Middlemen in English Business 127 



much acceptance in English economic theory. Petty in 1662 was 

 of the opinion that a "large proportion of these .... might 

 be retrenched, who properly and originally earn nothing from the 

 Publick, being onely a kinde of Gamesters," yet he recognized their 

 services in being "veins and arteries, to distribute back and forth 

 . . . , the product of Husbandry and Manufacture."^ Locke 

 also regarded middlemen "Brokers" as inconsistent with the public 

 good,^ because they retarded the circulation of money. But these 

 opinions had but little effect and wasted in the eighteenth century 

 before the tenet that the employment of population and labor was 

 the fundamental riching power in a nation,^ and that therefore goods 

 ought to pass through as many hands as possible."* This theory, 

 though resting on the economic fallacy of "making work," did favor 

 the existence of middlemen and carriers, but hindered any change of 

 organization which tended to reduce the number of middlemen or 

 forced a change in their occupation. For instance, the introduction 

 of the turnpike, stage-coach and canals was opposed by the vested 

 interests. The doctrines of the period were therefore not opposed 

 to the rise and perpetuation of middlemen. 



Omitting the personal catering to human whims and fancies, the 

 only justification which a middleman can offer for his existence is 

 that by his intervention economies are realized which at least equal 

 what he extracts from the trade for his expenses and profits. The 

 test of this equality in a competitive market is determined by the 

 effect his intervention in the handling of a ware has on the price of 

 that ware. If he performs a real service to the trade the price is 

 lowered; if he does not perform such a service the price is raised and 

 he is eliminated. In actual trade the inertia of habit and the power 

 of monopoly may long continue him as an unprofitable servant. 



In a state of widely dispersed industry, with little local special- 

 ization, with poor means of communication and transportation, and 

 with seasonal activity, there is excellent opportunity for the rise of a 

 middleman class. Goods must be bought in small lots from domestic 

 producers, and they must be sold to distant consumers in small lots. 

 It is not profitable for each producer to carry his small product to 

 the distant consumer; the cost of carriage and the waste of time pre- 

 vent. Nor does he know nor have the means of learning where 



1 Petty, Treatise of Taxes, 11. 



^Locke, Works, 11, 15. 



' Palgrave, 1, 87; Defoe, Eng. Tr. 11, Chap. XXXVII. 



' Defoe, Com. Eng. Tr. 11, 178, Chaps. XXXVII and XXXYIII. 



