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 IV.

Sir,

I expected to have found in your “Principles of Political Economy,” something calculated to settle public opinion on the subject of machinery, and all those inventions for facilitating production by which manual labour is saved, and the quantity of produce is increased without any addition to the costs of production. I was in hopes to meet with such definite principles, such exact reasoning, as would command conviction; to which your Essay on Population has accustomed the public; - - - - but the present is not the Essay on Population.

It seems to me, (for I am sometimes reduced to the necessity of using this form of expression after having read your demonstrations)—it appears to me that you recognize only one advantage in the use of expeditious methods of production; namely, that of multiplying produce to such a degree, that even when its selling price is diminished, the total value of the quantity produced still exceeds the value of the quantity produced before the introduction of the improvements.* The advantage which you particularize is incontestable; and it had previously been observed, that the total value of the cotton manufactures, as well as the number of workmen employed in that pursuit, was singularly increased since the introduction of the improved methods of manufacture. An analogous observation had been made with respect to the printing-press, the machine employed in the multiplication of books, a branch of produce which now employs (besides authors) a much greater number of industrious persons than formerly, when books were copied by hand, and produces a sum far greater than when books were more expensive.

But this very substantial advantage is only one amongst many which nations have derived from the use of machines. It only refers to certain articles of produce, the consumption of which was capable of sufficient extension to counterbalance the diminution of price; but there is in the introduction of machinery an advantage common to every economical and expeditive process; an advantage which would be felt, even where the consumption of the article produced was not susceptible of any increase; an advantage which ought to be fully appreciated in the principles of political economy. You will excuse my returning to some elementary notions for the purpose of clearly explaining myself on this point.

Machines and tools are both productions which, as soon as they are produced, become capital, and are employed in the production of other articles. The only difference which exists between machines and tools is, that the former are complex tools, and the latter are simple machines. As there are neither tools nor machines which create power, they must be considered as means by which we transmit an action, a vivid force, which we have the power of directing to an object intended to be modified by that force. Thus a hand-hammer is a tool by means whereof we employ the muscular force of a man, in certain cases to beat out a leaf of gold; and the hammers of a great forge are likewise tools by means whereof we employ a fall of water in flattening iron bars.

The employment of a power gratuitously furnished by nature, does not take away from a machine its quality as a tool. Weight multiplied by quickness, which constitutes the power of a goldbeater’s hammer, is no less a physical power of nature, than the weight of the water which falls from a mountain.

What is the whole of our industry, but the employment of the laws of nature? It is by obeying nature, says Bacon, that we learn to command her. What difference do you perceive between knitting-needles and a stocking-frame, but that the latter is a tool more complex and more efficient than the needles, but, in fact, applying, to greater or less advantage, the properties of metal, and the power of the lever, to fabricate the vestments with which we cover our feet and legs?

The question is, therefore, reduced to this:—Is it advantageous for man to take into his hands a tool more powerful, capable of doing a much greater quantity of work, or of doing it much better, in preference to another tool of a gross and imperfect construction, with which he must work more slowly, with greater toil, and less perfection?

I should be doing injustice to your good sense and that of our readers, were I to doubt of the universal answer.

The perfection of our tools is connected with the perfection of our species. It is this which constitutes the difference which we observe between ourselves and the savages of the South Seas, who have hatchets of flint, and sewing-needles made of fish-bones. It is no longer permitted to a writer on political economy to recommend the prohibition of such means as chance or genius may furnish us with; even for the express purpose of reserving more labour for our workmen: he would soon find all his own reasoning employed to prove that we ought, retrograding instead of advancing in the career of civilization, to relinquish, successively, all the discoveries we have made, and render our arts more imperfect for the purpose of multiplying our toils, and of lessening our enjoyments.

Undoubtedly there are inconveniences inseparable from the transition from one order of things to another, even from an imperfect order to one which is better. What wise man would wish to abolish, all at once, the prohibitions which oppress industry, and the customs and duties which impede the intercourse of nations, prejudicial as they are to general prosperity? On these subjects, the duty of well-informed persons consists, not in suggesting motives for preventing and proscribing every species of change, under pretext of the inconveniences which it may produce; but in appreciating those inconveniences; in pointing out the practicable means of averting or mitigating them, in order to facilitate the adoption of a desirable amelioration.

The inconvenience, in this case, is a shifting of income, which, when sudden, is always more or less distressing to that class whose revenues are diminished. The introduction of machines diminishes (sometimes, but not always) the income of the classes who derive their subsistence from their corporeal and manual faculties, and augments the revenues of those whose resources consist in their intellectual faculties and their capitals. In other terms, machines which abridge labour, being, in general, more complex, demand more considerable capitals. The person who uses them is, therefore, obliged to purchase more of what we call the productive services of capital, and requires less of what we call the productive services of labourers. At the same time, as they require in their general and particular management perhaps more extensive combinations and more sedulous attention, they require more of that species of service whence the profit of the proprietor is derived. Cotton-spinning, by means of the small wheel as it was formerly carried on by many families in Normandy, scarcely merits the name of a factory; whilst a cotton-mill on a large scale is a factory of the first consequence.

But the most important, though not the most generally perceived, effect resulting from the use of machinery, and, in general, from every expediting process, is the increase of income which is thereby acquired by the consumers of the articles produced; an increase which costs nothing to anybody, and merits some more detailed examination.

instead of 16,000, which it would have cost if the process of the ancients had been still in use.

The same population is nevertheless fed; for the mill does not diminish the quantity of meal produced; the profits gained in society still suffice to pay for the new produce; for as soon as the 6000 francs are paid for expenses of production, that moment 6000 francs are gained in profit; and society enjoys this essential advantage, that the individuals of whom it consists, whatever be their means of existence, their incomes—whether they live by their labour, their capitals, or their landed possessions, reduce the portion of their expenses devoted to paying for the making of meal, in the proportion of sixteen to six, or by five-eights. Where a man must formerly have expended eight francs a year for this purpose, he will now have to lay out only three, which is exactly equivalent to an increase of income: for the five francs saved in this article may be spent on any other. If equal improvements took place in every article of produce in which we expend our incomes, those incomes would actually have been increased by five-eights; and a man who gets 3000 francs a year, whether by grinding corn, or in any other manner, would really be as rich as if he had gained 8000 before these improvements were made.

These considerations must have escaped the attention of M. Sismondi, when he wrote the following passage:—“* Whenever the demand for consumption exceeds the means of producing, every new discovery in mechanics or the arts is a benefit to society, because it furnishes the means of satisfying existing wants. But when the production is fully equal to the consumption, every such discovery is a calamity, because it only adds to the enjoyments of the consumers the opportunity of obtaining them at a cheaper rate, while it deprives the producers even of life itself. It would be odious to weigh the value of cheapness against that of existence.”

It is plain that M. Sismondi does not adequately appreciate the advantages of cheapness, or conceive that what is saved in the expense of one article, may be laid out in additional purchases of another commodity, beginning with the most indispensable.

Hitherto no inconvenience has been known to arise from the invention of corn-mills; and their beneficial operation is seen in the diminished price of produce, which is equivalent to an increase of income to all those who make use of the invention.

But it is said that this increase of income obtained by the consumers, is taken from the profits of the nineteen unfortunate persons whom the mill has deprived of employment. This I deny. The nineteen labourers retain the possession of their industrious faculties, with the same strength, the same capacity, the same means of working, as before. The mill does not place them under the necessity of remaining without occupation, but only of finding another employment. Many circumstances are attended with this inconvenience, without producing similar advantages to compensate for it. A fashion which passes away, a war which closes a market, a change in the course of commerce, are a hundred times more ruinous to the labouring class than any new invention whatever.

It may still be insisted that, supposing the nineteen discarded labourers were instantly to find capitals to set them to work in some new branch of industry, they would not be able to sell their produce, because the mass of the productions of the society would be thereby increased, while the sum of its revenues would remain without addition. Is it then forgotten that the revenues of the society are increased by the very circumstance that there are nineteen new labourers? The wages of their labour form a revenue which enables them to acquire the produce of their labour, or to exchange it for any other equivalent commodities. This is sufficiently established by my preceding letters.

Strictly speaking, then, one disadvantage only remains—the necessity for these men to find a new occupation. Now the progress which is made in a particular department of industry, is favourable to industry in general. The increase of income which is derived from a saving in the expense of one article of consumption, tends to an expenditure on other objects. Nineteen men accustomed to grind corn have been deprived of that employment alone; a hundred new occupations, or extensions of the old branches of industry, have been thrown open to their exertions. I desire no better proof of this than the increase which has taken place in the works and population of every place in which the arts have attained a high degree of cultivation. We are so much accustomed to see the productions of new arts, that we scarcely remark them; but how forcibly would they strike the ancient inhabitants of Europe, could they revisit the earth! Let us imagine for a moment some, even of the most enlightened, such as Pliny or Archimedes, walking about one of our modern towns; they would think themselves surrounded by miracles. The abundance of our crystals and glasses, the magnitude and number of our mirrors, our clocks, our watches, the variety of our stuffs, our iron bridges, our engines of war, our ships, would astonish them beyond expression. And if they were to visit our workshops, what a multitude of occupations of which they could not have the least idea! Would they ever imagine that thirty thousand men are constantly employed all night, in Europe, in printing newspapers which people read the next morning while they are taking tea, coffee, chocolate, and other refreshments, as new to them as the newspapers themselves? Doubt not, Sir, that if the arts, as I find pleasure in thinking they will, continue to improve; that is to say, to produce more at less cost, new millions of men will, in a few ages, produce things which, could we rise up to see them, would excite in our minds no less surprise than Archimedes and Pliny would feel if they were to revive amongst us. We who scribble paper in search of truth, must be on our guard: if our writings should go down to our grandchildren, the terror with which we contemplate improvements which they will have greatly excelled, may probably appear to them somewhat laughable. And as to the workmen of your country, at once so ingenious and so miserable, our descendants may, perhaps, look upon them as persons, who were forced, in order to get their livelihood, to dance upon a rope with a weight fastened to their feet. They will read in history that some new plan was every day proposed to enable them to continue dancing, but unluckily the only one which could have been efficacious was omitted—the simple expedient of taking off the weight. Then our descendants, after having laughed at, may, perhaps, see reason to pity us.

I have said that beneficial improvements may be attended with transient inconveniences. Those which are produced by the invention of expeditious methods, are fortunately mitigated by circumstances which have been already described, and by others to which I have not yet alluded. It has been said that the cheapness resulting from an economical process, promotes the consumption of the article produced in such a manner, that a greater number of people are employed in its production than before; as has been observed in the spinning and weaving of cotton: and you yourself consider this circumstance alone as capable of more than compensating for the injury. I will add, that in proportion as machines and accelerating methods become more numerous, the difficulty of still discovering new improvements is increased; particularly in an old art in which the workmen are already formed. The most simple machines were first invented; afterwards came others more complex; but as they grow more complex, they are more expensive to establish, and require more human labour in their formation, which, in some degree, indemnifies the labouring classes for the work which they lose through the use of the new machine. The complication and dearness of a machine are obstacles to its being too suddenly adopted. The machine for dressing cloth by means of a rotary movement, cost, originally from 25,000 to 30,000 francs. Many manufacturers were at first unable to lay out such a sum; others hesitated, and still hesitate to adopt it, waiting for a satisfactory confirmation of its success. When machines are thus slowly introduced, almost all the inconveniences of such inventions are avoided. In short, I have always found, practically, that new machines produce more alarm than injury. As to the benefit arising from them, it is constant and durable.

M. de Sismondi raises an objection founded on what would happen supposing a hundred thousand knitters to make with their needles ten million pair of stockings, and a thousand workmen with stocking-frames to produce the same quantity. The result, according to him, would be, that the consumers of the stockings would only save fifty centimes (or half a franc) per pair, and yet that a manufacture which formerly maintained a hundred thousand persons, would now support only twelve hundred. But he obtains this result only by suppositions which are inadmissible.

To prove that the consumers of stockings would only pay fifty centimes less than before, he supposes that the costs of production would be, in the first case, as follows:—

And in the second case, he sets down the expenses thus:

Now I observe in this account thirty millions for the interest of capital sunk, and the profit of the proprietors; which is to suppose a capital of two hundred millions for an undertaking capable of supporting twelve hundred men, and paying fifteen per cent for capital: a supposition truly extravagant.

A workman cannot use two frames at once; a thousand workmen would therefore require a thousand frames. A good stocking-frame costs six hundred francs; the thousand would consequently cost six hundred thousand francs. Add to this capital, a like capital for other utensils, workshops, &c., still the capital required will be only twelve hundred thousand francs. Admit that the interest and profits of the proprietors should be fifteen per cent on this capital, which is very fair; for a permanent business, which should produce more, would be reduced by competition to this rate of profit. This being allowed, we shall find for interest and profits of the proprietors one hundred and eighty thousand francs, instead of thirty millions.

A like observation applies to the two millions for the expenses of repairs, &c.; for even if new machines were to be bought every year instead of repairing the old ones, still they would only cost six hundred thousand francs. Nor would the circulating capital cost any think like two millions; for of what is this sum composed, according to M. Sismondi’s hypothesis? Of the raw materials, which he estimates at ten millions, and the wages, for which he allows one million; altogether eleven millions: the interest whereof at five per cent is five hundred and fifty thousand francs. But as in this business the manufactures may be completed and sold in less than six months, the capital, for which interest is to be allowed for the year, may be employed twice, and would cost each time only two hundred and seventy-five thousand francs, instead of two millions.

All these expenses together make only twelve millions fifty-five thousand francs, instead of fifty millions, which, according to M. de Sismondi’s suppositions, would be the cost of the stockings made by the knitting-needles. I am far from supposing that the saving would be so enormous, for while the author has greatly exaggerated the capital requisite for the machines, he has attributed to them too great a degree of efficacy in supposing they would enable twelve hundred workmen to do the work of a hundred thousand; but I say, that if the saving in this production were really so great, the low price of the stockings, or any other article of clothing produced under similar circumstances, would operate so favourably in extending the consumption, that instead of the hundred thousand supposed workmen being reduced to twelve hundred, their number would, in all probability, be doubled.

And if the consumption of this particular article would not admit of so excessive a multiplication of the same commodity, the demand for other kinds of produce would be increased in proportion; for observe, that after the introduction of the machines, society retains the same revenues as before; that is to say, the same number of workmen, the same amount of capital, the same land. Now, if instead of devoting, out of this mass of revenue, fifty millions to the purchase of stockings, the introduction of the frames should make it no longer necessary to lay out more than twelve in this article, the thirty-eight millions remaining would be applicable to the purchase of other articles of consumption, if not to the extended consumption of the same.

These arguments we learn from principles, and they are confirmed by experience. The distress endured by the population of England, which M. de Sismondi laments with the feeling of a true philanthropist, originates in other causes: it is chiefly caused by the poor laws of that country; and, as I have before observed, by a mass of taxes, which renders production too expensive; so that, when goods are offered for sale, the incomes of a great proportion of consumers are insufficient to enable them to pay the prices which the manufacturer or producer is absolutely compelled to demand.

[* ]“When a machine is invented, which, by saving labour, will bring goods into the market at a much cheaper rate than before, the most usual effort is such an extension of the demand for the commodity, that the value of the whole mass of goods made by the new machinery greatly exceeds their former value; and notwithstanding the saving of labour, more hands instead of fewer, are required in the manufacture.—P. 402.

“But we must allow that the preeminent 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.”—P. 412.

[* ]Nouveaux Principes, &c. tom. ii. p. 317.