Principles of Political Economy (J.S. Mill, 1871), vol. 2
SOME OF THEIR APPLICATIONS TO SOCIAL PHILOSOPHY.
JOHN STUART MILL.
IN TWO VOLUMES.
LONGMANS, GREEN, READER AND DYER.
SAVILL, EDWARDS AND CO., PRINTERS, CHANDOS STREET.
THE SECOND VOLUME.
BOOK III. EXCHANGE.—(Continued.) Chapter VII. Of Money. Page § 1.Purposes of a Circulating Medium 3 2.Gold and Silver, why fitted for those purposes 5 3.Money a mere contrivance for facilitating exchanges, which does not affect the laws of Value 8 Chapter VIII. Of the Value of Money, as dependent on Demand and Supply. § 1.Value of Money, an ambiguous expression 11 2.The value of money depends, cæteris paribus, on its quantity 12 3.—together with the rapidity of circulation 17 4.Explanations and limitations of this principle 19 Chapter IX. Of the Value of Money, as dependent on Cost of Production. § 1.The value of money, in a state of freedom, conforms to the value of the bullion contained in it 23 2.—which is determined by the cost of production 26 3.This law, how related to the principle laid down in the preceding chapter 28 Chapter X. Of a Double Standard, and Subsidiary Coins. § 1.Objections to a double standard 32 2.The use of the two metals as money, how obtained without making both of them legal tender 34 Chapter XI. Of Credit as a Substitute for Money. § 1.Credit not a creation but a transfer of the means of production 36 2.In what manner it assists production 37 3.Function of credit in economizing the use of money 40 4.Bills of exchange 41 5.Promissory notes 47 6.Deposits and cheques 48 Chapter XII. Influence of Credit on Prices. § 1.The influence of bank notes, bills, and cheques, on price, a part of the influence of Credit 51 2.Credit a purchasing power similar to money 52 3.Effects of great extensions and contractions of credit. Phenomena of a commercial crisis analyzed 54 4.Bills a more powerful instrument for acting on prices than book credits, and bank notes than bills 59 5.— the distinction of little practical importance 62 6.Cheques an instrument for acting on prices, equally powerful with bank notes 68 7.Are bank notes money? 70 8.No generic distinction between bank notes and other forms of credit 72 Chapter XIII. Of an Inconvertible Paper Currency. § 1.The value of an inconvertible paper, depending on its quantity, is a matter of arbitrary regulation 75 2.If regulated by the price of bullion, an inconvertible currency might be safe, but not expedient 78 3.Examination of the doctrine that an inconvertible currency is safe if representing actual property 80 § 4.Examination of the doctrine that an increase of the currency promotes industry 83 5.Depreciation of currency a tax on the community, and a fraud on creditors 86 6.Examination of some pleas for committing this fraud 87 Chapter XIV. Of Excess of Supply. § 1.Can there be an oversupply of commodities generally? 92 2.The supply of commodities in general cannot exceed the power of purchase 94 3.—never does exceed the inclination to consume 95 4.Origin and explanation of the notion of general oversupply 97 Chapter XV. Of a Measure of Value. § 1.A Measure of Exchange Value, in what sense possible 101 2.A Measure of Cost of Production 103 Chapter XVI. Of some Peculiar Cases of Value. § 1.Values of Commodities which have a joint cost of production 107 2.Values of the different kinds of agricultural produce 110 Chapter XVII. Of International Trade. § 1.Cost of production not the regulator of international values 113 2.Interchange of commodities between distant places, determined by differences not in their absolute, but in their comparative, cost of production 115 3.The direct benefits of commerce consist in increased efficiency of the productive powers of the world 118 4.—not in a vent for exports, nor in the gains of merchants 119 5.Indirect benefits of commerce, economical and moral; still greater than the direct 121 Chapter XVIII. Of International Values. § 1.The values of imported commodities depend on the terms of international interchange 124 2.—which depend on the Equation of International Demand 126 3.Influence of cost of carriage on international values 131 § 4.The law of values which holds between two countries and two commodities, holds of any greater number 132 5.Effect of improvements in production on international values 136 6.The preceding theory not complete 140 7.International values depend not solely on the quantities demanded, but also on the means of production available in each country for the supply of foreign markets 142 8.The practical result little affected by this additional element 147 9.The cost to a country of its imports, on what circumstances dependent 150 Chapter XIX. Of Money, considered as an Imported Commodity. § 1.Money imported in two modes; as a commodity, and as a medium of exchange 154 2.As a commodity, it obeys the same laws of value as other imported commodities 155 3.Its value does not depend exclusively on its cost of production at the mines 158 Chapter XX. Of the Foreign Exchanges. § 1.Purposes for which money passes from country to country as a medium of exchange 160 2.Mode of adjusting international payments through the exchanges 160 3.Distinction between variations in the exchanges which are self-adjusting, and those which can only be rectified through prices 166 Chapter XXI. Of the Distribution of the Precious Metals through the Commercial World. § 1.The substitution of money for barter makes no difference in exports and imports, nor in the law of international values 169 2.The preceding theorem further illustrated 173 3.The precious metals, as money, are of the same value, and distribute themselves according to the same law, with the precious metals as a commodity 177 4.International payments of a non-commercial character 179 Chapter XXII. Influence of the Currency on the Exchanges and on Foreign Trade. § 1.Variations in the exchange which originate in the currency 181 2.Effect of a sudden increase of a metallic currency, or of the sudden creation of bank notes or other substitutes for money 182 3.Effect of the increase of an inconvertible paper currency. Real and nominal exchange 187 Chapter XXIII. Of the Rate of Interest. § 1.The rate of interest depends on the demand and supply of loans 191 2.Circumstances which determine the permanent demand and supply of loans 192 3.Circumstances which determine the fluctuations 196 4.The rate of interest, how far, and in what sense connected with the value of money 199 5.The rate of interest determines the price of land and of securities 205 Chapter XXIV. Of the Regulation of a Convertible Paper Currency. § 1.Two contrary theories respecting the influence of bank issues 207 2.Examination of each 210 3.Reasons for thinking that the Currency Act of 1844 produces a part of the beneficial effect intended by it 214 4.— but produces mischiefs more than equivalent 220 5.Should the issue of bank notes be confined to a single establishment? 235 6.Should the holders of notes be protected in any peculiar manner against failure of payment? 238 Chapter XXV. Of the Competition of different Countries in the same Market. § 1.Causes which enable one country to undersell another 240 2.Low wages one of those causes 248 § 3.—when peculiar to certain branches of industry 245 4.—but not when common to all 247 5.Some anomalous cases of trading communities examined 249 Chapter XXVI. Of Distribution, as affected by Exchange. § 1.Exchange and Money make no difference in the law of wages 252 2.—in the law of rent 255 3.—nor in the law of profits 256 BOOK IV. INFLUENCE OF THE PROGRESS OF SOCIETY ON PRODUCTION AND DISTRIBUTION. Chapter I. General Characteristics of a Progressive State of Wealth. § 1.Introductory Remarks 263 2.Tendency of the progress of society towards increased command over the powers of nature; increased security; and increased capacity of co-operation 264 Chapter II. Influence of the Progress of Industry and Population on Values and Prices. § 1.Tendency to a decline of the value and cost of production of all commodities 270 2.—except the products of agriculture and mining, which have a tendency to rise 272 3.—that tendency from time to time counteracted by improvements in production 274 4.Effect of the progress of society in moderating fluctuations of value 275 5.Examination of the influence of speculators, and in particular of corn dealers 277 Chapter III. Influence of the Progress of Industry and Population on Rents, Profits, and Wages. § 1.First case; population increasing, capital stationary 282 2.Second case; capital increasing, population stationary 286 3.Third case; population and capital increasing equally, the arts of production stationary 287 4.Fourth case; the arts of production progressive, capital and population stationary 288 5.Fifth case; all the three elements progressive 295 Chapter IV. Of the Tendency of Profits to a Minimum. § 1.Doctrine of Adam Smith on the competition of capital 300 2.Doctrine of Mr. Wakefield respecting the field of employment 302 3.What determines the minimum rate of profit 304 4.In opulent countries, profits habitually near to the minimum 307 5.— prevented from reaching it by commercial revulsions 310 6.— by improvements in production 312 7.— by the importation of cheap necessaries and instruments 314 8.— by the emigration of capital 316 Chapter V. Consequences of the Tendency of Profits to a Minimum. § 1.Abstraction of capital not necessarily a national loss 319 2.In opulent countries, the extension of machinery not detrimental but beneficial to labourers 322 Chapter VI. Of the Stationary State. § 1.Stationary state of wealth and population, dreaded and deprecated by writers 326 2.— but not in itself undesirable 328 Chapter VII. On the Probable Futurity of the Labouring Classes. § 1.The theory of dependence and protection no longer applicable to the condition of modern society 333 2.The future well-being of the labouring classes principally dependent on their own mental cultivation 338 3.Probable effects of improved intelligence in causing a better adjustment of population — Would be promoted by the social independence of women 340 4.Tendency of society towards the disuse of the relation of hiring and service 341 5.Examples of the association of labourers with capitalists 345 6.— of the association of labourers among themselves 352 7.Competition not pernicious, but useful and indispensable 376 BOOK V. ON THE INFLUENCE OF GOVERNMENT. Chapter I. Of the Functions of Government in general. § 1.Necessary and optional functions of government distinguished 381 2.Multifarious character of the necessary functions of government 382 3.Division of the subject 388 Chapter II. Of the General Principles of Taxation. § 1.Four fundamental rules of taxation 390 2.Grounds of the principle of Equality of Taxation 392 3.Should the same percentage be levied on all amounts of income? 395 4.Should the same percentage be levied on perpetual and on terminable incomes? 400 5.The increase of the rent of land from natural causes a fit subject of peculiar taxation 407 6.A land tax, in some cases, not taxation, but a rent-charge in favour of the public 410 7.Taxes falling on capital, not necessarily objectionable 412 Chapter III. Of Direct Taxes. § 1.Direct taxes either on income or on expenditure 415 2.Taxes on rent 415 3.—on profits 417 4.—on wages 420 5.An Income Tax 422 6.A House Tax 426 Chapter IV. Of Taxes on Commodities. § 1.A Tax on all Commodities would fall on profits 432 2.Taxes on particular commodities fall on the consumer 433 3.Peculiar effects of taxes on necessaries 435 4.—how modified by the tendency of profits to a minimum 439 5.Effects of discriminating duties 444 6.Effects produced on international exchange by duties on exports and on imports 448 Chapter V. Of some other Taxes. § 1.Taxes on contracts 458 2.Taxes on communication 461 3.Law Taxes 463 4.Modes of taxation for local purposes 464 Chapter VI. Comparison between Direct and Indirect Taxation. § 1.Arguments for and against direct taxation 466 2.What forms of indirect taxation most eligible 471 3.Practical rules for indirect taxation 473 Chapter VII. Of a National Debt. § 1.Is it desirable to defray extraordinary public expenses by loans? 477 2.Not desirable to redeem a national debt by a general contribution 481 3.In what cases desirable to maintain a surplus revenue for the redemption of debt 483 Chapter VIII. Of the Ordinary Functions of Government considered as to their Economical Effects. § 1.Effects of imperfect security of person and property 487 2.Effects of over-taxation 489 3.Effects of imperfection in the system of the laws, and in the administration of justice 491 Chapter IX. The same subject continued. § 1.Laws of Inheritance 497 2.Law and Custom of Primogeniture 499 3.Entails 504 4.Law of compulsory equal division of inheritances 506 5.Laws of Partnership 508 6.Partnerships with limited liability. Chartered Companies 510 7.Partnerships in commandite 515 8.Laws relating to Insolvency 521 Chapter X. Of Interferences of Government grounded on Erroneous Theories. § 1.Doctrine of Protection to Native Industry 530 2.Usury Laws 542 3.Attempts to regulate the prices of commodities 548 4.Monopolies 550 5.Laws against Combination of Workmen 552 6.Restraints on opinion or on its publication 558 Chapter XI. Of the Grounds and Limits of the Laisser-faire or Non-interference Principle. § 1.Governmental intervention distinguished into authoritative and unauthoritative 561 2.Objections to government intervention the compulsory character of the intervention itself, or of the levy of funds to support it 563 3.increase of the power and influence of government 565 § 4.— increase of the occupations and responsibilities of government 566 5.— superior efficiency of private agency, owing to stronger interest in the work 568 6.— importance of cultivating habits of collective action in the people 570 7.Laisser-faire the general rule 572 8.— but liable to large exceptions. Cases in which the consumer is an incompetent judge of the commodity. Education 576 9.Case of persons exercising power over others. Protection of children and young persons; of the lower animals. Case of women not analogous 580 10.Case of contracts in perpetuity 584 11.Cases of delegated management 585 12.Cases in which public intervention may be necessary to give effect to the wishes of the persons interested. Examples: hours of labour; disposal of colonial lands 588 13.Case of acts done for the benefit of others than the persons concerned. Poor Laws 593 14.— Colonization 596 15.— other miscellaneous examples 603 16.Government intervention may be necessary in default of private agency, in cases where private agency would be more suitable 606