Credit Money and the Precious Metals. 237 



before, if the absolute quantity received by him were less 

 than before. 



A close study of what are known as the natural laws of 

 •economics — such as that of supply and demand — reveals 

 the fact that their saving, and, indeed, essential principle is 

 that of an automatic compensatory action. An extreme 

 tendency in any direction calls into operation a checking or 

 balancing movement. Thus, an increased demand for any 

 article, by raising its price and increasing the profits of the 

 capitalist engaged in its production, stimulates an increased 

 supply of that article by attracting capital to the industry ; 

 this movement tends to make good the relative deficiency, 

 and thus to check the advance of prices. Again, the in- 

 creasing employment of capital in a highly profitable 

 industry increases the demand for labour in that industry, 

 and, therefore, tends to raise wages ; hence, the appearance 

 of a higher profit for the capitalist, analogous to the " un- 

 earned increment" of the landowner, calls intoplayconditions 

 which promote its distribution. It may be said that the 

 true test of the soundness, or naturalness, of any economic 

 arrangement is its subservience to such compensatory 

 action in accordance with a ruling principle of nature. 

 Now there is grave reason to doubt whether the State mono- 

 poly of land, any more than any other monopoly, would be 

 consistent with the possibility of such action and reaction. 

 On the other hand, it is quite clear that the " unearned in- 

 crement" arising from the private ownership of land is to 

 5ome extent under the law of compensatory action which 

 tends to promote distribution. A rise of rents in this 

 country induces, for instance, the cultivation of the 

 cheaper lands of the colonies, the United States, and other 

 regions of the globe ; and the competition of the grain and 

 other agricultural produce received thence has tended to 

 reduce rents again by lowering the profits of farming and 

 diminishing the competition for farms. The demand for 



