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THE PRINCIPLES OF WEALTH AND WELFARE

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THE PRINCIPLES OF WEALTH AND WELFARE

ECONOMICS FOR HIGH SCHOOLS

BY

CHARLES LEE RAPER, Ph.D.

PROFESSOR OF ECONOMICS, UNIVERSITY OF NORTH CAROLINA

THE MACMILLAN COMPANY

LONDON : MACMILLAN & CO., Ltd. I919

Ali rights reservtd

Copyright, 1906, By the MACMILLAN COMPANY.

Set up and electrotyped. Published July, 1906.

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J. S. Gushing & Co. — Berwick & Smith Co.

Norwood, Mass., U.S.A.

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PREFACE

No claim is made that this little book is exhaustive. It is only a simple and elementary vi discussion of the more important principles ^ which are involved in the consumption, pro- ^ duction, and distribution of wealth. And wealth is everywhere thought of as a means <\r to an end — a means to human welfare in all C4 of its manifold aspects.

The author desires to acknowledge his in- debtedness to Professor E. K. Graham, of the University of North Carolina, for many valu- able suggestions as to the statement of prin- ciples and facts. To his wife, who has revised the manuscript, he is under many obligations.

CHARLES LEE RAPER.

Chapel Hill,

North Carolina,

April, 1906.

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CONTENTS

INTRODUCTION

PAGE I

SECTION I

THE CONSUMPTION OF WEALTH — WELFARE

CHAPTER

I. Wants and their Satiation . . • • i3 IL Demand, Value, Price 35

SECTION II

THE PRODUCTION OF WEALTH —WELFARE

A. Introduction I. Production: Its Nature and Agents . • 5^

B. Agetits of Production

II. Labor a Producing Agent • • • • 57

III. Land a Producing Agent 76

IV. Capital a Producing Agent .... 92 V. Business Management a Producing Agent . 104

C. Aspects or Groups of Production VI. Agriculture and Mining — Producers of

Wealth 128

VII. M anufacture — A Producer of Wealth . 134 VIII. Transportation — A Producer of Wealth . 139 IX. Exchange : Commerce — A Producer of

Wealth 149

IX

X CONTENTS

CHAPTEK PACK

X. Exchange: Money a Standard of Value —

A Producer of Wealth . . . .161 XI. Exchange: Money a Medium of Exchange —

A Producer of Wealth . . . .173 XII. The State — A Producer of Wealth . . 188

SECTION III

CONSUMPTION AND PRODUCTION; MAR- KET PRICE — WELFARE

I. Demand and Supply; Market Value and

Price 209

SECTION IV

THE PRODUCTION AND DISTRIBUTION OF WEALTH — WELFARE

I. Distribution: Its Nature and Standard

II. Distribution of Wealth and Wages

III. Distribution of Wealth and Wages ; Trades

Unions and Factory Acts

IV. Distribution of Wealth and Rent V. Distribution of Wealth and Interest .

VI. Distribution of Wealth: Pay of Business

Management and Profits (a) Management and its Pay (d) Management and Profits

(c) Monopoly Management ; its Pay and Profits 301

(d) Legislation and Monopoly Management VII. Distribution of Wealth : the State

227 237

250

275 286

293 293

297

309 319

APPENDIX

Course of Readings 329

INDEX 331

THE PRINCIPLES OF WEALTH AND WELFARE

INTRODUCTION

The Making of a Living a Great Force in Life ; Economics. — Religion and the making of a liv- ing, to use popular expressions to describe great and complex forces, enter into the life of every human being, in some form or other and to some degree or other. They are all-pervading forces. They are always at work, quiet and unobserved, or violent and manifest to all. And these two sets of forces, though in many respects seemingly opposites, can never be entirely sepa- rated. They are working together in the life of every human being, and at every moment of his life. Whether or not the economic set of these mighty forces is greater and more important than the religious, it is certainly great and funda- mental in human life. It is at the basis of all human effort ; it surrounds every human being from his cradle to his grave.

Economics : a Social Science of Business Motives and Activities. — A study of the forces involved in the making of a living — in the consumption and production of wealth, — a study of these universal and all-important forces we call eco- nomics. As in wealth consuming, and especially

B I

2 PRINCIPLES OF WEALTH AND WELFARE

in wealth producing, no man lives entirely or even largely to himself, so economics does not deal with individuals as individuals solely, but with individuals as parts of a larger body called society. It is a systematic study of the busi- ness activities of society. Neither does eco- nomics deal with the wonderful forces of nature in themselves, but only with these great forces as they are by human effort transformed into various articles for man's consumption, or as these great forces aid as motive powers in the production of the manifold forms of wealth. A study of business activities does not include the physical sciences ; it does not include the great sciences of physics, chemistry, and biology. Nor does this study include all the social sciences. It does not deal with the political and social forces of life in themselves. These forces are in themselves distinct from those of the business world. Economics deals with those social forces whose standard of measurement is money, while government, law, and sociology are the sciences of those social forces, the yardstick of whose measurement is, or at least should be, something very different from money. We have said that religion and the making of a living can never be entirely separated. Likewise the economic can never be divorced from the political, social, and intellectual aspects of life. All other as-

INTRODUCTION 3

pects of human life have a basis in the economic, and this is in turn fundamentally and vitally in- fluenced by the others.

Economics deals with the Production and Con- sumption of Wealth. — The economic or busi- ness world has within itself something of activ- ity on the part of the individual, — an exercise which brings pleasure to his body and mind. It has also something of effort, which brings discomfort and even pain to the individual. This business realm is ever moving and throb- bing, is like the sea with its incessant floods and ebbs, and is full of joys and pains com- mingled in different proportions. This realm is ever consuming wealth in its manifold forms and qualities, and is ever producing these forms and qualities. In its consumption it uses mate- rial forces and forms, which in popular speech we call goods, to satisfy or help to satisfy human desires and wants. These goods which are the results of human activity and effort — the products of wealth producing — do not, can- not, satisfy all the desires and wants of man. They can satiate the lower or more material wants, and are an important means in satisfy- ing the higher wants. They do not satiate the purely religious, moral, and intellectual desires, but they are the greatest means toward the sati- ation of these desires.

PRINCIPLES OF WEALTH AND WELFARE

Wealth, what is it? A Means to Man's Welfare.

— These goods, which we call wealth, consist of material goods — lands, houses, tools, machines, live stock, raw material, finished goods, bonds, stocks, money, etc., — and also of certain imma- terial goods. A man's business or professional reputation and connections, and the organization of his business activities, are certainly not mate- rial goods in the strictest sense, but they are nevertheless thought of as a part of his wealth. This wealth in none of its forms should be con- sidered as the end of activity and effort, but only as a means to an end — the satiation of human wants. To consider wealth as an end in itself is to hold up a low standard of reli- gion, to worship a temporary and material form and force, and is to place man beneath material and even sordid things. Welfare in all its mani- fold aspects should be the end of all economic effort, as well as the end of all economic satis- factions and joys.^

^ The economic realm is composed of man and wealth, and the relations of these may be illustrated by the accompany- ing diagram.

Let the square represent the economic realm. Man and wealth, the two objects within this realm, while distinct from each other, are in very close and vital relations. Man in-

INTRODUCTION 5

Economic Motives and Acts, of the Individual and Society, to produce Wealth and satiate Wants. — In this economic realm every indi- vidual by virtue of his very nature and sur- roundings has desires and wants, both of his body and mind. And these wants can be sati- ated, more or less, by wealth. It is wealth that has the power to satiate these wants or to contribute to their satiation. It is wealth that is the greatest instrument in the hands of man, that is a universal and powerful means which enables him to supply his wants, whether they be the most simple or the most complex. Not only does every individual have desires the sati- ation of which is more or less dependent upon wealth, but he also puts forth, in some degree, activity and effort in order that this powerful instrument may become his own possession and may be for his own use and pleasure.

Man, his wants, and the process of their satia- tion, are the center of all economic forces and of all economic thought. His wants may be few and most simple in their nature, or they

eludes common labor and managing labor; and this labor is immaterial^ siibjesfive (belonging to the ver)- being of man), exchangeable (in connection with man), and useful. Though not included in wealth, this labor is a great agent in its pro- duction. Wealth, on the other hand, consists of those goods which can satisfy man's wants and which are the result of man's efforts; and these goods are material (\zxg<t\y ■=,0)^ objective (ex- ternal to man), exxhangeable, and useful.

6 PRINCIPLES OF WEALTH AND WELFARE

may be many and most complex. They may be those of the strong adult, of the infirm, of the child, or of society in its various organiza- tions. To satisfy all of these desires and wants, manifold as they are in both form and intensity, means the putting forth of great activity and effort, not only on the part of the individual, but also on the part of society. The indi- vidual must produce wealth with which to sat- isfy his own wants and also the wants of those who by virtue of age or weakness must needs depend upon him. He must produce wealth for the use and pleasure of his family, his church, his clubs, and his educational, governmental, and charitable institutions. In this production of wealth, moreover, the individual cannot, at least should not, transgress upon the rights and privileges of other individuals. Every eco- nomic motive and act on the part of the indi- vidual should take into consideration the rights of a larger body called society, in which every individual lives and puts forth his efforts; wel- fare to society, as well as to the individual, should be the ultimate aim of every economic act and should be included in every economic motive. And it is the first duty of the state to create and maintain conditions which are highly favorable to all producers and consumers of wealth.

INTRODUCTION /

Economic Institutions and Conditions largely the Results of the Past. — Ideas and processes which are entirely new seldom come into any aspect of life, and when they come they are more or less modifications of older ones. The seemingly new things, which come into mod- ern life with such frequency and at times with such great popular sensations, are in reality new only in their outward appearances, or at most are new only in a few of their parts. Of the great human institutions of to-day few indeed are of very recent origin, while many of them reach back for their foundation into times long since passed.

Modern democracy, of which we hear so much, and to which so many of us offer our devotions, is old in thought and even in practice. Many of our religious ideas and processes have come down to us from the far-away Hebrews, while many of our intellectual forms and pro- cesses were worked out by the ancient Greeks. Beyond a doubt this is more or less a fact of the economic aspects of modern life. Many of our present institutions in the realm of business activity go back for their basis to the seven- teenth and eighteenth centuries, and not a few of them to a period much earlier. In fact, most of the economic forces of to-day are as old as mankind ; they are not only universal but

8 PRINCIPLES OF WEALTH AND WELFARE

also everlasting. The agriculturist tills the soil. By means of his own labor and certain forces of nature he works upon other forces of nature in order that he may produce wealth with which to satisfy his wants ; and this pro- cess is as old as civilized man. The idea has not changed, though the methods and imple- ments of tillage have changed, and in recent times with wonderful rapidity and results. The idea of transforming some of the most elemen- tary forms of wealth, as for instance raw wool, into the highest and most delicate forms — into the most beautiful fabrics of clothing — is old, though the methods of such transformation have seen marvelous changes, especially within the last century. In our enthusiasm for ideas and things which are modern we allow our- selves to believe that the elements, as well as the external forms, of our present system of transportation are new, though in reality they are as old as history. The idea of transporting goods from one place to another, by water or overland, by some method or other, is, to say the least, very old. The merchant, acting as a middleman in the exchange of economic prod- ucts, was as well known to the ancient Jews as was their famous temple dedicated to Jehovah. The Policy of the State toward the Individual's Economic Acts ; in Part Ancient. — Many of the

INTRODUCTION 9

fundamental ideas of our government, religion, intellectual processes, and economic efforts are indeed old in their origin. And the policy of society toward the individual producer of wealth is also in its essential features of very ancient origin. The state, which more or less represents the larger body of individuals called society, has always taken some part in the production of wealth and welfare. At one time it has allowed the individual great freedom in his business activities ; at another time it has not only regu- lated the individual's activities, but has also carried on in itself certain economic enterprises. Of individual economic freedom the man of the present possesses much more than did the pro- ducer of wealth in the ancient or mediaeval period. The chief characteristic of the modern individual as compared with the wealth producer of old Rome or mediaeval England is perhaps his freedom, the amount of liberty which the state permits him to enjoy in his economic life. This he prizes as his choicest treasure.

This remarkable feature of modern life did not, however, come into being suddenly, or even within a short time ; it is the result of many forces working together through a long period. American industrial or business life, of which we are a part and of which we think so highly, is by no means a creation solely of the

10 PRINCIPLES OF WEALTH AND WELFARE

American people ; much of it came to us from our motherland, England, and from the continent of Europe. Our present wonderful economic life is no new creation ; it is the result of a long line of marvelous development. It is the result of many ideas and forces which have worked together through centuries and centuries in England and Europe, and which have been profoundly influenced by the wonderful natural forces and environment of our own location, as well as by the unprecedented freedom which the individual has enjoyed in government, religious dogmas, and economic effort.

The Permanent Economic Forces and Principles and the Changing Forms in which they Work. — We must now bring our introductory words to a close and consider in detail the forces and principles of the consumption of wealth, and of its production and distribution. We now come to examine the body, blood, and brain of the economic life of to-day. In our examination we shall discover ideas and forces which, though pulsating with great vigor, are nevertheless as old as mankind. We shall also discover that these forces and principles are now embodied in new and strange forms, and that they are at work upon a scale never dreamed of one hundred years ago. To the permmient and vital parts, the blood and brain of economic life, let us

INTRODUCTION II

give our most devoted attention. The forms of their embodiment^ and the degree to which they work in different places and at different times, are largely temporary and shall take a second place in our considerations and devo- tions.

QUESTIONS

(i) How great a factor in your life is the making of a living ?

(2) What is economics? Wherein is it different from law?

(3) What is wealth? How should it always be looked upon?

(4) What is the aim of all economic motives and acts ?

(5) Are the principles of business life always the same under all conditions ?

SECTION I

THE CONSUMPTION OF WEALTH — WELFARE CHAPTER I

WANTS AND THEIR SATIATION

Nature acts upon Man ; Wants. — The won- derful being, man, his wants, and the process of their satiation are, as we have said, the center of all economic reasoning and action. They are at the basis of all wealth consuming and producing; they are the fundamental ideas in human welfare. Man, though in some instances a marvelously refined and spiritualized being, is himself largely made up of material forces, and he is throughout his life surrounded by nature and her forces. These forces are ever, as long as he lives, acting upon him. They cause him to be like a furnace the fires of which must from day to day be fed. They create in him feelings and desires for something which has the power to satiate his cravings ; the power to supply to nature the fuel for which she is ever calling. These desires of man create in him wants, and these wants are of all grades

13

14 PRINCIPLES OF WEALTH AND WELFARE

and degrees. They range from the smallest and simplest to the highest and most complex, and from the most material to the most intel- lectual and spiritual. His wants continually and loudly call for something, in some form or other, that can relieve the demands which nature incessantly makes upon him, and that can bring to his wants at least partial satiation. As man's desires and wants are largely created by natural forces, so his demands are supplied largely by material forces, by that which in popular language we call forms of wealth.

Society acts upon Man ; Wants. — Nature is, however, not the only force which surrounds the individual and which creates within him wants and demands for wealth. The individual, as we have said, lives with other individuals — in a large and complicated body called society — and is surrounded throughout his life by the forces of this society. These forces, as well as those of nature, not only surround him but also make deep and lasting impressions upon him. They give shape and intensity to his desires and wants ; they, in fact, have very much to do in creating his wants. Ask the man or woman who lives in the great cities, in which society brings individuals into close and vital contact, in which the social forces are most strongly felt, why they have certain wants for food and cloth-

WANTS AND THEIR SATIATION 15

ing, and they will invariably tell you that fashion or style, which is entirely a social force, in a large measure creates their wants. Human wants are, therefore, the results of the powerful forces of nature and society, and this is true of all classes of men. In the lower ranks of society, for the mass of men in fact, the forces of nature are the more important in creating and giving shape to wants, while for the higher classes the forces of society are the all-powerful ones.

Along with nature and society, there is an- other set of forces which has much influence upon the desires and wants of man, both in the individual and in the collective body. The tendencies which are handed down from father to son, the physical and mental inheritances of the individual and the community, have much to do in creating economic wants, cer- tainly in creating particular forms and degrees of these wants. Economic man is always sur- rounded by many inherited and traditional forces, as well as by natural and social environ- ment. The forms of foods and houses, for in- stance, which the individual calls for may, in many cases, be traced to the wants and demands of his ancestors.

Classes of Wants. — As we have said, the wants of man are of all grades and degrees of intensity. This fact, however, does not prevent

l6 PRINCIPLES OF WEALTH AND WELFARE

US from making a general classification of them, and in our discussions we shall treat of them under the following heads : living wants^ developmental wants, and gover^ime^ttal wants, (a) Living Wants, by Nature and Society. — The first and most important of these classes of wants in all ranks of society is that for living, — for food, clothing, and shelter. These wants are universal ; they are in some variety and in- tensity in the lowest type of the American negro, as well as in the highest and greatest Anglo-Saxon. In one man the desire for food is merely for subsistence. He cares nothing for a variety of food, or for dainty forms of it. Let us consider an illustration. Many a negro in the Southern states has his desire for food satiated when he has eaten, in great quantities at times, of hog meat and corn bread, both cooked in the simplest way. In another in- dividual the want for food, while perhaps not so intense, is satiated only by a great variety of meats and breads, prepared in many different ways. The wants for food, therefore, cover the widest imaginable range, and this is equally a characteristic of the wants for clothing and shelter. The simplest garment that can cover the body, and the smallest and poorest tent or hut that can afford protection from the rains, winds, and snows, satiate the desires of many

WANTS AND THEIR SATIATION ly

a man for clothing and shelter. There are, however, many individuals whose desire for clothing can only be satiated by the most elabo- rate and artistically made dress, and whose wants for shelter demand the most extensive and magnificent palaces.

In any of these wants for living there is, as a rule, a certain element which nature creates and also one which society produces. The wants which nature creates are few and simple, yet at times most intense. The wants produced by social forces are more and more complex and varied. Many a man has desires not only for the necessary elements in his foods, clothing, and houses, but also for a large element in each of these purely for the sake of variety and dis- tinction. When such a man becomes desirous of being distinguished among and even above his fellow-men, when he has desires to shine, so to speak, in the realm of society, then his wants become manifold and complex, and more and more difficult in their satiation. We can most easily understand the differences between the demands which are created by nature and those created by society by examining certain rep- resentative illustrations. The dining-table of New York City's highest social class must con- tain not only the elements of foods necessary for subsistence and health of body and mind,

1 8 PRINCIPLES OF WEALTH AND WELFARE

but also those elements which social ideas de- clare to be necessary for variety, distinction, and social sensations. The table of the small Georgia farmer, on the other hand, is supplied only with the simple necessities of life. The English lord must have in his house not only the utility of shelter from the sun, winds, and storms, but also sleeping chambers in great number and variety, halls and parlors of many kinds, furniture and treasures of art of a unique and splendid type. But the simple tenant on the Carolina hills must have but a one-room cabin.

{b) Developmental Wants, of the Individual and Society. — We have seen that the living wants arise from the great pressure which nature brings upon man, and as a resultant of the social forces which ever surround him. We have assumed that all these wants create in man more or less of the necessity to put forth activity and effort. When, however, man begins to struggle with nature and her mighty forces, in order that he may produce something with which to satiate his wants, he recognizes that his own labor possesses little power as compared with that of mighty nature, and that his own simple muscular strength and energy can accomplish exceedingly slight results. This experience, though it at times brings him much

WANTS AND THEIR SATIATION 19

discomfort and even pain, creates in man a new desire and causes him to put forth greater effort ; it produces in him a new want — the want of his own development.

This want on the part of the individual to be more skilled, and to possess more control over nature and her forces, while not so funda- mental and universal as the want for living — for existence — is nevertheless at times very- strong and important. These developmental wants, like those for living, are manifold and of many degrees of intensity. In fact, the wants for development and those for living in many cases go hand in hand. In the want for food, clothing, and shelter, there is more or less of a want for a strong and healthy body and mind — a want for physical and mental development and culture.

(i) This economic being called man has wants for his own muscular strength and skill. (2) He also has wants for the development of his own intellectual powers ; has wants for teachers, books, scientific apparatus, works of art and music. (3) This economic being has desires for the development of the great society in which he lives and puts forth his efforts. He has wants for more efficient highways and streets, whereby he may the more easily come in contact with his neighbors ; he has wants for

20 PRINCIPLES OF WEALTH AND WELFARE

boards of health, sewers, and scavengers, that the disease germs which threaten his Hfe may be ehminated; he has wants for fire departments, with which to protect himself and his property ; he has wants for schools, in which he may learn to become a better citizen, as well as a more efficient producer of wealth ; he has wants for hos- pitals and asylums, in which his fellow-men who are diseased, infirm, poverty-stricken, and mad, may be provided for. Economic man also has wants for deeper and less obstructed rivers and harbors ; he has wants for canals, with which to connect the great natural bodies of water and make them into continuous waterways for the purpose of transportation; he has wants for light- houses and life-saving stations as an aid to the sailor ; he has wants for postal and railway sys- tems, for the transportation of intelligence, per- sons, and goods. (4) Economic man also has wants for the development of his spiritual facul- ties. He desires to know more of the Creator of himself and of his fellow-men. He desires to incorporate into his own heart more of love, faith, and charity, more of honesty and honor. He has wants for ministers, churches, and a great system of religious organizations.

(c) Governmental Protective Wants. — Wants of this class, as well as many of those just mentioned, arise from the fact that man is both

WANTS AND THEIR SATIATION 21

an individual being and a part of a larger body called society. Robinson Crusoe in his com- plete loneliness is only an imaginary man. He exists nowhere in our whole economic realm. Economic man lives not by himself or unto himself, but in a community which is more or less densely populated. This community in its organization has many and varied forms, but in the United States it may be considered under the following groups : county, munici- pality, state, and nation. Whether of one type or another, this community is a living body and, therefore, has its desires and wants of various kinds and degrees. The special kinds and degrees of its wants depend, to an extent, upon the location of the community, — the environment given it by nature and by man, — and to an extent upon the economic conditions and wants of the individuals who constitute the community. Such a collective body we may call the state, whether it be a small or a large community. Many of the wants of this state are those for development, — of its own collective powers, — and these have already been considered. It yet remains to treat of those governmental wants which are more essentially of the nature of protection on the part of the state to the individual.

(i) In the first case, there is the govern-

22 PRINCIPLES OF WEALTH AND WELFARE

mental want of regular and permanent bodies set apart for the administration of the general affairs of the people. Not only is there a want for regular legislative and executive bodies, (2) but there is also a want for a permanent sys- tem of courts and penal institutions, of jails and penitentiaries, in order that justice may be established and maintained in the actions of individual with individual, and of individuals with the collective body which we call the state. (3) There are likewise governmental wants for armies and navies, with which the peace and order of the community may be pre- served, and with which the reputation and integrity of the state may be maintained.

Satiation of Wants : Consumption of Wealth. — All these wants, whether for living, develop- ment, or governmental protection, should be satiated. It is wealth, in some form or other, which has the great power to satiate these wants or help in their satiation. To the continuous and ever recurring series of w^ants should be adjusted a continuous series of supplies. If the simple and necessary wants for food, clothing, and shelter are not satiated, the individual weakens, becomes diseased, and dies. If the demands which nature makes upon him are not supplied from without, man's physical energy is soon consumed and exhausted. If the wants

WANTS AND THEIR SATIATION 23

for development, both of the individual and of society, and for governmental protection, are not satiated, there is lack of progress, there is inefficiency, there is exhaustion and disease. But satiate all these wants, as far as subsistence and efficiency both demand, and there will be vigor, health, prosperity, progress, and welfare.

Consumption of Wealth a Consumption of Utili- ties.— Every individual being is, therefore, a consumer, and must be a consumer. He is a consumer of those forms of material things which can satisfy or aid in the satisfaction of his wants, whether they be few and simple, or varied and complex. That which man con- sumes is, however, not the substance of things but their utility or service, though in their con- sumption the form of the things is changed. The consumption of foods, for instance, is the using of the various food elements which they contain, and in this case the transformation takes place very rapidly indeed ; the bread is used up at one time. The consumption of a house, to meet the wants for shelter or home, is also the using of the various elements which it contains, and in this case the transformation takes place very slowly ; the house is used up hour by hour throughout a very long period. We, therefore, consume utilities, rather than material substances. We consume that which

24 PRINCIPLES OF WEALTH AND WELFARE

in popular language the world calls wealth. Our wants of various kinds and degrees are the causes of this consumption of wealth in its manifold shapes and qualities. These same wants are also the causes of the production of these forms of wealth — the causes of human activity and effort. To produce forms of wealth or utilities which can satiate or help to satiate all of our wants is the ultimate aim of the pro- duction of wealth in any form.

Wealth, the Power to satiate Wants, the Result of Effort. — As we have said in our introductory remarks, economics does not deal with the forces of nature in themselves. It deals with these forces only as they aid in producing utili- ties which can satiate human wants. While wealth consists largely of material substances, it by no means includes all the material things of the world. Unless these material things have the power to satiate human wants, and unless they are produced at the cost of human activity and effort, they are not wealth ; they are not of use to man. There must be a want on the part of man for a material thing, and it must be of such a form as to be consumed by man before it can begin to possess the quality of wealth. Human effort must also be put forth for the acquirement of a material thing before it becomes wealth. Air and light are

WANTS AND THEIR SATIATION 2$

wonderful material forces, but in most instances they are not wealth. They are supplied by mother nature in such quantities that man has no want for them and has to put forth no effort in order to obtain them. In a sense, to be sure, these substances are used by man. In a sense they are, therefore, utilities, but they are not forms of wealth from our point of view.

Satiation of One Want creates a New Want ; Evolution in Wants. — We have said that wants of some form or other are ever recurring. When one want is satiated, another is created, and the new want may be of the same form and intensity as the old, or it may be a very different one, a higher or a lower one. There is, beyond any doubt, an evolution in human wants. There must, therefore, be a correspond- ing evolution in the process of satisfying these wants — in the process of producing utilities which have the magic power to satisfy them. And many of the world's most philanthropically disposed men are spending their noble lives in attempting to contribute to this evolution, in attempting to create new and higher human wants, and in attempting to discover a process whereby to produce utilities which can in the fullest and best manner satiate them.

Consumption of Wealth; Amount and Effects. — As we have already said, the aim of all

26 PRINCIPLES OF WEALTH AND WELFARE

consumption should be welfare, to the individual and society alike. The amount and quality con- sumed by any man are, therefore, most impor- tant and vital problems ; the consumption of wealth is just as vital a problem as is its pro- duction. And we shall treat of this problem in the following paragraphs.

From the very nature aiid purpose of con- sumption, it is clear that no injurious goods should be consumed. Of course, the injury which comes from consuming certain goods depends largely upon the purpose and extent of their consumption. The use of a certain amount of spirituous liquors, and for a certain purpose, may bring benefit, while a larger use, and that for the sake of dissipation, brings to human life weakness, disease, and even destruc- tion. The motive force behind consumption is a human want, which nature and society have created in the individual or in the collective body of men, and to satiate this want, and per- haps incidentally to create a higher want, should be the object of all consumption. Consump- tion is in itself not an end ; it, like wealth, should be only a great means to a greater end — human welfare or greater physical, mental, and moral efficiency in the individual and society.

Consumption should never be separated from

WANTS AND THEIR SATIATION 2/

the ideas and problems of prodtiction. Man should consume in order not only to live, but also to produce wealth and welfare — to put forth great and efificient activity and effort. To satisfy his normal wants, whether created by nature or by society, is to add a large element to man's welfare and pleasure. It is also to add to his efficiency as a producer of wealth, as well as to make of the individual the great- est possible man and citizen. The putting forth of activity and effort by man not only produces wealth, but also develops him physically, morally, and mentally.

There should be no waste. The amount of wealth consumed determines, as we have said, not only the amount produced, but also the efficiency of the consumer as a producer. It likewise determines, in a large measure, the standard of honesty according to which the pro- ducer acts in all his business relations. The more wealth he consumes, the more of the goods produced he desires to keep for his part, and the less he is willing to allow to the other agents of their production. Too many, yes a thousand times too many, are the instances of dishonesty and crime in the business world because of ex- travagant consumption. Extravagant or care- less consumption by an individual, or by a group of society, is not only a waste of wealth, but it

28 PRINCIPLES OF WEALTH AND WELFARE

is also a positive harm to society, if indeed not to the individual who thus consumes.

Of this waste of wealth we have to-day a vast amount. It seems to us that a part of the economic world has gone mad in its extrava- gant and careless consumption of wealth, in its consumption of utilities which in many cases do not really belong to the individual who thus consumes them. Vast amounts burned in the fires of dissipation, so to speak ! Foods and drinks of every conceivable kind and quality ; dress and jewelry, to the enumera- tion and description of which there is no end ; houses in many lands, in the building of which the four corners of the earth have been com- pelled to contribute a part ; horses, carriages, and automobiles, of every description — enor- mous consumption !

Many do not consume enough for Efficiency; Cannot. — There are many normal wants, and their degrees of intensity vary within a very wide range. We believe that the ideal in the satia- tion of these wants, of each grade and degree of intensity, is that of strength and efficiency. We believe that consumption should be in kind and in amount in strict proportion to the want. The simple wants for living — food, clothing, and shelter — are, or at least should be, easy of satiation. Here there is a call for utilities to

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be consumed, not for the sake of variety or distinction, but for subsistence and efficient strength. To satiate the wants of this kind should not be very difficult. It does not re- quire a great amount of wealth.

For some cause or other, however, many in- dividuals, even in these most progressive times, cannot satiate their simple wants, at least to the point of efficient strength. It may be due to their lack of activity and effort, because they produce little wealth. It may be because they are robbed of a part of that which they do pro- duce. They live in the barest way. Oftentimes they have not, for consumption, a sufficient amount of meat and bread, a sufficient quantity of clean and warm clothing, and a healthful dwelling place. They do not consume sufficient wealth to satiate to an economical degree their simplest and most fundamental wants. In the larger cities there are millions of people who do not consume sufficiently to make themselves and their children strong and efficient producers. There are even millions who do not consume utilities in amounts large enough to enable them to live out their natural lifetime. Millions who really are dying, though slowly, because their simplest and necessary wants of <