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dum. But the fact cannot be disputed that the period of the Civil War, when the greatest destruction of wealth this country ever saw was going on, was a time of great business prosperity and industrial activity. Nor can this be explained upon any theory that we were then borrowing of the future. To borrow of the future is a physical impossibility. By no process of financial juggling can any one eat to-day the egg that is to be laid tomorrow. The ships that were sunk, the houses that were burned, the shot and powder fired away, and the immense amounts of other wealth unproductively consumed or wantonly destroyed were not future ships, houses, powder, and shot, but existing products of labor. Nor did we even borrow from abroad. As a people, we owed less to foreign nations at the end than at the beginning of the war.

Is there, then, such a thing as overproduction ? Manifestly, there cannot be, in any general sense, until more wealth is produced than is wanted. In any unqualified sense, overproduction is preposterous, when everywhere the struggle to get wealth is so intense; when so many must worry and strain to get a living, and there is actual want among large classes. The manner in which the strain of the war was borne shows how great are the forces of production which, in normal times, go to waste; proves that what we suffer from now is not overproduction, but underproduction.

Relative overproduction there, of course, may be. The desires for different forms of wealth vary in intensity and in sequence, and are related one with another. I may want both a pair of shoes and a dozen pocket-handkerchiefs, but my desire for the shoes is first and strongest; and upon the terms on which I can get the shoes may in large measure depend my ability to get the handkerchiefs. So, in the aggregate demand for the different forms of wealth, there is a similar relation. And as, under the division of labor characteristic of the modern industrial system, nearly all production is carried on with the view, not of consumption by the immediate producers, but of exchange for other productions, certain commodities may be produced so far in excess of their proper proportion to the production of other commodities, that the whole quantity produced cannot be exchanged for enough of those other commodities to give the usual returns to the capital and labor engaged in bringing them to market. This disproportionate production of some

VOL. CXXXVII.- No. 325.

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things, which is overproduction in relation to the production of other things, is the only kind of overproduction that can take place on any considerable scale, and the overproduction of which we hear so much is evidently of this character.

But what is the cause of this relative overproduction : That is the important question. Does it spring, as some of the social. ists seem to think, from the lack of intelligent direction in production, which requires for its remedy governmental supervision of industry? Is it due to any removable cause, or must we, as the penalty for having called steam and machinery to the aid of human muscles, accept conditions in which men suffer from want while warehouses are glutted ?

To answer these questions let us examine the phenomena more closely. What is relative overproduction when viewed from one side is evidently relative underproduction when viewed from the other. And what we call overproduction as to any particular commodity or commodities may proceed from increased production of things of one kind or from decreased production of things of other kinds. Thus the original impulse which produces relative overproduction may be one stimulative of production or one restrictive of production. But, while the phenomena of relative overproduction may thus arise from causes opposite in essential character, it is only within a limited field and to a limited extent that causes so different in their nature can produce similar results. This we may see if we note the different general effects which follow increase or diminution of production in any special branch of industry. Let us suppose, for instance, that there is, from some discovery or improvement, an increase in the production of coal, out of proportion to the increase of other productions. More coal thus being brought to market than can be sold at previous rates, the price falls. The result is, that all the consumers of coal who so desire can increase their consumption of coal, and those who do not wish more coal can increase their consumption of other things, while, in all branches of industry where coal is used, the cheapening of coal reduces cost and stimulates production. Thus the gen. eral effects of the increase in the production of coal, as they become diffused over the whole field of industry, are to increase all other production, and to reëstablish an equilibrium between the production of coal and the production of other things on a basis of increased production.

But suppose some cause, natural or artificial, to check the production of coal so that it falls below the previous proportion to other production. Its price rises, and the consumers of coal must use less coal or less of something else. Miners, transporters, etc., of coal find themselves out of employment, and their power of purchasing commodities cut off or diminished. At the same time, the enhanced price of coal makes production more costly in all branches of industry which make use of coal, and thus the general effects of the diminution in the production of coal are to reduce all other production, and the restoration of equilibrium, when it again takes place, will be on a basis of diminished production. Thus we see that the general effect of increase of production in any particular branch of industry is to increase production in all branches, while the general effect of decrease of production in any particular branch of industry is to generally decrease production.

Or to put it in another way: Trade being the exchange of commodities for commodities, in which money is but the common measure of values and instrument of transfer, supply of commodities of one kind is demand for commodities of other kinds. Whatever, therefore, causes the bringing to market of an increased amount of commodities, at once increases the supply of those commodities and the demand for other commodities, thus increasing the volume of trade and generally increasing production. Whatever, on the other hand, diminishes the amount of commodities brought to market, at once decreases supply and diminishes demand, lessening the volume of trade and decreasing general production.

This we see very plainly in relation to those branches of production in which the varying character of the seasons causes marked alterations. Good crops mean increased demand of all kinds, active trade, and general prosperity, although it may be that to many farmers, or perhaps to farmers in general, the immediate benefit of unusually large crops is neutralized by the lower prices consequent on relative overproduction. And reversely, although to many farmers, and perhaps to farmers in general, the immediate effect of a poor crop may be compensated for in higher prices, yet poor crops mean to the community at large decreased demand of all kinds, dull trade, and hard times.

It is thus apparent that, while relative overproduction of any commodity or group of commodities may arise either from

increase in the production of these commodities or from decrease in the production of other commodities, yet there are differences in the general results springing from these two differing causes which will enable us to infer from which of the two any particular disturbance of the equilibrium proceeds. If the nature of the primary cause be to increase production, its seeondary or diffused effects must be to stimulate production generally, to augment the volume and increase the briskness of trade; and whatever be the disturbance in the branch or branches of production in which the impulse is first felt, it will soon pass away as the stimulating impulse communicates itself to other branches. But when the nature of the primary cause is to check production, the impulse persists in the checking of other production, and its general effects are to diminish demand and cause dullness in trade, the disturbance which it first causes tending to perpetuate itself in wider circles, causing a dislocation in the interlaced machinery of production and exchange, which is finally reduced only at the cost of deprivation and suffering

To illustrate, let us suppose discoveries or inventions which so increase productive power in certain branches of industry that, even with the increased demand which follows reduced price, not so many hands are needed in those employments as before. But the same cause which thus displaces labor in certain employments operates, in the way before pointed out, to create a greater demand for labor in other employments and thus to facilitate redistribution without loss or suffering. Suppose, however, a check to production, which operates to a like extent in lessening the demand for labor in the same branches of industry. The cause which thus displaces labor in these departments operates, in this case, to reduce the demand for labor in other departments, making it harder instead of easier for the labor displaced in one occupation to find employment in others. Dis. placement thus tends to further displacement, and waste and suffering are extended and protracted.

Looking at the phenomena which present themselves to-day in the dullness of trade, the forced idleness of laborers, and the curtailment of production in so many branches of in. dustry, and which in times of marked industrial depression present themselves in aggravated form, there can be no difficulty in deciding to which class of primary causes they are due. They are not due to causes primarily operating to increase production,

even if to increase it disproportionately, but to causes which primarily operate to check production. It is not true, as the New York “Herald” says, in cutting down the margin of the news-dealers, that the country is producing too much-an assertion that in one form or another is echoed generally by the press. What is true is that the country is producing too little. Reductions in wages and in profits, the fall of interest, dullness of trade, the involuntary idleness of men who would gladly be at work, are not the symptoms of too great a production of wealth; they are the symptoms of restriction upon the production of wealth.

Nor have we far to look to recognize restrictions upon the production of wealth sufficient to account for all these phenomena — restrictions which prevent that interaction of demand and supply which, under conditions of freedom, will determine the proportion that all branches of production should bear to one another with infinitely greater promptness and exactness than could any human intellect. In the first place, almost all our taxes, either purposely or incidentally, restrict production. Taxes upon the exchange of commodities are as much taxes upon the production of commodities as taxes directly levied upon production. We maintain an enormous tariff upon imports for the express purpose of hampering and restricting the exchange of commodities — a tariff which extorts from the producers of the country a greater revenue to the Government than even the profligacy which it has engendered can find excuse to spend ; which in addition extorts from producers a probably still greater sum for the benefit of favored individuals and corporations, whose lobbyists almost mob Congress when any proposition for the reduction of taxation is made; and which still further causes waste and loss that probably exceed both what goes to the Government and what goes to the favored interests. Our national internal revenue taxation is, moreover, not merely for the most part a direct tax upon production,- for, whatever may be said against the use of whisky and tobacco, their production, from the economic stand-point, is as truly the production of wealth as is the production of bread and cheese, but it is a taxation which creates monopolies.

Nor have we even internal free trade, although, thanks to the constitution, the political power is prohibited from interfering with it. But we have suffered the corporations to whom we

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