help him to know what he is getting and enable even the inexpert buyer to buy safely. Advertising and salesmanship. From the point of view of the seller of any commodity there is not much doubt as to the efficacy of advertising and expert salesmanship. Serious doubts have been expressed, however, as to the social advantage of what may be called high-pressure selling. Why, we are asked, should we be subjected to all the arts of the expert salesman and advertiser, who are doing their utmost to persuade us to spend our money for things which we do not need? On the other hand, it is replied, why should not every art of persuasion known to the expert be brought to bear upon men to lead them to do what they ought to do? This is what evangelism, moral. leadership, and all sound instruction amounts to. If we are to allow freedom in the exercise of the arts of persuasion at all, it will be difficult to draw the line. Who shall act as our censor and permit one man and forbid another to persuade people to do what he wants them to do? Except in extreme cases this argument is unanswerable. In the case of immoral acts, or any act which the moral sense of the community condemns, it is obviously as immoral to persuade people to commit those acts as it is to commit them. If there is anything which men clearly ought not to buy, it is equally clear that men ought not to advertise it or try to sell it. But the difficulty, except in extreme cases, is to decide just what things it is proper, and what it is improper, to buy. It is quite clear, however, aside from all questions of legal conduct, that much of our advertising is a waste of human energy. Sometimes it is a service to a consumer to apprise him of the fact that he can buy something which he has long wanted and to tell him where it can be had. In most cases, however, advertising serves no such purpose. One does not need an advertisement to apprise him of the fact that soap can be purchased. The only purpose served, in all such cases, is to persuade people to buy one brand rather than another. Our helplessness in such a situation is revealed to us when we consider that it would take a great deal of campaigning, accompanied by advertising and high-pressure persuasion, to work up a public sentiment hostile to advertising. We might easily waste more energy in this campaign than is now wasted in advertising. Political campaigning. Socialists are in the habit of pointing to the wastefulness of advertising as one of the costs of competition. They do not point out, however, that a political campaign is just as wasteful as a selling campaign. The candidate for office advertises his candidacy and uses high-pressure persuasion to get people to vote for him. Since the extension of government power and authority would multiply government offices, it would necessarily multiply the number of campaigners and greatly increase the waste of time and energy used up in political campaigns. Every campaigner, even he who is campaigning for socialism, is doing much the same kind of work as is done by the expert advertiser. He is using highpressure persuasion to get men to do things which they would otherwise not do. It looks as though we should have to regard persuasion in all its aspects, except persuasion to do that which is morally condemned, as a necessary cost of freedom. A despot could suppress all persuasion, in politics as well as in salesmanship, but a free people can scarcely get along without it. Freedom is in some respects costly, but it is worth all it costs. CHAPTER XXX ECONOMIC CRISES Financial crises. One of the most important and most puzzling of all modern economic questions is that of the frequent recurrence of financial crises and general industrial depressions. A financial crisis is an occasion when the money market becomes suddenly demoralized, confidence disappears, and credit shrinks. Everyone to whom money is owed wants it at once, but no one wants to let go of any money in his possession for fear that he may not be able to get any more. Besides, there does not seem to be money enough to pay off existing debts. In the chapter on Banking it was pointed out that a large part of the business of the world is done on credit, without the actual handling of money. If you will imagine a group of men doing business with one another, where each one trusts every other, you will see that large amount can be done with a ridiculously small amount of money. Many transactions will be carried on by means of promises to pay money instead of with the money itself. Many of these promises will be balanced against one another and canceled without the use of any money. In other cases the money will be used merely to pay the balances. But if something should happen to destroy their confidence either in one another or in the continuance of prosperity, the maintenance of price levels, the productivity of labor, or anything else upon which business depends, so that no one would accept promises, but everyone demanded real money, there might not be money enough to go around and make the necessary payments. In that case business would have to slow down, and only as much business could be done as could be transacted with the small amount of money available. If in addition to this everyone held on to all the money he could lay hands on, for fear that he might not be able to get any more, even the limited amount of money in circulation would move slowly, and business would have to slow down correspondingly. A swift dollar may pass from hand to hand many times in a day and in this case do a large amount of business, but a slow dollar passes from hand to hand only a few times a day and does a small amount of business. Industrial depressions. An industrial depression is usually more deep-seated than a financial crisis and usually lasts for a longer time. It is a general stagnation of production because of inability to get satisfactory prices for products. Various explanations, some intelligent and some absurd, have been offered. Overproduction is one of the most common and least intelligent. There may be such a thing as disproportionate production, but such a thing as general overproduction is a physical impossibility. The production and supplying of one thing is a demand for something else—the more production, the more demand; but if some things are produced and offered for sale, and there is no demand for them, it means either that those few things are overproduced or that the other things which might be exchanged for them are underproduced. The overproduction theory. One phase of the overproduction theory of industrial depression is that wages are so low that the laborer is not able to buy his own products. It is argued that this results in an overproduction and a glut on the market. There are many excellent reasons why wages should be higher than they are, but this is not one of them. So far as its effect on the general purchasing power of the community is concerned, it makes no difference whether wages are high and rent, interest, and profits are low or whether wages are low and rent, interest, and profits are high. If the laborer gets a small share of the production of a given industry, and the managers, landowners, and capitalists get a large share, these have a large purchasing power and the laborer a small purchasing power. The value of the whole product of every industry goes to these various classes, and they have it all to spend. If one class possesses a large share, and another class a small share, the total amount to be spent for other commodities is not affected by that distribution. If the laborers get absolutely the whole product of an industry, there would be no more to spend on other products than if the laborers got one half the product and the other participants got the other half. This, let is be repeated, has nothing to do with other and excellent reasons why wages should be high. The periodicity theory. A certain periodicity has been observed in the recurrence of crises and depressions. It is not always easy to determine just the interval that elapses between depressions. Sometimes they come approximately twenty years apart, but they have a disconcerting habit of coming at unexpected times. In his book on "Economic Crises" Jones gives the following table:1 In the nineteenth century it will be noticed that there were severe crises in 1818, 1837, 1857, with lesser crises in 1825 and 1847. The severe crises seemed to come every twenty years for almost half a century. Again, there were severe crises 1 Edward D. Jones, Economic Crises. The Macmillan Company, New York, 1900. |