very foundation of all credit is thus left doubtful, neither 
 the credit of the nation nor that of the mass of its citizens 
 can reach its proper strength. None can profit by such un¬ 
 certainty except those whose command of wealth enables 
 them to secure themselves, at the expense of others, against 
 the hazards of the future. 
 
 The necessary alternative to the issue of paper currency 
 by the government is the delegation of this function to banks 
 and the complete substitution of private credit for public as 
 the medium of exchange in domestic operations. A large 
 proportion of these operations are already performed by means 
 of bank credit, with an adjustment to the needs of the day 
 which is nearly automatic; and the only relief from the 
 increasing perils of the present situation is to be found in 
 the same direction. This reliance upon banks would not, 
 necessarily, mean the absorption of the whole right of paper 
 issue by the national banks, although this absorption would 
 have much to recommend it; but it would clearly imply the 
 confinement of the right to banks working under tolerably 
 uniform conditions, as the guarantee of their safety and wide 
 credit, and therefore presumably under some kind of national 
 regulation and supervision. 
 
 Even with the use of bank-notes, then, the paper currency 
 must continue to be a subject of national legislation. There 
 is, however, an important distinction in the kind of legislation 
 
THE AMERICAN LEGAL TENDER PAPER. 565 
 
 called for by government paper and by bank paper respectively, 
 and a great difference in the risks to which we may be exposed 
 in the two cases. Congress has had the national bank system 
 before it, for any necessary legislation, for almost the same 
 length of time as the legal tender issues; but the course of 
 action in the two cases offers no point of resemblance. In¬ 
 consistent and essentially weak as the dealing of Congress 
 with the legal tender issues has been, its legislation as to the 
 banks has on the whole been marked by steady purpose, has 
 tended to complete the original system, and as a general result 
 has materially strengthened it. Deservedly or not, the banks 
 have from the start had abundance of enemies, in Congress 
 and out of it; but the bank legislation if not uniformly wise, 
 has been sparing in amount and usually directed to the 
 details rather than the general structure and credit of the 
 system. Comparison shows clearly that for thirty odd years 
 the legislator has approached bank questions from an entirely 
 different point of view and in a different frame of mind from 
 that which has led him to such unfortunate results in acting 
 upon legal tender notes. He has not felt the same tempta¬ 
 tions, he has not been under the same outside influences, the 
 pressure of the times has not turned his thoughts in the same 
 direction. The fundamental difference in the two cases is no 
 doubt explained by La Rochefoucauld’s familiar maxim, “ that 
 it is easier to be wise for others than to be wise for one’s 
 self.” The legislator has found it congenial and easy to hold 
 others to the strict line of their obligations and of sound 
 public policy, but not so easy to observe this line in .deciding 
 as to what lay within his own hand. His greatest folly in 
 dealing with the banks — the absurd attempt, made by Con¬ 
 gress in 1881 and foiled by the veto of President Hayes, to 
 force a reduction of the interest of bonds held bvthe banks — 
 was after all not a measure of relaxation towards them, but 
 one of severity. 
 
 This natural tendency of Congress, considered merely as a 
 collection of human beings, to exact more from others than 
 from themselves, is undoubtedly strengthened by the kind 
 of presumption established in the popular mind to the dis- 
 
566 
 
 ECONOMIC HISTORY. 
 
 advantage of any corporation, in questions of responsibility or 
 of seeming conflict of interest. The national banks have felt 
 the pressure of this influence against them, in cases where 
 they have sought for changes of legislation which would have 
 been for the general advantage. No doubt in such cases 
 impartiality of judgment would better have befitted the legis¬ 
 lator than unfavorable prepossession; but, after all, can it be 
 doubted that the disposition to say “No” has had an im¬ 
 portant place among the causes for the general steadiness 
 of our bank legislation ? To hold the banks to their obliga¬ 
 tion and to grant them few favors has been the rule, and 
 the existence of any rule analogous to this in dealing 
 with the legal tender issues would have given an entirely 
 different cast to that unfortunate chapter of our history. 
 
 The nations already referred to as able to manage their 
 currencies successfully and quietly have all done this by 
 delegating the power of issue to banks. They have estab¬ 
 lished their banks on different principles, but have agreed in 
 the general policy of throwing upon them certain duties and 
 restricting the field of probable legislation. That their systems 
 have a remarkable steadiness and permanence has already 
 been pointed out. These systems they also strengthen as 
 time goes on, not so much by legislation as by practice, by 
 public opinion, and by the establishment of traditions of duty 
 on the part of the banks themselves. Both in England and 
 in France the legislative power takes distinctly the attitude 
 of observation, towards an establishment which is conducted 
 for private profit, but is intrusted with a quasi public function. 
 In Germany the imperial control of the Reichsbank makes 
 the relation somewhat different, and yet a note circulation of 
 remarkable stability has been built up there on the basis of 
 private capital invested in order to earn a profit. In neither 
 one of the three countries does the regulation of the currency 
 present itself as a subject for ordinary legislation. 
 
 But it is not necessary for the present discussion to enter 
 upor. the general considerations for or against a paper cur¬ 
 rency consisting of bank notes alone; and I shall only call 
 
THE AMERICAN LEGAL TENDER PAPER. 567 
 
 attention here, in conclusion, to the often-repeated argument 
 that a government issue, being a loan without interest, results 
 in a saving to the Treasury which is lost when the right of 
 circulation is delegated to banks. The experience of the 
 United States in the last five years alone presents a complete 
 answer to this penny-wise reasoning. In that space of time 
 the people of the United States have lost by shaken confidence, 
 discouraged enterprise, and the actual ruin of thousands of 
 citizens, resulting from the mismanagement of their currency, 
 an amount beyond all comparison with the annual saving of 
 perhaps 112,000,000 made by them at the Treasury. The 
 thrill of alarm which runs through the country whenever 
 the gold reserve dips too far below the line, or when there 
 is delay or doubt in applying the costly remedy, means a loss 
 to the people to be measured only by scores of millions. The 
 monetary panic of 1893 alone, by its direct results and with¬ 
 out reference to the stagnation which followed it, was enough 
 to counterbalance all savings of interest made by the Treasury 
 in the last twenty years. 
 
 But the question as to the means of securing the safest 
 paper currency is one in which the consequences to the 
 national industry and prosperity are on a scale so vast that 
 any attempt at pecuniary measurement appears irrelevant, — 
 as irrelevant as it would be to draw from the post-office deficit 
 a conclusion as to the maintenance of the postal service by 
 our people. No such calculations are needed to show that 
 our people cannot afford to rest content with a system which 
 their experience for a generation has shown to be radically 
 unsafe. So long as such a system continues, its history must 
 continue to repeat itself. Errors made in the past will be 
 made also by the new men in the future; and the possibility 
 that, in any moment of popular discouragement or passing 
 delusion, some fresh experiment or abandonment of whole¬ 
 some limitation may be resolved upon in haste, but with 
 irreparable results, must continue to be a standing menace 
 to our credit, public and private. 
 
568 
 
 ECONOMIC HISTORY. 
 
 XXI. 
 
 THE AMERICAN IRON INDUSTRY. 
 
 F. W. TAUSSIG. 
 
 From The Quarterly Journal of Economics, Feb. 1900, 
 
 pp. 143-170. 
 
 I N the following pages I propose to consider the growth of 
 the iron industry in the United States during the last 
 thirty years, and the effect on it of the protective duties which 
 have been maintained throughout this period. The rate of 
 growth has been so extraordinary, and has been attended by 
 changes so striking, as to make the mere chronicle an instruc¬ 
 tive chapter in economic history. We see here at work on a 
 huge scale the forces which have transformed modern 
 industry, and get vistas of new social problems, as well as 
 more light on the questions which chiefly engaged the atten¬ 
 tion of economists a generation ago. Both for the interest of 
 the subject itself, and by way of clearing the ground for the 
 discussion of the protective duties, 1 I shall first describe the 
 revolution which has taken place in the American iron and 
 steel industry, proceeding thereafter to those aspects of the 
 industry which are especially connected with the tariff con¬ 
 troversy. 
 
 Thirty years ago Great Britain was still the world’s com¬ 
 manding producer of iron and steel. Notwithstanding half a 
 century or more of almost continuous protection, the United 
 States held but a distant second place. The output of pig iron 
 in the old country in 1870 was very nearly six millions of tons : 
 that in the new country was but little over a million and a half. 
 But between 1860 and 1870 the product in the United States 
 
 1 The Quarterly Journal of Economics, Aug. 1900, pp 475-508. 
 
THE AMERICAN IRON INDUSTRY. 
 
 569 
 
 had doubled, — a geometrical progression, which, if maintained, 
 must soon cause all rivals to be distanced. It is much easier, 
 however, to double a small number or a small output than a 
 large one: the rate of growth in the beginnings of a move¬ 
 ment is rarely maintained for long during its later course. 
 Yet in this case the unexpected happened: for three decades 
 the geometrical progression was maintained in the output of 
 pig iron in the United States. The product of 18T0 had been 
 double that of 1860, 1880 doubled 1870, and 1890 again 
 doubled 1880. The iron industry of Great Britain held its 
 own, and, indeed, between 1870 and 1880 made a notable 
 advance; but it could not match the astounding pace of its 
 young rival. In 1890 the United States turned out more 
 than nine million tons of pig iron, for the first time passing 
 Great Britain, and displacing that country suddenly as the 
 leading producer. The depression which followed the crisis 
 of 1898 caused a sharp decline in the American product, the 
 lowest point being reached in 1894. But with the revival of 
 activity after 1896 the figures again mounted, reaching near 
 twelve millions in 1898, and fourteen millions in 1899. The 
 year 1900 will hardly show a repetition of the feats of the 
 previous decades. The pace of the geometrical progression is 
 too killing to be maintained; yet all present indications are 
 that the close of the decades will show an output beyond the 
 dreams even of five years ago. 1 
 
 This enormous increase, however, has been by no means 
 evenly distributed over the United States. Within the 
 country a revolution has taken place, which is part and parcel 
 of the changed relation to other countries, and which must be 
 followed before the latter can be understood. 
 
 The first great impulse to the production of crude iron on a 
 large scale came in the United States with the successful use 
 of anthracite coal as fuel. During the twenty years preced- 
 
 1 The figures as to the production of iron in the two countries are easily 
 found in the excellent statistical reports prepared for the trade in the two 
 countries, — the Statistical Reports of the British Iron Trade Association, of which 
 Mr. J. S. Jeans has long been secretary, and the Statistical Reports of the Iron 
 and Steel Association, of which Mr. J. M. Swank has been the equally efficient 
 secretary. 
 
570 
 
 ECONOMIC HISTORY. 
 
 ing the Civil War (1840-60) the site of the industry and its 
 growth were governed by this fuel. 1 Hence eastern Pennsyl¬ 
 vania was the main producing district. The supplies of ore 
 near this region were smelted with its anthracite coal, and 
 Philadelphia was the central market. Proximity to the sea¬ 
 board made foreign competition easy, except so far as it was 
 hampered by the tariff duties; and the very existence of the 
 iron industry was felt to depend on the maintenance of pro¬ 
 tection. For some time after the close of the Civil War this 
 dominant position of anthracite iron was maintained. In 
 1872, when the systematic collection of detailed statistics 
 began, out of a total production of 2,500,000 tons, one-half 
 was smelted with anthracite coal, a third with bituminous 
 coal or coke, the remainder with wood (charcoal). The use 
 of soft coal, which had begun before 1860, became rapidly 
 greater. Already in 1872 it was important; and from year 
 to year it grew. In the periodic oscillations between activity 
 and depression, which mark the iron trade more distinctively 
 than any other industry, anthracite iron shrank sensitively in 
 the slack periods, and barely regained its own in the succeed¬ 
 ing periods of expansion. Bituminous or coke iron, on the 
 other hand, held its own during the hard times, and advanced 
 by leaps and bounds with each revival of activity. In 1875 
 for the first time its output exceeded that of the rival eastern 
 fuel, and since that date the huge advance in the iron product 
 of the United States has been dependent on the use of coke. 
 Indeed, the use of anthracite alone began to shrink at a com¬ 
 paratively early date. It soon ceased to be used on any large 
 scale as the sole fuel, coke being mixed with it for use in the 
 blast-furnace. The production of iron with anthracite coal 
 only has shrunk to insignificant dimensions. What is classed 
 as “ anthracite iron” is smelted with a mixture of coke and 
 hard coal; and, even with the aid of the coke, this means of 
 reducing the ore has come to be of less and less importance. 
 Virtually, anthracite coal has been displaced as an iron-making 
 fuel. 
 
 1 For an account of the industry during this period I refer to my Tariff 
 History of the United States, pp. 123-135. 
 
THE AMERICAN IRON INDUSTRY. 
 
 571 
 
 This change is easy of explanation. It is the inevitable 
 result of the greater plenty and effectiveness of coke; and it 
 has been powerfully promoted by the rapid development of the 
 United States west of the Appalachian chain, and the near¬ 
 ness of the coke region to this growing market. Anthracite, 
 at best, is an obdurate fuel. At the same time its strictly 
 limited supply, and the cleanliness and freedom from smoke 
 which make it an ideal domestic fuel, have maintained its price 
 at a comparatively even level. On the other hand, the almost 
 unlimited supplies of bituminous coal and the feverish compe¬ 
 tition in opening coal lands and marketing their product have 
 caused an almost uninterrupted fall in its price. Coke has 
 proved, ton for ton, a better fuel' than anthracite: the supplies 
 of bituminous coal available for coking are virtually limitless; 
 and the processes of coking have been applied on a huge scale 
 and with tireless energy. 
 
 Pittsburg, long ago seen to be destined to become a great 
 iron centre is situated in the heart of the region where 
 coking coal is plentiful. To this point the iron industry has con¬ 
 verged, attracted first by cheap fuel, and soon by other geo¬ 
 graphical advantages of the region, — its easy access to the 
 growing western country, and the added opportunities of 
 securing super-abundant quantities of the best ore. Pennsyl¬ 
 vania has remained the greatest iron-producing State in the 
 Union; but since 1880 it has been western Pennsylvania, and 
 no longer eastern, which has secured to the State its leading 
 position. Since 1890 this district alone has yielded steadily 
 forty per cent, of the enormous iron product in the country; 
 and it is here, and in the other western districts in which the 
 same industrial forces have been at work, that we have to 
 study the conditions on which the growth of the iron industry 
 has depended. 
 
 The westward movement has been spoken of in the preced¬ 
 ing paragraph as affected by the geographical distribution of 
 the fuel. But it has been no less affected by the distribution of 
 the ore supply ; and the effect of this in turn has rested on the 
 revolution wrought in the iron trade by the Bessemer process. 
 
572 
 
 ECONOMIC HISTORY. 
 
 The first inventions which made plentiful the iron indis¬ 
 pensable for all our material civilization were Cort’s processes 
 for puddling and rolling. Through the first three-quarters of 
 the century this was the mode in which the world got its 
 supply of the metal in tough form, usable where heavy strain 
 must come on it. The processes involved at once a consider¬ 
 able plant, complex machinery, and strenuous exertion by 
 skilled and powerful laborers,—conditions which during this 
 period promoted the supremacy of the British iron trade. In 
 the decade 1860-70 the process devised by Sir Henry 
 Bessemer, to which his name attaches, began a second revolu¬ 
 tion in the iron trade. That process involves a still larger 
 plant and still more elaborate machinery; and it applies 
 machinery more fully to the elimination and subsequent 
 replacing of the carbon on which the toughness of the iron 
 depends. By the new methods the production of mild steel — 
 that is, tough iron — became possible on a vastly greater 
 scale. Bessemer steel has displaced puddled iron in most of 
 its uses. Not only this: the cheap and abundant supply, 
 besides filling needs previously existing, has opened vistas for 
 new plant, machinery, durable instruments of production of 
 all sorts. The first great application of the method was to 
 rails, where the elastic and impact-sustaining steel enabled 
 railway engines and cars to be doubled and quadrupled 
 in size, and to become more efficient in even greater ratio. 
 Gradually and steadily, new and wider uses were found for 
 the cheap steel. From great ships down to every-day nails, 
 almost every iron instrument became cheaper and better. 
 Wood was supplanted by steel for a variety of uses, and the 
 slow-growing and easily exhausted stores of timber were re¬ 
 enforced by the well-nigh limitless deposits of ore in the 
 earth’s crust. A new domain in nature’s forces was opened to 
 man. 
 
 But the Bessemer process depends for its availability on 
 special kinds of ore and pig iron, — such as are well-nigh free 
 from sulphur and especially from phosphorus. Variants of 
 the process, free from this limitation, have indeed been 
 applied on a great scale, especially in Germany, where 
 
THE AMERICAN IRON INDUSTRY . 
 
 573 
 
 supplies of non-phosphoric ore are not readily available. 
 But the original Bessemer process remains the most effective 
 and the most economical. Ores adapted to it have hence be¬ 
 come doubly valuable, and the accessible parts of the earth 
 have been scoured to find them. The deposits of Great 
 Britain in Cumberland and Lancashire contained important 
 supplies, yet not in quantity adequate to the new demand: 
 and the Spanish fields of Bilboa, on the Bay of Biscay, have 
 become an indispensable supplement for the British iron¬ 
 masters. In the United States, also, some of the sources 
 previously used in the region east of the Appalachian chain 
 proved to be available, — such as the famed deposits, once 
 unique in their ease of working, in the Cornwall hills of 
 eastern Pennsylvania. But the greater part of the eastern 
 ores were too highly charged with phosphorus, or for other 
 reasons unavailable. Here, as in Great Britain, a distant 
 source of supply was turned to. The Lake Superior iron 
 region, long known to explorers and geologists, suddenly 
 sprang into commanding place. Here were abundant and 
 super-abundant supplies of rich and properly constituted ore. 
 These and the equally abundant coal of Pennsylvania were 
 brought together, the iron made from them was converted 
 into steel by the Bessemer process ; and thus only became 
 possible the astounding growth in the production of iron and 
 steel in the United States. 
 
 The iron mines of the Lake Superior region stretch in 
 widely separated fields along the lake, jrom the middle of its 
 southern shore to its extreme north-western end. Intercalated 
 between them is the great copper-bearing peninsula, whose 
 rich yield of that metal has affected the copper trade in the 
 same manner and almost in the same degree as the iron 
 mines have the iron trade. At the extreme eastern end is the 
 Menominee iron field, usually described in connection with 
 the other Lake Superior fields, yet differing from them in 
 important respects. The ore of the Menominee district is 
 easily mined ; and it is easily shipped, finding an outlet by the 
 port of Escanaba on Lake Michigan, and thus traversing a 
 much shorter journey to its Eastern markets than that from 
 
574 
 
 ECONOMIC HISTORY. 
 
 the Lake Superior mines proper. But it is usually of non- 
 Bessemer quality, and hence can play no considerable part in 
 the most characteristic effects of the new developments. The 
 great Bessemer ore fields of Lake Superior are four in 
 number: in geographical order from east to west, the Mar¬ 
 quette, the Gogebic, and the neighboring Vermilion and 
 Mesabi. As it happens, the geographical order has been also, 
 in the main, the order of exploitation. The easternmost, the 
 Marquette, finding its outlet by the port of that name, was the 
 first to be worked on a great scale. Even before the Civil 
 War, mining and smelting had begun; and, as the Bessemer 
 process was more and more largely used, especially after 1878, 
 it was exploited on a larger and larger scale. Here began 
 the digging on a great scale, and the transportation to great 
 distance, of Bessemer ore. After a considerable interval the 
 second field, the Gogebic, began to be worked, in 1884. 
 Lying some two 'hundred miles further west, along the 
 boundary line between Wisconsin and Michigan, and finding 
 its outlet by Ashland, on the southern shore of Lake Superior, 
 here was found perhaps the richest and purest Bessemer ore. 
 At about the same time, in 1884, began the development 
 of the most distant of the fields, the Vermilion, lying to the 
 north of the extreme end of Lake Superior, in the State of 
 Minnesota, close to the Canada frontier. Here, too, were 
 great stores of rich Bessemer ore, shipped by the port of 
 Two Harbors, on the northern shore of the lake. 
 
 In all these fields the ore has been secured by what we 
 commonly think of as “ mining,” — by digging into the 
 bowels of the earth, and bringing the material up from a 
 greater or less depth. But in very recent years the latest 
 and now the most important of the fields has given oppor¬ 
 tunity for the simplest and cheapest form of mining: great 
 bodies of ore are lying close under the ground, and, when 
 once the surface glacial drift has been removed, obtainable 
 by simple digging and shovelling, as from a clay pit. 1 Along 
 
 1 It should be noted that in the Marquette region, also, the iron ore was 
 secured at the first working and for many years thereafter by open cuts. But the 
 extraction of ore on a great scale has proceeded by underground operations. 
 
THE AMERICAN IRON INDUSTRY- 
 
 515 
 
 the Mesabi 1 range of hills, lying about one hundred miles 
 north-west of the end of Lake Superior, distant not many 
 miles from the Yermilion range, vast tracts of rich iron ore, 
 finely comminuted and easily worked, lie close to the surface. 
 Here a new source of supply was added, offering unique op¬ 
 portunities for exploitation on a great scale. These oppor¬ 
 tunities were availed of with astounding quickness. The 
 Mesabi field at once sprang into the front rank among the 
 Lake Superior fields, and, indeed, among all the iron-ore 
 fields of the world. Ten years ago the region was a trackless 
 waste. In 1892 it was opened by railway. Towns sprang 
 up, huge steam-shovels attacked the precious ore, and long 
 trains carried it to the newly constructed docks at the.port 
 of Duluth. Even during the depression that followed the 
 crisis of 1893 the output from this field mounted year by 
 year. In 1893, virtually the first year of operation, 600,000 
 tons were shipped from it; in 1894, thrice that amount; and 
 in 1895 it became, what it has since remained, the most pro¬ 
 ductive of the iron-mining districts. A little less than half 
 of the ore is of Bessemer grade. Its physical constitution, 
 moreover, is such that, for advantageous use in the furnace, 
 other ore needs to be mixed with it. Were it all of the prized 
 Bessemer quality, and in the best form, the other fields might 
 be entirely displaced. With the limitations in the quality of 
 the new ore, the other fields still find themselves able to hold 
 their own in the market, though their supremacy is ended by 
 the favored rival. 
 
 For many years the Lake Superior mines have been the 
 main sources of supply for the iron ore of the American iron 
 industry. More than half of the total supply has here been 
 secured; and the Bessemer supply, which has been by far 
 the most effective and significant part of the total, has come 
 mainly from this region. 2 
 
 1 Variously spelled: Mesabi, Mesaba, Messabi, Messaba. 
 
 2 The United States Geological Survey, in its successive admirable Reports on 
 the Mineral Resources of the United States, has followed the history of the iron 
 fields of Lake Superior, as, indeed, of all the mineral resources of the country. 
 In the issue for 1895-96 (forming vol. iii. of the Seventeenth Annual Report of the 
 Survey) a summary description is given, with convenient sketch maps showing 
 
576 
 
 ECONOMIC HISTORY . 
 
 In this brief description of the Lake Superior iron region, 
 reference has been made to the ports by which the ore is 
 shipped, — Escanaba, Marquette, Ashland, Duluth, Two Har¬ 
 bors. To each of these the ore must be carried by rail from 
 the mines, — sometimes a few miles, sometimes, as with a 
 large part of the Minnesota supplies, a hundred and more. 
 And, with this first movement, only the beginning is made in 
 its long journey. From the shipping port it is carried east¬ 
 ward by water to meet the coal, — the coal being coked at the 
 mines, and in that form made best available for smelting pur¬ 
 poses. Some of the ore goes down Lake Michigan to Chicago, 
 where it meets the coal from Pennsylvania about half-way. 
 Some of it goes farther, through Lakes Huron and Erie, and 
 meets the coal at Toledo, Ashtabula, Cleveland, and other 
 ports on Lake Erie. The largest part is unloaded from the 
 vessels at lake ports, and carried by rail to the heart of the 
 Pittsburg coal district, there to be smelted by the coal on its 
 own ground. No small amount goes even beyond,—to the 
 eastward in Pennsylvania, beyond the Pittsburg district, even 
 into New Jersey and New York, almost to the seaboard itself. 
 Hence the cities of Erie and Buffalo have become important 
 ore-receiving ports on Lake Erie, the ore, if not smelted there, 
 going thence by rail on its journey to the smelter. This last 
 and farthest invasion of distant regions by the Lake Superior 
 ore has been promoted by the import duty on the competing 
 foreign ore which seeks to find an entrance by the Atlantic 
 seaboard, — an aspect of the iron trade of which more will be 
 said in the second part of this paper. 1 
 
 The iron-producing region which depends on the Lake 
 Superior ores thus stretches over a wide district, the ex¬ 
 treme ends being separated more than a thousand miles. 
 Close by the iron mines are a number of charcoal-using fur¬ 
 naces in Wisconsin and Michigan. The still unexhausted 
 forests of these States supply this fuel in abundance; and 
 
 the location of the several fields. In Cassier’s Magazine for October, 1899, 
 Messrs. J. and A. P. Head, two English engineers, published an excellent brief 
 account of the Lake Superior mines, and of the modes of working them. 
 
 1 The Quarterly Journal of Economics, Aug. 1900, pp. 475-508. 
 
4 
 
 
 THE AMERICAN IRON INDUSTRY. 577 
 
 charcoal iron, though long supplanted for most uses by the 
 coke-smelted rival, has qualities which enable a limited sup¬ 
 ply to find a market, even at a relatively high price. Next in 
 order come Chicago (South Chicago) and some neighboring 
 cities, among which Milwaukee in Wisconsin and Joliet in 
 Illinois are the most notable. It is one of the surprises of 
 American industry that iron manufacturing on a huge scale 
 should be undertaken at such points, distant alike from ore 
 and from coal, and having no natural advantages whatever. 
 The coke is moved hundreds of miles by rail from Pennsyl¬ 
 vania, and meets the ore which has travelled no less a dis¬ 
 tance from Lake Superior. Ease of access to the western 
 market gives these sites an advantage, or at least goes to 
 offset the disadvantage of the longer railway haul of the fuel. 
 Other iron-producing points of the same sort are scattered 
 along Lake Erie. At each of the ports of Toledo, Lorain, 
 Ashtabula, Erie, Buffalo, especially Cleveland, ore is smelted, 
 and iron and steel making is carried on. But the coal region 
 itself — western Pennsylvania and the adjacent parts of Ohio 
 — remain the heart and centre of the iron industry. Hither 
 most of the ore is carried; and here the operations of smelt¬ 
 ing, converting into steel, fashioning the steel into rails, 
 bridges, plates, wire, nails, structural forms for building, are 
 performed on the greatest scale. For some years the natural 
 gas of this region added to its advantages and aided in its ex¬ 
 ceptionally rapid growth. But each supply of gas exhausted 
 itself before long, and new discoveries did not maintain the 
 inflowing volume at its first level. It was the abundant and 
 excellent coal which formed the sure basis of the manufactur¬ 
 ing industries, and the permanent foundation more especially 
 of iron and steel making. 
 
 Whether the ore goes to the coal or the coal meets the ore 
 half-way, one or both must travel a long journey, by land as 
 well as by water. One or both must be laden and unladen 
 several times. A carriage of 800, 900, over 1,000 miles 
 must be achieved, with two separate hauls by rail. Fifty 
 years ago, even twenty years ago, it would have seemed well- 
 nigh impossible to accomplish this on a great scale and with 
 
 37 
 
573 
 
 ECONOMIC HISTORY. 
 
 great cheapness. The geographical conditions on which a 
 large iron industry must rest were supposed by Jevons in 
 1866 to be the contiguity of iron and coal. 1 But here are 
 supplies of the two minerals separated by a thousand miles of 
 land and water, and combined for iron-making on the largest 
 scale known in the world’s history. One of the most sagacious 
 of American students of economics, Albert Gallatin, early 
 predicted that the coal area of western Pennsylvania would 
 become the foundation of a great iron industry, and that only 
 with its development would the American iron manufacture 
 attain a large independent growth. 2 But he could not dream 
 that his prophecy would be fulfilled by the utilization of ores 
 distant fifteen hundred miles from the seaboard, transported 
 from a region which was in his day, and remained for half a 
 century after his day, an unexplored wilderness. 
 
 The history of the American iron trade in the last thirty 
 years is thus in no small part a history of transportation. 
 The cheap carriage of the ore and coal has been the indis¬ 
 pensable condition of the smelting of the one by the other. 
 And, clearly, this factor has not been peculiar to the iron 
 industry. The perfecting of transportation has been almost 
 the most remarkable of the mechanical triumphs of the United 
 States. Great as have been the evils of our railway methods, 
 disheartening as have been some of the results of unfettered 
 competition, the efficiency of the railways has been brought 
 to a point not approached elsewhere, largely in consequence 
 of that very competition whose ill effects have been so often 
 and so justly dwelt on. The good has come with the evil; 
 and here, as in the whole domain of private property and com¬ 
 petitive industry, the crucial problem is how to eradicate the 
 ill and yet maintain the good. In the carriage of iron ore 
 and of coal, the methods of railway transportation developed 
 under the stress of eager competition have been utilized to 
 the utmost; and the same is true of the transfer from rail to 
 ship and from ship to rail again, of the carriage in the ship 
 
 1 Jevons, The Coal Question, second edition, chap. xv. 
 
 2 Albert Gallatin, Memorial to the Free Trade Convention (1832), as reprinted 
 in State Papers and Speeches on the Tariff, pp. 19, 180. 
 
THE AMERICAN IRON INDUSTRY. 
 
 579 
 
 itself, and of the handling of accumulated piles of the two 
 materials. The ore is loaded to cars at the mines by me¬ 
 chanical appliances. At the Mesabi mines the very steam- 
 shovel that digs the ore from the ground deposits it in the 
 adjacent car. At the lake, high ore-docks protrude hundreds 
 of yards into the water. On top of them run the trains, the 
 ore dropping by gravity from openings in the car-bottoms 
 into the pockets of the docks. Thence it drops again through 
 long ducts into the waiting vessels, ranged below alongside 
 the dock. At every step direct manual labor is avoided, and 
 machines and machine-like devices enable huge quantities of 
 ore to be moved at a cost astonishingly low. The vessels 
 themselves, constructed for the service, carry the maximum 
 of cargo for the minimum of expense ; while the machinery 
 for rapid loading and unloading reduces to the shortest the 
 non-earning time of lying at the docks. At the other end of 
 the water carriage, especially on Lake Erie, similar highly 
 developed mechanical appliances transfer from boat to rail¬ 
 way car again, or, at will, to the piles where stocks are accu¬ 
 mulated for the winter months of closed navigation. At either 
 end the railway has been raised to the maximum of efficiency 
 for the rapid and economical carriage of bulky freight. What 
 has been done for grain, for cotton, for coal, for all the great 
 staples, has been done here also, and here perhaps more 
 effectively than anywhere else: the plant has been made 
 larger and stronger, the paying weight increased in proportion 
 to the dead weight, the ton-mile expense lessened by heavier 
 rails, larger engines, longer trains, and easier grades, the 
 mechanism for loading, unloading, transshipping perfected to 
 the last degree, or to what seems the last degree until yet 
 another stage towards perfection is invented. And evidently 
 here, as elsewhere, the process has been powerfully promoted 
 by unhampered trade over a vast territory, and the conse¬ 
 quent certainty that costly apparatus for lengthened transpor¬ 
 tation will never be shorn of its effectiveness by a restriction 
 in the distant market. 
 
 Still another factor has been at work in the iron trade, as it 
 has in other great industries, — the march of production to a 
 
580 
 
 ECONOMIC HISTORY. 
 
 greater and greater scale, and the combination of connected 
 industries into great single-managed systems. Nothing is 
 more wonderful in the industrial history of the past genera¬ 
 tion than the new vista opened as to the possibilities of organ¬ 
 ization. The splitting up among different individuals and 
 separate establishments of the successive steps in a com¬ 
 plicated industry — those of the mining, carrying, smelting, 
 rolling, fashioning of iron — was supposed to be due to the 
 limitations of human brain and energy: the management of 
 them all was beyond the physical and nervous capacity of 
 any one man or of any small group of associates. But the 
 range of single management, the size of the unit, have en¬ 
 larged prodigiously. The increasing application of machinery 
 has made it possible to reduce operations more and more to 
 routine and system, and to lessen the need of independent 
 judgment for every step. Technological education has sup¬ 
 plied an array of trained, intelligent, and trustworthy assist¬ 
 ants,— engineers, chemists, mineralogists, electricians, — to 
 whom can be delegated a multitude of steps and processes 
 that formerly needed the watchful eye of the master himself. 
 That master must possess new powers and new resources; 
 and the freedom of the modern industrial community, and 
 especially the free atmosphere of our restless and reckless 
 democracy, have stimulated and drawn forth the masterful 
 minds from every social stratum. Hence in all directions we 
 see combinations which unite in one whole a number of asso¬ 
 ciated industries, and, at their best, secure the highest indus¬ 
 trial efficiency. At their best; for only then are the gains 
 permanently secured. The retribution for error in manage¬ 
 ment is as great as are the rewards of success ; and judgment 
 has become the most highly prized and highly paid human 
 talent. 
 
 The iron trade has shown as markedly as any of the great 
 industries the signs and effects of these new conditions. Not 
 only has the size of individual establishments grown, — this 
 is a phenomenon of long standing, — but the number of in¬ 
 dustries united in one organization has rapidly enlarged. 
 Iron mines, coal mines, coke ovens, railways, steamers, docks, 
 
THE AMERICAN IRON INDUSTRY. 
 
 581 
 
 smelting works, converting works, rolling-mills, steel-works, 
 machine-shops,—these have been combined into one impos¬ 
 ing complex. The great iron and steel companies operate 
 iron mines on Lake Superior, coal mines and coke establish¬ 
 ments in Pennsylvania, docks and railways, as well as iron 
 and steel works proper. The largest of them, the Carnegie 
 Company, has built a railway of its own, specially equipped 
 for the massive and cheap carriage of ore and fuel, from the 
 shore of Lake Erie to the Pittsburg coal district. At its ter¬ 
 minus on Lake Erie (Conneaut) a new harbor and a new city 
 have been created. The economy in production from such 
 widely ramifying organizations is not merely or chiefly in dis¬ 
 pensing with the services and saving the gains of so many 
 independent middlemen : it arises mainly from consistent 
 planning of every stage, the nice intercalation of operations, 
 the sweeping introduction from end to end of expensive 
 and rapid-working machinery, continuously supplied under 
 homogeneous administration with the huge quantities of 
 material which alone make possible effective and economical 
 utilization of the great plant. 1 
 
 1 Among the great iron and steel enterprises may be noted the following : — 
 
 The Carnegie Company, in form an unincorporated partnership, having no 
 shares listed on exchanges or publicly dealt in, has grown from comparatively 
 small beginnings to huge dimensions, its capitalization being supposed to be 
 $200,000,000. It owns or controls the most productive mines of the Gogebic and 
 Mesabi regions, part of the mines in the Vermilion range, and mines also in the 
 Marquette range. Railways, docks, and a fleet of steamers on the lakes are 
 under its control. Its railway from Lake Erie at Conneaut to Pittsburg, equipped 
 in the most solid manner for transporting ore, fuel, and iron, carries freight at 
 rates which are in the lowest range of rates per ton-mile among American rail¬ 
 ways. Its iron and steel works are at various points centering about Pittsburg. 
 It owns the greater part of the coal lands and coke plants in the Connellsville 
 district. 
 
 The Federal Steel Company, a New Jersey corporation, with a capital of 
 $200,000,000, half preferred, half common, is the greatest rival of the Carnegie 
 Company on Lake Superior. It owns mines in the Mesabi range and in the 
 Vermilion range, with a railway of its own leading to both. It has also a fleet 
 of steamers on the lakes, the great works of the Illinois Steel Company (of which 
 mainly it is the successor) at Chicago, Milwaukee, and Joliet, a considerable 
 railway of its own about Chicago, works at Lorain, Ohio (on Lake Erie), and at 
 Johnstown, Pa. 
 
 The American Steel and Wire Company, also a New Jersey corporation, with 
 
582 
 
 ECONOMIC HISTORY. 
 
 It is not within the scope of the present paper to weigh the 
 advantages or disadvantages of this mode of organizing in¬ 
 dustry. It may bring the community face to face with the 
 conditions of established monopoly, or, more probably, in this 
 industry at least, may mean simply a farther stage in the de¬ 
 velopment of great-scale production. It may prove, in the 
 combinations of the last year or two, to have been carried so 
 far as to transcend the bounds of human capacity, and may 
 therefore portend a series of break-downs, and the subsequent 
 sub-division and reseparation of the component industries. 
 Whether in its social aspects or in its prospects of permanent 
 productive efficiency, we must await further experience before 
 knowing what gains and losses will accrue, what problems must 
 be faced. But it is clear that great organizations of the pro¬ 
 ductive forces — even though perhaps not so huge as some of 
 those launched of late years—are to be permanent factors in 
 the conduct of many industries, and of the iron industry 
 among them. And it is clear, also, that the movement is not 
 peculiar to the iron trade, and points to no forces specially 
 aroused in the protected industries. Whether in the cheapen¬ 
 ing of transportation, in the advance of the technical arts, in 
 the organization and management of great consolidations, the 
 forces have been such as directed American manufacturing 
 and mechanical industry at large, and indeed have been at 
 
 a capital of $90,000,000, owns mines in the Marquette and Mesabi regions, coal 
 lands and coke ovens, iron and steel works at Cleveland and Pittsburg, and a 
 large number of rod and wire mills scattered over the country from Massachusetts 
 to Missouri. 
 
 Other very large enterprises are the Republic Iron and Steel Company (capi¬ 
 tal, $55,000,000) and the National Steel Company, capital about $60,000,000), 
 both with widely ramifying operations. More concentrated in their operations 
 but still on a great scale, are the Bethlehem Steel, the Cambria Steel, the Penn¬ 
 sylvania Steel, and the Lackawana Iron and Steel Companies. 
 
 Of a different type are certain corporations to which the term “trust ” more 
 specially applies, attempting as they do to control the entire production of cer¬ 
 tain articles. Among these are the Americau Tin Plate, the American Steel 
 Hoop, the National Tube Companies. 
 
 [Most of the corporations above enumerated were combined in the United 
 States Steel Corporation, on February 25, 1901. Cf. C. F. Meade’s “The 
 Amalgamated Association, in The Quarterly Journal of Economics, November, 
 1901, pp. 60-68.] 
 
THE AMERICAN IRON INDUSTRY. 583 
 
 i * . 
 
 work in greater or less degree in all the countries of advanced 
 civilization. 
 
 While the Lake Superior ores, utilized under the conditions 
 just described, have been by far the most important source of 
 supply for the iron industry, a large contribution has come 
 from another source, also, — from the Southern States. 
 
 In the region where the States of Tennessee, Alabama, and 
 Georgia adjoin, the conditions once thought indispensable for 
 a flourishing iron industry exist in perfection. Here are great 
 deposits of ore, easy of working; and close by them great de¬ 
 posits of coking coal, no less easily worked. Before the Civil 
 War, these natural advantages were not utilized : the regime 
 of slavery and the lack of means of transportation prevented 
 any resort to them. But with the quickening of the industrial 
 life of the South, when once the Civil War and the trying 
 days of reconstruction were passed, the mineral resources of 
 this region were developed on a rapidly enlarging scale. 
 Alabama, where the best deposits of coal occur, became a 
 great iron-producing State: here again, though for a less dis¬ 
 tance and on a smaller scale, the ore made its journey to the 
 coal. The rate of growth was most rapid between 1880 and 
 1890: the pig-iron output of Alabama rose from 69,000 tons 
 in 1880 to 915,000 in 1890. The large supply of labor at low 
 wages has contributed to the easy and profitable utilization 
 of this source of supply. The free negro has turned miner, 
 and has proved not only a docile laborer, but also, — paid, as 
 miners are, according to the tonnage brought to the pit’s 
 mouth, •— on the whole, an efficient one. It may be a ques¬ 
 tion how far the low-money wages paid to him are low simply 
 in proportion to his still moderate efficiency, and how far they 
 constitute a factor of real importance in enabling the product 
 to be put on the market at a low price. The favorable natu¬ 
 ral conditions, when once unlocked by the regime of freedom 
 and the means of transportation that came with it, doubtless 
 constitute the main basis for the growth of the Alabama iron 
 industry. There are other aspects of it which deserve the 
 attentive consideration of the student of social questions, — 
 
584 
 
 ECONOMIC HISTORY. 
 
 the conduct and the prospects of the negroes suddenly herded 
 together in the mining regions, and the relations of the two 
 races under the new conditions. But these are matters that 
 lie apart from the present inquiry. For good or ill — doubt¬ 
 less, mainly for good — the Southern iron has taken its place 
 as an important part of the iron supply, with the same rapid¬ 
 ity, though with no such dramatic features, as that smelted in 
 Pennsylvania from the Lake Superior ores. 
 
 The Southern ore contains phosphorus in too large amounts 
 to make it available for the Bessemer process; and this has 
 given it a place somewhat apart in the iron industry of the 
 country. The iron made from it has not competed with that 
 from the Lake Superior ore, and has been used chiefly for 
 general foundry purposes. Marketed at a very low price, the 
 increasing supplies have made their way to places further and 
 further removed. Pittsburg itself soon used Alabama iron for 
 foundry purposes; the Western States and the Eastern alike 
 were supplied ; in New England it displaced Scotch pig, pre¬ 
 viously imported in considerable quantity; and, finally, it 
 began to be exported to England itself. These exports are 
 probably not of importance in the permanent current of trade : 
 the iron has gone out chiefly in a period of unusually depressed 
 prices, and even at this time only as ballast for cotton ships. 
 Beyond this strictly limited movement we shall probably see 
 the export of iron from the United States, not in its crude 
 form, but in much more advanced stages. But this is a sub¬ 
 ject for later consideration. It suffices to note here that the 
 possibility of export, even at nominal rates of freight and in 
 times of exceptionally low prices, shows how vastly changed 
 are the conditions from those of thirty years ago. 
 
 The outcome of the great changes in the geographical dis¬ 
 tribution of the iron industry is shown in the tabular state¬ 
 ment on the next page. 
 
 In the Eastern District the output, notwithstanding a great 
 increase in the period for which the year 1890 stands, has 
 
 barely held its own. The total production in 1895-98 was 
 
 % 
 
 not sensibly greater than in 1872. On the other hand, the 
 Central District has increased its production steadily and 
 
THE AMERICAN IRON INDUSTRY. 
 
 585 
 
 enormously, whether in western Pennsylvania itself or in the 
 neighboring States of Ohio, Indiana, Illinois. This is the 
 region where Lake Superior ore is smelted with Pittsburg 
 coal: in and about Pittsburg itself, in the immediately adja¬ 
 cent parts of Ohio, and at the various lake cities where the 
 
 PRODUCTION OF PIG IRON IN THE UNITED STATES. 1 
 
 (In thousands of gross tons.) 
 
 
 1872. 
 
 1880. 
 
 1885. 
 
 1890. 
 
 1895. 
 
 1898. 
 
 Eastern District (eastern Penn¬ 
 sylvania, New York, New 
 Jersey). 
 
 1,217 
 
 1,610 
 
 1,312 
 
 2,342 
 
 1,390 
 
 1,431 
 
 Western Pennsylvania alone . 
 
 387 
 
 772 
 
 1,081 
 
 2,661 
 
 3,549 
 
 4,435 
 
 Central District (western Penn¬ 
 sylvania and also Ohio, In¬ 
 diana, Illinois). 
 
 849 
 
 1,502 
 
 1,874 
 
 4,517 
 
 6,019 
 
 7,787 
 
 Southern District (Alabama, 
 Georgia, Tennessee, Virginia, 
 Maryland). 
 
 127 
 
 238 
 
 639 
 
 1,554 
 
 1,491 
 
 1,785 
 
 Other States. 
 
 356 
 
 485 
 
 319 
 
 790 
 
 546 
 
 770 
 
 Total for the United States . . 
 
 2,549 
 
 3,835 
 
 4,044 
 
 9,203 
 
 9,446 
 
 11,773 
 
 ore meets the coal, — Cleveland, Toledo, Chicago, and the 
 rest. Not less striking is the rate of growth in the Southern 
 District, of which Alabama is the most important State. 
 While the total production here is far outweighed by that in 
 the Central District, it now exceeds that in the East, and 
 bids fair to continue to do so. 
 
 \ 
 
 Before we close this review of the forces which have been 
 at work in the iron industry, some other aspects of the sub¬ 
 ject deserve brief attention. Here, as elsewhere, the labor 
 situation and the trade-union movement have had their in¬ 
 fluence. But the power of the labor unions among the iron 
 
 1 In this table the figure for eastern Pennsylvania is for the iron smelted in 
 the State with anthracite, or anthracite and coke mixed, while that for western 
 Pennsylvania is for the bituminous (coke) iron. 
 
586 
 
 ECONOMIC HISTORY. 
 
 workers has been less in the United States than in Great 
 Britain ; and this fact has been of no small consequence. It 
 is true that the Amalgamated Association of Iron and Steel 
 Workers has long been a firm and powerful organization, 
 modelled on the British unions and strong in its bargaining 
 with the employers. 1 But some of the large iron and steel 
 establishments have been non-union; and their competition, 
 as well as the example they set of a possible cutting-loose 
 from the organized laborers, imposed a strong check on the 
 union’s control of the conditions of employment. The largest 
 of the American establishments, the Carnegie Company, thus 
 cut loose from the union, as a consequence of the great strike 
 — fairly a pitched battle —at the Homestead works in 1892. 
 The consequence has been that the American iron and steel 
 master has felt more free than his British rival to push on 
 with new processes, to remodel his organization, to readjust 
 his labor force. 
 
 No doubt, in the talk of the average business man, there is 
 much exaggeration of the dictates of labor unions, and many 
 an impossible claim to attend to his own affairs in his own 
 way. But, on the other hand, whatever may be one’s sympa¬ 
 thy with labor organizations, it is not to be denied that a 
 firmly organized trade-union tends to present a stolid opposi¬ 
 tion to change and to improvements. This is but human 
 nature. The first effect of a new machine or a better rear¬ 
 rangement is to displace or discommode some laborers; while 
 the disposition to “ make work,” however disavowed overtly, 
 is too deep-rooted to permit labor-saving changes to be made 
 without strong though silent opposition. Even where no 
 open resistance is offered, the mere existence of a strong and 
 all-inclusive union, not to be fought without heavy loss, has 
 often a benumbing influence, preventing the very considera¬ 
 tion of radical changes, and keeping industry in its estab¬ 
 lished grooves. Such has been one of the effects of the 
 strong organization of English iron workmen (the engineers); 
 and the great strike between them and their employers in 
 
 1 See the account of the organization, by Carroll D. Wright, in The Quarterly 
 Journal of Economics, vol. vii. p. 400 (July, 1893). 
 
THE AMERICAN IRON INDUSTRY. 
 
 587 
 
 1898 was at bottom due to this consequence of their strength. 
 For good or ill the American iron industry has been compara¬ 
 tively free from this benumbing influence. For good, in that 
 the advance of the art of production has been unrestrained; 
 for ill, in that the workman, as is inevitable when standing 
 alone, has bargained on unequal terms with a powerful em¬ 
 ployer, and has been compelled often to accede to long hours 
 and harsh conditions. 
 
 One other of the social aspects in the growth of the iron 
 industry deserves attention: its connection with the coal 
 trade, and with some of the labor problems that have arisen 
 in that allied industry. The dominant position of the Pitts¬ 
 burg coal district has been repeatedly referred to in the pre¬ 
 ceding pages. For the iron trade the most important section 
 of that district is the famed Connellsville coke region, lying 
 some fifty miles south of Pittsburg, along the banks of the 
 Yougliiogheny River. Here is a level and uniform outcrop of 
 the best coking coal; and from this has come most of the 
 coke used in smelting Lake Superior ores, and, indeed, the 
 greater part of that used in the United States. Important 
 supplies have come also from other near-by regions in Penn¬ 
 sylvania and West Virginia; and Alabama has made from 
 her own coal the coke for smelting her iron. But the Con¬ 
 nellsville coke is by far the most important contributor, and 
 alone supplies more than half of the total used in the country. 
 
 The price of coke has gone down markedly in the last 
 twenty years, in sympathy with the price of bituminous coal 
 generally. Thirty years ago coke at the ovens was sold for 
 $3 a ton. In recent years the price has been on the average 
 not far from 11.50 a ton, and in times of depression less than 
 81 a ton. Fuel has been turned out for the American iron¬ 
 master at prices lower than those paid by his rivals in any 
 part of the world; while low rates of transportation have 
 enabled the cheap fuel to be carried to furnaces near and dis¬ 
 tant, without the loss of this cardinal advantage. 
 
 Here, as in the mining and transportation of the ore, and 
 in the practice at the furnace and the mill, cheapness has been 
 secured, but by methods that are, in part at least, vitally dif- 
 
588 
 
 ECONOMIC HISTORY. 
 
 ferent. There has been, indeed, the same bold adventure in 
 opening new sources of supply, the same conduct of indus¬ 
 try on a great scale, the same firm organization in direct 
 connection with the iron and steel industries. But the nature 
 of the operations caused cheapness to be attained at the coal 
 mines and coke ovens, not only by machinery and organiza¬ 
 tion, but also, to no small extent, by cheap labor. The min¬ 
 ing of coal is mainly pick-and-shovel work, requiring little 
 handicraft skill or trained intelligence ; and this is still more 
 true of the work at the coke ovens. The coal mines of the 
 United States have drawn to themselves the lowest and poorest 
 kinds of manual labor ; except, indeed, where machines for 
 cutting the coal have proved applicable, and skilled and intelli¬ 
 gent mechanics have consequently been called on to work 
 them. The miners in England seem to have maintained a 
 better relative position. Their trade organization has been 
 strong, the standard of living and of efficiency comparatively 
 high. In the United States multitudes of newly arrived im¬ 
 migrants have been drawn to the mines, partly through de¬ 
 liberate arrangement by the employers, partly through the 
 silent adjustment of supply to demand. There they have 
 huddled, inert, stolid, half-enslaved. The nationalities that 
 have contributed of late years so heavily to our immigration 
 
 — the Italians, Bohemians, Hungarians, Poles, and what not 
 
 — have here found employment such as they could at once 
 turn to. In times of activity their condition is passable, and 
 doubtless better than it had been in their homes beyond the 
 sea. In times of depression and low prices the barest living 
 is all they can secure, and sometimes not that. The Ameri¬ 
 can or Americanized laborers of higher standards have met a 
 disheartening competition, and have vainly tried to stem the 
 tide of falling wages and half-employment, with the attendant 
 misery, strikes, riots, bloodshed. 1 
 
 Here once more we touch phenomena that lie mainly out- 
 
 1 See, among others, the article by J. E. George, in The Quarterly Journal oj 
 Economics, vol. xiii. pp. 186, 447 (January and July, 1898). Compare with the 
 same writer’s more recent articles in the Jahrbilcher Jur Nationaloekonomie, vol. 
 xviii. Nos. 4, 5. The similar conditions in the anthracite region are described by 
 G. 0. Virtue in the Bulletin of the Department of Labor for November, 1897. 
 
THE AMERICAN IRON INDUSTRY. 
 
 589 
 
 side the scope of the present inquiry. The growth of the coal 
 industry is a subject by itself, presenting peculiarities of its 
 own. “ Overproduction ” has been its constant cry ; and un¬ 
 deniably there has been a pressure on the market of a large 
 and constantly enlarging supply of coal. The continued open¬ 
 ing of new mines, with all the chances of reaping a fortune 
 from the combination of mining and railway ventures, has 
 proceeded with feverish and excessive activity ; and, certainly, 
 it is this gilded opportunity which has caused the systematic 
 agglomeration of cheap labor in the bituminous coal districts 
 the country over. It may be, also, that, even under condi¬ 
 tions of comparative stability (as in the anthracite regions, 
 where no new fields are available), the nature of the indus¬ 
 try, the extreme difficulty of stopping a mine when once in 
 operation, the strong inducement to work it continuously at 
 its maximum capacity, — such causes as these may lead in¬ 
 evitably and recurrently to mounting output and cut-throat 
 competition. Both sets of causes probably have been at work 
 in bringing about the special severity of periods of depression 
 in the coal and coke districts. 
 
 At all events, a bitter competition has intensified the evil 
 social conditions which must emerge where great masses of 
 ignorant laborers are congested in out-of-the-way places. 
 Truck-shops, low wages, semi-feudal conditions, cheap coal, 
 have meant a cheap man. At the iron mines the conditions 
 seem to have favored the better mode of securing cheapness, — 
 vigorous and intelligent labor, using highly elaborated machin¬ 
 ery. Such, too, has been, in greater degree at least than at 
 the coal mines, the direction in which improvement has 
 marched in the railways, on the vessels, at the docks, in the 
 iron and steel works. But at the very foundation of the 
 industry, at the coal mine and the coke oven, we have a 
 social sore. Perhaps it is but temporary: this great and 
 vigorous organism of ours may absorb the foul matter, even 
 though it be steadily fed from without by new accretions. 
 But foul it is, and remains. When Jevons, a generation ago, 
 surveyed, doubtless with some excess of pessimism, the coal 
 trade of Great Britain, he warned his countrymen that their 
 
590 
 
 ECONOMIC HISTORY. 
 
 great structure of material wealth rested on a foundation of 
 brutislmess and pauperism. 1 We have been wont to thank 
 God that we are not as other peoples. But the plague is on 
 us also; and we, too, must face the social responsibilities it 
 involves. 
 
 Thus the growth of the iron industry illustrates all the ex¬ 
 tremes of the industrial revolution which has taken place in 
 the United States since the Civil War. Unfettered enterprise, 
 unrestrained competition, have worked their utmost. The 
 eager search for new resources in the earth’s crust has gone 
 on with feverish haste. The march of the arts has led to 
 unceasingly wider utilization of the forces of nature. Produc¬ 
 tion on the great scale has advanced, until the huge enter¬ 
 prises seem almost ready to crush the foundations on which 
 they rest or topple over of their own weight. Fabulous riches, 
 and misery and squalor most abject, alike have come with 
 this marvellous transformation; and the twentieth century 
 dawns with new conditions, new problems, new duties. 
 
 1 The Coal Question (1866), Preface, p. xxiii. 
 
LE XIX* SIECLE. 
 
 591 
 
 XXII. 
 
 LE XIX e SIECLE. 
 
 G. de MOLINARI. 
 
 From Journal des Economistes, 15 janv. 1901, pp. 5-19. 
 
 I 
 
 L E trait caracttristique du siecle qui vient de finir, ce qui 
 ^ le distingue de tous ceux qui Font prtctdt, c’est le dt- 
 veloppement extraordinaire de la puissance productive de 
 Fhomme. Par la conquOte et l’asservissement des forces 
 mtcaniques et chimiques, ajouttes ou substitutes a sa force 
 physique dans F oeuvre de la production, il a pu augmenter, 
 dans des proportions qui eussent semblt autrefois invraisem- 
 blables, les mattriaux de la vie. On aura une idte de ce progrts, 
 accompli surtoufc dans la seconde moitit du sitcle, en consul- 
 tant les tableaux de l’accroissement de la richesse aux Etats- 
 Unis, c’est-El-dire dans le pays ou Findustrie est arrivte a son 
 plus haut point de productivity. Tandis qu’en 1850 la rich¬ 
 esse de l’Union amtricaine n’ttait tvalute qu’a 7 milliards 135 
 millions de dollars, soit a 308 dollars par ttte, elle s’tlevait, 
 d’aprts le dernier recensement de 1900, a 90 milliards, soit a 
 1.180 dollars par tete. Dans la derni&re dtcade seule, Faug- 
 mentation avait ttt de 35 milliards, — une somme de rich- 
 esses plus considerable, au dire du D r Powers, que celle que le 
 continent amtricain tout entier avait pu accumuler depuis la 
 dtcouverte de Christophe Colomb jusqu’au commencement de 
 la guerre de la Secession. II y a sans doute quelque chose h 
 rabattre dans cette statistique americaine, et nous devons con¬ 
 fessor, en toute humility, que la richesse de l’Europe n’a pas 
 fait depuis un demi-sibcle une aussi prodigieuse enjambte; 
 mais nous pouvons conjecturer, d’aprbs les chiffres du rende- 
 
592 
 
 ECONOMIC HISTORY. 
 
 ment dcs impots, sans parler d’autres indices, que dans tous 
 les pays ou le vieil outillage de la production industrielle et 
 agricole a dtd transforme et renouvele, la richesse s’est accrue 
 dans une proportion au moins double de celle de l’augmenta- 
 tion de la population, malgrd les charges et les obstacles de 
 tous genres que les vices et l’ignorance des gouvernements 
 aussi bien que ceux des gouvernds opposent a son ddveloppe- 
 ment naturel et rdgulier. 
 
 On s’expliquera ce phdnomdne, si l’on songe a la somme 
 dnorme de travail a bon marchd que nous ont procurde l’in- 
 vention et les perfectionnements successifs de la machine a 
 vapeur. On estime au plus bas mot que le travail d’un cheval- 
 vapeur dquivaut a celui de 10 hommes. Or, la statistique 
 officielle nous apprend que le nombre des chevaux-vapeur 
 s’est dlevd en France de 60.000 en 1840 k 6.800.000 en 1897. 
 C’est done une somme de travail dgal a celle de 63 millions 
 d’hommes qui a dtd mise au service de l’industrie frangaise. 
 Et non seulement ce travail est plus dconomique de tout la 
 diffdrence du prix de la houille, nourriture de la machine, et 
 de celui de l’alimentation vdgetale ou animale de l’homme, 
 mais encore il ddveloppe une puissance et obtient des rdsultats 
 qu’aucun ddploiement de forces humaines ne pourrait at- 
 teindre. On aurait beau accumuler une masse de travail 
 lmmain ddcuple de celle de la machine d’un train express, 
 c’est a peine si l’on obtiendrait une vitesse dix fois moindre. 
 Et en supposant que des milliers d’hommes echelonnds a portae 
 de la voix fussent employes a transmettre un message, leur 
 travail serait impuissant k rivaliser de vitesse avec celui du 
 tdldgraphe, tout en coutant des milliers de fois plus cher. 
 
 Mais l’accroissement de la quantity des produits et des ser¬ 
 vices qui constituent la richesse n’a pas dtd le seul ni peut- 
 dtre m^rne le plus important rdsultat de la transformation de 
 la machinerie de l’industrie ; elle en a eu deux autres d’une 
 portde superieure, en dlevant la nature du travail rdservd k 
 rhomme dans l’ceuvre de la production, et en Cendant avec 
 la sphere des ^changes celle de la solidarity humaine. 
 
 Les machines ne fournissent qu’un travail materiel dont les 
 operations doivent dtre dirigdes ou tout au moins surveilldes 
 
LE XIX e SlECLE. 
 
 593 
 
 par l’intelligence de l’homme. Si elles le dispensent d’un 
 effort physique, elles exigent une application constante de sa 
 force intellectuelle et elles engagent souvent au plus haut 
 degrd sa responsabilitd morale. Un conducteur de locomotive 
 et un aiguilleur, par exemple, ne ddpensent dans leur journde 
 qu’une faible somme de force physique, mais leur attention 
 doit etre appliqude sans rel&che a l’opdration qui leur est con¬ 
 fide. Si leur intelligence n’y est pas suffisamment tendue, 
 s’ils n’ont qu’a un faible degrd le sentiment de leur responsa¬ 
 bilitd, ce ddfaut d’application a leur devoir peut causer la 
 perte de centaines de vies, sans parler des dommages pure- 
 ment matdriels. Mais l’exercice de l’intelligence et de la res¬ 
 ponsabilitd ont pour effet naturel de ddvelopper les facultds 
 mises en oeuvre, et c’est ainsi que le niveau intellectuel et 
 moral des ouvriers qui dirigent ou surveillent le travail des 
 machines apparait dans toutes les branches d’industrie que le 
 progrds a touchdes comme manifestement supdrieur a celui 
 des simples manoeuvres qui font l’office de machines. 
 
 Le progrds industriel n’a done pas eu seulement pour effet 
 d’augmenter la quantitd des produits, il a dleve, pour ainsi 
 dire, la qualite des producteurs. II a eu encore un autre 
 effet, non moins bienfaisant, c’est d’dtendre et de multiplier 
 les liens de solidaritd entre les homines. Dans les sidcles qui 
 ont prdcdde le notre, la splidre de la solidaritd ne depassait 
 gudre les frontieres des Etats. Les membres de chaque na¬ 
 tion formaient une socidtd d’assurance mutuelle contre le 
 risque d’invasion et de pillage, quand ils n’dtaient pas eux- 
 memes envahisseurs et pillards. S’ils dtaient intdressds a la 
 prospdritd les uns des autres, ils ne l’dtaient point a celle 
 des membres des autres nations. Ils avaient, au contraire, 
 intdrdt a la diminution des forces et des ressources des peuples 
 avec lesquels ils dtaient continuellement en guerre. Cet dtat 
 de choses a changd, la solidaritd a succddd a l’antagonisme, 
 lorsque les dchanges ont associd les interdts des individus ap- 
 partenant a des nations diffdrentes. Or, c’est l’accroissement 
 de la productivitd de l’industrie qui a provoqud en la ndeessi- 
 tant l’extension de la sphere des dchanges. Lorsque le tra¬ 
 vail, assiste par une machinerie de plus en plus puissante,— 
 
594 
 
 ECONOMIC HISTORY. 
 
 et pour emprunter un exemple au rapport de Michel Chevalier 
 sur l’Exposition de 1867, lorsque l’introduction du moteur 
 circulaire a porte de 80 a 480.000 le nombre de mailles qui 
 peuvent etre confectionn^es en une minute dans la fabrication 
 des tricots, — le marclie local a cesse de suffire a cette produc¬ 
 tion exub^rante, il a fallu agrandir son debouche, et il en a 
 etd ainsi dans toutes les industries ou le travail a la machine 
 se subs tit uait au travail a la main. Alors, pour rdpondre a 
 ce besoin d’extension des marches s’est produite une demande 
 extraordinaire de progrds des mojens de communication. Les 
 inventeurs, utilisant les ddcouvertes de la science, se sont ap¬ 
 pliques a satisfaire a cette demande; la vapeur, puis l’dlec- 
 tricitd ont dtd employees h surmonter l’obstacle des distances. 
 780.000 kilometres de chemins de fer, 1.800.000 kilometres de 
 lignes tdlegraphiques, construits presque en totalitd dans la 
 seconde moitie du sifecle, des lignes de navigation a vapeur qui 
 dtablissent des communications rdgulieres entre les parties les 
 plus dloigndes du globe ont commence P oeuvre de Purification 
 des marches des produits, des capitaux et du travail. 
 
 Malgre les obstacles que cette extension de la sphere des 
 ^changes a rencontres dans les interets attaches a l’ancien 
 etat des choses, elle se poursuit avec une force d’impulsion 
 irresistible, et on peut deja en apprdcier la portae finale en 
 comparant l’etat de developpement des rapports economiques 
 des nations au debut et a la fin du sifecle. 
 
 Nous n’avons que des donnees partielles et incertaines sur 
 le commerce exterieur des nations civilisees dans les siecles 
 precedents; nous savons seulement que le commerce de l’An- 
 gleterre en 1800 n’atteignait pas 2 milliards de francs 1 et que 
 celui des autres nations reunies s’eievait a peine a ce chiffre; 
 en sorte que le commerce du monde civilise tout entier ne 
 depassait pas le commerce actuel de la Belgique. M. Levas- 
 seur l’evaluait dernierement a 87 milliards pour la periode 
 1894-95, 2 c’est-ft-dire qu’il aurait au moins vingtupie dans le 
 cours du siecle. Le commerce international des capitaux ne 
 s’est pas moins developpe que celui des produits. La statis- 
 
 1 30.570.000 liv. st. a l’importation et 43.152.000 liv. st. a l’exportation. 
 
 2 L’injluence des voies de communication au xix* siecle, par E. Levasseur, p. 12. 
 
LE XIX' SlECLE. 
 
 595 
 
 tique ne nous fournit, a la v6rit6, aucune donn^e sur la pro¬ 
 duction du capital dans la periode qui a prdc^de l’avbnement 
 de la grande industrie, et elle ne nous renseigne encore que 
 d’une manidre approximative sur son importance actuelle. 
 M. Robert Giffen a y valuy a 200 millions sterl. — 5 milliards de 
 francs — le montant de Fepargne annuelle du Royaume-Uni, 
 ce qui est peut-^tre excessif. Mais on peut affirmer avec cer¬ 
 titude que la productivity de l’epargne s’est accrue avec celle 
 de l’industrie, et on sait que les pays ou la production des 
 capitaux s’est particuli£rement dyvelopp^e, l’Angleterre, la 
 France, la Belgique, la Suisse, l’Allemagne, en fournissent des 
 quantit^s croissantes au reste du monde. La transformation 
 de l’outillage de la production industrielle et agricole, sans 
 oublier celle du matyriel de guerre, maritime et terrestre, en 
 a demande des quantitys ynormes, surtout dans le dernier 
 quart de stecle. Seule, la construction des cliemins de fer en 
 a absorby environ 200 milliards. Mais, non moins que Im¬ 
 portation des produits, celle des capitaux crye et multiplie les 
 liens de solidarity entre les peuples. Les pays importateurs 
 de capitaux sont intyressys a la prospyrity de ceux qui les 
 produisent, afin de les obtenir en abondance et a bon marchy, 
 les pays exportateurs le sont plus encore a celle de leurs 
 dybiteurs. 
 
 Le dyveloppement de la production, dyterminy par la crea¬ 
 tion d’une machinerie a la fois plus puissante et plus econo- 
 mique, a elargi aussi, quoique dans une proportion moindre, 
 les dybouchys du travail. La population s’est accrue dans la 
 mesure de l’extension de son debouchy; elle a doubly en 
 Europe dans le cours du xix e si£cle, et elle a fourni, en outre, 
 a Immigration un contingent qui a dypassy en une seule annye 
 celui qu’elle lui fournissait auparavant en un stecle. De 
 10.000 individus en 1820, immigration s’est yievye a 871.000 
 en 1887 et, en l’espace de quatre-vingts ans, elle n’a pas porty 
 moins de 15 millions d’hommes de race blanche dans les 
 autres parties du globe. Ces ymigrants ont fycondy par leur 
 travail et acquis au domaine de la civilisation d’immenses ry> 
 gions, dont les ressources naturelles demeuraient improduc- 
 tives; ils ont fait souche de peuples nouveaux, approvisionny 
 
596 
 
 ECONOMIC HISTORY. 
 
 1’Europe de matieres premieres et de demies alimentaires, 
 agraudi les debouches de son industrie et btendu, avec la 
 sphere de Exchange, celle de la solidarity des interets. 
 
 Telle a etb l’oeuvre capitale du xix e sibcle, et la meilleure 
 
 * 
 
 part de son actif. A des Etats isolbs et politiquement liostiles, 
 il a commence a, substituer des nations bconomiquement unies 
 par les liens de plus en plus nombreux et series de l’bchange. 
 Et cette extension de la sphere de Exchange a eu, en merne 
 temps, pour rbsultat d’internationaliser le progrbs lui-meme. 
 Toutes les nations se trouvant dbsormais en concurrence, leurs 
 industries sont obligees de s’assimiler tous les progrbs rbalisbs 
 ailleurs, sous peine d’etre exelues du marchb gbnbral, et merne 
 de leur propre marchb. Au commencement du siecle ces 
 progrbs qui multipliaient les produits en abaissant les frais de 
 la production btaient, pour ainsi dire, le monopole de l’Angle- 
 terre. Apres s’etre efforcbs de se protbger contre eux, par les 
 barrieres de la douane, les industries du continent out com- 
 pris la nbcessitb de les imiter, et c’est ainsi que les produits 
 manufactures de la France, de la Suisse et, en dernier lieu, 
 de l’Allemagne, ont rbussi, grace au stimulant de la concur¬ 
 rence britannique, a depasser en quantitbs croissantes les 
 frontieres du marchb national. 
 
 Aujourd’hui a surgi un nouveau concurrent, l’industrie amb- 
 ricaine, armbe de machines-outils qui abaissent encore les prix 
 de revient, demain surgira peut-etre la concurrence chinoise, 
 dont la bienfaisante influence s’ajoutera h celle de la concur¬ 
 rence ambricaine pour provoquer en Europe un mouvement 
 de rbforme des impedimenta politiques, fiscaux, protection- 
 nistes, qui blbvent artificiellement le prix des matbriaux de la 
 vie. 
 
 Avons-nous besoin d’ajouter que des sibcles se passeront 
 avant que l’humanitb soit exposbe a produire plus qu’elle ne 
 peut consommer. Malgrb l’essor que la conqubte d’un contin¬ 
 gent colossal de forces naturelles est en train d’imprimer a sa 
 capacitb productive, l’humanitb est encore pauvre, tres pauvre, 
 et il faudra que sa production annuelle soit au moins dbcuplbe 
 pour lui assurer une modeste aisance. 
 
 Mais c’est seulement par l’extension de l’organisme de la 
 
LE XIX* SlECLE. 
 
 597 
 
 production et de l’^change que le travail, assists des forces de 
 la nature, pourra satisfaire avec une abondance de plus en plus 
 grande les besoins, encore aujourd’hui si incompl&tement des- 
 servis, de la consommation. Or cet organisme est d’une sen¬ 
 sibility extreme, et a mesure qu’il s’ytend et solidarise des 
 intdrets plus noinbreux dans les diff^rentes parties du globe, 
 les causes de perturbation, telles que les guerres et les autres 
 calamites dues aux vices et a Fignorance des gouvernements 
 et des individus, qui se manifestent sur un point du marchd 
 agrandi des y changes, se r^percutent sur tous les autres. Ces 
 causes de desordre et de mine n’ont pas cessd de se multiplier 
 et meme de s’aggraver dans le cours du si^cle, et, en regard 
 des progres qui constituent son actif, elles ont produit un 
 passif qui a absorb^, sinon la totality, au moins une part trop 
 considyrable de cet actif de progres. 
 
 ii 
 
 II semblerait que l’accroissement extraordinaire du com¬ 
 merce international, en dyveloppant entre les peuples la solid¬ 
 arity des intyrets et en augmentant, par la meme, le besoin de 
 la paix, eut du rendre les guerres plus rares. On pouvait 
 d’autant plus se bercer de cette espyrance que les progres de 
 l’industrie augmentaient chaque jour le nombre et la richesse 
 de la classe dirigeante de la production et lui valaient une 
 part d’influence plus considyrable dans le gouvernement des 
 Etats. Cependant, il n*en a pas yty ainsi. Les guerres n’ont 
 pas yty moins nombreuses au xix e sifecle, et elles ont yty bien 
 autrement destructives et couteuses qu’elles ne l’avaient yty 
 au xvm e . 
 
 Nous ne possydons pas le compte des vies humaines que la 
 guerre a consommees depuis les dernibres anises du rkgne de 
 Louis XIV jusqu’a la Ryvolution frangaise, mais c’est le porter 
 fort haut que de Fyvaluer a un million. Les armyes ytaient 
 alors peu nombreuses et les difficultys du recrutement obli- 
 geaient les gynyraux h, mynager la vie de leurs soldats. La 
 Ryvolution a changy cet ytat de choses en mettant & la dis¬ 
 position des chefs des armyes rypublicaines ou impyriales 
 
598 
 
 ECONOMIC HISTORY. 
 
 un nombre illimite de rdquisitionnaires ou de consents. Ils 
 ont obtenu ainsi un avantage d^cisif sur leurs adversaires, 
 accoutumds aux pratiques de l’ancien systkme, et Ton sait que 
 Moreau qualifiait Napoleon de vainqueur a raison de 10.000 
 liommes par lieure. Le peu de ddveloppement du credit pub¬ 
 lic obligeait de meme les gouvernements a limiter leurs arme- 
 ments, et a conclure la paix aussitot que leur tr^sor etait 
 ^puise. La faible augmentation des dettes publiques dans le 
 cours du xvm e si£cle nous fournit a cet dgard une indication 
 positive. D’aprks une statistique dress^e par Dudley-Baxter, 
 elles ne se seraient accrues que de 5 milliards dans la pdriode 
 de 1715 a 1793 1 ; mais, a dater de cette dpoque, on voit l’in- 
 dustrie destructive de la guerre prendre un essor plus pro- 
 digieux encore que celui des industries productives. Les 
 guerres de la Revolution et de 1’Empire consommkrent en¬ 
 viron 5 millions d’hommes; et ce compte s’est particulRre- 
 ment accru dans la seconde moitie du sikcle. En additionnant 
 les victimes de la guerre depuis la Revolution, on est arrive au 
 monstrueux total de 9.840.000, prfes de 120 millions pour les 
 pays appartenant a notre civilisation. La consommation des 
 capitaux a progresse plus rapidement encore que celle des 
 liommes. En sus des depenses couvertes annuellement par 
 l’impot, la guerre et la paix armee, autrement dit la prepara¬ 
 tion & la guerre, ont participe pour cent milliards, au plus bas 
 mot, a l’augmentation des dettes publiques dans le cours du 
 stecle. 
 
 Cependant, ce qui etait jadis la raison d’etre de la guerre a 
 cesse d’exister. Aussi longtemps que les peuples civilises 
 ont ete menaces de destruction ou tout au moins de deposses¬ 
 sion par les invasions des barbares, la guerre a ete une neces- 
 site. Car il fallait bien s’assurer contre un peril toujours 
 imminent et inevitable. 
 
 Mais grace aux progres du materiel et de l’art de la de¬ 
 struction — et ces progres n’ont pas ete, pour le dire en pas¬ 
 sant, moins utiles que ceux du materiel et des arts de la 
 production — ce peril a disparu. Les peuples civilises enva- 
 hissent au contraire et s’approprient les regions occupees 
 
 1 Dudley Baxter, National Debts. 
 
LE XIX* SltiCLE. 
 
 599 
 
 par lenrs anciens envahisseurs. La guerre ne s’impose plus 
 a eux. Elle depend de leur volonte. 
 
 II s’agit done de savoir s’ils ont encore int^ret a la youloir. 
 Get intergt existait sans aucun doute pour les aristocraties 
 qui trouvaient dans la conquete d’un Etat ou d’une province 
 un supplement de serfs ou de sujets qui leur fournissaient, 
 par les corv^es les redevances ou les impots, un supplement 
 de revenus. Mais que peut bien rapporter la conquete de la 
 province ou de l’Etat le plus riche a une nation qui demande 
 ses moyens de subsistance non plus au pillage ou k l’exploita- 
 tion du travail de ses esclaves, de ses serfs ou de ses sujets, 
 mais a la culture de son sol et a la pratique honn£te de son 
 industrie ? . L’exp^rience de toutes les guerres qui ont ravage 
 le monde dans le cours de ce si&cle n’a-t-elle pas attests qu’elles 
 ont coute aux vainqueurs plus qu’elles ne leur ont rapports ? 
 Comment done s’expliquer que des etres pourvus de raison 
 et sachant compter continuent & pratiquer une industrie qui 
 travaille a perte ? Ce serait 1& sans doute un phdnomene inex¬ 
 plicable, et une aberration du ressort des m^decins alienistes 
 si les producteurs — chefs d’industrie, capitalistes et ouvriers 
 qui paient les frais de toutes les guerres, poss^daient dans 
 le gouvernement des nations une influence pr^ponderante. 
 Mais, en depit des revolutions, des unifications et des con¬ 
 stitutions politiques qui ont eu pour objet d’affranchir les 
 nations de l’exploitation d’une caste nationale ou etrang&re, 
 la forme de leurs gouvernements seule a change, le fond est 
 demeure le m$me. Les intents particuliers n’ont pas cesse 
 de se coaliser pour faire la loi k l’inter^t general. Et dans 
 toute l’Europe les intents engages dans la conservation de 
 l’etat de guerre, intents militaires et politiques, sont de- 
 meures preponderants. Les armees et les fonctions pub- 
 liques qui etaient sous l’ancien regime l’unique debouche de la 
 classe gouvernante, n’ont pas cesse d’etre considers comme 
 superieures aux autres emplois de l’activite humaine. Elies 
 attirent encore de preference les rejetons de l’ancienne classe 
 dominante avec les parvenus de la nouvelle, et constituent un 
 puissant faisceau d’interets, aussi bien dans la plupart des 
 republiques que dans les monarchies. Or, la guerre etant 
 
600 
 
 ECONOMIC HISTORY. 
 
 aujourd’hui comme elle l’ytait jadis une source de profits et 
 d’honneurs pour les militaires professionnels, il est naturel 
 qu’ils y poussent. “ Connaissez-vous bien mon arm^e, disait 
 Napoleon ? C’est un chancre qui me d^vorerait, si je ne lui 
 donnais de la pature 1 ! ” 
 
 * _ 
 
 Cette pature, les d^tenteurs du pouvoir, chefs d’Etats et 
 politicians, sont d’autant plus disposes & la lui donner que la 
 guerre fait taire les oppositions et ajourne, sauf a les aggraver 
 plus tard, les difficultes int^rieures. On s’explique done que 
 la guerre ait surv^cu aux pdrils qui mena 9 aient la civilisation, 
 et il y a grande apparence qu’elle leur survivra aussi long- 
 temps .que cette industrie destructive disposera d’une influ¬ 
 ence politique sup^rieure a celle des industries productives 
 qui en supportent les frais et les dommages. On s’explique 
 aussi que Faccroissement extraordinaire de la productivity de 
 l’industrie, en augmentant la richesse et la puissance des 
 nations, ait d^terminy un dyveloppement correspondant des 
 appareils de guerre. Du moment ou le risque de guerre sub- 
 siste et peut dchoir du jour au lendemain, sous la pression 
 d’intyrets qui demandent une pature, il faut bien s’armer 
 contre ce risque, opposer a l’ennemi une puissance destructive 
 au moins dgale a la sienne et, par consyquent, l’augmenter 
 dans la proportion des forces et des ressources que cryent et 
 dyveloppent les progrks de l’industrie. Cette proportion, le 
 rygime de la paix armye Fa certainement atteinte aujourd’hui 
 en Europe, s’il ne 1’a point dypassye. 
 
 Ces ynormes effectifs que nycessite le rygime de la paix 
 armye ne peuvent, d’ailleurs, sous peine de se rouiller, de- 
 meurer toujours inactifs. Un chomage trop prolongy dytd- 
 riore les ateliers de la destruction aussi bien que ceux de la 
 production. La guerre est nycessaire a la santy des armyes. 
 Aussi enseigne-t-on dans les ycoles militaires que chaque gyn- 
 dration doit avoir la sienne. Mais les dettes publiques se sont 
 tellement alourdies et le prix de revient d’une guerre entre 
 des nations ygales en puissance s’est tellement accru, qu’il est 
 devenu de plus en plus difficile de donner satisfaction aux 
 professionnels de Fart. Qu’a-t-on fait ? On a remplacy, dans 
 
 1 Henri Welschlinger, Journal des Debats , 14 juillet 1900. 
 
LE XIX e SIECLE. 
 
 601 
 
 ce dernier quart de sidcle, les guerres, ddsormais trop cou- 
 teuses entre les nations civilisdes, par des guerres de conquete, 
 d’exploitation ou de rapine, en dehors du domaine de la civ¬ 
 ilisation. Les gouvernements europdens se sont partagd 
 l’Afrique et ils mettent aujourd’hui la Chine au pillage, sous 
 prdtexte d’ouvrir de nouveaux ddbouchds a l’industrie et de 
 faire participer les negres, sans oublier les Chinois, aux bien- 
 faits de notre civilisation. Mais il suffit d’additionner et de 
 comparer les frais de conqugte et de conservation des coLonies, 
 des protectorats et des zones d’influence avec les profits qu’en 
 tirent l’industrie et le commerce, pour §tre ddifid sur la valeur 
 de ce prdtexte. La conqudte, rassujettissement, l’exploitation 
 fiscale et protectionniste n’ont pas la vertu d’dtendre les dd- 
 bouchds de l’industrie et du commerce. Ils contribuent plutot 
 a les resserrer en augmentant les charges quo les budgets de 
 la guerre, de la marine et des colonies font peser sur toutes 
 les branches de la production. Quant a la civilisation, est-ce 
 bien par le massacre et le pillage qu’on peut en faire apprdcier 
 les bienfaits aux “ Barbares ” ? 
 
 Aux frais d’armement hors de toute proportion avec les 
 besoins reels de sdcurite des peuples civilises, aux guerres 
 engagdes pour donner satisfaction a des intdrets de caste, de 
 parti ou de dynastie, il faut ajouter, dans la colonne du passif 
 du xix e sidcle, une augmentation continue du prix des ser¬ 
 vices sur lesquels les gouvernements font main basse aux dd- 
 pens de l’activitd privde, et les frais d’un systdme de prdtendue 
 protection de l’industrie qui ne rdtribue aucun service. 
 
 Les rdvolutions et les rdformes politiques qui ont eu pour 
 objet d’enlever aux oligarchies nobiliares et cldricales de 
 l’ancien rdgime le monopole du gouvernement des nations n’ont 
 eu, en fait, d’autres rdsultats que d’dtendre successivement ce 
 monopole, et de confdrer ainsi a une classe de plus en plus 
 nombreuse le pouvoir et l’influence naturellement attachds & 
 la possession de l’Etat. Les fonctions qui servaient de dd- 
 bouchds a l’ancienne classe gouvernante n’ont plus suffi & la 
 nouvelle. Il a fallu les multiplier pour satisfaire a l’accroisse- 
 ment de la demande. L’extension des attributions de l’Etat 
 est devenue par consdquent une ndcessitd politique. En vain, 
 
602 
 
 ECONOMIC HISTORY. 
 
 les dconomistes, gens naifs et incapables d’apprdcier ce genre 
 de ndcessitd, se sont dvertuds & ddmontrer que les produits et 
 les services de l’Etat reviennent plus cher aux consommateurs 
 que ceux de l’industrie privde; que les fonctionnaires de 
 l’Etat sont plus raal recrutds, moins laborieux et moins servi- 
 ables que ceux des entreprises par-ticulieres, rien n’y a fait. 
 Sous la pression irresistible des influences dlectorales et autres, 
 l’Etat a dtendu ses attributions et multiplid ses fonctionnaires, 
 et les petits Etats municipaux, ddpartementaux ou provin- 
 ciaux ont suivi partout Pexemple du grand. Pour ne citer que 
 la France, le nombre des fonctionnaires publics de tout ordre 
 s’y est elevd, dans le cours du sidcle, de 60.000 a 400.000, et 
 l’dtatisme va, de m§me, se propageant dans les autres pays, 
 sans excepter l’Angleterre, a mesure que l’extension de la 
 classe gouvernante augmente la demande des places. 
 
 Aux benefices provenant du monopole des fonctions pub- 
 liques se joignaient, sous l’ancien regime, ceux des privileges 
 en matiere d’impots et des redevances fdodales. Ces privi¬ 
 leges et ces redevances, apres avoir dtd abolis sous leurs 
 anciennes formes, ont peu a pcu reparu, sous d’autres formes 
 adaptdes aux intdrets dominants. Les impots indirects et les 
 monopoles qui pesent principalement sur les couches politique- 
 ment les moins influentes de la population, et qui ne ligur- 
 aient en France que pour un tiers dans le budget des recettes, 
 ont atteint successivement la proportion des deux tiers. Les 
 droits de douane que le traits de 1786 avait abaissds, sous 
 l’influence des doctrines libdrales, propagdes en Angleterre 
 par l’dcole d’Adam Smith, en France par celle de Quesnay et 
 de Turgot, ont dtd relevds, d’abord h titre d’instruments de 
 guerre, ensuite d’instruments de protection et mis au service 
 des interdts politiquement influents. Ils ont remplacd, pour 
 les grands propridtaires terriens, les redevances fdodales et 
 ont dtd dtendus aux ddtenteurs de la propridtd industrielle 
 coalisds avec eux. 
 
 Cette coalition s’est rompue en Angleterre, et les intdrSts 
 agrariens rdduits & leurs propres forces ont succombd sous 
 Peffort de la Ligue contre les lois cdrdales. La multitude, 
 exondrde du tribut qu’elle payait aux intdrets privildgids, a pu 
 
LE XIX ’« SIfiCLE. 
 
 603 
 
 augmenter sa consommation des articles de n^cessitd et de con- 
 fort, tout en accroissant son 6pargne, et Findustrie britannique, 
 encourag^e par le d^veloppement de la consommation et stim¬ 
 uli par la concurrence, a pris un essor merveilleux. 1 
 
 L’exemple de l’Angleterre a £t6 suivi d’abord par les autres 
 nations et on a pu croire, un moment, qu’une nouvelle £re de 
 liberty et de paix allait s’ouvrir pour le monde. Mais l’illu- 
 sion a 6t£ courte. Les intdrets militaristes et protectionnistes 
 n’ont pas tard6 a reprendre le dessus. La guerre de la Seces¬ 
 sion am^ricaine, en donnant la victoire aux Etats protection¬ 
 nistes, leur a permis delever le tarif au gr6 de leurs app^tits. 
 La guerre franco-allemande, en provoquant, avec une recru- 
 
 1 Nous empruntons k notre jeune confrere YIndividualiste, le tableau suivant 
 des resultats de la politique du libre-echange en Angleterre: 
 
 ANNEES 
 
 
 1859-60 
 
 1869-70 
 
 1879-80 
 
 1889-90 
 
 1899-1900 
 
 
 Millions 
 
 Millions 
 
 Millions 
 
 Millions 
 
 Millions 
 
 
 de £ 
 
 de £ 
 
 de £ 
 
 de £ 
 
 de £ 
 
 Revenu national. 
 
 70 
 
 74 
 
 79 
 
 89 
 
 120 
 
 Dette nationale. 
 
 828 
 
 800 
 
 777 
 
 691 
 
 639 
 
 Propriete imposee, impot sur le 
 
 
 
 
 
 
 revenu, valeur annuelle en gros. 
 
 335 
 
 445 
 
 577 
 
 669 
 
 759 • 
 
 Placements k la caisse d’epargne . . 
 
 39 
 
 51 
 
 76 
 
 108 
 
 182 
 
 
 lbs. 
 
 lbs. 
 
 lbs. 
 
 lbs. 
 
 lbs. 
 
 Consommation de the par habitant. 
 
 2.7 
 
 3.6 
 
 4.7 
 
 5.0 
 
 5.9 
 
 Consommation de sucre par habitant. 
 
 35 
 
 53 
 
 66 
 
 77 
 
 91 
 
 
 
 MOYENNES ANNUELLES 
 
 
 1854-59 
 
 1860-69 
 
 1870-79 
 
 1880-89 
 
 1890-99 
 
 
 Millions 
 
 Millions 
 
 Millions 
 
 Millions 
 
 Millions 
 
 
 de £ 
 
 de £ 
 
 de £ 
 
 de £ 
 
 de £ 
 
 Importations nettes (importations, 
 
 
 
 
 
 
 moins les reexportations) . . . 
 
 144 
 
 216 
 
 305 
 
 331 
 
 375 
 
 Exportations (de produits anglais 
 
 
 
 
 
 
 seulement). 
 
 113 
 
 160 
 
 218 
 
 230 
 
 237 
 
 
 Par 
 
 Par 
 
 Par 
 
 Par 
 
 Par 
 
 
 millions 
 
 millions 
 
 millione 
 
 millions millions 
 
 
 de 
 
 de 
 
 de 
 
 de 
 
 de 
 
 
 tonnes 
 
 tonnes 
 
 tonnes 
 
 tonnes 
 
 tonnes 
 
 Navigation entree dans les ports 
 
 
 
 
 
 
 anglais (moins le cabotage) . . . 
 
 10.000 
 
 14.300 
 
 23.700 31.600 41.000 
 
 Bateaux construits par des pro- 
 
 
 
 
 
 
 prietaires anglais. 
 
 230 
 
 314 
 
 398 
 
 500 
 
 605 
 
 Fonte produite. 
 
 3.460 
 
 2.520 
 
 6.390 
 
 7.900 
 
 7.950 
 
 Coton brut travaille dans les manu- 
 
 
 
 
 
 
 factures. 
 
 385 
 
 358 
 
 556 
 
 657 
 
 696 
 
 Or accumuld: De 1858 k 1899 le total des importations nettes d’or s’est elevd 
 k £ 148.000.000 ou 3.700.000.000 de francs. 
 
 1 livre sterling ou £ = 25 francs. 
 
604 
 
 ECONOMIC HISTORY. 
 
 descence du militarisme, l’accroissement gdndral des budgets 
 de la guerre, a obligd les gouvernements a demander a leurs 
 parlements un complement de ressources. La coalition pro- 
 tectionniste a trouvd cette occasion favorable pour se re¬ 
 former et mettre a prix son concours. 
 
 Les tarifs de douane ont dtd relevds dans le double intdret 
 de la fiscalitd et de la protection. En Allemagne, en Italie, 
 en France les droits sur les articles de premiere ndcessitd, le 
 pain et la viande, ont dtd exhausses de manure a en dlever 
 les prix d’un tiers ou de moitid, dans l’intdr$t des proprid- 
 taircs fonciers, tandis que d’autres exhaussements de tarifs 
 sur les matdriaux des vetements, de l’ameublement, des trans¬ 
 ports, fournissaient, avec l’adjonction d’un systeme de primes, 
 la part de leurs allids, les propridtaires d’industries, aux dd- 
 pens de la gdndralitd des consommateurs et des contribuables. 
 Aux impots que ceux-ci doivent h l’Etat s'ajoutent les impots 
 qu’ils ne doivent pas, et qui ne sont, en rdalitd, autre chose que 
 les vieilles redevances fdodales transformdes et modernisdes. 
 
 On s’explique done que l’augmentation extraordinaire de la 
 richesse, ddterminde par une merveilleuse efflorescence de 
 progres, n’ait pas accru d’une maniere dquivalente le bien- 
 etre des peuples civilisds. L’incapacitd et les vices des gou¬ 
 vernements, le militarisme, l’dtatisme, le protectionnisme ont 
 ddvord une forte part de cette plus-value de l’industrie. L’ig- 
 norance et l’insuffisance morale des individus dmancipds de 
 l’ondreuse tutelle de la servitude, mais encore incapables de 
 supporter tout le poids de la responsabilitd attachde a la lib¬ 
 erty, en ont ddtruit ou stdrilisd une autre part. II faut bien 
 le dire. La multitude qui vivait au jour le jour du produit de 
 son travail ne possddait ni la capacitd, ni les ressources ndees- 
 saires pour mettre en pleine valeur son capital de forces 
 productives. Comme le constatait Adam Smith, l’ouvrier 
 ddpourvu d’avances se trouvait vis-a-vis de l’employeur dans 
 une situation indgale, qu’aggravait la ddfense de remddier h 
 cette indgalitd par l’association. D’un autre cotd, il avait 
 & faire le difficile apprentissage de la libertd, il devait rdgler 
 et contenir ses besoins actuels en prdvision des ndcessitds 
 futures, pourvoir aux accidents et aux chomages, remplir 
 
LE XIX e SlECLE. 
 
 605 
 
 toutes ses obligations envers lui-meme et envers les etres dont 
 il etait responsable. Doit-on s’etonner s’il n’a point suffi a 
 cette tache, si, avec un salaire debattu dans des conditions 
 in^gales et diminue par les cliarges des impots qu’il devait 
 et celles des impots qu’il ne devait pas, il a trop souvent 
 succombe sous le faix, et si, en meme temps que croissait 
 la richesse, se propageaient la misSe et la degradation 
 morale ? 
 
 Ces maux qui ont accompagnd la transformation de l’indus- 
 trie et l’emancipation des classes ouvrieres, les dconomistes se 
 sont appliques a les rattacher a leurs vdritables causes, et a 
 rdclamer les reformes propres a y rem^dier. Mais ces rd- 
 formes se heurtent a des intdrets puissants et intraitables, et 
 elles n’ont point d’ailleurs une efficacite immediate et radicale. 
 Les socialistes ont eu plus de succes en attribuant en bloc 
 les soufifrances de la multitude a un pouvoir mysterieux et 
 redoutable qu’ils ont d^signd et stigmatise sous le nom de 
 tyrannie du capital. Cette tyrannie, ils convient les masses 
 ouvrieres a la renverser, en employant le procddd expeditif 
 d’une revolution sociale. La revolution faite les socialistes 
 autoritaires, collectivistes ou communistes, se proposent de 
 charger l’Etat de reorganiser la societe; les socialistes an- 
 archistes, au contraire, veulent abolir l’Etat, mais les uns et 
 les autres s’accordent sur un point essentiel: la confiscation 
 du capital. 
 
 Et telle est la solution de la question sociale qui tient le 
 record de la popularite a l’aurore du xx e si£cle. 
 
 hi 
 
 Le xix e siecle legue a son successeur un heritage de milliar- 
 daire. Aucun de ses predecesseurs n’a autant grossi la for¬ 
 tune qu’il avait regue. Mais s’il a agrandi son domaine et 
 augmente dans des proportions auparavant inconnues la 
 somme de ses richesses immobili&res et de ses valeurs mobi¬ 
 lises, il laisse cet enorme heritage fortement greve de dettes. 
 Il l£gue aussi a ses heritiers, sans parlor des vices communs 
 a tous les sidcles, et dont il ne s’est guere applique a se cor- 
 
606 
 
 ECONOMIC HISTORY. 
 
 riger, des habitudes enracin^es et aggrav^es de dissipation et 
 de gaspillage. 
 
 Le xx e siecle continuera sans aucun doute a accroitre la 
 productivity de l’industrie et a multiplier la richesse. Ses 
 savants, ses inventeurs, ses industriels, ses capitalistes, ses 
 ouvriers ne chomeront point, ils travailleront sans relache h 
 augmenter la soinme des matyriaux de la civilisation et da 
 bien-etre. Mais il est malheureusement permis de craindre 
 que P oeuvre de ces artisans laborieux de la production ne con¬ 
 tinue aussi a etre contrar^e, par l’aveugle ygoisme des in- 
 tyrets, que ses fruits ne soient, comme d’habitude, dytournys 
 de leur destination utile, et employys a des fins nuisibles. 
 
 Pendant que la science et l’industrie multiplient la richesse, 
 le militarisme, l’ytatisme et le protectionnisme, en attendant 
 le socialisme, s’associent pour la dytruire, et en ypuiser la 
 source. Les recettes que le travail annuel des nations fournit 
 au budget des gouvernements ne suffisent plus a leurs dy« 
 penses. C’est en gryvant le travail des gynyrations futures 
 qu’ils rytablissent Pequilibre. Les dettes publiques de PEurope 
 out doubly dans la seconde moitiy du siecle. En suivant la 
 meme progression, elles atteindront pour le moins 400 mil¬ 
 liards en Pan 2000. Quels que soient les progres de la 
 production, ce fardeau ne dypassera-t-il pas les forces des 
 producteurs ? Souhaitons done — et c’est le veeu le plus utile 
 que nous puissions adresser a notre descendance —, que le 
 xx e siecle n’excelle pas seulement, comme son devancier,* 
 a produire de la richesse, mais qu’il apprenne & la mieux 
 employer. 
 
APPENDICES. 
 
 i. 
 
 LEADING SECTIONS FROM THE ENGLISH NAVIGA¬ 
 TION ACTS. 
 
 Act of 1660, 12 Car. II., c. 18. 
 
 An Act for the Encouraging and Increasing of Shipping and 
 
 Navigation. 
 
 For the Increase of Shipping and Encouragement of the Naviga¬ 
 tion of this Nation, wherein, under the good Providence and Pro¬ 
 tection of God, the Wealth, Safety, and Strength of this Kingdom 
 is so much concerned; (2) Be it enacted by the King’s most Ex¬ 
 cellent Majesty, and by the Lords and Commons in this present 
 Parliament assembled, and by the Authority thereof, That from 
 and after the first day of December , one thousand six hundred and 
 sixty, and from thenceforward, no Goods or Commodities whatso¬ 
 ever shall be imported into or exported out of ^ny Lands, Islands, 
 Plantations, or Territories to his Majesty belonging or in his Pos¬ 
 session, or which may hereafter belong unto or be in the Possession 
 of his Majesty, his Heirs and Successors, in Asia, Africa, or Amer¬ 
 ica, in any other Ship or Ships, Vessel or Vessels whatsoever, but 
 in such Ships or Vessels as do truly and without Fraud belong only 
 to the People of England or Ireland, Dominion of Wales, or Town 
 of Berwick upon Tweed, or are of the Built of and belonging to 
 any the said Lands, Islands, Plantations, or Territories as the Pro¬ 
 prietors and right Owners thereof, and whereof the Master and 
 three-fourths of the Mariners at least are English; . . . 
 
 III. And it is further enacted by the Authority aforesaid, 
 That no Goods or Commodities whatsoever, of the Growth, Pro- 
 
608 
 
 ECONOMIC HISTORY. 
 
 duction or Manufacture of Africa , Asia, or America, or of any 
 Part thereof, or which are described or laid down in the usual 
 Maps $r Cards of those Places, he imported into England, Ireland, 
 or Wales, Islands of Guernsey and Jersey, or Town of Berwick 
 upon Tweed, in other Ship or Ships, Vessel or Vessels whatsoever, 
 hut in such as do truly and without Praud belong only to the 
 People of England or Ireland, Dominion of Wales, or Town of 
 Berwick upon Tweed, or of the Lands, Islands, Plantations, or 
 Territories in Asia, Africa, or America, to his Majesty belonging, 
 as the Proprietors and right Owners thereof, and whereof the Mas¬ 
 ter, and three-fourths at least of the Mariners are English ; . . . 
 
 IV. And it is further enacted by the Authority aforesaid, That 
 no Goods or Commodities that are of Poreign Growth, Production, 
 or Manufacture, and which are to be brought into England, Ireland , 
 Wales, the Islands of Guernsey and Jersey, or Town of Berwick 
 upon Ticeed, in English- built Shipping, or other Shipping belong¬ 
 ing to some of the aforesaid Places, and navigated by English Mari¬ 
 ners, as aforesaid, shall be shipped or brought from any other Place 
 or Places, Country or Countries, but only from those of the said 
 Growth, Production, or Manufacture, or from those Ports where 
 the said Goods and Commodities can only, or are, or usually have 
 been, first shipped for Transportation, and from none other Place 
 or Countries; . . . 
 
 VIII. And it is further enacted by the Authority aforesaid, 
 That no Goods or Commodities of the Growth, Production, or 
 Manufacture of Muscovy, or of any the Countries, Dominions, or 
 Territories to the Great Duke or Emperor of Muscovy or Russia 
 belonging; as also that no Sort of Masts, Timber, or Boards, no 
 foreign Salt, Pitch, Tar, Rosin, Hemp or Plax, Raisins, Pigs, 
 Prunes, Olive-Oils, no Sorts of Corn or Grain, Pot-Ashes, Wines, 
 Vinegar, or Spirits called Aqua-Vitae, or Brandy-Wine, shall 
 from and after the first day of April, which shall be in the Year of 
 our Lord one thousand six hundred sixty-one, be imported into 
 England, Ireland, Wales, or Town of Berwick upon Ticeed, in any 
 Ship or Ships, Vessel or Vessels whatsoever, but in such as do 
 truly and without fraud belong to the People thereof, or some of 
 them, as the true Owners and Proprietors thereof, and whereof the 
 Master and three-fourths of the Mariners at least are English: 
 And that no Currans nor Commodities of the Growth, Production, 
 or Manufacture of any the Countries, Islands, Dominions, or Ter¬ 
 ritories to the Ottoman or Turkish Empire belonging, shall from 
 
APPENDIX I. 
 
 609 
 
 and after the first day of September, which shall be in the year of 
 onr Lord one thousand six hundred sixty-one, be imported into any 
 the afore-mentioned places in any Ship or Vessel, but which is of 
 English built, and navigated, as aforesaid, and in no other, except 
 only such foreign Ships and Vessels as are of the Built of that 
 Country or Place of which the said Goods are the Growth, Produc¬ 
 tion, or Manufacture respectively, or of such Port where the said 
 Goods can only be, or most usually are, first shipped for Transpor¬ 
 tation, and whereof the Master and three-fourths of the Mariners 
 at least are of the said Country or Place; . . . 
 
 XVIII. And it is further enacted by the Authority afore¬ 
 said, That from and after the first Day of April, which shall be 
 in the Year of our Lord one thousand six hundred sixty-one, no 
 Sugars, Tobacco, Cotton-Wool, Indigoes, Ginger, Fustick, or 
 other dying Wood, of the Growth, Production, or Manufacture 
 of any English Plantations in America, Asia, or Africa, shall be 
 shipped, carried, conveyed, or transported from any of the said 
 English Plantations to any Land, Island, Territory, Dominion, 
 Port or Place whatsoever, other than to such other English Planta¬ 
 tions as do belong to his Majesty, his Heirs and Successors, or 
 to the kingdom of England or Ireland, or Principality of 
 Wales, or Town of Berwick upon Tweed, there to be laid on 
 shore; . . . 
 
 Act of 1662, 14 Car. II., c. 11. 
 
 XXIII. And whereas some Doubts and Disputes have arisen 
 concerning the said late Act, For increasing and encouraging of 
 Shipping and Navigation, about some of the Goods therein pro¬ 
 hibited to be brought from Holland and the Parts and Ports there- 
 abouts; (2) Be it enacted and declared, that no Sort of Wines, 
 (other than Hhenish) no Sort of Spicery, Grocery, Tobacco, Pot- 
 Ashes, Pitch, Tar, Salt, Bozin, Deal-Boards, Fir, Timber, or 
 Olive-Oil, shall be imported into England, Wales, or Berwick, 
 from the Netherlands or Germany, upon any Pretence whatsoever, 
 in any Sort of Ships or Vessels whatsoever; . . . 
 
 Act of 1663, 15 Car. II., c. 7. 
 
 V. And in regard his Majesty’s Plantations beyond the Seas 
 are inhabited and peopled by his subjects of this his Kingdom of 
 England, for the maintaining a greater Correspondence and Kind¬ 
 ness between them, and keeping them in a further Dependance 
 
 39 
 
610 
 
 ECONOMIC HISTORY. 
 
 upon it, and rendring them yet more beneficial and advantageous 
 unto it in the further Imployment and Increase of English Ship¬ 
 ping and Seamen, Vent of English Woollen and other Manufac¬ 
 tures and Commodities, rendring the Navigation to and from the 
 same more safe and cheap, and making this Kingdom a Staple, not 
 only of the Commodities of those plantations, hut also of the 
 Commodities of other Countries and Places for the Supplying of 
 them; and it being the Usage of other Nations to keep their Plan¬ 
 tations Trade to themselves: 
 
 VI. Be it enacted, and it is hereby enacted, That from and 
 after the five and twentieth day of March, one thousand six hun¬ 
 dred sixty-four, no Commodity of the Growth, Production, or Man¬ 
 ufacture of Europe , shall be imported into any Land, Island, 
 Plantation, Colony, Territory, or Place to his Majesty belonging, 
 or which shall hereafter belong unto or be in the Possession of his 
 Majesty, his Heirs and Successors, in Asia, Africa, or America, 
 (Tangier only excepted) but what shall be bona-fide, and without 
 Fraud, laden and shipped in England, Wales, or the Town of Ber * 
 wick upon Tweed, and in English built Shipping, or which were 
 bona-fide bought before the first day of October one thousand six 
 hundred sixty and two, and had such Certificate thereof as is di¬ 
 rected in one Act passed the last Sessions of this Present Parlia¬ 
 ment, intituled, An Act for preventing Frauds, and Regulating 
 Abuses in his Majesty's Customs; and whereof the Master and 
 three Fourths of the Mariners at least are English, and which shall 
 be carried directly thence to the said Lands, Islands, Plantations, 
 Colonies, Territories, or Places, and from no other Place or 
 Places whatsoever; any Law, Statute, or Usage to the contrary 
 notwithstanding; . . . 
 
 See English Statutes at Large. 
 
APPENDIX II. 
 
 611 
 
 II. 
 
 IMPORTANT SECTIONS OF AMERICAN NAVIGATION 
 
 ACTS. 
 
 Act of July 20, 1789. 
 
 Chap. III.— An Act imposing Duties on Tonnage. 
 
 Be it enacted by the Senate and House of Representatives of 
 the United States of America in Congress assembled , That the fol¬ 
 lowing duties shall he, and are imposed on all ships or vessels en¬ 
 tered in the United States, that is to say: 
 
 On all ships or vessels built within the said States, and belong¬ 
 ing wholly to a citizen or citizens thereof, or not built within the 
 said States, but on the twenty-ninth day of May, one thousand 
 seven hundred and eighty-nine, belonging, and during the time 
 such vessel or vessels shall continue to belong wholly to a citizen 
 or citizens thereof, at the rate of six cents per ton. On all ships or 
 vessels hereafter built in the United States, belonging wholly, 
 or in part, to subjects of foreign powers, at the rate of thirty cents 
 per ton. On all other ships or vessels, at the rate of fifty cents 
 per ton. 
 
 Sec. 3. And be it further enacted , That every ship or vessel em¬ 
 ployed in the transportation of any of the produce or manufactures 
 of the United States, coastwise within the said States, except such 
 ship or vessel be built within the said States, and belong to a citizen 
 or citizens thereof, shall, on each entry, pay fifty cents per ton. 
 
 1 U. S. Statutes at Large, 27. 
 
 Act of Dec. 31, 1792. 
 
 Chap. I. An Act concerning the Registering and Recording of 
 
 Ships or Vessels. 
 
 Section 1. Be it enacted , . . . That ships or vessels which shall 
 have been registered by virtue of the act, intituled “ An act for regis¬ 
 tering and clearing vessels, regulating the coasting trade and for 
 other purposes, ” and those which after the last day of March next, 
 shall be registered, pursuant to this act, and no other (except such 
 
612 
 
 ECONOMIC HISTORY. 
 
 as shall he duly qualified, according to law, for carrying on the 
 coasting trade and fisheries, or one of them) shall he denominated 
 and deemed ships or vessels of the United States, entitled to the 
 benefits and privileges appertaining to such ships or vessels: Pro¬ 
 vided, That they shall not continue to enjoy the same, longer than 
 they shall continue to be wholly owned, and to be commanded by a 
 citizen or citizens of said states. 
 
 Sec. 2. And be it further enacted, That ships or vessels built 
 within the United States, whether before or after, the fourth of 
 July, one thousand seven hundred and seventy six, and belonging 
 wholly to a citizen or citizens thereof, or not built within the said 
 states, but on the sixteenth day of May, in the year one thousand 
 seven hundred and eighty nine, belonging and thenceforth continu¬ 
 ing to belong to a citizen or citizens thereof, and ships or vessels 
 which may hereafter be captured in war, by such citizen or citizens, 
 and lawfully condemned as prize, or which have been or may be 
 adjudged to be forfeited for a breach of the laws of the United 
 States, being wholly owned by a citizen or citizens thereof, and no 
 other, may be registered as hereinafter directed: Provided, That 
 no such ship or vessel shall be entitled to be so registered, or if 
 registered, to the benefits thereof, if owned in whole, or in part, 
 by any citizen of the United States, who usually resides in a for¬ 
 eign country, during the continuance of such residence, unless 
 such citizen be in the capacity of a consul of the United States, or 
 an agent for, and a partner in, some house or trade or co-partner¬ 
 ship, consisting of citizens of the said states actually carrying on 
 trade within the said states. 
 
 1 Statutes at Large, 287. 
 
 Act of March 1, 1817. 
 
 Chap. XXXI. — An Act concerning the navigation of the United 
 
 States. 
 
 Be it enacted, . . . That after the thirtieth day of September next 
 no goods, wares, or merchandise, shall be imported into the United 
 States from any foreign port or place, except in vessels of the 
 United States, or in such foreign vessels as truly and wholly be¬ 
 long to the citizens or subjects of that country of which the goods 
 are the growth, production, or manufacture; or from which such 
 goods, wares, or merchandise, can only be, or most usually are, 
 first shipped for transportation: Provided, nevertheless, That this 
 regulation shall not extend to the vessels of any foreign nation 
 
APPENDIX II. 
 
 613 
 
 which has not adopted, and which shall not adopt, a similar 
 regulation. 
 
 Sec. 4. And be it further enacted , That no goods, wares, 
 or merchandise, shall be imported, under penalty of forfeiture 
 thereof, from one port of the United States to another port of the 
 United States, in a vessel belonging wholly or in part to a subject 
 of any foreign power; but this clause shall not be construed to 
 prohibit the sailing of any foreign vessel from one to another port 
 of the United States, provided no goods, wares, or merchandise, 
 other than those imported in such vessel from some foreign port, 
 and which shall not have been unladen, shall be carried from one 
 port or place to another in the United States. 
 
 3 Statutes at Large, 351. 
 
 Act of May 24, 1828. 
 
 Chap. CXI. — An Act in addition to an act , entitled , “An act con¬ 
 cerning discriminating duties of tonnage and impost 
 
 Be it enacted , . . . That, upon satisfactory evidence being given 
 to the President of the United States by the government of any for¬ 
 eign nation that no discriminating duties of tonnage or impost are 
 imposed or levied in the ports of the said nation upon vessels wholly 
 belonging to citizens of the United States, or upon the produce, 
 manufactures, or merchandise imported in the same from the United 
 States, or from any foreign country, the President is hereby author¬ 
 ized to issue his proclamation, declaring that the foreign discrim¬ 
 inating duties of tonnage and impost within the United States are 
 and shall be suspended and discontinued, so far as respects the ves¬ 
 sels of the said foreign nation, and the produce, manufactures, or 
 merchandise imported into the United States in the same from the 
 said foreign nation, or from any other foreign country: the said 
 suspension to take effect from the time of such notification being 
 given to the President of the United States, and to continue so 
 long as the reciprocal exemption of vessels belonging to citizens of 
 the United States, and their cargoes, as aforesaid, shall be contin¬ 
 ued and no longer. 
 
 4 Statutes at Large, 308. 
 
 Act of Feb. 10, 1866. 
 
 Chap. "VTII. — An Act to regulate the Registering of Vessels. 
 
 Be it enacted , . . . That no ship or vessel, which has been re¬ 
 corded or registered as an American vessel, pursuant to law, and 
 
614 
 
 ECONOMIC HISTORY. 
 
 which shall have been licensed or otherwise authorized to sail under 
 a foreign flag, and to have the protection of any foreign govern¬ 
 ment during the existence of the rebellion, shall be deemed or 
 registered as an American vessel, or shall have the rights and priv¬ 
 ileges of American vessels, except under the provisions of an act 
 of Congress authorizing such registry. 
 
 14 Statutes at Large, 3. 
 
 Act of June 26, 1884. 
 
 Chap. CXXI. — An Act to remove certain burdens on the American 
 merchant marine and encourage the American foreign carry¬ 
 ing trade. 
 
 Sec. 14. [Be it f urther enacted ,] That in lieu of the tax on ton¬ 
 nage of thirty cents per ton per annum heretofore imposed by law, a 
 duty of three cents per ton, not to exceed in the aggregate fifteen 
 cents per ton in any one year, is hereby imposed at each entry on 
 all vessels w r hich shall be entered in any port of the United States 
 from any foreign port or place in North America, Central America, 
 the West India Islands, the Bahama Islands, the Bermuda Islands, 
 or the Sandwich Islands or Newfoundland; and a duty of six cents 
 per ton, not to exceed thirty cents per ton per annum, is hereby 
 imposed at each entry upon all vessels which shall be entered in 
 the United States from any other foreign ports: 
 
 Sec. 17. When a vessel is built in the United States for foreign 
 account, wholly or partly of foreign materials on which import 
 duties have been paid, there shall be allowed on such vessel, when 
 exported, a drawback equal in amount to the duty paid on such 
 materials, to be ascertained under such regulations as may be pre¬ 
 scribed by the Secretary of the Treasury. Ten per centum of the 
 amount of such drawback shall, however, be retained for the use of 
 the United States by the collector paying the same. 
 
 23 Statutes at Large, 57. 
 
 Act of March 3, 1891. 
 
 Chap. DXIX. — An Act to provide for ocean mail service between 
 
 the United States and foreign ports, and to promote commerce. 
 
 Be it enacted , . . . That the Postmaster-General is hereby author¬ 
 ized and empowered to enter into contracts for a term not less than 
 five nor more than ten years in duration, with American citizens, 
 for carrying of mails on American steamships, between ports of the 
 
APPENDIX II. 
 
 615 
 
 United States and such ports in foreign countries, the Dominion of 
 Canada excepted, as in his judgment will best subserve and pro¬ 
 mote the postal and commercial interests of the United States, the 
 mail service on such lines to he equitably distributed among the 
 Atlantic, Mexican, Gulf, and Pacific ports. . . . 
 
 Sec. 3. That the vessels employed in the mail service under the 
 provisions of this act shall be American built steamships, owned 
 and officered by American citizens, in conformity with the existing 
 laws. . . . They shall be divided into four classes. The first class 
 shall be iron or steel screw steamships, capable of maintaining a 
 speed of twenty knots an hour at sea in ordinary weather, and of a 
 gross registered tonnage of not less than eight thousand tons. No 
 vessel except of said first class shall be accepted for said mail ser¬ 
 vice under the provisions of this act between the United States 
 and Great Britain. The second class shall be iron or steel steam¬ 
 ships, capable of maintaining a speed of sixteen knots an hour at 
 sea in ordinary weather, and of a gross registered tonnage of not 
 less than five thousand tons. The third class shall be iron or steel 
 steamships, capable of maintaining a speed of fourteen knots an 
 hour at sea in ordinary weather, and of a gross registered tonnage 
 of not less than two thousand five hundred tons. The fourth class 
 shall be iron or steel or wooden steamships, capable of maintaining 
 a speed of twelve knots an hour at sea in ordinary weather, and of 
 a gross registered tonnage of not less than fifteen hundred tons. 
 
 Sec. 4. That all steamships of the first, second, and third 
 classes employed as above and hereafter built shall be constructed 
 with particular reference to prompt and economical conversion into 
 auxiliary naval cruisers, and according to plans and specifications 
 to be agreed upon by and between the owners and the Secretary of 
 the Navy, and they shall be of sufficient strength and stability to 
 carry and sustain the working and operation of at least four effect¬ 
 ive rifled cannon of a caliber of not less than six inches, and shall 
 be of the highest rating known to maritime commerce. . . . 
 
 Sec. 5. That the rate of compensation to be paid for such ocean 
 mail service of the said first-class ships shall not exceed the sum of 
 four dollars a mile, and for the second-class ships two dollars a 
 mile, by the shortest practicable route, for each outward voyage; 
 for the third-class ships shall not exceed one dollar a mile, and for 
 the fourth-class ships two-thirds of one dollar a mile for the actual 
 number of miles required by the Post Office Department to be 
 travelled on each outward bound voyage: . . . 
 
 26 Statutes at Large, 830. 
 
616 
 
 ECONOMIC HISTORY . 
 
 m. 
 
 THE AMERICAN CIVIL WAR. 
 
 COST OF THE WAR. 
 
 From Report of Special Commissioner of the Revenue (David 
 
 A. Wells) 1869, pp. iv-vii. 
 
 It would seem desirable at tliis point, now that all feeling in re¬ 
 gard to the subject from its bearing on political questions has 
 apparently passed away, to place upon record the exact cost of the 
 war, as nearly as the same can be determined. With this object 
 attention is asked to the following exhibit: — 
 
 The amount of outstanding national indebted¬ 
 ness March 7, 1861, was $76,455,299.28. 
 
 During the four years of war which terminated 
 in April, 1865 (April 1, 1861, to April 1, 
 1865), the actual receipts of the treasury, 
 were as follows: — 
 
 From internal revenue . . 
 
 From customs. 
 
 From lands. 
 
 From direct tax . . . . 
 
 From miscellaneous sources 
 
 8314,337,317 01 
 280,861,618 45 
 1,812,083 80 
 4,668,259 31 
 74,120,413 37 
 
 Total receipts 
 
 8675,799,691 94 
 
 The receipts of revenue from April 1, 1865, 
 to June 30, 1869, inclusive, during which 
 period the larger portion of the expenditures 
 has been directly in consequence of the war, 
 were as follows: — 
 
 From internal revenue . . 
 
 From customs. 
 
 From lands. 
 
 From direct tax . . . . 
 
 From miscellaneous sources 
 
 8967,207,221 41 
 729,991,875 97 
 7,402,188 28 
 9,017,217 30 
 194,949,122 13 
 
 Total receipts 
 
 81,908,567,625 09 
 
APPENDIX III . 
 
 617 
 
 The amount of outstanding indebtedness, 
 less cash and sinking fund in treasury, 
 
 June 30, 1869, was $2,489,002,480.58. 
 
 Deducting from this the amount of outstand¬ 
 ing indebtedness at the outbreak of the 
 war ($76,455,299.28), we have, as the 
 sum borrowed for war purposes and not 
 repaid out of the receipts above indicated $2,412,547,181 30 
 
 Making the total expenditure (loans 
 and receipts) in eight and a quarter 
 years of war and its effects . . . $4,996,914,498 33 
 
 Deducting the amount which, but for the 
 war, might be taken as the average ex¬ 
 penditure of the government during this 
 
 period, say $100,000,000 per annum . . 825,000,000 00 
 
 We shall have.$4,171,914,498 33 
 
 which sum represents the cost of the war to the United States 
 government down to June 30, 1869. 
 
 To this sum should be added the value of the pensions now paid 
 by the government on account of the war, if the same were capi¬ 
 talized. This at eight years’ purchase of the present annual pay¬ 
 ment, would amount to about two hundred millions. 
 
 But this aggregate, however large, must still further be increased 
 by other items if we would reach the true cost of the war to us as 
 a people, the above representing only the expenditures of the na¬ 
 tional government. 
 
 These additional charges are substantially as follows: — 
 
 Increase of State debts, mainly on war 
 
 account. $123,000,000 00 
 
 County, city, and town indebtedness in¬ 
 creased on account of the war (estimated) 200,000,000 00 
 Expenditures of States, counties, cities, and 
 towns, on account of the war, not rep¬ 
 resented by funded debt (estimated) . . 600,000,000 00 
 
 Estimated loss to the loval States from the 
 
 V 
 
 diversion and suspension of industry, and 
 the reduction of the American marine 
 
 and carrying trade. 1,200,000,000 00 
 
 Estimated direct expenditures and loss of 
 property by the Confederate States by 
 reason of the war. 2,700,000,000 00 
 
618 
 
 ECONOMIC HISTORY. 
 
 These estimates, which are believed to he moderate and reason¬ 
 able, show an aggregate destruction of wealth, or diversion of in¬ 
 dustry, which would have produced wealth in the United States 
 since 1861 approximating nine thousand millions of dollars — a 
 sum nominally in excess of the entire increase of wealth, as re¬ 
 turned by the census for the whole country from 1850 to 1860. 
 
 This, then, was the cost of the destruction of slavery; the cost 
 of compromise ; the cost of the unfaithfulness of those who 
 founded this nation to the idea by which the nation lives. What 
 does it measure? It is substantially a thousand millions a year 
 for nine years; or at the wages of five hundred dollars a year, the 
 labor of two millions of men exerted continuously during the 
 whole of that period. It is three times as much as the slave prop¬ 
 erty of the country was ever worth. It is a sum which at interest 
 would yield to the end of time twice as much as the annual slave 
 product of the South in its best estate. 
 
 u The places of those who sleep in their graves have been filled 
 by new laborers; the incubus of slavery, which was slowly but 
 surely making the fertile South a desert scorched as by a consum¬ 
 ing fire, has been removed; thousands of miles of new railroads; 
 inventions never before excelled in their labor-saving character; 
 millions of acres of the richest lands opened to settlement, now 
 render labor easy and product large.’’ Without faltering and with¬ 
 out tampering with the public faith, it is now the duty of this 
 people to undertake'the far easier task of payment for the service 
 already rendered. If we hesitate or falter, dishonor, second only 
 to that which tolerated slavery, will overwhelm the land, and the 
 idea of a free people governing themselves will become a scorn and 
 a by-word among nations. 
 
 PAYMENT OF THE WAR DEBT. 
 
 From Report of the Secretary of the Treasury (Hugh Mc¬ 
 Culloch) 1884, pp. xxvii-xxix. 
 
 It is in the highest degree -gratifying to the Secretary to notice 
 the great reduction of the public debt since it reached its highest 
 point in August, 1865, and its continued reduction since his last 
 report, in 1868. The following table exhibits the reduction both 
 of principal and interest: — 
 
APPENDIX III. 
 
 619 
 
 On August 31, 1865, the indebtedness of the United States, not 
 including bonds issued to the Pacific Railroad Companies, was as 
 follows: — 
 
 Debt bearing coin interest.$1,108,310,191 80 
 
 Debt bearing currency interest .... 1,273,220,103 16 
 Matured debt not presented for payment . 1,503,020 09 
 
 Debt bearing no interest. 461,616,31151 
 
 Total debt.$2,844,649,626 56 
 
 Cash in the treasury. 88,218,055 13 
 
 Amount of debt less cash in the treasury $2,756,431,571 43 
 
 The annual interest charge was $150,977,697.87, and the average 
 rate paid was 6 per cent. 
 
 On Nov. 1, 1868, the indebtedness of the United States, not 
 including bonds issued to the Pacific Railroad companies was as 
 follows: — 
 
 Debt bearing coin interest.$2,107,577,950 00 
 
 Debt bearing currency interest .... 72,325,000 00 
 
 Matured debt not presented for payment . 9,753,723 64 
 
 Debt bearing no interest. 409,151,898 42 
 
 Total debt.$2,598,808,572 06 
 
 Cash in the treasury. 113,873,019 24 
 
 Amount of debt less cash in the treasury $2,484,935,552 £2 
 
 The annual charge was $126,408,343, and the average rate paid 
 was 5 -fo per cent. 
 
 On Nov. 1, 1884, the public debt was as follows: — 
 
 Debt bearing interest. 
 
 Debt on which interest has ceased since 
 
 maturity. 
 
 Debt bearing no interest. 
 
 $1,206,475,600 00 
 
 12,547,485 26 
 623,468,436 36 
 
 Total debt . . 
 
 Cash in the treasury 
 
 $1,842,491,521 62 
 434,008,572 93 
 
 Amount of debt less cash in the treasury $1,408,482,948 69 
 
620 
 
 ECONOMIC HISTORY. 
 
 The annual interest charge is now (1884) $47,323,831.50, and 
 the average rate paid 3 per cent. 
 
 Reduction of debt in sixteen years . . . $1,076,452,604 13 
 
 Reduction of annual interest charge . . 79,084,511 50 
 
 Reduction of debt in nineteen years . . . 1,347,948,622 74 
 
 Reduction of annual interest charge . . 103,653,866 37 
 
 r t V 4 
 
 In the management of its debt the United States has been an 
 example to the world. Nothing has so much surprised European 
 statesmen as the fact that immediately after the termination of one 
 of the most expensive and, in some respects, exhaustive wars that 
 have ever been carried on, the United States should have com¬ 
 menced the payment of its debt and continued its reduction through 
 all reverses until nearly one half of it has been paid; that reduc¬ 
 tion in the rate of interest has kept pace with the reduction of the 
 principal; that within a period of nineteen years the debt, which 
 it was feared would be a heavy and never ending burden upon the 
 people, has been so managed as to be no longer burdensome. It is 
 true that all this has been effected by heavy taxes, but it is also 
 true that these taxes have neither checked enterprise nor retarded 
 growth. 
 
APPENDIX IV. 
 
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V. 
 
 AMERICAN PROGRESS IN MANUFACTURES. 
 
 S. N. D. NORTH. 
 
 Compiled from the Twelfth Census, Vol. VII., pp. xlyii.-clv. 
 
 The Twelfth Census marks the close of the first complete cen¬ 
 tury of manufactures in the United States. As a basis from which 
 to measure the progress of the one hundred years, there is available 
 a government paper, now become classic, which fairly represents 
 the industrial situation in the United States shortly after the 
 organization of the federal government, and just prior to the open¬ 
 ing of the nineteenth century. This is the “ Report on Manufac¬ 
 tures,” submitted to Congress in 1791, by Alexander Hamilton, 
 Secretary of the Treasury, in obedience to an order of the House 
 of Representatives. He enumerated some 17 industries which had 
 “ grown up and flourished with a rapidity which surprises, affording 
 an encouraging assurance of success in future attempts.” The 17 
 industries were as follows: 
 
 1. Skins. — Tanned and tawed leather, dressed skins, shoes, boots, 
 and slippers, harness and saddlery of all kinds, portmanteaus and trunks, 
 leather breeches, gloves, muffs and tippets, parchment and glue. 
 
 2. Iron. — Bar and sheet iron, steel, nail rods and nails, implements 
 of husbandry, stoves, pots and other household utensils, the steel and iron 
 work of carriages, and for shipbuilding, anchors, scale beams and weights, 
 and various tools of artificers, arms of different kinds; though the manu¬ 
 facture of these last has diminished for want of a demand. 
 
 3. Wood. — Ships, cabinet wares, and turnery, wool and cotton cards, 
 and other machinery for manufactures and husbandry, mathematical in¬ 
 struments, coopers’ wares of every kind. 
 
 4. Flax and hemp. — Cables, sail cloth, cordage, twine and pack 
 thread. 
 
 5. Bricks and coarse tiles and potters’ wares. 
 
 6. Ardent spirits and malt liquors. 
 
 7. Writing and printing paper, sheathing and wrapping paper, paste¬ 
 board, fullers’ or press papers, paper hangings. 
 
APPENDIX V . 
 
 623 
 
 8. Hats of fur and wool, and mixture of both, women’s stuff and silk 
 shoes. 
 
 9. Refined sugars. 
 
 10. Oils of animals and seeds, soap, spermaceti and tallow candles. 
 
 11. Copper and brass wires, particularly utensils for distillers, sugar 
 refiners and brewers; andirons and other articles for household use, 
 philosophical apparatus. 
 
 12. Tinwares for most purposes of ordinary use. 
 
 13. Carriages of all kinds. 
 
 14. Snuff, chewing and smoking tobacco. 
 
 15. Starch and hair powder. 
 
 16. Lampblack and other painters’ colors. 
 
 17. Gunpowder. 
 
 In addition to the industries above enumerated, which were car¬ 
 ried on as regular trades in many localities, Mr. Hamilton went on 
 to describe — 
 
 a vast scene of household manufacturing, which contributes more largely 
 to the supply of the community than could be imagined without having 
 made it an object of particular inquiry. 
 
 The “ manufactories carried on as regular trades,” and included 
 in Mr. Hamilton’s category, comprised such as would naturally 
 spring up in a new country to supply the immediate necessities 
 of the inhabitants, together with those whose materials were most 
 abundant and inviting. Agricultural implements and other tools 
 of industry were made in quantities fully equal to the demand. 
 Firearms were also made. The dressing of skins, especially tan¬ 
 ning, had become an important industry, and was carried on both 
 in establishments exclusively devoted to the purpose, and by many 
 shoemakers and farmers as a subsidiary occupation. The number 
 of brewers and distillers was remarkable, and nearly the entire 
 domestic demand for beverages was supplied by home production. 
 Sawmills, grist mills, brick kilns, wool-carding mills, and fulling 
 mills existed in great number, but always on a small scale, supply¬ 
 ing only local needs. The manufacture of paper, which had been a 
 successful colonial industry, also supplied the domestic require¬ 
 ments, and several glass works existed. “ Iron works have greatly 
 increased in the United States,” said Mr. Hamilton, “ and are prose¬ 
 cuted with much more advantage than formerly.” The shipbuild¬ 
 ing industry was particularly well developed and widespread. In 
 1793 the tonnage of the United States exceeded that of every other 
 
624 
 
 ECONOMIC HISTORY. 
 
 \ 
 
 nation except England. In the main, however, the people had 
 confined themselves to such manufactures as could not he imported 
 to advantage. Foreign goods, chiefly textiles, were largely im¬ 
 ported in exchange for agricultural products. 
 
 In 1810 Albert Gallatin, Secretary of the Treasury, in response 
 to a resolution of the House of Representatives of June 7, 1809, 
 made a report which is an admirable summary of the condition of 
 American manufactures at that date. Secretary Gallatin estimated 
 that in 1809 the value of the products of American manufactures 
 exceeded $120,000,000. Tench Coxe’s estimate, based upon the 
 returns obtained at the census of 1810, was $198,613,471, and the 
 Treasury reports show that in 1811 American manufactures to 
 the value of $3,039,000 were exported. The censuses immediately 
 following throw little light upon the rate of growth, that of 1820 
 being so defective that Congress never authorized the publication 
 of the figures. The enumeration of manufactures was omitted 
 altogether from the census of 1830; and the census of 1840 made 
 no attempt whatever to foot up the aggregate value of the products 
 returned. The census of 1850 fixed this value at $1,019,106,616 
 for that year — an increase of fivefold over Mr. Coxe’s estimate for 
 1810. It is clear from the report of this census and from a great 
 body of unofficial data available, that the country had made notable 
 progress in nearly every line of manufactures, and laid the founda¬ 
 tions deep and broad for subsequent development. But it may be 
 noted that until nearly 1840, iron continued to be smelted by char¬ 
 coal, the process differing little from that employed in colonial 
 times, and not until the decade between 1830 and 1840 was pud¬ 
 dling generally introduced in the United States. During this 
 decade the iron rails used in the construction of railroads were 
 obtained exclusively by importation; coke was not generally used 
 in smelting until 1850; in 1860 our production of pig iron reached 
 only 987,559 tons, in comparison with the 14,452,234 tons pro¬ 
 duced in 1900; steel rails were not manufactured in the United 
 States until 1860; and the first Bessemer steel was produced here 
 in 1864. 
 
 The factory system of manufacture, so called, in contrast to 
 domestic and shop manufacture, had practically no existence in the 
 United States at the opening of the nineteenth century, although 
 its development in England, particularly in the textile industries, 
 had been rapid during the last quarter of the eighteenth century. 
 During or just prior to that period, the great basic inventions for 
 
APPENDIX V . 
 
 625 
 
 automatic textile manufacture were put in practical operation in 
 England. These, together with the invention of the steam engine, 
 which occurred at about the same time, rapidly withdrew manufac¬ 
 turing industries from the household and the shop, and concen¬ 
 trated them in the factory, where large bodies of men and women 
 worked for stipulated wages under skilled direction, thus accom¬ 
 plishing what is commonly called the industrial revolution, and 
 inaugurating the factory system of manufacture. 
 
 This system obtained its first foothold in the United States dur¬ 
 ing the period of embargo and the War of 1812. The manufacture 
 of cotton and wool passed rapidly from the household to the mill; 
 but the methods of domestic and neighborhood industry continued 
 to predominate, even in these industries, down to and including the 
 decade between 1820 and 1830; and it was not until about 1840 
 that the factory method of manufacture extended itself widely to 
 miscellaneous industries, and began rapidly to force from the mar¬ 
 ket the handmade products with which every community had hitherto 
 chiefly supplied itself. It seems probable that until about the year 
 1850, the bulk of general manufacturing done in the United States 
 was carried on in the shop and the household, by the labor of the 
 family or individual proprietors, with apprentice assistants, as con¬ 
 trasted with the present system of factory labor, compensated by 
 wages, and assisted by power. 
 
 The census of 1850 is therefore the proper starting point for the 
 comparative statistics of manufactures, although it is not possible 
 to make any analysis of the figures returned by that census, which 
 will determine with certainty the proportion of manufactures pro¬ 
 duced in factories, in distinction from the products of the household 
 and of the neighborhood shop. Since the date of that census, the 
 relative value of the manufactured products of the shop and the 
 household has steadily decreased, until, at the Twelfth Census, it 
 represents but an insignificant part, say one-thirteenth, of the total 
 value of products. 
 
 Not until the decade between 1860 and 1870 did it become ap¬ 
 parent that the complete supply of staple products for the home 
 market was within the capacity of domestic manufacture. During 
 the Civil War, the great demand for manufactured supplies of 
 every description, and the high protective duties on imports, neces¬ 
 sitated by the revenue requirements of the government, stimulated 
 enterprise and production to an extent not known before or 
 
 since. The census indicates that the value of manufactured products 
 
 40 
 
626 
 
 ECONOMIC HISTORY . 
 
 more than doubled in that decade, increasing from $1,885,861,676 in 
 1860 to $4,232,325,442 in 1870. The actual increase was, however, 
 somewhat less, and the increase between 1870 and 1880 somewhat 
 greater, than the figures indicate; since the values reported in 
 1870 were based upon a paper currency, while those of 1860 and 
 1880 were gold values. The increase from 1880 to 1890 was larger 
 than in any preceding decade. The figures of the census of 1890 
 indicate a period of unprecedented industrial prosperity. The full 
 effect of labor-saving devices had begun to be felt; great progress 
 had been made in the utilization of the agricultural and mineral 
 resources of the country; the vast West was just emerging from 
 the frontier stage; capital was abundant, and at all points available 
 for the extension and strengthening of every line of industry. 
 
 The decade covered by the Twelfth Census shows a relatively 
 small rate of progress, measured by percentages, but in many re¬ 
 spects it was the most notable in our history. The absolute increase 
 in gross value of products during the decade — $3,641,850,215 — 
 was nearly equal to that of the entire period up to and including 
 the census of 1870. The decade will remain conspicuous in our 
 manufacturing history for two things: The entrance of the United 
 States into international trade in manufactures, in systematic com¬ 
 petition with the chief exporting, nations; and the reorganization 
 of industry on broader lines, through industrial combination, which 
 has placed many branches of manufacture on a new basis in relation 
 to competition. 
 
 The manufacturing industries of the United States in 1900 may 
 best be considered from the point of view of their interdependence 
 or relationship to one another. For this purpose the Twelfth Cen¬ 
 sus has brought the industries of the country together into 15 
 grand groups. The 354 industries of the census correspond, in 
 a measure, to the “ species ” of natural history, while the 15 great 
 groups of industries are analogous to the “ genera, ” the whole mak¬ 
 ing the great “ order ” of manufacturing industry. 
 
 1. Food and Kindred Products. — First among the 15 groups 
 stands the manufacture of food and kindred products, with $2,277,- 
 702,010 value in 1900, which was nearly double that for 1880, and 
 constituted 17.5 per cent of the total value of all products of manu¬ 
 facture. Included in the group are 25 specified manufacturing 
 industries which utilize one or more of the food products of agricul¬ 
 ture. The development of this group of industries is a remarkable 
 demonstration of the advance of factory manufacturing in recent 
 
APPENDIX F. 
 
 627 
 
 years, and of its invasion of a field once belonging almost exclus¬ 
 ively to agriculture and the household. 
 
 Wholesale slaughtering and meat packing, represented by 573 
 establishments with gross products of $698,206,548, the largest 
 value of any industry in the group, or indeed of any industry in 
 any of the 15 groups, with the exception of iron and steel. This 
 industry made its first appearance as a manufacture in the census 
 reports of 1850. It is further notable for its remarkable concentra¬ 
 tion, the single state of Illinois contributing more than one-third 
 to the total value of the product. 
 
 In marked contrast in respect to distribution is the second most 
 important manufacture included in this group, that of flouring and 
 grist mill products, with a value of $560,719,063, from 25,258 
 establishments, located in every state in the Union. At all cen¬ 
 suses, until 1900, the flour and grist milling industry was the most 
 important in the United States in value of products. The census 
 of 1850, which returned but four industries with products exceeding 
 $50,000,000 in value, gave at the head of the list flour and grist 
 mills, with 11,891 establishments and products valued at $136,- 
 056,736. Since 1850 the number of such mills has increased to 
 25,258 and the value of products to $560,719,063. 
 
 2. Textiles . — While manufactures of food stuffs form the most 
 valuable class of products, manufactures of clothing and fabrics of 
 every description for household and other uses occupy the third 
 rank. The fundamental materials of this group are textile fibers 
 of every variety — cotton, wool, flax, silk, jute, hemp, ramie, and 
 other coarser fibers, and all admixtures of them. The group in¬ 
 cludes not merely the fabrics utilized for clothing, but such other 
 products as carpets, oilcloths, mats and mattings, nets, cordage, etc., 
 and the manipulation of textile goods in every form and for every 
 purpose. Forty-four classes of manufactures appear in this group, 
 which, at the census of 1900, comprised 30,048 establishments, 
 being fourth in rank among the 15 groups in this particular. The 
 value of products of these establishments was $1,637,484,484, which 
 constituted 12.6 per cent of the total value of all products for the 
 United States, and was exceeded in 1900 only by group 1, food and 
 kindred products, and by group 3, iron and steel and their products. 
 At the census of 1890 it was second in respect to value of products. 
 
 The cotton manufacture stands at the head of the textile industries 
 proper with respect to all the items covered by the census reports, 
 the value of its products being $332,806,156. From the beginning 
 
628 
 
 ECONOMIC HISTORY. 
 
 of the century this industry has been one of the leading and in some 
 respects the most typical of our factory manufactures, and it is 
 regarded as the most highly organized. At the census of 1840, 
 1,240 mills were returned, with 72,119 persons employed, a capital 
 of $51,102,359, and products valued at $46,350,453, a value ex¬ 
 ceeded at that census only by the value of the products of the flour¬ 
 ing and grist mills. At the census of 1850, cotton manufacture 
 was second in rank, the value of its products being $65,501,687 for 
 1,074 establishments. In 1900 there were but 973 cotton mills, 
 excluding all the establishments engaged in the rehandling of 
 primary products and the manufacture of specialties, which at this 
 census are separately returned for the first time under the distinct 
 industry name, u cotton, small wares.” Of this class, there were 
 82 establishments reported. The United States has pressed forward 
 so rapidly in the manufacture of cotton that in the production of 
 cotton goods, judged by relative spinning capacity, it now holds the 
 second rank among nations. In 1900 Great Britain was operating 
 45,400,000 spindles, as contrasted with 18,590,515 in the United 
 States ; 7,155,500 in Germany ; 6,090,889 in Russia ; 5,039,000 in 
 France ; 4,945,783 in India ; 3,140,171 in Austria ; 2,614,500 in 
 Spain ; 2,092,730 in Italy ; and 1,709,400 in Switzerland. The 
 number of spindles in the world in 1900 has been estimated at 
 103,383,386, and on this basis the United States operates 18 per cent, 
 of the world’s spindles. 
 
 The wool manufacture took root in the colonies as early as any 
 other industry, and down to the period of the War of 1812 it re¬ 
 tained all the characteristics of a neighborhood industry. The 
 advance of the wool manufacture into the perfected factory system 
 has been more slow than that of cotton, although there are many 
 w T ool-working establishments of enormous productive capacity. The 
 census of 1900 shows a continued decadence in the manufacture of 
 woolens proper, as distinguished from worsteds, there being an 
 actual decrease in the value of the products of woolen mills, accom¬ 
 panying a marked increase in the value of worsted products. 
 
 The worsted manufacture is an industry of comparatively recent 
 origin in the United States. Early in the forties there were two 
 or three large mills in New England for the production of worsted 
 fabrics or stuffs for women’s wear, but the manufacture made little 
 headway until after the close of the Civil War, and it was not until 
 about 1870 that the manufacture of worsted goods for men’s wear 
 was seriously undertaken in this country. Since then, however, the 
 
APPENDIX V. 
 
 629 
 
 development of the industry along these lines has been phenomenal, 
 and there are now in this country half a dozen or more mills of 
 most modern equipment turning out these goods in larger quantities 
 than any foreign establishments. 
 
 The most notable achievement in textile manufactures has been, 
 perhaps, in the carpet industry. Beyond question the United 
 States is the greatest carpet manufacturing nation. The 133 qiills 
 engaged in this industry in 1900 produced $48,192,351 worth of 
 two-ply or three-ply ingrains, Brussels, moquettes, tapestries, vel¬ 
 vets, Smyrnas, and the higher grades of Axminsters and Aubussons, 
 representing an aggregate of over 80,000,000 square yards of car¬ 
 pets. The development of the machine manufacture of carpets 
 dates from 1844. 
 
 The manufacture of hosiery and knit goods has in previous 
 censuses been treated as a branch of wool manufacture; it is now 
 more properly presented as a cognate industry, wool having given 
 place to cotton as the chief material of these goods. In this in¬ 
 dustry also the United States has outstripped the rest of the world. 
 More machine-knit goods, both underwear and hosiery, are turned 
 out annually in this country than in all other countries combined. 
 The knitting of socks and stockings remained wholly a household 
 industr}’’ until 1832, when the principle of knitting by power was 
 first successfully applied at Cohoes, N. Y. The value of the prod¬ 
 ucts of hosiery and knit goods mills in the census year was 
 $95,482,566, an increase of 42 per cent, since 1890. 
 
 Notable also among textiles for its rapid development in recent 
 years is the silk manufacture. In 1850 there were but 67 estab¬ 
 lishments engaged in this industry, and their production was 
 valued at only $1,809,476. The present census shows 483 estab¬ 
 lishments manufacturing goods valued at $107,256,258, which is 
 an increase of 22.9 per cent, since 1890. The United States has 
 in fifty years become the chief silk-manufacturing nation in the 
 world, with the possible exception of France, the value of whose 
 products in this industry may still slightly exceed that of the 
 products of the United States. 
 
 3. Iron and Steel. — The third great group comprises the prod¬ 
 ucts of iron and steel in almost infinite variety. Returns were 
 received from 13,896 establishments in this group representing a 
 value of products of $1,793,490,908, which constitutes 13.8 per 
 cent, of the total gross value of products of all industries during 
 the census year. Since the last census there has developed an en- 
 
680 
 
 ECONOMIC HISTORY. 
 
 tirely new branch of manufacture, that of tin and terne plate, rep¬ 
 resented in 1900 by 57 establishments, with 3,671 wage-earners, 
 and products valued at $31,892,011. The increase in the value of 
 products of the iron and steel group was 56.8 per cent. 
 
 At the time when the census was taken the blast furnaces, roll¬ 
 ing mills, steel works, forges, and bloomeries of the country were 
 in a state of activity unprecedented in our history, and yet it was 
 impossible to promptly supply the demands for their products. In 
 these mills have occurred the most marked advances in labor-saving 
 machinery and in appliances for reducing labor costs. To these 
 advances, which are nearly all of American invention, is due the 
 fact that since the last census was taken the United States has 
 reached a point where, measured by value of products, it stauds 
 preeminently the greatest iron-manufacturing nation in the world. 
 
 4. Lumber and its Rcmanufactures. — The fourth great group 
 of industries is that which uses wood as its material. The Twelfth 
 Census shows for this group 47,079 establishments, $946,116,515 
 capital, and $1,030,906,579 as the value of products, which was 7.9 
 per cent of the total value of products of the country. 
 
 In 1850, lumber, sawing and planing, was second in rank, with 
 17,895 establishments and products valued at $58,520,966. At the 
 present census, 37,239 establishments reported $735,175,987 as the 
 value of lumber and timber products and planing-mill products. 
 These two branches were shown as a single industry in 1850, and 
 the combination is made here for purposes of comparison, thus 
 eliminating duplications. Subtracting from this combined value 
 of products the cost ($94,137,837) of material purchased in a 
 partly manufactured form by the planing mills, there remains 
 $641,038,150 as the true net value of products, or eleven times 
 the amount reported fifty years before. 
 
 5. Leather and its Finished Products. — The fifth great group 
 of national industries is that which depends upon skins and hides 
 for its chief raw materials. It includes in its products the leather 
 itself in all its forms, tanned and curried, patent and enameled, 
 and morocco, as well as the finished products into which the leather 
 is remanufactured. The most important among these are included 
 under the factory production of boots and shoes, and the minor in¬ 
 dustries of saddlery and harness, trunks, belting, and a great variety 
 of other leather goods. 
 
 The group includes 16,989 establishments, having a capital of 
 $343,600,513, employing an average of 238,202 wage-earners, and 
 
APPENDIX F. 
 
 681 
 
 reporting a value of products of $583,731,046, which constitutes 4.5 
 per cent of the total value of products for all industries. Included 
 in the fifteenth group, that of hand trades, are reports from 23,560 
 establishments engaged in the custom manufacture and repairing of 
 boots and shoes, representing an additional product of $26,550,678. 
 It is significant of the evolution of the industry that these latter 
 establishments, now excluded from the leather group by the some¬ 
 what arbitrary classification of the Census Office, represented until 
 a comparatively recent period the entire product of boots and shoes. 
 
 In no other industry is the advance from the household and 
 small-shop manufacture more clearly shown than in the manufacture 
 of boots and shoes, which were formerly made one pair at a time 
 and exclusively by hand, but which are now produced in factories 
 with their intricate division and subdivision of labor, by w 7 hich 
 each employee performs but one of the score or more of separate 
 operations which combine to turn out the finished product with the 
 utmost rapidity. The factory manufacture of boots and shoes had 
 its origin in this country about 1815. The development of the in¬ 
 dustry is almost wholly the result of American enterprise, both as 
 to machinery and methods, and-this is the only country in which 
 the factory production of boots and shoes has practically driven out 
 the hand-made article. Factory methods made possible the pro¬ 
 duction in the census year of 219,000,000 pairs of boots, shoes, 
 and slippers of all descriptions. A large and increasing proportion 
 of this product is exported. 
 
 6. Paper and Printing . — The sixth great group is that of paper 
 and printing, in which 26,747 establishments, with $557,610,887 
 capital and 297,551 employees, turned out products valued at 
 $606,317,768, which constituted 4.7 per cent, of the total value 
 of products for all industries. The value of products of this group 
 of industries in 1900 was more than threefold that in 1880. The 
 census classification includes in this group the manufacture of wood- 
 pulp. Many of the great paper-manufacturing companies of the 
 present day own the forests and operate the w T ood-pulp mills in in¬ 
 timate connection and often in the same buildings with their paper 
 mills. This condition is one which has arisen almost wholly dur¬ 
 ing the last decade ; and, indeed, the whole development of the 
 manufacture of paper from the fiber of wood is of modern date 
 and largely of American origin. Nowhere in industry has there 
 occurred an evolution o striking as that which has entirely 
 changed the sources and character the materials utilized. The 
 
632 
 
 ECONOMIC HISTORY. 
 
 paper and wood-pulp industry records a phenomenal advance during 
 the decade. In 1900, 763 establishments produced $127,326,162 
 worth of products, an increase in value since 1890 of 61.3 per cent. 
 
 Next in importance to the production of the material itself, and 
 of even greater importance than the manufacture of paper, measur¬ 
 ing importance by value of product, stands printing and publishing, 
 in which are included, under separate classes, book and job printing, 
 music printing, and the printing and publishing of newspapers and 
 periodicals, representing among them an aggregate product of 
 $347,055,050, or more than one-half of the value of all products 
 included in the group. The old-fashioned, laborious method of 
 typesetting by hand has very generally given place, particularly 
 in newspaper offices, to machine typesetting. Accompanying this 
 change has been a development in the printing press which permits 
 the production of newspapers of enormous size with a rapidity and 
 at a price not conceived of twenty-five years ago as within the 
 possibility of mechanical enterprise. 
 
 7. Liquors and Beverages. — The seventh great group of in¬ 
 dustries covers the production of liquors and beverages, including, 
 distilled liquors, malt liquors, wines, and mineral and soda waters, 
 and the important cognate industry of bottling. The group in¬ 
 cludes 7,861 establishments, with $534,101,049 capital, 63,072 
 wage-earners, and with products valued at $425,504,167, which 
 sum represents 3.3 per cent, of the total value of products for all 
 industries. The value of products for the industry has more than 
 doubled since 1880. The products of the distilleries, breweries, 
 and wineries of the country represented a total annual production 
 of 1,325,358,094 gallons of beverages. 
 
 8. Chemicals and Allied Products. —The eighth great group of 
 industries is that of chemicals and allied products, in which are 
 included, in a manner somewhat arbitrary, the manufacture not 
 only of chemicals proper, but the proprietary and patent prepara¬ 
 tions of drugs, medicines, and compounds, expressed and other oils, 
 non-mineral paints, explosives, fertilizers, dye stuffs and extracts, 
 salt, petroleum refining, and many similar industries, the total 
 number of classes being 20. The manufacture was carried on in 
 5,444 establishments, with a capital of $498,390,219, employing 
 101,522 wage-earners, and products valued at $552,891,877, or 4.3 
 per cent, of the total value of products for all industries. 
 
 This group is one of vast and growiug importance, its products 
 contributing in constantly increasing quantities to the subsidiary 
 
APPENDIX V. 
 
 633 
 
 materials and supplies required in nearly every other line of manu¬ 
 facture. With the exception of lumber products and the hand 
 trades, all the remaining groups depend more or less upon the 
 assistance of the chemical industries, and to the remarkable ad¬ 
 vance made in chemical manufactures we may attribute a large 
 share of the general advance made in all industries. The statistics 
 show that the value of products in this group was more than three¬ 
 fold that in 1880. This increase represents a great variety of 
 chemical products, the manufacture of which had previously either 
 not been undertaken at all in this country, or only in the most 
 desultory and unsatisfactory manner. The single branch of the 
 chemical industry in which the United States appears to have 
 lagged behind in any degree is in the manufacture of dye stuffs 
 and coal-tar products. 
 
 9. Clay, Glass, and Stone Products. — The ninth great group 
 is that of clay, glass, and stone products, among which industries, 
 although their products are widely dissimilar, there is a certain 
 degree of kinship, owing to the fact that they all derive their raw 
 materials from the earth by extractive processes, and these raw 
 materials are of kinds which have only a potential value as they lie 
 in the earth, the value as represented in the census reports being 
 the labor cost of extraction and preparation. Included in this 
 group are sixteen industries, among which are pottery products, 
 plate and window glass and glassware of all kinds, the reworking 
 of glass and clay products, mantels, marble-work, emery wheels, 
 lime and cement, grindstones, millstones, hones and whetstones, 
 monuments and tombstones, kaolin and other earth grinding, etc. 
 The group shows 14,809 establishments, with $350,902,367 capital, 
 244,987 wage-earners, and $293,564,235 as the value of products, 
 or 2.3 per cent of the total value of products for all industries — 
 nearly threefold the value reported in 1880. 
 
 10. Metals and Metal Products , other than Iron and Steel. — 
 The tenth great group of industries, the manufacture of metals 
 other than iron and steel, includes 35 of the census industries, 
 among which are brass, copper, brass castings, watches, clocks, and 
 jewelry, gold and silver reducing and refining, plated ware, electro¬ 
 plating, zinc, lead, type founding, and all metal working other than 
 that of iron and steel. The development of these industries during 
 the last decade was rapid, being enormously stimulated by the in¬ 
 creased utilization of electricity for both power and heat. The 
 extension of the street-railway system in all parts of the country 
 
6 34 
 
 ECONOMIC HISTORY. 
 
 since the successful application of electricity as a method of pro¬ 
 pulsion, has been one of the chief factors in quadrupling the uses 
 of copper during the last ten years. For the group there were 
 reported 16,305 establishments, with $410,646,057 capital, 190,757 
 wage-earners, and $748,795,464 as the value of products, or 5.8 per 
 cent, of the value of products for all industries. The total value of 
 products for the group at the census of 1880 was $173,273,848. 
 Thus the rate of increase in this group for the twenty years was 
 considerably greater than in any other group, except vehicles for 
 land transportation. 
 
 11. Tobacco. — The eleventh great group of industries comprises 
 those which are confined to the manufacture of tobacco in any of 
 its forms. This group shows 15,252 establishments, with $124,- 
 089,871 capital, 142,277 wage-earners, and products of $283,076,546 
 in value, or 2.2 per cent of the total gross value of products in 
 1900, an increase of more than 100 per cent, for this group since 
 1880. This industry has undergone great changes since the Eleventh 
 Census was taken. In all manufacturing communities there re¬ 
 main small shops for the manufacture of cigars, and this branch of 
 the industry is widely distributed; but the manufacture of smoking 
 tobacco, chewing tobacco, and cigarettes has shown a remarkable 
 tendency toward consolidation, giant organizations controlling the 
 greater p&rt of the production. 
 
 12. Vehicles for Land Transportation .—The twelfth great 
 group of industries includes all manner of vehicles for land trans¬ 
 portation. These manufactures utilize so many varieties of raw 
 materials that it is impossible to class them together on that basis, 
 although it is the common one in the census grouping, and they 
 are therefore grouped together on the basis of the similarity in use 
 of their products. They include nine industries, the most important 
 of which are the manufacture and repair of cars by steam and 
 street railway companies, the manufacture of carriages and wagons, 
 and of bicycles and tricycles. There were 10,113 establishments in 
 this group, with $396,778,672 capital, 316,214 wage-earners, and 
 products valued at $508,649,129, or 3.9 per cent of the total value 
 of products for all industries, an increase since 1880 of 384.6 per 
 cent., or nearly four-fold. 
 
 13. Shipbuilding. — The thirteenth great industry group is that 
 of shipbuilding, which has been assigned to a distinct class, not 
 only because of its growing importance and the great public interest 
 in its development, but also because it utilizes such a great variety 
 
APPENDIX V. 
 
 635 
 
 of raw materials that it can not be properly assigned to any of the 
 other groups. 
 
 A remarkable increase in this industry is shown by the statistics 
 of the Twelfth Census. The value of ships, boats, and vessels of all 
 kinds produced in the shipyards of the country, both private and 
 governmental, has increased from 840,342,115 in 1890 to $85,612,- 
 470 in 1900, an increase of 112.2 per cent. The whole of this 
 increase, however, has been in the branch of iron and steel shipbuild¬ 
 ing j the value of such vessels constructed, not including those in 
 governmental shipyards, increased from $12,929,953 in 1890 to 
 $50,367,739 in 1900, or 289.5 per cent. On the other hand, there 
 was an actual decrease of 3.7 per cent in the value of wooden ships, 
 boats, etc. (not including those in Government shipyards), built in 
 1900, as compared with the output of the year 1890, the amounts 
 being $24,210,419 and $25,135,457 respectively. 
 
 14. Miscellaneous Industries .—The fourteenth group of in¬ 
 dustries is a heterogeneous grouping of all the miscellaneous in¬ 
 dustries not included in any of the prior groups, nor in the hand 
 trades, and not susceptible of such inclusion. It comprises all 
 those branches of true manufacturing which, by reason of their 
 peculiar character as specialties or novelties, or by reason of thp 
 special raw material utilized, or for any other reason, can not 
 properly be classified with any of the great general groups preced¬ 
 ing. The group reported 29,479 establishments, $1,348,920,721 
 capital, 483,273 wage-earners, and products valued at $1,004,092,- 
 294, or 7.7 per cent of the total gross value of products, an increase 
 of over threefold since 1880. 
 
 15. Hand Trades .—There remains to be considered one great 
 group embracing the industries commonly known as hand trades, 
 which in this census have been segregated from the manufacturing 
 industries proper, in order to bring out distinctly the relative im¬ 
 portance of each. In the total number of establishments reporting 
 at the Twelfth Census, these hand trades naturally represent a pro¬ 
 portion altogether out of keeping with the relative value of their 
 products. In 1890 there were 143,716 such establishments report¬ 
 ing, out of a total number for all industries of 355,415, or 40.4 
 per cent. In 1900 the number of such establishments had increased 
 to 215,814, and represented 42.1 per cent of the total of 512,254 
 establishments. In 1890 they employed 661,760 persons, including 
 all the proprietors of such establishments. In 1900 the number of 
 wage-earners was 559,130, to which, in order to render the number 
 
636 
 
 ECONOMIC HISTORY. 
 
 comparable with that of the census of 1890, must be added 242,154 
 proprietors, making a total of 801,284. The value of the products 
 of these establishments in 1890 was $1,009,347,226, or 10.8 per 
 cent, of the total gross value of the products of the manufacturing 
 industries of that year. In 1900 the gross value of products was 
 $1,183,615,478, or 9.1 per cent, of the total. 
 
 Included in the 15 groups are establishments representing nearly 
 every manufacturing industry which is pursued by man in any part 
 of the world. The exceptions are practically confined to certain 
 products of skilled hand labor, ordinarily known as specialties or 
 novelties. Types of this class of industry are the manufacture of 
 lace, rugs, and embroidery. Even here the machine manufacture 
 of lace from cotton threads has attained a considerable development 
 in the United States by the use of American mechanisms. 
 
 In several lines of manufacture, moreover, notably in the textiles, 
 American production is still confined largely to what are known as 
 staple products, susceptible of rapid production, in accordance with 
 a uniform standard, at a minimum labor cost, and involving a com¬ 
 paratively small element of artistic skill on the part of the work¬ 
 man. It is a fact that the use of the Jacquard loom in the weaving 
 of fancy patterns into the body of fabrics is not as general in the 
 textile factories of this country as in those of continental Europe. 
 In all branches of fancy goods, however, there has been a notable 
 progress in the United States since 1890. That the minds of 
 American manufacturers are turning more and more to the increased 
 development of the artistic side of manufacturing is shown in many 
 ways, and notably by the establishment in certain manufacturing 
 centers — largely through the generosity and at the instigation of 
 manufacturers — of schools of industrial art, where special attention 
 is paid to the application of art to manufacture, and by the found¬ 
 ing of textile schools, where young men and women are taught the 
 business of manufacturing from the scientific and artistic points of 
 
 view. 
 
INDEX. 
 
 Ad valorem duties, principle of, 186. 
 
 Agriculture, system of, in the 18th cen¬ 
 tury, 58; in the 19th, 63; injured by 
 commercial legislation, 67; importance 
 to Germany of, 181; condition of, in Eng¬ 
 land, 212, 215, 219, 220; in Ireland, 233- 
 237 ; Italian, 303; effects of improve¬ 
 ments on, 211, 313-315, 320-321. 
 
 Alsace-Lorraine, 56, 330. 
 
 Ancien regime, budget of, 75. 
 
 Anjou, system of metairie in, 62. 
 
 Annuities, conversion of perpetual into 
 terminable, 140-141. 
 
 Anti-Corn-Law League, formation of, 214; 
 object of, 216; influence of, 218, 229. 
 
 Arkwright, Sir Richard, his invention of 
 the water-frame, 39, 40, 129. 
 
 Army, organization of, under Louis XVI., 
 83; absence of standing, in America, 
 417, 422. 
 
 Artois, Charles, Count of, his opposition to 
 
 , reform, 73. 
 
 Auerstadt, 87. 
 
 Atkinson, Edward, 298, 318, 410, 546. 
 
 Augustus, Emperor, 27. 
 
 Australia and California, effect of gold dis¬ 
 coveries in, 259, 264-269, 277-279. 
 
 Austria, advantage of Suez Canal to, 302; 
 financial crisis, 357, 359, 363; national 
 wealth of, 476 ; business failures in, 503. 
 
 Auvergne, peasants of, oppose reform, 80. 
 
 Baltic ports, hampered by Sound dues, 
 180. 
 
 Banks of England and of France, fluctua¬ 
 tions in rate of discount of, 496-497. 
 
 Basic steel, 541. 
 
 Baxter, Dudley, estimate of British income 
 by, 474. 
 
 Beddoes, Dr., assists Davy, 52. 
 
 Belgium, 417, 483, 485, 490, 500, 507. 
 
 Bell, Mr., inventions of, for printing cali¬ 
 coes, 43-44. 
 
 Belligerent and neutral rights, conflict of, 
 115. 
 
 Berkeley, Bishop, 449. 
 
 Berlin decree, 116. 
 
 Berthollet, M., his experiments in bleach¬ 
 ing, 43. 
 
 Bessemer steel, 312, 324, 438, 442, 448, 
 572-576, 584, 624. 
 
 Blockade, neutral demands respecting, 109. 
 
 Bolton, adopts cotton manufacture, 35; 
 birthplace of Arkwright and Crompton, 
 213; comparison with Lowell, 416. 
 
 Boot and shoe industry, displacement of 
 labor in, by machinery, 320, 631. 
 
 Boulton, Mr., of Soho, his connection with 
 Watt, 49. 
 
 Bourse, the, 64. 
 
 Bradford, dependent on the wool trade, 32. 
 
 Brazil, 6, 14. 
 
 Bread, cost of manufacture and distribu¬ 
 tion, 321. 
 
 Bretagne, 5, 6, 82. 
 
 Brienne, ministry of, 81. 
 
 Bright, John, 214. 
 
 Britain, see Great Britain. 
 
 California, see Australia and California. 
 
 Calonne, ministry of, 75; statement of mil¬ 
 itary expenses, 78; new measures by, 
 80; dismissed, 81. 
 
 Canada, French colony of, long under the 
 government of an exclusive company, 8. 
 
 Canada, Dominion of, its growth, 1867- 
 1900, 621. 
 
 Canal, Suez, economic effects of its con¬ 
 struction, 300-304. 
 
 Carrying trade, on the ocean, revolution 
 of, 305-309; on the land, revolution of, 
 309-317. 
 
 Champagne, land owners in, 56. 
 
 China, 308, 413, 415. 
 
 Church, revenue of, in 1875, 76. 
 
 Clearing houses of London and New York, 
 returns of, 491. 
 
 Coal, difficulties in mining, 51; industrial 
 revolution due to, 54; reduction in con- 
 
638 
 
 INDEX. 
 
 sumption of, by ocean steamers, 307; 
 effect of machinery on, 319; use of an¬ 
 thracite, 419; increase in production of, 
 485; wages in mining of, 495; produc¬ 
 tion of, in Canada, 621; possession of, 
 by the South, 582. 
 
 Cobden, Richard, and the Anti-Corn-Law 
 League, 214; on the corn laws, 217, 232. 
 
 Colbert, manufactures encouraged by, 66, 
 67. 
 
 Colquhoun, Mr., speech of, 231. 
 
 Collie, Messrs, failure of, 356, 364. 
 
 Colonies, ancient Greek and Roman, 3 ; 
 Spanish, 4; Portuguese, 5; of Holland, 
 7; of France, 8; rapid progress of Eng¬ 
 lish, 9, 26; exclusive companies injuri¬ 
 ous to, 13; the trade of British, how 
 regulated, 14-26, 511-514; the different 
 kinds of non-enumerated commodities 
 specified, 15; enumerated commodities, 
 17; restraints upon their manufactures, 
 20; favored by Britain, 22; except'as 
 to foreign trade, 24; little credit due to 
 European policy for success of, 28; 
 their chief indebtedness, men, 30; Eng¬ 
 lish interference with trade of French, 
 111 - 112 . 
 
 Commerce, restraints on by exclusive com¬ 
 panies, 13-14; by navigation acts, 15, 
 511; French, fettered by guilds, 65 ; 
 effect of American Non-intercourse Act 
 on, 121; policy of France towards, under 
 the Restoration, 168; of Zollverein, 178— 
 180,189; treaties of, 198, 292-296; effect 
 of Suez Canal on, 300-304 ; improved 
 transportation and, 307, 309, 489; con¬ 
 dition of foreign, an economic symptom, 
 491 ; of Canada, 621. 
 
 Commonable Fields, 102. 
 
 Contraband of war, neutrals’ demand re¬ 
 specting, 109. 
 
 Corn laws, object of, 207 ; of 1801, 207 ; 
 of 1804, 209; of 1816, 209; of 1828, 213; 
 new law of 1846, 231; report of com¬ 
 mittee on, 208; injurious effects of, 211; 
 formation of Anti-Corn-Law League, 214; 
 Mr. Villiers on the, 215 ; Sir Robert 
 Peel’s opinion of, 219; the sliding scale, 
 220 ; policy of Peel towards, 230 ; final 
 measure of gradual repeal, 231 ; their 
 relation to the new gold, 282. 
 
 Corporations, restrictions on trade, im¬ 
 posed by, 65. 
 
 Cotton, early manufacture of, 34; inven¬ 
 tions which have developed the manu¬ 
 facture of, 36-43; the factory system 
 illustrated by its manufacture, 407; 
 statistical and economical comparison 
 
 of its manufacture in Great Britain and 
 the United States, 409-417; the extent 
 of its production an economic symptom, 
 485; American manufacture of, 628. 
 
 Cotton-gin, invented by Eli Whitney, 405. 
 
 Crises and revivals, periodicity of, 355, 357, 
 373, 483, 509-510. See Depression. 
 
 Crompton, Samuel, his invention of the 
 mule, 41. 
 
 Dakota, wheat product of, 320 ; settle¬ 
 ment of, 392, 393, 397. 
 
 Davy, Sir H., his early career, 52 ; invents 
 safety lamp, 53. 
 
 Decree, Berlin, Nov. 21, 1806, 116 ; at 
 Warsaw, 1807, 117 ; Milan, Dec. 17, 
 1807, 118; of St. Cloud, Sept. 12, 1810, 
 118 ; of Fontainebleau, Oct. 19,1810,118. 
 
 Deficit of 1787, 80. 
 
 Depression, economic, of 1873-1876, 355; 
 universality of, 356-358, 473 ; a cause, 
 the failure of foreign investments, 358- 
 364; mildness of its effects in the United 
 Kingdom, 364-368 ; question of its con¬ 
 tinuance discussed, 369-373; existence 
 of. from 1873 to 1879, proven by statistics 
 and economic symptoms, 469-510; fol¬ 
 lowed by a revival, 1879-1883, similarly 
 presented, 469-510; and renewed depres¬ 
 sion of 1883-1885, 473-510. 
 
 Dettes publiques, chap. xv.; augmentation 
 des, depuis 1870, 450-452 ; dcpenses de 
 la guerre, de la marine, capital nominal 
 et interets des dettes, 453 ; conversion 
 de rentes, 454 ; abaissement du taux 
 depuis 1870, 359; modes d’emission, 
 361; repartition des fonds publics, 462; 
 negotiation des rentes fran^aises aux 
 sources etrangeres, 363 ; revolution 
 dconomique, 365. 
 
 Discount, rates of, in 1873, 356; variations 
 in, an economic symptom, 496-497. 
 
 Disturbances, economic, since 1873, an ex¬ 
 planation of, 321-322. 
 
 Domingo, St., French colony of, 9. 
 
 Douanes, legislation affectant les, 168; les 
 recettes des, du zollverein, 202. 
 
 Dudley, Dud, discovers a mode of smelt¬ 
 ing iron with coal, 50. 
 
 Dutch settlements in America, slow im¬ 
 provement of, owing to government of 
 an exclusive company, 7. 
 
 Duties, modes of levying, 185-188. 
 
 £chelle mobile, 154. 
 
 Edict of Stein, see Stein. 
 
INDEX . 
 
 639 
 
 Edicts of Hardenberg, see Havdenberg. 
 
 Egypt, cotton of, 415. 
 
 Electricity, industrial use of, 325; future 
 effects of, 509. 
 
 Employment of labor, changing conditions 
 of, 318-321, 323, 407; advantages of 
 America in the, 417-428, condition of, 
 an economic symptom, 503-505. 
 
 England, finances of, 1793-1815, chap. vi.; 
 a new system introduced by Mr. Pitt in 
 1797, 126; new impost called the triple 
 assessment, 127; income tax imposed 
 and repealed, 127-128; explanation of 
 partial prosperity under heavy taxation, 
 128-129; inventions rescued England 
 from financial ruin caused by French 
 war, 129-131; amount of expenditure 
 during the war (1793-1815), 131; quota¬ 
 tions from Sir John Sinclair’s work on 
 the Revenue containing forebodings of 
 financial distress, 132-133; amount of 
 public debt at successive periods from 
 1736 to 1816, 132-133,136; tabular state¬ 
 ment of public income and expenditure, 
 1792-1849, 134; amount raised on loan, 
 etc., 135; delusive nature of the sinking 
 fund, 136-137, 142; inconsistent meas¬ 
 ures adopted, dead weight annuity, con¬ 
 version of perpetual into terminable 
 annuities, 139-142; balances of income 
 and expenditure, 1792-1850, 143-144; 
 excess of expenditure over income dur¬ 
 ing the period of war, and excess of 
 income during subsequent peace, 144; 
 316 years of peace required to cancel 
 debt of 24 years of war, 144-146; finances 
 of, 1837-1887, chap, xviii, 511-532, 603. 
 
 Europe, colonial policy of, 1-28; little to 
 boast of, 28-29; except in the contribu¬ 
 tion of men, 30; the army in her revolu¬ 
 tions, 83; failure of rye crop in, 234; 
 rise of prices in, due to new gold, 255, 
 257; drain of silver from, to the East, 
 275; effect of Suez Canal on the com¬ 
 merce of, 302; financial crises in, 357; 
 rapid advance in her cotton manufactures, 
 407; advantages of America for compe¬ 
 tition with, 417-427; economic changes 
 in, 469-473, 508-510; the wealth of, 474- 
 477; her indebtedness, 450-468; her in¬ 
 dustrial evolution, 533-536, 591-596. 
 
 Famines, prevention of, 313. 
 
 Feudal system, the, described, 57-68; over¬ 
 throw of, in France, 84. 
 
 Finances, difficulties of, Louis XVI., 77-79; 
 judicious policy of Sir Robert Peel, 221- 
 
 229. See England, la Restauration, la 
 France sous le second empire, French 
 Indemnity. 
 
 Flanders, small proprietors in, 56, 62. 
 
 Flour, displacement of labor in the manu¬ 
 facture of, 320-321. 
 
 Foville, A. de, 475, 493. 
 
 France, the trade of her colonies, how reg¬ 
 ulated, 15; the government of the colo¬ 
 nies conducted with moderation, 25; the 
 sugar colonies better governed than those 
 of Britain, 26; Huguenots from, settle 
 in England, 46; rural nobility and peas¬ 
 ant population of, 55-63; condition of 
 towns, 63; of trade, 65; of manufac¬ 
 tures, 66; decline of national prosperity, 
 68-70; efforts of reform under Louis 
 XVI., 71; resistance of privileged classes, 
 72; the budget, 75; general dissolution 
 of order, 82; the army, 83; final catas¬ 
 trophe, 84; permits colonial trade to neu¬ 
 tral ships, 111-115; restrictions on this 
 trade by English orders in council, 116, 
 117; blockade of her ports by England 
 118; la Restauration, 148-169; potato 
 disease appears in, 234; effects of new 
 gold in, 251; sous le second empire, 284- 
 297; payment of indemnity by, 326-350; 
 investments of, in new countries, 359; in¬ 
 crease of her public debt, 451; sells Lou¬ 
 isiana to the United States, 382; national 
 wealth of, 475; invested capital of, 500; 
 business failures in, 503; recent fluctua¬ 
 tions of trade, 488, 490, 492, 509, 538. 
 
 France, la, sous le second empire, chap. xi.; 
 le credit foncier et le credit mobilier, 284; 
 ardeur de la speculation, 285; la crise de 
 1857 et ses suites, 286; developpement du 
 credit, 287; nouveau systeme de conces¬ 
 sion des chemins de fer, 287; les grandes 
 compagnies, 288; multiplications des 
 moyens de communication, 289; progr£ s 
 du commerce exterieur, 290-291; le sdna- 
 tus consulte du 25 dec., 1852,292; mesures 
 relatives a la disette, 292; premiers de- 
 grevements, 293; exposition de 1855, 293; 
 projet de supprimer les prohibitions, 294; 
 lettre du 5 janvier, 1860; le traite de com¬ 
 merce avec l’Angleterre, 295; autres 
 traitds, 296. 
 
 Frederic the Great, 93. 
 
 Frederic William III., edict of emancipa¬ 
 tion, 95. 
 
 Free ships, free goods, neutral demands of, 
 109. 
 
 Freight rates, reduction of, 307, 309. 
 
 French Indemnity, payment of, a vast 
 transaction, 326; conditions under which 
 
640 
 
 INDEX. 
 
 payment was to be made, 329, 330 ; gen¬ 
 eral process of payment, 331-332 ; parti¬ 
 cular means employed, 333-337 ; bills 
 how obtainable for, 338-340; relation of 
 French trade to, 341; movement of 
 precious metals an element in, 343-347 ; 
 striking facts suggested by, 348 ; tri¬ 
 umph over obstacles in, 349-350, appli¬ 
 cation of, the various items classified, 
 350-353. 
 
 French Revolution, the, division of classes 
 before, 55 ; division of property, 56; 
 feudal system, 57, 61; rural nobility, 
 58; town government, 64; the guilds, 
 65 ; restrictions on manufactures, 66 ; 
 wealth of France at the period of, 68 ; 
 in manufactures, 68 ; in agriculture, 69 ; 
 in commerce, 70 ; schemes of reform, 
 71-75; the budget, 75-76; inequality in 
 distribution of taxes, 77; expenses of 
 the court, 78; the army, 83 ; the ancient 
 polity destroyed, 84. 
 
 Frome adopts the cotton manufacture, 35. 
 
 Gallatin, Albert, report of, 406, 624. 
 
 Germany, social and agrarian changes ef¬ 
 fected in, by Stein and Hardenberg, 86- 
 108; her neutral markets glutted during 
 the war 1793-1815, 110 ; formation, ob¬ 
 jects, and administration, of the Zollver- 
 ein, 170-206 ; effect of the new gold 
 upon, 255, 257, 261; payment of indem¬ 
 nity to, by France, 326-350 ; application 
 of the indemnity by, 350-354; financial 
 depression in, in 1873, 356, 357, 361 ; 
 the change in her monetary system, 368; 
 increase of her public debt since 1870, 
 451; American advantages in manufac¬ 
 ture over, 417-425; national wealth of, 
 475-476, 480; recent economic progress, 
 322, 483, 485, 488, 493-496, 500, 509; 
 her people the largest element in recent 
 American immigration, 506. L’essor in- 
 dustriel de l’allemagne, chap, xix, 533- 
 545. 
 
 Giffen, Robert, economic investigations of, 
 355, 474, 493, 501, 506. 
 
 Gladstone, Mr., 217. 
 
 Gloucestershire, dependent on the woollen 
 trade, 32; Roman iron works in, 50. 
 
 Gold, an element in payment of French 
 indemnity, 329, 333, 336, 343-346, 349; 
 a special advance of, made by the Bank 
 of France, 332, 334; its production in 
 British Columbia and Nova Scotia, 621. 
 See New Gold. 
 
 Grain, variations in prices of, in the 
 17th century, 315 ; effect of improved 
 
 transportation on prices of, 314-317. 
 See Corn Laws. 
 
 Great Britain, progress of her American 
 colonies, 9-13; the trade of her colonies, 
 how regulated, 14; distinction between 
 enumerated and unenumerated commodi¬ 
 ties explained, 15; restrains manufac¬ 
 tures in America, 20; privileges granted 
 to her colonies, 22; constitutional free¬ 
 dom of her colony government, 24; the 
 sugar colonies worse governed than those 
 of France, 26; increase in her trade dur¬ 
 ing the war, 1793-1815, 31; introduction 
 of woollen and cotton manufactures, 32- 
 36; encourages manufacture of linen in 
 Ireland, 45 ; lack of success in silk 
 manufacture, 45-46 ; her great inven¬ 
 tions, 36-44, 47-53; gave her wealth and 
 commercial supremacy, 44, 53-54 ; her 
 laborers contrasted with the German, 
 88; trade of neutrals opposed, during 
 war with France, 109,115; orders in coun¬ 
 cil, 116-118; their abolition, 120-124 ; 
 the war of 1812, 124; finances of, 1793- 
 1815, 126-147; tariff of the Zollverein 
 hostile to, 172; the Zollverein participates 
 in the advantages of, 183-184; imports of 
 the Zollverein from, 194 ; the Corn Laws 
 1801-1849, 207-241; their abolition, 231- 
 233; repeal of the navigation laws, 239- 
 241; advance in general prices due to 
 the new gold, 252-253; a corrective in¬ 
 flow of silver to the East, 256, 269, 276; 
 her use of credit, 252, 271-276 ; com¬ 
 mercial treaty with France, 23 Jan , 
 1860, 295-296; distribution system of, 
 302 ; tonnage statistics of, 305 ; British 
 wheat market, 317 ; growth of her in¬ 
 dustries, 323 ; bills on, in French in¬ 
 demnity, 335, 337 ; liquidations of, 1873- 
 1876, 355-374; statistical and economi¬ 
 cal comparison of cotton manufactures 
 in United States and, 409-417, 425-427 ; 
 consumption of iron and steel by, 435; 
 increase of blast-furnaces, 440; expense 
 of her army aud navy, 453 ; growth of 
 her national wealth, 474 ; cotton indus¬ 
 tries of, 485-486; postal statistics of, 
 490 ; foreign trade of, 492 ; prices of 
 staple commodities in, 493-494; wages 
 of her coal miners, 495 ; invested capital 
 of, 499 ; business failures in, 502 ; emi¬ 
 gration from, 506; increase in marriages, 
 507 ; her navigation acts, 607-610. 
 
 Greek colonies, 3. 
 
 Guienne, system of m^tairie iq, 61 ; pro¬ 
 vincial assemblies introduced into, 74. 
 
 Guilds, restrictions imposed by, 65-fi7 ; 
 
INDEX. 
 
 641 
 
 hereditary possession salable, 63 ; at¬ 
 tempt to abolish, 66. 
 
 Hamilton, Alexander, Report on Manu¬ 
 factures, 443, 622-623. 
 
 Hanse Towns, 117, 180, 194. 
 
 Hardenberg, agrarian legislation of, in 
 1811, 98 ; consists of two edicts, 99 ; 
 rights commuted by first edict of, 100; 
 principles of indemnification, 101; rules 
 for guidance in the application of these 
 principles, 102; agricultural reforms of 
 the second edict, 103-104 ; restrictions 
 in edict of 1807 removed, 104; important 
 passage quoted from, 104-106 ; various 
 measures in, 106-108. 
 
 Hargreaves, John, his invention of the 
 spinning-jenny, 38, 129. 
 
 Henry III., restrictions on trade imposed 
 by, 65. 
 
 History, place in, of period from 1860 to 
 1885, 298; summary of recent economic, 
 322-325, 469-473, 508-510. 
 
 Holland, 114, 118, 119, 180, 194, 483, 497, 
 507. 
 
 Hours of labor, reduction in, 503-505. 
 
 Human race, the, increased power of, 
 through railroad agencies, 310; com¬ 
 mercial relations establish the unity of, 
 471-472. 
 
 Immigration, American, 28-30, 238, 395, 
 505-507, 588. 
 
 Imports, increase of, in England, 1793— 
 1815, 31 ; restrictive duties on, in Eng¬ 
 land, 46, 207-212; in France, 67, 148- 
 169 ; in Germany, 185-191 ; effects of 
 decrees and orders in council, 114, 116- 
 121; oscillations in receipts of, in Ger¬ 
 many, 1834-1859, 202; removal of duties 
 on, in England, 211-233; reduction of 
 duties on, in France, 294-297 ; varia¬ 
 tions in, an economic symptom, 487, 
 491-492; amount of, in Canada, 621. 
 
 Income and property tax, introduction of, 
 by Sir Robert Peel, in 1843, 224; ex¬ 
 empted, in England, 1845, 1875, 475; 
 value of property assessed for, in Eng¬ 
 land, 224, 474 ; in France, 475 ; in Ger¬ 
 many, 476 ; in United States, 478. 
 
 Indemnity, see French Indemnity. 
 
 India, cotton manufacture an ancient in¬ 
 dustry in, 34; effects of new gold 
 upon, 252-258, 268-269 ; due chiefly to 
 her absorption of silver, 272-276; reduc¬ 
 tion in length of voyage to and from, 
 by Suez Canal, 300-306. 
 
 Industries, see Cotton, Iron and Steel, In¬ 
 ventions, Worlds’ Economic Progress. 
 
 Interest, rates of, 135, 453, 496-497. 
 
 International relations, increase and im¬ 
 portance of, 469-473. 
 
 Inventions, John Kay’s fly-shuttle, 36; 
 Robert Kay’s drop-box, 37; John Har- 
 greave’s spinning-jenny, 38; Richard 
 Arkwright’s water-frame, 39 ; Lewis 
 Paul’s revolving cylinders, 40; Samuel 
 Crompton’s mule, 41 ; Edmund Cart¬ 
 wright’s power-loom, 43; James Watt’s 
 steam-engine, 49; Dud Dudley’s smelt¬ 
 ing process, 50 ; Humphrey Davy’s 
 safety-lamp, 53 ; Eli Whitney’s cotton- 
 gin, 405 ; recent, enumerated, 324-325; 
 general effects of, 53-54, 131, 322-324, 
 509-510. 
 
 Ireland, manufacture of linen in, 45 ; dis¬ 
 tress in, 233-236 ; emigration from, 
 237-238. 
 
 Iron, its early use in Britain, 50 ; the im¬ 
 petus given by Dudley’s smelting pro¬ 
 cess, 51; effect of duties on, during the 
 Restoration, 160 ; exports of, from Zoll- 
 verein, 200-201; world’s production in 
 1880, 445; iron-ore in the United States, 
 573-579, 583-584. 
 
 Iron, pig, increase in world’s product 1870- 
 1883, 317; in England, 484; in the 
 United States, 569-572, 585. 
 
 Iron and steel, effect of cheapening on 
 railroad construction, 318; important 
 uses of, 435-447. 
 
 Iron industrv, American, chap. xxi. 
 
 Italy, 34, 303, 481, 483, 488, 490. 
 
 Kay, John, his invention of the fly 
 shuttle, 36. 
 
 Kay, Robert, his invention of the drop- 
 box, 37. 
 
 Kendal, dependent on the woollen indus¬ 
 try, 32. 
 
 Labor, liberally rewarded in the colonies, 
 1, 9 ; restrictions upon, by the guilds, 
 65-68 ; rights commuted by the edict of 
 Hardenberg, 100 ; demand for, can only 
 increase with increase of capital, 130- 
 131 ; decrease of, in the management of 
 vessels, 305 ; displacement of, by ma¬ 
 chinery, 318 ; in cotton mills of the 
 United States, 318, 415 ; advantages 
 possessed in America, 417-427 ; cost of, 
 reduced bj” machinery, 428; strikes a 
 symptom of its condition, 504-505; or- 
 
 41 
 
642 
 
 INDEX . 
 
 ganization of, in United States iron in¬ 
 dustry, 586-587. 
 
 Laborers, tenure of, in British American 
 colonies, 10; effects of the feudal system 
 upon, 57-68; abolition of “caste in 
 persons,” by Stein, 92, 94; character of 
 German, 184; of British, 370-371; of 
 American, 416-421; variations in the 
 condition of, an economic symptom, 
 503-504; union of, employed in the 
 United States iron and steel industry, 
 586-587. 
 
 Lafayette, Marquis of, his American ex¬ 
 pedition, 73-74. 
 
 Land, quantity of, an element in coloniza¬ 
 tion, 3, 4, 9, 10; classification of, before 
 and after the Revolution, 56-57; “caste 
 in land” abolished by Stein, 92, 94, 96; 
 agrarian legislation of Hardenberg, 98- 
 107 ; failure of crops, 1845-1846, 234- 
 238; effects of improved transportation 
 and production, 212, 320-321; westward 
 progress of American settlement, 375- 
 399. 
 
 Latin Monetary Union, 290. 
 
 Lead, Romans obtaiued from Wales, 50. 
 
 Levasseur, E., writings of, 251, 597. 
 
 Licenses, commercial, number of, 1802- 
 1811, (note) 120 ; evils of, during the 
 blockade, 120-122. 
 
 Linen trade, the, its history, 45. 
 
 Loans, amount of money raised by, in 
 England (1801-1821), 135; two distinct 
 methods of obtaining, 136-141 ; extent 
 of, by the Bank of France under the 
 Second Empire, 285-287 ; their employ¬ 
 ment of, for payment of French indem- 
 nit 3 r , 331-332, 338-341 ; conversion of, 
 454-459; investments in public, an 
 economic symptom, 498-500. 
 
 London, its money market a great distribu¬ 
 tor, 253 ; and equalizer, 358. 
 
 Louis XVI., character of, 71 ; abortive 
 reforms by, 72. 
 
 Lowell, Francis C., establishes first com¬ 
 plete cotton factory at Waltham, 407. 
 
 Macclesfield, transfer of silk trade from 
 Spitalfields to, 46. 
 
 Machinery, improvements in cotton, 36- 
 44 ; the steam engine, 49-50 ; enact¬ 
 ments against, prior to French Revolu¬ 
 tion, 66; displacement of labor by, 318- 
 319, 415 ; epoch of efficient, 321-325 ; 
 laws against exportation of, by England, 
 404; cotton, introduced into America by 
 Samuel Slater, 403-404; Eli Whitney’s 
 
 cotton gin as important as inventions of 
 English cotton manufacturing, 405 ; Mr. 
 Lowell sets up improved cotton, 406- 
 407 ; stoppage of, during American civil 
 war, 414 ; British operatives, 370-372; 
 American operatives, 417-425 ; cost of 
 labor, reduced by, 428 ; advantages of, 
 430-434; important iron products due 
 to, 435-440 ; recent advancement in iron 
 and steel, 441-449, 572-573, 580. 
 
 Maltzahn, Baron, report of, to Mr. Can¬ 
 ning, 185. 
 
 Manchester, its early prosperity dependent 
 on wool, 32; adopts cotton industry, 35. 
 
 Mankind, see Human Race. 
 
 Manufactures, British restraints on, in 
 North America, 20; fostered by Colbert, 
 66-67; the protective policy of the Resto¬ 
 ration, 148-169; beneficial effects of Sir 
 Robert Peel’s policy, 224-226; establish¬ 
 ment of, by the Zollverein, 172, 181; 
 growth of the factory system, 400-409; 
 ■American progress in, 622-636. 
 
 Merchants, the government of a company 
 of, the worst possible for a country, 7. 
 
 Metals, precious, the movement of, an ele¬ 
 ment in the payment of French indem¬ 
 nity, 343-347. See New Gold. 
 
 Mexico, 390. 
 
 Milan decree, 118. 
 
 Mining, coal, 51-53; iron-ore, 529-534. 
 
 Money, effects of an increased supply of, 
 244-251, 256-257; effects of a credit sys¬ 
 tem, 251-252; kinds of, used in pay¬ 
 ment of French indemnity, 330, 333- 
 338, 340; investments in credit institu¬ 
 tions, 498; Canadian savings, 621. 
 
 Monopolies, injurious effects of colonial, 
 7-8, 15-22; the guilds, 65-66; the ex¬ 
 ample of England, 232. 
 
 Nantes, edict of, the revocation of, 46. 
 
 Napoleon I., Berlin decree of, 116; Milan 
 decree of, 118; decree of St. Cloud and 
 of Fontainebleau, 118. 
 
 Nations, increasing relations of, 469-473. 
 
 Navigation Acts, English, enumerated and 
 unenumerated commodities of, 15-22; 
 repeal of, 239-241 ; leading sections 
 from the, 607-610; American, important 
 sections of, 611-615. 
 
 Necker, appointed minister, 74; dismissed, 
 75; restored to office, 81. 
 
 Neutrals, historical sketch of England’s 
 policy towards, 110-112 ; evasion of 
 belligerent rights by, 113-115 ; orders 
 in council against, 116, 117, 118. 
 
INDEX. 
 
 643 
 
 Neutrality armed, principles of, 109-110; 
 advantages, 113-115. 
 
 Newcomen, the inventor of a steam engine, 
 48; its defects, 48-49. 
 
 New England, the colonial law of inherit¬ 
 ance, 10; importance of its fishery, 16 ; 
 freedom of its government, 25; changes 
 in the factory population, 421 ; advan¬ 
 tages of, for manufactures, 417-434 ; 
 recent output in Eastern manufactures, 
 584. 
 
 Newfoundland, 308. 
 
 New Gold, the, chap, x; a fall in value of 
 money and a rise of general prices, 
 caused by, 242-243 ; the rise of prices 
 unequal during period of augmentation, 
 244; two-fold process by which the in¬ 
 creased production operates, 245-247 ; 
 the laws which govern the rise of prices, 
 247-251; the influence of different cur¬ 
 rencies upon the course of the movement, 
 251-257; a change in the distribution 
 rather than an increase in the amount 
 of wealth from, 259 ; a loss to com¬ 
 mercial nations produced by, 260 ; the 
 order and effects of the movement upon 
 different nations, 260-275; influences 
 developed by the movement that com¬ 
 pensate for the loss, 275-278 ; the un¬ 
 equal rise of prices in particular countries 
 during the movement, 278-281. 
 
 Norwich, the original seat of the woollen 
 trade, 32. 
 
 Ocean freights, reduction of, due to 
 economy in consumption of coal by com¬ 
 pound engines, 307-308. 
 
 Operatives, the character of German, 184; 
 of English, 370-372; of American, 417- 
 425; average product of, at different pe¬ 
 riods, in cotton mills of the United States, 
 318, 415. 
 
 Orders in council, of May 16,1806, 116; of 
 Jan. 7,1807, 117; of Nov. 11, 1807, 117; 
 of April 26, 1809,118; Lord Brougham 
 on, 122-124; declaration by the Prince 
 Regent to revoke, 124 ; but too late to 
 prevent the war of 1812, 124. 
 
 Paper, American legal tender, ch. xx. 
 
 Paris, trade of, in the 18th century, 64; 
 its mob armed against the ministry, 80; 
 parliament of, demands an Assembly of 
 the States General, 81; treaty of, not the 
 cause of American industrial indepen¬ 
 dence, 401; number of new companies 
 established in, 1881-1884, 500. 
 
 Peasantry, French, condition of, prior to 
 the Revolution, 57-63; their emancipa¬ 
 tion, 82-85; German, condition of, prior 
 to the emancipating edict of Stein, 87- 
 88 ; the abolition of caste in persons and 
 serfdom, 92-96. 
 
 Peel, Sir Robert, administration of, 217; 
 his policy in regard to the corn laws, 
 219-221; financial policy of, 221-225 ; 
 commercial policy of, 225-229 ; repeal 
 of the corn laws by, 230-233. 
 
 Petty, Lord Henry, new financial depar¬ 
 ture by, 145-146. 
 
 Picardy, small landed proprietors of, 62. 
 
 Population, movement of, an economic 
 symptom, 507-508. See Immigration, 
 United States Census. 
 
 Portugal, colonies of, 5; in 16th century a 
 great naval power, 6; her colonial 
 government, 25. 
 
 Postal statistics, economic significance of, 
 490-491. 
 
 Potato, Ireland and the, 233-238. 
 
 Prices, low, of land in the colonies, 7 ; 
 colonial, of European goods, 15 ; com¬ 
 parison of, of bread before and since 
 1789, 69; of bread, in England during 
 the war (1793-1815), 130 ; the sliding 
 scale regulated by, of wheat, 213, 219- 
 222; increase in, of grain owing to fail¬ 
 ure of the potato crop, 236; effect of the 
 new gold on general, 242-283; effect of 
 railroads and steamships on, 314-315; 
 of cotton, in relation to the American 
 civil war, 414 ; their economic signi¬ 
 ficance, 492-494. 
 
 Production, in European colonies, 1-30; 
 an increase of, owing to the great inven¬ 
 tions, 31,51, 53-54; low state of, in 
 France prior to the Revolution, 55-68 ; 
 hindered in Prussia by the caste system, 
 94; effects of the protective system upon, 
 of iron during the Restoration, 160 ; 
 improved conditions of, in the Zollverein, 
 184-185; the lessened cost and increased 
 amount of, owing to recent improve¬ 
 ments, 317-320; comparison of cotton, 
 in 1860 and 1880, 415; the world’s, of iron 
 and steel in 1880, 445; the economic 
 significance of variations in the world’s, 
 1870-1885, 484-486; of coal and gold 
 in Canada, 621; of iron and steel in the 
 United States, 1880-1900, 630. 
 
 Production and distribution, average sav¬ 
 ing in time and labor of, in recent years, 
 298; new conditions of, 298-325. 
 
 Prussia, see Germany, Stein, Hardenberg, 
 Zollverein. 
 
C44 
 
 INDEX. 
 
 Purchasing power, in France, 69; in Eng¬ 
 land, 130; in America, 416. 
 
 Quito, 4. 
 
 Railroad construction, recent reduction 
 in the cost of, 312, 318 ; extent of, an 
 economic symptom, 489-490; extensive 
 influence of American, and transporta¬ 
 tion, 578-579. 
 
 Railways, introduction of, in Germany, 
 183 ; extension of, in France, 287-289 ; 
 average freight charges of American, 
 309-310; economic effects of, 311-315 ; 
 German acquisition of, in Alsace-Lor¬ 
 raine, 330-331; investments by Germany 
 of French indemnity in, 351; speculation 
 in, by new countries, 360; comparative 
 mileage in 1881 of, in the United States 
 and other countries, 435 ; the world’s 
 mileage, in 1889, 310; increase in Cana¬ 
 dian mileage, 1868-1900, 621. 
 
 Reciprocity of foreign countries, speech of 
 Sir Robert Peel on, 227-229; benefits of, 
 469-473. 
 
 Restauration, la, politique commerciale de, 
 chap. vii.; de l’esprit des lois douani- 
 6res, 148; ordonnance du 23 avril, 1814, 
 149 ; 1’administration et la Chambre, 
 149; reclamations contre l’ordonnance, 
 150; droits sur les fers, 150 ; loi du 17 
 ddcembre, 1814,151; rapport de Magnie- 
 Grandprez, 152; loi du 28 avril, 1816, 
 152; loi du 27 mars, 1817,153; le transit 
 d’Alsace retabli, 154; protestations des 
 ports de mer, 154 ; loi de 1819 sur 
 l’echelle mobile, 154 ; loi de 1821, 155 ; 
 ses consdquences, 156; reclamations pro- 
 tectionistes, 156 ; loi de 1820, 157 ; loi 
 du 27 juillet, 1822, 157; rapport de 
 Bourienne, 158 ; les sucres, 159 ; les 
 bestiaux, 160; les fers, 160; premieres 
 reclamations des manufacturiers contre 
 le systeme, 160; pretentions de la droite, 
 161; profession de foi du Baron Saint- 
 Cricq, 161; loi du 17 mai, 1826, 163; 
 attitude du gouvernement, 163; difficultes 
 du systeme, 164; traites de commerce, 
 165 ; les etudes economiques, 165; J. B. 
 Say et la theorie des debouches, 165; 
 projet de loi modern du ministere Mar- 
 tignac, 167; caractere du systeme pro- 
 tecteur, 168; de la faveur dont il jouis- 
 sait en Europe, 169. 
 
 Revenue, public, and expenditure, before 
 the Revolution, in France, 75-80; from 
 1792 to 1849 in England, 134, 143-144 ; 
 1861-1884 in the United States, 616- 
 
 620; 1868-1900 in Canada, 621; 1837- 
 1885 in England, 511-532. 
 
 Revolution, economic, due to inventions, 
 31, 53-54, 298, 324-325, 405, 415, 509; 
 social and political, see French Revo¬ 
 lution, Stein. 
 
 Roebuck, Dr., associated with James Watt, 
 49. 
 
 Romans, the advance of the Roman slower 
 than of the Greek colonies, 3. 
 
 Rule, of 1756, meaning of, 111; relaxation 
 of, 112; of 1798, neutral complaints of, 
 112 . 
 
 Russell, Lord John, advocates a fixed 
 duty, 221; fails to form a cabinet, 231. 
 
 Russia, reprisals against, 110; prohibitory 
 tariff of, 193 ; grain harvest of, 1888, 
 316; increase in public debt since 1870, 
 451; restrictions upon its goods in the 
 English Navigation Acts, 608. 
 
 Sailing-vessels, decrease in number and 
 total tonnage of, 300, 308. 
 
 Savings banks of Canada, 525. 
 
 Say, M. L£on, Report of, discussed, 326- 
 350. 
 
 Scheele, discovers the bleaching properties 
 of oxvmuriatic acid, 43. 
 
 Schon, Theodor v., his opinion of the 
 edict of emancipation, 87, 95. 
 
 Seal fishery of Newfoundland, changes in, 
 308. 
 
 Search, right of, neutral demands, 109. 
 
 Securities, government, investments in, an 
 economic symptom, 498-499. 
 
 Serfdom, abolition of, in France, 84 ; in 
 Germany, 94. 
 
 Shipping, increased efficiency of, 300-309; 
 encouragement to American, 615*; amount 
 of Canadian, 621. 
 
 Si£cle, le xix e , chap. xxii. 
 
 Silk trade, the, establishment in England by 
 the Huguenots, 46; American, 629. 
 
 Silver, the drain of, to the East, 275-276. 
 
 Sinclair, Sir John, quotations from his 
 work on the public revenue, 132-133. 
 
 Slater, Samuel, erects first cotton factory 
 with machinery after English models in 
 America, 403. 
 
 Socialism, recent phases of, 505. 
 
 Soetbeer, Dr., statistics of, 476. 
 
 Southern States, the, estimated loss to, by 
 the civil war, 617; the rate of increase 
 of their population an important factor in 
 the census, 396, 399; recent development 
 of the iron industry in, 582-585. 
 
 Spain, the colonies of, 4; her assertion of 
 
INDEX . 
 
 645 
 
 an exclusive claim to all America, 6; 
 policy of her trade with the colonies, 
 14; cotton introduced by the Moors into, 
 34; reprisals against, in 1805, 110 ; aug¬ 
 mentation of debt since 1870,451; con¬ 
 version of its loan to Cuba, 456. 
 
 Speculation, see Crises. 
 
 Spices, 513. 
 
 Spindles, John Hargreaves the first to 
 make use of a number of, 38; total num¬ 
 ber of, operated in 1880, in the cotton 
 manufacture of the United States, 414. 
 
 States-General, demanded, 80; meeting of, 
 fixed, 81. 
 
 Steam engine, invention of, 48-50; effects 
 of, upon the productive energies of Great 
 Britain, 129-131 ; economic value of 
 recent improvements in, 307. 
 
 Steamers, ocean, displace sailing vessels, 
 300-308; their increased efficiency, 305- 
 308. 
 
 Steel, Bessemer, value of discovery of, 
 312; substitution of, in place of iron, 
 312-313; prompt introduction of, rails 
 in America, 442; the United States in 
 advance of other nations in the use of 
 (1880), 447, 448; remarkable increase in 
 its use in the United States, 572-576, 
 624. See Iron and Steel. 
 
 Stein, the emancipating edict of, decreed 
 in 1807, 86; his own account of the edict, 
 86; Schon’s view of, 87; its threefold 
 character, 88; modern peasant proprie¬ 
 torship not included in, 89; a description 
 of, in detail, 90-95; text of, 95-97. 
 
 Stock, amount and description of, created 
 in England from 1801 to 1821,135; com¬ 
 parison of methods of funding debt in, 
 in 3 and in 5 per cent annuities, 137-139. 
 
 Strikes, economic significance of, 504-505. 
 
 Suez Canal, economic effect of its construc¬ 
 tion, 300-304. 
 
 Sugar, originally an “enumerated” com¬ 
 modity, 16 ; manufacture of refined, 
 discouraged in British colonies, 20, 26; 
 increased consumption of, in 1880 in the 
 United States, 487. 
 
 Suicides, variations in the number of, an 
 economic symptom, 508. 
 
 Tariff, protective, levied during the 
 Restoration, 148-169; nature of, in the 
 Zollverein, 185-193 ; prohibitory, in 
 Russia, Poland, and Austria, 193; adop¬ 
 tion of free trade by England, 207-233. 
 See Imports. 
 
 Taxation, under Louis XVI., 76; indirect, 
 formerly preferred to direct, by British 
 
 governments, 127; a common system of, 
 introduced by the Zollverein, 178; valu¬ 
 ation of property for, in the United 
 States, 478. 
 
 Tea, increased importation of, in 1880 in 
 the United States and France, 487, 488. 
 
 Telegraph, extent of the electric system, 
 289-290, 310 ; influence of, on the con¬ 
 ditions of commerce, 302, 471; statistics 
 of its use, a symptom of economic pro¬ 
 gress, 490-491. 
 
 Textile manufactures, early history of, in 
 England, 32-38; importance of the great 
 inventions to, 38-49, 53-54; restrictions 
 upon, prior to 1789, in France, 66-67; 
 progress of, in Germany, 184-185; de¬ 
 velopment of the factory system in the 
 United States, 400-408; nature and ex¬ 
 tent of American cotton manufactures, 
 409-416 ; advantages of the United 
 States for competition in, 417-434; 
 strikes of workmen in, 505. 
 
 Tilsit, peace of, 94. 
 
 Tin, obtained by the Romans from Corn¬ 
 wall, 50. 
 
 Tobacco, an “ enumerated ” commodity, 
 18; low duty upon colonial, 22; impor¬ 
 tation of, in United States, France, and 
 Germany, 487, 488. 
 
 Tolosan, on the wealth of France, 68. 
 
 Tonnage, statistics of British, 305; of the 
 world’s, 308, 490; of Canadian, 621. 
 
 Towns, magistracy of, before the Revolu¬ 
 tion, 63-64; remarkable increase in 
 population of cities in Germany and the 
 United States, 540. 
 
 Trade, restrictions upon colonial, 13-24; 
 increase of, in England, 1793-1815, 31; 
 extent of, in France, before and after the 
 Revolution, 70-71; effect of orders in 
 council upon, 119; development of in¬ 
 ternal, of the Zollverein, 178-179; its 
 policy towards external, 187-195; eman¬ 
 cipation of English, 207-233; influence 
 of the new gold upon, 250-251, 259, 270- 
 271, 279-280; progress of, in France, 
 291; changes in, through the opening of 
 the Suez Canal, 300-304; effect of im¬ 
 proved transportation on, 305-317 ; of 
 improved production, 317-321; charac¬ 
 teristics of the depression in, 1873-1876, 
 369; comparison of English and United 
 States cotton, 409; illustration of Ameri¬ 
 can advantage for competition in for¬ 
 eign, 425-428 ; statistics of Canadian, 
 621. See World’s Economic Progress. 
 
 Transportation, early conditions of, in 
 France, 60; improved facilities of, in the 
 
646 
 
 INDEX. 
 
 Zollverein, 178-179, 183-184; multipli¬ 
 cation of means of, in France, 284, 287- 
 289; influence of Suez Canal on, 300- 
 304; revolution in the carrying trade on 
 the ocean, 305-309; on the land, 309- 
 312; effects of improved, 312-317; eco¬ 
 nomic significance of, 489-490, 578-579. 
 
 Treaty, of Amiens, 110, 136; at Vienna, 
 124; between United States and Great 
 Britain, in 1815, 125; Anglo-French com¬ 
 mercial, of 1860,295-296; three Franco- 
 German treaties or conventions of 1871, 
 329. 
 
 Treaties of commerce, of the Zollverein, 
 198-201; of France, under the Second 
 Empire, 292-297; series of international, 
 470. 
 
 Trianon, tariff of, 118. 
 
 Turgot, on subdivision of land, 56; guilds 
 abolished by, 65; commercial legislation, 
 67; measures of reform, 72; dismissed, 
 73. 
 
 United Kingdom, see Great Britain. 
 
 United States, the colonial progress, 9-25; 
 advantages from neutral position of, in 
 the French and English war, 113-114; 
 non-intercourse act by, 121; the war of 
 1812, 122-124 ; peace concluded, 125; 
 trade with the Zollverein, 187; relief 
 sent to Ireland, 235; Irish emigration to, 
 236-238; effects of new gold in, 252, 254- 
 257, 275-276; influence of the Suez Canal 
 on, 302; reduction on ocean freight to 
 foreign countries, 308 ; railroad freight 
 transportation of, 310; transfer of its 
 western wheat crop, 317; displacement 
 of muscular labor in the cotton mills of, 
 318; crisis of 1873 in, 356, 359; railway 
 speculation in, 360; decline of English 
 exports to, 362; low prices in, 363; in¬ 
 creased capacity for production and 
 manufacture of iron, 370, 372 ; early 
 introduction of textile machinery in, 
 400-405; growth of the factory system, 
 405-408; statistical comparison of cotton 
 manufacture of Great Britain and, 409; 
 character of the cotton fabrics in Eng¬ 
 land and, 410-413; advantages in indus¬ 
 trial competition over Europe of, 417- 
 424; ability for competition in foreign 
 markets of, 424-429; improvements in 
 cotton manufacture by, 430-434; con¬ 
 sumption of iron and steel in, 435, 630; 
 the various uses of iron and steel by, 
 435-439, 579; progress of the iron and 
 steel industries, 441-449, 568-590; na¬ 
 
 tional wealth of, 477-479; consumption 
 of tea and coffee in, 487; revival of 
 trade in 1880, 490, 492 ; statistics of 
 failures in, 502 ; variations in the de¬ 
 mand for laborers, 1870-1885, 503-504; 
 strikes in, 505; immigration returns of, 
 506; increase of marriages in, an eco¬ 
 nomic symptom, 507; important sections 
 from navigation acts of, 611-615; cost 
 of the Civil War, 616-618; payment of 
 war debt by, 618-620; production of 
 iron ore in 1890, 583-584; of pig iron, 
 584-585; safety of the legal tender paper 
 of, 568-590; iron industry in, 568-590; 
 progress of manufactures in, 622-636. 
 
 United States Census, of 1790, 375-381; 
 of 1810, 381-383; of 1820, 383-385; of 
 1830, 386-388; of 1840, 388-389; of 
 1850,390-391; of 1860, 391-393 ; of 1870, 
 393-395; of 1880, 395-399; of 1890, 399; 
 of 1900, 399. 
 
 Versailles, treaty signed at, Jan., 1871, 
 329. 
 
 Vessels, economy in construction and man¬ 
 agement of, 305; sailing, disappearance 
 of, 308. 
 
 Vienna, crisis of 1873 begins in, 356. 
 
 Villainage, abolition of, 98. 
 
 Villiers, Mr., 213, 215, 216, 221. 
 
 Wages, comparison of, in the 18th and 
 19th centuries in France, 68-69; demand 
 for labor can only increase with increase 
 of capital, 130 ; necessarily higher in 
 London than in the country, 130; com¬ 
 parison of weekly wages in 1790 and 
 1800, in England, 130; of cotton-mill 
 operatives, in Rhode Island in 1840 and 
 1886, 318; on wheat farms in the United 
 States and Prussia, 321; of English work¬ 
 men, 371; of women in cotton mills of 
 Lowell, 415; variations in, an economic 
 symptom, 494-496; increase in, in the 
 iron ore mining industry of the United 
 States 585. 
 
 War, cost of French, to England 1793- 
 1815, 124, 131; cost of her American 
 war, 133-134; method of payment, 136- 
 147; cost of the American civil, 616— 
 618; the payment of the war debt, 618— 
 620. 
 
 Watt, James, his invention of the steam 
 engine, 48-49. 
 
 Wealth, increase of, caused by the great 
 
INDEX. 
 
 647 
 
 inventions, 31, 44; estimate of, in France, 
 68-71; public income and expenditure 
 of the United Kingdom from 1792-1849, 
 134; financial policy of Sir Robert Peel, 
 221-229; change in distribution rather 
 than in the increase of, from the new 
 gold, 259 ; cost of Franco-German war to 
 France, 327-328; result of the war on 
 German finance, 351; increase in na¬ 
 tional, an evidence of economic pro¬ 
 gress, 474; in Great Britain, 474; in 
 France, 475; in Germany, 476; in Aus¬ 
 tria, 476; in the United States, 477; cost 
 of the American Civil War, 616-618; 
 payment of the war debt, 618-620; Ca¬ 
 nadian, 621. 
 
 West Indies, the remoteness of, greatly in 
 favor of its European colonies, 4; the 
 sugar colonies of France better governed 
 than those of Britain, 26; trade of, with 
 Europe carried on by neutrals during 
 the war, 1793-1815, 111-114. 
 
 Wheat, price of, in England in 1801, 207; 
 in 1804, 208; at the conclusion of the 
 French war, in 1815, 209; the sliding 
 scale of 1829 regulated by the price of, 
 213 ; increase in price of, owing to the 
 failure of the potato crop in Ireland, 
 236 ; momentous consequences of im¬ 
 proved conditions of production and dis¬ 
 tribution in the instance of, 313-317, 
 320-321. 
 
 Whitmore, Mr., his opinion of the corn 
 laws, 211. 
 
 Whitney, Eli, invention of the cotton gin 
 by, 405. 
 
 Woollen industty, the most ancient and 
 important in Great Britain, 32; meas¬ 
 ures taken for its promotion, 32-33; 
 enactments against the exportation of 
 the machinery, 400-401; American, 628. 
 
 Work, reduction in the hours of, a reason 
 for strikes, 504. 
 
 Workingmen, character of the German, 
 184; condition of the English, 371; ad¬ 
 vantages of the American, 417-425. 
 
 World’s economic progress, the, 1873- 
 1885, chap. xvii.; rapidity of, in recent 
 years, 469-473; increase in national 
 wealth, an evidence of, 474; in Great 
 Britain, 474; in France, 475; in Ger¬ 
 
 many, 476; in Austria, 476; in the 
 United States, 477; causes of, 479-481; 
 symptomatic method of estimating, dur¬ 
 ing a fixed period, 481-482; primary 
 symptoms of, 483; extent of production, 
 483-486; extent of consumption, 486- 
 489; changes in transportation, 489- 
 490; state of the money market, 491; 
 foreign trade, 492; secondary symptoms 
 of, 492; variation in prices, 492-494; 
 in wages, 494-496; rate of discount, 
 
 496- 497; investments and dividends, 
 
 497- 501 ; bankruptcies and failures, 502; 
 reflective symptoms of, 503; condition 
 of the working classes, 503; strikes, 504; 
 immigration and emigration, 505-506; 
 relative frequency of births, deaths, and 
 marriages, 507-508; the future, 509- 
 510, 606. 
 
 Young, Arthur, travels in France of, 56, 
 59, 62, 556. 
 
 Zollvekein, the, motives for its forma¬ 
 tion, 170; sentiment of national unity 
 created by, 171; the union not due to 
 commercial hostility towards other 
 States, 172-173; the various treaties 
 which preceded the final league, 174- 
 176; its extent and population, 177; 
 objects of, 178; results from, 179; three 
 desiderata of, 180; future influences of, 
 181; its facilities for inland trade, 182- 
 183; special advantages possessed by, 
 184; tariffs of, 185-193. 
 
 Zollverein, le, historique de cette associa¬ 
 tion, 196; population des £tats associes 
 en 1861, 198; trails de commerce avec 
 les principaux pays du monde, 198; 
 valeur de son commerce de 1835-1858, 
 199; principaux produits importes et 
 exports en 1834, 1844 et 1857, 200; 
 commerce avec la France de 1847-1858, 
 201; recettes des douanes de 1834- 
 1859, 202; recettes en 1858 et 1859 
 classes d’npres les fitats de l’Union, 
 203; partage de la recette entre les 
 divers £tats, 203; navigation, 204; avan- 
 tages du Zollverein, 205. 
 

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