Category: Harvard

During one of my recent scavenger hunts in the internet archive hathitrust.org I  scored the serendipitous discovery of a syllabus for six lectures given in 1896 by the recent Harvard economics A.M. alumnus and later professor of accounting, William M. Cole. His subject was the unequal distribution of wealth and the lectures were held under the auspices of the American Society for the Extension of University Teaching of Philadelphia. In previous years this subject was treated by  Richard T. Ely and John Bates Clark.

Cole had been a teaching assistant for Frank W. Taussig’s introduction to the principles of economics and one presumes much (if not all) of what Cole offered his public was theory à la Taussig, warmed up and perhaps somewhat dumbed down for popular consumption.

An earlier post provides more detail about the later career of William M. Cole.

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Homecoming, 1896

…Portland people will be interested to know that Mr. William M. Cole, who is in this city to represent the American University Extension Society at Assembly hall tonight, is a Portland boy. He was a Brown medical scholar at the High school, graduating from Harvard as one of the eleven Summa cum laude men of his class, has been instructor in political economy at Harvard and at Radcliffe, and was secretary of the Massachusetts commission on the unemployed. He is now a lecturer on economics for the American University Extension Society. Mr. Cole devotes his leisure largely to literary work. His latest work is “An Old Man’s Romance,” published last summer, and favorably reviewed by such literary papers as the Bookman, the Bookbuyer, the Boston Transcript and the Atlantic Monthly. It appeared under the pseudonym, Christopher Craigie. Mr. Cole had an article “Alone on Osceola,” in the August New England Magazine.

Source: The Portland Daily Press (Portland, Maine)
6 Feb 1896, p. 8.

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Cole Lectured on Wealth Distribution four times in 1896

• Bangor, Maine. Mar. 16, 30 Apr. 13, 20, 27 May 4
• Farmington, Maine. Feb 18 Mar. 17, 31 Apr. 14, 21, 28
• Portland, Maine. Apr. 2, 9, 16, 23, 30 May 6
• Saco, Maine. Feb. 19, Mar. 18, Apr. 1, 15, 22, 29.

Source: The American Society for the Extension of University Teaching, Philadelphia. The Citizen (April 1896) p. 72.

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[Series E.]

University Extension Lectures
under the auspices of
The American Society
for the
Extension of University Teaching.
Syllabus of a
Course of Six Lectures on

The Causes of the Unequal Distribution of Wealth Treated with Special Reference to the Principles Underlying the Problems of Labor, Land and Capital.

BY
WILLIAM MORSE COLE, A. B.
Late Instructor in Political Economy in Harvard University.

No. 16.
Price, 15 Cents.

Copyright, 1896, by
American Society for the Extension of University Teaching,
111 S. Fifteenth St., Philadelphia, Pa.

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The Causes of
the Unequal Distribution of Wealth.

CLASS.— At the close of each lecture a class is held for those students who wish to study the subject more thoroughly. All who attend the lectures may remain for the class discussion, whether desirous of participating in it or not. The object of the class is to give the students an opportunity of coming into personal contact with the lecturer, in order that they may, by conversation and discussion, the better familiarize themselves with the principles of the subject, and get their special difficulties explained.

PAPERS.— Students are urged to send to the lecturer at regular intervals papers on the topics set. These papers are returned with corrections and comment.

EXAMINATIONS.— Those students whose papers and attendance upon the class exercises have satisfied the lecturer of the thoroughness of their work will be admitted to an examination at the close of the course. Each student who passes the examination successfully will receive from the society a certificate in testimony thereof.

STUDENTS’ ASSOCIATION.— The formation of a Students’ Association for the reading and study before and after the lecture course, as well as during its continuance, is strongly recommended. In the case of fortnightly lectures the sessions of the Association may be held on the same evening of the alternate week.

REFERENCES.

NOTE.— Since Economics is a comparatively new science, the amount of new literature of which the permanent value has not yet been determined is very great. Much of the new doctrine, moreover, is incorporated in general text-books and set forth in detail rather for the specialist than for the general reader and thinker. It is deemed wise, therefore, to refer for this course to a few only of the standard books. These will familiarize the student with recognized doctrine so that he may read new literature with discrimination.

LECTURE I.

Wealth.— J. S. Mill, Political Economy, first ten pages of Preliminary Remarks; or J. L. Laughlin’s Abridgment of Mill, Preliminary Remarks.

Agents in Production.— Mill [The reference “Mill” will mean J. S. Mill, Political Economy.], Bk. I, Chaps. I to VII (incl.); or, Laughlin [The reference “Laughlin” will mean J. L. Laughlin’s Abridgment of Mill’s Political Economy.], Bk. I. F. A. Walker, Political Economy, Part. II.

Rent.— Mill, Bk. II, Chap. XVI; or Laughlin, Bk. II, Chap. VI. Walker, Polit. Econ., Part II, Chap. I, §§ 44, 45; Part IV, Chap. II.

Law of Diminishing Returns.— Walker, Wages Question, Chap. V.

LECTURE II.

Unearned Increment.— Mill, Bk. V, Chap. II, §§ 5, 6; or, Laughlin, Bk. V, Chap. I, § 5. Henry George, Progress and Poverty, Bk. VII, Chap. III; Bk. VIII, Chap. II. Walker, Polit. Econ., Pt. IV, Chap. II, §v258; Pt. VI, Chap. VII (3d Ed., Chap. X).

LECTURE III.

Wages and Profits.— Mill, Bk. II, Chap. XI, §§ 1, 2, 3; Chap XV; or, Laughlin, Bk. II, Chap. II, §§ 1, 2, 3; Chap. V. Walker, Polit. Econ., Pt. IV, Chaps. III. IV. V.

LECTURE IV.

The Increase of Capital.— Mill, Bk. I, Chap. XI and Chap. VIII; or, Laughlin, Bk. I, Chap. VIII and Chap. VI.

Trusts.— E. von Halle, Trusts (Macmillan & Co., 1895).

Railroads.— A. T. Hadley, Railroad Transportation, (G. P. Putnam’s Sons, 1890) Chaps. III, IV, V.

LECTURE V.

Wages in Different Employments.— Mill, Bk. II, Chap. XIV; or, Laughlin, Bk. II, Chap. IV. J. E. Cairnes, Political Economy, Part I, Chap. III, § 5. Report Mass. Commission on Unemployed, Pt. IV, p. 1 to lii. Walker, Wages Question, Chap. XIV.

Trade Unions.— J. E. Cairnes, Political Economy, Pt. II, Chaps. III, IV. Walker, Wages Question, Chap. XIX.

Profit Sharing.— N. P. Gilman, Profit Sharing (Houghton, Mifflin & Co., 1889) Chaps. IX, X.

The Question of Population.— Mill, Bk. II, Chap. XI, § 6; Chaps. XII, XIII; or Laughlin, Bk. II, Chap. II, §§ 4, 5; Chap. III. Walker, Wages Question, Chap. VI; Chap. XVIII, § 3.

The Wages Fund.— J. E. Cairnes, Pt. II, Chap. I. Walker, Wages Question, Chaps. VIII, IX.

LECTURE VI.

International Trade.— Mill, Bk. III, Chap. XVII; or Laughlin, Bk. III, Chap XIII. J. E. Cairnes, Political Economy, Pt. III, Chap. I.

The Classical View of Laissez Faire.— Mill, Bk. V, Chap. XI. J. E. Cairnes, Polit. Econ., Pt. II, Chap. V.

Instability of Modern Conditions.— Walker, Polit. Econ., Pt. III, Chap. VI. C. F. Dunbar, The Theory and History of Banking, (G. P. Putnam’s Sons, 1891) Chaps. I, II. Report Mass. Commission on Unemployed, Pt. IV, Introduction.

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LECTURE I.
The Agents in the Production of Wealth and the Primary Principle of Rent.

The field of economic study is the production, distribution, and exchange of wealth in civilized society and among men actuated by normal motives and conducting their operations in the normal manner. Economics, therefore, does not offer its conclusions to be applied directly to abnormal conditions or transactions. It is highly practical, for it furnishes the general, fundamental principles which give an insight into all economic activity. Its relation to politics, or the art of government, is like that of physiology to hygiene. It does not decide between policies, —it furnishes the knowledge of principles which enables one possessed of facts and having certain aims to decide for himself. (See Quarterly Journal of Economics, July, 1891, “The Academic Study of Political Economy,” by C. F. Dunbar.)

A knowledge of the primary laws of production and distribution is essential for a comprehension of the problems of wealth and poverty. Not all things useful or agreeable are wealth, but only those which are also transferable, capable of accumulation, and limited in quantity.

Man’s only physical power is that of moving things. His mechanical agency in producing wealth is therefore small. Without the forces and materials supplied by nature, man would be helpless. Yet, in modern times, even with the maximum assistance of nature, few men unassisted by capital could produce a tithe of what they consume. Thus land and labor are the requisites of production: and capital, though not always absolutely necessary, is a necessity if modern methods are used, and in any case increases the produce many fold.

Not all labor is productive of wealth; but some which seems at first sight unproductive is in reality highly productive and much that is unproductive is of far greater importance to the community than it could be if it were devoted to production.

Capital, in the economic sense of the word, is wealth set apart to assist further production. The owner has sacrificed his immediate satisfaction in the use of it by devoting it to increase the productive forces of the community. It serves its use by being consumed, but would be valueless to the community if it were hoarded. Recompense for its consumption is furnished in the product which it assists in producing.

Of the three parts into which the produce of industry is commonly divided, we shall first consider rent. Rent owes its origin to the diversity of lands. If all land were like all other land and there were enough to satisfy everyone, there would be no rent. At one time in every country there was enough good land to satisfy everyone, and therefore no one paid rent. The poor lands were not cultivated. As the community grew and required a greater produce, however, the law of diminishing returns came into effect and forced cultivation down on poorer lands or induced more expensive processes of cultivation on the old lands. As the community was thus obliged to pay more for its produce, the better lands, producing as cheaply as before, yielded more than enough to pay the normal wages and profit. The owner demanded this surplus in rent, and the cultivator not only was able to pay it, but was forced to do so by the competition of others. Rent, then, is payment made to the owner of superior land for its use, and the amount of rent is measured by the superiority of that land over land which yields only normal wages and profits, i.e., the superiority of that land over the poorest land which must be cultivated to supply the needs of the community. A change in the demand for products which affects the margin of cultivation therefore affects rents.

Not only fertility, but accessibility, surroundings, etc., determine rent. These are the chief elements in the rental price of stores, offices, wharves, factories and residences. Yet a part of this is not rent but profit on the capital invested in the buildings.

Rent forms no part in the cost of production, for it is paid for superior advantages.

LECTURE II.
The Land Question.

Rent arises not only from superior fertility or productiveness, but from superior accessibility and superior surroundings. These are variable and are often the result of the growth of society, independent of effort on the part of the owners of land. Yet the owners appropriate the increase in rental or selling value without recompense to the society which produced it. Such appropriation of “unearned increment” is the origin of many fortunes in every community. Though legally and politically just, such appropriation is morally unjust. Yet there is no apparent way of remedying the injustice by any political machinery now in operation. A man who refused to appropriate the unearned increment would simply leave it for another’s benefit. The advocates of the single tax recommend the abolition of all injustice arising from appropriation of unearned increment by seizing for public benefit without compensation to the owner, except for improvements made, all land now privately owned. This would secure for society not only all present and future but also all past unearned increment. This would bring great wealth to the public treasury and thus make it possible to relieve poverty, but it would perpetrate an injustice much greater than that which it would correct; for the greater part of the unearned increment has been appropriated by past owners, and to confiscate the property of present owners would be to take away from them property for which they have already paid a presumably fair price. The single tax advocates say that there never was properly any valid title to land, since the land was created for all and no man made it, —and that therefore it is a man’s own fault if he buys and pays for a right which the seller did not possess.

This raises the question whether the right to exclusive control over land is a moral right. The usual answer is summed up in the phrase, “Give a man an insecure tenancy of a garden, and it will become a desert; but give him a nine years’ lease of a desert, and he will convert it into a garden.” Private ownership is considered necessary for a proper care and cultivation of landed property. This, however, is solely on the ground of policy. Yet, justice demands as much. In many localities population is excessive, crowds closer and closer together, and thereby not only raises the cost of living, but destroys much that makes the pleasure of the old inhabitant. If he, and his ancestors before him, or anyone from whom he may purchase, have chosen a place for their habitation or their work, no justice can demand that he be caused to suffer by the encroachment of a new population or an increased population for which he is not responsible. If population is to grow, as some predict, until it is pressed for means of subsistence, there is the more reason for sustaining, now while the world is big enough for all, the right of anyone to secure for himself and his descendants land which shall be their allotted space. Certain incompetent classes of population can grow in excess of all usefulness for themselves or others, and as their growth involves evil to those who are innocent of irresponsible growth, the one protection in the right of private property in land cannot justly be withdrawn.

This right of private property in land, however, does not include the right to appropriate the “unearned increment” which is the creation of society. The assumption of it by society would be both just and politic. The difficulty is one of practicability. The assumption could not cover the unearned increment of the past, for that cannot be traced; it could not cover all that in the present and future, for many of the present land owners have already compensated past owners for expected increment, and would thus suffer from injustice; and the line between earned and unearned increment, and the amount of increment, are not always apparent. Justice demands this assumption, however, and ways of making it practicable will be devised.

In one class of land, no private right of ownership should be recognized at all. Much of the world’s mineral wealth, for example, is locked up in few localities. This belongs to society at large. All mines, therefore, should be public property, and managed for society’s interest.

In the same category belong all lands having special narrowly-limited properties, such as that comprising grand scenery and natural transportation routes. Permanent private control of them constitutes monopoly, which is counter to public justice.

LECTURE III.
The Relation of Profits and Wages.

No man works in these days without the assistance of capital; and even his wages are paid out of capital. Temporarily, therefore, the rate of wages will depend upon the number of persons desiring employment and the number of commodities suitable for their use which are offered them by persons desiring their services. An increase in the number of persons desiring employment, without a corresponding increase in the capital available for their payment, produces lower wages, and an increase in the capital offered as wages, without corresponding increase in the number desiring employment, produces higher wages. A sudden rise in the value of commodities produced does not necessarily bring with it the ability to pay higher immediate wages, for as wages are usually paid out of capital, the wage-paying power is not immediately affected.

Labor is required by capital. The rate of wages, therefore, cannot permanently remain below the point which suffices to supply a working population. The amount which will supply population is determined largely by the workers themselves. If workers are unwilling to undertake the support of families at a given rate of wages, the number of marriages declines, the birth rate is reduced, and the population fails to supply the demand of capitalists for workers. Then the competition of employers for workers raises wages until the point at which workers are willing to marry and assume the support of families is reached. This point is in the long run the minimum limit of wages. Though there is no maximum limit, there is in most communities a natural force which tends to keep wages from reaching a very high range. The tendency of population to increase is generally manifest, and in most communities there appears to be a marked connection between the rate of increase and the wages of labor. An increase of wages among certain classes of workers often results in a larger population; and this, when unaccompanied by a proportionally increased capital, results in a reduction of wages. Thus the rise in wages counteracts itself. This increase in population, however, is by no means universal, and is in no case necessary. An important check on sudden fluctuations in wages is found in migration of laborers.

As capital greatly increases the world’s produce, and is a necessary element in carrying on business by modern methods, the possessor of it receives a share of the produce. This share is called profit, or, more strictly speaking, interest. The justification of this share lies in the fact that capital is the result of self-denial on the part of someone at sometime, in devoting to productive use wealth which might have given him immediate personal gratification if spent. Similar self-denial is involved also on the part of an inheritor of wealth who devotes it to productive use. Interest is not only just, but its payment is dictated by policy, for capital would not increase rapidly enough to assist the growing population if this inducement were withdrawn.

Chronologically, interest or profit is a residue. It consists of the balance of production after wages are paid. If the total amount of production is fixed, the greater the share of labor, the smaller that of capital, and vice versa. The rate of profit cannot permanently remain below that point at which it is worth the while of possible capitalists to save rather than to spend their wealth; for the moment it falls below that point expenditure increases and the fund for paying wages decreases, until laborers are obliged to accept lower wages or go without work. Then this reduction of wages increases profits, and it thus restores the rate at which wealth will be saved. A very high rate of profit, on the other hand, stimulates saving, and thus, by increasing the amount of capital seeking to hire laborers, raises wages and partially counteracts itself. The migration of capital is an important check upon extreme variations.

Yet high wages and high profits are not inconsistent. The interests of laborers and of capitalists are conflicting only in the act of dividing the produce of industry. They have a common ground in the desire to increase the produce so that the share of each may be larger.

The distinction between interest and profits is wide. One is the share of the owner of capital as such, and the other is the share of a manager, — or, strictly speaking, wages of superintendence. Thus, profits though usually associated with capital, are really reward for labor; and they form the usual path by which men pass from the rank of laborer to that of capitalist.

LECTURE IV.
The Problems of Capital.

No adequate understanding of economic problems is possible without some appreciation of the amount of capital involved in modern industries. Formerly, labor was assisted by capital; now the function of labor is chiefly directing capital. Dividing capital into two parts, the auxiliary (which the laborer employs in his work), and the remuneratory (which supports the laborer while he is engaged in production), the remuneratory will be found in many industries but a tithe as much as the auxiliary. Man has acquired and accumulated great control over the forces and supplies of nature, and converting these into capital he increases many fold the production of wealth. Whatever, therefore, affects the amount of capital in a community is of great importance.

No judgment upon the value of the service of capital is adequate unless it takes into account the element of risk involved in modern investment. A turn of fashion, a change of government policy, a new discovery in science, a new invention in machinery, may annihilate not only expected profits but capital itself. New investments are often surrounded with great risk. As it is the expectation rather than the actual existence of profit that determines the conversion of wealth into capital, a rate of profit extraordinarily high is justified if the possibility of it was needed to induce capitalists to enter a venture clearly for the public good.

Great combinations of capital result often from the risks of business. The prosperity of each business firm is dependent not only on the ability of its manager, but also, in a certain degree, upon that of competitors. An ill-judged move by one firm often brings disaster to its bitterest enemies as well as to itself. A union of interest so that the wisest counsel will prevail among all concerned is a natural step. Moreover, the union forms an insurance of each against the monopoly of special privileges and improvements by the others.

Much of the gain from the combination of capital arises from the conduct of business upon large scales. Too much emphasis can hardly be placed upon this element. Great saving arises from cheaper purchase of material in large quantities; from better utilization of material through a larger range of methods, machines and facilities; and through economy in purchasing, selling and directing agencies. Each member of a combination has the advantage of the best knowledge of every other member. Whether the goods produced are sold cheaper in consequence or not, society is richer, because the energy and capital saved are available for other things.

Combinations of capital to control the markets and exact tribute from consumers have no such economic basis. They are analogous to the monopoly of rich mines discovered by accident. It will be found, moreover, that combinations of capital to force unduly high prices are seldom permanently successful unless they are founded on a natural monopoly. In such cases it is the monopoly of things which should be the property of society at large, and not the combination of capital, that brings evil. Though a powerful combination having no natural monopoly may for a time control the market, it cannot long keep prices above the point at which they would be maintained without the combination; for whenever they raise prices artificially beyond that point a large profit can be made by any outside producer, and such will not be wanting.

One is not accustomed to consider crime an element in economics. Yet we find a species of it an important element in our discussion of capitalism. Unfortunately, the great combinations are not free from evidence of it. Many of them have been known to commit robbery and bribery. Their facilities for such work in bankrupting railroads, robbing stockholders, bribing legislatures, securing unjust discrimination, and the like, are great. Though their economic power gives them this political power, the question is not properly one of economics. Justice will not suffer any economic consideration, whatever it may be, to issue the final word in the matter of combinations of capital, if it is found that they create moral degradation and political corruption.

LECTURE V.
The Problems of Labor.

Though the wages of labor are found to differ in different employments in consequence of the conditions of each trade (as, e.g., the cost of learning, steadiness of employment, agreeableness, etc.,) the differences are often found much greater than can be accounted for by such causes. The explanation lies in the existence of barriers setting off non-competing groups, — the wages of the members of each group being determined largely by the economic position of the commodity which they produce. The wages of workers above the lowest class are determined partly by the principles that govern rent. This is especially clear of the entrepreneur or manager’s class.

The steady growth of improvements, adding to the productive power of capital, decreases the proportional though not the absolute share of the laborer in the product of industry. A great hope for the laborer lies in the possibility of becoming a capitalist. The law of minimum wages shows that a laborer who begins his career with determination may become a capitalist.

Co-operation is specially directed toward the realization of interest and profits for the laborer. Its failures have been due largely to inadequate appreciation by the co-operators of the functions of the entrepreneur.

Profit sharing, though aiming less high directly, may, when scientifically conducted, give the laborer as good opportunities. In principle, it furnishes the laborer opportunity to use his employer’s facilities for producing wealth, and to share with his employer the produce resulting.

The most popular agency for improving the worker’s lot is the trade-unions. Associations of workers to gather and spread information concerning trade conditions, to set high standards of workmanship, to stir up public opinion against inhuman employers, and to perform other like functions, are economic agents of good; but trade-unions have often defied natural law and involved themselves in inevitable destruction. Their danger is the blind following of unintelligent leaders, but a knowledge of fundamental economic principles is spreading among them.

Trade-unions, co-operation and profit-sharing are at best but palliatives. The ultimate labor problem lies deeper. Three fundamental questions must be asked. What does the laborer do for society? What does society do for the laborer? What does society owe the laborer?

The grades of labor are infinite, — from him who has brute strength and will work faithfully when under supervision, to him who has executive ability to direct and combine the varied works of a thousand others. The first can barely without aid support himself, and he cannot render to society much that it desires. The service of this man is hardly greater than that of his ancestors two centuries ago: if he does more, he does so through the help of inventions or the capital of others. It is the work of others, therefore, and not his work which is of increased utility.

The worker who is able by quick mind and nimble fingers to operate a delicate machine — the manipulation of which has been taught him — contributes somewhat individually to society; but the greater part of the gain here, also, lies in the machine which he operates. If, however, he can devise new methods, acquire versatility to operate several machines and thus economise time or labor, or invent a new machine or process, he has contributed something to economic progress. The services which may be rendered to society are infinite, and society’s wants are infinite.

Wages are higher in this generation than ever before in the history of the world. The poorest laborer counts as necessities articles of consumption which were luxuries for the well-to-do a century ago . Poverty to-day is rather relative than absolute. Fluctuations in circumstance rather than continued distress constitutes present-day poverty . For the fluctuations society is largely responsible, but the opportunities for success to make a fair average are continually growing.

Society does not owe more than it has received. A proper aim of life is development, which must proceed from generation to generation. A class of population industrially as incapable as its ancestors of two hundred years ago is a drag on society. Its labor is hardly more valuable to society than to itself. The highest grades of labor, utilizing the advance in knowledge and accumulated wealth, are able to render greater service to society than to themselves, and their reward is greater in consequence.

Though society may not owe more to the laborer, can she afford to give more? Clearly the advance of wealth renders high wages possible for all. Yet, even if society owes a living to every man of this generation, it does not owe a living to all the children he may beget. Whether one accepts the so-called Malthusian theory or not , one comes face to face with poverty which is clearly due to excessive population in certain classes. The growth of these classes is out of proportion to the growth of the services which they render society, and society cannot afford to assume the responsibility for their support and for the support of their increase.

The positive check to population has but infrequent play in our civilization. The preventive, though obvious, is alarmingly absent in the classes most needing a check. The true remedy for poverty, therefore, is a combination of the preventive check, operating in these classes, with an improvement in the character of the population which, through proper conditions of birth and education, shall lift the new generations into more efficient industrial classes.

LECTURE VI.
Modern Tendencies.

Not many years ago the wealth of the community depended largely upon its own industrial conditions. As the means of transportation were improved, the natural advantages of one section were reaped in part by others, through a division of labor. Division of labor sprang up internationally as well as locally, determined by comparative rather than absolute cheapness.

Nowadays though trade is continuing between different sections of the world, it is not merely international. The inhabitants of other continents obtain some of the advantages of the natural resources of America by coming personally to our shores. This change, though not wholly economic, had its origin in economic changes.

The natural resources of America are great only relatively: great because the population is unusually energetic and has not been numerous. As America absorbs more and more of the rest of the world, and becomes more and more like it, she loses more and more of her economic advantage.

Though the tendency is for greater correspondence in the industrial condition of different countries, the tendency is for greater inequality in the distribution of wealth in each country. Every year sees new control over the forces of nature, and this control is not universally shared. The man who by executive or inventive ability can add to the comfort or pleasure of many others is usually able thereby to secure a fair income. The number of men who can and do render service to society in such manner is yearly increasing. The ignorant laborer, on the other hand, has not, as a rule, ability or capital either to make or to use new discoveries, methods or combinations. The maximum productiveness of mere obedient brute force was reached many hundred years ago, and there is no economic reason why the man who has now nothing but obedient brute force to offer society should receive more for his work than such a man received several hundred years ago. Thus as society grows both in numbers and in wealth, the difference in income between the most serviceable member of society and the least serviceable member, economically speaking, becomes greater and greater.

Not only is the distribution of wealth tending to greater inequality, but to greater instability. Commercial transactions were formerly carried on largely with money. To day, money plays practically no part except in the retail trade. Its chief use is as a common measure of value. The world’s financial work is carried on almost wholly by credit. Merchants buy goods largely with notes or with checks; these notes and checks are discounted or deposited with banks, and in return bank credits are given. With these bank credits in the form of checks other payments for goods or notes are made, and thus the circuit is completed without the use of money. Though the banks hold money in reserve for the payment of their obligations, it is in small proportion to the amount of them; and much of this money, moreover, is either bank-bills or government legal tender, — both of these being paper based almost entirely on government credit. In international relations, finally, most payments are made in drafts (which correspond in nature to notes or checks), and international balances are settled largely in bonds, which are themselves forms of credit. The failure of any person concerned in these transactions to meet his obligation may precipitate difficulty on others, who again involve a new circle, and a financial crisis may result. In such a crisis not only speculative but real values collapse, and able, careful men of high financial standing may be rendered penniless by the misjudged steps of men across seas of whom they have never heard. Labor as well as capital may be involved in these disasters, for commercial stagnation often results temporarily. With most barriers broken down between nations, each is partly involved in the disasters of others, whether those disasters result from unpredictable circumstances or from mis judged or short-sighted policy.

One of the premises of economics is freedom from artificial restrictions. Until one realizes that natural laws are in operation, one is surprised to see how wages and profits, values, prices, etc., work themselves out to equilibrium. The conclusions of economics show that things must be thus and so. Yet we must not assume too readily that they are actually so in real life. All logic is based on premises, and therefore before applying the logic of economics to any particular phase of life, we must see that the premises correspond with the actual conditions. As a matter of fact, few communities realize the freedom which economics assumes. Whether one believes that this or that is the true fundamental principle for improving the condition of man- kind, one must know that a particular individual can never be judged wholly by that which is true of his class, that the hazards of modern industrial life have rendered generalization useful only for large classes, and that individual duty toward other individuals is greater than ever before.

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Questions.

LECTURE I.

1. Which, if any, of the following persons are agents in increasing the wealth of the community: a pianist, a piano maker, a soldier, a dress maker, an architect, a hairdresser, a teamster, the captain of an excursion steamer? In each case, give your reason for including or excluding the person named.
2. Would the total wealth of the community be increased immediately or ultimately, or both, if you sold to your neighbor for $9000 a house which cost you $8000, thus compelling him to save $1000 on the expense of a trip to Europe, and you devoted your profit to establishing a harness shop?
3. Explain fully the cause of rent and show how rent may be estimated.
4. How does Mr. Walker’s treatment of the law of “diminishing returns” differ from Mr. Mill’s?

LECTURE II.

1. Explain the nature of the “unearned increment” from land.
2. State the grounds for the assumption of “unearned increment” by the State
3. What do you think of the justice of Mr. George’s single tax on land?
4. What do you think of General Walker’s objections to the public assumption of the “unearned increment?”

LECTURE III.

1. What do you understand to be the minimum rate of wages that may prevail in any community?
2. Is there any economic reason for paying women lower wages than men?
3. Explain by what process wages and profits are kept at an equilibrium.
4. What is the difference between interest and profits?

LECTURE IV.

1. Explain the chief advantages of production upon a large scale.
2. What is the effect upon labor of the sudden conversion of large amounts of remuneratory capital into auxiliary capital? Is this a necessary result?
3. What do you think of Karl Marx’s statement that capital is unproductive, and interest is mere confiscation of the product of laborer’s industry?
4. What, in your opinion, are the comparative dangers in a combination of steel manufacturers and a combination of cotton cloth manufacturers?

LECTURE V.

1. Do you believe that the restriction of population is the only fundamental remedy for poverty in the laboring classes?
2. What would you give as the law of the differences of wages in different employments?
3. Would you say that the failures of profit-sharing militate against it as a practicable palliative for the condition of laborers?
4. What do you think of a proposition to “make work” by inaugurating an eight-hour day?

LECTURE VI.

1. Do you look upon restriction of immigration as an economic necessity in the near future?
2. Explain the effect of changes in transportation upon the growth of cities.
3. What do you understand to be the conditions under which international trade will spring up?
4. What is your attitude toward the doctrine of “Laissez-faire?”

Source: University Extension Lectures under the auspices of The American Society for the Extension of University Teaching. Syllabus. Series E. Number 16.

Image Source: William Morse Cole faculty portrait in Radcliffe College, Book of the Class of 1913-14. Colorised at Economics in the Rear-view Mirror.