James Champlin’s Lessons on Political Economy
James Tift Champlin (1811–82) was born in Colchester, Connecticut. He enrolled at Brown University in 1830, where the president, Francis Wayland, greatly impressed him.
Wayland was a staunch defender of private property, the free market, and classical liberalism. His book The Elements of Political Economy (1837) is based on sound and insightful economic principles with an emphasis on human action.
After graduating in 1834 and trying his hand at teaching, James Champlin returned to Brown University as a resident graduate and was appointed a tutor at the university in 1835. In 1841, he was elected professor of ancient languages at Waterville College in Waterville, Maine, which is still in existence today as Colby College. In 1857, Champlin became the college’s president and professor of moral and intellectual philosophy.
Champlin published books on philosophy, ethics, and, most notably, Lessons on Political Economy (1868), from which the following selections are taken.
Men do not generally work for the good of others, but for their own.
Political economy assumes as its basis in human nature that men in their business affairs are governed by selfishness; that every man will aim so to dispose of his labor and its products as to promote in the highest degree the objects of his desire, and will endeavor to attain any end with the least possible amount of irksome labor. Upon this principle, which is most unquestionably true, the whole science is built. From it follow the laws of value and price, and on it rest our whole monetary and industrial fabric. Thus, though many ethical principles may be defended on economical grounds,—as, when we say that honesty is the best policy,—and many economic principles on ethical grounds; yet Ethics and Political Economy are essentially distinct sciences. Ethics treats of right, Political Economy of gain. Ethics lays down the rules of conduct in our intercourse with others which are dictated by an enlightened sense of duty; Political Economy, the rules of action, dictated by an enlightened self-love. Ethics regards the good of others ; political economy our own good alone, but always within the limits of the rights of others. Hence it can not be expected that business will be conducted upon benevolent principles, though it should always be conducted upon honest principles. And yet, a man may all the time have a benevolent purpose in acquiring his property—meaning to use it, and actually using it, as he goes along, for the good of his race—and may thus be truly a benevolent man.
Now, in making exchanges, men are governed wholly by a sense of interest. From this it follows, that if we wish to obtain money or other articles from men, we must offer them something which they regard as an equivalent. It is of no use to tell them that they ought to consider it an equivalent, if they do not actually so consider it. Men will be their own judges in these matters.
Wealth is anything costing labor which contributes to the gratification of any of our desires. Wealth is any article of value, or what avails us for any purpose or use. And the real value of an article of wealth—what is commonly called its intrinsic value—depends entirely upon the nature and urgency of the desire which it is fitted to gratify. The foundation of wealth, therefore, lies partly in the nature of objects and partly in the nature of man. There is a world without and a world within, and wealth is the result of the correspondence between these two worlds. No variety or kind of qualities in an object would constitute it an article of wealth, without desires in man which they are fitted to gratify. But man having various desires and wants, and objects around us having qualities adapted to gratify them, these objects are capable of becoming articles of wealth, with every degree of value, from the highest to the lowest.
The real value of any article, or what is sometimes called its intrinsic value or utility, consists in what it avails to gratify some desire or want of our nature. It depends, then, wholly upon its qualities in relation to our desires.
As each man can conveniently produce but a small number of articles, but wants many, and these widely scattered over the world, there must always be a ceaseless change of place in all articles of use.
A tariff designed simply and solely to protect certain articles from foreign competition can rarely be justified,—never, indeed, except on the ground that the production of these articles is necessary for the defense and independence of the nation, or that their protection for a time will, by creating facilities for their manufacture, diminish their price in the end. In the early history of a country there are undoubtedly many articles of this kind which should be protected ; it was so, unquestionably, in our early history. But I can not believe that, to any considerable extent at least, it is any longer so. The great civil war which has just ceased has shown that all the arts of production are sufficiently advanced among us to meet any emergency. And as the consumers of any article are always vastly more numerous than the producers, it must be better for the whole that each one should be allowed to buy where he can buy the cheapest. And even when prevented from doing this in any part of the world by a protective tariff, it does not help the case to retaliate by a like tariff : it is better to adhere to the right ourselves, and protest against the wrong.
It is quite clear that were each individual and each nation to produce what they can produce cheapest and best, and all exchange with each other without any commercial restrictions, the wants of the world would be the best supplied.
As labor-saving machinery performs to some extent the labor of the hand, to the same extent it dispenses with human labor, and tends to turn men out of employment. But at the same time, it greatly diminishes the cost of articles, and hence increases the demand for them, and consequently for the labor required in producing them; since the number of purchasers of any article of common, use increases rapidly as it comes within the reach of those of small means, who are always vastly more numerous than those of large means. Besides, when articles are cheap they are put to new uses. And not only so, but, with the increased productiveness of labor, capital increases, and hence new wants spring up which have to be supplied by new products. From these and the like causes the demand for labor is kept good, so that, not withstanding the astonishing increase in the use of labor-saving machinery, the demand for labor was probably never greater than at present. Labor, indeed, under improved processes and means, is more effective than formerly, and hence the laborer can devote more hours to social and self improvement, and less to toil. But these diminished hours are better remunerated as production and capital increase. Hence, the use of laborsaving machinery is a blessing to all classes.
Taxes diminish to their full extent the productive resources of a country. The capital thus absorbed can no longer be employed in making useful machines or remunerating productive labor. Taxation, therefore, by rendering labor less productive, tends to raise the price of articles, and consequently, to the same extent, to diminish consumption, since men will always consume less in proportion as the productive results of their labor are less. Hence, while taxes are actually paid by the consumer, they are really a burden and a restraint upon the productive energies of a country. We see, therefore, that it is utterly impossible that a “national debt” should be a “national blessing,” as has been proclaimed by some. A national debt, whether in the form of bonds, certificates of indebtedness, or legal-tender notes, can be paid ultimately only by taxes, and hence represents so much burden upon industry to be paid at some time. The less of such blessings a country has, the better it will be off.
Usury laws are anomalous, useless, and often pernicious.—Usury laws are laws fixing the rate of interest. Such laws are anomalous, because no such restrictions are laid upon any other exchanges. The absurdity of restrictions on the exchanges of most other articles is, indeed, quite too obvious not to strike every one. The value of corn, lumber, wool, etc., varies so much at different times and in different places, that every one sees that it would be unjust to fix the rate at which they should be exchanged for each other or for other articles. The value of money, to be sure, is much steadier. It fluctuates the least of any article. But yet it does fluctuate; if it did not it would not be necessary to fix the rate of interest, as that would always be uniform. And if it be more valuable at one time and in one place than in another, then it is plainly unjust to fix a uniform rate of interest for its use. And at the same time, such an attempt is useless and of no avail. It is notorious that no attention is paid to usury laws by either borrowers or lenders of money. The penalties of forfeiture, etc., for violating the law are entirely unavailing, since the borrower, who should enforce the forfeiture, would never be able again to obtain accommodation at any of the banks, or with any of the private money-lenders where it was known. Finding enough persons who will give them their price for their money cheerfully, money-lenders will not be likely to accommodate those who not only grumble at their terms, but are disposed to take advantage of any illegality in the rates charged. Or, if they do accommodate them, they will be sure to protect themselves by some of the many devices resorted to in such cases, as by taking the interest at the time the loan is made, or the like.
Usury laws, therefore, while they are entirely unavailing, are decidedly immoral in their tendencies. The constant violation of them corrupts the conscience and habituates men to the violation of law without compunction. At the same time, as far as they have any effect, they are harmful to money-borrowers. Many men, who now use their money themselves, would be willing to loan it if they could legally receive for it what they consider its fair value. Hence many men of enterprise and energy, who could use money to the greatest advantage, are deprived of it by the operation of usury laws. It is high time, therefore, that these laws were swept from our statute-books. Or, if retained in any form, they should merely fix the rate of interest where no particular rate is agreed upon between the parties.
The only sure way to keep paper money from depreciating is, by the party issuing it standing ready to redeem it at any moment on demand in the precious metals.
If, now, an inferior medium be introduced under the auspices of the government, or some controlling money-power in the State, it will necessarily go into circulation, and will inevitably displace any superior money already in circulation, and prevent any such from coming into circulation.
The object of law is to administer justice; and justice has to do largely with the right of property. Now the right of property is the right to hold and use as one pleases—of course in an innocent way—what is his own. Any violation of this right is injustice, and must interfere materially with the development of industry and the accumulation of property.
One will not labor for that of which he may at any moment be unjustly deprived. Where, therefore, the government is unjust, and arbitrarily appropriates to itself the property of the subject, as suits its caprice, or fails to defend the subject from the rapacity of others, industry will be comparatively paralyzed. But where the government itself strictly observes the right of property, and obliges all others to observe it, then, property being safe, industry will be rapidly developed.
Every community system of labor has been found unprofitable and proved a failure.
Members of a community having a common treasury and a common table, have, not the stimulus of individual reward to labor for. No member can ever have any property of his own, but merely share in the common stock with the other members—the ignorant, the indolent, the unskilful, being placed on a par with the intelligent, the active, and the skilful. Co-operation in labor is all-important for the success of industry; but what is technically called “communism,” which makes all things common, can but prove ruinous to it.
The furnishing of employment to laborers by the government tends to enlarge the dependent classes, and at the same time takes away all motive to earnest industry, by making the reward secure, however imperfect the labor. It is a species of Communism.
"Every succeeding generation is served effectively by numerous objects and agents of nature which the preceding generation considered useless, or even nuisances."
"Only those utterly disabled should be wholly provided for by society. In other cases, where they throw themselves upon the community for support, they should be required to labor to the extent of their ability as a condition of their receiving the required aid."
"Each kind of industry stimulates and promotes the others, and when as many kinds as possible are carried on in the same community or country, they all prosper the best."