THE ENORMOUS LOSS OF POTENTIAL WEALTH THROUGH INVOLUNTARY IDLENESS.

The political economist, Mr. President, deals with property _in esse_, and producers employed. I propose for a moment to deal with property _in posse_ and producers unemployed. The wealth which the political economist discusses is realized wealth; that to which I now briefly invite your serious consideration is the wealth that might be, and would be, brought into existence were the energies of all the people utilized.

For, while it has attracted but little attention from writers on economic science, it will be found upon examination that the non-employment of its members is incomparably the greatest loss which an increase in the value of money and the consequent disorganization of industry inflicts on society.

The great writers and thinkers on economic subjects discuss with care the elements that enter into the production and distribution of wealth.

They follow in detail the manufactured article through all its stages, from the crude material to the finished product; and, when completed, they conduct it through the intricate channels by which it reaches the hands of the consumer. The greatest consideration is bestowed upon the labor employed and the wealth resulting therefrom, but scarcely any thought is given to the immeasurable ma.s.s of potential wealth not produced, but lying latent in the brains and hands of the millions who are condemned to involuntary idleness.

While no mere sum in arithmetic can represent the enormous loss suffered by a nation through this cause, let us see whether we can arrive by figures at an approximate conception, at least, of the loss of wages which it entails upon the working ma.s.ses, and the corresponding loss of wealth to the country.

The most thorough and painstaking investigation into the conditions of labor in this country has been that which for many years has been conducted by the Ma.s.sachusetts Bureau of Labor. Its work has been universally admitted to be free from bias, and devoid of all attempt to establish any special hobby, or to force, by figures, the proof of any preconceived theory.

SOME STATISTICS OF THE UNEMPLOYED.

An examination of the work of that bureau shows that, in 1887, there were 816,470 persons engaged in wage earning in the State of Ma.s.sachusetts. Of those, 241,589, or nearly 30 per cent., were idle during some part of the year--ranging from one to six or more months.

The average of their unemployed time was about four months, or one-third of the year.

Now, 240,000 people idle for one-third of their whole time is equivalent, in money loss, to the total idleness of one-third of that number, or 80,000 people, for the entire year. The whole number of persons enrolled for labor in the State being 816,470, this is equivalent to the total idleness of one-tenth of the people engaged in all occupations.

If a number equivalent to one-tenth of the people in all occupations are idle twelve months in the year in a State like Ma.s.sachusetts, where labor is better organized, better cla.s.sified, and more efficiently ordered than elsewhere in this country, it can not be presumed that any other State of the Union will exhibit a smaller proportion of unemployed laborers.

The Census Report of 1880 states the number of persons employed in all occupations as 17,392,099, out of a population of 50,155,783, or a percentage of 34.68 of the entire population. Our present population being not less than 65,000,000, if we a.s.sume, as we are warranted in doing, that a like proportion of the population is engaged in occupations of all sorts, it is clear that we have to-day a working population of 22,254,000 persons.

Accepting as correct the careful deductions from the Reports of the Ma.s.sachusetts Bureau of Labor that a number equivalent to ten per cent.

of the people are always out of employment we find that at the present time there are 2,250,000 persons involuntarily idle in this country. How faintly does the term "the army of the unemployed" describe this vast number of eager and willing men seeking in vain the opportunity to earn a livelihood for themselves and families.

Were the business of the country in the active condition in which it could not avoid being if our money system were perfectly adjusted to industry, and if employers were competing for laborers with the same degree of eagerness that laborers are competing for employment, the average wage of a day for a working man would not be less than $2. This would make but the moderate sum of $50 a month for each workman, which, under the most thrifty system of household economy, can not be considered more than enough for the support of an American family.

THE WAGE LOSS FROM INVOLUNTARY IDLENESS.

By multiplying the number of persons thus shown to be idle, by this moderate average wage, we arrive at the amount of $4,500,000 as the daily sum which is lost to the wage earners of the United States by the non-employment of labor. This is a money loss of $27,000,000 a week, $117,000,000 a month, or the amazing sum of $1,404,000,000 a year. A saving of this sum for a year and three months would pay our entire national debt. This being the loss in a single year, we can imagine (making due allowance for difference in the numbers of the population) how stupendous has been the loss to the nation during the past seventeen years, a loss exceeding incomparably all other losses whatsoever.

If a crop of wheat be lost, it is appropriately noted as a public misfortune; if a city be burned down, or swept away by flood, it is properly regarded as a great national calamity, and the sympathies of all the people go out in unstinted measure to the sufferers. But here is a loss as real and as deplorable as any ever caused by flood or fire--a loss whose consequences, while not so apparent, are as destructive to national prosperity as the burning of ten cities, or the occurrence of one hundred and forty Johnstown disasters every year, and always to the people who can least afford it. Yet it pa.s.ses almost wholly unheeded except by the sufferers.

A war that would take a million of men from industry and deprive the country of the production which would result from their labors, would be regarded as a calamity of unsurpa.s.sable magnitude, yet a shrinkage in the volume of money relatively to population withdraws much more than that number from productive pursuits, and without the salutary discipline and restraints of military life, subjects them to conditions of which the unavoidable results are poverty and crime.

Imagine, Mr. President, the unhappiness, discontent, and even despair implied in the mere statement that 2,000,000 men are constantly out of employment; (or, what amounts to the same thing, that three times that number are idle for four months in the year!) Imagine, what it means to the working people of this country to be deprived of the enormous sum of $1,400,000,000 a year.

But, aside from the effect on the individual, what benumbing consequences are entailed upon the nation by the idleness of so large a number of its people. The loss of the wealth which the labor of those men might have created is a loss never to be retrieved. When the money volume of a country is sufficient to keep prices from falling, and thus to encourage capital to seek productive enterprises, in which labor is employed, every willing man is kept at work, and no country can enjoy any higher degree of prosperity than when all its people are employed, and the products of their labor equitably distributed.

Much, I believe, of the prejudice against silver money arises from an idea, conscientiously entertained, by many, that gold money has the greater "intrinsic value." I shall, therefore, Mr. President, at the risk of being a little abstruse, discuss that point.

THE MEANING OF VALUE.

No discussion of the subject of money can be intelligently conducted without a correct conception of the meanings attaching to the terms employed. For a misconception of those meanings is the root of much of the confusion and difficulty by which the subject is surrounded.

"Value" is a word which, of necessity, is more frequently used--and, I will add, more frequently misused and misunderstood--than any other employed in the discussion of economic science. Volumes have been written upon it, and yet, from the daily misapplication of the word in leading magazines and newspapers, it is evident that its meaning is very imperfectly understood.

The idea involved in the word "Value" is so broad and pervasive that within the limits of a speech it would be impossible to discuss it in all its bearings. I shall not, therefore, at this time, do more than present what I conceive to be a basic definition of it.

Value is human estimation placed upon desirable objects whose quant.i.ty is limited, and whose acquisition involves sacrifice. In order that an object may have value it must not only be the subject of human desire, but there must be a limitation of its quant.i.ty, and its acquisition must demand a sacrifice from him who would obtain it. The term "intrinsic value" is used by many writers with a total disregard of the idea involved in the word _value_. An article may have estimable qualities that are intrinsic, but no article whatever can have intrinsic value.

Its "value" is the mental estimation of its qualities, as modified by the limitations of its quant.i.ty and the amount of sacrifice necessary to obtain it. In other words, value is subjective, not objective. In economic discussion, however, value is treated as though it resided in the object, rather than in the mind, and while, for convenience, I may occasionally use it in that sense, it is important to bear in mind the distinction.

In that acceptation, value is usually divided into value-in-use, and value-in-exchange. Certain esteemed qualities of an object may make it of great value-in-use; but unless its acquisition demand sacrifice, it can have no value-in-exchange. It is only with this cla.s.s of value that economists deal. No matter how important the intrinsic qualities of any article may be, if there be no limitation of its quant.i.ty and its acquisition requires no sacrifice, it can have no value in the sense in which the word "value" is used in political economy. The air has qualities inestimable to mankind; it must be regarded as incomparably the most useful of all the objects of human desire; yet it has no value because there is no limitation of its quant.i.ty. By reason of its universality and accessibility, air requires no sacrifice to get it. If, however, circ.u.mstances should render air limited in quant.i.ty it is conceivable that it might become of surpa.s.sing value. A man confined in the "Black Hole" of Calcutta would give a fortune for free access to air. So water, where freely obtainable, without sacrifice, although indispensable to life, has no value in the economic sense--no value in exchange. But when not so obtainable, as in populous cities, where sacrifice of time and labor would be necessary to obtain it from river, lake, or spring, people pay for the convenience of having it in their homes. The indispensable prerequisites of value in all objects are utility--either actual or attributed--combined with limitation of quant.i.ty and the sacrifice necessary to be made in order to obtain it.

But value is not a property inhering in any article itself. It is not intrinsic. If the value were inherent or intrinsic it could not be taken away.

To ill.u.s.trate: A generation ago the cradle with which wheat was harvested was said to possess intrinsic value. It was undoubtedly one of the most useful of all the articles needed by man. All that was then in that machine is in it still, yet the value is gone. Had the value been something that was intrinsic, had it resided in the object, and not in the mind, that cradle would still be worth all that it ever was. So, on the other hand, an article may possess most estimable qualities, but if those qualities are not known or recognized by the human mind the article will have no value.

A few years ago cotton seed had no value as an article of general commerce. To-day it is exceedingly valuable, because it has been found to possess estimable qualities not before suspected.

Indeed so strongly does the idea of value rest upon the estimation of the mind that it is not even necessary for an article to possess in reality any desirable quality whatever in order to have value. It will be sufficient if such quality is popularly attributed to it. Numbers of instances could be cited in which there was present no element of value except limitation of quant.i.ty, added to a mere belief, or conception of the mind, that the article had desirable qualities. Many will remember that a few years ago a herb called "Cundurango" was introduced into this country from Central America. It was generally believed to possess healing qualities in cases of cancer, and so came to have great value.

As soon as this popular illusion was dispelled the article ceased to have even the slightest value.

Land being indestructible and irremovable, is believed to be the embodiment of the idea of intrinsic value. Take, then, a lot on Madison Avenue, New York; it is worth perhaps a thousand times as much as a lot of equal size in a village remote from the city. What proportion of its high price is derived from what is called its greater "intrinsic"

value? A lot on that fashionable thoroughfare has no intrinsic attribute, or quality, that is not equally the attribute or quality of the village lot. The difference in its value, or, more correctly, the difference in the estimation in which it is held, as compared with that attaching to the village lot, is derived wholly from circ.u.mstances that are extrinsic, not from qualities that are intrinsic.

The action of society in utilizing land in the neighborhood of the city lot by building up around it gives that lot a value greater than one of equal size elsewhere.

But in order that a thing may subserve a useful or beneficent purpose it is not necessary that the quality which enables it to subserve that purpose should be intrinsic or inherent in the thing itself.

To apply this reasoning to the subject under discussion--whatever intrinsic qualities the metal, gold, may possess, they confer no force whatever on gold-money.

WHAT IS MONEY?

The money of a country is that thing, whatever it may be, which is commonly accepted in exchange for labor or property and in payment of debts, whether so accepted by force of law, or by universal consent. Its value does not arise from the intrinsic qualities which the material of which it is made may possess, but depends entirely on the extrinsic qualities which law, or general consent, may confer.

Money is of transcendent importance to civilization. It is the physical agency to which society has a.s.signed the function of measuring all equities, and it is the sole agency upon which that incomparable function has been conferred. It is in terms of money that society computes the material value of all human sacrifice, alike the highest effort of genius and the daily toil and sweat of the millions who labor.

In order to measure equitably the natural and inevitable mutations in the value of other things, money should itself be of unchanging value.

That is to say, any given amount of money should, so far as human foresight can regulate it, require at all times an equal amount of sacrifice for its acquisition. Thus, in the case of a contract made to-day, requiring the payment of a dollar twelve months hence, that dollar when due should exact from the debtor precisely that amount of sacrifice, and no more, which would be required had he paid the debt the day after contracting it.

No one will deny that the most important quality that money can possess is that it shall truthfully measure and state equities.

As I have shown by the figures heretofore cited, gold has risen in value between 30 and 40 per cent. since the demonetization of silver. It is not therefore so faithful a measure of value as is silver, which as ill.u.s.trated by a variety of examples, has maintained almost undisturbed its relation to commodities.

THE VALUE OF MONEY, AS SUCH, NOT IN THE MATERIAL BUT IN THE STAMP. MONEY IS AN ORDER FOR PROPERTY AND SERVICES.

The logic of the situation, and the reasoning of all the leading authorities on money, lead irresistibly to the conclusion that its value does not reside in the material, but in the stamp; in other words, on the legal-tender function impressed on that material. It is an order for property and services.

Aristotle, writing of money, says:

Money by itself * * * has value only by law, and not by nature; so that a change of convention between those who use it is sufficient to deprive it of all its value and power to satisfy all our wants.