Chapter CLVI: Section VI: Paper Money—A Curse Or A Blessing? (7)

542 We shall, in the books to follow this, inquire with great care, what
are the means best calculated to remedy this dangerous tendency. We
need only remark here, that it is to be found in a judicious
association of small capitalists, and also in the capitalization, so
to speak, of personal qualities. A well organized society of
work-men, without capital, may indeed obtain credit, as for
instance, the Schultze-Delitsch societies, the Russian
_artel-schnicks_ (market-aid societies) etc. prove. (_Frühauf_, Die
russ. Artels in _Faucher’s_ Vierteljahrsschrift, 1868, I, 106 ff.)
We may also mention the greater credit accorded to a land-owner the
moment he becomes a member of a land-loan association as compared
with what he could obtain before he had joined it. The popular
belief of the ancient Egyptians afforded them a very great
instrument of credit in the pledging of the remains of their
ancestors. (_Herodot._, II, 136.)

_ 543 B. Hildebrand_ is of opinion that the Political Economy of the
future may be characterized as credit-economy, in the same way as
the Economy of the present may be called money-economy, and that of
the past as barter-economy of barter. (National Œkonomie der
Gegenwart und Zukunft, I, 276 ff.) _Hildebrand’s_ view is correct in
so far as that, with every advance in civilization, credit comes to
have absolutely and relatively an ever increasing importance,
although in the middle ages, especially under feudal forms
(_Lehensformen_), there were numberless operations in credit.
Otherwise, however, _Hildebrand’s_ three kinds of economy are, by no
means, coördinated. While barter and purchase through the
instrumentality of money, in every instance, entirely exclude each
other, it is impossible to imagine a credit-transaction of which the
promise of a barter-performance or of a money-performance does not
constitute the base. During a “money-economical
(_geldwirthschaftlichen_) period” [i.e., one during which money is
the medium of exchange, and not notes; and when barter does not
obtain.—_Translator_.] the service rendered by money as a medium of
exchange may, for the most part, be supplanted by credit. Money, as
a measure of value, still remains the substratum of credit itself.
(See _Knies_ in the Tübinger Ztschr., 1860, 154 ff.; and in the
Freiburger Programm, 9 Sept., 1862, 19.) Earlier yet, _A. Wagner_,
Beitr. zur Lehre von den Banken, 1857 ff. Among the most practical
propositions of Saint Simonism is that of a _système genéral des
banques_, intended to administer all the goods of the nation, and to
loan them to individuals engaged, in production. (_Bazard_, 205 ff.)

544 It is destructive of credit to allow the debtor to await several
decrees or judgments before his liability is established; to allow
him, on easy terms, delays, reversals of judgment, the costs of the
case etc. The term within which a creditor might bring in his claim
before the meeting of creditors in the Amsterdam Boedel-chamber was
formerly thirty-three and a third years. (_Büsch_, Darst. der
Handlung, Zusatz, 82.) In the presidency of Bengal there were, in
1819, 81,000 cases in arrears, and in 1829, 140,000. Westminister
Review, XIX, 142.

545 And yet _Melon_ is of opinion that the state should favor the debtor
as much as possible. (Essai politique sur le Commerce, ch. 12, 18.)
This was the view entertained on this subject by the older
practitioners. In Bengal, the _dhura_, a species of “judgment of
God,” in which the party who could hold out longest against hunger
was declared the victor, was the only means to compel a debtor to
pay his debt. As a consequence, the Bengal peasant could not borrow
money at less than 60 per cent. per annum. Edinburgh Review, XXII,
67. On the damages attending the credit-laws and credit-courts of
Russia, by which all foreign goods are rendered exceedingly dear,
see _v. Sternberg_, Bemerkungen über R., 100 ff. In a country in
which a great many powerful personages are above the laws, an
incorporated loaning bank may be an indispensable necessity.
(_Storch_, Handbuch, II, p. 23 ff.) In Naples, even as recently as
1804, no debtor could be arrested during the last six months of the
queen’s pregnancy. At a previous period, one might fail in business
there and escape all punishment by exposing the hindermost part of
himself in a nude state publicly before a column of the _Vicaria_.
(_Rehfues_, Gemälde von Neapel, I, p. 203 seq., 222.) In Schwytz,
the rate of interest is so high, because the law allows the debtor
to pay his creditor, whether the latter will or not, in articles of
household furniture, clothes etc., estimated at a very high value.
(_Hermann_, Staatsw. Untersuchungen, 202.) It has now become quite
usual in the United States, on account of the many delays granted to
the debtor by “democratic” laws introduced there, instead of mere
mortgage, to give full warranty deeds when capital is loaned. By
this means, the creditor is in danger, when misfortune overtakes
him, to see himself compelled to let his property go at one-fourth
of its value.

546 See the Heliast oath in _Demosth._, adv. Timocr., 746. The Roman
system of credits in the time of Polybius was much better than the
Carthaginian. _Polyb._, VI, 56, XXXII, 13.

547 Sachsenspiegel, III, 39. _J. Grimm_, Deutsche Rechtsalterthümer, 612
ff. _Dahlmann_, Dänische Gesch., II, 245, 339. _Hermann_, Russ.
Gesch., III, 357. On slavery for debt among the Malays, see Ausland,
1845, No. 157.

_ 548 Beaujour_, Tableau du Commere en Grèce, II, 176.

549 C. 2 X. De Pignor. An appropriate provision in a priestly
government. _Diodor._, I, 79.

550 Staying in a place by the debtor until the creditor is satisfied,
and other degrading stipulations, which, however, were prohibited by
the police regulations of the Empire in 1548, art. 17.

_ 551 Marten’s_ Ursprung des Wechselrechts, 1797. Statuta Mediol., 1480,
fol. 238 ff. The municipal law of Florence unconditionally
imprisoned the father or grandfather for the debt of the son, when
the latter engaged in industrial pursuits with their consent. (Stat.
Flor., I, 201.) In Bologna, the brothers of a bankrupt who had
constituted one household with him were held responsible for his
debts. (Statuti dell’ Università de Mercantati della Città di B.,
1550, fol. 110.) The law of Geneva excluded from all positions of
honor the son who had left his father’s debts unpaid. _Montesquieu_,
E. des Lois, XX, 16. The consequence was, that among the higher
classes not a creditor lost anything for centuries. (_K. L. v.
Haller_, Restauration der Staatswissenschaften, VI, 519.) Compare
the “Nurenberger Reformation” of 1479, fol. 61 and 68 of the edition
of 1564.

552 Compare the R. P. O. of 1548, art. 22. And so, by the Code de
Commerce, III, 4, I, even the simple bankrupt in contradistinction
to the fraudulent bankrupt is punished, and every person unable to
pay his debts is declared a _simple_ bankrupt, who, among other
things, has made excessive household expenses, or lost considerable
sums by play etc. Compare _Sully_, Mémoires, Livre XXVI, who
declares it to be his most wholesome law, that fraudulent bankrupts
should, like thieves, be punished with death, and that all their
fraudulent assignments, gifts, etc., should be declared void.
Further, Ordonn. de Louis XIV., sur les Failletes, art. 11; _J. de
Wit_, Mémoires, 77 ff; _v. den Heuvel_, Sur le Commerce de la
Hollande, 110 ff. Frederick William I., in 1715, threatened with the
galleys all light-headed bankrupts, and, in 1723, all those who,
knowing their insolvent condition, should effect further loans.
_Mylius_, Corp. Const. March. II, 2, 31, 40. For China, see _Davis_,
The Chinese, I, 247 ff. _Gr. Soden_, Nat. Oek., III, 231, demands
that, in case of doubt, the guilt of the bankrupt should always be
presumed.

553 In England only one-tenth of the number of bankrupts are considered
innocent. _Elliot_, Credit the Life of Commerce, 1845, 50 ff.

554 The _contrainte par corps_ of debtors was abolished in France in
1792, but restored in 1797. Even _Turgot_ remarked that since
slavery had ceased there was no further fear (?) that the poor would
be oppressed by imprisonment for debt. (Sur le Prêt d’ argent, §
31.) According to _Droz_, the question is not one of weighing
“freedom” against “miserable money,” but the deprivation of a few of
that freedom and the non-fulfillment of obligations entered into,
that is against the destruction of public confidence.

555 A similar development among the Greeks:

A. Rigorous slavery for debt, which Kypselos moderated at Corinth.
(_Pausan._, V. 17, 2), and Solon abolished in Athens. (_Plutarch_,
Sol., 15. _Demosth._, de fals. Legat., 412.)

B. The reckless creation of debts as seen in Aristophanes; while
outside of Athens slavery for debt lasted yet a long time.
(_Hermann_, Griech. Privatalterth., § 57, 20.) In the time of
Demosthenes, the merchant in arrears in the payment of his debts was
cast into prison, and the bottomry-debtor who deprived his creditor
of his security might be punished with death, (_Demosth._ adv.
Pharm., 922, 958), and this although the _cessio honorum_ was
introduced. _Hermann_, § 70, 3. Compare _Xenoph._, Vectigg., 3,
_Demosth._ adv. Apat., 892; adv. Lacrit., and adv. Dionys. In
Corinth, the state superintended expenses made by parties. This was
part of its credit-policy. (_Athænæus_, VI, 227.) For a remarkable
Rhodian law relating to debts, see _Sext._ Emp., Hypot. I, 149.

In Rome:

A. The chief characteristic of the ancient law in this matter was
the eventual sale of the person of the debtor on the getting of the
loan (_nexum_); the power of the creditor to put the _addictus_ to
death or to sell him in foreign parts; finally, the _in partes
secanto_, in the concourse of creditors. Without these rigorous
provisions, the borrower might easily have evaded his debts, by the
emancipation of his son and turning over his property to him.
(_Niebuhr_, Rom. Gesch., II, 770 ff; _Savigny_ in the Abb. der
Berliner Acad., 1833. _Zimmern_, Gesch. des röm. Privatrechts, III,
131 ff.)

B. Later, we find nothing of the execution of the debtor, or of the
sale of his person; but he might be compelled to do slave labor for
his creditor without any protection against ill-treatment. Slavery
for debt was restricted by the Lex Poetelia. (_Niebuhr_, III, p.
178; _Mommsen_, III, 494.) The Prætorian law introduced the custom
of putting the creditor in possession of the goods of the debtor,
with power of sale, which proceeding rendered the debtor infamous.
See several passages in _Walter._, Röm Rechtsgesch, 763 ff;
_Tertull._, Apol., 4; Tab. Herac. I, 115 ff. Later, Cæsar’s Lex
Julia permitted the honest debtor to escape imprisonment by the
assignment of his goods.

C. The moneyed oligarchy which prevailed in Rome caused the adoption
of exceedingly severe measures against delinquent debtors. (_Plut._,
Lucull., 20. _Cic._, ad. Att. V. 21, VI.), although its members
themselves incurred debts in the most reckless manner. Cæsar, in the
year A.C. 62, excluding his active (_activen_), owed debts to the
amount of 25,000,000 sesterces; M. Antonius, in the year 24,
6,000,000; in the year 38, 40,000,000; Curio, 60,000,000; Milon,
70,000,000. (_Mommsen_, Römische Geschichte, III, 486.) Compare
_Gellius_, XX, 1, XV, 14.

556 Whenever a new shop-keeper, who sells goods on monthly credits,
settles in a district, the number of poor persons invariably
increases. (_McCulloch_, Commercial Dictionary.) The ruinous credit
given by the Jews to the Westphalian peasants begins with an account
for the goods which they have succeeded in pressing upon them, after
five or six years have elapsed. The Jew seldom sues accounts at law;
but he besieges the debtor and discovers where his last head of
cattle and his last little supply of provisions are to be found. As
he is willing to accept everything that has any value, sometimes in
payment of arrears, and sometimes in payment for some new piece of
trash, he is sure to obtain his dues in the end, but not until his
victim, who is sunk deeper and deeper in the abyss of debt by every
“accommodation,” is entirely ruined. (_Schmerz_, Rheinish-Westphäl.
L.W., 396 ff.)

557 In the lower and middle stages of civilization, we find a multitude
of laws by which minors, students etc., but especially land-owners
are limited to a minimum of credit, which, however, varies very much
with the person, and is subjected to a number of embarrassing forms,
the consent of a third person, for instance etc. (Compare Bayerische
L.O. von 1553, fol. 83.) Such laws, however, give as much room to
the play of dishonesty as they take away from that of want of
reflection.

558 On the municipal regulations (_Städteordnungen_) of the 14th and
15th centuries, which compelled Jewish creditors especially to have
their evidences of indebtedness redeemed within from every two to
five years, see _Stobbe_, Juden im Mittelalter, 129. Compare further
the Würtemberg L. O. of 1515, Statut. Ferrar, ed. 1650, lib. II,
rub. 37, 289. According to the other provisions of the laws in North
America, some book accounts were required to be sued on within six
and others within seventeen years. (_Ebeling_, Gerchichte und
Erdberschreibung der v. Staaten, II, 247, 298.) The Prussian law of
March 31, 1838, provides a period of limitation of three years for
all ordinary commercial debts. A similar law was passed in the
Kingdom of Saxony, in 1846. In London, there has been found a great
number of hatters, tailors, boot and shoe dealers etc., whose books
showed credits of more than £4,000, most of them not to exceed over
£10. How much of all this must be lost entirely, and how that loss
must increase the sums paid for boots, shoes and hats by the prompt
payer! (_McCulloch_, v. Credit.) We find, even in Athens, that the
period of limitation was shortened in the interest of credit, and
that in the case of minors, it did not exceed five years.
(_Demosth._ adv. Nausim., 989.) Security for a debtor not over one
year. (_Demosth._, adv. Apatur., 901.) The prohibition of Zaleukos
to issue any evidences of debt whatever goes much farther.
(_Zenob._, Proverb. V, 4.)

559 Compare the report of the Dresden Handelskammer, 1864, 11.

_ 560 A. Mayer_, in _Faucher’s_ Vierteljahrsschrift, 1865, IV, 65.

561 We learn from the debates in the English parliament of February 9,
1827, that, in two years and a half, there were, in London and its
environs, 70,000 cases of imprisonment for debt, the costs of which
were from £150,000 to £200,000. In 1831, there were in one debtors’
prison 1,120 prisoners, who owed on an average £2 3s. 2d.
(_McCulloch_, l. c.) There was, in 1792, a case of a woman who, for
a debt of £19, remained in prison 45 years, and others like it. (See
_Archenholtz_, Annalen, IX, 87 ff; X, 169 ff, XIII, 125.) In England
in 1844, arrest for sums less than £19 was prohibited. _Johnson_ had
already proposed a similar provision. (Idler, 1758, Nos. 22 and 38.)
Imprisonment for debt was abolished in France, England and Austria
in 1867; in the North German Confederation, on the 29th of May,
1868, but arrest for security’s sake was retained. _Sismondi_ finds
fault with nearly all laws in the premises, because they attack the
person of the debtor rather than his personal property, and his
personal, rather than his immovable, property. He would have all
this just the contrary of what it is. The first interferes with the
very source of wealth, the productive power of labor; the second
causes goods to be sold much below their value. Neither of these
evils attends the last. (_N. Principes_, I, 250.)

562 A law of the North German Confederation allows the pledging of
future wages, only in the case of public officers, and those holding
permanent places in the service of private parties, whose salaries
are over 400 thalers per annum. The original draft had excepted only
the things necessary to workmen and those directly depending on
them; while the law as passed makes the prohibition general. This
was undoubtedly done for the convenience of employers as well as of
courts; as for instance in the circuit of Dortmund, there were, in
one year, 10,000 cases in which wages were garnisheed. (Annalen des
N.D. Bundes und Zollvereins, 1869, 1071 ff.) But the recklessness of
those workmen whose wages are below the average, might have been
just as well guarded against without dragging those whose wages are
above the average down to their level, if a distinction had been
made between production-credit and consumption-credit, and the
latter had been limited by providing that no suit should be
instituted for supplies made to public houses, taverns etc.

563 In the second book of _Moses_, 22, 25 ff., and the fifth, 24, 6. A
very old Norman law provides that in actions for debt, execution
should not issue against effects of the debtor which are
indispensably necessary to him to maintain his position, such as the
horses of a count or the armor of a knight. (Dialog. de Scaccario.)
Magna Charta extended this provision so as to include the
agricultural implements and cattle of the peasantry. The moment
these laws, in consequence of a false principle of humanity, except
anything but what is absolutely necessary, they injure credit. Thus,
for instance, in Brazil, a law of 1758, providing that nothing
immediately employed in or directly necessary to the production of
sugar should be seized on execution, caused great injury to the
production of sugar. (_Koster_, Travels in B., 1816, 356 ff.)

564 § 2, Cod. De Prec. Imper. Off., I, 19. The diets of the Empire had
granted such letters in the fourteenth century. (_Wachsmuth_, Europ.
Sittengesch., IV, 690.) They were granted, as a rule, only with the
previous knowledge of the Emperor, by the police ordinances of the
Empire of 1548, art. 22.

565 So in Austria, Saxony, Brunswick, the electorates of Hesse and
Baden. In Prussia, they could be granted only after a juridical
decree to that effect; and an appeal to a superior court was allowed
to reverse or affirm it. Compare _Mittermaier_ in the Archiv. für
civilist. Praxis, XVI, and also _P. de la Court_, Aanwysing der
politike Gronden en Maximen van Holland etc., 1669, I, ch. 25.
Nürnberg obtained as a privilege, in 1495, that no _moratorium_
should be valid as against its citizens. (_Roth_, Geschichte des
Nürnb. Handels, I, 86.)

566 Compare the discussions in the French National Assembly, in the
month of August, 1848. It is much less disadvantageous in times of
great commotion, when all business is brought to a stand still, to
extend the time in which bills of exchange etc. are payable. Such a
measure prevents a number of bankruptcies which the real balance of
debts due to one and owing by him does not render necessary.

567 In the persecution of the Jews in the middle ages, the so-called
_Brief-todten_ (letter-killing), or the destruction of titles, was
very common. In 1188, the French government released all crusaders
from the payment of interest on their debts, and granted them an
extension of three years’ time to pay off the principal.
(_Sismondi_, Hist. des Français, VI, 82.) Similar compulsory
measures were provided against the Jews and usurers in 1223 (Ibid,
VI, 539 ff.); and in 1299 (Ordonnances, I, 1331), on the formal
request of the nobility. (Ordonnances, II, 59.) Again, in 1594,
there was a release of one-third of the interest on all national and
private debts. (_Sismondi_, XXI, 318.) The general _moratorium_ of
the Milanese for a term of eight years, introduced in 1251, after
their war with France, was of an essentially different character.
(_Sismondi_, Geschichte der italienischen Republiken, III, 155.) The
same is true of the general _indult_ granted by Philip II. in
Belgium. (_Boxhorn_, Disquisitt. politicæ, 241 ff.)

568 The abolition or release of debts, so frequent in ancient
revolutionary times, reminds us, in many ways, of the crises
precipitated in modern times by paper money and produced by the
state. The ancestors of Alcibiades and Hipponikos laid the
foundation of an immense fortune, in Solon’s time, by purchasing
land in large quantities with money borrowed from several citizens,
a short time before the abolition of debts. (_Plutarch_, Sol., 15.)

569 Enormous consumption of wax in the churches of the middle ages. In
the cathedral of Wittenberg alone, a short time before the
Reformation, more than 35,000 pounds of wax candles etc. were burned
yearly. At the same time, honey was generally used instead of sugar.
How much more important, therefore, at that time must bee-culture
have been, considered from the point of view of circulation as
compared with what it is to-day. And so in Catholic countries, a
difference in the external manifestation of religion causes the
relative importance of the consumption of fish to increase and
decrease. In 1803 there was little demand in France for ivory
crucifixes, rosaries etc. In 1844, the demand for them and for
_prie-Dieu_ for the bed-room etc. was increased. (_Mohl_,
Gewerbwissenschafliche Reise, 101.) To engage successfully in the
sale of sugar in Persia, it is necessary to know that in that
country it is liked only in little hat-shaped lumps, which are used
only as semi-voluntary gifts; and that, in such case, custom fixes
the number of lumps. (_Steinhaus_, Russlands commercielle etc.
Verhh., 151.) In the Levant, workmen prefer bars of iron which are
small and of varied form because they find it difficult to
manipulate the large ones. The English bear this in mind much better
than the Russians. (_Steinhaus._) A merchant sending wood to
Southern France must be acquainted with the form of the staves used
in the manufacture of barrels there. Compare _Büsch_, Geldumlauf,
VI, 2, 2.

570 The circulation of goods compared to the circulation of the blood:
by _Mirabeau_, Philosophie Rurale, ch. 3. _Turgot_, Sur la Formation
etc. § 69. _Canard._, Principes, ch. 6.

_ 571 Eiselen_, Volkswirthschaftslehre, 98 ff. If in ancient times
commerce played a much less important part than it does among the
moderns, it was, as _Montesquieu_ says, because the whole commercial
world was then more uniform in climate and the character of its
products than it is now. (Esprit des Lois, XXI, 4.)

572 Of the successive steps, sheaves, corn, flour, bread,—flour has the
greatest capacity for circulation. And, indeed, the last operation
of labor on a great many goods, because of their consequent more
narrowly specialized utility, is accompanied by a decrease in their
capacity for circulation. As an illustration, we may mention
ready-made clothing as compared with cloth. The capacity for
circulation of a commodity is very much advanced when the demand is
wont to increase with the supply, as is the case with gold and
silver, but not with learned books, optical instruments etc. Many
commodities have but little circulating capacity, because no one
desires to purchase them but at first hand. See _Menger_,
Grundsätze, I, 245 ff.

_ 573 Knies._, Die Eisenbahnen und ihre Wirkungen, 1853, 79.

574 Compare _Schmitthenner_, I, who calls attention and with reason to
the importance of loans on chattel mortgages. But _Berkeley_,
Querist, No. 265, remarks that a squire with a yearly income of
£1000 can, “upon an emergency,” do less good or evil than a merchant
with £20,000 ready money.

575 A very important difference between Russia and England.

_ 576 Storch_, Handbuch, I, 273 ff. There is also a useless circulation
which is not calculated to promote the division of labor, but to
employ idle time or idle capital, as in the case of games of hazard,
speculation in stocks, wheat etc. Even impoverishing consumption may
produce rapidity of circulation, as in Germany during the war years
1812 and 1813. (_F. G. Schulze_, N. Œkonomie, 1856, 667.) Relying on
this fact, _Hume_ (1752) on Public Credit, Discourses, No. 8, argues
in favor of the old opinion, that all circulation is wholesome and
to be encouraged. _Boisguillebert_, Traité des Grains, I, 6, went so
far as to laud war because it accelerated the circulation of wealth.
On the necessity of a _circulation sans repos_, see ibid., II, 10.
In a similar way _Law_, Trade and Money, 1705, and _Dutos_,
Réflexions Politiques sur le Commerce, over-valued the circulation
of wealth as such. Concerning the Mercantile System, see § 116.
_Darjes_, Erste Gründe der Cameralwissenschaft, 1768, 531. And even
_Büsch_, Geldumlauf, I, 29, 32 ff., III, 96, who in other places
nearly always overlooks real production and sees only the
circulation of money caused thereby. Thus he calls the poor when
they are helped in money, and spend it, useful members of society!
(IV, 32, 39. Similarly, _v. Struensee_, Abhandlungen, 1800, I, 282
ff., 400 ff.)

577 As, for instance, happened in France in 1577, when all commerce, and
in 1585 all industry, were declared to be _de droit domanial_. Louis
XIV. was of opinion that the king was absolute master of all private
property of priests and people. (Mémoires histor. de Louis XIV., II,
121.) Compare _Duclos_, Mémoires, I, 14 ff.

578 Compare Theod. Cod., V, 9, 1; Just. Cod., X, 19, 8; XI, 47, 21, 23;
XI, 50, 51, 52, 55, 58. How full the really classic period of the
Roman jurists was of the idea of freedom of competition, we see in
_Paullus_: L. 22, § 3, Dig. XIX, 2. The provisions concerning _lœsio
enormis_ appear first in the time of Diocletian. (Just. Cod., IV,
44, 2.)

_ 579 Benjamin Franklin_ says that the freer the form of government is,
the more the people show themselves in their true aspect. Ancient
Rome, with the early development of its rational disposition, soon
learned to favor freedom of commercial intercourse. Compare
_Mommsen_, Römische Geschichte, I, passim. This was, certainly, an
element of its greatness, but also of the proletarian evils
developed in it an early date, and which were weighed down only by
the absolute growth of the state and the development of its economic
interests during centuries.

580 Nor must it be forgotten that competition raises prices as well as
lowers them. The expressions higher price and lower price denote
only different sides of the same relation. _M. Chevalier_ is of
opinion that our present breathless competition is characteristic
only of a period of transition prolific in new inventions, a
competition soon to be followed by peace. (Cours, II, 450 ff.)

581 Ἀγαθὴ ἔρις: Hesiod., Opp., 10 ff.

582 “Whoever speaks of competition suppresses the existence of a common
aim,” says _Proudhon_, although he adds, after _Bileam’s_ way, that
to cure the evils of competition by competition, is as absurd as to
lead men to liberty by liberty, or to cultivate the mind by
cultivation of the mind.

583 Compare _Bastiat_, Harmonies économiques, ch. 10.

584 If all classes were protected against competition, no class would
derive any advantage from it, since a “universal privilege” is an
absurdity. If only certain classes or individuals are protected, it
is done at the cost of all others.

585 The question should not be formulated thus: “Caprice or rule?” but
“Rule of morals, or rule of law?” _Schmoller_ against _v.
Treitschke_ in _Hildebrand’s_ Jahrbb.

586 Concerning the arguments by which the commercial restrictions of the
middle ages were defended, see below. They were, for the most part,
well founded for the age in which they were advanced. A judicious
education will often be compelled to provide limitations, but always
with the intention, by this means, of making possible a really
greater independence. Thus the current of commerce may be too weak
in a poor and thinly settled country in order that supply and demand
should always and everywhere meet and be satisfied. Under such
circumstances, their artificial concentration at certain points is
among the most efficient means of promoting the economy of the whole
people. The policy of freedom of commerce was recommended even in
the seventeenth century by _J. Child_, by _North_ and _Davenant. W.
Roscher_, Zur Geschichte der englisch. Volkswirthschaftslehre, 65
ff., 85 ff., 113 ff., 142 ff. And earlier yet, in Holland, by
_Salmasius_, De Usurus, 1638, 583 and _de la Court_. Compare
Tübinger Ztschr., 330 ff. Thus _Boisguillebert_ says: _Il n’y avait
qu’à laisser faire la nature et la libertê, qui est le
commissionaire de cette même nature_. (Factum de la France, 1707,
ch. 5.) See, also, Dissertation sur la Nature des Richesses, ch. VI;
Détail de la France, 1697, II, ch. 13; Tr. des Grains, II, 8. For
the most part dictated by a reaction against Colbertism.

See further, _Mélon_, Essai Politique sur le Commerce, 1734, ch. 2.
_M. Decker_, Essay on the Causes of the Decline of Foreign Trade,
1744, 31 ff, 106 ff. _J. Tucker_, Essay on the advantages and
disadvantages which respectively attend France and Great Britain
with regard to Trade, 1750. _Forbonnais_, Elémens du Commerce, 1754,
I, 63. _Genovesi_, c. I, 17, 3, is of opinion that at least in case
of doubt, commerce stood more in need of freedom than of protection.
_Verri_, in his Meditazioni, goes still farther. The Physiocrates,
with their _laissez aller_ and _laissez faire_ recommend competition
as the best means to increase the net income of a people. According
to _Dupont_, 147 ff, éd. Daire, the province of legislation is
confined to declaring the laws of nature. His motto is: _liberté and
propriété_. _Adam Smith_ asks that the state should do only three
things: insure protection against foreign states, the administration
of justice at home, the establishment and maintenance of certain
institutions of advantage to the whole community, but which private
interest could not establish for want of means to cover the expenses
attending them. (Wealth of Nations, V, ch. I, 2.) Hence he demands
(III, ch. 2) the abolition of all kinds of _fidei commissa_, of
royalty in mines (I, ch. 11, 2), of all corporate and exclusive
privileges, of all protective duties etc. (IV, ch. I ff), but
especially of the colonial policy hitherto in vogue. (IV, ch. 8.)

The attacks of the Socialists on freedom of competition were begun
by _Fichte_, Geschlossener Handelsstaat, 126, in which it is called
a robber-system or system of spoliation. He would have the state
have more solicitude for human industry than if men were so many
swallows. See further, _Sismondi_, N. Principes, passim, who
everywhere demands the protection of the government for the weaker.
_Fourier_, N. Monde industriel, 396, who thinks that _le monopole
général_ is always a _preservatif contre le commerce_. _Bastiat_,
Harmonies économiques, ch. 10, has a very valuable refutation of
these follies. Recently, _Rodbertus_, Hildebrand’s Jahrbücher, 1865,
II, 272, is of opinion that “social individualism” has ever had in
history the task of dissolving decaying societies, as, for instance,
under the Cæsars.

587 Whoever would sell to others must purchase of them. (_Child._,
Discourse of Trade, 358.) Similarly _Temple_, Works III, 19, and
_Becher_, Polit. Discurs, 1547. This view seems to have become the
national one first in Holland. Compare also _Quesnay_, 71 and
_Mirabeau_, Philosophie rurale, 1763, ch. 2.

588 We often hear it said: “nothing sells because there is no money.”
But the real cause here is, in most instances, not a want of money,
but a want of other goods which might serve as a counter-value. In
bad times, for instance, there is many a weaver who would consider
himself fortunate, even if he could get no money for his cloth, to
obtain instead, meat, bread, wood, raw material etc. If money only
were wanting, that might easily be as favorable a symptom in
commerce, as when there are not enough shops, steamers etc., to
carry on the business of the country. Compare _North._, Discourses
upon Trade, 1691, 11 seq., but especially _J. B. Say’s_ celebrated
theory of Markets, traité I, ch. XV.

589 See _Humboldt’s_ observations as to how, in Spanish America,
agriculture in the vicinity of the mines increases and decreases
with the wealth of the latter. (N. Espagne, III, 11 ff.) See also
_Harrington_ (ob. 1677), On the Prerogative of a Popular Government,
I, ch. 11; _Cantillon_, Nature du Commerce, 16. And so _Stein._,
Lehrbuch, 122 seq., points out how great enterprises produce
especially for the consumption of the small householder without
capital, and how, therefore, the flourishing condition of the one
determines that of the other.

590 Those indeed who live by the spoliation of others, as robbers,
deceivers etc. are interested in the economic prosperity of the
latter only so long as their spoliation of them is not endangered.
Only to this extent can it be claimed with _Fr. List_ that the
nobility of the Middle Ages, in obeying the selfish calculation
which led to the oppression of the peasantry, engaged in as bad a
speculation as a manufacturer of our day would who should feed his
steam-engine with nothing but saw-dust or scraps of old paper. The
cities of the middle ages had a much more undoubted economic
interest in the emancipation of the peasantry as a class than the
nobles or the clergy.

591 Such exceptions there certainly are, even if it were not true “that
the most godly cannot rest in peace unless he is acceptable to his
ungodly neighbor.” Nations that furnish the same products as we do
may, indeed, “spoil our market,” just as at home the selfish
shoemaker may desire the prosperity of all wearers of shoes, that is
of all other industries, but not that of all other producers of
shoes. The view that long prevailed, that one man’s gain was always
some other man’s loss (_Th. Morus_, Utopia 79, ed. Colon. 1555;
_Baco._, Sermones fideles, cap. 15; _quid-quid alicubi adiicitur,
alibi detrahitur_; _M. Montaigne, Essais_ I, 21: _les prouficit de
l’un est le dommage de l’autre_) prevailed much longer in
international affairs where observation is much more difficult than
in national affairs; although even here, _P. de la Court_, Maximes
politiques, 1658, contrasts the economic interest of Holland with
that of the rest of the Netherlands and prefers it to theirs. Even
_Voltaire_ says: “The desire of the greatness of the Fatherland
includes the desire of evil to our neighbor. Evidently no country
can gain except what another loses.” (Dict. philosophique, v.
Patrie.) Compare, however, the _peut-être_ in his Histoire de la
Russie, I, 1, on the occasion of the English-Russian treaty of
commerce. Similarly, _Galiani_, Della Moneta, I, 1, IV, 1; _Verri_,
Opuscoli, 335, and recently _v. Cancrin_ who says that “in every-day
life, property is acquired only at some other person’s expense.”
(Weltreichthum, 1821, 119. Oekonomie der menschl. Gesellschaft,
1845, 23.) The cosmopolitan view (_Xenoph._, Cyrop., III, 2, 17.
Hier., 10) which prevails in Adam Smith’s school was introduced by
_Hume_, Essays, 1752, On the Jealousy of Trade. _Quesnay_,
Encyclopédie, v. Grains, 294, ed. Daire; _A. Smith_, Theory of moral
Sentiments, 1759, p. 6, sec. 2, ch. 2. _Pinto_, Lettre sur la
Jalousie de Commerce, 1771, and _J. Tucker_, Four Tracts on
commercial and political Subjects, 1776, 34 ff and 42 ff. “The
system of states exercises no influence whatever on the world’s
commerce.” (_Lotz_, Handbuch I, 11.) More recently, _R. Cobden_, in
his Russia, Edinb., 1836, among others argued, that the conquest of
Turkey by the Russians would be useful to England, because then more
(?) English products would probably be sold there. Russia would
become no stronger thereby, as conquests always injure the conqueror
more than they benefit him. The idea of European equilibrium is
therefore a chimera, because no state can be prevented from having
an internal growth, as great as may be. Thus, in the summer of 1853,
we heard the London Times sometimes preach that every cannon-shot
fired by the English at the Russians might kill an English debtor or
an English customer. The Venetians entertained a similar view at the
beginning of the fifteenth century. Compare _M. Sanudo_ in
_Muratori_, Scriptores, XXII, 950 ff. See above, § 12.

Moreover, Malthus had recognized that there were natural rivalries
between nations which produced exceptions to Tucker’s laws.
(Principles, Preface.) Similarly _Garve_, in Cicero’s Pflichten
(1783), III, 146 ff.

_ 592 B. Franklin_, Works, vol. III, 49. _Sismondi_ claims for all
civilized nations the right of interfering with the governments of
other nations with whom they have or might have commercial
relations, and of insisting that they shall have a good government
under which commerce may freely develop. (N. P. VII, ch. 4.)

593 As for instance when the _ami des hommes_ says that he felt towards
an Englishman or a German as he did towards a Frenchman with whom he
was not acquainted. _Mirabeau_, Philosophie rurale, ch. 6.

594 Thus, for instance, the Stoic, Zeno: _Plutarch._ De Alex, fort, 1,
6.

595 Compare even _Lauderdale_, Inquiry, 274 ff.

596 How well, for instance, the English sustained Napoleon’s continental
blockade, the evils produced by which were intensified by several
bad harvests. Its worst time did not, indeed, coincide with that of
the struggle with the United States. The ancient Athenians, during
their contest with Philip of Macedon, considered the question of the
supplies from the Bosphorus etc. as one of life and death. But this
can be looked upon only as a cogent proof of the small development
which their commercial talents had received at the time. How easily
might they not, according to our ideas, have obtained corn from
Sicily or Egypt.

597 According to the acute analysis of language made by _F. J. Neumann_,
Tübinger Ztschr., 1872, 317 ff., the word “price” has reference to
an actual purchase or sale, while the expression “value in
exchange,” generally called simply value, is based upon a valuation,
or intimates in a general way that an object possesses value; value
in exchange is, so to speak, the average of several
price-determinations. Price, according to _Schäffle_, is the
external consequence of value in exchange, a means of representing
the latter. (N. Œk., III, Aufl., I, 218.) Only through the
difference between value in exchange (universal possibility) and
price (special reality) is the _laesio enormis_ of the jurists
possible. (_Schmitthenner_, Staatswissenschen, I, 416.)

598 By market price, _prix courant_, is meant the money-price of
commodities, determined by competition.

599 A problem very similar to that of the motion of bodies in space.

_ 600 Lotz_, Handbuch, 50 ff., calls those commodities costly which are
obtained only at a high cost of production, and dear, those whose
price is above the cost of production.

601 Compare _Canard_, Principes d’Economie politique, ch. 3. Almost
simultaneously, _H. Thornton_, 1802, Paper-Credit of Great Britain.

602 See _Jackson’s_ Account of Morocco, 284, for cases in which, in the
Sahara, when the burning winds of the desert had dried up the water
in the leathern bottles of the caravan, a drink of water cost from
$10 to $500.

603 The North American aborigines very frequently consent, in their
exchanges, to take any offer made to them by their equals, however
insufficient it may be, because they fear revenge. _Schoolcraft_,
Information etc., II, 178. As to the effects of cunning, the
Tungusi, when they get a glass of brandy from the Russians, grow
almost idiotic, and give away their goods at mock-prices in drink.
(_v. Wrangell_, Nachrichten, I, 233.) In the higher stages of
civilization, on the other hand, very distinguished people are, by
no means, privileged because of their position, in the struggle for
prices. In modern times, claims (_reclamen_) have taken the place of
greater physical or political power. Compare _E. Hermann_, Leitfaden
der Wirthschaftslehre 1870, 91 ff.

604 Thus _Galiani_ says, that before one of the two parties has
expressed his want to buy or to sell, the pans of the scales are in
equilibrium. The first that speaks breathes on one of them, and it
drops. (Dialogue sur le Commerce des Bleds, 1770, No. 6.) This has
been verified in a striking manner in California, where the most
valuable commodities were often purchased at auction at the lowest
prices, while when purchased from merchants and even the most
wretched shopkeepers, they were sold enormously dear. (_Gerstäcker_,
in the Allg. Zeitg., May, 1850.) Thus there were harvested in
France, in 1817, 48,000,000 hectolitres of wheat, valued at
2,046,000,000 francs, in 1820, 44,500,000 hectolitres valued at
895,000,000 francs. (_Cordier._) This vast difference in price
existed, because in 1817, the whole world was still trembling under
the impression made by the failure of the crops in 1816, while in
1820, the feeling of comfort and security caused by the rich year
1819, still prevailed. Low prices at forced sales under decree etc.
See below, § 5. That travelers are so frequently taken advantage of
in effecting changes of money is explainable partly by their urgent
wants, which are well known to the opposite party, and partly by
their supposed ignorance in the matter. And so, at auction sales,
out-bidding one another has something very seductive in it for
ignorant or hot-headed purchasers.

605 It was considered immoral by his contemporaries, when William the
Conqueror introduced the custom of farm-letting to the highest
bidder. (_A. Thierry_, Conquête de l’Angleterre, II, 116, éd.
Bruxelles.) It is repugnant to poetic and delicate minds to think
that everything has a price exactly fixed. (§ 2.) I need only refer
to the picture of Helen which Zeuxis exhibited for money, which act
of his was characterized, by his cotemporaries, as a species of
prostitution. _Val. Mac_, III, 7. _Ælian_, V, 4, IV, 12. _Socrates_
judgment on the payment of the sophists. _Xenoph._, Memor., I, 6,
13.

606 Competition has only a negative influence on prices, inasmuch as it
modifies the extreme operation of the other grounds of their
determination. _Thornton_, Paper Credit. _Lotz_, Revision, 1811, I,
74 ff, 241 ff.

607 The expression, “intensity of demand,” in _Malthus_, Principles, ch.
2, sec. 2. As early a writer as _Sir J. Stewart_ calls attention to
the difference between large and high and small and low demand. A
high demand will always raise the price, as when, for instance, two
wealthy virtuosi compete at an auction. _Paucorum furore pretiosa_,
as Seneca says. An English penny of the time of Henry VII, once
sold, on such an occasion, for £600. In 1868, at the Lafitte
auction, seven bottles of wine sold to Rothschild at 235 francs a
piece after the _Maison dorée_ had offered 233. (N. freie Presse,
Dec. 17, 1868.) A great demand has frequently no result but to
increase the supply, and the price rises only in so far as the
demand is too sudden to permit a parallel growth of the supply.
(Principles, Book II, ch. 2, 10.) The present price of tea could not
remain unaffected, if ten different private merchants, competing one
with another, or the agent of a privileged commercial society,
should send orders to China for an equal quantity of tea. (_Verri_,
Meditazioni, IV, 8 ff.)

608 Immense weight laid on the _æqualitas permutationis_ (after
_Aristot._, Eth. Nicom., V. 7,) in the ethics and economics of the
scholastic middle ages, and in the time of the Reformation. Compare
_Melancthon_, in Corp. Ref., XVI, 495 ff, XXII, 230.

609 A very barbarous theory of price in _Xenoph._, De Vectigg., 4. The
ancients made little progress in this respect, although there are
not wanting ingenious observations on certain phenomena of prices.
(See _Aristot._, (?) Oecon. II; _Cicero_, De Off. III, 12 ff.)
_Mariana_, De Rege et Regis Institutione, 1598, III, explains price
as the relation of value to quantity. According to _Locke_, the
price of a thing is determined by the relation between “quantity”
and “vent”: the increase or diminution of its useful qualities
influences it only so far as it alters that relation.
(Considerations on the Consequences of the Lowering of Interest etc,
1691, Works II, 20 ff.) _Law_, on the contrary, says that the “vent”
can never be greater than the “quantity,” but that the “demand” may
be. Wherefore, he proposes the formula: quantity in proportion to
the demand. (Trade and Commerce considered, 1705, ch. 1.) In chap.
6, _Law_ distinguishes three elements in price: quality, quantity
and demand. The expression “quantity” is, certainly, very
unsatisfactory. How many examples does not _Tooke_ (Thoughts and
Details, on the high and low Prices of the last thirty Years, 1823,
part IV) give to illustrate how, when the supply was smallest,
prices were lowest and _vice versa_! It was so almost always after
the market was over-filled, when a great many speculators had lost
and no one dared to purchase anew. _Montanari_ (ob. 1687) furnishes
us with an excellent theory of prices. (Della Moneta, 64 ff.,
Custodi.) And a still better one, _Sam. Pufendorf_, Jus Naturæ et
Gentium, 1672, V. 1, who must be considered the best authority on
the laws of prices before _Stewart_. _Boisguillebert_, Traité des
Grains, II, 1, 10. _Galiani_, Della Moneta, I, 2, knows only the
factors _utilità_, and _rarità_, although in his exposition of the
latter, he discusses many points which would be called the cost of
production in our time. The wisdom of Providence has granted us the
most useful things in the greatest abundance to make them cheap.
_Stewart_, Principles II, 2, 4, rendered a great service to the
theory of prices, tracing back supply to the cost of production,
demand to want and ability to pay; and his deserves to be called the
immediate predecessor of _Hermann’s_ remarkable theory. (_Hermann_,
Staatsw. Untersuchungen, 66 ff.) For a peculiar theory of prices,
see _Paganini_, Saggio sopra il giusto Pregio delle Cose, 189 ff.
_Neri_, Osservazioni, 1751, 127. _Gust. Menger_, Grundsätze, I, 179
ff., has made an interesting attempt to explain the formation of
prices in its simplest shape, in the supposition of a monopoly in
the seller, and by then going over to the subsequent modifications
introduced by the competition of many sellers.

610 “Instead of separating, in the same matter, the points of view of
the buyer and seller, we may distinguish the consideration of the
thing to be acquired and the thing to be given by one and the same
person.” (_Rau._) The possessor of the more current commodity
appears especially as demanding, that of the less current as
offering or supplying, (_v. Mangoldt._)

611 This is for free goods=0, for monopolized goods=1/0.

612 The obvious fact that every price supposes a comparison of two
commodities, and that every buyer is, at the same time, a seller,
has been overlooked by only too many writers. And hence _Dutot’s_
opinion, that, as all men buy and few only sell, the state, in case
of doubt, should favor the buyer. (Réflexions sur le Commerce et les
Finances, 1738, 962, éd. Daire.) And so the often-mooted question
whether universal dearness or cheapness is more useful: the latter
advocated, for instance, by _Herbert_, Police générale des Grains,
1755; _Verri_, Meditazioni, V; the former by _Boisguillebert_,
Traité des Grains, I, 7, II, 9; and by the Physiocrates. (_Quesnay_,
Maximes générales, Nr. 18 ff., I, Problème Économique; also by _A.
Young_, Polit. Arithmetics, ch. 8.) The laity in Political Economy
understand by dearness only the general cheapness of the medium of
circulation or exchange, and _vice versa_.

613 Thus, even a poor man in Naples sometimes requires a glass of
ice-water. The introduction of the extensive use of snow into Sicily
improved the condition of the public health. (_Rehfues_, Gemälde von
Neapel, I, 37 ff.) On the other hand, furs, in the far north, are
articles of prime necessity. Newspapers in a free country satisfy a
want much more urgent than in countries which are not free. And so,
_Senior_ says that shoes are “necessaries” to all Englishmen, since
without them, their health would suffer. To the lower classes of
Scotland they are “luxuries.” Custom permits them to go barefoot
without hardship or degradation. For the middle classes of the same
country, they are “decencies.” Shoes are worn there, not to protect
the feet but one’s civil position. In Turkey, tobacco is a decency
and wine a luxury. The reverse is the case in England. (Outlines, 36
ff.)

614 As to the relativity of the opposites of “temperance” and “excess,”
every person should attend to the following points: a, not to exceed
one’s income; b, to provide for one’s self and one’s family; c, to
lay by something for a rainy day; d, to place one’s self in a
position to care for the poor; e, to indulge in no pleasure
injurious to body or mind; f, to give no bad example. (_Tucker_, Two
Sermons, 29 ff.) _Menger_, Grundsätze, I, 92 ff., endeavors to
compare the value in use of different commodities from the point of
view, that the means of gratification of a less urgent want, when
the more urgent wants of the present are satisfied completely,
should be preferred to the means of over-gratifying the latter.

615 Thus the price of many dark articles of apparel rises in a moment of
unexpected universal mourning. A very remarkable case in Paris, at
the death of Henry II. (_Montanari_, Delia Moneta, 85, Custodi.) On
the other hand, a change of fashion may greatly depress the price of
many commodities. Such a change may take place even in the case of
precious stones; as, for instance, now in London, a perfect emerald
is most highly prized. (_King_, Precious Stones and Metals, 1871.)
The rise of many drugs in times of cholera, and of leeches, for
example, in Paris, 600 per cent. Rise of the price of powder, horses
etc. at the outbreak of a war, and of the price of iron caused by
extensive railroad building. In Circassia, a good shirt of mail was
formerly worth from 10 to 200 oxen: but since it was discovered not
to be a protection against cannon balls, its price fell 50 per cent.
(_Bell_, Journal of a Residence in Circassia, I, 403.)

616 On “connected” (_connexen_) goods, the use of one of which supposes
the use of the other, as, for instance, sugar and coffee, wood and
stone used in the construction of buildings, see _Schäffle_,
Nat.-Oek, II. Aufl., 179.

617 Observed by _Necker_, Sur la Législation et le Commerce des Grains,
1776. Compare _Roscher_, Ueber Kornhandel und Theuerungspolitik,
1853, 1 ff. In Athens, for instance, the _medimnos_ of wheat cost
ordinarily five drachmas, but during the siege by Sulla it rose to
1000 drachmas. (_Demosth._ adv. Phorm., 918. _Plutarch_, Sulla, 13.)
Compare II. Kings, 6, 25, 7, 1. In Paris during the siege by Henry
IV. it rose to 5000 per cent. of the ordinary price. (_Lauderdale_,
Inquiry, 60 ff.) During the siege of Breisach, in 1638, a mouse was
finally worth 1 florin, the quarter of a dog, 7 florins, a quarter
of wheat, 80 thalers. (_Röse_, Leben H. Bernhards, M., 11, 269.)
Compare _Strabo_, V, 248 seq.

618 Wheat is still more indispensable than meat. Hence, in the ten
principal markets of Prussia, the price of rye rose much more from
1811 to 1860 than the price of beef; the former between 0.32 and
1.03 silver groschens and the latter between 2.32 and 4.94 silver
groschens. (Annalen der preussischen Landwirthschaft, 1869, No. 9.)
And so in the Rhine district, the wine harvests have undergone much
greater changes in price than the prices of must, although the years
differed very largely in the quality of the yield. Thus the crop of
1830 was only 225, that of 1868, 10,845 pieces, and yet the minimum
price between 1831 and 1865 was only from 3 to 58 flr. per ome.
(_Engel_, Preuss. Statist., Ztschr., 1871, 168 ff.)

619 In England, the price of wheat has not unfrequently risen from 100
to 200 per cent. when the harvest was from one-sixth to one-third
under the average, and when a supply from abroad had modified even
this condition of things. (_Tooke_, History of Prices, I, 10 ff.)
_Tooke_ is of opinion that in a country with poor-laws like those of
England, a deficit of one-third in the wheat crop, if there were no
stores remaining and no importation from abroad, would cause the
price of wheat to rise, 500, 600, and even 1000 per cent (p. 15.)

620 See _Davenant_, Political and Commercial Works, London, 1771, II,
224. Tooke was somewhat acquainted with Davenant. According to this
law, a deficit in the harvest of 10 per cent. would raise the price
of corn 30 per cent.; one of 20 per cent. would raise the price of
corn 80 per cent.; one of 30 per cent. would raise the price of corn
160 per cent.; one of 40 per cent. would raise the price of corn 280
per cent.; one of 50 per cent. would raise the price of corn 450 per
cent.

621 In England, it is 38.8 per cent. of the supply that comes to the
market. (Quart. Review, XXXVI, 425.) In Belgium 40, and in Saxony at
least 50 per cent. (_Engel_, Jahrb. der Statistik etc. von Sachsen,
I, 276.) In Germany, the farmers consume on an average two-thirds
themselves. (_v. Viebahn_, Zoll.-v-Statist., II, 958.) With this
_Plato_, De Legg., VIII, agrees remarkably well.

622 On the difference in this respect between England, Germany and
northwestern Norway, see _Hermann_, p. 71.

623 Hence it not unfrequently happens that grain grows dear not from any
real want of it, but because it is generally supposed that such want
exists. For an explanation of why it is that wheat and similar
commodities have an almost invariable price, when the average is
taken of a long series of years, see _infra_ § 129.

624 Case in Naples in which after a poor harvest the price of corn
remained very low, because the oil-harvest had also failed, and the
poor could earn nothing in that industry in which they were largely
employed, and _vice versa_. (_Galliani_, Della Moneta, II, 2.) Thus
_Adam Smith_, Wealth of Nations, I, ch. 7, distinguishes between
“effectual” and “absolute” demand. Similarly _J. Steuart_,
Principles I, ch. 18. Care should be taken to distinguish in this
respect between desire and demand.

625 Thus, in the famine in Ireland in 1821, during which potatoes rose
to fabulous prices, but wheat scarcely at all, and had therefore to
be exported.