Part 12

On the other hand, saving is socially necessary in every industrially developed community in order to furnish the requisite capital for the continued production of wealth. Professor Marshall has estimated that every year one-fifth of the wealth of a nation is used up in the processes of manufacture and production; just to keep machines, factories, railroads, and other instruments of production up to the point of efficiency and restore loss and depreciation would therefore require considerable saving. If the nation is to grow wealthier and is to accumulate additional capital, manifestly still more must be saved. This is done in all progressive countries. Saving is carried on by individuals, however, and not by nations, and the motives that lead to it are personal. The most important is probably the desire to provide for wife and children or other relatives; next to that is the wish to lay by sufficient for one’s old age. In our individualistic society, where each family forms an independent unit and is assumed to be self-supporting, it is very desirable that habits of thrift and saving be developed. Both from a social and a personal point of view 132 therefore saving must be approved, though it is undesirable that it should proceed so far as to prevent spending for the gratification of essential present needs.

But what shall we say about expenditures for luxuries? Here the spending is for the gratification of a want, though it may be out of proportion to the results. What shall be our attitude to it? This question is not so easy to answer as the other. Three different schools have given as many answers to the problem of luxury: the first condemns it utterly; the second approves it wholly; and the third takes an intermediate position between the two extremes. Luxury is condemned by the first school from three points of view: as a question of individual morals, it is regarded as debasing and enervating, thus preventing the highest development of the human faculties; as a question of economics it is condemned as wasteful; and as a question of right and justice it is incompatible with an equitable distribution of wealth. It is upon this last point that the opponents of luxury lay the greatest emphasis. As the quantity of existing wealth is insufficient to satisfy even the primal wants of the large majority of our fellow-creatures, we should endeavor to increase this available store as much as we can, and should refrain from drawing upon it in a reckless manner in order to gratify superfluous wants. Furthermore, the productive powers that we can use are, as a matter of fact, limited; and therefore, if the wealthy classes divert a portion of these forces towards the production of articles of luxury, there will be so much the less available for the production of those staple articles that the masses require for their consumption. In the case of a Robinson Crusoe this would be perfectly clear: if he devoted several months to the polishing of a diamond for ornament, he would have to go without a house or other improvements he might have made in that time. Or, if he forced his man Friday to spend half his time polishing 133 diamonds for him, Friday might be compelled to go without sufficient clothing or food or housing. The same thing is true of organized society, only the truth is hidden by the phenomena of exchange. It has been estimated that the annual consumption of wealth in the United States is divided somewhat as follows: necessaries, six billion dollars; luxuries, three and one-half billion (of which $900,000,000 go for liquor and $500,000,000 for tobacco); capitalistic uses, three and three-quarter billion. It is manifest that if the expenditure for luxuries was curtailed or abandoned, there would be more to devote to the other categories.

The opposite school replies to these arguments that luxury is an indispensable stimulus to progress; that really all economic progress is first manifested in the form of a need of luxury, and that luxury therefore is a necessary phase of its development. Since luxury is wholly relative, every want or need is, on its first appearance in the world, regarded as superfluous; first, because no one has hitherto wanted it, and secondly, because its production probably requires a considerable amount of labor, on account of man’s inexperience and the inevitable gropings in the dark that attend all beginnings. The decencies of life today and even the necessities were once regarded as luxuries--chimneys in houses, shoes, forks and knives, linen for the body, bath tubs, etc. If all luxury had always been sternly suppressed when it made its appearance, all the needs that constitute civilization would have been nipped in the bud, and we should still be in the condition of our ancestors of the Stone Age. Civilization depends on the multiplication of wants. Economic progress is a process of converting superfluities into conveniences, and conveniences into necessities.

The attitude taken by practically all economists today is intermediate between these two extremes. Moderate luxury is justified, but lavish 134 and indiscriminate luxury is disapproved of. This justification of luxury rests upon purely economic grounds. In so far as personal consumption is the objective point of production, the prohibition of luxury would act as an impediment to enterprise. If the desire to enjoy luxuries stimulates the productive powers of economically important members of society, it is justifiable as a necessary motive force. The introduction of luxuries and the consequent raising of the standard of living seems often the only way to secure progress. If the mass of the people live on the minimum of cheap food, multiply as long as cheap food is to be had, and spend little for comforts and luxuries, then most of the labor of such a community must be spent in obtaining food for the masses. Such is the condition in India and China. But if a large part of the community has a higher standard of living, it will exercise self-restraint in the increase of its numbers, and the whole level of intelligence and comfort will be raised, as in France or Switzerland or New England. On the other hand, it is urged that “failure on the part of any family to secure the necessaries of life is injurious, not only to it, but to the whole community. Under-consumption means under-nutrition and loss in industrial efficiency. If permitted to continue it must inevitably undermine the standards which make a family self-supporting and self-sufficient and reduce its members to dependency. The general interest requires, therefore, acceptance of the maxim: the consumption of luxuries should be deferred until all are provided with necessaries…. This suggests that no one is justified in spending income for a luxury for himself or his family that will afford less happiness than would the same income spent for someone else.”

But the difficult question at once suggests itself: How can the surplus incomes of the rich be used so as to provide for the needs 135 of the poor, without undermining their independence or permanently lowering their earning power? It has been suggested that there should be a socialization of luxury; that the rich should use their wealth for the construction of public art galleries, libraries, parks, baths, etc., which would thus gratify as great a number as possible. The feeling is growing in the United States and in the world that wealth is a social trust, and that the ownership of wealth imposes upon a person certain moral obligations. While every man has a legal right to spend his surplus income as he pleases, he is morally bound to spend it in such a way as to increase the welfare of the whole community.

Let us now finally take up the problem of economy in consumption. It is said that an American family will waste enough food for a French family to live on. The farmer who leaves his implements out in the rain or his cattle without proper shelter, is guilty of waste. We all waste clothing by frequent changes in fashion. Such waste is as much due to a lack of knowledge and training as to carelessness. The single example of the consumption of food will illustrate this point. “If we place the average income of an American family at $500--and it will not greatly exceed that figure--then nearly $250 of this amount is expended each year for food. Waste occurs in any or all of the following ways: (1) needlessly expensive foods containing little real nutriment are used; (2) there is a failure to select the foods best suited to the needs of the family; (3) a great deal is thrown away which ought to be utilized; (4) bad preparation of the food causes it to lose much of the nutriment which it does contain; (5) badly constructed ovens diffuse heat, instead of confining it, and cause enormous loss of fuel. We shall state less than the truth if we estimate that fully one-fifth of the money expended for food is absolutely wasted, while the excessive expenditure often fails to 136 provide adequate nutrition.” The remedy for such a waste as this clearly lies in the teaching of domestic science in our public schools to the daughters and future wives of the workingmen. As the ordinary household expenses, as shown above, absorb from 80 to 90 per cent of the ordinary income, the training of the housewife, under whose control they fall, is almost as imperative as that of the wage-earner.

The economic evils of intemperance have already been partially stated in the objections to luxury. There is, however, one additional objection to the excessive use of intoxicating liquor which is not true of most indulgences: it diminishes a man’s productive powers. It is harmful in its effects upon both consumption and production. Other items of consumption appear, however, not so clearly under the immediate control of the consumer. The housing accommodations in many of our large cities have often been unsanitary and unworthy of being called homes. Legislation has been necessary to compel the erection of better tenements and prevent the exploitation of helpless people. So too it has been found necessary to legislate against loan-sharks, in order to protect people against their own improvidence and ignorance. In addition to legislation against positive evils, we must of course look to education as the great remedy of waste in consumption.

There is one other phase of the subject of consumption that may well be mentioned before leaving this subject. Owing to the constant pressure of the consuming public for cheap goods, many articles are produced under conditions dangerous to the health, morality and well-being of the operatives, as in the case of the “sweated trades.” To remedy these evils consumers’ leagues have been started in many places, the members of which pledge themselves not to buy goods or to trade in stores where the conditions of work are not up to certain prescribed standards.

They realize that as consumers they owe a duty to other members of 137 society not to exploit them. While this method has proven a fairly effective method of protest in some cases, it cannot be looked to as a solution of this evil. But it emphasizes the fact that the interests of all members of society as producers and consumers are closely interdependent, and that the progress of society requires the improvement of the condition of all.

XV. MONEY AND BANKING.

Probably on no subject has there been such confused thinking or have such widely varying views been held as on that of money. There is, however, substantial unanimity of opinion on the important points among economists today, though in practice there still remain many unsolved problems. The modern industrial system has already been characterized as one of capitalistic production, of large-scale enterprises with extended use of machinery. Not less fundamental are the processes of valuation and exchange made possible by the use of money and credit; and also by the machinery for the geographical distribution of goods, our railroads and steamship lines. The modern stage of economic development has been described by Hildebrand as one of “credit economy,” as opposed to those of barter and money economy, which preceded. It is inconceivable that the modern complex system of exchange could be maintained without the extended use of money and credit. Without attempting to define these terms or to trace their historical development, we may proceed at once to state some of the problems to which they have given rise.

The first question that suggests itself is, what determines the value of money? The generally accepted answer may be briefly stated: it is, that the value of money depends, other things remaining the same, upon its quantity. According to the quantity theory an increase in the supply of money will cause a fall in the value of each unit, just as 138 an increase in the supply of wheat or cotton will cause a fall in the value of each bushel or bale. Conversely, a decrease in the quantity of money will cause a rise in the value of money. It is simply an application of the general law of value to money. The phrase “other things remaining the same” is however an important one, for it assumes that the amount of business and the methods by which it is conducted will remain substantially unchanged. Of course if an increase in the amount of money is accompanied by an equivalent expansion of trade, the one may offset the other and the value of money remain unchanged. Now, inasmuch as the prices of all goods and services are measured and expressed in terms of money, it is clear that a fall in the value of money means a rise of general prices; the value of each commodity is now expressed in terms of a larger number of less valuable units or dollars. Prices will be high if the quantity of money in circulation in a country is large; they will be low if the quantity is small. To the question, which is better for a country, high prices or low prices, it may be answered that it is a matter of indifference, provided only that there is enough money to do the work of exchange efficiently and that fluctuations are prevented. Just how much constitutes enough is, however, a matter of contention. In the undeveloped sections of our country, where capital is scarce and banking facilities undeveloped and where most of the people are debtors, there has always been a demand for cheap and abundant money. Capital and money have been confused and the need of one has led to a demand for the other.

It is not a matter of indifference, however, whether prices be rising or falling, that is, whether inflation or contraction of the currency is taking place. A period of falling prices means hardship and injustice to debtors and producers of goods, as farmers, manufacturers, etc. Having contracted obligations and engaged in the 139 production of commodities with the expectation of a given price, they find their goods worth less when ready for the market and themselves confronted with a loss instead of the anticipated profit. Under such circumstances a contraction of the currency and falling prices means lessened production of wealth. Consequently many writers, and even so good an economist as President Walker, have urged that a slow steady inflation of the currency would promote trade and “give a fillip to industry.” The monetary history of the United States is filled with attempts to realize this in practice: colonial and revolutionary bills of credit were first issued; when these were forbidden by the new Constitution resort was had to issues by state banks. When the Federal Government began the issue of greenbacks and restricted the use of state bank notes, the inflationists looked to this source for assistance. After the defeat of the Greenback party, they turned finally to the coinage of silver, which was now falling in price, and the question of bimetallism in the United States was made a practical political issue.

Down to 1870 practically all the nations of Europe and America had the system of bimetallism at ratios of 15½ or 16 to 1. About that date the great increase in the supply of gold and the fall in the value of silver led one country after another to abandon the latter and to adopt the system of gold monometallism. This was vigorously resisted by many persons and several fruitless efforts made to secure a system of international bimetallism. Failing that, the friends of silver in this country endeavored to secure independent action by the United States alone, and were ultimately successful in obtaining the purchase by the Federal Government of practically the entire silver output of the country during the years 1878-1893.

Development of the Manufacturing Industries in the United States, 1800-1905.

======+==========+========================+===========+===========+ | | Wealth. | | | | +---------------+--------+ | | Fiscal| | | | | | Year,|Population| | | Production| Raw wool | ending| June 1. | | Per | of | imported. | June | | Total. |capita. | wool. | | 30-- | | | | | | | | | | | | | | | | | | ------+----------+---------------+--------+-----------+-----------+ | | Dollars. |Dollars.| Pounds. | Pounds. | | | | | | | 1800 | 5,308,483| -- | -- | -- | -- | 1810 | 7,239,881| -- | -- | -- | -- | 1820 | 9,638,453| -- | -- | -- | -- | 1830 |12,866,020| -- | -- | 35,802,114| 669,883| 1840 |17,069,453| -- | -- | 52,516,959| 9,898,740| 1850 |23,191,876| 7,135,780,000| 307.69| -- | 18,695,294| 1851 |23,995,000| -- | -- | -- | 32,607,315| 1852 |24,802,000| -- | -- | -- | 18,343,218| 1853 |25,615,000| -- | -- | -- | 21,616,035| 1854 |26,433,000| -- | -- | -- | 20,228,035| 1855 |27,256,000| -- | -- | -- | 18,599,784| 1856 |28,083,000| -- | -- | -- | 14,778,496| 1857 |28,916,000| -- | -- | -- | 16,505,216| 1858 |29,758,000| -- | -- | -- | -- | 1859 |30,596,000| -- | -- | 60,264,913| -- | 1860 |31,443,321| 16,159,616,000| 513.93| 75,000,000| -- | 1861 |32,064,000| -- | -- | 90,000,000| -- | 1862 |32,704,000| -- | -- |106,000,000| 42,131,061| 1863 |33,365,000| -- | -- |123,000,000| 73,931,944| 1864 |34,046,000| -- | -- |142,000,000| 90,464,002| 1865 |34,748,000| -- | -- |155,000,000| 43,877,408| 1866 |35,469,000| -- | -- |160,000,000| 67,918,253| 1867 |36,211,000| -- | -- |168,000,000| 16,558,046| 1868 |36,973,000| -- | -- |180,000,000| 24,124,803| 1869 |37,756,000| -- | -- |162,000,000| 39,275,926| 1870 |38,558,371| 30,068,518,000| 779.83|160,000,000| 49,230,199| 1871 |39,555,000| -- | -- |150,000,000| 68,058,028| 1872 |40,596,000| -- | -- |158,000,000|122,256,499| 1873 |41,677,000| -- | -- |170,000,000| 85,496,049| 1874 |42,796,000| -- | -- |181,000,000| 42,939,541| 1875 |43,951,000| -- | -- |192,000,000| 54,901,760| 1876 |45,137,000| -- | -- |200,000,000| 44,642,836| 1877 |46,353,000| -- | -- |208,250,000| 42,171,192| 1878 |47,598,000| -- | -- |211,000,000| 48,449,079| 1879 |48,866,000| -- | -- |232,500,000| 39,005,155| 1880 |50,155,783| 43,642,000,000| 850.20|240,000,000|128,131,747| 1881 |51,316,000| -- | -- |272,000,000| 55,964,236| 1882 |52,495,000| -- | -- |290,000,000| 67,861,744| 1883 |53,693,000| -- | -- |300,000,000| 70,575,478| 1884 |54,911,000| -- | -- |308,000,000| 78,350,651| 1885 |56,148,000| -- | -- |302,000,000| 70,596,170| 1886 |57,404,000| -- | -- |285,000,000|129,084,958| 1887 |58,680,000| -- | -- |269,000,000|114,038,030| 1888 |59,974,000| -- | -- |265,000,000|113,558,753| 1889 |61,289,000| -- | -- |276,000,000|126,487,729| 1890 |62,622,250| 65,037,091,000|1,038.57|285,000,000|105,431,285| 1891 |63,844,000| -- | -- |294,000,000|129,303,648| 1892 |65,086,000| -- | -- |303,153,000|148,670,652| 1893 |66,349,000| -- | -- |298,057,384|172,433,838| 1894 |67,632,000| -- | -- |309,748,000| 55,152,585| 1895 |68,934,000| 77,000,000,000|1,117.01|272,474,708|206,033,906| 1896 |70,254,000| -- | -- |259,153,251|230,911,473| 1897 |71,592,000| -- | -- |266,720,684|350,852,026| 1898 |72,947,000| -- | -- |272,191,330|132,795,202| 1899 |74,318,000| -- | -- |288,636,621| 76,736,209| 1900 |76,303,387| 88,517,306,775|1,164.79|302,502,328|155,928,455| 1901 |79,003,000| -- | -- |287,450,000|166,576,966| 1903 |80,372,000| -- | -- |291,783,032|177,137,796| 1904 |81,752,000|107,104,211,917|1,310.11|295,488,438|173,742,834| 1905 |83,143,000| -- | -- |298,915,130|249,135,746| 1906 |84,216,433| -- | -- |298,294,750|201,688,668| 1907 |85,817,239| -- | -- |311,138,321|203,847,545| 1908 |87,189,392| -- | -- | -- |125,980,524| ------+----------+---------------+--------+-----------+-----------+

======+==========+=====================================================+ | | Manufactures of cotton. | |Production+--------------------------+--------------------------+ Fiscal| of | Thousands of spindles in | Thousands of bales of | Year,|cotton.| operation on Sept. 1st. | domestic cotton taken | ending| | | by mills. | June | (500-lb. +--------+--------+--------+--------+--------+--------+ 30-- | bales, | In | In | Total | In | In | Total | | gross |Southern|Northern| United |Southern|Northern| United | | weight.) |States. | States.| States.| States.| States.| States | ------+----------+--------+--------+--------+--------+--------+--------+ | Number. | Thou- | Thou- | Thou- | Thou- | Thou- | Thou- | | | sands. | sands. | sands. | sands. | sands. | sands. | 1800 | 73,222| -- | -- | -- | -- | -- | -- | 1810 | 177,824| -- | -- | -- | -- | -- | -- | 1820 | 334,728| -- | -- | -- | -- | -- | | 1830 | 732,218| -- | -- | -- | -- | -- | -- | 1840 | 1,347,640| 181 | 2,104 | 2,285 | 71 | 166 | 237 | 1850 | 2,136,083| 265 | 3,733 | 3,998 | 78 | 497 | 575 | 1851 | 2,799,290| -- | -- | -- | 60 | 404 | 464 | 1852 | 3,130,338| -- | -- | -- | 111 | 588 | 699 | 1853 | 2,766,194| -- | -- | -- | 153 | 650 | 803 | 1854 | 2,708,082| -- | -- | -- | 145 | 592 | 737 | 1855 | 3,220,782| -- | -- | -- | 135 | 571 | 706 | 1856 | 3,873,680| -- | -- | -- | 138 | 633 | 771 | 1857 | 3,012,016| -- | -- | -- | 154 | 666 | 820 | 1858 | 3,758,273| -- | -- | -- | 143 | 452 | 595 | 1859 | 4,309,642| -- | -- | -- | 167 | 760 | 927 | 1860 | 3,841,416| 324 | 4,912 | 5,236 | 94 | 751 | 845 | 1861 | 4,490,586| -- | -- | -- | 153 | 650 | 803 | 1862 | 1,596,653| -- | -- | -- | -- | -- | -- | 1863 | 449,059| -- | -- | -- | -- | -- | -- | 1864 | 229,372| -- | -- | -- | -- | -- | -- | 1865 | 2,093,658| -- | -- | -- | -- | -- | -- | 1866 | 1,948,077| -- | -- | -- | 127 | 541 | 668 | 1867 | 2,345,610| -- | -- | -- | 150 | 573 | 723 | 1868 | 2,198,141| -- | -- | -- | 168 | 800 | 968 | 1869 | 2,409,597| -- | -- | -- | 173 | 822 | 995 | 1870 | 4,024,527| 328 | 6,804 | 7,132 | 69 | 728 | 797 | 1871 | 2,756,564| -- | -- | -- | 91 | 1,072 | 1,163 | 1872 | 3,650,932| -- | -- | -- | 120 | 977 | 1,097 | 1873 | 3,873,750| -- | -- | -- | 138 | 1,063 | 1,201 | 1874 | 3,528,276| -- | -- | -- | 128 | 1,192 | 1,320 | 1875 | 4,302,818| -- | -- | -- | 130 | 1,071 | 1,201 | 1876 | 4,118,390| -- | -- | -- | 134 | 1,220 | 1,354 | 1877 | 4,494,224| -- | -- | -- | 127 | 1,302 | 1,429 | 1878 | 4,745,078| -- | -- | -- | 151 | 1,345 | 1,496 | 1879 | 5,466,387| -- | -- | -- | 186 | 1,375 | 1,561 | 1880 | 6,356,998| 561 | 10,092 | 10,653 | 189 | 1,382 | 1,570 | 1881 | 5,136,447| -- | -- | -- | 225 | 1,713 | 1,938 | 1882 | 6,833,442| -- | -- | -- | 287 | 1,677 | 1,964 | 1883 | 5,521,963| 860 | 11,800 | 12,660 | 313 | 1,759 | 2,072 | 1884 | 5,477,448| 1,050 | 12,250 | 13,300 | 340 | 1,537 | 1,877 | 1885 | 6,369,341| 1,125 | 12,250 | 13,375 | 316 | 1,437 | 1,753 | 1886 | 6,314,561| 1,150 | 12,250 | 13,400 | 381 | 1,781 | 2,162 | 1887 | 6,884,667| 1,200 | 12,300 | 13,500 | 401 | 1,687 | 2,088 | 1888 | 6,923,775| 1,250 | 12,300 | 13,550 | 456 | 1,805 | 2,261 | 1889 | 7,472,511| 1,360 | 12,700 | 14,060 | 480 | 1,790 | 2,270 | 1890 | 8,562,089| 1,570 | 12,814 | 14,384 | 539 | 1,979 | 2,518 | 1891 | 8,940,867| 1,740 | 12,900 | 14,640 | 613 | 2,027 | 2,640 | 1892 | 6,658,313| 1,950 | 13,250 | 15,200 | 684 | 2,172 | 2,856 | 1893 | 7,433,056| 2,100 | 13,450 | 15,550 | 723 | 1,652 | 2,375 | 1894 |10,025,534| 2,200 | 13,500 | 15,700 | 711 | 1,580 | 2,291 | 1895 | 7,146,772| 2,400 | 13,700 | 16,100 | 852 | 2,019 | 2,871 | 1896 | 8,515,640| 2,850 | 13,800 | 16,650 | 900 | 1,605 | 2,505 | 1897 |10,985,040| 3,250 | 13,900 | 17,150 | 999 | 1,793 | 2,792 | 1898 |11,435,368| 3,550 | 13,900 | 17,450 | 1,254 | 2,211 | 3,465 | 1899 | 9,459,935| 3,950 | 14,150 | 18,100 | 1,415 | 2,217 | 3,632 | 1900 |10,266,527| 4,368 | 15,104 | 19,472 | 1,523 | 2,350 | 3,873 | 1901 | 9,675,771| 5,500 | 11,700 | 20,200 | 1,583 | 1,964 | 3,547 | 1902 |10,827,168| 6,400 | 15,000 | 21,400 | 2,017 | 2,066 | 4,083 | 1903 |10,045,615| 6,900 | 15,100 | 22,000 | 1,958 | 1,966 | 3,924 | 1904 |13,679,954| 7,650 | 15,200 | 22,850 | 1,889 | 2,046 | 3,935 | 1905 |10,804,556| 7,631 | 16,056 | 23,687 | 2,140 | 2,139 | 4,279 | 1906 |13,595,498| 8,995 | 16,255 | 25,250 | 2,373 | 2,536 | 4,909 | 1907 |11,375,461| 9,528 | 16,847 | 26,275 | 2,411 | 2,574 | 4,985 | 1908 |13,587,306| 10,201 | 17,304 | 27,505 | 2,187 | 2,352 | 4,539 | ------+----------+--------+--------+--------+--------+--------+--------+

======+===========+===========+===========+============ | | | | | | | | Fiscal| | | Unmanu- | Year,| | | factured | Imports ending| Exports. | Imports. | silk | of crude June | (domestic)| | imported. | rubber. 30-- | | | | | | | | | | | | ------+-----------+-----------+-----------+------------ | Dollars. | Dollars. | Pounds. | Pounds. | | | | 1800 | -- | -- | -- | -- 1810 | -- | -- | -- | -- 1820 | -- | 7,812,326| -- | -- 1830 | 1,318,183| 5,774,013| -- | -- 1840 | 3,549,607| 6,504,104| -- | -- 1850 | 4,734,424| 20,781,346| -- | -- 1851 | 7,241,205| 22,164,442| -- | -- 1852 | 7,672,151| 19,689,496| -- | -- 1853 | 8,768,894| 27,731,363| -- | -- 1854 | 5,535,516| 33,949,503| -- | -- 1855 | 5,857,181| 17,757,112| -- | -- 1856 | 6,967,309| 25,917,999| -- | -- 1857 | 6,115,177| 28,685,726| -- | -- 1858 | 5,651,504| 18,584,810| -- | -- 1859 | 8,316,222| 26,976,381| -- | -- 1860 | 10,934,796| 33,215,541| -- | -- 1861 | 7,957,038| 25,271,382| -- | -- 1862 | 2,946,464| 8,890,119| -- | 2,125,561 1863 | 2,906,411| 14,121,589| -- | 5,104,650 1864 | 1,456,901| 14,341,501| 407,935| -- 1865 | 3,451,561| 9,223,686| 288,286| -- 1866 | 1,780,175| 27,502,194| 567,904| -- 1867 | 4,608,235| 19,302,005| 491,983| -- 1868 | 4,871,054| 17,335,406| 512,449| 8,438,019 1869 | 5,874,222| 20,481,312| 720,045| 7,813,134 1870 | 3,787,282| 23,380,053| 583,589| 9,624,098 1871 | 3,558,236| 29,876,640| 1,100,281| 11,031,939 1872 | 2,304,330| 35,307,447| 1,063,809| 11,803,437 1873 | 2,947,528| 35,201,324| 1,159,420| 14,536,978 1874 | 3,095,840| 28,193,869| 794,837| 14,191,320 1875 | 4,071,882| 27,738,401| 1,101,681| 12,035,909 1876 | 7,722,978| 22,725,598| 1,354,991| 10,589,297 1877 | 10,235,843| 18,923,614| 1,186,170| 13,821,109 1878 | 11,438,660| 19,081,037| 1,182,750| 12,512,203 1879 | 10,853,950| 19,928,310| 1,889,776| 14,878,584 1880 | 9,981,418| 29,929,366| 2,562,236| 16,826,099 1881 | 13,571,387| 31,219,329| 2,790,413| 20,015,176 1882 | 13,222,979| 35,719,791| 3,549,404| 22,712,862 1883 | 12,951,145| 38,036,044| 4,731,106| 21,646,320 1884 | 11,885,211| 29,074,626| 4,284,888| 24,574,025 1885 | 11,836,591| 27,197,241| 4,308,908| 24,208,148 1886 | 13,959,934| 29,709,266| 6,818,060| 29,263,632 1887 | 14,929,342| 28,940,353| 6,028,091| 28,649,446 1888 | 13,013,189| 28,917,799| 6,370,322| 36,628,351 1889 | 10,212,644| 26,805,942| 6,645,124| 32,339,503 1890 | 9,999,277| 29,918,055| 7,510,440| 33,842,374 1891 | 13,604,857| 29,712,624| 6,266,629| 33,712,089 1892 | 13,226,277| 28,323,841| 8,834,049| 39,976,205 1893 | 11,809,355| 33,560,293| 8,497,477| 41,547,680 1894 | 14,340,886| 22,346,547| 5,902,485| 33,757,783 1895 | 13,789,810| 33,196,625| 9,316,460| 39,741,607 1896 | 16,837,396| 32,437,504| 9,363,987| 36,774,460 1897 | 21,037,678| 34,429,363| 7,993,444| 35,574,449 1898 | 17,024,092| 27,267,300| 12,087,951| 46,055,497 1899 | 23,566,914| 32,054,434| 11,250,383| 51,063,066 1900 | 24,003,087| 41,296,239| 13,073,718| 49,377,138 1901 | 20,272,418| 40,246,935| 10,405,555| 55,275,529 1902 | 32,108,362| 44,460,126| 14,234,826| 50,413,481 1903 | 32,216,304| 52,462,755| 15,270,859| 55,010,571 1904 | 22,403,713| 49,524,246| 16,722,709| 59,015,551 1905 | 49,666,080| 48,919,936| 22,357,307| 67,234,256 1906 | 52,944,033| 63,043,322| 17,352,021| 57,844,345 1907 | 32,305,412| 73,704,636| 18,743,904| 76,963,838 1908 | 25,177,758| 68,379,781| 16,662,132| 62,233,160 ------+-----------+-----------+-----------+------------

Calendar years.

Development of the Manufacturing Industries in the United States, 1800-1905--Continued.

=====+=======================+============+ | | | | Production of | Exports of | | | domestic | +------------+----------+ copper & + Year.| | | manufac- | | Coal. |Copper.| tures | | | | of. | | | | | | | | | -----+------------+----------+------------+ | Long | Long | Dollars. | | tons. | tons. | | | | | | 1800| -- | -- | -- | 1810| 20| -- | 17,426| 1820| 3,080| -- | 18,547| 1830| 285,779| -- | 36,601| 1840| 1,848,249| 100 | 86,954| 1850| 6,266,233| 650 | 105,060| 1851| 7,798,683| 900 | 91,871| 1852| 8,764,879| 1,100 | 103,039| 1853| 9,437,757| 2,000 | 108,205| 1854| 10,698,841| 2,250 | 91,984| 1855| 11,541,672| 3,000 | 690,766| 1856| 12,095,469| 4,000 | 534,846| 1857| 11,910,883| 4,800 | 607,054| 1858| 12,477,213| 5,500 | 1,985,223| 1859| 13,958,192| 6,300 | 1,048,246| 1860| 13,044,680| 7,200 | 1,664,122| 1861| 14,721,439| 7,500 | 2,375,029| 1862| 15,612,353| 9,000 | 1,098,546| 1863| 19,034,877| 8,500 | 1,026,038| 1864| 21,076,003| 8,000 | 251,272| 1865| 21,243,012| 8,500 | 991,746| 1866| 25,896,056| 8,900 | 143,761| 1867| 27,432,520| 10,000 | 474,110| 1868| 29,341,036| 11,600 | 479,488| 1869| 29,378,893| 12,500 | 355,274| 1870| 29,496,054| 12,600 | 504,741| 1871| 41,861,679| 13,000 | 188,218| 1872| 45,940,535| 12,500 | 185,983| 1873| 51,430,786| 15,500 | 88,711| 1874| 46,969,571| 17,500 | 356,758| 1875| 46,739,571| 18,000 | 1,085,688| 1876| 47,571,429| 19,000 | 3,441,939| 1877| 54,019,429| 21,000 | 2,913,943| 1878| 51,728,214| 21,500 | 2,319,901| 1879| 60,808,749| 23,000 | 2,831,053| 1880| 63,822,830| 27,000 | 793,455| 1881| 76,679,491| 32,000 | 824,896| 1882| 92,456,419| 40,467 | 658,941| 1883| 103,310,290| 51,574 | 1,404,243| 1884| 107,281,742| 64,708 | 2,664,964| 1885| 99,250,263| 74,052 | 5,447,423| 1886| 101,500,381| 70,430 | 2,602,869| 1887| 116,652,242| 81,017 | 2,033,523| 1888| 132,731,837| 101,054 | 3,812,798| 1889| 126,097,779| 101,239 | 2,348,954| 1890| 140,866,931| 115,966 | 2,349,392| 1891| 150,505,954| 126,839 | 4,614,597| 1892| 160,115,242| 154,018 | 7,226,392| 1893| 162,814,977| 147,033 | 4,525,573| 1894| 152,447,791| 158,120 | 19,697,140| 1895| 172,426,366| 169,917 | 14,468,703| 1896| 171,416,390| 205,384 | 19,720,104| 1897| 178,776,070| 220,571 | 31,621,125| 1898| 196,407,381| 235,050 | 32,180,872| 1899| 226,554,636| 253,870 | 35,983,529| 1900| 240,789,310| 270,588 | 57,852,960| 1901| 261,874,836| 268,782 | 43,267,021| 1902| 269,277,178| 294,423 | 41,218,373| 1903| 319,068,229| 311,627 | 39,667,196| 1904| 314,121,784| 362,739 | 57,142,081| 1905| 350,820,840| 402,637 | 86,225,291| 1906| 369,783,284| 409,735 | 81,282,664| 1907| 428,895,914| 387,945 | 94,762,110| 1908| -- | -- | 104,064,580| -----+------------+----------+------------+

=====+===========================================+======================+ | | | | Production of | Iron and steel + | | Manufactures. | +----------+----------+----------+----------+----------+-----------+ Year.| | | | | | | | Natural | Iron | Pig | Steel.| Imports. | Exports | | gas. | ore. | iron. | | | (domestic)| | | | | | | | | | | | | | | -----+----------+----------+----------+----------+----------+-----------+ | Dollars. |Long tons.|Long tons.|Long tons.| Dollars. | Dollars. | | | | | | | | | | | | | | | 1800| -- | -- | -- | -- | -- | 52,144| 1810| -- | -- | 53,908| -- | -- | 91,914| 1820| -- | -- | 20,000| -- | -- | 46,552| 1830| -- | -- | 165,000| -- | 6,346,287| 322,747| 1840| -- | -- | 286,903| -- | 8,157,923| 1,127,877| 1850| -- | -- | 563,755| -- |20,145,067| 1,953,702| 1851| -- | -- | -- | -- |22,439,297| 2,336,587| 1852| -- | -- | -- | -- |23,568,649| 2,368,384| 1853| -- | -- | -- | -- |34,944,002| 2,541,554| 1854| -- | -- | 657,338| -- |35,456,143| 4,249,959| 1855| -- | -- | 700,159| -- |28,693,979| 3,803,706| 1856| -- | -- | 788,515| -- |29,050,101| 4,256,613| 1857| -- | -- | 712,640| -- |30,743,649| 4,959,238| 1858| -- | -- | 629,548| -- |20,171,007| 4,843,592| 1859| -- | -- | 750,560| -- |22,379,743| 5,577,748| 1860| -- | -- | 821,223| -- |26,158,235| 5,870,114| 1861| -- | -- | 653,164| -- |21,160,235| 6,039,149| 1862| -- | -- | 703,270| -- |11,451,707| 4,732,348| 1863| -- | -- | 846,075| -- |16,152,843| 6,681,417| 1864| -- | -- | 1,014,282| -- |23,822,876| 7,541,967| 1865| -- | -- | 831,770| -- |16,660,991| 11,227,294| 1866| -- | -- | 1,205,663| -- |25,598,147| 4,006,180| 1867| -- | -- | 1,305,023| 19,643|31,630,519| 9,351,062| 1868| -- | -- | 1,431,250| 26,786|30,346,768| 10,950,275| 1869| -- | -- | 1,711,287| 31,250|38,213,717| 10,938,492| 1870| -- | 3,031,891| 1,665,179| 68,750|40,273,682| 13,483,163| 1871| -- | -- | 1,706,793| 73,214|53,024,075| 21,189,692| 1872| -- | -- | 2,548,713| 142,954|67,852,616| 11,463,880| 1873| -- | -- | 2,560,963| 198,796|74,302,102| 13,655,087| 1874| -- | -- | 2,401,262| 215,727|46,786,469| 15,098,248| 1875| -- | -- | 2,023,733| 389,799|31,432,380| 19,534,215| 1876| -- | -- | 1,868,961| 533,191|23,197,417| 15,449,846| 1877| -- | -- | 2,066,594| 569,618|19,320,927| 16,501,638| 1878| -- | -- | 2,301,215| 731,977|18,987,130| 16,053,571| 1879| -- | -- | 2,741,853| 935,273|19,594,608| 15,133,493| 1880| -- | 7,120,362| 3,835,191| 1,247,335|71,266,699| 14,716,524| 1881| -- | -- | 4,144,254| 1,588,314|60,604,477| 16,608,767| 1882| 215,000| -- | 4,623,323| 1,736,692|67,976,897| 20,748,206| 1883| 475,000| -- | 4,595,510| 1,673,535|58,495,246| 22,826,528| 1884| 1,460,000| -- | 4,097,868| 1,550,879|40,147,053| 21,909,881| 1885| 4,857,200| -- | 4,044,526| 1,711,920|33,610,093| 16,592,155| 1886|10,012,000| -- | 5,683,329| 2,562,503|37,534,078| 15,745,569| 1887|15,817,500| -- | 6,417,148| 3,339,071|49,203,164| 15,958,502| 1888|22,629,875| -- | 6,489,738| 2,899,440|48,992,757| 17,763,034| 1889|21,097,099|14,518,041| 7,603,642| 3,385,732|42,377,793| 21,156,077| 1890|18,792,725|16,036,043| 9,202,703| 4,277,071|41,679,591| 25,542,208| 1891|15,500,084|14,591,178| 8,279,876| 3,904,240|53,544,372| 28,909,614| 1892|14,870,714|16,296,666| 9,157,000| 4,927,581|28,928,103| 28,800,930| 1893|14,346,250|11,587,629| 7,124,502| 4,019,995|34,937,974| 30,106,482| 1894|13,954,400|11,879,679| 6,657,888| 4,412,032|20,925,769| 29,220,264| 1895|13,006,650|15,957,614| 9,446,308| 6,114,834|23,048,515| 32,000,989| 1896|13,002,512|16,005,449| 8,623,127| 5,281,689|25,338,103| 41,160,877| 1897|13,826,422|17,518,046| 9,652,680| 7,156,957|16,094,557| 57,497,872| 1898|15,296,813|19,433,716|11,773,934| 8,932,857|12,626,431| 70,406,885| 1899|20,074,873|24,683,173|13,620,703|10,639,857|12,100,440| 93,716,031| 1900|23,698,674|27,553,161|13,789,242|10,188,329|20,478,728|121,913,548| 1901|27,066,077|28,887,479|15,878,354|13,473,595|17,874,789|117,319,320| 1902|30,867,863|35,554,135|17,821,307|14,947,250|27,180,247| 98,552,562| 1903|35,807,860|35,019,308|18,009,252|14,534,978|51,617,312| 96,642,467| 1904|38,496,760|27,644,330|16,497,033|13,859,887|27,028,312|111,948,586| 1905|41,562,855|42,526,133|22,992,380|20,023,947|23,510,164|134,728,363| 1906|46,873,932|47,749,728|25,307,191|23,398,136|29,053,987|160,984,985| 1907|52,866,835|51,720,619|25,781,361|23,362,594|40,587,865|181,530,871| 1908| -- | -- |15,936,018| -- |27,607,909|183,982,182| -----+----------+----------+----------+----------+----------+-----------+

=====+========================================+=========== | Prices of staple commodities. | +-------------------+---------+----------+ Washed | Per ton. | | |Ohio fleece |---------+---------+ Middling| Standard | wool, per Year.| | Steel | cotton, |sheetings,| lb., in | Pig iron| rails, | per | per | eastern | No. 1, |standard |pound.| yard. | m’k’ts, | foundry.|sections.| | | July 1. | | | | | Medium. -----+---------+---------+---------+----------+----------- | Dollars.| Dollars.| Cents. | Cents. | Cents. | | | | | | | | | | 1800| -- | -- | -- | -- | -- 1810| -- | -- | -- | -- | -- 1820| -- | -- | -- | -- | -- 1830| -- | -- | -- | -- | 50 1840| 27.88 | -- | -- | -- | 39 1850| 20.88 | -- | 12.34 | 7.87 | 37 1851| 21.38 | -- | 12.14 | 7.08 | 42 1852| 22.63 | -- | 9.50 | 6.96 | 38 1853| 36.13 | -- | 11.02 | 7.92 | 53 1854| 36.88 | -- | 10.97 | 7.96 | 37 1855| 27.75 | -- | 10.39 | 7.64 | 40 1856| 27.18 | -- | 10.30 | 7.50 | 42 1857| 26.34 | -- | 13.51 | 8.90 | 50 1858| 22.19 | -- | 12.23 | 8.25 | 37 1859| 23.33 | -- | 12.08 | 8.50 | 40 1860| 22.70 | -- | 11.00 | 8.73 | 50 1861| 20.26 | -- | 13.01 | 10.00 | 30 1862| 23.92 | -- | 31.29 | 18.55 | 47 1863| 35.24 | -- | 67.21 | 36.04 | 70 1864| 59.22 | -- | 101.50 | 52.07 | 100 1865| 46.08 | -- | 83.38 | 38.04 | 73 1866| 46.84 | -- | 43.20 | 24.31 | 67 1867| 44.08 | 166.00 | 31.59 | 18.28 | 49 1868| 39.25 | 158.46 | 24.85 | 16.79 | 45 1869| 40.61 | 132.19 | 29.01 | 16.19 | 48 1870| 33.23 | 106.79 | 23.98 | 14.58 | 45 1871| 35.08 | 102.52 | 16.95 | 13.00 | 60 1872| 48.94 | 111.94 | 22.19 | 14.27 | 70 1873| 42.79 | 120.58 | 20.14 | 13.31 | 48 1874| 30.19 | 94.28 | 17.95 | 11.42 | 53 1875| 25.53 | 68.75 | 15.46 | 10.41 | 49 1876| 22.19 | 59.25 | 12.98 | 8.85 | 35 1877| 18.92 | 45.58 | 11.82 | 8.46 | 44 1878| 17.67 | 42.21 | 11.22 | 7.80 | 36 1879| 21.72 | 48.21 | 10.84 | 7.97 | 38 1880| 28.48 | 67.52 | 11.51 | 8.51 | 48 1881| 25.17 | 61.08 | 12.03 | 8.51 | 44 1882| 25.77 | 48.50 | 11.56 | 8.45 | 45 1883| 22.42 | 37.75 | 11.88 | 8.32 | 41 1884| 19.81 | 30.75 | 10.88 | 7.28 | 34 1885| 17.99 | 28.52 | 10.45 | 6.75 | 31 1886| 18.71 | 34.52 | 9.28 | 6.75 | 33 1887| 20.93 | 37.08 | 10.21 | 7.15 | 37 1888| 18.88 | 29.83 | 10.03 | 7.00 | 39 1889| 17.76 | 29.25 | 10.65 | 7.00 | 39 1890| 18.41 | 31.78 | 11.07 | 7.00 | 37 1891| 17.52 | 29.92 | 8.60 | 6.83 | 35 1892| 15.75 | 30.00 | 7.71 | 6.50 | 34 1893| 14.52 | 28.12 | 8.56 | 5.90 | 26 1894| 12.66 | 24.00 | 6.94 | 5.11 | 21 1895| 13.10 | 24.33 | 7.44 | 5.74 | 21 1896| 12.95 | 28.00 | 7.93 | 5.45 | 18 1897| 12.10 | 18.75 | 7.00 | 4.73 | 23½ 1898| 11.66 | 17.62 | 5.94 | 4.20 | 29 1899| 19.36 | 28.12 | 6.88 | 5.28 | 31½ 1900| 19.98 | 32.29 | 9.25 | 6.05 | 31½ 1901| 15.87 | 27.33 | 8.75 | 5.54 | 26 1902| 22.19 | 28.00 | 9.00 | 5.48 | 26¾ 1903| 19.92 | 28.00 | 11.18 | 6.25 | 31½ 1904| 15.57 | 28.00 | 11.75 | 7.13 | 32½ 1905| 17.88 | 28.00 | 9.80 | 7.00 | 39 1906| 20.98 | 28.00 | 11.50 | 7.25 | 37 1907| 23.89 | 28.00 | 12.10 | 7.62 | 36 1908| 17.70 | 28.00 | 10.62 | 6.75 | 38 -----+---------+---------+---------+----------+-----------

Calendar year.

The arguments in favor of bimetallism are as various as the motives of its advocates, but two or three of the more important ones may be 140 briefly stated. It is urged because it would give a more stable measure of value than either silver or gold alone could do; and the evil effects of fluctuations in the value of gold since 1873 are pointed out to illustrate this contention. Monometallists answer this by asserting that most of the price changes can be accounted for by improvements in production; that even if they were caused by a contraction of the currency, this was simply one of the risks of business; and finally, that the evil effects of falling prices are offset by a corresponding reduction in interest rates. A second argument of the bimetallists was the alleged insufficiency of gold on which to do the world’s business. As this has been practically met by the phenomenal increase in gold production in the last decade, especially since the gold discoveries in Alaska, it is not necessary to dwell upon this argument. On February 1, 1909, the per capita circulation of money in the United States reached $35.00, the highest point in our history. A final argument of the bimetallists concerns foreign trade: it would facilitate this by establishing a fixed par-of-exchange between all countries. While the weight of this may be admitted, it has been practically deprived of all force by the adoption of the gold standard by virtually all the industrially developed nations of the world. This last fact shows that the question has now been actually settled by the logic of events and today the issue of bimetallism has only an academic interest.

Another problem connected with money which has been removed from the arena of oratory to that of calm discussion is that of government paper money. It is urged, with much truth, that if a nation issued paper money instead of gold or silver, it would save all the expense of mining these metals. It would resemble, as Adam Smith said, the discovery of wagon roads through the air in the realm of transportation. Another argument advanced in favor of government paper money is that it would be possible by a scientific adjustment of the 141 issues to regulate the amount of money in circulation and so to prevent all fluctuations in prices. Both contraction and inflation would be prevented and a cheap and yet ideal system of money would exist. Still others see in this form of money an instrument for the creation of wealth; this last argument simply results from a confusion of ideas and need not be dealt with. A sufficient answer to the other two is an appeal to the lesson of history: no government which has embarked upon the issue of paper money has ever been able to restrict the issues within reasonable limits; often it has led to national bankruptcy and the repudiation of the entire issues. The experience of the United States with the greenbacks has been more fortunate than that of many countries, but does not tempt to further experiment.

The monetary situation in the United States today may be regarded as fairly well settled. Although we have a very heterogeneous assortment of different kinds of money, a fairly distinct sphere is allotted to each, and as the basis for all, the gold standard has been definitely established by law. Money of large denominations consists of gold and gold certificates (lowest denomination, $20), of greenbacks and national bank notes (lowest denomination, $10, though one-third of bank notes may be $5); the needs of retail trade are met by the issue of silver certificates and silver dollars, and of fractional currency. The system would be much simplified by the retirement and destruction of the $346,000,000 in greenbacks, but as there is now a fifty-per cent reserve in gold back of them, little danger need be apprehended from their presence. Many people have regarded the existence of some $500,000,000 worth of silver dollars as a menace to the goodness of our money supply, but as the amount of gold in circulation increases the silver will form a constantly smaller percentage of the whole. It is a cumbersome and not very valuable asset of the Government, but 142 is now almost powerless for good or ill.

Important as is the subject of money and essential as is the need of a standard of undoubted goodness, it is overshadowed in practical significance by the problems of banking and credit. An investigation by the Comptroller of the Currency some years ago showed that over 90 per cent of the receipts of the national banks consisted of credit instruments, while probably 60 per cent of the trade of the country was carried on by credit rather than by cash transactions. A credit transaction is a transfer of goods or money for a future equivalent; the element of time is introduced. This makes possible an enormous increase in the number of exchanges and obviates the necessity, to a large extent, of using money. Most of us enjoy personal credit, which is limited only by our ability to persuade other people to trust in us. But this power of purchasing things without immediate payment must be made readily available if the ordinary business man is to make use of it. This is done through the medium of a bank, whose business it is to discount the notes of its customers, which in turn is based upon confidence in their prospective earnings. The bank credit thus obtained may be transferred by means of checks to other persons and to other banks. It is the most fluid and volatile means of payment yet devised, and is subject to dangers and abuses. In the last analysis business based upon such a system of credit rests upon confidence in the honesty of individuals and in the enforcement of the law governing contracts, and also in the ability of those who have pledged themselves to future payment to make good their obligations. In times of panic credit fails and resort is had to money.