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period of time all the original cost is repaid, the ship is worn out, and a new one is built. There will be a surplus advantage if after repayment of the cost of construction the ship is still efficient, and goes on working. It is now a tool that costs nothing.

It is clear from this analysis that there is over-consumption in the construction of all fixed capital. For a time, more or lees long, more wealth has been consumed than is made; the difference is a diminution of means.

The machine made, no doubt, restores that diminution, but only gradually. The maintenance of the workers who built the ship is gone: except the portions successively restored, this is clearly a loss of wealth. Bread and meat have been eaten, and there is nothing wherewith to buy more. But there are two very distinct kinds of over-consumption: one impoverishes, the other does not. Both use up wealth, and it disappears; but one kind destroys wealth which can be spared; the other lessens the stock of productive capital. Over-consumption, which lessens capital, generates poverty; that which uses up savings does no harm. The employer and the workman may dispose of their profits and wages in any way they choose, without injury to the public wealth. The capital is restored by the results of the business—the share of the things made accruing to each man lies, economically, at his absolute disposal. He can devote them to necessaries or to luxuries, or he may throw them into the sea; no harm to wealth thence arises. He remains where he was; not richer, but not poorer. Or he may save a part of his share of products which belongs to him; that is, he may convert them into capital by applying them as instruments for increasing industry. No impoverishment ensues; for they were his to fling away, if he chose. On the contrary, ha enriches himself and his country. He has made the means of producing wealth larger; he has increased future wages and profits for himseli and others; and he has done this with income which trade had given him to consume in any way whatever.

We are now in a position to perceive the magnitude of the blunder of which the American people were guilty in constructing this most mischievous quantity of fixed capital in the form of railways. They acted precisely like å landowner who had an estate of £10,000 a year, and spent £20,000 on drainage. It could not be made out of savings, for they did not exist; and at the end of the very first year he must sell a portion of the estate to pay for the cost of his draining. In other words, his capital, his estate, his means of making income whereon to live, was reduced. The drainage was an excellent operattion, but for him it was ruinous. So was it with America. Few things, in the long run, enrich a nation like railways; but so gigantic an overconsumption, not out of savings but out of capital, brought her poverty, commercial depression, and much misery. The new railways have been reckoned at some 30,000 miles, at an estimated cost of £10,000 & mile; they destroyed 300 millions of pounds' worth, not of money, but of corn, clothing, coals, iron, and other substances. The connection between such over-consumption and commercial depression is only too visibly here that of father and son.

But the disastrous consequences were far from ending here. The over-consumption did not content itself with destroying the wealth. used up in making the railways and the materials of which they were composed. It sent other waves of destruction rolling over the land. The demand for coal, iron, engines, and materials kindled prodigious. excitement in the factories and the shops; labourers were called for on every side; wages rose rapidly; profits shared the upward movement; luxurious spending overflowed; prices advanced all round; the recklessness of a prosperous time bubbled over, and thi subsidiary overconsumption immensely enlarged the waste of the national capital set in motion by the expenditure on the railways themselves. Onward still pressed the gale; foreign nations were carried away by its force. They poured their goods into America--so overpowering was the attraction of high prices. They supplied materials for the railways, and luxuries for their constructors. Their own prices rose in turn, their business burst into unwonted activity, profits and wages were enlarged, and the vicious cycle repeated itself in many countries of Europe. Over-consumption advanced with greater strides; the tide of prosperity rose ever higher, and the destruction of wealth marched at greater speed.

England took a prominent share in the excited game. In no slight degree is she answerable for the American rush into railway construction. It was carried out by means of bonds, and England bought largely of those bonds. It has been asserted that she purchased these bonds to the incredible extent of 150 millions sterling. But with what did she pay them? With iron rails, locomotives, and other products of her industry. And what did she get in return? Pieces of paper, debts. Her wealth was diminished, and she paid, in addition, the same penalty as the Americans. Her manufacturers were stimulated by this artificial activity of trade to exaggerated production. Higher wages and profits were distributed over the nation, and an immense impulse was given to luxurious and needless consumption. The approach of the avenging depression was accelerated, it might seem, almost intentionally.

But these American operations did not satisfy English ardour. The passion for lending raged with great vehemence. England showered her loans over many regions of the globe; loans, be it repeated, always made in goods, in commodities produced at great cost, and lost to England in exchange for acknowledgments of debt. England lent ironclads to Turkey, military resources to Bosnia, articles for wasteful consumption to Egypt, innumerable gratifications to American Republics. Her colonies carried off rails and locomotive stores and clothing for their advancing populations--and no better application of wealth could have been made. Future customers for English trade were thus provided, men who would enlarge English industry with ever-expanding demands for its products, demands expressed in corn and wool sent across the ocean to pay with. Nevertheless, the fact remained always the same-England stripped herself of her wealth in exchange

for nothing. And it made no difference for the time whether the loan was granted to a solvent or to an insolvent borrower, whatever might be the result later; whether interest was ever remitted or not, in all cases alike England was emptied, and paper documents substituted into the vacuum, whatever might be subsequently their value.

Germany was caught by the same whirl of over-consumption. Soldiering and war did their wasteful work: nor has the former stopped its devastations. A more severe depression fell on Germany than on any other country, except perhaps America. A harassed Minister is proposing to obtain resources for the support of countless legions of armed soldiers by increasing the over-consumption of wealth by aug. mented duties at double cost-the cost of the articles consumed, and the extra cost of compelling them to be provided at home. Then a very unlooked-for surprise added largely to her woes. The gold of the French indemnity, which was expected to be her salvation, proved, to the astonishment of the Germans, to be a great aggravation of their sufferings. What could that gold do for Germany, so long as it remained in the country, except place German property in different hands? There was already gold enough in Germany to perform that service. Germany obtained thereby no increase of useful wealth. However, it did execute its function of transferring property to new possessors, and with painfully mischievous energy. First of all, by its help, the Government betook themselves to building fortresses, purchasing military stores, and bringing up the army to the highest standard of efficiency. Did the fortresses and the guns restore the food and materials consumed in their construction? Guns and fortresses were excellent machines for making the national wealth disappear; they could do nothing to repair the terrible waste of the war. Further, much of the idle gold was lent to speculative traders who reckoned on an active demand from now prosperous Germany. They enlarge1 their factories and increased the stock of goods. Much gold had been paid to individuals in payment of Government debts; these men came forward as buyers: and the eternal tale was repeatedraised prices, increased wages, abundant profits, active consumption of every kind of wealth. Then followed the natural consequence, so touchingly described by the Neue Stettiner Zeitung, as quoted in the Times : "Five long years of unexampled depression are the bitter penalty we have had to pay for one intoxicating year of joy.”

Over-consumption worked its will on unhappy France: but the blunder was not commercial. Armaments and war impoverished France as they did Germany, but with the severe additional aggravation that the war was carried on within her territory. German industry lay undisturbed, if excited; French trade, besides what the war itself cost, was harassed with interruption and loss at every point. Labourers were hurried away from their fields, manufacturing towns fell into the hands of the enemy, and their works impeded; railways were filled with carriages conveying soldiers, and trucks containing military stores: commercial lines of communication were broken: French har

bours blocked against French ships; with many other like disasters. The over-consuming force was immense; but it encountered a resistance that was heroic. After the deeds of violence ceased and a gigantic indemnity had been paid, the French people, with instinctive genius, applied, with most painful effort, the one remedy which political economy pointed out for the cure. Without knowing political economy they practised what it prescribed. They could do this, because political economy is common sense. France saved. She underconsumed for enjoyment; the surplus she gave away to the augmented taxation, which then cost her nothing. Thus France has come forth from the commercial depression with a freshness and strength which have called forth the astonishment and the admiration of the world.

Such was the over-consumption which prevailed over the greater part of the human race. It destroyed more than it re-made; it diminished wealth rapidly, but it was accompanied by increased activity of trade, by great commercial prosperity. The co-existence of these two facts, apparently so contradictory, was rendered possible by the process of attacking the wealth which still survived, and filling up the gaps, caused by the consumption, by fresh extra consumption. Had mankind been resolved to carry out the process to its last end, the whole wealth of the world would have been destroyed in some three years amidst universal enjoyment; and the great populations would have died out like locusts. All would have been devoured.

This over-consumption, which was the first stage, with its accompanying commercial inflation, generated the second stage in the history of the great depression--over-production. The excited demand for goods to consume-paid for by fresh sacrifices of the still existing capital-raised prices, wages and profits to an unprecedented height: it seemed to be unlimited. Thus additional machinery for production started up upon every side; new mines were opened, new factories built, new steam engines set to work, new railways opened, multitudes of new labourers called away from the fields to man new mills. “Since 1871-72,” justly remarks the Pall Mall Gazette, we have passed through a complete revolution in our iron and coal industries. The number of blast-furnaces for the production of pig-iron increased in 1873-74 from 876 to 959.” Then mark the extent of the over-production as shown by the stoppage of work when the excited buying had disappeared, and trade had to deal only with ordinary demands. "There were in 1878 only 454, or about half, at work. Between 1871 and 1873 the number of collieries at work in the United Kingdom advanced from 3100 to 3627, and at the end of 1875 had still further advanced to 4501. In the three years, 1875, 1876, 1877, no fewer than 270 of these collieries failed; and in 1877-1878 the collapse was still more rapid. In the four years, 1871 to 1875, the number of persons engaged in coalmines rose from 351,000 to 537,000-—an extension of employment rapid and violent, almost beyond example; and since 1875, and at present, we are struggling to restore the wholesome equilibrium which we lost eight years ago.' That struggle has been vehemently resisted by the working classes. They refused to acknowledge the fact that the machinery for producing was vastly in excess of the power of buying, and that the sale of the products could no longer yield the

same remuneration to labour. They betook themselves to war. Mr. Bevan in the Times tells us that there were last year no fewer than 277 strikes in Great Britain against 181 in 1877; but how many of these distressing battles were victorious ? Four only. In 17 the operatives obtained a compromise; in 256 the strikers were defeated. What can show more clearly how idle it is to fight with words and arbitrary ideas against the stern realities of the nature and facts of trade?

And now what are the remedies by whose help we may hope to lessen and ultimately to put an end to the painful sufferings inflicted by this unprecedented commercial depression? One in particular is advocated with great warmth by the leaders of the working classes. Work short time, they cry; produce less. The fact they take their stand on is true. Even up to this very day there is more produced than can be sold, except at such a loss as would lead to the closing of the workshops. The advocates of short time acknowledge this fact. They admit that the business can no longer yield them the same weekly wage. They consent to a reduction of wages : but they demand that it shall take the form of their working for five days a week only instead of six, and of their receiving less money at the week's end, but at the same rate of wage per day as they had been earning heretofore. They will thus fight the evil, they say, from which the depression in trade has come-overproduction. Buyers will be found for the smaller quantity of goods produced : they will receive lower wages, but they will have given less work: they will maintain the standard of the daily wage unchanged, and when better times come they will recover their old position. But this language does not state, in full completeness, the problem calling for consideration, and it tacitly makes an assumption which is positively untrue. It is assumed that the cost of the production of the goods now made in five days will be the same as when the mill worked six. The idea is that the working, the wage, the goods, their price, of one day a week shall be given up : what happened in the five days will go on unchanged as before. This is a complete and very grave mistake. The goods now made in five days will cost more to make, will be dearer to the employer than when they were produced in a mill working one day more. An employer has many more charges to encounter than wages and cost of materials : interest on his own and borrowed capital, rent of buildings, expenses of superintendence and office-work; the pumping out of the water in the mine by an engine that never stops, and other items of the same kind. These expenses now fall on the goods of five days only instead of six: they swell the cost of their production, and then what is the necessary consequence? Their price must be raised, or the loss on the business, already unendurable, will become still heavier. The selling price must necessarily be raised if the business is to continue: and what will be the effect of such a demand? The number of buyers will assuredly be lessened: some more will

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