4. Economic goods, or order to escape from the confusion of thought into which the English classical economists fell thru the use of the word "wealth," modern economists employ it sparingly and use in its stead the phrase "economic goods," meaning thereby any commodity or material thing which pos sesses value. Desirable things that possess no value are called "free goods," because they are supplied by nature gratuitously. The great mass of goods which are bought and sold in the market are economic goods and these are the things in which the economist is especially interested. Ile wants to know why they differ in value, why they fluctuate in value, what are their costs of production, how they are marketed, and why they are wanted.
As I have said, in the English classical school of political economy all these economic goods were called wealth, that word being defined as including every thing that has value or exchange power. But the word "wealth" is very broadly used in common speech, and hence the conclusions of the economists with regard to wealth are often misunderstood by the public. For example, Mr. Carnegie is known to be a man of great "wealth," owning as he does a large number of the bonds of the United States Steel Cor poration. These bonds give him a claim upon a cer tain portion of the earnings of the corporation, but they are not wealth in the economic sense. The econ omist would not call them economic goods. They are merely legal claims on the income produced by certain economic goods owned by the stockholders of the United States Steel Corporation. To be tech nically correct, these bonds should be called property, not wealth. In the same way a share of Pennsyl vania Railroad stock is property, not wealth; it is the holder's legal evidence that he has an ownership in terest in the railroad and is entitled to share in the distribution of its earnings.
5. the word wealth is often used as if it were related to, if not synonymous with, wel fare. A man of wealth is often spoken of as "well to-do," yet wealth and welfare are independent of each other. The word welfare implies happiness and contentment. Great wealth may bring neither of these to a man or to a nation. Indeed, it is quite pos sible that a social census, if one could be taken, would find more misery and discontent among the rich than among those people who are obliged to work every day for their living.
6. The economist thinks of the human family as producers and consumers. All are consumers, for otherwise they would perish, and the vast majority of them are also producers, for by their daily labor they must earn their income. Since the problems of production and consumption are entirely different, the economist studies them separately; sometimes to such an extent that the unwary reader gets an idea that in economics certain classes of society are consumers and others are almost exclu sively producers. This is of course an erroneous con ception. In a civilized country, like the United States or Canada, there are very few people who are not both producers and consumers. The so-called idle rich are numerically almost negligible. So are the other-non producing classes, such as the sick, the defectives, the aged and such criminals as are not given employment.
A producer is a person who creates utility or helps bring it into existence. The earliest producers known in the history of the human race -were herders and farmers, and in the popular mind the farmer is still thought of as being the greatest of all producers, for he coaxes from the soil the grains and fruits and veg etables which support human life. He also supplies us with most of the meat we eat. The earth is, of course, the real producer. The farmer by his labor merely manipulates and directs natural forces. Eco nomically Ile is in no greater degree a producer than the conductor of the freight train who hauls his crop to market, or any one of the wholesalers and retailers who pass it on to consumers.
Let us trace a bushel of wheat from Dakota until it appears in New York City in loaves of bread. The railroad hauls it to Minneapolis, where it possesses greater utility than in Dakota and therefore greater value, because the millers want it. The miller, who is a manufacturer, converts the wheat into flour, thus adding to its utility and value. The railroad hauls it to New York, where it possesses more utility than in Minneapolis, being more in demand. The baker turns it into bread, adding thereby both to its utility and value, for it is now in the form demanded by the so-called ultimate consumers. Some of the loaves may be sold to consumers by grocers who have, like the railroad, merely increased their place utility, for they have saved the consumer the labor of going to the more distant bakery.