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4 per cent, to ordinary private persons, 6 per cent, and to money-changers and the like, 8 per cent. According to the Laws of Menu, the Brahmin may receive only 2, the warrior, 3, lower castes, 4 or 5 per cent a month. Public regulation of pawnbroking does not succeed any better than the regulation of other business; secrecy is desired by both parties, so that laws are easily invaded.

A symptom of a condition is frequently mistaken for its cause. Thus it was observed that a low rate of interest frequently coincided with a period of prosperity, and the inference was drawn that the former was the cause of the latter. So, after governments had given up trying to prohibit interest, a plan was conceived of making their subjects prosperous, by fixing the rate. When Louis XIV. lowered the rate to five per cent, he asserted in the preamble to his decree that it would promote the welfare of land-owners and business men, and prevent idleness. Several early English writers took the same view; thus one says, that every lowering of the rate of interest by law produced a corresponding increase in the national wealth. Whether or not this is true must always remain doubtful, because it has proved absolutely impossible to lower interest by law. The expedients by which usury laws were evaded have been many, acknowledgments of indebtedness to a larger amount than that actually received, acknowledging it in a higher kind of money than that in which the loan was made, taking commodities at an exorbitantly high price by the debtor or selling them to the creditor at a disproportionately low one, fixing terms of payment in such a way that the debtor is almost forced to let them slip by the list is almost inexhaustible. Even if the government were successful in forcing interest below the natural rate, less capital would certainly be loaned, and more would go to foreign parts; less, also, would be saved. Governments are able, however, to make the rate of interest unnaturally high. In

Switzerland, at one time, those who took less than the prescribed rate were punished, as well as those who took more. But the most effective way is for the government to fix a low rate and impose heavy penalties for exceeding it; because in this case the debtor, being usually more in need of obtaining the loan than the creditor is of investing his capital, is forced to pay to the latter not only the natural interest but also a compensation for the risk that is run in violating the law.

More confusion has existed on the subject of interest than upon most economical subjects, at any rate, it has existed longer. As late as 1754, a writer of some pretensions accounted for interest as follows: Some people hoard their money, instead of spending it, and thus produce a scarcity; so others, who need to obtain some of this money, are obliged to pay interest in order to induce the possessors to lend it. Interest has been very frequently confounded with the price of money. The most popular fallacy upon the subject now is that the rate of interest can be lowered by increasing the amount of currency. What men really wish to borrow usually is capital-agencies of production and money is only a means for the transfer of these. The amount of currency can have no effect upon the abundance of capital, and even an increase in the abundance of capital does not always lower the rate of interest; this is partly determined by the value of capital

in use.


The existence of interest depends, of course, primarily upon the existence of private property. Until the right of property is recognized as extending beyond actual possession there is not likely to be much lending. The aversion to interest has now nearly disappeared; it is recognized that if one man lends another anything, the first has done the second a favor, and some inducement proves necessary to induce men to lend to one another. The price for the use of capital tends to become lower and lower, like the price of commodi

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Nations, after having reached a certain stage of civilization are eager to trade with other nations. Even savages are willing to barter goods with foreigners for trinkets and whiskey. Governments, however, being very conservative institutions, and, perhaps, remembering that when their subjects were savages they were very likely to exchange substance for show, have always looked askance upon trade. They have not been able to suppress it completely, but have been obliged to content themselves with obstructing it. A very strong belief prevails that the advantages of a trade entirely accrue to the seller; thus international trade has been regarded as a matter for diplomacy. In commercial treaties the object is, naturally enough, to get more than is given; and the nation which goes furthest in abolishing the impediments to trade which have been imposed, is thought to grant most.

Many provisions that have been made in commercial treaties in ancient and mediæval times, and some in later days, are somewhat curious. The first consideration is to induce the State with which the treaty is made to give legal security to citizens of the other, who reside there for purposes of trade, in case this security is not already enjoyed. The treaty of 1856, between England and Morocco, covenanted that the countrymen of a debtor should not be held responsible for debts which they had no part in contracting; that between England and Mexico, in 1826, guaranteed, among other things, that prices should be freely determined between buyers and sellers; that citizens of each country, resident in the other, should be free from forced conscription for military service; that they

should freely exercise their religion; and that their graves should be inviolate. Treaties of this kind were very common in ancient times, and some were made very early. It is thought that the places in the suburbs of Jerusalem, where Astarte and other heathen gods were worshipped unhindered, owed their existence to commercial treaties with Phoenicians, Moabites, and other peoples.

After industrialism had made considerable progress in Europe, matters of commerce entered into treaties which were primarily political. For example, in a treaty between the Venetians and the Latin Empire, in Constantinople, it was agreed that no citizen of a State at war with Venice should be permitted to sojourn in the Byzantine Empire. Likewise, while the Dutch were the foes of Spain, they were favored commercially by France; by a treaty made in 1596 they were put upon an equality with the French. Such treaties were not entirely unknown to the ancients. The king of Bosporus had the rights of citizenship in Athens, and his property there was free from taxation. By a treaty of the Emperor Justinian with Ethiopia, the latter was to furnish aid against the Persians, while Byzantium was to import its silk from Ethiopia, instead of from Persia.

These economical alliances have been most frequently formed between States in which, by reason of differences in the nature of their soil and of national culture, the industries of the one do not compete much with those of the other. Still, two States can hardly be found which have not some industries in common, and in making treaties, the art of the negotiator has been extensively employed to over-reach,- to obtain more "concessions" than are granted. A treaty of England with Portugal, made in 1703, was regarded as a masterpiece in this line, because, by its workings, Portugal exported to England a considerable quantity of Brazilian gold. A Portuguese writer, in the middle of the century, delivered himself thus: "Through

unexampled stupidity we permit ourselves to be clothed (by foreigners) ... England robs us every year, by its industry, of the products of our mines." And yet the provisions of the treaty were very simple; Portugal withdrew her prohibition of English woollen goods, and restored the former duty of fifteen per cent, while England permitted Portuguese wines to pay a duty one third less than that on French wines.

Commercial treaties have been made of all degrees of liberality. They have even been used with a view to general freedom of trade. In the latter case, the promise is frequently made to treat the products of the other party on an equal footing with those of the most favored nations, as regards import duties. Treaties of this sort were rare in antiquity. Perhaps the nearest approach to one was a sort of reciprocal granting of the rights of citizenship between Athens and Rhodes. Early in the fourteenth century, Flanders adopted free-trade principles, somewhat similar to those later followed by Holland. In 1490, Florence promised to permit England to enter into all the treaties it should make with others. In a treaty of the same country with France, at about this time, it was stipulated that Florentine ships should be treated as Gallic, and Florentine merchants as true Gauls. Many treaties of this character were made between many States of Europe in the sixteenth and seventeenth centuries. In the eighteenth century, however, these principles were receded from, but in the nineteenth they have again become common.

It would be perfectly possible for universal freedom of trade to be secured by commercial treaties. Still, this result is not likely to be brought about in that way. The treaties may contribute to the result, however. If it is seen that trade with one country is beneficial, there is a chance that in the course of generations the inference may be drawn that trade with two countries would be still better, and eventually

that there is no good reason why a nation should refuse to trade with any other wishing it.

The desirability of freer trade between this country and South America has received consideration lately. It has been held that in removing obstructions which we have placed upon trade with those countries, we should try to induce them to remove their obstructions also. A writer in the Boston Herald, says:—

"Naturally, if we repeal our sugar duty, and demand nothing of these South and Central American governments, they will not of themselves come forward and offer us favors for what they can obtain for nothing. They will look upon us as a race of men so absorbed in our own affairs as to be little better than idiots, when we come to take into account matters of international importance."

There can be no objection to the course here advocated; but even if these governments should refuse to abolish their obtructions to trade, that would be no reason why we should retain ours. It is always well to speak to people in language which they can understand, if you speak at all, and if these peoples are not sufficiently enlightened to see the true reasons for removing the duties they have placed upon our products, it may be well enough to talk to them about "mutual concessions "; but there is no occasion for being deceived ourselves by the words we use. Trade is, by its nature, reciprocal ; "tout achat est vente et toute vente est achat." If we buy of these people, they must buy of us, directly or indirectly. If they refuse to take our goods directly in exchange for theirs, it may be necessary for us to make payment in English goods for which we have exchanged others of our own.

As long as South Americans buy the same amount of our goods, it does not make much difference to us whether their governments impose duties upon them or not; but it is not a matter of indifference to us if their duties cause them to buy less of our goods. But even in the latter case we cannot profitably retaliate by placing duties upon their goods. Trade with these coun

tries would be a good thing for us, or it would not; if not, then we should not probably trade much with them anyway; if it would be a good thing, then the fact that they interpose obstructions to trade and diminish its volume does not make it wise for us to interpose further obstructions and restrict it still more.


A few years ago Mr. Richard T. Ely advocated spending the surplus revenue of the country in the construction of internal improvements. The surplus, it appears, is a thing of the past; part of it has gone in the way counselled; appropriations for public buildings have been very liberal; rivers and harbors have not been entirely neglected, though appropriations for their improvement have by no means reached the scale he hoped for; railroads and canals have receieved due attention. A new claimant for public money has appeared, namely, arid land. Unfortunately, just as the surplus has been squandered the one truly wise way of spending it has been discovered. There is a good deal of land in the West which, being watered with the public money, would produce corn and wheat; the former is said to serve very well for fuel, and everybody knows how we suffer for more of the latter.

The tendency of new settlements to revert to somewhat primitive ideas and customs has been frequently remarked. Massachusetts and Virginia during the first very few years of settlement reverted almost to a tribal ownership of property. In the former, this was accompanied uninterruptedly by famine. A change for the better took place only with the introduction of private property. In Virginia, when the settlers gave up the system of common labor and joint stock companies, as much work was performed in a day as formerly in a week. The people of these States, having experienced very vividly the advantages of civilized methods of industry over savage methods, for a long time manifested no

tendency to return to the latter after once giving them up. The West was settled in a different way and passed through no such experience. Its socialistic leanings display themselves later and in a different way. Mr. Richard Hinton describes these tendencies very sympathetically in the Forum:

In forecasting the growth of a distinct policy shaping fresh demands for this newer West, I am first confronted by the overwhelming physical geography of the region; secondly, by the one supreme condition that it creates-aridity; thirdly, by the fact that it is impossible to achieve full reclamation of the desert without concurrent and continued control over the sources of the waters, first by the nation, next by the States affected acting with it, and finally by the local communities into which the States are subdivided. Private ownership of water is already set aside. Private appropriation thereof is already modified by public control of a deficient supply. Private and corporate rental of water is subject to State and county regulation of rates. Private ownership of water works and ditches will soon be a thing of the past. The needs which have already created the beginnings of these policies and purposes will, as fast as the newer West reaches the fulness of statehood, find their counterpart in strenuous demands upon the nation for aid in constructing the greater works needed in a vast system of water-storage and floodcontrol, such as is certain to be inaugurated. With this, it will be found that a general control of our remaining forest region and timber areas will be demanded by the same physical conditions which must make the newer West a practical unit, both in configuration and in the social-economic forces that will be thereby created and evolved. The railroads beyond the Missouri have already shown their submission to the same controlling law. Their construction and administration have been carried forward on an immense scale. Unity along the latitudes they serve is absolute; as absolute will be the demand in the newer West for their public ownership. There being no possibility of competition - for there are no navigable water-ways- the combination of forces is such as to drive forward the problem of general control.

The view that the physical geography of certain regions renders necessary a government in certain respects socialistic has the recommendation of novelty. Suppose it granted, however, that private appropriation of water in this region would. be detrimental; it does not clearly follow that public control should be vested in the general government. The theory of our government is that the people of any locality

can manage their own affairs better than any external authority can for them. Very likely the local government in this case has not yet the capital necessary to construct the required works, but there is no pressing need for these works at present. There is no occasion to fear that our agricultural products will not be sufficient for our requirements for some time yet without the utilization of the desert. There is enough private enterprise and capital among us to make the necessary investments as soon as the conditions arise to make it profitable.. At any rate, there are no better grounds for taxing the whole people of the country to supply water to Western farmers than to supply fertilizers to farmers elsewhere.

Looked at in a certain way, the private appropriation of the water needful for irrigating a large section of land seems liable to entail hardship upon cultivators of the soil. Those who owned the water would have those to whom it was necessary entirely at their mercy. But, in the same way, those who own the land in any country would, theoretically, be able to drive those who do not own any of it into banishment. Land is certainly no less necessary to life than water.

More interesting than speculations about the wisdom or unwisdom of public control of water supply is the observation of the actual direction of social movements in a part of the West. It seems by no means unlikely, in view of the facts which Mr. Hinton has collected, that an actual experiment will be made in the common ownership of certain agents which, in most civilized societies, have been the property of individuals. Mr. Hinton calls attention to the stringent provisions in the Constitutions of all the newest States, including Wyoming and Idaho, for the public control of transportation companies and other corporations directly ministering to public. convenience, like those formed for coalmining, the supply of light, street railways, etc. If these States would be content to try their own experiments in socialism

without calling upon the general government for assistance, the rest of the country might well look on with equanimity and even with interest.


The concluding paper, by Mr. Carnegie, of the tariff discussion which has been waged in the North American, appears this month. Not much light has been thrown upon the question; but as public attention was directed to the subject, perhaps it was as well for people to read the arguments for and against a protective tariff, in the Review, as it would have been if they had turned to other writers who have used the same arguments. A writer who draws his illustrations from the events of the hour gives somewhat more weight to the same arguments than one who wrote before the present events occurred. Moreover, action must be taken with reference to the present condition, and so it is well to know as accurately as possible what the present condition is.

In summing up, Mr. Carnegie thinks that every point raised by opponents of the present tariff principles has been disposed of. These points he enumerates as follows: "First, the policy of protection in general; second, that the infantile stage (of our industries) has passed; third, that if we do not buy from abroad, foreign nations cannot purchase from us; fourth, that our nation's prosperity and wealth are best gauged by the extent of its dealings with other countries; fifth, that protection creates monopolies." The disposition of the last is curious and typical of protective reasoning. There is no monopoly in manufacturing, because any one with from $100 to $100,000, or more, can invest it in manufacturing establishments. "In the iron and steel branch, with which I am familiar, any citizen of the United States who has $100 can become part owner to-morrow; he can purchase the shares of almost all the steel concerns at much less than the capital actually invested." A monopoly, which all

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