exempted some businesses from taxation or from some other common burden. This was often done in the case of railroads. In all of these cases the law gives to some individual or firm rights, powers, privileges, or immunities not possessed by other members of the public. These are examples of legal endowments.

Mandatory intervention.-Over against the inhibitory functions of the law, which were discussed under the head of Prohibitive Intervention, stand its accelerative functions, less numerous, but no less interesting. Usually whether I shall enter into a contract with you is a matter solely for my determination. If I sell food, I may refuse to sell bread to X because his head is bald, to Y because he eats with his knife, or to Z because he believes in ghosts; and this though each is starving. I may sell at any price I please, and I may charge one man half the value of the bread while I charge another double its worth. I may close my shop whenever it suits my fancy to do so, for any reason or for no reason at all. But if my business is that of a carrier of goods or passengers, or that of an innkeeper, or if I sell gas, water, or electricity instead of bread, ordinarily I may do none of these things. Upon persons or firms engaged in some businesses the law imposes affirmative duties that they shall deal with all proper persons who are willing to pay prices which the law has said are reasonable, and that they shall make no discriminations that are unreasonable. Such businesses, moreover, may not be forsaken at will. While in most businesses the owners may fix the amount and kind of property which they use, the owners of railroads, for example, must if necessary buy more cars and engines. Telephone companies must lay more cables if the growth of the demand for telephones requires it. To enforce these affirmative duties imposed by the law two principal remedies exist: the person who has been injured by the failure of the owners to perform these duties may sue them and collect for his injury; or he may require some officer of the state, usually the attorney general, to bring action to compel the owners to perform their duties.

Promotive intervention is unlike prohibitive intervention in that it is always the purpose of the latter to prevent action, while the former contemplates action and change. Doubtless the ideas conveyed by the terms "mandatory" and "promotive" intervention are sufficiently similar to be expressed by a single term, yet it seems helpful to distinguish them. The purpose of mandatory intervention is to compel action, as may be seen by reference to the examples given above under

that heading. The purpose of promotive intervention is to aid one

in acting.

See also

35. Gild Merchant Regulations versus Craft Gild Regulations,

54. The Law Merchant.

57-62. On Mediaeval Social Control of Industrial Activity.

233. The Socialization of Law.

C. The Relation of Government to Industrial Activity

390. MERCANTILISM1

The principles of the mercantile system were not taught by any School; there was no master, there were no disciples. From one of its aspects it was a popular economics and not that in the best sense of the term. Though Adam Smith turned to Mun when he looked for a discriminating statement of the Mercantile views, it is clear from his various criticisms on them in the 4th book of the Wealth of Nations, that he does not regard them as a body of arguments and conclusions carefully worked out by thoughtful men from desire of truth, but rather as a scheme of commercial policy which different governments had adopted on the advice of interested merchants and manufacturers. Its principles, so far as they were ever elaborated into a system, seem to him to be the maxims of practical men of business, who know how trade benefits themselves and have no concern how it benefits the nation at large. On the other hand, the motive of governments in adopting the Mercantile policy could hardly have been disinterestedly to benefit the merchants and manufacturers. The time of its first appearance and the time of its decline will help us to understand the matter. It is usually said to have begun with the Reformation and ended with the French Revolution; and this means that it began when foreign commerce was becoming a power in Europe and ended when governments were beginning to be constitutional and popular. The common notion of Mercantilism represents it as confusing wealth with money, or at least with the precious metals. The charge thus blankly stated is not strictly true; but it is true that views were adopted and made the ground of political

Taken by permission from James Bonar, Philosophy and Political Economy, pp. 130-33. (Swan Sonnenschein & Co., 1893.)

action for more than two centuries, which might fairly be represented as logically involving the fallacy in question. The intelligible motive for adopting a policy which promised to multiply the precious metals in a country was clearly the desire of the rulers to have a full treasury for warlike and other purposes. There was also a belief that for general reasons (the reasons of the "merchants and manufacturers") it was good for the country that as much of the precious metals as possible should be attracted into it. The measures adopted to secure this end were the prohibition to export gold and silver "forth of the kingdom," the careful watching of the balance of trade, to see that our exports should in value exceed the imports, in order that there might be a balance in money to come into the country, restraints (by duties or prohibitions) on importation from foreign countries, and encouragement (by bounties and drawbacks) of exportation, special encouragements of home manufacture and of the growth of a home population to labour on it, treaties of commerce to secure privileges for our exporters, and finally the foundation of Colonies and the retention there of our monopoly of trading.

It has been stated that Mercantilists agreed in displaying an exaggerated care for the mere numbers of the people. The fallacy of considering a large population to be of itself a source of strength to a nation may indeed be connected with the military view in which the Mercantile System seems to have originated; but it is not necessarily of a piece with the rest of the policy. Not only the adherents of the Mercantile policy but nearly all economical writers before the Physiocrats were more or less tainted with this fallacy; and it is no more safe to identify this view with Mercantilism than it is to identify Mercantile theorists with the support of an absolute monarchy. No doubt the policy arose at a time when Monarchies in Europe were becoming strong, and the regulation of trade may have seemed as natural in an absolute monarchy as the regulation of religion, morals, and literature. But the Mercantile system prevailed even under the Commonwealth; and it survived the expulsion of the Stuarts. Its absence in Holland was due rather to its imprácticability there than to the popular form of the Dutch government. It is true that Colbert, the great bugbear of the Physiocrats, was the minister of an absolute monarch; but the Physiocrats who successfully contended against the continuation of his policy were themselves suspected of inclining to an absolute form of government. The Mercantile system was no immediate consequence of the decay of feudalism and the rise

1

of powerful monarchies. The first efforts of these monarchs were rather in the direction of sumptuary measures; their interference with foreign importation was meant not to bring money into the country, but to prevent their own people from being corrupted by foreign luxuries. It is not till a century after the discovery of America and the fall of feudalism that we find Mercantile views coming forward with authority. All we can safely say seems to be that, when the separate States became more conscious of their own national life than of the ties that bound them to their neighbours, they were easily led to confound commercial dependence with political, and it was not hard for jealousy and suspicion to convince them that their neighbour's gain could not at the same time be their own. We can understand too that in the days when governments did not understand the limits of their omnipotence they would feel bound to regulate the spirit of trading which seemed to be becoming a passion with their citizens, to the detriment of their patriotism. This would seem to them the more imperative because trade is not the creation of any government, but is one of the sponte acta that have a life of their There was therefore an interference at every point. Isolated writers, especially in England, expressed doubts about the wisdom of this interference; but it was not till the middle of the eighteenth century, when a great School of Economists arose in France, that both rulers and people were forced to pay some regard to the demand for freedom of trade. The demand was simply that what was spontaneous in its origin should be allowed to be spontaneous in its development.

own.

391. THE MERCANTILIST REGULATIONS BECOME ONEROUS1 In every quarter, and at every moment, the hand of government was felt. Duties on importation, and duties on exportation; bounties to raise up a losing trade, and taxes to pull down a remunerative one; this branch of industry forbidden, and that branch of industry encouraged; one article of commerce must not be grown because it was grown in the colonies, another article might be grown and bought but not sold again, while a third article might be bought and sold but not leave the country. Then, too, we find laws to regulate wages; laws to regulate prices; laws to regulate profits; laws to regulate the interest of money; custom-house arrangements of the most vexatious

1 Taken by permission from H. T. Buckle, History of Civilization in England, I, 201-3. (D. Appleton & Co., 1906.)

kind, aided by a complicated scheme, which was well called the sliding scale a scheme of such, perverse ingenuity that the duties constantly varied on the same article, and no man could calculate beforehand what he would have to pay. To this uncertainty, itself the bane of all commerce, there was added a severity of exaction, felt by every class of consumers and producers. The tolls were so onerous as to double and often quadruple the cost of production. A system was organized, and strictly enforced, of interference with markets, interference with manufactories, interference with machinery, interference even with shops. The towns were guarded by excisemen, and the ports swarmed with tide-waiters, whose sole business was to inspect nearly every process of domestic industry, peer into every package, and tax every article; while that absurdity might be carried to its extreme height, a large part of all this was by way of protection: that is to say, the money was avowedly raised, and the inconvenience suffered, not for the use of the government, but for the benefit of the people; in other words, the industrious classes were robbed in order that industry might thrive.

Such are some of the benefits which European trade owes to the paternal care of European legislators. But worse still remains behind. For the economical evils, great as they were, have been far surpassed by the moral evils which this system produced. The first inevitable consequence was that in every part of Europe there arose numerous and powerful gangs of armed smugglers, who lived by disobeying the laws which their ignorant rulers had imposed. These men, desperate from the fear of punishment, and accustomed to the commission of every crime, contaminated the surrounding population; introduced into peaceful villages vices formerly unknown; caused the ruin of entire families; spread, wherever they came, drunkenness, theft, and dissoluteness; and familiarized their associates with those coarse and swinish debaucheries which were the natural habits of so vagrant and lawless a life. The innumerable crimes arising from this are directly chargeable upon the European governments by whom they were provoked.

392. THE DEVELOPMENT OF INDIVIDUALISM1

With a view to determining the task of the twentieth century, it would be well if we should trace as far back as possible the whole

1 Adapted by permission from Thomas Davidson, "The Task of the Twentieth Century," International Journal of Ethics, XII (1901–2), 23-28.