done; were these men, however much surpassing | in the scale, we have men who on the whole do other members of the industrial society, among themselves equal in all respects which concern the conduct of business; and were this class, thus constituted and endowed, so clearly and conspicuously marked that no one of their number should ever fail to be recognized as belonging to it, while, on the other hand, no one lacking business ability in this degree should esteem himself capable of conducting business or be so esteemed, with a view to his obtaining credit, by those who have capital to loan or goods to sell: were these several conditions to be all completely realized, we should then have a situation closely analogous to that which exists in the case of a community around which is found good land, of uniform quality, in amount more than adequate to raise all the produce required. The result would be, either that the employing class would, by forming a combination and scrupulously adhering to its terms and its spirit, create and maintain a monopoly price for their services in conducting the business requiring to be done, which is so improbable as to be altogether out of our contemplation, or else they would, by competing among themselves for the amount of business to be done by them individually, bring down the rate of profits to so low a point that the remuneration of each and every one of this class would be practically equal to what he could earn for himself in other avocations, either as an independent laborer, working in his own shop or on his own lot of land, or, as a wage laborer, hired by some one of his own intellectual class, no more qualified in any way than himself to conduct business. Under such conditions, profits, as distinguished from wages, would be destroyed. The persons actually remaining in the conduct of business would, indeed, earn their subsistence-otherwise the function could not be performed; but, economically speaking, it would make no difference to them whether they did this as employers or as employed. In fact, however, the qualifications for the conduct of business are not equal throughout all of a sufficiently numerous class. First, we have those rarely gifted persons who, in common phrase, seem to turn everything that they touch into gold; whose commercial dealings have the air of magic; who have such power of insight that they almost appear to have the power of foresight; who are so resolute and firm in temper that apprehensions and alarms or repeated shocks of disaster never cause them to relax their hold or change their course; who have such influence and command over men that all with whom they have to do acquire vigor from the contact, and work for them as they would not work for others. Next below, but far below, the class described, we have that much more numerous body of men of business, who possess a high order of talent, merely; whose success is easily comprehended, even if it can not be imitated, by their less gifted competitors; men of natural mastery, sagacious, resolute and prompt in their avocations. Then, descending further well or pretty well in business; men who enjoy a harmonious union of all the qualities required for the conduct of affairs, though possessing those qualities each in but a moderate degree; or else in whom some defect, mental or moral, impairs a higher order of abilities; men who are never masters of their fortunes, are never beyond the imminence of failure, and yet, by care and pains and diligence, win no small profits from their business, and, if frugality be added to their other virtues, accumulate in time large estates. — Lower down in the industrial order are a multitude of men who are found in the control of business enterprises, for no very good reason that can be seen by those who know them; men of checkered fortunes, sometimes doing well, but more often ill; some of them, perhaps, filling a place which would not otherwise be filled, but more commonly in business because they have forced themselves into it under a mistaken idea of their own abilities, perhaps encouraged by the partiality of friends. who have been willing to place in their hands the agencies of production, or entrust them with commercial or banking capital. —Now, in my view of the question of profits, we find, in the lower stratum of the industrial order, as thus sketched, a no profits" class of employers. Notwithstanding all the magnificent premiums of business success, the men of real business power are not so many but that a great part of the posts of industry and trade are filled by persons inadequately qualified, who consequently have a very doubtful carcer, and realize for themselves, first and last, a very meagre compensation, so meagre that, for purposes of scientific reasoning, we may treat it as constituting no profits at all. Live they do, partly by legitimate toll upon the business that passes through their hands; partly at the cost of their creditors, with whom they make frequent compositions; partly at the expense of friends or by the sacrifice of inherited means. This bare subsistence, obtained through so much of hard work, of anxiety, and often of humiliation, we regard as. that minimum which, in economics, we can treat as nil. From this low point upward we measure profits, just as we measure rent upward from the line of the no-rent lands, or lands whose selling price represents an annual interest of only a few cents an acre. - If the view of the employing class. here presented fairly corresponds to the facts of industrial society, profits, manufacturing profits, for example, are, granted only perfect competition, not obtained by deduction from the wages of mechanical labor, any more than rent is obtained by deduction from the wages of agricultural labor; and, secondly, manufacturing profits do not constitute a part of the price of manufactured goods, any more than rent constitutes a part of the price of agricultural produce. All profits are drawn from a body of wealth which is created by the exceptional ability of the employers who receive profits, measured upward from the line of the noprofits employers, just as rents are drawn from a body of wealth created by the exceptional fertility of the rent lands, measured from the level of the lands which bear no rent. The normal price of manufactured goods, of any particular description, is determined by the cost of production of that portion of the supply which is produced at the greatest disadvantage. If the demand for such goods is so great as to require a certain amount to be produced under the management and control of persons whose efficiency in organizing and supervising the forces of labor and capital is small, the cost of production of that portion of the stock will be large, and the price will be correspondingly high; yet it will not be high enough to yield to employers of this grade any more than that scant and difficult subsistence which we have taken as the no-profits line.. The price at which these goods are to be sold, however, will determine the price of the whole supply, since, in any market, at any given time, there can be but one price for different equal portions of the same commodity. Hence, whatever the cost of production of those portions of the supply which are produced by employers of higher industrial grades, they will command the same price as those portions which are produced at the greatest disadvantage, just as wheat produced on rich lands at a cost of three shillings a bushel is sold for the same price with wheat produced on comparatively sterile lands, at a cost of six shillings a bushel. Profits, therefore, do not enter into the price of any commodity; for the price of each and every commodity is fixed by the cost of production of that portion of the supply which yields no profits. - Do profits come out of wages? Not at all. The employer of the lowest industrial grade, the noprofits employer, must pay wages sufficient to hire laborers to work under his direction. The employer of a higher industrial grade will pay the same wages, no less, no more; but, selling his goods, so far as they are of equal quality, at the same prices as the employer who makes no profits, he will yet be able, by careful study of the sources whence his materials are drawn; by a comprehension of the ever-varying demands of the market; by steadiness and self-control; by organizing force and administrative ability; by energy, economy and prudence, to accumulate a clear surplus, after all obligations are discharged, which surplus is called profits, just as the cultivator of the better soils has a surplus left in his hands, after paying wages for labor and interest for capital, which surplus, in this case called rent, goes to the owner of the soil, as such, be he the actual cultivator or another person. It will have been observed, that, throughout this discussion, I closely assimilate profits with rent. I believe this to be a sound and just view of the origin of profits and of their relation to the other shares of the product of industry. If this view shall be approved as correct, the demand of Prof. Sidgwick will be met, and we shall have, for the first time since the destruction of the wage-fund doctrine, a complete and consistent theory of the | distribution of wealth. By this theory the residual claimant upon the product is not, as under the old economic doctrine, the capitalist employer, but the laborer. Subject to three several deductions of a definite nature, the wages class will, upon the assumption here made of perfect competition, supplying all the conditions of a really good market, receive all they have helped to produce. First. Rent is to be deducted. On the lowest grade of soils there is no rent. On the more productive soils, rent, at its economic maximum, equals the excess of produce after the cost of cultivating the no-rent soils has been deducted; this rent, as has been said, does not affect the price of agricultural produce, nor does it come out of the remuneration of the agricultural laborer. We thus see that the first deduction to be made from the product of industry is of a perfectly definite nature. Rent must come out before the question of wages is considered. The laborer, as such, can not get this, or any part of it, by any economic means. It must go to the owner of the lands unless confiscated by the state, or ravished away by violence. - Second. From the product of industry must be deducted a remuneration for the use of capital. That remuneration must be high enough to induce those who have produced wealth to save it and store it up, instead of consuming it immediately for the gratification of personal appetites or tastes. This may imply, in one state of society, an annual rate of interest of eight per cent.; in another, of five; in another, of three. The only reason, industrially speaking, for interest being paid at all, is, that by the use of capital production may be enhanced; and the interest so paid is, theoretically, only a part, often, such is the force of competition among would-be lenders, a very small part of the excess of product so generated. Since the product remaining after the payment of interest is always, in theory, equal to what would have been the product had interest not been paid (that is, had the capital for the use of which interest is paid, not been employed), and since, in fact, the product so remaining is always greater in general, vastly greater-at times inconceivably greater-than the product otherwise would have been, we see that that party to distribution whose claims are residual, that is, which takes all which no other claimant carries away, is benefited by every payment of interest on account of capital used in the production of wealth. Indeed, as high interest, under free competition, shows that the contribution made to production through each successive increment of capital is very large, it may fairly be said that the residual claimant upon the product of industry derives a greater relative benefit through the employment of capital where a high rate rather than a low rate of interest is paid. The third and last deduction to be made from the product of industry, before the laborer becomes entitled thereto, is what we have called profits, the remuneration of the employer, the entrepreneur, the man of business, the captain of industry, the merchant, manufacturer or banker, who sets in motion the costly and complicated machinery of modern production. If I have rightly apprehended the nature of the employer's function and the source of his profits, those profits would, under free and full competition, not form | a part of the price of commodities (price being determined by the cost of production under the most disadvantageous conditions, i. e., in this instance, production by the no-profits employers); while no economic means whatsoever would suffice to carry any portion of profits over to wages, even were employers forbidden by law to receive them, just as no economic means can be devised by which rent could be made to enhance wages, even though landlords were forbidden themselves to touch it. In other words, profits consist wholly of wealth created by individual employers, over and above the wealth which would have been produced, in similar industrial enterprises, by the same labor force and capital force, under the control and direction of employers of lower economic efficiency. These three shares being cut off, the whole remaining body of wealth daily or annually produced is, according to the economic theory presented, the property of the laboring class: their wages or the remuneration for their services. So far as by their energy in work, their economy in the use of materials, or their care in dealing with the finished product, the value of that product is increased, that increase goes to them by purely economic laws, provided, only, competition be full and free. Every invention in mechanics, every discovery in the chemical art, no matter by whom made, inures directly and immediately to their benefit, except so far as a limited monopoly may be created by law for the encouragement of invention and discovery. Every improvement in their own efficiency as laborers, whether due to quickened zeal, to heightened intelligence or to greater industry, sobriety or thrift, will, by this rule, serve directly to advance their wages. Unless by their own neglect of their own interests, or through inequitable laws, or social customs having the force of law, no other party can enter to make any claim upon the product of industry; nor can any one of the three parties already indicated carry away anything in excess of its normal share, as herein before defined. It will appear, at a glance, how widely the result here attained differs from that which was reached under the old economic theory of the distribution of wealth, according to which from the entire product of the exertions and sacrifices of the industrial community is cut off, first, rent, as determined by the Ricardoan formula; secondly, wages, the laborer's share, as determined by the wage-fund formula, the amount possibly to be paid in this way being irrespective of the number and of the industrial quality of the laboring class. All that remains belongs to the capitalist employer. By such a rule of distribution, no gain in the efficiency of the individual laborer, whether taking the direction of greater energy or of greater economy; no mechanical invention, no chemical discovery, however much the capability of production may be increased thereby, can profit the laborer anything, except as it first enhances the profits of the employing class, and thereby adds to the capital of the wage fund, to be thereafter expended in purchasing labor. In opposition to this view, I hold, that, notwithstanding the formal attitude of the laboring class in industry, as hired by the employing class and working for stipulated wages, the normal operation of the laws of exchange is to make the former, in effect, the owner of the whole product, subject to the requirement of paying the definite sums charged against the product. on the three several accounts of rent, interest and profits. FRANCIS A. WALKER. “WALTHAM SYSTEM," a term much used in connection with the manufacture of cotton and woolen goods during the period from 1814 to 1830. Prior to the war of 1812, the processes of carding, spinning, weaving and fulling, were carried on in separate establishments under different proprietors. But in 1813, in consequence of the inventions of Francis Cabot Lowell, the Boston manufacturing company was enabled to combine all these processes in their establishment at Waltham. Boarding houses for their operatives, and the periodical payment of wages in money, in lieu of payment in provisions and clothing from the factory store, were also introduced. This system was soon afterward introduced at Lowell, and soon became general. The advantages of the Waltham system, alike to manufacturers and workmen, are too obvious to require explanation. C. C. WANTS. Man alone, of all animate beings, possesses the faculty of constantly adding to his wants, and to the means of providing for them. This double faculty, in course of time, very materially modifies human life, and the life of most organic beings; it completely changes the primitive distribution of the different genera of animals and vegetables, as well as their respective proportions. It is that faculty which, in the words of Buffon, "ends by impressing our ideas upon the face of the earth"; the faculty which has given our intellect the exercise that has so prodigiously developed its power, and without which the human mind would have remained but little above that of the different species of apes. To this faculty we must also attribute the multiplication of our race upon the earth, whose spontaneous productions would not furnish sufficient sustenance for a millionth part of those who now dwell upon it. The faculty of increasing our wants should always be joined to that of increasing the means of satisfying them, for these two faculties are inseparable; they stand to each other in the relation of cause and effect, and the latter could never act but under the spur of the former; so that we can not logically deplore, with certain schools of pretended philosophers, the continual extension which is given to human wants by the onward march of humanity, without at the same time censuring the increase of the means of subsistence, and of the goods of all kinds which the second faculty, that is, industry, has procured for us. - Of all the publicists who have maintained the doctrine of the limitation of wants, J. J. Rousseau is the most radical, and the only consistent one; for he is the only one who, looking upon the faculty of extending our wants as a direful gift, has entirely repudiated, at least in theory, all the goods whose production is due to that faculty. According to him, mankind entered upon the path of degradation, from the very day that they thought of substituting a cabin for a cave in the rocks and the foliage of trees, or determined to add the bow and arrow to their teeth or their nails. (Discours sur l'origine de l'inégalité.) If Rousseau had reflected, that, in order to reduce the human race to this manner of living, it would be necessary to sacrifice it almost entirely, he would probably have acknowledged that the advantage of thus elevating a few rare individuals to the condition of the orang-outang, would not be worth such a sacrifice.. -The theorizers of to-day do not push the doctrine of the limitation of wants as far as Rousseau did; and, although they hold the same principle, they assign different motives for it. They consider the generalization of the desire for well-being the principal source of our ills, because it is calculated to develop cupidity, envy and other maleficent motives; and they would counteract it by inculcating austere religious tenets, a contempt for the pleasures of this world, and resignation to present suffering, in anticipation of happiness in a future life. They think of perfecting man's life on earth by contemning and despising it. They assure us that the general observance of their doctrines or precepts is the best means to secure the tranquillity and happiness of nations, and of strengthening social order. Unfortunately these modern defenders of what Bentham calls the principle of asceticism, do not preach by example. Fully provided themselves with all that can satisfy most completely awakened wants, it ill becomes them to censure in the impoverished classes the aspiration to a position more or less nearly resembling their own, unless they first themselves renounce the advantages of their position. This, however, they do not do; they very willingly make use of the goods which they pretend to despise; we generally find them very anxious to escape privation, and none of them has yet been able to persuade himself to live in a Diogenes tub. This contradiction between their theory and their practice gives ground for the belief that their faith in the truth and efficacy of their doctrine is not very lively or sincere, and this is probably one of the causes of the fruitlessness of their preaching.. But even if they were to join example to precept, as did some of their predecessors in past ages, they would succeed no better than did these in inducing mankind to live a life contrary to their instincts. We can not change the nature of things by ignoring it; it remains what it is despite all our opinions and all our errors. The soul of man, such as God made it, and as it manifests itself during the entire time of its union with the body-from the cradle to the grave-is an inexhaustible source of desires (Frederick Bastiat, Harmonies Economiques): and a desire is nothing but a seeking for some satisfaction, or a shrinking from some pain, that is to say, a tendency to well-being. - This tendency, therefore, is essential to the soul; it is as intimately connected with, and inherent in, our nature, as the mysterious force which attracts them to the centre of the earth is to heavy bodies. All that the will of man can do is to direct this tendency toward some gratifications rather than toward others; but we obey them in all our resolves, even when we constrain present wants in order to enjoy a future gratification, or impose a hardship upon ourselves to escape still greater ones, or resist the temptation to a physical gratification with a view to intellectual or moral pleasure, or even when we practice the greatest possible renunciation, and deny ourselves all of this world's goods with the hope of thus obtaining a happy existence in a better world. - Among the infinite variety of directions that may be given to our wants, some are more and some less favorable, some are more and some less opposed to the perfecting or improvement of human life. Thus, for instance, nations whose desires are too exclusively directed toward sensual gratifications, soon degenerate, because it is the nature of such gratifications to weaken the vigor and manhood of those who give themselves over to them without restraint, to degrade their affective faculties, to render them at the same time less fitted for intellectual operations, and thus to weaken the principal element of our power. But too absolute a repression of the instincts which urge us to sensual gratifications would be attended with no less pernicious results. Whether this repression be inspired by religious belief, or prompted by the idea-an idea which bears the impress rather of laziness than of philosophy-that it is better for man to stifle his wants than to have to produce the means of satisfying them, the inevitable effect will be to degrade his most precious faculties by allowing them to remain inactive. For it is to their activity alone that we must attribute the immense development which they have acquired, a development which may be estimated by comparing the most civilized portions of the population of Europe with the tribes that have remained almost in their primitive state of barbarism. The science of morals points out to us the reefs upon which our blind tendencies would wreck us; its duty is to show us as clearly as possible the good or evil courses which wants may take, by discovering and indicating to us all the consequences of our inclinations, whether proximate or remote. Of the many courses which these inclinations may take, there is one which will surely lead to our ruin, and others which lead as surely to the progressive improvement of humanity in every respect. It is the part of morals to tell us whither these differ suffering. A. CLÉMENT. WAR. (See DECLARATION OF WAR, BELLIGERENTS, EXCHANGE OF PRISONERS.) WAR, The Civil. (See REBELLION, THE, in U. S. History.) ent courses lead, in order that, while obeying the | grade nations. The wants of nations are never irresistible impulse of our nature to seek after a fixed quantity, they are constantly varying and well-being, we may be less exposed to losing our generally progressive; but they are endowed with way. In the present state of science this missuch elasticity, even in what concerns food, that sion of morals is scarcely even outlined, and the experience has frequently shown that great variaonly real progress which we have made in this re- tions may occur in their yearly alimentary producspect for over a century, is due to political econo- tion without exercising any proportionate influmy.— But, although political economy has thrown ence upon the number of the population, that the a great deal of light upon the consequences of population may increase without an equivalent some of the tendencies and habits of mankind increase in the quantity of products, and that taken collectively, its object is not so much to influ- an increase of general production may coincide ence us in the direction of our wants as to enlight- with the stationary state of the population. In en us on the general means of insuring their sat- this latter case the wants of each are more fully isfaction. It is for this reason that it takes these satisfied; in the former cases they are necessariwants as they are, and recognizes utility in every-ly restricted, and there is, consequently, more thing which they cause us to seek, without stopping to examine whether they are rational or not. Those who find fault with it for proceeding in this manner, do not realize that it could not act otherwise without extending its field of investigation beyond measure; that it could not furnish suitable rules to guide us in the choice of our satisfactions, and in the development of our inclinations and tastes, without creating out of whole cloth a science which does not exist. The principles of po- WAR DEPARTMENT. One of the executive litical economy are in every way independent of departments of the United States government, esthe direction our wants take, and they will be tablished by act of Aug. 7, 1789. (1 Stat. at Large, none the less true and useful when the progress p. 49.) The head of this department, officially of morality shall have made the general wants of designated the secretary of war, has charge of all man better understood, and more strictly conform- matters respecting military affairs, under the direcable to well-being and the perfection of life than tion of the president; has custody of all records, they are at present. The natural laws of produc- etc., relating to the army, the superintendence of tion, distribution and consumption of the objects all purchases of military supplies, the direction of of our wants remain the same, no matter what army transportation, the distribution of stores, the nature of the satisfactions which these objects etc., the signal service and meteorological records, procure, and independently of the favorable or the disbursement of all appropriations for rivers injurious results which the habit of these gratifi- and harbors and their survey and improvement, cations may have upon individuals and nations. and the superintendence and supply of arms and It is with the principles of political economy as munitions of war. The secretary of war is a memwith those of mechanics: they remain the same ber of the cabinet (salary, $8,000). He is required whether applied to the creation of an implement to make an annual report to congress, with stateof warfare-an instrument of death and destruc- ment of all appropriations and their expenditure, tion or suggesting rules for the better employ- contracts for supplies or services, reports of surment of the forces employed in the production of veys, and of improvements of rivers and harbors, means of subsistence. Thus, for instance, the prin- returns of the militia in the various states, etc. ciples of political economy are as well adapted to The extensive business of the war department is point out to the savages of North America the gen- distributed among ten military bureaus, each under eral means of obtaining abundantly the alcoholic a chief who is an officer of the regular army, and wants which degrade and kill them, as they are receives a salary of $5,000 while at the head of a to enlighten civilized nations upon the social con- bureau. The chief clerk of the department (salary, ditions most favorable to the increase and diffu- $2,750) has charge of the correspondence and acsion of all that can contribute to the improvement counts, communicates between the secretary and of physical life and of the intellect. It is never- department officers, and has general superintendtheless true that the progress of morality, without ence of 90 to 100 clerks and other employés atchanging anything in the principles of political tached to the secretary's office. economy, must aid in rendering the application general of the United States army is at the head of of those principles more profitable; and the realiza- a bureau of 575 clerks, etc. He issues the orders tion of this truth has led most economists to some of the president and the general commanding the extent into the domain of morals, while they were army, conducts the army correspondence, the reseeking to measure the relative extent and merit cruiting and enlistment service, issues commisof different classes of wants, while they were sions, receives reports and resignations, is custocombating the errors and prejudices which favor dian of the voluminous army records of the United luxurious and purely frivolous expenses, and con- States, keeps the muster rolls, and makes an andemning those which tend to enervate and de-nual report of the strength and discipline of the The adjutant |