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The comparative Prices of Labor in Europe and the United States-These Prices determine the Value of Money and other Capital in these two Quarters-Money worth more than other Capital.—Its Value in any Country, and at any given Time, determined by the Rate of Interest-Some Account of the Rates of Interest in different Countries, and at different Times.-The Average Interest of Money in the United States, as compared with the Average in Europe.-Difference in the joint Cost of Money and Labor in these two Quarters-Different States of Society the Causes of this Difference.-The Greatness of the Power acquired in Europe. by the Wrongs to Labor.--The practical Importance, in forming a System of Public Economy for the United States. of considering the Difference in the Cost of Money and Labor in Europe and America.-A Commercial Principle lies at the Bottom of this Difference, and controls Results.

THE statistics of the prices of labor in the United States and in Europe, are so often cited, as to cause it to be universally and well known, that the difference in these two quarters is very great. Taking the average of prices in Europe, it has been found that they are less than one third of the average prices in the United States, for the same descriptions of labor. For the purposes we have in view in this work, therefore, we assume, whenever there is any occasion to refer to it, that the average price, cost, or value of American labor, is as three to one of the average price, cost, or value of European labor.

Labor being the parent of all other kinds of capital, as before shown, it will follow that the cost of everything which it creates is measured by its price. Adam Smith, Ricardo, and others, have set up labor as the measure of all values. Smith is so earnest on this point, that he takes pains to show, that money is not the measure of value, as some say it is, but that labor discharges that function. We agree with him, that money does not; and we are not disposed to make any controversy with his position that labor does, if he means only to assert a general principle, that labor influences prices, causing an approximation toward an agreement in prices with a given amount of labor; but we shall have occasion to deny that any certain reliance can be placed upon labor as the measure of price, and to maintain that supply in relation to demand, in

every given case, is the rule that controls prices. It is sufficient for our present purpose to say, that labor is the measure of the cost of other capital; from which it will follow, that, as the average price of labor in Europe is not more than one third of its average price in the United States, the average cost of all the capital which in these two quarters labor creates, being all other than itself, can only be in the same ratio, viz., as one in Europe to three in the United States.

Money is the product of labor as truly as any other capital, and its value is naturally determined by it. But money, as a species of capital, may be considered as worth more at the same cost, than other kinds, inasmuch as it is a common currency, and will always purchase all other kinds, and supply wants more certainly and more conveniently than any other.

The comparative value of money, in different quarters of the world, and at different times, is ascertained by the comparative rate of interest that is paid for it, on an average, as a subject of trade. Adam Smith states that under Henry VIII., interest above ten per cent. was declared unlawful; that it was reduced to eight per cent. under James I.; to six per cent. soon after the restoration; and to five per cent under Queen Anne. It has gradually fallen since that time; and money was borrowed by the British government, in the old French war, as we call it here, at three per cent. Holland, in the time of Adam Smith, some 70 to 80 years ago, borrowed at two per cent., as her credit was at the highest point; and her private citizens borrowed at three per cent. Legal interest in France, in the early part of the 18th century, fluctuated from five to two per cent.

It is true, that these laws against usury prove no more than that interest was exacted at higher rates than the law allowed, and that these legal reductions followed in the train of the market reductions.

There have been times and countries in which the interest of money was so high as to be now almost incredible. It appears by the letters of Cicero, that Brutus loaned money at forty-eight per cent. in the latter days of the Roman republic; and Adam Smith states that forty, fifty, and sixty per cent. had been paid for the use of money, by farmers of estates in Bengal, and the crops mortgaged to secure principal and interest, so great were the profits. It has happened, for very short periods, when money was tight, and much was at stake, that interest as high as the highest of the above rates, has been paid in the city of New York. But it is not

these exorbitant, accidental, and transient rates of interest, but the general average, in a course of years, that determines the value of money, as a subject of trade, in different quarters of the world.

The use of money is bought and sold in market, like anything else, and the rate of interest is its price. That is to say, when the average rate of interest in one country is 6 per cent., and in another 3 per cent., the value of money is twice as much in the former as in the latter, or two to one. The same rule is applicable to the variations of interest in the same country at different times. Adam Smith has laid down this rule very clearly in the following terms: "Whatever are the causes which lower the value of capital, the same must necessarily lower that of interest, and exactly in the same proportion. The proportion between the value of capital and that of interest, must remain the same." There may be transient exceptions to this rule, from either a temporary scarcity or plenty of money in market; or more properly, perhaps, from the difficulties. or facilities of obtaining it.

The following table of the rates of discounts in London, for the last twenty years, on first-class paper, by finding the account of the same firm, doing business through the same brokers, for that period, was furnished by a London correspondent of the New York Courier and Enquirer:

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January, 1838..
July, do.

January, 1839.

July, do.
January, 1840..
July, do.
January, 1841..

July, do.

January, 1842..

July, do.
January, 1843.

July, do.
January, 1844..

July, do.
January, 1845.
July, do.
January, 1846....
July, do.
January, 1847.

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The interest of money on the continent of Europe, is generally less than in England. If we put the rate of interest in Europe at

3 per cent., and that in the United States at 6 per cent., it is probably a fair exhibit; as the latter as often and as much exceeds 6 as the former exceeds 3. It would, perhaps, be fair to say, that money is worth as much more in the United States, than in Europe, as labor is. The difference in the value of property generally, it might perhaps be said necessarily, corresponds nearly with this measure, inasmuch as there can be no good reason why the permanent capital created by labor should fall below itself in value. But, as before remarked, money capital may be considered as worth more than other kinds at the same cost, it being always more available for use as a common currency.

It will be seen, therefore, that the cost of money in the United States is rated very low, as compared with its cost in Europe, if the difference be allowed to be as two to one. It is proposed, however, in the general argument of this work, to allow that the difference is only as three to two, which is a sacrifice in the force of our argu


It will be seen, therefore, if the difference in the price of labor in Europe and the United States, is as three for the latter, and one for the former, as shown above; and if the difference in the cost or value of money, in these two quarters, be assumed as three to two, that the joint value, or cost, or price, of labor and money in Europe and the United States, is as two for the latter, and one for the former; or one hundred per cent. difference; that is to say, money and labor together cost twice as much in the United States as they do in Europe. The true difference is, in fact, considerably in excess of this.

The primary, fundamental cause of this difference, is disclosed in another chapter, viz., that the labor of Europe is held in a state of bondage, and forced to work on terms prescribed by those who in fact wield the power of masters. Down to this time, labor in Europe has always been kept in a state in which it is compelled to toil for bare subsistence. The reward of labor as a compensation for the services of one human being rendered to another, both of whom are assumed to be on a footing of equality by nature, and in all the rights of the social state, never entered into the policy of the states of Europe, and was never admitted as an element in the systems of European economists; but it has always been carefully excluded from both. The principle adopted and acted upon by both-by one in the promulgation and exposition of creeds in their abstract forms, and by the other in carrying them out in the

practical operations of government-has been such a provision for labor as will merely perpetuate the race of laborers. It is so expressed by Adam Smith, and others of his school, in terms, as already seen in another chapter. Nothing has ever been contemplated, by either the economists or governments of Europe, except the bare subsistence of laborers, that they may render the most effective service, and that the race may not become extinct by deprivation and want, in the same manner as provision is made for beasts of burden, draught, and other services. The principle of reward, of compensation, for laboring man, was never thought of by them, any more than that of rewarding the laboring beast; and the laboring man in Europe, for the most part-in all that regards the principles of public economy there, and in all that is devised and put in force by European governments, to the extent of their ability, which, unfortunately has too much control in the premises -has no more to do in fixing the measure of his subsistence, than the laboring brute. It is public economy, there that presides over his destiny, and political power that controls it.

This radical and fundamental cause runs up and branches out into all departments of European society, distributing itself in a thousand ramifications, where it occupies, in these respective stages, the position, and discharges the functions of mediate or intermediate causes. All these influences, however, have but one origin, viz., that principle of the European creed, that the masses were born to serve the few.*

The greatness of the power acquired by this wrong done to the labor of Europe, and the parties by whom it is appropriated, are worthy of a moment's consideration, in addition to what is said on this point in the preceding chapter. It is nothing less than two thirds of the fair reward of labor in that entire portion of the world, if it be admitted, as will certainly be maintained, that the reward, the compensation obtained by American labor, is a just compensationthat it is the freedom and the fair price. It is a great power in any single state, for ever increasing in a sort of geometrical ratio. "A great stock with small profits," says Adam Smith, "increases faster than a small stock with great profits. Money, says the prov

• Of course it will be understood that all this reasoning is predicated on the state of European society before the general revolution attempted in 1848, commencing at Paris. What will be the end of this we know not; but the sole cause of this great movement is the condition of labor above described, and the object of this revolution is the restoration of labor to its rights.

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