JAPANESE NOTIONS 3 W OF European Political Economy BEING A SUMMARY OF A VOLUMINOUS REPORT UPON THAT SUBJECT FORWARDED TO THE JAPANESE GOVERNMENT BY TENTEARO MAKATO COMMISSIONER OF JAPAN TO MAKE THE INVESTIGATION PRECEDED BY A SKETCH OF A PRELIMINARY INQUIRY INTO THE SAME SUBJECT BY MR. TEREMOTO, OF THE JAPANESE LEGATION This pamphlet is especially commended to students of political economy in British and American schools. For though of physical athletics there may be enough, of intellectual athletics there is need for more. In these schools there is no doubt much reading and subse- quent recitation, but this cultivation of the memory, though important, will not alone produce intellectual strength, and if not accompanied by actual THOUGHT is likely, by and by, to result in mental atrophy. The transcriber and translator, himself a graduate of the University of Pennsylvania, and in Political Economy, too, had much to overcome before accepting, with his Oriental friends, the radical views of the report. The decision of these two educated Japanese gentlemen, given after a long and earnest investigation upon a subject of such vital importance as Political Economy, will prove to be, I am sure, both entertaining and profitable. Entertaining, in that they have deviated from paths beaten and tedious. Profitable, in that by questioning the highest scholastic authority they would incite readers to think. For it is only by THINKING FOR ourselves, and in no other way, that we practice intellectual athletics. PHILA DELPHI A PRINTED UNDER THE SUPERVISION OF KUYA SHIHOSHO The genial transcriber and translator of this economic inquiry, my dear friend R. C. K., lived only to see it in press. I miss him much. Resigning his office at the capital, he had joined me in Philadelphia, preparatory to establishing, in my native land, schools for the purpose of arousing thought upon the great social questions now being discussed in most European countries, and with such vehemence in Great Britain and in the United States. 1 miss my friend, oh, how much ! Yet I shall not travel altogether lonely on my return to Japan. Tender thoughts of my friend will be my company and cheer. Beside me in spirit I shall respire his counsel and force, and be stimulated to double work in humanity’s cause. The first edition of ten thousand copies has been distributed. It has been commended. Approving letters come from many English-speaking lands. I am thus pleased and encouraged. This second edition, in which I have made no change in my friend’s text, except the mention of Professor Andrews’s change to Chicago and the addition of explanatory foot-notes, I leave in proper hands for wider distribution. TENTEARO MAKATO. Philadelphia, December i, 1898. Inquiries regarding this pamphlet (the Japanese officials and students having returned) may be addressed to James Love, 627 Market Street, Camden, N. J. Judge J. M. K., of Philadelphia, father of R. C. K., assumes the loving duty of again distributing five thousand copies. INDEX. PAGE Teremoto’s inquiry (reported by R. , C. K.) s Walker, Francis A 8 his explanations ..... 8 his remedies g Land in political economy, note . . 8 Writers, their disagreements ... g George, Henry io Makato, sent for II his first interview 1 1 Makato’s Report. Summary by himself 12 Reforms in vogue 13 Development of landlordism ... 14 Ideal republics 14 The physiocrats 15 Smith, Adam 15 on the universities 24 his “ Wealth of Nations” ... 30 Malthus 16 Ricardo 16 Smith’s followers 17 Perry, Arthur Latham, LL.D. ... 17 definition of political economy . 18 of wealth 18 of labor 18 of capital 19 of land 20 Andrews, E. Benjamin ...... 24 definition of economics .... 25 of wealth 25 of capital 25 of rent 25 Marshall, Alfred 25 definition of political economy . 25 of capital 26 of land 26 of production ...... 26 diminishing returns in agricul- ture 26 a mathematical sample .... 26 wealth 27 PAGE Nicholson, J. Shields definition of political economy . of capital of land of labor upon precise terms Dati and Honga Feudalism Definitions of political economy and wealth, etc., from — Jean Baptiste Say Earl of Lauderdale M. Sismondi Henry C. Carey Pierre Joseph Proudhon . . . M. Bastiat J. Stuart Mill Carl Marx J. R. McCulloch William Nassau Senior .... Patrick Edward Dove .... Amasa Walker Horace Greeley James E. Thorold Rogers . . W. Stanley Jevons John E. Cairnes Bonamy Price Emil de Laveleye Henry Sidgwick . Simon Newcomb J. Lawrence Laughlin .... Francis A. Walker Van Buren Denslow .... Richard T. Ely . Henry D. Macleod Henry D. Lloyd A. T. Hadley Maffeo Pantaleoni Mathematics in political economy . Co-operation Henry George his theories quotations from (Chattel slavery Prasdial slavery Civilization : its spread Conclusion 27 27 28 28 28 27 29 29 30 3° 30 31 31 3i 3i 3i 3i 3i 31 32 32 32 32 32 32 33 33 33 33 33 34 34 34 34 34 35 36 36 36 37 39 33 38 38 40 3 “ And while professors disagree, the ideas that there is a necessary conflict be- tween capital and labor, that machinery is an evil, that competition must be restrained and interest abolished, that wealth may be created by the issue of money, that it is the duty of government to furnish capital or to furnish work, are rapidly making way among the great body of the people, who keenly feel a hurt and are sharply conscious of a wrong. Such ideas, which bring great masses of men, the repositories of ulti- mate political power, under the leadership of charlatans and demagogues, are fraught with dangers ; but they cannot be successfully combated until political economy shall give some answer to the great question which shall be consistent with all her teach- ings, and which shall commend itself to the perceptions of the great masses of men.” “ Wealth is the blood of nations. Congestion results when too much is forced into one part of the social body, and atrophy or paralysis results to the parts deprived of it. But, above all, individual rights are universally sacrificed when riches are un- justly distributed. It was these rights that the French Revolution sought to recon- quer. If we do not wish to renew catastrophies, we must not renew the conditions that produce them.” — M. Godin, founder of the Familist6re at Guise. “ It often happens that the universal belief of one age of mankind — a belief from which no one was, nor without an extraordinary effort of genius and courage, could at that time be free — becomes to a subsequent age so palpable an absurdity, that the only difficulty then is to imagine how such a thing can ever have appeared credi- ble.” — John Stuart Mill. 4 JAPANESE NOTIONS OF EUROPEAN POLITICAL ECONOMY. For some years, at Washington, I had been intimate always with one or more members of the Japanese embassy, a relation brought about by a long residence in Japan and my familiarity with the language. We had, at times, discussed military matters, literature, art ; but more frequently the practical matters of progress, — invention, rail- roads, electricity, production on a grand scale, and so on. “ The fac- tories,” said Teremoto one evening, “ with their tall, smoky chimneys, rattling machinery, and increasing monotony of toil, have done our Japanese people, at least our working-people, little good ; and accord- ing to your great economist Walker, and other college teachers, for whose views, however, I have very little respect, they are not likely to do any.” Surprised at the remark, — for to me “economics” seemed as out of place in his country as a boiler-factory on Parnassus, or the gospel of Saint W. H. Mallock in the New Testament canon, — I asked if, in Japan, any attention had been paid to political economy. “Until lately,” he replied, “it was, as a science, altogether unknown, and even now, saving as a subject of governmental policy under the name of politics, is ignored except by men educated abroad. Books, to be sure, have been written upon ‘ Akinawa’ and ‘Kayura,’ that is to say, on commerce and exchange, and also upon finance, or systems of public loans and revenues ; which latter are somewhat like the books of your present school of finance, or so called ‘Economics.’ These books, as do yours, deal with buying and selling, banking, money, and methods of taxation, teaching mainly the art of abducting the honey without alarming the hive.* They have a great deal to say about ‘ Kinsing’ [gold], ‘ Morso’ [goods], and the ‘ Yama Midaso’ [foreigner]. They ignore any inquiry into ‘ distribution,’ or, if alluding to it at all, tacitly assume that the present distribution of the produced wealth is between laborers and capitalists (including land-owners with the latter), and that it is based upon unavoidable natural law. “ However, the initiative to my study of this matter did not spring from myself. I had never consciously thought about it at all. In every country, at least in all civilized countries, — Japan, Corea, China, Siam, Hindostan, Europe, America, — there are some so rich as to be wasteful and destructive, and many so poor as to be in want, conditions result- * Under the name of “ Economics” the teaching of political economy has really been abandoned. What is now called “ The Science of Exchange,” “ The Science of Values,” “ The Science,” as Macleod has it, “ which treats of the laws which govern the relations of exchangeable quantities,” — if it is science at all, should be classified under the head of mathematics. — Maicato. 5 6 Japanese Notions of European Political Economy. ing, I had thought, from innate differences in individuals : unchange- able ordinances of nature. “But about three years ago Mr. Neesima, Minister of Education, through the foreign office, wrote to our minister here, in brief, that in Japan the effect of labor-saving machinery, steam-engines, and great factories had not tended to reduce the hours of labor or to relieve women and children from excessive work. Mr. Neesima had fondly believed that these wealth-producing devices would tend towards leisure and opportunity, and that his schools would shortly contain all the children in the land. Yet in Yokohama, Tokyo, Osaka, and throughout ‘ Dai Nippon’ the effect seems to have been the very re- verse, and the workingman’s life has become not easier, but harder. They have made the cost of living greater and life more anxious. Factories are filling up with children working fourteen hours daily ; and lines of little boys and girls aged from ten to fourteen, at our sea- ports, are employed, for a pittance, to coal great ocean steamships. Coolies still go naked ; women labor in the fields with babes strapped to their backs ; and now, in case of short crops, the small farmers and laborers have no ‘ Damios’ to fall back upon. Facilities for mort- gaging have increased, and the land seems to be passing to large holders. The machines, he said, unquestionably do our working- classes harm, and it is really to be feared that the fierce competitive spirit that is engendering will eventually obliterate what we have of antique, picturesque, and lovely among the Japanese people. “‘Make inquiry,’ wrote Ishtamusho, head of the foreign office, ‘ in those places where these wonderful machines are most used, as to their social effects, and learn what methods, if any, have been adopted to cause them to bring that comfort and leisure to the masses for which they were evidently devised.’ The embassador was directed to em- ploy such experts and incur such expense as might be dictated by his judgment, ‘on which the Mikado’s government confidently relied.’ “ I was then,” said Teremoto, “ an unpaid attache, and the embas- sador, handing me the despatch, directed that I should make, in one or more of the manufacturing cities, a preliminary investigation. “ This I did. In Philadelphia I saw a new phase of American life. On a former visit, with apartments in the Continental, I had seen, I now found, but the upper side of things, — art-galleries, museums, libraries, colleges, costly churches, elegant dwellings, and well-to-do distinguished people. 1 had too, no doubt, seen great department stores, ship-yards, and locomotive-works, but all from the point of view of a well-fed and contented man. My attention had not been attracted to the workers, except that they appeared to be better clothed, better fed, better housed, and apparently happier than with us. “I now, under my instructions, was to abjure the civilities of the rich in order to spend my time among and learn something about the poor. My former perceptions I soon found to be illusive. The better dress, houses, furniture, more varied food of these people was accom- panied, I was surprised to find, with more tension, more anxiety, and 1 think with less happiness than among the same classes in Japan. In factories, amid the roar of labor-saving machinery, I found consider- able numbers of children and young people of both sexes working ten hours daily, which with the noon hour and the half-hours occupied in going and returning, make a twelve-hour day ; called to toil by shrieking steam- whistles and so fearful of being docked or discharged that usu- ally the larger part of them were waiting at the factory doors fifteen to Japanese Notions of European Political Economy. 7 thirty minutes before time. Posted conspicuously about the rooms I saw ‘The Rules,’ rigidly forbidding talk, forbidding friends to enter, and so on, enforced by fines. I found that with the lapse of time machines have been speeded faster and faster, and that sometimes one person who formerly ran but one machine, now runs two, three, or even more. In cotton-factories one young woman now has charge of four looms, and occasionally five. I found that these workers rarely owned their own homes, three-fourths at least being tenants liable to eviction upon thirty days’ notice. Wages seemed to be no more than a bare living, though at a much higher standard than in Japan, very few accumulating anything. In the coal-mining regions of Pennsylvania, Ohio, and Illinois what they choose to call liberty is really abject slavery. The coal companies usually own all the houses occupied by the miners, and hold eviction over their heads. Besides they maintain company stores charging higher prices and deducting bills weekly from wages. This far-underground, unwholesome, and dangerous toil is wretchedly paid, and although the legal age in Penn- sylvania is twelve, many boys much younger are at work. Attempts to better things have usually been defeated by importing brutalized laborers from the east of Europe, or negroes, satisfied with slave wages, from the South. To improve these conditions labor unions had been formed, but were commonly defeated by the men and women out of work and struggling to get it. Strange fact (now first called to my attention, although prevailing in Japan), many cannot get work at all, while those at work must toil to exhaustion. In our loved land, however, the contrasts are less serious. Between rich and poor the gulf is narrower. Our dwellings do not indicate such great extremes, and the politeness of our working-people is in marked contrast to the rude- ness, passionate profanity, and threats of American streets. “ Puzzled to account for phenomena that I felt must have an expla- nation, I visited Pittsburg, Chicago, then Boston, where, ignoring the truth that we are immediately descended from two parents, then four, eight, sixteen, thirty-two, in geometric progression, they trace social differences to heredity, and finally New York, in all finding similar conditions. Then taking to books, I soon found that inequalities of the same kind prevailed all over Europe. The countries had grown rich, but the gains had not been general ; and as to happiness, I could only think that there had been no gain at all ; for, in America espe- cially, the great body of the people are becoming intelligent enough to chafe at their inability to secure what they feel to be their due. An excessive nervous tension results, recognizable in their neglect of tea (alone used in Japan) for the maddening stimulants, whiskey and beer, and for the dreadful sedative tobacco, disgustingly smoked and chewed.* “ How is this? I said to the librarian there. It is the natural order, he replied, springing from that tendency in mankind to in- * This strain is by no means confined to the manual working-classes. It is very noticeable among the mercantile and manufacturing as well, in their expensive and underbidding newspaper advertisements, sign-boards upon distant road-sides, or disfiguring mountain scenery and sea-side resorts, or store-front announcements, — “ Selling off at Cost,” “ Prices cut in Half,” “ Great Summer-Reduction Sale.” Be- sides, one is startled at the immense number of suits at law. These people get no rest. Business, the “struggle for existence,” occupies their entire thoughts. Surely now (if not before) in this age of undreamed-of wealth-producing machines all men are entitled to higher lives than this. — Makato. 8 Japanese Notions of European Political Economy. crease their numbers up to the limit of subsistence, the inevitable struggle for life.* He first mentioned economics and ‘ the natural tendency of wages to a minimum,’ and called my attention to the alcove, ‘Political Economy, Finance, Socialistics. ’ Tens of thou- sands of volumes, he said, had been written in all languages ; here were only some hundreds of the more widely known. Amid all this literature, said I, bewildered, point to one that briefly explains this ‘law of wages.’ Point to some glimmer at least that may lead to further light. Here, he exclaimed, is what you need. It is by a man who in the schools holds the highest rank, — Professor Francis A. Walker, M.A., Ph.D. (and since then LL.D.), professor, etc., and deals with the ‘ Wages Question.’ ” “This book was neither pleasant reading nor easy. Dogmatic in its tone, unenlivened by illustration, no enthusiasm is felt, and no in- dignation, except (later) towards writers less pessimistic than himself, ‘apostles of a new political economy and a regenerated humanity,’ who question his premises or logic. “ In the opening paragraph he writes, ‘ All wealth has, of course, to be produced in the first place ; and, moreover, it is produced to be consumed, and for this end alone,’ and yet he proceeds to treat landf as wealth. Though how land can be produced and consumed he fails to explain; while in another work his ‘Political Economy,’ after assenting to the formula of most writers that land, labor, and capital are ‘ the three primary factors in the production of wealth,’ defines wealth to be ‘all articles of value and nothing else,’ of course in- cluding land, failing altogether, like most of the professors, to note this ‘ contradiction of terms. ’ “ The pictures he presents of child-labor in England — little girls in brick-yards and agricultural gangs of children of both sexes, aged from four to ten — can by any sensitive man be read only by an effort and with tears. No such degradation can be found among any of the peoples to whom the English send missionaries. No such examples of devilish toil can be found except where powers have been utilized and machines invented to produce ‘ wealth’ with undreamed-of ease. “ This is the paradox of progress. “ Walker’s explanations are, first, ‘ the Malthusian law,’ — that the spiritual being, man, like instinctive beings, animals, tends to increase faster than the food-supply; and, second, that the inadequate supply is because of ‘ the law of diminishing returns in agriculture’ ; that is * Malthus, the author of this theory, thinks that man has a tendency to increase in geometric progression, and his food only in arithmetic. But, in procreation, man is not guided as the animals, wholly by impulse. How could any thinking man have presented such a theory? How could a thinking age accept it? Men increase faster than the food supply ! Consider the progeny reared by one hen ; the millions of eggs spawned by one fish ; an acre of bananas producing one hundred and thirty-three times as much food as an acre of wheat, that with good culture yields fifty-fold. Is there not upon the island of Manhattan to-day, with two millions of people, not only more food, but better and more varied food, per unit of population, than one hundred years ago? than two hundred years ago to each unit? Can the poverty of that island be traced to want of food ? — Makato. f “ Land” in political economy means the universe outside of man, — all that external nature offers to the use of man, including not only the solid surface of the earth, but air, ocean, rivers, sunlight, rainfall, wind-power, gravitation, and so on. For the owners of land own, of course, the landing-place of ships and seines, the rainfall, air, and all the rest. Perry and many recent writers speak of “ natural agents” and ]a.nd. The first free and valueless; the second, as they attempt to show, made valuable by the individual owners. — M akato. 9 Japanese Notions of European Political Economy. to say, because that men whose wants grow with their ability to gratify them will reproduce their kind as do the animals, whose wants are defi- nite and fixed ; and also because any certain extent of ground, as a square rod or an acre, will not forever continue to return to increased exertion (‘successive doses of labor’) a corresponding increase of bricks or blankets, cabbages or clothing, hay or houses, — that is, of ‘ wealth’ ; in short, because all girls of twelve or thirteen will there- after produce young with the regularity of rabbits, and because the necessaries produced on an acre might not suffice for a province ; therefore there follow low wages and want, not impartially to all people alike, not to professors of economics, nobles, great landlords, and monopolists, but only — strangest proposition of all — to the classes who produce the wealth ! “Though, to a thinking Japanese, these propositions may seem too absurd for controversy, they are, in fact, the very foundations of the economic structure which Walker and the schools have built ; a structure buttressed with a further theory that, though the laborer evidently produces and advances ‘ capital’ or ‘ wealth’ to his em- ployer, and of more value than his ‘ wages’ at the end of the week, no more laborers can find employment than there is capital to ad- vance to them their wages ! “A melancholy system ! Too dark for the dark ages ! A Baby- lonian tower that, erected in utter misconception of the sky, ends in a confusion of tongues and a dismal ruin of clay. “ His remedies — the trite ones preached from pulpits and urged by moralists of Europe for centuries, or that have been ineffectually attempted by legislation again and again — are, — “ i. Frugality and temperance. “ 2. The spreading of individual and mutual intelligence among working-people. “3. Sexual self-restraint. “ 4. Factory acts by legislative bodies. “5. The inculcation of sympathy and respect in the community for laborers.* “ In Japan no old writer that I know of mentions saving as merito- rious. Sawa, last century, says, ‘ Gato, by taking no wife, rearing no children, and eating rice only, got rich. But,’ moralizes Sawa, ‘ where would be, if all laborers acted as Gato, the next generation of workers and soldiers? Truly, it flashes upon my melancholy wit that, though we love silk gowns and idle lives, the Mikado, the Shogun, the princes, the priests, and my worthy self should raise silk and rice for ourselves ; and no lives could be offered upon the altars of patriotism but our own.’ “ After spending some days upon Walker, my librarian guided me to others. But the tenor of all was the same. For existing social con- ditions nature, chiefly, is responsible. They are dreamers and ‘ Uto- pians’ who believe that much change is possible. For the rest there was great disagreement. “ They disputed about the nature of wealth, of value, interest, rent. They were unsettled as to the law of wages, matters lying at the very * Why, it might be asked, is labor so helpless, and “ capital” so able to take care of itself? Surely labor produces not only all capital, but all wealth. Yet, accord- ing to these writers, it is naturally a poor thing, needing “protection” at all times and sympathy. — M akato. io Japanese Notions of European Political Economy. base of their structure. They disagreed as to the very scope of politi- cal economy. About the only matters upon which I found a consensus of opinion were, first, that the poor are a mere matting, made to be trodden upon ; second, that it is natural that men should find diffi- culty in getting employment ; third, that it is natural that wages should tend to a minimum merely sufficient for support. And with all of them there is a great deal of talk about over-production of wealth and over-production of men. “ To be sure, I had never before attempted to explain these mat- ters ; had, in fact, never thought of them at all ; but in the presence of these attempts to explain them I stood aghast. I felt in my soul that the peoples who had made these prodigious material advances had failed in the moral one. With ever more and more powerful tools, capable of results that belittle Aladdin’s genii, to conclude that the inventing workingman can hope only for a bare living wage ! With machinery turning out four-panelled, finished doors, daily twenty-five to the man ; planing, tonguing, and grooving flooring fifty times faster than for- merly by hand ; making blinds, sash, glass, bricks, roofing, nails, paints, wall-paper, and transporting them, too, with so much greater ease than at the beginning of the century, it is harder for the ordinary workingman to own his own home now at its close. So hard that in 1890, in New York City, ninety-four families in each hundred were tenants, many of them packed so closely in unsanitary tenements as to be not only a social menace, but a bitter satire upon the Christianity of the times. “ The light that I sought did not come from the schools. In New York City a discussion was going on upon ‘ Tenement-House Reform,’ and at a great meeting held in Cooper Union, Mr. Henry George’s speech advocating, as the only reasonable and business-like way to accomplish permanent good, the abandonment of taxing houses and goods, to concentrate all tax upon the value of lots, made a sensation. Under the prevailing private ownership of land, he urged, and the con- sequent difficulty of getting work, there results a severe and one-sided competition among workingmen of all kinds, tending to force wages always to a minimum. And that, even if they could be offered good dwellings free of any rent at all, the ultimate result would be a reduc- tion of money wages to the full extent of the avoided rent, as in the case of the parish relief extended to farm laborers in England some sixty years ago. “ By concentrating tax upon the value of lots not only would lots now held vacant by speculators be at once offered to builders at lower prices, but by the removal of taxation from buildings there would be encouragement to build. Lot monopoly being broken, tenement- house crowding and suffering would be bettered, to be ultimately, by the widening of the area of the single tax, cured altogether. “ Though my librarian pooh-poohed it, declaring that George was wholly untrained and unscientific, I procured at a store a copy of his ‘ Land Question.’ What a relief from the dread literature I had been involved in ! Here was logical exactness at last, illuminated by a facility of forceful illustration and flashes of wonderful eloquence ; a style lucid and sparkling as the Kohinoor diamond. But, such is the power of habit, I could not then free myself from the customs of my . time. Though the light had dawned brilliantly upon me, to my then dulled eyes it was merely a glimmer. But it was anyhow a glimmer. I recalled, too, the remarks that I had heard on a train in Illinois, after Japanese Notions of European Political Economy. 1 1 having passed through a remarkably well-cultivated and thrifty tract of farms. It was a ‘school section,’ my informant said, that the trustees had fortunately retained, instead of alienating at an early day, as had generally been done. This section now brought in rent to the school district as much per acre annually as others had sold for in fee. A gentleman in the next seat remarked, ‘ Why might not the land of this whole State have been thus fortunately retained ?’ — a question that now recurred to me with force. “ Nearly a year had elapsed when I made my report to Mr. Iwashida, my chief, in which I explained that, feeling myself to be incompetent, I would suggest as commissioner to pursue the investigation a gentle- man fully equipped, Mr. Tentearo Makato, who had graduated at Yale under Professor Sumner, following a previous study at Columbia under Professors Mayo Smith and Seligman. “At the request of the embassador Makato came to Washington, where during several evenings the matter was by all three freely dis- cussed. Makato expressed himself as unfavorably impressed by the teachings he had received, and declared that the books recommended and praised by the teachers seemed to him to be abstruse, contra- dictory, and incomprehensible. He felt confident that no one of them satisfactorily explained the perceived phenomena. ‘ In this so-called science,’ he said, ‘there is wide divergence of opinion, and, unlike chemistry, or physics, or astronomy, there is no consistent body of accepted truth. The feeling on the part of many had been that ma- terial progress itself would eventually bring the hoped-for moral re- sult ; though others hold that it can come only by the slow process of Natural Selection, causing a necessary change in the structure and size of the brain. But, so far, ‘ Disappointment has kept pace with Time, and, outside the schools, Discontent is exciting her hosts to passion.’ I feel sure, he said, though in Japan we have not hitherto moved in this direction at all, that when we do we will, taking com- mon sense for a guide, succeed in threading through this mammoth cave of confusions to light. For our students, having far less to unlearn than their European fellows, are for this very reason seem- ingly brighter. They are, to be sure, like Europeans, born into a web of customs, beliefs, traditions, laws, hard to be freed from. But this web has not, by a long succession of “thinkers,” been made to appear a beneficent entanglement established by natural law, the attempt to escape from which is to be condemned as unscientific and absurd.’ “Except an occasional brief letter and a draft for expenses, we heard nothing from the Commissioner for nearly a year; when he re- turned to explain that he deemed it prudent to delay his report for a time. ‘ Notwithstanding,’ he said, ‘ that in Japan we have not formu- lated rules of reasoning, we have in the maxim “ Proof is better than argument” a suggestion of the “logic” largely used by the professional economists, who have unconsciously anchored themselves to this fallacy, “Post hoc ergo propter hoc” (after this therefore because of this), which by the logicians they have been so warned to avoid.’ “ He had first asked the question, The inequalities that exist in Japan,- — great riches and landed estates on one side, beggary and com- plete landlessness on the other, — here amid the roar of steam-driven wealth- producing machines, do they also exist ? And then the further questions, Are these extremes in any way related ? and, Is such an unequal distribution of wealth because of conformity to or non- conformity to natural law ? 12 Japanese Notions of European Political Economy. “ It was these further questions that had delayed him. The ‘ why’ taught in the schools was extremely unsatisfactory ; and their remedies, no better, are mere ‘ Mended lids to cracked pots.’ “Well, some months later Makato again appeared in Washington, this time with his report. The manuscript, quite voluminous, was ac- companied by certain entire printed books. “ At the embassador’s suggestion, this report was summarized in a preliminary paper adapted to ordinary comprehensions in Japan. The whole was thereupon forwarded to the Mikado’s government at Tokyo, and after a short delay is now, I believe, going through the press there. The effect that it will have upon Japanese thought may seem slight for a time, but in the end I believe it will be profound.” Mr. Teremoto having furnished me with a copy, and feeling it to be so important, this summary I have translated and herewith print. THE SUMMARY. [An accompanying despatch from the embassador to Japanese Foreign Office omitted.] “ Washington, D. C., United States of America, “ To M. IWASHIDA, “ February 28, 1898. “ Embassador, etc. : “ Your Excellency, — In accord with instructions given me in January, 1896, commanding an investigation (for the use of the Department of Education) into the condition of laborers in America and Europe, the scientific explanation of such conditions, and the remedial measures adopted, I took an early opportunity to visit the great manufacturing cities of Pennsylvania and New York, and also of the West, where I found full verification of the facts reported by Mr. Inomoto, whose investigations, briefly sketched, are prefixed to this. But I went further, devoting twenty-four months in all, reaching in my investigations European countries. “ It would too much extend this paper to cite a hundredth part of the printed facts accompanying main report ; but Mr. Henry George’s papers upon ‘ Labor in Pennsylvania,’ the reports of the labor bureaus of Pennsylvania and other States, ‘ The Bitter Cry of Outcast Lon- don,’ ‘The Poor of Great Cities’ (in America and Europe, by sundry writers familiar with each site), ‘ How the Other Half lives’ (a sketch of poverty in New York City, by Reis), ‘ London Labor and London Poor,’ ‘ Reports of Commissions upon the Better Housing of the Poor’ of New York City, and others, all show a most painful, I might say frightful, condition of overwork, poverty, and want in the very centres of ‘civilization’ and of wealth. ‘The tramp has come in with the locomotive, and almshouses and prisons have marked material progress, as well as have costly dwellings, rich warehouses, and magnificent churches. Upon streets lighted with gas and patrolled by uniformed policemen beggars wait for the passer-by, and in the shadow of college and library and museum are gathering the more hideous Huns and fiercer Vandals of whom Macaulay prophesied.’ Here is the problem to be solved. What unseen agency is it that, abstracting from the masses in the United States and Great Britain wealth measured by hundreds, yea, by thousands of millions of dollars annually, permits it to be gambled for, enjoyed, and often ridiculously wasted, by men who take no part in its production ? 13 Japanese Notions of European Political Economy. “ Before the American Revolution, before these machines and powers came into use, the tramp and the millionaire had not yet devel- oped ; each class a complement to the other, each a menace to free institutions, is each, apparently, equally proof to any severity of law. “ My interest was greatly excited, for conditions of the same kind, though of less intensity, prevail in Japan. But admitting, as I tacitly had, that, using our primitive tools, the workers should be poor, why, after invention has increased their power fifty-fold or a hundred-fold, should they still be poor ? “ I found many projected reforms, the postulate of each being that social disorder is due to the non-appreciation of the belief it would teach. The principal of these movements to some extent actually in practice are in the direction of, — “ i. Inculcating religious ‘ truth.’ “ 2. Prohibition, or restraint of the use of intoxicants. “ 3. Frugality and saving. “ 4. Taxing commerce, or ‘protection.’ “5. Removing taxes from commerce, or free-trade. “ 6. Improving the housing of the poor. “7. The institution (as in Ireland) of peasant proprietorship. “ 8 . Restraining the immigration of laborers. “9. Increasing charity. “10. More and better schools. “ 11. Co-operation between labor and capital. “Other ‘reforms,’ each with a considerable following, but hardly yet attempted in practice, are, — “State Socialism. — The organization of society somewhat as an army. A project for the governmental ‘ control of all machinery of production.’ Civil law carried to an extreme, and government execu- tives directing all industry. “Anarchism. — Directly in opposition to the above, being no less than the abolition of all civil law. “ Communism. — The production of wealth in common by the com- munity. No individual property. “Nihilism (confined to Russia, I think). — The overthrow of des- potic government and the setting up of representative. “ Yet, whatever of evil these reformers pointed out seemed to me to be caused either by the natural impulses of men, or by some greater but unrecognized underlying evil. With, I think, little depth of search, they assume that men, women, and children naturally work themselves to disease and death ; are naturally intemperate ; natu- rally dwell in crowded, unwholesome tenements ; naturally find it hard to get work when they wish to go to work, and are naturally landless. And such of these reforms as are within range of possi- bility (some are wholly impracticable) if carried into practice would be of ill effect, or of little effect, or, at best, the merest palliatives, although of two or three of them it might be said that their direction is right.” In China, in Hindostan, in our own loved Japan, civilization is so very ancient that the oldest records do not deal with conditions very different from the present ; yet in the old days some wise men saw and occasionally hinted at that “ grave injustice of men” which long con- tinued custom now presents to us as the justice of God, and that no one for ages has questioned. Shihosho, in “ The Peasant’s Woe,” sings, — 14 Japanese Notions of European Political Economy. “ Ah ! my man, my brave and patient worker ; the Daimio owns the soil, the winds, the rain, the very air thou breathest. Work, work, thou patient slave. For thou art a slave.” And in the same song, Omari, the priest, tells the peasant, “ I don’t wish to cultivate rice in a marsh and in the hot sun.” “ Well ! But you need rice!” “ Truly,” replies Omari, “ but are there not tithes ?” And that divine man Sebayama of old, sings, “ Ah ! the lot of the worker! His sad lot. I think of it and weep. Japan is a Kanguri tree; its few leaves beautiful and breezy; its sum- mit crowned with bright flowers and fruit ; yet, supporting all, the great net-work of roots grovel in darkness in the ground.” Of the northern European, a comparative new civilization, how- ever, more is known. In Britain and in Germany Ctesar found a people brave and liberty loving, among whom was a fair equality of condition. How that original tribal freedom gradually gave way to vassalage under the supremacy of feudal chiefs, and how, later on, with the decline of feudalism there developed a system of direct and indirect personal taxes, money-rents, and “serfage,” is clearly known. And that the cause of this enslavement was not yet entirely obscured is seen in the Watt Tyler rebellion of the fourteenth century, where, though the immediate inciting cause was a uniform poll-tax that had been levied upon all, the outbreak was really against landlordism. The records of manor courts were burned ; they demanded the abo- lition of villainage, the restoration of common woods and fields, and of the crown lands that had been alienated to favorites. And also in the German peasants’ rebellion early in the sixteenth century, when, among other reforms, they demanded that serfage should be abolished, that game should be free, that the forests and commons appropriated by the rich should be restored. But with lapse of time and the great development of cities the close relations between man and land seem to have been altogether ob- scured. There have been popular outbreaks again and again, but with no popular apprehension of the evil to be remedied. Men are few in- deed who can, even in a limited way, drag themselves from the customs of their times. Nearly two thousand three hundred years ago Plato, deploring the great inequality that separated the rich citizens from the poor citizens in opposing camps, with resulting dissension and disaster, made the effort in his ideal “Republic.” About four hundred years ago another famous essay was that of Sir Thomas More, in his “ Utopia,” a name that is now a synonyme for the impracticable. Though himself rich and titled, standing next the king in authority, he says of the govern- ments of his day, ‘ ‘ Therefore, as I hope for mercy, I can have no other notion of all the other governments [he excepts Utopia] that I see or know, than that they are a conspiracy of the rich, who in pre- tence of managing the public only pursue their private ends and de- vise all the ways and arts they can find out ; first that they may with- out danger preserve all that they have so ill acquired, and then that they may engage the poor to toil and labor for them at as low rates as possible, and oppress them as much as they please.” This imagined Utopia, told of by a returned navigator, was an island in the newly discovered Occident, and where existed an order of things quite dif- ferent from England. Slavery, however, existed in Utopia. More, it seems, could not think of a civilized state without that, though the slaves were well treated. But land was held in common, and, in order to equalize opportunities, the occupants shifted every ten years. Lord Bacon later wrote his “ New Atlantis.” Then came Hobbes’s “ Levia- than,” Harrington’s “Oceana,” and others. But, attempted scien- i5 Japanese Notions of European Political Economy. tific explanations were not made till about the beginning of last cen- tury ; and towards its middle, in France, there arose a group of most original thinkers under the lead of Franpois Quesnay, physician-in- chief to the king. These men “recognized the fundamental relation between land and labor which had been lost sight of, and arrived at practical truth . . . through a course of defectively expressed reason- ing.’’ “Wealth,” however, they rightly defined as consisting exclu- sively of material things drawn from land by the exertion of labor and possessing value in exchange or exchangeability (excluding personal qualities and skill, evidences of debt, and, of course, land). These men saw that “ rent,” or, as they called it, “ the product net,” — the landlord’s share (the landlord considered as a landlord only), — is a portion of the produced wealth really created by the community, and not by the landlords; that it justly belongs to the community, being a naturally provided fund for public use ; and that taxes levied upon the making, exchanging, or possession of wealth should be abandoned and recourse be had to a tax upon “rent” alone, — the “ Impot Unique,” — in English the “ Single Tax.” This conclusion, which after long and patient study I now hold to be true and the only remedy for enormous social evils, was by them arrived at by the faulty reasoning that agriculture is the only pro- ductive employment, which after all expenses of production are paid leaves a premium, or net product, or, as we now say, “rent,” in the hands of the non-producing landlord, and that mechanical and com- mercial employments are “sterile,” as, though adding to the value of the things whose form or place they change, this added value is only that which is consumed in the operations. Thus they overlooked altogether the product net, or rents, of cities, which, important then, are now in most civilized countries much greater than the farming and mining rents. In reasoning that rent arises from the generative principle in nature, and not from competition for the use of land for all purposes, they had established a treacherous foundation that, in its ultimate fall, carried with it their main structure, the Single Tax that they had built upon it. In the storm of the French revolution, and the long wars that ensued, Quesnay and his fellows were forgotten. But in “The Wealth of Nations,” printed first in 1776, Adam Smith, taking less radical grounds, and treating land (illogically) as wealth, had better success. Although by adopting this error his book was received, he necessarily failed to grasp the principles of true political economy ; while the great army of writers from his time until now, though proud of their “improvements,” have been, with very few excep- tions, mere hair-splitters of no originality whatever. These attempted scientific explanations, under the name of political economy or economics, being now everywhere taught, it will be neces- sary to briefly examine in the effort to discover to the Japanese people whether they are in truth expositions of natural laws so clearly pre- sented as to compel acquiescence, and where upon the main principles,, at least, there is a consensus of opinion ; or whether the economics of the schools, like the Ptolemaic astronomy of the schools, in taking some false step in its premises, has not been compelled to add intri- cacy to intricacy to a final, incomprehensible confusion of absurdities. Adam Smith, author of the tamous “Wealth of Nations,” pub- lished first in 1776, and who had in France become personally known 1 6 Japanese Notions of European Political Economy to Quesnay and his friends, though somewhat indefinite and incon- sistent as to the nature of wealth, in his definition of capital excludes land, and in his chapters on taxation points out that a tax on “rent” is a desirable tax. and one that cannot be shifted from landlord to tenant. “ Ground-rents are a still more proper subject of taxation. . . . A tax upon ground-rents would not raise the rents 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 the use of the ground.” “Ground-rents and the ordinary rent of land are, therefore, perhaps, the species of revenue which can best bear to have a peculiar tax imposed upon them.” He frequently speaks harshly of landlordism, declaring that “as soon as the land of any country has all become private property the landlords love to reap where they have not sown, and demand a rent even for its natural produce” ; and that in the Shetlands, where sea-fish are so abundant, the landlord’s rent is determined not by the productions of the land, but by the productions of the sea, and that they demand a rent even from gatherers of sea- weed that grows beneath the waters of the shore. Smith and the writers who succeeded him, confusing “land” with “capital” in much of their reasoning, and misled by observing that the working masses, possessing neither, underbid each other in the struggle to live, argued that “wages” (the distributive share of labor in the joint production of land, labor, and capital) are derived from capital, so that no more laborers can be employed than there is capital to employ them ; and that wages naturally tend to a minimum that will give a bare living. Then came the Rev. Thomas R. Malthus, who, in a pseudo scien- tific treatise, concludes that there is a natural tendency in mankind to increase in numbers faster than the food-supply, and thus, wages being limited by the amount of capital, any increase in the quantity of capi- tal must be followed by an increase of laborers, the competition of whom to get work tends wages downward to a mere living, when further increase of numbers is checked by want.* Then came Ricardo to show that land value (“rent”) arises dif- ferently from the values of things created by human labor, which are based upon the relative amounts of labor exerted in their production ; that land is not produced at all, its value developing altogether from competition for its use, and that rent is thus proportioned to the excess of the production of any particular land over the produce of land “ at the margin of cultivation,” which can be had for nothing, or no rent. Ricardo, however, like most of his predecessors and successors, over- looked city land, the most important of all, notwithstanding that its rent is based upon the same principle. Then was developed what the writers called “the law of diminish- ing returns in agriculture,” — that is, that past a certain stage of pro- duction additional “doses of labor,” as they express it, bring propor- tionally smaller and smaller and finally no further returns at all. Thus it seemed as if labor was left without hope, and that by the * Genesis, revised and improved by the Rev. Mr. Malthus: “Be fruitful and multiply and replenish the earth and subdue it. But thou shalst not let thy multi- plication exceed the multiplication of the herbs and the living things that shall be to thee for meat, which is by arithmetic progression. Shouldst thou get to going faster, by geometric progression, thou, or some of thou, and perhaps most of thou, wilst find thee in a fix.” — An “unedited” note, by Terfmoto. Japanese Notions of European Political Economy. 17 very constitution of the world and human impulses great inequality must always prevail. The rich and the poor, wealth and waste, pov- erty and want can never cease to be. These writers and the hosts who have followed them, generally without question, include in the term wealth both land and evidences of debt, and even include labor by treating special skill, as that of a surgeon, a preacher, a linguist, or a mechanic, as the “ wealth” of these men, — their immaterial wealth.* Here plainly is what the logicians call a complete “contradiction of terms.” Land, labor, and capital the essential primary factors in the production of wealth ; and land, labor, and capital each in itself treated as wealth ! Personal skill, promissory notes, and bonds, land, factory buildings, machinery, money, etc., are, according to these men, all “wealth,” and at the same time primary factors in the produc- tion of wealth ! In the physical sciences what would be thought of the professor who, after averring charcoal, nitre, and saltpetre to be the three primary and essential elements or factors in the production of gunpowder, should assert that nitre is not really a primary factor, being composed of the other two, that saltpetre is nothing more nor less than nitre, and then treat each separately as gunpowder ! f Neglecting their own definitions, and thinking of “ wages” only as the amounts paid to hired laborers or mechanics at the end of the week or month (that is, “ some wages,” and not all wages), including land, skill, bonds, etc., also in the term capital, and thinking of returns to capital as combined with returns to labor as the “profits” of capital, and thinking of interest not as always the distributive share of capital, or returns for the use of capital, but very generally as returns for the use of borrowed money only, and yet always confusing “rent” with interest, immense confusion grew into the system, — confusion piled upon confusion to the extreme of absurdity. To make this more clearly seen I present the following citations from sundry writers, but first and principally from the “ Political Economy” of Arthur Latham Perry, LL.D., an author of much repute, and who, writing sixteen years ago, had not yet reached that extreme of absurdity found in later professorial books, quotations from which, I fear, might be received in Japan as incredible : Perry’s Political Economy. — These extracts are from his eigh- teenth edition, dated 1881, and dedicated to John Bascom, David A. Wells, Francis A. Walker, and William G. Sumner, men of the highest standing in the schools. “ This edition (eighteenth) has grown in size, in symmetry, and in maturity of thought and expression. It has been carefully revised, and in large part rewritten once and again and again,” but “ in nomencla- * These men’s incomes are not derived from capital, except in a limited way from the capital of their instruments or professional books. They are derived from labor. Whether it be by a weak man or a strong man, one little skilled or much skilled, what is exerted is labor, what results to each is wages ; wealth, if it is in gold or any material thing having exchange value and drawn from land by the exer- tion of labor; but otherwise, no matter how the individual may consider it, not wealth (politico-economic wealth) even when it is a formal written promise to (at some future time) transfer wealth. — Makato. f Professor Perry. See pages 19 and 21. 1 8 Japanese Notions of European Political Economy. ture, ... in studied clearness of statement on every page, ... it is the same book still.” (Preface, p. vii.) “A science is a body of exact definitions.” A definition, he says, must be so exact that “the class must be perfectly separated, in the mind by the conception and in the words by the definition, from all other classes. The class as defined must include everything that has the quality for the sake of which the investigation is had. There can be no ragged edges”* (p. 89). “ What is established in respect ... to a part may be . . . affirmed . . . of the whole” (91). Political economy, he says, “is the science of sales or exchanges. Anything whatsoever that is salable, or can be made so, comes within its view, and scientifically it cares nothing whatever for anything else’ ’ (96). “We place the field of the science just where Whately places it, — ‘ Catallactics, or the science of exchanges' ; just where the continental Kiehl puts it, — ‘ Die Lehre von der Werthen' ( the doctrme of values')-, and just where Macleod locates it, though we do not like the term ‘ quantities’ in this connection, — ‘ The science which treats of the laws which govern the relations of exchangeable quantities' " (112). Finding that no other writer has satisfactorily defined wealth, and unable himself to fix its bounds, he declares “ that a chief reason of the slow progress of the science hitherto has been, that it has tried to use a word for scientific purposes which no amount of definition and explanation and manipulation could make suitable for that service” (99). He then proposes that the word “property” shall take its place. “ The three requisites of production” (production, be it noted, not of “wealth,” but of “property,” that is, land, slaves, govern- ment bonds) “are, first, ‘Natural agents’; . . . second, labor; . . . and third, capital. . . . These three conspire in all production” (167). Note that he here uses “ natural agents” in place of “ land,” in order, later, to treat land as capital, apart from natural agents. He nowhere explains how these natural agents can be used apart from land. Labor, “the factor of first importance,” he defines to be “per- sonal effort of any kind, put forth in view of a return service and for sake of it.” “ Effort that is not sold is not labor” (204). . Which definition excludes labor expended in producing things to be con- sumed directly by the laborer. “The wise laborer is he who . . . makes himself necessary to his employer. . . . That laborer will be the last one discharged” (210). By laborer he here means only the hired laborers, and unconsciously changes the economic meaning of labor from all human exertion in the production of wealth to some human exertion in the production of wealth. “ The value of labor is controlled by the grand law of supply and demand.” “ Other influences on wages are secondary at best” (250). In California, in 1849, wages for common labor rose to an ounce (six- teen dollars) a day. Now, with a superabundance of capital (indi- cated by the comparatively low rate ot interest), which he argues creates demand for labor, the same class are paid one dollar and twenty- five cents. “ The more capital the higher the rate of wages” (273). * Compare with J. Shields Nicholson, Professor of Political Economy in the University of Edinburgh, page 27, or Bonamy Price, page 32. — Makato. Japanese Notions of European Political Economy. i g “The demand for labor . . . cannot be unlimited” (225). As societies are .composed of men all of whom want more things and are at the same time capable of producing things, is not this unlimited demand for the wealth that can be brought forth only by labor ? And is not this unlimited demand for wealth associated with a supply limited only by human ability to produce ? “ Wages, therefore, cannot rise indefinitely” (221;). Why not ? Man’s inventive power is practically unlimited. His ability to pro- duce wealth constantly grows. If his wages do not, there is, evi- dently, some intercepting robber. Perry treats of labor only in connection with the factor capital, leaving out the factor land. For example, “In this country, where there is nothing to hinder any laborer from becoming a ‘ capitalist ’ ” (247). “ So long as capital and labor rest solely upon their natural rights, neither can have the advantage of each other” (247). “ Capi- tal .. . has intimate relations with wages, and the two are not antago- nistic.” “The production of most material bodies is a joint process, in which capital and labor both conspire” (243). “ Capitalists are under no obligation to employ laborers at any time” (237). “Wages are paid out of the joint products of the employer’s capital and the laborer’s industry” (231), etc., etc., etc. He says, “ Strikes are contrary to the very old adage, that it takes two to make a bargain” (241). “But let the bargain always be free”(24i). “ If one party, who happens to have the power to do it, uses anything like compulsion upon the other, it ceases so far forth to be a bargain at all, and becomes a sort of robbery” (241). And yet, as things are now organized, we can so easily see, in the matter of wages, that three make the bargain,- — to wit, one employer who needs one man, and two men who need employment. “The second grand requisite of production is capital.” “ But it is not an original element, because it is of itself a product of the other two factors” (251). But later on he writes “Land is capital” (298). He defines capital as “anything valuable outside of man him- self which becomes a means of further produce” (252). “We are willing to take the risks with this definition” (252). Thus, after de- claring that a definition must be so exact as to clearly and without “ragged edges” separate the thing defined from all other things, he hopelessly confuses the boundary between capital and land. “And it is because capital brings gratuitous natural forces into service,” etc. (256). The rainfall, sunlight, air, winds, electricity, gravitation (natural forces), how can they be “brought into service” except on land ? The term land includes them all. “ The reward of capital is technically ‘profits’ ” (260). And yet he subdivides profits into wages of superintendence, interest, and compensation for risk. Thus the distributive shares of landlord, laborer, and capitalist — to wit, rent, wages, and interest— do not correlate. For, though he gives wages to labor, he includes, besides interest, wages also in the capitalist’s share (wages of superintendence) and also “rent,” inasmuch as he declares land to be capital. As to ‘ ‘ compensation for risk’ ’ it has no place whatever, as risk is eliminated when all the transactions of a community are taken together. “Capitalists are the principal people who desire steadily, and are 20 Japanese Notions of European Political Economy. able to pay for. the service of laborers” ( 2 * 6 ). “ The sole sources ot riches” (Perry objects to the term wealth) “and taxes is trade” (600). Note that he includes “land,” that is, the world, — the universe, — in the term “ riches.” “Laborers are every way the economical equals of capitalists. Laborers offer a service to capitalists, and capitalists offer a service to laborers. They stand man to man to the mutual advantage of both, and one is as independent as the other” (267). “As a capitalist, he cannot exist without them ; as laborers, they cannot exist without him” (267). In all this landlords are omitted, — the men “owning” the whole field of labor, — the world, — with legal power to lock out their landless fellows. “All that is produced is to be divided ; if more is produced, more is to be divided” (269). Yes, but how divided? By including land in the term capital and “rent” in the term “interest,” he fails to see that during the past one hundred years, while interest has declined, rent has enormously advanced. “ Profits and wages are reciprocally the leavings of each other, since the aggregate products created by the joint agency of capital and labor” (omits land again) “are wholly to be divided between them. This demonstration is extremely important, as it proves beyond a cavil, that the value of labor tends constantly to rise, . . . and therefore that there is inwrought in the very nature of things a tendency towards equality of condition among men. God has ordered it so” (270). It has been so ordered, no doubt ; but God does not keep men in leading- strings. The moral laws, like the physical, are left to man to dis- cover. Any other system apparently would maintain men in babyhood. Yet among primitive men we observe a full equality of opportunity, and a fair equality of condition. If starvation exists in an Indian tribe, it is because there is a real scarcity of food, equally affecting all. Why, if God ordains equality, has advancing civilization always brought greater and greater inequality, often ending in an overthrow of the civilization and a lapse into barbarism? Spectres of ruined cities and departed empire, though silent, are admonitory. “All capital is products saved for further use in production” (273). Land being included in capital is thus a product saved for use in further production ! “ Profits are the leavings of wages” (273). But, as I have shown, he includes wages also in profits (wages of superintendence). “It is conceded by all that air and light and gravity and elec- tricity and other natural powers, disconnected with the land” (bold-face type mine), “ are free for all to use at will” (274). Maybe, if found disconnected. But is it possible to conceive of them as so disconnected ? Can any of them be used apart from land ? To ask these questions is to answer them. “The questions relating to land and its products have been among the most vexed questions in political economy, have exercised a vast amount of ingenuity, and have led to careful observations in the whole field of agriculture” (275). He thinks that his “previous definitions and classifications apply here without a break” (275). Of landlords he writes, “ What they received gratuitously they must gratuitously transmit” (278). (He infers here that they can de- mand a price for improvements alone.) “ But if they go farther, and Japanese Notions of European Political Economy. 2 1 demand pay for the natural qualities of the soil which God gave and they have not improved, for the sun that shines and the rain that falls on it, the demand is blocked at once by the common sense of the pur- chaser. ... I cannot give you something for that which costs you nothing, and which I can get for nothing” (278). The light and frontage of a corner lot, the natural fertility of soil and mild climate of California, are they not sold ? “ Human motives are such, and everything is so providentially ar- ranged, that we cannot, as a rule, sell God’s gifts; it would be derog- atory to the Giver if we could” (279). Is not man’s freedom God’s gift? And is not the earth God’s gift ? Have not both been sold? “ Whatever makes land more an object of desire than it was before, whether increased fertility or a location now become more ad- vantageous, will so far forth increase its value” (281). “There are no such powers” (indestructible powers of the soil), “and even if there were, their value could not be separated from the value created by labor and capital expended upon it” (280). “ Lands in cities or in the neighborhood of them, lands of unusual fertility or possessing superior building sites, lands containing rich mines or a remarkable water-power, sometimes excite an extraordinary desire to possess them and bear in consequence an extraordinary price” (281). “Still, the efforts, care, and abstinence of their owners, or of others, have made up the essential part of their present utility” (bold-face type mine) (282). “ Land may be purchased and held a long time with a view to ulti- mate profit. . . . Little may have been done for the land originally, and little in the mean time, and yet the ultimate price be large, because the purchase-money should be replaced with compound in- terest” (bold-face type mine) (282). Loss from declining land values ought, then, justly to be made good by the state. And should capital, in the form of factory buildings and machinery, or a grocer’s stock, be allowed by their owners to stand ten, twenty, forty years totally un- touched, there would remain, I fear, instead of the original cost with interest added, little more than rust, dust, and decaying walls. “ Abstinence, therefore, which is one form of effort, has often to do with the value of land” (282). “This brings us to the very important proposition that by much the largest part of all salable land is nothing more nor less than capital’ ’ ( 28 3)‘ “The moment it is recognized as such,* the difficulties that have perplexed economists and statesmen — for example, Mr. George, in his labored discussion of land, and Mr. Gladstone in his Irish Land Bill — mostly, if not wholly, disappear” (283). “That portion of the land that is capital, then, must, of course, possess all the characteristics of capital, and among these is the lia- bility to wear out” (284). This shows, I think, that he confuses improvements with land, and is really, though unconsciously, defend- ing property in improvements (property in wealth), and not property in land. He speaks of whole tiers of farms in New Hampshire that have * The writers before him, similarly confused, Perry overlooks. Even Adam Smith, though omitting land from his definition of capital, seems, at times, in his arguments to include it both in capital and wealth. — Makato. 22 Japanese Notions of European Political Economy. fallen in value, and such facts, he thinks, “should shut the mouths of Henry George and the Irish Land Leaguers” (284). But are not the owners of these farms entitled “to their purchase-money back with compound interest” ? (282). The values of lands in Babylon and the plains about it have also declined in value, and perhaps to zero. The reason is manifest, — the owners now, there being no inhabitants, can exact no “ rent.” “The truth is that the common sense of mankind seals such ownership” (284). Common sense may sometimes mean long-con- tinued custom that has utterly fettered thought, and reminds one of the Duke of Argyle’s paragraph in assaulting Henry George : “ I know- very well, whether I can unravel his fallacies or not, he is talking the most arrant nonsense, and must have in his composition, however in- genious and however eloquent, a rich combination and a very large percentage of the fanatic and goose.” (“The Prophet of San Fran- cisco,” Nineteenth Century, April, 1884.) “The rent of leased land is the measure of the service which the owner of the land thereby renders to the actual cultivator of it” (288). The word “thereby” in this sentence can refer only to the word “rent” preceding. And consequently the service rendered to the cultivator by the owner is to carry off a part of the cultivator’s produce as rent. “ The rent of land does not differ essentially in its nature from the rent of buildings in cities, or from the interest of money” (288). He here thinks of interest as returns for borrowed money only, and not as the distributive share of capital. “It is also in strict accordance with right that the legal owner should continue to receive a return in the shape of rent * for all the fer- tility and opportunity actually rented by him, and no more” (290). All through his book “tillable lands,” “diversity of soils,” “su- perior crops,” “increased fertility,” “ law of diminishing returns in agriculture,” “ improvements in cultivation,” — “the questions relating to land . . . have led to . . . observations in the whole field of agri- culture,” and so on, again and again, show that by “ land” he is think- ing usually of farm lands. “The best tenure of .lands is the fee simple in the hands of the actual cultivator” (293). The census reports of 1880 and 1890 show that tenancy, both in city and country, is steadily increasing. f The word “ farm” in the United States has quite a different mean- ing from the same word used in Great Britain. It means here a man cultivating his own fields in his own way, and it means there a man cultivating another’s fields with his own funds in a way and on terms made a matter of contract between the two. And these two modes of culture are so distinct that they are not likely to lie alongside of each x Why does he not say interest, as above suggested ? — Makato. f The census reports of 1880 and 1890 show that in ten years farm tenancy has grown in Iowa from about twenty-four per cent, to twenty-nine and one-half per cent. , in New Jersey, from twenty-four and one-half per cent, to thirty-two per cent. ; in Mas- sachusetts, from eight to fifteen per cent.; in Maryland, from thirty-one to thirty-seven and one-fourth per cent. ; in Kansas, from thirteen to thirty-three per cent. ; in Ohio, from twenty-five to thirty-seven per cent.; and that city tenancy in 1890 was in Boston eighty-one and one-half per cent. ; in Baltimore, seventy-four per cent.; in Pittsburg, seventy-three per cent. ; in Kansas City, seventy-seven per cent. ; in Philadelphia, seventy-seven per cent. ; in New York City, ninety-four per cent. ; and in these cities one-third to one-half of the comparatively few home-owners are mortgaged. — Makato. Japanese Notions of European Political Economy. 23 other in the same country to any great extent for a very long time’ ’ ( 2 93 )- “ In this country the plough is guided almost exclusively by the man who owns the soil” (293). This is not in accord with census reports. Besides, he forgets the landless farm laborers. “ The lands naturally fall into those hands which are most capable of using them productively, because such persons can afford to pay more for them than anybody else” (294). But the tenants are every- where the ones who use them productively. The landlords’ lapabili- ties are confined to raising and collecting the rents. “ It would seem that the masses of men are educated and developed by nothing so much, at least by nothing more, as and than by the ownership of land” (294). The institution of the “single tax,” by which landlessness is abolished, each member of the community having precisely the same rights in the lands of the community as every other member, then would tend greatly to this “ education and develop- ment.” “ The institution of slavery led to the system of large plantations” (295). This is what Americans call “putting the cart before the horse.” It was the large landed estates granted by Spanish and English kings that led to the introduction of slavery. “ No degree of merit in the other parts of the British system can ever compensate the want of just and broadly liberal views of land’ ’ (298). The land tenure of Great Britain is the same as in the United States, except that the British landlords’ powers have been somewhat checked by acts of Parliament. “The questions of land test the powers of the economist to the utmost” (298). “Land is a commodity made such by human effort” (298). “ Private property in land is a dictate of the deepest justice and of the largest experience” (298). “The rent of leased land is but a return service of the cultivator for the use of the capital of the land-owner” (299). “ Superior soils pay a rent because the price of produce justifies the cultivation of inferior soils” (299). “ But is not rent a return for a service rendered? And if the rent be confiscated would the service continue to be rendered ?” (86). That is, if rents should be collected, not for private but for public use ; if landlords should not be permitted to let out the world, would there be a world to use ? “ The price of produce (in this term Perry includes land, which he says is produced), as of everything else, is determined by the demand for it and the supply of it” (299). As in “products” he includes not only true wealth, but also land (or the universe outside of man) evidences of debt, skill, what can he mean by “ everything else” ? “As lands are capital, so rents are profits” (299), and “profits,” he has said, are resolvable into wages, interest, and compensation for risk. “An uncommonly competent critic (see Nation , ii, 146) conceded, on the appearance of the first edition of this book, that original light was thrown upon the vexed question of land” (p. ix). So Perry is not to be wondered at, because, like all of his compeers, he does noth- ing more than to put in pseudo-scientific shape the popular beliefs, customs, and prejudices of his age. Rare, indeed, is the mind that they do not fetter. 24 Japanese Notions of European Political Economy. I confess that upon re-reading these extracts from Perry, in which, priding himself upon his logic, he violates every logical rule and falls into every fallacy ; noting his confusions and overlapping definitions, his substitution of the term property for the term wealth, and his varied absurd reasons for the private appropriation of rent, there comes over me a feeling of shame that custom can so degrade the intellect of man. E. Benjamin Andrews, formerly professor of political economy at Cornell University, until lately president of Brown University, and who has just accepted the superintendency of the Chicago Public Schools, is a man widely known and of the highest reputation. He seems to have an open mind and to have grown in stature. His book was written after a long course of linguistic study and attempts to comprehend the incomprehensible German and Italian as well as English “economists,” in which, for the time, he lost his mental grasp ; for these works “ so cause the mind vainly to torment itself in the effort to discover their meaning that at last it collapses exhausted, with its capacity for thinking completely destroyed.” His book, though less absurd than Perry’s, is seemingly an assurance that there still is truth in the assertion of Adam Smith about the universities of his time, the greater part of which have not been forward to adopt improvements, and are “sanctuaries in which exploded systems and obsolete prejudices have found shelter and protection after they have been hunted out of every other corner of the world.” This compendium was published first in 1888, and is yet largely used. The schoolman, as usual, shows all over it. It is entitled “Institutes of Economics,” and is by “Elisha Benjamin Andrews, D.D., LL.D., President of Brown University and late Professor of Political Economy and Finance in Cornell University.” It is dedi- cated “To Hof-Rath Dr. John A. R. Von Helferich, Professor of Economics and Finance in the University of Munich, by his former pupil, the author.” On the back of the title-page is a quotation of four lines from Xenophon, in the Greek original, without an accom- panying translation. Of independent thought there is apparently little. The author rests mainly upon authorities, to whom he con- stantly refers. The first chapter, “Economics Defined,” is headed with these: Cossa, Guide, ch. i. Mill, Essays, 1829, on Method in Pol. Ec. Sidgwick, on do., Fortnightly, 1879. Roscher, Grundlagen, Einl., ch. i. Cohn, Grundlegung, Einl., chaps, i, ii, iv. Gamier , Traite d' econ. pol., 682-85. . The second chapter, “General and Private Wealth,” is headed with Storch, Zur Kritik d. Begr. von Nationalreichthum (1827). Mar- shall, Economics of Industry, § 7. Hawley, Quar. Jour. Econ., vol. ii, 365, 599. Inama-Sternegg, Vom National- Reichthum, Deutsche Rundschau, June, 1883. Neumann- Spallart, Weltwirtschaft, Jahrb., 1883-84, pp. 8 ff. Schmoller-Forschungen, vii. From his preface I read, “ As economics is now in transition (bold- face type mine), many deprecate all effort at present to summarize it afresh” (p. vi). Modification or improvement he probably means. “Transition,” suggestive of a greater or complete change, as from infirmity to death, is, I think, the unintended expression of a truth. “ Meantime our best texts, with all that is true, profound, and well said in them, blend not a few propositions that what may be called the general judgment of progressive economists pronounces Japanese Notions of European Political Economy. 25 inadequate, misleading, or erroneous. Such are especially nu- merous in regard to the nature of wealth, the scope of econo- mics, and in the weighty rubrics of Value, Money, Interest, Wages, and Profits” (all bold-face type mine), (vi). That is, they (“ our best texts”) are at sea not only upon the very foundation prin- ciples of political economy, but even as to its scope ! “Economics is that branch of learning conversant about general wealth.” Might not statistics or “ finance” also be “ conversant about general wealth” ? Besides, as “ our best texts” disagree as to the nature of wealth, economics is conversant about something not yet defined. “ Wealth,” Andrews says, “ being the collective name for all those categories of things, powers, relations, and influences which both result from conscious human effort and directly contribute to human welfare in its temporal aspect (1). “ Categories of” sounds learned, but should be omitted. And the “things, powers, relations, and influ- ences” may, by this definition, have no value in exchange (as required by other definitions) and yet be “ wealth.” “ Capital is the name of all products, material or immaterial (bold-face type mine) which are engaged in or devoted to the mission of helping labor to create further products. It is thus one great depart- ment of wealth” (47). Roscher has well classified the various forms of capital as follows (omits land, but includes “incorporeal or imma- terial capital” which is not defined, but probably refers to skill, as of mechanics, physicians, and so on, — that is, to skilled labor, or prop- erly labor, which cannot be capital at all). “ Ground-rent is the advantage accruing to land-owners from the use (bold-face type mine) of certain uncreated or socially created powers and utilities connected with land, including, besides mere fer- tility of soil, also mineral wealth, water privileges, location, etc.” (166). “Rent forms no part of the cost of production, and is payable for no service. It swells the individual fortunes only at the expense of society as a whole. . . . Rent does not cause higher prices, but is caused by them (bold-face type mine), (165). * He includes in the term “ wages” the reward of common, unskilled labor only. The rewards (salaries or fees) earned by “ peculiar talents’ ’ are profits. He distributes the produced wealth into rent, interest, wages, and profits, four portions which do not correlate with the factors land, labor, and capital. Alfred Marshall, Professor of Political Economy in the Univer- sity of Cambridge, Fellow of St. John’s College, and sometime Fellow of Baliol College, Oxford, occupies the first rank, “ beyond all ques- tion,” says Cossa, the eminent Italian economist. Marshall defines “ political economy or economics’ ’f to be a “study of man’s actions in the ordinary business of life ; it inquires how he gets his income and how he. uses it. Thus, it is on one side a study of wealth, and on the other, a more important side, a part of the study of man.” I fear that Japanese students may regard this as an ironical production of my own. However, it can be readily verified by turning to page 1 of his book. Verbose incomprehensibility characterizes Marshall, a style caused * Compare the lines in bold-face type with Perry on the same subject, ante. f In his “ Principles of Economics,” 1891. 26 Japanese Notions of European Political Economy. not only by his confusion of mind, but by his scholastic neglect of the English tongue for Latin, Greek, German, Italian, and French, and also by a mathematical turn, inducing him to still more mystify both himself and his readers by abstruse geometric and algebraic proofs. Commencing on page 126 are thirteen pages devoted to capital, but that cannot be understood. They deal with “social capital, trade capital, consumption capital, auxiliary capital, potential capital, circu- lating capital, fixed capital, specialized capital, personal capital.” Of personal capital he says, “ We might slightly modify Adam Smith’s phrases and say that individual capital is that portion of the person’s external goods by which he obtains a livelihood (Erwertsmittel).” Four pages, commencing at 116, are given to “Labor,” which he defines, “ As any exertion of mind or body undergone, partly or wholly, with a view to some good other than the pleasure derived directly from the work.” Like his compeers, he refers constantly to soil, fertility, crops, and so on, taking but an agricultural view of land. It seems never to occur to him to ask, “ Besides cabbages and corn, other things produced by human effort are produced — where ?’ ’ “The requisites of production,” he writes, “are commonly spoken of as land, labor, and capital : those material things which owe their usefulness to human labor being classed under capital and those which owe nothing to it being classed under land. The distinction is obvi- ously a loose one ; for bricks are but pieces of earth slightly worked up, and the soil of old settled countries has for the greater part been worked over many times by man. and owes to him its present form” (191). This extreme confusion runs through all recent writers. They cannot separate man’s works from God’s. Can’t distinguish a brick from a clay bed ! And as to farm lands and all other lands, what gives value, and sometimes high value, to lands in new settlements ? Manifestly the presence, or the anticipated presence, of a large popu- lation. Not that they “ have been worked over many times.” He devotes many pages to “ Diminishing Returns in Agriculture” and “Doses of Labor,” not noting that all extended production, whether of beans or books, pottery or penknives, hay or houses, must ulti- mately require an extension of space. I doubt that it is possible to discover what Marshall means by “ law.” He makes, in thirty-two pages, without coming to positive conclu- sion, “A preliminary survey of Distribution and Exchange,” erro- neously, I think, treating “exchange” under the head of “distribu- tion” instead of “production,” for “it is by exchange and through exchange that man obtains and is able to exert the power of coopera- tion which, with the advance of civilization, so enormously increases his ability to produce wealth.” “ Joint and Composite Demand and Supply” occupy eleven pages, with frequent^and elaborate foot-notes, and also eight intricate mathe- matical notes in the appendix. One of these (No. 14) is here given as a sample of the diablery of recent “ economics.” Note XIV. (page 434). Let the demand equation for knives be y — F{x ) (i), let the supply equation for knives be y = <1 ( x ) (2), let that for handles be y = ^(x) (3) » and that for blades be y = 0 2 (- r ) (4), then the demand equation for handles is y = f\{f) = F(x) — q 2 M • • ■ • ( 5 )- Japanese Notions of Europea 7 i Political Economy. 27 The measure of elasticity for (5) is — that is jxfi'M)- \ that is U(*)J f xF'(x) -- x