that encouragement to trade in general is the result, I am obliged to cry, halt! Your theory stops at what we see, and takes no account of what we don't see.

"We don't see that since our burgess has been obliged to spend his six francs on one thing, he can no longer spend them on another.

"We don't see that if he had not this pane to replace, he would have replaced, for example, his shoes, which are down at the heels; or have placed a new book on his shelf. In short, he would have employed his six francs in a way in which he cannot employ them now. Let us see then how the account stands with trade in general. The pane being broken, the glazier's trade is benefited to the extent of six francs. That is what

we see.

"If the pane had not been broken, the shoemaker's or some other trade would have been encouraged to the extent of six francs. That is what we don't see. And if we take into account what we don't see, which is a negative fact, as well as what we do see, which is a positive fact, we shall discover that trade in general, or the aggregate of national industry, has no interest, one way or the other, whether windows are broken or not.

"Let us see, again, how the account stands with Jacques Bonhomme. On the last hypothesis, that of the pane being broken, he spends six francs, and gets neither more nor less than he had before, namely, the use and enjoyment of a pane of glass. On the other hypothesis, namely, that the accident had not happened, he would have expended six francs on shoes, and would have had the enjoyment both of the shoes and the pane of glass.

"Now as the good burgess, Jacques Bonhomme, constitutes a fraction of society at large, we are forced to conclude that society, taken in the aggregate, and after all accounts of labor and enjoyment have been squared, has lost the value of the pane which has been broken."

In one respect the argument against luxury is less strong than that against the breaking of a pane of glass, but in another respect it is stronger. When the shopkeeper in the story has to spend six francs on a pane of glass, he gets no satisfaction out of it and deprives himself of a pair of shoes which he needs. Had he spent the six francs on a luxury, he would presumably have got some enjoyment out of it, even though it had been followed by indigestion or a headache. To this extent it would have been better to have a luxury costing six francs than to have been compelled, through

the carelessness of an overexuberant son, to spend that amount on a pane of glass. On the other hand, when one compares · the expenditure of money for a luxury with the investment of money in tools or other instruments of production, one does not get so favorable a picture. When one spends money for a luxury, one does, it is true, set labor to work, in a luxury-producing industry; but if one were to spend the same amount of money for tools, one would set an equal quantity of labor to work in a tool-producing industry. It is at least as desirable to give work to toolmakers as to luxury producers. In fact, it is much more desirable. The more men there are working in tool-making industries, the better supplied with tools the nation will be. The way they are set to work is by the purchase of tools; that is, by the investment of money in tools.

If you have a dollar to spend over and above what is necessary to maintain you in efficient comfort, you have your choice of spending it on some unnecessary article of consumption or of investing it in some productive enterprise. Whether it be a dollar or a hundred thousand dollars, the principle is the same. If you decide to invest your money in a productive enterprise, you tend, to the extent of your investment, to set labor to work erecting the buildings or manufacturing the machines which will be needed in production. The more people there are who are investing in this way, and the more they invest, the more productive enterprises we shall have. This not only sets labor to work preparing the buildings and machinery, but will continue to employ labor to run the enterprises. Again, as a result of this, more goods are produced and the nation is better fed, clothed, and supplied with all necessaries. It is therefore very much better that there should be a great many people investing their money productively than that they should merely spend their money for extravagant luxuries which are of no use to anyone except themselves. He who does less well with his money than he might do is

doing badly. He therefore does badly who spends his money luxuriously when he might invest it productively.

Emulation in extravagance. Nothing could contribute more to the general prosperity and well-being of the nation than such moral habits as would discourage extravagant consumption and encourage thrift and wise investments in all sorts of productive enterprises. A particularly vicious and wasteful factor in many a social group is competition or emulation in extravagance. What Professor Thorstein Veblen1 has called " conspicuous waste" is sometimes required of everyone with social ambitions. Of all forms of competition, competitive consumption is the most pernicious and wasteful. When men and women try to advertise their solvency by ostentatious wastefulness, there develops a real competition to see who can advertise most effectively.

This is part of a very widespread tendency. Certain Chinese mandarins of an older day used to allow their finger nails to grow to inordinate lengths as a visible sign that they did not have to work. The binding of the feet of women served much the same purpose. Where work is not regarded as respectable, some visible sign of respectability is generally sought. Sometimes these customs are copied even by those who do have to work, as in the case of high-heeled shoes and of long trains.

Emulation in the waste of physical energy. It is not only the possession of plenty of money which is thus vulgarly advertised. The possession of abounding physical energy is also advertised by the practice of conspicuous vices which tend to dissipate energy. The young man who can dissipate freely can thus advertise to the world that he has health and energy to spare, just as he can advertise to the world that he has money to spare when he spends it extravagantly. When there is no sense of moral values and no sober self-restraint, the possession of abundant health and the possession of abundant 1 The Theory of the Leisure Class.

money lead to equally demoralizing vices. The poor are safeguarded by their poverty from the extravagant use of money, but they are quite as likely to indulge in the extravagant uses of vitality as are the rich. If there be any difference, the dissipation of physical energy is worse than the dissipation

of money.

The teacher, the preacher, or the moral leader who can persuade the people to abandon such habits and use their surplus money and their surplus energy productively rather than wastefully will deserve to stand among the greatest of statesmen and nation builders. Nations are built by the wise expenditure of human energy. The less it is wasted, and the more it is used up in production or useful work, the greater the progress of the nation.

We have chosen to discuss, in this chapter, a theme which is not ordinarily treated in works on economics. It has generally been assumed that economics had nothing to do with morals and religion. With certain sentimental and conventional aspects of these human interests, perhaps the economist has nothing to do. But in so far as they are factors, or may become factors, in national wealth, prosperity, and power, nothing can be of more interest to the economist. Even religion, if it stimulates the productive virtues and discourages the vices which waste and dissipate human energy, may become one of the greatest factors in the building of a great, prosperous, and powerful nation. The nation which possesses such a religion will eventually outgrow in all these particulars the nation which does not, or which possesses a religion which enervates, which lulls to sleep, or which represses the productive virtues.1

1 For a fuller discussion of this topic, see the author's book entitled "The Religion Worth Having." Houghton Mifflin Company, Boston, 1912.

CHAPTER VII

THE GEOGRAPHICAL SITUATION

The human factor is the most important factor in national prosperity. Nevertheless, the natural situation is a factor which must be taken into consideration. However gifted and courageous a race may be, it will find it easier to expand and become prosperous, powerful, and great in a favorable than in an unfavorable environment.

Importance of environment. But what is a favorable environment? It is easy to overemphasize the bodily comfort of living in a warm as opposed to a hot or a cold climate, and to ignore the bracing effects of changeable weather. It is also easy to overemphasize the tremendous productivity of certain tropical regions and to forget that they produce the enemies as well as the friends of man in great profusion. It is equally easy to go too far in the opposite direction and to hold that hard conditions, such as a harsh climate and a sterile soil, are best for man's development. If hard conditions are all that men need, the Eskimos of the Far North are peculiarly blest.

If we take everything into consideration, it is probable that the temperate zones are most favorable to man's development as well as to his prosperity. He has here fewer unconquerable enemies than in the tropics or in the frigid zones. He finds a wider variety of useful materials, such as grass, timber, and minerals, and he finds them in greater abundance here than elsewhere. Here the advantages to be gained by work are more obvious and more easily comprehended by the average intellect than anywhere else. The intelligence required to see the advantage of building shelters, making clothing, and kindling fires, especially in a place where, along with the cold