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Author: 
 
 Mathews, Frederic 
 
 Title: 
 
 Taxation and the 
 distribution of wealth 
 
 PI3.C6' 
 
 Garden City, N.Y. 
 
 Date: 
 
 1914 
 
^^^^^Q-X^-?^ 
 
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 \ 
 
 Mathews, Frederic, 1869- 
 
 Taxation and the distribution of \vealth ; studies in tlie eco- 
 nomic, ethical, and practical relations of fiscal systems to 
 social organization, by Frederic Mathews. Garden City, New 
 York, Doubleday, Pa<re & company, 1914. 
 
 xili, ,2), 6S0 p., 1 1. 23^ cm. 
 
 "Authors, editions, and sources quoted" : p. 065-071. 
 
 CoxNTENTs.— Protection.— Taxation.— The natural tax.— Proffross.— 
 Politics. 
 
 1. Taxation. 2. Social prohlonis. 3. Tar i IT. 4. Wealth. 
 
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Taxation and the Distribution of Wealth 
 

 Taxation and the 
 Distribution of Wealth 
 
 STUDIES IN THE ECONOMIC, ETHICAL, AND PRACTICAL 
 
 RELATIONS OF FISCAL SYSTEMS TO 
 
 SOCIAL ORGANIZATION 
 
 By 
 FREDERIC MATHEWS 
 
 Garden City New York 
 DOUBLED AY, PAGE & COMPANY 
 
 1914 
 
Aim 
 
 Copyright, igi 4, by 
 Frederic Mathews 
 
 All rights reserved, including that of 
 
 translation into foreign languages, 
 
 including the Scandinavian 
 
 Man is generally considered by statesmen and projectors as the 
 materials of a sort of political mechanics. Projectors disturb nature 
 in the course of her operations on human affairs, and it requires no more 
 than to leave her alone and give her fair play in the pursuit of her ends 
 that she may establish her own designs. . . . Little else is required 
 to carry a state to the highest degree of affluence from the lowest bar- 
 barism but peace, easy taxes, and a tolerable administration of justice; 
 all the rest being brought about by the natural course of things. 
 
 Adam Smith. 
 
CONTENTS 
 
 Introduction 
 
 PAGE 
 XV' 
 
 Tart I 
 
 PROTECTION 
 
 Book I— The Old Protection. Book II— The New 
 
 Protection, 
 
 BOOK I — THE OLD PROTECTION 
 
 Chapter I — First Principles of Protection ... 3 
 Section i — The Origins of Protection, 3 
 Section 11 — Gold and Wealth, 6 
 Section ni — ^The Balance of Trade, 7 
 
 Chapter II — General Protection 18 
 
 Section i — Protection and Capital, 18 
 Section n — ^The Infant Industry, 20 
 Section ni — Protection of Industry, 28 
 
 Article i — Protectionist Maxims. Article 2 — Protection which 
 Raises Price. Article 3 — Protection which Lowers Price. 
 
 Chapter III — Protection and Labour 38 
 
 Section i— The Creation of a Demand for Labour by 
 
 Protective Taxation, 38 
 Section n — ^The Raising of Wages by Protective Taxation, 40 
 Section iii — Pauper Labour and Protection, 41 
 Section iv — Protected Labour in the United States, 46 
 
 BOOK II — THE NEW PROTECTION 
 
 Chapter I — ^Analysis of the New Protection ... 55 
 
 Chapter II — Productive Potentialities .... 59 
 
 Chapter III — ^The Attraction of Capital .... 66 
 Section i — Capital Attracted by Taxation, 66 
 Section 11 — Effects of Taxation on Capital, 73 
 
 vn 
 
 l!'i 
 
VUl 
 
 Contents 
 
 Chapter IV— Dumping .... '*"■ 
 
 Section i — Toiro+i^^ /^- 4.u_ tt^- _ ' * * 75 
 
 Section n 
 
 Chapter V — 
 
 Section i- 
 
 Section n- 
 
 Articxe I 
 
 Section m- 
 
 Chapter VI — : 
 
 -Taxation for the Encouragement of Dumping, 7 c 
 -Taxation for the Prevention of Dumping, 84 
 
 The Tariff- Weapon 
 The Import Duty as a Weapon, 94 
 The Tariff-Weapon and Trade, 97 
 Diplomacy. Article 2— Preference. 
 Tariff Warfare, 109 
 
 Imperialism and Progress. 
 
 94 
 
 Contents 
 
 Chapter II— Real Property 
 
 Section 1 — Classification, 164 
 
 Section 11 — Capital Value of Improvements, 164 
 
 Section iii — Capital Value of Land, 165 
 
 Section iv — Rent of Improvements, 164 
 
 Section v — Ground-Rent, 170 
 
 Chapter III — Comparative Classification of the Sources 
 
 OF SocLAL Revenue 
 
 IX 
 
 PAGE 
 164 
 
 173 
 
 ZI8 
 
 Chapter 
 
 Chapter 
 Section 
 
 123 
 126 
 
 Tart II 
 
 TAXATION 
 
 Book l-Indirect Taxation. Book ll-Direct Taxation. 
 
 BOOK I — INDIRECT TAXATION 
 I— General Principles of Taxation 
 II— The Taxation of Consumption 
 
 c .• I— Advantages of Indirect Taxation, 126 
 
 Section n— Taxmg the Foreigner, 128 
 
 Section m— Indirect Taxation for Revenue, 130 
 
 Section iv-Convenience and Security of Indirect Taxation, 141 
 
 ARTICLE I— Convenience. Article 2— Security. 
 Section V— Expense of Indirect Taxation, 143 
 
 BOOK II — DIRECT TAXATION 
 
 Chapter I— Personal Property 
 
 Section i~Classification of Property, ici 
 
 Section ii— Income, 151 
 
 Section m—Inheritance, 155 
 
 Section iv— Credits, 155 
 
 r^'^^l^ I— Securities. Article 2— Bank Deposits. Article x— 
 Coin. Article 4-Notes. Article s-Summary. -^"^"^ 3 
 
 Section v— Chattels, 159 
 
 Section vi— Miscellaneous Taxes, 161 
 
 151 
 
 Tart III 
 THE NATURAL TAX 
 
 Book I— The Value of the Land. Book II— The Tran- 
 sition. Book III — Incidence of Taxation^ Indirect and 
 Direct, Book IV — Fiscal Problems. 
 
 BOOK I — THE VALUE OF THE LAND 
 
 Chapter I — Difficulties in Direct Taxation of Land 
 
 Values 
 
 179 
 
 Chapter II — ^Land Values 181 
 
 Section i — General Considerations, 181 
 
 Section n — Method of Estimation, 183 
 
 Section iii — Estimates, 192 
 
 Article i — Great Britain 1885. Article 2 — ^The United States 
 1890. Articles — Pennsylvania. Article 4 — Connecticut. Article 
 5 — Boston. Article 6 — Summary. 
 
 Section iv — Other Estimates, 201 
 
 Article 1 — Great Britain 1899. Article 2 — Other Countries. 
 
 Chapter 
 Chapter 
 
 BOOK II— THE TRANSITION 
 I — The Land and Society 
 
 n — Direct Assessment of Land Values: Con- 
 fiscation AND Compensation 
 
 208 
 
 213 
 
X Contents 
 
 PAGE 
 
 Chapter III— The Repeal of Indirect Taxes ... 224 
 Section i— Tariff- Weapon Taxes, 224 
 Section 11— Protective Taxes, 224 
 
 Article i — ^Exporting Industries. Article 2 — ^Domestic In- 
 dustries. 
 
 Section m — Revenue Taxes, 226 
 
 « 
 
 Chapter IV— The Establishment of Land Values . . 227 
 Chapter V— The Diffusion of a Tax on Land Values 235 
 
 BOOK m — INCIDENCE OF TAXATION. INDIRECT AND 
 
 DIRECT 
 
 Chapter I— Incidence of Indirect Taxation in the 
 
 United States 239 
 
 Chapter II— Incidence of a Direct Tax on Land Values 247 
 
 BOOK IV— FISCAL PROBLEMS 
 
 Chapter I — Labour ^5^ 
 
 Section i— Labour and Indirect Taxation, 258 
 Section 11— Labour and Direct Taxation, 265 
 
 Chapter II — Railways 269 
 
 Chapter III— Money 278 
 
 Chapter IV— Property ^.286 
 
 Chapter V— Natural Economics 293 
 
 Part IF 
 
 PROGRESS 
 
 Book I— Progress and Politics. Book II— Intellectual 
 Progress. Book III— Religion. Book IV— Philosophy. 
 
 BOOK I— PROGRESS AND POLITICS 
 
 Chapter I — Introduction 
 
 Chapter II — Darwin and Weismann 
 
 Chapter III— Political Progress and Reason . 
 
 r» 
 
 303 
 316 
 
 . 
 
 Contents j xi 
 
 PAGS 
 
 BOOK n— INTELLECTUAL PROGRESS 
 
 Chapter I — The Great Man . . . . . . . ! 326 
 
 Chapter ill — The Law of Intellectual Progress . . 331 
 Section i — Method of Inquiry, 331 
 Section 11— Art, 333 
 
 Article i— Classification. Article 2— Architecture. Arti- 
 cle 3 — Sculpture. Article 4— Painting. Article 5— Music 
 Article 6 — Poetry. 
 
 Chapter III— Science and Man 349 
 
 BOOK III— RELIGION 
 
 Chapter I— Object and Method of Inquiry . . . 356 
 
 Chapter II— Lao-tsze 366 
 
 Chapter ni— Confucius 369 
 
 Chapter IV-— Brahmanism 372 
 
 Chapter V—Buddhism -378 
 
 Chapter VI— Zoroaster 380 
 
 Chapter VII— Egypt 383 
 
 Chapter VIII— Judaism 387 
 
 Chapter IX — Mohammed 389 
 
 Chapter X— Greece 393 
 
 Section 1 — Introduction, 393 
 Section n— Greek Tragedy, 396 
 Section in — Greek Philosophy, 400 
 
 Article i— The Early Philosophers. Article 2— Socrates. Arti- 
 cle 3— Plato. Article 4— Anstotle. Article 5 — Cleanthes. 
 
 Chapter XI— Rome 417 
 
 Chapter XII — ^Summary 420 
 
 BOOK IV— PHILOSOPHY 
 
 Chapter I— Pre-Socratic Thought 423 
 
 Section i — Introduction, 423 
 Section n — ^The Physicists, 426 
 
 Article 1 — ^Thales. Article 2 — ^Anaximenes. Article 3 — ^Diog- 
 enes of ApoUonia. 
 
 Section in — ^The Metaphysicians, 431 
 
 Article i— Anaximander. Article 2 — Pythagoras. Article 3 — 
 Xenophanes. Article 4 — Parmenides. Article 5 — ^Zeno and 
 Melissus. 
 
4 
 
 xii Contents 
 
 PAGE 
 
 Section iv— The Metaphysical Physicists, 342 
 
 Article i — Heraclitus. Article 2 — Empedocles. Article 3— 
 Democritus. 
 
 Section v — The Physical Metaphysicians, 460 
 
 Article i — ^Anaxagoras. Article 2 — Protagoras. Article 3 — 
 Gorgias. 
 
 Chapter II — ^Attic Philosophy 475 
 
 Section i — Socrates, 475 
 
 Section n — The Socratic Schools, 479 
 
 Article i — Introduction. Article 2 — ^The Megarians. Arti- 
 cle 3 —The Cyrenaics. Article 4 —The Cynics. 
 
 Section in — Plato, 483 
 Section rv — Aristotle, 488 
 Section v — Epicurus, 493 
 Section vi — Zeno, the Stoic, 495 
 Section vn — Pyrrho, 497 
 
 Chapter III — Mysticism 502 
 
 Section i — The Alexandrians, 502 
 Section n — Faith, 504 
 
 Chapter IV — Modern Philosophy 509 
 
 Chapter V — Christ 521 
 
 Section 1 — The Law of Substance, 521 
 Section u — The Law of Reason, 536 
 Section iii — The Law of God, 529 
 
 Contents 
 
 BOOK n— POLITICAL PRACTICE 
 
 Chapter I— The Indirect Tax in Practice 
 
 Chapter II— Practical Socialism . . . . 
 
 Chapter III — Fiscal Mechanics .... 
 
 Chapter IV— The Fiscal Clearing House . 
 
 xiu 
 
 PAGE 
 621 
 
 r 
 
 Tart F 
 
 POLITICS 
 
 Book I — Political Thtory. Book II — Political Practice, 
 
 Book III — Practical Politics. 
 
 BOOK I— POLITICAL THEORY 
 
 Chapter I — Introduction . . 547 
 
 Chapter II — Aristocracy 556 
 
 Chapter HI — Democracy 561 
 
 Chapter IV— Natural Society .568 
 
 BOOK m— PRACTICAL POLITICS 
 
 Chapter I— The Indirect Tax in the United States . 628 
 Section i — Indirect Finance, 628 
 Section n — Direct Finance, 636 
 Section in — Applied Direct Finance, 638 
 
 Chapter II— France 644 
 
 Chapter III— Germany 647 
 
 Chapter IV— Russia 650 
 
 Chapter V— England 652 
 
 Chapter VI— The East 656 
 
 Chapter VII— Conclusion 658 
 
 Authors, Editions, and Sources Quoted 665 
 
 Index 673 
 
I 
 
 '? 
 
 i 
 
 ft 
 
 Introduction 
 
 Among the more important questions confronting the twentieth cen- 
 tury are those dealing with the distribution of wealth. The systems 
 of taxation upon which national administrations are based, are impor- 
 tant factors in this connexion. The relation of these systems to the 
 general process of the production and distribution of wealth is here 
 reviewed. 
 
 The subject naturally falls into several fields. A government may 
 seek, through the taxing powers under its control, to develop or protect 
 the industrial life of the society it administers. It may limit their use 
 to purely fiscal objects; and again, use them in order to further the 
 various political interests of the social organization: actually and in 
 relation to other societies. 
 
 The system of industrial Protection, or the attempt to develop the 
 productive capacity of a society through the use of the Tariff, and 
 other forms of administrative assistance, is discussed in Part I. Part II 
 is devoted to the examination of different methods of supplying social 
 financial needs. Among other policies reviewed is that of basing social 
 fiscal demands, so far as possible, upon the annual wealth created by the 
 society as a whole, in the form of the values represented by its imim- 
 proved land area. For reasons developed, this policy seems worthy 
 detailed examination. Part III presents such examination. 
 
 It is impossible to discuss national financial methods in their wider 
 application, without meeting political and social questions leading into 
 fields not limited by economic inquiry. The relation of national fiscal 
 policies to the intellectual life of a people is important. The dominant 
 conceptions of progress affect the means through which a nation meets 
 the expenses of organized existence. The relatively recent develop- 
 ments of the evolutionary sciences present questions of sodal and 
 
Introduction 
 
 political significance. A study of organized society can scarcely be 
 undertaken without coming in contact with ethical and theological 
 influences; these, m turn, involving problems of a speculative or philo- 
 sophic nature. No discussion of the fundamental ideas, underlying 
 existing political and social structures, would seem complete without 
 an examination of their connexion with such problems. Part IV is, 
 therefore, occupied with the relation of the evolutionary sciences, intel- 
 lectual progress, speculative, theological and philosophic thought, to 
 the subject of social and political organization. 
 
 Part V deals with the relation of the subjects discussed to systems at 
 present in force. 
 
 Part I 
 PROTECTION 
 
 BOOK I 
 THE OLD PROTECTION 
 
 BOOK II 
 THE NEW PROTECTION 
 
; 
 
 Book I 
 
 THE OLD PROTECTION 
 
 II 
 
 CHAPTER I 
 
 FIRST PRINCIPLES OF PROTECTION 
 
 Section 1 — The Origins of Protection. Section II — Gold and 
 Wealth, Section III —The Balance of Trade. 
 
 Section I — The Origins of Protection 
 
 PROTECTION, as embraced in national fiscal systems, is a 
 policy of using the taxing powers of a society in order to pro- 
 tect or develop its industrial life. The earlier conceptions 
 upon which general Protection rests have been superseded in 
 part by the latter-day developments of the system; as it is impossible, 
 however, to understand these without an examination of the older 
 foundations upon which the modern structures are reared, the earlier 
 forms of Protection are here reviewed. The subject thus falls into two 
 fields: The Old and the New Protection. 
 
 The origin and history of Protection are generally traced to a single 
 source. The majority of protective policies seems to be derived, his- 
 torically at least, from one fundamental economic idea which played 
 a dominant part in the political life of its day; although at present sub- 
 merged or largely superseded by other considerations. This idea is that 
 wealth and the monetary metals are interchangeable terms, referring to 
 identical things. In other words, that the wealth of a nation is directly 
 dependent upon the quantity of gold and silver it possesses; or again, 
 that the wealth of a nation is exactly measured by the amount of gold 
 and silver it controls at any given time. 
 
 This idea long dominated economic thought. It was evident that the 
 precious metals were the most easily convertible and least perishable of 
 commodities and that they represented all others as their simplest 
 expression; what, therefore, more natural than for governments to 
 suppose that their wisest course lay in using their powers to attract and 
 
 3 
 

 m 
 
 4 The Old Protection pt. i 
 
 hold these metals, and that this policy should be regarded as the best 
 means of increasing the wealth of the people? 
 
 The origin of this conception is lost in remote antiquity, but from it 
 sprang the Mercantile System from which present Protection is derived, 
 in both theory and application. "Midas," says Mr. Macleod,i "was the 
 parent of the Mercantile System, and for several centuries every Gov- 
 ernment in Europe was imbued with his ideas. . . Midas saw that 
 with treasure in his hand he was wealthy — he could obtain whatever he 
 wanted, and could command the services of others. . . The very 
 same ideas gradually grew up in Europe. Sovereigns saw that their 
 chief power consisted in the treasure they could accumulate. It then 
 became a cardinal point in their policy to encourage the importation of 
 money as much as possible and to prohibit its export. . . The 
 Spaniards, dazzled with the briUiant prospect of securing the greatest 
 part of the wealth of the worid, without labour, imagined that the well- 
 being of the country consisted in amassing enormous heaps of gold and 
 silver." 
 
 The accumulation of the precious metals, as the measure of all wealth, 
 thus became the dominant policy of governments; laws of the greatest 
 severity were enacted, prohibiting the exportation of gold, and every 
 means offered to encourage its importation. Such was the fundamental 
 economic principle in Europe, before the beginning of what is called the 
 Commeraal Age. 
 
 As population increased, however, and as intercourse between the 
 nations became more general, the value of this poHcy was questioned. 
 Instead of aiding national and individual accumulation, the reverse was 
 the case. It was seen that this prohibitive system interfered with the 
 purchase of foreign goods, for it was easier to buy abroad with gold than 
 with commodities. It was found that the exportation of the precious 
 metals did not lessen their amount in the exporting country, but tended 
 rather to their increase; for goods bought with gold might be sold abroad, 
 and a profit thus returned upon the gold exported. The apparent folly 
 of sending gold out of the country was compared to the actions of the 
 husbandman in sowing seed. "If we only behold the actions of the 
 husbandman in the seed-time," says Mr. Mun,2 "when he casteth away 
 much good com into the ground, we shall account him rather a madman 
 than a husbandman. But when we consider his labours in the harvest, 
 
 > The PrincipUs of Economical Philosophy, Vol. I., p. sa 
 
 « Cited by Adam Smith, The Wealth of Nations, Bk. IV., ch.i., p.4. 
 
 Bk. I 
 
 First Principles of Protection 
 
 which is the end of his endeavours, we shall find the worth and plentiful 
 increase of his actions." 
 
 Here, then, arose a new economic policy destined to supplant the old. 
 It was said that the small bulk of the precious metals made it impossible 
 for governments to prevent their exportation, and that there was a policy 
 which would cause them to flow back if exported; a policy by means of 
 which governments might even create an inflowing stream of gold. It 
 was shown, unless exports and imports were equal, that there must result 
 a certain remainder, or balance of value, not payable in goods which must 
 be paid in gold; this balance, it was said, was the important element in 
 international exchange; and upon it depended the net profit, or advan- 
 tage, of a nation's conunerce with other nations. The title of Mr. Mun's 
 book — England's Treasure in Foreign Trade — illustrates the principle. 
 Here arises that conception in exchange, long dominant in Europe, and still 
 affecting nearly all governmental policies: the conception of the "balance 
 of trade." This balance is the difference between the values of exports 
 and imports, measured in money, which a nation must apparently pay 
 or receive in order to settle foreign exchange. Where this balance is 
 favourable, a stream of gold appears to flow toward a given nation; 
 where unfavourable, the nation seems in danger of being drained of its 
 monetary metals. As the balance of trade depends upon the relative 
 values of exports and imports, there seems but one policy for a govern- 
 ment to adopt: it should turn its energies toward increasing the 
 value of exports and diminishing that of imports, for gold will thus, 
 seemingly, flow in its direction and into the coffers of the people. 
 
 Such is the theory of international exchange, based upon the balance 
 of trade. A favourite illustration is an analogy drawn between the 
 trade of a nation and that of a merchant: the merchant's profits, it is 
 said, depend upon the value of sales (exports) in relation to the value of 
 purchases (imports). The greater the value of sales and the less that 
 of purchases, the greater must be the money balance between the two, or 
 total profit. 
 
 If the economic validity of these considerations is admitted, the advan- 
 tages of the protective system are apparent. There are different ways of 
 affecting exchange with reference to the balance of trade: drawbacks, 
 bounties, and restrictions of various kinds readily suggest themselves; 
 one method, however, is pecuharly adapted to the purpose: the obvious 
 pohcy of restricting, taxing, or prohibiting imports under what seem the 
 most advantageous conditions. 
 
 I( 
 
 h 
 
I 
 
 i 
 
 I 
 
 The Old Protection 
 
 Pt. I 
 
 The two fundamental conceptions lying at the base of modern protec- 
 tionist philosophy have now been developed and may be expressed as 
 follows: (i) That gold and wealth are the same things. (2) That 
 the amount of wealth may be increased in any area by affecting the 
 balance of trade. 
 
 Section II — Gold and Wealth 
 
 Whether gold and wealth may reasonably be regarded as identical, 
 will depend upon the meanings given to these expressions. The mean- 
 ing of gold is too clear to require elaboration; the term denotes one of 
 the precious metals. The meaning of wealth, however, is more elusive. 
 Perhaps the most satisfactory definition may be found in the pages of 
 Adam Smith, ^ who says: 
 
 "A nation may import to a greater value than it exports for half a 
 century, perhaps, together; the gold and silver which comes into it 
 during all this time may be all immediately sent out of it; its circulating 
 coin may gradually decay, different sorts of paper money being sub- 
 stituted in its place, and even the debts too which it contracts in the 
 principal nations with whom it deals may be gradually increasing; and 
 yet its real wealth, the exchangeable value of the annual produce of its 
 lands and labour, may, during the same period, have been increasing in 
 a much greater proportion." 
 
 This passage contains not only an interesting distinction between gold 
 and wealth, but, perhaps, the best definition of ** wealth": the exchange- 
 able value of the annual produce of land and labour. It is unnecessary 
 to dwell upon the difference between any given metal and the entire 
 produce of land and labour, regarded as a factor in exchange. It is 
 evident from this definition of wealth that gold, or the monetary metals, 
 and wealth, should never be confused. To say that gold is wealth is 
 analogous to the statement that a bay is the ocean, or that a mountain 
 is the earth. "It would be too ridiculous," says Smith, 2 "to go about 
 seriously to prove that wealth does not consist in money, or in gold or 
 silver, but in what money purchases, and is valuable only for purchasing. 
 Money, no doubt, makes always a part of the national capital; but it 
 has already been shown that it generally makes but a small part, and 
 always the most unprofitable part of it." 
 
 If wealth were measured by the possession of gold, the wealth of a man 
 
 » The Wealth of Nations. Bk. IV., ch. iii., p. 7a, 
 " Ibid., Bk. IV., ch. i., p. 10. 
 
 Bk. I 
 
 First Principles of Protection 
 
 owning thousands of acres of land and tens of thousands of cattle, would 
 be measured by whatever amount of gold he happened to possess at any 
 given time. If he had no gold, he would be a poor man. If he sold 
 cattle for loo oimces of gold, his wealth would be increased by that 
 amount, although the cattle might have cost him twice that much. If 
 he bought horses with the gold, he would immediately become poor again. 
 If he bought horses for loo ounces of gold, and sold cattle for 50 ounces, 
 he would impoverish himself to the extent of a flow of 50 ounces of gold 
 out of his pockets. This is the "Balance of Trade." 
 
 Section III — The Balance of Tra.de 
 
 The foregoing definition of wealth develops a better position for the 
 study of the protective system in relation to the balance of trade. If this 
 definition is accepted, it follows that a government, in attempting to 
 influence the balance of trade, is not affecting wealth in general, but is 
 attempting to increase the flow of gold toward its territory — a very 
 different thing. This fact may, however, be accepted, and the balance 
 of trade theory, based upon the confusion of gold and wealth, be re- 
 jected; yet another balance of trade theory may at once be suggested, 
 based upon this distinction itself. 
 
 Gold, it may be said, is not wealth in any exact sense; but gold is 
 none the less a desirable part of wealth, representing the least perishable 
 and most constant value known, and playing, in consequence, an excep- 
 tional r61e in international exchange. Other commodities are consumed 
 and disappear, while gold remains and holds its value; other commod- 
 ities fluctuate, while gold is relatively stable; its presence may exert 
 a disproportionate influence upon commerce; and, more intrinsically 
 desirable than other commodities, its accumulation is a policy to be 
 encouraged. The balance of trade theory, based upon these considera- 
 tions, and the relation of export to import values, plays an important 
 part in modem political life and is worthy examination. 
 
 Gold obviously possesses no advantage over other commodities in the 
 satisfaction of human needs; it neither warmc nor shelters, clothes nor 
 nourishes; yet it represents the warmth, the shelter, the clothes and the 
 nourishment obtained through the consumption of other commodities. 
 There is, however, a difference between a thing and that which it repre- 
 sents. While the value of food, clothing, and houses is inherent in them, 
 the value of gold is of a distinct nature and consists, not in its ability to 
 satisfy, but to represent these in the channels of commerce, and thus 
 
 i 
 
 I 
 
8 
 
 The Old Protection 
 
 Pt. I 
 
 Bk.'l 
 
 First Principles of Protection 
 
 avoid the expense and inconvenience of barter. This representative, or 
 commercial, value of gold is of importance in exchange, owing to its 
 exceptional qualities as a medium through which the consimiable wealth 
 of the world may be distributed. 
 
 The value of gold is thus dependent upon, and conditioned by, 
 the existence of consumable wealth demanding distribution through 
 exchange. Where such wealth exists without gold exchange may be 
 effected independently of it; the value of exchangeable wealth, therefore, 
 does not depend upon the presence of gold. On the contrary, the value 
 of gold arises alone through the existence of the exchangeable wealth; 
 where gold exists without consumable commodities, the gold can pur- 
 chase nothing; that is, has no commercial value. On the other hand, 
 where exchangeable wealth exists without gold, the capacity to purchase 
 gold exists with it, and the value of general wealth, if not independent 
 of the presence of gold, seems but little affected thereby. The value of 
 gold can thus be realized in no way other than in the purchase and dis- 
 tribution of consumable wealth; imless so used, the value of gold as a 
 factor in commerce, seems to be non-existent. Nor does it apparently, 
 make the slightest difference whether the goods purchased with a nation's 
 gold are of a durable nature or not: the amount of annual wealth pro- 
 duced by a nation seems, to borrow an illustration from Smith, no more 
 dependent upon the amoimt of gold within its territory at any given 
 time, than the amount of its food depends upon the tin pans or hardware 
 it might possess at any moment. 
 
 There is, apparently, in the laws of nature no more reason to sup- 
 pose that the food supply of a nation can be increased by accum- 
 ulating tin, than that its wealth can be increased by piling up 
 gold. If a nation produces the food supply, the tin necessary for its 
 distribution may be allowed to take care of itself; and so, the annual 
 wealth a nation creates will attract all the gold necessary for its dis- 
 tribution, simply through its existence. There is, seemingly, no more 
 use in collecting tin, in order to increase food, than in collecting gold, 
 in order to increase wealth; the value of tin is dependent upon the 
 use to which it may be put, which, in the present case, depends upon 
 the food supply. The value of gold is fixed in the same way: by its 
 use, and is dependent upon the annual production of consumable 
 wealth. 
 
 Speaking of the nimiber of pots and pans in a coxmtry, Adam Smith* 
 
 ' Ibid., Bk. IV.. ch. L, pp. X2, 13. 
 
 says: "But it readily occurs that the number of such utensils is in 
 every country necessarily limited by the use which there is for them; 
 that it would be absurd to have more pots and pans than were necessary 
 for cooking the victuals usually consumed there; and that if the quan- 
 tity of victuals were to increase, the number of pots and pans would 
 readily increase along with it, a part of the increased quantity of vict- 
 uals being employed in purchasing them, or in maintaining an additional 
 number of workmen whose business it was to make them. It should 
 as readily occur that the quantity of gold and silver is in every country 
 limited by the use which there is for those metals; that their use con- 
 sists in circulating commodities as coin, and in affording a species of 
 household furniture as plate; that the quantity of coin in every country 
 is regulated by the value of the commodities which are to be circulated 
 by it: increase the value, and immediately a part of it will be sent abroad 
 to purchase, wherever it is to be had, the additional quantity of coin 
 requisite for circulating them: that the quantity of plate is regulated by 
 the number and wealth of those private families who choose to indulge 
 themselves in that sort of magnificence: increase the number and wealth 
 of such families, and a part of this increased wealth will most probably be 
 employed in purchasing, wherever it is to be found, an additional quan- 
 tity of plate: that to attempt to increase the wealth of any country, 
 either by introducing or by detaining in it an unnecessary quantity of 
 gold and silver, is as absurd as it would be to attempt to increase the 
 good cheer of private families, by obliging them to keep an imnecessary 
 number of kitchen utensils." 
 
 These considerations are not in harmony with the balance of trade 
 theory. Facts, however, seem to support them. If, for instance, gold 
 were the controlling factor in the creation of wealth, the nations produc- 
 ing the greatest quantity of gold would be the richest and most powerful 
 nations. If such were the case, Spain and Portugal would be the most 
 richly endowed of European countries, while others, less well supplied 
 with mines, would have to content themselves with being commercial 
 dependencies. England has produced relatively little or no gold, and for 
 the past half century has ignored the balance of trade philosophy; it can, 
 however, scarcely be maintained that England has, in consequence, been 
 placed at disadvantage with Spain and Portugal; either with reference 
 to material wealth, woridly power, or the possession of pure bullion. 
 
 Again, history demonstrates that the accumulation of gold or the 
 monetary metals, within a nation's boundaries, has little or no effect upon 
 
lO 
 
 The Old Protection 
 
 Pt. I 
 
 the nation's natural resources, which constitute the real basis of its 
 wealth; that even long and expensive wars may be carried on inde- 
 pendently of the amount of gold or money in its possession; that here, 
 as ever, a country's productive energy and territorial resources consti- 
 tute its real wealth, which may be drawn upon irrespective of this or 
 that amount of gold in circulation at any given time. An interesting 
 illustration of this position is presented in The Wealth of Nations:'^ 
 "The last French war cost Great Britain upward of ninety millions, 
 including not only the seventy-five millions of new debt that was con- 
 tracted, but the additional two shillings in the pound land-tax, and what 
 was annually borrowed of the sinking fund. More than two thirds of 
 this expense was laid out in foreign countries; in Germany, Portugal, 
 America, in the ports of the Mediterranean, in the East and the West 
 Indies. The kings of England had no accumulated treasure. We never 
 hear of any extraordinary quantity of plate being melted down. The 
 circulating gold and silver of the country had not been supposed to exceed 
 eighteen millions. Since the late re-coinage of the gold, however, it 
 is believed to have been a good deal underrated. Let us suppose, 
 therefore, according to the most exaggerated computation which I 
 remember to have either seen or heard of, that, gold and silver to- 
 gether, it amounted to thirty millions. Had the war been carried on 
 by means of our money, the whole of it must, even according to this 
 computation, have been sent out and returned again at least twice in 
 a period of between six and seven years. Should this be supposed, it 
 would afford the most decisive argument to demonstrate how unneces- 
 sary it is for Government to watch over the preservation of money, since 
 upon this supposition the whole money of the country must have gone 
 from it and returned to it again, two different times in so short a period, 
 without anybody's knowing anything of the matter." 
 
 This is one of the most striking statements in economic thought of the 
 fact that international exchange is not carried on with money. It 
 shows that international trade is carried on through the exchange of 
 commodities, and that the actual amoimt of money changing hands in 
 such trade is an almost negligible quantity, as concerns the national 
 production and distribution of wealth. 
 
 Daniel Webster, 2 speaking of the balance of trade theory, said: "The 
 
 ' Bk. IV.. ch. i., pp. 14, 15. 
 
 * Speech of Daniel Webster upon the Tarif, m the House of Representatives. April x and 2, 1824. 
 Taussi{[. State Papers and Speeches on the Tarif, p. 349. 
 
 Bk. I 
 
 First Principles of Protection 
 
 XI 
 
 truth is, that all these obsolete and exploded notions had their origin in 
 very mistaken ideas of the true nature of commerce. Commerce is not a 
 gambling among nations for a stake, to be won by some and lost by 
 others. It has not the tendency necessarily to impoverish one of the 
 parties of it, while it enriches the other; all parries gain, all parties 
 make profits, all parties grow rich, by the operations of just and liberal 
 commerce. . . We have reciprocal wants and reciprocal means for 
 gratifying one another's wants. This is the true origin of commerce, 
 which is nothing more than the exchange of equivalents, and from the 
 rude barter of its primitive state to the refined and complex conditions 
 in which we see it, its principle is uniformly the same; its only object 
 being, in every stage, to produce that exchange of commodities between 
 individuals, and between nations, which shall conduce to the advantage 
 and to the happiness of both. Conamerce between nations has the 
 same essential character as commerce between individuals, or between 
 parts of the same nation. Cannot two individuals make an interchange 
 of commodities which shall prove beneficial to both, or in which the 
 balance of trade shall be in favor of both? If not, the tailor and the 
 shoemaker, the farmer and the smith, have hitherto very much mis- 
 understood their own interest. And with regard to the internal trade of 
 a country, in which the same rule would apply as between nations, do 
 we ever speak of such an intercourse being prejudicial to one side because 
 it is useful to the other? Do we ever hear that, because the intercourse 
 between New York and Albany is advantageous to one of these places, 
 it must therefore be ruinous to the other?" 
 
 Webster quotes Mr. Huskisson, President of the English Board of 
 Trade of that day, as follows : " ^There is no political question on which 
 the prevalence of false principles is so general as in what relates to the 
 nature of conmierce and to the pretended balance of trade; and there 
 are few which have led to a greater number of practical mistakes, at- 
 tended with consequences extensively prejudical to the happmess of 
 mankind. In this country our parliamentary proceedings, our public 
 documents, and the works of several able and popular writers have 
 combined to propagate the impression that we are indebted for much 
 of our riches to what is called the balance of trade. . . Our true policy 
 would surely be to profess, as the object and guide of our commercial 
 system, that which every man who has studied the subject must know to 
 be the true principle of commerce — the interchange of reciprocal and 
 equivalent benefit. We may rest assured that it is not in the nature of 
 
12 
 
 The Old Protection 
 
 Pt. I 
 
 Bk. I 
 
 First Principles of Protection 
 
 13 
 
 ih 
 
 commerce to enrich one party at the expense of the other. This is a 
 purpose at which, if it were practicable, we ought not to aim; and which, 
 if we aimed at, we could not accomplish.'" 
 
 The foregoing considerations, may bring the two following proposi- 
 tions within the boimds of reasonable acceptance: (i) That gold and 
 wealth are not the same things; (2) that commerce is carried on between 
 nations by means of the exchange of commodities. With these funda- 
 mental conceptions in mind, a few of the argiunents usually offered 
 in aid of the balance of trade theory may be examined. 
 
 Mention has been made of the supposed support of the balance of 
 trade in the analogy between the affairs of a nation and those of an 
 individual. It is said that a merchant's sales are comparable to 
 the exports of a nation; if the value of the merchant's sales (exports) 
 is greater than that of his purchases (imports), his affairs are in a 
 satisfactory condition; and, it is concluded, a nation's policy should 
 be guided by the same principles. In other words, that the import 
 duty should be used to check the excess of imports (purchases) over 
 exports (sales). 
 
 It is evident that the trade of nations is composed of exchanges 
 effected by individuals; a typical transaction may be followed. A mer- 
 chant sends a ship abroad, with a cargo for sale; the vessel may return 
 laden with goods alone, gold alone, or with goods and an amount in 
 gold. It is evident that the profits of the voyage are in no sense depend- 
 ent upon this amount in gold; they are, on the contrary, directly depend- 
 ent upon the total relative value of the return cargo, whether consisting 
 of goods, gold, or any combination of these. In other words, the greater 
 the value of the total return cargo (imports) in relation to the outgoing 
 cargo (exports) the greater will be the profits of the voyage. This 
 position requires little demonstration and suggests that no analogy exists 
 between the exports of a nation and the amoimt of sales of a merchant, 
 the confusion of ideas being due to the introduction of money in one 
 instance and not in the other. Trade is the exchange of commodities; 
 money the instrument by means of which the trade is effected: the 
 means and not the end. The trade is incomplete until the money 
 obtained on one hand is laid out on another. 
 
 A man whose wealth consists entirely in land and cattle may again be 
 considered. If he begins to sell cattle for gold, he will create a favourable 
 balance of trade; if he sells all his cattle, this balance will reach a 
 maximum, but the man will cease to exist as a factor in production in 
 
 proportion to the decrease of his herds. If he invests his gold in the 
 purchase of horses, the balance of trade will run hopelessly against 
 him until he is "drained"; but he will begin to produce once more in 
 proportion to the outflow of his gold. If the horses are worth more 
 than the cattle, he has made a net gain. If he had gradually invested 
 in horses, during the sale of his cattle, his balance of trade would have 
 fallen off, and would have run against him, while his wealth was increas- 
 ing. If the horses are worth less than the cattle, he might have had a 
 large, favourable balance of gold during the entire transaction, and end 
 with a heavy loss. His profits depend upon the total relative value of 
 his horses and cattle; not upon momentary gold balances. If his ex- 
 ported cattle are worth more than his imported horses, he has lost. There 
 thus seems to be no analogy between a nation's exports, and the gold a 
 man receives for his goods; such analogy exists, however, between na- 
 tional exports and money laid out in stock; between imports and money 
 received. Again, goods traded may be compared to exports, and goods 
 received to imports, and if the latter do not exceed the former in value, 
 the trade is not profitable. 
 
 The man who sells goods for money is not yet paid, nor has he been, 
 until^ the money is used in the purchase of other goods, and upon the 
 relative value of these depend the profits of the transaction; that is, 
 upon the excess of the value of his imports over that of his exports. 
 These considerations may be applied to exchange in general, and lead to 
 the conclusion that the balance of trade has little or nothing to do with 
 the profits or losses involved in international commerce. It seems that 
 a nation is in the same position commercially as the individual merchant, 
 and that the factor which constitutes the national profits is the surplus 
 value, to the nation considered, of the goods it receives (imports) over 
 the value of the goods it sends away (exports). The greater the relative 
 value of its imports, or what it receives, the greater wiU be the value of 
 its trade, or profits. Nor need the question be confused by the intro- 
 duction of money. Gold is but a commodity in international exchange; 
 it forms the international money and circulates as bullion, at its com- 
 modity value, in relation to other commodities. Gold, therefore, in 
 international trade, constitutes an import or an export, as the case may 
 be, and the proportion it may bear to these at any given moment has no 
 connexion with the profits of the commerce involved. 
 
 Commerce between nations is thus the same thing as barter between 
 individuals: the exchange of conunercial equivalents; and a nation no 
 
X4 
 
 The Old Protection 
 
 Pt. I 
 
 1 1 
 
 more hands over a "balance" m money to another nation, for which it 
 has not received an equivalent return, than a merchant is like3y to adopt 
 such a course. If, then, international trade is the exchange of equivalent 
 values, no nation can gain anything by checking the value of its im- 
 ports, in order to influence the balance of trade. If commerce is the 
 exchange of conmiercial equivalents, the checking of imports will check 
 commerce, lose the advantages of exchange to the nations involved, and 
 produce no other result. 
 
 There is another form of the balance of trade theory using the import 
 duty, not to draw money toward a country, but to keep money already 
 in a coimtry from seeking a foreign outlet through normal exchange. 
 This position is usually stated in some such form as the following: If 
 there is a demand for $ioo worth of iron in America, and the iron is 
 bought in England, America is supposed to have gained the iron, but 
 to have lost the $ioo. On the other hand, if America produces the iron 
 for herself, although it may cost $iio, she obtains the iron and keeps 
 the money as well — net gain for America of $qo. This position, of 
 course, supposes that all imports are purchased with money alone. 
 This, as has been shown, seems not to be the case; exports pay for im- 
 ports, and unless the money sent to England is buried in the ground, it 
 implies a like amount of English money spent on American goods. If 
 so, America has lost $io in increased price, and destroyed a potential 
 trade to the extent of $ioo. 
 
 It may be said, however, that money sent to England need not return 
 to America, but seek an outlet in other countries. In this case, it seems 
 that France or Germany completes the exchange with America; condi- 
 tions remaining the same. If it is supposed that the money need not come 
 back to America at all, the existence is implied of a country producing 
 nothing other countries buy. Such a country evidently could not exist 
 commercially; but if such existence is admitted, it could apparently 
 gain nothing by the imposition of import duties, in order to prevent its 
 money seeking a foreign outlet. Such a nation is simply taxing itself 
 in order to pay $io interest on every $ioo worth of iron it produces; 
 which, as the iron is produced and consumed, must soon amount to a 
 usurious rate. 
 
 Such a policy is more or less analogous to that of a manufacturer who 
 pays a heavy interest charge on funds employed in producing goods 
 which cost him more than their market value. He pays out money in 
 order to obtain funds which cost still more money to employ. More- 
 
 Bk. I 
 
 First Principles of Protection 
 
 IS 
 
 over, a nation taxing imports, in order to keep money in the country, 
 taxes only that portion of the population coming in contact with the 
 tax through consumption; that is, imposes an unequal tax burden. If 
 the economic advantage of keeping money in a country is granted, it is 
 obvious that import duties are not the only means which may be em- 
 ployed. A country can keep any given amount of money within 
 Its boundaries by subsidies, bounties, or the issue of its debentures. 
 In the last case, it can hold any amount desired at no higher rate 
 than the market price of its securities, know exactly at any time how 
 much the money costs to hold, cease the expenditure when convenient, 
 and at the same time impose an equal, in place of an unequal, tax burden! 
 The arguments in favour of the imposition of import duties, as affect- 
 ing the balance of trade, or in order to keep money in a country, seem to 
 involve the two suppositions discussed: first, that gold is wealth, and 
 desirable independently of any use to which it may be put in the 
 channels of trade; second, that international trade is something othe- 
 than the exchange of equivalents, whether expressed in gold or other 
 commodities. 
 
 The balance of trade theory depends upon the idea that commerce 
 between nations mvolves a mysterious quantity of floating money, irre- 
 spective of the goods exchanged: a balance which may be caught like a 
 butterfly by the nation weaving the cleverest network of indirect taxes. 
 
 This idea has been regarded as an '^ exploded notion" by the best minds 
 on both sides of the Atlantic for generations. In spite of this fact 
 however, the balance of trade theory exerts a great influence over nearly 
 all national poUcies, and forms one of the cornerstones of modem fiscal 
 structures. It is constantly met in practical American politics, where it 
 is rarely discussed but is accepted, Uke the gravitation of matter, as a 
 fundamental truth requiring no demonstration. 
 
 The balance of trade theory may always be put to the crude but effec- 
 tive test of bulUon returns. If the balance of trade theory is in harmony 
 with the facts, a country which imposes no import duties with reference 
 to it, will be in danger of losing its capital. 
 
 Wherever protective taxes exist, it may be said that they exert a cer- 
 tam mfluence over the balance of trade. England, for more than half 
 a century, has not only ignored the balance of trade, but imposed no 
 protective taxation. England is, consequently, the one country in the 
 world most exposed to the danger of being "drained" of her money supply 
 which will flow away from her toward those countries holding a network 
 
 If 
 
i6 
 
 The Old Protection 
 
 Pt. I 
 
 of import duties, ready to catch the balance of trade. This is a prev- 
 alent opinion. "Only last year," says Mr. Chiozza-Money,i writing 
 in 1903, *^we had Mr. Seddon telling a British audience that every 
 year we sent away over sea 160,000,000 golden sovereigns to pay for our 
 balance of trade." 
 
 The metiiod of estimating the balance of trade is simple. The total 
 value of imports and exports are compared: if imports are greater tiian 
 exports, the difference is supposed to represent money sent out of the 
 country. The Statistical Abstract of the United Kingdom shows the 
 following returns for 1902; 
 
 Imports (values c. i. f. ) p. 91 
 
 Exports (values f. o. b.) p. 129 . . . * ' ] \ 
 
 From wWdi should be deducted goods previously imported (values 
 f. o. b.) p. 133 
 
 ^528,391,000 
 283,424,000 
 
 £244,967,000 
 
 65,815,000 
 
 Excess of total imports over exports £179,152,000 
 
 It is evident, upon tiie theory of tiie balance of trade, that in 1902 
 England must have sent away in gold $179,152,000 in order to pay for 
 this unfavourable balance. Here is where the Premier of New Zealand 
 found his 160,000,000 *' golden sovereigns." In other words, if this 
 theory is in harmony with the facts, the bullion returns of the United 
 Kingdom for 1902 must show £179,152,000 excess of buUion exported 
 over bullion imported. 
 
 In the Statistical Abstract, the following items appear with reference 
 to bullion and specie: 
 
 i!.xports, p. 155 26,125,206 
 
 £ 5,268,139 
 
 Thus, where nearly £180,000,000 against England are expected, over 
 £5,000,000 in her favour are found, showing some discrepancy between 
 the balance of trade theory and "the facts." 
 
 There is, however, no difficulty in tracing the millions of sovereigns 
 which seem to have melted into space. International trade is barter, 
 but services may be exchanged as well as goods. "Just as a barrister," 
 says Mr. Chiozza-Money, "may import goods value £10,000 a year 
 witiiout exporting goods, giving his services in exchange, so a nation 
 
 * Through Preference to Protection, p. ag. 
 
 Bk. I 
 
 First Principles of Protection 
 
 17 
 
 may pay for a great part, or even the whole of its imports, by giving 
 services in exchange for commodities sent it by other nations." The 
 subject is interestingly and exhaustively discussed, in relation to existing 
 conditions, in the essay cited, from which the foregoing comparison is 
 taken. 
 
 The theory of the balance of trade is one of the many relics of the old 
 Mercantile System, so long dominant in Europe. When governments 
 found they were impotent to keep gold from seeking the most profitable 
 market, and that its exportation was not an economic evil, they devoted 
 their attention to "regulating the balance of trade" rather than to the 
 prevention of the export of gold and silver. "From one fruitless care it 
 was turned away to another care," says Adam Smith, 1 "much more 
 intricate, much more embarrassing, and just equally fruitless." 
 
 The opinion that gold and wealth are the same things, together with 
 the balance of trade theory, have been discussed for two reasons: first, 
 because they lie at the "head of the corner" of modem Protection; and 
 second, in order to present grounds for a reasonable acceptance in 
 economic discussion of the two following positions: 
 
 1. Gold, or money, should never be confused with general wealth. 
 
 2. International exchange may be expressed in terms of commod- 
 
 ities, independently of money; that is, represents an exchange 
 
 of equivalents. 
 The balance of trade theory may be left with a citation from Mill:^ 
 The principle of the Mercantile Theory is now given up even by writers 
 and governments who still cling to the restrictive system. Whatever 
 hold that system has over men's minds, independently of the private 
 interests exposed to real or apprehended loss by its abandonment, is 
 derived from fallacies other than the old notion of the benefits of heaping 
 up money in the country. The most effective of these is the specious 
 plea of employing our own countrymen and our own national industry, 
 instead of feeding and supporting the industry of foreigners." 
 
 » The Wealth of Nations. Bk. IV., ch. i., p. 7. 
 
 « Principles of Political Economy, Bk. V., ch.x., ji, p. 554. 
 
 (( 
 
Bk. I 
 
 General Protection 
 
 19 
 
 
 CHAPTER II 
 
 GENERAL PROTECTION 
 
 Section I — Protection and Capital. Section II— r^e Infant In- 
 dustry. Section 111— Protection of Industry. 
 
 Section I — Protection and Cahtal 
 
 THE import duty, adopted under the Mercantile System and 
 the balance of trade, possessed a nimiber of potentialities, 
 among the most important of which, through its effect upon 
 prices, was the opportunity of employing labour and capital 
 in industry otherwise neither profitable nor possible. The import duty 
 thus gradually took upon itself a new function, and, where aban- 
 doned or neglected as a means of influencing the balance of trade, was 
 welcomed and supported as a means of establishing industry and em- 
 ploying labour. 
 
 General Protection, or the policy of taxing foreign commodities in 
 order to hold the home market for the home producer, is among the most 
 obvious of all economic policies. When it is urged, in favour of the 
 protective import duty, that it can bring industries into existence, not 
 otherwise possible, such industries may be pointed out in operation: 
 when the duty is advanced as an employer of labour, the payrolls of 
 such industries are sufficient demonstration of the truth of the state- 
 ment. A statute passed, a duty fixed: a definite, economic result is 
 obtained. If the statute were not passed, the duty not established, 
 trade would be left to follow its normal course, and there would be no 
 evident and immediate artificial consequences. 
 
 If, upon general principles, it is said that the use of stimulants is not 
 always to be encouraged, few will contradict the statement as mere 
 theory; and advance a number of facts in order to refute the principle 
 and establish the opposed position: that stimulants are invariably 
 beneficial. The reason is, that the science of medical experience has 
 established the first statement as a general principle, based upon a 
 
 z8 
 
 wider knowledge of a greater number of systematized facts than may 
 be presented upon the other side. 
 
 There exists such a generalization applied to the economic questions 
 of this phase of Protection. This generalization is based upon the 
 position, supported by endless facts, that the number of workmen 
 which any given individual may employ must bear a fixed relation to 
 his capital; in other words, that no man can employ a greater number 
 of workmen than his capital will allow. If this is so, it follows that 
 the nimiber of workmen which may be employed by any given number 
 of men, or by a society, must bear a definite relation to their com- 
 bined capital, or to the total amount of capital within the society; 
 and can never exceed it. "The general industry of the society," says 
 Adam Smith, ^ "never can exceed what the capital of the society can 
 employ. As the number of workmen that can be kept in employ- 
 ment by any particular person must bear a certain proportion to his 
 capital, so the number of those who can be continually employed by 
 all the members of a great society, must bear a certain proportion to 
 the whole capital of that society, and can never exceed that proportion. 
 No regulation of commerce can increase the quantity of industry in 
 any society beyond what its capital can maintain. It can only divert a 
 part of it into a direction into which it might not otherwise have gone; 
 and it is by no means certain that this artificial direction is likely to 
 be more advantageous to the society than that into which it would 
 have gone of its own accord." 
 
 When the direct bearing of this position upon protective legislation 
 is understood, it seems evident that such legislation can no more 
 increase the total general industry of a country, or the labour em- 
 ployed, than it can increase its amount of capital; and it is difficult 
 to believe that the mere imposition of an import duty can bring 
 capital into existence. If this were so, if import duties created 
 capital, the richest nations would be those with the greatest number 
 of such duties, and their capital limited only by the available quan- 
 tity of paper, ink, and legislative enactments. It is evident, however, 
 that protective duties can only affect capital already in existence, 
 and do not increase its amount. As such taxes can only affect exist- 
 ing capital through restricting trade, the restriction or prohibition of 
 normal trade is the essence of the protective system. Mill^ uses the 
 
 » The Wealth of Nations, Bk. IV.. ch. ii., p. 25. 
 
 > PrincipUs 0/ Political Economy, Bk. V., ch. x., { 1, p. 553. 
 
20 
 
 The Old Protection 
 
 Pt. I 
 
 Bk. I 
 
 General Protection 
 
 21 
 
 k 
 f 
 
 I 
 
 terms "restrictive*' and ''prohibitory" as more characteristic of the 
 principle than ''protective." 
 
 The restriction of trade, then, is the only means by which the pro- 
 tective system can act upon capital or industry; and the assumption 
 that the capital or industry of any country can be increased by re- 
 stricting or prohibiting its trade seems questionable. It this were so, 
 the nations with the greatest capital would be those with the least 
 trade. Protection, therefore, can apparently never increase the capital 
 or industry of a nation. Its only means of acting upon the capital 
 being to check or restrict trade, the profits or increase of capital, which 
 might be gained through the action of untrammelled trade and industry, 
 are naturally lost in proportion to the amount of restriction imposed 
 by protective legislation. 
 
 This conception has not been without results, especially in England. 
 Its nature, however, is so general that its application may be lost to 
 view, and considerations are often advanced in support of the protec- 
 tive theory which may be brought under this comprehensive principle. 
 These may, therefore be examined. 
 
 The Protection of the old school falls under two distinct policies: 
 First, the protection of industry; second, the protection of labour. 
 An analysis of the first, as developed in the usual channels of discussion, 
 permits its study under two principal divisions: (i) infant industry; 
 (2) the protection of industry. 
 
 Section II — The Infant Industry 
 
 Among the most important contributions to the literature of Protec- 
 tion is that prepared by Alexander Hamilton at the request of the 
 American House of Representatives. This paper, read in December, 
 1791, is entitied A Report on Manufactures, and from its sincerity and 
 ability lends stronger support to many of the considerations advanced 
 than most of the protectionist literature dated before or since. A dis- 
 cussion of Protection in its relation to industry cannot be better opened 
 than with a citation from this document. 
 
 "It is well known—" says Hamilton, 1 "and particular examples in the 
 course of this report will be cited — that certain nations grant bounties 
 on the exportation of particular commodities to enable their own work- 
 men to undersell and supplant all competitors in the countries to which 
 these com modities are sent. Hence the undertakers of a new manu- 
 
 > Hamilton's Report on Manufactures. State Papers and Speeches on the Tanjff. Taussig, p. 31, 
 
 facture have to contend not only with the natural disadvantages of a 
 new imdertaking, but with the gratuities and remunerations which 
 other governments bestow. To be enabled to contend with success, 
 it is evident that the interference and aid of their own governments 
 are indispensable. " 
 
 This argument in favour of governmental aid in the establishment 
 of manufacturing enterprise has become a classic in economic discus- 
 sion; it is known as the argument in aid of '4nfant industry." In 
 support of this position, Hamilton and the later protectionists offer 
 many plausible considerations showing the advantages of govern- 
 mental assistance of new and struggling undertakings. These considera- 
 tions are regarded as especially applicable to new countries, although 
 applying with equal force to any new industry unable to compete with 
 the foreign producer. 
 
 It is evident that the initial assistance, or temporary support, of 
 industries in their infancy, does not involve a general protective policy; 
 governmental aid is suggested in this sense merely in order to help the 
 industry upon its feet, until able to walk alone. The first difliculty 
 met, therefore, is to discover what an infant industry really is. The 
 question offers scope for wide difference of opinion; experience showing 
 that assistance of infant undertakings results in a final protective system, 
 owing to difficulty in distinguishing "infant" from other forms of indus- 
 try, and in withdrawing support when the infant period is passed. 
 This position is always advanced, however, where opportunity exists, 
 and the infant industry is found fully established among the prin- 
 ciples of the New Protection in England and Germany, under the title 
 of " productive potentialities." The subject may, therefore, be reviewed 
 in some detail, especially as it derives importance from a passage in 
 Mill's Principles of Political Economy. This passage may be cited as 
 formulating clearer ideas with reference to infant industry than the less 
 specific considerations of Hamilton. 
 
 "The only case, " says Mill,i ''in which, on mere principles of political 
 economy, protecting duties can be defensible, is when they are imposed 
 temporarily (especially in a young and rising nation) in hopes of natural- 
 izing a foreign industry, in itself perfectly suitable to the circumstances 
 of the country. The superiority of one country over another in a branch 
 of production, often arises only from having begun it sooner. There 
 may be no inherent advantage on one part, or disadvantage on the 
 
 * Principles of Political Economy, Bk. V.. ch. x„ § i, p. 556. 
 
22 
 
 The Old Protection 
 
 Pt. I 
 
 other, but only a present superiority of acquired skill and experience. 
 A country which has this skill and experience yet to acquire, may, in 
 other respects, be better adapted to the production than those which 
 were eariier in the field: and besides, it is a just remark of Mr. Rae, 
 that nothing has a greater tendency to promote improvements in 
 any branch of production than its trial under a new set of conditions. 
 But it cannot be expected that individuals should, at their own risk, 
 or rather to their certain loss, introduce a new manufacture and bear 
 the burthen of carrying it on until the producers have been educated 
 up to the level of those with whom the processes are traditional. 
 A protecting duty, continued for a reasonable time, will sometimes 
 be the least inconvenient mode in which the nation can tax itself 
 for the support of such an experiment. But the protection should be 
 confined to cases in which there is good ground of assurance that the 
 industry which it fosters will after a time be able to dispense with it; 
 nor should the domestic producers ever be allowed to expect that it 
 will be continued to them beyond the time necessary for a fair trial of 
 what they are capable of accomplishing. " 
 
 It is impossible to present the infant industry position more favour- 
 ably or with greater authority than in these passages from Hamilton 
 and Mill. Other considerations from the pen of Mill are of interest 
 in this connexion. The adoption of Protection in Australia is said to 
 have been due largely to the influence of two men — one an adminis- 
 trator, the other an economist: Earl Grey and J. S. Mill; the part 
 played by the latter being, perhaps, more important than that of the 
 former. The policy of a great and growing country was thus largely 
 established by a guarded passage in the works of a man formally opposed 
 to the principles adopted through the misinterpretation of his opinion 
 as is shown in the following extract^ from a letter to a student of his 
 works in Victoria: 
 
 "It is a great compliment to me that my supposed opinions should 
 have had the influence you ascribe to them in Australia. But there 
 seems to have been a considerable degree of misunderstanding as to 
 what they are. The fault probably lies with myself in not having 
 explained them suflSciently. I have entered rather more fully into the 
 subject in the new editions published this spring. But, not to give 
 you the trouble of referring to them, I can have no difficulty in saying 
 that I never for a moment thought of recommending or countenancing 
 
 ' J. S. Mill in Protection in Canada and Australasia. Chomley, p. 8i. 
 
 Bk. I 
 
 General Protection 
 
 23 
 
 in a new Colony, more than elsewhere, a general protective policy, or 
 a system of duties on imported commodities, such as that which has 
 recently passed the representative assembly of your Colony. What 
 I had in view was this: If there is some particular branch of industry, 
 not hitherto carried on in the country, but which individuals or asso- 
 ciations possessed of the necessary capital are ready and desirous to 
 naturalize, and if these persons can satisfy the Legislature that, after 
 their workpeople are fully trained, and the difficulties of the first intro- 
 duction surmounted, they shall probably be able to produce the article 
 as cheap, or cheaper, than the price at which it can be imported, but 
 that they cannot do so without the temporary aid, either of a subsidy 
 from the government, or of a protective duty, then it may sometimes 
 be a good calculation, for the future interests of the country, to make 
 a temporary sacrifice, by granting a moderate protecting duty for a 
 certain limited number of years, say ten, or at the very most twenty, 
 during the latter part of which the duty should be on a gradually di- 
 minishing scale, and at the end of which it should expire. You see how 
 far this doctrine is from supporting the fabric of protectionist doctrine 
 in behalf of which its aid has been invoked. " 
 
 The conditions upon which governmental aid may sometimes be 
 advocated with reference to new industry may, therefore, be formu- 
 lated in the opinion of the greatest authority cited in its support: 
 
 1. When the aid is given alone to start the industry. 
 
 2. When the industry is naturally suited to the country. 
 
 3. When the capital is at hand, and the only difficulty is the want 
 
 of skilled labour or experience. 
 
 4. When it is highly probable that the article may be produced as 
 
 cheaply or more cheaply than elsewhere. 
 
 5. When the duty expires sdiei a period of not longer than twenty 
 
 years. 
 
 A glance at these conditions, and the passages from Mill upon which 
 they are based, may show that they present no foundations for the 
 establishment or encouragement of a general protective policy, yet 
 this has been done in Australia, and is being done to-day wherever this 
 passage in Mill's Principles of Political Economy is used as an induce- 
 ment to protective taxation. 
 
 There is apparently but one reason why any suitable infant industry 
 should not be able to start upon its career alone and unaided — lack of 
 ^Ued laboiir. 5wffix:iept capital is, of course, implied; as the duty 
 
24 
 
 The Old Protection 
 
 Pt. I 
 
 
 i; 
 
 ;: 
 
 ; 
 
 could not create the capital. The existence of the capital granted, 
 the question arises whether the capital could not import the necessary 
 labour; especially as experience presents innumerable examples of such 
 importations. In order, therefore, to discover any genuine infant 
 industry, it is essential to recognize the conditions imposed by Mill; 
 and, at the same time, to suppose that for some reason, not clear, 
 the skilled labour required cannot be imported. Such being the 
 case, the infant industry is compelled to enter upon a period of trial, 
 or training. 
 
 An import duty can apparently be of no use to the industry during 
 such a period, for the reason that the industry would, ex hypothesi, 
 be able to produce nothing; the only result of such a tax, therefore, 
 would be to raise the price of the commodity, while benefitting no one. 
 All such periods must be passed at the expense of capital, while labour 
 and machinery are trying their wings. It seems, therefore, that an 
 import duty is useless in the actual starting of an industry before it 
 can produce anything. The capital at hand, the labour trained, the 
 experience complete, it must be evident, however, that there is still 
 less need of governmental support for any suitable industry. 
 
 In order, therefore, to discover a really worthy infant industry, it 
 is essential to add another condition to those defined, and to regard 
 the industry as entering upon a transitory period, during which pro- 
 duction is carried on in an expensive and unsatisfactory manner, and 
 to suppose the import duty necessary to tide over such a period. 
 
 If an import duty is imposed with this object in view, it will in all 
 likelihood bring other infant industries producing the same article 
 into existence; and when the transition period of one is drawing to a 
 close, the analogous period of another may be but half over or be- 
 ginning; which process must result either in the establishment of fixed 
 Protection or the destruction of later industries by the removal of the 
 duty. Again, the import duty of this nature is sometimes regarded 
 as a reward to the capitalist who has risked his time and money in 
 the creation of new enterprise. Considered in this light, it seems that 
 the import duty offers but a poor return, so far as the establishment 
 of really legitimate industry is concerned. If profits are maintained 
 by means of the duty, other industries will follow and reap the advan- 
 tages created for the first; in this way not only reducing profits and the 
 reward of the capitalist, but rendering it impossible to remove the duty 
 without injury to the series of later industries. Thus the following 
 
 Bk. I 
 
 General Protection 
 
 25 
 
 considerations might be presented with reference to the infant industry 
 of the Old Protection: 
 
 1. The import duty is useless in starting an industry before it 
 
 can produce. 
 
 2. The duty is useless after the industry is in operation, if the 
 
 industry is suitable; for its suitability can be shown only by its 
 capacity to compete with other producers. 
 
 3. If the duty is imposed dining a transition period of poor or 
 
 expensive production, it will bring other industries into ex- 
 istence, and lead to definite Protection. 
 
 4. The duty may offer an unsatisfactory reward to the capitalist, 
 
 in allowing competition before the industry is fully developed, 
 thus reducing profits; rendering it again impossible to remove 
 the duty without endangering all the industries affected, thus 
 leading again to definite Protection. 
 
 If a question arises with reference to the best method of tiding a 
 really suitable and struggling industry over its period of transition, 
 and at the same time rewarding the patriotic innovator, the answer is 
 not far to seek: a direct bounty, paid in proportion to the amount of 
 labour employed, for a limited period upon a diminishing scale, appears 
 to meet all the requirements of the case; avoid the cost of collecting the 
 duty and the necessity of the eventual adoption of fixed Protection. A 
 specific subsidy, paid to a specific industry for a definite time, seems to 
 possess all the advantages, urged in favour of the import duty in this 
 connexion without the dangers it involves. It can help the industry 
 over its transitional period; demonstrate whether the industry is in 
 reality suitable or not, and, by eliminating home competition until the 
 advantages of the enterprise are definitely demonstrated, it can reward 
 the innovators and be removed at the proper time without the ruin of a 
 chain of dependent producers. 
 
 A few passages from Hamilton's Report^ may be cited in reference to 
 bounties, this Report being in many ways the ablest contribution to the 
 literature of the older protectionist school: 
 
 "This has been found one of the most efficacious means of encourag- 
 ing manufactures, and it is, in some views, the best. ... Its 
 advantages are these: 
 
 I. It is a species of encouragement more positive and direct than any 
 other, and for that very reason has a more inunediate tendency to 
 
 ^ Hamilton's Report on Manufactures. Taussig, p. 64. 
 
26 
 
 The Old Protection 
 
 Pt. I 
 
 stimulate and uphold new enterprises, increasing the chances of profit 
 and diminishing the risks of loss in the first attempts. 
 
 2. It avoids the inconvenience of a temporary augmentation of price, 
 which is incident to some other modes, or it produces it to a less degree, 
 either by making no addition to the charges on the rival foreign article, 
 as in the case of protecting duties, or by making a smaller addition. . . . 
 
 3. Boimties have not, like high protecting duties, a tendency to 
 produce scarcity. An increase of price is not always the immediate, 
 though where the progress of a domestic manufacture does not counter- 
 act a rise, it is commonly the ultimate effect of an additional duty. '' . , , 
 
 These considerations may permit the formulation of the following 
 conclusions with reference to the infant industry: 
 
 1. Under no condition is the imposition of an import duty the most 
 
 advantageous method of aiding desirable enterprise. 
 
 2. The supposed benefits of the import duty may be obtained 
 
 directly by means of a subsidy. 
 It may be observed that the infant industry position, as stated by 
 Mill, overlooks two essential conditions: first, that the lack of skilled 
 labour can be the only difl&culty met by any suitable industry; and, 
 second, that such labour may practically always be imported by the 
 capital supposed to be waiting investment. Again, Mill seems to over- 
 look the fact that any encouragement of the infant industry by means 
 of an import duty not only has, but always must, lead to definite Pro- 
 tection. 1 Later, however, this led Mill to abandon the infant industry 
 position. 2 
 
 There is no lack of specific instance to which reference may be made 
 in support of the foregoing considerations. Every industry, brought 
 into existence within any free trade area, in competition with others, is 
 an infant industry in every sense of the word, and as much in need 
 of protection against the earlier industries as though they were on 
 the other side of a national boundary. The fact that such industries 
 have been brought into successful operation in every country, 
 seems to demonstrate that suitable industries are independent of gov- 
 ernmental support, and may be brought into being through the 
 natural action of economic conditions; nor need it make any differ- 
 ence, apparently, whether such enterprise is protected from foreign 
 competit ion or not, the most important competition with which it 
 
 » An interesting and more detailed discussion of the subject will be found in Facts and Fallacies of Mod- 
 trn ProUction. B, R. Wise. 
 » Cf., p. 6a. 
 
 Bk. I 
 
 General Protection 
 
 27 
 
 has to deal is that of the already established home producer within the 
 free trade area. 
 
 There exists perhaps no more marked illustration of the fact that 
 suitable industry may come into being and establish itself without 
 governmental protection than may be derived from the southern states 
 of America. After the Civil War these states were left in an exceptionally 
 helpless industrial condition; their interests, largely agricultural, were 
 established upon slave labour; their capital, exhausted in war and in the 
 abandonment of slavery; yet this impoverished, agricultural country was 
 exposed to the merciless competition of the North under a system of free 
 trade such as no nation has seen. The result upon protectionist principles 
 must have been industrial prostration, complete and unconditioned. 
 
 "Little more than half a generation has elapsed," says Mr. Atkinson,^ 
 "since the infant industries of the new South were imdertaken. What 
 are the present conditions? Pennsylvania striving by the adoption 
 of every possible improved method to meet the competition of the iron 
 furnaces of Alabama. New England trembling lest the centre of the tex- 
 tile arts shall be moved from Massachusetts and Rhode Island to the 
 Carolinas and Georgia. The wood-working shops of the middle South 
 competing with the great establishments of the middle West. I think 
 I need make no further rejoinder to Professor Sedgwick *s plea for even 
 temporary protection to infant industries. Let these facts speak for 
 themselves. " 
 
 In the works of the earlier protectionists, attention is chiefly occupied 
 with the creation of industry; they offer a modest and apologetic plea 
 for temporary aid, and occasionally seem alive to the evils of govern- 
 mental interference with natural economic conditions. They bear in 
 mind the fact that the ultimate abandonment of the duty is the great 
 desideratum and that once an industry has been fairly tried it should no 
 longer be artificially supported. As time went on, however, the infant 
 industries, born through such considerations, began to grow into pros- 
 perous middle age. It became necessary, therefore, to look about for 
 other arguments in support of taxation for the benefit of these by no 
 means struggling imdertakings. The creation of industry thus slipped 
 into the background and the maintenance of industry took its place. 
 Why, it was asked, limit governmental assistance to this or that strug- 
 gling enterprise? Industry itself was the result for which to strive, not 
 any special kind of industry; all industry should be encouraged and 
 
 ^ Address before thf Economy Club o/ London, 
 
 1 1 
 
28 
 
 The Old Protection 
 
 Pt. I 
 
 Bk. I 
 
 General Protection 
 
 29 
 
 I' 
 
 tj i 
 
 supported, and thus governmental aid is demanded for industry in 
 general. 
 
 Section III — Protection of Industry 
 Article i — Protectionist Maxims. 
 
 Industry itself, unqualified and unconditioned, here becomes the 
 basis of definite Protection. The industries of a country, it is said, are 
 the measure of its wealth and productive power. By means of industrial 
 enterprise and initiative, wealth is created and production encouraged. 
 This offers employment to labour, maintains wages at a higher level, 
 increases the national powers of consumption, and with them, the 
 general well-being of the community. AU these advantages may be 
 attributed to industry, which thus becomes the object of attention, and 
 the most intelligent administrative policy seems that most effectively 
 engaged in developing the existing and potential resources of the country. 
 
 Thus, whether the earlier foundations of Protection are accepted or 
 not, the import duty remains a fruitful heritage and grows in strength 
 and stature. There are two fundamental maxims of the orthodox 
 protectionist school of this type: 
 
 1. That the import duty encourages industry. 
 
 2. That such protected industry creates a demand for labour, raises 
 wages and thus benefits the society. 
 
 Protected industry, for purposes of analysis, may be divided into two 
 classes: the industry which raises price and the industry which lowers 
 price. These two classes include all protected industry of the kind at 
 present under discussion. The protective import duty can affect indus- 
 try through price alone; it can moreover affect price in but three ways: 
 (i) by raising price permanently; (2) by lowering price permanently; 
 (3) by affecting price temporarily. If the duty affects price through 
 temporary increase, the infant industry already considered appears. 
 If it lowers price temporarily, the industry falls into one of the two other 
 classes as eventuaUy affected; if the duty has no effect on price, it of 
 course ceases to be a protective measure. It seems, therefore, that these 
 two classes may be regarded as exhaustive. 
 
 Article 2— Protection Which Raises Price. 
 
 When industry itself is considered as an advantage, and its support 
 advocated through governmental aid in raising price, one side alone 
 of the question is presented: the facts that the industry is estab- 
 
 lished and the capital and labour employed. If the attention is limited 
 to these phases of the Protection which raises price in order to encourage 
 industry, it seems that the subject is viewed from the position of the 
 producer alone, and that of the consumer is ignored. An indefinite 
 number of facts in favour of the protective system may thus be presented 
 with ease; an indefinite number of truths, it may be said; but these facts 
 will be but half the facts, the truths but half truths, and the other half 
 of the facts have no less bearing upon conclusions derived than the first 
 half alone. Thus, when the position is stated that the encouragement 
 of industry is desirable by means of the artificial raising of price, the 
 entire position is not presented; the necessary consequences of raising 
 prices to consumers is neglected. If this form of Protection is beneficial, 
 the position should be put in the following form. The encouragement of 
 industry is beneficial; therefore prices should be raised to consumers. 
 
 Again, the economic advisability of raising prices by means of an im- 
 port duty does not follow from the assumption that industry should be 
 encouraged; for the reason that all prices cannot be raised by import 
 duties. It is, in consequence, impossible to encourage all industry by 
 means of the taxation of some imports. The raising of the price of 
 some imports by means of a tax must act as a deterrent influence upon 
 other industries; as the tax affects other producers and consumers. Food 
 taxes offer little protection to the majority of farmers of a food export- 
 ing country. No tax on foreign commodities can protect the building or 
 transportation interests, as such; the employers of unprotected labour, 
 or any of the thousand and one occupations which natural conditions 
 create in every country and which are not dependent upon import 
 duties. It thus seems impossible to benefit all industry by the taxation 
 of some imports. This may be made clearer in another way: a 
 direct bounty or subsidy is a most effective method of encouraging 
 industry. If this method were adopted as a means of encouraging 
 industry, the result is evident; each individual in a country would be 
 justified in demanding his or her quota of encouragement; with the 
 result that each would receive the taxes already paid less the cost of 
 collection and distribution. There would in reality be little encour- 
 agement for any industry but tax-gathering in such a system. It 
 thus seems that only some industries can be encouraged by means of 
 taxation of imports which raises prices, and that other industries must 
 be discouraged owing to greater scarcity and increased cost. 
 
 It therefore seems that the original protective position requires still 
 
 t I 
 
 , i 
 
 I' > 
 
30 
 
 The Old Protection 
 
 Pt. I 
 
 another restatement, in order to present the conditions more accurately; 
 and should be put as follows : Certain industries should be encouraged; 
 therefore, prices should be raised to all consumers and certain indus- 
 tries should be discouraged. Nor does this statement seem in any 
 way an imfair revision of the position of this phase of Protection, for if 
 industry is encouraged on one side by raising prices artificially, other 
 industries must, apparently, be discouraged proportionately on another 
 by affecting consumers adversely; whether industries or individuals. 
 
 When, however, the protective policy of raising prices for the encour- 
 agement of industry is stated in this way, every argument in its support 
 might be advanced in support of a policy employing a part of the public 
 funds for the purpose of building sand-hills on the seashore which the 
 rising tide could wash away. This policy would encourage infinite 
 industry, create an unlimited demand for labour; and so, upon protec- 
 tive principles, raise wages, increase prosperity, create a demand for 
 agricultural produce, and so on. 
 
 Such a statement may seem at first sight a mere travesty upon the 
 protective theory; it may be said that no analogy exists between the 
 support of productive industry by means of taxation and the govern- 
 mental building of sand-hills; the first producing consumable wealth, 
 the other nothing; the first giving profitable employment to capital, the 
 other paying out public funds in unproductive activity. 
 
 Upon closer examination, the analogy between the two policies is not 
 as forced as might be supposed. The supposition may be adopted by 
 way of illustration that a people, by means of the unusual argimients, is 
 induced to adopt this form of high-priced protective taxation in order to 
 encourage industry. K it is supposed that it costs the people £i ,000,000 
 annually to encourage industry in this way, the question is whether these 
 £1,000,000, as far as the people at large is concerned, might not equally 
 well have been paid from the public treasury in employing labour to 
 build sand-hills. By means of the protective duty which raises price, 
 these £1,000,000, taxed out of the pockets of the people, are usually 
 distributed through three channels: artificial profits to capital, wages 
 to labour, and custom house expenses. The profits to capital may be 
 of two kinds: either abnormally swollen through monopolistic organiza- 
 tion, or reduced to the normal level through competition within the 
 protected area. The wages, of course, consist simply in paying £10 in 
 wages in order to produce £5 in result; that is, the labour employed in 
 industry, dependent upon taxation for its support, is unproductive labour 
 
 Bk. I 
 
 General Protection 
 
 31 
 
 to the extent of the difference in value between the taxed price and the 
 normal price of the commodity produced. That portion, therefore, of 
 the £1,000,000 of extra cost paid to labour is paid to unproductive 
 labour; to laboiu* employed for a longer time than necessary to produce 
 a given result. The remainder of the £1,000,000 goes to custom house 
 ofl5cials, inspectors, and functionaries of various kinds; that is, it again 
 goes to improductive labour. 
 
 If, at any given time, there had been no duty and consequently 
 no artificially supported industry, the capital in the country would be 
 the same as with the duty; the same amount of capital would seek em- 
 ployment and the same amount of labour would apparently be employed; 
 the returns to capital would be the normal returns iminfluenced by 
 taxation or monopolistic organizations. The duty offers neither a 
 greater amount of emplojnnent to capital nor to labour, merely diverting 
 them from normal to abnormal channels. The duty can, therefore, it 
 seems, achieve but the following results: (i) It may give a monopolized 
 profit to capital; if not, the normal profit could be obtained without the 
 duty and no result occurs as far as capital is concerned. (2) It pays a 
 portion of the £1,000,000 to labour employed in producing commodities 
 which cost more than they are worth; this labour is unproductively 
 employed to the extent of the difference between the protected and 
 unprotected values of the commodities, and to this extent, therefore, 
 as far as producing anything is concerned, the labour might just as well 
 have been employed on the sand-hills. (3) The remainder of the 
 £1,000,000 goes to officials occupied in collecting taxes which raise the 
 price of goods, officials quite as unproductively employed as the imneces- 
 sary labour. Thus, so far as producing any real wealth is concerned, 
 the encouragement of industry by means of prices forced up through 
 taxation is fimdamentally not far removed from its encouragement by 
 means of employing labom: in the erection of sand-hills on the seashore. 
 The two propositions seem practically identical; for, it might be asked, 
 what difference could it make to a people as a whole, whether a certain 
 amount of the public money is used to pay artificially swollen profits, 
 unnecessary labour, and salaries to unproductive officials; or to en- 
 courage industry among the sand-hills? In fact, support may be foimd 
 for the opinion that the £1,000,000 might have been better employed 
 in the sand than in the diversion of the resources of a people into chan- 
 nels created by taxed prices. If the public funds had been expended in 
 the sand-hill industry, the money would have gone to the greater num- 
 

 
 '1 
 
 'i 
 
 m 
 
 I ; 
 
 I 
 
 32 
 
 The Old Protection 
 
 Pt. I 
 
 ber in the form of wages, and not to the smaller number in the form of 
 artificial profits and salaries. Again, the encouragement of industry 
 of this kind may be withdrawn at any time without endangering pro- 
 tected capital in any way. Lastly, because in this way the people may 
 know exactly how much it costs to "encourage industry" and may 
 compare the result obtained with the expense involved. 
 
 There is thus, apparently, another form in which the protective 
 position which raises price might be put without doing violence to its 
 fundamental principles. This form would be something like the follow- 
 ing: some industry should be encouraged; therefore, a portion of the 
 people's money should be handed over to certain individuals to do with 
 as they please. This formulation of the phase of Protection under 
 discussion is in complete harmony with the views of Mill and Adam 
 Smith. 
 
 "A commodity is never permanently imported," says Mill,i "unless 
 it can be obtained from abroad at a smaller cost of labour and capital 
 on the whole, than is necessary for producing it. If, therefore, by a 
 duty on the importation, it is rendered cheaper to produce the article 
 than to import it, an extra quantity of labour and capital is expended, 
 without any extra result. The labour is useless, and the capital is spent 
 in paying people for laboriously doing nothing. " Protective taxes are, 
 of course, effective but as they affect the great staples of conmierce 
 represented by the necessaries of vital and industrial existence. 
 "Taxes upon the necessaries of life," says Adam Smith, 2 "have nearly 
 the same effect upon the circumstances of the people as a poor soil or a 
 bad climate. Provisions are thereby rendered dearer in the same manner 
 as if it required extraordinary labour and expense to raise them." 
 . . . "Such taxes, when they have grown up to acertain height, 
 are a curse equal to the barrenness of the earth and the inclemency of 
 the heavens. " 
 
 Article 3— Protection Which Lowers Price, 
 
 The protective duty, it may be said, instead of raismg prices in reality 
 lowers them. To the advocate of the high-priced Protection, cheapness 
 is little better than contagion. The cheap coat=cheap man position of 
 President McKinley, is well known. Nevertheless, a certain frailty in 
 human n ature questions at times the economic wisdom of paying more 
 
 1 ^"*^^P^ «/ Political Economy. Bk. V.. ch. iv.. § s. p. 51X. 
 The Wealth of Nations. Bk. IV., ch. ii.. p. 39. 
 
 Bk. I 
 
 General Protection 
 
 33 
 
 for goods than the goods are worth; to meet this weakness another school 
 of Protection appears, which repudiates that of the higher price. This 
 phase of Protection presents the import duty in a new role: that of the 
 poor consumer's friend. Protection is urged on one side as raising prices, 
 and thus encouraging industry, employing labour, raising wages, and 
 so forth. Protection, it is said on another side, lowers prices and thus 
 encourages industry, employs labour, raises wages, and so forth. A 
 bewildering array of facts, figures, and diagrams may be prepared in 
 support of either contention. 
 
 Reduced price is the cornerstone of this form of Protection, as is in- 
 creased price that of the policy considered. In order to show that 
 Protection lowers prices, the following method may be adopted. A 
 commodity is selected, a date is given, the price of the commodity is 
 quoted on that date; an import duty is imposed, the price of the com- 
 modity is given at a later date, the last price is lower than the first. 
 These are the facts: from the facts the theory is evolved, that the import 
 duty lowers prices. 
 
 At first sight nothing may seem more clear than that which the facts 
 are desired to prove. As sometimes happens, however, with the pres- 
 entation of facts of this nature, all the facts are not cited. In order to 
 make a complete case in support of this position, the price at which the 
 article could be imported at the later date should be given; if the article 
 could be imported at the later date for less than the protected 
 article, it seems evident that the duty had not only not lowered the price, 
 but was, in fact, keeping it above the normal level. These are the real 
 facts, and it is safe to assume where the import duty is retained, that the 
 taxed price is higher than the import price; were this not so, the duty 
 would be useless. This untaxed import price, however, never appears in 
 the home market, for the reason that the foreign goods are shut out or 
 raised in price by the duty; with the result that nothing is easier than 
 to trace the reduced price to the duty, to domestic competition, or to the 
 improved methods of production that it may have brought into exist- 
 ence. 
 
 A closer comparison of prices and methods, however, might show that 
 natural causes, independent of the duty, have been the real cause of the 
 reduction, while the duty was simply maintaining an artificially in- 
 creased price, of which fact the people are ignorant, as the second import 
 price never appears. The fact that a price falls after the imposition of 
 the duty no more shows that the fall is caused by the duty than the 
 
i' 
 
 II 
 
 34 
 
 The Old Protection 
 
 Pt. I 
 
 I ' 
 
 fact that a boat had changed its place, shows that the change is due 
 to a breeze sprung up in the meantime. The boat may have changed 
 its position by the use of steam or electricity; currents or tides may have 
 been the motive power, the breeze possibly unfavourable. There exists 
 one ideal industry of this nature: the steel and iron industry of the 
 United States. This industry is invariably cited in all Protection 
 literatxire as the imchallenged example of the wisdom of Protection. 
 What are the facts? "One feature of the Tariff Act of 1870 may be 
 briefly mentioned in passing,'' says Mr. Low.i "It placed a duty of 
 $28 (£5,123.) per ton on steel rails, with the fixed purpose of developing 
 the home industry. In the year before the passage of the Bill placing 
 this high duty on steel rails, the number of tons produced in the United 
 States was 8,616. By 1875, the manufacture had developed to 259,699 
 tons; by 1881, it was 1,210,285 tons, and in 1883 the duty was reduced 
 to $17 per ton, and in 1890 to $13 per ton. From $106 a ton in 1870 the 
 price, through domestic competition, fell to $28 a ton in 1902. " These 
 facts, it seems, ''speak for themselves." In spite of vast increase in 
 demand during this period, not only did the price of rails constantly fall 
 after the imposition of the duty, but the duty itself is continually lowered. 
 The price of rails in 1870 was $106 a ton; after the duty is imposed, the 
 price falls to $28 a ton in 1902-3; the duty following suit during the same 
 period, from $28 in 1870 falling to the Dingley duty of $8. With a little 
 taste for statistical compilation, these figures might be carried farther 
 in order to show the benefits of this form of Protection. The average 
 consumption of rails during the period 1870-1903 might be estimated 
 with the average reduction in price during that period; a fabulous total 
 could thus be reached and presented as the saving gained by the Ameri- 
 can people owing to the wisdom of their legislative assemblies in taxing 
 steel rails. 
 
 A question, however, arises: might not rails have been imported during 
 all this time for a price less than that quoted? 
 
 The fact that the duty was never abandoned suggests that such was 
 the case. This being so, it seems that the millions presented as savings 
 would be, to say the least, misleading; and it becomes essential to con- 
 sider another series of facts with equal bearing upon the case. 
 
 "Now,2 to show how the Dingley duty of $8 per ton on steel rails taxes 
 American railroads, and hence reaches deep into the pockets of shippers 
 
 » Protection in the United States. A. Maurice Low, p. 31, 
 
 « John R. Dunlap. Ttu: Evening Post, N. Y., October 26, 1904. 
 
 Bk. I 
 
 General Protection 
 
 35 
 
 and travellers on American railroads, I need only cite the fact that, 
 during the year 1903, our American railroads purchased from the steel 
 pool exactly 3,046,836 tons of new steel rails (see statistical abstract. 
 Department of Commerce and Labor). The prices toj foreign railroads 
 being, say $20 per ton — as we now know — and the pool price to 
 American railroads being $28 per ton, that means that the American 
 people, during the single year last past, contributed a clean net profit of 
 $24,374,688 to the rail pool. . . . And during the past six years — 
 since the Dingley bill was enacted — these same American railroads 
 have been forced to contribute to the few members of the rail pool 
 exactly $102,621,256 — or $8 per ton on 12,827,657 tons of rails bought 
 and used." 
 
 Rails offer no exceptional example of the advantages of this form of 
 Protection. Another passage from the letter quoted serves as illustra- 
 tion. "In the spring of 1903, I had occasion to get exact market 
 quotations for various iron and steel products in *free trade' England 
 and 'protection' America. The quotations were supplied by one of 
 the oldest and most reputable New York firms engaged in the import 
 trade in iron and steel, and they were as follows, the quotations in each 
 case being for a long ton of 2,240 lbs. f.o.b. at Middlesboro and Swansea, 
 England, and f.o.b. Pittsburgh, Pa., the prices being those current 
 during the first half of May, 1903: 
 
 Merchant bar iron 
 Bessemer billets 
 Bessemer pig iron 
 No. 3 foundry iron 
 Gray forge iron 
 Tank plates 
 Black plates 
 
 "Since May, 1903, there has been some decline in American prices — 
 but also a corresponding decline in English prices. In other words, the 
 differences between American and English prices are still current, as they 
 have been since the day the Dingley Bill was enacted; and this state- 
 ment can be verified by an examination of the past and current quotations 
 given in the Iron Age of New York and the Iron and Coal Trades 
 Review of London. " 
 
 A brief analysis of these prices and a realization of the millions they 
 represent, taxed out of the pockets of the American people, render of 
 
 England 
 
 United 
 
 Dingley 
 
 
 States 
 
 Duty 
 
 $30.00 
 
 $48.10 
 
 $13.44 
 
 20.00 
 
 30.00 
 
 6.72 
 
 14.36 
 
 19.3s 
 
 4.00 
 
 11.40 
 
 19 -75 
 
 4.00 
 
 11.25 
 
 19.00 
 
 4.00 
 
 30.91 
 
 38.08 
 
 13.44 
 
 50.40 
 
 72.80 
 
 29.12 
 
 !■ 
 
36 
 
 The Old Protection 
 
 Pt. I 
 
 
 r 
 
 doubtful advantage the economy involved in the Protection which lowers 
 prices. The foregoing considerations, however, but represent a par- 
 ticular period. The eflFect of such taxation extending over a number of 
 years has been reviewed by Mr. D. A. WeUs,i who filled the position of 
 Special Commissioner of Revenue in the United States for some time. 
 He says: 
 
 "The average price for steel rails in the United States from 1878 to 
 1887 was $44 per ton. In Great Britain, during the same period, the 
 average was $30 per ton. At these rates, the adverse difference in the 
 cost of consumption of 20,000,000 tons of steel in the United States 
 would have been $280,000,000. But as a difference, as respects the 
 cost of the iron used in the making of steel in the two countries of $7 per 
 ton, has already been allowed, the cost of the consumption of steel in 
 the United States may be properly charged with only one half this 
 disparity, or $140,000,000. 
 
 "Taking, therefore, the lowest grades of iron and steel as a standard 
 in this computation of the disparity of cost or price, from 1878 to 1887, 
 the aggregate excess of cost of iron and steel in ten years, to the con- 
 sumers of the United States, above that paid in Great Britain, has been 
 $560,000,000, or at an average of $56,000,000 per annum; and on a 
 separate computation, made in the same way, for the year 1887, the 
 disparity in price for the United States rises for that single year to 
 $80,000,000. . . . 
 
 "In 1880 there were 1,005 iron and steel works, rolling mills, and blast- 
 furnaces in the United States, whose aggregate capital, according to M. 
 Swank, was $23 1 ,000,000. According to Professor Pumpelly , the capital 
 in the iron mines of the country for that same year was $62,000,000; and 
 from the joint reports of these two census experts it would appear that 
 the aggregate capital invested in all the coal-mines of the country, at the 
 same date, was $248,000,000, of which nearly $200,000,000 stood for the 
 value of the mineral lands or royaUies. The proportion of coal and the 
 cost of coking, chargeable to the iron industry, may possibly cover the 
 odd $48,000,000. The entire capital invested in the iron and steel 
 industry in the United States in 1880 was, therefore, about $341,000,000; 
 and the data above submitted warrant the conclusion that the price 
 paid by the consumers of iron and steel in the United States, in order to 
 sustain these industries for ten years, and to enable the owners thereof 
 to enjoy i ts profits — paying wages to their employes somewhat less on an 
 
 * Xeceni Economic Changes, pp. 472, 474. 
 
 Bk. I 
 
 General Protection 
 
 37 
 
 average than were paid at the same time to other and outside labour — 
 was about 65 per cent, more than the entire capital invested in it. And, 
 as it has been aheady shown that it would be impossible for any other 
 country to supply the annual requirements of the United States of iron 
 and steel for consumption, it further follows that the payment of $50,- 
 000,000 to $80,000,000 per annum of this country to sustain a branch 
 of industry which cannot be displaced destroyed or by any possible 
 foreign competition, is clearly necessary. " 
 
 The fundamental maxim of orthodox Protection is that protective 
 taxation encourages industry. Taxation of this kind can affect industry 
 through price alone. . In the foregoing discussion, reason appeared for 
 believing that taxation which forces up price can never "create" any- 
 thing but waste. In the study of Protection which lowers price, there 
 seemed grounds for the opinion that such taxation can never really lower 
 price; if it did, it would cease to protect. An examination of one of the 
 most noteworthy protected industries of this kind suggests that such 
 Protection forced millions out of the natural distributive channels 
 of the wealth of the people taxed in order to encourage it. 
 
 An examination of Protective taxation in its relation to industry seems 
 to lead to the following positions: 
 
 1. The bulk of the industry in any country is directly dependent 
 
 upon the capital seeking investment. 
 
 2. No accumulation of protective taxes can increase the amount, 
 
 of such capital. 
 
 3. Protective taxation can only affect industry through increase 
 
 of price, which involves proportionate loss and restriction of 
 all industry brought under the influence of such taxation 
 through raw materials, transportation rates, and so on. 
 
 
CHAPTER III 
 
 PROTECTION AND LABOUR, 
 
 Section I — The Creation of a demand for Labour by Protective 
 Taxation. Section II — The Raising of Wages by Protective 
 Taxation. Section 111 — Pauper Labour and Protection. 
 Section IV — Protected Labour in the United States, 
 
 Section I — The Creation of a Demand for Labour by Protec- 
 tive Taxation 
 
 THE positions that a tax upon a certain commodity can create, 
 or increase a demand for labour, raise wages, keep them at a 
 higher level, or add to thek purchasing power, lie at the 
 foundations of the protective structure; and are either 
 tacitly assumed by protectionist apologists or supported by the usual 
 array of fact and figiu*e. 
 
 The method of demonstration is simple: a duty is imposed; the 
 duty diverts a certain amount of capital toward a given industry; the 
 industry naturally employs labour; without the duty the mdustry could 
 not exist; the conclusion is that the labour would not be employed 
 without the tax. 
 
 It seems evident that it is not the tax which employs the labour, but 
 the capital; it also seems evident that the tax does not create the capital; 
 the capital must have been in existence, seeking investment, before the 
 fixing of the duty, or there woujd have been no purpose in its imposition; 
 yet, without assuming that an import duty can bring capital into exist- 
 ence, it is not easy to discover how an import duty can bring a demand 
 for labour into existence. If an import duty could create capital, it is 
 evident that a certain amount of capital, which did not exist before, must 
 miraculously appear from surrounding space within a given area im- 
 mediately after the imposition of a duty upon a certain commodity. 
 Few students of the subject will care to ascribe these magic properties 
 to the import tax; yet, as labour cannot be employed without capital, it 
 
 38 
 
 Bk. I 
 
 Protection and Labour 
 
 39 
 
 seems no less miraculous to suppose that a duty can create a demand 
 for labour than to assimie that it creates capital. The miracle would 
 be no less in one instance than in the other; it would, in fact, be 
 the same miracle; and yet this miracle is assumed, and from it arises 
 the entire fabric of Protection in relation to labour. 
 
 The facts, figures, and diagrams which may be compiled to demonstrate 
 this position of Protection with reference to labour are without limit. 
 They may be prepared along the following lines. The entire protected 
 capital of a country and the total amount of protected wage dependent 
 upon it, may be estimated; two great totals of capital and wage depen- 
 dent upon the import duty are thus reached. The prices of certain 
 commodities may be given before and after the imposition of the duty, 
 if the later prices are lower than the earlier, it is possible to arrange 
 another series of figures representing increased efficiency of wages owing 
 to the duty; showing that wages had either been raised or their purchas- 
 ing power increased. Thus an enormous aggregate of millions may be 
 presented, representing protected capital, protected wages, and the 
 increased purchasing power of the latter; all of which are traced to the 
 beneficent influence of the duty. These figures would present the facts 
 upon which is based the theory that Protection creates a demand for 
 labour and increases wages. 
 
 Unless, as has been seen, it is admitted that an import duty can create 
 capital where none existed, the millions representing protected capital 
 fail in demonstrating the advantages of Protection as an employer of 
 labour; for the reason that the capital must have existed in the country 
 before the duties were fixed, and these millions must, therefore, have 
 employed the same amount of labour whether the taxes were imposed or 
 not. In the same way, the millions representing protected wage seem 
 no less unconvincing; for the reason that the capital already existing 
 must have paid them, duty or no duty. It has been seen how Protection 
 reduces prices in one of the most highly protected industries in the world, 
 which has constantly lowered prices, and if such reductions as these are 
 studied, they may lead to more or less skeptical conclusions with refer- 
 ence to the advantages of taxing the poor man's needs in order to make 
 them cheaper. All these millions, therefore, representing protected 
 capital and protected wages seem valueless in demonstrating the advan- 
 tages of Protection for the wage- worker: First, because capital is 
 brought into being through the natural action of industry and trade, 
 and not through the imposition of import duties. Second, because 
 
40 
 
 The Old Protection 
 
 Pt. I 
 
 Bk. I 
 
 Protection and Labour 
 
 ) 
 
 i; 
 
 existing capital must employ labour, duty or no duty. Third, because 
 Protection never really lowers price; if it did, the tax would not protect. 
 Many considerations are advanced with reference to the supposed 
 advantages gained by labour through the protective duty, the majority 
 depending, however, directly or indirectly, upon the assumption that 
 protective taxation creates a demand for labour, which implies the crea- 
 tion of capital. As it is, however, impossible to discuss the subject 
 of Protection in relation to labour, without constantly meeting this 
 ** created" demand, it may be well to discuss the conclusions suggested, 
 supposing this miraculous demand possible. 
 
 Section n — The Raising of Wages by Protective Taxation 
 
 There are two ways of raising wages: one by lowering the price of 
 commodities, another by increasing the demand for labour. The first 
 method has been discussed as applied to Protection which lowers prices* 
 The supposed increase in the demand for labour created by protective 
 taxes remains. 
 
 If it is admitted that a tax on a commodity can increase, or create, a 
 demand for labour, it by no means follows that such a tax can raise 
 wages. There is an established economic principle that value depends 
 upon supply and demand. In order to show that Protection increases 
 the value of labour, or raises wages, it seems essential not only to show the 
 increased demand, but, in addition, that this demand exceeds the avail- 
 able supply. Until the total demand reaches and passes the total supply, 
 wages will apparently remain at much the same level, imaffected by any 
 increased demand. The fact that in all protectionist countries a por- 
 tion of the population is in a state of unemployment, seems to show that 
 Protection does not absorb the total available supply of labour and is 
 thus probably without influence in increasing wages. As long as a 
 mass of unemployed labour exists in any protectionist country there is 
 ground for the opinion that the taxation of goods will never effectively 
 raise the average level of wages; cannot, in fact, raise such an average 
 until all the unemployed have found occupation. 
 
 Other considerations lead to the same conclusions, even although it is 
 admitted that a tax is capable of creating a demand for labour — that 
 is, capital. If the labour in any country is divided into two classes, pro- 
 tected and improtected, the first class can apparently form but a small 
 fraction of the total, for the following reasons. Unprotected labour is 
 that portion which meets the entire home demand and at the same time 
 
 41 
 
 produces the whole of industrial exports; this labour represents all nor- 
 mal home consumption, all exporting industry, together with all the 
 labour employed in transportation, building trades, and other daily 
 occupations, independent of import duties. The protected labour, on 
 the other hand, represents only that industry unable to meet the home 
 demand without artificial aid. The bulk of unprotected labour, there- 
 fore, must apparently be greatly in excess of protected labour, and it 
 seems that the greater number will dominate the labour market; that 
 is, decide the rate of wages. In other words, that protected wage will 
 simply depend upon the price of unprotected labour. 
 
 The United States come nearest the realization of the protectionist 
 dream. In all literature dealing with the subject, the United States 
 are cited as the shining example of the advantages of Protection. It is, 
 therefore, in the United States that the protection of labour is carried 
 to the fullest extent, and consequently there the largest proportion of 
 protected wage-workers may be found. In an analysis 1 of the census 
 returns for 1900, it has been shown that the proportion of protected to 
 unprotected labour in the United States is approximately as 1:46. 
 In other words, in that heavily protected country, there are forty-six 
 unprotected wage-workers for every protected wage- worker. In order, 
 therefore, to accept the protective theory of wages, it is necessary to 
 suppose: first, that an import duty can create a demand for labour, 
 which impUes that it can create capital; and, in addition, that one man 
 in forty-seven can affect the wages received by forty-six, while at the 
 same time a mass of unemployed labour is found in every large city in 
 the country. To suppose that protective taxes can raise the price of 
 wages seems analogous to the assumption that damming up a stream 
 raises the level of the ocean into which it flows. 
 
 Section III — Pauper Labour and Protection 
 
 The effect of protective taxation is to raise prices to the home con- 
 sumer; if it does not, it ceases to protect. This benefits the sellers of 
 commodities; the wage-worker, however, is not a seller of commodities 
 but a seller of labour, and it seems not unnatural to ask why the in- 
 creased price of commodities should benefit the seller of labour? The 
 price of labour is measured in money, as is the price of commodities; as 
 the value of the latter goes up, the value of wages must apparently go 
 down; it must require a greater amount of labour to obtain the same 
 
 » Mr. Edward Atkinson. Fads and Figures the Basis of Economic Science, p. 42, ' 
 
42 
 
 The Old Protection 
 
 Pt. I 
 
 commodities. Yet this increased price is urged as a benefit to labour; 
 the worker is practically told that the less the value of his wages, that is, 
 the higher the price of commodities, or the more he has to work, the 
 
 better off he is. , . , , 
 
 This position gives rise to the "pauper labour" argument which has 
 long gone hand in hand with the " infant industry " in the fields of classic 
 Protection. The position may be stated as follows: The foreigner 
 works for so much; we naturally desire a higher standard of wages; we, 
 therefore, have but to exclude the foreigner from our markets by means 
 of the omnipotent import duty and aU wiU be well. The price of goods 
 wiU go up, wages will be paid at a higher rate, a demand for labour wUl 
 be created, and all the blessings of the protectionist paradise enjoyed by 
 
 the people. i- j • j 
 
 The **pauper labour" position assumes that cost of production de- 
 pends entirely upon the rate of wages, and that tiie rate of wages depends 
 upon the price of goods. If the first were true, it would naturally follow 
 that India and Chma, with their enormous populations and small wage, 
 would control the industrial markets of the world. If cost of production 
 depended entirely on wages, no low-wage European countiy would need 
 Protection against relatively high-wage England and America. If wages 
 were the dominant factor in production, how, it might be asked, could 
 high-wage England have held the commercial supremacy of the world 
 for more tiian half a century without a single protective tax on her 
 schedules? The facts, when examined in the markets of the world, seem 
 to show that cost of production does not depend upon wages, but upon 
 the natural resources of a country, upon the skill of a population, upon 
 its abiUty to invent and make use of machinery, and, very largely, upon 
 its inteUigence applied to systematic production and the organization 
 
 of industry. 
 
 The assumption that the rate of wages depends upon high pnce sug- 
 gests tiie following considerations: The taxing of the food of the 
 English people under the Com Laws was a form of Protection maintained 
 m order to put up prices in the interests of the land-owning classes of 
 England. The manufacturing class was unprotected by this form of 
 taxation; on the contrary, it was found that it must discourage manu- 
 factures, England bemg a food importing country. As nations can only 
 exchange their products with each other, and as imports must always 
 be the equivalent of exports, it was found that England, by taxing, or 
 restricting her unports (foodstuffs), was in reality taxing, or restricting, 
 
 Bk. I 
 
 Protection and Labour 
 
 43 
 
 her own exports (manufactures). In other words, England, in forcing 
 up the price of her own cereals, as against foreign pauper labour, was ren- 
 dering her own manufactures proportionately more diflScult and closing 
 the foreign market to them; in other words, protecting the manufactures 
 of foreign coimtries. This attitude of manufacturing capital in England 
 led to the final overthrow of the Corn Laws. Thus, as long as land- 
 owning legislation was dominant in England, Protection demanded high- 
 priced foodstuffs in order to protect English labour against the foreign 
 pauper. This kind of Protection, however, it was found, protected 
 foreign manufactures, and, when the influence of manufacturing capital 
 began to be felt in Parliament, Protection demanded low-priced food- 
 stuffs, in order to protect the people from the foreign pauper. The 
 repeal of the Com Laws in England was as much a protective measure 
 as the tax on grain. One measure was dictated by the land-owning 
 class, the other by the manufacturing class; and protection against 
 the pauper foreigner was made the excuse both for the high price 
 and the low price of the same commodities. The English Com 
 Laws protected foreign manufactures by checking English imports. In 
 the United States, a food-producing nation, conditions exactly the 
 reverse of those of England might be expected to produce the 
 same results: protect foreign manufactures of highly finished products. 
 How this is done may be shown in the following extract from a com- 
 prehensive review of American trade conditions in 1830:^ 
 
 "The injurious effect which the duty has on the numerous mechanics 
 employed in the various manufactures of iron has been so ably and 
 forcibly exposed in their representations to your honourable body, that 
 we have nothing to add on that subject; but, as we beg leave respectfully 
 to refer to their memorials, we must do it with one exception. So far 
 as we are informed, we are induced to believe that they have overrated 
 the quantity of iron contained in the hardware imported into this coun- 
 try — an error, which, if it is one, does not weaken their arguments 
 respecting the main question at issue. The leading facts are, that 
 amongst the foreign manufactures imported into the United States, 
 hardware, cutlery and all others of which iron is the material, are ex- 
 ceeded only by those of cotton, woollen, and silk stuffs; and that the 
 prime cost of the quantity annually consumed amounts to $3,500,000, 
 whilst that of the bar iron imported from England, whence the manu- 
 
 » The Free Trade Memorial addressed to the Senate and House of Representatives of the United States. 
 Albert Gallatin. State Papers and Speeches on the Tarijf. Taussig, p. 177. 
 
44 
 
 The Old Protection 
 
 Pt. I 
 
 factures of that metal are almost exclusively imported, does not 
 amount to $240,000. Whatever may be the quantity of bar iron 
 used in the manufacture of hardware and other articles thus im- 
 ported, it interferes equally with American bar iron, whether 
 imported as a raw material or in its manufactured state. If the 
 quantity thus used does not, as is asserted, exceed 9,000 tons, the 
 prime cost of which is less than $350,000, the duty which prevents its 
 importation arrests the progress of those branches of industry which 
 would otherwise convert that raw material into manufactured articles, 
 worth $3,500,000. The workingmen who are able and willing to apply 
 their labor to this highly desirable and truly profitable object, do not 
 ask your honourable body for any extraordinary protection, but only 
 that the impediments arising from an extravagant protecting duty on 
 the raw material be removed. " 
 
 The United States thus seems to be doing the same thing as England 
 before she abolished the Com Laws. The taxation of raw materials 
 protects foreign manufacturers of finished products and consequently 
 diminishes the possible demand for American labour. The illustration 
 offered is dated as far back as 1832. It might be supposed that sub- 
 sequent legislation had altered this anomaly, pointed out so long ago. 
 The following passage, therefore, may be of interest, written by Mr. 
 Atkinson, with reference to the same industries as late as 1904. In 
 refering to the analysis of the iron and steel industries by Mr. Wells, 
 already cited, Mr. Atkinson^ says: 
 
 "I shared with him in making this analysis, which is carefully guarded, 
 is conservative, and is far within the mark in proving that in the ten 
 years which elapsed from 1888 to 1897 the excess of disparity in price 
 paid by the consimiers of this ocuntry mainly to the producers of iron 
 and steel, stated by Mr. Wells at five hundred and sixty million dollars 
 ($560,000,000) was in fact nearer seven hundred millions ($700,000,000) 
 than the sum named. This disparity, whatever the price may have been 
 in either year in this country or in Europe, rendered it impossible for 
 the converters of pig and bar iron into machinery and the higher types 
 of metallurgy of this coimtry to compete with the workshops of Europe, 
 while the iron and steel makers of the crude forms of pig, ingot, and bar 
 were enabled to convey enormous sums from the pockets of the consumers 
 into their own quickly accumulated wealth. The intermediate con- 
 sumers of these crude forms of metal, the machinists, the tool makers, 
 
 » Edward Atkinson. Facts and Figures the Basis of Economic Science, p. io8. 
 
 Bk. I 
 
 Protection and Labour 
 
 45 
 
 and that vast body of craftsmen far more numerous than all occupied 
 upon the pig, bar, and rail, were restricted and oppressed, while their 
 competitors in Europe were fully protected in control of all the markets 
 of the world and in part of the home market in this country. " 
 
 These two statements of certain industrial conditions in the United 
 States present the action of a system of restrictive taxation extending 
 over three-quarters of a century. They suggest that such taxation had 
 suppressed, or rendered less productive, an incalculable amount of val- 
 uable industry, while the capital actually employed under forced prices 
 merely employed labour in "laboriously doing nothing," as Mill says. 
 Capital is not created by import duties, but by accumulations saved 
 from productive industry. So far then as industry is checked, or 
 rendered less productive by taxation, it seems safe to assume that the 
 production of wealth and the accumulation of capital is checked pro- 
 portionately. If, however, the accumulation of capital is checked, 
 the demand for labour will apparently be diminished at the same time. 
 Just as the English Com Laws, in checking English imports checked Eng- 
 lish exports and, consequently, the demand for English labour, so must 
 all artificial checking of production in any country restrict the normal 
 accumulation of capital in that country and consequently restrict the 
 demand for labour. Nor does it seemingly make any difference to 
 what height prices may be forced by taxation. Such forcing of prices 
 will simply protect the foreigner to a certain extent, and, as long as a 
 mass of unemployed labour floods the centres of population, has little 
 effect on wages. 
 
 "The theory that high prices make high wages," says Mr. Atkinson, 1 
 "is so shallow as to make one wonder that any man of common sense 
 should present it. When it is remembered that ninety (90) per cent, of 
 the demand for food, fuel, clothing, and shelter is for the supply of 
 small farmers, farm laborers, common laborers, wage-earners, factory 
 operatives, mechanics, and persons of small fixed incomes, it becomes 
 plain that high prices quickly diminish consumption by leading to forced 
 economy. This tends at once to lessen the demand for labor, to the dis- 
 charge of large numbers of workmen, and to efforts to reduce rates of 
 wages; then follow strikes, and other misdirected efforts to get relief. 
 One may sympathize with the workmen under these conditions without 
 approving their misdirected methods. " 
 
 The pa uper labour argument says that a population should tax itself 
 
 1 Facts and Figures the Basis of Economic Science, p. 32. 
 
46 
 
 The Old Protection 
 
 Pt. I 
 
 as protection against the low- wage foreigner. What are the facts in high 
 wage America in one of the most highly protected industries in the 
 worid? "In 1880," says the Pittsburgh Survey,^ "Slavs, Lithuanians, 
 and Italians did not form one per cent of the population in either Pitts- 
 burgh or Allegheny. By 1890 they had reached four per cent, and out 
 of an army of 90,000 wage-earners, one in every ten was an inmiigrant 
 from southeastern Europe. By 1900, one-third of the foreign-born were 
 of this new immigration, and the movement of the Teutonic and Keltic 
 races had practically ceased. We must wait until the census enumera- 
 tion of 19 10 before we may definitely know what proportion these new- 
 comers form to-day, but it may safely be assumed that the percentage of 
 foreign-bom in the greater city will equal that of 1900, thirty per cent, 
 or roughly, 200,000, half of whom will be from southeastern Europe. 
 Poles, Italians, and Jewish immigrants head the list. Lithuanians, 
 Croatians, Servians, Slovaks and Ruthenians are numbered by the 
 thousands, and Magyars, Greeks, Bohemians, and Roumanians are here 
 in lesser groups. . . So the Slav gains his foothold in the Pitts- 
 burgh industries," continues the Report, 2 " and in the doing of it, he 
 undermines the mcome of the next higher mdustrial group and gains the 
 enmity of the Americans. Shrewd superintendents are known not only 
 to take advantage of the influx of unskilled labour to keep down day 
 wages, but to reduce the pay of skilled men by a gradually enforced 
 system of promoting the Slavs. " 
 
 This seems to be the way the pauper labour taxes, and high prices, 
 keep up wages practically. They suppress the more highly finished and 
 diversified forms of production, they congest capital, which might have 
 been employed in these, in enormous acamiulations acting imder taxa- 
 tion; and then the foreign pauper labour is imported in shoals in order 
 to compete in a free trade labour market and keep wages at the lowest 
 possible level. 
 
 Section IV — Protected Labour in the United States 
 
 If any country in the world can show the practical realization of 
 protectionist theories, that country is the American Republic, not only 
 because of its unlimited development of the protective system, but 
 because its industrial career was begun under the most favourable 
 conditions, freed from vicious, inherited institutions. A brief glance, 
 
 * Charities and the Commons, January, zgog, p. 534. 
 *Ibi<L, p. 538. 
 
 Bk. I 
 
 Protection and Labour 
 
 47 
 
 therefore, at the condition of labour during two periods in the United 
 States may be presented: 
 
 The history of American Protection shows a marked change since the 
 beginning of the system. In the early days, those in favour of the policy 
 presented their petitions to legislators in carefully studied arguments 
 requesting but a modest aid, and that, in most cases, of a temporary kind. 
 They appealed to the generosity of the country, to the intelligence and 
 consideration of its representatives, as though conscious of the dangerous 
 ground upon which they were treading. The granting of their thought- 
 ful and often deprecatory petitions was regarded as a favour which might 
 at any moment be withdrawn. This has entirely changed after a few 
 decades. The Civil War presented a harvest of taxes to those enjoying 
 governmental favours and served to confuse protective and fiscal meas- 
 lu-es in the popular mind. There could be but one result; a great 
 strengthening of the protective position on every side, and the constant 
 accumulation of new protective taxes. The arguments of a Clay or a 
 Hamilton are no longer heard nor needed — a measure is simply pre- 
 sented and looked after by those interested, whichever party may 
 happen to be in power. 
 
 This represents a complete triumph for Protection; and after three 
 quarters of a century the practical realization of its promised advan- 
 tages with reference to labour may be sought. Upon protectionist 
 theories the condition of American labour must constantly improve and 
 its retmns constantly increase, not only in proportion to the increase of 
 the wealth of the country, but in proportion to the Protection offered. 
 Labour, it may be expected, will become more and more prosperous and 
 contented; strikes will never occur; the demand for labour "created" 
 will be out of all relation to the supply; and wages will mount in direct 
 proportion to the increase of wealth and import duties. What, then, 
 are the facts? 
 
 In order to answer this question, the condition of labour during the 
 early decades of the Republic may be compared with the economic 
 situation in which labour finds itself to-day. An interesting accoimt 
 of American labour during the earlier days of the last century is found 
 in Wakefield's England and America,^ 
 
 Wakefield was the inventor of a new phase of Protection. His experi- 
 ence in the colonies having shown him, where available land lay at their 
 disposition, that colonists could employ themselves independently of 
 
 * England and America. £. G. Wakefield. 1833. 
 
48 
 
 The Old Protection 
 
 Pt. I 
 
 accumulated capital, he observed that this made uncertain labour, high 
 wages, and placed capital at a disadvantage in new countries. He, 
 therefore, suggested the protection of capital through the taxation of 
 imoccupied land. By fixing an artificially high price on all undeveloped 
 land, it was obvious that colonists upon their arrival would be forced 
 to become wage-workers for a time at least, instead of employing them- 
 selves upon the land. By this means, the effects of congested population 
 and concentrated wealth in old nations could be artificially reproduced 
 in the colonies and new countries. He cites ^ the case of a certam 
 Mr. Peel, who brought £50,000 and three thousand wage-workers from 
 England to fhe Swan River colony in West Australia. On his arrival, 
 however, this imfortunate capitalist *'was left without a single servant 
 to make his bed or fetch him water from the river. " Wakefield's theory 
 of colonization was suggested by the difficulty in combining capital and 
 labour in new countries. "If," ^ he says, " all members of the Society are 
 supposed to possess equal portions of capital ... no man would have 
 a motive for accumulating more capital than he could use with his own 
 hands. This exists to some extent in New American settlements where 
 a passion for owning land prevents the existence of a class of labourers for 
 hire.'* He observes^ that mankind, as a result of "concert and combina- 
 tion," divides itself into owners of labour and owners of capital as a 
 simple contrivance for promoting the accumulation of capital. There 
 seems, however, in his time, to have been a lamentable lack of this wise 
 ''concert and combination" in America. He says:^ "In the northern 
 states of the American Union it may be doubted whether so many 
 as a tenth part of the people would fall under the description of 
 hired labourers. ... In England the labouring class compose the 
 bulk of the population." "Where land is very cheap," he continues,^ 
 "and all men are free, where everyone who so pleases can easily 
 obtain a piece of land for himself, not only is labour very dear, 
 as respects the labourers' share of the produce, but the difficulty 
 is to obtain combined labour at any price." The result of these con- 
 ditions is, naturally, that in new countries capital does not show the 
 same tendency to concentration as in older industrial societies; on the 
 contrary, under such conditions, capital evinces an inclination to 
 
 » Vol II, p. 33. 
 « Vol. I., p. i7« 
 
 • Ibid., p. 18. 
 
 « Ibid., pp. 42. 43f 44* 
 
 • Ibid. p. 347. 
 
 Bk. I 
 
 Protection and Laboiu: 
 
 49 
 
 scatter itself throughout the community. "A barbarizing tendency 
 to dispersion," as Wakefield^ puts it. The wage-earner has, in fact, 
 means at his disposal of becoming a capitalist himself. This is the 
 picture Wakefield presents of the condition of American labour during 
 the early days of the Union. However, all is not so dark : " The Ameri- 
 cans are the only people in the world, " he says,^ " blessed with leisure 
 and equality." "The evils of society, misery and vice produced by 
 misery, are unknown in America. "^ "But in what coimtry," he 
 asks,^ "except North America and some new colonies, do the wages 
 of free labour employed in agriculture much exceed a bare subsistence 
 for the labourer . . . imdoubtedly farm-horses in England, being a 
 valuable property, are better fed than English peasants. The peasant 
 of the South of England suffers nearly all the evils, but enjoys none of 
 the advantages of slavery." . . . He relates^ a conversation with 
 some American capitalists who said: "Our capital was ready for many 
 operations which require a considerable period of time for their com- 
 pletion; but we could not begin such operations with labour which, we 
 knew, would soon leave us. If we had been sure of retaining the labour 
 of such emigrants, we should have been glad to have engaged it at once, 
 and for a high price: and we should have engaged it, even though we 
 had been sure it would leave us, provided we had been sure of afresh 
 supply whenever we might need it. " 
 
 There seems no reason to doubt these statements of Wakefield; they 
 are but typical of the expressions of writers dealing with the same period 
 in America. "The Americans are nearly all in easy circumstances," 
 says de Tocqueville.^ "Among the new things in America nothing 
 struck me more forcibly than the general equality of condition among the 
 people."^ "Sixty years ago," says Bryce,^ "there were no great 
 fortunes in America, few large fortunes, no poverty. " 
 
 These are the conditions in the United States during the earlier 
 decades of their existence. They may be compared with existing labour 
 conditions after nearly three quarters of a century of constant accum- 
 ulations of protective taxes. This may be done through the figures of 
 
 »Vol. II. p. 52. 
 
 • Vol. I., p. 328. 
 » Ibid., p. 325. 
 
 • Ibid., pp. 246, 247, 47. 
 
 • Vol. IL, pp. 191, 192. 
 
 « De la Detnocratie en AmSrique. Tome i., p. 83. ' 
 ' Ibid., p. 1. ' 
 
 • The American Commonweallh, 180S. Vol, 11, p. 745. 
 
 4 
 
so 
 
 The Old Protection 
 
 Pt. I 
 
 census returns, in connexion with poverty and unemployment. There 
 exist several such studies, that of Mr. Robert Hunter in his work 
 Poverty is among the more recent; he saysi^ "The figures of un~ 
 employment, although very imperfect, show that the evil is widespread, 
 even in times of prosperity. The census of 1890 shows that 3,523,730, 
 or 15.1 per cent of all of the workers over ten years of age, engaged in 
 gainful occupations, were unemployed a part of the time during that 
 year (Vol. on Occupations, pp. ccxxviii et seq.). These figures are, how- 
 ever, criticised by the census of 1900 as incomplete. In the last census 
 the number found to be unemployed at some time during the year was 
 6,468,964, or 22.3 per cent of all the workers over ten years of age 
 engaged in gainful occupations {Idem, p. ccxxvi). Thirty-nine per cent 
 of the male workers unemployed, or 2,069,546 persons, were idle from 
 four to six months of the year (Idem, p. ccxxxv). These figures are for 
 the country as a whole, and for all industries, including agriculture. In 
 manufacturing alone the unemployment rose to 27.2 per cent of all 
 workers." Again he says,2 "The total number of paupers in the United 
 States in the year 1891 was about 3,000,000, according to the estimates 
 of Prof. Richard T. Ely and of Mr. Charles D. KeUogg, then Secretary 
 of the Charity Organization Society of New York City (North American 
 Review, April, 1891). . . . There is every indication that not less 
 than 4,000,000 persons are now dependent upon the public for relief." 
 After presenting the necessary data with reference to the number of 
 evictions and pauper burials, he observes i^ On the basis of these figures 
 it would seem fair to estimate that certainly not less than 14 per cent of 
 the people, in prosperous times (1903), and probably not less than 20 
 per cent in bad times (1897), are in distress. " 
 
 These estimates embrace the population at large; a brief notice, there- 
 fore, of the condition of labour employed in some of the oldest and most 
 highly protected industries of the country may be of interest, as the 
 protective theory requires that such industries protect labour, and 
 raise wages. The Pittsburgh Survey of Charities and the Commons for 
 March, 1909 (p. 1035) furnishes material for such a notice. What, 
 then, are the conditions of labour "protected" for three quarters of a 
 century? 
 
 I. An altogether incredible amount of overwork by everybody, 
 
 * Poverty. Robert Hunter, p. 28. 
 ' Ibid., pp. 20, 21. 
 
 • Ibid., p. 25. 
 
 Bk. I 
 
 Protection and Labour 
 
 SI 
 
 reaching its extreme in the twelve-hour shift for seven days in the week 
 in the steel mills and the railway switch-yards. 
 
 II. Low wages for the great majority of the labourers employed 
 
 by the mills. 
 
 III. Still lower wages for women. 
 
 IV. An absentee capitalism, with bad effects strikingly analogous 
 to those of absentee landlordism. 
 
 V. A continuous inflow of immigrants with low standards. 
 VI. The destruction of family life. 
 VII. Archaic social institutions. 
 
 VIII. The contrast between the prosperity on the one hand of the 
 most prosperous of all the communities of our western civilization 
 . . . and, on the other hand, the neglect of life, of health, of physi- 
 cal vigour, even of the industrial eflSciency of the individual. 
 
 What are the practical effects upon a population "protected" in this 
 way? A glance at the rising generation is the best answer. "Not one 
 child in ten," says ^ a settlement worker, "comes to us from the river- 
 bottom section without a blood or skin disease, usually of long standing. 
 Not one out of ten comes to us physically up to the normal of his or her 
 age. Worse than that, few of them are up to the mental standard, and 
 an increasing percentage are imbecile." "London's East End is open 
 for the inspection of travelling Pittsburghers, " continues Mr. Adams,^ 
 "There they may see in its fullness the crop of pauperism, depend- 
 ence, and degeneracy which is bred in the third and fourth generations, of 
 conditions no worse than their own average, and not so bad as their 
 own worst. " 
 
 The political and administrative conditions which such a protected 
 population will breed are of no less significance than its children. "It 
 has been the boast of this coimtry," says the report, (p. 857), "that the 
 judiciary is not swayed by politics, but here in the subordinate courts 
 we have a branch of the judiciary so steeped in politics that the squire's 
 office as a campaign centre and a place of political organizing rivals the 
 saloon." "I have it on good authority," says Mr. Fitch, (March, p. 
 1090) "that before the primaries of May, 1908, orders came from the 
 New York office of the United States Steel Corporation, to the general 
 superintendent of the Edgar Thompson plant at Braddock, directing 
 him to order the department superintendents to line up their employes 
 
 * Ibid., February, p. 945. 
 
 * Ibid., p. 946. 
 
p 
 
 The Old Protection 
 
 Pt. I 
 
 for the Penrose candidates for the Legislature. The general superin- 
 tendent caUed a meeting of the department superintendents and delivered 
 the orders. This created some dismay, for local option was an issue in 
 m the pnmanes, and the Penrose candidates were opposed to local option 
 Some of the superintendents were already prominently identified with 
 the local option party and had been assisting in organizing the campaign 
 How they could with honour and self-respect abandon the issue at that 
 pomt was not dear to the officials. But the answer to their objections 
 was dear and to the point. They were told to break any and all prom- 
 ises and to work for Penrose, because the United States Sted Cor- 
 poration needed him in the Senate. It is probably unnecessary to add 
 that Penrose carried Allegheny County." 
 
 ^ This superlatively protected labour is here found '' encouraged '^ by an 
 increasing flood of pauper labour constantly tending to reduce wages to 
 the lowest foreign standard, while an absentee capitalism absorbs the 
 millions taxed out of the population and dictates to the voter and his 
 so-called representative at Washington. 
 
 The population of the United States may thus be seen beginning its 
 economic existence under the most favourable conditions; in possession 
 of vast and undevdoped land area, ample and evenly distributed wealth 
 and free from inherited industrial and social evils. This same popula- 
 Uon may again be observed reproducing with extraordinary rapidity 
 all the social diseases of older societies: abnormal accumulations of 
 wealth, unemployment, pauperism, labour problems, and widdy ex- 
 tended poverty with their attendant evils of political dependence, vice, 
 oppression, and distress; this change occurring, moreover, during the 
 most rapid increase in national wealth and protective taxes that the 
 world has seen. 
 
 There is reason to bdieve that the real factors in fixing the rate of 
 wages are supply and demand in the labour market, and not import 
 duties. Free trade England, without a single protective duty, presents 
 all the problems of labour and poverty found in the over protected 
 Germany and United States. When unlimited and undevdoped land lay 
 at the disposition of tiie population, labour not only possessed op- 
 portunity for self employment, but the capacity for tiie absorption 
 of unemployed masses always existed in the land. Thus, until the 
 land is occupied, evenly distributed wealth and no poverty are found in 
 the United States; with the absorption of the land the population is con- 
 gested in the dries and poverty and unemployment appear. Other 
 
 Bk. I 
 
 Protection and Labour 
 
 S3 
 
 things equal, there is reason to believe, were the population of the United 
 States suddenly increased to the same relative density as those of India 
 or China, that wages in America would at once fall to the wage level in 
 those coimtries, and that such a fall would occur independently of the 
 amount of import duties or the tariff schedules. 
 
 Thus, instead of a protectionist paradise in the United States, the 
 population is found following the same lines of economic develop- 
 ment as those followed by all other populations. It reproduces 
 the same phenomena in relation to the distribution of its wealth 
 as free trade England or protected Germany, and the fact that the 
 returns to labour, although they seem to have fallen rapidly during 
 the past sixty or eighty years, have not yet reached the level 
 in England, Germany or China, is due to the fact that the popula- 
 tion has not yet reached the same relative density to its capital 
 and land area as that of those countries. If the high wage of England 
 is cited in relation to wages of Italy and Greece, it is obvious that this 
 difference is not caused by protective import duties, but by the greater 
 demand in the labour market. Thus when the relatively high wage of 
 the United States is advanced as caused by protective taxes, it is as 
 though the rise of the tide were traced to a dam. Wages are higher in 
 the United States than elsewhere because of the natural resources of the 
 country and the large land area in relation to the population, and not 
 because of taxes on imports. 
 
 Few men bring a wider knowledge of the subject to the formulation 
 of an opinion with reference to the relation of labour and protective 
 taxation than Thorold Rogers i and no study of the subject could be 
 better dosed than in his words: 
 
 "In the United States the process is being exhibited on the most 
 gigantic scale. The freest people in the worid, where administrations 
 and parliaments have been able to study and avoid the errors and crimes 
 which older governments have committed against labour, have sub- 
 mitted to a tariff which clips the wages of the workman to the extent of 
 50 per cent., under the pretence of supplying him with variety of em- 
 ployment. It is a trifle that heavy duties are imposed on a few foreign 
 luxuries, except in so far as they give a semblance of equity to those 
 which are laid on common necessaries, on the clothing of the workmen, 
 on his tools, on the farmer's implements of husbandry. The motive 
 of the im post is, of course, to mcrease the profits of capital; and this has 
 
 > Work and Wages. Thorold Rogers. M. P., p. 553. 
 
54 
 
 The Old Protection 
 
 Pt. I 
 
 hitherto been the result, and the impoverishment and dependence of 
 labour — a consequence as certain though not so manifest. The more 
 remote but inevitable consequence, a bitter distrust and growing enmity 
 of the labourer toward the employer, has been occasionally seen in the 
 furious outbreaks which have from time to time occurred in America, 
 and are likely to recur whenever, as is frequent in protected trades, a 
 great depression comes over a special industry. 
 
 "From sheer folly, or from interested motives, a belief that better 
 profits would ensue to employers, or in order to serve party ends by 
 giving a false interpretation of economical phenomena, there are persons 
 who are foolish or wicked enough to advocate the return to a protective 
 policy in England imder the name of fair trade. The good sense of the 
 better educated and more experienced English workman shows him that 
 his acceptance of this doctrine would be nugatory in articles of voluntary 
 use, and suicidal in those of necessary use, and he has, therefore, rejected 
 the suggestion." 
 
 Book II 
 
 THE NEW PROTECTION 
 CHAPTER I 
 
 ANALYSIS OF THE NEW PROTECTION 
 
 A STUDY of the older phases of Protection on both sides of the 
 Atlantic dwells upon those aspects of protective theory which 
 have played their part in economic controversy since the days 
 of Adam Smith and long before; it deals with that school of 
 economic thought to which the Scottish philosopher is sometimes 
 assiuned to have given the death-blow, and which Mill, in his time, 
 regarded as a false theory and a negligible quantity in England at least. ^ 
 How far this death-blow has proven effective may be judged by the 
 degree in which the nations of the Old and the New Worlds have aban- 
 doned or maintained fiscal restrictions upon their trade and industry. 
 The extent to which Protection may be regarded as a negligible quantity 
 in England is shown by its prominence or the reverse upon the horizon 
 of English politics to-day. 
 
 England has represented for the past half century the freest com- 
 mercial system in the world; she has, as it were, been the standard bearer 
 of that Liberalism invoked by Adam Smith, which Bright and Cobden 
 helped to carry to one successful issue at least; the Liberalism associated 
 with the names of Burke, Peel, Gladstone, Moriey and a host of able 
 Englishmen instrumental in obtaining the repeal of the Com Laws. 
 The year 1848 marked a turning point in English history, when the laws 
 taxing the food of the people were repealed and England stood alone 
 among the nations of the world, with unprotected industry and unpro- 
 tected labour. Such an experiment, on so vast a scale, undertaken by one 
 of the leading industrial and commercial nations of the world, must be 
 among the most instructive events in economic history. The practical 
 outcome of such a policy must apparently be conclusive, and after 
 
 » Principles of Political Economy, Bk. V., ch. x., § i, p. 552. 
 
 $s 
 
S6 
 
 The New Protection 
 
 Pt. I 
 
 half a century of unrestricted commerce demonstration reached in the 
 controversy between Protection and Free Trade. 
 
 By many so it is supposed to be. One difficulty alone remains: the 
 free-trader regards the results as demonstrating his original position, 
 while the protectionist points to the same results and remarks that, now,' 
 at last, Free Trade has been put to the test of experience, and 
 proved inadequate. The discussion remains much as at first, except 
 that new conditions and readjustments in industrial and commercial 
 affaire have formed a new ba^is for protective considerations, not avail- 
 able under a less highly developed system of production and distribution. 
 The citation of Smith and MiU with reference to latter-day Protection is, 
 to the minds of many, as though the authority of a medieval astrologer 
 were invoked, in order to disprove modem astronomical theory. The 
 New Protection has passed beyond the age to which the demonstrations 
 of Mill and Smith applied. It takes its origin, it is said, from conditions 
 poUtical, economic, and industrial, of which the eariier economists knew 
 nothing, owing to the extraordinary changes in productive and distribu- 
 tive methods of the past few decades. 
 
 "The new era of Protection," says Professor Schmoller,* "has arisen 
 not because economists and statesmen have been unable to understand 
 the beautiful arguments of Free Trade, nor because a few monopolists 
 and manufacturers have dominated the Government: it has arisen from 
 the natural instincts of the peoples. It does not only rest — in many 
 cases it does not primarily rest — on List's doctrine of educative tariffs 
 (the 'productive powers' or 'infant industries' argument); it arises 
 from a motive which is rather instinctively felt than clearly Understood 
 viz., that tariffs are international weapons (Machtmittel) which may 
 benefit a country, if skillfully used. " 
 
 Considerations such as these present a new field of inquiry. The 
 new protectionist questions or denies the majority of the conclusions 
 of Smith and Mill with reference to the eariier phases of the protective 
 system; he may go farther than this, and accept the majority of their 
 demonstrations, but base his opinion upon later conditions with which 
 they were unfamiliar; or he may complete the circle of his economic 
 evolution and cite isolated passages from Smith and Mill in order to dis- 
 prove the body of their own conclusions. This is a familiar attitude in the 
 New Protection and renders it impossible to disregard the opinion of these 
 writers, a lthough the value of their views is questioned at the outset. 
 
 » Sckriften des Vercins fUr SociaipolUik, quoted by Professor Ashley. The TarijS Problem, p. 3a 
 
 Bk. II Analysis of the New Protection 57 
 
 The Old Protection still meets most of the mental needs of the United 
 States. Until recently, beyond the lowering or revision of duties, the 
 policy has been little discussed in practical affairs, and a few references 
 to the "infant industry," "pauper labour," or the "balance of trade," 
 generally suffice to lull the population into intellectual security. 
 The greater political experience and knowledge of the older world, how- 
 ever, demand other sedatives. These are supplied by the new school of 
 Protection. England, because of her Free Trade, and Germany, owing 
 to her recent industrial activity, are the two nations in which the New 
 Protection has taken deepest root, and which present conditions most 
 favourable to its growth. In these, as in otiier countries, however, the 
 modern aspects of the protective policy may be used simply as develop- 
 ments of the older phases, they may be advanced in conjunction with, in 
 addition to, or entirely independent of, the more familiar system, 'in 
 some ways the New Protection is distinct from the Old, in others they are 
 interwoven so intimately as to become indistinguishable. This makes 
 it difficult at times to reduce the New Protection to clear statement, 
 independent of the classic school. The popular system has therefore 
 been reviewed, as reference to it is often necessary in a study of the 
 later positions. 
 
 An examination of the chief writers and statesmen dealing with the 
 New Protection in England and Germany will, in all likelihood, permit 
 the groupmg of its canons under the six following propositions: 
 
 I. Protective taxation may be used to advantage in the development 
 of productive potentialities, or potential values. 
 
 n. Protective taxation may act advantageously in the attraction of 
 foreign capital. 
 
 m. Tariff schedules present an effective diplomatic lever, or weapon in 
 tiie negotiation of treaties, the formulation of trade advantages, and in ob- 
 ^^cT'''''^'''^'''' ^""^^ commercial and political, from other nations 
 
 IV. The import duty may be profitably used in the support and 
 protection of long established and important national industries threat- 
 ened by unfair competition, or "dumping," of foreign producers, and 
 also as a means of msuring tiie foreign market as far as possible to the 
 home producer. 
 
 V. Imperialism, the assurance of national industrial independence, 
 food supply and so forth. ' 
 
 VI. Progress. 
 
S8 
 
 The New Protection 
 
 Pt. I 
 
 Notwithstanding the great variety of positions from which Protection 
 maybe viewed, and the changing nature of the grounds upon which 
 it may be supported, there are few considerations in favour of the 
 protective import duty not to be grouped, either with the conventional 
 Protection, or under one or more of these six headings of the later school, 
 ranging from productive potentialities to progress in its widest applica- 
 tion. These six positions of the New Protection may therefore be ex- 
 amined. 
 
 CHAPTER n 
 
 PRODUCTIVE POTENTIALITIES 
 
 THE doctrine of Adam Smith ^ is that "No regulation of com- 
 merce can increase the quantity of industry in any society 
 beyond what its capital can maintain." If, therefore, any 
 industry is maintained by artificial means, it can exist but 
 through the creation of prices higher than necessary; in other words, 
 through national loss, to an extent proportionate to the increased price. 
 
 The popular Protection demurs at the acceptance of this position; the 
 New Protection, on the contrary, recognizes it as fimdamental, economic 
 truth; pointing out, however, that this position, although true, is true 
 as referring to present, or existing, values alone; which leaves the question 
 of future possibilities untouched. "Protection," says Professor Ashley,^ 
 "always involves at first a loss — not, indeed, always proportionate to 
 the tariff; this is a Free Trade exaggeration to which I shall return later 
 — a loss which is expressed in the easiest way by saying that the con- 
 sumer has to pay more than he otherwise would for the protected com- 
 modities. If he does not. Protection is imnecessary. But everything 
 turns upon the words at first. " 
 
 Roscher^ puts the case as follows: "The sacrifices which the protec- 
 tive system directly imposes on the national wealth consist in products, 
 fewer of which, with an equal straining (Anstrengung) of the productive 
 forces of the country, are produced and enjoyed than free trade would 
 procure. But it is possible by its means to build up (bUden) new pro- 
 ductive forces, to awaken slumbering ones from their sleep, which, in the 
 long run, may be of much greater value than those sacrifices. Who 
 would say," he asks, "that the cheapest education is always the most 
 advantageous?" He cites List's* contrast of "two owners of estates 
 each of whom has five sons, and can save i,ooo thalers a year. The one 
 
 1 The Wealth of Nations, Bk. IV., ch. iL, p. 26. 
 
 • The Tariff Problem, p. 24. 
 
 •Roscher, Political Economy, Lalor's Translation, Vol. 11., p. 432. 
 
 * List, Nationales System der polit. Oeconomie, Kap — 12. 
 
 59 
 
 -»j[a^ 
 
6o 
 
 The New Protection 
 
 Pt, I 
 
 brings his sons up as tillers of the ground (5a«er«=peasants) and puts 
 his savings out at interest. The other, on the contrary, has two of his 
 sons educated as rational (rationelle) agriculturists, and the others as 
 mtelhgent industrial workers, and at a cost which prevents the possi- 
 bility of his accumulating any more capital. Which of the two has cared 
 better for the standing, wealth, etc., of his posterity; the adherent of 
 the theory of exchangeable values,' or the adherent of the doctrine 
 of productive forces'?" The "scientific Protection" of List is here 
 met; the position which List, in the words of Professor Ashley > 
 has made the basis of his Protectionist doctrine. As List phrased it 
 the quesUon of the productive powers of a country and their possible 
 development is far more important than that of present values: it might 
 be well worth while to incur a loss for a time in order to secure a more 
 than proportionate future gain. " 
 
 The import duty is here urged as of economic advantage on the grounds 
 that permanent and relatively greater mdustrial values may be developed 
 by sustauung a temporary loss; that, while prices may be increased 
 temporarily, they may be lowered permanently, thus creating eventuaUy 
 more than compensating gain. In other words, it is impossible, appar- 
 ently, to distinguish between the "productive powers "of the modem 
 scientific Protection" and the "infant industry" of the classic Protec- 
 tion. They are, it seems, identical; and nothing can be urged m favour 
 of one not to be urged in favour of the other with equal validity. 
 Professor Schmoller speaks of them as identical. Professor Ashley brings 
 up the well-worn passage from Mill in their support. The familiar in- 
 dustnal nursling appears once more; and, if such backward oflfspring are 
 to be educated, there is reason to believe that the proper method is with 
 du-ect bounties, and not with import duties; for in this way alone may 
 the whole protective programme be avoided, and the artificial tax 
 removed, when it is time for the productive powers to be realized in 
 fact, and not m theory alone. In this way no future loss is necessarily 
 entaJed; the 'powers" are given every chance to develop, and the 
 people may estimate what they cost in pounds, shillings, and pence in 
 relation to "present values." 
 
 Mm may be quoted in support of the infant undertaking, the passage 
 havmg been discussed at length with a direct view to these productive 
 potentiahties of the New Protection. It would be interesting to know 
 the total general eflfect of Mill's influence in connexion with Protection; 
 
 i » The Tari£ Problem, pp. 25, 26. 
 
 Bk. II 
 
 Productive Potentialities 
 
 61 
 
 it would not be surprising, owing to this single passage, if the total net 
 result of his writings had not been much in favour of the protective 
 theory, rather than the reverse; although their entire tendency is dia- 
 metrically opposed to it. Bright is quoted ^ as saying that this one pas- 
 sage "would cause more injury to the world than all his writings would 
 do good"; and, as Professor Ashley says, speaking of Mill's free trade 
 friends, "they were quite right in their alarm." Wherever the infant 
 industry argument is heard for a moment, full-grown Protection is a 
 foregone conclusion. 
 
 This celebrated passage may be cited in such a way that it seems to 
 lend vastly more support to the infant industry than Mill intended. 
 The New Protection appropriates the passage as follows ;2 "Protective 
 duties can be defensible, on mere grounds of political economy, when 
 they are imposed temporarily (especially in a young and rising nation) 
 in hopes of naturalizing a foreign industry in itself perfectly suitable to 
 the circmnstances of the country. " 
 
 Quoted in this way, the passage seems to imply — as Mill regarded 
 protective duties as "defensible upon mere grounds of political 
 economy," especially under certain conditions — that he regarded 
 them as defensible upon other grounds and under other conditions as 
 well. In Mill's Principles of Political Economy appear the following 
 words :8 
 
 "The only case in which, on mere principles of political economy, 
 protecting duties can be defensible, is" et cetera . . . The original 
 passage may suggest that Mill regarded protective duties as defen- 
 sible, upon mere principles of political economy, imposed temporarily, 
 in a single isolated instance; but, as indefensible upon other grounds 
 and under other conditions. 
 
 In this connexion, the following passage from Mill's^ letter to Mr. 
 G. K. Holden of New South Wales, in 1868, is of interest: "I have not 
 altered the opinion that such encouragement is sometimes useful, and 
 that in many cases the most just mode in which it could be given is that 
 of a temporary protecting duty, on condition that it should be known 
 and declared to be merely temporary, and of no very long duration. 
 But I confess that I almost despair of this general understanding being 
 ever prac tically established. I find that in Australia Protection is not 
 
 » Mr. Carnegie. Empire of Business, cited by Professor Ashley, The Tariff Problem, p. 24. 
 
 « Professor Ashley, The Tariff Problem, p. 24. 
 
 » Professor Ashley's edition of MiU is cited. Bk. V., ch. x.. § i p. 922. 
 
 * LeUers of John Stewart MiU, Vol. II., p. 116. 
 
62 
 
 The New Protection 
 
 Pt. I 
 
 advocated in this form nor for this purpose, but that the vulgarest and 
 most exploded fallacies are revived in its support. " 
 
 These considerations led Mill to abandon his infant industry position, 
 as is shown in his letter ^ to Mr. A. M. Francis of Queensland, in 1869: 
 " The only opinion I intended to withdraw was that which recommended, 
 in certain cases, temporary protective duties in new coimtries to aid the 
 experimental introduction of new industries. And even on this point 
 I continue to think that my opinion was well grounded, but experience 
 has shown that protectionism, once introduced, is in danger of perpetu- 
 ating itself through the private interests it enlists in its favour, and I 
 therefore now prefer some other mode of public aid to new industries, 
 though in itself less appropriate." Thus, when the New Protection 
 cites Mill in support of the Protection of the infant industry, it is citing 
 him in support of a position which he finally abandoned. 
 
 It is also of interest to note how the name even of Adam Smith may 
 be used in support of this phase of the New Protection. With reference 
 to the position that the productive powers of a country may be of greater 
 importance than present values, Professor Ashley 2 says: "Considera- 
 tions such as these were not absolutely imknown to Adam Smith; it is 
 remarkable how many ideas which we are wont to ascribe to later times 
 are to be found somewhere in his pages. He recognises that ' advantages ' 
 are not always 'natural'; they may be 'acquired,' and the effect will be 
 just the same. But against the obvious reply that some countries may 
 have advantages still to 'acquire,' he has absolutely nothing to say but 
 to express his doubt as to the probability of ever recouping the tempo- 
 rary loss. Yet it is evident that to leave the matter to a judgment of 
 probability is to concede the possibility that a protective policy may 
 in some cases be economically justifiable; and it is evident also that 
 Smith's policy involves the stereotyping of existing conditions. " 
 
 The New Protection thus suggests: first, that Adam Smith, in express- 
 ing his doubt of the economic advantage of a specific protective policy 
 conceded the possible advantage of a general protective policy, in some 
 cases; second, that Smith's policy involves the '' stereotyping of existing 
 conditions." It is not easy to follow the New Protection at this point 
 for the reason that if Smith's policy concedes the economic advantage of 
 protective taxation in "some cases," it is not clear in what way it involves 
 the stereotyping of existing conditions. Or if it involves the latter 
 
 * Ibid, p. 200. 
 
 » The TariJ Problem, p. 26. 
 
 Bk. II 
 
 Productive Potentialities 
 
 63 
 
 condition, how it can concede the economic justification of a protective 
 policy in some cases : the two propositions seem mutually exclusive. Per- 
 haps Smith's own words are the best interpretation of his meaning with 
 reference to the acquired advantages of the New Protection. Professor 
 Ashley does not cite the page of Smith's work in which this concession 
 may be foimd; he doubtless, however, refers to the following passage: 
 "By means of such regulation, indeed," says Smith/ "a particular manu- 
 facture may sometimes be acquired sooner than it could have been 
 otherwise, and after a certain time may be made at home as cheap or 
 cheaper than in the foreign country. But though the industry of the 
 society may be thus carried with advantage into a particular channel 
 sooner than it could have been otherwise, it will by no means follow that 
 the sum total, either of its industry or of its revenue, can ever be aug- 
 mented by such regulation. The industry of the society can augment 
 only in proportion as its capital augments, and its capital can augment 
 only in proportion to what can be gradually saved out of its revenue. 
 But the immediate effect of every such regulation is to diminish its 
 revenue, and what diminishes its revenue is certainly not very likely 
 to augment its capital faster than it would have augmented of its own 
 accord, had both capital and industry been left to find out their 
 natural employments. 
 
 "Though for want of such regulations the society should never acquire 
 the proposed manufacture, it would not, upon that accoxmt, necessarily 
 be the poorer in any one period of its duration. In every period of its 
 duration its whole capital and industry might still have been employed, 
 though upon different objects, in the manner that was most advan- 
 tageous at the time. In every period its revenues might have been the 
 greatest which its capital could afford, and both capital and revenue 
 might have been augmented with the greatest possible rapidity. 
 
 "The natural advantages which one country has over another in 
 producing particular commodities are sometimes so great that it is 
 acknowledged by all the world to be in vain to struggle with them. 
 By means of glasses, hot-beds, and hot walls, very good grapes can be 
 raised in Scotland, and very good wine, too, can be made of them at 
 about thirty times the expense for which at least equally good can be 
 brought from foreign countries. Would it be a reasonable law to pro- 
 hibit the importation of all foreign wines, merely to encourage the making 
 o f claret and burgundy in Scotland? But if there would be a manifest 
 
 : » The Wealth of Nations, Bk. IV.. ch. u., p. 30. 
 
64 
 
 The New Protection 
 
 Pt. I 
 
 absurdity in turning toward any employment thirty times more of the 
 capital and mdustry of the country than would be necessary to purchase 
 from foreign countries an equal quantity of the commodities wanted 
 there must be an absurdity, though not altogether so glaring, yet exacti; 
 
 oIe^r,T . ' !? :T^ '"^"""^ ""^ ^"** employment a thirUeth, 
 or even a three-hundredth part more of either. Whether the advantages 
 which one country has over another be natural or acquired, is in this 
 Th f>, r ~°^«q"«°<=«- As long as one country has those advantages 
 and the other wants them, it will always be more advantageous for fhe 
 latter rather to buy of the former than to make. It is an acquired 
 
 !nXT f"" ""^ T ^''^''' ^^' ^^^^ ^' «««'^'^«"' ^ho exercises 
 another trade; and yet they both find it more advantageous to buy of 
 
 tr"ades°" ' '° '°^' ^^^* '^'^ °°' ^''""^ to their particular 
 
 To read the "stereotyping of existing conditions" into this passage, 
 
 th:.t"!,°; i"^". ' •''' '''"'^^ '^'''''^ ^"-^ ^l^"ly ^"PP°rted opinion 
 that natural mdustnes are mvariably of greater value to a nation than 
 
 taxed mdustnes, is not difficult; yet, at the same time, to discover con- 
 cessions with reference to the "possibility that a protective poUcy may 
 m some cases be economically justifiable "is not so easy ^ ■' -^ 
 
 The "infant industries," "productive powers and potentiaUties," 
 educational tariffs," and so forth, have nothing but the import duty 
 in common with Protection : they may even be supported by men opposed 
 to protective measures, as the following passage shows • 
 
 Says Roscher,! "AU rational education keeps in view as its object the 
 subsequent independence of the pupil. If it desired to continue its 
 guardianship, the payment of fees, etc., until an advanced age. 
 It would thereby demonstrate either the pupil's want of capacity, or the 
 absurdity of its methods. The industrial protective system also can 
 be justified as an educational measure only on the assumption tiiat it 
 may be gradually dispensed with; that is, tiiat, by its means, there may 
 be a prospect of attaining the freedom of trade. In the case of all highly 
 avJized nations, the presumption is in favor of freedom of trade, both 
 at home and abroad, and in such nations the desire for a protective 
 system must be looked upon as a symptom of disease. " 
 
 Thiers^ said in tiie Chamber of Deputies, in 1834: "Used as a retalia- 
 tory mea sure, the tariff is fatal; as a favour, it is an abuse; as an en- 
 
 » PolUical Economy. Vol. II.. p. 442. 
 • Ibid., p. 446. 
 
 Bk. II 
 
 Productive Potentialities 
 
 6s 
 
 couragement of an exotic industry, which cannot be naturalized, it is 
 impotent and useless. Used to protect an industry, which may succeed 
 it is good; but it is good only temporarily; it should end when the educa- 
 tion of the industry is complete, when it is grown up. " 
 
 "Listi considers imiversal freedom of trade not only as the ideal, but 
 also as the object which is to be striven for by temporary limitations on 
 trade. " 
 
 Two tendencies may be observed in the New Protection. The first is 
 to repeat the arguments of the older school in more general terms, or 
 with reference to industrial education. Reasons have been presented 
 for believing that the import duty is disadvantageous with reference to 
 tlie "infant industry" of the Old Protection. If the issue is shifted to 
 "educational" grounds, it seems that the best method of educating 
 industry is by means of a fixed bounty for a limited time, in order to learn 
 the cost of the process, and the use of the education; both of which are 
 impossible where an import duty is tolerated. Hamilton,2 the ablest of 
 American protectionists, has been cited with reference to bounties in 
 this connexion. In Germany, Rau,^ is quoted as preferring "to toler- 
 ate state premiums (politically so dangerous), rather than protective 
 duties, because, in the case of the former, the magnitude of the as- 
 sumed sacrifice may be exactly estimated in advance." 
 
 The second tendency of the New Protection is to quote Smith and 
 Mill in such a way that the passages cited seem to refute the body 
 of the works of these two really careful thinkers. Reference to the 
 original passages is the best comment upon this phase of the New 
 Protection. 
 
 » Ibid. 
 
 » Cf.. p. 25. 
 
 • Lehrbuch, 11., 5214. cf. Roscher, Political Economy, Vol. II., p. 450. 
 
CHAPTER m 
 
 THE ATTRACTION OF CAPITAL 
 
 Section I — Capital Attracted by Taxation. Section n — Effects of 
 
 Taxation on Capital. 
 
 Sechon I — Capital Attracted by Taxation 
 
 THE attitude of recognized political economy toward the 
 relation of protective taxation to capital is that the tax 
 is impotent so far as the creation of capital is concerned, 
 taxation simply diverting existing capital from natural into 
 artificial channels. The Old Protection, with its ''created" demand 
 for labour, implies the creation of capital by taxation. The New 
 Protection ignores this attitude of the popular policy, and may recognize 
 the impossibility of either creating a demand for labour, or miracu- 
 lously bringing capital into existence by the simple process of imposing 
 import duties; yet the imposition of the duty in relation to capital is 
 supported on other grounds. 
 
 The mobility of capital is no longer governed, it may be said, by 
 the economic conditions of the eighteenth or early nineteenth century; 
 the facilities at present offered to profit-seeking tendencies, together 
 with the modem use of machinery, having revolutionized productive 
 and distributive methods easily within the memory of living man. 
 These two influences, working together, lead to a transferability and 
 mobility of capital of which Adam Smith could not have conceived, 
 and which has grown with increasing rapidity since the days of Mill, 
 with the result that large interests in old countries are found devoted 
 to the establishment of industrial enterprise in newer communities. 
 Capital may thus take wing, as it were, and transfer its beneficent 
 influence from a free trade or low tariff area to a more highly protected 
 society, in order to enjoy freedom from competition and larger profits. 
 It is evident that where greater facilities for employment of capital 
 are offered, or where greater profits are derived, a greater power of 
 attracting capital exists. This power of attraction, too, owing to 
 
 66 
 
 Bk. II 
 
 The Attraction of Capital 
 
 67 
 
 modern methods of transportation and communication, may have 
 results which the earlier economists could not have contemplated with 
 reference to the movement of capital from one country to another. 
 It thus becomes of importance, in the development of the industrial 
 life of the modern society, to offer every inducement to capital, not 
 only in order to retain that existing in the country, but, if possible, 
 to invite its importation and investment from abroad. Hence arises 
 another function of the import duty — the attraction or retention of 
 capital through the establishment of conditions favourable to its em- 
 ployment. 
 
 The considerations in favour of this phase of the new protective 
 policy cannot be more clearly or thoughtfully presented than in the 
 following passage from Professor Ashley:^ "The diffusion of manu- 
 facturing industry over the world has been greatly assisted in the past, 
 and is likely to be assisted far more in the future, by two sets of forces 
 which deserve more attention than they have as yet received. The 
 first is the profit-seeking tendency of capital, which pursues an immediate 
 gain without any regard to the ultimate effect on national prosperity. 
 In several different ways has the business enterprise of England — in 
 a less degree and more recently that of other manufacturing countries 
 also — assisted the foreign customers to dispense with foreign imports. 
 This assistance at first took the form of the exportation of machinery 
 for the manufacture of the same sort of goods, and this process is still 
 going on. With the machinery has frequently been exported the skill 
 necessary to manage it at first and to instruct the foreigner in its use.^ 
 The significance of this educational service to backward coimtries 
 has been pointed out by two observers, who — poles asunder as they 
 are in their social attitude — resemble one another in their large ac- 
 quaintance with economic fact and in their freedom from conventional 
 judgments. 'Japan and China,' says Mr. Carnegie, 'are building 
 factories of the latest and most approved character, always with British 
 machinery and generally under British direction. The jute and cotton 
 mills of India are numerous and increasing. It is stated that one 
 British manufacturing concern sends abroad the complete machinery 
 for anew mill every week.'3 'English and German capitalists, English 
 engineers and firemen,' says Prince Krapotkin, 'have planted within 
 
 » The Tarif Problem, p. 75. 
 
 « In one case, that of Park. Brother & Co., ot Pittsburg, in 1862, "several hundred English workmen 
 were imported to insure success." 
 • Empire of Busittess, p, 317. 
 
68 
 
 The New Protection 
 
 Pt. I 
 
 Bk. II 
 
 The Attraction of Capital 
 
 69 
 
 m 
 
 Russia the improved cotton manufactures of their mother countries; 
 they are busy now in improving the woollen industries and the pro- 
 duction of machinery; while Belgians are rapidly improving the iron 
 trades in South Russia/ ^ And, as the last-named observer points 
 out, the new producers start with advantages in the possession of the 
 latest and best machinery, which only the most up-to-date plants in 
 the older manufacturing countries possess. 
 
 "In proportion as the wave of industrial production penetrates mto 
 younger countries, it miplants there all the improvements due to a 
 century of mechanical and chemical inventions; it borrows from science 
 all the help that science can give to industry. The new manufactures 
 of Germany began where Manchester arrived after a century of experi- 
 ments and gropings; and Russia begins where Manchester and Saxony 
 have now reached. 
 
 "Equally important with the exportation of machinery and skill 
 has been the investment of capital abroad; and it is this which has 
 been most noteworthy in recent years. There has long been a good 
 deal of investment of British capital in foreign works — thus the de- 
 velopment of the railway system of the United States, which has done 
 so much to stimulate manufactures in that country and in particular 
 has reacted upon the British agricultural interests by the cheapening 
 of the transportation of grain, has been to a considerable degree en- 
 couraged by British capital. But in more recent years, with the heighten- 
 ing of the tariff walls of other countries, there has been a movement of 
 capital of a still more ominous kind — viz., the establishment by Eng- 
 lish manufacturers of factories within the protected areas. Anyone 
 who is acquainted with an English staple industry can at once furnish 
 the names of several firms which have adopted this policy. I under- 
 stand that this is the case, for instance, in the woollen industries, with 
 the firms of J. F. Firth & Sons of Heckmondwike (carpet making), 
 and Sir Titus Salt, Bart., Sons & Co., Limited, of Saltaire (dress goods, 
 &c.), in the United States; of Isaac Holden & Sons, Limited, of Bradford 
 (wool combing), in France; and of W. and J. Whitehead, of Bradford 
 (worsted spinning), in Spam. In the cotton industry the Fine Cotton 
 Spinners' Association have two or three mills in France; and Coats' 
 is said to have a thread mill in Russia. In order to benefit by the fact 
 that the German duty on yam is considerably lower than that on 
 thiea,d, a Belfast linen firm has established thread works in Germany, 
 
 * Fidds, Factories, and Workshops, p. 10. 
 
 where it twists, bleaches, dyes, and finishes the yarn which it imports. 
 In the metal and machinery trades the names occur to one of J. J. 
 Savile & Co., of Sheffield (steel), with their works in Russia, and of 
 Messrs. Weir, of Glasgow (ships' pumps), with their works in Germany." 
 . . . "The second influence which ought to be noticed is the increasing 
 use of more or less automatic machinery. The staple export industries 
 of Great Britain used to call for large quantities of fairly skilled labour. 
 In several of the great industries of to-day the tendency seems to be to 
 replace this fairly skilled labour by, on the one side, a relatively small 
 quantity of more highly intelligent labour in places of some respon- 
 sibility, and, on the other side, a larger force of labour of a much lower 
 grade of skill. It looks as if these manufactures in the future, instead 
 of a great deal of quality B, will want a little of quality A, and the rest 
 of quality C. Here we may listen again to Mr. Carnegie. ^ We may 
 not agree with his political ideals; but we can recognise in him a man of 
 the keenest insight into the methods of modern production: 
 
 "*The mechanical skill of old is not generally required, but, where 
 necessary for a few positions in each huge factory, is readily obtained 
 from the older manufacturing lands. Automatic machinery is to be 
 credited as the most potent factor in rendering non-essential to suc- 
 cessful manufacturing a mass of educated mechanical labour, such as 
 that of Britain or America; and thus making it possible to create manu- 
 facturing centres in lands which, until recent years, seemed destined 
 to remain only producers of raw material.' " 
 
 If these passages are studied in relation to the " infant industry," 
 a refutation of that position may be found in the protectionist's own 
 words. The "infant industry" invites a society to tax itself in order 
 to educate its productive potentialites. It is clear that such education 
 can have no meaning other than development of machinery and skilled 
 labour. But, says the "attraction of capital " argument, no such educa- 
 tion is necessary, modern conditions making it possible for the newest' 
 and most backward countries to import skiU and machinery without 
 any trouble. The New Protection here presents also the exact reverse^ 
 of the "pauper labour" argument. Low wage countries attract capital' 
 from high wage countries, says the New Protection; why, then, should; 
 a country tax itself in order to raise wages which must repel its own and i 
 foreign capital toward low wage areas? J 
 
 This po sition, however, presents the import duty upon wider grounds] 
 
 » Empire 0/ Business, p. 319. 
 
70 
 
 The New Protection 
 
 Pt. I 
 
 than any advanced by the older school. It may be pointed out that 
 organized industry and assured profits within any thoroughly protected 
 area to-day possess a power to attract and absorb capital from other 
 countries to which earlier conditions present no parallel. 
 
 "And it should be observed/' says Professor Ashley, ^ "that they 
 furnish the protectionist with some additional theoretic arguments which 
 are well worth weighing. Adam Smith argued that protection could only 
 divert capital from one industry to another; the protectionist can reply 
 that in many instances it has attracted fresh capital into the country. 
 Adam Smith, again, relying on the transferability of capital, expected 
 that the lessening of prosperity in one particular home industry owing 
 to foreign competition would result in the transference of capital to 
 another home industry. But, as we have seen, it may lead to the trans- 
 ference of capital to the same industry in another country." 
 
 Capital attracted from other countries exists where no capital existed 
 before; it brings its stimulating influence to bear upon industrial life, 
 where no such stimulus may be regarded as otherwise possible. Where 
 capital moves in this way, industry is actually encouraged, and a demand 
 for labour created within the protected area. This encouragement 
 and creation do not seem valid as advanced by the conventional Pro- 
 tection; they do apply, however, as understood by the newer school 
 and must, therefore, be accepted and discussed upon other grounds. 
 
 Whether the attraction of capital is advantageous or not need not 
 detam the attention; this position is analogous to the assumption of the 
 orthodox Protection that industry should be encouraged. That 
 productive industry should be encouraged may be admitted. In the 
 previous discussion of the subject, the question resolved itself into what 
 was the best and least expensive method of encouragement, and this 
 seemed to be the removal of checks and restrictions upon its development. 
 Here, agam, is met the question, not whether capital should be attracted 
 but what is the best method of attraction; for it is obvious that cap^ 
 ital may be attracted from one country to another by means other 
 than the taxation of the vital and industrial needs of its population. 
 
 The advantages or disadvantages of different methods of stimulating 
 the mdustnal life of a society are not at first sight apparent in their 
 relative degree of importance. When it is said that a nation gams 
 more tiirough increasing its capital, by means of taxation, than it 
 ioses m h igher prices and artificial conditions, the relation of the two 
 
 ' r*? Tarif Problem, p. 73, 
 
 Bk. II The Attraction of Capital 71 
 
 sides of the question is not at once clear. The capital gained is a de- 
 finite fact, measurable in figures; the higher prices may be offset against 
 the capital, but then occurs the consideration of the stimulus the im- 
 ported capital has given to the productive powers of the nation with 
 its important, but intangible, advantages. The discussion of the sub- 
 ject usually ends in the expression of divergent opinion, owing to the 
 difficulty of exact presentation of the relative cost and advantage gained. 
 
 It may not seem impossible, however, to compute in pounds, shillings, 
 and pence the relative cost and gain of two different methods of at- 
 tracting capital; one, by means of the taxation of imports, which might 
 be called the indirect method; and another, which might be called the 
 direct method. The New Protection invites a nation to tax itself in 
 such a way that it must pay artificial profits to capital, in order that 
 home capital may remain within its boundaries, and that foreign cap>- 
 ital be tempted to seek investment in the development of its industry. 
 The New Protection thus taxes imports, puts up prices, and involves 
 all the expense and every form of Protection, in order to pay exaggerated 
 profits to capital. But it seems evident that any nation can pay 
 profits to capital at any rate whatever, and attract all the capital it can 
 profitably use, without taxing imports, putting up prices or involving 
 any of the waste of Protection. 
 
 Upon protectionist principles, the advantage gained by a nation in 
 capital, attracted through import taxation, is evident — the nation 
 gains the capital. It is also evident that the more heavily the nation is 
 taxed, or the greater the profits offered, the greater will be its powers 
 of attraction; in other words, that the import duty is only effective 
 in attracting capital in proportion to the amount of taxes, in the form 
 of profits, which it hands over to protected capital. The question 
 thus resolves itself into the comparison of two methods of taxation, 
 either of which may attract a given amount of capital. 
 
 The New Protection taxes a nation in order to attract capital through 
 abnormal profits; that is, through a higher rate of interest than the 
 market rate for money. The average interest rate of a nation's se- 
 curities is the standard by means of which other methods of attracting 
 capital may be measured. 
 
 It may be supposed that the difference between the two is 5 per 
 cent; in other words, that a nation can borrow money at 3 per cent 
 and that the average profits of capital attracted by Protection is 8 
 per cent. The actual percentages are unimportant, the essential 
 
72 
 
 The New Protection 
 
 Pt. I 
 
 Bk, II 
 
 The Attraction of Capital 
 
 73 
 
 feature being that the rate of profit guaranteed on capital, attracted by 
 means of import duties, must be greater than die average rate for money; 
 otherwise no capital would be attracted by the protected industries 
 
 It may now be supposed that a certain amount of foreign capi'tal is 
 bodily attracted from abroad by the import duty and invested in pro- 
 tected mdustry._ Upon this assumption, everj. year a certain percenLe 
 of the total capital must be sent abroad in profits and, if these are 
 at about the rate of 8 per cent, at the end of twelve or thirteen years 
 the foreigner has received his entire capital back again from the 
 protected country. The taxing country seems, tiierefore, after such 
 a i^od, which may be longer or shorter in proportion to taxed 
 profits, no better off tiian before, and its capacity for employing labour 
 no greater than at first. At the end of twenty-five or thirty yeare 
 the protected nation has sent the entire amomit of die original capital 
 out of the comitiy, togeUier witii an added quantity equal to it, and 
 continues the process indefinitely. 
 
 -IJese seem to be the results of adopting the protective, or indirect 
 metiiod of attracting foreign capital. If tiie taxation imposed does not 
 atti-act any capital, but is continued merely in order to prevent home 
 capital from seeking foregin outlets, die nation is taxing itself in order 
 to pay usurious interest on capital for which it has no legitimate use- 
 and, at the same time, losing the real increase in its capital which might 
 rofite "^ '^ '""''^ productive use abroad tiirough tiie return of 
 
 Another method of attracting capital may now be examined. If the 
 nation borrows the capital abroad at 3 per cent, it could be used in tiie 
 encouragement of any industry as long as desirable. At tiie same cost 
 to tiie nation as tiie indirectly attracted capiul with relation to tiiis 
 industry alone, a sinking fund of 5 per cent could be created, tiie entire 
 amount, prmcipal and interest, paid off in twenty years, the flow of 
 capital out of tiie country stopped, and the industry owned at home at 
 at Je same time. Which, it may be asked, is the most advantageous 
 metiiod of attracting capital? To pay 8 per cent indefinitely, wi^ tiie 
 loss of tiie entire capital gained eveiy ten or twenty years, or to pay 8 
 percent for twenty years when tiie capital remains at home? 
 
 Or agam, it may be asked, which is the better policy? To pay x 
 per cent for a definite amount of capiUl to be used for a definite puriise 
 in a definite way, as long as desirable and tiien returned, or to pay 8 
 per cent mdefinitely on aU existing protected capital, in order to attract 
 
 an indefinite amount of capital, to be used indefinitely for an indefinite 
 purpose, without knowing in reality whether or not any capital is at- 
 tracted; for, it must be remembered, that in order to attract capital by 
 means of import duties a nation must guarantee artificial profits on all 
 industries involved, although no capital is attracted during the process. 
 If this is imderstood it may appear that in the foregoing comparison the 
 cost of attracting capital by means of import taxes is much imderesti- 
 mated; for the reason that such methods involve the paying of artificial 
 profits upon the entire amount of the capital invested in all the protected 
 industries of the country, although not one dollar, franc, or poimd 
 of capital may be attracted. If any is attracted by such methods, 
 however, it apparently costs the people many times, in all likelihood 
 many himdreds of times, its real value; besides being constantly sent 
 out of the country in profits and dividends. 
 
 The same considerations apply to the subject of keeping capital 
 in a coimtry by means of protective taxes. If the capital requires 
 these taxes to keep it in the country, the wisest course seems to be to 
 wish it godspeed, for the nation could easily obtain the same capital 
 from other sources at far less expense than the protective taxes. 
 
 When forei^ capital is attracted and incorporated within the do- 
 mestic capital, and no profits sent abroad, analogous conditions are 
 met. Capital can be attracted in this way but by a system of taxation 
 guaranteeing permanent profits on all protected capital, whether at- 
 tracted or not. By the issue of its obligations the nation would have 
 the permanent use of any given amount of foreign capital at the nor- 
 mal rate, paid on the amount actually attracted alone, and have the 
 possibility always present of checking unnecessary expense; together 
 with the advantage of knowing what it was doing, why it was doing it, 
 and how much it cost. 
 
 Section II—Effects of Taxation on Capital 
 
 ^ The protective theory, that a nation gains the total capital which 
 its taxes attract, is not only questionable, but improbable, for the 
 following reasons: 
 
 In the case of a single nation, there is reason to beHeve that taxation 
 of mdustnal products but diverts existing capital from one form of 
 employment to another, the protected capital moving from one in- 
 dustry mto a less productive industry. International industry in 
 general suggests analogous conclusions; namely, that the taxation of 
 
74 
 
 The New Protection 
 
 Pt. I 
 
 industry diverts capital from one area into a less productive area, and 
 the tendency to attract implies a counteracting tendency to repel. ^ 
 In other words, taxes attracting capital may repel or expel other capital. 
 The reasoning applying to a single nation applies to industrial condi- 
 tions at large. It seems, in fact, that the most important movement 
 of capital must be toward free trade, or freer trade areas, for the reason 
 that the latter, on account of unrestricted industry and commerce, 
 enjoy a more productive division of labour; and produce, in conse- 
 quence, a relatively greater quantity of wealth, with its tendency to 
 attract other wealth. England's maintenance of her position as the 
 monetary centre of the world, without protective taxes, due doubtless to 
 a number of causes, lends no little support to this position. 
 
 "England is constantly investing abroad and so losing her capital," 
 says the New Protection. Every million England sends abroad at 5 
 per cent returns two millions in forty years to English soil, and the 
 process continues indefinitely. This attraction costs the nation nothing. 
 
 The capital attracted in this way, therefore, creates more wealth 
 than it displaces. The capital attracted by protective taxation and 
 artificial profits, on the contrary, seems to displace more wealth than 
 it creates; were this not so, the protective taxation would be unnecessary. 
 
 * Cf. pp. 8x. Sy. 
 
 CHAPTER IV 
 
 DUMPING 
 
 Section I 
 
 Taxation for the Encouragement of Dumping. 
 — Taxation for the Prevention of Dumping. 
 
 Section II 
 
 Section I — Taxation for the Encouragement of Dumping 
 
 THE recent changes in modern industrial conditions, throughout 
 the entire field of production and distribution, present many 
 new considerations in support of theoretical Protection with 
 which the older advocates of the school were unfamiliar. 
 With different conditions, different problems arise. It may be asked 
 to-day, not whether more normal or natural methods are best; but, as 
 abnormal and unnatural conditions are everywhere prevalent, much 
 more complicated questions are presented with reference to the best 
 means of meeting these. 
 
 Perhaps in few phases of modern industrial development are the 
 changes so marked as in those traceable to the influence of great accumu- 
 lations of fixed capital. On one side, capital is possessed of a mobility 
 unknown to the earlier economic thinkers. On another, however, capital 
 establishes itself in enormous plants and industrial systems, with fixed 
 charges so great, and, at times, the possible margin between profit and 
 loss so small, that the slightest checking of production may cause im- 
 portant loss to owner and operative alike. Again, the productive powers 
 of these great undertakings have been increased, and are increasing, 
 through modern applications of steam and electricity, with great rapidity. 
 These conditions, singly and together, give rise to a definitely conceived 
 industrial policy rendered more effective by modem methods of com- 
 munication and transportation. This poHcy is known to the modem 
 economist as "dumping." 
 
 In its later aspect, dumping is largely due to two causes: Protection 
 and organized capital. Protection alone would probably be poweriess 
 to carry on a system of industrial dumping on any important scale, for 
 
 75 
 
76 
 
 The New Protection 
 
 Pt. I 
 
 home competition would be a constant check on prices. Organized 
 capital would be Uttle more effective, for it would be compelled to meet 
 competition from abroad, without the assistance of taxes controlling 
 domestic prices. Combined, however, these two factors create industrial 
 systems often free from competitive influence abroad as well as at home. 
 The protective taxes shut out the foreign producer. Organization 
 finding itself in control at home, casts its eye upon foreign markets; not 
 as coming in competitive contact with the foreign producer, but as a 
 means of disposing of surplus product. Price is of slight importance, 
 for decreased cost of production, increased output and constant operation 
 are the dominant considerations in this policy. The organization of 
 capital, rendered at once easy and effective through the influence of a 
 protective system, is carried to its fullest development in Germany and 
 the United States; the latter country exhibiting, perhaps, the most 
 remarkable achievements in this direction. 
 
 As in all matters pertaining to exchange, there are, in connexion with 
 dumping, two policies to be considered: the policy of the dumping nation 
 and that of the nation into which the goods are dumped. In looking 
 for concrete examples, the attention is drawn to Germany and the 
 United States as those most efficient in dumping, on account of their 
 organized capital sheltered behind protective taxation; and, on another 
 side, to England, with her unprotected markets, as the nation most 
 exposed to their industrial attacks. The policy of the nation producing 
 the dumped goods will be considered first. 
 
 Dumping is of two kinds: one, a constant and systematic policy; 
 another, due to what Professor Ashley aptly calls ''the inexorable needs 
 of fixed capital." In the first, the policy is adopted of producing a con- 
 stant output greater than the home demand will support, and disposing 
 of it abroad; in the second, a plant may, for various reasons, overstock 
 the home market temporarily, and dispose of its surplus from time to 
 time in other countries at any price obtainable. These two kinds of 
 dumping may be distinguished as constant and intermittent. The 
 intermittent variety may be neglected in relation to the producing 
 nation; if it becomes of industrial importance it will resemble the 
 constant kind and may be grouped with it. 
 
 This industrial policy is of interest, both as an offshoot of protective 
 taxation and in its effects upon the industrial and financial life of a 
 nation supporting such a system. Its advantages have been cleariy 
 and favourably expressed by a witness before the Industrial Commission 
 
 Bk. II 
 
 Dumping 
 
 77 
 
 of the United States, in 1899:1 "My idea is that English and German 
 manufacturers invariably make a dumping ground of America when they 
 are slack of work; they distribute their fixed charges over a fuU tonnage: 
 they get their profit out of the home trade and dump their surplus into 
 America. ... We want to take a leaf out of the book of the German and 
 the Englishman, and we want to send stuff abroad. . . . The effect 
 of the tariff in our special line of business is very material. We ship 
 our products from one end of the United States to another. We ship to 
 Maine and San Francisco, Seattie and Galveston. We go from one 
 port to another with cotton ties, bands, everything of that kind. We 
 have a rate of freight which is higher from Pittsburgh to the ocean points 
 than the Englishman can send the stuff for. He can ship for four, six, 
 eight shillings a ton to Galveston, Charieston, or any of tiiese ports;' and 
 our freight from Pittsburgh is heavier by railroad tiian tiie freight across 
 the water. Now if we had not tiiat tariff it would mean Uiat we should 
 have to meet tiiat price. . . . We can manufacture more cheaply 
 tiian anywhere else in tiie world, . . . but we could not reach all 
 over tiiis country and compete with tiie foreigner in certain ways if we 
 had not a tariff. '' Another witness is reported as follows : 
 
 "Q. How does tiie export price compare with the price to the 
 American consumers? A. We are seUing to the markets of the 
 world at a less price than at home. 
 
 " Q. Will you kindly explain the business reasons for doing that? 
 A. The business reason for doing that is that by working up a foreign 
 busmess we can operate our mills more fully, we can make our goods 
 cheaper, and whenever the time comes tiiat there is a decline of the 
 home price it will not necessarily affect tiie foreign prices. There are 
 times when the export prices are higher tiian the home prices Just 
 at the present time our home prices, I tiiink, are probably 50, 60, or 70 cents 
 ahundred higher than our export. I do not really know just the difference 
 but I know tiiere is a difference in favour of export to-day. At times 
 It IS the otiier way. But by manufacturing, say, 200,000 tons of wire 
 per annum to export to all parts of the world we cheapen tiie entire cost 
 of manufacture veiy materially. By doing tiiat we are able to give the 
 consumer at home a lower price in tiie long nm, and employ perhaps 25 
 
 ZZn^r^^ "^r T^^'^' '^ "^"^ ^ '^^ ^^^S ^ ^^ fig^^ that it wil 
 equahz^itself . Our home prices and our foreign prices are never neces- 
 
 PP.S^ '^ ""• '' '"^"^'"^ ^^"'»*^^^''' •• '-5- ^'^^ by Professor Ashley. Tke Tanjf Problem. 
 
*l 
 
 ;» 
 
 'it' 
 
 I' 
 
 ! 
 
 i: 
 
 78 
 
 The New Protection 
 
 Pt. I 
 
 sarily on a parity; one might be higher and the other might be lower; it 
 would depend entirely on circumstances. " 
 
 With this data, the advantages of supporting protected industries 
 which sell abroad for less than at home may be summarized as follows: 
 First, in developing a foreign demand the cost of production is lessened, 
 and the home consumer benefited by a lowered price. Second, by 
 increasing the output of a plant, a greater quantity of labour is employed 
 than would otherwise be possible, thus creating a demand for labour, 
 raising wages and so forth. 
 
 It will be admitted that among the most effective methods of lowering 
 cost of production is constant operation and increased output; that dump- 
 ing decreases cost of production is evident; that decreased cost of produc- 
 tion permits lower home prices is dear; that protected dumping industries 
 are, in consequence, able to sell to the home consumer at a lower price than 
 would otherwise be possible is obvious; that they do so at times is probable, 
 for net gain may often be increased in this way, especially if the demand 
 begins to fall off: that protected dumping industries ever lowerthereal, or 
 normal price, in the home market is, however, neither dear nor obvious. 
 
 It may even appear evident that they not only do not do so, but never 
 can; and that the existence of the protected price, forced by means of 
 taxation, is demonstration of the validity of such a position. As one 
 of the authorities dted observes: "If we had not that tariff, it would 
 mean that we should have to meet that price." It thus seems that 
 dumping, or the non-competitive exploitation of foreign markets, by 
 means of a forced price at home, is not a very effective factor in lowering 
 prices in the home market; that it may, or may not, lower protected prices 
 is of slight importance, but that it lowers normal prices seems a position 
 neither in harmony with the facts nor with the testimony presented. 
 
 The Protection which lowers price has been discussed with reference to 
 one of the most important dumping industries in the world; there seems, 
 therefore, little advantage in developing the subject in this direction. 
 There is reason to believe that it has cost the American people many 
 hundred of millions during the past ten years to lower prices in this way 
 in a single dumping industry and that the "lowered" prices were always 
 very much higher than necessary during the entire process of reduction. 
 Exhaustive statistical demonstration of this position is found in the 
 works of Mr. D. A. Wells, 1 and in those of Mr. Edward Atkinson.^ 
 
 > Recent Economic Changes, Appendix p. 467. 
 
 « Pacts and Figures the Basis of Economic Science, p. 108 et seq. 
 
 Bk. II Dumping yg 
 
 When a nation is urged to tax itsdf in order to supply the foreigner with 
 its products at less than the home price, so that the demand for labour 
 may be increased, wages raised, and so on, the long familiar arguments of 
 the dassic Protection are but repeated with reference to the "creation 
 of a demand for labour." It may, of course, be admitted, by means of 
 presenting the home producer with artificial profits in the home market 
 while underselling abroad at the same time, that a greater quantity of 
 labour may be employed in such industry than would otherwise be 
 possible. In other words, that a highly taxed and protected exporting 
 mdustry will absorb a greater amount of capital than the same industry 
 untaxed. This capital must have existed in the country, however be- 
 fore taxes made dumping possible; that is, the existence of the capital 
 rniphes that without the taxes it would have sought some other outlet in 
 more productive and diversified industry and, consequently, have 
 employed more labour without dumping than with it. It seems here 
 as m the older Protection, to be simply a question of the diversion and 
 congestion of capital and labour through the control of the fiscal system 
 of a country. -^ 
 
 In the discussion of the conventional ProtecUon, it was shown how 
 Cobden and the EngUsh free traders of the last century dwelt upon the 
 protection given to foreign manufacturers by the English Com Laws and 
 mstances were presented showing how the taxes on raw materials in 
 America protected the foreign producer of the finished article The 
 taxation which permits the home producer to control industry in this 
 way and at the same time dump his products abroad, wiU be much more 
 d^advantageous to the country permitting such conditions, even to the 
 extent of dnvmg home capital abroad, in order to profit by the lower 
 
 e^oTof M "p'^AJ^""' "'"^'^- '^^ ^°«°-^g -trac"; from Z 
 
 report of Mr. F. Oppenheim,i British Consul General at Frankfort! 
 
 on-Mam serves as illustration: x-rdnjaorr- 
 
 "The development of the German export trade in iron and iron goods 
 
 were not able to satisfy the demands of the home market and at the 
 
 same tune mamtam their position in the world's market. Import ro^e 
 
 apidly and exports receded in proportion. With the turn T£ tide 
 
 he exporting mdustries again became anxious to export, Te S^d ^n 
 
 sumption havmg proved insufficient. Tie ^^^ iorZ^Zl 
 
8o 
 
 The New Protection 
 
 Pt. I 
 
 Bk. II 
 
 Dumping 
 
 8i 
 
 ^ 
 
 I! ' iP 
 
 ^1 
 
 ' abroad dearly illustrate this. Imports receded step by step as the home 
 market no longer needed them. It is very remarkable, however, how 
 quickly the German manufacturers succeeded in regaining their former 
 position in the world's market, which they had abandoned of their own 
 free will. They were assisted (it is true) by favourable circumstances, 
 more especially by heavy demands from the United States. Important 
 articles of German manufacture went to the United States in considerable 
 
 quantities. 
 
 "The syndicates, too, came to the rescue of the iron industry; under 
 cover of|the protectionist duties, the syndicates were enabled to keep up 
 prices at home in spite of the limited demand, whereby the several works 
 were placed in a position to reduce their prices in the worid's market and 
 were enabled more easily to compete. The difference of prices, however, 
 fixed by the same works for sales at home and sales abroad became so 
 great that it produced strong comments even in the Diet. Among all 
 the syndicates those controlling raw material and half-finished goods 
 proved themselves the most powerful and the hardest masters. They 
 sold raw material and half finished goods abroad at low prices, so that 
 the home industries which worked off such raw materials, etc., were 
 severely handicapped. These asserted (and not without reason) that 
 the consumers of German raw material m foreign countries, especially 
 in Holland and Belgium, were, by these prices, placed in such an ad- 
 vantageous position that it was most difficult, if at all possible, to com- 
 pete against their prices. The syndicates themselves admitted the 
 seriousness of the position by expressing their willingness to grant 
 certain export bonuses, which, however, the industries concerned 
 pronounced inadequate. Some cases actually transpired in which 
 German "finishing" manufacturers had to decline orders owing to the 
 exorbitant prices of raw material, which orders subsequently passed to 
 Holland, Belgium and the United Kingdom. " (pp. 7, 8.) 
 
 . "Thus this German material is to be had much cheaper 
 abroad than it can be had at home, yet the home customer makes from 
 such German material (half-finished goods) finished goods, for the sale 
 of which he will greatly have to rely upon export. On the worid's 
 market the merchandise of this German manufacturer will have to com- 
 pete against foreign merchandise, also made from German material 
 (half -finished goods), and as this material was purchased at a greatly 
 reduced cost, the foreign manufacturer can sell his goods considerably 
 cheaper than the German. Thus it follows that the German export of 
 
 half-finished goods is rapidly driven up, while the export of finished 
 goods recedes — a state of affairs altogether contrary to the best eco- 
 nomic interests of the country, as it is most beneficial to the country at 
 large that the exported goods should contain and represent as much na- 
 tional labour as possible. The export of machines, e.g., benefits national 
 labour more than the export of iron bars, yet iron bars, while they cost 
 home consumers 95 marks delivered at the Rheinish-Westphalian'works, 
 were exported during the month of September for 80 marks, or even 72 
 marks, f . o. b. It is said that the British and Belgium rolling mills cal- 
 culated their prices for roUed wire upon the basis of these cheap purchases 
 in Germany, so that the price fell very considerably on the world's market, 
 and the German wire industries, which export nearly 60 per cent, of their 
 produce, were forced to make allowance for their considerably reduced 
 price." ... "A very glaring case to the point was reported in 
 Dusseldorf. A factory using tin for its raw material continued for many 
 years a profitable trade with Holland in tinned goods, buckets, etc 
 In consequence of the cheap export price of tin, the identical goods are 
 now manufactured in Amsterdam very probably from German material 
 so that the manufacturer was left with a stock of about ioo,cxx) pails, for 
 which he could find no customers. Another firm (in Dortmund) 'has 
 decided to transfer a considerable part of its establishment to HoUand 
 as it can there obtain the necessary German raw material so much more 
 cheaply than in Germany." (pp. 27-28.) 
 
 It is evidently to the best interests of a country to represent in its 
 exports the greatest amount of domestic labour; to export the most 
 highly finished goods. The taxation of raw material on one hand 
 and dumpmg abroad on another, wiU apparently check this most produc- 
 tive and diversified employment of labour and concentrate it within fewer 
 and less varied channels of less productive industry. It thus seems that 
 protected dumping not only narrows the demand for labour, by con- 
 gesting It m fewer channels, but may drive capital abroad and check the 
 possible demand for labour at the same time. 
 
 Other considerations may be presented in this connexion. It may 
 readily be shown how the abnormal and unstable growth of protected 
 exportmg organizations must sink deep into the industrial and financial 
 me of a nation, through channels other than those of the direct employ- 
 ment of capital and labour. The United States presents the most in^ 
 structive illustration of this phase of the New Protection: 
 When a great industrial combination is focused under a system of taxes 
 
 I 
 
82 
 
 The New Protection 
 
 Pt. I 
 
 Bk. II 
 
 Dumping 
 
 83 
 
 
 rates and forced prices, such as those at present in vogue in America, 
 an enormous earning power is placed under the control of its organizers. 
 These men are not unnaturally tempted to capitalize and sell this earning 
 power at its full capacity. When such an organization is formed, with 
 earnings largely dependent upon a network of taxes, its securities are 
 sold to the people or disposed of through the fiduciary institutions, if 
 the people refuse to buy them in the open market. If the industries are 
 over-capitalized, as is generally the case, the securities will begin to fall 
 in value, with the result that they may be repurchased by the original 
 organizers and reinflated in a thousand ways, through readjustments in 
 direct and indirect taxes, new transportation rates and agreements, 
 exaggerated statements, declarations of unearned or guaranteed divi- 
 dends, and so on. This process, it is obvious, is entirely in control of the 
 organizers and the men who fix the taxes and the rates; it may be con- 
 tinued indefinitely and is independent of the relation of original capitali- 
 zation to original earning powers. The facts seem to show that the popu- 
 lation which taxes itself in order to dump goods abroad, sells its goods to 
 the foreigner for less than it must pay itself, congests and stifles a large 
 part of its own industry, and creates an irresponsible system of stock 
 manipulation at the same time. 
 
 This phase of the New Protection may be studied at length in financial 
 investigations of the United States. The connexion between legislative 
 interference with economic conditions, by means of protective fiscal 
 enactments, and the whole financial and industrial system of a people, 
 is not only direct and intimate, but no such legislation can exist without 
 involving the national financial existence. The bank, the insurance 
 company, and organizations of trust in general, find themselves not only 
 in possession of funds seeking investment, but, at the same time, in 
 possession of funds which may be used to influence legislative decisions 
 affecting such investments; and for what, it may be asked, does protec- 
 tive legislation exist, if not to develop the resources of the country, 
 encourage industry, create a demand for labour, and raise wages? In 
 other words, to adopt fiscal enactments at the dictation of organized 
 capital. 
 
 The financial resources of the people, in the course of saving and 
 industry, drift toward the banking, the insurance, and the fiduciary 
 institutions of the country. Great resources are thus placed at the 
 disposition of those in control of these organizations, and great resources 
 have always been, and in all likelihood always will be, in some form or 
 
 other, the chief factors in legislative decisions. Where these resources 
 find opportunity for affecting values by means of fiscal decisions 
 the result is obvious. The presidents or directors of a bank or insurance 
 company may be largely interested in protected or dumping industries; 
 it is, in fact, impossible for them not to be interested in such industries, 
 for, although they may not own or hold a single share of their issues, 
 these issues will enter into the credit system of the country and so affect 
 all institutions fimdamentally. The value of such protected securities, 
 again, is dependent upon the decisions of the legislative assembly, or 
 upon the attitude of the fiduciary corporations in which the important 
 financial interests of the country are represented, and the possibilities of 
 organization and reorganization, capitalization and over-capitalization, 
 legislation, speculation, and peculation, become practically limitless. 
 Values may be juggled indefinitely by means of stock and tax manipu- 
 lation, holding companies, subsidiary organizations of various kinds, 
 transportation arrangements, and in a thousand other ways — the entire 
 series of which would be rendered largely inoperative were the power of 
 forcing prices by means of taxation withdrawn from legislative assemblies. 
 
 The New Protection, in some instances, merely restates the positions 
 of the familiar school. In the majority of cases, however, it is a great 
 improvement over the older doctrines, and the fathers of Protection 
 would be lost in admiration at some of the developments of their latter- 
 day disciples. The Old Protection sought to swell the profits of capital 
 in the home market; it was occupied with domestic conditions alone. 
 The New Protection ranges over a wider field, including the foreigner — 
 both producer and consumer — within its more catholic solicitude. 
 By no means blind to the economic harmonies resulting from the reserva- 
 tion of the home market for its own use, it casts its eye at the markets 
 of the world; home Protection permitting it to hold the domestic market 
 and dumping, to undersell the foreigner abroad, simultaneously. 
 
 In these fields the New Protection meets but one difficulty: the dan- 
 ger of flooding the home market with reimported, dumped goods. 
 Where the home price is forced up by taxation, it becomes, of course, 
 possible to sell correspondingly lower in foreign markets; but the higher 
 the home price is raised, and the lower the foreign price falls, the greater 
 the danger of an industry being "threatened" by the "unfair" competi- 
 tion of its own dumped goods — the highly protected dumping industry 
 is exposed, as it were, to an "onslaught" of its own product in its own 
 market. This is a serious difficulty, but as yet no remedy has appeared. 
 
 
 I 
 
84 
 
 The New Protection 
 
 Pt. I 
 
 Bk. II 
 
 Dumping 
 
 1 
 
 I 
 
 It would seem, in this connexion, that the New Protection should 
 suggest double schedules: one, taxing foreign goods; and another, affect- 
 ing domestic goods already dumped abroad. In this way alone may a 
 people hope to be effectively protected against the unfair competition 
 of its own pauper labour. Professor Ashley^ approaches this idea in 
 part with his conception of the "variable, " "elastic" or "easily handled" 
 import duty, with reference to industries threatened from abroad. This 
 "elastic," or "easily handled" duty is much superior to the fixed, 
 protective tax. It does not, however, meet all the needs of the New 
 Protection with reference to industries threatened by the reimportation 
 of their own products. The masses might be confused in finding their 
 taxes shifted up or down indefinitely. The most practical method of 
 meeting this difficulty seems to be to impose a fixed duty of the conven- 
 tional kind upon foreign goods; and, in addition, to adopt an "elastic," 
 or "easily handled," duty which would shut out all dumped domestic 
 goods. In this way, the people would be conscious of nothing but the 
 familiar tax, while the "elastic" duty would never appear, any more 
 than the normal foreign import price, as it need be used but for purposes 
 of complete exclusion. May not every argument advanced in support 
 of the highly protected dumping industry be advanced in support of 
 such a system of taxation? 
 
 Section n — Taxation for the Prevention of Dumping 
 
 Dumping involves two policies: the New Protection advises that 
 a nation should tax itself in order to dump goods in foreign markets; 
 again, that a nation should tax itself in order to prevent this very 
 thing. If both positions are effective, nothing can apparently be 
 gained on one side which cannot be prevented on another. The 
 protectionist, however, prefers to limit the discussion to one phase at a 
 time. 
 
 From the point of view of preventing dumping, a free trade, or low 
 tariff, country is presented "defenceless" in the midst of powerfully 
 protected, high tariff nations, making determined attacks upon 
 her ancient industry by flooding her free markets with artificially cheap- 
 ened goods; the protected nations, with their high tariff walls, refusing, at 
 the same time, to accept the defenceless nation's output — a process 
 not only "sucking" the capital out of the defenceless nation, but under- 
 mining the foundations of her existing industrial system. Such is the 
 
 » Tke Tarif Problem, p. 134. 
 
 8S 
 
 picture presented by the New Protection of low tariff countries, England 
 being the t3^ical victim. 
 
 So far as capital is concerned, there are only two ways in which it can 
 be "sucked": "The balance of trade" or the "attraction of capital," 
 both of which have been examined. Dumping, as affecting established 
 industry, may, however, be considered. 
 
 Dumping is no new thing, doubtless dating from the birth of industry. 
 "How frequently," says Roscher,i "it has happened that England by 
 keepmg down her prices for a time has strangled her foreign rivals." 
 
 . . . "Hume,inthepariiamentarysessionof 1828, uses the expression 
 'strangulate' to convey this idea. As eariy as 1815, Brougham said: 
 'It was well worth while to incur a loss on the exportation of English 
 manufactures in order to stifle in the cradle the foreign manufacturers. ' 
 The report of the House of Commons on the condition of the mining 
 district (1854) speaks of the great losses, frequently in from three to 
 four years, of £300,000 to £400,000, which the employers of labour under- 
 went voluntarily, in order to control foreign markets." Dumping is 
 thus a long established English policy, the natural outcome of certain 
 industrial conditions, and will, in all probability, exist as long as industry. 
 It may be said, however, that modem dumping bears no resemblance to 
 the eariier forms and may be carried on upon a scale unknown a genera- 
 tion ago, involving new conditions and industries, not only not in the 
 cradle, but which may for centuries have formed a vital element in the 
 industrial life of a threatened population. 
 
 There is, unfortunately, one insurmountable difficulty in the discussion 
 of dumping: which is to establish any accurate method of distinguishing 
 goods dumped in the normal course of trade from those dumped owing 
 to ''unfair" causes. Every manufacturer will doubtiess find reason for 
 believing tiiat all foreign goods competing with his own are dumped; 
 and yet the fact that foreign industry can undersell in the home market 
 by no means proves tiie foreign price caused by unfair competition. 
 Nor, even when shown that the foreigner enjoys a governmental 
 bounty and a protected price in his own market, is it shown that he seUs 
 his goods for less than cost. Protected price and bounty demonstrated, 
 the question of cost demands discussion in relation to other sources of 
 supply, and to the possibility tiiat tiie foreign producer may be able to 
 dommate the home market without governmental aid, such taxes and 
 bounties swelling his profits witiiout affecting price. Thus, to prove tiiat 
 
 * Political Economy, Vol. II., p. 437. 
 
86 
 
 The New Protection 
 
 Pt. I 
 
 Bk. II 
 
 Dumping 
 
 87 
 
 goods "compete unfairly" is a difficult and complicated matter. An 
 effective method of distinguishing between fair and unfair competition 
 yet remains to be discovered; and, when discovered, its conclusions for 
 any given moment will be useless in a short time, owing to changing 
 conditions. 
 
 The extreme view of the producer will be that all foreign goods com- 
 peting with his own are unfairly dumped; the extreme view of the con- 
 sumer that the cheapest goods are the most desirable, whether dimiped 
 or not making no difference. The former opinion need apparently not 
 always be true. As, in the case of the producer, the question resolves 
 itself into a distinction between fair and unfair competition, so, in the 
 case of the consumer, the question arises: Which presents the best 
 supply, the high domestic price, or the low import price? 
 
 Here again occurs the question of the nature of the competition. If the 
 foreign producer is able to undersell constantly in the home market, it 
 seems clear that he is the best purveyor. If the consumer taxes himself 
 in order to shut him out, it seems that the consumer is paying imneces- 
 sary taxes, in higher price, and depriving himself of the salutary in- 
 fluences of competition. Dumping, from the point* of view of the 
 consuming nation, is by no means without compensation. The direct 
 consumer obviously gains in lowered price, and the general industrial life 
 of the nation is indirectly stimulated, through the importation of raw 
 material of manufacture; the new industries representing possibly more 
 capital and labour than any displaced. As Professor Smart ^ says: 
 "The steel maker cannot be expected to rejoice lq dumping, but the 
 shipbuilder, the galvanizer, and the tinplate worker openly do. There 
 is an almost ludicrous Nemesis in the compensation. America makes 
 her own tinplates excessively dear, and spoils her own trade in canned 
 goods. At the same time she dumps cheap steel into South Wales. 
 Our tinplate manufacturers, in consequence, send out cheap tin plates 
 to Germany, Russia, Australia, and Canada, and give them a hold on 
 the canned fruit and meat trade which otherwise America might have 
 kept from them. It reminds one of a besieging army smuggling am- 
 munition and food into the beleagured town. 
 
 "The Board of Trade Blue Book, quoting our Consul-General at Ham- 
 burg, says that there are four surveyors from Lloyd's Registry stationed 
 at Diisseldorf to superintend and standardise the shafts and other heavy 
 iron forgings which are being sold to English shipbuilders at cheaper 
 
 ' The Return to Protection, p. 153 et seq. 
 
 prices than they are to German. So Germany, at great expense, is 
 doing all she knows to establish shipbuilding and shipping trade, while 
 her own manufacturers are giving us the materials for imderselling her. 
 It is playing our game as effectually as if Germany sent her best football 
 players to play for us against a German team. 
 
 "In face of this Nemesis, then, even if we consider that the compen- 
 sations do not outweigh the injury, it would be well to have a littie 
 patience. It is not unnoticed in Germany at least. Even protec- 
 tionist chambers of commerce are complaining, in so many words, that 
 'cheap German exports of materials make it possible for firms abroad 
 to offer serious competition in Germany.' Suppose we found that our 
 Clyde steamers were being built in Germany because our Lanarkshire 
 steel makers were supplying that country with plates cheaper than they 
 would supply to Glasgow; we should, I think, have something to say. 
 But this is what is happening with the Rhine steamers. 'The building 
 of boats,' says the Board of Trade Blm Book, 'for the Rhine river naviga- 
 tion has passed over almost entirely to Holland, because the works in the 
 Rheinish-Westphalian district, producing heavy plates, deliver in Hol- 
 land at lower prices than in the interior of Germany. Evidence, in fact, 
 is accumulating that this selling of material below cost to the industries 
 of a rival country is pulling down with one hand what is being built up 
 with another. . . . It is of course from our iron and steel industries 
 that we hear most complaints about dumping. Germany exports to 
 us pig kon, blooms, angle iron, girders, rails, rolled wire, rolled tubes, 
 wire nails. America exports pig iron, iron pipes, bars, bedstead angles' 
 steel, ship plates, rails, boring machines. Most of these are products of 
 Kartells and Trusts; but, considering the cheapness of coal and transport, 
 and the difficulty of getting comparative prices— German bars, for 
 instance, have often been of inferior quality — it is impossible to say 
 what, and how much of them are, properly speaking, 'dumped.* 
 
 "The total value of the iron and steel trade of Great Britain, Mr. 
 Hugh Bell tells us, is something between £150 and £160 miUions. 
 Of tills very large total £15! milUons come as imports; tiie remainder is 
 home produced. Of this £15! milKons, 8 millions come from Germany, 
 HoUand, and Belgium. 'Is this paltry quantity,' he asks, 'going to 
 destroy tiie whole of our great industry?' In tiie year in which tiiey sent 
 us tiie 8 miUions, we sent tiiem £6f millions of similar articles. In tiie 
 same year we sent America upward of £10 miUions of iron and steel. 
 I should be interested in knowing,' he continues relentiessly, 'Uie names 
 
ill 
 
 88 
 
 The New Protection 
 
 Pt. I 
 
 I 
 
 t 
 
 of finns whose liquidation has been due to foreign dumping. I know of 
 none, but I do know of many who would have had the greatest difficulty 
 in weathering the bad trade of the last three years had cheap foreign 
 steel been denied them.' '* 
 
 Dumping may, in a free trade market, have a salutary effect in keeping 
 prices at a normal level: one of the important objects of Free Trade. 
 Low prices, even in dumping industries, may be due to natural as well 
 as artificial advantages, thus rendering practically impossible a definite 
 and workable distinction between fair and unfair dumping. 
 
 "The Bessemer process," says Mr. Hugh Bell,^ "required pig iron of 
 pure quality. The ores of Lancashire and Cumberland afforded this, 
 but they alone did not suffice. Spain was called on to redress the bal- 
 ance; and we find that what amoimted to under half a million tons in 
 1875, . . . amounted to no less than 5,310,000 tons in 1902. 
 But the production of pig iron from home ores continued nevertheless. 
 Puddled iron, replaced by steel for rails and many other purposes, 
 still found an outlet in the materials used for shipbuilding. With the 
 flexibility for which the trade is remarkable, capital flowed into plate 
 mills, and prosperity returned. Fate had, however, another arrow in 
 her quiver. The problem of eliminating phosphorus, the noxious 
 ingredient in pig iron, had long occupied men's minds. Its solution 
 is due to Englishmen, to whom the world owes most, if not all, of the 
 great improvements which have been made in iron manufacture. The 
 basic process invented by Messrs. Thomas & Gilchrist, and brought to 
 practical success by Messrs. Vaughan & Co., at Middlesbrough, was 
 fraught with even greater disaster to the British iron trade. The 
 ordinary pig iron of this country, and more especially that produced from 
 Cleveland iron stone, is remarkably unsuited for use in the basic Bessemer 
 converter. On the other hand, the ores of Germany, and certain other 
 countries, yield a pig iron which could not be bettered for that purpose. 
 A statement of the technical grounds for this assertion would be out of 
 place in this paper. It suffices to say, that such a statement would ab- 
 solve the British iron master from all blame in having seen the basic 
 process develop in Germany with giant strides, while it made relatively 
 little progress in this country." "This is a curious example," adds Mr. 
 Bell in a note, "of the way in which many people take obvious instead 
 of the real explanation of economic phenomena. The development of 
 German industry is attributed to the protective policy, with which it 
 
 > Protection and the Steel Trade, The Independent Review, October 1903, pp. 70, 71. 
 
 Bk. II 
 
 Dumping 
 
 89 
 
 only synchronised, instead of to the Thomas Gilchrist process, which 
 permitted the growth of the German iron trade. " 
 
 The application of such considerations may, however, be admitted 
 and the "mystery of dumping" regarded as still unsolved. It is naturally 
 to free trade England that the dumping policy of highly protected 
 countries presents the gravest dangers and where Protection would 
 supposedly cause the greatest gain. Altiiough closely allied considera- 
 tions maybe advanced with reference to any other country, the case in 
 favour of die import duty as affecting English industry, tiii-eatened by 
 foreign dumping, may be put as follows: 
 
 A land-owning legislature, in control of the fiscal policy of Great 
 Britain, gradually developed the system of food taxation known as the 
 Corn Laws. Taxes had also accumulated on manufactures, but owing 
 to the dominant influence of the land-owning class tiiese were of less 
 importance, and until tiie ministries of Lord Palmerston and Sir Robert 
 Peel tiie landed interests had no difficulty in controlling taxes and legis- 
 lation. The Corn Laws were the natural outcome of a protective 
 land-owning Assembly. During tiie earlier decades of tiie last century 
 however, a new influence arose in Pariiament: that of manu- 
 facturmg capital. The result was a victory for Free Trade and tiie repeal 
 of tiie Com Laws. This victory was an expression of the desire of British 
 manufacturing capital for wider markets on one hand, and cheaper food 
 supply on anotiier, by means of which their interests could be protected 
 As pomted out, tiie repeal of the Corn Laws, in a food importing country' 
 was as much a manufacturing protective measure as an import duty on 
 manufactures in a food exporting country. Morieyi says: "There was 
 m this notiiing that is either astonishing or discreditable. The impor- 
 tant fact was that the class-interest of the manufacturers and merchants 
 happened to faU in with the good of the rest of the community: while 
 the class-mterest against which they were going up to do battie was an 
 uncompensated burden on the commonwealth." . "With a 
 
 population increasing at the rate of a thousand souls a week, how can 
 
 ^r^!Z^.% "^l T^\^' ^'^'^ ""^^^^^ ^^^^ b^ ^^--^tantly increasing 
 Z^fZ r '^' ^^Ployment of labour; and how can foreign 
 
 countries buy our manufactures, unless we take in return tiieir com, 
 
 ^^TL^'a T"" "^'' '^'^ ^'' ^^^' ^^ P^«^"^^?" Speaking of 
 fund^isedm this connexion, Moriey says:^ "Men contributed freely 
 
 » Richard Cobden's Life, by John Morley. p. 95. 
 Ibid., p. 167. 
 
90 
 
 The New Protection 
 
 Pt. I 
 
 Bk. II 
 
 because they knew that the rescue of their capital depended on the open- 
 ing of the markets from which the protection of com excluded them. " 
 
 This Free Trade form of Protection was expected to make England 
 the manufacturing centre of the world. With her large population, 
 small area, and unrestricted food importation, it was assumed that Eng- 
 land would be the most highly protected country in the world. Other 
 countries, it was supposed, would be induced by this protective Free 
 Trade to occupy themselves with the production of grain and raw 
 materials, leaving the more advanced and highly finished products 
 to Great Britain, in which less developed countries would never be 
 able to compete with her. 
 
 As a result of this policy, English manufactures greatly flourished for a 
 time, but during the seventies and eighties of the last century their 
 growth seems to have been arrested by various causes, but partly 
 through English aid in establishing manufacturing centres abroad, and 
 through the imforeseen development of foreign industry by means of 
 modem methods. Nor is this all, nor the worst, from the protective 
 point of view. Foreign nations, instead of adopting England's 
 more liberal policy, not only hedged themselves about with bristling 
 tariff fortifications, but, by means of taxes and subsidies, cast designing 
 eyes upon England's own market: an unexpected turn of affairs. 
 
 Thus England, instead of standing alone as the manufacturing centre 
 of the world, stands alone indeed, but as the most vulnerable object of 
 manufacturing attack. Free Trade, it seems, has been tried and found 
 wanting. Again, this threatening of England's industry is of an excep- 
 tionally annoying and dangerous nature. Were it always due to a con- 
 stant policy and improved methods, the results would be bad enough, 
 but such, it is said, is not the case. The dumping may be intermittent, 
 and naturally occurs at times of depression when likely to do most harm. 
 Thus the English producer may find a weak market suddenly flooded 
 with foreign goods dumped at a price which the foreigner cannot support 
 permanently nor without governmental aid ; the foreigner simply adopting 
 the intermittent and irresponsible dumping of surplus in an improtected 
 market, the import price bearing no relation to cost, either at home or 
 abroad. If the foreigner is successful in these attacks and destroys the 
 English industry, he may raise or lower prices as he pleases in such a way 
 that unaided competition is impossible. These are the evils of dumping 
 as affecting the producer in low tariff countries. The political danger 
 of allowing the industrial system of a coimtry to become dependent 
 
 Dumping 
 
 91 
 
 upon foreign supply may be pointed out, together with the menace to 
 labour in such irresponsible competition. Thus, it is said, while English 
 industry demanded Free Trade half a century ago, modem methods 
 and existing tariffs have changed conditions, and changing conditions 
 demand changing measures. 
 
 Such are the considerations dwelt upon by the New Protection. The 
 argument in favour of taxing a population to support threatened 
 industries has a sound not unlike the wail of the ** infant industry" in its 
 decline. Thus, industry, it seems, needs Protection in the first stages 
 of its growth, all through the period of its maturity, and here, at last, 
 when no longer able to hold its own. When, however, a dangerous policy 
 of intermittent dumping, aimed at the established industry of England, 
 or of any other country, is recognized, the question of a remedy arises. 
 "No," says Professor Ashley, 1 "there is apparently no way of meeting 
 the danger which such imports threaten to national prosperity and 
 political security, but the employment of the only economic weapon of 
 defence which the State possesses — viz., import duties. " It is, how- 
 ever, clear that the ordinary fixed duty is of no value against inter- 
 mittent dumping; the dumping price may be so low that only exclusion 
 could obtain the desired result. The quantity of goods dumped may be 
 so great, and the dumping occur so suddenly, or at such an inopportune 
 time, that no fixed import duty would be effective. 
 
 The New Protection is alive to these diflficulties; the remedy being 
 in this instance, however, the variable, easily handled, or elastic import 
 duty. "There remains then, " says the author cited,^ "for present con- 
 sideration, the question of defensive tariffs; and one must begin by 
 pointing out that this purpose will not be served by a general all-round 
 low or even moderate customs duty. No low or even moderate duty will 
 suffice to keep out foreign goods when they are being sold at any price 
 to 'relieve' the domestic market. . . . What seems dictated by 
 the requirements of the case is the statutory authorization of the Execu- 
 tive to impose the duties that may be required from time to time as the 
 cu-cumstances arise. ... A policy more 'elastic,' more easily 
 handled, is what is required. " 
 
 This is the "elastic," "easily handled" import duty of the New 
 Protection. Before it the fixed duty with its great possibilities pales 
 intojnsignificance. May it not be asked, once such an ''elastic" or 
 
 » The Tariff Problem, p. X31. 
 • Ibid, pp. 138-134. 
 
 a 
 
92 
 
 The New Protection 
 
 Pt. I 
 
 ''easily handled" system of taxation is established, to whom would 
 sufficient economic insight be given to perceive clearly and impartially 
 whether certain prices of certain goods represented fair or unfair com- 
 petition, natural or unnatural industrial conditions? By means of what 
 inexplicable process could the human mind decide whether certain 
 industries could or could not meet certain prices with reference to the 
 ultimate national good? The mere suggestion of the ''elastic" duty 
 reveals in the New Protection one of the most noteworthy examples 
 of the faith in the infinite wisdom of the politician to be found in 
 economic history. 
 
 To the more or less sophisticated observer, however, the question 
 arises whether such "elastic" taxes would not possess a certain market 
 value, in the industrial centres under their influence. Could not values 
 be manipulated at will with such flexible duties and that without 
 responsibility? Even the suspicion in the mind of an active and well 
 meaning official that certain foreigners were contemplating an "on- 
 slaught" would, of course, be excuse for putting the functions of such 
 versatile taxes to the test, and studying their elastic effects on the stock 
 market. 
 
 However, if desirable industries are threatened by foreign dumping, 
 it may be asked whether they may not be aided without infficting a 
 population with the possibilities of an elastic and easily handled system 
 of protective taxation? It is obvious that the flexible duty itself is not 
 the support required; the money produced by means of higher prices 
 at certain times is the real assistance; the money is the protection, not 
 the duty, the latter being but a means to an end. There are two ways 
 to provide money for a nation's desirable and threatened industries: one, 
 to surrender the power of taxing it blindly and indefinitely with import 
 duties; another, to draw on the public treasury for the specific 
 purpose at the specific time to the desired extent; in other words, to aid 
 the industry as far as necessary and no more. It may, of course, be 
 said that the handing about of public money through direct subsidies 
 and bounties may be a source of official corruption. Such corruption 
 is probably a foregone conclusion. It seems, however, that the possi- 
 bilities of official corruption offered by publicly acknowledged subsidies, 
 great as they may be, are none the less as a drop in the ocean in com- 
 parison with official corruption caused by protective import duties. 
 The indirect method of protecting threatened industry presents all the 
 complexity and expense of every phase of Protection in their incal- 
 
 Bk. II 
 
 Dumping 
 
 93 
 
 culable results; the direct method is simple and obvious and involves 
 no expense other than the necessary amount, which would be partly 
 counteracted in the lower prices enjoyed by the people during the 
 defensive period. 
 
 "If, however," says Professor Smart, i "Protection is the only remedy 
 for Dumping, we may well hesitate. A man may be suffering from a 
 slight cold, but may object to take a medicine that will throw him into 
 fits. 
 
 "The moment we admit that Dumping is a claim for counter duties, 
 we seem to have taken a long step and a perilous one. At what stage 
 in the Dumping is the aid of the State to be invoked? Is it when a 
 thousand tons have been dumped, or a hundred thousand, or a million? 
 Surely, a smaller trade may be ruined by dumping before any large 
 figure is reached. Or are we to stop the danger before it emerges, by 
 putting ' an average duty of lo per cent. ' on all manufactures? 
 
 "And who is to decide what is Dumping, as distinguished from 'fair 
 competition?^ Is it seUing at cost? — or under cost? — or far under 
 cost? What is 'cost ? When the students in a Political Economy class 
 have got to the length of answering that question they have very Httle 
 more to learn. " 
 
 » The Return to Protection, p. 167. 
 
Bk. II 
 
 The Tariff-Weapon 
 
 95 
 
 I 
 
 I 
 
 CHAPTER V 
 
 THE TARIFF-WEAPON 
 
 Section 1—The Import Duty as a Weapon. Section H^The Tariff 
 Weapon and Trade, Section III — Tariff Warfare. 
 
 Section I— The Import Duty as a Weapon 
 
 THE new era of Protection does not depend upon ordinarily 
 announced conceptions of trade and industry alone. The 
 more or less narrow and individualistic political economy of 
 Smith and Mill has been superseded, it is said, by a wider 
 view of the needs of a people as a whole; by a broader interpretation of 
 the national and political life than that of the earlier economic writers. 
 International relations have recently become more intimate and com- 
 plex; Mill could scarcely have foreseen the existing national inter- 
 dependence, commercial and fiscal, while Smith could not have con- 
 ceived it. 
 
 The new protective era, as shown in a passage cited, arises, neither 
 because economists have been unable to understand the arguments of 
 the older free trade school, nor because capital has been able to dom- 
 inate the fiscal policy of government; "it arises from a motive which 
 is rather instinctively felt than cleariy understood, viz., that tariffs are 
 international weapons (Machtmittel) which may benefit a country, if 
 skillfully used. "1 
 
 The reasons advanced in support of a system of taxation to be used 
 in this way are many; ranging from the various German schools, repre- 
 sented by the writings of Professors Wagner, Oldenburg, Pohle, and 
 the more moderate positions of Professors Schmoller, Conrad and Sering, 
 to the retaliatory suggestions of Mr. Balfour. " The only alternative, '' 
 says the latter, 2 "is to do to foreign nations what they always do to each 
 other, and, instead of appealing to economic theories in which they 
 wholly disbelieve, to use fiscal inducements which they thoroughly 
 
 » Professor Gustav Schmoller. cited by Professor Ashley, The TariJ Problem, p. 30. 
 « Cf. Professor Smart. The Return to Protection, p. 121. 
 
 94 
 
 understand." Or, again, extending from the more crystallized fiscal 
 system of France to the "dynamic and progressive" policy of the 
 United States. 
 
 Other considerations occur in this connexion — considerations largely 
 independent of the usual economic positions, and which suggest 
 the protective system of trade regulation, despite economic disad- 
 vantage. The danger of allowing a nation to become dependent upon 
 a foreign food-supply may be pointed out; again, attention may be 
 called to tiie disadvantages of placing any great industry, entering 
 into national defence, at the mercy of foreign producers. A mere 
 agreement between foreign powers might cripple a nation in such a 
 position. The import duty may thus possess a significance independent 
 of economic or industrial advantage. Protective taxes, levied upon such 
 grounds, may be used to prevent a nation from being put in dependent 
 political positions, and urged irrespective of industrial and financial loss. 
 Such considerations enter largely into the German and EngHsh schools 
 of the later Protection, and are worthy study. They recall Adam 
 Smith's 1 position witii reference to the EngKsh Navigation Acts. He says 
 that it may be advantageous to lay some burden upon foreign industry, 
 "when some particular sort of industry is necessary for the defence of 
 the country. " Adam Smith may thus be quoted in support of such 
 taxes, modem conditions adding weight to these considerations. After 
 a review of Smith's position with reference to the English Navigation 
 Acts, Professor Ashley says .-2 
 
 "Smith, it will be perceived, was much less cosmopolitan than many 
 of his foUowers; he had strong national feelings; and he did not anticipate 
 an unbroken era of international peace. Moreover, he did not think it 
 his business as an economist to disregard poUtical considerations, nor 
 did he apologise for introducing 'non-economic' arguments. But the 
 alarm of the Free Trade precision at Smitii's concession was altogetiier 
 justified; for it opens tiie door to very much more than its author con- 
 templated. One wonders, for instance, what Smitii would have said 
 to the present condition of affairs when tiie English people are dependent 
 upon importation for more than three-quarters of its bread, and for 
 almost half of it upon importation from a country with which we have 
 quite recentiy seemed on tiie verge of war. Or, again, if he had Uved 
 
 ' The Wealth of Nations. Bk. IV.. ch. ii.. p. 35. 
 « The Tarijff Problem, p. 36. 
 
96 
 
 The New Protection 
 
 Pt. I 
 
 in these days of steel-built battleships, would he have viewed 
 with equanimity a state of things which may well make its ap- 
 pearance — a flourishing shipbuilding trade absolutely dependent 
 upon importation for the cruder forms of steel which it needs as its raw 
 material?" 
 
 This is an important passage, and presents considerations not 
 to be brushed aside by economic generalizations. The passage 
 cited applies chiefly to England ; the considerations suggested, however, are 
 of equal significance with reference to any nation importing to any 
 extent food staples and the raw materials of the steel, iron and 
 shipbuilding industries. The import duty here appears in a new 
 field. The import duty, as a weapon, may or may not be a protec- 
 tive industrial measure; the weapon tax is an ultra-economic instru- 
 ment, or tool, which may be used to threaten, protect, formulate, 
 injure or reward, as conditions dictate and as the best interests of the 
 nation demand. 
 
 It is essential, at the outset of an inquiry into the nature of the tariff- 
 weapon, to draw a distinction between the tariff- weapon as such, and the 
 piuposes for which that weapon may be used. Thus, if the import tax 
 is used in order to make money flow toward a country, it is attracting 
 capital, or regulating the balance of trade; and the tax applied to these 
 purposes should be discussed under those headings. If used to exclude 
 the foreign producer, it is encouraging industry or protecting labour, 
 and such a tax can be studied but in relation to those positions. The 
 importance of this distinction is marked; the tax is here studied as a 
 weapon alone. 
 
 Upon closer analysis, many of the arguments used in favour of the 
 tariff-weapon will be found to be pure Protection, either of the old or 
 newer school. With the elimination of these, the tariff-weapon may be 
 studied from two positions: the economic and the non-economic. The 
 first presents the use of the fiscal system of a nation as a means of obtain- 
 ing industrial concessions and advantages from other nations; the second 
 is chiefly concerned with the purely militant phase of the subject, in its 
 relation either to industrial or actual warfare. The tariff-weapon will, 
 therefore, be studied under two headings: the Tariff- Weapon and Trade, 
 and Tariff Warfare. 
 
 A tax can be used as a weapon in but two ways. It can be put 
 on or taken off; there is apparently nothing else to do with it, 
 and the weapon used in reference to warfare and trade seems to 
 
 Bk. II The Tariff-Weapon 97 
 
 exhaust the subject, for one involves the imposition of taxes, the other 
 their repeal. 
 
 Section II — The Tariff- Weapon and Trade 
 
 Article I — Diplomacy. 
 
 In the study of a complex subject, it is sometimes useful to attempt 
 to express its fundamental principles as simply as possible, in order to 
 develop its essential features; an analysis, then, of these few fundamentals 
 may present the original problem in clearer light. There is one danger 
 in inquiry of this kind — that of tracing analogy, where no analogy 
 exists; conclusions based upon these will, of course, be valueless. 
 
 This method, however, seems available in the present instance. Inter- 
 national commerce is trade; trade is the exchange of commodities. 
 Trade between nations is the transfer from one to another of a great 
 number of material things, their number or variety having nothing to do 
 with the essential conditions involved. There is, apparently, no dis- 
 tinction in principle between the exchange of a million commodities for 
 a million others, and the exchange of one commodity for another. Trade 
 therefore, between nations is not much the same thing as trade between 
 individuals, but identically the same thing. By means of the introduc- 
 tion of money and the balance of trade, this truth may be obscured, and 
 the "practical" politician, together with the popular protectionist, seem 
 to imagine that international trade is some form of jugglery, in which 
 money or capital is tossed in the air by invisible hands, to be caught by 
 whichever nation spreads the most astutely constructed maze of taxes. 
 The introduction of money does not change the nature of international 
 commerce; for the reason that money, or the international money, gold, 
 circulates between nations at its intrinsic or bullion value alone, and 
 consequently, in this connexion, is as much a commodity as any other. 
 It is simply one of an infinite number of terms in which total exchange 
 is effected. 
 
 This position has been discussed under the "Balance of Trade," with 
 reference to this phase of the tariff-weapon of the New Protection. 
 "Fleets and armies are maintained, not with gold and silver, but with 
 consumable goods, " says Adam Smith. ^ If this is true in time of war, 
 it may seem equally so with reference to the "fleets and armies'* of 
 normal commerce. 
 
 The abler thought of the New Protection, in both England and Ger- 
 
 > The Wealth of Nations. Bk. IV., ch. i.. p. 13. 
 
 m 
 
98 
 
 The New Protection 
 
 Pt. I 
 
 Bk. II 
 
 The Tariff-Weapon 
 
 99 
 
 tii 
 
 many, recognizes that trade between nations is but the exchange of equal 
 values represented by consumable goods. "Since one nation can last- 
 ingly pay another nation only with its own products," says Roscher,^ 
 "any limitation of imports must, under otherwise equal circumstances, 
 be attended by a corresponding limitation of exports. " 
 
 "The notion that foreign nations can sell everything to us and take 
 nothing in exchange except money is, of course," says Professor Ashley,^ 
 "one of the fallacies of popular protectionism. In the long run — imless 
 the prosperity of a nation is very rapidly declining indeed, and when 
 such a time comes there is not likely to be any doubt about it — goods 
 are paid for by goods or services. " 
 
 The New Protection is thus in harmony with the best economic thought 
 in the opinion that international trade may be expressed in terms of 
 commodities or services. The exchange of one loaf of bread for one 
 pair of boots differs in no way in nature from the exchange of a million 
 loaves and a million pairs of boots; nor, if the bread and boots are again 
 changed into an infinite number of commodities, among which may be 
 gold in any proportion, is the principle of the transaction altered, which 
 is simply the exchange of equivalent values expressed in material things. 
 It seems, therefore, that a perfect analogy may be traced between 
 individual and national trade and that, in consequence, conclusions 
 applying to the nature of one apply to the nature of the other. 
 
 It may be supposed then, in order to study the action of the tariff- 
 weapon, that the village baker and shoemaker have ceased to trade with 
 each other, owing to some long standing feud. After a time, however, 
 the baker discovers that making his own shoes or paying a higher price 
 for them in a neighbouring village, is becoming a tedious and expensive 
 process, as his children grow up. The shoemaker has had a like experi- 
 ence in bread baking, and negotiations are opened with reference to 
 trade. The advantages of the feud are here evident; without it, they 
 would both be "defenceless"; that is, they would both be buying 
 bread and boots in the best market. The feud, however, has been bitter 
 and expensive. Inthisway, both parties are fully "armed." The shoe- 
 maker's weapon is his refusal (import duty) to buy bread from the 
 baker, and vice versa; in other words, the shoemaker is "armed" only 
 when he pays more for bread than it is worth; unless he does so, he is 
 "defenceless." 
 
 1 Political Economy. Vol. 11. p. 434. 
 
 • Tke Tarif Problem, p. 99, 3d edition. 191 1. 
 
 Negotiations may be supposed to proceed along the following lines; 
 The baker approaches the shoemaker and offers to buy boots on condi- 
 tion that the shoemaker buy his bread, that is, remove or lower an 
 import duty. The shoemaker, however, is too intelligent to be caught 
 in the snare of buying better bread, as the baker suggests. He sees some 
 scheme behind these fair proposals, and, at the same time, an opportunity 
 of gaining additional advantages. He decides to wield his "weapon" in 
 fact. He, therefore, declines to buy bread, imless the baker agrees to 
 buy shoes from him, as well as boots. The great possibilities of the 
 "weapon" then dawn upon the mind of the baker; after long consider- 
 ation, he issues the following ultimatum to the shoemaker: he agrees 
 to buy boots and shoes, on condition that the shoemaker grant 
 him certain concessions with reference to buns. It is evident that the 
 need arises, at this juncture, for wise and skillful negotiation; what 
 is the relation between the profits derived from the trade in shoes and 
 buns, and what relation do these profits bear to the trade in boots 
 and bread? The wisdom of the shoemaker will be tried at this point; 
 it is by no means easy to estimate these relations exactly, and he must, 
 of course, avoid granting the baker more valuable concessions than he 
 himself obtains; otherwise the shoemaker's money will instantly begin 
 to "flow" toward the baker, through the balance of trade. Besides 
 these difficulties, the baker, who might have been employed in an embassy 
 in his youth and thus have learned something of diplomacy, has perhaps 
 added a "most favoured baker clause" to his ultimatum, tiius adding to 
 the complexities of the situation. How much trade might the shoe- 
 maker lose through the introduction of this clause, and what is the rela- 
 tion between the possible loss on one side and the possible gain in ac- 
 cepting the ultimatum? Even the most intelligent shoemaker, well 
 versed in the prices and profits of boots and shoes, and even of bread 
 and buns, might have difficulty in solving these problems. The sub- 
 ject is becoming involved in a diplomatic haze. If the shoemaker 
 accepts the ultimatum, he will be obliged to buy his bread and buns 
 in the best market; while, on the other hand, owing to the "most favoured 
 baker clause," the shoemaker would be defenceless as far as rolls and 
 tarts were concerned, and might have to buy these in the best market 
 as well; which, of course, might be a very serious matter, as any one 
 knows, who is familiar with the mysteries of diplomacy and the dangers 
 of the balance of trade. Besides these complications, the " most favoured 
 baker clause" might affect the price of sUppers in some roundabout way. 
 
lOO 
 
 The New Protection 
 
 Pt. I 
 
 Bk. II 
 
 The Tariff- Weapon 
 
 lOI 
 
 f 
 
 
 and thus create still another difficulty: not only obliging him to buy 
 rolls and tarts in the best market, but possibly affecting his slipper 
 trade in such a way that he could buy better slippers than he could 
 produce himself. The ''most favoured baker clause'' stipulates that 
 the goods of the baker should be purchased on terms equally favourable 
 with those of any other baker, and the shoemaker must protect himself 
 against the dangers such possibilities might create. When the difficulty 
 of solving the question is imderstood, it may well appear necessary for 
 the shoemaker to call in a lawyer from the city to aid in the negotiations. 
 The lawyer, with his superior intellectual training, at once per- 
 ceives the subject to be one demanding great diplomatic skill and 
 finesse; he, therefore, after long reflexion and exhaustion of all statis- 
 tical information, makes a tempting counter proposition to the baker, 
 who, not to be outdone by the shoemaker, employs another lawyer. 
 These gentlemen, understanding matters of this kind much better than 
 the baker and the shoemaker, at once get to work on a really "practical" 
 basis, and soon develop a new series of negotiations, involving systems 
 and counter-systems of retaliation and counter-retaliation, duties, 
 drawbacks and rebates, together with various indirect forms of re- 
 strictions and revised methods of classification, by means of which 
 boots could be classed with slippers, and bread with tarts; counter- 
 vailing duties and ad valorem duties, with and without detailed sliding 
 scales of maximum and minimum rates, specific duties and conditional 
 duties; taxes, surtaxes and compensating surtaxes; duties imposed 
 with and without reference to excise, duties with drawbacks and with- 
 out drawbacks, preferences, and shipping preferences, maximum and 
 minimum tariffs, general and conventional rates, revised methods of 
 valuation, with and without reference to import and excise duties; 
 harbor dues, stamps, autonomous tariffs, and different forms of taxes 
 affecting package and raw materials, by means of which the prices of 
 goods are affected in a thousand ways, without taxing the goods them- 
 selves, and a host of other complicated restrictions, checks and counter- 
 checks, limitations and prohibitions upon which it is unnecessary to 
 dwell. The haze here settles into an impenetrable fog. The baker 
 and the shoemaker can form no conception of what the lawyers are 
 doing; the lawyers themselves can form no such conception, shown by 
 the fact that they often produce the most undesired and imexpected 
 results. The poor baker and shoemaker have, of course, no compre- 
 hension of the matter and the process being a profitable one to the 
 
 lawyers, the latter simply continue negotiations with great industry 
 activity, and dexterity, piling up taxes in order to take them off again 
 in an inexhaustible series, and the process perpetuates itself indefinitely. 
 
 There are three courses open to the shoemaker: (i) He may break 
 off negotiations and decline to buy anything from the baker. (2) 
 He may accept intermediate conditions, drawn up by the lawyers. (3) 
 He may dismisss the lawyers and buy what he wants where he pleases. 
 
 If he adopts the first course, he inflicts a maximum loss upon himself, 
 and very likely deprives himself of an advantageous market for his own 
 goods at the same time. In other words, he loses all the advantages 
 created by trade and the division of labour. If he adopts the second 
 course, he infficts himself with a proportionate loss, and deprives him- 
 self of some of the best markets. If he dismisses the lawyers and buys 
 what and where he pleases, he infficts himself with no loss whatever, 
 enjoys the best markets, and all the advantages which the lawyers 
 could confer, if they took off all his weapon-taxes at once. 
 
 The perfidious baker, however, may not adopt this liberal course; 
 but may, on the contrary, continue taxing the shoemaker's goods, and 
 at the same time, injure him by underselling in the shoemaker's own 
 market, or by intermittent onslaughts of dumped mufl^ns. If the>aker 
 cannot be induced to remove his taxes, in return for the shoemaker's 
 taxes, the tariff-weapon is useless and should be removed at once. 
 If the shoemaker attempts to meet any of these difficulties with his 
 tariff-weapon, he will be using it for purposes other than those for which 
 it was designed; it was designed, solely, to make the baker take off 
 his taxes in return for weapon-taxes; if the baker will not do this, the 
 shoemaker's taxes cannot accomplish the single aim of their existence, 
 and cease to have any purpose. If they are used to guard against 
 ordinary low prices, the shoemaker is protecting industry; if he uses 
 them to guard against intermittent low prices, he is taxing himself in 
 order to protect his market from dumping; if he attempts to draw more 
 money from the baker than flows in the baker's direction, he will be 
 regulating the balance of trade, or attracting capital. If he uses his 
 tariff taxes to guard against certain imports, which may affect this or 
 that industrial possibility, he will be educating infant industries or 
 developing productive potentialities; none of which have anything to 
 do with the tariff-weapon. 
 
 If the baker wiU not repeal his taxes in return for the shoemaker's, 
 the tariff-weapon has failed to produce the desired result, and is merely 
 
 1 
 
102 
 
 The New Protection 
 
 Pt. I 
 
 Bk. II 
 
 The Tariff-Weapon 
 
 103 
 
 I 
 
 injuring the shoemaker. The import duty, imposed as an economic 
 weapon in this connexion, can never realize the unique purpose of its 
 being until it is taken off. No considerations, therefore, which involvte 
 its existence for any other purpose, apply to its use as a weapon; such 
 considerations fall under the various forms of Protection to which they 
 belong, and should be discussed in relation to these. 
 
 The tariff-weapon, as such, is a self-inflicted injury, having no object 
 other than its removal in return for industrial concessions. If these 
 concessions can be obtained, the weapon-tax should be taken off in ex- 
 change for them, as soon as possible; if they cannot be obtained, the 
 weapon-tax should be taken off, as soon as possible; there is nothing 
 gained in keeping it on in either event. On the contrary, everything is 
 to be gained in taking it off in either event; it was designed to be taken 
 off, and can have no other object; the sooner it is taken off, moreover, 
 the sooner it fulfils the single purpose of its imposition. If it is permitted 
 to stay on, it destroys its own object and becomes a protective tax in 
 some form or other, and, in consequence, useless as a weapon. If, then, 
 to return to the illustration, the baker refuses to remove his taxes] 
 the tariff- weapon is a demonstrated futility; and, if the shoemaker 
 continues to tax himself with it, he is simply inflicting himself with a 
 useless burden. 
 
 There are other considerations with reference to the use of the taxing 
 powers of a nation as a weapon. If a nation, wedded to the theories 
 of Protection, as aU nations are, with but a possible single exception 
 decides to make us of its tariff taxes in this way, it is evident that the 
 protective functions of the tax schedules must not be affected by their 
 diplomatic qualifications. The protective taxes can no more be used as 
 weapons than as providers of revenue. The protective tariff impUes 
 the mtiposition of taxes; the tariff-weapon, however, can be effective 
 but in their removal — it is the reduction alone of such taxes, in return 
 for other reductions, which lends any excuse to this form of taxation. 
 But, in order to be repealed, weapon-taxes must first be imposed- 
 what, then, must be the result in the imposition of taxes to be used 
 as weapons? Upon revenue and protective duties wiU become en- 
 grafted a third form of taxation, super-imposed upon the other two 
 The policy suggesting itself in this connexion, to a commission empowered 
 to arrange a schedule of duties for a protectionist country, may easily be 
 miagined. The capitalist's interests wiU doubtless have suggested to 
 the commission that certain duties are essential for the protection of the 
 
 industrial classes. Labour is generally willing to vote for such taxes as 
 it is led to suppose that it is taxing the pauper foreigner. These pro- 
 tective taxes are, therefore, necessary, and must be imposed over and 
 above those essential for revenue. The far-seeing statesmen who 
 compose the Tariff Commission will perceive, however, that this already 
 formidable array of taxes should be raised still higher, in order to arm 
 the people by adding weapon-taxes to existing revenue and protective 
 duties; in this way alone could such taxes be reduced without interfering 
 with the revenue and protective functions of the schedules. These 
 weapon-taxes, therefore, must be added to other taxes, and essential 
 neither for revenue nor Protection. A nation, effectively armed witii 
 the tariff-weapon, necessarily evolves three distinct and mutually 
 subversive systems of indirect taxation, which have to be built one upon 
 another in order to produce any practical results. The revenue taxes 
 will be tiie foundation of the structure, and must not be high enough to 
 protect to any extent or tiiey wiU cease to produce revenue; the pro- 
 tective taxes wiU come next, and must be too high to produce any amount 
 of revenue, or tiiey will cease to protect. The weapon-taxes must tiien 
 be added to these, and put up so high tiiat tiiey can be reduced or 
 repealed witiiout interfering with the functions of the otiier two. It is 
 thus easy to conceive the policy which must dominate a Commission em- 
 powered to negotiate a treaty witii these weapon-taxes. The question 
 the Commission has to decide is, what taxes may be removed in return 
 for the removal of other taxes. 
 
 It may be assumed tiiat tiie capitaKst^s interests have either been 
 consulted, or have intimated to the commission that such and such 
 taxes might be advantageously modified for the protection and best 
 interests of labour. The people at large wiU invariably be represented 
 m the removal of such weapon-taxes by organized capital; this is un- 
 avoidable where a single protective tax exists. As it is not unnaturaUy 
 assumed that tiiese interests are identical, such negotiations can have 
 but one result: the shifting of the incidence of unnecessary taxation 
 at the dictation of capital. No other result could be achieved, for no 
 other result is attempted; those possessed of political influence sufficient 
 to have such taxes modified, or removed, wiU profit thereby. If no 
 inducements sufficiently strong present themselves, tiie tariff-weapon 
 rests upon tiie rack; the unnecessary taxes stay where put. 
 
 On the otiier hand, unnecessary additions to revenue and protective 
 taxes create vested interests where none existed; profits will be swoUen 
 
 ti 
 
I04 
 
 The New Protection 
 
 Pt. I 
 
 Bk. II 
 
 The Tariff- Weapon 
 
 loS 
 
 l!t»l 
 
 beyond the hopes ot the protectionist, and security values feel the influence 
 of the tariff-weapon. These taxes, imposed in order to be removed, will 
 find in many cases all the political and financial interests in the country 
 involved with their retention. They will thus tend to become fixtures, 
 with the result that the next Tariff Commission will perceive the wisdom 
 of adding yet more weapon-taxes, in order to arm the people still more 
 effectively. Such taxes are thus, sooner or later, involved with the 
 entire financial life of the nation, and, if not removed at a very early stage 
 of their existence, become nothing more than exaggerated protective taxa- 
 tion. The following interviews^ show the practical application of such 
 considerations. 
 
 "Senator Hopkins of Illinois is one of two or three former members 
 of the Ways and Means Committee who helped frame the Dingley law. 
 He is ready to alter the schedules he helped to fix. 
 
 "* Unless the Republicans revise the tariff now,' he said, *I am unable 
 to understand how they can go into the next campaign and discuss it. 
 When the Dingley law was framed it was well understood that many of 
 the duties were placed higher than they should have been, because it 
 was expected they would be lowered by reciprocity treaties. The 
 duties on sugar, paper, and steel were placed especially high. I take 
 it that the beet sugar interest influences had considerable to do with the 
 duties on that commodity. Since the duty on paper was fixed the mills 
 have formed a Trust and operate practically as one plant. There have 
 been important industrial changes all over the country, since the old 
 law was passed which make changes necessary. The same need of 
 protective duties does not exist as in 1897. 
 
 "Representative McCall of Massachusetts talked in the same strain. 
 * There are many things in the Dingley law,' he said, 'which we do not 
 like to look a man straight in the eyes and defend. Then, if we do not 
 revise schedules, we must soon retire that old Republican friend of ours, 
 who has been brought forward in every stump speech of the campaign — 
 that is, the argument that when the tariff is to be revised it should 
 be revised by its friends." 
 
 ** Representative Crumpacker of Indiana, a defeated aspirant for 
 Senator Fairbank's place, is a pronounced tariff revisionist. He is 
 reported to-day as saying: *I am going to urge the President to call an 
 extra session, and in the call to request Congress to examine carefully 
 every schedule so that the revision may be as complete and thorough 
 
 » The Evening Post, N. Y., December s, 1904. 
 
 as possible. If we postpone revision until the Fifty-ninth Congress it 
 will never be done.' 
 
 "Representative Burleigh of Maine is the only 'stand-patter' brought 
 forward this morning. He is entirely in accord with the views expressed 
 in Senator Hale's recent interview and declares that the Senator's 
 views meet with the entire approval of the Maine people. They do 
 not want the tariff question opened." 
 
 The statesmen will adopt the same principle of the tariff-weapon 
 all along the line; it may be shown from the point of view of the manu- 
 facturers in the following passage:^ 
 
 "When Congress gave us 45 per cent, we needing only 20 per cent, 
 they gave us a Congressional permit, if not an invitation, to consolidate, 
 form one great trust, and advance our prices 25 per cent, being the 
 difference between the 20 per cent needed and the 45 per cent given." 
 
 These interviews are instructive; and permit the study of the tariff- 
 weapon in use. They may be noticed in sequence: The first speaker 
 presents the process of imposing exaggerated taxes in order that such 
 taxes may be lowered. It is evident that other nations will "arm" 
 themselves in the same way, with the result that if the weapon-taxes 
 are taken off, the nations find themselves where they were in the first 
 place; for, of course, neither will remove either revenue or protective 
 taxes in return for mere "weapon" concessions. This interview also 
 shows capitalistic influences at work, imposing weapon-taxes as well as 
 protective taxes, and a trust forming under the influences of such taxa- 
 tion. It is, of course, clear that these taxes enter into profits and 
 security values the moment imposed, with the result that they become 
 inflated protective taxes, and may never be removed. 
 
 The second speaker is conscious of having assisted in imposing^taxes 
 which are difficult to defend. 
 
 The third suggests the opinion that unless weapon-taxes are repealed 
 shortly after their imposition, they will never be repealed. In other 
 words, that the tariff-weapon may be practically useless. 
 
 The fourth speaker is the most interesting of all: here is a statesman 
 voicing, apparently, a large portion of the community, who believes it 
 good policy to impose taxes on the necessaries of life, in order to take 
 them off, and then to keep them on. The statesmen who put the taxes 
 on say tiiey did so in order to take them off; through another statesman, 
 the peop le say they prefer to keep them on. There thus seems reason 
 
 *H. E. Miles in American Industries. November 15, 1907, p. 14. 
 
 t| 
 
 ■I 
 
 if! 
 
io6 
 
 The New Protection 
 
 Pt.I 
 
 Bk. II 
 
 11 
 
 ! Ul 
 
 
 
 to believe that the people, and this type of statesmen, are blissfully 
 unconscious of the only advantages which weapon-taxes possess. The 
 people surrender the power of taxation to their representatives, who 
 build up taxes in order to take them down. Then the people, and their 
 representatives, say that they prefer to continue to pay the taxes. 
 This instructive passage seems to show one of two things: either that 
 a large portion of the population, and some of the statesmen, are incap- 
 able of understanding the only object of weapon taxation, or that such 
 statesmen are unwilling to express such comprehension, neither posi- 
 tion lending much support to the tariff-weapon. 
 
 These passages refer to the Dingley Bill of 1907. The Payne-Aldrich 
 Bill became law in 1909. In the Dingley schedules the increase of 
 taxation, designed to be repealed, maybe studied; this is the " weapon " 
 being raised with the taxes, so to speak. The weapon may now be 
 expected to fall. It took thirteen years, much agitation, and many 
 broken promises, to make this weapon move at all. It flashed in the 
 air for thirteen years, and was finally dragged down to be sharpened 
 in 1909. What was the result? A single passage will suffice for any one 
 who has watched the history of the Payne-Aldrich Conmiittee. Senator 
 Bristow of Kansas is described as a "strong and convinced protectionist.** 
 He is also interested in red paint. He saysr^ "We paint our bams with 
 it in Kansas. I saw them putting up duties which I believed would 
 affect its cost. I wanted to know why — I could find no reason — no 
 proof that it was necessary. I insisted, and I soon made up my mind 
 that they had no intention of considering the difference in cost of pro- 
 duction, that they sneered at the idea, that they were simply intent 
 on giving their political supporters what they wanted. Moreover, 
 they intended to force us to be a party to the business. It was the 
 most dishonest and corrupt work I have ever seen, and I revolted." 
 This is the way the Dingley "weapon " fell, after thirteen years of 
 exaggerated taxation and untold millions of waste. 
 
 Nor does it make any difference whether, through reciprocity clauses, 
 any maximum and minimum taxes are handed over to President or 
 Tariff Commission with power to negotiate treaties. Such taxes must 
 be useless for any other purpose; that is, worth less as taxes than as 
 markets. The instant they swell profits sufficiently, they will appear in 
 the form of party contributions, and the President or Tariff Commission 
 will neve r be able to touch them. Thus a portion of such taxes will 
 
 « Tht Tariff in Our Times. TarbeU. p. 300. 
 
 The Tariff-Weapon 
 
 107 
 
 become fixtures and useless as weapons, and a portion will be juggled 
 up or down in return for analogous foreign concessions, as capital 
 dictates. A population must pile up more taxes than it can possibly 
 remove, in order to remove any taxes; in other words, apparently always 
 lose the instant it begins to use the tariff-weapon. 
 
 Artide 2 — Preference. 
 
 The tariff-weapon, studied in the committee room and the popular 
 mind at the same time, is a strange thing; yet this is the weapon with 
 which the people of England are invited to arm themselves. It may 
 be believed that the Tariff Reform weapon of the Unionist party would 
 be more skilfully used than that of the Americans; and, as the wielding 
 of the weapon of the great Republic is examined, such hope does not 
 seem extravagant. Whether the people of England as a whole, however, 
 would gain from the imposition of such taxation may be questioned! 
 England can never "arm " herself with this mysterious weapon unless 
 she multipUes her indirect taxes at first; and she can never gain any- 
 thing from the weapon unless she takes the taxes off. But the in- 
 stant she begins to tax herself for this purpose, she wiU create vested 
 and protected interests, making it difficult for her to untax herself, 
 except in limited ways, under limited conditions; and certainly impost 
 sible to untax herself to the extent of paying no protective or weapon- 
 taxes, as at present. If England ever places a retaUatory tax on 
 her schedules, there is reason to believe that she wiU never be able 
 to realize the trade advantages she possesses to-day, and that such 
 a tax will sooner or later involve all the evils and expense of general 
 Protection. 
 
 In protected countries, the tariff-weapon involves the engrafting 
 of removable taxes upon existing revenue and protective systems. 
 In England, the tariff-weapon requires the adoption of an entirely new 
 feature. Speaking in the House of Commons on May 28th 190:5 
 Mr. Chamberlain saidr^ "The Preference must be given either on raw 
 matenals or on food, or on both." Again: "If you are to give a 
 preference to the Colonies - and I don't say that you are - you must 
 put a tax on food. I make the honourable gentleman opposite a present 
 of ^at." A fe,w years later, Mr. Chamberiain2 is more explicit- 
 When w e return to power," he says in 1906, "we bring our pohcy with 
 
 » Cf. Through Preference to Protection. L. G. Chiozza-Money, p. 32. 
 Cf. The Spectator. Jamiavy 30th, 1906. 
 
io8 
 
 The New Protection 
 
 Pt. I 
 
 Bk. II 
 
 f 
 
 ■m 
 
 i i' 
 
 US. And my Lords and gentlemen, with Fiscal Reform, remember, we 
 bring Preference also." 
 
 Mr. Chamberlain and his immediate following will, sooner or later, 
 disappear from the political arena; the Unionist party may be dissolved 
 or reorganized upon a number of issues, with as many leaders; the 
 question of food taxation may be obscured and confused with various 
 forms of conferences and referendums; but the demand for taxes 
 of this nature will probably always remain active and constant in 
 England, as long as an indirect fiscal system exists. 
 
 When a tax is imposed upon foreign manufactured goods in England, 
 the English producer is protected in the usual way in the home market, 
 but, if a preferential system of food and raw material taxation is added; 
 the range of English Protection would be indefinitely extended. It 
 would be possible, as England is a great consumer of these materials, 
 to grant certain concessions and preferences to the Colonies and other 
 coimtries, in return for which foreign markets could be opened to the 
 English producer. Thus a tax on food could be used to put up 
 rents at home and protect a market abroad at the same time. 
 
 The preferential phase of the New Protection is a significant feature 
 in England, and may seem destined sooner or later to play an important 
 part. The history of party government has long represented but the 
 swing of the pendulum between modified Liberal and Conservative 
 opinion. The conventional thought is unable to meet recent issues, 
 and to-day a Liberalism is found which, but a few years ago, would have 
 been considered of the most Radical nature. This may be expected 
 to cause a compensating Conservative reaction, and there is no policy 
 before the English people to-day so well calculated to represent such a 
 reaction as preferential Tariff Reform. The old Free Trade Man- 
 chester school of manufacturing capital dies a natural death, approached 
 with the protective tax and the preferential duty at the same time. 
 The Com Laws protected the landlord and exposed the manufacturer; 
 the New Protection unites them and meets every demand of capital 
 wherever employed. Foodstuffs may be controlled in order to raise rents, 
 while no diflSculty need be caused in the manufacturer's market, owing 
 to Protection and Preference. Preferences and concessions may be 
 granted to the Colonies and food-producing nations, by means of the 
 use of the preferential weapon in such a way that, while the home 
 population is held in a vice, new markets for manufacturers could 
 be developed abroad, by screwing the vice this way or that. The food 
 
 The Tariff-Weapon 
 
 109 
 
 could be taxed out of, or into, the mouths of the population of England 
 in order to protect a foreign market. The preferential weapon of the 
 New Protection is an effective conception, and it is not strange tiiat it 
 looms so large on the English political horizon. It seems diflScult to 
 understand how it has been so long resisted. It need not be developed 
 at lengtii, however, in its relation to trade. In tiiis connexion, it sug- 
 gests a duplex, reversible form of protective taxation, acting through the 
 price of food and raw materials, by means of which rents may be raised, 
 and capital may tax the home population in order to protect itself 
 in foreign markets. The home population is invited to deprive itself 
 of things to eat in order that tiie Imperial population may be deprived 
 of clothes to wear and tools with which to work. 
 
 Section III— Tariff Warfare 
 Notiiing shows more cleariy the influence of capital over admin- 
 istrative policy to-day than the custom of regarding a nation solely 
 m the light of a producing organization. An industrial society is 
 considered as a great industry producing goods indefinitely witiiout 
 consummg anything. Yet no industry can produce witiiout con- 
 sumption of tiie raw materials of its products. As this position seems 
 evident, it seems also evident that no nation can produce witiiout con- 
 summg the elements of production; in otiier words, as an industry must 
 consume m order to produce, so an industrial society must necessarily 
 be composed of consuming and producing elements. The consuming 
 elements of a society, however, have no place in the philosophy of 
 Protection; the productive elements alone are considered. This tendency 
 has gamed such a hold upon ideas of political economy, that it is impos- 
 sible to discuss the subject from any other point of view. The works 
 of such men as Mill and Adam Smitii are either disregarded, or an 
 isolated passage here and there is cited, upon which is reared a system 
 of protective taxes of all kinds. The dominant idea in administrative 
 methods IS tiie invention of means by which the taxing powers of a 
 
 nter!r. T.. """"^ ^''" ^^ ^"^'^' ^^ ^^^^^^^^^ organizations; the 
 It trl? tI^'^ organizations being confused with those of tiie people 
 tZl J^' ^<iea of regarding the taxing powers of a society as some- 
 
 TZU^\^^"^^ "^ ^'^"^ "^"^ "" ''' ^^^°^^^ts may be brought 
 
 iUuction'S """" '^ P'"^^""^^" '^'^'''y> ^^^^^ ^taxed 
 production and consmnption and untaxed markets, is yet, if ever 
 
 ^ 
 
 1 
 
no 
 
 The New Protection 
 
 Pt. I 
 
 Bk. 11 
 
 
 t 
 
 'ill 
 
 i 
 
 i|i 
 
 ;i 
 
 ij 
 
 I 
 
 to dawn upon the political horizon. The following passage* serves as 
 illustration. 
 
 "The new mercantilism often overlooks, as every movement of the 
 kind which is based on popular cries is sure to do, that these weapons 
 may, as often as not, be used xmskilf ully. And thus Russia, the United 
 States, and France, have fallen back on an extravagantly high pro- 
 tective system. But their action drives all other states to a certain 
 amount of tariff regulation, if only not to be quite defenseless. With- 
 out such weapons we cannot expect to make commercial treaties. And 
 therefore Professor Schumacher" (who had read a previous paper) "has 
 been very much to the point in emphasizing the importance of negotia- 
 tions tariffs (Verhandlungszollen). The man who ignores these facts 
 dwells in Cloudcookooland, and does not descend to the real earth 
 with its opposing interests and struggles." 
 
 This attitude is, apparently, one from which there is no escape, colour- 
 ing as it does all political policies. Other nations tax our goods, it is 
 said; we are compelled, therefore, to tax their goods; or rather to tax 
 ourselves in self-defence, in order to induce them to remove their taxes 
 on our products. In other words, other nations refuse our goods; it is, 
 therefore, apparently to our interest to refuse theirs in order to open 
 their markets. The import duty is supposed to be the only means of 
 accomplishing this end. This is probably not the case, and there is 
 reason to regard it, in comparison with other methods, as cumbersome 
 and extravagant. A nation, for instance, might be induced to remove 
 certain taxes in return for a direct monetary consideration, by means 
 of which gain could be compared with cost, and their relative values 
 understood. This is impossible in import taxation. Again, instead 
 of multiplying import duties indefinitely, without knowing what is 
 accomplished or how much it costs, the war could be carried on by means 
 of flooding the home market with cheap goods, through subsidizing 
 home or other sources of supply. The foreigner could thus be shut 
 out of the home market as long as desired, and injured as much as 
 possible, more effectively and at less expense than with import duties. 
 During the war, moreover, the people would be enjoying cheaper goods 
 and greater powers of production instead of high prices and scarcity. 
 If the foreign nation retaliates by shutting out more goods, a reply 
 may be made with another subsidy, undermining another of its industries 
 
 » Professor GusUv SchmoUer — " Scknf ten dts VtreinsfUr SoeidpolUik, xcviu, 270. quoted by Professor 
 A»hl^, The TariJ Problem, p. 31. 
 
 The Tari£E-Weapon 
 
 ni 
 
 and flooding the home market with domestic products; while all the 
 time exactly how much the industrial warfare is costing in relation to 
 the gain produced may be known. 
 
 This method of direct fiscal warfare may be carried into the field of 
 military operations. ' Adam Smithi may be dted in support of the 
 position that taxes may be advantageously imposed with reference 
 to certain industries essential to the defence of the country The New 
 Protection, basing its position upon modem conditions, has stronger 
 reasons than Smith in support of the same policy. England is the most 
 vulnerable country in this connexion, on account of her small area 
 and Free Trade. The New Protection asks^* what Smith would have 
 said to a state of affairs in which the people of England is "dependent 
 upon miportation for more than threesjuarters of its bread, and for 
 almost half of it upon importation from a country with which we have 
 qmte recentiy seemed on the verge of war?" The threatening of the 
 steel and iron industries, by German and American dumping in un- 
 protected English markets, adds to the dangers of the situation as far 
 as these mdustries are essential to the building of ships and the casting 
 of g^; considerations which apply to other countries as weU as to Eng- 
 land m proportion to the conditions involved, and which cannot be 
 swept away by purely economic arguments. The present poUtical 
 system makes .t possible for a single diplomat or pohtidan to throw a 
 whole people into convulsions through ignorant or unguarded utter- 
 ances. It makes it easy for organized capital to use the entire naval 
 and mihtary resources of a nation in control of spheres of influence- to 
 develop wars with weaker nations in order to keep a party in power 
 or create a demand for the output of a steelworks and ammunition 
 factoiy; and, consequently, lends weight to these considerations of tiie 
 New Protection. Their importance may be frankly admitted. Here, 
 as m the case of tiie encouragement of an industry die problem has 
 noUung to do with the end in view but is concerned solely with tiie 
 means suggested. 
 
 Protection.of course, presents tiie same measure for arming a great 
 nation on tiie verge of war as tiiat presented for tiie training of tiie 
 mdustnal nurshng. Whatever end is desired, Protection has but 
 one means to suggest; tiie ends may vary to infinity, tiie means remain 
 ^ffd_and unchangeable -a tax on imports is tiie one arrow in tiie 
 I m w«m of N<MoiK, Bi. IV.. ch. a., p. 35. 
 
 'Pro(«or AdUey. The TariS PrOU^. I J. 
 
 ^ 
 
112 
 
 The New Protection 
 
 Pt. I 
 
 Bk. II 
 
 The Tariff-Weapon 
 
 113 
 
 protectionist quiver. Yet, it is not essential for a population to throw 
 itself into the blind mazes of protective taxation, in order to develop 
 cereal resources, biiild ships, or make gim castings and magazine rifles. If 
 it is politically desirable for England, or any other nation, to create 
 artificial food supplies, this can be done through direct subsidies, and the 
 people benefit by cheaper food at the same time. All the advantages 
 of this phase of the weapon of the New Protection might be obtained 
 by a minimum price, by the subsidy of a railway or shipping line, 
 as subsidized for postal purposes to-day. The same means can 
 be used to build any number of men-o'-war and disappearing 
 cannon. It is unnecessary to tax the food supply of a people, 
 or the staples of its industry, to accomplish these results; they 
 can be achieved directly, and at less expense, by means of money 
 raised in legitimate fiscal channels, instead of in the suppression of 
 industry and the creation of artificial scarcity of the necessaries 
 of life. 
 
 It may be said that the placing of public funds in this way, at the 
 disposition of a body of politicians, is a dangerous thing and must 
 lead to the corruption of the body in control of the funds. This position 
 may be admitted. Such direct subsidies would, in all probability, 
 develop a complicated network of misapplication and misappropri- 
 ation of public money. It may, however, be said at the same time that 
 Protection of this kind, if politically desirable and dependent upon 
 direct subsidies, must be carried on more or less under the public eye; 
 the cost of the Protection and corruption can thus be estimated, rela- 
 tively at least, in connexion with the accruing advantages. Where 
 the power of imposing indirect taxes, however, is surrendered to the 
 same body of corruptible officials, the whole field of irresponsible Pro- 
 tection is placed at their disposition, the harvest to be reaped is indefi- 
 nitely greater than in any direct system, and the cost, the corruption, 
 the officials, and the relative advantages instantly disappear from 
 view and can never be accurately traced. If, therefore, it is dan- 
 gerous and corrupting to place direct subsidies under the control of 
 officials, there seems reason to believe that to place the much more 
 complicated and influential engine of the indirect taxing powers of 
 a nation imder such influences must be vastly more dangerous and 
 corrupting. 
 
 "With regard to subsistence," says Mill,i "the plea of the Pro- 
 
 ^FriudpUs of Political Economy. Bk. V., ch. x., fi x, p. 555> 
 
 tectionists has been so often and so triumphantly met, that it requires 
 little notice here. That country is the most steadily as well as the 
 most abundantly supplied with food, which draws its supplies from 
 the largest surface. It is ridiculous to found a general system, 
 of policy on so improbable a danger as that of being at war with 
 all the nations of the world at once; or to suppose that, even if in- 
 ferior at sea, a whole country could be blockaded like a town, or 
 that the growers of food in other countries would not be as anxious 
 not to lose an advantageous market, as we should be not to be deprived 
 of their com." 
 
 It may be of interest to inquire to what extent the foregoing con- 
 siderations, with reference to the tariff-weapon, are justified by specific 
 cases and actual conditions. The following is a brief analysis of the 
 tariff war between Germany and Russia in 1893-4: 
 
 "The statistics published by the German Government show that 
 after the outbreak of the tariff war, the German export trade to Russia 
 had been partiaUy paralyzed. The exports of locomotives ceased; 
 the export of wrought iron was one-third of the average in the preceding 
 year, and of cement less than one-half. And in addition to the losses 
 of the German exporters and manufacturers, it became apparent that 
 a large number of Germans Uved by the import and handling of Russian 
 products, and they were, of course, severely affected. The railways 
 which are State property, were run, on certain branches, at a loss. 
 German ships were practically excluded from Russian ports, and the 
 German coast towns, interested in the carrying trade, were heavy 
 sufferers. . . . With the approach of winter the situation became worse, 
 as the Baltic ports were closed by the ice. The large trade in extra- 
 European goods, which had been carried on through Germany was 
 crippled. The transit of raw cotton through Germany for the Russian 
 market was, in 1893, only one-half what it has been in the preceding 
 year. And in addition to the economical losses, a grave danger was 
 imminent. There is ample proof that the tariff war, as it proceeded, 
 was regarded by both responsible parties as likely to lead to a state of 
 thmgs dangerous for the peace of Europe." 1 "On the other side," 
 contmues Mr. Ashley: "Russia was suffering from the injury inflicted 
 on her agricultural exports, particularly after the good harvest of 1893. 
 Ihe foUowing table shows the movements of imports and exports between 
 the two c ountries for the years 1890 to 1894, inclusive. It wiU be re-, 
 
 *««*»<, p. 4fi. ated'm Modem Tariff History. P«-rcy Ashley, p. 93. 
 
 1-1^ 
 
114 
 
 The New Protection 
 
 Pt. I 
 
 Bk. II 
 
 The Tariff- Weapon 
 
 "S 
 
 
 Russian Exports 
 
 to Germany 
 
 Mill. Roubles 
 
 German Exports 
 
 to Russia 
 
 MiU. Marks 
 
 . 178 
 
 193 
 
 . 138 
 
 54 
 58 
 38 
 
 . 148 
 
 35 
 54 
 
 membered that the acute struggle was in the latter half of 1893, and in 
 the first two months of 1894." 
 
 Year 
 
 1890 
 1891 
 1892 
 
 1893 
 1894 
 
 In reference to the Franco-Italian tariff war, the following may be 
 cited from the same source*; "The consequences of the war to the 
 commerce between the two coimtries are immistakable. The following 
 table shows the French exports to Italy and the Italian exports to 
 France for the five years preceding and five years following the 
 commencement of the war. It will be remembered that practically 
 although the acute struggle was over by the beginning of 1890, the 
 conflict continued to 1899, since until that year neither coimtry would 
 grant the other its best terms; the table shows that the trade never 
 recovered from the blow of 1888. The figures are million poimds 
 sterling." 
 
 
 v^ »» 
 
 Xi^A 
 
 French Exports 
 
 Italian Exports 
 
 ^^ to Italy 
 
 to France 
 
 1883 .... 12.0 
 
 17. 1 
 
 1884 
 
 
 
 » 
 
 . II. 3 
 
 14.7 
 
 1885 
 
 
 
 » 
 
 11.5 
 
 10.5 
 
 1886 
 
 
 
 » 
 
 . 12.4 
 
 12.4 
 
 1887 
 
 
 
 
 13 
 
 12.3 
 
 1888 
 
 
 
 
 6.2 
 
 7.2 
 
 1889 
 
 
 
 
 . 6.7 
 
 5-3 
 
 1890 
 
 
 
 
 6.5 
 
 4 9 
 
 1891 
 
 
 
 
 5-4 
 
 49 
 
 1892 
 
 
 
 k 
 
 . 6.7 
 
 5-3 
 
 1899 
 
 
 
 » 
 
 6.1 
 
 6.3 
 
 The total exports of France to all countries show an increase during 
 the period. "Italy suffered much more — her total exports declined 
 considerably. The competitors of the two countries reaped the benefits 
 of the struggle; to the combatants themselves it brought only difficulties 
 and a great amoimt of damage." 
 
 Another passage* may be cited in reference to the war between 
 France and Switzerland. 
 
 "The effects of the war were severe on both sides. The following 
 
 •p. 33S. 
 
 ■p. 347. 
 
 table gives (in million francs) the French exports to Switzerland, and 
 the Swiss exports to France, for the four years preceding the war, and 
 the four years after the commencement: 
 
 Year 
 
 1889 
 1890 
 1891 
 1892 
 
 1893 
 1894 
 
 1895 
 1896 
 
 French Exports Swiss Exports 
 to Switzerland to France 
 
 230.5 
 242.8 
 
 234.8 
 227.9 
 172.8 
 129.9 
 163.2 
 179.9 
 
 101.5 
 104.2 
 
 103.4 
 91.9 
 
 74-9 
 66.6 
 
 67.3 
 75.4 
 
 "The figures for 1895 show the beginning of an improvement, since the 
 war only lasted for seven months of that year; since then the upward 
 movement has on the whole continued, but up to 1901 the trade between 
 the two countries has not returned to the level of 1891." France 
 seems to have been the heaviest loser in this instance, and "the result 
 of the war was so much a victory for Switzerland that she secured some 
 preferences over other nations in the French market, without giving 
 France any such preference in return." 
 
 From a study of these figures, as well as from general considerations, 
 it seems that loss swift and certain, must be the result of the wielding 
 of the tariff-weapon. In such insUnce as that of France, in the Franco- 
 Italian war, where total exports increased during the struggle, it is 
 natural to conclude that such independent increase would have been 
 still greater, without restrictive taxation, and that real loss is no less 
 expressed in the necessary falling off of trade with the nation involved. 
 Where, as in the case of Switzerland, a nation gains certain concessions 
 as a result of the war, it seems that not only, after several years of the 
 enjoyment of victory, had her exports not returned to the point reached 
 before the war began, but that the natural gain possible without the 
 restrictive taxation of markets and industry had been lost at the same 
 time. The cause of this was probably that found at work in the study 
 of the weapon-taxes of the United States. These taxes, placed over 
 and above protective and revenue taxes, become at once involved with 
 political and capitalistic interests; with the result that they may never 
 fall to the protective and revenue level from which they began. No 
 gain, therefore, from the tariff-weapon can apparently equal the loss 
 involved. 
 
 The New Protection, after demonstrating the invalidity of the prin- 
 
 ' 't 
 
ii6 
 
 The New Protection 
 
 Pt. I 
 
 Bk. II 
 
 ■it 
 
 t i 
 
 dples of Adam Smith, applied to modem conditions, almost invariably, 
 quotes* a certain passage from his works in support of retaliatory duties: 
 The passage in this connexion, together with the attendant qualifying 
 passages to which the New Protection is oblivious, may therefore be 
 cited: 
 
 "The case in which it may sometimes be a matter of deliberation,*' 
 says Smith,2 "how far it is proper to continue the free importation of 
 certain foreign goods, is, when some foreign nation restrains by high 
 duties or prohibitions the importation of our manufactures into their 
 country. Revenge in this case naturally dictates retaliation, and that 
 we should impose the like duties and prohibitions upon the importation 
 of some or all of their manufactures into ours. Nations, accordingly, 
 seldom fail to retalitate in this manner. . . . There may be good 
 policy in retaliations of this kind, when there is a probability that they 
 will procure the repeal of the high duties or prohibitions complained 
 of. The recovery of a great foreign market will generally more than 
 compensate the transitory inconveniency of paying dearer during a 
 short time for some sorts of goods. To judge whether such retaliations 
 are likely to produce such an effect, does not, perhaps, belong so much 
 to the science of a legislator, whose deliberations ought to be governed by 
 general principles which are always the same, as to the skill of that 
 insidious and crafty animal vulgarly called a statesman or politician, 
 whose councils are directed by the momentary fluctuations of affairs. 
 When there is no probability that any such repeal can be procured, it 
 seems a bad method of compensating the injury done to certain classes 
 of our people, to do another injury ourselves, not only to those classes, 
 but to almost all other classes of them. When our neighbours prohibit 
 some manufactures of ours, we generally prohibit, not only the same, for 
 that alone could seldom affect them considerably, but some other 
 manufactiu-e of theirs. This may no doubt give encouragement to 
 some particular class of workmen among ourselves, and by excluding 
 some of their rivals, may enable them to raise their price in the home 
 market. Those workmen, however, who suffered by our neighbour's 
 prohibition will not be benefited by ours. On the contrary, they and 
 almost all the other classes of our citizens will thereby be obliged to 
 pay dearer than before for certain goods. Every such law, therefore 
 imposes a real tax upon the whole country, not in favoiu: of that par- 
 
 « Cf. Professor Ashley. The Tariff Problem, pp. 28, 32. 
 * Tke Wealth 0/ Nations. Bk. IV.. ch. u., p. 40, et seq. 
 
 The Tariff-Weapon 
 
 iiy 
 
 ticular class of workmen who were injured by our neighbours' prohi- 
 bition, bat of some other class." 
 
 The tariff-weapon of the New Protection, studied in the light of 
 "practical" poUtical and financial conditions, may be found, as other 
 phases of the new protective school, to be a duplex, protective measure 
 aimed at foreign markets. Thus, the preferential taxes of the New 
 Protection tax the home population in order to raise prices abroad- 
 the tariff-weapon taxes of the new era impose a double system of 
 taxation upon the home population, in order to control prices at home 
 and abroad at the same time, by means of the reduction of unnecessary 
 burdens. Through the action of the tariff-weapon, not only the im- 
 position, but the removal, of indirect burdens may be made the subject 
 of political and capitalistic manipulation, with all the advantages of 
 the process. 
 
 The tariff-weapon is a double-edged sword grasped by the blade and 
 the firmer the hold the deeper it sinks into the flesh of the wielder. 
 
 "But now let us look a little into this policy of retaUation," says Sir 
 Henry CampbeU-Bannerman. 1 "It is, of course, an obvious makeshift. 
 It pleases the Protectionists. It does not content them, but they know 
 quite well that if it is adopted, gradually ~ it may be speedily - their 
 whole programme will have to be taken. It captures the selfish interests 
 of individual trades and of individual men; it gratifies the fighting 
 mstmcts of the nation— and we have not to go far back to see what may 
 come when the fighting instinct of the nation is aroused. The design 
 is to prevent unfair competition - the foreigner can undersell us in some 
 cases, owing to advantages of climate, of wages, of hours of labour, social 
 conditions, or high tariffs, and the proposal is that the Government 
 should have power given to it to put on duties against such cases - in 
 other words, to gamble with the trade of the country behind the back 
 of Parliament. . . . Mr. Balfour's maxim is this: 'We must do to 
 other countnes what other countries do to each other.' I am familiar 
 with another maxim. 'Do to others as you would that they should do 
 to you.' ... On the whole, I myself should fall back upon the 
 antiquated maxim of Scripture, that it is better to do unto others as 
 we would that they should do unto us — and that is the doctrine of 
 rree Trade." 
 
 ^Speech Delivered ai Bolton, October isth, 1903. 1 
 
 ri! 
 
 . -I 
 
 i-'lii 
 
 1 
 
Bk. II 
 
 ImperiaKsm and Progress 
 
 119 
 
 Hti 
 
 CHAPTER VI 
 
 IMPERIALISM AND PROGRESS 
 
 A NUMBER of the phases in which the import duty may 
 be presented xmder both the Old and the New Protection 
 have been examined. The list is, however, by no means 
 exhausted, and may be extended through the development 
 of considerations suggested by the headings of the present chapter. 
 
 In Germany, the works of a nimiber of writers: List, Wagner, Olden- 
 burgh, Roscher, Hildebrandt, Schmoller, Knies, and others, have 
 formed the basis of more or less divergent schools. In England, 
 the New Protection develops a number of different positions in refer- 
 ence to political protection, retaliation, preference. Colonial policy, 
 Imperial imity and growth of Empire. In America, the older school 
 is enlarged and enriched by " dynamic and progressive " considerations. 
 As population increases, as wealth accumulates and manufacturing 
 interests grow in productive power, a country comes more and 
 more imder imperialistic and progressive influences. Its accumula- 
 tions of capital seek new channels of investment, and its more or 
 less redundant population, new opportimities for occupation and em- 
 ployment. Around these causes forms a more or less definite policy 
 of territorial and industrial growth and expansion of various kinds. 
 New fields of production are sought by the people; new markets for 
 their produce, and new employment for their reserves of industrial 
 energy and capital. Trade, it is shown, is the great agent of productive 
 development, and commerce the imfailing source of wealth. It thus 
 becomes at once necessary and desirable to open and protect new markets 
 abroad for manufactiu-es; a Colonial policy is suggested and maintained, 
 and spheres of influences become an important feature in foreign rela- 
 tions. All these conditions may apparently be furthered by means of 
 the regulation and control of the productive elements involved, which 
 imply the imposition of taxes on imports. 
 
 Many other considerations having relatively littie to do with indus- 
 trial conditions may be invoked in support of the regulation of trade 
 through the import duty: the growing burden of Empire, necessitating 
 
 118 
 
 supervision of the various manifestations of development, political and 
 sociological, as well as economic; the need of imperial and political 
 unity and of welding the interests of a great society into a consistent 
 whole; the danger of being dependent upon foreign sources of supply 
 in case of international complications; causes brought into existence 
 in Europe through the Napoleonic wars; the need of the regulation and 
 adjustment of commerce, in order that a society may pass from agri- 
 culture to a higher stage, in the harmonious union of industrial and 
 agrarian production. The converse proposition, the need of agricultural 
 development under certain conditions, as a supplement to mercantile 
 and manufacturing pursuits. Other phases of the policy may grow 
 out of Fichte's conception of a self-centred and contained social organ- 
 ization, in which administrative functions maintain a proper balance 
 between the different productive elements. 
 
 Again, it may be said that all societies, at any given time, but present 
 an ever varying phase of an endless evolution; no fixed principle is 
 therefore acceptable with reference to the changes of social conditions; 
 each problem, as it arises, requires solutions more or less distinct from 
 those of earher or later questions. Economics thus become of piu-ely 
 practical or empirical interest, demanding the most expedient policy 
 for the movement. The intelligent control of the taxing resources of 
 the nation may, it seems, present such a policy under certain conditions. 
 No temporary expedients, says another school, but, on the contrary, 
 a constant and consistent endeavour to realize the highest possibilities of 
 all kinds which the society may present; the taxing powers of the nation 
 should thus always be used in such a way that undeviating progress 
 may be assured. 
 
 Existing conditions, as found in any modern society, it may be said, 
 are not based upon general or theoretical conceptions of trade and 
 industry; but, on the contrary, upon a purely adventitious social de- 
 velopment, derived from an indefinite past and conditions over which 
 the present organizations have had no control. These organizations 
 have thus been developed through an evolutionary process, based upon 
 conditions more or less analogous to those existing; a process in which a 
 series of actual facts has evolved another series of such facts; that 
 in consequence, these facts, together with the industrial conditions 
 involved, may present a truer relation to the needs of society as con- 
 stituted in reality than the generalized conceptions of theoretical econ- 
 omists. These conceptions, it may appear, however reasonable and 
 
 i^ 
 
I20 
 
 The New Protection 
 
 Ft. 1 
 
 acceptable, from a philosophic or academic point of view, may fail 
 in sufficient recognition of the distinction between a rationalized cos- 
 mopolitanism and the complicated, political and industrial relations of 
 reality. 
 
 Other considerations may be advanced in support of a protective 
 policy for political and sociological ends, independent of economic result. 
 National and imperial homogeneity, the diversification of industry, 
 the need of constantly approaching the highest possible degree of social 
 efficiency in all its phases; the educational development of the working 
 classes; progress, intellectual and artistic, as well as political and in- 
 dustrial; national prestige, patriotism; the desirability of shedding 
 the light of civilization over an ever widening area through the protection 
 and retention of markets among less developed peoples, are some of 
 the phases of Protection to be presented in this aspect of the subject. 
 
 An examination of even a portion of the field shows that the policy 
 is lacking in neither volume nor variety of considerations advanced. 
 All considerations, however, unite in one unchanging position: faith in 
 a tax on imports to achieve any desired result. 
 
 An analysis of material of this nature shows that it may be divided 
 and classified along the following lines: The great bulk of protective 
 considerations may be grouped either with those phases discussed; or, 
 falling outside these, divided into two classes which may be called the 
 Progressive and the Practical. 
 
 The Progressive group presents for the first time the social organiza- 
 tion as a progressive imit, suggests the idea of political progress in its 
 wider aspects, and, consequently, progress in general. Considerations 
 of this class are involved with the use of the import duty as a fiscal, 
 as well as a protective, measure. Discussion may, therefore, be de- 
 ferred until this use has been examined. 
 
 The Practical group includes a number of considerations of importance, 
 both fiscal and protective, discussed later under an examination of 
 practical conditions. The attention may, therefore, here be turned to 
 purely fiscal systems. 
 
 I < 
 
 Part II 
 
 TAXATION 
 
 BOOK I 
 INDIRECT TAXATION 
 
 BOOK II 
 DIRECT TAXATION 
 
 
 ' ; -I 
 
 I 
 
 I 
 
♦ 'i 
 
 Book I 
 
 INDIRECT TAXATION 
 
 
 t 
 
 I 
 
 CHAPTER I 
 
 General Principles of Taxation 
 
 THE revenue of a society is derived from the resources of its 
 constituent units. These resources may be divided into 
 capital and revenue, and it seems clear that social revenue 
 can be derived permanently from individual revenue alone. 
 The first question met, therefore, with reference to social revenue 
 is: In what does individual revenue consist? 
 
 "The private revenue of individuals," says Adam Smith^ "arises 
 ultimately from three different sources: rent, profit, and wages. 
 Every tax must finally be paid from some one or other of these three 
 different sorts of revenue, or from all of them indifferently." 
 
 That all private revenue may be resolved into Rent, Profits, and Wages 
 is a position of no little importance, and may be given a moment's 
 attention; this position maybe based upon the following consideration: 
 Private economic incomes are created through exchange; these incomes, 
 therefore, deperid upon the relative values, or prices, of things exchanged. 
 Production occurs, however, through the combination of three productive 
 factors; Land, Capital, and Labour. The return to these three factors, 
 therefore, or Rent, Profit, and Wages, forms the exhangeable value or 
 price of the commodity produced. Price, in consequence, or all private 
 revenue from productive sources, is ultimately resolvable into its three 
 constituent elements: Rent, Profit and Wages. The subject is ex- 
 haustively treated in The Wealth of Nations,^ "The sources of in- 
 come," says Mill,2 "are rent, profits, and wages. This includes every 
 sort of income, except gift or plunder." A study, therefore, of Taxation 
 should be an analysis of the relation of the sources of social revenue 
 to these three sources of individual revenue. 
 
 * The Wealth of Nations, Bk. V., ch. ii., p. 413. 
 
 * Bk. I., ch. vi. 
 
 * Princi^ 0/ Political Economy, Bk. V., ch. iii.. § i, p. 496. 
 
 123 
 
124 
 
 Indirect Taxation 
 
 Pt. II 
 
 Bk. I 
 
 I ! 
 
 The nearest approach to a single imiversally acceptable proposition 
 in reference to Taxation is contained in the four principles drawn up 
 by Adam Smith, ^ which, as Mill 2 says, have become classical. They 
 may, therefore, be quoted in order to serve as a standard of excellence 
 to which different forms of taxation may be referred. 
 
 "I. The subjects of every state ought to contribute toward the 
 support of the Government, as nearly as possible, in proportion to 
 their respective abilities; that is, in proportion to the revenue which 
 they respectively enjoy under the protection of the state. The expense 
 of government to the individuals of a great nation is like the expense 
 of management to the joint tenants of a great estate, who are all obliged 
 to contribute in proportion to their respective interests in the estate. 
 In the observation or neglect of this maxim consists what is called the 
 equality or inequality of taxation. Every tax, it must be observed 
 once for all, which falls finally upon one only of the three sorts of revenue 
 above-mentioned, is necessarily unequal, in so far as it does not affect 
 the other two. . . . 
 
 "n. The tax which each individual is bound to pay ought to be 
 certain, and not arbitrary. The time of payment, the manner of 
 payment, the quantity to be paid, ought all to be clear and plain to the 
 contributor, and to every other person. Where it is otherwise, every 
 person subject to the tax is put more or less in the power of the tax- 
 gatherer, who can either aggravate the tax upon any obnoxious con- 
 tributor, or extort, by the terror of such aggravation, some present 
 or perquisite to himself. The uncertainty of taxation encourages the 
 insolence and favours the corruption of an order of men who are naturally 
 unpopular, even where they are neither insolent nor corrupt. The 
 certainty of what each individual ought to pay is, in taxation, a matter 
 of so great importance, that a very considerable degree of inequality, 
 it appears, I believe, from the experience of all nations, is not near so 
 great an evil as a very small degree of uncertainty. 
 ^ "m. Every tax ought to be levied at the time, or in the manner, 
 in which it is most likely to be convenient for the contributor to pay 
 it. A tax upon the rent of land or of houses, payable at the same term 
 at which such rents are usually paid, is levied at the time it is most likely 
 to be convenient for the contributor to pay; or, when he is most likely 
 to have wherewithal to pay. Taxes upon such consumable goods as 
 
 « The Wealth of Nations. Bk. V., ch. ii.. p. 414. 
 
 * PrindpUs of PolUical Economy, -Bk. V., ch. ii., | 1, p. 483. 
 
 General Principles of Taxation 
 
 I2S 
 
 are articles of luxury are all finally paid by the consimier, and generally 
 in the manner that is very convenient for him. He pays them by little 
 and little, as he has occasion to buy the goods. As he is at liberty, too, 
 either to buy, or not to buy, as he pleases, it must be his own fault if he 
 ever suffers any considerable inconvenience from such taxes. 
 
 "IV. Every tax ought to be so contrived as both to take out and 
 to keep out of the pockets of the people as little as possible over and 
 above what it brings into the public treasury of the state. A tax may 
 either take out or keep out of the pockets of the people a great deal 
 more than it brings into the public treasury, in the four following ways: 
 First, the levying of it may require a great number of officers, whose 
 salaries may eat up the greater part of the produce of the tax, and whose 
 perquisites may impose another additional tax upon the people. 
 Secondly, it may obstruct the industry of the people, and discoiu*age 
 them from applying to certain branches of business which might give 
 maintenance and employment to great multitudes. While it obliges the 
 people to pay, it may thus diminish, or perhaps destroy, some of the fimds 
 which might enable them more easily to do so. Thirdly, by the for- 
 feitiu*es and other penalties which those unfortimate in(Uviduals inciu: 
 who attempt unsuccessfully to evade the tax, it may frequently ruin 
 them, and thereby put an end to the benefit which the community might 
 have received from the employment of their capitals. An injudicious 
 tax offers a great temptation to smuggling. But the penalties of smuggling 
 must rise in propbrtion to the temptation. The law, contrary to all 
 the ordinary principles of justice, first creates the temptation, and then 
 punishes those who yield to it; and it commonly enhances the punish- 
 ment too in proportion to the very circumstances which ought certainly 
 to alleviate it, the temptation to commit the crime. Foiu*thly, by 
 subjecting the people to the frequent visits and the odious examination 
 of the tax-gatherers, it may expose them to much unnecessary trouble, 
 vexation, and oppression; and though vexation is not, strictly speaking, 
 expense, it is certainly equivalent to the expense at which every man 
 would be willing to redeem himself from it. It is in some one or other 
 of these four different ways that taxes are frequently so much more 
 burdensome to the people than they are beneficial to the sovereign." 
 
 Taxes may be so levied that they are recoverable by the original 
 contributor, or fall directly on the property upon which they are assessed. 
 The subject, therefore, at once falls into two fields — Indirect and Direct 
 Taxation. 
 
 'A 
 ( 'ii 
 
 Mil 
 
 I (1 
 
 h 
 
 k 
 
I 
 
 Bk. I 
 
 Taxation of Consumption 
 
 127 
 
 
 1 
 
 1 
 
 CHAPTER n 
 
 THE TAXATION OF CONSUMPTION 
 
 Section I — Advantages of Indirect Taxation, Section II — Taxing 
 the Foreigner. Section III — Indirect Taxation for Revenue. 
 Section IV — Convenience and Security of Indirect Taxation. 
 Section V — Expense of Indirect Taxation. 
 
 Section I — Advantages of Indirect Taxation 
 
 THE indirect method of deriving social revenue by means 
 of the taxation of goods consumed by the society has been 
 adopted by all nations. A policy of such wide and con- 
 stant application must possess certain advantages. These 
 are expressed dearly and authoritatively in the words of Prince Bis- 
 marck,^ who says: "I declare myself as essentially favourable to the 
 raising of all possible revenue by indirect taxes, and I hold direct taxes 
 to be an onerous and awkward makeshift. . . . Indirect taxes, 
 whatever may be said against them theoretically, are in fact less 
 felt. It is difficult for the individual to calculate how much he 
 pays, and how much falls upon his neighbours, but he knows how 
 much income tax he pays. . . . With direct taxes a man is 
 not asked: Can you on a pinch do without your beer; can you 
 smoke less; can you use less light (petroleum) of an evening? No, 
 he must pay the direct tax whether he has money or not, whether 
 in debt or not; and what is worse, distraint follows, and nothing has 
 a greater effect on a man's disposition than execution on account of a 
 few pence which cannot at the moment be extorted from the one who 
 
 owes them." 
 
 The same statesman advocates^ indirect methods upon other grounds: 
 "Indirect taxes are preferable to direct not merely because of the ad- 
 vantages in the mode of raising them, the superfluity of executions and 
 distraints, and the fact that the taxpayer fixes both the time and meas- 
 
 1 speech in the Reichstag, November 22, 1875- Quoted by W. Harbutt Dawson, Protection in Germany, 
 
 p. 54- 
 
 « Speech of February 22. 1878. Ibid p. SS- 
 
 126 
 
 ure of his taxation; their great superiority is to be sought in their 
 coimterbalancing effect, by virtue of which the indirect pressure of 
 taxes is distributed, in a manner varying according to local circumstances 
 and the conjunctures of trade, among all those persons who are affected, 
 from the production or import of the object taxed to its consumption. 
 While direct taxes, for the most part fall entirely and immovable upon 
 those liable, who cannot transfer them to others, and are often threatened 
 with distraint, an indirect tax is primarily taken from the one liable, 
 but he is able, so far as home products are concerned, to transfer the 
 tax he has paid to the buyers of his goods, while as for taxed articles 
 imported from abroad the producing country wholly or partially bears 
 the tax. Since the indirect tax is, as a rule, incorporated with the other 
 competing factors which go to the formation of price, as one of the less 
 important elements of a now indivisible whole, its burdensome effect 
 upon the individual, not apparently, but to a great measure actually, 
 disappears. Thus all the advantages advanced on behalf of direct 
 taxes can at the most claim a theoretical value. In theory the tendency 
 to affect the individual in proportion to his capacity, which lies at the 
 basis of these taxes, may be estimated too high; the practical form of 
 such taxes very seldom fits in with the theory. The financial capacity 
 of the individual taxpayer is not always expressed in his income, apart 
 from the general impossibility of calculating that income even approxi- 
 mately. Family position, health, and local and other circumstances, 
 which direct taxatioii disregards and must disregard, create the 
 greatest diversity in actual financial position even among persons of 
 equal income." 
 
 Another passage may be cited: "Those who want to see the electors 
 dissatisfied with the Government will hold fast to direct taxes; those 
 who seek to promote content in the population will be more for indirect. 
 That is the result of practice and experience, and I need not develop 
 the psychological reason for it. Whoever offers opposition wants 
 to see discontent among the people, and will devise means to find it 
 and to excite it, by representing the Government as incapable, malev- 
 olent, and perhaps only as clumsily." 
 
 It is impossible to study Bismark*s speeches of this period without 
 being impressed with the importance lent to indirect fiscal methods 
 and their practical superiority, in his mind, over other forms of 
 taxation. A study of these considerations, to which the great 
 majority of statesmen would doubtless subscribe, may permit the ad- 
 
fi 
 
 I 
 
 
 
 |l 
 
 II 
 
 128 
 
 Indirect Taxation 
 
 Pt. n 
 
 vantages of indirect systems to be summarized under the following 
 heads: 
 
 I. Certain indirect taxes may be collected wholly or in part from 
 foreign sources. 
 
 n. Indirect taxation involves the least friction in raising national 
 revenue. 
 
 in. Taxes levied upon consumption, fonning a part of the price 
 of commodities, are paid by the contributor at the most convenient 
 time or avoided; thus offering little difficulty in the supply of the social 
 needs, and, consequently, increasing the content and security of the 
 population. 
 
 rV. Indirect taxes, owing to their many advantages, are both 
 relatively and actually less felt and less expensive than other methods 
 of raising revenue. 
 
 These positions are discussed in the order named. 
 
 Section n — ^Taxing the Foreigner 
 
 The opinion that it is possible for a nation to derive a certain amount 
 of revenue from other nations is frequently met in economic discussion. 
 Many passages from the economists may be cited in its support, and 
 many instances occur in which price is not affected proportionately 
 to a duty. Mill presents an important demonstration of this position. 
 The most direct method of '^taxing the foreigner" is to levy a duty on 
 exports and add the amount of the duty to price; if the foreign demand 
 remains imchanged, the total duty may be recovered in the foreign 
 market, and the entire tax has apparently been collected abroad. 
 
 "By taxing exports," says Mill,i "we may, in certain circumstances, 
 produce a division of the advantage of the trade more favourable to 
 om^elves. In some cases we may draw into our coffers, at the expense 
 of foreigners, not only the whole tax but more than the tax: in other 
 cases, we should gain exactly the tax; in others less than the tax. In 
 this last case, a part of the tax is borne by ourselves: possibly the 
 whole, possibly even, as we shall show, more than the whole." 
 
 In reference to a supposed trade in broadcloth and linen between 
 England and Germany, Mill continues by way of illustration: "Sup- 
 pose that England taxes her export of cloth, the tax not being supposed 
 high enough to induce Germany to produce cloth for herself. The 
 price at w hich cloth can be sold in Germany is augmented by the tax. 
 
 » Principles of PolUical Economy. Bk. V., ch. iv., { 6., p 513. 
 
 Bk. I 
 
 Taxation of Consumption 
 
 129 
 
 This will probably diminish the quantity consumed. It may diminish 
 it so much that, even at the increased prices, there will not be required 
 so great a money value as before. Or, it may not diminish it at all, 
 or so little, that in consequence of the higher price, a greater money 
 value will be purchased than before. In this last case, England will 
 gain, at the expense of Germany, not only the whole amount of the 
 duty, but more; for, the money value of her exports to Germany being 
 increased, while her imports remain the same, money will flow into 
 England from Germany. The price of cloth will rise in England, and 
 consequently in Germany; but the price of linen will fall in Germany, 
 and consequently in England. We shall export less cloth and import 
 more linen, until the equilibrium is restored. It thus appears (what is 
 at first sight somewhat remarkable) that by taxing her exports, 
 England would, in some conceivable circumstances, not only gain from 
 her foreign customers the whole amount of the tax, but would also 
 get her imports cheaper. She would get them cheaper in two ways, 
 for she would obtain them for less money, and would have more money 
 to purchase them with. Germany, on the other hand, would suffer 
 doubly: she would have to pay for her cloth a price increased not only 
 by the duty, but by the influx of money into England, while the same 
 change in the distribution of the circulating medium would leave her 
 less money to purchase with." 
 
 This, is the most favourable case to be presented with reference to 
 taxing the foreigner. It may be asked, however, whether this passage 
 will bear analysis. It certainly seems somewhat remarkable, as Mill 
 says, that a nation could turn money from foreign sources into its 
 treasury by taxing its own exports. Were such results possible in 
 reality, the extreme unpopularity of the export duty would be difficult to 
 understand. The question is: What is the real incidence of the tax in Mill's 
 illustration? Who actually pays the export duty levied on English cloth? 
 The German consumer, in increased price, is the answer Mill gives to 
 the question. But, it may again be asked, why does the German 
 consumer pay the increased price? But one answer seems possible: 
 He pays the increased price because the cloth is worth to him the orig- 
 inal price plus the amount of the duty. He would have paid the 
 extra price, duty or no duty, as demonstrated by the supposed fact 
 that he does pay it. If the English exporter or producer had asked 
 the extra price, it could have been obtained independently of any duty. 
 In the case supposed the English exporter must be regarded as 
 
 II 
 
 M 
 
 ^ } 
 
I30 
 
 Indirect Taxation 
 
 Pt. II 
 
 i. 
 
 I 
 
 unfamiliar with the possibiHties of the German market. Had he 
 wished he could have added the duty to the price of cloth, and put that 
 amount into his own pocket in the form of increased profits, instead 
 of into the English Treasury in the form of an export duty. The 
 real value of the English goods in the German market was the first 
 price plus the duty, and when the English exporter pays the duty and 
 reimburses himself in higher prices, he pays the tax himself in reaUty ; 
 for his doth is worth the entire amount obtained. The fact that the 
 German demand for cloth continued unaffected by the duty, is proof 
 that the real value of the goods was the increased price. When, there- 
 fore, the Enghsh exporter sells his goods to the German for a certain 
 sum, part of which is already paid away in export taxes, the exporter 
 is loser to the extent of the tax; in other words, pays it himself; the 
 German consumer simply paying what the goods were worth to him 
 before, as well as after, the imposition of the duty. Instances such as 
 this, in which merchants are supposed to be ignorant of the value of 
 their own goods, must be rare; so exceptional, in fact, as to be beyond 
 the range of any available or productive administrative policy. What 
 happens when a foreign market seems to bear such a tax, is that the 
 taxing administration diverts the potential profits of a certain trade 
 from the pockets of the exporter to the public treasury, and the exporter 
 loses to that extent. The inconsistency in the iUustration seems to 
 Ue in the supposition that the original price paid in the German market 
 was the real value of the English goods, and that the tax forced the 
 German consmner to pay more than they were worth. 
 
 The conditions are sUghtly altered when the German demand for 
 doth, instead of remaining unaffected, faUs off; so that the money 
 value of the quantity exported, in spite of increased prices, is no greater 
 than at first. In this instance, there is no favourable flow of money as 
 before. "In this case," says MiU, "England gains the duty " As 
 before, England wiU coUect the tax, but the tax is paid as before and 
 for the same reasons, by her own exporters in the loss of possible 
 profits. The exporter loses his available profits and finds his trade 
 adversely affected. 
 
 In the third instance the tax is so heavy that but a portion of it may be 
 regained in increased prices, while the trade is adversely affected to an 
 extent still greater than before. The exporter in this case pays a part 
 of the tax directly, a part indirectly, as before, and his trade suffers 
 an added loss from the taxes imposed. 
 
 Bk. I 
 
 Taxation of Consumption 
 
 131 
 
 These three cases present the most advantages possible with reference 
 to raising revenue from foreign sources. On examination, however, 
 no such possibility seems to exist; and where such an attempt apparently 
 succeeds, it but results in the exporters of the taxing nation losing 
 the profits they might otherwise have obtained. If it were possible 
 for a nation to raise money from foreign sources in this way, why should 
 any tax be imposed other than an export duty? Or, if export duties can 
 produce but a part of the revenue, why are such taxes so rare? The 
 answers to these questions are not far to seek: first, because other nations 
 cannot even seemingly be taxed in this way to any appredable extent; and 
 second, because when such taxes are apparently recovered from foreign 
 sources, the exporters well know that they are losing so much profit. 
 
 Duties of this kind must be very light; they can never exceed the 
 difference between the price of the taxing nation and that of other 
 sources of supply, or the trade will cease. Again, the tax can never 
 be high enough to induce the foreigner to produce for himself; while 
 any given population can tax itself to any desired extent, it can only 
 seem to "tax the foreigner" in a very slight degree. The tax may produce 
 only what the possible, but unrealized, profits of a trade will allow. 
 Again, the foreigner pays the price voluntarily, and he alone is judge 
 of the values involved; he cannot be forced to pay the tax, he has the 
 possibilities of other sources of supply and his own production always 
 present; the apparent revenue, therefore, is not only slight but may 
 cease at any moment. 
 
 These supposed cases are ephemeral, and could occur but imder 
 peculiar conditions. Interference with natural commerce may, as Mill 
 points out, bring about very different results, as little expected as 
 desired. He shows how in certain circumstances, the imposition of an 
 export duty may cause the taxing nation not only to pay the entire 
 amount of the tax, but an additional sum to the foreigner. "It is 
 not an impossible supposition," he says, "that by taxing our exports 
 we might not only gain nothing from the foreigner, the tax being paid 
 out of our own pockets, but might even compel our own people to pay 
 a second tax to the foreigner." Such cases are evidently due to the 
 trade being unable to support the burden imposed, but, as they present 
 no possibility of raising funds from foreign sources, they need not be 
 examined. They show, if it is supposed that one nation can tax another, 
 that the foreign nation can respond in kind, and nothing is gained on 
 either side 
 
ii^ 
 
 Indirect Taxation 
 
 Pt. II 
 
 Bk. I 
 
 Taxation of Consumption 
 
 133 
 
 A tax on exports leaves the home market unaffected; the manufacturer 
 or exporter pays the tax and regains his contribution as best he can from 
 the foreigner. The export duty of this nature offers a direct antithesis 
 to the protective import duty; the latter protects the home market and 
 taxes the many for the benefit of the few, while the export duty taxes 
 the few for the benefit of the many, and protects the foreign market. 
 It is thus not remarkable that the export duty has never been popular 
 with the manufacturing and legislative classes, although the most direct 
 and obvious means of taxing foreign nations. 
 
 These considerations lead again to the import duty. Distinct con- 
 ditions are found in every trade; thus taxes on different trades may cause 
 different results. The conditions of a given trade might be such that a 
 tax upon foreign goods would not be entirely added to the original 
 price; where this occurs, the difference between the tax and the increased 
 price seems to have been derived from foreign sources. This suggests 
 another method of taxing the foreigner. 
 
 It is shown by taxing imports in a certain way, in specific trades, 
 that money may be caused to flow into the treasury from foreign sources. 
 The authority of Mill may be invoked in support of this position. Re- 
 ferring to the same trade as before he says, "Instead of taxing the cloth 
 which we export, suppose that we tax the linen which we import. The 
 duty which we are now supposing must not be what is termed a pro- 
 tecting duty, that is, a duty sufficiently high to induce us to produce 
 the article at home. If it had this effect, it would destroy entirely 
 the trade both in cloth and in linen, and both countries would lose 
 the whole of the advantage which they previously gained by exchanging 
 those commodities with one another. We suppose a duty which might 
 diminish the consumption of the article, but which would not prevent 
 us from continuing to import, as before, whatever linen we did consume. 
 "The equilibrium of trade would be disturbed if the imposition of 
 the tax diminished, in the slightest degree, the quantity of linen con- 
 sxmied. For, as the tax is levied at our own custom-house, the German 
 exporter only receives the same price as formerly, though the English 
 consumer pays a higher one. If, however, there be any diminution of 
 the quantity bought, although a larger sum of money may be actually 
 laid out on the article, a smaller one will be due from England to Germany: 
 this sum will no longer be an equivalent for the sum due from Germany 
 to England for cloth, the balance therefore must be paid in money. 
 Prices will fall in Germany and rise in England; linen will fall in the 
 
 German market; cloth will rise in the English. The Germans will pay 
 a higher price for cloth, and will have smaller money incomes to buy 
 it with; while the English will obtain linen cheaper, that is, its price 
 will exceed what it previously was by less than the amount of the duty, 
 while their means of purchasing it will be increased by the increase of 
 their money incomes." 
 
 In this case an import duty is placed on German linen, but the tax 
 must be so nicely gauged that the relation between supply and demand 
 will be affected in a certain way; the total quantity consiuned must 
 be less than at first, although the trade must not be endangered. If 
 the home demand is unaffected by the duty, it is evident that the entire 
 amount of the tax is added to the price and, as Mill says, "the whole 
 of the tax will be paid out of our own pockets." 
 
 If the total money value of the linen imported is equal to the first 
 price, plus the duty, the English consumer pays the tax in full. If 
 this told value is decreased owing to diminished demand, the entire tax 
 cannot be added to the English price; the taxed price of the linen will, 
 therefore, be equal to the original price, plus an amount less than the 
 duty. The difference between this amount and the duty is supposed 
 to be paid by the German exporter. Thus, if a certain quantity of linen 
 is originally worth one hundred shillings, the duty ten shillings, and the 
 price after the imposition of the duty raised five shillings, it is supposed 
 that the two countries each pay half the duty. This position may be 
 questioned. The profits derived by the German exporter enable him 
 to reduce his price by five shillings duty, and still continue the trade. 
 Before the imposition of the duty he would have been both able and 
 willing to have supplied the English market at a reduction of five shil- 
 lings; in other words, the English consumer has been pa)ang a price 
 five shillings greater than necessary. In this case the English consimaer 
 apparently pays five shillings out of his pocket in taxes, and loses five 
 shillings in preventing a reduction in price. It thus seems that the 
 ten shillings in the English treasiuy are, in reality, contributed by 
 the English consumer: five shillings in increased price and five shillings 
 in an artificially high price sustained by the tax. 
 
 Mill recognizes the fact that in such cases it is not the foreign pro- 
 ducer who pays the tax, as is generally supposed, but believes it to 
 fall upon the foreign consumer of English cloth; his reason is that a 
 flow of money, created in England's favour, has raised the price of her 
 exports, while at the same time, diminishing the available money in 
 
H 
 
 134 
 
 Indirect Taxation 
 
 Pt. II 
 
 6k. I 
 
 Taxation of Consumption 
 
 135 
 
 
 Germany. Even if this position is accepted, it seems that the 
 falling off in money supply in Germany must cause an exactly 
 compensating decrease in demand, and it is not easy to perceive how 
 decreased demand and diminished money supply could raise prices. 
 Mill accoimts for this by the flow of money to England increasing the 
 value of exports. Such arguments are necessarily of an attenuated 
 character; they may, however, be met by compensating considerations; 
 for if the price of goods can be raised abroad by means of an import 
 duty, the price could have been raised independently of any duty on 
 foreign goods; in other words, the higher price could have been obtained 
 for the asking; and the argument drifts in a circle and returns to con- 
 siderations suggested by the export duty. 
 
 Mill's considerations are complicated by the introduction of a flow 
 of money; another illustration may be presented reducing the subject 
 to simpler terms through the elimination of money. 
 
 A trade may be supposed, carried on between a civilized nation and 
 savages, the latter unfamiliar with the use of money; the trade consist- 
 ing in the exchange of ivory and firearms at a fixed ratio. The civilized 
 nation decides to tax the savage. An export duty is imposed upon 
 firearms. The traders increase the quantity of ivory demanded from 
 the savage to an equivalent extent. If the savage is willing to give the 
 increased amount of ivory, the real incidence of the tax falls upon the 
 exporters of firearms; for they might have added it to their profits 
 without any tax. If the savage will only pay part of the increased 
 amount of ivory demanded, the exporter pays a part of the tax 
 directly and the rest in losing a possible gain. If no extra quantity 
 of ivory can be extracted from the savage, the exporter of firearms 
 pays the entire tax himself. 
 
 It may be supposed, however, that the merchants and the traders, 
 appreciating these facts, induce their government to adopt a different 
 method of taxing the savage. They suggest an import duty on ivory, 
 instead of an export duty on firearms. The savage is again invited 
 to contribute an increased quantity of ivory for the same firearms. 
 As before, three courses are open to him; he may decline to pay any 
 portion of the extra price; in other words, the home demand for ivory 
 is unaffected and the home consumer pays the entire duty in increased 
 prices. Again, the savage may consent to pay a part of the extra 
 amount; that is, the home demand fall off relatively, and the home con- 
 sumer pays a part of the tax in augmented prices and the remainder 
 
 in forcing the price beyond that which the savage was ready to meet; 
 in this case, it is usually supposed that the savage pays a part of the 
 tax. Again, the savage may consent to give the entire extra amoimt of 
 ivory demanded; in this case the tax is collected in full by the govern- 
 ment, but the price is not increased to the home consumer. In this 
 instance, it is assumed that the savage has paid the entire amount of 
 the tax. In such a case the home consumer has lost the possibility of 
 the price reaching its normal level; which as events have shown, is the 
 original price less the duty. If such an instance could occur in reality, 
 owing to ignorance of the possibilities of any given trade, the home 
 consumer is paying an artificially forced price, and the real incidence of 
 the tax falls upon him, even in this exceptional case, as it apparently 
 does in all others. 
 
 The subject may be further simplified by supposing the goods con- 
 tributed by the savage to be gold instead of ivory. All the taxes can 
 do, in whatever form imposed, is to extract a greater quantity of gold 
 from the savage. If the quantity is increased, it is evident that the 
 producers or consumers of the taxing nation bear their real incidence 
 through the loss of the gold they might have put in their own pockets 
 without any taxes; for, in any normal trade, it is impossible to force 
 the savage to pay more than he is willing to pay, and natural condi- 
 tions, not taxes, fix the amount. If the quantity of gold obtained 
 is not increased, the savage is imtaxed in any way. How imnecessary 
 is the introduction of a balance of trade and a flow of money in 
 the study of international trade relations is shown by the fact that 
 the goods of the savage might be gold and ivory combined, without 
 altering conditions. But gold and ivory combined are typical of general 
 international exchange; gold bullion being the form in which money 
 circulates in such exchange. 
 
 These considerations are apparently unaffected by an import duty 
 levied upon goods held in bond for export, having, therefore, no home 
 market. In such circumstances, the price to the home consumer 
 cannot be affected, the duty is added by the exporter to the foreign 
 price. An import duty levied upon goods held for export is analogous 
 to an export duty; and to urge it as a means of taxing the foreigner 
 is to complete the circle of investigation and to return to considerations 
 suggested by an export duty. 
 
 All methods devised for taxing the foreigner, that is, all taxes levied 
 upon goods in such way that price is not proportionately increased 
 
 r 
 
 f 
 
 r 
 
 I 
 
 r L 
 
i» 
 
 136 
 
 Indirect Taxation 
 
 
 ! 
 
 Pt. II 
 
 are the taxation of the unrealized possibilities of trade; either the profits 
 of the home producer, or the expenses of the home consumer. It seems, 
 therefore, that such taxes are necessarily ephemeral; even the appearance 
 of taxing the foreigner can never be of importance. A system of revenue, 
 based upon the ignorance of traders of the potentialities of their own 
 trade, offers no secure or enduring foundation. 
 
 There are other reasons why such attempts to tax foreign nations 
 are futile. As such taxes can be levied but upon trade with any given 
 nation, it is obviously open to the foreign nation to tax goods in exacUy 
 the same way; thus rendering abortive any even apparent advantage 
 As MiU says,i "If England, in the case already supposed, sought to 
 obtain for herself more than her natural share of the advantage of the 
 trade with Germany by imposing a duty upon linen, Germany would 
 only have to impose a duty upon doth, sufficient to duninish the demand 
 for that article about as much as the demand for linen had been dimin- 
 ished in England by the tax. Things would then be as before, and 
 each country would pay its own tax. Unless, indeed, the sum of the 
 two duties exceeded the entire advantage of the trade; for in that 
 case the trade, and its advantage, would cease entirely." 
 
 Section III— Indirect Taxation for Revenue 
 Article i — General Considerations. 
 
 As methods of taxing the foreigner can never be productive or 
 lasting, and as the expenses of society must be met, the attention turns 
 to other means of providing revenue. The import duty again appears 
 and at last becomes a tax levied for fiscal purposes alone, and as 
 such is merged in the wider influences of a tax on consumption in 
 general; including the various forms of excise. Here for the first time 
 occurs the conception of a tax as a tax; attention up to the present 
 has been occupied with conceptions invented for the use of the taxing 
 powers of a society for something other than that for which these powers 
 naturally seem intended — the production of revenue. 
 ^ Indirect taxation of whatever nature, whether upon foreign goods 
 m the form of an import duty, or upon domestic goods as excise, offers 
 great advantages to an administration, and is not without apparent 
 advantage to a people. The advantages to the people are, for the most 
 part^^a negative character, consisting largely in the fact that it is 
 
 » PrindpUs of PolUkal Economy. Bk. V., ch. iv.. % 6. p. 516. 
 
 Bk. I 
 
 Taxation of Consumption 
 
 137 
 
 impossible to estimate the amount of their fiscal burdens or their ulti- 
 mate effects. It is again supposed that these taxes are either paid 
 at the most convenient time or avoided. Taxes thus absorbed in 
 price have, for these reasons, always possessed a certain popularity 
 even among those upon whom they bear most heavily. 
 
 The advantages of indirect methods from the administrative point 
 of view are evident. In the majority of cases they offer the admin- 
 istration an easy and certain form of collection; they keep the people 
 in ignorance of the amoimt they are taxed; they permit a thousand 
 uses of the taxing powers having nothing to do with revenue and re- 
 dounding to the advantage of politician or capitalist; they render a 
 government largely independent of the suffrage of the people and 
 permit an unpopular administration to support itself with ease, where 
 no direct taxes might be collected. Such advantages are too 
 great to be ignored and governments have shown no tendency to ignore 
 them; the result is that a large portion of the expenses of social organ- 
 ization is met to-day by means of taxes on consumption and industry 
 in some form or other. Taxes of this natiu-e form what is supposed to 
 be an approximate method of taxing incomes; the expenses of an in- 
 dividual naturally bear some relation to his possessions; and the taxing 
 of his consumption seems to place a more or less proportionate tax 
 upon his revenue. For purposes of taxation, commodities are divided 
 into luxuries and necessities. These two classes include different ob- 
 jects for fiscal attention; taxes levied upon one or the other producing 
 different results, both in the revenue derived and their effects upon 
 society. 
 
 Article 2 — Luxuries. 
 
 Taxes levied upon luxuries present, to a certain extent, the advantages 
 mentioned with reference to indirect methods. On the other hand, as 
 Adam Smith ^ says, "Such taxes, in proportion to what they bring into 
 the public treasury of the State, always take out and keep out of the 
 pockets of the people more than almost any other taxes. They seem 
 to do this in all the foiu* different ways in which it is possible to do it." 
 The four ways are: (i) the great expense in elaborate customs and 
 revenue administration required; (2) the discouragement to industry 
 when voluntary consumption is concerned; (3) corrupting practices; 
 (4) the necessary annoyance and complicated supervision. As taxes 
 
 1 Tht Weoltk of Nations. Bk. V., ch. iL. p. 494. 
 
 m 
 
138 
 
 Indirect Taxation 
 
 Pt. II 
 
 if 
 
 of this kind, are practically voluntary, they are subject to much varia- 
 tion, both in the amount of revenue produced and in the proportion 
 of total revenue created. They are thus open to two objections from 
 the administrative point of view, the most serious found in a tax; 
 those of variation in amount, and uncertainty in produce. Expensive, 
 variable, and uncertain, such taxes offer a correspondingly unsatis- 
 factory basis for revenue. 
 
 Article 3 — Necessaries, 
 
 Taxes on necessaries, from an administrative attitude, are greatly 
 preferable to those upon luxuries. The necessaries of existence, vital 
 and industrial, must be consumed by the entire people; such commodities 
 will, therefore, form a vastly greater bulk than luxuries. In price, 
 also, necessaries present important advantages; as they are cheaper, 
 they support a higher rate of taxation, and thus produce, actually and 
 relatively, a larger revenue than taxes upon higher-priced goods. This 
 revenue, again, will be more constant, as the consumption of necessaries 
 varies within narrow limits, and can never cease altogether. The 
 taxation of the staples of life and industry thus becomes the most con- 
 stant source of revenue derived from indirect methods, and as such, the 
 most important of modem fiscal systems. 
 
 The foregoing considerations are advanced from an administrative 
 point of view. There is another point of view, however, from which a 
 fiscal system may be studied: that which regards a society, as a whole. 
 Looked at in this light, the indirect taxation of necessaries presents a 
 different field for analysis and different considerations. The first 
 of these is the fact that such taxes must bear much more heavily upon 
 the poor than upon the rich, and thus form a proportionately unjust 
 and unsatisfactory source of revenue, irrespective of temporary advan- 
 tages. The taxation of vital needs places a sure and easy method of 
 raising revenue in the hands of an administration, independent of the 
 suffrage of the mass of the population, and may thus seem to lend per- 
 manence and stability to the society. On the other hand a fiscal system 
 bearing more heavily upon one class than upon another, and that class 
 always the more numerous, must lay the foundation for poUtical dis- 
 turbance, revolt, and final revolution; the very ease with which an 
 administration may support itself through indirect channels increases 
 the ultimate difliculties of the social organization. The foUowing con- 
 siderations serve as illustration : 
 
 Bk/I 
 
 Taxation of Consumption 
 
 139 
 
 It is evident that a much greater proportion of the revenue of the 
 poor is spent on the actual requirements of life and industry than 
 of the incomes of the well-to-do. Three fourths, or all the income 
 of the very poor man, may be spent upon the essential needs of 
 existence, and all the income so spent falls under the influence of taxes 
 on necessaries. On the other hand, such taxes will absorb a much 
 smaller proportion of the income of the richer classes. A man with 
 £50 a year in wages will be forced to spend nearly 100 per cent of 
 his total revenue upon necessaries. If these necessaries are taxed, 
 100 per cent of his income falls imder contribution. If the increased 
 prices caused by taxation amount to £5, he will pay that amount or 
 10 per cent of his income in taxes. On the other hand, it is possible 
 that a man in receipt of £50,000 income, might not expend £5,000 a 
 year in the purchase of the commoner needs of the people; in which 
 case, instead of 100 per cent of his income being taxed, only one 
 tenth part of it would contribute to the public treasury, and thus 
 instead of paying 10 per cent of his inome to the state, but one tenth 
 of his income would be taxed and he would contribute but one tenth of 
 10 per cent, or one one-hundredth of his greater resources. The poor 
 man will thus be taxed, ten times as heavily, proportionately, as the 
 rich man. 
 
 This form of taxation, in which contribution is levied upon the 
 necessaries of life, is universal to-day, and forms what might be called, 
 approximately, an inversely progressive income tax; that is, a tax 
 increasing as a man's poverty, and decreasing relatively to his wealth. 
 The smaller the income, the greater the proportion of taxation it is 
 forced to pay; the larger the income, the greater the proportion it may 
 escape. If indirect taxes on necessaries were assessed directiy, their 
 effects upon the two incomes considered would be as follows: On 
 assessment day the poor man, in all probability, would be compelled 
 to produce his entire £50 of income, 10 per cent of which would be 
 taken in taxes. The rich man, on the contrary, would be required to 
 produce that portion alone of his resources spent upon necessaries; in 
 the case supposed, he would be taxed but on £5,000, leaving £45,000, 
 or 90 per cent of his income untouched. The disproportion of 
 the burden thus placed upon the two incomes is evident; yet this 
 disproportion seems to be the least important of the results produced in 
 any society supported by the indirect taxation of necessary living 
 expenses. 
 
 j- 
 
 ^ii 
 
■il 
 
 if 
 
 
 140 
 
 Indirect Taxation 
 
 Pt. II 
 
 Where 100 per cent of one income is taxed, and but 10 per cent 
 of another, the larger, or least taxed income, possesses an untaxed 
 reserve, or saving capacity, of which the smaller, or most taxed incomes, 
 are deprived. Thus, an income of £50,000, taxed upon £5,000 alone, 
 might easily save £10,000 a year out of the total income; while an 
 income of £50, taxed on 100 per cent of its amount, could save nothing 
 or a disproportionate percentage. In the second year of the action of 
 such taxes, the first income will have added 10 per cent to its capital, 
 that is, the income, increased by 10 per cent, will be taxed upon a 
 smaller scale and possess a greater power of accumulation; the 
 smaller income, saving nothing and still taxed upon 100 per cent of 
 its amount. Where a society raises its revenue, wholly or in part, 
 therefore, by means of the indirect taxation of necessaries, a process 
 of accumulation sets in toward the larger or least taxed incomes. In 
 other words, the larger incomes will possess a progressively increasing 
 and untaxed accumulating power in proportion to the wealth repre- 
 sented, while smaller incomes will be denied such an untaxed reserve in 
 proportion to the poverty involved. The greater the income, therefore, 
 the greater will be its power of accumulation in reference to taxation; 
 the smaller the income, the less the possibility of creating a reserve 
 untaxed through living expenses. This process carried on generation 
 after generation, throughout the entire series of the incomes of a 
 society, can produce but one result: the distortion of the distribution 
 of the annual wealth of the society in such a way that the larger incomes 
 will absorb a constantly increasing proportion, while the smaller in- 
 comes will be brought under an increasing process of taxation. When 
 it is realized, in addition, that the action of taxation enforced through 
 living expenses may be greatly modified under specific conditions, 
 the effects of the disparity of burden become more marked. , 
 
 The forced action of such taxes, with reference to the two incomes 
 considered, would be as follows: the man with £50 a year is forced 
 to pay £5 in taxes, the man with £50,000, however, is not forced to pay 
 any more; thus the forced burden upon the smaller income is one tenth 
 part of its total, while the forced burden upon the larger income is 
 one ten-thousandth part of its greater amount. The forced effects 
 of such methods, however, do not end here; for by means of the pro- 
 tective theory, the ''balance of trade," ''infant industries," the 
 " pauper-labour," the "attraction of capital," "weapon-taxes," and so 
 on, an increased burden of taxation may be piled cumulatively upon the 
 
 Bk. I 
 
 Taxation of Consumption 
 
 141 
 
 smaller incomes, producing little or no revenue — producing nothing, 
 apparently other than the indefinite swelling of the larger incomes. 
 
 Section IV— Convenience and Security of Indirect Taxation 
 
 Article 1 — Convenience. 
 
 It may be urged in favour of indirect fiscal methods, in which the 
 tax becomes an indistinguishable part of price, that the contributor 
 pays the tax at the most convenient time; or escapes it altogether. 
 As Prince Bismarck has been quoted in support of this position, the 
 words of another German may be cited in the same connexion. 
 
 "On penalty of death," says a writer, 1 dealing with taxes on necessaries, 
 " Nature compels us to eat, and so on penalty of death we are compelled 
 to pay the bread and meat taxes. The man who fails to pay his direct 
 taxes may have his goods distrained, but he cannot be punished. But 
 the man who is unwilling to pay the taxes on bread and meat must die 
 of hunger. It is a truly diabolical system. For by increasing burdens 
 on the food of the people civilisation in general is deteriorated, the masses 
 are placed in the unworthy position that they can only satisfy their 
 most xu-gent needs, while the resources of culture which they create are 
 monopolised by those who have no right to them save the fact of possession. 
 The system of indirect taxation is in direct antagonism to civilisation." 
 
 Taxes of this kind, pressing upon wages everywhere, deteriorate 
 the whole food supply of the masses. " The German Labour Market 
 Correspondence for December, 1901, reported^ that the average price 
 of provisions had increased 7^ per cent, at Leipzig, and at Chemnitz 
 and at other Saxon towns 12^ per cent. So, too, Dr. G. Creuzbacher, 
 in his inquiry into the food consimiption of the town of Munich, shows, 
 that the consumption of meat has decreased even in that well-to-do 
 city during recent years. While the population of Munich increased 
 between 1881 and 1900 109.75 per cent , the consumption of meat only 
 increased 81.33 per cent., the decrease per head being from 94.8 to 
 81.8 kilogrammes. . . . Meanwhile, the consumption of horse 
 flesh has increased — a sinister fact whose significance cannot be 
 misunderstood. ... In his report for 1902 the factory inspector 
 for Leipzig said: *The economic conditions of the workers have 
 not impr oved during the past year, since the incomes of many 
 
 I We LebensmittUtdUe und die indirecten Steurer. cited by Dawson. Protection In Germany, p. 103. • 
 " Ibid., p. 197. 
 
 \U 
 
 { 
 
 I 
 
 I 
 
it 
 
 142^ 
 
 Indirect Taxation 
 
 Pt. II 
 
 Bk. I 
 
 M 
 
 I tt 
 
 sf 
 
 ! 
 
 workpeople have undergone a further diminution, partly owing to a 
 reduction of wages and partly owing to a curtailment of the hours of 
 work, and since the prices of the most important articles of food have 
 increased. The endeavour to economise shows itself in the diminution 
 of the consumption of meat, and the larger demand for horse flesh.* 
 The same thing was reported from Berlin, Hamburg, Halle, Altona, 
 Bochum, Dortmimd, Horde, Schwerte, and other industrial towns." 
 
 M. Yves Guyot^ gives a like account of the taxation of food products 
 in France: "In Paris," he says, "while taxes have increased, the 
 consumption of fresh meat has decreased relatively to the popula- 
 tion. . . . The annual ration of the adult Parisian is only 87 kilos 
 of meat instead of the 108 kilos of the soldiers. There has been a 
 decrease instead of increase." An analogous condition is shown in the 
 reports from Amiens, Bordeaux, Bourges, Grenoble, Lille, Limoges, 
 Lyon, Marseilles, Nantes, Nimes, Rennes, Roubaix.2 "The conclusion 
 is that the relative decrease of the consumption of meat in the 
 majority of large towns of France proves the injury resulting from 
 the taxes which increase the price 0.35 c. per kilogramme."* 
 
 Thus the convenience of indirect taxation of vital needs seems chiefly 
 the convenience of relative degrees of starvation; for the payment of 
 such taxes can never be long deferred or they will indeed be escaped in 
 this world at least. 
 
 Article 2 — Security. 
 
 Another advantage urged in favour of indirect fiscal methods is that 
 they permit the taxing of a people without their knowing how much 
 they pay or having any control over the process. A people which would 
 not tolerate a certain amount of taxation, if levied directly, may with 
 ease be forced to pay a much greater amount without being conscious 
 of the fact. As has been well said, when a direct tax would cause a 
 revolution, indirect methods permit the taxation of the bread out of 
 the mouths of a population with no results other than complaints of hard 
 times. Indirect methods thus render the administration largely in- 
 dependent of popular suffrage. Where an administration controls a 
 few distributive centres, it may live with ease upon the resources of 
 a population, even though it may be in a state of revolution. 
 
 1 Le Pain et la Viande dans le Monde, pp. 37-39. 
 •Ibid., p. 30. 
 *Ibid.. p. 49. 
 
 Taxation of Consumption 
 
 143 
 
 "When in Ireland, during the height of the Land League agitation," 
 says Henry George,^ "I was much struck with the ease and certainty 
 with which an unpopular government can collect indirect taxes. At 
 the beginning of the century the Irish people, without any assistance 
 from America, proved in the famous Tithe war that the whole power of 
 the English Government could not collect direct taxes they had resolved 
 not to pay; and the strike against rent, which so long as persisted in 
 proved so effective, could readily have been made a strike against 
 direct taxation. Had the government which was enforcing the claims 
 of the landlords, depended on direct taxation, its resources could thus 
 have been seriously diminished by the same blow which crippled the 
 landlords; but during all the time of this strike the force used to put 
 down the popular movement was being supported by indirect taxation 
 on the people who were in passive rebellion. The people who struck 
 against rent could not strike against taxes paid in buying the commodi- 
 ties they used. Even had rebellion been active and general, the British 
 Government could have collected the bulk of its revenue from indirect 
 taxation, so long as it retained command of the principal towns." 
 
 This passage shows the distinction between direct and indirect fiscal 
 methods, in relation to popular political movements. With control 
 of a few ports and industrial centres, an administration may support 
 itself indefinitely from the resources of a population, which, under a 
 direct system, would be in active revolution. This is not always a 
 disadvantage to the people so governed. Such a possibility may tide 
 them over ignorant and aimless popular agitations which, if successful, 
 would work wreck and ruin. But, when the necessary action of the 
 indirect taxation of necessaries is understood in relation to the distri- 
 bution of the wealth of a society, such security seems but the crust over 
 a volcano, whose certain eruption is but rendered more dangerous. 
 
 Section V — Expense of Indirect Taxation 
 
 Great expense is involved in all indirect forms of taxation, in com- 
 parison to the amount realized by the state. By indirect means of 
 raising social revenue the people are forced not only to pay the tax 
 in increased prices but in addition all profits and' interest charged 
 by traders on capital advanced in the payment of excise and customs, 
 together with a host of other augmentations, varying with conditions 
 and artic les. The following calculation serves as illustration: It was 
 
 ^ Protection and Pru Trade, p. 8z. 
 
 *l 
 
 il 
 
■V 
 
 t 
 
 144 
 
 Indirect Taxation 
 
 Pt. II 
 
 estimated at one time in England that an extra tax of 2s. per gallon 
 imposed by Parliament upon ardent spirits would produce £1,000,000. 
 Based on the conditions in Scotland, the following estimates may be 
 made. When the Act imposing the 2S. tax came into operation, 
 meetings were held by spirit dealers in Edinburgh and Glasgow; the 
 resolution adopted was that the price of whiskey should be increased by 
 one penny per gill. There being thirty-two gills in the imperial gallon, 
 the increased price was at the rate of 2s. 8d. per gallon, one third 
 more than the increased tax imposed by Parliament. The duty on 
 all spirits was, however, charged per gallon on what was techni- 
 cally called **proof strength." The spirits were sold to consumers 
 at about the proportion of one gallon of water to four gallons of 
 proof spirits. 
 
 "Starting, then, from this point," says a writer,^ treating the sub- 
 ject in this connexion, "with a new calculation respecting the total 
 burden imposed on the public, these are the results: On four gallons 
 of proof spirits Parliament has imposed an additional duty of 2S.'j>er 
 gallon or 8s. in all. The publicans and retail spirit dealers, by the addi- 
 tion of one gallon of water convert these four gallons into five of the 
 strength which is desired by the purchasers; and in accordance with the 
 resolutions already referred to, they charged an increased rate of 2S. 8d. 
 on each of these five gallons or 13s. 4d. in all. Thus while the Chan- 
 cellor of the Exchequer receives 8s., the public pays 13s. 4d., to enable 
 him to collect the smaller sum. To obtain £1,000,000 then from 
 these parties, it is necessary to impose an additional burden of 66f 
 per cent., or £666,666 in all." 
 
 It is estimated that equitably devised direct taxes cost on the average 
 2^ per cent in the collection, on which basis the cost of the revenue 
 derived would have been but £25,000. 
 
 "It is, therefore, the same," says Mr. M'Laren, "as if aland owner 
 should prefer to borrow £10,000 at an expense of 66f per cent., or 
 £6,666 to obtaining it at the rate of 2J per cent, or for £250 in all by 
 mortgaging his estate." 
 
 The above estimates refer to excise taxation. The import duty is 
 more extravagant for the reason that it raises the price of the home 
 product while not bringing a shilling of revenue into the treasury: two 
 soiurces of supply are taxed while one alone produces income. This is 
 
 > Indirect Taxation, Duncan MXaren. Read at a meeting of the Sodal Sdesce Association. £din< 
 burgh, 1860. 
 
 Bk. I 
 
 Taxation of Consumption 
 
 145 
 
 shown by a study of the following estimates, based upon the supposi- 
 tion that England some day decides to tax her grain supply, as has been 
 suggested, both for revenue and preferential objects: 
 
 With a duty of 2s. per quarter, or about 6d. per cwt. (i cwt. = 112 
 lbs.; I quarter = 480 lbs.) Mr. Chiozza-Money,i gives the following 
 figures, representing the total grain consumption of the United King- 
 dom for 1902: 
 
 From foreign countries . 
 From British possessions. 
 Home grown 
 
 Cwts. 
 . . . 176,000,000 
 35,000,000 
 . 160,000,000 ' 
 
 Cvfts, 371,000,000 
 
 "At 6d. per cwt.," he continues, "the extra cost to the consumer would 
 be £9,275,000, but the revenue would gain only 6d. per cwt. on the 
 foreign supply, viz., £4,400,000." 
 
 Thus revenue raised through import taxation swells the price of 
 all goods affected directly or indirectly, while only a part of these pro- 
 duce revenue for the state. 
 
 A striking instance of the waste of wealth due to taxation of this 
 kind is reported from Australia : " Meat in Victoria," says Mr. Chomley 2 
 "has been raised to great prices by the stock tax on sheep and cattle 
 coming into the Southern Colony from the pastures of New South 
 Wales and Queensland. . . . Another effect of the stock tax, 
 entirely logical, yet so grotesque and tyrannous as to shock even con- 
 vinced protectionists, arose through the admission of sheep in bond 
 to be slaughtered in Melbourne and exported as frozen mutton to Eng- 
 land. The sheep's heads were not exported, and during the time of 
 severe distress in Melbourne poor women and children visiting the 
 slaughter yards obtained there a nutritious article of food which was 
 a blessing in many households. But on these heads no duty had been 
 paid, and therefore a paternal protectionist government had to devise 
 means to prevent them from going into consumption and afflicting 
 the people with the curse of cheap food. Accordingly they sent to the 
 abattoirs customs officers and barrels of kerosene oil. The heads were 
 piled in great heaps, soaked with oil, and burned before the eyes of 
 hungry women and children." 
 
 * Through Preference to Protection, p. 35. 
 
 • \.^^°*^**^ »*» Canada and Australasia. C. H. Chomlqr, p. x68. Additional instances of the waste in 
 mdirect methods will be found on p. 240, 
 
 „,,r • ■ i 
 
 li 
 
146 
 
 Indirect Taxation 
 
 Pt. II 
 
 6k. I 
 
 Taxation of Consumption 
 
 147 
 
 i -_ 
 
 Under ordinary conditions, such demonstration of the destructive 
 nature of indirect taxes would never appear; the consumer, instead of 
 having his food and the necessaries of his trade burned before his eyes, 
 is compelled to work longer to obtain the same goods. The destruction 
 of his wages and the return for his labour is, however, no less real in one 
 instance than in the other; his strength and wages are burned instead 
 of the things they buy. 
 
 Indirect taxation of consumption redounds to the disadvantage of 
 the people supporting such measures in many other ways. Taxes 
 on consumption diminish the quantity consumed; where the actual 
 amoimt is not checked, the possible gain is restricted. All industries 
 not supported by indirect taxation will find their markets suppressed 
 by such methods. An instance may be presented in which an indirect 
 tax levied by England upon a foreign population suppresses English 
 industry. Among the most effectually indirect taxes in existence is 
 the Indian salt tax. Here, the English people lift the burden from their 
 own shoulders and place it upon those of their fellow-subjects in India. 
 Such methods at fost sight seem the height of political wisdom; the 
 English consimier at home is imaffected, and the Indian Administra- 
 tion obtains the entire revenue. The average annual consumption of 
 salt in England is 62 lbs.; 25 lbs. are considered essential; the average 
 consumption in India is about half that amoimt, while the consumption 
 of the upper classes will reduce the average still lower for a large portion 
 of the Hindu millions.* 
 
 The medical profession traces the prevalence of leprosy and other 
 diseases to the lack of sujQ5cient salt,^ and the cattle and agriculture of 
 the coimtry seem vitally affected by the same cause.' What are the 
 effects of such restricted consimiption on English trade? 
 
 "It is also very curious," says Mr. Pennington,* "to see what the 
 merchants and others concerned in the British salt trade have to say 
 about this question of the consimiption of salt in India when the falling 
 off begins to touch their pockets. 'To the population of India,' 
 says an advocate of more English salt for Indian consumption, *the 
 complete abolition of the salt tax would be a reform beneficent beyond 
 conception. The consumption of salt would probably be trebled within 
 
 1 Mr. J. B. Pennington. B. L. (CanUb.). The Imperial and Asiatic Quarterly Renew, October. 1904. 
 
 pja97- 
 > Ibid.. Proceedings of the East India Association, pp. sBa-3. 
 
 * Ibid. p. 303. 
 *Ibid.. p. 397* 
 
 three years — ' and yet no one would eat more salt than was good for 
 them. 'Finally, the salt-producers and shippers have worked them- 
 selves into the belief that the salt tax ought to be abolished. On this 
 point they say: The question of the complete abolition of the salt tax — 
 not inaptly termed the ** bread tax of the Hindu " — is probably the most 
 important question that can receive the attention of members of the 
 English salt trade as a united body at the present time, and so on.' " 
 The following* is an extract from a letter to Mr. Pennington in this 
 connexion: 
 
 London, July 23, 1904. 
 
 Dear Sir: 
 
 I have read with great pleasure the report you have been good enough to send me 
 of yoxu: paper on the Salt Tax in India, a subject which much interests me, as fifty 
 years' experience in the salt trade of this coxmtry has often brought it directly to my 
 notice. . . . 
 
 From this point of view the Indian Salt Tax is not exclusively an Indian question, 
 but one which also materially affects many interests in England itself; and now that 
 we are invited to ** think imperially," it cannot be inappropriate to deal with the matter 
 on the broader basis, and consider it in its relation to British Imperial interests. It 
 is computed that the consumption of salt in India, with its population of 240,000,000, 
 would soon be trebled were the duty abolished, and this calculation is to some extent 
 supported by the fact that since the reduction of the duty on March 31st of last year 
 the consumption h£^ greatly increased, so that, besides the larger demand for salt 
 manufactured in India itself, the exports from Liverpool to Calcutta, etc., for the six 
 months to the end of Jime last amoimt to 140,000 tons, against 88,000 tons in the same 
 period of 1903, and 82,000 in the same period of 1902. This extra trade benefits not 
 only the English salt makers, both employers and employed, and the English railways 
 and canals engaged in transporting it to the coast, but is also a boon to the British 
 shipowner and sailor, giving them better employment outward to the Indian ports* 
 Nor does the advantage end there, for the larger supply of tonnage thus available to 
 the Indian producer for the export of his rice, wheat, jute, cotton, linseed, etc., is an 
 item of great importance to the development of the Indian export trade with other 
 countries. 
 
 Besides this, it is obvious that the large increase in the consumption of salt in India, 
 which it is expected would result from the abolition of the tax, would give emplojonent 
 to an enormous number of hands required for its distribution throughout the country, 
 would add to the revenue of the railways and canals of India, and increase the profits 
 derived from the salt trade by those engaged in its manufacture. When all this is 
 taken into account, I believe the advantages accruing to the various interests enumer- 
 ated above, added to the direct benefits derived by the Indian natives from the freer 
 use of salt in their food, in the curing of fish, the preservation of meat and vegetables, 
 the feeding of catde, the cultivation of land, and in many other ways, would, if it 
 were possible to express them in figures, be found to far outweigh the amoimt (some 
 
 * Ibid., pp. 307-8. 
 
 •^ 
 
148 
 
 Indirect Taxation 
 
 Pt. II 
 
 Bk. I 
 
 Taxation of Consumption 
 
 149 
 
 - t 
 
 \ i 
 
 li * 
 11 
 
 »■ 
 
 I 
 
 £6,000,000, I believe) of the revenue derived by the Indian Government from the 
 
 
 J. B. Pennington, Esq., 
 Yannouth, Isle of Wight 
 
 I remain, dear sir, yours truly, 
 J. W. Fox, 
 Late managing Director Weston & Westall, Ltdt^ 
 London agents to the Salt Union. 
 
 This most indirect of indirect taxes thus suppresses a great English 
 industry, with all its ramification of transportation and distribution, 
 . and must, consequently, check English production and the demand for 
 English labour. Cicero* says that the Romans used to protect their 
 growers of grapes and olives by forbidding the people beyond the Alps 
 to raise these articles of food. This destroyed not only the vineyards 
 and orchards of others, but the labour of the Roman people, required to 
 pay the increased price. The modern duty has the same effect; it 
 stifles productive industry at home and abroad, and destroys the labour 
 necessary to pay taxed prices. 
 
 The Continental System of Napoleon was one of the most elaborate 
 networks of indirect taxation ever woven; and the amount of wealth 
 it destroyed in France must have been enormous. A striking example 
 of such destruction is found in the pages of Thiers. 2 Speaking of 
 Marseilles, formerly the queen of the Mediterranean and since become 
 its queen again, he says: "For twenty-five years she saw more than 
 three hundred vessels of commerce rotting at her quays without 
 moving. . . . The only distraction in her distress was when some 
 captured English merchandise was abandoned to the flames under the 
 eyes of a people dying of hunger; watching the destruction in a few hours 
 of riches upon which they might have lived. 
 
 "Bom and brought up at Marseilles," he adds, "I still recall this 
 spectacle and seem to see the rank of motionless vessels ranged in 
 lines from the place de la Cannebiere as far as the fort Saint- Jean. 
 A child at the time, and often on the quays, I used to study these vessels; 
 I knew their names and appearance as one knows the houses in a famil- 
 iar street, and I never saw one move during the last years of the Em- 
 pire. Its fall," he says, "was the occasion of a joy such as I have 
 never seen in any other time or circimistances." 
 
 In this way is seen at a glance how the taxes imposed by iNapoleon 
 in support of his Continental System destroyed all the wealth repre- 
 
 ^ Commonweaith, IIL, ix. ^ 
 
 * « Histoirc dc I'Empire, Tome IV., Livre XXXYH, p. 243. 
 
 sen ted in these vessels; all the wealth their natural occupations might 
 have created; all the wealth which might have been enjoyed and con- 
 sumed by the men employed in working, loading and imloading them, 
 during that period both at home and abroad; all the wealth burned 
 in Marseilles and at other places, together with all the wealth 
 wasted throughout the country, on account of the artificial scarcity 
 due to such methods. Direct destruction due to taxation of this kind, 
 such as the burning of food products, or the locking up of shipping 
 is rarely seen in its crude forms. During the Napoleonic regime, the 
 people of central France did not see a portion of their crops and vine- 
 yards burning or rotting before their eyes, but their produce and labour 
 were destroyed, however, exactly as in a fire, by means of forced prices 
 on one side, and the strangling of the consuming powers of the people 
 on another. And, as the Indian salt tax starves the cattle and population 
 of India, does it force English labour out of employment, reduce the 
 returns to English shipping, force up the price of foodstuffs in the Eng- 
 lish market, through the checking of tonnage in foreign ports, and react 
 adversely upon the population of England, in direct proportion to the 
 consuming powers suppressed. Permanent and profitable commerce 
 cannot be forced; commerce must be profitable to all concerned, or 
 cease; and where ports or markets are forced or protected by artificial 
 fiscal methods, the nation imposing the taxes congests its wealth and 
 checks its industrial development through the stifling of consumption. 
 
 The advantages of indirect systems have been summarized under 
 four headings: (i) taxing the foreigner; (2) the best source of 
 revenue; (3) convenience and security; (4) expense. Counter con- 
 siderations maybe presented: 
 
 I. There seems reason to believe that no nation can ever tax foreign 
 sources in reality. Where such results are temporarily apparent, the 
 nation burdens the unrealized possibilities of its own commerce. It 
 is, moreover, always possible for foreign nations to retaliate in kind, so 
 that no even apparent advantage could be gained for any length of time. 
 
 II. Indirect taxes, in order to produce important or constant 
 revenue, must be laid upon the necessaries of life and industry. The 
 taxation of such necessaries is, in consequence, the same thing as the 
 direct assessment of living expenses. As the necessary living expenses 
 of the poor form a relatively larger part of income than the necessary 
 living expenses of the rich, the forced effects of such taxation will be 
 the same thing as an inversely proportionate income-tax; levying 
 
ISO 
 
 Indirect Taxation 
 
 Pt. II 
 
 
 ; 1 
 
 If 
 
 increasing tribute upon poverty, and exempting wealth in proportion 
 to its amount. 
 
 m. The convenience created by indirect methods seems largely 
 measured by the convenience of different forms of starvation, and 
 their security dependent upon ignorance and the time necessary to 
 bring about the inevitable political upheaval due to disproportionately 
 placed burdens. 
 
 IV. The expense of such taxation is in two ways greater than neces- 
 sary: First, in order to raise revenue from consumption, it is essential to 
 raise the price of all soiurces of supply, although but few of these pro- 
 duce revenue. Again, checks on consumption, at home or abroad, 
 destroy the industries which might supply the suppressed demand, 
 resulting in the loss of the wealth such markets might create. 
 
 The subject may be left with the following passages from Adam 
 Smith and Mill. "A tax upon the necessaries of life," says the former,^ 
 "operates exactly in the same manner as a direct tax upon the wages of 
 labour.** To the extent in which wages are influenced by the price 
 of provisions, wages will rise with such taxes, but, as wages are controlled 
 chiefly by the supply and demand in the labour market, and not by the 
 price of provisions, such taxes act as a direct burden upon wages which 
 can apparently never raise the return to labour beyond mere subsistence 
 as long as an imemployed supply exists. 
 
 "There are some forms of indirect taxation," says Mill,^ "which must 
 be peremptorily excluded. Taxes on commodities, for revenue purposes, 
 must not operate as protecting duties, but must be levied impartially 
 on every mode in which the articles can be obtained, whether pro- 
 duced in the country itself, or imported. An exclusion must also be 
 put upon all taxes on the necessaries of life, or on the materials or 
 instruments employed in producing these necessaries. Such taxes 
 are always liable to encroach on what should be left untaxed, the in- 
 comes barely suflficient for healthful existence. 
 
 Taxes on consumption, in the light of the foregoing considerations, 
 are at variance with the principles laid down by Adam Smith. 
 
 > The Wealth of Nations. Bk. V., ch. iL, p. 467. 
 
 • FrimdpUs of Political Economy, Bk. V.. ch. vL. I a, p. s»3» 
 
 "Book II 
 
 DIRECT TAXATION 
 CHAPTER I 
 
 PERSONAL PPOPERTY 
 
 Section I — Classification of Property. Section II — Income, 
 III — Inheritance, Section IV — Credits. Section V- 
 Section VI — Miscellaneous Taxes, 
 
 Section 
 ChaUds. 
 
 t f 
 
 Section I — Classification of Property 
 
 NO DETAILED examination of the great number of specific 
 imposts classed as direct is essential to the present purpose. 
 The attention is occupied with the sources from which direct 
 taxes may be derived, for the purpose of separating and clas- 
 sifying these sources with reference to their relative suitability in the 
 production of social revenue. 
 
 Direct taxes, as all others, must fall upon property in some form. 
 The chief distinction between indirect and direct schedules is that the 
 latter reach immediately the property upon which the burden is sup- 
 posed to rest. A study of direct systems, therefore, leads to an analysis 
 and classification of the different forms of property. General property 
 falls into two great classes: personal and real; in legal terms, movable 
 and immovable property. These, again, may be subdivided for fiscal 
 
 purposes as follows: 
 
 /. Personal Property. 
 
 I. Income. 2. Inheritance. 3. Credits. 4. Chattels. 
 
 5. Miscellaneous^ 
 
 //. Real Property. 
 
 I. Capital Value of Improvements. 2. Capital Value of Land. 
 
 3. Rental Value of Improvements. 4. Rental Value of Land. 
 
 Section II — Income 
 The principle of contribution in proportion to means forms the most 
 
 V 
 
152 
 
 Direct Taxation 
 
 Pt. II 
 
 acceptable basis for inquiry into the relative merits of different sources 
 in supplying social revenue. This principle is the first laid down by 
 Adam Smith, and upon it, as he says, depends the equality or in- 
 equality of the burden of taxation. 
 
 The principle of contribution, in accordance with means, suggests 
 the levjdng a certain percentage on incomes. The income-tax, at first 
 sight, appears to be the tax fulfilling such conditions most satisfactorily. 
 The income-tax is, however, open to serious objections; creating diffi- 
 culties in collection, and inequalities in incidence, not at once obvious. 
 Perhaps the first difficulty found is the variable nature of incomes 
 which creates either a variable revenue for the state, or a variable amount 
 to be paid by the contributor. Individual incomes vary within a wide 
 range, at times cease altogether, or develop rapidly in certain circum- 
 stances. The result is, that an income-tax may be subject to varia- 
 tion, either in the amount derived or in the amoimt payable by the 
 individual; both among the most serious objections to a tax, and 
 this upon the presumption that the income-tax could be assessed and 
 collected with fairness and regularity. Experience shows, however, that 
 such a supposition is far from the truth; the income-tax in practice 
 is widely removed from such a tax in theory. The following are some 
 of the causes to which this difference may be traced: 
 
 The same percentage upon different incomes does not constitute an 
 equal burden. A man in receipt of an income of £50 paying £5 in 
 taxes pays, in reality, a far greater tax than a man enjoying a revenue 
 of £10,000 paying £1,000 in taxation. This disparity is so evident 
 that all systems of income taxation attempt to avoid it by different 
 means. Again, a certain percentage of the same amount of revenue 
 derived from different som^ces may constitute an imequal contribution. 
 An income, for example, derived from investment, and the same income 
 derived from necessarily continued personal effort, represent distinct 
 subjects for taxation. 
 
 The graduated assessment, together with the exemption of incomes 
 only sufficient for bare subsistence, form the most familiar methods of 
 avoiding these difficulties. Thus, if £50 is regarded as the minimum 
 income essential for existence, only incomes above that amount may 
 be made subject to contribution and that in proportion to their value; 
 the larger the income the greater the percentage due. These suggestions, 
 however, are necessarily open to the objections of discouraging saving 
 and industry in both the poorer and richer classes. "To tax the larger 
 
 Bk. II 
 
 Personal Property 
 
 153 
 
 incomes at a higher percentage than the smaller," says MilP "is to 
 lay a tax on industry and economy; to impose a penalty on people for 
 having worked harder and saved more than their neighbours. It is 
 not the fortunes that are earned, but those which are unearned, that it 
 is for the public good to place under limitation. A just and wise leg- 
 islation would abstain from holding out motives for dissipating rather 
 than saving the earnings of honest exertion." 
 
 If the progressive income-tax appears of advantage in Ie?sening the 
 difference between the richer and poorer classes, the causes of the dif- 
 ference are neglected. A wise administration, as Mill points out, 
 should not attempt to regulate inequalities, but, on the contrary, elimi- 
 nate the artificially created and sustained inequalities of opportimity 
 constituting the original cause of the differences involved. Under 
 any system of income taxation, the assessment must rely largely 
 upon individual estimates, and even with most careful administrative 
 methods it is practically impossible to collect an income-tax pro- 
 gressively; thus, not only may the larger income avoid adequate 
 contribution, but a large portion of such property escape taxation 
 altogether. 
 
 The most effective method of reaching an income is at its sources, 
 by authorizing corporations and employers to deduct the tax from 
 interest, the amounts due on securities or salaries, and to empower 
 tenants to deduct the amount of the tax from rent. This cannot be 
 done progressively, as corporation, employer, and tenant have no means 
 of estimating the total amount of an income; they deal with but a 
 portion of the whole. If, on the other hand, no attempt is made to 
 reach the income at its source, the equable collection of the tax is more 
 problematic, little remaining upon which to rely but the statement of 
 individuals or corporations. Again, an income-tax would collect nothing 
 from unused or undeveloped properties, however valuable; the specu- 
 lator in land, holding his property out of use, would not be taxed, great 
 as might be its annual increase in value. The real-estate owner, on the 
 contrary, who added to the value of his holdings, by means of develop- 
 ment and improvement, would be taxed proportionately. The man 
 whose wealth might have greatly increased, but who added nothing to 
 the social wealth, would be exempt, while the productive efforts of the 
 other would be laid under contribution. 
 
 Incomes again differ not only in nature but duration, presenting 
 
 » Principles of Political Economy. Bk. V.. ch.. ii.. S 3. P- 487- 
 
 <1 
 
154 
 
 Direct Taxation 
 
 Pt. II 
 
 I 
 
 i 
 
 
 
 
 Other grounds for distinctions in value, and widely different subjects 
 for taxation. Incomes not only vary as earned through personal 
 exertion and derived from invested capital, but these latter may be 
 permanent or temporary, and differ again within a wide range, thus 
 presenting difficulties of relative valuation. 
 
 Again, the man whose income is due to his own efforts is under 
 greater obligations to save a part of his resources in order to provide 
 for those dependent upon him than the man deriving his means from 
 invested capital; yet, when savings are set aside or invested, they be- 
 come subject to taxation. The contributor, therefore, under the greater 
 necessity for economizing his resources, pays not only upon his original 
 income, but is taxed in proportion to the amount he is able to save; 
 he pays once upon his original income and twice upon the amount of 
 savings for his old age or those to come after him. Such considerations 
 suggest the exemptions of savings in any system of income taxation. 
 Here, however, a question arises with reference to the nature of savings: 
 whether an amoxmt reserved from income is to be permanently saved, 
 or spent at some indefinite period after the returns are made. There 
 is obviously no satisfactory reply to such a question. The possibility 
 might be suggested of fixing a different rate for personal or invested 
 incomes. Such a distinction in rate could never bear any accurate 
 relation to the incomes under contribution. Terminal incomes, for 
 example, of different periods of diu-ation, vary in value. Again, 
 incomes gained from whatever source and under whatever conditions 
 vary indefinitely in value, owing to circiunstances impossible for an 
 administration to take into account. Health, ability, age, family 
 position, and other considerations may cause two incomes of the 
 same kind and amoimt to bear no relation to each other as subjects 
 for taxation. 
 
 "It is to be feared, therefore," says Mill,* after a careful analysis 
 of the income-tax, "that the fairness which belongs to the principle 
 of an income-tax cannot be made to attach to it in practice: and that 
 this tax, while apparently the most just of all modes of raising a revenue, 
 is in effect more unjust than many others which are prima Jade more 
 objectionable." 
 
 The income-tax presents a more or less unjust and inconvenient 
 source of revenue, however estimated, assessed or collected. It pos- 
 sesses, however, one great superiority over all indirect forms: that of 
 
 > Principles of PolUical Economy, Bk. V., ch. iii, I S, p. soa 
 
 Bk. II 
 
 Personal Property 
 
 iSS 
 
 economy ; it involves no waste or destruction of property or labour, and 
 relatively little expense other than the cost of collection. 
 
 Section III — Inheritance 
 
 A tax levied upon inheritance is not open to many objections urged 
 against the assessment of incomes. There is, however, one important 
 objection to taxation of inheritance. As estates subject to death 
 duties are generally transferred in the form of realized capital, the 
 inheritance tax becomes not a tax upon revenue, but an assessment of 
 capital. The variations in the value of capital in different hands and 
 under different conditions create difficulties and inequalities in the 
 burden imposed by this tax analogous to those in the assessment of 
 income. Irrespective of these considerations, the inheritance tax 
 might well be called an ''unthrifty" tax, as Adam Smith would say; for, 
 where any large amoimt is derived from it, it must, on accoimt of the 
 burden laid upon capital, and not upon income, check the productive 
 power of the society; this tax, therefore, imposes a burden out of pro- 
 portion to the benefit derived. It presents, nevertheless, marked 
 superiorities over all taxes yet considered. The progressive principle 
 may be applied with a much closer approximation to certainty than 
 in any form of income assessment. Inheritance taxes, again, are ex- 
 ceptional in the ease and slight expense involved in their collection. 
 They are also exceptional in the ease with which contribution may be 
 avoided entirely, through the transfer of property before death. 
 
 Section VI — Credits 
 
 Article i — Securities, 
 
 After the income and inheritance taxes, perhaps the most obvious 
 method of placing property imder contribution is to attempt to reach 
 that form of wealth represented in credit obligations. Under the 
 general heading of credits may be grouped stock, shares, bonds, mort- 
 gages, book accounts, bills, notes, partnerships, and interest in cor- 
 porate wealth of various kinds; all evidence, in fact, of wealth due. 
 Such evidence forms the basis of any system attempting to reach credits 
 for fiscal purposes. This evidence of the debts of others may be regarded 
 as an unsatisfactory source from which to derive revenue, for three 
 reasons: 
 
 First, such methods may involve the taxation of the same property at 
 
 A ' 
 
IS6 
 
 Direct Taxation 
 
 Pt. II 
 
 Bk. 11 
 
 Personal Property 
 
 IS7 
 
 
 least twice, or perhaps oftener. Second, because the incidence of such 
 taxes falls chiefly upon those least able to bear it; namely, borrowers. 
 Again, because, owing to the evanescent nature of such property, it 
 can never be reached or taxed upon a just or comprehensive scale. 
 
 An ordinary mortgage, or lien upon a piece of real estate, is typical 
 of the great majority of securities; for it is only as these refer to speci- 
 fic properties that they possess value. Under any system of general 
 property taxation, the real estate itself will be taxed in the first place; 
 when, therefore, money is borrowed upon it, and the mortgage taxed, 
 the property is evidently taxed a second time. If money is borrowed 
 on the mortgage, and the second credit assessed, the same value is 
 laid under contribution in three different instances. If, therefore, a 
 fixed sum is distributed upon all three sources, the method becomes 
 cumbersome and difficult to apply. If taxes are assessed, either in the 
 form of levying a fixed sum, or in the absorption of a certain percentage 
 of values reached, such burdens are borne chiefly by the most needy 
 members of the conmiunity: borrowers. The borrower is in need of 
 money and tempted to take less where such taxes are imposed; the 
 lender, on the contrary, is never obliged to take less for his capital than 
 the average rate of interest. Where mortgages, or credits, are taxed, 
 such taxes may apparently in most cases be shifted to the borrower; 
 mortgages, subject to taxation, commanding a lower rate in the money 
 market. Capital will drift toward other channels until the average 
 return on mortgages bears the normal relation to other forms of invest- 
 ment; or, in other words, imtil the tax is borne by the real property owner, 
 or borrower. It seems, therefore, in any system of general property 
 taxation, both less expensive and less complicated to tax the real 
 property in the first place, and exempt credits issued against it. 
 
 These considerations are based upon the assumption that taxes 
 of this nature could be assessed and collected with uniformity; such an 
 assumption seems, however, far from the truth. Much the greatest 
 volume of wealth represented by credits is in the form of corporate 
 obligations; and the difficulty in the assessment of these is very great. 
 
 The taxable securities of a corporate organization, represented by its 
 stock and bonded indebtedness, may be held with ease, either actually 
 or in trust outside the state or taxing unit in which the corporation 
 exists, and thus escape taxation. If only credits are taxed, and the 
 burden is not shifted, the value represented by rolling stock, land, 
 buildings or plant escapes. If, however, the actual property is taxed, 
 
 the securities representing it should be exempt, for reasons given. 
 The owners of such securities can avoid taxation more easily than any 
 other class, and those for whom the tax is designed are those most 
 likely to escape contribution. The most effective methods of reaching 
 these values is through the land, rolling stock, plant or franchises, 
 to which they represent proportionate titles. Even credits held in 
 foreign countries, impossible to reach in any other way, might by this 
 means contribute their share to the administration under which the 
 wealth represented was produced. If, however, the actual property 
 is taxed, no attempt should be made to tax it twice through its credit 
 representations. Such attempts but create fraud and injustice. 
 
 Article 2— Bank Deposits, 
 
 Any system of general credit taxation would attempt to reach credits 
 in the form of Bank Deposits. This could be done with exceptional 
 ease at slight expense. A deposit held in a bank to the credit of an 
 individual represents a promise to pay; and, as no institution could 
 hold a sum of money out of use representing its total deposits, these 
 deposits represent the real property against which the bank has loaned 
 the depositors' funds. They are mortgages held by the creditor against 
 the assets of the bank, and considerations advanced in connexion with 
 other forms of credits apply to these. Bank deposits, however, may have 
 no relation to the depositor's resources; he may have a large deposit in 
 one bank, and owe that or some other institution ten times the amount. 
 To tax such credits would check productive enterprise; the ease with 
 which it may be done rendering it peculiarly disadvantageous. If an 
 effective system of taxing bank balances were put into force, the bank- 
 ing business would be vitally affected, and the advantages of credit and 
 Clearing House lost. 
 
 Article 3 — Coin, 
 
 The assessment of general property, as a basis of revenue, involves 
 the assessment of money. This must be done in the form of coin or 
 notes. The ease with which coin may escape contribution, and the 
 fact that its momentary possession has no relation to the wealth of the 
 individual, need not be developed. Coin could only be reached effect- 
 ively through bank reserves, and the attempt to tax it in this form 
 would result in a tendency to hold reserves in notes. Where a fixed 
 com reserve is made legal, its taxation might not have the sHghtest 
 
158 
 
 Direct Taxation 
 
 Pt. II 
 
 Bk. II 
 
 ( 
 
 
 
 
 
 relation to the general volume of notes or loans depending upon it. 
 A tax of tliis nature would probably be the least productive and most 
 disadvantageous form of direct taxation. It would affect the basis 
 of the credit and monetary system of the country. 
 
 Article 4 — Notes. 
 
 Irredeemable paper money need scarcely enter into modem economic 
 discussion. A nation or bank lending its authority to the issue of 
 paper money, with the promise to redeem it, may do so with reference 
 to three bases of security: legislation, credit, and gold or its equivalent. 
 If notes are issued upon the first two, a debit is created to an equivalent 
 extent, and the basis of the debt must be tangible property in some form. 
 Redeemable notes in the last analysis rest upon some actual value or 
 the issuers would possess no credit, power to legislate, nor resources 
 for their redemption; this value is apparently the best subject for 
 taxation in all cases. Taxes on notes could again be effective through 
 bank reserves alone; the taxation of these reserves could produce but 
 little revenue in the first place, and would tend to reduce the reserve in 
 the second — a dangerous process. If the notes are issued against gold 
 or its equivalent, the same considerations apply; in this case, the notes 
 are mortgages upon definite rather than indefinite property, as at first. 
 All notes of whatever nature, in order to represent real value, must 
 represent real assets; if an attempt is made to tax the notes, the bulk 
 of these will escape taxation, and such notes can only be reached in the 
 most disadvantageous form — that of bank reserves. If the assets 
 are taxed, the notes should be free. 
 
 There are other forms of credit property, more fleeting and intangible 
 than those mentioned: patents, copyrights, processes, trademarks, 
 good- will, and commercial organization. If it is impossible accurately to 
 reach credits of a more definite nature, these evanescent values are 
 beyond the range of practical fiscal attention, owing to the impos- 
 sibility of estimate or assessment in any workable form. 
 
 Article 5 — Summary. 
 
 A review of credit property leads to the following conclusions with refer- 
 ence to its suitability or imsuitability to form a part in the national 
 fiscal structure: 
 
 First, all forms of credit must represent some form of tangible prop- 
 erty in order to possess any tangible value. As the borrower is 
 
 Personal Property 
 
 159 
 
 the owner of the real property and the return to money lent upon it 
 cannot fall below the average rate for any length of time, taxes on 
 credits will be borne by real property. If, however, the real property 
 is taxed in thie first place, credits should be exempt. 
 
 Second, in the case of corporate securities, it seems impossible 
 to reach the values sought with any accuracy except through the 
 definite property represented. Taxes levied upon actual prop- 
 erty may be distributed over the credits based upon it, without 
 the taxation of a single stock or bond. By far the most effective 
 means of reaching property for fiscal purposes is to assess definite 
 things and not their incorporeal representations in the form of 
 credits or securities. In this way alone is it possible to distribute 
 contributions over an entire system of incorporated certificates of 
 ownership. 
 
 These considerations suggest the second class of personal property; 
 that class including definite, material assets, such as those against which 
 credits are issued. 
 
 Section V — Chattels 
 
 Property classified as chattels includes railway rolling stock, furniture, 
 crops, farming, and manufacturing machine y, cattle, general stock and 
 so forth. At first sight this form of property offers a more definite 
 basis for fiscal purposes than credits. Experience shows, however, 
 that chattel property presents serious diflSiculties of valuation, assess- 
 ment and inequality. Two bales of goods lie side by side in the ware- 
 house of a merchant; an expert might be xmable to distinguish between 
 the two without elaborate investigation; yet these two similar packages 
 may represent widely different values. In the assessment of fiscal 
 contributions, the basis of equal distribution does not lie in that which 
 is taxed or not taxed; but in the relation of the values assessed to the 
 means of the contributors, both individually and in relation to each 
 other. If £1,000 is to be assessed upon a community and the 
 assessment is made upon values incapable of exact relative estimation, 
 no part of the £1,000 will be justly placed. This applies to the as- 
 sessment of percentages: if the values assessed do not bear a proper 
 relation to each other throughout the entire community, every per- 
 centage assessed will bear a false relation to every other. Here is 
 the inherent objection to taxes of this kind: the fact that they present 
 no possibility of a justly distributed burden, owing to the impossi- 
 
i6o 
 
 Direct Taxation 
 
 Pt. II 
 
 Bk. II 
 
 Personal Property 
 
 i6i 
 
 1 
 
 biKty of the exact relative estimation of the values upon which they 
 must be assessed. 
 
 By what means can the values of pictures, art objects, complicated 
 machinery, and blooded stock be fixed in relation to each other through- 
 out any area by different valuers unfamiliar with the various fields, 
 when experts might differ in their estimations both actually and rela- 
 tively? How can the rich gem collector be prevented from putting his 
 wealth out of sight while the horse, the cow and the machinery of the 
 farmer pay their full quota? By far the greater values of personal 
 chattel property are those disappearing most easily at the proper time, 
 and estimated both relatively and actually with the greatest difficulty. 
 The smaller values, on the contrary, such as common stock, crops, 
 wagons and farm machinery, are more in evidence, and estimated as 
 full value with relative ease. Again, great difficulties are met in con- 
 nexion with such property as the rolling stock of railways, the mains, 
 pipes and plants belonging to a water or electric light company, the 
 poles and wires of a telephone or telegraph system. The cost of con- 
 struction or replacement forms no standard of the relative values at 
 which property of this kind should be assessed. The relative value 
 of such property does not depend upon the number of cars or the length 
 of the pipes, but depends on earning powers; and these earning powers 
 need have no connexion with the quantity of steel or amount of wire 
 involved. Such earnings depend upon the distribution of goods, 
 water, gas, or communication over the various systems. Here b'es 
 the true value of such property; the real wealth forming the basis 
 of the securities issued against it. The most elaborate estimates of 
 the rolling stock, plants, pipes, or wires of great public-service corpora- 
 tions form no basis for valuing the wealth in franchise and security, 
 either actually or relatively, annually created by their control. Uni- 
 versal experience shows that the taxation of personal chattel property 
 is among the most unjust, annoying and least effective methods of 
 raising public funds ever devised. " The assumption that it is necessary 
 to assess everything," says Mr. WeUs,i "in order to tax equitably 
 involves an impossibility, and therefore unavoidable inefficiency, 
 injustice, and inequality in administration. ... the term property 
 is made to apply equally to entities and to symbols or non-enrities, 
 which is in itself an absurdity." 
 The hi story of this form of taxation in all countries supports Mr. 
 
 « Theory and Practice of Taxation, D. A. Wdls, pp. 394-395. ' 
 
 Wells' position: "No man and no corporation," says an experienced 
 assessor 1 of the State of New York, "banks only excepted, need pay 
 a tax on personal property. Widows and orphans must pay. Upon 
 them in the extremity of their distress, the law lays its heavy hand. It 
 bereaves the bereaved. Moribund itself, it has an affinity for the 
 effects of the dead. The records of the surrogate furnish the schedule, 
 and the machinery of the law used in adjusting an estate is not sufficiently 
 flexible to regularly permit such a transfer of securities as would insure 
 an exception." 
 
 Section VI — Miscellaneous Taxes 
 
 Nearly all nations derive a portion of their revenue from a variety 
 of miscellaneous imposts. Various forms of taxation may be laid upon 
 contracts, registration, insurance, bills, notes, acknowledgments of 
 receipt, and deeds of release. Taxes of this kind are most effectively 
 imposed through the legal documents serving as evidence of the agree- 
 ment. Taxes on the transfer of property of different kinds, and on the 
 purchase and sale of land especially, may be levied by means of stamps 
 or registration fees. 
 
 Taxes of this kind possess certain advantages; they may be assessed 
 and collected with ease and certainty; in proportion to the amount 
 produced, they involve little expense. They are, nevertheless, open 
 to the following objections: First, they fall upon capital and not 
 upon revenue — an "unthrifty'' form of taxation. Second, their in- 
 cidence falls upon the contributor least subject to them; that is, upon 
 the seller; the seller being in most cases forced to sell, while the buyer 
 is less often forced to buy. The considerations suggested with reference 
 to borrower and lender in the case of mortgages apply. Capital will 
 seek investment in other fields until the return upon the purchase 
 involved is at no disadvantage with these; or, until the tax is 
 shifted to the seller. 
 
 Taxes on the transfer of land present other considerations. It 
 may be said in general that taxes on the purchase and sale of goods 
 are harmful, in that they throw obstacles in the way of trade. Taxes 
 on the transfer of land, however, are peculiarly objectionable for other 
 reasons. Land is the most productive form of property. The seller of 
 land in most cases, through lack of capital, ability, or for other reasons, 
 
 « Mr. G. H. Andrews, addressing a legislative committee, October 6, 1874, cited by Mr. T. G. Shear- 
 man. Natural Taxation, p. 75. 
 
 J1 
 
l62 
 
 Direct Taxation 
 
 Pt. II 
 
 Bk. II 
 
 Personal Property 
 
 163 
 
 
 is unable to give the land its greatest productive value; the purchaser, 
 on the contrary, sees greater productive advantages in its use. Ob- 
 stacles placed in the way of the purchase and sale of land are, therefore, 
 hindrances in the path of the entire productive powers of a people. 
 
 Taxes on leases, which form a direct discouragement to agriculture 
 are of this nature. "The more it costs to acquire any property, the 
 less must be the net value of it when acquired," says Adam Smith ;^ 
 and again, "All taxes upon the transference of property of every kind, so 
 far as they diminish the capital value of that property, tend to diminish 
 the funds destined for the maintenance of productive labour. They are 
 all more or less unthrifty taxes that increase the revenue of the sovereign, 
 which seldom maintains any but unproductive labourers, at the expense 
 of the capital of the people, which maintains none but productive." 
 
 Taxes may also be placed upon commimication: letters, newspapers, 
 advertisements, and so forth. 
 
 Postal rates, when service is supplied by the administration at little 
 above cost, are not a tax; but, if the rates are increased until an im- 
 portant revenue is derived, the fiscal character of the service becomes 
 apparent. Revenue derived from this source is rarely considered ad- 
 vantageous; it increases the cost of business commimication and throws 
 difficulties in the way of commerce. Taxes on advertisements are 
 open to the same objection; taxes on newspapers, to the more serious 
 one of being a tax on the most important source of education and in- 
 formation of the people. 
 
 Taxes upon legal proceedings are open to the objection of forming an 
 inducement to the extension and complication of the process. They 
 are, as Mill^ say^, little else than a "tax on redress, and therefore a pre- 
 miimi on injiuy. ... In the enumeration of bad taxes, a conspic- 
 uous place must be assigned to law taxes." In the levying of such 
 taxes it is sometimes suggested that those who benefit by the legal tri- 
 bunals should bear the expense of their administration. It seems, how- 
 ever, as Mill points out, that the reverse consideration is nearer the 
 truth: the fact that certain persons had need to appeal to the tribunals 
 shows that it was rather they who had been least benefited by their 
 administration. 
 
 The revenue raised for local purposes in the form of octroi duties is 
 but an indirect tax on consimiption, and, as such, is discussed with in- 
 
 » The WtaUk cf Nations. Vol. U.. Bk. V.. ch. ii.. p. 458. 
 
 > Principles of Political Economy. Bk. V.. ch. V., 5 3 p. SiQ. 
 
 direct methods in general. The octroi duty, although properly speaking, 
 neither import nor excise, is a peculiarly unfair and unequal burden, 
 inasmuch as the bulk of goods taxable in this way forms the food of 
 city populations and the raw materials of manufacture. 
 
 "These indirect taxes," says Mill,i "are much more objectionable 
 in towns than on the frontier, because the things which the country 
 supplies to the towns are chiefly the necessaries of life, and the materials 
 of manufacture, while of what a country imports from foreign countries 
 the greater part usually consists of luxuries." 
 
 An octroi system cannot produce any considerable revenue without 
 pressing severely upon the poorer classes of the towns. The octroi 
 thus presents the irregularities and inequalities of import and excise 
 duties in an intensified form, as affecting the poorer portions of city 
 populations. 
 
 ^Prindplu 0/ Political Economy. Bk. V., ch. v., i 4f P> 5^0. 
 
Bk. II 
 
 Real Property 
 
 i^S 
 
 CHAPTER n 
 
 REAL PROPERTY 
 
 Section I — Classificaiion. Section II — Capital Value of Improve- 
 ments, Section III — Capital Value of Land. Section IV — 
 Rent of Improvements. Section V — Ground-rent. 
 
 Section I — Classification 
 
 THE second of the classes into which general property is divis- 
 ible is real, or immovable, property. Property of this kind 
 is again divisible into two classes: land and improvements. 
 These classes, however, physically inseparable, are usually 
 considered together under the term real esUte. That land and im- 
 provements constitute, however, two distinct forms of value is evident 
 upon a moment's thought. Land is created by cosmic processes 
 over which the human being has no control; improvements are created, 
 immediately, at least, by man. The distinction between the two is 
 important in any examination of real property as a source of national 
 revenue. 
 
 Property of this kind may again be estimated in two ways: either at 
 total capitalization or at its annual rental value. Real property, 
 therefore, may be considered under four heads: i. Capital value of 
 improvements; 2, Capital value of land; 3, Rental value of improve- 
 ments; 4, Rental value of land. 
 
 Section H — Capital Value of Improvements 
 
 Among the most obvious forms of taxable property is that of im- 
 provements and buildings. Where such property is taxed, the value 
 of the improvement is estimated and a percentage of the total assessed. 
 
 This tax is practically a tax on the improvement of land, and to be 
 evenly distributed it is essential that all improvements should be 
 capable of exact valuation in relation to each other. Attempts at 
 such relative valuation gave rise to the old English custom of counting 
 the number of hearths in a house, later superseded by the more conven- 
 
 164 
 
 ient method of counting the windows, number of stories, or other means 
 of approximating its value in relation to other buildings. In the taxation 
 of improvements, the ever-present difficulty of exact valuation is met, 
 and as accurate relative estimates must form the basis of any just system, 
 this difficulty is a serious one. Other difficulties may be mentioned. 
 
 Taxes on improvements may fall largely or entirely, not upon the 
 owner of the improvement, for whom they are intended, but upon the 
 tenant. This seems to apply in particular where improvements are 
 represented by larger investments in buildings, houses, warehouses, 
 factories and so forth. If capital employed in these investments could 
 be taxed, so that its returns were less than the possibilities offered by 
 other forms of employment, no more capital would seek such channels. 
 The fact, however, that capital flows in these directions suggests that 
 such capital is no more effectively reached in the majority of cases, 
 than the average of capital employed in other fields. 
 
 If, however, a tax of this kind could be made effective, that is, if 
 capital employed in the improvement of land could be taxed in pro- 
 portion to the value of improvements, such a tax would be of disad- 
 vantage to the community; for it would restrict and destroy the most 
 productive of all activities: the improvements of land. 
 
 Improvements of this kind are but chattels attached to the soil, 
 and many considerations suggested in the study of chattels in general 
 apply to the improvements of land. Buildings, houses, and improve- 
 ments cannot be hidden or moved from place to place; but their number 
 and quality may be adversely affected by taxation, while the great 
 difficulty of exact relative valuation is always present. 
 
 If such methods really place the intended burden upon the owners of 
 improvements, the result will be to restrict the productive powers of 
 the society; if the burden is shifted to others, the property assessed 
 contributes nothing, and the tax may act in many cases as an indirect 
 tax on consumption or living expenses, instead of a direct contribution 
 from real property. On the other hand, improvements present great 
 advantages over ordinary movable chattels, as a source of revenue, 
 the chief of which are their relative availability and the slight expense 
 involved. 
 
 Section IH — Capital Value of Land 
 
 The capital value of land presents another obvious source of social 
 revenue, and has formed one of the oldest objects of taxation. Land, 
 
Bk. II 
 
 Real Property 
 
 167 
 
 I 
 
 } 
 
 
 I 
 
 166 
 
 Direct Taxation 
 
 Pt. II 
 
 as a basis for social contribution, possesses peciiliar advantages presented 
 by no other form of property. Land cannot be hidden, as can valuable 
 chattels; it cannot be moved, transferred or held in different neigh- 
 bourhoods, as can securities; its quantity cannot be restricted or di- 
 minished, as in the case of houses and improvements; its amount may 
 be estimated with almost ideal precision, and the relative value of 
 different holdings thus much more closely approximated than in any 
 other form of property. Again, the value of the situation of land cannot 
 be deteriorated to any extent by the owner, as is possible in the case 
 of improvements; for to do so would, in the majority of cases, decrease 
 rather than increase his revenue. The extent of land areas may be 
 accurately calculated and their value approximated independently of 
 interested testimony, thus doing away with the otherwise inevitable 
 premium upon fraud. These qualifications are possessed in the same 
 degree by no other element of wealth. 
 
 In order to assess the total, or capitalized, value of land, surveys 
 must be made with estimates of the relative value of its component 
 parts. A tax of this nature, upon the total value of land, falls upon 
 rent to a certain extent, but only to a certain extent; for, unless the land 
 is revalued every time the tax is imposed, the contribution will not 
 vary in proportion to the rental value, the tax remaining a fixed quantity 
 as established in relation to the value of the land at a definite time. 
 The value of the land will, of course, vary with changing conditions, 
 the value of the different portions will vary actually and in relation to 
 each other. A fixed contribution, based upon the capitalized value of 
 land, therefore, however just at the time of assessment, becomes less 
 so with every alteration in value within the area considered. A tax 
 of this kind is called an invariable land-tax and has played an important 
 part in fiscal history. 
 
 Taxes may be payable in different forms of wealth: the produce of 
 land, military service, in various forms of obligations, and in coin of 
 the realm. For modem administrative purposes, contributions to 
 the public treasury are nearly always estimated in money, and this 
 money has a certain relation to the value of gold. A fixed land-tax, 
 therefore, is open to two objections: it will vary with the value of the 
 different portions of the land, both actually and relatively; and^again, 
 with the variations of the gold, money, or wealth in which it is payable. 
 A tax of this nature must, therefore, be relatively variable, subject, 
 as it is, to changing influences. 
 
 A contribution of £10 annually from a certain property may become 
 a lighter or heavier burden as the value of the property rises or falls, 
 and with changes in the value of money. The rental value of the property 
 might increase or decrease indefinitely; the value of gold might change 
 in its relation to consumable wealth; all of these variations would have 
 a marked effect, both upon the burden borne by the property, and the 
 revenue obtained by the State. This variable nature of the fixed 
 land-tax is a serious objection; although such a tax as applied to the 
 land possesses marked advantages. 
 
 "A land-tax," says Adam Smith, ^ "which, like that of Great Britain, 
 is assessed upon each district according to a certain invariable canon, 
 though it should be equal at the time of the first establishment, neces- 
 sarily becomes unequal in the process of time, according to the unequal 
 degrees of improvement or neglect in the cultivation of the different 
 parts of the coimtry. . . . This tax, therefore, so far offends against 
 the first of the four maxims above mentioned. It is perfectly agree- 
 able to the other three." 
 
 These considerations apply to contributions assessed upon land and 
 improvements combined. In so far as such a tax falls upon improvements 
 it is open to the objections mentioned. In so far as it falls upon the 
 value of the land, it possesses the advantages with the disadvantages 
 pointed out. 
 
 In connexion with a land-tax, however, a new form of property appears 
 an element of wealth presenting important distinctions separating it 
 from other forms considered. This element of wealth is the value 
 attaching to land irrespective of improvements; that is, the value 
 inherent in land considered apart from the value of labour applied to 
 it. This new element may be examined, therefore, in reference to its 
 qualifications as a source of revenue. 
 
 Taxes, if paid, must fall somewhere; are borne by some form of 
 property, sooner or later. Taxes on commodities nearly always fall 
 upon consumers. Taxes falling entirely on trade are paid out of the 
 profits of the traders. Taxes assessed upon the owners of houses fall 
 upon tenants in the majority of cases, and taxes on credits usually fall 
 upon debtors when collected. It may be asked, upon what form of 
 wealth does a tax fall, assessed upon the value of unimproved land? 
 Such a tax, properly assessed, should not affect human industry in 
 connexion with improvements, for no value represented by them is laid 
 
 * Th4 Wealth of Nations. Book V., ch. ii.. Part 11, Art. i, p. 4x7. 
 
 
 T,, .. 
 
 

 V . 
 
 
 
 i68 
 
 Direct Taxation 
 
 Pt. II 
 
 under contribution. Contribution from unimproved land regards the 
 land as freed from the results of human effort; it considers the land in its 
 natural condition, and estimates value as affected by social, not in- 
 dividual, causes. 
 
 The land, in its unimproved state, is untouched by the hand of man; 
 that is, free from the results of labour. The unimproved value of 
 those portions of the surface of the earth, upon which great populations 
 exist, is caused by the existence of those populations. It represents neither 
 labour, capital, skill, credit nor industry, in any individual or corporate 
 form. It does represent, however, the combined number, wealth, 
 industrial powers, and productive energies of a population existing upon 
 a given portion of the earth at a given time; and to these in their col- 
 lective sense is due the value possessed by unimproved land. This 
 value, moreover, created by a society, as a society, is a form of wealth 
 belonging peculiarly to the social organization. Revenue, therefore, 
 derived from the unimproved value of land is derived from wealth 
 created by society and belonging to it in its collective sense; and not 
 from wealth created by individuals or belonging to them. Fiscal contri- 
 butions, properly levied through the medium of imimproved land 
 fall, apparently, upon socially created wealth without infringing upon 
 individual or corporate wealth. Regarded, therefore, in relation to 
 other forms of property, as a source of social revenue, the value of 
 imimproved land presents exceptional advantages. It presents, 
 at the same time, however, an important difficulty: variability, 
 for relative and actual variations create important inequalities in inci- 
 dence. 
 
 The variability in the values of real property suggests another method 
 
 of estimation and assessment. Rentals, it may be said, form an exact, 
 self-regulating register of values, and, therefore, contributions levied 
 upon rentals are not open to objections met in a fixed house or land- 
 tax. Rentals represent the annual value of the capital invested, 
 and a contribution assessed upon rent not only estimates the 
 property at its actual value, but varies with this value and es- 
 tablishes it in relation to other values at the same time: rent serving 
 to measure and register automatically these important factors in fiscal 
 reqiiirements. 
 
 Another fiscal resource is thus reached: one assessed upon rental, or 
 annual value, rather than upon total, or capital, value. The rental 
 value of real property may be assessed in two ways; the rent of improve- 
 
 Bk. II Real Property 169 
 
 ments and the rent of land presenting two distinct values which maybe 
 assessed separately or in combination. The rent of real estate is thus 
 divisible into improvement rent and ground-rent; the incidence of a 
 tax upon rent in general, therefore, is twofold and these two sources 
 must be considered separately. 
 
 Section IV — Rent of Improvements 
 
 If profits of buildings and improvements, as expressed in rent, were 
 lowered by fiscal pressure, capital would flow into other channels and 
 only the most profitable improvements would be developed. It seems, 
 therefore, that the portion of a tax assessed upon building or improve- 
 ment rent falls eventually upon the tenant, or consumer of the im- 
 provement. 
 
 A large portion of social revenue, assessed upon the rent of improve- 
 ments, is derived from the rent of houses, and contributions raised 
 from this source present advantages over other forms of revenue. The 
 impossibility of hiding houses, or holding them outside the taxing area, 
 combined with the estimates, actual and relative, rendered by rental 
 values, are important in this connexion. The fact that rent, in its 
 action, eliminates difficulty with regard to actual and relative estimates, 
 renders this source the most equal yet discussed. Mill and Adam Smith 
 unite in their approval of a tax on the rent of houses. Says the latter:^ 
 "In general, there is not perhaps any one article of expense or con- 
 sumption by which the liberality or narrowness of a man's whole ex- 
 pense can be better judged of than by his house rent. A proportional 
 tax upon this particular article of expense might, perhaps, produce a 
 more considerable revenue than any which has hitherto been drawn 
 from it in any part of Europe.'' 
 
 Mill2 says speaking of this tax: "In so far as it falls on the occupier, 
 if justiy proportioned to the value of the house, it is one of the fairest 
 and most unobjectionable of all taxes. ... A house-tax is a 
 nearer approach to a fair income-tax, than a direct assessment on in- 
 come can easily be." 
 
 The advantage of a tax of this nature is the accuracy with which 
 rent serves as a basis of proportionate estimates; registering values, 
 as it does, actually and in relation to each other at the same 
 time. The chief disadvantage of such a tax is the inequality with 
 
 » Th* Wealth of Nations. Bk. V., ch. ii., p. 435- 
 
 • Principles of Political Economy. Bk. V., ch. iii., S 6, p. 502. 
 

 J- 
 
 170 
 
 Direct Taxation 
 
 Pt. II 
 
 Bk. 11 
 
 Real Property 
 
 171 
 
 
 which it falls upon owner and occupier, for the owner is not propor- 
 tionately reached. 
 
 Section V — Ground-rent 
 
 The remaining form of rent is the annual value of land independent 
 of improvements. The study of this form of property, in the light of 
 earlier considerations, and in relation to other forms of taxable wealth, 
 brings a combination of these into view. In an examination of assess- 
 ments upon real property, land offered the greater number of advan- 
 tages; when the land was regarded as separate from improvements, 
 the resulting value presented a form of wealth not traceable to individual 
 endeavour, but to the society as a whole, as the source of its existence. 
 This value, therefore, seemed a peculiarly suitable source from which 
 social needs might be supplied. A difficulty appeared: the variable 
 nature of the values considered. This difficulty disappears, however, 
 if, instead of capital values, annual values derived from these are con- 
 sidered. The advantages of land, as a source of revenue, with the 
 advantages offered by rent, as a means of registering values, are com- 
 bined in this way. It seems, in fact, that in the combination of un- 
 improved land and rent, a form of property is met, presenting exceptional 
 conditions as a subject for fiscal attention. 
 
 A method of supplying social needs, which only touches socially created 
 wealth, cannot have escaped the attention of the abler economists. 
 "Ground rents," says Smith, * "are a still more proper subject of tax- 
 ation than the rent of houses. A tax upon ground rents would not 
 raise the rent of houses. It would fall altogether upon the owner 
 of the ground rent, who acts always as a monopolist, and exacts the 
 greatest rent which can be got for it. . . . Ground rents seem, in this 
 repect, a more proper subject of peculiar taxation than even the 
 ordinary rent of land. The ordinary rent of land is, in many cases, 
 owing partly at least to the attention and good management of 
 the landlord. A very heavy tax might discourage too much this at- 
 tention and good management. Groimd rents, so far as they exceed 
 the ordinary rent of land, are altogether owing to the good government 
 of the sovereign, which, by protecting either the industry of the whole 
 people, or of the inhabitants of some particular place, enables them to 
 pay so much more than the real value of the ground which they build 
 
 > The Wealth of Nations. Bk. V., ch. ii., pp. 436-437. 
 
 their houses upon; or to make to its owner so much more than compen- 
 sation for the loss which he might sustain by this use of it. Nothing 
 can be more reasonable than that a fund which owes its existence to 
 the good government of the State should be taxed peculiarly, or should 
 contribute something more than the greater part of other funds, toward 
 the support of that government." 
 
 After pointing out that the predominant element of rent in large 
 cities is usually that paid for the use of land, MilP says: "Among the 
 very few kinds of income which are fit subject for peculiar taxation, 
 these ground-rents hold the principal place, being the most gigantic 
 example extant of enormous accessions of riches acquired rapidly, 
 and in many cases unexpectedly, by a few families from the mere ac- 
 cident of their possessing certain tracts of land, without their having 
 themselves aided in the acquisition by the smallest exertion, outlay, 
 or risk. So far, therefore, as the house-tax falls on the ground-landlord, 
 it is Hable to no valid objection." 
 
 These two economists unite in regarding a tax on the rent of un- 
 improved land as the best of all sources of social revenue: "Among the 
 very few kinds of revenue which are fit subject for peculiar taxation," 
 says one. "Ground-rents seem, in this respect, a more proper subject 
 of peculiar taxation than even the ordinary rent of land," says the other. 
 
 The three productive sources of private revenue are rent, profits, 
 and wages. Rent is of two kinds: improvement rent and ground- 
 rent. The distinction between tax upon ground-rent and a tax upon 
 the rent of improvements is important. 
 
 The annual value of a portion of land, independent of improvements, 
 is due to the profit to be derived from its use; through its proximity to 
 harbour, markets, railway, or mineral wealth, in relation to centres of 
 population. These profits determine the rental value of the land, or 
 the price the tenant is willing to pay for its use. Ground-rent, therefore, 
 is directly dependent upon profits. Profits, however, will be dependent 
 upon something else — the consuming power of the people at large, or 
 upon the return to productive occupation, or wages, in the broadest 
 sense of the term. Thus rent, derived from the ownership of unimproved 
 land, takes its rise from improvement rent, profits, and wages combined; 
 or from the productive energies of the society as a whole, and repre- 
 sents, not rent alone, but a value combining all three sources of revenue. 
 A tax, therefore, upon ground-rent seems to reach all three sources of 
 
 ' PrincipUs of PoliUcal Economy. Bk. V., ch. iii. § 6, p. 503. 
 
 1 1 
 M 
 
 >fi! 
 
 H 
 

 I 
 
 I* 
 
 172 
 
 Direct Taxation 
 
 Pt. II 
 
 revenue in proportion to their amount. An analogous train of reason- 
 ing does not seem available with reference to improvement rent; for 
 the reason that improvement rent is due to individual initiative; if 
 therefore, this rent is reached by a tax, a disproportionate burden is 
 placed upon it; if the tax is shifted to tenant, a disproportionate burden 
 is placed upon profit and wages. 
 
 These considerations suggest that a tax on ground-rent conforms to 
 the first principle laid down by Adam Smith, stating that individuals 
 should contribute "in proportion to their respective abilities." As 
 their abilities are measured by their revenues, in the form of improve- 
 ment rent, profit, and wages, and, as ground-rents are proportionate to 
 these, a tax proportionate to ground-rents seems "proportionate to their 
 abilities." 
 
 The second principle states that a tax should be "certain and not 
 arbitrary." Ground-rents seem to meet this condition automatically. 
 
 The third principle states that a tax should be payable at the time 
 most convenient for the contributor. A tax upon ground-rents may 
 easily be regulated to suit this maxim. 
 
 The fourth principle shows that a tax should "take and keep out of 
 the pockets of the people as little as possible over and above what it 
 brings into the treasury of the State." A tax levied upon ground-rent 
 offers exceptionally inexpensive methods of assessments and collection. 
 
 "Both ground rents and the ordinary rent of land," says Smith, * 
 "are a species of revenue which the owner, in many cases, enjoys with- 
 out any care or attention of his own. Though a part of this revenue 
 should be taken from him in order to defray the expenses of the State, no 
 discouragement will thereby be given to any sort of industry. The 
 annual produce of the land and labour of the society, the real wealth 
 and revenue of the great body of the people, might be the same after such 
 a tax as before. Ground rents, and the ordinary rent of land, are there- 
 fore, perhaps, the species of revenue which can best bear to have a 
 peculiar tax imposed upon them." 
 
 » The Wealth «/ Natums. Bk. V.. ch. u.. p. 437. 
 
 CHAPTER III 
 
 COMPARATIVE CLASSIFICATION OF THE SOURCES OF SOCIAL REVENUE 
 
 jA COMPARISON of the most important sources from which 
 /% revenue may be derived permits their classification with ref- 
 ^ % erence to the principles of Adam Smith. Unfortunately, 
 neither Smith nor Mill has arranged such a comparative 
 scale of taxable property. As the preceding review, however, has 
 closely followed their thought, it is not unreasonable to believe, had 
 any such scale been prepared by either, that it would not have differed 
 materially from the one presented. Passages from their works have 
 been cited in support of such a position. Apart, however, from discus- 
 sion of the relative merits of other sources of revenue, they both give 
 the first place in justice and equality to unimproved land rentals. 
 
 SOURCES OF PUBLIC REVENUE IN ORDER OF EQUITY AND ECONOMY 
 
 I. Direct taxes on ground-rents, or on the annual value of unim- 
 proved land. 
 n. Direct taxes on the rent of real estate, or on the rent of land 
 
 and improvements combined. 
 in. Direct taxes on the rent of improvements: houses, buildings, 
 
 plants, and so forth. 
 IV. Direct taxes in any form not included in the above: inherit- 
 ance, income, and so forth. 
 V. Indirect taxes on consumption for revenue: import and excise 
 
 duties, octroi, stamps. 
 •VI. Indirect protective taxes of whatever nature: tariff-weapon, 
 balance of trade, protection of industry, labour, and so forth. 
 
 The word "tax" is used in reference to many functions of an impost 
 which, in any proper sense of the word, are not taxes at all. That 
 which constitutes a good tax, in the legitimate sense, is the ability of 
 the measure to satisfy the fiscal needs of the society justly and inex- 
 pensively. A tax, as a tax, neither has nor should have any other 
 
 173 
 
I 
 
 ri 
 
 II • 
 I' f 
 
 i 
 
 !l 
 
 174 
 
 Direct Taxation 
 
 Pt. II 
 
 purpose. In so far as its qualifications for the production of revenue 
 are subordinated to other functions does it become an imposition, 
 supported by the powers of the State subject to manipulation in con- 
 nexion with interests coming under its influence. 
 
 Here occurs a significant question in connexion with fiscal methods; 
 one to which little attention has been paid, either by economists or 
 in the practical application of fiscal systems. The question is: If a 
 certain source of social revenue is recognized as the best of all sources, 
 to what extent should that source be used in supplying the social needs? 
 If, for example, experience and recognized opinion imite in demonstrat- 
 ing the income tax to be the best and fairest of taxes, to what extent 
 should social revenue be raised from incomes? If the assessment of 
 individual income is the best and least expensive method of raising 
 5 per cent of the social requirements, why is not this same method 
 the best for raising 10 per cent? But, if best for 10 per cent, why not 
 for one half or the whole? If any given source is the best from which 
 to derive 5 per cent of social needs, it seems the best from which 
 to derive the entire amount required; the amount derived not affecting 
 the source, which must apparently remain the best until exhausted. 
 
 Or again, if any given tax produces a certain quantity of revenue 
 in the best and fairest manner, the question arises, to what extent 
 should the resources of the tax be used? Should but 5 per cent of its 
 revenue-producing capacity be employed for social purposes, and the 
 remainder of the revenue raised by less advantageous means? Should 
 but 10 per cent of its capacity be used? It is e\ident that a train of 
 thought analogous to the preceding is suggested; and that, if a tax 
 produces a given percentage of social revenue in the best manner, no 
 other tax could meet the social requirements as well until this best of 
 sources is exploited. Not 5 nor 50 per cent of the possibilities of such 
 a tax, therefore, should be realized before other sources are touched; 
 but 100 per cent of its powers should apparently be used by the society 
 before other methods are adopted. If the best source is incapable of 
 supplying the entire needs of the society, this best of sources should first 
 be exhausted when the next best method should be determined and 
 exhausted in turn. 
 
 To what conclusions these considerations lead, is evident. Ground- 
 rents, of the annual values of unimproved land, are, in the opinion of the 
 two greatest economic thinkers, the best sources from which a society 
 may derive its revenue. In actual practice, the rent of unimproved 
 
 Bk. II 
 
 Classification of Sources of Revenue 
 
 17s 
 
 land presents many advantages over other methods of supplying such 
 revenue. The question is, then, whether social revenue would not be 
 most satisfactorily derived entirely from unimproved land values? Or, 
 if these values are insuflScient to produce the entire revenue, whether 
 this best of sources should not be used as far as jwssible before others 
 are touched? A science of fiscal method, if there is ever to be such a 
 thing in human affairs, would seem to consist in the classification of 
 the chief sources of social revenue, in reference to justice and fiscal 
 advantage alone, and the adoption and exhaustion of the best available 
 in succession. 
 
 A more or less familiar fiscal policy is here suggested. It is known as 
 the." Taxation of Land Values," " The Single Tax," or " I'lmpot Unique" 
 of the French writers of the seventeenth and eighteenth centuries. This 
 policy first appeared some hundreds of years ago in the works of that 
 body of men in France known as the Economists or the Physiocrats, 
 and is associated with the names of Quesnay, Turgot, Le Trosne, Dupont 
 de Nemours and others. It has been familiar in England for years, 
 and in America is chiefly associated with the names of Henry George 
 and T. G. Shearman. 
 
 The suggestion of deriving the entire social revenue from the value 
 of unimproved land is radical; and whatever advantages it may 
 possess from an economic or academic point of view should never 
 outweigh the disadvantages with which it might be involved from other 
 points of view. For reasons presented, however, the subject seems 
 worthy discussion; the evident theoretic advantages presented are so 
 great that it may be of interest to weigh these in relation to some of 
 the many questions and objections which any such policy may involve. 
 In application, difiiculties, objections, and disadvantages crowd upon 
 the mind in great numbers. ' 
 
 The first question is, naturally, whether the annual undeveloped value 
 of land may be considered great enough to bear the burden of the admin- 
 istrative expenses of a nation. The attention then turns to the changes, 
 desirable or the reverse, to be expected or feared from so radical a modifi- 
 cation of accepted methods. The effects of such a system upon social 
 and industrial conditions are suggested, together with its effects upon 
 labour, capital, railways, money, franchises, and corporate wealth. Can 
 the State justiy impose such burdens upon property, protected and 
 regarded as individual wealth for generations? The effects of such a 
 system upon trade, markets, and international relations, progressive 
 
I 
 
 176 
 
 Direct Taxation 
 
 pt. n 
 
 society in its various aspects, and upon social, municipal, and juris- 
 prudential problems are but few of the questions arising in the study 
 of such fundamental change of existing systems. 
 
 The third portion of the present inquiry is devoted to the discussion 
 of these and allied problems. As that form of wealth represented 
 in unimproved values seems due to natural causes, the revenue derived 
 from it has been regarded as the natural revenue, and the problems 
 suggested are reviewed under the title of "The Natural Tax." 
 
 Part III 
 
 THE NATURAL TAX 
 
 BOOK I 
 THE VALUE OF THE LAND 
 
 BOOK II 
 THE TRANSITION 
 
 BOOK III 
 INCIDENCE OF TAXATION, INDIRECT AND DIRECT 
 
 BOOK IV 
 FISCAL PROBLEMS 
 
 "^1 
 
 ! t 
 
 5 -i 
 

 "Book I 
 
 THE VALUE OF THE LAND 
 
 CHAPTER I 
 
 DIFFICULTIES IN DIRECT TAXATION OF LAND VALUES 
 
 A STUDY of the chief sources of social revenue suggests the 
 following positions: 
 I. The existence of any society upon a given portion of 
 ^ the earth is the origin of the value of the land occupied 
 
 by that society. 
 
 2. This value, created by the society as a whole, seems to belong to 
 the society as a whole. 
 
 3. This value is represented, and its relative variations periodically 
 registered, in the annual value of the unimproved land, or ground-rents. 
 
 4. Social revenue, derived from this source, seems to be derived 
 from wealth created by society. 
 
 5. Consequently, there seems reason to regard the rent of unim- 
 proved land as the source best suited to supply social needs. 
 
 The question then arises whether the best sources of revenue should 
 not be used to their fullest capacity before less advantageous means 
 are adopted. If so it follows: either that all social revenue should be 
 derived from the values of imimproved land, or that these values should 
 be used as far as possible in meeting social requ^'rements before other 
 sources are touched. 
 
 Both these conclusions, however, are at variance with existing fiscal 
 systems, in theory as well as in practice, and may be regarded as of 
 questionable value. Again, it may seem that a society, founded at 
 its origin upon such principles, might have adopted more or less ad- 
 vantageous methods; but that the societies of to-day, founded upon rad- 
 ically distinct conceptions, do not present a field suited to their 
 application. It may also be questioned whether the value of unim- 
 proved land presents a fund suflicient to bear such requirements; and 
 whether in its absorption by society, social conditions would not be 
 generated, creating results ultimately disadvantageous. 
 
 179 
 
i8o 
 
 The Value of the Land 
 
 Pt. Ill 
 
 
 These more or less general considerations again resolve themselves into 
 a variety of specific, and practical objections and difficulties, occurring in 
 great numbers, as different phases of the subject are examined. The most 
 important may perhaps be included under the following headings: 
 /. The Value of the Land, 
 
 Is the rental value of land, irrespective of improvements, sufficiently 
 great to bear the assessment of the entire social revenue, or of any material 
 portion thereof? In other words, what is the relation of the annual 
 value of unimproved land to annual social revenue? 
 //. The Transition. 
 
 Is there any method possible by means of which a transition could be 
 effected from indirect to direct taxation without more than compensating 
 danger to industrial and financial conditions? 
 ///. Confiscation and Compensation. 
 
 Is society justified in absorbing for social needs property which it has long 
 regarded as private, and protected in individual possession? If so, should 
 the owners of such property receive compensation and to what extent? 
 IV. The Establishment of Land Values, 
 
 Is the separation of the values of land and improvements practically pos- 
 sible with accuracy sufficient to form the basis of a workable fiscal system? 
 7. Can the Tax Be Transferred? 
 
 Is it possible to shift the incidence of a direct tax on land values from 
 land-owner to tenant or consumer through proportionally increased rentals 
 and prices; thus exempting land values from actual contribution, although 
 serving as the channel through which revenue is derived. 
 
 VI. The Incidence of the Tax. 
 
 Upon what class would the burden of such a tax fall compared 
 with existing methods? 
 
 VII. Labour. 
 
 The effects of a direct system upon labour with reference to existing 
 Protection. 
 
 VIII. Railways. 
 IX. Money. 
 
 X. Property. 
 XI. Progress. 
 XII. Ethical Significance. 
 These headings include, perhaps, the most important questions and 
 difficulties suggested in the study of a fiscal system based upon un- 
 improved land. To these, therefore, the attention may be directed. 
 
 CHAPTER II 
 
 LAND VALUES 
 
 Section I — General Considerations. Section II — Method of Estimation. 
 
 Section III — Estimates. 
 
 Section I — General Considerations 
 
 IN ORDER to discover to what extent the value of unimproved 
 land may serve as a fiscal basis, it is essential to estimate the 
 relations between the annual value of the land and the annual 
 social expenditure. If the land values are greater than the 
 expenses of social organization, these apparently represent a fund 
 from which social revenue could be derived without many of the 
 difficulties presented by other methods. If these unimproved values 
 are found to be less than social requirements, the extent to which 
 they should be used remains for discussion. The importance, there- 
 fore, of establishing the relation between land values and the expense 
 of social organization is evident. 
 
 The mere existence of a population upon any fixed area forms the 
 natural source from which all values of unimproved land are derived; 
 and this in the most primitive or complex forms of society. With 
 increase of population and social improvements, the natural value of 
 the land augments. As societies are formed and organized with greater 
 industrial advantage and security, the land, under their influences, 
 becomes proportionately more valuable; that is, the mere surface of 
 the earth in certain positions becomes worth far more than fertile or 
 mineral land in other situations. This added value is given by organized 
 society and the advantages it offers; greater in one place than in another. 
 The value men are willing to pay for the use of imimproved land in one 
 spot is the value they are willing to pay for the advantages offered by 
 society in that place. These generally take the form of security of 
 property, markets, profits, business opportunities, transportation facili- 
 ties, and other advantages, social and administrative. Thus the value 
 
 i8i 
 
 
l82 
 
 The Value of the Land 
 
 Pt. Ill 
 
 Bk. I 
 
 Land Values 
 
 183 
 
 
 n 
 
 ii 
 
 of unimproved land, or ground-rent, is the price men are willing to 
 pay for the privileges and gains derived from living in organized society. 
 Ground-rent expresses in money what organized society is worth to 
 the individual. 
 
 On the other hand, however, organized society implies expense, or 
 cost of organization, and this cost is measiu*ed by taxes. Ground-rents 
 represent what society is worth to the individual in profits, and social 
 opportunity; taxes represent what the same society costs the same 
 individual. As these values are usually expressed in the same money, 
 at the same place, and at the same time, they may be compared. If 
 the value of the advantages which society offers in the form of industrial 
 opportunity, profits, wages, and so forth, measured in money, were 
 not greater than the expenses involved in the form of taxes, measured 
 in the same money, men would cease to live in society and scatter them- 
 selves irregularly over the surface of the earth. In other words, if 
 the value of social advantages, expressed in ground-rents, did not exceed 
 the value of social expense, expressed in taxes, there would be no eco- 
 nomic justification for the existence of organized society. But as society, 
 in its organized form does exist, there is reason to believe it worth 
 more than it costs; or, to express the same relation in different terms, 
 that ground-rents are greater than taxes. 
 
 The cost of organizing society could apparently not be greater than 
 the economic advantages derived, as these advantages are necessarily 
 the basis upon which groimd-rents depend. Where this is not the case, 
 that is, where taxes are greater than ground-rents, it would seem that 
 the eventual disorganization of the society must follow, for its sup- 
 port would cost more than the advantages offered were worth. Taxes 
 would be greater than the economic advantages obtainable. 
 
 As society grows in wealth, however, so will its administrative needs, 
 although it would seem that the latter can never overtake the former, 
 as the cost of administration must follow and be dependent upon the 
 wealth administered. Even in a declining society this relation would 
 prevail; for, where the value of land and social wealth is decreasing, 
 so must the social needs, until, with the divorce of value from the land, 
 the social wealth will disappear and with it the need of administra- 
 tion. It thus seems that, in any and all forms of society, the annual 
 value of land is greater than the annual social expenditure. 
 
 The development of the same train of thought might establish a 
 closer relation between the two. The foregoing considerations are 
 
 based upon any and all methods of raising revenue; therefore, upon those 
 at present in use. But many of these methods cost the people much 
 more than the revenue obtained. Ground-rents, therefore, are not only 
 greater than the revenue derived, but greater by the cost of the revenue 
 over the amount realized. Nor is this the only addition which may be 
 made to the first estimate, for, through increased prices, due to artificial 
 and protective taxation, and consequently increased living expenses 
 of all kinds, it will be evident that the actual revenue not only costs 
 the people more than the amount derived, but that this amoimt is 
 decreased in its efficiency, or purchasing power. Ground-rents, there- 
 fore, may be regarded as not only greater than social revenue by the 
 cost of the revenue over the amount obtained, but also by the decreased 
 efficiency of the actual revenue created. StiQ one more consideration 
 may be suggested. All revenue must ultimately be derived from the 
 productive industries of a society, as these industries create the total 
 or gross revenue of the people. As these industries, again, are the 
 chief employers of land and labour, it seems to follow that the total 
 return from the land is diminished through the action of indirect taxa- 
 tion, owing to the necessary restriction of the natural industrial de- 
 velopment, and the stifling of normal consuming powers. In other 
 words, if all restrictions were removed from industry and consumption, 
 the productive use of land would be materially increased, and its total 
 annual value correspondingly greater. Natural land values thus seem 
 to be considerably greater than the expenses of social administration. 
 
 Section II — Method of Estimation 
 
 In order to present specific relative estimates of the value of unim- 
 proved land and social expenditure, it is necessary to select a few coun- 
 tries, states, and cities; to calculate as nearly as possible the annual 
 value of the land in these places, and compare this value with the total 
 amoimt of revenue raised at present, while bearing in mind the following 
 principles: 
 
 1. Ground-rent, or economic rent, is the total value of unimproved 
 land, including taxes already paid by it. 
 
 2. The annual market value of unimproved land is the ground-rent, 
 or economic rent, less these taxes. The annual market value of the 
 land constitutes the net rent. 
 
 3. The existing capitalized, or market value, of land is equal to 
 the net annual rent expected (deducting taxes) multiplied by the number 
 
 • i] 
 
 u 
 
i84 
 
 The Value of the Land 
 
 Pt. Ill 
 
 of years, which, multiplied by the current rate of interest, would produce 
 one hundred. 
 
 4. The true, or total, capitalized value of land is reached in the 
 same way without the deduction of taxes. 
 
 5. The annual groimd-rental value of land, therefore, may be con- 
 sidered as equal to the average rate of interest on its capitalized value, 
 plus all taxes levied on land values at present. 
 
 One method of establishing the relation of ground-rents to revenue 
 would thus be to calculate the present net unimproved rent, add all 
 taxes paid by this rent at present, and estimate the proportion of this 
 gross or economic rent to gross taxes. There is, however, a slightly 
 simpler method leading to the same result, which may better serve the 
 present purpose. 
 
 The method is to estimate as nearly as possible: 
 
 1. The present net rent (deducting taxes) of the land in the places 
 selected. 
 
 2. The entire amount of revenue produced. 
 
 3. The amount of revenue at present raised from ground-rents. 
 
 4. The amount of taxes which it would be necessary to assess upon 
 present net groimd-rents, in addition to existing taxes, should all revenue 
 be derived from the single source of unimproved land values. 
 
 In order to estimate approximately the present net rent of unim- 
 proved land within any administrative area, it is essential to establish 
 a relation between land values in general, and some definite value rec- 
 ognized in the present system of valuation, which may lihus serve 
 as a basis of calculation, or mean proportional. Total real estate 
 forms the most satisfactory value of this kind; it becomes necessary, 
 therefore, to attempt to establish a generally acceptable propor- 
 tion between unimproved land values, or ground-rents, and total real 
 
 estate. 
 
 M. de Foville estimates the capitalized value of the land of France 
 in private fortimes at three billion pounds sterling; buildings at two 
 billions. 1 This would give an estimate of five billions for total real 
 estate; the land alone would thus be worth three fifths or 60 per cent 
 of real estate. It is probable, however, that these figures include all 
 absorbed improvements of agricultural property as "land," but also 
 that they disregard value attaching to the land through the annual 
 earning powers of franchises public, corporate, and individual; if such 
 
 » Statesman's Year Book, 1911, p. 76s* 
 
 Bk. I Land Values 185 
 
 is the case, the 60 per cent here represented as "land" is probably below 
 the truth. It remains to be discovered to what extent this approximate 
 estimate of 60 per cent maybe regarded as applicable to other countries, 
 and all kinds of real estate, to agricultural land, suburban property, 
 and to sites and buildings of metropolitan centres. 
 
 With reference to agricultural values perhaps the most comprehen- 
 sive returns in the most convenient form are found in the following 
 table: 
 
 AGRICULTURAL CAPITAL* 
 
 Value, Millions £ Sterling 
 
 Land Cattle Sundries Total 
 
 United Kingdom . . . i,686 202 189 2,077 
 
 France 2,580 232 281 3,093 
 
 Germany i,977 303 228 2,508 
 
 Russia 2,113 350 247 2,710 
 
 Austria 1,473 161 163 1,797 
 
 Italy 1,180 92 127 1,399 
 
 Spain 1,056 46 no 1,212 
 
 Portugal 138 II IS 164 
 
 Sweden and Norway . . 212 41 25 278 
 
 Denmark 205 26 23 254 
 
 Holland 240 28 27 295 
 
 Belgium 300 22 32 354 
 
 Switzeriand .... 138 18 16 172 
 
 Danube States .... 420 42 46 508 
 
 Greece 94 5 10 109 
 
 Europe i3»8i2 1,579 1,539 16,930 
 
 United States .... 3,314 451 377 4,142 
 
 Canada 230 47 28 305 
 
 Australia 236 120 36 392 
 
 Total 17,592 2,197 1,980 21,769 
 
 These relations indicate that more than 60 per cent of total agri- 
 cultural capital is represented by the value of land. The values here 
 returned as land, however, are doubtless improved values and there- 
 fore greater than groimd values. On the other hand, many of 
 the values returned under the headings "Cattle" and "Sundries" 
 are, no doubt, not real estate in the proper sense of the word, 
 which would form a perhaps compensating consideration on the 
 other side. An analysis of these figures, however, does not indicate 
 that the value of unimproved agricultural land is less than 60 per cent 
 of total agricultural real estate, which is all that is necessary for the 
 present purpose. 
 
 In turning the attention to occupied land, a more complicated series 
 
 * Industries and Wealth of Nations. Mulhall, p. 384. 
 
 1: 
 
« 
 
 
 II 
 
 i86 
 
 The Value of the Land 
 
 Pt. Ill 
 
 of values is met; it being evident that the relation between land and 
 real estate will vary almost indefinitely in the same city, the same 
 neighbourhood, or lie same street. Instead of reference to particular 
 returns, a safer method of discovering the average relations between 
 land and real estate in cities would be to observe the average which 
 experience has shown to be the most advantageous from the point of 
 view of investment. Such an average would cover occupied land from 
 the least to the most valuable, and present a relation which 
 values will not only approximate, but to which they must ulti- 
 mately conform, whatever the original relations; for widely differ- 
 ing relations will be proportionately improfitable, and subsequent 
 variations approach the most profitable average, through a process of 
 elimination. 
 
 A thorough study of the subject in this connexion is presented by 
 Mr. Richard M. Hurd, who shows the results of the examination of 
 "the mass of valuations of land and buildings, rentals, and mortgages 
 obtained in about fifty cities," the point of view being that of a "con- 
 servative lender on real estate." He says-.^ "The most important 
 consideration governing suitability to location is that of proportion of 
 cost of building to value of land, the safe general rule being that the 
 cost of the building should approximately equal the value of the land. 
 In other words, the typical successful property, land and building, ap- 
 pears to earn double interest on the cost of the building, one half 
 of which capitalized as economic rent gives a value to the land 
 equal to the cost of the building. While there are exceptions to this 
 proportion it forms a median line of departure, appl)dng most closely 
 to business property, whether the building is a $5,000 one-story 
 brick on a cheap lot or a $3,000,000 office building in the highest price 
 location." 
 
 This statement of the general proportion of land to building values, 
 with reference to the most profitable returns, is of greater interest in 
 the present inquiry than any amount of particular statistical infor- 
 mation; certain considerations are, however, suggested. 
 
 If land and building represent approximately equal investment, or 
 original cost, there must be a change in their relation in the course of 
 time; and this change will apparently always be in favour of the land, 
 as bricks and mortar rarely, if ever, appreciate while land often does. 
 Where land falls in value the building must of necessity follow suit. 
 
 > Principles of City Land Values, p. 97. 
 
 Bk. I 
 
 Land Values 
 
 187 
 
 11 
 
 As Mr. Hurd says:^ "To say, however, that buildings create land values 
 is to reverse the truth, buildings being the servants of the land and of 
 value only as they fulfil its needs." Thus a building, situated upon land 
 rising rapidly in value, may depreciate in proportion to the rise of 
 the value of the land, until the building is torn down. In such a case, 
 the land was not only worth loo per cent of total real estate, but more 
 valuable with no building, by the cost of demolition. Where land is 
 rapidly declining the same phenomena might occur. Thus, all changes 
 redound to the relative advantage of land. "One fruitful source of 
 error," says Mr. Hurd,^ "in studying land values is to regard the prob- 
 lem as involving only a point of time instead of a period of time. Any 
 valuation based upon present facts alone is incomplete, consideration of 
 past influences and future prospects being vitally necessary. The 
 life of value in land, whether the unit taken is a city, a section of a city, 
 or a single lot, bears a close analogy to all other life in being normally 
 characterized by a small beginning, gradual growth, and increased 
 strength up to a point of maximum power, after the attainment 
 of which comes a longer or shorter decline to a final disappear- 
 ance. Thus all value in city land undergoes a continuous evolution 
 from a state of non-existence through a cycle of changes, to a final 
 dissolution, or to a new birth, when the process is repeated on the same 
 
 land." 
 
 The cycle of changes will in nearly all instances result in the appre- 
 ciation of land values in relation to improvements, whether the land 
 itself is stable, rising, or declining in value. Thus, with any city as a 
 unit, in which land and improvements represented equal original in- 
 vestment, if these values are compared at any given time, the value 
 of the land may be considerably greater than the value of improvements; 
 only the more recent values conforming to the typical 50 per cent 
 proportion. 
 
 Again, it may be remembered, in computing the values of the land area 
 of any city, that the value of its franchises is an essential element in 
 their estimation. The land privilege of a transportation company 
 is as much an element of value as the right to erect a building. Thus, 
 if the capitalized value of all franchises, granted by any city, is added 
 to the present estimated value of its land area, and these values com- 
 pared to total real estate, the value of the land will, apparently, be 
 
 » Ibid., p. 17. 
 * Ibid., p. 18, 
 
 I 
 
i88 
 
 The Value of the Land 
 
 Pt. Ill 
 
 I 
 
 
 ) I 
 
 I 
 
 greater than 60 per cent of total real estate.^ This proportion will 
 therefore, be adopted in the following estimates as well within conser- 
 vative limits. If the 60 per cent average, however, for any reason is 
 regarded as too high, calculations may be made upon any more satis- 
 
 1 A few specific instances and figures may be presented. An interesting study of the value of unimproved 
 land will be found in Mr. T. G. Shearman's work. Natural Taxation. Mr. Shearman there presents 
 careful analysis of a great number of returns in reference to agriciiltural and urban values; on page 138, Mr. 
 Atkinson is cited as follows with reference to values in Boston: "At the average of recent years the value 
 of land is $333,000,000; of buildings and improvements, $230,000,000." Total real estate, $563,ooo,ooa 
 Land values over 59 per cent of real estate irrespective of franchise values and without estimating the taxes 
 already paid by the land both of which would increase the percentage. Mr. Thomas Hills, who was chair- 
 man of the Boston board of tax assessors for twenty-five years is cited on page 237 as giving "the precise 
 figures for 1892, of a single block in the heart of Boston, \yiag between Washington Street and Tremont 
 Street. This block, containing 97,652 square feet, was assessed, for the land alone, $7,157,800, and for 
 buildings alone $982,200. The pure land value was $73.29 per foot $3,192,512 per acre; the building 
 value, $10.05 per foot; $437,778 per acre. Thus, in one of the most thickly settled and closely built parts 
 of Boston, the land value is more than seven times as great as the building value, and is 86 per cent of the 
 whole real estate." Such examples may be multiplied indefinitely. For example (Mulhall Dictionary oi 
 Statistics page 313). "In 1888 there were let on lease for eighty years at Piccadilly and Charing Crosj 
 Road, covering 19.000 square feet for £3.600 per annum, being at the rate of £8.300 per acre; the tenant 
 erecting buildings worth £27.000. This would represent a selling value of £300,000 per acre for the land." 
 Estimating the expected return on the capital invested in the buildings at 3 per cent, the annual building 
 rental would be £810. The total rental value of the property thus representing £4,410 of which £3,600 
 is pure land value; over 75 per cent of the total without reference to the return expected upon the ground 
 rental invested. 
 
 " In four years ending 1886. Hamburg pat up new suburbs and houses worth £3.305,000, the value of the 
 sites being 60 and the building 40 per cent of the total (Diet. Statistics page 316)." This estimate, of 
 course, disregards taxes already paid by the land together with aU franchise values. 
 
 A brief historical review of the subject may not be without interest. " In 1660 Petty 's valuation places 
 land values at 57 per cent, of total wealth; the selling prices being then under £5 an acre. At the time of 
 Davenant (1703) land had risen to £9; "at the time of Young (1774) to £18. The total wealth respectively 
 estimated at (millions) £250, £490, and £1.100. Toward the close of the eighteenth century, Beeke, Pitt, 
 and Eden made valuations for Great Britain. The valuation of real estate is given by Doctor Beeke as 
 920 millions — viz.: 
 
 Land in England £600,000.000 
 
 Land in Scotland 120,000.000 
 
 Houses in Great Britain 200.000,000 
 
 Real Estate £920,000,000 
 
 Land 720.000,000 
 
 •* The most elaborate work of this kind was Colquhoun's, in 1812, which formed the basis on which Lord 
 Liverpool and Pavlo Pebrer evidently constructed their subsequent tables. Pebrer's estimates give the 
 following valuations for the United Kingdom: 
 
 Land 1,600 (Mil. Sterling) 
 
 Houses 533 
 
 Mines and Canals 166 
 
 Real Estate 2.299 
 
 Land x,o6o 
 
 '* Porter's estimate in 1840 confirmed those previously made and showed a progressive increase in 
 
 wealth." 
 
 Spallart gives the following returns for Italy: 
 
 Land 1,160 (Mil. Sterling) 
 
 Houses 360 
 
 1,420 
 
 Bk. I Land Values 189 
 
 factory basis; no essential difference is obtained imtii the average is 
 reduced to 25 or 30 per cent, for which no justification is found. 
 
 A more or less acceptable ratio between pure land values and total 
 real estate is thus established, and it remains to discover what relation 
 these land values bear to social expenditure. Real estate is already 
 estimated in this connexion as one of the present sources of revenue, 
 and will form one of the terms of a proportion, or common denominator, 
 by means of which this relation may be approximated. 
 
 In any attempt at even relatively exact study of the subject, it is 
 evident that the distinction between the present annual return of unim- 
 proved land and its economic, or true value, cannot be too strongly 
 emphasized. Groimd-rents, or total land values, are already taxed to a 
 certain extent by present methods, these taxes have long been capital- 
 ized and the market value of the land proportionately reduced. In 
 order, therefore, to reach the true value of ground-rents, the amount 
 of taxes already paid should be added to present net rents. For example : 
 If the untaxed, or gross, rent of a tract of land is £ 1,000, at twenty years 
 purchase its value will be £ 20,000. If, however, this land is subject 
 to a tax of £ 200, or 20 per cent, its capitalized value will be proportion- 
 Mr. Coglan gives these estimates for Australia: 
 
 Land 533 (Mil. Sterling) 
 
 Railways 94 
 
 Houses 239 
 
 Total Real Estate 866 
 
 Canada land 288 (Mil. Sterling) 
 
 Rails , . 151 
 
 Houses , , 127 
 
 Total Real EsUte 566 
 
 Cf. MidhaWs Did. of Statistics, pp. 589, 597. 
 
 The total ratable'valuation for Ireland in 1867 is given as £12,975,000, of which £9,ioo,ooo'was land. 
 
 The valuation for 1901 is given as follows: 
 
 Land £9,066,000 
 
 Houses 5,163.000 
 
 R^"S , 704,000 
 
 Total £14,933.000 
 
 — Surveyors^ InstUuU Transactions, VoL XXXV, p. a88. 
 
 r The land returned throughout these estimates no doubt includes absorbed improvements such as ditch- 
 ing, drainage, tillage, and so on, which will swell its value; on the other hand, the lotal is always far in 
 excess of 60 per cent of real estate and compensating elements of value have been neglected in taxes 
 ahready assessed and franchises. These figures seem to show that the estimate of 60 per cent of total real 
 estate values, as pure unimproved land value, is conservative. The subject b thoroughly discussed by 
 Mr. Shearman. He presents a great number of estimates based upon reports of urban and agricultural 
 values in the United States. His conclusions are identical with those of the text although based upon 
 totally different methods of calculation. His conclusion is that unimproved land forms more than 60 per 
 cent of urban real estate values and possibly less of agricultural real estate, while 60 per cent is a conserv- 
 ative estimate of average conditions and in all likelihood below the truth. 
 
 id 
 
IQO 
 
 The Value of the Land 
 
 Pt. Ill 
 
 Bk. I 
 
 Land Values 
 
 191 
 
 I 
 
 lately diminished, or equal to but £16,000; the difference, £4,000, being 
 the capitalized value of the Uxes imposed. If, therefore, in order to 
 raise the total revenue from ground-rents alone, it were necessary to 
 impose an assessment upon the land of £500 a year, it is evident that 
 the present assessment need be increased but by £300 as the land 
 already pays £200 of the £500 required. 
 
 Nearly all criticism of the taxation of land values regards present 
 land values as imtaxed; it appears that to assess all contributions upon 
 ground-rents, would require the assessment of all present taxes upon 
 present ground-rents. This is a mistake to the extent in which Uxes 
 are already borne by land values, as the market value of the land, and 
 the rent derived, are naturally reduced by the capitalized and annual 
 value of the taxes paid. As the capitalized value of the land is but the 
 capitalized value of the net rent, it follows that this capitalized value 
 must be proportionately smaller as the net, or taxed, rent is smaller 
 than the gross, or untaxed, rent. 
 
 Sixty per cent of all real-estate values seems, on the average, repre- 
 sented by the unimproved value of the land. If 60 per cent of total 
 real estate is pure land value, 60 per cent of taxes paid at present by 
 real esUte, fall upon ground-rents — that is, are abready paid by the land 
 and must, in consequence, be deducted from total taxes in order to 
 discover what additional contribution should be derived from land in 
 order to raise the total revenue from this source. 
 
 Here a moment's attention may be given to a subject of importance: 
 that form of socially created wealth coming under the general term 
 ''franchise." A franchise is the permission granted by a society 
 to individuals or corporations to make use for a given purpose of cer- 
 tain lands under the jurisdiction of the society. The use of these 
 lands is the only real value attaching to the franchise. Railways are 
 naturally the most important of the land-using corporations to-day, 
 and their land-using privileges, or franchises, are the sources from which 
 they derive their wealth-producing power. The exclusive right to the 
 use of a narrow strip of land, ten or ten thousand miles long, gives 
 railways their value; and this value derived from the land is as much its 
 inherent attribute as the situation of urban property, mineral wealth, 
 or the natural fertility of the soil. The fact that the land used by a 
 railway is but a strip of barren wilderness no more detracts from its 
 value as a medium of transportation, than the fact that a dty lot may 
 be useless for pasture detracts from its value as a building site. The 
 
 value of land used by a railway is as real and measurable as any form 
 of value adhering to land for any purpose. The value of land depends 
 upon one thing: the use to which it may be put, and to estimate the 
 value of the land used by a railway upon any basis, other than the 
 value of the franchise, is on a par with the estimation of land in urban 
 centres with reference to fertility. 
 
 The total value of the securities of a railway corporation, less the 
 total value of its stationary property, rolling stock, road bed, equipment, 
 and so forth, represents the value of its franchises; and the value of 
 these, plus the taxes paid by the railway on land, represents the true 
 or economic value of the land it uses. The relation between these 
 franchises, or land values, is shown in the history of almost any railway, 
 in the difference between the value of its securities and the cost of equip- 
 ment. 
 
 These considerations apply to all forms of franchises. Telegraph, 
 telephone, and gas companies, electric light plants, water works, and 
 street railways owe their wealth-producing abilities to their right to the 
 use of land in certain neighbourhoods. Without this privilege their 
 wires, pipes, rails and rolling stock would be useless. The importance 
 of this privilege may be judged by comparing the value of securities 
 issued against it with the other values involved. If these comparisons 
 are made, the value of the franchise, or the value of the right to the 
 use of the land, will, in all probability, often be found to form by far 
 the greater portion of the total value; much nearer 100 per cent, perhaps, 
 than the 60 per cent adopted. The value of a franchise might in some 
 cases be many times other values involved. In the case of franchise 
 privileges, however, the same average may be maintained, although 
 doubtless much below the truth. The value of both franchise privileges 
 and ordinary ground-rents is created by society as a whole. All 
 land-using interests, individual or corporate, are here, therefore, re- 
 garded^s "Real Estate" and 60 per cent of their value as ground-rents. 
 
 A position has now been developed from which some of the returns of 
 particular societies may be examined with reference to the relative 
 values of ground-rents and revenue in order: (i) to attempt to es- 
 tablish a relation between the two; (2) to estimate the amount of 
 additional contribution necessary from ground-rents in order to pro- 
 duce the entire revenue from this one source. 
 
 An able analysis of this nature is in existence; the work of Mr. T. G. 
 Shearman, and, as his figures have stood the test of time, they possess 
 
 IhI 
 
 ■ I"- 
 
 I ; 
 
192 
 
 The Value of the Land 
 
 Pt. Ill 
 
 Bk. I 
 
 Land Values 
 
 193 
 
 
 greater value than would more recent compilations. With one or 
 two exceptions, therefore, the following estimates are a review of Mr. 
 Sheannan's study of the subject. The United Kingdom is considered first. 
 
 Section m — Estimates 
 
 Article 1 — Great Britain 1885. 
 
 The returns for 1885 are used in the following estimates. The whole 
 amount raised by taxation, says Mr. Shearman,^ national and local, in 
 Great Britain and Ireland for 1885, was £118,341,000. {Statesman's 
 Year Booky 1888, p. 236): 
 
 The official returns of the income-tax for 1885 (twenty-eighth Report 
 Internal Revenue Department) show the following results. All incomes 
 will be classed as "British." 
 
 British Net Incomes from Real Estate — Returned in 1885. 
 L From pure ground-rents: 
 
 Manors, tithes, fines, etc £853,000 
 
 Fishing and shooting rights .... 572,000 
 
 Market privileges and tolls 607,000 £2,032,000 
 
 n. From land and improvements: 
 
 Agricultural lands £65,442,000 
 
 Houses and lots 127,050,000 
 
 Canals, water works, mines, iron works, gas 
 
 works, etc 22,381,000 
 
 Railways 33,050,000 
 
 ^247,923,000 
 
 60 per cent of this is £148,753,000 
 
 Net annual ground-rents £150,785,000 
 
 Taxes may now be considered which have been levied already upon 
 land values and which have of course been deducted from gross rent 
 in the above returns. They are as follows : 
 
 Land-tax £1,045,000 
 
 Inhabited house duty 1,855,000 
 
 Income-tax on rents 3,605,000 
 
 Local rates 37,846,000 
 
 Tithes 4,054,000 £48,405,000 
 
 Sixty percent of this amount, or £29,043,000, must be deducted from 
 total taxes, as that much is already contributed by the land; £150,785,000 
 being the net return in groimd-rents. 
 
 Gross British taxes 
 
 Deduct taxes now paid from ground-rents 
 
 £118,341,000 
 29,043,000 
 
 £89,298,000 
 
 This is the amotmt, says Mr. Shearman, which would be collected 
 from British rents if all taxes were levied upon them. It is almost 
 exactly 59 per cent of British net ground-rents, leaving all rent from 
 houses and improvements untaxed. All British and Irish taxes could 
 be paid out of existing rents and yet leave to the landlords a clear income 
 of £61,487,000 ($300,000,000) per annum, besides their house rents, etc., 
 amounting to at least as much more. 
 
 Article 2 — The United States i8qo. 
 
 The census of 1890, continues Mr. Shearman, estimates the total 
 real "wealth" of the United States at $65,037,091,197; of which real 
 estate is set down at $39,544,544,333. But of this, real estate to the 
 real value of $3,833,335,225 is exempt from taxation; and as there is 
 no use in taxing public property, only to pay the tax out of the public 
 treasury, exempt property may as well be excluded from these calcu- 
 lations. 
 
 The assessed valuation of property in 1890, which of course has little 
 relation to its real value, was: 
 
 Real estate 
 Personal property 
 
 $18,956,556,675 
 6,516,616,743 
 
 $25,473,173,418 
 
 * Natural Taxation. Thomas G. Sheannan, p. 143. 
 
 Thus it will be seen that real estate constituted 74I per cent of all 
 assessed property, and therefore bore that share of ad valorem taxes. 
 For convenience, this share may as well be called 75 per cent. The 
 local ad valorem taxes amounted to $470,652,000. Reckoning land values 
 as usual at 60 per cent of real estate, those values bore 60 per cent 
 of 75 per cent of all local ad valorem taxes. This is exactly 45 per 
 cent, leaving 55 per cent to be borne by land improvements and per- 
 sonal property. Special taxes, such as licenses, succession taxes, 
 corporation taxes, poll taxes, etc., are not included. But, as a large pro- 
 portion of what is assessed as personal property is in fact real estate 
 
I 
 
 194 The Value of the Land Pt. Ill 
 
 in a disguised fonn, the probability is that real estate actually bears 
 more than 75 per cent of all local taxes of every description. 
 
 The valuation of real estate in the census was certainly not made 
 upon any lower estimate of the rate of interest than 5 per cent, as 
 even that would value land at twenty years' purchase. Only a 
 small part of American real estate could be sold then or now at 
 even that rate. Nevertheless, that rate is here accepted. It fol- 
 lows that rent must be reckoned at $ per cent on the capitalized 
 value of land, since "land" in law is nothing but a name for a title to 
 ground-rents. 
 
 On this basis the following results are reached. They are extremely 
 conservative; that is to say, they err on the side opposed to the argument 
 here presented. 
 
 True Value of Real Estate 18 go 
 
 Real estate taxed as such* $35 711 209 000 
 
 S^^il^^ys • ; 8;68sUo7:ooo 
 
 Mines and Quames 1,291,291,000 
 
 Telegraphs and Canals, far more than .... 312,093,000 
 
 T 7°^ . ' e.'. $46,000,000,000 
 
 Land values, 60 per cent of this .... $27,600,000,000 
 
 Ground Rental and Taxes in the United States. 
 
 Rent at 5 per cent on $27,600,000,000 . $1,380,000,000 
 
 National expenses $357,889,000 
 
 Local taxes 470,652,000 
 
 »v ^ ... $828,541,000 
 
 Deduct 45 per cent of local taxes aheady laid on 
 
 _ ^^ 211,793,000 
 
 Taxation on present net rents if all other taxes are 
 
 repealed 616,147,000 
 
 Surplus rent $763,252,000 
 
 Thus all national and local taxes, if collected exclusively from ground- 
 rents, would absorb only 44J per cent of those rents, leaving to 
 the owners of the bare land a clear annual rent of $763,252,000, besides 
 the absolutely untaxed income from all buildings and improvements upon 
 their land. 
 
 The above estimate of ground-rents is very far below the reality. 
 It does not include one dollar for the enormous value of oil wells, 
 gas wells, pipe lines, the street privileges of gas, electric light, steam- 
 
 » Real esUte worth over 13,800,000,000 is exempt from all taxation. 
 
 Bk. I Land Values 195 
 
 heating, or water companies and other land privileges not expressly 
 enumerated. 
 
 Article j — Pennsylvania, 
 
 Owing to a very remarkable example of public spirit, the State of 
 Pennsylvania affords an opportunity for an inquiry of this kind, un- 
 equalled in any other State. A Revenue Commission has been formed 
 by associations of private citizens, representing all interests, which has 
 pursued a line of thorough investigation for several years past. Al- 
 though its work is still incomplete and some of its statistics are plainly 
 erroneous, they have been prepared in the best of faith and with unusual 
 care; while their errors are easily found and readily corrected. 
 
 In roimd numbers the Commission estimates the entire wealth of 
 Pennsylvania in 1892, at a true value of $9,692,000,000. Of this, 
 $1,250,000,000 are reported as "moneyed capital." This is an obvious 
 error, in a computation of real wealth. Moneyed capital cannot mean 
 anythmg else than debts and credits. . . . Deducting this item 
 there remains real "wealth" (reckoning land values as part of wealth) to 
 the amount of $8,500,000,000. On the basis of a full report of fire insur- 
 ance in the State, the Commission estimates that $5,000,000,000 of this 
 amount is of an insurable nature, that is, the value of buildings and 
 chattels. This leaves the value of the bare land (which is the only 
 thing incapable of being destroyed by insurable risks) at about 
 $3,500,000,000, or a trifle more than 41 per cent of the value of all 
 wealth. . . . 
 
 The entire local taxation of Pennsylvania in 1892 was $49,383,906. 
 Of this there was levied upon real estate in various forms, $36,000,000 
 as follows: 
 
 Taxes on "real estate" •,, 6a< fiar 
 
 Taxes on railways ...,...: 2,i46,«i 
 Taxes on other land-owning corporations about 
 
 $1,200,000 say 1,208,038 
 
 $36,000,000 
 
 Sixty per cent, of this is $21,600,000; and this was the amount borne 
 by the land values of Pennsylvania in 1892. 
 
 The proportion of federal taxation which would have fallen upon 
 Pennsylvania, had federal taxes been direct, and levied in proportion to 
 population, as required by the Consititution, was less than $30,000,000. 
 But if levied in proportion to land values alone, it would be about 
 
t 
 
 I 
 
 II I 
 
 l< » 
 
 196 The Value of the Land Pt. Ill 
 
 $36,000,000. These figures furnish all materials necessary to determine 
 the effect upon Pennsylvania land-owners of a concentration of taxes 
 upon ground-rents. 
 
 Pennsylvania — Ground-rents and Taxes of i8g2. 
 
 Rent at 5 per cent on $3,500,000,000 .... $175,000,000 
 
 Federal taxes 36,000,000 
 
 Local taxes 49,384,000 
 
 $85,384,000 
 Deduct 60 per cent of real estate taxes already paid . 21,600,000 
 
 Taxation on present net rents, if all other taxes are 
 
 repealed 63,784,000 
 
 Surplus rent $111,216,000 
 
 Thus all national and local taxes, if collected only from ground-rents, 
 would absorb less than 36 per cent of those rents in Pennsylvania, 
 leaving to the land-owners a clear income of over $111,000,000 per 
 anniun, besides the untaxed income from their buildings and other 
 improvements. 
 
 It will be noticed that a much smaller proportion of ground-rent seems 
 to be required for the payment of all taxes in Pennsylvania than 
 in the United States at large. This apparent discrepancy is due 
 to the fact that the valuation of real estate, made by the Pennsyl- 
 vania Commission, was 25 per cent higher than the census valuation 
 of 1890. 
 
 If the census estimates should be accepted with reference to Pennsyl- 
 vania, as in other cases, the result would be as follows: 
 
 Pennsylvania — Ground-rents in i8go — Taxes in i8g2. 
 
 Land values, per census 1890 $2,810,000,000 
 
 Rent at 5 per cent $140,500,000 
 
 Federal taxes 36,000,000 
 
 Local taxes 49,384,000 
 
 $85,384,000 
 Deduct taxes falling on ground-rents in 1892 . . 21,600,000 
 
 Taxation on net rents of 1892, if all other taxes were 
 
 repealed 63,784,000 
 
 Surplus rent $76,716,000 
 
 On the basis of the census estimates of value, therefore, the concen- 
 tration of all taxes upon ground-rents would absorb about 45! per cent 
 of Pennsylvania net rents. This, it will be seen, is nearly the same 
 proportion of rent which would appear, from the census, to be sub- 
 
 Bk. I Land Values 197 
 
 ject to absorption by such taxation, if applied to the United States as a 
 whole. 
 
 Article 4 — Connecticut. 
 
 It appears, by the Report of the Special Commission on Taxation, 
 in 1887, that the local taxes of Connecticut then amoimted to about 
 $6,600,000, that the average tax rate was i| per cent but railways were 
 separately assessed and taxed exactly i per cent. The assessed value 
 of real estate was $251,000,000 of which land values, at the usual rate 
 of 60 per cent, would amount to $1 50,000,000. Railway property within 
 the State was known to be worth, at regular market prices, $62,000,000; 
 and it was assessed at its full value, the tax being made low on accoimt 
 of the known imder-valuation of all other property. The land value in 
 railways, at 60 per cent, amounted to $37,000,000. 
 
 The census of 1890 gives the following returns of the true market 
 value of real estate in Connecticut. 
 
 Connecticut — True Values of Real Estate, i8go. 
 
 Real estate, returned as such $543,421,891 
 
 Railways 54,550,504 
 
 Mines and quarries 3,108,787 
 
 Canals, telegraphs, etc.* 14,753,310 
 
 $615,834492 
 
 Sixty per cent of this for land values amounts to $369,500,000. 
 We can now calculate. 
 
 Connecticut Ground-rents, i8go, and Taxes, 1887. 
 
 Net ground-rent at 5 per cent on $369,500,000 . . $18,475,000 
 
 Federal taxes, apportioned on basis of rents . . 4,800,000 
 
 Local taxes 6,600,000 
 
 $11,400,000 
 Deduct taxes already Jaid on ordinary land 
 
 values: 1$ 1 50,000,000 at 1 1 percent $2,812,500 . 
 Do. on railways at i per cent . . 370,000 . 
 
 ^3,182,500 
 Taxation on present net rents, if all others are re- 
 pealed 8,117,500 ^ 
 
 Surplus rents $10,257,500 ' 
 
 The concentration of all taxes upon the ground-rents of Connecticut, 
 therefore, would not absorb more than 44^ per cent of those net rents, 
 
 * This item includes shipping. But as gas works and other immensely valuable franchises on land are not 
 included, this item is not too large. 
 

 198 The Value of the Land Pt. Ill 
 
 leaving to the land-owners a clear income of over $10,000,000 per annum, 
 besides all their income from buildings and improvements. 
 
 Article 5 — Boston, 
 
 J For the purpose of solving the problem submitted by Mr. Edward 
 Atkinson, concerning the city of Boston, let us accept his figures, although 
 they are not brought quite up to the date of 1890, and certainly under- 
 state the value of land. 
 His figures are given for 1888, and are as follows: 
 
 Land, assessed value $333,000,000 
 
 Buildings, assessed value 230,000,000 
 
 Personal property 201,000,000 
 
 ^ The whole amoimt of State and local taxes in Boston, in 1888, is 
 given by Mr. Atkinson at $10,000,000 per annimi; and he estimates 
 the national taxes at "a sum as large if not larger than all the State, 
 county, city, and town taxes combined." But in this he is much 
 mistaken. For many years local taxation has exceeded national tax- 
 
 • 
 
 ation; and as we have already shown, the State and local taxes assessed 
 upon property by its value, exclusive of licenses, succession taxes, and 
 many others, exceeded, in 1890, the whole amount of national expend- 
 itures by about $113,000,000. In 1888 a direct tax of $300,000,000 
 would have amply suflSced to cover all the expenditures of the federal 
 government, pensions included. 
 
 Apportioned according to population, as the Constitution requires, 
 Boston's share of such a direct tax would have been $2,100,000.^ 
 
 Apportioned according to the value of the land, either with or without 
 improvements, Boston's share of such a direct tax would have been 
 much less than $4,500,000. The latter figure may be accepted, not 
 only as affording stronger support to Mr. Atkinson's theory, but also 
 as based upon just principles, in accordance with which it may be assumed 
 that the Federal Constitution would be amended, whenever strictly 
 direct taxation is adopted. 
 
 It may be assumed with entire certainty, in this case, as in others, 
 that the assessors' estimate of the value of real estate was based upon 
 the theory that it was renting for at least 5 per cent per annum, net, on 
 its capital value; for it is incredible that the assessors should have 
 valued land at more than twenty times its annual rent. The annual 
 rental value of the bare land of Boston in 1888 was therefore at least 
 
 I Population. 1890: United States, 63,633.000; Boston, 446.0Q0, 
 
 Bk. I Land Values 199 
 
 5 per cent on $333,000,000; that is to say $16,650,000. The tax rate 
 was $13.50 per $1,000 or $4,500,000 on the bare land. 
 
 On this basis, and giving the benefit of every doubt in favour of Mr. 
 Atkinson's views, the following conclusions are reached: 
 
 Boston Ground-rents and Taxes in 1888. 
 
 Ground-rent at s per cent of . . . $333,000,000 $16,650,000 
 
 Federal taxes $4,500,000 
 
 Local taxes ....•..., 10,000,000 
 
 $14,500,000 
 Deduct taxes on land values already paid . . . 4,500,000 
 
 Taxation on present net rents, if all other taxes are 
 
 repealed 10,000,000 
 
 Surplus rent $6,650,000 
 
 Thus all national and local taxes, if concentrated upon the 
 groimd-rents actually found and assessed by the assessors of 
 Boston, would absorb barely 60 per cent of those rents, leaving 
 Boston land-owners a clear income of over $6,650,000 per annum, 
 besides the imtaxed income from buildings and other improve- 
 ments. 
 
 Omissions from Boston rents. Thus far it has been assumed that the 
 figures of Boston assessors, upon which Mr. Atkinson relies, correctly 
 represent the market value of all Boston land. . . . 
 
 But it is not necessary to enter into this question just now. Even 
 accepting the official assessment, these figures show upon their face 
 that the assessors have omitted from their estimates of land values in 
 Boston some items of immense importance. Where is there any account 
 made of the privileges conferred over and under Boston streets, upon 
 railway, telegraph, telephone, gas, electric light, steam heating com- 
 panies, etc.? So far as these corporations actually own, in their own 
 names and of record, offices and buildings, over which they have ex- 
 clusive control, like any other private land-owner, such property 
 is assessed, but only at the same rate per square foot as other 
 private land. But not one dollar of the value of the franchises 
 of any of these corporations, or of the privileges which they 
 have over and under Boston streets, is included in the asses- 
 sor's estimate of land value. This will appear even more clearly 
 upon examination of the assessor's annual reports. Such franchises 
 and privileges are never assessed under the head of "land" in any 
 State of the union. 
 
 

 
 V 
 
 8 
 
 '200 The Value of the Land Pt. Ill 
 
 No doubt the Boston assessors and Mr. Atkinson were astonished 
 at the suggestion, made some years ago, that all these franchises and 
 privileges come within the definition of "land"; but they certainly do, 
 both imder the principles of economic science and under the plain 
 terms of American law. They are " hereditaments," ^ which form a 
 part of " land" under both Massachusettes^ and New York law^ although 
 exempted from taxation by statute in New York, and by the dead hand 
 of Chief Justice Shaw in Massachusetts. 
 
 Applying this principle to raihoad, telegraph, gas, and other 
 corporate privileges, in or over the streets of Boston, there can 
 be no doubt that the land values appertaining to these fran- 
 chises would be eagerly bid for at $3,000,000 per annum. The 
 whole of this large sum is entirely omitted from the official esti- 
 mate of ground-rents in Boston; and therefore at twenty years* 
 purchase the land of Boston has been undervalued to the extent of 
 $60,000,000. 
 
 This estimate is confirmed by the census 1890, which shows that the 
 real values of real estate, including these franchises, were nearly 30 per 
 cent higher than the assessed values in Massachusetts. The official 
 figures for Boston alone are not at present accessible; but there is every 
 reason for believing that the undervaluation there was as great at least 
 as in the rest of the State, since Boston has more valuable franchises 
 than any other part of the State. In view of these facts let us revise 
 the foregoing table, on the basis of an addition of only 25 per cent, 
 instead of 30 per cent. 
 
 Boston Ground-rents and Taxes, 1888. Corrected by Reference to Census, 
 
 Ground-rent assessed as such $16,650,000 
 
 Correction of under-assessment per census . . . 4,162,000 
 
 $20,812,000 
 
 Federal taxes $4,500,000 
 
 Local taxes 10,000,000 
 
 $14,500,000 
 Deduct taxes on land values already paid 4,500,000 
 
 Taxation on present net rents, if all other taxes are re- 
 pealed 10,000,000 
 
 Surplus rents $10,812,000 
 
 » Smith V. New York, 68 N. Y. SS*' 
 "i Rev. Stat., ch. 3. S 7- 
 •1 Rev. Stat., 750. 
 
 Bk. I 
 
 Land Values 
 
 201 
 
 The concentration of all taxation upon ground-rents, in Boston, 
 would not, therefore, absorb as much as 48 per cent of those rents. 
 
 Article 6 — Summary, 
 
 All the foregoing calculations have been made without any precon- 
 ceived theory as to the proportion which taxation would probably 
 bear to rent, and without any anticipation that there would be much 
 uniformity in the results obtained from such widely separated and 
 widely different communities. Let us now compare these results, reck- 
 oning the British pound at $4.85. 
 
 
 Net ground- 
 
 Additional 
 
 Proportion 
 
 
 rent, less 
 
 tax 
 
 taken by 
 
 
 present tax 
 
 
 tax 
 
 Great Britain 
 
 . $ 731,307,000 
 
 $433,095,000 
 
 59 % 
 
 United States 
 
 1,380,000,000 
 
 616,748,000 
 
 44i% 
 
 Pennsylvania 
 Connecticut 
 
 140,500,000 
 18,475,000 
 
 63,784,000 
 8,217,000 
 
 45^% 
 44i% 
 
 Boston 
 
 20,812,000 
 
 10,000,000 
 
 48% 
 
 The uniformity of result, where the figures are based upon the same 
 census, as in the United States at large, Pennsylvania, and Connecticut, 
 is remarkable. 
 
 In Great Britain the estimate of ground-rent does not allow a dollar 
 for the value of vacant land or unoccupied houses, parks or pleasure 
 grounds. The magnificent estate of Chatsworth is rated at only $3,000 
 per annum. An addition of one third to the values included above 
 would be far below the truth. With such an addition, the proportion 
 of taxes to British rents would be reduced below 44I per cent. 
 
 All attainable statistics thus point to the conclusion that the entire 
 cost of the most expensive and even extravagant governments in civilized 
 countries could be placed upon groimd-rents, without taking in taxation 
 even half of the present net income of land-owners from that source 
 alone.' 
 
 Section IV — Other Estimates 
 
 Article i — Great Britain i8gg. 
 
 The foregoing estimates are from a single source; one more, therefore, 
 may be added adopting a different date and method. The United 
 Kingdom is chosen, and the returns for the year 1899-1900, preceding 
 the increase in taxation rquired by the Boer War, as representing the 
 
 
! . 
 
 202 The Value of the Land Pt. Ill 
 
 most normal year of a later decade. The fiftieth number of the Statis- 
 tical Abstract for the United Kingdom is used (1888-1902), the page 
 given refers to that upon which the returns cited may be found; only 
 round numbers are presented. 
 
 The total Imperial revenue, derived from taxes, is given (p. 9) in 
 the year selected as nearly £100,000,000. Of this total Imperial 
 revenue a certain amount is derived from funds representing ground- 
 rents. An approximation of this amount might be reached by esti- 
 mating the total Imperial taxes paid by real estate and fimds invested 
 in land-using corporations; 60 per cent of this amount will probably 
 approximate the taxes already paid by ground-rents. In order to 
 estimate the amount of Imperial taxes contributed by real estate, it is 
 necessary to discover what proportion of the income-tax is derived 
 from that source. This be suggested as follows: 
 
 Schedule A. (p. 36) gives a total income for the United Kingdom from 
 
 the ownership of lands, houses, and so forth of about . . . £228,000,000 
 
 Schedule B. (p. 36) from the occupation of land 17,000,000 
 
 Schedule D. (p. 39) total derived from railwa)^, mines, gas works, 
 
 water works, quarries, markets, tolls, etc 69,000,000 
 
 Total income derived directly from landed interests . . . £314,000,000 
 
 The total income assessed (p. 37) is about £565,000,000; the total 
 revenue produced (p. 37) about £19,000,000. That portion of the 
 total revenue of £19,000,000 produced by real estate might be estab- 
 lished by the proportion: 
 
 314 (Mil. Ster.) : 565 = (10) : 19. 
 
 In other words, the income derived from real estate (£314,000,000) 
 will be to the total income (£565,000,000) directly as the revenue 
 derived from real estate is to the revenue derived from total income 
 (£19,000,000). This proportion suggests that about £10,000,000 of 
 the income-tax is derived from landed interests. This permits the 
 following estimate: 
 
 Total Imperial Taxes Derived from Real EsUde. 
 
 Estate, etc. Duties (p. 9) £14,000,000 
 
 Land-tax (p. 9) 800,000 
 
 House duty (p. 9) 1,600,000 
 
 Income-tax derived from real estate .... 10,000,000 
 
 Total Imperial taxes from real estate . . . £26,400,000 
 
 It thus seems that about £26,400,000 of the Imperial revenue was 
 derived from interest coming under the heading real estate, or l$tnded 
 
 Bk. I 
 
 Land Values 
 
 203 
 
 interest. Sixty per cent of this amount may, therefore, be regarded 
 as having been contributed from ground-rents ; or £1 5,840,000 of Imperial 
 taxes as derived from unimproved land values in the year selected. 
 Attention may now be (Hrected to local taxes. 
 
 Total receipts for local expenditure 
 1899-1900 (p. 51) . 
 
 Deduct Government contributions 
 Loans 
 
 £122,000,000 
 . £16,000,000 
 
 28,000,000 44,000,000 
 
 £ 78,000,000 
 This leaves approximately £78,000,000 as the amount raised by 
 taxation proper derived from local rates, representing water, gas and 
 electric light undertakings, tramways, tolls, rents, sales of property 
 and so forth. 
 
 No less an authority than Sir Robert Giffeni may be cited in support 
 of the opinion that the entire incidence of local rates falls upon giound- 
 rents. He says: "The idea of the separate rating of ground values 
 arises from a misunderstanding of the real incidence of rates. As 
 that burden falls ab initio upon the ground landlord, diminishing the 
 sum of capital or income he is able to obtain for his property, there 
 is really no separate ground value to be assessed.'* If this is the'actual 
 incidence of rates, as many authorities believe, it follows that the amount 
 of local revenue derived from ground-rents is 100 instead of 60 per 
 cent of the^ total revenue. Upon this supposition, the proportion of 
 both Imperial and local revenue combined, borne by ground-rents at 
 present, would be much greater than 60 per cent, and the proportion of 
 present net rents, necessary to assess, in order to raise all revenue from 
 that one source, correspondingly less. But limiting the percentage of 
 land values to the estimate of 60 per cent of real estate, the following 
 results are obtained;. 60 per cent of £78,000,000 or £46,000,000 repre- 
 senting the amount of local taxes paid by ground-rents. 
 
 Total 
 - . , revenue 
 
 Impenal taxes £100,000,000 
 
 ^<^ rates 78,000,000 
 
 Total tax revenue 
 Derived from ground-rents. 
 
 £178,000,000 
 62,000,000 
 
 £116,000,000 
 
 Derived from 
 ground-rents 
 £16,000,000 
 46,000,000 
 
 £62,000,000 
 
 T,^^?f'!l%T^*"f^"l'!^ C.m«;„;,n on Local Taxation, p. 97. cited by Professor Smart. 
 Taxahon of Land Values and the Single Tax. p. 46. 
 
 I.' 
 
f ' 
 
 204 
 
 The Value of the Land 
 
 Pt. Ill 
 
 Bk. I 
 
 Land Values 
 
 1 
 
 ( ^ 
 
 r 
 I? I 
 
 This leaves £116,000,00 to be assessed upon present net ground- 
 rents if all revenue were derived from these values. 
 
 It now remains to estimate at what amount present ground-rents 
 may be approximated. This may be done by taking 60 per cent of 
 total income derived from real estate. This total has already been 
 estimated at £314,000,000, 60 per cent of which is £188,000,000, a 
 conservative amount at which to set the present net ground-rents of 
 the United Kingdom. The foregoing estimates may therefore be simi- 
 marized as follows: 
 
 
 United Kingdom. 
 
 
 Total tax 
 revenue 
 
 Net ground-reiits 
 (less present tax) 
 
 Additional 
 assessment 
 
 Proportion of 
 rent assessed 
 
 £178,000,000 
 
 £188,000,000 
 
 £116,000,000 
 
 61 per cent 
 
 
 Net ground-rents . 
 Assessment 
 
 Surplus ground-rents . 
 
 . £188,000,000 
 116,000,000 
 
 
 
 £72,000,000 
 
 
 In the year 1899- 1900 the entire revenue, Imperial and local, could 
 apparently have been raised from the value of unimproved land, or 
 economic rent, and still have left £72,000,000 of socially created wealth 
 in the hands of individuals, together with the untaxed revenue from 
 houses and improvements. 
 
 It is imnecessary to add to the number of these estimates; they may 
 be made for any city, state or country, where the data is available. 
 In any systematic study, however, care should be taken to obtain the 
 real value of the unimproved land. This real annual value is usually 
 at least equal to the assessed annual value; plus the annual value of 
 the franchises of all land-using corporations; plus 60 per cent of the 
 annual taxes already paid by total real estate. The sum of these annual 
 values will approximate the true, or imtaxed, annual value of the un- 
 improved land, or gross economic rent. This gross rent may then be 
 compared with the total revenue. If, for example, it is desired to 
 discover the gross economic rent of the United Kingdom, to the pres- 
 ent net groimd-rent should be added all taxes paid by these rents at 
 present. The estimates of the previous illustrations show: 
 
 United Kingdom — Economic Rent. 
 
 Present net groimd-rents £188,000,000 
 
 Taxes already paid by ground-rents .... 62,000,000 
 
 Total imtaxed or economic rent 
 
 £250,000,000 
 
 205 
 
 This gross, or economic, rent may be compared with the total revenue 
 of £178,000,000 leaving £72,000,000 of economic rent untouched, were 
 all revenue derived from the land. 
 
 Or, again, as in the niustrations presented, taxes already paid by 
 unimproved land — that is, 60 per cent of taxes borne by total real 
 estate, may be deducted from total taxes, and the remainder may 
 approximate the amount to be assessed upon present net ground-rents 
 in a direct fiscal system, based upon sociaUy created wealth alone. 
 
 Article 2 —Other Countries, 
 
 Without carrying detailed calculations any farther, it may be of 
 interest to attempt to discover to what extent those presented apply 
 to other countries. This may be done through a study of the relations 
 existing between total property and real estate, total earnings and tax- 
 burden. 
 
 If these relations in a number of different societies present no funda- 
 mental distinctions between the same relations in the countries con- 
 sidered,^ there seems ground for the opinion that the annual value of 
 economic rent more or less approximates the same relation to revenue 
 in other countries as in those examined. 
 
 The following table ^ presents an approximation of the relations 
 of tax burden to total earnings. 
 
 Earnings 
 
 Millions 
 
 £. 
 
 United Kingdom 
 
 France . 
 
 Germany 
 
 Russia 
 
 Austria . % 
 
 Italy . . 
 
 Spain 
 
 Other states . 
 
 Europe . 
 United States 
 
 Total 
 
 1,423 
 1,199 
 1,284 
 1,004 
 707 
 436 
 
 273 
 816 
 
 7,142 
 3,116 
 
 10,258 
 
 MiUion £ Sterling 
 
 Nat. 
 
 Local. 
 
 Taxes. 
 
 
 79 
 
 43 
 
 102 
 
 42 
 
 85 
 
 45 
 
 84 
 
 II 
 
 69 
 
 IS 
 
 56 
 
 27 
 
 29 
 
 7 
 
 52 
 
 28 
 
 SS6 
 
 218 
 
 65 
 
 98 
 
 621 
 
 Z-i6 
 
 The following table presents the approximate relation of real to total 
 property in the countries named. It may be found in^Mulhall's 
 
 ^ 'M.M^hdM'i Industries and Wealth oj Nations, p. 53. 
 
 (1 J 
 
 ' 1 '. 
 
2o6 
 
 The Value of the Land 
 
 Pt. Ill 
 
 Bk. I 
 
 Land Values 
 
 I 
 
 Industries and Wealth of Nations^. The proportions have here been 
 roughly transposed from diagrammatic to numerical relations. 
 
 Proportion of Real to Total Property, 
 
 United Kingdom . . . . 35 per cent. 
 
 France 50 per cent. 
 
 Germany 45 per cent. 
 
 United States 49 per cent. 
 
 Russia 50 per cent. 
 
 Austria 50 per cent. 
 
 Italy 52 per cent. 
 
 Spain 55 per cent. 
 
 Holland 49 per cent. 
 
 Belgium 50 per cent. 
 
 Australia 37 per cent. 
 
 Canada 37 per cent. 
 
 Average 46 per cent. 
 
 These relations between total and real property, total earnings and 
 total expenditure, apparently show that economic rent does not fall 
 below the administrative requirements of a society. Such relations 
 lead but to approximate opinion; the fairly constant nature of the 
 series seems, however, not without significance. 
 
 In any attempt to estimate the value of unimproved land in any 
 city, state, or coimtry, it should be remembered that the available 
 returns in many cases do not present the necessary material; or the 
 material presented may be misleading. For example; in New Zealand 
 the value of the unimproved land is returned 2 at about £95,000,000 
 for 1902. The general taxes for that year amounted to about £6,000,000 
 from which £3,000,000 may be deducted as derived from state owned 
 railways, post-ofl5ces and so forth, leaving £3,000,000 to be added to 
 about £2,500,000 of local revenue; a total tax revenue of about £5,500,- 
 000. At twenty years' purchase the annual value of the imimproved 
 land returned would be but £4,750,000. Under the Land and Income 
 Assessment Act of 1900, there was an ordinary land-tax on the actual 
 value of the land, and an income-tax. Mortgages are subject to the 
 land-tax at the rate of id. in the pound. In addition to the ordinary 
 land-tax there is a graduated tax on land, rismg from one eighth of a 
 penny in the pound on values from £5,000 to £10,000, up to twopence 
 in the pound on values of £210,000 and upward.^ Yet, even with 
 
 » Plate XXV. p. 52. 
 • Statesman's Year Book, 1904, p. 366. 
 ;.» Ibid., pp. 364, 365. 
 
 207 
 
 allowance for the exceptional incidence of these taxes upon unimproved 
 values, the amount returned as such may not approximate what seems 
 to be the normal relation as established by the returns of England and 
 the Umted States. If this is the case, it is necessary to inquire whether 
 the Item returned as unimproved land represented unoccupied land 
 alone — that is, did not include land occupied by improvements. These 
 are returned at about £60,000,000; this estimate may include improve- 
 ments and sites. If this is the case, 60 per cent of these £60,000,000, 
 should be added to the £95,000,000, in order to reach a closer approxi- 
 mation of the real value of the land. It is also necessary to inquire 
 whether in the values returned, any account had been taken of the 
 values of the franchises of land-using corporations, and not until these 
 had been estimated and added to the other values can even an approxi- 
 mation to the real value of the land be obtained. 
 
 These estimates suggest that the annual value of economic rent in 
 any soaety is generally in excess of the social expenditure; or, to present 
 a closer relation, that the entire expenditure of the societies considered 
 might have been met in the years selected by an increased assessment 
 of, approximately, 50 per cent upon the present net value of the un- 
 improved rents. 
 
 LI 
 
Bk. II 
 
 The Land and Society 
 
 209 
 
 t 
 
 •i 
 
 I 
 
 Book II 
 
 THE TRANSITION 
 CHAPTER I 
 
 THE LAND AND SOCIETY 
 
 THE annual value of unimproved land, or ground-rents, has 
 long been recognized as personal property. These values, 
 moreover, may represent capital recently invested, and in 
 many instances appear in the form of corporate wealth, which, 
 through institutions of trust, exerts a wide influence throughout the 
 industrial life of a population. The absorption of such property by the 
 State suggests two questions: one, with reference to the right of society 
 to take such a step, and another, with reference to its economic con- 
 sequences. The questions here occiu*, whether the absorption of land 
 values does not require illegitimate confiscation of private property; 
 whether society should compensate owners affected; and whether the 
 financial diflSculties in such a change would not outweigh the anticipated 
 advantages. In other words, whether a system of transposition may be 
 conceived which does not present too great danger in its effect upon the 
 industrial and financial life of a society. 
 
 The following passage from Blackstone^ may be dted with reference to 
 the right of society over the land it occupies. "There is nothing which 
 so generally strikes the imagination, and engages the affections of man- 
 kind, as the right of property; or that sole and despotic dominion which 
 one man claims and exercises over the external things of the world, in 
 total exclusion of the right of any other individual in the imiverse. And 
 yet there are very few that will give themselves the trouble to consider 
 the original and foimdation of this right. Pleased as we are with the 
 possession, we seem afraid to look back to the means by which it was 
 acquired, as if fearful of some defect in our title; or at best we rest 
 satisfied with the decision of the laws in our favour, without examining 
 
 ^ Blackstoue's Commentaries on tie Laws of England, Bk. 11., ch. L, p. Z. 
 
 208 
 
 the reason or authority upon which these laws have been built. We 
 think it enough that our title is derived by the grant of the former pro- 
 prietor, by descent from our ancestors, or by the last will and testament of 
 the dying owner; not caring to reflect that (accurately and strictly speak- 
 ing) there is no foundation, in nature or in natural law, why a set of words 
 upon parchment should convey the dominion of land: why the son 
 should have a right to exclude his fellow-creatures from a determinate 
 spot of ground, because his father had done so before him: or why the 
 occupier of a particular field or of a jewel, when lying on his death-bed, 
 and no longer able to maintain possession, should be entitled to tell the 
 rest of the worid which of them should enjoy it after him. These in- 
 quiries, it must be owned, would be useless and even troublesome in 
 common life. It is well if the mass of mankind will obey the laws when 
 made, without scrutinizing too nicely into the reason for making them. 
 But when law is to be considered not only as a matter of practice, but 
 also as a rational science, it cannot be improper or useless to examine 
 more deeply the rudiments and grounds of these oositive constitutions 
 of society. 
 
 " In the beginning of the worid, we are informed by holy writ, the all- 
 bountiful Creator gave to man 'dominion over aU the earth, and over the 
 fish of the sea, and over the fowl of the air, and over every living thing 
 that moveth upon the earth.' This is the only true and solid foundation 
 of man's dominion over external things, whatever airy metaphysical 
 notions may have been started by fanciful writers upon this subject. 
 The earth, therefore, and all things therein, are the general property of 
 all mankind, exclusive of other beings, from the immediate gift of the 
 Creator." 
 
 Thus, in seeking the ultimate foundations upon which property rights 
 in land repose, the position is met, stated in Blackstone's words, that the 
 earth is the "general property of all mankind." It seems necessary, 
 therefore, to accept the administrative decisions of society as the inter- 
 pretation of these rights, from which there is, apparently, no appeal. 
 
 Without going into elaborate discussion of Roman law in connexion 
 with land, it may be said that modern European systems of land tenure 
 are derived from Rome through the feudal systems, which involved the 
 holding of land upon condition of certain payments to the Crown, or to 
 society. These payments often, in fact nearly always, took the form 
 ofmiUtar y service. Blackstone^ may again be cited: "The other ancient 
 
 * Ibid. Bk. X., ch. viii., pp. 300-3x0. 
 
 
t- " 
 
 310 
 
 The Transition 
 
 Pt. Ill 
 
 levies were in the nature of the modem land-tax: for we may trace up the 
 original of that charge as high as to the introduction of our military 
 tenures : when every tenant of a knight's fee was bound, if called upon, to 
 attend the king in his army for forty days in every year. But this 
 personal attendance growing troublesome in many respects, the tenants 
 found means of compounding it, by first sending others in their stead 
 and in process of time by making a pecuniary satisfaction to the crown 
 in lieu of it. This pecimiary satisfaction at last comes to be levied by 
 assessments, at so much for every knight's fee, under the name of scut- 
 ages; which appear to have been levied for the first time in the fifth 
 year of Henry the Second, on account of his expedition to Toulouse, and 
 were then, I apprehend, mere arbitrary compositions, as the King and the 
 subject could agree. ... Of the same nature with scutages upon 
 knight's fees were the assessments of hydage upon all other lands, and of 
 talliage upon cities and burghs. But they all gradually fell into disuse 
 upon the introduction of subsidies, about the tune of King Richard II. 
 and King Henry IV. . . . By a variety of statutes imder Edward I. 
 and his grandson, it was provided that the King shall not take any aids 
 or tasks, any talliage or tax, but by the common assent of the great men 
 and Commons in Parliament." 
 
 But one result could be expected from these changing conditions; a 
 slow but no less certain shifting of original public burdens from the land 
 to the people. The feudal system, which as Blackstone* says, Sir 
 Henry Spelman does not scruple to call the "law of nations in our west- 
 cm world," required the systematic allotment of lands in retum for ser- 
 vice rendered to the community. " These allotments were called /eoJa, 
 feuds, fiefs, or fees; which last appellation lq the northern language sig- 
 nifies a conditional stipend or reward. Rewards or stipends they evi- 
 dently were," says Blackstone, "and the condition annexed to them was, 
 that the possessor should do service faithfully, both at home and in the 
 wars, to him by whom they were given; for which purpose he took the 
 jur amentum fidelitatis, or oath of fealty: and in case of the breach of 
 this condition and oath, by not performing the stipulated service, or 
 by deserting the lord in battle, the lands were again to revert to him who 
 granted them." 
 
 The feudal system, in its original form, thus derived a large portion 
 of the national resources from the land; and this portion, with changing 
 conditions, has been much diminished, until out of relation to the orig-^ 
 
 >Ibid. Bk.IL.ch. iv., pp. 43. 45. 
 
 Bk. II The Land and Society 211 
 
 inal obligations. Says Cobden,* in this connexion: "For a period of 
 one hundred and fifty years after the conquest, the whole of the revenue 
 of the country was derived from the land. During the next hundred 
 and fifty years it yielded nineteen twentieths of the revenue — for the 
 next century down to the reign of Richard III, it was nine tenths. 
 During the next seventy years to the time of Mary it fell to about three 
 fourths. From this time to the end of the Commonwealth, land appeared 
 to have yielded one half the revenue. Down to the reign of Anne, it was 
 one fourth.^ In the reign of George I it was one fifth. In George the 
 Second's reign, it was one sixth. For the first thirty years of George the 
 Third's reign, the land yielded one seventh of the revenue. From 1 793 to 
 1816 (during the period of the property tax) land contributed one ninth. 
 From that time to the present, one twenty-fifth only of the revenue had 
 been derived directly from land. Thus the land, which anciently paid 
 the whole of taxation, paid now only a fraction or one twenty-fifth, not- 
 withstanding the immense increase that had taken place in the value of 
 the rentals. The people had fared better under the despotic monarchs 
 than when the powers of the state had fallen into the hands of a landed 
 oligarchy, who had first exempted themselves from taxation, and next 
 claimed compensation for themselves by a corn law for their heavy and 
 peculiar burdens." 
 
 Again, between land and other forms of property, there exists a fun- 
 damental difference; a difference which suggests that " equity and right 
 reason" demand administrative distinctions between land and other 
 wealth. Says Judge Arthur O'ConnerS K. C, with reference to this 
 distinction: 
 
 "Now, between land and every other form of property there is an 
 obvious, abiding, and essential difference. Every other form of prop- 
 erty is transitory^ wasting and destructible, the temporary production of 
 human industry, obtained by labour out of the material which the land 
 suppUes ; but the land is not of human production : and as no man made 
 it so, no man can destroy it; 'no man, however feloniously inclined, 
 can run away with an acre of it.' Man's very body is built up of its 
 substance; he is taken from it, and wHl return to it; while he lives, 
 he must Kve and labour on its surface. Equity and right reason would 
 appear to suggest that the product of human industry should be the 
 absolute property of the person or persons that created it, whether the 
 
 * speech in the House of Commons, Monday evening, March X4th, 184a. 
 » Pinal Report of the Royal Commission on Local Taxation, p. 179^ 
 
212 
 
 The Transition 
 
 Pt. Ill 
 
 creation be of food, or habitation, or instrument, or any other thing. 
 But with land it is different. Equity and right reason here suggest that, 
 as access to the face of the globe is for mankind a necessary condition of 
 existence, and yet land is incapable of creation by human industry, the 
 same rule of absolute and exclusive ownership cannot apply. On the 
 point the law of England is in accord with common sense; and according 
 to that law, land is not the subject of absolute property. *No man is, in 
 law, the absolute owner of lands. He can only hold an estate in them,' 
 and that estate he holds imder the Crown as representative of the 
 commimity. 
 
 "It is then in accordance at once with reason, equity, and the law, to 
 say that England belongs to the English; that the land of England, with 
 all that is beneath its surface, and all that it produces by the imassisted 
 force of nature belongs to the people of England. Whatever may at 
 any time be the authorised occupation of its surface, or any part of it, 
 however turned to accoimt — well or ill, or not at all — however its 
 resources, in whatever hands, may be developed or neglected, it is true 
 to say collectively that the land of England belongs to the people of 
 England." 
 
 The following conclusions are thus suggested: 
 
 1. The ownership of land is finally vested in the society which 
 occupies it. 
 
 2. The administrative decisions of society, through its authorized 
 representatives, are the only interpretation of this right of 
 ownership. 
 
 3. The right of society to assess contributions upon the land under 
 its jurisdiction is not only complete, but the foimdation of present 
 system of land tenure. 
 
 It seems unessential to extend inquiry farther. European systems 
 are derived through the feudal system from a common origin in Rome. 
 Eastern systems seem more or less analogous to earlier European 
 methods. 
 
 CHAPTER II 
 
 THE DIRECT ASSESSMENT OF LAND VALUES 
 CONFISCATION AND COMPENSATION 
 
 j4 NOTHER question demanding attention refers to the economic 
 /% effects of devoting to social purposes values recognized as 
 y \ private property for generations; values, moreover, which 
 form the basis for an incalculable number of other values, and 
 consequently, enter into the industrial and financial fabric of society. 
 Unimproved land values, again, are almost as varied in nature as any 
 other form of property; and, in consequence, present proportionately 
 varied subjects for fiscal attention. Great tracts in the entailed owner- 
 ship of a noble family, or appropriated by capitalist or corporation, in 
 the early days of a community's existence and representing a large 
 unearned increment, do not present the same kind of value as the land 
 owned and used by the agriculturist, or recently purchased at its full 
 value with the savings of labour and industry. Other difficulties arise. 
 The following table shows that in England the smaller holdings of land 
 are divided among a much greater number of individuals than the larger 
 holdings. 
 
 Distribution of Land^ 
 
 1,000 persons own about 30,000,000 acres averaging 30,000 each. 
 4,000 " " " 20,000,000 " " 5,000 " 
 
 10,000 " " " 10,000,000 " " 1,000 
 
 50,000 " " " 9,000,000 " ** 130 
 
 130,000 " " " 1,750,000 " « 13 
 
 ti 
 
 u 
 
 Increased assessments upon the larger holdings of one person require 
 the proportionate assessment of the smaller holdings of a great number of 
 persons. Thus, estimates showing the anomalies of the present system 
 may be used to show that in order to reach socially created wealth, in 
 the hands of a few freeholders, it is necessary to tax a disproportionate 
 number of smaller holdings. These considerations invite others. When 
 i t is under stood that the smaller holdings change hands much of tener than 
 
 ^English and Irish Land Question, p. 2., Mr. Shaw Lefevre, M. P., quoted from Herbert SPenar 
 OH the Land Question, p. 25. 
 
 213 
 
214 
 
 The Transition 
 
 Pt. ni 
 
 Bk. II The Direct Assessment of Land Values 
 
 2IS 
 
 > '1 
 
 the larger, and therefore represent, actually and relatively, less increased 
 value in the possession of the owners, and may, in many instances, 
 represent no increased value, conditions are met which may make the 
 most enthusiastic advocate of land taxation pause. As Mr. Spencer ^ 
 once wrote, "had we to deal with the parties who originally robbed the 
 himian race of its heritage, we might make short work of the matter. 
 But, imfortunately, most of our present land-owners are men who have 
 either mediately or immediately — either by their own acts or by the 
 acts of their ancestors — given for their estates equivalents of honestly 
 earned wealth, believing that they were investing their savings in a legit- 
 imate manner. To justly estimate and liquidate the claims of such, is 
 one of the most intricate problems Society will one day have to solve." 
 
 Does this problem admit of solution? Is there any method, capable 
 of practical application, which will permit the absorption by society of 
 socially created wealth without injustice to owners of land representing 
 no such wealth? In other words, is it possible to distinguish between the 
 earned and imeamed value of the land? Can land, which has returned 
 its original cost many times over to its possessors, and which may be 
 worth as many times the original outlay to-day, be distinguished from 
 land purchased but yesterday at its full value, representing the savings 
 and labour of a life time? 
 
 Two urban land-owners may hold properties side by side; one an 
 inheritance, entailed for generations, representing thousands or millions 
 in increased values, due to social causes; the other, perhaps, fimds re- 
 cently invested, held by fiduciary organization or trustee; can these 
 values be proportionately estimated and assessed? Can the land priv- 
 ileges of a great and long established corporation, be fairly valued and 
 assessed in the same way and at the same rate as the recently acquired 
 holding of the peasant proprietor? 
 
 Such questions demand definite answers; generalized considerations 
 fail to meet them. They must be met with specific replies, if the sub- 
 ject of using social wealth for social needs is ever to have a hearing by 
 the majority of the middle classes; moreover, its ultimate acceptance 
 or rejection, like that of all other political institutions, depends upon 
 these middle classes, not only on account of equity and right reason, 
 but because of the important pecuniary interests involved. In no 
 country is the land all held by dukes, capitalists, and great corporations; 
 a glance at the list of English holdings, which represent perhaps the 
 
 ■Ibid. p. 33, reprinted from Social Statics, i8sx. 
 
 greatest concentration, shows that 190,000 taxpayers hold 1,000 acres 
 or less, while only 5,000 possess larger holdings. An increased assess- 
 ment upon 5,000 holdings, involves an analogous step with reference 
 to 190,000, while the latter may represent a smaller amoimt of socially 
 created wealth, both actually and relatively, or no such wealth at all. 
 
 These considerations present one of the greatest difliculties in the ap- 
 plication of social wealth to social needs. If the "unearned increment,*' 
 in the hands of the great corporation or city landlord, is to be assessed 
 and absorbed by society, how can that value invested in land, repre- 
 senting full purchase price and no "unearned increment," be pro- 
 portionately valued and assessed; or, rather, proportionately escape 
 assessment? The absorption of the one involves the exemption of the 
 other to a certain extent; the first representing value given to the 
 land by the community, for which nothing has been paid; the other, 
 on the contrary, the full market price of such value, very dearly paid, 
 perhaps, by labour and industry. 
 
 Mill^ meets the diflSculty by suggesting the recognition of values 
 existing at a given date, and the subsequent assessment of increased 
 values. Such a suggestion is open to objectiohs; chief among which 
 are its complexity, the opportunity for fraud, and the fact that it takes 
 no note of existing disparities in the control of socially created wealth. 
 The following is another method: 
 
 The direct assessment of unimproved land values is op>en to the 
 objection of imequal burden imposed, on account of the difference in 
 the nature of these values. Many of those differences may be referred 
 to differences in period of tenure; land held for a long period usually 
 representing a more or less proportionate increase in value, as com- 
 pared with land recently purchased. Two pieces of adjoining urban 
 property may be considered. One, inherited by a great proprietor, has 
 returned its original cost many times over in rent, and still represents 
 many times the original outlay in its present market price, the other 
 property, supposedly but recently purchased at its full value, with 
 savings or funds of an institution of trust. The values of the two 
 properties may be regarded as equal, but it is evident that the same 
 contribution from each brings different burdens to their owners; the 
 first owner being in possession of many times the original investment, 
 both in rent aheady paid and still existing values; the second owner, 
 possessin g his original investment alone. Contribution assessed upon 
 
 ^Principles of Political Economy. Bk. V., ch. U., f $, p. 493, 
 
2l6 
 
 The Transition 
 
 Pt. Ill 
 
 I • 
 
 I 
 
 11 t 
 
 the first property is, in the opinion of Mill, "liable to no valid objection"; 
 these values, to cite the same authority^ again, holding the principal 
 place as " fit subjects for peculiar taxation ! '^ In assessing and absorbing 
 such values as these, the society does not withdraw property from the 
 hands of individuals; it ceases to continue a process of contribution. 
 No question arises, apparently, with reference to either confiscation or 
 compensation, the society simply ceases to contribute the wealth which 
 it creates to its individual members. On the other hand, absorption 
 of the second value is in no way in harmony with either justice or 
 right reason; for not only is the individual in possession of no socially 
 created wealth, but the society, in checking ground-rents, seems to 
 repudiate obligations it has tacitly assumed; and may create great 
 financial confusion in so doing. How then, may this difficulty be 
 bridged? 
 
 It is obvious that no alteration in existing fiscal systems could be 
 wisely contemplated, except as a measure adopted with care, and rep- 
 resenting a gradual, thoroughly regulated, process; extending over a 
 period of time as long as necessary, occupying perhaps the life of a 
 generation or longer, if desirable. There would thus occur a slow and 
 progressive absorption of land values from a small percentage of their 
 total until complete. This progressive process may be carried on in 
 different ways: either all unimproved values could be brought at once 
 under fiscal influence, or they could be divided into, say, ten classes, 
 representing ten different periods of tenure; that is, classes based upon 
 date of title; the first class including the oldest titles to the use of land 
 at present in force, the tenth class the most recent. The intermediate 
 classes would represent intermediate titles, classified with reference 
 to date of possession. In this way, the older titles, representing in 
 the majority of cases, the greater amount of unearned increment, 
 could be first assessed; while the later titles could be exempt from 
 contribution for any satisfactory period. Thus, if lo per cent were 
 the amount first assessed upon the oldest titles, after a given period, 
 ID per cent would be assessed upon the second division and 20 upon 
 the first; after the lapse of the next period, 30 per cent of the oldest 
 rents could be absorbed and 10 per cent of the values in the third class. 
 When 100 per cent had been reached in the older titles, the process 
 ceases and the later values would gradually fall under the same system. 
 
 Apian of this nature might eliminate certain difficulties. The ques- 
 
 » rrincipUs of Political Economy. Bk. V., ch. iii., $ 6, p. 502. 
 
 Bk. II The Direct Assessment of Land Values 
 
 217 
 
 tion of compensation to the more recent land-owners would apparently 
 right itself for the following reasons. The two adjoining urban prop- 
 erties may again be considered: the land values of the first property 
 might be in the first class with reference lo title; those of the second in 
 the tenth class. Two and one half years may be adopted as the 
 period of assessment and lo per cent the amount assessed. The first 
 property, upon the adoption of a direct fiscal system, would be assessed 
 at once lo per cent of its unimproved rental vaue, and its market value 
 would be proportionately diminished. On the other hand, the land of 
 the second property would be exempt and need not Himin kh in value; 
 it might, on the contrary, relatively increase in value. Thus, the 
 action of a slow and progressive system need inflict no loss on recent 
 land-owners. After a period of two and one half years, the older prop- 
 erty would contribute 20 per cent of its unimproved rental value, and 
 not until twenty-five years have elapsed would the newer property 
 be taxed at all, and then only to the extent of 10 per cent of its site 
 value; not until fifty years had passed, would it be paying as much 
 the adjoining property. During that time, the land might change 
 hands many times; the first owner, owing to the exemption of his land 
 from tax burdens, perhaps being able to sell at a profit. Subsequent 
 owners, being conscious of what contribution they would be expected 
 to pay, woifld govern their prices accordingly. 
 
 There are certain objections to this method not to be overlooked. 
 The most important is, that precedence in title need not represent 
 proportionate increase in value. Two pieces of land representing 
 the same original investment at the same time may vary in- 
 definitely in value, directly and relatively. Again, a recent title 
 may suddenly become enormously valuable, and an older one present 
 a loss. 
 
 This suggests the classification of land with reference to increased 
 value, rather than with reference to date of title. Such a classification 
 would doubtless be the more desirable, were it possible; but the neces- 
 sity of establishing the value of the original investment would, in all 
 likelihood, place it beyond the realm of the practicable; there is ap- 
 parently no method by means of which the original cost of land coifld 
 be exactly determined. This difficulty may be partly avoided by means 
 of classification based upon existing values, rather than period of owner- 
 ship. Such a classification would present advantages, for through it 
 not only could the most valuable urban sites and franchise values 
 
 DJ 
 

 i 
 
 jl 
 
 
 2l8 
 
 The Transition 
 
 Pt. Ill 
 
 be brought within the fiscal horizon, but these, as the most valuable, 
 would probably present, actually if not relatively, the greatest amount of 
 unearned increment. This, however, need not always be the case; 
 for the greatest values may in many instances represent the latest 
 purchases. And here occurs the thought of combining the two methods 
 of classification in a way that might preserve the advantages of both, 
 while eliminating a portion at least of their difficulties. 
 
 This method of classification may be formulated. K one series of 
 ten classes of land values is arranged with reference to periods of tenure, 
 and another with reference to values, a third series may be formed by 
 means of these two combined. Thus, if the first series is numbered 
 I — ID in respect of date, and the second series i' — lo' in respect 
 of value, the basis is established for a third classification, founded 
 upon the other two; ranging from 2" — to 20." The advantages 
 of this third classification will be as follows: If it is supposed that a 
 certain rental value falls into class i with reference to title, and i' with 
 reference to value, it would fall into class 2" as far as suitability for 
 absorption is concerned — that is, would represent simultaneously the 
 oldest title and highest value. Land falling into classes 10 and 10' 
 in relation to date and value, would be in class 20" jrith reference to 
 suitability for taxation; that is, would represent the latest title and 
 lowest values and would be correspondingly free from fiscal burdens. 
 A piece of land representing an old title but small value would fall 
 into classes i and 10', thus be included in class 11," and occupy 
 an intermediate position between the most and least suitable 
 values. As the greatest unearned increment in land is almost in- 
 variably found where the longest period of tenure is combined with 
 the greatest value; this method of classification seems to present the 
 possibility of reaching socially created wealth in the form of land 
 values approximately in proportion to the socially created wealth 
 involved. 
 
 Example: The land of any area may be arbitrarily classified as 
 A, B, C, D, and so forth, for the sake of identification, thus: 
 
 Land 
 
 A 
 
 B 
 
 C 
 
 D 
 
 E 
 
 P 
 
 G 
 
 ' H 
 
 I 
 
 K 
 
 refers to specific properties belonging to certain owners. 
 
 Bk. II The Direct Assessment of Land Values 
 
 219 
 
 If the same land is classified with reference to period of tenure, the 
 following order might be obtained: 
 
 Classification with reference to 
 period of tenure. 
 
 A 
 
 B 
 
 C 
 
 D 
 
 E 
 
 F 
 
 G 
 
 H 
 
 I 
 
 K 
 
 1 
 
 10 
 
 2 
 
 6 
 
 S 
 
 9 
 
 7 
 
 4 
 
 5 
 
 8 
 
 If the same land is again classified with reference to values, the 
 following order might occur : 
 
 Classification with reference to 
 values. 
 
 A 
 
 B 
 
 C 
 
 D 
 
 E 
 
 F 
 
 G 
 
 H 
 
 I 
 
 E 
 
 1' 
 
 8' 
 
 8' 
 
 9' 
 
 10' 
 
 2' 
 
 6' 
 
 4' 
 
 5' 
 
 r 
 
 i 
 
 In^ combining these two series by simple addition a new series is 
 obtained. 
 
 Classification with reference to tenure 
 and value combined. 
 
 A 
 
 B 
 
 C 
 
 D 
 
 E 
 
 F 
 
 G 
 
 H 
 
 I 
 
 K 
 
 1 
 
 10 
 
 2 
 
 6 
 
 8 
 
 9 
 
 7 
 
 4 
 
 5 
 
 8 
 
 1' 
 
 8' 
 
 3' 
 
 9' 
 
 10' 
 
 2' 
 
 6' 
 
 4' 
 
 5' 
 
 7' 
 
 2" 
 
 18" 
 
 5" 
 
 15" 
 
 18" 
 
 11" 
 
 18" 
 
 8" 
 
 10" 
 
 15" 
 
 Ist 
 
 8th 
 
 2nd 
 
 7th 
 
 6th 
 
 5th 
 
 6th 
 
 8rd 
 
 4th 
 
 7th 
 
 The series 2", 18", 5", 15", and so on would serve to approximate 
 the relative availability of the values considered; in other words would 
 serve to establish the relative amount of socially created wealth they 
 
 m 
 
 
220 
 
 The Transition 
 
 Pt. Ill 
 
 Bk. II The Direct Assessment of Land Values 
 
 221 
 
 represent. Land A would be the first available, presenting the 
 oldest title and greatest value combined; Land B would be the 
 least suitable and consequently exempt as long as desirable; Land 
 E would be third with reference to title, and tenth with reference 
 to value, but together with land G, sixth with reference to these 
 
 combined. 
 
 There are many methods of classifying titles with sunultaneous 
 reference to age and value; differentials, coefficients, and logarithmic 
 calculations may be used. It may be useful, under certain conditions, 
 to give greater or less relative prominence to value and period of tenure; 
 value, for instance, being of greater importance in new neighbourhoods; 
 period of tenure in long established areas. Again, in certain cases, it 
 might be advantageous to begin with varying relative percentages. 
 Fifty per cent or more might be the first assessment upon the very 
 highest and oldest values, other percentages decreasing in proportion 
 to values involved. Periods of assessment could be varied; they could 
 be briefer with reference to the highest values and proportionately 
 longer as values decreased. The subject is capable of endless modifica- 
 tion in application. The method presented is but the simplest illus- 
 tration of the possibility of such combined classification. A method of 
 this nature suggests a means of reaching socially created wealth while 
 inflicting no injury upon lately acquired property, or that which repre- 
 sents no unearned values. Local conditions would doubtless modify 
 methods of simultaneous classification, yet, as a general principle, it 
 seems that a progressive system of assessment, progressively applied, in 
 order of value and period of possession combined, presents a means of 
 absorbing social wealth which need inflict no actual loss. Where society 
 but ceases to pour its wealth at the feet of individuals, no cause for com- 
 pensation occurs. Again, where later and smaller titles are carefully 
 respected, and exempt from assessment as long as necessary to inflict 
 no loss, it is obvious, where no loss is occasioned, that no cause for com- 
 pensation exists. 
 
 Classifications of this nature may be made largely independently 
 of the testimonies of land-owners, which gives them advantage over 
 methods involving interested statements. Dates of titles are in most 
 cases on record, and land values may be approximated by methods to 
 be discussed. It is evident that these classifications would be of 
 value only during a temporary period of transition; their object being 
 but to exempt small and recently acquired holdings from relatively 
 
 unjust contribution. This transitory period passed, all land would fall 
 under the same influence. 
 
 Students of Mr. Herbert Spencer's earlier works are familiar with 
 the views presented in Social Statics (185 1) in favour of the policy usually 
 called **Land Nationalization'' or the "resumption" of the land by the 
 commimity. Mr. Spencer's subsequent studies led him to reject these 
 earlier opinions and his matured conclusions are reviewed in Justice 
 (1891). Mr. Spencer there presents three reasons for the modification 
 of views expressed in Social Statics. These reasons may be sum- 
 marized as follows: (i) The fact that in England a sum equal to 
 £500,000,000 had been contributed from the land to the commimity 
 during the past three centuries in the form of poor rates ;^ (2) the 
 question of compensation seems to involve such difficulty and in- 
 justice that the resumption of the land by the community would 
 cause more loss than gain;^ (3) the ''vices of officialism." "When 
 we see," says Mr. Spencer,^ "that alike in despotic Russia, in con- 
 stitutional Italy, as well as in democratic France and America, 
 public agents of all grades, from ministers down to police officers, 
 cannot be trusted — very often will not do the right thing without 
 a bribe, and will perpetually do the wrong thing when a bribe is 
 given — we can scarcely expect public oversight of land-owners to be 
 efficient." 
 
 None of these considerations apply to a direct fiscal system as here 
 imderstood. They may be briefly reviewed. 
 
 I. The fact that a certain sum had been contributed in charity by 
 the land to the community, during a period extending over three hun- 
 dred years in the past, has slight relation to the advantages or 
 disadvantages of a specific fiscal system to be put in operation in 
 the present or the future. Again, as poor-rates, or what the land 
 has contributed to the commimity, are but a portion of taxation; 
 and, as ground-rents, or what the community contributes to the land, 
 must apparently always have been greater than total taxation, it seems 
 to follow that the value which the community has given to the land, 
 in the form of ground-rents, must be in excess of what the land has 
 given to the commimity in the form of poor-rates, leaving a balance 
 due from the land to the community. 
 
 * Justice, 189X, HerbertSpencer on the Land Question, p. 2a. 
 
 * Ibid., p. 37. 
 
 • Ibid., p. 27 
 ' Ibid., p. 39. 
 
222 
 
 The Transition 
 
 Pt. Ill 
 
 n. The second consideration, with reference to compensation of 
 expropriated land-owners does not seem final in the present instance. 
 No land-owners need be expropriated; for the reversion to public 
 ownership and control of land, as suggested in Mr. Spencer's earlier 
 studies, is not involved with the policy imder discussion. The 
 genuine difficulties with reference to small and recent holdings might 
 be largely eliminated by means of a progressive system of land 
 value classification and assessment progressively applied to socially 
 created wealth alone, with the proportionate exemption of small and 
 recently acquired values. If this can be done, by means of simul- 
 taneous classification of value and period of tenure, no loss is in- 
 flicted upon individuals, and, consequently no cause for compen- 
 sation created. The owners of the oldest and most valuable site 
 and franchise values would find the return from these slowly dim- 
 inishing, through a period of years as long as necessary to cause 
 no financial confusion; while, at the same time, revenue from 
 plants and improvements would be increased through the repeal of 
 burdens upon these. 
 
 in. It may be said that Mr. Spencer's third consideration wirii 
 reference to the "vices of officialism" does not apply for the fol- 
 lowing reasons: A single direct system is not involved with "land 
 nationalization," "resumption by the commimity," "public manage- 
 ment," "public control" or "public ownership" in any way not 
 recognized at present. On the contrary, if anything has been de- 
 monstrated in fiscal history, it is the "vices of officialism," and the 
 freeing of society from these may be regarded as among the most 
 important advantages to be hoped from a direct policy. Indirect 
 taxation is the fundamental cause of the "vices of officialism"; where 
 the cause is eliminated, some diminution in the effect might be ex- 
 pected. 
 
 It is imfortunate that Mr. Spencer did not turn his attention to a 
 direct system, based upon social wealth, as distinct from public control 
 or management of land. His conclusions are, briefly stated,^ as follows: 
 "While, as shown in Chapter XI., I adhere to the inference originally 
 drawn, that the aggregate of men forming the community are the su- 
 preme owners of the land — an inference harmonizing with legal doctrine 
 and daily acted upon in legislation — a fuller consideration of the 
 matter has led me to the conclusion that individual ownership, 
 
 1 Ibid., p. 33. Cf. JusUu, Appendix B. 
 
 Bk. II The Direct Assessment of Land Values 223 
 
 subject to State suzerainty, should be maintained." He refers to 
 the subject in the closing chapter of his Autobiography,^ in the 
 same terms concluding that "individual ownership under State- 
 suzerainty ought to continue." These finaUy formulated positions of 
 Mr. Spencer seem in no way out of harmony with the fiscal system 
 here considered. 
 >.Voi. n., p. 536. 
 
 m 
 
 s 
 
 I! 
 
Bk. II 
 
 The Repeal of Indirect Taxes 
 
 225 
 
 1 
 
 
 CHAPTER in 
 
 THE REPEAL OF INDIRECT TAXES 
 
 Section I — Tariff-Weapon Taxes, Section II — Protective Taxes, 
 
 Section III — Revenue Taxes, 
 
 Section I— Tariff- Weapon Taxes 
 
 THE repeal of indirect taxes involves important difficulties. 
 For examination with reference to repeal these taxes may 
 be classified as above. 
 A study of the imposition of indirect burdens, upon revenue 
 and protective measures, in order to arm a nation diplomatically, 
 may suggest that, in abandoning this process, a nation will not only 
 lose nothing, but gain at once aU the advantages the process could 
 create; besides avoiding its dangers and expense. These tariff-weapon 
 taxes were imposed for no purpose other than exchange for foreign 
 taxes. If the exchange can be effected, the Uxes should be repealed 
 at once. If not, their retention is without purpose. The moment they 
 are repealed, in exchange for other taxes, they realize the sole significance 
 of their existence. If they cannot be so exchanged, their existence has 
 no significance and they cause nothing but harm. If, therefore, the 
 statesmen who imposed these taxes did so in the proper way; that is, 
 in such a way that they may be repealed without affecting protective 
 or revenue measures, they may be removed at any time with safety. 
 
 Section II — Protective Taxes 
 Article i — Exporting Industries. 
 
 A widely extended system of protective schedules is among the most 
 serious difficulties in the modification of existing fiscal methods. A 
 progressive system, progressively applied, seems to be the least disad- 
 vantageous method of approaching the subject. 
 
 Protective taxes may be divided into two classes: Taxes benefiting 
 exporting industries, and taxes supporting industries supplying the 
 
 224 
 
 home market alone. There is reason to believe that the majority 
 of exporting industries require no protective taxation. For an industry 
 which can undersell the foreigner in his own market to demand pro- 
 tection at home seems more or less inconsistent, economically considered. 
 Such taxes do little but create abnormal prices in the domestic market, 
 and a demand for more taxes abroad. Viewed in the light of economics, 
 import duties affecting exporting industries could in many, if not in 
 the majority of cases, be removed with little effect other than the check- 
 ing of swollen profits and prices. 
 
 On the other hand, such a step would be neither wise nor desirable on 
 account of the securities involved. Here Ues the most important 
 difficulty with reference to the removal of indirect taxation. No 
 step, therefore, which would suddenly affect these values could be 
 safely entertained. 
 
 This suggests the careful consideration, as far as possible, of every 
 interest affected, and a gradual reduction of protective taxes of this 
 kind, continued over a period of years long enough to occasion no 
 violent fluctuations. 
 
 Article 2 — Domestic Industries. 
 
 The second class of protective taxes suggests other considerations. 
 These taxes are presumed to affect industries supplying the home 
 market alone. The industries affected by taxes of this nature may 
 or may not depend upon the taxes for their existence. If not, the 
 same considerations are met, but where industries are actually dependent 
 upon indirect taxes for their existence, the gradual removal of the taxes 
 would destroy the industries and throw the labour out of employment 
 at once; besides checking earning powers and destroying values. Duties 
 affecting industries of this kind could remain intact as long as necessary 
 to insure industrial and financial security. Ten or twenty years might 
 be ample to allow for a readjustment of the values and capital concerned, 
 and would avoid any sudden displacement of labour. 
 
 Again, it may be said that the repeal of protective restrictions upon 
 trade, markets, and consumption will lower prices upon many forms 
 of raw material; these lowered prices rendering certain industries possi- 
 ble which existing high prices and restrictions place beyond the reach 
 of the people. Capital will thus flow into untaxed and unrestricted 
 channels, with the result that a newer and broader basis for the demand 
 for labour may come into existence. Values now checked and stifled 
 
V 
 
 I; 
 
 , 
 
 226 
 
 The Transition 
 
 Pt. Ill 
 
 by taxes upon running expenses will find new life, and many securities, 
 either dormant or non-existent to-day, may be brought into active being, 
 thus creating compensating considerations with reference to the dangers 
 of eliminating protective duties — dangers, however, which should never 
 be neglected. 
 
 Protection, it may also be remembered, may be continued under a 
 direct system to any extent, with reference to any industry for any 
 length of time. The direct subsidy is more effective and less expensive, 
 as a protective measure, than the import duty. The direct subsidy 
 could always be used where required to avoid complication. 
 
 Section HI — Revenue Taxes 
 
 Taxes of this nature present relatively little difficulty in their removal, 
 revenue, excise, and octroi duties may be lifted from commodities with 
 comparatively slight danger. Nevertheless, important financial inter- 
 ests may be involved with the action of these taxes, and no sudden 
 effects should be caused. The gradual and progressive principle again 
 occurs. Revenue taxes might be classified with reference to the amount 
 produced and their relative importance in the industrial and financial 
 life of the society. By means of these classifications, taxes could be 
 gradually removed in such a way that the smallest values and those 
 least interfering with industrial life would be first repealed, others 
 remaining in abeyance as long as conditions required. 
 
 Direct taxes on all forms of personal property, houses, improvements, 
 incomes, plants, rolling stock, mortgages, and credits would offer no 
 difficulty; the contributors being relieved of an unnecessary burden 
 with no disadvantageous results. 
 
 In any radical change of existing systems, the period of transition 
 is the most critical consideration. This period of readjustment would 
 require great care; for artificial y created and supported values would 
 be foimd on every hand demanding conservation if disaster is to be 
 avoided. In general, it may be said that a progressive system, pro- 
 gressively applied, and especially designed for the purpose of protecting 
 all values, and avoiding sudden and violent fluctuations, would be the 
 only way in which conditions of this kind could be met. 
 
 CHAPTER IV 
 the establishment of land values 
 
 Two sites adjoin in a metropolitan centre; one vacant, the 
 other occupied by a remunerative building investment. 
 Should these two sites be estimated and assessed at the same 
 value, one yielding a large return to the owner, the other 
 nothing? Again, perhaps one of the sites is occupied by a new and 
 valuable building, the other by an older, smaller, but still paying im- 
 provement; should the less productive site contribute on the same basis 
 as the more productive? Can, or should, in this way, a more or less 
 hypothetical value be placed upon land irrespective of actual returns? 
 Analogous questions arise with reference to agricultural land. Is it 
 possible, in workable form, to divorce those values represented by the 
 cultivation of generations, and improvements due to drainage, grading, 
 hedging, planting, fencing and so on, from the value of the mere sur- 
 face of the soil? How may the two kinds of value be distinguished 
 which together form the total value of a water works: one represented 
 by its pipes, plant, power, and machinery, and the other by the area 
 occupied in its distributive functions? What is the value of that portion 
 of the street of a city used by a tramway or omnibus corporation? 
 How much is the tunnel worth, constructed by an underground trans- 
 portation company? Telephone or cable companies use relatively 
 little of the surface of the earth; their wires or cables may be stretched 
 overhead, under the ground, or under the sea; at what amoimt, however, 
 should be valued the land which they do use? How much is the long 
 strip of desert worth, unable perhaps to support a blade of grass, yet 
 which supports the daily traffic of a great transcontinental railway 
 system? At what amount may be estimated that small portion of the 
 earth in a wilderness, occupied by the shaft of a mine? Questions 
 such as these demand definite answers if land values, representing social 
 wealth, are ever to take their natural place in fiscal and industrial life. 
 The w ords of Lord Farrar^ present some of these difficulties. He 
 
 ^Memoranda presenUd to The Royal Commission on Local Taxation, p. 82, quoted by Professor Smart 
 Taxation of Land Values, and the Single Tax, p. 75. 
 
 227 
 
 
ft- 
 
 I 
 
 
 228 
 
 The Transition 
 
 Pt. Ill 
 
 says, speaking of site rating: "I doubt whether any such scheme is 
 practicable. In the first place the land and the house have not, for 
 purposes of valuation, any separate existence. Valuers, no doubt, 
 say they can value them separately, and Mr. Chaplin's Agricultural 
 Rating Act may be quoted as a precedent, if, indeed that unfortunate 
 Act can be quo led as a precedent for anything. Valuers will, no doubt, 
 put a valuation on anything, whether they know anything about it 
 or not, but the question is what real basis have they for their valuation. 
 The only ultimate basis of a valuer's knowledge is his e3q)erience of 
 actual market values; and as the land and the houses upon it are sold 
 and let together, no such basis can exist for a separate value of the two 
 things. A valuer's judgment is limited by his experience and where 
 there is no experience his judgment is untrustworthy." 
 
 Perhaps the most interesting body of material with reference to 
 the practical application of direct rating of land values is found in the 
 Final Report of the Royal Commission on Local Taxation. The Members 
 of the Commission are men accustomed to the administration of practi- 
 cal affairs; men whose names are synonymous with ability and integrity. 
 The subject is examined with thoroughness, numerous witnesses 
 develop almost every side of the question, and apparently exhaust 
 the most authoritative sources of information. The majority of the 
 Conunission not only reported against the measure, but against the 
 mild form suggested with reference to local taxation alone. The Min- 
 ority Report concludes^ that the rating of site values, if adopted under 
 certain very conservative conditions, "would show that there is no 
 large undeveloped source of taxation available for local purpose, and 
 still less for national purposes." 
 
 A few citations from the Commission's^ Final Report follow: "Mr. 
 Vigers, President of the Surveyor's Institution, stated that sites and 
 structures could be valued separately if the buildings were suitably 
 situated, but he pointed out the difl&culty where this is not the case, 
 and thought that such a system was not advisable on the groimd that 
 it would involve a double valuation and lead to expense and friction. 
 
 "Mr. H. A. Hunt thought that it would be very difficult to value 
 sites and structures separately, and very expensive. He stated that 
 in making valuations at the present time, he never divided site from 
 structure. 
 
 Bk. II 
 
 The Establishment of Land Values 
 
 229 
 
 1 Final Report of Commission on Local Taxation, p. 176. 
 s Ibid., pp. 4it 42. 
 
 "Mr. Rickman pointed out that each site would have to be valued 
 separately, and that it would be very difficult to deal with the case of 
 restrictive covenants and rights of adjoining owners, which vary very 
 much. 
 
 "Mr. Sabin . . . pointed out that difficulties would arise where 
 the ground -rent of a leasehold was relatively large, and represented a 
 first charge on the building, and not merely the value of the bare land. 
 In such a case the freeholder, if he were the party in receipt of the full 
 ground-rent, would desire not to be assessed on the whole annual sum 
 reserved under the lease, while the lessee would hold that the whole 
 was site value. Such disputes would be reduced in proportion to the 
 closeness of the definition adopted. Other difficulties would arise 
 which definition would not so readily avoid; as, where the capabilities 
 of the site were not easily determinable; where the concurrence of 
 two or more freeholders might be necessary to secure the best use; and 
 where rights of adjoining properties to light and air might be undeter- 
 minable quantities. 
 
 "Mr. Mathews, land agent and surveyor, of Birmingham, thought 
 that though it was possible to put a separate value on site and structure, 
 it was not practicable, as it would involve an inquiry into the most 
 productive use the land could be put to. He also thought that the 
 proposed system would give rise to endless litigation." 
 
 Other difficulties are presented when the varying nature of site values 
 is understood. Mr. Fox,^ Secretary of the Conunission, asks the fol- 
 lowing question: "A, the ground-landlord, lets a site for £io a year 
 to B, the builder. B spends £i,ooo in building, and lets the house for 
 £70 to C. B thus receives £60 net, or 6 per cent on his outlay, which 
 we may assume to be the ordinary rate of builders' profits. 
 
 "The neighbourhood improves, and after a while C lets the house 
 for £100 a year to D. C thus receives £30 net. 
 
 "The ratable value of the house is now £100, and the site value is £40. 
 
 "Who is the owner or recipient of that site value? 
 • "A, the ground-landlord, clearly has £10 of it, and no more. But 
 who has the remaining £30? " 
 
 Before entering into a more or less detailed examination of the sub- 
 ject, Adam Smith may be consulted. He says,^ after observing that 
 "nothing could be more reasonable than that a fund which owes its 
 
 » The Rating of Land Values, p. 39. 
 i } The Wealth of Nations. Bk. V., ch. ii., p. 438. 
 
 )i- 
 
 4 
 
 ■ 
 
230 
 
 The Transition 
 
 Pt. Ill 
 
 
 f< 
 
 
 I 
 
 existence to the good government of the State should be taxed pecul- 
 iarly." "Though, in many different coimtries of Europe, taxes have 
 been imposed upon the rent of houses. I do not know of any in which 
 groimd rents have been considered as a separate subject of taxation. 
 The contrivers of taxes have, probably, found some difficulty in ascer- 
 taining what part of the rent ought to be considered as ground rent, 
 and what part ought to be considered as building rent. It should 
 not, however, seem very difficult to distinguish those two parts of 
 the rent from one another." 
 
 This distinction may be approximated in the following way. 
 Commercial and industrial properties are first considered: railways, 
 water, and gas companies, office buildings, and so forth. If, from the 
 total earnings of the property, that is, of land and improvement ^gether, 
 are deducted all taxes, repairs, and operating expenses, together with 
 an ample allowance on capital invested in improvements, there will 
 be a remainder which represents no form of fixed charge with reference 
 to improvements; it will, therefore, apparently represent the net annual 
 value of the land alone. It seems, moreover, that this method may 
 be applied to all forms of commercial, franchise, and mineral values. 
 It may be used to estimate the value of the land privileges of a cable, 
 or a wireless telegraph, company; of the value of the rights to the use 
 of the streets of an omnibus corporation or the mineral privileges of a 
 mining enterprise. The capital value of a franchise may be reached by 
 deducting from the market value of all securities issued against it, the 
 total value of all tangible property owned by the corporation; the 
 average rate of money will then approximate the annual value con- 
 sidered. 
 
 All land values, under a direct fiscal system, would be registered. 
 The mere fact of registration would in the course of time, act as a final 
 method of establishing values of all kinds from the franchise of a great 
 railway to the site of a house. With reference to idle or partly developed 
 property, it may be said that within certain limitations, the use a man 
 may choose to make of his land is of no concern to the community. Its 
 value, however, is of interest, as having been created by the community 
 and belonging apparently to it. Ground-rents, therefore, if ever applied 
 to social needs, should be based upon the most productive use to which 
 land may be put. Where this is done, irrespective of actual use, the 
 society either insures the most productive occupation of the land, 
 or involves its members with no loss through the action of individuals. 
 
 Bk. II The Establishment of Land Values 231 
 
 The conclusions of the majority of the Royal Commission were 
 opposed to the separate rating of land values "on account of the diffi- 
 culty, and uncertainty of the proposed system of valuation." These con- 
 clusions were, however, not held by all the members of the Commission. 
 A Minority Report^ says: "On the whole we are disposed to think 
 that a valuation of sites, sufficiently accurate for the purpose and not 
 inferior to the present valuation of hereditaments, could be made 
 without undue labour and expense. The evidence afforded by sales 
 and leases of sites constitutes, we believe, an adequate basis for an 
 expert's judgment, and the valuation so made can in most cases be 
 checked by deducting the value of the structure (i e., a percentage on 
 the normal cost of reproduction) from the rack-rent of the whole 
 property. Such a valuation could obviously be made only by a pro- 
 fessional expert, though the data and inferences on which it is based can 
 be understood and criticized by any one possessed of common sense 
 and local knowledge." 
 
 The following is taken from the individual report of His Honour, 
 Judge O'Connor, K. C.^: "Many witnesses who appeared before the 
 Commission, dwelt with emphasis upon the alleged or suggested dif- 
 ficulty of estimating the value of the land apart from buildings upon 
 it; but no one of the expert witnesses would say that it was impossible, 
 and none would admit that he could not himself do it if was necessary. 
 But, in fact, the matter is passed the stage of mere argument, for not 
 only is the thing being done every day for private purpose, but it is 
 also done on public account in all three countries under the established 
 practice. The entire system of valuation in Ireland under Acts of Par- 
 liament is based upon the separate valuation of land and buildings. 
 In England, land has to be separately valued in the country for the 
 purpose of the Agricultural Rates Act, which prescribes the procedure 
 for ascertaining, and the Returns which are to show, the division between 
 the ratable value of agricultural land and that of the buildings and 
 other hereditaments. . . . When the matter is considered quietly, 
 apart from personal interest or the prejudice of class or profession^ 
 it will be easily seen that there is no real difficulty about it, and that it 
 would be just as practicable to make a map of the whole country, show- 
 ing the valuation per acre or rood or plot of the surface of the land, 
 ^s it is to make an Ordnance Survey Map, showing the elevation above 
 
 » Royal Commission on Local Taxation, Report of the Minority, p. 169. 
 * Ibid, p. 182. 
 
 t * 
 
 
232 
 
 The Transition 
 
 pt. in 
 
 Bk. II The Establishment of Land Values 
 
 233 
 
 the sea of every part of the country. In both there would be plains and 
 slopes and peaks, though the summits of the physical contours, would 
 often be the depression of the valuation contours, and vice versa." 
 
 The case cited by Mr. Fox may be considered as typical of a com- 
 bination of interests in ground-rents. A lets a site for £10 a year to 
 B, who spends £1000 and lets the whole property for £70 to C, who 
 sublets for £100, although the owner received but £10. How many 
 these different interests contribute proportionately? 
 
 This cannot be done without relative classification. A represents 
 the oldest title, but receives only one fourth the value of the land. 
 C is in receipt of the bulk of the unearned increase, and his interest 
 should be classed proportionately higher than that of A, as a contribu- 
 tary source. B receives but the normal return on his improvements 
 and should contribute nothing. 
 
 An extreme case may be presented: A invests in umimproved land, 
 and lets to B for £10. B makes no improvements, but, a railway ter- 
 minal being projected close by, sublets to C for £100. C spends £1000 
 and sublets at once to D for £200. 
 
 In this case, at 6 per cent return on improvements, the land is 
 worth £140, of which A receives but £10, B £90, and C £40, respect- 
 ively. B, who has invested nothing, but who has the larger interest, 
 should be the first contributor, C, following in the relation of 40 to 90, 
 and A as 10 to these. 
 
 It may seem in this case that A's capital invested in land is placed at 
 a disadvantage with C^s capital invested in improvements. If A's 
 investment is among the smaller holdings and presents no imearned 
 increase, by means of classification in relation to these, it should be 
 exempt from contribution long enough to inflict no loss. 
 
 Such considerations would apparently apply to interests in land 
 represented by mortgages. These interests should be classified in rela- 
 tion to values and contribute proportionately. The bulk of such in- 
 terests would probably be represented by institutions of trust and 
 would have to be treated with the greatest care. The land-owner 
 receiving no return from mortgaged property, would contribute nothing. 
 
 It may be said in general, if ever the direct assessment of socially 
 created wealth is attempted by a society, that distinctions in interest in 
 the same land would probably disappear and the land be owned and 
 used by the same person; the man able and willing to pay the most 
 for it. On the other hand, during anv period of readjustment these 
 
 intermediate interests should be carefully considered and a system of 
 proportionate classification, proportionately applied, seems the most 
 effective way in which this could be done. 
 
 Another difficulty would arise with reference to unproductive im- 
 provements. Land might increase in value while improvements 
 deteriorated. Should an unproductive owner receive compensation 
 for worthless improvements? Such questions are probably best de- 
 cided through the study of specific cases by means analogous to those 
 in use. 
 
 It seems scarcely worth while to multiply difficulties and counter 
 considerations of this nature; the process may be continued indefinitely. 
 No radical modification of existing fiscal methods such as the liberation 
 of industry and the use of social wealth for social needs, could be adopted 
 without meeting an endless array of important practical complications. 
 A glance at prevalent slums, pauperism, commercialized vice, pluto- 
 cratic exploitation, strikes, labour troubles, unemployment and the 
 tide of Socialism gathering round these suggests, however, that 
 the^existing system is not devoid of practical difficulties of its own. These 
 difficulties, therefore, on both sides, should be fully stated and estimated 
 m relation to each other, and the most rational conclusions adopted. 
 
 Under a direct fiscal system, based upon ground-rents as here under- 
 stood, land would be regarded as private property. Titles to the land 
 should be registered publicly, at whatever value the owner estimated 
 them, without interference on the part of the administration. This 
 annual unimproved value would be a matter of public knowledge and 
 any one could offer a higher contribution for the use of the land, if he 
 regarded it as worth more than it was paying. If the land-owner in 
 possession were unable or unwilling to pay the real value of his land, 
 he would be superseded after sufficient notice by a more productive 
 owner, the first landlord receiving from the second full compensation 
 for all capital invested in productive improvement. Owners in pos- 
 session might by this means be protected from loss on one side and from 
 ignorant over-estimation on another. 
 
 With some such method as this, modified to suit specific conditions, 
 such as mineral privileges, franchises and so forth, the mere public 
 registration of titles to the use of land would establish their value 
 automatically. Where the value of titles to the ownership of specific 
 portions of the land is a matter of public knowledge, these values will 
 largely regulate themselves, both actually and relatively, through pub- 
 
 > i 
 
 I. 
 
 !'. 
 
234 
 
 The Transition 
 
 Pt. Ill 
 
 lidty. By this means productive land-owners would be able to fix 
 the value of their land themselves and would pay what they considered 
 it worth. Under such a system, the land might find its most productive 
 use in the hands of men whose interest it was to make the most of it; 
 and, as the Duke of Argyll^ well says, "the land of a country is never so 
 well 'nationalized* as when it is committed to the ownership of men 
 whose interest it is to make the most of it." 
 
 ^TU.FrofhtffiS San Francisco, Tkt NintUtnth Centwy, April, 1884. p. 544- 
 
 i 
 
 CHAPTER V 
 
 THE DIFFUSION OF A TAX ON LAND VALUES 
 
 A TAX on nearly all forms of consumption is either bodily 
 transferred to the consumer or diffused through intermediate 
 channels. Would a tax contributed by the owner of groimd- 
 rents be recovered by increasing rents proportionately? 
 If this can be done, the incidence of such a tax will be diffused through- 
 out the society in prices, and borne by the consumer of the produce of 
 the land in the form of food, buildings and transportation. 
 
 The majority of economic writers believe that a tax on ground-rents 
 cannot be recovered by the owner of the land. Their reasons are: 
 Value depends upon supply and demand. A tax on a commodity 
 may be used to affect the supply. By checking supply, price may be 
 raised and a tax recovered. The supply of land cannot be affected by 
 taxation, and the demand is often independent of fiscal influences, 
 based upon density of population, transportation, facilities, mineral 
 deposits and so forth. "A tax upon ground rents would not raise 
 the rent of houses," says Smith.^ "It would fall altogether upon the 
 owner of the ground rent." "A tax on rent falls wholly on the landlord," 
 says Mill. ^ " There are no means by which he can shift the burden upon 
 any one else. It does not affect the value or price of agricultural prod- 
 uce, for this is determined by the cost of production in the most un- 
 favourable circumstances, and in those circumstances, as we have so 
 often demonstrated, no rent is paid." Mill here suggests the Ri- 
 cardian theory of rent, which is in harmony with this opinion. "Com 
 is not high because a rent is paid," says Ricardo,^ "but a rent is paid 
 because com is high." And again,* "If the high price of com were the 
 effect, and not the cause of rent, price would be proportionately in- 
 fluenced as rents were high or low, and rent would be a component 
 part of price. But that com which is produced by the greatest quantity 
 
 ^ Wealth of Nations. Bk. V., ch. «., p. 436. - 
 
 « Principles of Political Economy. Bk. V., ch. iii.. S^. p. 496. 
 • Principles of Political Economy, p. 60. 
 < Ibid., p. 63. 
 
 «3S 
 
 
I 
 
 
 236 
 
 The Transition 
 
 Pt. Ill 
 
 of labour is the regulator of the price of com; and rent does not and 
 cannot enter in the least degree as a component part of its price." 
 
 The natural conclusion is that the incidence of a tax on ground-rents 
 fails upon the owner of the rent and cannot be transferred. This 
 view, however, is not held by all inquirers. A well sustained opinion, 
 from an opposed point of view, is found in the works of Mr. D. A. Wells i^ 
 "Is it possible to believe that in a city Uke New York, where less than 
 four per cent of its population pay any direct tax on real estate, or in a 
 city like Montreal, where the expenses of the city are mainly derived 
 from taxes on land and the building occupancy of land, the great ma- 
 jority of the inhabitants of those cities are exempt from all land tax- 
 ation? In China, where, as before shown, the title or ownership of all 
 land vests in the emperor, and the revenue of the Government is almost 
 exclusively derived from taxation of land in the form of rent, does the 
 biurden of the tax remain upon the owner of the land? If the tax in the 
 form of rent is paid in the products of the land, as undoubtedly it is 
 in part, will not the cost of the percentage of the whole product of 
 the land that is thus taken increase to the renter the cost of the per- 
 entage that is left to him; or, if the product is sold for money with which 
 to pay the tax rent, will not its selling price embody the cost of the 
 tax, as it will the cost of every other thing necessary for production? 
 To affirm to the contrary is to say that the price which the Chinese 
 farmer pays for the right of the exclusive use of his land is no part of 
 the crops he may raise upon it. 
 
 "Consider next the assertion of those who maintain the non-diffusion 
 theory that taxes on land are paid by the owners because the supply of 
 land can neither be increased nor diminished. In answer to it we 
 have the indisputable fact that the owners of land, whenever taxes 
 are increased, attempt to obtain an increased rental for it if the circxmi- 
 stances will permit it. And the very attempt tends to increase the 
 rent. Nothing but adverse circumstances, such as diminishing popu- 
 lation or commercial and industrial distress, can prevent a rise in the 
 rental of land on which the taxes are increased; and in the case of dwell- 
 ings and warehouses the rise is almost always very prompt, because 
 no man will erect new buildings or warehouses unless their rent com- 
 pensate fully the increase of taxation. And in any prosperous com- 
 munity, in which population increases in the natural ratio, there must 
 be a constant increase of dwellings und warehouses to prevent a rise 
 
 ^jrk$ory and Practice of Taxation, p. 5g4. 
 
 Bk. II The Diffusion of a Tax on Land Values 
 
 237 
 
 of rent, independent of higher wages and higher taxation. In no other 
 occupation is capital surer of obtaining the average net remuneration 
 than in the erection of dwellings and warehouses, and nothing but 
 lack of general prosperity and diminishing population can throw the 
 burden of taxation on real estate or its owners, without the slightest 
 attempt at combination on their part. If the owners of land are not 
 reimbursed for its taxation by its occupants, new houses 'would not be 
 erected, the old ones would wear out, and after a time the supply would 
 be so small that the demand would raise rents, and house building begin 
 again, the tax having been transferred to the occupier.* 
 
 "It is pertinent at this point to notice the averment that is frequently 
 made, that cultivators of the soil cannot incorporate taxes on the land 
 in the price of their products, because the price of their whole crop 
 is fixed by the price at which any portion of it can be sold in foreign 
 markets. In answer to this we have first the fact that, to give the 
 population of the world an adequate supply of food and other agri- 
 cultural products, it is not only necessary that all the land at present 
 under cultivation shall continue to be so employed, but further that 
 new lands shall each year be brought under cultivation, or else the land 
 already cultivated shall be made more productive." 
 
 Neither of these diametrically opposed positions is easily answered. 
 This suggests a different method of inquiry. 
 
 There are apparentiy but four possible suppositions with reference 
 to the recovery or non-recovery of a tax upon unimproved land values: 
 (i) The tax may be entirely recovered by the owner of the ground- 
 rent; (2) it may be partly recovered; (3) it cannot be recovered 
 at all; (4) in some cases it may be recovered, in others not. 
 
 I. Land values depend fundamentally upon the profit to be derived 
 from the use of the land; profits upon the general return to productive 
 employment, or wages. If a tax upon unimproved land is everywhere 
 recoverable by the land-owner, profits must swell proportionately, or 
 the tenant would not pay the increased rent. But profits could not 
 be maintained without a relative movement in the general absorbing 
 capacity of the population, or a compensating rise in wages. Thus, 
 upon the supposition of the full recovery of the land-tax, a society will 
 diffuse the burden throughout all its members; the land-owmng class 
 excepted in part, for it would contribute a certain share through con- 
 sumption, and act as gatherers of the revenue. From an economic 
 point of view, a society under such a system might gain the following 
 
 m 
 
 :\\ 
 
 i f 
 
 
238 
 
 The Transition 
 
 Pt. Ill 
 
 advantages: (i) The sum annually extracted from the earnings of 
 the people through prices forced by protective taxation. {2) The 
 burdens unposed upon their earnings through higher prices, caused by 
 revenue taxation which never find their way into the national treasury. 
 (3) Fiscal accimiulations imposed upon their industry and commerce 
 for diplomatic purposes; (4) Those annual losses represented by the 
 stifling of normal trade and industry through indirect burdens on con- 
 sumption; (5) The millions absorbed from earnings, traceable to 
 party contribution, waste, administration extravagance and corruption 
 owing to the control of taxes levied upon the necessaries of life. Upon 
 the supposition, then, that assessments upon land values are recoverable, 
 a direct system might create great advantages for a society as a whole; 
 land-owners, being unaffected, rent increasing with the tax. 
 
 n. K the owners of groimd-rents can recover but a portion of the 
 tax, the society as a whole seems to gain the foregoing advantages, 
 together with that portion of the wealth it annually creates, not recov- 
 ered through increased rents. 
 
 in. If none of the tex could be recovered, the people at large ap- 
 parently gain the foregoing increase to their revenues, together with 
 that portion of existing taxation not falling upon ground-rents, to-day. 
 
 IV. If, in certain cases, the tax could be recovered and in others not, 
 or in any combination of the two, the gains to the society seem to be 
 proportionate; for in no instance would the tenant pay more than the 
 land was worth and the land is worth whatever value the society as a 
 whole attaches to it taxed or untaxed. 
 
 ,/;;!..; :■ 
 
 Book III 
 
 INCIDENCE OF TAXATION: INDIRECT, DIRECT 
 
 CHAPTER I 
 
 INCIDENCE OF INDIRECT TAXATION IN THE UNITED STATES 
 
 TO SOME observers a single fiscal system, based upon the 
 value of the land, involves a disproportionate burden upon 
 agricultural interests. Contribution from farms and small 
 holdings, at the same rate as from valuable city sites and cor- 
 porate land privileges, seems to place an unequal burden upon the 
 former. Again, it seems that the exemption of improvements upon 
 city land, and that owned by corporations, frees a portion of property 
 from taxation to which improvements upon agricultural land offer no 
 adequate analogy. A tax upon land values may also be confused with 
 a tax upon land; in which case it seems, as a greater amount of land 
 is necessarily employed in agriculture than in other pursuits, that a 
 land-tax must bring a corresponding burden upon agrarian interests. 
 In other words, that a farm of a thousand acres would be taxed a 
 thousand times as heavily as an acre in Wall or Lombard Street. 
 
 These three suppositions involve three misconceptions; the first 
 with reference to the incidence of the tax; the second with reference to 
 the effects of proportionate assessment; the third ignores the distinc- 
 tion between value and extent. 
 
 Considerations with reference to agricultural land raise the question 
 of the incidence of a direct tax on land values in general; and, as this 
 question of incidence is important, not only to land-owner, but to the 
 community, it should receive attention, with reference both to indirect 
 methods at present in operation, and in connexion with a direct single 
 system. A comparison may then be made between the incidence of 
 indirect and direct taxation. In order to present material for such 
 comparison, it is essential to review the expense of present methods, to 
 attempt to estimate by which classes of the community this expense is 
 borne, and, as nearly as possible, in what proportion. The same approxi- 
 
 239 
 

 
 240 
 
 Incidence of Taxation 
 
 Pt. m 
 
 Bk. Ill 
 
 Incidence of Indirect Taxation 
 
 241 
 
 mations may then be suggested with reference to the direct assessment 
 of ground-rents and the two compared. 
 
 In nearly every country supported by indirect taxation, with the 
 exception of England, incidental protection is not only welcomed, but 
 protective taxes are imposed. As indirect systems nearly always m- 
 volve Protection, a protectionist country should be selected for analysis; 
 the United States presenting perhaps the most available field. In the 
 fiscal system of the United States, unburdened with the expenses of 
 long-established monarchical institutions and crystallized methods, 
 the most nearly perfect example of the evolution of indirect systems 
 may be found. The attention will, therefore, be directed to the tax 
 burdens, intended and otherwise, of the citizens of the United States, 
 in relation to the expense and incidence of these taxes. A comparison 
 may then be made between this incidence and that to be expected 
 from the direct assessment of the unimproved value of the land. It is 
 impossible to present an analysis of this nature more clearly and sunply 
 than in the form adopted by Mr. T. G. Shearman, to whose statistical 
 studies reference has frequently been made. The following estimates 
 are but a brief review of Mr. Shearman's figures. 
 
 Indirect systems involve great expense in the indirect process of 
 collection! and burdens which never find their way mto the pubhc 
 treasury. Revenue, raised from the taxation of consumption m the 
 form of excise, involves the restiiction of tiie natural industnes of tiie 
 people affected by tiiese taxes. It is impossible to estimate tiie loss 
 involved in the effects of such taxation; it would probably reach a 
 large sum. There exists no data, however, upon which such estunate 
 may be made; none, therefore, will be presented. 
 
 The import duty, on another hand, presents some opportmuty for 
 tiie calculation of the cost of revenue raised; the difference between 
 the value of the quantity consumed, at domestic or protected prices, and 
 
 .Tb^ toUow ing Dresents a singuUr insUnce of th. cost involved in the coUection of indirert tales. Under 
 Jl^r^ coast oTT cou„t, .nst be watched. ^J^^ ^Zt^^^^tZZ 
 maintained at ports whether anything is coUected or not. For several yeaK ine r ma 
 TanaC publish^, under the tiUe of 'Curiosities of the Customs.' -"--^'^;^*^X ^hrL ab"^^^ 
 the motion of Sir John Lubbock in 1876. At ten ports whne -'*-« X'^n^'fot^ M e^tTher 
 servants of the Crown, costing the country £7.200. wrote 18.207 official lUteR and forms, ^t «ghtjtn 
 ^rts fifty Customs officers coUected in the year a total of £56 - about a halfpenny a head P^^ ^ay at a 
 T^oiZ 607 and of 24.480 sheets of official paper. At seven ports, where the coUection amounted to 
 £T6x th; fi ty sic office^ cost £7.47x. and sent up 25.387 letters and forms. At a dozen otherpom ^ 
 rZl^ -n-r to coUect £is ^os and forty-six men were kept employed in making 25.625 official returns a^d 
 Xt^ Lder Ifa ^y Si. Of course, the larger ports do far better than tins but Uie pnen^lco^^- 
 ti^lTto l^r the cost of aU this appalling waste of labour and money." - A Just Ba.s of Taxatton. 
 Frederick Verinder, p. 6. 
 
 the untaxed or normal value, will approximate the cost of the revenue 
 derived. In the study prepared by Mr. Wells, ^ it was shown that the 
 people of the United States, during the decade ending in 1887, paid an 
 average price for iron and steel representing an excess over English 
 prices of $56,000,000 per annum. The average revenue of the United 
 States, derived from iron and steel during that period, was less than 
 $15,000,000 annually; this shows an addition in cost to the consumer of 
 nearly four (3!) times the amount of the revenue derived. Nor does 
 this complete the estimate; tin-plates are included with the dutiable 
 articles; no tin-plates were produced in the United States during the 
 period considered and, therefore, the increased cost of American pro- 
 duction relates solely to other forms of iron products. " Excluding these," 
 says Mr. Shearman, ^ "the revenue from iron and steel has averaged less 
 than $12,000,000 per annum, diu-ing the period referred to. The con- 
 sumer has, therefore, paid over four and one half times as much as the 
 duty in addition thereto." Governor Foss^ says: "Although the entire 
 yearly income from tariff duties is about $326,000,000 which means 
 $3.50 a person, or $17.50 a family, the annual private tax of monopoly, 
 which makes the invitation to combine irresistible, is over $4,000,000,000, 
 which means $40 a person or $200 a family." A tax of $3.50 costs $40 
 or over eleven times the amount of the tax. 
 
 Mr. Shearman estimates the general cost of revenue, raised by means 
 of the import duty, at but three times the amount produced. The fol- 
 lowing calculations are made upon that basis. It is unessential to 
 present any lengthy statistical justification for such an estimate, for 
 the reason that it may be altered or rejected without involving the 
 conclusions to which the following studies lead. 
 
 Indirect taxes are first paid by dealers, who reimburse themselves 
 in prices to the consumer. Thus, all prices of taxed goods embody 
 dealers' profits on taxes paid. These profits no doubt represent at 
 least 25 per cent; they must in many cases act cumulatively, as the same 
 goods are handled by several different dealers; 15 per cent is, how- 
 ever, adopted. The profits on taxes paid upon assessments of 
 buildings and improvements are probably less; 5 per cent may be a fair 
 estimate. 
 
 There are other considerations which should be added to the foregoing 
 
 1 Cf., p. 36. 
 
 * Natural Taxation, p. 26. 
 
 • Speech at the Cleveland Dinner of the National Democratic Club, New York City, Monday evening. 
 March 4tZQZ3. The Trend, l/iaxch, 1912, p. 541. 
 
 
k ) 
 
 242 Incidence of Taxation ' Pt. Ill 
 
 in any attempt to estimate the cost of indirect taxation. Vested in- 
 terests, created by fiscal measures, render the reduction of such taxes 
 difficult, thus involving unnecessary burdens and administrative ex- 
 travagance. The sums raised to put different parties in power must, 
 of course, be paid out of the people's pockets, back again into those 
 from which they are advanced. The possibilities created for legisla- 
 tive and financial manipulation of values are almost all directly trace- 
 able to legislative fiscal decisions. How many millions of dollars an- 
 nually change hands in the United States in order to influence fiscal 
 decisions? How many millions are annually extracted from the pockets 
 of the people as a result of juggling the securities issued against these 
 taxes? The amoimts are probably not small. They must, however, 
 be neglected in the following estimates, no data existing upon which 
 they may be approximated. The calculations presented, therefore, 
 seem conservative to a degree. 
 
 Based upon some of the foregoing considerations, the census returns 
 for 1880, and other official statistics, Mr. Shearman ^ obtains the fol- 
 lowing estimates: 
 
 American Tax Burden of i88o. 
 
 Import duties $186,500,000 
 
 Internal revenue, etc 147,000,000 
 
 Increased prices, domestic protected goods . . 559,500,000 
 
 Total $893,000,000 
 
 Dealer's profits, 15 per cent 134,000,000 
 
 $1,027,000,000 
 
 Local taxes $312,000,000 
 
 Landlords* and dealers' profits, 5 per cent . . 15,600,000 327,600,000 
 
 Grand total $1,354,600,000 
 
 Total expense $1,354,600,000 
 
 Total revenue 645,500,000 
 
 Increased burden $709,100,000 
 
 These figures suggest that, in order to raise a revenue, in 1880, of 
 $645,500,000, the people of the United States were taxed $1,354,600,000. 
 
 It is now essential to discover, as nearly as possible, the burden 
 imposed by such taxes and profits upon the different classes of the people, 
 in order to approximate the incidence of this indirect system. It 
 is evident that these charges are paid from a fund which would other- 
 
 ^Natural Taxation, p. 27. 
 
 Bk. Ill 
 
 Incidence of Indirect Taxation 
 
 243 
 
 wise have remained in possession of the contributor — that is, from 
 a fxmd which the members of the society would have saved, or 
 have been able to save, upon the same scale of expenditure. It 
 is evident, also, that these taxes are paid in direct proportion 
 to the expense of living, for indirect taxes of importance must be 
 levied upon the vital and industrial necessaries of the people. 
 The larger the proportion the expenses of mere existence bears 
 to each income the greater will be its relative share of com- 
 pulsory taxation. If, then, the total earnings of the people are 
 classified, together with the normal saving capacity of each class, 
 it seems that a method is reached of approximating the tax 
 burden of each class; for the taxation of necessaries bears a 
 direct relation to living expenses, and hence to saving capacity. 
 Thus, if the living expenses of an income of $1,000 are $900, its 
 saving capacity $100, and the tax 10 per cent of expenses, this 
 income will save $100 and be taxed $90. An income of $100,000, 
 with living expenses of $75,000 and a saving capacity of $25,000, 
 will, imder the same system, be taxed $7,500 and save $25,000; 
 in other words, the smaller income will be taxed 90 per cent of 
 its saving capacity and the larger 30 per cent. The tax will, there- 
 fore, bear three times as heavily upon the accumulations of the 
 smaller income as upon those of the larger. These relations are, of 
 course, arbitrary; it now remains to approximate actual conditions 
 as nearly as possible. 
 
 After a review of all returns dealing with the subject, Mr. Shearman^ 
 says: "Let us now estimate the probable savings of each class, in 
 1880, after all taxes were paid. Labor conmiissioners have 
 repeatedly inquired into the savings of labourers, with the result 
 of fixing these at not more than 5 per cent, of such incomes under 
 $500, after all taxes have been paid. As taxes consume, directly 
 and indirectly, at least 15 per cent, of a labourer's average in- 
 come, the average labourer is not so thriftless as it might at 
 first appear. The middle class find it difficvdt to save more than 
 10 per cent. But the savings of the rich proceed upon a rapidly in- 
 creasing ratio, until we reach some men who save, with ease, 95 per 
 cent, of their income. 
 
 "Constructing a table upon the foundation thus afforded, taking 
 American statistics so far as they go, and using British statistics only 
 
 * Ibid., p. 33. 
 
 i 
 
rr«- 
 
 244 
 
 Incidence of Taxation 
 
 Pt. Ill 
 
 Bk. Ill 
 
 Incidence of a Direct Tax 
 
 for the purpose of supplementing and classifying American figures, 
 the following is the result; 
 
 American Incomes^ Expenses, and Savings, 1880. 
 
 245 
 
 Qass 
 
 Persons 
 
 Income 
 
 Average 
 Expenses 
 
 Average 
 
 Range 
 
 Average 
 
 Savings 
 
 I. 
 
 50 
 
 over 
 
 
 
 
 II. 
 
 500 
 
 $1,000,000 
 250,000 to 
 
 $1,500,000 
 
 $250,000 
 
 $1,250,000 
 
 111. 
 
 5,000 
 
 1,000,000 
 50,000 to 
 
 450,000 
 
 100,000 
 
 350,000 
 
 IV. 
 
 12,500 
 
 250,000 
 20,000 to 
 
 88,000 
 
 40,000 
 
 48,000 
 
 V. 
 
 27,000 
 
 50,000 
 10,000 to 
 
 27,500 
 
 15,000 
 
 12,500 
 
 VI. 
 
 75,000 
 
 20,000 
 5,000 to 
 
 14,000 
 
 9,000 
 
 S,«» 
 
 VII. 
 
 250,000 
 
 10,000 
 2,000 to 
 
 6,400 
 
 5,000 
 
 1,400 
 
 vin. 
 
 850,000 
 
 5,000 
 
 700 to 
 
 2,700 
 
 2,300 
 
 400 
 
 IX. 
 X. 
 
 3,500,000 
 13,672,000 under 
 
 2,000 
 350 to 
 700 
 
 350 
 
 1,000 
 
 400 
 300 
 
 850 
 
 380 
 
 285 
 
 ISO 
 
 30 
 IS 
 
 "It is now necessary to tabulate the aggregate expenses and savings 
 of each class, as an entire class. 
 
 American Incomes, Expenses, and Savings, 1880. 
 
 Qass 
 
 Persons 
 
 Total 
 Income 
 
 Total 
 Expenses 
 
 Total 
 Savings 
 
 I. 
 
 SO 
 
 $75,000,000 
 
 $12,500,000 
 
 $62,500,000 
 
 II. 
 
 500 
 
 225,000,000 
 
 50,000,000 
 
 175,000,000 
 
 m. 
 
 5,000 
 
 440,000,000 
 
 200,000,000 
 
 200,000,000 
 
 IV. 
 
 12,500 
 
 343,750,000 
 
 187,500,000 
 
 156,250,000 
 
 V. 
 
 27,000 
 
 378,000,000 
 
 243,000,000 
 
 135,000,000 
 
 VI. 
 
 75,000 
 
 480,000,000 
 
 375,000,000 
 
 105,000,000 
 
 vn. 
 
 250,000 
 
 675,000,000 
 
 575,000,000 
 
 100,000,000 
 
 VIII. 
 
 850,000 
 
 850,000,000 
 
 722,500,000 
 
 127,500,000 
 
 IX. 
 
 2,500,000 
 
 1,000,000,000 
 
 950,000,000 
 
 50,000,000 
 
 X. 
 
 13,672,000 
 
 4,101,600,000 
 
 3,896,520,000 
 
 205,080,000 
 
 
 17,392,050 
 
 $8,568,350,000 
 
 $7,212,020,000 
 
 $1,356,330,000 
 
 "The incidence of taxation is now to be considered. The gross 
 expense of the people's living has been estimated as above, at $7,212,- 
 000,000 for the year 1880. Taxation was distributed nearly pro rata 
 upon this. The whole burden of taxation, including its intended and 
 
 unintended effects, has been shown to be $1,350,000,000. This was 
 equal to 18^^ per cent on expenses. As the total savings, before 
 taxes are deducted, would amoimt to $2,700,000,000, the ultimate 
 burden imposed by taxation and its effect was 50 per cent, of all national 
 savings. 
 
 "But, while this is the average, that average is based on a vast dis- 
 proportion of burdens. The tax of 185^^ per cent upon expenses 
 means a tax of less than 4 per cent, upon the easy savings of the richest 
 class, but of 78 per cent upon the hard savings of the poorer class. 
 Indirect taxation, therefore, bears twenty times as heavily upon the 
 average poor man as it does upon the average rich man." 
 
 The incidence of the indirect taxation of living expenses upon two 
 average incomes may now be considered without selecting either 
 extreme, say Class III and Class IX. Incomes $88,000 and $400, 
 expenses $40,000 and $380, savings $48,000 and $20, respectively; in- 
 cidence of tax 18 per cent of living expenses. The first income will 
 be taxed $7,200, or 15 per cent of its saving capacity; the smaller income 
 will be taxed $68.40, or 342 per cent of that capacity; 3.42 times as 
 much as it can save. It may now be supposed that the tax burdens are 
 lightened 50 per cent by direct or less expensive methods. The first 
 income would then be able to save $3,600 in addition, 9 per cent increase 
 of saving capacity; the second income could save $34.20 — 171 per cent 
 increase of savings. 
 
 These relations contain a fairly satisfactory explanation why the 
 poorer classes have never been able to accumulate, in proportion to the 
 increasing wealth of a society supported by the indirect taxation of 
 living expenses. An indirect fiscal system not only renders it im- 
 possible for the poor to accumulate in proportion to increasing social 
 wealth, but makes it possible for the richer classes to absorb the social 
 wealth, and at the same time accumulate in a progressively increasing 
 ratio thereto. 
 
 The essential feature of indirect systems is not the amount levied, 
 nor the expense created; but the fact that all such systems are assessed 
 directly upon the compulsory expenses of existence; thus progressively 
 decreasing the accumulating capacity of the smaller incomes, in inverse 
 ratio to their amoimt, with an exactly reversed effect upon the larger 
 fortunes. This effect is due neither to the amoimt raised nor to the 
 expense of the system; but to the fact that a progressively increasing 
 proportion of the smaller incomes is brought imder the influence of 
 
246 
 
 Incidence of Taxation 
 
 Pt. Ill 
 
 
 
 taxation, and a progressively increasing proportion of the larger incomes 
 is exempt. The power of accumulation, therefore, of each income, 
 taxed on compulsory living expenses, increases cumulatively as its 
 amoimt and decreases progressively as the income diminishes. The 
 burden created by an indirect policy varies inversely as the means of 
 the contributor. 
 
 Thus an indirect system of taxation has a direct effect in the dis- 
 tribution of social wealth. The taxation of living expenses, through 
 the increasing proportion which these bear to earnings as earnings 
 decrease, is the cause of such conditions. 
 
 More than a quarter of a century has passed since the period to which 
 these estimates refer. They are here examined as being more valuable 
 than later compilations, for they may be studied in the light of the sub- 
 sequent industrial evolution of the United States. The process of 
 the concentration of social wealth which they illustrate, has there 
 proceeded at an unprecedented rate during the past twenty-five years 
 through causes largely influenced by the multiplication of indirect 
 taxes. 
 
 These figures, moreover, although referring to a specific period of 
 a specific nation, are of universal application and develop a principle 
 involved in the action of all indirect systems. The essential feature 
 in the distribution of social burdens is the relation which the basis of 
 the system bears, actually and relatively, to the means of the contrib- 
 utor. Every tax, therefore, upon every indirect schedule based upon 
 living expenses, will impose a direct burden upon the individual in 
 proportion to the relation which living expenses bear to income. The 
 burden will thus fall cumulatively where vital needs are nearest total 
 income, and bring with it relative exemption where vital needs form the 
 smallest proportion of the means involved. This will be the effect 
 of a single assessment. With annual assessments, the distribution of 
 the entire wealth of the society will be affected, and a progressive proc- 
 ess of accumulation toward the larger incomes set in while the fields 
 of pauperism and unemployment will increase proportionately: To 
 those who have will be given, and from those who have not will be 
 taken away, even the little they possess. 
 
 ii 
 
 
 CHAPTER II 
 
 THE INCIDENCE OF A DIRECT TAX ON LAND VALUES 
 
 IN ANY attempt to estimate the incidence of the direct tax, it 
 should be remembered that the burdens of an indirect and a 
 direct system are different. In the United States, for instance, 
 it seems that in 1880 the people paid more than $1,350,000,000 in 
 order to raise a revenue of $645,500,000. By direct methods there 
 would in all likelihood have been a saving of more than the difference 
 of $700,000,000 presented. 
 
 In order to pursue inquiry with special reference to the agricultural 
 class, the population may be divided as follows: 
 
 1. The landless. 
 
 2. The land-owners. 
 
 3. Farmers, whether owning or renting land. 
 
 I. Under a direct system, the landless class would be relieved of 
 present burdens, and its capacity for wealth accumulation, progressively 
 increased as the burdens were withdrawn. The result would thus be, 
 not only to bring relief from existing taxation, but to create a power of 
 accumulation at present non-existent. 
 
 TT. With reference to the land-owning class, Mr. Shearman* says: 
 "It has already been shown that the concentration of all American taxes 
 upon American land-owners would not absorb half of their ground- 
 rents. But it would be a great mistake to assimie that such taxation 
 would absorb half of their whole income, or anything approaching 
 to it. No allowance has thus far been made for the important fact that, 
 considered as an entire class, the owners of ground-rents also own all the 
 buildings and other improvements upon their land, besides a much larger 
 share of all personal property, in proportion to their number, than any 
 other class of the community. All these things would be relieved from 
 taxation under the system here proposed. All taxes on real estate 
 and probably 75 per cent, of the taxes on personal property are paid 
 by land-owners. (Not more than one tenth of the persons who are 
 not assessed for some land are ever assessed for any personal property. 
 
 1 Ibid., p. Z77. 
 
 247 
 
1^' 
 
 --m ^ 
 
 
 i 
 
 
 1 
 
 
 1 
 
 ■t 
 
 1 
 
 
 ■1 
 
 248 
 
 Incidence of Taxation 
 
 Pt. Ill 
 
 taking the whole country together.) They also pay at least their full 
 share, in proportion to their numbers, of tariff and excise taxes, and of 
 the burdens which indirectly flow from those taxes. As American, 
 land-owners constituted 48 per cent, of the heads of families in 1890 
 they will be released from 48 per cent, of those burdens, the amount of 
 which was estimated, on a previous page, at $1,050,000,000 per annum. 
 
 "The local taxes on both real and personal property in 1890 amounted 
 to $470,652,000. As real property constituted three fourths of all 
 assessed values, its owners paid three fourths of these taxes ($352,- 
 989,000), three fourths of the taxes on personal property ($88,248,000), 
 and 48 per cent, of the $1,050,000,000 burden, created by federal 
 indirect taxation ($504,000,000). These were the burdens borne by 
 real estate owners, as a class, in 1890: all of which would, under 
 the taxation of ground-rents alone, be replaced by a single tax of 
 $828,541,000. 
 
 "The effect of such a change in taxation, upon American owners Of 
 real estate, taken as an entire class, would be as follows: 
 
 "American real estate owners paid, in 1890, under the present system 
 of taxation: 
 
 An local taxes on real estate $352,989,000 
 
 75 per cent, of local taxes on personal estate ...,,. 88,248,000 
 48 per cent, of federal taxes and burdens attendant thereon . • • 504,000,000 
 
 $945,237,000 
 They would pay, if all taxes were concentrated on ground-rents: 
 
 An local taxes $470,652,000 
 
 All federal taxes 357,889,000 828,541,000 
 
 Net reduction of burdens on real estate 
 
 $116,696,000 
 
 That the concentration of taxes on ground-rents would reduce the 
 present burden on real estate may seem impossible, yet, in the light of 
 the great relative cost of indirect taxes, such an assumption is not ex- 
 travagant. The incidental burdens of revenue indirectly raised are in 
 all probability more than as great agaii; as the revenue itself. Through- 
 out the foregoing calculations these burdens have been placed at 
 $700,000,000. "They include," says Mr. Shearman, "a large private 
 profit, through enhanced prices, maintained by tariffs and excise laws; 
 and they also include a sum, qidte as large, absolutely wasted, by keep- 
 ing up prices on goods which, after all, do not afford an average profit 
 
 Bk. Ill 
 
 Incidence of a Direct Tax 
 
 249 
 
 to domestic producers. Land-owners as land-owners do not get the 
 profit, and nobody gains by the waste. 
 
 "No doubt a small section of the land-owning class do get a large 
 share of the profits arising from the monopolies fostered by protective 
 tariff and excise taxes. But more than nine tenths of the land-owners 
 derive no benefit from these monopolies. All of them must pay their 
 proportion of the taxes and private tribute, levied by laws creating 
 monopolies; but the profit accruing goes to those who can nm the 
 monopolies, whether they own or only hire land. 
 
 " Direct jtaxation would put an end to all such monopolistic profits 
 and all the indirect effects of indirect taxation. Owners of land who 
 did not hold any share in tariff-bred or similar monopolies, would save, by 
 substituting direct for indirect taxation, their share of the $700,000,000 
 annually lost to the people at large in this way. And this saving more 
 than outweighs all the additional taxation falling upon them, through 
 the exemption of labor and personal property from taxes. 
 
 "Another reason is of even greater importance, and clears up the whole 
 apparent mystery. These statistics show that if all the land were 
 owned by a class, on perfectly equal terms, in equal shares, they 
 would all gain by direct taxation. But they do not stand on an equal 
 footing or own equal shares. On the contrary it is now undisputed 
 that more than 75 per cent, in value of all American real estate, in- 
 cluding railways, is owned by less than 10 per cent of the whole number 
 of land-owners. Indeed, it is practically undisputed that this amount 
 is held by less than 5 per cent, of the whole number, and that half of 
 all the value is held by one one hundredth of all owners. 
 
 "This fact immediately puts a new light upon the whole question. 
 Accepting the far too conservative estimate that one tenth of all the 
 owners, or 600,000 families, own three fourths of all the land, and con- 
 structing a table, showing the effect of the change in taxation upon 
 them, we should reach very different results. 
 
 "These families, being much richer than the remaining 5,500,000, 
 of course pay even now a much larger share of taxes of all kinds. Own- 
 ing three fourths of all real estate, they must now pay three fourths of 
 the taxes on that, or, in round numbers, $264,000,000. They doubt- 
 less pay one fourth of all personal taxes or, $29,000,000. Their quota 
 of federal taxes, etc., would be very much larger than that of the same 
 number of small land-owners. It would not be less than $200,000,000. 
 On the other hand, this class includes nearly all those persons who 
 
 I 
 

 > 
 
 
 ' 
 
 250 
 
 lucidence of Taxation 
 
 Pt. Ill 
 
 derive profit from tariffs, monopolies, and bounties; all of which would 
 be swept away by a natural system of taxation. This class, as a whole, 
 
 would suffer some loss. 
 
 "But the line must be drawn still higher up. The profits of arti- 
 ficial monopolies and bounties are almost entirely divided among less 
 than 50,000 land-owners. The remaining 6,000,000 get practically 
 none of these profits. The line of division, therefore, must be drawn 
 between the 50,000 famiUes, which own at least 30 per cent, of aU the 
 land values of the United States and the 6,000,000 who own the 
 
 remainder. 
 
 '^Allowing one half the burdens, indirectly resultmg from tariffs 
 and excise laws to be mere waste, bringing no profit to anybody, still, 
 in years of average prosperity, annual profits to the amount of $350,- 
 000,000 would remain; of which more than $300,000,000 go to the 
 50,000 largest land-owners. 
 
 "Let us now construct a table showing the incidence of direct taxa- 
 tion upon 
 
 The 50,000 Largest Land-owners. 
 
 They paid in 1890: 
 
 30 per cent, of taxes on real estate . 
 
 10 per cent, of taxes on personal estate . . 
 
 10 per cent of tariff, etc., taxes, profits, and waste 
 
 $106,000,000 
 
 11,700,000 
 
 105,000,000 
 
 They gained profits from the tariff, etc 
 
 Their net profits from the system of indirect taxation 
 
 were . . • • ' ' '> ' r ' 
 
 Under direct taxation, they would make no tariff profits, 
 and would pay 30 per cent, of all taxes . 
 
 Their net loss, from direct taxation 
 
 $222,700,000 
 300,000,000 
 
 $ 77,300,000 
 
 249,000,000 
 
 $326,300,000 
 
 "This explanation makes it easy to understand how the vast ma- 
 jority of land-owners may actually gain by assuming the whole burden 
 of direct taxation. By so doing they get rid of paying a tribute of 
 $^c;o,ooo,ooo to a small band of bounty-fed capitalists, and of an annual 
 waste of $350,000,000 more. The loss of this tribute will fall entirely 
 upon the few who depend upon unjust legislation for their profits. 
 
 "But the case even of the afflicted 50,000 is not so bad as it at first 
 seems Let us review their whole situation. Possessing 30 per cent, 
 of all real estate values, they enjoy an annual rent, from land and build- 
 ings, of close upon $700,000,000. Their income from tariff profits and 
 
 Bk. Ill 
 
 [Incidence of a Direct Tax 
 
 251 
 
 the like has been put at $300,000,000. They would lose by the adoption 
 of direct taxation only three per cent, of their rents; although they 
 would lose, and ought to lose, the whole of the tribute which they levy 
 upon their fellow citizens, by means of an abuse of the taxing power. 
 The immense benefits which would be conferred upon the coimtry, by 
 the abolition of indirect taxation, would certainly increase rent by 
 much more than three per cent.; and thus even this small class would 
 lose nothing but the illegitimate profits, which they make by an abuse 
 of the taxing powers of the national government. 
 
 "Yet thefe must be some class which would lose absolutely by the 
 concentration of taxes upon ground-rents. There is. It is that small 
 number of persons whose chief investment is in vacant land and whose 
 chief occupation is keeping land out of use." 
 
 III. The effects of a direct system upon the agricultural land-owner 
 may now be discussed. After an analysis of the census returns for 
 1890, in order to establish the basis for the estimates to follow, Mr. 
 Shearman^ says: "The proportion of land values* held by farmers 
 shrinks when put to the test of statistics as much as does their numerical 
 proportion. The same census returns aggregate the real value of 
 farms at ( in roimd numbers) $13,279,000,000, out of a total taxable 
 real estate value of $46,000,000,000, including railroads, etc. As much 
 more than one third of all farms are not owned by farmers, we must 
 deduct at least one third from this farm value, in estimating the 
 amount owned by farmers. This would leave them in possession of 
 a value, in both land and its improvements, of about $8,800,000,000, 
 or less than one fifth of the whole value of real estate, which closely 
 corresponds with their proportion of the population. 
 
 "The independent farmer, therefore, is a rapidly diminishing factor 
 in American politics. . , . The farmer is apt to cry out against 
 what he calls the injustice of exempting from all taxation the mag- 
 nificent buildings sometimes erected in cities, forgetting that such 
 buildings always stand upon the most expensive land, while his own 
 farmhouse and barn stand upon land of utterly insignificant value. 
 In adjusting taxation, the only question of importance is as to the relative 
 proportion which will be borne by diferent classes; and it is of no impor- 
 tance whatever that any single piece of property should pay much or 
 little, provided all other properties of the same kind pay in exact 
 proportion with it. A farmhouse, costing $1,500 to build, will stand 
 
 > Ibid., p. 184.186. 
 
 
 '•I' 
 
 il'; 
 
 f 
 
 !»■■ 
 
 h 
 
 4': 
 
 1 
 
rn^. 
 
 f 
 
 2sa 
 
 Inddence of Taxation 
 
 Pt. Ill 
 
 
 upon a piece of land which, including the siurounding garden, on an am- 
 ple scale, would not be worth more than $15. But an average dty 
 house, costing $10,000 to build, will stand upon a lot, worth at least 
 $5,000; while a warehouse, costing $50,000 to build will frequently 
 stand upon a lot worth $50,000. 
 
 '*So far, therefore, as the mere value of land which is required for 
 the purpose of supporting the house or building of any kind is concerned, 
 the farmer would gain largely by concentrating taxes upon that and 
 exempting all buildings." This may be shown by the following ap- 
 plication of the principle: If a tax of $1,165 is to be laid upon 
 the three pieces of property mentioned, the result, under the present 
 system, would be as follows: 
 
 "Farmhouse and land, $1,515; city house and land, $15,000; ware- 
 house and land, $100,000. Total, $116,515; tax rate, i per cent. 
 Tax on the farmhouse, $15.15, on the city house, $150, on the warehouse, 
 $1,000. 
 
 "Under a system exempting all buildings and improvements, the 
 assessment would be as follows: 
 
 "Farm land, $15; city land, $5,000; warehouse land $50,000. 
 
 "The gross tax remaining the same ($1,165), it would be divided on a 
 total assessment of only $55,015, requiring a tax rate of 25 per cent. 
 The farmhouse owner would pay 32 cents; the city house owner, $106; 
 and the warehouse owner, $1,059. Reduction of farmer^ s tax, g8 per 
 cent:' 
 
 It may be said that the taxation of ground values involves, not only 
 the assessment of the land upon which a farmer's house may stand, 
 but of his entire farm as well, thus bringing a larger proportion of 
 agricxiltural than urban land under fiscal influence. Here arises the 
 confusion of ideas with reference to the taxation of land, and the taxa- 
 tion of land values. If every piece of land in the United States, or in 
 any other country, were valued, and a certain number of horseshoes 
 were piled upon each portion — every shoe representing one dollar, 
 franc or shilling, as the case might be — and apportioned exactly 
 to the nimiber of dollars, francs, 01; shillings representing the value 
 of the land; it is evident that great piles of horseshoes would accumu- 
 late on the valuable sites of cities, and that land in the country would be 
 relatively free. Long lines of horseshoes would be strung over rail- 
 way routes, along water fronts, telegraph and telephone property, 
 while adjoining land would have relatively few or none. If, now, 
 
 Bk. Ill 
 
 Inddence of a Direct Tax 
 
 253 
 
 it were suggested to assess taxes upon these horseshoes, and the word 
 "land" never mentioned, it is obvious that the greater the number of 
 horseshoes, the greater would be the amount and proportion of taxes 
 levied. The fact that all the buildings, and all the personal property 
 in the nation were exempt from taxation would make no difference. 
 Where a given amount is to be assessed, it would be assessed in proportion 
 to the number of horseshoes and nothing else; where a given percentage 
 is assessed, it would represent a given percentage of the number of 
 horseshoes, and nothing else. As cannot be too often repeated, the 
 essential feature in a just fiscal system is not concerned with the amount 
 of property nor with the things taxed; but is concerned with the pro- 
 portions in which the tax is distributed. Covering the land with horse- 
 shoes in proportion to its value, and then assessing taxes in proportion 
 to the number of horseshoes, is identical with a direct fiscal system 
 based upon land values; for contributions would be apportioned with 
 reference to the number of dollars, francs or shillings, representing the 
 values of the land, and not to acreage. If the effects of raising revenue 
 from horseshoes, piled upon land in proportion to value, is ever under- 
 stood by agriculturists, a great fiscal light may dawn upon the bucolic 
 intelligence. 
 
 The effect of a direct system upon agricultural land in relation to 
 the present system may be shown in the following illustration with 
 reference to Boston and the land in its vicinity. "No statement of 
 the whole amount of personal property assessed upon Massachusetts' 
 farms alone is accessible," says Mr. Shearman, ^ "but by comparing 
 three counties, Berkshire, Franklin, and Hampshire, in which the value 
 of farms in 1885 constituted more than half the value of all real estate, 
 with Suffolk county, in which farms constituted only the one hundred 
 and twentieth part of all real estate, we can reach a very fair conclusion 
 as to the effect of the exemption of both personal property and improve- 
 ments. 
 
 "As we are compelled to compare the farm values of 1885 with the 
 total assessments of 1890, there is no use in giving precise figures; and 
 round numbers will therefore be used. The assessed value of all 
 property in Suffolk County was $851,000,000. In the three farming 
 counties it was $91,000,000. If personal property and buildings had 
 been exempted, and land had been assessed at its unimproved value, 
 the assessment of Suffolk would have been $377,000,000, and that of 
 
 > Ibid, p. X96. 
 
 V:'\ 
 
Ift 
 
 J t 
 
 I 
 
 '! it 
 
 254 
 
 Incidence of Taxation 
 
 Pt. Ill 
 
 Bk. Ill 
 
 Incidence of Indirect Taxation 
 
 255 
 
 the three farming counties would have been less than $22,000,000. 
 Thus the assessment of Suffolk County (which is only another name for 
 Boston) would have been reduced 56 per cent.; but the assessment of 
 the fanning counties would have been reduced 76 per cent. Assuming 
 i the rate of taxation to be i per cent., on the present valuation, Boston 
 would pay, under the present system, $8,510,000 and the fanning 
 counties $910,000. Under the refonned system, Boston would pay 
 $8,900,000, while the fanning counties would pay only $520,000. The 
 burden upon farms would be lightened by 43 per cent., and yet the 
 burden of Boston would be increased by less than 5 per cent.; the State 
 receiving precisely the same revenue, in any case. Or, to put it the 
 other way, Massachusetts farmers are paying 75 per cent, more of 
 the State taxes, under the present system, than they would pay under 
 a tax upon the unimproved value of the land alone." 
 
 With these considerations in mind, showing how direct assessment 
 upon the value of the land brings a relatively lessened tax burden to 
 agriculture, the effects upon American farmers as a class may be dis- 
 cussed. 
 
 " Using round numbers," says Mr. Shearman, ^ "it has been shown that 
 the total ground-rent of the United States for 1890 was $1,380,000,000; 
 the whole amount of taxes to be provided for was $828,000,000; the 
 local taxes on real estate were $354,000,000, and on personal property, 
 $117,000,000; the national taxes, all indirect, were $358,000,000; while 
 the burden of private profit or of waste, caused by the nature of in- 
 direct taxes, was about $700,000,000 in 1880, and could not well be 
 
 less in 1890. 
 
 "It will not make much difference whether the farmer's share of land 
 values in the United States is estimated at more or less than 30 per cent, 
 since their proportion of local taxation will vary in proportion thereto. 
 But according to the census of 1890 the value of farms was less than 
 30 per cent, of the value of all taxable real estate and land privileges.* 
 
 "Farmers have never made any profit out of the higher prices caused 
 by indirect taxation, and, therefore, they have paid their share of all 
 profit so made, without receiving any part of it back. 
 
 "Since American farms constituted, in 1890, 30 per cent, of all real 
 estate, their owners must have paid at least 30 per cent, of the taxes 
 on real estate. In fact they paid more; because land franchises did 
 not pay their share. . . • 
 
 » Ibid., p. 191-194- , , . 
 
 « True value of all Uxable real csUte, over $46,000,000,000; of fanns, 113,279.000,000. 
 
 "Indirect taxes are of course paid, not in proportion to wealth or 
 income, but according to consumption. If farmers live as well as other 
 people, they pay such taxes in proportion to their numbers, not their 
 property. It may be assimaed that they are more frugal than most 
 other land-owners. But farm owners^ who form one fourth of all 
 families, live in much better style than do the great mass of landless 
 people. They, therefore, pay at least one fourth of all indirect taxes. 
 We thus reach the conclusions now stated. 
 
 "American farm owners pay, under the present system of taxation: 
 
 30 per cent, of/taxes on real estate ($354,000,000) $106,200,000 
 
 25 per cent, of taxes on personal property ($117,000,000) . . . 29,250,000 
 25 per cent, of indirect taxes and profits thereon ($1,050,000,000) . 262,500,000 
 
 $397,950,000 
 
 $248,400,000 
 
 "They would pay under the system here proposed: 
 30 per cent, of all necessary taxes, with no indirect burdens attached 
 ($828,000,000) 
 
 Reduction of Farmers Taxes through direct taxation .... $149,550,000 
 "Thus the farmers would save much more than one third of their 
 present tax burdens by the concentration of taxes on ground-rents alone. 
 ... Of course, the proposal to collect taxes from only one source 
 implies that the burden is to be increased upon the class which controls 
 that source. But the proposal is that the whole burden shall be placed 
 upon the owners of groimd rents, including the franchises on land. 
 Such owners form a very small minority of the residents of cities and 
 towns; and therefore a vast majority of such residents would not suffer 
 any increase of burdens, through any amount of relief which might be 
 given to farmers. . . There is no conflict of interest between those 
 who live in cities and those who live on farms. But there is a great 
 conflict of interest between those who own city land and those who 
 own the farms. Under a single tax upon ground-rents, farm owners, as 
 a class, would not pay nearly so large a share of taxes as they do now; 
 because the value of their land is so much less than the value of city, 
 town and railway land." 
 
 Before leaving the subject, it may be of interest to make a direct 
 statistical comparison between the results of the indirect taxation of 
 living expenses and normal distribution. This may be done by means 
 of sunmiarizing the results of a study of the following table, showing the 
 amount of ten classes of American incomes in 1880, together with their 
 respective expenses, tax burdens, and savings, before and after taxation. ^ 
 
 * CL. Ibid.« p. 36. , 
 
 r ( 
 
nfif*-* 
 
 256 
 
 \u 
 
 \l 
 
 ! 
 
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 1 1 
 
 ! 
 
 Incidence of Taxation 
 
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 8 
 
 10 
 
 o 
 
 8 
 
 O 
 
 00 
 
 o 
 
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 8 
 
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 9 
 
 n 
 
 00 
 
 
 8 
 
 en 
 
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 s 
 
 o 
 
 
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 »o 
 
 8 
 
 O 
 
 t^ O 
 
 8 c* M 10 10 t^ O O- 
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 00 PO Tf 
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 vO 00 «^ 
 
 Ovc8 
 
 vo r^ w 
 
 H M Ci M 
 
 
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 O 
 
 Ov 
 
 fO»oOo ^w w O «o^ 
 c« o*t^io»oO t^»o t^oo 
 
 M M M t^ 
 
 8 
 in 
 
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 d H C« to *0 t^ ^°^ 
 
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 m 
 
 a 
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 u 
 (J 
 
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 I 
 
 pq 
 
 m 
 
 a 
 
 P4 
 
 u 
 
 Pt. Ill 
 
 o -^ 
 
 \o *o t^ 
 
 ^ M CO 
 ••. «<k ^ 
 
 CO O M 
 
 O •* M 
 
 M M (>< 
 
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 c* O t^ 
 
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 000 
 10 000 
 
 t>. «o O^ 
 
 CO »^ »o 
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 88^ 
 
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 S8J1 
 
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 to 
 
 o 
 
 VO 
 00 
 
 to 
 
 § 
 
 Ov 
 
 to 
 
 M 
 
 3 
 
 Bk. Ill 
 
 Incidence of a Direct Tax 
 
 2S7 
 
 These figures show apparently that the total normal accumulating 
 capacities of the rich and labouring classes were not very different in 
 amount, each being a little over $1,000,000,000; the difference in favour 
 of the labouring class. The result of an indirect process of taxation 
 levied upon living expenses was, however, that the total earnings of 
 the people, instead of being distributed in proportion to natural accumu- 
 lation, were divided in such a way that nearly 3I times (3.43) the natural 
 share of the labouring class fell into the hands of the rich. It is evident 
 that this process, continued imder an indirect system, and over a period 
 of time, must increase progressively in effect; for, as the savings of the 
 larger incomes increase, their powers of accumulation will be propor- 
 tionately augmented. Under a direct, and properly apportioned fiscal 
 system, no such distortion in the distribution of wealth would occur 
 after the tax had been paid. This distorted distribution is, however, 
 the characteristic feature of all fiscal systems based upon the taxation 
 of living expenses. 
 
 Such systems act progressively throughout all the incomes of a 
 society, and result in the cumulatively increasing distortion of the 
 distribution of the social wealth, imtil the process destroys itself — 
 becomes top-heavy, and results in the inevitable revolutionary collapse. 
 This seems, in a few words, to present the essential features of the his- 
 tory of every society based upon indirect fiscal methods. The blind 
 will lead the blind through this process of progressive accumulation and 
 distortion until they both fall into the pit. 
 
 m 
 
 It 
 
 Vh 
 
 )■'; 
 
 J<l 
 
 A 
 
^•rr. 
 
 Bk. IV 
 
 Labour 
 
 ^SP 
 
 Book IV 
 
 FISCAL PROBLEMS 
 CHAPTER I 
 
 LABOUR 
 
 Section I — Labour ahd Indirect Taxatioh. Section II — Labour ahd 
 
 Direct Taxation, 
 
 Section I — Labour and Indirect Taxation 
 
 IN AN interesting work dealing with the London poor, written during 
 the earlier decades of the last century, the author presents the then 
 existing conditions governing a certain trade of the metropolis. 
 In this trade, with changing methods of production, a custom arose 
 among the workers of employing their children, which, owing to the 
 nature of the work, was possible while they were very yoimg. The 
 increased competition thus increased the economic desirability of large 
 families, and the need of putting still younger children to work. The 
 result was that the larger the families the less became the relative return 
 for the goods produced; while, without large families, the workers were 
 unable to compete at all. Says Mr. Mayhew:* "The only means of 
 escape from the inevitable poverty, which sooner or later overwhelms 
 those in connection with the cheap shoe trade, seems to the workmen to 
 be by the employment of his whole family as soon as his children are 
 able to be put to the trade — and yet this only increases the very de- 
 pression that he seeks to avoid." The workers engaged in this occupa- 
 tion, yoimg and old alike, were thus caught in the toils of a process, 
 the accumulative evil effects of which were intensified by their indus- 
 try and the conditions of their existence. 
 
 The workmen of the days of Mr. Mayhew are long since in their 
 graves; their children very old, or passed beyond economic conditions 
 to which they owed their earthly experiences. The conditions pre- 
 
 ^London Labor and tie London Foot, VoL IL, p. 357. 
 
 358 
 
 sented, however, by Mr. Mayhew with reference to this trade seem, with 
 certain modifications, more or less typical of conditions governing the 
 existence of London labour at large. In other words, the greater the 
 number of workers, the greater will be the competition among them; 
 and, consequently, the lower the returns to labour, imtil wages reach 
 a point beyond which they cannot be reduced, or the level essential to 
 support physical existence. Later conditions in London, studied in the 
 exhaustive treatise of Mr. Charles Booth, ^ seem to support this position. 
 Mr. Rountree's'^ study of conditions in York leads to the opinion that 
 such conditions are not limited to London, and if the history of the 
 subject is studied as presented in the works of Prof. Thorold Rogers,* 
 extending over a period of himdreds of years, it may seem that the indus- 
 trial masses of Great Britain present more or less analogous conditions. 
 
 On the other side of the Atlantic, a number of students, among whom 
 may be mentioned Mr. Jacob Riis* and Mr. Robert Hunter,^ present 
 allied conclusions. On the continent, the works of Karl Marx,« Prince 
 Krapotkin,^ together with a host of other sociological writers, show 
 that these conditions are not limited to English-speaking communities 
 and more or less analogous observations could readily be presented 
 from the chief nations of the East. The bulk of the industrial masses, 
 it seems, is forced, by present systems of production and distribution, 
 to live and labour on the verge of what is called the "poverty line," 
 that is with returns supplying but the needs of physical existence, while 
 the slightest adversity, unemployment, disease or old age opens the 
 pit of want. This vital pressure of the industrial masses upon the 
 means of subsistence seems fairly constant the world over. Even when 
 the effects of the migration of the past decades, from the old world to 
 the new, are considered, conditions remain fundamentally unchanged, 
 and populations from which a number of millions are withdrawn, but 
 propagate in an increasing ratio until the gap has been filled. 
 
 "It has been observed," says Mr. Hunter,^ "again and again that 
 emigration from a country causes an increase in the number of children 
 bom in that country. William Farr noted that in Norfolk, England, 
 
 > Life and Labour of the People of London, 
 
 • Poverty: A Study of Town Life. 
 
 • Six Centuries of Work and Wages. 
 
 • How the Other Half Lives. 
 
 • Poverty. 
 
 • Capital. 
 
 » Fields, Factories, and Workshops. 
 
 • Poverty, p. 200. 
 
 ; 1 
 
i6Q 
 
 Fiscal Problems 
 
 Pt. Ill 
 
 Bk. IV 
 
 Labour 
 
 361 
 
 emigration was followed by large families. Commenting upon this 
 fact, he says that when the young people emigrate, the parents re- 
 maining at home have on an average five children instead of two or 
 three, or none.* In almost every country in Europe the same tend- 
 ency has been observed , . . Professor Richmond Mayo-Smith 
 says: 'Emigration does not threaten to depopulate the coimtries of 
 Europe. Had there been no emigration during the century, it is not 
 probable that the population of Europe would have been any greater 
 than it is. The probabilities are all the other way. Europe has never 
 grown so fast as during the present century.'^ , . . There is a 
 strange and rather startling probability that the twenty million persons 
 who have emigrated to this coxmtry have been replaced by twenty or 
 so million persons who would not have been born had these emigrants 
 remained at home." 
 
 The flood of himianity pouring into the United States may not 
 have had much effect upon the normal growth of population. The 
 foreign-bom element seems to supplant the native bom to an approxi- 
 mately equivalent extent. 
 
 "Professor John R. Conmions," says Mr. Himter, "who is now perhaps 
 our foremost student of the subject, says, in his study of Immigra- 
 tion for the Industrial Commission, 'It is a hasty assimiption which 
 holds that inmiigration during the nineteenth century has increased 
 the total population in the United States.'^ Professor Commons' 
 statement is based upon the same principle of the growth of population 
 which was considered in the previous paragraph. Immigration to this 
 country has a striking influence upon our birth-rate. As emigration 
 tends to increase the number of births among those remaining at home, 
 so immigration, it is thought, causes a decrease in the birth-rate of the 
 persons already in the coimtry to which immigrants come. The late 
 President Francis A. Walker, who was the superintendent of the cen- 
 suses of 1870 and 1880, and therefore at the fountain head of infor- 
 mation on the subject, vigorously maintained that had there been 
 no iBMnigration to this country during the last seventy years, the native 
 element would have filled by an increased number of births, 'the places 
 which the foreign element has usurped.' "* 
 
 Whetherthis position is accepted or not, the pressure of the industrial 
 
 « VUal SkUistics. by William Farr. p. 62. 
 
 • Emigration and Immigration, by Richmond Mayo-Smith, p. 23. 
 
 * Industrial Commission. Vol. XV., p. 277. 
 
 « Discussions in Economics and Statistics, by Francis A. Walker, Vol. II., pp. 417-426. 
 
 masses upon the means of subsistence seems a fairly constant con- 
 dition, not to be neglected in the study of questions dealing with labour. 
 A study of the " labour problem" deals with a mass of humanity, clinging 
 to existence, as it were, through the pressure of its natural fecundity 
 upon its vital requirements. And here occurs the essential relation 
 of indirect fiscal systems to labour* Present industrial society is based 
 upon fiscal conceptions involving the taxation of the necessaries of life, 
 but these necessaries are the vital threads, so to speak, by means of which 
 the industrial masses cling to existence. An indirect fiscal system 
 thus bears not an important, but a vital, relation to the industrial 
 masses. Political organizations based upon the indirect taxation of 
 necessaries,literally nourish themselves upon the life-blood of the people. 
 No study of labour, therefore, which neglects the action of the national 
 fiscal system imder which the labour is considered, will touch the heart 
 of the question. The action of an indirect taxation, based upon the 
 necessaries of existence, is the vital element in the labour problem. 
 
 Questions of this nature deal directly with the production and distri- 
 bution of wealth. As no form of industrial wealth can be created without 
 labour, no question can deal with labour in particular, without having 
 to do with the process of wealth production and distribution; labour 
 being one of the three factors in production, and wages one of the three 
 channels of distribution. The study of the labour problem, therefore, 
 leads at once to an analysis of wealth production and distribution in 
 relation to fiscal systems. 
 
 There are three elements in production: Land, Capital, and Labour. 
 From the union of these arises the annual sum of wealth brought into 
 existence in any industrial society. This annual total of production 
 derived from the three productive elements is distributed through three 
 channels of revenue: Rent, Profits, and Wages. All annual wealth 
 is resolvable into these three forms of revenue.^ 
 
 The taxation of revenue, in whatever form, falls eventually upon these 
 sources of revenue, singly or combined. Rent, Profits, and Wages, 
 therefore, may be taxed, but nothing else, for there is no other form of 
 economic revenue to tax. 
 
 Present methods of taxation are largely involved with duties levied 
 upon commodities, these commodities forming a large proportion 
 of the living expenses of the masses of the people. The taxation of 
 the staples of life and industry, therefore, falls more heavily upon 
 
 • i] 
 
 m 
 
262 
 
 Fiscal Problems 
 
 Pt. Ill 
 
 Bk. IV 
 
 Labour 
 
 263 
 
 the smaller incomes than upon the larger. The bulk of the smaller 
 incomes is naturally derived from manual labour. The taxation of 
 necessaries is, therefore, to a large extent, the taxation of wages. In 
 the preceding analysis of conditions in the United States in 1880, it 
 was shown that the incomes of over thirteen millions of persons were 
 apparently taxed about twenty times as heavily, relatively, as the 
 incomes of about fifty persons. But the great number of smaller incomes, 
 together with their disproportionate taxation, will produce a large pro- 
 portion of the total revenue derived. In the estimates cited, ^ the rev- 
 enue derived from the labouring class was more than twice as much as 
 from the other two classes combined. This shows that a large percentage 
 of all revenue, produced by indirect taxation of living expenses, is de- 
 rived from the taxation of wages. But results more important than 
 the mere taxation of wages will be produced by such a system. The 
 disproportionate taxation of wages affects, not wages alone, but the 
 process of distribution of wealth throughout the society. 
 
 Total revenue is resolvable into three forms: Rents, Profits, and 
 Wages; to tax one of these disproportionately involves, not only the 
 taxation of that form of revenue, but the proportionate exemption of 
 the other two at the same time. Thus, to tax wages disproportionately 
 creates a relative relief, or process of accumulation, with reference to 
 rent and profits. And here the results of the taxation of living expenses 
 but begin. The disproportionate taxation of wages not only exempts 
 profits from normal contribution, and tends to profit accimiulation, 
 but creates the possibility of forced and abnormal profits through the 
 action of import and excise duties. This disproportionate burden upon 
 wages exempts profits, and may cause their artificially stimulated 
 increase. An analogous train of thought is suggested with reference 
 to rent. Abnormal burdens upon wages bring abnormal exemption 
 for rent, with the result that socially created wealth, in the form of 
 land values, will accumulate in the hands of individual rent owners. 
 
 It might be thought that the effects of an indirect burden upon vital 
 needs would end here; but perhaps the most important effects of such 
 a system are yet to be discussed. It is obvious that the progressive 
 accumulations of wealth in the hands of rent and profit owners, will 
 give these economic advantage over the owners of wages. The most 
 important of these will be the practical expulsion of the wage owner 
 from the land in its valuable forms, leaving the rent and profit owner 
 
 * Cf., p. 256. 
 
 in possession. Thus, the indirect taxation of living expenses, or the 
 disproportionate taxation of wages, will throw control of the valuable 
 land of a coimtry into the hands of the richer classes. But the control 
 of the land will bring into existence other and more important influences. 
 The control of the land, and the social wealth it represents, not only 
 makes the industrial class practically dependent, politically and eco- 
 nomically, upon the capitalist and land-owning classes, but places the 
 political and economic policy of the nation in their hands. 
 
 A society, therefore, supported by indirect means, will, apparently, 
 develop the following political elements: (i) A fiscal system creating 
 forced and artificial values, through disproportionate taxation of wages 
 and disproportionate exemption of profits and franchises. (2) A 
 legislative system, permitting the incorporation of these values. (3) 
 A highly centralized and organized capitalist class, with interests inti- 
 mately involved with tax schedules and legislation. (4) An industrial 
 mass of wage workers, caught in a double process of competition, low- 
 ering wages on one side, raising rent and profits on another, while 
 contributing the bulk of the revenue necessary to keep the process 
 in existence. 
 
 The man who controls these combined influences is in possession 
 of a power little less than magic. He may, in order to "regulate the 
 balance of trade," "tax the foreigner," or gather labour under a pro- 
 tecting wing, create enormous values by the imposition of the most 
 inoffensive and "patriotic" import duties. He may then issue corpor- 
 ate certificates against the values represented, and the vista of 
 indirect protectionist finance is opened to the discerning eye. He 
 is now in a position to develop the possibilities of an indirect fiscal 
 system. The paths before him are bewildering. He may do almost 
 anything. He may keep control of the properties, and inflate or 
 depress the securities through legislative decisions, statements or com- 
 binations on the exchange. He may simply over-capitalize the prop- 
 erties and sell them to the people outright. If the people do not buy, 
 no trouble is occasioned; he sells them to the people, in spite of them- 
 selves, through this or that insurance company or fiduciary institution 
 which he may happen to control. If he does not care to take such a 
 step, no difficulty occurs; he borrows whatever is needed from this 
 or that bank or trust company, of which he happens to be president, 
 or whose directorate is interested in the securities. If his interests are 
 in any way furthered by supporting the values of the over-capitalized 
 
264 
 
 Fiscal Problems 
 
 Pt. in 
 
 Bk. IV 
 
 Labour 
 
 26s 
 
 
 if 
 
 I m- i 
 
 obligations, he enters into an agreement with reference to a freight 
 rate, or classification of goods with a railway or transportation company, 
 whose directors may happen to hold some of the securities involved, 
 and the thing is done. If, for any reason, it grows inconvenient to 
 continue payments on these obligations, no difficulty is caused; he 
 anticipates the fall of the seciuities on the exchange, and stops the 
 payments. That is, all he has to do is to put the values in his pockets 
 over again as they disappear. In this way, by means of an indirect 
 tax, he takes the money out of the people's pockets to create the values 
 in the first place; he then takes the money out of the people's pockets 
 which the values represent, from this or that fiduciary institution, 
 and he then takes the money out of the people's pockets to continue 
 the values in existence. If, for any reason, this becomes inconvenient, 
 he has but to take the values out of the people's pockets all over again, 
 as they go out of existence, whenever he chooses to allow them to fall 
 away to nothing. If any of the misguided populace do not appre- 
 ciate these patriotic efforts to protect them, but begin investigations or 
 proceedings of some kind, no annoyance need be met. Arrangements 
 are made with this or that statesman, or legislative assembly, with 
 reference to this or that enactment, technicality, or committee, and 
 everything is straightened out. He may then begin to protect the people 
 all over again from the dangers of the "balance of trade" and "pauper 
 labour," or arm them against the foreigner with a trusty tariff-weapon, 
 which will tax the food out of their mouths, while he patriotically 
 imloads the weapons upon the fiduciary institutions in the form of 
 dangerously inflated securities. 
 
 The foregoing methods of indirect protectionist finance may be 
 modified or combined in infinite ramifications. If other fields are 
 sought, attention may be turned to organization. Industry affected 
 by an indirect tax is generally ready to organize. Another area is 
 opened for patriotic activities. Thoroughly organized capital is the 
 one potent factor in protectionist legislation; and another vista appears, 
 leading into a maze of organization, disorganization and reorganization, 
 practically without end. The indirect tax forms the basis of the struct- 
 ure; the certificates of incorporation form the motives of the designs; 
 the banks, the insurance companies, and the legislative assemblies are 
 the masons and contractors; while the statesmen and the financiers 
 are the builders and the architects. And it might well be asked, what 
 more patriotic inspiration could be sought than to design and build 
 
 m such materials. Every loan, tax, or decision inflates or depresses 
 a security as desired; every legislative enactment, with reference to a 
 tax or a franchise, sweeps the savings of the people this way or that 
 as decided; every market, protected or suppressed, pours a golden 
 stream in any given direction; and if surfeited with these Napoleonic 
 conquests, the bmlders have but to turn into their pockets a few of 
 these streams, with an import or excise duty, and gracefully retire 
 from the scene amid the plaudits of a grateful people. 
 
 All this may be done while the industrial populace is as unconscious 
 of the process and as incapable of freeing itself as a frog prepared for 
 viMsection. The whole organized forces of the society, ecclesiastical, 
 legislative, and military, support the measures; the people neither 
 understand what is being done to them, nor would be able to free them- 
 selves if they understood. The chief difference between the frog and 
 the people is that the latter make a great show of choosing the operators- 
 but what difference can it make to either who handles the knife? As 
 far as the frog or the people is concerned, the result is the same. 
 
 The effects of the indirect taxation of living expenses, in relation 
 to the mdustrial masses, may be summarized as follows: (i) The 
 obvious disproportion of the burden laid upon wages and the smaUer 
 mcomes; (2) the forced and relative inflation of rents and profits, 
 together with the unnatural process of accumulation created; (3) 
 the consequent control of socially created wealth by the larger incomes- 
 (4) the possibilities of value manipulation through the control of fiscal 
 and legislative decisions. 
 
 Section II—Labour and Direct Taxation 
 Rent, Profit, and Wages are the only forms of economic revenue: 
 therefore, the only legitimate subjects of taxation. Rent, however 
 may be divided into two distinct portions; one, created by the individual 
 or improvement rent; another, created by society, or ground-rent. If 
 this ground-rent is taxed and nothing else, it is evident that aJl taxes 
 on wages, profits, and improvement rent will be repealed. The most 
 important results of this freedom from taxation will be that the three 
 sources of income will bear their normal relations to each other, and 
 that wages will neither be disproportionately taxed, nor profits and 
 improvement rent disproportionately exempt. The immediate effect 
 of such a change might be a proportionately increased accumulating 
 power among smaUer incomes; in other words, where all taxation of 
 
 m. 
 
 i^.'j 
 
266 
 
 Fiscal Problems 
 
 Pt. Ill 
 
 living expense is withdrawn, there occurs no progressively increasmg 
 burden laid on poverty through the taxation of the necessaries of life. 
 
 This might not be the only result of a direct system. Where land 
 contributes to the society in proportion to society's contribution to it 
 holding land out of use becomes an unprofitable occupation. One of 
 two results may therefore be expected; either the land will be made 
 productive, or put on the market. These two tendencies working 
 together would, apparently, redound to the advantage of labour. The 
 first would cause a demand for productive labour in agriculture, the 
 building trades and so forth; the second would render it increasingly 
 possible for labour, with small capital, to employ itself directly upon 
 the land. In this way the demand for productive labour might be 
 increased, the competition lessened among the industrial masses, and 
 greater accumulating capacity developed among the smaller incomes, 
 through the elimination of the taxation of necessaries. The repeal of 
 these taxes, together with the added expense of holding land out of use, 
 might bring labour into wider and more direct contact with the soil, 
 causing normal land distribution in accordance with its most productive 
 use. This tendency might result in a rise in wages imtil the return to 
 labour had reached its normal level. 
 
 There exists, perhaps, no more instructive history of labour than that 
 of Professor Thorold Rogers. As this work is studied, the complete sub- 
 jection of labour to the land-owning and legislative classes is pre- 
 sented with singular force, and this subjection is brought about chiefly 
 through fiscal legislation. All that is necessary to cause the complete 
 dependence of the industrial masses upon capital is to exempt the land 
 from just contribution, and increase burdens upon living expenses. 
 This is shown by Professor Rogers with reference to English labour 
 after the examination of material dating from the earliest records until 
 yesterday; and English labour is shown to be as much at the mercy of 
 the English land-owner after the Wat Tyler insurrection as before. 
 Labour may be "freed" by legislative enactment, but this freedom may 
 have slight results where a class retains control over fiscal decisions. 
 The legislation capable of granting manumission was capable of passing 
 Acts regulating the rate of wages, i of debasing the coin in which the 
 wages were paid, 2 of creating the Quarter Sessions assessments,^ of 
 
 Bk. IV 
 
 Labour 
 
 » Work and Wages. 
 ■ p. 428. 
 " p. 353- 
 
 Thorold Rogers, p. 489. 
 
 267 
 
 extinguishing the ancient rights of the peasantry with reference to 
 pasture and fuel,^ of permitting enclosures, ^ of confiscating the fimds 
 of the labour guilds,^ of passing the Law of Settlement,* of establishing 
 the Com Laws,^ of placing a disproportionate burden of taxation upon 
 labour,^ and of reducing wages still further by means of import and 
 excise.^ 
 
 There can apparently be but one result of legislation of this nature — 
 a constant deterioration in the condition of the industrial masses 
 subject to its influence. "From one point of view," says Professor 
 Rogers,^ "the analyist of the 'good old times* may be able to show that 
 life was shorter, disease more rife, the market of food more unsteady, 
 the conveniences and comforts of life fewer and more precarious than 
 they now are. From another point of view, and that by far the most 
 accurate and exact, the relative position of the workman was one of 
 far more hope and far more plenty in the days of the Plantagenets 
 than it has been in those of the House of Hanover; that wages were, 
 relative to their purchasing power, far higher, and the margin of enjoy- 
 able income over necessary expenditure was in consequence far wider." 
 
 A study of these and analogous facts in every country shows that 
 the only thing essential to the subjugation of labour is a fiscal system 
 which keeps land out of its reach. The shifting of the basis of the 
 national revenue from the land to consumption, by means of excise and 
 import duties, is a means perfectly adapted to this end. These taxes will 
 create a network around the industrial masses of a society, and while 
 the revenue necessary for social organization can be largely drawn from 
 their needs, the wealth which they create collectively, in the form of 
 land values, will fall entirely into the control of individuals. In this 
 way, the wage workers may be held at swords' length from the land, 
 while forced to contribute the bulk of the expense necessary to keep 
 the sword sufficiently sharp for the purpose. This process would be 
 more difficult under a direct system. First, because no legislature 
 would possess the power of destroying the relative value of wages through 
 the taxation of the necessaries of life. Second, because the absorption 
 
 » Ibid. p. 
 
 488. 
 
 » p. 488. 
 
 
 • P- 349. 
 
 
 * P- 433- 
 
 
 « p. 489. 
 
 
 •p. 489. 
 
 
 »p.489. 
 
 
 p. 490. 
 
 ■ 
 
 H 
 
 if 
 
 .^- 
 
•HI 
 
 268 
 
 Fiscal Problems 
 
 Pt. Ill 
 
 of unimproved land values by the society would cause all land to be 
 brought to its most productive use. That is, bring labour itself into 
 more direct contact with it. 
 
 There is another influence which might be brought into existence 
 under a direct fiscal system. Reasons have been presented for be- 
 lieving that the wealth society creates, in the form of land values, 
 is greater, in annual value, than the cost of social administration. 
 If such is the case, how should the surplus be used after social needs 
 are met? Industrial conditions require the supplanting of the aged, 
 if society is to be maintained at its maximum of productive activity. 
 But the aged have contributed their share to the wealth and develop- 
 ment of the society, and society owes them the surplus after social 
 needs have been satisfied. It seems, therefore, if such a surplus exists, 
 that it should be distributed annually throughout the older members 
 of the social organization in the form of old age pensions. Such a 
 system might have effect upon administration. Where every individual 
 has a direct pecuniary interest in maintaining land values at a maximum, 
 and social expenses at a minimum, administrative extravagance and 
 waste might not be so common as at present. 
 
 The relation of a direct fiscal system to labour may be summarized 
 as follows: (i) By means of freeing wages and the smaller incomes 
 from disproportionate taxation, their value and accumulating capacity 
 may be increased. (2) To render unproductive land owning unprof- 
 itable, might bring land nearer the reach of labour; thus increasing 
 its capacity for self-employment. (3) The elimination of taxes on 
 industry might increase the productive and consuming power of the 
 society, and thus the demand for productive labour. (4) The distribu- 
 tion of surplus social revenue among the aged might insure labour its 
 legitimate share in socially created wealth. 
 
 CHAPTER II 
 
 RAILWAYS 
 
 MR. HERBERT SPENCER, in his Autobiography,^ tells 
 of Huxley saying that Spencer's idea of a tragedy was 
 a "deduction killed by a fact." From the Spencerian 
 point of view with reference to tragedy, few subjects 
 are so fraught with wreck and ruin as the history of railway trans- 
 portation, when brought in contact with conventional economic gen- 
 eralizations. 
 
 Stephenson*s combination of escape steam-blast and tubular boiler, 
 of strong draught and large heating surface, resulting in the application 
 of steam to transportation, brought into existence one of the greatest 
 forces in the industrial world — the modern railway. As the origin 
 and development of this power are studied, conventional theories 
 are found singulariy at fault. There is, perhaps, no subject entering 
 into the process of the production and distribution of wealth, to which 
 familiar economic conceptions are less applicable, and in reference to 
 which conclusions may be advanced with greater diflidence. The 
 different interests are not only so numerous, but so widely diversified and 
 so little subject to generalization governing other conditions, that no 
 little temerity is required in hazarding any opinion. The proposition, 
 however, seemingly least out of harmony with established conditions 
 and the most intelligent opinion is as follows: The interests of rail- 
 ways are so inextricably involved with the interests of society at large, 
 that it is impossible to distinguish at what point they diverge, and, 
 therefore, in the majority of cases, the permanent interests of a 
 society may best be furtiiered by the furtherance of the permanent 
 interests of its railways. 
 
 There are two points of view from which the modem railway may be 
 studied: the external and internal. Of the two, the latter is the more 
 instructive and deserving of attention. From it, alone, may be seen 
 the functions of the various parts of the railway, considered as a living 
 organism . It is impossible to approximate any even moderately accept- 
 
 » VoL L, p. 467. 
 
 269 
 
 4 
 
 i 
 
 31 
 
i T'^bT 
 
 270 
 
 Fiscal Problems 
 
 pt. m 
 
 Bk. IV 
 
 ^?i 
 
 able conception, with reference to railway methods, without apprecia- 
 tion of the requisites upon which the organism depends for its existence. 
 There was few evils of present railway methods; few forms of railway 
 combination or discrimination, whether with reference to rival rail- 
 ways, waterways, competitive points, corporations or individuals, 
 which have not their reason for existence in some way involved with 
 the larger interests of the road; and hence, in some way, with the larger 
 interests of the commimity. These two interests can thus never be 
 separated in any comprehensive study of railway problems. 
 
 The railway stands in a unique position in economic history, differing 
 widely and in many ways from other forms of enterprise. The orthodox 
 economic conception of competition, generally applicable to other 
 forms of commercial activity, fails when brought in contact with the 
 railway. The assumption that the expansion and contraction of 
 capital or the checking of production, may safely be left to regulate 
 prices under any and all conditions, does not apply to railways to the 
 same extent as to other enterprise; in some cases has no application. 
 The capital invested in railway transportation is of little or no value 
 for other purposes and cannot, therefore, be readily transferred; nor 
 can it cease production when prices reach an unprofitable level as 
 can other capital in the majority of cases. It is nearly always less dis- 
 advantageous for railways to continue operation at a loss than to dis- 
 continue at a larger loss. The bankrupt road and bankrupt competition 
 are thus brought into existence, a form of competition neither frequent 
 nor persistent in other occupations. 
 
 A railway constitutes an enterprise in which cost of service is prac- 
 tically no guide to price; it may pay to render certain service perman- 
 ently at less than cost, on account of more than compensating 
 advantages. Back-loading may form an important factor in the estab- 
 lishment^of rates, and discrimination with reference to certain points 
 is an almost, if not completely, imavoidable result. Under certain 
 conditions it may be more advantageous for a road to make long, 
 rather than short hauls; and that over the same line, at the same time, 
 and at the same rate. Through trafl&c may be more profitable than 
 local traffic, and vice versa; and this, irrespective of distance, points, 
 tonnage, or many of the considerations which at first seem the con- 
 trolling factors in the establishment of rates. Competition at one 
 point may render it essential to reduce rates below those of a non- 
 competitive point; yet local discrimination of this nature need not be 
 
 Railways 
 
 271 
 
 more unfair or unnatural than the discrimination of a canal with 
 reference to a point higher than another: difference in elevation re- 
 qumng a greater number of locks, and thus rendering transportation 
 more expensive. Yet, the situation of a town in the neighbourhood 
 of a waterway or of another railway, is a natural condition, closely 
 analogous to the greater or less elevation of a point with reference 
 to a canal. Discrimination against, or in favour of, individuals is 
 among the greatest difficulties met from the external point of view 
 Yet even here it might at times be shown that, under certain conditions 
 enterprise otherwise impossible could be built up in this way. 
 
 Competition between railways, as understood between other forms 
 of mdustry, is practically out of tiie question. The ultimate result 
 between competing roads must, apparently, always be some form of 
 agreement as to territory, traffic, rates or division of earnings. 
 
 The railway stands again in a peculiar position with reference to the 
 commumty, the administration, its patrons, and to other railways 
 Its corporate existence, in the first place, requires a certain amount of 
 legal regulation involving legislation. Again, in exercising the right 
 of emment domain, as railways must, the railway depends upon ad- 
 mmistrative support; as also where built and run with aid of govern- 
 mental subsidies. These and other influences bring railways peculiarly 
 under legislative and administrative control, naturally suggesting 
 legislative relief from difficulties. Yet legislative influence, where 
 extended beyond the essential, is not always an unmixed benefit to the 
 commumty. In a certain sense, there is no more reason for a society 
 to surrender its railways to private ownership and management 
 than to adopt the same course with reference to its highways 
 or the streets of its cities. On another hand, the analogy be- 
 tween a highway or a street, and a raflway, is only extemaUy and 
 momentarily apparent; essential distinctions obKterate any but super- 
 ficial resemblance. 
 
 The various forms of administrative control, tried from time to time 
 have not been successful. Mr. Acworth refers to the limitation 
 of dividend, sliding scales, periodic revision of rates, fixed minimum 
 rates, and other suggestions in the terms of Sir Albert RoUiti as 
 'dangerous delusions" which to many minds will not seem ex- 
 travagant. Perhaps the greatest volume of material coUected and 
 
 *n relation to Railways. A Policy of Free Exchange, p. xg^, r«i,i«oiaM 
 
272 
 
 Fiscal Problems 
 
 Pt. Ill 
 
 Bk. IV 
 
 Railways 
 
 373 
 
 classified with reference to railway management, is that of the cele- 
 brated Italian Commission ^ which sat for three years and studied the 
 subject in all forms, in every country. 
 
 The final conclusions of the Commission were opposed to state owner- 
 ship or control, in consideration of service rendered, expense, and polit- 
 ical dangers involved. After this elaborate report. Italy gave up state 
 management and adopted the measures suggested. The elusive nature 
 of the subject is shown by the fact that Italy, after all her varied reports 
 and experiences, has gone round in a ring, as it were, and returned to 
 state ownership; and, it might be added, seems more or less in doubt 
 with reference to the results. 
 
 If, however, the advisability and, at times, necessity of a certain 
 amount of administrative supervision of railways is recognized, another 
 prolific field of discussion is opened. Questions occur with reference 
 to the nature of such supervision; whether it should be vested in the 
 legislative assembly, the executive, the judiciary, or in some other 
 authority, or combination of authorities. 
 
 Again, the development of the railway in different countries has 
 been due to different causes, and carried on under different conditions; 
 considerations which lead into new and more confusing quandries. 
 In certain countries, the railway has preceded the needs and develop- 
 ment of the commimity, as at times in America; or, the reverse may be 
 the case, as notably in England. The railway in other coimtries has 
 grown up independently of plan or system, as in Belgium; or may be 
 the result of long and carefully formulated preparation, as in France. 
 The history of railway development is, in fact, almost as varied as 
 the history of the different countries in which the development has 
 taken place. In some countries, the railway has been created and 
 fostered by governments; in others, developed by private initiative and 
 capital; in some, traceable to purely mdustrial causes; in others, 
 largely affected by speculation, or political and military considerations. 
 It is evident, therefore, that railways, starting from such varied origins, 
 continued under such different influences, and presenting such baffling 
 material for analysis, evolve different conditions for study wherever 
 
 found. 
 
 The most superficial review of railway methods in different countries, 
 reveals essential distinctions in many or all cases; distinctions naturally 
 
 » Atti deUa Commissione d'Inckiesta sulVEsercitio delk Perrovie Italiane, 1881. An interesting summary 
 ol this report will be found in President Hadley's luminous work. Railroad TransporUUion, Chapter XII. 
 
 evolving different relations between the railway and the State, These 
 relations may be broadly divided into five classes, which Mr. Acworth^ 
 has summarized as follows; 
 
 (i) The State may both own and work. 
 
 (2) It may own and not work, but lease. 
 
 (3) It may work without owning. 
 
 (4) It may neither own nor work, but merely control. 
 
 (5) It may let the railways alone altogether. 
 
 These classifications may be simplified for the present purpose: 
 
 1. Complete state ownership, operation, and control. 
 
 2. Complete private ownership, operation, and control. 
 
 3. Intermediate conditions. 
 
 The relation may be considered of a direct fiscal system to State and 
 railway. 
 
 I. Railways owned and controlled by the State present no difficulty. 
 State property need not be affected by changes in fiscal methods. A 
 reduction in rates might be expected, having a possible beneficial effect 
 upon industries coming under their influence. This reduction could 
 occur through the repeal of taxes on iron and steel, and, in general, of 
 all taxes increasing the cost of extensions and running expenses. 
 
 II. In countries in which railways are privately owned and controlled, 
 important problems are presented. On one hand, great national 
 tansportation systems, representing enormous interests, earning powers, 
 and franchise values, are dominated by individuals. This places not 
 only the control of volumes of socially created earnings in the hands of 
 these individuals, but throws productive industry directly under their 
 influence. This makes it possible for individuals to capitalize and 
 sell, for their own benefit, wealth created by the society. Through 
 the over-capitalization and dilution of earnings, shipping discrimina- 
 tions and so on, it is possible to wield dangerous power over the economic 
 life of a people; swelling accumulations in one direction, while stifling 
 industrial competition and general values in another. It makes it 
 possible, under certain conditions, to turn a national transportation 
 system into a private speculating machine, through the use of its credit 
 and the disposition of its earnings. By means of over-capitalization, 
 suppression, or declaration of dividends, wrecking, receiverships, and 
 reorganizations, values may be affected almost indefinitely through 
 control of transportation organizations. 
 
 * The State in Releiion to Railways, in A Policy a/Free Exchange, p. 165. 
 
 ii| 
 
 1 •! 
 
 9 
 
tft' 
 
 274 
 
 Fiscal Problems 
 
 Pt. Ill 
 
 Bk. IV 
 
 Railways 
 
 This may suggest that the direct and full assessment of railway 
 franchises could but prove advantageous. It may appear that such a 
 step, together with the necessary publicity involved, would act as a 
 salutary check upon rate discrimination and railway exploitation in 
 general. Again, it might be said, where these great public service 
 franchises are made the object of administrative fiscal solicitude, that 
 capitalization will be largely limited to cost of construction and ex- 
 tension, and, consequently, the exploitation of a society, by means of the 
 manipulation of securities issued against the societies' own wealth, 
 will be proportionately checked. These, and allied considerations, 
 suggest that the absorption of social wealth controlled by individuals, 
 in the form of railway's franchises, might be of economic advantage to 
 the society as a whole. Unfortunately, such considerations but present 
 a single side of the questions at issue. On another side is found a 
 vast railway system, involved in an incalculable number of ways, 
 throughout the vital financial interests of a nation, with rates influenced 
 by the amount of socially created wealth in the hands of corporations. 
 Thus, not only are the rates and activities of the railway influenced 
 by private ownership, but the railway's securities and indebtedness are 
 concerned. These, again, enter into every financial and industrial 
 channel in the country through loans and investments of bank and 
 saving institutions. Securities of this nature present sensitive and 
 fluctuating values, intimately affected by taxation in many ways. 
 These securities affect, not the railway alone, but fiduciary institutions, 
 and through them the credit and industrial basis of the society. To 
 affect the value of railway securities adversely, may endanger the whole 
 fabric of the people's industrial existence. 
 
 Looked at from one point of view, the subject seems clear and simple; 
 from another, involved in impenetrable clouds. The problem is, how 
 to reach the socially created wealth in the hands of privately owned and 
 controlled railways; to withdraw the power of railway exploitation and 
 discrimination from individuals, and, at the same time, neither injure 
 the railway, in taxing its property as a corporation, nor affect its securities. 
 The problem may present hopeless difficulties. If there is any solution, 
 however, it can be reached but through the constant conservation of 
 the railways* interests at every step, and in the elimination of all danger- 
 ous and antagonistic legislation. The problem suggests the follo^\dng 
 general considerations: 
 
 Railways and railway franchises in private hands are at present 
 
 27s 
 
 taxed, both directly and indirectly. The amount of direct taxation is 
 a known quantity; this amount, instead of being levied upon real estate 
 rolling stock, securities, and improvements, could be assessed upon 
 the land privileges of the railway. This step need involve no disturb- 
 ance. The amount of indirect taxation, paid by the railway, might 
 be approximated by means of estimates with reference to its con- 
 sumption of taxed goods, iron, steel, and so on. With the gradual 
 repeal of indirect taxation, this amount could be assessed upon 
 franchises as the indirect burdens were eliminated. After this 
 transposition, the railway would be paying no more taxes than 
 at first. Here, again, no difficulty occurs. In questions with refer- 
 ence to amounts or estimates, the final decision may nearly always 
 be left to the railway, the subject being of but temporary interest to 
 the society. 
 
 If all taxes paid by railways are to be concentrated upon land privileges, 
 the value of these privileges should next be estimated. The tax already 
 paid, and that to be finally assessed, would then be a matter of simple 
 calculation. If the railway were paying too much, the difference could 
 be repealed; if not enough, a certain amount would remain to be assessed. 
 This amount is a known quantity and could be'assessed in the following 
 way. A period of time could be selected, as far as possible that most 
 convenient for the railway. The total amount could then be divided 
 into percentages, also to suit the convenience of the railway; and these, 
 again, paid during intermediate periods; once more as far'as possible 
 in accordance with the railway's decisions. These periods and per- 
 centages could be made of any desired length or amount, and should 
 be made in co-operation with the railway; step by step, and, within 
 certain limitations, it might be said, as the railway decided. Temporary 
 decisions would be of Uttle moment to the society, and might be of 
 vital importance to the railway. 
 
 If the absorption of these franchise values were approached in this 
 way, that is with every effort to protect and benefit the railway at 
 every step, the attempt at least might be made without hopeless failure 
 at the outset. Under the most favourable conditions, however, the 
 process would involve difficulties which should never be overlooked, 
 and which can be met but with the exhaustive study and consideration 
 of every problem presented. 
 
 ni. Conditions intermediate between State and private ownership 
 require no lengthy discussion. The preceding considerations might 
 
 44^ 
 
 I* 
 
 I 
 
 } 
 
376 
 
 Fiscal Problems 
 
 Pt. Ill 
 
 Bk. IV 
 
 apply to State or private interests, as the property fell into one class 
 or the other. 
 
 A few general considerations may be hazarded, subject to modification 
 as affected by specific conditions. Great transportation and public 
 service systems, in private control, such as the railways of England 
 and the United States, represent millions of security values owned 
 by the people at large, or held by fiduciary institutions, against which 
 the institutions have lent the savings of the people. The control 
 of this enormous volume of wealth lies in the hands of the few men 
 controlling the directorates of the railways and the institutions. Where 
 such conditions exist imder a protective and indirect fiscal system, 
 the properties represented may be taxed and bled in two ways. Every 
 tax on iron and steel will absorb a portion of railway earnings and depress 
 railway securities. Every possibility of the use of corporate credit, may 
 divert another portion of earnings into the pockets of those in control. 
 The value of the land privilege of a railway will depend upon rates in 
 relation to nmning expenses. With existing, or productively modified, 
 schedules of rates, it is not impossible that untaxed running expenses 
 might increase railway earnings under a direct system. If taxes on 
 iron and steel are repealed on one hand, and private speculation in 
 railway earnings is checked on another, these earnings might be paid 
 to the holders of the securities in the form of dividends instead of to 
 protected interests and stock manipulators in the form of taxes and 
 privately controlled franchises. Railway paper in general and fiduciary 
 institutions might thus be benefited. This would, of course, depend 
 upon the relations established between land privileges, running expenses, 
 and rates, and everything should be done to support railway values in 
 such relations. 
 
 One method of railway control has never been attempted, and may 
 be mentioned, as of possible interest in a direct fiscal system. This 
 method is the administrative application of the holding organiza- 
 tion. By means of such an organization a society, through its admin- 
 istration, might control its transportation system without the expense 
 and danger of either owning or operating. This might be done without 
 money as follows: An administration could create a holding corpora- 
 tion with whatever capitalization was necessary. Interest on shares 
 in this organization could be guaranteed at a conservative rate. These 
 shares would then possess the value of a government security, and 
 could be used to obtain control of the stock of the chief railways, or 
 
 Railways 
 
 277 
 
 railway holding companies. The administration need not be embar- 
 rassed through the issue of these obligations; control of rates could pro- 
 duce the funds required. An organization of this kind might be of 
 service m the application of direct fiscal methods to raHways The 
 creation of such an administrative railway holding organization 
 would open problems of application and control, requiring long and 
 carefid study. It has at least the advantage of not being a demon- 
 strated failure and the idea may not be unworthy the examination of 
 those mterested m administrative problems. 
 
 "1 
 
 I i 
 
 !'l 
 
 %y 
 
 , 
 
Wn 
 
 i 
 
 CHAPTER ni 
 
 MONEY 
 
 THE relation of fiscal and monetary systems is more intimate 
 than that of any other economic factors imder administra- 
 tive control. Money is affected by taxation and reacts upon it 
 in two ways: First, the system of taxation may affect the 
 nature and volume of the circulating medium through the taxation of 
 issues; second, as taxes are paid in money, the entire fiscal sytem is 
 dependent upon the nature of the medium in which the taxes are paid. 
 Thus, money presents a subject wholly exceptional in relation to revenue 
 systems, existing or suggested. The importance of this relation is so 
 great that it leads to exceptional consideration. 
 
 The repeal of a tax affecting a commodity, if intelligently conceived 
 and executed, may have no effect other than the elimination of an im- 
 necessary burden. The repeal of a tax affecting the value of money 
 might be the exact reverse, certain individuals reaping inordinate 
 profits contributed by the people, in the derangement of their financial 
 system. This relation between money and taxation demands that the 
 first care of an administration should be to insure the permanent stability 
 of the value of money. Any system not recognizing this can work little 
 but disaster. The repeal of taxes affecting the issue of money, or influ- 
 encing the currency in any way, is of especial significance in relation 
 to a single, direct system. Difl&culty is here met of which no adequate 
 treatment exists. The few writers who touch the subject usually 
 limit themselves to suggestions of certain, ill-defined advantages of 
 greater "freedom" in banking under direct methods. That the word 
 "freedom," used in juxUposition with the word "banking," suggests 
 some vague association of ideas in connexion with the more or less 
 dearly understood issue of paper money, is not unlikely; and any treat- 
 ment of the subject, in which the word "freedom" has ever so slight 
 a share, and the word "banking" is left in a mist, may well render it 
 or any allied policy unworthy further examination. 
 
 The repeal of existing taxes affecting money would leave the monetary 
 system of the coimtry in a nebulous condition. Such a condition might 
 
 278 
 
 Bk. IV 
 
 Money 
 
 279 
 
 destroy any advantages derived, and create an entirely new series of 
 industrial and financial evils. There are few administrative possibiH- 
 ties so dangerous as ignorant legislative tampering with money. 
 
 A fiscal system, based upon ground-rent as a single source, involves 
 the repeal of taxes affecting money. But the repeal of such taxes in- 
 volves incalculable results and may be disastrous. How, then, may this 
 crux be met? 
 
 Two ways suggest themselves. First, the fact that specific taxes 
 affect the medium in which the taxes are paid leads to exceptional 
 treatment of those taxes. If, therefore, a society reached the point 
 of basing social expenditure on social wealth, the peculiarly monetary 
 taxes could be sifted from others — and continued in existence. The 
 taxes affecting money are nearly always restrictive, and could thus 
 preserve the various forms of money in their present condition. In 
 this way, a change of fiscal methods might be brought about without 
 financial disturbance in connexion with money. This is one way of 
 meeting one of the greatest difficulties with which the single land-tax 
 would have to cope. A second way is as follows: 
 
 In monetary systems the chief interest centres in paper issues, as 
 metaUic money, short of flagrant legislative aberration, takes care of 
 itself. The number of systems upon which the issues of paper money may 
 be based is practically infinite. Jevons^ mentions fourteen classifica- 
 tions any one of which may be used singly, or in combination with any 
 or aU others. The possible unrestricted combinations of fourteen 
 numbers may be calculated and an extensive series reached; the only 
 limit apparently to the possibilities of issuing paper money. There 
 is thus no lack of material upon which to construct monetary systems; 
 and, with such a wealth of opportunity, it is not remarkable that 
 many writers on currency problems are attacked with that "dangerous 
 kind of intellectual vertigo" to which Jevons refers.2 The extremes of this 
 series of monetary systems, whatever the basis of its construction, 
 however, will be: ist, the simple deposit method, . . . n"^ the uth 
 limited issue of irredeemable paper money. All possible systems of issue 
 will be contained within these extremes, inclusive. 
 
 There is, however, an important fact to be observed. Great as may 
 be the number of systems contained within the series, they may be 
 tracedto three sources of monetary value; to which they must all 
 
 » Money and the Mechanism of Exchange, pp. 2i7-22a 
 *Ibid., p. 317. 
 
28o 
 
 Fiscal Problems 
 
 Pt. Ill 
 
 III 
 
 eventually be referred, singly or combined. These sources are: (i) 
 Intrinsic value; (2) Credit; (3) Legislation. A gold coin or gold 
 certificate, representing a specific deposit of gold of specific fineness is 
 an example of the first. Bank notes or government notes, of a greater 
 or less degree of convertibility, may present examples of the second. 
 Notes issued against revenue payments, paper legal tender, or in- 
 convertible paper money in various forms, may present examples of 
 
 the third. 
 
 Monetary history shows that a people's wealth and industry are 
 at the mercy of legislative assembly and financier largely in proportion 
 to the extent in which their monetary system is exposed to the fluctuation 
 of credit and legislation. The simplest and most stable money seems, 
 therefore, that in which not only a specific quantity of gold of specific 
 fineness represents the monetary unit, but one from the foundations 
 of which tlie changing influences of credit and legislation have been 
 expelled: In other words, a metallic money with a metallic standard. 
 A monetary system of this nature — that is, one in which neither credit 
 nor legislation has any share, is peculiarily suited to a single direct, 
 fiscal policy. A money based upon intrinsic worth is a natural money, 
 and the relation of a natural money to a natural fiscal system may be 
 briefly noticed. 
 
 There are certain objections to metallic money. 
 
 1. The "inelasticity" of metallic money; its amount may not vary 
 with varying needs. 
 
 2. Expense. As every paper certificate requires an equivalent 
 bullion deposit, interest is lost which might be gained by paper issued 
 in excess of the metallic reserve. 
 
 3. A metallic money may form an insuflicient basis for the volume 
 
 of Exchange. 
 
 4. A metallic money, with a single gold standard, fluctuates with 
 the value of gold; and consequently forms a variable medium. 
 
 These objections may be discussed in order: 
 
 I. With reference to the relative elasticity of paper and metallic 
 money. Professor Walker^ says: "We have seen that elasticity is also 
 predicated of Incontrovertible Paper Money by its advocates and 
 admirers, but upon examination we foimd that there is no elasticity 
 whatever in such a money, in the sense of its giving imdcr pressure 
 to resimie its shape after pressure is withdrawn. There is no more 
 
 1 Money, p. 416. 
 
 Bk. IV 
 
 Money 
 
 281 
 
 elasticity in a circulating medium composed of incontrovertible notes 
 than there is in a lump of dough, which may be pulled out to any length 
 at least until it breaks apart, but never flies back when the distending 
 force is withdrawn. 
 
 "But is there elasticity, in any proper sense, in a Convertible Paper 
 Money? Those who demand that money shall be ' elastic,' mean by 
 this that there shaU be more of it at one time than at another Is 
 this elasticity? A rubber band is elastic, but there is no more of it 
 at one time than at another. It will cover more ground at one time 
 than at another, but, it only does so by becoming thinner. There 
 wiU be more of it, in any one place, at one time than at another, but 
 for this reason, there is less of it in some other place. There is no more 
 rubber when the band is stretched than there was before. Now 
 elasticity m this, the true sense, belongs eminently to metalUc money' 
 No class of commodities known to men yield more quickly under 
 pressure, or react more promptly. If an exceptional demand arises 
 anywhere, gold or sUver responds with an alacrity which would be 
 unattamable by any article not possessing great value for its bulk 
 and not, at the same time, that arUcle in which the values of aU commodi- 
 ties are expressed for purposes of exchange." 
 
 _ n. A money, from which every admixture of credit and legislation 
 IS ejected, and which rests upon intrinsic bullion value, does not permit 
 the saving of interest through paper issues in excess of the bullion 
 reserve. This fact, in the opinion of some writers, causes an unnecessary 
 expense m connexion with a metallic money. That such expense is 
 m any sense a disadvantage, in comparison with the gain upon another 
 side, IS, however, not admitted by many whose opinion may not be 
 lightly disregarded. The attention may be concentrated upon the 
 inconvertible bank notes of France, which a careful administration 
 has long mamtained at par with gold; upon the notes of the Scottish 
 banks, at times preferred by tiie people to metallic money: upon tiie 
 issues of the Bank of England, during die restriction; or, upoV otiier 
 such <ases, where a more or less mixed currency seems to involve no 
 great disadvantage. The history of money, however, presents a greater 
 number of mstances in which more or less allied systems have created 
 loss so great that any saving of interest becomes of slight significance 
 
 The volume of Exchange in proportion to the amomit of money 
 displaced IS unmense. The circulating medium of a people is the 
 foundation of this great superstructure. The financial life of tiie oeoole 
 
282 
 
 Fiscal Problems 
 
 Pt. Ill 
 
 % 
 
 'h 
 
 
 reposes upon the monetary system of the coimtry ; the monetary system, 
 in turn, upon what there is of real value beneath. 
 
 Every element entering into these foundations, other than intrinsic 
 worth, weakens them proportionately. Monetary experiments show 
 that economy in the basis of a monetary system, and hence in the basis 
 of the industrial and financial structure of the society, is analogous to 
 economy in the foundations of a great building. The building may appear 
 externally as secure without proper stone and cement beneath; it may 
 last a long time, under favourable conditions with insufficient support; 
 but the cost of repair, lack of confidence, and its certain collapse 
 before better built structures, will no doubt be greater than the 
 extra original outlay required by solid foundations. 
 
 ni. The insufficiency of metallic money may not seem a conclusive 
 objection, for the following reasons. First, the volimie of exchange 
 does not depend upwn the actual quantity of money existing at any 
 moment in a country; credit and Clearing House transactions render 
 the amoimt of business done, largely independent of cash actually 
 changing hands. Speaking of the ratio of cash reserve to bank deposits 
 in England, Mr. Walter Bagehot^ says: "So far from our being able 
 to rely on the proportional magnitude of our cash in hand, the amount 
 of that cash is so exceedingly small that a bystander almost trembles 
 when he compares its minuteness with the immensity of the credit which 
 rests upon it." The Clearing House reduces this proportion still far- 
 ther, doing for banking institutions what the latter do for individuals. 
 "When it is said," says Professor Walker, ^ "that the annual Clearing 
 House transactions of London now stand at or above £6,000,000,000 
 while those of New York are even greater, the importance of this con- 
 tribution to the economy of money will be apparent." 
 
 It may again be said that money is a quantity of two dimensions: 
 volimie, and speed of movement. A given quantity of money may 
 perform an indefinitely variable amount of work; moving slowly under 
 certain conditions, and more rapidly where the volume of exchange is 
 increased. 
 
 Lastly, it may be said that a metallic money, with a gold imit of value, 
 need not be limited by a fixed quantity of gold. When money is limited 
 to a single metal, the control of that metal may throw a dangerous 
 lever into the hands of the banking and creditor class. The alternate 
 
 ^Lombard Street, p. i8. 
 *M0my, p. 69. 
 
 I 
 
 Bk. IV 
 
 Money 
 
 283 
 
 contracfaon and release of the currency, especially during times of un- 
 setOed finanaal conditions, may result in the indefinite absorption of 
 property by the creditor class. A purely metaUic money need not be 
 subject to control in this way. Where gold alone is insufficient to meet 
 the demands of Exchange, there seems to be no reason why other metals 
 could not be put into circulation without danger, if no arbitrary ratio 
 IS fixed, and then- buUion value alone is recognized. Gold could al- 
 ways remain the unit, whatever metals were used. A difficulty would 
 occur with reference to fluctuation in metal values. Where a gold 
 umt IS adopted, paper based upon other metals would simply hkve 
 to pay a premium, or the reverse, as determined by the bullion values 
 represented. 
 
 IV. There are two reasons why objections to metalUc money with 
 reference to its variabiUty, do not seem conclusive. First experience 
 recognizes gold as tiie most satisfactory of mediums; the least variable 
 of metals, and certainly less variable tiian any combination of credit 
 and legislation. Second, it may be said tiiat tiiere is a method by means 
 of which the fluctuations of gold might be reduced to a minimum while 
 reserving tiie advantages of a metaUic money. The fact that a specific 
 quantity of gold constitutes the monetary unit of a country is no reason 
 why conti-acts should necessarily be expressed in that unit The fluctu- 
 ations in the value of tiie precious metals has suggested tiie inquirv 
 whether some substitute for tiiem could not be found in order to rive 
 greater stabiUty to payments extending over a long period of time. Such 
 a substitute has been adopted to a Hmited extent in corn-rents, and 
 this prmaple has long been in practice in relative degrees in different 
 countnes. ^ Locke' advanced tiiis idea in his paper, The Value of Money 
 Wheat, in this part of tiie world, and tiiat grain which is the constant 
 general food of any otiier counti:y, is tiie fittest measure to judge of 
 the altered value of tilings, in any long tract of time.' Mr. Homer « 
 in his speech during tiie bulUon debates, declared tiiat 'Bread-coiii 
 IS the paramount and real standard of all values.'" 
 
 "We axe forced to admit," says Jevons,' "tiiat tiie statesmen of 
 Queen Ehzabetii were far-seeing when tiiey passed tiie Act which oblijted 
 the colleges of Oxford, Cambridge, and Eton, to lease tiieir lands for 
 corn-rent s. The result has been to make tiiese colleges far richer tiian 
 
 ' Cited by Professor Walker, Money, a. iso. 
 'Ibid. 
 
 'MoMy Md Ikt Iteckanitm of Biolmnit. p. 326. 
 
284 
 
 Fiscal Problems 
 
 Pt. Ill 
 
 they would otherwise have been, the rents and endowments expressed 
 in money having sunk to a fraction of their ancient value.'* 
 
 These considerations suggest the multiple legal tender, or tabular 
 standard of value. Such a standard would represent the value of a 
 specific quantity of gold at a certain time, expressed in standard com- 
 modities. A multiple standard of this nature might give a stable 
 monetary unit, which could be used for deferred or long-standing in- 
 debtedness, such as interest on the more conservative securities, 
 trust funds, and government or municipal obligations. The subject 
 is favourably discussed by Professor Jevons.^ He says: "Such 
 a standard would add a wholly new degree of stabiUty to social rela- 
 tions, securing the fixed income of individuals and public institutions 
 from the depreciation which they have often suffered. Speculation 
 too, based upon the frequent oscillations of prices, which take place 
 in the present state of conmierce, would be to a certain extent dis- 
 couraged. The calculations of merchants would be less frequently 
 frustrated by causes beyond their own control, and many bankruptcies 
 would be prevented. Periodical collapses of credit would no doubt 
 recur from time to time, but the intensity of the crisis would be mitigated 
 because as prices fell, the liabiUties of debtors would decrease approx- 
 imately in the same ratio." 
 
 Owing to existing conditions it may seem impossible for a purely 
 metallic money to be brought into existence in any great commercial 
 nation to-day. It may appear possible, however, by means of uniform 
 issues and the strengthening of metallic reserves, to improve existing 
 monetary systems and to place them proportionately beyond the influ- 
 ence of the legislative assembly and the financial magnate. 
 
 No study of monetary problems could be better concluded than with 
 the following citation from the pen of Professor Jevons. He says, in 
 closing his work on Money and the Mechanism of Exchanged "From 
 all the above considerations it follows that the only method of regulatmg 
 the amount of the currency is to leave it at perfect freedom to| regulate 
 itself. Money must find its own level like water, and flow in and out of 
 a country, according to fluctuations of conmierce which no government 
 can foresee or prevent." . . . Speaking of paper issues he continues: 
 "Private issues should disappear like private mints, and each kingdom 
 should have one uniform paper circulation, issued from a single central 
 
 Bk. IV 
 
 Money 
 
 285 
 
 state department, more resembling a mint than a bank. The manner 
 of issuing this paper currency should be strictiy regulated in one sense; 
 the paper circulation should be made to increase and diminish with 
 the amount of gold deposited in exchange for it. At the same time, 
 no thought need be taken about the amount so issued. The purpose 
 of the strict regulation is not to govern the amount, but to leave that 
 amount to vary according to the natural laws of supply and demand. 
 In my opinion, it is the issue of paper representative notes, accepted 
 in place of coin, which constitutes an arbitrary interference with the 
 natural laws governing the variations of a purely metallic currency 
 so that strict legislative control in one way leads to more real freedom 
 in another." 
 
 These considerations may be briefly smnmarized: In any modi- 
 fication of present fiscal methods, existing monetary systems should be 
 preserved with the greatest care. No taxes affecting monetary value 
 should be repealed imtil the money of the country has been established 
 upon a basis independent of the influence of such taxes. If, by means of 
 uniform issues and gradual increase of metallic reserves, a country 
 could develop a workable system, based upon bullion values, taxes 
 affecting monetary issues might be repealed without danger. 
 
 r i^J 
 
 » Ibid., p. 333« 
 ' y?' 340. 341^ 
 
i 
 
 CHAPTER IV 
 
 PROPERTY 
 
 THE absorption of ground-rents by society is criticized as sub- 
 versive of the institution of private property. The relation 
 of fiscal systems to property in general may, therefore, be 
 suggested. 
 Unimproved land is rendered valuable because of the existence of 
 society, and what Adam Smith calls the good government of the sov- 
 ereign, in other words, the expenditure of public money raised by taxa- 
 tion. This expenditure of public fimds creates a certain volume of annual 
 wealth represented by the "powers of the soil," advantages of situation 
 and natural desirability of different kinds. Present administrative 
 methods not only create this annual wealth through use of the social 
 resoiirces, but allow it to accumulate in the hands of individuals; 
 present methods, therefore seem subversive of the rights of society to 
 publicly created wealth. 
 
 "The total expenditure of all the London authorities ^ — Coimty, 
 Poor-Law, Sanitary, Police, Educational, etc. — is, according to the 
 Government Returns for 1894-5, as corrected by the statistical officer 
 of the London County Coimcil (London Statistics j vol. vii., pp. xlv. — 
 bd.), £12,876,922. Of this only £1,650,856 is derived from rents of 
 public property, fees, fines, dues, and 'simdry other sources.' Grants 
 in aid from the Imperial Exchequer provide £1,666,159, consisting of 
 the education grant (£594,640) — grants to the Metropolitan Police 
 Conmiissioners (£610,828), Exchequer grants to London Coimty Council 
 out of licences, estate duties, and Customs and Excise (£460,557), and 
 a small grant to Poor-Law authorities (£134) • This leaves the enormous 
 sum of £9,338,473 to be levied locally in the form of rates. These 
 three items — grants out of Imperial taxation, local rents, and 'other 
 sources' — make up, for the year imder consideration, a total of £12,- 
 
 655488. 
 
 " Of course Londoners pay not only the whole of the 9 1-3 millions 
 raised in rates, but also their due proportion of the imperial taxation 
 
 > Tke Great Problem ofow Great Towns, reprinted from the Echo, pp. 15-16. 
 
 286 
 
 I 
 
 Bk. IV Property 287 
 
 out of which the grants of about i 2-3 millions are made. The total 
 amount contributed by the public in general is, therefore, £11,004,632. 
 "We arrive, therefore, at this interesting comparison: 
 
 London land values (created by public) say £16,000 000 
 
 London's expenses (paid by public) 11)0041632 
 
 " The people of London pay, directly or indirectly, £11,000,000 a year 
 to make and keep the land valuable; and then pay £16,000,000 a year 
 to the landlords because it is valuable." 
 
 These methods are typical of existing systems. Societies tax them- 
 selves in order to continue their organized existence. This existence 
 together with the expenditure of the public funds, creates great annual 
 values belonging peculiarly to the society, for the reason that they are 
 caused by social activities. Present administrations then hand a large 
 portion of this social wealth over to the ownership and control of indivi- 
 duals. There can be but one result, a result analogous to that created 
 by the indirect taxation of living expenses; namely, the pro- 
 gressive accumulation of socially created wealth in the hands of 
 the richer members of the society. The present administrative 
 system, therefore, seems subversive of the rights of property, so 
 far as public property is concerned, in denying to society the wealth 
 society creates. 
 
 How the present system destroys and undermines the right of 
 individual property, m the form of wages and the smaller incomes, 
 throughout all societies based upon the taxation of living expenses, has 
 been shown. ^ The existent system seems destructive of individual 
 property rights in other ways. The expenditure of public funds creates 
 rental values. The absorption by individuals of these ground-rents 
 created by the population on one hand, and paid by the same pop- 
 ulation on another, undermines property rights in incomes and wages 
 swelling ground-rents in large cities. 
 
 Rural districts present analogous conditions. The agricultural 
 labourer is held from the soil by means of legislation with reference to 
 land and the indirect taxation of his wages. In England, especially, 
 the time, capital, and labour expended upon the cultivation of the soil 
 seem largely at the mercy of the owner or lessee of the land. This 
 influence does not stop here, however. Through the power of expelling 
 the labo urer from the cottage or allotment, freedom of opinion and 
 
 * Cf., pp 356, a(Sx. 
 
 :; 
 
 1 
 
* 
 
 288 
 
 Fiscal Problems 
 
 Pt. Ill 
 
 Bk. IV 
 
 : 
 
 i 
 
 I 
 
 political discussion may be stifled. The following is dted from the 
 Report of the Proceedings of the Rural Reform Conference. ^ 
 
 Mr. William Weston (Wisbech Division of Cambridgeshire): "I 
 stand before you a workingman hailing from the Northern or Wisbech 
 Division of Cambridgeshire, and I am here to-day to represent the 
 workingmen. Their great request was that I should put before the 
 Conference the Allotment Question. That is a question that is nearest 
 to the heart of every workingman in our village. We have failed 
 already to get our land by Acts that have been passed before, but we 
 have in our villages at the present time some land vmder the Volimtary 
 system. But I wish to let this Conference know that this Voluntary 
 system is likely to prove a failure. I may tell you that where I live 
 we have sixteen allotments, and when a question cropped up between 
 us and one of the landlords, he threatened to expel us next Michaelmas 
 at one month's notice. Now, I ask this Conference and any agricultural 
 labourers the question: Can rural labourers in this or any other country, 
 farm under a system like that? What we want, gentlemen, and what 
 we mean to have, is fixity of tenure. Our workingmen have had this 
 land for some years, which was full of twitch, and though they cleared it 
 and manured it and cultivated it, still they are threatened to be expelled, 
 next Michaelmas, and they say, 'We cannot go on without food, manure, 
 etc. What is to be done?'. . . On the nth of September they can 
 give us notice, and on the nth of October we have to quit our allotments 
 without any compensation." 
 
 The following are extracts from the remarks of Mr. Hines' (Mid- 
 Oxfordshire) : " Now, what I want to impress upon you is this — what- 
 ever you do, make an appeal to every candidate that comes before the 
 constituency of which you are a member, and impress upon their minds 
 the necessity of making an alteration in the tenancy of the cottagers 
 in this country. My friend, Joseph Arch, I see by reading this paper 
 which I have been reading, has brought forward a movement to the 
 effect that the labourers shall not be evicted from their cottages with 
 less than six months' notice. My friends, I go further than this myself, 
 and I think the scheme originated with me, as far as South Oxfordshire 
 and North Buckinghamshire was concerned, that no power in existence, 
 either landlord, land agent, or house farmer should have the power to 
 
 > The Condition of the Rural Population. A Verbatim Report of the Proceedings of the Rural ReformCon- 
 ference, held at the Memorial EaU, Farringdon Street. Duember loth, iSgz, under the Auspices of the National 
 Liberal Federation, p. 43. 
 
 • Ibid, pp. 49-SO. 
 
 Property 
 
 289 
 
 turn the agricultural labourer adrift with less than twelve months' 
 notice. . . . What do I find when I go out into North Worcester- 
 shire? I find agricultural labourers come to me one after another and 
 say: *We could put up with this village; we could put up with the 
 wages and with the allotments of this village, but the way in which we 
 are put into cottages, and forced to rent under a farmer makes the places 
 like gaols.' Hundreds of times the labourers have come to me, when 
 I have been trying to organise them, and to persuade them to join the 
 Agricultural Labourers' Union, and they have said 'We would join the 
 Union, and it is our wish to join the Union, but though we are not 
 afraid of being discharged from our employment, we are afraid of being 
 evicted from our cottages and turned adrift'; and all of you know what 
 eviction from the cottages means." 
 
 The profitable working of the soil is dependent upon a degree of 
 permanency of tenure. Where this is endangered, the time, labour, 
 and capital expended are endangered to an equivalent extent; and 
 where rent and rates can be raised owing to improvements, the prop- 
 erty represented by improvements is proportionately endangered. 
 
 One more citation may be presented from this collection. Mr. C. H. 
 Cardell,! C. C. (Launceston Division of Cornwall) says: "What is the 
 first cry of the agricultural labourer when he gets his allotment? It 
 is for security for improvements and security of tenure. Bear in mind 
 that that security of tenure in their case, important as it is, is not so 
 important as it is in the case of the tenant-farmer, because a tenant- 
 farmer has his all staked in his occupation, but the occupation of an 
 allotment gives the allotment holder but a partial source of income. 
 
 "The question has been referred to in regard to the crowding of 
 our population from the country districts into the towns. What is the 
 cause of this? It is because good culture is a penal thing. Good culture 
 is to-day absolutely iUegal. Let any man try it, and he will find that 
 the capital once placed in the soil is as absolutely confiscated as though 
 they had smuggled it. I say that as soon as a man has a thousand 
 pounds in his pocket, the Army, the Navy, and the whole Constitution 
 defend him in his right to it, but the very moment he places these coins 
 in soil, he loses, before any tribunal in the land, every particle of right 
 to it.^ Under those circumstances how can it be that agriculture should 
 flourish? The gentleman who spoke just now said it was a monstrous 
 thing tha t so many farms should be merged into one, and that the popu- 
 
 * Ibid., p. 59. 
 
290 
 
 Fiscal Problems 
 
 Pt. Ill 
 
 lation should be disappearing. Why is it? It is because bad culture is 
 the only legal culture, because good culture has no security, in spite of 
 all the Agricultural Holdings Acts that have been passed. A gentleman 
 who was certainly not prejudiced, in bearing testimony against this 
 Act, said the other day in Norfolk that 300 exchanges has taken place 
 in the coimty, and only two of those exchanges had taken placed under 
 the Act. And why? Because it is a dead letter. 
 
 " Gentleman, the time is coming when these things must be altered. 
 The old proverb used to state, *That which could not be cured must 
 be endured.' But that old proverb has been misread, and now it is, 
 *What can't be endured must be cured.' Gentlemen, our land-owners 
 and our legislators would do well to take note of the proposals and 
 revolutionary ideas which are flooding this country — ideas which I 
 cannot go with altogether myself. But why are these measures being 
 proposed? It is because of the breakdown of the present system of 
 ownership, because the tenant farmers of England to-day dare not put 
 their energy, and enterprise and capital into the soil, and that the 
 minimum system of production is the only system under which we are 
 authorised to proceed. In the county from which I hail, in the last 20 
 years we have decreased something like 40,000 in population. Those 
 40,000 people have gone principally from agriculture. And what 
 is the reason? People will not realise that it is because of the absolute 
 insecurity of the tenant's capital, and that therefore the culture has 
 gone out of the country." 
 
 Such conditions lead to the conclusion that present systems of land 
 tenure are largely subversive of property rights, represented in capital 
 and labour invested in the direct culture and improvement of the soil. 
 Property of this kind is attacked at present with the familiar results 
 of urban overcrowding and agricultural destitution. An incident cited 
 in the Reminiscences of Sir Edward Russell ^ shows how far-reaching 
 and pervasive is this attack on private property. "Her Majesty, 
 the Queen, when staying in one of her country residences, had upon a 
 visit a gentleman of high situation, to whom on one occasion she said, 
 when speaking of the neighbourhood: *I don't like the s (re- 
 ferring to a landed family in the neighbourhood). 'Why, ma'am?' 
 asked the gentleman. *0h!' answered the Queen, * because they are 
 very bad to their tenants, and many of their cottages are in a horrid state, 
 and if anything is done by any tenant at their own expense to improve 
 
 1 Quoted from Taxation Reform, by F. D. Perrott, p. 14.J 
 
 Bk. IV 
 
 Property 
 
 291 
 
 their condition, the first thing the 
 
 -s do is to raise the rent 
 
 upon them. The gentleman courteously replied: 'Well, I am only glad, 
 ma 'am, that you sympathise with the afflictions of the tenants.' Where- 
 upon the Queen said: *0h, I am a tenant myself from Mr. of 
 
 , and I have made many improvements, and every time I 
 have made an improvement my rent has been raised." 
 
 "Building is at present penalized," says the Right Honourable Charies 
 Booth. 1 "A property in section (A) is perhaps old and out of repair, 
 but if the owner should rebuild and by so doing increase its annual value 
 say, from £300 to £600, the occupier, would on the system now in use, 
 have to pay not only this additional rent, but also double the amount 
 of the former rates." 
 
 These considerations refer to English systems of land tenure. In 
 the essential feature of the subject, however, they seem sufficiently 
 typical to permit the following generalizations: (i) The expenditure 
 of public funds, and the existence of society, create and increase a 
 volume of annual wealth represented in ground-rents, franchises, mineral 
 privileges, and so forth. This property, created by society, belongs to 
 society in equity and right reason. The present system, in permitting 
 this wealth to remain largely in private possession and control, destroys 
 the right of society to property created by and belonging to it. (2) 
 Owing to the existing insecurity of the property rights of tenants, the 
 progressively cumulative burdens laid upon smaUer incomes, through 
 the taxation of living expenses, together with opportunities of financial 
 manipulation which these taxes create, the property of the tenant and 
 poorer classes is effectively " attacked " by existing administrations. 
 
 The insecurity of property due to these indirect methods is the fun- 
 damental objection to existing fiscal and administrative systems. Prop- 
 erty can never be secure under a system based upon the taxation of vital 
 needs for protective purposes and fiscal burdens laid in proportion to 
 necessary living expenses. Every day such a system, continues in 
 existence but destroys and distorts the circulation of the people's 
 wealth, concentrates it in this channel or that, and destroys the property 
 rights of the bulk of the population in wealth which it creates. 
 
 A direct fiscal system, based on social wealth, does not seem open to 
 these objections. Properly understood and properly administered, 
 such a system would absorb for social needs only that property created 
 by the s ociety, and allow the individual undisturbed possession of 
 
 > Life and Labour of the People of London, Final Vol., p. 195. 
 
 ■ 1 
 
292 
 
 Fiscal Problems 
 
 Pt. Ill 
 
 property due to his own exertions. At the same time, it would take it 
 largely, if not entirely, out of the power of the individual to exploit 
 the resources of a society for his own gain, through the control of 
 values created by fiscal and administrative decisions. Such a system 
 would be based fundamentaUy upon property, in particular and in 
 general. Such a system would give to the individual that which 
 belonged to the individual, to the society that which belonged to the 
 society — it would render unto Caesar that which was Caesar's. 
 
 I 
 
 It 
 
 i! 4 
 
 CHAPTER V 
 
 NATURAL ECONOMICS 
 
 WHAT is the natural process of the distribution wealth 
 with reference to the derivation of social revenue? 
 Social revenue should evidently be derived from the an- 
 nual revenue of the entire people. In what then does the 
 total gross revenue of the people consist? How may it be reached? 
 To what extent should it be apportioned to social needs, and how may 
 that portion be absorbed by society, without affecting the productive 
 capacity of individuals? 
 
 The various systems of industrial activity are carried on through 
 the agency of two distinct industrial groups which might be called 
 the directly and indirectly productive. Both groups will be productive 
 in a general sense, but a distinction may be made between the two forms 
 of production. The first, or directly productive group, will include 
 those members of the society whose interests are concerned with the 
 direct exploitation of the resources of the earth; the second, or indi- 
 rectly productive, those devoted to the modification, or preparation 
 for consumption, of the crude material actually produced by the 
 first group. The distinction between the two forms of industry may be 
 illustrated by a comparison of the occupations of the farmer and the 
 miller; the farmer produces the grain, the miUer prepares it for consump- 
 tion. Again, the miner extracts from the earth the crude ores rendered 
 available only after passing through the hands of the smelter and the 
 metallurgist; the railway and transportation interests distributing it 
 throughout the society. The distinction between the two forms of 
 production is evident upon a moment's reflection; and, for the sake of 
 convenience, they may be styled productive and manufacturing; the 
 first is devoted to the direct production of raw material, the second to 
 its subsequent modification or distribution. 
 
 The gross revenue of a people, in its original form, consists in that 
 mass of crude material annually brought into existence by the activities 
 of the directly productive members of the society. AU the material 
 wealth a people can possess must be contained in some form within 
 
 293 
 
294 
 
 Fiscal Problems 
 
 Pt. Ill 
 
 this annual volume of raw production. The question then is one of 
 distribution. How should this total gross revenue of society be dis- 
 tributed to the individual units? 
 
 In order to approach the subject more definitely, let it be supposed 
 that all the fruits and harvests of the earth, the products of the mine, 
 the field, the vineyard, and the chase, lay before a single arbiter for 
 distribution, as the different classes of the people present their claims 
 and receive their shares. 
 
 The directly productive class would naturally be the first considered, 
 for the total gross revenue is due to its industry. But before it receives 
 its share it will be found that this class separates itself into three distinct 
 subdivisions: (i) the class of labourers, or wage workers; (2) that 
 of employers, or organizers of labour; (3) land-owners. 
 
 Those to whom the first distribution shoiild be made would perhaps 
 be the laboxuing, or wage-working, class and their claims may be heard 
 first. On reflection, however, these claims seem established, as agreed 
 upon with the employing class. That portion of the gross social prod- 
 uce which belongs to the labouring class has already been fixed, in the 
 amoimt of wages agreed upon. To the wage-working class, therefore, 
 may be given a portion of the total produce equal to the value of Wages. 
 
 The employing, or capitalist, class is next in turn. To this class, it 
 is evident, belongs that portion of the total revenue representing the 
 risk, skill, ability, and capital contributed by its members to general 
 production. To this class, then, belongs that share of the total 
 wealth represented by Profits. 
 
 After these returns have been made, the proprietor, or land-owning 
 dass will naturally lay claim to the remainder of the total social revenue. 
 That the remainder of the revenue belongs to the land-owning class in 
 return for the use of their land, and the improvements thereon, may not 
 appear imnatural; and the entire remainder of the revenue, after Wages 
 and Profits are deducted, may be handed over to the land-owning dass 
 in the form of Rent. In this way, the total gross revenue of the sodety 
 will be distributed. 
 
 If the manufacturing dass asks in what way its revenue is to be derived, 
 it may be pointed out, that while the whole revenue has already been 
 distributed, it is yet in its crude, or imavailable, form. Before it can 
 be of use it must be handed over to the manufacturing dass to be pre- 
 pared for consiunption; during this process, the proper share will natur- 
 ally be contributed to the members of this class in return for its industry. 
 
 Bk. IV 
 
 Natural Economics 
 
 295 
 
 In this way, the gross revenue of the society will apparentiy be divided 
 justly and satisfactorily to all concerned, and all might be well if, at 
 this juncture, another class did not put in an appearance and request 
 to be provided with its share of the annual revenue. This class 
 represents a subdivision of the indirectiy productive class, but, as 
 its members are not occupied in industry or transportation, how may 
 these demands be met? This class represents the administrative 
 members of the society; through their occupations, the society has 
 been assured of the order and security necessary to production and it 
 is essential that it should receive its reward. 
 
 But whence shall this reward be derived, and in what proportion? 
 To all other dasses of the people seemed to belong an established, and 
 naturally regulated, portion of the total wealth; here alone difliculty 
 occurs, after the total wealth had apparently been justly distributed. 
 It is evident that the administrative class is not industrially productive, 
 either directly or indirectly; its reward, therefore, must come from the 
 results of the activities of the directly productive class. But how and 
 in what proportion? 
 
 This is, perhaps, the most pregnant question in political and economic 
 inquiry. Upon the answer will depend the fiscal and financial history 
 of the resulting society. 
 
 If administrative expenses are withdrawn from the wages of the 
 workers, an unjust burden will be laid upon their strength and vitality, 
 their productive and consuming powers will be affected, and the total 
 product of the sodety diminished. 
 
 If the expense of adminstration is withdrawn from the profits of the 
 capitaHst or employing dass, an unjust burden wiU be laid upon em- 
 ployment and industry, and the productive power of this dass pro- 
 portionately checked. 
 
 There remains that portion of gross revenue handed over to the land- 
 owning class, after the deduction of wages and profits. The functions 
 of the land-owner, as a member of the directiy productive dass, are two- 
 fold: first, he must put his land in a productive condition; second, he 
 must maintain that condition. Production depends upon the first, 
 its continuance upon the second. It is essential, therefore, to the most 
 effective production, that the improvements of the land-owner should 
 be untaxed. To withdraw administrative expenses from the annual 
 value of these improvements places an unjust burden upon improve- 
 ment rent and checks proportionately the most productive of occu- 
 
 I 
 
 j' 
 
296 
 
 Fiscal Problems 
 
 Pt. Ill 
 
 Bk. IV 
 
 pations — the direct development of land. The revenue of the land- 
 lord, therefore, or total rent, may be divided into three portions: (i) 
 The' rent of improvements; (2) profits; (3) a portion representing 
 neither rent, improvements, nor profits necessary for their mainte- 
 nance. 
 
 A certain portion of the landlord's capital must be spent in the de- 
 velopment of his land, in order to put it in a productive condition. 
 Such expenditure must be profitable, or it will cease and production be 
 proportionately checked. Again, there must be a portion of total rent, 
 represented neither by improvements nor profits, necessary for their 
 maintenance. Were this not so, it might be asked to what is to be 
 traced the rental value of an unimproved city lot. No capital has been 
 spent on improvements, no profits, consequently, can be expected 
 from them; yet such values may not only be great, but increase 
 without the expenditure of individual capital. 
 
 A portion of the gross social income apparently remains, therefore, 
 in possession of the land-owning class, due neither to its expenditure 
 on improvements nor profits essential to their maintenance. It may 
 thus seem that this portion of the total gross revenue will be the best 
 from which to derive administrative expenses: First, because revenue 
 derived from this source would not be a check on the rewards of pro- 
 duction, as represented in wages, profits, or improvement rents; second, 
 because in deriving administrative expenses from this source, no burden 
 is placed on any class as a productive factor. The burden, on the con- 
 trary, is borne by society as a whole, after each class has received 
 just renumeration for its productive activities. These considerations 
 suggest that that portion of gross revenue best reserved for admin- 
 istrative expenditure is that represented by the annual value of the 
 undeveloped powers of the earth in control of the land-owning class. 
 
 The foregoing passages contain a brief statement of the position 
 developed by those inquirers in France known as the Physiocrates, 
 or CEconomistes. Their views will be found elaborated in the works 
 of Quesnay, Dupont de Nemours, Mercier de La Riviere, Tabbe Baudeau- 
 and others. These views had at one time some influence, and 
 during the early revolutionary period were partly put into practice. 
 Arthur Young made his celebrated journey through France at that 
 time, and was interested in all political and administrative questions 
 of the day. He had found a property in the Bourbonnais,^ at Villeneuve 
 
 KYoung's Travels in France, p. 23X« 
 
 Natural Economics 
 
 297 
 
 sur-Allier near Moulins, which he was anxious to buy. He was one 
 of the best informed agriculturists of his day, a man whose chief char- 
 acteristics were sterling good sense and an honest love of the land. 
 In the range of economic literature, therefore, there is probably no 
 opinion with reference to the applications of the Physiocraric land-tax 
 of greater interest than that of Arthur Young. He was not only an 
 informed inquirer; as an Englishman uninfluenced by political passions, 
 but directly interested in the application of this tax. He says:i 
 
 "The impossibility of levying the (Economistes land-tax is found in 
 France to be as great in practice as the principles of it were absurd in 
 theory. I am informed (February, 1792), that the confusion arising 
 from this cause, in almost every part of the kingdom, is great. The 
 tax of 300 miUions, laid on the rental of France, would not be more than 
 2S. 6d. in the pound; too great a burden on just political principles, 
 but not a very oppressive one had it been once fairly assessed, and 
 never afterward varied. But, by pursuing the jargon of the produii 
 net, a.nd making it variable, instead of fixed, every species of incon- 
 venience and uncertainty has arisen. The assembly divided the total 
 among the departments; the departments the quotas among the dis- 
 tricts; the districts among the municipalities; and the municipalities 
 assembled for the assessment of individuals: the same decree that fixed 
 the tax at 300 millions, limited it also not to exceed one-fifth of the 
 produit net; every man had therefore a power to reject any assessment 
 that exceeded that proportion; the consequence was, the total assigned 
 to the municipalities, was scarcely anywhere to be found, but upon 
 large farms, let at a money-rent in the north of France; among the 
 small proprietors of a few acres, which spread over so large a part of 
 the kingdom, they all screened themselves under definitions, of what 
 the produit net meant; and the result was, that the montii of December, 
 which ought to have produced 40 millions, reaUy produced but 14. 
 So practical has this visionary nonsense of the produit net proved, 
 under the dispensations of a mere democracy, though acting nominally 
 by representatives. ... The people, without property, have a 
 direct interest in seconding the refusals of otiiers to pay, that are in 
 the lowest classes of property, and who can really fll afford it; one great 
 objection to all land-taxes, where possessions are much divided. With 
 power in such hands, tiie refusal is effective, and tiie national treasury 
 is empty . But supposing such enormous difficulties overcome, and 
 
 ^ Ibid, p. 349. 
 
 ,'i 
 
 il'i 
 
 Ji! 
 ,1- 
 
 (ti 
 
298 
 
 Fiscal Problems 
 
 Pt. Ill 
 
 Bk. IV 
 
 'i' 
 
 m 
 
 
 these little properties valued and taxed on some practicable plan, from 
 that moment there must be a new valuation every year; for, if one has 
 wealth enough to improve beyond the capacity of the rest, they immedi- 
 ately shift a proportion of their tax on him; and this has accordingly 
 happened, early as it is in the day, and indeed is inherent in the nature 
 of the tax, as promulgated by the assembly. Thus annual assessments, 
 annual confusion, annual quarrels, and heart-burnings, and annual 
 oppression, must be the consequence; and all this because a plain, simple 
 and practicable mode of assessment was not laid down by the legislature 
 itself, instead of leaving it to be debated and fought through 500 legis- 
 latures, on the plan, purely ideal and theoretical, of the CEconomistes! " 
 
 How this principle affected him individually is shown by the following 
 passage. He says,^ speaking of France: "I had serious thoughts of 
 settling in that kingdom, in order to farm there; but the two measures 
 adopted, of a variable land-tax, and a prohibition on the export of 
 wool, damped my hopes, ardent as they were, that I might have breathed 
 that fine climate, free from the extortion of a government, stupid in 
 this respect as that of England." 
 
 These passages show the effects of the application of the principles of 
 the Physiocrats, upon one of the best informed minds of that day. 
 They suggest some fimdamental error of the Physiocratic position, 
 in both conception and application. 
 
 The subject may be briefly reviewed. The problem is to find that 
 portion of the total gross production of a society, essential neither to 
 putting land in a productive condition, nor to the profits necessary 
 for the maintenance of such a condition. The Physiocrates regarded 
 this as a portion of the net product remaining in the hands of productive 
 land-owners after all necessary expenses had been paid. In order to 
 collect such a tax, therefore, they supposed it essential to estimate 
 and assess annually this net product in the hands of productive owners 
 of land; hence the methods adopted, and the diflSculties outlined by 
 Arthur Yoimg. Yet, in a study of the subject, as presented by these 
 men, there seems no other way to assess and collect such a tax. The 
 total crude product must apparently be directly reached through pro- 
 ductive land. And here, it seems, lies the initial error of the Physio- 
 cratic position, in conception and in practice. 
 
 At the outset of their demonstration, they regarded the owners of 
 land as a productive class. They should have separated the land-owning 
 
 >IbiA. p. 3SS. 
 
 Natural Economics 
 
 299 
 
 class mto two distinct subdivisions: productive and non-productive 
 land-owners. Thus, to return to the illustration, that portion of the 
 totaJ crude product of a society remaining after the claims of Wages and 
 Profits had been satisfied, should be divided as follows: There wiU be 
 but one division of the land-owning class having any just claim to the 
 remamder; that division will be represented by productive land-owners 
 alone. These land-owners will naturally claim that portion of the total 
 product represented in the rental value of their improvements, and 
 this portion should be handed to them. After these needs are satis- 
 fied that portion of total product, previously handed to non-productive 
 land-owners, wiU remain for distribution; and this, it would seem, is the 
 proper portion to reserve for social requirements. The non-productive 
 land-owners could lay no claim to it, for their land would have 
 produced no part of the annual total; their land would have produced 
 nothing. Land of this non-productive kind is represented in city sites, 
 franchises, and non-productive values in general. When, therefore] 
 an amount for administrative needs is to be withdrawn from the total 
 revenue of society, this non-productive land-owning class should con- 
 tribute an amount equal to the non-productive or unimproved value 
 of Its land. In other words, the non-productive or unimproved value of 
 land, in the form of site and franchise values and undeveloped mineral 
 wealth, should remain in the hands of the society and not be distributed 
 except to society itself, in meeting social expenses. When, therefore 
 the total gross product is to be distributed, society should first appro^ 
 pnate to itself that portion represented by the non-productive value 
 of the land under its jurisdiction, and distribute the remainder through 
 the natural channels of exchange. 
 
 This position understood, many of the difficulties pointed out by 
 Arthur Young with reference to a direct land-tax, disappear; for, assessed 
 m this way, it would bring no burden upon productive land-owners 
 but, on the contrary, could fall upon non-productive or unimproved 
 land m proportion to its value. 'Productive industry would not be 
 taxed, as at present, improvements would not be penalized, as under the 
 existing system; and socially created wealth would support the needs 
 of the society. This is apparently the only way in which that which is 
 Caesar's can be rendered into Caesar. 
 
 1'^ 
 
 !! 
 
Part IF 
 
 PROGRESS 
 
 U 
 
 BOOK I 
 PROGRESS AND POLITICS 
 
 BOOK II 
 INTELLECTUAL PROGRESS 
 
 BOOK III 
 RELIGION 
 
 BOOK IV 
 PHILOSOPHY 
 
 ( ; 
 
 '•i.t| 
 
 
Book I 
 
 PROGRESS AND POLITICS 
 
 CHAPTER I 
 
 INTRODUCTION 
 
 THE comparison of direct and indirect fiscal systems is not 
 hmited to economic discussion. The direct system and 
 Free Trade mvolve the aboUdon of import taxation The 
 abandonment of the import duty, however, entails an un- 
 famzhar form of social organization, which may be regarded with 
 distrust, upon other than economic grounds. AU that Smith or Mill 
 wrote m opposition to Protection, and in support of industrial freedom, 
 may be accepted; the theoretic validity of direct fiscal systems may b^ 
 admitted, and yet the abolition of the import duty remains open to 
 wide discussion. The withdrawal from legislatures of power to tax 
 consuniption would be foUowed by a new era in the history of civiliza- 
 tion. Such a st^ would have direct and important influence upon 
 the production and distribution of wealth, but would, at the same time 
 have other influences upon society at large. ' 
 
 The import duty is an essential factor in' the establishment of national 
 distmcuons national poUdes and national boundaries; together with 
 their attendant nvalries, industrial, social and poUtical. The aba^ 
 donment of the import duty would thus cause important modification 
 m mternational relations, through the elimination of these distinctions. 
 But such ehmmation must cause decline in the political and industrial 
 nvalry dependmg upon them. Were international Free Trade estab- 
 hshed, many existmg political institutions would faU into disuse- 
 among the most important of which would probably be general miUtar; 
 orgamzation. Where national boundaries cease to exist commercial 
 the mamtenance of armaments would sooner or later become an unnec- 
 essary expense; for the reason that poUtico-commercial questions would 
 no longer exist upon the international horizon. Where die ships and 
 traders of every nation have the freedom of whatever lands or waters 
 
 303 
 
 1/ 
 
 ». 
 
 I 
 
304 
 
 Progress and Politics 
 
 Pt. IV 
 
 Bk. I 
 
 Introduction 
 
 welcome their goods, Protection becomes impossible, "spheres of influ- 
 ence" become an anachronism, and miUtary budgets would be subjected, 
 perhaps, to more or less active criticism, wherever greater than necessary 
 for police work. It seems, in fact, that real industrial Uberty, if ever 
 adopted on a large scale, must sooner or later fore-shadow naUonal 
 disarmament. Where the import duty ceases to exist, the chief cause 
 of international complication has been destroyed, and the mdustrid 
 and financial interests of a people or group of peoples become mvolved 
 with the maintenance of peaceful relations, in order to develop markets 
 and establish financial confidence. 
 
 Such results may seem desirable from a pacific point of view. This 
 attitude wiU not appeal to all, however, and reasons supporting tiie 
 permanent repeal of the import duty may develop grounds for its per- 
 manent adoption. The disadvantages of war are evident and need 
 not be dwelt upon; tiie disadvantages of permanent peace, however, 
 to many observers are not less important. The highest development 
 of human society, botii in general and in particular, is to be achieved 
 but by bringing each nation, or poUtical organization, to its highest 
 pitch of efficiency in every phase of activity. But tiiis can be done 
 through rivalry and competition alone, and any form of industrial 
 freedom which decreases this competition seems subversive of human 
 development. The import duty here appears as a factor in competitive 
 industrial and poUtical conditions; and, consequentiy, in progress m 
 general. These conditions are not only tiie invariable forerunners of 
 otiier progressive influences, but, it may be said, all progress is caused 
 and conditioned by material political progress. Witii increase of national 
 wealtii and political power come intellectual incentive and opportumty; 
 the development of the arts and sciences, and, in general, those influences 
 tending to the elevation of mankind and the betterment of human so- 
 ciety, considered not only materially and economically, but intel- 
 lectually, etiiicaUy, and morally. Upon the progressive poUtical organi- 
 zation tiien, as an essential foundation, depend those influences which 
 might be called the superstructure of progressive society: the arts, 
 culture, science, philosophic inquiry, and inteUectual development. 
 
 These considerations, with reference to relations existing between 
 social organziations, may be applied almost literaUy to the various 
 relations existing within the society itself; for competitive influences, 
 created by progressive conditions of whatever nature, serve but to 
 cause an increasing degree of efficiency within the social Umits; this 
 
 30s 
 
 efficiency tending to increase the social activities in every field. The 
 fact that social and political progress demands certain conditions, and 
 that these conditions bear heavily upon the industrial niasses, may be 
 a matter of regret; but such conditions seem essential to national 
 development. Industrial liberty, that is, the elimination of all fiscal 
 industrial restrictions, might possess certain theoretic advantages; 
 but its ultimate effect would check existing industrial competition to a 
 large extent. At the same time, the relaxation of competitive conditions 
 must cause compensating relaxation in industrial efficiency; with the 
 result that the progressive development of the society may sooner or 
 later be adversely affected, internally and externally. It requires no 
 stretch of the imagination to trace these influences into a wider field, 
 beyond the national existence. The records, the Uterature, the knowl- 
 edge, which a nation leaves behind it, even long after the nation itself 
 has disappeared; the science and thought of a long silent people, may 
 still aid generations of which an ancient race had never dreamed; and 
 so, upon national progress depend, not alone the development of any 
 given society, but of other peoples, of all peoples: in fact of humanity 
 as a whole. 
 
 In the panorama of history, the endless flux in human events is perhaps 
 the first condition noticed. To find one permanent society, one enduring 
 civilization, is impossible. A state, an empire rises, rules, and crumbles 
 into obUvion, much as the organic units of which it is composed; yet 
 each leaves some trace or tradition affecting conqueror and conquered 
 aUke, thus contributing in some degree to that universal change of 
 human progress in its entirety. The poUtical systems and institutions 
 of those peoples most conspicuous in human affairs have one common 
 characteristic — they have all been based upon a progressive conception 
 of society. Man is everywhere seen organizing for purposes of economic 
 and poUtical achievement; famiUes crystaUize into tribes; tribes into 
 peoples; these into nations and empires; flowing over other portions of 
 the human sea to absorb or be absorbed, as their natural efficiency 
 and fecundity decide. The conditions governing these movements, and 
 the survival or extinction of the nations of the eartii, have been due to 
 their fitness or failure as progressive poUtical organizations. These or- 
 ganizations again must have depended upon miUtary efficiency, not for 
 their existence alone but for their development as poUtical factors. Thus, 
 progress in aU its phases is involved with poUtical society as it has ex- 
 isted in the past and with its necessary resultant — miUtary efficiency. 
 
 I V| 
 
 II 
 
306 
 
 Progress and Politics 
 
 Pt. IV 
 
 Progress, both material and intellectual, national and political, as 
 well as in its wider application to humanity at large, may thus be 
 traced to the sheer, mechanical force derived from effective mili- 
 tary organization. Progress in the past rests upon the same mar- 
 tial and material basis. To this cause is it owing that weaker 
 or less fit races have been exterminated and the stronger survived. 
 If, now, the chief modem factor in this international and inter- 
 racial process is removed, if the essential element in the modern 
 intersodal struggle for life is abandoned, the struggle itself will be 
 carried on imder less exacting conditions or eventually cease. The 
 elimination of national, industrial and commercial distinctions might 
 react adversly upon national and industrial progress, if not arrest 
 it altogether, and with it the development of humanity as a 
 whole. 
 
 It is but a step from this attitude to the evolutionary hypothesis and 
 its apparently unavoidable conclusions with reference to human society. 
 It may be shown from the researches of the biologist, as well as from the 
 studies of the political observer, that the static society is a practical 
 and theoretic impossibility. In the history of the nations, the non- 
 progressive organization does not exist and carry on its peaceful tradi- 
 tions beside its more powerful neighbours; it sooner or later disappears 
 from the stage, and the world knows it no longer. The non-progressive 
 society does not merely cease to progress; it ceases to exist, through causes 
 generated within or coming from without. Both political history and 
 the evolutionary sciences show that the permanently static social 
 condition is unknown. In the history of the races of man, as 
 in that of the organic individual, where progression ceases, regression 
 begins. 
 
 Thus, social and political conditions, into which military efficiency 
 does not enter as an essential factor, may be fraught with danger to 
 the future of society. Industrial freedom, therefore, in so far as it 
 involves such conditions, is open to this objection. Human progress 
 in the past has been caused by the rivalry of political organizations, based 
 upon military efficiency. There seems no other basis upon which prog- 
 ress may continue. The maintenance of the import duty, in establish- 
 ing and perpetuating the distinctions upon which political competition 
 depends, may thus be regarded as among the conditions essential to 
 human progress. Any form of social organization, therefore, tending 
 to the elimination of national competition, may be regarded with dis- 
 
 Bk. I 
 
 Introduction 
 
 307 
 
 trust, as subversive of progress in general. This opinion has been pre- 
 sented from various points of view. From that of the practical adminis- 
 trator, it may be found in a message ^ of Mr. Roosevelt when President 
 of the United States. He says: "If the great civilized nations of the 
 present day should completely disarm, the result would mean an im- 
 mediate recrudescence of barbarism in one form of another." Doc- 
 tor Maudsley* expresses the same idea from another point of view: "It 
 may justly be doubted," he says, "whether it is anjrthing more 
 than elusive imagination that foresees, as crown of organic evolu- 
 tion, a race of placid beings bound together in unity of spirit, 
 making the whole earth busy with their peaceful industries, per- 
 suaded rationally of the folly of war, and living lives of good-will 
 and good works to one another; whether in fact such a consumma- 
 tion would not mean the emasculation physical, moral, and intel- 
 lectual of the race.'' The attitude of the evolutionary scientist 
 is suggested in the following passage: "In one of my latest con- 
 versations with Darwin," says Alfred Russel Wallace,^ "he expressed 
 himself very gloomily on the future of humanity, on the groimd that 
 in our modem civilization natural selection had no play and the 
 fittest did not survive." 
 
 It may thus seem that any system of political organization tending 
 to check political and industrial competition would eliminate the es- 
 sential factor in the play of natural selection as applied to modem society, 
 with the proportionate subversion of progressive conditions in all their 
 phases. This attitude shows how great and far-reaching are the 
 benefits traceable to the progressive conception of society based upon 
 military efficiency; for upon it may depend not only the present develop- 
 ment of the nation, but its future, together with that of himianity at 
 large. The generations may thus regard themselves as tmstees of the 
 progress and cxilture of the past; handing on the torch of enlightenment 
 to generations yet to be. Thus, not material wealth alone is the object 
 of the progressive political organization of society, but the perpetuation 
 of the treasures of the arts, the intellect, and the wisdom of the ages; the 
 highest ethical and moral systems of mankind; his spiritual aspirations, 
 and last, but most important, perhaps, the future of the race. Eco- 
 nomics are here left behind, and problems suggested dealing with national 
 
 » Message communicated to the two Houses cf Congress at the beginning of the Third Session of the Fifty- 
 eighth Congress, p. 32. 
 ' Body and Will, Henry Maudsley, M. D., pp. 325-326. 
 • Human Selection, Fortnightly Review, September, 1890, p. 325. 
 
1f^". 
 
 308 
 
 Progress and Politics 
 
 Pt. IV 
 
 development, inteUectual and moral progress, and the future of humanity 
 as a whole. 
 
 Progress can have but two forms: physical and psychical. The first 
 must be studied through the biological and evolutionary sciences; the 
 second by means of other methods. The attention will be turned first 
 to the relation of the evolutionary sciences to progressive political 
 society. 
 
 CHAPTER n 
 
 DARWIN AND WEISMANN 
 
 THE discussion of human progress leads to the evolutionary 
 sciences. A brief statement of the evolutionary hypothesis, 
 with its later development, may, therefore, not be out of 
 place. 
 The evolutionary conception of organic existence may be as old as 
 thought itself. 
 
 "Theories of the imiverse, in which the conception of evolution plays 
 a leading part," says Professor Huxley,^ "were extant at least six 
 centuries before our era. Certain knowledge of them, in the fifth century, 
 reaches us from localities as distant as the valley of the Ganges and 
 the Asiatic coasts of the ^Egean. To the early philosophers of Hindo- 
 stan, no less than to those of Ionia, the salient and characteristic feat- 
 ure of the phenomenal world was its changefulness; the unresting 
 flow of all things through birth to visible being and thence to not being, 
 in which they could discern no sign of a beginning and for which they 
 saw no prospect of an ending." 
 
 The evolutionary conception of the Cosmos dawns with the earliest 
 thought, is suggested in Greek inquiry, developed by Buff on and Lamarck, 
 given scientific expression in the researches of Darwin and Wallace, 
 while later inquiry carries the subject almost as far beyond the earlier 
 contributions of the last century as were these beyond the conception 
 of Goethe and Lamarck. 
 
 There are two fimdamental conceptions of the Darwinian theory: 
 (i) The enormous power of increase with which every form of life is 
 endowed. (2) The tendency of individuals to vary in all directions 
 within certain limits, together with the capacity for the transmission 
 of the variations in a greater or less degree. "As many more individuals 
 of each species are bom," says Darwin,^ "than can possibly survive; 
 and as, consequently, there is a frequently recurring struggle for ex- 
 istence, it follows that any being, if it vary however slightly in any manner 
 
 > Evolution and Ethics, pp. 53-54. 
 • The Origin 0/ Species, Vol. I., p. 5. 
 
 309 
 
 Ki 
 ^j 
 
 ' ''J 
 
3^o Progress and Politics pt. iv 
 
 profiuble to itself, under the complex and sometimes varying conditions 
 of life, will have a better chance of surviving, and thus be naturaUy 
 sdected. From the strong principle of inheritance, any selected variety 
 wiU tend to propagate its new and modified form." This passage 
 contains the statement in its simplest form of the principles upon which 
 the law of natural selection is based. 
 
 In the operation of such a process it occurs "that the structure of 
 every organic being is related, in the most essential yet often hidden 
 manner, to that of all the other organic beings, with which it comes into 
 competition for food or residence, or from which it has to escape or 
 on which it preys."! "It may metaphorically be said," continues 
 Darwm,« "that natural selection is daily and hourly scrutinizing 
 throughout the world, the slightest variations; rejecting those that are 
 bad preserving and adding up aU that are good; silently and insensibly 
 working, whenever and wherever opportunity offers, at the improvement 
 of each orgamc being in relation to its organic and inorganic conditions 
 of life. 
 
 Such is the briefest possible statement of the theory of biological 
 evolution as announced by Darwin, and the earlier inquirers. In the 
 Ortgm of species, the thought of Darwin is largely occupied with the 
 rdation of variations profitable to the individual form immediately 
 affected; with the advantages of such variation to the mdividual it- 
 self. The passages cited illustrate this position. In this connexion 
 an important development has taken place in recent biological investi- 
 gation, showing that the types selected are not necessarily those prof- 
 itable to the mdividual in the present, but those through which the 
 species IS hkely to find its most effective development in relation to its 
 environment. The struggle for life is carried on not between individuals, 
 as individuals, but between typical forms toward which these individuals 
 tend; and to the larger interests of which the interests of the individual 
 form must be subordinate. 
 
 Such a consequence seems involved in even the earliest formulation 
 of the naturally selective process as a necessary corollary. As the 
 essence of Uie principle is that it must act in the manner conducive to 
 the most effective results, it seems that it must act through the media 
 of the argest numbers. These largest numbers, this majority in the 
 Uleqrde of a species, can, however, never be in the present, but lie 
 
 'Ibid. Vol. I., p. 54. 
 'Hud. pp. 103-103, 
 
 Bk. I 
 
 Darwin and Weismann 
 
 3" 
 
 within that long series of generations covering the existence of the 
 species in its entirety. Other things equal, it seems that the most efficient 
 forces in the evolutionary process must be those by means of which the 
 interests of existing individuals are most effectively subordinated to 
 the development of the tjrpical form of the series of generations covering 
 the whole number of organic existences involved. The interests of 
 the individual, as an individual, and the importance of those modifica- 
 tions profitable to itself, have thus a subordinate place in the economy 
 of natural selection; except as identical with the larger ends of general 
 and typical development. 
 
 The labours of the later biological inquirers support this view. Until 
 recently, the theories of the causes dominating the average length of 
 individual life may be said to have moved along two parallel lines, fa- 
 miliar to students of Mr. Spencer's Biology, and the works of the earlier 
 evolutionists. In accordance with one position, adopted by Leuchart 
 and others, which may be called the theory of external control the 
 duration of life was supposed to be determined by the size of the individual 
 and the complexity of its structure. In the words of Mr. Spencer,* 
 "greater integration " should be regarded as the basis of the realization 
 of the life cycle, in length and degree. In accordance with the other 
 theory, which may be called that of internal control, length of life 
 was considered as related to the chemical constitution of the cells of 
 which the body was composed. 
 
 Professor Weismann's views are opposed to both these positions. 
 He says,2 "I consider that duration of life is really dependent upon 
 adaptation to external conditions, that its length, whether longer or 
 shorter, is governed by the needs of the species": and again, ^ with 
 reference to animal life, "that nature does not tend to secure the 
 longest possible life to the adult individual, but, on the contrary, tends 
 to shorten the period of reproductive activity, as far as possible, and 
 with this the duration of life." 
 
 The principle which Professor Weismann found in the ascendant, 
 in the action of natural selection, was the need of the species, taken as a 
 a whole, and spread over entire series of generations. This might be 
 pictured by conceiving the ideal needs of the species as projected, as 
 it were, in front of the advancing vital form. The actual type most 
 
 \i,) 
 
 » Principles of Psychology, Vol. I,, § 172, p. 384. Principles of Biology^ Vol. L, S 31, p. 8a. 
 • Weismann on Heredity, The Duration of Life, Vol. I., p. 9. 
 ■ Ibid. p. II, 
 
312 
 
 Progress and Politics 
 
 Pt. IV 
 
 nearly conforming to this ideal representative will be the one "naturally 
 selected." In a rapidly changing environment, adaptability would 
 doubtless, be more readily secured through short-lived rather than through 
 long-lived generations. To serve the needs of the species, then, and not 
 those of the individual, it is held, is the length of life either lengthened 
 or curtailed; the dominant forces of nature imposing conditions in which 
 the length and breadth of the life of the individual play, relatively, 
 little part. 
 
 In this larger view of the selective process, series of generations, and 
 even entire species, are pitted against each other in a struggle in which 
 typical efficicency in a future, perhaps distantly removed, is the quality 
 for which the victor strives, and in the furtherance of which his own 
 immediate interests may have little place. The drama of progress is 
 thus involved with interests always apparently beyond the reach of 
 existing generations. 
 
 The inquiries of Professor Weismann, and those of later biologists, 
 show apparently that the duration of individual existence is not de- 
 pendent upon the size or molecular constitution of the body; but is 
 rather lengthened or shortened in accordance with the requirements 
 of the species as a whole. When, however, the lowest, or single-celled, 
 forms of life are observed, nothing corresponding to death, as it occurs 
 in higher forms, is found. In the single cell the cycle of vital exist- 
 ence is continuous; the individual, under certain conditions, simply 
 separating into two or more parts, and these continuing to live and grow 
 and separate again indefinitely. Here arises one of the most suggestive 
 generalizations in the history of biological science, second to natural 
 selection alone. The phenomenon of death is found at an early stage 
 of the evolutionary process, as the fundamental expression of progress, 
 underlying from the beginning that series of changes upon whicn 
 progressive life has entered. In this conception of death, as a 
 factor in the cosmic process, the principle of natural selection 
 develops a larger meaning. A fundamental principle is found 
 inherent in all evolutionary phenomena, a principle involving the 
 constant subordination of the individual and the immediate to the 
 general and the universal; of the particular and concrete to the 
 typical and abstract. 
 
 A study of the place of death in the action of natural selection leads 
 at once to inquiries with reference to the nature of heredity. There 
 appear but two possible hypotheses upon which explanations of heredity 
 
 Bk. I 
 
 Darwin and Weismann 
 
 313 
 
 may be based. "Either,'* says Professor Weismann,* "the substance 
 of the parent germ-cell is capable of undergoing a series of changes 
 which, after the building-up of a new individual, leads back again to 
 identical germ-cells; or the germ-cells are not derived at all, as far as 
 their essential and characteristic substance is concerned from the body 
 of the individual, but they are derived directly from the parent germ- 
 cell." The latter is the position adopted by Professor Weismann; 
 as holding the same opinion he cites^ Ray Lankester, Brooks, Meynert, 
 van Bemmelen and others. To this list W. Platt-Ball^ adds Wallace, 
 Poulton, Francis Galton and others; while Wallace* himself increases 
 the list with the names of Lloyd-Morgan, Sir W. T. Thiselton-Dyer and 
 Mr. G. Archdall Reid. The position here developed is known as the 
 Continuity of the Germ-plasm, and, in the words of Professor Weismann,* 
 is "founded upon the idea that heredity is brought about by the trans- 
 ference from one generation to another, of a substance with a definite 
 chemical, and above all, molecular constitution." The germ-plasm 
 might thus be represented as Professor Weismann* says, "by the meta- 
 phor of a long creeping root-stock from which plants arise at intervals, 
 these latter representing the individuals of successive generations." 
 
 Upon this theory, to unite the hereditary qualities of two individuals, 
 and so secure the advantages to be obtained from the constant blending 
 of individual modifications, requires that every new life should return 
 to the original starting-point — the single cell; there, and there alone, 
 can occur the union in the new individual of the hereditary qualities 
 of both progenitors. It is unnecessary to enter into the thick of bio- 
 logical inquiry; that which concerns the present purpose is that wherever 
 the law of natural selection appears, whether in its earlier or later state- 
 ments, the interests of the majority of individuals are constantly sub- 
 ordinated to its action. The investigations of later inquirers strengthen 
 this position, and show the increasing intensity of the competitive 
 struggle required by progressive conditions. As Professor Weismann^ 
 says, speaking of the action of natural selection: "In order that any 
 part of the body of an individual of any species may be kept at the 
 maximum degree of development, it is necessary that all individuals 
 
 » Weismann on Heredity, Vol. I. Continuity ojthe Germ-plasm, p. 170. 
 
 • The Germ-plasm, p. 396. 
 
 • The Effects of Use and Disuse, p. vi. 
 
 • Evolution and Character, Fortnightly Review, January 1908, p. ii. 
 
 • Essays on Heredity, Vol. I., Continuity of the Germ-plasm, p. 17a 
 
 • Ibid, Significance of Sexual Reproduction, p. 273. 
 ' Ibid., p. sgg. 
 
 il^ 
 
 h 
 
314 
 
 Progress and Politics 
 
 Pt. IV 
 
 possessing it in a less perfect form must be prevented from propagation 
 — they must succumb in the struggle for existence." This position is, 
 apparently, but the essential corollary of the law of natural selection 
 as formulated by Darwin; nor were he and the earlier thinkers uncon- 
 scious of it as the passage cited from Mr. Wallace would show with 
 reference to Darwin's "gloomy" expressions in connexion with the future 
 of humanity, on the grounds of the checking of the selective process by 
 modem civilization. Natural selection, acting as it does through vital 
 competition, entails the continuance of that process; not only as es- 
 sential to progress, but as essential to either static or non-retrogressive 
 conditions. *'From the war of nature," says Darwin,i "from famine 
 and death, the most exalted object which we are capable of conceiving, 
 namely, the production of the higher animals, directiy follows." Weis^ 
 mann,2 after a brief statement of the theory of natural selection as 
 fonnulated by Darwin and WaUace, expresses the necessary conclusion 
 in the following terms: "K this view be the true one, if adaptation in 
 all parts of hving forms be truly the result of natural selection, then 
 the same process which produced these adaptations will tend to preserve 
 them, and they will disappear directly natural selection ceases to act. 
 These considerations show why organs which have become superfluous 
 and have faUen into disuse necessarily degenerate and ultimately dis- 
 appear." This position, while in a sense among the later developments 
 of modem biological science, has long been familiar to those brought 
 into contact with nature. This is shown in the selection which the 
 agncultunst makes of his seed-grain or stock, and the ''running out" 
 of the product without selection. Such a process was doubtless apparent 
 to the first systematic shepherds or tiUers of the soil. Virgil gives it 
 accurate expression in the Georgics.3 After recommending such annual 
 selection of seed to the husbandman, he says that "the natural ten- 
 dency of all things is toward degeneration and reversion; as when pull- 
 ing agamst a stream, a rower who relaxes his efforts for a moment, is 
 caught m the current and drawn down the river again." 
 
 When the principles of natural selection are grasped, their application 
 throughout the evolutionary process becomes evident. The fact that 
 progress can continue but through vital competition and selection shows 
 were it p ossible to constmct the scientific formula of the existence of 
 
 ^Tke Origin of Species, Vol. II, p. 305. 
 
 > Essays on Hereditary, Vol. II.. Retrogressive Development in Nature, p. 16. 
 • L, p. 190. 
 
 Bk. I 
 
 Darwin and Weismann 
 
 31S 
 
 any progressive form of life, that the interests of the existing individual 
 would find no symbol therein; except as included in those larger interests 
 of the progressive species as a whole. 
 
 The conclusions suggested by the evolutionary sciences are that the 
 interests of a progressive species, as such, and the interests of the majority 
 of its constituent units are opposed: that, in fact, the moment an 
 organic form enters into progressive competition with other forms, the 
 sacrifice of the interest of the majority of individuals, represented in 
 any given period or series of generations, becomes a condition of 
 development. This is the fundamental position to which the evolu- 
 tionary sciences seem to lead, applied to the lowest form of organic 
 existence or to the highest phases of human society. 
 
 I 
 
 t 
 
 ill 
 
CHAPTER III 
 
 
 POLITICAL PROGRESS AND REASON 
 
 THE view of vital, progressive conditions formulated in the 
 Origin of Species and the Descent of Man suggests a revision 
 of accepted social theories and conceptions. It may even 
 suggest, if the purpose of social organization is the furtherance 
 of the interests of the majority concerned, that many such conceptions 
 require important modification. The first essential of progress is that 
 all individuals cannot succeed. The path of progress is strewn with 
 the ghosts, as it were, of countless millions of the unsuccessful, fallen 
 and exterminated, in order that others might survive and reproduce. 
 No form of life can advance, or retain its position, by means other than 
 the propagation of the species through individuals above the average; 
 and, in consequence, through constantly multiplying beyond the limits 
 of comfortable existence, with the inevitably entailed vital competition. 
 One feature of the process, therefore, seems evident; namely, had it 
 been possible at any time for any species to secure itself against the 
 competition of others, that it would have been to the interest of the 
 majority concerned to haVe suspended the conditions of vital competi- 
 tion among themselves. That the progressive development of the 
 species might be arrested thereby could have no weight, for the reason 
 that such a suspension of progressive competition would not only have 
 been to their own immediate interests in the present, but to the interests 
 of the majority of all future generations as well. Progress can be main- 
 tained but by constantly sacrificing the vital interest of the majority 
 of all individuals involved, existing and to come. This necessity, 
 sooner or later, brings aU the forms under competitive influences, and' 
 requires the propagation of the species through the agency alone of 
 those above the average development, with the result that the majority 
 of the individuals of any existing generation, and, in the life of the species, 
 the overwhelming majority of all individuals, must be prevented from 
 realizing the fullest possibiUties of existence. In looking back over the 
 progressive chain of organic existence, the sacrifices of the majority of 
 unnumbered preceding generations must have been entailed. 
 
 316 
 
 Bk. I 
 
 Political Progress and Reason 
 
 317 
 
 In turning the attention to the human species, it seems that the exist- 
 ing generation stands upon the eminence attained through having tram- 
 pled, as it were, over the prostrate forms of the majority of those who 
 came before. Since man separated himself from lower organisms, and 
 came imder the influence of conditions called himian, progress has been 
 carried on in the same way as throughout other forms of life: through 
 the unremitting struggle, suffering, and premature death of the majority 
 of each generation. As generation succeeds generation, and series 
 succeeds series, it is evident that progress has entailed not alone the 
 sacrifice of the interests of the majority, but of a majority constituting 
 the overwhelming preponderance of all the individuals brought imder 
 progressive influences. The generations gone before have offered 
 themselves a living sacrifice upon the altar of the typically progressive 
 form; the same process continues to-day and projects itself into the 
 future. 
 
 In a study of the life and death struggles of the peoples, the names 
 of but few of which have been preserved, the query occurs: What 
 advantage they could have found in supporting such conditions. The 
 chief significance of the life of prehistoric generations was apparently 
 a ruthless trial of their vital forces. As man emerges from his first 
 infancy, and passes into the clearer light of history, he seems governed 
 by the same conditions; and where freed from competition with other 
 species, he but enters into progressive competitive struggle with his 
 own kind. Human history thus presents much the same conditions of 
 progress as the history of other species; and tribes, races and nations 
 succumb or survive in a never relaxed competitive process. As the 
 significance of such conditions is appreciated; as some dim conception 
 dawns upon the mind of the misery, suffering and premature death 
 caused throughout the progress of the past, the intelligence of preceding 
 generations becomes questionable. It seems difficult not to wonder 
 at the use they have made of the supposedly distinguishing human 
 attribute of reason. The dictates of reason would, apparently, have 
 rendered but one course acceptable — to abandon conditions which 
 entailed nothing but the suffering and failure of the majority. They 
 could have done this by limitmg increase to the means of subsistence, 
 by checking competition among different groups through the widest 
 possible political union, and have led lives of relative peace and ease. 
 
 They did, however, nothing of the kind. On the contrary, conditions 
 involved in the progressive process of the lowest organisms are carried 
 
 
 11 
 
 ■ ! 
 
 M4 
 
 ^I'l 
 
 1 .1 
 
3i8 
 
 Progress and Politics 
 
 Pt. IV 
 
 I 
 
 !] 
 
 I - 
 
 into higher animal existence, and extend without interruption through 
 the highest forms of life. Each generation of men accepts its martyrdom 
 in the name of an ever-receding posterity as blindly and unconsciously, 
 apparently, as did the generations of any extinct fossil species, or of 
 the simpler vegetable forms. Human generations offer themselves to 
 be bled upon the altar of generations yet to be; which, as they come into 
 existence, take up the process in turn, and hand it on to their children, 
 and their children's children, entailing the suppression of the vital 
 interests of the majority of all concerned — past, present, and to come 
 — until the species finds rest at last among the remains of completed 
 geological periods. 
 
 Man's history, in fact, seems but one long unconscious process of 
 self-immolation. "I know of no study," says Professor Huxley,* 
 "which is so unutterably saddening as that of the evolution of himtianity, 
 as it is set forth in the annals of history. Out of the darkness of pre- 
 historic ages man emerges with the marks of his lowly origin strong upon 
 him. He is a brute, only more intelligent than other brutes; a blind 
 prey to impulses, which as often as not lead him to destruction; a victim 
 to endless illusions, which make his mental existence a terror and a burden, 
 and fill his physical life with barren toil and battle. He attains a cer- 
 tain degree of physical comfort, and develops a more or less workable 
 theory of life, in such favourable situations as the plains of Mesopotamia, 
 or of Egypt, and then, for thousands and thousands of years, struggles 
 with varying fortunes, attended by infinite wickedness, bloodshed, and 
 misery, to maintain himself at this point against the greed and the 
 ambition of his fellow-men." 
 
 How, it may be asked, can the possession of reason be reconciled 
 with the maintenance of such conditions; reason, which, it would seem 
 gives power and intelligence sufficient to check the aimless process? 
 Why should man support and perpetuate conditions which stifle the 
 higher realization of his being? This is the question suggested by the 
 application of the evolutionary sciences to human society. 
 
 The comparatively recent developments of evolutionary and bio- 
 logical inquiry render the bulk of earlier political and social investigation 
 imavailable in this connexion. Although the essential conditions govern- 
 ing the progressive modification of lower vital forms have doubtless 
 been familiar to thoughtful observers for thousands of years, the reali- 
 zation that man is governed by identical conditions, together with all 
 
 * Science and Christian Tradition, Agnosticism, p. 256. 
 
 Bk. I 
 
 Political Progress and Reason 
 
 319 
 
 that this implies, is but beginning to appear in inquiry. The works 
 of even such a recent and comprehensive thinker as Mr. Spencer are 
 not entirely satisfactory in the light of more recent biological develop- 
 ments. Mr. Benjamin Kidd presents one of the most suggestive reviews 
 of the subject. The study of human society from the position formulated 
 by the evolutionary sciences develops a certain path of inquiry. Starting 
 from the purely physico-biological position, and asking what relation 
 it bears to human society, the mind can apparently but drift along 
 certain lines. There have been clearly traced by Mr. Kidd, and rather 
 than merely parallel his thought, a few of his pages may be transcribed. 
 
 "How is the possession of reason," asks Mr. Kidd,* repeating the 
 foregoing question, "ever to be rendered compatible with the will to 
 submit to conditions of existence so onerous, requiring the effective and 
 continual subordination of the individuaFs welfare to the progress of a de- 
 velopment in which he can have no personal interest whatever? . . . 
 
 "The possession of reason must, it would seem, involve the oppor- 
 tunity of escape from the conditions mentioned. The evidence would, 
 however, appear to point indubitably to the conclusion that these 
 conditions can have had no sanction from reason for the mass of the 
 individuals subjected to them. It may be held that they are conditions 
 essential to progress, and that the future interests of the society to which 
 we belong, and even of the race, would inevitably suffer if they were: 
 suspended. But this is not an argument to weigh with the individual 
 who is concerned with his own interests in the present and not with the 
 possible interests in the future of society or the race. It seems impossible 
 to conceive how the conditions of progress could have had any rational 
 sanction for the host of exterminated peoples of whom a vision arises 
 before us when we compare the average European brain of to-day with 
 that of the lowest savages, and consider the steps by which alone the 
 advance can have been made. The conditions of progress may be 
 viewed complacently by science, but it can hardly be said that they can 
 have any rational sanction for the Red Indian in process of extermination 
 in the United States, for the degraded negro in the same country, for 
 the Maori in New Zealand, or the Aboriginal in Australia. 
 
 "The same conclusion is not less certain, although it may be less 
 obvious elsewhere. The conditions of existence cannot really have had 
 any rational sanction for the great mass of the people during that pro- 
 longed period when societies were developed under stress of circimistances 
 
 ^ * Social Evolution, pp. 68-80. ■ 
 
 
 ii 
 
320 
 
 Progress and Politics 
 
 Pt. IV 
 
 Bk. I 
 
 Political Progress and Reason 
 
 321 
 
 
 on a military footing. An inevitable feature of all such societies was 
 the growth of powerful aristocratic corporations, and autocratic classes 
 living in wealth and power and keepmg the people in subjection while 
 despising and oppressing them. It is no answer, it must be observed, 
 to say that these societies were a natural product of the time, and that 
 if any social group had not been so organized, it must ultimately have 
 disappeared before stronger rivals. We can scarcely shut our eyes to 
 the fact that the future did not concern the existing members, and 
 that to the great mass of the people in these societies, who lived and 
 suffered in subjection to the dominant class which a military organi- 
 zation produced, the future of society, or even of the race, was a matter 
 of perfect indifference, compared with the actual and obvious hardships 
 of their own oppressed condition in the present. 
 
 "When we come to deal with society as it exists in the highest and 
 most advanced civilizations of our time, and put the same question to 
 ourselves as regards the conditions of existence for the masses of the 
 people there, it is startiing to find that we are compelled to come to a 
 like conclusion. The conditions of existence even in such communities 
 can apparently have no rational sanction for a large proportion of the 
 individuals comprising them. When the convenient fictions of society 
 are removed, and examination lays bare the essential conditions of life 
 in the civilisation in which we are living, the truth stands out in its naked 
 significance. We are speaking, it must be remembered, of a rational 
 sanction, and reason has, in an examination of this kind, nothing to do 
 with any existence but the present, which it insists it is our duty to 
 ourselves to make the most of. The prevailing conditions of existence 
 can, therefore, have no such sanction for large masses of the people in 
 societies where life is a long onerous rivalry, where in the nature of 
 things it is impossible for all to attain success, and where the many work 
 and suffer, and only the few have leisure and ease. Regard it how we 
 may, the conclusion appears inevitable, that, to the great masses of 
 the people, the so-called lower classes, in the advanced civilisations of 
 to-day, the conditions imder which they live and work are still without 
 any rational sanction. . . . 
 
 "The evolutionist may be convinced that what is called the exploita- 
 tion of the masses, is but the present-day form of the rivalry of life which 
 he has watched from the beginning, and that the sacrifice of some in 
 the cause of the f utvure interests of the whole social organism is a necessary 
 feature of our progress. But this is no real argiunent addressed to those 
 
 who most naturally object to be exploited and sacrificed, and who in 
 our modem societies are entrusted with power to give political effect 
 to their objections. Science may be painfully convinced that the 
 realisation of the hopes of socialism is quite incompatible with the 
 ultimate interests of a progressive society; but it would still be irrational 
 to expect even this consideration to generally affect the conduct of those 
 who are concerned not with the problematic interests of others in the 
 distant futiu:e, but with their own interest in the actual present. . . . 
 The voice of reason could hardly find fitter utterance than in the words 
 of Professor Huxley, while telling us that at best our civilisation does 
 not embody any worthy ideal, or possess the merit of stability, he does 
 not hesitate to further express the opinion that *if there is no hope of a 
 large improvement of the condition of the greater part of the human 
 family' — mark the uncomprising sweep of the words — he would 
 haU the advent of some kindly comet to sweep it all away. *What 
 profits it,* he asks pertinentiy, *to the hiunan Prometheus that he has 
 stolen the fire of heaven to be his servant, and that the spirits of the 
 earth and the air obey him, if the vulture of Pauperism is eternally to 
 tear his very vitals and keep him on the brink of destruction? '. . . . 
 
 "If we ask ourselves, therefore, what course it is the interests of 
 the masses holding political power in our advanced societies to piu"sue 
 from the standpoint of reason, it seems hardly possible to escape the 
 conclusion that they should in self-interest put an immediate end to 
 existing social conditions. Man in these societies has placed an impos- 
 sible barrier between him and the brutes, and even between him and 
 his less developed fellow-creatures. He no longer fears the rivalry or 
 competition of either, . . . 
 
 "With whatever intention the evolutionist may set out, he will speed- 
 ily discover, if he carry his analysis far enough, that so far from society 
 existing firmly based on universal logic and reason, for large masses 
 of the population, alike in past stages of our history and in the midst 
 of the highest civilisations of the present day, reason has been, and 
 continues to be, unable to offer any sanction for the prevailing condi- 
 tions of life." 
 
 These are the lines of thought along which the mind drifts when 
 occupied with the social and political significance of the evolutionary 
 sciences. The conclusions are suggested that progressive political 
 systems are not only provocative of unnecessary social evil, but founded 
 upon principles devoid of any rational justification. The first, because 
 
 i.W 
 
 ^1: 
 
322 
 
 Progress and Politics 
 
 Pt. IV 
 
 I' •! 
 
 they demand the unceasing sacrifice of the vital welfare of the majority 
 of their constituent individuals. The second, because, in all progressive 
 Systems, the interests of the system and those of the majority are opposed; 
 the majority, therefore, can have no interest in the furtherance of pro- 
 gressive p)olitical systems. 
 
 The progressive society came into being during the ages of man's 
 savage infancy; its objects were, and still are, to further the interests 
 of its members, to protect them from the aggressions of other societies 
 and dangerous elements within. With its growth as a social and polit- 
 ical factor, endless questions, problems, and complications, both within 
 and without its borders, are evolved, resulting in present highly complex 
 political and social conditions. These conditions involve the existence 
 of progressive political aggregates with conflicting interests; the prog- 
 ress of one demanding its development in relation to others of its kind. 
 This progress requires the subordination of individual welfare to the 
 progress of the political aggregate; and the picture presents itself of 
 great populations, involving hundreds of millions of individuals, sacri- 
 ficing their real and vital interests for the purely ideal and abstract 
 interests of a political aggregate called a State or a Nation. A teeming 
 mass of more or less sentient beings separates itself into imaginary 
 portions, by means of trade regulations and indirect taxes; and creates, 
 by means of these imaginary divisions, equally imaginary interests, in 
 conflict with other interests of the same kind. These teeming millions 
 are thus occupied in sacrificing their vital welfare upon the altar of the 
 abstract and unrealizable interests of these imaginary subdivisions of 
 their number, called this or that State, Nation or Empire. It may thus 
 appear that the elimination of these fictitious distinctions between pro- 
 gressive political aggregates would eliminate artificial or imaginary 
 interests conflicting with the real and vital interests of individuals. 
 Where there exists no artificially sustained conflict of interests, based 
 upon the imaginary interests of progressive aggregates, the real 
 and vital welfare of existing human beings, of real living men 
 and women, becomes the end toward which social and political activity 
 should be directed, and not that of an imaginary progressive abstraction. 
 That the furtherance of actual individual lives, and not the interests 
 of fictitious aggregates, is the proper ultimate end of social effort, Mr. 
 Spencer^ points out: "So long as the existence of a community is 
 endanger ed by the actions of communities around, it must remain true 
 
 ^ Data of Ethics, S 49> P> Z34* 
 
 Bk. I 
 
 Political Progress and Reason 
 
 323 
 
 that the interests of individuals must be sacrificed to the interests of the 
 community, as far as is needful for the community's salvation. But if 
 this is manifest, it is, by implication, manifest, that when social antago- 
 nisms cease, this need for sacrifice of private claims to public claims ceases 
 also; or rather, there cease to be any public claims at variance with 
 private claims. All along, furtherance of individual lives has been the 
 ultimate end; and if this ultimate end has been postponed to the proxi- 
 mate end of preserving the community's life, it has been so only because 
 this proximate end was instrumental to the ultimate end. When the 
 aggregate is no longer in danger, the final object of pursuit, the welfare 
 of the xmits, no longer needing to be postponed, becomes the immediate 
 object of pursuit." 
 
 The distinction between the interests of a political aggregate, and 
 those of its constituent units, may be made clear through other considera- 
 tions, dealing with the internal rather than the external organization 
 of progressive systems. Political conceptions underl)dng the organi- 
 zation of the ancient State, present a condition of society in which the 
 competitive process was continued among families, clans or groups, 
 rather than among the constituent individuals. A change has occurred 
 with changing conditions, giving rise to altered conceptions of legislative 
 and political principles. These changes have, however, in no way dimin- 
 ished the fundamental rivalry and sacrifice to which progress is due. 
 On the contrary, the wider the field open to competitive influences, 
 the greater seems to be their intensity. "The movement of the pro- 
 gressive societies has been imiform in one respect," says Sir Henry 
 Maine, ^ "Through all its course it has been distinguished by the gradual 
 dissolution of family dependency, and the growth of individual obliga- 
 tion in its place. The Individual is steadily substituted for the Family, 
 as the unit of which civil laws take account." 
 
 The existing members of a commvmity, through the legal and con- 
 stitutional form of the social organization, thus enter into agreement; 
 not only with each other, but extend the terms of the contract, inherited 
 from the dead, through an indefinite series of future generations. Society, 
 and especially progressive society, might thus be regarded as a partner- 
 ship extending over an indefinite number of generations, and existing 
 between the dead, the living, and those yet to be. 
 
 This partnership can have but one rationally intelli^ble object — the 
 furtherance of the interest of the majority involved; or, as usually 
 
 * Ancient Law, p. 168. 
 
 I 
 
 I 
 
iu 
 
 Progress and Politics 
 
 Pt. IV 
 
 Bk. I 
 
 tV 
 
 stated, the furtherance of the ''interests of the community." The words 
 ''interests of the community" form one of the most familiar terms met 
 in political and economic discussion. Few terms, however, are less 
 explicit in their meaning, less carefully used, or more open to miscon- 
 ception. Bentham,! advances the apparently axiomatic proposition 
 that the interest of the community is "the sum of the interests of the 
 several members who compose it." Such is doubtless the conventionally 
 recognized significance of the term, yet, studied in the light of the evolu- 
 tionary sciences, the interest of the fictitious political aggregate, or of 
 the progressive community, not only is not, but never can be, the sum 
 of the interests of its units. A community, or a political society, 
 represents, not only the individual units existing at any moment, but that 
 series of generations of individuals coming under its influence during 
 the entire period of its activity. Progressive conditions involve the 
 subordination, and not the furtherance, of the interests of the vast 
 majority of individuals forming these series of generations. The inter- 
 ests of the progressive community, therefore, and the interests of the 
 overwhelming majority of its units, are not only not the same, but 
 antagonistic. 
 
 A community, or a political society, is a symbol, an abstraction, rep- 
 resenting the dead, the living, and generations yet to be. It is an 
 ideal conception representing extinct societies; such as the ancient 
 Roman and Persian empires, or those at present in existence m Europe or 
 America. Abstract conceptions of this kind can never possess any 
 specific concrete existence. A symbol called a State, or an Empire, 
 represents a series of generations living under certain laws and 
 taxes, and cannot possess a conscious existence of its own. Exist- 
 ing, living, human beings, therefore, who sacrifice their vital wel- 
 fare for that of a symbol representing a progressive series of gen- 
 erations, prostrate themselves apparently before a figment of their 
 imagination. 
 
 This fact is presented w^th added force when the fossilized remains of 
 extinct species are examined. Were their entire record available, their 
 history could doubtless be traced from the moment of their first char- 
 acteristic modifications, through the entire progressive process of de- 
 velopment and decline. It has been seen, under what conditions, and 
 through what constant individual sacrifice, this progress was maintained; 
 and, whe n the species has ceased to exist, as all species must, it may well 
 
 » PnncifUs of Morals and Legislation, p. 3. 
 
 Political Progress and Reason 
 
 32s 
 
 be asked how the majority of its units were benefited by the progressive 
 struggle. 
 
 "We are told," says Professor Huxley, ^ "to take comfort from the 
 reflection that the terrible struggle for existence tends to final good, and 
 that the suffering of the ancestor is paid for by the increased perfection 
 of the progeny. There would be something in this argument if, in 
 Chinese fashion, the present generation could pay its debts to its an- 
 cestors; otherwise it is not clear what compensation the Eohippus gets 
 for his sorrows in the fact that, some millions of years afterward, one 
 of his descendants wins the Derby." 
 
 Such considerations need not appear as idle speculations without 
 application to human society. An extinct species is analogous in its 
 process of evolution to an extinct empire, and it may be asked of what 
 practical benefit was the progress of Rome to the majority of her citizens, 
 to the men whose bones whitened upon barbarian deserts or who 
 joined the corn-fed rabble in order that the land of Italy might be 
 concentrated in slave-worked latifundiay that a Verres or a Dolabella 
 make sport of the resources of subject peoples, and Him and Vandal 
 revel on the grave of a decaying world? 
 
 Applied to the present these considerations suggest that existing 
 generations have no more interest in the progress of the future than the 
 Eohippus of Professor Huxley in the triumph of the Derby winner of 
 yesterday. The bulk of real men and women, under this or that pro- 
 gressive administrative system, have no more personal interest in the 
 support of such a system than the hungry Roman rabble in the triumphs 
 of an Africanus, or in the later triumph of the sword of the barbarian. 
 Purely altruistic considerations lead to identical conclusions; for, with 
 future progress is involved, not only the sacrifice of the interests of the 
 majority of existing individuals, but of future generations. 
 
 From the point of view established by the evolutionary sciences, 
 utilitarian considerations imite with those of a purely altruistic nature, 
 in questioning the utility of politico-progressive conditions. 
 
 > Evolution and Ethics, pp. 198, 199* 
 
 W 
 
 h 
 
 
 I 
 
Bk. II 
 
 The Great Man 
 
 327 
 
 Book II 
 INTELLECTUAL PROGRESS 
 
 CHAPTER I 
 
 THE GREAT MAN 
 
 POLITICAL and economic considerations, based upon the 
 evolutionary sciences, are of interest or the reverse, in pro- 
 portion to the social significance lent to the latter. To some 
 inquirers they appear of value; others, while admitting 
 their truth, fail to perceive their available application to human so- 
 ciety. 
 
 The evolutionary sciences may be regarded as the final source 
 of information with reference to progressive conditions involving 
 indefinite periods of time; but, on another hand, there are impor- 
 tant factors in hiunan development relatively, if not actually, 
 independent of their influence. These factors act within appre- 
 ciable periods, with infinitely greater rapidity, and thus possess a 
 significance not to be lent to biological generalizations. From 
 this attitude, the positions of Darwin and Weismann may be read- 
 ily admitted and as readily ignored. The progress concerning present 
 himaan populations, or the next score or so of the generations of 
 men, it may be said, is not evolutionary or naturally selective prog- 
 ress, but social, industrial and intellectual progress. The influences 
 which guided the physical modifications of the eohippus or the 
 ictheosaurus, or even of man in his prehistoric condition, do not 
 apply to civilized man in any inunediate sense. The real struggle, the 
 real "survival of the fittest" in civilized society, takes place in a sphere 
 of activity distantly removed from Spencerian generalizations with 
 reference to "ruminant" and "camivora." Progress, for man of the 
 twentieth century, is largely removed from the field of biological inquiry 
 and a physico-selective process based upon a struggle for animal sub- 
 sistence. Progress, from this point of view, becomes intellectual rather 
 than biological, psychical rather than physical; and, consequently, 
 
 326 
 
 neither considerations based upon economic grounds, nor biological 
 generalizations, form the positions from which it may most profitably 
 be studied. 
 
 Several writers have presented studies of progress in this light, among 
 which may be mentioned Mr. Mallock's Aristocracy and Evolution. 
 Mr. Mallock not only presents the subject from what might be called 
 the ultra-biological attitude, but some instructive criticism of the posi- 
 tions of Mr. Kidd, Mr. Spencer, Mr. Webb and others. Mr. Mallock^s 
 thesis is, that progress, as it concerns civilized man to-day, is the result of 
 forces independent of physico-biological conditions and dependent upon 
 intellectual influences exerted over their fellows by men of superior 
 mental attainments. The Aristocracy of Mr. Mallock consists of those 
 individuals possessing intellectual powers above the average. The 
 "great man" is the man capable of exerting intellectual dominion; and, 
 as Mr. Mallock^ says, "the great man, as here understood, does not in 
 any way correspond to ih^ fittest man in the Darwinian struggle for exist- 
 ence. The fittest man in the Darwinian sense merely promotes prog- 
 ress by the physiological process of reproducing his slight superiorities 
 in his children, and thus raising in the slow course of ages the general 
 level of capacity throughout subsequent generations of his race. The 
 great man, on the contrary, promotes progress, not because he raises 
 the capacity of the generations that come after him, but because he rises 
 individually above the general level of his own." . . . "The 
 great man, as an agent of progress, shows his greatness in a way pre- 
 cisely opposite to that in which the fittest man shows his fitness. This 
 it is that our contemporary sociologists all fail to perceive, and endless 
 error is the consequence. The great man, unlike the strongest lion, 
 promotes progress by increasing the food-supply not of himself, but of 
 others; or if he increase his own, as he no doubt generally does, he does 
 so only by showing others how to increase theirs. He is like a lion who 
 should be better fed than the rest of the lions in his region, not because 
 he took a carcass from them for which they all were fighting, but because 
 he showed them how to find others which they never would have foimd 
 unaided, and took for himself in payment a small portion of each." 
 Mr. Mallock says^ in another suggestive passage: "And what is true 
 of the struggle which produces industrial progress is true of that which 
 produces progress of all other kinds. Scientific knowledge increases in 
 
 • Aristocracy and Evolution, pp. 130-131. 
 ' Ibid., pp. 146-147. 
 
 i 
 
 h > 
 
 »L- 
 
.'t 
 
 Hi 
 
 fill 
 
 i 
 
 i 
 
 I 
 ii)' 
 
 328 
 
 Intellectual Progress 
 
 Pt. IV 
 
 proportion as those exceptional individuals whose studies have brought 
 them most near to the truth are able to fight down the opinions of the 
 exceptional individuals who differ from them, and to impress their 
 own undisputed upon the world. Such knowledge does not increase 
 on accoimt of any struggle amongst the learners, which causes some of 
 them to become more and more apt in learning. It grows on account 
 of a struggle between philosophers, each of whom aims at settling what 
 the learners shall learn. And with regard to religion and politics the case 
 is just the same. The progressive struggle is primarily between rival 
 prophets and politicians. The spread of Christianity, for instance, was 
 not brought about by Christian races exterminating those that were not 
 Christians. It was brought about by Christian thinkers and teachers 
 discrediting the doctrines taught by thinkers and teachers who were 
 opposed to them. Free-trade again, in this country, has not triumphed 
 over protectism, because the mass of free-traders have exterminated that 
 mass of protectionists. It has triumphed simply because, in the eyes of 
 the majority, one school of theorists has succeeded in discrediting another. 
 
 "Now these facts, which, when once stated, are so obvious, not only 
 throw the Darwinian struggle for existence altogether into the back- 
 ground as an agent in social progress, but they show that it presents us 
 with no true analogy to that kind of struggle from which progress 
 principally results. They show us, on the contrary, that the struggle 
 which produces social progress, though it resembles the Darwinian 
 struggle in one point, is in all other points contrasted with it." 
 
 Mr. Mallock, speaking of suggested industrial reforms, concludes as 
 follows: 
 
 ** Nowhere is the impossibility of such changes more clearly indicated 
 than in the phrases now most frequently used to indicate their specific 
 nature — such phrases as Hhe emancipation^ and Hhe economic freedom* 
 of the labourer. These phrases, if they have any meaning at all, can 
 mean one thing only — the emancipation of the average man, endowed 
 with average capacities, from the control, from the guidance, or, in other 
 words, from the help, of any man or men whose capacities are above the 
 average — whose speculative abilities are exceptionally keen, whose 
 inventive abilities are exceptionally great, whose judgments are ex- 
 ceptionally sound, and whose powers of will, enterprise, and initiative 
 are exceptionally strong. That is to say, these phrases, if they have any 
 meaning at all, mean the deliberate loss and rejection, by the less 
 efficient majority of mankind, of any advantage that might come to it 
 
 Bk. II 
 
 The Great Man 
 
 329 
 
 from the powers of the more efficient minority. 'Economic freedom,' 
 in fact, would mean economic poverty; and the ' emancipation ' of the 
 average man would merely be the emancipation which a blind man 
 achieves when he breaks away from his guide. The human race pro- 
 gresses because and when the strongest human powers and the highest 
 human faculties lead it; such powers and faculties are embodied in and 
 monopolised by a minority of exceptional men; these men enable the 
 majority to progress, only on condition that the majority submit 
 themselves to their control; and if all the ruling classes of to-day 
 could be disposed of in a single massacre, and nobody left but those 
 who at present call themselves the workers, these workers would be 
 as helpless as a flock of shepherdless sheep, until out of themselves a 
 new minority had been evolved, to whose order the majority would 
 have to submit themselves, precisely as they submit themselves to 
 the orders of the ruling classes now, and whose rule, like the rule of all 
 new masters, would be harder, and more arbitrary, and less human 
 than the rule of the old." 
 
 This position may be briefly formulated as follows: 
 
 (i) The conclusions of the physical sciences are of slight importance 
 in connexion with modern progressive society, inasmuch as the human 
 competitive process is carried on in an intellectual rather than in a 
 physical world. (2) Progress, in its practical and determinable sense, 
 is largely, if not entirely, due to the capacity of society to receive and 
 perpetuate intellectual impressions from men of superior endowments. 
 (3) Any form of social and political organization which relaxes the 
 rivalry and incentive to development among the superior intellects, 
 and, at the same time, the capacity of the society for the reception and 
 application of the results of their activities, must tend to check intellectual 
 progress — by far the most important progress affecting civilized man. 
 
 This position is of interest. Mr. Mallock's remark may be recalled, 
 to the effect that if the intellectually inferior mass ever freed itself from 
 one form of intellectual dominion, it would but evolve other dominant 
 elements from within itself and continue the process of the past. 
 
 If this position is regarded as final, it may seem impossible to 
 check the competitive struggle among the intellectually superior. Under 
 whatever form human society may be organized, the superior will 
 always dominate by the inherent right of their superiority. 
 
 History, everywhere, shows man, the aggregate, dominated by man, the 
 individual; shows that the Many are not only at the mercy of the Few, 
 
 " 1 
 
!•'» 
 
 rJji 
 
 )'i,|f 
 
 Ml 
 
 J'h'' 
 
 330 
 
 Intellectual Progress 
 
 Pt. IV 
 
 politically; but owe the conditions of their existence, mental and phys- 
 ical, the very action of their faculties, to that most powerful and ex- 
 clusive of all aristocracies — the aristocracy of the intellect. The 
 aristocrats of the intellect generate the power that keeps the wheels of 
 society revolving upon their course. They rule in spite of themselves, 
 and when one regime is overthrown, the great wheels but make another 
 revolution and move as wills the strongest. 
 
 This intellectual aristocract, this ''great man'* of Mr. Mallock, is the 
 Uebermensch of Nietzsche, the Superman of what might be called 
 idealistic Darwinism. This is the man who possesses the intellectual 
 birthright and the power to wield the wills of other men— the man who 
 can force other men to think in terms of his own thought. Briefly 
 expressed, this position is, that the earth and all it contains, by natural 
 law and natural right, belong to those who can take it; to dispute them 
 is folly; they are their own justification, and enforce their own decrees. 
 An ideal realm of intellect is here opened — a realm in which the Super- 
 men strive and wrestle in higher spheres of thought for the dominion 
 of the world. 
 
 The Supermen here come into view; in other words, the dominant 
 forces in intellectual movement. A study of these involves an outline 
 of intellectual history. 
 
 CHAPTER II 
 
 THE LAW OF INTELLECTUAL PROGRESS 
 
 Section I — Method of Inquiry. Section II — Art. 
 
 Section I — Method of Inquiry 
 
 AS THE astronomical empyrean may be analyzed by means 
 /\ oi spherical sections, degrees and minutes, the intellectual 
 2 \^ firmament may be made subject to a process of inclusive 
 classification. The areas within which the intellectual move- 
 ments of man have taken place are: the Arts, Science, Philosophy, and 
 Religion. These four areas will, therefore, be briefly reviewed. The 
 following passages from the pen of Sir Henry Maine^ is of interest in 
 such inquiry: 
 
 "Mr. Tylor has justly observed that the true lesson of the new science 
 of Comparative Mythology is the barrenness in primitive times of the 
 faculty which we most associate with mental fertility, the Imagination. 
 Comparative Jurisprudence, as might be expected from the natural 
 stability of law and custom, yet more strongly suggests the same in- 
 ference, and points to the fewness of ideas and the slowness of additions 
 to the mental stock as among the most general characteristics of mankind 
 in its infancy. 
 
 "The fact that the generation of new ideas does not proceed in all 
 states of society as rapidly as in that to which we belong is only not 
 familiar to us through our inveterate habit of confining our observation 
 of human nature to a small portion of its phenomena. When we under- 
 take to examine it, we are very apt to look exclusively at a part of 
 Western Europe and perhaps of the American Continent. We con- 
 stap% leave aside India, China, and the whole Mahometan East. 
 This limitation of our field of vision is perfectly justifiable when we are 
 occupied with the investigation of the laws of Progress. Progress is, 
 in fact, t he same thing as the continued production of new ideas, and we 
 
 » Early History of Institutions, pp. 225-230. cited by the author in Popular Government, pp. 190-104. 
 
 ; 
 
 tt 
 
 IB!' 
 
 W' 
 
 
 ^1! 
 
 ii 
 
332 
 
 Intellectual Progress 
 
 Pt. IV 
 
 ♦1 
 
 'A 
 
 can only discover the law of this production by examining sequences of 
 ideas where they are frequent and of considerable length. But the 
 primitive condition of the progressive societies is best ascertained from the 
 observable condition of those which are non-progressive; and thus we 
 leave a serious gap in our knowledge when we put aside the mental 
 state of the millions upon millions of men who fill what we vaguely call 
 the East as a phenomenon of little interest and no instructiveness. 
 The fact is not unknown to most of us that, among these multitudes, 
 Literature, Religion, and Art — or what corresponds to them — move 
 always within a distinctly drawn circle of imchanging notions; but the 
 fact that this condition of thought is rather the infancy of the human 
 mind prolonged than a different maturity from that most familiar to 
 us, is very seldom brought home to us with a clearness rendering it 
 fruitful of instruction. 
 
 " I do not, indeed, deny that the difference between the East and the 
 West, in respect of the different speed at which new ideas are produced, is 
 only a difference of degree. There were new ideas produced in India 
 even during the disastrous period just before the English entered it, 
 and in the earlier ages this production must have been rapid. There 
 must have been a series of ages during which the progress of China was 
 very steadily maintained, and doubtless our assumption of the absolutely 
 immobility of the Chinese and other societies is in part the expres- 
 sion of our ignorance. Conversely, I question whether new ideas come 
 into being in the West as rapidly as modem literature and conversation 
 sometimes suggest. It cannot, indeed, be doubted that causes, unknown 
 to the ancient world, lead among us to the multiplication of ideas. 
 Among them are the never-ceasing discovery of new facts of nature, 
 inventions changing the circumstances and material conditions of life, 
 and new rules of social conduct; the chief of this last class, and certainly 
 the most powerful in the domain of law proper, I take to be the famous 
 maxim that all institutions should be adapted to produce the greatest 
 happiness of the greatest number. Nevertheless, there are not a few 
 signs that even conscious efforts to increase the nimiber of ideas have 
 a very limited success. Look at Poetry and Fiction. From time to time 
 one mind endowed with the assemblage of qualities called genius makes 
 a great and sudden addition to the combination of thought, word, and 
 sound which it is the province of those arts to produce; yet as suddenly, 
 after one or a few such efforts, the productive activity of both branches 
 of invention ceases, and they settle down into imitativeness for perhaps a 
 
 Bk. II The Law of Intellectual Progress 333 
 
 century at a time. An humbler example may be sought in rules of 
 social habit. We speak of the caprices of Fashion; yet, on examining 
 them histoncaUy, we find them singularly limited, so much so, that we 
 are sometmies tempted to regard Fashion as passing through cycles of 
 form ever repeating themselves. There are, in fact, more natural 
 limitations on the fertility of inteUect than we always admit to ourselves 
 and these, reflected in bodies of men, translate themselves into that 
 wearmess of novelty which seems at intervals to overtake whole Western 
 societies, including minds of every degree of information and cultivation " 
 This passage formulates that in which intellectual progress consists 
 and the method of developing the law of that progress. "Progress " 
 says this trained observer, "is the continued production of new ideas- 
 and we can only discover the law of this production by examining se' 
 quences of ideas where they are frequent and of considerable length " 
 
 It is difficult to reduce inquiry with reference to intellectual progress 
 to more clearly defined considerations than these. Intellectual prog- 
 ress IS inconceivable in any form other than in that of the continuous 
 production of new ideas; and the law of that progress can be discovered 
 but m an analysis of these ideal sequences. For the present purpose 
 no volummous mass of material need be presented. The movement 
 alone of the sequences is considered. The endless imitations, repe- 
 titions and reproductions to which they have given birth are of no L 
 portance m this movement. The revolutions of the satellites of any 
 heavenly body are of minor interest, or readily determined, once the 
 movement of the sphere round which they revolve is understood. The 
 attenUon, therefore, wiU be directed to the movement of the various 
 ideal sequences within the most important fields of inteUectual activity 
 for tSie purpose of discovering, if possible, the law of their development 
 
 Section n — Art 
 Article i — Classification. 
 
 Art as here understood embraces that portion of inteUectual pro- 
 duction not mcluded within philosophy, religion, or scientific inqiL 
 This region may be divided into five fields: L The arts of Bel 
 sign, or Architecture. IL Sculpture. III. Painting. IV Music V 
 Poetry, considered in its widest interpretation 
 
 of '^ir ^iT.S^t'^^ '^"'". 't^^'^""' "^ '^''' ^^°^^S ^'^^ the domain 
 of Art. As the history of these is developed, age after age, it seems 
 
 I •, 
 
 I 
 
 I 
 
 ?i 
 
 I A 
 
 rJ4u. 
 
334 
 
 Intellectual Progress 
 
 Pt. IV 
 
 Mil 
 
 i 
 
 that even in the realm of the purely ideal, is found the process of 
 evolution and devolution, of which all phenomena seem but varying 
 phases. As these five regions are examined, and as the essential ideas 
 constituting their progressive history are traced, this process gradually 
 comes into view. 
 
 A rticle 2 — A rchitecture. 
 
 The great art of structural design, to which so much of beauty and 
 interest in human expression may be traced, in all likelihood owes its 
 primitive origin to the idea of shelter, or convenience. As these humble 
 needs were satisfied, the art itself became of more importance, was used 
 for other purposes, and developed under the influence of radically 
 distinct ideas. From its earliest manifestations, a distinction may be 
 observed between the Arts of the East and the West. The first has 
 given rise to many varied and beautiful conceptions, but it is rather 
 in the West that occurs the most progressive and intellectual develop- 
 ment. 
 
 From the tombs and temples of the earliest civilizations; from the 
 monuments of Assyria and Egypt, and notably from Persepolis, 
 Beni Hassan, and the Rameseum, were evolved the exquisite pro- 
 portions of the orders of the Greeks. From these again, imder 
 the influence of Rome, through the media of amphitheatre, coliseiun 
 and basilica, new conceptions came into being, and new ideas were 
 produced. 
 
 Mediaeval Christianity poured a wealth of fresh forms into archi- 
 tectural art through the spiritual elegance of Gothic design. These, 
 in turn, fade or blend with the growing vitality of the Renaissance, 
 and again new decorative ideas crystallize around the palace or the 
 dome. Progress dining all these periods is everywhere manifest. 
 The sequences of new ideas never cease, or cease but to begin anew 
 with greater variety and fectmdity. Decorative ideas are constantly 
 brought into being, and laid at the foundations of subsequent prog- 
 ress. 
 
 from Italy the Renaissance spread its revivifying influences over 
 Europe and notably into France, where, under Louis XII, Francis I, 
 Henry U, and the last of the Bourbons, it received its most productive 
 development. These later manifestations, however, great as is their 
 charm and interest, were as progressive forces less rich and fertile than 
 the earlier. The progress of the art is later carried on with lessened 
 
 Bk. II The Law of Intellectual Progress 335 
 
 vitality, until, after the sumptuous dignity of Louis XIV, the graceful 
 efflorescence under Louis XV, and the formal reaction under Louis 
 XVI and the Empire, form and design begin to repeat themselves- 
 and any development of the art in any sense analogous to the progress 
 of the past is sought in vain. 
 
 Production to-day, in the art of structural design, however interesting 
 and distinguished its appUcation, seems to have passed the creative 
 period, and be limited to the application of decorative conceptions 
 evolved m a more progressive age. Says Ferguson, ^ in this connexion: 
 In the European system it is considered more essential that a building 
 especially in its details, should be a correct copy of something else' 
 than good m itself or appropriate to its purpose." Such criticism may 
 appear severe, yet it is impossible to find in the recent arts of design, 
 m whatever field, any progressive movement analogous to the great or 
 even minor creative periods of the past. But, it may be said, the 
 human mmd is finite and, consequently, cannot produce new ideas for- 
 ever. A time must appear in its history when its creative capacity is 
 exhausted, when production can continue but through the repetition of 
 ah-eady developed conceptions. When such a period is reached, it 
 need not mean that the mind has grown less fertUe, or less capable 
 of creative effort, but that the possibiHties of fertilization no longer 
 exist: m other words, that there are no few forms capable of structural 
 apphcation to be discovered. When such a period occurs, however 
 progress is at an end, and further movement, independent of repetition' 
 mipossible. The most characteristic architectural efforts of the present 
 are probably found in the field of purely utiUtarian and domestic de- 
 sign; the tomb, the temple, the palace, or the cathedral, no longer 
 supply the creative inspiration of an earKer day or when attempted 
 strike but feeble echoes of the "frozen music" of the past. ' 
 
 Thus the sequence of ideas underlying the progressive development 
 of the arts of design suggests a cycle, as it were, of structural motives- 
 a cycle starting under the influence of a given idea of utihty; developing 
 through the appUcation of decorative ideas; giving birth to thousands 
 of years of progressive movement, and then entering upon a period of 
 sterile repetition, the dominant idea of which seems to have returned to 
 the startmg point - utilitarian convenience. A series of ideas is found 
 representing a process of slow movement, a zenith reached on the shores 
 of the Me diterranean, rapid progress in other directions, and then rever- 
 
 » History of Indian and Eastern Architecture, pp. 5. 6. 
 
336 
 
 Intellectual Progress 
 
 Pt. IV 
 
 con- 
 
 sion and repetition all along the line. In an art presenting such 
 ditions progressive movement is apparently exhausted. 
 
 Article j — Sculpture, 
 
 In the history of plastic and lithic expression few efforts of importance 
 occur independently of architecture, until appear the sombre creations 
 of Assyrian and Egyptian civilization; and even here the higher forms of 
 sculpture are inextricably involved with the requirements of the architect. 
 The earlier Asiatic and Egyptian elements of the art poured into Greece 
 through the island of Crete and the lion gates of Mycenae, to burst into 
 independent existence, touched with the magic of the chisels of Phidias 
 and Praxiteles. In Greece the art of sculpture reached its zenith. No 
 country and no age present such varied and articulate lithic beauty 
 as the shores dominated by the spear of Athene Promachos. 
 
 In every art certain ideas are found which can be adequately expressed 
 but through the media of the art in question; there are thus ideas capable 
 of formulation through plastic representation alone. An interesting de- 
 velopment of such ideas occurred during the most important periods of 
 Asiatic and European civilization; matured and culminated with these, 
 and then entered upon the apparently inevitable process of repetition or 
 ceased. If the first ideas giving rise to these sequences are sought, and 
 the view extended over the history of sculpture as a whole, it may 
 appear that nearly all expression of this nature originated in the direct 
 rendition of natural forms, suggesting at a later period the application 
 of these to monumental and architectural design. The great empires of 
 the East have contributed their share of ideas constituting the sculp- 
 tural history developed under their influence, imtil the sequence is 
 arrested or begins to repeat itself. On turning to Greece, however, 
 and regarding Hellenic sculpture as a culmination of the movements 
 of the East, it may seem that the art both reached its zenith and 
 entered upon its decline under the shadow of the Parthenon, leaving 
 little to do for those who come after but to worship — and repeat. 
 Rome produces imitations alone; but the Byzantine and early 
 Gothic eras present the art once more in a subordinate but still vital 
 movement. This line of development gradually exhausts itself in 
 the later Middle Ages, when the great Buonorotti and the men of 
 the Renaissance turned back once more to Greece for inspiration. 
 This period is peculiarly rich in sculpture, and certain new ideas 
 appear, especially in monumental and architectural applications of 
 
 Bk. II 
 
 The Law of Intellectual Progress 
 
 337 
 
 the art. Another period of movement, but of less productive vitality, 
 may be traced in France as the waves of the Renaissance roll northward 
 and exhaust themselves beyond the Alps. As the inspiration of the 
 modern Muse is studied, however, she seems no longer concerned with 
 ideas such as have given rise to the great movements of the past; she 
 is no longer occupied with the expression of religious emotion, trans- 
 cendent efforts to attain the ideal, or even with the humbler oflice of the 
 imitation of Greek originals. On the contrary, her chief thought seems to 
 be the expression of the emotion of the artist, in direct contact with 
 external nature, rather than the attempt to realize any purely imagina- 
 tive conceptions, such as have constituted the progressive history of the 
 art in the past, a tendency to be noted even in monumental and 
 architectural application. Thus, it may seem, the lithic Muse has 
 turned once again to the original source of her inspiration, and seeks in 
 direct conmiunion with nature the fullest realization of her being, a 
 tendency scarcely to be carried farther than in the works of Rodin. ' 
 
 Article 4 — Painting, 
 
 The art of painting, in all likelihood, owes its origin to the same ideas 
 to which the art of sculpture may be traced ■— direct and unimaginative 
 rendition of natural impressions followed by architectural application. 
 In the East, and even among the Greeks, painting seems to have long 
 remained in strict subordination to architecture, although doubtless car- 
 ried to degrees of perfection of which nothing is known. The Chinese, the 
 Japanese, and the Persians of a later day developed the art as far as lay 
 within their powers and then began to repeat. The Byzantine workers 
 in pigment and mosaic, and especially the earlier Italian masters, de- 
 velop new progressive periods and some of the most interesting phases 
 in the history of the art. These epochs fade with the ages which gave 
 them birth, while the art meets the demands of another period and 
 bursts into the flower of the "new birth" in Italy. To the painter the 
 names of Botticelli, Pinturicchio, Titian, Veronese, and Raphael each 
 presents a new and distinct conception, an independent link in the se- 
 quence of ideas through which the painter's art traces its progressive 
 development. In the men of that day, Italy exhausts herself, and 
 the next period presents but repetitions. The seat of progress moves 
 to the northward, where Rembrandt, Rubens and the "divine'* Velas- 
 quez add their sha^-e to the sequence, present a new and fresh series 
 of conceptions, endlessly imitated and repeated by their followers. 
 
 • VJ 
 
 r ■ 
 
 :j^ 
 
 111 
 
 
 ti i! ' {| 
 
338 
 
 Intellectual Progress 
 
 Pt. IV 
 
 New life and new ideas come into being once again, however, although 
 with lessened power and fecundity. The sequence is continued in 
 France by Poussin and the earlier French schools; later by Delacroix, 
 Millet, and the men of 1830. England presents another movement of 
 the same kind with Reynolds, Gainsborough, Constable, and others, 
 together with the beginning of conscious repetition in the Pre-Raphaelite 
 movement of the last century. These latter periods of development, 
 in whatever country they may be traced, lead up to that which may be 
 regarded as the characteristic form of the later art — the modem land- 
 scape. The essential idea of modern painting seems to be the rendition 
 of impressions derived directly from nature; and in landscape this idea 
 has received development with which the earlier art is unfamiliar. 
 Modem landscape painting, in some of its higher forms, may be 
 regarded as presenting works of art little, if at all, inferior to those 
 of an earlier age. It may seem, however, that an age seeking its 
 characteristic inspiration in the reiteration of one idea scarcely presents 
 the elements essential to progress, however interesting its variations 
 of a single theme. 
 
 The artists of China and Japan, the Byzantine workers, the early 
 Florentine masters, the works of Veronese, Raphael, Velasquez, or 
 again the works of Claude and Poussin, each suggest a distinct ideal 
 conception in this field of expression. These sequences of ideas present 
 the progressive history of the art; and where they stop, it seems that 
 progress stops. Progress has long since ceased in China, Persia, and 
 Japan. The breath of the Renaissance has long since ceased to inspire a 
 Titian or a Tintoretto; modem painting presents no movement analogous 
 to the great creative periods of the past. The walls of a modern exhibi- 
 tion may often be divided into their pictorial elements; all the ideas 
 they present may often be traced to their sources in recalling a Botticelli 
 in Florence, a Veronese or a Titian in Venice. Or, again, these elements 
 may act through a process of double dilution, so to speak, as when the 
 thought of Luini or the early Italians is presented upon a canvas evi- 
 dently inspired by the scholarly decorations of M. Puvis de Chavannes; 
 or Japan and Velasquez appear filtered through impressions derived 
 from the interesting personality of Mr. Whistler. Where this cannot 
 be done, the modem Muse seeks her inspiration directly from nature. 
 The majority of modem painters would perhaps disclaim any creative 
 or imaginative intention, and regard nature alone as their highest in- 
 centive to expression and "tmth*' their only object. If this is so, and 
 
 Bk. II The Law of Intellectual Progress 339 
 
 if the creative and decorative conceptions capable of pictorial repre- 
 sentation have all been exploited, as it would seem at some period they 
 must necessarily be, it may seem that the art of painting is following 
 the movement traced in the fields of architecture and sculpture. In 
 other words, that painting develops a sequence of progressive ideas 
 for a time, and when these are exhausted begins to repeat itself or turn 
 back to the idea from which it took its rise — direct rendition of natural 
 impressions. 
 
 Article 5 — Music. 
 
 Music and speech seem at one time to have been indistinguishable. 
 Music apparently arose from what might be called cerebral, or verbal, 
 expression as distinguished from expression which, in the course of time, 
 has become characteristically musical. The eariiest records support 
 this view. Says Nauman^ with reference to the earliest Chinese music: 
 "The close relationship that originally existed between the constitution 
 of the state and music is also clearly shown in Chinese history." In 
 connexion with eariy Hindoo music, Bird says:^ "Many of these 
 Raginis were so entirely without rhythmical symmetry, that it would be 
 almost impossible to reproduce them in the same form as they were 
 executed by the Hindoo singers; they seem like the outpourings of 
 exalted beings, who wed to words such sounds as their emotion or 
 fancy suggests." "The Egyptians placed their music in close affinity 
 with astronomy, a position which we have already seen it occupy among 
 the Chinese and Hindoos; but it was also among the Greeks that this 
 combination attained to its greatest significance. "3 "The word 
 'Psalter' means, indifferently, a performance on a stringed instru- 
 ment and a 'sacred hymn. '4 . . . " The musical endowments of the 
 Israelites and the gift of prophecy were intimately associated one with 
 another." 
 
 The earliest records present music as an essentially dependent art; and, 
 even among a people attaining such intellectual heights as the Greeks, 
 music seems to have occupied a subordinate relation to poetry. "The 
 Hellenes," says Naumann^ "were content that painting shouldvremain a 
 mere slavish imitation of sculpture, and music the handmaid of poetry." 
 
 • The History of Music, p. 8. 
 » Ibid., pp. 24, 25. 
 
 " Ibid., p. 38. 
 
 • Ibid., p. 67 
 
 • Ibid., p. 116. 
 
 \ 
 
 I 
 
 it 
 
 I 
 
 11 
 
340 
 
 Intellectual Progress 
 
 Pt. IV 
 
 ii'i 
 
 »♦ 
 
 Such dependence, in fact, seems a necessity before the discovery of the 
 musical system underlying modern methods of composition and notation. 
 The very late period at which a method was devised for defining the 
 relative length of musical sounds is one of the remarkable facts 
 in the progress of ideas forming musical history. Until such a 
 system was formulated, the foundations for distinctly musical expression 
 scarcely existed. These foundations once established, however, music 
 rapidly developed a complete and independent existence; and a period 
 of remarkably rich, rapid, and productive activity is entered. As in 
 painting, the name of each of the great masters, from the time the art 
 became independent until to-day, suggests some distinctly character- 
 istic musical idea underlying their productions. The pages of musical 
 history are filled with the records of some of the most distinguished and 
 interesting of personalities. 
 
 Recent music, however, hardly presents a progressive and creative 
 movement such as suggested by the names of Bach, Beethoven or 
 Berlioz. On the contrary, as in painting, the characteristically modem 
 music seems to seek its inspiration in the direct statement of perceived 
 fact or thought, if the terms are permissible, rather than in the ideal, 
 melodic, religious, emotional, dramatic, intellectual or purely scientific 
 influences, which gave birth to so much of beauty and interest in the 
 past. The pure intellectuality of Bach, the "power that makes for 
 righteousness" of Beethoven, the spiritual beauty of Brahms, the melodic 
 wealth of a Mozart or a Bizet, the dramatic and emotional elements of 
 Wagner, scarcely find adequate representation in the ideas dominating 
 peculiarly modem production. 
 
 The basic idea of modem music is perhaps best expressed in the works 
 of Richard Strauss, and in studying these it is interesting to note how 
 closely allied with verbal conceptions, as distinguished from purely 
 musical expression, are the productions of this interesting author. In 
 other words, how he, and distinctively modem music with him, seem to 
 present the inevitable retum to the ideal starting-point, with all the 
 resources of modem orchestration. This tendency to develop the purely 
 cerebal element of musical expression has been noted by modem criticism. 
 Says Mr. James Huneker* in his Essay on Strauss: "He is a thinker, 
 a philosopher as well as a poet, and deeply religious in the cosmical 
 sense; he purposes no less a task than the complete subjugation of men's 
 imagination. Notes, phrases, groups, movements, masses of tone are 
 
 ^(herUmes, p. 49. 
 
 Bk. II The Law of Intellectual Progress 341 
 
 no longer merely sensuous symbols, but the actual symbols of a language; 
 we must hasten to learn the new speech." Again, 1 "Music . . 
 has never been so articulate, so dangerously definite, so insidiously 
 cerebral." Says another student 2 of modern music: "Strauss is what 
 the French called un cirebraly which is by no means the same thing as a 
 man of intellect. Un Urebral is a man who feels through his brain, in 
 whom emotion transforms itself into idea rather than in whom idea 
 is transfigured by emotion." This tendency seems a definite and 
 self-conscious one; Strauss^ says with reference to the score of "Also 
 sprach Zarathustra": "I meant to convey musically an idea of 
 the development of the human race from its origin, through the 
 various phases of development, religious as well as scientific, up to 
 Nietzsche's idea of the Uebermensch." Again :4 "Why cannot music 
 express philosophy? Metaphysics and music are sisters. Even in 
 music one can express a viewpoint, and if one wishes to approach 
 the Worid Riddle, perhaps it can be done with the aid of music." 
 One seems to hear an echo of the far-off music of ancient India or 
 Egypt. 
 
 Article 6 — Poetry, 
 
 In the history of the arts considered, ideas are met incapable of ade- 
 quate expression in words — hence the arts in which these ideas seek 
 their proper realization. The decorative ideas of the period of Francis I 
 cannot be expressed without actually designing in that combination of 
 classic and Gothic form typical of the eariy French Renaissance. It is 
 impossible to express the conceptions of a Veronese without attempting 
 to reproduce the typical wealth of colour and form his name recalls. 
 And so through the other arts: forms in stone or musical chords are 
 necessary to their expression. In turning to the literary art, however, 
 ideas appear, finding their proper expression through the media of 
 words. 
 
 When the results of the activities of the human mind in this field are 
 considered, its creative fertility is more limited than might be supposed. 
 "The lesson of the new science of Comparative Mythology," says Sir 
 Henry Maine, "is the barrenness in primitive times of the faculty which 
 we most associate with mental fertility, the Imagination." The lesson 
 
 • Ibid, p. 17. 
 
 • Arthur Symons, cited by Huneker, Ibid., p. 35. 
 
 • Ibid., p. 4S- 
 
 • Ibid., p. 35. 
 
 I 
 
 'i 
 
 t. 
 
 ■ 
 
 '• 1! 
 
 
342 
 
 Intellectual Progress 
 
 Pt. IV 
 
 Bk. II 
 
 The Law of Intellectual Progress 
 
 343 
 
 . 
 
 •;■ 
 
 in other fields may seem not distantly removed from that of compara- 
 tive mythology. 
 
 As Sir Henry Maine says, progress consists in the continued production 
 of new ideas. In order then to trace the progress of literary expres- 
 sion it is necessary to turn the attention to the ideas dominating each 
 progressive age, and to formulate these in their simplest terms. The 
 subject may, of course, be developed indefinitely. The present purpose 
 involves but the briefest of glances across the ages, tracing the move- 
 ments of the dominant luminaries, in order to discover, if possible, 
 the law of their motion. In such a glance, it may be observed that 
 the moons and satellites but follow the greater bodies. They can 
 no more escape their influence than matter cease to gravitate. 
 
 It seems reasonable to trace man's first attempts at articulate 
 expression to the desire for simple communication; to the idea under- 
 lying the transmission of direct and unimaginative truths. Records 
 remain of but a very late period of man's linguistic history; a large 
 portion of the earliest of these supports such a position and possesses 
 no literary or artistic interest. Many of the Cuneiform and Egyptian 
 inscriptions are historical, legal or astronomical documents. Doubtless 
 however, long before these the records of kings and heroes began to 
 possess a m)rthological and legendary significance, and literature, or 
 poetry, properly speaking, came into being. 
 
 The earliest form of poetry is nearly always the heroic epic. An 
 analysis of the Ramayana and the Mahabharata of India, the earlier 
 legends of Persia, of the myths of the Eddas and the Niebelung and even 
 of many aspects of mediaeval European poetry, reveals a certain phase 
 of song as typical of the thought of early civilizations; and wherever 
 such poetry appears, it has found its richest and fullest expression in the 
 Iliad and the Odyssey. The idea roimd which poetry of this nature 
 revolves, is the idea of martial prowess; and reaches its apotheosis in 
 in Homer. The great iEschylus, the father of Greek tragedy is cited ^ 
 as regarding his own works as but cnunbs fallen from Homer's mighty 
 banquet. 
 
 In Homer, then, the idea round which revolve man's first literary 
 aspirations — the idea of the fierce joys of a world in which "strife was 
 father and king," — has foimd its fullest expression, sung as no man has 
 sung since the day of the first great epic. 
 
 It cannot be assumed that the Iliad and the Odyssey epitomize all 
 
 > Aiktiutus, vni., 30. 
 
 Eastern and Western thought of the earliest period; there are notable 
 exceptions; in the Vedantic and EgyptisLU writings; the compilations 
 of Confucius; in the Zenda Vesta , and in that rich and varied body of 
 Greek material from Orpheus and Hesiod to Theocritus and the Alexan- 
 drians. This material, however, in its most important manifestations, 
 is either philosophic or theological and will be examined in its place. 
 Poetry alone is here considered and, as pure rhythmic song. Homer 
 may well be regarded as having exhausted this first of poetic ideas. 
 
 Three stately figures dominate the Latin world of letters: Lucretius, 
 Cicero, and Virgil. The great poet of the Republic is, however, first and 
 last a philosopher and but voices Greek discoveries; he cannot, therefore, 
 be regarded as the typical Roman poet. Cicero again is largely a philos- 
 opher and a Hellene to the extent in which he philosophizes. Virgil, 
 primarily a poet and a Roman, presents the next great figure, the next 
 idea, in the progressive sequence of literary thought. 
 
 Virgil was born in the year 70 B. C. The battle of Actium was fought 
 in 31 B. C. Virgil was consequently in his prime at that memorable 
 period of the ancient world. He was a friend of Maecenas; and Maecenas 
 was the minister and friend of Augustus. Given these facts, and a slight 
 familiarity with the political conditions of the Roman world of the period, 
 the idea round which the more serious work of Virgil would revolve, might 
 be predicted. The ^Eneidj while cast in the Homeric matrix of the 
 heroic epic, and, at the same time, saturated with earlier Graeco-Roman 
 thought, is neither an heroic epic nor a Lucretian dissertation on the 
 nature of things. Virgil, in fact, presents a new idea in its highest form. 
 The idea, first of all, of imperial and political imity, of the majesty of 
 Roman power; and, combined with this, a deeper and more significant 
 conception of nature and man than may be found in the struggles of 
 Hector and Achilles. The poet of the Augustan age infused these ideas 
 into literary expression, and his mind long dominated the poetic 
 thought of the Middle Ages in their mystico-theological speculations. 
 
 The shade of Dante next appears upon the literary horizon. With 
 study of the works of these three singers — Homer, Virgil, and Dante — 
 questions arise with reference to the action of the poetic intellect. What 
 is poetry? What are its proper functions? Does it present a picture 
 of nature to be taken seriously, in its rational and philosophic aspect, or 
 but a vague and distorted impression, whose chief significance lies in 
 the magic of the rhythm or the beauty of the imagery? Upon the answer 
 to these questions will depend the impression derived from the great 
 
 
 I I!. 
 
 k 
 
 N 
 
.'!i[ 
 
 'ff 
 
 344 
 
 Intellectual Progress 
 
 Pt. IV 
 
 poetic creations of the past. Christianity has come into existence 
 since the days of Virgil, and the Divina Commedia is a view of nature 
 seen through the camera obscura of mediaeval Roman Catholicism, 
 coloured by mythical traditions of the ancient world and Floren- 
 tine politics. The poet presents conceptions of moral rectitude and 
 retribution for sin, as formulated by the conventional, theological, 
 and political traditions of his age. He presents a "vision"— a 
 mystical, and symboUcal vision. The poem of Dante is a work of 
 extraordinary imaginative power, with isolated passages of rare force 
 and beauty. If an attempt is made to sink beneath the surface 
 however, in search, not of imaginative creations, but of some definite, 
 rationally acceptable truth, the result seems to be but symbolized 
 visions and mysticism — Christo-pagan visions and mysticism — re- 
 volving round the idea of reward and punishment in another worid. 
 This idea has given rise to a vast field of literary production, evolved 
 from mediaeval religious and political conceptions, and based upon theo- 
 logical and mystical interpretations and demonstrations. 
 
 If works of this nature are regarded as poetic imagery, they possess 
 all the value of such imagery. If supposed to contain a deeper cosmo- 
 logical significance, their value will depend upon the value attached to 
 interpretations of nature derived through what might be called the 
 mathematico-mystical method from theologico-mythical information. 
 
 A characteristic application of this method, of which endless examples 
 occur in Pythagorean and theological literature, is found in the Vita 
 Nuova^. Dante there says that the death of Beatrice occurred on the 
 ninth day of the montii, and, in the Syrian reckoning, in the ninth month 
 of the year. According to Ptolemy, and other no less trustworthy 
 sources of information, there are nine heavens, which work effects on 
 earth in accordance with their conjunctions. From this data he infers 
 that his lady was a nine, "by simiUtude." But it is evident that the 
 number three is the root of nine, and at the same time, that the Author 
 of miracles is three; from which it may be perceived that the lady in 
 question was a miracle whose only root was the Holy Trinity. He 
 adds that a more subtie inquirer might find more subtle solutions, but 
 that this simple explanation to him is the most satisfactory. 
 
 The worid moves on; b'terary production continues. Poetico- 
 theological symbolism and mysticism are unable to dominate a succeed- 
 ing age, and the reaction sets in. The next imporUnt idea underiying 
 »xxx. 
 
 Bk. II 
 
 The Law of Intellectual Progress 
 
 34S 
 
 literary expression is that of the skeptical man of the world: the idea 
 dominating the minds of such men as Montaigne, Cervantes, and Ra- 
 belais. Popular ignorance and theological dogmatizing produce the 
 usual results in the clearer intellects, and these hold up a mirror to 
 the world in which they live; a polished surface as it were, reflecting 
 their world and nothing else; except, perhaps, the more or less cynical 
 smile with which they flash reflections of what they see therein. 
 
 The great Shakespeare perhaps typifies this idea in its highest expres- 
 sion; the idea of what might be called the "laugh," and at times a sad 
 and vacant laugh; the idea with which many of the clearest and ablest 
 intellects the world has produced have found themselves constrained to 
 look upon the changes rung upon the tawdry stage of human existence. 
 This idea is found in many tongues and ages; and often seeks expres- 
 sion when older forms of thought are breaking up: Lucian, Cervan- 
 tes, Heine, Swift, Voltaire. 
 
 The constant flux observable in intellectual history, shows the inter- 
 action of two forces upon each other — the action of society upon the 
 creative intellect and that of the intellect upon society. The early tribal 
 wars and wanderings produce the heroic epic culminating in the never 
 equalled Homer; the wider political horizon of Rome and a later world, 
 combined with Hellenic thought and theological speculation, produce 
 Virgil; Virgil and theological mysticism evolve Dante; mysticism reacts 
 as skepticism; and skepticism as what might be called theological ratio- 
 cination. Mysticism is incapable of containing the clearer intellects, 
 and skepticism is the result; skepticism, however, leads to nothing, and 
 in its turn is inadequate to hold the deeper and more searching thought; 
 the poet turns once more to ponder and to "make." 
 
 Milton typifies the next idea in the development of the poetic intel- 
 ligence. Paradise Lost is one vast argument. It is a reaction against 
 skepticism; a conscious attempt to present the rational justification 
 underlying the then existing, and still persisting, theological intrepreta- 
 tions of nature in the Western world. The foundation upon which this 
 entire argument depends, is the idea of the "fall" of man. This idea of 
 the "fall" is an interesting one in intellectual history, showing the per- 
 sistence of tradition on one hand; and, in the words of Sir Henry Maine, 
 "the barrenness in primitive times of the faculty which we most asso- 
 ciate with mental fertility, the Imagination." The minds of men of a 
 certain type, gravitate toward this idea, with mechancial precision; 
 it may be found in nearly all theological systems, and doubtiess first 
 
 I 
 
 ■4 
 It 
 
 tl 
 
346 
 
 Intellectual Progress 
 
 Pt. IV 
 
 '■'M 
 
 1 
 
 I 
 
 i| 
 
 
 presented itself as the only method of accounting for the existence of 
 evil in the construction of theological formula. It is endlessly reiterated 
 in theological speculation, in East and West alike. Hesiod^ and Ovid* 
 present familiar Western forms, while Christo-theological systems 
 doubtless incorporated it within their doctrines, as derived from the 
 Chaldean' influences from which so much of Hebrew tradition seems 
 evolved. 
 
 This idea of the "fall," lying at the base of a great volume of theo- 
 logical and poetical production — ancient and modem. Eastern and 
 Western — is of interest with reference to Christianity, so far as the 
 words of Christ may be regarded as the foundation of Christian systems. 
 There is apparently no suggestion in His words in any way involved with 
 this position. The volume of literary production revolving roimd the 
 idea of the "fall of man," and dating from the oldest Chinese and 
 Chaldean records, down to the most recent theological demonstrations 
 of Europe, is too vast to permit even suggestion. The significance of 
 this field, however, seems to depend upon the acceptance, as a basis of 
 reasoning, of traditional, cosmological conceptions of periods which have 
 left no record; tradition which all scientific evidence shows to be question- 
 able, to say the least. As the sage Aristotle* remarks, quoting an old 
 Hellenic proverb with reference to the poetic conceptions of the Cosmos, 
 xoXXdb tpsOBovrat ioi8o(, "the bards sing many fallacies." 
 
 To regard the works of Virgil, Dante, and Milton in the light of purely 
 rationalized analysis may seem lacking in proper appreciation. This 
 attitude may, however, be questioned, for the reason that the works of 
 these men must apparently be regarded, either as purely artistic creations 
 of the imagination, possessing only an imaginary significance; or, as 
 containing a deeper and profounder meaning underlying their poetic 
 exterior. If the latter point of view is adopted, this deeper meaning, 
 when simply and dearly expressed, should be capable of withstanding 
 the most thorough scrutiny to which it may be subjected. From the 
 other point of view, these works may apparently be considered as sug- 
 gestive eflflorescences of the poetic faculty; of interest in detail, but when 
 regarded as consistent wholes, as having only imaginary connexion 
 with nature or reality, and slight application to the problems besetting 
 the hum an mind. Whichever point of view is adopted, some ground 
 
 • Work and Days, 109 et aeq. 
 
 • Metamorphoses, I, 3. 
 
 • The Chaldean Account of Genasis. Geotge Smith, pp. tj, Wf 
 ^Metaph. A. 2. 983 aju 
 
 Bk. II 
 
 The Law of Intellectual Progress 
 
 347 
 
 of sympathy with Plato ^ may be discovered in the treatment accorded 
 the poets in his ideal State: That they should be regarded as persons of 
 great note, worthy of all respect and consideration; that they should be 
 anointed with oil and crowned with garlands and — sent upon their 
 way rejoicing. HoXXd tp668ovTat dotSoL 
 
 Another age followed; argumentative theologizing is incapable of 
 containing the more powerful intellects, and another voice arose. 
 Every lover of the inexhaustible Faust knows it to be the con- 
 sistent elaboration of the ethical principle imderlying the bulk of ethical 
 systems. This elaboration, however, is not one of mystico-mythical 
 speculation nor rationalistic development of undemonstrated theological 
 hypothesis; but one of the most beautiful and richest of poetical inter- 
 pretations of nature. It is however, a poetical interpretation and a 
 metaphysical elaboration, and poetry and metaphysics have in their 
 turn been superseded. The Sturm and Drang of the earlier decades 
 of the last century, so perfectly voiced in Faust, have given way to 
 what seems the characteristic attitude of the modern mind; an attitude 
 which may be summarized in one brief word — truth. 
 
 The modem literary producer no longer seeks subjective and meta- 
 physical interpretation of the world, in the workings of his own imagina- 
 tion, with a Werther or a Faust; but, on the contrary, tries to look 
 upon external objective nature as it is. The masters of nineteenth and 
 twentieth century poetry and prose no longer present vast mystical and 
 theological conceptions; their single object, the one idea with which they 
 seem to labour, is the transcription of nature, if the term is permissible, 
 rather than either its interpretation or translation, and "the humble 
 truth," as Guy de Maupassant would say, their chief or only inspiration. 
 Upon no page, perhaps, has life been so intimately and literally tran- 
 scribed as upon that of Tolstoi. Tolstoi presents the essential concep- 
 tion underlying modem literature; truth — tmth direct and imadorned. 
 
 It is of interest, too, to study the works of Tolstoi with some such 
 thought in mind; for two periods may be discovered in his productive 
 activity; his earlier, or artistic period, giving place to a later, directly 
 didactic period. Tolstoi thus exemplifies in his own person the characteris- 
 tic attitude of modem artistic and literary expression in its extreme form; 
 abandoning, as he did, even the literally transcriptive method of ob- 
 serving nature for the direct and simple statement of perceived or 
 reasoned facts. Literary expression is almost reduced to pure science 
 
 * Republic, m.,i9&K, 
 
 f 
 
 I 
 
 ; i 
 I 
 
 11 
 
^' 
 
 348 
 
 Intellectual Progress 
 
 Pt. IV 
 
 at such a period; and science, in its broader sense, may well be considered 
 as epitomizing latter-day art. The salient characteristic of modem 
 expression, in all its fields, seems to be the direct formulation of imimag- 
 inative truths. This characteristic renders the present the natural, or 
 scientific, period of production as distinguished from others. Here, 
 then, in the field of modem literature, is the tendency to look to truth 
 and tmth alone; a tendency which seeks no higher motive, recognizes no 
 nobler inspiration, than may be found in natural fact and natural law. 
 Thus, if it may be assumed that the dominant idea underlying man's 
 earliest incentive to linguistic communication was the desire to express 
 the simple natural facts of existence, a by no means strained analogy may 
 be traced between the ideas imderlying his first and latest periods of 
 expression. 
 
 The entire field might be cmdely epitomized as follows: Organic 
 evolution develops imimaginative speech, or the direct statement of 
 perceived truths. Speech develops organized society and war. War 
 produces the heroic epic and Homer. Homer and later political so- 
 ciety produce Virgil. Virgil and mediaeval Christianity produce Dante, 
 or theological mysticism. Mysticism gives way to skepticism and 
 Shakespeare. Skepticism reacts in the form of tradition-based, argu- 
 mentative theologizing, and Milton. Argumentative theologizing is 
 followed by independent metaphysical interpretation of natiu*e, and 
 metaphysical interpretation, by the independent statement of directly 
 perceived tmths, and — the cycle is complete. 
 
 . CHAPTER III 
 
 SCIENCE AND MAN 
 
 <4 MONO the most important results of scientific research has 
 
 /\ been an increasingly accurate conception of the place occupied 
 
 / % by the human race in the material universe. Few more 
 
 important contributions to knowledge may be made than 
 
 those coming under the head of the astronomical and evolutionary 
 
 sciences. These sciences have shown, with apparentiy unquestionable 
 
 evidence, the story of man's past, and to these must he look for the 
 
 story of his future: the goal to which his progress leads. 
 
 " What will be the end thereof? " asks Doctor Maudsley . ^ "Are we to 
 look forward to a continued becoming or to an ultimate unbecoming of 
 things? Will evolution on earth go on forever? Or is not the end of life 
 on earth foredoomed by as certain a fate as the end of individual life? 
 Will not the same causes that have formed it, and are bringing it to 
 perfection, even should they continue to operate, inevitably bring it 
 to destmction? . . . The common law of life," he continues,^ 
 answering his own question, is slow acquisition, equilibrium for a time, 
 then a gentle decline that soon becomes a rapid decay, and finally 
 death. It is a law which govems the growth, decline, and fall of nations 
 as well as of individuals, for a nation, being but a complex imion of very 
 complexly constituted individuals, cannot any more than they continue 
 forever in one stay. Nor can humanity as a whole escape the doom 
 thus plainly decreed for it. If the force at the back of all becoming on 
 earth is that which the sun has steadily supplied to it through countless 
 ages, and still steadily supplies, it is plain that when it fails, as fail it 
 one day must, there will be a steadily declining development and a 
 rapidly increasing degeneration of things, an undoing by regressive de- 
 compositions of what has been done by progressive combinations through 
 the succession of the ages." 
 
 The human race, regarded in relation to the planetary life within which 
 it is contained, or in relation to a planet contained itself within a sidereal 
 
 » Body and Witt. p. 3i7« 
 « Ibid., pp. 319-320. 
 
 349 
 
 ii 
 
 i 
 
 I 
 
 I 
 
 
 i 
 
3 so 
 
 Intellectual Progress 
 
 Pt. IV 
 
 Bk. II 
 
 Science and Man 
 
 351 
 
 I 
 
 
 
 i 
 
 system, can look forward apparently to nothing, but a process of evolu- 
 tion and devolution; leading not only to the death and dissolution of the 
 planet upon which its uneasy existence has been evolved, but to the 
 dissolution of the system within which that insignificant planet itself 
 has been brought into existence. 
 
 A species can have have but a limited existence. Palaeontological 
 laws show that every life province is but a geological flora or fauna in 
 course of becoming fossilized; the rhythmic motion of the waves of time 
 will absorb man and his progress with the same certainty that they have 
 absorbed the extinct species of the past. "Yet one more rhythm," 
 says Mr. Spencer, ^ "extremely slow in its action, may be traced in the 
 phenomena of life, contemplated, under their more general aspect. 
 The researches of the palaeontologists show that there have been going 
 on during the vast period of which our sedimentary rocks bear record, 
 successive changes of organic forms. Species have appeared, become 
 abundant and then disappeared. Genera, at first constituted of but few 
 spedes, have for a time gone on growing more multiform, and then have 
 begun to decline in the niunber of their subdivisions, leaving at last but 
 one or two representatives, or none at all. During longer epochs whole 
 orders have thus arisen, culminated and dwindled away. And even those 
 wider divisions containing many orders have similarly undergone a gradual 
 rise, a high tide and a long continued ebb." This is the law of life 
 upon the planet earth. What may be regarded as the law of life of the 
 planet itself? Says Mr. Spencer: 2 
 
 "For the earth, as a whole, when it has gone through the entire series 
 of its ascending transformations, must remain, like all smaller aggre- 
 gates, exposed to the contingencies of its environment; and .... 
 be subject to forces sufficient to cause its complete disintegration." 
 
 The mind, turn where it will, finds but imceasing change; whether it 
 regards the immediate phenomena of life or the ultimate laws governing 
 the movements of the material universe, an all-pervading process of 
 evolution and devolution, seems to be the end of its inquiry. Says 
 Mr. Spencer .-3 " When that integration everywhere in progress through- 
 out our solar system has reached its climax there will remain to be effected 
 the inmieasureably greater integration of our solar system with other 
 such systems. There must then reappear in molecular motion what is 
 
 » First Principles, f 8s, p. 228. 
 
 » Ibid, i 181, p. 4s6. 
 
 » Ibid.. §S 182. 183. p. 464. 
 
 lost in the motion of masses, and the inevitable transformation of this 
 motion of masses into molecular motion cannot take place without re- 
 ducing the masses to a nebulous form. 
 
 "Thus we are led to the conclusion that the entire process of things as 
 displayed in the aggregate of the visible universe is analogous to the 
 entire process of things as displayed in the smallest aggregates. 
 
 " Motion as well as matter being fixed in quantity it would seem that 
 the change in the distribution of matter which motion effects coining to 
 a limit in whichever direction it is carried, the indestructible motion 
 thereupon necessitates a reverse distribution. Apparently the universally 
 co-existent forces of attraction and repulsion, which, as we have seen, 
 necessitate rhythm in all minor changes throughout the universe, also 
 necessitate rhjrthm in the totality of its changes, produce now an im- 
 measurable period during which the attractive forces predominating cause 
 universal concentration and then an immeasurable period during which 
 the repulsive forces predominating cause universal diffusion — alter- 
 nate eras of evolution and dissolution." 
 
 These conclusions are based upon the phenomena presenting laws 
 among the closest approximations to certainty with which the human 
 mind is familiar. They lead, apparentiy, to the opinion that hiiman 
 progress however considered, can no more present a constant process 
 of ascending modifications than the progress of any other spedes; or 
 of any individual member of any species. Death and dissolution await 
 human species as certainly as they await the individual man. 
 
 Other considerations lead to the same conclusions. Heat, if not the 
 first essential, is one of the essentials of earthly organic existence. The 
 heat from which life on earth derives its being springs from two sources; 
 the heat inherent in the earth itself and that fountain-head of earthly 
 vital energy — the sim. "The inquiries of Mallet and others," says 
 Proctor,^ "show that the present vulcanian energies of the earth are 
 due in the main to the gradual withdrawal of the earth's nudear parts 
 from the surface crust, because of the relatively more rapid loss of heat 
 by the former. The surface crust is thus left to contract under the 
 action of gravity, and vulcanian phenomena — that is, volcanoes and 
 earthquakes — represent the mechanical equivalent of this contraction. 
 Here is a process which cannot continue forever, simply because it is 
 in its very nature exhaustive of the energy to which it is due. It shows 
 us that the earth's nudear regions are parting with their heat, and as 
 
 ^ Our Plau Among Infinities, p. 28. 
 
 ,114 
 
 I 
 
 f 
 
352 
 
 Intellectual Progress 
 
 Pt. IV 
 
 Bk. II 
 
 Science and Man 
 
 i:|i 
 
 they cannot part with their heat without warming the surface-crust, 
 which nevertheless grows no warmer, we perceive that the surface- 
 heat is maintained from a source which is being gradually exhausted. 
 The fitness of the earth to be the abode of life will not only be affected 
 directly in this way, but wiU be indirectly affected by the loss of that 
 vulcanian energy which appears to be one of its necessary conditions. 
 At present, the surface of the earth is like the flesh clothing the living body ; 
 it does not wear out because (through the life which is within it) it 
 undergoes continual change. But even as the body itself is consumed 
 by natural processes so soon as life has passed from it, so, when the 
 internal heat of the earth, which is its life, shall have passed away, her 
 surface will 'grow old as doth a garment'; and with this inherent terrestrial 
 vitality wHl pass away by slow degrees the life which is upon the earth." 
 If the discovery of radium is regarded as modifying this view, inquiry 
 is but turned toward other fields, such as tidal fricUon of depletion of the 
 atmosphere. Speaking of Meunier's theory of the absorption of moisture 
 and atmosphere as a planet ages. Proctor^ says: "But apart from all 
 such considerations, we know that a process of exhaustion is taking place, 
 even in the Sun himself, whence all that exists upon the Earth derives 
 its life and daily nourishment. So that indirectly by the dying out 
 of the source of life, if not directly by the dying out of life, this Earth 
 must one day become as bleak and desolate a scene as we believe the 
 Moon to be at this present time." 
 
 It thus seems, by whatever process the earth is deprived of heat or 
 atmosphere, that the evolution of earthly life must ultimately reach a 
 point when it will consist of adaptations to constantly worsening con- 
 ditions. "It is an error," says Professor Huxley,2 ''to imagine that 
 evolution signifies a constant tendency to increased perfection. That 
 process undoubtedly involves a constant remodelling of the organism 
 in adaptation to new conditions; but it depends on the nature of those 
 conditions whether the direction of tiie modifications effected shaU be 
 upward or downward. Retrogressive is as practicable as progressive 
 metamorphosis. If what the physical philosophers teU us, tiiat our 
 globe has been in a state of fusion, and, like the sun, is graduaUy cooling 
 down, is true, then the time must come when evolution will mean ad- 
 aptation to an universal winter, and all forms of life will die out, except 
 s^^^ ^Q^ and simple organisms as die Diatom of the arctic and antarctic 
 
 * Ibid., p. 60. 
 
 s Evolution and Ethics, p. 199. 
 
 353 
 
 ice and the Protococcus of the red snow. If our globe is proceeding from 
 condition in which it was too hot to support any but the lowest living 
 thing to a condition in which it will be too cold to permit of the exist- 
 ence of any others, the course of life upon its surface must describe a 
 trajectory like that of a ball fired from a mortar; and the sinking half of 
 that coiurse is as much a part of the general process of evolution as the 
 rismg. 
 
 Doctor Maudsley^ presents the following picture of the future of 
 humanity: "The disintegrating process may be expected to take effect 
 first in the highest products of evolution and to reach in deepening suc- 
 cession the low, lower, and lowest organizations and organic compoimds. 
 The nations that have risen high in complexity of development will 
 degenerate and be broken up, to have their places taken by less com- 
 plex associations of inferior individuals; they in turn will yield place to 
 simpler and feebler imions of still more degraded beings; species after 
 species of animals and plants will first degenerate and then become 
 extinct, as the worsening conditions of life render it impossible for them 
 to continue the struggle for existence; a few scattered families of de- 
 graded human beings living perhaps in snow huts near the equator, very 
 much as Esquimaux live now near the pole, will represent the last wave 
 of the receding tide of human existence before its final extinction; until 
 at last a frozen earth incapable of cultivation is left without energy to 
 produce a living particle of any sort and so death itself is dead." 
 
 After reviewing the material upon which the opinion may be based. 
 Professor Cliff ord^ says: "We may therefore, I think, conclude about 
 the end of things that, so far as the earth is concerned, an end of life 
 upon it is as probable as science can make anything." 
 
 May we look farther yet to stages still later in the history of the earth? 
 "Truly," says Proctor,' "it is like looking beyond death; for now imag- 
 ination presents our earth to us as an inert mass, not only lifeless as at the 
 beginning, but no longer possessing that potentiality of life which ex- 
 isted in her substance before life appeared upon her surface. We trace 
 her circling year after year around the sun, serving no useful purpose 
 according to our conceptions. The energy represented by her motions 
 of rotation and revolution seems to be as completely wasted as are 
 those parts (the whole save only one 230,000,000th portion) of the sun's 
 
 « Body and WiU, p. 32a 
 
 * Lectures and Essays, The First and Last Catastrophe, p. 158. 
 
 * Our Place Among Infinities, p. 30. 
 
 ' 1! 
 
 ii I 
 
 f 
 
 
 I 
 
354 
 
 Intellectual Progress 
 
 Pt. IV 
 
 Bk. II 
 
 Science and Man 
 
 35S 
 
 ! 
 
 light and heat, which, falling on no planet, seem to be poured uselessly 
 intoxdesert space." 
 
 This is the picture science presents of the future of the teeming earth: 
 a lifeless mass of matter sweeping blindly, and apparently without pur- 
 pose, through the undisturbed silences of space, rotation succeeding 
 rotation, revolution succeeding revolution, bereft, not only of life 
 but of the very possibility of life. The mind, however, need not stop here 
 for it perceives that the planet earth is but one of a system of planets 
 with the sun at its centre; this system but an aggregate of atoms, as it 
 were, in limitless ether; and that this aggregate is sweeping toward a 
 point in one of the constellations, revolving in its turn through a cycle 
 so vast, an orbit so inmiense, that neither its centre nor its period can 
 be calculated. 
 
 And here the mind can go no farther. "How grotesquely ludicrous 
 then," says Doctor Maudsley,i "the absurdity of man's vainly attempted 
 conceptions of a great final cause or purpose of things! In order to 
 conceive a cosmic final cause it would be necessary for the individual to 
 achieve the abolition of time, which is the mere condition of human 
 thought, and to acquire the power of thinking beyond himself, which 
 would be the abolition of himself." 
 
 And might not the same terms be applied to man's attempt to realize 
 a progress Independently of the laws of cosmic evolution? Would it 
 not seem for him to attain a never ending process of development, that 
 it would be necessary for him to achieve the abolition of time, one of 
 the conditions of his existence? Would it not seem, in the light of 
 science, that progress is a vast cosmic process, as much beyond the control 
 of political society as the plane of the ecliptic? In any fundamental 
 sense, as much beyond the range of the action of the "great man's" mind 
 as the orbits of the spheres? 
 
 In the light of science, man is scarcely the final goal of the universe 
 the "heaven-descended heir" of all the ages. His existence may be 
 regarded as a more or less unfortunate accident; his story, in the words 
 Mr. Balfour,2 "as a brief and transitory episode in the life of one of the 
 meanest of the planets. Of the combination of causes which first 
 converted a dead organic compound into the living progenitors of human- 
 ity, science, indeed, as yet knows nothing. It is enough that from such 
 beginnings famine, disease, and mutual slaughter, fit nurses for the 
 
 » Body and Will, p. 334. 
 
 • Foundations of Belief, p. 3a 
 
 future lords of creation, have gradually evolved after infinite travail, 
 a race with conscience enough to feel that it is vile, and intelligence 
 enough to know that it is insignificant. We survey the past, and see 
 that its history is of blood and tears, of helpless blundering, of wild 
 revolt, of stupid acquiescence, and empty aspirations. We sound the 
 future, and learn that after a period, long compared with the individual 
 life, but short indeed compared with the divisions of time open to our 
 investigation, the energies of our system will decay, the glory of the 
 sun will be dimmed, and the earth, tideless and inert, will no longer 
 tolerate the race which has for a moment disturbed its solitude. Man will 
 go down into the pit, and all his thoughts will perish. The imeasy 
 consciousness, which in this obscure comer has for a brief space broken 
 the contented silence of the universe, will be at rest. Matter will know 
 itself no longer. 'Imperishable monuments' and 'immortal deeds,' 
 death itself, and love stronger than death, will be as though they had 
 never been. Nor will anything that is be better or be worse for all that 
 the labour, genius, devotion, and suffering of man have striven through 
 coimtless generations to effect." 
 
 That the vast womb of nature will re-absorb within itself the world 
 to which it has given birth, together with all that world contains, is not a 
 modem idea. It is a thought to which any rational mind is drawn. 
 Lucretius, two thousand years ago, gave it scientifically adequate ex- 
 pression. He concludes:^ 
 
 Haut igitur leti praedusa est ianua cado 
 nee soli terraeque neque altis aequoris undis 
 sed patet immani et vasto respectat hiatu. 
 
 A.nd so Death's jaws are never dosed, 'gainst sky and earth, and sea and dawn, 
 But open wide e'er stand opposed, look bade and vast, abysmal, yawn. 
 
 ( De Rerum Natura, V. 373* 
 
Bk. Ill 
 
 Object and Method of Inquiry 
 
 357 
 
 ['. 1 
 
 I' 
 
 "Book III 
 
 RELIGION 
 CHAPTER I 
 
 OBJECT AND METHOD OF INQUIRY 
 
 THE axes running north and south and east and west of the con- 
 tinent of Asia intersect at a point north of the Himalaya 
 Mountains and eastward of the Hindu Kush; a point approx- 
 imately the centre of a vast cup-like region, regarded by some 
 inquirers as the homestead, or cradle, of the human race. This region 
 lies immediately to the north of the mighty Himalayas; the Bolor and 
 the Ala-Tau mountains define it on the west and northwest, the Altai 
 ranges and their offshoots upon the north and east, and the Kuen- 
 Loun to the south and southeast. Grouped aroimd it are the three typical 
 races of man. "No other region on the globe," says de Quatrefages,i 
 "presents a similar union of extreme human types distributed round a 
 common centr^." 
 
 As the topographical conformation of this region is examined, its 
 suitability as a distributive centre is evident. From this high lying bowl, 
 as it might be called, draining the surrounding mountainous country, 
 pour the watercourses of the continent; the rivers of China leading 
 away to the north and east, the Salwen and the Me-Khong through the 
 Malay Peninsula; the Brahmaputra and the Indus, although both rising 
 on the northern slopes of the Himalayas, owing to the remarkable topog- 
 raphy of the region, flow to the southeast and southwest into the Bay 
 of Bengal and the Arabian Sea. The Ganges drains the southern slope 
 and waters northern India, while the streams of the western ranges 
 stretch away through the steppes of northwestern Asia to the valleys 
 of the Oxus and Jaxartes. 
 
 "Salute these sacred summits," says Renan,^ "where the great races 
 of the wo rld which carried within their womb the future of humanity, 
 
 » The Human Species, p. J76. 
 
 ■ Dc I'Originc du Language, p. 231. 
 
 first looked upon the infinite; and inaugurated those two facts which have 
 changed the face of the world: morality, and reason." The men of 
 prehistoric ages may perhaps be considered as roaming down the great 
 watercourses of Central Asia; streaming away like the water they 
 followed through virgin valley and forest primeval; some to the plains 
 and steppes to the northward, others to the east along the coast to the 
 Aleutian islands, or across what is now Behring Strait and the Island of 
 St. Lawrence, to the continents of another hemisphere; some down the 
 Salwen and the Me-Khong to the Malay Peninsula, the Sundas, Australia, 
 and New Zealand, or, scattered like pollen by the winds of the sea, im- 
 pregnating the islands of the Pacific. Others again, perhaps, drifting 
 down the southern slopes of the Himalayas, peopled the valleys of the 
 Indus and the Ganges, or streamed away to the ancient regions of the 
 Caspian and the Euxine, while the Tigris and Euphrates led to the Med- 
 iterranean and the land of the Nile. 
 
 Whatever theory of the peopling of the world is adopted, however, 
 in Asia must be sought many of the most interesting and inspiring con- 
 ceptions to which the himaan mind has given birth: in Asia, the primeval 
 home of humanity, the parent of letters and philosophy, the birthplace 
 of the sciences and the mother of religions: Ex Oriente lux. 
 
 To ask the origin of religion is the same as to ask the origin of life. 
 To seek the origin of fimdamental phenomena, is but to ask what sup- 
 ports the turtle of the Indian cosmogony, which supposes the earth to be 
 upheld by an elephant, the elephant by a turtle, and the turtle suspended 
 in space. It would be as well to suspend the earth in space in the first 
 place. "Prima in orbe deos fecit timor." "But fear it was that first 
 made gods on earth," says Petronius,^ and concludes: 
 
 "And now the criminal's vow, the traitor's greed 
 Contend, inventing gods to suit their need." 
 
 Religious phenomena, in their political, fiscal, and metaphysical 
 aspects support the opinion of the C3mical Roman. The interests of priest 
 and politician, combined with the pecimiary value of ignorance and 
 superstition in 'the masses, have doubtless played an important 
 part in the development of the religious systems of the world. 
 These, in connexion with the inexplicable facts of existence; the 
 heavens, the sun and the stars, thunder and electricity, together 
 with man's imaginative tendencies, hallucinations, delirium, disease, 
 
 » Frag., v.. p. 3S6« 
 
 '»!( 
 
 n 
 
358 
 
 Religion 
 
 Pt. IV 
 
 t 
 
 war, sex, birth, and death, ronn a large proportion of the elements from 
 which many, if not the majority, of tiieological conceptions are derived. 
 Whatever the opinion, or lack of opinion, adopted with reference 
 those phenomena, broadly classified as religious, nothing seems more 
 clearly demonstrated in history, however, than that religion is a force; 
 and intangible, inexplicable force, perhaps, but a force none the less; 
 and as such, no more to be disregarded in the study of political and 
 social phenomena, than any other fact falling beneath the observation. 
 "An unbiased consideration of its general aspects," says Mr. Spencer, * 
 "forces us to conclude that religion, everywhere present as a weft run- 
 ning through the warp of human history, expresses some eternal fact." 
 Such considerations suggest that the least unsatisfactory method for 
 the study of the phenomena of religion, is identically the same as that 
 adopted in the study of other phenomena. Their existence is accepted 
 for the reason that they leave impressions upon the faculties. These 
 are analyzed and classified, and these classifications form the bases and 
 criteria to which subsequent impressions and inductions may be referred. 
 The study of the phenomena of religion is, however, fraught with 
 difficulties of observation and interpretation, from which the inductive 
 natural sciences are largely free. Cicero* tells the story of Simonides 
 and the tyrant Hiero, in which the latter requests the philosopher to 
 tell him something of the nature of the gods. Simonides asks for a day 
 in which to consider the matter; the next day he begs for two days more; 
 then for four days for further meditation, and subsequentiy continued 
 doubling the time required. When Hiero asked the reason, he replied 
 that the longer he considered the subject, the greater became its difficulty 
 and obscurity. 
 
 This difficulty and obscurity are the prevailing impressions in inquiry 
 devoted to religion. There exists, however, a body of trustworthy, 
 scientific material dealing with the subject due to the patient effort and 
 research of many able scholars. Their labours, divorced from theo- 
 logical, metaphysical, and traditional influences present, perhaps, the 
 most useful critical conmientary with reference to the field considered. 
 This apparatus, in connexion with the original sources of information 
 as the basis of study, presents the essentials of any rationalized conclu- 
 sions with reference to religion. In order to reach such conclusions, 
 however, it is necessary to submit the subject under discussion to two 
 
 > First Principles, | 6., p. 16. 
 < De Nat. Dear., L. aa. 
 
 
 I 
 
 Bk. Ill 
 
 Object and Method of Inquiry 
 
 359 
 
 distinct processes: (i) An analytical process of separate phenomena, 
 or an attempt to resolve these into their constituent parts; (2) a 
 comparative and, if possible, synthetic process, by means of which these 
 parts may be studied in relation to each other, or united in a s)aithesis 
 of the essentials of the entire field. "Method," as Aristotie^ would 
 say, "begins when from a variety of conceptions derived from experi- 
 ence, one universal conception is evolved which embraces all similar 
 
 »i 
 
 cases. 
 
 While no conclusive evidence exists with reference to the origin of 
 religion, material is foimd giving vague glimpses of the origin of re- 
 ligions. Comparative philology presents data from which such 
 glimpses may be derived. Professor Miiller^ says, in recapitulating 
 the conclusions of his third lecture on the science of religion : " We found, 
 first of all, that there is a natural connection between language and 
 religion, and that therefore the classification of languages is applicable 
 to the ancient religions of the world. 
 
 "We found, secondly, that there was a common Aryan religion before 
 the separation of the Aryan race; a common Semetic religion before the 
 separation of the Semetic race; a common Turanic religion before the 
 separation of the Chinese and the other tribes belonging to the Tiu^anian 
 class. We found, in fact, three ancient centres of religion as we had 
 foimd before three ancient centres of language, and we have thus gained, 
 I believe, a truly historical basis for a scientic classification of the prin- 
 cipal religions of the world." 
 
 No material exists, apparentiy, permitting the explanation of the 
 evolution and classification of religions much beyond the position sum- 
 marized in the foregoing citation. A study of the ultra-primitive re- 
 ligious conceptions of man, based upon analysis and comparison of the 
 roots and fundamental characters of the most ancient tongues, seems to 
 present a vague monotheism as the earliest religous form of which informa- 
 tion may be obtained. Such information is, however, of the most 
 elusive nature. As man spread himself over the surface of the globe, 
 and language developed into written characters, later religions slowly 
 came into existence. With the basis of classification suggested by 
 Professor Miiller, these may best be studied in relation to the language 
 and branches of the human family, from which they are derived. 
 
 To the north and east of that region beyond the Himalayas, provision- 
 
 H 
 
 * Metaph. A. i. 981 a 5. 
 ' Scienu of Rdigum, p. 99. 
 
 
HI'B' 
 
 ill 
 
 h ?» 
 
 I 
 
 1 
 
 360 
 
 Religion 
 
 Pt. IV 
 
 ally regarded as a distributive centre of population and language, the 
 great Mongolid family stretches to the Pacific, and, in the opmion 
 of certain ethnologists, over the entire aboriginal Americas, from the 
 Esquimaux on the north, to the Patagonians and Fuegians at their 
 southern extremity. In Taoism some scholars find the primitive creed 
 of ancient China in its later phases; others see in Confucianism the re- 
 formation of the original beliefs. On the upper reaches of the Ganges, 
 it seems, were written the last hymns of the Vedas; and these, with the 
 other sacred writings, form the bases of the Indian system of Brahman- 
 ism. About one hundred miles northwest of the sacred city of Benares, 
 in the country of Oudh, five centuries before Christ, was born Gautama,' 
 whose creed spread through southern India and northeastern Asia- 
 dying out later at its source, while retaining its hold m other lands, and 
 forming one of the "three religions" of China. To the southwest of 
 Central Asia lies the region known to the ancients as Bactriana, through 
 which swept the legions of Alexander, and here, it seems, probably not 
 later than the sixth century before the present era, lived the great 
 Zoroaster; the prophet of Ormazd and Ahriman. Zoroaster dommated 
 the religious thought and lives of countless millions through the various 
 phases of Persian civilization; and is heard to-day by but a few scattered 
 remnants in the land of his birth, and the Parsis in western India. In 
 the ancient land of Egypt, a mysterious polytheism and nature worship 
 seems to have been the popular faith of the teeming millions of the Nile, 
 whose mysteries and priest-craft are now as silent and empty as the 
 mighty ruins of Kamac. Here, too, was bom Moses, the law-giver 
 of Israel, the prophet of the One God, the Jehovah of Abraham and the 
 Arab sheiks of Ur. From Egypt, again, and the legends of the ancient 
 Pelasgi, sprang the beautiful Hellenic mythology; the gods of Orpheus, 
 Homer, and Hesiod, and these, together with numberiess other streams 
 of influence from her conquests and possession, poured into the lap of 
 the mistress of the ancient worid on the banks of the Tiber. A few 
 miles south of Jerusalem, between the Dead and the Mediterranean Seas, 
 Hes Bethlehem; and here was bom the Christ who preached the One God 
 of Abraham; not, however, as his prophet, but as his only begotten Son. 
 This creed spread away to the north and west, formed a great focus at 
 Rome during the Middle Ages, broke later into various crystallizations, 
 and spread its influence to the New Worid. At the northem extremity 
 of the region the ancients caUed Arabia Felix, near the shores of the 
 Red Sea, Hes Mecca; and here arose Mohammed, the prophet of Islam, 
 
 Bk. Ill 
 
 Object and Method of Inquiry 
 
 361 
 
 whose followers swept across northern Africa, occupied Spain, penetrated 
 to the gates of Rome, and as far north as central France. To the east- 
 ward, they absorbed the ancient Empire of the Persians, and with 
 Mahmud, Jenghiz Khan, and Tamerlain overran Central Asia, China, 
 and India, and carved an Empire, reaching from the pillars of Hercules 
 to the Hindo Kush. His followers form to-day numerically, perhaps, 
 the fifth of the great religious creeds of the world; Christianity and 
 Confucianism lead in the number of their adherents; Brahmanism, or 
 Hinduism, practically one, coming third; Buddhism fourth, while Taoism 
 ranks, probably, after Buddhism and Mohammedanism. Jainism and 
 Zoroastrianism are relatively insignificant numerically. ^ 
 
 These form the chief religious classifications into which civilized man, 
 ancient and modem, may be divided. They form, as it were, the natural 
 subdivisions into which the original classifications suggested by Pro- 
 fessor Miiller are resolved. 
 
 If a Japanese or Indian scholar were to visit England or America, in 
 order to study the religious systems of the people, he would find most 
 of the populations of these countries styling themselves "Christian." 
 His next question would naturally be: What is Christianity? The 
 Oriental inquirer might well be bewildered with the variety of replies 
 received. In these countries, regarded as largely under the influence 
 of a single creed, he would find endless opinions with reference to that 
 creed; opinions varying from the most elaborate teleological conceptions, 
 to the attitude w^hich regarded Christianity as a series of laboured hal- 
 lucinations, built aroimd a personality which may never have existed. 
 After examining the opinions of orthodox theologians; the endless 
 series of refutations by heterodox theologians; the refutations of the en- 
 tire theological system — orthodox and heterodox — from other sources, 
 together with the confused and inarticulate opinions of the masses, 
 the Oriental inquirer might begin to think of Christianity as a strange 
 and elusive phenomenon; about which, apparently, none knew less than 
 the Christians. At the same time, however, as a student of religious 
 influences, he would be imable to ignore Christianity, for despite these 
 confused warrings and contradictions, its creed has occupied an im- 
 portant place in human history, and among other great systems of 
 religious thought. 
 
 The im portant question arises, therefore, by what means may the 
 
 1 Cf. Sir Monier Monier- Williams, Buddhism, p. zviii. These relations may be largely modified in 
 accordance with the method of classification adopted. Cf. Buddhism and Its CkrisUan Critics^ by Dr. 
 Paul Carus, Chi^igo, 1897, p. 165. 
 
 ii 
 
 m 
 
 t 
 
362 
 
 Religion 
 
 Pt. IV 
 
 Bk. Ill 
 
 Object and Method of Inquiry 
 
 363 
 
 unprejudiced investigator discover the essential features of Christianity 
 and, at the same time, free inquiry from the series of mythical, mystical, 
 symbolic, and metaphysical mazes possessing interest chiefly for the 
 antiquary or the psychologist? Such an inquirer might conclude that 
 this could best be done by the simple expedient of addressing himself 
 inunediately to the original fountain-head of Christianity itself. In the 
 words of Christ, and in the words of Christ alone, he might expect to 
 find the most direct and authoritative material dealing with the subject. 
 
 There isjone objection to the method. The words of Christ present a 
 system but remotely allied to existing systems. In other words, the 
 thought of Christ, freed from mysticism, metaphysics, and theological 
 interpretations, contain little or no statement of much of the religious 
 opinion actually dominant under the name of Christianity. The method 
 adopted will thus depend upon the object of inquiry. 
 
 Religious phenomena may be divided into two distinct classes: (i) 
 The permanent and original f oimtain-head, or ultimate source of inspira- 
 tion, tfrom which the religion in all its phases is derived; (2) The 
 changing and shifting mazes of theological commentary and inter- 
 pretation; of myth, dogma, teleological and metaphysical speculation, 
 crystallizing about the central figures. 
 
 This second class of phenomena, again, seems to resolve itself into 
 two classes: (i) Certain fixed ideas which, in varying degrees of 
 importance, are conmion to almost all religions; such as virgin births, 
 powers of evil, the fall of man, atonements, miracles, and so forth; (2) 
 A process of thought sweeping aroimd these fixed ideas in endless cycles 
 of repetition, contradiction, and reiteration of form, dogma and rituals 
 presenting an acamiulation of mystical and symbolic material, under- 
 going a process of evolution and modification, and varying with varying 
 conditions; temporal, political, local, and intellectual. 
 
 It is here imessential to trace any comparison of these fixed ideas, or to 
 study their development. They do not suggest any exalted opinion of 
 the resources of the human imagination. The endless repetitions of 
 the same miracles and miraculous conceptions, the same powers of evil, 
 atonements, temptations, annunciations, transmigrations, transfigura- 
 tions and trans-substantiations; the same ascensions, resurrections, 
 predestinations, damnations, Paradises and Purgatories; the same golden 
 ages, falls of man, original sins, mystical trinities and imities, symbolical 
 numbers, such as three and seven, grow monotonously familiar; and 
 suggest man's incapacity to formulate a conception of the Divinity, 
 
 independent of these not extraordinarily inspiring fixed formulas. This 
 is a field, however, outside the present inquiry. It may be developed 
 through the original sources of information, or in the interesting works 
 of Douglas, James Legge, Mills, Carey, Sir William Jones, Colebrooke, 
 Bumouf, Smith, Whitney, Max Miiller, Budge, Deussen and a host 
 of able and trustworthy scholars. The travels of Father Hue might 
 also be mentioned in this connexion, bringing as they do, in the words of 
 Doctor White, ^ "to the notice of the world the amazing similarity of the 
 ideas, institutions, observances, ceremonies, and ritual, and even the 
 ecclesiastical costumes of the Buddhists to those of his own church." 
 These similarities, Father Hue traces^ through " * the crozier, the mitre, 
 the dalmatic, the cope or pluvial j which the grand l^mas wear on a journey 
 or when they perform some ceremony outside the temple, the service 
 with a double choir, psalmody, exorcisms, the censer swinging on five 
 chains, and contrived to be opened or shut at will, benediction by the 
 limas with the right hand extended over the heads of the faithful, the 
 chaplet, sacerdotal celibacy, Lenten retirements from the world, the 
 worship of saints, fasts, processions, litanies, holy water — these are 
 the points of contact between the Buddhists and ourselves.' The good 
 Abbe has by no means exhausted the list, and might have added * con- 
 fessions, tonsure, relic worship, the use of flowers, lights, and images 
 before shrines and altars, the sign of the cross, the Trinity in unity, the 
 worship of the Queen of Heaven, the use of religious books in a tongue 
 unknown to the bulk of the worshippers, the aureole or nimbus, the crown 
 of saints and Buddhas, wings to angels, penance, flagellations, the 
 flabellum or fan, popes, cardinals, bishops, abbots, presbyters, deacons, 
 the various architectural details of the Christian temple ' and so forth. 
 To this list, Balfour^ s CydopcBdia of India adds, * amulets, medicines, 
 illuminated missals'; and Mr. Thompson^ * baptism, the mass, requiems.' " 
 The subject of the reiteration of the same ideas throughout the entire 
 field of formal religion is interestingly reviewed, and an introduction to 
 a larger portion of its literature presented, in a work entitied Bible Myths 
 and their Parallels in other Religions.^ 
 
 Within the higher fields of theological speculation, the tendency of the 
 theological mind to repeat itself is not less marked. 
 
 * A History of the Warfare of Science with Theology, Vol. II., p. 380. 
 
 * Buddhism «i» Christianity, by Arthur Lillie in Religious Systems of the World, p. X64. 
 
 * Illustrations of China, Vol. II., p. 18. 
 « Bouton, New York, 1883. 
 
 ■4 
 
 m 
 
 r :\ 
 
 i'-i 
 
3^4 Religion pt. IV 
 
 Says Doctor Legge,i in comparing the thought of the Chinese" philos- 
 opher, Mendus, with that of Bishop Butler, "In fact, that philosopher, 
 bom rather more than two thousand years before Bishop Butler, devel- 
 oped a theory of human nature in which he anticipated every important 
 point insisted on by the Christian prelate." 
 
 Doctor White touches this phase of the subject briefly but interestingly 
 in the closing chapter of his Warfare of Science with Theology, where an 
 introduction to a portion of its literature will be found. This second 
 class of what might be called metaphysico-theological speculation, pre- 
 sents a natural process of evolution and repetition, doubtless of a certain 
 historical and psychological interest, but radically removed from the 
 fountain-heads of the creeds round which it revolves. 
 
 The ultimate sources are largely independent of the fixed ideas shot 
 up, so to speak, in their neighbourhood, and of the cycles of theological 
 and metaphysical speculation revolving about these. 
 
 In order, therefore, to come in direct contact with ultimate religious 
 conceptions alone, inquiry at once refers to the single source from which 
 each system takes its rise, and theological and metaphysical substrata 
 are regarded as beyond the field chosen for review. 
 
 In order to apply to the fountain-heads of inspiration which have 
 dominated the religious thought of the world, with the object of 
 discovering their teachings, it is necessary: First, to formulate 
 an exact conception of what is meant by religion; second, to in- 
 terrogate the final authority of all religions considered with refer- 
 ence to these conceptions. The first question then, is: What is a re- 
 ligion? 
 
 The well qualified observer, Sir Monier Monier-Williams,^ says with 
 reference to that which constitutes a religion: (i) "Every system 
 claiming to be a religion in the proper sense of the word must postulate 
 the eternal existence of one living and true God of infinite power." (2) 
 "It must reveal some method by which the finite creature may com- 
 municate with the infinite Creator." (3) "It must also take for 
 granted the immortality of man's soul or spirit, and the reality of a 
 future state." (4) "It is most undeniably true that religion must of 
 necessity imply morality." 
 
 Whether or not this definition is accepted in the letter, it is essential 
 that any system of thought purporting to be religious, must adopt some 
 
 » The Religions of China, p. 103. 
 • Buddhism, pp. 538, 539. 
 
 
 Bk. Ill 
 
 Object and Method of Inquiry 
 
 365 
 
 position with reference to the four issues suggested: (i) Divinity, 
 (2) Mediation, (3) Immortality, (4) Morality, or Ethics. 
 
 In order, therefore, to examine the doctrines of a religion as such, its 
 teachings may be referred to these four headings which may thus serve 
 as a standard of comparison. With this method the examination of 
 hopelessly voluminous material is unnecessary. Confucius, Buddha 
 or Christ, are regarded as knowing best what they taught, with refer- 
 ence to those problems called religious. These questions can be answered 
 in a few simple words of the founders of the creeds. 
 
 Four direct questions alone are here to be asked of the great religious 
 
 teachers of the World: (i) God? (2) Mediation? (3) Inunortal- 
 ity? (4) Ethics? 
 
 I 
 
 I 
 
Bk. Ill 
 
 Lao-tsze 
 
 367 
 
 f. 
 
 J- 
 
 CHAPTER n 
 
 LAO-TSZE 
 
 TO THE north and east of central Asia, spreads that group of 
 tongues and religions regarded by Professor Miiller as belong- 
 ing to the Turanian branch of the human family; that 
 branch neither Aryan nor Semetic. Two great figures dom- 
 inate these creeds and tongues: the mysterious Lao-tsze and Confucius. 
 These two men were contemporaries, although, Lao-tsze was much the 
 elder. 
 
 Lao-tsze, the "old philosopher" of China, is among the most suggestive 
 of thinkers. The Tao Teh King reveals one of the most profound, 
 although one of the most illusive of personalities: "a superior man, who 
 liked to keep himself unknown."^ His contribution to religious thought 
 is the briefest of such works, yet among the noblest and most instructive. 
 He seems always on the verge of developing some great discovery, which, 
 he knows must elude him; a discovery which he tries to touch, but to 
 find it intangible; he listens and looks for it, to find it inaudible and 
 invisible; he tries to tell of it, but knows that words will fail. 
 
 "There is an Infinite Being, which existed before heaven and earth, 
 
 How calm it is! How free! 
 
 It lives alone, it changes not. 
 
 It moves everywhere, but it never suffers, 
 
 We may look on it as the Mother of the Universe. 
 
 I, I know not its name. 
 
 In order to give it a title, I call it Tao (the way). 
 
 When I try to give it a name, I call it Great, 
 
 After calling it Great, I call it Fugitive. 
 
 After calling it Fugitive, I call it Distant. 
 
 After calling it Distant, 1 say it comes back to me."" 
 
 There are few more suggestive attempts to conceive the inconceivable 
 and formulate that which the finite mind can never formulate, than in 
 the Too Teh King. This, then, is the God of Lao-tsze : an infinite, eternal 
 
 » Legge. Texts of Taoism, Pt. I. Sacred Books of the East, Vol. XXXIX., p.3s. 
 » Too Teh King, XXV. Translation in Professor MUller's Science of Religion, p. 114. 
 
 366 
 
 being, from which all things are derived and which is incapable of 
 definition by the finite human mind. 
 
 With reference to the second question of religious inquiry, Lao-tsze is 
 silent; he himself pretends to no inspiration from heaven, and points to 
 the Tao, or the Way, as the path to the Great Beyond. "The relation 
 of the Tao to all the world," he says,i "is like that of the great rivers 
 and seas to the streams from the valleys." 
 
 With reference to immortality, the following passage may be cited:' 
 " But I have heard that he who is skillful in managing the life entrusted 
 to him for a time travels on the land without having to shun rhinoceros 
 or tiger, and enters a host without having to avoid buff coat or sharp 
 weapon. The rhinoceros finds no place in him into which to thrust 
 his horn, nor the tiger a place in which to fix his claws, nor the weapon a 
 place to aximit its point. And for what reason? Because there is in 
 him no place of death." 
 
 Like the great and wise man he is, he goes into no detail with reference 
 to life after death. 
 
 Ethically, the conceptions of Lao-tsze are identical with those of 
 Buddha, Christ, Socrates, and the greatest ethical teachers. "To those 
 who are good (to me), " he says,^ "J am good; and to those who are not 
 good (to me), I am also good; and thus (all) get to be good. To 
 those who are sincere (with me), I am sincere; and to those who are not 
 sincere (with me), I am also sincere; and thus (all) get to be sincere." 
 He distinctly says* to return good for evil: "It is the way of the Tao 
 ... to recompense injury with kindness." 
 
 These passages are typical of all that Lao-tsze says with reference to 
 the subjects discussed. The four questions have now been answered in 
 the words of the founder of Taoism, and may be briefly summarized: 
 (i) He recognizes an infinite, spiritual Divinity. (2) He is silent 
 or obscure as to the method of communication with man, but points to 
 the Tao as the means of such communication. (3) He recognizes man's 
 immortality, and, in his comparison of the relation of the Tao to the 
 world, as that of the sea and the great rivers to the streams of the valleys, 
 he seems to regard man's union with God, or the Tao, as the highest 
 form of immortality. (4) He preaches a noble and elevated system of 
 ethics. 
 
 » Too Teh King, XXXII., 5. Translation by Doctor Legge, Sacred Books of the East.Vol XXXIX., p. js. 
 > Ibid., L., 4, p. 92. 
 » Ibid, XLIX. 2, p. 91. 
 * Ibid., LXIII., I, p. 106. 
 
 }i: 
 
 HI 
 
368 
 
 Religion 
 
 Pt. IV 
 
 Popular Taoism presents slight relation to the thought of this great 
 man : * ' No polytheism could be more pronounced, ' * says Doctor Legge, * 
 "or more grotesque, with hardly a single feature of poetic fancy or 
 aesthetical beauty." Again,^ "That the name of the system of 
 thought and of the man should be identified, as they are, with the base 
 religion described, ... is a mystery at present inexplicable." 
 
 » Tke Religions of China, p. lya 
 s Ibid., p. 229. 
 
 
 
 ■ 
 
 CHAPTER III 
 
 CONFUCIUS 
 
 THE great Confucius is the second important figure met in 
 Eastern thought. The teachings of Confucius are more 
 secular than those of Lao-tsze. The latter seems to have 
 developed his system chiefly from meditation and introspec- 
 tion; while Confucius, to use his own words, was a "transmitter and 
 not a maker, believing in and loving the ancients."^ 
 
 With reference to God, Confucius is almost completely silent; "not 
 once throughout the Analects does he use the personal name," says his 
 translator."^ " But," said the Master,^ "there is Heaven; — that knows 
 me"; and whether or not Confucius may be supposed to recognize a 
 God, depends entirely upon the interpretation of the Chinese word for 
 "Heaven." Confucius looked upon man as a member of society, and 
 paid little or no attention to questions relating to God, divine origin or 
 immortality. On the contrary, his mind seems to have dwelt chiefly 
 upon past customs, records, history, and literature, and it is rather to his 
 scholarship and intellectual ability that he owes his greatness than to 
 peculiarly religious thought. "I would say that he was imreligious 
 rather than irreligious," says Legge.* 
 
 With reference to life after death, the Master is non-conmiittal. Tsze- 
 kung asks, "Do the dead have knowledge (of our services, that is), or 
 are they without knowledge?" The Master replied: "If I were to say 
 that the dead have such knowledge, I am afraid that filial sons and 
 dutiful grandsons would injure their substance in paying the last 
 offices to the departed; and if I were to say that the dead have not such 
 knowledge, I am afraid lest imfilial sons should leave their parents un- 
 buried. You need not wish, Tsze, to know whether the dead have knowl- 
 edge or not. There is no present urgency about the point. Hereafter you 
 will know it for yourself."^ "To give one's self earnestly to the duties 
 
 1 Analects, VIL x.. Translation by Doctor Legge, Sacred Books of the East, Vol. I., p. xqs. 
 
 * Ibid., p. 99. 
 
 * IbiA, XIV. 37, p. aSg. 
 
 * Ibid, p. 99. 
 >Ibid. 
 
 369 
 
 iii 
 
 fwH 
 
I A 
 
 370 
 
 Religion 
 
 Pt. IV 
 
 I 
 
 li 
 
 i 
 
 't: 
 ill 
 
 I 
 
 due to men," said theMaster,i "and, while respecting spiritual beings, 
 to keep aloof from them, may be called wisdom." "While you do not 
 know life" he asks^ "how can you know about death?" Spiritual 
 bemgs^ were among the subjects "on which the Master did not talk." 
 These few simple phrases of Confucius, with reference to subjects pre- 
 senting no definite material for inquiry, demonstrate the wisdom and 
 sincerity of the ancient sage of China. 
 
 The ethics of Confucius, while perhaps not upon the same plane as those 
 of Lao-tsze, are noble, explicit, and intelligible. He dwells upon the 
 importance of truth and truthfuhiess at all times. "I do not know," 
 he says* "how a man without truthfuhiess is to get on. How can a 
 large carriage be made to go without the cross-bar for yoking the oxen 
 to, or a small carriage without the arrangement for yoking the horses?" 
 His most famous phrase is the reply to his disciple, Tsze-kung, who asked: 
 "Is there one word which may serve as a rule of practice for all one's 
 life? " "Is not Reciprocity such a word? " said Conf ucius.^ " What you 
 do not want done to yourself, do not do to others." Confucius repeats* 
 this phrase in the Doctrine of the Mean. This is the golden rule of 
 Christianity in its negative sense. Confucius seems to have appre- 
 ciated its positive application as well, and expresses his regret'^ at not hav- 
 ing "set the example in behaving to a friend, as I would require him 
 to behave to me." 
 
 The thought of Confucius is thus chiefly of a non-religious nature, 
 and consequently he has nothing to say with reference to communication 
 with the Divinity or his own inspiration. "I am not one who was born 
 in the possession of knowledge," he says;^ "I am one who is fond of 
 antiquity, and earnest in seeking it there." These passages are sufficiently 
 typical to permit the following summary of the views of Confucius with 
 reference to the four fundamental problems of religious inquiry: as to 
 the Divinity, he is vague and non-committal. The same may be said 
 of his views of man's immortality; he regards himself as in no way in- 
 spired; and preaches an elevated code of ethics and morality. 
 
 The pu re spring alone, as it wells from the master's mmd, is found in 
 
 * Ibid, VI, 20, p. igi. 
 
 * Ibid., XI, II, p. 241. 
 
 * IbiA, Vri, 20, p. 201. 
 
 * Ibid, II, 22, p. 153. 
 
 * Ibid, XV, 25, p. 301. 
 
 * Ibid, XIII, 13, p. 394. 
 ' Ibid. 
 
 * Ibid., VII. 19, p. 201. 
 
 Bk. Ill 
 
 Confucius 
 
 371 
 
 thought of this nature at its source. As it passes, however, through 
 endless channels of interpretation and exposition, and into the minds of 
 those unable to receive or contain it, the clear waters are drained into 
 swamps and quicksands, or lie in stagnant pools. Such has been the 
 fate of the teachings of Lao-tsze and Confucius; it is beside the present 
 purpose to follow them through these. 
 
 1 : 
 
 lit 
 
 ; I 
 
 I 
 
CHAPTER IV 
 
 BRAHMANISM 
 
 THE home of another group of religions, chief among which 
 are the great systems of Brahmanism and Buddhism, lies 
 to the south of the Himalayas. 
 
 "Veda, Upanishad, Sutra^ —poetry, philosophy, prayer." 
 .... Here in the sacred books of the Brahmans is the real re- 
 ligious fervour of the East, possessed as they are "by the infinite desire 
 for spiritual knowledge^ With incessant questioning they beset the 
 mystery of being. The S vetas vatara opens thus : * The seekers converse 
 together. What form of cause is Brahma? Whence are we? By 
 whom do we live and where at last abide? By whom are we governed? 
 Do we walk after a law, in joy and pain, O ye knowers of God? ' And the 
 Kena thus: 'By whom decreed and appointed does the mind speed to its 
 work?' The Mitri asks: 'How can the soul forget its origin? How, 
 leaving its selfhood, be again united thereto?* In Yajnavalkya's Code, 
 the munis inquire of their chief: 'How has this world come into being, 
 with gods, spirits, and men; and how the soul itself?. Our minds are 
 dark; enlighten us on these things." 
 
 What answer is found to these questions in the sacred texts of India? 
 A study of the Vedantic writings leads to the Upanishads as the highest 
 development of the religious thought of the Brahmans, and the essence 
 of the Upanishads may be expressed in two words and a symbol: 
 
 Brahman = Atman. 
 Man is divine. 
 As Deussen* says: "If for our present purpose we hold fast to this 
 distinction of the Brahman as the cosmical principle of the universe, the 
 atman as the psychical, the fundamental thought of the entire Upanishad 
 philosophy may be expressed in the simple equation: 
 
 Brahman = Atman. 
 "That is to say — the Brahman, the power which presents itself 
 materialized in all existing things, which creates, sustains, preserves. 
 
 1 Oriental Rdigions, India. Johnson, p. 336. 
 
 « Tk* Religion and Pkilosopky of India, The Upanishads. 
 
 Translated by Rev. A. S. Geden. M. A. 
 
 Bk. Ill 
 
 Brahmanism 
 
 373 
 
 and receives back into itself agam all worlds, this eternal infinite divine 
 power is identical with the atman, with that which, after stripping off 
 everything external, we discover in ourselves as our real most essential 
 being, our individual self, the soul. This identity of the Brahman and 
 the atman, of God and the soul, is the fundamental thought of the 
 entire doctrine of the Upanishads." 
 
 In the twelfth Khanda of the sixth Prapathaka of the Khandogya- 
 Upanishad, a father bids his son bring the fruit of the Nyagrodha tree. 
 "Break it," he commands. * "What do you see there?" he asks. 
 "These seeds, almost infinitesimal," replies the son. "Break one 
 of them," commands the father, and again asks what the son sees therein. 
 "Nothing," is the answer. "My son," says the father, "that subtile 
 essence which you do not perceive there, of that very essence this great 
 Nyagrodha tree exists." Then comes the pregnant sentence containing 
 the "great saying" of the Vedanta philosophy: 
 
 "Etadatmyam idam sarvam, tat satyam, sa atma, tat tuam asi 
 Svetaketu." 
 
 Anquetil Duperron^ translates this passage as follows: "Ipso hoc 
 modo (ens) illud est subtile: et hoc omne, unus atma est: et id verum 
 et rectum est, O Sopatkit, tatoumes, id est, ille atma tu as." 
 
 Deussen' renders: "Glaube, O Teurer, was jene Feinheit ist, ein 
 Bestehen aus dem ist dieses Weltall, das ist das Reale, das ist die Seele, 
 das bist du, O Cvetaketu." 
 
 Rajendralal Mitra^ interprets: "All this universe has the (Supreme) 
 Deity for its life. That Deity is Truth. He is the Universal Soul. 
 Thou art He, O Svetaketu." 
 
 Professor MuUer^ elaborates the thought in slightly different terms: 
 "That which is the subtile essence (the Sat, the root of everything), 
 in it all that exists has its self, or, more literally, its selfhood. It is 
 the True (not the Truth in the abstract, but that which truly and really 
 exists). It is the Self, i. e., the Sat is what is called the Self of every- 
 thing. Lastly, he sums up, and tells Svetaketu that, not only the whole 
 world, but he too himself is that Self, that Satya, that Sat." 
 
 When this elemental thought of the Upanishads is grasped in its 
 completen ess, it may seem that therein the religious imagination exhausts 
 
 1 Sacred Boohs of the East, Vol. I. The Upanishads, Pt L, [>. Z04. Translated by Prof. Max 
 MiUler. 
 
 • Ibid, p. XXXV. 
 
 * Sechaig Upanishad' s des Veda, p. x68. 
 
 • Sacred Books of the East, Vol. I., p. xxxv. 
 
 * Ibid., p. xxxvi. 
 
 :i 
 
 ¥■ 
 
i I. 
 
 374 
 
 Religion 
 
 Pt. IV 
 
 t ^' 
 
 
 itself. It can go no farther. After endless searchings and importunings, 
 the finite here loses itself in the infinite and ceases its quest — "As a 
 bird when tied by a string flies first in every direction, and finding no 
 rest anywhere, settles down at last on the very place where it is 
 fastened."^ 
 
 The finite thus becomes the infinite, and the infinite the Self. No more 
 elevated conception of man in his relation to the Divinity can be for- 
 mulated. ReHgion can take him no farther; faith can bring him no 
 nearer to God. "As the flowing rivers disappear in the sea, losing their 
 name and their form, thus a wise man, freed from name and form, goes 
 to the divine Person, who is greater than the great. He who knows 
 that highest Brahman becomes even Brahman. In his race no one 
 is bom ignorant of Brahman. He overcomes grief, he overcomes evil; 
 free from the fetters of the heart, he becomes immortal."^ 
 
 Says Deussen:^ "If we strip this thought of the various forms, 
 figurative to the highest degree and not seldom extravagant, under 
 which it appears in the Vedanta texts, and fix our attention upon it 
 solely in its philosophical simplicity as the identity of God and the soul, 
 the Brahman and the atman, it will be found to possess a significance 
 reaching far beyond the Upanishads, their time and country; nay, we 
 claim for it an inestimable value for the whole race of mankind. We are 
 unable to look into the future, we do not know what revelations and 
 discoveries are in store for the restlessly inquiring human spirit; but 
 one thing we may assert with confidence, — whatever new and unwonted 
 paths the philosophy of the future may strike out, this principle will 
 remain permanently unshaken, and from it no deviation can possibly 
 take place. If ever a general solution is reached of the great riddle, 
 which presents itself to the philosopher in the nature of things all the 
 more clearly the further our knowledge extends, the key can only be 
 found where alone the secret of nature lies open to us from within, that 
 is to say, in our innermost self. It was here that for the first time the 
 original thinkers of the Upanishads, to their immortal honour, found it 
 when they recognized our atman, our inmost individual being, as the 
 Brahman, the inmost being of universal nature and of all her phenomena." 
 Professor Miiller,^ in his work on the Vedanta philosophy says: "Their 
 whole philosophy was built on the conviction that every human being 
 
 » Ibid, Kahndogya-Upamshad, VI. Prapathaka, 8. Khanda, p. gg. 
 
 « Mundaha-Upanishad. IH. Mundaka, 2 Khanda, 8, 9. Sacred Books of the East, VoL XV., p. 41. 
 » The Religion and Philosophy of India. The Upanishads, translation by Rev. A. S. Geden, p. 39. 
 ^The Vedanta Philosophy, pp. 168-170. 
 
 Bk. Ill 
 
 Brahmanism 
 
 375 
 
 has its true being in Brahman, and this feeling, though it is chiefly meta- 
 physical, breaks out occasionally as a moral p)Ower also. We say, We 
 should love our neighbour as ourselves. The Vedantist says. We should 
 love our neighbours as ourself ; that is, we should love them not for what 
 is merely phenomenal in them, for their goodness, or beauty, or strength, 
 or kindness, but for their soul, for the divine Self in all of them. Thus, 
 in the Upanishads an old sage, who takes leave of his two wives when 
 retiring into the forest, says to his beloved Maitr^yi (Brih. Ar. II., 4): 
 *Thou who art truly dear to me, thou speakest dear words. Come sit 
 down, I will explain it to thee, and mark well what I say.' And he said: 
 * Verily, a husband is not dear, that you may love the husband; but that 
 you may love the Self, therefore a husband is dear. Verily, a wife is 
 not dear, that you may love the wife; but that you may love the Self, 
 therefore a wife is dear.* 
 
 "This is carried on to sons, and friends, to the gods and all creatures 
 they all are to be loved, not for themselves as they appear, but for the 
 Self that is in them, for their eternal Self, for that universal Self in which 
 we all share, in which we all live and move and have our being. Like 
 many a truth in Eastern religion, this truth also, that in loving 
 our neighbour we really love God, and that in loving our 
 neighbour we love ourselves, has sometimes been carried to 
 an extreme, till it became a caricature. But, nevertheless, it 
 shows an enormous amount of intellectual labour to have rea- 
 soned out that we should love our neighbour, because in loving 
 him we love God, and in loving God, we love ourselves. The deep 
 truth that lies hidden in this, was certainly not elaborated by any other 
 nation, so far as I know. 
 
 ' "So much to show that the Vedanta philosophy, abstruse as its meta- 
 physics are, has not neglected the important sphere of Ethics, but that, 
 on the contrary, we find ethics in the beginning, ethics in the middle, 
 and ethics in the end, to say nothing of the fact that minds so en- 
 grossed with divine things as the Vedanta philosophers, are not likely 
 to fall victims to the ordinary temptations of the world, the flesh, and 
 other powers." 
 
 The God of the Vedantists is an infinite, perfect, spiritual 
 Being imminent in, and external to, visible, conscious nature. This 
 Being is compared to light and air, which, while streaming 
 through space as distinct imities themselves, are nevertheless 
 the media through which all the vast complex of individual phenom- 
 
 i 
 
 li 
 
376 
 
 ReKgion 
 
 Pt. IV 
 
 m. 
 
 ena comes into being, or the environment within which it continues its 
 existence. 1 
 
 "As light, as one, through space eternal wells, 
 
 And yet in every form is held in bond, 
 The inmost Self of every being dwells 
 
 In every fonn — and yet remains beyond. 
 
 "The air, as one, is borne through boundless space, 
 Yet round each form it ever wells and wanes; 
 
 And so the inmost Self of Being's place 
 Is every form — and yet without remains. 
 
 "The sun, the eye of all the sweeping spheres, 
 Shines free from fault which other eyes endure: 
 
 E'en so, beyond all others' pains and fears, 
 Lives Being's inmost Essence, free and pure." 
 
 The God of the Vedantists is not only perfect, but perfect in an in- 
 exhaustible degree :2 
 
 "For perfect this and perfect that, the perfect from the Perfect grows; 
 Take perfect from the perfect still, Perfection ever overflows." 
 
 Deussen' renders this passage: 
 
 " Jenes is Voll, und voll dieses, 
 Aus VoUem Voiles wird geschopft; 
 Zieht man von Vollem ab Voiles, 
 Bleibt doch das VoUe tibrig noch." 
 
 The Upanishads are regarded as essentially inspired writings. Speak- 
 ing of Brahman they say: 
 
 "Fire is his head, sim and moon his eyes, 
 His ears the regions of the sky. 
 His voice is the revelation of the Veda. 
 (Seine Stimme ist des Veda Oflfenbarung).*** 
 
 The four questions of religious inquiry may now be answered from 
 the sacred scriptures of India: God? Immortality? Meditation? 
 Ethics? 
 
 The God of the Upanishads is conceived as an infinite, perfect, spiritual 
 
 « Kathaka-Vpanishad H. Adkyaya, s. Valh. o-xi 
 
 * Brihadaranyaka-Upanishad, V Adkyaya, z Brahmanam. 
 
 * Secktig Upaniskad's des Veda, p. 489. 
 
 * Mundaka-Upanishad 2. 1. 4. The Raigion and Philosophy of India. Deossen, Traoslation by Geden, 
 pw joa. 
 
 Bk. Ill 
 
 Brahmanism 
 
 377 
 
 Entity, at once imminent in, and external to phenomenal nature, and 
 representing the elemental essence of that nature. Man's union with 
 this Divinity is the highest form of immortality. The word of God is 
 echoed in the inspired words of the Vedas. The system of ethics and 
 morality of the Upanishads is as elevated as any formulated by human 
 tongue. 
 
 The Upanishads, then, present one of the richest and most inspiring 
 of religious systems. "In the whole world," says Schopenhauer* 
 ** there is no study so beneficial and so elevating as that of the Upanishads. 
 It has been the solace of my life, it will be the solace of my death." 
 
 1 Cited by Professor MUller, The Vendaia Philosophy, p. 8. ; 
 
 I 
 
 li 
 
j:- 
 
 CHAPTER V 
 
 BUDDHISM 
 
 BUDDfflSM," says Sir Monier Monier-WiUiams,! "at least 
 in its earliest and truest form, is no religion at all, but 
 a mere system of morality and philosophy, founded on a 
 pessimistic theory of life.'* It seems, indeed, impossible to 
 discover any statement of Gautama^s with reference to the existence 
 of a Divinity as conceived by the more spiritual religions of the world. 
 "As regards the denial of a Creator, or Atheism in the ordinary accepta- 
 tion of the term," says Professor Muller,^ "I do not think that any one 
 passage from the books of the canon known to us, can be quoted which 
 contradicts it, or which in any way presupposes the belief in a personal 
 God or a Creator." The two types of mind already discovered in 
 China, appear again in India. One turns within, to a spiritualistic, or 
 religious, solution of the problems of existence; the other seeks in 
 objective nature more rational and philosophic explanations. Thus, if 
 God, meditation, and immortality are eliminated from the thought of 
 Buddha, his ethical teachings become the centre of his system. 
 
 The Dhammapada presents, perhaps, the nearest approach to the 
 words of Buddha himself. " If we may consider," says Professor Muller,^ 
 "the date of the Dhanmiapada firmly established, and treat its verses, 
 if not as the utterances of Buddha, at least as what were believed by the 
 members of the Coimcil imder Asoka, in 246 B. C, to have been the 
 utterances of the foimder of their religion, its importance for a critical 
 study of the history of Buddhism must be very considerable, for we can 
 hardly ever expect to get nearer to Buddha himself and to his personal 
 teachings." The attention will therefore be limited to the Dhammapada; 
 the "Path of Virtue," or the "Footstep of the Law." The verse which 
 D'Alwis quotes from the introduction* of Buddhaghosa's commentary 
 — "The Teacher who had reached the very depths (lit. bottom) of 
 Saddhamma, preached this holy Dhanmiapada" — shows its significance: 
 
 > Buddhism, p.S37. 
 
 > Science of Religion, p. lag. 
 • Science of Religion, p. 165. 
 
 < Cf. Sacred Books of the East, Vol. X., Dhammapada, p. Uv. 
 
 378 
 
 Bk. Ill 
 
 Buddhism 
 
 379 
 
 " He abused me, he beat me, he defeated me, he robbed me — in 
 those who do not harbour such thoughts hatred will cease." 
 
 " For hatred does not cease by hatred at any time: hatred ceases by 
 love, this is an old rule."^ 
 
 " We live happily indeed, not hating those who hate us! among men 
 who hate us we dwell free from hatred. "^ 
 
 " Let a man overcome anger by love, let him overcome evil by good; 
 let him overcome the greedy by liberality, the liar by truth. "^ 
 
 " He who has no wound on his hand, may touch poison with his hand; 
 poison does not affect one who has no wound; nor is there evil for one 
 who does not commit evil."* 
 
 " These wise people, meditative, steady, always possessed of strong 
 powers, attain to Nirvana, the highest happiness."^ 
 
 What is this " highest happiness," this Nirvana of Buddhism? The 
 " absolute nothing," say Burnouf and Muller.* 
 
 "Om, mani padme, om! the Dewdrop slips into the shining sea!"^ 
 
 "The snowflake that glistens at mom on Kailasa, 
 Dissolved by the sunbeams, descends to the plain: 
 Then, mingling with Gunga, it flows to the ocean. 
 And lost in its waters returns not again." 
 
 Thus an attempt to reach the religious conceptions of Gautama may 
 result in the following brief summary, although the subject is involved 
 in almost hopeless obscurity. With reference to a personal self-con- 
 scious Divinity, he is silent or obscure. Man's inunortality and com- 
 munication with God are necessarily involved in the same silence and 
 obscurity. He preaches as elevated conceptions of the ethical relations 
 of man as any formulated; identical with those of Lao-tsze and the 
 Upanishads. Bumouf,^ says that he does not hesitate to translate 
 the Buddhist mditri by the term imiversal charity. 
 
 ^ IbiA,3Ch. I., 4, 5, p. 5. 
 
 * Ibid, Ch. XV., 197, p. 54. 
 
 » Ibid., Ch. XVII.. 223. p. 59. 
 
 * Ibid., Ch. IX., 124, p. 35. 
 
 • Ibid., Ch. II., 23, p. 9. 
 
 • Science of Religion, p. 140. 
 
 ' Edwin Arnold, Light of Asia, p. 203. 
 
 « Buyer's Recollections of Northern India, cited by Johnson, Qrier^ Religion, India, p. 362. 
 
 ' LALotus de la Bonne Loi, p. 300. 
 
 t 
 
CHAPTER VI 
 
 ZOROASTER 
 
 THE ancient and august creed of Iran and the "Great Kings" 
 has nearly perished; to find the words of its founder among 
 the ruins may be impossible. There remain but the texts 
 not destroyed by Alexander, and whatever light history and 
 the modem Parsis may give. 
 
 "It has long been felt as a difficulty of no ordinary magnitude," says 
 Rawlinson^ " to reconcile the account which Herodotus, Dino, and others 
 give of the ancient Persian religion with the primitive traditions of the 
 Persian race embodied in the first Fargard of the Vendidad, which are 
 now found to agree remarkably with the authentic historical notices 
 contained in the Achaemenian monuments. . . . Throughout 
 Herodotus we have not a single trace of Dualism; we have not even 
 any mention of Ormazd; the religion depicted is purely and entirely 
 elemental, the worship of the sun and moon, of fire, earth, water, and 
 the winds or air. (Conversely, in the inscriptions there is nothing ele- 
 menUl; but the worship of one Supreme God, under the name of Ormazd, 
 with perhaps an occasional mention of an Evil Principle." 
 
 This conflict of sources of information is rendered more evident upon 
 further inquiry, and whether the creed of Zoroaster was a dualism, or 
 no more dualistic than the popular Christianity of modem Europe, 
 with its divine and satanic principles, will depend upon the selection 
 and interpretation of material dealing with the subject. Ample 
 support, however, may be found for the opinion that the the religion of 
 old Iran was as essentially monotheistic as any of the great creeds of the 
 world. Perhaps the nearest approach to the actual thought of Zoroaster 
 with reference to God, occurs in Eusebius; this passage, Eusebius cites^ 
 as containing the very words of Zoroaster, the Magus, in the holy ritual 
 of the worship of the Persians. 
 
 "The God of the falcon's head is the first, incomiptible, eternal, un- 
 generated, indivisible, utterly unequalled, controller of all that is good. 
 
 » History of Herodotus, Rawlinson, Vol. I., p. 346. 
 ' Praep. Evan. I., 5a, Vol. I., p. 52. 
 
 380 
 
 Bk. Ill 
 
 Zoroaster 
 
 381 
 
 unapproachable by gifts, the best of the best, and the wisest of the wise; 
 the father of all justice and good council, self-taught, natural, perfect, 
 intelligent and sole discoverer of the sacred sum of things." 
 
 The Achaemenian inscriptions and the foregoing passage are sup- 
 ported by the creed of the modern Parsis, as shown in the following 
 extract* from one of their catechisms: 
 
 A few Questions and Answers to acquaint the Children of the holy 
 Zarthosti Community with the subject of the Mazdiashna Religion j i, e.^the 
 Worship of God, 
 
 Question. — Whom do we, of the Zarthosti commimity, believe in ? 
 
 Answer, — We believe in only one God, and do not believe in any 
 beside Him. 
 
 Question. — Who is that one God ? 
 
 Answer, — The God who created the heavens, the earth, the angels, 
 the stars, the sun, the moon, the fire, the water, or all the four 
 elements, and all things of the two worlds; that God we believe in. 
 Him we worship. Him we invoke. Him we adore. 
 
 This seems to be the same God originally invoked by Zoroaster 
 himself. 
 
 With reference to immortality the Vendidad says:^ "Gladly pass the 
 souls of the righteous to the golden seat of Ahura Mazda, to the golden 
 seat of the Amesha-Spentas, to the Garo-nmanem, the abode of Ahura 
 Mazda, the abode of the Amesha-Spentas, the abode of all the other 
 holy beings." In the Dinkard^ is found: "This, too, that whoever 
 gratifies that which is enjojnnent, renders his soul imimortal; even for 
 this reason, because the soul subsists through good works, and good 
 works are all those which gratify enjoyment." 
 
 The following are some of the ethical conceptions of the creed : " Within 
 perfect diligence in industry is also comprised opposition to any harm 
 whatever, and it is opposition to harm and perfect goodness that are 
 worthy of every happiness."* "This, too, that by him who would act 
 for the pleasure of others, owing to virtue, the growth and increase owing 
 to Vohuman are produced. "^ 
 
 With r eference to meditation, it seems that Zoroaster may or may not 
 
 » Chips from a German Workshop, Mliller, Vol. I., p. i6g. 
 
 Zend-Avesta. Vendidad, Fargard XDC., 32, Sacred Books of the East, VoL IV., p. 214. 
 » S. B, E. Pahlavi Texts. Part IV., VoL XXXVIL. p. 339 (42). 
 « Ibid, (43). 
 • Ibid.. Us). 
 
382 
 
 Religion 
 
 Pt. IV 
 
 be regarded as divinely inspired; there being some doubt upon the 
 subject.^ 
 
 A study of the most authoritative information available may permit 
 the following summary of the creed of Zoroaster: He recognized one 
 omnipotent and supreme Divinity; intelligent and self-conscious. Man's 
 immortal nature appears an essential element of his system. No in- 
 formation exists establishing whether or not he regarded himself a 
 divinely chosen messenger. The moral and ethical conceptions of the 
 creed are noble and elevated. 
 
 There, then, are the God and the creed of the great Zoroaster; and, 
 as preached by the modern Parsis, "They rest," in the words of Pro- 
 fessor Muller,2 "on a foundation which ought never to be touched, a 
 faith in one God, the Creator, the Ruler, and the Judge of the World." 
 
 » Cf. Mttller, Chips from a German Workshop, Vol. I., pp. 170-X71. 
 * Ibi<U p. 178. 
 
 CHAPTER VII 
 
 EGYPT 
 
 "Who does not know what monsters they worship in Egypt demented? 
 Crocodiles here are adored, while there, in another place, tremble 
 Reverend worshippers, bowed to an ibis! sated with serpents; 
 Sacred apes of the long tail, golden images flashing 
 There where Memnon, broken in twain, makes magical music; 
 Where hes Thebes, old Thebes, with her hundred of portals in ruins. 
 Here whole towns bow down to the cats and the fish of the river; 
 Others worshipping dogs; but never they worship Diana. 
 Sacred are onion and leek; impiety ever to taste them; 
 Holy nation of men whose divinities grow in their gardens I" 
 
 IN DESCRIBING the creed of the people, Herodotus* supports 
 this impression of Juvenal;^ "They are religious to excess," he 
 says, "far beyond any other race of men." He also attributes^ 
 to Egypt the first conceptions of immortality and transmigration 
 of the soul. 
 
 There seems undoubtedly to have been an enormous amoimt of 
 theological complication and priest-craft in ancient Egypt; the number 
 and variety of the gods is oppressive, and every locality appears to have 
 had its theogony. There is, however, another side to the religious 
 thought of Egypt; a side very different from the bundle of popular 
 absurdities and superstitions presented by Juvenal and others. Ancient 
 as the civilization of the Nile undoubtedly was, there is much in it 
 traceable to Asiatic influence. 
 
 "Now I believe, I may broadly say," says Bunsen,* "that the fact 
 to which I allude, viz., that the Egyptian language betrays a strictly 
 historical connection with Asia, or, to speak more precisely, with the 
 Semetic and Iranian tribes, is among those who have studied them 
 according to the critical school of comparative philology, no longer an 
 object of controversy." "We must regard the Egyptians, therefore," 
 
 III., 37. Rawlinson, Vol. II., p. 51. 
 * Satire XV., i-io. 
 » IL, 123. 
 
 « Discourse read before the Ethnological Section of the British Association for the Advancement of Science. 
 Oxford, June 28, 1847. 
 
 383 
 
 '^\\\} 
 
 1 H 
 
 ?: i\ 
 
 V* 
 
384 
 
 Religion 
 
 Pt. IV 
 
 ;i 
 
 V 
 
 says Rawlinson,* "as an Asiatic people, immigrants into their own 
 territory, which they entered from the east, and nearly allied to several 
 important races of South- Western Asia." Few better accounts of the 
 important features of the Egyptian creed may be found than in the 
 words of this distinguished scholar: 
 
 "The primary doctrine of the esoteric religion imdoubtedly was the 
 real essential Unity of the Divine Natxire. The sacred texts taught that 
 there was a single Being, 'the sole producer of all things both in heaven 
 and earth, Himself not produced of any' — 'the only true living God 
 self originated' — *who exists from the beginning' — *who has made all 
 things but has not Himself been made.' This Being seems never to have 
 been represented by any material, even symbolical, form. It is thought 
 that He had no name, or, if He had that it must have been imlawful 
 either to pronoimce or write it. He was a pure spirit, perfect in every 
 respect — all-wise, almighty, supremely good." . . . 
 
 "It is difficult in many cases to fix on the exact quality, act, or part of 
 nature intended; but the principle admits of no doubt. No educated 
 Egyptian priest certainly, probably no educated layman, conceived of 
 the popular gods as really separate and distinct beings. All knew that 
 there was but one God, and understood that when worship was offered 
 to Khem, or Kneph, or Phthah, or Maut, or Thoth, or Ammon, the 
 One God was worshipped under some one of His forms or in some one 
 of His aspects! "2. . . . 
 
 Transmigration seems to have involved a series of existences imtil 
 perfection was reached, when "finally the good and blessed attained the 
 crowning joy of the union with God, being absorbed into the Divine 
 Essence, and thus attaining the true end and full perfection of their 
 being."' This creed, in its highest conception of God and immortality, 
 seems identical with the teachings of Lao-tsze and the Upanishads. 
 
 The most important religious relic of Egypt is the celebrated Book of the 
 Dead. Where these texts were written, is unknown. "The general 
 testimony of their contents," says Budge,* "indicates an Asiatic home 
 for their birthplace." This Book seems to contain the essence of 
 Egyptian religious teachings; the essence of the Book of the Dead is the 
 CXXVth chapter, and the essence of that chapter may be expressed 
 in one word: Truth. In this impressive allegory the soul of the dead 
 
 » History of Ancient Egypt, Vol. I., ch. uL, p. 97. 
 
 * Ibid, VoL L, ch. X., pp. 314-315. 
 » Ibid, p. 319. 
 
 * The Book oj the Dead, Translation by Budge, p. zlvi. 
 
 I 1 
 
 Bk. Ill 
 
 Egypt 
 
 38s 
 
 appears before the judgment seat of Osiris, in the Hall of the goddesses 
 Isis and Nephthys, who symbolize Right and Truth. This is called the 
 Judgment Hall of the double Maati, or the Hall of Two Truths. Anubis 
 balances the heart of the dead on the scales with the symbol of Right and 
 Truth. Thoth records the result of the weighing, while the monster 
 Am-met stands ready to devour the unjustified, as the dead man urges 
 his claims to salvation. "I have come," says the soul of the dead^ to 
 Osiris, "and I have drawn nigh to see thy beauties; my hands are raised 
 in adoration of thy name 'Right and Truth,'" . . . "Hail, thou 
 child, who comest forth from the Lake of Heq-at, I have not made 
 myself deaf to the words of right and truth"2. . . and again:' 
 "I live upon right and truth, and I feed upon right and truth." 
 
 In this chapter occurs the "negative confession" of the Egyptian creed 
 showing that the ethical and moral conceptions of Egypt were the same 
 as the highest ethical and moral conceptions of any other creed. The 
 claims of the deceased before the judgment seat of Osiris, are all devoted 
 to showing that he had wronged none in any way.* "The Egyptian 
 code of morals," says Budge,^ "as may be seen from the CXXVth 
 chapter, was the grandest and most comprehensive of those now known 
 to have existed among the nations of antiquity." 
 
 The Hymn to Ra when he riseth is typical of the best of the Egyptian 
 invocations and shows their conception of God. "Thou risest, thou 
 risest, thou shinest, thou shinest, thou who art crowned king of the gods. 
 Thou art the lord of heaven; [thou art] the lord of earth; [thou art] the 
 creator of those who dwell in the heights and of those who dwell in the 
 depths. [Thou art] the God One who came into being in the beginning 
 of time. Thou didst create the earth, thou didst fashion man, thou didst 
 make the watery abyss of the sky, thou didst form Hapi (i.e., the Nile), 
 thou didst create the watery abyss, and thou dost give life unto all that 
 therein is. Thou hast knit together the mountains; thou hast made 
 mankind and the beasts of the field to come into being; thou hast made 
 the heavens and the earth. . . . O thou divine youth, thou heir 
 of everlastingness, thou self-begotten one, O thou who didst give thy- 
 self birth! One, mighty [one], of myriad forms and aspects, king 
 of the world, Prince of Annu (Heliopolis), lord of eternity and ruler of 
 
 * Ibid., czxv.. p. x88. 
 
 * Ibid, p. XQS' 
 » Ibid., p. 197. 
 
 * Ibid., p. cbdz. 
 ^ Ibid., p. cboc. 
 
 I 
 
 i 
 
386 
 
 Religion 
 
 Pt. IV 
 
 everlastingness, the company of the gods rejoice when thou risest and 
 when thou sailest across the sky. . . . Thou art unknown and no 
 tongue is worthy to declare thy likeness; only thou thyself [canst do 
 this]. Thou art One, even as is he that bringeth the tenfl basket. "^ 
 
 Chapter LXIX may be cited as illustrative of the Egyptian's con- 
 ception of his union with the Divinity after death. "The deceased is 
 always identified with the god Osiris," says Budge,^ "and frequently 
 called by the god's name." 
 
 Thus the God of ancient Egypt seems a Divinity very like the one 
 preached by Zoroaster, by Lao-tsze and the Upanishads. "It is per- 
 fectly certain," says Budge,^ "that when the Egyptians declared that 
 their god was One, they meant exactly what the Hebrews meant when 
 they declared that Jehovah was One, and what the Arabs meant, and 
 still mean when they cry out Allah is One. At all events the One god 
 of the Egyptians possessed all the essential attributes of the Christian's 
 God." 
 
 In Egypt, then, is found a religious system which in its highest feat- 
 ures may be summarized as follows: An infinite intelligent. Divinity, 
 made known to man through a body of sacred writings; man's union 
 with God regarded as the highest form of immortaUty, the goal of all his 
 hopes. With these is combined an ethical and moral system inferior to 
 none; based upon the foundations of all ethics and all morahty — Right 
 and Truth. 
 
 * Ibid., pp. 8-Q. 
 'Ibid, pp. xcviii. xdx. 
 ' Ibid., p. Ixzix. 
 
 CHAPTER VIII 
 
 JUDAISM 
 
 A QUIVER full of steel arrows," says Renan,i "^ cable with 
 strong coils, a trumpet of brass, crashing through the air 
 with two or three sharp notes, such is Hebrew. A language 
 of this kind is not adapted to the expression of philosophic 
 thought, or scientific result, or doubt, or the sentiment of the infinite. 
 The letters of its books are not to be many; but they are to be letters of 
 fire." This is the tongue in which is written the words of the One God 
 of Abraham. Speaking of Greece, Renan says,^ "Her philosophers, 
 while dreaming of the immortality of the soul, were tolerant toward 
 the iniquities of the world. Her religions were merely elegant munic- 
 ipal playthings; the idea of a imiversal religion never occurred to 
 her. The ardent genius of a small tribe established in an outlandish 
 corner of Syria seemed created to supply this void in the Hellenic intel- 
 lect. . . . The inhabitants of Padan- Aram were particularly attached 
 to the legend of the fabled Orham, King of Ur, and called him Aborham 
 (Abraham), the Father-Orham, a name which was destined to go down 
 into the deepest strata of mythological history .3 . . . 
 
 "A sort of deism without metaphysics was what the fathers of Judaism 
 and Islamism inaugurated at that early period, with a very sure and 
 unerring instinct^. . . . These ancient patriarchs of the Syrian 
 deserts were in reality comer-stones of humanity. They are the * tris- 
 megists' of religious history. Judaism, Christianity, and Islamism all 
 proceed from them."^ 
 
 The god of Abraham is a transcendently powerful and personal 
 conception : "I am the first, and I am the last ; and beside me there is no 
 God."^ "I am the Lord, and there is none else; beside me there is no 
 God: I will gird thee, though thou hast not known me: that they may 
 know from the rising of the sun, and from the west that there is none 
 
 1 Uistory of the People of Israel, Vol. I., p. 86. 
 ' Ibid., Preface, p. vii. viii. 
 « Ibid., p. 63. 
 
 * Ibid., p. 49. 
 » Ibid., p. SI. 
 
 • Isaiah, LX.-6. 
 
388 
 
 Religion 
 
 Pt. IV 
 
 w 
 
 beside me: I am the Lord, and there is none else. I form the light and 
 create darkness; I make peace, and create evil; I am the Lord, that doeth 
 all these things." ^ "I have made the earth, and created man upon it: 
 I, even my hands, have stretched out the heavens, and all their host have 
 I commanded."^ These words sound not unlike the god of Zoroaster, 
 of Lao-tsze, of Egypt, and the UpanishadSy speaking in the first person. 
 
 It is a singular fact that this transcendently spiritualized and personal- 
 ized religion dwells but slightly upon the subject of unmortality. "The 
 silence of the Pentateuch respecting immortality," says Clarke,' "is 
 one of the most remarkable features of the Jewish religion." 
 
 With reference to ethics is written:* "Thou shalt love thy neigh- 
 bour as thyself : I am the Lord." Again:^ "And if a stranger sojourn 
 with thee in your land, ye shall not do him wrong. The stranger that 
 sojoumeth with you shall be imto you as the homebom among you, and 
 thou shalt love him as thyself." It seems safe to say that no creed ever 
 has, or ever will, transcend this clear injunction of the God of the Hebrew 
 prophets; it is identical with the best of the noblest creeds of the world. 
 
 Perhaps the creed of Israel could not be better summarized than in 
 the words of her own prince of thinkers:^ "Remember thy Creator 
 in the days of thy youth, or ever the evil days come, and the years draw 
 nigh, when thou shalt say, I have no pleasure in them ... or ever 
 the silver cord be loosed, or the golden bowl be broken . . . and 
 the dust retmn to the earth as it was, and the spirit return unto God 
 who gave it. . . . This is the end of the matter; all that hath been 
 heard: fear God and keep his commandments; for this is the whole duty 
 of man." 
 
 Here is an omnipotent, self-conscious Divinity communicating with man 
 through his chosen prophets with "the word of the Lord upon them." 
 Here is an ethical system identical with the best of all other creeds, 
 and immortality subordinated to other thought or conceived in the 
 words of the Preacher as the "return of the spirit to God who gave it." 
 
 » Isaiah. LXV:s. 
 «/5atV»A. LXV:i2. 
 
 • The Ten Great Religions, Vol. 7, p. 417. 
 « Lenticus, XIX:i8. 
 
 » Leviticus. XIX;33. 
 
 • Eccksiastes, XII. x, 6. 13, 
 
 CHAPTER XI 
 
 MOHAMMED 
 
 IN THE name of the merciful and compassionate God. 
 "r. H. We have not sent down this Qur'^n, to thee that 
 thou shouldst be wretched; only as a reminder to him who 
 fears — descending from Him who created the earth and the 
 high heavens, the Merciful settled on the throne! His are what is in 
 the heavens, and what is in the earth, and what is between the two 
 and what is beneath the ground ! . . . God, there is no God but He ! 
 His are the excellent names."i 
 
 "He is God, there is no God but He; to Him belongs praise, in the 
 first and the last; and His is the judgment; and unto Him shall ye 
 retum."2 
 
 "He is God, the one, the victorious. He created the heavens and the 
 earth in truth! It is He who clothes the day with night; and clothes the 
 night with day; and subjects the sun and the moon, each one runs on to 
 an appointed time; aye! He is the mighty, the forgiving! ... His 
 is the Kingdom, there is no God but He.' ... 
 
 "He is God alone! God the Eternal! He begets not and is not 
 begotten! Nor is there like unto Him any one!"* "Your God is one 
 God; there is no God but He, the merciful, the compassionate. "^ 
 
 This is the God of Islam, the God of Mohammed. When the writings 
 and the creeds of the chief religious teachers of the world are examined 
 the God of Mohammed becomes a by no means unfamiliar conception, 
 a by no means isolated creation of the Prophet. The God of Islam 
 presents the attributes of the supreme Divinity of the other great re- 
 ligions of the worid. When the human being invokes the Divinity, 
 the results are practically always identical: he exhausts the resources of 
 his imagination; his capacity for exalted utterance and the superlatives 
 of his lang uage. This done, he can but repeat himself or the conceptions 
 
 » Oiw'ftn, Chapter of T. H. (XX., Mecca) Translation, by E. H. Palmer, Sacred Books of the East, Vol. 
 K., pp. 34-35. 
 
 • Ibid, xxviii., 70, p. us. 
 
 ' Ibid., zzzix., 5. p. 182. 
 ! * Ibid., czii., p. 344. 
 
 » Ibid., Vol VI., Part I., ii., 150, p. ai. 
 
 389 
 
 M' 
 
1^^ 
 
 390 
 
 Religion 
 
 Pt. IV 
 
 M 
 
 of other seers and prophets, and a study of the bulk of the religious writ- 
 ings of the world shows that neither one nor the other opportunity has 
 been neglected. A comparison of the more elevated records of Egypt; 
 the writings of the VedaSj many Chinese inspirations, the religious 
 material of the Achaemenian inscriptions, the utterances of the Hebrew 
 prophets, the suras of the Alkoran and many prayers and invocations 
 of the Greek and Roman world, leaves a singularly uniform impression 
 with reference to the Divinity described. The God invoked in the 
 best of these writings never varies: whatever differences may be found 
 are traceable to superficial distinctions of time, race or figurative lan- 
 guage. The God Himself remains always the same God. He represents 
 the most transcendent conceptions to which a given mind, race or tongue 
 can give birth; the highest of the highest, the superlative of superlatives 
 and — the hymn or invocation ceases, or begins to repeat itself. 
 
 Thus, the Gki«d upon whom Mohammed dwells at length, bears a close 
 resemblance to the God whom Lao-tsze knew it was useless to attempt 
 to describe. If this God is studied more closely, familiar echoes of 
 Zoroaster occur, of the Book of the Dead, of the Upanishads, the Vedas, the 
 Achaemenian inscriptions, the Hebrew prophets, and of the best of the 
 religious thought of Greece and Rome. In all this body of material, 
 the noblest conceptions with reference to the Divinity are constantly 
 going over the same ground in different tongues and different climes; 
 the Supreme God has a different name — there is no other distinction. 
 If there is one Supreme God, there can be but one God who is Supreme, 
 and whether sung on the rivers of China, the snow-clad crests of the 
 Himalayas, the plains of old Iran, or the deserts of Arabia, He must 
 always remain One and the Same. 
 
 With reference to inunortality the great soifrces of religions inspiration 
 are often vague or silent; it is only in descending to their interpreters 
 and expoimders that the details of a future life begin to appear. Moham- 
 med presents a marked exception; in no single fountain-head of religious 
 inspiration may such explicit conceptions of life after death be found. 
 In the opinion of Mohammed, the futiure state of the sinner and unbe- 
 liever present no alluring prospects. 
 
 "Verily, those who disbelieve in our signs, we will broil them with 
 fire; whenever their skins are well done, then we will change them for 
 other skins, that they may taste the torment. Verily, God is glorious, 
 and wise/'i 
 
 >5. 3.£.,Vo|. VI.. Qur'An, Part L. iv.. 55. p. 80. 
 
 Bk. Ill 
 
 Mohammed 
 
 391 
 
 "And for those who disbelieve in their Lord is the torment of hell, 
 and an evil journey shall it be!"^ 
 
 " Verily, hell is an ambuscade; a reward for the outrageous, to tarry 
 therein for ages. They shall not taste therein cool nor drink, but only 
 boiling water and pus — a fit reward! "^ 
 
 They shall "dwell in the fire for aye," and shall be "given to drink 
 boiling water that shall rend their bowels asunder.'' ^ 
 
 On the other hand, the Koran glitters with equally accurately formu- 
 lated conceptions of Paradise, the eternal abode of the good and the 
 faithful; conceptions possessing an interesting psychological relation to the 
 arid wastes of Arabia, for "beneath it rivers flow, its food is enduring and 
 likewise its shade!"* 
 
 "In it are rivers of water without corruption, and rivers of milk, the 
 taste whereof changes not, and rivers of wine delicious to those who 
 drink; and rivers of honey clarified; and there shall they have all kinds 
 of fruit and forgiveness from their Lord."^ There the faithful wUl 
 find "garden twain," "both furnished with branching trees," "in each 
 are flowing springs," "in each are of every fruit two kinds" and couches 
 the "linings of which are of brocade," with "the fruit of the two gar- 
 dens within reach, to cull." "Therein are maids of modest glances," 
 of the greatest discretion and reserve; like "rubies and pearls"; the 
 gardens are -shaded "with dark green foliage"; "in each two gushing 
 springs," in each "fruit and palms and pomegranates"; "maidens best 
 and fairest, with bright large eyes," "kept in their tents," reclining 
 on "beautiful carpets" and "green cushions."^ 
 
 There are other passages in the Koran however, presenting different 
 and not less elevated conception of man's immortal nature; "God 
 takes to Himself souls at the time of their death."^ Sale translates^ 
 a verse in the Chapter on Light: "Unto God belongeth the kingdom of 
 heaven and earth; and unto God shall be the return at the last day." 
 Lane-Poole* renders the same lines: "God's is the empire of the 
 heavens and the earth, and to Him must aU things return." "This 
 
 » Ibid., Vol. DC, Part 11., Ixvii., 5, p. 293. 
 
 2 Ibid., Ixxviii., 25, p. 317. 
 
 ' Ibid., xlvii., 15, p. 230. 
 
 « Ibid., Vol., VI., xiii., 35, p. 237. 
 
 •Ibid., Vol. IX., xlvii., 15, p. 230. 
 
 • Ibid., Iv., 4>7S, p. 260. 
 
 "^ Ibid., ch. zxxix.. 40, p. 186. 
 
 • Koran, xxv., p. 285. 
 
 • The Speeches oj Mohammed, p. lii. 
 
 ' r 
 
392 
 
 Religion 
 
 Pt. IV 
 
 formula/ says Palmer, i "is always used by Mohammedans in any 
 danger and sudden calamity, especially in the presence of death." 
 Here is a conception of inmiortaUty identical with that of Lao-tsze 
 the Book of the Dead, the Upanishads, and the author of EcclesiasUs- 
 the union of man with God. 
 
 There is frequent evidence in the Koran of Mohammed having con- 
 sidered himself a divinely appointed and inspired messenger.* 
 
 With reference to Mohammed's ethical conceptions the following 
 passages may be cited: "Righteousness is not that ye turn your faces 
 toward the east or the west, but righteousness is, one who beUeves in 
 God, and the last day, and the angels, and the Book, and the prophets 
 and who giveth wealth for His love to kindred, and orphans, and the 
 poor, and the son of the road (the wayfarer), and beggars, and those 
 in captivity; and who is steadfast in prayer, and gives alms; and those 
 who are sure of their covenant when they make a covenant; and the 
 patient m poverty, and distress, and in time of violence; those are they 
 who are true, and these are those who fear."3 The foUowing passages 
 occur m the table talk of Mohammed."* "Say not, if people do good 
 to us, we will do good to them, and if people oppress us, we wiU oppress 
 them ; but resolve that if people do good to you, you will do good to them, 
 and if they oppress you, oppress them not again." "Forgive thy 
 servant seventy times a day."* "He is not strong, or powerful who 
 throws people down, but he is strong who withholds himself from anger "« 
 In the Koran^ is written that paradise shall be the reward of those who 
 *ward off evil with good." 
 
 In the creed of Islam is met the same omnipotent Divinity of other 
 rehgious sources; an inspired prophet who presents various conceptions 
 of immortality, permittmg various interpretations, one of which is 
 man's union with God after death, the fundamental conception of all 
 the great creeds of the world. Ethical injunctions may be selected from 
 the words of Mohammed which almost paraUel those of other great 
 religions. ^ 
 
 ^Sacred Bocks of the East.\o\.Wl.,p. 22. Note. 
 
 • Cf. Ibid, n., and note p. 13. 
 
 • Ibid, ii., 170, p. 24. 
 
 « The Speeches of Mohammed, p. 147. 
 
 • Ibid, p. 163. 
 
 • Ibid, p. 167. 
 
 »S.A£..VoLVI,xiu. 3o,p.a3S. 
 
 CHAPTER X 
 
 GREECE 
 
 Section I — Introduction, Section II — Greek Tragedy. 
 
 Section III — Greek Philosophy, 
 
 Section I — Introduction 
 
 EACH of the creeds already examined possess one body of 
 writings as the chief source of information. In Greece and 
 Rome, however, no such recognized sources are found, and 
 inquiry into the best religious thought of those countries 
 must adopt a modified method. The political and religious history of 
 the two great Western nations of antiquity, suggests that the best of 
 their religious opinion should be sought anyhwere rather than in "in- 
 spired" channels. 
 
 The primitive belief of the Aryans, whatever it may have been, un- 
 doubtedly changed wijth the wars and wanderings of the tribes, as they 
 emerged from the mists of the past. The earliest poets and theogonists 
 of Greece doubtless found a mass of myth and legend awaiting them, 
 and information with reference to these is ahnost entirely derived from 
 Orpheus, Homer and Hesiod. These are the sources to which the 
 eariier popular creeds of Hellas must be referred, and their informa- 
 tion is elusive. 
 
 The following instance suggests the results to which inquiry in this 
 field may lead. Justin,^ in his Hortatory Address to the Greeks, says 
 that Orpheus was their first teacher of polytheism. Again,^ that Orpheus 
 introduces no less than three himdred and sixty gods in his theogony. 
 He then proceeds to cite later Orphic writings in support of a purely 
 monotheistic creed. 
 
 Early theological polemics present other instances of the same kind. 
 If the Orphic fragments themselves arc analyzed, little light is thrown 
 upon the subject. 
 
 »xv. 
 
 * Justin on the Sole Government of God, U. 
 
 393 
 
 ?ll 
 
11 
 
 394 
 
 Religion 
 
 Pt. IV 
 
 Bk. Ill 
 
 Greece 
 
 The hymns of Orpheus, the speculations, of Pythagoras, and the 
 Platonic writings were adopted by the Alexandrian mystics as the 
 chief sources of their inspiration. The speculations of Plotinus, Porphyry, 
 and Proclus suggest the mazes through which the Orphic fragments may 
 be followed. 
 
 Recent inquiry, however, refers the bulk of the Orphic writings to the 
 Alexandrine age, and in the words of Grote:^ " Even the earliest among 
 them, which served as the stock on which the later editions were en- 
 grafted, belong to a period far more recent than Hesiod: probably to 
 the century proceeding Onomakritus (B. C. 610-510)." 
 
 If, on the other hand, the most ancient of these texts are ac- 
 cepted for what they purport to be, they present a fragmentary 
 mass of poetic imagery and no systematic thought permitting ac- 
 curate analysis. 
 
 So far as Homer is concerned there is no cosmological, theological 
 or teleological hypothesis for or against which a brave array of passages 
 from the Iliad or Odyssey might not be cited. In the light of the con- 
 flicting and inconsequent thought of the greatest of the bards, even the 
 skeptics of a later age claimed him for their own.* As the learned 
 Mosheim^ says: "The poet seems to me to have been at no certainty, 
 but to have rashly, and with but little judgment, interwoven with his 
 verses the dogmas that were prevalent among the Greeks. I do not 
 therefore wonder that the ancients, Heraclides, Plutarch, and in fact 
 all, whether wise or unwise, were able to corroborate as they pleased 
 their opinions and dogmas by the authority of Homer." Consistent 
 thought is not the chief characteristic of the earlier cosmological theog- 
 onists; and where thought is not consistent, analysis is impossible. 
 Nor is inquiry aided by a study of the Sibylline oracles. If regarded 
 as genuine, they may be used for any purpose; if regarded as 
 partly or entirely the fabrications of Alexandrine mystic, Jew or 
 Christian, they become valueless as casting any light upon pure 
 Hellenic thought. Thus the attempt to submit the earlier poets, 
 theogonists, and oracles to a critical analysis results in the impres- 
 sion of having tried to analyze a cloud, which, with a little sym- 
 bolic jand allegorical intrepretation, may be presented in any form 
 desired. These and allied sources do not contain the best religious 
 
 395 
 
 » History of Greece, VoL I., p. 20. 
 
 » Cf. Lagrtius, Pyrrho, VIIL 
 
 * Cudworth 9 Intellectual System (Harrison). Vol 1.. p. 172 (note). 
 
 inspiration of Hellas; on the contrary they present a heterogeneous 
 mass of myth, legend, imagery and forgery suggesting at times the 
 inspiration of Jew and Christian, priest and politician, quite as 
 much as that of the Divinity. 
 
 Orpheus, Homer, and Hesiod, therefore, together with the entire 
 body of oracles, sibyls, dogmas, legends, and allegories of the popular 
 theology are not embraced in the field examined. Attention is here 
 turned to the records of the ablest minds of Hellas in her prime. 
 
 Greek history presents two periods: Marathon, Salamis, and the 
 Victories of Gelon inaugurate the second period; and, with the exception 
 of Sparta perhaps, Hellenic civilization about the fifth century, B. C, 
 undergoes a change not unlike that of the Renaissance in later Europe. 
 Old beliefs receive new formulation, are subjected to analysis and criti- 
 cism or rejected. New social forms are developed, new forms of thought 
 evolved, and the most gifted of the races of men bursts into matur- 
 ity. This second period embraces the best of the religious life of 
 Greece. 
 
 Mature Hellenic civilization presents two more or less distinct 
 divisions of thought: Greek tragedy and Greek philosophy. These lead 
 to another bewildering impression of variety and contradiction. There 
 is, apparently, no attitude toward the Divinity and the Universe, God, 
 Nature, and Man not contained in the thought of Greece in the clearest 
 and most beautiful of forms. There is scarcely a phase of religious hallu- 
 cination and fanaticism, of the purest atheistic materialism, skeptical 
 idealism or the sanest worship of one omnipotent Creator not expressed 
 in the tongue of ancient Hellas. 
 
 If this body of literature is sifted, in order to reach its fountain-heads, 
 the three great tragic poets are met on one side, and her leaders of 
 philosophic thought, from Thales to Pyrrho, on another. Here again, 
 however, the same difficulty occurs, owing to the wealth and variety 
 of the material. In the later phases of Greek tragedy, there is much 
 thought which may be regarded as either skeptical or atheistic; 
 while in Greek philosophy, the purest theism and the purest 
 atheism are found hand in hand, so to speak, or at least existing side 
 by side. 
 
 Religious ideas are obviously not to be sought in the rationliastic or 
 scientific speculation of poet or philosopher. The fields of religion and 
 philosophy may therefore be regarded as distinct; the essentially re- 
 ligious views of the philosophers may be grouped with those of the tragic 
 
396 
 
 Religion 
 
 Pt. IV 
 
 writers; and rationalistic and scientific inquiry reserved for separate 
 study. 
 
 Section II — Greek Tragedy 
 
 The three great tragic poets stand at the sources of the religious 
 thought of Hellas at her zenith. It is impossible to study them in this 
 connexion without discovering a consistent conception of divine unity 
 and power. The religious significance of Greek tragedy will appear to 
 some minds vastly more inspiring than that of many writings of an 
 exclusively religious natiu-e. 
 
 Greek tragedy reveals as consistent conceptions of divine omnipotence, 
 justice, intelligence, and unity of man's immortal nature; and as elevated 
 a moral interpretation of that nature as the bulk of the sacred writings 
 of the world. 
 
 "If we proceed to analyze the cardinal idea of Greek tragedy"* 
 says an informed student, "we shall again observe the close connection 
 which exists between the drama and the circumstances of the people at 
 the time of its production. Schlegel, in his Lectures on the Drama, 
 defines the prevailing idea of Greek tragedy to be the sense of an op- 
 pressive destiny — a fate against which the will of man blindly and vainly 
 dashes. This conception of hereditary destiny seems to be strongly 
 illustrated by many plays, Orestes, (Edipus, Antigone are unable to 
 escape their doom. Beautiful human heroism and exquisite innocence are 
 alike sacrificed to the fatality attending an accursed house. Yet Schlegel 
 has not gone far enough in his analysis. He has not seen that this 
 inflexible fate is set in motion by a superior and anterior power, that it 
 operates in the service of offended justice. When (Edipus slays his 
 father, he does so in contempt of oracular warnings. Orestes, haunted 
 by the Furies, has a mother's blood upon his hands, and unexpiated 
 crimes of father and of grandsire to atone for. Antigone, the best of 
 daughters and most loving of sisters, dies miserably, not dogged by 
 Fate, but having of her own free will exposed her life in obedience to the 
 pure laws of the heart. It is impossible to suppose that a Greek would 
 have been satisfied with the bald fate-theory of Schlegel. Not Fate 
 but Nemesis, was the ruling notion in Greek tragedy. A profound sense 
 of the Divine government of the worid, of a righteous power punishing 
 pride and vice, pursuing the children of the guilty to the tenth generation, 
 but show ing mercy to the contrite — in short, a mysterious and ahnost 
 
 » John AddingtoB Symonds. The Cruk Poets, Vol 11., p. 7. 
 
 Bk. Ill 
 
 Greece 
 
 397 
 
 Jewish ideal of offended Holiness pervades the whole work of the 
 tragedians. This religious conception had gradually defined itself in 
 the consciousness of the Greek race." Such is the impression of a 
 study of the tragic writers: one of the most intense and convincing concep- 
 tions of divine unity and power to which human utterance has given ex- 
 pression. The God of iEschylus and Sophocles yields in nothing in majesty 
 or might, in dignity or justice, to any God of which the mind of man has 
 dreamed; yields to nothing to the God of Zoroaster or Mohammed, to 
 the Brahman of the Upanishads, to the Supreme Being of Lao-tsze, of 
 Egypt, or to the Jehovah of the Hebrew prophets. Says iEschylus:* 
 
 Again: 
 
 .2 
 
 "Great King of Kings, most blessed of the blest, 
 Most perfect Might of power's last degree; 
 Thrice happy Zeus, but let persuasion rest 
 Upon thy will, that what Thou will'st may be." 
 
 "For 'neath no other's sway hast thou Thy throne, 
 To wield a sceptre as another wills; 
 No high command hast thou to hold in awe, 
 But ever, ready as Thy Word, the deed 
 Awaits to hasten what Thy mind conceives.*' 
 
 And Euripides:' 
 
 "Ah, Zeus, why should we wretched mortals tell 
 The wisdom of the sons of men — in vain, 
 For but in Thee must we forever dwell. 
 And all we do but what thou dost ordain." 
 
 Sophocles closes the tragedy of the Trachinice with words which 
 might be approximately rendered: 
 
 "Ye who dread death have seen, and many woes and strange, 
 May know that Zeus alone is found within them all." 
 
 As conceived in the thought of ^Eschylus, God's power, justice, man's 
 immortality and the retribution for sin, differ in no essential particular 
 from the allied ideas of any of the great creeds of the world: 
 
 "Look up to Him who watches from on high 
 And guards the toiling sons of men, and those 
 Who justice from their fellows seek in vain: 
 The wrath of God of suppliant abides, 
 ___^^^__ Nor by the guilty's woes is soon appeased." • 
 
 * Sup. 503. 
 " Sup. 574. 
 
 * Sup. 734. 
 
 * Sup. 356. 
 
398 
 
 Religion 
 
 "How then shall I behold the thought Divine, 
 Or pierce the depths of its unfathomed range? " * 
 
 "Whate'er is destined, that must even be; 
 Nor e'er transgressed the boundless will of God." " 
 
 "For mighty Pluto judges men below, 
 And all surveys with all recording mind." ' 
 
 "Yet courage still, in proper time and day, 
 Each man who slights the gods strict justice finds. 
 
 Pt. IV 
 
 Bk. Ill 
 
 fit 
 
 In the thought of Sophocles is found the same God and the same 
 ideas. Creon, King of Thebes, has commanded that the body of Antig- 
 one's brother remain unburied, exposed to the wolves and vultures. 
 Antigone buries the body herself, despite his orders, and says,^ when 
 questioned: 
 
 "Not Zeus it was who sent me that command, 
 Nor such the justice which the gods enthroned, 
 Have fixed within the laws for man designed; 
 Nor of such force have I thine edict deemed, 
 That God's imwritten and unfailing laws 
 By mortal man could ever be annulled. 
 Not of to-day are these, nor yesterday; 
 Their life e'er flows eternal on through time. 
 And no one knows when first they saw the light. 
 Could I, of some mere mortal pride in dread. 
 E'er answer to the Gods for breaking these? " 
 
 Again;* 
 
 Ah! may the fates my life forever guide, 
 In purest rev'rence of each deed and word. 
 Ordained by those decrees of Heaven sublime, 
 Whose father great Olympus was alone. 
 No mortal form within their nature blends. 
 Nor these to sleep shall e'er oblivion lull; 
 For great the might of God that Uves therein. 
 And great the God, nor grows He ever old. 
 
 » Sup. I02S. 
 
 « Sup. 1015. 
 
 • Eumenides, 272. 
 *Sup. 711. 
 
 • Antigone, 450. 
 
 • (Edipus Tyrannus, 864. 
 
 Greece 
 
 'Nay, by the flash of mighty Zeus 
 And Themis crowned in heaven, 
 Not long shall sin be unavenged." * 
 
 399 
 
 The measure of Euripides contains a singularly interesting body of 
 religious thought. He presents the disintegration of old Hellenic forms. 
 iEschylus and Sophocles transcend the conventional theogonies and relig- 
 ious conceptions and weld these into a unity — Euripides on the other 
 hand examines, analyzes or attacks them. Euripides thus presents a spirit 
 of inquiry and skepticism not found in the works of the older tragedians. 
 Many passages might be cited illustrating disbelief in the *'gods,'' and 
 the opinion that they owed even their imaginary existence to earthly 
 interests of priest and politician. If the attention is limited, to these 
 and allied passages, Euripides seems an irreligious or non-religious 
 writer. No such impression, however, is found in the writings of Eurip- 
 ides in their entirety. On the contrary, passages occur presenting 
 religious conceptions identical with those of iEschylus and Sophocles; 
 and it is obviously these which present the religious thought of this 
 interesting mind as distinguished from skeptical and philosophical 
 speculation. The following may suggest the passages cited: 
 
 Oh, thou. Upholder of the earth, and yet 
 Thereon in sphinx-like mystery enthroned; 
 Whate'er thou art, or mighty Zeus, or Fate 
 In nature's law ordained, or guiding Mind, 
 Thee I invoke; for though thou mak'st thy way 
 With noiseless tread through hidden paths unseen, 
 With justice rulest thou the sons of men.' 
 
 Who knows but what we hVe in Death's dull bond; 
 And dying, enter into life beyond?' 
 
 Far better than a host, without the right, 
 Is one good man in God's and Justice's sight.* 
 
 Through all the sky the fearless eagle soars, 
 And all the earth's the brave man's native land.* 
 
 There is no shadow 'mong'st the sons of men, 
 No darksome cave of earth, whose depths can heal 
 . The evil tainted heart, though ne'er so wise.* 
 
 > Electra, 1063. 
 
 * Trojan Women, 884. 
 
 » Dindorf, Vol. II.. Frag., 7, p. 936. 
 
 * Ibid., Frag. 5, p. 929, 
 » Ibid., Frag. 19, p. 975 
 
 * Ibid., Frag. 3. p. 932. 
 
 11 
 
 l! 
 
Pt. IV 
 
 400 ReHgion 
 
 Wild tongues and folly's brood 
 
 End but in pain, 
 Sweet peace and fortitude 
 
 Steadfast remain. 
 For, in the ether free, 
 
 Far though they dwell, 
 Heaven-born, powers see 
 
 Mortals full well.* 
 
 " Treat not the wretched ill; thou art a man.*'" 
 
 Analogous passages might be multiplied. The foregoing present 
 grounds however, for the opinion that Greek tragedy contains 
 identicaUy the same conception of one, omnipotent Divinity, as the 
 bu^ of the religions of the world; beUef in man's immortal nature 
 and an elevated conception of ethics and morality. The exquisite 
 words of Sophocles3 typify the ethics of Greek tragedy: 
 
 Section HI — Greek Philosophy 
 Article I— The Early PhUosophers. 
 
 Bk. Ill 
 
 Greece 
 
 401 
 
 (( 
 
 AU things are fuU of gods," Thales is quoted* as sayine "With 
 
 H rr" l°J'*' ^*^'" "^^^ I^°tagoras,« "I am unable to say anything 
 definite, either in connexion with their existence, or their non-existence." 
 No gods exist at aU, Democritus' impUes, when he says: "Nothing 
 exists but atoms and the void." 
 
 Such varied opinions suggest a question with reference to the best 
 means of reviewing that portion of HeUenic philosophic thought devoted 
 to religion; as much of Greek philosophy is evidenUy either non-religious 
 or directly antegonistic to religion. 
 
 The simplest method seems to be to separate the field into purely 
 philosophic and purely religious speculation; to reserve the former for 
 later stud y; and, while glancing at the more or less unsystematic theol- 
 
 * Baccha, 385. 
 
 * Dindorf, Frag. 15, p. goi. 
 
 » Ajax, 5M. Untranslatable: the meaning might be suggested: 
 
 For kindly grace shall e'er beget 
 More grace and kindness stilL 
 
 • Lagrtius. 1. 1, p. 6. 
 
 • Ibid., DC. 8. p. 239. 
 
 • Ibid., IX. 7. p. 23& 
 
 ogizing of the earlier thinkers, to concentrate the attention upon the 
 religious thought of the mature Athenian intellect. 
 ; The theologizing philosopher is, in a sense, an anomaly; yet theology 
 presents an irresistible temptation to a number of philosophic minds; 
 and the philosophizing theologian as well, is a not unfamiliar figure in 
 speculative history. And so Greek speculation, as all others, presents 
 two distinct phases: the philosophic, or rational; and the theological, 
 or religious. 
 
 Thus Thales philosophized and theologized simultaneously, and not 
 until the completely reasoned atheistic and skeptical positions of the 
 Atomists and the Sophists are developed is the reasoned negation of 
 all theological opinion reached. 
 
 The theological reflections referred to Thales are of doubtful authen- 
 ticity and questionable import. Anaxamander of Miletus makes the 
 Infinite the principle of ''all things"; although what is meant, in a theo- 
 logical sense, by the Infinite at this early stage of inquiry is difficult to 
 determine. The Pythagoreans were exceptionally religious, symbolic, 
 and mystic; so much so, in fact, that one of the clearest minds of the 
 day denied the validity of their cosmological conceptions; repudiated 
 the metaphysical Pythagorean Many and recognized Unity alone as 
 the fundamental reality: the only adequate expression of true being. 
 Xenophanes presents the most significant religious conception of his 
 time. Aristotle 1 says that Xenophanes "looked up to the whole of 
 Heaven and called it God." Such thought leads him to deny the Orphic 
 and Homeric multiplication of divinities; and Timon,2 the sillograph, 
 styles him the "wise reprover of the fallacies of Homer." Xenophanes 
 shows the human mind in search of truth, but growing conscious of 
 its limitations, and the endless possibilities of error. Timon^ lends him, 
 approximately, the following thought: 
 
 (( 
 
 Ah, that true wisdom were mine, dear, prudent and truth all containing, 
 For the dim paths that I follow but fade, and beguile and deceive me; 
 Ignorant, weary and old, adrift in the mazes of error, 
 Lost in the One and the All, wherever my spirit may wander.' 
 
 >» 
 
 A mind such as that of Xenophanes, recognizing an all controlling 
 Unity in nature, will be little interested in speculations of men dealing 
 
 « MOaph. A. s: 986 b 24. 
 •^LaSrtius, DC, a,p. 231. 
 • Sextus Empiricus, Pyrrh. By pot; 1. a, p. 99. 
 
402 
 
 Religion 
 
 Pt. IV 
 
 ! ' 
 
 With a power which it bdieves transcends their every conception. In 
 denying the mystical and symbolic complexities of the Pythagoreans 
 Xenophanes repudiated the conventional anthropological divinities, and 
 referred aU thmgs'^ to an infinite intelligent Unity, distinct from man:i 
 
 One is God, both of mortals and Gods, forever the greatest- 
 One, neither like unto men in mind, nor like them in body' 
 InteUect aU is this God, aU reason, sight, and all hearing ' 
 Ruling through power of mind, aU things; and, free from aU effort. 
 Motionless ever he is, unmoved, unchanged and unchanging. 
 Mortals forever believe that the gods are even as mortals- 
 Having such senses as they, in voice, in sight and in body- 
 But of a truth, if the ox or the lion had hands for contrivilig 
 Thmgs m the manner of men, then horses like unto horses 
 Ocen as oxen, would paint their gods, and make them as they are. 
 AU that IS worthy of blame in men of the gods is recorded- 
 Homer and Hesiod teU of the deeds, both shameless and lawless 
 Done by the gods: adultery, theft, and deceiving each other. 
 
 Such passages show, even at this early day, that the highest type of 
 Hellemc mmd was by no means completely entangled in the confused 
 theogomes of Orpheus and Homer. 
 
 th Jm ""^^^ f P^y^^ teleological conception among the philosophers is 
 the Nous, or Intellect of Anaxagoras, which, as Aristotle^ says, he employs 
 
 Um^^f'^ r "^ "^^ ?'"^" ^' ^^ ^^ ^' -' ^^ divine 
 Unity, of Xenophanes is thus developed into a more definite entity 
 
 which may be mterpreted as a cohscious Intelligence, external to the 
 phenomenal world, but acting upon it in harmony with reason: an im- 
 portant development of thought theologicaUy considered 
 Empedocles next appears. The fragments remaining of the thought 
 
 t^^^Tr ^"T"'''^ '""'"^ '^^^"^ speculations of the most 
 vaned nature. To reduce these to a consistent whole is difficult Thev 
 present many elements purely Eastern; they drift to Egypt and India, 
 mto a world of Pythagorean mystics; through forms of the most daring 
 transcendental metaphysics, only to be suddenly checked with scientific 
 analysis of the phenomenal and material. The following is perhaps the 
 simplest statement of his conception of the Divinityi^ ^ "^ ^ 
 
 "Mind alone, holy and pure, all mind in infinity sweeoinff 
 Consaously, swift, and free, thn)ugh the unive^ e^^where darting." 
 
 » Mullach, Pragmento^PkUosopharum Graecormm, Vol. I., v. i-t. p. «oc 
 « Metapk. A. 4. 985 a 18. * 
 
 • Muliaoh. Vol. I., p. 12, V. 395. 
 
 Bk. Ill 
 
 Greece 
 
 403 
 
 These few notices lead to the period of Attic philosophy, and the 
 fullest religious expression of the Greek intellect. 
 
 Article 2 — Socrates. 
 
 The advent of Socrates occurred at one of the critical epochs in the 
 history of philosophic speculation. Democritus and the Atomists, on 
 one side, had rationally demonstrated the impossibility of the existence 
 of incorporeal or supra-sensible entities. They had thus developed the 
 scientifically reasoned position of what is known in speculation as the 
 9U(Ji<; 5XoYO(;, or the Cosmos considered as the unconscious and imper- 
 sonal amalgam of matter and motion. The elements of matter thus 
 become the principles of all things — c?px<3:<; t6v SXwv ccT6tiou<;. 
 
 The Sophists, on another side, had analyzed the Nous, or Intelligence, 
 of Anaxagoras into the purely subjective opinion of the individual 
 human consciousness, and thus made "man the measure of all things": 
 TcdvT(i)v xpTQJJ^aTwv ti^Tpov (SfvOpwxoq. 
 
 These two positions understood, there seems little room for philosophic 
 theologizing; yet Socrates, in his perfect comprehension of them, was 
 able to imdermine the then existing theories of knowledge upon which 
 they were based, and consequently makes such theologizing possible. 
 The Pfuedo presents a vivid impression of an implicit confidence, not 
 alone in God's existence, but in His intelligent and spiritual perfection. 
 The God of Socrates is an infinite spirit, a Being in whom all wisdom, 
 truth, and beauty lie — the one real Existence to which the mind of 
 man may turn. 
 
 "Shall the seeker of true wisdom," he asks,^ "who cherishes the hope 
 that he will meet with it nowhere but in eternity, be grieved at death, 
 and not rather glad to go? Surely must he think so, friend; for, if 
 a philosopher, he will be firmly convinced that he will find true wisdom 
 in the other world alone." 
 
 The mortal man dies, but that part of him which truly lives "takes 
 its flight afar, safe, and imperishable ;"2 and virtue and wisdom are the 
 wings of the soul in its flight, says Socrates,^ and it behooves us to 
 leave nothing undone to share therein, for* "noble the reward and great 
 the hope." xaX6v ydtp t6 56Xov xal ii i'kiclq jjLeYiXiQ. 
 
 » Phado, 68 A. 
 s Ibid, X06 £. 
 ' Theaetetus, 176 B. 
 • Plnedo, 114 C 
 
 k ij 
 
 Mi 
 
404 
 
 Religion 
 
 Pt. IV 
 
 These simple and explicit statements suggest as pm-e a religious 
 atmosphere as any of the great religious writings of the world. 
 
 Ethics were preeminently the "art" of Socrates, and occupy an im- 
 portant position in the system of Plato. The study of ethics leads to the 
 study of man as a member of society; the principles of ethics and the 
 principles of social theory are identical in their attempt to determine the 
 ultimate relation of man to man. It is then in society that the proper 
 development of ethical theory is found. The RepMic presents the 
 political and social conceptions of Socrates and Plato in their final 
 form. A study of the chief ethical material of the Republic shows the 
 attempt to answer the aU-important question: What is Justice; 
 Justice being considered necessarily the comer-stone of any 
 rational system ^of social and poUtical organization. What then is 
 Justice? 
 
 The first book of the Repvhlic contains probably the most finished 
 dialectic ethical material in existence. Socrates is here in conversation- 
 a definition of Justice is required, and that of Simonides is accepted as a 
 pomt of departure, 'justice," has said Simonides "is to render each 
 his due." The discussion of Justice, therefore, develops a close analysis 
 of this position; finally formulated in the statement tiiat Justice "benefits 
 friends but injures foes." Socrates opposes arguments advanced from 
 this attitude, on the ground tiiat injury must beget injury, and tiiat 
 injustice must beget injustice; in other words, that perfect justice re- 
 cognizes no distinction between friend and foe. He concludes, i there- 
 fore, tiiat "it is the duty of a just man neither to injure friend nor any 
 other." This is the same ethical conception as tiiat found in the Tdo 
 Teh King, the Upanishads, the Book of the Dead, the Texts of Buddha, 
 tiie Hebrew Prophets, and in fact in the best of the reHgious writings of 
 the world. This position might well be summarized as "doing to others 
 as we would have them do to us." 
 
 Article j — Plato. 
 If, among the works of Plato, those dealing especially with Socrates 
 are separated from those regarded as more closely approximating Plato's 
 own later speculations; if these latter are compared with Aristotle's 
 notices of Socrates, Xenophon's MemorabUia, Diogenes, Laertius 
 Apuleius, and other Socratic writers on one hand; and the maze of com- 
 mentaty, elucidation, explanation, and elaboration to be traced from 
 
 Bk. Ill 
 
 Greece 
 
 405 
 
 the works of Plato through the Alexandrian and patristic writers, to 
 the mysticism and symbolism of the Middle Ages and a later day; certain 
 distinctions may doubtless be drawn between the God of Socrates and 
 the God of Plato. With a little learning and a little metaphysics, 
 almost any theistic creation may be developed and styled "the God 
 of Plato." The volume of material renders this method feasible and may 
 be drawn upon indefinitely, in support of any position. It seems, how- 
 ever, that another method might be adopted, in order to discover, so 
 far as possible, Plato's own opinion with reference to the Divinity, 
 stated in its simplest and most authoritative form. This method would 
 probably lead to an analysis of Plato's works, in order to select what 
 seems to be the most constructive and typical of these. In that work 
 might then be sought the clearest and simplest statement to be 
 found with reference to the subject. That statement, in Plato's 
 own words, freed from any interpretations and elaborations, might 
 thus seem the most definite expression of Plato's conception of the 
 divine nature. 
 
 The Republic is his most mature and constructive work. "The 
 Republic,"^ says Grote, "is undoubtedly the grandest of all his com- 
 positions; including in itself all his different points of excellence." The 
 Republic presents Socrates in a new light. "He is no longer," says 
 Grote,2 "a dissenter amidst a community of fixed, inherited, convictions. 
 He is himself in the throne of King Nomos: the infallible authority, 
 temporal as well as spiritual, from whom all public sentiment emanates, 
 and by whom orthodoxy is determined." What then are the attributes 
 of the Platonic divinity as expressed in this work? " God," says Plato,^ 
 "is perfectly simple and perfectly true, both in word and deed," xojxiB^ 
 5pa 6 ©s^g axXouv xal dXiQGIi; ev ts epycp xal Iv X6y(|). 
 
 The religious literature of the world presents no characteristics of the 
 gods more worthy to be called divine, than "perfect simplicity and 
 perfect truth." Plato says,^ with reference to immortality, "The 
 gods care for those who earnestly seek to become just, and in 
 the practise of virtue to become like God, as far as lies in hu- 
 man power." The God, the immortality, and the ethics of Plato 
 and Socrates seem in fact the same God, the same immortality, and 
 
 » Plato, Vol. m., p. 122. 
 ' Ibid., p. 240. 
 
 • De Republica, 382 E. 
 
 • Ibid.. 613 A. 
 
 II 
 
4o6 
 
 Religion 
 
 Pt. IV 
 
 Bk. Ill 
 
 Greece 
 
 407 
 
 the same ethics as those of the greatest religious teachers man's nature 
 has evolved. 
 
 Article 4—AristoUe. 
 The next great figure in HeUenic thought is Aristotle. To express 
 m a few words the theological conceptions of this great man is no light 
 task. Besides the difficulty and obscurity with which Aristotle himself 
 has mvolved the subject, other difficulties occur. An examination of 
 even a smaU portion of the mass of commentary and exposition, crys- 
 tallized around this powerful mentaUty, presents ample material for 
 refemng any desired religious opinion, or lack of opinion, to the "master 
 of those who know." 
 
 The foUowing passages maybe selected with reference to God- The 
 Deity IS recognized by all as a certain First Cause and Principle of things « 
 O -re yip @si><; 5ox« tuv aiT((ov xa<rtv sivac xai ifxh tc«; Questioned 
 with reference to the nature of this divmity, he says^ it is: A motionless 
 Fu-st Mover, Ixsi 8'i«£ Tt xivoiiv aM (ix(v„Tov 8v; which itself 
 generates Motion: Itrrc Tofvuv tc xai 8 x.vel; upon which nature, and 
 the heavens depend, ^x to.aux,? 5pa cSpxi? <ipT,jTa. i «ip«v4« xai * 
 ?u(Tts; which generates motion through infinite tune, xivst T<ip t4v 
 Sxetpov xpivov; necessarily constituting an Entity, i^ oiviTx,? 5pa 
 «OTiv 6v; generating motion as that which is loved, xtvet ik 6? ^p<iiisvov 
 proporuonately excellent and beneficent, xai i dviyr^j), xaXd? an 
 eternal substance, !1tc ^4v o3v I^.v oOtria rt? cEtSco;; thus constituting a 
 t^t Prmaple, xai outu? ipxi) ; without motion and distinct from the 
 phenomena of the senses; xai ixivrjTo? xai xex<-p.cixlv„ Toiv ala^-^Cy; 
 involving no magnitude iiT. (t^TeOo? o5S4v Ixe.v; without parts and 
 mdivisible, air dtisp^,? xai c28ia£peT6? Icrr.v; existing mdependently of 
 matter, itt toIvuv Ta6Tas See ri? oOda?dva. 5veu SXi,?; the essential 
 element and pnnciple of life, Ixei hi (iSc, xai !;o,ii Zi ye 6xcipve.; God 
 IS an anunate Being, Eternal, the Highest, and the Best, ^aixlv Zk t4v 
 Weiv elvat i;^t>v itS.ov apiairov; whose life and activities are eternal 
 and coextensive with the essence of the Divine nature, iore i;^,* xai 
 ai^v ouvex^)? xai itSco; Oxipxet t^ 0e<i.; such then is God.ToOto yip 
 
 It is not difficult to choose certain passages from the most authentic 
 Anstoteh an writings; and with a Uttle freedom in rendering, and care 
 
 * Metaph. A. 2. 9K3 a 8. 
 
 • Ibid. A. 6, 7. 107 1. 1073. 
 
 in juxtaposition, to attribute theological conceptions to Aristotle that 
 might well make a Zoroaster, a Mohammed or a Hermes-Trismegistus 
 tiu*n green with envy. The thought of this really great intelligence 
 possesses a speculative and metaphysical significance lacking in oracular 
 and aphoristic utterance. And here a single exception will be made in 
 the method adopted in previous inquiry; instead of allowing Aristotle 
 to speak for himself, a little learned commentary and interpretation 
 will be consulted with reference to the Aristotlelian theology. That 
 monument of industry and erudition, The Intellectual System of the 
 Universe, by Doctor Cudworth, will be selected. In discussing these and 
 other passages of The Metaphysics the learned Doctor says:* 
 
 "Now what Aristotle's agent understanding is, and whether it be 
 anything in us, any faculty of our human soul or no, seems to be a thing 
 very questionable, and has, therefore, caused much dispute amongst 
 his interpreters; it being resolved by many of them to be the divine 
 intellect, and commonly by others a foreign thing. Whence it must 
 needs be left doubtful, whether he acknowledged anything incorporeal 
 and immortal at all in us. And the rather because, laying down this 
 principle, that nothing is incorporeal, but what acts independently 
 upon the body, he somewhere plainly determines that there is no intel- 
 lection without corporeal fantasms. That which led Aristotle to all 
 this, positively to affirm the corporeity of sensitive souls, and to stagger 
 so much concerning the incorporeity of the rational, seems to have been 
 his doctrine of forms and qualities, whereby corporeal and incorporeal 
 substance are confoimded together, so that the limits of each could not 
 be discerned by him. Wherefore we cannot applaud Aristotle for this; 
 but that which we commend him for is chiefly these four things; first, 
 for making a perfect incorporeal intellect to be the head of all; and 
 secondly, for resolving that nature, as an instrument of this intellect, 
 does not merely act according to the necessity of material motions, but 
 for ends and purposes, though unknown to itself; thirdly, for maintaining 
 the natiurality of morality; and lastly, for asserting the t6 ^9* fiyilv 
 autexousy, or liberty from necessity." 
 
 The following is also of interest in this connexion i^ "But the grand 
 objection against Aristotle's holding the world's animation is still behind; 
 namely, from that in his Metaphysics, where he determines the highest 
 starry heavens to be moved by an immovable mover, commonly supposed 
 to be the Deity itself, and no soul of the world; and all the other spheres 
 
 « Vol I., p. 97 . «Jbid,p.3« 
 
 ^i 
 
408 
 
 Religion 
 
 Pt. IV 
 
 Likewise to be moved by so many separate intelUgences, and not by souls 
 To which we reply that indeed Aristotle^s first immovable mover is no 
 mmidane soul, but an abstract intellect separate from matter, and the 
 very Deity itself: whose manner of moving heavens is thus described by 
 him: Ktvel U dx; lp(5^evov, 'it moveth only as being loved/ Where- 
 fore, besides this supreme mmioved mover, that philosopher supposed 
 another mfenor moved mover also, that is, a mundane soul, as the 
 proper and immediate efficient cause of the heavenly motions; of which 
 he speaks after this manner: Ktvo6{X6vov hk T^XXa xcvet, 'that which 
 Itself bemg moved,^ objectively, or by appetite and desire of the first 
 good moveth other things.' And thus that safe and sure-footed in- 
 terpreter Alex. Aphrodisius, expounds his master's meaning, that the 
 heaven bemg animated, and therefore, indeed, moved by an internal 
 prmaple of its otsti, is, notwithstanding, originally moved by a certain 
 immovable and separate nature, which is above soul, Tcp voelv ts aM. 
 xal 6(p£^tv xd 2pe5tv ixecv t^^ b^oi^aec.^ ocOtoO ' both by its contemplat- 
 mg of It, and havmg an appetite and desire of assimilating itself there- 
 unto. Anstotle seeming to have borrowed this notion from Plato 
 who makes ^,he constant regular circmngyration of the heavens to be an' 
 imitation of the motion or energy of intellect. So that Aristotle's 
 first mover is not properly the efficient, but only the final and 
 objective cause of the heavenly motions, the immediate efficient cause 
 thereof bemg t],^x^ xa? (fdatq 'soul and nature.' 
 
 "Neither may this be confuted from those other AristoteUc intelli- 
 gences of the lesser orbs; that philosopher conceiving in like manner 
 concemmg them, that they were also the abstract minds or inteUects 
 of certam other inferior souls, which moved their several respective 
 bodies or orbs arcularly and uniformly, in a kind of imitation of them 
 For his plam ly appears from hence, in that he affirms of these his inferior 
 mtelligences likewise, as well as of the supreme mover, that they do 
 xtveiv G)? TiXo? 'move only as the end.' 
 
 "Where it is evident, that though Aristotle did plainly suppose a 
 mmidane mteUectual soul, such as also contained, either in it, or under 
 It, a plastic nature, yet he did not make either of these to be the Supreme 
 S ^"^^^^^JT^, ^^^ ^'' principle of things to be one absltely 
 perfect mmd or mteUect, separate from matter, which was c?x(v^to, omI 
 an ^ovable nature,' whose essence was his operation, and which 
 moved only as bemg loved, or as the final cause: of which he pronounces 
 
 Bk. Ill 
 
 Greece 
 
 409 
 
 in this manner: "Oti ix Tota6TiQ<; dpxriq TJpTiQTat 6 oSpaviq xat 1^ ^ujk;: 
 'That upon such a principle as this heaven and nature depend'; that is, 
 the animated heaven, or mimdane soul, together with the plastic nature 
 of the universe, must of necessity depend upon such an absolutely 
 perfect and immovable mind or intellect. 
 
 "Having now declared the AristoteUc doctrine concerning the plastic 
 nature of the universe, with which the Platonic also agrees, that it is: 
 ^ (Jilpoq t^ux^q, ^ [kii aveu t];ux^<;, 'either part of a mimdane intellectual 
 soul;' that is, a lower power and faculty of it, 'or else not without it, 
 but some inferior thing depending on it'; we think fit to add in this 
 place, that though there were no such mimdane soul, as both Plato and 
 Aristotle supposed, distinct from the Supreme Deity, yet there might 
 notwithstanding be a plastic nature of the universe depending im- 
 mediately upon the Deity itself. For the plastic nature essentially 
 depends upon mind or intellect, and could not possibly be without 
 it; according to those words before cited: *Ex ToiauTiQc; ipxtj? TJpTTjTac 
 f) 9U(ji(;, 'nature depends upon such an intellectual principle,' and for 
 this cause that philosopher does elsewhere join vouc; and (fdaiq, 'mind 
 and nature' both together." 
 
 To any one at all familiar with celestial matters and the methods and 
 purposes of the Divinity, what the learned doctor has done in the fore- 
 going passages is at once evident. The Aristotelian deity is therein 
 endowed with every essential for the fullest development of which the 
 most mystical of theologizers could dream. The t6 i(f' -^^jlIv, or autexousy, 
 may be used to put the uXixi?) dvayxiQ, or mechanical necessity, of the phy- 
 sicists to ffight; the t6 eS xal xaXw?, the "orderly regularity and harmony 
 of the mundane system,"^ which is readily developed from the xivelv 6<; 
 T^Xoq and the xivel Ik gx; IpcDjievov may put the (pujiq aXoyoq, or 
 purposeless nature and the xdcvTwv xpTQ^J^dc^wv ixlTpov avOpwiuo? or "man 
 the measure of all things," of the Atomists and the Sophists to shame. 
 What may not be done with a "plastic nature of the universe" which 
 is Yj [ligoq ^\jxfiq, tJ jjif) avsu ^^x^^ "either part of a mundane intel- 
 lectual soul, that is, a lower power and faculty of it, or else not 
 without it, but some inferior thing depending on it;" when at the same 
 time, every justification is presented for combining the voO<; and the 
 96fft<;, mind and nature. When "an immovable first mover" is 
 recognized and that ix Tota6TiQ<; ipx^? iJpTTQTat 6 oSpav&q xal f) (pujK; 
 " heaven and nature depend upon such an intellectual principle," 
 
 * Cf. IbiA, p. 275. 
 
 i 
 
4IO 
 
 Religion 
 
 Pt. IV 
 
 and, beside this "supreme unmoved mover," "another inferior moved 
 mover" is also assumed; "that is, a mundane soul, as the proper and 
 immediate efficient cause of the heavenly motions." Which may 
 be pictured as being moved, "objectively, or by appetite and desire 
 of the first Good," and "which moveth other things." What 
 indeed may not be achieved in theological metaphysics when the "cir- 
 cumgyrations of the heavens are regarded as an imitation of the motion 
 or energy of intellect" if this circumgyration is brought in mystic con- 
 tact with " these other Aristotelic intelligences of the lesser orbs? " Not 
 forgetting that that philosopher conceived "in like manner concerning 
 them, that they were also the abstract minds or intellects of certain 
 inferior souls, which moved their several respective bodies or orbs cir- 
 cularly and uniformly in a kind of imitation of them," especially as it 
 plainly appears from hence, in that he affirms of these his inferior intel- 
 ligences likewise, as well as of the supreme mover that they do xtvetv 
 CO? TiXoc; 'move only as the end?'" The Aristotelian divinity, thus 
 expounded and elucidated, glitters with inviting possibilities; is pregnant 
 with every theistic, mystic, and metaphysical potentiality, and capable 
 of any theological development in any direction. 
 
 The same Aristotelic deity may now be examined, as developed in 
 another mind from these same passages of the same Aristotelian writings, 
 in comment upon these same commentaries of the illustrious author of the 
 IfUellectuaJ System of the Universe. This deity has just been studied 
 through a mystical telescope, so to'speak, in relation to the "heavenly orbs" ; 
 it may now be examined under a microscope, in relation to the texts of Aris- 
 totle, remembering that the pen of the great Mosheim commands a per- 
 haps not less vast body of scholastic erudition than that which inscribed 
 the Intellectual System. Says this learned scholar in comment upon the 
 Aristotelian writings and the foregoing passages from Cudworthi^ 
 
 " *The soul is moved,' says Aristotie. It is therefore moved by some- 
 thing else, it cannot originate motion.' See De Anim. lib. i. Cap. 2. p. 4. 
 Therefore, since Aristotle altogether opposed an endless progression, 
 and did not doubt that there is in the imiverse some first principle of 
 motion, it was fit that he should attribute immobility to this first cause 
 whence motion proceeded. For if he had alleged that this cause moved, 
 he would have required a higher ascent to be made, and must have 
 inquired for a new cause of motion. But Aristotie clearly perceived that 
 DO small difficulty would arise, how that which is not itself moved can 
 
 1 Ibid. VoL L, pp. 369-270 (note). 
 
 Bk. Ill 
 
 Greece 
 
 411 
 
 move and excite other beings. In order that he might meet this difficulty 
 he conceived that it was enough to determine as to the manner in which 
 the first cause moved, that it entirely differs from all other kinds of motion 
 traceable in the imiverse. But he does not by this means meet the 
 whole difficulty. They who are disposed to pursue the inquiry may go 
 on and ask: What kind of motion is this? Aristotle therefore en- 
 deavours in this chapter to answer this very natural inquiry. He says 
 forsooth that Deity moves (b? ixt9u[jLT)T6v, (Jx; t6 6pe)tT6v, clx; votqt^v, (Jx; 
 ^ptipLsvov 'as a thing to be desired, and a thing longed for, as intelligible 
 and loved.' Every one explains these terms according to his own views; 
 some, desirous of throwing light upon their master, introduce readers 
 into new difficulties through their imperfect conception of the force of the 
 words and phrases employed. . . . But there was no reason, I 
 fancy, why learned men should have taken such pains. For these words 
 and phrases are only specimens of the verbiage under which Aristotle 
 conceals, as he sometimes does, his own ignorance. The brevity 
 and obscurity which he employs, show that he was conscious that 
 he could not explain the true nature of that motion which Deity, 
 himself immovable, produces; yet he seems to have xmderstood very 
 well that he must repress the urgency of curious inquirers by new and 
 unwonted words and phrases thrown out as a sop to Cerberus. Had he 
 been conscious that he could meet the expectation of readers, he would 
 have spoken with much greater clearness and perspicuity. The whole 
 force of the sentence, * Deity moves as a thing to be desired and 
 loved,' will appear on examination to be very little different from the 
 following. * Deity moves without trouble either to itself or others; as 
 they who are loved by their friends can give commands even by a wink 
 of the eye, and effect whatever they please, even though they themselves 
 do nothing.' Which is the same as saying: *I do not know how he 
 excites motion, who himself is unmoved. I know this, indeed: that he 
 does not move as other natures move, which even while they move, 
 themselves supply the force by which they are impelled.' What else 
 can this be called than concealing ignorance with fine words, and 
 seeming to say a great deal when really nothing is said. Let competent 
 judges decide whether it is credible that the Stagirite wished by these 
 words to maintain that there is in the highest orb, over which he placed 
 the Deity, a peculiar soul, which moves it; Deity only looking on and 
 not effecting the motion. ... On what ground the words which 
 follow, xivoOjievov U T5XXa xivec are referred to the mundane soul, I 
 
412 
 
 Reli^on 
 
 Pt. IV 
 
 Bk. Ill 
 
 Greece 
 
 4 
 
 I I 
 
 cannot discover. They simply mean, that which is moved conmiimicates 
 motion to other things. Nothing can be more simple or more con- 
 sistent with the philosophy of Aristotle. I have pursued this point so 
 much the farther, because I perceived with regret that in explaining 
 this part of the Metaphysics of Aristotle, which treats concerning 
 Deity and intelligent agents interpreters toil very much, and imagine 
 a good many things, no trace, of which can be found in the philos- 
 opher's writings." Mosheim^ says on another page with reference to 
 the God of Aristotle, "Nay more, I consider the difference to be but 
 a slight between his God and the gods of Epicurus." 
 
 The inquirer who has given a little attention to the study of the natural 
 history of divinities,will recognize that two divinities of distinct varieties 
 are here discovered; yet, strange to say, both sprung like Athene from 
 the brain of Aristotle. The first divinity belongs to the well-known 
 Alexandrine Hebraico-mystic family, and might be indexed, in a col- 
 lection of such interesting creations, as the deus-cdbdisticus metaphystco- 
 mysticus Aristotelis-Cudworthianus. The second divinity, by means 
 of this instructive science, is easily classified as the divus-diabolicus 
 individuus-Democritii-Aristotelis-Mosheimiensis, 
 
 The teleologico-mystic Aristotleian divinity sparkling in the pages of 
 Doctor Cudworth is here suddenly transformed into a mere mechanico- 
 atomic conception, or disappears in a cloud of verbiage behind which 
 Aristotle hides his own ignorance. And such would indeed seem the 
 inevitable result in attempts to explain or interpret the words of men 
 dealing with subjects which permit of no rational or scientific demonstra- 
 tion, and which every individual may expoimd or interpet as desired. 
 Such attempts lead to nothing but dreary repetitions of threadbare, 
 brain-spun futilities appearing again and again throughout the field 
 of theological polemics, in endless re-interpretations and reiterations. 
 Aristotle has been selected, in the present instance, as a peculiarly 
 favourable source at which a little study of theological commentary and 
 elucidation might be undertaken; for the reason that the mind of 
 Aristotle is one of the most rarely clear and consistent in the history of 
 thought. If, then, these are the results of such commentary and elucida- 
 tion when applied to this intelligence, what must be lie results of 
 such commentary applied to the words of men whose chief claims to con- 
 sideration are perhaps neither lucidity nor consistency? Such 
 interpreta tions suggest the possibility that the body of elaboration and 
 
 » IWd, VoL n.. p. 93 (note). 
 
 413 
 
 # 
 
 elucidation, crystallized aroimd every great religious teacher, may serve 
 no purpose other than that of a heavy pall, hiding his true thought 
 and growing ever denser. 
 
 He who opens the works of Aristotle, without any theistic predi- 
 lections, is brought in contact with a great and rational intelligence, 
 keenly alive at every step to the limitations of its own legitimate action, 
 and fearful of transcending these; an intelligence which, in its attempt 
 to deal with the ultimate problems of existence, is conscious that these 
 may only be approached by the human reason through the most highly 
 generalized abstractions of which it is capable. Aristotle, therefore, 
 possessing a rational and scientific intelligence, can only refer his Divinity, 
 or First Principle, to these abstractions. The theistic mind, in its 
 conceptions of the Divinity, exhausts the linguistic superlatives at its 
 command; the rational mind, in so far as it attempts to conceive the 
 Divinity at all, exhausts its capacity for the production of ultimate, 
 abstract generalizations. At this point, they both cease to act, and the 
 attempt of the finite to contain the Infinite is ended. 
 
 There are thus two points of view from which the ontological specula- 
 tions of Aristotle may be studied: the philosophic and the theistic. 
 From the first, an accurate intelligence is seen exhausting itself in a 
 series of the widest generalizations of which it can conceive; from the 
 theological point of view, it will suflSce to say that the God of Aristotle 
 possesses a chameleon-like adaptability. No body of speculative ma- 
 terial in the world offers the suggestive potentialities of the Metaphysics 
 of Aristotle; and any genuine theologizer, versed in celestial affairs 
 and Greek metaphysics; any one at home among the "circumgyrations of 
 the heavens," and the "intelligences of the lesser orbs," who appreciates 
 the limitless possibilities of the 'mundane intellectual Soul' of the voOq, 
 and the 96(Jt(; distinct and combined, of the t6 l(p* f)[jLTv, and the t6 e5 
 xal xaX<D<; of the i;a)ov cJiStov (Jfptarov, of the oOj(a Tt? dtSio?, of the avsu 
 uXt]? and the xtvel Ik clx; ipcj^jievov ; will soon be able to develop the Movd:? 
 and the TpiAq, the mystic Kabbalah or anything else for that matter, 
 in the writings of Aristotle and, doubtless, at the same time the 
 i^Mcf. tk; ixiXa ^a^s-jri) "a most grievous ignorance, sottishness and 
 stupidity of mind,"^ m those who may not happen to agree with him. 
 
 With reference to immortality, Aristotle^ says that we cannot see 
 the futu re — Ixet^ij) ^zh jjiiXXov dcpav^q fj^ilv; This, however, need be 
 
 » Cf. Cudworth, Vol. I. p. 279. 
 *Eth. Nic, A. iz. xzoi a 17 
 
 I 
 
414 
 
 Religion 
 
 Pt. IV 
 
 Bk. Ill 
 
 I <i 
 
 '.i' 
 
 no discouragement to those of wider range of vision. A great number 
 of authorities may be foimd supporting every variety of opinion, with 
 reference to the views of Aristotle and the student who follows the 
 subject, will be led into the thick of a "mighty controversy," in which 
 learned scholars train ponderous Latin folios and quartos upon each 
 other in the most masterly and impressive manner. As Aristotle 
 himself said that he knew nothing about the subject, however, and as 
 there is strong probability that such was actually the case, this con- 
 troversy will not be pursued. 
 
 In the NicJumachean Ethics^ Aristotle says that the just man feels 
 toward his friend as toward hmiself, for his friend is but another self: 
 2oTi YGcp 6 (p{Xo<; dfXXoq aO-udq. 
 
 Again, on being asked, how we should treat our friends, he says:^ 
 **As we wish them to treat us" — wq Sv eu^afiieGa a6To6<; fjyiiv ic<)oa- 
 fipeaOoct. 
 
 Thus the attempt to develop the ontological and ethical con- 
 ceptions of Aristotle, from his own words, might lead to some 
 such summary as the following: Aristotle tipparently recognized 
 a First Cause, or Principle of things, which may be interpreted 
 as desired; he seems to have regarded the future as "invisible," 
 and said that we should treat oiu: friends as we would have them 
 treat us. 
 
 The speculations of these two men, Plato and Aristotle, seem to serve 
 as poles toward which the thinking mind is drawn as long as it continues 
 to move; they present what might be called the extremes of the oscil- 
 lations of the intellectual pendulum, the two conflicting methods of the 
 hiunan mental process: the deductive and the mductive; and no thought 
 of the world develops higher flights of pure speculation, on one side- 
 or offers abler attempts of the finite to transcend the conditions of its 
 own existence, on another. 
 
 Article 5 — Cleanthes. 
 
 Later Greek religious thought nearly all revolves round the mind of 
 Plato and need not be examined at length. The Stoics of the Graeco- 
 Roman world seem to have been men of purest religious aspirations. 
 Their thought cannot be better voiced than in the Hymn to Zeus of 
 Cleanthe s,^ of which the following lines are a feeble reflection: 
 
 * I. 4. ii66a32. 
 
 * Laertius, V. i, p. 115. 
 
 * Stobcus, Physica L t. 
 
 Greece 
 
 HYMN TO ZEUS 
 
 O Zeus, most glorious of the immortal poweis, 
 Arch-King of many names and one decree, 
 Hail! Thou whose deathless might o'er nature towers, 
 For mortals right it is to speak to Thee. 
 
 Thou art our liie, and naught but echoes dim. 
 
 Of Thee is all that creeps through death and birth, 
 
 To Thee I sing; Hiy might I ever hymn 
 
 As at Thy nod the heavens sweep round the earth. 
 
 Strong, willing slaves hast Thou, who never tire 
 But flash, from out Thy hand unconquered hurled, 
 Swift forked tongues of ever-living fire 
 Through deep-toned thunders o'er a trembling world. 
 
 A world which thine own law shall right, and flow 
 Through all existent things, and these combine; 
 And, blending with the least and greatest, show 
 How great the God of all: supreme, divine. 
 
 For naught existence has, to come or past. 
 Or breathes on earth, except as by Thy leave; 
 Nor in the ether far, nor ocean vast: 
 Save where the erring their own sorrows weave. 
 
 But Thou shalt right the wrong, the best maintain, 
 To Thee disorders but Thy law fulfill; 
 To Thee all things are good; Thou shalt ordain 
 AU in one Harmony, and good from ill. 
 
 Good which blind mortals still in error fly; 
 
 Ill-fated souls who seek what they possess; 
 
 Nor see nor hear the law of God on high. 
 
 Which, 3delding, would their lives with Reason bless. 
 
 Thus some avoid the Good, while others haste 
 Through warring strife for bubbles name and fame; 
 And some in greed, and some in dalliance, waste 
 In idle sense their lives, all lost to shame. 
 
 But Thou, all giving Zeus of thunder's throne, 
 From out his wretched error free mankind. 
 Dispense the clouds, O Father, let be known 
 With what just piurpose Thou hast all designed. 
 
 Thus man may sing Thy works as mortal should 
 And, honouring him, may'st Thou too, honoured be. 
 For not for men nor gods is greater good 
 Than e'er to hymn Thy wondrous works and Thee. 
 
 41S 
 
4i6 
 
 Religion 
 
 Pt. IV 
 
 The highest religious thought of Greece evolves the same ontological 
 conceptions developed by civilized man in every part of the world; the 
 same intelligent spiritual Divinity, the same union of man therewith as 
 his highest hope of immortality, and the same ethical code found m the 
 best of all other religious systems. 
 
 
 CHAPTER XI 
 
 ROME 
 
 THE thought of Rome requires no lengthy'' analysis in the 
 present connexion. [ The intellectual Latin world is to that 
 of Greece as moonlight to the .sim. The banks of the Tiber 
 present but feeble reflections of the flame that glowed at the 
 shrine of Athene. The Greek dominated the intellectual world of 
 Rome as completely as the Roman legion the political world of its day; 
 and by the same right — sheer might. " It was no longer a small rivulet," 
 says Cicero,* "flowing from Greece toward Rome, but a deep and 
 mighty torrent of Grecian art and thought." 
 
 In the Roman world, as in that of Greece, appear the usual popular 
 poets singing the usual confused and inconsequent theological myths 
 and legends; the inevitable array of oracles and sibyls, in control of 
 priest or politician; voicing ambiguous utterances piuporting to be 
 inspired from on high: while augurs, diviners and soothsayers interpret 
 the "signs and wonders" as augurs, diviners, and soothsayers alone know 
 how. On another side some of the clearer and abler intellects, conscious of 
 the useless dangers and inanity of such superstititions, xmite in the great 
 hymn to nature of Lucretius, and deny all divine influences whatever: 
 
 These things well learned and held in mind, we see 
 That nature of herself all things can do, 
 Without the Gods, from haughty masters free.' 
 
 With reference to Jove, Merciuy and the rest of the celestial nomen- 
 clature, Pliny' says, "Who does not refer them to natural phenomena? 
 Can we believe that the great head of all things, whatever it may be 
 interests itself m human affairs? Can we doubt that it is impolluted 
 by such a sad and complicated oflSce?" 
 
 Beside these, another group of men, conscious of the absurdities of 
 what the priest and politician called religion, yet unsatisfied with the 
 blanks of Atomism and Atheism, looks to a higher power and a nobler 
 "rerum n atura" than that of which poet or philosopher coxild tell. In 
 
 1 De Re Publica, 11. 19, p. 310. 
 * De Rerum Natura., II. xoga 
 ■ Nat. EisU, II.. 7 (5) p. 74. 
 
 417 
 
41 8 
 
 Religion 
 
 Pt. IV 
 
 ( 
 ' 
 
 
 f 
 
 .UEtt 
 
 turning to Rome, in search of the best religious and ethical thoughts one 
 figure dominates all others. Cicero must doubtless be chosen as typical of 
 the best Rome has to give in this connexion; " the man whom Rome when 
 free called the father of his Country," as Juvenal ^ says, and whom Pliny « 
 hails as "the father of Roman eloquence and literature as well." 
 
 The religious and ethical conceptions of Cicero are identical with 
 those of Plato. All his discourse, he says' in his essay on Virtue, is 
 derived from the great Hellene as from some "sacred and hallowed 
 fountain." His recognition of divine unity, intelligence and man's 
 immortal nature, cannot be better or more clearly expressed than in a 
 single passage from the Somnium Scipoinis in which Africanus appears 
 in a dream and bids him follow the example of the great men of the past: 
 " Follow them," he says,* "and regard your body not yourself as mortal; 
 not that it is which is evident to sense that constitutes your true being; 
 but your soul. Know that you are divine, for a God it is, that lives 
 and feels, that remembers and foresees, that rules, controls, and moves 
 the body over which it presides as the God-head rules the world. For 
 as the God eternal moves all that is mortal in this world, so the immortal 
 soul of man moves his fragile body here below." 
 
 With that of aU great ethical thinkers, the mind of Cicero turns to 
 the study of man in society and, with Lao-tsze and Socrates, he ex- 
 presses the opinion that the bulk of human error and confusion is trace- 
 able to the unnecessary conflict between the immutual laws of nature 
 and the artificial regulations of mankind. He says,^ in developing a 
 thought concerning justice in his essay on the Laws: "Justly did Soc- 
 rates execrate him who first drew a distinction between utility and 
 nature, for he used to complain that this was the source of all human 
 error. In the words of Pythagoras, the goods of friends are "common" 
 and "friendly equaUty," from which it is evident, when a wise man dis- 
 plays that natural benevolence to one of equal virtue, that that occurs 
 which is to some incredible, but which necessarily follows: namely, 
 that he values himself no more than the other, for what difference can 
 occur where interests are identical? Where interests differ, however 
 slightly, true friendship ceases, the nature of which is that one regards 
 others in the same light as that in which one regards one's self." 
 
 » Sat. Vin., 243. 
 
 « Nat. Hist. VII., 30 (31), p. 79. 
 
 * Tusc. Disp. v.. 13, p. 54. 
 
 * De Re Publico. VI.. 19. p. 347. 
 » De Legibus, I., 12. p. 370. 
 
 Bk. Ill 
 
 Rome 
 
 419 
 
 In these, and in other passages of Cicero, occur the same ethical con- 
 ceptions developed in all the great religious writings of the world. The 
 principle seems to remain the same, and is merely expressed in different 
 words or evolved from different positions. Restated, as formulated by 
 Cicero in The Laws and elsewhere, it seems to be as follows: Justice, 
 Natural Law, and Right Reason consist in respecting the natural rights 
 and interests of others as one's own. The God, the belief in the im- 
 mortal nature of man, and the ethical conceptions of the great Roman 
 jurist and administrator seem the same God, the same belief, and the 
 same ethics developed by all the great creeds in existence. 
 
 It is not difficult to cite a mmiber of passages from the best minds of 
 the Latin world, showing their religious and ethical views to be in 
 practical harmony with those of Cicero. "You are a part, drawn from 
 the Divinity," says Epictetus.* "Wretch," he continues,^ "you carry 
 about a God within you and you know it not." "All is gain to me, O 
 nature," says Antoninus,^ "which bring the changing seasons. From 
 Thee all things, in Thee all things, and to Thee all things return. The 
 poet says, dear dty of Cecrops; wilt thou not say dear city of Zeus?" A 
 study of the Roman writers of the higher type, such as Seneca,* Juvenal,^ 
 Persius,^ and Tacitus,^ reveals thought of a closely allied nature, and leads 
 to the opinion that the clearer intellects form much the same conceptions 
 of the Divinity, immortality, and ethics in all ages, all tongues, and all 
 climes. Traces of a sane monotheism may be foimd even in Virgil.* 
 
 Thus the best minds of Rome seem to unite in the ethical conceptions 
 of the best body of religious writings elsewhere. Even the witty and 
 wordly Martial^ says: 
 
 "Not in fine words in this, Marcus, 
 If you would be loved you must love." 
 
 "Divine it is," says Pliny,io "for mortals to assist their fellows, and 
 this is the path to eternal glory." The words of this "atheist" 
 would grace any body of religious material in the world. 
 
 » DissertaHones, II., 8, 11, p. 125. 
 
 • Ibid., II., 8, 12, p. 125. 
 
 • Commentarii, IV., 23, p. 38. 
 
 • Ep. CVII., Nat. Q. 11.45. 
 » Sat., XV, 147. 
 
 • Sat., II., 71. Sat., III., 35. 
 » Close of the Life of Agricola. 
 
 • Mneidos, VI., 724. Georg., IV., 220. 
 
 • VI.. XI. 
 
 w Nat. Hist., II.. 7 (5). p. 74. 
 
 ?i«j 
 
Bk. Ill 
 
 Summary 
 
 421 
 
 CHAPTER Xn 
 
 SUMMARY 
 
 THE foregoing brief inquiry into the "nature of the gods" 
 as Qcero would say, has been undertaken with the object ot 
 d^ovenng, rf possible, the essential elements underlying the 
 best rehgious thought of the world. 
 
 ieS M^^cr^^r^'^T'.'^! «^ ^« '^<=« - P«>Ples coming undef 
 twTcSs 1^.? "^'*' ""^ "^^ '°*° '^y ^' '°"glJy divided into 
 sSefvT^tW ' "^""^ u"^ ^"'°'^"'° to man as a member of human 
 Zlt^^wT^^^ "* "^^ manifestation of a power othe! 
 than earthly. Withm the first, may be grouped such minds^s those of 
 
 lor man ever to detemune" the Absolute in a philosoohical sen«.- «n-i 
 
 confine their observations of nature to the phenomenal world upon wUch 
 
 ^Z ZmZ1Z^^'\ "J^ "^^"'^ ^^ ^ represented'Cen of a 
 TO^*n? ! ' ^^°"'' *^"dency; minds of this type seize upon the 
 
 430 
 
 the beautiful measures of ancient Hellas or the more sombre syllables 
 of Rome, this Creed, whatever the soimds of the tongue attached to its 
 God or its prophet, never seems to vary in the thought which lies be- 
 yond the sound. It presents always one Supreme, intelligent Divinity, 
 Creator and Ruler of the world; man's union with his Creator as the 
 highest immortality, his noblest hope; and the love of his fellow as the 
 siu-est means of its attainment. In this Creed blend the purest religious 
 seekers evolved by the human race; the distinctions between them are 
 caused but by tongue or name; by sounds alone: for there can never be 
 more than one supreme Divinity; more than one union therewith; or 
 more than one humanity on this earth, at least, through which the soul of 
 man proceeds on its journey up to God. Nor is it impossible to take a 
 broader view of the subject, and to find the same God always present, 
 wherever man lifts his eyes to some power other than that of earth; to 
 find always one and the same God in the idol of the savage, the spirit 
 worship of the Taoist, the heaven of Confucius, the hope of peace for 
 which the Buddhist longs, and in the sects and dogmas of the West. 
 Says a man^ whose knowledge of tongues and creeds is wide: "What 
 have we in common with the Turanians, with Chinese and Samoyedes? 
 Very little, it may seem; and yet it is not very little, for it is our com- 
 mon humanity. It is not the yellow skin and the high cheek-bones that 
 make the man. Nay, if we but look but steadily into those black Chinese 
 eyes, we shall find that there, too, there is a soul that responds to a soul, 
 and that the God whom they mean is the same God whom we meatif how- 
 ever helpless their utterance, however imperfect their worship." 
 
 The worlds of Greece and Rome introduce the subsequent intellectual 
 development of the West and the modem era. The few suggestions 
 of these worlds here brought together are but broken threads leading 
 into some of the most interesting bodies of intellectual material extant. 
 If Hellenic thought is regarded as embracing a period extending from 
 the Homeric writings to the later Alexandrian philosophers; and the in- 
 tellectual history of Rome as extending from the earliest poets of the Re- 
 public to Claudianus or Boethius, practically all the sources of inspiration 
 will be included to which the thought of the western world of to-day 
 may be traced in the process of its evolution. Thus the names of Demo- 
 critus, and Protagoras, Parmenides, Socrates, Plato, Aristotle; of Epi- 
 curus, and Lucretius lead to many interesting forms of the philosophic 
 and spec ulative thought of both the earlier and later worlds. Inquiry 
 
 > Profesior Max Mttller, Science of Relighnt, p. 83. 
 
422 
 
 Religion 
 
 Pt. IV 
 
 drifts with them, as it were, from Athens to Alexandria; thence to Rome, 
 and then northward with the revival of learning until the modem thought 
 of the western Europe of to-day is reached. Athens seems a dynamic 
 centre, generating currents of intellectual activity on every side. If, 
 however, the movements of these currents are studied in greater detail, 
 the rationalistic thinkers of Greece, from Thales to Pyrrho, lead into more 
 or less distinct streams and eddies, flowing into the ocean of modem 
 science as the natural inheritance of the sources from which they arise. 
 Other streams and channels, springing always from Athens, flow across 
 the Mediterranean to Alexandria, another dynamic centre, generating 
 new currents and new streams, with Augustine and Clement, Origin, 
 Athenagoras, Justin, Cjrril, and Lactantius; presenting another series 
 of widening cycles of intellectual influence. These lead once more by 
 other roads to Rome, and into the religious thought of the present westem 
 world. There will thus appear two wide gaps in the brief review 
 just completed; two gaps presenting influences of interest and im- 
 portance not yet mentioned. The thought necessary to fill these may 
 be separated into two movements; two cycles of intellectual influences, 
 as it were; one revolving roimd the human Reason as a centre, the 
 other roimd a Figure on a Cross. 
 
 "Book IV 
 
 PHILOSOPHY 
 CHAPTER I 
 
 PRE-SOCRATIC THOUGHT 
 
 Section I — Introduction. Section II — The Physicists. Section 
 III — The Metaphysicians. Section IV — The Metaphysical 
 Physicists, Section V — The Physical Metaphysicians. 
 
 Section I — Introduction 
 
 THE history of thought, in relation to the problems of existence, 
 presents two distinct phases: the theological and the rational. 
 Between the two is a vaguely defined field referred to meta- 
 physics. A philosopher in Plutarch^ says that to philoso- 
 phize is "to inquire, to wonder, and to doubt." But the fields of 
 neither theology nor metaphysics are entirely free from these influences. 
 The theologian, however, refers his final explanations to supra-rational 
 and supra-mimdane influences, the metaphysical mind, to influences 
 which the metaphysician best imderstands. The scientific philoso- 
 pher may be distinguished from these by one unfailing test; he rejects 
 explanation not to be referred to the human Reason itself. That is, 
 to that sequence of ideas called rational, based upon human experi- 
 ence, regarded as distinct from teleological, metaphysical, or ultra- 
 rational influences. Philosophy, therefore, as distinguished from 
 theology and metaphysics, is the independent effort of the himian mind 
 in search of tmth within the content of its own consciousness; in other 
 words, the stmggle of the human intelligence for self-realization within 
 itself. 
 
 As any one, more or less familiar with modem European sculpture, 
 strolls for the first time through the galleries of Hellenic marbles in 
 the Vatican, he may find a strangely vivid impression of having been 
 
 » De £i. 2. 
 
 423 
 
 : 1 
 
424 
 
 PhUosophy 
 
 Pt. IV 
 
 
 there before; an impression which intensifies with closer examination 
 of these beautiful relics of antiquity. If of the idealistic temperament 
 he may refer this impression to the reminiscence of some earlier existence 
 passed on the shores of Ionian seas. As attention is turned to one 
 marble after another, however; a fountain in Paris, may be recaUed- 
 a bronze or a reUef in London, or some application of lithic design in 
 Berlm or Vienna. This may lead to another explanation of the apparent 
 familiarity of many of these works; in all likelihood the true one: namely 
 that the sculpture of the Greeks represents the culmination of the 
 resources of the art; and that the Greeks had discovered and developed 
 the majority of ideas capable of Uthic expression, leaving later sculpture 
 httie choice but to foUow where they first had trod. And so, the marbles 
 of the Vatican or the Acropolis recall, in inverse process, forms developed 
 centuries after they had seen the Ught. Thus, as the philosophic inquirer 
 turns to one period after another; studies the thought of one country 
 age, or school; and compares this with thought developed under other 
 conditions, the attention constantly reverts to one period as the needle 
 to the pole. 
 
 Eariy Asiatic and Oriental thought is chiefly religious or dogmatic 
 ideas are arbitrarily assumed or developed, presented in aphoristic 
 form and symbol, or clothed with the sanctity of revelation. Analysis 
 of the mental processes through which the original assumptions are 
 formulated and the sequences derived, is rarely attempted, or im- 
 possible, owing to the nature of the material. When, however, among 
 the mass of ultra-rational symbol and aphorism, certain thought appears 
 possessmg a more or less rational basis, it has often a famiUar ring to 
 the HeUenist. These considerations are not without application to 
 later Western inquiry; and whether the history of the human Reason, 
 m relation to tiie problems of existence, is approached from the Con- 
 fucian Analects, the Tao Teh King, the Zenda Vesta, the Upanishads ' 
 or fresh from the pages of Spencer, Huxley, Clifford, Wundt, Haeckel,' 
 or the most modem of the moderns, as the thought of Hellas is studied. 
 It seems that all has been summarized therein — aU said before and 
 all to be said by those to come after. 
 
 Thus it might seem possible to a wanderer in the Vatican to compose 
 a history of no small portion of modern sculpture without leaving the 
 Hellenic gaUeries at Rome; and so, to the student of Greek thought. 
 It may seem that a by no means superficial statement of the results 
 of modem speg^tion might be suggested without the presentation of 
 
 jk. -- -^- ,_ 
 
 ::-\ 
 
 Bk. IV 
 
 Pre-Socratic Thought 
 
 425 
 
 a single thought not first expressed in that most articulate tongues: 
 the speech of Anaxagoras and Democritus, of Socrates, Plato and 
 Aristotle. 
 
 These considerations suggest tne purpose and scope of the present 
 study. It is undertaken to discover, if possible, the laws governing 
 the action of the rational intelligence, in its investigation of the ulti- 
 mate problems of existence, and in order to formulate the results pro- 
 duced. 
 
 A study of rational speculative thought leads to Greece. In ancient 
 Hellas, Reason first grows conscious of itself and presents the beginnings 
 of all later scientific inquiry. Hellenic ^speculation, however, develops 
 two fields: Pre-Socratic and Post-Socratic thought. 
 
 There are three sources upon which an analysis of the former may be 
 based, owing to the almost total disappearance of the original works. 
 These sources are: first, the fragments, or direct quotations, of the 
 earliest thinkers; second, historical reviews or notices of their opinions; 
 third, passages cited or summarized in controversy. The first of these 
 though slight, is vastly the most important. The second is larger and 
 of value in throwing light upon the subject; this information, however, 
 is one degree removed from the fountain-head; and its value, as re- 
 flected through another mind, is dependent upon the ability of the 
 compiler to imderstand the material with which he deals. The works 
 of Aristotie form a source of this nature more valuable many times over, 
 than all others combined; owing to his faultiess comprehension of the 
 positions stated, and his invariable seizure of the essentials involved. 
 Laertius, Plutarch, Stobaeus, Simplicius, Theophrastus, and Sextus 
 Empiricus have preserved important information of this kind. 
 
 The third class represents citation or commentary used in controversy. 
 The works of Aristotle are again, as ever, the most valuable mine in 
 which such citation may be found; it is, however, except when used by 
 Aristotle, two degrees removed from its ultimate inspiration and cor- 
 respondingly less valuable. Some of the writers mentioned present 
 information of this nature; the larger portion, however, is found in 
 the works of Plato, the Alexandrine commentators and metaphysicians, 
 in the patristic writings, and in certain Roman studies and reviews. 
 Information derived from this third class of comment and controversy 
 should be used with caution, and-— always with the exception of 
 Aristotle — in many cases is not only redundant, but misleading, 
 owing to confused thought and the polemical attitude adopted. The 
 
 m 
 
 m 
 
426 
 
 Philosophy 
 
 Pt. IV 
 
 material dealing with the subject, as in theological literature, increases 
 in volume as it recedes from the original inspiration, and decreases 
 in value inversely as its bulk. 
 
 Thus the history of the human Reason leads to Greece and Pre-So- 
 cratic thought, and an enormous cone, or pyramid, of investigation 
 and commentary, referring to the few fragments representing the apex 
 of the p3n"amid; the base of which is formed by the constantly widening 
 area of history and comment of succeeding ages. In order to reduce 
 the subject to its simplest terms, the original sources are presented and 
 reference is largely limited to Aristotle. 
 
 Section II — The PHYsiasxs 
 
 Article i — Tholes. 
 
 The pendulum of inquiry, in search of the beginnings of rational 
 thought, after various oscillations from east to west, sooner or later 
 comes to rest at a point in Asia Minor near the mouth of the Maeander; 
 for there, in the town of Miletus, it seems, were bom Thales, Anaximan- 
 der and Anaximenes, to whom may be traced the origins of the rational 
 history of man. The intelligence there first grows conscious of itself 
 in relation to the imiverse; it there opens its eyes as a child, as it were, 
 in an all-enveloping Cosmos of inexplicable phenomena, and asks 
 perhaps the first and most natural question: What is it? Pure reason, 
 basing its inquiries upon impressions of nature derived through the 
 senses, can act in but one way: it must concern itself with the resem- 
 blances of things; it can alone classify phenomena by means of that 
 which they possess in common; these classifications within wider gener- 
 alizations, and so on. When the reason, based upon contact with 
 nature through the media of sense, ceases to do this, it ceases to act; 
 it can do nothing else. Thus, when the reason begins to move with 
 Thales, it can do but one thing: the mind is conscious through the senses 
 of something external to it; this something is the objective, sensible 
 xmiverse, and the mind naively asks: What is it? The answer to this 
 question, in the then existing condition of knowledge, can take but one 
 rational form: it must seek to classify different material phenomena ' 
 within one general conception, or material element, common to all. 
 
 The question, therefore, "What is it?" with reference to the universe, 
 resolves itself into the question: What is the element common to the 
 external phenomena with which the senses come in contact? Their 
 
 Bk. IV 
 
 Pre-Socratic Thought 
 
 427 
 
 principle, said Thales* their element, that of the nature of which they 
 all partake, is water; and Thales, instead of referring this opinion to 
 divine inspiration, or analogous sources of information, supported 
 it with his own reasons derived from the observation of natiu*e. This 
 is why all rational thought begins with this memorable man. The 
 conception that "all things" might be reduced to a single ultimate 
 principle, or element, based upon rational explanation and the direct 
 observation of nature, proves him to have been one of the few creative 
 intellects of the world, the first philosopher; and, as Anaximenes, 2 in a 
 letter to Pythagoras, well says: "To Thales must be attributed the 
 beginnings of all wisdom." 
 
 Aristotle^ says that his reasons for this position were doubtless derived 
 from observing that "all forms of nourishment are more or less moist; 
 that heat is generated from moisture and the vital f imctions continued 
 through it, as the first principle of things is that from which they arise. 
 Again, from the facts that the seeds, or germs, to which the growth of 
 things may be traced are moist, and that water is naturally the prin- 
 ciple, or element, of moisture." Water, therefore, said Thales, may 
 apparently be regarded as the original or elemental substance, from 
 the various modifications of which other phenomena are derived. 
 
 Article 2 — Anaximenes. 
 
 If all things are resolvable into a single primitive substance, the next 
 object of inquiry will be the process of modification. If there is such 
 a thing as an element common to all things, in accordance with what 
 principle or principles will it undergo change? What is the process 
 governing modifications? This is the next question to which turned 
 the minds of thinking men, and philosophy enters upon its history. 
 
 It was doubtless observed that water, under certain conditions, 
 becomes a solid of greater or less density; and under others, a vapour 
 of varying degrees of rarity. It seems reasonable, therefore, to believe 
 that change in the primitive element occurs through a process of con- 
 densation and rarefaction. But, if this is the process governing modi- 
 fication, it seems that the primitive substance itself must be sought in 
 that element which is conunon to all things modified. Thus, in the series 
 of changes presented by water, as it turns from a solid into vapour 
 
 ' Aristotle. Metaph. A. 3., 983 b za 
 ' Lagrtius. II. 2., p. 34. 
 »Ibid. 
 
428 
 
 Philosophy 
 
 Pt. IV 
 
 Bk. IV 
 
 Pre-Socratic Thought 
 
 429 
 
 through liquefaction, it seems evident that the substance common 
 to these variations is not the water but the vapour. The rarest sub- 
 stance, therefore, must be that of the nature of which others partake. 
 The element of other substances and its greater relative contraction, 
 will produce the denser phenomena. The vapour into which water 
 expands, presents varying degrees of density, until it disappears en- 
 tirely, through mingling with the surrounding atmosphere. What, 
 therefore, more reasonable than to regard this atmosphere itself, or 
 air in general, as the primitive substance from which all changeable 
 phenomena are derived through a process of condensation and rare- 
 faction? If this position is adopted, it becomes essential to abandon 
 the position of Thales, and regard air, or the surrounding ether, as 
 the elemental substance. In reaching this position, philosophy has 
 taken its first definite step in advance. 
 
 Expansion and contraction, at this point then, are regarded as the 
 process of modification; and air, or the rarest ether, as the primitive 
 substance modified. This is the position reached by Anaximenes. 
 The most important passages in which it is formulated are to be found 
 in Simpliciusi and Plutarch: 2 
 
 Anaximenes .... is of the opinion that the essential nature 
 of things is one and infinite; holding it however, to be determinate, 
 rather than indeterminate, and regarding it as air. This air, or primi- 
 tive substance, he believes, will vary in its relative density and rarity, 
 consistent with the nature of different things; thus, when very rarefied' 
 it becomes fire; when less so it is reduced to winds, clouds, and waters- 
 with increasing contraction becoming earth, stone, and all other 
 things. 
 
 Anaximenes .... says that air is the principle of aU existences; 
 that from it, is everything evolved; and into it, eventuaUy disappears. 
 As the soul which controls and constitutes our own existence is nothing 
 but air; so, that, within which the whole worid is held and enveloped 
 is but air and spirit. 
 
 Article j — Diogenes of Apollonia, 
 
 ^ Anaximenes sought a more definite conception of the primitive sub- 
 stance th an Thales, and attempted to develop a method of accounting 
 
 « Simpl. Phys. 24. 26. (Theophr.) Diel's Vorsokraiiker. Vol. I., p. 18. 
 • De Placitis PkUosoph. I., 3. 4. Ibid., p. 21. 
 
 for its modifications. The subject, however, may be carried a step 
 farther; for if there is a primitive element of all things, and air is 
 that element, it naturally becomes necessary to determine as far as 
 possible its essential characteristics. Diogenes of Apollonia devel- 
 ops the thought of Anaximenes. First, he said, the primitive sub- 
 stance must not only be one which is common to all things, and 
 capable of entering into ail things; but, second, it must be capable 
 of thought. The fragments in which this position is established 
 are found in Simplicius, in his commentary upon the Physics of 
 Aristotle. In these, Diogenes expresses the next development of 
 thought as follows:* 
 
 2. 
 It seems to me, if we regard the universe as composed of all existent 
 things, that it must bring about the changes of these through itself; 
 and at the same time remain essentially unaltered. For, if there were 
 elementally distinct things in the world, such as earth, water, and others 
 which appear to the senses; and if these were essentially and individually 
 distinct from each other, never changed their nature, and were not 
 susceptible to alteration, they would be incapable of blending with 
 other things, of receiving nourishment and increase from them, or 
 of causing their disintegration. Vegetable life would not be generated 
 from the earth; animals and other things would not be reproduced, 
 if there were no common element in them. But all these things have 
 a common origin; they take different forms at different times and return 
 to their origin once more. 
 
 4. 
 As men and other animals derive their life from the air they 
 breathe, and consequently, their soul and intelligence; and as, 
 when they cease to breathe the air, life and thought leave them 
 as well; there seem excellent reasons for believing that men 
 and animals derive their life, souls, and intelligence from the air they 
 absorb. 
 
 3- 
 Without intelligence, things could not be systematically distributed 
 
 as they are; for all things bear definite relations to each other: sunmier 
 
 and winter, night and day, rain, wind and good weather; and, if one 
 
 reflects upon these and other relations, one finds they are arranged 
 
 with purpose and harmony. 
 
 > The numbers preceding the citation are those of Diel's Vorsokratiker. 
 
 VI 
 
430 
 
 Philosophy 
 
 Pt. IV 
 
 I 
 
 And so, it seems to me, that what we call air must possess thought 
 and consciousness; and that it must preside over and control everything; 
 and so I believe that thought is derived from air, and that it arranges, 
 is blended with, and penetrates into all things; and that nothing exists 
 which does not partake of the nature of air. 
 
 Diogenes of ApoUonia represents an interesting position in early 
 thought: the culmination of inquiry, developed from the original 
 hypothesis of Thales that "all things" could be resolved into a primitive 
 substance. The definite conclusion is here reached, if there is an elemen- 
 tal substance, that there can be no such thing as generation, properly 
 speaking, but that all change must be referred to modifications of 
 existing substance. 
 
 As Erdmann^ says: "Diogenes denies consciously what his pred- 
 ecessors had denied unconsciously, viz., the existence of the immaterial. 
 Not only does he expressly call his original substance, of which all things 
 are modifications, a 9(i)(xa, but he already knows that a distinction is 
 made between matter and spirit, and it is evidently in opposition to such 
 a dualism that he maintains that reason, which to him is identical with 
 vitality and feeling, is imminent in the air and unthinkable without it. 
 Hence everything, even inorganic existences, and especially man, 
 receives life and knowledge by breathing. Physiological examples, 
 e.g., the foamlike nature of seeds, are intended to prove the life-giving 
 nature of the air. This attempt to maintain the earlier Monism against 
 Dualism makes the naive hylozoism into a materialistic doctrine." 
 yA consistently materialistic explanation of the phenomena of nature 
 IS here presented for the first time; "all things" at this juncture are 
 reduced to a single primitive matter, or substance, which partakes of 
 the nature of all changeable things, and which, itself, is vitalized air, 
 or ether. This, then, seems to be the essential element, or principle 
 of things, and the process representing the rarefaction and condensation 
 of this primitive substance will represent the principle of modification. 
 As the condensation and rarefaction of air is carried on through its 
 absorption, reduction and exhalation, the process of breathing, or the 
 process of expansion and contraction of air, is the explanation of change. 
 In the then existing condition of knowledge, the hypothesis of Thales 
 is incapable of further development; an ultimate single substance, 
 
 1 History of Philosophy. English translation edited by Prof. W. S. Hougli, VoL L, p. 35. 
 
 Bk. IV 
 
 Pre-Socratic Thought 
 
 431 
 
 presenting no possibility of further analysis, is reached, together with a 
 theory apparentiy explaining the features of modification. The movement 
 of thought in this direction is arrested; on reaching Diogenes of ApoUonia 
 it reaches the limits of the possible development of the original con- 
 ception of Thales that the Cosmos could be resolved into a single primi- 
 tive element. An island, so to speak, appears in the ocean of thought: 
 an island discovered by Anaximenes and Diogenes. The thinker 
 must either stay with them and accept their conclusions, or go completely 
 back to the starting-point and begin again. The reason he must go 
 back to the beginning is that the hypothesis of speculation is exhausted 
 on reaching this island of Diogenes. Thales began with the assumption 
 that all things might be resolved into a primitive element. This element, 
 when reduced to vitalized ether, is not susceptible to further develop- 
 ment; its changes may apparently be explained by a process of conden- 
 sation and rarefaction — and the movement of thought ceases. Reason 
 begins its history by positing an ultimate material principle of things; 
 it reduces this to its final analysis, and stops; it can go no farther. Di- 
 ogenes of Apollina may, therefore, be left upon this island of vitalized 
 ether. 
 
 Thought, in continuing its quest, must go back to the beginning, 
 make a circle, so to speak, and start once more. This is what might 
 be called the first cycle of purely physiological thought. It is known 
 as the Ionic school, extending from Thales to Diogenes of Apollinia; 
 approximately from the 35th Olympiad to the 80th Olympiad; from 
 640 B. C. to 460 B. C. 
 
 Section III — The Metaphysicians 
 Article 1 — Anaximander. 
 
 The rational intelligence may adopt two methods of reaching ex- 
 planation: it may analyze and classify particular phenomena in order 
 to establish a general conception; or, it may adopt a general conception 
 and test it through comparison with particular phenomena. The 
 two methods, although leading to identical results, represent two dis- 
 tinct attitudes at the starting-point. 
 
 The philosophic investigator, disinclined to accept vitalized ether 
 and its process of modification established by Diogenes as the final 
 solution of tiie Cosmos, will begin to look about for anotiier hypotiieti- 
 cal conception upon which to base further inquiry. In going back to 
 
 '! 
 
432 
 
 Philosophy 
 
 Pt.IV 
 
 l! 
 
 ■^i; 
 
 
 '»■■ 
 
 the starting-point at Miletus, in search of such a conception, he finds 
 another philosopher, Anaximander, the younger friend and associate 
 of Thales, who supplies the desired hypothesis and suggests a new method 
 with which to approach philosophic investigation. Anaximander 
 says that "all things" cannot be resolved into a primitive substance, 
 as Thales supposed; but, on the contrary, all things are derived from 
 a pre-existing infinity which originally contained them within itself. 
 A first principle cannot, therefore, be derived from particular things, 
 because particular things are derived from a first principle. Within 
 such a first principle, or infinite combination, says Anaximander,^ 
 all things exist and are derived from it. "For," as Aristotle says,* 
 referring to Anaximander, "all things are either a first principle or 
 derived from a first principle. There can be no first cause, or principle 
 of the infinite, for it would then be limited. Beside which, that which is a 
 first principle must be ungenerated and unchangeable, for all things 
 changeable and generated must have an end. . . . There can, 
 therefore, be no first principle of the infinite; changeable things, on 
 the contrary, being derived from the first principle itself. This 
 infinite first principle then contains and controls all things. . . . 
 It is in its nature divine, changeless, and immortal." 
 
 When this conception of Anaximander is grasped, it appears that 
 change may be regarded as caused, not by modification of the primitive 
 substance, as the lonians supposed, but through a process of separation 
 from it.' 
 
 This is a method of inquiry different from that adopted by the lonians. 
 Anaximander seems to have been the first thinker to suggest it, and 
 through it will further progress proceed. The most important notice 
 of Anaximander is that of Theophrastas:* "Anaximander regarded 
 the first principle and element of things as infinite, and was the first 
 to use that word in connexion with a principle. He said that it was 
 neither water nor any of the other things usually called elements, but 
 that the infinite was something of a different nature from these, and 
 that from it proceeded the heavens and the worlds; and things at their 
 dissolution must of necessity return to that from which they are 
 evolved. . . . Doubtless, perceiving the four elements changing 
 into each other, he does not wish to make any one of these the primitive 
 
 * Aristotle Hetaph. A. 3., 1069 b aa. 
 « Aristotle Pkys. T. 4., 203 b. 6. 
 ' Ibid., A. 4., 187 a 30. 
 / Diel's Vorsokratiker. Vol. I., 9, p. 13. 
 
 Bk. IV 
 
 Pre-Socratic Thought 
 
 433 
 
 substance, but chooses rather to adopt something other than any of 
 these. And he does not think that the modifications of sensible pheno- 
 mena are caused by changes in the elemental substance, but by the 
 separation of opposites caused by eternal motion." 
 
 The primitive substance, or potential " mixture," as Aristotle would 
 call it, is here regarded as consisting of an infinite homogeneous unity 
 from which all variable things proceed and into which they are ab- 
 sorbed. The process of change, then, is no longer condensation and 
 rarefaction, but separation. The next question in inquiry will be: What 
 governs the separation of particular, measurable things from the infinite, 
 inuneasurable unity? 
 
 Article 2 — Pythagoras » 
 
 The infinite unity of Anaximander is incapable of being changed or 
 measured, but everything else, being derived from it, is corruptible and 
 finite; that is changeable and measurable. It is obvious that neither 
 separation, change, nor measure can occur, except through the establish- 
 ment of difference; that is, through the determination of more or less. 
 If the infinite of Anaximander is regarded as an absolute, unlimited 
 unity, and all other things are derived from it, it seems that this unity 
 must be greater than all other things. But, again, the multiplicity 
 of things derived from unity must bear relations within itself, as well 
 as to the original unity. But these relations, involving as they must 
 the establishment of more or less, can only occur through the media of 
 quantitative distinctions. It seems, at the same time, that quantitative 
 distinctions, in order to obtain exact formulation, must be capable of 
 being determined through the relations of definite mathematical, or 
 numerical, conceptions. But, if things differ essentially as more or 
 less, and differences of more or less are fundamentally distinctions 
 of number, it seems reasonable to believe that essential differences 
 and numerical differences must be identical; in other words, that 
 number and essence are the same. The suggestive speculative con- 
 ception imderlying the Pythagorean systems is here reached. 
 This conception in its most abstract form presents the Cosmos, 
 or sum of things, as an unchangeable, unlimited unity from which 
 changeable, limited things are derived, in harmony with an estab- 
 lished system of numerical relations. This is the fundamental 
 speculative thought of Pythagoras. In the words of Aristotle,^ it may 
 
 ^ ■ Aristotle Metapk. A. S- 986 « t. 
 

 1 1 
 
 II 
 
 I 
 
 434 
 
 Philosophy 
 
 Pt. IV 
 
 be expressed in the position which regards "the element of numbers as 
 the element of things." 
 
 The lonians reasoned through sense perception of matter; they reduced 
 matter to its simplest element and denied the existence of the incor- 
 poreal as the necessary culmination of their school. Pythagoras, in 
 developing the thought of Anaximander, rather than that of Thales, 
 looks at nature from a different point of view. He seeks not the element 
 of the substance modified, but the principles of governing modification. 
 In developing this hypothesis, Pjrthagoras formulates an ideal, rather 
 than a corporeal principle, and suggests a method of inquiry based 
 upon the conception of mathematical relations, as principles governing 
 existence. He thus lays the foimdation of later idealistic systems, and 
 was perhaps the first piure metaphysician after Anaximander. With 
 him speculation advances into unexplored seas full of hope and with 
 abundant material; in other words, with a new and unexhausted hypothe- 
 sis: the hypothesis of the solubility of phenomena in the crucible of 
 mathematical relations. 
 
 Two methods of inquiry are thus developed at the outset of cosmo- 
 logical speculation: the inductive and the deductive. The first devotes 
 attention to the study of nature in the observation of particular phe- 
 nomena through the media of sense impressions. These impressions are 
 analyzed and classified in relation to each other, and general conceptions 
 evolved. The second method begins with the formulation of a general 
 conception, and derives its classification of particular phenomena from 
 it. The first leads to an analysis of matter; the second to an analysis 
 of ideas. There are two important conceptions in rational speculation 
 traceable to Pythagoras: First, the idea that number, and the essence 
 of things, are indentical.^ Second, that sensible bodies might be 
 resolvable into four elemental substances: fire, water, earth, and air.^ 
 
 The mind which begins to construct the heavens out of numbers, as 
 Aristotle^ would say, with the P3rthagoreans, or, in other words, to 
 speculate upon the hypothesis of the solubility of cosmical problems 
 in a mathematical crucible, will soon find itself involved in questions 
 dealing with abstract distinctions between things and symbols of things, 
 between quantitative and qualitative categories. As numerical and 
 mathematical relations are infinite, and as these infinites themselves 
 
 • Aristotle, Ibid. 
 
 • La^rtius VIII., 19, p. 210. 
 
 • De Codo. r. I., 300 a 15. 
 
 Bk. IV 
 
 Pre-Socratic Thought 
 
 435 
 
 are infinitely varied in nature, when they are applied to such abstrac- 
 tions as Truth, Being, God, Nature, Reality, the One and the Many, a 
 limitless maze of mystical and metaphysical speculation is opened for 
 investigation. Pythagoreanism is essentially mystic, confused and com- 
 plex, and as such achieves the negation of philosophy. The object of 
 philosophy is realization; the moment any system opens a limitless 
 infinity, philosophy ceases; for there can be no definite realization m 
 
 infinity. . . 
 
 In the contemplation of the Pythagorean hypothesis, the mmd is 
 drawn to one phase of inquiry: the ultimate inquiry m this connexion, 
 that with reference to the relation between the One and the Many; 
 between the unity from which things proceed and the multiplicity of 
 things derived. This is the point in the Pythagorean position upon 
 which discussion concentrates, and from which pWlosophic movement 
 
 The rational intellect, in beginning to speculate with Anaximander, 
 finds itself drawn to the thought of Pythagoras in search of the explana- 
 tion of the phenomena of change. On meeting Pythagoras, it turns 
 to the study of an abstract unity on one hand, and to the concrete 
 multiplicity derived from this on another. If, then, it begins to study 
 this infinity, and adopts mathematical principles as the only means of 
 submitting it to an exact analysis, it but opens up other infinities, and 
 the process perpetuates itself indefinitely. Pythagoreanism is an end- 
 less series of self-perpetuating numerical categories; it can, conse- 
 quently, present no possibility of self-realization to the finite mind 
 which understands it. The finite, rational intellect, therefore, at this 
 juncture has no choice but to reject the categories altogether, and 
 turn attention to the ultimate unity: in the speculative language of 
 the day, to repudiate the "Many" and seize upon the "One." This 
 is the next progressive and necessary step in rational thought, and is 
 taken by Xenophanes. Aristotle ^ says that he was the first thinker 
 to introduce unity in thought. 
 
 Article 3 — Xenophanes. 
 
 The mind which rejects the Many and recognizes but absolute Unity 
 frees itself at a stroke from difficulties arising from speculative concep- 
 tions of plurality; from all the mystic and symbolic logicalities and 
 illogicalities of Pythagoreanism. This position adO|pted, however, 
 
 ^ Metapk. A. $. 986 b 3 1. 
 
 \mt 
 
436 
 
 Philosophy 
 
 Pt. IV 
 
 the attention is drawn to the necessity of establishing more definite 
 conceptions with reference to the nature of this Unity, or the "One." 
 How may the One be known? How may the human reason come in 
 contact with it? What is it? These are the questions Xenophanes 
 will be expected to answer. He saysi^ 
 
 The absolute Being, the One, is not generated. Generation can 
 occur only from that which is like or unlike; but the generation of the 
 absolute can take place from neither one nor the other; not from like, 
 for such a supposition would be the negation of the absolute, in the 
 implication of relations to others of the same nature; not from unlike, 
 for things can but generate their own kind. As absolute Being, or 
 Unity, therefore, is ungenerated, it must be eternal. Eternal but neither 
 infinite or finite: not infinite, for infinity implies a negation of deter- 
 minate existence; not finite, for that involves measure and plurality. 
 Neither is it movable nor inunovable: not the first, for it would then be 
 divisible; not the second, for that involves a quality of non-existence. 
 
 Xenophanes possessed one of the most interesting intellects of early 
 Greek thought, but came perilously near being a theologian; it is indeed 
 not always easy to trace the purely philosophic element in his specu- 
 lation; his Unity may seem a pantheistic divinity. Aristotle2 says 
 that he looked up to the whole heavens and called them God. Such 
 a position, however, in philosophy, requires more exact determination 
 than the negatives cited: but when Xenophanes is asked for further 
 definition of his position he is lent the following words: 
 
 Surely never hath been, nor e'en ever will be a mortal 
 Knowing the Gods, and the nature of things of which I am speaking; 
 For though we chance on the truth, we do so unheeding, unknowiig: 
 Nought but opinion there is, all things in its error enfolding.' 
 
 These lines show the first germ of conscious doubt in philosophy, 
 and the first recognition of a philosophic distinction between truth 
 and human opinion. Up to this point the reason proceeds upon the 
 tacit assumptions of the existence of an ultimate, objective truth, 
 ^<1 ^^t sense and rational deliberation were trustworthy guides to 
 
 • Tlib passage is » brid summaiy of the speculative esseptiab of the opinions attributed to Xenophanct 
 in the Aristotelian work, De Xmophane, tk, (HI. 977), and ia Siopfidus (f iy#., «, laff. Did*, vi* 
 I., p. 40). 
 
 » lieia^. A. 5. 986 b 24. 
 
 • Sextus Empiricus, Adv. Math. VII., 49 and iia 
 
 Bk. IV 
 
 Pre-Socratic Thought 
 
 437 
 
 its discovery. Xenophanes, after his experiences with the abstract 
 complexities of Pythagorean metaphysics, frees himself from these 
 by the denial of the complex and the recognition of the one absolute 
 existence alone. When questioned, however, with reference to the 
 nature of this absolute, or true Being, he merely presents a few negations; 
 and, upon further inquiry, begins to doubt. He doubts, but unsystemat- 
 ically, imsdentifically, as it were; and notwithstanding ancient texts 
 to the contrary, there is no trace of a rationalized skepticism to be 
 found in his words. ^ Philosophy must obviously move on without 
 him, and seek another leader to answer these questions. 
 
 Article 4 — Parmenides, 
 
 Absolute Being, devoid of change, the One, divested of plurality, 
 necessarily implies something distinct from change and multiplicity. 
 If the One is absolute and without relation, if there is such a thing as 
 an ultimate, objective Being, Truth, or Reality, there should be some 
 rational method of distinguishing between the absolute and the relative; 
 between the existent and the non-existent — between Being and Be- 
 coming, in the phraseology of the period. The next step, therefore, 
 must be to determine the essential difference between Truth, or true 
 Being, and that which is but opinion. Aristotle^ says that Parmenides 
 was said to be the pupil of Xenophanes; and the pupil naturally repre- 
 sents the development of this phase of thought. Aristotle^ says he 
 formulated two distinct conceptions with reference to Being and Be- 
 coming. He regarded Truth, or real Being, as the only genuine exist- 
 ence; but, compelled to recognize the impressions derived from variable 
 phenomena, he referred Truth to the decisions of the deliberative 
 reason; other phenomena to mere sense impressions. Thus Truth, or 
 the Absolute, may be approached through the action of the reason 
 alone; all else must be regarded as mere opinion, or rather as non-existent. 
 The following are the most important records of the thought of Par- 
 menides in relation to earlier and later speculation: 
 
 4-s- 
 
 "Come, the two paths I will show thee and well listen thou to my saying; 
 These are the paths which alone will aid thee in search of true knowledge: 
 Firs t, that true Bemg exists, and impossible that it should not be. 
 
 * M. Victor Cousin presents an interesting review of the question, FragmetUi PkUosopkiqius (Philosofhk 
 Ancienne), p. 77, 
 
 * Metaph. A. 5, 986 b 22. 
 •Ibid. 
 
438 
 
 Philosophy 
 
 Pt. IV 
 
 
 This is the trustworthy path, for truthfuhiess ever attends it. 
 Second, Non-Being is not; and that it must be non-existent. 
 This is the path I would say of which thou must ever know nothing. 
 That which is not is imknown and thou canst not tell its existence. 
 For the same thing is the thought with that which can come into Being. 
 
 6. 
 Being is, we must say, and saying it, e'en must believe it. 
 Possible is it to be; but not to be means no existence. 
 Non-Being, therefore, is not; and this then I bid thee to ponder. 
 First, from this path would I lead thee, again from that other moreover; 
 Doubly involved and confusing, where mortals in ignorance wander, 
 Helplessness guiding alone the wavering thoughts they have in them; 
 Borne along dumbly and blindly, a swarm of unreasoning creatures; 
 Thinking non-Being the same, yet not the same, is as true Being; 
 And that aU things are involved in paihs of their own contradiction. 
 
 The actual non-existence of that which may be referred to opinion, 
 derived from mere sense impression, and the necessary existence of 
 all derived from deliberative reason, is the key to the thought of Par- 
 menides, and to a large portion of later speculation. 
 
 He continues: 
 
 7. 
 Things which are not can never be; but do thou avoid this path of 
 
 inquiry. 
 
 1.V.34. 
 
 Let not long accustomed habit lead thee into it with undiscerning 
 eye and tongue and sounding ear; but do thou judge the conflicting 
 evidence of the senses by means of the Reason, as I have told thee. 
 
 8. 
 
 There is but one other way; namely, that Being exists. It contains 
 many proofs that it is; it is ungenerated and indestructible, complete, 
 unchangeable, and without end. It was not, nor will it be, for it exists 
 now; one and indivisible. Where wilt thou seek its origin? Whence 
 could it be increased. . . . 
 
 It is indivisible and homogeneous. There is no more Existence in 
 one place than in another to prevent its perfect consistency; nor is 
 there less. It is everywhere complete. Being embraces, and is con- 
 tained in. Being. It is moreover immovable, held, as it were, in vast 
 bonds; without beginning and without end; for generation and dis- 
 solution are rejected by the true faith. . . . 
 
 The thought, and the cause of the thought, are identical; for without 
 the subject in which the thought is expressed, you will not find the 
 
 Bj^^ IV Pre-Socratic Thought 439 
 
 thought. There neither is, nor wiU be, anything, but that which is; 
 for fate has bound it in one complete and motionless whole. All 
 those things, therefore, which men perceive through the senses, and 
 believe to be true, wHl, in reality, be nothing but names; such things, 
 for instance, as men believe arise and dissolve into others; to be and 
 not to be; things which are constantly changing their positions and 
 appearances. 
 
 This phase of thought, as Parmenides has shown, must finally refer 
 "all things" to the abstract human reason, acting independently of 
 sense experience. Thus Parmenides divides his works into two dis- 
 tinct fields, one treating of real existence, or truth, and the other of 
 transient opinion. 
 
 He says: 
 
 1.V.29. 
 Well the pure heart must thou know that dwells in the truth all convincing; 
 Also opinion of men which not upon truth has been founded: 
 But these things shalt thou learn; and that which is based on opinion, 
 E'en must thou judge m the balance; everything carefully weighing. 
 
 All changing phenomena will thus be regarded as but impressions 
 
 left upon the minds of men. And as these phenomena form and fade 
 
 and vary, they are in reality, or rather, in non-reality, but the names 
 
 by means of which men distinguish them. 
 
 19. 
 Thus, in opuiion of men, have things and their changes arisen. 
 Things which seem to be now; yet which, as they're ever maturing, 
 Fade and vanish away; but names in the mmds of mere mortals. 
 
 16. 
 As to each man is the nature fused through his flexible members. 
 So is the mind of the man, which thinks as but part of his body; 
 Thought, in each and in all, is perfection of structural being.* 
 
 In this way Parmenides suggests that in rational cognition alone 
 may truth, or real Being, be found; and that all else is but unsystematized 
 sense impression, error, or opinion: mere names or idle phantasies, as 
 Timon^ says. 
 
 > This seems the sense in which Parmenides uses the words xh yip icXiov 1^:1 v6t)h«. The passage is 
 preserved in Aristotle; who, after reference to Democritus and tue citation of two passages of closely allied 
 meaning from Empedocles, introduces his quotation from Parmenides with the words: xal IIapnevl5T<c^ 
 8i dTo»a(veT«t xhy aMy Tp6xov {Metaph. T. 5, 1009 b 21). For a scholarly, as well as philosophic, dis- 
 cussion of the fragment, Cf. Lewes History of Philosophy, p. 876. 
 
 » Lagrt* us, DC 3, p. 232- 
 
440 
 
 Philosophy 
 
 Pt. IV 
 
 s 
 
 Rationalized thought here develops and formulates a final position 
 with reference to absolute truth. Truth, or Being, is that which exists 
 and only that which exists; and this Being, or Existence, is determined 
 or determinable through the action of the abstract intelligence alone. 
 Pannenides regarding all true entities as One, and this One as constitu- 
 ting the only real existence. ^ This One exists, and nothing else exists 
 in the literal acceptance of the terms. This is the position established 
 by Pannenides in his own works; and in the words of Zeller,^ "the 
 unanimous testimony of later writers." 
 
 Thought here develops: (i) A conscious and rationalized state- 
 ment of the inability of the senses to present truth. (2) A perfect 
 faith in the action of the himian reason, unshaken by any trace of 
 skepticism. The reason here denies the evidence of the senses; en- 
 trenches itself within itself; establishes itself as its own criterion; refers 
 itself for verification to itself; and — another island is discovered in 
 the seas of speculation; the ship of reason here puts into another port, 
 so to speak; her voyage is ended in this direction. The reason that a 
 final port in inquiry is here discovered is that at this point, in denying 
 the validity of the senses, the hiunan reason denies the only other 
 source of rational human knowledge; denies the validity of the only 
 other philosophic source of information through which it could verify 
 its own decisions. There is nothing but the evidence of sense to which 
 reason can appeal in its own justification. When the philosophic 
 reason denies the testimony of sense, it refers itself to itself for verifica- 
 tion; that is, it denies all possibility of verification, except through its 
 own conclusions; it disappears, as it were, in a cloud of ratiocination, 
 and inquiry becomes incapable of further development. Later thinkers 
 of this school can do nothing but stay here and defend this island of 
 rationalized abstractions discovered by Pannenides. The island may 
 be defended, but it cannot be moved rationally; there is no philosophic 
 lever with which to move it. All philosophic validity of sense experienced 
 here disappears for the first time, but the citadel of reason remains. 
 Just as Diogenes represents the culmination of the inquiry of the earlier 
 Physicists, does this position, as formulated and defended by Zeno and 
 Melissus, represent the culmination of the inquiry of the earlier Meta- 
 physicians. Thought can go no farther in this direction: the hypothesis 
 in the then existing condition of knowledge is exhausted. Reason here 
 
 « AristoUc Metapk, A. s; 986 b aS. 
 
 « PreSocratic Pkilosophy, VoL I., p. 587. 
 
 Bk. IV 
 
 Pre-Socratic Thought 
 
 441 
 
 posits itself as the final standard of Truth; refers itself to itself, and 
 progress ceases. 
 Melissus^ formulates the position as follows. 
 
 Article 5 — Zeno and Melissus, 
 
 I. 
 
 Whatever was, always was, and always will be ; for had it come into being, 
 it must have been nothing before it came into existence. But if it were 
 nothing, it is impossible that anything should have come from nothing. 
 
 2. 
 
 Since Being did not come into being, is, was, and always will be, 
 it has no beginning and no end, but is infinite. Had it come into being, 
 it would have had a beginning and an end, for its existence must have 
 begun at some time, and must cease at some time. But if it neither 
 began nor ended, always was and always will be, it has no beginning 
 and no end. It is impossible for anything always to be without con- 
 stituting complete Being. 
 
 Nothing, having a beginning and an end, can be eternal or infinite. 
 
 6. 
 If it is infinite, it must be One; for if it were two, they could not be 
 infinite; for they would be limited by each other. 
 
 7. 
 
 Being therefore is eternal, infinite, one and homogeneous. It cannot 
 decay, become greater, change nor suffer; for, were any of these possible. 
 Being would not be complete. If it were subject to change. Being would 
 not be homogeneous, for that which existed must pass away and Non- 
 Being come into existence. For, if but a hah* changed in ten thousand 
 years, all would be destroyed in the eternity of time. It is not possible 
 that Being should change, for that which was, is not destroyed, and 
 that which is not, does not come into being. Since nothing is added to 
 Being, nothing taken away, and it cannot differ, how could existing 
 things be altered? For if anything becomes different it must suffer 
 change and alteration. 
 
 This is the culmination of the Eleatic school. As Erdmann^ says: 
 "Just as Anaximenes represents the highest perfection of the physio- 
 
 * Diels, VoL I., p. 143. 
 
 • History of Pkilosopky, Vol. L, pp. 42,44. 
 
 •i 
 
 tt 
 
 J. 
 
Bk. IV 
 
 Pre-Socratic Thoughts 
 
 443 
 
 
 !^^ 
 
 442 
 
 Philosophy 
 
 Pt. IV 
 
 logical, so Pannenides represents that of the metaphysical tendency. 
 As in the former case, it is no more possible to make further progress, 
 in the doctrine itself, but it can be defended against opponents. . . . 
 By the side of Melissus, as the champion of Eleaticism as opposed to 
 the doctrines beneath it, stands Zeno, who protects it as a reactionary, 
 combating innovation. His task is a desperate one, and therefore 
 requires great force. Hence the great subjective importance of 
 the man. It is not a question here of discovering profound novel- 
 ties, but of exercising all imaginable acuteness in order to secure 
 what has been found. Hence the perfection of the formal side of 
 his philosophizing, which makes Zeno into the Diogenes of Apollonia 
 
 of his school." 
 
 At this point philosophy reaches a mild crisis in its history, the founda- 
 tions of thought are scattered and confused. Up to the present it has 
 seemed possible to trace each speculative hypothesis through a logical 
 sequence of ideas, leading naturally and necessarily from one position 
 to another, until the resources of the hypothesis are exhausted and pro- 
 gress is no longer possible. Thus, to continue the simile adopted, Anax- 
 imenes and Diogenes have been left on one side on an island of pure 
 matter, discovered through an analysis of the testimony of the senses; 
 and Zeno and Melissus may here be left upon an island of pure 
 ideas, or of abstract ratiocination, discovered through the action of 
 the reason, independently of the evidence of sense. At this junc- 
 ture, however, progress is no longer possible in either direction; 
 all momentum is spent; and, unless Diogenes or Zeno offers all 
 that is desired in cosmological theory, the thinker must go back to the 
 starting-point in search of a new hypothesis and begin once more. The 
 Reason begins once more, and in doing so makes another circle, and 
 completes what might be called the first metaphysical cycle of thought. 
 This cycle may be traced from its beginning, with the method of An- 
 aximander in Miletus, until its culmination with the Eleatics. It ex- 
 tends approximately from the 42nd Olympiad to the 84th Olympiad; 
 from about 611 B. C. to about 444 B. C. 
 
 Section IV — The Metaphysical Physicists 
 
 'Article i — Heraclitus. 
 
 That philosophy here reaches a crisis is evident from the different 
 classifications adopted by historians in their reviews of this period. 
 
 As the fragments and records of the thought of Heraclitus, Empedocles, 
 and Anaxagoras are studied, it is impossible to classify them philo- 
 sophically with any of their predecessors; although, at the same time, 
 their thought is essentially dependent upon earlier inquiry, physical 
 and metaphysical. It seems as though they recognized the insufficiency 
 of the basis of previous speculation, and attempted to establish new 
 foundations by means of a rearrangement and reorganization of the old. 
 The crude induction of the period, reasoning from direct sense perception, 
 they understood, could but take them back to the materialistic island 
 of Diogenes. On the other hand, in developing mental abstractions, 
 they had but reached the idealistic island of Zeno, which denied the 
 senses any participation in Reality. Neither of these islands was 
 sufficiently large or strong to hold all the thinking minds of the day; 
 and as there is no medium through which the human being can come 
 in rational contact with nature, other than sense and reason, men 
 attempted to combine the physiological and psychological methods of 
 the earlier thinkers. This is a new idea in the history of thought: 
 the starting-point of the new epoch. The ship of Reason begins a new 
 voyage of discovery — another breeze fills her sails, and seas unex- 
 plored lie before her again. 
 
 Two distinct and complete cycles of thought have now been traced: 
 the Ionian and that which culminated with the Eleatics. The first of 
 these is purely physiological; the second purely psychological. In other 
 words, one culminates in a world of pure matter, the other in a world of 
 pure ideas. They have led to nothing but a materialistic Cosmos on one 
 side, and an idealistic Cosmos on another. The mind, therefore, has no 
 resoiu*ce but to accept one of these, or make an attempt to reach new 
 discoveries through a combination of earlier methods. Erdmann^ pre- 
 sents an excellently understood introduction to this period of thought, 
 which had better be transcribed than merely paralleled: 
 
 "The antithesis of matter and category, uXtq and X6yo<;, as Aristotle 
 calls it, has been reduced by the Pythagoreans to that of the Many and 
 the One, and, finally by the Eleatics, to that of Non-Being and Being, 
 to formulas which even Plato makes use of as being quite adequate. 
 In attempting, however, to carry out a tendency to which the P)rthag- 
 oreans had only inclined, viz., to lay stress on Being to the exclusion 
 of Non-being, the Eleatics became pure anti-physical metaphysicians, 
 and form, as Plato and Aristotle rightly remark, the opposite extreme 
 
 1 Ibid., p. 46. 
 
 i 
 
 8 
 
444 
 
 Phaosophy 
 
 Pt. IV 
 
 to the Physiologers. But just this extreme position which they had 
 taken up continually compels them against their will to set up again 
 what they had tried to deny just before. And this is natural; for 
 if Being is to be thought to the exclusion of all Non-Being, and the 
 One in opposition to aU plurality, the thought of the second re- 
 appears by the side of the first, just as along with the thought of 
 the concavity of a surface there appears that of the convexity of the 
 other side. The Eleatics, as Aristotle rightly says, have been 
 compelled to set up, by the side of their science of Being, a theory of 
 that which they nevertheless declared to be illusive appearance. And 
 if progress consists in doing wittingly and deliberately what was 
 done unconsciously and under compulsion from an earlier point 
 of view, progress will require a philosophy which combmes Being 
 and Non-Being, the One and the Many, and hence also metaphysics 
 and physics. 
 
 *' Hence the Metaphysical Physiologers, or physiological metaphy- 
 sicians, occupy a higher position, as compared with the groups considered 
 hitherto. And, in the case of at least two of them, the 'Ionian and 
 Sicilian Muses,' this position has been fixed by Plato with an accuracy 
 that admits of no improvement. If, on the other hand, Aristotle 
 reckons them among the physiologers, he overlooks the fact that his 
 own definition of the conception no longer fits them, since they do not 
 derive everything from the material alone.'' 
 
 Heraclitus is the thinker who inaugurates the new era; formulates 
 the new method. The Eleatics recognize an absolute, changeless Unity, 
 and deny existence to all plurality, or change. But the senses show 
 an infinite multiplicity of material phenomena undergoing a never- 
 ceasing process of change and movement in every direction, wherever 
 the subject comes in contact with external nature. All things seen, 
 heard, or perceived in any way, come into being, bloom, fade, and die.' 
 To deny this process and attempt to regard it as a purely imaginary 
 presentation, with Parmenides and Zeno, scarcely ojffers a really com- 
 prehensive explanation of nature. The Eleatics deny Becoming, 
 and exalt Being. The inevitable revolt occurs, and Heraclitus reverses 
 the Eleatic conception in the denial of Being, and the envelopment 
 of the universe in a process of eternal change. All phenomena flow- 
 ing beneath the senses present a never-ending series of modifications. 
 This is perhaps the first thing noted in the external worid; to 
 deny it seems superficial; Heraclitus makes it his starting point. 
 
 i' 
 
 Bk. IV 
 
 Pre-Socratic Thought 
 
 445 
 
 The following are his most important speculative fragments as num- 
 bered by Diels; 
 
 This Cosmos is the same for all, and was made by neither gods nor 
 men. It always has been, is, and always will be, an ever-living fire, 
 which rhythmically flares and fades. 
 
 90. 
 All things are exchanged for fire, and fire for all things; as exchange- 
 able wares are turned into goldy and gold again into wares. 
 
 10 1. 23. 
 Everything changes into one, and one into everything again. 
 
 76. 
 
 Fire lives in the death of earth, air in the death of fire; water lives 
 in the death of air, and earth in that of water. 
 
 36. 
 
 For souls, it is death to become water, for water death to become 
 earth; but water comes from earth and soul from water. 
 
 91- 
 It is not possible to go twice into the same river, nor twice to find 
 
 any perishable substance in the same condition; for these, owing to 
 
 the swiftness of their changes, disperse and reform, though never the 
 
 same, but recompose and disperse anew, and again reform and dissolve. 
 
 49a. 
 
 We step, and we do not step, into the same rivers; we are and we 
 
 are not. 
 
 32. 
 Wisdom is one. It wills, and wills not, to be called Zeus. 
 
 41. 
 Wisdom is one. It is to know the Reason by means of which all 
 things are run through all things. 
 
 78. 
 The way of man is without purpose, but not that of God. 
 
 108. 
 Not one of those to whose discourses I have listened has learned 
 that wisdom is something separate and distinct. 
 
 107. 
 The eye and the ear are poor witnesses when'they belong to the ignorant. 
 
 "3- 
 Understanding is common to all men. 
 
 \^ 
 
 ■■ 1 
 
 W 
 
 II 
 
2! 
 
 446 
 
 Philosophy 
 
 Pt. IV 
 
 114. 
 
 Those who would speak with intelligence should hold firmly in their 
 reasonings to that which all possess in common; even more firmly 
 in fact than a city holds to its laws. All human laws are developed from 
 one divine law, and this law rules as it wills and suflSces, and more 
 than suffices, for all things. 
 
 2. 
 
 So we should follow that which is possessed in common; yet, although 
 reason is possessed in common, the many live as though they had an 
 understanding peculiar to themselves. 
 
 80. 
 
 We should recognize that war is universal; that strife is the normal 
 course of nature, and that all things arise and pass away through proc- 
 esses of mutual antagonism. 
 
 53- 
 Strife is the father of all, the king of all, the maker of gods and men; 
 
 some slaves, some free. 
 
 67. 
 God is day and night, winter and summer, war and peace, hunger and 
 satiety; he assumes varying forms, as blending wreaths of incense; and 
 each man gives him the name he pleases. 
 
 100. 
 The changing seasons bring everything in its turn. 
 
 123. 
 Nature loves to hide. 
 
 45. 
 The boundaries of the soul you would not find though you wandered 
 
 over every path. 
 
 48. 
 The name of the bow is life; but the chord it strikes is death. 
 
 26. 
 Man is like a light in the night; lit and blotted out. 
 
 27. 
 At death men will find that which they neither hope nor expect. 
 
 As the thought of Heraclitus is studied, together with the ideas with 
 which the speculative intellects were occupied during the age under 
 discussion, the influence of the earlier schools is marked; but this in- 
 fluence, in its progressive significance, is traceable in an attempt to com- 
 
 i 
 
 Bk. IV 
 
 Pre-Socratic Thought 
 
 447 
 
 bine earlier thought in a comprehensive system. Matter and idea, 
 substance and category, uXtjv and Xiyoq, instead of being regarded as dis- 
 tinct and separate entities, as in earlier inquiry, are combined by Herac- 
 litus. He seeks a material principle, or element, of changing phenomena 
 with the lonians, and finds it in fire, which he doubtless chose as the rarest 
 and most changeable of substances. He questions the testimony of 
 the senses and individual opinion, with the Eleatics, and recognizes 
 with them that reason is the ultimate criterion of Truth; but not any 
 reason, that reason alone which men possess in common with the divine 
 and universal Reason. ^ Heraclitus combined these earlier phases of 
 thought, and involves all things in a process of universal flux, arising 
 from what he calls Strife, a principle controlling generation and cor- 
 ruption, although from this very antagonism itself harmony results. ^ 
 This harmony might be compared to that of a bow, or a harp, which 
 results from opposed tension.^ The elemental substance is thus under- 
 going a constant process of conversion and reversion; all things are 
 changed into it; and it, in turn, is changed back again into all things; and 
 the process is endlessly perpetuated through the antagonistic action and 
 interaction of generated things upon each other. 
 
 If nature is regarded in the light of such considerations, the resulting 
 philosophy will be largely one of contradictions; it will attempt to ride 
 two horses at the same time. As all things are constantly reverting 
 to their element, and as this element again is undergoing a corresponding 
 and opposed process of conversion into all things, one thing may be 
 considered in much the same light as another; for it is but a question 
 of time imtil everything becomes something else, or generates its own 
 opposite. This is exactly the position formulated by Heraclitus. The 
 endless flux, in which all things that flow beneath the senses are involved, 
 seems to present nothing stable, nothing certain; phenomena merely 
 appear as wraiths of smoke or incense, blending in a restless series of 
 unending generation and degeneration; they are simply caught up 
 into existence for a moment, like bubbles in a stream, to be changed again 
 into something else or their own negation, as the only purpose of their 
 being. One thing is thus very much like another: 
 
 iiJi 
 
 59. 
 
 The straight and the crooked are one. 
 
 Adv. Math. VII., 126, 131. 
 
 1 Sextus Empiricus 
 « Frag. 8. 
 • Frag. SI. 
 
448 
 
 ii 
 
 I 
 
 Philosophy 
 58. 
 
 Pt. IV 
 
 Bk. IV 
 
 Pre-Socratic Thought 
 
 449 
 
 Good and bad are the same. 
 
 6o. 
 
 The road up is the same as the road down. 
 
 8 
 
 Opposition unites. 
 
 6i 
 
 The sea is both the purest and foulest of water; drinkable and bene- 
 ficial to fish, undrinkable and harmful to men. 
 
 126 
 The cold becomes hot; the wet dries, and the parched becomes moist. 
 
 These statements of the identical nature of contraries do not seem 
 mere metaphysical quibbles, when the conditions of early thought are 
 understood, and an attempt is made to look at the world through the 
 eyes of this suggestive old thinker of Ephesus. The rational ground 
 of this position could not be better explained than in the following 
 passage from Plutarch,^ citing Heraclitus: 
 
 "It is the same thing to be alive or dead, awake or asleep, young 
 or old; for all these are changed into each other. Just as the potter 
 fashions different living forms out of the same clay, and as easily destroys 
 them again, and repeats the process indefinitely, so nature, from the 
 same matter, fashioned our ancestors, our fathers and ourselves, and 
 will evolve the generations yet to come. Thus, as the stream of genera- 
 tion flows endlessly on in one direction, so the stream of dissolution 
 flows eternally on in another, whether the poets call it Acheron or 
 Cocytus. So it is that the same cause which first opened our eyes 
 upon the light of day carries us ever on and down to eternal night." 
 : Few passages present a more vivid impression of the involved, 
 criss-cross method of Heraclitus than his conception of 2 "immortal 
 mortals and mortal immortals, dying their life and living their 
 death." As these fundamental ideas of Heraclitus are studied in 
 relation to earlier thought, the attention is drawn to two phases of 
 inquiry. 
 
 The first Ionian thinkers regarded matter as distinct, and, conse- 
 quently, developed a purely materialistic Cosmos. The Eleatics turned 
 their attention to an analysis of the independent reason, and culminated 
 
 *Consol.adApott, la p. 127, 
 * Fxag. 63. 
 
 in an idealistic system. Heraclitus rejects both positions, and begins 
 a new epoch with the combination of the two, imdergoing constant 
 modification. If, then, inquiry begins anew with this combination 
 method, the attention naturally turns to a closer analysis of the nature 
 of matter, through the modification of which all change is produced; 
 and again, to the effects of this change upon the human reason itself. 
 The reason can no longer be regarded as an independent entity with 
 the Eleatics, but becomes involved with material processes, even in 
 its ''divine and universal" significance, as Heraclitus would say; both 
 as dependent upon the physical constitution of the subject, and the 
 universal flux of matter, through which, in some phase or other, it 
 seems all subjective impressions are derived — the development of a 
 thought suggested by Parmenides^ The lonians, on reaching what 
 they considered the ultimate physical element of the Cosmos, neces- 
 sarily ceased to speculate: their knowledge could take them no farther. 
 To a mind, however, standing upon the higher level of a later age, the 
 resolution of phenomena into a material principle suggests inquiry 
 into the nature of the principle; and when it is recognized that all phe- 
 nomena, into which this principle enters, exist in a condition of constant 
 instability, the mind drifts inevitably toward questions dealing with 
 the effects of this instability upon the action of Reason. The stream 
 of physical phenomena, flowing beneath the senses, must bear an im- 
 portant relation to the human intellect itself; and knowledge derived 
 from it must appear of a more or less ephemeral nature. These are 
 the thoughts suggested in a study of the records of Heraclitus. He 
 inaugurates more systematic inquiry into the nature of matter, and 
 the action of the human intelligence: two important steps in the history 
 of thought. Speculation along these lines will develop an analysis of 
 matter on one side, and discover the purely relative results of the 
 human reason on another. As Aristotie^ suggests of Heraclitus, he 
 will begin to regard all things as being and not being; and all opinion 
 as relatively true. 
 
 HivTa x^9^'h says Heraclitus, ''all things move," and the movement is 
 caused by the antagonism of generated things acting upon each other. 
 This brings about their dissolution, back again into the primitive element 
 from which they were derived; and the process is endlessly repeated. 
 Upon this position, then, as the basis of investigation, and with move- 
 
 • Frag. 16. 
 
 * iietaph. r. it 1005 b H- 
 
 *■ 
 
4SO 
 
 Philosophy 
 
 Pt. IV 
 
 ment, or generation, caused by Strife, the question arises: What 
 causes the strife? Why should the natures of material phenomena 
 be sufficiently antagonistic to generate the smn of the movement of 
 the universe? Heraclitus is silent. Thought must move on. Why are 
 things changed into each other? What is the origin of movement? 
 
 Article 2 — Empedocles. 
 
 Empedocles, the mysterious and magnificent, appears upon the 
 horizon. He perceives both the strength and the weakness of earlier 
 investigation; recognizes the necessity of answering the question with 
 reference to the nature of matter and movement, and is as impressed as 
 Heraclitus with the speculative importance of change. He looks upon 
 the sum of things and sees no permanence anywhere; not even a per- 
 manent element, or substance, with Heraclitus; not even a permanent 
 generation of things from this. He sees nothing but imresting move- 
 ment, devoid of all stability, even of that of death itself. ^ 
 
 8. 
 
 There is no origin of generate things; 
 There is no birth nor woeful death to fear; 
 There is alone a mingling, changing mass 
 Of things that rise and fade, a constant flux; 
 This mortals birth and generation call. 
 
 II. 
 Fools, fools! For no deep sinking thought have they 
 Who think that aught can ever come to be, 
 That was not in existence long before; 
 Or yet, who think that aught that is, can cease. 
 Or wholly fade, and perish utterly. 
 
 12. 
 
 For, from what is not, naught can e*er arise; 
 
 And that a thing that is, should vanish quite. 
 
 Ne'er can occur; unheard of and unknown. 
 
 For things must stay there where they shall be placed; 
 
 And e'er remain where they have always been. 
 
 Empedocles accepts the flux of Heraclitus, but sinks deeper into the 
 nature of change. He rejects the primitive substance of the lonians 
 altogether, resolving matter into elements, or imchanging principles; 
 and accoimts for change, or morion, by means of two forces in- 
 stead of one. These forces, in the metaphorical language of 
 the day, he calls Love and Hate; and refers their action to the 
 
 3k. IV 
 
 Pre-Socratic Thought 
 
 451 
 
 essentially similar and dissimilar constitution of material phenomena. 
 His words are: 
 
 ^7- 
 Two-fold the truth which I shall now proclaim: 
 
 Once from the Many grew the One alone, 
 
 And then the One, in separate parts dissolved, 
 
 And Many from the One there came to be. 
 
 So thus two-fold the birth of changing things, 
 
 Two-fold their death; for that which these unite 
 
 Must death create, and death destroy, as well; 
 
 And birth, which out of scattered things must grow, 
 
 Will, in its turn, thus fade and fly away. 
 
 Nor ever cease these things their constant change; 
 
 United now by Love all into one, 
 
 And now by Hate asunder torn in turn; 
 
 Until together, once again, they blend 
 
 And thus become imited in the All. 
 
 And so, as One, from out the Many comes. 
 
 And Many grow from separate in the One, 
 
 All things arise; nor life-term fixed have they; 
 
 But, with their changing elements, they live 
 
 And endless cycle of a changeless change. 
 
 This is a new speculative conception; change, or motion, is here 
 represented by two distinct forces acting upon the elemental principles 
 underlying material phenomena; these elements themselves being 
 unchangeable. The next question is: What are these elements; these 
 unchanging principles underlying the modification of matter? Em- 
 pedocles replies, doubtiess developing a thought derived from Py- 
 thagoras:* 
 
 6. 
 
 Four roots there are from which all things arise: 
 
 King Zeus, and Hera, and Aidoneus, 
 
 And with them Nestis, of the weeping eyes. 
 
 That moisten mortal fountains with her tears. 
 
 17 V. 18. 
 
 Fire, earth, and water, and the boundless air; 
 
 Love, blent with these, e'er equal far and wide, 
 
 While baleful Strife, apart, the balance holds. 
 
 Here is a definite conception of matter and motion, as four imchanging 
 elements; acting and reacting upon each other through opposed and 
 
 » Lagrtius. VIII. x. p. axo. 
 
 » t 
 I 
 
 » 
 
Bk. IV 
 
 Pre-Socratic Thought 
 
 4S3 
 
 ii 
 
 1 
 
 4^2 
 
 Philosophy 
 
 Pt. IV 
 
 counter-balancing forces, causing integration, or union on one side; 
 disintegration, or disunion, on another. 
 Empedocles continues his exposition: 
 
 17 V. 27. 
 
 And these four elements of separate things 
 All equal are, and in their age the same; 
 Yet each one diflferent offices may fill, 
 As each is better suited to the task; 
 Thus each may rule with changing flight of time. 
 And nothing can be added to these four, 
 Nor aught be ever drawn from them away; 
 For were this so, would they soon cease to be, 
 And what could e'er the Sum of things increase? 
 From whence to AU in All such increase come? 
 Destroyed where could they go, these elements, 
 Whence aU evolves; are they not everywhere? 
 Thus these alone exist the same, and blend, 
 And through each other run; and thence arise 
 All other changing things; while these remain 
 The same, unchanged throughout Eternity. 
 
 Empedocles develops an improvement upon the theory of the Cosmos 
 advanced by Heraclitus. Matter is here resolved into four elements, 
 which have always been, and always will be, essentially the same. 
 The modification in the combinations of these elements produces the 
 varying phenomena of the material world. These different combina- 
 tions of the elements are caused by two forces: Love and Hate, or 
 Harmony and Discord, acting upon liem. 
 
 The next question is: What is the nature of the action of these two 
 forces? Why do things repel each other or unite? Why do they 
 blend on one side, and refuse to combine on another? This is the 
 inevitable question of the origin of motion; the question at which all 
 previous thinkers had hesitated, and over which their systems trip 
 and fall. Empedocles realizes its importance, grasps the fact that it 
 had never been answered, frees himself from all earlier entanglements; 
 and answers the question with the most interesting and important 
 cosmological theory yet developed. The process of change, or motion, 
 he says is analogous to that through which the painter produces varied 
 forms by means of the different combinations of a few elementary pig- 
 naents. In nature the real forms are produced in the same way. The 
 pigments are represented by the four elements underlying material 
 
 phenomena; and the process of combination or disintegration is due 
 to the like, or unlike, nature of the various substances produced; those 
 which are like blending and forming new combinations, the unlike 
 repelling each other and causing corresponding disintegration. He 
 explains in greater detail: 
 
 33 Thus, as when masters of the painters' art, 
 
 Who would some varied votive shrine prepare, 
 
 Take many coloured pigments for their task; 
 
 And, blending these in skilful harmony, 
 
 Resemblances present of many things; 
 
 As more or less of this or that they choose. 
 
 Thus trees they trace, and men's and women's forms, 
 
 And savage beasts, and soaring birds of prey, 
 
 And fish beneath the sea, and e'en as well 
 
 The long-lived gods; in honour o'er them all. 
 
 So let not error now thy mind mislead 
 
 To think that of the countless things so brought 
 
 To real existence, other source there is 
 
 Than these four elements; and mark my word, 
 
 For what those hearest comes as from a god. 
 22 And thus all things in parts of each imite; 
 
 The sun, the earth, the heavens, and the sea, 
 
 Where like finds like in separate, changing things: 
 
 And so those forms the best prepared to blend, 
 
 To their own kind are ever drawn by Love; 
 
 And things unlike are farthest forced apart. 
 
 In birth, in combination and in form, 
 
 To mingling all opposed; in hatred steeped; 
 
 So led by Strife which thus has wrought their birth. 
 37 So fire grows from fire, and the^earth 
 
 In substance grows from earth; the air from air. 
 
 90 Thus sweet with sweet imitea, the sharp with sharp, 
 The bitter with the bitter, hot with hot. 
 
 91 The water quick in ruddy wine will melt 
 But never with the oil wiU it combine; 
 
 109 And thus it is that earth through earth we see, 
 
 Through moist the moist, through air the ether clear; 
 
 And learn through fire of its destructive flame. 
 
 Through Love of Love we leam^ through Strife of Strife: 
 107 For out of these are all things wrought and formed: 
 
 Through these we think and suffer and enjoy. 
 
 The first inquirers devote their attention to the discovery of an ulti- 
 mate primitive substance, the modifications of which produced the 
 
 : 
 
 41 
 
454 
 
 Philosophy 
 
 Pt. IV 
 
 
 changes in sensible phenomena; the development of this conception 
 culminates in the position of Anaximenes and Diogenes. If a Cosmos 
 of vitalized air fails to satisfy the mind, a new theory of matter is re- 
 quired. This may be found by rejecting the primitive substance of 
 the lonians, the changeable substance of Heraclitus, and resolving 
 substance into unchanging elements. Change may then be explained, 
 not by expansion and contraction, nor by a process of reversion and 
 conversion, but by different combinations of the elements of which 
 substance is composed. This is the most important step yet made in 
 cosmological speculation. The elements of Empedocles fulfil these 
 conditions, as Aristotle^ points out; and form the primitive, imperish- 
 able constituents of matter. Change, therefore, depends upon the 
 movement and combinations of these elemental principles. 
 
 At this point, must occur another radical development in thought. If 
 matter is resolvable into changeless elements, and not into a homo- 
 geneous substance subject to modification, the phenomena of motion 
 must be something distinct from matter; in other words, the unchange- 
 able elements of matter must be acted upon by something other than 
 themselves, in order to account for the phenomena of change. It is 
 here necessary, therefore, to distinguish between matter and motion. 
 Empedocles recognizes this necessity perfectly and, as Aristotle^ says, 
 was the first thinker to do so; an important development in thought. 
 In distinguishing motion from matter, he divides motion into two 
 principles, different and opposite.' Here, then, for the first time in 
 speculation, distinct conceptions of matter and motion are reached; of 
 the first, as composed of four unchanging elements, from the combinations 
 of which variable phenomena arise; of the second, as two forces gene- 
 rated through the action and interaction upon each other of like and 
 unlike substances. The Cosmos is thus reduced, in its simplest terms, 
 to four elements, in a self-generated state of flux. But as the human 
 physical constitution is caught, as it were, in the process; and, as the 
 hmnan mind itself may be regarded as dependent, not only in its action, 
 but for its existence, upon the physical constitution of the subject; 
 it seems evident that the human reason at this point may be regarded 
 as a more less questionable source of information with reference to the 
 Absolute. Empedocles is alive to the position, and seems to have had 
 
 * Metaph. B., 4; 1000 b 19. 
 
 * Ibid. A- 4; 985 a S «ik1 30. 
 *Ibid 
 
 Bk. IV 
 
 Pre-Socratic Thought 
 
 4SS 
 
 no very exalted opinion of the race of men; either as a whole, or in its 
 higher intellectual manifestations: 
 
 124. 
 
 Alas! ye wretched races, wretched men, 
 
 Of what blind strife and woes have ye been bom I 
 
 2. 
 And mean the mind, throughout your members fused, 
 With many ills and many numbing cares; 
 And brief the dreary span of life, that turns 
 So quick to death, like fleeting smoke consumed; 
 Each soul but trusting in the things alone. 
 That each within its own experience finds, 
 Distraught upon all sides, yet seeking Truth. 
 In vain! for not in eye, nor ear of man, 
 Nor reason, can the truth be found; and thou, 
 When thou hast swept through error's futile round, 
 Mayst know that man may never farther see.* 
 
 If the pure speculation is extracted from the poetry of Empedocles 
 four positions are developed: (i) The resolution of matter into 
 imperishable elements. (2) The action and interaction of the com- 
 binations of these elements upon each other as the principle of motion, 
 or change. (3) The necessity of distinguishing motion from the ma- 
 terial elements themselves. (4) The position is beginning to be 
 understood, owing to the physical constitution of man, that the 
 human intellect, or source of rational knowledge, must be contained 
 within, and dependent upon, an all-pervading flux. Both sense and 
 reason, therefore, in all their manifestations, may be regarded as but 
 the ever varying phases of a self-perpetuating series of modifications. 
 As Zeller^ says: 
 
 "Heraclitus had deprived substance of all permanence; Parmenides, 
 on the contrary, had denied generation and decay, motion and change; 
 Empedocles strikes out a middle course. He maintains on the one 
 hand with Parmenides, that Becoming and Decay in the strict sense, 
 and therefore qualitative change in the original substance, are un- 
 thinkable; but, on the other hand, he does not absolutely abandon this 
 point of view. He allows not only that particular things, as such, 
 arise, decay, and change, but also that the conditions of the world are 
 subject to perpetual change. Consequently, he is obliged to reduce 
 
 *The numbers are those of Diels. The arrangement that which seems best to develop the thought of 
 Empedocles. 
 » Pre-Socratic Philosophy. Vol. II., pp. 117-121. Translation by AUeyne. 
 
 S > 
 
 ; if 
 
 <n' ' 
 
 t:i 
 
 I 
 
1^ 
 
 4S6 
 
 Philosophy 
 
 Pt.IV 
 
 these phenomena to movement in space, to the combination and separa- 
 tion of imderived, imperishable, and qualitatively unchangeable sub- 
 stances, of which there m\ist, in that case, necessarily be several, variously 
 constituted, in order to explain the multiplicity of things." 
 There is but one more step in this direction. 
 
 Article j — DemocrUus, 
 
 To the rational mind the position of Empedocles, in its relation to 
 cosmical phenomena, is imsatisfactory in two ways: (i) In its con- 
 ception of the elements of matter. (2) In its conception of motion, 
 or force, acting upon these. That is to say, it is completely imsatis- 
 factory. 
 
 I. Empedocles' conception of the elements of matter is imsatis- 
 factory for the following reasons: He posits four elemental principles. 
 All material phenomena, he says, are changeable and corruptible, 
 with the exception of these. But here a difficulty occurs. Why, 
 if all things are derived from the same source, should some of these 
 be changeable and others imchangeable? Upon such an assumption 
 it seems that the soiu'ces of things must be different — a strange con- 
 clusion. Again, these elemental principles must be either different 
 or the same. If different, or unlike each other, they must either be 
 subject to change or changeless, (a) If subject to change, they must 
 be resolvable into other elements, which is impossible; both from the 
 original hypothesis and in the contemplation of an infinite progression. 
 These elements must, therefore, necessarily be changeless, in order to 
 constitute elements, or first principles. (^) If these elements are 
 different, or imlike in essence, the question arises: How may things 
 unlike be derived from elements which are unlike? In order that all 
 elements of difference may be derived from changeless first principles, 
 it seems that these principles themselves must be identical, or homo- 
 geneous, in nature. In other words, the ultimate principles from which 
 the phenomena of change and difference are derived must be essentially 
 the same. What rational ground may be discovered, in a imiverse of 
 things different, for the assumption that the elemental principles of 
 things are also different? As Aristotle^ says, the thing is impossible, 
 or demands a lengthy process of ratiocination. The process has never 
 been forthcoming, and the position is suggested that the elements of 
 matter must be like in nature, or essentially identical. Thus, in com- 
 
 • Melapk B. 4i looo b 31. 
 
 III 
 
 Bk. IV 
 
 Pre-Socratic Thought 
 
 L. 
 
 457 
 
 bining the positions developed under a and g it seems that the 
 first principles, or elements of matter, must be both changeless and 
 the same. Changeless because, in order to be elements, they can permit 
 of no further analysis or division; the same, because they must contain 
 within themselves all elements of difference. These considerations 
 lead to the rejection of the four different, or unlike, elements of Em- 
 pedocles; and to the position that the elements of matter must be homo- 
 geneous particles; identical in essence and incapable of modification or 
 division. 
 
 n. The conception of Empedocles with reference to motion is also 
 unsatisfactory. The conception of two forces acting upon matter, 
 through a process of integration and disintegration of substances, like 
 and unlike, necessarily involves a contradiction of terms. As Aristotle^ 
 points out, every integration must involve a corresponding disintegration 
 upon another side, and vice versa. Force, or motion, therefore, cannot 
 rationally be divided at all; for all force, or motion, in ultimate analysis, 
 must be essentially one. 
 
 These positions lead to the fully formulated atomic theory of the 
 Cosmos, as developed by Leucippus and Democritus. Matter is here 
 resolved into changeless, indivisible units, or elements; absolutely 
 simple and homogeneous, thus presenting no qualitative distinctions, 
 although infinitely varied in size, weight, form, and reciprocal relations! 
 These variations present the elements of motion, difference in size 
 involving difference in weight; heavier atoms, because of their relative 
 weight, sinking; and in so doing, forcing Ughter and less consistent 
 combinations upward, or in different directions. Revolutions will 
 thus occur and, consequently, motion of all kinds be generated. This 
 motion, however, it seems, should be distinguished from force in the 
 later sense of the word, despite several texts to the contrary. Zeller^ 
 takes Lewes to task for lending the conception of force to the atomic 
 theory of this period. Weight alone, it seems, was thought sufficient 
 to explain motion, and the references of Aristotle support this 
 view. 
 
 If atoms are indivisible and regarded as entities, they must occupy 
 space; that is, there must be a distinction between space and that which 
 it contains — between matter and that in which matter moves H 
 ^efirsUs regarded as entity, the second should be regarded as nonentity, 
 
 » Metaph. A. 4; 985 a 27. 
 
 • Pre^ocratU Philosophy. Vol. n., p. 241. Note l,^ 
 
d' 
 
 imr. 
 
 : I 
 
 4S8 
 
 Philosophy 
 
 Pt. IV 
 
 or the void. Thus, only two things may be considered as possessing 
 any cosmical significance: matter and empty space, atoms and the void.* i 
 
 This conception of the Cosmos requires a mechanical theory of sen- 
 sation. This Democritus appreciates, and supplies in the theory of 
 external phenomena constantly throwing off forms, or more or less 
 perfect images of themselves, which " fall in," as it were, upon the mind 
 through the sensitive siuiaces of the physical organization, and thus 
 produce sensation. The thing in itself, therefore, or the object which 
 produces the sensation, can never be perfectly known to the subject, 
 or that in which the sensation is produced; for the subject can only 
 receive the object through that incomplete part of it which sense is 
 capable of absorbing. These sensations will, of course, resolve them- 
 selves into reflective activity within the subject; but this, and all other 
 mental phenomena, must remain dependent upon the motion pro- 
 duced by the gravitation of atomic material elements and conditioned 
 by it. All sensation, therefore, must be the result of the contact of 
 matter, and the other senses may be resolved into modifications of 
 the sense of touch.^ Sextus^ cites the exact words of Democritus as 
 follows: "Opinion alone is the sweet, opinion the bitter, opinion the 
 hot; and subjective impression and opinion alone are the colour and 
 the appearance of things. In causal* reality nothing exists but atoms 
 and the void. Sensible phenomena, which in opinion are supposed 
 to exist, have no real existence; nothing really is but space and atoms." 
 
 The simplest and most nearly complete statement of the Demo- 
 critical position, at a single source, is perhaps that of Laertius. It 
 is in accord with all others of the best understood notices of this important 
 thinker. Laertius^ says that Democritus regarded "Space and Atoms 
 as the elemental principles of the universe, and all else as mere subjective 
 opinion. He said that the worlds were infinite, generated and perish- 
 able, that nothing could come from nothing, and nothing return to 
 nothing; that the atoms were infinite in size and number, and borne 
 through space in endless revolutions. Thus, all things are produced 
 
 » Aristotle, Metaph. A. 4. qSs b 4; P. 5, 1009 b ii; A. 2; 1069 b 22; Pkys. V. 4; aoj a 33; DeCoelo A 7 
 «7Sb 30; r. 2. 300b 8; DeGen el Corr. A. i, 314 a 21; A: 7, 3»3 b 10; De An. A. 2, 404 * »7; A. 3, 406 
 b i7,La&tiusIX.VII. 
 
 « Aristotle De Schsu. 4. 442 b i. 
 
 • Adt. Logic. Vn. 135, p. 310- . ,. V- 
 ... • There seems no reason for abandoning the old reading (akfu). It is in complete harmony with the 
 
 system of Democritus, and presents a better antithesis to vijiv than *cef|. Ci. Fabridus note d., p. 310, 
 Lewes, p. 96. 
 
 • IX. 7, p. 238. 
 
 Bk. IV 
 
 Pre-Socratic Thought' 
 
 4S9 
 
 from atoms: fire, water, air, and earth arising from atomic combinations; 
 that these present nothing but combinations, although permanent and 
 imaffected on account of their solidity. That the sun and the moon are 
 in like manner formed from such revolving bodies; and the soul in the 
 same way, the mind and the soul being identical. That we see through 
 the falling of images on the eye; and that everything is due to mechanical 
 law, or necessity. That motion is the origin and cause of the generation 
 of all things and this motion he called necessity." 
 
 Real, or pure, knowledge, independent of subjective opinion, or 
 appearance derived from sense perception, can naturally have no place 
 in such a conception of the Cosmos; and Democritus, possessing a 
 rarely exact intelligence, perceives, anticipates, and accepts every 
 rational conclusion to be derived from the atomic conception of the 
 Universe. He is cited* as sa)dng that there either is no truth, or that 
 man is blind to it, for it lies in an abyss; that no test of any kind of 
 appearance exists, and that there is no criterion of truth. 
 
 As the universe is contemplated from this point of view, it seems a 
 boundless realm of vacant space, through which an infinity of minute 
 material particles, without qualities and without sensation, fall eternally; 
 or act and react upon each other in an unending process of restless, 
 unconscious movement, in harmony with the laws governing the grav- 
 itation of matter. These atoms fall, and rise, and turn through a 
 changeless process of mechanical coalescence and disintegration, of 
 concussion, recoil, and rotation, from which process is evolved all that 
 has been, is, or ever will be. In such a universe there is no room for 
 any enduring consciousness, or God, of any kind. If a few gods are 
 irrationally infused into it, for the sake of theological convenience, as 
 is sometimes done, it seems that these divinities must either be irrational 
 or powerless. The elements of matter must act upon each other in 
 harmony with the laws governing the material universe. But these 
 laws themselves must act through mechanical necessity with unvarying 
 regularity, or be subject to chance, or caprice. If the first, the gods 
 are poweriess; if the second, irrational; and in either case, it seems as 
 well to have no gods as a helpless and inconsequent theogony. This 
 is the position recognized as the outcome of this line of inquiry by 
 competent observers. ^ 
 
 » Aristotle Metaph. T. 5, 1009 b 11; Lagrtius PyrrJio. VHI. 11., pp. 245-252. 
 
 » Sextus Empiricus, Adv. Physic. DC. 59; Cicero, De Natura Deontm, L 12; Plutarch, Adv.CU. VHl' 
 Cf. Cudworth, Vol. I. pp. 105, 127 * 
 
460 
 
 Philosophy 
 
 Pt. IV 
 
 
 
 ^ ■' 
 
 
 ! God, immortality, knowledge, reason, truth, or for that matter, any 
 conception of the Cosmos or humanity, other than as a mechanical 
 coalescence and disintegration of indivisible, material particles in a 
 state of flux, generated by gravitation, here vanish in the void — - and 
 another island is discovered in the speculative seas. Thought can go 
 no farther in this direction; progress ceases. The subject is incapable 
 of further analysis, and the ship of Reason puts into another port. This 
 is the great and scientifically fortified island of lifeless matter and im- 
 conscious motion. This is the (fdaa; ^oyoq or the OXix^j iv^YTtTj of 
 speciilation; this is the Democritical hylopathic Atheism, at which the 
 learned Doctor Cudworth hurled The Intellectual System of the Universe; 
 this is the world of inert mass and fortuitous motion, the 66v tt}*; vuxt6?, 
 the "egg of the night," laid by Democritus in the metaphysical gardens; 
 and it is one of the most profoundly reasoned and thoroug^y entrenched 
 conceptions of the material universe ever conceived. There is no 
 escape from this position along these lines of inquiry; the rational 
 mind has no choice but to stay here "cribbed, cabined, and confined," 
 and defend this island with Leucippus and Democritus, or go back to 
 the starting-point in search of another method and begin over again. 
 
 The philosophic mind chose to continue its quest and began again. 
 In going back to the starting-point, the third cycle of speculative thought 
 is completed. This cycle has here been called that of the Metaphysical 
 Physicists, and has culminated again in a piirely materialistic universe, 
 or in a mechanico-atomic atheism. This period of thought extends 
 from about the 70th Olympiad to the 90th Olympiad; approximately 
 from 500 B. C. to the last decades of the same century. 
 
 Section V— The Physical Metaphysicians 
 Article i—Anaxagoras. 
 
 Zeno, the Eleatic, demonstrates rationally that there can be no such 
 thing as motion — Diogenes, the Cynic, gets up and walks. Here is 
 the fundamental difficulty underlying speculative inquiry; the conflict 
 between rational cognition and sense perception. Thought, which 
 satisfies only one of these to the exclusion of the other, is, naturally, 
 incapable of presenting a comprehensive system. Systems which 
 satisfy neither one nor the other, such as those of Pythagoras, Heraclitus 
 and Empedocles, form but links in the chain of development from one 
 ^eculative position to another. The problem before the thinking men 
 
 Bk. IV 
 
 Pre-Socratic Thought 
 
 461 
 
 of the period under discussion, was to blend the dictates of the reason 
 with the evidence of the senses. Thought begins to have a history 
 behind it; something has been learned of the necessary action of the 
 mind in developing certain lines of inquiry, and the consequence is 
 that thinkers of this period are able to avoid certain difficulties and cur- 
 rents of thought of which the earlier inquirers were unconscious. In- 
 quiry pursued along the lines followed by the Eleatics, in their study 
 of the action of the mind, is now known to lead to nothing but an is- 
 land of idealistic ratiocination, carried on independently of the experi- 
 mental observation of nature, and denying all validity to the testimony 
 of sense. On turning attention to an analysis of matter, the thinker 
 knows that it is but a question of time until thought drifts upon the 
 materialistic islands of Diogenes or Democritus. Thought must, there- 
 fore, avoid these difficulties at present; and while developing the dual- 
 istic hypothesis of Heraclitus, there being no other not already exhausted, 
 it must not become involved in either purely material or purely ideal 
 inquiry. 
 
 The problem, therefore, requires a new formulation of conceptions 
 with reference to both matter and mind. It seems that earlier specula- 
 tion must be in error in its interpretation of matter. The flux of Hera- 
 ditus must, of course, be recognized, but it seems that this flux, or 
 motion, may be explained upon grounds other than any yet developed. 
 Things exist, it may be said; the mass moves beneath the senses. This 
 change, or becoming, must be recognized if the ideaUstic abstractions 
 of the island of Zeno are to be avoided. Changeable things, then, 
 flow from and into each other. These things, consequently, must 
 have been contained within the original mass, or they would never 
 appear. Things must arise from something or nothing; the second 
 is rationally and physicaUy unthinkable. Generated things, then, 
 must arise from things already pre-existent in the ultimate substance. 
 But things from which all things are generated must partake of the 
 nature of these, or their generation would be impossible. Things of 
 this kind, which underlie changing phenomena, might be regarded as 
 germmal essences, or seeds, possessing in themselves potentially aU 
 qualities of matter both external and internal; both of the object and 
 of the subject. Such seeds, or essences, however, must be regarded 
 as infinitely divisible; otherwise the indivisible elements of the Atomists 
 will be met, and their entire philosophy develop. If the ultimate 
 mass, however, is regarded as consisting of such elements as those con- 
 
iri' 
 
 462 
 
 PhUosophy 
 
 Pt. IV 
 
 ceived, it seems obvious that its original condition must have been 
 one devoid of particular forms and quaUties; although these would 
 have existed in infinite potentiaUty within the primitive mixture itself. 
 The question then arises: What caused the separation which evidently 
 took place, in order to account for existing phenomena? This prim- 
 itive chaos of infinite potentiaUties, without form or quality, must 
 be acted upon by something, in order that these potentiaUties may 
 develop; a principle is required to explain subsequent change and motion. 
 But upon observing tiie material universe, change and motion withm 
 it s^m directed to ends, or purposes; design is everywhere evident; 
 things have specific relations to each otiier; changes are governed by 
 principles directing them to certain aims, or objects. In order, then, to 
 meet the requirements of explanation of this orderly series of phenomena 
 perceived on every side, change, or motion, it seems should be regarded 
 as rational, or intelUgent; for no other conception could account for 
 a purposive process of modification. Change, or motion, tiierefore, 
 should be conceived as directed and controlled by an external and 
 independent IntelUgence, or Reason, acting upon the flux, or de- 
 velopment of the germinal seeds of things, bringing tiiem to the 
 rational realization of the potentiaUties tiiey possess. This con- 
 ception of the Cosmos avoids Atomism on one side, and the 
 unscientific logicalities of the Eleatics on another. The first, 
 because the infinite divisibilty of the elements of matter is recog- 
 nized, and the elements of difference are contained in potentiality 
 within all substance; the second, because change is considered part 
 of Reality and controlled by Intelligence. This is an analysis of 
 the mental processes of Anaxagoras. It is based upon tiie followmg 
 fragments as numbered by Diels: 
 
 17- 
 The Greeks speak wrongly of birth and death, for nothing really 
 comes into being or ceases to be; things are formed and dispersed from 
 existing matter. Thus, more correctly, is birtii but combination; and 
 
 death but separation. 
 
 I. 
 AU things were mixed together, infinite in number and infinitely 
 minute; but in this mixture no single thing could be perceived on account 
 of this minuteness. The air and ether, both in themselves infimte 
 contained and per^^aded everything, for tiiey were tiie greatest of aU 
 in quantity and bulk. 
 
 Bk. IV 
 
 Pre-Socratic Thought 
 
 463 
 
 Of the smaU there is not a least, but always a less indefinitely; for 
 it is impossible that something existing should not be, and thus of the 
 great there will always be a greater. The same thing appUes to the 
 smaU; although each thing is itself in both great and smaU. 
 
 4. 
 
 This^ being so, we must beUeve that there are many things of many 
 kinds in all generate entities; the seeds, or germinal essences of aU 
 things, with all kinds of forms, colours, and tastes. That men have 
 been made of these, and other Uving things possessing a soul. That 
 these men have cities and tilled fields, as with us; and sun and moon 
 and stars, and their land brings forth many things of all kinds, which 
 they gather, and upon tiie best of which they live. I have said this 
 with reference to separation in order to show that it occurs not only 
 with us but elsewhere. 
 
 But before individual things were separated, everything was mixed 
 togetiier, and no external or distinguishing qualities could exist. This 
 was prevented by the universal blending of everything: of tiie moist 
 and tiie dry, the hot and the cold, tiie light and the dark, and the mass 
 of eartii contained, and of the infinite number of germinal seeds infinitely 
 different. And neither among tiie other things is any one Uke any 
 otiier. And so we must think tiiat aU things are contained in the total 
 mass. 
 
 8. 
 In a universe which is One, things are not absolutely separated or 
 cut off from each other, as though with a double-edged ax; not even 
 the hot from the cold, nor vice versa. 
 
 6. 
 
 Since the great and the small have the same number of parts, aU 
 things wiU contain a part of aU other thmgs. It is not possible for 
 things to exist entu-ely separately, but each wiU contain a part of aU 
 Mid since the least cannot exist, it can neither be separated nor created 
 of itseU; thus, as things were in the beginning, are they at present; 
 blended and combined with each other. There are thus many things 
 m everythmg, and of separate things an equal number in both the greater 
 and the less. 
 
 12. 
 
 Other tlungs contain a part of everything, but Intelligence is infinite 
 and ruled by itself. It is combined with nothing, but exists free, alone. 
 
^■1 
 
 464 
 
 Philosophy 
 
 Pt. IV 
 
 in and for itself. If it were not distinct and independent, but mixed 
 with other things, it would partake of the nature of all things; for in 
 all a part of all exists, as I have shown; and things thus mixed with it 
 would prevent its dominion over others and limit its own free and self- 
 sufficient existence. Intelligence is of all things the subtlest and the 
 purest; it possesses complete knowledge of all, and the greatest power. 
 Intelligence controls everything that possesses life or soul, the greatest 
 and the smallest. It controlled the totality of changes from the first. 
 At first it began the cycle of modifications with a small beginning, 
 extended its influence farther, and will extend it still farther. Intel- 
 ligence is conscious of all; the united, the separate, and the distinct; 
 of all things to be, all things that were and exist no longer, that are and 
 that will be. Intelligence controls and orders all, together with the 
 movements of the stars, the sun, the moon, the lower atmosphere and 
 the higher ether, which are separate bodies. It is owing to this suc- 
 cession of changes that separation occurs; that the rare is distinguished 
 from the dense, the hot from the cold, the light from the dark, and the 
 dry from the moist. For things are composed of many parts, and Intel- 
 ligence alone is distinct and entirely separate from other things. In- 
 telligence alone is perfectly homogeneous in the greatest and the smallest; 
 nothing else is homogeneous, but each thing is that of which it contains 
 predominant elements. 
 
 13. 
 Thus, when Intelligence began to generate motion, distinctions grad- 
 ually came into being among the things moved; and wherever motion 
 was felt, qualities and distinctions occurred; and through motion 
 and difference, themselves, was the cycle of change progressively in- 
 creased. 
 
 IS- 
 
 Things dense, moist, cold and dark, mingled one with another to 
 form the earth; those of a rarer, warmer, and drier and cleaner nature 
 united in the composition of the higher ether. 
 
 16. 
 
 Out of things separated in this way the earth is formed; water is 
 
 separated from the clouds, and earth from water; and by means of 
 
 cold, stones are condensed from earth, and these are still more distinct 
 
 from water. 
 
 14. 
 But Intelligence, as ever, and especially at this point, is where all 
 
 Bk. IV 
 
 Pre-Socratic Thought 
 
 46s 
 
 other things are to be found; that is, throughout the surrounding mass, 
 and in things imited with it and separated from it. 
 
 The position of Anaxagoras is summarized in the well-known pas- 
 sage in Laertius:^ All things were mixed in confusion. Intelligence 
 came and arranged them. 
 
 A new conception of the Cosmos appears; a new theory of matter, 
 and the first philosophic statement of an intelligent and incorporeal 
 principle of motion. Greek speculation of this period presents ex- 
 ceptional elements of interest. It is the first point in its history at 
 which it shows signs of becoming self-conscious, of a realization of the 
 two distinct processes in which the human faculties move, and a de- 
 liberate avoidance of both pure materialism and pure idealism. 
 
 Atomism was in the speculative air, and even Heraclitus and Emped- 
 ocles seem to have contemplated^ the possibility of a more profoimd 
 analysis of matter than may be found in a primitive substance or the 
 four elements of the Pythagoreans. It was thus, doubtless, understood 
 at this period, if analysis is pushed to a point at which the elements 
 of matter are regarded as indivisible, that a purely materialistic and 
 mechanical conception of the universe inevitably results, as has been 
 seen. The question hinges upon the divisibility of the elements of 
 matter. The action of the mind of Anaxagoras shows consciousness 
 of this fact; and, in developing the thought of Heraclitus, he consequently 
 branches out into a path other than that of Empedocles, thus avoiding 
 the Atomic rocks and starting inquiry in another direction. Aristotle,* 
 probably for this reason, places him later in speculation, although 
 older than Empedocles. 
 
 The two developments upon which the philosophic importance of 
 Anaxagoras depends are : First, his conception of the elements of matter 
 in the form of germinal seeds; (jxIppiaTa as he called them. Second, 
 his introduction of Reason, or Intelligence, as a cosmic principle govern- 
 ing motion. 
 
 The Anaxagorean theory of matter, while new and ingenious, is far 
 from satisfactory. In the first place, if accepted in its strictly physical 
 sense, the primitive condition of substance must have been that of 
 a single mixture, or homogeneous mass, devoid of qualities; a purely 
 
 » U. 3. p. 34. 
 
 « Pltdarch de PlacU. PkO. I. 13, 
 
 * Metaph. A. 3, 984 a 11. 
 
 V 
 
 01 
 
14^ 
 
 4^6 Philosophy Pt. IV 
 
 negative, and indefinite [Liy[i(Xy or mixture, as Aristotle ^ points out, 
 which practically reproduces the vague Infinite of Anaxamander. If 
 now, with Anaxagoras the properties of all motion and difference are 
 regarded as existing in potentiality within this mixture, in the form of 
 germs, or seeds, it seems, in order to preserve a rational conception of 
 qualities and difference, that a point must be reached at which these 
 seeds, or germs, will no longer be divisible. When such a point is 
 reached, however, the entire atomic philosophy will result. Anaxag- 
 oras only avoids this by the introduction of infinite divisibility with 
 reference to his elements; but when infinity is introduced, explanation 
 ceases. The mind cannot grasp infinity, and the object of philosophic 
 inquiry is to find something which the mind can grasp. The conse- 
 quence is that Anaxagoras' theory of matter has never played an im- 
 portant part in speculation, for the reason that it does not explain. 
 
 On the other hand, his introduction of Intelligence, or Reason, as 
 the guiding principle of motion is of importance, and forms the motive 
 power of the next movement in thought. The word Nous, as used 
 and defined by Anaxagoras, embraces in idea a combination of the 
 words Spirit, Intelligence, and Reason. The presence of design in the 
 modifications of matter forms the rational basis for the introduction 
 of such a conception as a cosmological principle; and, unless it is denied, 
 that matter changes with orderly design or law, in relation to other 
 matter, it is not easy to deny at this point the possibility of the existence 
 of such Intelligence or Reason. If such design or purpose is denied, 
 however, the (fOaiq aXoyo?, or unconscious mechanism, of the Atomists 
 instantly appears. The recognition of this Nous, Intelligence, or 
 Reason of Anaxagoras, avoids such conclusions, and supplies the 
 object of further inquiry. All other gates, it seems, are closed to 
 speculative thought, but the Nous of Anaxagoras gleams like a light 
 in the night, leading away from the rocks of Atomism and on to hopeful 
 discoveries. 
 
 The thought of Anaxagoras, however, is essentially involved in physics. 
 He already has the Eleatic and Pythagorean metaphysics behind him, 
 and realizes the dangers of idealistic ratiocination divorced from experi- 
 mental knowledge of nature. Socrates^ complains that Anaxagoras, 
 after raising hopes at the outset of his exposition by the introduction 
 of Intelligence, nevertheless, attempts the explanation of phenomena on 
 
 » Metapk. A. 8, 989 b 6; Pkys. P. 4, 203 a 23. 
 s FkaetLf. 98 B. 
 
 i 
 
 m^. 
 
 Bk. IV 
 
 Pre-Socratic Thought 
 
 467 
 
 physical grounds, and only employs his Intelligence where all other 
 explanation fails. Aristotle ^ makes a remark to the same effect. This 
 tendency, however, seems an unavoidable feature of the thought of the 
 period and is required by any system desiring to avoid Zenonian 
 ratiocination on one side, and the atomistic mechanism on another. 
 
 However, Anaxagoras has given a new direction to thought, and 
 progress again becomes possible. Materialistic speculation must be 
 avoided, and attention turned toward Mind, or Reason, as the object 
 of investigation. The hypothesis of the new era is that the phenomena 
 of nature may be resolved into matter and Reason, with Reason as 
 the controlling factor. Further progress, therefore, must proceed to 
 an analysis of Reason. 
 
 Article 2 — Protagoras. 
 
 To say that Reason, or Intelligence, controls everything is to suggest 
 much and define little until an explicit understanding of Reason is formed. 
 As the conception of a rational, or purposive, cosmic principle acting 
 upon matter is studied, it seems that its activities can take place under 
 certain conditions alone. Either Reason must be implied in the 
 existence of matter or external to it. If Reason is external to matter, 
 its influence thereon must be adapted to certain ends, otherwise, 
 it can have no purpose and consequently becomes irrational. So 
 far as philosophy, or human reason, is concerned, it is obvious that 
 these purposes, or ends, must be called specific and finite; they would 
 otherwise be incapable of realization within the finite himian conscious- 
 ness. These purposes of Reason, therefore, must be finite in order 
 to be determined, and they, moveover, must be determined or 
 determinable within the content of the human intelligence; such deter- 
 mination naturally involving the negation of the infinite. If the other 
 supposition is adopted, and Reason regarded as combined with matter, 
 or implied in the existence of the mass upon which it acts, the fore- 
 going considerations are equally necessary; for Reason, in order to 
 determine itself, must act through specific means for specific ends; and 
 as soon as these ends are realized within the human consciousness they 
 become necessarily finite. These considerations seem implied in any 
 combination of the foregoing processes. If the conception of an inde- 
 finable Reason, acting upon an infinite mass for undetermined ends? 
 is suggested, philosophy ceases. The one purpose of philosophy is 
 
 1 Metaph. A.4, 985 a 18. 
 
 m 
 
« 
 
 lii 
 
 K i 
 
 Sit'1 
 
 I 
 
 468 
 
 Philosophy 
 
 Pt. IV 
 
 rational realization within the finite human consciousness; for no other 
 humanly rational realization is conceivable. 
 
 This is an important step in advance of Anaxagoras. He suggested 
 the significant conception of Reason acting upon matter, but left Reason 
 an imdetermined quantity. The Reason, or Nous, of Anaxagoras is a 
 vaguely conceived, objective phenomenon acting upon matter in an 
 undetermined way. It is possible to formulate a more definite con- 
 ception of the process through the foregoing analysis of Reason. This 
 process must consist in a definite sequence of finite means, consciously 
 directed toward finite ends, capable of determination within the hiunan 
 mind. Anaxagoras, one might say, left an objective Reason fluttering 
 in the air, like a butterfly with a broken wing. Aristotle^ cites him as 
 accepting a more or less clearly imderstood medium between contra- 
 dictions, so that all things might be regarded as false; for, in a mixture 
 in which all things are indiscriminately blended and mingled one with 
 another, it seems diificult to regard the mixture as either good or bad; 
 or anything whatever as necessarily true. Anaxagoras^ himself says 
 "We are not able to judge of the truth on account of the feebleness 
 of the senses." Thus, an analysis of the Anaxagorean Nous suggests 
 both the uncertainty of the testimony of the senses, and the purely 
 subjective, or relative, nature of Reason. A net has been thrown over 
 the butterfly: it cannot escape. Nothing is gained in the supposition 
 that objective Reason, or Intelligence, might realize itself in some ultra- 
 human consciousness. Rational thought is necessarily carried on 
 within the limits of the human mind, and lacks the power to penetrate 
 within any consciousness other than that of the finite hiunan being. 
 No Reason, or Intelligence, therefore, outside the hiunan reason or 
 intelligence, possesses any significance in rationalized thought owing 
 to the conditions of its existence. The butterfly is now securely fastened 
 to the dissecting table and may be examined at leisure. It turns out 
 to be but an earthworm after all: it only seemed a butterfly. In any 
 event it can never flutter again before the eyes of a real philosopher, 
 for he knows now that no Mind, Reason, InteUigence, or anything else 
 can possess any rational significance for man, other than in the con- 
 sciousness of the human subject. This is one of the greatest discoveries 
 in thought. 
 
 The individual human subject here becomes the final embodiment of 
 
 > Metaph. 7, lozs a 36. 
 'Fra^az. 
 
 Pre-Socratic Thought 
 
 469 
 
 Bk. IV 
 
 Reason, or Intelligence; and "all things," instead of being referred to a 
 vague objective Reason, must be referred to the concrete subject. Rea- 
 son therefore, or the embodiment of ultimate truth, so far as it may be 
 determined, rests within each individual mind alone. Individual minds 
 not only differ, however, but are themselves subject to endless modi- 
 fication. There can, therefore, be no ultimate truth, no final Reason 
 or Intelligence, whatever; and man, the individual, becomes the measure 
 of all things. In the words of Protagoras, ^ to whom is due the philo- 
 sophic discovery of the subjectivity of human knowledge: IldvTwv xp^- 
 liaTwy ^JilTpov (2vOp(i)XO(;. 
 
 As soon as the conception of an objective truth, or Reason, is eliminated 
 from inquiry, it becomes evident that individual hiunan opinion is the 
 only thing with which philosophy has to deal; but, as human opinions 
 are infinitely different and infinitely variable, it is obvious that they 
 can be considered but as forming changing terms of changing relations. 
 Hence, all opinion becomes equally true or equally false; or rather, 
 forms the terms of a relation, and is in reality neither true nor false; 
 and consequently leads nowhere. 
 
 The older inquirers idolized objective truth and devoted their en- 
 ergies to its discovery. Individual opinion, Heraclitus seems to have 
 regarded as a disease. ^ Protagoras makes the discovery that Truth, 
 Reason, Mind, Intelligence, or anything else, can have no rational 
 existence outside the content of the human mind; and, hence, is neces- 
 sarily driven to exalt individual opinion, on the ground that no other 
 opinion is determinable. As self-realization is the one object of philo- 
 sophic inquiry; and, as such inquiry must of necessity be carried on 
 within the limits of the individual consciousness; it is obvious that all 
 objective conceptions of Truth or Reason must henceforth be eliminated 
 from philosophic investigation. Since the days of Protagoras no rational 
 mind will seek explanation of cosmic phenomena not determinable 
 within the subjective human intellect. Perhaps the clearest single 
 expression of the thought of Protagoras is found in Sextus. He says' 
 in distinguishing the position of Protagoras from that of Pyrrho: 
 
 "Protagoras would establish man as the measure of all things; of 
 the existent that they are, and of the non-existent that they are not. 
 By measure he meant the final criterion, and by things he meant condi- 
 
 ^ LaCrtius. DC, 8. p. 239. 
 
 » Ibid., XI, I, p. 228. 
 
 » Pyrrh. Hypot. x. 32, p. 94- 
 
 \ 
 
p 
 
 i: 
 
 470 
 
 Philosophy 
 
 Pt. IV 
 
 tions; which, then, is to say that man himself is the final criterion of 
 aU conditions; both of those which are, that they are; and of those 
 which are not, that they have no existence. For this reason he recognized 
 the phenomenal alone, as it appeared to each individual; and thus 
 estabUshed the principle of relativity. Protagoras said that man him- 
 self, as matter, was in a state of flux; and, as the matter changes it 
 necessarily undergoes augmentations and losses; and tiie senses tiiem- 
 selves will tiius be modified and varied with age and other physical 
 conditions. He said tiiat the fundamental relations of all phenomena 
 were contained in essence in matter; so tiiat matter would simply be 
 to each one as it appeared to each one. Men perceive different things 
 at different times in accordance with changing circumstances. Who- 
 ever is m a normal condition perceives things as tiiey appear to tiie 
 normal, and vice versa. The same considerations apply to difference 
 traceable to age, sleep, wakefulness, and all otiier conditions. Thus 
 m accordance with Protagoras, man, tiie individual, becomes tiie cri- 
 tenon of Being, or existence, for those phenomena which appear to 
 men exist; those which appear to no human inteUigence do not exist 
 And thus we see, in recognizing both the changing condition of matter 
 and the fact that it contains witiiin itself the relations of all phenomena' 
 that he shows tiiat which is invisible for us, and tiiat which may be 
 readily grasped." 
 
 Protagoras! seems to have been a friend or pupO of Democritus, and 
 his tiiought is evidentiy much influenced by physical speculation. It 
 IS, therefore, of interest to observe how identical conclusions may be 
 denved tiirough tiie development of purely idealistic inquiry. Gorgias 
 was a foUower of the ideaUstic Eleatic school, and presents tiie follow- 
 mg positions divorced from all physical considerations. 
 
 Article 5 — Gorgias. 
 
 In his writings with reference to nature and non-existence, Gorgias 
 laid down m order under tiiree headings: First, that nothing exists 
 Second, that if sometiiing did exist it would be unintelligible to tiie 
 human being. Third, that if anytiiing existed and could be understood 
 It could not be demonstrated or explained to others. ' 
 
 I. That nothing exists, he demonstrated as foUows: If anything 
 ^stedm reality, it must be tiiat which exists, tiiat which does not 
 
 « Laertius, IX., 8. 
 
 * Aristotle Dc Xcnopkane. etc,. 5.6; and Sextus, Adv. Logic. VII, 65. p. 285. 
 
 Bk. IV 
 
 Pre-Socratic Thought 
 
 471 
 
 exist, or a combination of the two. But ultimate Truth, or real ex- 
 istence, cannot be regarded as either non-existent or as a combination 
 of existence and non-existence without a contradiction of terms. These 
 suppositions, therefore, must be eliminated; and Truth, or existence, 
 regarded as that which exists. Existence, or truth, if existing, will 
 be either eternal, generated, or again a combination of the two. 
 
 Existence is not eternal: For without origin or beginning, it would 
 be infinite; if infinite, it is nowhere; for it could not be in anything else, 
 as nothing is larger than it; nor could it be in itself, for upon such a 
 supposition it would be both object and surrounding space, both body 
 and place, which is absurd. That which exists, therefore, cannot 
 exist in itself without being eternal; if eternal, it is infinite; if infinite 
 it exists nowhere; if nowhere it does not exist at all. 
 
 Existence is not generated: If generated, it must owe its birth either 
 to existence or to non-existence; but the first is impossible, for if it 
 exists previous to its own generation, it is not generated. Existence 
 cannot arise from non-existence; for that which does not exist can 
 obviously generate nothing. Nor can Existence be simultaneously 
 generate and eternal; such a supposition involves a contradiction of 
 terms. Ultimate Truth, therefore, or real Existence, does not exist at 
 all. 
 
 n. If Existence, or Truth, did exist, it must be incomprehensible 
 and unknown to man: If Existence is not in thought and reason, it 
 is obviously unthinkable and unreasonable; and consequently unknow- 
 able and incomprehensible. If thought did not exist, however, how 
 could Existence be thought? If Existence, or Truth, therefore, exists 
 at all, it must exist in thought. But it is obvious that all which is 
 thought, is not existence itself; for were such the case, everything we 
 think would necessarily exist; such as winged men, or chariots rolling 
 on the seas; that which is thought is, therefore, not necessarily Truth, 
 or Existence, itself. From which it appears that if thought itself is 
 not Truth, or that which really exists, that which does not exist cannot 
 be thought. Contraries correspond to contraries. Existence is con- 
 trary to non-Existence. If Existence is thought, non-Existence cannot 
 be thought. Thus as we conclude finally and without appeal from the 
 evidence of the senses, that the audible and the visible exist; if thought 
 itself is the criterion of Truth, we should in the same way conclude that 
 all which is thought exists; and, consequently, recognize the existence 
 of winged men, monsters, and chimera, the moment we tbi>k of themj 
 
472 
 
 Philosophy 
 
 Pt. IV 
 
 i I 
 
 j: • 
 
 y T 
 
 i 
 
 I 
 
 which is absurd. Existence, therefore, or ultimate Truth, is neither 
 to be thought nor comprehended. 
 
 m. If we supposed that Existence were comprehended by any one, 
 it would be inexplicable to others: If we suppose the object of compre- 
 hension to be perceptible to the senses, it is obvious that that which is heard 
 must be explained by hearing; that which is seen must be explained by 
 sight, and so on, and not crosswise — that is, that which is evident 
 to sight, cannot be understood by hearing, and so on. But even though 
 we suppose that we understand by means of the senses, we must of 
 necessity conmiunicate through words. But words are neither the 
 object to be explained, nor do they constitute real Existence. Words 
 are capable of communicating nothing but words; beside which external 
 objects have no more relation to words than the visible has to the sense 
 of hearing, or sight to a perception of the taste. Yet, nevertheless, 
 how can we communicate except through the media of words? If 
 it is suggested that words may be arranged to express the object per- 
 ceived, it may be replied that the words do not express the object; 
 the object on the contrary, suggesting the words. But words themselves 
 and their sequences are external, objective phenomena, as well as other 
 objects of perception; and as such, essentially distinct from other ex- 
 ternal objects; and, on account of this distinction, are no more capable 
 of conununicating the true nature of these than the objects themselves 
 could communicate their own nature to each other." 
 
 Metrodorus of Chios put the final touch to the thought of this period 
 when he said,i "We know nothing; not even that we know nothing." 
 
 The conventional method of meeting the arguments of Protagoras 
 and Gorgias by means of the single word "sophistry" is not impressive in 
 a philosophic sense. On the contrary, these positions present conclusions 
 of rational intellects moving with perfect accuracy. At this period of 
 inquiry the intelligence acted with the Atomists and the Sophists, or 
 it did not act at all; if it reasoned, it reasoned with them. 
 
 The shores of another island here loom on the horizon. When the 
 speculative significance of the subjectivity, or relativity, of human 
 knowledge is appreciated; and when it is understood that no truth, 
 or -existence, can be rationally conceived other than within the finite 
 human consciousness; it seems as though cloud, or shadow of truth, had 
 lifted from the mind. For this reason the inhabitants of this island 
 call it t he island of 'Enlightenment"; others call it the island of 
 
 » Seztus. Adv. Math. VII. 88, p. 891. 
 
 Bk. IV 
 
 Pre-Socratic Thought 
 
 47i 
 
 "Sophistry," for here are met Protagoras, Prodicus, Hippias, and 
 Gorgias. 
 
 But one other school of thinkers, that of the Atomists, has been as 
 much misrepresented as that of the Sophists. The fact that they 
 denied both the utility and the possibility of philosophy led them to 
 turn to practical affairs, and to produce but few speculative writings. 
 Their school, however, was a logical necessity in the development of 
 thought; and represents the idealistic pole corresponding to the pure 
 materialism of the Atomists on another side. It represents the results 
 of inquiry turned toward an analysis of the phenomena of mind, rather 
 than to that of the phenomena of matter. As this position is studied, 
 its importance becomes more evident. The contemplation of the merely 
 relative nature of human knowledge, the constant flux of matter, from 
 which sense and reason arise; the consequent relativity, variability, 
 and uncertainty of human opinion in all its forms, lead to a reasoned 
 disbelief; not only in the existence of ultimate Truth, discoverable 
 through the testimony of the senses, as in the first cycle of idealistic 
 thought, but to a reasoned disbelief in the human Reason itself. It 
 leads to the denial of the validity of both sense and reason, upon per- 
 fectly rational grounds. 
 
 This island of Sophistry is an important position in the speculative 
 seas and presents for the first time a completely reasoned crisis in thought. 
 It is useless to return to the starting-point at this juncture in order 
 to begin again; the Reason here repudiates itself and philosophy ceases. 
 Rational men adopt the Atomic or the Sophistical position. There is 
 nothing else to do — speculative momentum is spent. 
 
 When man first began to reason with reference to the problems 
 of Nature, he resolved the universe into matter, sought its ultimate 
 principle, and on reaching the hylozoism of the lonians with Anaximenes 
 and Diogenes, he discovered what seemed to be the simplest principle 
 of substance, and with this discovery his hypothesis exhausts itself. 
 He goes back to the starting-point and begins again; this time resolving 
 the universe into a rational abstraction. He analyzes this abstraction 
 and discovers its ultimate principle to be Reason divorced from sense. 
 He thus exhausts another hypothesis and is compelled to deny the 
 evidence of the senses, in order to support this purely idealistic ab- 
 straction. This position, however, presents no intelligible explanation 
 of change and movement, and consequently he goes back to the starting- 
 point once more, resolves the universe into a combination of matter 
 
 I 
 
 
 • 1 
 
474 
 
 Philosophy 
 
 Pt. IV 
 
 and reason, and reduces it to a fortuitously moved mechanism. This 
 result not proving satisfactory, he begins yet again; this time regard- 
 ing reason as the guiding principle of the combination; and finally 
 reduces the universe and himself to an aimless and kaleidoscopic series 
 of impressions, any one of which as valid as any other. If he tries 
 to begin again at this point, however, he will fiind it impossible; at the 
 starting point are to be found nothing but the abandoned wrecks of 
 exhausted hypothesis; there is not a sea-worthy craft afloat. There is 
 apparently nothing but matter and mind into which the Cosmos may 
 be rationally resolved, and both of these have now been exhausted, 
 with all their combinations. The reason is forced to accept the (fdciq 
 fiXoy 0? of the Atomists on one side, or deny the possibility of rational 
 speculation and ultimate Truth with the Sophists, on another. The ra- 
 tional intelligence has no choice; it either accepts these positions 
 or it does not: In either event, it ceases to act; the Reason here develops 
 the scientific basis of its own negation for the first time, and can 
 move no more. This movement of thought is carried on along lines 
 almost parallel with the cycle that culminated in Atomism; the crisis 
 occurs simultaneously in both physical and metaphysical speculation. 
 Philosophy is dead. 
 
 I' 
 
 CHAPTER II 
 
 ATTIC PHILOSOPHY 
 
 Section I — Socrates. Section II — The Socratic Schools, Section 
 III — Plato. Section IV — Aristotle. Section V — Epicurus. 
 Section VI — Zeno, the Stoic. Section VII — Pyrrho. 
 
 Section I — Socrates 
 
 TO OPEN a new era in thought at this period seems impossible. 
 The rational thinker knows that intellectual movement has 
 ceased, and sinks into a fatalistic materialism with Democritus 
 or abandons inquiry with Protagoras. Atomism or Skep- 
 ticism: there is nothing else. To open a new era requires the shaking of 
 the foimdations of these fortresses; it requires what might be called a 
 speculative earthquake. To shake men's confidence in accepted opinion 
 is the work of a t)n*o, and merely intensifies Skepticism: to shake men's 
 confidence in scientifically reasoned Skepticism is the work of an intel- 
 lectual giant such as the world has seldom seen. The giant appeared; 
 his name was Socrates. 
 
 The trained speculative intellect, in meeting a system of thought, 
 wastes no time in contemplation of superstructure until it has examined 
 the foundations upon which these are reared. It sinks at once to the 
 underlying sources from which conclusions are derived; in other words, 
 to the theory of knowledge lying at the base of rational thought. This 
 is the point at which the equipped inquirer concentrates attention at 
 once. 
 
 The Atomists based their knowledge upon impressions derived from 
 nature through the senses; the Sophists regarded knowledge as limited to 
 individual opinion. In the Theaetetus, Socrates formulates and ana- 
 lyzes these and all other then existing conceptions of knowledge under 
 the following headings: 
 
 I. Sense Perception. 
 II. True Opinion. 
 
 475 
 
 i ii 
 
 t 
 I 
 
 \ 
 
476 
 
 Philosophy 
 
 Pt. IV 
 
 if 
 
 m. True Opinion, with rational explanation by means of: 
 
 a. Speech 
 
 p. Description through Elements 
 
 y. Relative Distinction. 
 I. Sense Perception. ITavTa x<»>pei, "all things move," say the Atom- 
 ists and the Sophists with Heraclitus. All things are in a state of flux; 
 and there is no knowledge other than human knowledge. Again, human 
 knowledge and opinion present infinite degrees of difference and, conse- 
 quently, that which appears to each is to each. Thus knowledge is 
 merely that which each man perceives, and, therefore, the sense 
 perception of the individual must be regarded as knowledge and as the 
 measure of all things. 
 
 "But," says Socrates,* adopting the same point of departure, Tcavra 
 Xwpet, "all things move," means literally that all things are always mov- 
 ing with all kinds of motion. Thus the individual percipient subject, or 
 man, must be regarded with all things else as always moving with all 
 kinds of motion. Those, therefore, who regard man as the measure, will 
 necessarily adopt a standard which itself is constantly changing; and, 
 as it is impossible to measure anything with a constantly varying stand- 
 ard, individual sense perception can never constitute the criterion of 
 truth or real knowledge. 
 
 n. True Opinion. The entire administration of the tribunals of 
 justice refutes this position; says Socrates,^ for if those who administer 
 those tribimals are regarded as doing so correctly, they can alone do so 
 in accordance with the pleading and testimony of others, in connexion 
 with things and events of which they themselves neither have, nor pre- 
 tend to have, any personal knowledge. Their opinion, therefore, if true, 
 can be nothing but the result of the testimony or the pursuasion of 
 others. True opinion and Knowledge, therefore, may in no sense be 
 regarded as identical. 
 
 m. True Opinion with rational explanation.^ Three conceptions may 
 be formed with reference to the meaning of the words "rational explana- 
 tion." a. They may mean explanation or elaboration of a subject 
 through the voice, or words, g, They may mean explanation of a thing 
 through the elements of which it consists, or, f, through distinctions 
 established in relation to other things. 
 
 « TheaeUtus. 181-183. 
 
 * Ibid., aox A. 
 
 * Ibid, aox D, et 9tt^ 
 
 Bk. IV 
 
 Attic Philosophy 
 
 477 
 
 Speech: If speech is meant, nothing is added to the original concep- 
 tion of true opinion; for all but the deaf and dumb are able to formulate 
 their opinions through the medium of words; and means of articulate 
 commimication, as the necessary conditions of its expression, can never 
 be regarded as distinct from true opinion. 
 
 Explanation through elements: If this is meant by explanation, a 
 thorough knowledge of all elements is implied. But as things are infinite 
 in number, and their elements consequently infinitely infinite, true opinion 
 may in some cases be accompanied by knowledge of elements, in others 
 not. This position, therefore, must be regarded as falling short of true 
 knowledge. 
 
 Relative distinctions: If relative distinctions are meant, if true opinion 
 means the understanding of that which a thing has in common with 
 others; but knowledge, as combining this true opinion with the per- 
 ception of its particular and distinctive relations, nothing in reality 
 is said; for the following reason. True opinion, itself, must imply 
 familiarity with the characteristic attributes of an object; and such 
 a qualification of true opinion as is represented in relative distinc- 
 tions, as an adjunct to it, is redundant and meaningless; for no 
 true opinion whatever could exist without necessarily involving such 
 distinctions. 
 
 Socrates, therefore, brings his investigation of the nature of Knowl- 
 edge to a close with the following words: 
 
 '^'It is utterly futile, in our search for Knowledge, to say that it is true 
 opinion with knowledge of distinctions or anything else; for not in senses 
 perception, O Theaetetus, nor in true opinion combined with rational 
 explanation is Knowledge. . . . And does not our art in conse- 
 quence declare that all the results of our efforts have turned out but 
 windy futilities unworthy of being fostered." 
 
 In the Theaetetus, and in other works, Socrates has demonstrated this 
 statement to the last degree of refinement. Socrates asks the most 
 momentous question of thought; a question never asked before and 
 consequently never answered; what is Knowledge? In asking this 
 question Socrates overthrows or undermines every existing theory with 
 reference to it. This is the speculative earthquake which alone would 
 introduce a new philosophic era. This is not Sophistry properly speak- 
 ing; this, if the term is permissible, is the out sophisticization of Soph- 
 istry on its own grounds. Sophistry denies the possibility of the 
 discovery of ultimate Truth, or real Knowledge. Socrates denies the 
 
 % 
 
478 
 
 Philosophy 
 
 Pt. IV 
 
 validity of the denial; and undermines the theories of cognition upon 
 which it is based. 
 
 The rational thinkers, aground, so to say, on the islands of Atomism and 
 Sophistry, find these positions established upon certain assumptions 
 with reference to that which constitutes Knowledge; in other words, with 
 reference to the nature of the action of their own faculties. These men 
 not only find their assumptions challenged, but overthrown; they become 
 either no longer tenable or require analysis and refonnulation. All 
 thought is superficial until the theory of Knowledge upon which it is 
 based^is determined. There is no more pregnant philosophic question 
 than that for which Socrates stands in the history of thought. What is 
 Knowledge? And, when it is distinctly shown that it must be something 
 other than any conception yet formulated, its stimulating influence is 
 irresistible. "Philosophy," says Socrates,^ "begins with wonder.** The 
 man who could inspire men with wonder once more was the man who 
 could revivify philosophy, and the way to make men wonder was to 
 shake the foundations — not of their opinions, but of their doubts. To 
 shake the foundations of opinion, creates skepticism; to shake the foun- 
 dations of skepticism, creates wonder — that is, the beginnings of philos- 
 ophy. It becomes necessary to establish a new theory of Knowledge or 
 reformulate the old, if only to withstand the scrutiny of this unresting 
 intellect. It becomes necessary to defend positions never before ques- 
 tioned, and their mere defence requires dearer definition and conceptions; 
 more exact statement, analysis, and classification. The mind of man 
 begins to stir again; philosophy breathes the stimulating ether of new 
 ideas; her eyes open in a new world; and the Reason moves once more. 
 
 The intellectual pedigree of nearly all mental manifestations is usually 
 easily traceable; the majority of intellectual phenomena may be clas- 
 sified almost as easily as a familiar beetle or the commoner vertebrates. 
 In attempting to do this with Socrates, however, the material presented 
 for analysis is singularly illusive. Instead of the customary combination 
 or variation of existing conceptions with its predetermined outcome, 
 Socrates seems like an intellectual dynamo generating speculative 
 momentum independently of surrounding influences. From the mind of 
 Socrates sprang a speculative force at once destructive and generative; 
 consuming, as it were, existing speculative theories in its path, yet, at 
 the same time, radiating pregnant speculative ideas in all directions. 
 Knowledge, Truth, the Good, Virtue, God, Justice, the Soul, Immor- 
 
 1 TheaeUtus, 155 D. 
 
 Bk. IV 
 
 Attic Philosophy 
 
 479 
 
 tality, the State, Law, the True, the Beautiful, Morals, Intuition, 
 innate Ideas, Conscience, Definition, Genera. Are Virtue and Knowl- 
 edge identical? Can Virtue be taught? And above all. Ethics and a self- 
 conscious method of inquiry. Until the appearance of Socrates, men had 
 devoted their efforts to the penetration of the depths of external nature; 
 Socrates turned his efforts to the penetration of the depths which lay 
 within himself. This is the key of Post-Socratic philosophy; the essen- 
 tial distinction between earlier and later Hellenic thought. Socrates 
 despaired^ of the results of speculation into the nature of the universe 
 and dissuaded men from such inquiry; he regarded it as lying beyond the 
 range of the human intelligence. On the other hand, he discovered a 
 whole world of human nature never before studied, never explored; as 
 Cicero says^ he brought philosophy down from the heavens to the earth. 
 
 Aristotle,^ with his usual discrimination, points out Socrates' chief 
 contribution to thought. It is a consciously formulated method of 
 inquiry; a method which resolves itself into the establishment of generic 
 conceptions and a process of inductive reasoning based upon these. 
 
 The insuflSciency of earlier methods is made manifest; it seems as 
 though the "ancients," as Aristotle calls them, had proceeded in a dream, 
 unconscious not only of what they were doing, but of their very methods 
 of procedure. At last, however. Philosophy's eyes are opened; she is 
 now awake, as it were, and conscious of the course to be followed in 
 future investigation. The good ship Reason finds herself once again 
 provisioned for a promising voyage. She tugs at her chains of atoms 
 and relativity; her sails swell with the freshening breeze. Socrates has 
 done his work like a man, or rather like a god, and waves a smiling fare- 
 well as he puts the hemlock to his lips. The good ship Reason stirs 
 and moves and men study the stars once more. 
 
 Section II — The Socratic Schools 
 Article i — Introduction. 
 
 Starting once more with a new speculative method at this point, com- 
 pletes the fourth cycle of philosophic thought; four complete rings are 
 here left behind which have produced nothing but Atomism and Skep- 
 ticism. The Reason rejects these and begins again. 
 
 * Phaedo, 96 C; Xenophon Jfem. I. i. p. 6.; IV. 7, p. 191. 
 » Tusc. Disp. V. 4, P- 48. 
 
 * Metaph. M.4, 1078 b 27. 
 
 I, 
 
t t 
 
 '! . 
 
 8 
 
 480 
 
 Philosophy 
 
 Pt. IV 
 
 Sii^ 
 
 In a study of rational thought from this point, two facts should be 
 borne in mind. First, philosophy now has a history behind it; intellect- 
 ual processes have been formed, developed, and analyzed by men of the 
 highest ability. With any given hypothesis, as a point of departiu-e, 
 the necessary sequence of ideas through which a rational process must 
 lead are now known. Second, two discoveries of the first importance 
 have been made in the hitherto unknown seas of speculation. The rocks 
 of materialistic Atomism, based on sense perception on one side; and the 
 barren shoals of idealistic, subjective opinion on another. The philos- 
 opher no longer sails his craft without a chart to guide him. He now has 
 an exact knowledge of the situation of these rocks and barren shoals, two 
 on one side, and two on another, which he must avoid if he wishes to get 
 anywhere else. He has also a chart of the currents of thought which sweep 
 resistlessly toward these islands. Once his ship is caught in any of these 
 currents, the philosopher knows that he can never disentangle her, and 
 that he must sooner or later find himself wrecked or stranded again. 
 Speculative navigation is here becoming an exact science; the thinker no 
 longer drones semi-consciously through unknown waters, but looks 
 clearly at the seas, and the islands of rocks and shoals on either side. 
 The master of a speculative vessel at present knows what he is doing, 
 and lays his course with his eyes open. 
 
 The Socratic convulsion in thought requires a thorough reorganiza- 
 tion of existing schools and theories of knowledge. The first impression 
 seems one of beijvilderment. Everything considered established is over- 
 thrown; new problems are proposed, a new method of inquiry suggested, 
 and its validity rationally demonstrated. The first question, therefore, 
 is the relation of the old discoveries to the new. Philosophy is exact, 
 specific, articulate, or ceases to be philosophy. 
 
 As is inevitable in any great speculative discovery, such as a new 
 method, the discovery will be available for a great variety of purposes. 
 Some inquirers may think, after the first glamour has cleared, that the 
 new method strengthens existing positions. Other inquirers will adopt a 
 different point of view, and believe that none of the ideas scattered by 
 Socrates with such prodigality had been properly analyzed and form- 
 ulated. To these thinkers such words as Knowledge, the Good, Virtue 
 offer new stimulus to thought. These are the men who leave the islands, 
 go back to the starting-point, and form the crews and captains of new 
 speculative expeditions. Socrates gathered all the elements of thought 
 within himself and set them all free in different directions. He gathered 
 
 
 Bk. IV 
 
 Attic Philosophy 
 
 481 
 
 them, as it were, from an external objective nature and set them free, to 
 use a simile of his own,i like a covey of doves within the human intellig- 
 ence itself. He can think exactly as a Sophist; he knows the inner work- 
 ings of the atomic intellect and shows the foimdations of both systems 
 to be dubious to say the least. Inquiry from Thales to Protagoras had 
 looked upon the "sum of things" as an external objective phenomenon, 
 the riddle of which it was its object to cut open or lay bare, in order to 
 discover its essential nature. The great discovery of Protagoras shows 
 that such a process is impossible and inconceivable; and even were it 
 possible or conceivable, it must of necessity involve formulation or 
 expression within the limits of the subjective human intelligence. The 
 object of all inquiry is the discovery of Truth, but since the days of 
 Protagoras no rational mind will seek an objective truth; it will never 
 look for the heavens to open and reveal themselves; in other words, it 
 will look for truth where it knows truth can alone be found: within the 
 content of its own consciousness. Thus, before Socrates, men had 
 sought for truth in an analysis of the phenomena of external nature; 
 after Socrates, men seek for truth in analysis of the phenomena of the 
 reflecting human intellect. When this distinction is ignored, the mind 
 reverts to Pre-Socratic methods and will be caught in already exploited 
 processes. Post-Socratic thought, however, overlies and includes earlier 
 inquiry. 
 
 It may be said, that the words "The True," "The Good," and "Vir- 
 tue," form the centres round which the three Socratic schools revolve. 
 The Megarians turned their attention to a study of the first, the Cy- 
 renaics to the second, and the Cynics to the third. Socrates in showing 
 the superficiality of the finite end, or subjective opinion of the Sophists, 
 put the rational and subjective investigation of Truth in its place. The 
 Socratic Truth thus absorbs and transcends individual opinion. It 
 becomes an objective Realty which exists within the hiunan conscious- 
 ness; what is this Realty, this Socratic Truth, ask the Megarians. 
 
 Article 2 — The Megarians. 
 
 There are three sources from which the opinions of the Megarian school 
 may be derived: Plato seems to refer to them in the Sophist, the Lives 
 of Laertius, and Aristocles in Eusebius. The most suggestive passage 
 is perhaps in the Life of Stilpo,^ in which he says: "Not that which I 
 
 I 
 
 1 
 
 1 Theaetetus, 197 D. 
 *LagrHus,U. xz, p.6z. 
 

 482 
 
 Phflosophy 
 
 Pt. IV 
 
 see before me is a vegetable, for a vegetable existed thousands of years 
 ago; this object, therefore, which the sense perceives is not a vegetable." 
 This is the key to the doctrine of the Megarians. The key to the under- 
 standing of their answer to the question: What is the True? 
 
 In the passage in Plato,* which apparently refers to the Megarians, he 
 speaks of a school diametrically opposed to that of the materialists. This 
 school seeks reality in "a superior and invisible region of purely ration- 
 alized and incorporial forms," reducing all material phenomena to mere 
 dust by their reasonings, and lending them but a perpetual process of 
 change for arriving at that condition. 
 
 Laertius^ says that Euclides, who formed the school of Megara, was a 
 dose student of Parmenides; and Aristocles^ groups the Megarians 
 with the Eleatics in the recognition of unity in true Being alone and the 
 denial of the existence of anything else. The answer, therefore, given 
 by the Megarians to the question. What is the True, is that the True 
 consists in that generic abstraction in which all particulars are con- 
 tained. To this generic conception alone can any real permanence, or 
 existence, be accorded; for the particular, sensible forms from which 
 such a conception is derived merely flow beneath the senses and vanish. 
 It is, consequently, only as the mind forms and understands these generic 
 groups that it is capable of coming in contact with Reality, or the True. 
 
 The Megarians show the grafting of the Socratic conception of 
 genera upon the earlier school of Elea. 
 
 Article j — The Cyrenaics. 
 
 Aristippus is the leader here; a clear mind and exact thinker. He 
 seized upon the "Good" of Socrates and devoted his attention to its 
 analysis. What is the "Good"? 
 
 Since the days of Anaxagoras and the discovery of Protagoras, every 
 philosophic concept must have a piupose; what then is the purpose of 
 the "Good," as capable of being realized. Aristippus applies the ana- 
 Ijrtic, subjective, principle of Protagoras to the synthetic, objective, 
 "Good" of Socrates, and discovers that the "Good" can have no signifi- 
 cance other than in relation to the individual human percipient. The 
 " Good" of Socrates, therefore, like the Nous of Anaxagoras, must possess 
 a finite purposive existence in the human mind. The " Good," conse- 
 
 1 Sophist, 346 B. Cf. Cousin. Oamts dc Platon, note to The Sophist,Wol XL, p. 5x7. Also Zeller Socrates 
 and the SocraHc Schools, p. 318. 
 * Euclides, II 10., p. 58. 
 ' Eusebhis. Praep., Ev. XIV. 17. i. 
 
 Bk. IV 
 
 Attic Philosophy 
 
 483 
 
 quently, is definite and concrete; not indefinite and abstract as Socrates 
 left it. This may seem but a return to the formless shoals of individual 
 opinion, and such is practically the case. Aristotle^ groups Aristippus 
 with the Sophists; but Aristippus, nevertheless, goes a step farther. He 
 says the Sophists discovered the island of subjective opinion, but they 
 did not develop a method of realizing the " Good. " This method, says 
 Aristippus, 2 is as follows: Man is conscious of sensations which may be 
 broadly classified as pleasurable or the reverse. The wise man in search 
 of the " Good," therefore, will analyze these in relation to each other, and 
 choose the most agreeable. This, says Aristippus is the " Good" — and 
 Aristippus says no more. The Cyrenaics show the fusion of Socratic 
 thought with Atomism and the subjective opinion of the Sophists. 
 
 Article 4 — The Cynics. 
 
 Virtue, say the Cynics, is the only good, and turn their attention to 
 Virtue. This school presents little thought of importance. Aristotle,* 
 who misses nothing of interest in earlier thought, pays little attention to 
 the Cynics. Here is another phase of the many sided Socrates. His 
 abstemiousness and self-control are seized upon by certain minds with a 
 leaning toward aceticism, and in this way, the avoidance of pleasure and 
 the comforts of existence is laboriously identified with Virtue. 
 
 The great majority of the followers of Socrates was intellectually 
 incapable of understanding him in any comprehensive sense, with the 
 result that each one took what small portion each was able to seize and 
 carry, and proceeded to graft it upon the established systems. Socrates 
 had boldly attacked these. The Post-Socratic schools are startled 
 into thought for a moment, and then begin to sink helplessly back into 
 the old channels and currents. 
 
 Section III-— Plato 
 
 As the True, the Good, and Virtue are analyzed with the later Socratic 
 thinkers, it seems as though an iridescent bubble had swelled until it 
 burst. It seems as though these later expeditions, although they had 
 steered clear of the islands for a time, were not far upon their journey. 
 A few more questions, a few more answers, strong currents will set in, 
 
 >i 
 
 il 
 
 1 Metaph. B. 2, 896 a 33. 
 
 « Laertius, II. 8, p. 53. 
 
 ^ Metaph. A. 29, 1024 b 3s. 
 
484 
 
 Philosophy 
 
 Pt. IV 
 
 
 l: 
 
 
 and it will be but a question of time until the rocks of Atomism or the 
 shoals of Sophistry appear once more. 
 
 But the most important question of all those asked by Socrates has 
 not yet been studied. The great question, that upon which all others 
 depend, and from which all others must be answered; the question: 
 What is Knowledge? The mind of Socrates was capable of embracing 
 and containing all that preceded him in thought. It holds the Eleatic 
 metaphysicians through the Megarians, the subjective idea of the Soph- 
 ists through Aristippus and the Cynics. Without the Socratic schools, 
 it would have been impossible to gather preexisting systems, focus them 
 at one point with Socrates, formulate their positions and establish the 
 basis of supplies and point of departure of the greatest voyage that ever 
 sailed the speculative seas: the voyage of Attic philosophy, which not 
 only moved with the impetus gained with the concentration of previous 
 thought; but which, it may well seem, has swept the seas clean for those 
 who came after. The mind of Socrates was the focus in which earlier 
 thought centred and from which the new expedition sets out; the minds 
 of Plato and Aristotle were the directing forces. 
 
 "The universal objective reason," says Erdmann,^ "which Anaxagoras 
 had meant (or at least included) in his vou<;, has by the moral genius of 
 Socrates become subjective in him (the 5v6p(i>xo(; of Protagoras) ; so that 
 when he consults his own genius, the deity answers in it, when he follows 
 his own pleasure, reason is followed. Thus he stands above Anaxagoras 
 and Protagoras as their higher unity." . . . "The Megarians had 
 shown how much room there was for Eleatic metaphysics in the Socratic 
 doctrine; Aristippus had indicated its points of contact with Protagoras, 
 and hence with the physics of Heraclitus and the Atomists; finally 
 Antisthenes had proved the possibility of being an adherent of Socrates, 
 and yet remaining a dialectician after the fashion of Gorgias trained by 
 Zeno and Empedocles. None of these facts were forgotten, and at the 
 same time the last of the pre-Sophistic views of the world, that of the 
 Pythagoreans, is consciously incorporated with Socratism. The repre- 
 sentative of this Socratism thus apprehended from every side, is Plato; 
 and it is no accident that he connects all his inquiries with the person of 
 Socrates, in whom philosophy had become personal." 
 
 This is the complete, comprehensive Socrates; no longer the Socrates 
 left behind with the hemlock in his hand. This is the Socrates analyzed 
 from every side, studied in every relation to preceding thought; the 
 
 >VoLL,p.94. 
 
 Bk. IV 
 
 Attic Philosophy 
 
 48s 
 
 Socrates fully "determined" in the philosophic sense. The first Socrates 
 asks the question what is Knowledge? The second Socrates, or Plato, 
 answers it, and from this question and answer starts the human Reason 
 once again for her fifth voyage. 
 
 In order to understand Plato's answer to this question, it is essential to 
 bear in mind the exact condition of speculative thought of that day. The 
 importance of the Protagorean discovery of the subjectivity of knowledge 
 cannot be overstated; considerations advanced from other points of 
 view possess no interest for a philosopher from this time on: he has under- 
 mined the foundations of other positions. On the other side Democ- 
 ritus and his followers had analyzed matter by means of reason based 
 upon sense perception. A man who understands the perfect rationality 
 of pure Atomism must be reached through the action of reason based 
 upon something other than sense perception; he has exhausted the pos. 
 sibilities of reason based upon sense. The man who can command 
 a philosophic expedition from this point must understand the exact 
 position of these rocks and shoals and know the precise situation, direc- 
 tion, and strength of every current in the seas. 
 
 Knowledge, say the Sophists, is individual opinion. Knowledge, say 
 the Atomists, is sense perception. Socrates in the Theaetetus says that 
 Knowledge is nothing of the kind. The philosophers study his position, 
 formulate it in relation to their own, and find material for new inquiry. 
 The Reason is at last prepared for a new voyage; she has merely been 
 putting about so far in order to gather the philosophers for a serious 
 expedition. Plato is the heir of Socrates and is put in command. The 
 Reason gets under way. 
 
 The Sophists ask Plato the great question first. "What, they say, 
 is Knowledge?" "Knowledge," says Plato, "is subjective." The 
 philosophers breathe a sigh of relief; they know they are really ofiF at 
 last. "But," Plato continues, "Opinion is not Knowledge. There is 
 deeper subjective Knowledge within man's soul than mere individual 
 opinion. For," he continues, "the lovers of true wisdom know that 
 philosophy, taking the soul under its care, a prisoner in the body, as it 
 were, and fast bound therein, compelled to look upon the world as 
 through a dungeon and not freely and independently, but steeped in 
 utter ignorance, perceive that the strength of the prison is foimded in 
 the souls' own desires; that the prisoner ever tightens his own bonds. 
 The lovers of wisdom, I say, know that philosophy, receiving the soul 
 in this condition, talks to her gently and quietly and tries to set her free; 
 
 It' I.. 
 
;; 
 
 kt 
 
 486 
 
 Philosophy 
 
 Pt. IV 
 
 tells her that the perception of the eyes is full of illusion, as is that of the 
 ear and the other senses; and advises her to depend upon these as little as 
 possible, persuading her to gather and concentrate herself within herself, 
 to put her faith in nothing but herself, and in that portion alone of her 
 being, in and by itself, which she can grasp and understand in and by 
 herself; and to regard as \mtrue that which she learns by other means 
 which vary with varying conditions. Such things are indeed tangible 
 and obvious, but that which she herself perceives is in thought and pure 
 reason, and without bodily form. Real wisdom, true knowledge," says 
 Plato, **lies within each man's own soul; but it must be sought thought- 
 fully and earnestly. Here within us; within the inmost depths of our 
 own being; lie the elements of truth; the essences of all worthy the 
 eflFort of those who seek to know." 
 
 Thought begins its history with the vague idea of the existence of some 
 cosmic Reality, or Truth, to be discovered through the observation of 
 external nature; it resolves this conception into the objective Reason 
 of Anaxagoras, and thence into subjective opinion with Protagoras. 
 It thus seems to have sought something which had no existence. It dis- 
 covers a cloud to be a butterfly, and a butterfly but that which any one 
 might happen to think it. This is the ''enlightenment" of the Sophist; 
 the cloud drifts by, the butterfly is dissected and thrown away but 
 nothing remains. This enlightenment is that of utter instability and the 
 cloud rises upon an empty farce. Thought examines and rejects this 
 position with Socrates, and Knowledge, after being analyzed from an 
 objective cloud into subjective opinion, again becomes objective within 
 the human consciousness itself. Thought here finds once more *'the 
 question, the wonder and the doubt" of the true philosopher: a whole 
 world unexplored; the world that lies within. Plato is in full command 
 of the ship. The breeze freshens and the low-lying shoals of the island 
 of Sophistry disappear behind her wake. 
 
 The speculative seas, however, are treacherous; the most promising 
 expedition may suddenly find itself becalmed or drawn into winds and 
 currents which render further progress impossible; and this, perhaps, 
 when all may seem most favourable. The Reason is well under way, 
 the shoals of Subjectivety are disappearing astern; but there is another 
 island to be cleared. The black rocks of Atomism loom over the horizoa 
 and the winds and ourents seem drawing in that direction. The philos- 
 ophers begin to watch the rocks. Plato knows what the next question 
 must be. The ship is beginning to drift; the question must be answered. 
 
 Bk. IV 
 
 Attic Philosophy 
 
 487 
 
 The question is: If knowledge lies within, whence is that knowledge 
 derived? The rocks of sense perception seem strangely near. But 
 Plato knows the rocks, and the currents. He says: "This knowledge is 
 based upon ideas which are not derived through the senses; but which 
 each individual may discover within the elements of his own conscious- 
 Philosophers are sensitive to the way of a ship on the speculative 
 
 ness. 
 
 seas. They know that the Reason is here suddenly caught in a strong 
 current sweeping her back toward the island of Sophistry; because, if 
 these ideas are not derived through the senses, they must be implanted 
 within each mind at birth. If they are implanted at birth, they must 
 either be identical or different in all individuals. If identical, all men 
 will think alike. But all men do not think alike. Therefore, Knowl- 
 edge based upon these innate ideas must eventually resolve itself into 
 nothing but mere individual opinion as before. But Plato knows this 
 perfectly and continues: 
 
 "These ideas of which I speak are not implanted within the soul at 
 birth; the human soul is immortal; but how may true immortality be 
 conceived other than as existence extended throughout a limitless past, 
 as well as throughout a limitless future? The soul which thinks and 
 lives within each man on earth; the soul which constitutes in each of us 
 our own true being, is derived from that absolute and immortal Being 
 within which all wisdom and knowledge is contained. The soul of man, 
 passing its transitory existence here below, comes from absolute Exis- 
 tence which knows neither beginning nor end. From this Existence, 
 then, are these ideas derived. In the reminiscence, or recollection, of a 
 higher Knowledge, inherited from man's immortal nature must the ele- 
 ments of true earthly knowledge be discovered. The human soul not 
 only lives and shall live, but always has lived; the purest sources of 
 thought, welling spontaneously within, have been engendered in another 
 and a higher life. In this thought, in these ideas, which constitute the 
 generic conceptions of the phenomenal world, we may find glimpses of 
 the Truth. These ideas are the elements of Knowledge. They form 
 the universals within which all particulars are contained; the permanent 
 existences imderlying the changeable material of phenomenal nature; 
 and thus constitute the essentials of real knowledge. By reasoning 
 from these universals, these generic conceptions of the phenomenal, to 
 still higher conceptions, from generalization to higher syntheses, may man 
 obtain an insight into truth; the Truth within which all truths are con- 
 tained; the Truth of the One the Absolute, the Beautiful, the Good. 
 
 * • 
 
488 
 
 Philosophy 
 
 Pt. IV 
 
 Within us," says Plato, to the Sophists, *' within the elements of each 
 man's own soul, lie the objective, or eternal, elements of knowledge, 
 and in the rational analysis and combinations of these," he says turning 
 to the Atomists, ''lies Knowledge." **Man," says Plato, "sees with his 
 Reason and not with his eyes."^ 
 
 The Platonic theory of Knowledge is a suggestive conception. The 
 philosophers grow conscious of a breath of genius; the Reason swings up 
 into the wind, frees herself from the eddies of Subjectivity, and bears 
 away from the rocks of Atomism. She is really cleared at last. 
 
 The rocks and the shoals sink below the horizon astern. The Reason 
 lifts with the swell of deep waters and steers for the open sea. Soft 
 skies smile down invitingly and the gods seem strangely near. The man 
 at the lookout reports land in sight. "The land," says Plato, "is the 
 land of Knowledge: the land of the Good, the Beautiful, the True." 
 
 One of the philosophers goes forward to see for himself. He is a man 
 with exact, clean-cut features. He reports no land in sight; he says it 
 was an illusion; and adds, moreover, that the ship will never make land 
 in the direction in which she is heading. All is attention. No man 
 makes a statement on the Reason which he is not ready to support 
 against all comers. This man's name is Aristotle. The philosophers 
 listen. 
 
 Section IV — Aristotle 
 
 I. "Plato," says Aristotle, "is attempting to reach knowledge by 
 means of a theory and method of inquiry based upon the existence of 
 abstract, general conceptions, within which the particulars of the phenom- 
 enal world are contained. A thing must exist either objectively or sub- 
 jectively. If these general, or universal, ideas of Plato are conceived 
 as existing objectively, either within or without the human consciousness, 
 this method and theory wiQ be involving inquiry in a hopeless and unnec- 
 essary confusion for the following reasons. The essence and condition 
 of the typical, or general, conception is classification. When we reduce 
 particular, sensible phenomena to rational, typical conceptions we 
 classify them; we separate and classify a particular thing within a 
 
 1 Plato's theory of knowledge runs through his entire works. As the sources of the above summary, the 
 following passages may be cited. Phaedo 72-75. 82, 83, 91. 92, Meno 81-86, Laws 732. Timeus 36. Craty' 
 lus 440. Republic X, 596, 611. Pkaedrus 249. 250. The statement that man see with his reason and not 
 with his eyes, is suggested by Plato's remark in Laertius' Life of Diogenes the Cynic (VI. 2. p. 14S). 
 When the latter said that he could see the table and the cup, but not their generic conceptions; Plato 
 replied, " Because you have eyes to see the first, but not intellect to see the other." 
 
 Bk. IV 
 
 Attic Philosophy 
 
 439 
 
 general conception. These general conceptions, Plato tells us, are the 
 only Realities. Owning to the constant flux and change in which all 
 sensible phenomena are involved, these generalities, Plato would have 
 us believe, are the permanent elements in things with which alone pure 
 knowledge must concern itself. It must be remembered, however, that 
 any given particular may be embraced within a great number of abstract 
 generalizations. Thus the particular Socrates may be classified under 
 the general conceptions of man, biped, animal, philosopher, statesmani 
 soldier, and so forth; and, in attempting to reach knowledge in the analy- 
 sis of these abstractions alone, we are involving inquiry in a confusion 
 which can lead to nothing but the profitless increase in the number of 
 abstract generalizations. Again, it must be rememberd that these 
 t3rpical ideas will refer to types as well as to things — that is, they will be 
 particulars and generals at the same time. The use of this method," says 
 Aristotle, "is as though, in attempting to solve an arithmetical problem, 
 we began our calculations by increasing the numbers with which we have 
 to deal by way of simplification." 
 
 II. "But," continues Aristotle, "these abstractions of Plato have no 
 rationally conceivable objective existence, either within or without the 
 human consciousness, for the following reasons. These ideas neither 
 are, can be, nor pretend to be anything but the expression of the relation 
 existing between particular things and general conceptions; and the 
 relation between two things can possess no conceivable existence, except 
 within the consciousness of the finite, percipient subject. These Pla- 
 tonic generalizations, therefore, are subjective; in the exact, and limited 
 interpretation of the word, and subjective alone. Nor is their existence 
 possible under any other condition; for how," asks Aristotle, "can the 
 subject form any conception of the relation between particulars and the 
 categories within which these are contained, except through the study of 
 particulars? And how," he asks again, "may the study of particulars 
 be profitably carried on by the human subject in any way other than in 
 the study of the natiu*al phenomenal world as revealed to us through the 
 observation of the senses? 
 
 III. "Heraclitus has shown, however," Aristotle continues, "that all 
 phenomena falls under the observation of the senses in a never-ceasing 
 condition of change; but the science of things in constant flux can have 
 no existence. If, therefore, knowledge, or science, can exist at all, it can 
 exist but in the systematized study of the permanent elements under- 
 lying sensible phenomena. These elements of knowledge, therefore, 
 
 t 
 

 t 
 
 li 
 
 . \ 
 
 
 490 
 
 Philosophy 
 
 Pt. IV 
 
 must exist in a state of pennanence, independently of direct and immedi- 
 ate sense perception. These permanent elements are discoverable only 
 through a systematic method of observation, and inquiry based upon 
 rational induction; or a process of reasoning from particulars, directly 
 perceived through sense impression, to rationally fonnulated generaliza- 
 tions based upon these. By this means, and by this means alone, can we 
 lay the foundations of true Science and Method; and Science, and 
 Method begin," says Aristotle, "when, from many conceptions derived 
 from experience, one imiversal conception is evolved which will embrace 
 all similiar cases. Reminiscence is essential in the search for knowledge, 
 but the search for knowledge can never be effectively carried on through 
 any method based upon any reminiscence other than that of previous 
 experience gained by the patient observation and classification of the 
 phenomena of nature; as revealed to man through the intelligent use 
 of his sentient, percipient faculties. 
 
 IV. "The general conceptions so derived, however; these perma- 
 nent elements of things, are not implanted within the individual 
 consciousness at birth; neither are they reminiscences of a previous 
 existence, nor direct sense impressions. They are, on the contrary, 
 rational, subjective conceptions, developed within the mind itself; 
 but derived from, and entirely dependent upon, the contact of 
 the reason with external nature through the systematic observation of 
 
 the senses. 
 
 "This," says Aristotle, "is the path of true Knowledge; the path of 
 comparative analysis, inductive reasoning, and experimental verification 
 of the positions so derived; the path which leads through careful obser- 
 vation of nature, patient research and experiment from particular truths 
 to truths of ever-widening application and of ever-deepening significance. 
 It is a very astonishing thing," he concludes, "if we were indeed blest 
 with such a congenital knowledge of things, as Plato suggests, that we 
 nevertheless, should be totally unconscious of the possession of such a 
 rare and priceless treasure. Man," says Aristotle, "sees with his eyes 
 first; and with his reason afterward."* 
 
 It may be said in brief that Aristotie seized the indefinite, objective, 
 idealistic abstraction of Plato, based upon reminiscence of previous 
 existence; seized it in the psychical ether, as it were, and, by a masterly 
 
 1 The above is a brief analysis of Aristotle's refuUtion of the Platonic Theory of knowledge and die 
 •stablishment of his own. It is derived from all his writings; the following passages may be specifically 
 cited: Metaph. A. i, 981 a 1; A. 9, 992, 993; B. i, 996 a 6; B. 6, 1003 a 7; Z. 16, 1040 b a$; if. 4, 5, 9; 
 Analyt Post., A. 13, 81. 
 
 Bk. IV 
 
 Attic Philosophy 
 
 491 
 
 metaphysical tour de force, turned it into a definite, subjective, idealistic 
 abstraction, based upon experience. 
 
 There are no artificial distinctions of rank on the Reason; the man 
 commands her who can. Aristotle is at the helm. 
 
 The mists thought to be land clear away, and Aristotle lays the new 
 course. The philosophers begin to analyze matter in the laboratory 
 instead of in their minds as before; and the foundations of the experi- 
 mental sciences are laid. Definition, induction, and experimental 
 verification of impressions derived from the observation of nature, 
 are the means Aristotle offers for the attainment of knowledge; the 
 stars, by which he lays the new course. The good ship Reason speeds 
 onward, the hand at the helm is steady; and the seas stretch ever 
 ahead. 
 
 The philosophers analyze and generalize, and each new discovery opens 
 up the possibility of other new discoveries lying still beyond; they 
 analyze and define these only to find other material for newer discoveries 
 ever forming in the mind. The promised land of Knowledge seems far; 
 the seas stretch away, and the course of the Reason opens up ever- 
 widening and ever-receding horizons of inductive generalizations of 
 which there appears no end. Month after month goes by, year after 
 year, and they seem no nearer Knowledge than before; an endless sky 
 spreads ever above and an endless sea beneath. The philosophers 
 begin to ask where they are going? How they may know whether they 
 were going anywhere or not? Time flows by, the horizons recede; new 
 horizons take their place only to fade and recede in turn. The phi- 
 losophers grow weary. The hand at the helm is steady, but the 
 hand grows rigid and cold, the eye grows glazed and motionless — 
 and the philosophers know that Aristotle can see no farther. He 
 takes them out on all endless voyage on a shoreless sea and leaves them 
 there. 
 
 The philosophers find they are realizing nothing. The Aristotelian 
 method discovers nothing but the possibilities of new discoveries through 
 a never-ending series of generalizations. The object of Philosophy is 
 determination, realization. A man enters the field of rationalized 
 research, not for the sake of the research, but for what the research is 
 capable of realizing. Definite self-realization is the goal of philos- 
 ophy; and a never-ending process of ratiocination realizes nothing. The 
 philosophers grow impatient. They ask what is this Knowledge they 
 seek so helplessly? In what is it contained? How may it be deter- 
 

 492 
 
 Philosophy 
 
 Pt. IV 
 
 mined? How realized? What means have they of distinguishing be- 
 tween knowledge and something other than knowledge? An endless 
 sea of glittering generalizations is all that Aristotle offers; but, what 
 means, they ask, have they of knowing whether these generalities, or 
 anything else for that matter, constitute true knowledge? How shall 
 they know that they know? What is the criterion of knowledge? To 
 what may it be referred? 
 
 The philosophers ponder; Aristotle had never paid any attention to 
 this question. He had assumed that rational generalizations based 
 upon systematic analysis of sense experience, constituted knowledge. 
 This assumption, however, simply leads through boundless seas of widen- 
 ing abstractions. The question arises how must knowledge be imder- 
 stood and determined. If knowledge does not exist, further speculation 
 is useless; if it does exist, where and how does it exist? An endlessly 
 self-perpetuating series of generalizations is certainly not knowledge in 
 its philosophic sense. What then is knowledge? What is the criterion 
 of Truth? 
 
 To refer this criterion with Aristotle to sense and reason is no longer 
 possible; this method has no end. Sense and reason combined merely 
 multiply the possibilities of abstract conceptions. The philosophers 
 have learned that the voyage of the Reason can last forever upon this 
 assumption and take them nowhere. What then is the criterion of 
 Truth? 
 
 This is a vital question; a critical position in every voyage of specu- 
 lative discovery. Men who take the trouble to man the Reason know 
 the course that lies in her wake. They will pay no attentioij to any 
 objective criterion of Knowledge, Truth, Reason or anything else; these 
 men have left the shoals of subjective opinion behind them. They them- 
 selves, therefore, must be able to grasp the criterion they seek, or it can 
 have no existence so far as they are concerned. These men begin to 
 realize that the human being is in possession of but three conceivable 
 modes of rational perception: Sense, Reason or their combination. 
 They have exhausted the possibilities of their combination with the 
 followers of Heraclitus and Aristotle. They thus begin to perceive that 
 the criterion of Truth must lie in sense or reason; not in their combina- 
 tion. It can lie in nothing else because there is apparently nothing else 
 within the rational content of the human consciousness. An endless sea 
 of generalities is of slight interest to the philosopher on reaching this 
 point. He is weary of the seas and wants to reach land; let it be where 
 
 Bk. IV 
 
 Attic Philosophy 
 
 493 
 
 it may. The nlame of the man who answers this important question h 
 Epicurus; the philosophers listen. 
 
 Section V — Epicurus 
 
 **Reason and sense combined," says Epicurus, "are taking us no- 
 where; they mean but a glassy sea of mental abstractions. The real 
 criterion of truth can never be found in this way; it must lie either in 
 reason or in sense; not in their combination. But we have already 
 exhausted the possibilities of metaphysical reason with Pythagoras, the 
 Eleatics, and Plato; and they developed nothing tangible. The definite 
 criterion of Truth and Reality, therefore, must lie in the perceptions and 
 affections of the senses. ^ For the senses are devoid of all reason and 
 incapable of receiving impressions from memory. They cannot cause 
 motion of themselves, nor increase nor diminish the impressions they 
 receive from external sources. They lie beyond control; for the similar 
 cannot judge the similar, being of equal value; nor the dissimilar, for they 
 possess different criteria; nor, in fact, can any sensation judge of an- 
 other, for they all influence us at the same time. The reason again can- 
 not judge of the senses; for all reason depends upon these. The truth 
 of the senses is established by the reality of their perceptions; for sight 
 and hearing are as real to us as pain. It follows from these considera- 
 tions that we should judge of the unknown by that which is evident— 
 that is, the perceptions of the senses. 
 
 "The criterion of Truth, then," says Epicurus, " is sense perception." 
 "Man," says Epicurus, "sees with his eyes and nothing else." Epi- 
 curus is at the helm and lays the course as follows :2 "The universe is 
 body, or matter; for that bodies exist the senses everywhere testify; 
 and, as previously pointed out, the senses should decide everything not 
 directly evident. Other\\dse if there were no such thing as what we call 
 the void, or empty space, there would be nothing in which bodies could be 
 contained, or across which they could move as we see them move in 
 reality. ... Of bodies, some are combinations and some the ele- 
 ments from which these combinations are formed. These last are 
 indivisible and unchangeable; otherwise all things would eventually be 
 resolved into non-existence. But these elements persist independently 
 of the flux and change of all combined bodies; they are complete in 
 themselves and thus offer no opportunity for natural dissolution. It 
 
 » LaSrtius X. 20, p. 262. 
 « Ibid. 24, pp. 263, 264. 
 
494 
 
 Philosophy 
 
 Pt. IV 
 
 a 
 
 >t 
 
 iM 
 
 iifi 
 
 follows necessarily, therefore, that the elements of things must be in- 
 divisible atoms. ... We must remember^ also that images 
 are produced simultaneously with perception; for images are con- 
 stantly being thrown off from the surfaces of bodies and as constantly 
 replaced." 
 
 The philosophers hear the grating of the keel of the Reason as she 
 strikes a shore at last. Epicurus has here discovered another island in 
 the philosophic seas; and the island is of the same geological forma- 
 tion as that of Diogenes and Democritus; but not the same island. 
 This island is larger and stronger than the others. It has been dis- 
 covered through the minds of Plato and Aristotle; and is the island of 
 sense perception as the ultimate criterion of all himaan knowledge; in a 
 imiverse of atoms, space, and motion, and nothing else. The philos- 
 ophers know that the Reason here ends her voyage; she will never sail 
 again. No speculative expedition can be fitted out on this island, it 
 contains no chart of the seas, and the star to the north leads nowhere. 
 The philosophers walk ashore and watch the Reason as she pounds to 
 pieces on the rocks. 
 
 Few figures in the history of thought have been so misimderstood 
 as Epicurus. His was a lucid intelligence. He perfectly understood 
 Plato and Aristotle, and knew that one could only paint pictures of 
 knowledge, and the other but offer an endless series of ever-receding hori- 
 zons. Epicurus was a true philosopher; he sought realization, not 
 abstractions; he wanted facts, not pictures; and he discovered the 
 great rockbound island of subjective sense perception as the only criterion 
 
 of Truth. 
 
 This is the end of the fifth voyage of speculative inquiry. The philos- 
 opher must either stay with Epicurus on this island of matter and sense 
 perception, or go back to the beginning and start once more. If he 
 stays here, he accepts a purely materialistic and mechanical conception 
 of man and the Universe. Epicurus reproduces the tfuaiq aXovo? of 
 Democritus. He does so, however, more convincingly, if possible, for 
 the reason that the Atomism of this period has been developed with 
 the experience of the greatest thought of the world behind it. Escape 
 from it is no longer possible through the subjective thought of Plato 
 and Aristotle. 
 
 The world, however, refused to accept the position of Epicurus and 
 began again; completing the fifth cycle of philosophic speculation. This 
 
 * Ibid., p. 365. 
 
 Bk. IV 
 
 Attic Philosophy 
 
 49S 
 
 cycle extends trom Socrates to Epicurus; from about the 80th Olympiad 
 (460 B. C.) to the final breaking up of Hellenic thought. 
 
 Section VI— Zeno, the Stoic 
 
 Another voyage of inquiry can evidently only follow Plato and 
 Aristotle. They took the Reason number five farther than any one 
 else; and, consequently, the Reason number six has but to follow in 
 her wake until in the neighbourhood of the Atomic rocks, and then 
 sail on a voyage of her own. 
 
 Here, then, the inevitable question is asked once more: What is 
 the criterion of Truth? Where is it found? "In sense," says one of 
 the philosophers. The rocks loom ahead, down goes the helm, and 
 the ship is saved. However this does not answer the question; and 
 the Reason number six is now drifting helplessly about in a shoreless 
 sea with rocks in the oflSng. 
 
 What is the criterion of Truth? It is obvious, at this point, that 
 the answer cannot be found in the abstract Reason of Plato, the combi- 
 nation of Sense and Reason of Aristotle nor in the pure Sense of Epicurus. 
 There is only one conceivable answer which will not reproduce the 
 exhausted possibHities of these positions. The Stoics gave the answer 
 and attempt to maintain it throughout a long process of by no means 
 mspirmg ratiocination, in which they are constantly reproducing dif- 
 ferent phases of long-exploited hypotheses. Laertius and Sextus present 
 this answer in its simplest form. The criterion of Truth, say the Stoics 
 IS found in what they caUed the Cataleptic Phantasm, or sensuous 
 apprehension.! This conception of knowledge they compared to 
 the unpress left upon wax by a seal;2 Knowledge, therefore, say the 
 btoics, IS the modification of the consciousness through sense perception 
 This conception of knowledge is tantamount to saying what was the 
 only possible thing to say at this juncture in inquiry; namely, that man 
 sees with his eyes and his reason at the same time. 
 
 This is the theory of knowledge of the founders of the Stoical school- 
 Zeno, Crysippus, Cleanthes, and others. Their thought reveals a 
 strong theological bias; these men are, properly speaking, out of place 
 m philosophy. They begin to differ among themselves as soon as 
 they attempt to develop their positions; and an analysis of ahnost 
 any of th ese shows them constantly reverting to the exhausted theories 
 
 > Sextus, Adv. Math. VH. 253. 
 •Lagrtius. VII. i, 35. 
 
 4 
 
496 
 
 PhUosophy 
 
 Pt. IV 
 
 Bk. IV 
 
 Attic Philosophy 
 
 497 
 
 of Plato and Aristotle in order to avoid Skepticism and the Atomism 
 of Epicurus. The Atomists attack them on one side; the Skeptics 
 on another; and the Stoics in their struggles are forever sUpping and 
 tripping over exploited hypothesis no longer possessing significance 
 in rational thought. The only position of philosophic interest presented 
 by the Stoics is this conception of knoweldge, or, the criterion of Truth, 
 as contained simultaneously in sense perception and rational appre- 
 hension: the instant they move from this position they begin to repeat 
 exhausted theories. Attention, therefore, may be concentrated upon 
 this one position of the Stoics, if progress is desired, for no other position 
 but Atomism interests the philosopher at this point. 
 
 Knowledge, then, say Zeno and Crysippus, is the modification of 
 the soul which occurs the instant it perceives anything; and this si- 
 multaneous physical and psychical apprehension, or catalepsis, is the 
 criterion of Truth. This is the way the Stoics steer the ship of Reason 
 away from the neighbourhood of the rocks of sense perception. This 
 position is mteresting and ingenious as the only conceivable theory of 
 knowledge not fully exploited. However a question arises. Why 
 should simultaneous sense perception and psychical apprehension 
 necessarily be any better criterion of Truth than these regarded, either 
 separately, or in any non-simultaneous combination? Why, if the 
 wine of external nature is poured mto the pure water of the soul, through 
 the perception of the senses, should their combination at the moment of 
 mmgling be any nearer reaUty than the wine alone, the water alone, or 
 their combination at any time other than that of their blending? More- 
 over, the wine modifies the water of the soul, as the seal the wax; but 
 is not the wine modified as weU, as far as the soul is concerned? The 
 water reddens with the wine. But does not the wine grow paler? What 
 reason then is there to regard this sensuous apprehension of the Stoics 
 as the criterion of ReaUty? To what may it be referred for justifi- 
 cation? If to sense, the rapidly forming currents sweep back to Atom- 
 ism, n to any phase of reason, either alone or combined with sense, 
 abandoned theories reappear. The philosophers state these considera- 
 tions to Zeno and ask him how, by means of his criterion of Truth, may 
 true and false impressions be distinguished. "This is very simple," 
 says Zeno, "we distinguish them by separating those impressions which 
 we perceive to be fallacious from others which we recognize as presenting 
 a real object as it really is." ^ 
 
 iSextus. Adv. Math. VII. 244; Laertius. VII. 36. 37: Zeller. Stoics and Epicureans, p. 86. 
 
 The philosophers are bewildered; however, they ask him hopefully 
 if he will explain what reason he has for believing that his criterion 
 itself is true — that is, capable of establishing a real thing as it really is. 
 Zeno says that this involves no difficulty; and explaios the process as 
 
 follows: 
 
 "This criterion is true for the following reasons: We possess within 
 us the power of judgment and assent, just as we possess the power of 
 willing; these impressions, which we call cataleptic, are those which, 
 through their irresistible nature, command the assent of the judgment. 
 These cataleptic impressions, consequently, are obviously true; for 
 the reason that they command the assent of the judgment. Our cri- 
 terion is true, therefore, because we believe it to be true; in other words, 
 it is true because — because it is true." And so on and on and on 
 throughout all the pages of Stoical ratiocination; which it is unessential 
 to develop at length. ^ 
 
 The philosophers perceive with regret that they must look elsewhere 
 for some one to lay the course of the ship; she is beginning to drift help- 
 lessly round in rings; or she finds herself sailing along famously for a 
 time through waters long since traversed in which she had never found 
 a port. 
 
 Section Vn — Pyrrho 
 
 One of the philosophers takes the helm from Zeno and begins — but 
 why go on? Any man who has ever sailed the philosophic seas knows 
 his reckoning to the fraction of a second at this point; he knows that 
 there is but one thing left for the human reason to do, and exactly 
 what that thing is. All that is needed is to open Sextus Empiricus 
 and re-read the passages cited with reference to Protagoras and Gorgias, 
 and it will be seen that the rational processes which applied at an earlier 
 period to the Nous of Anaxagoras, apply once more with mathematical 
 precision to the criterion of Truth of a later day. As Zeller^ points out, 
 there is an intellectual process through which the Reason must move 
 with reference to the subjective criterion of Truth, analogous to that 
 through which it moved with reference to the objective Nous, or Reason, 
 of Pre-Socratic thought. In other words, when the subjective prin- 
 ciple of Protagoras is applied to the objective Nous of Anaxagoras, it 
 
 * LaCrtius. Zeno. Sextus. Adv. Log. Vlll. 397. ' Cicero Acad. I., 11. Zeller, Stoics and Epicureans p. 89. 
 Lewes History of Philosophy, p. 288, et seq. 
 > Pre-Socratic Philosophy. Vol. II. , P.S40Z. Note z. 
 

 498 
 
 Philosophy 
 
 Pt. IV 
 
 
 
 It 
 
 becomes evident that there is no such thing; and that Reason, or Intel- 
 ligence, can be rationally conceived as individual, human opinion alone. 
 Now, this same subjective principle applied to the criterion of truth, 
 however conceived, whether as the generic, rationalized abstraction of 
 Plato, the experimental generalization of Aristotle, the sense perception 
 of Epicurus, the cataleptic apprehension of the Stoics, or these in any 
 combination, shows that there is no such thing as a criterion of truth; 
 and that all rationally conceivable truth must be resolvable once more 
 into the opinion of the individual human subject: in other words, into 
 an indefinite series of finite relations. 
 
 . And here it may be seen that subjective, Post-Socratic thought is 
 essentially nothing but a repetition of the processes of objective, Pre- 
 Socratic thought. Thales begins the first era with the question: What 
 is the objective world? Socrates begins the second era with the ques- 
 tion: What is the subjective worid? All the answers evolved in the 
 first era culminate in Atomism and Skepticism. In the second era 
 Plato reproduces the ultra-sensible ratiocination of the Eleatics, Aris- 
 totle reformulates the psycho-physical method of Anaxagoras, in a 
 subjective presentation of the objective Reason. Epicurus redevelops 
 the sense-perception of Democritus, which resolves itself once more 
 into Atomism, while the Skeptics repeat the subjective conceptions of 
 Gorgias and Protagoras. Post-Socratic thought is a repetition of 
 the rings of Pre-Socratic thought, devoted to subjective instead of 
 to objective analysis, and culminates in identically the same positions — 
 Atomism and Skepticism. 
 
 The rational mind at this point in inquiry has no resource but to 
 begin to repeat the mental processes akeady developed by the Sophists: 
 to recognize the fact that there is no criterion of truth, and that the 
 attitude known as the suspension of judgment is the only rational one. 
 
 Pyrrho dominates the only thought there is at this period of specula- 
 tion. He left no writings, but his position and that of his followers, the 
 later Skeptics, may be formulated from the pages of Sextus^ andLaertius.* 
 
 The Five Skeptical Modes of Doubt, or Suspension of Judgment. 
 
 L Contradiction II. Progression to Infinity. III. The Criss- 
 CrosSy or Vicious Circle. IV. Hypothesis. V. Relativity. 
 
 I. Co ntradiction. The fact that different contradictory opinions 
 
 « Pyrrh. Hypot. 1. 164. 
 * IX. 2. xa 
 
 Bk. IV 
 
 Attic Philosophy 
 
 499 
 
 are everywhere found, both in conventional life and philosophic thought, 
 naturally leads to Doubt, or suspension of judgment. If certain opinions 
 among these contraries are selected as true, the validity of the choice 
 must be demonstrated, and the second mode of suspension appears. 
 
 n. Progression to Infinity. Every proof offered in demonstration 
 of an opinion requires demonstration itself or remains without value 
 as proof. Thus every proof urged requires another proof, which must 
 lead to an endless series or culminate in a position without support; 
 that is, in the suspension of judgment. The dogmatist may attempt 
 to avoid the progression to infinity by means of demonstrating the 
 rational by the sensible, or vice- versa; in this case, we meet the third 
 mode of suspension. 
 
 III. The CrisS'CrosSj or Vicious Circle. The dogmatist who proves 
 a mental conception by means of an appeal to the evidence of the senses 
 must next proceed to demonstrate the validity of the sense impression. 
 If he does this by means of a proof derived from sense, he falls into the 
 endless progression. If he demonstrates it by means of another mental 
 conception, he begins to move in a circle, or to demonstrate by means 
 of that which requires demonstration. The dogmatist may then assume 
 the existence of an established or universal truth; that is, one which 
 requires no demonstration. In this case we meet the fourth mode of 
 suspension. 
 
 IV. Hypothesis. The assumption, as a means of demonstration, 
 of an undemonstrated hypothesis is rationally imtenable; for that 
 position to which all others are to be referred is in peculiar need of 
 support. But although such an assumption is admitted, it is obviously 
 without application as a means of demonstration; for it may be balanced 
 with an opposed hypothetical assumption of identical value; posited 
 through the same right of arbitrary adoption. The dogmatist may 
 then present the only remaining position. He may choose to regard 
 his hypothetical assumption as self-evident, and decline either to sup- 
 port it with other evidence or to admit the possibility of an opposed 
 hypothesis. Dogma can go no farther; this is its last resource. This 
 case, where demonstration and the possibility of contradiction are 
 denied, presents the fifth mode of suspension. 
 
 V. Relativity.. Every mental conception can exist but in relation 
 to sensible objects or to other mental conceptions. Every impression 
 derived through the senses can exist alone in relation to object or sub- 
 ject. Independently of such relations neither mental conception nor 
 
Soo 
 
 Philosophy 
 
 Pt. IV 
 
 Bk. IV 
 
 Attic Philosophy 
 
 SOI 
 
 \\i 
 
 '^ 
 
 
 sense impression is conceivable or capable of being perceived; for their 
 conception or perception implies a subject and an object; that is, a 
 relation. The result is that every position adopted, whether sensible 
 or intelligible, must imply a relation to something else, and, consequently, 
 take its place in a series of relations in which the independently and 
 arbitrarily absolute can play no part; no criterion of truth is therefore 
 p>ossible. 
 
 The essentials of scientific Doubt might be reduced to the two follow- 
 ing positions. The human subject has but two means of coming in 
 contact with that which is external to it, in other words, of knowing 
 an object; these are Sense and Reason. An object must be known either 
 through itself or through others. It is impossible to know an object 
 through itself; for objects make different impressions upon different 
 subjects; and Sense and Reason contradict each other. Nor can one 
 know an object through any other; for all demonstration can but lead 
 to an infinite series of generalizations or sense impressions; to the criss- 
 cross of indefinitely proving one by the other, or to the vicious circle 
 of proving one by another of the same kind. With the elimination 
 of these, all demonstration but leads to an imdemonstrated arbitrary 
 hypothesis. Thus every criterion of truth is impossible. If admitted 
 without demonstration, the hypothetical or relative is presented; if 
 demonstration is attempted, an infinite series of generalizations is 
 entered. 
 
 The Skeptics are thinking men of intelligence, familiar with all the 
 intricacies of earlier thought. They have atomized with Democritus, 
 sophisticized with Protagoras, greeted the eager, earnest Socrates as 
 the rising sim of a new day. They have embarked with Plato, done 
 what they could to find the "Good" and the "True" without success; 
 they have worked with Aristotle, only to find themselves adrift on a 
 shoreless sea. They have visited the island of Epicurus; and, had it 
 been satisfactory, they would have stayed there. They began over again, 
 and did what they could with Zeno only to find it in vain. Knowledge 
 and truth, they are compelled to admit, are but will-o'-the-wisps which 
 vanish as they are approached; but rainbows which human mind and 
 human hand may never seize. This is rational, scientific Skeptidsm: 
 the island of quicksands upon which consistent intellects are driven in 
 their efforts to find the Truth. The whole history of thought lies before 
 them; they have investigated every hope, exhausted every hypothesis, 
 
 and the impossibility of man's ever attaining to rational, self-realiza- 
 tion of the Absolute is the only conclusion they find. The Reason 
 number six is now aground upon a floating island of shoals and quick- 
 sands, and the philosophers know that she will never get off; for the 
 Reason has sprung a leak. 
 
 The discovery of this island ends the sixth voyage of speculative 
 inquiry and the Reason number six is falling quietly to pieces with 
 Pyrrho in the stem gazing vacantly into space. If the Pyrrhonists 
 are asked to define their position, they say that they are able to define 
 nothing; but add that they do not present even this observation in 
 any sense as a definition. 
 
 Gorgias and Protagoras said the same thing two hundred years before. 
 
 " Man," says Pyrrho, "can see neither with his eyes nor with his reason, 
 nor with any combination of eyes and reason. Man," says Pyrrho, 
 "is blind." This is the end of Greek philosophy. 
 
Bk. IV 
 
 Mysticism 
 
 503 
 
 !l 
 
 7 • ?: 
 
 CHAPTER m 
 
 MYSTICISM 
 
 Section I — The Alexandrians, Section II — FaUh. 
 
 Section I — The Alexandrians 
 
 THE philosopher is discouraged; his quest seems futile. Hope 
 but lures him ever on the rocks of Atomism or leaves him 
 on the shoals of doubt and ignorance. He hears of another 
 expedition fitting out for a voyage of inquiry and thinks he 
 may as well see what it is. He goes back to the starting-point, and 
 completes the sixth cycle of philosophic thought. 
 
 Plotinus is at the helm of the new speculative vessel. The philos- 
 opher asks the name of his craft. Plotinus knows, if he calls her the 
 Reason, that the philosopher will decline to embark; the philosopher 
 of this period has exhausted the speculative possibilities of reason. 
 
 "The name of my craft," says Plotinus, "is the Ecstasy." There 
 was nothing else to say. 
 
 The philosopher looks her over. The Ecstasy is evidently built 
 for speed rather than a long cruise in all weathers. Her sail area is 
 large, and the philosopher is afraid to ask her draught and what ballast 
 she carries. However she is the only thing afloat at present; and the 
 philosopher thinks he may as well start in any event as go back to 
 the rocks and the shoals. Plotinus^ lays the course. 
 
 "The intellect itself, entirely independent of either sense or reason, 
 is the ultimate Reality, or constitutes true Being. Intellect, therefore, 
 is truly the subject's perception of those things which do not lie outside 
 of the intellect itself, the objects of its perceptions being not external 
 to itself. The intellect, on the contrary, establishes its own laws and 
 conditions, or rather is itself the law of its own existence. It is conse- 
 quently correct to say that intellectual perception and true Being are 
 identical; for the knowledge of things independently of matter is the 
 same as t he knowledge of the things in themselves." 
 
 » Plotinus Enn. V. ix. s . p. 252. 
 
 502 
 
 The philosopher ponders — this is strange, suggestive, new. The 
 Ecstasy is evidently fast, very fast; she clears the rocks and the shoals 
 in a moment and is out in deep water with a bound. The philosopher 
 asks for a little further enlightenment, which Plotinus^ supplies as 
 follows: 
 
 "If in the perceiver the things perceived are contained; if, indeed, they 
 are impressions of the things seen, he will not contain the things them- 
 selves. But if he possesses the things themselves, he does not see them 
 through dividing himself (into the perceiver and the thing perceived); 
 but prior to the division of himself, he both beheld and possessed them. 
 If, however, this be the case, it is necessary that contemplation should 
 be the same with the object of contemplation, and intellect the same 
 with the intelligible. For if it is not the same, there will not be truth. 
 For unless this is admitted, he who is said to possess beings will only 
 possess an impression different from beings, which is not truth. For 
 truth ought not to be of another thing, but that which it says, that also 
 it should be. Thus, therefore, intellect, the intelligible, and being are 
 one; and this is the first being, and the first intellect possessing beings, 
 or, rather, it is the same with beings. If, however, intelligence and the 
 intelligible are one, how on this account does that which is intellective 
 intellectually perceive itself? For intelligence, indeed, as it were, com- 
 prehends the intelligible, or is the same with it. Intellect, however, 
 which intellectually perceives itself, is not yet manifest. But intelli- 
 gence and the intelligible are the same; for the intelligible is a certain 
 energy, since it is neither power, nor void of life, nor again is its life 
 adventitious, nor its intellection in something different from itself, as 
 in a stone, or a certain inanimate thing, and it is also the first essence. 
 If, therefore, it is energy, and the first energy, intelligence likewise will 
 be most beautiful and will be essential intelligence. For intelligence 
 of this kind is most true, it is the first and subsists primarily, and will 
 therefore, be the first intellect. For this intellect is not in capacity, 
 nor is this one thing, but intelligence another; since thus again, the 
 essential of it would be in capacity. If, therefore, it is energy, and the 
 essence of it is energy, it will be one and the same with energy. Since, 
 however, being and the intelligible are one and the same with energy, 
 all will be at the same time one, viz., intellect, intelligence, and the 
 intelligible. If therefore, the intelligence of it is the intelligible, but 
 it is the intelligible, hence it wiQ itself intellectually perceive itself. 
 
 * Fhtintu on Gnostic Hypostases (V. iii). Translation by Taylor, ScUri Works of Ploiinus, p. 2O5. 
 
 li 
 
S04 
 
 Philosophy 
 
 Pt. IV 
 
 I 
 
 !i 
 
 
 For it will perceive itself by inteUigence, which it is, and will under- 
 stand the intelligible, which also it is. According to each of these, 
 therefore, it will intellectually perceive itself, both so far as it is intel- 
 ligence, and so far as it is the intelligible, and will understand by intel- 
 ligence what it is." 
 
 The foregoing passage is typical of the voyage of the Ecstasy. As 
 Erdmanni says, speaking of Plotinus, His incapacity for consistent, 
 logical thought grows more and more evident as the Ecstasy proceeds; 
 suffice it to say that the helm passes to Proclus, who lays the course 
 as follows. As Lewes2 well says, "Listen." 
 
 "Mercury, the Messenger of Jove, reveals to us Jove's paternal 
 wiU, and thus teaches us science; and, as the author of all investigation 
 transmits to us, his disciples, the genius of invention. The Science which 
 descends into the soul from above is more perfect than any science 
 obtained by investigation; that which is excited in us by other men is 
 far less perfect. Invention is the energy of the soul. The Science which 
 descends from above fills the soul with the influence of the higher Causes. 
 The gods announce it to us by their presence, and by illuminations, and 
 discover to us the order of the universe." 
 
 These then are the knowledge and its sources of the Alexandrian 
 mystics. These remarks of Proclus are the funeral oration of Philos- 
 ophy. Proclus rechristens the '* Ecstasy," the "Frenzy" and steers 
 her straight for the cloud banks of Mysticism into which she disappears. 
 The philosopher knows that further inquiry is useless, and starts 
 back to the rocks and the quicksands. On the way the winds blow him 
 on an unfamiliar shore. 
 
 Section n — Faith 
 
 A group of hospitable inhabitants helps him to land. The sturdy, 
 earnest Augustine, the cultured Clement, Cyril, Justin, Athenagoras^ 
 and the graceful Lactantius. Lactantius* tells him that all philosophy 
 is but self-destructive fatuity, leading to nothing but its own negation; 
 that human weakness and frailty must always render its attempts 
 futile. But, he adds, that not even pure Skepticism will prevail, for 
 it is impossible that absolutely nothing should be known. 
 
 To a philosopher who has drifted through every speculative ring 
 which th ought has developed up to this point, but to find himself reduced 
 
 > History of Philosophy . Vol. i„ p. 341. 
 
 « Biographical History of Philosophy, p. 335. Translation by Lcwe«, 
 
 • Divin. Inst. IIL 4, p. 155. 
 
 Bk. IV 
 
 Mysticism 
 
 505 
 
 to Atomism and Skepticism as their only results, this idea of Lactantius 
 is not without interest. No one can be more convinced of the vanity 
 of philosophy than the rational thinker of this period; no one more 
 willing to admit the inanity of the action of the speculative himian 
 intelligence, than the man who has watched the Reason drift round the 
 subjects of Atomism and Skepticism for himdreds of years but to fall 
 into them again and again as moths that flutter round a flame. 
 
 The philosopher asks a few questions. He is told that he is on the 
 island of Faith, and receives lengthy and detailed explanations upon 
 all questions. The philosopher is delighted; he thinks he has found a 
 haven at last, and proceeds into the interior. On the way he meets 
 another body of men; a few questions have suggested themselves. He 
 asks if they will explain. They do so with great amiability, volu- 
 bility, and in endless detail; but the philosopher notes that their ex- 
 planations differ from those received. He ponders and proceeds. He 
 meets another bcdy of men; their replies again differ from those re- 
 ceived before. He asks why this should be. He is told that they, 
 the speakers, alone are in possession of the "true faith"; and that the 
 other sources of information can offer no safe guidance. A thought 
 of the quicksands of subjective faith crosses the mind of the philosopher. 
 
 The philosopher asks for a little enlightenment upon the question 
 why they, the speakers, should alone be in possession of the only ''true 
 faith." He is referred to the authorities; the authorities refer to the 
 books. The philosopher reads the books; all the books; for he knows 
 that the finite mind, in a land of faith or snywheTe else, moves but 
 through a series of relations, and consequently it is impossible to know 
 one book unless one knows all the books. After the philosopher has 
 read the books, he asks the authorities for further enlightenment with 
 reference to the origin of the information contained. The authorities 
 tell him that they have been inspired by divine revelation. The philos- 
 opher asks if they are all inspired. The authorities scout the idea. 
 He asks which one is inspired, and each authority points to a different 
 book. "This book alone," they say, "is really inspired; all others are 
 but error and delusion." The philosopher ponders. 
 
 He asks the authorities, if any given book is inspired, why the other 
 books should not be derived from the same source. To the philosopher 
 this question seems worth a moment's attention for the following reasons. 
 These books seem to him made up of two portions: One, consisting of 
 national or racial myth, legend, and poetic imagery; another, consisting 
 
5o6 
 
 Philosophy 
 
 Pt. IV 
 
 
 of pure thought moving independently of sense and reason about the 
 most important problems of existence. 
 
 The first portion of these books when examined reveals varying phases 
 of an evolutionary development revolving for the most part round a 
 limited number of fixed conceptions such as: creations, golden ages, 
 falls of man, deluges, confusions of tongues, original sins, annunciations, 
 virgin births, incarnations, temptations, redemptions, descents into 
 the infernal regions, powers of darkness, spirits of evil, atonements, 
 sacrifices, mystical symbols, and so on and so on. These conceptions, 
 when imbedded in any formal system of faith, seem chiefly the result 
 of a process of selection or rejection in harmony with the national mental 
 or political peculiarities of any given people or ecclesiastical hierarchy. 
 They may thus gradually become crystallized in a rigid and exclusive 
 body of ritualistic dogma, regarding all other'* faith" as the creation of 
 the spirits of outer darkness. These systems then often begin to repeat 
 themselves, and while reproducing at times identically the same hier- 
 archical or ritualistic phenomena, may regard each other as the incar- 
 nation of the Evil One. They may even try to "convert" each other 
 to practically identical dogmas in which only linguistic distinctions may 
 be found; or again, they may formulate rigid ritualistic distinctions; 
 and, while regarding each other as anathema, they may simply be 
 reproducing or reversing dogmatic processes which had already been 
 going on in other lands and other tongues for hundreds or thousands 
 of years. ^ 
 
 This portion therefore of the books, to the philosopher, seems traceable 
 to a purely human process of development, and their agreement or 
 disagreement a matter of local or historical interest. By means of 
 eliminating this mass of acamaulation, however, a definite body of material 
 is found within the books, presenting a different kind of interest and 
 devoted to the fundamental problems of existence. 
 
 When this portion of the books is submitted to a process of compar- 
 ative analysis, most of the books of the land of Faith all say very 
 much the same things; about very much the same subjects in 
 very much the same way; and, when translated into any single tongue, 
 in very much the same words. It seems to the philosopher, therefore, 
 that they might well be regarded as evolved from very much the same 
 source. In other words, it seems that the great bulk of the distinctions 
 and differences of the various systems of the land of Faith is due to 
 
 1 For references Cf . p. 363. 
 
 Bk. IV 
 
 Mysticism 
 
 S07 
 
 the interpretations and elucidations of the authorities, and not to the 
 original sources; and that even those supposedly vastiy important dif- 
 ferences and distinctions do littie but present an endless process of repeti- 
 tion; revolving round certain fixed conceptions common to nearly 
 all the systems of faith. However, when the sources of the various 
 systems of faith are studied, certain differences and distinctions are 
 apparent, which may be regarded as possessing vast cosmic importance 
 or as of not the slightest significance; in accordance with the intellectual 
 constitution of the observer. And here another thought crosses the 
 mind of the philosopher. If these differences of the land of Faith 
 are regarded as of vast import, and, consequently, this one or that 
 is held with unapproachable tenacity, the following considerations are 
 suggested. 
 
 1. The good ship Reason has long shice been wrecked on a foreign 
 shore; she is pounding to pieces on the rocks of Atomism or sinking into 
 the quicksands of relative subjectivity with Pyrrho and the Skeptics. 
 Faith is the guiding light at present; opinions are derived from inspired 
 sources; and consequently, possess no rational foundations within the 
 human mind. If opinions are based upon reason, they cease to be 
 faith and require no inspired support. Different faiths, therefore, 
 cannot be rationally subjected to rational distinctions: to reason for 
 or against a faith is as much an anomaly as to attempt the demonstra- 
 tion of a geometrical problem with a burst of impassioned oratory, or 
 a flood of tears. 
 
 2. Every individual, therefore, in the land of Faith will have a 
 rational right to adopt whatever faith may seem best, without being 
 subject to any rational criticism of any kind; for, faith, is beyond the 
 reach of reason. All ratiocination, therefore, all expenditure of polem- 
 ical and apologetic energy with reference to distinctions in faith may 
 seem not distantiy removed from the wisdom of the serpent which chases 
 its own tail and by no means unlikely to lead to equally profitable results. 
 
 3. The thought, therefore, occurs to the philosopher, if any given 
 book is inspired from sources other than human, that there seems no 
 tenable reason why they should not all be inspired; especially, when 
 regarded independently of the ecclesiastical authorities, as they all 
 say very much the same thing, or can be interpreted as desired. Thus 
 it seems that each book, whether inspired or not, is the best source 
 of cosmical information for any one choosing to have faith in it; and that 
 any given faith can scarcely rationally claim superiority over any other; 
 
 iil 
 
5o8 
 
 Philosophy 
 
 Pt. IV 
 
 1': 
 
 for faith in order to be faith must be based upon something other than 
 reason. 
 
 The philosopher presents a few of these considerations to the authori- 
 ties. The authorities scout the ideas; they alone, they say, that is 
 each particular authority, is in the sole possession of the Truth; the 
 one and only divine revelation; the one and only monopolistic exploita- 
 tion of the Divinity. To the poor philosopher it seems neither a very 
 inspiring nor very worshipful Divinity who would reveal Himself to 
 but a small portion of his creatures to the exclusion of all others. He 
 begs the authorities for a little enlightenment on this question. The 
 authorities point to more authorities, and when these apparently fail to 
 answer the question, they grow impatient and point to the rack, the 
 gibbet, and the stake. These are the ultimate authorities of the period 
 on the island of Faith; the final criteria of Truth for which the poor 
 philosopher had sought so long and earnestly. He has little choice; 
 he patches up a truce with the authorities or he goes to his death like 
 a man with the thought of Socrates to console him, and a sigh for the 
 days of the cruise of the good ship Reason. 
 
 In any event, and whatever happens, the philosopher dies; philosophy 
 dies; and their ashes blend and are swept into space with the breath of 
 the four winds of heaven. 
 
 CHAPTER IV 
 
 MODERN PHILOSOPHY 
 
 A STUD Y of Hellenic thought presents a chart of the speculative 
 seas of antiquity. The Alexandrians develop nothing but 
 mysticism, and lose themselves in a mysterious theological 
 metaphysics. Roman thought has no independent existence. 
 Lucretius and Cicero, with the lesser lights of the Latin world, restate 
 Greek problems and Greek solutions. As thought begins with the naive, 
 wondering inquiry of Thales, and ends with the hopeless, disillusioned 
 doubt of Pyrrho, it reveals the elements of all ancient speculation. Six 
 times has the human Reason started upon its quest for Truth, and six 
 times has it been reduced to a purely mechanical and materialistic con- 
 ception of the universe on one side; or to a purely idealistic subjectivity 
 on another. Each time it has been with greater force, and the wreck of 
 Reason proportionate. The increasing knowledge of succeeding ages 
 has but rendered the rocks more formidable and the shoals more shallow 
 and desolate. Independently of these rocks and shoals the Reason has no 
 refuge; it but drifts round in rings from one to the other of these, 
 starting ever afresh only to be wrecked again and again as before. 
 
 This seems to be the law governing ancient speculation. It now re- 
 mains to discover the relation of this law to modern speculation. In 
 order to do this it is necessary to present a brief examination of modern 
 thought as a whole. Its movement and results may then be compared 
 with those of the thought of the past. The present study is not a history 
 of philosophy, it is an attempt to determine, if possible, the laws govern- 
 ing the action of the speculative intellect. For the sake of brevity, there- 
 fore, the voyage through the modem philosophic seas will be but one of 
 verification, not of discovery. It will, consequently, not be necessary 
 to trace the development of each movement of thought; the culminating 
 point of each is all that is required. A thousand volumes lie open through 
 which these movements may be traced in detail; results alone are here 
 sought. The voyage of discovery may be undertaken by means of 
 reference to the works of the original thinkers or with the aid of a philo- 
 sophic historian, such as Erdmann, Lewes, or any of the abler writers on 
 
 509 
 
Sio 
 
 Philosophy 
 
 Pt. IV 
 
 Bk. IV 
 
 Modem Philosophy 
 
 S" 
 
 ! 
 
 i 
 
 
 the subject. Lewes is here chiefly cited on account of his ability in the 
 analysis and expression of philosophic thought in lucid English. 
 
 A study of the efforts of the human Reason through another period of 
 inquiry meets the Middle Ages with an arid waste of ecclesiastical 
 authority and mediaeval scholasticism: no more desolate picture is con- 
 ceivable to a philosopher. The Dark Ages, dominated by ignorant 
 mysrico-theological dogma, interpretation, and Aristotelian quibblings, 
 stretch away in every direction; nothing else can be seen: the Reason 
 has no existence. The desert stretches over more than a thousand years 
 from the days of the great Athenians; neariy half a hundred of the 
 generations of men have been swept by the looms of life, as it were, for a 
 moment into being and back again into the night; without a gleam of 
 rational intelligence to lead them on their way. 
 
 A dull and feeble spark begins to glow in the fog and the desert, toward 
 the close of the eleventh century, and Abelard " 'transgressed^ the limits 
 of his forefathers' by the composition of the treatise Sic et Non, the object 
 of which was to cite the passages of Scripture and the Fathers, pro and 
 con upon every important topic: this collocation of contradictory state- 
 ments given by the highest possible authorities was meant, as Abelard 
 distinctly informs us, to train the mind to vigorous and healthy doubt, in 
 fulfilment of the injimction, 'seek, and ye shall find; knock, and it shall 
 be opened unto you.' . . . Whatever his intention may have been, 
 the result of such a work was clearly foreseen by theological teachers, who 
 regarded doubt as danmable, and would not tolerate it imder the plausi- 
 ble aspects of intellectual gynmastics, or the love of seeking for truth. 
 But theologians were unable to arrest the development of speculation. 
 Doubt began; disputation waxed stronger; logic played like lambent 
 flame around the most sacred subjects; Scholasticism entered every 
 city in Eiu-ope, and filled it with subtle disputants." 
 
 No better description of Scholasticism can be foimd than that of 
 Tyndall:^ "As a traveller without a compass in a fog may wander long, 
 imagining he is making way, and find himself after hours of toil at his 
 starting-point, so the schoolmen, having 'tied and untied the same knots, 
 and formed and dissipated the same clouds,' found themselves at the end 
 of centuries in their old position." 
 
 The leaven begins to work, however; the spark of Reason to glow; 
 itjflickers and flutters here and there imtil stamped out by the author- 
 
 » Lewes' History of Philosophy, p. 360. 
 • Fragments of Science Vol. II., p. 147. 
 
 ities in the fulness of their wisdom, as soon as it sheds any light. But 
 Roger Bacon lives and labours for the truth in England, and spends a 
 portion of his life in prison in consequence; Copernicus and Galileo are 
 born; the first is ridiculed after his death, the second compelled to re- 
 tract his discoveries. The spark of Reason falters here and there with 
 the little known names of the Middle Ages and the Revival of Learning, 
 imtil it bursts into reality as the flame flashes round a stake on the 
 Campo dei Fiori at Rome, and licks up all that is mortal of Giordano 
 Bruno. 
 
 But the flame is at work in other directions. It is stamped out in one 
 place but to start anew elsewhere. Another great man bearing the name 
 of Bacon appears; he formulates a more thorough system of knowledge 
 and method of inquiry; he is known as the father of experimental philos- 
 ophy. About the same time, another man begins to "inquire, to won- 
 der, and to doubt." The Cartesian method is conceived. The world 
 moves on. Another thinker seizes the torch. 
 
 "The only novelty in Spinoza's Method," says Lewes,^ "is that it is a 
 further development of the Method of Descartes. Descartes thought 
 that the Mathematical Method was capable of being applied to meta- 
 physics, but he did not apply it; Spinoza did apply it. This may seem a 
 trifling addition : in reality it was the source of all the differences between 
 Spinoza and his teacher. Descartes' principles will inevitably lead to 
 Spinoza's system, if those principles are rigorously carried out. But 
 Descartes never attempted the rigorous deduction of those consequences, 
 which Spinoza, using the mathematical method, calmly and inflexibly 
 deduced. Those who rebel at the conclusions drawn must impugn the 
 premises from which they are drawn; for the system of Spinoza is neither 
 more nor less than a demonstration." 
 
 Lewes presents a clear analysis of both method and demonstration. 
 The following is his conclusion :^ "We have witnessed the mathematical 
 rigour with which it is developed; we have followed him step by step, 
 dragged onward by his irresistible logic; and yet the final impression 
 left on our minds is that the system has a logical but not a vital truth. 
 We shrink back from the consequences whither it so irresistibly leads us; 
 we gaze over the abyss to the edge of which we have been dragged, and 
 seeing nought but chaos and despair, we refuse to build our temples 
 there. We retrace our steps with hurried earnestness, to see if no false 
 
 * Ibid., p. 472. 
 
 • Ibid., p. 485. 
 
 I 
 
II 
 
 I 
 
 It 
 
 512 
 
 Philosophy 
 
 Pt. IV 
 
 route has been taken; we examine every one of his positions, to see i| 
 there be not some secret error, parent of aU other errors. Arrived at the 
 starting-point, we are forced to confess that we see no error — that each 
 conclusion is but the development of antecedent positions; and yet, in 
 spite of this, the mind refuses to accept the conclusions." 
 
 The student of Hellenic thought knows what has happened when 
 Spinoza appears in modem speculation. The human reason has struck 
 the Atomic rocks once more; they may be given different names; mov- 
 ing matter may be called substance with a large S, or even God, why 
 not? The real philosopher is interested in things, not in names, and 
 he knows that he here finds another rationally demonstrated island 
 rising out of the seas of speculation, of identically the same geological 
 formation as those of Diogenes, of Appolonia, Democritus, and Epicurus. 
 The island has another name — that is the only difference. "The 
 adequate ideas, as component parts of the inkUectus infinitus" says 
 Erdmann,! "are eternal; only the fragments of them pass away. Ac- 
 cordingly the greater the number of adequate ideas which go to make 
 up a man's mind — which in turn will depend upon the perfection 
 with which his body is organized — the larger will be the part of him 
 that is eternal, the less reason will he have to be afraid of death. (Those 
 who find in these last sentences a personal God, personal immortality, 
 and ever so much besides, must not forget that, according to Spinoza's 
 express declaration, God has neither understanding nor will." A god 
 without imderstanding or will presents once more the long familiar 
 96(ji<; 5X070? of Democritus. 
 
 Spinoza seems to have been, like Democritus and Epicurus, a great 
 and good man with a mathematically accurate intelligence, and when a 
 perfectly rational intelligence develops a system of cosmological inquiry, 
 it moves with mathematical precision to Greek conceptions of the 
 phenomenal world. Yet, if Spinozism is not accepted at this juncture, 
 what resource remains? The Cartesian hypothesis and method 
 leads to the system of Spinoza as their inevitable result. If the 
 Cartesian method is rejected, the mind has no starting-point in this 
 line of inquiry. It is, therefore, at this point in modem thought 
 reduced to Spinozism or an inarticulate Skepticism. All the phe- 
 nomena of Hellenic thought here begin to repeat themselves. This 
 is the first crisis in modem speculation. The reason has no escape; 
 it must accept Spinozism or reject the foimdations upon which tlr- 
 
 Erdmann History 0/ PkUosopky. VoL H.. p. 87. 
 
 Bk. IV 
 
 Modem Philosophy 
 
 S13 
 
 only rational thought of the period was built — Rings, Atomism, 
 and Skepticism again. 
 
 "The doctrine of Spinoza," says Lewes,* "was of great importance, 
 if only because it brought about the first crisis in modern Philosophy. 
 His doctrine was so clearly stated, and so rigorously deduced from admit- 
 ted premises, that he brought philosophy into their dilemma. 
 
 "Either my premises are correct, and we must admit that every clear 
 and distmct idea is absolutely tme; tme, not only subjectively, but 
 objectively; — If so, my system is tme: 
 
 "Or my premises are false; the voice of Consciousness is not the 
 voice of truth; and if so, then my system is false, but all Philosophy 
 is impossible: since the only ground of Certitude — our Consciousness 
 — is pronounced unstable, our only means of knowing the truth is 
 pronounced fallacious. 
 
 " Spinozism or Skepticism? Choose between them for you have no 
 other choice."' 
 
 Here is a complete crisis. The mind must go back and begin over 
 again with another method. If the mind, developing the Cartesian 
 method, culminates in Spinozism and refuses to accept his conclusions, 
 it must turn its attention to psychological investigation in order to 
 pronounce upon its own qualifications to deal with the fundamental 
 problems of existence. 
 
 Thought here begins again with two newly formed rings behind it. 
 The threads of the inductive experimental method of Bacon may be 
 taken up. Bacon was bom in the last half of the Sixteenth Century 
 (1561); Descartes toward the close of the same period (1596), Spinoza 
 in 1632. The Cartesian method exhausts itself within Spinoza, and 
 the rocks and shoals once more. In beginning again thought enters 
 the second period of modem philosophy. What are its results? After 
 two or three generations of scientific inquiry, each position formulated 
 leading, naturally and necessarily, into another, speculation again culmi- 
 nates with the leaders of eighteenth-century thought in France. The 
 following is from Erdmann :2 "Diderot's atheism comes out most openly 
 in the Interpretation de la Nature and in the Conversation with (TAlembert. 
 
 , , . Here he developes his theory (Buffon's) of living molecules, 
 the imion and separation of which produce the material transformation, 
 or life of the universe; here is found his reduction of all psychology to 
 
 A 
 
 » History of Philosophy, p. ^3. 
 History 0/ Philosophy, VoL II., pp. 164, 165. 
 
 '.J 
 
 II 
 
514 
 
 Philosophy 
 
 Pt. IV 
 
 ill I 
 
 li 
 
 ' 
 
 physiology of the nerves; here, too, his arguments against freedom and 
 inmiortality . . . here his gibes against those who assume the ex- 
 istence of a personal God, and do not believe that the great musical 
 instrument, we call the world, plays itself." 
 
 Here is the 6X1x1?) dvdYxiQ of Hellenic materialism. "It was," continues 
 Erdmann, "according to his own statement through Diderot, that the 
 physician, Julian OflFray de Lamettrie, was first encouraged to become an 
 author. His Histoire Naturelle de VAmey 1745 (certainly his most solid 
 work), along with a satirical piece of writing against his colleagues, 
 brought about his expulsion from France, as his I 'Homme Machine did 
 from Holland. He was then summoned to Berlin by Frederick the Great • 
 and there, in the capacity of Reader to the King, and — as Voltaire 
 
 wittilysaid— court-atheist, he composed a large number of works. . 
 In all of these he teaches the most thorough-going atheism and material- 
 ism, and calls religion the disturber of the peace, which keeps individuals 
 from enjoyment, and society from unity. A State of atheists pure and 
 simple would not merely be possible, as Bayle surmised; it would be 
 the happiest of all. What is called mind is a part of the body, namely 
 the brain, which, on account of its finer muscles, gives birth to finer 
 products than the extremities. When it ceases to be active, "/a 
 farce estjoueel" 
 
 The Attic philosopher would know his reckoning exactly at this 
 point; it is unnecessary to investigate farther. The reason is repeating 
 itself over and over again. The Attic philosopher, however, would 
 probably realize that this was only one phase of the results of the physio- 
 logical, experimental method; there is a corresponding idealistic Skep- 
 ticism due about this period, developed through investigation dealing 
 with the intellect rather than with matter. 
 
 The period is toward the close of the eighteenth century. The 
 inquirer goes back to the starting-point once more with Hobbs and 
 Locke; watches the good Bishop of Cloyne diverge into a purely idealistic 
 system, and predicts the result. The heirs of this line of inquiry are 
 Hume and Kant. 
 
 In the Inquiry Concerning Human Understanding^ is found: "The 
 most perfect philosophy of the natural kind only staves off our ignorance 
 a little longer: As perhaps the most perfect philosophy of the moral 
 or metaphysical kind serves only to discover larger portions of it. Thus 
 the obser vation of human blindness and weakness is the result of all 
 
 « Vol. n. Sect. IV. Part i.. p. 37. 
 
 Bk. IV 
 
 Modem Philosopty 
 
 515 
 
 philosophy, and meets us, at every turn, in spite of our endeavours to 
 
 elude or avoid it." 
 
 The Attic philosopher finds familiar shores again. He sees another 
 essay by the same author, entitled: The Skeftic^ "If we can de- 
 pend upon any principle, which we learn from philosophy, this, I think, 
 may be considered as certain and undoubted, that there is nothing, 
 in itself, valuable or despicable, desirable or hateful, beautiful or de- 
 formed; but that these attributes arise from the particular constitution 
 and fabric of human sentiment and affection." The Attic philosopher 
 seems to hear Protagoras say: Havcwv x^rii^i.'zm [/.eTpov i'vOp^xoc;. 
 
 Kant^ says in concluding the Critique of Pure Reason, that we have 
 to deal with but two questions in a canon of pure reason: "Is there a 
 God; is there a future life?" He continues: "But from these two 
 great objects, for the attainment of which all these efforts of pure rea- 
 son have been imdertaken, we remain as far removed as though our 
 labours had been declined at the outset. So far as knowledge is con- 
 cerned, this much at least is certain and established, that with reference 
 to these two questions, God and Immortality, knowledge can never be 
 ours I" Protagoras said precisely the same thing over two thousand 
 
 years ago. 
 
 The Attic thinker would be at home at this juncture in modem thought. 
 He would find speculation repeating the conclusions of his friends, 
 Epicurus and Pyrrho; one woiild be repeated by the Encyclopedists, 
 or the "court atheist" at Sans Souci, the other by the methodical philos- 
 opher of Konigsberg or the historian of England. A later age, later 
 demonstrations of identical conclusions; there would be no other dif- 
 ference. 
 
 Another series of rings and repetitions are formed as a result of the 
 inquiry of the second period of modem philosophy. Another crisis, and 
 another process of repetition begins; for Kant does not stop with the 
 *^Pure Reason'^ and the philosopher follows again with the ''Practical 
 Reason'' into the thick of the German metaphysics of the last century. 
 He drifts along for a time, but not without a troubled sense of being 
 teed into land-locked waters, bound by preconceived theological shores. 
 The rational thread of ideas grows more and more attenuated; and at 
 last snaps and vanishes. The philosopher is able to follow no longer and 
 is strangely reminded of the cruise of the "Ecstasy." 
 
 » Vol. I., p. ai6. 
 
 • Kfitik der Reinen Vernuft, pp. 579. sSo. 
 
 *f 
 
 I 
 
• I 
 
 K 
 
 
 i; i 
 
 Si6 
 
 Philosophy 
 
 Pt. IV 
 
 "Plotinus," says Lewes, ^ "shrank from no extravagances: where 
 Reason failed, there he called upon Faith. The Germans, coming 
 after the seciure establishment of Positive Science, fomid Philosophy 
 in a similar dilemma: either to declare itself incapable, or to proclaim 
 its despotism and infallibility: what Logic demonstrated must be ab- 
 solutely true. 
 
 "This faith in logic is remarkable, and may be contrasted with the 
 Alexandrian faith in Ecstasy. Of the possibility of human logic not 
 being the standard of truth, the Germans have no suspicion; they are 
 without the Greek skepticism as to the Criterium. . . . The history 
 of modern metaphysical philosophy is but the narrative of the same 
 struggles which agitated Greece. The same problems are revived, and 
 the same answers ofiFered." 
 
 Teutonic mystics and metaph)rsics seem to have been as powerless 
 as those of Alexandria to hold the attention of consistent thinkers. 
 Thus the labours of earlier modem speculation but culminate in thorough- 
 going Materialism and Skepticism, or fade away into thought lacking 
 the capacity of exact formulation. As says Sir Leslie Stephen,^ in his 
 essay on the Vanity of Philosophizing: "We cannot accept Descartes, 
 or Spinoza, or Leibutz, or Bacon, or Hobbs, or Locke, as giving satis- 
 factory or even coherent systems, or as having done more than lead to 
 the thorough skepticism of Hume. K Kant presented one solution of 
 the difficulties in which philosophy was landed, we have still to ask what 
 precisely Kant meant; whether his criticism was simply all-destructive, 
 or really left anything standing, and, if so, what it left standing; and 
 who represents the proper line of development? " 
 
 There seems nothing to be done at this point but to note the formation 
 of another series of rings; go back to the beginning and start again. 
 A few thinkers will be found attempting to establish a "psychological" 
 method; after a generation or two the present is reached. The fol- 
 lowing citation is from the pen of Professor Haeckel:' 
 
 "Pantheism regards God and the world as a unity. The idea of 
 God becomes identical with that of Nature or Substance. This Panthe- 
 istic view of the world is in sharp contrast to all forms of Theism. . . . 
 There always remains the fundamental distinction between the two, 
 that in Theism, God is contrasted with Nature as an extramundane being, 
 
 4 
 
 > History tf Philosophy, pp. 335, 338. 
 
 • Social Rights and Duties, Vol. 11., p. 188. 
 
 • Dia WeltrOthsel, p. 333, 333- 
 
 Bk. IV 
 
 Modem Philosophy 
 
 S17 
 
 creating and sustaining the world, and acting upon it from without; 
 while in Pantheism, God as an intramundane being is identified with 
 Nature itself and regarded as co-extensive with substance as force or 
 
 energy." 
 
 Haeckel traces the pantheistic conception of nature from Anaxam- 
 ander, through Democritus, Heraclitus, and Empedocles. He shows how 
 Lucretius repeats it in the Latin world. Bruno again in the sixteenth 
 century, Spinoza m a later age; eighteenth-century materialism is the 
 same thing over again and modem science repeats it once more to-day. 
 
 "Atheism," he continues, "recognizes no gods and goddesses if by 
 this is imderstood personal, extramundane beings. This 'godless world- 
 system' is but another expression of the Monism, or Pantheism, of 
 modern science presenting its negative aspect; the non-existence of an 
 extramundane or supernatural Divinity. In this sense Schopenhauer 
 has well said, 'Pantheism is but a polite atheism.' The tmth of Pan- 
 theism is the elimination of the dual antithesis between God and the 
 world, in recognizing that the world exists through itself and its own 
 forces. The Pantheistic maxim: God and the world are one, is but a 
 polite way of bidding the Almighty farewell." 
 
 The philosopher hears the ring of the consistent thought of the first 
 Diogenes, of Democritus, of the good Epicurus and much, as Haeckel says, 
 of Anaximander, Heraclitus, and Empedocles. It seems at times in 
 reading the Weltrathsd that the majestic Lucretius had dropped his own 
 long, rhythmic line and continued his exposition in modem prose. 
 Professor Haeckel presents the latter-day forms of the materialistic or 
 monistic conception of the imiverse. Atheistic monism or materialism 
 will not appeal to all minds; phases of rationalized Doubt should 
 appear on another side. 
 
 rp Huxley, as articulate an intelligence as the nineteenth century devel- 
 oped, rejects pvure materialism, and when asked to define his position 
 formulates^ that of "Agnosticism:" he says he knows nothing of the ulti- 
 mate problems of the universe. This then is the result of twenty-five 
 hundred years of speculation and the field may be reviewed. 
 
 In a study of Hellenic thought, it seemed that a law was foxmd govern- 
 ing the action of the philosophic intellect. This law showed, apparently, 
 that the development of every speculative hypothesis could have but 
 two results: one, leading through an analysis of the phenomena of matter 
 to a materialistic and mechanical interpretation of nature; another, 
 
 KSciena and Culture, pp. 347*248. Agnosticism, Science and Christian Tradition, p. aog. 
 
 "li 
 
 \4 
 
itl 
 
 Si8 
 
 Philosophy 
 
 Pt.IV 
 
 Bk. IV 
 
 Modem Philosophy 
 
 519 
 
 m 
 
 leading through an analysis of consciousness to a resolution of knowl- 
 edge into a series of subjective ideal relations. This seemed to be 
 the law controlling the action of the rational speculative intellect in 
 the best and clearest thought the world has developed; that of Greece. 
 Modem inquiry, examined in relation to this law, seemed to follow 
 exactly the same rings and results traceable in antiquity. If this law 
 has governed speculative investigation, it cannot have escaped the 
 attention of competent students; nor has it. 
 
 "There are two characteristics of Modem Philosophy," says Lewes, ^ 
 "which may here be briefly touched on. The first is the progressive de- 
 velopment of Science, which in ancient speculations occupied the sub- 
 ordinate rank, and which now occupies the highest. The second is 
 the reproduction in Philosophy of all the questions which agitated the 
 Greeks, which also pass through a similar course of development: not 
 only are the questions similar, but their evolutions are so. 
 
 "After the Eleatics had vexed the problems of Existence to no purpose, 
 there came Democritus, Anaxagoras, Plato, and Aristotle, who en- 
 deavored to settle the problems of the nature and origin of human knowl- 
 edge. So, in modem times, after Descartes and Spinoza, came Hobbes, 
 Locke, Leibnitz, Reid, and Kant. The ancient researches into the origin 
 of knowledge ended in the Skeptics, the Stoics, and the New Academy: 
 that is to say, in Skepticism, Conunon Sense, and Skepticism again. 
 The modem researches ended in Berkeley, Himie, Reid, and Kant: 
 That is, in Idealism, Skepticism, Conamon Sense, and Skepticism again. 
 These inquiries terminating thus fruitlessly, a new and desperate spring 
 was made in Alexandria: reason was given up for ecstasy; Philosophy 
 merged itself in Religion. In Germany a similar spectacle presents 
 itself: Schelling identified Philosophy with Religion. Thus has 
 Philosophy completed its circle, and we are left in this nineteenth 
 century precisely at the same poiat at which we were in the fifth." 
 
 The trenchant pen of Huxley * sunmiarizes the results of more than 
 two thousand years of the speculative labours of man. "Materialism 
 and Idealism; Theism and Atheism; the doctrine of the soul and its 
 mortality or immortality — appear in the history of philosophy like the 
 shades of Scandinavian heroes, etemally slaying one another and eternally 
 coming to life again in a metaphysical 'Nifelheim.' It is getting on 
 for twenty-five centuries, at least, since mankind began seriously to 
 
 * History of Philosophy, p. 788. 
 *S(ience and ChrisdaH Tradition, p. 312. 
 
 give their minds to these topics. Generation after generation, philos- 
 ophy has been doomed to roll the stone uphill; and, just as all the world 
 swore it was at the top, down it has rolled to the bottom again. All 
 this is written in innumerable books; and he who will toil through them 
 will discover that the stone is just where it was when the work began." 
 
 Is any other result probable? Reason, in ultimate analysis, must be 
 the inclusion of a fact withm a fact of wider significance. It can only 
 begin with the recognition of a tmth, and continue through the refer- 
 ence of this tmth to another of more general application. This done, 
 the process must continue indefinitely or reach the inexplicable; that is, 
 cease to be reason. This position is unaffected if the deductive, in 
 place of the inductive, process is contemplated. The question then 
 resolves itself mto one dealing with the sources of the basis of the de- 
 duction. If this basis is derived from experience, the method just 
 mentioned is that upon which this basis itself must repose. If derived 
 from something other than experience, its source remains to be deter- 
 mined; and when the rational mind attempts this, it finds itself, in a 
 flash, back with Anaximander at the origin of thought; to drone once 
 more round the rings already traced. 
 
 This it seems is the condition of the action of the human reason. 
 It acts this way or it acts not at all. If the Reason arrests the process 
 at a given point, it accepts an inexplicable fact which the sense perceives. 
 If it continues the process, it can never reach an intelligible end within 
 the finite human consciousness. In the first instance, it settles upon 
 the rocks of Epicurus; in the second, it drifts about in the consciously 
 hopeless Skepticism of Pyrrho. In both, or in either, it meets the 
 inscmtable; brings up face to face with the Sphinx that broods over human 
 existence, wherever the mind may turn. 
 
 A possible analogy has been mentioned between the history of sculp- 
 ture and the history of rational, cosmic speculation. It was suggested 
 that that rare source of beauty and inspiration, the Hellenic intellect, 
 had exhausted the possibilities of the former; and it may appear that 
 it has exhausted the possibilities of the latter as well. As the great 
 torso of Appolonius in the Vatican throws its shadow over every form 
 that fell frpm the chisel of Buonarroti, the consistent, sculpturesque 
 minds of Anaximander, Democritus, Protagoras, Aristotie, and Pyrrho 
 throw their shadows over the thought that was to come. These men 
 loved pure Reason as a god; they followed the light of the gray-eyed 
 Athene that glowed within, as the mariner the gleam of the spear of 
 
S20 
 
 Philosophy 
 
 Pt. IV 
 
 Athene Promachos that flashed from the Acropolis; and the thought of 
 these men carved the history of the human reason out of chaos. Thus, 
 the rockbound coasts of Democritus, and the quicksands of Prota- 
 goras are all that pure Philosophy has discovered. The whole history 
 of philosophy might be presented as one interminable line of rocks and 
 shoals in a sea of futile speculation, on which a steely sky looks down in 
 bland, unconscious irony on all the efforts of the mind of man to pene- 
 trate bevond. 
 
 ^t 
 
 I I 
 
 CHAPTER V 
 
 CHRIST 
 
 Section 1-^The Law of Substance, Section U^-The Law cf Reason, 
 
 Section III — The Law of God, 
 
 Section I — The Law of Substance 
 
 HE first efforts in cosmological speculation dealt with matter 
 as evident to sense. From Thales and Anaximenes down 
 to the present, many clear and able minds have been absorbed 
 in a materialistic interpretation of the phenomenal world. 
 Every addition to knowledge, from this point of view, strengthens the 
 material and mechanical conception of the imiverse. For, it may be 
 said, science is impossible without law, and every widening vista of 
 nature, gained through the media of the experimental sciences, but 
 reveals the subjection of phenomena to a never-varying sequence of 
 mechanical cause and effect. 
 
 When the all-pervading influence of law throughout the Cosmos is rec- 
 ognized, and man is regarded as an infinitesimal manifestation thereof, 
 his complete insignificance is evident. In this light man becomes but 
 a more or less conscious automaton controlled by cosmic forces as 
 old and as powerful as the material universe, which sweep him blindly 
 into and out of his ephemeral existence, as determined by the action 
 and interaction of a system of laws possessing neither consciousness nor 
 volition. This is the philosophic attitude announced and demonstrated 
 ages ago by Democritus, Epicurus, and Lucretius. Modem science 
 strengthens this position. 
 
 Among the most suggestive contributions to knowledge, in a philo- 
 sophic sense, is that generalization of Professor Weismann known as 
 the "continuity of the germ-plasm." This position and its demon- 
 stration present important evidence in support of the materialistic 
 and mechanical interpretation of the phenomena of life. To suppose 
 that man possesses, individually or collectively, the slightest control 
 over his own existence, physical or mental, may well have seemed but a 
 
 521 
 
522 
 
 Philosophy 
 
 Pt.IV 
 
 curious illusion since the days of Democritus. When, however, man is 
 studied in the light of the theory of Continuity, he exists but as a plant- 
 like growth of somatic cells gathered about a rootstock of vital germs, 
 from which the somatic cells fall away as the individual dissolves. 
 This position understood, it is obvious that no efforts of the individual, 
 singly or combined, can affect the nature of the germ-cells as handed 
 down from one generation to another. Comparing the germ-plasm 
 to a long creeping rootstock from which individual plants arise at 
 intervals, Professor Weismann^ says: 
 
 "Hence it follows that the transmission of acquired characters is 
 an impossibility, for if the germ-plasm is not formed anew in each 
 individual but is derived from that which preceded it, its structmre, 
 and above all its molecular constitution, cannot depend upon the in- 
 dividual in which it happens to occur, but such an individual only forms, 
 as it were, the nutritive soil at the expense of which the germ-plasm 
 grows, while the latter possessed its characteristic structure from the 
 beginning, viz., before the commencement of growth." 
 
 In a philosophic sense, this theory of Continuity is exceptionally 
 interesting; for, as its significance is grasped it becomes evident that 
 the external forces of environment and heredity are not important 
 influences in the life of the individual, but the sole and all-controlling 
 influences. If inherited qualities are entirely due to a natiu*ally selective 
 cosmic process, in which the acquirements of the individual play no 
 part; and if all mental or physical assimilations are the transitory ac- 
 cidents of environment — and there seems justification to many ob- 
 servers for accepting both these positions — there seems no place, in 
 any independent sense, for that much discussed entity or non-entity, 
 the hiunan ego. The individual of the human species, as that of any 
 other species, becomes, as Professor Weismann says, a plant-like growth 
 or "the nutritive soil at the expense of which the germ-plasm grows." 
 There are few scientific discoveries so little flattering to the " heaven 
 descended heir of all the ages " as this important position of Continuity. 
 In a philosophic sense it practically obliterates him and all his works. 
 
 As far back as the days of Democritus, there has been good reason 
 to regard man as a fortuitous coalescence of the elements of matter 
 in a state of flux. When, however, he is placed beneath the high-powered 
 microscope of modem science, and studied upon the comparative an- 
 atomical dissecting table or in the biological laboratory, it seems im- 
 
 • Si$mficance of Sexual Reproduction, Essays on Heredity, Vol. i. , p. 273. 
 
 Bk. IV 
 
 Christ 
 
 523 
 
 possible to regard him in any other light. From this point of view, 
 his powers of independent volition, moral intuitions, intellectual activi- 
 ties, and spiritual aspirations become automatic hallucinations trace- 
 able to molecular flux. 
 
 The problems, however, of the freedom of the human will, and moral 
 responsibility, meet the inquirer on every side, at every step; in almost 
 every phase of scientific investigation. If the evolutionary and bio- 
 logical sciences, together with the earlier forms of Atomism, are ignored, 
 and matter resolved into electric force-points, or units of positive and 
 negative electricity, the question is but shifted into other fields. 
 
 An interesting parallel has been drawn between Kant, as a philos- 
 opher, and Copernicus, as an astronomer. The latter demonstrated 
 that the apparent movement of many of the heavenly bodies could 
 be explained by the motion of the earth itself; and Kant shows how 
 many mental phenomena may be referred, not to external causes, but 
 to the laws governing the working of the individual human mind. In 
 developing this analogy it is obvious that the study of psychic phenom- 
 ena may be removed from the field of external causes, and applied 
 directly to the contemplation of the mechanics and chemistry of the 
 brain itself. The researches of the physiological psychologists are 
 uniform in their conclusions in this connexion. The works of Ferrier, 
 Ribot, Wunt, Horsley, Spencer, Huxley, Schiff, Hitzig, Luys, Goltz, 
 Clerk-Maxwell, Schafer, Bain, Clausius, and a host of other inquirers 
 go far to show that from whatever point of view the molecular con- 
 stitution of the brain is observed, its physical condition and the accom- 
 pan3dng sequences of ideas and sensation appear as much imder the 
 influence of mechanical law as any class of phenomena coming within 
 the range of the natural sciences. Says Huxley, ^ after an interesting 
 review of the subject: "If these positions are well based, it follows 
 that our mental conditions are simply the symbols in consciousness 
 of the changes which take place automatically in the organism; and 
 that, to take an extreme illustration, the feeling we call volition is not 
 the cause of a voluntary act, but the symbol of that state of the brain 
 which is the immediate cause of that act." 
 
 Thus, whether the subject is approached externally, from the at- 
 titude of the evolutionist or biologist, in the study of the influences 
 of heredity and selection: or internally, in the study of the chemical 
 and mole cular constitution of the brain, from the theory of the co-rela- 
 
 * Animal Automatism. Science and Culture, p. 246. 
 
I 
 
 1* 
 
 ( 
 
 ii 
 
 524 
 
 Phflosophy 
 
 Pt. IV 
 
 tion and conservation of energy; from the position, in fact, of any or all 
 of the inductive, natural sciences, a stream of mechanical cause and me- 
 chanical effect appears, through which the himian ego is swept very much 
 as a fallen leaf through the coiurse of a moimtain torrent. 
 
 And as the view is extended, this helplessness and insignificance 
 of man but comes into increasing prominence. The vast imconscious 
 stream of matter, flowing through all the worlds within range of the 
 perceptions, sweeping "all things" from non-being into being, and back 
 into the night, seems to present but one approximation to Reality — 
 but one condition as the result of the "Law of Substance"; affecting 
 the systems, and galaxies of systems, of stellar space as indifferently 
 as the pimy labours, the "empires," and the "progress" of man. Change 
 and dissolution, it seems, are the only Realities which the Law of Sub- 
 stance has to present. 
 
 "Natural knowledge," says Huxley,^ "tends more and more to the 
 conclusion that 'all the choir of heaven and furniture of the earth' are 
 the transitory forms of parcels of cosmic substance wending along the 
 road of evolution, from nebulous potentiality, through endless growth 
 of sun, and planet, and satellite; through all varieties of matter; through 
 infinite diversities of life and thought; possibly, through modes of being 
 of which we neither have a conception, nor are competent to form any, 
 back to the indefinable latency from which they arose. Thus the most 
 obvious attribute of the cosmos is its impermanence." Man and his 
 works grow strangely ephemeral when studied in the light of the Law 
 of Substance; neither man himself nor his systems, neither the builders 
 nor the structures, seem endowed with any permanent significance: 
 
 "Seest thou these great buildings?" says Christ ;2 "there shall not 
 be left here one stone upon another, which shall not be thrown down." 
 
 The light of pure science, when turned upon man, from whatever 
 position, reveals but blindness, helplessness, and insignificance. "I 
 know no study," says Huxley,^ "which is so imutterably saddening 
 as that of the evolution of humanity as it is set forth in the annals of 
 history," and science seems to point to a future worthy of the past. 
 Man bears the mask of death upon his brow, the germ of his lowly 
 origin in his body; and when progress ceases, as cease it one day must 
 from forces generated from within, as well as from without "regressive 
 
 * Evolution and Ethics, p. 50. 
 s Mark XIII: 2. 
 
 * Science and Christian Tradition, p. 256. 
 
 Bk. IV 
 
 Christ 
 
 525 
 
 is as practicable as progressive metamorphosis" * When man reaches 
 the crown of his evolution, he will apparently begin the reversal of the 
 processes through which he has proceeded in the past; and the principle 
 of the Continuity of the vital substance from which his life arises seems 
 to show what the reversal of those processes means. In the literal, 
 scientific sense of the words, as Christ^ says, "many shall be last that 
 are first; and first that are last." 
 
 The Law of Substance points with as certain a finger to the future 
 of humanity as that with which it points to its past. In any event, 
 whatever future awaits man himself, a lifeless mass of inert matter, 
 revolving aimlessly through space until it itself dissolves, is the only 
 futiu^e science has to predict of the earth upon which he exists. 
 
 Thus, studied in the light of the Law of Substance, man seems to 
 possess no significance of any kind. He represents nothing but fleeting 
 accumulations of moving matter, which grow dimly conscious of them- 
 selves for a moment and then fade into infinite nescience. Neither 
 he nor anything else possesses the slightest comprehension of anything 
 in a universe of plant-like matter in imconscious motion. He is as 
 much a nonentity as the transitory shape of a wave which forms to 
 break upon a rock. He possesses no more significance than the flux 
 of a chemical compound or the reaction of an acid. The Law of Sub- 
 stance leads straight to an unqualified materialistic atheism and nothing 
 else. 
 
 From this point of view man is obviously of no interest, other than 
 as an atomic unit in society. Ethics is the science of society, so far 
 as such a science may be said to exist. What then are the ethics of 
 the Law of Substance? The latest and most authoritative exposition 
 of this conception of nature is found in Professor HaeckeFs interesting 
 Riddle of the Universe: 
 
 "Man," says Haeckel,^ "belongs to the social vertebrates and has 
 consequently, as all other social animals, two different duties: one to 
 himself, and another to the society to which he belongs. The first 
 is dictated by self-love, or egoism; the second by love of others, or 
 altruism. . . . The recognition of the equal value of these two 
 impulses — love of self and love of others — is the most important 
 fundamental principle of our morality. The highest goal of all rational 
 
 1 Evolution and Ethics, p. xgg. 
 « Matthew XIX: 30. 
 • Die WeltrOthsd, p. 404. 
 
: 
 
 1 ^ll 
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 ll 
 ll 
 
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 -I 
 [ '1 
 
 :1 
 
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 if: ■* 
 
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 526 
 
 Philosophy 
 
 Pt. IV 
 
 ethics is thus very simple: the establishment of the natural equality of 
 egoism and altruism, of self-love and the love of one's neighbour. The 
 Golden Rule says: *Do unto others as you would that they should do 
 unto you.' From this highest of Christian precepts it follows of it- 
 self that we have duties toward ourselves as sacred as those toward our 
 fellows. . . . From the recognition of our fundamental moral 
 principle follows its highest precept, that command called the Golden 
 Rule of ethics, or briefly, the Golden Rule. Christ has repeated in 
 the single phrase: *Thou shalt love thy neighbour as thyself.' Mark 
 rightly adds: 'There is no greater conunandment than this,' and 
 Matthew says: *In these two commandments is the whole law and 
 the prophets.' In this weightiest and highest conmiandment is our 
 monistic ethics in perfect accord with Christianity." 
 
 Haeckel then traces the origin of this principle to the period at which 
 men first began to think, and it thus seems that the ethics of the Law 
 of Substance, from Confucius to Haeckel, may be formulated, as formu- 
 lated by Haeckel, in the words of Jesus of Nazareth :i 
 
 "All things therefore whatsoever ye would that Men should do unto 
 you, even so do ye also imto them: for this is the law and the prophets." 
 
 Section II — The Law of Reason 
 
 An analysis of the history of philosophic inquiry seems to show that 
 every interpretation of nature, involving matter as a controlling element, 
 sooner or later leads up to a fully developed atheistic materialism. It 
 may also show that every exhaustive system of inquiry, turning to an 
 analysis of the reason, sooner or latter culminates in the quicksands of 
 an idealistic Skepticism. When the rational perfection of both these 
 systems is understood, it may seem that rational thought, which has 
 not yet reached one or the other, is simply thought in a process of evolu- 
 tion which has yet to reach its final development; the development of 
 the thought of Plato and Aristotle led to nothing else. The mechanical 
 materialism of Democritus has never been rationally answered, and 
 still dominates some of the ablest minds of modem times. In the same 
 way, no reply has ever been made to the skeptical modes of the sus- 
 pension of judgment. It may be said, within their fields, that pure 
 Atomism and pure Skepticism are the only rational positions formulated 
 by the human mind. Yet the human mind has refused to accept them 
 as final, with the result that it has done nothing but drift round in 
 
 » Matthew VII: i a. 
 
 Bk. IV 
 
 Christ 
 
 527 
 
 rings; periodically re-discovering these two positions after re-develop- 
 ing processes of thought, which had been fully exhausted hundreds or 
 thousands of years before. 
 
 A scientific Skepticism, based upon the subjectivity of knowledge, 
 leads to the tolerance of every error; for the reason, that not only 
 can no truth exist independentiy of a series of relations; but even 
 supposing its existence, its comprehension would necessarily be resolv- 
 able into such a series. It is impossible to state this position, together 
 with a complete summary of all the modes of the suspension of judgment 
 formulated by the skeptical intellect, more clearly and finally than in 
 the words of Jesus ^ of Nazareth: 
 "Judge not." 
 
 This train of thought, however, carried to its logical conclusion pro- 
 duces an inarticulate quietism, conscious of nothing but its own ig- 
 norance. Pure Skepticism is no more flattering to man than pure 
 Atomism. Atomism reduces him to a fortuitous chemical compound 
 in a state of flux; Skepticism to a kaleidoscopic series of illusions — 
 likewise in a state of flux. From either point of view, the action of his 
 mind possesses no comprehensive potentiality, any more than that of a 
 magpie or a phonograph: his tongue but ratties over the jingles scribbled 
 by instinct or the accidents of experience on the phosphorescent records 
 of his brain. 
 
 This perfect skeptical quietism, however, will not be able to hold 
 the more powerful intellects which understand it; the result being that 
 they will attempt an analysis of experience, in hopes at least of reducing 
 it to an orderly conception of relations. This is the attitude from which 
 is derived the Positive System of Comte and the Synthetic Philosophy of 
 Mr. Spencer. In this way philosophies of experience are evolved. 
 
 An analysis of experience attempts no solution of ultra-mundane 
 problems; human relations alone are considered. But human relations 
 once more present ethics as the chief object of inquiry. In other words, 
 m the light of the Law of Reason, man seems to possess no significance 
 except as a member of human society. What then are the ethics of 
 the Law of Reason? 
 
 Perhaps the most authoritative formulation of the relativity of human 
 knowledge, together with a philosophic syntiiesis of tiie experimenUl 
 sciences, may be found in tiie works of Mr. Spencer; tiiese tiierefor 
 may pre sent the most recent and important statement of the ethics 
 
 « Matthew VII: i. 
 
 i! 
 

 N 
 
 528 
 
 Philosophy 
 
 Pt. IV 
 
 Bk. IV 
 
 Christ 
 
 529 
 
 ti 
 
 '■ 
 
 of the Law of Reason. In the Data of Ethics,'^ Mr. Spencer, expresses 
 his belief in the ultimate rational union of what are called the egoistic 
 and altruistic conceptions of ethical relations. "For/' as he says, 
 "that which the best human nature is capable of is within the reach 
 of human nature at large." He continues: "From the ten thousand 
 priests of the religion of love, who are silent when the nation is 
 moved by the religion of hate, will come no sign of assent; nor 
 from their bishops who, far from urging the extreme precept of the 
 master they pretend to follow, to turn the other cheek when one is 
 smitten, vote for acting on the principle — strike lest ye be struck. 
 Nor will any approval be felt by legislators who, after praying to be^for- 
 given their trespasses as they forgive the trespasses of others, forthwith 
 decide to attack those who have not trespassed against them; and who af- 
 ter a Queen's Speech has invoked ' the blessing of Almighty God' on their 
 councils, immediately provide means for committing political burglary. 
 "But though men who profess Christianity and practise Paganism 
 can feel no sympathy with such a view, there are some classed as an- 
 tagonists to the current creed, who may not think it absurd to believe 
 that a rationalized version of its ethical principles will eventually be 
 
 acted upon." 
 
 The name of Huxley is not associated with any formal system of 
 thought; yet few men of modem times have given greater powers to 
 the dissemination of the light of pure Reason. He says:^ 
 
 "Again, all that is best in the ethics of the modern world, in so far as 
 it has not grown out of Greek thought, or Barbarian manhood, is the 
 direct development of the ethics of old Israel. There is no code of 
 legislation, ancient or modem, at once so just and so merciful, so tender 
 to the weak and poor, as the Jewish law; and, if the Gospels are to be 
 tmsted, Jesus of Nazareth himself declared that he taught nothing but 
 that which lay implicitly, or explicitly, in the religious and ethical system 
 
 of his people." 
 
 It would seem, therefore, that the Ethics of the Law of Reason, as 
 voiced by Spencer and Huxley, are identical with the ethics of the Law 
 of Substance as voiced by Haeckel; and that the Ethics of both Substance 
 and Reason are identical with the Ethics of Jesus of Nazareth; and might 
 be summarized in the passage cited from Matthew which He said con- 
 tained "the law and the prophets": 
 
 »ll 97-08, pp. as6-2S7- 
 
 • Scienu and Christian Tradition, p. 31 S- 
 
 "All things therefore whatsoever ye would that men should do unto 
 you, ever so do ye also unto them." 
 
 Section III — The Law of God 
 
 In a study of the sources of religious thought these phenomena were 
 accepted without question, as the scientist accepts the phenomena of 
 the material world. This attitude may appear superficial. The de- 
 velopment of modern scientific method may seem to demonstrate the 
 negligible nature of the phenomena of religion. The interesting work 
 of Professor Haeckel presents strong support for this view. It may, 
 therefore, be of interest to inquire whether the discussion of religion is 
 not a mere waste of time; and whether thought, based upon the existence 
 of God, is not based upon nothing at all. 
 
 In an essay upon Animal Automatism, Professor Huxley develops 
 the philosophic significance of the physical constitution of the animal 
 body and brain, and applies it with its corollaries to the human being. 
 The question arises then, whether, in the opinion of such a distinguished 
 scientist, this mechanical hypothesis of necessity eliminates all others; 
 rendering materialism, fatalism or atheism the only tenable attitude 
 with reference to man and nature. Huxley ^ says: 
 
 "As I have endeavoured to explain on other occasions, I really have 
 no claim to rank myself among fatalistic, materialistic, or aUieistic 
 philosophers. Not among fatalists, for I take the conception of necessity 
 to have a logical, and not a physical foundation; not among material- 
 ists, for I am utterly incapable of conceiving the existence of matter 
 if there is no mind in which to picture that existence; not among atheists 
 for the problem of the ultimate cause of existence is one which seems 
 to me to be hopelessly out of reach of my poor powers. Of all 
 the senseless babble I have ever had occasion to read, the dem- 
 onstrations of those philosophers who undertake to tell us all about 
 the nature of God would be the worst, if they were not surpassed 
 by the still greater absurdities of the philosophers who try to prove 
 that there is no God." 
 
 In the opinion of one of the ablest scientists and clearest thinkers of 
 modern times, it seems that neither the "Law of Substance" nor the 
 "Law of Reason" has, in the slightest particular, demonstrated the non- 
 existence of God and that all attempts at such demonstration are 
 worse than "senseless babble." 
 
 * Science and Culture, pp. 247-248. 
 
I 
 
 530 
 
 Philosophy 
 
 Pt. IV 
 
 I 
 
 J <» 
 
 I". 
 
 Tr ■ 
 
 "But," he says again, 1 "if it is certain that we can have no knowledge 
 of the nature of either matter or spirit, and that the notion of necessity 
 is something illegitimately thrust into the perfectly legitimate concep- 
 tion of law, the materialistic position that there is nothing intheworid 
 but matter, force, and necessity, is as utteriy devoid of justification as 
 the most baseless of theological dogmas." 
 
 Sense and Reason ! Sense and Reason ! Poor humanity possesses no 
 means other than these of deriving intelligible impressions from the 
 objective worid. These are its only eyes — and these are glazed and 
 sightless. The soul, to borrow an analogy from Socrates, is locked in 
 a dungeon; the darkness is broken by feeble Hght derived through two 
 narrow openings. One looks out upon a blank wall; the other upon a 
 blank fog. Atomism and Skepticism are all it can see. Other than 
 these, it is conscious of nothing but a black night of nescience: all that 
 pure intelligence has ever produced. 
 
 Strange to say, however, the intelligence, after developing these 
 positions, seems to reach out in spite of itself to something transcending 
 its own formless chaos. Pure atheistic materialism is indebted to no 
 one more than to Democritus, yet even this rarely rational intelligence 
 cannot resist the temptation of infusing a few wraithlike divinities 
 into his atomic Cosmos. While his mind moves with resistless pre- 
 cision, when limited to the physical, it commands but slight respect in 
 its theological flights. The fact, nevertheless, remains that the first 
 of scientific atheists and materialists recognized the "gods" and even 
 developed a strange and mysterious theogony of his own.2 
 
 Epicurus, the next great philosophic "atheist," displays the same 
 inconsequent phenomenon: that of a philosopher who regards sense as 
 the only criterion of truth; yet who talks about "the gods." Laertius* 
 says, he was a remarkably pious man; that he even wrote a work on 
 piety and a treatise on the Gods. Epicurus, while usually regarded as 
 the arch prophet of atheism, seems in reality to have had no slight 
 theological tendencies, and even follows in the path of Democritus in 
 establishing a vague and intangible theogony. * It must be admitted, 
 however, that the theologizing of Democritus and Epicurus is not 
 inspiring. The theologizing materialist is little more successful outside 
 
 » Lay Sermons and Addresses, pp. 134-125. 
 
 « For a thorough review of the subject and aU sources Cf. ZeUer. Pre-SocraticPkilosopky.Vol U.. p. aSi 
 et seq. 
 
 » Epicurus, X., 5 and 17. 
 
 « Cf. ZeUer, Stoics and Epicureans, p. 438, where all sources may be found. 
 
 Bk. IV 
 
 Christ 
 
 531 
 
 his field than the philosophizing theologian. Zeller * compares the theog- 
 ony of Epicurus to a society of Epicurean philosophers. Th« learned 
 Doctor Cudworth does not hesitate, and, although on one page^ he 
 cites a passage from Epicurus, from which he deduces that that philos- 
 opher acknowledged "an animalish and conscious or perceptive nature," 
 "besides senseless matter"; yet, on another, he speaks of the Gods of 
 Epicurus in by no means respectful terms. He calls^ them a "multi- 
 farious rabble and democracy of Gods," and again^ refers to them as 
 "those romantic monogrammous Gods of Epicurus," which "could 
 have been nothing else but a certain kind of aerial and spectrous men, 
 living by themselves, nobody knows where." The dispassionate in- 
 quirer may well find reason for sympathy with the illustrious author of 
 the Intellectual System of the Universe in the supercilious treatment 
 accorded the "romantic" and "monogrammous" Gods of Epicurus, 
 who ' 'live by themselves, nobody knows where." In theological matters 
 it seems but natural to desire to have one's divinities under one's eye, 
 so to speak, as the learned Doctor evidently had his own. 
 
 Strange to say again, even the majestic Lucretius^ condescends to a 
 far-off and preoccupied theogony. "Who pass their lives serene in 
 calm repose," in another remote neighbourhood, the situation of which 
 he fails to determine. 
 
 The real philosopher turns with a sense of relief from the teleological 
 speculations of such dogmatic theologians as Democritus, Epicurus, 
 and Lucretius, to the really consistent atheistic thought of Diderot, 
 Lamettrie, Holbach, and Haeckel. 
 
 The action of the rational modem mind on coming in contact with 
 the blank of philosophy is among the interesting things in thought. 
 Atomism and Skepticism are as old as thought itself, and philosophy 
 lias produced nothing else. Atomism and Skepticism, however, possess 
 but a logical significance for many of the best minds understanding them; 
 and these, consequently, as soon as they have developed one or the 
 other, inunediately seek something else. 
 
 If Atomism is not wholly satisfactory, the philosophic inquirer may 
 inject a vital principle into his universe; he will then be in possession of a 
 Cosmos f ormed of matter and life. This presents a duaUstic hypothesis. 
 
 * Stoics and Epicureans, p. 442. 
 
 " Intellectual System. Vol. i., p. 305. 
 •Ibid., p. 103. 
 
 • Ibid., p. IDS. 
 
 ■ De Rerum Natura, II., Z094. 
 
1 
 
 532 
 
 Philosophy 
 
 Pt. IV 
 
 Bk. IV 
 
 Christ 
 
 ' 
 
 
 Some are satisfied with this position and go no farther. Others fuse the 
 material and vital elements, and so form a monistic hypothesis. The 
 resulting universe will then be composed of an all-pervading, vitalized 
 substance: the position of the old lonians. This is also the modern 
 scientific Monism, so ably advanced by Professor Haeckel. If this 
 position does not present all that's desired, as a cosmological theory, this 
 substance may be called God: which offers some gratification to certain 
 minds. This is the Pantheism of Spinoza; in reality it but gives another 
 name to the iilyiia of the Ionian thinkers. The Divinity is invited 
 in at one door of the Cosmos, so to speak, and bidden farewell at another, 
 as Haeckel shows. 
 
 If none of these positions seems suflficiently inspiring, modem rational 
 thought has but one resource: it must turn to an analysis of experience 
 as its only refuge. Victor Cousin, after exhausting earlier systems, 
 attempts to formulate these in a system combining their best elements; 
 various forms of Eclecticism will be the result. If any of these satisfy 
 the intelligence, inquiry ceases. If not, Auguste Comte presents another 
 method, the Positive, consisting in the formulation of the sciences as a 
 school of thought. Strange to say, the mysterious force of religion 
 is here found again as in the thought of those " atheists," Democritus 
 and Epicurus. In place of the worship of the Gods, however, 
 Comte suggests the worship of humanity; though why any one 
 who declines to worship the Divinity should worship anything is 
 not made clearer than in the theology of Epicurus or Lucretius. 
 This "anthropolatry" of Comteism is among the strangely distorted 
 evidences of what might be called a theistic instinct in man. Huxley, 
 while recognizing 1 that the service of his fellow man is not only an 
 intelligible, but a laudable resolution, and, in the proper sense of the 
 word, a religion, adds with reference to the Comtian religion: 
 "But when the Comtist asks me to worship * Humanity* — that is 
 to say, to adore the generalised conception of men as they have ever 
 been and probably ever will be — I must reply that I could just as 
 soon bow down and worship the generalised conception of a 'wilderness 
 of apes.'" 
 
 Another form of intelligence, of which Huxley is the type, abandons 
 any attempt to reach an ultimate solution of the problems of existence; 
 thus, he invents the "Agnostic" position, which shelters many a clear 
 and fearless intellect together with his own. 
 
 ' Science and Christian Tradition, Agnosticism, p. 355. 
 
 S33 
 
 Tyndall^ says: "The animal world is, so to say, a distillation through 
 the vegetable world from inorganic nature. From this point of view 
 all three worlds constitute a unity, in which I picture life as immanent 
 ever3rwhere." This is pure hylozoism, as recognized by Haeckel. 
 Tyndall, however, continues: "Nor am I anxious to shut out the idea 
 that the life here spoken of may be but a subordinate part and function 
 of a Higher Life, as the living, moving blood is subordinate to the living 
 man. I resist no such idea as long as it is not dogmatically imposed. 
 Left for the human mind freely to operate upon, the idea has ethical 
 vitality; but stiffened into a dogma, the inner force disappears, and the 
 outward yoke of a usurping hierarchy takes its place." 
 
 Mr. Spencer's attitude seems to be purely mechanical and anthropo- 
 logical. He says in First Principles^ in a suggestive passage with 
 reference to the controversy between science and religion: "An un- 
 biased consideration of its general aspects forces us to conclude that 
 religion, ever3rwhere present as a weft running through the warp of 
 human history, expresses some eternal fact; while it is almost a truism 
 to say of science that it is an organized mass of facts, ever growing and 
 ever being more completely purified from errors, and if both have bases 
 in the reality of things, then between them there must be a funda- 
 mental harmony. It is an incredible hypothesis that there are two 
 orders of truth, in absolute and everlasting opposition. Only in some 
 Manichean theory, which amongst ourselves no one dares openly avow, 
 however much his beliefs may be tainted by it, is such a supposition 
 even conceivable. That religion is divine and science diabolical 
 is a proposition which, though implied in many a clerical decla- 
 mation, not the most vehement fanatic can bring himself distinctly to 
 assert. 
 
 "Each side, therefore, has to recognize the claims of the other as 
 standing for truths that are not to be ignored. He who contemplates 
 the universe from the religious point of view must learn to see that this 
 which we call science is one constituent of the great whole; and as such 
 ought to be regarded with a sentiment like that which the remainder 
 excites. While he who contemplates the universe from the scientific 
 point of view must learn to see that this which we call religion is similarly 
 a constituent of the great whole; and, being such, must be treated as a 
 subject of science with no more prejudice than any other reality. It 
 
 * Fragments of Science, Vol. II. , p. 245. 
 M6,p.i& 
 
 
■ I 
 
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 S34 
 
 Philosophy 
 
 Pt. IV 
 
 behooves each party to strive to understand the other, with the con- 
 viction that the other has something worthy to be understood; and with 
 the conviction that when mutually recognized this something will be the 
 basis of a complete reconciliation." 
 
 In the Principles of Sociology ^ after an interesting review of the closely 
 allied nature of the various phenomena of religion, Mr. Spencer^ says: 
 "We get from this kinship of beliefs among races remote in time, space, 
 and culture, strong warrant for the inference that ghost-propitiarion 
 is the origin of all religions." The "eternal fact," therefore, which Mr. 
 Spencer regards as underiying the ever present phenomena of religion, 
 seems to be "ghost-propitiation." Mr. Spencer regrets, however, that 
 this position does not appeal to a certain type of intelligence. He says:^ 
 "It is strange how impervious to evidence the mind becomes when 
 once prepossessed. One would have thought that such an accumulation 
 of proofs, congruous with the proofs yielded by multitudinous other 
 societies, would have convinced every one that the Egyptian religion 
 was a developed ancestor-worship. But such proofs appear to have no 
 effects in the minds of the theologians and the mythologists." 
 
 The butterfly in the net, the i^uxt) in the dungeon; thought, fettered 
 with sense and reason, is forced to one of the following positions: It 
 ceases to think at all, it accepts Atomism or Skepticism, or it begins to 
 analyze experience as its sole resource. Its movement from this point 
 will depend upon what it imderstands by experience. If it regards 
 certain phases of thought leading into German metaphysics, as embraced 
 in experience, it can follow Kant with the Practical Reason. If it regards 
 the possibilities of thought as exhausted in earlier systems, it may at- 
 tempt an eclectic process of selection with M. Cousin. Other concep- 
 tions of experience may lead to various forms of Pragmatism with James 
 or Bergson. If it regards the experimental sciences as exhausting the 
 field of human experience, it may follow Comte in his positive formula- 
 tion of these. If it regards a wider synthesis as possible, it may follow 
 Mr. Spencer with his Synthetic Philosophy. The position chosen 
 among these or other attitudes of modem thought depends upon the 
 meaning lent to "experience." 
 
 None of these positions, however, satisfies a portion of the thinking 
 or of the unt hink ing world. Inductions based upon experience, in its 
 philosophic sense, seem incapable of reaching the theological and 
 
 « Vol II.. I S84, p. 675. 
 t VoL II., i 586. p. 603. aote. 
 
 . i 
 
 Bk. IV 
 
 Christ 
 
 S3S 
 
 mythological intellects. As Mr. Spencer says, they seem "impervious" 
 to his most seductive generalizations of this nature. 
 
 If the theologians and mythologists had attempted to demonstrate 
 to Mr. Spencer the truth of some theory of vision or application of 
 force, by means of symbolized deductions from the Sybiline oracles, 
 or mystical citations from inspired writings, the chances are that Mr. 
 Spencer would have been as "impervious" to their demonstrations as 
 the theologians to Mr. Spencer^s theory that ghost-propitiation was 
 the origin of all religion. Mr. Spencer would probably have said that 
 a false method leading nowhere had been adopted. And here the ques- 
 tion might be asked, whether Mr. Spencer had not adopted an analogous 
 method in his religious investigations; whether, in fact, in attempting 
 to judge the entire field of religion, or of ultra-rarional, ultra-sensible 
 experience by means of empirical and anthropological standards, Mr. 
 Spencer had not confused two distinct fields of inquiry. The very 
 imperviousness of the theological intellect to the results of such methods 
 suggests the thought. A system to which a large part of the intellectual 
 world is impervious seems proportionately lacking; correspondingly 
 devoid of the essentials of a perfect synthesis. Mr. Spencer speaks of 
 religion everywhere present in human history as expressing some "eter- 
 nal fact," as having a "basis in the reality of things," as "standing for 
 truths not to be ignored," as being with science "a constituent of the 
 great whole," as "having something worthy to be understood," that 
 "when recognized will be the basis of a complete reconciliation"; yet all 
 Mr. Spencer has to offer toward such recognition and reconciliation is a 
 theory of "ghost-propitiation." And here occurs a question with refer- 
 ence to the meaning of the word "experience" in inquiry. 
 
 Experience can have but one comprehensive, philosophic meaning, 
 which embraces the essentials of all phases of human experience. The 
 sum of the historical records of humanity presents the legitimate field 
 covered by human experience, and these records show important evi- 
 dence of experience referred to untra-rational, ultra-sensible influence. 
 They show evidence of experience which has dominated, and still dom- 
 inates, large portions of mankind, to the apparent exclusion of experi- 
 ence to be referred to rational or sensible causes. Mr. Spencer and 
 Professor Haeckel may mass irrefutable evidence through libraries of 
 volumes; may explain all the phenomena of nature, from the formation 
 of the first nebula down to the last sermon in Saint Paul's, upon a mon- 
 istic or ghost-propitiative hypothesis; present them with every scientific 
 
 f r 
 
r 
 
 t 
 
 > ' 
 
 if. 
 
 536 
 
 Philosophy 
 
 Pt. IV 
 
 authority, and the result will but demonstrate the imperviousness of 
 the theological intellect to evidence of this nature. 
 
 If the most beautiful abstractions of the idealistic philosopher are 
 presented to the experimental scientist, in order to show that there are 
 no such things as matter and motion, the scientist will probably change 
 the subject: All his investigations, the entire action of his faculties, 
 are based upon the existence of matter and motion, which he perceives 
 flowing beneath the observation of his senses, turn where he will. If 
 an attempt is made to demonstrate to the idealistic thinker that nothing 
 exists but moving matter, he will perhaps decline to develop the issue, 
 for he perceives that the demonstration itself can proceed but through 
 a sequence of ideas which the motion of matter fails to explain. One 
 refers explanation ultimately to sense, the other to consciousness. 
 One moves in a world limited by sense impressions, the other in a world 
 boimd by subjective abstractions. 
 
 Thus, when it is attempted to demonstrate to the theologian that 
 matter and motion constitute the sum of existence, the only thing 
 demonstrated is the imperviousness of the theological intellect to the 
 evidence adduced. The experimental scientist moves in a world limited 
 by his faculties of observation; he cannot follow the idealist in a field 
 of rationalized abstractions; and neither can follow the theologian who 
 moves in an ultra-rational, ultra-sensible world. Neither Democritus 
 nor Epicurus can demonstrate the existence of their very insignificant 
 theogonies; and where these men fail in such modest efforts, success 
 need scarcely be expected where others labour imder much heavier theo- 
 logical burdens. Here another method of inquiry may be suggested 
 with reference to an analysis of experience. 
 
 Since the days of Protagoras, no rational intelligence accepts explana- 
 tion not containable within itself. The Cosmos, then, in its philo- 
 sophic sense, can mean but the external world as reflected in the percipi- 
 ent subject. What then is the Cosmos? 
 
 "Matter," says one school, and explains all phenomena satisfactorily 
 to itself upon this hypothesis. To another school this h)^thesis 
 leaves all the phenomena of mind unexplained. "The Cosmos consists 
 of idealistic, subjective impressions," says this school, and offers cor- 
 responding explanations. But both these hypotheses break down when 
 brought in contact with the demands of another school as explaining the 
 phenomena of religion. These answers, therefore, are acceptable as 
 far as they go, but incomplete where they fail. 
 
 Bk. IV 
 
 Christ 
 
 S37 
 
 The student of Aristotle will recall his method in the Ethics of re- 
 solving the human consciousness into certsdn elements for examination. 
 This method might here be adopted. Human experience is written in 
 human history; this experience shows that man has approached the 
 problems of existence from three distinct positions: The physical, 
 the psychical, and the theological. History, or the book of human 
 experience, is written with three pens dipped, as it were, in sense, in 
 reason, and in something other than these. The human consciousness 
 might thus be compared to a triangular prism; the ray of light derived 
 from external nature being broken, as it is reflected from its surface 
 and resolved into a spectrum; thus forming the impression upon 
 the subject derived from the "sum of things"; the rays and colours 
 may, of course, subdivide and intermingle in endless combinations and 
 variations. 
 
 Thus, to continue the analogy, the sides of the prism might represent 
 pure sense, pure reason, and something which eludes the most per- 
 sistent scrutiny of both. This third side might be called Life, or God. 
 Any comprehensive analysis of experience should apparently include 
 these three elements, for the records of consciousness, or the experi- 
 ence of mankind, present evidence of all three to the observation; as 
 Mr. Spencer says, "everywhere present as a weft nmning through the 
 warp of human history." The thought of even the first and greatest of 
 "atheists and materialists," Democritus and Epicurus, presents evidence 
 of this nature in no negligible quantity; while other minds and even whole 
 historical epochs seem dominated by no other influence. The phe- 
 nomena of religion are as persistent in history as those of any other phase 
 of experience. "The world," says Tyndall,i "will have a religion of 
 some kind." 
 
 The pure materialist disregards the philosophic significance of this 
 fact; posits an inscrutable mystery which he calls Matter, and bases 
 his interpretations of nature thereon. The idealist neglects the evidence 
 of sense, resolves the world into another inscrutable mystery which he 
 calls Mind, and develops idealistic systems. Another type of consciousness 
 begins its investigations by positing another inscrutable mystery, which 
 it calls God, and weaves endless theological formxilae. To these three 
 elements of himian consciousness may the sum of human experience be 
 traced, and a comprehensive conception of experience should embrace 
 all three; for the reason that evidence of all three is everywhere found 
 
 » Fragments of Scieme, Vol. IL, p. asa 
 
538 
 
 Philosophy 
 
 Pt. IV 
 
 
 !■ I 
 
 '! 
 
 and the field of experience can, consequently, not be covered without aU 
 three hypotheses. 
 
 In ultimate analysis all three of these elements of consciousness 
 present a blank and formless chaos, one no less than another, and may 
 thus be regarded as the three final phases of consciousness, or sides, 
 of the psychical prism. This prism, then, may be examined under 
 three headings: The Law of Substance, the Law of Reason, and the 
 Law of God. 
 
 The Law of Substance seems to be Atomism, the Law of Reason 
 skeptical quietism. What then is the law of something other than these? 
 How may it be discovered, how determined within the human conscious- 
 ness? In what way should a rational study of religious experience 
 proceed? By what standards should it be judged? What method 
 adopted in its analysis? 
 
 Comte, in his Positive system of experience neglects religious experi- 
 ence altogether, and attempts to divert the religious instinct to what 
 Huxley calls "anthropolatry." Mr. Spencer, who presents perhaps the 
 most extensive synthesis of experience yet formulated, refers his examina- 
 tion of religious experience to social, political, and anthropological 
 standards and reduces the entire field to "ghost-propiriation." But 
 if the human consciousness presents three distinct sides to external 
 nature — that is, if history traces experience in three distinct fields ■— it 
 seems that the interpretation of the experience of religion in terms 
 applicable to political or pathological inquiry may be considered as 
 imsdentific. 
 
 If, as Mr. Spencer says, religion may be regarded as "one constituent 
 of the great whole," with a "basis in reality" to be "treated as a sub- 
 ject of science," it may seem that the same method should be brought 
 to the study of religion as to the study of any other phenomena express- 
 ing some "eternal fact." 
 
 To interpret the phenomena of matter in terms of the phenomena of 
 matter is not alone legitimate but essential to intelligent investigation. 
 To interpret rationalized thought in rational terms is equally necessary; 
 but to interpret the phenomena of matter in terms of idealistic abstrac- 
 tions, independentiy of experience, can lead to no intelligent result; 
 any more than the attempt to judge of a generalization by means of 
 weight or chemical analysis; for a generalization, as such, can neither 
 be weighed nor analyzed in a laboratory. A generalization can only be 
 analyzed legitimately in relation to other generalizations dealing with 
 
 Bk. IV 
 
 Christ 
 
 S39 
 
 phenomena of the same kind and belonging to the same field of inquiry. 
 Thus rationalized conceptions can properly be analyzed but in relation 
 to rational conceptions; the phenomena of matter in relation to analogous 
 phenomena of matter; and, by the same rule, the phenomena of religion 
 can be analyzed rationally and "as a subject of science" in relation to 
 analogous phenomena alone; that is, in relation to the phenomena of 
 religion. 
 
 In the history of the development of the experimental sciences there 
 is a large field traceable to political and religious influences. This fact, 
 however, presents but slight justification for referring all science to 
 political or religious origins. Thus the reference of all religious experience 
 to anthropological sources may seem not unlike gauging the power of 
 an electric dynamo with a yardstick, or the speed of a ship with a ther- 
 mometer. The history of thought is but the story of the action and 
 reaction, upon each other, of ideas derived from three distinct sources; 
 and as such suggests that the phenomena of religion cannot be approached 
 from the empirical, or anthropological, point of view. That side of 
 the psychic prism presenting its surface to ultra-human influences is 
 as impervious to the light which pierces the other sides as one of these 
 to the light which pierces the other; and the attempt to trace ultra- 
 rational, ultra-sensible phenomena through rational, sensible categories 
 seems a false method. 
 
 It is a question whether any pure intelligence, any Greek, such as 
 Gorgias or Aristotle, would adopt such a method with the material at 
 hand which modern scholarship presents for a comparative analytical 
 examination of the field of religion, as religion. Gorgias^ shows that 
 what is evident to one sense cannot be referred to another; and that 
 phenomena can be judged but by a criterion of the same kind. " Science 
 and method begin," says Aristotle,^ "when from many conceptions 
 derived from experience one universal conception is evolved which 
 will embrace similar cases." It is obvious in inquiry that cases must be 
 similar and the criterion adopted of the same kind as the things judged. 
 
 It may thus seem, if the human mind is ever to reach a comprehen- 
 sive synthesis of experience, that such a synthesis should embrace all 
 experience; that is, include religious experience. This, it seems, can be 
 done but by adopting the same method with reference to the phenomena 
 of religion that the scientist would adopt with reference to scientific 
 
 ■ Sextus Empiricus. Adv. Log. VU. 8i, p. 289. 
 , t Uttaph. h. 1, 981 a s. 
 
 f 
 
S40 
 
 Philosophy 
 
 Pt. IV 
 
 thought. He would turn the attention to the study of the minds which 
 had dominated the history of their fields; for he would know that by 
 this means alone could be reached the final comprehensive sources of 
 the experience considered; and when this same method is adopted with 
 reference to religious experience, wiQ a comprehensive conception of 
 the subject be approached. 
 
 The fact that the evolution of the natural sciences presents an enor- 
 mous mass of ignorance, error, dogmatic theorizing, empirical and 
 a priori speculation, need not lead to the opinion that the best thought 
 arising from it is pure fallacy. The fact that the human philosophic 
 reason throughout its entire history has done nothing but develop a 
 series of rings, collapsing periodically in exactly the same phases of 
 Atomism and Skepticism, need not lead to the total neglect of the ra- 
 tional faculties. Thus, in the same way, the fact that a vast amount of 
 the phases of religion to be seen in every part of the world is but a 
 dreary repetition of the same dull dogma and superstition, need not 
 lead to the denial of the existence of God. The hiunan mind would 
 have to transcend the conditions of its existence in order to demonstrate 
 either the non-existence or the existence of God, and all such attempts, as 
 Huxley says, are but "senseless babble" or "lunar politics." 
 
 The method adopted in any comprehensive analysisof experience should 
 be the method of that Muse whom Huxley calls his "liege lady" — 
 Natural Science. It should be the same method as that of the metallur- 
 gist in his laboratory, in making a test for copper or gold. He first 
 samples all material to be examined, with reference to a given relative 
 standard. He next reduces these samples to a single, proportionately 
 representative body; and the nugget of pure metal remaining in the 
 crucible after this has been put through the furnace and all flux removed 
 is that of which he is in search: the imit, by means of which the value 
 of all the ore bodies under observation may be judged. It may be 
 said, however, that he never mixes bodies which have no relation to each 
 other. He never mixes iron ore with gold-bearing quartz — he keeps 
 his samples and his metal pure. 
 
 The questions met, therefore, with reference to religion are: What 
 is the material to be examined? How may the necessary samples be 
 obtained? How may these be put through the furnace of comparative 
 analysis, and how reduced to a single body? To the first question, in 
 any inquiry based upon experience, there can be but one answer: the 
 material to be examined should be the entire body of thought, in its 
 
 Bk. IV 
 
 Christ 
 
 S4I 
 
 most authoritative form, that has dominated the religious history of 
 man. The answer to the second question seems equally obvious: 
 the samples can only be obtained by choosing, from the ultimate sources 
 examined, certain characteristic thought with reference to typically 
 religious problems. These can then be reduced to a single body by 
 being brought together and compared one with another in their re- 
 lations to these problems. This whole process, with the exception of a 
 single final test, has been completed. The fundamental questions of 
 religion have been stated to the sources. Their answers have been 
 gathered and compared. The essential problems with which religion 
 deals were found to be four — God, Immortality, Mediation, Ethics. 
 Varying answers were discovered to these questions, certain teachers 
 lending greater prominence to one question than to another, or neglect- 
 ing issues which other teachers regarded as of paramoimt importance. 
 Thus, Confucius neglects the ideas of God and immortality, and turns 
 his thought largely to ethics. Mohammed dwells at great length 
 upon God and immortality, and seems less interested in ethical ques- 
 tions than others. Zoroaster, Socrates, Plato, and the Upanishads dwell 
 largely upon man's immortal nature, and his union with God as his 
 highest hope. Buddha seems to turn his thought chiefly to earthly love and 
 pity. All this thought, however, when brought together and compared, 
 presents a certain consistent attitude toward religious problems; a chain, 
 as it were, nmning through all religions, binding them more or less closely 
 together. This chain of thought thus seemed to lead to the essentials of 
 a typical or imiversal religion embracing the others. This religion pre- 
 sented the following atitudes toward fundamental religious problems: 
 
 1. The recognition of an infinite Intelligence, or self-conscious, spir- 
 itual Divinity. 
 
 2. Man's immortality or union with God. 
 
 3. The divine inspiration of certain teachers. 
 
 4. A system of ethics or morality which almost invariably takes 
 the form of the injunction of doing unto others as we would have them 
 do unto us. 
 
 The words of one important religious teacher remain to be studied. 
 These four questions may now be answered in the words of Jesus of 
 Nazareth: God? Immortality? Mediation? Ethics? He says: 
 
 I. God? " God is a Spirit: and they that worship him must worship 
 in spirit and truth." ^ 
 
 ijohn. IV: 24 
 
I 
 
 54^ 
 
 Philosophy 
 
 Pt. IV 
 
 H 
 
 I 
 
 
 2. Immortality? "Verily, verily, I say unto you, If a man keep my 
 word, he shall never see death. "^ 
 
 "Neither for these only do I pray, but for them also that believe on 
 me through their word; that they may all be one; even as thou, Father, 
 art in me, and I in thee, that they also may be in us."2 
 
 3. Mediation? "And the high priest said unto him, I abjure thee 
 by the living God, that thou tell us whether thou be the Christ, the 
 Son of God. Jesus saith unto him, Thou hast said."^ 
 
 4. Ethics? "All things therefore whatsoever ye would that men 
 should do unto you, even so do ye also unto them: for this is the law and 
 the prophets.'*^ 
 
 These words seem to contain the vital elements of all Science, Rea^ 
 son, and Religion. 
 
 In Ethics, they exhaust the best that Science and Reason have to 
 offer; Science and Reason can go no farther. 
 
 In their conception of Mediation, they present a comprehensive 
 Intelligence which postulates itself. 
 
 Their conception of Immortality rises to that of the noblest of the 
 Vpanishads; in their hope of the union of God and man, in a way that 
 ennobles man, but in no sense debases God. 
 
 The conception of God as a Spirit, whose worship is Truth, has never 
 been, and probably never will be, transcended by the human mind. 
 SaysRenan:^ 
 
 "The day he pronounced those words, he really was the Son of God. 
 He spoke for the first time the word on which shall rest the religion 
 of Eternity. He founded the pure worship of no age nor land; the 
 reUgion of every lofty soul until the end of time. His religion on that 
 day was not only the reUgion of humanity, it was the absolute religion; 
 and, if on other planets beings dwell, endowed with reason and morality' 
 their religion can never be other than that which Jesus proclaimed at 
 Jacob's well. Man could not rest therein, for one attains the ideal for 
 but a moment. The word of Jesus was a gleam in a sombre night. It 
 has taken eighteen hundred years for the eyes of mankind (what do I say, 
 for an infinitely small portion of mankind) to grow accustomed to it! 
 But the gleam shaU become the full day; and, after having exhausted 
 
 1 Ibid.. VIU: SI. 
 Ubid., XVU: 20. 
 » Matt., XXVI: 63. 
 < Ibid.. VII: 12. 
 > Vie de Jtsus, p. 244. 
 
 1 1 ■ •$ 
 
 4 
 I'd 
 
 Bk. IV 
 
 Christ 
 
 543 
 
 every circle of error, humanity will return to those words as to the im- 
 mortal expression of its faith and of its hope." 
 
 These words contain the essence of the scientifically reasoned philo- 
 sophic systems and great religions of the world. If the total of human 
 experience may be referred to three comprehensive fields, the world, as 
 reflected in the human experience, or consciousness, must be regarded as 
 a triple, not as a single or a dual, object of study; and the three sides it 
 presents are Sense and Reason, and something other than either. Sense 
 and Reason when fully analyzed, singly or combined, reduce the world 
 and man to a formless chaos of substance or ignorance, and then unite 
 in the Ethics of Christ as their only vital principle. 
 
 The words of Christ then transcend these and embrace the best^ of 
 the religions of the world. Thus, human experience in its comprehensive 
 sense: Science, Reason, and Religion combined, might be summarized 
 in the thought suggested by the one word — Christ. 
 
 This is the nugget of pure metal lying at the bottom of the crucible. 
 In the words of Renan: "He really was the Son of God." 
 
 ! f 
 
 
1 1 ^!i ; 
 
 
 j 
 
 if 
 
 1 \ 
 
 ^mm 
 
 Part V 
 
 BOOK I 
 POLITICAL THEORY 
 
 BOOK II 
 POLITICAL PRACTICE 
 
 BOOK III 
 PRACTICAL POLITICS 
 
 < '!' 
 
 ' 'M 
 
ii 
 
 ) I 
 
 I 
 
 I 
 
 I 
 
 Book I 
 
 POLITICAL THEORY 
 CHAPTER I 
 
 INTRODUCTION 
 
 AN," says Aristotle,^ "is naturally a political animal." 
 If so, it seems that many of man's most enduring achieve- 
 ments should be sought within the field of social and 
 political organization. Yet, since the great Athenians, 
 political history presents slight realization of such hope, there are few 
 subjects seemingly within the legitimate range of the human inteUigence 
 involving such illusive and conflicting material, and in which so little 
 progress may be traced since the first systematic statement of its 
 problems. Political thought to-day, in its more general aspects, is 
 concerned with much the same questions with which it was occupied 
 some thousands of years ago. 
 
 The fundamental problems in administrative organization are the 
 relations to the society and to each other of the different administrative 
 powers created. How are these powers to be derived? Upon what 
 principle should their control be governed? These are the first questions 
 met in the organization of political systems. In nearly every field of 
 thought, inquiry exhausts itself sooner or later, in a position developed 
 in Athens over two thousand years ago as the ultimate analysis of which 
 the subject is capable. Political inquiry is no exception. The old 
 Greek analysis of the One, the Few, and the Many exhausts the classi- 
 fication of the forms in which the administrative powers of political 
 systems may exist. Aristotle accepts this analysis and says^ that the 
 supreme authority of States must be in the hands of One, of Few, or of 
 Many. Where these systems appear in their perfectly realized form, 
 the resulting society presents a pure Autocracy, a pure Aristocracy, or a 
 pure Democracy. When, however, any one of these pure forms is 
 
 * Politics. A. », 1353 ^ <• 
 
 I' V 
 
 547 
 
 I 
 
I 
 
 i 
 
 { 
 
 548 
 
 Political Theory 
 
 Pt. V 
 
 brought into actual existence, there is always a tendency to degenerate 
 into what might be called its corresponding corruption. 
 
 Thus, a society which selects its ablest man, and gives him absolute 
 power, establishes a pure kingship, or Autocracy; but with changing 
 conditions or under his less able successors, this Autocracy will gradually 
 be transformed into an oppressive tyranny, or despotism. Again, 
 where a society surrenders its powers to a few men of the highest attain- 
 ments or birth, the society establishes an Aristocracy which may be of 
 great temporary advantage. Experience shows, however, that a pure 
 Aristocracy sooner or later abuses its power and degenerates into a 
 corrupt oligarchy. Again, a society attempting to govern itself through 
 the popular will alone shows an inevitable tendency to develop into a 
 formless and headless body under mob rule; a condition of which the 
 rule of the One usually presents the only available remedy. 
 
 If these are the ultimate forms in which political society may be 
 organized, and if each shows a tendency to change and degenerate, 
 it seems that the history of the typical society will present a sequence of 
 these administrative phases gradually superseding each other; the pure 
 form originally established degenerating into its corresponding corruption 
 when a revolutionary change will occur; the earlier form being replaced 
 by another, until all the phases are exhausted; when the society will 
 begin to repeat the process. This seems in fact to be the law of what 
 might be called political motion. This law has been observed and for- 
 mulated by the most competent political and constitutional observers. 
 The natural sequence seems to be in the order named. In its earliest 
 stages, when the need for thoroughly centralized authority is great, a 
 society generally develops a pure kingship, or Autocracy, which sooner 
 or later becomes a despotic tyranny. The strongest men will then organ- 
 ize in order to rid themselves of the tyrant and found an aristocratic 
 system. The Aristocracy will become an oppressive oligarchy, which 
 the people will eventually throw off and found a Democracy. The 
 Democracy will fall into the hands of the corruptionists, develop factions 
 and civil wars, with the result that the society will be forced to throw 
 itself under the sword of a dictator and the process begins anew. 
 
 It is, of course, under exceptional conditions that one man will be 
 able to trace the entire sequence in any single society; for the life of the 
 organization may outlast that of its units many times over. Yet the 
 lives of certain men at times happened to fall at such periods that 
 their opinions with reference to political and constitutional changes are 
 
 Bk. I 
 
 Introduction 
 
 549 
 
 of peculiar interest. In the entire range of history the field of this nature 
 opened to Polybius was perhaps unique. As a Greek he was in pos- 
 session of the best of Hellenic thought; but, his life, falling as it did 
 toward the close of Greek civilization, and passed largely at Rome 
 showed him the birth and growth of a new power and all the poUtical 
 movements of that exceptional period. Two worlds were thus unfolded 
 to the view of a single man, and one well equipped for their intelligent 
 observation. The value of the opinion of Polybius with reference to 
 constitutional evolution could not be better shown than in the words of 
 
 Freeman:^ 
 
 "There was one Greek historian before whose eyes the history of the 
 world was laid open as it never was to any other man before or after. 
 There was one man who, in the compass of a single life, had been as it 
 were a dweller in two worlds, in two wholly different stages of man's 
 bemg. To the experience of Polybios the old life of independent Greece, 
 the border warfare and the internal politics of her commonwealths, 
 had been the familiar scenes of his earlier days. His cMldhood had 
 been brought up among the traditions of the Achaian League, among 
 men who were fellow-workers with Markos and Aratos. His birth 
 would almost fall in days when Megalopolis stood, under the rule of 
 Lydiadas, as an independent unit in the independent world of Hellas. 
 The son of Lykortas, the pupil of Philopoim^n, may have sat as a child 
 on the knees of the deliverer of Siky6n and Corinth. He could remember 
 the times when the tale of the self-devotion of their illustrious tyrant 
 must have still soimded like a trumpet in the ears of the men of the Great 
 City". He had himself borne to the grave the urn of the last hero of his 
 native land, cut off, as Anaxandros or Archidamos might have been, in 
 border warfare with the rebels of Mess^n^. He could remember times 
 when Macedonia, perhaps even when Carthage, was still an independent 
 and mighty power, able to grapple on equal terms with the advancing, 
 but as yet not overwhelming, power of Rome. He lived to see all 
 swept away. He lived to see Africa, Macedonia, and Greece itself, 
 either incorporated with the Roman dominion or mocked with a 
 shadow of freedom which left them abject dependents on the will of 
 the conquering people. He saw the dominion of the descendants of 
 Seleukos, the truest heirs of Alexander's conquests, shrink up from the 
 vast empu-e of western Asia into the local sovereignty of a Syrian king- 
 dom. He saw Pergamos rise to its momentary greatness and Egypt 
 
 1 Comparative Politics, p. aoa. 
 
 IM! 
 
 [i li 
 
5SO 
 
 Political Theory 
 
 Pt. V 
 
 B 
 
 lili 
 
 begin the first steps of its downward course. He saw the gem of Asiatic 
 history, the wise Confederation of Lykia, rise into being after the model 
 of the State m which his own youth had been spent. He lived to stand 
 by the younger Scipio beside the flames of Carthage, and, if he saw not 
 the nun of Corinth with his own eyes, he lived to legislate for the help- 
 less Roman dependency into which the free HeUenic League of his youth 
 had changed. The man who saw all this saw changes greater than the 
 men who lived in the days of Theodoric and Justinian, or the men who 
 lived in the days of the elder Buonaparte." 
 
 This passage suggests political changes involving several generations, 
 tte hves of many miUions of men, and scores of constitutional systems 
 The movement of so many political aggregates passing through different 
 constitutional phases, as Freeman says, in all likelihood never feU before 
 or smce beneath the eyes of a single trained observer. The opinion of 
 Polybius, therefore, with reference to the movement of constitutional 
 systems is worth attention. 
 
 The cycle mentioned is that observed by Polybius: Autocracy, Aris- 
 tocracy, Democracy, which seem to degenerate progressively and foUow 
 each other automatically whenever men unite in the formation of 
 political society. "This," says Polybius,i "is the regular cycle of 
 constitutional revolutions, and the natural order in which constitutions 
 change, are transformed, and return again to their original stage. If a 
 man have a clear grasp of these principles he may perhaps make a mis- 
 take as to the dates at which this or that will happen to a particular 
 constitution; but he will rarely be entirely mistaken as to the stage of 
 growth or decay at which it has arrived, or as to the point at which it 
 will undergo some revolutionary change." 
 
 The pure forms of Autocracy, Aristocracy, and Democracy rarely 
 appear upon the stage of events; the average constitution being one in 
 which these are mixed in different combinations. In no mixed system 
 however, has a perfect balance ever been obtained between these powers' 
 one or the other always gains an ascendency, encroaches upon the fields 
 of the others, and sooner or later, with increasing influence, develops its 
 own pure form. When a pure power thus appears, the society often 
 begms to pass through the pure phases of the sequence traced. When 
 this momentum is exhausted, mixed forms reappear and the process 
 repeats itself. *^ 
 
 .^J^tle^s study of the Greek sUtes under his observation led him to 
 
 . '^Tk€ Bisiorics 0/ Polybius, VI., 9. Shuchburgh's TransUtion. Vol. I. p. 466. 
 
 Bk. I 
 
 Introduction 
 
 SSI 
 
 regard that mentioned as the most natural sequence through which con- 
 stitutional changes occur. ^ The most noteworthy constitutional sequence 
 in antiquity, however, is upon the great stage of Roman history; the 
 political and legal genius of the Roman people lending it peculiar effect 
 and interest. Thus the early autocratic kingship degenerates into the 
 usual despotic tyranny. This throws sufficient power into the hands of 
 the leading men to supplant the tyranny with the aristocratic power of 
 the patricians. The abuse of this power begins to throw the balance 
 toward the plebeians, which results in the struggle of the orders and the 
 Marian upheaval. The balance thrown entirely in the direction of the 
 Many, produces the usual corrupt plutocracy, political factions, the 
 usual civil wars culminating in the usual dictatorship. The society, after 
 going through the regular forms of the typical constitutional sequence 
 reproduces the pure autocracy of the first stage of the social life which 
 is followed by the disintegration of the society. 
 
 Thus, had Polybius, after watching this process in antiquity, seen the 
 early mixed systems of England gradually give way to the pure despotism 
 of the Stewarts, he would probably have predicted that a constitutional 
 revolution was to be expected. The question would then be whether 
 the balance would fall toward Aristocracy or Democracy. This will 
 depend upon the relative stability of existing institutions. The popular 
 Assembly held the balance with the result that a pure Democracy was 
 established. Had he then watched the hopeless phases through which 
 the Long Parliament drifted, he would probably have said that a pure 
 Autocracy was but a question of time. When the society had reestab- 
 lished a pure one-man power, with Cromwell in control, he would possibly 
 have said that the pure phases were now exhausted; that the Autocracy 
 would collapse and the society go back to a mixed system with Aris- 
 tocratic leaning. 
 
 Had Polybius watched the earlier mixed constitutions of France 
 gradually crystallize into the pure despotism of the Bourbons, he would 
 perhaps have wondered what form the Revolution would take. If the 
 Aristocracy supports despotism, the power will fall toward Democracy, 
 as it had in England in the previous century. Democracy in control 
 and mob-rule everywhere in force, the date at which a dictatorship will 
 be established becomes the next question. The Napoleonic dictatorship 
 in full power, he would probably have begun to estimate what mixed 
 form the society would adopt. When the mixed Monarchy had super- 
 
 » Eth.. Nic. r. la, X160 b aa. a. PdiHa T. 15. 1286 b 8 et sc(^ '^ 
 
 II 
 
552 
 
 Political Theory 
 
 Pt. V 
 
 seded the pure Autocracy, he would have studied the constitution in 
 order to see which power held the balance and would develop a pure form. 
 The pure Democracy of the revolution 1848 in operation, he would 
 expect the pure power of the second Republic to give way to the pure 
 Autocracy of the second Empire. The pure Autocracy in control, the 
 society has again exhausted the pure sequences, will develop some more or 
 less mixed form and get ready to begin over again. It seems that no 
 form of administrative organization has ever been conceived in which the 
 final controlling power is not in the hands of one man, of a few men, or of 
 the representatives of the many; and this controlling balance, into which- 
 ever power it falls, is mathematically certain to develop a pure 
 power sooner or later, which will degenerate, and roimd the society 
 will begin to revolve through the usual rings of revolution and re- 
 organization. 
 
 This seems to be the law governing the action of organized constitu- 
 tional force. This is the law which led Talleyrand always to regard 
 Napoleon, even at the height of his power, as an ephemeral phenomenon 
 and Moscow as "the beginning of the end." This is the law which led 
 Macaulay to predict in 1857 that, as soon as the land was occupied, 
 the population of the American Republic would begin to repeat all the 
 phases of older societies. "You may think that your country enjoys 
 exemption from these evils," he wrote^ to Randall; "I will frankly own 
 to you that I am of a very different opinion. Yoiu: fate I believe to 
 be certain, though it is deferred by a physical cause. As long as you 
 have a boundless extent of fertile and unoccupied land, your labouring 
 population will be far more at ease than the labouring population of the 
 Old World, and, while that is the case, the Jefferson politics may continue 
 to exist without causing any fatal calamity. But the time will come when 
 New England is as thickly populated as Old England. . . . Then 
 your institutions will be fairly brought to the test. . . . There will 
 be, I fear, spoliation. The spoliation will increase the distress. The 
 distress will produce fresh spoliation. There is nothing to stop you. 
 Your constitution is all sail and no anchor. . . . Either some 
 Caesar or Napoleon will seize the reins of government with a strong hand, 
 or yoiu: Republic will be as fearfully plundered and laid waste by bar- 
 barians in the twentieth century as the Roman Empire was in the fifth; 
 with this difference, that the Huns and Vandals who ravaged the Roman 
 Empire c ame from without, and that yoiu: Hims and Vandals will have 
 
 » Macaulay 's Life and Letters. Vol. II., pp. 408, 400. 
 
 . 5 < 
 
 Bk. I 
 
 Introduction 
 
 553 
 
 been engendered within your own country by your own institutions. 
 This seems to be the law governing poUtical motion and, watched at 
 work for thousands of years, it seems ahnost as regular in its acUon as 
 
 the law of gravitation. 
 
 When this law is understood, little hope of stabihty will be enter- 
 tained for any of the final forms of poUtical organization in their punty. 
 A pure Aristocracy seems but the foundation for a democratic upheaval; 
 a pure Democracy but a dictatorship in embryo. The result is that 
 informed poUtical inquiry turns to the development of constitutional 
 systems embracing the advantageous elements of the three admmis- 
 trative forms while discarding their dangers and corruptions. 
 
 As Polybiusi says, none of the three forms in its purity can be regarded 
 as the best. The best constitution, or organized citadel of adminis- 
 trative power, should be constructed of the best elements of aU three, 
 with the eUmination, or counter-checking, through another power of 
 their dangerous phases. This same idea announced so many centuries 
 ago is constantly repeated to-day wherever men turn then: attention to 
 constitutional organization. Says Freeman i^ "The older school of 
 English constitutional writers deUghted to show that the English Consti- 
 tution contained a monarchic, an aristocratic, and a democratic element, 
 and that the three were wrought together in such true and harmomous 
 proportion that we could enjoy the good side of all the three great forms 
 of government without ever seeing the evil side of any of them. This 
 is the point at which political inquiry of this nature begins. 
 
 The problems before the constitution builder is so to combme, control, 
 and balance the powers entrusted to the One, the Few, and the Many, 
 that no smgle power may dominate the society or subvert the other two. 
 In democratic constitutions this may take the form of a system of 
 checks and balances between the Executive, the Judiciary, and the 
 Legislature. The history of Europe shows, apparently, durmg the last 
 century, that the English system of a Umited monarchy, an upper heredi- 
 tary Chamber with veto power, and a flexible Ministry, representmg the 
 majority of an elective Assembly is, for Anglo-Saxon soaety at least, 
 as nearly stable a balance of administrative functions as has yet been 
 discovered. In such a system, however, the beam of the scale will fall 
 toward the lower House.^ Had Polybius watched it at work, he would 
 
 »VI., 3, p. 459- 
 
 « Growth of the English Constitution, p. u. 
 
 « Cf. Growth of the English ConstUution, Freeman, pp. iSS. 231. 
 
 l! 
 
 i 
 
■4 
 
 
 1 
 
 i\ 
 
 i- 
 
 II 
 
 554 
 
 Political Theory 
 
 Pt. V 
 
 probably expect the Crown gradually to lose its vital functions, he would 
 probably believe that friction between the two Houses would tend to 
 check the veto power of the upper Chamber and eventually reduce it 
 to a mere shell. If such is the case, a pure Democracy is but a question 
 of time. 
 
 When the pure Democracy is developed, the society will reproduce 
 the phases through which it passed in the seventeenth century, recombine 
 and begin to repeat the mixed constitutional forms through which it 
 has been passing periodically for about fourteen hundred years. ^ The 
 history of the English Constitution seems to a large extent but a repro- 
 duction of the history of other political constitutions, ancient and modem . * 
 Whatever mixed system a society adopts, it neariy always develops a 
 pure form sooner or later. The society will thus find itself periodically 
 passing through analogous constitutional phases; recombining, reprodu- 
 cing analogous combinations and then repeating. In the seventeenth 
 century as Freeman well says:* "A King of England once more, as in 
 the days of Henry and Sunon, stood forth in arms against his people 
 to learn that the power of his people was a greater power than his. 
 But in the seventeenth century, just as in the thirteenth, men did not 
 ask for any rights and powers which were admitted to be new; they only 
 asked for the better security of those rights and powers which had been 
 handed on from days of old." Again,* speaking of the tribunal before 
 which Charles the First was arraigned: "Even the vote by authority 
 of which that tribunal acted, the vote which seems so strange and daring, 
 the vote which declared that it was high treason for a King of England 
 to levy war against his Parliament, was little more than a translation of 
 an earlier vote which had declared John to be 'a perjured King in re- 
 bellion against his Barons.'" 
 
 Again, in i688, as Freeman says:^ "A true Assembly of the nation 
 once more put forth its greatest power, and chose William of Orange, as, 
 six hundred years before, another Assembly of the nation had chosen 
 Harold the son of Godwine. The cycle had come round; the English 
 people had won back again the rights which their fathers had brought 
 with them from their old home beyond the seas." 
 
 As soon as a Western society develops a pure Autocracy, this Autoc- 
 
 >Ibid., pp. 30, 31. 
 * Ibid., pp. 14, a seq. 
 ' Ibid., p. zoQ. 
 *Ibid., p, IS3. 
 ■Ibid., p. IS4. 
 
 Bk. I 
 
 Introduction 
 
 5SS 
 
 racy begins to degenerate and undermine its own power. The constitu- 
 tional change is inevitable. The balance in the resulting society will 
 lean toward Aristocracy or Democracy, and these two forms thus be- 
 come the most familiar in modem political organization. There are 
 apparently no others. The literature of the subject is large; the last 
 half century being especially rich in the number of its contributions. 
 This literature, as well as the forms of existing society, nearly always 
 partakes of the nature of one or the other of these opposed schools of 
 political thought. Perhaps the writings of Sir Henry Maine and Mr. 
 Lecky on one side, and those of Karl Marx and Henry George on another 
 may be regarded as more or less typical of each. 
 
 No comprehensive view of the subject may be obtained, however, 
 without extending the range of inquiry over a wider field than that of 
 the immediate foreground. A great body of investigation dealing with 
 political theory and political society exists, suggested by the names of 
 Bryce, Morley, Sir Frederick Pollock, Grote, Adam Smith, Mill, The 
 Fabian Essayist, Spencer, Taine, Turgot, Rousseau, de Tocqueville, 
 the forerunners of the French Revolution, Locke, Hobbs, Owen, the 
 German and Russian political writers and, in fact, practically all the 
 political and jurisprudential thinkers from Confucius, Aristotle, and 
 Cicero to Mr. Chamberlain, might be named. To say that this entire 
 volume of thought might be divided exactly into two distinct portions 
 would doubtless be an exaggeration; yet these two broad classifications 
 nearly always make themselves felt, sooner or later, in some form or 
 other. The division always presenting itself is that separating nearly 
 all political inquiry into two schools; the schools of the Few and the 
 school of the Many; the Aristocratic and Democratic systems. With 
 the elimination of a transitory Despotism, it seems impossible to formu- 
 late constitutional thought in terms not embraced in these two cate- 
 gories. The final repository of political power must apparently be vested 
 in the control of an established group, or derived from the community 
 through the action of the vote. If the first is adopted, the society is 
 Aristocratic, if the second, the basis of a Democracy has been formed. 
 
 Political inquiry thus resolves itself into a comparison of Aristoc- 
 racy and Democracy. The best way to study a political system is in 
 the actual working of a society under it; the subject will, therefore, be 
 examined in a brief analysis of the Aristocratic and Democratic systems 
 in typical, existing societies. 
 
 :l 
 
 I. ■ 
 
 '••I 
 
i 
 
 MB 
 
 CHAPTER n 
 
 111 
 
 I 
 
 I 
 
 I 
 
 ARISTOCRACY 
 
 IT IS not easy to study the history of nations under aristocratic 
 constitutions and long remain in ignorance of the dangers of 
 entrusting administrative power to the Few. The formation 
 of class interests opposed to those of the Many is inevitable. The 
 temptation of the Few to place their interests before those of the 
 majority is always present, and experience shows not often resisted. 
 
 Books have been multiplied indefinitely to prove the superiority of 
 aristocratic political society; the considerations to be advanced in its 
 favour as opposed to the democratic form are endless; some of the 
 broader theoretical positions all but unanswerable; even Ruskin and Mr. 
 Gladstone,! it may be remembered, styled themselves "inequaliUrians." 
 Yet, when the attention is turned from these generalizations to the 
 study of Aristocracy in fact, the system leaves much to be desired. 
 
 There is but one basis for the best form of aristocratic political organi- 
 zation: that basis is territorial possession. The ownership of land, as 
 the foundation of political and legislative influence, is by far the best 
 qualification for legislative influence in any aristocratic system. Prop- 
 erty of this kind not only frees the legislature from corrupting external 
 dangers, brings with it local influence, but to a certain extent blends the 
 permanent interests of the owner and occupier of the land; that is, 
 the interests of the administrative class and the interests of the society 
 at large. On account then of the limited area of her land, and the 
 fact that few, if any, modern societies have developed parliamentary 
 institutions of a more liberal type, England presents the most favourably 
 constituted modem example of aristocratic society: the society in 
 which the application of aristocratic principles may be studied under 
 most favourable conditions. 
 
 It is not the present purpose to develop even the briefest review of 
 the theoretical considerations to be advanced either for or against the 
 aristocratic principle; the able works dealing with the subject need no 
 repetition . The attention, on the contrary, is turned for a moment to the 
 
 » Life of Gladstone, JcDm Mqrley. 
 
 SS6 
 
 Bk. I 
 
 Aristocracy 
 
 SSI 
 
 legislative history of the most successful aristocratic society of modem 
 times. The only way in which facts may be studied with profit is 
 in the light of some generalized process of classification. So, too, the 
 only method of judging theory is to test its capacity for being brought in 
 contact with facts. The way administrations meet conditions shows 
 the resiilts of the principles upon which the adminstrative system of the 
 society is based. It seems impossible then, for reasons given, to study 
 the workings of an aristocratic administration under conditions more 
 favourable than in the history of the English people. This history is 
 exhaustively analyzed for a period of six hundred years, and the 
 results presented by Professor Thorold Rogers in Work and Wages. The 
 advantages of the aristocratic system here becomes clearly evident 
 — for the administrative Aristocracy. As the attitude of a legislative 
 Assembly, based upon the aristocratic principle, is studied, toward such 
 questions as Acts regulating wages, ^ the debasement of the coin in 
 which the wages were paid,^ quarter sessions assessment,^ the right 
 of the peasantry to pasture and fuel,* enclosures,^ the confiscation 
 of the funds of labour guilds,^ Laws of parochial settiements,^ dispro- 
 portionate burden of taxes,^ Com Laws, and so on, these advantages 
 come into startling relief; they seem, however, invariably, in favour of 
 the administrative oligarchy; except where decisions undo the evil 
 effects of previous decisions. Says Professor Rogers:^ 
 
 "We have been able to trace the process by which the condition of 
 English labour had been continually deteriorated by the acts of govern- 
 ment. It was first impoverished by the issue of base money. Next 
 it was robbed of its gidld capital by the land thieves of Edward's re- 
 gency. It was next brought in contact with a new and more needy 
 set of employers — the sheep masters who succeeded the monks. It 
 was then with a pretence, and perhaps with the intention of kindness 
 subjected to the quarter sessions assessment, mercilessly used in the 
 first half of the seventeenth century, the agricultural labourer being 
 still further impoverished by being made the residuum of all labour. 
 
 1 Work and Wages, p. 480. 
 
 • Ibid., p. 428. 
 » Ibid., p. 353. 
 < Ibid., p. 488. 
 » Ibid. 
 
 • Ibid., p. 349. 
 » Ibid., p. 433. 
 
 • Ibid., p. 505. 
 
 • Ibid., p. 488. 
 
 11 
 
 a 
 a 
 
 w 
 
i'< 
 
 f^l 
 
 iK' 
 
 SS^ Political Theory pt. V 
 
 The agricultural labourer was then further mulcted by enclosures, and 
 the extinction of those immemorial rights of pasture and fuel which he 
 had enjoyed so long. The poor law professed to find him work, but was 
 so administered that the reduction of his wages to a bare subsistence be- 
 came an easy process and an economical expedient. When the monarchy 
 was restored, his employers, who fixed his wages by their own authority, 
 relieved their own estates from their ancient dues at the expense of his 
 poor luxuries by the excise, tied him to the soil by the Law of Settie- 
 ment, and starved him by a prohibitive com law." 
 
 It is not easy to add to this interesting summary of the "practical" 
 advantages accruing to a people who surrender themselves to the mercies 
 of an aristocratic administration. A few others, however, have been 
 presented in the words of Cobden.^ 
 
 In fact, any one who studies the action of the average aristocratic 
 legislative assembly, in Great Britain or elsewhere, may be led to the 
 opinion that such an assembly is never so well employed as when en- 
 gaged in the reversal of its own decisions. 
 
 It is not easy to estimate the amoimt of legislation developed by 
 the Com Laws. All this mass of legislative complication grew out 
 of ignorance or worse, and the one step which possessed any value 
 in the long chain was but the repeal of legislation which should 
 never have been enacted. Says Buckle^ in speaking of the repeal of 
 the Com Laws: "I have selected this instance as an illustration be- 
 cause the facts connected with it are imdisputed, and, indeed, are fresh 
 in the memory of us all. For it was not concealed at the time, and 
 posterity ought to know, that this great measure, which, with the ex- 
 ception of the Reform Bill, is by far the most important ever passed by 
 a British Parliament, was, like the Reform Bill, extorted from the legis- 
 lature by a pressure from without; that it was conceded, not cheerfully, 
 but with fear; and that it was carried by statesmen who had spent their 
 lives in opposing what they now suddenly advocated. Such was the 
 history of these events; and such likewise has been the history of all 
 those improvements which are important enought to rank as epochs 
 in the history of modem legislation. 
 
 "Besides this, there is another circumstance worthy the attention of 
 those writers who ascribe a large part of European civilization to meas- 
 ures originated by European governments. This is, that every great 
 
 > Cf., p. m. 
 
 * History of Civilisation in England, Vol. I, p. 334. 
 
 Bk. I 
 
 Aristocracy 
 
 SS9 
 
 reform, which has been effected, has consisted, not in doing something 
 new, but in undoing something old. The most valuable additions made 
 to legislation have been enactments destructive of previous legislation; 
 and the best laws which have been passed, have been those by which some 
 former laws were repealed. In the case just mentioned, of the corn 
 laws, all that was done was to repeal the old laws, and leave trade to its 
 natural freedom." 
 
 The actual history of aristocratic govemments shows, as Buckle 
 points out, that the most important steps taken by 'these have been forced 
 upon them from without, in the first place; and in the second, consist 
 chiefly in the repeal of their own legislation. As Lord Acton* well 
 says with reference to the action of corporate bodies: 
 
 "The House of Lords represents one great interest — land. A body 
 that is held together by a common character and has common interests is 
 necessarily disposed to defend them. Individuals are accessible to 
 motives that do not reach multitudes, and may be on their guard against 
 themselves. But a corporation, according to a profoimd saying, has 
 neither body to kick nor soul to save. The principle of self-interest 
 is sure to tell upon it. The House of Lords feels a stronger duty toward 
 its eldest sons than toward the masses of ignorant, vulgar, and greedy 
 people. Therefore, except imder very perceptible pressxire, it always 
 resists measures aimed at doing good to the poor. It has been almost 
 always in the wrong — sometimes from prejudice and fear and miscal- 
 culation, still oftener from instinct and self-preservation. Generally, 
 it does only a temporary injury, and that is its plea for existence. But 
 the injury may be irreparable. And if we have manifest suffering, 
 degradation and death on one side, and the risk of a remodelled senate 
 on the other, the certain evil outweighs the contingent danger. For 
 the evil that we apprehend cannot be greater than the evil we know." 
 
 Again :2 "The fact is that education, intelligence, wealth are a 
 security against certain faults of conduct, not against errors of policy. 
 There is no error so monstrous that it fails to find defenders among the 
 ablest men. Imagine a congress of eminent celebrities, such as More, 
 Bacon, Grotius, Pascal, Cromwell, Bossuet, Montesquieu, Jefferson, 
 Napoleon, Pitt, etc. The result would be an Encyclopedia of Error. 
 They would assert Slavery, Socialism, Persecution, Divine Right, 
 Military Despotism, the reign of force, the supremacy of the executive 
 
 1 Letters to Mary Gladstone, p. 206. 
 * Ibid., p. 195 et seq. 
 
 Hi 
 
 !■ 
 
 't>l 
 
S6o 
 
 Political Theory 
 
 Pt. V 
 
 ;, 
 
 over legislation and justice, piurchase in the magistracy, the abolition 
 of credit, the limitation of laws to nineteen years and so forth. If 
 you were to read Walter Scott's Pamphlets, Southey's Colloquies, 
 Ellenborough's Diary, Wellington's Despatches — distrust of the select 
 few, of the chosen leaders of the community, would displace the dread 
 of the masses. The danger is not that a particular class is imfit to 
 govern. Every class is xmfit to govern. The law of liberty tends to 
 abolish the reign of race over race, of faith over faith, of class over 
 dass. It is not the realisation of a political ideal: it is the discharge of 
 a moral obligation." 
 
 Such consideration may well recall the words of Huxley* in expressing 
 his indebtedness to Comte for the conviction "that the organization of 
 society upon a new and purely scientific basis is not only practicable, 
 but is the only political object much worth fighting for." 
 
 These passages present four positions with reference to Aristocracy: 
 
 1. A large part of the entire process of aristocratic legislation, as its 
 history is presented by Professor Rogers in relation to the population 
 under its control for six hundred years, could be siunmarized in one word 
 — exploitation. 
 
 2. Buckle's clearly expressed opinion, which history supports, that 
 every great reform effected has been forced upon aristocratic assemblies 
 from without and consists in little but the repeal of their own enactments. 
 
 3. The words of Lord Acton, that "distrust of the select few," may 
 well "displace the dread of the masses." 
 
 4. The opinion of Huxley that a scientific reorganization of society 
 is the "only political object much worth fighting for." 
 
 The most thorough arraignment of the aristocratic principle need 
 apparently be sought no farther than in the words of England's best 
 informed and ablest sons. As Lord Acton says: "The danger is not 
 that a particular class is imfit to govern. Every class is unfit to govern.** 
 
 yiay Sermons, Addresses and Reviews, p. 13a 
 
 CHAPTER III 
 
 DEMOCRACY 
 
 j4 RISTOCRACY concentrates political power in the hands of 
 /% the Few. Democracy embraces the widest possible surface 
 / % of the social organization and derives power from the Many. 
 •^ "^ It is a curious comment upon the action of the human intel- 
 ligence to compare constitutional literature with political conditions: 
 to compare the Democracy of de Tocqueville and the French writers 
 of the eighteenth century, the Democracy of Washington, Hamilton, 
 and Jefferson; the Democracy of Lowells' tribute at Birmingham, with 
 the Democracy that walks the streets and casts its vote to-day in London, 
 Paris, and New York. 
 
 There are many words in every tongue constantly used, either without 
 any definite conception of their meaning or with meanings so different 
 that they may be applied to any purpose. Such words are Liberty, 
 Industrial Freedom, Natural Rights, Social Justice, and such a word 
 is Democracy. To some minds Democracy seems to present a golden 
 inspiration from Heaven, to others a sinister invention of the Evil One. 
 The attempt to discover what Democracy really is might lead to the 
 definition of Sir Henry Maine •,^ as a starting-point — namely, that 
 Democracy is a "form of Government," just as is Monarchy or Aristoc- 
 racy, and in ultimate analysis little but an "inverted Monarchy." 
 Demos simply votes himself into the throne of the Caesars, which he 
 occupies at times with questionable grace, to say nothing of intelligence. 
 In a democratic society. Demos occupies the citadel of power and, it 
 may well be asked, what are his administrative qualifications? In 
 other words, what is the concrete thing. Democracy? 
 
 The first essential in responsible administration is the exercise of 
 intelligent volition; without this, decision becomes but brainless inanity. 
 But, it may again be asked, is it conceivably possible for a multitude 
 to exercise intelligent volition? Has any multitude in history ever 
 shown itself for any time anything but a dough-like mass, kneaded into 
 any desired form by capitalist, priest, or politician; or the aimless 
 
 * Popular Government, p. 59. 
 
 56s 
 
's62 
 
 Political Theory 
 
 , 
 
 Pt. V 
 
 inconsequences of which these Mow for their own profit? Is it pos- 
 able or thinkable for a multitude to conceive, formulate, and direct any 
 policy except through the instrumentality of its few more or less dominant 
 inteUects? To say that these may be chosen representatives of popular 
 opmion, IS beside the issue in the application of democratic theory to 
 concrete questions. Popular opinion, in the first place, when brought 
 in contact with complicated financial and administrative problems, 
 has rarely shown itself anything but a confused amalgam of ignorance 
 and error; and these individuals, in the second place, once in possession 
 of poUtical power, became invested with individual and class interests, 
 quite as much as the most rigidly exclusive Aristocracy; and this with- 
 out tradition to preserve, permanent or territorial position to uphold 
 or any responsibility beyond a few years of office. ' 
 
 Vox populi, vox dei, says the old Latin proverb; but granting vox 
 popult to be vox dei, important questions remain with reference to the 
 meaning of vox and populus. '' Is the voice of the People the voice which 
 speaks through scruHn d'arrondissement or through scrutin de lisW 
 pertinently asks Sir Henry Maine,i "by Plebiscite or by tumultuaAr 
 assembly? Is it a sound in which the note struck by minorities is 
 entirely silent? Is the People which speaks, the People according to 
 household suffrage, or the People according to universal suffrage; the 
 People with aU the women excluded from it, or the People, men, women 
 and children together, assembling casually in voluntary meeting? 
 None of these questions have been settled ; some have hardly been thought 
 about. In reality, the devotee of Democracy is much in the same posi- 
 tion as the Greeks with their oracles. All agreed that the voice of 
 an oracle was the voice of a god; but everybody allowed that when he 
 spoke he was not as inteUigible as might be desired, and nobody was 
 quite sure whether it was safer to go to Delphi or to Dodona." 
 
 As England offers the most favourable ground for study of the working 
 Aristocracy, the American Repubhc presents the best material for the 
 study of Democracy in reality; and not in the hypothetical relations of 
 men s mmds. The real history of Democracy in America, it may be 
 said, begins at the close of the Civil War. Until then the population 
 had an unoccupied land area at its disposition, and under such condi- 
 tions would probably have spread itself over the country equally satis- 
 factorily under a Chinese Emperor or an Indian Rajah. Until a popula- 
 tion fills Its land area, it can scarcely be said to come in contact with its 
 
 . » Popular Government, p. 185. 
 
 Bk. I 
 
 Democracy 
 
 563 
 
 administration; the land offering relief at all points. Not until the 
 land is absorbed will its institutions be put to the test, as Macaulay 
 pointed out years ago. During the latter half of the nineteenth century, 
 the land of the United States was gradually absorbed and the conditions 
 foreseen by Macaulay began to make their appearance. The land no 
 longer possessed its old absorbing power, with the result that the in- 
 creasing population has been forced to flood existing centres. 
 
 While the history of early American Democracy presents general 
 well-being, evenly distributed wealth, and relatively little political 
 spoliation, later American Democracy presents constantly increasing 
 slums and pauperism, together with the most rapid and resistless con- 
 centration of property and political power in the hands of a few individuals 
 that has in all likelihood ever occurred under any administration. These 
 conditions have, moreover, been produced under the direction of a 
 government supposed to be by the people and for the people. 
 
 The prevalent conceptions of Democracy and constitutional theory 
 in the United States to-day are those derived from eighteenth-century 
 French theorists and the English Whigs under George III. To listen to 
 popular theories of (k>vemment and consitutional debates in the legis- 
 latures of the American Republic is to hear archaic echoes of a dead 
 century. They have a "quaint paleozoic quality," says Professor 
 Ford. ^ "They sound like edioes from a remote past." It is of interest, 
 therefore, to watch this eighteenth-century Democracy at work in 
 relation to twentieth-century conditions. Montesquieu and the English 
 Whigs, speaking through the Constitution of the United States, have 
 nothing to say with reference to the public service franchise as a factor 
 in Democracy, they are silent upon the connexion between an indirect 
 fiscal system and universal suffrage, they make no mention of the nominat- 
 ing organization in relation to incorporated wealth, a protective system, 
 an important judicial decision, the "boss," or the slum vote. These 
 are none the less problems of existing conditions confronting the Adminis- 
 tration of the United States, and it is interesting to watch the elements 
 which eighteenth-century Democracy generates in order to express 
 the "will of the people" with reference to such problems. 
 
 In a democratic society the majority of the male population is usually 
 supposed to wield political power. This, in any large society, can 
 obviously be done but through parliamentary representation. The 
 "will of the people" can be expressed in no other way. The selection 
 
 > The Cause of Political Corruption, Scribners' Magazine, January, xgxi, p. 6a> 
 
 I' 
 
 4 
 
 ■n 
 
 ■ J 
 
5^4 
 
 Political Theory 
 
 Pt. V 
 
 :iii 
 
 'ii 
 
 
 ' .,)( 
 ' 
 i 
 
 
 of this representation becomes, therefore, a vital element in the political 
 life of the population; the real source of power; yet eighteenth-century 
 Democracy ignores this important crux in the Democracy of fact. 
 The nominating organization is a piece of ultra-constitutional machinery 
 supplying the motive power necessary to make the constitution move at 
 all. It is like a modem locomotive dragging about a train of antiquated 
 stagecoaches. 
 
 "If," says Mr. Godkin,* "I said that the reluctance of a democracy 
 to vote at all, or to vote right, was not foreseen by the early democratic 
 advocates, and that they made no provision for it in their system, I 
 should not be very far wrong. This was the greatest mistake of the 
 theoretic democrats. They never foresaw the big democracies. The 
 working of democracy in America was something of which they had no 
 conception. They did not anticipate the necessity of organizing and 
 directing the suffrage, nor of the intervention of the boss and his as- 
 sistants. . . . 
 
 "Under this regime, the nominating system, of which no theoretical 
 writer had the least idea, has grown into a piece of machinery more com- 
 plicated than the government itself. The man who manages it, who says 
 who must compose the body which selects the candidates— that is, who 
 designates the delegates to the nominating convention — is really the 
 most powerful man in the community. Every one who wishes to enter 
 public life bows before him. No one who, being in public life, wishes 
 to rise higher, no Representative who wishes to be Senator, nor Governor 
 who wishes to be President, will gainsay him or quarrel with him. Every- 
 body but the President in a second term is at his beck. For similar 
 reasons, he holds the legislators in his power. If they do not legislate 
 as he pleases, he will not allow them to come back to the legislatiure. 
 He has to be consulted, in fact, about every ofl5ce. He may be boss of a 
 district, a dty, or a state. The larger his dominion and the denser its 
 population, the more powerful he is. . . . Any person who to-day 
 described the government, say, of New York or Pennsylvania, or any 
 other large American State out of the books, would give no real idea of 
 it. He would miss the real source of power, and the way it was infused 
 into the machinery. If there be anything seriously wrong with democ- 
 racy in America, to-day, it lies in the nominating system, yet this 
 attracts comparatively little attention." 
 Anothe r development of Democracy is noticed by nearly all observers. 
 
 » Problems o/Modtrn Democracy, p. 289 et seq. 
 
 Bk. I 
 
 £)emocracy 
 
 565 
 
 This is the neglect of political life by wealth and education on one side; 
 and it might be said, the suspicion of wealth and education as poUtical 
 factors among the populace on another; 'The cult of incompetence," 
 a distinguished observer^ caUs it in France. This is doubtless due to 
 many causes; among them might be mentioned, however, the necessary 
 control of the politician or statesman by the party machinery and the 
 fact that the average workingman at the polls may beUeve the candidate 
 most nearly approaching his own financial and inteUectual level will 
 best be able to appreciate his political needs. Education, therefore, and 
 wealth, when not used as a means of corruption, seem not only of Uttle 
 advantage in the pubUc life of a Democracy, but may even become a 
 barrier between the industrial masses and men of means and distinction. 
 This seems one tendency with reference to conditions generated in a 
 Democracy. Another tendency, however, of a different nature, may be 
 traced to financial and corporate influence. This tendency results 
 in important official positions such as those of Attorney-General, Speaker, 
 District Attorney, Treasurer, Senator, Judge, Assessor, and so forth 
 being filled by men of attainments of a certain kind, usually of a dis- 
 tinctly legal type: these men being chosen because of their ability or 
 poHtical influence and placed in these specific positions for specific 
 purposes. Through these officials it is possible for the men who 
 supply the party contributions to the "machine" to control the de- 
 cisions of a Finance Committee, the imposition of taxes, the disposition 
 of public funds, fiscal decisions, the awarding of contracts, subsidies, 
 appropriations, franchises, prosecutions, and receiverships; it is per- 
 fectly possible to enact legislation in such a way that legal responsi- 
 bflity may be quashed wherever desired and the control of public funds 
 and fiduciary institutions placed outside the pale of tiie law; while 
 statutes may, of course, be construed, interpreted, and appUed as 
 
 Thus the typical legislative and official body of Democracy seems to 
 absorb the lesser intellectual lights, on one side, to form the bulk of its 
 material; and, on another, to have a few acute and conscious legal ele- 
 ments thrust into it; injected as it were from without, through the party 
 machinery into certain positions for certain purposes. The legislation 
 to be expected from an administrative system constituted in tiiis way, 
 
 » Le C«//« rf« /7««>w/>«»«ce. par Emfle Faguct. . v... *•. u t -^^u Qf .«««» 
 
 « The student who desires to study Democracy at work could not do better than consult Lincoln Steffen*- 
 
 The Shame of tlie CUies, or Hcndrick's Story of Life Insurance, McClure's. New York. AU necessary daU 
 
 and endless specific cases will there be found. 
 
566 
 
 Political Theory 
 
 Pt. V 
 
 espedaUy with reference to its fiscal and financial decisions, may not 
 seem of a very inspiring nature. If the bulk of the fiscal and financial 
 decisions of the United States is examined, some ground may be found 
 for the opinion of the Chairman of the House Committee on Banking 
 and Currency! who says "that there is scarcely a law upon our statute 
 books affecting our finances and currency which is clearly and purely 
 the result of economic thought and such as would have passed but for 
 necessity, ignorance or political cowardice." 
 
 However, it may seem an injustice to suppose that ''necessity, igno- 
 rance, and political cowardice" exhaust the resources of such legislative 
 and administrative material. Says Mr. Godkin:2 "Every government 
 has been a rich man's government. It is only in some of the smaller 
 Swiss cantons that departures from this rule have been made. But, 
 as a rule, in democratic societies of our day, government has been trans- 
 ferred to poor men. These poor men find themselves in possession of 
 very great power over rich communities. Through the taxing power 
 rich corporations and rich individuals are at their mercy. They are not 
 restrained by tradition; they are often stimulated by envy or other 
 anti-sodal passions." 
 
 Thus the democratic society, studied in practice, seems to develop 
 three characteristic administrative elements; (i) A relatively poor 
 legislature devoid of distinction, social or intellectual; (2) a party 
 organization in complete control of tiiis legislature, through its control 
 of patronage and the suffrage; (3) the wealtii and intelUgence of tiie 
 society largely outside poUtical life. The practical Democracy seems 
 to be a poor and ignorant legislature controUed by party machinery 
 acting as a screen for the wealth and inteUigence of tiie community. 
 What can be, what must be, the results of such a system? Need it be 
 said that practically the important administrative activity of such a 
 society wiU resolve itself into the dictation of fiscal decisions by organized 
 wealth and the blackmailing of the organized wealth by the politicians? 
 A man who has studied it at first hand for years in the great cities of 
 America suggests the following definition^ of Democracy: "the 
 government of the people, by the rascals, for the rich." 
 
 Vox popidi, vox dei: It seems that in ninety-nine cases in a hundred 
 vox popu li means that a corporation desires a protected market or a 
 
 » Congressman Charies N. Fowler. Address before the Illinois Manufacturers' Association, Chicago 
 December lo, 1907. "«v«^", 
 
 • Problems of Modern Democracy, p. 301. 
 
 • Lincoln Steffens. The Shame of the Cities, p. 103. 
 
 Bk. I 
 
 Democracy 
 
 567 
 
 legislative enactment; a demagogue seeks popularity, a politician sees 
 an opportunity of levying legalized blackmail; a financial genius, a 
 method of creating millions out of nothing by capitalizing a tax on a 
 vital or industrial requirement: an issue is made, "patriotism" is in- 
 flamed, the people are harangued through the orators and the news- 
 papers, the political machinery is set in motion, the measure is passed, 
 and the tongues of the hydra-headed Demos, supposed to echo the 
 voice of the Divinity, have given utterance to their wisdom. 
 
 To any one possessing any familiarity with what the words "franchise," 
 "machine," "boss," "contract," "Protection," "taxation," "commer- 
 cialized vice," mean, in actual fact in a democratic society, there may 
 seem ample reason to believe that Democracy, in its practical aspects, 
 presents all the elements for the establishment of as sodden and sordid 
 an abuse of political power as has ever been invented. As Huxley^ 
 well says: "Up to this time, the progress of such republics as have been 
 established in the world has not been such as to lead to any confident 
 expectation that their foundation is laid on a sufficientiy secure subsoil 
 of public spirit, morality, and intelligence. On the contrary, they 
 exhibit examples of personal corruption and of political profligacy, as 
 fine as any hotbed of despotism has ever produced; while they fail in 
 the primary duty of the administration of justice, as none but an effete 
 despotism has ever failed." 
 
 The mass of political theory, ancient and modem, may be roughly 
 separated into two broad divisions: the aristocratic and the democratic. 
 The leading writers devoted to the support of Democracy, together with 
 an examination of the actual results produced by aristocratic legis- 
 lative assemblies, suggest the following definitions of Aristocracy: 
 
 Aristocracy — a form of government in which a few individuals 
 exploit the resources of a society for their own benefit. 
 
 That body of political thought devoted to the support of Aristocracy 
 and the actual conditions generated in democratic societies present 
 grounds for the following definition of Democracy: 
 
 Democracy — a form of government in which a few individuals ex- 
 ploit the resources of a society for their own benefit. 
 
 All that is necessary to reach these conclusions is to study adminis- 
 trative history without prejudice, and above all to look carefully at 
 the facts. 
 
 * Bume, p. 34. 
 
CHAPTER IV 
 
 NATURAL SOCIETY 
 
 THE Study of political society in the light of the evolutionary 
 sciences, mathematics, and economic inquiry suggests the 
 following considerations: 
 I. Progress can apparently be continued but through a 
 selective process demanding the propagation of a species through in- 
 dividuals possessing a more than average development. This process, 
 consequenUy, requires the death or failure of those below this standard^ 
 that is, progress demands the sacrifice of the vital interests of the majority. 
 In a physico-biological sense, therefore, progressive conditions seem 
 opposed to the vital interests of the majority of the individuals concerned, 
 and consequently lacking in any rational claim to their support. 
 
 It may be said, however, that human progress is political, not physical, 
 and incapable of being brought within the scope of biological generaliza- 
 tions. Political progress necessarily involves the aggression of one 
 society in relation to other societies. Aggression of this kind neces- 
 sarily involves in turn the aggression of the progressive society in rela- 
 tion to its own units. This aggression must be based fundamentaUy 
 upon the subordination of the interests of the majority of individuals 
 to those of the society regarded as a progressive organization. It 
 is, however, impossible to form any rational conception of a society 
 except as an aggregate of individuals. A society based upon this 
 principle, therefore, subverts the interests of the majority of its individuals 
 in order to subvert the interests of another majority of its individuals. 
 This process seems devoid of a rational principle at the beginning and 
 incapable of leading to anything but its own subversion in the end. 
 Progressive political systems, in that they attempt the essentially 
 impossible, that is, the union of the interests of the individual with 
 those of a progressive aggregate, must apparently always sweep round 
 in aimless circles. The history of the constitutional development and 
 final collapse of the progressive societies of the past supports such a 
 position. 
 
 It may be said again that progress is neither biological nor political, 
 
 568 
 
 M 
 
 Bk. I 
 
 Natural Society 
 
 S6a 
 
 but psychological and intellectual; and, as such incapable of being 
 expressed in either biological or political terms. If progress of this 
 kind is subjected to a process of analysis, the ideal sequences presented 
 seem chiefly involved in a series of rings or repetitions. If that accumu- 
 lation <rf systematized experience called science is regarded as embodying 
 progress, it seems that science shows, with whatever certainty it pos- 
 sesses, that all progress, in whatever form conceived, must inevitably 
 be lost in the silent chaos of the future, just as man^s history is lost in 
 the silent chaos of the past. Compare Part IV. 
 
 n. Indirect taxation is a system of raising social revenue by means 
 of levying taxes on consiunable goods. Taxes of this nature, in order 
 to be constant and productive, must be assessed upon vital and indus- 
 trial necessaries. A fiscal system based upon such taxes, as are all exist- 
 ing national systems, is analogous to the direct periodic assessment of 
 incomes in proportion to necessary living expenses. Comparison of the 
 necessary living expenses of an income of £100 with those of an income 
 of £100,000 suggest the practical results of this process. It is obvious 
 that a vastly larger proportion of the smaller incomes will be taxed than 
 of the larger. It may thus seem that the taxation of incomes in pro- 
 portion to necessary living expenses must draw the smaller incomes of 
 any society into a progressively increasing process of taxation; while 
 creating at the same time a progressively increasing process of exemption 
 and accimaulation on the side of the larger fortunes. The result of 
 this process can but create a constant withdrawal of property from the 
 hands of the poor: giving to those who have, and taking from those 
 who have not, even the little they possess. Further considerations and 
 statistical illustrations will be found in Parts II and III. 
 
 III. The best economic thought suggests that the suppression of 
 industry is disadvantageous. Taxes upon consumption sujppress the 
 industries adversely affected. If the industries supported by taxation 
 are of greater value than untaxed industry, France, England, and the 
 United States should cut themselves up into small protected areas 
 each taxing the other's goods. But it seems obvious that however small 
 the protected areas might be, they could always be cut into smaller, a 
 process which, carried to its logical conclusion, would lead to the abolition 
 of trade as the smrest means of creating wealth. These considerations 
 lead to the opinion that the unsuppressed and imtaxed consuming power 
 of any population is worth more in annual earning capacity than the 
 taxed, aaid suppressed consuming power. Compare Part I. 
 
 II 
 
}\ 
 
 S70 
 
 Political Theory 
 
 Pt. V 
 
 rV. The existence of a population upon any given area of the earth's 
 surface causes a certain value to attach to that area independently of 
 other conditions. This value is created by the whole population, ir- 
 respective of individual initiative or 'effort. This value, therefore, 
 belongs apparently to the population, as a population; and may be re- 
 garded in that light in reference to the needs of organized society. This 
 value is measured and automatically registered, both actually and rel- 
 atively, by the annual rental value of unimproved land. The annual 
 value of its imimproved land, as represented largely in franchises, 
 mineral privileges, and city site values, forms perhaps the most natural 
 and economically advantageous basis from which to defray the annual 
 requirements of society. Further consideration and statistical analysis 
 will be found in Parts IT and III. 
 
 The following is an extract from Article I, Sections 7 and 8, of the 
 Constitution of the United States: "All bills for raising revenue shall 
 originate in the House of Representatives; but the Senate may propose 
 or concur with amendments. . . . The Congress shall have power 
 to lay or collect taxes, duties, imposts, and excises." 
 
 The following is an extract from the Constitution of California, 
 Article XIII, Section 6: "The power of taxation shall never be sur- 
 rendered or suspended by any grant or contract to which the State shall 
 be a party." 
 
 The inhabitants of the United States thus live under two distinct fiscal 
 systems; these may be called Federal and Local and distinguished as 
 indirect and direct. This dual fiscal process is adopted by all admin- 
 istrations to-day, the distinction between an indirect Federal system and 
 a direct Local system is nearly always traceable. 
 
 Reasons have been presented for the opinion that these indirect 
 Federal systems of taxation are unnecessary and injurious. But in 
 contemplating the possibility of the substitution of direct for indirect 
 methods, the question arises; how would such a transposition affect 
 the Federal administrations? 
 
 Reasons, estimates, and statistics have been presented suggesting 
 that the administrative expenses of the United States, Federal and Local, 
 could have been met during their past history with less waste and more 
 even distribution, by means of the direct assessment of socially created 
 
 ■ 
 
 Bk. I 
 
 Natural Society 
 
 S7I 
 
 wealth. Reasons have also been presented for the opinion that such a 
 form of revenue, in allowing the consuming powers of the people to reach 
 a maximimi, would create a greater wealth-producing capacity than 
 e^sts to-day, besides relieving the people of an imnecessary burden. 
 
 These considerations suggest that the people of California, or of any 
 state of the American Union, could assess their socially created wealth 
 directly, meet local obligations, and at the same time contribute their 
 full share to the Federal administration, in proportion to their population, 
 as the Constitution provides, with less expense than at present. 
 
 In this way it might seem possible for the people of the United States 
 to transfer their indirect Federal system to a direct Local system, while 
 observing not only the letter but the spirit of their Constitutions; 
 Federal and Local. 
 
 A question arises with reference to the difference in the fimctions of a 
 Federal administration supported by direct rather than by indirect 
 methods. 
 
 An examination of the legislative history of any nation shows that a 
 great proportion of such history is traceable, directly or indirectly, 
 to indirect fiscal methods in general; shows, in fact, that an overwhelming 
 proportion of the legislative history of man has to do in some form or 
 other with indirect taxes on consumption. If these indirect burdens 
 upon the vital needs of a people are useless, all this mass of legislative 
 accumulation seems proportionately without justification. 
 
 A portion of the volume of statute and decision which has poinded 
 from every legislative Chamber of modem times, dealing with the forced 
 circulation of paper money, not based upon bullion equivalent, might 
 next be examined in the light of the following passage. " In my opinion,'' 
 says Jevons,^ "it is the issue of paper representative notes, accepted 
 in place of coin, which constitutes an arbitrary interference with the 
 natural laws governing the variations of a purely metallic ciurency." 
 
 If the opinion of Jevons is accepted, this entire body of legislation 
 may seem as but the "arbitrary interference with natural laws," and as 
 such, of questionable value. 
 
 A slightly different method might be adopted. Any Act may be 
 selected in the statutes of any nation. This Act may, in many cases, 
 be found to be an Act to amend a previous Act. If so, the attention 
 may be turned to the Act of which the first was an amendment and the 
 process continued. Where this is done, one legislative Act after another 
 
 * Money and the Mechanism of Exchange, p. 342. 
 
 f, 
 
S72 
 
 Political Theory 
 
 Pt. V 
 
 Bk. I 
 
 Natural Society 
 
 S73 
 
 m ■ ^ 
 
 •d^i: 
 
 M : 
 
 may be traced to previous Acts and a chain developed of statute and 
 amendment, every link of which is derived as the necessary outcome of 
 some original legislative Act. The attention may then be turned from 
 origins to results, and begin at the same point as before. Every legis- 
 lative Act may lead to certain legislative amendments or results; these 
 results taking their place in the chain and becoming legislative causes 
 in their turn. Studies of this natiu-e may lead to the conclusion that 
 the bulk of human legislation is a self-perpetuating process, nearly every 
 Act leading necessarily to another; each becoming both cause and effect 
 in turn. In continuing the examination, however, and in tracing specific 
 chains, these chains may be found to end abruptly at a given point. 
 Thus, in beginning with any link in the centre of a legislative chain, 
 this chain may be traced, link by link, to an original Act in which it 
 takes its rise; in following the chain in another direction, another Act 
 may be discovered in which it ends. If then the Act in which the chain 
 arises is compared with that in which it ends, food for reflection may 
 be found; if the last Act is but the repeal of the first. It may seem, in 
 fact, that the entire chain was useless, as the legislative Assembly itself 
 had pronounced it to be. If then the original Act is studied in relation 
 to the best economic and political thought, and seems due simply 
 to ignorance, disregard for natural economic laws, class legislation, 
 popular hallucination, arbitrary dictation, legislative indifference or 
 corruption the entire legislative chain may seem not only useless but 
 vicious. 
 
 The Com Laws represent one of these long chains of legislation pour- 
 ing for years from the English Parliament, creating endless misery and 
 endless additional legislation, and ceasing only when the original Acts 
 establishing the Laws had been abolished. The process is everywhere 
 traceable. The aimless perpetuation of these sequences has attracted 
 the attention of a few observers; be it said, however, without affecting 
 either the faith of the people in legislation or the faiti of legislatiu-es in 
 their own decisions. The process of creating political evils by legislation, 
 amending the original Acts until complete repeal results, continues 
 without possibility apparently of achieving any result or of ceasing to 
 perpetuate itself. "In a paper read to the Statistical Society in May, 
 1873," says Mr. Spencer ^ " Mr. Janson, vice-president of the Law Society, 
 stated that from the Statute of Merton (20 Henry III.) to the end of 
 1872, the re had been passed 18,110 public Acts; of which he estimated 
 
 * Social Statics and Man vs. State, p. 341. 
 
 that four-fifths had been wholly or partially repealed. He also stated 
 that the number of public Acts repealed wholly or in part, or amended, 
 during the three years 1870-1871-1872 had been 3,532, of which 2,759 
 had been totally repealed." 
 
 In comment upon this passage Mr. Spencer says: "To see whether 
 this state of repeal has contmued, I have referred to the annually-issued 
 volumes of " The Public General Statutes " for the last three sessions. 
 Saying nothing of the numerous amended Acts, the result is that in 
 the last three sessions there have been totally repealed, separately or 
 in groups, 650 Acts, belonging to the present reign, besides many of 
 preceding reigns." 
 
 But it must be remembered that before these Acts are repealed they 
 must have created evils sufficient to cause widespread misery or the 
 influence in opposition to them would never have become politically 
 effective. As Mr. Spencer continues: "We forget that before laws 
 are abolished they have generally been inflicting evils more or less 
 serious; some for a few years, some for tens of years, some for centuries. 
 Change your vague idea of a bad law into a definite idea of it as an agency 
 operating on people's lives, and you see that it means so much of pain, 
 so much of illness, so much of mortality." Thus, the " mother of Par- 
 liaments" in pronouncing by her own decisions about four fifths of 
 18,110 of her own Acts to be useless suggests reason for regarding the 
 remaining one fifth as legislation yet to undergo the apparently inevit- 
 able process of amendment and repeal. As Mr. Spencer^ adds: "The 
 postulate that men are rational beings, continually leads one to draw 
 inferences which prove to be extremely wide of the mark." 
 
 These rings of Acts, amendments, and repeals may be traced through 
 nearly all legislative assemblies. The legislation dealing with the 
 French assignats is a notorious example. The legislation with reference 
 to the maximum prices of the same period presents the same phenomena. 
 The history of the Acts of the Italian Government dealing with railway 
 control forms another such ring which shifts through Act after Act, until 
 it finds itself back at the starting-point. 
 
 It is, however, in the United States that the most instructive examples 
 of modem legislation may be foimd. The Sherman Silver Act, by 
 endangering the Treasury gold reserves, caused imtold loss and misery 
 throughout the population in its direct and indirect effects upon the 
 panic of 1893. Yet this Act was repealed only with great effort, after 
 
 ^ Ibid., p. 365. 
 
S74 
 
 Political Theory 
 
 Pt. V 
 
 
 ir 
 
 the mischief was done, in face of stubborn opposition in the Senate, and 
 then but by a vote of 43 to 32.^ 
 
 The American Navigation Acts are another example. The early 
 American shipping and carrying trade was among the most important 
 in the world. The great American statesmen have destroyed it almost 
 entirely. 
 
 An eminent Scotch builder is cited^ as saying: "For the last thirty 
 years they have permitted us to build, and largely to own, nearly all 
 the ships that the ocean-carrying trade requires; and they have caused a 
 loss to their people of about £40,000,000 annually of freight money that 
 they might have appropriated to themselves." 
 
 The policy adopted by the legislatures after the Civil War, of selling 
 the right to tax the people to the highest bidder, naturally developed a 
 systematic organization of the purchasers of these rights. Thus, a 
 corporation may buy the right of imposing taxes from the legislatures 
 and then buy the control of other corporations in possession of such 
 rights. By this means a single corporation may control a legislature, an 
 entire chain of taxes and other corporations, and then, through rates and 
 prices, absorb the earnings of the population to a practically unlimited 
 extent. Even a population possessed of as little political information as 
 that of the American Republic, however, will gradually gain some dim 
 conception of the process and the idea of "curbing" the trusts appears. 
 The representatives of the people then go into session and produce the 
 following results:' 
 
 "Without statutory authority a corporation could not invest its assets 
 in the purchase of the stock of other like corporations, and so the Legis- 
 lature of the State of New York in the early nineties enacted a law per- 
 mitting this to be done. . . . It is a matter worthy of notice, and a 
 commentary upon legislation in these days, that the very Legislature 
 in the State of New York, which gave this right to a corporation to create 
 a monopoly by the piu*chase and control of other corporations engaged 
 in like business, enacted a most drastic statute, pimishing any arrange- 
 ment or combination whereby a monopoly in the manufacture, produc- 
 tion or sale of any article or conunodity in common use was created, and 
 declaring such a monopoly a misdemeanour, punishable by a fine not to 
 exceed $5,000, or imprisonment for not longer than one year, or both said 
 
 « Financial History of the United States, Dewey, p. 445. 
 f « The Tariff and the Trusts. Franklin Pierce, p. 96. 
 • Ibid., p. 5a 
 
 Bk. I 
 
 Natural Society 
 
 S7S 
 
 fine and imprisonment. By the statute allowing a corporation to pur- 
 chase stocks of other corporations the Legislature marked out the way 
 for the creation of a monopoly and legalized it, and then turned around 
 and at the same session, with a great cry against monopolies, passed a 
 statute punishing the commission of that for which it had already pro- 
 vided. Other states then followed the example of New York and enacted 
 similar statutes allowuig the creation of monopolies and then providing 
 for their punishment by vigorous penal laws." 
 
 European legislatures enact statutes, amend them and finally repeal 
 the bulk of their own decisions; this process, however, of dipping up 
 water out of a stream and pouring it back through a sieve, may involve 
 different bodies and require years before an assembly has reversed the 
 bulk of its own decisions. It has thus in all likelihood, remained for an 
 American assembly to achieve this final legislative triumph: the practical 
 repudiation of its own Acts by a single body in a single session. 
 ' Certain students, ^ however, of the evolution of the "practical" Ameri- 
 can legislative intellect, seem at no loss to account for these mental 
 processes, and trace shadows of the corporate bribe on one side, and of 
 the blackmailers' club on another, flitting as it were across this luminous 
 body of incorruptible statemanship "Yet," says Mr. Pierce,2 who has 
 made a careful study of the subject, "this is characteristic of American 
 legislation. We legalize conditions out of which an evil arises and then 
 attempt to suppress the evil by penal statutes." 
 
 The history of the Sherman Law illustrates this process on a national 
 scale. An aimless and irresponsible system of taxing everything the 
 population requires in its daily life and industry, inevitably throws the 
 control of interstate trade into the hands of the men in control of 
 the taxes and the transportation systems. This naturally congests the 
 bulk of the trade of the coimtry in certain trust controlled channels, and 
 Congress passes a statute forbiddiug agreements in restraint of trade. 
 Litigation follows, in order to discover the meaning of the statute, and 
 the question is finally brought up to the Supreme Court. 
 
 The Court ruled, in the trans-Missouri freight case, (i66 U. S., 290) 
 that all restraint of trade, whatever its nature, is illegal. Congress, 
 however, through the fiscal system of the coimtry, has legalized restraint 
 of trade on a national scale, and the restraint continues. More 
 litigation follows; appeal after appeal is made from the lower Courts, 
 
 » With reference to this same legislature. Cf. The Story of Life Insurance, Burton J. Hendrick. p. 225 
 etseq. 
 ^*The Tariff and the Trusts, p. Si. 
 
 I I 
 
 I i 
 
576 
 
 Political Theory 
 
 Pt. V 
 
 until the Supreme Court finds itself again face to face with the Sherman 
 Law. Owing to the great accumulations of capital, based upon tax- 
 restrained trade, the earlier construction of the statute has become 
 dangerous at a later date. The Court is compelled to recognize this 
 fact; shifts its position, reverses its earlier rulings, and recognizes a 
 '^reasonable" restraint. 
 
 In other words, it refers the whole question back agam to individual 
 judges; and the thing can go roimd and round indefinitely, until the law 
 is amended or repealed; when Congress will begin to reverse itself 
 instead of the Court. It would seem, if the Sherman Law has any 
 basis in nature or reason, that the entire protective system of trade 
 restraint should be brought imder it and abolished. If, on the other 
 hand, the protective system has any basis in nature or reason, a ring 
 of protective taxes and rates should be built around every state in the 
 Union. 
 
 The characteristic occupation of legislative bodies seems to be the 
 amendment and reversal of their own decisions. In this sense, the 
 legislative intellect acts in the same way as the philosophic intellect. 
 The builders of philosophic systems lay certain foundations upon which 
 to erect their structures. They then begin to build and modify. As 
 years go on, these modifications inevitably develop pure philosophic 
 Skepticism, and the philosophers have destroyed the foundations of 
 their own buildings. The philosophers then repudiate their own work, 
 begin again and repeat the process. The legislators build their systems 
 in the same way. They adopt certain Acts as a starting-point. These 
 Acts develop thousands of other Acts and amendments. The legisla- 
 tors at last find themselves face to face with the original Act. They 
 then repeal the original Act and begin to build anew. 
 
 A study of the indirect tax shows it to be one of the mainsprings of 
 Federal legislation, and of a large part of local legislation. If the bodies 
 producing these statutes, seem chiefly occupied in amending or reversing 
 their own decisions, without the taxes it may appear that the opportimity 
 for legislative decision, amendment, and reversal would be relatively 
 slight. An administration, without the power of legislating upon the 
 indirect tax, could not be brought imder the hypnotic spell of the pro- 
 tectionist. It would be free from the mystic rites of the "balance of 
 trade" and the "tariff-weapon." Such an administration would be 
 almost incorruptible, not because the oflSdal fingers might not ache to 
 reach the peoples' pockets, but because they would lack the power, 
 
 Bk. I 
 
 Natural Society 
 
 .577 
 
 without the people growing more or less conscious of what they were 
 doing. Nor need a people, living under such an administration, be any 
 less effective in a political sense, apparently, than any other. They could 
 protect themselves against the white perils, the black perils, the yellow 
 perils, and all the perils of the rainbow, quite as well with money raised 
 through direct channels, as with money raised indirectiy from the 
 necessaries of life. The chief difference would probably be that the 
 populations would begin to form some nebulous idea of the relation of 
 these multi-coloured "perils" to taxes, army, and navy contracts and 
 the Stock Exchange; and, if they began to do this, these "perils" might 
 grow paler. The question is suggested, however. What would be the 
 constitutional form of a political organization supported by the direct 
 contribution of socially created wealth? 
 
 The history of political societies is the history of certain ideas; 
 just as the collective history of the bee seems dominated by the idea of 
 gathering honey. The story of the formation, modification, and abandon- 
 ment of these ideas forms the political and constitutional history of man. 
 In the first stage of his political existence, aggregates are formed, dom- 
 inated by the idea which gave birth to the eariy Eastern monarchies; 
 the idea of irresponsible centralized power, usually regarded as necessary 
 for military efficiency. Greece brings new political conceptions into 
 existence. She formulated the ideas of Autocracies modified by aris- 
 tocratic and democratic bodies and the first conception of the pure 
 Democracy. Nearly everything that the Hellenic intellect touched, 
 it proceeded to exhaust in an analytical sense. The history of Greece 
 practically exhausts the subject of constitutional political organization. 
 She repeated all the phases of Autocracy, Aristocracy, and Democ- 
 racy in their purity, and then began to combine them and repeat 
 the combinations. Man as a "political animal," has never done 
 anything else. Rome goes through all the phases in their purity, 
 corruptions and various combinations from beginning to end. England, 
 after different combinations of the three forms of power, goes through 
 the pure phases with their culminations and then begins to repeat the 
 combinations. Within littie over a century, France goes through the 
 pure phases twice, with various intervening repetitions and combinations. 
 
 In every one of these shifting forms of political society, man is dom- 
 inated by the characteristic idea from which the organization takes its 
 rise. He conforms to its characteristic constitutional system, written 
 or unwritten; autocratic, aristocratic, democratic, or these combined 
 
 \l 
 
il 
 
 578 Political Theory pt. v 
 
 in different arrangements of constitutional balances. The balance, 
 however, is never perfect: no system of constitutional checks has been 
 devised making it impossible for one power to subvert another, thus 
 gain a controlling influence, develop its pure form, degenerate, and throw 
 the balance into the hands of whatever power or combination could seize 
 it. This process, it seems, is endless and to it may be traced the series 
 of revolutions and reorganizations through which human political 
 society has written its history in the past. This history of constantly 
 shifting constitutional rings, extending over twenty-five hundred years 
 suggests the question whether any stable constitution is conceivable, 
 whether any system of political organization can be formulated, check- 
 ing this apparently inevitable movement, this tendency of the admin- 
 istrative elements of society to consume the society until the consumers 
 are consumed and the process begins anew. 
 
 Such a thing may well seem impossible, but if such possibility exists, 
 it can be realized but by taking the opportunity of exploiting the social 
 resources out of the hands of any administrative power; for it is but 
 through the control of social resources that the process can proceed. 
 
 The typical political organization consists of an Executive, an upper 
 Chamber and a representative popular Assembly; these are the elements 
 of constitutional systems. A mixed constitution may be considered, 
 formed with a limited Executive, with veto subordinated to the decisions 
 of a strong upper Chamber. With these powers act a popular repre- 
 sentative Assembly, whose decisions may be reversed by the upper 
 Chamber. Had Polybius been asked to pronounce upon such a con- 
 stitution, he would probably have said that too great a preponderance 
 of power has been entrusted to the upper Chamber. He would then 
 probably have predicted that this body would absorb the essential 
 administrative functions, and thus change the formal mixed constitution 
 into a pure Aristocracy. It would then develop the oppressive oligarchic 
 form and finally a democratic upheaval. The form in which these 
 constitutional powers might appear would be of no importance. The 
 Executive might be an hereditary monarch, a popular ministry, an 
 elective president, a dual elective consulship, as in Rome, or a dual 
 hereditary kingship, as in Sparta; it would make no difference — the 
 balance of power would lie with the upper Chamber, and whether an 
 hereditary Aristocracy or an elective Senate, the outcome would be 
 the same — oppressive oligarchy and a democratic upheaval. 
 Another mixed constitution may be considered. A limited Execu- 
 
 Bk. I 
 
 Natural Society 
 
 579 
 
 tive is subordinated to a popular Assembly. The upper Chamber may 
 exercise the functions of revision, amendment or delay, but lacks the 
 power of reversal. The balance here lies with the popular Assembly. 
 In accordance with what seems to be the law of constitutional evolution, 
 this body will begin to control the society. A pure Democracy will 
 result. The Executive may be a King, a Sultan or a President; the 
 upper Chamber may represent all the quarterings of the college of 
 heraldry combined with all the legal and judicial wisdom of the country. 
 It will make no difference. The control of the society lies with the 
 popular body. The Executive and the upper Chamber will become 
 figureheads. The popular Assembly will split into political parties and 
 factions for purposes of exploitation. These parties and factions will 
 organize for control and themselves be controlled by the most powerful 
 capitalistic influences in the country. Plutocracy, disorganization, mob 
 rule, civil war, and a dictator are the usual outcome. The problem 
 then before the constitution builder is to bring the balance of adminis- 
 trative forces into a stable condition, but the problem has never been 
 solved. The balance may remain ostensibly poised for generations, 
 but always falls over on one side or another. 
 
 The political history of man revolves about one subject — property. 
 The entire administrative, legislative, and political activities of the 
 human race may probably be referred, in final analysis, to the movement 
 of matter. Political systems are essentially but systems govemmg the 
 movement of matter through the administrative organizations. Under an 
 Aristocracy, all the matter moves toward the Aristocrats: under a dem- 
 ocratic system, all the matter moves toward the Plutocrats; that is, 
 toward the men controlling the popular assemblies. A study of polit- 
 ical and administrative systems reveals a fairly constant tendency, 
 whatever the system may be, for the property of the population to 
 congest in the hands of the men who control it. It is obvious, however, 
 that such a process cannot continue indefinitely. The matter, which 
 flows toward the Few, must of necessity flow away from the Many. 
 As the matter accumulates in their hands, the Few grow fewer and 
 fewer, but the Many grow more and more. The process can last only 
 as long as the Few control the balance of power. The Few grow fewer 
 and fewer, the Many grow more and more. The Few ever shift the 
 matter away from the Many, but as they do this, they shift the Power 
 away from themselves. The Few build up great piles of matter, the 
 Many build up great piles of Power. When the Few have built up all 
 
 .11 
 
 • I* 
 

 ^ 
 
 \h'- 
 
 r i 
 r 
 
 
 5^ 
 
 Political Theory 
 
 Pt. V 
 
 the matter, the Many have built up all the Power. Then the Power 
 will fall on the Matter, and the Few and the Many, the Matter and 
 the Power, the Buildings and the Builders, will all fall into the pit 
 together. 
 
 U society ever wishes to stop this process of piling up the social wealth 
 on one side, until it drags the society into the pit on another, the first 
 thing to do seems to be to take it out of the power of the social organi- 
 zation to move any matter in any direction whatever, except to give 
 the wealth belonging to the society back again to the society. The 
 movement of matter, in the administrative sense, is largely limited to 
 one thing — the control of the taxing powers of the social organization. 
 Make it impossible for any administrative element or elements to control 
 these taxing powers, and the property of the society will cease flowing 
 toward the control of the taxes; the balance will no longer be tossed 
 this way or that, and the society may stop churning itself round in 
 revolutionary rings. All practical constitutional tliought should begin 
 with the control of the taxing power. 
 
 Taxation, as at present imderstood, consists in the appropriation of 
 individual property by the social organization for social needs. If 
 this process but results in the accumulation of the property of the 
 Many in the hands of the Few, would it seem unreasonable to contem- 
 plate checking the process altogether? Can this process be checked 
 more effectively than by establishing, as a constitutional principle, that 
 no power to tax the property of the individual shall be surrendered to 
 legislatures? Can the withdrawal of property from the Many and its 
 piling up in the hands of the Few be stopped more effectively than by 
 the refusal of the mdividual units to tax each other's property through 
 the social organization? In other words, by limiting the Constitutional 
 functions of their representative bodies to respecting the property rights 
 of others as they would have their own respected. 
 
 Under a Constitution, however, which withdraws from the social 
 representation all power to tax the property of the individual, the question 
 of revenue must be met. If the word "Caesar" represents the aggre- 
 gate of all individuals involved, that is the society as a whole, past, 
 present, and to come; and the wealth which this aggregate creates in 
 the form of the value of the land upon which it exists, is separated 
 from wealth created by the individual, could this question be more 
 effectively answered than in the words: "Give imto Csesar that 
 which is Caesar's." 
 
 IT ■! 
 
 I'' 
 
 ■I 
 
 Natural Society 
 
 S8i 
 
 Bk. I 
 
 "In order to find out what is the best State," says AristoUe,i «we 
 should first find out what is the best life. Until this is established the 
 best form of poUtical organization cannot be discovered, for those who 
 lead the best life will naturally live under the best administration. We 
 should begin, therefore, by seeking the best life, and then, whether that 
 Ufe is not the best for both the individual and the social aggregate." 
 Can a man lead a better life than in refusing to support a political aggre- 
 gate whose actions faU, however sUghtly, below the standard which his 
 own self-respect establishes as the best for himself? Can this position 
 be formulated more clearly than in giving to God that which is God's? 
 
 Can these three fundamental elements, then, of a natural constitution; 
 that is, one neither aristocratic nor democratic, but which rests upon 
 individual human freedom, be better expressed than in the words: Do 
 unto others as you would they should do unto you: Give unto C»sar 
 that which is Caesar's and unto God that which is God's? 
 
 » Politics, H. X, 1323 a 14. 
 
 
 :< »l 
 
Book II 
 
 POLITICAL PRACTICE 
 CHAPTER I 
 
 THE INDIRECT TAX IN PRACTICE 
 
 A CITY man once paid a visit to a farmer friend in the country. 
 The farm lay on a stream flowing into the river which supplied 
 the city with water. The bams lay in a hollow and drained 
 into the stream. The city man explained to the farmer 
 that such conditions were a mistake; for, in allowing them, the farmer 
 was not only polluting the water used by the city, but wasting valuable 
 fertilizing material. The farmer took a piece of paper and showed how, 
 owing to the situation of the bams, the preservation of the drainage would 
 cost so much, and how it would cost so much more to raise and distribute 
 it on the fields. He then showed the probable annual yield of the process. 
 It cost four or five times as much as it was worth. He did not have the 
 money to spend in that kind of farming. However, as he was a reason- 
 able man, as well as a practical farmer, he recognized the justice of the 
 city man's observations and offered to adopt his suggestions in every par- 
 ticular, if the city man would pay the bills. The city man grew interested 
 in other topics of conversation and never mentioned drainage again. 
 
 This fable teaches the difference between a rational sequence of ideas 
 in a man's mind, and external conditions with which such ideas may 
 have as much actual connexion as with the moons of Jupiter. In 
 the instance cited, the city man was perfectly right. The farmer was 
 perfectly right. One was govemed by generalized abstractions, the 
 other by concrete conditions. There was no possibility of bringing them 
 together. The drainage is still wasted, the river still polluted. There 
 not only was no solution to the difl5culty but there probably never will be. 
 
 The difference between political theory and political practice is 
 marked. Up to the present fiscal systems have been studied from the 
 viewpoint of the political and economic theorist; in the library, as it 
 
 582 
 
 Bk. II 
 
 The Indirect Tax in Practice 
 
 583 
 
 were, imder the lamplight. The subject may now be examined out of 
 doors in the sunlight. Light often makes great differences in form, 
 throwing high-lights into shadow and bringing depths unnoticed into 
 salient relief. The attention may here be turned to an existing fiscal 
 system, with its steam up, so to speak, and the piston-rods at work 
 in the cylinders. The system of the United States is selected, as the 
 indirect tax may there be studied in its maturity; considerations, how- 
 ever, applying to the indirect tax of the American Republic, apply 
 with local modifications to the indirect tax wherever found. The 
 taxes of the United States may be roughly classified as follows: 
 
 1 . The fundamental tax imposed by all societies upon their members ; 
 this tax is economic rent. It is paid partly to the State and partly to the 
 ground landlord. The practical effects of this tax, as assessed and col- 
 lected to-day, is to inflate all securities based upon land values: such as 
 franchises, mineral privileges, city sites, and so forth. 
 
 2. Increased prices, due to excise and revenue duties. These taxes 
 are paid partly to the State and partly to the interests affected. These 
 taxes inflate all incorporated earning powers and securities involved. 
 
 3. Protective taxes. None of these taxes is ever paid to the State. 
 Their effect is to inflate every stock and bond certificate of the protected 
 
 industries. 
 
 4. Tariff-weapon, or diplomatic, taxes. These taxes are generally 
 added to existing protective or revenue schedules. They are in most 
 cases paid to the protected or vested interests involved. Their effect 
 is to inflate securities of this nature, directly and indirectly, and steady 
 such values generally. 
 
 5. Taxes in the form of party contributions and funds subscribed 
 for purposes of legislative manipulation. These are paid into the pockets 
 of politicians, high and low. Their effects may be to protect and shelter 
 financial interests, to steady the market on the Exchanges, assist in 
 securing the solvency of the great institutions, and in keeping the indus- 
 trial heart of the people beating. 
 
 6. The revenue itself might be added to this list, although almost 
 a negligible quantity in really practical politics. 
 
 Viewed from an administrative chair, or that of a bank president 
 with millions of other men's money in his charge, there is nothing to 
 which the action of these taxes might better be compared than the 
 muscular contraction and expansions of the heart, as affecting the 
 circulation of the blood. Every one of these taxes helps in some way 
 
584^ 
 
 Political Practice 
 
 Ft. V 
 
 or other, and often in many ways combined, to aid the circulation; to 
 contract or expand the industrial heart of the nation and send the blood 
 that much farther with increased regularity. 
 
 Smith and Mill present arguments for believing many of these taxes 
 to be based upon false economic principles. The practical man knows, 
 however, that these arguments may be regarded as so much waste paper, 
 so far as having any actual application to existing conditions is concerned. 
 No one is forced to meet arguments, and the practical man is forced to 
 meet conditions as they develop. These taxes create conditions, are 
 in fact, themselves conditions, and needless to say the conditions, and 
 not the arguments, are in control. That vast, impersonal force set 
 in motion by an entire people, the force represented by the various 
 fiscal processes of a great population is, perhaps, the most important 
 single economic factor in any way under human control. This force, in 
 its organized activities, represents an irresistible engine in its action 
 upon the economic life of the nation and the distribution of its wealth. 
 Where this engine is permitted to affect natural values in the form 
 of prices, franchises, securities, and so on, the individuals who control 
 or influence it find financial opportunities at their disposition which 
 there is no reason to avoid, and which it may be impossible to avoid, where 
 such conditions exist. If, for instance, it becomes possible to employ 
 capital under the influence of a protective tax, not only no reason 
 exists for not doing so, but conditions may make it impossible to 
 employ the capital in any other way. If a bank director or financier 
 finds occasion for the investment of funds in his charge, or for the 
 development of industry, rendered possible by a fiscal system; in taking 
 advantage of such an opportunity, he but exercises the legitimate 
 functions of his profession. If he neglects it, he proves false to his 
 duties as trustee, representative of corporate funds or guardian of 
 savings in his care. The members of an administrative system, the 
 directors of fiduciary institutions, the representatives of corporate 
 wealth in any form owe a direct responsibility to the people and to 
 the owners of the funds entrusted to them. This responsibility can 
 have but one significance — to make the most advantageous use of the 
 fimds possible as either administrator or trustee. 
 
 Under every indirect system, the man of affairs, as administrator or 
 financier, is acted upon by two forces: his responsibility to the people at 
 large, as represented in their industrial life; and opportunities of making 
 the most productive use of that responsibility through his influence, direct 
 
 Bk. II 
 
 The Indirect Tax in Practice 
 
 58s 
 
 or indirect, upon legislation. If it is possible for him to increase the 
 earnings or wealth of the industries and institutions he represents, for 
 what, it may be asked, is the legislature empowered except to enact 
 measures for such a purpose? 
 
 The development of this train of thought will suggest the practical 
 side of indirect financiering. As has been said, the fiscal policy of a 
 nation is the most important economic and financial factor under the 
 nation's control. When such a policy is allowed to affect values in 
 any way, artificial values will necessarily be created. Every indirect 
 tax, whatever its nature, creates artificial values, whether protected 
 or not. An excise duty creates a vested interest of some sort, if only in 
 its exemption of socially created wealth from just fiscal burdens. In 
 this way, every indirect tax will bring into existence an artificial earning 
 power, which, whether actively listed on the Exchanges or not, will 
 enter into all the ramifications of the financial life of the nation. Great 
 protected interest will, like a wedge, sink deep into the people's industrial 
 heart. Exempt or but partiy taxed franchises, mineral wealth, and so 
 forth, will cut like a knife under the foundations of the entire financial 
 life of the country through the investments of the fiduciary institutions. 
 Values created by indirect fiscal system dependent upon these, will 
 have been sold to the masses of the people in a thousand ways of which 
 they have no knowledge. 
 
 The indirect tax in theory is a useless and dangerous burden; in 
 practice, it is a very different thing. In practical finance it acts as a 
 force-pump keeping the nation alive. One goes round a ring one's 
 self at this juncture and shakes hands with Mr. Chamberlain on the 
 other side of the fence, as it were. 
 
 Put any man of practical common sense in a position in which he 
 must provide funds to meet the never-ending payrolls of thousands of 
 workmen, and the demands of ever-renewing, ever-matiuing financial 
 obligations; put him in control of a great bank or institution of trust, 
 conscious of its responsibility to its depositors, and let him imderstand 
 what it means to have the value of millions of securities, for which he 
 is personally responsible, endangered for an instant; let him know what 
 it means to feel the industrial and financial pulse of a great people 
 beneath his touch; feel the heart throbs of a nation, and know what the 
 magic word "credit" means in practical politics and practical finance; 
 and there will be little question whether he is a protectionist or free 
 trader. Give him the responsible administrative control of a great 
 
^'•f 
 
 iff 
 
 I 
 
 'A 
 
 S86 
 
 Political Practice 
 
 Pt. V 
 
 industry, dependent directly or indirectly upon fiscal schedules and 
 representing the interests of thousands of workers and investors; put 
 him in the presidential chair of a great railway or corporation, with 
 the ever-renewing, ever-recurring obligations of bonded indebtedness, 
 repair and extensions to meet or go into the hands of a receiver; give 
 him a responsible position on the financial committee of a legislative 
 assembly with vast interests to study, consider, and preserve; make him 
 the chairman of a board elected to discuss tariff issues or indirect schedules, 
 and let him realize the importance of his decisions, be conscious of his 
 responsibility to millions of human beings, rich and poor alike, and he 
 will become but little interested in the relative theoretical merits of 
 Protection and Free Trade. He would probably pat the free trader 
 on the head, tell him he, too, used to be a free trader in his youth, but 
 that he had no time to talk about it just then. Take the most so-called 
 "practical" of socialists, the most rational of free traders or single 
 taxers, the most philosophic of anarchists, explain the real financial 
 situation to them; take any one of them or take them altogether, let 
 them imderstand what they are doing, and put them in the position of 
 men who have to act, and not talk; and they can be turned into high- 
 tariff, Chinese-wall protectionists in a flash of light, if they have a gleam 
 of practical intelligence. This is not the logic of economics, nor of 
 political theory; this is the resistless force of conditions. The practical 
 man is not interested in theories. These taxes may or may not be theo- 
 retically advantageous; should, or should not, have been imposed. 
 Practical politics have nothing to do with these questions. These 
 taxes exist as financial factors, and are as vital a necessity to 
 the nation as food and drink to a man; and that is the end of it. 
 All the theories ever conceived cannot change these conditions. 
 The practical man deals with the thing as it is, he cannot 
 help himself; he is forced to deal with the thing as it is, and theories 
 do not meet it. 
 
 This is real Protection; this Protection requires no protective theories 
 for its support; no free trade theories can affect it. The solvency of 
 every fiduciary institution in a country is directiy dependent upon in- 
 direct fiscal schedules, because these schedules represent industrial values 
 against which the savings of the people have been lent, and in which 
 these savings have been invested by the institutions of trust. No intel- 
 ligent man, therefore, in responsible administrative control, will ever 
 vjlow these schedules to be dangerously affected, he well knows that, 
 
 Bk. II 
 
 The Indirect Tax in Practice 
 
 S87 
 
 through the great institutions, they represent literally the life-blood of 
 the nation. 
 
 These are the facts. This is the thing as it is, and there are but two 
 things that can face the thing as it is in practical politics; the practical 
 politician has but two tools with which to work : He works with money 
 or cold steel, or he works not at all; and the practical man will use these 
 two things to keep the indirect tax in force. This is the reason why in 
 practical politics the indirect tax stops where it is; the reason why 
 economic theories drift round it like summer breezes round the turrets 
 of a man-o'-war. The reason is, that the money and the gims of the 
 people are behind it. 
 
CHAPTER n 
 
 PRACTICAL SOCIALISM 
 
 SINCE the days of Marx, Socialism has had a more or less 
 definite system in which to imite its adherents. The system 
 of Marx has been developed and simplified. Socialism is 
 largely the politics of labour unions where these fall away from 
 existing parties. Many of the upper and educated classes are declared 
 Socialists. Socialism is thus becoming a definite self-conscious system 
 with intelligent leaders and popular support. 
 
 The level of the mass of the imemployed seems to be gradually rising 
 in the streets of London, Paris, Berlin, and New York ; the areas of poverty 
 and pauperism slowly spreading over the great centres of population. 
 The number of Socialist votes is increasing and with them the number of 
 Socialist representatives returned to legislative bodies. Such conditions 
 may lead to inquiry with reference to the effects they are likely to have 
 upon the societies in which they obtain. The mass of the unemployed 
 might be regarded as the mercury in the political thermometers; 
 the more the bulb of poverty and imemployed is expanded in any 
 society, the higher will the unemployed mercury shoot up in the 
 social tube. What heats the bulb below? What makes the mercury 
 go up? 
 
 Every indirect tax on a vital necessary can act apparently in but one 
 way with reference to the distribution of wealth; it can but take the food 
 out of the poor man's mouth or the clothes off his back and pile them up 
 in the form of industrial securities in the rich man's pockets. The reason 
 is that the smaller a man's means, the greater must be the relative 
 proportion spent upon vital needs, and, consequently, the greater will be 
 the relative proportion absorbed by taxation. This process carried on 
 for generations throughout a society will draw an increasing proportion 
 of the population into the quicksands of poverty and force the imemployed 
 mercury so much higher in the populous thermometers. But where the 
 consuming power of the bulk of the population is checked in this way 
 industrial development will be proportionately suppressed. As popu- 
 lation increases these taxed and suppressed powers of consumption will 
 
 588 
 
 Bk. II 
 
 Practical Socialism 
 
 589 
 
 be unable to support the increase proportionately and the unemployed 
 mercury shoots up still higher. 
 
 This is what the indirect tax does on one side; on another side, it 
 does something very different. It not only employs a mass of arti- 
 fically distributed labour, inflates untold millions of security values, 
 but acts as the mainspring of the industrial heart action of a nation, 
 through its institutions of trust. No man in administrative control will 
 ever dare touch it for this reason; cannot touch it in fact. If he did, 
 he would but create greater evil than those in existence. Thus the 
 indirect tax will be held where it is as long as the men in power can do 
 it, they cannot help themselves, the conditions will control them; and as 
 long as they hold it where it is, the mercury will rise in the great cities 
 as steadily and resistibly as the tides. The money and the guns of the 
 people are heating the bulbs of poverty and pauperism and forcing the 
 mercury ever higher in the tubes. Existing administrations, the cap- 
 italistic elements of society with the bulk of the middle classes are 
 progressively increasing the number of Socialists' votes. They do it 
 with the guns and the indirect taxes. They will continue to do it as 
 long as they can, they cannot stop themselves and nothing can stop 
 them. 
 
 When the action of indirect schedules in relation to the distribution of 
 wealth is understood, the collapse of a society based upon indirect taxa- 
 tion seems but a question of time. The history of the end of existing 
 societies may be read in the past. The fiscal system through which the 
 modem society derives its life will supply everything necessary for its 
 destruction: Paupers and plutocrats with the taxes and the guns 
 driving the mercury ever higher in the tubes. Sooner or later the mercury 
 will overflow, and the bulb below will burst, as it always has in the past. 
 
 Existing administrations live upon indirect taxes, but the indirect 
 taxes spread the poverty and pauperism upon which they rest. The 
 firmer the taxes are held, the stronger becomes the explosive force beneath, 
 and the higher climbs the mercury. In other words, the greater becomes 
 the number of votes at the disposition of radical and revolutionary 
 leaders. A mass and an idea, brute force and a voice, are important 
 things in practical politics. The Socialist leaders are gradually beginning 
 to understand what they mean by Socialism. Existing social systems 
 are suppljdng them with votes. The dispossessed masses are the driving 
 wheels of revolutions. An idea bringing them together is like the ex- 
 plosive force in the cylinders. When the pressure reaches a certain point, 
 
Ij 
 
 Itl 
 
 S90 
 
 Political Practice 
 
 Pt. V 
 
 they will begin to move, and the direction taken will depend entirely 
 on the hand at the throttle. Existing society is undermining its own 
 foimdations. Socialism seems waiting to receive it. 
 
 What is Socialism? A railway may be selected as illustration. The 
 railway is owned by one man; it is run by a thousand and earns a 
 million a year. The combined efforts of a thousand men produce a 
 million clear profit all of which goes to one man. The wages of the nine 
 hundred and ninety-nine is fixed by the "iron law "; if they produced 
 two million they would all go to one man. As the population increases 
 in wealth and numbers, profits may increase; they will all go to one 
 man. But increase in population may intensify competition in the 
 labour market. Profits may go up, wages may fall, all the gains may 
 go to one man; all the losses to the nine hundred and ninety-nine. 
 This suggests the following considerations: 
 
 The annual earnings of the railway are produced not by one man but 
 by a thousand. The earnings seem to belong to the men who produce 
 them, owner included. The title to the annual earnings should, there- 
 fore, apparently be merged in the ownership of the entire body to whose 
 activities they are due. The proper distribution of the net produce would 
 thus seem to be throughout the thousand producers in some proportion 
 to service rendered, in which owner and worker alike would receive a 
 normal retiun. But if this can be done with one industry, why not with 
 two? Why not with ten? Why not with all the productive industries 
 of any given society? The total annual earnings of any society might 
 be divided by the nimiber of productive workers. The result might 
 show that these earnings were large enough to check the growth of 
 poverty and pauperism in the society, and keep the great body of workers 
 in self-respecting circumstances. Why then should not these earning 
 powers be regarded as the property of the society as a whole and controlled 
 and distributed through the social organization? This seems the basic 
 idea of modern Socialism. It may be found in the words of a member 
 of the English Parliament. Mr. Victor Grayson says in his election 
 address: "I am a Socialist, and believe that there can be no freedom or 
 security for the working classes while the land and means of production 
 are owned and controlled by a small privileged class." A mass and an 
 idea make up the political history of man. Here is the idea: the poli- 
 ticians and the financiers of to-day are supplying the mass as rapidly as 
 they can turn the people into paupers, unemployed, and plutocrats 
 through the action of indirect schedules. When the mass and the idea 
 
 Bk. II 
 
 Practical Socialism 
 
 S9I 
 
 meet, existing society will become " theoretical " and Socialism will be 
 " practical." 
 
 The Socialist programme is, then, that the existing sources of the pro- 
 duction of wealth are no longer to be owned and controlled by individuals 
 for their own benefit; but owned and controlled by the society for the 
 benefit of all. The first question is: How are the Socialists to get 
 possession of these productive sources? How get control of existing 
 earning powers? There are only two ways in practical politics : Money 
 or gunpowder. The Socialists must buy these earning powers, or 
 they must take them by force. They can never get possession of them 
 in any other way. 
 
 If they are to be purchased, the next question is : How much? Where 
 will the Socialists get the money? The State. Where will the State 
 get the money to merge the title in itself to the entire wealth of a people, 
 unless the people hand their entire wealth over to it as a gift? It 
 seems safe to say, if any party ever gets control of a nation^s legislature 
 and attempts socialization by purchase, that the world has never seen 
 such a financial orgie as would result. Whatever happened, however, 
 there could be but one outcome: the Socialist State would be mortgaged 
 forever to a few individuals who organized the merger. It may be 
 supposed, however, that these diflSculties are overcome in some form 
 or other which, there is reason to believe, they would never be. The 
 next question is with reference to the earning powers. If the Socialist 
 State continued existing indirect taxes in order to continue existing 
 earning powers, the people would continue feeding themselves with one 
 hand and taking the food out of their mouths with another, exactly as 
 they are doing to-day; and they always take out more than they put in 
 the mere cost of the process making the difference, irrespective of other 
 considerations. 
 
 If the Socialist State buys these earning powers, based upon indirect 
 taxes, the Socialist State must continue to give them the value which 
 they to-day possess. But their present value is only maintained by the 
 periodic explosion of a mixture of taxes and gunpowder in the industrial 
 cylinders of the nation. The Socialist State would be forced to inflate 
 these same values by the same means which inflate them to-day: taxes 
 and gimpowder. The chances are, with a financial orgie at the start, taxes 
 and gimpowder as the inevitable accompaniments of Socialism, that, un- 
 der the Socialistic regime, the people would be little better off than to-day. 
 Their situation would, in all probability, be worse; for experience shows 
 
592 
 
 Political Practice 
 
 Pt. Y 
 
 that the routine of State management is inadequate to meet the demands 
 of highly organized and highly specialized industrial enterprise. There 
 woidd thus be taxes and gunpowder at the beginning, inevitably de- 
 creasing earning powers, with the equally inevitable necessity of in- 
 creasing the taxes and gunpowder;' which presents a self -perpetuating 
 series of by no means alluring possibilities. It may be supposed, however, 
 that, after purchasing the earning powers, the Socialist State repealed 
 the taxes. There could be but one result. The Socialist State would 
 find that it had purchased a big balloon, let out all the gas, and pos- 
 sessed no means of inflating it again. Even the return to Socialistic 
 taxes and gimpowder could never revivify productive powers and 
 markets, which had taken years of patient effort and the most active 
 organization and competition to develop. 
 
 But, it might be said, all these difl^culties arise from an error at the 
 starting-point. There are two ways of merging the national annual 
 wealth. The Socialist State, even in order to purchase it, would have 
 to be possessed of suflScient power to enforce its decrees; but, given the 
 power, why purchase the wealth? Why not merge it at once? The mere 
 decision of an assembly would be sufficient to legalize such a step — 
 nothing else is necessary. In this way the society would avoid all financial 
 difficulties and escape the incubus of a perpetual indebtedness, while the 
 individuals whose wealth had been absorbed would enjoy all the ad- 
 vantages of the other members of the society. It seems, therefore, as 
 all sovereignty exists but in the decisions of a society, that, by the sim- 
 ple means of the transfer of the title to annual wealth from the individual 
 to the sodal organization, it becomes possible to distribute this wealth 
 in beneficent showers throughout the whole people, instead of in the 
 form of more or less turgid and congested streams as at present. Such a 
 thing could, of course, be done by force alone; and, as Socialism of this 
 natiu-e seems by far the most "practical" measure ever likely to be 
 adopted in any attempt at radical political reorganization, it may be 
 given a moment's attention. 
 
 It may be supposed, then, that the most practical method of socializing 
 the wealth of a nation is cold steel; all financial complications are thus 
 eliminated in a moment, and the process has but to be put in prac- 
 tice. Such a process may be briefly examined, as it might actually 
 occur, if ever attempted. In order to make it as easy as possible, 
 it may be supposed that the Socialists have gathered together enough 
 money and bombs to bribe the police and blow up the authorities. The 
 
 Bk. II 
 
 Practical Socialism 
 
 593 
 
 Red Flag is everywhere victorious from the sheer weight of numbers 
 gathered beneath it; London, or Paris or New York lies at their mercy; 
 and they have but to take the wealth of the rich, nationalize it, and dis- 
 tribute it evenly and justly throughout the society. Let us suppose 
 that we have long struggled to right the wrongs of the people; they are 
 grateftd to us and appoint us chairman of a committee of distribution. 
 They call us the " saviour of the people." It is obvious that we cannot 
 nationalize, socialize, distribute, or do anything else with the wealth of 
 the rich until we have it. The first thing, therefore, is to get it. Ail 
 we have to do is to take it and distribute it. No one will interfere with 
 us. We can now put our hopes for the people into practice. We or- 
 ganize a committee of the brave comrades, therefore, take along a few 
 intellectuals to help us do the thinking, and begin operations. We 
 may begin at the beginning and make a clean sweep, so that the people 
 may get all the wealth of the rich and nothing escape. 
 
 The most obvious thing would seem to be to loot the great residenrial 
 quarters. Away we go to Park Lane, to the Place de TEtoile or up 
 Fifth Avenue, as the case may be. The result of this expedition will 
 be an enormous mass of books, rugs, fximiture, and motor-cars, which 
 will be handed out to the people through the distributing organization, 
 as fairly as possible, doubtless amidst great rejoicing: the people have at 
 last come into their own. Some little confusion might be occasioned, 
 perhaps, as it was found that there were not enough pictiu-es and motor- 
 cars to go round, and that the only way to distribute them with any 
 degree of fairness would be to cut the pictures in pieces and take the 
 cars apart. Of course they could not be sold, and the money distrib- 
 uted, for these things are of use to the rich alone, and all the rich would 
 have been forced to leave the country or pretend they were enjoying 
 themselves with the brave comrades; that is, there would be no rich any 
 more to buy these things and we would simply have to do the best we 
 could with them. 
 
 One of the intellectuals will say that this is not the real wealth we 
 are seeking, and we begin a closer search. The result of this will be 
 some plate, silver and jewellery, which the rich had not been able to take 
 away with them in their ffight. This will be better, it can be melted; 
 and each of the comrades will receive a small piece of bullion, and their 
 wives some dust as their share of the diamonds and the emeralds. This 
 may seem a little disappointing, for all we have distributed so far are 
 some pnemnatic tires and a few shillings worth of bullion. One of the 
 
 m 
 
[^ 
 
 594 
 
 Political Practice 
 
 Pt. V 
 
 intellectuals finds a bank book somewhere, and then we see the light. 
 The pneumatic tires and the sofa cushions, he says, are not the wealth we 
 are after; the real wealth of the rich lies in the banks and the trust com- 
 panies. A triumphal expedition will be made to the "City," to Wall 
 Street, or the Place de la Bourse. The bank books show where are 
 millions and millions of the wealth of the rich which we have but to 
 divide up. In the banks we find a great number of ledgers and papers 
 and a very small portion of the money expected. Part of this money will 
 be in paper and an infinitely small portion in coin. The paper money will, 
 of course, be worth exactly as much as it is worth in the form of paper 
 pulp. The banks which issued it will be ruined, and the governments 
 behind it will not be able to oppress the people any more by redeeming 
 their obligations to them. Each of the brave comrades, therefore, will 
 receive his share of paper pulp, for it could only be divided by weight 
 with any degree of fairness. The coin would have to be put through the 
 same process. If all the coin in any great nation, to-day, were divided 
 evenly, each individual would receive a few dollars, francs or shillings, 
 as the case might be, and these would soon disappear from the masses 
 in return for provisions; for it must be remembered that all sources of 
 income would be dried up in a moment, the circulation of money through 
 the regular channels would be checked, and all forms of wages and em- 
 plojonent cease. 
 
 After the coin and the paper had been distributed, one of the intel- 
 lectuals might say that we had not yet reached the real thing. The 
 real wealth of the rich, he says, lies down in the vaults in the form of 
 bonds and securities. At last we have found what we are after; now we 
 can really begin to divide up the wealth of the rich. A drill and a little 
 dynamite do the work in a moment. The light begins to dawn and now 
 the wealth can really be distributed to the people. Down we go into the 
 vaults with great rejoicing. There are found innumerable tin boxes 
 filled with papers — paper, paper, paper, always paper; nothing but 
 paper. And here arises an important question. How shall this paper 
 be distributed? Shall it be reduced to pulp, cut into small pieces, or shall 
 we add up the millions it represents, divide the total by the number of 
 the people, and tell each one he is worth so much? If we do the latter, 
 and the people say they would like to have the money, all we could give 
 them would be pieces of paper. If we try to sell the paper, no one would 
 buy it. Not one of its obligations would be honoured; not a franc, shil- 
 ling or dollar would be paid on it. Every industry it represented would be 
 
 
 Bk. II 
 
 Practical Socialism 
 
 595 
 
 
 ruined and have shut down, owing to the impossibility of getting money 
 required for running expenses. The obligations of the previous govern- 
 ment would be equally worthless. We would be the government. If we 
 wish these pieces of paper to have any value, we would have to pay the 
 money obligations they represent. But the brave comrades have all 
 the money. If they wish the paper to have any value, they will have 
 to pay its obligations to the owners of the paper. But the brave com- 
 rades have all the money and all the paper as well. In other words, 
 they would have to pay themselves the money which they have, for the 
 paper which they also have. In other words, there is not the slightest 
 use in distributing the paper at all, and we might as well burn it up. 
 It seems we have not got our hands on the wealth of the rich, as yet, by 
 
 any means. 
 
 One of the intellectuals is thinking the matter over. He says: "These 
 pieces of paper represent land, industries, and property of various kinds. 
 The paper is not the wealth ; the properties are the real wealth of the 
 rich and all we have to do it to take these and distribute them systemati- 
 cally throughout to the people. At last we see the light; now we 
 can begin operations in earnest. This intellectual shows signs of fiscal 
 intelligence; we appoint him our Minister of Finance and begin again. 
 Out we go to Birmingham and Manchester to get the wealth of the 
 rich; to the industrial centres of the coimtry; up the Hudson or down the 
 Seine. Everything will be arranged now and the people soon be com- 
 fortable and happy. 
 
 These matters, however, would be taking up time; the people from the 
 provinces would be crowding into the city to get their share of the wealth 
 of the rich. We, of the city, would go out to the provinces to get the 
 wealth of the rich. No wages, of course, would be paid anywhere; 
 all the owners of the industries would have fled or be turned out of 
 possession. The provisioning of the city would be checked. The small 
 amount on hand would be consumed in a short time. Prices will go up 
 with astonishing rapidity. The people in the city will be growing hun- 
 gry at the same rate. They will grow very hungry in a very few days, and, 
 after the first novelty of the thing had worn off, they might tire of the 
 diet of chandeliers, lace curtains and worthless securities which would 
 be all we could hand out to them. However, we issue a bulletin, saying 
 that we have at last found the wealth of the rich, and would distribute 
 it at once; a little patience is all that is necessary. 
 
 Out in the provinces, where we have now gone to get the wealth, we will 
 
596 
 
 Political Practice 
 
 Pt. V 
 
 find a Sabbath-like stillness; the great wheels of the industries will be 
 motionless; the engines silent; the fires out. However, we can now begin 
 to distribute the wealth. Shall we send a few trainloads of brick down 
 to the dty to check the famine, or would the people prefer to divide 
 up the corrugated iron roofing at first? Shall we cut the boiler tubes 
 into halves or quarter sections for distribution? Shall we take down the 
 smokestacks, or try to sell them as they stand to some of the brave com- 
 rades or the intellectuals ? The Minister of Finance meets these questions 
 with a supercilious smile. "Is it not the boiler tubes and the smoke- 
 stacks which constitute the wealth of the rich," he says, "we must 
 take these properties and nm them for the benefit of the people." The 
 wealth of the rich has escaped us again. However, this time we really 
 do know where it is and will soon be able to divide it up among the people. 
 We issue peremptory orders to the Minister of Finance to put the in- 
 dustries on a working basis and to distribute the profits to the people 
 at once. He says that he will follow our instructions to the letter 
 immediately — all that is necessary is so many hundreds of millions 
 of capital. What is to be done? " Produce the money," says the Minister 
 of Finance, "or divide up your industries in the form of bricks and scrap 
 iron." We call a formal meeting of all the comrades and the intellectuals. 
 None of them seem anxious to lend us a few hundred millions at this time* 
 but all agree that some systematic attempt must be made in order to 
 get the money; in order to get the wealth of the rich, in order to divide it 
 up among the people. If we go down to the city, we will probably dis- 
 cover that the looting of the banks and the disembowelling of the vaults 
 is not conducive to the floatation of securities to any large amount. 
 " Money or scrap iron," says the Minister of Finance. What can be done? 
 "Taxes," says the Minister of Finance. The comrades and the in- 
 tellectuals say there is nothing else to do. We take a map; cut the 
 people into local units imder local administrations, and begin to assess 
 taxes as lightiy and fairly as we can. A littie money comes in. As 
 soon as some vestige of order begins to appear, we may be able to bor- 
 row a littie more here and there by hypothecating the taxes. Things 
 begin to look better. We start up a small number of the industries, 
 as soon as the profits come in we will divide them up; money will begin 
 to circulate and we will be ble to start up the rest of the industries. 
 
 All this, however, will be taking up time. The famine in the dty 
 will burst into flames now and then. Some of our measures are not 
 popular. We hear the word "traitor" is bandied about with our name 
 
 Bk. II 
 
 Practical Socialism 
 
 597 
 
 attached to it. Some of the brave comrades have deserted us, and are 
 forming counter organizations. We must have a police force to keep 
 them in order, or they will destroy all our plans just as we are on the 
 point of getting the wealth of the rich and dividing it up. We must 
 protect the people at all hazards. Out in some of the provinces opera- 
 tives, thrown out of work, will revolt against us and want to go back to 
 the old order in which at least they had something to eat. We must 
 repress the enemies of the people. A small military organization is 
 necessary — more taxes, more police. However, these things are 
 essential, if we are ever going to get the wealth of the rich in order to 
 divide it among the people. Other matters will require attention. 
 Some of the rich people, whose wealth we are trying to distribute, have 
 fled to other countries; they want to come back and get their property. 
 We have destroyed enormous values and markets affecting neighbouring 
 sodeties; great financial interests are involved; they combine, and there 
 is an ominous movement of troops about our frontiers. Military organ- 
 ization is necessary; we appeal to the patriotism of the people; they 
 respond with alacrity in order to protect themsdves against the tyrants 
 and the foreigners — taxes, loans, debts. 
 
 However, the Minister of Finance has been at work; and it is now time 
 to divide up the profits of the industries in operation. At last we will 
 get some of the wealth, at least, and all will be well. We call for his 
 report. Yards of figures: Enormous defidt. "It could not be otherwise," 
 says the Minister of Finance, "for the reason that when we took over 
 these properties, the plants were either designed and built with reference 
 to a protective system of taxation or to supply markets which were so 
 dependent. The result is, that unless we tax and protect our markets 
 as they were protected before, we can never run these plants at a profit." 
 The wealth of the rich has eluded us once more; we never seem to be 
 able to get our hands on it. However, now we really know where it is. 
 All we have to do is to protect the markets and divide up the profits among 
 the people. On go the taxes, every kind of a protective tax of which 
 any one can think. We study these in relation to foreign schedules, 
 and add certain percentages to them so that the people will be armed 
 with a tariff-weapon, and we can thus gain concessions from the foreigner 
 without affecting our own industries. Some of the intellectuals will 
 begin to'theorize, but we are practical men and have no time to listen 
 to theories. We must protect the people " practically," or we will never 
 get the wealth of the rich to distribute. 
 
 «: 
 
 n 
 
598 
 
 Political Practice 
 
 Pt. V 
 
 But the Minister of Finance has not done with his report: "Military 
 and administrative expenses," he says, "are increasing and must be met, 
 if we are to get the wealth of the rich and protect the people from the 
 tyrants. So many millions are, therefore, an absolute necessity if our 
 Administration is not to collapse when on the point of realizing the 
 wealth we are seeking for the benefit of the people." All taxes are hy^ 
 pothecated under a thousand different forms and these resources ex- 
 hausted. The issue, therefore, resolves itself simply into raising more 
 money or abandoning the people to the oppressors. He lays his plan 
 before us. "Our Administration," he says, "is in possession of great 
 resources: resources which conservatively estimated represent so many 
 thousands of millions. We are holding these for the benefit of the people 
 and these resources will, of course, be turned over to the people as soon as 
 their real annual value can be realized, which is impossible at present, 
 owing to the lack of credit and accumulations of capital in the country. 
 "Let us, therefore," he continues, "sell these properties to the local ad- 
 ministrations, and allow them to pay us for them with certificates based 
 upon the properties, and the lands which they represent. These certifi- 
 cates will thus always have a sound and real value behind them, and with 
 these certificates, we will be able to pay our debts, develop the industries 
 support our troops and protect the liberties of the people." 
 
 There will be debates in the Assembly about this time; some of 
 the intellectuals will croak. They say we are trying a dangerous 
 game that has been tried before. We ask them to suggest something 
 better, something "practical." They say nothing more. But our Min- 
 ister of Finance will answer their objections. "Our issues," he says, 
 "are not analogous to other issues of the same kind. Are we not the 
 chosen and disinterested representative of the people and their liberties? 
 Will not these issues be wisely controlled and limited by us? Are they 
 not based upon the most secure of all wealth? — the land on which we 
 tread. When times get better, will they not necessarily be reabsorbed 
 through the purchase of the national domains from the local administra- 
 tions? " At last, we begin to see the light; at last we have found a way 
 to get the wealth of the rich ''practically." All we have to do is to discount 
 it, to assign it, as it were, to the people. We see signs of fiscal genius 
 in our Minister of Finance. These issues, moreover, we perceive, will 
 possess other advantages. They will scatter the tides to real property 
 throughout the nation, through the local administrations, and render 
 our government that much more secure. 
 
 U 
 
 Bk. II 
 
 Practical Socialism 
 
 599 
 
 But beside these theoretical considerations, the Minister of Finance 
 invariably ends his speeches with the bald statement: "Paper Money 
 or collapse." Collapse is not a pretty thing when we are on the verge 
 of getting the wealth of the rich to distribute to the people. We must 
 get the wealth at all events. The people have put their trust in us and 
 we will not prove false to them or to it. The presses are put to work, 
 and a shower of paper money falls over the population. At last the 
 people are getting the wealth in practical form and soon all will be rich 
 and happy. The administration is now in funds; we can start all the 
 industries and distribute the profits as fast as they come in. 
 
 Our government, it must be remembered, is a workingman's govern- 
 ment. It is formed for the workers and we think of them alone. What 
 we want to do for the workers is to divide up the wealth of the rich among 
 them in return for their work. How can we do it? As the result of the 
 next meeting of the Assembly, we isssue the following: 
 
 The government of the people binds itself to guarantee the existence 
 of workmen by means of work. 
 
 It binds itself to guarantee work to every citizen. 
 
 The government decrees the immediate establishment of national 
 workshops. The minister of public works is charged with the execution 
 Of the present decree. 
 
 The Members of the Government. 
 
 Matters look more promising. The people are delighted. The in- 
 dustries are at last put in motion and we will soon divide the profits. 
 
 In the meantime troops are beginning to cross om* frontiers; heads of 
 columns are reported in other directions, and uprisings take place in cer- 
 tain provinces in sympathy with these. It is necessary to send a colunm 
 or two to the northward and a body of horse to the disaffected provinces. 
 These troops must be handled efficiently and intelligently. A young 
 colonel of cavalry or captain of artillery shows signs of ability, and we 
 are glad to throw responsibility into his hands while we look after the 
 dvil and financial affairs of the nation. These affairs are growing 
 complicated on another side and demand attention. Our paper money 
 is coming back to us in taxes. If we refuse it, and demand taxes in 
 specie, we will depreciate our own money. If we suppress it as it comes 
 in, we will have no funds with which to carry on the government. Our 
 paper money comes in, and out it goes again. The faster it comes in. 
 
 f' 
 
6oo 
 
 Political Practice 
 
 Pt. V 
 
 the faster it goes out; the faster it goes out, the more it depreciates; the 
 more it depreciates, the faster it goes out; and the faster it goes out 
 the faster it comes in. However, we must turn our attention to other 
 matters. 
 
 It is now time to distribute the profits of the national industries. 
 The people will, at last, get the wealth of the rich. Yards of figures: 
 Enormous deficit. "Regrettable but unavoidable," says the Minister 
 of Finance. "The reason is that under the old order these industries 
 possessed a market. To-day no such market can be found. Multi- 
 ply protective taxes as we will, no market can be developed which permits 
 nmning at a profit. The reason seems to be the checking of the pre- 
 vious circulation of wealth." He closes his address with the words: 
 "Another issue of paper money or close up your industries, disband your 
 armies and allow the tyrants to take possession of the people." We 
 must protect the people at all hazards until we get the wealth of the 
 rich to distribute to them. We are practical men and have no time to 
 theorize about the limitations of paper money issues. Out goes the 
 paper, or out we go ourselves and abandon the people to the tyrants 
 and oppressors. That is all there is to it. If any of the intellectuals 
 make trouble and try to stir up sedition among the people, the jail or 
 the guillotine awaits them; theories will never get the wealth of the 
 rich to distribute to the people. 
 
 Another issue of paper money; down it goes in value, and up goes the 
 price of provisions. Specie begins to disappear from circulation. Oiu* 
 wisdom and farseeing statesmanship, however, are equal to the occasion. 
 In order to bring back specie, we forbid speculation in it under penalty 
 of six years in irons; and specie disappears altogether. We forbid the 
 sale of oiu: money below par under penalty of twenty years in chains — 
 and the market is flooded with counterfeits. We forbid the investment 
 of all capital abroad under the penalty of death -- and subscriptions 
 are opened abroad in order to speculate in our securities. We fix a 
 maximum price for provisions, force dealers to observe it — and the 
 dealers go out of business. We force them to sell — they adulterate 
 the provisions. We put a forced price on everything we can reach — 
 and two prices come into existence : one public, the other secret. How- 
 ever, we must turn our attention to other matters. 
 
 The minister of Finance reports another deficit in the national in- 
 dustries. The people begin to grow restive in paying taxes in order to 
 support a body of workmen in unprofitable enterprise. We get to work 
 
 
 
 Bk. II 
 
 Practical Socialism 
 
 6oi 
 
 with the tariffs and the octrois. We plunge into the custom houses and 
 the indirect schedules; taxes are piled up in every conceivable way for 
 the benefit of the people; we must protect the people whatever hap- 
 pens. Another yawning and growing deficit: same reasons. We are 
 forced to shut up the industries. This throws a vast body of 
 workmen out of employment. The spectre of famine stalks in the 
 city. The people loot the provision dealers. We tell the police to be 
 lenient; the people must live. The people loot more dealers, and the 
 dealers go out of business. The mayor of the city is on the spot and 
 knows what he is talking about. He issues the following bulletin: 
 
 The Mayor to His Fellow Citizens: 
 
 The City contains so many millions of inhabitants; the soil of the 
 City produces nothing to eat, any more than the deck of a ship at sea. 
 
 When provisions come to the City, if the inhabitants rob the owners 
 of them, supplies will cease to be sent. 
 
 The City will have nothing with which to feed the millions of its 
 inhabitants. 
 
 So many millions of persons, destitute of everything, will devour each 
 other. 
 
 This is the red spectre of famine in a great city — it is as real as hunger 
 and as practical as bloodshed. We strengthen the police force, move 
 troops up around the City, and issue orders to put down the red spectre 
 at all hazards. Strong counter-revolution against us in the large centres 
 of population. There is treason in the hearts of the people. Some of 
 them are corresponding with the tyrants and oppressors. Risings occur 
 in the provinces. Bands of robbers are forming on every side; honest 
 hard-working coimtiy people are turned into thieves and cutthroats; 
 for all the sources of their livelihood have been dried up. In every 
 opposition we see the germ of sedition. There is treason in the city, 
 treason in the Assembly; treason and tyrants everywhere. The people 
 must be protected, come what may; we set up a guillotine in the city. 
 We send out guillotine expeditions to the provinces. They cannot 
 work fast enough. The traitors clog the knives. We form them into 
 squads and shoot them down; we load them into hulks and sink them 
 like rats in the rivers, so that the very fish are polluted, and we have to 
 issue a decree forbidding a starving population to eat the only food it 
 can get, for fear of a pestilence; and the pestilence comes in spite of us and 
 our decrees. It is simply a question of mass against mass. If we do not 
 
6o2 
 
 Political Practice 
 
 Pt. V 
 
 l: fi 
 
 extenninate them, they will exterminate us; that is all there is to it, 
 "practically." 
 
 Our strong and statesmanlike conduct is beginning to show results, 
 however, and we can now turn our attention to other matters in order 
 to get the wealth of the rich and distribute it to the people. Our re- 
 pressive and military operations cost money; the more they cost the more 
 paper we must issue; the more we issue, the less it is worth; the less it is 
 worth, the more we issue. There is nothmg else to do "practically." 
 Down it goes; down, down, down. The more we issue the less it is 
 worth, and the less it is worth the more we issue, down, down, down. 
 There is no more trouble in the Assembly about the issues, no more 
 theorizing; they come out in floods instead of in showers. Some 
 of the intellectuals are beginning to understand how to protect the 
 liberties of the people with great patriotic enthusiasm and make a 
 little money for themselves at the same time. The debtor class is 
 beginning to be felt at the meetings. It is no little convenience to be 
 able to pay obligations in a depreciating money. If we watch the As- 
 sembly closely, we will learn when it is a good time to buy heavily — 
 and defer payments. Speculation goes on everywhere ; we can force a man 
 to take paper for specie, but we cannot force him to give specie for paper. 
 Down, down, down. We must begin to watch our paper money closely 
 now, or we will get into trouble. We float or sink with it. Something 
 must be done to put it and the finances in order and check the ruinous 
 speculation in our money. 
 
 We have now flooded the country with an enormous volume of paper 
 and the expedients to which we have been driven to raise funds have 
 created an infinite variety of different forms of securities, all represent- 
 ing different kinds of values and bearing different rates of interest. 
 Speculation is rampant in these on every side and fortimes are beginning 
 to accumulate with great rapidity. The people do not like it: they say 
 that the members of the Administration are making money out of their 
 own decisions. Something must be done. Our minister of Finance 
 is equal to the occasion. We merge all public loans, all debentures, 
 all obligations of all kinds in one form, bearing one fixed and moderate 
 rate of interest. This at once checks speculation in our securities for all 
 values are alike. Our wisdom and fiscal ability however do not stop 
 here. The local administrations have, of course, need of money to 
 continue in existence and protect the people from the tjrrants and op- 
 pressors. These local finances give rise to speculation and peculation. 
 
 Bk. II 
 
 Practical Socialism 
 
 603 
 
 We therefore bind ourselves with all local obligations, and bind ourselves, 
 at the same time, not to seize the properties upon which they are based 
 until the sums are liquidated. 
 
 Benevolence and fiscal intelligence can go no farther; besides which it 
 is an excellent move to strengthen the Administration. Our next step 
 will be to merge all local obKgations with the one central obligation and 
 reduce the whole series to the same rate of interest. We inscribe all 
 national and local obligations combined, in a Great Book: one debt, one 
 rate. In this way we become a debtor, a creditor, a popular representa- 
 tive and a benevolent despot all in one; not alone in reference to the 
 central administration but in connexion with the provinces as well. 
 This strengthens us throughout the entire country, it is impossible to 
 be stronger; and, at the same time, it throws the control of all fiscal 
 and financial affairs into our own hands. We are too clever for the 
 speculators; we can outwit them at their own game. All values are 
 uniform at this juncture and we are in absolute control. However, it is 
 notessential to stop speculation alone; our papermoneymust be strength- 
 ened as well. We are worth exactly as much as it, no less, no more. 
 Its value must now be supported in order to save the people from the 
 tyrants, in order to get the wealth of the rich, in order to divide it among 
 the people. There are two ways of doing this: one is to bring specie 
 back into circulation; the other to check the issues of the paper. Both 
 will be done at the same time; turning our attention first to specie: 
 
 We repeat our decrees awarding six years' imprisonment to every man 
 who buys or sells specie. We sentence every man who refuses oiu* paper, 
 or who pays it out at a loss, to an enormous fine and six months' impris- 
 onment for the first offence; double the fine and twenty years' impris- 
 onment for the second. We decree that all hidden and hoarded gold, 
 silver and jewellery shall belong partly to the informer and partly to the 
 government. In certain localities we abolish specie altogether, and 
 order it to be brought to the authorities and exchanged for paper. This 
 will enable us to float the specie wherever and whenever it will do the most 
 good in supporting our paper money. These measures have more success 
 than we hoped: specie is beginning to come back into circulation in the 
 centres. Our paper money suddenly jumps into new life and shows 
 great vitality. Things at last look encouraging, and we will now turn to 
 the isuues in order to limit these as much as possible. We must support 
 this hopeful rise in our paper. 
 
 In order to stop the issues, we now defray certain expenses over a 
 
 •1 
 
 '.' 
 
 : ; 
 
6o4 
 
 Political Practice 
 
 Pt. V 
 
 certain amount, with an entirely new form of paper. These certificates 
 will represent large amounts only, and thus will not compete in the 
 ordinary currency. Up goes our paper money faster than we expected. 
 We next issue a new form of paper, based upon certain specific properties. 
 This paper, therefore, can never fall below the value of those properties 
 and consequently cannot injure our paper money. Up goes our paper 
 at every step we take. Finance is a beautiful thing when thoroughly 
 mastered. We next issue another form of paper, redeemable at sight 
 in certain specific properties. We select the best men in the country, 
 organize them into banking institutions, give them certain properties, 
 with power to issue notes against these. These notes we then borrow 
 from them in order to meet expenses. In this way, these institutions 
 will be behind the notes and our own issues may be proportionately 
 limited. Up goes oiu: paper money with leaps and bounds — up, up, up. 
 We then issue another form of paper, representing the current revenues 
 of the year; another form redeemable by the treasurer in specie under 
 certain conditions; another form redeemable by the treasurer in specie 
 under other conditions; another form of paper representing voluntary 
 loans; another form representing forced loans. Up goes our paper 
 money, back comes the specie. Things are looking bright. It is a 
 fortunate thing for the people that they are blessed with such a Minister 
 of Finance as oiu-s; no one else could have outwitted the speculators 
 so cleverly. Our paper money has touched par and every one will soon 
 be rich and happy. 
 
 While we are congratulating our Minister of Finance the bottom 
 suddenly drops out of our paper and specie begins to disappear. What 
 can be the trouble? The people say that the speculators had been watch- 
 ing our operations and helping us along in putting up the rate for our 
 paper by the simple expedient of retiring a few millions from circulation 
 now and then, in order to pour them out as soon as we had worked our 
 money up to par. They, of course, knew that we would do everything 
 we could to keep it there and help them turn an honest penny at the 
 same time. They knew, if they helped us put up the rate, that we would 
 help them realize when the time came. Reciprocity is a great principle 
 in finance. The people say the speculators made great sums in this 
 move. In order to protect our paper issues, we have now flooded the 
 country with a new and vastly complicated mass of paper; speculation 
 is rampant at once. Financial companies are coming into existence 
 which use their influence in various ways the people do not like. We 
 
 Bk. II 
 
 Practical Socialism 
 
 60s 
 
 forbid the sale of their securities — they change them into transfers 
 on the books. We suppress the companies — and the people say that a 
 great deal of money was made in certain quarters during the process. 
 Speculation in our new paper is spreading like wildfire everywhere. 
 If we support its value, speculation will continue. If we merge it in 
 the old debt, it will all fall in a dead weight to the level of our paper 
 money and we will never be able to raise any more fimds. Something 
 must be done. We shut up the Exchange — and speculation continues 
 in a thousand places instead of in one. The people say that enormous 
 sums were realized in certain quarters about that time. However, we 
 must now turn our attention to other matters. 
 
 Military operations are constantly gaining in importance. The 
 enemies of the people are gathering on every side. It takes a strong 
 man at the head of the armies of the people. Our young captain of 
 artillery has become a great general long ago. He knows how to spread 
 his troops over the critical surface in a campaign and how to concentrate 
 them at the critical point in a battle. He knows how to handle generals 
 of division in council and an army corps in action. We make him general- 
 in-chief of the national forces. The people are delighted, they call him 
 the "saviour of the people,' ' they call us tyrants and oppressors. However, 
 matters are becoming more settled, thanks to the influence of a general- 
 in-chief , and the people turn to us and ask when we are going to divide 
 the wealth of the rich. Something must be done. The strong hand of 
 the general-in-chief has checked confusion so that we can really get to 
 work at last with our distribution. 
 
 We hold an important conference with the Minister of Finance. He 
 says the proper and practical way to distribute the wealth of the rich is 
 as follows: "The Administration," he begins as usual, "is in possession 
 of great resources, the value of which it is impossible to realize at the 
 present moment. We have, however, already anticipated this value 
 in our paper circulation. The people thus hold the wealth in solution, 
 as it were; all we have to do, in order to give it to them actually, is to dis- 
 pose of the national properties to them in return for our paper, and 
 destroy the paper as it comes back into the treasury. This is a splendid 
 idea. Why had we never thought of it? Matters are now beginning to 
 take on a really practical and businesslike form, and we turn all our atten- 
 tion to disposing of the national wealth to the people in return for our 
 paper money. At this juncture the people have the millions and we 
 have the property; all that is necessary is to make the exchange. Prac- 
 
 I 
 
 II • 
 
 .* M I 
 
6o6 
 
 Political Practice 
 
 Pt. V 
 
 •f 
 
 tical finance is not so difficult after all; a child can understand it. The 
 only difficulty is that the millions are on paper and not worth anything 
 when they come back to us, and the national properties are unproductive 
 and not worth anything when the people get them. However, we have 
 no time to waste on such visionary and theoretical considerations: we 
 are practical men. 
 
 We put the former values on the properties and offer them to the 
 people: no bids, no buyers. We offer to accept payment in yearly in- 
 stallments: no bids, no buyers. We offer to accept payment, part in 
 specie and part in the certificates already issued on the properties: no 
 response. We offer to accept all inscriptions in the "Great Book" for 
 half the amoimt of the sales. We offer to accept taxes on the properties 
 half in kind and half in money. We anticipate sales by bills to contractors 
 who can deal with prospective purchasers. We offer to dispose of the 
 properties on mere verbal agreements. We put them up at auction. 
 A small amount of the national properties are disposed of in this way. 
 The people say that a great deal of money was realized by certain individ- 
 uals in control about this time. However, we must turn our attention 
 to other methods if the people will not buy the properties from us. 
 
 "If the f)eople will not take the properties," says the Minister of 
 Finance, "there is but one thing to do — force the people to take them." 
 The way to do this is obvious: All that is necessary is to inaugurate a 
 system of loans based upon the national properties; loans to be partly 
 volimtary and partly forced. By means of these loans the people will 
 have to take the properties whether they want them or not. What 
 could be simpler? At last we have really foimd a way to distribute the 
 wealth of the rich. All we have to do is to force the wealth out of the 
 hands of the rich; anticipate its value in paper money, assign it as it 
 were, to the people, force the people to take the paper money and then 
 force them to take the property in exchange for the paper money. Prac- 
 tical finance is a beautiful thing, and now we can get the work on a 
 practical basis. 
 
 First we open voluntary subscriptions for loans against the national 
 properties. Next we require every individual in the coimtry to return 
 the condition of his finances. A board of examiners is appointed in 
 each locality familiar with local affairs, empowered to double estimates, 
 if they doubt the truth. We then assess all property above an amoimt 
 essential for sustenance in a progressively cumulative system. This 
 wise measiure will cut the heart out of the wealth of the people, and 
 
 Bk. II 
 
 Practical Socialism 
 
 607 
 
 retire millions of paper, but millions still remain. The dty must be 
 fed, or the red spectre will flare up in fury. We are forced to buy enor- 
 mous quantities of provisions and to sell them to the people at a loss. 
 Military operations demand more money at every step. We must meet 
 these demands with paper or we cannot meet them at all. Our paper 
 is sagging heavily everywhere. The lower it goes, the faster it comes 
 out; the faster it comes out, the lower it goes; and the lower it goes, the 
 faster it comes out: down, down, down. However, we must now turn 
 our attention to other matters. 
 
 Army and administrative affairs are not looking bright as our paper 
 falls. Officers, officials, and members of the government are unable to 
 live on their salaries as the paper goes out of sight. All our different 
 kinds of paper are sagging everywhere. The ranks of the armies are 
 not filled up as readily as before; the soldiers are not properly fed or 
 clothed. We force the most rigid conscription, but the conscripts have 
 to be fed and clothed. We hear of mutinies in the armies here and there. 
 Something will have to be done; something practical. Our paper 
 scarcely has any market at all. 
 
 We begin to cancel obligations in one fourth specie and three fourths in 
 bills on the national properties. We issue new bills with various forms 
 of specie support or no one will take them. We issue new forms of 
 orders on the different treasuries. We appoint a special commission of 
 finance, and empower its members to raise money on their own respon- 
 sibility. The needs of the army demand enormous sums and men with 
 real money to handle the contracts. The men with the real money are 
 on hand. There are now three standards of value in the country: specie, 
 provisions, and our paper, which is rapidly falling out of sight. The 
 men with the real money must handle the great contracts for the armies. 
 Our paper will not do it. These men have certain opinions with ref- 
 erence to the relation of the values in which they will do business. 
 These are the rich and powerful men of the country; we will do business 
 upon their basis or there will be no business done. We must protect 
 the people from the tyrants and oppressors. The more we protect the 
 people, the more business we do, and the more business we do the richer 
 and more powerful these men become, and the lower our paper falls on 
 the Exchanges. Some of these men are elected to the Assembly, they 
 are all naturally represented in the Assembly, the people say that great 
 fortunes are made out of the Assembly. Things are beginning to change ; 
 our deaees are not met with the enthusiasm they once inspired. The 
 
6o8 
 
 Political Practice 
 
 Pt. V 
 
 
 rich and powerful men are felt everjrwhere. The men upon whom we 
 have forced the national properties wish to get to work and develop 
 them. They require a soimd financial basis in order to do so; they offer 
 employment to the people on such conditions. The people do not want 
 oiu: paper. We issue a decree establishing all values upon a specie 
 basis. We must meet our expenses with specie. Interest must be paid 
 upon our obligations in specie. The speculators and the big con- 
 tractors say we will not last much longer. We begin to pay part of our 
 obligations in specie and to cancel the principal by handing over the 
 national properties to the creditors. The people say that a great deal 
 of money was lost by the creditors of the government, although some 
 very large fortunes accumulated about this time. The speculators say 
 we are bankrupt. However, we must now turn om: attention to other 
 matters. 
 
 We must provide for the troops or the people will be handed over to 
 the tyrants and oppressors, and we will never be able to distribute the 
 wealth of the rich to them. The troops must be kept in the field in 
 order to protect the people. It takes money to keep troops in the field. 
 The troops are waiting outside the doors of the Assembly with the 
 general-in-chief at their head. Money = provisions = troops. No 
 
 money = no provisions = no the door opens, the shadow of the 
 
 Sword falls over the Assembly, and the upshot of the matter is that the 
 people, in the form of a brave and loyal army, turn the people, in the form 
 of the national representation, out of doors. The Sword enters into 
 possession. The nation has swvmg round in one of the inevitable rings 
 of forced political society, and we never have f oimd the wealth of the rich 
 to distribute to the people. The man with a Sword is in possession. AH 
 the wealth and power in the coimtry are with him, the people are with 
 him, they are tired of the confusion, sick of us and our paper money 
 and the whole thing is back again at the starting-point with a rich class, 
 a poor class, private property, and indirect taxes. Our forced paper money 
 has disintegrated the society into new elements as would an add. It has 
 cut the social fluid, as it were, and precipitated a new rich class in place 
 of the old one. The new rich class has the money to control the taxes, 
 pay the army, and employ the people — and we may as well resign our 
 position as diairman of the Assembly as gracefully as possible and see 
 if we can get a commission on the Emperor's guard. We have 
 simply been pumping water into a sieve; we have been flounder- 
 ing round in a ring in a quicksand; we have been floating through 
 
 Bk. II 
 
 Practical Socialism 
 
 609 
 
 a society in a paper parachute and we may as well walk home when 
 
 it touches the earth. 
 
 There is nothing imaginary about these situations. Every posiUon 
 met is a real position; every difficulty faced is a real difficulty; every de- 
 cree suggested, a real decree; every expedient a real expedient put to 
 the test of fact, with real flesh and real blood; real guns and real money. 
 The man who knows how to f oUow them knows that they present actiial 
 conditions, every one; that they are but a crude analysis of the financial 
 history of France for a hundred years. 1 He knows that the ghosts of 
 John Law and the Regent have been ffitting across the pages. He has 
 seen the new regime repeating the errors of the old. He has heard 
 famt echoes of the voices of Mirabeau and Marat; of the Jacobms and 
 the Montagnards. He has seen LeBon touring the provinces with his 
 guiUotine. He has seen Carrier at work, scuttling his hulks loaded with 
 human freight on the Loire. He has seen the head of the red spectre 
 behind the barricades of the Faubourg St. Antoine. He has heard Danton 
 and Robespierre in the Assembly, seen Hoche, Pichegru, and Moreau 
 at the head of the Republican troops. He has recalled the names of 
 Babeuf and the Girondins; he remembers the Chouans and la Vendee, 
 Charette and Larochejacquelein. He remembers the story of Louis 
 Blanc and the national workshops, of the assignats, the territorial man- 
 dates and every conceivable device of the mind of man to make a piece 
 of paper worth a piece of gold without givmg gold for it. He has seen 
 Camot at work in the war office, "organizing victory," Cambon with 
 the " Great Book" in the Treasury. He has seen the blood flow on the 
 Place de la Revolution and watched the convulsions through which a 
 nation plunges when it cuts off its own head. He has seen a great people 
 helplessly floundering in a bloody morass until a man on a white stal- 
 lion rides into the heart of the action with a park of artillery, a column 
 of horse, and a whole nation behind him, to put a stop to the confusion. 
 And, if he looks a Kttle farther, he sees the man on horseback go through 
 identically the same process with his indirect taxes; and the France of 
 to-day doing the same thing with the same means. 
 The French Revolution presents all the facts necessary for the f ormu- 
 
 iThis statement may be readily verified by tracing the indexed word "Finance" througli any authoritative 
 history of the French Revolution. That of Theirs, in Shoberls' Translation, has been used in the present 
 instance. The basis of any other statement with reference to this period wiU be found in Jevons and Walker 
 on Money under Assignats. The decrees and statements with reference to the National workshops wiU be 
 found ia A Policy of Free Exchange, edited by Thomas Mackay under National Workshops, by St» 
 Lot Strachey. A logical and not a temporal sequence has, of course, been presented in the text. 
 
■1 :l 
 
 1 
 
 6io 
 
 Political Practice 
 
 Pt. V 
 
 lation of an opinion with reference to the practical possibility of the 
 nationalization of wealth by force. Wealth can no more be socialized, 
 nationalized or anything else by force, than the tide can be forced to 
 rise with a toy pistol or a rosebud forced to bloom with a heavy armed 
 cruiser. The wealth of the rich does not consist in houses, lands, and 
 industries; nor even in the power to control these productively; for this 
 power, as a wealth-creating factor, is dependent upon the consuming 
 powers of the people. To check the existing flow of wealth through ex- 
 isting channels, such as existing wages, securities, and earning powers, 
 will check the consimiing capacity of the masses; and the wealth of the 
 rich will vanish into thin air. It can no more be taken by force than 
 a rainbow can be gathered in a net, and the attempt will at once check the 
 consumption of the nation by checking existing earnings and channels of 
 distribution. In other words, when the Socialists try wealth nation- 
 alization by force, they will begin operations by nmning a knife through 
 their own throats and wind them up by putting a bullet into the back of 
 their own heads, which is exactly what the men of the Great Revolution 
 accomplished after endless effort and waste of blood and treas\u*e. 
 
 If a man or an industry is said to be worth a million, it does not mean 
 that a thousand men can cut up one or the other and each take a thou- 
 sand. It does not mean that they have a cave full of gold miraculously 
 filled, whatever is taken away. It means that they represent a certain 
 annual earning capacity, and if they are cut up, their earning capacity 
 will be cut up with them, and no one will get any wealth at all. The 
 degree of rapidity with which the circulating mediiun of any society flows 
 through certain industrial channels, or through the possession of certain 
 individuals, decides whether a man is rich or poor. If the flow of 
 money through existing channels is stopped, it will stagnate in a few 
 pools and puddles, and the poor will be worse off than before. Any 
 Administration which does not recognize the richer classes as that which 
 they are — the trustees of the nation's wealth — will in all likelihood 
 never accomplish anything but get the people into trouble. 
 
 The French Revolution seized an enormous mass of property, national • 
 ized and socialized it as well as any such property can be socialized in all 
 probability. The instant it was seized, however, its value disappeared; 
 it became unproductive, not only because State control cannot meet the 
 demands of highly specialized industry as profitably as individual 
 control, but because the markets, essential to the support of the indus- 
 tries, are of necessity dried up through any forced and convulsive proc- 
 
 Bk. II 
 
 Practical Socialism 
 
 6ii 
 
 ess of expropriation. The instant the State seized the properties, 
 therefore, it found itself in possession of a debt and a deficit. And 
 there is excellent reason to believe, when the modem Socialist State 
 goes into working operation, that it will begin to divide up the wealth of 
 the rich in the forms of a debt and a famine; and that it will divide it up 
 with paper money and a guillotine in orthodox Revolutionary style, for 
 it will have nothing else with which to divide it. 
 
 The men of the great Convulsion have exhausted the subject of 
 coercive Socialism for the practical man who studies its financed history 
 and analyzes the action of their minds with the red spectre on one side 
 and a bottomless pit on another. The man who thinks he could have 
 avoided their errors and done very much better than they, under the 
 same conditions, should study the Pit and the Spectre again. 
 
 All such attempts at social amelioration, by means of the expropria- 
 tion of one class for the benefit of another, always have had, and, 
 in all likelihood, always will have, but one result. The force will cut the 
 society into antagonistic elements; these elements will writhe with each 
 other in the death throes for the control of the force, with the result 
 that the man who, with map, compass, and scale, can plan the most 
 effective military campaign; the man who can hold the clearest military 
 ensemble in his mind, at the head of an army in action, will be the man 
 who dictates the conditions of the surviving society — Marius, Sulla, 
 Caesar, Cromwell, Bonaparte. In other words, he will bring the disin- 
 tegrated society back to the condition of a highly centralized society, 
 found a dictatorship, a dynasty or an exploding' Aristocracy, and 
 lay all the essential foundations for another disintegration, which 
 process seems to present the salient elements] of "practical" political 
 
 history. 
 
 But it would be no such easy matter to attempt to "socialize" the 
 wealth of a great nation as has been supposed. To reproduce such a 
 suddenly successful revolution as that of France would require a union 
 of the great majority of the people to begin with. Such imion is, however, 
 rarely found at the beginning of any such movement; the result would be 
 civil war at the start; civil war, moreover, with the bulk of the wealth 
 and intelligence on the side of the existing government, which would, 
 in addition, possess the power of absorbing the resources of the Socialists 
 while the war went on, simply by controlling a few important dis- 
 tributive centres. But, even if the Socialists win the day, and find 
 themselves in possession of an enormous debt, an exhausted treasury. 
 
6l2 
 
 Political Practice 
 
 Pt. V 
 
 •■r 
 
 and the productive powers of a people distorted and destroyed by 
 war, the outlook for coercive SodaKsm will awake little enthusiasm in 
 a mind familiar with practical affairs. 
 
 The Socialists may, of course, repudiate the debt; but what about the 
 treasury and the earning powers, with a prostrate people, and credit and 
 confidence destroyed by the repudiation of national obligations, upon 
 which enormous financial interests with incalculable ramifications de- 
 pend? Such repudiation would be analogous to looting the banks and 
 institutions of trust; the beauties of which have already been examined. 
 There can be but one answer to such a question, "practically." The 
 rings of the French Revolution, taxes, gimpowder, and paper money: 
 the Pit and the Spectre again. Destroy existing channels of distribution, 
 and the Spectre will appear in a moment; check existing earning powers 
 ever so slightly, and the Pit will begin to yawn. There will be nothing 
 for the Socialists to do but pour shrapnel into one, and paper into the 
 other, until the paper crumbles away beneath them and the shrapnel 
 begins to fall on their own heads. The future of the Socialist State, 
 after a successful revolution, looks even bleaker than with a perpetual 
 mortgage gnawing at its vitals; and that, whether it elects to pay its 
 debts or not. 
 
 The essential element of administrative vitality is money; a steel-clad 
 battleship is but a hulk without a piece of gold in her cylinders. The 
 Socialist SUte will last only as long as it can control the necessary means. 
 If ever a people return a Socialistic legislature to power, these men, in 
 order to realize their policy, will find themselves face to face with the 
 inevitable problem — funds. If they decide to buy the sources of 
 production, they will have to get the money, and where can they get it 
 except through paper issues? If they adopt a policy of forced expro- 
 priation existing powers of earning and consumption will dry up in a 
 flash; they will be worse off than before. They will have but one re- 
 source in either case; they will begin to do exactly what all other legis- 
 latures would do in the same position — they will force paper, in order 
 to keep themselves alive, and when their paper falls to nothing they will 
 have no power left. If they do not force their paper, they may not 
 live a year. If they do force their paper, they will undemune their own 
 support. Taxes and paper, taxes and paper — without these, no 
 Socialist legislature can wield administrative power; with these, the 
 Socialist legislature will reproduce identically the same phenomena 
 which all other legislatures have reproduced since political taxes and 
 
 6k. II 
 
 Practical Socialism 
 
 613 
 
 paper came into existence. They will destroy themselves with their 
 
 own weapons. 
 
 There are excellent elements in Socialism, regarded as an ethical ab- 
 straction; there can however be but little hope for it, as a specific admin- 
 istrative system, so long as an indirect tax exists. The wealth which 
 Socialism wishes to distribute depends upon the tax; take off the tax 
 the wealth will vanish. Keep on the tax, Socialism will be distributing 
 taxes, and will have to do it with paper money. Under such conditions, 
 Socialism is but the old treadmill. If enough votes are ever united to 
 attempt the socialistic administration of the wealth of a nation. Socialism 
 will, in all likelihood, discover that it has a white elephant on its hands 
 and one that seems a very different elephant in the control of its new 
 owners. Will Socialism recognize the obligations of the existing admin- 
 istration? If so, Socialism will pile a complicated burden upon its 
 already hopeless encumbrances. Will Socialism repudiate these? If 
 so, it will imdermine the financial and industrial structure of the society 
 and a bloody chaos will probably result. Will it adopt some intermediate 
 course? In such a case the outcome in its effects upon values would 
 probably be confusion worse confoimded. The Socialist elephant would 
 begin to show signs of immediate collapse, irrespective of the method of 
 his capture. He could only be kept alive, in any event, by constantly 
 pumping paper and taxes into his lungs with great effort and expense; 
 and the pump could be kept at work but by periodic explosions of gun- 
 powder in the cylinders of the Socialist State, very much like the explo- 
 sions of an electric spark in a gas engine — which is exactly what is being 
 done to-day. 
 
 The practical man who understands what existing Administrations are 
 doing with their taxes on the necessaries of life will not doubt that the 
 future belongs to the Revolution. Existing Governments themselves are 
 the real revolutionary forces. The question seems to be in no sense 
 whether the Revolution will occur or not; but what form will it take? 
 WTien existing Governments have congested the wealth under their 
 control, within such narrow limits that the expropriated mass wields 
 the balance of power, existing Governments will become "visionary"; just 
 as did the Governments of the Roman Senate, the Stewarts, the Bourbons, 
 and the Bonapartes, each of which, in its day, was among the greatest 
 "practical" forces in the world. Those forces which might be roughly 
 grouped imder the general heading of Socialism are, in all likelihood, 
 
 l- 
 
 t 
 
6i4 
 
 Political Practice 
 
 Pt. V 
 
 the most influential and effectively organized in the anti-govemmental 
 field at present. The leaders of these forces will probably exert influence 
 of no little political importance in the not distant future. It might be 
 said that they aheady exert such influence. Yet, if this leadership is 
 ever to take its place among the practical and advantageous social 
 factors, it may seem that it should study the vital relation of a national 
 credit and fiduciary system to the sources of wealth production of which 
 Socialism wishes to gain control, and realize that the instant that system 
 is endangered, those sources of wealth production will dry up. So- 
 cialist leaders should recognize that these soiurces can neither be pur- 
 chased nor appropriated without great financial resources; and then they 
 should turn their attention to the practical history of irredeemable paper 
 money. 
 
 CHAPTER III 
 
 FISCAL MECHANICS 
 
 THE greatest force in the political world is what might be called 
 fiscal force. The solution of a problem in fiscal mechanics, 
 therefore, demands the scientific application of fiscal force 
 to administrative machinery. The present problem may be 
 stated as follows: 
 
 The indirect tax seems to be a dangerous political disease. But if 
 the tax is abolished, the solvency of every institution of trust will be en- 
 dangered, and financial and industrial chaos result. The diflSculty lies 
 in the vaults of the banks and fiduciary institutions in the form of cor- 
 porate earning powers dependent upon indirect fiscal systems. There is 
 not a tax on an indirect schedule which does not affect the value of securi- 
 ties either immediately or remotely. These securities are deposited in 
 trust of banks and financial institutions and these have lent the savings 
 of the people upon the values represented. The value of these securities 
 is the basis upon which the savings depend. This value is only main- 
 tained by the payment of the interest, dividends, and obligations, which 
 the securities involve. These securities must be annually inflated, as it 
 were, to be kept alive, and the only way of inflating them is to continue 
 the existing earning powers of the corporations represented — in other 
 words, by keeping the taxes on. Take the taxes off, the earning 
 powers cease, the securities cannot be annually inflated and become so 
 much waste paper; the institutions close their doors, and the savings of 
 the people disappear. These pieces of paper might be likened to the 
 lungs or the heart of the nation. It is only through their annual 
 inflation, or pulsation, that the blood of the nation — its money — is 
 kept in circulation. The periodic pulsations of those pieces of paper 
 is as essential to the industrial life of the people, as the pulsations of his 
 heart to the life of a man. Affect these securities adversely and the 
 heart of the people stops beating. 
 
 like everything else, however, indirect schedules may be examined 
 from different points of view. The essentials for another examination 
 are supplied by the following: (i) Existing taxes. (2) Domestic 
 
 61S 
 
6i6 
 
 Political Practice 
 
 Pt. V 
 
 ^fl 
 
 prices. (3) Foreign prices. (4) Capitalization and security values 
 of industries affected. 
 
 With this material at hand, the taxes of any indirect system may be 
 classified in different ways. By means of the comparison of home and 
 foreign prices, the purely diplomatic, or weapon-taxes, may be sifted from 
 other taxes. The effect of these upon security values could then be 
 studied. The protective taxes could next be grouped and divided into 
 different classes. Those raising prices, without being necessary to protect, 
 might be examined. How do these taxes affect the securities and earn- 
 ings involved? Financial institutions in general? Specific institution? 
 Individuals? Capitalization? Earning power? 
 
 Again, a comparison of foreign and domestic prices will make it 
 possible to select another class of taxes which, through their effect on 
 nmning expenses, raw material, package, and so forth, bring indirect 
 influences into existence not at first expected. What are these influences? 
 Do they check productive and earning capacity in some of the industries 
 affected? Do they increase running expenses and, consequently, de- 
 press the value of securities? Which securities? How? How much? 
 What would be the increased earning power of the industries affected 
 if the tax were repealed? How much could the value of their securities 
 be increased by the removal of any given tax? By the removal of 
 another tax? 
 
 Taxes which prohibit the importation of the raw material of industry 
 must suppress domestic industry. These taxes can be classified. They 
 will point to certain industrial possibilides and certain latent earning 
 powers. Can these be organized for the purpose of the repeal of the tax? 
 What capital would they employ? Labour? Earning power and 
 security values? How would existing seciuities be affected? Depressed? 
 Inflated? 
 
 Excise and import schedules could be studied singly and combined for 
 the purpose of classifying taxes which suppressed markets at home and 
 abroad. Possible relative value of these markets, if developed with 
 reference to the value of existing seciuities? Earning power and security 
 value of these taxes on? Off? Possibility of organizing adversely 
 affected industries in order to develop these markets and earning powers 
 by removing the tax? Capitalization? Securities? Taxes which 
 vitally affect fiduciary institutions. How? How much? Favourably? 
 Adversely? Comparison of net gain or loss with the tax on? With the 
 tax off? Taxes which affect the fixed charges and extension of railways. 
 
 Bk. II 
 
 Fiscal Mechanics 
 
 617 
 
 Adversely? Favourably? Net gain or loss occasioned in the value of 
 the securities affected by the tax? 
 
 Taxes which affect one area and increase its productive power. Taxes 
 which affect other areas and decrease their productive power. Relative 
 values of the areas affected with the tax on? With the tax off? Taxes 
 which represent artificially inflated securities of enormous value. Taxes 
 which suck the life out of other securities to an enormous extent. Taxes 
 which stifle industry. Taxes which strangle labour. Taxes which blot 
 values out of existence. Which values? How much are they worth? 
 Can they be organized? Incorporated? Taxes which — but why go on? 
 
 Any one can analyze these schedules, and if this is done carefully and 
 dispassionately, they may be found to possess a wealth-creating power of 
 which the orthodox politician does not dream. This wealth-creating 
 power does not lie in increasing them, but in diminishing them systemat- 
 ically and productively. Every tax on these schedules must hide a 
 market and an earning power, or it would never have been put on; there 
 would have been no practical use in putting it on. Where is the market? 
 What is the earning power? How much are they worth in relation to 
 existing markets and existing earning powers? 
 
 In other words, every indirect tax in existence to-day suppresses a 
 market and an earning power which could be developed to-morrow if the 
 tax were taken off productively. There is, moreover, reason for believe- 
 ing that the capitalized earning power of a tax of is greater than the 
 capitalized earning power of the tax on. There are, as it were, more 
 valuable infant industries, productive potentialities, and corporate cer- 
 tificates hidden in an indirect schedule than it brings into existence 
 to-day; and these values can be developed but by the repeal of the 
 taxes. A tax removed from a raw material, substance affecting package, 
 or running expenses, will apparently inflate securities on one side, if 
 done carefully and productively, to a greater value than it will depress 
 securities on another. 
 
 These potential values will, of course, not be in existence at any given 
 moment; it is, however, possible to study them in relation to the pro- 
 ductive reduction of indirect schedules. In other words, before re- 
 moving a tax, liberating an industry and inflating a security, to compare 
 the value of the new industry or the new security with the old, and 
 balance these in the vaults of the institutions. 
 
 It is only by liberating strangled industry and stifled markets, locked 
 in a tariff tax; only by loosening bonds binding unemployed labour fast 
 
6i8 
 
 Political Practice 
 
 Pt. V 
 
 if 
 
 in an import or excise duty; and in doing it with real securities and real 
 earning powers, that a nation can hope to free itself from the weight 
 which lies on its heart to-day and distorts its circulation by causing 
 artificial industrial pulsations. It is only by putting new corporate 
 certificates in the place of the old that a people may hope to have any 
 practical or enduring reform in administrative affairs. This can be 
 done by inflating existing paper by means of tax reduction, or by creat- 
 ing new paper in the same way. A tax inflates a piece of paper; when 
 it is shown that another piece of paper can be inflated by taking the 
 tax off, and that the second is worth more than the first, there may appear 
 to be some practical basis for Free Trade. Reason shows that untaxed 
 markets are worth more than taxed markets. The only rational economic 
 thought the world has developed shows it; undisputed fact shows it in 
 every free trade area in the world; and when practical men begin to ask 
 if it is not so everywhere, under all conditions, Protection will begin to 
 look a little more visionary than at present. 
 
 It is apparently a practical certainty that the annual value of the 
 incorporated earning powers of a direct fiscal system, that is, the imtaxed 
 and unstifled industries and markets of a people, is greater than that 
 of an indirect fiscal system; that is, the taxed and stifled industries and 
 markets of a people. 
 
 Here all the arguments of the protectionist may be reversed in his own 
 words. The vials of Protection may be inverted, as it were, and poured 
 over the protectionist's own head; for it is as possible, literally, to build 
 up industries by taking taxes off; to "protect" labour in the same way; 
 to "create" a demand for it; to "attract" capital; to develop "productive 
 potentialities and feed the industrial nursling"; in practical, orthodox, 
 protectionist form by means of the elimination of a fiscal biu-den, as it is 
 by the imposition of such a burden. 
 
 Every advantage, real and imaginary, of a protective fiscal system may 
 apparently be gained by a people in taking taxes off, as well as in putting 
 them on; and this with greater values to develop and less danger and 
 expense. In other words, the productive reduction of an indirect fiscal 
 system contains all the latent financial and industrial possibilities of its 
 productive construction, and it is worth more down than it is up. 
 
 A railway has been considered as typical of existing industrial condi- 
 tions. The railway represents the labour of a thousand men, one of 
 whom is the owner. The thousand men produce a million annual profit, 
 all of which goes to one man. In actual fact the wage-workers would be 
 
 Bk. II 
 
 Fiscal Mechanics 
 
 619 
 
 worse off than supposed. Every indirect tax on a necessary would be 
 taxing their wages out of their pockets and creating a process of accumula- 
 tion toward the owner. The owner, again, through the control of these 
 taxes, might form protected industrial organizations along his line and 
 develop new forms of values. He could then grant transportation priv- 
 ileges to these, as against other industries, and form still another proc- 
 ess of accumulation. He could capitalize these industries and his railway 
 while keeping control of them, and, by shifting a tax or a rate, pour 
 through the Exchanges another stream of gold into his pockets. By 
 means of the purchase of land, in relation to extensions and terminals, 
 socially created wealth in the form of unimproved land values could be 
 absorbed by the owner of the railway. The workers would not only 
 have no part in any of these accumulations but, through the taxation 
 of living expenses, their wages would constantly be forced to swell them. 
 
 These considerations suggest a Socialist or a Syndicalist policy, by 
 means of which the earnings could be distributed to the producers of 
 wealth. The practical application of any such policy has been examined. 
 The enforced expropriation of one class for the benefit of another has 
 never resulted, and can never result, in anything but financial collapse 
 or civil war. It means a bloody orgie of taxes and paper money, leading 
 up to a military dictatorship. It has been tried. 
 
 Another method of improving the social conditions may be considered: 
 Any administration expecting to live should know where to get the 
 money to keep itself alive, and no adminstration can live on paper money. 
 A railway has been presented with an earning capacity of a million. 
 This might represent a capitalized value of twenty millions. Of this 
 total value, however, only a part will represent capital actually expended 
 in the equipment of the road. If it cost ten millions to build the road, 
 there will be ten millions representing pure franchise value. The ten 
 millions spent on equipment belong to the owner and should not be 
 touched; the ten millions representing franchise value belong to the 
 people; and this principle applied throughout the entire unimproved land 
 values of the country suggests the sources from which an administration, 
 with industrial freedom for its object, might support itself. Where these 
 land values are turned into the national treasury, taxes on vital needs 
 may be proportionately repealed. Wherever these taxes are repealed, 
 the purchasing and saving capacity of wages will be increased and the 
 artificially supported process of accumulation toward the larger incomes 
 will cease. The chances are again that the absorption of imimproved 
 
626 
 
 Political Practice 
 
 Pt. V 
 
 .1 
 
 1 1 
 
 land values and untaxed industry would cause an increasing demand 
 for labour. If this is so, competition in the labour market will relax 
 proportionately and wages rise actually as well as relatively. If these 
 land values are greater than administrative expenses, the difference could 
 be distributed in the form of old-age pensions. In this way the people 
 could share in the surplus social wealth they create. 
 
 This process, if realizable at all, however, would require much time 
 and care and be fraught with very great difficulty at every step. In 
 reality, no fixed line exists between owner and worker; between capital 
 and labour. Ownership, in actual fact, reduces itself to holders of indus- 
 trial securities represented by the institutions of trust of the country. 
 Every wage-worker is an owner and a capitalist in the narrowest, as well 
 as in the widest, sense of the term, for the institutions have lent his 
 savings on the industrial securities of the country; he thus owns these 
 in a literal sense. If he has no savings and no employment, his interests 
 are still more intimately mvolved with those of capital, for it is but 
 through the maintenance of the national industrial life that he can hope 
 for occupation and independence. 
 
 The first condition of success would be to assure and support the land 
 privileges of the society; without this the Administration would be 
 forced to resort to unproductive and indirect methods and begin to 
 repeat existing conditions. 
 
 The reaching of these values intelligentiy would again be a difficult 
 matter. The great bulk of the socially created wealth, as well as the 
 indirect taxes, has been capitalized long ago and sold to the people over 
 and oyer again, through the institutions of trust. To touch even a 
 pure site or franchise value ignorantly or violently may but dose the 
 doors of the institutions and shoot up the level of the unemployed. It 
 would require not only the greatest care but the realization of every value 
 to be extracted from indirect schedules, in order to steady the institutions 
 during the process. 
 
 These are the elements of the science of fiscal mechanics applied to the 
 Uberation of industry and the natural distribution of wealth. All a tax 
 can do, practically, is to divert a stream of real money from one direction 
 to another. It can inflate paper as it goes up; it can inflate paper as 
 it goes down. An indirect fiscal system is like a giant hammer in a mill 
 — it can take steam both ways; in the downward as well as in the upward 
 stroke, and, under proper control, the land of a nation can generate 
 power. 
 
 CHAPTER IV 
 
 THE FISCAL CLEARING HOUSE 
 
 INQUIRY into fiscal and economic conditions seems but to develop 
 a dangerous disease in the body politic on one side, and a dangerous 
 operation on another. The practical man, the man who deals 
 with conditions, will have little interest in the various suggestions 
 of administrative reform before the public to-day. The difficulty lies 
 in the vaults of the great institutions of trust of London, Paris, and 
 Berlin, in the form of pieces of paper representing industrial earning 
 powers. Those pieces of paper control the situation, nothing else does. 
 If the bulk of those pieces of paper can be kept throbbing with strong 
 and regular pulsations, questions of administrative and political reorgan- 
 ization might be advantageously considered — not otherwise. To allow 
 the pulsations of those pieces of paper to cease for a moment means 
 a bloody collapse; to keep them pulsating during any period of radical 
 readjustment may be impossible and would require a fiscal operation of 
 the most serious nature. 
 
 The disease from which the patient is suffering is the indirect taxation 
 of his vital requirements. The operation would consist in cutting out 
 these taxes and putting natural blood and oxygen in their places. The 
 patient will, apparentiy, have to put himself volimtarily on the operating 
 table and have his indirect taxes cut out if he wants to get well. If he 
 does not care to do this, he will probably go into convulsions later on. 
 The symptoms of his disease are nearly always the same and repeat 
 themselves through one administration after another: A ring of indirect 
 taxes, youthful exuberance and progress for a time; protectionism, 
 militarism, imperialism and great patriotic enthusiasm, followed by 
 increased indirect taxationism. A strong, steady and progressively in- 
 creasing flow of gold to the brain; plutocratism, pauperism, unemploy- 
 mentism. The gold congests in certain veins and arteries with great 
 force; paralysis in the extremities, demagogism, socialism, anarchism, 
 class-antagonism, and revolutionism. Death in convulsions is the usual 
 result. 
 On the other hand, if he submits to an operation, there may be a 
 
 621 
 
 ii 
 
 ■A ■ 
 
622 
 
 Political Practice 
 
 Pt. V 
 
 sKght chance of recovery. It must be admitted, however, that the 
 operation is a dangerous one — viciously dangerous — but the better 
 the patient understands the danger, the greater the chance of recovery, 
 and the less the risk of cutting his own throat. A study of the effects 
 of indirect burdens on consumption, in the suppression of markets, and 
 depreciation of security values in various ways, suggests that the possi- 
 bility may exist for the practical solution of problems dealing with the 
 distribution of wealth facing the more important national Adminis- 
 trations to-day. The existence of such a possibility, however, and 
 its realization are two very different things; its realization may be beyond 
 the range of the attainable. The different populations of the world have 
 tangled themselves up in a golden net of their own weaving. They cannot 
 break its meshes. If they try, the cords will but sink deeper into their 
 flesh. If they did break them, they would not be able to stand up. 
 The only hope lies in trying to untwist the tangles and loosen the golden 
 
 chains. 
 
 If any population ever begins to understand what it is doing with its 
 indirect schedules, and attempts to free itself from these, a grave danger 
 will arise involving the industrial and financial life of the nation through 
 its institutions of trust. A single effective organization of these insti- 
 tutions, therefore, woidd be necessary, if this danger is to be avoided. 
 An organization of this kind would act as a fiscal Clearing House, its 
 object being to examine and pronounce upon tax reductions with ref- 
 erence to their effects upon its members. It could block dangerous 
 reductions on one side, and act as an incentive to productive reductions 
 on another. It could serve to balance loss and gain in every institution 
 in the country. With such a fiscal Clearing House system, thoroughly 
 organized for the protection of every financial institution affected, and, 
 if the people began to see the values locked up in their indirect schedules, 
 it might be possible to liberate these earning powers without throwing 
 the nation mto convulsions or an indefinite stroke of paralysis. 
 
 The value of such an institution would depend upon the ability of 
 practical men, representing specific industries, to imderstand and esti- 
 mate to what extent certain taxes of an indirect system must cut into 
 their earnings and strangle their markets if these taxes inflate earnings 
 and protect markets on another side. A tax can but turn a real stream of 
 real money from one direction into another. Everything would depend, 
 therefore, upon the relative values of these two streams. If the untaxed 
 stream on money is not greater than the taxed stream, the repeal ai the 
 
 Bk. II 
 
 The Fiscal Clearing House 
 
 623 
 
 taxes might be dangerous. If, on the other hand, the repeal of a tax 
 liberated a stream. of earning powers greater than those it congested, 
 and these two streams were controlled through a single institution, the 
 repeal of the tax would increase the wealth of the country and involve no 
 difficulty. 
 
 A fiscal Clearing House, properly controlled, might perform the opera- 
 tion of indirect tax excision without too great danger. It would be 
 able to keep the nation's heart beating on one side, and to force stronger 
 and steadier industrial pulsations on another. With every institution 
 of trust sound and strong, the heart action of the nation would not be 
 endangered; and every tax repealed would cause the blood to flow that 
 much farther and swifter through the body politic. 
 
 Such a Clearing House would know, as long as it held the institutions 
 of trust in a solvent condition, that every explosion would take place 
 regularly in the industrial cylinders, every pay roll would be met; every 
 wage would be paid, every obligation which kept the people financially 
 alive would be honoured. It would know, with these institutions solvent , 
 that the heartbeats of the nation were assured, that the savings and the 
 treasure of the people were safe; and it would be able to pay littie attention 
 to anything else. When the last tax was taken off, and turned into good 
 securities in the vaults of the banks and trust companies, these securities 
 would be inflated with natural instead of artificial values; the lungs of 
 the nation would be filled with pure oxygen instead of with taxes and 
 gunpowder as at present, and the pulsations of its heart would throv*' 
 its blood into natural and not into artificially congested channels. 
 When this was accomplished, when every protective tax was removed, 
 when every revenue tax as it came off naturally and productively, and 
 not before, was assessed upon socially created wealth, in the form of 
 land and franchise values, when every franc or dollar was so placed, 
 such an institution would have fulfilled the purpose of its existence, its 
 work would be done. The nation would be that much richer, its blood 
 would flow natm-ally and evenly, unaffected by forced respiration and 
 distortion, every bank and institution of trust would be solvent and — 
 the people would be free. 
 
 There seems little other possibility of improvement in himian social 
 and political conditions. If it is impossible for a nation to take down its 
 excise and tariff walls productively, and to support itself from social 
 wealth, it seems that industrial freedom and administrative improve- 
 ments are but dreams and must always remain so. 
 
624 
 
 Political Practice 
 
 Pt. V 
 
 The operation, strange to say, could be performed upon two or more 
 patients at the same time with sUghtly less certainty of failure than 
 upon one. Thus, if the fiscal schedules of France and Germany, or of 
 England and the United States, are studied in relation to each other, 
 opportunites will be presented for building up earning powers, opening 
 new markets, and inflating securities by means of tax reductions which 
 are not available in the schedules of a single nation. If the repeal of a 
 tax on a commodity in the United States mjured certain securities in that 
 country, the tax might be reduced in such a way, with reference to 
 other markets, that it would cause a more than corresponding rise in 
 securities in England. These two influences would, of course, have to 
 be examined and passed upon by the financial houses involved, in order 
 to become available. The depression occasioned in the United States 
 could be met in different ways. It could be met by a prearranged and 
 compensating transfer of values from England. It could be met by an 
 exchange of the American tax for an EngUsh tax designed to create a 
 compensating rise in American values; or it could be met by the reduc- 
 tion of yet another tax. And here becomes evident how great would be 
 the advantage of a third or fourth party in the process. Taxes might 
 be removed in Germany in a way that would inflate compensating 
 values in the United States, while German institutions could be 
 protected through the exchange of taxes with England, France, the 
 United States or Russia. The wider the process tiie greater the hope 
 
 of success 
 
 There are other ways in which a fall in values might be avoided. The 
 great steel and iron industries of Germany and the United States may be 
 considered. The sudden repeal of taxes on steel and iron in those coun- 
 tries would affect every institution holding steel and iron securities. The 
 institutions might possibly be protected by compensating reductions 
 of taxes upon other industries; yet a collapse in steel and iron securities 
 would be disastrous as affecting individuals. This danger might be 
 nullified by means of carefully studied reductions in Austria, England or 
 Russia affecting tiie same securities. Thus, the artificially controUed 
 home market would be opened, but an uncontrolled world market would 
 be put in its place before values were affected. 
 
 Agam it is evident that material shipped abroad from a highly pro- 
 tected country must pay a higher transportation rate tiian if the ships 
 carrying it were able to return with a full cargo. Thus, by means of 
 the repeal of Uxes on goods, freight rates might be lowered and so 
 
 Bk. II 
 
 The Fiscal Clearing House 
 
 625 
 
 compensate for the repeal of a protective tax effecting the exporting 
 industry. 
 
 There is still another way in which a collapse in highly protected 
 securities might be avoided. This is by means of an international 
 organization of the industries representing such securities. If the pro- 
 tected steel and iron industries of Germany and the United States were 
 brought imder one control, their securities could be more effectively 
 protected in any s)rstem of tax reduction than at present. If the more 
 important of these industries throughout the world were amalgamated, 
 such an organization would be in control of the world market; through 
 it, areas, rates, prices, and wages could be arranged in the most advan- 
 tageous manner and all values supported. 
 
 With some such systems as the foregoing, under intelligent centrol, 
 it is not inconceivable that the total capital in any country could be 
 increased by tax reductions; fiduciary institutions protected, and even 
 existing highly protected securities in some cases raised in value at the 
 same time. 
 
 This may be illustrated as follows: It may be supposed that an 
 enormous stone wall, with but one opening, were built aroimd every 
 county in England; that trade could be carried on through this opening 
 alone, and that the passage of every commodity were heavily taxed. It 
 is obvious that, under such conditions, many industries in the different 
 counties would be highly protected; that they would have borrowed 
 money from the county banks on their collateral, and the people would 
 doubtless regard any form of coimty existence, not shut within a thick 
 stone wall, as visionary and impracticable. If the walls were taken 
 down, their industries would fail, their labour be thrown out of employ- 
 ment, and their banks close their doors. These would be the facts: 
 they would thus be forced to continue building their walls and dimin- 
 ishing their consuming power by increased cost of transportation and 
 taxes. They could not help themselves. Their minds would be in- 
 capable of conceiving any other form of social organization. It is, 
 however, evident that England can exist without stone walls around 
 each coimty, with only one opening for a heavily taxed exchange of goods. 
 It is also evident that the trade between the coimties in England to-day 
 is worth more to the English people than it would be if they were fenced 
 off from each other with these walls. If this were not so, walls should be 
 built around every coimty, township, and village in the coimtry, for the 
 purpose of checking trade, and the people could increase their wealth 
 
626 
 
 Political Practice 
 
 Pt. V 
 
 
 by so doing. If the walls exist, however, together with the industries 
 and the banks with the protected paper, the following considerations 
 are suggested: 
 
 The paper in the county banks of England to-day is worth more, and is 
 on a sounder basis, than it would be if each county were shut off from 
 every other, and all the trade in the country dependent upon walls and 
 taxes. The problem then would be, how could the people get free from 
 these walls and taxes? It is obvious that the first thing should be the 
 protection of the banks representing their credit and savings. They 
 should, therefore, form these county banks into a single bank, and then 
 throw these into a single representative institution in control of the 
 finances of all the coimties combined; when this is done, they should 
 turn their attention to the industries and the stone waUs. As supposed, 
 there is but one opening in these walls through which goods must pass. 
 If the tax is not collected at this opening, the industries may lose their 
 prices or market. Their paper will fall and the banks be injured. 
 It is obvious, however, that these industries must consume certain goods; 
 if not, they could produce nothing. The proper thing to do, then, 
 would be to find out what these goods were; next, to knock a hole in the 
 wall close to any industry considered, so that transportation expenses 
 could be reduced. This reduction could then be calculated and a pro- 
 portionate amount removed from taxation. The banks would not be 
 affected and no harm would be done to the industry. After one or two 
 such attempts, it might be found that these operations were beginning 
 to injure paper in other counties and to destroy valuable markets in 
 other directions. This is what the central organization would meet; it 
 should see that these walls are not knocked over carelessly and 
 ignorantly, but that every stone is taken down systematically and 
 every loss met with compensating gain. The central organization of 
 the banks of England would have a map of all the walls and all the 
 counties before it and be able to see, if a wall were pierced in such a 
 place, that nmning expenses could be lowered and earnings increased. 
 If a market were lost or paper affected in the process, it should attempt to 
 make another opening in the wall near the industries or market affected; 
 so that wherever a market were lost within a wall, a market in a neigh- 
 bouring country could be supplied to take its place, if possible. Thus 
 the industrial and financial life of the people might be kept sound and 
 strong. If this process were continued, it seems that the counties might 
 gradually take down all their walls sooner or later, and find themselves 
 
 Bk. II 
 
 The Fiscal Clearing House 
 
 627 
 
 exactiy in the condition in which they are to-day. By this means it is 
 not only probable, but practically certain, that the bulk of the values 
 represented would be greater with the walls down than it was with the 
 walls up. These considerations with reference to the coimties of England 
 apply to the nations of the world. 
 
 The goal toward which inquiry seems to lead is here reached. That 
 goal is the suggestion of the fiscal union of the great industrial nations 
 of the world, for the purpose of freeing their populations from the dan- 
 gerous indirect burdens upon their vital needs and the distribution of 
 their wealth. If the institutions of trust of different nations were organ- 
 ized with such an object in view, these nations could form a single cen- 
 tral organization. This central international Clearing House would be in 
 control of the schedules of the nations forming the union. By means of 
 this control, it could develop natural markets and use these to support 
 values adversely affected. 
 
r 
 
 I 
 
 Book III 
 
 PRACTICAL POLITICS 
 CHAPTER I 
 
 THE INDIRECT TAX IN THE UNITED STATES 
 
 Section I — Indirect Finance, Section II — Direct Finance, 
 Section III — Applied Direct Finance. 
 
 Section I — Indirect Finance 
 
 NO STUDY of indirect fiscal methods is complete without a 
 brief examination of the indirect financial influences which 
 they create. The United States presents the most fertile 
 field for the growth of influences of this kind. A large land 
 area recently absorbed by a population without political experience, one 
 of the most costly wars in history, great natural resources, and a democ- 
 racy controlled by party machinery, acting at the dictation of capital 
 concentrated by the fiscal system of the country; present a soil upon which 
 the indirect impost on consimiption will flourish as nowhere else. The 
 result will be an extraordinarily rapid congestion of the national wealth. 
 This process of wealth congestion has been summarized as follows:* 
 
 "Fifty years ago, there were not to exceed fifty millionaires in the whole 
 of the United States, and their combined fortunes — including the half- 
 millionaires as well — did not exceed a probable $100,000,000, or i per 
 cent, of the then aggregate wealth of the nation. Sixteen years ago the 
 combined fortimes^ of this class were estimated as $36,500,000,000, or 
 56 per cent of our national wealth. To-day a bare i per cent of our 
 population owns practically 99 per cent, of the entire wealth of the 
 nation." Thus, if these figures are correct, the American Democracy, 
 having $100 to distribute among one hundred people, hands $99 to one 
 man in the form of taxes and franchises and allows ninety-nine people 
 to underbid each other for the remaining dollar in the form of wages. 
 
 » Heniy L. Call. Address before the American Association for the Advancement of Science, December 27th, 
 S906. 
 
 628 
 
 3k. Ill The Indirect Tax in the United States 
 
 629 
 
 Indirect taxes and land values unassisted would not congest the na- 
 tional wealth so quickly; the process of accumulation is indefinitely accel- 
 erated through the control of the taxing power and the influences it 
 creates. This is the way it is done. 
 
 The chief resource of the classic school of indirect, or "high," finance 
 in England and on the continent was for many years debasing the coin 
 of the population. The control of any administration made this an easy 
 and profitable process. More exact systems of weights and tests grad- 
 ually discouraged this industry. Paper money, however, presented a 
 more profitable one; for the value of the paper could be affected indefi- 
 nitely without the trouble of reissue. The higher phases of finance 
 thus turned toward paper money. The history of paper issues, as time 
 went on, began to make some impression upon the popular mind with 
 the result that the manipulation of these fell into relative disuse. It was 
 found, however, that paper could be issued and influenced in forms other 
 than money; and wider and higher fields were opened. Paper may be 
 issued against the decisions of a legislative body, against a tax on an 
 indirect schedule or a franchise; it may be controlled through a trans- 
 portation rate, inflated or depressed through the action of a committee 
 affected through the action of a fiduciary institution. When these 
 principles of indirect, or high finance, are understood, they present pos- 
 sibilities for financial wonder working, which may make the mere debaser 
 of the coin or paper money manipulator hide his head. They may be 
 used to control the entire process of the wealth distribution of a nation. 
 The boasted science of economics has nothing to do with it; it is magic, 
 pure magic. Thisis the way it works: 
 
 The modem industrial society, supported by indirect methods, places 
 two wands in the hands of the financiers, gives them two kinds of incense 
 with which to weave their spells and spread their charms over the body 
 politic. These wands are the indirect tax and the transportation rate; 
 the incense consists of the corporate franchise on one side and the fidu- 
 ciary institution on another. As long as we control these four elements 
 of fiscal magic: the rate, the tax, the bank, and the franchise, the wealth 
 of the society in which we play the r61e of fiscal magician will never 
 flow through its natural channels; we can always spirit it away or turn 
 it in any direction we choose. The people can no more stop us than 
 they can stop the winds blowing. Beaconsfield used to say that nothing 
 was more ridiculous than the British public in one of its occasional 
 spasms of morality: he never saw the American public trying to "curb 
 
 i\ 
 
630 
 
 Practical Politics 
 
 Pt. V 
 
 the trusts" or catch the financiers. It's like a blind man trying to catch 
 a butterfly. Give us control of those wands and that incense and the 
 American public is in the net; not the butterfly. 
 
 Whatever the American people do, we can weave a spell around them. 
 If they try to adopt certain legislation, we can divert it. If they do 
 adopt certain legislation, we can interpret it. Whatever decisions they 
 obtain, we can construe them; whatever men they elect to office, we can 
 control the machine that controls the men. No matter what reform 
 they inaugurate, we can control the ballot boxes or count the vote — 
 nothing can stop us: we control the control. ^ Let the people hurl what 
 spear they will at us, and we can stop it in the air with our magic or 
 turn it against themselves. They will try to catch us m one place but 
 to find a few receivers "receiving" what little we have left. They will 
 fly off in another direction but to find themselves aboard a water-logged 
 hulk which we had scuttled long ago. They will try to "inquire" into 
 us in the form of an insurance organization, and we change ourselves 
 into an office boy or a gas company. They will start for the office 
 boy or the gas company with a great blowing of trumpets — and we 
 become a calm and peaceful copper mine, a thousand miles away. They 
 will get a railway president to "investigate" us, and we will appear to 
 him in the form of the majority of the stock, or the board of directors, 
 of his own railway. They will set an " honest " politician to "reform our 
 methods" and we flash a vision before his eyes of the machine which 
 keeps the honest politician in office. They will "crusade" against 
 us in the form of a railway rebate, and we appear in the form of a sol- 
 vency of a great fiduciary institution. They will hear about some inno- 
 cent little combination or holding company we had brought together 
 in order to "protect the people," and make a great fuss with their fines, 
 their statutes, and their constitutions, while we may be running a dozen 
 such organizations, worth fifty times as much, about which they know 
 nothing. If things get dull or the people require a little more protection, 
 we can appear in the form of a civic crusader ourselves and go crusading 
 agamst the maladministration of our own organization in the cities. 
 These "waves of reform" are excellent things. They keep the local 
 bosses i n order. They help us "protect the people," and put up the 
 
 » The ease with which this is done, methods adopted and specific cases will be found described in the 
 articles: At the Throat of the Republic, by Charles Edward RusselL Cosmopolitan Magazine, December 
 1907, "One can order any reasonable number of fraudulent votes with as much certainty as one would 
 order oysters," (p. 148). "Nine out of every ten elections are decided solely by the methods of the vote- 
 broker and the ballot-box stufier," (p. 150). 
 
 F'll 
 
 Bk. Ill The Indirect Tax in the United States 
 
 631 
 
 market rate in dollars or votes, as the case may be, of the "vice" which 
 we dole out to the people at the other end of the mystic circle in the form 
 of a police administration. The more we ''reform " ourselves in this 
 way, the easier it is to control the votes and monopolize the sale of 
 the "vice." 
 
 If any of the "honest" politicians grow indignant and begin to inter- 
 fere with our affairs, the chances are they will only get the people into 
 trouble. When a practical politician is really "honest," and not merely 
 playing politics, it usually means he is tr3dng to blackmail us. How 
 much? If the good old plan does not work, all we have to do is to let 
 them continue their righteous vituperation and do a little quiet selling 
 in the meantime. They are certain to frighten the people sooner or 
 later. Sooner or later a bank will refuse to clear for this or that institu- 
 tion or another will close its doors. A great industry will default on its 
 bonds, or receivers will be appointed somewhere else. We can then call a 
 few loans in one place and turn ourselves into a run on a bank in another, 
 while the lightning of a financal panic flashes over the country. When 
 this has gone on long enough, we can make our appearance in the form of 
 a few million dollars, which may or may not happen to belong to the 
 people themselves, and stop the runs here and there where we see an 
 opportunity of controlling a few more institutions, or rigging up a new 
 combination of organizations, which we can make play into each other^s 
 hands and into our own pockets. The people will get down on their 
 knees in gratitude to us and we then appear to them with a golden halo 
 on our brow and all the righteousness on our side. 
 
 The plain people will then soon begin to denounce us as a "govern- 
 mental privilege," while in reality we are nothing but an innocent imtaxed 
 ore body, oil well, franchise or a few million acres of land through which we 
 are thinking of running an extension later on. The plain people will call 
 us "undesirable citizens," "predatory wealth," or a grinding monopoly, 
 while we will be nothing but a steady stream of the plain people's own 
 money which they insist upon pouring into our pockets in the form of 
 indirect tax or a franchise; nothing can stop them and they cannot stop 
 themselves. The plain people force themselves to force their money into 
 our pockets and then they criticize us for taking it. The plain people 
 will think that we are a great statesman, a captain of industry, a meteoric 
 Napoleon of finance or a mighty Empire builder, while in fact we are 
 nothing but a ring of plain people in control of a tax or a rate. 
 
 The danger of the existing system lies in tolerating the control of 
 
 '.« 
 
4 
 
 632 
 
 Practical Politics 
 
 Pt. V 
 
 Bk. Ill The Indirect Tax in the United States 
 
 633 
 
 bit 
 
 r].' 
 
 ■f > 
 
 rates, prices, and public franchises by individuals. Individuals with 
 such control may with ease build up enormous earning powers, simply 
 by diverting the circulation of a people's wealth with taxes and trans- 
 portation agreements. They will then incorporate and capitalize these 
 earnings, dispose of them to the people through the Exchanges and the 
 institutions of trust, and the people will thus have invested their savings 
 in capitalized railway rebates and taxes on their own needs. The 
 "widow and the orphan" will own the paper; the great statesmen and 
 the financiers will own the money; all they need is to control the taxes 
 and rates; they can then inflate the paper with these and sell it to the 
 trust and insurance companies. To affect these values, no matter how 
 created, unintelligently and improductively, means panic and disaster, 
 and can mean nothing else. This may be illustrated in another way! 
 It may be supposed that we are practical politicians and patriotic 
 Empire builders. If so, we desire above all else to "protect the people." 
 "encourage industry," "raise wages," "create a demand for labour," 
 and all the rest of it. No population presents a more advantageous 
 field for such operations than that of the United States. Th^ attention, 
 then, may be turned to the American Republic with these projects in 
 mind. There is, of course, but one way in which to realize our hopes 
 for the people practically — taxes. Everything else is "visionary" and 
 "Utopian." If, however, the indirect schedules of the United States 
 are examined, the outlook is not encouraging at present; little is left to 
 "protect." The fiscal builders have been at work and scarcely a vital or 
 industrial requirement remains to form the basis of our structures. The 
 foundations are preempted; nearly every vital need of the people is taxed 
 into the control of individuals. Nevertheless, no really "practical" 
 Empire builder need be discouraged. There is an enormous field as yet 
 unexplored by the builders in the United States. If the people of the 
 United States can encourage industry and create a demand for labour 
 by means of taxing their needs, the people of the state of Maine or 
 California can do the same thing in the same way. If the population of 
 the United States can encourage industry and protect labour with a ring 
 of indirect taxes "practically," the population of every state in the 
 Union can do so as well; and no constitutional theories should be allowed 
 to interfere. If it is of practical advantage to tax the consumption of the 
 American people as a whole, it must be "visionary" for the populations 
 of the different states to lose such advantages. If the populations of the 
 United States, regarded as a unit, gains anything from protective taxes, 
 
 < 
 
 the population of every state in the Union must lose these advantages, 
 imless they form a row of indirect taxes around their borders. What 
 can the people of the state of Illinois gain by taxing the goods of Canada 
 or old Mexico, not to be gained by taxing the goods of Maine or New 
 Mexico? Why should the people of the South lose all the advantages 
 of taxing the goods of the North? Why should the people of the West 
 not "encourage their industry," "create" a demand for their labour, and 
 develop their "infant industries" by taxing the produce of the older 
 industrial centres of the East? Why should the farmers of the Eastern 
 States allow the grain and stock of the West to be "dumped" into East- 
 em markets, their laboiu: and industries to be imdermined, and their 
 capital drained away? Why should the people of the state of New York 
 lose all the capital they might attract through the balance of trade? 
 Why should the inhabitants of Pennsylvania be deprived of the tariff- 
 weapon? The conclusions are obvious. If any of these measures are 
 practical and advantageous for the states combined, they must be 
 practical and advantageous for the separate states. Either the people 
 of the United States are to-day supporting a series of delusions in their 
 fiscal schedules, or they are losing the advantages of these same sched- 
 ules formed aroimd each state. 
 
 Let it be supposed, then, that after one of the usual panics, what might 
 be called an Inter-State Protective party is organized. The people are 
 shown how "visionary" it is to lose the practical benefits of Inter-State 
 Protection, how, by simply estimating the difference of the cost of pro- 
 duction in the different states, their labour could be employed, their 
 wages increased, and their industry developed. It is obvious that it is 
 perfectly possible to "encourage industry" and "create a demand "for 
 labour in this way "practically." If we took each state as a imit and be- 
 gan operations with indirect schedules; infant industries and productive 
 potentialities could soon be developed which to-day are non-existent. 
 Every practical protectionist argument may be offered in support of 
 such a system. If values can be built up in the United States by shutting 
 out the goods of Canada or Mexico, values can be built up in Illinois 
 or Alabama by shutting out the goods of Pennsylvania or New York. 
 One is no more "practical" than the other. It is evident, however, the 
 day after the adoption of this policy, that no enormous amount ot 
 capital would suddenly appear, where none had existed the day before. 
 The result is that in building up our industries we would have to work 
 with the capital and earnings actually existing in the country. 
 
634 
 
 Practical Politics 
 
 Pt. V 
 
 Thus, it is decided to encourage an infant iron or coke industry in the 
 state of New York. All that is necessary is to shut the iron and coke of 
 Pennsylvania out of the state of New York with a ring to taxes. It 
 seems clear, however, that the day after these taxes are imposed, the 
 people of New York need not necessarily be in possession of greater 
 capital or earnings than before, yet, none the less, these taxes might 
 develop enormous values in New York. By means of taxing the con- 
 sumption of the population of New York, we could accumulate a few 
 ** tariff- weapon" taxes of various kinds, which would be reduced where 
 he saw an opportunity of controlling ore bodies or coal supplies in other 
 states. These taxes would, of course, be studied in relation to a trans- 
 portation system or a freight rate, and when our taxes and rates were 
 organized, we would have developed the possibility of producing earnings 
 in the state of New York which do not exist to-day owing to the theories 
 of the visionary inter-state free traders. We could develop these earn- 
 ing powers, moreover, without the expenditure of a single dollar of 
 capital — the control of taxes and rates is all that is necessary. The 
 next thing to do is to build the plants and ''create" a demand for labour. 
 Nothing is easier. Of coiu-se, we control one or two fiduciary institutions, 
 or are represented in them; no one can build up Empires practically or 
 create a demand for labour without the institutions. There will be 
 nothing theoretical about the earnings developed with our taxes; these 
 earnings will be under our control in a stream of real dollars, and all we 
 have to do is to lend ourselves the money which the people have entrusted 
 to us against the taxes which we impose upon the people. We can then 
 build the plants, control the earnings, inflate and depress the securities 
 as we please, and show the people our 'payrolls and industries in order 
 to demonstrate that our patriotic protection of their interests can create 
 a demand for labour practically. This is the way indirect taxes ''create" 
 a demand for labour. This is the way capital seems to descend from 
 heaven inside of a ring of taxes on consumption. This is the way capital 
 seems to be created by multiplying taxes. This is the way industry 
 and "empires" are built out of the life-blood of a nation. 
 
 To any one, however, who understands what we are doing, it is 
 evident that we have created nothing but a tax on a necessary, and the 
 opportunity of borrowing the savings of the people against the capitalized 
 value of the tax. We have simply diverted a stream of money from the 
 earnings of the population with a tax, incorporated the tax, and then 
 sold the people their own taxes, or rather their own earnings, for their 
 
 Bk. Ill The Indirect Tax in the United States 
 
 63s 
 
 !• -t' 
 
 I »! 
 
 own savings. The people would be taxed in order to allow us to capi- 
 talize their taxes, borrow their own capital from their own institutions, 
 and then they would be forced to continue to tax themselves in order to 
 pay themselves profits, in the form of their own taxes, and protect their 
 own saving^ in the institutions of trust. This is the way we can take 
 away from those who have not, by means of a tax on a vital need 
 not only the little they possess, but that which they think they have in 
 the form of their savings. Yet every value we create in this way will 
 be "practical" to the last degree, and enter vitally into the whole in- 
 dustrial and financial life of the country through the solvency of its 
 
 institutions. 
 
 If we continued to "protect" the people practically in this way for 
 a few years in America, we could force enormous values into the banks 
 and insurance companies of every state of the Union. We could capi- 
 talize taxes imposed upon the consumption of one state, and "create" 
 a great industry where none existed before; but, in order to do so, we 
 would have thrown a greater amount of labour out of employment in 
 another state, twisted their earnings out of the control of the taxing 
 populations, checked the normal accumulation of their capital, and so 
 have thrown another mass of labour out of its natural and most pro- 
 ductive occupation. "Theoretically'* the people will have lost all the 
 advantages they might have gained from their untaxed and imrestricted 
 powers of production, consumption, distribution, and accumulation, 
 but, in order to compensate them for this Utopian dream, we have 
 "practically" sold them their own taxes for their own capital. "Theo- 
 retically," the people, have lost every gain accruing from the unrestricted 
 accumulation and circulation of wealth; but, to offset such academic 
 delusions, we have sold them their own earnings for their own savings. 
 
 This is the way the great Empires are built. All that is necessary 
 is to spread a ring of tax gatherers around any area and pile up patriotic 
 fiscal burdens on the vital fimctions of the protected population, capi- 
 talize the taxes and sell and resell them through the Exchanges and the 
 institutions. Every state in the American Union, every county in 
 England, every department in*France, can be built up into a protectionist 
 Empire by taxing its consumption and capitalizing the earning capacity 
 of the taxes. When an Empire is built in this way, however, the securi- 
 ties issued against the taxes are forced into the heart of the Empire 
 through the institutions of trust, and the taxes can then never be touched 
 without danger. When we begin to build in this way, there is only one 
 
636 
 
 Practical Politics 
 
 Pt V 
 
 R t ^ 
 
 iW \ 
 
 
 ' 
 
 
 
 safe thing to do —continue building; continue to force the taxes and 
 force up the values. Once we begin, we can never stop building until 
 the building topples over of its own wc^ight; and the higher our structure 
 is reared, the deeper grows the pit of blood and misery undemcathi 
 which forms the foundation of our edifice. 
 
 Let us suppose, then, that we had built up every one of the United 
 States into a protectionist Empire, such as France, Germany, or any of 
 the Administrations of what Frederick 11 used to call the European 
 "cock-pit." If we had been successful in our efforts to protect the people, 
 we would have turned each state into a progressive Empire; each one 
 piling up Imperial taxes on its vital needs, with all its earnings, savings, 
 and institutions of trust dependent upon the securities and industries 
 we had organized with our taxes. Touch these texes unintelligently 
 and unproductively, down will go the values, the institutions will 
 topple over, the unemployed will flood the centres, and the Empires 
 will either go into active revolution, or the statesmen and empire builders 
 of Kansas and Minnesota will begin to "receive" the money of investors 
 and despositors. The Imperial populations would be tied up in a knot 
 with their own taxes. 
 
 Section II — Direct Finance 
 
 If the total earnings in the United States to-day, based upon freedom 
 of inter-state trade, are greater than they would be with the consuming 
 powers of the individual states strangled in a network of taxes, the 
 possibility, at least, would exist of realizing existing values, had such a 
 fiscal network been woven about the industries of each state. If every 
 state in the American Union had been built up into a protectionist 
 Empire with indirect taxes, it is only through the careful and productive 
 realization of existing, untaxed industrial values, that the population 
 could build up the greater Empire of the American Union as it exists 
 to-day. 
 
 It must be admitted, however, that this building would be diflScult. 
 If all the states of the American Union were to-day taxing their own 
 consumption in order to encourage industry and so forth, the statesmen 
 and financiers of the Empires of Missouri or Texas would have loaded 
 the institutions under their control with securities representing the 
 capitalized value of these taxes. The most effective way, therefore, 
 for the people of the United SUtes, regarded as a whole, to free them- 
 selves from these tax-built securities and Empires, would be to form 
 
 Bk. m The Indirect Tax m the United States 
 
 637 
 
 a politically effective Union of the Empires involved. This Federal 
 administration could form every institution of trust of the local 
 administrations into a single representative institution; these could 
 then be organized into a central institution for the purpose of realizing 
 the unrestricted earning powers at present in existence. If the repeal 
 of taxes on the necessaries of life of the patriotic inhabitants of the 
 Empire of Rhode Island or Ohio, endangered the institutions of trust 
 of the Imperial capitals of Providence or Columbus, with these insti- 
 tutions under a single organization, this danger might be avoided. 
 Everything should be done to support and increase all values involved 
 by the exchange of the taxes, and the liberation of the markets to be 
 found in the other great Empires, such as Minnesota or Iowa. Every 
 one of these sources of value should be studied in relation to existing 
 values before any were touched, and still greater values brought into ex- 
 istence wherever possible. 
 
 If by means of a ring of custom houses, every state of the American 
 Republic had been formed into an Empire, such as Germany or Austria, 
 the earnings of the population would be diverted by these imperial 
 taxes and turned toward the banks and institutions within the rings. 
 These rings of taxes would twist existing earnings out of their normal 
 channels, and force them round within congested tax-bound areas. If 
 we control the institutions and these rings of taxes, we can divert the 
 earnings of the population into any direction we choose. This is indirect 
 high finance. 
 
 If the institutions holding the industrial securities of a nation are 
 drawn together, every tax diverting a stream of money into an industrial 
 security on one side, may be used to turn the same stream of money into 
 other industrial securities on another side by the repeal of the tax. 
 If we build up taxes on steel and iron, we pour a stream of the people's 
 money into steel and iron securities. If we take the taxes off steel and 
 iron, we can pour a stream of money into railway securities and the 
 secmities of every steel and iron consuming industry in the country. 
 The taxes control a stream of money as they go up, they can control a 
 stream of money as they come down. It is simply a question of the 
 control and the direction of the stream. 
 
 A nation through its Administration can employ the same wands and 
 the same incense used to-day by the financiers; and if ever a nation, 
 under proper control, begins to finance in this way, it will not be easy 
 to finance much higher than it; for the reason that imtaxed consimaption 
 
k 
 
 638 
 
 Practical Politics 
 
 Pt. V 
 
 is worth more in annual wealth-producing power than taxed and strangled 
 markets; and a nation, through its Administration, can control all the 
 institutions, all the franchises, all the rates, all the taxes, and — all 
 the gims. This is direct high finance. 
 
 Section III — Applied Direct Finance 
 The foregoing flight into the rarer financial ether has been undertaken 
 for the purpose of suggesting another source of value which might be 
 available imder a direct fiscal system and used to strengthen institutions. 
 This value is represented by property and earnings twisted out of se- 
 curities, not by taxes alone, but by indirect or "high" financial influences. 
 "By a fiction, and with the connivance of the Federal courts," says 
 Mr. Connolly, 1 "these men in control of the Northern Pacific Company 
 acquired an empire, free of conditions, estimated by competent author- 
 ities to be worth one thousand million dollars J' The property of the 
 great bulk of a population supporting such a system will be largely 
 at the mercy of the men who control it. From them there is no 
 appeal. "The more one looks into the situation," says Mr. Con- 
 nolly,2 the more one will be convinced that the courts are 'packed'." 
 Thus, where a great railway is wrecked and reorganized for the 
 benefit of those in control or used as a private speculating machine, 
 the earnings of the road are diverted from the real owners — the 
 stock and bond holders — into the pockets of the controlling interests. 
 Where this process is checked, it is obvious that security values may 
 be proportionately steadied. 
 
 "In December, 1893, the comptroller of the cmrency announced the 
 failure during the year of 158 national banks, 172 State banks, 177 
 private banks, 47 savings banks, 13 loan and trust companies, and 6 
 mortgage companies. . . . In 1894 there were 156 railways, opera- 
 ting a roileage of nearly 39,000 miles in the hands of receivers. . . . 
 The total capitalization in the hands of receivers was about $2,500,000,- 
 000 or one fourth of the railway capital of the country. "^ 
 
 In 1907 such conditions were reproduced with great loss and the 
 shifting and congestion of enormous values, which under normal con- 
 ditions wovdd have been stable. These are the conditions which 
 must reproduce themselves periodically in any irresponsible adminis- 
 trative system such as that of the United States. 
 
 » Big Business and the Bench. Everybody's Magazine, June, 191 2; p. 837. 
 
 « Ibid., p. 841. 
 
 • Financial History of the United States. Dewey, p. 446. 
 
 
 Bk. Ill The Indirect Tax in the United States 
 
 639 
 
 Such a system will create a situation of the most confused and com- 
 plicated nature with an imcontroUed process of wealth congestion which 
 it may seem impossible to arrest, yet which, if not checked, can but 
 result in the inevitable dangerous collapse predicted by Macaulay. It 
 may be necessary for the population of the United States to go through 
 two or three more civil wars before it begins to understand even 
 dimly what it is doing with its tax-built industry and its paper-built 
 financial system. A collection of seventeenth and eighteenth century 
 political curios can no more deal with such a situation than with an 
 earthquake. As Mr. Bigelow^ used to say, "flagrant war" can be the 
 only outcome. 
 
 There seems, in fact, no possibility at present for the people of the 
 United States to free themselves from existing conditions. The taxes 
 have been allowed to enter too deeply into their industrial life. The 
 honest and well-meaning statesmen will be powerless to touch them and 
 the ablest financiers incapable of removing them. The result is that 
 the politicians will continue to distract the popular attention with their 
 usual wordy wars, and the financiers to pile up the taxes or shift them 
 about until the apparently inevitable bloody upheaval occurs. They 
 cannot help themselves and the process cannot be stopped. 
 
 The population has, of course, not the slightest comprehension of the 
 subject. The following is a citation from the Republican platform of 
 1908. "In all tariff legislation, the true principle of protection is best 
 maintained by the imposition of such duties as will equal the difference 
 between the cost of production at home and abroad, together with a 
 reasonable profit to American industries." 
 
 If some American industries fail and some succeed, there is a difference 
 in cost of production among American industries; that is, it seems 
 impossible to fix any single duty which will equal the difference between 
 the cost of production at home and abroad. If some foreign industries 
 fail and some succeed, and the most effective of these are excluded from 
 American markets, America will lose the advantages of the best supply, 
 and of the most productive division of her labor. Again, if the popu- 
 lation of America is taxed, in order to "assure a reasonable profit to 
 American industries," it must be taxed with reference to the worst 
 managed American industries in relation to the most effective foreign 
 producer; that is, the taxes must guarantee unreasonable profits to the 
 most effective American industries and support the least productive. 
 
 > CL Letter to Civic Forum, December 17, zgog. 
 
640 
 
 Practical Politics 
 
 Pt.V 
 
 iii'l 
 
 f 
 
 In other words, it would seem, from a rational point of view, that 
 this '*true principle" of Protection begins with a practical impos- 
 sibility, continues through an economic absurdity, and ends up with 
 a flagrant injustice. This is the theory upon which the^ taxes are 
 built up. 
 
 Practically, however, the application of this "true principle" of Pro- 
 tection is described by Senator Bristow^ as follows: "They had no 
 intention of considering the difference in the cost of production, they 
 sneered at the idea, they were simply intent on giving their political 
 supporters what they wanted." This is the way the theory works 
 "practically." 
 
 Senator Bristow may seem too severe upon his colleagues who "sneered" 
 at the true principle of Protection. It is, in fact, impossible to avoid 
 sympathizing with these statesmen, for when the "true principle" 
 is understood, it seems in reality little worthy any treatment other than 
 that which it received. Thus, although the statesmen "sneer" at it, 
 the population swallows the "true principle" as eagerly as the "infant 
 industry," the "balance of trade," or the "pauper labour"; more taxes 
 arc piled up on the vital needs of the people and the cost of living 
 soars still higher. 
 
 This increased cost of living begins to make some impression on the 
 popular mind, with the result that the "true principle" of 1908 is aban- 
 doned by the Republicans in 191 2 for the "protection of labour," "diver- 
 sification of industry," and "pauper labour," which the people so well 
 understand. The Progressives, while clinging to the abandoned "equal- 
 izing of conditions" of the 1908 platform, make a new discovery in that 
 "primarily the benefit of any tariff should be disclosed in the pay 
 envelope of the laborer.** This is an interesting development in pro- 
 tectionist economics, although just how a tax collected at the port of 
 New York is to find its way primarily into the pay envelope of the 
 labourer in central Wisconsin is not made very clear. But if this piece 
 of magic could be performed, in what would it result but taking the 
 money out of the pay envelope of the labourer who consumed the 
 taxed goods, to put it into the pay envelope of some other labourer? 
 
 The increased cost of living produced by this kind of economics 
 
 gives the Democrats a chance. They say that the tariff should be 
 
 "limited to the necessities of the Government." They add, however, 
 
 that the "system of tariff taxation is intimately connected with the 
 
 » a., p. X06. 
 
 Bk. Ill The Indirect Tax in the United States 
 
 641 
 
 business of the country," and they favour "legislation that will not 
 injure or destroy legitimate industry." 
 
 This platform, while economically a great improvement over the 
 " true principle" and the "pay envelope," will, in all likelihood, lead to no 
 real improvement in the political or industrial conditions in the United 
 States. "The Democrats do not want free trade," says Mr. Wilson.* 
 This means, then, that a gradual general lowering of exaggerated duties 
 is all that is to be attempted. If this is so, and if the attempt is suc- 
 cessful, the process of wealth concentration will be carried on under the 
 Democrats with but slightly lessened speed for a few years, when a 
 panic or bad crops will give a "glorious victory" to the "true principle" 
 or the "pay envelope" and the process will be accelerated. 
 
 The chances are, however, that the situation will be but little affected 
 under the Democrats. The Underwood Bill is but a protective system 
 of taxes somewhat lower than the Payne-Aldrich Bill. An honest and 
 well meaning Executive is powerless under the American system. 
 When ta,xes have been piled up to a certain height, it is often to 
 the interest of politicians to lower or revise them. The money can be 
 made either way. As President Cleveland wrote to Representative 
 Catchings in 1894:2 "Senators have stolen and worn the livery of 
 Democratic tariff reform in the service of Republican protection." 
 Cleveland undoubtedly had at heart the genuine relief of the popula- 
 tion, but could do nothing. The Wilson bill became law without his 
 signature. The present Democratic regime will, in all likelihood, go 
 through very much the same phases as other Democratic regimes; and 
 then the Republicans will come back and the tariff be "revised" again. 
 
 But, if such is not the case, what can the population hope from a 
 Democratic administration? If the Democratic party is able to put all 
 its reforms into practice, if it repeals every protectionist measure, and 
 does so without scandal or panic; if it continues in power for fifty years 
 and offers the people a fairly honest adminstration during that time, the 
 people of the United States will be living under a system analogous to 
 that of England during the last half of the nineteenth century. The 
 general condition of the population of England is probably slightly 
 worse than that of the United States at present. This is apparentiy 
 all the population can hope from the Democrats. The indirect taxes 
 and the land values will continue to congest the social wealth under 
 
 » speech at Philadelphia, Monday, October 28, 1912. 
 ' Cf. Financial History of the United States, Dewey, p. 456. 
 
642 
 
 Practical Politics 
 
 Pt. V 
 
 whichever party is in power, just as they have done in England without 
 any protective taxes. The population will continue to turn itself 
 into paupers and plutocrats, corrupt police and "gunmen,'^ under which- 
 ever machine gets control of the votes, and the population cannot stop 
 itself. As Macaulay said, its constitution is "all sail and no anchor. " 
 It lacks the means of arresting the process. 
 
 The American Congress to-day no more represents the interests of 
 the bulk of the population than the EngUsh ParKament under George 
 III represented the interests of the English people of that day. 
 
 Not until the Executive of the United States is able to act indepen- 
 dently of a machine elected, a machine controlled, and a machine or- 
 ganized representation, will he be able to offer the people any adequate 
 tariff policy. ^ And not until the Executive is himself in personal imme- 
 diate touch with the financial life of the nation, through a great central 
 organization of its institutions of trust, will he be able to formulate or 
 adopt any such policy with intelligence. 
 
 There is no possibility of any real industrial or administrative im- 
 provement in the United States without two elements which the popu- 
 lation not only does not possess, but which it seems to lack the capacity 
 to develop. England is the only country possessing them in any degree 
 of efficiency, and it may require many panics and another civil war be- 
 fore the people of the United States begin to understand the necessity 
 of such elements in any responsible administration. The first of these is a 
 great Central banking institution with a single reserve system; the sec- 
 ond is an Administration free from influences dictated by francliises 
 and indirect tax schedules. The United States does not possess the 
 first, and if it were formed to-day it would be controlled to-morrow 
 by the dominant financial interests; it could not help itself; conditions 
 would force it into their hands. The Uxes and the franchises would 
 doit. 
 
 The situation seems hopeless in the United States, and it may be as 
 well to keep the politicians explaining how the increase in gold and 
 "prosperity" account for the high cost of living, wrangling about the 
 "difference between the cost of production," "representative govern- 
 ment," the "separation of the powers," "pure democracy," "social jus- 
 tice," the "rule of the people," "maximum prices," and so on. The empty 
 rattle of the brains of dead Republics can be heard any day in or out of 
 Congress. It may be as well to let them rattle on, anything in fact to 
 distract the popular attention from the one vital issue — the real stream 
 
 Bk. Ill The Indirect Tax in the United States 
 
 643 
 
 of the people's real money controlled by the taxes, the rates, the fran- 
 chises, and institutions. 
 
 This real stream of real money is that with which any responsible and 
 effective Administration would have to deal, and no Administration, 
 not independent of rings, machine support, and party contributions 
 can touch it; this is the stream that oils the machine and supplies the 
 contributions. In order to be dealt with it at all, it should be thrown 
 into the control of one Central institution. This institution should form a 
 single reserve system, analogous to that of the Bank of England, and 
 so control the credit system of the country. In this way this stream of 
 money could be used to protect values of all kinds; a larger amount of 
 capital could be rendered available by means of a single reserve; and, 
 through the control and extension of credit, this stream of money could 
 be used m the development of natural untaxed industry, instead of in the 
 accumulation of tax-built paper as at present. The savings of the people 
 might thus gradually be released from investment in their own taxes, 
 and the expenses of the Administration met through the progressive 
 absorption of unimproved land values. 
 
 These considerations apply with certain modifications to every country 
 in which industrial values are affected by taxation. 
 

 CHAPTER II 
 
 FRANCE 
 
 FRANCE presents in many ways the most interesting body of 
 political experience in modem history. She blends the active, 
 inquiring citizenship of Greece with the ruthless application 
 of Rome; she reproduces the cruder methods of antiquity 
 under the influences of modem thought. Other nations hesitate, tem- 
 porize, compromise and their revolutions move slowly. France formu- 
 lates, defines, and cuts with a knife. She drives herself through three 
 reproductions of constitutional absolutism while other nations are drifting 
 through various combinations. She shows the furnace in which nearly 
 every realizable political conception has been put to the test of fire. 
 
 The France of the seventeenth century emerges from the darkness of 
 the Middle Ages at the head of the wealth and culture of Westem civ- 
 ilization; le roi soldi as her guiding light. The indirect taxes are every- 
 where at work, however; the great King wields a vanishing sceptre 
 and niles on a rotting throne. The Administration could do but one 
 thing: force its existence as long as possible and then fall with the people 
 into the inevitable bloody collapse. The people scrambled out as best 
 they coidd and made the most violent effort in history to cut themselves 
 off from the past, reorganized, and began again. They began again at 
 the bottom of a revolutionary democractic pit and forced themselves 
 round in it with "practical" democratic methods until they found them- 
 selves imder the sword once more. But the Revolution was not ended 
 with the eighteenth Brumaire; another world of practical politics re- 
 mained to be explored; the world of progress and Imperialism. Prog- 
 ress for any given population means but one thing in practical politics: it 
 means the infliction of indirect taxes upon other populations. France 
 during her struggles had developed one of the most perfect of military 
 machines and her tyrant was a past master with the guns. The result 
 was that, under Napoleon, France made phenomenal progress in a short 
 time. Progress of this kind, however, demands armies in the field, and 
 armies in the field lick up money in proportion to the progress. In or- 
 der to keep the armies in the field it was necessary for France to distort 
 
 644 
 
 Bk. Ill 
 
 France 
 
 64s 
 
 the circulation of her own wealth with indirect taxes. In order to draw 
 the money from other populations it was necessary to suppress and distort 
 the circulation of wealth throughout the whole progressive area; that is, 
 the home population, the subject populations, and those against which 
 the progress was aimed. There can be but one result, a slumbering 
 volcano of hatred and patriotism generated or the other side of the taxes. 
 The progressive bubble will burst on a battlefield and the other popu- 
 lations will begin to make progress at the expense of the home popula- 
 tion. 
 
 These seem the fundamental ideas about which the practical political 
 intellect has revolved since the beginning of the political history of man. 
 They are the ideas from which the political and diplomatic history of 
 Europe takes its rise. There is nothing to choose between the methods of 
 Napoleon at Tilsitl, Erfurt, and Presburg, and those of the allies at 
 Vienna; they are, in fact, identical. As the wounded lion crouches on 
 the bridge at Leipzig or utters his dying groan in the steely squares of 
 Waterloo, the wolves fling themselves on his carcass. 
 
 After the hundred days France was "lost" from one point of view; 
 I'saved" from another. With all her experience of being lost and saved 
 in this way, however, France has never lost faith in the ability of a 
 practical politician with an indirect tax and a gun to accomplish any- 
 thing. Yet, if the mental processes of the practical politician are analyzed, 
 reason may be found for believing that he will do nothing with his gun 
 and his tax but take from the poor to give to the rich. Man can do 
 nothing in any practical political sense but move matter. He may 
 protectionize, imperialize, fiscalize, patriotize, or do anything else he 
 pleases, with reference to indirect taxes, and the cmde fact remains that 
 these can do nothing but chip a piece of matter from another piece of 
 matter and give it to the men who do the chipping. 
 
 The result is that since the great Revolution France has but drifted 
 round in smaller revolutions with the inevitable man on horseback bring- 
 ing up the rear; in other words, used the national bayonets to chase 
 the national coat-tails through the gates of the Palais Bourbon. 
 
 Any one who studies the mass of experience presented by French 
 politics grows skeptical with reference to the practical advantages of a 
 tax and a gun. He may be led to believe that the only use of an indirect 
 tax is to be exchanged for another tax in order to protect the labour and 
 industry of the people and give them access of the necessaries of 
 life; and that the only use of a gun is to see that that is done. 
 

 646 
 
 Practical Politics 
 
 Pt. V 
 
 If indirect taxes are removed, every bank in the country holding certain 
 paper may be endangered. Every bank holding other paper may be 
 benefited. This shows that nothing can be done until the banks are 
 brought together. Every bank in the country from the Pyrenees to the 
 Belgian frontier should be put under the control of the Bank of France. 
 Does the foreigner injure a French industry by excluding it from his 
 market with a tax? Does France injure him in the same way? Can 
 the taxes be exchanged? If so, French paper will go up; so will the 
 foreigner's. Some one's paper may get hurt and loans be called. The 
 same thing applies to the foreigner. With the French banks properly 
 organized, the Bank of France will see that no French institution is 
 injured. The foreigner should have the same sort of an organization 
 to do the same work. If the home and the foreign institutions are 
 brought together dangerous complications can be avoided, and an old 
 market will not be suddenly withdrawn as a new one was expected. 
 
 The process is closely allied to a problem in hydraulic engineering. 
 A single organization of the institutions of trust of the coimtry would be 
 able to control the level of the total values represented. This level 
 should not be allowed to fall, and wherever it can be raised by pouring 
 taxes into it, this should be done. Where this level is steadied or raised, 
 the land values beneath can bear the expenses of raising it. The reali- 
 zation of this process would mean real freedom, and real freedom, based 
 on sound finance, is the only thing France has never tried. 
 
 CHAPTER HI 
 
 GERMANY 
 
 GERMANY, drawn together by the Napoleonic wars and finally 
 focussed in the existing Empire, presented, after the seventies, 
 many of the characteristics of a youthful nation: imion, 
 patriotism, progress, and military enthusiasm. These develop 
 through the usual phases into the usual phases of Imperialism, Protection- 
 ism, enormous accimiulations of indirect fiscal burdens and extrava- 
 gant military and naval expenditure. Germany's artificially stimulated 
 industrial activity combined with the inevitably attendant extravagant 
 taxation have produced new symptoms in the body politic. The ficti- 
 tious industrial pulsations forced by indirect taxes are much more power- 
 ful and rapid in modern society than in antiquity or even before the 
 era of steam and electricity. The different progressive systems of Rome 
 might last several hundred years before they collapsed one after the 
 other. There seems little hope, however, for any such relative length 
 of life in the modern systems with their tax-based industrial respira- 
 tion. The lungs rise and fall to-day under much higher and more 
 effective pressure than that of even a half century ago. The taxes and 
 gunpowder may be exploded with much greater rapidity and precision, 
 and the inevitable results produced in a much shorter time. Thus 
 conditions may be seen maturing sooner than might be expected 
 in Germany. 
 
 The forced and distorted circulation induces artificial legislation of 
 great complexity in order to counteract its effects. Protection, food 
 taxes, Kartels, monopolies, battleships, Krupp guns, fiscal and financial 
 difficulties appear on one side; unemployment, pauperism, strikes, dis- 
 content, corruption and Socialism appear naturally and necessarily on 
 another. The Eagle generates the battleships and the Krupp guns, 
 these generate the Kartels and the food taxes, the food taxes generate 
 pauperism and unemployment, these generate organized Socialism and 
 the Red Flag. It seems but a question of time imtil the Eagle and the 
 Red Flag meet and sooner or later the Red Flag will fly over the Eagle. 
 
 In welding together the present Empire, Bismarck was keenly alive 
 
 647 
 
I 
 
 
 648 
 
 Practical Politics 
 
 Pt. V 
 
 to the value of the indirect tax as a cohesive force. The indirect tax, 
 it might be said, is the germ from which the modem progressive in- 
 dustrial society takes its rise, and the germ which generates its death. 
 It seems but a question of time, mechanics, and a series in geometrical 
 progression. The society is bom with the indirect tax, nourishes itself 
 with the indirect tax, fills its lungs with the indirect tax, stimulates its 
 heart action with the indirect tax, and the society will probably cut its 
 own throat with the indirect tax. A forced price on a vital need 
 with a self-perpetuating series of progressive acciunulations is the motive 
 power. 
 
 Where a progressive population increases as rapidly as the taxes, and 
 there is no undeveloped land area at its disposition, it will reach a point 
 sooner or later when an explosion is inevitable. Where two populations, 
 such as those of Germany and England find themselves approaching 
 such conditions, war is the natiu-al result. It is almost the duty of their 
 Administrations to fling them at each other, rather than let them tear 
 themselves to pieces with internal convulsions. The explosion cannot 
 be avoided xmder such conditions, and it may seem wise in every way, 
 from an administrative point of view, to direct it outside the society 
 rather than allow the lava to overflow the domestic hearth. A war 
 splits or over-rides opposition to the Administration, absorbs the unem- 
 ployed, stills the agitators, and inflames patriotism. Thus an Anglo- 
 German war seems as necessary to-day as was that of Athens and Sparta 
 or of Rome and Carthage. Under analogous conditions there seems 
 nothing else to do. Yet if these two populations allow themselves to be 
 exploded into each other, as were those of Germany and France in 1870 
 for much the same reasons, the chances are that neither one nor the 
 other will reap the slightest benefit from the process, while a few in- 
 dividuals in control will accumulate enormous fortunes. 
 
 If Grermany gains command of the sea she may enjoy a few years of 
 expansion. Imperialism, and progress at the cost of enormous fiscal 
 burdens upon the bulk of the people. The progressive population, how- 
 ever, will multiply like weeds in an uncultivated field, rapidly fill up 
 every outlet opened, and begin to reproduce existing conditions. England 
 has had control of the sea for generations, yet the English Empire build- 
 ers are doing all they can to show that the average English worker 
 is worse off than the average German worker, and the chances 
 are that there is little to choose between them. If Germany ex* 
 pands until she bursts into a war with England and gains control of 
 
 Bk. Ill 
 
 Germany 
 
 649 
 
 the sea, she can read her own future in the industrial conditions of 
 England to-day. 
 
 Is there any alternative? Why not put the banks of the country under 
 the control of the Bank of Germany, draw up the Kmpp guns behind 
 the banks, instead of behind the food taxes, and then protect and develop 
 the industry of the country by the repeal of taxes that suppress markets 
 or increase fixed charges. The control of the rates of the Government 
 railways can help in the process, and the unimproved land values may 
 pay the bills. 
 
CHAPTER IV 
 
 RUSSIA 
 
 RUSSIA presents an enormous population in the grip of oflSciaL 
 dom. The vast areas involved and the lack of organization 
 seem to render futile any hope of social or administrative 
 betterment. The poor and ruthlessly distorted circulation 
 is of long standing, the congestion of the most exaggerated nature 
 but it seems that they may force their existence indefinitely. The 
 upheaval in China shows, however, that the thing cannot go on for- 
 ever. No matter how effectively the ignorant peasants may be kept 
 at work at the guns, every rouble withdrawn on one side withdraws a 
 peasant from the guns on another. It seems to be but a mathematical 
 calculation in roubles and muzhiks. When the muzhiks with the guns 
 have forced the roubles away from the muzhiks with the hoes, to a 
 compensating extent, the latter will appear in the field with the scythes 
 and the wood axes. One side will kill more than the other, and then the 
 thing will begin over again. Can anything be done? 
 
 A Republic, a real constitution, representative government, organize 
 and nationahze the wealth, give the land to the peasants, tax its unim- 
 proved value are some of the suggestions offered. None of these really 
 goes to the heart of the matter. The Republics and constitutional 
 governments reproduce more or less analogous conditions wherever in 
 operation, and the radical suggestions will find the whole force of the 
 Government against them. The practical reason is not far to seek. 
 
 In 1909 the average Russian seems to have imported to the value of 
 about 10 shillings; the average Englishman,^ to the value of £13, 17s. yd., 
 well over twenty-five times as much. The conditions are of course not 
 analogous, but it seems none the less, if Russian trade were allowed to 
 flow naturally, that her imports might be vastly increased without reach- 
 ing even the relative average importation of England. 
 
 The bulk of Russian trade is carried on through the European frontier, 
 the Black Sea and Finland. "The custom duties levied at these three 
 
 » Statesman's Year Book, ign, p. 73. Russian population 160,095,200. Imports, 788,448,000 roubles. 
 Ibid., pp. 1150, 1178. 
 
 650, 
 
 Bk. Ill 
 
 Russia 
 
 651 
 
 frontiers form 90 per cent of all custom duties (1907)."! These taxes, 
 combined with the excise and land values, represent the industrial 
 pulsations of the heart of the Russian people. The existing Government 
 will force them as long as a bayonet is at its command. It looks very 
 much as though taxes and force and want would be the lot of the bulk 
 of Russian muzhiks as long as they continue to reproduce. If they can 
 ever get free they can do so, but along some such lines as the following: 
 The natural conditions of the country and her vast area render the 
 population of Russia largely dependent upon agriculture. Russia's 
 policy of stifling the trade of her people works two evils at once. It 
 deprives her agrarian population of the best machinery, and, by forcing 
 ships to enter Russian ports almost in ballast, it saddles her own pro- 
 duce with a double transportation rate in foreign markets; that is, there 
 and back. Russia entangles her helpless millions in a net with one 
 hand, strangles them with another, and is forced to keep the Cossacks 
 at work with the guns pumping taxes into their lungs in order to keep 
 them alive during the process. If Russia stops working the guns the 
 people^will collapse inside the net; if she takes her hand from their throats 
 they will probably have a fit of violent insanity. If she continues with 
 the grip and the guns, the people wiU be at each other's throats sooner 
 or later. It is but a question of roubles and muzhiks in geometrical 
 progression. 
 
 If there is any solution it lies in loosening the net with^care. The in- 
 telligent unlocking of the consuming powers of a great population such 
 as that of Russia can create enormous values in Germany, England, and 
 the United States. The inflation of these values will increase the demand 
 for Russian produce in every market of the worid and put every Russian 
 value affected upon that much sounder basis. If these opportunities 
 are presented to Russian statesmen and financiers in proper form, they 
 may be able to reduce taxation productively, put new values and new 
 pulsations in the banks of Moscow and St. Petersburg, and give the land 
 to the m en willing to pay the most for it. 
 
 > Ibid p. Z174. 
 
CHAPTER V 
 
 ENGLAND 
 
 
 ENGLAND, alone among the nations, is unburdened with 
 protective taxation and stands, therefore, a step nearer in- 
 dustrial freedom than any other. To suppose that she will 
 ever actually free herself may, however, seem impossible to 
 any one familiar with English conditions. If a fiscal astrologer were to 
 attempt to cast the political horoscope of England, his mind might 
 drift along some such thought as the following: 
 
 War with Germany will make relatively little difference one way or the 
 other to the bulk of the population; the only practical result will be a 
 great accumulation of taxes whoever wins. The real issue is the distrib- 
 ution of the social wealth in the form of taxes and land values. These 
 Mvm continue to congest the national wealth in certain channels, pauperism 
 will continue to spread over the country, labour organizations will 
 grow in power. In spite of suggestions of referendums. Colonial and 
 Imperial Conferences, and Home Rule, the chances are that the fear 
 of food taxation will keep the Liberals in power longer than the by- 
 elections seem to indicate. Home Rule, however, will weaken them, 
 radical votes will accumulate, and the unemployed mercury will con- 
 tinue to crawl up in the populous thermometers. The head and the tail 
 of the people have already met in Parliament. Home Rule and taxes 
 will increase the opposition votes. The votes will swell up the Uil. 
 It ^dU begin to wag. It will split the Liberals and the Conservatives 
 will come back. When the Conservatives are in power they will have 
 to do something. Without the repetition of Liberal poHcies there is 
 only one thing they can do — Tariff Reform. Protection, preference, 
 retaliation, tariff-weapons, food taxes, '^easily handled" schedules and' 
 so on will be scattered over the people with a generous hand. The 
 Radicals and the Socialists may be kept quiet for a time with a few 
 taxes hung on in some mysterious way or with different forms of 
 pensions and insurance. Capital held in reserve in order to see what 
 would happen will begin to seek investment under this or that 
 tax. The practical Empire builders will add up a row of millions and 
 
 652 
 
 Bk. Ill 
 
 England 
 
 653 
 
 talk about " the facts" and a "created " demand for labour. Enormous 
 artificial activity may be caused by shifting about the wealth of a people 
 through the taxing power. The landed and manufacturing interests 
 will be united to a man. It will seem Uke the good old days before the 
 Reform and the Com Law agitation. Something like the rotten boroughs 
 and the piping times of the "hungry forties" will reappear. The 
 Parliament Act of 191 1 will be amended or repealed. ParUament wiU 
 complete another series of rings, and produce new sequences of Acts 
 amendments, and repeals with great rapidity. If Mr. Spencer were 
 aHve he would begin to count up the repeals. Every one who is any one 
 will be deUghted. PracticaUy Mr. Chamberlain is perfectly right- the 
 surest way to go fast is to sit on the safety valve - until the boiler 
 bursts and even then we go still faster. 
 
 No one who understands the action of indirect schedules, however, will 
 hope for lasting benefit from these measures. He will know that they 
 can produce nothing but so many more milHonaires in Mayfair, so many 
 more paupers on the poor rates, and raise the unemployed mercury that 
 much higher. It is nothing but the long famihar '^practical" proce<;s 
 of trying to keep a dog aUve by forcing it to eat its own tail. 
 
 Napoleoni showed it in all its purity when he used the pubUc funds in 
 the pubUc market to force up the rate of the public debt. It is nothing 
 but taking property from one part of the people to give it to another 
 part of the people. Tariff Reform will but shift the weight on the lever 
 of the safety valve and force the whole nation that much nearer the pit 
 The pit IS always there, the nation digs it under itself with its own taxes 
 and the taxes wiU force it into it whether it wants to go or not More 
 taxes can stop the SociaUsts' votes from falling over the country, labour 
 umons from growing in power, and the unemployed from flooding the 
 centres as easily as more taxes can stop a channel fog from crawling 
 over London when the wind is in the right direction. Strikes will 
 grow m effect and extent, the unemployed will increase in numbers 
 and sooner or later the labyrinths of the great centres of population will 
 vomit then- hordes over the face of England and there will be no 
 power to check them. 
 
 Can anything be done? The following is a citation from Thorold 
 Rogers :2 
 
 J^A^se of dissatisfaction is the practice of putting all local taxation 
 
 f » Cf. Thiers Histoire de rEmpire. Tome H. XVI.. p. iig. 
 • Work and Wages, pp. 532, 533. 
 
6S4 
 
 Practical Politics 
 
 Pt. V 
 
 on the occupier. This is especially felt in towns, where local taxation 
 is increasingly severe. The industries which aggregate in towns have 
 by their natural competition for building sites, aggravated by artificial 
 scarcity induced on a limited area, continually enhanced the groimd- 
 value of house property in densely peopled localities. . . . It is 
 commonly and confidently said that these taxes are only paid through 
 the occupier, and not by him; that is, if they were shifted to the landlord 
 or the owner of the ground-rent, the price would be enhanced by all the 
 tax. To this it is a sufficiently practical answer to say, that in such a 
 case no wrong can possibly be done by transferring local taxation to 
 the ground owner and building owner in towns." 
 
 The ground owner will at once perceive the injustice of Professor 
 Rogers' suggestion; to the occupier this injustice will not be so clear. 
 The economist may believe that such a suggestion should be adopted. 
 The man who deals with conditions, however, knows that it does not 
 meet the situation. 
 
 Any such suggestion, in order to be effective, should apply to ground 
 values all over the country: Railways, mines and land privileges of all 
 kinds. To lay the leaden hand of an Administration upon values which 
 may or may not affect institutions of trust is a dangerous thing to do 
 in practical politics, and no intelligent Chancellor of the Exchequer would 
 do it. No Chancellor of the English Exchequer can offer the people of 
 England any intelligent system of fiscal reform imtil the English people 
 themselves begin to imderstand what they are doing with their indirect 
 taxes, and the danger reflected on the horizon by existing labom: condi- 
 tions. Under existing conditions no Chancellor of the Exchequer will 
 do anything but continue the aimless juggling of tax schedules in some 
 form or other until the people of England begin to get to work on these 
 schediiles themselves; imtil they organize their institutions of trust in 
 such a way that none of these can be injured, and then try to put the 
 unimproved land values in the National Treasury and the indirect sched- 
 ules in the vaults of the banks of England in the form of industrial 
 securities. How can such a visionary thing be done? 
 
 In a protectionist coimtry the repeal of a tax on an industrial raw 
 material may inflate the securities of certain industries. In England, 
 where no protective taxes exist, the problem is a different one. Every 
 tax on an indirect schedule, however, blocks a market in some form or 
 other: if it did not, it would produce no revenue. 
 
 This market will, moreover, possess an annual money value to the 
 
 Bk. Ill 
 
 England 
 
 6SS 
 
 industries adversely affected. These industries will be foreign or 
 domestic. If foreign, EngKsh statesmen can offer the tax to foreign 
 Administrations in exchange for a foreign tax carefully studied in re- 
 lation to EngHsh values. If the reduction of a tax hurt English paper 
 on one side, it could be repealed in such a way, with reference to foreign 
 schedules, that it might inflate EngUsh paper on another. If the indus- 
 tries are domestic, it Kes with them to estimate how much they would be 
 benefited by the repeal of taxes on their markets. A letter has been 
 atedi to show how a tax imposed by the Administration of England 
 even upon a subject population, can injure English industry, depress 
 EngUsh securities, and throw EngHsh labour out of employment. 
 
 What about the revenue and the condition of the country during any 
 such period of tax reduction? The Bank of England understands the 
 finanaal conditions of the country. The Bank should be put in control 
 of every financial institution of importance. It should study the total 
 values represented by these in relation to total land values. If the Bank 
 said tiiat a tax could be repealed, it could be done. H tiie Bank said 
 that a certain percentage of certain unimproved land values could take 
 the place of the tax, the change could be made. 
 
 England, for several reasons, is the nation best suited to take a decisive 
 step toward real freedom, and the natural leader and centre of such a 
 movement, should it occur. England possesses in her great national 
 Bank, an institution not only abeady in immediate contact with the 
 financial and administrative life of the country, but an institution com- 
 manding the respect of the worid. England is entangled in no pro- 
 tective system of taxation polluting her Administration, and possesses 
 a monetary system nearer pure gold than any other. The Bank of 
 England, therefore, contains the most effective key to the entire situa- 
 tion, national and international. K tiie people of England, and of any 
 other nation or nations, ever decide to increase their wealth and pro- 
 ductive power through the liberation of their industries and markets, 
 England's is the natural Administration, and the Bank of England the 
 existing institution around which other institutions could be grouped. 
 
 » Cf p. 147. 
 
CHAPTER VI 
 
 THE EAST 
 
 A VOLUME might be written in study of the relation of East- 
 em and Western fiscal systems in connexion with direct 
 taxation. Such study woiJd revolve about a few consider- 
 ations which might be stated as follows: A population 
 in the East will be either independent or under Western influence. 
 If the first, it needs money to build battleships, make progress, and so 
 forth: K the second, it must be protected. The only way to do either 
 is to tax the vitals of the population and sell the taxes in the money 
 centres of the West. Take off the Uxes, mstitutions will begin to shake 
 in London and Paris, taxes will shoot up in the West and men-o'-war 
 will crawl through the Suez Canal. 
 
 The chief fruits of taxes with which Eastern populations are inflicted 
 in this way are famines and security values; the East gets the famine, 
 the West gets the security. It may be said, however, that the untaxed 
 consuming powers of the vast populations of the Orient are of great 
 industrial value in the West; and this value can be brought into existence 
 but by the elimination of burdens upon Eastern consumption. If the 
 West ever begins to realize the value of its own untaxed consuming 
 power, the taxes restricting this at present can be exchanged for Eastern 
 taxes. The values these represent in industry will inflate Western 
 paper and strengthen institutions during the process. The East might 
 meet its obligations with unimproved land privileges, and increase the 
 value of its own paper through the exchange of other taxes for Western 
 concessions. 
 
 There are three dangers threatening every society under existing 
 conditions; in the East as well as in the West — (i) Foreign aggres- 
 sion or control. (2) Ignorance and disorder below. (3) Ignorance 
 and corruption in its own administration. If the society ceases to 
 exclude or tax the goods of foreign societies, it may free itself from un- 
 necessary burdens, gain the advantages of unrestricted commerce, in- 
 crease its wealth and the chief cause of foreign aggression, and control 
 will cease to be effective. This cause is the manipulation of values through 
 
 656 
 
 Bk. Ill 
 
 The East 
 
 657 
 
 the control of indirect schedules. No foreign influence possesses the 
 power to enforce and collect direct taxes throughout a great and 
 hostile population. If the society checks the process of taxing its own 
 goods, the exploitation of the poor, through the control of such tax- 
 ation, will cease at the same time, and the danger from below grow 
 less. If the society withdraws from its Administration the power to 
 absorb wealth, not directly created by the society itself, the Administra- 
 tion will be largely freed from corrupting influences, and lose, at the 
 same time, its power to exploit the resources of the society in its control. 
 There will be an added danger, however, affecting society under any 
 fiscal system, and which a direct system would not alter. This danger 
 is multiplication in numbers beyond a normal relation to land area* 
 Matter in the form of humanity seems to reproduce itself imconsciously 
 much as it does in the form of weeds or locusts. Where land will sup- 
 port it, it overflows and "increases and multiplies." This results in the 
 members of a population bidding against each other for the right to use 
 bits of the surface of the earth. This process creates ground-rents which, 
 under the existing system, are paid to the ground-rent owner. Under a 
 direct system they would be paid to the State. Where a population 
 increases beyond a certain relation to its land area, these values will rise 
 rapidly and the food supply diminish relatively, at the same time. If 
 the population continues to increase, it will find itself upon a treadmill 
 under a direct system, analogous to that upon which society finds itself 
 to-day with its indirect taxes. In other words, if a society does not 
 develop sufficient intelligence to limit its numbers to land area and 
 food supply it will produce little but famine, ground-rents, and revolu- 
 tions under whatever system of production and distribution it adopts. 
 
 
CHAPTER VII 
 
 CONCLUSION 
 
 TO ERASMUS is due the observation, worthy the Stagirite 
 himself, to the effect that the human understanding is like 
 a drunken clown on horseback — support him on one side, 
 he collapses on another, and the process, it seems, may be 
 continued indefinitely. The farther inquiry is pushed, the farther 
 realization recedes. "Of making many books there is no end, and much 
 study is a weariness to the flesh." Weariness and skepticism may weU 
 seem the only goals at the end of every path really followed, but skep- 
 ticism leads nowhere. If the drunken clown starts to ride his horse, he 
 falls off altogether. 
 
 The greater the intensification of skepticism, however, the less grows 
 faith in the political manifestation of the human intelligence, and the 
 greater the faith in Nature, or in human freedom. Freedom, however, 
 presents difficulties in application which may well seem greater than 
 those existing. The chief difficulty lies in capitalized industrial values 
 forced by taxation. These values are forced into the industrial heart 
 and lungs of the people through their institutions of trust. These 
 values^ must continue to be forced, or the people wiU die industrially and 
 financially. The nation will force itself to death in any event, for these 
 taxes but congest the blood and air into an ever-contracting space, 
 until there is a greater expanding force generated than the c(Hitracting 
 force of the taxes. When this point is reached the nation explodes and 
 begins again. 
 
 Human "practical politics" are as near perpetual motion as anything 
 man is Ukely to discover. Practical poUtics lives upon indirect taxes, 
 and indirect taxes produce nothing but revolutionary rings. The great- 
 est revolutionary forces are the Prime Ministers, the Parliaments, and the 
 Legislative AssembUes at present in power. They work with indirect 
 taxes and forced paper, and their taxes and paper are constantly shift- 
 ing the ground from under them; constantly turning the treadmill 
 beneath their feet. When a nation reaches a point where the taxes 
 have forced the national wealth to a certain level in cerUin channels, 
 
 658 
 
 Bk. Ill 
 
 Conclusion 
 
 659 
 
 the laws of political gravitation will shift the force from one direction 
 to another; the wheels will begin to revolve, the revolution will occur 
 and the great statesmen and the financiers can stop it as easily as they 
 can stop the revolutions of the spheres. 
 
 The practical political wisdom of man is much like that of a squirrel 
 on a wheel in a cage. The squirrel cannot explain rationally what he 
 is doing or why he is doing it; he is a "practical" squirrel and simply 
 continues to turn the wheel. 
 
 When a revolutionary period is reached, the pikes and the scythes 
 chase the lions and the eagles round in a ring amidst the wildest 
 "patriotism " on both sides. The pikes and the scythes then turn them- 
 selves into lions and eagles; breed another generation of pikes and 
 scythes, and the thing begins again. The indirect taxes will do it, the 
 squirrel has but made another revolution on the wheel inside the cage. 
 The question is whether a nation, on reaching a point at which the 
 wheel begins to turn, can obey the laws of political gravitation, without 
 wallowing through the usual pit of pikes and blood. It seems not. 
 The vital importance of the existing system to the industrial life of a 
 nation will force existing Administrations to force its existence as long 
 as possible — that is, force the nation into the pit. If the pit can be 
 avoided, however, it can never be done by turning the usual treadmill. 
 The squirrel should try to think of the possibility of getting out of the 
 cage altogether, and then he will not be in the wheel any longer. It must 
 be admitted, however, that this is a most "academic" possibility for any 
 practical squirrel to contemplate. No squirrel in the history of the world 
 has ever been able to get out of the cage. The bars are built of steel 
 and gold, and cannot be broken. The only way for the squirrel to get 
 out of the cage is to begin to study the subject of cage making — Empire- 
 building, in other words — on his own account. 
 
 The best way to study this subject practically, is with a list of indus- 
 trial security values and a tax schedule in one hand; a list of foreign 
 prices of raw materials and finished products in another. With these 
 in view, it may seem that a home tax taken off a raw material may put up 
 a security value, and that a foreign tax taken off a finished product may 
 do the same thing. The next thing is to realize that a home tax is a 
 foreign tax to a foreigner, and vice versa. The next thing seems to be 
 to exchange the home tax for the foreign tax, and increase the industrial 
 values affected. This is the way to take the cage apart. 
 The attempt, however, would not be easy. It would involve problems 
 
66o 
 
 Practical Politics 
 
 Ft. V 
 
 of the greatest complexity and importance at every step. To try to 
 inflate a security value in one place, might depress values in another 
 to a dangerous extent, and nothing but disaster result. There would 
 probably be a flare of fire and lightning here and there, and now and then. 
 The real problem is, in fact, so difl&cult that any solution may be scarcely 
 worth contemplating. All indications seem to show that the future of 
 humanity will be but the repetition of the dreary rings of blood and 
 wretchedness which form the history of its past. The attempt to check 
 the process would result in something very like a major operation in 
 fiscal surgery. ^ 
 
 The anatomical features of the operation might be suggested as fol- 
 lows: The heart of the patient is divided into three ventricles: (i) 
 The socially created wealth. (2) The national treasury, (3) the 
 fiduciary institutions. The blood of the first flows to-day largely into 
 the hands of individuals. The blood of the second is forced up out of 
 the vitals of the people. The natural action of the first of these, together 
 with the forced action of the second, as they expand and contract, pump 
 the blood into the third ventricle, and so keep up a forced and dan- 
 gerously distorted circulation. 
 
 An effective operation would require the running of a knife into the 
 patient's heart, in such a way that the blood represented by the national 
 wealth would be turned into the national treasury. At the first touch 
 of the knife, however, if not adjusted with perfect accuracy, the third 
 ventricle will begin to lose blood with great rapidity. Here is where the 
 danger lies. There is but one hope of avoiding a fatal hemorrhage in 
 the third ventricle. If the national wealth is turned into the national 
 treasury, it is obvious that the blood filling that ventricle to-day can be 
 proportionately released and allowed to flow naturally through the whole 
 body politic. If this is done in exactly calculated relation to every drop 
 withdrawn on one side, it may generate suflScient power to force a 
 compensating amount of blood into the third ventricle from another, and 
 so sustain the circulation necessary to keep the patient alive. If this 
 can be done, the operation would be a success; the patient's heart would 
 beat normally and the blood flow through all his veins and arteries. 
 If not, the knife would cut into such an explosion of blood and dynamite 
 as the world has seldom seen. 
 
 The operation might be described in fiscal terms as follows: 
 
 I. A great Central banking organization, or Clearing House, in 
 control of a single reserve system would be necessary. By means of this 
 
 Bk. Ill 
 
 Conclusion 
 
 661 
 
 organization the solvency of all fiduciary institutions could be protected 
 at every step. This would be the first condition of success; without it, 
 nothing could be done. 
 
 II. Existing Administrations, constitutions, institutions, and judi* 
 ciaries should be used at all times, wherever possible. Friction and 
 confusion would thus be greatly lessened. 
 
 HI. The value of the land privileges of the coimtry should be sus- 
 tained and developed through security of tenure and productive use. 
 Every encouragement and protection should be given to capital in 
 every form. Capital invested in highly taxed and artificial industries 
 should be given every opportimity of readjustment, directly assisted 
 where necessary, and never suddenly affected. Inducements should be 
 offered to capital, and credit extended wherever the natural industries of 
 the coimtry could be developed. This would apply especially to 
 railways, mines, and large land-using corporations. No readjustment 
 in rates and prices necessary to sustain these values should be opposed. 
 The Administration should depend ultimately upon them for support. 
 
 IV. The earning powers suppressed by indirect taxation should be 
 carefully developed by means of the gradual repeal of taxes on industry. 
 The annual value of every tax on vital necessaries should be realized, 
 as far as possible, through its exchange for other taxes, by means of which 
 new markets could be opened and the investment of capital and untaxed 
 industry encouraged. 
 
 V. As indirect systems were abandoned, socially created wealth in the 
 form of land values could be allowed to flow into the national treasiuy, 
 through a gradual and progressively applied process of absorption. 
 
 VI. If the socially created wealth is greater than administrative 
 expenses, the surplus could be allowed to flow back to the people through 
 a system of old-age pensions. 
 
 With some such policy more or less xmderstood by a population, in- 
 dustrial emancipation might at least be attempted without a hopeless 
 fiasco at the start. Under the most favourable conditions, however, 
 it would be a difficult process; doubtless full of unexpected compli- 
 cations, for it is impossible to foresee all conditions which might be 
 developed. Only the frank acceptance of these conditions, the recog- 
 nition and conservative treatment of every difficulty as it arose, could 
 hope to make such an attempt with even the semblance of success. 
 It is useless to lurge the patient to submit to the operation. If it has 
 
662 
 
 Practical Politics 
 
 Pt. V 
 
 advantages, he must understand them himself. If he cannot see them, 
 there are none. They are like the great subjective principle of the 
 criterion of truth; they are like the kingdom of God — they exist within 
 or they exist not at all. 
 
 The three chief factors in the intellectual history of man: political 
 administration, the science of nature, and his sense of the eternal, 
 present three currents of thought almost constantly in conflict with 
 each other. The harmonizing of these would represent the rational 
 self-realization of man as a member of society. Whether such realiza- 
 tion is ever to occur or not, time alone can decide. It seems safe to 
 assume, however, that no such hope can be entertained imder existing 
 industrial and political conditions. The rational man can find no place 
 in them, but at the same time he may find no opportunity of escape; 
 no gateway leading to intellectual freedom. Reason and his hope of a 
 better world point in certain directions, but the actual needs of the hour 
 force him in a third, with the existing discordant results; and the process 
 perpetuates itself indefinitely. 
 
 These three fields have been reviewed with the pmpose of discover- 
 ing their relation to each other. The conclusion suggests that ethical 
 and rational considerations support commercial and industrial freedom 
 as the most advantageous system of human relations, national and 
 international. Practical considerations show !the difficulty, if not the 
 impossibility, of the realization of any such relations and the import- 
 ance of these existent conditions cannot be ignored. They represent 
 the crux of the situation: the Gordian knot which must be cut if ever 
 man is to live in harmony with the best he has in him and the best the 
 ^orld has to give. 
 
 The words of but one man in the history of thought show a rational 
 and scientific comprehension of the disease from which society is at 
 present suffering. The words of that man have suggested themselves 
 at times throughout the present inquiry. The words of that man con- 
 tained the essence of the only unanswerable positions developed by 
 speculative thought. They rang true when brought in contact with 
 the progressive process of accvunulation and deprivation resulting from 
 indirect fiscal system; true with reference to the economic application 
 of social wealth — of that which is Caesar's; true in the light thrown 
 by Science over the future of mankind. The words of that man contained 
 the pure metal resulting from an analytical comparison of the religions of 
 the world. 
 
 Bk. Ill 
 
 Conclusion 
 
 663 
 
 There is an old East African adage which says: "The monkey's 
 grandmother was a fool." If ever the nations of the world realize the 
 fact that their existing progressive political and fiscal systems are all 
 inherited directly from that apparently not very highly gifted lady, 
 they may possibly begin to question them as the final embodiment of 
 administrative wisdom. If they begin dimly to understand their 
 political and fiscal methods, and to study these in relation to the admin- 
 istrative methods represented by the Nazarene, they may begin to free 
 themselves from the fiscal and political conceptions of the monkey's 
 grandmother, which they are supporting to-day. 
 
 If ever such an attempt is made, the men of those nations should 
 support their existing governments, whatever they are, but while sup- 
 porting existing systems they should run up the Imperial Insignia of the 
 Federation of the World beside the union jack and the stars and 
 stripes; beside the tricolour of France; the united standards of Ger- 
 many and Russia, and the yellow and the red of China and Japan — 
 the one real World Empire can be built with the indirect schedules of 
 those Administrations. A single, imited system of tax reductions is 
 greater, in wealth-producing power, than any number of systems of tax 
 constructions. 
 
 If ever men begin to build in this way, they will construct a new king- 
 dom in the demolition of the old, and a new design will appear. A 
 design purer, stronger, and more enduring than anything they have yet 
 conceived. At the head of the comer of that new design will be laid 
 the stone the other builders had rejected. On that stone, cut clear and 
 deep, will be the words: One Tax, One Freedom, One Kingdom, and 
 One God. 
 
 HI 
 

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 Thompson, Mr. Cf. Lilhe. 
 
 Thiers, M. A., Histoire de TEmpire. Fume, Jouvet et Cie. Paris, 1878. 
 
 ToQUEViLLE, Alexis de, De la D^mocratie en Am^rique. Michel L6vy Frtrcs, Paris, 
 
 1872. 
 Tyndall, John, Fragments of Science. Apple ton N. Y., 1894. 
 
 U 
 
 Upanishads, Sacred Books of the East, Vols, I., XV. Translation by Professor 
 
 MiiUer. Oxford, 1900. 
 , Sechzig Upanishad's des Veda. Translation by Professor Deussen. Brock- 
 
 haus, Leipzig, 1905. 
 , Text and Translation. Seshacharri. Madras, 1905. 
 
 Vendidad, Cf. Zend-Avesta. 
 
 Verender, F. a Just Basis of Taxation. English Land Restoration League, London. 
 
 1900. 
 Vergil, Virgilius. Apud A. Dulau. London, 1800. 
 ViGE&s, Mr. Cf. Royal Conmiission on Local Taxation. 
 
 W 
 
 Wakefield, E. G., England and America, Richard Bentley, London, 1833. 
 Walker, Professor Francis A. Money. Henry Holt & Co., N. Y., 1883. 
 Wallace, Alfred Russel, The Fortnightly Review, Sept., 1890. Jan. 1908. 
 Weismann, Dr. A., Essays upon Heredity, Oxford, 1891. 
 
 , The Germ-Plasm. Parker & Ronnfeldt, Scribner, N. Y., 1893. 
 
 Wells, D. A., The Theory and Practice of Taxation. D. Appleton, N. Y., 1900. 
 
 , Recent Economic Changes. D. Appleton, N. Y., 1897. 
 
 White, Andrew Dickson, A History of the Warfare of Science with Theology. D. 
 
 Appleton, N. Y., 1896. 
 Wilson, Mr. Woodrow, New York Times, Oct. 29th, 191 2. 
 Wise, B. R., Facts and Fallacies of Modem Protection. Triibner, London, 1897. 
 
 Xenophanes. Cf. Mullach. Sextus Empiricus. 
 
 Xenophon. Memorabilia Socratis. Dindorf, Oxford, 1862. 
 
 Young, Arthur, Travels in France. Bell, London, 1900. 
 
 I 
 
 f 
 
 .1 
 
 authors, editions, and SOURCES QUOTED 671 
 
 Zeller, Dr. E., Pre-Socratic Philosophy. Translated by S. F. Alleyne. Longmans, 
 
 London, 1881. 
 , Stoics, Epicureans, and Sceptics. Translated by O. J. Reichel. Longmans, 
 
 London, 1870. 
 , Socrates and the Socratic Schools. Translated by O. J. Reichel. Longmans, 
 
 Lonkon, 1868. 
 Zeno of Elea, Cf. Diels, Diogenes Laertius. 
 Zeno, the Stoic, Cf . Sextus Empiricus Diogenes Laertius. 
 Zoroaster. Cf. Zend-Avesta, Eusebius. 
 
. 
 
 INDEX 
 
 II 
 
 ' 4 
 
 ii 
 
 A BELARD, 510. 
 
 •**■ Acworth, W. M., 271, 273. 
 
 Acton, Lord, 559. 
 
 Adams, Samuel Hopkins, 51. 
 
 Aeschylus, 342, 397. 
 
 Agricultural Land, 247, et seq. 
 
 Alexandrians, 502. 
 
 Anaxagoras, 402, 460, 468. 
 
 Anaximander, 401, 431. 
 
 Anaximenes, 427, 441. 
 
 Andrews, George H., 161. 
 
 Antigone, 398. 
 
 Antoninus, 419. 
 
 Architecture, 334. 
 
 Arch, Joseph, 288. 
 
 Argyll, Duke of, 234. 
 
 Aristippus, 482. 
 
 Aristocles, 481. 
 
 Aristocracy, 556, Cf. Political Theory. 
 
 Aristotle, 425. Anaxagoras, 402, 465, 
 466, 467, 468. Anaximander, 432. 
 Aristippus, 483. Cynics, 483. Democ- 
 ritus, 458. Empedocles, 450, 456, 
 457. Ethics, 414. God of, 402. Gorgias, 
 470. Heraclitus, 449. Immortality, 
 413. Knowledge, Theory of, 488. 
 Method, 359, 539. Parmenides, 437, 
 439, 440. Poets, 346. Politics, 547, 
 551, 581. Pythagoras, 433, 434. Soc- 
 rates, 479. Thales, 427. Xenophanes, 
 401, 435, 436. 
 
 Arnold, Sir Edwin, 379. 
 
 Art, 333. 
 
 Ashley, Professor W. J., Attraction of 
 Capital, 67, 70. Dumping, 84, 91. 
 International Exchange, 98. Infant 
 Industry, 61. Productive Potential- 
 ities, 59, 60, 61, 62. Tariff-Weapon, 
 95, III, 116. 
 
 A^ey, Percy, 113. 
 
 Atkinson, Edward, Boston Land Values, 
 188, Note. Infant Industry, 27. Pau- 
 per Labour, 45. Protected Labour in 
 the United States, 41. United States 
 Steel Industry, 44. 
 
 Atomism, Cf. Diogenes of Apollonia, 
 Democritus, Epicurus, Spinoza, Dide- 
 rot, Haeckel, Law of Substance, Law 
 of Reason, Skepticism. 
 
 Australia, Protection in, 22, 6r, 145. 
 Land Values, 189, Note. 
 
 gAGEHOT, WALTER, 282. 
 
 ^ Balance of Trade, 5, 7, 97, 135. 
 Chiozza-Money on, 16. Huskisson on, 
 II. Mill on, 17. Smith on, 9, 10, 
 17, 97. Webster on, 10. 
 
 Balfour, The Rt. Hon. A. J., 94, 354. 
 
 Balfour's Cyclopedia, 363. 
 
 BaU, W. Piatt, 313. 
 
 Bank Deposits, Taxation of, 157. 
 
 Beaconsfield, Earl of, 629. 
 
 Beeke, Dr. 188. Note. 
 
 BeU, Hugh, on Steel Trade, 87, 88. 
 
 Bentham, J. B., 324. 
 
 Bessemer Process, 88. 
 
 Bigelow, John, 639. 
 
 Bird, Mr. 339. 
 
 Bismarck, Prince, 126. 
 
 Blackstone, Sir William, 208, et seq. 
 
 Book of the Dead, 384, et seq. 
 
 Booth. The Rt. Hon. Charles, 259, 291. 
 
 Boston Land Values, 188 Note, 198. 
 
 Bounties and Protection, 25, 65, no, 112. 
 
 Brahmanism, 372. 
 
 Bright, John, 61. 
 
 Bristow, Senator, 106, 642. 
 
 Brougham, Lord, 85. 
 
 Bnmo, Giordano, 511. 
 
 Bryce, The Rt. Hon. James, 49. 
 
 Buckle, Henry Thomas, 558. 
 
 Buddha, 378. 
 
 Buddhism and Roman Catholicism 363. 
 
 Budge, E. A. Wallis, 384, 385, 386. 
 
 Bunsen, Baron von, 383. 
 
 Burleigh, Representative, 105. 
 
 Bumouf, Eugene, 379 
 
 Butler, Bishop, and Mencius, 364. 
 
 Buyers* Recollections of Northern India, 
 
 379- 
 
 pALL, H. L., 628. 
 
 ^^ Campbell-Bannerraan, SirHenry,ii7. 
 
 Canada, Land Values, 189 Note. 
 
 Capital, as Factor in Production, 123, 261. 
 Attraction of, 66. Creation of, by 
 Indirect Taxation, 38, 634. Taxa- 
 tion and, 18, 59, 73, 634, 661. Cf. 
 Clearing House, Finance. 
 
 673 
 
 
674 
 
 INDEX 
 
 
 Cardell, Mr. G. H., 289. 
 
 Cams, Dr. Paul, 361 Note. 
 
 Camegie, Andrew, 67, 69. 
 
 Chamberlain, The Rt. Hon. Joseph, 107, 
 585, 653. 
 
 Charities and Commons, Cf. Pitts- 
 burgh Survey. 
 
 Chattels, Taxation of, 159. 
 
 Chiozza-Money, L. G., Balance of Trade, 
 16. Indirect Taxation, 145. 
 
 Chomley, C. H., 145. 
 
 Christ, 521. Unto him that hath, 257. 
 Blind leaders of the blind, 257. That 
 which is Caesar's, 299, 580. The Law 
 of Substance, 524, 526. Fall of Man 
 346. Many there be first that shall 
 be last, 525. All things whatsoever 
 ye would, 526, 529, 580. Judge not, 
 527. The Law of God, 529, 581. 
 The Kingdom of God, 581, 662. 
 
 Cicero, 148, 343, 358, 417, 418, 479. 
 
 Clarke, James Freeman, 388. 
 
 Classification of Land Values, 215. 
 
 Classification of Sources of Revenue, 173. 
 
 Cleanthes, 414. 
 
 Clearing House, Fiscal, 621, 637, 642, 
 646, 649, 655, 660. 
 
 Qeveland, Ex-President Grover, 641. 
 
 Clifford, Professor W. K., 353. 
 
 Cobden, Richard, 211. 
 
 Coglan, Mr., 188 Note. 
 
 Coin, Taxation of, 157. 
 
 Commerce and Exchange. Cf. Balance 
 of Trade. 
 
 Commission, Industrial, of United States, 
 77. Itahan Railway, 272. Royal, 
 on Local Taxation, Final Report, 288, 
 et. seq. 
 
 Commons, Professor John R., 260. 
 
 Comte, Auguste, 527, 532. 
 
 Compensation, 213. 
 
 Conference, Rural Reform, 288. 
 
 Confiscation, 213. 
 
 Confucius, 369. 
 
 Connecticut, Land Values, 197. 
 
 Connolly, C. P., 638. 
 
 Constitution, Natural, 581. 
 
 Constitutional Evolution, 547, 577. 
 
 Consumption, Taxation of. Cf. Taxa- 
 tion, Indirect. 
 
 Continental System of Napoleon, 148. 
 
 Continuity of Germ-Plasm, 522. 
 
 Com Laws, 42, 89, 558. 
 
 Com Rents, 283. 
 
 Cousin, Victor, 437 Note, 482, Note, 
 532. 
 
 Credits, Taxation of, 155. 
 
 Creuzbacher, Dr. G., 141. 
 
 Criterion of Truth, 493, 495. 
 
 Cmmpacker, Representative, 104. 
 Cudworth, Ralph, D. D., 407, et seq, 
 
 413 Note, 531. 
 Cynics, 483. 
 Cyrenaics, 482. 
 
 r)'ALWIS, 378. 
 
 ^^ Dante, 343. 
 
 Darwin, Charles, 307, 309, 310, 314. 
 
 Davenant, 188. Note. 
 
 Democracy, 561. 
 
 Democratic Party in U. S., 640. 
 
 Democritus, 400, 456, 520, 530. 
 
 Descartes, Rene, 511, 516. 
 
 Deussen, Professo. Paul, 372, 373, 374. 
 
 'Dewey, Davis Rich, 638. 
 
 Dhammapada, 378. 
 
 Diderot, Denis, 513. 
 
 Diffusion of Direct Taxation, 237. 
 
 Dingley, Duty on Steel and Iron, 35, 
 Bill, 104. 
 
 Dinkard, 381. 
 
 Diogenes of Appollonia, 428. 
 
 Diogenes, the Cynic, 460, 488, Note. 
 
 Diogenes Laertius, 425. 
 
 Diplomacy and the Tariff- Weapon, 97. 
 
 Direct Taxation, 151, 247. Cf. Clear- 
 ing House, Finance. 
 
 Dumping, Encouragement of, 75. Pre- 
 vention of, 84. 
 
 Dunlap, J. R., 34. 
 
 Duperron, Anquetil, 373. 
 
 Duty, Import. Cf. Protection., Taxa- 
 tion, Indirect. 
 
 Duty, Excise. Cf. Taxation, Indirect. 
 
 Duty, Export, 128. 
 
 gAST, The, 656. 
 
 ■^^ Ecclesiastes, 388. 
 
 Echo, The, 286. 
 
 Economics, Natural, 293. 
 
 Educational Tariffs, 59, 65. 
 
 Egypt, Religion of, 383. 
 
 Eleatics, 431. 
 
 Ely, Professor R. T., 50. 
 
 Empedocles, 402, 450. 
 
 England, 652. Aristocracy, 556. Bal- 
 ance of Trade, 16. Com Laws, 42, 
 89, 558. Dumping, 89. Preference, 
 107. Steel Trade, 86. New Pro- 
 tection, 55. Cf. Great Britain. 
 
 Epictetus, 419. 
 
 Epicums, 493, 530. 
 
 Erasmus, 658. 
 
 Erdmann, Professor J. E., Diderot, 513. 
 Diogenes of Apollonia, 530. Eleatics, 
 441. de Lamettrie, 516. Metaphy- 
 sical Physicists, 443. Plato, 484. 
 Plotinus, 504. Spinoza, 512. 
 
 INDEX 
 
 675 
 
 Ethics, 526, 528. Cf. Golden Rule. 
 
 Euclides of Megara, 482. 
 
 Euripides, 397. 
 
 Eusebius, 380. 
 
 Exchange, International. Cf. Balance 
 
 of Trade. 
 Excise. Cf. Taxation, Indirect. 
 Experience, Philosophy of, 535. 
 
 pAGUET, M. EMILE, 565 
 ■'• Fall of Man, 345. 
 
 Faith, 504. 
 
 Farmers, 245, et seq. 
 
 Farr, W., 259. 
 
 Farrer, Lord, 227. 
 
 Faust, 347. 
 
 Ferguson, James, 335. 
 
 Feudal System and present system of 
 Land Tenure, 210. 
 
 Fiduciary Institutions, 264, 615, 620, 
 626, 634, dj^T, 660. Cf. Clearing House, 
 Finance. 
 
 Finance, 615. Direct, 636, 638. High, 
 628. Indirect, 263, 628, 633. Prac- 
 tical, 582, 619, Protectionist, 82, 
 263, 634. Railways, 273. Socialistic, 
 588, et seq., 610, 619. Cf. Clearing 
 House, Fiscal Problems. 
 
 Fiscal Mechanics, 615. 
 
 Fiscal Problems, 258, 619. 
 
 Fitch, John Andrew, 51. 
 
 Food Taxes, 141. 
 
 Ford, Professor Henry Jones, 563. 
 
 Foreigner, Taxation of, 128. 
 
 Foss, Governor, 241. 
 
 Foville, M. de, 184. 
 
 Fowler, Congressman Charles N., 566. 
 
 Fox, A. W., on Site Rating, 229. 
 
 Fox, J. M., on Salt Tax, 147. 
 
 France, 644. Tariff Wars, 114, 115. 
 Food Taxes, 142. Revolution, Cf. 
 SocialisnL 
 
 Franchise, 190, 619, 661. Classification, 
 215. Estimation of Value, 190, 230. 
 Cf. Railways, Finance. 
 
 Frands, A. M., 62. 
 
 Freeman, Edward A., 549, 553, et seq. 
 
 rjALLATIN, A., 43. 
 
 ^^ George, Henry, 143. 
 
 Germany, 647. Dumping, 80, 87. Food 
 
 Taxes, 141. German-Russian Tariff 
 
 War, 113. Steel Trade, 86. 
 Gifl5n, Sir Robert, 203. 
 Gilchrist Process, 88. 
 Godkin, Lawrence, 564, 566. 
 Goethe, 309, 347. 
 Gold and Wealth, 6, 7, 12. 
 Gold as Monetary MetaI,28o, et seq. 
 
 Golden Rule, Free Trade, 117, 581. 
 Lao-tsze, 367. Confucius, 370. Brah- 
 manism, 375. Buddhism, 379. Zor- 
 oaster, 381. Egypt, 385. Judaism, 
 388. Mohammed, 392. Socrates, 404, 
 Aristotle, 414. Cicero, 418. Pliny, 
 419- Haeckel, 526. Spencer, 528. 
 Christ, 542. 
 
 Gorgias, 470, 539. 
 
 Grayson, Victor, 590. 
 
 Greece, Art, 334, 336, 339. Religion, 
 387, 393, 400. Greek Tragedy, 396. 
 Philosophy, 423. 
 
 Great Britain, Land Values (1885), 192, 
 (1899) 201. Cf. England. 
 
 Grote, George, 394, 405. 
 
 Ground-Rent, 170, 190, 619, Cf. Fran- 
 chise, Land, Rent. 
 
 Guyot, M. Yves, 142. 
 
 fJ-ADLEY, A. T., 272, Note. 
 
 ■■■■■^ Haeckel, Emst, 516, 525. 
 
 Hamburg, 188, Note. 
 
 Hamilton, Alexander, 20, 25. 
 
 Hendrick, Burton J., 565. Note. 575, 
 Note. 
 
 Heraclitus, 442, 469. 
 
 Herodotus, 380, 383. 
 
 Hesiod, 346. 
 
 Hills, Thomas, 188. Note. 
 
 Hines, Mr., 288. 
 
 Holden, G. K., 61. 
 
 Homer, 342, 394. 
 
 Hopkins, Representative, 104. 
 
 Homer, Frands, 283. 
 
 Hue, Father, 363. 
 
 Hume, David, 514, 518. 
 
 Huneker, James, 340. 
 
 Hunt, H. A., 228. 
 
 Hunter, Robert, 50, 260. 
 
 Hurd, Richard M., 186, 187. 
 
 Huskisson, W., on Balance of Trade, 11. 
 
 Huxley, Professor Thomas, 269, 321. 
 Animal Automatism, 523. Agnostic- 
 ism, 517. Democracy, 567. Ethics, 
 528. Evolution, 309, 318, 325, 352, 
 5 24. Fatalism, Materialism, and Athe- 
 ism, 529, 530, 540. Philosophy, 518. 
 Positive Philosophy, 532. Politics, 
 560. Progress, 321. 
 
 IMPERIALISM and Progress, 118. 
 ■'• Improvements, Capital Value, 164. 
 
 Rental Value, 169. 
 Inddence of Taxation. Direct, 247 
 
 268. Indirect, 139, 239. 
 Income-Tax, 151. 
 Increment, Uneamed, 215, et seq. Cf, 
 
 Ground-Rent, Franchise, 
 
 i 
 
676 
 
 INDEX 
 
 1^^ 
 
 Indirect Taxation, 126. Cf. Taxation. 
 
 Industry, Infant, 20, 60, 69. Cf. Pro- 
 tection, Mill. 
 
 Inheritance, 155. 
 
 lonians, 426. 
 
 Ireland, Land Values, 189, Note. 
 
 Isaiah, 388. 
 
 Italy, Railway Commission, 272. Tariff 
 War, 114. 
 
 TANSON, Mr. 572. 
 
 ^ Jehova, 387. 
 
 Jevons, Professor W. S., 279, 283, 284, 
 
 571. 
 Judaism, 387. 
 
 Judiciary, in United States, 575, 638. 
 Justice, Social, Socrates on, 404. Cf. 
 
 Natural Constitution, 581. 
 Justin, 393. 
 Juvenal, 383, 418. 
 
 j^ANT, Immanuel, 515, 516, 518, 
 
 *^523, 534- 
 Kellogg, Mr. C. D., 50. 
 Kidd, Benjamin, 319. 
 Koran, 389, et seq. 
 Krapotkin, Prince, 67, 259. 
 
 T ABOUR, as Factor in Production, 123, 
 
 *-* 261. Conditions, 46, 619. Creation 
 of Demand for Labour, 38, 79, 634. 
 Direct Taxation and Labour, 265. 
 English, 49, 267. Indirect Taxation 
 and Labour, 258. Land, Labour, and 
 Capital, 123, 261. Old-Age Pensions, 
 268, 661. Pauper, 41. Protection 
 of, in United States., 46. Protective 
 Taxation, 263, 619, 634. Wages, 40. 
 Cf. Living Expenses. Natural Eco- 
 nomics, 294. 
 
 Lactantius, 504. 
 
 Lamettrie, Julien de, 514. 
 
 Land, as Factor in Production, 123, 261 
 Agricultural, 185, 247. Capital Value 
 of, 165. Establishment of Land Val- 
 ues, 227. Estimates of Land Values, 
 192. Land, Labour, and Capital, 
 123, 261. Land Values and Real 
 Estate, 184. Land Values and Popu- 
 lation, 657. London Land Values, 
 286. Rental Value of, 170. Source 
 of Revenue, 173, 619. Unearned In- 
 crement, 218. Urban, 186. Values, 
 Qassification, 215, et seq. Society 
 and the Land, 208, 657. Land Values 
 and Fmance, 227, 619, 654, 661. Cf. 
 Qearing House. Finance. 
 
 Land-Owning Class, 247, et seq. 
 
 Lane-Poole, Stanley, 391. 
 
 Lao-tszc, 366. 
 
 Lefevre, Shaw, 213. 
 
 Legislation, ^ 571. Aristocratic, 557. 
 Democratic, 566. 
 
 Legge, Dr. James, Confucius, 369. Lao- 
 Tsze, 366. Mencius, 364. 
 
 Leviticus, 388. 
 
 Lewes, George Henry, Metaphysical Phil- 
 osophy, 516. Parmenides, 439, Note. 
 Philosophy, 518. Produs,so4. Schol- 
 asticism, 510. Spinoza, 511, 513 
 
 Lillie, Arthur, 363. 
 
 List, Frederick, Educative Tariffs, 59, 65. 
 
 Living Expenses, Taxation of, 139, 141, 
 241, 244, 255, 265, 619. 
 
 Locke, John, 283. 
 
 London Land Values, 286. 
 
 Low, A. M., 34. 
 
 Lucretius, 343, 355, 417, 531. 
 
 Luxuries, Taxation of, 137. 
 
 VfACAULAY, Lord, Letter to Ran- 
 ^^^ daU, 552, 642. 
 Macleod, D., 4. 
 
 Maine, Sir Henry, Legislation, 323. 
 Democracy, 561, 562. Progress, 331, 
 
 341. 
 
 Mallock, W. H., 327, et seq. 
 
 Man, Fall of, 345. The Great Man, 326, 
 354. Science and Man, 347. ■» 
 
 Martial, 410. 
 
 Mathews, Mr., 229. 
 
 Maudsley, Dr. Henry, 307, 349, 353, 354. 
 
 Mayhew, Henry, 258. 
 
 Mayo-Smith, Professor Richard, 260. 
 
 McCall, Representative, 104. 
 
 M'Laren, D., 144. 
 
 McKJnley, President, 32. 
 
 Megarians, 481. 
 
 Mellissus, 441. 
 
 Mencius and Bishop Butler, 364. 
 
 Mercantile System, 4, 17. 
 
 Metrodorus of Chios, 472. 
 
 Miles, H. E., 105. 
 
 Mill, John Stewart, 124. Balance of 
 Trade, 17, Foreigner, Taxation of, 
 128, et seq. Food Supply, 112 
 Groimd-Rents, 171, 215, 216, 235. 
 Improvement Rent, 169, Income, 
 Source of, 123. Income-Tax, 153, 154. 
 Infant Industry, 21, 22, 61. Legal 
 Proceedings, Taxation of, 162. Neces- 
 saries, Taxation of, 150. New Protec- 
 tion, 112. Octrois, 163. Protection of 
 Industry, 19, 32, 55. 
 
 MUton, John, 345. 
 
 Miscellaneous Taxes, i6i. 
 
 Mitra, Rajendralal, 373. 
 
 Mohammed, 389. 
 
 INDEX 
 
 677 
 
 Money, 278. Tabular Standard, 284. 
 Metallic, 280. Paper, 629. Cf. So- 
 cialism. 
 
 Monier-Williams, Sir Monier, 361, 364, 
 378. 
 
 Morley, Lord, 89. 
 
 Mortgages, 156, 232. 
 
 Mosheim, J. L., 394, 410. 
 
 Mulhall, M. G., 185, 205, 206. 
 
 MiiUer, Professor F. Max, 421. Buddha, 
 378, 379- Language and Religion, 
 359. Parsis, 381. Vedantic Philos- 
 ophy, Z7Z, 374. 
 
 Mun, Thomas, 4. 
 
 Music, 339. 
 
 Mysticism, 344, 394, 502. 
 
 jaAPOLEON, Continental System, 148. 
 Finance, 653. Progress, 644. 
 
 Natural Economics, 293. 
 
 Naumann, Emil, 341. 
 
 Navigation Acts, American, 574. Eng- 
 lish, 95. 
 
 Necessaries, Taxation of, 138. Cf. Liv- 
 ing Expenses. 
 
 New Zealand Land Values, 206. 
 
 Nirvana, 379. 
 
 Notes, Taxation of, 158. 
 
 Q'CONNOR, JUDGE ARTHUR, 211, 
 
 ^^ 331. 
 
 Octroi, 163. 
 
 Oppenheim, F., Report on German 
 
 Manufactures, 79. 
 Ormazd, 380. 
 Orpheus, 393. 
 Ovid, 346. 
 
 pABRER Pavlo, 188, Note. 
 
 Painting, 337. 
 Pahlavi Texts, 381. 
 Palmer, E. H., 392. 
 Parmenides, 437. 
 Parsis, 381. 
 
 Pauperism and Unemployment, 5a 
 Pauper Labour, 41. 
 
 Payne-AIdrich Bill, 106. 
 
 Peel, Mr., 48. 
 
 Pennington, J. B., 146. 
 
 Pennsylvania Land Values, 195. 
 
 Penrose, Senator, 52. 
 
 Pensions, Old-Age, 268, 661. 
 
 Petronius, 357. 
 
 Petty, 188, Note. 
 
 Phaedo, 487. 
 
 Philosophy, 423. Attic, 475. Cosmic, 
 423, 521. Greek Philosophy and Re- 
 ligion, 400. Modem, 509. Pre- 
 
 Socratic, 423. Post-Socratic, 475 
 Political and Progressive, 316, 547. 
 Results of Twenty-five Centuries of 
 Speculation, 518. Scholastic, 510. Cf. 
 Atomism and Skepticism. 
 
 Ph5rsiocrates, 293, et seq. 
 
 Pierce, Franklin, 574, 575. 
 
 Pittsburgh Survey, 46, 50. 
 
 Platforms, Political, In United States; 
 Republican, 639. Progressive, 640. 
 Democratic, 641. 
 
 Plato, Poets, 347. God of, 404. Theory 
 of Knowledge, 483. 
 
 Pliny, The Elder, 417, 418, 419. 
 
 Plotinus, 502, 516. 
 
 Plutarch, 423, 448. 
 
 Poetry, 341. 
 
 Politics, 547. Practical Politics, 628. 
 
 Political Practice, 582. Political Theory, 
 547. 
 
 Polybius, 548, 550, 553, 578. 
 
 Poverty, Chief Cause of, 246. In United 
 States, 50. 
 
 Pragmatism, 534. 
 
 Preference, 107. 
 
 Proclus, 504. 
 
 Proctor, R. A., 351, 352, 353. 
 
 Profit, as Factor in Production, 123, 261, 
 296. 
 
 Production, Elements of, 123, 261. Cf. 
 Natural Economics. 
 
 Progress, 303, 568. Imperialism, 118. 
 Intellectual, 326. Law of Intellectual 
 Progress, 331. Progress and Politics, 
 303. Political Progress and Reason, 
 316, 568. 
 
 Progressive Party in United States, 640. 
 
 Property, Classification of, 151. Per- 
 sonal, 151. Real, 164. Indirect Tax- 
 ation, 256, 261, 579, 619. Cf. Finance, 
 Living Expenses, Natural Economics. 
 
 Protagoras, 400, 467, 520. 
 
 Protection, Old, 3. Balance of Trade, 
 5, 7- Bounties, 25, 65. Capital, 18. 
 Demand for Labour, 38. Protection- 
 ist Finance, 82, 639, Cf. Finance. 
 Gold and Wealth, 6. Industry, Pro- 
 tection of, 28. Infant Industry, 20, 
 69. Labour and Protection, 38, 46, 
 619. Pauper Labour, 41, 69. Max- 
 ims, 28. Origins of, 3. Practical, 
 583, 584, 588, 618, 632, et seq. Price 
 and Protection, 28, 32, 42, et seq, 59. 
 First Principles of Protection, 3. 
 Wages, 40, Cf . Mill, Smith, Taxation, 
 Finance. 
 Protection, New, 55. Analysis of, 57. 
 Attraction of Capital, 66, 70. Boimties 
 no, 112. Dumping, Encouragement 
 
678 
 
 INDEX 
 
 
 1 
 
 I 
 
 e 
 
 ■'. 
 
 n 
 
 of, 75. Prevention of, 84. Finance, 
 264. Imperialism, 118. Preference, 
 107. Productive Potentialities, 59 
 69. Progress, 118. Retaliation, 109. 
 Tariff-Weapon, 94. Cf. Ashley, Mill, 
 Smith, Finance. 
 
 Protective Taxes, Cf. Livnng Expenses, 
 Repeal of, 224, Cf. Clearing House. 
 
 Pyrrho, 469, 497. 
 
 Pythagoras, 394, 401, 418, 433. 
 
 QUATREFAGES, A. DE, 356. 
 
 J> AILWAYS, and Direct Taxation, 
 •■■^ 273. Holding Company, 276. Cf. 
 
 Finance. 
 Randall, H. S., Macauley's Letter, sSi- 
 Rau, K. H., 65. 
 Rawlinson, George, 380, 384. 
 Real Estate and Land Values, 184, et seq. 
 Reason and Politics, 316, 568. Law of 
 Reason, 526. 
 
 Recovery of Tax on Land Values, 235. 
 
 Religion, 356. 
 
 Renan, Ernest, 356, 387, 542. 
 
 Rent, as Factor in Production, 123, 261, 
 265. Improvement Rent, 169. Cf. 
 Natural Economics, Ground-Rent, 
 Land. 
 
 Repeal of Indirect Taxes, 224. Cf. 
 Clearing House. 
 
 Report on Manufactures. Cf . Hamilton. 
 
 Retaliatory Tariffs. Cf. Tariff- Weapon. 
 
 Republican Party in United States, 639. 
 
 Revenue, Private, 123. 
 
 Revenue, Social, 123. Direct, 151. In- 
 direct, 126. Sources of, 173. Taxes, 
 Repeal of, 226. Cf. Clearing House, 
 Finance, Living Expenses, Taxation. 
 
 Ricardo, David, 235. 
 
 Rickman, Mr. 229. 
 
 Riis, Jacob, 259. 
 
 Rogers, Professor Thorold, 259. Eng- 
 lish Labour, 266, 557. Protection and 
 Labour, 53. Site Rating, 653. 
 
 Rollit, Sir Albert, 271. 
 
 Roman Catholicism and Buddhism, 363. 
 
 Rome, Religion of, 417, 
 
 Roosevelt, Ex-President, Theodore, 307. 
 
 Roscher, W., New Protection, 59, 64, 
 
 „ 8S, 98. 
 
 Rountree, B. S., 259. 
 
 Rural Reform Conference, 288. 
 Russell, Charles Edward, 630. 
 Russell, Sir Edward, 290. 
 Russia, 650. Russian-German Tariff 
 War, 113. 
 
 CABIN, Mr. 229. 
 
 ^ Sale, George, 391. 
 
 Salt Tax, Indian, and English Industry, 
 
 146, 655. 
 Schlegel, A. W. von, 396. 
 Schmoller, Professor Gustav, 56, 94, 1 10. 
 Scholasticism, 510. 
 Schopenhauer, 377. 
 Science and Man, 349. Cf. Progress. 
 Sculpture, 336. 
 Seciuity Values and Taxation, 155, 583. 
 
 Cf. Clearing House and Finance. 
 Seddon, Mr., 16. 
 Sextus Empiricus, 469, 498. 
 Shakespeare, 345. 
 
 Shearman, T. G., Land Values, 188, Note. 
 Direct Taxation, 192. Incidence of 
 Taxation, Indirect, 240, et seq. Di- 
 rect, 247, et seq. 
 Sherman Law, 575. 
 Sherman Silver Act, 573. 
 Sibylline Oracles, 394. 
 Simonides and Hiero, 358. Justice, 404. 
 Skepticism, Cf. Xenophanes, Protagoras, 
 Gorgias, Pyrrho, Spinoza, Hume, Kant, 
 Huxley, Law of Reason, Atomism. 
 Smart, Professor, on Dumping, 86, 93. 
 Smith, Adam, Balance of Trade, 9, 10, 
 1 7, 97- Gold and Wealth, 6. Ground- 
 Rent, Taxation of, 170, 172, 229, 235. 
 Improvement Rent, Taxation of, 169. 
 Infant Industry, 62, 63. International 
 Exchange, 10. Land-tax, Invariable 
 167. Luxuries, 137. Navigation Acts 
 95, III. Necessaries, 32, 150. Pro- 
 tection and Capital, 19, 59. Protection 
 of Industry, 19, 63. New Protection, 
 III. Retaliation, 116. Revenue, 
 Sources of, 123. Taxation, Principles 
 of, 124. Transfers, 162. Wealth, 
 Definition of, 6. 
 Socialism, Practical, 588. 
 Society, Aristocradc, 556. Democratic, 
 561. Indirect Taxation, 579, 589. . 
 The Land, 208, 657. Natural, 568. 
 Political, 303, 316, 547, 578. Pro- 
 gressive Society, 305. Cf. Progress, 
 Finance, Clearing House. 
 Socrates, 403, 418, 466, 475. 
 Socratic Schools, 479. 
 Sophocles, 397, 398. 
 Sources of Revenue, Private, 123. Pub- 
 
 he, 173. 
 Spallart, 188, Note. 
 Spelman, Sir Henry, 210. 
 Spencer, Herbert, 269, 311, 322, 527. 
 Ethics, 528. Evolution, 350. Philos- 
 ophy, 533- Land Question, 214, 221, et 
 seq. L^slation, 572. Religion, 358, 533. 
 
 Spinoza, Benedict, 511, 516. 
 Standard, Tabular, of Monetary Values, 
 284. 
 
 Steel Industry in United States, 34, et seq. 
 
 44, Sh 625. England, 87. 
 Steffens, Lincoln, 565, Note, 566. 
 Stephen, Sir Leslie, 516. 
 Stilpo, 481. 
 Stoics, 414, 495. 
 Strachey, St. Loe, 609, Note. 
 Strauss, Richard, 340, 341. 
 Substance, Law of, 521. 
 Survey, Pittsburgh, 46, 50. 
 Symonds, Arthur, 341. 
 Symonds, John Addington, 396. 
 Superman, 326, 341. 
 Swan River Colony, 48. 
 
 'PARBELL, Ida M., 106. 
 
 ^ 1^0 teh king, 366. 
 
 Tariff-Weapon, 94. Preference, 107. 
 Repeal of, 224. Trade, 97. Tariff 
 Warfare, 109. France-Italy, 114. 
 France-Switzerland, 114. dermany- 
 Russia, 113. 
 
 Taxation, Prindples of, 123. Sources of 
 Private Revenue, 123. Classification 
 of Sources of Social Revenue, 173. 
 
 Taxation, Direct, 151. Assessment, Cf. 
 Clearing House. Bank Deposits, 157. 
 Chattels, 159. Classification of Prop- 
 erty, 151. Coin, 157. Credits, 155. 
 Difficulties of, 179, 582, 620. Diffu- 
 sion of, 235. Ground-Rents, 170. Im- 
 provements, Capital Value, 164. Rental 
 Value, 169. Incidence, 247. Income, 
 151. Inheritance, 155. Labour, 268. 
 Land, Capital Value, 165. Rental 
 Value, 170. Land-tax, Invariable, 
 167. Mortgages, 156, 232. Miscel- 
 laneous Taxes, 161. Notes, 158. Per- 
 sonal Property 151. Real Property, 
 164. Securities, 155. Transfers, 162. 
 Wages, 268. Cf. Clearing House, 
 Fmance, Railways, Ground-Rents, 
 Land Values. 
 Taxation, Indirect, 126, 569. Advan- 
 tages of, 128, 141, 149. Prince Bis- 
 marck on, 126. Consumption, 126. 
 Convenience, 141. Expense, 143, 240, 
 Note. Fiduciary Institutions, 583. 
 Cf . Clearing Hojuse and Finance. Food 
 Taxes, 141. Foreigner, Taxation of, 
 128. General Principles, 123. In- 
 cidence, 139, in the United States, 239. 
 Labour, 261. Living Expenses, 139. 
 Luxunes, 137. Necessaries, 138. 
 Octroi, 163. Practical Effects, 583, 
 588, 620, 635. Preference, 107. Rev- 
 
 INDEX 079 
 
 enue, 136. Repeal, 224, 624. Secur- 
 ity, 142. In the United States, 628. 
 Wages, 265. Cf. Living Expenses, 
 Protection. 
 Taxation, Natural, 179. Classification 
 of Sources of Revenue, 173. Con- 
 fiscation and Compensation, 213. 
 Difficulties, 179, 582, 620. Diffusion, 
 235. Inddence, 247, 265. Natural 
 Economics, 293. Land Values, Esti- 
 mation of, 181. Classification of, 217. 
 Transition, 208, 224. Cf. Clearing 
 House, Land, Finance, Railways. 
 
 Taxation and Capital, 19, 59, 66, 73. a. 
 Clearmg House, Finance. 
 
 Tax Reduction, 224. Productive, 626, 
 637. Cf. Clearing House. 
 
 Thales, 400, 426. 
 
 Theatetus, 475. 
 
 Thiers, A., 64, 148, 609, Note. 653, Note. 
 
 Thomas Gilchrist Process, 88. 
 
 Thompson, Mr. 363. 
 
 Timon, the Sillograph, 401. 
 
 Tolstoi, Count L€o, 347. 
 
 Toqueville, Alexis de, 49. 
 
 Tragedy, Greek, 396. 
 
 Transfers, Taxation of, 162. 
 
 Transition from Indirect to Direct Fiscal 
 Methods, 208. Cf. Clearing House 
 
 Truth, Criterion of, 493, 495. 
 
 Tylor, Mr., 331. 
 
 Tyndall, John, 510, 533. 
 
 TTNEARNED INCREMENT, 171. 
 ^ 215, 218. 
 
 United States, 628. Democracy, 561. 
 Dumping, 76. Finance, 583. Inddence 
 of Indirect Taxation, 239. Industrial 
 Conditions, 46. Land Values (1890) 
 193- Labour, 46. Pauperism and Un- 
 employment, 50. Population, 263. Cf. 
 Protection, Finance, Tariff-Weapon. 
 Practical Pohtics. 
 
 United States Steel Corporation, 51, 624. 
 
 Upanishads, 373, et seq. 
 
 yEDANTA Philosophy, 373. 
 ^ Vendidad, 380. 
 Verender, Frederick, 240, Note. 
 Victoria, Queen, 290. 
 Vigers, Mr., 228. 
 Virgil, 314, 343. 
 
 W"AGES, as a Factor in Production, 
 ^^123,261. Direct Taxation, 268. In- 
 direct Taxation, 265, 619. Protec- 
 tion, 40. Cf. Labour. 
 
 Wakefield, E. G., 47. 
 
 Walker, Professor FrandsA.,260, 280, 283. 
 
I 
 
 680 
 
 INDEX 
 
 Wallace, Alfred Russel, 307, 313. ' 
 
 Warfare, Tariff, icsg. Cf. Tariff- Weapon 
 
 Wealth, Definition, 6. Distribution and 
 Taxation, 255. Cf. Finance. 
 
 Weapon, Tariff, 94. 
 
 Webster, Daniel, on Balance of Trade, 10. 
 
 Weismann, Dr. August, 311, 313, 522. 
 
 Wells, D. A., Incidence of Land-tax, 
 236. Steel and Iron Industry of 
 United States, 36. Taxation, 160. 
 
 Weston, Mr. W., 288. 
 
 White, Andrew, D. 363, 364. 
 
 Wilson, President, 641. 
 
 y ENOPHON, 479, Note. 
 
 ^^ Xenophanes, 401, 402, 435. 
 
 yO^^G, Arthur, 188, Note. Physio- 
 -■• crate Land-tax, 296, 297, 298. 
 
 7ELLER, Dr. E., Democritus, 457, 
 
 ^-' 530. Note. Empedocles, 455. Epi- 
 curus, 530. Note, 433. Megar- 
 ians, 482. Note. Parmenides, 440. 
 Skeptics, 497. Zeno, the Stoic, 496. 
 Note. 
 
 Zeno of Elea, 441, 460. 
 
 Zeno, the Stoic, 495. 
 
 Zend Avesta, 380. 
 
 Zeus, 397, et seq., 415. 
 
 Zoroaster, 380. 
 
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