Well, then, these instruments of production, which do nine tenths of the work, can be brought into existence and kept in repair only by abstinence. Somebody must save what he otherwise would have squandered in present enjoyment. Instead of orgies with boon companions he prefers to improve his farm, to buy better tools, to build a mill, etc. The instruments of production into which he transforms his savings are part of those which increase tenfold the gross products to be divided. He is clearly entitled to some portion of the increase his savings have effected: what that portion shall be will be decided by perfectly impartial umpires, — demand and supply. If of any one kind of the instruments of production there are less than the community can use to advantage, the rent for their use will be high, the profits to be derived from constructing more will be great, and many will be constructed; until at last there will come into existence as many as will command such annual rent or equivalent profit as will satisfy the existing effective desire for accumulation. If he cannot get income enough from his instruments of production to make it worth while to save in this shape, he will form instead instruments of convenience: he will improve his dwelling-house or build a new one; or, abandoning saving, he will use better food, better clothing, go oftener to the shows or the play; and if he be rich, he will call together a number of carpenters, masons, and other artificers, and build him a "gilded palace." In building this he will pass over to the artificers a portion of the annual product which came to him as rent for his part of the community's property, and the artificers will eat it and drink it, and put it into clothing, or obtain some amusement with it, or put a portion in the bank. Every particle of the value of the gilded palace and its luxurious furniture will, when it is finished, have passed into the hands of labor, and the greater part of it will have been consumed by those who were able and willing to work. Thereafter the gilded palace will stand as a striking witness to the fact that in some previous year or years there were funds which could be devoted to unproductive purposes. The totality of such costly edifices, yachts, etc., which existed in San Francisco in 1879 were the accumulations since 1849. They struck the eye and excited the

imagination, and they led Mr. George to very erroneous conclusions.

Mr. George says:

"There is no necessity for abstract reasoning. The question is one of simple fact. Does the relative power of producing wealth decrease with the increase of population?"

that is, by

But he wishes to establish the universal fact that the production of wealth increases faster than population. This he endeavors to prove by inferences from other facts, abstract reasoning. He could not do it in any other way, except by appealing to statistical facts, and is therefore not to blame for the method. What he appears to err in is the way in which he applied his method. He looks at a very sparsely peopled community, and sees that in it a canoe is a more suitable instrument than a steamer, a common road than a railroad; that, in short, there is a limit to the application of modern devices in that community. With a greater population, more capital could be applied; and, to a certain point, with increase in the annual product as compared with the population. Where he errs is in concluding that what is true to a certain point is true indefinitely. He is so sure of this that he instances California. He says: "In 1849, $16 a day were only ordinary wages. Now, men are glad to work a week for that sum, and money is loaned by the year for what would not have hardly been deemed extortionate by the month." But, strange as it may seem, Mr. George does not think that wages are lower because labor yields less wealth. He says:

"On the contrary! Instead of the wealth-producing power of labor being less in California in 1879 than in 1849, I am convinced that it is greater; and it seems to me that no one who considers how enormously during these years the efficiency of labor in California has been increased by roads, wharves, flumes, railroads, steamboats, telegraphs, and machinery of all kinds, — by a closer connection with the rest of the world, and by the numberless economies resulting from a larger population, can doubt that the return which labor receives from nature in California is on the whole much greater now than it was in the days of unexhausted placers and virgin soil; the increase in the power of

the human factor having more than compensated for the decline in the power of the natural factor. That this conclusion is the correct one is proved by many facts that show that the consumption of wealth is now much greater, as compared with the number of the laborers, than it was then. Instead of a population composed almost exclusively of men in the prime of life, a large proportion of women and children are now supported, and other non-producers have increased in a much greater ratio than the population; luxury has grown far more than wages have fallen; where the best houses were cloth and paper shanties are now mansions whose magnificence rivals European palaces; there are liveried carriages on the streets of San Francisco, and pleasure yachts on her bay; the class who can live sumptuously on their incomes has steadily grown; there are rich men beside whom the richest of the earlier years would seem little more than paupers, in short, there are on every hand the most striking and conclusive evidences that the production and consumption of wealth have increased with even greater rapidity than the increase of population, and that if any class obtains less it is solely because of the greater inequality of the distribution."

This quotation is an example of the eloquence with which Mr. George states his conclusions, and of the unwariness with which he adopts them and considers them proved.

Wages had fallen to one sixth, and the interest upon capital to nearly a twelfth; yet he thought the annual product must certainly be greater per man than it was in 1849! One would think he would have asked, If this be so, what becomes of it? Rent, profits, and wages must take the whole; and rent and profit again spend nearly the whole of their shares upon wages. How, then, could it be that wages had fallen to one sixth part of what they were? Having come to this question, it must have occurred to him to look into the census of 1870 and see what were the earnings of labor and capital, — that is, the gross product out of which the share of rent must come. Looking into this, he would have found that the value of all farm products, including betterments and additions, was $50,000,000, and that the number of hands employed was forty-eight thousand, giving $1,040 a year to each; or, dividing by three hundred days, $3.50 a day. Turning now to mining, he would have found the

gross product $8,300,000, and the hands employed seventy-six hundred, giving to each $1,090 a year, or $3.60 a day. Turning again to manufactures, he would have found the gross product $68,000,000, the materials being $27,000,000, leaving $31,000,000 as the value added to materials by forty-nine thousand persons; giving $633, or $2.11 a day.

The agricultural and mining gross products included of course more rent, and the manufacturing less rent; but they all three contained funds which went to non-productive labor, that is, to the seventy-six thousand persons who were engaged in professional and personal services. The thirty-three thousand persons engaged in trade and transportation could hardly have much increased the average. We will call their earnings $4 a day, or $1,200 a year, for each person, or $39,000,000 altogether.

We have, then,

48,000 persons engaged in agriculture and producing

7,600 in mining, producing.

49,000 in manufacturing .

33,000 in trade and transportation.

76,000 in professional and personal services

213,600

We have, then, $128,300,000 to be divided among two hundred and thirteen thousand six hundred persons, or just about $600, or $2 a day against $16 a day, earned by each man in 1849.

Nobody supposes that the census enumerations are absolutely exact, but on the other hand nobody believes that they err by fifty per cent; and it will be seen then how wild, beyond belief, were the conclusions which Mr. George considered proved by his method of reasoning.

He believed that labor, assisted by capital, was earning in California over $16 a day; and his book would tend to make the laborer feel himself wronged if he did not receive that amount. But all that labor and capital together earned was about $2.11 a day, as shown by the statistics of manufactures; and out of this and the shares of rent in agriculture and mining, the persons engaged in professional and personal services had to be. supported.

With the total annual product, such as it was, the laborers could not possibly have had more than they obtained; and it is a pity they and their innumerable well-wishers in other classes should have been disquieted by Mr. George's generous and eloquent but exceedingly inaccurate reasoning.

Analyzing Massachusetts in the same way as California, we find:

divided gives $566 a year, or $1.89 a day.

But the estimates in Massachusetts were in currency, which was at 15 per cent discount, so that the daily earnings in that State come down to $1.61 against $2 in California. With all her machinery, and all the economies resulting from a denser population, Massachusetts in 1870 could not divide among her workers as much as thinly settled California.

And here we come to a distinction as to the wealth of States, which seems nowhere present to the mind of Mr. George.

A State may possess a vast accumulation of public and private edifices, and a vast aggregate of tools, machinery, mills, etc. These strike the eye and impress the imagination forcibly. The beholder infers at once that he is in an enormously rich community, and his next inference is that in such a community the wages of labor ought to be very high. It seems as if where there was so much visible wealth every one ought to have a great abundance. But the value of these visible portions of wealth has already been consumed once. At the time of their construction, nearly every cent of their cost passed directly or indirectly into