Pebbuaby 25, 1887.] 



SCIENCE, 



199 



from this is, that, whether profits are increasing or 

 not, there is direct evidence that profits are be- 

 coming more widely distributed among the classes 

 engaged in trade and industry, and that, while 

 the larger capitalists may be receiving a lower re- 

 turn than that to which they have been accus- 

 tomed, the number of those who are making a 

 profit, though possibly a small one, has largely 

 increased. 



The signers recognize the fact that over-produc- 

 tion may exist for a time and in certain branches 

 of industry, and that it tends to correct itself. 

 But they are more or less at a loss to account for 

 an over-production at once so general and so long- 

 continued as the one under consideration has been. 

 They are disposed, however, to explain this as the 

 effect of the protectionist policy of so many 

 foreign countries, which has become more marked 

 during the past decade than ever before. " The 

 high prices which protection secures to the pro- 

 ducer within the protected area naturally stimu- 

 late production, and impel him to engage in com- 

 petition in foreign markets. The surplus produc- 

 tion which cannot find a market at home is sent 

 abroad, and in foreign markets undersells the 

 commodities produced under less artificial con- 

 ditions." 



A share of the blame, if blame it can be called, 

 for the depression, is laid upon the working of 

 the limited liability system. Under this the capi- 

 tal invested in small sums by a large number of 

 individual shareholders is, as a rule, contented 

 with a lower rate of interest than the ordinary 

 producer will require upon the capital which he 

 employs at his sole and unlimited risk. The ten- 

 dency of limited liability companies is also to 

 undertake enterprises with regard rather to the 

 creation and speedy sale of the shares at a pre- 

 mium than to their permanent prosperity. The 

 limitation of the liability further serves to encour- 

 age a less cautious or more speculative system of 

 trading than can safely be pursued by a trader who 

 is himself liable for the full extent of his opera- 

 tions. The report offers no opinion as to the bene- 

 fit derived by the community at large from the 

 limited liability companies, but simply points out 

 the important influence which they have exercised 

 both upon the extent of production and the rate 

 of profit obtainable on the capital employed in it. 

 The fact that stocks held by middle-men have be- 

 come available for consumption without replace- 

 ment, because of the more rapid and direct com- 

 munication between the producer and the con- 

 sumer, has tended to depress prices and profits ; 

 and there is also to be taken into consideration 

 the fact that the possibilities of new demands 

 throughout the world are becoming annually more 



limited : it is consequently predicted that in future 

 more stability in the ratio of supply to demand 

 may be expected, with a more regular though re- 

 duced rate of profit. 



The report next considers at much length the 

 fall of prices. The reasons for this may be 

 briefly enumerated as an appreciation of the 

 standard of value, a decreased demand both in 

 domestic and foreign markets, — the latter attrib- 

 uted in large degree to the operation of protective 

 tariffs, — and the fact that the reputation of Brit- 

 ish workmanship does not stand as high as it once 

 did. The fraudulent stamping of foreign goods 

 of inferior quality with British marks has had 

 something to do in bringing about this result ; and 

 many witnesses before the commission believed 

 that legislative restrictions on labor, and the action 

 of the working-classes themselves in increasing 

 the cost of production by strikes, and so forth, 

 have had an important effect. The majority re- 

 port, however, dissents from the view of these 

 witnesses. 



When it comes to the question of remedies for 

 the depression, the report becomes more vague 

 and indefinite. The cost of production must be 

 cheapened so far as is consistent with the main- 

 tenance of sound quality and good workmanship. 

 The increasing severity of foreign competition 

 must be met. New markets must be sought for. 

 Technical and commercial schools must be devel- 

 oped and improved until they are equal to those 

 on the continent of Europe. Legislation is needed 

 to make more effective the provisions of the exist- 

 ing laws as to the counterfeit or fraudulent mark- 

 ing of goods. The law as to limited liability com- 

 panies is susceptible of improvement, though the 

 report fails to point out how. The report then 

 concludes, " We think that while, on the one 

 hand, the information which we have been able 

 to collect will tend to dispel much of the appre- 

 hension which appears to prevail on the subject of 

 our commercial position, and to encourage a more 

 hopeful view of the situation, it will also show, 

 that, if our position is to be maintained, it must 

 be by the exercise of the same energy, perse- 

 verance, self-restraint, and readiness of resource, 

 by which it was originally created." 



The minority report is of interest, because it 

 embodies the views of Lord Dunraven and his 

 fellow-advocates of fair trade. In its analysis of 

 the depression, it is in almost entire agreement 

 with the majority report ; its individuality con- 

 sists in its recommendations. It mentions and 

 approves the remedies outlined by the majority of 

 the commission, but finds that they leave un- 

 touched the greatest and most permanent causes 

 of the depression, which are the action of foreign 



