The Online Library of Liberty

A project of Liberty Fund, Inc.

• Introduction
• Principles of Political Economy
• Introduction
• Chapter I: On the Definitions of Wealth and Productive Labour
• Chapter II: On the Nature and Measures of Value
• Chapter III: Of the Rent of Land
• Chapter IV: Of the Wages of Labour
• Chapter V: Of the Profits of Capital
• Chapter VI: Of the Distinction Between Wealth and Value
• Chapter VII: On the Immediate Causes of the Progress of Wealth

chapter vii

On the Immediate Causes of the Progress of Wealth

section i

Statement of the particular Object of Inquiry

[The particular object of inquiry is to trace the causes which are most effective in calling forth the powers of production in different countries.

Moral and political causes are, in this respect, of primary importance; but it is intended chiefly to consider those which are more directly within the province of political economy.

Many countries, with great powers of production, are poor, and many, with scanty powers of production, are comparatively rich, without any very essential difference in the security of property.

If the actual wealth of a country be not, after a certain period, in some degree proportioned to its powers of production, there must have been a want of stimulus to produce; and the practical question for consideration is, what is the most immediate and effective stimulus to the progress of wealth.]

section ii

Of an Increase of Population considered as a Stimulus to the continued Increase of Wealth

[If want alone, or the desire of the necessaries of life among the labouring classes, were a sufficient stimulus to production, the earth would have been comparatively full of inhabitants.

A man whose only possession is his labour can make no effectual demand for produce if his labour be not wanted.

To justify the employment of capital, there must be a demand for the produce of it, beyond that which may be created by the demand of the workmen employed.

The effect of the increase of population to raise profits by lowering wages must be very limited, and must soon be checked by want of demand.

By a reference to experience, it will be found that those states often make the slowest progress in wealth where the stimulus arising from population alone is the greatest.

The practical question is, whether the pressure of the population hard against the limits of subsistence is an adequate stimulus to the increase of wealth? And the state of most countries of the world determines the question in the negative.]

section iii

Of Accumulation, or the Saving from Revenue to add to Capital, considered as a Stimulus to the Increase of Wealth

Those who reject mere population as an adequate stimulus to the increase of wealth, are generally disposed to make every thing depend upon accumulation. It is certainly true that no permanent and continued increase of wealth can take place without a continued increase of capital; and I cannot agree with Lord Lauderdale in thinking that this increase can be effected in any other way than by | saving from the stock which might have been destined for immediate consumption, and adding it to that which is to yield a profit; or in other words, by the conversion of revenue into capital.*

But we have yet to inquire what is the state of things which generally disposes a nation to accumulate; and further, what is the state of things which tends to make that accumulation the most effective, and lead to a further and continued increase of capital and wealth.

It is undoubtedly possible by parsimony to devote at once a much larger share than usual of the produce of any country to the maintenance of productive labour; and it is quite true that the labourers so employed are consumers as well as unproductive labourers; and as far as the labourers are concerned, there would be no diminution of consumption or demand. But it has already been shewn that the consumption and demand occasioned by the persons employed in productive labour can never alone furnish a motive to the accumulation and employment of capital; and with regard to the capitalists themselves, together with the landlords and other rich persons, they have, by the supposition, agreed to be parsimonious, and by depriving themselves of their usual | conveniences and luxuries to save from their revenue and add to their capital. Under these circumstances, I would ask, how it is possible to suppose that the increased quantity of commodities, obtained by the increased number of productive labourers, should find purchasers, without such a fall of price as would probably sink their value below the costs of production, or, at least, very greatly diminish both the power and the will to save.(196)

It has been thought by some very able writers, that although there may easily be a glut of particular commodities, there cannot possibly be a glut of commodities in general; because, according to their view of the subject, commodities being always exchanged for commodities, one half will furnish a market for the other half, and production being thus the sole source of demand, an excess in the supply of one article merely proves a deficiency in the supply of some other, and a general excess is impossible. M. Say, in his distinguished work on political economy, has indeed gone so far as to state that the consumption of a commodity by taking it out of the market diminishes demand, and the production of a commodity proportionably increases it.

This doctrine, however, to the extent in which it has been applied, appears to me to be utterly unfounded, and completely to contradict the great principles which regulate supply and demand.

It is by no means true, as a matter of fact, | that commodities are always exchanged for commodities. The great mass of commodities is exchanged directly for labour, either productive or unproductive; and it is quite obvious that this mass of commodities, compared with the labour with which it is to be exchanged, may fall in value from a glut just as any one commodity falls in value from an excess of supply, compared either with labour or money.(197)

In the case supposed there would evidently be an unusual quantity of commodities of all kinds in the market, owing to the unproductive labourers of the country having been converted, by the accumulation of capital, into productive labourers; while the number of labourers altogether being the same, and the power and will to purchase for consumption among landlords and capitalists being by supposition diminished, commodities would necessarily fall in value, compared with labour, so as to lower profits almost to nothing, and to check for a time further production.(198) But this is precisely what is meant by the term glut, which, in this case, is evidently general not partial.

M. Say, Mr. Mill,* and Mr. Ricardo, the prin-|cipal authors of the new doctrines on profits, appear to me to have fallen into some fundamental errors in the view which they have taken of this subject.

In the first place, they have considered commodities as if they were so many mathematical figures, or arithmetical characters, the relations of which were to be compared, instead of articles of consumption, which must of course be referred to the numbers and wants of the consumers.

If commodities were only to be compared and exchanged with each other, then indeed it would be true that, if they were all increased in their proper proportions to any extent, they would continue to bear among themselves the same relative value; but, if we compare them, as we certainly ought to do, with the numbers and wants of the consumers, then a great increase of produce with comparatively stationary numbers and with wants diminished by parsimony, must necessarily occasion a great fall of value estimated in labour, so that the same produce, though it might have cost the same quantity of labour as before, would no longer command the same quantity; and both the power of accumulation and the motive to accumulate would be strongly checked.(199)

It is asserted that effectual demand is nothing more than the offering of one commodity in exchange for another. But is this all that is necessary to effectual demand? Though each commodity may have cost the same quantity of labour and capital in its production, and they may be | exactly equivalent to each other in exchange, yet why may not both be so plentiful as not to command more labour, or but very little more than they have cost; and in this case, would the demand for them be effectual? Would it be such as to encourage their continued production? Unquestionably not. Their relation to each other may not have changed; but their relation to the wants of the society, their relation to bullion, and their relation to domestic and foreign labour, may have experienced a most important change.(200)

It will be readily allowed that a new commodity thrown into the market, which, in proportion to the labour employed upon it, is of higher exchangeable value than usual, is precisely calculated to increase demand; because it implies, not a mere increase of quantity, but a better adaptation of the produce to the tastes, wants and consumption of the society. But to fabricate or procure commodities of this kind is the grand difficulty; and they certainly do not naturally and necessarily follow an accumulation of capital and increase of commodities, most particularly when such accumulation and increase have been occasioned by economy of consumption, or a discouragement to the indulgence of those tastes and wants, which are the very elements of demand.(201)

Mr. Ricardo, though he maintains as a general position that capital cannot be redundant, is obliged to make the following concession. He says, “There is only one case, and that will be temporary, in which the accumulation of capital with a | low price of food may be attended with a fall of profits; and that is, when the funds for the maintenance of labour increase much more rapidly than population;—wages will then be high and profits low. If every man were to forego the use of luxuries and be intent only on accumulation, a quantity of necessaries might be produced for which there could not be any immediate consumption. Of commodities so limited in number, there might undoubtedly be an universal glut; and consequently there might neither be demand for an additional quantity of such commodities, nor profits on the employment of more capital. If men ceased to consume, they would cease to produce.” Mr. Ricardo then adds, “This admission does not impugn the general principle.”* In this remark I cannot quite agree with him.(202) As, from the nature of population, an increase of labourers cannot be brought into the market, in consequence of a particular demand, till after the lapse of sixteen or eighteen years, and the conversion of revenue into capital may take place much more rapidly; a country is always liable to an increase of the funds for the maintenance of labour faster than the increase of population. But if, whenever this occurs, there may be a universal glut of commodities, how can it be maintained, as a general position, that capital is never redundant; and that because commodities may retain the same relative values, a glut can only be partial, not general? |

Another fundamental error into which the writers abovementioned and their followers appear to have fallen is, the not taking into consideration the influence of so general and important a principle in human nature, as indolence or the love of ease.

It has been supposed† that, if a certain number of farmers and a certain number of manufacturers had been exchanging their surplus food and clothing with each other, and their powers of production were suddenly so increased that both parties could, with the same labour, produce luxuries in addition to what they had before obtained, there could be no sort of difficulty with regard to demand, as part of the luxuries which the farmer produced would be exchanged against part of the luxuries produced by the manufacturer; and the only result would be, the happy one of both parties being better supplied and having more enjoyments.

But in this intercourse of mutual gratifications, two things are taken for granted, which are the very points in dispute. It is taken for granted that luxuries are always preferred to indolence, and that the profits of each party are consumed as revenue. What would be the effect of a desire to save under such circumstances, shall be considered presently. The effect of a preference of indolence to luxuries would evidently be to occasion a want of demand for the returns of the increased powers of production supposed, and to throw labourers out | of employment.(203) The cultivator, being now enabled to obtain the necessaries and conveniences to which he had been accustomed, with less toil and trouble, and his tastes for ribands, lace and velvet not being fully formed, might be very likely to indulge himself in indolence, and employ less labour on the land; while the manufacturer, finding his velvets rather heavy of sale, would be led to discontinue their manufacture, and to fall almost necessarily into the same indolent system as the farmer. That an efficient taste for luxuries, that is, such a taste as will properly stimulate industry, instead of being ready to appear at the moment it is required, is a plant of slow growth, the history of human society sufficiently shews; and that it is a most important error to take for granted, that mankind will produce and consume all that they have the power to produce and consume, and will never prefer indolence to the rewards of industry, will sufficiently appear from a slight review of some of the nations with which we are acquainted. But I shall have occasion for a review of this kind in the next section; and to this I refer the reader.

A third very serious error of the writers above referred to, and practically the most important of the three, consists in supposing that accumulation ensures demand; or that the consumption of the labourers employed by those whose object is to save, will create such an effectual demand for commodities as to encourage a continued increase of produce.

Mr. Ricardo observes, that “If 10,000l. were | given to a man having 100,000l. per annum, he would not lock it up in a chest, but would either increase his expenses by 10,000l., employ it himself productively, or lend it to some other person for that purpose; in either case demand would be increased, although it would be for different objects. If he increased his expenses, his effectual demand might probably be for buildings, furniture, or some such enjoyment. If he employed his 10,000l. productively, his effectual demand would be for food, clothing, and raw materials, which might set new labourers to work. But still it would be demand.”*

Upon this principle it is supposed that if the richer portion of society were to forego their accustomed conveniences and luxuries with a view to accumulation, the only effect would be a direction of nearly the whole capital of the country to the production of necessaries, which would lead to a great increase of cultivation and population. But, without supposing an entire change in the usual motives to accumulation, this could not possibly happen. The usual motives for accumulation are, I conceive, either the future wealth and enjoyment of the individual who accumulates, or of those to whom he means to leave his property. And with these motives it could never answer to the possessor of land to employ nearly all the labour which the soil could support in cultivation; as by so doing he would necessarily destroy his neat rent, and render it impossible for him, without subsequently dismissing the greatest part of his workmen and | occasioning the most dreadful distress, either to give himself the means of greater enjoyment at a future distant period, or to transmit such means to his posterit.(204)

The very definition of fertile land is, land that will support a much greater number of persons than are necessary to cultivate it; and if the landlord, instead of spending this surplus in conveniences, luxuries and unproductive consumers, were to employ it in setting to work on the land as many labourers as his savings could support, it is quite obvious that, instead of being enriched, he would be impoverished by such a proceeding, both at first and in future. Nothing could justify such a conduct but a different motive for accumulation; that is, a desire to increase the population—not the love of wealth and enjoyment; and till such a change takes place in the passions and propensities of mankind, we may be quite sure that the landlords and cultivators will not go on employing labourers in this way.(205)

What then would happen? As soon as the landlords and cultivators found that they could not realize their increasing produce in some way which would give them a command of wealth in future, they would cease to employ more labour upon the land;* and if the business of that part of the so-|ciety which was not engaged in raising raw produce, consisted merely in preparing the other simple necessaries of life, the number required for this purpose being inconsiderable, the rest of those whom the soil could support would be thrown out of work. Having no means of legally demanding a portion of the raw produce, however plentiful it might be at first, they would gradually decrease in numbers; and the failure of effective demand for the produce of the soil would necessarily diminish cultivation, and throw a still greater number of persons out of employment. This action and reaction would thus go on till the balance of produce and consumption was restored in reference to the new tastes and habits which were established; and it is obvious that without an expenditure which will encourage commerce, manufactures, and unproductive consumers, or an Agrarian law calculated to change the usual motives for accumulation, the possessors of land would have no sufficient | stimulus to cultivate well; and a country such as our own, which had been rich and populous, would, with such parsimonious habits, infallibly become poor, and comparatively unpeopled.(206)

The same kind of reasoning will obviously apply to the case noticed before. While the farmers were disposed to consume the luxuries produced by the manufacturers, and the manufacturers those produced by the farmers, all would go on smoothly; but if either one or both of the parties were disposed to save with a view of bettering their condition, and providing for their families in future, the state of things would be very different. The farmer, instead of indulging himself in ribands, lace, and velvets,* would be disposed to be satisfied with more simple clothing, but by this economy he would disable the manufacturer from purchasing the same amount of his produce;(207) and for the returns of so much labour employed upon the land, and all greatly increased in productive power, there would evidently be no market. The manufacturer, in like manner, instead of indulging himself in sugar, grapes and tobacco, might be disposed to save with a view to the future, but would be totally unable to do so, owing to the parsimony of the farmers and the want of demand for manufactures.† |

An accumulation, to a certain extent, of common food and common clothing might take place on both sides; but the amount must necessarily be extremely confined. It would be of no sort of use to the farmer to go on cultivating his land with a view merely to give food and clothing to his labourers. He would be doing nothing either for himself or family, if he neither consumed the surplus of what they produced himself, nor could realize it in a shape that might be transmitted to his descendants. If he were a tenant, such additional care and labour would be entirely thrown away; and if he were a landlord, and were determined, without reference to markets, to cultivate his estate in such a way as to make it yield the greatest neat surplus with a view to the future, it is quite certain that the large portion of this surplus which was not required either for his own consumption, or to purchase clothing for himself and his labourers, would be absolutely wasted. If he did not choose to use it in the purchase of luxuries or the maintenance of unproductive labourers, it might as well be thrown into the sea. To save | it, that is to use it in employing more labourers upon the land would, as I said before, be to impoverish both himself and his family.

It would be still more useless to the manufacturers to go on producing clothing beyond what was wanted by the agriculturists and themselves. Their numbers indeed would entirely depend upon the demands of the agriculturists, as they would have no means of purchasing subsistence, but in proportion as there was a reciprocal want of their manufactures. The population required to provide simple clothing for such a society with the assistance of good machinery would be inconsiderable, and would absorb but a small portion of the proper surplus of rich and well cultivated land. There would evidently therefore be a general want of demand, both for produce and population;(208) and while it is quite certain that an adequate passion for consumption may fully keep up the proper proportion between supply and demand, whatever may be the powers of production, it appears to be quite as certain that a passion for accumulation must inevitably lead to a supply of commodities beyond what the structure and habits of such a society will permit to be consumed.†

But if this be so, surely it is a most important error to couple the passion for expenditure and | the passion for accumulation together, as if they were of the same nature; and to consider the demand for the food and clothing of the labourer, who is to be employed productively, as securing such a general demand for commodities and such a rate of profits for the capital employed in producing them, as will adequately call forth the powers of the soil, and the ingenuity of man in procuring the greatest quantity both of raw and manufactured produce.

Perhaps it may be asked by those who have adopted Mr. Ricardo’s view of profits,—what becomes of the division of that which is produced, when population is checked merely by want of demand? It is acknowledged that the powers of production have not begun to fail; yet, if labour produces largely and yet is ill paid, it will be said that profits must be high.

I have already stated in a former chapter, that the value of the materials of capital very frequently do not fall in proportion to the fall in the value of the produce of capital, and this alone will often account for low profits. But independently of this consideration, it is obvious that in the production of any other commodities than necessaries, the theory is perfectly simple. From want of demand, such commodities may be very low in price, and a large portion of the whole value produced may go to the labourer, although in necessaries he may be ill paid, and his wages, both with regard to the quantity of food which he receives and the labour required to produce it, may be decidedly low.(209) |

If it be said, that on account of the large portion of the value of manufactured produce which on this supposition is absorbed by wages, it may be affirmed that the cause of the fall of profits is high wages, I should certainly protest against so manifest an abuse of words. The only justifiable ground for adopting a new term, or using an old one in a new sense, is, to convey more precise information to the reader; but to refer to high wages in this case, instead of to a fall of commodities, would be to proceed as if the specific intention of the writer were to keep his reader as much as possible in the dark as to the real state of things.(210)

In the production of necessaries however, it will be allowed, that the answer to the question is not quite so simple, yet still it may be made sufficiently clear. Mr. Ricardo acknowledges that there may be a limit to the employment of capital upon the land from the limited wants of society, independently of the exhaustion of the soil. In the case supposed, this limit must necessarily be very narrow, because there would be comparatively no population besides the agriculturists to make an effective demand for produce. Under such circumstances corn might be produced, which would lose the character and quality of wealth;(211) and, as I before observed in a note, all the parts of the same produce would not be of the same value. The actual labourers employed might be tolerably well fed, as is frequently the case, practically, in those countries where the labourers are fed by the far-|mers,* but there would be little work or food for their grown up sons; and from varying markets and varying crops, the profits of the farmer might be the lowest at the very time when, according to the division of the produce, it ought to be the highest, that is, when there was the greatest proportionate excess of produce above what was paid to the labourer. The wages of the labourer cannot sink below a certain point, but a part of the produce, from excess of supply, may for a time be absolutely useless, and permanently it may so fall from competition as to yield only the lowest profits.

I would observe further, that if in consequence of a diminished demand for corn, the cultivators were to withdraw their capitals so as better to proportion their supplies to the quantity that could be properly paid for; yet if they could not employ the capital they had withdrawn in any other way, which, according to the preceding supposition, they could not, it is certain that, though they might for a time make fair profits of the small | stock which they still continued to employ in agriculture, the consequences to them as cultivators would be, to all intents and purposes, the same as if a general fall had taken place on all their capital.(212)

If, in the process of saving, all that was lost by the capitalist was gained by the labourer, the check to the progress of wealth would be but temporary, as stated by Mr. Ricardo; and the consequences need not be apprehended. But if the conversion of revenue into capital pushed beyond a certain point must, by diminishing the effectual demand for produce, throw the labouring classes out of employment, it is obvious that the adoption of parsimonious habits in too great a degree may be accompanied by the most distressing effects at first, and by a marked depression of wealth and population permanently.(213)

It is not, of course, meant to be stated that parsimony, or even a temporary diminution of consumption,* is not often in the highest degree useful, and sometimes absolutely necessary to the progress of wealth. A state may certainly be ruined by extravagance; and a diminution of the actual expenditure may not only be necessary on this account, but when the capital of a country is deficient, compared with the demand for its products, a temporary economy of consumption is required, in order to provide that supply of capital | which can alone furnish the means of an increased consumption in future. All that I mean to say is, that no nation can possibly grow rich by an accumulation of capital, arising from a permanent diminution of consumption;(215) because, such accumulation being greatly beyond what is wanted, in order to supply the effective demand for produce, a part of it would very soon lose both its use and its value, and cease to possess the character of wealth.

On the supposition indeed of a given consumption, the accumulation of capital beyond a certain point must appear at once to be perfectly futile. But, even taking into consideration the increased consumption likely to arise among the labouring classes from the abundance and cheapness of commodities, yet as this cheapness must be at the expense of profits, it is obvious that the limits to such an increase of capital from parsimony, as shall not be attended by a very rapid diminution of the motive to accumulate, are very narrow, and may very easily be passed.

The laws which regulate the rate of profits and the progress of capital, bear a very striking and singular resemblance to the laws which regulate the rate of wages and the progress of population.

Mr. Ricardo has very clearly shewn that the rate of profits must diminish, and the progress of accumulation be finally stopped, under the most favourable circumstances, by the increasing difficulty of procuring the food of the labourer. I, in like manner, endeavoured to shew in my | Essay on the Principle of Population that, under circumstances the most favourable to cultivation which could possibly be supposed to operate in the actual state of the earth, the wages of the labourer would become more scanty, and the progress of population be finally stopped by the increasing difficulty of procuring the means of subsistence.

But Mr. Ricardo has not been satisfied with proving the position just stated. He has not been satisfied with shewing that the difficulty of procuring the food of the labourer is the only absolutely necessary cause of the fall of profits, in which I am ready fully and entirely to agree with him: but he has gone on to say, that there is no other cause of the fall of profits in the actual state of things that has any degree of permanence.(216) In this latter statement he appears to me to have fallen into precisely the same kind of error as I should have fallen into, if, after having shewn that the unrestricted power of population was beyond comparison greater than the power of the earth to produce food under the most favourable circumstances possible, I had allowed that population could not be redundant unless the powers of the earth to keep up with the progress of population had been tried to the uttermost. But I all along said, that population might be redundant, and greatly redundant, compared with the demand for it and the actual means of supporting it, although it might most properly be considered as deficient, and greatly deficient, compared with the extent of territory, and the powers of such territory to produce | additional means of subsistence; that, in such cases, notwithstanding the acknowledged deficiency of population, and the obvious desirableness of having it greatly increased, it was useless and foolish directly to encourage the birth of more children, as the effect of such encouragement, without a demand for labour and the means of paying it properly, could only be increased misery and mortality with little or no final increase of population.

Though Mr. Ricardo has taken a very different course, I think that the same kind of reasoning ought to be applied to the rate of profits and the progress of capital. Fully acknowledging that there is hardly a country in the four quarters of the globe where capital is not deficient, and in most of them very greatly deficient, compared with the territory and even the number of people; and fully allowing at the same time the extreme desirableness of an increase of capital, I should say that, where the demand for commodities was not such as to afford fair profits to the producer, and the capitalists were at a loss where and how to employ their capitals to advantage, the saving from revenue to add still more to these capitals would only tend prematurely to diminish the motive to accumulation, and still further to distress the capitalists, with little increase of a wholesome and effective capital.(217)

The first thing wanted in both these cases of deficient capital(218) and deficient population, is an effective demand for commodities, that is, a demand by those who are able and willing to pay an | adequate price for them; and though high profits are not followed by an increase of capital, so certainly as high wages are by an increase of population, yet I believe that they are so followed more generally than they appear to be, because, in many countries, as I have before intimated, profits are often thought to be high, owing to the high interest of money, when they are really low; and because, universally, risk in employing capital has precisely the same effect in diminishing the motive to accumulate and the reward of accumulation, as low profits. At the same time it will be allowed that determined extravagance, and a determined indisposition to save, may keep profits permanently high. The most powerful stimulants may, under peculiar circumstances, be resisted; yet still it will not cease to be true that the natural and legitimate encouragement to the increase of capital is that increase of the power and will to save which is held out by high profits; and under circumstances in any degree similar, such increase of power and will to save must almost always be accompanied by a proportionate increase of capital.

One of the most striking instances of the truth of this remark, and a further proof of a singular resemblance in the laws that regulate the increase of capital and of population, is to be found in the rapidity with which the loss of capital is recovered during a war which does not interrupt commerce. The loans to government convert capital into revenue, and increase demand at the same time | that they at first diminish the means of supply.* The necessary consequence must be an increase of profits. This naturally increases both the power and the reward of accumulation; and if only the same habits of saving prevail among the capitalists as before, the recovery of the lost stock must be rapid, just for the same kind of reason that the recovery of population is so rapid when, by some cause or other, it has been suddenly destroyed.

It is now fully acknowledged that it would be a gross error in the latter case, to imagine that, without the previous diminution of the population, the same rate of increase would still have taken place; because it is precisely the high wages occasioned by the demand for labour, which produce the effect of so rapid an increase of population. On the same principle it appears to me as gross an error to suppose that, without the previous loss of capital occasioned by the expenditure in question, capital should be as rapidly accumulated; because it is precisely the high profits of stock occasioned by the demand for commodities, and the consequent demand for | the means of producing them, which at once give the power and the will to accumulate.

Though it may be allowed therefore that the laws which regulate the increase of capital are not quite so distinct as those which regulate the increase of population, yet they are certainly just of the same kind; and it is equally vain, with a view to the permanent increase of wealth, to continue converting revenue into capital, when there is no adequate demand for the products of such capital, as to continue encouraging marriage and the birth of children without a demand for labour and an increase of the funds for its maintenance.(219)

section iv

Of the Fertility of the Soil considered as a Stimulus to the continued Increase of Wealth

[A fertile soil gives at once the greatest natural capability of wealth that a country can possess; and in speaking of the deficient wealth of a fertile country, it is meant to speak comparatively rather than positively.

The settlers upon a very rich soil, with a vicious division of property at first, and unfavourably situated with regard to markets, might increase very slowly in wealth and population, and would be very likely to acquire indolent habits.]

It has been said, that those who have food and necessaries at their disposal will not be long in want of workmen, who will put them in possession of some of the objects most useful and desirable to them.* But this appears to be directly contradicted by experience. If the establishment, extension, and refinement of domestic manufactures were so easy a matter, our ancestors would not have remained for many hundred years so ill supplied with them; and been obliged to expend the main part of their raw produce in the support of idle retainers. They might be very ready, when | they had the opportunity, to exchange their surplus raw produce for the foreign commodities with which they were acquainted, and which they had learnt to estimate. But it would be a very difficult thing, and very ill suited to their habits and degree of information, to employ their power of commanding labour in setting up manufactures on their own estates. Though the land might be rich, it might not suit the production of the materials most wanted; and the necessary machinery, the necessary skill in using it, and the necessary intelligence and activity of superintendance, would all unavoidably be deficient at first, and under the circumstances supposed, must be of very slow growth; so that after those ruder and more indispensable articles were supplied, which are always wanted and produced in an early stage of society, it is natural enough that a great lord should prefer distinguishing himself by a few splendid foreign commodities, if he could get them, and a great number of retainers, than by a large quantity of clumsy manufactures, which involved great trouble of superintendance.(220)

It is certainly true, however, taking as an instance an individual workman, and supposing him to possess a given degree of industry and skill, that the less time he is employed in procuring food, the more time will he be able to devote to the procuring of conveniences and luxuries; but to apply this truth to whole nations, and to infer that the greater is the facility of procuring food, the more abundantly will the people be supplied with con-|veniences and luxuries would be one among the many rash and false conclusions which are often made from the want of due attention to the change which the application of a proposition may make in the premises on which it rests. In the present case, all depends upon the supposition of a given degree of industry and skill, and the means of employing them. But if, after the necessaries of life were obtained, the workman should consider indolence as a greater luxury than those which he was likely to procure by further labour, the proposition would at once cease to be true. And as a matter of fact, confirmed by all the accounts we have of nations, in the different stages of their progress, it must be allowed that this choice seems to be very general in the early periods of society, and by no means uncommon in the most improved states.(221)

Few indeed and scanty would be the portion of conveniences and luxuries found in society, if those who are the main instruments of their production had no stronger motives for their exertions than the desire of enjoying them. It is the want of necessaries which mainly stimulates the labouring classes to produce luxuries; and were this stimulus removed or greatly weakened, so that the necessaries of life could be obtained with very little labour, instead of more time being devoted to the production of conveniences, there is every reason to think that less time would be so devoted.(222)

At an early period of cultivation, when only rich soils are worked, as the quantity of corn is the | greatest, compared with the quantity of labour required to produce it, we ought always to find a small portion of the population engaged in agriculture, and a large portion engaged in administering to the other wants of the society. And there can be little doubt that this is the state of things which we really should see, were it true, that if the means of maintaining labour be found, there can be no difficulty in making it produce objects of adequate value; or that when food can be obtained with facility, more time will be devoted to the production of conveniences and luxuries. But in examining the state of unimproved countries, what do we really see?—almost invariably, a much larger proportion of the whole people employed on the land than in those countries where the increase of population has occasioned the necessity of resorting to poor soils; and less time instead of more time devoted to the production of conveniences and luxuries.(223)

Of the great landed nations of Europe, and indeed of the world, England, with only one or two exceptions, is supposed to have pushed its cultivation the farthest; and though the natural qualities of its whole soil by no means stand very high in the scale of comparative richness, there is a smaller proportion of the people employed in agriculture, and a greater proportion employed in the production of conveniences and luxuries, or living on monied incomes, than in any other agricultural country of the world. According to a calculation of Susmilch, in which he enumerates the different proportions | of people in different states, who live in towns, and are not employed in agriculture, the highest is that of seven to three, or seven people living in the country to three living in the towns:* whereas in England, the proportion of those engaged in agriculture, compared with the rest of the population, is less than as two to three.†

This is a very extraordinary fact, and affords a striking proof how very dangerous it is, in political economy, to draw conclusions from the physical quality of the materials which are acted upon, without reference to the moral as well as physical qualities of the agents.(224)

It is undoubtedly a physical quality of very rich land, if worked by people possessing a given degree of industry and skill, to yield a large quantity of produce, compared with the number of hands employed; but, if the facility of production which rich land gives has the effect, under certain circumstances, of preventing the growth of industry and skill, the land may become practically less productive, compared with the number of persons employed upon it, than if it were not distinguished for its richness.

Upon the same principle, the man who can procure the necessary food for his family, by two days labour in the week, has the physical power of working much longer to procure conveniences | and luxuries, than the man who must employ four days in procuring food; but if the facility of getting food creates habits of indolence, this indolence may make him prefer the luxury of doing little or nothing, to the luxury of possessing conveniences and comforts; and in this case, he may devote less time to the working for conveniences and comforts, and be more scantily provided with them than if he had been obliged to employ more industry in procuring food.

Among the crowd of countries which tend more or less to illustrate and confirm by their present state the truth of these positions, none perhaps will do it more strikingly than the Spanish dominions in America, of which M. Humboldt has lately given so valuable an account.(225)

Speaking of the different plants which are cultivated in New Spain, he says of the banana, “Je doute qu’il existe une autre plante sur le globe qui, sur un si petit espace de terrain, puisse produire une masse de substance nourrissante aussi conside´rable.”* He calculates in another place more particularly, that “dans un pays e´minemment fertile un demi hectare, ou un arpent le´gal cultive´ en bananes de la grande espe‘ce, peut nourrir plus de cinquantes individus, tandis qu’en Europe le měme arpent ne donneroit par an, en supposant le huitie‘me grain, que 576 kilogrammes de farine de froment, quantite´ qui n’est pas suffisante pour la subsistance de deux individus: aussi rien ne frappe plus l’Europe´en | re´cemment arrive´ dans la zone torride que l’extrěme petitisse des terrains cultive´s autour d’une cabane qui renferme une famille nombreuse d’indige‘nes.”†

[The produce of the banana, compared with the labour employed upon it, is so prodigious, that the inhabitants of the districts where it prevails will never, it is said, be roused from their excessive indolence till the cultivation of it has been prohibited.

Though the labouring classes have such ample time to work for conveniences and comforts, they are almost destitute of them; and from improvident habits, suffer at times even for want of food.

This poverty is not confined to the lower regions of New Spain. In ascending the Cordilleras to the finest climates in the world, the state of things is not very different.

Maize, which is the chief food of the people on the Cordilleras, very greatly exceeds in productiveness the grains of Europe.

Even in the town of Mexico subsistence may be obtained by one or two days’ labour in the week, yet the people are wretchedly poor.

The same poverty prevails in the country districts; and famines, from the failure of the crops of maize, combined with the indolence and improvidence of the people, are frequent, and are mentioned by Humboldt as the most destructive check to population.

Such habits of indolence and improvidence necessarily act as formidable obstacles in the way of a rapid increase of wealth and population.]

That the indolence of the natives is greatly aggravated by their political situation, cannot for a moment be doubted; but that, in spite of this situation, it yields in a great measure to the usual excitements is sufficiently proved by the rapid cultivation which takes place in the neighbourhood of a new mine, where an animated and effective demand is created for labour and produce. “Bientôt le besoin re´veille l’industrie; on commence a‘ labourer le sol dans les ravins, et sur les pentes des montagnes voisines, par tout ou‘ le roc est couvert de terreau: des fermes s’e´tablissent dans le voisi-|nage de la mine: la cherte´ des vivres, le prix conside´rable auquel la concurrence des acheteurs maintient tous les produits de l’agriculture, de´dommagent le cultivateur des privations auxquelles l’expose la vie pe´nible des montagnes.”‡(226)

When these are the effects of a really brisk demand for produce and labour, we cannot be at a loss for the main cause of the slow cultivation which has taken place over the greatest part of the country. Except in the neighbourhood of the mines and near the great towns, the effective demand for produce is not such as to induce the great proprietors to bring their immense tracts of land properly into cultivation: and the population, which, as we have seen, presses hard against the limits of subsistence, evidently exceeds in general the demand for labour, or the number of persons which the country can employ with regularity and constancy in the actual state of its agriculture and manufactures.(227)

In the midst of an abundance of fertile land, it appears that the natives are often very scantily supplied with it. They would gladly cultivate portions of the extensive districts held by the great proprietors, and could not fail of thus deriving an ample subsistence for themselves and families; but in the actual state of the demand for produce in many parts of the country, and in the actual state of the ignorance and indolence of the natives, such tenants might not be able to pay a rent equal to | what the land would yield in its uncultivated state, and in this case they would seldom be allowed to intrude upon such domains; and thus lands which might be made capable of supporting thousands of people, may be left to support a few hundreds of cattle.

Speaking of a part of the Intendency of Vera Cruz, Humboldt says, “Aujourd’hui des espaces de plusieurs lieues carre´es sont occupe´s par deux ou trois cabanes, autour desquelles errent des boeufs a‘ demi-sauvages. Un petit nombre de familles puissantes, et qui vivent sur le plateau central, posse‘dent la plus grande partie du littoral des Intendances de Vera Cruz, et de San Luis Potosi. Aucune loi agraire ne force ces riches proprie´taires de vendre leurs majorats, s’ils persistent a‘ ne pas vouloir de´fricher euxměmes des terres immenses qui en de´pendent.”*

Among proprietors of this description, caprice and indolence might often prevent them from cultivating their lands.(228) Generally, however, it might be expected, that these tendencies would yield, at least in a considerable degree, to the more steady influence of self-interest. But a vicious division of territory prevents the motive of interest from operating so strongly as it ought to do in the extension of cultivation. Without sufficient foreign commerce to give value to the raw produce of the land; and before the general introduction of manufactures had opened channels | for domestic industry, the demand of the great proprietors for labour would be very soon supplied; and beyond this, the labouring classes would have nothing to give them for the use of their lands. Though the landholders might have ample power to support an extended population on their estates, the very slender increase of enjoyments, if any, which they might derive from it, would rarely be sufficient to overcome their natural indolence, or overbalance the possible inconveniences or trouble that might attend the proceeding. Of that encouragement to the increase of population, which arises from the division and sub-division of land as new families are brought into being, the country is deprived by the original state of property, and the feudal customs and habits which it necessarily tends to generate. And under these circumstances, if a comparative deficiency of commerce and manufactures, which great inequality of property tends rather to perpetuate than to correct, prevents the growth of that demand for labour and produce, which can alone remedy the discouragement to population occasioned by this inequality, it is obvious that Spanish America may remain for ages thinly peopled and poor, compared with her natural resources.

And so, in fact, she has remained. For though the increase of population and wealth has been considerable, particularly of late years, since the trade with the mother-country has been more open, yet altogether it has been far short of what it would have been, even under a Spanish govern-|ment, if the riches of the soil had been called forth by a better division of landed property, or a greater and more constant demand for raw produce.

Humboldt observes that “Les personnes qui ont re´fle´chi se´rieusement sur la richesse du sol Mexicain savent que, par le moyen d’une culture plus soigne´e, et sans supposer des travaux extraordinaires pour l’irrigation des champs, la portion de terrain de´ja‘de´friche´ pourroit fournir de la subsistance pour une population huit a‘ dix fois plus nombreuse.” He then adds, very justly, “Si les plaines fertiles d’Atalisco, de Cholula et de Puebla ne produisent pas des re´coltes plus abondantes, la cause principale doit ětre cherche´e dans le manque des consommateurs, et dans les entraves que les ine´galite´s du sol opposent au commerce inte´rieur des grains, surtout a‘ leur transport vers les côtes qui sont baigne´es par la mer des Antilles.”†(229) In the actual state of these districts, the main and immediate cause which retards their cultivation is indeed the want of consumers, that is, the want of power to sell the produce at such a price as will at once encourage good cultivation, and enable the farmers to give the landlords something that they want, for the use of their land. And nothing is so likely to prevent this price from being obtained, as any obstacles natural or artificial to internal and external commerce.

[That it is the want of demand rather than the want of capital which retards the progress of wealth in New Spain, may be inferred from the abundance of capital noticed by Humboldt.

Altogether, the state of New Spain strongly illustrates the position, that fertility of soil alone is not an adequate stimulus to the increase of wealth.

A similar conclusion may be drawn from the state of Ireland.]

The cultivation of the potatoe, and its adoption as the general food of the lower classes of the people in Ireland, has rendered the land and labour necessary to maintain a family, unusually small, compared with most of the countries of Europe. The consequence of this facility of production, unaccompanied by such a train of fortunate circumstances as would give it full effect in the increase of wealth, is a state of things resembling, in many respects, countries less advanced in civilization and improvement.

The prominent feature of Ireland is, the power which it possesses and actually exercises, of supporting a much greater population than it can employ, and the natural and necessary effect of this state of things, is the very general prevalence of habits of indolence. The landed proprietors and principal tenants being possessed of food and necessaries, or at least of the ready means of procuring them, have found workmen in abundance at their command; but these workmen not finding sufficient employment in the farms on which they had settled, have rarely been able to put their landlords in possession of the objects “most useful and most desirable” to them.(230)

Sometimes, indeed, from the competition for land occasioned by an overflowing population, very high rents have been given for small portions of ground fit for the growth of potatoes; but as the power of paying such rents must depend, in a considerable degree, upon the | power of getting work, the number of families upon an estate, who can pay high money rents, must have an obvious limit. This limit, there is reason to believe, has been often found in the inability of the Irish cottar to pay the rent which he had contracted for; and it is generally understood that the most intelligent Irish landlords, influenced both by motives of humanity and interest, are now endeavouring to check the progress of that redundant population upon their estates, which, while it generates an excessive degree of poverty and misery as well as indolence, seldom makes up to the employer, in the lowness of wages, for the additional number of hands which he is obliged to hire, or call upon for their appointed service in labour. He is now generally aware that a smaller number of more industrious labourers would enable him to raise a larger produce for the consumption of towns and manufacturers, and at the same time that they would thus contribute more largely to the general wealth of the country, would be in a more happy condition themselves, and enable him to derive a larger and more certain rent from his estates. It may fairly be said therefore, that the possessors of food and necessaries in Ireland have not been able to obtain the objects most useful and desirable to them in return.

The indolence of the country-labourers in Ireland has been universally remarked.

[The time which the Irish labourer has to spare does not, as appears from experience, put him in possession of an ample quantity of conveniences and luxuries.

The Irish peasant has not been exposed to the usual excitements which create industry, owing to the abundance of people compared with the work to be done.

If the labour of the Irish peasant, whether in the house or in the field, were always in demand, his habits might soon change.]

It may be said, perhaps, that it is capital alone which is wanted in Ireland, and that if this want were supplied, all her people might be easily employed. That one of the great wants of Ireland is capital will be readily allowed; but I conceive it would be a very great mistake to suppose that the importation of a large quantity of capital, if it could be effected, would at once accomplish the object required, and create a quantity of wealth proportioned to the labour which seems ready to be employed in its production. The amount of capital which could be laid out in Ireland in preparing goods for foreign sale, must evidently depend upon the state of foreign markets; and the amount that could be employed in domestic manufactures, must as evidently depend upon the domestic demand.(231) An attempt to force a foreign market by means of capital, must necessarily occasion a premature fall of profits, and might, after great losses, be quite ineffectual; and with regard to the domestic demand, while the habits of the great mass of the people are such as they are at present, it must be quite inadequate to take off the products of any considerable mass of new capital. In a country, where the necessary food is obtained with so little labour, and the population is still equal or nearly equal to the produce, it is perhaps impossible that the time not devoted to the produc-|tion of food should create a proportionate quantity of wealth, without a very decided taste for conveniences and luxuries among the lower classes of society, and such a power of purchasing as would occasion an effective demand for them. But it is well known, that the taste of the Irish peasant for articles of this description is yet to be formed. His wants are few, and these wants he is in the habit of supplying principally at home. Owing to the cheapness of the potatoe, which forms the principal food of the lower classes of the people, his money wages are low; and the portion which remains, after providing absolute necessaries, will go but a very little way in the purchase of conveniences. All these circumstances are most unfavourable to the increase of wealth derived from manufactures destined for home consumption. But the tastes and habits of a large body of people are extremely slow in changing; and in the mean time the application of capital in larger quantities than was suited to the progress of the change, would certainly fail to yield such profits as would encourage its continued accumulation and application in the same way. In general it may be said that demand is quite as necessary to the increase of capital as the increase of capital is to demand. They mutually act upon and encourage each other, and neither of them can proceed with vigour if the other be left far behind.

[In general, the checks which Irish manufactures and productions have received, have been more owing to want of demand than want of capital. Demand has generally produced capital, though capital has sometimes failed to produce demand.

Ireland might be much richer than England if her redundant population were employed in commerce and manufactures; but to accomplish this object, a change of habits would be more effectual than a premature supply of capital.]

The state of Ireland then may be said to lead to nearly the same conclusions as that of New Spain, and to shew—

That the power of supporting labour may often exist to a much greater extent than the will;(232)

That the necessity of employing only a small portion of time in producing food does not always occasion the employment of a greater portion of time in procuring conveniences and luxuries;(233)

That the deficiency of wealth in a fertile country may be more owing to want of demand than to want of capital;(234)

And, in general, that the fertility of the soil alone is not an adequate stimulus to the permanent increase of wealth.(235)

section v

Of Inventions to abridge Labour, considered as a Stimulus to the continued Increase of Wealth

[Inventions to save manual labour are generally called forth by the wants of mankind in the progress of improvement; and therefore seldom much exceed those wants.

But the same laws apply to machinery as to fertile land: a full use cannot be made of either without an adequate market.

The natural tendency of machinery is, by cheapening the commodity produced, so to extend the market for it, as to increase its whole value. This has been strikingly the case in the cotton trade; and when machinery has this effect, its enriching power is prodigious.]

When however the commodity to which machinery is applied is not of such a nature, that its consumption can extend with its cheapness, the increase of wealth derived from it is neither so great nor so certain. Still however it may be highly beneficial; but the extent of this benefit depends upon a contingency. Let us suppose a number of capitalists in the habit of employing 20,000l. each in a manufacture of limited consumption, and that machines were introduced which, by the saving of labour, would enable them to supply the actual demand for the commodity with capitals of ten thousand pounds each, instead of twenty. There would, in this case, be a certain number of ten thousand pounds, and the men employed by these capitals, thrown out of employment. On the other hand, there would be a portion of revenue set free for the purchase of fresh commodities; and this demand would undoubtedly be of the greatest advantage in encouraging the | employment of the vacant capitals in other directions. At the same time it must be recollected that this demand is not a new one, and, even when fully supplied, could only replace the diminution of capital and profits in one department, occasioned by the employment of so many ten thousands, instead of twenty thousands. But in withdrawing capital from one employment and placing it in another, there is almost always a considerable loss. Even if the whole of the remainder were directly employed, it would be less in amount. Though it might yield a greater produce, it would not command the same quantity of labour as before; and, unless more menial servants were used, many persons would be thrown out of work; and thus the power of the whole capital to command the same quantity of labour would evidently depend upon the contingency of the vacant capitals being withdrawn undiminished from their old occupations, and finding immediately equivalent employment in others.(236)

If, in order to try the principle, we were to push it farther, and to suppose that, without any extension of the foreign market for our goods, we could by means of machinery obtain all the commodities at present in use, with one third of the labour now applied, is it in any degree probable that the mass of vacant capitals could be advantageously employed, or that the mass of labourers thrown out of work could find the means of commanding an adequate share of the national produce? If there were other foreign trades which, by means of the | capital and labour thrown out of employment, might be greatly extended, the case would be at once quite altered, and the returns of such trades might furnish stimulants sufficient to keep up the value of the national income. But, if only an increase of domestic commodities could be obtained, there is every reason to fear that the exertions of industry would slacken. The peasant, who might be induced to labour an additional number of hours for tea or tobacco, might prefer indolence to a new coat. The tenant or small owner of land, who could obtain the common conveniences and luxuries of life at one third of their former price, might not labour so hard to procure the same amount of surplus produce from the land. And the trader or merchant, who would continue in his business in order to be able to drink and give his guests claret and champagne, might think an addition of homely commodities by no means worth the trouble of so much constant attention.(237)

It has been said that, when there is an income ready for the demand, it is impossible that there should be any difficulty in the employment of labour and capital to supply it, as the owner of such an income, rather than not spend it, would purchase a table or chair that had cost the labour of a hundred men for a year. This may be true, in cases of fixed monied revenues, obtained by inheritance, or with little or no trouble. We well know that some of the Roman nobles, who obtained their immense wealth chiefly by the | easy mode of plunder, sometimes gave the most enormous prices for fancied luxuries. A feather will weigh down a scale when there is nothing in the opposite one. But where the amount of the incomes of a country depend, in a considerable degree, upon the exertion of labour, activity and attention, there must be something in the commodities to be obtained sufficiently desirable to balance this exertion, or the exertion will cease. And experience amply shews, by the number of persons who daily leave off business, when they might certainly have continued to improve their fortunes, that most men place some limits, however variable, to the quantity of conveniences and luxuries which they will labour for; and that very few indeed would attend a counting-house six or eight hours a day, in order to purchase commodities which have no other merit than the quantity of labour which has been employed upon them.

Still however it is true that, when a great income has once been created in a country, in the shape of a large mass of rents, profits and wages, a considerable resistance will be made to any essential fall in its value.(238) It is a very just remark of Hume,* that when the affairs of a society are brought to this situation; that is, when, by means of foreign trade, it has acquired the tastes necessary to give value to a great quantity of labour not employed upon actual necessaries, it may lose most of this trade, and yet continue great and | powerful, on account of the extraordinary efforts which would be made by the spare capital and ingenuity of the country to refine home manufactures, in order to supply the tastes already formed, and the incomes already created. But if we were to allow that the income of such a nation might, in this way, by possibility be maintained, there is little chance of its increasing; and it is almost certain that it would not have reached the same amount, without the market occasioned by foreign commerce.

Of this I think we shall be convinced, if, in our own country, we look at the quantity of goods which we export chiefly in consequence of our machinery, and consider the nature of the returns obtained for them. In the accounts of the year ended the 5th of January 1818, it appears that the exports of three articles alone in which machinery is used—cottons, woollen and hardware, including steel goods, &c. are valued at above 29 millions. And among the most prominent articles of the imports of the same year, we find coffee, indigo, sugar, tea, silks, tobacco, wines, and cotton-wool, amounting in value all together to above 18 millions out of thirty! Now I would ask how we should have obtained these valuable imports, if the foreign markets for our cottons, woollens, and hardware had not been extended with the use of machinery? And further, where we could have found substitutes at home for such imports, which would have been likely to have produced the same effects, in stimulating the cultivation of the land, the accumulation | of capital, and the increase of population? And when to these considerations we add the fortunes which have been made in these manufactures, the market for which has been continually extending, and continually requiring more capital and more people to be employed in them; and contrast with this state of things the constant necessity of looking out for new modes of employing the same capital and the same people, a portion of which would be thrown out of their old occupations by every new invention;—we must be convinced that the state of this country would have been totally different from what it is, and that it would not certainly have acquired the same income in rents, profits and wages, if the same ingenuity had been exercised in the invention of machinery, without the same extension of the market for the commodities produced.(239)

[If, from the time of Edward I. we had had no foreign commerce, our revenue from the land alone would not have approached to what it is at present, and still less our revenue from trade and manufactures.

Most of the states of Europe, with their actual divisions of landed property, would have been comparatively unpeopled, without the excitements arising from manufactures and extended markets.] 409

In carrying on the late war, we were powerfully assisted by our steam-engines, which enabled us to command a prodigious quantity of foreign produce and foreign labour. But how would their efficacy have been weakened if we could not have exported our cottons, cloths and hardware?(240) |

If the mines of America could be successfully worked by machinery, and the King of Spain’s tax could be increased at will, so as to make the most of this advantage, what a vast revenue might they not be made to afford him! But it is obvious that the effects of such machinery would sink into insignificance, if the market for the precious metals were confined to the adjacent countries, and the principal effect of it was to throw capital and labour out of employment.

In the actual state of things in this country, the population and wealth of Manchester, Glasgow, Leeds, &c. have been greatly increasing; because, on account of the extending demand for their goods, more people have been continually required to work them up; but if a much smaller number of people had been required, on account of a saving of labour from machinery, without an adequate extension of the market, it is obvious that these towns would have been comparatively poor, and thinly peopled. To what extent the spare capital and labour thrown out of employment in one district would have enriched others, it is impossible to say; and on this subject any assertion may be made, as we cannot be set right by an appeal to facts. But I would ask, whether there are any grounds in the slightest degree plausible for saying, that not only the capital spared at any time from these manufactures would be preserved and employed elsewhere; but that it would be employed as profitably, and create as much exchangeable value in other places as it would have done in | Manchester and Glasgow, with an extending market? In short, are there any plausible grounds whatever for stating that, if the twenty millions worth of cottons which we now export, were entirely stopped, either by successful foreign competition or positive prohibitions, we should have no difficulty in finding employment for our capital and labour equally advantageous to individuals in point of profit, and equally enriching to the country with respect to the exchangeable value of its revenue?(241)

Unquestionably any country has the power of consuming all that it produces, however great in quantity; and every man in health has the power of applying his mind and body to productive labour for ten or twelve hours of the day. But these are dry assertions respecting the powers of a country, which do not necessarily involve any practical consequences relating to the increase of wealth. If we could not export our cottons, it is quite certain that, though we might have the power, we should not have the will, to consume them all in kind at home; and the maintenance of our national wealth and revenue would depend entirely upon the circumstance whether the capital thrown out of the cotton trade could be so applied as to produce commodities which would be estimated as highly and consumed as eagerly as the foreign goods before imported.(242) There is no magic in foreign markets. The final demand and consumption must always be at home; and if goods could be produced at home, which would excite people to work as many | hours in the day, would communicate the same enjoyments, and create a consumption of the same value,(243) foreign markets would be useless. We know however from experience, that very few countries are capable of producing commodities of the same efficacy, in this respect, as those which may be obtained by a trade to various climates and soils. Without such a trade, and with a great increase in the power of production, there is no inconsiderable danger that industry, consumption, and exchangeable value would diminish; and this danger would most unquestionably be realized if the cheapness of domestic commodities occasioned by machinery, were to lead to increased saving rather than to increased expenditure.

But it is known that facilities of production have the strongest tendency to open markets, both at home and abroad. In the actual state therefore of most countries, there is little reason to apprehend any permanent evil from the introduction of machinery. The presumption always is, that it will lead to a great extension of wealth and value. But still we must allow that the pre-eminent advantages derived from the substitution of machinery for manual labour, depend upon the extension of the market for the commodities produced, and the increased stimulus given to consumption; and that, without this extension of market and increase of consumption, they must be in a great degree lost. Like the fertility of land, the invention of good machinery confers a prodigious power of production. But neither of these great powers | can be called fully into action, if the situation and circumstances, or the habits and tastes of the society prevent the opening of a sufficient market, and an adequate increase of consumption.

The three great causes most favourable to production are, accumulation of capital, fertility of soil, and inventions to save labour. They all act in the same direction; and as they all tend to facilitate supply, without reference to demand, it is not probable that they should either separately or conjointly afford an adequate stimulus to the continued increase of wealth, which can only be kept up by a continued increase of the demand for commodities.

section vi

Of the Necessity of a Union of the Powers of Production with the Means of Distribution, in order to ensure a continued Increase of Wealth

We have seen that the powers of production, to whatever extent they may exist, are not alone sufficient to secure the creation of a proportionate degree of wealth. Something else seems to be necessary in order to call these powers fully into action; and this is, such a distribution of produce, and such an adaptation of this produce to the wants of those who are to consume it, as constantly to increase the exchangeable value of the whole mass.(244) |

In individual cases, the power of producing particular commodities is called into action, in proportion to the effective demand for them; and the greatest stimulus to their production is a high market price, or an increase of their exchangeable value, before more capital and labour have been employed upon them.

In the same manner, the greatest stimulus to the continued production of commodities, taken all together, is an increase in the exchangeable value of the whole mass, before more labour and capital have been employed upon them.(245) And this increase of value is effected by such a distribution of the actual produce as is best adapted to gratify the existing wants of society, and to inspire new ones.

It has been stated in a preceding section, that if all the roads and canals of the country were broken up, and the means of distributing its produce were essentially impeded, the whole value of the produce would greatly fall; indeed, it is obvious that if it were so distributed as not to be suited to the wants, tastes, and powers of the actual population in different situations, its value might sink to such a degree as to be comparatively quite inconsiderable. Upon the same principle, if the means of distributing the produce of the country were still further facilitated, and if the adaptation of it to the wants, tastes and powers of the consumers were more complete than at present, there can be no doubt that a great increase in the value of the whole produce would follow.

But to illustrate the power of distribution in in-|creasing the mass of exchangeable value, we need only refer to experience. Before the introduction of good roads and canals in England, the prices of produce in many country districts were extremely low compared with the same kind of produce in the London markets. After the means of distribution were facilitated, the price of country produce, and of some sorts of London produce which were sent into the country in exchange for it, rose; and rose in a greater degree than the country produce fell in the London markets, or the London produce fell in the country markets; and consequently the value of the whole produce, or the supplies of London and the country together, was greatly increased; and while encouragement was thus given to the employment of a greater quantity of capital by the extension of demand, the temporary rise of profits, occasioned by this extension, would greatly contribute to furnish the additional capital required.(246)

It will be asked, perhaps, how an increase in the exchangeable value of the whole produce of a country is to be estimated? It has before been stated that real value in exchange, from its very nature, admits of no accurate and standard measure; and consequently, in the present case, no measure can be mentioned which is perfectly satisfactory. Yet even bullion, our most common measure of value, might, in general, and for short periods, be referred to; and though abstractedly considered, wealth is nearly independent of money; yet in the actual state of the relations of the dif-|ferent countries of the world with each other, it rarely happens that any great increase or decrease in the bullion value of all the commodities of a country takes place, without an increase or decrease of demand for commodities, compared with the supply of them.

It happens however, undoubtedly, sometimes, that the value of bullion alters, not only generally, but in particular countries; and it is not meant to be said that a country cannot possibly be stimulated to an increase of wealth after a fall has taken place in the money-price of all its commodities. As the best approximation to a measure of real value in exchange, in application to the commodities of different countries and different times, I before proposed a mean between corn and labour;* and to this measure I should be disposed always to refer, when any commodities are to be estimated, with the exception of corn and labour themselves. But as, in speaking of national wealth, it is necessary to include the exchangeable value of food; and as food cannot well be the measure of food, I shall refer generally to the labour, domestic and foreign, which the bullion-price of the produce will command, or the sacrifices which people are willing and able to make of their own or other persons exertions in order to obtain it, as the best practical measure of value that can be applied; and though undoubtedly not accurate, yet sufficiently so for the present purpose. |

General wealth, like particular portions of it, will always follow effective demand. Whenever there is a great demand for commodities, that is, whenever the exchangeable value of the whole mass will command more labour than usual at the same price, there is the same kind of reason for expecting a general increase of commodities, as there is for expecting an increase of particular commodities when their market-prices rise. And on the other hand, whenever the produce of a country estimated in the labour which it will command falls in value, it is evident that with it the power and will to purchase the same quantity of labour must be diminished, and the effective demand for an increase of produce must, for a time, be checked.(247)

Mr. Ricardo, in his chapter on Value and Riches, has stated that “a certain quantity of clothes and provisions will maintain and employ the same number of men, and will therefore procure the same quantity of work to be done, whether they be produced by the labour of a hundred or of two hundred men; but they will be of twice the value, if two hundred have been employed in their production.”* But, even taking his own peculiar estimate of value, this statement would very rarely indeed be true. The clothes and provisions which had cost only one hundred days’ labour would never, but in the most unnatural state of things, be able to procure the same quantity of work to | be done as if they had cost two hundred days’ labour.(248) To suppose it, is to suppose that the price of labour, estimated in necessaries, is the same at all times and in all countries, and does not depend upon the plenty or scarcity of necessaries compared with labour, a supposition contradicted by universal experience. Nine quarters of wheat will perhaps command a year’s labour in England; but sixteen quarters will hardly procure the same quantity of work to be done in America. And in the case either of a sudden increase of productive labour, by a rapid conversion of revenue into capital, or a sudden increase of the productiveness of the same quantity of labour, there is not the slightest doubt that a given portion of necessaries would be quite unable to set in motion the same quantity of labour; and, if the exchangeable value of the produce should fall in a greater ratio than its quantity increases, (which may very easily happen,) then the same quantity of labour would not be set in motion by the increased quantity of necessaries, and the progress of wealth would receive a decided check.(249)

Such a check would still more obviously be the consequence of a diminished demand for produce, owing to the decline of foreign commerce, or any other cause. Under these circumstances, both the quantity and value of produce would soon be diminished; and though labour, from the want of demand, would be very cheap, the capitalists would soon lose both the will and the power to employ it in the same quantity as before.(250) |

In every case, a continued increase in the value of produce estimated in labour seems to be absolutely necessary to a continued and unchecked increase of wealth; because without such an increase of value it is obvious that no fresh labour can be set in motion.(251) And in order to support this value it is necessary that an effective distribution of the produce should take place, and a due proportion be maintained between the objects to be consumed and the number, wants, and powers of the consumers, or, in other words, between the supply of commodities and the demand for them.

It has already been shewn that this value cannot be maintained in the case of a rapid accumulation of capital occasioned by an actual and continued diminution in the expenditure and consumption of the higher classes of society.* Yet it will be most readily allowed that the saving from revenue to add to capital is an absolutely necessary step in the progress of wealth. How then is this saving to take place without producing the diminution of value apprehended?

It may take place, and practically almost always does take place, in consequence of a previous increase of value, or of revenue, in which case a saving may be effected, not only without any diminution of demand and consumption, but under an actual increase of demand, consumption and value during every part of the process.(252) And it is in fact this previous increase of value and revenue | which both gives the great stimulus to accumulation, and makes that accumulation effective in the continued production of wealth.

[M. Sismondi limits the value of the produce of any year to the value of the revenue of the preceding year; but this would preclude increase of value. A great increase of exchangeable value and demand may take place in any one year by a better distribution of produce, and a better adaptation of it to the wants of the society.]

The fortune of a country, though necessarily made more slowly, is made in the same way as the fortunes of individuals in trade are generally made,—by savings, certainly; but by savings which are furnished from increased gains, and by no means involve a diminished expenditure on objects of luxury and enjoyment.(253)

Many a merchant has made a large fortune although, during the acquisition of this fortune, there was perhaps hardly a single year in which he did not rather increase than diminish his expenditure in objects of luxury, enjoyment, and liberality.(254) The amount of capital in this country is immense, and it certainly received very great additions during the last twenty-five years; but on looking back, few traces are to be found of a diminished expenditure in the maintenance of | unproductive labour. If some such traces however are to be found, they will be found in exact conformity to the theory here laid down; they will be found during a period, when, from particular circumstances, the value of the national produce was not maintained, and there was in consequence a great diminution of the power of expenditure, and a great check to the production of wealth.

Perhaps it will be said, that to lay so much stress on distribution, and to measure demand by the exchangeable value of the whole produce, is to exalt the gross revenue at the expense of the neat revenue of a country, and to favour that system of cultivation and manufacturing which employs on each object the greatest number of hands.(255) But I have already shewn that the saving of labour, and the increase of skill, both in agriculture and manufacturing industry, by enabling a country to push its cultivation over poorer lands, without diminution of profits, and to extend far and wide the markets for its manufactures, must tend to increase the exchangeable value of the whole; and there cannot be a doubt that in this country they must have been the main sources of that rapid and astonishing increase in the value of the national wealth, which has taken place during the last thirty or forty years.

To dwell therefore mainly on the gross revenue of a country rather than on its neat revenue is in no respect to under-rate the prodigious advantage derived from skill and machinery, but merely to give that importance to the value of the whole produce | to which it is so justly entitled. No description of national wealth, which refers only to neat revenue, can ever be in any degree satisfactory. The Economists destroyed the practical utility of their works by referring exclusively to the neat produce of the land. And the writers who make wealth consist of rents and profits, to the exclusion of wages, commit an error exactly of the same kind though less in degree. Those who live upon the wages of labour, unproductive as well as productive, receive and expend much the greatest part of the annual produce, pay a very considerable sum in taxes for the maintenance of the government, and form by far the largest portion of its physical force. Under the prevalence of habits of prudence, the whole of this vast mass might be nearly as happy as the individuals of the other two classes, and probably a greater number of them, though not a greater proportion of them, happier. In every point of view therefore, both in reference to the part of the annual produce which falls to their share, and the means of health and happiness which it may be presumed to communicate, those who live on the wages of labour must be considered as the most important portion of the society; and any definition of wealth which should involve such a diminution of their numbers, as to require for the supply of the whole population a smaller annual produce, must necessarily be erroneous.

In the First Chapter of this Work, having defined wealth to be “the material objects which are ne-|cessary, useful, and agreeable to mankind,” I stated as a consequence that a country was rich or poor according to the abundance or scantiness in which these objects were supplied, compared with the extent of territory. It will be readily allowed that this definition does not include the question of what may be called the amount of disposable produce, or the fund for taxation; but still I must consider it as a much more correct definition of the wealth of a country than any that should refer to this disposable part alone. What should we say of the wealth of this country, if it were possible that its rents and profits could remain the same, while its population and produce were reduced two-thirds? Certainly it would be much poorer according to the above definition; and there are not many that would dissent from such a conclusion.

That it would be desirable, in a definition of national wealth, to include the consideration of disposable produce, as well as of actual quantity and value, cannot be doubted; but such a definition seems to be in its nature impossible, because in each individual case it must depend upon opinion, what increase of disposable produce should be accounted equivalent to a given diminution of gross produce.

We must content ourselves therefore with referring generally to the amount and value of national produce; and it may be subsequently stated as a separate, though very important consideration, that particular countries, with the same amount and | value of produce, have a larger or smaller proportion of that produce disposable. In this respect, no doubt, a country with a fertile territory will have a prodigious advantage over those whose wealth depends almost entirely on manufactures. With the same population, the same rate of profits, and the same amount and value of produce, the landed nation would have much the largest portion of its wealth disposable.(256)

Fortunately, it happens but seldom that we have to determine the amount of advantage or disadvantage occasioned by the increase of the neat, at the expense of the gross revenue. The interest of individual capitalists uniformly prompts them to the saving of labour, in whatever business they are engaged; and both theory and experience combine to shew that their successful efforts in this direction, by increasing the powers of production, afford the means of increasing, in the greatest practicable degree, the amount and value of the gross produce,* provided always that such a dis-|tribution and consumption of the increased supply of commodities takes place as constantly to increase their exchangeable value.

In general, an increase of produce and an increase of value go on together;(258) and this is that natural and healthy state of things, which is most favourable to the progress of wealth. An increase in the quantity of produce depends chiefly upon the power of production, and an increase in the value of produce upon its distribution. Production and distribution are the two grand elements of wealth, which, combined in their due proportions, are capable of carrying the riches and population of the earth in no great length of time to the utmost limits of its possible resources; but which taken separately, or combined in undue proportions, produce only, after the lapse of many thousand years, the scanty riches and scanty population, which are at present scattered over the face of the globe.

section vii

Of the Distribution occasioned by the Division of Landed Property considered as the means of increasing the Exchangeable Value of the whole Produce

[The three causes most favourable to distribution are, the division of landed property; internal and external commerce; and the maintenance of unproductive consumers.

In the first settlement of new colonies, an easy subdivision of the land is necessary to give effect to the principle of population.]

The rapid increase of the United States of America, taken as a whole, has undoubtedly been aided very greatly by foreign commerce, and particularly by the power of selling raw produce, obtained with little labour, for European commodities which have cost much labour.(259)

[The rapid increase of the establishments in North America depended greatly upon the facility of settling new families on the land as they branched off from their parent stocks.

The vicious distribution of landed property almost all over Europe, derived from the feudal times, was the main cause which impeded the progress of cultivators and wealth in the middle ages.]

Adam Smith has well described the slack kind of cultivation which was likely to take place, and did in fact take place, among the great proprietors of the middle ages. But not only were they bad cultivators and improvers; and for a time perhaps deficient in a proper taste for manufactured products; yet, even if they had possessed these tastes in the degree found to prevail at present, their inconsiderable numbers would have prevented their demand from producing any important mass of such wealth. We hear of great splendour among princes and nobles in every period of history. The difficulty was not so much to inspire the rich with a love of finery, as to break down their immense properties, and to create a greater number of demanders who were able and willing to purchase the results of productive labour.(260) This, it is obvious, could only be effected very gradually. | That the increasing love of finery might have assisted considerably in accomplishing this object is highly probable; but these tastes alone, unaccompanied by a better distribution of property, would have been quite inefficient. The possessor of numerous estates, after he had furnished his mansion or castle splendidly, and provided himself with handsome clothes and handsome carriages, would not change them all every two months, merely because he had the power of doing it. Instead of indulging in such useless and troublesome changes, he would be more likely to keep a number of servants and idle dependants, to take lower rents with a view of having a greater command over his tenants, and perhaps to sacrifice the produce of a considerable portion of his land in order to encourage more game, and to indulge, with more effect and less interruption, in the pleasures of the chase. Thirty or forty proprietors, with incomes answering to between one thousand and five thousand a year, would create a much more effective demand for wheaten bread, good meat, and manufactured products, than a single proprietor possessing a hundred thousand a year.

[It is physically possible for a small number of very rich proprietors and capitalists to create a very large demand; but practically, it has always been found that the excessive wealth of the few is never equivalent, in effective demand, to the more moderate wealth of the many.

But though it be true that the division of landed property to a certain extent is favourable to the increase of wealth, it is equally true that beyond a certain extent it is unfavourable.

It will be found that all the great results in political economy respecting wealth, depend upon proportions; and this important truth is particularly obvious in the division of landed property.]

On the effects of a great sub-division of property, a fearful experiment is now making in France. The law of succession in that country divides property of all kinds among all the children equally, without right of primogeniture or distinction of sex, and allows but a small portion of it to be disposed of by will.

This law has not yet prevailed long enough to shew what its effects are likely to be on the national wealth and prosperity. If the state of property in France appears at present to be favourable to industry and demand, no inference can thence be drawn that it will be favourable in future. It is universally allowed that a division of property to a certain extent is extremely desirable; and so many traces yet remain almost all over Europe of the vast landed possessions which have descended from the feudal times, that there are not many states in which such a law as that of France might not be of use, with a view to wealth, for a certain number of years. But if such a law were to continue per-|manently to regulate the descent of property in France; if no modes of evading it should be invented, and if its effects should not be weakened by the operation of an extraordinary degree of prudence in marriage, which prudence such a law would certainly tend to discourage, there is every reason to believe that the country, at the end of a century, will be quite as remarkable for its extraordinary poverty and distress, as for its unusual equality of property. The owners of the minute divisions of landed property will be, as they always are, peculiarly without resource, and must perish in great numbers in every scarcity. Scarcely any will be rich but those who receive salaries from the government.(261)

In this state of things, with little or none of the natural influence of property to check at once the power of the crown and the violence of the people, it is not possible to conceive that such a mixed government as France has now established can be maintained. Nor can I think that a state of things, in which there would be so much poverty, could be favourable to the existence and duration of a republic. And when, in addition to this, we consider how extremely difficult it is, under any circumstances, to establish a well-constituted republic, and how dreadfully the chances are against its continuance, as the experience of all history shews; it is not too much to say, that no well-grounded hope could be entertained of the permanent prevalence of such a form of government.(262)

But the state of property above described would be the very soil for a military despotism. If the | government did not adopt the Eastern mode of considering itself as sole territorial proprietor, it might at least take a hint from the Economists, and declare itself co-proprietor with the landlords, and from this source, (which might still be a fertile one, though the landlords, on account of their numbers, might be poor,) together with a few other taxes, the army might easily be made the richest part of the society; and it would then possess an overwhelming influence, which, in such a state of things, nothing could oppose. The despot might now and then be changed, as under the Roman emperors, by the Praetorian guards; but the despotism would certainly rest upon very solid foundations.

[In the British empire, the immense landed possessions which formerly prevailed have been divided by the prosperity of commerce and manufactures.

A large body of middle classes has been formed from commerce, manufactures, professions, &c. who are likely to be more effective demanders than small proprietors of land.

Under these circumstances, it might be rash to conclude that the abolition of the right of primogeniture would increase the wealth of the country; but if we could come to this conclusion, it would not determine the policy of a change.

There is reason to think that the British constitution could not be maintained without an aristocracy; and an effective aristocracy could not be maintained without the right of primogeniture.

It is not easy to say to what extent the abolition of the law of primogeniture would divide the landed property of the country; but the division would probably be unfavourable to good government.

Although therefore a more equal distribution of landed property might be better than that which actually prevails, it might not be wise to abolish the law of primogeniture.

But whatever laws may prevail, the principle will remain true, that the division of landed property is one of the great means of distribution which tends to keep up and increase the exchangeable value of the whole produce.]

section viii

Of the Distribution occasioned by Commerce, internal and external, considered as the Means of increasing the exchangeable Value of Produce

The second main cause favourable to that increase of exchangeable value, which depends upon distribution, is internal and external commerce.

[Every exchange which takes place in a country effects a distribution of its commodities better adapted to the wants of the society, and calculated to give a greater market value to the whole produce.]

The Economists, in their endeavours to prove the unproductive nature of trade, always insisted that the effect of it was merely to equalize prices, which were in some places too high and in others too low, but in their amount the same as they would be after the exchange had taken place. This position must be considered as unfounded, and capable of being contradicted by incontrovertible facts. The increase of price at first, from the extension of the market, is unquestionable. And when to this we add the effect occasioned by the demand for further produce, and the means thus afforded of rapid accumulation for the supply of this demand, it is impossible to doubt for a moment the direct tendency of all internal trade to increase the value of the national produce.

If indeed it did not tend to increase the value of the national produce, it would not be carried | on. It is out of this increase that the merchants concerned are paid; and if some London goods are not more valued in Glasgow than in London, and some Glasgow goods more valued in London than in Glasgow, the merchants who exchange the articles in which these towns trade, would neither be doing themselves any good, nor any one else. It is a mere futile process to exchange one set of commodities for another, if the parties, after this new distribution of goods has taken place, are not better off than they were before. The giving one article for another has nothing to do with effectual demand, unless the commodity received so far exceeds in value the labour employed on the commodity parted with, as to yield adequate profits to the capitalists concerned, and to give them both the power and the will to set fresh labour to work in the same trade.(263)

It has been said that the industry of a country is measured by the extent of its capital, and that the manner in which this capital is employed, though it may make some difference to the enjoyment of the inhabitants, makes very little in the value of the national revenue. This would be true on one supposition, and on one supposition only; namely, that the inhabitants could be persuaded to estimate their confined productions just as highly, to be as eager to obtain and consume them, and as willing to work hard for them, and to make great sacrifices for them, as for the commodities which they obtain from a distance. But are we at liberty to make such a supposition? It is specifi-|cally to over-come the want of eagerness to purchase domestic commodities that the merchant exchanges them for others more in request. Could we but so alter the wants and tastes of the people of Glasgow as to make them estimate as highly the profusion of cotton goods which they produce, as any articles which they could receive in return for them under a prosperous trade, we should hear no more of their distresses. It may be allowed that the quantity of productive industry maintained in a country is nearly proportioned to the quantity of capital employed; but the value of the revenue will be greater or less, according to the market prices of the commodities produced. These market prices must obviously depend upon the interchange of goods; and consequently the value of the revenue, and the power and will to increase it, must depend upon that distribution of commodities which best adapts them to the wants and tastes of the society.

The whole produce of a nation may be said to have a market price in money and labour. When this market price is high, that is, when the prices of commodities rise so as to command a greater excess of labour above what they had cost in production than before, while the same capital and number of people had been employed upon them, it is evident that more fresh labour will be set in motion every year, and the increase of wealth will be certain and rapid. On the other hand, when the market prices of commodities are such as to be able to command very little more | labour than the production of them has cost, it is as evident that the national wealth will proceed very slowly, or perhaps be quite stationary.

In the distribution of commodities, the circulating medium of every country bears a most important part; and, as I intimated before in a note, we are much more likely to obscure our reasonings than to render them clearer, by throwing it out of our consideration. It is not easy indeed, without reference to a circulating medium, to ascertain whether the commodities of a country are so distributed as to give them their proper value.(264)

It may be said, perhaps, that if the funds for the maintenance of labour are at any time in unusual abundance, it may fairly be presumed that they will be able to command a more than usual quantity of labour. But they certainly will not be able to command more labour, nor even so much, if the distribution of them be defective; and in a country which has a circulating medium, the specific proof of the distribution being defective is, that the whole produce does not exchange for so large an amount of circulating medium as before, and that consequently the producers have been obliged to sell at a great diminution of money profits, or a positive money loss.

From the harvest of 1815 to the harvest of 1816, there cannot be a doubt that the funds for the maintenance of labour in this country were unusually abundant. Corn was particularly plentiful, and no other necessaries were deficient; yet it is an acknowledged fact, that great numbers were | thrown out of employment, partly from the want of power, and partly from the want of will to employ the same quantity of labour as before. How is this fact to be accounted for? As I have said before, it would not be easy to account for it without referring to a circulating medium; because, without such reference, the proof of a defective distribution would be extremely difficult. But the moment we refer to a circulating medium, the theory of the fact observed becomes perfectly clear. It is acknowledged that there was a fall in the money value of the raw produce, to the amount of nearly one third. But if the farmer sold his produce for only two thirds of the price at which he had before sold it, it is evident that he would be quite unable to command the same quantity of labour, and to employ the same quantity of capital on his farm as he did the year before. (265) And when afterwards a great fall of money price took place in all manufactured products, occasioned in a considerable degree by this previous fall of raw produce, it is as evident that the manufacturers would be unable to command the labour of the same number of workmen as before. In the midst of the plenty of necessaries, these two important classes of society would really have their power of employing labour diminished, while all those who possessed fixed incomes would have their power of employing labour increased, with very little chance of an increase of will to extend their demand in proportion; and the general result would resemble the effects of that partial distribution of products which | would arise from the interruption of accustomed communications. The same, or a greater quantity of commodities might be produced for a short time; but the distribution not being such as to proportion the supply in each quarter to the demand, the whole would fall in exchangeable value, and a very decided check to production would be experienced in reference to the whole country. It follows, that the labouring classes of society may be thrown out of work in the midst of an abundance of necessaries, if these necessaries are not in the hands of those who are at the same time both able and willing to employ an adequate quantity of labour.(266)

It is of no use therefore to make suppositions about a great increase of produce, and, rejecting all reference to a circulating medium, to conclude that this great increase will be properly distributed and effectively consumed. It is a conclusion which we have no right whatever to make. We know, both from theory and experience, that if the whole produce falls in money value, the distribution must be such as to discourage production. As long as this fall in the money price of produce continues to diminish the power of commanding domestic and foreign labour, a great discouragement to production must obviously continue; and if, after labour has adjusted itself to the new level of prices, the permanent distribution of the produce and the permanent tastes and habits of the people should not be favourable to an adequate degree of consumption, the clearest principles of political eco-|nomy shew that the profits of stock might be lower for any length of time than the state of the land rendered necessary;(267) and that the check to production might be as permanent as the faulty distribution of the produce and the unfavourable tastes and habits which had occasioned it.

[Referring to the command over labour as the final measure of the value of the whole produce, its bullion value should be previously referred to, in order to ascertain whether its distribution be such as to enable it to command labour in some proportion to its quantity.

The distribution of commodities, occasioned by internal trade, is the first step towards any considerable increase of wealth and capital.]

The motives which urge individuals to engage | in foreign commerce are precisely the same as those which lead to the inter-change of goods between the more distant parts of the same country, namely, an increase in the market price of the local products; and the increase of profits thus made by the individual, or the prevention of that fall of profits which would have taken place if the capital had been employed at home, must be considered as a proportionate increase in the value of the national produce.(268)

Mr. Ricardo begins his Chapter on Foreign Trade by stating that “No extension of foreign trade will immediately increase the amount of value in a country although it will very powerfully contribute to increase the mass of commodities and therefore the sum of enjoyments.” This statement is quite consistent with his peculiar view of value, as depending solely upon the labour which a commodity has cost. However abundant may be the returns of the merchant, or however greatly they may exceed his exports in value according to the common acceptation of the term, it is certain that the labour employed in procuring these exports will at first remain the same. But, as it is so glaring and undeniable a fact that the returns from an unusually favourable trade will exchange for an unusual quantity of money, labour and domestic commodities; as this increased power of commanding money, labour and commodities is in reality what is meant by the merchant when he talks of the extension of the foreign market and a favourable trade, (269) it appears to me that such | a state of things which may, and often does last a sufficient time to produce the most important results, is alone, and at once, a decisive proof that the view of exchangeable value, which makes it depend exclusively upon the cost of production, is essentially incorrect, and utterly useless in solving the great phenomena which attend the progress of wealth.

Mr. Ricardo seems to think that value cannot increase in one department of produce without diminishing it in some other.* This again may be true according to his view of value, but is utterly unfounded according to that more enlarged view of exchangeable value which is established and confirmed by experience. If any foreign power were to send to a particular merchant commodities of a new description which would sell in the London market for fifty thousand pounds, the wealth of such merchant would be increased to that extent; and who, I would ask, would be the poorer for it? It is no doubt true that the purchasers of these commodities may be obliged to forego the use of some of the articles which they had before been in the habit of buying,† and so | far in some quarters may diminish demand; but, to counterbalance this diminution, the enriched merchant will become a purchaser of additional goods to the amount perhaps of the whole fifty thousand pounds, and thus prevent any general fall in the value of the native produce consumed in the country, while the value of the foreign produce so consumed has increased to the amount of the whole of the new produce imported. I see no difference between a present from abroad, and the unusual profits of a new foreign trade, in their effects upon the wealth of a state. They are equally calculated to increase the wealth of the community, by an increase both of the quantity and value of the produce obtained.

It will be said perhaps that, neither the people nor the money of the country having been by supposition increased, the value of the whole produce estimated in labour or money cannot be increased.

With regard to labour I would observe that, when I speak of the value of the whole produce of a country being able to command more labour than before, I do not mean to refer specifically to a greater number of labourers, but to say that it could either purchase more at the old price, or pay the actual labourers higher; (271) and such a state of things, with a population which cannot imme-|diately be increased, always occasions that demand for labour, which so powerfully encourages the exertions of those who were before perhaps only half paid and half employed; and is at once the surest sign and most effective stimulus of increasing wealth. It is the natural consequence of the value of the produce estimated in labour increasing faster than the population, and forms the true and healthy encouragement to the further increase of numbers.

With regard to money, this most useful measure of value would perform its functions very indifferently, if it could in no respect accommodate itself to cases of this kind; and if the importation of a valuable commodity always proportionably reduced the price of the other parts of the national produce. But this is far from being the case, even if we do not suppose any fresh importation of the precious metals. The occurrence of such an event is precisely the period, when a greater velocity is given to the circulation of the money actually in use, and when fresh paper may be issued without a fall in the rate of foreign exchanges, or a rise in the price of bullion and of goods. One or other, or both of these resources will be applied, except in the most barbarous countries; and though undoubtedly, in the case of the importation of foreign commodities which come directly into competition with domestic goods, such goods will fall in price, and the producers of them be for a time rendered poorer, yet it will very rarely indeed happen that | other goods not affected by such competition will fall in money value; and altogether no fall will take place in particular commodities sufficient to prevent a rise in the money price of the whole produce.(272)

It may naturally be expected however that more money will be imported; and, in fact, a successful extension of foreign trade is exactly that state of things which most directly leads to the importation of bullion. For what is it that the merchant exporter specifically considers as a successful extension of foreign commerce in dealing with civilized nations? Undoubtedly the power of selling his exports abroad for a greater value than usual, estimated in bullion; and of course, if the goods which he would import in return will not sell at home so much higher as to warrant their importation, a part or the whole of the returns will be imported in money. But if only such an amount be imported as shall bear the same proportion to the returns in goods as the whole of the currency of the country does to the whole of its produce, it is obvious that no difficulty whatever can occur in the circulation of the commodities of the country at their former prices, with the single exception of those articles with which the foreign goods might directly enter into competition, which in this case would never be sufficient to prevent a general increase of value in the whole produce.

I distinctly therefore differ from Mr. Ricardo in the conclusion implied in the following passage. “In all cases the demand for foreign and home | commodities together, as far as regards value, is limited by the revenue and capital of the country. If one increases, the other must diminish.”* It appears to me that in almost every case of successful foreign trade, it is a matter of unquestionable fact that the demand for foreign and home commodities taken together decidedly increases; and that the increase in the value of foreign produce does not occasion a proportionate diminution in the value of home produce.

I would still however allow that the demand for foreign and home commodities together, as far as regards value, is limited by the revenue and capital of the country; but, according to my view of the subject, the national revenue, which consists of the sum of rents, profits, and wages, is at once decidedly increased by the increased profits of the foreign merchant, without a proportionate diminution of revenue in any other quarter; whereas Mr. Ricardo is evidently of opinion that, though the abundance of commodities is increased, the revenue of the country, as far as regards value, remains the same; and it is because I object rather to the conclusion intended to be conveyed, than to the actual terms of the passage quoted, that I have used the word implied rather than expressed.(273)

It will readily be allowed that an increase in the quantity of commodities is one of the most desirable effects of foreign commerce; but I wish particularly to press on the attention of the reader | that in almost all cases, another most important effect accompanies it, expressly rejected by Mr. Ricardo, namely, an increase in the amount of exchangeable value. And that this latter effect is so necessary, in order to create a continued stimulus to productive industry, and keep up an abundant supply of commodities, that in the few cases in which it does not take place, a stagnation in the demand for labour is immediately perceptible, and the progress of wealth is checked. An extension of foreign commerce, according to the view which Mr. Ricardo takes of it, would, in my opinion, place us frequently in the situation in which this country was in the early part of 1816, when a sudden abundance and cheapness of corn and other commodities, from a great supply meeting a deficient demand, so diminished the value of the income of the country, that it could no longer command the same quantity of labour at the same price; the consequence of which was that, in the midst of plenty, thousands upon thousands were thrown out of employment—a most painful but almost unavoidable preliminary to a fall in the money wages of labour, which it is obvious could alone enable the general income of the country to employ the same number of labourers as before, and, after a period of severe check to the increase of wealth, to recommence a progressive movement. (274)

Mr. Ricardo always seems to think that it is quite the same to the labourer, whether he is able to command more of the necessaries of life by a rise in the money price of labour, or by a fall in | the money price of provisions; but these two events, though apparently similar in their effects, may be, and in general are, most essentially different. (275) An increase in the wages of labour, both nominal and real, invariably implies such a distribution of the actual wealth as to give it an increasing value, to ensure full employment to all the labouring classes, and to create a demand for further produce, and for the capital which is to obtain it. In short, it is the infallible sign of health and prosperity. Whereas a general fall in the money price of necessaries often arises from so defective a distribution of the produce of the country, that the general amount of its value cannot be kept up; in which case, under the most favourable circumstances, a temporary period of want of employment and distress is unavoidable; and in many cases, as may be too frequently observed in surveying the different countries of the globe, this fall in the money price of necessaries is the accompaniment of a permanent want of employment, and the most abject poverty, in consequence of retrograde and permanently diminished wealth.(276)

The reader will be fully aware that a great fall in the price of particular commodities, either from improved machinery or foreign commerce, is perfectly compatible with a continued and great increase, not only in the exchangeable value of the whole produce of the country, but even in the exchangeable value of the whole produce of these particular articles themselves. (277) It has been repeatedly stated that the whole value of the cottons | produced in this country has been prodigiously increased, notwithstanding the great fall in their price. The same may be said of the teas, although when they were first imported, the price per pound was greatly higher than at present; and there can be little doubt, that if we were to attempt to make our own wines by means of hot-houses, they would altogether be worth much less money, and would give encouragement to much less industry than at present.

Even when the commodity is of such a nature as not to admit of an extension of the market for it from reduced price, which very rarely happens, yet the capital and labour, which in this case will be thrown out of employment, will generally, in enterprising and commercial countries, find other channels into which they may be directed, with such profit as to keep up, and often more than keep up, the value of the national income. At the same time it should be observed, and it is a point of great importance, that it is precisely among cases of this description, where the few exceptions occur to the general and powerful tendency of foreign commerce, to raise the value of the national income; and whenever these exceptions do take place, that is, whenever the value of the national income is diminished, estimated even in money, a temporary distress from a defective distribution of the produce cannot fail to take place. If this diminished value be estimated in labour, the distress among the labouring classes, and check to the progress of wealth, will continue as long as the | diminished value so estimated lasts: and if it could be proved that, under particular circumstances, any species of foreign trade tended permanently to diminish the power of the national produce in the command of domestic and foreign labour, such trade would certainly have the effect of checking permanently the progress of wealth and population.(278)

The causes of an increase in the effective demand for particular commodities are of very easy explanation; but it has been considered, and with reason, as not very easy to explain the cause of that general briskness of demand which is sometimes so very sensibly felt throughout a whole country, and is so strikingly contrasted with the feeling which gives rise to the expression of trade being universally very dead. As the specific and immediate cause of this general increase of effective demand, I should decidedly point to such a distribution of the produce, and such an adaptation of it to the wants and tastes of the society as will give the money price for which it sells an increased command of domestic and foreign labour; and I am inclined to think that, if this test be applied to all the striking cases that have occurred, it will rarely or never be found to fail.(279)

It cannot for a moment be doubted, for instance, that the annual increase of the produce of the United States of America, estimated either in bullion or in domestic and foreign labour, has been greater than that of any country we are acquainted with, and that this has been greatly owing to their | foreign commerce, which, notwithstanding their facility of production, has given a value to their corn and raw produce equal to what they bear in many of the countries of Europe, and has consequently given to them a power in commanding the produce and labour of other countries quite extraordinary, when compared with the quantity of labour which they have employed. It can as little be doubted that in this country, from 1793 to 1814, the whole exchangeable value of the produce, estimated either in domestic and foreign labour, or in bullion, was greatly augmented every year. In this increase of value, as well as riches, the extension of our foreign commerce has been considered, almost without a dissentient opinion, as a most powerful agent; and certainly till 1815, no appearances seemed to indicate, that the increasing value of our imports had the slightest tendency to diminish the value of our domestic produce. They both increased, and increased greatly, together, estimated either in bullion or labour.(280)

But while in every country to which it seems possible to refer, an increase of value will be found to accompany increasing prosperity and riches, I am inclined to think that no single instance can be produced of a country engaged in a successful commerce, and exhibiting an increasing plenty of commodities, where the value of the whole produce estimated in domestic and foreign labour was retrograde or even stationary. And of the two ways in which capital may be accumulated, as stated by Mr. Ricardo in his chapter on Fo-|reign Commerce, namely an increase of revenue from increased profits, or a diminished expenditure, arising from cheap commodities,* I believe the latter never has been, nor ever will be, experienced as an effective stimulus to the permanent and continued production of increasing wealth.(281)

Mr. Ricardo will perhaps say, and say truly, that according to his own view of value, foreign commerce will increase it, as soon as more labour has been employed in the production of all the commodities taken together, which the country obtains; and that the plenty produced by foreign trade will naturally encourage this employment. But what I wish specifically to state is, that the natural tendency of foreign trade, as of all sorts of exchanges by which a distribution is effected better suited to the wants of society, is immediately to increase the value of that part of the national revenue which consists of profits, without any proportionate diminution elsewhere, and that it is precisely this immediate increase of national income arising from the exchange of what is of less value in the country, for what is of more value, that furnishes both the power and will to employ more labour, and occasions the animated demand for labour, produce and capital, which is a striking and almost universal accompaniment of successful foreign commerce; whereas, a mere abundance of commodities falling very greatly in value compared with labour, | would obviously at first diminish the power of employing the same number of workmen, and a temporary glut and general deficiency of demand could not fail to ensue in labour, in produce, and in capital, attended with the usual distress which a glut must occasion.(282)

Mr. Ricardo always views foreign trade in the light of means of obtaining cheaper commodities. But this is only looking to one half of its advantages, and I am strongly disposed to think, not the larger half. In our own commerce at least, this part of the trade is comparatively inconsiderable. The great mass of our imports consists of articles as to which there can be no kind of question about their comparative cheapness, as raised abroad or at home. If we could not import from foreign countries our silk, cotton and indigo, our tea, sugar, coffee and tobacco, our port, sherry, claret and champagne, our almonds, raisins, oranges and lemons, our various spices and our various drugs, with many other articles peculiar to foreign climates, it is quite certain that we should not have them at all. To estimate the advantage derived from their importation by their cheapness, compared with the quantity of labour and capital which they would have cost, if we had attempted to raise them at home, would be perfectly preposterous. In reality, no such attempt would have been thought of. If we could by possibility have made fine claret at ten pounds a bottle, few or none would have drunk it; and the actual quantity of labour and capital employed in obtaining these | foreign commodities is at present beyond comparison greater than it would have been if we had not imported them.

We must evidently therefore estimate the advantage which we derive from such a trade upon a very different principle. This is the simple and obvious one often adverted to as the foundation of every act of barter, whether foreign or domestic, namely, the increased value which results from exchanging what is wanted less for what is wanted more. After we had, by our exports of home commodities, obtained in return all the foreign articles above-mentioned, we might be very much puzzled to say whether we had increased or decreased the quantity of our commodities, but we should feel quite certain that the new distribution of produce which had taken place, by giving us commodities much better suited to our wants and tastes than those which had been sent away, had decidedly increased the exchangeable value of our possessions, our means of enjoyment, and our wealth.

Taking therefore a very different view of the effects of foreign commerce on exchangeable value from Mr. Ricardo, I should bring forwards the extension of markets as being, in its general tendency, pre-eminently favourable to that increase of value and wealth which arises from distribution.(283)

section ix

Of the Distribution occasioned by unproductive Consumers, considered as the Means of increasing the exchangeable Value of the whole Produce

The third main cause which tends to keep up and increase the value of produce by favouring its distribution is the employment of unproductive labour, or the maintenance of an adequate proportion of unproductive consumers.

It has been already shewn that, under a rapid accumulation of capital, or, more properly speaking, a rapid conversion of unproductive into productive labour, the demand, compared with the supply of material products, would prematurely fail, and the motive to further accumulation be checked, before it was checked by the exhaustion of the land. It follows that, without supposing the productive classes to consume much more than they are found to do by experience, particularly when they are rapidly saving from revenue to add to their capitals, it is absolutely necessary that a country with great powers of production should possess a body of unproductive consumers.(284)

In the fertility of the soil, in the powers of man to apply machinery as a substitute for labour, and in the motives to exertion under a system of private property, the great laws of nature have provided for the leisure of a certain portion of society; and | if this beneficent offer be not accepted by an adequate number of individuals, not only will a positive good, which might have been so attained, be lost, but the rest of the society, so far from being benefited by such self-denial, will be decidedly injured by it.

What the proportion is between the productive and unproductive classes of a society, which affords the greatest encouragement to the continued increase of wealth, it has before been said that the resources of political economy are unequal to determine. (285) It must depend upon a great variety of circumstances, particularly upon fertility of soil and the progress of invention in machinery. A fertile soil and an ingenious people can not only support a considerable proportion of unproductive consumers without injury, but may absolutely require such a body of demanders, in order to give effect to their powers of production. While, with a poor soil and a people of little ingenuity, an attempt to support such a body would throw land out of cultivation, and lead infallibly to impoverishment and ruin.

Another cause, which makes it impossible to say what proportion of the unproductive to the productive classes is most favourable to the increase of wealth, is the difference in the degrees of consumption which may prevail among the producers themselves.

Perhaps it will be said that there can be no occasion for unproductive productive consumers, if a consumption sufficient to keep up the value of the produce | takes place among those who are engaged in production.

With regard to the capitalists who are so engaged, they have certainly the power of consuming their profits, or the revenue which they make by the employment of their capitals; and if they were to consume it, with the exception of what could be beneficially added to their capitals, so as to provide in the best way both for an increased production and increased consumption, there might be little occasion for unproductive consumers. But such consumption is not consistent with the actual habits of the generality of capitalists. The great object of their lives is to save a fortune, both because it is their duty to make a provision for their families, and because they cannot spend an income with so much comfort to themselves, while they are obliged perhaps to attend a counting-house for seven or eight hours a day.(286)

It has been laid down as a sort of axiom among some writers that the wants of mankind may be considered as at all times commensurate with their powers; (287) but this position is not always true, even in those cases where a fortune comes without trouble; and in reference to the great mass of capitalists, it is completely contradicted by experience. Almost all merchants and manufacturers save, in prosperous times, much more rapidly than it would be possible for the national capital to increase, so as to keep up the value of the produce. But if this be true of them as a body, taken one with another, it is quite obvious that, with their actual | habits, they could not afford an adequate market to each other by exchanging their several products.

There must therefore be a considerable class of other consumers, or the mercantile classes could not continue extending their concerns, and realizing their profits. In this class the landlords no doubt stand pre-eminent; but if the powers of production among capitalists are considerable, the consumption of the landlords, in addition to that of the capitalists themselves and of their workmen, may still be insufficient to keep up and increase the exchangeable value of the whole produce, that is, to make the increase of quantity more than counterbalance the fall of price. And if this be so, the capitalists cannot continue the same habits of saving. They must either consume more, or produce less; and when the mere pleasure of present expenditure, without the accompaniments of an improved local situation and an advance in rank, is put in opposition to the continued labour of attending to business during the greatest part of the day, the probability is that a considerable body of them will be induced to prefer the latter alternative, and produce less. But if, in order to balance the demand and supply, a permanent diminution of production takes place, rather than an increase of consumption, the whole of the national wealth, which consists of what is produced and consumed, and not of the excess of produce above consumption, will be decidedly diminished.

Mr. Ricardo frequently speaks, as if saving were an end instead of a means. (288) Yet even with | regard to individuals, where this view of the subject is nearest the truth, it must be allowed that the final object in saving is expenditure and enjoyment. But, in reference to national wealth, it can never be considered either immediately or permanently in any other light than as a means. It may be true that, by the cheapness of commodities, and the consequent saving of expenditure in consumption, the same surplus of produce above consumption may be obtained as by a great rise of profits with an undiminished consumption; and, if saving were an end, the same end would be accomplished. But saving is the means of furnishing an increasing supply for the increasing national wants. If however commodities are already so plentiful that an adequate portion of them is not consumed, the capital so saved, the office of which is still further to increase the plenty of commodities, and still further to lower already low profits, can be comparatively of little use. On the other hand, if profits are high, it is a sure sign that commodities are scarce, compared with the demand for them, that the wants of the society are clamorous for a supply, and that an increase in the means of production, by saving a considerable part of the new revenue created by the high profits, and adding it to capital, will be specifically and permanently beneficial.(289)

National saving, therefore, considered as the means of increased production, is confined within much narrower limits than individual saving. While some individuals continue to spend, other | individuals may continue to save to a very great extent; but the national saving, or the balance of produce above consumption, in reference to the whole mass of producers and consumers, must necessarily be limited by the amount which can be advantageously employed in supplying the demand for produce; and to create this demand, there must be an adequate consumption either among the producers themselves, or other classes of consumers.

Adam Smith has observed “that the desire of food is limited in every man by the narrow capacity of the human stomach; but the desire of the conveniences and ornaments of building, dress, equipage, and household furniture, seems to have no limit or certain boundary.” That it has no certain boundary is unquestionably true; that it has no limit must be allowed to be too strong an expression, when we consider how it will be practically limited by the countervailing luxury of indolence, or by the general desire of mankind to better their condition, and make a provision for a family; a principle which, as Adam Smith himself states, is on the whole stronger than the principle which prompts to expense.* But surely it is a glaring misapplication of this statement in any sense in which it can be reasonably understood, to say, that there is no limit to the saving and employment of capital except the difficulty of procuring food. (290) It is to found a doctrine upon the unlimited desire of man-|kind to consume; then to suppose this desire limited in order to save capital, and thus completely alter the premises; and yet still to maintain that the doctrine is true. Let a sufficient consumption always take place, whether by the producers or others, to keep up and increase most effectually the exchangeable value of the whole produce; and I am perfectly ready to allow that, to the employment of a national capital, increasing only at such a rate, there is no other limit than that which bounds the power of maintaining population. (291) But it appears to me perfectly clear in theory, and universally confirmed by experience, that the employment of a capital, too rapidly increased by parsimonious habits, may find a limit, and does, in fact, often find a limit, long before there is any real difficulty in procuring the means of subsistence; and that both capital and population may be at the same time, and for a period of great length, redundant, compared with the effective demand for produce.

Of the wants of mankind in general, it may be further observed, that it is a partial and narrow view of the subject, to consider only the propensity to spend what is actually possessed. It forms but a very small part of the question to determine that if a man has a hundred thousand a year, he will not decline the offer of ten thousand more; or to lay down generally that mankind are never disposed to refuse the means of increased power and enjoyment. The main part of the question respecting the wants of mankind, relates to their | power of calling forth the exertions necessary to acquire the means of expenditure. (292) It is unquestionably true that wealth produces wants; but it is a still more important truth, that wants produce wealth. Each cause acts and re-acts upon the other, but the order, both of precedence and of importance, is with the wants which stimulate to industry; and with regard to these, it appears that, instead of being always ready to second the physical powers of man, they require for their development, “all appliances and means to boot.” The greatest of all difficulties in converting uncivilized and thinly peopled countries into civilized and populous ones, is to inspire them with the wants best calculated to excite their exertions in the production of wealth. One of the greatest benefits which foreign commerce confers, and the reason why it has always appeared an almost necessary ingredient in the progress of wealth, is, its tendency to inspire new wants, to form new tastes, and to furnish fresh motives for industry. Even civilized and improved countries cannot afford to lose any of these motives. It is not the most pleasant employment to spend eight hours a day in a counting-house. Nor will it be submitted to after the common necessaries and conveniences of life are attained, unless adequate motives are presented to the mind of the man of business. Among these motives is undoubtedly the desire of advancing his rank, and contending with the landlords in the enjoyment of leisure, as well as of foreign and domestic luxuries. |

But the desire to realize a fortune as a permanent provision for a family is perhaps the most general motive for the continued exertions of those whose incomes depend upon their own personal skill and efforts. Whatever may be said of the virtue of parsimony or saving, as a public duty, there cannot be a doubt that it is, in numberless cases, a most sacred and binding private duty; and were this legitimate and praiseworthy motive to persevering industry in any degree weakened, it is impossible that the wealth and prosperity of the country should not most materially suffer. But if, from the want of other consumers, the capitalists were obliged to consume all that could not be advantageously added to the national capital, the motives which support them in their daily tasks must essentially be weakened, and the same powers of production would not be called forth.(293)

It has appeared then that, in the ordinary state of society, the master producers and capitalists, though they may have the power, have not the will, to consume to the necessary extent. And with regard to their workmen, it must be allowed that, if they possessed the will, they have not the power. It is indeed most important to observe that no power of consumption on the part of the labouring classes can ever, according to the common motives which influence mankind, alone furnish an encouragement to the employment of capital. As I have before said, nobody will ever employ capital merely for the sake of the demand occasioned by those who work for him. (294) Unless | they produce an excess of value above what they consume, which he either wants himself in kind, or which he can advantageously exchange for something which he desires, either for present or future use, it is quite obvious that his capital will not be employed in maintaining them. When indeed this further value is created and affords a sufficient excitement to the saving and employment of stock, then certainly the power of consumption possessed by the workmen will greatly add to the whole national demand, and make room for the employment of a much greater capital.

It is most desirable that the labouring classes should be well paid, for a much more important reason than any that can relate to wealth; namely, the happiness of the great mass of society. But to those who are inclined to say that unproductive consumers cannot be necessary as a stimulus to the increase of wealth, if the productive classes do but consume a fair proportion of what they produce, I would observe that as a great increase of consumption among the working classes must greatly increase the cost of production, it must lower profits, and diminish or destroy the motive to accumulate, before agriculture, manufactures, and commerce have reached any considerable degree of prosperity. If each labourer were actually to consume double the quantity of corn which he does at present, such a demand, instead of giving a stimulus to wealth, would probably throw a great quantity of land out of cultivation, | and greatly diminish both internal and external commerce.(295)

There is certainly however very little danger of a diminution of wealth from this cause. Owing to the principle of population, all the tendencies are the other way; and there is much more reason to fear that the working classes will consume too little for their own happiness, than that they will consume too much to allow of an adequate increase of wealth. (296) I only adverted to the circumstance to shew that, supposing so impossible a case as a very great consumption among the working producers, such consumption would not be of the kind to push the wealth of a country to its greatest extent.

[It might be desirable, on other accounts than with a view to wealth, that the labouring classes should not work so hard; but as this could only be accomplished by a simultaneous resolution among workmen, it cannot take place.

With the single exception of the effects to be expected from prudential habits, there is no chance of an increased consumption among the working classes; and if there were, it is not the kind of consumption best calculated to encourage the employment of capital.

When the demands of the landlords have been added to those of the productive classes, it appears from experience that profits have often prematurely fallen.

But if the master producers have not the will to consume sufficiently, and the working producers have not the power, then, if the aid of the landlords be not found sufficient, the consumption required must take place among the unproductive labourers of Adam Smith.

Every country must necessarily have a body of unproductive labourers; but it is a most important practical question to determine, whether they detract from the wealth of a country, or encourage it.

The solution of this question depends upon the solution of the greater questions, 1st. whether the motive to accumulate may be checked from the want of demand, before it is checked by the difficulty of procuring food; and 2dly, whether such check is probable.

An attempt has been made to determine these two questions in different parts of the present work, and if the determination be just, we may conclude that a body of unproductive labourers is necessary as a stimulus to wealth.

Of the persons constituting the unproductive classes, those which are paid voluntarily will be considered in general as the most useful in exciting industry, and the least likely to be prejudicial by interfering with the costs of production.

Those which are supported by taxes are equally useful with regard] to distribution and de-|mand; they frequently occasion a division of property more favourable to the progress of wealth than would otherwise have taken place; they ensure that consumption which is necessary to give the proper stimulus to production; and the desire to pay a tax, and yet enjoy the same means of gratification, must often operate to excite the exertions of industry quite as effectually as the desire to pay a lawyer or physician. Yet to counterbalance these advantages, which so far are unquestionable, it must be acknowledged that injudicious taxation might stop the increase of wealth at almost any period of its progress, early or late;* and that the most judicious taxation might ultimately be so heavy as to clog all the channels of foreign and domestic trade, and almost prevent the possibility of accumulation.

The effect therefore on national wealth of those classes of unproductive labourers which are supported by taxation, must be very various in different countries, and must depend entirely upon the powers of production, and upon the manner in | which the taxes are raised in each country. As great powers of production are neither likely to be called into action, or, when once in action, kept in activity without great consumption, I feel very little doubt that instances have practically occurred of national wealth being greatly stimulated by the consumption of those who have been supported by taxes. Yet taxation is a stimulus so liable in every way to abuse, and it is so absolutely necessary for the general interests of society to consider private property as sacred, that one should be extremely cautious of trusting to any government the means of making a different distribution of wealth, with a view to the general good. But when, either from necessity or error, a different distribution has taken place, and the evil, as far as it regards private property, has actually been committed, it would surely be most unwise to attempt, at the expense of a great temporary sacrifice, a return to the former distribution, without very fully considering whether, if it were effected, it would be really advantageous; that is, whether, in the actual circumstances of the country, with reference to its powers of production, more would not be lost by the want of consumption than gained by the diminution of taxation.(297)

[If distribution be a necessary element of wealth, it would be rash to affirm, that the abolition of a national debt must certainly increase wealth and employ the people.

If the powers of production in a well peopled country were tripled, the greatest difficulty would be the means of distribution; and it would depend upon the circumstance of proper means of distribution being found, whether the increased powers were a great good, or a great evil.

It may be a question, whether, with the great powers of production possessed by this country, and with its actual division of property in land, the same stimulus could be given to the increase of wealth, without the distribution occasioned by a national debt.

Still there are serious evils belonging to a national debt. It is both a cumbersome and a dangerous instrument of distribution.]

A third objection to such a debt is, that it greatly aggravates the evils arising from changes in the value of money. When the currency falls in value, the an-|nuitants, as owners of fixed incomes, are most unjustly deprived of their proper share of the national produce; when the currency rises in value, the pressure of the taxation necessary to pay the interest of the debt, may become suddenly so heavy as greatly to distress the productive classes;* and this kind of sudden pressure must very much enhance the insecurity of property vested in public funds.

[On these accounts it might be desirable to diminish the debt, and discourage its growth in future; but after being accustomed to a great consumption, we cannot recede without passing through a period of great distress.]

It is, I know, generally thought that all would be well, if we could but be relieved from the heavy burden of our debt. And yet I feel perfectly convinced that, if a spunge could be applied to it to-morrow, and we could put out of our consideration the poverty and misery of the public creditors, by supposing them to be supported comfortably in some other country, the rest of the society, as a nation, instead of being enriched, would be impoverished. It is the greatest mistake to suppose that the landlords and capitalists would either at once, or in a short time, be prepared for so great an additional consumption as such a change would require; and if they adopted the alternative suggested by Mr. Ricardo in a former instance, of saving, and lending their increased incomes, the evil would be aggravated tenfold. The new distribution of produce would diminish the demand for the results of productive labour; and if, in addition to this, more revenue were converted into capital, profits would fall to nothing, and a much greater quantity of capital would emigrate, or be destroyed at home, and a much greater number of persons would be starving for want of employment, than before the extinction of the debt.

[The landlords would probably employ more menial servants, and this would be the best remedy that in the actual circumstances could be applied; but the structure of society would be greatly deteriorated by the change.]

With regard to the capitalists, though they would be relieved from a great portion of their taxes, yet there is every probability that their habits of saving, combined with the diminution in the number of effective demanders, would occasion such a fall in the prices of commodities as greatly to diminish that part of the national income which depends | upon profits; and I feel very little doubt that, in five years from the date of such an event, not only would the exchangeable value of the whole produce, estimated in domestic and foreign labour, be decidedly diminished, but a smaller absolute quantity of corn would be grown, and fewer manufactured and foreign commodities would be brought to market than before.(298)

[A country with land, labour, and capital, has certainly the power of recovering from this state of things; but it would have passed through a period of great stagnation; and finally a considerable body of unproductive labourers may be absolutely necessary to call forth its resources.]

It has been repeatedly conceded, that the pro-|ductive classes have the power of consuming all that they produce; and, if this power were adequately exercised, there might be no occasion, with a view to wealth, for unproductive consumers. But it is found by experience that, though there may be the power, there is not the will; and it is to supply this will that a body of unproductive consumers is necessary. Their specific use in encouraging wealth is, to maintain such a balance between produce and consumption as to give the greatest exchangeable value to the results of the national industry. (299) If unproductive labour were to predominate, the comparatively small quantity of material products brought to market would keep down the value of the whole produce, from the deficiency of quantity. If the productive classes were in excess, the value of the whole produce would fall from excess of supply. It is obviously a certain proportion between the two which will yield the greatest value, and command the greatest quantity of domestic and foreign labour; (300) and we may safely conclude that, among the causes necessary to that distribution, which will keep up and increase the exchangeable value of the whole produce, we must place the maintenance of a certain body of unproductive consumers. This body, to make it effectual as a stimulus to wealth, and to prevent it from being prejudicial, as a clog to it, should vary in different countries, and at different times, according to the powers of production; and the most favourable result evidently depends upon | the proportion between productive and unproductive consumers, being best suited to the natural resources of the soil, and the acquired tastes and habits of the people.

section x

Application of some of the preceding Principles to the Distresses of the Labouring Classes, since 1815, with general Observations

[The distresses of the labouring classes have been attributed to deficient capital. The capital may be deficient compared with the population, and yet not deficient compared with the effective demand for it.

If one fourth of the capital of a country were suddenly destroyed, or transported to a different part of the world, profits would be high and saving would be the remedy required.]

On the other hand, if the capital of the country were diminished by the failure of some branches | of trade, which had before been very prosperous, and absorbed a great quantity of stock; or even if capital were suddenly destroyed, and from peculiar circumstances a period were to succeed of diminished consumption and slack demand, the state of things, with the exception of the distresses of the poor, would be almost exactly reversed. The remaining capitalists would be in no respect benefited by events which had diminished demand in a still greater proportion than they had diminished capital. Commodities would be every where cheap. Capital would be seeking employment, but would not easily find it; and the profits of stock would be low. There would be no pressing and immediate demand for capital, because there would be no pressing and immediate demand for commodities; and, under these circumstances, the saving from revenue to add to capital, instead of affording the remedy required, would only aggravate the distresses of the capitalists, and fill the stream of capital which was flowing out of the country. The distresses of the capitalists would be aggravated, just upon the same principle as the distresses of the labouring classes would be aggravated, if they were encouraged to marry and increase, after a considerable destruction of people, although accompanied by a still greater destruction of capital which had kept the wages of labour very low. There might certainly be a great deficiency of population, compared with the territory and powers of the country, and it might be very desirable that it should be greater; but if the wages of labour | were still low, notwithstanding the diminution of people, to encourage the birth of more children would be to encourage misery and mortality rather than population.(301)

Now I would ask, to which of these two suppositions does the present state of this country bear the nearest resemblance? Surely to the latter. That a great loss of capital has lately been sustained, is unquestionable. During nearly the whole of the war, owing to the union of great powers of production with great consumption and demand, the prodigious destruction of capital by the government was much more than recovered. To doubt this would be to shut our eyes to the comparative state of the country in 1792 and 1813. The two last years of the war were, however, years of extraordinary expense, and being followed immediately by a period marked by a very unusual stagnation of demand, the destruction of capital which took place in those years was not probably recovered. But this stagnation itself was much more disastrous in its effects upon the national capital, and still more upon the national revenue, than any previous destruction of stock. It commenced certainly with the extraordinary fall in the value of the raw produce of the land, to the amount, it is supposed, of nearly one third. When this fall had diminished the capitals of the farmers, and still more the revenues both of landlords and farmers, and of all those who were otherwise connected with the land, their power of purchasing manufactures and foreign products was of necessity greatly diminished. The | failure of home demand filled the warehouses of the manufacturers with unsold goods, which urged them to export more largely at all risks. But this excessive exportation glutted all the foreign markets, and prevented the merchants from receiving adequate returns; while, from the diminution of the home revenues, aggravated by a sudden and extraordinary contraction of the currency, even the comparatively scanty returns obtained from abroad found a very insufficient domestic demand, and the profits and consequent expenditure of merchants and manufacturers were proportionably lowered. While these unfavourable changes were taking place in rents and profits, the powerful stimulus which had been given to population during the war continued to pour in fresh supplies of labour, and, aided by the disbanded soldiers and sailors and the failure of demand arising from the losses of the farmers and merchants, reduced generally the wages of labour, and left the country with a generally diminished capital and revenue;—not merely in proportion to the alteration of the value of the currency, but in reference to the bullion value of its produce, and the command of this bullion value over domestic and foreign labour. (302) For the four or five years since the war, on account of the change in the distribution of the national produce, and the want of consumption and demand occasioned by it, a decided check has been given to production, and the population, under its former impulse, has increased, not only faster than the demand for labour, but faster than the actual pro-|duce; yet this produce, though decidedly deficient, compared with the population, and compared with past times, is redundant, compared with the effectual demand for it and the revenue which is to purchase it. Though labour is cheap, there is neither the power nor the will to employ it all; because not only has the capital of the country diminished, compared with the number of labourers, but, owing to the diminished revenues of the country, the commodities which those labourers would produce are not in such request as ensure tolerable profits to the reduced capital.(303)

[But when profits are low, and capital is on that account flowing out of the country; to encourage saving, is like the policy of encouraging marriage when the population is starving and emigrating.

Our present low profits have been attributed to the cultivation of poor land, heavy taxation, and restrictions on commerce; but it is difficult to admit a theory of our distresses inconsistent with the theory of our prosperity.

Whatever may be the final tendency of these causes; yet as the country was more than usually prosperous when they prevailed in a greater degree than at present, we must look elsewhere for the immediate sources of the existing distress.]

How far our artificial system, and particularly the changes in the value of our currency operating upon a large national debt, may have aggravated | the evils we have experienced, it would be extremely difficult to say. But I feel perfectly convinced that a very considerable portion of these evils might be experienced by a nation without poor land in cultivation, without taxes, and without any fresh restrictions on trade.(304)

If a large country, of considerable fertility, and sufficient inland communications, were surrounded by an impassable wall, we all agree that it might be tolerably rich, though not so rich as if it enjoyed the benefit of foreign commerce. Now, supposing such a country gradually to indulge in a considerable consumption, to call forth and employ a great quantity of ingenuity in production, and to save only yearly that portion of its revenue which it could most advantageously add to its capital, expending the rest in consumable commodities and unproductive labour, it might evidently, under such a balance of produce and consumption, be increasing in wealth and population with considerable rapidity. But if, upon the principle laid down by M. Say, that the consumption of a commodity is a diminution of demand, the society were greatly and generally to slacken their consumption, and add to their capitals, there cannot be the least doubt, on the great principles of demand and supply, that the profits of capitalists would soon be reduced to nothing, though there were no poor land in cultivation; and the population would be thrown out of work and would be starving, although without a single tax, or any restrictions on trade. (305) |

The state of Europe and America may perhaps be said, in some points, to resemble the case here supposed; and the stagnation which has been so generally felt and complained of since the war, appears to me inexplicable upon the principles of those who think that the power of production is the only element of wealth, and who consequently infer that if the powers of production be increased, wealth will certainly increase in proportion. Now it is unquestionable that the powers of production were increased by the cessation of war, and that more people and more capital were ready to be employed in productive labour; but notwithstanding this obvious increase in the powers of production, we hear every where of difficulties and distresses, instead of ease and plenty. In the United States of America in particular, a country of extraordinary physical resources, the difficulties which have been experienced are very striking, and such certainly as could hardly have been expected. These difficulties, at least, cannot be attributed to the cultivation of poor land, restrictions upon commerce, and excess of taxation. (306) Altogether the state of the commercial world, since the war, clearly shews that something else is necessary to the continued increase of wealth besides an increase in the power of producing.

That the transition from war to peace, of which so much has been said, is a main cause of the effects observed, will be readily allowed, but not as the operation is usually explained. It is generally said that there has not been time to transfer | capital from the employments where it is redundant to those where it is deficient, and thus to restore the proper equilibrium. But I cannot bring myself to believe that this transfer can require so much time as has now elapsed since the war; and I would again ask, where are the under-stocked employments, which, according to this theory, ought to be numerous, and fully capable of absorbing all the redundant capital, which is confessedly glutting the markets of Europe in so many different branches of trade? It is well known by the owners of floating capital, that none such are now to be found; and if the transition in question is to account for what has happened, it must have produced some other effects besides that which arises from the difficulty of moving capital. This I conceive to be a great diminution of the whole amount of consumption and demand. The necessary changes in the channels of trade would be effected in a year or two; but the general diminution of consumption and demand, occasioned by the transition from such a war to a peace, may last for a very considerable time. The returned taxes, and the excess of individual gains above expenditure, which were so largely used as revenue during the war, are now in part, and probably in no inconsiderable part, saved. I cannot doubt, for instance, that in our own country very many persons have taken the opportunity of saving a part of their returned property-tax, particularly those who have only life-incomes, and who, contrary to the principles of just taxation, | had been assessed at the same rate with those whose incomes were derived from realized property. This saving is quite natural and proper, and forms no just argument against the removal of the tax; (307) but still it contributes to explain the cause of the diminished demand for commodities, compared with their supply since the war. If some of the principal governments concerned spent the taxes which they raised in a manner to create a greater and more certain demand for labour and commodities, particularly the former, than the present owners of them, and if this difference of expenditure be of a nature to last for some time, we cannot be surprised at the duration of the effects arising from the transition from war to peace.

[This diminished consumption must have operated very differently in different countries. Some it must have relieved, others it has distressed. Those which suffered the least by the war have suffered the most by the peace.

The distress which has attended the peace is an unfortunate association; but it should be recollected that it has arisen from peculiar circumstances, which in the same degree are not necessarily connected with the termination of a war.

On account of the evils likely to be felt from a sudden diminution of consumption, the policy which has often been recommended of raising the supplies for a war within each year may fairly be doubted.]

If the country were poor, such a system of taxation might completely keep down its efforts. It might every year positively diminish its capital, and render it every year more ruinous to furnish the same supplies; (308) till the country would be obliged to submit to its enemies from the absolute inability of continuing to oppose them with effect. On the other hand, if the country were rich, and had great powers of production, which were likely | to be still further called forth by the stimulus of a great consumption, it might be able to pay the heavy taxes imposed upon it, out of its revenue, and yet find the means of adequate accumulation; but if this process were to last for any time, and the habits of the people were accommodated to this scale of public and private expenditure, it is scarcely possible to doubt that, at the end of the war, when so large a mass of taxes would at once be restored to the payers of them, the just balance of produce and consumption would be completely destroyed, and a period would ensue, longer or shorter, according to circumstances, in which a very great stagnation would be felt in every branch of productive industry, attended by its usual concomitant general distress.

[Although it is necessary to save, in order to recover the capital which the country has lost; yet if profits are low and uncertain, saving is not the first step wanted.

What the country wants is an increased national revenue, or an increase of the exchangeable value of the whole produce. When this has been attained we may save with effect.

The question, how this increase of revenue is to be attained, has been attempted to be answered in the latter sections of this chapter.

An increased revenue is not so easily attained as an increased proportion of capital to revenue.]

Still, however, it is of the utmost importance to know the immediate object which ought to be aimed at; that if we can do but little actually to forward it, we may not, from ignorance, do much to retard it. With regard to the first main cause | which I have mentioned, as tending to increase the exchangeable value of the national produce, namely the division of landed property, I have given my reasons for thinking that, in the actual and peculiar state of this country, the abolition of the law of primogeniture would produce more evil than good; and there is no other way in which a different division of land could be effected, consistently with an adequate respect for the great fundamental law of property, on which all progress in civilization, improvement, and wealth, must ever depend. But if the distribution of wealth to a certain extent be one of the main causes of its increase, while it is unadvisable directly to interfere with the present division of land in this country, it may justly become a question, whether the evils attendant on the national debt are not more than counterbalanced by the distribution of property and increase of the middle classes of society, which it must necessarily create; and whether by saving, in order to pay it off, we are not submitting to a painful sacrifice, which, if it attains its object, whatever other good it may effect, will leave us with a much less favourable distribution of wealth? (309) By greatly reducing the national debt, if we are able to accomplish it, we may place ourselves perhaps in a more safe position, and this no doubt is an important consideration; but grievously will those be disappointed who think that, either by greatly reducing or at once destroying it, we can enrich ourselves, and employ all our labouring classes. |

[A greater freedom might be given to commerce without diminishing the revenue of the customs. The permanent effects of opening the trade with France would certainly be beneficial.

But in looking forward to changes of this kind, we should attend to the caution given by Adam Smith, which would be particularly applicable to the silk trade.

When the opening of any trade would produce temporary distress, it is because it would diminish for a time the exchangeable value of the whole produce; but, in general, the extension of trade increases it.

A knowledge of the effects of unproductive consumers on national wealth will make us proceed with more caution in our efforts to diminish them.

Public works, the making and repairing of roads, and a tendency among persons of fortune to improve their grounds, and keep more servants, are the most direct means within our power of restoring the demand for labour.]

If by the operation of these three causes, either separately or conjointly, we can make the supply and consumption bear a more advantageous proportion to each other, so as to increase the exchangeable value of the whole produce, the rate of profits may then permanently rise as high as the quality of the soil in cultivation combined with the actual skill of the cultivators will allow,* which is far from being the case at present. And as soon as the capitalist can begin to save from steady and improving profits, instead of from diminished expenditure, that is, as soon as the national revenue, | estimated in bullion, and in the command of this bullion over domestic and foreign labour, begins yearly and steadily to increase, we may then begin safely and effectively to recover our lost capital by the usual process of saving a portion of our increased revenue to add to it.

[It is thought by many that the revenue of the country would be most effectually increased, and the balance of consumption restored, by an abundant issue of paper; but this opinion is founded on a mistaken view of the effects of a depreciated currency.

A great issue of paper now would have a very different effect from that which it had during the war.]

Perhaps a sudden increase of currency and a new facility of borrowing might, under any circumstances, give a temporary stimulus to trade, but it would only be temporary. Without a large expenditure on the part of the government, and a frequent conversion of capital into revenue, the great powers of production acquired by the capitalists, operating upon the diminished power of purchasing possessed by the owners of fixed incomes, could not fail to occasion a still greater glut of commodities than is felt at present; and experience has sufficiently shewn us, that paper cannot support prices under such circumstances. (311) In the history of our paper transactions, it will be found that the abundance or scantiness of currency has followed and aggravated high or low prices, but seldom or never led them; and it is of the utmost importance to recollect that, at the end of the war, the prices failed before the contraction of the currency began. It was, in fact, the failure of prices, which destroyed the country banks, and shewed us the frail foundations on which the excess of our paper-currency rested. This sudden contraction no doubt aggravated very greatly the distresses of the merchants and of the country; and for this very reason we should use our utmost endeavours to avoid such an event in future; not, how-|ever, by vain efforts to keep up prices by forcible issues of paper, in defiance at once of the laws of justice and the great principles of supply and demand, but by the only effectual way, that of steadily maintaining our paper of the same value with the coin which it professes to represent, and subjecting it to no other fluctuations than those which belong to the precious metals.

In reference to the main doctrine inculcated in the latter part of this work, namely, that the progress of wealth depends upon proportions; it will be objected, perhaps, that it necessarily opens the way to differences of opinion relating to these propositions, and thus throws a kind of uncertainty over the science of political economy which was not supposed to belong to it. If, however, the doctrine should be found, upon sufficient examination, to be true; if it adequately accounts for things as they are, and explains consistently why frequent mistakes have been made respecting the future, it will be allowed that such objectors are answered. We cannot make a science more certain by our wishes or opinions; but we may obviously make it much more uncertain in its application, by believing it to be what it is not.

Though we cannot, however, lay down a certain rule for growing rich, and say that a nation will increase in wealth just in the degree in which it saves from its revenue, and adds to its capital: yet even in the most uncertain parts of the science, even in those parts which relate to the proportions of production and consumption, we are not left | without guides; and if we attend to the great laws of demand and supply, they will generally direct us into the right course. It is justly observed by Mr. Ricardo that “the farmer and manufacturer can no more live without profit than the labourer without wages. Their motive for accumulation will diminish with every diminution of profit, and will cease altogether when their profits are so low as not to afford them an adequate compensation for their trouble, and the risk which they must necessarily encounter in employing their capital productively.”* Mr. Ricardo applies this passage to the final and necessary fall of profits occasioned by the state of the land. I would apply it at all times, throughout all the variable periods which intervene between the first stage of cultivation and the last. Whenever capital increases too fast, the motive to accumulation diminishes, and there will be a natural tendency to spend more and save less. When profits rise, the motive to accumulation will increase, and there will be a tendency to spend a smaller proportion of the gains, and to save a greater. These tendencies, operating on individuals, direct them towards the just mean, which they would more frequently attain if they were not interrupted by bad laws or unwise exhortations. If every man who saves from his income is necessarily a friend to his country, it follows that all those who spend their incomes, though they may | not be absolute enemies, like the spendthrift, must be considered as failing in the duty of benefiting their country, and employing the labouring classes, when it is in their power; and this cannot be an agreeable reflection to those whose scale of expenditure in their houses, furniture, carriages and table, would certainly admit of great retrenchment, with but little sacrifice of real comfort. But if, in reality, saving is a national benefit, or a national disadvantage, according to the circumstances of the period; and, if these circumstances are best declared by the rate of profits, surely it is a case in which individual interest needs no extraneous assistance.(312)

Saving, as I have before said, is, in numerous instances, a most sacred private duty. How far a just sense of this duty, together with the desire of bettering our condition so strongly implanted in the human breast, may sometimes, and in some states of society, occasion a greater tendency to parsimony than is consistent with the most effective encouragement to the growth of public wealth, it is difficult to say; but whether this tendency, if let alone, be ever too great or not, no one could think of interfering with it, even in its caprices. There is no reason, however, for giving an additional sanction to it, by calling it a public duty. The market for national capital will be supplied, like other markets, without the aid of patriotism. And in leaving the whole question of saving to the uninfluenced operation of individual interest and individual feelings, (313) we shall best conform to | that great principle of political economy laid down by Adam Smith, which teaches us a general maxim, liable to very few exceptions, that the wealth of nations is best secured by allowing every person, as long as he adheres to the rules of justice, to pursue his own interest in his own way.

[Though the science of Political Economy must, from its nature, resemble more the science of morals or of politics than that of mathematics, yet if its principles be founded on a sufficiently extended experience, they will rarely in their application disappoint our just expectations.]

There is another objection which will probably be made to the doctrines of the latter part of this work, which I am more anxious to guard against. If the principles which I have laid down be true, it will certainly follow that the sudden removal of taxes will often be attended with very different effects, particularly to the labouring classes of society, from those which have been generally ex-|pected. And an inference may perhaps be drawn from this conclusion in favour of taxation. But the just inference from it is, that taxes should never be imposed, nor to a greater amount, than the necessity of the case justifies, and particularly that every effort should be made, consistently with national honour and security, to prevent a scale of expenditure so great that it cannot proceed without ruin, and cannot be stopped without distress.(314)

Even if it be allowed that the excitement of a prodigious public expenditure, and of the taxation necessary to support it, operating upon extraordinary powers of production, might, under peculiar circumstances, increase the wealth of a country in a greater degree than it otherwise would have increased; yet, as the greatest powers of production must finally be overcome by excessive borrowing, and as increased misery among the labouring classes must be the consequence, whether we go on or attempt to return, it would surely have been much better for the society if such wealth had never existed. It is like the unnatural strength occasioned by some violent stimulant, which, if not absolutely necessary, should be by all means avoided, on account of the exhaustion which is sure to follow it.(315)

[It is the duty of governments to avoid war if possible; but if it be unavoidable, so to regulate the expenditure as to produce the least fluctuation of demand.

Other classes are often relieved by the taking off of taxes; but nothing can compensate to the labouring classes the want of demand for labour.

To state these facts is not to favour taxes, but to bring forward additional reasons against imposing them without a strong necessity.

The labouring classes suffer more from low wages in adversity than they are benefited by high wages in prosperity. To them fluctuations are most unfavourable. The interests of the great mass of society require peace and equable expenditure.]

[* ]See Lord Lauderdale’s Chapter on Parsimony, in his Inquiry into the Nature and Origin of Public Wealth, ch. iv. p. 198. 2d. edit. Lord Lauderdale appears to have gone as much too far in deprecating accumulation, as some other writers in recommending it. This tendency to extremes is exactly what I consider as the great source of error in political economy.

[* ]Mr. Mill, in a reply to Mr. Spence, published in 1808, has laid down very broadly the doctrine that commodities are only purchased by commodities, and that one half of them must always furnish a market for the other half. The same doctrine appears to be adopted in its fullest extent by the author of an able and useful article on the Corn Laws, in the Supplement to the Encyclopaedia Britannica, which has been referred to in a previous chapter.

[* ]Princ. of Polit. Econ. ch. xxi. p. [292–3]. 2d edit.

[† ]Edinburgh Review, No. LXIV. p. 471.

[* ]Princ. of Polit. Econ. chap. xxi. p. [291]. 2d edit.

[* ]Theoretical writers in Political Economy, from the fear of appearing to attach too much importance to money, have perhaps been too apt to throw it out of their consideration in their reasonings. It is an abstract truth that we want commodities, not money. But, in reality, no commodity for which it is possible to | sell our goods at once, can be an adequate substitute for a circulating medium, and enable us in the same manner to provide for children, to purchase an estate, or to command labour and provisions a year or two hence. A circulating medium is absolutely necessary to any considerable saving; and even the manufacturer would get on but slowly, if he were obliged to accumulate in kind all the wages of his workmen. We cannot therefore be surprized at his wanting money rather than other goods; and, in civilized countries, we may be quite sure that if the farmer or manufacturer cannot sell his products so as to give him a profit estimated in money, his industry will immediately slacken. The circulating medium bears so important a part in the distribution of wealth, and the encouragement of industry, that to set it aside in our reasonings may often lead us wrong.

[* ]Edinburgh Review, No. LXIV. p. 471.

[† ]Of all the opinions advanced by able and ingenious men which I have ever met with, the opinion of Mr. Say, which states that, un produit consomme´ ou de´truit est un de´bouche´ ferme´ (l. i. ch. | 15.) appears to me to be the most directly opposed to just theory, and the most uniformly contradicted by experience. Yet it directly follows from the new doctrine, that commodities are to be considered only in their relation to each other,—not to the consumers. What, I would ask, would become of the demand for commodities, if all consumption except bread and water were suspended for the next half year? What an accumulation of commodities! Quels de´bouche´s! What a prodigious market would this event occasion!

[† ]The reader must already know, that I do not share in the apprehensions of Mr. Owen about the permanent effects of machinery. But I am decidedly of opinion, that on this point he has the best of the argument with those who think that accumulation ensures effective demand.

[* ]In Norway and Sweden, particularly the former, where the agricultural labourer either lives in the farmer’s family or has a portion of land assigned to him in lieu of wages, he is in general pretty well fed, although there is but little demand for labour, and considerable competition for such employment. In countries so circumstanced, (and there are many such all over the world,) it is perfectly futile to attempt to estimate profits by the excess of the produce above what is consumed in obtaining it, when for this excess there may be often little or no market. All evidently depends upon the exchangeable value of the disposable produce.

[* ]Parsimony, or the conversion of revenue into capital, may take place without any diminution of consumption, if the revenue increases first.(214)

[* ]Capital is withdrawn only from those employments where it can best be spared. It is hardly ever withdrawn from agriculture. Nothing is more common, as I have stated in the Chapter on Rent, than increased profits, not only without any capital being withdrawn from the land, but under a continual addition to it. Mr. Ricardo’s assumption of constant prices would make it absolutely impossible to account theoretically for things as they are. If capital were considered as not within the pale of demand and supply, the very familiar event of the rapid recovery of capital during a war would be quite inexplicable.

[* ]Ricardo’s Princ. of Polit. Econ. ch. xxi. p. [292]. 2d. edit.

[* ]Susmilch, vol. iii. p. 60. Essay on Population, vol. i. p. 459. edit. 5th. In foreign states very few persons live in the country who are not engaged in agriculture; but it is not so in England.

[† ]Population Abstracts, 1811.

[* ]Essai Politique sur la Nouvelle Espagne, tom. iii. l. iv. c. ix. p. 28.

[† ]Nouvelle Espagne, tom. iii. l. iv. c. ix. p. 36.

[‡ ]Nouvelle Espagne, tom. iii. liv. iv. c. ix. p. 12.

[* ]Tom. ii. l. iii. c. viii. p. 342.

[† ]Tom. iii. l. iv. c. ix. p. 89.

[* ]Essays, vol. i. p. 293.

[* ]Chap. ii. sect. vii.

[* ]Princ. of Polit. Econ. ch. xx. p. [279].

[* ]Sect. III. of this chapter.

[* ]From what has been here said, the reader will see that I can by no means agree with Mr. Ricardo, in his chapter On Gross and Net Revenue. I should not hesitate a moment in saying, that a country with a neat revenue from rents and profits, consisting of food and clothing for five millions of men, would be decidedly richer and more powerful, if such neat revenue were obtained from seven millions of men, rather than five, supposing them to be equally well supported. The whole produce would be greater; and the additional two millions of labourers would some of them unquestionably have a part of their wages disposable.(257) But I would further ask what is to become of the capital as well as the people in the case of such a change? It is obvious that a con-|siderable portion of it must become redundant and useless. I quite agree with Mr. Ricardo, however, in approving all saving of labour and inventions in machinery; but it is because I think that their tendency is to increase the gross produce and to make room for a larger population and a larger capital. If the saving of labour were to be accompanied by the effects stated in Mr. Ricardo’s instance, I should agree withM. Sismondi and Mr. Owen in deprecating it as a great misfortune.

[* ]It appears to me that if the two first sentences in Mr. Ricardo’s Chapter on Foreign Trade were well founded, there would be no such intercourse between nations. (270)

[† ]This, however, will not necessarily happen. The greater temptation offered to consumption may induce some persons to spend what they otherwise would have saved, and in many cases the wealth of the country, instead of suffering by this change, will gain by it. The increased consumption, as far as it goes, will occasion an increase of market prices and profits. The increase of | profits will soon restore the capital which for a short time had been diverted from its destined office; and the country will be left with habits of greater consumption, and at the same time with proportionate means of supplying them.

[* ]Princ. of Polit. Econ. c. vii. p. [130]. 2d edit.

[* ]Princ. of Pol. Econ. ch. vii. p. [131]. 2d edit.

[* ]Wealth of Nations, Vol. ii. B. ii. ch. ii. p. 19. 6th edit.

[* ]The effect of obliging a cultivator of a certain portion of rich land to maintain two men and two horses for the state, might in some cases only induce him to cultivate more, and create more wealth than he otherwise would have done, while it might leave him personally as rich as before, and the nation richer; but if the same obligation were to be imposed on the cultivator of an equal quantity of poor land, the property might be rendered at once not worth working, and the desertion of it would be the natural consequence. An indiscriminate and heavy tax on gross produce might immediately scatter desolation over a country, capable, under a better system, of producing considerable wealth.

[* ]In a country with a large public debt, there is no duty which ought to be held more sacred on the part of the administrators of the government than to prevent any variations of the currency beyond those which necessarily belong to the varying value of the precious metals. I am fully aware of the temporary advantages which may be derived from a fall in the value of money; and perhaps it may be true that a part of the distress during the last year, though I believe but a small part, was occasioned by the measure lately adopted, for the restoration of the currency to its just value. But some such measure was indispensably necessary; and Mr. Ricardo deserves the thanks of his country for having suggested one which has rendered the transition more easy than could reasonably have been expected.

[* ]The profits of stock cannot be higher than the state of the land will allow, but they may be lower in any degree. (see p. 300.) The great difference between Mr. Ricardo and me on this point is, that Mr. Ricardo thinks profits are regulated by the state of the land; I think they are only limited by it one way, and that if capital be abundant, compared with the demand for commodities, profits may be low in any degree, in spite of the fertility of the land. (310)

[* ]Princ. of Polit. Econ. ch. vi. p. [122].

[1]‘in the same proportion as capital’ is inserted.

[2]Replaces ‘or if it does’.

[3]‘and profits so low in consequence’ is ins.

[4]‘the capitalist’ is ins.

[5]Replaces ‘Now a dispute about increasing productions by saving is one thing, and about the motives for increasing them another.’

[6]First written simply ‘; but also the wages of the labourer.’

[7]‘in certain proportions to be agreed upon’ is deleted here.

[1]Traité d’Économie politique, 4th ed., 1819, p. 122.

[2]Replaces ‘in confining our enquiries to’.

[1]The remainder of the paragraph replaces ‘employed.’

[2]‘in such case’ is del. here.

[3]The preceding paragraph and the first part of this paragraph replace: ‘It is not true that those labourers would be most productive, the operations of whom were most assisted by capital, or the results of previous labour; because if I employ 100 men and £10,000 capital I must have returned to me all that the 100 men destroy, and the profits on the £10,000 capital in the value of the commodities produced. If I employ 2,000 men and £10,000 capital I must have what the 2,000 men consume and the profits on £10,000 capital. Mr. Malthus appears to think that the value of the return will be in proportion to the capital employed—the labourers must return a commodity not only of the value of the’ etc.

[4]‘all’ replaces ‘directly’.

[5]‘as’ replaces ‘into’.

[1]Replaces ‘If he answer, no, I trust he will find few to agree with him.’

[1]Replaces ‘his profit, as the value of the goods, is to be realized.’

[1]‘given’ replaces ‘very small’.

[2]Blank in MS: according to Humboldt, as quoted by Malthus,p. 382, twenty five. Humboldt, however, says nothing about the quantity of labour.

[3]‘and with the same quantity of labour’ is ins.

[4]The remainder of this sentence replaces ‘by the same number of men in England’.

[5]Replaces ‘of equal value’.

[6]‘variations’ replaces ‘value’.

[7]‘standard’ is ins.

[1]The last three paragraphs, beginning ‘And on what’, are ins.

[2]‘a certain’ replaces ‘the’.

[3]Blank in MS: ‘cloth’ is mentioned below.

[1]Malthus’s p. 61; above, pp. 30–31.

[1]The Note originally ended here; the remainder is ins.

[2]‘and the respective quantities will be represented by their cost, at the same time and place’ is deleted here.

[3]A remark pencilled by Ricardo on the margin, and then rubbed out, is faintly legible: ‘I do not say a commodity will be worth its cost in labour, but in proportion to its cost in labour.’ Cp. Principles, ed. 3, above, I, 47, n.

[4]‘natural’ is written above ‘just’, which however is not deleted.

[5]‘at the usual rate,’ is del. here.

[6]‘produce it and’ is ins.

[7]‘real’ is ins.

[8]‘relative’ is ins.

[1]i.e. Note (9) above.

[2]Wealth of Nations, Bk. 1, ch. vii; Cannan’s ed., vol. 1, p. 57.

[1]The remainder of the sentence replaces ‘yet it is in consequence of this difference in the fertility of the land on which this corn is grown and the fertility of that on which the corn is grown from which the other loaf is made, and which regulates the value of all corn that rent is paid.’

[2]‘compensation for’ is ins.

[1]Last nine words are ins.

[2]Last nine words are ins.

[1]The following passage is del. here: ‘but they are not applicable to any other commodity but paper money. Money is not consumed.’

[2]Last nine words are ins.

[1]‘I think it is not regulated by supply and demand.’ is del. here.

[2]‘value of the’ is ins.

[3]Replaces ‘by the demand and supply’.

[4]Replaces ‘upon the demand for or supply of’.

[5]Replaces ‘depends on’.

[6]Last two sentences are ins.

[1]‘exchangeable’ is ins.

[1]‘comparatively’ is ins.

[1]Malthus’s Grounds of an Opinion, 1815, pp. 38–9 and 41. Ricardo had criticized these opinions of Malthus in his Principles, above, I, 419–420.

[2]This sentence is ins.

[3]‘or the value of a larger proportion,’ is ins.

[1]Last three lines replace ‘that the hatter, the shoemaker, the ironmaster, and every’.

[2]‘after paying rent’ is ins.

[3]‘than before’ replaces ‘of the whole’, which had been ins.

[4]The Note originally ended here; the remainder is ins.

[5]Replaces ‘by a rise of wages’.

[6]Replaces ‘so far from its being true, that a large class of commodities will rise in price, they will do the contrary they will absolutely fall’.

[7]‘in a small proportion’ was first ins. here, and then del.

[8]‘little’ is del. here.

[1]McCulloch criticizes this Note in letter 417 of 22 Jan. 1821; see Ricardo’s reply, letter 418 of 25 Jan., and cp. letter 421. Ricardo considers the converse case in ed. 3 of Principles, above, I, 35 and 43.

[2]The following is del. here: ‘Supposing he had used his own measure of value could he have explained the effects of a rise of wages on relative value—on profits &c.? Would he have come to the same conclusions? Certainly not for if’.

[3]‘denies’ is del. here.

[4]‘under the conditions I have supposed’ is ins.

[1]‘justly’ is ins.

[2]‘nominal’ replaces ‘real’.

[1]MS reads ‘See Remark 72—Page 16½ 17’, referring to the earlier pagination of MS.

[1]‘general’ is ins.

[*]Inquiry into the Nature and Progress of Rent Page 57.

[*]Inquiry into the Nature and Progress of Rent Page 57.

[*]Inquiry into the Nature and Progress of Rent Page 57.

[2]‘a lower’ replaces ‘the same’.

[1]‘low’ replaces ‘lower’, and five words below ‘high’ replaces ‘higher’.

[2]‘existed’ is written in pencil above ‘was offered’, which however is not del.

[3]‘surplus’ is del. here.

[4]Replaces ‘raise double the produce’.

[5]Replaces ‘forgets that the proof of no rent being paid’.

[6]Replaces ‘does not depend [‘only’ is ins. here] on worse lands being taken into cultivation.’

[7]‘some’ here and below, and ‘some of’ further down in this sentence are ins.

[1]‘and’ is replaced by ‘such as’ in the copy sent to Trower on 26 Nov. 1820, letter 403.

[2]‘altho of the same value as a capital which employs labour only,’ is del. here.

[1]‘the quantity’ is ins.

[2]‘the expence of production’ replaces ‘value’.

[3]Above, Note (11), p. 34.

[4]The words that follow the quotation are ins.

[1]‘relatively to one particular commodity’ is ins.

[2]The remainder of the sentence replaces ‘for each.’

[3]In substance, Principles, above, I, 87, n. 1.

[4]This paragraph is ins.

[1]The sentence originally ended here; ‘particularly if measured by corn and labour’ was then ins., and finally it was expanded as above.

[2]‘the quantity of’ replaces ‘the value of’, which had been ins.

[3]Above, I, 145.

[4]The six lines that follow in the Note replace an earlier version, in which the causes enumerated were only two—what is now the second being then merely a clause of the first: ‘is owing to two causes, one, the expences attending the purchase of gold and silver with bulky commodities, if the purchasers possess no others, particularly if the commodities with which the purchase is made must be conveyed to a great distance. In the country importing gold, all that expence, [ins. here: ‘the value of’] all that quantity of labour in fact, must be realized in the gold. [This sentence is replaced by ‘The expences of importing gold must be increased and must therefore raise its value.’] Secondly, the different rate of profits in different countries’ etc.

[5]The remainder of the sentence replaces ‘the intensity of labour.’

[6]Last nine words are ins.

[7]‘: Does not the labour on these constitute’ replaces ‘as not constituting’; and the question-mark at the end replaces a full stop.

[1]This sentence (where the medium is the quantity of labour, as opposed to the value of labour of the preceding sentence) is inserted.

[1]A copy of this Note, with a few variants, was sent by Ricardo to Trower on 26 Nov. 1820, letter 403.

[1]Copy to Trower ‘probably’.

[2]‘obtained’ replaces ‘bestowed’.

[3]Copy to Trower ‘a great’.

[1]Above, p. 34.

[1]‘at all times’ is del. here.

[1]Ch. xxxii, ‘Mr. Malthus’s Opinions on Rent.’

[1]Above, I, 404–9.

[2]Note (51) below.

[1]The remainder of the sentence replaces ‘for them.’

[1]Last eight words are ins.

[2]Last nine words are ins.

[3]First written ‘were not so strong would be permanently’, then revised ‘were not strong would be more or less permanently’, and finally corrected as above.

[4]‘limited’ is here ins.

[1]‘facility’ replaces ‘means’.

[2]‘doubly’ is del. here.

[3]‘what are now called’ is ins.

[1]‘on’ replaces ‘to’.

[2]Principles, above, I, 74–75.

[1]Inquiry into ... Rent, p. 57.

[2]‘really, if well understood,’ is ins.

[3]Above, I, 79–80 and 412; and cp. 81, n. 1.

[4]The phrase is not a slip for ‘of a fact not of an opinion’, as the Johns Hopkins ed. suggests, mistaking Ricardo’s modesty for arrogance.

[5]The first part of this sentence replaces ‘I know full well that I am not deserving of half the kind things which Mr. Malthus says of me, but I know also that I do not merit being held up as the enemy of landlords, or of holding any worse opinion’.

[1]The whole of this Note is ins. Cp. the footnote added in ed. 3 of Ricardo’s Principles, above, I, 404.

[2]The last two lines, beginning ‘and here’, are ins.

[1]‘past’ is del. here.

[1]An earlier version of this Note read: ‘In what medium fallen? Except in corn, and only in that, because corn would rise, the expences of cultivation, including even the fall in profits, would not have fallen.’

[2]‘with’ is written above ‘from’, which however is not del.

[1]‘necessaries and’ is ins.

[2]‘in Mr. Malthus’s medium’ is ins.

[3]‘as compared with’ is del. here.

[4]‘employed’ is ins.

[5]Above, I, 77.

[1]‘To tax the produce of the land is the same thing as to diminish its fertility. Mr. Malthus allows here then that to diminish’ is del. here.

[2]‘though’ replaces ‘however’.

[1]‘the supply of’ is ins.

[2]‘corn’ was ins. here, and then del.

[*]See 152.5

[5]Note (59) above.

[1]‘and improvements in agriculture’ is del. here.

[2]Last nine words are ins.

[3]‘different’ is del. here.

[4]The Note originally ended here; the remainder is ins.

[6]‘in corn produce’ is ins.

[7]Last eleven words, beginning ‘and if’, are ins.

[8]Last sixteen words, beginning ‘and therefore’, are ins.

[9]‘than the population’ replaces ‘than people’.

[1]‘with £100’ is ins.

[2]‘apparent’ is ins.

[3]Replaces ‘command all the necessaries and enjoyments’.

[4]Replaces ‘of all the necessaries and conveniences’.

[5]‘except this one commodity’ is ins.

[6]Replaces ‘to employ an additional capital in manufactures’.

[7]‘, and poorer’ is ins.

[1]‘the’ is del. here.

[2]‘the effects of’ is ins.

[1]Last seven words are ins.

[2]Replaces ‘with the same capital a greater produce’.

[3]Last eight words are ins.

[1]Cp. above, I, 405, n. 2.

[1]Replaces ‘would be lower than before’.

[2]MS, by a mistake, repeats here ‘that’.

[3]First written ‘in the requisite abundance at the old prices—why would it not be the same with corn unless the expences of production became greater?’—then rearranged as above.

[1]‘more than’ is ins.

[2]‘in France and Flanders’ is ins.

[3]Last ten words, beginning ‘in either’, replace ‘neither more nor less will be received’.

[4]‘wheat’ is ins.

[5]The last sentence is ins.

[1]‘expence’ is written above ‘expenditure’, which however is not del.

[2]‘of production,’ is ins.

[3]The remainder of this sentence is ins.

[4]‘but by a fall in the value of money’ was ins. here and subsequently del.

[5]‘first’ was ins. here and then del.

[6]The first part of this paragraph, beginning ‘Suppose’, replaces what was originally a continuation of the preceding paragraph: ‘; commodities rise next, and corn rises still more, on account of the fall in the value of money, which if confined to paper money and not extending to bullion is called depreciation of money. But such a rise is only nominal; if goods rise 20 p.c., the exchange is 20 p.c. against us, bullion is at 20 p.c. premium—so that in all our transactions’ etc.

[1]The last eight words are ins.

[2]‘real fall in the value of paper and partly to a real’ is ins.

[3]‘in substance’ is del. here.

[4]‘partly’ is ins.

[5]Replaces ‘says’.

[6]Cp. letter 147 to Trower, 25 Dec. 1815.

[1]The whole of this Note, with the exception of the two concluding paragraphs, replaces: ‘In this opinion I fully concur but does it not overturn Mr. Malthus’ theory as explained in the last four pages? What advantages, in exportation, had England which she had not before, in the 20 years from 1793 to 1813 in consequence of being obliged to grow her own corn, that it is to that circumstance Mr. M. ascribes the partial fall in England of the value of money?’

[2]Last seven words are ins.

[3]Replaces ‘a dear’.

[4]‘tax’ is del. here.

[1]The rewritten section ends here.

[2]Cp. Malthus’s p. 167; above, p. 144.

[3]The Note originally opened: ‘This would be a common benefit’, which was del.

[4]‘produce’ is ins.

[5]‘perhaps lower’ is ins.

[1]‘come up to’ is written above ‘keep pace with’, which however is not del.

[2]The last sentence is ins.

[1]Cp. above, I, 417 ff.

[2]Replaces ‘fall’.

[3]‘rents in’ is ins.

[1]First written simply: ‘Produce would be dear because with the diminished capital less would be produced.’

[2]The sentence originally continued ‘and high prices’; this was replaced by ‘and the whole produce of a high value’, which was finally del.

[3]‘(the profits of capital)’ was first ins. here, then del.

[4]The Note originally opened: ‘Who maintains such an absurd doctrine’, which was del.

[5]Replaces ‘high’.

[6]Replaces ‘The consumers’.

[7]‘Low’ replaces ‘, which’.

[1]The Note originally opened: ‘My conviction is the same.’; this was del.

[2]See Malthus’s p. 149; above, p. 117.

[3]‘a’ replaces ‘another’.

[4]‘No benefit’ is del. here.

[5]‘the last portion of’ is ins.

[6]Replaces ‘As taxation is concerned this doctrine is most important.’

[1]‘in the price’ is ins.

[2]‘even’ is del. here.

[3]Twelve pages of the MS, from here to the end of Note (102), were added later, replacing an original version which (as appears from the gap in the pencil numeration of the sheets) covered only four pages. The pages which contained the original version are wanting.

[1]The original and shorter version of this Note is wanting. See above, p. 171, n. 3.

[2]The following is del. here: ‘Suppose wages to continue the same and rent to fall profits must depend on the value of the produce.’

[3]‘of corn’ is ins.

[4]‘the same’ is del. here.

[5]‘trade of’ was ins. here, then del.

[6]‘rise’ replaces ‘rise or fall’.

[1]The words in brackets are ins.

[2]Malthus’s p. 188; above, p. 171.

[*]This inference has been made only in the case of wages not absorbing by their rise the whole additional quantity of produce obtained by the farmer.

[3]Replaces ‘a wrong’.

[4]‘I do more, I maintain they would positively fall’ is del. here.

[5]‘would not rise’ replaces ‘must also fall’.

[1]‘the power’ is del. here.

[2]The remainder of this paragraph replaces: ‘. If the farmer can not command more goods with his additional quantity of corn, then goods have not fallen in value in consequence of the fall in the value of labour, and [‘one of the conditions of the proposition is gone,’ is del. here] the profits of the manufacturers of those goods will be higher than before—they will obtain as great a value for their goods in each others commodities [‘and in corn’ was ins., then del.] as they did previously to the importation of corn, while the value of the labour which they employ to obtain them will be less, and this it is which constitutes high profits. If Mr. Malthus says that corn will fall so much that the farmer will get no additional profits, then he must admit that his profits will not conform to the general rate of profits, because the fall of corn and labour, compared with commodities, is the same thing with him as a high value of commodities, and therefore he gives up his proposition of a fall in the value of commodities and he establishes the necessity of high profits on manufactured goods. “But the rate of returns (from agriculture) must obviously conform itself to the general rate of profits,” and therefore profits on agriculture will be also high.’

[3]Replaces ‘from the discovery of some rich mine’.

[4]Replaces ‘depreciation’.

[1]Replaces ‘to my mind’.

[1]‘the prices of’ is ins.

[2]First written ‘a given quantity of capital and labour will procure a greater quantity of corn from abroad, when applied to manufactures’, then revised as above.

[1]Cp. above, pp. 117–18.

[2]Malthus’s p. 183; above, p. 166.

[3]See e.g. Malthus’s p. 97; above, p. 68.

[1]‘capital’ replaces ‘profits’.

[2]Blank in MS. The reference is no doubt to Note (58).

[1]‘—to a small’ is del. here.

[1]In MS, ‘209’.

[1]Last six words replace ‘which’.

[2]‘than double also’ is ins.

[1]The remainder of the Note replaces an earlier version which read: ‘Mr. Malthus has either not read what I have said with his usual attention or has not interpreted me with his usual candour [‘either’ is del., and the last nine words are replaced by ‘or he could not suppose that I was of opinion that the landlords rent increased in proportion to the gross produce’]. If with a certain capital 180 qts. of corn are raised and the landlord obtains 10 qts. for rent, I say if the quantity obtained with the same capital be increased to 360 qts. he will not have a rent of the same value unless he have 20 qts. or one eighteenth as before [‘because 20 qts. will be of no more value in exchange than 10 were before’ is ins. here]. If with a second capital only 340 qts. be raised, which is the reason of his obtaining 20 qts. as rent, I do not say he is to have an eighteenth part of the 340 qts. also, [‘and of all the produce which can be employed on the land with such a rate of return,’ is ins. here] and of the 320 which may be the produce’. The rest of this version is missing.

[2]‘may have’ replaces ‘has’.

[3]‘can’ is written above ‘may’, which however is not del.

[1]Last five words are ins.

[2]An unfinished paragraph is del. here: ‘It is according to the division of the produce of any given capital between the 3 classes that we are to judge of rent, profit, and wages. Suppose on a given farm with a given capital 100 qrs. of corn are raised and that the land-

and that next year, owing to new lands being taken into cultivation elsewhere, these 100 qrs. are differently divided and the landlords receive one third—33the farmer—

[1]A paragraph is del. here: ‘Rent is not a proportion of the produce obtained—it is not governed like wages or profits by proportions—depending as it does on the difference between the quantity of produce obtained by two equal capitals. If therefore I have anywhere said that rent rises or falls in the proportion that the produce obtained is increased or diminished I have committed an error. I am not however conscious of having so done.’

[2]Replaces ‘But value is regulated by the quantity last produced’.

[3]Replaces ‘if I have said so’.

[4]Replaces ‘substituting the word “portion”, instead of proportion’.

[5]Cp. the alteration in ed. 3 of Ricardo’s Principles, above, I, 83,n. 1, and cp. 402–3.

[1]‘admits’ is del. here.

[2]An unfinished paragraph is del. here: ‘Mr. Malthus as I before observed does not appear to understand what I have said about proportions and it is important that I should not be misunder-stood on that subject. Suppose I employ 3 equal quantities of capital successively on the same land as the prices rise. I say when the second quantity is applied, the proportion [‘paid to the landlord’ is ins. here] of the quantity obtained by the first will be increased—he will have no portion whatever of the second. When the third quantity of capital is applied he will get a still larger proportion of the quantity obtained by the first capital, a small proportion of the quantity obtained by the second, and no portion of the third. Though the proportion of each quantity before obtained will be increased, the proportion of the whole quantity obtained allotted to the landlord will be diminished. Suppose the quantity obtained by the 1st capital were 1800 qrs. by the second 1780 and by the third1760. When the 2d capital was employed he would have 20 qrs. as rent or 1/90 of the quantity obtained by the first capital, but this would be only 1/179 of the whole. When the 3d capital was employed he would get 40 qrs. on No. 1 or one 1/9, and 20 qrs. of No. 2 or 1/17.’The incorrectness of these calculations is partly due to an alteration of the figures which was not completely carried through.

[3]‘manifest and’ is ins.

[4]‘great’ is del. here.

[5]‘capital and a’ is ins.

[6]The remainder of the Note is ins.

[1]‘he is only permanently’ is del. here.

[2]In MS, ‘221’.

[3]‘with the same capital’ is ins.

[1]Should probably be ‘which this additional quantity of labour employed could produce.’

[2]‘permanent’ is ins.

[3]‘whether they do not’ is ins.

[4]‘and commodities’ is ins.

[5]‘could’ is ins.

[1]‘Mr. Malthus thinks this would not be the case’ is del. here.

[2]Replaces ‘I confess those grounds have’.

[1]Replaces ‘real exchangeable value’.

[2]‘of value’ is ins.

[3]The MS has here a cross, perhaps a reference to a footnote on a lost slip.

[1]Replaces ‘he’.

[2]Last twelve words are ins.

[3]‘natural prod...’ is del. here.

[4]‘surplus’ is del. here.

[5]‘from which we derive’ replaces ‘of’.

[6]Last seven words replace ‘and all that’.

[1]Replaces ‘answer’.

[2]‘the real’ replaces ‘that’.

[3]‘sometimes’ was ins. here, and then del.

[4]Replaces ‘The surplus produce shews itself in profits and wages,’.

[1]Malthus’s p. 229; above, p. 210.

[2]‘very’ is ins.

[3]The last two sentences, beginning ‘If the taxes’, are ins.

[1]Last seven words replace ‘it’.

[2]‘consequent’ is ins.

[3]‘to any one else’ is del. here, and ‘any one else’ is ins. seven words below.

[4]The whole Note is del.

[5]Last six words are ins.

[6]‘The rate of profits in’ replaces ‘The profits of’, here and six words below.

[7]‘proportional’ was ins. here, and then del.

[8]‘relative’ is del. here.

[9]‘the prices of’ is ins.

[1]An unfinished paragraph is del. here: ‘The relative cheapness of corn to manufactures [‘particularly’ ins., then del.] if the goods are made in the country, and are made with the usual and ordinary quantity of labour,’.

[2]‘in return’ is ins.

[3]‘the price of their goods’ replaces ‘prices’.

[4]Replaces: ‘The present rents once constituted profits.’

[1]‘or growing’ is del. here.

[1]Above, I, 126.

[2]Replaces ‘prove’.

[1]Replaces ‘the demand regulates the supply’.

[1]Last six words are ins.

[2]‘constantly’ is ins.

[1]Replaces: ‘With every demand for an increased quantity it will rise above this price therefore if capital and population regularly increase the market price may for years exceed its natural price. I am however very little solicitous to retain my definition of the natural price of labour—Mr. Malthus’s will do [‘nearly’ is ins. here] as well for my purpose.’

[1]Replaces ‘increased supply and diminished demand?’

[2]‘capitals’ replaces ‘profits’.

[3]Replaces ‘more’.

[4]‘in the country’ is ins.

[5]A footnote written on a loose slip is printed here in the Johns Hopkins ed., but it properly belongs to Note (208), p. 320 below.

[6]Replaces ‘the money price of wages’.

[7]‘temporary, and’ is ins.

[8]Replaces ‘or it must be permanent’.

[1]‘capitalist’ is del. here.

[2]‘paying’ is ins.

[3]‘former’ is ins.

[4]‘and wages do not fall’ is ins.

[1]Above , I, 95.

[2]‘effective’ is ins.

[3]A sentence is del. here: ‘Fixed capital cannot be increased, but through the means of labour— and therefore there must previously be an increase of circulating capital, or which is the same thing, a diminution of unproductive, and an increase of productive consumption.’

[4]‘an additional quantity of labour’ replaces ‘this additional capital in the support of labour’.

[1]‘they’ was ins. here, and then del.

[2]In MS, ‘262’.

[3]The whole Note is del. The above is only a fragment: the original Note must have covered over six pages of the MS, as it appears from the gap in the pencil numeration of the sheets.

[1]Should be 950, as below.

[2]‘950’ and ‘150’ replace respectively ‘900’ and ‘100’.

[3]‘it is quite possible that’ is del. here.

[4]A sentence is del. here: ‘This is perhaps the only case in which the substitution of labour for fixed capital, if horses can be so called, is not attended with advantage to the capitalist yet is nevertheless beneficial to the working classes.’

[1]‘a money’ was ins. here, then del.

[2]Replaces ‘for value depends upon quantity.’

[3]‘less’ is del. here.

[4]‘capital’ replaces ‘profits’.

[5]Replaces ‘redundant’.

[1]There are three versions of this Note, of which the final one is printed above. The earliest attempt began as follows: ‘By price Mr. Malthus means money price and of course at a time when money is not varying in value. This it must be remembered is my measure of value which Mr. Malthus so loudly condemns. In this passage he proposes a compromise with me, he will admit one half of my measure of value if I will admit one half of his. I cannot consent’—here Ricardo broke off and started again:‘Mr. Malthus must mean price in a money stationary, or varying in value. If the former, I say that the whole value depends upon price [replaced by ‘upon price and not upon quantity’; which in its turn is replaced by ‘upon the price of the whole quantity’]; and that it will be durable; and with little or no increase of quantity, there will be no increase of wages because the demand for labour depends on quantity. Though the whole produce may be at a greater price taken collectively every thing may be at its former price. The price of 150 qrs. of wheat may be greater than the price of 100 qrs. and yet each individual quarter may be at the same price. If Mr. Malthus means that the value of the whole produce depends in any degree upon price in a varying medium, I do not know how to argue with him, for then our notions of value are so different that we clearly do not understand the terms used by each other. In such a medium an increase of price may take place without any increase of quantity, [‘and even with a diminished quantity’ is ins. here] or the contrary may be the fact, the quantity and price may both rise, or both fall.’ This again was superseded, but two concluding sentences, which followed here, are preserved at the end of the final version of the Note.

[1]‘then’ is del. here.

[2]‘quantity of produce’ is del. here.

[3]Here ends the re-written section; cp. above p. 242, n. 1.

[1]Replaces ‘whatever’.

[1]‘real’ is del. here.

[1]‘This is only saying’ is del. here.

[2]The remainder of the sentence replaces ‘that tho’ the labourers portion of these 100 quarters before produced was 70 quarters and is now reduced to 65 quarters yet the latter quantity may be a larger proportion of the whole value. Corn may have risen in value in any measure Mr. Malthus will name, and therefore if 65 qrs. be a greater proporti...’

[3]‘with the same quantity of labour’ and ‘then’ are ins.

[1]Last six words are ins.

[1]The whole Note replaces: ‘I do not understand what the author means by these words.’

[2]‘to the limit of’ replaces ‘in proportion as’.

[1]‘in those two causes’ is del. here.

[2]‘however’ replaces ‘then’.

[1]‘quantity’ is del. here.

[2]‘which may be’ is ins.

[3]Malthus’s p. 310; below, p. 269.

[4]Replaces ‘high’.

[5]Malthus’s p. 310.

[6]‘whole’ is del. here.

[*]Note. Looking to my Chap. on Wages I seepage [94]. The market price of labour is the price which is really paid for it, from the natural operation of the proportion of the supply to the demand; labour is dear when it is scarce, and cheap when it is plentiful.page [94–95]. “Notwithstanding the tendency of wages to conform to their natural rate, their market rate may, in an improving society, for an indefinite period, be constantly above it.”page [97]. [“]Independently of the variations in the value of money, which necessarily affect wages, but which we have here supposed to have no operation, as we have considered money to be uniformly of the same value, it appears then that wages are subject to a rise or fall from two causes:The supply and demand of labourers.The price of the commodities on which the wages of labour are expended.”Now be it observed that these two causes are the very same as those mentioned by Mr. Malthus as operating on profits in Page 294 of his work.See also pages [215] and [216] Chap. 16.

[1]Replaces: ‘All these circumstances come under the general one of “what proportion of the produce shall be given to the labourer”. Profits depend on wages’.

[2]‘real’ is ins.

[1]Blank in MS. See Malthus’s p. 91 ff; above, p. 60 ff.

[2]‘from rising much’ replaces ‘down’.

[1]Last six words are ins.

[2]‘Under the circumstances mentioned’ is del. here.

[3]Replaces ‘varied’.

[1]‘always’ is ins.

[2]‘high money prices’ replaces ‘they’.

[3]‘or at least they would only do in proportion’ is del. here.

[4]‘uniformly’ was ins. here, and then del.

[5]‘not changed from his own to mine and from mine to his own on various occasions’ is del. here.

[6]‘real’ is ins.

[7]‘On the land last cultivated the farmer will get a less portion of corn and the labourer will’ is del. here.

[1]‘and will’ is ins.

[2]‘equal’ is ins.

[3]‘value’ replaces ‘proportion’.

[4]Replaces ‘to stimulate to’.

[1]Last eight words replace ‘have a less’.

[2]‘freely and’ is del. here.

[3]Blank in MS. See Note (171), above, p. 264.

[4]First written ‘that land which regulates profits. I have said so on Page 66’ [of ed. 2; above, I, 79–80]; then replaced by ‘that land which regulates both wages and profits’; finally altered as above.

[1]‘even’ is ins.

[2]Above, I, 17, n. 3.

[3]Replaces ‘in all measures’.

[4]Replaces ‘imported’.

[5]‘of importation’ is ins.

[6]‘on that land’ is ins.

[7]‘value’ replaces ‘price’.

[8]‘fall’ replaces ‘rise’.

[1]‘lower both’ replaces ‘raise’.

[2]‘exchanged for corn’ is del. here.

[3]‘the labourer be’ is ins.

[1]‘real’ is ins.

[2]Blank in MS. See Note (162), above, p. 254.

[1]Replaces ‘if it could happen’.

[2]A blank space was left for the comment in the MS, but it was not filled.

[1]The whole Note is ins.

[1]‘commodities’ is del. here.

[1]‘last cultivated’ is ins.

[2]‘and’ is del. here.

[3]‘or indeed the whole’ is del. here.

[1]Replaces ‘will’.

[1]Replaces ‘proposition’.

[2]‘individuals’ replaces ‘they’.

[3]‘and what I think erroneous opinions are advanced with much perseverance in every part of his’ is del. here.

[4]Replaces ‘will not consume, nor cause to be consumed by others, with a view to reproduction, the things which they have power to command’.

[5]‘purchase’ replaces ‘consume’.

[6]‘parliament to’ is del. here.

[1]Replaces ‘so fall, in labour,’.

[2]Replaces ‘there may be a glut of commodities estimated in labour’.

[3]The remainder is ins.

[4]‘generally’ is ins.

[5]‘to consume’ is ins.

[1]The last two lines, beginning ‘they will not’, replace ‘will they exchange freely for each other in the market?’

[1]‘only’ is ins.

[2]‘it’ replaces ‘they’.

[1]‘society’ replaces ‘man’; and below ‘their’ replaces ‘his’.

[1]‘foreign to’ replaces ‘beside’.

[*]Note. When I had the 1000 quarters the whole was consumed within the year, and so at every subsequent period —it is always consumed and reproduced. The word accumulation misleads many persons and sometimes I think it misleads Mr. Malthus. It is by many supposed that the corn is accumulated, whereas to make such a capital productive and to increase wealth it must be constantly consumed and reproduced.1

[1]This footnote is written on a loose slip of paper. Cp. above, p. 231,n. 5.

[1]‘the price of’ is ins.

[1]Last four words are ins.

[2]Replaces ‘will it be divided.’

[3]‘in’ replaces ‘of’.

[1]‘his’ replaces ‘the’.

[2]Note (202) above.

[3]The remainder of the sentence is ins.

[1]Last three sentences, beginning ‘Mr. Malthus clogs’, are ins.

[2]‘only’ is ins.

[1]Replaces ‘and yet that capital will not afford’.

[2]‘in many cases’ in ins.

[3]This sentence, beginning ‘It is not’, is ins.

[4]‘by saving’ is ins.

[1]‘We all agree’ is del. at the opening of the Note.

[2]‘in this instance’ is ins.

[3]Cp. Malthus’s p. 214–15, note; above, p. 194.

[1]The remainder of the Note replaces: ‘he must produce conveniences and luxuries for his master; if he can with great facility, and in a little time, produce the necessaries which he may require.’

[1]probably’ is del. here.

[*]To this must be added the superior2

[2]‘the superior’ is ins.

[1]Replaces ‘the state of the soil’.

[2]‘to wages’ ins. here, then del.

[3]Replaces ‘allowing’.

[4]‘always’ is ins.

[5]Replaces ‘I am’.

[6]‘make them’ here, and ‘induce them to’ in the following line, are ins. 382

[1]‘He´, monsieur, une bonne économie politique, je le répète, conseille peu’; Lettres à M. Mal-thus, 1820, p. 85 and cp. p. 72.

[1]Malthus’s p. 377; above, p. 332.

[2]Last four words are ins.

[1]Note (227) above.

[1]Replaces ‘small’.

[2]‘high’ is ins.

[3]‘great’ is ins.

[4]‘not’ is ins.

[1]‘motive’ is del. here.

[1]Replaces ‘there would be a corresponding desire to’.

[1]‘much of the’ is ins.

[2]‘place it’ is ins.; ‘in’ is omitted by an oversight.

[3]An unfinished passage is del. here: ‘Suppose that I employed a hundred horses with 10 heavy waggons to convey goods from London to Birmingham, and that each waggon was worth £100, and the 10 £1000. Suppose now that an improvement’.

[1]‘can command less labour, or rather’ is del. here.

[2]Corrected in pencil, by another (apparently McCulloch’s) hand, to read: ‘and there is no reason why any less should’.

[1]Replaces ‘Unless a capital’.

[2]This quotation and the others that follow in this Note are from Malthus’s pp. 404–6.

[3]Replaces ‘If’.

[1]Replaces ‘master’.

[2]The last eleven words, beginning ‘under any’, were originally placed at the end of the sentence, after ‘themselves’.

[3]‘the unlimited use of’ is ins.

[4]Replaces ‘whether he shall prefer tea, tobacco, or’.

[1]Cp. the sub-title of Mill’s Commerce Defended (1808) ‘An Answer to the Arguments by which Mr. Spence, Mr. Cobbett, and Others, have attempted to prove that Commerce is not a Source of National Wealth.’

[2]‘more’ was ins. here, and then del.

[3]The first part of the sentence replaces ‘Can improvements’.

[1]‘seeming’ is ins.

[2]‘it is true’ is del. here.

[3]See Malthus’s p. 413.

[4]Last eleven words, beginning ‘the means’, replace ‘they can never’.

[1]Written above ‘each’, which however is not del.

[2]‘that labour has fallen in value’ replaces ‘either that commodities have risen in value without a corresponding rise of labour, or that labour has positively fallen’.

[1]Last nine words replace ‘by commodities and not by their value’.

[2]Last four words replace ‘not rise’.

[*]In cost of production I always include profits at their current rate.

[1]‘of labour’ is ins.

[1]Last nine words replace ‘therefore 12000 would’.

[2]‘had and all they’ is ins.

[3]In MS this sentence is written on a slip stuck with wafers upon the sheet. It covers a continuation of the preceding sentence, which read: ‘follows, no more than ten thousand may be in constant employment and in full work one sixth of the ...’; this was altered to ‘follows, any more than that those who now can earn ten thousand days work are in constant employment and in full work.’; this was replaced as above.

[4]Last six words are ins.

[5]Last four words are ins.

[1]Replaces ‘Can Mr. Malthus be right when he says’.

[2]‘the same quantity of necessaries’ is del. here.

[3]Replaces ‘its profits would be no higher’.

[4]This paragraph is ins.

[1]‘in quantity’ is ins.

[1]‘absolute’ is ins.

[2]Above, I, 348.

[1]Last four words replace ‘argument.’

[2]In a note to the French translation of Ricardo’s Principles, 1819, vol. 2, pp. 222–4; cp. above, I, 349,n. 3.

[3]Last four words are ins.

[4]‘M. Say’ is del. here.

[5]‘All improvements in machinery have the same effect.’ is del. here. 427

[1]The whole Note is del.

[1]‘inclined and probably’ is ins.

[2]‘farmers, shopkeepers, &c. &c.’ is ins.

[3]‘his original share of’ is ins.

[4]‘contiguous’ is ins.

[5]Replaces ‘preservation’.

[1]‘greater profits’ replaces ‘savings’.

[2]‘not’ is ins.

[1]‘merchant’ is del. here.

[2]‘are’ replaces ‘have only been as’.

[3]Replaces ‘capitals’.

[4]‘relative’ is del. here. 5 Replaces ‘if’.

[1]Last eight words replace ‘the particular profits of a trade’.

[2]Replaces ‘When a merchant sells’.

[3]Replaces ‘nation’.

[4]Replaces ‘a given’.

[5]See Malthus’s p. 443; above,p. 394.

[1]‘relative’ is del. here.

[2]Replaces ‘he thinks too’.

[1]Replaces ‘Have they not’.

[1]Last six words are ins.

[2]Note (263) above.

[3]Replaces ‘as Mr. Malthus supposes’.

[4]Malthus’s p. 450; below, p. 403.

[1]Last five words are ins.

[2]‘as before’ is del. here.

[3]Last six words are ins.

[4]‘diminished expenditure’ is del. here.

[1]Replaces ‘I could command’.

[2]‘but either by determining whether’ is del. here.

[1]‘or desirable’ is ins.

[2]Replaces ‘The more foreign commodities they buy, the [‘less’ was omitted here by a mistake] quantity [replaced by ‘value’] of home commodities they can purchase.’—‘Observe I say “value they expend” not quantity bought’ is del. here.

[3]Replaces an unfinished version: ‘Increased! in what? in the quantity of consumable commodities; in this we agree, the question is whether’.

[1]Replaces ‘a useful’.

[2]The two paragraphs that follow were ins. later in the MS; a fresh sheet being used, they were attached by mistake at the end of Note (275) below, where they are obviously out of place.

[3]‘in amount to the profit’ replaces ‘to that’.

[4]‘and is now relinquished’ is ins.

[5]Last eight words replace ‘a value precisely equal’.

[1]‘In what medium?’ is del. here.

[2]Last sentence is ins.

[3]‘value’ is del. here.

[4]The remainder of the sentence replaces: ‘and, if the amount of commodities be not increased, they must have fallen in real value, if labour be the measure of value; because the same quantity of commodities cannot command the same quantity of value.’

[1]In the MS two further paragraphs were attached at the end of this Note by mistake: they are now printed as part of Note(273), to which they properly belong (see above, p. 408, footnote 2). The interposition of this extraneous matter explains the anomaly of two Notes, (275) and(276), under the same heading.

[2]‘without a fall [replacing ‘an increase’] in money wages’ is ins.

[3]Replaces ‘It is compatible, but not essential to it, and in general does not accompany it.’

[*]Insert this. And why not? because the demand for labour would be greatly increased without a corresponding supply—wages would be high and the condition of the labourer most happy.

[1]Replaces ‘Certainly, if it could be proved,’.

[2]‘Suppose with’ is del. here.

[3]Last two lines, beginning ‘might they’, replace ‘might not further savings be made?’

[4]A paragraph is del. at the beginning of the Note: ‘No one can doubt the importance of the commodities produced being well adapted to the general wants as a cause of briskness of trade and the increase of wealth.’

[1]‘quantity and’ is ins.

[2]‘and amount’ is ins.

[3]Malthus’s p. 165; above, p. 142.

[4]‘to the national wealth’ is ins.

[1]‘a barrel of’ is del. here.

[2]‘at home’ is ins.

[3]‘his’ is del. here.

[1]‘such’ is ins.

[2]‘labourers’ replaces ‘necessaries’.

[3]Last six words are ins.

[4]‘otherwise’ is ins. 463

[1]‘increase your supply of’ replaces ‘maintain more’.

[2]‘its owner’ replaces ‘it’.

[3]‘would be true if the’ is del. here.

[1]‘if possible’ is ins.

[1]‘the Chancellor of the Exchequer’ replaces ‘Mr. Vansittart’.

[1]Replaces ‘any’.

[2]In MS, ‘exchanges’.

[3]Last sentence is ins.

[1]Replaces ‘it is’.

[1]Last sentence is ins.

[1]Blank in MS. Probably Malthus’s p. 326; above, p. 285.

[1]Corrected in pencil, by another (perhaps McCulloch’s) hand, to read ‘which we shall not here stop to enumerate.’