In England, after the Black Death, when labor was scarce and hard to find, laborers were strong in bargaining but weak in voting because they had no votes. The employing classes were temporarily weak in bargaining but strong in voting, since they did whatever voting was done. At any rate they controlled the state. They were not slow to use the state to help themselves in the bargaining process.

In view of all these experiences, it is pretty certain that any class which finds itself so numerous as to be weak in bargaining and strong in voting will make use of a voting program. It is not so certain, judging by past and present experience, that it will use its voting power wisely. In fact, no case has yet appeared where a voting program adopted under such conditions was not destructive rather than constructive, which was not demagogic rather than economic, which did not consist in killing the goose that laid golden eggs in order to seize the whole stock, rather than in increasing the flock. But that is not the important certainty. The important certainty is that wherever and whenever such an unbalanced condition is allowed to arise as that which exists in England today, a voting program similar to that which has been paraded in this country as the program of the British Labor Party is certain to be adopted. Tho it lacks a single constructive feature, tho it is made up exclusively of scraps of Marxian jargon, catch phrases, and shibboleths, nevertheless, it is the kind of a program which any class is likely to adopt in its own interest when it for the first time concludes that it can outvote other classes and control the state.

IV. THE FIGHTING PROGRAM

It is sometimes affirmed that the labor program of the British laborers is more "advanced" than that of the American laborers. By the same token the program of the Russian laborers is more "advanced" than that of the British. The disproportion of the wage workers to other urban classes is also greater in Russia than in England, as it is in England than in the United States. That is to say, there are fewer technicians, business men, capitalists and smaller accumulations of productive capital, and fewer productive establishments calling for men in proportion to the number of men available to man them. This disproportion puts the Russian laborers, particularly the great mass of ignorant and unskilled laborers, at a still greater disadvantage in bargaining, but gives them vastly greater strength in other ways.

Numbers give strength not only in voting but also in fighting. Fighting, provided victory is certain and overwhelming, is a shorter cut to what is wanted than voting. To be sure, it may, like other short cuts, not work well in the long run, but it looks like a quicker method of getting possession of accumulated wealth than the voting program, as the voting program is quicker than the program of industry, thrift, and sound investing.

Where the numerical strength of the wage workers is not overwhelming, fighting may prove expensive even tho ultimate success looks pretty certain. Voting looks like a cheaper program than killing. But where numerical strength is so overwhelming as to make victory in fighting not only certain, but cheap because of the absence of power of effective resistance on the part of other classes, the fighting program is pretty certain to be adopted.

It is useless to point out to a great mass of ignorant and unskilled labor that even tho they have the power to take possession, with very little fighting, of the accumulated wealth of the country, still they would better not do it because, in the long run, they will lose more than they will gain by it. If they were capable of appreciating such arguments, they would not be ignorant and unskilled laborers. Men are not ignorant and unskilled laborers in industry and at the same time farsighted statesmen in politics. They are just as ignorant and short-sighted with respect to public as with respect to private affairs.

Therefore we may conclude that whenever and wherever a nation becomes so unbalanced occupationally as Russia is, the fighting program is certain to be the dominant labor program. In short, we in this country can have any one of these four programs which we choose to have. If we balance things up, none of the other programs will become dominant or dangerous. If things become slightly unbalanced, some kind of a collective bargaining program is certain to grow out of the situation. If they become somewhat more unbalanced, a voting program is certain to become the dominant program supported by the numerically superior class, whose numerical superiority makes it weak on the market but strong at the polls. If they become still more unbalanced, the numerically superior class, finding itself hopelessly weak on the market, but overwhelmingly strong in the use of physical force, will use its strength to take what it wants.

HARVARD UNIVERSITY.

T. N. CARVER.

NOTES AND MEMORANDA

INTERNATIONAL TRADE AND PRICES

IN the Quarterly Journal of Economics for February, 1918, Professor Wicksell has a note on price levels and international trade which suggests certain comments. Professor Wicksell approaches the problem throughout " from the goods end" so to speak; that is to say, he regards the movement of goods and not the movement of gold as the primarily effective factor in the changes in price levels produced by changes in international trade. Tho of course the movement of goods is the ultimate thing in all kinds of trade, yet it appears to me that Professor Wicksell underestimates the active influence of the money factor and that in consequence his account often does not represent fully the actual course of events.

Professor Wicksell's note contains two parts. The first deals with the effect of borrowing transactions between countries. Assume two countries under a free trade régime with only a land boundary between them, both having a gold currency. One borrows from the other. The result according to Professor Wicksell is increased" power of purchase " in the borrowing country and decreased power of purchase in the lending country, increased imports to the former and decreased imports to the latter, but no change in price levels. But the increased quantity of goods" will require a greater quantity of money to put it in motion " and a certain amount of gold will

pass automatically "to the borrower. This transmission of gold will appear at the beginning of the period of borrowing and then stop and its effect will be not to raise prices in the borrowing country but only, by maintaining the proportion between goods and money in the two countries, to keep prices

up to the old level in the borrowing country and down to the old level in the lending country.

It appears to me that the exact effect of the borrowing transaction will depend on the form in which the loan is taken, Suppose the borrowing country chooses to take the loan in the form of money then the supply of bills drawn on the lending country, or the demand for bills on the borrowing country will increase, exchange will move in favor of the borrowing country, and if it moves beyond the gold point, gold will flow in and all prices and money incomes will rise. This rise will increase the country's effective demand for imports—which will not have risen in price — and they will increase. Ultimately of course, the gold will flow out again to pay for the increased imports and the old price level will be restored. This process involves a movement of gold and a change in price levels before the movement of goods takes place at all.

Suppose, however, that the borrowing country takes the loan in the form of goods that is to say, suppose it spends the borrowed money in the lending country. Then the quantity of goods it imports will increase. This is evidently the case contemplated by Professor Wicksell. The imports of the lending country will have decreased relatively to the imports of the borrowing country. Whether they will have decreased absolutely depends on whether the loan represents a transference of demand from imported commodities to domestic commodities or not. In other words, it depends on whether the money, if it had not been lent to the borrowing country which, by hypothesis, spends it on the products of the lending country, would have been spent on imported goods or on goods produced at home. If it would have been spent on goods produced at home anyway, the fact that it is lent to a foreign country will obviously make no difference to the quantity of goods imported by the lending country. Whether the demand will in fact be transferred from imports to domestic commodities depends on the marginal utilities of imported and domestic goods to the savers who provide the loan. If in response to the demand for a loan they increase their saving they will obviously curtail their consumption of