§ 9. Increasing returns in the nineteenth century. Other forces were at work to create better dynamic conditions in western Europe. The great war ended in 1815 and wheat prices in England fell to a much lower level by 1822. This level was nearly maintained in English markets until 1877. Then again was a great fall to the lowest point in 1894. Returns in agriculture after 1815 were on the whole in creasing until 1894. Accordingly, a day's common labor ex changed for more food than before. Population grew, but still improved methods of agriculture produced more with less labor. Methods of transportation improved and the additional food was imported instead of being produced by very intensive cultivation of the limited area of Eng land. After the forties a great Irish emigration actually reduced year by year the total population of Ireland. Methods of production outside of agriculture were at the same time improving, and real wages almost steadily rose in western Europe throughout the nineteenth century. The great fall in wheat prices as measured in the markets of Liverpool from 1878 to 1894 which bankrupted many farmers and reduced agricultural land values in the eastern United States and in western Europe, brought cheap food to the people. It was a period of increasing returns in agricul ture, as an actual historical fact. It is a question whether that period did not come to an end about 1895, the growth of population in the international food markets of Europe and America having overtaken the increase of command over agricultural lands and brought us again into a period of decreasing returns.
§ 10. Rhythmic changes of population. Changes in pop ulation are constant. Until recently these changes have gener ally been of a rhythmic nature. Again and again, in the history of savage races, the failure of a single crop, war, or a plague would reduce a population in a few years much below a former level. This loss usually would be recovered within the next one or two generations. An enormous loss of popu lation, however, such as that from the Black Plague in Eng land in the fourteenth century, might rarely cause returns to the laborer to increase so greatly that the effects were not lost for a century. War, invasion, immigration, would re duce or add to the population of each country, yet on the whole the density of population would continue on about the same level from century to century. Good rulers and bad came and went and the education varied above and below a certain average. The amount of rainfall in some localities or in whole countries rises and falls in a pretty regular cycle of eight to ten years, more or less, causing food supplies to vary, as in the seven fat years and the seven lean years of biblical Egypt. The conditions for special crops, such as frost, snow, sun, cloudiness, hail, vary from year to year; and many insect pests run in cycles alternating with the insects' food supply and parasitic enemies. In a larger view the rise of labor-incomes that resulted from the opening of America and with the agricultural improvement of the last century may prove to be only rhythmic, not cumulative. In so far
as a rapid increase of population results, incomes are again lowered toward the former level.
§ 11. Cumulative dynamic economy. The growth of population in European and American countries in the past hundred years has gone steadily onward, not canceled by losses. The addition made to numbers (tho not necessarily a further continuation of the growth) is at least for a long period to come, a permanent fact. The movement is doubt less partly, but not wholly, rhythmic, and if a future decrease comes it is likely to result from different causes. This growth of population has gone along with other changes of an equally enduring character. Of this kind is the great increase of area open to settlement by the advanced industrial peoples, the permanent displacement on a whole continent of the sav age, hunting economy and its inefficient methods of food pro duction—the improvement of transportation opening up new sources of materials and foods to the older countries, and the rapid consumption of our supplies of timber, coal, and other mineral resources for which substitutes are difficult if not impossible to find.
§ 12. Individual and general adjustment to static condi tions. In every economic situation there is involved an equi librium of values and prices. It is the theoretically correct set of prices and incomes—not what we might wish to see but what logically results from the presence of men, desires, and goods as they are. In this equilibrium and in the movements bringing it about, there are two kinds or aspects of adjust ment to be observed, the individual adjustment and the gen eral adjustment. Each individual, it may be assumed, moves toward the occupation that (as conditions are, which he can not alter) offers him the best return (theory of wages), and uses his agents (theory of usance) so that they give the best return he knows how to obtain. If no new force is intro duced and existing forces are permitted to work themselves out, a static equilibrium will result and will continue un changed. The principle of proportionality would apply to all the combinations of factors in this equilibrium. At the pre vailing prices and with the prevailing methods, so much labor of a certain kind should be used with so many agents of various kinds. If either more or less of any factor is used, the result is a product of less value for the costs and hence yielding a smaller profit (theory of profits). If a new method or a new proportion is found to be better, this is a new dy namic element. But if the theoretic, static equilibrium has been attained, there is no chance to increase the yield except when correcting a previous error by which the ideal adjust ment was missed. The individual having found what seems the best adjustment has only to hold steadily to it.