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• Preface to the First Edition (1871)
• Preface to the Second Edition (1879)
• Preface to the Third Edition By Harriet Jevons
• Errata
• Chapter I: Introduction
• Mathematical Character of the Science.
• Confusion Between Mathematical and Exact Sciences.
• Capability of Exact Measurement.
• Measurement of Feeling and Motives.
• Logical Method of Economics.
• Relation of Economics to Ethics.
• Chapter II: Theory of Pleasure and Pain
• Pleasure and Pain As Quantities.
• Pain the Negative of Pleasure.
• Anticipated Feeling.
• Uncertainty of Future Events.
• Chapter III: Theory of Utility
• Definition of Terms.
• The Laws of Human Want.
• Utility Is Not an Intrinsic Quality.
• Law of the Variation of Utility.
• Total Utility and Degree of Utility.
• Variation of the Final Degree of Utility.
• Disutility and Discommodity.
• Distribution of Commodity In Different Uses.
• Theory of Dimensions of Economic Quantities.
• Actual, Prospective, and Potential Utility.
• Distribution of a Commodity In Time.
• Chapter IV: Theory of Exchange
• Importance of Exchange In Economics.
• Ambiguity of the Term Value.
• Value Expresses Ratio of Exchange.
• Popular Use of the Term Value.
• Dimension of Value.
• Definition of Market.
• Definition of Trading Body.
• The Law of Indifference.
• The Theory of Exchange.
• Symbolic Statement of the Theory.
• Analogy to the Theory of the Lever.
• Impediments to Exchange.
• Illustrations of the Theory of Exchange.
• Problems In the Theory of Exchange.
• Complex Cases of the Theory.
• Competition In Exchange.
• Failure of the Equations of Exchange.
• Negative and Zero Value.
• Equivalence of Commodities.
• Acquired Utility of Commodities.
• The Gain By Exchange.
• Numerical Determination of the Laws of Utility.
• Opinions As to the Variation of Price.
• Variation of the Price of Corn.
• The Origin of Value.
• Chapter V: Theory of Labour
• Definition of Labour.
• Quantitative Notions of Labour.
• Symbolic Statement of the Theory.
• Dimensions of Labour.
• Balance Between Need and Labour.
• Distribution of Labour.
• Relation of the Theories of Labour and Exchange.
• Relations of Economic Quantities.
• Various Cases of the Theory.
• Joint Production.
• Over-production.
• Limits to the Intensity of Labour.
• Chapter VI: Theory of Rent
• Accepted Opinions Concerning Rent.
• Symbolic Statement of the Theory.
• Illustrations of the Theory.
• Chapter VII: Theory of Capital
• The Function of Capital.
• Capital Is Concerned With Time.
• Quantitative Notions Concerning Capital.
• Expression For Amount of Investment.
• Dimensions of Capital, Credit and Debit.
• Effect of the Duration of Work.
• Illustrations of the Investment of Capital.
• Fixed and Circulating Capital.
• Free and Invested Capital.
• Uniformity of the Rate of Interest.
• General Expression For the Rate of Interest.
• Dimension of Interest.
• Peacock On the Dimensions of Interest.
• Tendency of Profits to a Minimum.
• Advantage of Capital to Industry.
• Are Articles In the Consumers' Hands Capital?
• Chapter VIII: Concluding Remarks
• The Doctrine of Population.
• Relation of Wages and Profit.
• Professor Hearn's Views.
• The Noxious Influence of Authority.
• Appendix I
• Appendix Ii

Illustrations of the Investment of Capital.

The time during which capital remains invested, and the circumstances of its investment and reproduction, are exceedingly various in different employments. If a person plants cabbages, they will be ready in the course of a few months, and the labour of planting and tending them, together with a part of the labour of preparing and manuring the soil, yields its results with very little delay. In planting a forest tree, however, a certain amount of labour is expended, and no result obtained until after the lapse of thirty, forty, or fifty years. The first cost of enclosing, preparing, and planting a plantation is considerable; and though, after a time, the loppings and thinnings of the trees repay the cost of superintendence and repairs, yet the absorption of capital is great, and we may thus account for the small amount of planting which goes on. The ageing of wine is a somewhat similar case. A certain amount of labour is expended without result for ten or fifteen years, and the cost of storage is incurred during the whole time. To estimate the real cost of the articles at the end of the time, we must, in all such cases, add compound interest, and this grows in a rapid manner. Every pound invested at the commencement of a business becomes 1·63 pounds at the end of ten years, 11·47 pounds at the end of fifty years, and no less than 131·50 pounds at the end of a century, the rate of interest being taken at five per cent. Thus it cannot be profitable to store wine for fifty years, unless it become about twelve times as valuable as it was when new. It cannot pay to plant an oak and let it live a century, unless the timber then repays the cost of planting 132 times.

If an annual charge, however small, has to be incurred (for instance, the cost of storage and superintendence), the expense mounts up in a still more alarming manner. Thus, if the cost of any investment is one pound per annum, the amount invested, with compound interest at five per cent, becomes 12·58 pounds at the end of ten years, 209·35 pounds at the end of fifty years, and the enormous amount of 2610·03 at the end of a century. We shall almost always have to take into account both the original and continuous cost of an investment. Thus if a stock of wine worth £100 be laid by for fifty years, and the cost of storage be £1 per annum, the total cost at the end of the time will be £1147·0 on account of original cost, and £209·35 for storage, or in all £1356·35.

It is to be feared that the rapid accumulation of compound interest is often overlooked in estimating the cost of public works and other undertakings of considerable duration. A great fort, breakwater, or canal (the Caledonian Canal, for instance) is often not completed for twenty years after its commencement, and in the meantime it may be of little or no use. Suppose that its cost has been £10,000 each year; then the aggregate cost would seem to be £200,000, but allowing for interest at five per cent it is really £330,000. The French engineer and economist, Minard,1 fully understood this point of finance, and showed that in the case of some public works, such as the great digue of Cherbourg harbour, and canals, the execution of which is allowed sometimes to drag on for half a century before any adequate result is returned, the real cost is incomparably greater than it is represented to be by merely stating the sums of money expended. In some cases, such as the first canal of Saint Quentin, a work, after being long prosecuted, is abandoned, and the loss by first cost and interest becomes enormous. The Guernsey Harbour is a case in point, and the English dockyards would supply abundance of similar facts.

An interesting example of the investment of capital occurs in the case of gold and silver, a large stock of which is maintained either in the form of money, or plate and jewellery. Labour is spent in the digging or mining of the metals, which is gradually repaid by the use or satisfaction arising from the possession of the metals during the whole time for which they continue in use. Hence the investment of capital extends over the average duration of the metals. Now, if the stock of gold requires one per cent of its amount to maintain it undiminished, it will be apparent that each particle of gold remains in use 100 years on the average; if ½ per cent is sufficient, the average duration will be 200 years. We may state the result thus:

The wear and loss of the precious metals in a civilised country is probably not more than part annually, including plate, jewellery, and money in the estimate, so that the average investment will be for 200 years. It is curious that, if we regard a quantity of gold as wearing away annually by a fixed percentage of what remains, the duration of some part is infinite, and yet the average duration is finite. Some of the gold possessed by the Romans is doubtless mixed with what we now possess; and some small part of it will be handed down as long as the human race exists.

[[1]]Minard, Annales des Ponts et Chaussées, 1850, 1er Semestre, p. 57.