5 



to the measure of his energy and skill, and by the nature of 

 his employment, only so far as it affords less or larger room 

 for enterprise. 



Is the demand for a certain article greater than the amount 

 of capital engaged in its production can readily supply, the 

 profit becomes greater than common, and immediately capital 

 is attracted from other less paying employments, and will con- 

 tinue to flow in until profits reach the common level. It is 

 hence readily seen that none of the great industries which are 

 by nature permanent, and which afford an unlimited field for 

 the investment of capital, can long remain upon other than 

 an equal footing. 



A striking verification of this law of equal j)rofits is afforded 

 by the consideration of risk : the more striking that this ele- 

 ment is the greatest apparent cause of disturbance. Great 

 risk may be defined as a certainty of small returns in the 

 aggregate, with an equal certainty of large retm-ns in single 

 instances ; and it is plain that the only fair basis of such in- 

 vestment is founded upon large immediate returns. Accord- 

 ingly it will be found, other tilings being equal, that profit 

 and risk increase or diminish in a direct ratio. The best ex- 

 ample of this is seen in the different returns which the money- 

 lender receives under different conditions of lisk. In the 

 recent panic, among other causes, the uncertainty of almost 

 any security contributed to establish in many instances 

 enormous rates of interest. 



It is not to be denied, however, that to this rule of ecpiality 

 in profits and wages there are exceptions, which, though they 

 cannot everywhere long continue, are none the less real where 

 or while they exist ; and these exceptions are found where, as 

 in very new" or old countries, the relations of capital and labor 

 are such as unduly to favor the one interest or the other, — a 

 question partly of population, and partly of the distribution 

 of industries. 



Trusting you will pardon this review of recognized laws of^ 

 political economy, doubtless well known to you all, and to 



