The Online Library of Liberty

A project of Liberty Fund, Inc.

• Preface.
• Advertisement.
• Letters, &c.
• Letter I.
• Letter II.
• Letter III.
• Letter IV.
• Letter V.
• Advertisement.
• Catechism of Political Economy; Or, Familiar Conversations On the Manner In Which Wealth Is Produced, Distributed, and Consumed.
• Chapter the First.: On the Composition of Wealth and the Use of Money.
• Chapter II.: On the Utility and Value of Products.
• Chapter III.: On Production.
• Chapter IV.: On the Operations Common to All the Species of Industry.
• Chapter V.: On Capital and Land.
• Chapter VI.: On the Formation of Capital.
• Chapter VII.: On the Manner In Which the Value of Products Is Established, and of the Charges of Production.
• Chapter VIII.: On the Profits of Industry, Capital, and Land; That Is, Income.
• Chapter IX.: On Wages, Interest, and Rent.
• Chapter X.: On Incomes Founded On Immaterial Products.
• Chapter XI.: On Consumption In General.
• Chapter XII.: On Private Consumption.
• Chapter XIII.: On Public Consumption.
• Chapter XIV.: On Public Property and Taxes.
• Chapter XV.: On Public Loans.
• Chapter XVI.: On Property, and the Nature of Riches.
• Chapter XVII.: On the Real and Nominal Price.
• Chapter XVIII.: On Money.
• Chapter XIX.: On Signs Representing Money.
• Chapter XX.: On Markets.
• Chapter XXI.: On Regulations Or Restraints of Industry.
• Chapter XXII.: On Importations, Duties, and Prohibitions.
• Chapter XXIII.: On Exportation.
• Chapter XXIV.: On Population.
• Chapter XXV.: On Colonies.
• Erratum.

LETTER III.

Sir,

We have hitherto founded our discussions upon the supposition of an indefinite liberty, allowing a nation to carry to the utmost extent production of every description; and it appears to me that I have proved that if this hypothesis could be realized, a nation so circumstanced would be able to purchase all that it could produce. From this faculty, and from the natural and perpetual desire of men to ameliorate their condition, an infinite multiplication of individuals and of gratifications would infallibly arise.

But the course of events is different. Nature and the abuses of social order have set limits to this faculty of production; and the examination of those limits, by leading us back into the existing world, will serve to prove the truth of the doctrine established in my treatise on political economy, that the obstacles to production are the real and sole impediments to the sale and disposal of produce.

I do not pretend to point out the whole of the obstacles by which production is impeded. Many of these impediments will manifest themselves during the progress of the science of political economy; others, perhaps, will never be ascertained, but many of great influence may already be observed, both in the natural or political order of things.

In the natural order, the production of alimentary commodities is more rigidly limited than that of furniture and clothing. Although mankind stand in need of a much greater quantity, in weight and value, of alimentary goods, than of all other sorts of produce together, yet commodities of this description cannot be brought from any considerable distance, for they are difficult to transport, and the care of them is expensive. As to those which may grow upon the territory of a nation, they are confined within boundaries, which the improvement of agriculture, and increase of capitals engaged therein may certainly extend,* but which will always be sure to exist. Arthur Young thinks that France does not produce more than half the alimentary produce which she is capable of producing. Suppose he is right in this; suppose even that with a more perfect agricultural system, France were to obtain double her present quantity of rural produce, without employing more agricultural labourers,† she would then possess 45 millions of inhabitants at liberty to devote themselves to other occupations. Her manufactures would find better markets in the country than at present, because the country would be more productive, and the surplus would be sold among the manufacturing population itself. People would not be worse fed than at present, but they would in general be better provided with articles of manufacture; with better dwellings, more furniture, finer clothing, and with objects of utility, instruction, and entertainment, which are now reserved for a very small number of people. The rest of the population is still rude and barbarous.

But in proportion as the manufacturing class increased, alimentary produce would become more in demand and dearer with relation to manufactures. The latter would produce diminished profits and wages, which would discourage those engaged in such branches of industry; hence it is easy to conceive how the restrictions which nature imposes on agricultural production, limit the produce of manufacture. But this effect, like all which happens naturally and results from the nature of things, would be very gradual, and attended with fewer inconveniences than any other possible combination.

Admitting the limits thus set by nature to the production of provisions, and, indirectly, of all other commodities, it may be asked how it happens that very industrious countries, such as England, where capital abounds and communications are easy, find the sale of their goods impeded long before their agricultural produce has attained its utmost limit. Is there then some unsoundness—some concealed disease, which preys upon them? - - - - There are probably several, which will successively show themselves; but I already perceive one—immense—fatal—and deserving the most serious attention.

Suppose some individual, a collector of public revenue for instance, were to take up his residence in the neighbourhood of each commercial, manufacturing, or agricultural establishment; and that this man without increasing the goodness of the produce, its utility, or the quality by which it becomes an object of desire and demand, were nevertheless to increase the costs of its production: what, I ask, would be the consequence? The value which is set on a commodity, even where the means of obtaining it exist,* depends on the enjoyment and utility which it is expected to afford. In proportion as its price rises, many persons cease to think it worth the expense which it occasions, and thus the number of its purchasers is diminished.

Besides, taxes do not augment the profits of the producer, although they increase the price of every production: the incomes of the producers become insufficient to purchase the produce, the moment its price is raised by the circumstance which I have just described.

Let us represent this effect by numbers, in order to pursue it to its remotest consequences. It will be well worth the trouble of examination, if it enable us to discern one of the principal causes of the evil which menances every industrious nation of the earth. Already the distresses of England forewarn other countries of the miseries which are reserved for them. They will be more painful wherever a more robust temperament excites to a greater developement of industry; the happiest effects will result from this, if it be left at full liberty; if it be restrained, then terrible convulsions will be the consequence.

If the manufacturer who produces a piece of stuff, after dividing between his assistants and himself a sum of thirty shillings for the productive services which have been employed in the production of the piece, is moreover compelled to pay six shillings to the receiver of taxes, either he must cease to make stuffs, or he must sell them for 36 shillings the piece.* But when this piece of stuff comes thus to be valued at 36 shillings, those who produced it, and have only received altogether 30 shillings, will only be able to buy five-sixths of the same article of which they could have previously purchased the whole; he who before could purchase a yard, must now be restricted to five-sixths of a yard, and so on.

The producer of corn who pays to another receiver a tax of six shillings on a sack of corn, of which the productive services have cost 30, must now obtain 36 for his sack instead of 30. It follows that the producers of corn and stuffs, when in want of either of those articles, can only acquire by their gains five-sixths of their productions.

As this effect is seen in these two commodities reciprocally, it may also take place in other articles. Without changing the state of the question, it is easy to suppose that producers, in whatever species of production they may be occupied, have occasion for liquors, colonial produce, lodgings, amusements, and objects of convenience and of luxury. These commodities they will find dearer than they can afford, with incomes such as they now enjoy, according to the rank which they occupy among the producers. Upon the hypothesis which we have taken for our example, there will always remain a sixth part of the produce unsold.

True it is, that the six shillings taken by the collector go to some one, and that those whom the collector represents (public functionaries, military men, or public creditors) may employ this money in obtaining the remaining sixth part, either of the sack of corn, or the piece of stuff, or of any other production. This indeed is what actually happens. But let it be observed that this consumption is entirely at the expense of the producers; and that if the collector, or those by whom he is authorized, consume a sixth part of the produce, the producers are thereby compelled to live upon the remaining five-sixths.

This you will allow; but, at the same time, I shall be told that any one may live upon five-sixths of what he produces. I am willing to admit that; but permit me to ask whether you think the producer could live equally well if two-sixths, instead of one, or one-third of his produce, were demanded from him?—No; but still he would live. - - - Ah! you think he would live! Then would he still live in case two-thirds were wrested from him?—then three-fourths?—But I perceive you do not attempt to reply.

Now, Sir, I flatter myself that my answers to the most urgent objections offered by you and M. Sismondi will be easily comprehended. “If, by creating new productions, (say you,) we are enabled to consume them, or to exchange them for others of which there exists a superabundance, and thus to procure markets for both, why then are not such new productions created? Is capital wanting? Capital abounds: every where undertakings are sought for in which it may be advantageously employed: it is evident (you affirm) that there are no longer any such,” (p. 499); “that all kinds of commerce are already overstocked with capital and labourers, who all offer their produce under prime cost,” M. Sismondi assures us.*

I am not quite prepared to say, that to follow the useful arts is a fool’s trade; but you will allow, gentlemen, that if ever it should become so, the consequence would not be different from that which you are lamenting. To buy the superabundant produce, it would be requisite to create other produce: but if the producers were placed in too disadvantageous a situation; if, after exerting the productive means sufficient for producing an ox, they were to produce only a sheep, and for this sheep, in exchange for any other kind of produce, were only to gain the same quantity of utility which exists in a sheep, who would go on producing under such disadvantages? The persons engaged in such an undertaking would have made a bad business of it: they would have expended a value which the utility of their produce would not suffice to reimburse; whoever should be silly enough to create another production sufficient to purchase the former, would have to contend with the same disadvantages, and would involve himself in the same difficulties. The benefit which he might derive from his production would not indemnify him for its expenses; and whatever he might buy with this production would be of no greater value. Then, indeed, the workman would no longer be able to live by his labour, and would become burthensome to his parish;* then the manufacturer, unable to live on his profits, would renounce his business. He would buy annuities, or go abroad in search of a better situation, a more lucrative employment, or, what is exactly equivalent, a production at less expense.† If he were there to meet with other inconveniences, he would again seek another theatre for his talents; and different nations would be seen pouring forth upon each other their capitals and their labourers; that is to say, all that is requisite to raise human society to the highest pitch of prosperity, if it understood its true interests, and the means by which they may be promoted.

I shall not attempt to point out the parts of this picture which apply more particularly to your country, Sir, or to any other; but I leave it for your consideration, and that of all well-meaning men who exert themselves to promote the welfare of the interesting, laborious, and useful part of mankind. Why do the savages of the new world, whose precarious subsistence depends on the flight of an arrow, neglect to build villages, and to inclose and cultivate lands? Because this kind of life demands labour too assiduous and painful. They are in the wrong; they calculate ill, for the privations they endure are far less tolerable than the constraints which a well-regulated social life would impose upon them. But if this social life were a galley, in which, after rowing with all their strength for sixteen hours out of the twenty-four, they were able to obtain only a piece of bread insufficient to feed them, they might indeed be excused for disliking social life. Now whatever renders the condition of the producer, the essential party in every society, more painful, tends to destroy the vital principle of the social body; to reduce a civilized people to a savage state; to introduce a state of things in which less is produced and less consumed; to destroy civilization, which is extended in proportion to the increase of the quantity of production and consumption. You observe, in several places, “that man is naturally indolent, and that it betrays great ignorance of his nature to suppose that he will always consume all he can produce” (p. 503). You are right, indeed; but I maintain no other doctrine when I say that the utility of productions is no longer worth the productive services, at the rate at which we are compelled to pay for them.

You appear convinced of this truth where you say, on another occasion (p. 342), “A tax will entirely put an end to the production of a commodity, if no one of the society is disposed to value it at a price equal to the new conditions of its supply.” And this inherent vice (of costing in charges of production more than it is worth) the commodity carries with it to the ends of the earth. It is every where too dear to command what it has cost, because it must be purchased by productive services equivalent to those employed in its production.

Another consideration, by no means unimportant is, that the costs of production are augmented not only by multiplied duties, by the dearness of articles of every sort, but by the habits which are produced by a vicious political system. If the progress of luxury and enormous emoluments—if the facility of obtaining illegitimate profits through favour and influence in contracts and financial operations, force the manufacturer, the merchant, the real producer, to require profits disproportioned to the services which they render to the production, in order to maintain their rank in society, then all these abuses tend to raise, from other causes, the costs of production, and consequently the price of productions, above the value of their actual utility. The consumption of commodities consequently becomes more limited; in order to acquire them, a greater quantity of productive services must be employed in the creation of another production: the charges of production must be increased. Consider then, Sir, how extensive are the evils produced by encouraging useless expenses, and multiplying unproductive consumers.

The rapid sale of articles offered at a cheap rate by means of expeditious methods of production, proves how truly the cost of production is the real impediment to the sale of goods. If the price be reduced one fourth, it is found that a double quantity is sold. The reason is, that every one is then enabled to acquire it with less labour, less costs of production. When under the Continental system it was necessary to pay five francs for a pound of sugar, whether the money were applied to the production of the sugar, or of any other commodity to be exchanged for it, France was able to purchase only fourteen millions of pounds.* Now that sugar is cheap, we consume eighty millions of pounds per annum, being about three pounds for each person. At Cuba, where sugar is still cheaper, they consume above thirty pounds for every free person.†

Let us then agree upon a truth which on every side presses on our notice. To levy excessive duties, with or without the participation of a national representation, or by means of a mock representation, no matter which, is to augment the costs of production without increasing the utility of the produce, without adding any thing to the satisfaction which the consumer may derive from it, and to impose a fine on production—on that which enables society to exist. And as among producers some are more advantageously situated than others for throwing upon their competitors all the burthen of circumstances, they fall heavier on some classes than on others. A capitalist can often withdraw his capital from one employment to place it in another, or to send it abroad. The proprietor of a concern may often be rich enough to be able to suspend his operations for a time. Besides, as long as the capitalist and the master can make their own terms with the workman, the latter is obliged to work constantly, and at any price, even when the employment does not procure him a subsistence. Thus do the excessive charges of production reduce several classes of certain nations to the necessity of confining their consumption to articles the most indispensable to their existence, and the lowest classes of all to die of want. Now, Sir, is not this, upon your own principle,* the most shocking and barbarous of all the methods of reducing the numbers of mankind?†

We now come to the objection in which there is, perhaps, the greatest force, because it is supported by an imposing example. In the United States, the obstacles to production are few, the taxes are light; and there, as in all other places, merchandize abounds, for which there exists no demand. “These difficulties,” you say,‡ “cannot be attributed to the cultivation of poor land, restrictions upon commerce, and excess of taxation. Something else, therefore, is necessary to the continued increase of wealth, besides an increase in the power of producing.”

Well! will you believe it, Sir? it is the very power of production itself, at least for the present, of which the Americans are in want, to enable them to dispose of the overflowing productions of their commerce to advantage.

The favourable situation of this people, during a long war, in which they have almost always enjoyed the advantage of neutrality, has turned their industry, and capitals, far too exclusively to external and maritime commerce. The Americans are enterprising; their voyages are cheaply performed; they have introduced into navigation long courses, and various accelerating manœuvres, which by shortening voyages, reduce their expense, and correspond with those improvements in the arts which diminish the costs of production; in short, the Americans have drawn to themselves all the maritime commerce which the English have not been able to engross; they have, for many years, been the intermediate agents between all the Continental powers of Europe and the rest of the world. Their success has even exceeded that of the English wherever those nations have been competitors, as in China.

What has been the result? An excessive abundance of those commodities which are obtained by commercial and maritime industry; and when the general peace at length opened the highway of the ocean to all nations, the French and Dutch ships rushed with a kind of madness into the midst of a career thus newly opened to them; and in their ignorance of the actual state of countries beyond sea—of their agriculture, arts, population, and resources for buying and consuming—these ships, escaped from a tedious detention, carried in abundance the produce of the Continent of Europe to all ports, presuming that the other nations of the globe would be eager to possess those commodities after their long separation from Europe.

But in order to purchase this extraordinary supply, it would have been requisite for these countries to create immediately extraordinary quantities of produce of their own; for, once more I repeat it, the difficulty at New York, at Baltimore, the Havannah, Rio-Janeiro, or Buenos-Ayres, is not to consume European manufactures. They would consume them very willingly if they could pay for them. But the Europeans required payment in cottons, tobaccos, sugars, and rice; but this demand even enhanced their prices: and as, notwithstanding the dearness of these commodities, and of money, which is also merchandize, it was necessary to take them or return without payment, these very articles, thus rendered scarce in their original country, became more abundant in Europe, and at length so completely overstocked the European markets, that a sufficient price could not be obtained for them, although the consumption of Europe had greatly increased since the peace: hence the disadvantageous returns which we have witnessed. But suppose for an instant that the agricultural and manufactured produce of both North and South America had suddenly become very considerable at the time of the peace, in that case the people of those countries, being more numerous, and producing more, would easily have purchased all the European cargoes, and furnished a variety of returns at a cheap rate.

This effect will, I doubt not, take place with respect to the United States, when they are enabled to add to the objects of exchange furnished by their maritime commerce, a greater quantity of their agricultural produce,* and perhaps some articles of manufacture also. Their cultivation is extending; their manufactures multiply; and as a natural consequence their population increases with astonishing rapidity. In a few years the whole of their varied industry will form a mass of produce, amongst which will be found more articles calculated to furnish profitable returns, or at least profits of which the Americans will employ a part in the purchase of European merchandize.

Merchandize produced by Europeans at a less expense than it can be made for in America will be carried to the United States; and goods which the soil and industry of America produce cheaper than they can be had elsewhere, will be carried home in exchange. The nature of demands will determine the nature of productions; each nation will prefer engaging in that kind of production in which it has the greatest success, that is, which it produces at the smallest expense; and the result will be exchanges mutually and permanently advantageous. But these commercial ameliorations can only be brought about by time. The talents and experience which the arts require are not acquired in a few months; years are necessary. The Americans will not discover in what manufactures they can succeed until after several attempts.* Then those particular manufactures will no longer be carried to them; but the profits which they will derive from this production will enable them to purchase other European produce.

On the other hand, agricultural speculations, however rapid may be their extension, can only by very slow degrees, present by their produce markets to the productions of Europe. As fast as culture and civilization extend beyond the Allegany mountains, into Kentucky and the territories of Indiana and the Illinois, the first gains are employed in the subsistence of the colonists as they arrive from the states more anciently peopled, and in building their habitations. The profits which exceed these first wants, enable them to clear a greater quantity of land; the next gains are employed in manufacturing their own produce for local consumption: and only the savings of a fourth order can be applied to the manufacture and fabrication of the produce of the soil for distant consumption. It is not until this latter state of things takes place that new states begin to offer markets for Europeans; this cannot be in their earliest infancy: their population must have had time to increase, and their agricultural produce must have become sufficiently abundant to oblige them to exchange it at a distance for other value. Afterwards, and by the natural progress of things, instead of exporting raw produce, they export produce which has received some preparation, and which consequently, comprising a greater value in a less bulk, is adapted to bear the expense of carriage. Such produce will one day come to Europe from New Orleans, a city destined to become one of the greatest marts in the world.

This point has not yet been attained; is it then wonderful that the productions of the United States have not yet afforded markets sufficient for the commercial efforts which followed the peace? Is it extraordinary that the commercial produce brought by the Americans themselves into their ports, at the conclusion of an excessive developement of their nautical industry, should yet remain there in superabundance?

You see, Sir, that there is nothing in this fact but what is quite conformable to the doctrine of your antagonists.

Returning to the painful situation in which all kinds of industry is at present placed in Europe, I might add to the discouragement resulting from the excessive increase of the charges of production, the disorders which such charges occasion in the production, distribution, and consumption of the values produced; disorders which frequently bring into the market a supply superior to the demand, and at the same time drive out of it much which might have been sold, and the prices of which would have been employed in the purchase of the former. Certain producers endeavour to recover by the quantity of what they produce a part of the value consumed by the revenue. Some productive services are able to escape from the avidity of the fiscal agents, as often happens with the productive services of capital, which frequently contrives to obtain the same interest, while lands, buildings, and industry are oppressed. Sometimes a workman who finds it difficult to maintain his family, endeavours by excessive toil to make up for the low price of his labour. Are not these causes which derange the natural order of production, and which occasion productions of some kinds to exceed what would have taken place, if the wants of the consumers alone had been considered? All objects of consumption are not necessary to us in the same degree. Before we reduce our consumption of corn to one half, we reduce our consumption of meat to a fourth, and our consumption of sugar to nothing. There are capitals so engaged in certain undertakings, particularly in manufactures, that the proprietors often consent to lose the interest, and sacrifice the profits of their industry, and continue to labour merely to support the establishment until more favourable times, and to preserve their utensils and connexions: sometimes they are apprehensive of losing good workmen, whom the suspension of employment would compel to disperse; the humanity of the proprietors is sufficient, in some instances, to carry on a manufacture which is no longer in demand. Hence arise disorders in the progress of production and consumption, still more grievous than those which originate in the prohibitions of the revenue or the vicissitudes of the seasons. Hence we see inconsiderate productions—hence recourse is had to rainous means—hence commercial establishments are overthrown.

At the same time I must remark, that although the evil is great, it probably seems greater than it is. The commodities which overstock all the markets in the world, may strike the eye by their magnitude in a mass, terrify the commercial world by their depreciation in value, and yet constitute only a very small part of the merchandizes of every sort made and consumed. There is no warehouse but would speedily be emptied, if every species of production of which its contents are made up, were to cease simultaneously in every part of the world. Besides, it has been observed, that the slightest excess of supply beyond the demand is sufficient to produce a considerable alteration in price. It is remarked in the Spectator (No. 200), that when the harvest exceeds by a tenth what is ordinarily consumed, the corn falls to half its price. Dalrymple* makes an analogous observation. We must not then be surprised if a slight excess should be frequently represented as an excessive superabundance.

This superabundance, as I have already remarked, is also occasioned in part by the ignorance of producers or traders on the nature and extent of the demand in the places to which goods are consigned. Of late years there have been many speculations hazarded, because there have been many new relations between different nations. Data were every where wanting to serve as the foundation of good calculations; but does it follow that because many affairs have been unprofitable, that others with better information may not succeed? I venture to predict that as new relations shall grow old, and reciprocal wants be more justly appreciated, the markets will cease to be glutted, and permanent connexions of mutual profit will be established.

But at the same time it is expedient to diminish gradually, and as far as the circumstances of every state will allow, the general and permanent inconveniencies which spring from too expensive a productive system. We ought to be firmly convinced that the more others gain, the more easily we shall sell our produce; that there is only one way to gain, namely, to produce, either by our own labour, or by that of the capital or lands we possess; that unproductive consumers are only substitutes for productive consumers; that the more producers, the more consumers there are; that, by the same rule, every nation is interested in the prosperity of every other nation, and that all are interested in having the easiest communications with each other, for every difficulty is equivalent to an increase of expense.

Such is the doctrine established in my writings, and which, I acknowledge, does not appear to me to have been shaken. I took up my pen to defend it, not because it is mine (the self-love of an author would be contemptible where such great interests are concerned), but because it is eminently social, and points out to mankind the sources of true wealth and the danger of drying them up. The rest of this doctrine is no less useful, because it teaches that capital and land are only productive when they are become respected property; that the poor man is interested in defending the property of the rich; that he is consequently interested in the preservation of good order, because a subversion, which could only yield him a temporary plunder, would deprive him of a permanent income. When we study political economy as it ought to be studied; when we have once perceived that the most useful truths rest on the most certain principles; we have nothing so much at heart as to place these principles within the reach of every understanding. Let us not augment their difficulties by useless abstraction; let us not recommence the folly of the economists of the 18th century by endless discussions on the net produce of lands; let us describe the manner in which facts occur, and expose the chain which connects them; it is then that our writings will acquire a great practical utility, and the public will be truly indebted to writers who are, like you, Sir, possessed of such ample means of enlightening them.

[* ]The principal obstacles to agricultural improvement in France are, first, the residence of the rich proprietors and great capitalists in towns, and particularly in an immense capital; they cannot acquire a knowledge of the ameliorations in which their capitals might be employed; nor can they watch over the application of those funds so as to obtain a corresponding increase of income. Secondly, it would be in vain for any particular secluded canton to double its produce; it can now scarcely get rid of what it already produces, for want of good cross roads, and industrious neighbouring towns. Industrious towns consume rural produce, and fabricate in exchange articles of manufacture, which containing greater value in a less compass can be carried to a greater distance. This is the principal impediment to the increase of French agriculture. The multiplication of small navigable canals, and cross-roads well maintained, would greatly augment the value of rural produce. But these objects would require local administrations chosen by the inhabitants, and intent only on the good of the country. The possibility of markets exists, but nothing is done to secure the benefit of them. Magistrates chosen in the interest of the central authority, become almost invariably fiscal or political agents, or what is still worse, agents of police.

[† ]This supposition is very admissible, since in England three fourths of the population inhabit towns, and consequently are not employed in agricultural pursuits. A country supporting 60 millions of inhabitants, might therefore be well cultivated by 15 millions of agricultural labourers; at which number the cultivators of France are now actually estimated.

[* ]The means of acquisition are the profits which each individual derives from his industry, his capital, and his lands. Consumers who have neither industry, capital, nor land, spend only what they are able to obtain from the profits of those who have. In every case, the income of each individual has a limit; and thoughthe possessors of very large incomes can sacrifice a great quantity of money for very trivial enjoyments, it must be allowed that the dearer any gratification is, the less it is considered indispensable.

[* ]If he reduce the quality, it will be equivalent to an increase in the price.

[* ]Nouveaux Principes, liv. iv. chap. 4.

[* ]The workman can only labour constantly whilst his work pays for his subsistence; and when his subsistence becomes too dear, it no longer suits the master to employ him. It may then be said, in the language of political economy, that the workman no longer offers (or supplies) his productive services, although in fact he is most anxious for employment; but his offer is not acceptable on the only lasting conditions on which it can be made.

[† ]Mr. Ricardo insists that, notwithstanding taxes and other charges, there is always as much industry as capital employed; and that all capital saved is always employed, because the interest is not suffered to be lost. On the contrary, many savings are not invested, when it is difficult to find employment for them, and many which are employed are dissipated in ill-calculated undertakings. Besides, Mr. Ricardo is completely refuted, not only by what happened to us in 1813, when the errors of Government ruined all commerce, and when the interest of money fell very low, for want of good opportunities of employing it; but by our present circumstances, when capitals are quietly sleeping in the coffers of their proprietors. The bank of France alone possesses 223 millions of specie (about nine millions of pounds sterling) in its chests, which is more than double the amount of its notes in circulation, and six times what prudence would consider necessary to reserve for the ordinary course of its payments.

[* ]See the Report on the Situation of France, made in 1813, by the then Minister of the Interior. He was interested in concealing this diminution of commerce.

[† ]Humbolt, Essai sur la Nouvelle Espague, tom. iii. p. 183.

[* ]Malthus on Population, book ii. ch. 13, 5th ed.

[† ]Mr. Malthus, convinced that certain classes are serviceable to society on account of what they consume alone, without producing any thing, would look upon the payment of the whole, or a great part of the English national debt, as a misfortune. On the contrary, this operation would, in my opinion, be very desirable for England; for the consequence would be, that the public creditors, being paid off, would find means to derive an income from their capitals; that the payers of taxes would themselves spend the 40 millions sterling which they now pay to the public creditors; that the taxes being diminished by 40 millions sterling, all productions would be cheaper; that consumption would consequently be greatly extended, and would afford employment to the workmen instead of the sabre blows which are now dealt out to them; and I own I see nothing in these results to alarm the friends of the public weal.

[‡ ]P. 498.

[* ]The commercial productions with which they furnish France, are sugar from India, China, and the Havannah, coffee, tea, nankeens, indigo, ginger, rhubarb, cinnamon, raw silk, and pepper.—Those of their soil and their arts are, cotton, tobacco, potash, rice, bark, whale oil, and dye woods.

[* ]The manufactures which a new nation may execute to the greatest advantage, are, in general, those which consist in preparing raw materials of their own growth, or imported at a small expense. It is not probable that the United States will ever supply Europe with cloth; but they will perhaps furnish her with manufactured tobaccos, and refined sugars; perhaps they may even establish cotton-manufactories on better terms than England.

[* ]Considerations on the Policy of Entails, p. 14.