ALBERT R. MANN 
 LIBRARY 
 
 New York State Colleges 
 
 OF 
 
 Agriculture and Home Economics 
 
 AT 
 
 Cornell University 
 

 Date Due 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Library Bureau Cat. No. 1137 
 
 Cornell University Library 
 
 HB 151.G22 
 
 Simple truths; the English version of a s 
 
 3 1924 013 916 329 
 
The original of tiiis book is in 
 tine Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924013916329 
 
SIMPLE TRUTHS, 
 
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SIMPLE TRUTHS, 
 
 • THE ENGLISH VERSION 
 
 ^ (Small ^xtutxBz on political 
 
 €t0nomg 
 
 j^OH THE INFOR,MATION OF ChINAMEN. 
 
 WMTTEN BY 
 
 ^ C. T. GARDNER, C.M.G., F.R.G.S., M.R.A.S., O 
 
 H. B. M. Consul at Amoy, 
 AND TRANSLATED INTO [CHINESE BY THE EEV, J, SADLER. 
 
 SHANGHAI : 
 
 AMERICAN PEESBYTEEIAN MISSION PRESS. 
 1 S9S. 
 

 (B ?/ ^ ^1 
 
FREF^C E. 
 
 tHE origin of this little book was as follows : A friend 
 of mine, with whom I had had frequent conversations 
 on economic subjects, remarked to me on the utter 
 ignorance of the Chinese, of all classes, of the rudiments 
 of political economy, and stated that, in his opinion, the 
 educating them in this respect would be a most useful work of 
 philanthropy, and he urged me to write a simple book on the 
 subject in Chinese ; other friends having made a similar 
 request, I at length determined to undertake the work, and 
 placed myself ia communication with the Society at Shanghai 
 for diffusing useful knowledge among the Chinese. On looking 
 over the list of subjects, on which the Society wished short 
 essays, I found many were connected with political economy, 
 and I therefore made up my mind to write sixteen short 
 essays on the subjects, and kindred subjects, proposed by the 
 Society, in such a manner that the sixteen essays, when 
 taken together, should form an elementary treatise on political 
 economy. My friend, the Rev. Mr. Sadler, kindly undertook 
 the labour of translating my English manuscript into Chinese, 
 and was good enough to request that the English version 
 should also be published. To this request I have acceded with 
 considerable misgivings, as I make no pretention whatever 
 to have anything new to say on economic subjects, and all 
 I have written will doubtless, though new to the Chinese, 
 be trite and stale enough to English students of political 
 economy. I have as far as possible avoided all matters on 
 which there is controversy, and where I could not avoid them 
 I have refrained from expressing my own views, and have 
 endeavoured to give fairly the arguments on both sides. 
 Several English friends, besides Mr. Sadler, have requested 
 
me to publish the English version. One of these friend s 
 arguments made me overcome my misgivings : " Don't hesi- 
 tate to publish, because all you have to say is trite and what 
 every economist knows and agrees on ; that is just what busy 
 people, who have not much time to read, want. Most books 
 on political economy are taken np with discussing very 
 profound subjects and controverting the errors of other 
 economists. What we busy men want is a short book, in 
 simple language, showing the first principles on which all 
 economists are agreed." 
 
 I therefore print this book with three hopes : first, that 
 it may be of benefit to Chinese who read English, and through 
 them to the rest of their countrymen; secondly, that it may 
 interest some of my many European and American friends in 
 these regions ; and thirdly, that the sale of copies may be of 
 service to an admirable institution. 
 
 Cheistophee Thomas Gardnbk. 
 Amoy, 1st April, 1898. 
 
TABLE OF CO:N^TE]SrTS. 
 
 INTRODUCTION.— Wealth— the uses of, the acquisition of, 
 (g^ diffusion of. Division of labour, interchange of commodities, 
 saving of labour, money, credit, rent, etc., honesty, co-operation, 
 education, demand and supply, producers and consumers, taxation, 
 administration, diffusion of wealth, charity — theory and practice 
 both necessary. — Pp. 1-10. 
 
 Chaptee I. H)iVfSfOU of XabOUr.— Benefits of, how to 
 
 secure, liberty of industry. Freedom of emigration and of immigra- 
 tion. Privileges to aliens. Religious toleration. Degree to which 
 division of labour can be carried. The maxims of political economy 
 act and react upon one another. — Pp. 11-25. 
 
 Chapter II. JntCtCbauge Of COmmO&ftfeS.— Benefits of, 
 benefits of external freedom of exchange greater to small than to 
 large areas. Judicious buying beneficial as well as judicious selling. 
 Deleterious commodities. Imports in payment of debt. Comparative 
 wealth of nations. Hindrances to the exchange of commodities. 
 Fallacy of the " mercantile theory." Consumer pays the taxes on 
 commodities. Benefit of free exports and free imports. — Pp. 26-38. 
 
 Chapter III. SaPf tlQ Of XabOUt. — Benefits of saving labour. 
 Machinery. Saving labour in production, in distribution, in transmit- 
 ting messages. By the use of money and by credit. In calculations. 
 The Latin union. Examples. Opposition to introduction of machi- 
 nery. Fallacy of objections. Machinery raises standard of living, 
 but entails dislocation of trade and temporary suffering. Modes of 
 fostering saving of labour. — Pp. 39-53. 
 
 Chapter IV. /IDoneS. — Necessity of a medium of exchange. 
 Different kinds of money. Axioms as to best forms of money. Coins, 
 
convenience of. Gold and silver coins. Standard of value. De- 
 preciation of silver, Bimetalism. Fluctuation of exchange. Pp. 
 54-65. 
 
 Chaptee V. (Irc5it. — Mutual trust a source of wealth. Good 
 laws and administration necessary to increase trust. Banks and pawn 
 brokers. Bank notes. Negociable instruments. Cheques. Bills of 
 Exchange. MargiiiJil credit. Bills of Lading. Warehouse receipts. 
 Personal security. Mortgages and vifgages. Letters of credit. — 
 Pp. 66-75. 
 
 Chapter VI. XOfltlS. — Lending a proprietary right. Loans of 
 money. Usury laws. Interest. Loans of im-movable rent. Loans 
 of movables. Hire. Loans of abilities and strength. Salaries and 
 wages. High wages not necessarily dear work. Lockouts and 
 strikes. Salaries. Loans of locomotion. Fares and freights. Postage. 
 War between capital and labour. What is capital ? — Pp. 76-91. 
 
 Chapter VII. IbOltCSt^- — Honesty the foundation of credit. 
 Penalties for dishonesty. Penal codes. Forgery. Arson. Barratry. 
 Adulteration. Breuch of trust. Breach of contract. Breach of trea- 
 ties. Shirking work. Want of thoroughness. " Nepotism." Infring- 
 ing goodwill. Trade marks. Patents and copy-right. — Pp. 92-105. 
 
 Chapter VIII. CO^OPCtatf Olt. — Go-operation in China. Com- 
 pulsory and voluntary co-operation. Trades unions. Guilds. Family 
 temples. Constraint. The State as a co-operative society. Defects 
 of Chinese co-operative societies compared with Western cooperative 
 institutions. Friendly societies. Insurance companies. Chambers of 
 Commerce. Combination of capitalists. Co-operative production 
 and distribution. International co-operation. — Pp. 106-118. 
 
 Chapter IX. JE&UCatiOll. — Education as a source of wealth. 
 Primitive and general education. Education should be progressive, 
 thorough, should embrace wide curriculum, should be widely diffused. 
 Distinction between education and instruction. Easy method of 
 learning. Examinations. Physical education. Education affects 
 future generation. — Pp. 119-137. 
 
 Chapter X. H)emanC) an^ Supply.— Demand creates supply 
 and supply creates demand. Price, cost of production and worth of 
 commodities. Fair protits. Fashion and luxuries. The standard of 
 
living. How to foster demand and supply. Supply creating demand. 
 Cheapness and over production. Interest of one nation in the pros- 
 perity of another.— Pp. 138-150. 
 
 Chapter XI. prObUCerS an& COltSUmerS.— Producers in 
 
 primitive societies. Distributors in modern societies. Protectors of 
 wealth. Consumers. Proportion of producers and consumers. Case 
 of deficiency of agriculturists, of excess of agriculturists. Excess of 
 civil and deficiency of military officers in China. Excess of yamgn 
 underlings. Number of soldiers requisite. Priests and nuns. The 
 consuming class. — Pp. 151-162. 
 
 Chapter XII. tlajatfOlt. — Ten canons of taxation. Taxes 
 on moral grounds. Taxes to protect industries. To countervail 
 bounties. Sources of revenue other than taxation. Land tax. 
 Income tax. House tax. Window tax. Poll tax. Legacy duties. 
 Taxes on houses, dogs, etc. Stamps. Import and export duties. 
 Octrois and likin. Monopolies. Excise. Sale of honors. State lotteries. 
 Taxes on luxuries. Revenue from crown lands, from public works, 
 from the post office, from royalties on mines. — Pp. 163-175. 
 
 Chapter XIII. H&ttlfltlStratiOn. — Mode of raising taxes. 
 Farming revenue. Prevention of fraud. Rates. Mode of spending 
 taxes. Self-preservation of State and protection. Individual rights. 
 Inherent defect of law. Amount to be spent on various objects. 
 How to get best value for money spent. Conscription and free 
 enlistment. Payment in honours. — Pp. 176-186. 
 
 Chapter XIV. Diffusion Ot Mealtb.— Object of wealth. 
 Greatest happiness of greatest number. Poor relief. Removing 
 causes of poverty. Laziness, vice, ignorance and sickness. Tempo- 
 rary poverty. Haussmauuism. Regulation of labour. Truck and 
 factory acts. Dangerous employments, responsibility for accidents 
 in. Mercantile marine. State aid to industries. Subsidies. 
 Bounties.— Pp. 187-199. 
 
 Chapter XV. Cbatitg. — ^.n. individual's duty goes beyond 
 dictates of law. Distinction, duty of State and individual. Proper 
 motive of charity. Mischief of indiscriminate charity. Proper objects 
 of charity. How to ensure flow of charity. Administration of 
 charities. The subjective value of charity. — Pp. 200-209. 
 
iKTROBrrcTioK. 
 
 <»o<--, 
 
 ' VERYBODY desires to obtain wealth ; when this desire The naeaof 
 
 wea. 
 
 rth. 
 
 is kept within reasonable boundsjthat is to say, when it 
 
 does not lead men to injure, oppress, or defraud others, 
 
 it is a right desire, and is implanted in man's mind by Heaven, in 
 
 order that men shonld exercise the abilities they possess, instead 
 
 of being idle, and idleness we know to be the parent of vice. 
 
 Wealth, that is, having plenty to eat, warm clothes to wear, 
 a good house to live in, etc, is a good thing, but there are better 
 things, such as Truth, tHourage, Temperance, Gratitude, Filial 
 Piety, Learniog, Brotherly and Conjugal Affection, etc. If the 
 pursuit of wealth is carried on by an individual, or by a nation, 
 to the detriment of these better things, the individual or nation 
 will really lose. We know, from history, how in the latter 
 end of the Song dynasty China paid too great attention to the jj ;^ 
 acquisition of wealth, and how, in consequence, her govern- 
 ment fell before foreigners, — the Mongols. As Confucius says : 
 " Wealth without righteousness is but a transitory cloud." 
 
 On the other hand, wealth, pursued by the right means, 
 and diffused in the right manner, not only adds to the bodily 
 comfort of people, by preventing cold and hunger, and by 
 easing the pains of sickness by good medicines, but is also a 
 means by which men's hearts and minds can be improved ; 
 when a country has obtained wealth it can afford a good 
 education to its people, and every penny spent on education 
 is two pence saved in crime ; for people who are educated and 
 wealthy are not so tempted to crime as people who are poor and 
 ignorant. Again, when a country is wealthy, there will be in 
 it people who have leisure to study morals, philosophy, medi- 
 cine, mechanics, chemistry, astronomy, etc. Had China, in the 
 time of the Chows and Sangs, not possessed a certain amount 
 
 m 
 
2 
 
 of wealth, had she been as poor as the Lolos ia Szechnan, the 
 
 Fan in Formosa, or the Li in Hainan, all the energy of all the 
 
 people would have been spent in obtaining the necessaries of 
 
 life, and Confncius, Mencius and the sages could not have 
 
 written the "Five Classics" and Choo Hi could not have 
 
 written his commentaries. 
 
 TheaeqniBj. There are some rules for obtaining wealth which are as 
 
 tion of wealth. ° 
 
 aniversally true as that 2 and 2 make 4, or as that 975 times 
 
 562 make 547,950. Some of these rules are as obviously true 
 as that 2 and 2 make four ; others, equally true, require study 
 and thought. 
 
 There are other rules for obtaining wealth, true in theory, 
 but which can only be put in practice under certain conditions. 
 If, therefore, the study of how to obtain wealth for a country 
 is to have beneficial results, two things have to be consider- 
 ed : first, what are the principles, acting on which the wealth 
 of a country can be increased ; secondly, how far it is practic- 
 able to apply these principles in any given country. 
 
 Diffusion of After having considered how a coantry can acquire 
 
 wealth. , > 1 , ■ 1 , , ' i" 
 
 wealth, we should thmk what steps can be taken so as to 
 diffuse the wealth among the inhabitants in such a way that 
 the greatest possible nnmber of them may be comfortable and 
 happy. If the whole wealth of a country is in the hands of a 
 few rich men, and the rest of the people are hungry and poor, 
 the wealth of that country will not be secure. The poor will 
 envy the rich and will rise in revolt, there will be riot and robbery, 
 and in the disorder much wealth will be destroyed. This has 
 frequently happened in China ; when there has been a famine, 
 the poor hungry people have taken to brigandage and robbery. 
 In speaking of the diffusion of wealth, it is not meant that 
 wealth should be equally divided ; this would not be possible, 
 even if it were right, and would be wrong, even if it were 
 possible. A sable coat is valuable when it belongs to one 
 person, but its value would be destroyed if it were cut up and 
 divided among a thousand persons. A handsome well-built 
 house is valuable when it belongs to one family ; its value 
 would be destroyed if it was pulled down and a brick given 
 to each of 10,000 persons. A poor man, if he has a warm 
 wadded coat and a cottage that keeps off the rain will, it is 
 
trne, envy the rich man vwho has the sable coat and the fine 
 house, bnt he will not generally try to rob the rich man; what 
 be will generally try to do is to work hard to save money to 
 . buy a coat and house as nearly iike the rich man's coat and 
 house as he can. As long as everybody in a country can 
 obtain the necessaries of life, with a reasonable am.ount of 
 comforts, it is a good thing there should be inequality of 
 wealth as it induces men to execcise industry and frugality in 
 order to become rich. 
 
 During the last two 'hundred years a great many learned 
 men in Europe have studied and thought over the ways by 
 which nations can be made rich. On certain principles there 
 is an unanimity of opinion ; in fact many principles can be 
 mathematically proved to be true- The following are univer- 
 sally admitted as principles that increase the wealth of 
 nations. Some of tkem are -as obvious as 2 and 2 make four, 
 but they will lead to truths not so obvious, just as the prin- 
 ciple that 2 and 2 make 4 leads to complicated truths iu 
 arithmetic. 
 
 1st. There should be a "Division ef labour," that is, a Division of 
 man should not try to do everything ; one man should take to * """^^ 
 agriculture, another to study, another to soldiering, another to 
 shipping, another to be a merchant, another to be a huntsman, 
 etc. 
 
 2nd. There should be a " Free interchange of commodi- Free inter- 
 tiesr 5i 3^ M *, as Mencius says, that is, that the rice eommodltfes. 
 grower should be able to exchange the rice he has grown more 
 than he can eat for, say, a piece of cloth the cotton spinner 
 has woven more than he can wear. 
 
 3rd. There should be Saving of labour. For example a Saving of 
 man can more easily dig up ground with a spade than with a * °'"^* 
 stick ; it therefore increases his wealth to use a spade for 
 the purpose instead of a stick. 
 
 4th. There should be a " Medium of exchange or money." Medium of 
 If a man grows more rice than he can eat, he wishes to ex- ^^°'**"se- 
 change the surplus for many things, sueh as tobacco, shoes, 
 clothes, etc. It is much more convenient, as it saves labour, 
 if he can sell his rice for money, and with the money buy 
 tobacco, shoes, clothes, etc., than if he had to take his rice 
 
round to the varions people, whose articles he wanted, to 
 barter his rice against their goods. 
 Credit, 5th. There should be Trust or Credit between man and 
 
 man ; when a person makes a bargain, especially if it is a big 
 one, he cannot carry the money with him to pay for it. The 
 seller trusts the buyer's promise to pay, and gives him the 
 article, or the seller accepts Bank notes, that is, he trusts the 
 Bank's promise to pay, for a Bank note is nothing but a pro- 
 mise to pay, or he accepts cheques or Bills of Exchange, in 
 which case he is trusting the drawers or drawees of the 
 cheques and bills. 
 Bent, etc, 6th. It increases the wealth of a country if loans are 
 
 facilitated, A man has a field, a house, a horse or money 
 which he does not wish to use himself, so he lends it to some- 
 one who does wish to use it ; that someone gets a profit out of 
 the use of the land, house, horse or money, part of which 
 profit he gives to the lender. The part he gives to the lender 
 is called rent, hire, and interest, etc. 
 Honesty, 7th. Honesty increases the wealth of a nation. If a 
 
 lender has implicit faith in the honesty of a borrower, he 
 will lend him land, houses, horses or money at a less charge 
 for the use of the article than if he has misgivings on the 
 subject. If he doubts the borrower very much, he will not 
 lend to him. A man reputed to be dishonest cannot borrow 
 money so readily, nor on such easy terms as a man reputed to 
 be honest. There are many ways in which honesty increases 
 the wealth of a nation. For example; European Insurance 
 Companies will not ensure Japanese ships against shipwreck, 
 unless these ships are commanded by European or American 
 captains, and European Fire Insurance Companies will not 
 insure Chinese shops in Chinese cities against fire, partly 
 because they do not trust the honesty of the Japanese captain 
 and Chinese shop-keeper, and this places the Japanese ship, 
 master and the Chinese retail dealer at a disadvantage. 
 Co-operation. 8th. Mutual help or co-operation increases the wealth' of 
 
 a nation. The most simple form of co-operation is when two 
 men work together at a piece of work, because they two toge- 
 ther can do it more than twice as fast as each working sepa- 
 rately could. Another simple form of Co-operation is that called 
 
" morrowing," ia vogue in Western Hnpei, There land, instead 
 of being held in common by the village community, is held in 
 patches by individuals. Hwang, Si, Chang, etc., help ChSn 
 plough his land to-day on the promise of Ch6n's helping them 
 plough their several lands on the " morrow " and succeeding 
 dUys. More complicated forms of co-operation are Partner- 
 ships, Joint Stock Companies, Trades Unions, Guilds, Corpora- 
 tions, etc. 
 
 9th. Education increases the wealth of a nation, not only Education, 
 because it makes the workman more skillful, but because by 
 studying arithmetic, chemistry and mathematics, people are 
 able to invent labor-saving machinery, by which the labor, 
 and consequently the cost of producing and carrying about 
 produce, is much reduced, 
 
 10th. The wealth of a country is increased by enconrag- Do. 
 ing the demand and facilitating the supply of commodities. 
 We all wish for a great many things we have not got, but we 
 cannot get them unless we are able and willing to pay for 
 them the price that people are willing to sell them for. If 
 many rich people want the same kind of thing, and are will- 
 ing to pay a high price for it, the price of that thing goes np, 
 until there is enough of it to satisfy the wants of the pur- 
 chasers. If the desire to possess, accompanied with the power 
 to purchase, is continuous, and the article desired can be pro- 
 duced in unlimited quantities, it will be produced to the extent 
 of the desire, accompanied with the power to purchase. This 
 is called "Demand creating supply." 
 
 Suppose an article, formerly very expensive, was suddenly 
 to become cheap, many people, who before wished for it but 
 could not afford it and therefore did not purchase it, would 
 be able to afford it and would purchase it. This is called 
 Supply creating demand. 
 
 Suppose a great many articles are produced, and there 
 are oiily a few purchasers, the owners of such goods, rather 
 than not sell at all, would sell at a loss for less than the 
 articles cost to produce ; and if the low price continued people 
 would cease to produce these goods, until they found out a 
 cheaper way of making them. Low prices therefore do not 
 enrich a nation, anless they are caused by cheapness of produc- 
 

 ■*• ± 
 
 tion. Agcain, wben there are many purchasers and few articles, 
 
 the prices go np beyond the worth of the articles, and the 
 
 holders of such articlesgeit high profits. The price of a thing 
 
 may be different from its worth. If things are sold below 
 
 their worth, prodactioa is checked ; if things are sold above 
 
 their worth, demand is checked ; high profits therefore do ncTt 
 
 enrich a nation if they check demand. 
 
 Producers J 2. The next principle on which all economists are agreed 
 
 Consumers, is as Mencius says : " The producers of wealth should be many 
 
 ^^^ and the consumers few." 
 
 ^ 5 S There are various kinds of producers of wealth. There 
 
 are the direct producers, such as the herdsmen, agriculturists, 
 artizans, manufacturers. Indirect producers, such as inventors, 
 students, mathematicians, teachers, etc. 
 
 There are distributors of wealth, such as the shop-keepers, 
 merchants, carriers, ship-owners, sailors, railway servants, etc 
 There are protectors of wealth, such as the mandarins 
 police, military forces, etc. 
 
 There are persons who, though they do not produce, 
 distribute or protect material wealth, tend to make human 
 life virtuous and joyous, such are priests, nuns, ministers of 
 the Gospel, sculptors, painters, novelists, musicians, singers 
 and actors, etc. The maxim with regard to them is that the 
 proportion among them should be a due one ; too many holy 
 priests and nuns in a country will sap the wealth of a country 
 as surely as too many actors and acrobats. 
 
 Then there are those who only consume, such as the idle 
 rich, beggars and criminals. It would be a good thing for 
 the wealth of the country if it could get rid of these mere 
 consumers and make them all work. 
 Taxation. 12. It is necessary in order to support the mandarins, 
 
 military, police, etc., that a fund should be levied from the 
 producers and distributors of wealth and from the holders of 
 wealth that has accumulated. This levy is called "Taxation ; 
 and the science of levying it in such a manner, at least to 
 impair the wealth of a country, is called the Economy of taxa- 
 tion. Upon this subject there is a great divergence of opinion 
 among experts. Some principles are universally agreed on 
 such as : 
 
Taxes should be preferred which cost least in collecting 
 compared with the amount of revenue they yield. 
 
 Taxes should, be preferred which are the least burden- 
 some to the tax payers. 
 
 Taxes should be levied in the interest of and expended 
 for, the benefit of the tax payers. The rich people are more ' 
 benefited by the expenditure of the taxes tlian the poor, 
 because such expenditure secures the enjo3'ment of wealth, 
 and therefore rich people should contributie more to the taxes 
 than poor people. 
 
 13. The next question that arises is called the Economy Administra- 
 of Ad/ministration ; or how the money collected in taxes can 
 be best spent, so that the work of protecting wealth shall be 
 effectively done without any waste of money ; on thie question 
 it is universally agreed, in the words of Mencius, that atten- 
 tion must be paid both to civil and military matters. There ^ 
 must be a sufficient number of efficient civil and military jX 
 officers, who must be adequately rewarded to obtain the men ^ 
 wanted, both as regatds probity and ability. They must be ^ 
 carefully selected, and after selection, be given adequate in- 
 ducement to work their best ; the army must be sufficient in ig 
 numbers; well drilled and well equipped. But neither in the J| 
 civil service nor in the military service should more men be 
 employed than are absolutely necessary. Employing more 
 men than necessary, not only is a waste of their pay, it is also 
 a waste of energy that should be used in producing wealth. 
 
 In this work the principles of increasing the aggregate 
 wealth of a country have been divided into the following 
 thirteen heads, to each of which a chapter will be devoted :— 
 ] . Division of Labor. 
 1. Exchange of Commodities. 
 
 3. Saving of Labor. 
 
 4. Money. 
 
 5. Credit. 
 
 6. Interest, Rent, Hire, and Wages. 
 1. Honesty. 
 
 8. Co-operation. 
 
 9. Education. 
 
 10. Demand and Supply. 
 
8 
 
 11. Producers and Consumers. 
 
 12. Taxation. 
 
 13. Administration. 
 
 After having considered the best means of acqairing 
 wealth, we should consider the best manner of diffiiaing it, so 
 ■ as to obtain the result laid down in the common but some- 
 what inadequate saying, " the greatest happiness of the great- 
 est number." An equal diffusion of wealth is impossible, and 
 a too unequal division of wealth, when most of the wealth of 
 a country belongs to a few persons, is dangerous. We have 
 to consider how the poor are to be given a share of the wealth 
 of the country. This is done in two ways : first, on grounds of 
 public good, in which case the aid to the poor should be given 
 by the sta*e from the taxes or rates ; secondly, from motives 
 of sympathy and benevolence, in which case the help is given 
 by individuals voluntarily from their private resources. 
 
 The first mode of diffusing wealth may be called the 
 diffusion of wealth by law. 
 
 This can be done in several manners, for instance by poor 
 laws, ordering that the poor should be fed, clothed, housed 
 or given money at the expense of the community, by educa- 
 tional laws enacting that the poor shall be taught at the 
 expense of the community. By factory laws laying down 
 that workmen and workwomen shall be given wholesome 
 places to work in, fixing their hoars of labor, ordering the 
 employer to give them compensation in case they are injured 
 in the employment, and by laws in which it is decreed that 
 state aid shall be given to certain industries. For example it 
 is a great advantage to a country to have ships and seamen of 
 its own ; how far is it right to tax the whole community to 
 give money to ship owners? The maxims generally agreed 
 on by economists are, that, while it is right in the public 
 interests to prevent the poor dying of starvation, help should 
 not he given the poor lavishly enough to encourage pauperism ■ 
 while the poor should, when necessary, be aided in the educa- 
 tion of their children, care should be taken not to destroy the 
 parents' sense of responsibility of providing themselves the 
 education necessary for their children, and that while factory 
 laws should protect women and children from the greed of 
 
9 
 
 their relatives and employers, grown it,p men do not require 
 so much protection ; each factory law must be judged by the 
 peculiar nature of the work it is desired to legislate for ; and 
 lastly, that while it is wise to foster native nascent industries, 
 it is not wise to nourish Tnoribund industries ; in all cases 
 such aid should be either tem,porary, or given from m,otives 
 of public policy, irrespective of economy. The diffusion of 
 wealth by law will be treated of in Chapter XIV. 
 
 Lastly, in Chapter XV will be treated the Diffusion of 
 wealth by individual benevolence or the organization of 
 charity. There are lazy bad people who will, if they can, live Charity, 
 by begging, and will not work if they can help it. To make a 
 country wealthy it is necessary that all who can work should 
 work. If charity is misdirected, and encourages idleness, it is 
 mischievous : on the other hand, charity well directed iucreases 
 the wealth of a country. Say a workman breaks his leg; if 
 charity supplies him with good medical treatment, he will get 
 well in a short time and set to work again ; if charity does 
 not help, he may either die, in which case his strength is lost 
 to the community, or he may be ill for a long time, and 
 a portion of his strength will be lost to the community. 
 
 If a rich man is wise, as well as liberal in his gifts, his 
 generosity will do good both to the individual and to the 
 community. If he is foolish in his gifts, he will do harm both 
 to the individual and to the community. If he gives wine to 
 a man half tipsj', he will not only do that man an injury, he 
 will also injure the communitj% as the man, maddened by 
 drink, will very likely destroy property and assault people. 
 
 The fundamental maxim with regard to charity, ou which 
 all economists are agreed, is : " The best help to be given the 
 poor is a help that will enable them, to help themselves to be 
 independent of charity." The ideal to which we should press 
 forward is that there should be such wise charity so largely 
 exercised that the necessity for charity should cease. 
 
 In conclusion, the science of political economy will not 
 in itself make a people wealthy. To the study of the st;ience 
 must be added thought and expprieuee as to how to apply the 
 principles learnt. If we do not study the principles we shall 
 make mistakes. Tiie wisdom of one man is limited ; by study 
 
 
 Theory 
 
 and 
 Prautii;*. 
 
10 
 
 we reap the wisdom of many, which is greater than the 
 wisdom of one. Having studied the wisdom of many we have 
 I to thiak how to apply it, for the mere study without thought 
 ^ W and experience is apt to degenerate into pedantry. Thought 
 ^ "^ and experience without study, leads men to wrong and mis- 
 ^ '^ chievous conclusions. As Confucius says : " Learning without 
 S& S thought is useless, thought without learning u dangerous." 
 
 9 
 
Chapter I. 
 
 division of Xabour. 
 
 fF a man attempts to do too many things, he will not do any Benefits of 
 
 of them well. If, for instance, he himself produces all di^'fion of 
 
 . labour, 
 the things he requires, he will only have a very few things. 
 
 If he tries to grow his own rice, breed his own goats, grow his 
 own cotton, weave it into cloth, dye it, grow his own indigo, 
 prepare it, shape and cut out. his cloth, make it into clothes, dig 
 out iron ore, smelt it, make ploughs, rakes, hoes, spades, needles, 
 build his own house, grow his timber and make the timber 
 into beams, planks, handles of spades, axes, etc., make his own 
 tiles, he will find it impossible to do all these things. There 
 have been people who have tried to do everything for them- 
 selves, but they have been very poor, they have had bad houses 
 bad food, bad clothes, no books, no paper; they have only 
 been able to provide themselves with the barest necessaries of 
 life, and have had no comforts, still less luxuries. 
 
 There have been tribes among whom there has been very 
 little division of labour. These tribes have lived by hunting 
 and fishing, but having only rude implements for killing game 
 and catching fish, in times of scarcity have killed and eaten 
 each other ; more shocking still, only the strong men and 
 women were able to hunt and fish, so directly persons became 
 old and infirm they were killed and eaten. 
 
 Further, hunting requires that there shall be wild beasts 
 to hunt, and wild beasts only exist where there are large 
 tracts of uncultivated country ; where there is agriculture, a few 
 mow of rice land will feed many people ; where people are 
 entirely dependent on hunting, it requires many hundred 
 mow of hunting land to feed one jnan. 
 
12 
 
 The first thing to make people rich is Division of labour, 
 that is, various men must devote themselves to various oc- 
 cupations ; by this means a man becomes skilled in the occupa- 
 tion to which he has devoted' himself, and can do more work. 
 
 The simple forms of division of labonr take place all the 
 world over in every household. The father of the family does 
 the heavy work in the fields, the mother does the lighter 
 work in the fields, rears silkworms, chickens or pigs, weaves 
 and dyes the cloth, makes the clothes for the household, 
 etc. Each of the children assists to the best of his or her 
 capacity in various ways. Stretch the household into a clan or 
 village community, and we find there is a still further division 
 of labonr. The majority of the clan will be engaged in agricul- 
 ture, according to the nature of the soil, growing rice, wheat, 
 potatoes, cotton, etc. Others will become blacksmiths, car- 
 penters, etc., others coppersmiths, others will atudy and be- 
 come school masters, others will make paper, etc. Each man, 
 being engaged in a special work, will attain special skill in that 
 work, and the community will be able to produce more and 
 better things by a division of labonr than if each man attempted 
 to do everything. Add to one village community many other 
 -village communities, and there is a still further division of 
 labour, producing still greater wealth. 
 
 The reason this takes place in the household, village 
 community and district is obvioas. By the division of laboar 
 more and better articles are produced in the family, villao-e 
 commanity and district than could have been produced with- 
 out division of laboar, or, in other words, the wealth of the 
 family, village community and district is increased by division 
 of labour. The same principle holds good when many dis- 
 tricts are joined into a province, when several provinces are 
 joined into a nation ; and when all the nations of the world are 
 connected by commerce, the province, nation and world are 
 enriched by division of labour. 
 
 How to To ensure division of labonr being a source of wealth it is 
 
 secure divi- , i , , . , 
 
 Bionof labour, necessary that eacfi person should, %n the sphere of his 
 
 ^nSy.^ activity, do the work for which he has the greatest aptitude 
 
 and capacity. In the household it would be absurd to set the 
 
 strong man to do the light work -and the weak womeii and 
 
13 
 
 children the heavy work. In the village commnnity it wonld 
 be absurd to make a blind man the barber, or an ignorant 
 mau the school-master. 
 
 In choosing what work a mau should do, his capacity has 
 to be considered. If in a village commuDity a member can 
 make 200 cash a day by making pots, and only 50 cash a day 
 by growing rice, it wonld be much better that he should make 
 ■pots than grow rice. Suppose there are two men, and it is 
 necessary that one should make pots and the other grow rice, 
 and suppose one of these men was clever in growing rice and 
 stupid at making pots, and the other clever at making pots 
 and stupid at growing rice. If these two men worked each at 
 what he was clever at, they would grow richer than if each 
 worked at what he was stupid at. How is one to find out 
 what a man is clever at and what he is stupid at. There is 
 only one way. Let him try, that is, there Tnust be liberty of 
 industry. If a family forces all its members to grow rice, 
 when some of them would do better by making pots, that 
 family loses. The same holds good with a village community, 
 district, province, nation and the world. There should be 
 liberty of industry. All men should be allowed to do the 
 work for which they are best fitted. In some countries the 
 hard work of agriculture has been done by slaves, who have 
 been compelled to do the work not for which they were best 
 fitted, but which their masters told them to do. These coun- 
 tries have not grown as rich as the countries in which there 
 has been freedom of industry. One reason for this is plain ; 
 the slaves, sure of food and clothing, worked no harder than 
 they were obliged, and they worked badly, not only because 
 they did not gain by the goodness of their work, but because 
 often they were set to work they had no .aptitude for. In 
 some countries people who have committed crimes, have been 
 punished by being forced to work and given no wages, only 
 fed and clothed; it has always been found that their work 
 costs more than what is done voluntarily by people working 
 ior wages and supporting not only themselves but their 
 families also out of their wages. 
 
 Liberty of industry entails : 1st, that a man shall not 
 hef<yrced to lahour on work for which he is unfitted; £nd, 
 
14 
 
 that he shall not he debarred from work for which'- he 
 is fitted. 
 
 In parts of India, at one time, certain work was only 
 allowed to be done by certain families. Tlins certain families 
 engaged in agricnlture, others in carpentry and others in 
 brass work ; and no son of an agriculturist was allowed to be 
 a carpenter or brazier ; the consequence was those parts of 
 India were very poor. 
 
 In Oorea no one but the nobles are allowed to become 
 officials, and the nobles are not allowed to engage in trade or 
 manna,! work. This, in spite of the richness of the soil in 
 Corea, the good climate and the plentiful deposits of gold in 
 the country, has kept Corea miserably poor. The nnmber of 
 nobles who do nothing, and therefore only consume the wealth 
 of the country and do not produce anything, is very large. 
 The nnmber of officials is enormous, and as the people are 
 heavily taxed to pay the salaries, they are very discontented, 
 and are constantly rising in rebellion. The nobles having the 
 monopoly of government offices, do not take the trouble to 
 learn to govern well. 
 
 In China, on the whole, a man has liberty of indnstry. 
 Men are not generally forced to join a trade they do not like ; 
 but even in China there is an interference with the freedom of 
 industry, checkiog the iocrease of wealth. There are guilds 
 and trades which will not admit outsiders into their profession, 
 that is, which debar men of capacity entering it. Take for 
 instance the crockery makers of Kiangsi and Kwangtung. 
 The crockery trades of these two provinces are distinctly 
 BuflPering from this exclusiveness. They work along the old 
 grooves and in the old manner, and do not improve, nor' 
 introduce new methods and designs ; indeed so far from im- 
 proving, the workmanship is decidedly deteriorating the 
 consequence of this is that Japan is ousting them. The 
 Japanese crockery is not only sold in larger quantities, but 
 the better qualities fetch higher prices; and not only this, 
 but by improved processes the Japanese are able to pro- 
 duce the common crockery at a less cost, and are under- 
 selling China abroad. China is thus losing a source of 
 wealth. 
 
15 
 
 {■ Farther, to ensure freedom of industry a man must be 
 
 allowed to work where he wants to work, and for this purpose 
 
 he must be allowed to go where he wants to go. In other 
 
 words there must be Freedom of emigration. 
 
 Take first the household. It would be manifestly absurd Freedom of 
 
 emigration, 
 to say that the members were only, to do work in the house ; 
 
 if that were made the rule, it is manifest that all tilling the 
 
 ground would be impossible. It would also be manifestly 
 
 absurd to prevent a man going to see his neighbours. By 
 
 going and looking at the way his neighbours work, he gains 
 
 knowledge and experience, and he becomes a better workman. 
 
 If his neighbours get good results with certain tools or 
 
 manures, or by sowing the seed at certain times, it is to the 
 
 advantage of the household that it should know the way other 
 
 households work. So too with regard to village communities, 
 
 it is to the advantage of such village communities that some 
 
 of its members should visit other village communities and see 
 
 how they do their work, so that if a man finds that other 
 
 village communities have better ways of tilling the ground, 
 
 spinning cotton, preparing indigo, etc., than his own, he may 
 
 be able to tell his villagers all about these better ways. It 
 
 also often happens that the harvest in one place is bad, and 
 
 that there is not enough food in the neighbourhood to support 
 
 the village community j some of them must go to other places 
 
 to earn a living. The same principles hold good with a 
 
 district, a province and a nation. There should be Freedom of 
 
 emigration. 
 
 For many years China, and other countries too, made the 
 
 mistake of not allowing her subjects to go abroad, and by this 
 
 means lost a good deal of the wealth she might otherwise 
 
 have acquired. At one time Chinese travelled about more 
 
 than Western people, and during that time China was richer 
 
 than Western people. Confucuis, Mencius and the other sages 
 
 travelled from state to state, and were able to tell the rulers 
 
 and people of various states in what things other states 
 
 surpassed or fell short of the state wherein they happened to 
 
 be. By this means it came about that "good was made an 
 
 example and evil a warning." In those days China was 
 
 ahead of Westera nations (except Rome and Greece) in know- 
 
16 
 
 ledge, and as knowledge is a source of wealth, in wealth too. 
 At one time Chiaa was the only nation that knew how to 
 make gunpowder, the art of printing, rearing silk-worms, 
 spinning silk, planting and preparing tea, making crockery, etc. 
 But by and by European people also travelled, and they 
 learnt all the Chinese knew — how to make gunpowder, how to 
 print, how to rear silk-worms, etc., and besides what they 
 learnt of China they found out some things for themselves — 
 how to fuse metals, how to spin cotton and weave cloth, etc. 
 They also learnt things from other foreign countries besides 
 China, by which they were enabled to enrich their own coun- 
 tries. Thus the Englishman who travelled in Spain, learnt 
 from the Arabs there the sciences of arithmetic, algebra and 
 chemistry. From the Italians he learnt banking, etc. By 
 combining all the knowledge possessed by all nations the 
 knowledge of each can be improved upon. 
 
 Freedom of industry not only requires that a man should 
 
 be able to go where he likes ; it also demands that he shall be 
 
 allowed to come where he likes, or in other words, besides 
 
 Freedom of freedom o{ emigration there should be freedom of immigration. 
 
 immigra ion. -j^^^ ^^^^ should a nation allow its subjects to go abroad ; it 
 
 should also allow foreigners to come to its country. 
 
 Take first the household. In China a household that has 
 no son, often adopts a boy and brings him up as a son. A 
 family often admits a scion of another family as a member' A 
 village community sometimes admits outsiders into the com- 
 munity. How often has it happened that the outsider so 
 admitted has been a most profitable son or member. Shun 
 was not the natural son of Yao, and the Great Yu was not the 
 natural son of Shun. 
 
 In the time of the Tang Dynasty the English were very 
 poor, and the wise king invited learned Frenchmen to come 
 to England to teach them. In the time of the Ming Dynasty 
 the Russians were very poor, and the wise Emperor of the 
 Russians invited numerous foreigners to come to Russia to 
 teach his people; later on the -wise King of Prussia the 
 ancestor of the present Emperor of Germany, invited learned 
 foreigners to his court. Kang-hi and Kien-lung invited learn- 
 ed foreigners to their courts, and these foreigners taught the 
 
17 
 
 Chinese many things which have increased the wealth of China, 
 such as astronomy, making cloisonne, etc. Afterwards Chia- 
 ching expelled the foreigners from China, and China became 
 poorer. 
 
 The more different kinds of skill and talents a family, a 
 district, a province, or a kingdom 6an utilize the richer will be 
 that family, district, province, or kingdom. The people of 
 different districts and provinces have different kinds of skill. One 
 of the reasons China has been as rich as she has been is be- 
 cause the government career has been open to men of all ranks 
 and from all parts of the empire ; further, because the higher 
 mandarins have to serve in provinces different from their own, 
 and have thus been able to avail themselves of the skill and 
 abilities of men of different provinces. Foreigners have different 
 skill and abilities from those of the Chinese, and China would 
 grow wealthier if she utilized the abilities of foreigners more 
 than she does. 
 
 Though a nation becomes wealthier by allowing foreigners 
 to come to its country, there is an exception if the foreigners 
 are bad men, who corrupt the morals of the people ; the dis- 
 advantages of allowing such men to come into the country, are 
 greater than the advantages. Or if they are incorrigibly lazy, 
 or too weak to work, it is unwise to allow them to settle in 
 great numbers in the country and to consume there more 
 than they prodace. Most Western states have wisely made a 
 rule not to admit within their conntries criminal and pauper 
 aliens. 
 
 It increases the wealth of a nation, in order to avail itself Privileges 
 to the full of the abilities of foreigners, to give aliens all the 
 rights and privileges of citizens, but this is a principle which, 
 though true in theory, can only be put in practice under 
 certain conditions. It would be impracticable to carry ont 
 this rule' to its full extent in China. Chinese and Western 
 people are so unalike that they cannot be treated exactly in 
 the same way. The laws of China are not suited to Westerners. 
 It is necessary that Westerners in China should have separate 
 judicial courts to which to be amenable. At one time this 
 . arrangement, of separate courts for foreigners, was very general 
 all over the world, that is, foreigners visiting a country were 
 
18 
 
 amenable to their own ofEcials, consuls, etc., rather than to the 
 local tribunals ; even now this holds good to a certain extent 
 with regard to foreign ships. Bat as Western laws and ad- 
 ministration became more uniform, exterritoriality was gra- 
 dually abolished. As long as exterritoriality existed and for 
 some time after, all foreigners in Western lands, were under 
 similar disabilities to those foreigners are under in China,., 
 For instance, they were not allowed to hold land in the 
 interior, nor to travel in the interior without passports. 
 
 The axiom as to the treatment of foreign immigrants is : 
 " It increases the wealth of a country to allow all foreigners, 
 with certain exceptions) such as criminals, and paupers, to visit 
 and reside in the country and to give them as many privileges 
 and to place them under as few disabilities as the conditions 
 of the country will allow. 
 
 As each country knows its own conditions best, each 
 country should make its own laws as to the privileges it gives 
 and the disabilities it imposes oq foreigners. The greater the 
 facilities a country is able to give, and the fewer disabilities it 
 is constrained to impose, the more it will iacrease its wealth. 
 America and Great Britain are the richest countries in the 
 world ; they are also the countries where most privileges are 
 given to and fewest disabilities imposed on foreigners. 
 
 It is often said : " Foreigners make a lot of money in the 
 country and then take the money home and spend it and thus 
 take away the money from the countrj'-." Those who say this 
 do not reflect that to earn money in a country, mouey's worth 
 must be given to that country. The Chinese who went to 
 Canada, saved as much money as they could and brought it 
 back to China to spend. But Canada was not poorer but 
 richer from the Chinese being allowed to go there. They built 
 the railway across Canada, quicker, better and cheaper than 
 it could otherwise have been built. By means of the railway 
 vast tracts of country were opened to grazing and agriculture 
 which were hitherto wa,ste. Large factories were established 
 for catching and canning fish in the interior of Canada, which 
 could not have been done but for the railway to carry the 
 canned fish to the markets. The case of Canada is simple, 
 because the class of Chinese who went there made things 
 
19 
 
 that can be seen. Singapore aad Hongkong have also grown 
 rich by the free immigratioa of people of all races. The 
 Chinese who go to Singapore do not all eogage .in artizaa 
 work ; many of them are shop-keepers and merchants, and 
 compete against the British shop-keepers and merchants ; 
 they do the work they have talent to do. So it is with 
 Americans, Germans, Frenchmen and men of all nationalities. 
 They can all go to Singapore and Hongkong and engage as 
 freely in trade there as British subjects and have there all 
 the privileges British subjects have. In Singapore and Hong- 
 kong they all gain money in what they have most talent for. 
 They most of them save their money to spend in their own 
 countries. It is true they take money away from Hongkong 
 and Singapore, but the work they do there is worth more than 
 the money they take away, and Singapore and Hongkong a,re 
 richer from their presence and from the privileges given 
 them. There is another way a country gains by admitting 
 foreigners. Thus the Chinese who go to Singapore get a taste 
 for foreign goods, such as soap, socks, needles, fish, and, when 
 they come back to their own country they introduce these 
 things among their friends, who also acquire a taste for them, 
 and a big trade springs up. Thus now Singapore imports fish 
 into Amoy to the value of hundreds of thousands of Taels a year. 
 
 Freedom of Industry also entails that we must not debar Beligioug 
 a man from work because he has different opinions from ours, 
 or in other words, there must be religious toleration. 
 
 In a household it would be manifestly absurd not to allow 
 a son to work in the fields, because he thought the world 
 square and the father thought it round. If a man makes 
 shoes or coats well and cheaply, it is to my advantage to buy 
 my coats and shoes of him, irrespective of whether he is right 
 or wrong in his opinions on subjects unconnected with shoe 
 and coat making. If a man is a good doctor and can heal me 
 of my sickness, but is not of the same religion as I, I had 
 better go to him and be cured than go to a man who agrees 
 with me on religious subjects and be killed. If I go a voyage 
 in a ship I had better go with a captain who has studied 
 navigation than with one who has studied theology. If a 
 people wish to be well governed they must choose as their 
 
 tolerationi 
 
20 
 
 rulers men who nnderstand the art of government best, not 
 men whose moral conduct they most approve of. The making 
 religion or morality a test for employing men as shoemakers, 
 tailors, ship captains, or mandarins, would certainly be wise 
 if our object was the production of hypocrisy, but it is absurd, 
 if we want, as we do, the best shoemakers, tailors, ship 
 masters and mandarins. 
 
 China would never have arrived at her present stage of 
 civilization and wealth had she not tolerated the three 
 religions— Confucianism, Taoism and Buddhism. And though 
 in some books Mahommedanism and Christianity are called 
 "perverse doctrines," China has, to a large extent, tolerated 
 both. She has availed herself of the talents of men of all 
 creeds, and by doing so has increased her wealth, but in so 
 far as she has permitted religious persecution in her borders, 
 80 far she has diminished her wealtii. 
 
 History is full of examples of nations impoverishing 
 themselves by religions intolerance. 
 
 From this cause Spain, which was once the richest and 
 most powerful nation in the world, has become one of the 
 weakest and poorest. The History of France gives us a strong 
 illustration of this truth. In the time of Kang-hi, France had 
 succeeded to the position of Spain and had become the richest 
 and most powerful nation of Europe ; in an evil hour for her, 
 her king, otherwise a good and wise monarch, was persuaded 
 by the Roman Catholic priests to persecute the "Protestants. 
 The French Protestants fled to other countries ; every country 
 which received them gained in wealth by doing so ; in England 
 they established the watch making and silk ribbon trades and 
 other industries, which now add to the wealth of England. 
 A long book has been written telling in detail how the various 
 countries they fled to were enriched by them ; meanwhile 
 France grew poorer and poorer, till, in the beginning of the 
 reign of Kia-tsong, the people were starving and rose in rebel- 
 lion and killed the King and Queen, the nobles and the priests, 
 and for a short time prohibited the Roman Catholic religion. 
 Then there came a wise ruler, who reinstated the Catholic 
 religion and gave universal tolerance to all other Teligiona. 
 Siuce then France has grown richer and richer every year. 
 
21 
 
 For a long time all the nations of the West kept themselves 
 poor by a foolish persecntioa of Jews and Jadaism, and even 
 now in many countries the Jews are under many disabilities. 
 The consequence is that the cleverest and richest Jews, driven 
 by disabilities away from other countries, come to America, 
 Prance, England, etc., and enrich these countries by their 
 abilities. The Jews are the cleverest traders of the world, and 
 some of them are the richest men in the world. The countries 
 which treat the Jews best derive most advantage from the 
 Jews' special abilities. 
 
 I have now explained the following maxims : — 
 
 1. Division of labour increases the wealth of a nation. 
 
 2. To ensure a due division of labour there inust be 
 
 freedom of industry. 
 
 3. Freedom of industry entails that a man shall not be 
 
 forced to do labour for which he is unfitted. 
 
 4. Nor be debarred frrnn work for which he is fitted. 
 
 5. That there should be freedom, of em,igration. 
 
 6. That with certain exceptions, such as criminals and 
 
 pav/pers, there should be freedom, of im,migration. 
 
 7. Foreigners should be given all possible privileges. 
 
 8. There should be religious toleration. 
 
 The next question that arises is the degree to which divi- Degree to 
 Bion of labour can be profitably carried. This degree differs aion of labour 
 according to the sphere. It is not the same in the household, carried 
 village community, district, province, kingdom and world. In 
 a household it would be obviously absurd if the father were 
 quite to confine himself to working in the fields, the mother to 
 rearing silk worms, the elder daughters to rearing poultry and 
 pigs, and the younger ones to looking after the baby. When 
 the father is at leisure, he assists the other members of the 
 family in their work, and so with the mother, etc. In a 
 village community, during the summer, the members will work 
 in the fields, but in winter they will do different work, such as 
 chop up fuel, spin cotton, mend their tools, etc. They will, if 
 such increases the wealth of the family or village community, 
 each work at various things ; in doing this each man will not 
 attain the skill at one thing which he would have attained if 
 be bad only worked at that one thing. At the same time he will 
 
22 
 
 attain a greater variety of a less skill, and will be able to 
 ntilize his spare time, and in a small commnnity this is more 
 profitable than a man attaining a high skill in a speciality. 
 In a district there should be greater division of labour than in 
 a village community, and one man will be more able to profit- 
 ably devote his atteutioQ to one thing, such as selling goods, 
 fishing, blacksmith work, carpentry, shoemaking, etc. In- 
 crease the district to the province, and there is a still greater 
 division of labour, and still more concentration of one man to 
 one thing, that can be profitably carried out, and still greater 
 in a kingdom than in a province, and still greater in the world 
 than in any one nation. The first axiom therefore as to the 
 degree to which division of labour can profitably be carried is : 
 " The division of labour can be profitably carried out to a 
 degree increasing in a ratio corresponding with the increase 
 of the area" 
 
 Again, take two countries each containing an area of 
 Bay 1,000,000 mow. If in one country there are only 1,000 
 persons, and in the other 10,000 persons, it is plain 
 that in the former there will not be the same advant- 
 age in having as great a division of labour as there will 
 be in the latter conntry, or in other words, "Division of labour 
 can be profitably carried out to a degree increasing in ratio 
 corresponding with the populousness of the area." 
 
 Now again, take a great area like Mongolia, where there 
 is not much variety of soil, etc. In such an area it will not be 
 profitable to carry ont division of labour to so great a degree as 
 in an area which has a sea border, rich mineral resources and a 
 varied soil and climate ; in other words, "Division of labour can 
 he profitably carried to a degree increasing in a ratio cor- 
 responding with the variety of resources of the area." 
 
 Now again, take a country which produces machinery. 
 The more complicated a machine is the more it is necessary 
 that some people should devote their attention not merely to 
 that machinery but to special parts of that machinery. In a 
 country which uses many kinds of complicated machinery 
 division of labour will be carried to a greater degree than in a 
 conntry which uses few kinds of or less complicated machi- 
 nery. In other words. " Division of labour can profitably he 
 
23 
 
 carried to a degree increobsing in ratio with the complexity 
 of civilization of the area." 
 
 In a country where the laws are simple, one man can 
 study them all. In a country where laws are complex, one 
 man devotes himself to crimiaal law, another to civil law, etc. 
 "Where civil law becomes complicated there is a further division ; 
 one man devotes himself to the laws of the land, another to the 
 laws of shipping, another to the laws of commerce. In a country 
 where there is not a great knowledge of medicine, one man can 
 study all the healing art of the country. In a country where 
 this knowledge is greater, one man studies surgery and another 
 medicine, and in the study of surgery there is a still further 
 division of labour ; one man devotes himself to the study of 
 the foot, another to the study of the eye, another to the study 
 of the bladder, etc. This specialization of work would be 
 possible in a small community, but would not be profitable. 
 In a small community, it is more desirable to have a man 
 who knows the general run of law rather than a specialist 
 who knows only one branch of the law, or who knows the 
 general run of the healing art rather than one who has special 
 skill in one branch of medicine. The degree to which labour 
 can be profitably divided is limited by the sort of labour most 
 required by the community. Among ten million people there 
 will be a suflScieat number of people suffering from diseases 
 of the eye to make it profitable that one or two doctors should 
 €ntirely devote themselves to curing eye diseases, as in such 
 case their time will be fully occupied. Among ten thousand 
 people there will be only a few suffering from their eyes, and 
 it will be more profitable to have a medical man with less 
 skill in eye curing than the specialist who will devote his 
 time to curing other diseases also. If there are a thousand 
 communities, each of ten thousand persons, the most profitable 
 division of labour is for there to be many general practitioners 
 and a few specialists and for the general practitioner when he 
 meets a difficult case to call in the specialist. Or in other 
 words, " Division of labour should be carried to such a degree 
 that men should attain the highest special skill of which they 
 are capable, consistently with the principle that they should 
 do the greatest amount of work of which they are capahle." 
 
24 
 
 The maxims Finally, nnless there is &n exchange of commodities there 
 
 eooiFomy art Can be little profitable division of labour, nnless the needle 
 
 uponTne ^^^^r Can Sell his needles, and in great quantities, if will be 
 
 another, impossible to divide the labour of needle naaking among his 
 
 employes, so that each shall obtain a special skill. It would 
 
 be no use to have, as is now done, many different kinds of 
 
 workmen — making the eye, sharpening the point, packing the 
 
 needles in paper, etc. 
 
 Unless there is machinery, that is, apparatus for samng 
 labour, there will be little profit in greatly dividing labour. 
 
 Unless there is money or a medium of exchange, many of 
 the occupations and trades that now exist, that is, many of the 
 divisions of labour, would be non-existent. The minting gold, 
 silver and copper, assaying the precious metals, banking, etc., 
 would be non-existent. 
 
 Unless there is trust between man and man or credit, 
 division of labour cannot be profitably carried out to a great 
 degree. 
 
 If there were no borrowing and lending, there conld not 
 be so much profitable division of labour. 
 
 Where there is not much honesty there cannot be much 
 profitable division of labour, for unless men are honestly paid 
 for the work done, they will not be induced to attain special 
 skill. 
 
 As for co-operation and education they are the warp and 
 woof of profitable division of labour. Without co-operation 
 there can be little division of labour. One of the objects and 
 results of division of labour is the attainment of special skill. 
 A certain amount of general education increases the power of 
 a man's mind and enables him to become a better specialist. 
 An oculist is a better oculist if the power of his mind has 
 been increased by his learning botany, anatomy, physiology, 
 etc. Besides, if a man only knows one thing he is apt to be 
 stupid. If a large quantity of men only know, for instance, how 
 to make the bowls of pipes and a new fashion of pipes 
 comes in, then a great many men will be thrown out of 
 employ, and the community will have to support them and 
 will lose for a time their wealth-producing work ; but if all 
 the bowl makers had been so well educated as to be able to 
 
25 ' 
 
 torn their hands to other things, then they would soon be 
 able 'to get other work, they wonld support themselves, and 
 their wealth-producing strength would not be wasted. 
 
 Again, division of labour will be more profitable where the 
 law of demand and supply is understood. For division of labour 
 is more profitable in the production of articles for which there 
 is a large and constant demand than in the production of 
 articles for which there is a smaller or less constant demand. 
 The producers of the former, from constant occupation, will 
 attain greater skill than the producers of the latter, who will 
 only be temporarily or intermittently occupied in the produc- 
 tion. 
 
 So too with the understanding the principles with regard 
 to producers and consumers. Where there is due proportion 
 among the various producers of wealth then there will be a 
 great profitable division of labour. So too with regard to the 
 economy of administration, of taxation and with regard to 
 the right diffusion of wealth. 
 
 This brings us to an axiom with which we will conclude 
 this chapter. 
 
 "The right understanding and applying one branch of 
 political economy, enable us rightly to understand and apply 
 other branches, and while increasing wealth within the sphere 
 of that branch, help to increase wealth in the sphere of other 
 branches," or in other words, " The wealth-producing power 
 of political economy increases in a geometrical progression 
 pari passu with the arithmetical progression of our know- 
 ledge and the application of that knowledge." 
 
Chapter II. 
 
 ^be 3ntercbange of CommoMties. 
 
 Benefit of JTrF a inan has only fifty mow of land he cannot grow on it 
 
 change of ^ all he wants: to till it he requires iron tools, and there 
 
 commo ity. ^^^ ^^ ^^ ^^^^ ^^ ^^^ ground ; he will want cotton to clothe 
 
 himself with, and the soil may be nnsnitable for cotton ; he 
 may want indigo to dye his clothes with, and the soil may be 
 unsuitable for indigo. The same principle holds good with 
 regard to a million mow. It is true more things can be got 
 out of a million mow than out of fifty ; but still the climate of 
 the million mow will be such as is not suitable for rice, say, 
 the inhabitants of this million mow will grow more than they 
 want of some things and exchange them for rice and other 
 products which their land is nnsuited for ; one thing is certain 
 no one will exchange one article for another unless he gains 
 by the transaction. Every m,an will buy, if he can, in the 
 cheapest market and sell in the dearest. The reason of this 
 is obvious ; every one desires to be richer than he is. Say 
 there are two men — Chang and Liu. Chang is cleverer in 
 growing rice, and can grow say 40 piculs a year, but could 
 only grow 5 piculs of cotton. To Chang 5 piculs of cotton 
 will be worth 40 piculs of rice, or 1 picul of cotton will 
 be worth 8 piculs of rice. Liu is cleverer at growing 
 cotton, and could grow say 5| piculs of cotton, but could only 
 grow 38| piculs of rice. To him 5i piculs of cotton will be 
 worth 38| piculs of rice, or 1 picul of cotton will be worth 
 to him 7 piculs of rice. If he changes with Cbang 1 picul 
 of cotton for 7^ piculs of rice, each party gains the value of i 
 a picnl of rice by the exchange. 
 
27 
 
 Now suppose that besides a difference of skill of Chang 
 and Lia the field of Chang is more suited for rice and the field 
 of Liu for cotton, so that by using his own field Chang 
 could produce on it 45 piculs of rice and only 4| piculs of 
 cotton. Then to Chang 1 picul of cotton would be worth 
 10 piculs of rice. Supposing Liu's field to be better suited 
 for cotton than rice, so that he could only grow 36 piculs of 
 rice in a year on it, while he could grow 6 piculs of cotton ; 
 to him a picul of cotton will only be worth 6 piculs of rice. 
 If he changes with Chang 1 picul for 8 of rice, each will 
 gain the value of 2 piculs of rice by the exchange. 
 
 If Chang devoted half his field to rice and half to cotton 
 he would produce a year 22| piculs rice and 2^ piculs 
 cotton. 
 
 If Lin devoted half his field to rice and half to cotton he 
 would produce a year 18 piculs rice and 3 piculs cotton. 
 
 Both together would produce a year 40| piculs rice and 
 5^ piculs cotton. 
 
 If Chang devotes all his field to rice and Lin all his to 
 cotton, both together would produce 45 piculs of rice and 6 
 piculs of cotton, and the two together would be richer by 4| 
 piculs of rice and 75 catties cotton, than if each grow his own 
 rice and cotton. 
 
 The benefit of exchange rests on two bases — the different 
 abilities of Chang and Liu and the different nature of theij: 
 lands, or, in other words, the diversity of human ability and 
 the diversity of natural resources. One thing is certain ; if 
 Chang did not gain by changing with Liu, he would not make 
 the exchange, and if Liu did not gain by changing with Chang, 
 he would not make the exchange. 
 
 Take not Chang or Liu alone, but many people; each 
 person will, if there is freedom of exchange, try to produce the 
 thing he has the greatest skill in producing, so as to procure, 
 in exchange for his surplus, the greatest possible quantity of 
 other things he wants, and not only that, he will also be 
 guided by the nature of the soil and climate of his field. If he 
 finds his soil more suitable for growing tea than rice, he will 
 ^row tea rather than rice. If he is in the neighbourhood of 
 iron, copper, coal, etc, he will perhaps devote his skill to 
 
28 
 
 producing iron, copper, coal, etc. ; more especially if his latner 
 
 had devoted his skill to the same trade and if he has had the 
 
 advantage of his father's teaching. 
 
 Benefit of In a small area it is impossible to exist without some 
 
 tr^domli freedom of exchaoge, in a medium-sized area there will be 
 
 exchange neater possibility of existeoee without freedom of exchange 
 
 greater to o ^ ■' r j r 
 
 small than to with other areas, but still interference with that freedom of 
 exchange would check the growth of riches of that area. 
 
 It is conceivable that the province of Kiangsu could 
 obtain a certain amount of wealth, even if all trade with other 
 provinces ceased. But the province of Kiangsu is richer by 
 trading with other provinces. Thus Kiangsu supplies Sze- 
 chuan with cotton and receives in exchange gold, white wax, 
 rhubarb and other medicines. Both Kiangsu and Szechnan 
 gain by this exchange exactly in the same way as Chang and 
 Liu ; by the exchange Kiangsu and Szechuau will have a 
 greater quantity of produce between them than if they both 
 themselves produced everything they wanted. 
 
 The empire of China could obtain great wealth, even if all 
 trade with foreign countries ceased, but her wealth is increased 
 by foreign trade. She exchauges her silk, strawbraid, tea, 
 camphor, rhubarb, etc., for foreign-made articles, such as 
 cotton and woollen textiles, needles, medicines, analine dyes, 
 clocks, matches and other articles which China is' unable to 
 produce as cheaply as foreign nations can; and foreign 
 nations purchase China's silks, strawbraid, camphor, rhubarb, 
 white wax, etc., becanse foreign countries cannot produce these 
 articles as cheaply as China. Just as in the case of Chang 
 and Liu the aggregate produce of China and of the foreign 
 countries is greater by the exchange than it could be without 
 the exchange. 
 
 In a small area there will be less variety of talent than 
 in a large area, and in a small area there will be less 
 variety of soil, climate and natural productions than in a 
 large area ; a email area is generally therefore more benefitted 
 by freedom of exchange than a large area, and more injured 
 by not having a freedom of exchange than a large area. This 
 is expressed in the following axiom: " 2Vie benefits of free 
 trade are in the inverse ratio to the magnUvde of the area. " 
 
£■9 
 
 The U. S. of Ameriea aad China are both large areas 
 possessing many iohabitaats aud great aataral resources ; both 
 check the increase of their wealth by throwing impediments in 
 the way of foreign trade. America's import tariff is far 
 higher than China's, yet the U. S. is far richer than China. 
 Why is this if foreign trade is a benefit ? The answer is easy : 
 it is because in the U. S. no impediment is pat in the way of 
 internal trade; small, medium and large areas in the United 
 States have freedom of exchange among each other throughout 
 the vast territories of the confederation. There is in the U. S, 
 110 likin, no stoppage of goods in transitu ; there are there 
 good railways to carry the goods inland ; there is no import 
 or export tax for goods going from one port in the 0. S. to 
 another and no export tax for American goods going from 
 the U. S. to foreign countries. In China, on the other hand, 
 there are no good railways j the canal and river communica- 
 tion, though excellent in some places, are filled with tax 
 stations, so that goods going from one district to another by 
 laud, pay heavy freight and likin, by water heavy likin, and are 
 detained long times for inspection. This impedes the freedom 
 of exchange of small areas with each other and keeps the 
 Chinese poorer than the Americans, though China allows 
 foreign goods to be imported to her coast ports on a lighter 
 tariff than America does. Ameriea owes her comparative wealth 
 not to the exclusion of foreign products, but to the free trade and 
 good communications that exist throughout the U. S. The U. S. 
 loses by excluding foreign products, but being a vast country, 
 rich in natural resources and in variety of soil and climate and 
 in the ability of her citizens aud commorant foreigners, the loss 
 she sustains in not admitting foreign products, is not much 
 felt, because she is rich. A rich nation, like a rich individual, 
 can afford a loss which would ruin a poor one ; but the rich 
 nation and the rich individual would both be richer if they in- 
 curred no losses. 
 
 In the same way, China does not owe her comparative 
 poverty to admitting foreign goods at low import duties — she 
 gains by this, but to the badness of her roads, the absence of 
 railroads, and the checks she imposes on the freedom of trade, 
 with each other, of the small areas within her borders. In 
 
30 
 
 conntries like China and the U. S. freedom of foreign trade 
 is important it is true, bat freedom of internal trade is more 
 important. For the benefits of free trade are in the inverse 
 ratio of the magnitude of the area. 
 
 In last chapter we considered division of labour as profit- 
 able by allowing each individual to work at what he has the 
 greatest capacity for ; in this chapter we have shown that 
 freedom of exchange is also profitable in that respect, and in 
 addition to that we have shown it is profitable in causing 
 goods to be produced in the places where they can be produced 
 best and easiest. There is a difi'erenne between division of labour 
 and freedom of exchange, namely, that while the profitableness 
 of division of labour increases in the ratio of the magnitude 
 of the area, the profitableness of freedom, of trade increases 
 in the inverse ratio, that is, decreases in the ratio of the mag- 
 nitude of the area. This difference has a practicable bearing 
 in the imposition of taxation. 
 Judicious I have heard Chinese, and foreigners too, say that it is 
 
 fioia'/'as well better for a country not to bay foreign things, as it takes money 
 
 asjudicioua out of the countrv. Now this is not true. We have shown in 
 sallmg. 
 
 the previous chapter with regard to foreign labour, that though 
 the labourer takes money out of the country, he leaves in the 
 country more value than he takes out ; so in regard to foreign 
 commodities, if they are not worth the money that is given for 
 them, they wonld not be bought. If I have 10,000 Taels and 
 no clothes, no food, no house, I am no poorer, because I spend 
 some of my money on clothes, food and house. It is true I 
 have no longer 10,0L)0 Taels, but I have clothes, food and a 
 house for the money I spent, and if I spend my money wisely 
 I am no poorer and may be richer. Thus if with 10,000 Taels 
 I spend Taels 1,000 on a house worth 1,200 Taels, Taels 1,000 
 on clothes worth 1,200, etc., it is plain that instead of my 
 Taels 10,000 I shall have articles worth Taels 12,000, and 
 though I have no silver I shall be a richer man than if I had 
 not spent the money ; as a general rule foreign commodities 
 are bought because, to the purchasers, they are worth more 
 than the money paid for them. Say a million foreign needles 
 are bonght for a hundred Taels. People give a hundred Taels 
 for them because they are worth in China more than a hundred 
 
31 
 
 Taels. If the handred Taels are seat to the foreign conntry 
 that made the ueedles, China will have, it is true, a hundred 
 Taels less, but she will have a million needles more than she 
 would have had if the purchase had not been made. As a 
 matter of fact the hundred Taels do not leave China. The 
 foreigner finds be can get for the hundred Taels a quantity 
 of silk, strawbraid or tea made in China, worth to him more 
 than a 100 Taels, and so he spends the handred Taels in silk, 
 strawbraid, or tea. China still has the same silver in the 
 conntry as before. What she has really done is, she has ex- 
 changed so much silk, strawbraid, tea, as the case may be, 
 for needles, and the exchange has been made precisely for the 
 same reason as Chang and Liu make the exchange of rice and 
 cottoa, because by making the exchange both China and the 
 foreign country get more of what they each want than they 
 could have by each producing both commodities. China and 
 the foreign country both gain and are richer by the exchange. 
 
 It may be objected what has been said above may be Deleterious 
 true about useful things like needles ; but how about opium 
 and spirits. I will at once admit that, if an individual, or a 
 nation, is so self-indulgent as to expend too much on opium or 
 drink, such will impoverish the individual or nation. I will go 
 further and say, if a government of a country sees its people 
 inclined to spend too much money on opium or drink, it is 
 quite right to check the import from abroad of opium and 
 drink, but in doing this it must exercise wisdom ; a total pro- 
 hibition of the import of opium and drink, or a too high levy 
 of duty, may entail upon the government a greater expense in 
 enforcing the law than it can afEord. The gain, too, by break- 
 ing the law may be so great that large numbers may be- 
 come contraband traders and smugglers, and being lawless in 
 one thing, may be lawless in all ; and more harm may ensue 
 from the prohibition than good be done by it. As in the case, 
 of refusing to allow criminal and pauper aliens to come to a 
 country a nation is quite justified in refusing to allow a mis- 
 chievous commodity to be imported. Each nation knows its 
 6wn conditioa, every state prohibits the free importation of 
 dynamite, most nations prohibit the free importation of arms 
 and ammunition. The conditions of each nation differ, and the 
 
32 
 
 means by which to check the importation from abroad of de- 
 leterious commodities mast differ according to the different 
 conditions of various nations. One thing is certain, the great- 
 er the freedom of exchange allowed, the wiser the means adopt- 
 ed to check the import of deleterious commodities, the greater 
 will be the wealth of the nation. 
 Imports in Suppose another case. Suppose Chaug, who grows rice, 
 
 of debt. lends Liu, who grows cotton, money. It is evident Lin will 
 have to pay Chaug interest, and suppose he pays the interest 
 in cotton and Chang owes no one anything. It is evident 
 Chang will have all the rice he (Chang) grows and some of the 
 cotton Liu grows. But though Liu has to give some of his 
 cotton to Chang, it does not follow that Chang is the richer 
 man. For instance, if Chang and Liu, before the money was 
 borrowed, each had fifty mow, and Liu uses the money to buy 
 ten more mow of land which produces 60 catties of cotton a 
 year and he only pays 20 catties a year interest, he may be a 
 richer man than Chang by 40 catties a year less the cost of 
 cultivation. 
 
 Now suppose that Chang not only lends to Liu, but lends 
 also to Li who smelts iron, to CMa who rears silkworms, to 
 Hsu who makes pipes. He will receive from Liu cotton, from 
 Li iron, from ChSn silk, from Hsu pipes not necessarily in kind, 
 butthe worthof a certain amount of cotton, iron, silk and pipes ; 
 and that irrespective of whether Liu, Li, Chgn and Hsu are 
 poorer or richer than he is. If Chang has both borrowed and 
 lent money, and still has his own field, what will be the result ? 
 If he has lent more than he has borrowed he will receive more 
 that he gives out, if he has borrowed more than he has lent he 
 will receive less than he has to give ont of his field. 
 
 The same thing happens with village communities, dis- 
 tricts, provinces and nations. If a nation has lent more than 
 it borrows, its import will be greater than its exports. If it 
 has borrowed more than it has lent, its export will be greater 
 than its import. As matter of a fact every nation is both a 
 borrower and a lender. When people living in England invest 
 money in a foreign country, whether the investment is in the 
 form of a loan to the foreign government, or shares in a foreign 
 country, companies, etc, England is lending that country money, 
 
S3 
 
 and tlie interest will be paid, generally not ia momey, but 
 in produce. England has lent Russia more money tkan Russia 
 has leuc England, consequently imports more goods from 
 Russia than she exports to Russia. England has lent most 
 countries of the world more than she has borrowed from them, 
 consequently her total imports are greater than her total 
 exports . 
 
 Some one may ask, How is it that the imports into Amoy 
 are greater than the exports, Amoy has not lent foreign coun- 
 tries money. That is true, but Amoy has lent labourers whose 
 work is worth monej-. Men go from Amoy to Manila, Burmah, 
 Singapore, Tonquin, Java, etc., earn money there and come 
 home to spend it ; some of them, before coming home, have 
 invested money in these foreign countries, and the interest of 
 the savings, whether of wages or iavestments, comes to Amoy 
 in the shape of imports. 
 
 Some one may ask. Supposing England has lent Russia 
 one hundred million Taels more than Russia has lent England, 
 will the excess of England's imports from Russia over her 
 exports to Russia exactly represent the interest on a hundred 
 million Taels ? Or in other words, will the excess of imports 
 over exports be exactly and invariably the indication of the 
 value of the interest of the indebtedness ? The answer to this 
 question is no. 
 
 We have supposed the case of Chang having lent Liu money, 
 the interest of which is 20 -catties of cotton a year. Now 
 supposing Chang is willing to accept as interest 15 catties of 
 cotton and a picul of iron, and suppose Liu can buy a picul 
 of iron for four catties of cotton, Liu will pay Chang 15 catties 
 of cotton and one picul of iron, as he will thus save a catty of 
 cotton. This is precisely what happens among nations. France, 
 England and Germany have each lent Russia more money 
 than she has lent each of them, and Russia pays them interest 
 it may be partly in her own produce and partly in the pro- 
 duce of other countries which she purchases in those other 
 countries. Thus Russia pays England the interest of her 
 indebtedness ; it may be wholly iij her own produce, such as 
 yrhe&t and tallow, or partly in her own produce and partly in 
 produce Russia purchases, such as, may be, tea and silk 
 
34 
 
 purchased in Chiaa with the kerosene oil Eassia sends to China, 
 partly may be in French or Italian wines, etc. So we see that 
 the excess of imports over exports, when two countries alone 
 are taken into account, will not give an accurate indication of 
 the amount of their relative indebtedness. 
 
 On the other hand, if we take the total imports of 
 a country from all countries of the world, and her total 
 exports to all countries of the world, the difference in 
 value will approximately represent her indebtedness or 
 otherwise as regards the whole world. If a nation imports 
 more than she exports, it will be a sign that she has 
 lent more than she has borrowed, and vice versd. One 
 can only make an approximate estimate of a nation's in- 
 debtedness or otherwise from these data for two reasons : 
 first, because it is very difficult to have accurate information 
 of what a nation imports and exports, so much comes and 
 goes for instance in the personal baggage and letters. Even 
 if we had accurate statistics the transactions of one year might 
 be very misleading. A nation like an individual will sometimes 
 spend more than its income in one year ; unlike an individual 
 it will rarely or never spend, more than its income for a suc- 
 cession of years. Nations like individuals will differ as to the 
 amount they save a year. If we take a long series of years and 
 add up the differences between the value of exports and im- 
 ports of a nation with all the world, and divide the sum by the 
 number of the years of the series, we shall have an accurate 
 estimate of the average indebtedness or otherwise of that nation 
 with regard to the rest of the world for that period. But we 
 shall not, after we have done this for every nation in the world, 
 be able to form any estimate at all as to their comparative 
 wealth. To do this we shall have to take other series of facts 
 into consideration. 
 
 Suppose Chang has 50 mow of land worth 30 Taels a 
 mow; he has also Taels \,hW, of which he keeps 500 in his 
 house and lends 600 to Liu and 400 to Chgn. Chano-'s total 
 wealth is Taels 3,000, 
 Comparative Suppose Liu has also 50 mow of land worth 30 Taels a 
 
 ^n&llow ™°^' ^"^^ ^^^ °° money in his house, but has lent Taels 3,000 
 to Ch^n, Liu's wealth will be Taels 3,900. 
 
85 
 
 Suppose Cli^u to have oaly 10 mow of land, but that being 
 in a town it is worth 1,000 Taels a mow; suppose him to 
 have no money or other property ; his wealth will be 10,000 
 Taels less his debts of Taels 3,400, or Taels 6,600. 
 
 tn other words, Chen who owes most may be the richest 
 of the three, and Liu who owes something may be richer than 
 Chang who owes nothing. 
 
 So it is with nations ; the comparative wealth of nations 
 does not depend only on the amount of their indebtedness or 
 otherwise, nor on the extent of their territories alone, nor even 
 oh the natural resources of the country alone, but also on the 
 uses made of these resources. If Ch6n, who has only 10 mow 
 of land, tilled it instead of building houses on it, his land 
 would only have been worth in all say Taels 300, and instead 
 of having wealth to the amount of Taels 6,600 he would be 
 bankrupt to the extent of Taels 3,100. 
 
 Chang and Lin will be guided, as before stated, in ex" Hindrances tb 
 changing their products by the gain each party makes on the exchange of 
 exchange. If they live far apart and the cost of carriage of commodities. 
 Chang's rice to Lin's house, and of Liu's cotton to Chang's 
 house, is very great, there will be no exchange. The less the 
 cost of carriage is the more profitable will be the exchange to 
 them both and the more wealthy will they become ; and, again, 
 if Chang and Liu each time they make an exchange have to pay 
 a heavy squeeze to the mandarins, they will either not ex- 
 change at all, or the exchange will not be so profitable. The 
 less squeeze they have to pay the more profitable the exchange 
 will be, or in other words, the less squeeze they have to pay 
 the wealthier will they grow, and this irrespective of whether 
 the squeeze is levied only on the cotton going to Chang's 
 house, or only on the rice going to Liu's house, or on both. 
 It is the same with nations ; the less the cost of freight on 
 commodities, and the less the import and export duties, the 
 more profitable will foreign trade be and the richer nations 
 will become. 
 
 Some people say, if we want to grow rich let us sell as j-allacy o! 
 
 much as we can and buy as little as we can. This is foolish. ^\f "merc^n- 
 
 ■' tile" theory. 
 
 If a person decides not to buy anythmg he must produce all 
 
 he wants himself, and that we have shown to be unwise. 
 
36 
 
 He will grow richer if he devotes his attention to- producing 
 what he can produce best and buying the things he can 
 get at a less cost than he could himself produce them for. 
 If Chang can get a picul of cotton for 10 piculs of rice, 
 and it would take him the same work to produce a picul 
 of cotton as it would to produce 11 piculs of rice, 
 he is wise to give 10 piculs of rice for one of cotton. It 
 is the same with nations. Suppose every time Chang ex- 
 changed 10 piculs of rice for one of cotton he had to pay a 
 picul of rice to the mandarins, evidently he would not take 
 the trouble to make the exchange. But then Liu would not 
 have made the exchange unless he could produce one picul of 
 cotton with greater ease than he could produce 10 piculs of 
 rice. Say he could produce one picnl of cotton as easily as he 
 could nine of rice. He would then perhaps offer a picul of 
 cotton for nine and a half piculs of rice, and the exchange will 
 still take place, but each of the exchangers will not gain so 
 much. If the squeeze gets big enough to eat up the gains of 
 the exchange exchanging will cease. 
 Consumer Chang not only exchanges his rice for Liu's cotton, he ex- 
 
 Uxes'on changes his rice for Chen's iron, and perhaps his profit on the 
 commodiUes. last exchange is not so great as on the exchange of rice for 
 cotton, in this case a smaller squeeze will kill the exchange 
 between Chang and Chga than would kill the exchange be- 
 tween Chang and Liu, or, in other words, there must be a 
 margin of profit. Trade will be limited by the expenses of 
 the exchanges, whether such expenses be in transit, taxes or 
 other costs. Each nation has in it many Chang's, Lin's, Chen's, 
 etc., .each desirous of exchanging their rice, iron and cotton for 
 as much as they can get for it ; each Chang will deal with the 
 Liu who gives him the best bargain ; in other words, eveiy one 
 desires to buy in the cheapest market and to sell in the dearest. 
 The cheaper the market the more goods will be sold in that . 
 market. The dearer the market the more goods will be sent to 
 that market for sale. It is the person who consumes the goods 
 who pays all the taxes and expenses of these goods, as, if he did 
 Hot gain by buying the goods at the selling price, which must 
 include freight, taxes, etc., he would not buy. The person who 
 sells the goods does not pay the taxes and expenses ; he is ia- 
 
37 
 
 jured by taxes and expenses in another way ; they reduce the 
 volume of his trade, and he of course will not gain by produc- 
 ing unless he can find purchasers to buy his goods at a price 
 which will leave him a margin of profit, after all expenses are 
 paid. High taxes deprive the seller of his occupation. 
 
 By allowing free export of goods a nation increases the Benefit of 
 volume of trade in her products and benefits the manufacturers *"" e^P°rtg. 
 of such products in the way of giving them occupation. By 
 allowing free imports she cheapens the price of products Pree importa, 
 to the consumers, so that they can have more things for 
 their money. Both free exports and free imports, add to the 
 wealth of the country. By allowing free imports, a nation 
 cheapens the cost of living ; by cheapening the cost of living, 
 it cheapens the cost of labour ; by cheapening the cost of 
 labour, it cheapens the cost of manufactures. 
 
 The U. S. allows her produce to be exported free of duty ; 
 she also allows raw materials to be imported free of duty, but 
 she taxes very heavily all manufactured goods coming from 
 foreign countries. The consequence of this is that most 
 manufactured articles are dearer in America than in England. 
 The cost of living in America is much greater than in Eagland. 
 A man with $5,000 a year is much richer in England than 
 he would be in America, as he can get his house, his servants, 
 Ms clothes, his labourers for much less money than he can in 
 America. The consequence is it costs less to produce things 
 in England than it costs to produce them in America. This is 
 especially observable as regards ships. England has con- 
 sequently many more merchant ships than America, for, 
 of course, the less good ships can be built for, the greater will 
 be the profit of the shipping companies and the more ships 
 will there be ; and, of the American ships, some are built in 
 England. In other -words, by free imports Englishmen in- 
 crease the occupation of ship owners and ship builders. By 
 taxing imports Americans decrease the occupation of ship 
 owners and ship builders ; allowing free imports, and so lessen- 
 ing the cost of production, is one of the means of fostering 
 export trade, as if things are produced cheap, they can, 
 unless overtaxed by the purchasing country, be sold cheap to 
 the consumer, and every one likes to buy things cheap. 
 
38 
 
 To sum np. The greater the division of labour and the 
 greater the freedom of industry, the greater will be the benefit 
 of freedom of exchange. 
 
 The more skilfnlly labour is saved, or in other words, the 
 more there is saving of labour in carrying goods and in making 
 them, the greater will be the benefit of freedom of exchange. 
 
 The better the money system is, that is, the easier the 
 medium of exchange does its work of helping exchanges, 
 the more will be the benefit of freedom of exchange. 
 
 Credit facilitates exchange, as do loans, borrowing and 
 lending, honesty, education, co'operation, the right nnder- 
 standing the laws of demand and supply. Taxation interferes 
 with the freedom of exchange, and it is desirable that taxation 
 should be light on imports as well as exports. There is only 
 one exception as to the desirability of freedom of exchange as 
 a means of enriching a natioii, and that is with regard to 
 commodities either noxious of themselves, or noxious in 
 particular nations, owing to the particular circumstances of 
 these nations. The greater wisdom of a country in regulating 
 freedom of exchange, the more the people of a nation by 
 education have learnt the right thing to do, and the more 
 honestly they strive to do it, the richer will that nation 
 become. Riches as well as honor are the gifts of wisdom, and 
 nations are made wealthy, as well as founded and established, 
 by righteousness and equity. 
 
 •«<^««/Mr>««\ka 
 
Chapter III. 
 
 Saving of Xabour. 
 
 ' VERY man wants more than he has got, and while hia Benefits of 
 desires are unlimited his powers of obtaining what he ^^.vmgiabour, 
 wants are limited by three things ; first by time. The 
 day only contains 24 honrs ; mAn only lives a certain number 
 of years, in the first of which he is too young to work, in the 
 last of which he is too old to work. Secondly, by his physical 
 weakness the strongest man can only work a certain number 
 of hoars a day, and he can only lift a certain weight. And 
 thirdly, by his stupidity the most learned man can only know 
 a very small fraction of knowledge, the cleverest man can 
 only do a few things. So when we speak of saving of labour 
 we mean three things — doing things quicker, doing things with 
 less exertion, and doing things better. Saving labour enriches 
 an individual in several ways. It enables him to do more Machinery, 
 work in a given time, say it is necessary for him to dig up 
 land, and that using a stick he can dig up a fang of land an 
 hour and by using a spade a fang of land in half an hour. 
 Supposing he can work 10 hours a day, evidently he will gain 
 by using a spade instead of a stick, as by doing so he can either 
 dig up 20 fang in the day instead of only 10 fang ; or, if he 
 only wants to dig up 10 fang in a day, he need only work for 
 five iu stead of 10 hours a day to do it ; and in the other five , 
 hours he can do other work, or study, or go and see a neigh- 
 bour, and perhaps learn from him ways of improving his crop. 
 If he finds that getting a buffalo to pull a plough to plough 
 the land is easier than digging the ground up with a spade, he 
 will get a buffalo to plough the land and will grow richer by 
 
40 
 
 the amoant of labour he saves. la the West it is foaad, la 
 some cases, labour is .saved by u^iag a steam plough instead of 
 a plough drawn by an animal. This is the case where the 
 field is very large ; but a steam plough costs a great deal of 
 money ; and so the farmers instead of buying it hire it by 
 the day. 
 
 Again, say a man has a field on a hill, and that above his 
 field is a stream, he will either dig ditches to bring down the 
 water to his field, or bring it down in bamboo pipes, and thus 
 save the labour of carrying the water he wants. He will 
 devote the time he thus saves either to leisure, other work, 
 study or visiting. Suppose a great quantity of water is re- 
 quired, labour will be saved perhaps by putting iron or crock- 
 ery pipes instead of bamboo pipes, or if the stream sometimes 
 runs dry. labour will be saved by digging dams to prevent 
 the water being wasted. In the West there are gigantic 
 aqueducts carrying water many hundreds of li, and gigantic, 
 reservoirs much bigger than the reservoir at Hongkong, from 
 which water is carried to towns many miles off. And these 
 reservoirs and aqueducts increase the wealth of the places 
 supplied by them, because they save labour. 
 
 Suppose a man has a series of rice fields on a hill. The 
 rice has to be grown on a fiat ground, so he makes the hill 
 ioto terraces ; supposing the water is below these terraces he 
 has to raise it to the level of the highest field. This he does, 
 by means of chain bucket's worked by treadles, trod by men ; if 
 much water is wanted, instead of a treadle, a wheel with cogs, 
 worked by a buffalo, is used to raise the water ; each process is 
 useful, as it saves labour, and the saving of labour means the 
 owner of the hill land can either in the same time irrigate 
 a greater quantity of land, or he can have more leisure 
 to do other work, or to study, or to visit friends. In West- 
 ern countries it- has been found to save labour to use steam 
 machinery to raise the water in chain buckets. 
 
 In ancient days people used to cut wood with flint knives ; 
 afterwards, when iron was discovered, axes were made, and the 
 wood was cut with axes ; then it was found out that planks 
 could be cut quicker and with less waste by using a saw than 
 by using an axe, and then that two men working the saw 
 
41 
 
 together, one at each end, could do the work quicker than 
 they could working separately. Each improvement of the 
 implements and methods saved time, and enabled men either 
 to produce more planks, or to have more time for other work, 
 study, or leisure. In Western countries it has been found that 
 it saves labour to use steam machinery for cutting planks, 
 and therefore Western nations use steam machinery for 
 the purpose, and grow richer to the degree that the machinery 
 they use saves labour ; those who ase the best machines grow 
 richer than those who use machines not so good, and those 
 who use the not so good machiues, grow richer than those who 
 do not use machines at all. 
 
 In ancient times people wore the skins of beasts as clothes, Saving 
 but gradually they found that clothes could be better made by production, 
 making the wool of animals, such as sheep and camels, into 
 clothes, as then they still had the sheep and camels, or out of 
 plants, such as cotton and hemp, or out of cocoons, such as 
 silk. Now it was soon found that with regard to all clothes so 
 made machines saved labour — machines for taking the seeds 
 out of the cotton, for cleaning, carding and combing the cotton, 
 spindles for spinning it into yarn, looms for weaving it into 
 cloth. The same took place in making wool into textiles and 
 in weaving the threads of the cocoons into silk, and also in de- 
 corticating hemp and weaving the fibre into grass cloth or 
 linen. Each saving of labour not only caused greater quanti- 
 ties to be produced, but also better qualities. Each saving of 
 labour increased wealth and gave more time for other work, 
 study and leisure. In Western countries the machinery of all 
 these processes has been improved by the introduction of 
 steam, so that Western countries, like England, which do not 
 grow cotton, are able to make fabrics cheaper than the 
 countries where the cotton grows. 
 
 In the day there are on the average twelve hours of light 
 and twelve of dark. In the extreme north and in the extreme 
 south of the world in winter there are not so many hours of 
 light and in summer there are more. It was found desirable, 
 in order to have more time to see to work in in winter, to have 
 artificial light. At first animal tallow was used, but it was 
 Boon found better .to use vegetable oil also and to coat the 
 
42 
 
 caijdles with wax, either made by the bees, or what is called 
 white wax, that is, wax made by a sort of firefly ; this white 
 wax is much made in Szechuan. Afterwards mineral oil was 
 discovered to be cheaper and to give a stronger light than 
 either tallow or vegetable oil ; then light was obtained by gas, 
 and then it was discovered that a most powerful light could be 
 produced by electricity. Each improvement enriched nations 
 by saving labour, that is-, by economizing time, economizing 
 exertion, and by doing things better than before. 
 Saving "We have glanced at the saving of labour in production ; it 
 
 distribution, i^ ^^^0 desirable to save labour in exchanging commodities and 
 reducing the cost of carriage, etc. 
 
 Goods are either carried by laud or water. Some of the 
 machines for land carriage are very simple, such is the carry- 
 ing pole, yet even the carrying pole was used, because by using 
 it labour was saved, that is, things were easier carried than by 
 carrying them in the hands. Where roads admit wheeled con- 
 veyances are used, which make the work of carrying still easier. 
 In some nations good roads have been made and bridges built 
 across rivers. These roads and bridges not only save labour, 
 but they are themselves a considerable part of the wealth of 
 the country ; then carts were drawn by cattle, then by steam 
 machinery and now by electricity. Railways were built, which 
 saved labour and bring places near to each other. Before 
 the railway was built it took many months to go from the 
 east to the west coast of America ; the journey can now be 
 performed in five days. It takes now two days to go from 
 Tientsin to Peking ; when the railway is completed it will 
 be possible to perform the journey in two hours. 
 
 So too with regard to carriage by water. Wood wanted 
 down stream was thrown into the water and floated down 
 stream, because it was less work carrying the wood that way 
 than ou the shoulders. Then rafts were made, then boats propel- 
 led by oars or yulos, then boats with sails, then boats with sails 
 were improved, so as to be able to trust themselves to cross 
 the open ocean, and not merely ply in rivers and hag the 
 coast on the sea border. Then it was discovered that vessels 
 propelled by steam could go quicker than vessels propelled by 
 sails, and could also go against wind and tide, and time. 
 
43 
 
 which is labour, was saved in using them. At first paddle 
 steamers were used, then it was found that screw propellers 
 were better than paddle wheels, and so on with many sub- 
 sequent improvements ; they all have for their object the 
 saving of time and labour. Thirty years ago it took over two 
 months for tea sent to London, or Russia, from Hankow to 
 reach its destination ; the freight was £12 a ton. Now it only 
 takes one month, so that a month's interest is saved on the 
 value of the tea annually sent to England and Russia, and 
 as the value of this is many millions of Taels the interest 
 saved is considerable. Again, owing to the steamers saving 
 labour they can be run cheaper, so that freight from Hankow 
 to London is only now about £2.0.0 a ton, so that people in 
 Russia and England get their tea cheaper by one month's in- 
 terest and by £10.0.0 a ton. They can either afford to buy 
 more tea than they could thirty years ago, or they can save 
 more money ; in other words, they are richer by the saving 
 of labour in steamer machinery. It is the same with the 
 Chinese ; Russian cloth and English textiles are made cheaper, 
 than they were thirty years ago, by the better steamer machi- 
 nery ; the Chinese can therefore either buy more Russian 
 cloth and English textiles than they could thirty years ago 
 (supposing they have the same wealth as they had thirty 
 years ago), or can save more money. In other words, China is 
 richer than she would have been had there not been the labour- 
 saving improvements in steamer machinery. 
 
 Besides actual carriage of goods there must be, in order to in transmit- 
 effect an exchange, communications between the parties effect- '"S'^^'^^ses. 
 ing the exchange. The quicker and easier the communications 
 the less labour will it take to effect the exchanges. Railways 
 and steamers have made oral communications much easier than 
 they used to be ; bat in many cases it is not convenient for a 
 trader to go and see another trader, nor to send him a verbal 
 message ; verbal transactions are not so good as written, because 
 there may be misunderstandings or forgetfulness. " Words," 
 says the Chinese proverb, "are like wind; what is written 
 is certain." In one sense writing itself is a saving of 
 labour. It was found out that it further saved labour if in- 
 stead of each man sending his letter by a special messenger 
 
44 
 
 a great many people entrusted their letters to one man to 
 carry, and so post offices were established, and, as they were 
 able to save labour, diminish cost of postage and save time in 
 delivery of letters, they increased wealth by increasing facilities 
 of exchange. A good postal system is a great source of 
 wealth to a nation. China has not yet got a good postal system. 
 The charge for delivering letters is much higher than ia 
 Western lands, and the delivery is far more dilatory. After- 
 wards the telegraph system was invented, quickening the 
 delivery of messages, and the telephone, by which men many 
 miles apart can speak to each other. Good postal systems, 
 telegraphs and telephones enrich nations, because they save 
 time and labour. 
 By use of To facilitate exchange there must be a medium of ex- 
 
 credit." change, that is, money. The use of money enriches nations, 
 because it saves labour. If England wants to buy a million 
 Taels worth of silk from China, and China wants to buy a 
 million Taels worth of shirtings from England, it saves the 
 labour of sending the silver from England to China and back 
 if banks in England and China, merely in the first case, credit 
 China and debit England, and in the second case debit China 
 and credit England, that is, if the business is done by cheques 
 and bills of exchange instead of by specie. In other words, 
 the credit system enriches a nation, because it saves labour. 
 
 It may not seem much labour writing a cheque, or 
 drawing a bill, but it has been found in practice that the 
 economizing labour in writing cheques and bills has had most 
 important results. In Western lands there are what are call- 
 ed life insurance offices. A man by paying so much a year 
 to one of these offices during his life time, is guaranteed that a 
 lump sum shall be paid to his family on his death. In Eng- 
 land alone hundreds of millions of Taels are paid to these in- 
 surance offices. It is manifest that if people who insure their 
 lives are dilatory in paying the premia the insurance offices 
 will not be able to pay the policies when due. The insurance 
 offices therefore generally made it a rule that if any one 
 was a month behind paying, in paying his premium, he should 
 forfeit his policy ; there having arisen hard cases from people 
 having forgotten to pay, the government made a law that 
 
45 
 
 insurance offices mast always remind policy holders of the 
 dates when their premia were due ; this entailed on the 
 insurance offices the work of writing many hundreds of 
 thousands of letters a year and paying postage on them ; 
 besides hundreds of thousands of people sending cheques to 
 the insurance companies entailed on them the trouble of 
 entering them, cashing them, etc. So now an agreement has 
 been made between insurance offices and banks that if the 
 banks would guarantee the policy holders paying the premia 
 regularly the offices would not ask the insurers for cheques. 
 The insurers found this very convenient, as it saved them the 
 labour of thinking when the premia were due, of writing 
 cheques and sending them to the insurance companies. The 
 insurance offices are saved the labour of writing the notices 
 and sending them off. The following is now what is generally 
 done. On the day the premium is due the bank debits the 
 policy holder ; fifteen days later it credits the insurance office, 
 and the insurance office debits the bank ; the insurance 
 office is thus credited fifteen days after the premium is due, 
 but fifteen days before it must be paid. The bank gets fifteen 
 days' interest on the premium, besides saving itself labour. 
 The saving of labour to the insurance offices thus effected has 
 enabled them to reduce their working expenses to such an 
 extent as to be able to reduce the premia of insurance. The 
 premia of insurance having been reduced the insurer has been 
 able to insure for a larger sum, or to save the money between 
 the old and present premia, and the insurance offices have 
 gained by reducing the premia, because more people insure 
 and they do a bigger business. 
 
 In making exchanges people have to make calculations, j„ calcula- 
 and labour will be saved in making these calculations if they ''°"^- 
 have studied a good system of arithmetic. English can calcu- 
 late quicker in multiplication and division than Chinese, be- 
 cause they have studied a better system of arithmetic than 
 the Chinese have. On the other hand, Chinese can add and 
 substract as quickly as Englishmen for two reasons : First, 
 because Chinese money and most of their weights and mea- 
 sures are on the decimal system ; and secondly, because they 
 make use of a machine called the "abacus," which English- 
 
The Latin 
 union. 
 
 46 
 
 men do not nse. The decimal system of weights, measures 
 and money is a good system, because it saves labour in reckon- 
 ing, and the abacus is a good thing, because it saves labour to 
 reckon with it. The French reckon both weights and measures 
 by the decimal system ; a metre being the 100,000th part 
 of a degree of latitude at the equator, or the l,O0Oth 
 part of a mile or minute of a latitude ; the metre they divide 
 into tenths, hundredths and so on. In the same way the 
 French weights are on the decimal system. The saving of 
 labour effected by adopting the decimal system in France has 
 been so great that many other nations, such as Germany, 
 Russia, Greece, Austria, etc., have adopted the French system 
 of weights and measures, and the English government is about 
 to introduce a law to adopt it in England. In the United 
 States of America some learned statesmen are advocating its 
 adoption in America. 
 
 The adoption of an uniform kind of money, and a uniform 
 standard of weights and measures on the decimal system, 
 saves labour in effecting exchanges in the domestic trade of a 
 nation' and in the foreign trade. Labour would be still 
 further saved in foreign trade if all the nations of the world 
 would adopt the same decimal system and the same units of 
 value, measure and weight. With regard to weights and 
 measures this will probably be done before many years are 
 over among Western nations ; but with regard to money there 
 are at present no hopes of this being done for a long time. 
 A uniformity of money throughout the world, or throughout 
 all Western nations, would undoubtedly by saving labour in- 
 crease the wealth of nations, but at present this is one of 
 those principles which, though theoretically desirable, cannot 
 in the present condition of the world be put in force. The 
 nearest approach to it is what is called the " Latin Union." 
 France, Italy, Greece, Servia, Bulgaria, Switzerland, etc., have 
 entered into a compact to have the same weight and purity 
 for their several coins ; this compact certainly facilitates ex- 
 changes among the nations belonging to the Union, and has 
 by saving labour, increased their wealth. 
 
 In making out accounts it saves labour to write say 
 Tls. 1,072.6.5.4 instead of one thousand and seventy-two taels 
 
47 
 
 six mace, five candareens, fonr cash. And so too in Chinese 
 labour is saved by writing the arithmetical characters rather 
 than the words. We call the arithmetical characters " Arabic 
 fignres ;" the Chinese call them "matze." Both Europe and 
 China borrowed the Arabic iigures and the "matze" from 
 the Arabs. The Chinese learnt the matze from the Arabs 
 iu the Tang dynasty. In Europe the Arabic figures were 
 probably learnt somewhat later. This is only one of the many 
 instances in which useful labour-saving knowledge has been 
 learnt from foreigners. 
 
 Having glanced at the reason labour-saving enriches Examples, 
 nations, let us look at the proportion in which it enriches 
 them. We will begin with examples as simple as two and 
 two make four and proceed from them to more complicated 
 examples. Suppose Chang produces rice and Liu produces 
 cotton, and suppose Chang finds out some labour-saving 
 machinery, by using which he is able to produce not merely 
 45 piculs of rice a year out of his field as formerly, but 
 60 piculs a year, but that Liu is no cleverer than before and 
 can only produce as before sis piculs of cotton. If we consider 
 Liu's work worth Chang's work, or in other words, if we take 
 labour as the standard of value, while before a picul of 
 cotton was worth seven and a half piculs of rice, it will now 
 be worth 10 piculs of rice, or in .other words, the price of 
 cotton will remain stationary, but rice will have depreciated. 
 By the depreciation neither will be poorer, and both together 
 will be richer by ] 5 picnls rice a year. 
 
 Suppose there are many Changs growing rice and many 
 Lias growing cotton, and only one Chang has discovered the 
 labour-saving inachinery, what will be the consequence ? The 
 Chang who uses the labour-saving method will be richer by 
 15 piculs of rice a year ; everyone else will be neither 
 richer nor poorer ; the relative price of rice and cotton will 
 continue as before, the aggregate of Changs and Lius will be 
 richer by 15 piculs of rice a year. 
 
 Now suppose there are 20 Changs, ten of whom use 
 the improved machinery and ten do not, and the Lius do not 
 improve, what will happen? 1st, The whole community 
 will be richer in the aggregate by 150 piculs of rice a year. 
 
48 
 
 2ad, The ten clever Changs will compete for the purchase of 
 cotton. Rice will depreciate and cotton will appreciate. The 
 Lias will be richer, as they will get more rice for their cotton. 
 3rd, The stupid Changs who do not use the improved machin- 
 ery will be poorer, as they will not get so much cotton for 
 their rice. 
 
 I think the stupid Changs would most probably attribute 
 their growing poorer not to their own stupidity, but to 
 the improved machinery, and would very likely try to 
 prevent the clever Changs using it. But in the interest of 
 every one it would be best instead of allowing them to do this 
 to teach them also to be clever, or, if they could not learn, to 
 give them other work to do. 
 
 Now, suppose in addition to the ten clever Changs there 
 were ten clever Jjius who, by using labour-saving machinery, 
 could each produce seven pieuls of cotton instead of six. The 
 aggregate community would now be richer by 150 pieuls of 
 rice and ten pieuls of cotton ; both rice and cotton would de- 
 preciate. The clever Changs and clever Lius would still be 
 richer) as they would be able to get the same amount of other 
 commodities and retain more of their own rice and cotton. The 
 stupid Chai^gs and stupid Lius would be not only comparative- 
 ly poorer ; they would be actually poorer, for though they 
 would still have as much rice and cotton as they had before, 
 they would not be able to exchange their surplus for so much 
 other things. The right remedy is not to prevent the clever 
 Changs and clever Lius from using the labour-saving machinery, 
 but to educate the stupid Changs and Lius to do the same, or 
 to set them to other work for which they have more capacity. 
 
 The same rule holds good if we take a million commodities 
 and use nations instead of individuals as our examples ; labour- 
 saving will not at the same time be discovered by all nations, 
 nor in all commodities, nor to an equal extent, and this is one 
 of the causes of fluctuations in value. Labour-saving in the 
 production of any one commodity enriches the world, thouo-h 
 it may impoverish one particular nation; the remedy for that 
 nation is not the prohibiting of labour-saving machinery, but 
 educating its people to use the same, or better, labour-saving 
 machinery in its products. Labour-saving iu the production 
 
49 
 
 of what is boaglit enriches the buyer by enabling to get a 
 
 greater quantity for the same value. Labour production in 
 
 what is sold enriches the seller by enabling him to sell 
 
 a greater quantity of what he produces, after retaining the 
 
 quantity he requires for his own consumption. 
 
 In all countries of the world there has always been op- Opposition to 
 
 ,.,..,, . , . intioduotion 
 
 position to the introduction of labour-saving machinery; the of machinery. 
 
 reason of this opposition is that its introduction does some- 
 times impoverish individuals for a time, though in the end it 
 enriches the community ; what is wanted is to get all the bene- 
 fit we can out of the introduction of labour-saving machinery 
 and to minimise the detriment. To do this we should study 
 the objections that have been raised against the employment 
 of machinery, see how far they are founded in mistakes and 
 correct those mistakes, how far founded in real facts and 
 meet those real facts. 
 
 The first objection made to labour-saving machinery is Fallacy of 
 that it throws people out of employ. One argument used by 
 working men was this: if by machinery eight hundred men do 
 the work that a thousand men did before, two hundred men 
 will be thrown out of employ. Now this argument seems good 
 until we think a little deeper. Everybody wants more than 
 he has got, and if he can get that something more without 
 extra exertion he will do so. If the things become cheaper he 
 can get more of them without extra exertion. Say he earns 
 one hundred cash a day, and that the price of shirtings was 
 20 cash a foot, and that he bought one foot a day. If the 
 price of shirtings falls to ten cash a foot he will be able to 
 buy two feet of shirtings a day with 20 cash. Again, say the 
 price of wooden planks ia 4,000 cash a fang, and after- 
 wards on account of labour-saving machinery falls to 2,000 
 cash a fang, what will be the result ; people who formerly 
 floored all their rooms will build bigger rooms and buy more 
 planks, people who only floored some of their rooms will floor 
 all their rooms and will buy more planks, and people who 
 before could not afibrd to floor any of their rooms, will now 
 floor some of them ; the demand for planks will so much in- 
 crease that more, not fewer people, will be employed in sawing 
 planks. 
 
50 
 
 When steam machinery for spinning cotton was first 
 introdaoed into England the spinners at the old looms thought 
 they woald be thrown out of employ by the laboar-saving 
 machinery. As a matter of fact the labour-saving effected by 
 the machiuery has so increased the sale of cotton cloth that 
 there are ten times as mauy persons employed now in making 
 cotton cloth than there were before the introduction of 
 machinery. 
 
 When railways were first introduced into England the 
 owners of carts and horses objected, because they thought that 
 their horses and carts would have no work to do. As a matter 
 of fact the railways so much increased traffic that more 
 horses, carts and carmen have been wanted since the in- 
 troduction of railways than were wanted before. 
 
 When steamers were introduced into China the junk 
 people objected, because they thought the introduction of 
 steamers would take the bread out of their mouths. What 
 has really happened is that the introduction of steamers has 
 caused many more people to travel. Thousands go a day from 
 Canton to Hongkong, when there only used to be tens. My- 
 riads go a month from Swatow and Amoy to Singapore when 
 there only used to be hundreds. Myriads go a month from 
 Hankow to Shanghai, when there used to be only tens. There 
 is now more employment for Chinese sailors than there was 
 before, and more employment for Chinese small boats ; a few 
 junk owners have lost, but millions of Chinese who go to 
 Hongkong, Singapore, Java, Manila, etc., have gained. 
 
 Another objection to the introduction of iabour-saving 
 machinery was that it would lessen the earning of unskilled 
 labourers, and that the majority of labourers being unskilled 
 the majority would be made poorer to enrich a few. What 
 has really happened is that skilled labourers have enormously 
 increased in numbers and the unskilled labourers have de- 
 creased in numbers. In England the wages of skilled labour 
 have increased fonr-fold and the wages of unskilled labour 
 have increased more than double. The reason for the increase 
 in the number of skilled labourers and decrease in the number 
 of unskilled labourers is evident. Machinery requires skilled 
 labourers, and it was worth the while of employers to pay 
 
51 
 
 highly for skilled labourers, so unskilled labourers had a 
 greater indncemeat to become skilled labourers, or to have 
 their children taught to be skilled labourers. It is not so 
 evident why the wages of unskilled labourers should have been 
 increased by the introduction of machiuery. One of the rea- 
 sons is, because with the increase of wealth the standard of ^^^^^i^a °^ 
 living is raised, and people require more comforts than they 
 formerly did, and are shocked at the poor living in the dis- 
 comfort they formerly did. Before the introduction of machin* 
 ery into England the wages of a strong unskilled labourer 
 was about seven shillings a week ; it is now 15 shillings, and a 
 shilling can now buy nearly twice as much bread, more than 
 twice as much tea, as one shilling could before. That is, in 
 England, while the workman has been getting more wages, 
 ever) thing in England has gone down in price, except house 
 rent ; and not only so, but the taxes that labouring men 
 have paid have been lessened. Again, another fact to be ob- 
 served is that the more a nation uses machinery the higher 
 will be the wages of the unskilled labourer, and the higher 
 the wages the more inducement there will be to save labour. 
 In America, where most machinery is used, the wages are 
 highest. In England, where more machinery is used than in 
 France, wages are higher than in Prance. In France, where 
 more machinery is used than in Italy, wages are higher than in 
 Italy. In Italy and Japan, where more machinery is used than 
 in China, wages are higher than in China. For a long time 
 wages were stationary in both Japan and China. Japan has 
 lately imported much machinery, China but little. Wages have 
 gone up in Japan, but Lave not gone up in China, except in a 
 few places like Shanghai, where machinery has been imported. 
 
 If machinery enriches a people, and especially if it en- Dislocation 
 riches the working people, why did the working people of all °ca*usfs^ 
 
 nations obiect to its introduction ? We have a proverb, " there temporary 
 
 suffering, 
 is no smoke without fire. " The truth of the matter is that 
 
 "labour-saving machinery does cause suffering among a small 
 number of people for a short time. We have seen in the in- 
 stance of the Changs and Lius ; the cleverer Changs and Lius 
 would cause loss to the stupider Changs and Lius, and that 
 this loss would continue until one of two things happened, 
 
52 
 
 Modes of 
 
 fostering 
 
 saving of 
 
 labour. 
 
 nntil the stupid people became clever, or until they got other 
 emploj'ment. We have shown that, though ultimately even the 
 wages of unskilled labour increases with the introduction of 
 machinery, or, in other words, though every saving of labour 
 will ultimately benefit stupid as well as clever people, yet in 
 the myriad products saving of labour is effected at differ- 
 ent rates and in different proportions, causing there to be 
 fluctuations in value, forcing some people either to study 
 more, or to change their mode of livelihood. This entails 
 some saffering, less indeed than the benefit ultimately derived, 
 but often very acute at the time. In the language of political 
 economy dislocation of trade causes temporary suffering. 
 The people thrown out of employ may take a long time to 
 learn or get another employment, and if they have been living 
 from hand to mouth, and have no savings, then sufferings will 
 be acute. To allow these people to starve, or grow weak from 
 want of food, would be not only wicked, it would be foolish; 
 wealth will ultimately be gained by the community which 
 does two things when there is a dislocation of trade. Educate 
 its people and maintain the starving workmen thrown out of 
 employ until they can get other work ; this can be done in two 
 ways : by the state and by private charity. And the more wisely 
 it is done the more will the country grow wealthy by saving 
 of labour and by the introduction of machinery. 
 To sum up : — 
 
 I. // there is free exchange, saving of labour in one trade 
 benefits the persons engaged in that trade and persons en- 
 gaged in other trades. 
 
 II. Labour-saving should be carried out where there 
 are natural advantages and by the persons most capable. 
 
 III. What saves time saves money. " Time is money." 
 
 IV. The same rules apply to a nation as to an indivi- 
 dual ; what enriches an individual will also enrich a nation 
 as far as the saving of labour is concerned. 
 
 V. Labor-saving causes dislocation of trade, and like all 
 changes, even salutary ones, entails a certain amount of tem- 
 porary suffering. 
 
 VI. But the benefit it confers is greater than the suffer- 
 ing it entails. 
 
53 
 
 VII. This suffering should he minimized hy education 
 and by finding people thrown out of employ other work, and 
 in this sphere both the action of the state and that of indivi- 
 dual charity may be evoked. 
 
 VIII. In order to induce people to exert themselves and 
 benefit the community by discovering new modes of saving 
 labour, it is desirable that the discoverer should be rewarded 
 according to the result of the work he does ; in other words, he 
 must be honestly paid. In the West this is done by allowing the 
 discoverer to take out a patent, which gives him for a certain 
 time the right to prevent other persons using his discovery with- 
 out his permission, a permission he is allowed to sell or let. 
 Patent rights in England are worth many thousands of pounds. 
 
 We see also that in the saving of labour as in division of 
 labour, and in the exchange of commodities, the more we 
 study and apply other principles of political economy the 
 more will it enrich a nation. 
 
 > »•* < 
 
Chapter IV. 
 
 Necessity of jr jj Chapter I. it was shown how men gain by division of 
 
 a medium nlfl c ^ ^ 
 
 of exchange, @!i labour. In Chapter IT. how they gain by freedom of 
 exchange. In Chapter III. how they gain by saving 
 of labour. When men began to work at different work, it 
 was necessary to allow one man to exchange the produce of 
 his labour for the produce of other men's labors. This process 
 of exchange increased in volume and profitableness as imple- 
 ments and machinery more and more saving labour came into 
 use. In very early days it was found that it was very in- 
 convenient efiecting exchange by simple barter. One man 
 might have more rice than he wanted and another man more 
 arrows. The rice grower might desire arrows, but the arrow 
 maker might not desire rice, or vice versd. One of two things 
 would happen ; there would either be no exchange, or else the 
 arrow maker would exchange his arrows for the other man's 
 rice in the hope of finding some one else who wanted rice, and 
 who would give him in exchange something he did want ; in 
 that case he would ask more rice for his arrows than if he 
 wanted the rice himself, because he would have to calculate 
 on the time and labour it would take to find a man who both 
 wanted rice and would give him what he wished in exchange ; 
 he would also have to reckon on the chance of the rice spoil- 
 ing and on the work it would entail to take care of the rice. 
 
 The man who had more rice than he wanted would want 
 other articles besides arrows; he woald want say clothes, 
 shoes, hats, tobacco, a pipe, etc. It would be a great tronble 
 carrying round his rice. to each of the people who produced the 
 
55 
 
 articles he wanted on the chance of their wanting rice and 
 of their giving him what he wanted in exchano;e for it. Al- 
 most all people have adopted a medium of exchange, that is to 
 say, they fixed on something for which everybody would ex- 
 change what he wanted to sell. The man who had more than 
 he wanted of one thing, would exchange his surplus for what 
 he could purchase anything he liked with ; he could thus easily 
 get what he wanted, because he offered something that every- 
 body would take in exchange, and what everybody will take 
 in exchange is to almost all intents money. 
 
 The sort of money used has differed at different times and Digerent 
 in different nations. The nations that first had the most '^'"'^^ "*• 
 division of Icthour, most freedom of exchange, most saving 
 of labour, were the first to make use of money ; and the 
 people who understood have best used the better sort of money. 
 The progress of the world in knowledge of trade has been 
 gradual, and some nations have advanced in this knowledge 
 more rapidly than others ; the consequence is that various 
 nations have various kinds of money, and each nation has 
 often changed its own currency. 
 
 At the present moment the Mongols all will exchange 
 their cattle for bride tea, so brick tea is used as money in 
 Mongolia. Some tribes in Africa will exchange their products 
 for beads, some for gunpowder, some for nails, some for cotton 
 cloth, some for knives. Among these tribes beads, gunpowder, 
 nails, cotton cloth, and knives are used as money. In some 
 parts of Hupei opium is used as money. 
 
 As I before stated money must be what everyone will 
 exchange the things they want to sell for ; there are several 
 things for which everyone will exchange things for ; which of 
 these exchangeable things are or is best to use as money ? 
 
 The first axiom is money should be portable. In an- Axioms as to 
 cient days among some people cattle was used as money — ^^^^ ^"■'"^ °^ 
 sheep, goats, horses, oxen, camels, etc. It was found out tbat 
 cattle, besides other disadvantages, were not portable, so in- 
 stead of taking an actual sheep, goat or horse in exchange, 
 the figure of a goat, sheep, or horse was stamped on a bit of 
 metal ; and this bit of metal represented the value of a goat, 
 sheep or horse. 
 
56 
 
 The second axiom found oat was that money should be in- 
 destructible; people who took cattle and grain in exchange had 
 to reckon on the former dying of diseases and of the latter 
 spoiling by mildew if they had to keep them. 
 
 A third axiom found out was that the article used as 
 m,oney should require labour to procure. Stones that could be 
 picked up by the roadside, though useful, would not serve as 
 money, as what everybody could get for themselves, they 
 would not take in exchange. 
 
 Fourth. Money should be divisible; different people 
 wanting different quantities of produce, it was necessary that 
 the medium of exchange should be so divisible as to give the 
 exact equivalent of what was wanted. 
 
 Metals more than anything else possess the four qualities : 
 portability, durability, requiring labour to procure and divisi- 
 bility. Hence among nearly all the nations of the world metals 
 are used as m^ney. The metals used as money have been gold, 
 silver, bronze, copper, brass, nickel and iron. Leaving out nickel, 
 which is only very little used as money, andiron, which has been 
 discarded as too cheap and ineludiug brass and bronze coins as 
 copper, there remain the three metals — gold, silver and copper. 
 Gold is better for money than silver or copper, because it is more 
 portable and less destructible than silver and copper. In large 
 transactions it is easier to pay in gold, because it saves labour in 
 carrying and counting to use it as money instead of silver or cop- 
 per. But it is not so good as silver and copper, in that it is less 
 divisible. In small transactions one can't weigh out so small a 
 piece of gold as only to be worth a few cash. Silver is mora 
 divisible than gold, but not so divisible as copper; it is more 
 portable and less destructible than copper, and is consequently 
 most useful ia medium transactions, while in small transactions, 
 when people who want to bay very little at a time, copper is the 
 most useful as money. In the West gold, silver and copper are 
 all used as money. 
 f,„i„g^ It was soon found that it saved the labour of cutting and 
 
 convenience weighing the metals used as money if they were divided into 
 equal bits, each bit containing a certain weight of metal. In 
 other words, the metals were made into coins. The people ia 
 each country soon learned to know the value of the coins issued 
 
57 
 
 m their country and took them in exchange without weighing 
 them or testing the parity of the metal. Iq Western coiiQtries 
 gold, silver and copper are all made into coins. In China only 
 silver and copper are made into coins, and silver only in small 
 quantities and quite recently. In Hhina the copper coins 
 are not uniform either in weight or purity of metal ; and so 
 an immense amount of labour is lost in China in weighing 
 silver, in ascertaining its touch, etc. When China has an 
 adequate silver coinage she will become richer, as the labour 
 she would save coald be employed in producing wealth. 
 To a small extent the use of foreign silver coins is an 
 advantage, but foreign coins are not made of pure silver, 
 and the amount of alloy in them differs, so that, before taking 
 them, calculations have to be made as to their value. When 
 China has a silver coinage of her own she will only have to 
 make calculations in her foreign trade. In her domestic trade 
 she will save a great deal of labour and grow richer. 
 
 The copper cash in China are not of the same weight and 
 kind. There are the big cash of Peking and the small cash 
 of the provinces. There are the mandarin cash, of which about 
 1,400 go to the Tael, and the ordinary cash, of which about 
 1,650 go to the Tael. When China has an uniform kind of 
 Crtsh through the empire much labour will be saved and China 
 will be richer. It is a good thing the Chinese government sees 
 this, and is establishing mints in Canton, Hankow, Tientsin, 
 Foochow, etc., to issue cash of an uniform weight and 
 
 purity. 
 
 For a lono- time the value of gold, silver and copper re- Gold and 
 ° , 11 1 i 1 1 i 1 silver coins, 
 
 mained nearly the. same as regarded each other, and the 
 
 governments of Western nations endeavoured to fix the relative 
 values of the various coins in use in their countries. Thus in 
 England a coin, containing one chien eight li of gold, was made 
 equal to 20 coins, each weighing about one mace, sixli, four hao 
 ofsilver,and one of these coins of silver was made equal to 12 
 coins of copper, each weighing about seven mace,two candareens. 
 That would suppose one oz. of gold to be worth about 16 oz. of 
 silver or 960 ounces of copper. In France the gold coin contain- 
 ed one mace, four candareens, two li of gold, and was worth 20 
 silver coins, each containing nearly due mace, one candareen 
 
58 
 
 and fonr li of silver, and one such silver coin was worth ten copr 
 per coins, each weighing about six mace, eight caudareens, and 
 four li of copper. Tlie French system, as the Euglish, computed 
 gold to be 16 times the. value of silver and about 960 times the 
 value of copper. 20 English gold coins are accordingly worth 
 25 French gold coins, and 20 English silver coins are about 
 worth 25 French silver coins. 24 English copper coins are 
 worth about 25 French copper coins. 
 
 In England accounts are kept in gold coins, in France 
 they are kept in silver coins. Our system of dividing silver 
 coins into 12 copper ones is not so easy to reckon with as the 
 French system of dividing the silver coins into ten, at)d our 
 system of counting in gold, silver and copjier not so easy as 
 the French system of only counting in silver coins. The re- 
 lative price of gold and silver sometimes changes. It was 
 very inconvenient in England in old times, wlien gold was 
 worth only fifteen times the weight of silver instead of sixteen, 
 that the value of an English gold coin should be worth I8| 
 silver coins instead of 20, or if gold was worth 17 times the 
 worth of silver, instead of 1 6, that the gold coin should be 
 worth 21^ silver coins instead of 20, so it was made obligatory 
 for every one to give or receive 20 silver coins for one gold 
 coin, but it was also decided that when the account was over one 
 gold coin gold should be paid. This law had three effects : Jst. 
 It increased the demand for gold. 2nd. It decreased the demand 
 for silver. 3rd. It fixed the value of English silver coins 
 as long as they remained in England, but when they went 
 to a foreign country they were only worth the silver they 
 contained. • 
 
 Standard of For a time foreign gold and silver coins were dealt in 
 
 D..p^*ciation simply as metal and varied with the varying price of gold and 
 of value, giiver. Afterwards France, America, Germany and other 
 countries also decided that gold should be the standard of 
 value in their countries, and that all debts over a certain 
 amount should be paid in gold ; they fixed the value of these 
 coins at practically the same ratio as England had done 
 namely about 16 to one. When this had been done their silver 
 coins were accepted in England, not merely as so much silver 
 but as money. The only 'thing to be taken in account was the 
 
59 
 
 trouble and expense of sending the silver coins to the conntry 
 that issued them and getting gold back in return. As each coun- 
 try adopted gold instead of silver as its standard of value, there 
 was a greater demand for gold and a less demand for silver. 
 Gold went up in price and silver went down, so that now one 
 ounce of gold is worth 32 ounces of silver. Part of this rise 
 in the price of gold is due to various Western nations using 
 gold as the standard of value, but part of the rise is due to 
 other causes. The depreciation of silver has taken place 
 ■ during the last 30 years, and in the same period there has 
 been discoveries of rich silver ore in Italy, Australia, America, 
 etc., and not only have there been these discoveries, but dar- 
 ing the same time there has been a great improvement made 
 in the machinery for smelting silver from the ore, saving the 
 labour and consequently lowering the cost of prodactiun. It is 
 diflBcult to say how much the difference of the ratio of price 
 between gold and silver is caused by the greater demand for 
 gold, which we will call appreciation of gold, or by the less 
 cost of production of silver, which we will call the depreciation 
 of silver. Just now Japan has adopted gold as the standard 
 of value ; her mere proposal to do this sent up the price of gold, 
 and gold has risen still more since, AM the European countries Bimetalism. 
 and America are discussing whether' it is possible to fix the 
 relative values of gold and silver. Some economists think this 
 impossible, others think it possible if all the nations of the 
 world would agree on the same system, others think it possi- 
 bie for one nation to fix the relaiive value of gold and silver in 
 its own territory. Some economists think it desirable for 
 governments to fix the relative value of gold and silver, other 
 economists think it undesirable. 
 
 To form an opinion on the subject it is necessary to 
 study : — 
 
 1st. What are the effects when all the metals used as 
 money become cheaper ? 
 
 2nd. What are the effects when one metal used as money 
 becomes cheaper, and the others do not, in countries where 
 there is no standard of value ? 
 
 3rd. What are the effects when the metal used as the 
 standard of value becomes cheaper ? 
 
60 
 
 4th. What are the effects when the metal not used as the 
 standard of value becomes cheaper ? 
 
 In the history of VVestera couQtries and of China we shall 
 find answers to all four of these questions. 
 
 From the begiuning of the Sung dynasty to the end of 
 the Yuan dynasty gold, silver aad copper gradually grew 
 cheaper. The prices of all other commodities gradually became 
 dearer, and wages gradually rose in mouey, but the labourer 
 was not better off, because he had to pay more for his food aud 
 clothes. Afterward in the beginuiug of the Miog dynasty * 
 America was discovered, and there came suddenly to Europe 
 an immense quantity of gold and silver ; this enriched the 
 Western nations on the whole, but the riches only went 
 into a few families ; prices of all commodities went up, but 
 wages did not go up so quickly, so the poor people for a 
 time were worse off than before, for they only received the same 
 money as wages, and this money did not buy as much food and 
 clochiug as formerly. By aud by as the rich men wanted to 
 spend the gold and silver they obtained from America, io 
 building larger houses, in making merchant vessels to go to 
 America to get more gold and silver, aud in buying handsomer 
 clothes, the workmen got more work to do, more workmen 
 were wanted than could be got, and the jjrices of wages went 
 np, even more than the prices of commodities, so the workmeu 
 ultimately, but after terrible sufferings, grew richer aud lived 
 in more comfortable cottages, ate better food, had better furui- 
 tare ; in other words, the standard of living was raised. 
 
 So we see a gradual fall in the price of metals, used as 
 money, seuds up the price of commodities and increases the price 
 of labour. A sudden fall in the price of the metals used as money, 
 like all dislocations of trade, causes temporary suffering, 
 but ultimately enriches a nation and raises the standard of 
 living. 
 
 In reply to the second question we have only to look at 
 what constantly takes place all over China. When silver is 
 plentiful its price in cash goes down. The workmen who 
 earn their livelihood in cash can get more silver for their days' 
 work. The prices of articles sold in silver do not drop in value 
 as quickly as silver, while the articles sold in cash remaiu at 
 
61 
 
 the same price. The principal gainers by the fall in the price 
 of silver are the workmen who receive their washes in casii and 
 the shop-keepers and others who sell their goods for cash. 
 
 "What are the effects when the metal used as the standard 
 of value becomes cheaper ? When I was a child great discoveries 
 of gold were made in California and Australia, and au immense 
 amount of gold came into England, makiLtg the price of gold fall ; 
 this happened about 1848. The first effect was to raise the 
 price of all other commodities than gold ; the price of commodi- 
 ties being raised, there was a greater demand for labour, and 
 wages rose, but not till after the price of commodities had gone 
 up. The great quantity of gold that came into England made 
 people live more luxuriously and raised the standard of living. 
 At first persons with small fixed incomes were greatly em- 
 barrassed in two ways : 1st. They found their incomes would 
 not purchase as much as formerly. Secondly, they found it the 
 custom to live in a grander style than formerly, and this they 
 could not do, so fell into a lower social class, but in a few 
 years they or their children had more ways of making money, 
 and the general stimulus which the supply of gold gave to 
 trade, manufactures, railways, steamers, and inventions, 
 caused there to be a demand for workers of all classes ; wages 
 and salaries rose more even than the price of commodities, and 
 the whole community was made richer, but not iu the same pro- 
 portion. A few very successful men in France, England and 
 America amassed millions. The labourers, professional men and 
 traders, though they earned more, spent more, and though they 
 got more comforts did not feel themselves richer, as all of their 
 class were living in the same style that they were. A certain 
 number of people, with fixed incomes, who were too old or too 
 feeble to adapt themselves to the new circumstances, became 
 both relatively and absolutely poorer. The sufferings of these 
 people, though acute to themselves, were not much in com- 
 parison with the increased comforts of the generality of the 
 nation. The cheapening of gold was undoubtedly a benefit to 
 the nations where gold was the standard of value. 
 
 Now, what is the effect of the cheapening of a metal used 
 as money iu a country but not as the standard of value ? The 
 effect seems different la a gradual fall to what it seems in a 
 
62 
 
 snddea fall. Thus for the last five centuries copper has be- 
 come cheaper; the result of the cheapeaiug of copper has, 
 ia countries which use copper as a standard of value, raised the 
 prices of commodities, of wages aad the standard of living. In 
 countries that do not use copper as the standard of value, it has 
 increased the gains of miutiog copper coins. The amount of 
 copper coins in circulation in foreign countries is of bat small 
 value. They are not hoarded, and consequently are accepted at 
 their face value more as circulating promises to pay than actual 
 payment. In Western countries wagds are generally paidin silver 
 and gold, and therefore the fall in the price of copper has not been 
 felt, and as far as its use as money is concerned, has not had 
 much effect. Its fall in price as a commodity has greatly 
 stimulated trade and increased wealth by lessening the 
 cost of production of all commodities in which copper is an 
 ingredient 
 
 In the last thirty years there has been a very rapid fall 
 in the price of silver, the effects of which have been different 
 in different nations. The difference has been due to the 
 difference of the indebtedness of various nations, and also 
 greatly as to whether the countries used gold or silver as the 
 standard of value. 
 
 In nations like England, where gold is the standard, the 
 first effect was to send down the price of wheat and cattle pro- 
 duced in silver-using countries, and this injured the farmers 
 and landlords in England, as the latter were unable to let 
 their agricultural lands at such high rents as before, but what 
 the farmers and landlords lost was gained by the community 
 in cheaper bread and cheaper meat. It injured the mannfac- 
 turers of goods sold abroad for silver, for they had to pay for 
 their machinery and wages in gold the same as before, but the 
 silver the goods sold for did not give them as much gold as 
 before. Part of this loss the manufacturers got back by having 
 to pay less gold for raw materials, such as cotton; partly they 
 recouped themselves by improving their machinery and pro- 
 ducing the commodities at less cost. On the whole, however 
 they have lost, or at all events have not had as much profits 
 as they would otherwise have gained. A third class of 
 Eoglishmen who have lost by silver becomicg cheaper are 
 
63 
 
 people whose capital or incomes are in silver, snch as employes 
 whose salaries are in silver and investors in securities which 
 give silver dividends. A fourth class which has suffered has 
 been that of the workmen whose trade has been impaired by 
 the foreign competition of silver-using countries, who have 
 been thrown out of employ, or who have not obtained so much 
 employment as before. 
 
 A sixth and most important class of people who have 
 suffered by the fall in the price of silver have been the debt- 
 ors who owe gold, as they have had to pay more silver as interest 
 of the debt, and as silver has not depreciated as much as gold 
 has appreciated, they have to pay much more of the products 
 of their labour as interest than they contemplated. 
 
 In countries that use silver as the standard of value the 
 cheapening the price of silver has stimulated Industrie*, but it 
 has increased the cost of living, and as yet wages have not 
 risen to counterbalance this increased cost. Besides having 
 to pay the interest of all debts in gold, debtor nations have 
 to pay much more silver than was contemplated at the time 
 and to give their creditors more of the products of the 
 country. 
 
 The gainers by the fall in the price of silver have been 
 creditors and gold investors ; and persons whose wages and 
 salaries are paid in gold have also gained by being able to get 
 almost every commodity cheaper than before. Further, if we 
 look at silver as a simple commodity, but not as money, the 
 whole world has grown wealthier by the lessening of the cost 
 of its production, and consequently lessening the cost of all 
 commodities in which silver is an ingredient. 
 
 I am of the opinion that the fall in the price of silver has 
 on the whole been a benefit to humanity, but this benefit, though 
 widely spread, has not been much noticed. People are so in the 
 habit of considering money as wealth, that they do not always 
 perceive that if the things they want to buy become cheaper, 
 they are richer, though they have no more money than 
 before. 
 
 In gold-nsing countries the effect of the cheapening of 
 silver has been to take away wealth from the landlords, farm- 
 ers, manafacturers and some of the workmen and diffuse it 
 
64 
 
 araon^ the community in cheaper commodities. In silver- 
 using countries the effect of the cheapening of silver has been 
 to make the rich richer and the poor poorer while increasing 
 the ajrgregate wealth of the nation. In guld-using countries the 
 volume of trade has increased, but the profits have been small- 
 er, id est, wealth has been more evenly diffused. lu silver-using 
 countries the profits have been swallowed up by the big 
 capitalists. 
 
 The very large classes in all countries who have lost by 
 the cheapening of silver are urging their governments to pass 
 laws allowing all payments to be made either in silver or gold 
 at a fixed rate, that is, to fix the relative price of silver and gold. 
 Some people think the effect of such a law would, if the price 
 of silver were fixed above its cost of production, that is, the 
 present*cost of producing silver, merely drive all gold out of 
 circulation, for people who got gold coins would either melt or 
 hoard them. Most, even of those who wish governments to 
 fix the relative price of silver and gold, do not wish one govern- 
 ment to act alone, but wish for a consultation of all the nations 
 of the world ou the subject. Now, whatever opinions one may 
 hold as to whether it is feasible or desirable for governments 
 to fix the relative prices of gold and silver, there is no doubt 
 that an international conference on money would be useful. 
 Fluctuations If such Conference could, and this does not seem impossible, 
 
 of exchaoge. i i , n . ^ 
 
 hit upon some plan to prevent the sudden fluctuations of prices 
 of silver and gold which are not due to the relative cost of 
 production, it would do much to mitigate the suffering that 
 these dislocations of trade are now causing, and it is quite 
 conceivable that this might be done without checking the pro- 
 ■ duction of either metal. Perhaps the conference might adopt 
 a compromise between the gold monometalists and bimetalists. 
 If for instance payments in silver were made legal up to 100 
 ounces of silver at a fixed value, and beyond 100 ounces pay- 
 ment to be made at the market rate, the demand for silver 
 would increase without checking the production of gold, 
 which its present high price is effecting. 
 
 Still greater benefit would ensue if all, or many of the 
 Western countries, would adopt a uniform system of carria"-e 
 and allow each other's coins to be legal tender up to a limit of 
 
65 
 
 say £10. Oae difl3,culty in the way of this is every conntry 
 would wish to mint the coins on which there was most profit. 
 To obviate this some arrangement would have to be come to as 
 to the number of such coins each nation should issue. It would 
 be better still if a neutralized state like Switzerland would 
 undertake the supervision of an international coinage in the 
 same way she undertakes the supervision of the international 
 postage system. 
 
Chapter V. 
 
 CreMt. 
 
 Mutual trust. ^^^-'-'^^^ ™^^ *'''°^*' ^^'^^ other there cad be no acqnisition 
 *^c^ of wealth. Trust is a foundation of riches. When a 
 labourer does a day's work he does it in the trust that 
 his employer will pay him his day's wages. When an em- 
 ployer gives " bargain money " to a workman, he does it in 
 the trust that the workman will perform the work for which 
 he has been paid bargain money. When a shop-keeper or 
 merchant sells goods on credit, he does so in trust that the 
 purchaser will pay for the goods ; when he receives payment 
 in bank notes, he does so in the trust that the bank issuing 
 these notes will pay them when presented ; when he receives 
 payment in cheques, he does so in the trust that the drawer of 
 the cheque will have funds in the bank on which the cheque 
 is drawn, and trust in the bank that it will honor it ; when he 
 receives a Bill of Exchange in payment, he does so in trust 
 that the drawer has authority to draw, and that the drawee 
 will honor the bill. When the bill is not a " sight bill," it is 
 generally presented to the drawee for acceptance. Sometimes 
 for greater security it is considered desirable to get a third 
 party to endorse, or back the bill; in this case the person who 
 receives the bill, trusts the endorser, in case drawee and 
 drawer fail to pay. 
 
 The way trust or credit enriches a nation, is that it saves 
 labour ; no great trade could be done if in each transaction the 
 money had to be counted out by the purchaser and paid over 
 to the vendor. In many cases the purchaser has no inteutiou 
 of retaining the goods for himself ; he only buys to sell again 
 
67 
 
 at a profit. If he had to pay for everything he bays at the 
 moment of the purchase he could not do so big a business ; in 
 other words, much of his labour, or capacity for labour, would be 
 wasted. The vendor in selling goods to the purchaser on 
 credit, trusts that the purchaser will ultimately pay, and in 
 doing so he unconsciously trusts that the customers of the 
 purchaser will pay the purchaser. In these simple transac- 
 tions the benefits of the credit system are : 1st. It saves labour 
 by enabling a man to do a big business with little work. 
 2nd. It facilitates division of labour by enabling some men to 
 devote their whole attention to the production and others to 
 the distribution of wealth, and among the latter class it 
 facilitates the division into wholesale and retail dealers. 3rd. 
 It facilitates the interchange of commodities. 
 
 Each development of the credit system, or in other words, 
 each increase of the trust of man in man, increases the wealth 
 of nations. Of course when one speaks of trust one means a 
 prudent and not a blind trust. Honesty and prudence are the 
 foundations of trust; dishonesty and imprudence destroy trust. 
 It is manifest the amount of trust we can prudently repose in Good lawa 
 any person, depends on three factors : 1st. His honesty. 2nd. istration ' 
 His ability to pay. 3rd. The probability of his being forced to "TncreaJe'" 
 pay in case he should be dishonest. The last factor will be mutual trust, 
 most efi'ective when the tribunals to which he is amenable are 
 wise and just and when the laws such tribunals administer 
 are wise and just also ; that is, there should be good com- 
 mercial laws and good tribunals. In these respects England 
 is in a better condition than China or Japan, and therefore 
 more credit is given to, or in other- words, more trust is 
 reposed in Englishmen than in Chinese or Japanese, and the 
 credit system in England has been far more perfected than 
 it has been in China or Japan. This places England in a 
 better position for obtaining wealth than China or Japan. 
 Englishmen and English companies have a better credit than 
 Chinese or Japanese ; more trust is reposed in them ; they can 
 borrow money on easier terms, and this is one of the reasons 
 they are able to compete favorably with the Chinese and 
 Japanese. The tea growers of India and Ceylon who only pay 
 four per cent a year for their borrowed capital, have an advant- 
 
age over the tea growers of China and Japan, who have to pay 
 from eight to 30 per cent for their borrowed capital. 
 
 Let us glance at how the present credit system in the 
 West came into existence and at the broad principles of com- 
 mercial law that have been acted on to meet the various new 
 requirements created by new developments of the credit system. 
 
 Banks and It had been found that in large transactions it was in- 
 
 pawnbro^ers. . , 
 
 convenient for the purchaser to have to weigh or count out 
 
 money for each transaction ; it was also found inconvenient 
 for the vendor to take possession and charge of the money. 
 It was desirable that money should be placed somewhere to 
 be at the command of the person entitled to it. Farther, 
 many persons who possessed valuables, such as jewels or land, 
 might be in urgent temporary need of money and might be 
 unwilling to sell the jewels or land, but might be willing to 
 borrow money on them ; hence arose pawn-brokers and bankers, 
 who did the doable business of taking care of the money of 
 people who had more money than they immediately wanted to 
 use; and of lending money on security to people who had 
 other property than money, but who wanted for immediate 
 use more money than they possessed. In both cases deposi- 
 tors and pawners had to impose trust in, or in other words, 
 give credit to bankers and pawn-brokers with whom they 
 dealt. They had not only to trust in the honesty of these 
 persons, bat they had also to trust in their care and caution. 
 In the bankers that they would not speculate rashly and lose 
 the money, that they would be careful not to pay forged 
 cheques, etc. In the pawn-brokers, that they would take care 
 of the article pledged, and not allow it to be stolen. In case 
 of land or houses being pledged as a vifgage, that the vifgage 
 would not allow the land to get out of cultivation, nor the 
 houses out of repair. In order to increase this trust good 
 laws were passed making the banker responsible if he paid a 
 forged cheque, making pawn-brokers responsible for due care 
 in the custody of the things pledged, and further, to prevent 
 facilities for theft, in some cases pawn-brokers were bound, 
 before advancing money on valuable pledges, to satisfy them- 
 selves that the persons offering the articles in pawn, had 
 honestly come by them. The French laws as to pawn-shops 
 
69 
 
 are particularly good. la France pawn-shops are a govern- 
 ment monopoly, and are so worked as jnst only to pay their 
 expenses ; the consequence is that thieves dare not attempt 
 to pawn stolen articles in them ; and the facilities, and 
 therefore the temptations to theft, are much decreased. The 
 poor obtain advances at the lowest possible rate of interest, 
 for the government doing business on a large scale is able to 
 keep down the cost of administration to a minimum, and as 
 the government makes no gain the people who borrow money 
 obtain the loan on easy terms and have not to pay the large 
 profits that private individuals, who take up the business of 
 pawn-brokers, would demand. With regard to vifgages, in 
 case the vifgagee does not take due care of the land and houses, 
 a good law will give the vifgagor a remedy in letting him sue 
 the vifgagee for damages, " waste " as it is called. 
 
 Another form credit has taken is that banks, which hold ^^'^^ notes, 
 money, are allowed to issue bank notes. Bank notes are only 
 promises to pay something, generally a specified amount of 
 gold, silver or copper. Their value depends on the trust in 
 the bank that issues these promises. Bank notes are very 
 convenient, as they are very portable, and in countries where 
 only the national banks issue them, they are universally 
 received as money. Their being received as money, facilitates 
 trade by saving time and labour in counting money, besides 
 other advantages. To increase the confidence and trust in bank 
 notes in , England there is an act called the " Bank Act," 
 which compels the bank issuing the notes always to keep in 
 its treasury a quantity of gold and silver proportionate to the 
 value of the notes issued. This law was necessary and ex- 
 pedient at the time it was passed, and it is doubtful whether 
 it can yet be safely repealed; it has tended to confirm the 
 trust in the notes, but on the other hand, it has kept idle a 
 quantity of gbld and silver, which would otherwise have been 
 useful in circulation among the people. In times of commer- 
 cial depression, when there has been a panic and a rush to 
 the bank to change the notes into gold, it has been found 
 necessary to suspend the act. Perhaps if the government 
 would secure the payment of bank notes the bank need not 
 be forced to keep a larger reserve than is necessary for its 
 
70 
 
 cnrrent bnsiness, and there wonld not be such a qnantity of 
 money lyiog idle as is now the case. 
 
 A bank note is a promise to pay, not to any one person 
 in particular as a Bill of Exchange, but to any person who 
 holds it. It is transferable without endorsement or any 
 formality. It is a " negotiable instrument," diiFering from a 
 Bill of Exchange or a cheque drawa to order, in that it does not 
 require to be endorsed. It differs from metal money in two 
 respects : First, payment of a bank note can be stopped. Each 
 bank note bears a number, and if therefore I lose a bank note, and 
 know the number, I can give notice to the bank to stop pay- 
 ment. This stoppage is only for purpose of enquiry. If the 
 person, who presents the note, can show that he came by it 
 honestly the bank is bound to pay, and the loser of the note 
 suffers the loss. If a man loses money of course he cannot get' 
 the money stopped. Again, if instead of losing the note the 
 note gets destroyed the owner of the note can, on proof of the 
 note being destroyed, recover its value from the bank. Thus, 
 and this is an ordinary case, if the notes are destroyed by 
 fire the holder can recover their amount from the bank by 
 presentation of the ashes. 
 Cheques. Another form of credit or trust is shown by the system of 
 
 cheques, that is, a man who has money, instead of keeping 
 it in his house, and thus tempting thieves and robbers, sends 
 it to a bank and draws cheques on the bank for the amounts 
 he requires. Cheques are of three kinds — cheques made pay- 
 able to bearer ; these, like bank notes, are negotiable instru- 
 ments without endorsement, that is, the bank is bound, if the 
 drawer of the cheque has money in its hands, to pay the 
 amount of the cheque to any one who presents it ; like bank 
 notes, cheques to bearer can, in case of loss, be stopped for 
 enquiry, but if the holder shows he has honestly come by 
 them the bank is bound to pay and the loser suffers the loss. 
 Secondly, cheques can be made payable to the order of a 
 particular person ; in such case they are not negotiable in- 
 struments until they have .been endorsed by the person in 
 whose favor they are drawn. When endorsed they become 
 negotiable instruments, and stand in the same position as 
 cheques drawn to bearer. Thirdly, and this is the most usual 
 
71 
 
 course, cheqnes can be not only made payable ito the order 
 of a particular person, they can also be crossed, in which case 
 they can only be paid through a bank. The eifeet of this is 
 that a crossed cheque is safe to be paid to the benefit of the 
 party entitled to it. No banker will receive or cash a crossed 
 cheque unless he knows the person presenting it. A crossed 
 cheque is a far safer way of transmitting money than a bank 
 note. It is advisable to cross all one's cheques, as if they are 
 lost or stolen the finder or thief can make no use of them, 
 and one can safely write a duplicate. 
 
 Each time a banker receives a cheque, he credits the 
 amount to the person sending it and debits himself. If the 
 cheque is on another bank, he further credits himself ancP 
 debits the bank on which the cheque is drawn. At fixed 
 periods the various banks exchange cheques, but they do not 
 necessarily collect the balances due ; they debit and credit each 
 other with these balances. Now not one per cent of the busi- 
 ness of the world is done with actual money ; it is almost all 
 done on the credit or trust system. This has a double advant- 
 age: 1st. In ninety- nine transactions out of a hundred it saves 
 the labour of counting out, weighing and shroffing money. 
 2nd, It allows a hundred-fold more business to be done than 
 could be done with the gold and silver in circulation. China's 
 trade with foreign countries is over 200,000,000 Taela a year. 
 The amount of treasure imported and exported is trifling in 
 comparison with the volume of the trade ; trifling as the 
 amount is it is much greater than the proportion of countries 
 (like England and France) where the credit system has been 
 carried to greater perfection and has been fostered by wise 
 commercial laws and trusted tribunals which enforce the laws. 
 
 Another system of credit is effected by Bills of Exchange. 
 A merchant buys say Tls. 100,000 worth of tea; he has not so 
 much capital, and he therefore borrows money from a bank and 
 gives in exchange Bills of Exchange at thirty days' or four 
 months' sight as the case may be, that is, he draws on the con- 
 signee of the tea who, on being shown the Bill of Exchange,- 
 promises to pay the amount of the bill when it falls due ; he 
 does this in the hopes that meanwhile he will be able to sell 
 the tea and realize the proceeds. It is obvious that as cargo 
 
Marginal 
 credit. 
 
 Bills of 
 Lading. 
 
 may fall in value, or be lost, the bank must take precautions ; 
 one of the precautions it takes is that it does not advance the 
 full value of the tea, but only say 80 per cent of the value . 
 another is that it will insist on the tea being insured ; it may 
 sometimes ask also that the Bills of Lading be lodged in its 
 hands. This brings us to two noteworthy features of the credit 
 system: 1st. What is called marginal credit. Secondly, the 
 extension in modern years of negotiable instruments. The 
 first we shall find to be a spontaneous result of the extension of 
 commerce, the second is an instance of wise laws aiding and 
 facilitating trade. 
 
 We have taken the case of a single transaction of a person 
 buying Tls. 100,000 of tea ; on this tea he obtains an advance 
 from the bank of say Tls. 80,000. If therefore he had no other 
 resources but his own he would be obliged to have at least 
 20,000 Taels capital before he could buy Tls. 100,000 worth 
 of tea, and if within a short time before the first tea could 
 be sold he goes in for ten such purchases his capital should 
 consist of Tls. 200,000, or in other words, a man's capital would 
 have to be 20 per cent of the volume of his trade. In some 
 instances this is the case, and such person is hampered by want 
 of capital. But in other instances trust or credit supplies the 
 want of capital If a merchant is known and trusted he can 
 obtain what is called marginal credit, that is, a rich firm 
 will give him credit or secure him to the extent of say Tls. 
 100,000. In this case he can do a large trade with a small 
 capital, and it is manifest that the persons in whom most trust 
 and credit is reposed are at an advantage as compared with 
 those in whom less trust is reposed. 
 
 In order to increase this trust and credit, good laws are 
 requisite to protect the creditor ; no one will lend unless he 
 hopes to get back his money, and the surer he is of getting it 
 back the readier he will be to lend and the easier will be the 
 terms he grants to the borrower. The wealth of a nation is 
 increased by the easiness with which money can be borrowed. 
 It is therefore desirable to pass laws to protect lenders from loss ; 
 this has been done in Western countries by elaborate enacts 
 ments on Bills of Exchange, Bills of Lading, Warehouse Receipts, 
 etc; the leading principle of which is to facilitate the recovery 
 
73 
 
 of money lent on Bills of Exchange and negotiable instruments. 
 
 (Bills of Exchange, when endorsed by the payee, are negotiable 
 
 instruments, that is, are payable to the holder.) If an endorsed 
 
 Bill of Exchange is lost it can, like a bank note, be stopped 
 
 for enquiries, but if the holder has come by it honestly the 
 
 holder has to be paid. The law with regard to Bills of Lading 
 
 has also been framed to facilitate trade by increasing credit ; 
 
 they are now, when endorsed by the assignee, negotiable 
 
 instruments, that is, the master of the vessel is authorized to 
 
 deliver the cargo to the holder of the Bill of Lading ; creditors 
 
 of the consignor who do not hold the Bill of Lading, cannot 
 
 claim the goods for debts owed to them by the consignor. 
 
 It is obvious that this, being the law, facilitates trade, because 
 
 people would not advance money on Bills of Lading on as 
 
 easy terms as is now done if the ownership of the goods 
 
 covered by the Bills of Lading could be disputed. 
 
 So too with warehouse receipts: these receipts, when Warehouse 
 ■ 1 1 • receipts, 
 
 endorsed by the person in whose name the warehouse receipt 
 
 stands, are negotiable inatruvnents, and can be transferred 
 by simple manumission in the same way as Bills of Exchange, 
 bank notes, endorsed cheques, etc., and the holder of such 
 warehouse receipts can get money advances on them to carry 
 on his business before the goods are sold and the proceeds 
 of the sale come back to him. The original vendor can always 
 protect himself by — until he is paid for the goods— insisting 
 on the Bills of Lading being consigned to him, or on the ware- 
 house receipts being made out in his name, and then he will 
 liave a " Lien," or hold, on the goods till he is paid ; otherwise 
 he must be content to be an ordinary creditor without the 
 special security of a hold on the goods covered by the Bills of 
 Lading or warehouse receipts. In these and other points it is 
 of immense advantage to trade that the law should be certain 
 and uniform. Traders are able to give and get credit more 
 easily when the law on the subject is fixed and certain. Both 
 .lender and borrower gain ; the lender by having more numer- 
 ous safe investments and the borrower by being able to obtain 
 loans on easier terms. 
 
 Besides these forms of credit a very common form of Personal 
 
 security, 
 
 giving credit is on what is called "personal security," that is, 
 
74 
 
 the borrower gives a '^promissory note." The possessor of a 
 promissory note stands in a better position than an ordinary 
 creditor, in that he is not required to prove the debt ; the 
 promissory note itself is considered sufficient proof of this. 
 The interest on debts, where there is ouly personal security, 
 is naturally greater than on debts where there is other 
 security. 
 Mortgages Credit is often given on land and houses, either by way 
 
 D vifgages. ^£ „ ^Q^fg^j^gg " Qj. <., yifgage ; " in the former case the lender is 
 paid a fixed amount of interest, and has the right, if the prin- 
 cipal and interest is not paid, to iforeclose, that is, to obtain 
 possession of the land and houses or immovable property. 
 In the case of a vifgage the lender, instead of interest, has the 
 nse of the house or land. Both vifgages and mortgages 
 differ essentially from advances made on Bills of Lading. In 
 the first place vifgages and mortgages have to be executed 
 with great formality. Secondly, the holder of a vifgage or 
 mortgage, is not by the vifgage or mortgage entitled to be the 
 owner of the land; before he becomes the owner there must be 
 either a formal foreclosure, or a deed of assignment trans- 
 ferring the land or houses to him, and further he must dis- 
 charge all the previous obligations and debts of the land and 
 give the mortgagor the balance between the value of the land 
 and the debt before his title to the land will be perfect. 
 
 Some economists think it would be desirable if loans 
 could be granted on immovable as easily as on movable pro- 
 perty. Without discussing these views it is easy to see cer- 
 tain differences between immovable and movable property, 
 rendering it less necessary to facilitate by, law loans on im- 
 movable property than on movable property. Immovable 
 property is not so quickly destroyed by consumption ; the 
 quantity of it, though enormous, is not unlimited ; land is not a 
 product of human energy, and though houses are, they are not 
 produceable to the same extent as other movable property. 
 There is not the same constant change of ownership, nor the 
 same frequent dealing in immovable property that there is in 
 movable property. The owner of immovable property can 
 always obtain a loan on it on easy terms, because it cannot be 
 carried off, and is not easily destroyed. Thus while insurance 
 
75 
 
 on houses is only one-eighth per cent a year insurance on ships 
 is probably about ten per cent a year. 
 
 Another form of trust or credit that tends in a minor Letters of 
 degree to increase the wealth of a nation is the practice of 
 granting what are called " Circular Letters of Credit." This 
 form of credit has only recently come into practice. It con- 
 sists in a man who is about to travel, on business or pleasure, 
 getting his bank to give him a circular letter of credit up to 
 a certain amount, which enables him to draw money all over 
 the world wherever his bank is known and trusted up to the 
 amount of his credit. When his bankers are advised of his 
 having drawn money anywhere, they debit his account with 
 the amount he has drawn. The advantage of this system to 
 the holder of the circular letter of credit i§, he can go and do 
 business all over the world, and can get money at once any- 
 where without having to go to the expense of a telegram 
 being sent to his bank to show he has credit there. At the 
 present moment the holder can obtain money on a circular 
 letter of credit granted by a good bank in almost every town 
 in Europe and the U. S., at all the principal places in Africa, 
 throughout the Russian dominions in Asia, in all the treaty 
 ports of China and Japan, and at many of the larger inland 
 towns in those countries. It is evident that- what makes it 
 possible to grant circular letters of credit is trust reposed in 
 the bank issuing them by the banks in other parts of the world. 
 This trust must have been merited, or it would not be reposed ; 
 before such trust is reposed three things are necessary — 
 honesty, good laws and good administration. 
 
 Note. — Bills of Lading and Warehouse Receipts differ es- 
 sentially from bank notes and cheques, in that the former entitle 
 the holder to specific goods. Cheques and bank notes entitle 
 the holders to a specific amount of specie. Bank of England 
 notes, in England, differ from cheques as being legal tender, 
 which cheques are not. By Chinese law a bank note is no more 
 legal tender than a cheque. If the bank note is dishonored 
 the mere reception of the note does not extinguish the debt. 
 
 > ^♦^ < 
 
Chapter VI. 
 
 %onn5, etc. 
 
 Lending a M^ NT person possessing anything can do three things with 
 right. ^V^ ^^> ^^ can .use it himself, he can sell it, or he can lend 
 it. In case he elects to lend it he requires to be paid 
 for the loan, and, if the article is damaged b_v the use, or deterio- 
 rates by lapse of time, for the deterioration also. When 
 money is lent the object lent is called capital, and the price 
 paid for the use of it is called interest. When immovable 
 property is lent the price for the use of it is called rent. 
 When movable property is lent the price for the use of it is 
 called HIRE. When human strength or skill is leot the price for 
 the use of it is .called salary, wages, etc. When a place in 
 a carriage or boat is lent the use of such place is called fare, 
 freight, etc. 
 
 Interest, rent, hire, salary, wages, fare, freight, etc. , 
 have all ooe quality in common ; they are the price paid for the 
 temporary use of a thing. In order that there may be what 
 Mencius calls "a free circulatioa of products," the process of 
 lendiQg and borrowing, as well as the process of buying and 
 selling, should be facilitated as much as possible. As far as 
 practicable no obstacles should be placed in the way of lend- 
 iog and borrowing. The lender should be able to recover 
 easily the payment for the use of the thing lent, and this is to 
 the interest of the borrower as well as of the lender, because 
 the surer the lender is to recover this payment, the easier will 
 he make his terms to the borrower. Bad security makes 
 interest high, and generally high interest means bad security. 
 The reason of this is that not only are there a great number of 
 
77 
 
 people who want to borrow, there are also a great nnmber of 
 people who want to lead. Some of the people who want 
 to lend are bold and speculative, some are timid and 
 cantioaa. The bold and speculative are willing to incur 
 the risk of losing their money on the chance of high profits ; 
 others prefer low profits with security. In the introduction I 
 showed how demand and supply affects the price of commodi- 
 ties. I shall deal with the subject more in detail in a future 
 chapter ; here it is sufficient to say that the law of demand 
 and supply regulates the price of lendiug things; that is, of 
 interest, rent, hire, salaries, wages, fare, freight, etc., as it 
 does the price of commodities. 
 
 We know that governments and trades-unions constantly 
 endeavor to fix the price of interest, rent, hire, salaries, 
 wages, fare and freight, and we have to consider how far 
 such interference increases or decreases the wealth of a nation, 
 and how far such interference is justifiable on other grounds 
 than that of economy. 
 
 First let ns take money. Some people considered it wrong Loans of 
 to take interest at all, and that if a man lent, say Taels 100 """"^y- 
 for a year, he should at the end of a year only be paid back 
 Taels 100. These people wished laws to be passed prohibiting 
 the taking of interest ; they thought such a law would benefit 
 the poor ; in reality such a law would injure both rich and 
 poor, the poor more than the rich. The use of money for a 
 year has a value, and if the holder of the 100 Taels could 
 make two Taels by using it himself for a year, he would lose two 
 Taels a year by lending it, free of interest, and consequently 
 would not lend it. A would-be borrower might be able to 
 make six Taels a year by the use of the money for the year ; 
 in that case he would gladly pay four Taels for its use. The com- 
 munity would be poorer by six Taels a year if the money was 
 not lent and not used at all, by four Taels a year if the money 
 was not lent, but used by the owner, than if it was lent at six 
 Taels a year and by the loan each of the parties, borrower 
 and lender, gain two Taels. 
 
 Up to recently most countries had laws limiting the 
 amount of interest to be paid at what was considered a fair 
 rate. Such laws were either inoperative or mischievous. 
 
78 
 
 Thus the lender and borrower would agree to misstate the 
 amount lent. The borrawer would acknowledge say to have 
 received Taels 100 when in truth he had only received Taela 
 80, or a condition of lending the money would be made that 
 the borrower was to buy pictures at a higher price than they 
 were worth. The borrower who had not got good security, could 
 not borrow at the legal rate ; he had to agree to the lender's 
 terms or forego the loan. The rate of interest was not really 
 lowered by these usury laws. Production and trade were 
 hampered by them. 
 
 When I was Vice-Consul in Canton, on the marriage of 
 the Emperor Tung Che orders were issued to the pawn-brokers 
 at Canton to remit one month's interest on all the money they 
 had advanced. The borrowers, I was told by the pawn-brokers, 
 never claimed this remission. If any borrower had claimed 
 the remission, the pawn-brokers would have granted it, but 
 would have refused to make other advances to such person. 
 
 Though as a rule it is better to leave lender and borrower 
 at liberty to fix the terms of their bargains, and for the 
 government only to see that the agreement is carried out, 
 there are exceptions ; few when money is concerned, but more 
 numerous as to transactions in which land is lent. 
 
 One exception is that if an article absolutely necessary is 
 owned entirely by a few persons, there will be a danger of 
 those persons combining to charge so inordinate a price for 
 its use as to be detrimental to the interests of the community. 
 This does not often take place when money is lent, as so many 
 people possess money that they compete with each other to 
 attract customers. We know that when China and Japan 
 borrowed money recently there was great competition among 
 various nations to lend jt, and China and Japan consequently 
 obtained their loans at a very cheap rate, considering the 
 security, far cheaper than if there had only been a few to lend. 
 So it is with individuals ; there are now so inany bankers and 
 lenders that they cannot charge exorbitant rates of interest to 
 borrowers who have good security. The borrowers can go to 
 different lenders and select the lender that gives them the 
 easiest, terms. 
 
 It must be borne in mind too that the kind of borrowing 
 
79 
 
 it is desired to facilitate is borrowing to nse the money profitably, 
 not borrowing to waste. This last sort of borrowing ought to be, 
 and in many countries is, made difficult. In England debts of a 
 person under 21 cannot be recovered by law unless they are for 
 necessaries which his parents ought to have supplied but have 
 not. So too with the debts of married women ; such debts 
 cannot by law be recovered from the husband unless they 
 are for necessaries which the husband has failed to supply. 
 So too it is desirable to regulate pawn-sho{)S to prevent their 
 facilitating theft by making advances on stolen property and 
 to prevent them oppressing ignorant and poor borrowers. 
 With regard to pawn-brokers, it would not, I think, hamper 
 trade if each nation fixed a maximum rate of interest, provid- 
 ed such rate of interest gave a sufficient profit to induce re- 
 spectable people to engage in the trade in sufficient numbers 
 to supply the needs of the people. 
 
 In the loan of immovable property greater government Bent, 
 interference is desirable than in the loan of money, and prob- 
 ably greater interference in loans of laud than in loans of 
 houses. The reason of this is that land, unlike money and 
 houses, is limited in quantity. Human labour and skill may 
 increase the fertility of land, but cannot increase its quantity. 
 Land is further absolutely necessary in order to grow food. 
 If therefore the land in a country falls into a few hands, the 
 land owners are able to exact an exorbitant rent, the tillers of 
 the soil are obliged to pay whatever is asked, and are ground 
 down to poverty and are ready to create riots. 
 
 The amount and nature of government interference with 
 rent should depend on the nature of the land tenure and the 
 conditions of the country. Land tenure differs considerably in 
 different countries; hundreds of controversial volumes have 
 been written as to what kind of land tenure tends most to 
 . increase the wealth of a nation. Some hold that land should 
 not be owned by private individuals at all, but should be the 
 property of the state, which should collect on it a fair rent or 
 land tax from the tillers. Others hold' that land should be 
 divided among as many private peasant proprietors as possible. . 
 (This is largely the case in France). Others that there should 
 be a periodical division of land among families ; the quantities 
 
80 
 
 being proportioned to the number of able-bodied in the 
 family. (This is largely done in Eussia). Others, and this is 
 the idea carried out in the U- S., and until recently in Great 
 Britain, that there should be a free trade in land. Each 
 system has its advantages and disadvantages. It is difficult 
 to say which most promotes the wealth of a nation. The 
 French system makes the peasant wonderfully frugal and 
 industrious. It also, by absorbing his interest in the land, 
 makes him quiet and peaceable. On the other hand, want of 
 capital prevents his using steam machinery, and a great part 
 of his labour is wasted. The Russian system has its advantages, 
 in that it provides a living for the whole population, but it has 
 its disadvantages. It forces men into a life of agriculture, 
 who have no taste or aptitude for it. It renders the Russian 
 peasant reckless, and as he has no permanent interest in his 
 land, he does not take pains to permanently improve its 
 fertility. Free trade in land has a great many advantages; it 
 causes the persons to cultivate laud, who have most taste and 
 ability in agriculture, it attracts capital to the land arid 
 encourages the use of labour-saving machinery and scientific 
 modes of cultivation, but it has also its disadvantages. I am 
 not aware that these disadvantages have yet showed themselves 
 in the U. S., which is a vast and sparsely populated country, 
 but in Great Britain, especially in Ireland and the highlands of 
 Scotland, the disadvantages have been many. Ireland is a 
 populous country in which there are no minerals and but few 
 manufactures ; almost all its wealth consists of agriculture. 
 Owing to various causes the land became the property of a 
 comparatively few landlords, who often resided out of the 
 island and exacted " rack rents " from the tenants, and who 
 also forced the tenants to emigrate, because it paid better to 
 use the laud for grazing than for tillage. The consequence 
 was the majority of the Irish were poor, discontented and 
 turbulent. The British government has recently considered it 
 advisable instead of leaving landlord and tenants to make 
 their own bargains, to" fix a fair rent for the land, and efforts 
 are now being, made to establish peasant proprietors there by 
 lending money to the tillers of the soil to purchase the land 
 they till, and in order to compel the landlords to accept a 
 
81 
 
 reasonable price for the laad, the parchase money has been 
 fixed at so many years' rent, the payment of the purchase 
 money to be spread over a period of years. This action of 
 the British government contravenes a principle of political 
 economy that there should he freedom of contract, bat it is 
 deemed more important in the present case to pacify the 
 agriculturists in Ireland than to enrich the country. 
 
 With regard to houses the government does not interfere 
 to fix fair rents, though in many large towns in England a few- 
 rich people possess all the land and are able to demand exorbi- 
 tant ground rents. An agitation is now going on in England 
 to confiscate for the public benefit what is called the " unearned 
 increment " of land, that is, the increase in the value of land not 
 due to the skill and industry of the land-owner, but to adven- 
 titious circumstances, such as, the land being situated in or near 
 large growing towns. Others are agitating to impose heavy 
 taxes on these ground rents. 
 
 In China the land question has not taken the same phase 
 as in Western countries. As a general rule in China agricul- 
 tural lands are owned by village communities, clans and families 
 more than by private individuals, and China, in order to pre- 
 vefit an increase in the number of people without resources 
 and vagabonds, justifiably places great obstacles in the way of 
 the transfer of land; these obstacles interfere with loans on 
 land, and render the interest on such loans higher than it 
 would otherwise be, as the lender has to take into account, when 
 making the loan, the cost and trouble of getting the land trans- 
 ferred to him in case the borrower neglects to pay the debt. 
 The fact that the borrower on land has to pay high interest, is 
 detrimental to the wealth of China, but it would probably be 
 still more detrimental for land transfers to be made so easy as to 
 increase the numbers of Chinese without means of subsistence. 
 What is more detrimental to the wealth of China, is preventing 
 foreigners renting land. Foreigners with their large capital 
 and greater chemical knowledge, would be able to improve the 
 tea, sugar, wheat, camphor and other cultivations and could in- 
 augurate new cultivations, such as quinine, coffee, etc., and they 
 could develop the mineral resources of the country which are 
 now lying idle. 
 
82 
 
 With regard to the rent of houses in China the practice 
 of considering them movable property, and of allowing the 
 renter of the land to remove the houses he has erected on 
 other men's lands, is in the present condition of China very 
 salutary. 
 Loan of With regard to the hire of movable things. Hire, as a 
 
 "'toe.*'^' rule, includes not only interest on capital, but also something 
 for wear and tear, or deterioration of the thing lent. In 
 Western countries, the movables ordinarily hired are steam 
 ploughs and other agricultural machinery, borrowed by farmers 
 who have not sufficient capital to make it worth their while to 
 purchase them ; stallions, bulls, boars, rams, etc., to line 
 mares, cows, sows and sheep, borrowed by breeders and 
 herd keepers who have not sufficient stock to make it worth 
 while to keep their own stud animals. In the hire of movables 
 it has been found best, in most countries, for the lender and 
 borrower to make their own bargains without the government 
 fixing the rate. 
 
 A common form of dealing with movables, especially 
 furniture, is what is called purchase on the hire system, that is, 
 the payment for articles by instalments spread over long periods' 
 on the payment of the first installment the borrower is given 
 the use of the article ; on the payment of the last installment 
 the article becomes the property of the borrower. This pur- 
 chase by hire system is now being largely adopted in Ireland 
 in order to enable the peasants to become proprietors of the 
 land they till. It has been adopted with success in England 
 by building societies, especially with regard to houses for the 
 artizan class. It enables the artizan to become the owner of the 
 house he occupies. The adoption of this system is highly con- 
 ducive to the wealth of a nation. It provides lucrative and safe 
 investment for capital, and is therefore beneficial to the lender. 
 It induces habits of thrift and industry on the part of the borrow- 
 er, and makes him eager to save periodically the sum due as 
 an installment instead of spending it on drink and expensive 
 eating. It encourages the production of commodities and 
 tends to increase the wealth of a nation, not only by enlarging 
 the amount, but also by fostering the moral qualities, thrift 
 and industry which produce wealth. 
 
83 
 
 Other things borrowed and lent are talents and strength. Salaries and 
 As a rule when talents are lent the hire of them is called salary, ^^S^s. 
 when strength is lent the hire of it is called wages. The least 
 possible wages that can long be paid for unskilled labqur is 
 enough to feed and clothe the labourer and his infant children ; 
 if wages go below that point a nation must die out, but more 
 than a bare subsistence should be paid as wages, and it has 
 been found that high wages do not necessarily make labour dear, 
 or even what is called unskilled labour. An English labourer re- 
 ceives about Mex. $1.25 a day for ten hours' work, a Frenchman 
 only about $1.00, and a Chinaman only 14 or 15 cents, yet it 
 has been found that in building earthen embankments for rail- 
 ways, fortresses, etc., the cost is the same in England,' France 
 and China, namely about 16 Mex. dollar cents a cubic yard ; 
 the reason of this is that the Englishmen, being better fed than 
 the Frenchmen, are able to do more work in the ten hours, 
 and Frenchmen, being better fed than Chinese, are able to do 
 more work than Chinese. 
 
 When workmen only demand fair wages, a native does not 
 los^ by paying them. When workmen demand excessive wages 
 the country does lose. Thus in America and Australia the 
 European workmen's wages are higher than in England, and in 
 many places in Australia and America the climate is better 
 suited to less well fed people; the better feeding does not enable 
 the labourer to do a proportionately greater amount of work. 
 In Australia and America the immigation of Chinese labourers 
 is discouraged, because they work cheaper than Europeans. In 
 discouraging Chinese immigration to keep up the price of labour, 
 America and Australia are checking the increase of wealth. 
 Thus in Australia many coal mines have ceased working, 
 because the wages of white men are so high that the mines 
 could only be worked at a loss, and the mine owners are not 
 allowed to import Chinese labourers. 
 
 Whetber Australia and America are justified in acting 
 against the laws of political economy by excluding Chinese 
 labour, or in other words, whether its introduction would be 
 more injurious than its a,dmission, is a question for Australia 
 and America to decide. If they decide unwisely they will 
 be losers. 
 
84 
 
 High wages In skilled labour, less even than in unstilled labour, do 
 
 meaifdTar'^ high wages mean dear work ? Gradually the laboar of the 
 work. vrorld is more and more being done by machinery, that is, by 
 skill and intelligence, and less and less by brute strength. 
 Wages for skilled labour must, at a minimum, be enough not 
 only to maintain the labourer and his infant family in life, 
 they must also be sufficient to give him the necessary educa- 
 tion, leisure for thought, etc., to develop his skill to the 
 required point. Take a cotton mill, for instance; it is far 
 wiser to pay highly for skilled workmen, who will not damage 
 the machinery, who can work many spindles and can work 
 them quickly than to employ unskilled workmen at far less 
 wages. By skilled labour the machinery is kept in constant 
 use; the buildings can be smaller and less expensive in propor- 
 tion to the work done if skilled labour is employed. But if 
 the workmen demand higher wages than their work is worth, 
 they will impoverish their country and themselves. The 
 labour will be carried on in other countries. Thus if the 
 English cotton spinners are demanding too high wages, the 
 manufacture of cotton textiles will be carried on in China, 
 Japan, and other countries, and not in England, and the 
 English cotton spinners will be thrown out of employ. 
 Certain industries have already moved from England, on 
 account of high wages, to Italy, where wages are lower. If we 
 lived in an ideal world, where everybody was guided by an 
 enlightened view of his own interests, it would be better for 
 the question of wages to be settled between the employer and 
 the workmen.- The employer would find it to his interest to 
 pay the workmen fair wages, and the workmen would find it 
 to their interests not to ask more than fair wa^es. There 
 would only remain the difficult task of finding out what are 
 fair wages. As the world exists we are confronted with three 
 facts— the avarice of employers, the greed of the employed, 
 and the ignorance of both. All three have checked the in- 
 crease of the wealth of nations. In Englaud employers have 
 sometimes endeavoured to take advantage of the necessitous 
 condition of the workmen and have inaugurated what are 
 Lock outs and called '■''lock outs," that is, they have combined to refuse 
 strikes. Workmen fair wages and have refused to employ anyone 
 
85 
 
 nnlesa he wonid work on the terms the employer dictated. 
 On the other hand, when orders have been brisk, the workmen 
 have sometimes combined in what is called a " strike^' that is, 
 they have refused to work at all, nnless paid exorbitant 
 wages. During these periods of struggle — wars between labour 
 and capital, as they are called — machinery, skill and strength 
 are idle to the detriment of the nation. Workmen, instead of 
 peaceably working and increasing the wealth of the nation, 
 take to rioting and destroying it. 
 
 It is very desirable there should be some mode of as- 
 certaining what are fair wages and of inducing the employers 
 to pay and the employed to accept such wages. These dis- 
 putes are often submitted to arbitration ; sometimes the em- 
 ployers and employed will not agree as to who are to be 
 arbitrators, or refuse to abide by the arbitrators' award. Some 
 people advocate the establishment of hoards of conciliation 
 by the government, whose decision should be final ; others 
 advocate the division of the profits of any concern among 
 those who supply the money and those who supply the labour. 
 
 At the present moment high wages are being kept up in 
 England in most trades by trades-unions, all the members 
 of which refuse to work except on terms laid down by the 
 unions. This is especially the case in the building trades, and 
 the workmen in these trades have so much power that they 
 compel municipalities and public institutions only to employ 
 union men. This works detrimentally to the wealth of Eng- 
 land in four ways ; in the first place it greatly increases the 
 cost of building, and therefore of rents, and so far diminishes 
 the value of money. 2nd. Owing to the cost of building 
 people do not build so large houses as they otherwise would, 
 so there is less employment given by private individuals to 
 bricklayers. 3rd. To make np for this the unions have put 
 pressure on municipalities to execute greater public works 
 than are required, such as town halls, libraries, schools, 
 workhouses. 4th. Attg^^Tby the high wages ruling in 
 towns the country folk flock from the country into the towns, 
 so that in many parts of the country there are not enough 
 men left to till the ground, and in the towns themselves there 
 are many more men than can find work to do. Some cannot 
 
86 
 
 find any work at all, and increase the numbers of criminals 
 and paupers. Others only get occasional work. To meet this 
 state of things it is desirable to do in England what is being 
 done in Ireland, that is, aid the peasantry to become pro- 
 prietors of land. Another step is letting small plots of 
 garden land close to the towns to the town artizans at 
 low rents, so that they can utilize their spare time in growing 
 vegetables. Such plots of land are called a^towzen^s. Recent 
 laws have facilitated the purchase of land to let out in 
 allotments, and there are now in England some 700,000 of 
 these allotments, which increase the wealth of England by 
 enabling our artizans to engage in work productive of wealth 
 in their leisure hours and by inducing habits of temperance, 
 frugality and industry. 
 Salaries. In the higher skilled labour, such as that of doctors, 
 
 lawyers, judges, statesmen, etc., the salaries must be higher 
 than the wages of workmen, because the cost of production is 
 greater, that is to say, more time and money has to be spent 
 on educating men for these professions, and because also there 
 are fewer men capable of developing the requisite skill. 
 
 In England the salaries of lawyers and judges are very 
 high; the consequence is a great many men study law; only a 
 very few can make a good living out of the profession. The 
 same is the case to a lesser degree with regard to doctors, 
 managers of companies and of manufactures, superintendents 
 of ship building, etc. These persons should receive high 
 salaries, not only because the education for their profession is 
 long and expensive and the men possessing the requisite 
 talents are rare, but also because they have facilities for 
 dishonesty, and it is wise to minimize the temptation. 
 
 As a rule public servants, such as ministers, consuls, 
 military and naval officers, are, considering their expenses 
 and the expenses of their education, paid less than lawyers, 
 doctors, merchants, managers of manufactures of equal talent. 
 The reason for this is that in England public servants are 
 . much respected, and many men are willing to forego hopes of 
 wealth in order to be respected, or in other words, where a 
 profession is very agreeable, less salary need be paid for an 
 equal amount of efficiency than when the occupation is dis- 
 
87 
 
 agreeable. The occupation of undertaker is very lucrative, 
 because the occupation is disagreeable ; on the other hand, the 
 occupation' of night-soil men, though disagreeable, is. badly 
 paid, because it requires no skill and can be engaged in by 
 people too. stupid to do anything else. The occupation of 
 domestic servant in England is higher paid than that of shop 
 assistant, because English people are independent and like 
 to have some hours of the day when they feel themselves their 
 own masters. A successful singer, actor, painter or sculptor 
 in England, obtains high pay, because there are very few 
 persons who have the talent to please the public, and because 
 there are many rich people in England who are willing to 
 pay high prices to hear a good singer, see a good actor, and 
 purchase good pictures and statues. 
 
 If the employment is permanent and unremitting the 
 wages or salary will .be lower than when the occupation is 
 occasional and precarious, that is, supposing equal skill ; 
 thus auditor's fees are higher than the pay of an accountant 
 permanently employed. 
 
 The paying fair salaries and wages, enriches a nation, as it 
 induces people to cultivate their talents and put forth their 
 full strength. The paying inadequate wages and salaries, 
 impoverishes a nation, as it not only prevents people cultivat- 
 ing their talents and using their energy, but it also creates 
 temptations to dishonesty. Of all things idleness and dis- 
 honesty are the most destructive of the wealth of nations. 
 
 As to fares and freights, governments and municipalities Fares and 
 have more interfered between borrower and lender in them ^''^'s''*^' 
 than in any other loans. This has been done on various 
 grounds. China in now starting railways, and it is important 
 that she should consider the best mode of managing these 
 railways, so as to increase the wealth of the country. In some 
 countries the railways are built by the governments ; in such 
 case the government obviously fixes fares and freights; the 
 rate of such fares and freights should be high enough to pay 
 the interest on the amount of money expended, the working 
 expenses, and wear and tear. If the government charges 
 more than this rate, it is taxing the railway travellers and 
 customers more than the rest of the community ; if it charges 
 
88 
 
 less ifc is practically giving the railway travellers, etc., a 
 bonus for travelling, etc., for it is charging thena less than 
 it costs. 
 
 This is the case in some parts of Australia, where work- 
 men's trains are run at a loss. This is economically wrong, 
 and can only be justified as a temporary measure under 
 exceptional circumstances. One of the injuries such action 
 inflicts is that it impairs the credit of the government. 
 Probably that part of Australia would be able to borrow 
 money for her railways on easier terms than it does now if 
 the public felt sure that the money borrowed would be used 
 for the benefit of the whole community instead of the benefit 
 of a particular class. . 
 
 In some countries there are railways built and run by 
 private individuals, but which the state guarantees shall pay 
 a certain interest to the shareholders. As railways develop 
 the resources of a nation and enrich the community, it is 
 often wise for the state to guarantee the interest to induce 
 people to provide the necessary capital. In such cases it is 
 the duty of the state to ensure the community's deriving the 
 greatest possible advantage from the railway, and that the 
 shareholders do not reap an undue gain ; it therefore often 
 fixes the rates of fares and freights as the condition of 
 guaranteeing the interest. 
 
 Other railways are built entirely by private enterprise, 
 but even then railway companies have to ask the state to 
 pass laws to compel the land owners on the route to sell their 
 land at reasonable prices ; the state giving the companies 
 special privileges, has not only the right, but is under the 
 duty to enact that the fares and freights charged shall be such 
 as to confer a benefit on the community, that is, such as to 
 increase the wealth of the nation. In most countries, even 
 when railways are built by private enterprise, the government 
 enacts that a certain number of trains shall ran at certain 
 fixed fares and freights. 
 Postage-. "With regard to the transmission of letters in most 
 
 countries the post office is a government monopoly, and this 
 has been found by experience to be advantageous. The state 
 can carry letters cheaper and (jnicker than private individuals 
 
can. la most coaatries the post offices, after payiiag all 
 expenses, make a profit. In England this profit amounts to 
 nearly twenty million dollars a year. This is a tax on letter 
 writers, but as it is cheerfully paid few governments care to 
 forego the revenue ; it would be more equitable to reduce the 
 rates of postage so as to merely pay the cost of the service. 
 So too with telegraphs ; in England the government has 
 taken over all the telegraph lines, and works them only to 
 pay the expenses and not give a profit. When telegraph 
 companies are established by private enterprise, as they have 
 special privileges, such as using the foreshore for their lines 
 and putting up poles on other persons' land, they may justly 
 be bound to conduct their business in such a way as to most 
 benefit the community, compatible with fair interest for the 
 shareholders ; and they may justly be bound to charge the 
 lowest rates consistent with such fair profits as to induce 
 people to invest in them. 
 
 In most countries it has been found advisable, especially 
 in the towns, to regulate the hire of cabs, boats, jinrickshaws, 
 etc., and to issue licenses to the cabmen, etc. This checks 
 theft, misconduct and extortion and saves the time of haggling. 
 The fare fixed should be as low as is compatible with inducing 
 a suificient number of fit persons to engage in the trade. 
 
 It has not, in Western lands, been found as a rule 
 desirable or necessary for the state to fix fares by steamers ; 
 the reason of this is, that steamers belong to so many com- 
 panies competing with each other for passengers and freights, 
 that the prices of both are kept down to a limit advantageous 
 to the community. Should it ever happen that all the steam 
 companies combined to charge excessive fares and freights, it 
 might become the duty of governments to intervene as they 
 have intervened in the case of the railways and telegraph 
 lines, which have a practical monopoly of the locomotion or 
 transmission of messages between certain points, and fix rates 
 of fare and freight. 
 
 I have alluded to the struggles between workmen and War between 
 employers ; these struggles have at times been very bitter. labour." 
 One of the workmen's representatives said " capital is robbery." 
 He argued that the wealth of all nations is created by labour, 
 
90 
 
 and that capital was the- amount employers had robbed the 
 labourers of by not giving them fair wages. There is a certain 
 amount of truth in such statements. It is true that many 
 men have become rich by oppressing those they employ and by 
 not giving them fair wages ; it is also true that some rich men 
 misuse their wealth and make it a curse instead of a blessing, 
 but the abuse of a thing does not make the use of it inex- 
 pedient. It is true the wealth of the world has been created 
 by labour, but the labour has not been mere manual labour ; 
 the mechanicians and thinkers who have applied steam and 
 electricity to the purposes of locomotion and light, have done 
 work for the increase of the wealth of the world ; and 
 80 have the students of mathematics, astronomy, chemistry, 
 etc., who by their studies rendered it possible for there to be 
 inventors ; and without capital it would have been impossible 
 for the students and inventors to have devoted time and money 
 to their studies and experiments, many of which, though 
 ultimately rendering .possible the mechanical achievements of 
 modern days, were at the time unfertile and unprofitable. 
 What is Now let us consider what is "capital" and how it is 
 
 produced. Capital is the proprietorship of anything that is 
 convertible into money, and it is accumulated by frugality and 
 self-denial, by postponing present enjoyment to have the means 
 for future enjoyment. The parent who, instead of killing his 
 infant child, feeds and nourishes it, is accumulating capital, 
 which. becomes the strength and labour capacity of that child 
 when it becomes a youth. The youth when he spends his time 
 in wholesome work, instead of impairing his health by vicious 
 self-indulgence, is accumulating capital, namely health and 
 strength, from which he will derive a livelihood. The parent 
 who exercises farther self-denial, and instead of making his 
 son earn money directly he has the strength to do so, gives 
 him time to learn and pays a teacher to teach him. is accumu- 
 lating capital in the son's knowledge. The son who exercises 
 self-denial by devoting his time to study, instead of wasting it 
 in amusements and idleness, is accumulating capital as surely 
 as if he earned wages, and instead of spending them all in 
 eating, drinking and women, put aside a portion of them in a 
 bank. In England certain professions can only be entered 
 
91 
 
 into at a certain age— a doctor, 21; a barrister, 23, etc. 
 A man entering these professions has to devote all his time to 
 study up to such ages ; during his studies he requires money 
 for his maintenance, education, etc. The knowledge he has 
 obtained is his capital. So too with all skill it is obtained by 
 self-denial on the part of the ancestor, parent or offspring. 
 
 Allowing men to accumulate capital for the future use 
 of themselves and then posterity is the strongest inducement 
 to frugality and industry, and it is by them that the wealth of 
 nations is increased. Experiments have been made of people 
 having everything in common ; such experiments have never 
 endured. Men will not work so hard for the sake of 
 humanity as they will for themselves and their relatives. 
 They will not exercise self-denial and frugality so much for 
 the good of the community as for the good of themselves and 
 those specially dear to them. 
 
 In America and England there is a danger, it is true, of 
 most of the wealth of those nations falling into few hands, 
 and though the poor in America and England aie better off 
 than the poor in any other country, there are probably no 
 countries in which there is so great inequality of wealth, 
 consequently there is in America and England a danger of the 
 poor envying the rich, and in their eagerness to share in the 
 wealth they see around them, decreasing or even destroying 
 this wealth, either by direct violence or by forcing the govern- 
 ments to pass laws contrary to the teachings of economical 
 science. China has not reached this stage; though the Chinese 
 poor are very poor, the Chinese rich are not very rich, and 
 there is not the same inequality of wealth as in America and 
 England; still in China there are constant riots, robberies, 
 and brigandage which would not occur if the people were 
 better off. The remedy is not the doing away with capital ; 
 this has never successfully been done, but to endeavour to 
 diffuse it more evenly in such a way as not to check individual 
 frugality and energy. 
 
Chapter VII. 
 
 Ibonest^. 
 
 Honesty the "npHAT honestv increases and dishonesty diminishes the 
 foundation .Mt' ... . . 
 
 of credit. G^ Wealth of nations has been shown in previous chapters. 
 
 Take the simplest form : dishonesty entails a waste of 
 labour ; if there are many thieves in a village, the villagers 
 will have to spend much of the time they might have spent 
 in productive work, in watching their crops and property, 
 or they will have to hire watchmen, or to hire a large police 
 force. 
 
 Unless there is a certain amount of honesty, there could 
 be no trust between man and man, and the system of credit 
 would be impossible. We have shown that the greater the 
 honesty the better credit is given, and that nations and 
 individuals, who have a greater reputation for honesty, can 
 borrow money cheaper than nations and individuals who have 
 a less reputation for honesty ; it is therefore to the interest of 
 societies and governments to foster honesty and to discourage 
 dishonesty. Societies can do this by visiting with social 
 obloquy persons who are dishonest ; governments can do so 
 by passing wise laws for the punishment of dishonesty and 
 by establishing good means for its detection. 
 Penalties for It has been discovered by experience that the certainty 
 
 of detection and of punishment of dishonesty, is far more 
 effective than severity of punishment in putting a stop to it. 
 It has also been discovered that too severe punishments defeat 
 their own purpose, as they rouse the sympathy of the com- 
 munity for the thief, and people will not complain, or will not 
 give evidence, or will not convict the offender. Again it baa 
 
 dishonesty. 
 
93 
 
 been discovered that apportioning the severity of the 
 punishment in proportion to the heinousness of the offence is 
 not so effective in discouraging dishonesty as apportioning the 
 severity according to four factors : — 
 
 1st. The temptation to commit the crime. 
 
 2'nd. The ease with which the crime is committed. 
 
 3rd. The frequency of the crime. 
 
 4th. The difficulty of detection. 
 
 Acts of dishonesty to which people are tempted should he 
 severely punished, in order that the fear of the punishment 
 may outweigh the temptation to be dishonest. Acts of dis- 
 honesty, which are easily committed, should be severely 
 punished for the same reason. Acts of dishonesty which are 
 frequently committed should be severely punished to protect 
 society ; and acts of dishonesty, which are difficult to detect, 
 should be severely punished, in order that the fear of the 
 severe punishment may outweigh the hope of escaping detec- 
 tion. No human being has a right to inflict vnore pain on 
 another than is absolutely necessary to protect himself and 
 his property and the persons and property of others. Hence 
 acts of dishonesty that are heinous in the eyes of the people, 
 need not be severely punished. 1st. Because social obloquy 
 punishes them. 2nd. Because they will not often be com- 
 mitted and are not a danger to society. Vindictive punish- 
 ment, that is, punishment according to desert, must be left to 
 Heaven ; human tribunals which cannot know the thoughts of 
 the heart, nor the defects of education that led to the act of 
 dishonesty, cannot apportion the severity of punishment in 
 accordance with the moral obliquity ; all they can do is to 
 award punishment in such a way as to deter people from acts 
 of dishonesty, and the nature of the punishment should be 
 such as to attain its object. Flogging is not an appropriate 
 • punishment for dishonesty, except in the case of very young 
 children, because many persons will willingly endure the pain 
 of a flogging in order to obtain money. Imprisonment, hard 
 labour, and disgrace, such as being forced to wear clothes that 
 only criminals wear, or being exposed in a wooden collar 
 (the cangue), are more effective deterrents against acts of 
 dishonesty than flogging. 
 
94 
 
 Penal codes. 
 
 Forgery. 
 
 Arson. 
 
 In all cases of pnnishment for dishonesty it is better, 
 when practicable, to employ punishments that give pain to the 
 mind rather than those which give pain to the body. In 
 other words, penalties should be moral rather than physical. 
 
 A good penal code increases the wealth of a nation by 
 checking dishonesty. The present Chinese penal code, though 
 it has considerable merits, is defective in several respects. 
 In the first place, it is vindictive instead of deterrent, that is, it 
 aims more at retribution than the prevention of crime. In the 
 second place, it imposes the penalty of flogging too much. 
 Thirdly, it makes the severity of the punishment depend too 
 much on the money value of the act of dishonesty. Fourthly, 
 Chinese law looks on dishonesty only in its aspect of a wrong 
 done to an individual, and does not take into account the 
 subtler but deeper wrong that acts of dishonesty do to society 
 and the nation at large. It allows the thief to escape punish- 
 ment if he restores what he steals, and the dishonest person 
 to escape if he compounds with the person defrauded ; it throws 
 the onus of prosecution on the person wronged, who is often 
 too ignorant or too weak to prosecute. In Western lands the 
 state prosecutes for many acts of dishonesty and punishes 
 the person wronged if he does not prosecute, or if be com- 
 pounds the felony. Hence in Western countries the detection 
 and punishment of acts of dishonesty are more certain than in 
 China. Lastly, the penal code of China is too limited, and it 
 cannot easily be added to. With constant new inventions and 
 new modes of conducting trade, there are constantly new 
 forms of dishonesty which require the passing of new laws to 
 put a stop to, and new modes of detection. When banking 
 came into vogue, forgery of cheques and bank notes came 
 into vogue also, and this crime had to be put a stop to. When 
 fire insurance came into vogue, frauds of insuring houses and 
 goods above their value, and then burning them, came into ■ 
 vogue also, necessitating the passing of laws inflicting severe 
 punishments of this act of dishonesty, and, in order to put a 
 stop to it, enacting that no matter what the sum insured for 
 was, the person whose property had been insured and destroyed 
 by fire, could only recover the amount of loss he had actually 
 sustained. This has had a good incidental effect, in that it 
 
95 
 
 makes it to the interest of the fire insurance companies 
 that when a fire breaks out there shall he as little damage Barratry, 
 done as possible, and they therefore invest in good fire engines- 
 and train men to put out fires, so that when a fire occurs it is 
 extinguished as soon as possible ; and the destruction of 
 wealth by fire in Western lands, is nothing like as great in 
 porportion to the wealth as it is in China. When ship 
 insurance came into vogue, the fraud also came into vogue 
 of insuring vessels and cargo above their value, and then 
 purposely wrecking them to obtain the sum insured. To 
 meet this dishonesty in Western lands special laws have been 
 passed severely punishing the fraud ; and agents have been 
 appointed all over the world to enquire into cases of wreck ; 
 whenever a wreck occurs, a rigid enquiry is held as to its 
 cause by a court consisting of naval and consular officers and 
 disinterested ship masters if the wreck occurs abroad, and by 
 special courts appointed for the purpose if the wreck occurs at 
 home. It would be well if the same law was passed with 
 regard to ship insurance as has been passed with regard to 
 fire insurance, namely that the insurer should only recover the 
 actual amount of his loss, but insurance companies opposed 
 this change of laws, as they thought if such a law was passed, 
 fewer ship owners would insure, and those who did insure 
 would do so for smaller amounts. In reality their opposition 
 to the law has injured themselves ; to cover themselves from 
 cases of fraud and carelessness they have been obliged to 
 charge higher premiums than the mere daugers of navigation 
 would necessitate, and consequently large ship companies 
 who have many ships, instead of insuring them with the 
 insurance companies, find it to pay better to insure themselves. 
 This is detrimental to the wealth of the nation in two ways : 
 It forces ship companies to do the double business of shipping 
 and insurance, thus checking a wholesome division of labour, 
 and it places owners of single ships, or of a few ships, at a 
 disadvantage, as they have either not to insure at all, or else 
 at rates that place them at a disadvantage ; and thus it checks 
 individual energy and enterprise. 
 
 It would greatly increase the wealth of China if Chinese 
 could insure their houses and property against fire and their 
 
96 
 
 slips and juuks against wreck, but there cannot be fire or 
 ship insurance until there is sufficient faith in the honesty of 
 •the persons who wish to insure and until there are good laws 
 punishing frauds on the insurance companies, and a good 
 system of detecting them. 
 Adulteration. Again, as knowledge of chemistry increased so frauds of 
 
 adulteration, which had always existed, would have increased if 
 good laws had not been passed punishing such adulteration, 
 and new measures had not been inaugurated, both to detect 
 the frauds and to bring the guilty parties to justice, such as 
 appointing chemical experts to examine milk, beer and other 
 food sold to the people and prosecuting those who dispensed 
 adulterated food- The form of dishonesty called adulteration 
 inflicts great loss on a nation and should be vigorously punish- 
 ed. The prosecution of the offence should not be left to the 
 person wronged, as in many cases he is too weak or ignorant 
 to prosecute ; or the goods have gone through so many hands 
 that he is uoable to point out the original offender. Let us 
 show how adulteration decreases wealth. The purchaser 
 manifestly loses as he obtains a spurious instead of a real 
 article. The nation of the vendor also loses. Thus the practice 
 of certain dishonest dealers in Canton and Shanghai in watering 
 silk, gave Chinese silk a bad name in the West and caused 
 Chinese silk to be sold at a lower price than it otherwise 
 would, and in smaller quantities. China thus lost both in 
 money and occupation. The selling of " lie tea " in Canton, 
 that is, mixing cactus leaves with the tea, or putting iron 
 filings into the tea to increase its weight, did China an injury, 
 as it gave Chinese teas a bad name and reduced their selling 
 price and the quantity sold. This " lie tea " being deleterious 
 to health the fraud was stopped .in England by the government 
 appointing inspectors of teas imported and by confiscating and 
 destroying all the " lie teas." 
 
 In 1879 the adulteration of cotton fabrics in England 
 with an excessive amount of China clay, did an injury to 
 England, in that it gave a bad name to English textiles, and 
 so reduced both the price and the quantity sold. It would be 
 a good thing if laws were passed compelling people to sell 
 goods for what they actually are, to have on the face of them 
 
©7 
 
 their components and to appoint inspectors to see that the 
 goods are correctly described. No nation, as far as I know, has 
 done this as to all articles, but many "Western nations have, 
 done so with regard to food. Of all forms of adulteration the 
 adulteration of food is most destructive of the wealth of 
 nations ; insomuch as on pure and sufficient food the health 
 and strength of people depend ; and the primary wealth of 
 all nations is the health and strength of their people. It is 
 not enough to punish adulterators, it is also necessary to 
 detect the offonce and for the government to prosecute 
 the oifender j the consumer has not the necessary know- 
 ledge to detect the fraud, nor the necessary time to prosecute. 
 In China the majority of people live on grain, which is not 
 easy to adulterate ; as the Chinese grow wealthier they will 
 probably adopt a more varied diet, and it will then be desir- 
 able to take measures to prevent the adulteration of food, more 
 especially when Chinese begin to study chemistry, and will be 
 more able to adulterate food in a manner difficult to detect. 
 Even now large quantities of foreign food for infants are 
 sold in China, and much of this is spurious and deleterious ; it 
 would advantage China if measures were taken to prevent the 
 dishonesty of selling spurious, adulterated and damaged food 
 as .good food. Adulterated liquids containing deleterious and 
 even poisonous substances, are imported from abroad to China 
 for sale to foreigners, especially sailors, and for mixing with 
 the cooling drinks sold in China to natives during the summer 
 weather ; these poisonous decoctions make people sick, and by 
 impairing the health of the people detract from the wealth 
 of the nation. It would be a good thing to put a stop to the 
 sale of poisonous drinks. 
 
 Again, the Chinese penal law is defective, in that it does Breach of 
 not mete out sufficiently severe punishment for breach of 
 trust, and does not provide an easy and sure mode for bring- 
 insr such cases before the courts. The instances in which 
 adult relatives defraud their infant relations of inheritances 
 are in China very common, so common, indeed, that little 
 discredit attaches to these frauds. The family feuds and 
 quarrels, the litigations these frauds lead to are very detri- 
 mental to the wealth of China, both as wasting labour which 
 
 trust. 
 
contract. 
 
 would Otherwise be utilized in the production of wealth, and in 
 fostering distrust of man in man. Still more detrimental is the 
 habit of dishonesty that the impnnity of these frauds tends 
 to create. Good penal laws and their certain execution do 
 good, not only in preventing frauds, but in inducing habits 
 of honesty. When evil acts are punished by the state, dis- 
 grace attaches to the doing of them, and gradually in peoples' 
 minds there rises a repugnance to doing them. Hence good 
 penal laws are an important factor in increasing the wealth 
 of nations. 
 Breach of Another form of dishonesty which checks the increase of 
 
 wealth in a nation is breaking promises ; unless there is a 
 trust imposed in men's promises, the commerce of the world 
 would be impossible. A contract is a written promise 
 mutually made by two or more parties ; any want of honesty 
 in fulfilling these contracts, impairs credit and injures the 
 wealth of a country. One reason the Chinese are more 
 Buccessfnl than the Japanese as merchants, and why West- 
 erners prefer to employ Chinese as compradores and in 
 other positions of trust than Japanese, is that the Chinese 
 are more honest in fulfilling their contracts. Honesty in 
 falfiUing contracts depends on three factors : First, the moral 
 sentiments of the people. Secondly, good laws enacting the 
 fulfilment of contracts. Thirdly, power of the executive to 
 enforce these laws. In Japan the second factor exists ; she 
 has recently passed commercial laws based on the laws of 
 the most enlightened nations, but the second and third factors 
 are defective ; it sometimes happens that a plaintifi" gets a 
 verdict in his favour in a Japanese court, but owing to the 
 want of executive power, cannot get the verdict enforced, and 
 the dishonest contractor, owing to the defect of the moral 
 sentiments of the Japanese, does not incur social obloquy. 
 This state of things really injures Japan more than the 
 foreigners, the contracts with whom the Japanese do not 
 fulfil, because now every one who makes contracts with 
 Japanese, takes into consideration the risk of such contracts 
 not being carried out and demands more onerous terms than 
 he would if he trusted them. In China the second and third 
 factors are defective. The second factor is not so important iu 
 
the case of contracts as in other matters, as, though the code 
 of China is defective, a long list of precedents has, to a great 
 extent, supplied the defects of the code, and as far as my 
 experience as Consul and Vice-Consul, reaching over thirty 
 years, goes, the decisions of Chinese courts on the subject of 
 breach of contracts, have been in accordance with right prin- 
 ciples. The defect of want of power to enforce these decisions 
 has been much remedied by the state of moral sentiments in 
 China, which attaches disgrace to a man who does not fulfil 
 his contracts. In China the fear of disgrace is one of the 
 strongest deterrents that could be devised ; the desire to gain 
 the esteem of one's fellows, is one of the strongest inducements 
 to act honourably. 
 
 There is a long literature as to the best modes of enfor- 
 cing the performance of contracts and promises, the leading 
 principles of which are that all contracts should be enforced, 
 except contracts to perform immoral or criminal actions, — 
 contracts obtained by fraud and misrepresentations, contracts 
 injurious to the interests of society at large, contracts in 
 restraint of lawful acts, such as marriage and trade, contracts 
 to perform illegal acta, contracts obtained by threats and 
 violence — "duresse." These last are void, because to make 
 a true contract it is necessary that the parties should have 
 exercised free will. • 
 
 The same principles, though not exactly the same rules, Treaties, 
 apply to the 'contracts among nations, or "treaties," as to 
 the contracts among individuals. In the long run a nation 
 gains by the strict observance of its contracts, even though 
 such observance entails temporary inconvenience. A nation 
 that strictly observes its contracts, is trusted and given credit. 
 When these contracts refer to loans, it is evident that a 
 nation which does not pay the interest and principal of the 
 loans it has contracted at the promised dates, will find difficul- 
 ty in borrowing money. Treaties are more solemn documents 
 than contracts ; unlike other contracts, treaties are' not void, 
 because obtained by duresse; in fact many treaties are obtained 
 by duresse ; still they should be observed iu order to maintain 
 peace, and because breaches of treaty lead directly or in- 
 directly to war. 
 
100 
 
 Shirking Another form of dishonesty that checks the increase of 
 
 work. 
 
 the wealth of nations, is shirking work and duty. The word 
 
 '"'■duty'" in the English language, means what we "ouie" to do. 
 A perfect honesty demands that we should devote all our 
 strength and abilities in -performing onr duty thoroughly. 
 In agriculture the tiller of the ground who works hardest and 
 takes most care to destroy the noxious insects that injure his 
 crop, will become richer than the tiller of the ground who 
 works less hard and who is less careful to do his work 
 thoroughly. In large commercial undertakings like banks, 
 steamer and railway companies, the company whose servants 
 work hardest and most carefully, will be more successful than 
 the company whose servants work less hard and less carefully. 
 Students who read hardest, and most thoroughly master the 
 subject of their study, will be able to get more fruit from 
 their labours than students who work less hard and less 
 thoroughly. Only those who have mastered mathematics and 
 astronomy, chemistry, mechanics, mineralogy, geology, or 
 botany, etc., will, as a rule, be able to make useful discoveries 
 and inventions. The Chinese are an intelligent race and are 
 willing to work hard ; their great defect is a want of thorough- 
 ness. I have been in many countries of the world ; none I 
 have seen have the same natural wealth as China. 1st. A 
 good climate suitable to humjin energy. 2nd. A vast extent 
 of territory with a fertile soil, capable of producing every 
 possible kind of crop and possessing incalcillable mineral 
 wealth, gold, silver, jade, copper, mercury, tin, iron and coal. 
 The iron hill at Tieh-kang-shan, in Hupei, is probably the 
 richest iron mine in the world. The coal fields reaching along 
 the Yang-tze, for at least eight hundred miles, are probably the 
 most extensive coal mines in the world. 3rd. Splendid navi- 
 gable rivers stretching east and west, north and south, formino 
 natural roads for the interchangeof commodities, and also swarm- 
 ing with fish ; no such navigable rivers exist in other parts of 
 the world. 4th. An extensive coast, with magnificent natural 
 harbours, washed by a sea full of wholesome food. 6th. A frugal, 
 industrious and generous population, quiet and kind-hearted. 
 Want of The benefit that China might derive from all these 
 
 ness. advantages, is checked by one fatal defect; a want of thorough- 
 
101 
 
 ness. The Chinese are content with "nearly" doing or 
 learning a thing. As long as it seems good they do not care 
 whether it is really good or not. The Yellow River has been 
 called China's Sorrow. A far greater sorrow is " Cha-pu-to" 
 "nearly." 
 
 China, with a popalatioa of 250 millions, was defeated in 
 war by Japan with 40 millions, because Chinese officers had 
 not studied the art of war as thoroughly as the Japanese ; 
 because China did not as thoroughly examine the arms and 
 ammunitions supplied to her soldiers as Japan did, because 
 China had not drilled her soldiers as thoroughly as the 
 Japanese had, because China had not been as careful to keep 
 her warships and war stores in good order as Japan had. In 
 the same way China in the competition of commercial 
 undertakings, is not so successful as other nations, because she 
 will not take the pains to perfect her productions. Her tea is 
 often badly fired, her silk and velvet made carelessly. For a 
 thousand years China has made no useful discovery or in- 
 vention, because she has not thoroughly studied the laws of 
 nature. China's laws are defective, because the Chinese have 
 not studied jurisprudence thoroughly. Her administration is 
 defective from want of public spirit — that is, a thorough sense 
 of duty — on the part of her officials. The banks, railways, 
 mining and shipping industries and manufactures which are 
 now being established in China will, unless the Chinese 
 'amend in the form of honesty I call thoroughness, be failures. 
 Loving China as I do I sincerely hope that she will amend in 
 this respect. I hope the reformation will be brought about by 
 the introduction of the great undertakings mentioned above. 
 The qualities of carefulness and thoroughness will be so 
 valuable that persons possessing them will be highly paid and 
 honored, and a high price will, it is hoped, make men strive to 
 be thorough and honest. 1 am the more inclined to hope this 
 from my study of the history of my own and other Western 
 nations. Before the introduction of great commercial under- 
 takings a similar lack of thoroughness was to be found among 
 Western people as is now found in China, but as these under- 
 takings could- only be carried on successfully by honesty and 
 thoroughness on the part of the employed, and a strenuous 
 
102 
 
 performance of duty, those who were deficient in the quality 
 of thoronghness, were either not employed or dismissed, while 
 those who possessed the quality were highly paid. This caus- 
 ed people to respect thoroughness, and it became a habit; 
 people without thoroughness were despised. The habit of 
 thoroughness was also demanded in the government services ; 
 on the display of thoroughness men's success in the public 
 service was rendered more certain and the whole administration 
 of such nations improved and became purer. 
 " Nepotiam. Closely connected with a lack of thoroughness there is an 
 
 insidious form of dishonesty which checks the increase of the 
 wealth of nations, the English word for which is " Nepotism." 
 It means unduly and unfairly favouring one's relatives, clans- 
 men and friends. This is a temptation to which the Chinese, 
 owing to their strong family affection, are particularly prone. 
 The favouriug one's relatives and friends in due proportion, is 
 not only right morally, but also tends to increase the wealth 
 of a nation by the inducement it gives to industry and self- 
 denial. The question is, how are we to know what are the due 
 bounds to this favouritism. The answer is simple : with what 
 is our own we can do what we like ; with what belongs to 
 others we should only do what is to the best interest of the 
 people to whom it belongs. If I have money of my own, I am 
 quite right in giving more away to my relatives and friends 
 than to strangers. If I have a business of my own, I am quite 
 right in employing my relatives and friends more than 
 strangers, even if my relatives and friends do not do the work 
 well and the strangers would ; but a different rule holds good 
 when the business belongs to others, as a large company, for 
 instance, of which I am a manager, or if the business be the 
 public service of which I am a high officer. In both these 
 cases 1 have only the right to give the preference to my 
 relatives and friends over strangers when they perform the 
 work equally as well as the strangers. If my relatives and 
 friends cannot do this, I should either not employ them, or I 
 should dismiss them ; and in the same way in giving advance- 
 ment or promotion. I should " thoroughly " investigate the 
 conduct and capacity of the applicants and be guided, not by 
 my own feelings and affections, but by the interests of the 
 
103 
 
 company or the public service. The Chinese are so prone to 
 favor their families and clans that it is a rule that no com- 
 missioned officer of the Chinese government can serve in his 
 own province, and now China is inaugurating great commercial 
 undertakings; unless some check is imposed on the "nepotisTn" 
 of the managers these undertakings will not be successful. 
 
 There is one more form of honesty that enriches nations Goodwill, 
 and the world, and that is, giving to every man the opportunity 
 of deriving the full value of the work he has done. I have in 
 the previous chapter spoken of fair wages with regard to work 
 done and completed at the time, but there is another kind of 
 work, the result of which may only appear in the future. 
 Thus when a shop-keeper has gained the confidence of his 
 customers by a long course of fair dealing, it is to the interest 
 of the public that he should be rewarded, in order to induce 
 others to act likewise. In the West such reward is given, 
 and the shop-keeper can sell the "goodwill" of his shop. 
 If he grows too old to keep the shop, it is convenient to hira to 
 be able to sell the " goodwill " of his shop, or if he dies, and 
 his family do not wish to carry-on the business, it is a boon to 
 them to be able to sell this "goodwill." In the same way a 
 manufacturer who makes good articles, gets a good reputation, 
 and it is only honest that he should enjoy the fruits of his 
 reputation. This is done by " trade marks." Any person Trade marks. 
 using a "teadb mark" not his own is committing a fraud 
 and stealing another man's reputation. In the West there is a 
 system of registering trade marks, and any one pirating an- 
 other's trade mark is punished. And, as a man ought to have 
 the fruits of his labour not only in his own country but all over 
 the world, treaties have been made among nations mutually 
 protecting the trade marks of each other's subjects. It is to 
 the lasting honor of China that, though she has not entered 
 into any treaties with other nations on this subject, she has 
 always punished persons who pirate foreign trade marks. 
 It would be to the advantage of China if she had some system 
 of registering the "trade marks" of her own subjects and 
 would get them protected abroad. This would encourage 
 Chinese manufacturers to make things well, so as to get a repu- 
 tation which would be valuable. 
 
104 
 
 Patents. Jq the Same way the honesty of giving the clever inventor 
 
 of new things the full vaUie of his cleverness by not allowing 
 other persons to use or sell snch new things without buying the 
 right to do so, makes a nation rich, as it causes people to try 
 and invent new things, in order that they may make money 
 by selling the permission to use and sell them. The wider 
 the area in which the inventor has the exclusive right over his 
 inventions the greater will be the pecuniary value of the in- 
 vention. Hence many nations have entered into treaties 
 mutually protecting the inventions of the several nations' sub- 
 jects. In the West any person making an invention can 
 register it and obtain what is called a patent for it, that is, 
 the exclusive right for a certain period of years of using his 
 invention. The consequence of this is that not only is clever- 
 ness, a source of wealth, encouraged and rewarded, but a new 
 species of wealth is created, namely, patent rights. The patent 
 rights of England are worth many millions of Taels. It 
 would increase China's wealth if she also had patent laws 
 encouraging Chinese to make inventions and punishing those 
 who infringed patent rights. 
 Copy-right. Again, another form of honesty is giving the writers of 
 
 books, of beautiful and usefnl thoughts, the composers of music, 
 the painters of pictures, etc., the full value of the fruit of their 
 labours ; the doing so increases the wealth of nations and the 
 wealth of the world, by encouraging persons to think deeply, 
 to write in good style, to compose beautiful music, to paint 
 beautiful pictures. Books, music and pictures are wealth, for 
 they add to the happiness of mankind. In the "West laws of 
 copy-right have been passed punishing people who print a 
 book without the author's permission ; hence the author and 
 his family have, for a period of years, varying in different coun- 
 tries, the exclusive right of printing and selling his thoughts ; 
 this right he can sell to persons who make it a business to 
 buy copy-right ; hence authors in the West are largely rewarded. 
 Lord Macaniay was paid £10,000 for the copy-right of his 
 History of England. Nanseu lately got £10,000 for the 
 cop3^-right of his account of his journey in the arctic regions. 
 As in the case of patents, the value of copy-right increases as 
 the area in which it is enforced increases; hence various 
 
105 
 
 nations have entered into treaties, each in its own territory 
 to protect the copy-rights of each other's subjects. It would 
 be a source of wealth to China if she also had a law of copy- 
 right, as it would encourage Chinese to write good books. 
 In the same way copy-right encourages the study of music and 
 the composing of beautiful tunes. So too with regard to pic- 
 tures ; a painter who makes a beautiful picture, can not only 
 sell the picture, but he can also sell the right to take prints 
 and photographs of it. Copy-right not only enriches the 
 musical composer and painter ; it enriches the people by giving 
 them better and more music and pictures, enables them by 
 the study of beautiful prints and photographs to acquire good 
 taste, and an artistic sense in making beautiful things which 
 other people will buy.. As is the case of books,, so treaties have 
 been entered into among nations mutually protecting in their 
 several territories the copy-right of each other's subjects in 
 musical compositions and pictures. The deficiency of China's 
 artistic education is a bar to the increase of her wealth. 
 England has improved in many products, porcelain for in- 
 stance, owing to the increased artistic sense of Englishmen, 
 and this increased artistic sense has been due, in a certain 
 measure, to the increased honesty in rewarding art which is 
 brought about by copy-right. As in the case of patent right, 
 copy-right is not only a source of wealthy it is also a species 
 of wealth. The copy-rights of Englishmen are worth several 
 million Taels. 
 
 The wealth of nations is founded in righteousness and 
 established by eqvAty. 
 
Chapter VIII. 
 
 <Eo»*operatton. 
 
 Co-operation 'b^HAT mutual help, in the simpler forms, is necessary for 
 ^^, increasing wealth, is well known in China ; and one rea- 
 son why China, in spite of her defects, is as prosperous 
 as she is, is due to the mutual help that exists in the house- 
 hold, clan, village communities, trades-unions and guilds. The 
 admirable institution of the " Family Temples " in China, with 
 their committees of management and family registers, the 
 collection of funds which are used to help the poofer members 
 of the family (gens), to support the widows and aged, to help 
 educate the promising young people, and to assist the members 
 of the family in their ofEcial careers, are extremely useful in 
 increasing the wealth of China, but they have certain defects 
 which impair their utility. 
 
 The mutual help given in the village community, the 
 system of " morrowing " — that is, neighbours taking turns to 
 help each other in ploughing, sowing and reaping — has great 
 advantages. 
 
 The Chinese Trades Unions, enabling the apprentices to 
 be educated in the trade, in helping the sick and those out of 
 employ, in hiring cooks, or combining to frequent certain eating 
 houses, enabling the food to be obtained by the workmen at 
 cheap rates, are also very good. 
 
 The system that rules on the Upper Yang-tze, of boats tra- 
 velling in " Pang," that is, in company with other boats, and 
 rendering each other gratuitous help when one boat gets into 
 difficulties; the custom too of the various "pangs" helping 
 each other, is also very good. 
 
107 
 
 The guilds of dealers in special commodities, which keep 
 the traders in those commodities well informed of all that goes 
 on in the trade, and which sometimes, as in the case of Chinese 
 post ofSSces, raise a common fund out of which to pay losses 
 incurred, thus making a system of insurance, are good. 
 
 Very good too are the greater guilds, such as the Canton, 
 Shantung, Shansi, Szechuan guilds, etc., established in the 
 various large marts of the empire, which assist the men from 
 their provinces who visit such marts. 
 
 Wealth-producing also is the system of partnerships, as- 
 sociated companies, etc. 
 
 But all Chinese systems of co-operation have three defects Defects of 
 
 closely connected with each other. Firstly, they do not allow Chinese 
 ■' J' J co-operative 
 
 sufficient individual liberty to outsiders to enter, nor to existing societies, 
 members to leave, and not sufficient liberty is allowed to mem- 
 bers while belonging to the associations. Secondly, the manage- 
 ment of the association is often defective, and the objects aimed 
 at by the association are not the right objects to aim at, and 
 the means taken to obtain these objects are not always the 
 right means. Thirdly, Chinese co-operative institutions do not 
 go far enough ; they often Stop short before the point where 
 the advantages of co-operation would be greatest. It is, as 
 Mencius says, as if when water is 72 feet deep the well were 
 only dug to 70 feet. 
 
 In Western countries there is an old fable still told to all 
 children — the fable of the " Bundle of Sticks." It is found in 
 Greek books written in the time of the Chow dynasty, and is 
 probably much more ancient than that time. I have not come 
 across this fable in Chinese, so will tell it. An old father was 
 dying ; he felt very anxious about his children, because they 
 were in the habit of quarrelling with each other, so he called 
 them to his bedside and gave them a bundle of faggots and 
 told them to break it ; none of them could do so ; he then undid 
 the bundle and gave them the separate faggots, which they 
 easily broke. Then he said : You are like these faggots ; as 
 long as you are united, none can harm you, but if you are 
 disunited, you will easily be broken. Compulsory 
 
 In the early and backward stages of society men are all a°d 
 forced to unite for the sake of self-protection, and existence co-operation. 
 
108 
 
 would be impossible without co-operation. Each man is forced 
 to give up part of his personal liberty in order to obtain the 
 protection of his fellows. This sort of co-operation, though it 
 is necessary in backward societies to protect wealth, does not 
 always tend to increase it. When laws and administration are 
 so good that each man has perfect liberty, a danger arises that 
 each man will live selfishly and will not help others, until by 
 education he finds that by mutual help he benefits himself, 
 and then a man will adopt co-operation voluntarily, and volun- 
 tary co-operation is a co-operation that invariably tends to 
 increase the wealth of nations. 
 
 The foundation of voluntary co-operation is trust in one's 
 fellows ; the foundation of trust is honesty. The greater the 
 honesty of people the greater will be the trust among them, and 
 the greater the trust the more voluntary co-operation there 
 will be. 
 
 In ancient times side by side with compulsory co-operation 
 there existed voluntary co-operation, and it is not always easy 
 to say whether such co-operation was voluntary or compulsory. 
 But in modern times among Western nations, where individual 
 liberty has been carried to great lengths, voluntary co-operation 
 has also been carried to great lengths, that is, co-operation 
 by status has given place to co-operation by contract. 
 
 In savage tribes all the male members of the tribe have to 
 be warriors and hunters, while the agricultural work has to be 
 done by the women. This sort of co-operation is not voluntary. 
 
 In the family, or tribe, where members assist and aid each 
 other, it is often difficult to say whether the co-operation is 
 voluntary or compulsory. For instance, the custom of " morrow- 
 ing," that is, people of the same tribe or village community 
 assisting each other in agriculture, by the members of one 
 household aiding in sowing and reaping the crop on the land 
 of another household one day, in the hopes that on another day 
 the assisted household will in turn help the assisting household. 
 This "morrowing" is probably partly voluntary and partly 
 compulsory. 
 
 Trades- Trades Unions, in which workmen combine together to 
 
 mutually assist each other, are sometimes involuntary, that is, 
 workmen who will not join them are maltreated. Where the 
 
 unions. 
 
109 
 
 Guilds. 
 
 state of the law and administration do not put a stop to inti- 
 midation and constraint, such Trades Unions, in so far as they 
 are involuntary, instead of increasing wealth, diminish it. But 
 when sach Unions are absolutely voluntary, that is, when any 
 man is free to join them when he wishes and quit them 
 when he wishes, they are voluntary, and add to the wealth of 
 nations by diffusing knowledge and by enabling the workmen 
 to resist oppression and to obtain for themselves fair wages. 
 
 So too the co-operation of Trading Guilds, when the 
 combination is voluntary and for proper ends, is conducive to 
 the wealth of the country by diffusing knowledge among the 
 members of such guilds, in stimulating demand for commodities, 
 and in keeping up fair profits ; but when such combinations 
 are involuntary they have injurious effects on the wealth of 
 nations. In the first place they are apt to exclude men of 
 ability from the guilds, and to admit relatives and friends ; 
 they are particularly liable to be swayed by the form of dis- 
 honesty I ca,\l " nepotism" ; they tend to establish monopolies 
 which are detrimental to wealth in shutting out healthy 
 competition and in raising profits to an unfair rate, thus 
 checking the demand for and the supply of comnaodities, and 
 hence the production of wealth. 
 
 So too with the institutions known as the " Family 
 Temples" in China. Such institutions are very valuable in 
 producing wealth when the managers consult the wishes and 
 interests of all the members of the family, when they use the 
 funds wisely to support the poor, foster education by giving 
 exhibitions to the poor students of the family who have 
 talent, etc. ; but they are destructive of wealth when the 
 managers do not administer the funds wisely and fairly, and 
 when they tyrannize over the members, or when they spend an 
 nndue proportion of the funds in theatricals, feastings and 
 religious ceremonials. 
 
 Co-operation, free and voluntary, is more productive of Constraint, 
 wealth than co-operation the result of constraint or custom. 
 "When people are allowed to choose those with whom they 
 co-operate, and the extent to which the co-operation shall 
 be carried, such co-operation will be more beneficial than when 
 constraint is used. The rule that Mencius lays down that it is 
 
 Family 
 Temples. 
 
110 
 
 better to persuade men's hearts than to constrain them, holds 
 true in every relation, especially in economics, and in economics 
 specially in co-operation, for two reasons : First, where there is 
 restraint, much of the labour of the co-operative society will be 
 wasted in restraining recalcitrant members instead of being 
 utilized in producing wealth. Secondly, because people will 
 always work harder when they are working voluntarily and 
 zealously than when they are working under restraint and 
 grudgingly; they will therefore produce more wealth. In all 
 communities there are a certain number of vicious and still 
 more of ignorant persons who must be coerced. Force or 
 coercion is not a remedy ; it is a necessary evil, and the objects 
 of all societies should be to reduce the use of force or coercion 
 to a minimum; the way to do this is two-fold : To make it better 
 worth people's while to be virtuous and wise than vicious and 
 ignorant. Secondly, to educate them ; this is what Confucius 
 meant when he said : " When the people are numerous, enrich 
 them, ; when they have been enriched, educate them." For if by 
 good lands and good customs good people become rich, is not 
 that rewarding them ? and is not showing people how they may 
 become rich educating them ? 
 
 The State. In one sense all municipalities, governments, and king, 
 
 doms are co-operations. In these kinds of co-operation there 
 is a certain amount of restraint and coercion that cannot be 
 dispensed with, but it should be the object of all governments 
 to reduce as far as possible this restraint or coercion. This is 
 what Mencius means when he says : "Let penalties and punish- 
 ments he light." 
 
 The second defect of Chinese co-operative institutions 
 consists in the management. There is not sufficient control 
 over the managers, who often misuse the common funds, or 
 even embezzle them; and it is very difficult to bring them 
 to justice, both from the absence of laws and the difficulties of 
 enforcing them ; there is still more difficulty in detecting wrong 
 acts. People's faith and confidence in these co-operative 
 institutions are impaired, and men do not join them as willingly, 
 
 Remedies, and do not extend them as far as is desirable. The remedy 
 lies in three directions : First, making good laws punishing 
 dishonest managers. Secondly, having a good administration, 
 
Ill 
 
 making it easy to prosecute such persons. Thirdly, having a 
 good system of inspections. When realms were small and good 
 kings were able personally to make tours of inspection through 
 the realm, the people, as Mencius tells us, rejoiced when the 
 king came round in his tours. In Western lands trades- 
 unions, friendly societies and other co-operative societies have 
 to publish periodical accounts of their receipts and expenditure, 
 and in order to avoid errors and fraud, have their accounts 
 examined by skilled disinterested auditors. Falsifying such 
 accounts is easily detected and severely punished; hence 
 managers find it to their interest to be honest; they also 
 find it to their interest to be zealous and careful, for if they 
 are lazy or careless the affairs of the co-operative society will 
 not prosper, and this, by the system of inspection, will soon 
 be discovered, and they will be dismissed. While if they are 
 honest, hard-working, and careful, the people they are working 
 for, and others too, will discover it ; their own co-operative 
 society will pay them highly, for, if it did not, other societies 
 would be glad to bid high for their services. 
 
 Very often the objects of co-operative societies have not 
 been good. They have often tried to raise wages and profits to 
 unfair dimensions by preventing other people working at or 
 learning the trade, by preventing dealers selling above a 
 certain quantity of goods made. This last is as common as it is 
 mischievous. It is mischievous, because it checks both supply 
 and demand and deprives the makers of such articles of the 
 means of their livelihood. It is noticeable that the ways 
 of obtaining objectionable ends are generally in themselves 
 objectionable — misrepresentation and intimidation supported by 
 covert and overt acts of violence. Hence it is necessary to make 
 laws, which, while permitting all associations for lawful pur- 
 poses, shall severely punish associations for unlawful purposes, 
 and, while giving associations for lawful purposes full liberty 
 to pursue their ends by lawful means, shall severely punish 
 slander and threats and still more severely acts of violence. 
 
 To gain the full benefit of co-operation it must go far 
 enough, both in the matter for which the co-operation is 
 employed and among the members of the co-operation; and 
 the co-operation should be widely diffused. 
 
112 
 
 Take Trades Unions for instance. In China the trades- 
 unions are generally composed of men belonging to one town. 
 The trades-unions of Canton do not co-operate with the 
 trades-unions of Fatshan or Swatow, towns in the same 
 province as Canton. Still less with the trades-unions of Amoy 
 and Foochow, which are in the adjoining province; on the 
 contrary, the trades-unions of Amoy regard the trades-unions 
 of Swatow as enemies. In China different trades-unions in 
 the same town rarely co-operate. The brass makers do not 
 assist the carpenters, etc. In the West the co-operation is 
 carried further ; while each trades-union has its own managers, 
 the managers of the various trades-unions co-operate and 
 sometimes merge together. Sometimes there is only one 
 trades-union for a pa,rticular trade throughout a whole kingdom. 
 Sometimes throughout the whole kingdom all the trades- 
 unions of the wage-earning classes co-operate. Thus when the 
 miners are well off, and the makers of machinery, bakers, or 
 builders are in such distress that their own unions can't help 
 them, the miners' unions grant aid to the other unions and vice 
 versa. There is also an international association, that is, a 
 co-operation of the trades-unions of many countries. Thus 
 the delegates of German, French, Russian, Italian, British, etc., 
 trades-unions meet to discuss matters affecting the interests 
 of wage earners all over the world. They also send delegates 
 to foreign countries to visit international exhibitions and 
 examine new products, new machines, improved modes of 
 manufacture there may be in foreign countries, so as to introduce 
 them among their fellow-subjects. That this mode of spread- 
 ing knowledge and skill enriches wage earners, improves trades 
 and increases the wealth of nations, is obvious. It is true that 
 sometimes these associations of trades-unions and inter- 
 national unions do harm, but they only do harm when they 
 pursue wrong objects or use wrong means. The most usual 
 wrong object is the raising of wages to a degree more than ia 
 fair ; the wrong means usually employed are misrepresentation 
 and intimidation. The remedy does not lie in checking the 
 co-operation, but in educating the people to see that unfairly 
 high wages check the demand for labour and commodities, 
 and injure the wage-earning classes by causing there to be less 
 
113 
 
 employment, and by making good laws to punish misrepre- 
 sentation and intimidation. 
 
 The part played ia the Chinese social life by the family 
 t'emple, ia the West is accomplished by friendly societies, to 
 which any maa can belong who pays the necessary subscrip- 
 tions. The number of these societies is very great, and the 
 amount and nature of the help they give their members vary 
 considerably. Most of them support their members when sick, 
 some grant old age pensions, some pay the burial expenses of 
 trembers and of their families, etc. These friendly societies 
 have a- beneficial effect in encouraging thrift and industry ; no 
 intimidation, as far as I know, has been employed by them ; 
 at one time, however, they had a serious defect, the managers 
 were apt to squander the funds, and even embezzle them, 
 unti-l a law was passed making it obligatory to publish 
 accounts, audited by skilled disinterested accountants, who 
 made a special study of statistics and could see that the 
 revenue should be adequate to make the payments promised. 
 Here the inspection of the prince, by his agents and laws, 
 caused men to have confidence in these friendly societies, and 
 caused more and more people to voluntarily subscribe to them. 
 No coercion is put upon any one to be a member. Default- 
 ing managers are severely punished. 
 
 The Chinese system of mutual help given by boats on the 
 upper Y"ang-tze, is good, but it is not carried far enough. In 
 Western countries the co-operation is effected by means of 
 insurance companies. The former, by paying a small sum, can 
 also insure his crops against droughts, floods and storms. 
 The ship owner and merchant can insure their ship and cargo 
 against loss or damage by the dangers of the sea. The owner 
 of a house, or any other property, can insure his wealth 
 against destruction by fire. Everyone can insure his life, 
 that is, by paying certain sums periodically while he is alive, 
 secure that a lump sum, or annual pension, be paid to his 
 widow, etc. 
 
 Before any of these kinds of insurance were possible, 
 statistics of storms, wrecks, fires, and deaths had to be made 
 out. In order to induce people to insure, the insurance 
 companies had to give the insurer the greatest possible ad- 
 
 Friendly 
 
 societies. 
 
 Insurance 
 companies. 
 
114 
 
 vantage for the least possible money, so they had to discover 
 what was the average damage done to crops by droughts, 
 floods and storms through a long succession of years and in 
 various countries. What was the average of wrecks of and 
 damages done to ships in various seas ? What was the average 
 duration of life in various climates ? What the average ex- 
 pectation of life at various ages ? These studies are so com- 
 plicated that it requires a special education to master them. 
 In order to have insurance companies there must be mutual 
 trust between the companies and the policy owners, and this 
 trust will probably not exist unless there are good' laws 
 preventing frauds on the companies. The insurance com- 
 panies have to publish audited accounts, and are, in England 
 and America, wound up unless they can show they have 
 sufficient assets to meet their liabilities. On the other hand, 
 attempted frauds on the companies are severely punished. 
 What does an insurer consciously or unconsciously do ? When 
 he insures his crop against storm, his ship against wreck, his 
 house against fire, and his family from poverty at his death, 
 he is co-operating and contracting with the other insurers 
 that if his crop is damaged by storm, if his ship is wrecked, 
 if his house is burnt, if he dies, they will contribute- to 
 indemnify him for the loss of his crop, his ship, or his house, 
 or will provide fqr his family at his death if he contributes to 
 save them from loss, etc., and he pays the premia, because it is 
 his interest to do so. Each person pays his fair share, plus 
 of course the wages of the actuaries, managers, clerks, etc., 
 and the rent of the buildings required. In some companies, 
 in order that the fair share, and no more than the fair share, 
 shall be paid, a fixed sum is allotted as interest to the parties 
 who advance the capital and for working expenses, and the 
 rest of the profits are divided among the insurers pro rata. 
 
 It may be asked, how do these insurance companies in- 
 crease the wealth of nations ? They encourage thrift and 
 industry ; by decreasing risks they attract men to be farmers 
 and ship owners, and the more men in a trade there are the 
 more will be the competition, and the greater the competition 
 the more men are induced to make improvements and to work 
 hard. In life insurance the fact of knowing that after death 
 
115 
 
 one's family will be provided for, prevents one feeling anxiety 
 of mind and enables one to devote all one's attention to 
 business instead of worrying about the future of one's children. 
 There are in the West two species of assurance, the converse 
 of life assurance one called Tontine. Say I have a child. I 
 put by a certain sum for him ; if he dies I forfeit the money, 
 if he lives he gets not only the money I gave and the interest, 
 but a share also of the money people gave to children who 
 died and the interest thereon. The other is called " Termin- 
 able Annuities, " that is, a fixed sum is paid to an insurance 
 •company, and the insurance company in return grants the 
 payee a fixed income for life. 
 
 The co-operation of merchants in the West is carried Chambers of 
 further than in China by what are called Chambers of Gom- 
 Tnerce. In each town in England there are Chambers of Com- 
 merce which look after the interests of the trade of the town, 
 which have people whose special duty it is to find out any 
 improvement in manufactory, any advance in chemical know- 
 ledge, any transactions abroad or at home likely to have an 
 influence on the trade, and to let all the members know ; and 
 there is the Associated Chambers of Com,merce, whose duty 
 it is to find out everything with regard to commerce generally 
 and to communicate each piece of information to the trade 
 specially interested. 
 
 In the West, too, to meet the co-operation of the wasre- Combinations 
 
 . ^ , . of capitalists. 
 
 earning classes, there are co-operations of capitalists or em- 
 ployers. Though the co-operation of capitalists use only one 
 mode of intimidation, namely a threat not to employ people — 
 lock outs — it often pursues a wrong object, that is to say, it 
 tries to reduce wages below the fair value. In such cases 
 there is a struggle between the capitalists and the wage 
 earners. Sometimes there is a strike, and the men refuse to 
 work, sometimes there is a lock out, and the capitalists refuse 
 to employ; more often there is a conference of the dele- 
 gates of both co-operations, and fair terms are given, or the 
 question is submitted to the arbitration of a disinterested party. 
 These co-operations, when used for a good object, that is, to 
 diffuse information with regard to the trade and to keep up 
 fair profits, are beneficial. ' They are only mischievous when 
 
116 
 
 their object is to obtain unfair profits or wages. The remedy 
 for the mischief is not patting a stop to the co-operation, bat 
 carrying it a step farther and doing what is done by some of 
 Co-operative the insurance companies, that is, apportioning a fixed sam for 
 production. ^-^^ interest of the capital and for the salaries of the managers 
 and dividing the profits p7'0 rata among the workmen and 
 all interested. Co-operative production has hitherto failed, be- 
 cause the workmen will not agree to give the managers, etc., a 
 large enough salary to attract men of the required abilitj- — that 
 is, the workmen by refusing fair pay to the managers injure 
 themselves. As education is difiPused among the workmen, it- 
 is hoped that they will see that it is to their interest to give 
 large profits to clever managers ; when this is the case, co-opera- 
 tive production will more and more come into practice. Several 
 large factories already make an approach to it, by, besides 
 paying their workmen the current rate of wages, giving them 
 extra gratuities in prosperous years. This makes it to the in- 
 terest of the workmen that the business should be prosperous,, 
 makes them work hard and be careful that the raw material 
 Co-operative shall not be wasted, nor the machinery damaged. " Co-opera- 
 istri ution. ii^g ])igiy,{i)^iiQ^i'" is largely practiced in every town in Eng- 
 land, that is, the profits in retail shops are often, after paying 
 rent and a fixed salary to the shop keepers, divided among 
 the customers in the shape of cheaper goods. Shops which 
 are managed on this principle are called co-operative stores. 
 Partnership Partnerships and companies are not carried to the extent 
 
 companies, they Ought to be in China, because of the absence of good laws 
 and consequent want of mutual trust. In the West partner- 
 ship and company laws are very minute, and having been 
 made after a severe study of the principles of jurisprudence 
 and commercial requirements, they have fostered the forma- 
 tion of partnerships and companies by increasing mutual trust. 
 In a previous chapter I stated that the principles of poli- 
 tical economy were beneficial when applied to the family, 
 village, district, province, nation and world at large. In one 
 sense every nation is a large co-operative society of persons 
 united together for the common good ; in it as in other co- 
 operative societies coercion should be reduced to a minimum, 
 and the nation should be, as far as practicable, a voluntary 
 
117 
 
 association. In olden days when a man was born a native 
 of a nation, he always remained so. This was called the 
 doctrine of indefeasible allegiance ; few or no foreigners 
 were allowed to become members of the nation. It is very 
 different now; almost every nation allows its subjects to 
 renounce their nationality and allows foreigners to become 
 members of its nation, so that now a man can choose what 
 nation he will belong to. The same principles apply to the 
 government of a nation as to the management of co-operative 
 societies. The managers should be carefally selected and 
 fairly paid. The national accounts of receipts and expendi- 
 ture should be drawn up, audited and published. There 
 should be stringent inspection. The nation should pursue right 
 ends and endeavor to attain them by right methods. 
 
 As the wealth of a nation, and of its individual members. International 
 
 oo-operation. 
 is increased by co-operation and mutual aid, so the wealth of 
 
 the world and of each individual nation is increased by inter- 
 national co-operation and mutual aid. The wealth of the 
 world has been increased by what is called the Postal Union, 
 to which most of the nations of the world now belong, where- 
 by letters and books can be posted in any town or village all 
 over the nations belonging to the Union, to any town or village 
 of any other nation belonging to the Union ; not only so, but 
 money also can be transmitted through the post offices from 
 any village in one of the nations of the Union to any village in 
 the other nations. In the same way there is an Union among 
 most nations of the world with regard to the transmission of tele- 
 grams, protecting submarine telegraph wires, avoiding collisions 
 at sea, an international code of maritime signals whereby ships 
 of all nationalities can communicate with each other, for 
 helping wrecks and ships in distress, protecting trade marks, 
 patents, copy-rights, etc., with regard to the duties and privi- 
 leges of consuls, with regard to the privileges, immunities and 
 honors to be paid to ambassadors, etc. 
 
 In international co-operative arrangements all coercion 
 and unfairness should be, as far as possible, avoided. Treaties 
 are in little danger of being broken when nations join in 
 them voluntarily ; they are in less danger of being broken 
 when the nations that join in them derive advantage from their 
 
]I8 
 
 operation. There are still many things about which there 
 might with advantage be international co-operation, thus the 
 adoption of an uniform system of money, weights and mea- 
 sures, rules as to the reward to be given for salvage at sea, etc. 
 To obtain the full benefit of international co-operation, right 
 ends must be pursued by right means. The right end is the 
 good of all the nations, especially of course one's own, and not 
 an unfair profit for one'; the right means are persuasion, and 
 the diffusion of education, not menace nor force. Force should 
 only be used as a hateful necessity to punish or restrain a 
 nation which is wronging others. The ideal to which we 
 should strive to attain is such a co-operation of nations that 
 arbitration should take the place of war in the world just as 
 the jadgment of national tribunals has, in civilized nations, 
 taken the place of clan fights ; when all the nations of the 
 world shall co-operate to put down acts of violence, cruelty and 
 injustice by nations, as in one nation individuals have co-opera- 
 ted by means of laws, police and inspectors, to put down 
 acts of yioleuce, cruelty and injustice by individuals. In fact, 
 that nations should not only recognize the truth of the Chinese 
 saying, ''All under heaven's vault are one family, " but that 
 they should carry out the duties that the belonging to the 
 family of nations entails. 
 
Chapter IX. 
 
 lebucation. 
 
 tHAT the first production of elementary wealth is depen- Education as 
 dent on education is an elementary truth, so obvious ^^^Jalth"* 
 that it wopld not be necessary to state it, were it not Primitive, 
 that it leads to truths which are not so obvious. Among the 
 most barbarous, ignorant and poor savages known in the 
 world, a certain amount of education is necessary to preserve 
 existence ; thus the children are taught the habits' of wild 
 animals, how to follow their tracks and kill them, how to 
 make weapons, etc. Ascending to tribes higher in the scale of 
 civilization, children are taught the ways and needs of cattle, 
 the sort of pasturages which tend best to fatten them, 
 where the best water is to be found, etc. When a nomad 
 pastoral people settles permanently on lands and becomes 
 agriculturists, their children have to be taught how to sow seed, 
 how to plough, manure and drain the land, the different 
 natures of soil and treatment required by different grains and 
 crops, how to rear various fruit trees. A further development 
 occurs when men study the insect life around them and the 
 plants not useful for food. Them various arts arise — the art 
 of rearing silk worms, of winding the silk thread from cocoons, 
 of spinning it into silk, of collecting honey and yellow wax 
 from the labour of the bees, and white wax from the labour of 
 the fire-fly. By studying plants men attained the germs of the 
 knowledge of medicine. They found out the healing proper- 
 ties of rhubarb. They learnt to plant the cotton plant, to gin, 
 clean, and card cotton, to spin its fibre into yarn, and to weave 
 the yarn into textiles. They learnt the oil-producing qualities 
 
120 
 
 of the bean, and the fertilizing quality of the refuse of the 
 bean, and thej used bean oil for light as well as food, and 
 bean-cake for manure. They learnt the nature of timber ; they 
 learnt what sorts of timber are best suited for building houses, 
 and what as fael ; they learnt to utilize the fibre of the hemp 
 and make it into coarse textile first, and finally into the beau- 
 tiful grass cloths. By the study of metals men learnt to use 
 iron for improving their weapons, their pastoral and agricul- 
 tural implements ; men learnt to use bronze and copper for 
 coins, lamps and sacrificial utensils ; men learnt to use silver 
 as money, gold for long enduring ornamental work ; they 
 learnt the nature of water and the habits of fishes ; they 
 learnt to tame wild birds and animals, such as the cormorant 
 and otter, and to train them to fish for them ; they learnt to 
 make nets and fish hooks ; they learnt to use water as a road ; 
 they learnt to build rafts, boats and junks in endless varieties, 
 fitted to the varieties of rivers and seas ; they learnt to subdue 
 horses, donkeys, mules, camels, oxen, bufi'aloes, yaks, etc., 
 and to train them to be their servants, to carry them on their 
 backs, to draw carts and carriages ; they taught them to 
 plough their fields and do other agricultural work. 
 
 In all these things education obviously and directly in- 
 creased wealth ; this sort of education "is called Technical 
 Education, and, applied to the simple matters above described, 
 may be termed Primitive Education. 
 General There is another kind of education which, though it does 
 
 education, ,. , . -,. 
 
 not directly produce wealth, does so indirectly in two ways : 
 first, by increasing the intelligence of people ; and secondly, by 
 giving knowledge which is utilized in improving the technical 
 arts, and without which knowledge many of the technical 
 arts could not have existed. This kind of education is called 
 General Education. Take the art of writing ; the first germs 
 of writing were probably making pictures of an article re- 
 presenting that article itself. Thus the picture of a man would 
 mean a man; of a dog, a dog; of a cow, a cow, etc.. Afterwards a 
 certain number of children were taught to read in these pictures, 
 not only the objects depicted, but the qualities of those 
 objects. The next step was the picture of a man represented not 
 necessarily a man, but some object pronounced in the same way. 
 
121 
 
 This caused a division of writing : one called Ideographic, that 
 is, depicting the meaning ; the other Phonetic, that is, depicting 
 the sound. The Chinese in their writing combine both, and 
 in most of their written characters a clue, both to the sound and 
 sense, is given. In the West, where writing probablj^ began in 
 the same way, the meaning has gone out of our characters and 
 the sound alone remains thus : \J an ox's head was turned 
 npside down into A, which is now only a sound ; {\, originally a 
 picture of a house, became B, only a sound. ftA a mountain be- 
 came S, only a sound. Another primitive method of writing 
 was by tying knots in strings ; another, imitating the marks 
 made in soft ground by the claws of birds. This last, called the 
 cuniform way of writing, existed in early days in China, and 
 previously in Chaldsea during the time Shun was supposed to 
 exist. Recently many books written in this writing have been 
 discovered and translated. These books' are not on paper, 
 but on bricks. They were evidently inscribed with the char- 
 acters like bird's claws on clay; the clay was burnt into brick. 
 In China .it occurred to wise men that it would save labour if 
 instead of the picture of the whole object, a picture of part of 
 it or a conventional form was adopted, thus for the picture of a 
 man was substituted A or -f , etc. Afterwards through many 
 stages Chinese writing was improved and took various forms — 
 the Tadpole character, the sealed character with its endless 
 varieties, the 'printed character and the cursive character — until 
 it has reached its present perfection of beauty. The Chinese 
 character is the most beautiful writing in the world, but it has 
 two defects : it takes too long to write, and is very difficult to 
 learn. It takes less time to write in English than to write in 
 Chinese ; it takes less brain power and work to learn to write in 
 English than to learn to write in Chinese, In other words, 
 there is less waste of labour in writing and learning English 
 than there is in learning and writing Chinese. One point is 
 common to both ; in the education of writing, as in all educa- 
 tion, there has been progress and advance. 
 
 Take the ^'■precious materials " of learning — paper, pen, 
 ink, the writing tablet. In all of these there has been 
 progress and advance. With regard to the surface written on, 
 the Chaldsean bricks have been mentioned : the Chinese are 
 
122 
 
 familiar with inscribing writing on rocks and stone tablets. 
 One people used to write on brass tablets- coated with wax 
 with a stylus, or iron rod sharpened at the end ; other nations 
 wrote on the leaves of trees ; one particular tree — the papyrus — 
 was much used for this purpose in Egypt, and many books 
 written in the time of the Hsia dynasty, on these papyrus 
 leaves, are still extant ; other nations wrote on the skins of 
 animals until the manufacture of paper was discovered, when 
 by the cheapness of this material, it has practically superseded 
 all others as material for writing on, besides having other 
 valuable uses of its own unconnected with writing. The pen 
 too has improved. Various pens have been used —the stylus, 
 the reed, the feathers of birds, innumerable kinds of metal pens, 
 the brush composed of the hairs of various animals, etc. 
 Ink too has improved from ordinary charcoal, soot mixed with 
 water or oil, ink nlade of the excrescence of the oak, of nut 
 galls to the beautiful Chinese ink, Indian ink as it is called 
 in Europe, which for certain purposes is probably the best ink 
 in the world, and which is much used by all nations. 
 
 So too in the education of arithmetic at first people were 
 so ignorant that they could only count up to five, the 
 numbers of fingers and thumb on the hand ; even now in 
 certain savage races any number over five is expressed by the 
 vague term " a great many." Gradually people got to the 
 number ten by counting up the fingers and thumbs of both 
 hands. They next got to a simple multiple of ten by adding 
 the toes to the fingers and thumbs, and to more complex 
 multiples of ten by adding together the fingers and toes of 
 several men. The next step was the converse process of 
 dividing by ten ; gradually there arose the knowledge of 
 decimals and the invention of the abacus. Here again we 
 find a progress in education. And now we have said enough 
 to show that one quality desirable in education, if it is to 
 
 Education increase wealth is, education should advance and be progressive. 
 
 progressive. ^^ ^^ o^^en Said : " Let us be content to be as wise as our fathers." 
 Such a saying does no harm if we consider what was the 
 quantity of our fathers' wisdom. Our fathers' wisdom con- 
 sisted of two halves. The first was to learn all their fathers 
 could teach them. The second was to improve on this knowl- 
 
123 
 
 edge and teach their children more than their fathers knew. 
 It would be better to say : " Let us not be less wise than our 
 fathers " and not be content with only half of their wisdom, 
 but let ns exercise both halves, that is, both learn the know- 
 ledge of the past and increase the knowledge of the future. 
 
 One defect of the Chinese educational sj'stem is, it is not 
 sufficiently progressive. Take the simplest technical education 
 and on a subject in which Chinese particularly excel — 
 agriculture. 
 
 The Chinese have learnt certain knowledge with regard 
 to seeds and the best seasons when to sow and reap ; they have 
 not suESciently learnt the nature of seeds themselves. It has 
 been discovered by study that by particular cultivation of 
 plants the seeds can be made more fertile ; hence in the West 
 there are seed farms, or farms for producing seeds that will be 
 most fertile. This has been carried to great perfection with 
 regard to wheat ; the cousequence of this and other studies 
 has been that a mow of land in the West produces twice as 
 much wheat as a mow in China. The Chinese have learnt to 
 a certain extent the principle of ploughing and drainage, but 
 in neither case do they go deep enough. Their crops only 
 derive nourishment from the surface soil ; the richness of the 
 soil below is not utilized. The disadvantage of surface, instead 
 of subsoil drainage, is that a great deal of the manure ex- 
 pended is washed away by the rain aud wasted, instead of 
 assimilating with the soil. The Chinese have learnt a great 
 deal about soils, what crops various soils are fitted to produce, 
 and what manures those crops require, but they have not 
 learnt the chemical composition of the earth, nor how to make 
 chemical manures to suit the different soils and crops. Some 
 of these mauures are equally or more effective than bean-cake 
 aad much cheaper. In fruit and timber culture, the Chinese 
 might increase their wealth by progressiug in education. In 
 the West there are schools specially for farming, where the 
 pupils are taught agricultural chemistry, the best way of 
 producing fertile seeds, the best way of rearing and grafting 
 frnit and timber trees. In the rearing and breeding of cattle, 
 pigs, fowls, etc., China might advance beyond the stage of 
 education she has reached, and might by study and education 
 
 Education 
 should be 
 thorough. 
 
124 
 
 improve her domestic animals. The horses in the West are 
 bigger and stronger and swifter than the horses in China. 
 They go qnicker, carrj^ and draw greater weights and do more 
 work in a given time than horses in China. They produce more 
 wealth. The cattle in the West are bigger and stronger than 
 the cattle in China; their iiesh is more nutritions and greater in 
 quantity ; they supply more milk, and are stronger at plough- 
 ing. The Chinese might by more progressive education make 
 their sheep produce better and more wool for making into cloths 
 and flannels. So too with many other things ; if the Chinese 
 for instance would learn to clean and sort the feathers of their 
 fowls, ducks, geese, etc., they would be able to sell these feathers 
 instead of throwing them away, and would grow richer. 
 
 We see now a second quality education should possess, it 
 should be thorough, that is, education should teach as much of a 
 subject as can be learnt. 
 Should em- It is observable that knowledge in one subject can often 
 
 brace wide |jg applied to improve production and increase wealth by being 
 used in another subject. Thus the discovery of the use of 
 metals improved hunting, agriculture, boat building, etc. It 
 was a union of many studies that produced the silk, tea and 
 white wax manufactures. Often the knowledge of a fact, at first 
 apparently merely curious, has had immense consequences in 
 increasing the wealth of the world. Three thousand years ago 
 a person observed that by rubbing a piece of amber till it be- 
 came hot, it attracted to it feathers and light objects, which 
 would fly up to it ; for many years the knowledge was not utiliz- 
 ed, but deep study and observations led to the discovery of the 
 laws of magnetism and electricity. The mariners' compass was 
 invented by people who understood the laws of magnetism ; by 
 the compass, mariners were able to guide their ships to the 
 haven in dark nights when they had no land marks, stars, or 
 sun to guide them' ; by further study of facts, which seemed 
 at first useless and irrevelant, the deviation of the compass was 
 discovered and a table given for its correction. Again it was 
 ascertained that the presence of iron or metal near a compass 
 made the needle point wrong ; by further study a plan was dis- 
 covered of obviating this tendency and rendering compasses as 
 true in iron as in wooden ships. 
 
125 
 
 Men used to be frightened of lightning and thunder and 
 supposed they were directed by a person like a human being, 
 only stronger and more powerful ; the study of a great many 
 facts led people to discover that lightning and thunder were 
 caused by electricity, and electricity was closely connected 
 with the fact of a piece of amber attracting a feather. By the 
 study of these and other facts men invented lightning conduc- 
 tors, rendering lightning innocuous ; by still further study they 
 were able to make lightning, which had been a terror to their 
 forefathers, a servant to their descendants, and now electricity 
 carries our messages in the telegraph, enables us to speak to 
 people miles away in the telephone, to hear the very words and 
 voices of speakers of words said long ago in the microphone, to 
 see actions that were done long ago in the kinetog'r.aph, to light 
 our houses, to warn ships off rocks, to draw our carts and car- 
 riages, to propel our ships, to warm our rooms and cook our 
 food, to ring bells when we visit our friends or call our 
 servants. 
 
 The observation that silver was apt to get black when ex- 
 posed to the air, and of the fact that looking through a convex 
 or concave piece of glass diminished or masrnified an object, 
 with other studies, led to various discoveries and inventions, — 
 spectacles, whereby the aged and people with weak sight are 
 able to prolong their studies, giving a greater wealth of know- 
 ledge to the world; the telescope enabling us to see things far 
 off: the microscope enabling us to see things so small as to be 
 invisible to the naked eye ; the spectroscope, by which we have 
 discovered what the sun, moon, and stars are made of; photo- 
 graphy, by which we can have pictures of our relations and 
 $:iends, houses, scenery, etc. ; the X rays, by which we can obtain 
 a faithful representation of our bones while we are still living, 
 tell where a bullet is if a man has been shot, where and what the 
 disease' is when he is in pain. The combination of the knowl- 
 edge attained by the microscope with the knowledge of the 
 human frame, and of the circulation of the blood, led to the 
 discovery of the causes of many diseases and how to prevent 
 them. Small pox, once the scourge of the world, has been 
 rendered little dangerous by vaccination. Measures can be 
 taken against wounds and sores putrefying by the antiseptic 
 
126 
 
 Education 
 
 fihould be 
 
 widely 
 
 diffused. 
 
 treatment ; laws of sanitation have been discovered and enforced 
 in the West, the rates of mortality have diminished, life has 
 been prolonged, the sickly have been made more healthy, the 
 strong have been rendered stronger, the first source of human 
 wealth, health and strength, has been increased, men have 
 become capable of greater labour in a given time, and the time 
 in which they have been capable of labour has been extended. 
 In all these instances the study of many things has led to the 
 increase of the wealth of nations. Besides studying each 
 subject as thoroughly as possible it is desirable to study as 
 many subjects as possible. 
 
 It is impossible for one man to study both each subject 
 thoroughly and everything. Some should study one thing and 
 some another, some should study the results of the studies of 
 several others ; there should be a division of labour in study as 
 well as in production. 
 
 In a nation which entirely subsists by hunting it is 
 essential that every man should be able to hunt. In a pastoral 
 nation it is necessary that every man should be able to rear 
 cattle. In a purely agricultural nation that every one should be 
 educated in farmiog In nations which are wealthy enough to 
 have many occupations, though it is not desirable that everybody 
 should know agriculture, it is desirable that everybody should 
 know something, that is, everybody should be educated ; in 
 other words, it increases the wealth of a nation to widely 
 diffuse education. 
 
 In the world's history we have many examples of the wealth 
 of nations being checked by education not being, widely enough 
 diffused, we have also examples of the wide diffusion of educa- 
 tion increasing the wealth of nations. Athens, a small country, 
 hardly as large as a Chinese " Hsien," became a great nation 
 in the time of the Chow dynasty by the wide diffusion of 
 education amoug the Athenians. On the other hand, the wealth 
 of Egypt in the time of the three dynasties, of Chaldsea in 
 the time of Shun, of Babylon in the time of the Hsia, of the 
 Medes and Persians in the time of the Chow, did not reach a 
 higher stage than it did, and ultimately perished, because 
 learning was the monopoly of a few. That the wealth of China 
 has developed to the stage it has, that it has lasted to the 
 
127 
 
 present day, that its lustre at one time was very great, is 
 largely due to the fact that education in China was at one time 
 more widely diffused than in other countries. In modern days 
 the wealth of China has probably not diminished, but its lustre 
 has paled, because other nations have outstripped her in the 
 race for wealth, and they have done so partly because education 
 has gradually been more diffused in those countries than in 
 China. Women who form half the population have, in the 
 East, been neglected in respect to education ; they have been 
 given some education it is true, but not enough. 
 
 In England during the last five hundred years education 
 has been more and more widely diffused among the people, 
 and wealth has increased 'pari passu. This increase has not 
 been gradual, but has come in gusts ; there was a gust of 
 diffusion of education in the time of the Sung dyna,sty, caused 
 by what is called the "Revival of Learning ; " that is when the 
 study of the ancient classics was intensified, by the discovery of 
 certain Roman and Greek books, similar to the Revival of Learn- 
 ing in China in the end of the Han dynasty by the discovery 
 of the Chinese classics. Again there was a spurt given when 
 printing was invented and the multiplication of books occurred, 
 cheapening the means of learning. This occurred in England 
 in the beginning of the Ming dynasfy. Another spurt was 
 given when there rose a division in the Christian Church be- 
 tween Catholics and Protestants which, though in many re- 
 spects a disaster, intensified learning by making people anxious 
 to prove by history and study that their view of religion 
 was correct. Another spurt occurred in the beginning of the 
 Ching dynasty called the Revival of Religion, when the lesson 
 was inculcated and brought home to men's minds in England, 
 that they should repay the bounty of Heaven by saving the 
 souls of their poorer brethren. From this date free schools 
 were established all over England for the education of the poor. 
 
 The greatest step of all was taken in England, within my 
 memory, in 1868, when it was enacted that all the boys and 
 girls in the country should be taught reading, vraiting and 
 arithmetic, that any parent neglecting to have his children 
 taught these subjects should be punished with fine and im- 
 prisonment, that no farmer or manufacturer should employ, or 
 
128 
 
 give wages to a child who could not read and write. Towns 
 and villages which had no schools were forced to. build them 
 and to pay for teachers to instruct the children. The effects of 
 these laws have been most satisfactory and astonishing. Crime 
 has diminished, the number of habitual criminals in proportion 
 to the population has gone down one-half, and if we take young 
 habitual criminals two-thirds, pauperism has decreased in an 
 equal proportion to crime. The investments of the working 
 classes in saving banks, in co-operative societies, and other 
 savings have quadrupled. Against this the nation has lost 
 somewhat in the loss of production by child labour in agricul- 
 ture and other arts, and in the parents being deprived of the 
 help of their children in household work, but this loss has 
 been more than compensated for by the increased intelligence 
 and skill of the population. The saving the strength of the 
 children has increased the capital of strength in the country, 
 just as the saving of money increases money capital. 
 
 Almost yearly, during the last twenty-nine years, subject 
 after subject has been added to the curriculum of compulsory 
 education, music, drawing. The elements of political economy, 
 of science, etc., and the mode of teaching has been improved, 
 having two objects, enabling children to acquire the required 
 knowledge as easily, and therefore as quickly as possible, and 
 so let their labour be as soon as possible available for the 
 farmer and manufacturer ; and secondly, increasing the in- 
 telligence of the children, so that after they leave school they 
 shall continue their studies and advance in knowledge. These 
 two kinds of teaching may be called instruction and education. 
 
 The scholarly Chinaman who reads this will see it is an 
 application of the saying of Mencius, Tung Kuug, circulation 
 of commodities. Learning is a commodity more precious than 
 jade, the wisdom that makes a " princely man." Cliun-tze is 
 better than any commodity, even a "jewelled incense burner; " 
 it is desirable that there should be a circulation, that is, wide 
 dilfusion of education. 
 
 Starting from the simplest and most obvious premises we 
 have deduced the following conclusions : — 
 
 1. Education must be progressive, that is, must have in 
 itself a capacity of advancing and becoming better. 
 
129 
 
 2. Education must teach as much about a subject as can 
 be known or leai-nt. 
 
 3. Education must teach as many subjects as can be learnt. 
 
 4. Education must be as widely diffused as possible. 
 
 5. Education must be imparted in the easiest way possible. 
 In order that there should be a supply of good education 
 
 it is desirable that there should be a demand for it, and there 
 probably, and almost positively, will be a demand for it if 
 there is a supply of it. 
 
 To write fully on education would necessitate writing a 
 long book. I propose only to touch on five points : 1st. What 
 should China do to inaugurate education, among the Chinese, 
 good in the five particulars just mentioned? 2nd. How can 
 she create a demand for the good sort of education ? 3rd. How 
 ought she test and examine her students to make sure they 
 are deriving the fullest possible benefit from the good educa- 
 tion ? 4th. What steps are desirable with regard to the educa- 
 tion of the body — physical education? 5th. Lastly, a high 
 inducement to individuals, village communities, districts, etc., 
 to advance the cause of education. 
 
 Education to be progressive must be of two kinds : it must Education 
 be technical and general, it must impart the learning that 
 exists, step by step, building up the pupil's knowledge layer 
 by layer, stage by stage, — instructing in short. Secondly, it 
 should increase the powers of the child's mind by exercising 
 them, leading them up to think, — educating. In other words, 
 teaching should cultivate two faculties — memory and thought. 
 In regard to the cultivation of the memory, the Chinese system 
 of teaching is probably the best in the world. A Chinaman is 
 much quicker at learning by heart than an Englishman, and 
 remembers better. This quickness to learn and retentiveness 
 of memory is a great advantage to Chinese in obtaining 
 wealth. In some respects, owing to this, the Chinese are the 
 best retail dealers in the world ; they are very quick too in 
 attaining mechanical skill and in learning to work machinery 
 made by others. They are very clever in attaining the know- 
 ledge that is dependent on the memory. But the Chinese 
 system of teaching does not cultivate the power of thought, 
 and therefore the Chinese do not improve on what they learn. 
 
 and 
 inatruction< 
 
130 
 
 and for many centuries have not made any useful discovery or 
 invention. The Chinese teaching would be improved if 
 children were made to think about the meaning of the books 
 they learn, instead of only learning them by heart; if the 
 candidates at examinations were encouraged to express new 
 ideas, instead of only repeating the views of commentators, 
 and if the study of mathematics was introduced into all 
 Chinese schools, 
 
 With regard to learning each subject thoroughly, it is 
 desirable that the same accuracy that Chinese teachers 
 demand in the written characters of their pupils were demanded 
 in all matters, Thoroughness, not " Gha-pu-to" should be 
 aimed at, the really knowing a thing not seeming to know 
 something about it. Any inaccurate statement should be 
 rigidly checked. It is a good practice to make children 
 examine an insect, a shop, or tree or any other object and call 
 upon them for an accurate description of what they have seen, 
 giving greater praise to accuracy than to grace of description 
 or amount observed. 
 
 In regard to learning as many things as possible, Chinese 
 teaching has hitherto been defective. Pp to quite recently 
 literary degrees in Chinese have been conferred only for 
 knowledge in Chinese literature. The saying of Confucius : " In 
 the West there are also sages," seems to have been lost sight 
 of. In the West degrees are given not only for proficiency in 
 the national literature, but also for proficiency in the langaage 
 and literatnre of ancient and contemporary foreign nations ; 
 degrees are also given for proficiency in other knowledge, 
 such as chemistry, zoology entomology, botany, physiology, 
 medicine, mathematics, metaphysics, logic, history, law, me. 
 chanics, music, painting, agriculture, political economy, etc. In 
 order to prevent the minds of people being narrow, the 
 graduate in one branch of knowledge has to show a moderate 
 acquaintance with other branches of knowledge. The wisdom 
 and learning of a myriad men is greater than the wisdom and 
 learning of one, the wisdom and learning of a myriad nations 
 is greater than the wisdom and learning of one. Hence every 
 nation should encourage the study of foreign literature and 
 foreign history. China is beginning to do so by putting 
 
131 
 
 questions on foreign learning in her examinations afld by giv* 
 ing degrees to those who, in addition to proficiency in Chinese 
 studies, have some acquaintance with foreign studies. This is 
 a step in the right direction, and will give an impetus to the 
 study of foreign subjects. 
 
 The next point is, what are the best ways of diffusing 
 education among as many people as possible ? The first way 
 is by making learuing respected. This will be done if scholars 
 are honored and have opportunities of obtaining lucrative 
 positions. This mode of diffusing education is carried to per- 
 fection in China ; the giving the literati privileges and rank, 
 denied to men who have only the advantages of birth and 
 wealth, and the recruiting mandarins from the body of literati 
 in China makes learning more honored than birth and wealth. 
 Birth is a good thing, wealth is a good thing, but learning is 
 better. I remember when I was stationed in West Hupei, com- 
 ing across villages that were so poor they could not give money 
 to the school masters, so parents paid them in food, enduring 
 the pangs of hunger to give their children education. It is 
 this love of children and love of learning that causes foreigners 
 to respect and admire the Chinese. 
 
 But there are other ways of diffusing education which 
 China might adopt, or extend, with advantage; the establish- 
 ment of schools to be supported by rates levied from munici- 
 palities, guilds and clans, to be under the supervision of the 
 gentry and elders, or committees of ancestral temples, or man- 
 agers of guilds. In China there already exists the machinery 
 for collecting and administering the funds requisite, the 
 publication and distribution of pamphlets and books containing 
 useful knowledge. Here again there are societies whose ser- 
 vices might be utilized and extended. If benevolent people in 
 China desiring to do a ^"-Hao-shih" (work of mercy) would 
 publish and give away books in Chinese on agriculture, silk 
 rearing, arithmetic, chemistry, mechanics and other useful 
 knowledge, in addition to the moral treatises that are now 
 distributed, the wealth of China would be increased. 
 
 Again, municipalities, heads of guilds, the local officials, 
 etc., might establish libraries containing good collections of 
 books accessible to students, and also circulating libraries 
 
132 
 
 whence the books could be lent to students to take home with 
 them. 
 
 Scholars should be encouraged to write books, by being 
 enabled to sell them when written, and for this purpose 
 some law of copy-right should be enacted, preventing the 
 publication and sale of a book without the author's permission. 
 Books should be multiplied in number and made cheaper by 
 taking advantage of improved mechanical contrivances. Thus 
 moveable metal type should be substituted for wooden blocks 
 in printing, because metal types do not wear out so quickly, 
 and because the same type can be shifted and used for many 
 books, and thus they save labour and cheapen the production 
 of books. Good press laws should be passed encouraging the 
 issue of good newspapers, punishing seditious, slanderous 
 and immoral writings, but allowing full freedom to honest 
 criticism. 
 
 The government too might educate the people by collecting 
 and publishing statistics of trade, etc. 
 
 England has nearly 600 Consuls and Vice-Consuls establish- 
 ed in different parts of the world, each of whom studies the 
 condition of trade in his district and sends home every j^ear a 
 Trade Report on it. These reports are published, so that our 
 merchants and manufacturers may know the wants and wishes 
 of foreigners. Other statistics are published, such as the 
 increase or decrease of inhabitants in given districts, the num- 
 ber of births, deaths and marriages that occur ; it was by the 
 publication of these and similar statistics that the rise of many 
 co-operative societies, such as insurance societies, friendly so- 
 cities, of which we spoke in last chapter, were rendered possible. 
 
 China should also encourage the study of special subjects. 
 This can be done in two ways : 1st. The endowment of original 
 research, that is, rewarding people who have made a special 
 study of any subject by giving them an income, so as to enable 
 them to devote themselves to that special subject. 2nd. The 
 founding chairs to teach special subjects, that is, endowino' 
 schools and colleges which teach special subjects. There are 
 in England special schools for medicine, law, agriculture, etc., 
 with regard to the last, the young men educated at the English 
 schools of agriculture, have been very successful as farmers all 
 
133 
 
 over the world. In some branches of commerce Germans have 
 been more successful than Englishmen, and England rightly 
 has devoted much time to discover the reason of this, and it 
 has been found to be because Germany has more schools 
 than England for giving a commercial education to her people, 
 and because she conducts that education on a better system. 
 
 The next point is how to impart the education in a manner _ Easy 
 that will produce the greatest results with the least amount ™eaniiiio° 
 of labour to the learner. Some parts of the Chinese system of 
 teaching the young are very good. Thus the practice of the 
 children swaying their bodies to and fro during lessons is very 
 good, as it prevents their being distracted from their lessons by 
 the physical discomfort of keeping still.' Very good too is the 
 system of repeating the lesson in a sing-song voice, as prevent- 
 ing the children being distracted by the discomfort of silence, 
 and the singing is pleasanter to do and hear than speaking. 
 Very good too, is the Chinese custom of inculcating moral 
 lessons by means of simple rhymes easily remembered. The 
 Germans have adopted all these excellences and carried them 
 further in what is called the Kindergarten system (now being 
 adopted in all Western nations). The children are not only 
 allowed to move their bodies during lessons, but also their 
 limbs, and that in a varied way ; they are not only allowed to 
 sing their lessons, they are given pretty tunes to sing them to ; 
 not only moral precepts are put in easy rhymes, but all possible 
 studies, arithmetic, geography, history, etc., 
 
 So important is the way to teach that in many Western 
 nations it has been found desirable to establish Colleges of Pre- 
 ceptors, that is, schools where people are taught to teach, and in 
 government and many other schools no person who has not a 
 certificate from the College of Preceptors is employed to teach. 
 
 A nation should not only teach its people in such a way Examina- 
 that they will improve on the learning they have received, will 
 know each subject thoroughly, will know many subjects, will 
 not only diffuse education widely and foster a demand for it and 
 supply the demand; it should continually test the education 
 in order to see that the people are deriving the fullest possible 
 benefit from it. This is done by a good system of examinations. 
 
 Examinations are carried to a great length in Western 
 
 tions. 
 
134 
 
 nations. Each nation has its own system ; all thinkers on the 
 subject are agreed that all these systems are, as yet, in an 
 experimental stage, that is, have defects which, it is hoped, will 
 be remedied in the fatnre when more is known oa the subject. 
 The object of examinations is two-fold: to select the best quali- 
 fied men for the work to be done and to prevent the public 
 being deceived by quacks and pretenders, besi'des testing the 
 progress made by learners. Every boy and girl in England is 
 often examined, and after he 'or she has attained a certain pro- 
 ficiency is given a certificate, after receipt of which employers 
 of labour are able to hire them. This takes place after 
 about nine years' education, say from the age of four to thirteen, 
 and is called Primary Education. At the age of thirteen or so 
 children whose parents can afford it are sent to what are 
 called Secondary Schools. Many of these secondary schools 
 have preliminary examinations, and only admit children who 
 evince sufficient intelligence to make the examiners consider 
 that they will probably make good use of their studies. Boys 
 who are exceptionally clever are often admitted to the schools 
 free of charge, and are sometimes besides given an income for 
 food and clothes. During the time boys are at the secondary 
 schools they are constantly examined, and if their progress is 
 slow they are often dismissed from the school. The usual age 
 for boys to stay at school is up to eighteen or nineteen, but 
 many clever boys leave before in order to qualify for some 
 special profession. At eighteen or nineteen, if the boys wish 
 to continue their studies, they go to college. Here again there 
 is a preliminary examination to pass, here again there are 
 exhibitions for the cleverest boys, here again there are periodic 
 examinations, which they must pass or leave the college. At 
 college men generally stay to about the age of twenty-three. 
 The cleverest men are given incomes for life, so that they are 
 under no necessity of earning their livelihood, and can devote 
 all their time to further study. This is the way we select the 
 best men for schools and teachers. For each profession there 
 are examinations and schools for especially educating boys for 
 these professions. Take the medical profession for instance; 
 before a lad is allowed to enter the medical school attached to 
 our hospitals he has to pass an examination in general kuowl- 
 
135 
 
 edge ; he usually enters a medical school at the age of sixteea 
 or seventeen ; here again the very clever boys are given 
 scholarships; after entering the school he devotes himself 
 entirely to medical subjects ; this study is extended over four 
 or five years; here again he is peridiocally examined in 
 medical sabjects, and only if he passes all the examinations is 
 he given a certificate and allowed to practice as a doctor. This 
 protects the public from quackery ; any one practicing without 
 a certificate is liable to punishment. So too with chemists 
 and druggists, lawyers, soldiers, sailors, consular officers, civil 
 servants ; they are all constantly examined. In many cases 
 the examination is competitive ; that is, awards are given to 
 the number of successful candidates who are the highest on the 
 list, according to the number of vacancies. The examinations 
 have different limits of age for different services and different 
 subjects on which men are examined. As a rule the number of 
 subjects is great ; to each subject a certain number of marks is 
 attached ; a candidate can select a certain number of subjects ; 
 if in any subject he fails to obtain a third of the marks allowed 
 he" gets no mark at all, as it is considered better to know a few 
 things well than to have a smattering of many. After a man 
 enters a service, he is given time to study the special duties 
 of his post, and is again examined ; if he fails to pass he has 
 to leave the service. 
 
 This system of examination has obvious advantages. It 
 puts a complete stop, as far as the entry into the services goes, 
 to "nepotism." It is a great incentive to study to all classes. 
 It, however, has defects ; moral qualities and good temper 
 are sometimes more valuable than learning, and though 
 boys of notoriously bad character are excluded from the 
 services, examinations cannot test character and temper, and 
 though boys in very bad health are rejected, not sufficient 
 weight is given to health and vitality. It is also a known fact 
 that boys develop ability at various ages ; our system gives a 
 great advantage to the precocious boys and excludes many 
 boys of superior abilities, but whose talents develop late. 
 It often injures boys by making them too eager to succeed 
 and overwork themselves. We ought, I think, to supplement 
 our examination system by giving more posts to selection. 
 
136 
 
 I do not tliink it woald be wise for China to imitcate our 
 examiaation system, bnt I think it would be wise for her to 
 establish schools to teach special subjects and have qualified 
 examiners in those subjects, who should give the successful 
 candidates certificates of competency of say medical knowledge, 
 law and history, foreign languages, jurisprudence, mineralogy, 
 engineering, etc., and that these certificates should be given 
 weight to when the Chinese officials desire to use the services 
 of men possessing such knowledge. 
 
 To increase the wealth of a country it is desirable that the 
 inhabitants should be given a physical as well as a technical 
 and mental education. The mind is intimately connected with 
 the body, and though we should not neglect the education of 
 the mind, a due attention to physical education has been found 
 conducive to intellectual progress. During the time of the 
 Chow dynasty the Greeks paid more attention to physical educa- 
 tion than any other nation ; they were at that time the people 
 of the highest intellectual attainments. It was when Greece 
 neglected the physical education that she degenerated ; a 
 learned Jew, well acquainted with Greek history, said our bodies 
 are the temples of the Holy Spirit. 
 Physical Japan for many years has been endeavouring to improve 
 
 the mental education of her people ; she has wisely at the same 
 time paid gi'eat attention to their physical education. 
 
 China would increase her wealth if her literary and com- 
 mercial classes would go in more for the physical work and play 
 of the Manchns and artizan Chinese. Archery, riding, skating, 
 swimming, walking, running, leaping, kicking the shuttlecock — 
 all have advantages. Chiua might also adopt some of the 
 Western exercises, such as boxing, fencing, single stick, bowls, 
 billiards, tennis, etc. All these exercises have the advantage of 
 strengthening and beautifying the body, making it healthier, 
 prolonging life, etc. They have also the advantage of giving 
 the young innocent pleasure and preventing their minds dwell- 
 ing on vicious thoughts. Some games, such as base ball, cricket, 
 foot ball, hockey, etc., tend further to promote courage, endur- 
 ance, self-denial and loyalty to one's fellows, which, first arising 
 from social games, develop into habits iaflueacing men's con- 
 duct in the more serious affairs of life. 
 
 education. 
 
137 
 
 A wise Jew, in the time of the Hsia dynasty, said that Education 
 Heaven visits the sins of the forefathers to the third and fourth generations. 
 •generations and rewards thousands in those who keep Heaven's 
 commandments. A wise Englishmaa, some forty years ago, 
 by a profound study of plants and animals, discovered what 
 is called the law of '" evolution." One of the modes of the 
 working of this law is heredity— seeds producing plants and 
 seeds like the parents, animals producing offspring like the 
 parents, human children inheriting the qualities and accom- 
 plishments of their parents. Another mode of evolution is 
 natural selection or survival of the fittest, that is, plants and 
 animals not in harmony with their environments tend to 
 die out. The same law holds good with men ; ignorance and 
 wickedness are unfitness ; they are inherited, and ignorant and 
 wicked families tend to die out. One example of this is given 
 in Maudsley's " Mind and Matter." An evil progenitor had 200 
 odd descendants ; all were criminals, lunatics or invalids, and 
 in the fourth generation died without issue. There is another 
 mode of evolution — artificial selection — under which by using 
 our knowledge we can select what qualities shall be evolved. 
 If we elect wisely, or, in the words of the ancient Jew, keep 
 Heaven's commandments, we improve our posterity. This is 
 a great inducement to educate ourselves so as to transmit 
 to our children the faculty and ability for learning. The good 
 memory of the Chinese is inherited by the race, so is the filial 
 afifection and love of learning. Some wicked families have 
 died out. There is not left a vestige of Hsi Mgn-ching, while 
 the descendants of Confucius are still in the land honored and 
 revered. If we disobey Heaven's commandments we shall have 
 stupid and vicious posterity ; and if the vice and ignorance is 
 very heinous, the race will die out. This truth not only con- 
 tains a terrible warning, it contains also a bright ray of hope. 
 Evil in its very nature is evanescent, bearing in itself the seeds 
 of its annihilation ; good is everlasting, and bears in itself the 
 seed of everlasting improvement and progress, extending its 
 influence indefinitely from the individual to the family, from 
 the family to the nation, and from the nation to humanity. 
 
 The mills of Heaven grind slowly, bat they grind exceed- 
 ing small. 
 
Chapter X. 
 
 2>emant> ant> Supply. 
 
 Demand 
 creates 
 
 jTLT is obvious that if a great many people want the same 
 
 Buppiyl @i thing, and are willing and able to pay a good price for it, 
 
 many people will work to produce that thing, and many 
 
 of that thing will be made and supplied to the market. This 
 
 is the simplest form of " demand creating swppli/." 
 
 We all want more things than we have got ; various peo- 
 ple want various things ; in most cases there are many things 
 we want, but don't buy because we are not rich enough, — we 
 cannot afford them, — but if, from any cause, these things be- 
 come cheaper, we are tempted to buy them and do buy them, or 
 And supply if ^ve have previously bought them, buy them in greater quanti- 
 
 creates 
 
 demand, ties. This is the simplest form of " supply creating demand.^' 
 Suppose that from poverty not so many people are able to 
 afford a thing as previously. The holder of these things will 
 have to sell them cheaper to tempt, or enable, people to buy, 
 and the retail dealers in such things will only give a smaller 
 price for such things to the merchants, and the merchants will 
 only give a smaller price to the manufacturers. If the price 
 the merchants will give to the manufacturers is so small that 
 the manufacturers can make no profits, the manufacturers will 
 cease to produce these things, and the workmen who made 
 them will be thrown out of employ, and will have to seek other 
 means of subsistence; in other words, diminishing demand 
 diminishes supply. The same thing happens when there is a 
 change of '■'fashion." Say one year it is the fashion to dress 
 children in flowered chintzes ; during that year there will be an 
 increased demand for flowered chintzes, and the prices of these 
 
139 
 
 goods win go Up ;■ the holders of large stocks and the manufac- 
 turers will make great profits, till the fashion changes. When 
 the fashion changes the prices will go down, the holders of big 
 stocks of flowered chintzes will lose money, the manufacturers 
 will cease to manufacture flowered chintzes, and the workmen 
 who made them will be thrown out of employ. The same 
 thing happens when there is an unusually wet, cold, dry, or 
 hot season. In an unusually wet summer, for instance, peo- 
 ple will not want to buy so many straw hats. 1 remember the 
 summer of 1878 in Enijland was abnormally wet ; the con- 
 sequence was the sale of straw hats was very small, the price 
 of straw braid went down in Shantung, the makers of straw 
 braid there were afraid to go on manufacturing until the ac- 
 cumulated stocks had been disposed of, and many working 
 people were thrown out of employ and had to seek other modes 
 of livelihood ; a diminished demand diminished the supple/. 
 It is obvious that a large demand for the commodities of a 
 nation increases the wealth of that nation ; and that a dimi- 
 nished demand decreases the wealth of a nation in two ways : It 
 lessens the price of the commodities that have been produced 
 and are in stock, and it throws ,people out of employment to 
 which they were accustomed, so that the wealth-producing 
 capabilities of their labour is lost (while they are idle in seek- 
 ing other employments), and impaired (while they are acquiring 
 the necessary skill in other employments). The price of an Price and 
 article does not entirely depend on its cost of production. It 
 depends also on two other factors — ^the quantity demanded and 
 the quantity in stock to meet the demand. These two factors 
 continually change, and this is one reason of the fluctuations 
 of pvices. But, however much prices fluctuate, they cannot per- 
 manently be below the cost of production, or else the things 
 would cease to be produced. When one says the cost of produc- 
 tion one does not mean what the things have cost to produce, 
 but the cost at which at the present tim,e they can he produced. 
 Tiie cost at which things can be produced is not a constant 
 quantity ; sometimes this cost increases by war, pestilence, or 
 a rise in wages ; more often it decreases by the discovery of 
 labor-saving machinery. When the latter is the case two things 
 occur : First, the manufacturers by the new process make great 
 
 cost- 
 
140 
 
 profits, bnt afterwards the law of competitioa comes in, and 
 the articles are sold at reduced prices ; the articles previously 
 made by the old process, which are in stock, are also only 
 saleable at the reduced prices, and the holders of such stock 
 lose money ; but it is to be noticed the holders of stock are in the 
 minority, and though they lose, they only lose the amount that 
 the consumers of the articles gain — there is no diminution of 
 the aggregate wealth cf the community, there is a redistribu- 
 tion of it. Secondly, the loss of the stock holders is one loss, 
 aud then done with ; in future they buy cheaper ; the gain to 
 the purchaser continues for ever, for, when once an improved 
 way of manufacture has been introduced, it has a tendency to 
 become universal, as the unimproved mode of manufacture can- 
 not compete with the improved mode. The workers must 
 either learn the new mode, or take to other employments ; 
 if they are too stnpid to learn the new mode, they lose their 
 employment or have to accept lower wages. 
 
 We are now able to deduce several principles with regard 
 to the PRICE of things. First, the price may be above or below 
 the worth of a thing. The worth of a thing is the cost of 
 ■ manufacture and of carriage to the consumer, plus a fair 
 profit to the makers and to the wholesale and retail dis- 
 tributors. A fair profit is an adequate return for the work the 
 manufacturers and dealers do. If manufacturers and distri- 
 butors obtain more than this by combination, or by way of 
 monopoly, or otherwise, the price of the thing goes up above 
 its worth. Demanding nnfair profits, like all other forms of 
 unfairness, or of dishonesty, is detrimental to the wealth of 
 nations ; for when unfair profits are asked and obtained, the 
 manufacturers, merchants and retail dealers do not gain all 
 that is lost by the consumer ; the increased price lessens the 
 demand, checks the production of wealth and deprives the 
 workers who make the articles of employment. 
 Fair profits. What are fair profits ? One cannot state a fixed percent- 
 
 age of gain as fair profits. In some things a very small per- 
 centage is fair profits, in others it requires a large percentage 
 of gain to be fair profits. In nations where industry is free, 
 the competition of manufacturers, merchants and retail dealers 
 to attract customers, will generally keep down profits to a fair 
 
141 
 
 scale. Fair, profits on things in universal and constant 
 demand, snch as rice, meat, flour, fish, cotton textiles, etc., will 
 be a very small percentage. There is little risk in producing 
 them ; they are soon sold, and the cost of production is quickly 
 recovered, or in trade language tlie naoney in them is " quickly 
 turned over." As regards retail dealers a small area will 
 contain many customers. 
 
 The profit on medicines on the other hand, in order to be 
 fair, must be a high percentage. It is to the interest of the 
 public that medicines should always be easily procurable at a 
 short notice, that is, there should be a druggist's shop within 
 easy distance from every one's house ; for many medicines there 
 is only an occasional demand ; the manufacturers, and still 
 more the merchants and most of all the retail dealers, have to 
 keep large stocks in hand ; many medicines go bad before they 
 are wanted; the money in them is not quickly turned over, and 
 the amount of customers for them in a given area is small. 
 Hence a fair profit for the manufacturers of medicines, though 
 a higher percentage than the profit of producers of corn and of 
 things in universal and constant demand, is lower than the 
 percentage of profit due to the merchant of medicines, and this 
 again is lower than the percentage of profit fairly due to the 
 druggist. In medicines, as in other commodities, if more than 
 a fair profit is asked and obtained, injury is done to the 
 community by checking the demand, and consequently lessen- 
 ing the supply of them and lessening the employment of 
 making them. 
 
 The percentage of profit can fairly be high on things not Fashion and 
 universally demanded, such as elaborate machinery and Inxuriea. "'""^'^ • 
 These two commodities have this in common, that the manu- 
 facturers, merchants and dealers sell few of them, and therefore 
 have a fair right to ask a higher percentage of profit than on 
 articles of which many are sold. Luxuries again have this in 
 common with " fashionable " things, that they are produced for 
 the rich and not for the poor ; a high percentage of profit on 
 luxuries and fashionable things is fair for two reasons : first, few 
 of them are sold ; secondly, it is equitable that rich people 
 should pay higher profits than poor ; but, even in luxuries and 
 fashionable things, demanding and obtaining more than fair 
 
142 
 
 profits is detrimental to wealth by diminishing the demand, 
 and consequently the sapply of them and the employment of 
 the workmen who make them. 
 
 Oertain moralists have denonnced fashionable things and 
 luxuries ; they have confounded use and abuse. The inordinate 
 desire of people to be fashionable and to obtain fashionable 
 things.irrespectiveofpriceandcost, and the inordinate greediness 
 for luxuries, irrespective of price and cost, are as destructive of 
 the wealth of nations as they are destructive of morality and of 
 manliness. Some rulers and legislators, only paying attention 
 to this half of the trnth, have passed sumptuary laws prohi- 
 biting the changes of fashion and the purchase of luxuries ; 
 such laws have not only been detrimental to wealth by depriv- 
 ing the makers of employment and by checking production; 
 they have also proved detrimental to morality by making 
 people think that there is no great harm in breaking the law. 
 The due desire to be fashionable is a desire implanted in 
 the mind of man by Heaven for the good of the human race; 
 it makes people industrious to accumulate sufficient wealth to 
 have fashionable things ; it stimulates the intelligence of 
 workers and manufacturers to produce fashionable things ; it 
 benefits the poor who are able to obtain serviceable unfashion- 
 able articles at a cheap price. A princely person, who is 
 wealthy, will encourage fashions and changes of fashions, 
 which give employment to the poor. When the embroidery 
 makers of Coventry were in poverty,' the Prince of Wales 
 endeavored to make the wearing of embroidery fashionable by 
 wearing a waistcoat of it. Other people followed the Prince's 
 example, and the people of Coventry got more employment and 
 were better able to provide for their families. Her Majesty 
 and our Royal Princesses constantly set the fashion in certain 
 things, in order that the makers of them may obtain a com- 
 fortable livelihood. In this, as in other matters, Her Majesty 
 has 'set a good example to her subjects; the rich are right 
 iu spending a due proportion of their wealth in fashionable 
 things so as to encourage industry. 
 
 The same rule holds good with regard to luxuries. What 
 is a luxury? It is a thing better than what is considered 
 necessary ; as people advance in intelligence and skill, many 
 
143 
 
 things which were considered luxuries have become necessaries; standard 
 in other words, the standard of living is raised. Wooden °^ "'''''^" 
 floors, years ago, were considered luxuries in England as 
 they are now in China ; in England they are now considered 
 necessaries. Tea and sugar were once considered luxuries in 
 England as they are now in some countries ; in England they 
 are now considered necessaries. Rice in some parts of China 
 is considered a necessary, in others a luxury. The standard of 
 living varies in different epochs and in different places. A 
 demand for luxuries, like the demand for fashionable things, 
 makes people industrious in order to obtain the money to buy 
 luxuries ; it gives employment to the makers of those luxuries- 
 There is a distinction between fashionable articles and 
 luxuries ; a fashionable article may be useless and ugly ; a 
 luxury is generally a thing of beauty to one of the senses, and 
 has intrinsic merits. The demand for fashionable articles only 
 creates a supply of new things, the demand for luxuries 
 creates a supply of the be^t things. It would be an ideal 
 state of affairs if every human being in the world had plenty 
 of the best things that the world can now, or hereafter will be 
 able to, produce. It is only by the demand of the rich for the 
 best things in the world that the supply of the good things, 
 now enjoyed even by the poor, was created. The demand for 
 luxuries raises the standard of living. Take four specific 
 luxuries — race horses, jewelry, costly wines and expensive 
 cigars. I purposely take extreme cases. For a single race 
 horse as much as £10,000 is sometimes given. At first it 
 might appear that the spending of such a sum on a luxury 
 was, while there are so many poor among us, wicked— as well 
 as a waste of wealth ; but when we examine the matter deeper 
 we find that the high price given for race horses creates a 
 supply of fine horses, to produce which a great deal of study 
 and care is devoted ; the whole breed of horses has improved — 
 carriage and omnibus and riding horses by a strain of blood, 
 and cart and dray horses by the improved knowledge of horse 
 breeding. ' The improvement of the breed of all kinds of 
 British horses causes a demand for them abroad, and hence a 
 trade has sprung up in breeding horses for export, so that the 
 high prices given for race horses really benefits the poor more 
 
144 
 
 thau if the money were given in charity. So princely naen 
 (chnn-tze) in England, like the Prince of Wales, the Duke of 
 Devonshire, and Lord Rosebery, buy and breed and race horses, 
 both for the sport and to improve the breed of horses and 
 increase the wealth of their nation. In other words, they nse 
 a dae proportion of their wealth in creating a demand for, and 
 therefore a supply of, luxuries. 
 
 So, too, the high price given for jewelry encourages the 
 production of jewelry both of the best and inferior qualities. 
 The high prices given for the best jewelry causes people to 
 study the laws of geology, and other kindred subjects, so as to 
 enable them to find the jewels ; it demands and obtains the 
 supply of high skill in cutting and setting jewels, it gives em- 
 ployment to the lapidary and other workmen. In ancient 
 days, and even now in many countries, jewels afford a safe 
 investment, and encourage habits of thrift and self-denial. The 
 jewelry of peasant women, the gifts of relatives or the result 
 of savings of their own, often forms the marriage portion of 
 the bride and the fuod from whence is derived the rearing 
 and education of the infant offspring. 
 
 So, too, with wines, cigars, etc.;. it seems at first monstrous 
 that a man should pay £5 for a bottle of wine or half a crown 
 for a cigar. On examining deeper into the matter, it is found 
 that the high prices paid for the best wines and tobacco is a 
 case of demand creating supply. The whole cultivation of the 
 vine and the tobacco plant is improved, the study of agriculture 
 is carried to a greater extent than would otherwise be the case 
 the qualities of the commoner sorts of wine and tobacco 
 are improved and the cost of their production is decreased. 
 The French peasant can get a bottle of better claret for a few 
 sons than he could if it were not for the demand for the best 
 claret for doable the money. Here again the demand for 
 luxuries gives greater employment, greater knowledge, greater 
 skill, lessens the cost of production, cheapens articles consumed 
 by the poor, and raises the standard of living. 
 How to foster Demand being so great a factor in increasing the wealth 
 and supply, of nations, what actions should be taken to foster demand ? and 
 what actions should be avoided as tending to check demand ? 
 Everything that tends to increase wealth tends to increase 
 
143 
 
 demand, as the more a man or nation has, the more he, or it, 
 is able to spend. Freedom of industry, the facilitation of the 
 exchange of commodities, saving of labour, a good monetary 
 system, mutual trust, wise commercial laws, houesty, — all tend 
 to increase wealth and to foster the demand for commodities, 
 which is in itself a means of increasing wealth ; in this, as in 
 other things, the axiom holds good " to him who hath is given 
 more abundantly." Education, mutual help, etc., also increase 
 demand by raising the standard of living. With regard to a 
 good monetary system, at the present moment, 1897, the north 
 of China is suffering from a scarcity of copper cash ; the 
 Chinese government is now wisely making great efforts to coin 
 good copper cash, in large quantities, as quickly as possible. 
 
 Another thing that increases demand is studying the 
 tastes and wants of consumers. A shop keeper tries to find 
 out what his customers want and to supply such articles. It 
 does not make any difference whether the customers are coun- 
 trymen or foreigners. The Chinese sell their silk, tea, crockery 
 and other articles for foreign consumption, and China would 
 grow richer if she studied the tastes and wants of foreigners 
 in her teas, silk, crockery, etc., more than she does. Japan does 
 study these wants and tastes, and that is one reason why she 
 is able to compete with China, though Japanese tea and silk 
 are, in some respects, inferior to Chinese. There are many 
 actions which, as they decrease demand, should be avoided, 
 such as making articles of inferior quality, adulterating goods, 
 etc. One of the most fatal ways of decreasing demand is the 
 establishment of monopolies ; these work detrimentally to the 
 wealth of nations by unduly increasing profits aud by taking 
 away from the manufacturers the inducement to improve the 
 product and lessen the cost of production. 
 
 Let us now consider how far supply creates demand. 
 Some examples are obvious ; it is evident there could have been 
 no demand for steam locomotion until steamers and railways 
 were invented. The moment the invention was made the 
 supply of quicker locomotion created a demand for it. When 
 steamers first ran from Hongkong to Canton and from 
 Shanghai to Hankow there were only a few tens of passengers a 
 month ; there are now several thousands a day. The cheapen- 
 
146 
 
 ing of things iaoreases their supply, because by cheapness more 
 
 things can be snppliable to people who have only a little money. 
 
 It is often said that cheapness is a bad thing, being the result 
 
 Cheapness 0^ what is Called over 'production, and therefore it will be 
 
 and over necessarv to enquire first, is cheapness ever an evil?' If so 
 production. ■' ^ • . . 
 
 when is it an evil ? and when is it good ? Can there be such a 
 
 thing as over production? and if so what evils does it eifect? 
 
 As regards cheapness. Where cheapness is the effect of a 
 
 decreased purchasing power of consumers it is an unmitigated 
 
 evil, and tends to stop production ; where cheapness is the effect 
 
 of over manufacture and over competition, it rights itself, as by a 
 
 survival of the fittest; only the cleverer manufacturers can still 
 
 continue to work at making these things; the stupider have to 
 
 give up manufacturing them, and to take to other professions 
 
 for which they are more qualified. This brings into success the 
 
 most skillfal manufacturers and increases skill and cleverness. 
 
 The evil wrought to the stupid is more than compensated by 
 
 the gain of the community in obtaining the advantage of 
 
 greater ability on the part of the manufacturers. 
 
 Where cheapness is due to a change of fashions, it only 
 inflicts a limited evil on people who have not been prudent. As 
 stated before, dealers in articles, the demand for which is liable 
 to be decreased by change of fashion, should insure themselves 
 .against loss by a change of fashion by asking a high rate of 
 profit while the fashion continues. 
 
 When cheapness is the efi'ect of a lessened cost of produc- 
 tion, it is a.good thing on the whole, though it may inflict loss 
 both on the holders of stocks, previously made at a greater 
 cost of production, and still greater loss on the manufacturers 
 who are not clever enough to at once adopt the new improved 
 way of manufacture. 
 
 Can there be over production ? What are the causes of it ? 
 What are the evils it entails ? and what are the remedies ? In 
 one sense over production is constant and inevitable. The 
 manufacturer has to make things for future demand, and the 
 future no one can exactly foresee. He has to calculate what 
 the demand will be at the time his manufactures reach the 
 market, and to do this he has to study the amount of the 
 articles in stock, that is, made and not yet being consumed, 
 
147 
 
 and many other things. An unexpected war, a bad harvest, 
 etc., may upset all his calculations ; his customers may not be 
 able to buy so much of his goods, and this is what is often call- 
 ed a depression of trade by over production ; it would be more 
 correct to call it a diminished demand caused by distress. 
 Until the manufacturer sees a prospect of the accumulated 
 stocks being sold off, he has to reduce his output, and his 
 workmen do not work fall time. The mutations of seasons 
 should be considered by the manufacturer, and the only remedy 
 seems to be carefulness not to do a larger business than the capi- 
 tal at his disposal renders prudent, that is to say, to be able to 
 bear losses during the time of depression. 
 
 Sometimes there is said to be over production, when there 
 is an increase in the output, due to more people engaging in 
 the tradcj and competition lowering articles, prices and lefssen- 
 ing profits. In such cases there is not necessarily really an 
 over production ; what really happens is a distribution of 
 wealth ; more people obtain a living, fewer people gain 
 fortunes. The people, whose gains are lessened by this state 
 of things, speak of it as over production and ruinous competi- 
 tion, but though bad for them, it is good for the community. 
 
 Supply always creates demand, but it is not always 
 certain that it will create demand in the precise article supplied. 
 Supposing a case — I have never known such a case in reality — 
 of everybody having already as much as they want of a com- 
 modity, say wheat or sugar. What would be the effect of a 
 fall in the price of wheat due to decreased cost of production ? 
 or a fall in the price of sugar due to, say, governments giving 
 a bounty for its production ? The people who have already 
 ■purchased as much wheat and sugar as they want, will not 
 buy any more wheat or sugar, but will spend the money they 
 gain by the cheapness of wheat and sugar in other articles ; in 
 other words, the demand for other articles will be increased. 
 What will be done with the surplus wheat and sugar ? New 
 markets will have to be found for it, or it will be wasted. 
 Wheat, when there has been a plentiful harvest, is often wasted 
 in China, because there are no facilities for sending it to 
 places where it is wanted, and because, by a foolish law, its 
 exportation to foreign countries is prohibited. 
 
H8 
 
 In England, wealth is so evenly diffused that almost 
 everybody has as much wheat to eat as he wants ; the 
 cheapening of the price of wheat may not create an increased 
 demand for wheat in England. If the cheapening was very 
 much it wonld, as people would use it for fattening cattle, but 
 in Ireland and Scotland and other countries, where people are 
 poorer, when wheat grows cheaper, people buy more of it and 
 use wheat as food instead of potatoes, oats, rye, etc.; not 
 only has this occurred by the cheapening of wheat, but new 
 markets have also been found for it, or what is made of it ; 
 thus American flour has lately become a large import into 
 China, or in other words, the supply of wheat in America has 
 created a demand for wheat in China. 
 
 The cheapening of sugar to the English consumer, by 
 the bounties given on the export of sugar in Germany, France 
 and America, has caused many English families to eat more 
 sugar, and it has been found that the eating of more sugar has 
 greatly benefitted the health of the consumers and has 
 increased their size and physical strength ; here we have a 
 surprizing instance of the benefit of cheapness ; besides the 
 benefit conferred on the consumers there has been an increase 
 of knowledge ; the discovery has been made what a useful and 
 health-giving article of food sugar is. It has also been dis- 
 covered that the mixture of a certain proportion of sugar with 
 lime, makes a durable cement, which resists the corrosive action 
 of the air and of sea water. The cheapness of the price of 
 sugar has caused it to be more and more used in making this 
 good cement. 
 
 We have said that the remedy for what is called over 
 production lies in the discovery of new markets. To discover 
 and utilize new markets three things are necessary : First, to 
 travel ; second, to learn all we can about the conditions of 
 foreign countries which may become purchasers of our pro- 
 ducts ; thirdly, to induce our governments to enter into com- 
 mercial treaties with the governments of such countries to the 
 mutual advantage of the people of all the countries concerned, 
 creating and facilitating the demand in the various countries, 
 for the products supplied by the various countries. Of the 
 benefits of travelling 1 have spoken when referring to the 
 
149 
 
 freedom of indastry. The benefits of stndyiag geography and 
 
 the conditions of foreign countries, is aii instance of the 
 
 material advantages of education ; the benefits of commercial 
 
 treaties is an instance of the principle of co-operation applied to 
 
 nations. 
 
 I pointed out that a wet June in England impoverished Interest of 
 ,.,,._, ,. , nations in the 
 
 the straw braid makers in Shantung, by decreasing the demand prosperity of 
 
 for straw braid ; equally the famine in the north of China in °' ^^ °* '°"'' 
 1877 threw multitudes of spinners in England out of employ 
 and impoverished them by decreasing the demand for cotton 
 textiles in China. In old days it used to be thought that one 
 nation gained by the misfortunes of another and people tried 
 to injure foreigners as enemies. The study of political economy 
 has taught us that supply of wealth creates demand for com- 
 modities, and the richer and more prosperous other nations are 
 the greatfir will be their demand for our commodities and the 
 better it is for us ; therefore it is wise to treat foreigners as 
 friends, and instead of trying to injure them, we gain in wealth 
 by doing them all the good in our power. From the study of 
 the law of demand and supply we are led to two important 
 truths : first, we are all members of the same body. As in our 
 natural body a wound inflicted on one member makes the 
 whole body sick, so in the body of society, in the body of the 
 nation, in the body of the world, any injury inflicted on one 
 member, injures the whole body. In a village, if one family 
 becomes poor, demand is decreased to the detriment of a whole 
 village ; in a nation, if one class is impoverished, the whole 
 nation suffers from a diminished demand ; in the world, if 
 one nation is impoverished, the whole world suffers from 
 a diminished demand — so true is the Chinese proverb : 
 "He who injures another, injures himself." The converse 
 is also true : he who benefits another, benefits himself. 
 Secondly, wealth as well as honor is the gift of wisdom, 
 but wisdom has to be obtained at a price greater and better 
 than jewels and gold; it has to be obtained by thought 
 and study. 
 
 A wise man, who lived in the time of the Chow dynasty, 
 gave a picture of what he considered an ideally wise woman ; 
 he represents her as richly and fashionably dressed, besides 
 
150 
 
 being endued with high moral attributes, governing her house- 
 hold, setting them to work in making fine needle work ; in 
 other words, she encouraged the production of wealth by 
 demanding commodities, by spending a due proportion of her 
 subsistence on luxuries, by educating her people, and by en- 
 couraging and organizing skilled industry. 
 
Chapter XL 
 
 producers an& Consumers of Mealtb. 
 
 tHIS chapter will be an exposition of the saying of Men cins Producers of 
 "To increase wealth the producers must be 'many, the ^P^'.'hin 
 ■" J ' " primitive 
 
 consumers few." societies. ■ 
 
 la civilized societies men can be divided into four classes : 
 1. Producers; 2. Distributors; 3. Protectors; 4. Consumers 
 of Wealth. 
 
 In savage tribes, when men live by the chase alone, 
 there are few prodncers of wealth; all are consumers; the 
 producers of wealth, among such tribes, are those who make 
 weapons to kill, or traps to snare wild beasts; the wild beasts 
 themselves, though wealth, are not produced by human labour. 
 
 In pastoral tribes the producers of wealth are the persons 
 who feed and breed domestic animals, the people who make 
 goads to drive them, whips and lassoos to subdue them, nets to 
 catch fish, ponds to keep fish in, etc.. Wealth in these tribes 
 consists of domestic animals as well as wild beasts, and, if people 
 know how to breed birds and fishes, in birds and fishes also, 
 and all the implements required for their rearing. 
 
 In agricultural communities land is added to man's wealth, 
 and all the cultivated products of land are wealth, and the value 
 of the land itself, that is, its wealth was added to by labour. In 
 these societies the tillers of land are the producers of wealth, as 
 are the makers of agricultural implements, ploughs, rakes, hoes, 
 etc., the builders of houses, carpenters, blacksmiths, miners, etc. 
 As learning advances people weave cotton, silk, hemp, etc., into 
 fibre ; spinners, weavers, manufacturers are producers of wealth. 
 The people who improve machinery, or modes of agriculture, 
 
152 
 
 are producers of wealth. As study advances, more people who 
 study plants and know how to use them to heal sickness, or to 
 assuage pain, are producers of wealth. So are the students who 
 read history and teach people to be wise, and aid the kings to 
 make good laws and govern well. The direct producers of 
 wealth are makers of hunting implements, cattle keepers, 
 agriculturists, artizans, miners, architects, factory hands, 
 machine makers, chemists, physicians, legislators, inventors, 
 teachers, jurists, etc. If we take wealth in a large sense as 
 anything that increases the happiness and innocent enjoyment 
 of mankind, we have also the producers of luxuries, such as 
 painters, singers, actors, musicians, etc., as producers of wealth. 
 Distributors As modern life becomes more complicated, it is found to add 
 
 of wealth iu , , , /. • t • n i i i • • 
 
 modern so- to the wealth 01 nations to divide labour, and, instead of the 
 cieties. producers of wealth themselves distributing and protecting it, 
 for a certain proportion of the people to confine their attention 
 to these labours instead of to producing wealth. Among the 
 distributors of wealth was first the hawker, then the shop- 
 keeper, then the merchant, then the capitalist and promoter 
 of companies. Among the distributors of wealth are the 
 porters, carmen, railway servants, boatmen, sailors, etc. So 
 intimately connected are the production and distribution of 
 wealth that persons who make the machinery by which wealth 
 is distributed, are rightly considered producers of wealth. 
 Thus the makers of carrying poles, baskets, rope, boats, ships, 
 locomotives, roads, canals, etc., are all producers of wealth. 
 
 ^'°wea!hh °* Soldiers, policemen, lawyers, judges, mandarins, kings 
 
 and governors of the people are the protectors of wealth. 
 The connection between the protection and the production of 
 wealth is not as close as the connection between production 
 and distribution. The work employed in making protective 
 machinery, though inevitable, is not productive of wealth ; 
 such is the manufacture of arms, fortresses, ships of war, guns, 
 rifles, etc. 
 
 Consumers of Lastly there comes the class of persons who only consume 
 
 wealth, who neither produce, distribute nor protect it. These 
 persons may be divided into three heads: 1. The vicious and 
 wicked, such as thieves, robbers, pirates ; 2. The vicious and idle, 
 such as the rich men who live on their money and neither work 
 
153 
 
 nor study, but only think of enjoying themselves. 3. The 
 virtuous and idle who retire from the world and do no work, 
 such as the ascetics, of whom examples may be found in the 
 anchorites of the West, and some of the Buddhist priests in 
 China. 
 
 Infant children are sometimes called consumers and non- 
 producers. They are not really so ; they are the future producers 
 of wealth, and what they consume during infancy will be repaid 
 to the world in the productive labour of their maturity. 
 
 As Mencius says, anything that tends to decrease the 
 number of unproductive consumers, and to increase the number 
 of producers and distributors, increases the wealth of nations. 
 If thieves and robbers diminish, a corresponding number of 
 persons, now employed as watchmen, police and soldiers in the 
 unproductive labour of protecting wealth, would be set free to 
 join the number of producers. 
 
 Another thing is. obvious ; there should be a due proportion 
 among ^he various producers of wealth for the needs of the 
 nation. If all are students, who will tend the cattle, plough 
 the fields, or make machines ? The needs of nations are con- 
 stantly changing ; what should be done so as always to have a 
 due proportion of the producers of the various kinds of wealth 
 requisite for the prosperity of the nation ? How can one ensure 
 that there shall be sufficient distributors ^d not too many ? 
 How can one ensure that there shall be sufficient protectors 
 and not too many ? If a nation has too few police, she will suffer 
 from thieves and robbers ; if she has too few soldiers, she will 
 suffer from the aggression of foreign nations ; if she has too 
 many police, or judges, or too many soldiers, she is incurring an 
 unnecessary waste, both in the cost of maintaining the police, 
 judges and soldiers, and also in unnecessarily preventing them 
 from being producers of wealth. 
 
 How can one ensure that men shall engage in the occupa- 
 tion for which they have most capacity ? That those who have 
 the best capacity for agriculture shall till the ground ; that those 
 who are most skilled in mechanical employments shall be 
 artizans ; that those with the best capacity for learning chemis- 
 try shall be druggists ; for the healing art, doctors ; for law, 
 legislators ; for instruction, teachers ; for the art of war, military 
 
 Should be 
 due propor- 
 tion among 
 producers, 
 etc. 
 
154 
 
 officers ; for commerce, traders ; for governing according to the 
 moral sentiments of the community, magistrates, etc., etc. 
 
 Lastly, how can one ensure that the men in the various 
 occupations shall exercise their capacity to the full, shall work 
 as hard as they can, and shall produce as much wealth as 
 possible with as little waste of labour as possible ? A few ca- 
 pable and industrious agriculturists will produce more from a 
 given area and be able to work a larger area than many in- 
 capable and lazy ones ; an army of a few capable hard-working 
 men is more efficient than a larger army of incapable and lazy 
 men. Not only are wages saved by having few instead of many 
 do the work, but, still more important, labour is saved, and there 
 are more men spared from agriculture and fighting to do other 
 work, such as make machinery, study, etc. 
 
 There is an axiom of political economy : " The object of 
 all productive labour is unproductive consumption." There 
 never can be too much wealth in the world ; everybody desires 
 to have as much as he can, and the result of producing more 
 wealth is that more people have good food, good clothing, good 
 houses, good furniture, good ornaments, good education, good 
 music, good pictures, etc. Supposing every man by his work 
 was able to produce twice as much as he now produces, people 
 would still work as hard as they do now, but they would have 
 twice as much wealth to enjoy, or consume, as they have now. 
 It is conceivable that too much of a single commodity might be 
 produced, it is inconceivable that there should be too much of 
 all commodities. What is done by the easier production of 
 wealth is that the standard of living is raised, or, in other 
 words, the comfort of the people is increased. 
 
 f he first rule for obtaining a due proportion of workers in 
 various occupations, and also for obtaining the most capable 
 men to work at these occupations, and to work their hardest 
 in these occupations, is the principle laid down by Mencins of 
 "rewarding people for the work done and not for the inten- 
 tion." This paying for results, combined with the law of 
 supply and demand, to a great extent fixes the wages of 
 different occupations ; for it is evident that when payment is 
 given for " work done," and not for intention, skilled labour 
 will obtain higher wages than unskilled labour, and there will 
 
155 
 
 be a greater demand for skilled labour than for nnskilled labour, 
 
 for the more skilled than for the less skilled labour. This is 
 
 precisely what has happened in England and some other 
 
 countries in the West; the labour of artizans of the towns is 
 
 more skilled than the labour of the agriculturist in the country, 
 
 and .consequently the town artizan has been higher paid than 
 
 the agricultural labourer, and the agricultural labourers have 
 
 flocked to the towns to obtain these higher wages. This, 
 
 though it has increased the wealth of the nations, has had 
 
 certain bad effects. 1. It has been one of the causes that in Case of too 
 T-i I J ii i /■ • 1 ^^^ agricul- 
 
 liiDglana there are too tew agriculturists as compared with turists. 
 
 mechanics. 2. The towns have been overcrowded and the 
 country depopulated. 3. Life in the country being more 
 healthy than life in the towns, and agricultural work than 
 artizan work or work in factories, the health of the people has 
 been somewhat impaired. 
 
 The remedy for the evil is, not compelling people to 
 live in the country and engage in agriculture, — as was done 
 at one time, and still is done in certain nations, — nor yet by. 
 raising the wages of agricultural labourers above " the reward 
 for the work done," but trying to make life in towns as healthy, 
 as life in the country. This has been done in various ways by 
 the establishment of open parks and recreation grounds, by 
 insisting on the artizans having healthy and spacious dwell- 
 ings, by insisting that the factories where he works shall be 
 wholesome, spacious and well ventilated, that men shall not be 
 packed too closely iu these factories, that very small children 
 shall not be employed at all in them, and that young people 
 and women shall not be allowed to overwork themselves, or to 
 labour above a certain number of hours a day, by inaugurat- 
 ing open air sports for the artizans and their families, by pro- 
 claiming certain days as holidays and providing cheap trains 
 to take the artizans trips into the country, by inducing the 
 artizans of the towns to take to agriculture as a recreation. 
 This has been done by buying up land in the outskirts of towns 
 and letting it out to artizans as gardens ; there are now in Eng- 
 land some 700,000 of these gardens. Lastly, an effort might 
 be made to enable the agricultural labourer to become the 
 owner of the land he tills. This is being done in parts of the 
 
156 
 
 British empire, such as Ireland and in some of the British 
 colonies, such as Canada, Some persons at home are thinking 
 of the practicability of giving our agricultural labourers an 
 inducement to stay in the country by persuading our large 
 land owners to split up the big farms of thousands of mow 
 into small agricultural holdings of ten to twenty mow each 
 and letting them to the labourers. If this could be done, and 
 the small tenants could be encouraged to become owners by 
 allowing them to purchase their tenements by payments stretch- 
 ing over a long series of years, and by lending them money 
 at a low rate of interest to stock their tenements, not only 
 would the number of agricultural labourers be raised to a due 
 proportion to other labourers, but- a quantity of land now out 
 of cultivation would be tilled and the produce would increase 
 the wealth of the country. 
 
 Case of too In China, fortunately, the admirable customs and laws 
 
 many agrjcul- . . 
 
 tiirists. relative to land have caused almost every Chinaman to have 
 
 an interest in agriculture ; and the proportion of agriculturists 
 ■ is not only amply sufficient for the requirements of the country, 
 but is in excess of their requirements. Its sufficiency adds to 
 the wealth of the country, not only in producing a healthy, hardy 
 and industrious race, but also in ensuring that all, or almost 
 all, the land in China that is cultivatable is cultivated ; every 
 foreigner who travels in China is struck with the way the sides 
 of hills and mountains are made to yield produce by being 
 dug into terraces, and with the industry of the people in 
 cultivating every level spot in the mountains, where there is 
 either a natural silt of soil, or where soil can be carried. Of 
 all places I have been to, the terrace cultivation is carried to 
 the greatest perfection in Chekiang and Shantung ; the utiliz- 
 ing small level plots in the mountains in Hupei, where the 
 agriculturist often cultivates small patches of ground of only 
 a few feet, in places so inaccessible that his only means of 
 reaching them is by a long ladder. Inasmuch as there is an 
 excess in the number of agriculturists, China suffers. Many 
 of the Chinese peasants are living on the verge of starvation ; 
 the material needs of existence absorb all their intellect ; they 
 are unable to improve their mode of cnltivating, and still more 
 anable to obtain a good education ; they are unable to save, 
 
157 
 
 or even provide snfficieut nourishment for their children, 
 the mortality among whom is very great ; in times of flood or 
 drought there is an appalling amount of starvation ; the land is 
 divided among so many that no' man does enough work, and 
 during a large portion of the year, when there is nothing to be 
 done on the fields, the peasants are forced to be idle. 
 
 The remedy for this state of affairs does not lie in dis- 
 couraging agriculture ; on the contrary, China is quite right to 
 encourage and honor agriculture as she does. The remedy 
 lies in her encouraging other occupations in the same spirit 
 as she encourages agriculture, — weaving and dyeing by 
 following Mencius' rale and not taxing the cloth as it moves 
 from village to village or province to province ; fishing, by 
 taking such measures that the fishermen shall obtain salt at 
 the cheapest possible rate to preserve the fish with; silk 
 production, by educating the people to rear silkworms and by 
 following Mencius' advice and planting mulberry trees ; manu- 
 factures and mining, by good laws and the free importation of 
 machinery; facilitating the interchange of commodities by 
 good roads, canals, railways, etc., not checking exchange by a 
 bad system of taxation : and by inaugurating a wise emigration 
 system, whereby, when the agricultural population is too dense 
 in one place, some of it may be transferred to places where 
 the agricultural population is too sparse. 
 
 So far from agriculture being overencouraged in China, 
 it could with advantage be still more encouraged by the 
 establishment of agricultural schools, and if the authorities 
 and gentry would learn how to improve the cultivation of 
 various crops, and, after having learnt, would teach the 
 people by example and precept ; if some of them would start 
 model farms, in which the best modes of agriculture and the 
 best manures were used, so that the people might see and 
 follow the example. 
 
 Some of the steps I have above advocated have been taken, 
 and are being taken, by Chinese statesmen. Li Hung-chang, 
 Chang Chi-tung, Sh^n Ping-cheng have made noble efforts to 
 encourage the manufactures of China, the building of railways, 
 steam-boat navigation, etc. Other statesmen are now opening 
 mines ; after the famine in Shantung, noble efforts were made 
 
158 
 
 to aid the sarplas population of Shantung to emigrate to the 
 sparsely populated lands of Manchuria. Authorities were 
 appointed to parcel out vacant lands among the immigrants ; 
 not only was all land tax remitted for a time, bnt 'the im- 
 migrants were provided gratuitously with seed and agricultural 
 implements ; in a short time prosperous and populous towns 
 like Tung-k'on and Sha-ho sprang up along the Yaloo, 
 Sungaree, Amur, and Wulau rivers, where before there had 
 only been a wilderness. The emigration system might be 
 carried further. The surplus population of Kwang-tung and 
 Fokien might be transplanted to vacant places in Tunnan, 
 Kwang-si, Kweichow, etc. 
 
 With regard to the encouragement of manufactures and 
 railways, Chang Chi-tung is desirous that as far as possible 
 the rails for Chinese railways should be made in China from 
 native iron rather than bought from abroad. In this' view 
 I humbly concur. It is true rails made in China will cost 
 more than rails made abroad, but the difference in price will, 
 in China's present condition, be a wise investment in encourag- 
 ing Chinese industries and in increasing the skill and 
 knowledge of Clhinese artizans. In the long run foreigners 
 will gain equally with Chinese ; the loss of the profits of the 
 foreign railmakers will be more than compensated by the 
 increased wealth and purchasing power China will attain by 
 such encouragement of her industries and by the increased 
 skill of her artizans. Having greater purchasing power China 
 will buy more foreign commodities. 
 
 In no land in the world is there an exactly due proportion 
 among the producers, distributors and protectors of wealth. 
 In all couatries there are too many mere consumers of wealth. 
 It should be the object of all nations to try and have as due a 
 proportion of producers and distributors as possible by encour- 
 aging every variety of production and distribution ; to diminish 
 as far as possible the numbers of the protectors of wealth by 
 stamping out crime and by employing the most capable men 
 and making them do as much work as they can and to do 
 away with the classes of people who only consume. 
 
 Each country has its excesses and deficiencies; China 
 has too many civil mandarins and expectant mandarins and 
 
159 
 
 .too few competent naval and military officers, doctors, Excess of 
 engineers, jurists, chemists, mathematicians, astronomers, andwanTof 
 scientific men, and historians, etc. The reason of this is that officlrsYu 
 great respect is given to the learning Chinese literature, and China. 
 the literati look on the civil service as the only sphere for 
 obtaining wealth and honour ; it is right that " those who govern 
 people should be nourished by the people ; " it is right to 
 honour learning ; it is right to select the rulers of the people 
 from learned men. But persons should be rewarded for 
 " work done " and not for intentions ; the excess in the num- 
 bers of civil mandarins in China checks China's wealth by 
 keeping a large number bf learned men, whose labour should 
 be producing wealth, in idleness. The remedy does not lie in 
 discouraging men entering the civil service (on the contrary, it 
 would be well if China still more encouraged her civil service 
 by greater honours and emoluments), but by encouraging other 
 professions and inducing scholars to enter them, such as the 
 military and naval services, the medical, engineering, legal 
 and scientific professions, and commercial occupations, by 
 honouring and rewarding " work done " in those avocations. 
 This can be effected by bestowing rank or literary degrees 
 on men obtaining proficiency in these avocations and 
 entrusting power to them. 
 
 Again, there is in China an excess of T'ingchais and Ya- Excess of 
 mfin runners ; these men do not come from the learned class, ungs. 
 and have little honour paid them, but are induced to join the 
 service, because they lead lazy lives and get large emoluments 
 and enjoy considerable power. It is very desirable to decrease 
 the number of these men by prohibiting officials having above 
 a certain number of attendants ; the powers too of these Yamen 
 runners should be considerably curtailed and their work con- 
 siderably increased ; on the other hand, their wages should be 
 increased to place them above the temptation of " squeezing," 
 which should be rigorously punished ; other occupations should 
 be found for those discarded — in manufactories, mines, police 
 force, post offices, and other institutions which China, it is 
 hoped, will shortly organize. 
 
 The number of police, land and sea forces necessary for a 
 nation depends on several factors ; the wealth and ability of the 
 
160 
 
 Number of. nation to snpport them, the qnantity and natnre of the wealth . 
 ""formXary^to be protected, whether the nation has a long sea border, 
 purposes, -whether she has an extensive land frontier, whether her 
 neighbours are peaceful and just, or warlike and aggressive. 
 England, which is an island, does not require alarge army, 
 though she is rich euongh to support one she does not do so, 
 as it is considered by British statesmen that a small army is 
 sufficient for her needs ; on the other hand, as she has a great 
 many colonies and numerous merchant vessels to protect, as half 
 the food consumed in England comes over the sea from abroad 
 a large navy is for England a matter of prime necessity. The 
 number of men employed in the British navy is only 100,000. 
 This, considering the adult male British subjects are nearly 
 100 million, and the enormous wealth and interests the navy 
 protects, is an economical number to be employed as protectors 
 of wealth. The U. S., which is bordered on the north by 
 British possessions, requires and maintains bat a very small 
 army. She has, considering the extent of her sea coast and 
 her wealth, a very small navy. She has not many merchant 
 vessels to protect, and her whole food supply is grown at 
 home ; at the same time her coast is open to depredation by an 
 aggressive nation with a powerful fleet, and it is quite possible 
 that, in the near fnture, the U. S. will be moved by this 
 consideration to strengthen her navj-. 
 
 Taking the army in China, and including in it the Man- 
 chu bannermen, regular soldiers and militiamen, the numbers 
 are fully adequate to China's requirements for police, land and 
 water forces, but they are not efficient. The men are not 
 sufficiently well drilled, equipped or organized, and the officers 
 are not sufficiently well versed in the modern science of war. 
 A force of one hundredth the number of men now employed 
 would, if it were well drilled, disciplined and organized, 
 commanded by capable officers, provided with proper com- 
 missariat and transport services, with a system of good railroads 
 and transport vessels for its rapid mobilization and concentra- 
 tion, be far more effective than China's present force ; and the 
 ninety-nine per cent would be able to be wealth producers. 
 
 No country in the world possesses better material for 
 soldiers than China. The brave, hardy and devoted men of 
 
161 
 
 Manchuria ; the conrageons, one may say, fierce men of Hanan ; 
 the brave, quick and intelligent men of Canton would, if well 
 .drilled, officered and equipped, make as good land soldiers as 
 any in the world, while the brave fishers and junkmen of 
 China's coast and great rivers would, if well drilled and 
 officered, form an admirable navy. What is wanted is a 
 selection of capable officers and a sufficient inducement to join 
 the service. If officers only think of " profit," their subor- 
 dinates will only think of profit too, and the whole military force 
 will he disorganized. If officers think of honour and the good 
 of their country, their men will follow their example. To get 
 the right kind of officers they must be rewarded for their 
 "work done" by the esteem of their countrymen and honours 
 from their sovereign. As long as the military profession is 
 despised, men of capacity will not enter it. It is right that 
 military officers should, to a certain extent, be subordinate to 
 civil officers, but this subordination is carried in China to 
 inordinate lengths. 
 
 With good government " in accord with the instincts of 
 the people " few soldiers will be required to re[iress internal 
 disorder?- In the Straits Settlements there are only 800 troops 
 to a population of many millions. 
 
 In China, though less than in some other countries, there Priests and 
 is probably an excels of priests and nuns ; the remedy is to 
 educate the people, so that, while respecting the spirits, they 
 maj be tree from ignorant and slavish superstitions. 
 
 In China, as in all the countries of the world, there is an The eonsum- 
 excess of criminals and beggars who consume wealth without "'^ ^ '^^^' 
 producing it, and, as far as the criminals are concerned, still 
 farther diminish wealth by necessitating the employment of 
 police and destroying the trust between man and man. What 
 can be done to diminish the numbers of criminals and beggars ? 
 Confucius gives us the answer, " When the people are nu- 
 merous, enrich them ; when they have been enriched, educate 
 them." People who can get lucrative employment are not so 
 tempted to crime and idleness as those who can only obtain a 
 bare subsistence. Those who are well off can exercise filial piety 
 and nourish their aged parents; they will have leisure to study 
 and improve their hearts, " When they are enriched, educate 
 
162 
 
 them." The ignorant have to be restrained from crime by 
 punishment; when people are igaorant there must be many 
 policemen to detect, catch and punish thieves ; when people 
 are educated they not only obtain a good livelihood, which 
 destroys the temptation to crime, but they acquire industrious 
 and virtuous habits and refrain from crime, not from fear of 
 punishment, but because doing wrong is odious to them, and 
 from idleness,becanse the" practice of what they have learnt " is, 
 as Confucius says, " delightful " to them. In England the spread 
 of education diminished both crime and idleness. Educate the 
 people of one nation and the police force of that nation may 
 be decreased ; educate all the people of the world and a large 
 part of the armies of the world could safely be disbanded ; many 
 swords could be changed into ploughshares and many spears 
 into pruning hooks ; millions now engaged in protecting wealth 
 would be set free to produce; wars, and war's concomitants, 
 pestilences and famines, would diminish. 
 
 May the spread of education and riches quickly come to 
 China. 
 
Chapter XII, 
 
 ^ayation. 
 
 NATION is, in one point of view, a co-operative associa- 
 tion united together for the common good. The 
 subscriptions a nation levies, to spend for the good of 
 the inhabitants, are called taxes-. As coercion should as much as 
 possible be avoided in. the collection of taxes, it is necessary 
 to persuade people to pay them willingly ; to induce people 
 to do this there are several principles which should be borne 
 in mind. 
 
 I. There should be no taxation without representation. The canons 
 That is, the people paying the taxes should have a voice in 
 
 the amount of taxes to be paid and should have full opportu- 
 nity of representing how such taxes will affect them. They 
 should also have a voice as to how the taxes should be spent. 
 
 II. Taxes levied should be expended for the benefit of the 
 tax payers. People will pay taxes more willingly when they 
 see that they derive benefit from them. 
 
 III. Taxes should be preferred of which the cost of collec' 
 tion is small. Say a nation wants to spend a million taels, and 
 two ways present themselves to collect this sum: one entailing 
 a cost of 100,000 Taels, the other 200,000 Taels, in collecting; 
 unless there is a strong- reason to the contrary the tax that 
 costs least to collect should be preferred, as it will press lesa 
 hardly on the tax payer, 
 
 IV. There should be no representation without taxation. 
 The only persons in a country who should escape taxation 
 should be the persons who have no representation. The poor 
 should be taxed as well as the rich, though not to the same- 
 
164 
 
 extent. I know of no country in the world now, and as far as 
 I know there never has at any time been a country where the 
 poor altogether escape taxation ; but there are some philan- 
 thropists who hold that the poor ought to escape all taxation. 
 The proposition would be impracticable even were it desirable, 
 and undesirable even were it practicable. If the poor paid no 
 taxes, or even if they did not pay their due share of taxes, 
 they would always be urging the government to reckless and 
 wasteful expenditure, and these are as injurious to a natioo 
 as they are to an individual. 
 
 V. The incidence of taxation should he equitable. The 
 poor should pay their fair share of the taxes and no more 
 than their fair share. The rich should pay more than the 
 poor, not only because they are able to afford more, but also 
 because they derive greater benefit from the expenditure of 
 taxes, especially that portion of the taxes spent on protecting 
 wealth. As a matter of fact all the present systems of taxation 
 I know of press more hardly on the poor than on the rich, and 
 up to the present time the problem of how to make taxation 
 press evenly on all classes has not been solved ; all that as yet 
 has been able to be done is to lighten, to a rrK>re or less degree, 
 the burden on the poor of taxation, 
 
 VI. Taxes on food and learning should be avoided. Food 
 and learning are required both by the poor and rich ; a poor 
 man requires sufiScient food to keep his body in the best health, 
 a rich man requires no more ; a poor tnan requires as much 
 education as will develop his intellectual power. It is, indeed, 
 desirable that rich men should have more education than poor, 
 but not that they should use their learning for their private 
 benefit, but for the good of the commuaity. A rich man re- 
 quires no more salt than a poor man ; if, therefore, the tax on 
 salt is such that for a man's necessary food he pays 500 cash 
 a year in salt tax, the poor man with 50,000 cash a year will 
 be paying one per cent of his income, while the rich man with 
 five million cash a year will only be paj'ing one hundredth 
 per cent of his income. There is a farther objection to taxes on 
 food, namely, that by increasing the price of food they prevent 
 poor people having enough to eat and diminish the health and 
 strength of the population. 
 
165 
 
 VII. Taxes mi trade and labour are to be avoided as muck 
 as possible, because such taxes by checking the desirable 
 division of labour, aud the, free circulation of commodities, 
 injure the sources of future wealth. 
 
 VIII. l^axes should not be levied in excess of require- 
 ments. It is better to leave the money " to fructify in the 
 hands of the people " than have a surplus in the government 
 treasury ; in the hands of the people the wealth will be 
 fertile and produce more wealth, in the treasury it will beidle 
 and unfertile. 
 
 IX. Income and expenditure should balance ;■ that is to 
 say, the taxes for a year should not exceed the benefit derived 
 in a year from the taxation ; when money has to be spent on 
 great public works, or armaments, the benefits of which will 
 last many years, the taxation to pay for them should be spread 
 over as many years as the advantages will last. This is best 
 done by loans redeemable in the period for which the benefit 
 endures. 
 
 X. Taxes should be only levied for revenue purposes. Taxes on 
 To this rule there are two exceptions : 1st. When any article is grounds, 
 bought for the sake of vicious indulgence, when large numbers 
 
 of the populace are prone to consume the article in excess, it is 
 right to put a high tax on it, irrespective of the revenue 
 ■ derived. In the West people are tempted to excess in spiritu- 
 ous liquors, in China people are tempted to excess in opium ; in 
 both the cases of spirits and opium it is right to raise a high tax, 
 not with the view of revenue, but with a view to check and 
 lessen the consumption. A high tax, with a good preventive 
 service, is better than total prohibition, because the object is, 
 not to prevent the moderate use, say at least for medicinal pur- 
 poses, but to prevent the abuse, and also because total prohibi- 
 tion would not be in accordance with the wishes of the people, 
 and would lead to evasions and breaches of the law. As has 
 been said by a learned jurist, "When laws go beyond the 
 moral sentiments of the community, law aud morality are apt 
 to perish together." (Sheldon Amo.=.) 
 
 The second exception is when heavy taxation is imposed Protection, 
 as a temporary measure to protect nascent native industries 
 against the competition of long established foreign industries. 
 
166 
 
 The wisdom, or unwisdom, of snch taxation can only be judged 
 by the result. When statesmen see that their nation possesses 
 facilities for such industries, and their people aptitude for them, 
 but that, owing to foreign nations being first in the field, such 
 industries do not exist in their nation, taxes to foster native 
 industries are not only justifiable, but laudatory, and are bene- 
 ficial both to the nation that imposes them and to the world 
 at large by producing wealth in the easiest manner. I am 
 informed an example of this has recently occurred. The TJ. S. 
 in order to create a domestic industry in wire nails put a 
 heavy import tax on them. The domestic consumption of this 
 article is very great, and led to keen competition to improve 
 and cheapen the production ; now America not only supplies 
 its own market, bat is able to sell to foreign nations cheaper 
 and better wire nails than they are able themselves to produce, 
 and the wealth both of the U. S. and the world is increased. 
 On the other hand, if the nation does not possess facilities for 
 the production of a commodity, and her people do not possess 
 aptitiKle for producing it, then taxes raised on such articles, 
 for any other purpose than revenue, are detrimental both to 
 the wealth of the nation imposing them and to that of the 
 world at large. To the nation by raising the price of the com- 
 modity, wasting labour and diminishing demand, to the world 
 at large by discouraging production of wealth in the places 
 and by the persons, in which and by whom, it can be most 
 easily produced. 
 To counter. Again, when one nation tries to destroy another nation's 
 
 ■ industry by granting a bounty on the export of a commodity, 
 the threatened nation is amply justified in raising its import 
 tax on snch commodity, not for the sake of revenue, but for the 
 sake of protecting her industry. Thus G-ermany is attempting 
 to destroy other nation's industries in sngar producing by 
 granting a bounty on the export of beet sugar. The U. S. 
 whose industry of beet sugar has been threatened by this 
 proceeding, has just passed a law surtaxing all bounty-fed 
 sugar to the amount of the bounty. The question of the wisdom 
 or otherwise of surtaxing bounty-fed commodities depends on 
 whether the nations, whose industries are threatened, derive 
 more benefit from protecting tlieir industries or from the 
 
 vail bounties. 
 
167 
 
 cheapness of the commodity. la England, though the German 
 bounties on sugar are destroying our cane sugar industries, 
 we think we derive a greater advantage from getting our sngar 
 cheap than we should by protecting our industries by counter- 
 vailing taxes and, therefore, do not surtax bounty-fed sugar. 
 
 Besides taxes, a nation often possesses other sources of '^""^'" 
 
 , ■ sources 
 
 revenue — ttie rent and sale, for instance, of government of revenue. 
 lands, the receipts of post offices, government railways and 
 telegraphs, royalties on mines, etc. In t£is last China pos- 
 sesses a rich source of revenue, which she has not yet begun to 
 exploit. 
 
 Let us now glance at the usual modes of taxation in vogue 
 among various nations and show how far they conform to the 
 canons of taxation, as far as the peculiar conditions of various 
 nations, especially of China, reader such canons applicable. 
 
 One of the first taxes levied is a tax on the laud and its Land tax. 
 produce. The tax on land, if moderate in amount, is one of the 
 fairest and best taxes that can be levied. Land is the gift of 
 Heaven to mankind, and, in so far as it is not the result of 
 individual man's labour, should be used for the benefit of all ; a 
 tax therefore on persons who obtain an exclusive use of land, 
 that is, a payment for the good of the community, is evidently 
 just. Land owners by the nature of things always have repre- 
 sentation, that is, they are always able to be in touch with the 
 government as to their interests, both in the collection and 
 expenditure of taxes. Land owners are the persons who 
 derive the benefit from the expenditure of taxes. The army 
 and navy protect them from invasion, police protect them from 
 robbery, good roads and good canals give them a larger market 
 for their produce. The cost of collection of land tax need only 
 be small. The land tax, though making the poor man pay his 
 share of taxation, does not make him pay more. In this tax 
 the rich man pays exactly his share of the taxes. The man 
 with 100 mow pays 100 times the land tax a man with one 
 mow of the same sort of laud pays. The tax ou land, if moder- 
 ate, does not increase the price of food, nor the cost of learn- 
 ing; it does not decrease the demand for labour, nor check the 
 circulation of commodities. China has been particularly for- 
 tunate in her land laws. iS'he has never allowed private 
 
168 
 
 propert}' in land to reach the leugth it has reached in some 
 Western lands, and has consequently been remarkably free 
 from agrarian troubles. Her system of classifyiag land_for 
 the purposes of taxation, so that the richer lauds should pay- 
 more and the poorer lands less taxation, is admirable ; equally 
 admirable is her practice of diminishing and remitting the 
 land tax in localities where there has been distress or disaster. 
 Against the iucideuce of Chinese land tax not a word is to be 
 said. China would 'find it more economical to collect the land 
 tax in money instead of in rice, but this can only be done 
 when the people are provided with a snfficieut amount of 
 the circulating medium. This China is now endeavouring 
 to do by working hard at minting money. Unfortunately not 
 ail the land tax collected in China reaches the government 
 treasuries and granaries. The remedy for this lies in ad- 
 ministration. . 
 Income tax. A tax which gives a high revenue in England, from which 
 
 all the poor are exempted, is the income tax, that is to say, 
 all rich people have to pay a percentage of these incomes, 
 varying in different years, but averaging about 2J per cent. 
 This tax, owing to the particular circumstances of England, 
 fulfills well all the canons of taxation, owing to the fact that all 
 companies in England have to publish their accounts, and 
 that merchants, traders and professional men have to keep 
 account books of their receipts and expenditure ; there is no 
 difficulty in ascertaining what a man's income is. The fact 
 that England is densely populated, that the companies and 
 large employers send in their income tax and the incouae tax 
 due from their profits and the salaries of their employes, 
 deducting the amoimt so paid from the dividends and salaries, 
 renders the collection of incouae tax very easy and cheap ; and 
 it is not an unpopular tax. People of less than 4,000 dollars 
 (Mex.) a year, pay a less proportion, people with under |1,500 
 a year pay no income tax at all„ This tax would not be suit- 
 able for China, where it is very difficult to ascertain what a 
 man's income is and where the number of wealthy men is few 
 in comparison with the masses, where the expenses of collection 
 would be very great and where the tax itself would be very 
 unpopular. 
 
169 
 
 Taxes on houses and rent have certain advantages. They Tax on 
 are easy and cheap to collect, and, if small houses are exempted, ''°"^''^' 
 they press more heavily on the rich than on the poor, but if 
 small houses are not exempted, they press more heavily on the 
 poor than on the rich. Thus in England, vphile the richer 
 classes spend less than one-tenth of their incomes on rent, the 
 poorer classes sometimes spend a third of their incomes on 
 rent, and therefore, unless the poorer houses are exempted, 
 the tax will press very heavily on the poor ; on the other hand, 
 if the poorer houses are exempted, it discourages the building 
 of good houses, and is detrimental to the building trade. 
 It is, however, a favourite mode of levying rates in Munici- 
 palities, from the ease of assessment and from the cheapness 
 of collection. How far it is advisable for any nation to levy this 
 kind of tax must depend on the social condition of that nation. 
 
 Taxes on windows have been abandoned by most civilized Window 
 nations, because it has been found that light and free current *^^" 
 of air are so essential to the health and well being of the 
 community that anything that prevents people from enjoying 
 these gifts of Heaven, is detrimental to the wealth of nations. 
 
 A very burdensome and odious tax, called the " Poll Tax," Poii tax. 
 was once imposed in England, that is, a fixed sum had to be 
 paid per head for each male and female who arrived at the 
 age of puberty ; an insult to the modesty of a female child, the 
 daughter of a blacksmith, by a tax collector, led to a serious 
 riot and rebellion. The king wisely abolished the tax. This 
 happened in the beginning of the Sung dynasty, and the tax 
 has never been since imposed in England. It is an odious tax 
 for many reasons ; it presses heavily on the poor, is difficult 
 and expensive to collect, and has other disadvantages. 
 
 Another kind of tax, levied in England, is what is called Legacy 
 
 duties. 
 
 "Probate and Legacy Duties." The system is that when a 
 rich man dies a certain percentage of his property goes to the 
 state, instead of all going to his heirs, legatees and successors ; 
 the percentage increases with the value of the property ; estates 
 under £1,000 value are altogether exempted. The percentage 
 also varies with the nearness or remoteness of relationship 
 of the legatee to the deceased; thus children have to pay a 
 lower percentage than nephews, and nephews a lower percent- 
 
170 
 
 age than strangers to the blood. This mode of taxation, 
 though suitable to England, where it is easy to ascertain the 
 amount of a man's wealth, would not be suitable to China, 
 where it is not easy to do so. 
 Taxes on Other direct taxes levied in England are taxes on dogs,, 
 
 etc. ' taxes on horses, taxes on vendors of tobacco, spirituous liquors, 
 etc.; all these taxes are inapplicable to China. Some of them, 
 such as the taxes on dogs and horses and licenses on vendors 
 of tobacco are probably detrimental in England. It would be 
 justifiable to raise rates on horses, as horses increase munici- 
 pal expenditure by wearing out the roads. As a rul e, taxes 
 from licenses on trades are never justifiable on financial 
 grounds ; they are only justifiable when it is desired by means 
 of them to regulate trades liable to abuses. Licenses for the 
 sale of tobacco and other articles of food may possibly check 
 smuggling and prevent adulterated articles being sold to the 
 public, but these objects would probably be better attained by 
 a rigid inspection. The licensing houses that sell spirituous 
 liquor, and opium and pawn-shops, rests on a difi'erent prin- 
 ciple; it is desirable that retail dealers in these articles, 
 which are so liable to be taken in excess, and that pawn- 
 brokers who, if not careful and honest, give great facilities for 
 theft, should be under a strong control not to tempt their 
 customers, and no stronger deterrent can be devised than the 
 fear of, by loss of license, being deprived of the means of 
 livelihood, in case they do not exercise their trade in a manner 
 consistent with the public interest. The same principle 
 applies to theatres and places of public entertainment. Such 
 places are constantly tempted to attract spectators by immoral 
 spectacles; this . temptation should be counterweighed by an 
 equally strong deterrent, and no stronger deterrent can be 
 applied than the fear of losing their licenses. 
 Stam 3 ^^ England a large revenue is derived from stamps, by 
 
 compelling all cheques, Bills of Exchange, receipts for large 
 amounts, written contracts, such as Powers of Attorney, Leases, 
 Charter Parties, etc., to have stamps, issued by the government, 
 attached to them. Starnps are payable as probate and legacy 
 duties, as consular and judicial fees, etc., etc. The system 
 works well in England. China might, with advantage, study 
 
171 
 
 tfae system with a view to its introductiou iu a modified form 
 into China. 
 
 Tiie above taxes are called " Direct Taxes," because they 
 are really paid by the parties from whom they are collected. 
 There is another kind of taxation called Indii-ect Taxes, be- 
 cause the burden of them does not fall on the persons from 
 whom they are collected, but upon others. Such are maritime 
 and inland duties, excise, etc. 
 
 The duties levied on foreign trade are of two kinds: Import and 
 1 • /• • ■ 1 • 1 • export 
 
 duties on foreign imports consumed in the native country, and duties. 
 
 duties on native produce consumed in foreign countries. These 
 duties are called Import and Export Duties. The effect of 
 import duties is to raise the price and thus lessen the 
 demand for foreign commodities. The people who really pay 
 these duties are the native consumers. When import taxes 
 are raised only for revenue purposes, they are in some coun- 
 tries an unavoidable necessity; the object should be to lessen 
 the duty as much as possible ; the lighter the duty the lighter 
 will be the cost of collection, as the less will be the temptation 
 to smuggle, and the less staff of preventive officers have to be 
 maintained. It must be remembered that tax collectors 
 neither produce, distribute nor protect wealth. They are only 
 consumers. As the labour spent on protection of wealth is 
 analogous to what is called '■'waste'" in mechanics, the labour 
 spent in collecting taxes is analogous to " friction " in me- 
 chanics; it is desirable to reduce this " waste " and friction to 
 a minimum, so that as large a percentage as possible of labour 
 should produce and distribute wealth. Again, a low import 
 duty will often yield a higher revenue than a high import 
 duty. If with a tea per cent ad valorem duty one million 
 Taels worth of goods are imported, and with a five per cent 
 duty three million taels, fifty thousand Taels a year will be 
 gained by the revenue by the low import duty, and one hundred 
 and fifty thousand Taels a year will be gained by the native 
 consumers ; the foreign makers of these goods will also gain in 
 increased occupation and will be able to afiord to buy more 
 native goods- Unless imports are paid for by exports they 
 will not be imported, except as payment for money owed 
 to the native country by the foreign country. The excess 
 
172 
 
 of imports over exports will represent the interest of the 
 money lent. 
 
 Export duties are really paid by the foreign consumer ; 
 unless the foreign consumer pays for the cost of the goods 
 plus cost of transport, pins profits, plus export duty, no one 
 will export goods. Lowering export duty increases the 
 foreign demand for goods, and it is often found that a low 
 export duty will yield a larger revenue than a high export 
 duty, by creating a greater demand for the native goods abroad. 
 Low export duties, still more no export duties, have this 
 advantage, they give lucrative employment to the people of a 
 nation. So well is this understood in the West that the 
 "Western nations do not levy export duties ; some go so far as 
 to pay bounties on export. 
 
 Both import and export duties check the free circulation 
 of commodities and lessen demand and supply. In a large 
 country with a great variety of climate and a facility for pro- 
 ducing many commodities, they are less noxious than in a 
 small country with not much variety of climate and with few 
 facilities for producing commodities. The smaller the area 
 to and from which goods are taxed in coming and going the 
 more will the taxes impoverish that area. On the other hand, 
 import and export duties have this advantage over direct 
 taxes, they are paid without coercion, no one need buy a 
 foreign import unless he likes, and consequently he need not 
 pay import dutj'. In the same way, no one is compelled to 
 sell his goods to foreigners. When the import duties are on 
 necessaries, specially when they are on food, they press more 
 heavily on the poor than on the rich. 
 Octrois and Likin and octrois are more mischievous taxes than import 
 
 likin. a^^(J export duties, as they check the free exchange of com- 
 modities in small areas, they lessen demand and supply, put a 
 stop to industries, force the areas to produce commodities 
 which they produce with difficulty, and do not allow them to 
 produce what they can produce easily. The cost of collection 
 is out of all proportion to the revenue derived; they necessitate 
 an army of likin runners whose labour is unproductive. Again 
 and again, in my travels through China, have I seen areas 
 which, if they had been devoted to the production suited to 
 
173 
 
 them, wonld have been wealthy, sunk in poverty by being 
 forced by likia to produce articles for which they are unfitted. 
 Likia is killing the Chinese tea trade, and checking every 
 native industry. If China wonld abolish likin, such an enor- 
 mous impetus would be given to trade, that the import and 
 export duties would, without raising them, give China a 
 far larger revenue than she now possesses. Englishmen would 
 consent to China's doubling the import and export duties if 
 fihe would but abolish likin. 
 
 The sale of monopolies is always an odious and unwise Monopolies, 
 way of raising a revenue ; by shutting out competition it 
 causes laziness in production and increases the cost of com- 
 modities. Monopolies in food supplies are the most odious 
 forms of monopoly, and a salt monopoly is probably the worst 
 of all. A salt monopoly checks the fishing industry, deprives 
 the poor of wholesome food and saps the health and vigour of 
 the people. The revenue raised by the salt monopoly in China 
 is very small in proportion to the loss it inflicts on the 
 people, — the large army of men connected with the salt office 
 whose labour is nnproductive. 
 
 Excise duties, that is, taxes on native productions, are 
 always financially a mistake; they are only justifiable when it 
 is desired to cheek the production of a commodity like spirits, 
 or opium, which the people are tempted to take in excess. 
 
 Raisiao" revenue by the sale of offices and honours is always 
 a mistake. The officers who have bought their posts will 
 recoup their outlay by " squeezing," and when literary degrees 
 and honours are sold their value in inciting men to worthy 
 labour is much impaired. 
 
 Eaising revenue by state lotteries and licensing gambling 
 is a mistake. Such increases the spirit of gambling, which is 
 the hope of gaining wealth that has not been earned, and 
 destroys habits of steady industry and frugality. 
 
 Taxes on luxuries, though just in theory, as throwing the 
 burden of taxation on the rich, are found in practice to yield 
 but a small revenue in proportion to the cost of collection. 
 
 The revenue derivable from government lands can never Eevemi^frara 
 foe great in China, where most of the land is the private 
 property of families and clans ; in outlying provinces, where 
 
 Excise. 
 
 Sale of 
 honors. 
 
 State 
 lotteries. 
 
 Taxes on 
 luxuries. 
 
174 
 
 there is unappropriated land, the demand for it is not Jjsen. 
 China is wise in giving this land gratuitously to the surplus 
 population of overcrowded provinces. There is a distinction 
 between the revenue raised from the sale and that from the 
 rent of government lands. The former is capital, and should 
 only be devoted to objects permanently benefiting the com- 
 munity; the latter is income, and can be spent on current 
 expenses. 
 Public works. The benefit of public works, such as railways, water 
 works, etc., extend over a period of years; the money ne- 
 cessary for their construction should be provided for by loans 
 and not from the current receipts of the year ; by this means 
 the persons who reap the benefits pay for them. The charges 
 for railway fares, transport of goods and water, should be 
 suQicient to pay the interest on the loans, the working expenses 
 and the depreciation by wear and tear. They should not do 
 more than this, otherwise the classes who use the railways or 
 waters, are being taxed for the benefit of those who do not use 
 them; the incidence of taxation will not be even. The same 
 Post office, principle applies to government telegraphs, etc. Most nations 
 derive a revenue from their post offices. Government post offices 
 are an advantage ; the work of distributing letters, parcels, 
 books, newspapers and small sums of money can be done 
 cheaper, quicker and better by a government than by in- 
 dividuals. The native post offices in China have merits, but 
 the work could be done better by the government. Instead of 
 abolishing the native post offices and postmen the Chinese 
 government should absorb them. With a cheaper and quicker 
 distribution more letters, books, and parcels would be posted, 
 and all the persons now engaged in post offices would be 
 wanted for the work of distribution; this would increase trade 
 and enrich the country. The reduction of postage often in- 
 creases the postal revenue. In England the postal revenue 
 amounts to some ten million dollars (Mex.) a year. In the 
 view of abstract theory this revenue is a tax on letter writers, 
 and favours people who do not use the post of&ce ; on the other 
 hand, it is a tax willingly paid, and as the rich use the post 
 office more than the poor, it tends to redress the inequality of 
 the incidence of taxation. 
 
175 
 
 China has an inexhanstible source of revenue which Royalties, 
 might render the Chinese government one of the richest 
 governments of the world, viz., royalties on the outputs of 
 mine?. Coal, iron, lead, silver, copper, tin, and almost all 
 minerals exist in China in large quantities. In mines, the 
 government retains rights of property ; they have not, as has 
 been the case in England and Western lands, been appropriated 
 by individuals; China could, without risk, obtain a large 
 revenue from mines by allowing them to be worked on con- 
 dition of their paying a royalty on the gross output. Mines 
 can be more profitably worked by private enterprise than 
 under government management ; private individuals, being 
 paid by the result, will work harder and more economically 
 than government officials. Not all mines pay : if such mines 
 are worked by private enterprise, the government will receive 
 its percentage of output, whether the mines succeed or not, 
 and will not need to advance money for prospecting and for the 
 initial expenses; it will receive gain without the risk of lo ss. 
 
Chapter XIII. 
 
 HDministvation. 
 
 ¥"''*' °f STufAVING- considered in the last chapter the best sort of 
 spendiug <^^ taxes and revenue to raise, we will consider in this 
 ^^^^' chapter: 1st. The best mode of raising taxes so as to 
 
 prevent waste and embezzlement. 2nd. The best way of spend- 
 ing the taxes, so that the people may derive the most beoefit. 
 Under the last head will come what are the objects for which 
 a government should strive. And what are the best modes of 
 attaining such objects ? How can a government obtain the 
 services of the best men at the cheapest rate ? How can it 
 ensure that these best men shall work their hardest for the 
 common welfare ? 
 Farming All throughout history it has been found that farming out 
 
 the revenues is an unwise measure. To the Western student, 
 acquainted with Eoman history, the evils of farming out rev- 
 enue are well known; the taxations and oppressions of the 
 publicans, or revenue farmers, the hatred with which the 
 people regarded them, is evinced by the coupling of "public- 
 ans and sinners " which constantly occurs in the New Testa- 
 ment, by the speeches of Cicero, the most eloquent of Roman 
 advocates, and by the terrible decline and fall of the old 
 Roman Empire which, in spite of its splendid laws and 
 administration, was crushed out by barbarous tribes. China 
 frequently farms out taxes, especially likin, and the farmers of 
 likin frequently use the power given them to trade in the 
 articles themselves and to crush out all competition by 
 accusing their competitors of smuggling. They purposely 
 make the likin regulations so complicated that uo one can 
 
177 
 
 ■understand them, and they keep these regulations secret in 
 order to entrap people. Oppressive and evil as the likin is in 
 itself, the evils are magnified by farming it out to syndicates 
 of speculators, whose only object is to make money- out 
 of the speculation, who have no care for the peoples' welfare, 
 for the peace of the country, for the good reputation of 
 China, or for anything but their own private gain, for which 
 they are ready to dishonour the good name of their country, to 
 evade or break treaties, to forfeit the goodwill of foreigners, 
 or even plunge the nation into war. Government officials 
 who collect taxes may be rapacious and dishonest, but 
 _ their rapacity and dishonesty has a limit — the fear of losing 
 their posts — but to the rapacity and dishonesty of the farmer 
 there is no check ; the worst he has to fear is not obtaining 
 a renewal of the farm ; this is no deterrent, and he does not 
 mind destroying the trade and exhausting the source of 
 revenue, provided he makes a profit during the time he 
 farms it. 
 
 What is the best way to prevent fraud on the part of tax Prevention 
 collectors, so that the whole of the money collected from the 
 people shall reach the government treasury ? The tax collectors 
 should be paid adequate salaries fixed in amount and regularly 
 issued, the juniors receiving less and the seniors more ; if the 
 former conduct themselves well, they ^ould, as vacancies occur, 
 be promoted ; the seniors, when they grow too old for work, 
 should be retired on pensions. The hope of a certain competency 
 would reduce the temptation to dishonesty. Defalcations should 
 be met with severe punishment, deep disgrace, and instant 
 dismissal. Defalcations should be made easy to detect by 
 minute accounts, which should be carefully and continually 
 scrutinized and periodically pablished, so that every tax payer 
 should have the opportunity of knowing whether the tax he 
 pays is credited to public account. Measures should be taken 
 that the tax collectors and the persons who make out the 
 accounts should not have the handling of the money, and for 
 this purpose the tax might, when in small amounts, be collected 
 by means of stamps, to be obliterated as receipts, every officer 
 to be accountable for the face value of the stamps served out 
 to him ; or by means of cheques paid into the government 
 
178 
 
 banks. The tax collectors giving receipts for the taxes on 
 production of the bank vouchers. 
 Rates. In the West, a distinction is drawn between what are 
 
 called taxes and what are called rates. The first are expend- 
 ed for the good of all the nation, the second for the good of 
 special localities. Of the former are the taxes levied for the 
 expenses of the army and navy, the expenses of the adminis- 
 tration of justice, the pay of government civil service, the court 
 expenses of the chief of the State, the building and keeping in 
 repair government offices. In some countries, railways and 
 police are provided for out of the Imperial taxes. Local rates 
 are generally applied to education (though often aid is given 
 also out of the Imperial taxes), roads, light and water supply, 
 sanitary works, relief of the poor, provision of allotments, etc. 
 Local rates are differently levied according to the area in 
 which they are spent. Much as' in China, there is Imperial 
 taxation, provincial taxation and municipal rates levied in a 
 prefecture, district or parish. In the West, we have counties, 
 divisions of counties, parishes, vestries, etc., each with muni- 
 cipal officers elected by the rate-payers ; sometimes for one 
 year, sometimes for a longer period ; each set of men elected 
 have their several powers and several objects on which they 
 expend the rates ; if they are extravagant, or if they do not 
 spend the money to advantage, they are not re-elected. China 
 in her divisions into provinces, tai, prefectures, hsien, sze 
 and pao, has all the materials for inaugurating municipal insti- 
 tutions, and she has in her gentry and elders the machines for 
 Municipal Councils ; what is wanted is an Imperial command 
 compelling the municipalities to provide good roads, in the 
 same way that commands are given for the reparation of 
 canals and embankments, to provide good education, good 
 water supply, good sanitation, and giving the gentry and elders 
 power to levy the rates. The people would discover the 
 advantage the expenditure would confer upon them, and would 
 willingly subscribe the necessary money and work. The money 
 being all spent in the locality close to their doors, they would 
 see that it was duly expended ; the property of the rich would 
 be made more valuable, the poor would not object, because 
 the wages would come to them, 
 
m 
 
 The same principles apply to the levying of mnnicipal 
 rates as to the collection of Imperial taxes, accounts of receipts 
 and expenditures should be published and audited. The rate 
 collector should be adequately paid, and receipts should be 
 granted to the rate-payers. Any fraud on the part of the 
 rate collectors should be rigorously punished. 
 
 On what objects should the Imperial taxes and municipal Mode of 
 rates be spent so as' most to benefit the tax and rate-payers ? taxes, 
 and how should they be spent to get the most value for 
 the money ? 
 
 Self-preservation is the first law of nature both as regards Self- 
 the individual and the associations of individuals called nations. 
 The first object towards which taxes should be devoted are 
 the military and naval expenditure necessary to protect the 
 nation from foreign enemies and foreign invasion and the 
 diplomatic service, whereby disputes between nations, which 
 are liable to lead to war, can be adjusted peaceably, and where- 
 by the friendship of foreign nations can be obtained and 
 preserved. 
 
 In this sphere, taxes should be spent to maintain nation- 
 al rights. A nation's rights are briefly : self-preservation, to 
 choose its own form of government without dictation from 
 foreigners, to do everything that will render itself prosperous 
 and strong, to have such a military and naval system and to 
 build such fortresses on its own territory as it considers neces- 
 sary, to adopt such commercial system as it may consider 
 . profitable, to pass such laws as it may deem wisest without 
 being dictated to by foreigners. Every nation to maintain its 
 rights must have an adequate naval and military force. 
 
 The next object on which taxes should be spent is the Rights 
 protection of the rights of the individuals who belong to the individual, 
 nation, both abroad and at home ; abroad by appointing 
 ministers and Consuls, who will bring any infringement of 
 these rights to the notice of the local authorities ; at home by 
 paying the expense of making good laws, good police, learned 
 and honest judges, etc. Industrial rights have three spheres — 
 rights of person, rights of property, rights of reputation — 
 in all these spheres there should be good laws to protect 
 every member of the nation, aad police and judges to enforce 
 
180 
 
 these laws ; besides the right to be protected from killing, 
 maiming and assault, threats and undae constraint, there 
 shonld be laws to protect the people of a nation against disease 
 and sickness, accidents, hunger, etc. It is desirable to make 
 sanitary laws and pay sanitary inspectors to see that these 
 Jaws are carried out, to make laws minimizing the dangers 
 of perilous occupations and to pay inspectors to see that these 
 laws are carried out ; such in the West are laws regulating 
 mines, factories, ships and railways. 
 
 With regard to the protection of a man's property, the 
 rule should be that everybody should have the right to use his 
 own property in any way he pleases, provided that in doing so 
 he does not injure others. Laws have therefore to be made to 
 restrain the poor from robbing or stealing from the rich and to " 
 restrain the rich from injuring the poor. The objects of laws 
 are to prevent wrongs by deterring people from commit- 
 ting them, to prevent parties aggrieved attacking ' their 
 aggressors by giving them a legal and peaceful remedy for 
 every wrong committed, and to put an end to litigation by 
 defining what are the rights of each individual. In the West 
 the persons belonging to various trades and professions study 
 the laws relating to their own trade and profession, so as to 
 conform to the penal laws and to ascertain what are their 
 rights and responsibilities under the civil laws. 
 
 There should be laws to protect a man's reputation, not 
 only by punishing those who slander and libel him, and by 
 making them pay him compensation for any pecuniary loss 
 their slander or libel may have inflicted upon him, but also 
 protecting his reputation by not allowing others to use it, or 
 his trade marks, without his consent, 
 ^"herent ^\\ human laws have an unavoidable deficiency ; there is 
 
 of law. a large, and perhaps the most important, sphere in which they 
 can have no operation ; no human laws can be made to control 
 the thoughts of the heart. While human laws can be made to 
 repress crime, and in a minor degree vice, they cannot be made 
 to enforce the practice of the higher virtues, generosity and 
 gratitude for instance. Besides the tribunals of law two other 
 tribunals are desirable — the tribunals of public opinion, which 
 should be more exacting than the tribunals of law, and which 
 
181 
 
 should condemn mauy actions which are not paaishable, and 
 which should reward many actions which are not legally 
 obligatory ; and the tribunals of conscience, which every man 
 carries in his heart, and which condemns him for unkind and 
 impure thoughts. It is to the interest of a nation that its 
 government should do all it can do to elevate the tone of so- 
 ciety and to awaken the conscience of each individaal. This 
 can be done by the endowment of education and of religions 
 that inculcate a high morality. 
 
 The principal objects on which taxes should be spent are : 
 the navy, army, police, the chief of the State and his court, 
 the civil services, legislation, judiciary penal establishments, 
 public buildings, means of locomotion, light and water, 
 sanitation, inspectors, relief of the poor, education and re- 
 ligions, etc. 
 
 The total" amount that a nation shoald spend on all these Amount to 
 objects, and the amount it should allocate to each, depends on ^^ =P^°'- 
 many factors, of which the following are the most important: 
 the wealth of the nation and its peculiar conditions. The 
 nation that spends more than is necessary on any of these 
 objects is incurring an unnecessary waste, and is, to the 
 extent of its waste, impoverishing the nation. The nation 
 that spends too little on any of these objects, is eudaoger- 
 ing the security of the nation and impeding it from 
 attaining the degree of wealth and happiness of which 
 it is capable. A due amount should be spent on the 
 chief of the State, in order to maintain the dignity of the nation 
 in the eyes of foreigners and natives. A due amount shoald be 
 spent on the army and navy to prevent aggression by foreigners 
 and revolt by subjects ; a due amount should be spent on 
 legislation to attract the wisest of the community to be legis- 
 lators; a due amount shoald be spent on the judiciary to 
 attract men of ability to be judges and to place the judges 
 above temptation ; a due amount on police and penal establish- 
 ments, so that punishment may be deterrent without being crael, 
 or in the words of Mencias, that punishments may be light ; 
 a due amount on public buildings and arts to encourage artistic 
 tastes among the people and for public convenience ; a due 
 amount on the means of locomotion, such as roads, etc., as to 
 
182 
 
 facilitate the circalation of commodities. As to whether rail- 
 ways should be bnilt and managed by the state, that must 
 depend on the peculiar circumstances of each country. State- 
 built railways have this advantage over railways built by 
 private enterprise, they are more useful for military purposes ; 
 on the other hand, railways built by private enterprise are apt 
 to give a greater return for the outlay, and are generally more 
 economically managed than State railways. What is a due 
 amount to spend on lighting the roads must depend on the 
 amount of traffic. Light enables work to be carried on by 
 night as well as day ; in the northern countries in winter the 
 days are very short, and light in such countries in the streets 
 and roads is now felt to be a necessity. A good water supply 
 is a necessitj in order to maintain the health of the inhabi- 
 tants of large towns, and, in countries like India, which are 
 subject to droughts, for purposes of irrigation. Iii the province 
 of Chekiang, the Chinese have wisely spent and spend large 
 sums in canals, which serve for both communication and 
 irrigation. 
 
 It is to the interest, both of the small area, like the 
 district, and to the nation, that every one within its borders 
 should be educated ; it is right therefore to devote both taxes 
 and rates to education, but the contribution of the state and 
 municipalities should not entirely relieve parents of their 
 responsibility to educate their children. If China should pass 
 a law making education universal and compulsory, the funds 
 could be raised probably from the contributions of families and 
 tribes through the committees of the family temples more 
 easily than by taxes or rates. With regard to the advisability 
 of endowing religions, different opinions are held ; there is no 
 doubt that the religious sentiment, leading men to acts of 
 virtue, is a valuable source of the wealth of nations, but it is 
 argued that the religions feeling of individuals is so strong 
 that the teaching of religion may be left to private enterprize 
 without aid from the State. In the U. S., where there are no 
 State endowments, there is no lack of religious teaching. 
 There is another difficulty with regard to the State endowing 
 religions, namely, that, in many nations people belong to 
 different religions. In Frauce, this difficulty is got over by 
 
183 
 
 what is called " concurrent endowment," that is, by endowing 
 all the religions in France. In Russia, and other countries in 
 the West, by choosing one Church as the State Church and 
 endowing it. Spain, and still more ^p^in's colony — Manila — 
 undoubtedly spend an excessive portion of the revenue on 
 religions endowment ; the number of priests, monks and nuns 
 who consume without producing wealth is greatly to the 
 detriment of Manila. The amount of revenue spent on in- 
 spection should depend on the habits of the people — inspectors 
 of food, inspectors of factories, inspectors of mines, inspectors 
 of schools, sanitary inspectors to see that the laws relating 
 to health are carried out, of railroads, to see the proper 
 appliances are used and proper precautionary measures adopt- 
 ed; inspectors of ships, to see they are properly 'built, manned 
 and ofiScered and not overloaded, etc. In England, it is a 
 noticeable fact that the people employed in factories and 
 mines are constantly asking the government to appoint more 
 and more inspectors, and that the capitalists who own the 
 factories and mines as a rule welcome inspection. 
 
 China, when she has established factories and mines, 
 when she has a mercantile marine, etc., will have to study 
 the factory laws, mining regulations, merchant shipping 
 laws of various nations, in order to enable her to enact such 
 laws on the subject as may be most suited to her needs 
 and conditions. 
 
 The question of what amount of revenue should be 
 allocated to each object is a question for the nation to decide ; 
 to enable it to decide wisely, it should study the arguments 
 of the various advocates of particular objects and see how 
 far their views have obtained in other nations and with 
 what effects. 
 
 Lastly, how can the money allocated to the different How-to 
 obiects be spent in the most economical way, that is, produce value 
 
 • J IT for money 
 
 the most efficient possible result ? spent? 
 
 In some countries every man is bound to serve as a 
 soldier, for sometimes two, sometimes three years. In such 
 countries the whole male population are trained to arms. 
 Some people assert that the country, in losing the wealth-pro- 
 ducing labour of every male for the period of service, is paying 
 
184 
 
 too heavy a price for the array ; others assert that the military 
 training is itself a moral and physical education, and that the 
 time spent in the army is not wasted. In England, where 
 only a small army is required, it is recruited by voluntary 
 enlistment, and,' in order that as many men as {iossible may 
 be trained to arms, men are only enlisted for a short period 
 and then changed ; in England wages are high and the pay of 
 soldiers is small ; the consequence is the men who enter the 
 ranks are generally young and unskilled, and have diflSculty, 
 when discharged, in finding other employment. The sailors 
 on the other hand, are trained from the ages of 14 to 18, and 
 then enter the navy for a period of ten years, which they can 
 extend to twenty. The various occupations of a sailor's life 
 cause him to have skill and intelligence, and he has no 
 difficulty in finding employment after his discharge. Besides 
 the army and navy we have a militia, reserve force, and 
 volunteers. The first consists of country people who only 
 train as soldiers for a portion of the year ; the second consists 
 of discharged soldiers who are given a small fee to keep them- 
 selves in readiness to serve when called upon ; and the third 
 consists of men engaged in other business, who are not paid, 
 but who devote their leisure time to training as soldiers as a 
 recreation. 
 
 The officers of the army and navy enter the service 
 young, and unless they rise to a certain rank, have to retire 
 at the ages of 40, 45, etc. When they retire they are given 
 a small pension. The pay of ofiicers is very small, because in 
 England, and on the continent generally, the military and 
 naval professions are very popular, being highly honoured. 
 The examinations are very severe, and continue for some 
 time after a man has entered the services ; if he cannot pass 
 these examinations, he has to retire; the sons of emperors 
 and kings and of the highest nobles enter the army and- 
 navy, which consequently have in them men of great talent 
 and capacity. 
 
 China is differently situated to Western countries; she 
 does not need a great army. Wages being low she conld at 
 a small cost obtain an army of men, large enough for her 
 needs, in the prime of life. She could also easily raise a 
 
185 
 
 reserve force by training the agricultural villagers, during 
 winter when they are idle. It is not the men, it is the 
 officers that are China's difficulty. Until the better class of 
 Chinese 'put their sons in the army and navy as a career, 
 China never will obtain an eiRcient military force. The pay 
 given to the troops, the money spent on ships and guns, will 
 be wasted, unless China trains her naval and military ofiScers. 
 High pay alone will not produce the right men. To induce 
 the right men to enter the profession and to be zealous 
 in it, the profession must be held in honour. No nation 
 that despises military men will have an army worth re- 
 specting. 
 
 To make a military force effective every officer should 
 serve in subaltern positions, and should, be promoted by 
 seniority, with occasional special promotion for distinguished 
 ability. The sons and grandsons of our queen have served 
 in our army and navy ; no favouritism was shown them ; 
 they had to pass the examinations and win their promotion 
 by merit. 
 
 To make an army and navy effective, there must be con- 
 stant drill, rigid inspection, good military equipments, which 
 should not be purchased until they have passed the inspection 
 of experts. Any officer, civil or military, receiving a com- 
 mission on the purchase of military stores, should be cashiered 
 and punished. 
 
 The same rules apply to the civil service. To render it 
 efficient there should be stringent examination before entry 
 into the service, another examination after a few years of service, 
 to show that the officer had been studying what is necessary for 
 the discharge of his duties. There should be a fixed salary 
 adequate for a man's sustenance, and a hope of promotion. The 
 least dishonesty, or falsification of accounts, should lead to a 
 man's instant dismissal. The only way to spend the taxes 
 economically is to make it to the interest of every one employed 
 by the government to be industrious as well as honest, to select 
 capable men and weed out the useless, to pay fair rewards for 
 the " work done," which necessitates that there should be pay- 
 ment in promotion and honour, besides payment in money. 
 Capable men will join a service on small pay in hope of 
 
186 
 
 promotion ; they are willing to forego riches to obtain hononr 
 and esteem. In the U. S. the army and navy are not so highly 
 esteemed as in Europe ; the conseqaeDce is the U. S. has 
 to pay its officers and men doable what it is neceSsary to 
 pay in England. As Mencius says : " It is not the desire of 
 profit that should be appealed to ; it is the heart " — that is, 
 the sentiment of duty and the desire to obtain the esteem of 
 one's fellows. 
 
Chapter XIV", 
 
 Diffusion of Mealtb. 
 
 •fe^HE object of increasing the wealth of nations is to increase Object of 
 
 • tfliT weal til" 
 
 (jy, the happiness of mankind. The object in making a 
 
 nation rich is to increase the happiness of the inhabitants 
 
 of that nation. To attain this object two things are necessary : 
 
 Firstly, that the aggregate wealth of the nation shall be great 
 
 enough to be capable of providing the means of happiness to 
 
 the inhabitants. Secondly, that the wealth shall, not only be 
 
 capable of providing the mean's of happiness, but that it should 
 
 also actually do so, and this can only be done by a righteous 
 
 diffusion of wealth. 
 
 In the previous chapters we have considered how the 
 
 aggregate wealth of nations can be increased ; we are now about 
 
 to consider how it should be diffused, 
 
 A righteous diffusion of wealth has been defined as a Greatest 
 . . happiness of 
 
 division of wealth that " causes the greatest happiness of the greatest 
 
 greatest member." This definition is useful as a general rule, 
 but it is not accurate, and when taken too literally has been 
 found to be mischievous. It sacrifices too much the happiness 
 of the minority to the happiness of the majority. If the in- 
 terests of the minority are duly considered, it is a mere truism 
 to say one ought to promote the greater happiness of th^ 
 greater number. A society in which all the wealth is absorbed 
 by ten per cent of the inhabitants, leaving the other ninety 
 per cent in bitter poverty, is not in so wholesome a state 
 as a society with less aggregate wealth, where ninety per 
 cent of the population are well off and ten per cent are in 
 bitter poverty and dying of starvation ; this second society is 
 
 number. 
 
188 
 
 not in so wholesome a state as a society which has still less 
 aggregate wealth, but where the whole population lives in a 
 fair degree of comfort. The object of the diffusion of wealth 
 should not be merely the greatest happiness of the greatest 
 number, but the greatest possible happiness of all. 
 
 Some people think that the greatest happiness of all is to 
 be obtained by an equal distribution of wealth among all. This 
 is called " communism." Whenever communism has been tried 
 in the past it has failed to promote happiness, and this for 
 several reasons : First, many objects of wealth are indivisible ; 
 their value is either destroyed or lessened by division ; such are 
 palaces, jewels, pictures, rich garments, etc. Next, if the division 
 of wealth was by compulsion equal, all inducement to work 
 hard, to exercise self-denial, to invent labour-saving machinery, 
 would be taken away. The healthy spirit of emulation would 
 have no sphere. The industrious would become indolent and 
 the lazy still lazier. If a man can work, it not only adds to 
 the wealth of the community that he should be made to work, 
 but also adds to his own happiness ; labour, which is a curse 
 to the savage, is a blessing to the civilized man ; study_, 
 which is irksome to the child, when habits of study are 
 acquired becomes a delight to the mature man. The unequal 
 diffnsion of wealth is just, because it gives to each man the 
 due reward for his labour. The man with great talents, who 
 has employed them well, becomes the ruler often cities; the 
 man with less talents, who has used them well, becomes the 
 ruler of one city. This is not only a just reward for the nature 
 of the work done, but it also benefits the people ruled, as by it 
 the man with the greater wisdom and greater power of work 
 has the greater sphere of influence and power. It is also 
 productive of the greatest possible happiness ; a full " shSng " 
 measure is as full as a full "ton" measure, though the 
 "tou" measure contains ten times as much as the "sheno'" 
 measure. The ruler of one city, who devotes all his energies 
 to ruling one city, is as happy as the ruler of ten cities, who 
 does the same. Each man is happy, and diffuses happiness 
 according to his capacity. There are, as Mencius says, 
 " occasions when a meal of rice is too great a reward, there are 
 others when the bestowal of a kingdom is not too great a re- 
 
189 
 
 ward." Heuce the religions teacher, who lately said there 
 should be no millionaires, and the woi'kman philosopher, who 
 said no man's service was worth more than £500 a year, were 
 both mistaken. It is to the interest of a nation that there 
 should be in it a few millionaires and many men with over 
 £500 a year. The reward for having done work well is being 
 given more work to do, the reward for having gained wealth 
 is the gaining of more wealth. 
 
 While it is to the interest of the nation, and the world at 
 large, that wealth should be unequally divided, it is not to the 
 interest of a nation, or the world, that any one should be 
 allowed to die of starvation ; nor is it to the interest of the 
 nation, or the world at large, that any large numbers of human 
 beings should be in dire poverty. Starving and poor people, 
 having nothing to lose by rebellion, crime and theft, are 
 tempted to hate and envy the rich and to rob them. It is 
 right, therefore, that the rich should pay a ransom to the poor, 
 both for reasons of expediency and on moral grounds, in order 
 that they may have security in the enjoyment of their riches 
 and satisfy the dictates of their conscience. The relief of the 
 poor, in so far as it is based on grounds of expediency and 
 public benefit, should be enforced by the State ; in so far as it 
 is based on moral grounds, it should be left to the individual. 
 We have thus two manners in which wealth can be diffused : 
 compulsory diffusion of wealth, or diffusion of wealth by the 
 operation of law, and voluntary diffusion of wealth, or 
 charity. 
 
 It is a natural law for riches to accumulate in a few 
 hands. The people in whose hands riches have accumulated 
 are called capitalists ; they are always under the temptation, in 
 their desire for gain, to reduce the wages of the working 
 classes below the requirements of fair reward for work done, 
 and as it is necessary for the man who has no capital to work 
 for a living, there is always the danger of the rich man taking 
 advantage of the poor man's necessities and driving a hard 
 bargain with him, and obtaining an unfair share of the result 
 of their joint labour. The soreness of feeling that such un- 
 fairness leads to, is a danger to the tranquillity of the State, 
 and it is often, therefore, expedient to pass laws compelling 
 
190 
 
 the more greedy capitalists to treat their labourers with the 
 same degree of generosity as an enlig'htened regard for their 
 own interests has induced the wiser capitalists to treat theirs. 
 
 Lastly, it may be expedient for a nation to tax the whole 
 community for the benefit of a particular class, in the hopes 
 that by so doing, this particular class may ultimately benefit 
 the community so greatly as to be worth the outlay. 
 
 We have thus seen there are three ordinary modes of 
 difi'usion of wealth by operation of law : — 
 
 1. Poor Belief. 
 
 2. Labour Regulations. 
 
 3. Endowment of Industries. 
 
 Poor relief. The law in England for relieving the poor has certain 
 
 resemblances with the law of China, but the difference of the 
 condition of the two countries, necessitates a different mode of 
 carrying out the law. Both countries are divided into parishes, 
 and in both countries the duty of supporting the poor, who 
 are unable to work, is, in the first instance, enforced on the 
 relatives, and in the second instance, failing relatives, (this 
 very rarely occurs in China, and often occurs in England), on 
 the parish. Vagrant poor should in both countries be sent to 
 their original parishes. In England, the area of the pariah 
 to which the poor are sent is greater than in China, and, 
 while in China the poor man is sent to his original parish 
 and lodged with a relative, in England there is a " union " 
 of parishes which provide homes for the poor, called work- 
 houses, in which not only the poor of the parishes of the 
 "union" are relieved and housed, but which also give tem- 
 porary, or, as it is called, casual relief to persons passino- 
 through the parish. In China there is no system of gi vino- 
 casual relief to wayfarers. Unlike Chiaa, nobody in En"-laud 
 need starve or be hungry; a hungry man has only to go 
 to one of the workhouses, established throughout the countrv, 
 and he will be fed and lodged. If capable of work, he will 
 - have to do some work ; if incapable of work, he will be 
 fed and lodged without doing work, and be passed on to his 
 own parish for permanent relief. The food given at the 
 workhouses is wholesome and nutritious, but not agreeable 
 to the palate ; the clothes supplied are warm, but not comfort- 
 
191 
 
 able ; to prevent the birth of panper offspring, husbands in 
 the workhouses are separated from their wives, and, to 
 prevent laziness, and the workhouses being made pleasant 
 retreats for the idle, all inmates of workhouses are placed 
 under irksome regulations and are treated with little respect. 
 Hence workhouses are loathed by the English poor, who do 
 their utmost to avoid them. Destitute children, mostly the 
 offspring of vice, are brought up by the workhouses ; whenever 
 the fathers of such children can be ascertained, they are bound 
 to support them. The expenses of building and maintaining 
 workhouses is very great, consequently the "unions " do their 
 utmost to dissuade people from entering them ; they do this 
 ID two ways : first, by giving help to aged poor who are able 
 to do a little work, but not enough to support themselves ; 
 this help is called " out-door relief." There is no objection 
 on the part of the English poor to accept out-door relief; 
 the distributors of it have to be very careful to dole it out so 
 as not to encourage laziness and shamming. The second 
 way is by boarding out pauper children among respectable 
 poor, aged people, instead of bringing them up in the work- 
 house. This system has a three-fold advantage : it saves 
 money, being less expensive than bringiog the children up in 
 the workhouse ; it provides employment for the poor, aged 
 people, and prevents them being forced into the workhouse ; 
 and it provides the wholesome influence of a home for the 
 poor outcast children ; it is a system that requires constant 
 and vigilant inspection, not always easy to give". 
 
 Besides the direct relief of the poor, it is expedient for Causes of 
 governments to remove the causes of poverty. The principal ^°^ss''''viee^'" 
 
 causes of poverty are laziness, vice, ignorance, and sickness, ignorance, 
 
 '■ and sickness. 
 
 To prevent laziness, two things are necessary : that there should 
 
 be as much fairly paid occupation as possible ; and secondly, 
 
 that lazy people should be made uncomfortable. With regard 
 
 to the lazy poor, this is done by their physical sufferings and 
 
 by strict regulations of workhouses, etc. ; with regard to the 
 
 lazy rich, this can only be done by elevating the moral sense 
 
 of the community and causing a lazy man, however rich, to be 
 
 despised and regarded with loathing by society. With regard 
 
 to vice, the national vice of Englishmen, and the inhabitants 
 
192 
 
 of northern lands, is "drinking," as the national vice of the 
 Chinese is opium smoking. Where drinking is the national 
 vice, strict measures should be taken to regulate the drink 
 traffic. In some countries, such as parts of Canada and of the 
 U. S., all sale of intoxicating liquors is prohibited ; in some 
 countries, like parts of Sweden, the sale of spirituous liquors 
 is made a municipal monopoly; the people who sell the liquor 
 derive no benefit from the quantity sold, and therefore are 
 under no temptation to induce their customers to drink. In 
 England, an abominable practice, that used to exist, of paying 
 wages partly in spirituous liquor, has been rendered illegal. 
 All places that sell spirituous liquor, have to be licensed ; but 
 a bad practice has grown up of " tied houses," that is to say, 
 manufacturers of beer and spirits advancing money to beer 
 shops and gin palaces and forcing the keepers to buy their 
 manufactures, and these people induce people to drink far 
 more than is good for them. It is the opinion of many persons 
 that there should be far fewer beer shops and gin palaces in 
 England than there are at present, that licenses should not be 
 so freely granted, and that the liquor traffic should be under 
 severer control. It would be well if public opinion in England 
 looked on brewers and distillers with less respect than it looks 
 on the more useful and less mischievous traders, such as tailors 
 and green-grocers ; this is not at present the case. For some 
 reason, not easy to understand, brewers are honoured in 
 England, and the profession of making beer is thought more 
 genteel than the making of boots. 
 
 With regard to dispelling ignorance, education is a source 
 of wealth and knowledge is a species of wealth. The forcing 
 the rich to pay for the education of the poor, is a diffusion o^ 
 wealth highly conducive to the welfare of the community. 
 Besides direct and compulsory education, there are various 
 modes of providing an indirect and voluntary education by 
 providing -m-Mseums containing specimens of every sort of plant, 
 animal, fish, bird and insect known ; specimens of ancient and 
 modern manufactures, works of arts and weapons of various 
 nations ; specimens of all metals, ores and soils ; specimens 
 of all machinery ; by providing picture galleries, containing 
 beautiful pictures by the celebrated painters of various countries 
 
193 
 
 and of various epochs ; by providing libraries containing the 
 books of all nations, reading rooms containing books and 
 newspapers ; and opening these museums, picture galleries, 
 libraries and reading rooms free to the poor, on the days, and 
 at hours, when the poor man is likely to be at leisure, so 
 that without paying anything he can study botany, zoology, 
 icthyology, oraithology, entomology, archaeology, geology, 
 mechanics, painting, drawing, sculpture, etc. ; read any book 
 on these subjects, and on history, law and all the sciences, 
 and know from the newspapers what is going on in the world. 
 There are in London and Paris two famous free libraries, to 
 which it is compulsory to send every book published in great 
 Britain and France respectively, and which purchase books 
 published abroad. The British library contains some millions 
 of volumes, so well catalogued and arranged, with so competent 
 a staff of librarians and messengers, that any book in any 
 language can be got in half an hour for a reader. This library 
 lately bought, at the price of £30,000, a complete collection of 
 the Chinese Sheng, Fu and Hsien Chi (Chinese works on local 
 topography) ; and there is a scholar who gives his whole time 
 to taking care of the Chinese books ; he has a staff of attend- 
 ants who serve out to students of Chinese literature the books 
 they desire to read. Paper, pencil and ink are provided gratui- 
 tously to the reader, a warm and beautiful room to read in, and 
 light to read by ; all through in England, in the provincial 
 towns, there are smaller free libraries for the use of students. 
 
 To do away with sickness, as a cause of poverty, free 
 hospitals and infirmaries are established to cure the sick and 
 wouiided as quickly as possible and to treat women in child 
 birth, so that the patients may quickly recover and not be 
 long idle. Measures are taken to prevent .people becoming 
 sick by carefully attending to the drainage and water supply 
 of towns, by providing wholesome artizan's dwellings, by 
 providing parks, open spaces, recreation grounds in the towns, 
 with bands to play music in these parks. Regulations are in 
 force to prevent the spread of infectious diseases, and in some 
 countries of contagious diseases also. 
 
 Owing to all these measures, poverty has perceptibly 
 . decreased in England ; the native poor, though still more 
 
194 
 
 Believing 
 
 temporary 
 
 poverty. 
 
 numerone than is desirable, are fewer in proportion of the 
 inhabitants and not in such dire distress as in many other 
 lands. One conseqaence of this is that the poor of other lands 
 flock to England in great nambers and swell the numbers of 
 paupers and criminals. Sach pauper immigrants are not 
 allowed to land in the U. S., France, Grermany, Spain, etc. It 
 is possible England will soon have to pass a law to prevent 
 their landing in England. 
 
 We have spoken of the measures that can be taken to re- 
 lieve permanent poverty and to remove its causes. When the 
 poverty is only temporary, and accidental, other measures can 
 be taken. Thus in occasions of droughts, floods, and famines, 
 when industrious people are thrown in distress, it has been 
 found more advisable, instead of giving money gratuitously, to 
 create work to be done ; this, in order that the persons relieved 
 should retain their self-respect and habits of industry. Such 
 work is always found dear and uneconomical, and can only be 
 wisely resorted to in emergencies. A French prefect, of the 
 name of Hanssmaun, considered that he had found a cure for 
 all poverty by insisting on the rich paying for the employment 
 of the poor in constant work, irrespective of whether the 
 
 Haussmaun. work was needed or not, and that in ordinary times. " Hauss- 
 maunism," or creating work not for the sake of the work, 
 but to destroy poverty, was found to demoralize the people in 
 the same way as communism and injudicious charity ; it was 
 found destructive of the habits of thrift ; it created an un- 
 wholesome degree of improvidence and deprived .men of the 
 wholesome inducement to save that is caused by the fear 
 of poverty. 
 
 Begulation of The second way a State diffuses wealth is by regulating 
 labour. To understand how State regulation of labour diffuses 
 wealth, it is necessary to bear in mind an axiom of economics 
 that the money wages of labour has a tendency to remain 
 steady or to increase. The labourer, as a rule, only measures 
 his labour in money, and is always trying to get more money 
 for it. He often does not notice that money itself may be 
 cheap or dear. In the time of the Mings, when an influx of 
 gold and silver into Europe made money cheap, the labourer 
 did not ask, as he had a right to do, a bigger money pay- 
 
 Jabonr, 
 
195 
 
 ment, bat he asked the government to pass laws cheapen- 
 ing the price of commodities. The same thing happened when 
 the price of money went down in 1848. In both times things 
 righted themselves ; the plentifulness of money caused a 
 demand for labour, which raised the price of labour. This 
 state of things continued till 1870, when the price of gold, the 
 measure of value in England, rose ;.and the price of all com- 
 modities has since been falling, but the gold price of labour has 
 not fallen. The labourer is much richer now with the same 
 wages, say three '■^chien" of gold a week, than he was in 1870 
 with three chien of gold a week, because three chien of gold will 
 now buy more food, tea, and clothes, than they would have 
 bought in 1870. The labourer will not consent, on this account, 
 to receive less gold wages than he did in 1870. Hence when the 
 operation of law gives the workmen an advantage at the 
 expense of the capitalist, the capitalist cannot recoup himself 
 by cutting down wages. The operation of law in diffusing 
 wealth is not confined to taking wealth from the employer and 
 giving it to the employed ; it sometimes takes wealth from the 
 employed and gives it to their families. 
 
 The first laws, on a scientific basis, passed in England Truck and 
 
 '■ ° factory acts, 
 
 for the regulation of labour, were the truck and factor^/ acts. 
 
 The former put a stop to the practice of paying labourers in 
 
 food, drink, and clothing instead of in money ; this practice had 
 
 been abused by the employers of labour making a profit in 
 
 selling these articles to their employes ; in fact cheating , them 
 
 out of part of their wages. [In British merchant ships the 
 
 masters are still allowed to sell tobacco and clothes to the 
 
 seamen at a profit. This system, called the "slop shop," 
 
 works great evils ; the seaman who does not patronize the slop 
 
 shop may have a bad time ; it is to be hoped that at the next 
 
 revision of the Merchant Shipping Act the slop shop will be 
 
 abolished.] 
 
 The factory acts met an evil caused by the greed of both 
 
 employers and employed. Women and small children were 
 
 hired in avocations, for which their weakness unfitted them, 
 
 and for long hours destructive of their health and strength. 
 
 The employers hired the women and children, because they got 
 
 them cheap, and the husbands and fathers, in their greed for 
 
196 
 
 gain, hired out their wives and. children to do more arduous 
 labour than they were fitted for. -The factory, acts regulated 
 the ages at which children might be employed and the hours 
 during which children and women might work ; they also laid 
 down that the factories should not be overcrowded, that they 
 should be healthy and well ventilated. [The first factory acts 
 were very unpopular ; they were carried by the personal energy 
 of Lord Beaconsfield and Lord Shaftsbury ; the former, 
 as a young man, had determined to follow two objects in 
 life : to improve the condition of the poor and to increase the 
 influence of the crown ; he lived to accomplish both objects, 
 and now he is dead. Primrose day indicates the national 
 gratitude]. 
 
 An efibrt is being made to carry factory laws a step 
 further and not allow adult men to work over eight hours a 
 day ; the advocates of this change in the law think that if the 
 law was passed there would be more employment ; this, however, 
 is very doubtful ; what would probably happen is that the cost 
 of production would be increased and the demand for labour 
 would be lessened. For instance, houses costing more to 
 build and repair, people would live in smaller houses and post- 
 pone repairs and alterations, and there would be less and not 
 more employment for the bricklayers ; still more wopld the 
 rise in the cost of production of articles that can be bought 
 from abroad, handicap our native workmen and cause less 
 employment, and more still in commodities we sell to foreign 
 countries ; other countries with longer hours of labour would be 
 able to undersell us. Besides, except in a very few and arduous 
 trades, eight hours a day is scarcely enough for work, either 
 morally or physieallj*. Lastly, if such a law were passed, it 
 would be exceedingly difficult to enforce it, and the passing 
 laws that cannot be enforced is highly detrimental and 
 demoralizing. 
 Dangerous Another way of diffusing wealth by the regulation of la- 
 
 "meutsr hour, is in dangerous employments, such as mines, and where 
 machinery is used, making the employer responsible to support 
 the employed during the time they are laid up by accidents, 
 and to make a provision for the families of those killed. In 
 order to discourage recklessness on the part of the workmen, 
 
197 
 
 some provision has to be made to relieve the employer of 
 responsibility, if the accident was caused by the fault or gross 
 carelessness of the workmen. At one time it was thought 
 advisable to induce the workmen putting pressure on their 
 fellow-workmen to be careful, by enacting that if the accident 
 was caused by the fault or carelessness of a person in the same 
 employ, the employer was not bound to pay compensation. 
 This proviso of " common employment " was found to be hard 
 on workmen, as the workmen could not always control their 
 fellow-workmen, and could never prevent the managers and 
 overseers being careless. A new law has now been passed 
 abolishing the proviso of the common employment and fixing 
 the limit of the employers' liability. This new law has met the 
 approval of both workmen and employers ; of the former, 
 because it practically raises their wages by the amount of 
 insurance they would have to pay for similar benefits ; of the 
 latter, because the fixing the limit of their liability they 
 know exactly what are their responsibilites and can ensure 
 against them, and because litigation to fix the "amount of 
 compensation will be avoided. 
 
 It would be a good thing in the next revision of the 
 merchant shipping act to apply the same principles to the 
 dangerous employment of merchant seamen. The higher class 
 British ship owners are very generous to their seamen and 
 officers ; any man sick, whether his sickness was caused by his 
 own fault, (jr in the service of the ship, instead of being 
 dismissed, is cured at the expense of the ship owners, who 
 continue to pay him wages all the time of his sickness. These 
 ship owners give generous holidays, during which wages are 
 still paid; everybody in the employ of these companies is 
 loyal to his employers ; the vessels are seldom wrecked, and so 
 well cared for that their bills for repairs are comparatively 
 small. These good ship owners' vessels perform voyages 
 quicker, and are more quickly turned round than bad ship own- 
 ers' vessels, because they both get a better class of sSamen, and 
 because the seamen are more encouraged to work their hardest; 
 the seamen of good ship owners very rarely commit ofiences, 
 and give the consuls abroad no trouble. The good ship owners 
 therefore gain by their generosity. Uu fortunately there are 
 
198 
 
 still bad ship owners, comparatively few now, and decreasing 
 in numbers, who grind down and oppress their seamen, who 
 underpay the masters and force them to supplement their 
 wages out of the profit of the slop shops, who, when seamen 
 are sick, at once discharge them, and try to get rid of them 
 if the vessel is docked, and to avoid paying hospital expenses 
 for injuries and sickness, who feed the men on cheap pro- 
 visions and issue the smallest quantities of these they dare. 
 The ships of such bad ship owners are often wrecked ; the bill 
 for repair is great ; they .get a bad class of seamen, and if they 
 do happen to get good meu, such men are not encouraged to 
 behave well ; the seamen of bad ship owners give constant 
 trouble to consuls abroad. The bad ship owners lose by their 
 meanness. It would be a good thing if the bad ship owners 
 were compelled to behave almost as well to their employes 
 as the good ship owners already do voluntarily, out of enlight- 
 ened self-interest. That such could not injure the shipping 
 trade, or place British ships at a disadvantage as compared 
 with foreign, is proved by the fact that the best British ship 
 owners, those most successful, already behave more generously 
 than it would be proposed to render obligatory. 
 State aid to ■yp'e now come to our third form of state diffusion of 
 
 industries. i i ' • 
 
 wealth, VIZ., the taxmg the whole community to support 
 
 particular trades. State aid to industries. 
 
 Most nations consider it so important to have a mercantile 
 navy of their own, that they encourage the shipping industry 
 by subsidies. Thus the Chinese government aided the " China 
 Merchants' Steam Navigation Company " by giving steamers 
 and by employing it at a high rate of freight in carrying rice 
 to the north. Japan is giving very heavy subsidies to the 
 " Nippon Yusen Kaisha." France and Germany both subsidize 
 their mail lines of steamers. Economically snch subsidies are 
 only justifiable when they foster an infant industry, which will 
 be able to dispense with a subsidy when it matures. But 
 other thaYi economic motives come in. For purposes of self- 
 defence it is necessary that a part of the population should be 
 trained to a sea-faring life. In this case subsidies to shipping 
 
 must be considered in the light of military expenditure 
 
 necessary waste. 
 
199 
 
 The giving bounties on exports, is only justifiable when 
 they are given to foster infant industries; if the bounties are 
 made permauent, not only is the native country paying tribute 
 to the foreign consumers, but it is lessening the wealth of the 
 world by causing something to be produced with more labour 
 at home, which " could have been produced with less labour 
 abroad ; the amount of labour wasted is a loss to the world. 
 
 ♦ • * 
 
Chapter XV. 
 
 Cbariti?, 
 
 Individual's ^T has already been stated that the tribunals of law cannot 
 beyond ^ enforce the practice of the higher virtues. The action 
 ^'° h,w! °* of ^^^ tribunals of law should be supplemented by the 
 
 action of the tribunals of public opinion and the tribunal of 
 the individual conscience. This truth is specially applicable 
 to acts of benevolence. A nation is a different subject matter 
 to an individual, and, though both a nation and an individual 
 are bound to act in accordance with morality, the difference 
 between a, nation and an individual imposes a different rule of 
 morality on the nation to what it imposes on the individual. 
 In the matter of the diffusion of wealth, the government of a 
 nation, which is in the position of a trustee, is bound to be 
 just first, and only generous to the extent that such generosity 
 benefits the nation at large. An individual is likewise bound 
 to be just, but he is bound too to be generous to the full 
 extent of his ability, and he can be generous as long as his 
 Distinction, generosity benefits a class, a few individuals, or even one 
 "*^an°d of**'^ individual, without benefitting the nation at large ; all he has 
 individual, to take care of is that he does not injure the nation. A wise 
 Greek philosopher in the time of the Chow [Plato] likened 
 a man to a chariot with the horses and charioteer. The 
 chariot was his conduct, the horses his emotions, and the 
 charioteer his reason. "It was right," he said, "that the 
 emotions should be the motive power of conduct, but the 
 emotions should be guided and checked by reason." A wise 
 Swiss philosopher, in the time of Kien-lung [Vattel] said: 
 " Generosity and friendship are equally virtues on the throne 
 
201 
 
 as in tlie cottage, but a wise and good king should, while* 
 cherishing these virtues in his private life, in his public 
 capacity restrain his emotions, and only be guided by the good 
 of his people." 
 
 However benevolent to the poor the action of the State 
 may be, there must always be left a sphere for private 
 benevolence. It is not only unlikely that State benevolence 
 should be so great as to destroy private benevolence, it is also 
 undesirable. As the Chinese philosopher says : " The benev- 
 olence that destroys opportunities to be benevolent, is ex- 
 cessive," Or as the wise Dutch jurist (Grotius) in the time 
 of the Ming said : " There are two kinds of duty — that 
 commanded by heaven, the neglecting of which would be 
 great wickedness ; and that which', though not directly com- 
 manded, is advised and enjoined as the more excellent way, 
 the following of which is the mark of a virtuous and exalted 
 mind, and which will not miss its reward." 
 
 The first principle to be observed, with regard to charity, Proper 
 is that the motive of its exercise should not be the gratifica- charity" 
 tion of our own emotions, however amiable, bnt the good of 
 oar fellows. 
 
 If we allow our emotions of pity a free course, without Mischief of 
 guiding and restraining them by our reason, mischief will as nate charity, 
 surely result as if the horses of a chariot were allowed to 
 gallop without being guided or checked by the charioteer. 
 If we give money to beggars, they will probably spend it on 
 drink or opium and do themselves and society injury. If we 
 are moved with pity, unrestrained by reason, and give money 
 to people who are mutilated, we encourage lazy people to 
 paint fictitious sores, and even worse wicked people to mutilate 
 their children, or other people's children, to excite pity, and 
 sending them out to beg. If we, when we hear, or read, a 
 plausible tale of woe and sorrow, at once give money without 
 enquiry, we encourage the telling of lies and the imposture of 
 the professional writer of begging letters. The mischief of 
 indiscriminate charity is deep and manifold. In the first 
 place money, recklessly given, robs the fand from which 
 wise charities are drawn. In the second place, by encouraging 
 imposture, it creates a feeling of distrast and dries up the 
 
202 
 
 'sources of charity ; people are so afraid of being cheated that 
 they will, if imposture is rife, often refuse to believe a true 
 story of distress, and will decline to relieve meritorious cases. 
 In the third place, indiscriminate charity encourages laziness, 
 destroys the manly independence of character, and, what is 
 worse, pauperizes a people. I remember a case of this, A 
 rich gentleman in England determined to make all the people 
 in a village happy ; he gave them beautiful cottages, beautiful 
 furniture, beautiful clothes and beautiful flowers. The vil- 
 lagers having obtained all these things for nothing, did not 
 really care for them, for it is a characteristic of the human 
 mind to find greater happiness in the pursuit of objects 
 than in their attainment, and the happiness of attainment is 
 in the proportion to the labour spent in pursuit. Instead of 
 working, the villagers made a living by showing off their gifts, 
 for many people flocked to see the " model village " ; and, in 
 the hopes that the rich gentleman would always give them 
 more gifts, recklessly spent their money on drink and vice. 
 Their children were not properly educated, and were perverted 
 by the evil example of their parents into habits of idleness and 
 dissoluteness. The many thousands of dollars, spent by that 
 rich gentleman in charity, were a curse and not a blessing. 
 
 In history we have a still more appalling warning of the 
 evil effects of indiscriminate charity in the Story of Rome 
 during the time of the " Division of the Chinese empire." 
 
 Home, owing to her wise laws, good administration, cour- 
 age and industry of her people, had become in the time of the 
 Han dynasty probably the most powerful and rich country the 
 world has ever seen. She was as renowned for poetry, litera- 
 ture and art as she was for the courage and discipline of her 
 army and navy, and for the skill in manufacturing implements 
 of war. In the time of Wang Mang, one man, the nephew of a 
 successful general, usurped all the power ; both he and his suc- 
 cessors were jealous of men of ability, and instead of employino- 
 the wealthy, the noble, the wise and the learned to help them 
 govern, surrounded themselves with low and servile flatterers. 
 The rich and noble having no honourable career open to 
 them, spent their time in idleness and ignoble pleasures. 
 The poor followed their example j honourable work was 
 
203 
 
 thought degrading. To please the people the rich established 
 a system of free meals and free eatertaioments for the poor, the 
 expression for which (" Panem et circenses ") has passed into 
 a proverb. The whole Roman population was demoralized by 
 these free meals and free entertainments ; they ceased to enter 
 the army and navy, or to till the ground. The former profes- 
 sions were filled with foreigners, and the latter by slaves. 
 Roman society became corrupt and vicious ; it lost its taste for 
 innocent amusement, and only cared for the cruel sport of the 
 arena, where enemies taken in battle, criminals and unpopular 
 persons, were thrown to be devoured by wild beasts kept for 
 the purpose, or made to fight and kill each other, that their 
 dying agonies might amuse the demoralized people. There 
 is a saying, " Deterioratio optimi pessima," as Rome in the 
 zenith of her glory was the greatest nation the world has seen, 
 so in her perversion she was the worst instance of vice and 
 corruption. Her wealth attracted the cupidity of the neigh- 
 bouring barbarous tribes, the life of idleness and luxury had 
 sapped away th& virtues of the Romans, courage and patriotism 
 had departed. At first she tried to buy off the barbarians, but 
 this only excited their cupidity more. Finally Rome, with all 
 her splendid weapons, all her knowledge of war, fell before 
 hordes of badly armed ignorant barbarians. 
 
 Many people still give charity in doles, that is, periodic 
 distribution of food and money to the inhabitants of certain 
 localities. I see lately a rich man in England has given 
 $400,000 to his native village, the interest of which is to be 
 divided for ever among the inhabitants of that village. He 
 had better have burnt the money or thrown it into the sea ; 
 then, if it had done no good, it would have done no harm ; as 
 it is, it will demoralize the inhabitants of the village. As 
 Mencius says, "There is a benevolence which is not true 
 benevolence." 
 
 Having pointed out what are mischievous kinds of charity. Proper 
 it remains to show : 1st. What are beneficial modes of charity. "cCity!* 
 2nd. What means can be taken to secure a plentiful flow of 
 charity in proper channels. 3rd. What measures can be taken 
 to ensure that these charities shall be honestly and economic- 
 ally administered. 
 
204 
 
 The first general principle with regard to the proper 
 objects of private charity, is that in any sphere where a 
 government can legitimately, in the interest of the whole 
 nation, from motives of expediency, direct a diffusion of 
 wealth, there individuals may find a sphere for charity, in 
 supplementing the work of the government, from motives of 
 kindness, to benefit, not necessarily the nation at large, but 
 also particular localities and particular individuals. 
 
 In the second place, while government directed diffusion 
 of wealth should confine itself to benefitting the nation of 
 which it is the trustee, individual charity should embrace all 
 humanity in the sphere of its kindness. 
 
 In the third place, while government directed diffusion of 
 
 wealth should confine its attention in great measure to human 
 
 beings, individual charity should include all sentient creation 
 
 in the circle of its benevolenc.e. 
 
 " He loveth best, who loveth most, 
 All things both great and small, 
 For the dear Lord, who loveth iia. 
 He made and loves them all." 
 
 For example, in directly relieving the poor the state 
 should make no distinction between deserving: and undeservino- 
 poor ; it should maintain the poor in life, but not in comfort. 
 Private charity can legitimately undertake the task of seek- 
 ing out cases of deserving poverty and of maintaining the 
 deserving poor, not only in life, but in comfort. Even to the 
 undeserving poor, especially the aged, private charity may give 
 comforts, provided it does so in such moderation as not to 
 demoralize the people. It can give the aged inmates of work- 
 houses little luxuries, such as tea and tobacco. It can relieve 
 the dreariness and monotony of workhouse life by giving 
 the inmates occasional concerts and theatrical entertainments. 
 It can supplement the workhouses, to which only undeservino- 
 poor should be forced to go, by establishing " alms houses," 
 or pretty little houses for the deserving poor, where the ao-ed 
 husband and wife can live together, and still enjoy the comfort 
 of each other's society. It can supplement the out-door relief 
 given by the action of law, by additional sums given to deserv- 
 ing cases. It can help the government eradicate the causes of 
 poverty by crusades against intemperance, by establishino- 
 
205 
 
 inuocent amusements, workmea's clnbs, coffee and tea shops, 
 etc., to wean people from the pablic houses, gin shops and 
 opium deus. It can aid the state to destroy the seeds of ill- 
 health by adding to the parks and recreation grounds, by 
 promoting the physical welfare of the poor, by establishing 
 wholesome out-door games and gymnasia for the young, by 
 giving the poor children of the towns occasional trips into the 
 country, and, when delicate, sending them for more or less 
 long periods to the bracing air of the seaside. It can supple- 
 ment the action of the State as to hospitals and infirmaries 
 by adding to the inmates' pleasures, as well as necessaries, 
 toys for the sick children, newspapers and books for the elder 
 patients ; by adding to the hospitals, the object of which is 
 to cure people, homes for the incurable, where people afBicted 
 with incurable diseases may pass the time, till death, in as 
 much comfort as they are capabls of receiving. 
 
 Private charity can establish deaf, dumb and blind asy- 
 lums for teaching those aflflicted a trade and industry suitable 
 to their condition, societies for the protection of women and 
 children, societies for preventing cruelty to animals, societies 
 for aiding emigration, reformatory schools for rescuing the 
 children of the vicious and youthful criminals from lives of 
 vice, schools for waifs and strays, training ships to bring up 
 boys as fishermen and mercantile seamen, lock hospitals to 
 rescue fallen women, etc., etc. 
 
 Charity may supplement the action of the government 
 in eradicating idleness by still further carrying out govern- 
 ment schemes of education, by bestowing prizes and scholar- 
 ships as rewards for industry, by supplj'ing poor people with a 
 higher education than the state scheme makes obligatory, by 
 supplying particular localities with a better class of school than 
 the State compels, by presents of pictures, statues, works of 
 art, curiosities, machinery, etc., to existing national, provincial 
 or district picture galleries and museums, of books to the 
 existing libraries, by founding more museums, picture galleries 
 and free libraries, by giving good musical instruments to exist- 
 ing schools, by establishing free lectures, by aiding th6 dissemi- 
 nation of good books and preventing people buying pernicious 
 books, by what are called " Colportage " Societies, by publish- 
 
206 
 
 ing, at cheap rates and in simple language, useful moral trea- 
 tises, books on science, etc., by causing the gratuitous distribu- 
 tion of such books. 
 
 Private charity may, in times of special distress, give em- 
 ployment to the poor fit current wages. In England, this is 
 frequently done by rich men hiring the poor to make garden 
 paths for them, to dig gravel, cut timber, chop fire wood, etc. 
 This emplojTnent of the poor by individuals has not the same 
 demoralizing effect that State labour has. I remember in 1890 
 there was a flood at Hankow, and many Chinese were in great 
 distress ; the Chinese authorities established a system of relief, 
 and at the request of my countrymen I asked Mr. Tsai Si-yung, 
 afterwards Taotai at Wuchang, then the Viceroy's Secretary, 
 what we foreigners could do to help ; he gave the wise reply : 
 "Employ as many Chinese as you can at the current rates of 
 wages ; those you employ will be able to assist their families, 
 and the more you employ the fewer will there be for us to 
 relieve." 
 
 In regard to regulating the laws of labour, individual 
 charity can do things that cannot perhaps be legitimately done 
 by government. Charity can decide only to purchase articles of 
 those shops which pay fair wages to their work people and only 
 to employ contractors who deal fairly with their employes. It 
 can or not only foster infant industries, it may temporarily sup- 
 port decadent industries by large purchases of the commodities. 
 The law of perfection of individual charity is, " Every in- 
 dividual should work all he can, save all he can, give all he 
 can" He is not bound, as the State is, to see that his gifts 
 shall benefit all ; he can give to one person, or to a particular 
 class ; he has to think of the means at his disposal and to do 
 with them as much good as he knows how to ; he may legiti- 
 mately confine his gifts to a particular place, like his native 
 village, his native province, or to a particular class in his vil- 
 lage, province or country— soldiers, sailors, actors, shop-keepers, 
 coachmen, artizans, merchants, etc. 
 
 As an example of beneficient aid given to a particular class, 
 there is a society in England called " The Girls' Friendly 
 Society " to help servant girls. lu England the servant girls 
 of all classes are not bought, as in China, but hired, and these 
 
207 
 
 girls, in the legitimate desire of bettering themselves, try to 
 get high wages, and with this object are constantly changing 
 their places. The Girls' Friendly Society has agents in every 
 town and village in England, and whenever a servant girl 
 leaves her village, the agent of the Girls' Friendly Society 
 writes to the agent at her destination, and if the girl gets sick, 
 or into trouble, the agent helps and advises her. Further, there 
 are special respectable and cheap lodging houses established, 
 where servant girls can stay, when they are out of place, while 
 they are looking for new situations. 
 
 An individual need not confine his charities to his own 
 countrymen ; he may legitimately extend them to people of all 
 nationalities — missionary societies, medical missions abroad, 
 education abroad, relief of poor abroad, etc. 
 
 As an example of private charity extended to men of all 
 
 nationalities the " Labour Bureaus " of the United States are a 
 
 good example. These " Labour Bureaus " collect information 
 
 as to the state of the labour market in each and every one of 
 
 the centres of industry in the United States and of each and 
 
 every trade. A man out of employ and poor, of whatever 
 
 nationality, has only to go to one of these labour bureaus, and 
 
 he will be told where he can get work, and, if necessary, he 
 
 will be forwarded to that place and an advance given him to 
 
 support him till he gets there. 
 
 The next question is, how is the flow of charity to be kept How to 
 
 ■^ . . ensure flow of 
 
 Tip towards good objects ? The answer is, by checking and charity. 
 
 punishing imposture. lu England there is a society called the 
 " Charity Organization Society," which makes it its business to 
 enquire into the working of charities and into the merits of 
 appeals to the public for charitable aid. This society brings 
 falsehood and imposture to light, and by checking, to a certain 
 extent, charities which are mischievous, creates a greater flow 
 of money to the charities that are useful and well administered. 
 To prevent charities being abused, or diverted from the 
 purposes for which they were intended, there are officers ap- 
 pointed called " charity commissioners," whose doty it is to see 
 that charities are properly applied. In case, as often happens, 
 the object for which the money has been given, ceased to 
 exist, or in case there is a change of circumstances, rendering 
 
208 
 
 the spending the money in the exact way the founders dictated 
 inexpedient ; thea the charity commissioners can decide in 
 what manner the money shall be spent, so as to, as nearly as 
 • possible, carry out the wishes of the donors. 
 ^'\To™'^f'^* Lastly, what should be the management of charities ? 
 
 charities. There are many charities for excellent objects, which if they 
 are not managed judicionsly will do injary and not good to the 
 commnuity. Snch are foundling hospitals. If foundlings are 
 taken and supported without enquiry, they encourage lazy 
 unnatural parents, divesting themselves of the duty of support- 
 ing their own children, and also encourage illicit intercourse 
 between men and women, if the result of such intercourse can be 
 put away in the foundling hospital. All foundling hospitals 
 should use their utmost efforts to discover the mother and 
 father of the foundling arid to force the father to support the 
 child. If the father is dead, the foundling hospital may be 
 justified in taking the child without payment, in order to 
 remove the temptation to infanticide. Foundling childrea 
 should be reared and educated by persons experienced in such 
 matters, and the institutions' should be frequently visited and 
 inspected by committees of persons unconnected with the in- 
 stitutions ; and these visitors' reports should be published. 
 
 All charities, especially foundling institutions, should be 
 open to inspection ; all charities should keep detailed accounts, 
 which should be audited by persons unconnected with the 
 charity and be published for the information of the community. 
 In China it would be well if the Chinese authorities would visit 
 and inspect all Christian schools, foundling institutions, 
 hospitals, etc., where natives are educated, reared or medically 
 treated, and would report thereon. All charities should 
 publish periodic reports of the work done, the rules and regu- 
 lations of the charity, the names and addresses of the man- 
 aging committee, treasurer and secretary and other officials 
 of the charity. 
 
 I have known of cases of charity managers trying to con- 
 ceal facts with regard to the charity. Such concealment of 
 facts is most mischievous. Thus a foundling hospital in 
 China, concealed, or tried to conceal the fact of the great 
 mortality among the children. This attempt at concealment 
 
209 
 
 gave rise to sinister and nnfounded suspicions. It should have 
 published the fact and explained that in foundling hospitals, 
 from the nature of things, there will always be great mortality. 
 The children often being the offspring of vice are weaklings 
 by heredity ; besides Chinese parents do not often abandon 
 their children until they are on the point of death ; the children 
 have often been long exposed, long underfed, long nncared for 
 before being taken charge of by the foundling institution. 
 
 In China, where the natives are very generous, all that is 
 necessary to create a flow of charity is to point out the proper 
 objects of charity and inspire the public with confidence in 
 the way the charity is organized and managed. 
 
 We have spoken of the objective value of charity ; one Ti^e sub- 
 
 . ..... . jeotive value 
 
 word, in conclusion, as to its subjective value. of charity. 
 
 The time comes to most of us when faith is dim and hope 
 as regards ourselves is dead ; it comes to all of us when the 
 evil days come and the years draw nigh, when we say we 
 have no pleasure in them, when desire shall fail, because man 
 goeth to his long home ; then, in those latter days, when we no 
 longer care for anything in life for ourselves, we can find 
 pleasure in doing good to others. If we open the doors of our 
 hearts to charity, we shall find " music within and a song " 
 that shall cheer us to work while it is still day, until the night 
 comes and there is rest. 
 

 
 
 
 
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