movement to form more improved farms, more mills, forges, machinery, etc., is diminished, and the labor which was forming them is set adrift and is unable to consume as largely as before; and so less commodities are required, and less labor to form commodities. Here we have a glut, a panic, and a period of

depression.

Rent has had nothing to do with the movement except as one of the closing effects. As the keener-sighted see that too much fixed capital is being formed, they may rush upon real estate as a means of securing some income; and this speculation may run very wild, because when A buys B's real estate his doing so does not diminish a particle the aggregate of funds seeking investment. He simply transfers them to B. But such a speculation is an effect, not a cause, of the movement which is about to culminate in a collapse. This would come to pass just the same if real estate were never either bought or sold.

THE MOTIVE OF GEORGE'S BOOK.

A collapse of this kind, aggravated by over-importations and by a simultaneous contraction of the currency, occurred in 1873, and continued in greater or less intensity until 1879; and it was during these years that Mr. George saw the misery which caused him to write his eloquent book. Unhappily, he seems to have entirely missed the nature and causes of the disease, and to have equally erred in the remedy he prescribed.

During this period of depression he saw "gaunt Famine side by side with the gilded palace," etc.; but the construction of the gilded palace in no way hastened or contributed to the collapse. On the contrary, it tended to postpone and moderate the collapse; and the construction of a thousand such at the proper moment, accompanied by similar expenditure in other directions, might have totally averted the miseries, losses, and wreck which filled the period from 1873 to 1879. They could not have been averted nor have been postponed for a moment by the confiscation of landed property or any other property.

Let us pass now to what Mr. George has to say about capital. Mr. George is particularly unfortunate in his use of the reductio ad absurdum.

In examining his free-trade notions we have seen him brush aside the opinions of Washington, Franklin, Hamilton, Jefferson, Jackson in short, of the majority of the statesmen and people of the United States - by a few phrases which to him appeared to be a reductio ad absurdum, but which a brief examination showed to be only a false syllogism. In writing of "Capital" he dismisses all previous political economists, both free-trade and protectionist, in a similar manner. He finds their propositions absurd — in holding labor to be supported by capital — “because they involve the idea that labor cannot be exerted until the products of labor are saved, — thus putting the product before the producer," and this he repeats several times in different words. Let us put this into a syllogism.

The producer of capital cannot be dependent for support upon the subsequent product.

Labor is the producer of capital, therefore labor cannot be dependent for support upon capital; but labor in the minor premise is undistributed, while in the conclusion it is distributed. It is a false syllogism.

The labor which precedes and produces certain capital is not the labor which is supported by that same capital, but quite another labor. There is nothing absurd in supposing that the crops raised by certain labor in 1882 may support and be absolutely necessary to the support of that other labor which raises the crops of 1883. The confusion of thought lies with Mr. George, and not with those whom he criticises.

Through many pages upon "Capital" he labors to show that "wages are not drawn from capital at all, but come directly from the produce of the labor for which they are paid." But the real wages of the laborers are the food, raiment, shelter, etc., for which they spend their wages. These are produced before they are used. They are advanced by the capitalist, who is reimbursed only when the articles or the property formed by labor are finished and put upon the market and sold.

That industry cannot exceed the amount which previously existing means can support, is plain enough; but in point of fact there always exists in an industrial society sufficient commodities to carry the community to the next harvest and somewhat beyond.

Industry, then, is not limited by capital, but both it and capital are limited by the field of employment.

Underneath this, and limiting it, lie the desires for the gratification of which the community, as a whole, will work and save. If it desire only bananas and bamboo huts, or mere necessaries, it will remain without progress and without wealth. If it desire the manifold conveniences, luxuries, and amusements now enjoyed in the United States, it will continually work towards the attainment of them as increasing skill, dexterity, judgment, and capital bring nature more and more under dominion. But at no point of time, between the two conditions, has it been true that there existed an unlimited demand for any one or for all the commodities known to the community. At any given moment the demand is limited to such quantity of commodities as can be obtained by a given amount of effort; and it is still further limited by the desire to provide for the future, the desire to

save.

Without this desire there can be none of that progress which grows from the greater efficiency given to labor by fixed and floating capital; that is, by those instruments of production and of convenience which, according to Mr. George himself, enable the community to produce a product ten times greater than it could unaided. But, at any moment, capital is of limited efficiency, and demand and supply will award it only a portion of that which it adds to the annual product. With a given population and a given efficiency of capital the latter cannot be increased indefinitely. Beyond a certain point a larger amount must either rest unemployed, or divide with that before existing the same portion of the annual product, thus diminishing the profits of the whole. There is, then, in every industrial community, at each point in its development, a limit to the field of employment, even if it be in possession of immense undeveloped resources. The English economists generally (and Mr. George follows their lead) suppose that there is only one limit; namely, that which is found in a scarcity of land, mines, etc. Whether this limit has ever been reached in any existing industrial community seems doubtful; that it has not been reached in the United States seems quite beyond doubt.

It is idle, then, to attribute the fluctuations in amount of employment to a deficiency of land brought about by speculation.

The normal limit to the field of employment is passed when the desire to save forms capital faster than the population and its effective demand increases. The excess of employment in this direction causes an excess of production of commodities, and a farther excess in the employment of what is called productive labor.

During the corresponding depression employment shrinks beneath its normal limit, and continues less than the average until the population has gained upon capital or has changed its habits of expenditure. Unemployed capital and labor, during a period of depression, are constantly looking for new commodities and new services with which to tempt the savers (great and small) to increase their expenditure; the savers, meanwhile, vie with each other for the possession of any property which yields a sure income; and those in whom the desire to save is least are crowded out and give up trying to accumulate, —until at last it begins to be apparent that more fixed capital is needed. Then commences another expansion, to be followed, after a longer or shorter period, by another collapse.

The violence of these fluctuations will doubtless diminish in proportion as the community obtains correct views of the relative magnitude of the industrial forces, of the amounts of fixed and floating capital, -the average quantity of unemployed capital in the shape of unsold stocks of commodities and of materials awaiting conversion into commodities, etc.; and, meanwhile, some considerable mitigation might be afforded if, during times of excitement, the general and State and city and village governments abstained, as far as possible, from expenditures for improvements, and reserved their means for times of depression.

To lay all taxes upon real estate would give governments enormous revenues during periods of excitement, when to use them would be prejudicial, and leave it without a large portion of its necessary revenue during periods of depression, when expenditures would be beneficial. How much could be collected

from taxes upon land during periods when land is so depressed that mortgaged property sold under foreclosure fails generally to pay its debts?

CONFUSIONS OF THOUGHT.

In his chapter on " Capital" Mr. George accuses all past economists of confusion of thought; but his own errors in this respect seem to outweigh those of all other writers put together.

He thinks it foolish to suppose that the capital produced in 1882 should support the labor of 1883, but finds nothing unreasonable in saying that the man who is at work upon an unfinished steamship "virtually produces the things in which he expends his wages."

But the things for which he expends his wages were created before he did his work, created by the previous joint efforts of antecedent labor and capital. They belonged to capital, which had furnished the instruments of production and advanced the wages and kept the instruments of production in repair. If what remained was more than the profit usual in the community, it would indicate that population had outgrown capital, that more capital was needed. To construct this capital more labor would be called for, and wages would rise. That is, labor (of all kinds) and capital and rent divide between them the total gross product. When this increases, wages and profits and rents increase. When this diminishes they all must submit to a diminution. The proportions of the gross product which go to one or the other are determined by demand and supply. If capital be relatively scarce, capital takes a larger percentage; if relatively abundant, it takes a smaller percentage. And so with respect to different classes of the community. If any be in excess, it receives a smaller share of the annual product; otherwise, a larger.

With the increase of the annual product, growing out of more. efficient labor and more efficient capital, the totality of wages must necessarily advance. If it advance less in any particular class it can only be because that class is relatively in excess. The amount per head which goes directly to labor of every sort in 1882 is more than the whole product of 1840, and the amount