ART. IV. HOW SHALL THE NATION REGAIN PROSPERITY ?

PART II.

In a previous article it was maintained that for the production of a very large class of commodities, which all the world want and must have, the United States enjoys peculiar and exceptional advantages; that, notwithstanding these advantages, there is a lack of demand entirely and abnormally disproportionate to the amount of such commodities which the United States is able, and desires to supply; or, in other words, while under natural circumstances it would be natural for all the world to buy largely of the products of our (manufacturing) industries, as a matter of fact the world does not so buy, but finds it for its interest to trade elsewhere; that in the absence of this demand a large percentage of the labor of the United States is, and from the very necessities of the case must continue to be, without employment, and a large percentage of its fixed capital is, and must continue to be, unproductive; that under such a condition of things poverty has increased, immigration has diminished, emigration has begun, and through temptations, heretofore unexperienced, the manifestations of crime have become alarmingly greater.

The above premises being correct, the conclusion arrived at was, therefore, legitimate; that the most important of all the questions now before the American people and their government are,How can we create new and greater demands and markets for our national products? How can we open new channels for trade, or enlarge those already existing; thereby creating new, larger, and remunerative employments for our surplus labor and capital, and so bring back the country to its old and normal condition of material prosperity ?

In the present article it is proposed to enter into the consideration of, and show, in part, by what agencies the demand and market for the products of American labor have been checked and made smaller than they need or ought to be; how the channels of

* North American Review, July - August, 1877.

our trade and commerce have been needlessly obstructed and destroyed; and by what course of policy and specific legislation these checks and obstructions can be removed, and the business of the country be revived, enlarged, and placed on a broader and more healthy basis. These are large words and bold assumptions. He who uses the one and ventures upon the other unwittingly, and is not prepared to make good his positions, is liable to a harsh criticism for vain speaking. Let the reader judge whether the writer has made himself liable to such accusation.

Continuing the line of argument before entered upon, it is desirable to next briefly consider how wants, in general (of things essential to a good livelihood), arise, and how, in general, they are satisfied.

Wants have their origin in human nature, and are practically illimitable. No one ever has all he wants, though pretension may be made to that effect. In general, every one satisfies his wants by his own labor; but no man who is not a savage or a Robinson Crusoe ever attempts to obtain all he wants by his own labor directly, or from the products of one locality; and nature evidently never intended that it should be otherwise. For there is no nation or country or community, nor probably any one man, that is not, by reason of differences in soil, climate, physical or mental capacities, at advantage or disadvantage as respects some other nation, country, community, or men, in producing or doing something useful. It is only a brute, furthermore, as economists have long recognized, that can find a full satisfaction for its desires in its immediate surroundings; while poor indeed must be the man of civilization that does not lay every quarter of the globe under contribution every morning for his breakfast. Hence, springing out of this diversity in the powers of production and of wants in respect to locations and individuals, the origin of trade. Hence its necessity and advantage; and the man who has not sufficient education to read the letters of any printed book perceives by instinct, more clearly, as a general rule, than the man of civilization, that if he can trade freely, he can better his condition and increase the sum of his happiness; for the first thing the savage, when brought in contact with civilized man, wants to do, is to exchange; and the first effort of every new settlement in any new country, after providing temporary food and shelter, is to open a

road, or other means of communication to some other settlement, in order that they may trade or exchange the commodities which they can produce to advantage, for the products which some others can produce to greater advantage.* And, obeying this same natural instinct, the heart of every man, that has not been filled with prejudice of race or country, or perverted by talk about the necessity of tariffs and custom-houses, experiences a pleasurable emotion when it learns that a new road has been opened, a new railroad constructed, or that the time of crossing the seas has been greatly shortened; and if to-day it could be announced that the problem of aerial navigation had been solved, and that hereafter everybody could go everywhere, with all their goods and chattels, for one tenth of the cost and in one tenth of the time that is now required, one universal shout of jubilation would arise spontaneously from the whole civilized world. And why? Simply because everybody would feel that there would be forthwith a multitude of new wants, an equal multitude of new satisfactions, an increase of business in putting wants and satisfactions into the relations of equations in which one side would balance the other, and an increase of comfort and happiness everywhere.

At the same time this truth, which is in the nature of an economic axiom, ought to be clearly kept in mind, namely, that there is no wealth to be made through trade or exchange of products, beyond the simple economy that results from the producer supplying the consumer cheaper than the consumer can supply himself directly by his own efforts. So much, then, for why we trade. A brief word, next, for how we trade.

Many, perhaps most, people who have not thought much on the subject, certainly many legislators, to judge from their talk, ——

There has been much of speculation, in which Henry C. Carey has taken the lead, as to what determines the location of settlements in new countries, and whether a community, if left to itself, will occupy primarily the poor or the rich soils. But the theory or consideration, above all others, that is determinative of this ques tion, is the natural methods or channels available in the first instance for intercommunication with other settlements or centres of population. And hence such new settlements always follow in the first instance the seacoast or the shores of navigable lakes or rivers, and rarely penetrate otherwise into the interior. The rich, easily cultivated fertile lands in the interior of such States as Indiana, Iowa, and Minnesota would, without the ready means of intercommunication afforded by railroads, have remained to the present hour almost as much a wilderness as they were at the commencement of the present century.

regard money as essential for trade. They are in the habit of thinking that when we buy anything, it is necessary to give money, and when we sell, to receive money. Money is not, however, absolutely essential to trade, business, or production. It facilitates trade; it is a most useful and desirable adjunct of trade, and discharges the same function in trade as a ship, a locomotive, a horse and cart, or a wheelbarrow, though in a larger and higher degree than any of these, or all other similar instrumentalities. These statements are all truisms, the A B C's of economic knowledge; yet they are not understood by the mass of the people, or by those whom the people select to represent them in legislative assemblies; and because they are not understood is one great reason why this nation is now in trouble. It is important, therefore, to endeavor to make more clear these truisms by illustration; such, for example, as is afforded by the analysis of what takes place in the purchase and sale of a pair of shoes.

Ask most people what is involved in such a familiar transaction, and they will tell you," Why, of course we understand. What a frivolous question! We went to the shop; picked out and took what suited us; gave the shoemaker five dollars, more or less, and departed. That's all there was about it." But hold! there was a good deal more than that involved in the transaction; so much more, that he who fully understands it has mastered the fundamental principles of finance, commerce, and political economy, though he may never in his life have read a book or attended a lecture on the subject. What the shoemaker gave was the result of his labor applied to a piece of leather; as the leather was the result of some other man's labor applied to a piece of hide; as the hide was the result of a third man's labor given to the raising of cattle. On the other hand, what was given for the shoes in the first instance was a sum of money; but unless the money was a gift to the purchaser, or he stole it, it was obtained in exchange, and represented some labor or service performed or to be performed in turn by the purchaser. We may therefore eliminate the use of the money from the transaction altogether, as it was simply used as a convenience, as oil is applied to the axles and bearings of an engine, to make the movements work easy with the minimum of friction. And, eliminating the money, the transaction resolves itself into an exchange of the labor or services of the

shoemaker for the labor or services of the man who desires to have and wear shoes. And as every other transaction throughout the world, by which men satisfy their wants and desires by producing and exchanging, or buying or selling, when analyzed, resolves itself into identically the same elements, we are led up to the recognition and acceptance of this broad general principle, namely, that all trade is at the bottom a matter of barter; product being given for product and service for service; that in order to sell we must buy, and in order to buy we must sell; and that he who won't buy can't sell, and he who won't sell can't buy.

Now, to come back to the more immediately practical questions under consideration. Why is there no demand for the multitude of useful things that the United States have the facilities for producing better and cheaper (as can be demonstrated beyond all question) than other countries? Why is there no opportunity for the multitude of our laborers, who ask for nothing else, than that they may have the opportunity to support themselves by producing, and are now denied that opportunity? One answer is, that the United States for now a long series of years has, in its fiscal policy, denied or ignored the truth of the above economic, axiomatic principles. It has not, indeed, in so many distinct words said to the American producers and laborers, You shall not sell your products and your labor to the people of other countries; but it has emphatically said to the producers and laborers of other countries, We do not think it desirable that you should sell your products or your labor in this country; and as far as we can interpose legal obstructions, we don't intend that you shall! But in shutting others out, we have at the same time, and necessarily, shut ourselves in. And herein is trouble No. 1. The house is too small, measured by the power of producing, for those that live in it. And remedy No. 1 is to be found in withdrawing the bolts, taking off the locks, opening the doors, and getting out and clear of all restrictions on producing and the disposal of products.

In fact, the country is very much in the condition of a merchant who has a store advantageously situated, and its shelves filled to repletion with a great variety of desirable goods. The roads that lead up to the store are in admirable condition, with good sidewalks and signboards and lamps to make sure that no one goes astray. But when customers come to the store, they find that the