or UT-1; total enjoyment on solid figure, dimensions UQ-1QT-1T, or U; total supply on areas parallel to plane of axes of X and Z, dimensions QT-T, or Q, and in like manner price, hire, total sum paid, etc., may be read, and their dimensional relations seen at a glance.

[The theory of dimension was (according to Jevons, Principles of Science, 1887, pp. 325) first clearly stated by Joseph Fourier. He expounded it with great lucidity in his Théorie Analytique de la Chaleur, 1822, §§ 159-162. An excellent popular statement of the theory, as it has since been elaborated, will be found in the beginning of Prof. J. D. Everett's C.G.S. System of Units, 1891. Jevons was the first to suggest the application of the theory to economics (Theory of Political Economy, 1888, pp. 232-252), but he unfortunately fell into some apparent errors and confusions which made the suggestion barren in his hands. A criticism of his treatment of the subject and an independent working-out of his suggestion, by the writer of the present article will be found in the American Quarterly Journal of Economics for April 1889, pp. 297314.]

P. H. W.

Its

DIMINISHING RETURNS. The law of diminishing returns is the name given to the proposition that increase of the population of a country, or, more strictly speaking, increase of the labour expended on a given area, tends to be accompanied by a diminution of the returns to a given amount of agricultural industry. The law, it is added, is only true after population has reached a certain degree of density, and even then improvements in the methods of production have a counteracting tendency. origin is to be found in the corn-law discussions of 1814 and 1815. During the great war cultivation had been extended over lands of a worse quality than those previously occupied, and the conclusion of peace threatened, unless more stringent restrictions on importation were enacted, to throw these lands out of cultivation. It was generally assumed that this would be an evil to the whole nation, and not only to the owners and cultivators of the lands in question, as it was supposed that every increase of cultivation must ultimately lower the price of corn by making it more abundant. But Malthus, in his Observations on the Corn Laws (1814), attributed "no inconsiderable part" of the difference between the English and the foreign price of corn to the "necessity" of cultivating the poorer lands, from which a given amount of produce is obtained by the expenditure of a larger quantity of labour than is required in raising an equal amount of produce on the better lands (p. 40). In the Nature and Progress of Rent (January 1815) he worked out this idea, and mentioned the opposing force of agricultural improvements, which he considered to be rarely sufficient to balance the necessity of applying to poorer land, so that "the quantity

585

of labour and capital necessary to procure the last addition that has been made to the raw produce of a rich and advancing country is almost constantly increasing" (p. 45). Sir Edward West, in his Essay on the Application of Capital to Land (January or February 1815), put forward the same idea of an actual diminution of the returns to agricultural industry in order to show that the price of corn would not be lower than the price at which importation was allowed (see CORN LAWS). Ricardo, in his Essay on the Influence of a Low Price of Corn on the Profits of Stock (February 1815), used the theory that with the increase of population the returns to agriculture diminish “independently of all improvements,"-i.e. supposing improvements not to take place,—as an argument against any restriction on the importation of corn. For this purpose it was not necessary to follow West and Malthus in holding that returns have generally diminished in spite of all improvements, but there can be no doubt that Ricardo did believe that improvements have only a temporary effect in retarding the diminution of returns (Low Price, Works, p. 377 n.; Principles, Works, p. 66). James Mill, in Elements of Political Economy (1821), insisted on an actual diminution of returns, and paid no attention to the effect of improvements in production. M'Culloch, in Principles of Political Economy (1825), expressed unhesitating belief in the actual diminution of returns with only temporary interruptions due to improvements (pp. 205, 277, 278, 383). This became for the time the received doctrine (see Longfield, Lectures, 1834-35, p. 181). But Dr. T. Chalmers in 1832 denied it, and showed, what was not then generally understood, that the bringing of new land into cultivation does not prove that an actual diminution of returns has taken place, as, owing to "improvements" or changes in human knowledge, the labour on the new land may be now as productive as the labour on the old land was before the change (Political Economy, in Works, vol. xix. pp. 17-24). H. C. Carey, in his Political Economy (1837-40), brought forward facts to show that the returns to agricultural industry, so far from diminishing, have actually increased enormously (vol. i. p. 58, iii. pp. 69, 70). J. S. Mill's teaching on the subject is not altogether consistent; sometimes he speaks as if there were no doubt that returns had increased (e.g. in the "Introduction" to Pol. Econ.) at other times as if they had with occasional interruptions steadily decreased (Pol. Econ., bk. i. ch. xii. §§ 2 and 3, esp. in 1st ed., ch. xiii. § 2, bk. iv. ch. ii. § 3, ch. iii. § 5). To meet Carey's objection, advanced in Past, Present, and Future (1848), and in Principles of Social Science (1858), that, as a matter of fact, the least fertile lands are cultivated first, Mill confined the operation of the "law" to

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old countries. Cairnes is probably the last writer of importance who expressed a strong belief in an actual diminution of returns (Leading Principles, 2nd ed. p. 119).

By the law as it is now taught (Sidgwick, Principles, bk. i. ch. vi.; Marshall, Principles of Economics, bk. iv. ch. iii.) no suggestion of any actual diminution of the returns to agricultural industry is intended. It is merely

equivalent to the proposition that in each stage of progress there is a limit beyond which the labour expended upon a given area cannot be increased without causing a diminution of returns. The position of the limit is constantly being changed by the progress of knowledge, and to say whether it has been passed in any particular case is a very difficult practical question. And even in a case where the productiveness of agricultural industry had actually diminished, it would not necessarily follow that the productiveness of all industry taken together had diminished. Diminishing returns in agriculture might be counterbalanced by increasing returns in other industries. On this point see INCREASING RETURNS.

In the older statements of the law the diminishing return" was the return to "a given amount of labour and capital." But a given amount of labour is not always aided by the same amount of capital, and when a given amount of labour is assisted by a greater amount of capital the returns to capital may diminish without any diminution of the produce of a given amount of labour. (See J. B. Clark, "Law of Wages and Interest in Annals of the American Academy of Political and Social Science, July 1890.)

E. C.

[For a fuller account of the discussions of 1813 to 1815, see E. Cannan, "The Origin of the Law of Diminishing Returns" in the Economic Journal, March 1892.]

DIMINISHING UTILITY. (See UTILITY.) DINAR (ancient). An Arabian gold coin weighing about sixty-six grains. It formed the circulating medium of a great part of both Asia and Africa for about twelve hundred years. DINAR (modern). The equivalent of the franc in Servia (see FRANC).

F. E. A.

DIODATI, DOMENICO, a Neapolitan, lived in the second half of the 18th century. He was the author of Illustrazione delle monete che si nominano nelle Costituzioni delle Due Sicilie, Napoli, presso Donato Campo, 1788 a book which describes the coins of Frederick II., Emperor of Germany and King of the Two Sicilies, and expresses their value in terms of money current at the author's date. It does not deal with theory, except by discussing the "three dif ferent values of money, extrinsic value, intrinsic value, and commercial value." According to Diodati the extrinsic value of a coin is the one declared by the state; the intrinsic value, the value of the metal in it; the commercial value,

DIODATI, LUIGI, the younger brother of Domenico Diodati, also wrote on coins, from a wish to continue his brother's work. His competence in questions concerning coins was recognised by the government, which made him director of the Neapolitan mint. He was a great admirer of Broggia, and sent Broggia's works to the Russian court to be translated into Russian.

In his book Dello stato presente della moneta nel Regno di Napoli e della necessità di un alzamento, con Prefazione; Napoli, stamperia Migliaccio, 1790, and in a sequel to it: Risposta ad alcune critiche fatte all' opera intitolata . ut supra; Napoli, 1794, Diodati discusses an abstruse point in the history of money, which he says neither De Sanctis, Serra, Turbolo, Locke, Melon, Spinelli, Galiani, nor Beccaria had explained completely, viz. the true cause why gold had disappeared in 1587 from the kingdom of Naples. The usual explanation of this fact was an excess of imports over exports, whilst it was due, according to Diodati, to the monetary reform undertaken by the other states of Italy, each of which had raised the nominal value of their coins. In conformity with this central idea of his, Diodati advises his government to raise the nominal value of money in the kingdom of Naples, so as to make it equal to that of other Italian states, and explains at great length how this alteration should be carried out-changing the money into a species of token money. The reason which Diodati gives for the elevation of the nominal value of coins in other states, and therefore for doing the same in the kingdom of Naples, consists in the rise of prices and the fall in the value of money, consequent on the discoveries of silver in America, and the impulse these supplies of metal gave to enterprise and business, whilst reducing all fixed incomes.

M. P.

DIRECT TAXATION. As defined by Mill (Principles, bk. v. ch. ii. § 1), taxation "which is demanded from the very persons who it is intended or desired should pay it."

Mill's definition has been generally adopted (see Prof. J. S. Nicholson's Art. "Taxation," Encyclopædia Britannica, 9th ed.), e.g. by Wagner (Handbuch, vol. ii. p. 152), and by Fawcett (Manual, 5th ed., bk. iv. ch. iii.) The latter writer abbreviates the definition by the statement that "a direct tax is really paid by the person from whom it is levied."

Practical financiers, as Prof. Bastable states (Public Finance, bk. iii. ch. i.), "regard those taxes as direct which are levied on permanent and recurrent occasions."

M'Culloch defined a direct tax as one which is taken directly from income or capital, and Dr. Ely (Taxation in American States and Cities, New York, 1888, p. 69) observes that

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relating to the supply of necessaries—the term necessaries not being confined to the bare means of sustaining life, but including all such things as are considered appropriate to the station of life of the person concerned; (4) an infant after attaining the age of 21 cannot retain property subject to liabilities acquired during his infancy without satisfying the liabilities incurred during that time, e.g. arrears of rent, calls on shares. On the same principle an infant partner who on attaining 21 retains his share of the profits, must allow himself to be debited with his share of the losses incurred during his minority. (5) Infant holders of gavelkind land may alienate such land subject to the performance of certain formalities, and there are other local customs giving infants an exceptional capacity to contract. (6) Infants holding themselves out to be of full age are liable to restore any advantage they have obtained by their misrepresentation to a person who acted on the faith of it.

E. S.

DISABILITIES OF LUNATICS AND DRUNKARDS. In this case it is not quite correct to speak of a disability. Infants and married women are under permanent restrictions imposed on them as a general consequence of their status. Mental derangement, on the other hand, does not in itself create a new status. No transaction could be invalidated by the simple fact that a party to the transaction is a lunatic or a drunkard; on the other hand, a person generally sane or sober may under certain circumstances avail himself of the plea of mental incapacity. The rule is, that a contract or a disposition of property—which term includes testamentary dispositions-is generally not binding on a person who at the time of making the contract or disposition is not of sufficient mental capacity to understand the nature of the transaction. Whether the incapacity is due to insanity in the proper sense of the word, to mere temporary derangement or illness, or to drunkenness, is quite immaterial. As a general rule the party, or representative of the party, who wishes to escape an obligation on the ground of mental incapacity must bring evidence to show that at the essential moment such incapacity existed, but where a person has, after a judicial investigation (inquisition), been formally declared a lunatic, the presumption is reversed, and the party wishing to uphold a transaction to which the lunatic was a party must prove that the contract or disposition was made during a lucid interval. There is one exception to the above-mentioned rule. When a party to a contract, otherwise voidable on the ground of the mental incapacity of the other party, did not, as a matter of fact, know of such incapacity and had no reasonable ground for knowing it, and where it is impossible to restore the parties to their former position, the incapable party or his representa

A

DISABILITIES OF MARRIED WOMEN. It is generally believed that the Married Women's Property Act of 1882 has removed all the disabilities of married women, but this is not the case. A married woman having separate property, not subject to a restraint on anticipation, may now make contracts binding not only the property of which she is possessed at the time, but also property acquired subsequently, during the continuation of the marriage, and she may by will dispose of her separate property; but great anomalies remain, of which the following may be quoted as instances. married woman, not being possessed of separate property, who purchases goods on credit and disposes of the goods, cannot be compelled to pay for the same although she subsequently acquires separate property of great value. A married woman not having any separate property, but knowing that her husband has made a will under which she will be entitled to a considerable legacy, makes a will, with the intention of securing the benefit of the legacy to some friend or relative, and dies after her husband. The legacy, will go to her next-ofkin, as her will can only dispose of "separate property," and property acquired after her husband's death is not separate property. A married woman entitled to a life interest in property subject to the usual restraint on anticipation, but not possessed of other separate property, incurs large debts. Her creditors are absolutely without any remedy. This state of things is most unsatisfactory. The old common law rule was based on the assumption that husband and wife were one person; the wife's proprietary existence ceased on the day of her marriage, and became absorbed into that of her husband, who took all her personal property, and possessed extensive rights of control and enjoyment with respect to her real property. This view, which at any rate had the advantage of clearness and consistency, has now been definitely abandoned; a wife now retains all her property and has extensive rights of disposition; the remaining restrictions have no social or economical reason, and their practical inconvenience is obvious. (See MARRIAGE SETTLEMENT.)

E. S.

DISCHARGE (Scotland). Extinction of a debt or obligation, which may be by—(1) payment or performance; (2) abandonment of claim by creditor; (3) compensation or set-off; (4) novation or replacement of the original obligation by another obligation; (5) delegation, or replacement of the original debtor by another

debtor; (6) confusion, the debt and the credit, in a condition immediately and finally to extinguish one another, coming to coincide in the same person. Also (Scotland) the document whereby the creditor discharges the debtor.

A. D.

DISCHARGE IN BANKRUPTCY. The effect of a discharge in bankruptcy under the Bankruptcy Act 1883, is to free the debtor from all debts and liabilities provable in the bankruptcy, except crown debts, and debts incurred by fraud or through a fraudulent breach of trust. Crown debts can be released by a certificate from the treasury. By the amending act of 1890, it is further provided that, unless the court otherwise orders, the discharge shall not release the debtor from any liability under a judgment in an action for seduction, or under an affiliation order, or under a judgment against him as a co-respondent.

Under the act of 1869, the discharge of a bankrupt was a matter practically in the hands of his creditors unless he had paid a dividend of 10s. in the pound. Under the acts of 1883 and 1890, it is in all cases a matter for the judicial discretion of the court.

At any time after being adjudged bankrupt, the bankrupt may apply to the court for an order of discharge, but the application cannot be heard until after his public examination is concluded. Notice of the day fixed for the hearing must be gazetted, and sent to the creditors. On the hearing, any creditors who desire it, must be heard, and the court must take into consideration a report of the official receiver as to the bankrupt's conduct and affairs. If it is shown that the debtor has been convicted of a misdemeanour under the Debtors' Act 1869, the court is directed to refuse the discharge. If, on the other hand, the debtor is shown to have been guilty of certain minor acts of misconduct specified by the act, such as the assets, without reasonable excuse, not amounting to 10s. in the pound, or not keeping proper trade books, or trading with knowledge of insolvency, or having been guilty of fraudulent conduct, the court must either refuse or qualify the discharge. A discharge may be qualified either by suspending it for a specified time, usually not less than two years, or by imposing conditions as to after-acquired property, as, for instance, by directing judgment to be entered up against the debtor for a certain sum. If the debtor's conduct has been blameless he is entitled to an unconditional discharge, and he may also obtain a certificate from the court removing any civil disabilities consequent on bankruptcy (§ 8 of the Act of 1890).

An undischarged bankrupt who obtains credit from any person to the extent of £20 or upwards without informing such person of his status is guilty of a misdemeanour.

M. D. C.

DISCLAIMER. A person appointed as trustee

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of a will or settlement who does not wish to accept the trust will find it safer as a general rule to execute a deed by which his non-acceptance is stated. A deed of this nature is called a deed of disclaimer. The word disclaimer is also generally used for any act of renunciation.

E. S.

DISCOMMODITY. The terms disutility and discommodity have been introduced into the nomenclature of political economy by Jevons (Theory of Political Economy, 1879, pp. 62, 63) as the opposites or contraries of the terms utility and commodity. Thus, by disutility he means, not the mere absence of utility, but the quality of causing positive inconvenience or discomfort. Similarly, by discommodity he means any action or material thing which possesses disutility. The term discommodity is used in much the same sense by Professor Marshall. "While demand is based on the desire to obtain commodities, supply depends on the overcoming of the unwillingness to undergo 'discommodities.' These fall generally under one of two classes, labour and the abstinence involved in putting off consumption" (Principles of Economics, vol. i. ed. 2, 1891, p. 193).

J. N. K.

DISCOUNT. The term "discount" signifies an abatement, or deduction, and is in practice applied in several ways: (1) stocks or shares are said to be at a discount when their market value shows an abatement from par value; (2) the stock of a trader is sometimes, from bankruptcy or other cause, sold at a discount from cost price; (3) a quoted or published price may be by custom subject to an abatement or discount, to purchasers for the trade, or for export; (4) an account for goods delivered may be paid at a date earlier than is usual upon receiving a discount therefrom; or (5) a bill of exchange, due at a future date, may be discounted, i.e. sold for cash at an agreed abatement.

Excepting in the first case, the discount is usually expressed at a rate per cent, and in cases 2, 3, 4, the formula for calculation is In the discount of a bill

simply D=- PX R

100 of exchange, the time it has to run is taken into

account, and the formula is D= PXRXT

100

; T representing, in theory, fractions or multiples of a year, but, in the practice of a banker, a fraction only.

In law, and in fact, the operation of discounting a bill is a purchase, and the property therein passes to the purchaser, who acquires all the usual rights of a holder (see BILL OF EXCHANGE, ENDORSER, etc.) In practice, a banker always places the amount of the bill to the credit of his customer, debiting him at the same time with the discount. In most discount operations the effective rate of interest