This section is from the "The Science Of Wealth" book, by Amasa Walker.
What shall we do with that large class of industrial actions which bring no reward to those who perform them?
We find labor and capital applied with the purpose of reproduction, but without result. And this not occasionally; but the share of failures can almost be determined with certainty, and is found to bear no inconsiderable proportion to business enterprise the world over. Indeed, in some occupations, entire success forms the exception.
These cases of mistaken industry would present very few questions but for the secondary uses to which we sometimes find them applied. Gibbon describes the towers, citadels, and palaces of Rome as built on the foundations of the ancient temples, theatres, and arches. We can draw a figure thence to our modern industry. The fortunes of one generation often rise from the failures of that which went before. If we trace the history of many of the most flourishing establishments, we shall find them resting at last on some great outlay of capital, or expenditure of labor, that ruined some man or corporation, and finally went to pay taxes or office rent. Such has been the fate of many of the railroads of the United States; so much so, that it has passed into a proverb that such stock must be sunk once to pay at all. A railroad is established, starts with brilliant prospects, and, after a descending course for a few years, arrives at bankruptcy. Even so, when the stock can be had for nothing, it may not pay for running, and lies idle, or half run. But perhaps the industry of the country takes a sudden start, or pushes up gradually, finds the old track there, and demands that its goods be carried to market. The experiment is made; and soon the road is worked to its utmost capacity, enriching holders, who had forgotten the existence of their stock.
The same thing occurs frequently in the course of individual enterprises. Men undertake great matters, launch into immense expenses, and, after sinking the full amount of their capital and credit, stop hopelessly. The works stand idle and melancholy for years, till some new industry or some shrewder manager takes them at half cost or for nothing, and gets a fortune out of them.
When one of the later emperors would build a monument of his achievements, he was forced to use fragments of older architecture; and so, history tells us, the head of Trajan frowned from the arch of Constantine. Many a modern fortune is pieced out of the wreck of earlier industry.
This, of course, presents only the best view of such mistaken investments. There are cases where industry, instead of coming back to re-animate the lifeless body by sudden movements, forsakes even the habitations it has delighted in; and the machinery of to-day becomes old-fashioned and useless under the surprising inventions of to-morrow. Every locality has its "folly," named from some helpless adventurer, who undertook more than he could carry, and which has reached a death from which there is no resurrection. Long lines of railroad stretch across the country, forsaken, apparently for ever, of passengers or freight. Mills and factories stand tenantless till they crumble. These only enumerate the gigantic failures of industry; while the amount of labor and capital misapplied in ordinary ways is beyond computation. The three causes for these industrial misadventures are as follows: —
1st, Capital is fallible in its calculations. Plausible schemes, based on views that are partial or temporary, draw even the ablest financiers into such investments. It would be out Of reason that such errors should not be committed, even with the keen scent of personal advantage and trained observation.
2d, Extravagance is, however, the prime cause of business failure. Men, in originating enterprises, sanguine in feeling, and exhilarated by the possession of large capital, almost invariably indulge in a scale of outlay which the return does not justify. They find it unpleasant or undignified to omit any thing from the completeness of preparation out of considerations of economy. The result is, that the expense of starting drags on them through the whole course, and perhaps ruins them. They arc kept down all the time by the original outlay, and often have to vacate their magnificent establishments for the entrance of parties who, getting them at half price, can afford to keep and work them.
3d, Another reason is found in those accidents or great developments which transfer business from one seat to another, just as wells give out with no apparent cause. The axis of commerce shifts its place, and leaves tropical bones and tropical fruit high on the northern hills.
What shall we do in our discussion with such investments of labor and capital? Shall industry carry them on its books, like bad debts, in the hope that something may some time come of them? Political economy here takes a lesson from the legislation by which obligations are outlawed after a certain time, and declares that wealth, unpro-ductively applied, is not capital; that it must be struck out of the account of the world's goods, to be reckoned either as loss or luxury. Whatever, from any cause, fails to recompense its outlay, though it may still have some utility, is to be considered as so much added to the common agencies of society. If any thing comes out of it, this is to be counted as so much received from the gratuitous gifts of nature. Whoever, by shrewdness or chance, has possession of them, is fortunate. A canal or railroad, whose stock has been once sunk, stands in just the same relation to political economy as do rivers and natural causeways, which facilitate travel, and render production easy, but are not capital, in the scientific sense of the term.