also discriminates between different kinds of incomes, taxing those from land most heavily, next those from business, and lastly those from professions. The reason is that the lump value of an income is smaller in proportion as it is uncertain of continuing. A doctor's income is worth less than that of a store-keeper, because his death may put an end to it any day.

21. In times of peace a nation's income should pay its expenses from year to year. In war this is seldom possible, and every war leaves a double burden of debt. As the war goes on the government is obliged to get large loans, either from its own people, or from abroad, or both. As its credit is imperiled by the war it borrows on harder terms than in peace. The money-lenders either require high interest, or they demand a big discount from the principal of the debt. That is, if they lend at four per cent, they demand a bond for the repayment of a hundred dollars, when they advance only ninety. It is better to sell bonds only at par value, and pay whatever interest is necessary. This leaves the country more free to convert its six or seven per cents into three and a half or four per cents as soon as they are redeemable.

22. The second indebtedness created by a war is that for pensions. To induce the citizens to enlist as soldiers, promises are held out that if they are killed, their families will be taken care of, and that if they themselves are disabled by wounds or sickness incurred in the service, they will be supported. Besides these two classes of pensioners there is a third, which consists of old soldiers no longer able to support themselves, although their disability cannot be traced directly to wounds or sickness incurred in the war. For these also the government makes provision. The number thus to be cared for is naturally very great, after a war which cost 400,000 lives in field and hospital, and which

saw a million of men under arms. It necessarily diminishes as that generation dies out, and in the course of time becomes a very trifling burden.

23. The debts incurred by great corporations, and even by private persons borrowing abroad, are in some sense public debts, and should be subjected to public regulation as to the amount which may be thus borrowed, and the conditions of payment. Such debts do not ordinarily bring money into the country to the extent to which they make it responsible to pay money back. Even where the interest is met by exports of produce, this tends to derange international exchanges, by requiring exports greatly in excess of imports to maintain a proper balance of trade. As such debts are incurred chiefly by corporations, and as these are especially under governmental control, it would be easy to place such borrowing under close restriction.

24. Taxation has been developed from the "boarding round" of petty kings, into a scientific assessment of all classes, and of all kinds of property, for public uses. It has passed from the land alone to other forms of property, and has tended to become indirect instead of direct. Direct taxes are the better because the juster form, but harder to get. The single tax to absorb the unearned increment of land-values is neither just nor expedient. It ascribes to land an industrial importance it no longer possesses. Public debts are the result of wars and include pensions to the disabled soldiers and the families of the slain.

CHAPTER IX.

Domestic Commerce.

I. As the earliest groups of persons were self-supporting

This was

their only commerce was between their members. an interchange not of things, but of services. One part of the work fell to the women, another to the men. Some men took to more active labor in hunting and killing wild beasts, while others worked at what called for less exertion. All the group profited by the labor of all.

2. Commerce in things grew up between groups, when it was found that each had something, which the rest had not, but would like to have. Gradually it extended over the whole country through the rise of a trading class, who carried their wares around, like a pedlar of our time. And with the growth of private property, the commerce within the old groups became one of things as well as of persons. Each man sold what he could produce to whoever would buy, whether in his own group or outside it.

3. Commerce thus grows out of difference in skill and difference in locality; and the more there is of either the greater will be the commerce. If all places produced just the same things, they would have nothing to exchange. If all men were producing the same things, they could not trade with each other. Wherever a people has been reduced from variety to uniformity of occupation, as in India and in Ireland, there is almost a cessation of commerce among them. No man needs or helps his neighbor, because all are doing the same thing. They therefore may have trade with foreigners, but none with each other.

4. As Adam Smith showed, the most profitable commerce for a country is that which goes on between people of the same neighborhood, or, as he called it, commerce between town and country. It is so for several reasons: (1) It requires no great outlay in getting the goods from the producer to the consumer. The cost of carriage is trifling, and adds little to the price. (2) It makes it possible to "turn over the capital" employed more quickly. When goods have to be sent abroad, the producer has to wait till they are carried over sea, and are sold, before he gets his money back. If he sells at home, the delay is much shorter, and the capital he is using is kept more active. Adam Smith counted that this advantage was twenty-four fold in favor of home commerce. Since transportation has grown more rapid this is reduced, but still exists.

5. (3) Commerce between distant points is not only costly through charges for transportation, and slow because of the distance, but is liable to be so managed by the trading class as to secure them excessive profits. This is especially true when the whole supply of an article has to pass through a few marts of trade on its way from producer to consumer. At these points it is found possible to buy up the supply of the article, or so much of it as will cause a scarcity, and to hold it for a rise in price. This increase the consumer has to pay, while the producer gets no part of it. In this way wheat and pork have been cornered in Chicago and New York, and fortunes made by extracting a much higher price from the consumer, while the Western farmer was none the better off, but rather the worse. These practices naturally led European consumers and traders to look for other sources of supply than America, and they have thus reduced our European market for food-products.

Nobody would think of cornering the wheat raised in Pennsylvania, because that is consumed in the neighborhood

of the farms which grew it. It has no distance to travel, and is not subject to the power of the trader.

6. In some cases the producers of necessary commodities follow the example of the traders, and combine to put up prices. This can be done most easily when the article is one which is produced in great establishments, few in number. Ordinarily these form a Trust, by combining all the establishments under a single direction and paying the profits of all out of a common fund. In case any establishment refuses to unite with the rest, the Trust sometimes seeks to coerce them by obtaining control of the supply of the raw material, or by securing from the railroads more favorable rates for transportation than these independent firms can obtain.

It is not true that Trusts always put up the prices of the article they produce. But even when they do not, they yet have the public at their mercy. They are at best benevolent despots; and freemen wish to live under no kind of despot.

7. Trusts formed by the combination of corporations are essentially illegal. The corporation is the creation of law, and possesses no other powers than its charter expressly confers. It "must keep within the four corners of its charter," the courts say. If a corporation be chartered to make coats, it cannot make shoes under that charter. If it be chartered to refine petroleum, or distil whiskey, or make plate-glass, it cannot combine with others to put up, or keep up, the price of whiskey, or of oil, or of glass, without going outside its charter, and thus becoming liable to forfeit it. When all the States do their duty in enforcing this legal principle, there will be few Trusts left.

8. Sometimes, especially when business is bad, the producers of some article form a temporary combination to regulate prices. This is called a Pool. It differs from a Trust in that it seeks not to put an end to competition, but