•mt mm Class. Book PUKSKNTlill) BY t-l CONVERSATIONS POLITICAL ECONOMY; IW WHICH THE ELEMENTS OF THAT SCIENCE FAMILIARLY EXPLAINED. BY THE AUTHOR OF CONVERSATIONS ON CHEMISTRY AND NATURAL PHILOSOPHY. CORRECTED AND IMPROVED, ANDr ADAPTED TO THE USE OF SCHOOLS. BY REV. J. Lr. BliAKE, A. M. BOSTON, BOWLES & DEARBORN, 72 WASHINGTON STREET. 1828. Vi T DISTRICT OF MASSACHUSETTS, tO wit .' District Clerk's Office. Be it remembered, that on the thhtyfirst day of May, A. d. 1828, in the fiftysecond year of the Independence of the United States OF America, Bowles and Dearhorn, of the said District, have de- posited in this ofSce the title of a book, the right whereof they claim as proprietors, in the words following, to wit : ''Conversations on Political Economy; in which the elements of that science are familiarly explained. By the author of Conver- sations on Chemistry and Natural Philosophy. Corrected and im- proved, and adapted to the^use of schools. By Rev. J. L. Blake, A. M." In conformity to the act of the Congress of the United States, en- titled, "An act for the encouragement of learning, by securing the copies of maps, charts and books, to the authors and proprietors of such copies, during the times therein mentioned ;" and also to an act, entitled, " An act supplementary to an act, entitled an act for the encouragement of learning, by securing the copies of maps, ch'arts, and books, to the authors and proprietors of such copies dur- ing the times therein mentioned ; and extending the benefits thereof to the arts of designing, engraving and etching historical and other prints." TNTO w r>AVT^ \ Clerk of the District of jr^U. vv.UAVib, ^ Massachusetts. Mrs. Hennen Jenntnss April 26, 1933 BOSTON", Press of I. R. Butts & Co. PREFACE. In offering to the public this small work, in which it is attempied to bring within the reach of young persons . science which no English writer has yet presented in 1 easy and familiar form, the author is far from infer- g from the unexpected success of a former elementary >rk, on the subject of chemistry, that the present empt is likely to be received with equal favor. Po- ical economy, though so immediately connected with the happiness and improvement of mankind, and the object of so much controversy and speculation among men of knowledge, is not yet become a popular science, and is not generally considered as a study essential to early education. This work, therefore, independently of all its defects, will have to contend against the novelty of the pursuit with young persons of either sex, for the in- struction of whom it is especially intended. If, however, it should be found useful, and if, upon the whole, the doctrines it contains should appear sound and sufficiently 4 PREFACE, well explained, the author flatters herself that this attempt will not be too severely judged. She hopes it will be remembered that in devising the plan of this work, she was in a great degree obliged to form the path she has pursued, and had scarcely any other guide in this popular mode of viewing the subject, than the recol- lection of the impressions she herself experienced when she first turned her attention to this study ; though she has subsequently derived great assistance from the kind- ness of a few friends, who revised her sheets as she advanced in the undertaking. As to the principles and materials of the work, it is so obvious that they have been obtained from the writings of the great masters who have treated this subject, and more particularly from those of Dr Adam Smith, of Mr Malthus, M. Say, and M. Sismondi, that the author has not thought it necessary to load these pages with re- peated acknowledgments and incessant references. It will immediately be perceived by those to whom the subject is not new, that a few of the most abstruse ques- tions and controversies of political economy have been entirely omitted, and that others have been stated and discussed without any positive conclusion being deduced. This is a defect unavoidably attached not only to the author's limited knowledge, but also to the real difficulty of the science. In general, however, when the sound- )' PREFACE. 5 ness of a doctrine has appeared well established, it Itias. been stated conscientiously, without any excess of caution or reserve, and with the sole object of diffusing useful truths. It has often been a matter of doubt among the author's literary advisers, whether the form of dialogues, which was adopted in the Conversations on Chemistry, should be preserved in this essay. She has, however, ultimately decided for the affirmative ; not that she particularly studied to introduce strict consistency of character, or uniformity of intellect, in the remarks of her pupil, an attempt which might have often impeded the elucidation of the subject ; but because it gave her an opportunity of introducing objections, and placing in various points of view questions and answers as they had actually occurred to her own mind, a plan which would not have suited a more didactic composition. It will be observed accord- ingly, that the colloquial form is not here confined to the mere intersection of the argument by questions and anwers, as in common school books ; but that the questions are generally the vehicle of some collateral re- marks contributing to illustrate the subject ; and that they are in fact such as would be likely to arise in the. mind of an intelligent young person, fluctuating between, the impulse of her heart and the progress of her reason, and naturally imbued with^ll the prejudices and popular feelings of uninformed 'benevolence. 1* b PREFACE. NOTE BY THE AMERICAN EDITOR. About 5000 copies of the improved edition of Conver- sations on Natural Philosophy are sold annually ; and the sale of the improved edition of Conversations on Chemistry is nearly as great. The author of the improvements in those works is hence induced to adapt to the use of schools, on the same plan, the Conversations on Political Economy. The subject of the volume, now presented to the public in an improved form, has not excited much interest in our country, and is of course but little under- stood ; but so evident is the importance of it to the well- being of the community, and so rapidly advancing is the state of education with us, that the editor doubts not he anticipates, in this undertaking, wants which will soon become so apparent that they cannot be neglected. In- deed, public attention during the last few years, has been considerably directed to the science of Political Econo- my, and the study of it has already been introduced into some of our seminaries of learning. It is believed an example so good will generally soon be followed ; and, that this new effort to aid the rising generation will re- ceive due consideration and favor. J. L. BLAKE. Boston, May 30, 1828. CONTENTS. CONVERSATION I. INTRODUCTION. Errors arising from total ignorance of Political Economy.— Advantages resulting from the knowledge of its principles. — Difficulties to be surmounted in this study, 12 CONVERSATION II. INTRODUCTION CONTINUED. Definition of Political Economy. — Rise and progress of socie- ty. — Connexion between Political Economy and morality. — Definition of wealth, 23 CONVERSATION III. ON PROPERTY. About the origin of wealth. — Legal institution of property. — Of landed property. — Security the result of property. — Objections to landed property answered. — Origin of na- tions in a savage or pastoral life. — Their progress in agri- culture. — Cultivation of corn. — Recapitulation, 31 CONVERSATION IV. ON PROPERTY CONTINUED. Effects of insecurity of property. — Examples from Volney's Travels.— Objections raised against civilization. — State of Boetica from Telemachus. — Objections to community of goods. — Establishment of Jesuits in Paraguay. — Moravians. — State of Switzerland. — Advantages resulting from the establishment and security of property, 43 CONVERSATION V. ON THE DIVISION OF LABOR. Origin of barter. — Division of labor. — Extracts from Smith's Wealth of Nation/ on the division of labor. — Advantages 8 CONTENTS. of machinery. — Effects of the division of labor on the- morals and intellects of the people. — Recapitulation, 53. CONVERSATION VI, ON CAPITAL. Distinction of rich and poor. — Accumulation of wealth. — - How it is disposed of. — The poor labor for it. — Contract between the capitalist and the laborer. — The rich under the necessity of employing the poor. — Definition of capital. — How capital yields an income. — Profits made by the em- ployment of laborers. — Productive laborers. — Indepen- dence of men of capital. — Industry limited by extent of capital. — Industry increases in proportion to capital. — Capi- tal augmented by the addition of savings fi*om income. — Happiness resulting rather from the gradual acquisition, than the actual possession of wealth, 67 CONVERSATION VII. ON CAPITAL CONTINUED. Of fixed capital. — Distinction between fixed and circulating capital. — Examples of the different kinds of capital. — Of slaves. — Fixed capital and circulating capital equally bene- ficial to the laboring class. — Machinery advantageous to the laboring classes. — Quotation from Macpherson on the advantages of machinery. — Quotation from M. Say's Treatise on Political Economy, 79 CONVERSATION VIII. ON WAGES AND POPULATION. Extreme limits of wages. — Wages regulated by the propor- tion which capital bears to population. — Small capital cre- ates small demand for labor, low wages, and great profit to the capitalist. — Increase of capital creates greater de- mand for labor, higher wages, and less profit to the capitalist. — Necessity of raising subsistence before other works are undertaken. — How wages are lowered by the increase of population without an increase of capital. — Effect of scarcity of provisions on wages — effect of rais- ing wages during a scarcity. — Of a maximum price of pro- visions. — Effect of a diminution of population by sickness on the rate of wages. — It is not work, but funds that cre- ates a demand for labor. — Wages^n Ireland. — Wages in town and country, /• 88 CONTENTS. y CONVERSATION IX. ON WAGES AND POPULATION CONTINUED. High wages not invariably accompanying great capital. — Great capital and low wages in China. — Small capital and high wages in America. — Advantages of new settled countries. — Poverty the natural check to population.— Great population advantageous only when resulting from plenty. — Increasing wealth preferable to any stationary capital. Mistake in encouraging population. — ^Population of manufacturing towns. — Industry. — Piecework, 103 CONVERSATION X. ON THE CONDITION OF THE POOR. Of the cultivation of common and waste lands. — Of emigra- tion. — Education of the lower classes. — Benefit clubs. — Savings banks. — Parochial relief. — Alms and private charities. — Rewards, 115 ' CONVERSATION XI. ON REVENUE. Modes of employing capital to produce revenue. — ^Which of these is most advantageous. — Varies according to the state of the country. — Garnier's observations on the em- ployment of capital. — Equality of profits aflrords a criterion of the due distribution of capital. — Natural arrangements of the distribution of capital. — Equality of profits in agri- culture, manufactures, and trade.— Why those profits ap- pear unequal, 129 CONVERSATION XII. ON REVENUE DERIVED FROM PROPERTY IN LAND. On rent. — High price of agricultural produce the effect, not the cause of rent. — Causes of rent ; 1. The fertility of the earth ; 2. Diversity of soil and situation requiring dif- ferent degrees of expense to raise similar produce. — Ori- gin of rent. — Rent increases positively in a progressive country, and diminishes relatively. — High price of raw produce necessary to proportion the demand to the supply. — Monopoly of land. — Monopoly defined, 141 10 CONTENTS. CONVERSATION XIII. ON REVENUE DERIVED FROM THE CULTIVATION OF LAND. Two capitals employed on land. — Two revenues derived from it. — Of the capital and profits of the farmer. — Of the du- ration and terms of leases. — Of tythes. — Extract from Paley. — Of proprietors farming their own estates. — Ex- tract from Townsend's Travels. — Farms held in adminis- tration. — Advantage of an opulent tenantry. — Metayer system of farming. — Small landed properties. — Extract from Arthur Young's Travels. — Dairy establishments in Switzerland. — Small farms. — Size of farms in Belgium and Tuscany. — Of mines. — Of fisheries, 158 CONVERSATION XIV. ON THE REVENUE OF THOSE WHO DO NOT EMPLOY THEIR CAPITAL THEMSELVES. Rent, or income derived from letting land. — Interest of mon- - ey, or income derived from loans. — Causes of the diflfer- ent rate of interest yielded by land or by money. — Causes of the fluctuations of interest. — Rate of interest in India, in China, and in America. — Of usury. — Government loans, or income derived from the funds. — Of unproductive labor- ers, or those who derive an income from the expenditure of others, 182 CONVERSATION XV. ON VALUE AND PRICE. Of the value of commodities. — Of the distinction between exchangeable value and price. — Of utility considered as essential to value. — Of the cost of production, or natural value of commodities. — Of the component parts of the cost of production, rent, profit, and wages. — Of their im- perfection as am.easure of value. — Of supply and demand. — Of the component parts of the exchangeable value of com- modities. — High price of commodities arising from scarci- ty. — Low price arising from excessive supply. — Low price arising from diminution of cost of production, -' 199 CONVERSATION XVI. ON MONET. Of the use of money as a medium of exchange. — Of coining. — Use of money as a standard of Vilue. — Of the variation of the exchangeable value of gold And silver. — In what man- CONTENTS. 11 ner it aifects the price of commodities. — Of nominal and real cheapness. — What classes of people are affected by the variation in the value of gold and silver. — How far money constitutes a part of the wealth of a country. — Of the exportation of money. — Of the means by which the value of the precious metals equalises itself in all parts of the civilized world, 217 CONVERSATION XVII. SUBJECT or MONEY CONTINUED. Of the depreciation of gold and silver. — Of the adulteration and depreciation of coined money. — Of banks. — Of paper money. — Effects of paper money when not payable in specie on demand. — Of the proportion of currency to the com- modities to be circulated by it, 235 CONVERSATION XVIII. ON COMMERCE. Difference of wholesale and retail trade. — General advantages of trade. — How it enriches a country. — Advantages of retail trade. — Great profits of small capitals explained. — Advantages of quick return of capital to farmers and manufacturers. — Advantages of roads, canals, &c. — Dif- ference of the home trade, foreign trade, and carrying trade. — Of the home trade, it employs two capitals at home, and puts in motion double the quantity of home industry. — It returns capital quicker, 253 CONVERSATION XIX. ON FOREIGN TRADE. Advantages of foreign trade. — It employs the surplus of capi- tal, and disposes of a surplus o^ commodities. — Of boun- ties. — Effects of restrictions on foreign trade. — Extract from Say's Political Economy. — Extract from Franklin's Works, 269 CONVERSATION XX. CONTINUATION OF FOREIGN TRADE. On the corn trade. — Consequences depending upon a home supply of corn in countries of great capital and population. — ^It produces high prices in ordinary seasons, and great fluctuation of prices in tkries of scarcity and of abundance. — Why this is not thfjcase in newly settled countries. — 12 CONTENTS. Propriety of free trade in general. — Danger of introducing a new branch of industry prematurely. — Extract from Mi- rabeau's Monarchic Prussienne on the advantages of free commercial intercourse, 283 CONVERSATION XXL SUBJECT or FOREIGN TRADE CONTINUED. Of bills of exchange. — Of the balance of trade. — Cause of the real variation of the exchange. — Disproportion of exports and imports. — Cause of the nominal variation of the ex- change. — Depreciation of the value of the currency of the country, . 293 CONVERSATION XXII. ON EXPENDITURE. Of the, disposal of revenue. — Of the expenditure of individu- als. — Effects of consuming capital. — Increase of revenue of a country beneficial to all classes of people. — Except in cases where government interferes with the disposal of capital. — Of sumptuary laws. — Of luxury. — Industry promo- ted by luxury. — Passages from Paley on luxury. — Sudden increase of wealth prejudicial to the laboring classes. — Passages from Bentham on legislation. — Luxury of the Romans not the result of industry. — Of the disadvantages arising from excess of luxury, 309 :^. CONVERSATION I. INTRODUCTION. Errors arising from total ignorance of Political Econo- my. — Advantages resulting from the knowledge of its principles. — Difficulties to be surmounted in this study. MRS B. We differ so much respecting the m-erit of the pas- sage you mentioned this' morning, that I cannot help suspecting some inaccuracy in the quotation. Caroline. Then pray allow me to read it to you : it is immediately after the return of Telemachiis to Salen- tum, when he expresses his astonishment to Mentor at the change that has taken place since his former visit ; he says, " Has any misfortune happened to Salentum in my absence ? the magnificence and splendor in which I left it have disappeared. I see neither silver, or gold, nor jewels, the habits of the people are plain, the build- ings are smaller and more simple, the arts languish, and the city is become a desert." — " Have you observed," replied Mentor with a smile, " the state of the country that lies round it?"- — "Yes," said Telemachus, " I per- ceive that agriculture is become an honorable profession, and that there is not a field uncukivated." — " And which is best," replied Mentor, " a superb city, abounding with marble, gold, and silver, with a steril and neglected country ; or a country in a state of high cultivation, and fruitful as a garden, with a city where decency has taken place of pomp ? A great city full of artificers, who are employed only to effeminate the manners, by furnishing the superfluities of luxury, surrounded by a poor and 1. What is the quotation from Telemachus with which this work commences ? 2. What is the leading sentiment in tfiis quota- tion ? 14 INTRODUCTION, uncultivated country, resembles a monster with a head of enormous size, and a withered, enervated body, with- out beauty, vigor, or proportion. The genuine strength and true riches of a kingdoin consists in the number of people, and the plenty of provisions ; and innumerable people now cover the whole territory of Idomeneus, which they cultivate with unwearied diligence and assi- duity. His dominions may be considered as one town, of which Salentum is die centre ; for the people that were wanting in the fields, and superfluous in the city, we have removed from the city to the fields." Well, must 1 proceed, or have I read enough to con- vince you that Mentor is right? Mrs B. I still persist in my opinion ; for though some of the sentiments in this passage are perfectly just, yet the general principle on which they are founded, that town and country thrive at the expense of each other, I believe to be quite erroneous : I am convinced, on the contrary, that flourishing cities are the means of fertilizing the fields around them. Do you see any want of cultivation in the neighborhood of London ? or can you name any highly improved country which does not abound with wealthy and populous cities ? On the other hand, what is more common than to observe decayed cities environed by barren and ill cultivated lands ? The purple and gold of Tyre during the prosperity of the Phoenicians, far from depriving the fields of their labor- ers, obliged that natipn to colonize new countries as a provision for its excess of population. Caroline. That is going very far back for an exam- ple. Mrs B. If you wish to come down to a later period, compare the ancient flourishing state of Phoenicia, with its present wretchedness, so forcibly described by Volney in his travels. 3. Does Mrs B. consider this sentiment correct ? 4, What is her opinion upon the subject ? 5. What does she say in sup- port of her opinion ? 6. What is the present condition of Phoe- nicia according to Volney ? INTRODUCTION. 1 5 Caroline. Has not this wretchedness been produced by violent revolutions, which during a course of ages have impoverished that devoted country, and does it not continue in consequence of the detestable policy of its present masters ? But in the natural and undisturbed order of things, is it not clear that the greater number of laborers a sovereign should, after the example of Idome- neus, compel to quit the town in order to work in the country, the better that country would be cultivated? Mrs B. I do not think so ; I am of opinion on the contrary that the people thus compelled to quit the town, would not find VN^ork in the country. Caroline. And why not ? Mrs B. Because there would already be as many laborers in the country as could find employment. Caroline. In England that might possibly be the case, but would it be so in badly cultivated countries. Mrs B. I think it would. Caroline. Do you mean to say that if a country which is ill cultivated were provided with a greater num- ber of laborers it would not be improved ? You must allow that this requires some explanation. Mrs B. It does so, and perhaps even more than you imagine ; for you cannot well understand this ques- tion without some knowledge of the principles of political economy. Caroline. I am very sorry to hear that, for I confess that I have a sort of antipathy to political economy. Mrs B. Are you sure that you understand what is meant by political economy ? 7. What inquiry does Caroline make concerning Phoenicia, with a view to invalidate Mrs B.'s opinion ? 8. Why does Mrs B. think that people thus compelled to leave the town would not find work in the country ? 9. Concerning what place does Caroline admit Mrs B.'s opinion to be just ? 10. ' What does Mrs B. say persons must understaa^, before they can comprehend how a country, under such circumstances, would remain unimproved, i?.Jthough furnished with an abundance of laborers ? 16 INTRODUCTION, Caroline. I believe so, as it is often the subject of ^'^conversation at home ; but it appears to me the most uninteresting of all subjects. It is about custom houses, and trade, and taxes, and bounties, and smuggling, and paper money, and the bullion committee, &c, which I cannot hear named without yawning. Then there is a perpetual reference to the works of Adam Smith, whose name is never uttered without such a respectful, and almost religious veneration, that I was induced one day to look into his work on political economy to gain some information on the subject of corn, but what with fore- stalling, regrating, duties, drawbacks, and limiting prices, I was so overwhelmed by a jargon of unintelligible terms, that after running over a few pages I threw the book away in despair, and resolved to eat my bread in humble ignorance. So if our argument respecting town and country relates to political economy, I fancy that J must be contented to yield the point in dispute without under- standing it. Mrs B, Well then, if you can remain satisfied with your ignorance of political economy you should at least make up your mind to forbear from talking of it, since you cannot do it to any purpose, Caroline. Oh! that, I assure you, requires very little effort : I only wish that I was as certain of never hear- ing the subject mentioned, as I am of never talking upon it myself. M?'s B. Do you recollect how heartily you laughed at poor Mr Jourdain in the Bourgeois- Gentilhorome, when he discovered that he had been speaking in prose all his life without knowing it ? — Well, my dear, you frequently talk of political economy without knowing it. But a few days since J heard you deciding on the very question of the scarcity of corn ; and it mu&t be confess- ed that your verdict was in perfect unison with your present profession of ignorance." 11. What does Caroline understand by political economy ? 12. To what writer does she allude ? 13. For what did Caro- line laugh at Jourdain 1 What application does Mrs B. make of this anecdote ? INTRODUCTION. 1 < Caroline. Indeed I only repeated what I had heard from very sensible people, that the farmers had a great deal of corn ; that if they were compelled to bring it to market there would be no scarcity, and that they kept it back with a view to their own interests, in order to raise the price. Surely it does not require a knowledge of political economy to speak on so common, so interest- ing a subject as this first necessary of life. Mrs B. The very circumstance of its general inte- rest renders it one of the most important branches of political economy. Unfortunately for your resolution, this science spreads into so many ramifications that you will seldom hear a conversation amongst liberal minded people without some reference to it. It was but yester- day that you accused the Birmingham manufacturers of cruelty and injustice towards their workmen, and assert- ed that the rate of wages should be proportioned by law to that of provisions ; so that the poor might not be sufferers by a rise in the price of bread. I dare say you thought that you had made a very rational speech when you so decided ? Caroline. And was I mistaken ? You begin to ex- cite my curiosity, Mrs B. ; do you think I shall ever be tempted to study this science ^ Mrs B. I do not know ; but I have no doubt that 1 shall convince you of your incapacity to enter on most subjects of general conversation, whilst you remain in total ignorance of it ; and that however guarded you may be, that ignorance will be betrayed, and may fre- quently expose you to ridicule. During the riots at Not- tingham I recollect hearing you condemn the invention of machines, which by abridging labor, throw a number of workmen out of employment. Your opinion was found- ed upon mistaken principles of benevolence. In shoitj 15. What was the case mentioned by Carohne to which Mrs B. alluded 16. "VVTiat did Caroline assert respecting the Birmingham manufacturers ? 17. Of what does Mrs B. propose to convince Caroline? 18. Why did Caroline condemn the invention oi machines ? 2-^ 1 8 INTRODUCTION, my dear, so many things are more or less connected with the science of political economy, that if you perse- vere in your resolution you might almost as well condemn yourself to perpetual silence. Caroline. 1 should at least be privileged to talk about dress, amusements, and such lady like topics. Mrs B. I have heard no trifling degree of ignorance of political economy betrayed in talking of dress. " What a pity," said one lady, "that French lace should be so dear ; for ray part I make no scruple of smuggling it; there is really a great satisfaction in cheating the custom house." Another wondered she could so easily reconcile smuggling to her conscience ; that she thought French laces and silks, and all French goods should be totally prohibited ; that she was determined never to wear any thing from foreign countries, let it be ever so beautiful ; and that it was shameful to encourage foreign manufactures whilst our own poor were starving. Caroline. What fault can you find with the latter opinion? It appears to me to be replete with humanity and patriotism. Mrs B. The benevolence of the lady I do not ques- tion ; but without knowledge to guide and sense to regulate the feelings, the best intentions will be frustrated. The science of political economy is intimately connected with the daily occurrences of life, and in this respect differs materially from that of chemistry, astronomy, or electricity; the mistakes we may fall into in the latter sciences can have little sensible effect upon our conduct, whilst our ignorance of the former may lead us into serious practical errors. There is scarcely any history or any account of voy- ages or travels that does not abound with facts and opin- ions, the bearings of which cannot be understood witliout 19. What was said of the French laces by the two ladies men- tioned by Mrs B. ? 20. With what is^political economy intimate- ly connected ? 21. What works abound in facts and opinions, the bearing of which cannot be understood without a knowledge of this science ? INTRODUCTION. 1 9 some previous acquaintance with the principles of politi- cal economy: besides, should the author himself be deficient in his knowledge, you will be continually liable to adopt his errors from inability to detect them. This was your case in reading Telemachus. Ignorance of the principles of political economy is to be discovered in some of the most elegant and sensible of our writers, especially amongst tlie poets. That beautiful composition of Goldsmith, the Deserted Village, is full of errors of this description, which, from its great popularity, are very liable to mislead the ill-informed. Caroline. I should almost regret to- learn anything which would lower that beautiful poem in my estimation. Mrs B. Its intrinsic merit as a poem is quite suffi- cient to atone for any errors in scientific principles. Truth is not, you know, essential to poetic beauty ; but it is essential that we should be able to distinguish between truth and fiction. Caroline. Well, after all, Mrs B., ignorance of political economy is a very excusable deficiency in women. It is the business of government to reforrli the prejudices and errors which prevail respecting it ; and as we are never likely to become legislators, is it not just as, well that we should remain in happy ignorance of evils which we have no power to remedy ? Airs B. Wheil you plead in favor of ignorance, there is a strong presumption that you are in the wrong. If a more general knowledge of political economy pre- vented women from propagating errors respecting it, no trifling good would ensue. Childhood is spent in ac- quiring ideas, adolescence in discriminating and rejecting those which are false : how greatly we should facilitate this labor by diminishing the number of errors imbibed in early youth, and by inculcating such ideas only as are founded in truth. 22. What popular work is mentioned as being full of errors ? 23. What, in Mrs B.'s opinion, atones for errors of sentiment, in the Deserted Village ? 24. Why does Caroline think women need not understand political economy ? 25. Why does Mrs B. think they ought to understand it ? 20 INTRODUCTION. Caroline. Surely you would not teach political economy to children? Mrs B. I would wish that mothers were so far competent to teach it, that their children should not have any thing to unlearn ; and if they could convey such lessons of political economy as Miss Edgeworth gives in her story of the cherry orchard, no one, I should think, would esteem such information beyond the ca- pacity of a child. Caroline. I thought I remembered that story per- fectly, but I do not recollect in it a single word relative to political economy. Mrs B. The author has judiciously avoided naming the science, but that litttle tale contains a simple and beautiful exposition of the division of labor, the merit of which you would more highly appreciate if you were acquainted with its application to political economy. You would perhaps allow children to hear the story of king Midas, whose touch converted every thing into gold. Qaroline. Is that also a lesson of political economy ? I think, Mrs B. you have the art of converting every thing you touch into science. Mj^s B. It is not art, but the real nature of things. The story of king Midas shows, that gold alone does not constitute wealth, and that it is valuable only as it bears a due proportion to the more immediately useful pro- ductions of the earth. Caroline. But children will not be the wiser for such stories unless you explain their application to political economy. You must give them the tnoral of the fable. Mrs B. The moral is the only part of a fable which children never read 5 and in this they are perfectly right, 26. How far does she think they ought to understand it ? 27. What work of Miss Edgeworth is mentioned containing useful les- sons on the subject? 28. What is there in the Cherry Orchard involving the principles of political economy ? 29. What other work upon the subject is reckoned suitable for children ? 30, What is the story of king Midas? INTRODUCTION. 21 for a principle abstractedly laid down is beyond their comprehension. The application will be made as they advance in life'. Childhood is the period for sowing the seecl, not for forcing the fruit ; you must wait the due season if you mean to gatner a ripe and plentiful har- vest. Caroline. Well, my dear Mrs B., what must 1 do? You know that I am fond of instruction, and that f am not afraid of application. You may recollect what pleasure I took in the study of chemistry. If you could persuade me that political economy v/ould be as inter- esting, and not more difficult, I would beg of you to put me in the way of learning it. Are there any lectures given on this subject ? or could one take lessons of a master ? for as to studying scientific books, I am dis- couraged from the difficulty of the terras; when the language as well as the subject is new, there are too many obstacle? to contend with at first setting out. Mrs B. The language of the science is frequently its most difficult part, but in political economy therr^'- are but few technical terms, and those you will easily com- prehend. Indeed, you have already a considerable Steele of information on this subject, but your notions are so confused and irregular, such a mixture of truth and error, that your business will rather be to select, separate, and methodise what you already know, than to acquire new ideas. It is not in my power to recom- mend you a master on this subject, for there are none — perhaps because there are no pupils. Those who seek for instruction on political economy, read the works written on that science, particularly the treatise of Adam Smith. Lectures on political economy have occasionally been given at the universities, especially at Edinburgh, and many of the students there are well versed in this science, as they turn their attention to it at an age when the mind is not yet strongly biassed by prejudice. 31. What remark is made of childhood relating to intellectual and moral improvement ? 82. Are there many technical terms in political economy ? 33. What works are usually read upon the subject ? 22 INTRODUCTEON. Caroline. But what then am I to do, Mrs B. ? I cannot attend those lectures, and T fear I shall never have courage to undertake the study of treatises which appear to me so difficult. Mrs B. Perhaps I may be able to smooth the way for you. It has been my good fortune to have passed a great part of my life in a society where this science has been a frequent topic of discussion, and the interest I took in it has induced me to study its principles in the works of the best writers on the subject ; but I must tell you fairly, that I did not commence my studies by opening these works at random, or by consulting Adam Smith on an insulated point, before I had examined his plan, or understood his object. I knew that in order to learn 1 must begin at the beginning, and if you are of opinion that my experience can be of any service to you, and will be content to receive an explanation in a familiar manner of what has been discussed or investi- gated by men of acknowledged talent and learning, I will 'ditempt to guide you through the first elements of the .^ience, without, however, presuming to penetrate into its abstruse parts. Caroline. Well then, J am quite decided to make the attempt ; you are but too good to me, Mrs B., to allow me again to become your pupil. You have so much indulgence, however, that 1 am never afraid of exposing my ignorance by my inquiries, though I fear I shall put your patience to a severe trial. 34. What advantages had Mrs B. for understanding this science ? 35.^ How did she commence the study ? INTRODUCTION. 23 CONVERSATION II. INTRODUCTION CONTINUED. Definition of Political Economy, — Rise and Progress of Society, — Connexion between Political Economy and Morality. — Definition of Wealth. CAROLINE. I HAVE been thinking a great deal of political econ- omy since yesterday, my dear Mrs B., but I fear not to much purpose ; at least I am no farther advanced than the discovery of the great confusion of ideas which prevails in my mind on the subject. That science seems to comprehend every thing, and yet I own, that I am still at a loss to understand what it is. Cannot you give me a short explanation of the nature of the science, that I may have some clear idea of it to begin with ? Mrs B. I once heard a lady ask a philosopher to tell her in a few words what is meant by political econo- my. Madam, replied he, you understand perfectly what is meant hy household economy; you need only extend your idea of the economy of a family to that of a whole people — of a nation, and you will have some comprehension of the nature of political economy. Caroline. Considering that he was limited to a few words, do you not think that he acquitted himself ex- tremely well ^ But as* I have little more patience than this lady, I hope you will indulge me with a more de- tailed explanation of this universal science. Mrs B. I would call it the science yvhich teaches us to investigate the causes of the wealth and prosperity of nations. 36. Why did Caroline consider political economy a perplexing subject ? 37. What reply did the philosopher make to the lady who desired him to tell what is meant by the term political econo- my ? 38. ¥/hat definition does Mrs B. give ? 24 INTRODUCTION. In a country of savages, you find a small number of inhabitants spread over a vast tract of land. Depending on the precarious subsistence afforded by fishing and hunting, they are frequently subject to dearths and fa- mines, which cut them off in great numbers : they rear but few children, for want destroys them in their early years : the aged and infirm are often put to death, but rather from motives of humanity than of cruelty, for the hunter's life requiring a great extent of country, and long and perilous excursions in quest of food, they would be wholly incapable of following the young and robust, and would die of hunger, or become a prey to wild beasts. As soon as these savages begin to apply themselves to pasturage, their means of subsistence are brought within narrower limits, requiring only that degree of wandering necessary to provide fresh pasturage for their cattle. Their flocks ensuring them a more easy subsistence, their families begin to increase ; they lose in a great measure their ferocity, and a considerable irapravement takes place in their character. B>j degrees the art of tillage is discovered, a small tract of ground becomes capable of feeding a greater relative number of people ; the necessity of wandering in search of food is superseded ; families begin to settle in fixed habitations, and the arts of social life are intro- duced and cultivated. In the savage state, scarcely any form of government is established ; the people seem to be under no control but that of their military chiefs in time of warfare. The possession of flocks and herds in the pastoral state introduces property, and laws are necessary for its security ; the elders and leaders therefore of these wandering tribes begin to establish laws, to violate which is to commit a crime, and to incur a punishment. This 39. What account is given of a country wholly inhabited by savages ? — —40. What change takes place when savages give them- selves to pasturage ? 41. What further change takes place when they discover the art of tillage ? 42. What is said of govern- ment in a savage state ? 43. What is mentioned to be the origin of social order? INTRODUCTION. 25 is the origin of social order ; and wiien in the third state the people settle in fixed habitations, the laws gradually assume the more regular form of a monarchical or re- publican government. B^ery thing now wears a new aspect ; industry flourislies, the arts are invented, the use of metals is discovered ; labor is subdivided ; every one applies himself more particularly to a distinct employment, in which he becomes skilful. Thus, by slow degrees, this people of savages, whose origin was so rude and miserable, becomes a civilized people, who occupy a highly cultivated country, crossed by fine roads, leading to wealthy and populous cities, and carrying on an extensive trade with other countries. Caroline. This is a very pleasing outline of the history of the rise and progress of civilization ; but I should like to see it a little more filled up. Mrs B. The subject you will find hereafter suffi- ciently developed ; for the whole business of political economy is to study the causes which have thus coope- rated to enrich and civilize a nation. This science is, therefore, essentially founded upon history, — not the his- tory of sovereigns, of wars, and of intrigues ; but the history of the arts, and of trade, of discoveries, and of civilization. We see some countries, like America, in- crease rapidly in wealth and prosperity, whilst others, like Egypt and Syria, are impoverished, depopulated, and falling to decay ; when the causes which produce these various effects are well understood, some judgment may be formed of the measures which governments have adopted to contribute to the welfare of their people ; whether such or such a branch of commerce should be encouraged in preference to others ; whether it be proper 44. In what state of improvement does the monarchical or republi- can form of government commence? 45. What ultimately becomes the condition of this supposed people of Savages ? 46. What does Mrs B. say is the whole business of political econo- my ? 47. On what is the science founded ? 48. What remarks are made in this place of Egypt and America, illustrative of the subject? 3 26 INTRODUCTION. to prohibit this or that kind of merchandise ; whether any peculiar encouragement should be given to agricul- ture ; whether it be right to establish by law the price of provisions or the price of labgr, or whether they should be left without control ; and so on. You see, therefore, that political economy consists of two parts — theory and practice ; the science and the art. The science comprehends a knowledge of the facts which we have enumerated ; the art relates more particularly to legislation, and consists in doing whatever is requisite to contribute to the increase of na- tional wealth, and avoiding whatever would be prejudicial to it. Mistakes in theory lead to errors in practice. When we enter into details, we shall have occasion to ob- serve that governments, misled by false ideas of political economy, have frequently arrested the natural progress of wealth when it was in their power to have accelerated it. Caroline. But since the world v^^as originally a rude wilderness, and yet has arrived at the improved state of civilization in which we now^ find it, the errors of go- verai^ent cannot have been very prejudicial. Mrs B. The natural causes which tend to develope the wealth and prosperity of nations are more powerful than the faults of administration which operate in a con- trary direction. But it is nevertheless true that these errors are productive of a great deal of mischief; that they check industry and retard the progress of improve- ment. Under bad .governments, particular classes of people are favored, others discouraged and oppressed : prosperity is thus unequally shared, and riches unfairly distributed. You look very grave, Caroline; do you be- gin to grow tired of the subject ? Caroline. Oh no; I think thus far I have understood 49. Of how many parts does political economy consist? 50. What does the science comprehend ? 51 , To what does the art or practice relate ? 52. What is said of the natural causes which tend to develope the wealth and prosperity of nations ? 53. What is the condition of the people under bad governments ? IN'TRODUCTION. 27 you; but before we proceed you must allow me to mention an objection which I confess distresses me ; if it is well founded I shall be quite at v^ariance with the maxims of po- litical economy, and that science will no longer retain any interest for me. I find that you are constantly talking of wealth ; of the causes which produce it ; of the means of augmenting it. To be rich, very rich, richer than other people, seems to be the great aim of political econ- omy. Whilst religion and morality teach us that we should moderate the thirst of gain, that inordinate love of wealth is the source of all crimes.' Besides that, it is very evident that the richest people are not always the happiest.^ Now, if wealth does not conduce to the hap- piness of individuals, how can it constitute that of nations ? A poor but vij^uous people are surely happier than a rich and vicious one. What remarkable examples do we not see of this in history. We are taught to admire the Greek republips, who despised the pomp and luxury of wealth. And then the Romans ; during the early part of their history they were poor and virtuous, but the acqui- sition of wealth depraved their character, and rendered them the slaves of tyrants. Now political economy ap- pears to me to induce the love of riches, and to consider it as the only end to be attained by government. Mrs B. This is a most alarming attack upon political economy ! When, however, you understand it better, you will find that your censure is unfounded. At present you must take my word for it, as I cannot show you the benefits arising from just principles of political economy, before you are acquainted with the principles themselves ; but I can assure you that they all tend to promote the happiness of nations, and the purest of morality. Far from exciting an inordinate desire of wealth or power, it 54. What objection does Caroline raise as to a supposed inconsist- ency between the piinciples of political economy and those of Christianity? 55. What comparison does she make between rich and poor people? 56. Wha:t observation does i she make con- cerning ancient Greece and Rome ? 57. With what does Mrs B. tell Caroline she must be acquainted, before she" can comprehend the benefits of just principles of political economy ? 28 INTRODUCTION. tends to moderate all unjustifiable ambition, by showing that the surest means of increasing national property are peace, security, and justice ; that jealousy between nations is as prejudicial as between individuals ; that each finds its advantage in reciprocal benefits ; and that far from growing rich at each other's expense, they mu- tually assist each other by a liberal system of commerce. Political economy is particularly inimical to the envious, jealous, and malignant passions; and if ever peace and moderation should flourish in the world, it is to enlighten- ed views of this science that we should be indebted for the miracle. But, my dear Caroline, I suspect that there is some error in your idea of riches. What do you call riches ? Caroline. Of course to be rich is to have a great in- come ; to be able to spend a great deal more than other people. Mrs B. You speak of the riches of individuals ; of comparative wealth. A rich man in one class of society might be poor in another. But this is not the definition that Tasked for — what do you understand by riches in general — in what does wealth consist ? Caroline. Oh, I suppose you mean money ? — I should say wealth consists in gold and silver. Mrs B. Consider what would be the situation of a country which possessed no other wealth than money. Do you recollect in what estimation Robinson Crusoe held his bag of gold when he was wrecked on a desert island ? Caroline. True ; but in an island which is not desert, money will purchase whatever you want. Mrs B. Then I should rather say that the things which we are desirous to procure with our money, such 58, What does Mrs B. say is the moral tendency of this science ? -. 59. To what description of persons daes she say that politi- cal economy is particularly inimical? 60.' In what does Caro- line suppose riches to consist ? 61. How does Mrs B. convince Caroline that wealth does not consist in money ? 62. In what does Mrs B. herself represent riches to consist? INTRODUCTION. 20 as land, houses, furniture, clothes, food, he. constitute riches ; and jiot the money by which they are obtained. Caroline. Certainly : these are clearly the things which constitute real wealth ; for unless we could pro- cure the necessaries of life with gold and silver, they would be of no use to us. Mrs B. We may therefore say that wealth compre- hends every article of utility, convenience, or luxury. This includes every object of our wishes which can be- come an article of commerce; such as landed estates, houses, the products of agriculture, those of manufac- tures, provisions, domestic animals, in a v.'ord, whatever can contribute to the welfare and enjoyment of men. Cai'oUne. Why should you confine you definition of wealth to things that can become articles of commerce ? Mrs B. Because there are many countries where the earth spontaneously produces things which can nei- ther be consumed nor sold ; and however valuable such things would be to us, could we obtain them, they cannot under those circumstances, be considered as wealth. The herds of wild cattle, for instance, which feed on the rich pastures called the Pampas, in South America, are of this description. Many of those large tracts of land are uninhabited ; and the cattle that range at large over them are of no value. Parties of hunters occasion- ally make incursions, and destroy some of them for the sake of their hides and fat ; whilst the flesh, which we should esteem most valuable, is either left to putrify, or is used as fuel to melt the fat for the purpose of tallow, which being transported to places where it can be sold and consumed, it acquires value and becomes wealth. In other parts of America, the grass of rich pastures is burnt on the ground, there being no cattle to consume it. 63. Why did she confine her definition of wealth to such things as can become articles of commerce ? 64. What illustration of her position did she give from the herds of wild cattle in South America ? 65. And what one did she give from the rich pas- tures in some parts of North America ? 30 INTRODUCTION. Caroiine. This may be the case in wild and uncul- tivated countries : but in those which are civilized, any land yielding unsaleable produce would be converted by the proprietor to some other use. Mrs B. I have heard that the fruit of many of the vineyards in France, was not gathered a few years ago, the grapes being so much reduced in value in conse- quence of a decree prohibiting the exportation of French wines, that the price at which they could be sold would not pay the expense of gathering them. In England, also, when all kinds of colonial produce were excluded from the continent of Europe, coffee is said to have been throw^n into the sea, because it would not pay the charges, on being landed. You see, therefore, that the effects of war or other circumstances, may for a time, in any country, destroy the value of commodities. Caroline. How very much you have already extend- ed my conception of the meaning of wealth ! And yet I can perceive that all these ideas were floating confusedly in my, mind before. In speaking of wealth we ought not t(yconfine ourselves to the consideration of the rela- tive wealth of individuals, but extend our views to what- ever constitutes riches in general, without any reference to the inequality of the division. All this is perfectly clear : no one can be really igno- rant of it ; it requires only reflection ; and yet at first I was quite at a loss to explain the nature of wealth. Mrs B. The confusion has arisen from the comm,6n practice of estimating riches by money, instead of obser- ving that wealth consists in such commodities as are use- ful or agreeable to mankind, of which gold and silver constitute but a very small portion. 66. Whal further illustration did she give from the vineyards in jFrance ? 67. And what one from the plenty of coffee in Eng- land? 68. What remark does Caroline introduce in the close of the second conversation, as to the meaning of wealth ? 69. From what does Mrs B. say that confusion as to the meaning of wealth had arisen? O:^ PROPERTY. 31 CONVERSATION III. ON PROPERTY. About the origin of Wealth ; Legal institution of Pro- perty ; of ^landed Property; Security the result of Property ; Objections to landed Property answered ; Origin of JVations in a savage or pastoral life ; their progress in Agriculture ; Cultivation of Corn ; Reca- pitulation. * CAROLINE. Well, my dear Mrs B., since you have reconciled me to wealth, and convinced me how essential it is to the happiness and prosperity of nations, I begin to grow im- patient to learn wiiat are the best means of obtaining this desirable object. Mrs B. Do not leave everything to me, Caroline. I have told you that you were not without some general notions of political economy, though they are but ill arranged in your mind. Endeavor, therefore, to iinravel the entangled thread, and discover yourself what are the principal causes of the production of wealth in a nation. Caroline. I assure you that I have been reflecting a great deal upon the subject. I do not know v/hether I am right, but I think it is labor which is the cause of wealth. Without labor the earth would yield but very little for our subsistence. How insignificant are its spon- taneous productions compared with those derived from agriculture ! The crab with the apple ; the barren heath with the rich pasture of the meadow ! Mrs B. It is very true that labor is a most essential requisite to the creation of wealth, and yet it does not necessarily insure Jts production. The labor of the sav- age _who possesses no wealth is often more severe than 70. What does Mrs B. tell Caroline to do, in the beginning of the third conversation? 71. What' does Caroline suppose is the first cause of wealth ? 72. What reason does she assign for this opinion ? 73. Is labor necessarily a cause of wealth ? 32 ON PROPERTY. that of our common ploughman, whose furrows teem with riches. The long and perilous excursions of savages in search of prey, the difficulty which, from want of skill, they must encounter in every process of industry, in constructing the simplest habitations, fabricating the rudest im.plements ; — all concur to increase their toil. Labor is the lot of man ; whether in a barbarous or civ- ilized state, he is destined to earn his bread by the sweat of his brow. But how is it that in the one case labor is productive of great wealth, whilst in the other it affords barely the necessaries of life ? Caroline. You have observed that the labor of the savage is less advantageous on account of his ignorance and want of skill; besides, he works neither with the activi- ty and the zeal, nor with the perseverance of men in civil- ized society. Savages, you know, are proverbial for their idleness. Mrs B. Inducements must thenie found to rouse them from that idleness ; motives to awaken their industry and habituate them to regular labor. Men are naturally dis- posed/^to indolence ; all exertion requires effort, and ef- forts are not made without an adequate stimulus. The activity we behold in civilized life is the effect of educa- tion ; it results from a strong and general desire to share not only in the necessaries of life, but in the ' various comforts and enjoyments with which we are surrounded. The man who has reaped the reward, as well as under- gone the fatigues of daily exertion, willingly renews his efforts, as he thus renews his enjoyments. But the ignorance of a savage precludes all desires which do not lead to the immediate gratification of his wants ; he sees no possessions which tempt his ambition — no enjoy- ments which inflame his desires ; nothing less than the 74. How does Mrs B. prove that it is not ? 75. What reply- does Caroline make to the question— why is not labor productive of wealth in a savage as well as in a civilized state ? 76. How is the natural disposition in man to indolence to be overcome ? 77. Of what is the activity in civilized life the effect ? 78. Why does the savage desire to satisfy his immediate wants only ? ON PROPERTY. 33 Strong impulse of want rouses him to exertion ; and, having satisfied the cravings of hunger, he lies down to rest without a thought of the future. Caroline. But if the desires of savages are so few and so easily satisfied, may not their state be happier than that of the laboring classes in civilized countries, who wish for so much, and obtain so little ? Mrs B. The brutish apathy which results from gross ignorance can scarcely deserve the name of content, and is utterly unworthy that of happiness. Goldsmith, in his Traveller, justly as well as beautifully observes, that " Every want that stimulates the bfeast Becomes a source of pleasure when redress'd." Besides it is only occasionally that a savage can indulge in this state of torpid indifference. If you consult any account of travels in a savage country, you will be satis- fied that our peasantry enjoy a comparative state of afflu- ence and even of luxury. But let us suppose a civilized being to come among a tribe of savages, and succeed in teaching some of them the arts of life — he instructs one how to render his hut more commodious, another to collect a little store of provisions for the winter, a third to improve the construc- tion of his bows and arrows ; what would be the conse- quences ? Caroline. One might expect that the enjoyment de- rived from these improvements would lead their coun- trymen to adopt them, and would introduce a general spirit of industry. Mrs B. Is it not more probable that the idle sava- ges would, either by force or fraud, wrest from the in- dustrious their hard-earned possessions ; that the one 79. What inquiry does Caroline propose, as to the comparative happiness of the savage and civilized state? 80. What reply does Mrs B. make to this inquiry ? 81. What supposition does she make of a civilized person who takes up his residence with savages ? 82. Would the savages generally be likely to adopt the improvements which he taught a few of them ? 34 ON PROPERTY. would be driven from the but be bad constructed with so much care, another robbed of the provisions he bad stored, and a third would see his well pointed arrows aimed at bis own breast. Here then is a fatal termina- tion to all improvement. Who will work to procure such precarious possessions, which expose him to dan- ger, instead of insuring his enjoyment ? Caroline. But all this would be prevented if laws were made for the protection of property. Mrs B. True but the right of property must be legally established, before it can be protected. For na- ture has given mankind every thing in common, and property is of human institution. It takes place in such early stages of society that one is apt to imagine it of natural origin ; but until it has been established by law, no man has a right to call any thing his own. Caroline. What, not the game he has killed, the hut he has built, or the implements he has constructed ? These may be wrested from him by force ; but he who thus obtains them acquires no right to them. Mrs B. When a man has produced any thing by his labor, he has no doubt, in equity, the fairest claim to it ; but his right to separate it from the common stock of nature, and appropriate it to his own use, depends en- tirely upon the law of the land. In the case of property in land, for instance, it is the law whidi decrees that such a piece of ground shall be- long to Thomas, such another to John, and a third to Jan:ies ; that these men shall have an exclusive right to the possession of the land and of its produce ; that they may keep, sell, or exchange it ; give it away during their lives, or bequeath it after their deaths. And in or- der that this law should be respected, punishments are enacted for those who should transgress it. It is not S3. Why would they not ? 84, But how could property under such circumstances be supported ? S5. How is everything given toman by nature ? 86. On what does one's right to property depend ? 87. How is one's right to a particular piece of land es- tablished ? 88. By what means are laws made effectual ? ON PROPERTY. 35 until such laws have been made for the establishment and protection of property, of whatever description it be, that the right of property is established. Caroline. You astonish me ! I thought that property in land had always existed : I had no idea that it was a legal institution, but imagined that it had originated from the earliest period of the world. We read that in the time of the ancient patriarchs, when families became too numerous, they separated ; and that those who went to setde elsewhere, fed their flocks, and occupied the land without molestation. There was no one to dispute their right to it ; and after their deaths the children inhabited and cultivated the land of their fathers. If we were to found a colony in a desert island, every man w^ould cultivate as much ground as he wanted for his own use, and each having an equal interest in the preservation of his possessions, property" would thus be established by general agreement, without any legal in- stitution. Mrs B. This general agreement is a kind i3f law, a very imperfect one it is true, and which was perhaps originally founded on the relative strength of individuals. If one man attempts to carry off the cattle or the fruits of another the latter opposes force to force 5 if he is stronger or better armed, he either kills his antagonist or drives him away ; if weaker, he is despoiled, or he calls in his neighbors to his succor, shows ihem the common danger, and may induce them to unite with him in taking vengeance on the aggressor. Many incidents of this nature must occur before regu- lar laws are instituted ; that is to say, before a public authority is established, which shall protect individuals against those who attack them, and punish the offenders. It is then only that a man may say, " This is my field ; 89. What case did Caroline mention, as evidence that individual right to landed estate had always existed ? 90. What supposition did she make concerning the establishment of a colony in a desert island illustrative of her views on this subject ? 91. What reply did Mrs B. make to this case ? 36 ON PROPERTY. this is my house ; this seed which I cast into the ground will bring forth an abundant harvest, which will be all my own ; these trees, which I plant, will every year yield fruit, v/hich I alone shall have a right to gather." Caroline. 1 now comprehend perfectly the advan- tage of such laws — it is security — before they were es- tablished, the strong might wrest everything from the weak ; and old men, women, and children who had no means of defence, were exposed to their rapine and vio- lence. The idle and improvident, when in want of subsistence, became the natural enemies of the labori- ous and industrious. So that without this law the men who had toiled hardest would be most likely to fall vic- tims to those who had done nothing. In a word, the wasps would devour the honey of the bees. Mrs B. Yes, security is the grand point ; it is se- curity which stimulates industry, and renders labor pro- ductive ; every step towards security, is a step towards civilizati>on, towards wealth, and towards general happi- ness. ^ Caroline. All this is very true ; yet an objection to the institution of landed property has just occurred to me, which appears of considerable importance. Before land became private property, the earth, you say, was possessed in common by all mankind ; every one had an equal claim to it. But the law which institutes land- ed property takes it from mankind at large to give it to a few/individuals ; in order therefore to make some men rich, it makes others poor. Now what right has the law^ to dispossess some in order to enrich others ? It should be just before it is generous. This objection, however, does not extend to any other than landed property 5 nothing is more fair than that men should gather the fruits of their labor ; that they should possess the houses they have built, the goods 92. What advantage does Caroline now discover in the civil laws of well organized society ? 93. What stimulates industry, and ren- ders labor productive ? 94. What objection does Caroline suggest concerning the existence of landed property ? ON PROPERTY. 37 they have fabricated ; but the land cannot become pri- vate property vv-iihout injury to others who are thus de- prived of their natural right to it. Mrs B. You would then secure to every one the possession of the wealth he may acquire, though you would refuse him the means of producing it "i You would make him master of his house, but take away the ground on which it stands ; protect his harvests, but not allow him the property of a field in which he may raise his crops I Caroline. I must confess that you have placed my objection rather in a ridiculous point of view ; but that is not enough, Mrs B. ; you must show me that it is erroneous before I can consent to relinquish it. Mrs B. In countries newly occupied, grants of land are made to those who are willing to reclaim it from a state of nature, and the great inequality that we witness in more modern times is the result of voluntary transfers from one individual to another, by gifts, by bequests, or by sale ; it is the necessary consequence of that freedom and that security of which we have just seen the origin. Nature in some instances bestows her gifts with un- bounded and inexhaustible profusion ; it is thus she has given us air and water, which are alike possessed and enjoyed by all. But when she confers her donations whh a more sparing hand, as is the case with land, the advantage of all requires that guardians should be ap- pointed to protect and cherish so valuable a gift ; and in order that they may have the strongest possible interest in its culture and improvement, they become proprietors, with all the advantages attached to exclusive possession. The institution of property in land, augments the Vi^ealth not only of the proprietors, but likewise of all other classes of men. Land may be considered as the instrument by which alone wealth is created ; and we have just seen that the 95. What reply does Mrs B. maks;! to this objec ioi ? 96. How are grants of land made ? 97. What is said of the bountiful and the sparing manner in which nature bestows her gifts ? 3S ON PROPERTY. security of its possession gives life and vigor to indus- try ; it is this security which raises the condiiion of our peasantry so much above that of a savage people who possess the land in common. Caroline. An institution of such evident and general utility cannot then be considered as unjust. Mrs B, Certainly not. It is by the test of general utility that the justice of all laws should be tried ; for there are none which do not impose some restraint on the natural liberty of man, and which, in that point of view, might not be deemed objectionable. But without the control of laws we have seen that neither the lives, the property, the reputation, nor even the liberty of men are secure ; we sacrifice therefore some portion of that liberty to the law ; and, in return, it secures to us the remainder, together with every blessing which security can give. Blackstone, in his Commentaries says, " Every man, when he enters into society, gives up a part of hi^ natural liberty, as the price of so valuable a purchase ; and in consideration of receiving the advan- tages of mutual commerce, obliges himself Xo conform to those laws which the community has thought proper to establish. For no man who considers a moment would wish to retain the absolute and uncontrolled pow- er of doing whatever he pleases, the consequence of which is, that every other man would also have the same power, and there would be no security to individuals in any of the enjoyments of life : political, therefore, or civnl liberty, which is that of a member of society, is no other than natural liberty, so far restrained by human laws (and no farther) as is necessary and expedient for the general advantage of the public. " That constitution or form of government, that sys- tem of laws, is alone calculated to maintain civil liberty, which leaves the subject entire master of his own con- 9S. Wha< is the instrument by which weahh is created ? 99. How should the justice of alllaws be tried ? 100. What is the sub- stance of the quotation from Blackstone, concerning natural and political lights ? 101. What constitution or form of government, is alone calculated to maintain civil liberty. ON PROPERTY. 39 duct, except in those points wherein the public requires some direction or restraint." Caroline. You have completely removed all my scruples respecting the institution of landed property, Mrs B. — let us now therefore return to the progress of wealth and civilization. Mrs B. We must not proceed too rapidly ; for the progressive steps in the history of civilization are ex- tremely slow, and we must learn to view the develope- ment of human industry in successive and almost insen- sible degrees. Civilized nations do not always originate from the set- tlement of a colony ; they frequently arise from a savage state, in which they may remain during a course of cen- turies. It was in this state we found the Indians on the discovery of America ; they were mere hunters ; and so long as men behold an unlimited space before them, in which they may wander without obstacle or control, it is difficult to conceive any circumstances which should lead them to adopt a setded mode of life, and apply them- selves to tillage. In countries abounding with large plains, the pastoral mode of life has prevailed ; but for this purpose there must have been established property in cattle, though the land were possessed in common. Such was the case with the ancient Scythians who inhabited the vast plains of Tartary, and with the modern Tartars and -Arabs, who, to this day, are wandering tribes, and, like the patriarchs of old, live in tents, and travel about with their flocks and herds in search of pasture. We have observed that men were by nature disposed to idleness, and this disposition's necessarily a great ob- stacle to the introduction of agriculture ; for it requires a considerable degree of foresight and knowledge, and 102. What was the condition of the American Savages when the country was first discovered by Europeans ? 103. What is said of the ancient Scythians and the modern Tartars and Arabs ? 104. What is mentioned as a natural obstacle to agriculture ? 40 ON PROPERTY. a firm reliance on the security of property, to labor at one season in order to reap the fruits at another. But we may suppose agriculture to be a progressive step from pastoral life ; that a tribe of shepherds may have met with enemies in their wandering excursions, and the apprehensions of losing their flocks may have induced them to settle ; they would probably choose a spot de- fended by nature from attacks of wild beasts, or the in- cursions of savage neighbors. Thus Cecrops pitched upon the rock on which the citadel of Athens is founded, to build a town. Or they may have been tempted by the attractions of some fruitful spot, under the protection of a neighboring government able to defend them. Vol- ney, in his account of the wandering tribes in Syria, says : " As often as they find peace and security, and a possibility of procuring sufficient provisions in any dis- trict, they take up their residence in it, and insensibly adopt a settled life and the arts of cultivation." These arts they; must have attained by very slow degrees — they observed that fruit trees may be multiplied ; that nutritious plants may be propagated ; that there are seeds which reproduce every year ; and that a great variety of animals may be tamed and domesticated. Thus supplied with a, new fund of subsistence, their chil- dren are better fed, their families increase, and age and infancy are protected and provided for. But these people are yet acquainted with only the first elements of agriculture ; how many fortunate chances must have occurred before they reached the important era of the cultivation of corn ! Wild corn has nowhere been found, and the Greeks imagined that a divinity de- scended on earth, to introduce it, and to instruct them in the cultivation of this valuable plant. Athens, Crete, 105. In what manner is it supposed, that persons may g;o from a pastoral life, to agriculture ? 106. What is mentioned of decrops, illustrative of this supposition ? 107. What account is given of the wandering tribes of Asia, by Volney ? 108. What opinion did thq Greeks' entertain concerning the first cultivation of corn. ? ON PROPERTY. 41 Sicily and Egypt, all claim the merit of being the origi- nal cultivators of corn ; but whoever are the people to whom we are indebted for this important discovery, or whatever are the means by which it was accomplished, there is none which has had so great an influence on the welfare of mankind. Feeble as it appears, this plant can resist the summer's heat and the winter's cold. It flou- rishes in almost every climate, and is adapted not only for the food of man, but for that of a great variety of do- mestic animals, and it yields by fermentation a pleasant and salubrious beverage. The grain will keep many years, and affords such a durable means of subsistence, that danger could no longer be apprehended in trusting to futurity, and plenty was secured during the longest and most unproductive winters. But the cultivation of this inestimable plant cannot be undertaken without considerable funds, fixed habitations, implements of husbandry,* domestic animals ; in a word, establishments which could neither be created nor main- tained without the institution of property. Savages have no corn, no cultivation, no domestic animals; they consume and destroy every thing without considering reproduction ; — and how different are the results ! We now see millions of men and animals inhabiting an ex- tent of country which would scarcely have sufficed for the maintenance of two or three hundred savages. ^ These are at first of a very rude and imperfect construction. In some parts of India the plough of a Hindoo, even to this day, is formed of a crooked stick very inartificially sharpened, and not un- frequently drawn by his wife. The use of domestic animals in agri- culture is another step toward civilization ; but no farming estab- lishment whatever could either be created or maintained without the institution of property. 109. What nations claim for themselves the honor of being the first cultivators of it ? 1 10. What circumstances make corn very valuable ? 111. What is necessary in order to the cultivation of corn ? — ^112. What is said in the note, of the use of the plough in India? 113. What comparison is made, as to the number of persons which can be supported in a savage or civilized state in the same extent of country ? 4* 42 ON PROPERTY, Caroline. Let us rest a little, my dear Mrs B. ; I am almost bewildered with the number and variety of ideas that you have presented to my mind. 1 wonder that these things never occurred to me before ; but I have been so accustomed to see the world in its present im- proved state, that my attention was never drawn to the many obstacles and difficulties it must have encountered, and the laborious progressive steps it must have^made before society could have attained its present state of perfection. Mrs B. Perfeqtion ! comparatively speaking, I sup- pose you mean ; for it is not long since you were ma- king lamentable complaints of the actual state of society ; in which indeed I could not entirely agree with you, though I think that we are still far removed from per- fection. But let us continue to trace the progress of wealth and civilization up to their present state, before we begin to find any fault with existing institutions. Caroline. I think 1 have now a very clear idea of the important consequences which result from the es- tablishment of property. It puts an end to the wander- ing hfe of barbarians, induces men to settle, and inures them to regular labor ; it teaches them prudence and foresight ; induces them to embellish the face of the earth by cultivation ; to multiply the useful tribes of animals and nutritious plants; and in short, it enables them so prodigiously to augment the stock of subsistence, as to transform a country which contained but a few poor huts and a scanty population into a great and wealthy nation. - 114. Does Mrs B. think that civil institutions as they now exist are perfect ? ON PROPERTY. 43 ' CONVERSATION IV. ON PROPERTY CONTINUED. ^ Effects of insecurity of property. — Examples from Fol- ney's Travels. — Objections raised against civiliza- tion. — State of Bcetica from Telemachus. — Objections to community of goods. — Establishment of Jesuits in Paraguay. — Moravians. — State of Sivitzcrland. — Advantages resulting from the establishment and se- curity of property. Mrs B. Now that we have traced the rise and pro- gress of civilization to the security of property, let us see whether the reverse, that is to say, insecurity of property in a civilized country, will not degrade the state of man, and make him retrace his steps till he again degenerates into barbarism. Caroline. Are there any examples of a civilized people returning to a savage state ? I do not recollect ever to have heard of such a change. Mrs B. No, because when property has once been instituted, the advantages it produces are such, that it can never be totally abolished ; but in countries where the; tyranny of government renders it very insecure, the people invariably degenerate, the country falls back into poverty, and a comparative state of barbarism. We have already noticed the miserable chEfnge in the once wealthy city of Tyre. Egypt, which was the original seat of the arts and sciences, is now sunk into the most abject degradation; and if you will read the passages I have marked for you in Volney's travels, you will find the truth of this observation very forcibly delineated. : 1 — 115. What does Mrs B. propose to show in this conversation ? 116. What question is proposed in reply by Caroline? 117. What is the reason that no civilized people have returned to a bar- barous state ? lis. What is the consequence in this respect v^here the tyranny of the government renders property insecure f 119. What countries are mentioned as instances of this ? 44 ON PROPERTY. Caroline reads. " When the tyranny of a govern- ment drives the inhabitants of a village to extremity, the peasants desert their houses, and withdraw with their families int6 the mountains, or wander in the plains. It often happens that even individuals turn robbers in order to withdraw themselves from the tyranny of the laws, and unite into little camps, w^hich maintain themselves by force of arms ; these increasing'become new hordes and new tribes. We may say, therefore, that in cultiva- ted countries the wandering life originates in the injus- tice or want of policy of the government." M7's B. This, you see, is very much to the point ; but here is another passage equally applicable. Caroline reads. " The silks of Tripoli are every day losing their quality from the decay of the mulberry-trees, of which scarcely any thing now remains but some hol- low trunks. Why not plant new ones ? That is a Eu- ropean observation. Here they never plant; because were they either to build or plant, the pacha would say this man has moifey, and it would be extorted from him." Besides, where there is so little actual security, what reliance can be placed on futurity ? What reason would the proprietors have to hope that the mulberry-trees would ev^er repay them for the trouble and expense of planting them ? Yet I w^onder that the government of the country should not, for its own sake, encourage the in- dustry of its subjects. Mrs B. In the w^retched government of the Turks, every thing is so insecure, from the life and property of the sovereign, to that of the lowest of his subjects, that no one looks to futurity, but every man endeavors to grasp at, and enjoy what is immediately within his reach. The fcijlowing passage will show you what sufferers they all are by such a mistakeu system of policy. 120. What does Volney say upon this subject?- 121, What does he say of the silks of Tripoli ? 122. What is the condition of property generally in Turkey ? ON PROPERTY. 45 Caroline reads. " In consequence of the wretch- edness ofthe government, the greater part of the pacha- lics are impoverished and laid waste. In tlie ancient registers of imports, upwards of 32O0 villages were reck- oned in that of Aleppo, but^&t present the collector can scarcely find 400. Such of our merchants as have re- sided there twenty years, have themselves seen the great- er part ofthe environs of Aleppo become depopulated. The traveller meets with nothing but houses in ruins, cis- terns rendered useless, and fields abandoned.' Those who cultivated them are fled into the towns, where the population is absorbed, byt where at least the individual conceals himself among the crowd from the rapacious hands of despotism. In other countries the cities are in some measui-e the overflow of the population of the country ; in Syria they are the effect of its desertion. The roads in the mountains are extremely bad, as the inhabitants are so far from levelling them that they en- deavor to render them more rugged, in order, as they say, to cure the Turks of their desire to introduce their cavalry. " The pacha may applaud himself for penetrating into the most secret sources of private property, but what are the consequences ? The people, denied the enjoy- ment ofthe fruits of their labor, restrain their industry to the supply of their pecessary wants ; the husbandman sows only to prevent himself from starving, the artificer labors only to maintain his fannly ; if he makes any savings he strives to conceal them. The people live therefore in poverty and distress, but at least they do not enrich their tyrants, and the rapacity of despotism is its own punishment. " Mrs B. The degeneracy of the mighty Persian and Indian monarchies since the conquest of those countries 123. What was the former number of villages in the environs of Aleppo? 124. Wha t is the present number .' 125. What is the state of the roads in Syria ? 126, Why do the common people in Turkey labor so little ? 46 ON PROPERTY. by the Mahometans, is also clearly deducible from the insecurity of property, and affords the most tremendous examples of national decline. Trott, in his History of Hindostan, informs us that during the disastrous times of the latter monarchs of India, the cruelties and oppres- sions of the agents of government were such that the farmers burnt their houses, utensils, and crops, and took refuge in the woods and mountains, where those who could neither excite charity nor maintain themselves by the sword, perished through want. Caroline. What a melancholy picture this is, my dear Mrs B. ! — it is, I think, even more painful to con- template than the wretchedness of savages ; for to their actual misery these people must add the regret of hav- ing known belter times. Mrs B. Dr Clarke's Travels abound with similar instances of insecurity of property, and legal oppression, which subvert society, and degrade the human species. " In Circassia," he observes that " the sower scattering seed, or the reaper who gathers the sheaves, are con- stantly liable to an assault ; and the implements of hus- bandry are not more essential to the harvest than the carbine, the pistol, and the sabre." Speaking of the Isle of Cyprus, he says : " The soil everywhere exhibited a white marly clay, said to be exceedingly rich in its nature, although neglected. The Greeks are so oppressed by their Turkish masters, that they dare not cultivate the land; the harvest would in- stantly be taken from them if they did. Their whole aim seems to be, to scrape together barely sufficient, in the course of the whole year, to pay their tax to the governor. The omission of this is punished by torture or by death ; and in case of their inability to supply the impost, the inhabitants fly from the island. So many 127. What does Trott say of the condition of Hindostan ? 128. What other traveller has given other similar accounts ? 129. What does Dt Clarke say of Circassia ? 130. ¥/hat does he say qf the isle of Cyprus ? ON PROPERTY. 47 emigrations of this sort happen during the year, that the population of Cyprus rarely exceeds 60,000 persons, a number formerly insufficient to have peopled one of its towns." Caroline. You have made me sensible of the ad- vantages of civilization ; but yet I confess that my mind is not fully satisfied. Is there no medium between a savage life and the extreme inequality of condition which we see in the present state of society? Can we not have conveniences without luxuries ; plenty without su- perfluity ? I think I have met with an example of such a people, Mrs B. ; but I dare not venture to mention my authority, as you have once before rejected it, Mrs B. If you allude to Telemachus, there are many sound doctrines of political economj^ in that v/ork ; though it must be acknowledged that it is not free from error. But let me hear the sentiments of Fenelon on this subject. Caroline. Do you remember that delightful picture which he draws of the inhabitants of Boetica ? There is an irresistible charm in the description of their happi- ness ; and if fabulous, it is certainly meant at least to delineate what ought to constitute the happiness of na- tions ; equality, community of goods, but {ew arts and few wants ; an ignorance or contempt of luxury, and manners perfectly conformed to tlie simplicity of nature. I must read you the passage, and you will tell me wheth- er it is not a satire on political economy : — " They live in common without any partition of lands, the head of every family is its king. They have no need of judges, for every man submits to the jurisdic- tion of conscience. They possess all things in common ; for the cattle produce milk, and the fields and orchards fruit and grain of every kind in such abundance, that a people so frugal and temperate have no need of property. 131. What is the mimber of inhabitants there ? 132. To what what work does Caroline allude in reply to this statement of Mrs B ? 133. Of the inhabitants of what place does Telemachus give an account? 134. What is this account ? 48 ON PROPERTY. They have no fixed place of abode ; but when they have consumed the fruits, and exhausted the pasturage, of one part of the paradise which they inhabit, they re- move their tents to another ; they have, therefore, no opposition of interest, but are connected by a fraternal affection which there is nothing to interrupt. This peace, this union, this liberty, they preserve by reject- ing superfluous wealth, and deceitful pleasures ; they are all free, they are all equal. " Superior wisdom, the result either of long experi- ence or uncommon abilities, is the only mark of distinc- tion aniong them ; the sophistry of fraud, the cry of vio- lence, the contention of the bar, and the tumult of bat- tle, are never lieard in this sacred region, which the gods have taken under their immediate protection ; this soil has never been distained whh human blood, and even that of a lamb has rarely been shed upon it. When we first traded with these people, we found gold and silver used for ploughshares ; and, in general, employed promiscuously with iron. As they carried on no foreign trade, they had no need of money ; they were almost all, either shep.berds or husbandmen ; for as they suf- fered no arts to be exercised among them, but such as tended immediately to answer the necessities of life, the number of artificers was consequently small : besides, a greater part, even of those that live by husbandry, or keeping of sheep, are skilful in the exercise of such arts as are necessary to manners so simple and frugal." Mrs B. This, my dear Caroline, is a representa- tion of what the poets call the golden age, and requires only truth to make it perfect. If it were an historical account, all the conclusions you deduce from it would be just ; but it is fiction, which you must allow makes an essential difference. Supposing that this earth v/ere a paradise, and yielded 135. What is the only mark of distinction among; the inhabitants ? 136. What is said of the use of gold among them ?■ 137. What does Mia B. sav of this account of Telemachus ? ON PROPERTY. 49 spontaneously all that is now produced by cultivation ; still without the institution of property it could not be enjoyed ; the fruit would be gathered before it was ripe, aninrials killed before they came to maturity ; for who would pro- tect what was not their own ? or who would economize when all the stores of nature were open to him ? There would be a strange mixture of plenty, waste, and- famine. In this country for instance, where the only common property consists in hedge-nuts and blackberries, how seldom are they allowed to ripen? In some parts of Spain, where the beauty of the climate produces a con- siderable quantity of good wild fruit, it is customary for the priest to bestow a blessing upon it before any is al- lowed to be gathered, and this ceremony is not perform- ed till the fruit is considered to be generally ripe ; by which means it is prevented from being prematurely gathered. It is with the same view that our game laws prohibit shooting, till the season when the birds have at- tained their full growth. Caroline. But though the BoBticans had all their goods in common, they were not without laws for pro- tecting them. Mrs B, The earth is not a paradise, and will not spontaneously yield its produce in abundance ; and if it were possessed in common ; who would set about culti- vating this or that spot of ground ? Government must allot to every man his daily task, and say to one you must work in this spot ; to another you must work in that. Would these men labor with the same activity and zeal as if they worked on their account — that is to say, received wages equivalent to their exertions ? Cer- tainly not. Such a system would transform indepen- dent men into slaves, into mere mechanical engines. 138. What supposition does Mrs B. make in reply to this account ? 139. What does she say of the only common property in Great Britain ? 140. How is wild fruit in Spain kept from being prema- turely gathered ? 141. What is said of the game laws in Great Britain ? 142. What difficulties would be found to exist, if the earth were possessed in common ? 5 50 ON PROPiERTY. There would be no inequality of condition it is tiue^ but the earth would not yield one tenth part of its ac- tual produce, the population would necessarily, be di- minished in the same propordon, and if all escaped the distresses of poverty, none would enjoy the acquisition of riches, an enjoyment which, when derived from the exercise of our talents and our industry, is a just and virtuous feeling ; it raises men not only in the scale of wealth, but in that of the power of doing good, of en- larging the sphere of human knowledge, with all the in- estimable benefits v./hich result from. it. There have, however, really existed establishments founded on a community of goods. That of the Jesuits in Paraguay was of this description. The influence of religion enabled these priests to exercise a despotic sway over the poor Indians whom they had converted to Chris- tianity ; it must be allowed that they tempered their pow- er by a patriarchal care of their docile subjects. Such a species of government might perhaps be well adapted to a tribe of ignorant uncivilized Indians, but it would never make a free, a happy, an independent, and a wealthy people. I must again repeat it, the industry of man re- quires the stimulus of exclusive possession and enjoy- ment ; and will always be proportioned to the personal advantage which he derives from it. There is, indeed, still existing a sect of the same de- scription, called iJoravians, but it is their religious tenets alone which enable them to keep up such an artificial system of communiiy, and it should be compared rather to a convent of monks and nuns than to a great nation. Caroline. I find I must give up the point of commu- nity of goods; but still 1 cannot help thinking that the great inequality of conditions which exist in the present state of society, is a serious evil. 143, When is the enjoyment of riches a just and virtuous feel- ing?- 144. What estabUshments have existed founded on a community of interests ? 145, What is said of such a species of government ? 146. What is said of the Moravians ? ON PROPERTT. 51 In Switzerland, where there is much less inequality of fortune than in this country, I have often admired and al- most envied the innocent and simple manners of the peo- ple. They seem not to know half our wants, not to suffer half our cares. Mrs B. The Swiss are governed by mild and equi- table laws, which render them a virtuous and a happy people ; and if they are not a rich and populous nation, it proceeds not from any Jivant of industry, but from the obstacles opposed both to agriculture and trade by the nature of their country ; for they are on the contrary uncommonly active and enterprising. I have often seen rpen carry on their shoulders baskets of manure up steep ascents inaccessible to beasts of burthen, and this for the purpose of cultivating some litde insulated spot of ground, which did not appear worth any such labor. The country women wear their knitting fastened round their waists, in order to have it at hand to fill up every litde interval that occurs in their domestic employments. If a Swiss woman goes to fetch water from the fountain, or faggots from the wood, her burthen is skilfully poised on her head, whilst her fingers busily ply the needles. But in- dustrious as they are, the resources of the country are too limited to enable a father of a family to provide for all his children ; some of them are therefore obliged to emigrate, and seek their fortune in a foreign land, which offers greater resources to their industry. Hence the number of Swiss merchants, governeses, shopkeepers, and servants that are to be met with in almost all coun- tries : would not these people be happier if they foimd means of exercising their industry and their talents in a country to which they are all so much attached, and which they have so much reason to love ? In the energy of youthful vigor men may often quit their own 147. What is said of the condition of the Swiss ? 148. What is said of the hard labor of the men .'- — —149. What is said of the industry of the Swiss women ? 150. What obstacles are in the way to happiness with the Swiss ? 52 ^ ON PROPERTY. country, and live happily in a foreign land ; but inquire of the parents who are on the point of separating from their children as soon as they have attained the hope- ful age of manhood, whether their country would be less happy for offering them the means of employment and maintenance at home. The Swiss cannot afford to support a standing army for the defence of their territory ; they are therefore un- der the necessity of engaging l^eir troops in the service of foreign potentates, in order to provide for a part of their population, and to have a resource by calling them home in times of danger. Would not these soldiers be happier in defending their own country, than in shedding their blood as mercenaries in the cause of foreigners ? We have a remarkable proof of it, in the effect which their patriotic songs are said to produce on them ; when these simple airs recall to their minds their beloved and regretted country, it either drives them to desertion, or renders their lives miserable ; and so deep is the impres- sion made by these nationalairs, that it was found neces- sary to forbid their being sung by the troops in foreign service. Caroline. There is no withstanding your attacks, Mrs B. — you drive me from all my strong holds. 1 ex- pected to have found a safe asylum in the mountains of Switzerland, I see that I must once more take refuge in London, where I am sure you will admit that the con- trast between the luxuries of the rich and the wretched- ness of the poor is shocking to every person of common feeling. Mrs B. If the wretchedness of the poor were the effect of the luxuries of the rich, 1 should certainly agree with you on that point ; but I believe it to be otherwise. However, as the people, whose progress towards wealth 151. Why do the Swiss engage their troops in the service of foreign powers ? 152. What is said to cause their soldiers to desert ? 153. What is the reply of Mrs B. to the suggestion of Caroline, that the wretchedness of the poor in London is caused by individual rights ? .'■■'3 i ^ ON THE DIVISION OF LABOR. 53 and civilization we have been tracing in our two last con- versations, are yet far from being sufficiently advanced in their career to be guilty of any great excess in luxury, we must patiently follow them in their advancement in knowledge and the acquisition of wealth before we treat of the subject of luxury. CONVERSATION V. ON THE DIVISION OF LABOR. Origin of Barter. — Division of Labor, — Extracts from Smithes Wealth of Nations on the division of Labor. Advantages of Machinery. — Effects of the Division of Labor on the morals and intellects of the people. — Recapitulation. MRS B. We have ascertained that the establishment and secu- rity of property were the chief causes of the emancipa- tion of mankind from the shackles of sloth and ignorance ; but there are other subordinate causes which tend great- ly to promote the progress of industry and civilization. The first of these is the introduction of exchange or bar- ter. We observed that when men found they could place a reliance on the security of their possessions, they la- bored with redoubled activity, and far from being sat- isfied with a scanty and temporary maintenance, they provide for the future, they accumulate a little store not only of the necessaries, but of the comforts and conve- niences of life. The one has a stock of arrows for the 154. What have been mentioned as the chief causes of the eman- cipation of mankind from the shackles of sloth and ignorance ? 155. What is mentioned first as a subordinate cause ? 156. What account is given of the manner in which barter or exchange is first cai'ried on among savages ? 5* 54, ON THE DIVISION OF LABOR. chace, another of provisions for the winter, a third of clothes or ornaments for his person. They will remain in undisturbed possession of this little property ; but those who can no longer obtain it by force or fraud will en- deavor to procure it by other means. In the hunting season they will apply to the fabricator of arrows ; but they will not go to him with empty hands ; they must be provided with something to offer in exchange for the arrows, something which they think will tempt him to part with them ; whilst those who have nothing to give in return, must go without the arrows, how much soever they may stand in need of them. Here then is a new incitement to a spirit of industry. Whoever has accumulated more than he wants of any article, may find means of exchanging the surplus for something that will gratify other desires. As objects of desire increase, the wish to possess and the efforts to obtain them increase also ; and the industry of man is exerted either in producing them himself, or in produ- cing something by means of which he may obtain them. Thus the torpid apathy and languid indolence of a sav- age, yields to the curiosity, the admiration, the desire, the activity, and industry of a civilized being. The man for instance, who first cultivates a litde spot of ground, may be said to produce in time a general har- vest ; not only by introducing the artoftillage, but by the powerful impulse which it gives to industry in general. He cannot himself consume the whole produce of his little garden, but he exchanges the surplus for other things of which he stands in need. Caroline. Besides, he would not have had sufficient time to bestow on the cultivation of his garden, if he had been, at the same time, obliged to provide for all his other wants. 157. What will persons do with the surplus of any article, above what is needed by themselves ? 158. How may the person who cultivates only a little spot of ground be said to produce a general harvest ? ON THE DIVISION OF LABOR. 55 Mrs B. Very true ; those therefore who mean to partake of the fruits of his garden, must contribute to- wards the supply of tliose other wants ; some will bring him fish from the river, others game from the woods ; when his immediate necessities are supplied he will be induced to exchange his vegetables for articles of con- veniency, such as baskets to contain his fruit, or some of the rude implements of husbandry ; or he may finally be tempted to part with some for mere luxuries, such as rare shells, feathers, and other personal ornaments. His neighbors will therefore be eager to procure and pro- duce articles which, either from necessity, conveniency, or merely from pleasure, will induce the gardener to part with the produce of his garden : for this purpose inven- tion will be stimulated, new articles will be produced, skill will be acquired, and a general spirit of industry de- veloped. Caroline. So far the introduction of barter seems to answer a very useful purpose ; but when once industry is roused, why should not every one exert his abilities to supply his own wants, and gratify his desires, without the intervention of barter ? If a man happens to be possessed of a superfluous quantity of any commodity, it is no doubt desirable to exchange it for something more want- ed: but it seems to me to be an unnatural and circui- tous mode of proceeding, to produce something which we do not want, in order afterwards to exchange it for something which we do want. Mrs B. Would you then have the baker kill his own meat as well as bake his own bread, brew his own beer, build his own house, make his own clothes, and do a thousand other things, instead of procuring them in exchange through the sale of his b^ead ? 159. What ai-ticles will the person who cultivates the ground he likely first to receive in exchange for his surplus produce ? 160. What would he then receive? 161. What will the neighbors of the gardener be likely to do ? 162. What objection does Car- oline suggest in relation to such a system of barter ? 163. What js the reply of Mrs B. .' 56 ON THE DIVISION OF LABOR. Caroline. Oh no, it would be impossible to under- take so many occupations; and then he can do one thing better than he can do many : but this separation of trades and employments cannot take place in a sav- age state. Mrs B. No, but it begins to operate as soon as bar- ter is introduced ; and it is to this circuitous mode that we owe all our improvements in skill and dexterity ; the advantages of which are much more important than you imagine. When barter became common, it was soon discovered that the more a man confined himself to any one single branch of industry, to the fabrication of bows and arrows for instance, the greater the skill and dexterity he acquir- ed in that particular art ; so that he could make bows and arrows not only quicker, but of better workmanship than another man who followed a variety of pursuits. Caroline. Now I begin to understand the advantage that results from barter, independently of its inspiring a spirit of industry and a taste for a variety of enjoyments. The artist who has acquired a superior degree of excel- lence in the fabrication of bows and arrows, would gain more, by confining himself entirely to that occupation, and exchanging his merchandise for whatever else he was desirous of obtaining, than by turning his attention to a variety of pursuits. Mrs B. No doubt he would, provided he were sure of being able to dispose of all the bows and arrows he could make; for it would be useless to fabricate more than he could sell or exchange ; and as no one could be- come a purchaser, unless he had something to offer in return, a long period of time must elapse before the pro- gress of industry woyjd create a sufficient number of pur- chasers to enable an'individual to earn a livelihood by the fabrication of bows and arrows. 164, When does the separation of trades and employments be- gin to take place ? 165. When barter becomes common, what is discovered ? 166. In what stage of society are men enabled to devote themselves advantageously to one particular art .' ON THE DIVISION OF LABOR. 57 It is therefore only in a more advanced stage of soci- ety that the demand for commodities is so great that men find it advantageous to devote themselves wholly to . one particular art. Adam Smith observes, that "in lone houses and very small villages which are scattered about in so desert a country as the highlands of Scotland, every farmer must be a butcher, baker, and brewer for his own family. In such situations we can scarcely expect to find even a smith, a carpenter, or a mason within less than twenty miles of another of the same trade. The scattered fami- lies that live eight or ten miles distant from the nearest of them, must learn to perform for themselves a great number of little pieces of work for which, in more pop- ulous countries, they call in the assistance of these work- men." This separation of employments, which in political eco- nomy, is called the division of labor, can take place only in civilized countries. In the flourishing states of Eu- rope we find men not only exclusively engaged in the exercise of one particular art, but that art subdivided into numerous branches, each of which forms a distinct occu- pation for different workmen. Here is a beautiful passage in Adam Smith, the merits of which you will now be able to appreciate. Caroline reads. " Observe the accommodation of the most common artificer or day-laborer in a civilized and thriving country, and you will perceive that the num- ber of people of whose industry, a part, though but a small part, has been employed in procuring him this ac- commodation, exceeds all computation. The woollen coat, for example, which covers the day-laborer,* as 167. Why cannot they do it before that time ? 168. What ac- count does Adam Smith give of some places of sparse population like the highlands of Scotland ?^ — 169. Where can separation of em- ployments take place ? 170. In the flourishing states of Europe what do we find illustrative of this subject ? 58 ON THE DIVISION OF LABOR* coarse and rough as it may appear, is the produce of the joint labor of a great multitude of workmen. The shep- herds, the sorter of the wool, the comber or carder, the dyer, the scribbler, the spinner, the weaver, the fuller, the dresser, with many others must all join their different arts in order to complete even this homely production. — How many merchants and carriers, besides, must have been employed in transporting the materials from some of those workmen to others who often live in a very distant part of the country ! How much commerce and naviga- tion in particular, how many shipbuilders, sailors, sail- makers, ropemakers, must have been employed in or- der to bring together the different drugs made use of by the dyer, which often comes from the remotest corners of the world ! What a variety of labor too is necessary in order to produce the tools of the meanest of those work- men ! To say nothing of such complicated machines as the ship of the sailor, the mill of the fuller, or even the loom of the weaver, let us consider only what a variety of labor is requisite in order to form that very simple machine, the shears with which the shepherd clips the wool. The miner, the builder of the furnace for heating the ore, the feller of the timber, the burner of the char- coal to be made use of in the smeltinghouse, the brick- maker, the bricklayer, the workmen who attend the fur- nace, the millwright, the forger, the smith, must all of them join their different arts in order to produce them. Were we to examine, in the same manner, all the differ- ent parts of his dress and household furniture, the coarse linen shirt which he wears next his skin, the shoes which cover his feet, the bed which he lies on, and all the different parts which compose it, the kitchen grate at which he prepares his victuals, the coals which he 171. What enumeration of artificers does Adam Smith think necessary in the production of woolen cloth ? 172. How is the shipwright, the sailor, the ropemaker, the merchant, the miner, &c. furnished with employment in its production ? 137. What further examination does he propose in order to show how many persons have been employed for our convenience ? ON THE DIVISION OF LABOR. 59 makes use of for that purpose, dug from the bowels of the earth, and brought lo him by a long sea and a long land carriage, all the other utensils of his kitchen, all the furniture of his table, the knives and forks, the earth- en or pewter plates upon which he serves up and di- vides his victuals, the different hands employed in prepar- ing his bread and his beer, the glass window which lets in the heat and the light, and keeps out the wind and rain, with all the knowledge and art requisite for pre- paring that beautiful and happy invention, without which these northern parts of the world could scarce have af- forded a very comfortable habitation, together with the tools of all the different workmen employed in producing those different conveniences ; if we examine, I say, all these things, and consider what a variety of labor is employed about each of them, we shall be sensible that without the assistance and cooperation of many thou- sands, the very meanest person in a civilized country could not be provided, even according to \^hat we very falsely imagine the easy and simple manner in which he is commonly accommodated. Compared, indeed, with the more extravagant luxury of the great, his accommo- dation must no doubt appear extremely simple and easy ; and yet it may be true, perhaps, that the accommodation of an European prince does not always so much exceed that of an industrious and frugal peasant, as the accom- modation of the latter exceeds that of many a Africau king, the absolute master of the lives and liberties of ten thousand naked savages." It is very true, certainly ; and it reminds me of an ob- servation of Dr Johnson in the Rambler, " That not a washerwoman sits down to breakfast, without tea from the East indies, and sugar from the West." 1 now comprehend your reference to the little story of the Cherry Orchard : it was by dividing amongst the 174. What comparison does he make between the peasant, the European prince and the African King ? 175. What remark of Dr Johnson is quoted ? 60 ON THE DIVISION OF LABOR. children the different parts of the process of plaiting straw, that they succeeded so nnuch better than the boy who was left to perform the whole of his plait alone. Mrs B. I will now point out to you some exam- ples remarked by Adam Smith in illustration of the ben- efits derived from the division of labor. That of the pin manufactory 1 shall give you in his own words. He observes, that " A workman not educated to this busi- ness, nor acquainted with the use of the machinery em- ployed in it, could scarce, perhaps, with his utmost in- dustry, make one pin in a day, and certainly could not make twenty. But in the way in which this business is now carried on, not only the whole work is a peculiar trade, but it is divided into a number of branches of which the greater part are likewise peculiar trades. One man draws out the wire, another straightens it, a third cuts it, a fourth points it, a fifth grinds it at the top for re- ceiving the head. To make the head requires two or three distinct operations ; to put it on is a peculiar busi- ness, to whiten the pins is another ; it is even a trade by itself to put them into the paper ; and the important bu- siness of making a pin is, in this manner, divided into about eighteen distinct operations, which in some man- ufactories, are all performed by distinct hands, though in others the same man will sometimes perform two or three of them. I have seen a small manufactory of this kind where ten men only were employed, and were some of them consequendy performed two or three distinct operations : but though they were very poor, and there- fore but indifferently accommodated with the necessary machinery, they could, when they exerted themselves, make among them about twelve pounds of pins in a day. There are in a pound upwards of four thousand pins of a middling size. Those ten person, therefore could make 176. How long does Adam Smith suppose it would take a person not educated to the business to make a pin ? 177. How is the labor of making pins now divided — and into how many distinct opera- tions .' 178. How many pins does he say ten persons have been seen to make in a day? 0^ THE DIVISION OF LABOR. 61 among them upwards of fortyeight thousand pins in a day. Each person, therefore, making a tenth part of fortyeight thousand pins, might be considered as making four thousand eight hundred pins in a day. But if they had all wrought separately and independently, and with- out any of them having been educated to this peculiar business, they certainly could not each of them have made twenty, perhaps not one pin in a day ; that is, certainly, not the two hundred and fortieth, perhaps not the four thousand eight hundreih part of what they are at present capable of performing, in consequence of a proper division and combination of their different opera- tions." Caroline. These effects of the division of labor are really wonderful ! Mrs B. The instance which Adam Smith quotes in proof of the dexterity acquired by men, whose labor is reduced to one simple operation, is also very striking. — After observing, that a man unaccustomed to a black- smith's forge can W'ith difficulty make three hundred nails in a day, he says that a common blacksmith can forge one thousand, but that he has seen boys who have been brought up to the art of nail-making exclusively, acquire such a degree of dexterity as to complete two thousand three hundred in a day. Caroline. The difference is prodigious : but I can conceive it when I observe with what awkwardness a man handles the tools of an art with which he is unac- quainted, whilst they are used with ease and dexterity by those who are accustomed to them. Mrs B. Then w^e must consider that when a man's whole attention and talents are turned to one particular object, there is a much greater probability of his discov- ering means of improving his workmanship, or facilita- 179. How great then is the gain from this division of labor? 180. What instance does Adam Smith give of the dexterity men will acquire when labof is reduced to one simple operation ?- 181. What is the probability as to improvements in the mechanic arts from such a division of labor ? 6 62 ON THE DIVISION OF LABOR. ling and abridging his labor, than if his mind were en- gaged in a variety of pursuits. It is most frequently to workmen that we are indebted for improvements in the process and instruments of labor. Another advantage derived from the division of labor is the regular and uninterrupted manner in which it ena- bles the work to proceed. A laborer who has many diversified occupations not only loses time in going from one to another, but also in settling himself to his differ- ent employments ; and as soon as his hand is in, as the workmen say, he must quit his work to take up another, totally different. Thus he must go from his plough to his loom, from his loom to his forge, from his forge to his mill — but no — there could be neither plough, nor loom, nor forge, nor mill, before a division of labor had taken place ; for no man could either find time or acquire skill to construct such machines unless they could bestow the whole of their labor and attention upon them. The construction of machines, therefore, we may con- sider as a refined branch of division of labor. Their effect in facilitating and abridging labor is almost incre- dible. How easy, for instance, the operation of grind- ing corn is rendered by so simple a machine as a wind- mill ! Were this to be done by manual labor, by bruizing it between stones, it would be almost an endless task ; whilst in a windmill the natural motion of the air per- forms nearly the whole of the work. Caroline. But the cotton mills we have lately seen are a much more wonderful example of the effect of machinery. In these a steam-engine sets all the wheels and spindles in motion, and performs the work of hun- dreds of people. Mrs B. The great efficacy of machinery in the hands 182. What is another advantage from the division of labor ? 183^ What illustration of this is given ? 184. What may be consider- ed a refined branch of the division of labor ? 185. What is said of the grinding of corn illustrative of the subject ? 186. What example still more striking is mentioned by Caroline ? ON THE DIVISION OP LABOR. 63 of man, depends upon the art of compelling natural agents^ such as wind, steam, and water, to perform the task which he would otherwise be obliged to execute himself 5 by which means labor is very much abridged, a great deal of human effort is saved, and the work is often accomplished in a more uniform and accurate man- ner. We noticed the skill that could be acquired in the art of forging nails : but the utmost efforts of manual labor fall far short of machinery. A machine had been in- vented in the United States of America for the purpose of cutting nails out of iron, the operation of which is so rapid that it forms 250 perfect nails in the space of one minute, or 15,000 in an hour. Caroline, The metals, 1 suppose, could not have been brought into use, till a considerable progress had been made in the divison of labor. Mrs B. Certainly not ; for it requires the exclusive labor of a great number of men to work a mine. The Mexicans and Peruvians in America, though they had made some progress towards civilization, had never sought for gold in the bowels of the earth ; but content- ed themselves with what they could pick up in the beds of rivers. In Britain, the Cornish mines were work- ed in very ancient times, and it is even supposed that the Phoenicians had introduced this art among the an- cient Britons, with whom they are said to have trafficked for tin and other metals. Caroline. I am perfectly satisfied that the division of labor is a necessary step towards the accumulation of national wealth : but may it not have an injurious effect on the mental faculties of individuals ^ A man who is con- fined to one simple mechanical operation, however great 187. Upon what does the great efficacy of machinery depend ? 188. What is said of the machine for cutting nails invented in the United States ? 189. What is said of the Peruvians and Mexi- cans as to their knowledge and use of gold ? 190. By whom is it supposed the Cornish mines were first worked ? 64 ON THE DIVISION OF LABOR. the facility and perfection he may acquire in the perform^ ance of it, is shut out from all other improvemsnt ; his mind will never be roused to exertion by difficulty, in- terested by variety, or enlightened by comparison. His ideas will be confined within the narrow limits of his monotonous employment, and his rational powers will become so degraded as to render him scarcely superior to the machinery at which he works. Whilst a com- mon husbandman, whose occupations are diversified, and but little aided by machinery, acquires knowledge by experience in his various employments, and, having a much wider range of observation, enjoys a correspond- ing developement of intellect. Mrs B. The knowledge of a ploughnian is often remarkably distinct in his limited sphere ; but yet I have usually found that in conversing upon general topics with a ploughman and with a mechanic, the latter has discovered more intelligence, and that his mind has appeared more active and accustomed to reflection. 1 conceive this to be owing to the facility which the arts afford in bringing men together in society. They are carried in towns, where neighborhood renders social intercourse more easy than in scattered hamlets in the country. When they meet together they talk over each other's concerns, read the newspapers, and discuss the politics of the parish, or of the state. This observation is particularly applicable to manufactories, where a num- ber of persons generally work together in the same room, and their employment seldom prevents conversation. Social intercourse, however low the members amongst whom it exists, cannot fail to promote the diffusion of knowledge ; they become acquainted with the comforts and conveniences which have been acquired by the more skilful and industrious ; they learn to appreciate 191. What suggestion does Caroline make as to the effect that this division of labor will have on the intellect ? 192. How does Mrs B. answer this suggestion ?— -193, What effect does sh& suppose social intercourse has as to the diffusion of knowledge I ON THE DIVISION OP LABOR. 66 their value, and are stimulated to acquire the means of obtaining them ; a mode of instruction which we have observed to be the most essential step towards dispelling ignorance and exciting industry. Caroline. But is there not some danger that the advantages obtained in the improvement of the mind by this state of constant intercourse amongst the lower classes in manufacturing towns, will be more than coun- terbalanced by the corruption of morals ? How much more vice appears to prevail amongst the lower orders in crowded cities than in the cottages of the peasantry ! Mrs B. You do not consider the difference of the population ; there are often a greater number of people collected together in a manufacturing town than there are scattered over a space of thirty square miles of coun- try : were their morals, therefore, the same, vice would appear much more conspicuous in the town than in the country. Admitting, however, the comparative amount of crimes to be greater in the former, I believe that it is compensated by a more considerable proportion of virtue. Caroline. But you must allow that we hear much more of the vices than of the virtues of manufacturing town and great cities. Mrs B. Because crimes, from being amenable to the laws, are necessarily made known, whilst virtue sel- dom receives any public testimony of approbation. Every act of fraud or violence is sounded in our ears, whilst the humanity, the sympathy for sufferings, the sac- rifices which the poor make to relieve each other's dis- tresses, are known only to those who enter into their domestic concerns. This has been frequently noticed by medical men who have attended the lower classes of people in sickness at their own houses. 194. What inquiry does Caroline make as to the effect, upon morals, of manufacturing establishments ? 195. What is Mrs. B's. reply ? 196. Why does Mrs B. suppose that more is said of the vices than of the virtues of persons in manufacturing estab- lishments ? 6* 66 ON THE DIVISION OF LABOR. Caroline. Yet, upon the whole, do you not think that the situation of the poor in the country is better than it is in towns ? Mrs B. They have each their advantages and dis- advantages, and I should imagine that good and evil are pretty equally balanced between them. If the inhabit- ants of towns are better informed, and can more easily acquire some of the comforts of life, the inhabitants of the country are more vigorous and healthy, more cleanly, and they have the advantage of a more constant and regular demand for the produce of their labor, which is not so liable to be affected by the casualties of war, fashion, and other causes, which often occasion great distress to manufacturers. But should you still entertain any apprehension that the division of labor may check and repress the intellec- tual improvement of the lower classes, ] should consider this as amply compensated by its prodigious effect in the multiplication of wealth, a circumstance which not only increases the comforts of the poor, but by facilitating the means of acquiring knowledge, ultimately promotes its diffusion among all classes of men. It is to the divisionof labor that we are indebted for all the improve- ments in the processes of art, and amongst others for the invention of printing, which has proved the means of so wonderfully extending all kinds of knowledge. We have now, I think, brought our savages to a con- siderable degree of advancement in civilization ; 1 would wish you briefly to recapitulate the causes which have produced this happy change, and at our next inter- view we will continue to trace their progress. Caroline. Labor seems to be the natural and imme- diate cause of wealth ; but it will produce litde more than 197. What comparison is made between the poor of manufactur- ing establishments and those in the country ? 198. On the sup- position, that this division of labor is calculated to check and repress intellectual improvement, how is it thought the evil may be com- pensated? 199. To what are we indebted for improvements in 'he arts? On capital. C7 the necessaries of life until its benefits are extended by the establishment of such a government as can give secu- rity to property. The spirit of industry will then be rapidly developed. The surplus produce of one individ- ual will be exchanged for that of another. The facili- ties thus offered to barter will naturally introduce the division of labor or of employment; and will soon give rise to the invention of machinery, the merits of which we have just discussed. Mrs B. Extremely well, Caroline. We shall now take leave of this improved slate of society for the pres- ent, with a conviction, I hope, that we leave mankind much happier than we found it. CONVERSATION VI. ON CAPITAL. Distinction of Rich and Poor. — Accumulation of Wealth. — How it is disposed of. — The poor Labor for it. — Contract between the Capitalist and the Laborer. — The Rich under the necessity of employing the Poor. — Definition of Capital. — How Capital yields an in- come. — Profits made by the Employment of Labor- ers. — Productive Laborers. — Independence of men of Capital. — Industry limited by extent of Capital. Industry increases in proportion to Capital. — Cap- ital augmented by the addition of savings from income. — Happiness resulting rather from the grad- ual Acquisition, than the actual Possession of Wealth. MRS B. In tracing the progress of society towards civilization, we noticed the happy effects resulting from the secui'ity 200. What recapitulation of the argument is given by Caroline ? 68 ON capitId. of property and the division of labor.' From this period we may also date the distinction of rich and poor. Caroline. And all the evils that arise from inequality of condition. This alas ! is the dark side of the picture. The weeds spring up with corn. Mrs B. 1 know not how this distinction can be call- ed an evil. If it does not exist in a savage state, it is because indigence is universal; for no one being able to acquire more than what is necessary for his immediate maintenance, every one is poor. When civilization takes place, the advantages arising from the division of labor enable an industrious skilful man to acquire more wealth than will suffice to gratify his wants or desires. By continued exertion this surplus produce of his industry in the course of time accumulates, and he becomes rich, whilst the less industrious, who acquires merely a daily subsistence, remains poor or possessed of nothing. Caroline. I see no great advantage in this accumu- lation of wealth, for it must either be spent or hoarded ; if spent, the industrious man is eventually no richer than his idle neighbors ; and if hoarded, the accumulation is of no use to any one. Mrs B. Your dilemma is put with some ingenuity, but you must at least allow that, where more is spent, there is a greater scope for enjoyment ; and in regard to hoarding, I hope you are not recurring to your notions about riches and money, and forget that the wealth of which we have been speaking consists of exchangeable commodities, either in agricultural or manufactured, many of which are not of a nature to be kept, where men are inclined to hoard them. A much better mode of dispo- sing of them has been devised ; one which not only secures, but augments them. 201. From what period is dated the distinction of rich and poor ? 202. What is the condition of the savages as to property ? 203. What is the objection of Carohne to v/ealth ? 204. What reply does Mrs B. make to this objection ? ON CAPITAL. 69 t Caroline, What can that be ? Mrs B. This you will hardly understand without some previous explanation. In civilized society m^n cannot, as in a state of nature, obtain a subsistence by hunting, or from the spontaneous produce of the earth; because the wilderness has been destroyed by cultivation, and the land has become pri- vate property. Caroline. And when the land is engrossed by the rich, there seems to be no resource left for the poor ? Mrs B, What do you suppose the rich do with their wealth ? Caroline. The poor, I am sure, partake very little of it ; for the sums of the most charitable give away are but trifling compared to what they spend upon them- selves. Mrs B. I am far from wishing that the poor should be dependent on the charily of the rich for a subsistence. Is there no other mode of partaking of their wealth but as beggars ? Caroline. Not that I know of, unless by stealing. Oh no, I guess now — you mean they may earn it by their labor ^ Mrs B. Certainly} The poor man says to the rich, " You have more than you want, whilst I am destitute. Give me some little share of your wealth for a subsist tence ; I have nothing to offer in exchange but my labor ; but with that I will undertake to procure you more than you part with — if you will maintain me, i will work for you." Caroline. But is it not usual to pay wages to labor- ers instead of maintaining them ? Mrs B. It comes to the same ; for the wages pur- 205. Why cannot men in civilized socie^ty obtain a living in the same manner that savages do ? 206. Does Mrs B. consider it desirable that the poor should live upon charity ? 207. In wht^t pther way can the poor be benefited by the rich ? 70 ON CAPITAL. chase a maintenance ; the money merely represents the things of which the laborer stands in need, and for which he may exchange it. Caroline. The laborer may then be supposed to say to the rich man, " Give me food and clothing, and 1 by my labor will produce for you other things in return." Mrs B. Precisely ; the rich man exchanges with the laborer the produce or work that is already done, for work that is yet to be done. It is thus that he acquires a command over the labor of the poor, and increases his wealth by the profits he derives from it. Caroline. This is a resource for the poor, I own ) but not enough to satisfy me entirely, for they are left at the mercy of the rich, and if these did not choose to em- ploy them, they would starve. Mrs B. True ; but what would the rich do without their assistance ? Caroline. Their wealth would furnish them a plen- tiful subsistence. - Mrs B. At first it might ; but in time it would be consumed. Their harvests and their cattle would be eaten, their clothes worn out, and their houses fallen into decay. Caroline. But you know that the harvests are annu- ally reproduced, new clothes are purchased, and houses repaired or built : riches easily obtain all these things. . Mrs B. But who is it that reproduces the harvest ? Who manufactures new clothes and builds new houses, but the poorer classes of men ^ Without their aid you could spend only what you actually possessed, and when it was gone you would be destitute. Caroline. True ; that is an idea that often perplexed me when I was a child. I thought that in proportion as my father spent his money he must be impoverished ; 108. What is the nature of the exchange between the poor and the rich ? 209. How does the rich man acquire a command over the labor of the poor ? 210. Whatobjection does Caroline offer to this? 211. What reply does Mrs B. make? 212. By whom are the rich resupplied, as their stores become exhausted ? ON CAPITAL. 71 but now I understand that wealth is reproduced by the labor of the poor, and that thence arises an annual income. Mrs B. If the value produced by the laborer exceeds what he has consumed, the excess will constitute an in- come to his employer ; and observe that an income can be obtained by no other means than by the employment of the poor. Caroline, Indeed I was perfectly aware that it was necessary to employ laborers for the purpose ; but I did not consider that it created reciprocity of benefit, by ren- dering the poor in a great measure independent of the will of the rich, Mrs B, The rich and poor are necessary to each other ; without the rich the poor would starve ; without the poor the rich would be compelled to labor for their own subsistence. Caroline. It, is very true, Mrs B.; and this is, I sup- pose, what you alluded to, when you said that the rich had a means of securing their wealth without hoard- ing it. Mrs B, Yes ; the laboring classes consume and re- produce it. Wealth, thus destined for reproduction by the employment of laborers, is called capital. You have heard of capital before, no doubt ? Caroline. Oh yes ; a man of fortune is said to be a man of capital ; I always considered these as synony- mous terms. Mrs B. So they are ; and you may have heard also that to spend a capital is very ruinous ; that it should be placed in some profitable line, so as to yield an income ; that is to say, it must be employed to set laborers to work, and the profit derived from their labor is called revenue or income. 213. How is neat income furnished to the rich ? 214. What is the nature of the reciprocity existing between the poor and the rich ? 215. What is called capital ? 216. What should be done with capital? 72 ON CAPITAL. Caroline. If capital is employed m paying the wa- ges of laborers, it is spent and consumed by them, and is lost to the capitalist as much as if he spent it. Mrs B. No ; capital employed is consumed, but not destroyed : it is at least no more destroyed than the seed sown in the ground, which is reproduced, with increase. Thus the capital consumed by laborers is reproduced with increased value in the articles of their workmanship. Caroline. I know that a capital produces an income ; and seem to have a clear idea how this is effected. Yet I have some scruples respecting the mode of obtain- ing it, which 1 am not altogether able to remove. I see that if the laborer reproduces for the capitalist only as much as he consumes, or, in other words, commodities equal in value to his wages, the income is only equiva- lent to the outgoing ; he restores therefore exactly what the capitalist has advanced him, the latter being neither a loser nor a gainer by the bargain ; any farther, at least, than that, by reproduction, perishable produce is made to last 5 and that if more is produced, it seems but fair that the laborer should have the whole of his earnings. Mrs B. No capitalist would consent to such an agreement. When the poor man applies to the rich one for a maintenance, offering his labor in return, he does not say — for the food you give me during the pres- ent year, I will produce an equal quantity of food next year — because he knows that he would not be employ- ed on such terms ; he must by the prospect of some advantage induce the capitalist to exchange food that is already produced for something .that is yet to be pro- duced. He therefore says — for the food you give me now, I will raise you a greater or more valuable supply next year. 217. How does Mrs B. compare the employment of capital to the seed cast into the ground ? 218. What objection does Caroline make to this mode of reproduction of capital? 219. Why does not the laborer receive the profits on his labor instead of the capi- talist? ON CAPITAL. 73 Caroline. It appears to me a hardship, notwithstand- ing, that after the rich have engrossed the whole proper- ty of the land, nothing should be left to the poor beyond their own labor, and that they should not be allowed to reap the whole of the advantages it affords. If I were a legislator, I should be disposed at all events to establish a law compelling the capitalist to allow the laborer the whole of the profit arising from his work. Such a regulation would surely tend to improve the con- dition of the poor. You smile, Mrs. B., I am afraid you will not allow of my plan. Mrs B. I would suggest an addition to it, which is a law to compel the capitalist to employ the laborers ; for on your terms none would give them work. The farmer, were he obliged to pay his husbandmen the value of the crops they raised, would derive no profit from their sale ; he would, therefore, leave his fields uncultivated, the land would lie waste, and the husband- men starve. Manufacturers for the same reason would discharge their workmen, merchants their clerks ; in a word, industry would be paralyzed ; and were you to devise a system of certain and inevitable ruin to a coun- try, I do not think you could adopt a more efficacious mode of promoting your design. Caroline. So much for the wisdom of my laws ! I certainly ought to have foreseen these consequences; since, as you observed before, the inducement for the rich to employ the poor is the advantage the former de- rive from the latter. Mrs B. Undoubtedly. The profits the rich reap from the employm.ent of their capital constitutes their income ; without such income the capital, it is true, might, by your compulsatory laws, be reproduced an- nually ; but yielding no income, the capitalist would 220. What law would Caroline have made? 221. What would be the consequence in Such a law were to be made ? 222. What constitutes the income of the rich ? 7 74 ON CAPITAL. gradually consume it in the maintenance of his family ; and thus his means of employing laborers would annu- ally diminish. So far from considering the profits which the capital- ist derives from his laborers as an evil, I have always thought it one of the most beneficent ordinations of Providence, that the employment of the poor should be a necessary step to the increase of the wealth of the rich. Thus the rich man has the means of augmenting his capital, not by hoarding, but by distributing it among his laborers, who consume it, and reproduce another and a larger capital — hence have they obtained the name of productive laborers. Caroline. When a man, therefore, becomes possess- ed of a capital, whether by accumulation of his savings or by inheritance, it is no longer requisite for him to work for a maintenance, as others will labor for him. Mrs B. It depends on the amount of his capital, and the extent of his desires. If it will yield an income sufficient to maintain him and his family with the degree of comfort or affluence which satisfies his ambition, he may live in idleness; if not, he will work himself; or at least superintend his laborers. This is the case with the farmer, the merchant, the master manufacturer, each of whom superintends his respective concerns. Do you understand now, that no productive enter- prise can be undertaken without capital f Capital is necessary to pay laborers, to purchase materials to work upon, instruments to work with ; in short to defray the whole expense attached to the employment of la- borers. Caroline. But a man may undertake a productive 223. Is it to be reckoned an evil, that the capitalist receives a profit from his laborers ? 224. Why should the poor who work for the rich be called productive laborers ? 225. Is it necessary that a person who possesses a capital should labor for his maintenance ? 226. Can a productive enterprise be undertaken without capital ? ON CAPITAL. 75 enterprise without employing laborers ; for instance, if he gathers mushrooms on a common, he requires no capital for that purpose ; no tools are used, the earth produces mushrooms spontaneously, and every one has a right to gather them. The same may be said of nuts and wild strawberries. Mrs B. These are small remnants of the resources of a savage state, in which subsistence is derived from the spontaneous produce of the earth : but ihe employ- ments which require no capital, are very inconsiderable, and occur only during a short season of the year. Caroline. There is one, whch appears to me of great importance — fishing. Fishermen are in no want of capital ; the fish cost them merely the trouble of catching. Oh no ! I am mistaken ; 1 forgot the nets and the boats that are necessary for fishing ; besides, the men must have something to subsist on, when the weather will not allow them to venture on the water. But there is another case, Mrs B. — I have known per- sons who were worth nothing, and yet who set up in business on credit. Mrs B. That is no exception ; for credit is the em- ployment of the capital belonging to another. Caroline. Well, it is a melancholy reflection that one must always possess something in order to gain more. He then who has nothing to begin with has no means of escaping from poverty. Mrs B. Poverty is a word of vague signification. If you mean to express by it a state of positive indi- gence the laborer who earns a subsistence from day to day, cannot come under that description. But if you use the word poverty in opposition to wealth, that is to say, to the possession of capital, laborers, though usual- 227. In what way does Caroline ' suppose such an enterprise should be carried on without capital ? 228. What reply does Mrs B. make ? 229. What reply does Mrs B. make, to Caroline's saying, one sometimes engages in business on credit ? 230. What does Caroline say is a melancholy reflection ? 231. What does Mrs B. say in reply ? 76 , ON CAPITAL. ]y in that state, are not necessarily condemned to it. A healthy and hard-working man may, if he be economi- cal, almost always lay aside something as the beginning of a little capital, which by additional savings accumu- lates. Caroline. That is true. Thomas, our undergar- dener, who is a very intelligent, industrious man, was saying the other day to one of his fellow laborers, that as soon as he had laid by a little money to begin the world with, he intended to marry. But it seems to me that if my father would give him a cottage, and an acre or two of ground, he might raise vegetables for market, and by these means support himself and his family. jyirs B. In that case your father would supply the capital. The cottage and the land is a capital, but they will not do alone. Thomas would besides require garden tools to work with, and an assistant, if not seve- ral, to prepare the ground. Then he must not only subsist himself, but maintain his family till the produce of his garden can be brought to market. In the course of three or four years, from the earnings of his daily labor he may have amassed a little capital sufficient to enable him to undertake this ; he will then no longer be a laborer for hire, but will work on his own account. It is thus everything has a beginning ; the largest fortunes have often had no greater origin. Now, supposing Thomas to be able to rent an acre of land when he is worth 100/., he may rent ten acres when he is worth 1000/., but he cannot rent more ; he cannot increase his farm beyond his means of paying for it ; his industry, therefore, is limited by the extent of his capital. Caroline. I do not quite understand that. Mrs. B. Let us imagine a tradesman, a shoemaker for instance, to be master of a capital which will enable 232. How can a laborer obtain a capital of his own ? 233. What is the supposed case of a gardener's becoming possessed of a capital ,' 234. By what is his industry then limited? ON CAPITAL. 77 him lo maintain ten workmen, and that the following year he finds that he has gained lOOZ. by the profits de- rived fi:-om their labor. This 100/. constitutes his in- come ; if he spend it, his capital remains what it was before ; but if he adds it to his capital it will enable him to maintain and provide work for a greater number of journeymen. Let us say that he can now employ twelve instead of ten men ; these will make him a greater quantity of shoes, and the additional profits aris- ing from their sale will, if added to his capital, still farther increase his means of employing workmen. Thus the demand for labor, or, in other words, em- ployment for the poor, will ever increase with the in- crease of capital, and be limited only by its defi- ciency. Caroline. But we must not forget that the master shoemaker and his family are to be maintained out of these profits ; the whole of them cannot, therefore, be added to his capital. Mrs B. Certainly not. The expenses of his family consume in genera], by far the greater part of a man's income ; but if he is prudent, he will lay aside as much as can be spared, and these' savings will enable him to enlarge and improve his business, of whatever descrip- tion it may be. Caroline. Thus a farmer would be able to extend and improve the cultivation of his farm by increasing the number of his laborers — and a merchant propor- tionally to extend his commercial dealings — so that the richer a man becomes, the more it will be in his power to increase his wealth. Mrs B. Yes ; the second thousand pounds is often acquired with less difficulty than the first hundred. Caroline. That is hard upon those who have no- 235. What is the case supposed of a shoemaker, who increases his business from the profits arising from it ? 236. What con- sumes the greater part of a person's ordinary income ? 237. Does one's power to augment his riches increase with his possessions ? 7* 78 - ON CAPITAL. thing. The rich landed proprietors buy up all the little farms ; rich merchants engross all the great commer- cial speculations ; in a word, the great fish devour the small ones. Mrs B. There is no truth in that comparison. He who accumulates a large fortune by his industry injures no one ; on the contrary, he confers a benefit on the community. You will understand this better by and by. In the mean time 1 must observe to you that happiness, so far as it is dependent on wealth, consists less in the possession of riches than in the pleasure of acquiring them. Every degree of increasing prosperity is attend- ed with its enjoyment. • Your gardener, who saves Jiis earnings with the prospect of settling at the end of two or three years, has probably more satisfaction in the prospect of his future wealth than he will have in the possession of it ; as long as he continues making annual additions to his capital, the same source of enjoyment will be preserved, but will never excite so strong an in- terest as at first. Merchants will tell you that their first gains gave them greater pleasure than all their subse- quent accumulations. Nature has wisely attached hap- piness to the gradual acquisition, rather than to the ac- tual poisession of vv-ealth, thus rendering it an incitement to industry ; and we shall hereafter see that this pro- gressive state of prosperity is most conducive also to the happiness of nations. 288, Is one person injured if another accumulates property ? 239. What connexion does Mrs B. suppose there is between wealth and happiness ? 240. What does she say nature has wisely done r ON CAPITAL. 79 CONVERSATION VII. ON CAPITAL CONTINUED. Of fixed Capital. — Distinction between fixed and cir- culating Capital. — Examples of the different kinds of Capital. — Of Slaves. — Fixed Capital and circu- lating Capital equally beneficial to the laboring Class. — Machinery advantageous to the laboring Classes. — (Quotation from Macpherson on the ad- vantages of Machinery. — Quotation from M. Say^s Treatise on Political Economy. MRS B. I. HAVE some further remarks to make to you on the nature of capital. A land owner, when he increases his capital by sav- ings from his income, may probably, instead of employ- ing the whole of his additional capital on husbandmen, find it more advantageous to lay out some part of it on workmen to build barns and outhouses, to store his crops and shelter his cattle 5 he may plant trees to produce timber, build cottages, and bring into cultivation some of the waste land on his farm. A manufacturer also, in proportion as he increases the number of his workmen, must enlarge his machinery or implements of industry. Caroline. But the capital laid out in building, tools, and machinery, will not yield a profit, like that which is employed in the payment of workmen, the produce of whose labor is brought to market. Mrs B. The farmer and manufacturer would not lay out their capital in this way, did they not expect to reap a profit from it. If a farmer has no barn or gra- nary for his corn, he will be compelled to sell his crops 241. How will a landholder be likely to expend a portion of his surplus income ? 242. How would it be with the manufacturer ? 243. Why will the farmer thus appropriate his capital ? 80 ON CAPITAL. immediately after the harvest, although he might proba- bly dispose of them lo greater advantage by keeping them sometime longer. So a manufacturer, by im- proving or enlarging his machinery, can, with less labor, perform a greater quantity of work, and his profits will be proportionate. Thus, for instance, when a manufacturer can afford to establish a steam engine, and employ a steam of va- por as a substitute for the labor of men and horses, he saves the expense of more than half the number of hands he before employed. The capital laid out in this manner is caWedJioced cap- ital^ because it becomes fixed, either in land, in build- ings, in machinery, or implements of art ; it is by keeping this capital in possession, and using it, that it produces an income. Whilst the capital employed in the main- tenance of productive laborers, whose work is sold and affords an immediate profit, is distinguished by the name of circulating capital. The produce of a farm, or the goods of a manufac- . turer, afford no profit until they are brought to market, and sold or exchanged for other things. This descrip- tion of capital is, therefore, constantly circulating. It is transferred first from the master to the laborer, in the form of wages and raw materials, then from the laborer it is returned to the master in the form of produce or workmanship of increased value ; but the latter does not realize his profits until this produce is sold to the public, who turn it to their use, and are therefore called the consum.ers of it. Caroline. 1 think I understand the difference be- tween fixed and circulating capital perfectly. A farmer derives profit from his implements of husbandry by 244. Why will the manufacturer thus appropriate his ? 245. How much is saved lo the manufacturer by the use of the steam engine ? 246. What is capital thus expended called ? 247. Why is it called fixed capital ? 248. What is called circu- lating capital 1 249. When does the produce of the farm, and the goods of the manufacturer yield profit ? ON CAPITAL. 81 their use, while kept in his possession ; and from his crops by parting with them. But to which kind of cap- ital should the farming cattle be referred ? Mrs B. ■ It depends upon the nature of the cattle. The value of the laboring cattle is fixed capital, like the implements of agriculture; thus the horseswhich draw the plough, as well as the plough itself, are ^xed capital. But sheep and oxen intended for market are circulating capital. Caroline. But should the plough be drawn by oxen, Mrs B., how would you settle the point then? for whilst they labor for the farmer they are fixed capital ; but when they are sold to the butcher they become cir- culating capital. Mrs B. They alternately belong to each of these descriptions of capital ; because the farmer makes his profit, first by keeping, and afterwards by selling them. Caroline. I'do not understand why you should call the maintenance of laboring men circulating capital, whilst you consider that of laboring cattle as fixed capi- tal ; they appear to me to be exactly similar. Mrs B. And so they are. The maintenance of cattle as well as that of laborers is circulating capital ; that maintenance is in both cases consumed and repro- duced with advantage ; it is therefore by parting with it that proOts are derived. But the value of the cattle themselves is fixed capital, and if laborers, like cattle, were purchased, instead of being hired, thus becoming the property of their employers, they also would be fix- ed capital. Caroline. And this, I suppose, is the case with the poor Africans in the West Indies? 250. To which description of capital should farming cattle be re- Jerred? 251. What objection does Caroline make to Mrs B.'s an- swer to the above question ? 252. How does Mrs B. answer the objection? 253. What further explanation does Mrs B. make ta the objection of Caroline ? 82 ON CAPITAL. Mrs B. Yes, and with slaves of every *description. Even the peasantry of Russia and Poland are in gene- ral considered as fixed capital, because their state of vassalage is such as to amount to slavery, the proprie- tors of the land having a right to their labor without re- muneration : and the value of an estate in Russia is not estimated by the number of acres, but the number of slaves upon it ; in the same manner as a West India plantation. A similar st^te of vassalage prevailed throughout most parts of Europe some centuries ago ; but in later times the progress of civilization has been such; that I believe every country, excepting Russia and Poland, has emancipated the laboring classes, expe- rience having proved that the more free and independent men are, the more industrious they become, and the bet- ter the land is cultivated. Caroline. I wish that the West Indian planters could be induced to adopt this opinion. Mrs B. The time will no doubt arrive when slavery will be abolished in every civilized country. But im- portant changes ought not to be introduced without ex- treme caution. The minds of men should be freed from the degrading fetters of ignorance, before they can reap advantage from personal emancipation. An ingenious author observes " that liberty is an instrument with which men may either make their fortune or de- stroy themselves ; that they should therefore be taught the use of it before it is entrusted to their hands." In all cases we shall find that gradual and progressive im- provement is invariably conducive to the happiness of mankind, whilst sudden and violent revolutions are al- 254. To which description of property do* slaves belong ? 255. In what countries exists what is called vassalage ? 256. What is to be understood by vassalage as here explained ? 257. Why has the vassalage of Europe been reduced to smaller limits than it formerly was ? 259. What supposition is made as to the perpetuity of hu- man slavery ? 260. What should precede the emancipation of slaves? 261. What remark on the subject is quoted from an in- genious author ? ON CAPITAL. 83 ways attended with danger. But we are deviating from oyr subject. Caroline. Well then, to return to it. I thought at first that 1 understood the difference of fixed and circu- lating capital perfectly ; but I find upon reflection, that I am at a loss to determine to which kind of capital seve- ral articles of property belong. For instance, is the money laid_out in the improvement of land, fixed or circulating capital? Mrs B. The money laid out on waste land to bring it into a state fit for cultivation, such as inclosing, drain- ing, ditching, preparing the soil, &:c. is fixed capital j and so is that which is employed in the improvement of land already cultivated. If it is the proprietor who lays out capital on land which he lets, he receives in remunera- tion an increase of rent ; if the farmer, he makes great- er profits. But the money laid out in the regular course of cultivation, such as ploughing, sowing, reap- ing, &:c. consists, as we have before observed, partly in fixed and partly in circulating capital. Caroline. 1 must say that 1 prefer the employment of wealth in the form of circulating, rather than in that of fixed capital. Granaries, barns, machine- ry, &ic. may be advantageous to the proprietors, but they must be injurious to the laboring classes ; for the more a man lays out as fixed capital, the less remains to be employed as circulating capital, and therefore the fewer laborers he can maintain. Mrs B. You must always remember that the great- est good you can do the laboring classes, is to increase the consumable produce of the country. Whilst plenty of the necessaries of life is raised, it signifies little to whom it belongs ; for whoever may be the proprietors of this wealth, they can derive no advantage from it but 262. Is money laid out in the improvement of land fixed or circu- lating capital ?- 263. Why does Caroline prefer that wealth should be in the form of circulating capital ? 264. What reply does Mrs B. make to her on this point ? 84 ON CAPITAL. by employing it ; that is to say, by maintaining with it productive laborers. The more abundant, therefore, this wealth is, the more people will be employed. Now it is evident that whatever tends to improve or facilitate labor, increases the productions of the country ; and if fixed capital should eventually occasion the raising a greater produce than circulating capital, it must be more beneficial to the laborers as well as to the capi- talist. Caroline. So it appears ; and yet I cannot under- stand how this operates with regard to machinery. We cannot substitute the powers of nature for human in- dustry without throwing people ^out of work. How then can the poor derive any benefit from inventions and improvements which prevent their being employed ? Mrs B. It may appear paradoxical, but it is never- theless true, that whatever abridges and facilitates labor, will eventually increase the demand for laborers. Caroline. Or, in other words, to turn people out of work is the most certain means of procuring them em- ployment ! This is precisely the objection I was ma- king to the introduction of new machinery. Mrs B. The invention of machinery, I allow, is at first attended with some parfial and temporary incon- venience and hardship; but on the other hand, the ad- vantages resulting from it are almost incalculable both in extent and duration- When any new machine or process whatever which abridges or facilitates labor is adopted, the commodity produced by it falls in price, the low price enables a greater number of persons to be- come purchasers, the demand for it increases, and the supply augments in proportion ; so that eventually more hands are employed in its fabrication than there were 265. Under what circumstances would fixed capital be more beneficial to laborers than circulating capital ? 266. What reply does Mrs^B. make to the question — How can the poor derive any profit fi'om inventions and improvements which prevent their being employed ? 267. How is that the fact ? ON CAPITAL. 85 previous to the adoption of the new process. When, for instance, the machine for weaving stockings was first invented, it was considered as a severe hardship on those who had earned a maintenance by knitting them ; but the facility with which stockings were made in the loom, rendered them so much cheaper, that those, who before were unable to purchase them, could now indulge in the comfort of wearing them, and the prodigious in- crease of demand for stockings enabled all the knitters to gain a livelihood, by spinning the materials that were to be woven into stockings. Caroline. That was a resource in former times, but household spinning is scarcely ever seen since Ark- wright's invention of spinning jennies. Where are the spinners now to find employment ? The improvements in machinery drive these poor workmen from one ex- pedient to another, till I fear at last every resource will be exhausted. Mrs B. No ; that cannot be the case. Where there is capital the poor will always find employment. In countries possessed of great wealth we see prodigious works undertaken. Roads cut through hills, canals uni- ting distant rivers, magnificent bridges, splendid edifices, and a variety of other enterprises which give work to thousands independently of the usual employment of capital in agriculture, manufactories and trade. What is the reason of all this ? It is in order that the rich may employ their capital ; for in a secure and free govern- ment no man will suffer any part of it to lie idle ; the demand for labor is therefore proportioned to the extent of capital. Industry, we have already observed, knows no other limits. The capitalist who employs a new ma- 268. What facts are mentioned concerning the knitting of stock- ings ? 269. How does Caroline reply to them ? 270. In the erection of what public works will the poor find employment where there is great wealth ? 271. To what is the demand for labor proportioned ? 86 ON CAPITAL* chine is no doubt the immediate gainer by it ; but it is the public who derive from it the greatest and most last- ing advantage. It is they who profit by the diminution of the price of the goods fabricated by the machine ; and, singular as it may appear, no class of the public receives greater benefit from the introduction of those processes which abridge manual labor, than the working classes, as it is they who are most interested in the cheapness of the goods. Caroline. Well, Mrs B., Imust confess myself van- quished, and beg pardon of Mr Watt for having ventured to doubt the beneficial effects of his steam-engine ; and of sir Richard Arkwright for having found fault with his spinning jennies. Mrs B. I will read you a passage in Macpherson's history of commerce which will show you the degree of estimation in which the inventions of Arkwright were held by that waiter. " If Mr Arkwright made a great fortune, he certain- ly deserved it ; for the advantages he conferred upon the nation were infinitely greater than those he acquired for himself; and iar more solid and durable than a hun- dred conquests. Instead of depriving the working poor of employment by his vast abridgment of labor, that very abridgment has created a vast deal of work for more hands than were formerly employed i and it was com- puted that in 1785, about 25 years after the invention of his spinning jennies, that half a million of people were employed in the cotton manufactories of Lancashire, Cheshire, Derby, Nottingham, and Leicester. And it is but justice to the memory of sir Richard Arkwright to say that he was unquestionably one of the greatest 272. What description of persons is most interested in having goods cheap ? 273. What work: is quoted by Mrs B. to corrobo- rate her opinions on this subject ? 274. How many persons are said to have been employed in the cotton factories of Lancashire, Cheshire, Derby, Nottingham, and Leicester, within twentyfive years of Arkwright ? ON CAPITAL. 87 friends to the manufacturing and commercial interests of this country, and to the interest of the cotton planters iii almost all parts of the world, and that his name ought to be transmitted to future ages, along with those of the most distinguished benefactors of mankind." Caroline, This is indeed a magnificent eulogium of Sir Richard Arkwright, but not more so, it appears, than he really deserves. Mrs B. I shall conclude my observations on the benefits arising from machinery by reading to you some remarks on the invention of printing, extracted from M. ^ay's excellent treatise on political economy. "Au moment ou elle fut employee une foule de copis- tes durent rester inoccupes, car on pent estimer qu'un seul ouvrier imprimeur fait autant de besogne que 200 copistes. II faut done croire que 199 ouvriers sur 200 resterent sans ouvrage. He bien, la facilite de lire les ouvrages imprimes, plus grande que pour les ouvrages manuscrits, le bas prix auquel les livres tomberent, I'en- couragement que cette invention donna aux auteurs pour en composer un bien plus grand nombre, soit d'instruc- tion, soit d'amusement, toutes ces causes firent, qu'au bout de tres peu de temps, il y eut plus d'ouriers im- primeurs employes, qu'il n'y avoit auparavant de copis- tes. Et si a present on pouvoit calculer exactement non sculement le nombre des ouvriers imprimeurs, mais en- core des industrieux que Timprimerie fait travailler, com- me graveurs de poincons, fondeurs de caracteres, re- Meurs, libraires, on trouveroit peut-etre que le nombre des personnes occupees par la fabrication des livres est cent fois plus grand que celui qu'elle occupoit avant I'in- vention de I'imprimerie." Caroline. And the number of readers must have increased in a still greater proportion. You may recol- 275. What effect have the improvements in spinning cotton had on commerce and the raising of cotton ? 276. From what other author is there a quotation made illustrating the subject ? 88 ON WAGES AND POPULATION. lect observing in our conversation on the division of labor, that the invention of printing was a circumstance most favorable to the diffusion of knowledge. Mrs B. Thus you see that capital, whether fixed or circulating, invariably promotes the increase of the produce of the country ; we may, therefore, I think, define capital to be an accumulated produce which tends to facilitate future productions. And the capital of a country is composed of the aggregate property of all its inhabitants. CONVERSATION VIL; ^ ON WAGES AND POPULATION. Extreme limits of Wages. — Wages regulated by the proportion which capital bears to population, — small capital creates small demand for labor, low wages, and great profit to the capitalist. — Increase of capital creates greater demand for labor, higher wages, and less 'profit to the capitalist. — Necessity of raising subsistence before other works are under- taken.— -How wages are lowered by the increase of population without an increase of capital. — Effect of scarcity of provisions on wages — Effect of rais- ing wages during a scarcity. — Of a maximum price of provisions, — Effect of diminution of pop- ulation by sickness on the rate of wages. — It is not work but funds that creates a demand for labor. Wages m Ireland. — Wages in town and country. MRS B. In our last conversation I think we came to this con- clusion, that capital is almost as beneficial to the poor as to the rich ; for though the property of the one, it is by its nature destined for the maintenance of the other. 280. What conclusion was drawn froni the last conversation as to utility of increased capital? ON WAGES AND POPULATION. 89 Caroline. It comes to the laborer in the form of wages, but as he must allow the capitalist a profit on his work, I should like very much to know what proportion that profit bears to the wages of the laborer. Mrs B. It varies extremely; but the wages of the laborer can never be permanently less than will afford him the means of living, otherwise he could not labor. Caroline. On the other hand, they can never be equal to the whole value of the work he produces ; for if his master made no profit by him he would not employ him. Mrs B. Such then are the two extremes of the wages of labor, but they admit of many intermediate de- grees of variation. If besides furnishing subsistence for himself, the wages of the laborer would not enable him to maintain a wife and bring up a family, the class of laborers would gradually diminish, and the scarcity of hands would then raise their wages^ which would ena- ble them to live with more comfort and rear a family ; but as the capitalist will always keep wages as low as he can, the laborer and his family can seldom command more than the necessaries of life. Caroline. By the necessaries of life, do you mean such things only as are indispensably necessary for its support ? Mrs B. No ; I mean such food, clothing, and gene- ral accommodation as the climate and custom of the country have rendered essential to the preservation of the life, health, and decent appearance of the lowest classes of the people. Fuel for instance, and warm clothing are necessary articles in this country ; but they 281. What is said concerning the proportion of profits enjoyed by the laborer ? 282. What would be the consequence if the la- borer were not to receive enough of the profits to support a fam- ily ? 283. Is the laborer able usually more fjthan to support his family ? 284. What is to be understood by the necessaries of life ? 8* 90 ON WAGES AND POPULATION. are not so in Africa. Civilization and the progress of wealth and manufactures have greatly extended the scale of necessaries ; the use of linen is now considered as necessary by ail classes of people, and shoes and stock- ings in England, at least, almost equally so. Houses with glazed windows and a chimney are become neces- saries, for if our poor were deprived of such accommo- dation, it would very materially increase mortality amongst them. In Ireland the peasantry bring up their children in a mud cabin, the door of which answers also the purposes of window and chimney. Caroline. Then would it not be better that the la- boring classes here should, like the Irish, accustom them- selves to hardships and inconveniences, rather than indulge in a degree of comfortable accommodation, the privation of which in a season of distress is attended with so much misery ? Mrs B, No ; I would on the contrary wish rather to extend than contract the scale of the necessaries of life. There is more health, more cleanliness, more in- tellect and more happiness developed in an English cot- tage than in an Irish cabin. There is more strength, vigor, and industry in an English peasant, who feeds on meat, bread, and vegetables, than in an Irish one, who subsists on potatoes alone. Caroline, No doubt. I would wish the lower classes every comfort which they can afford : but their wages will not always allov/ them such gratifications. What is it that determines the rate of wages ? Mrs B. It depends upon the proportion which capi- tal bears to the laboring part of the population of the country. Caroline. Or, in other words, to the proportion 285. How are children brought up in Ireland ? — \ — 286. What comparison does Mrs B. make between the poor of England and of Ireland ? 287. T\Tiat determines the rate of wages ? ON WAGES AND POPULATION. 91 which subsistence bears to the number of people to be maintained by it ? Mrs B, Yes, it is this alone which regulates the rate of wages, when they are left to pursue their natural course. It is this alone which creates or destroys the demand for labor. In order to render it more clear to you, let us simplify the question by examining it on a small scale — let us suppose for instance that we have founded a colony in a desert island ; that the settlers have divided the land amongst them and cultivated it for their own subsistence, and that being both proprietors and laborers, they reap the whole reward of their industry. Thus situated, should a ship be wrecked on the coast, and some of the crew eiFect their escape to shore, what would ensue ? They would furnish a supply of laborers who would be dependent on the original settlers for maintenance and employment. Caroline. But if those settlers have not raised a greater quantity of subsistence than is necessary for their own use, how can they maintain the new-comers.'* Without capital, you know, they cannot employ laborers. Mrs B. You are perfectly right. But it is proba- ble that the most industrious of them will have raised somewhat more subsistence than is absolutely necessary for their own consumption. They will possess some lit- tle stock in reserve, vdiich will enable them to maintain and employ at least a few of the shipv^^recked crew. Yet as these poor destitute men will all be anxious to share in this little surplus, each will offer his labor in exchange for the smallest pittance that will support life. Thus the capital of the island being inadequate to the maintenance of its population, the competition amongst 288. What case does Mrs B. suppose to illustrate the rate of wages ? 289. What reply does Caroline make ? 290. How does Mrs B. answer Caroline ? 291. In what manner will wages he reduced to a low rate with the inhabitants of the Island sup- posed ? 92 ON WAGES AND POPULATION. the laborers to get employment will render wages ex- tremely low, and the capitalist will derive a high profit from the industry of his laborers. A small capital, therefore, creates but a small demand for labor. Caroline. By demand for labor do you mean the demand of the poor for work, or of the capitalist for workmen. Mrs B. Certainly the latter. The demand for labor means the demand for laborers, by those who have the means of paying them for their work, whether it be in the form of wages, maintenance, or any other kind of remuneration. But what will happen in our colony, when the labor- ers shall have richly repaid their employers by the fruits of their industry ? Caroline. By raising a more plentiful harvest they would of course have a more plentiful subsistence. Mrs B. The harvest, you must observe, belongs not to the men who produced it, but to their masters ; how therefore does it follow of course, that the labor- ers obtain a larger share of it ? Caroline. I suppose that their masters having more capital, are willing to bestow a larger proportion of it on their laborers. Mt-s B. I believe that the capitalist will always make as high a pro6t, as he can upon the work of his labour- ers ; and that when his capital increases, he will choose rather to increase the number of his workmen than the rate of their wages. But the power of employing more laborers increases the demand for labor; and this, as I shall explain to you, eventually raises the wages or reward of labor. The capital of the settlers will probably be so much 292. What is meant by demand for labor ? 293. To whom would the harvest belong ? 294. To what purpose would the capitalist devote his surplus of profits ? ON WAGES AND POPULATION. 93 augmented by the industry of the laborers, that the difficulty will no longer consist in maintaining the new- comers, but in finding employment for the new capital. The possessors of this surplus capital will be eager to procure the services of the laborers; one perhaps to build a hut, another to fence a field, a third to construct a boat, and so on. For the surplus, unless employed, will yield no profit ; the competition therefore will no longer be amongst the laborers to obtain work, but amongst the masters to obtain workmen ; and this will necessarily raise the price of wages, and consequently diminishes the profits of the capitalist. Caroline. Oh, this is very clear. If John offers a man a shilling a day to work at his house, and Thomas gives eighteen pence to those who will build his boat, while James pays two shillings for fencing his field; wages must rise to two shillings a day : for if John and Thomas did not give as much as James, the latter would monopolize all the laborers. Mrs B. You see therefore that it is the additional capital produced by the labor of these men, which by increasing the demand for labor raises their wages. Thus whenever capital for the maintenance of labor- ers abounds, the capitalist must content himself with smaller profits, and allow his workmen a more liberal re- muneration. Hence as national opulence Increases, the laboring poor are more munificently rewarded, and the profits of capital diminish. Caroline. Oh, that is charming ! that is exactly what I wish. But, Mrs B. if during the second year, our colonists employ their laborers in building houses and fencing fields, instead of cultivating them, subsis- 295. How would an increase of capital tend to raise the price of labor? 296. How will the amount of profits compare with the quantity of capital designed for the maintenance of laborers ? 297. What will result from the increase of national opulence, in relation to the laboring poor and to the profits of capital ? 94 ON WAGES AND POPULATION. tence will again fall short, and the laborers will be re- duced to their former necessitous condition ; unless having once experienced such distress, they guard against it in future. Mrs B. That does not depend on the choice of the laborers, who must do the work they are hired to perform, of whatever nature it may be. But their em- ployers will be careful to provide for their maintenance, for they know that those who should neglect to make such a provision for their future services would be de- prived of them. They cannot work without subsistence, nor will they work without an ample subsistence whilst any of the colony has it to offer them. If John there- fore does not raise so great a harvest as James, he will not be able the following year to employ so many work- men. Each landed proprietor therefore will take care to direct the labor of his workmen towards raising the requisite subsistence, before he employs them in any other description of labor. Now let us suppose that the shipwrecked crew had brought wives with them, and reared families : would that have affected the rate of wages .? Caroline. Their wages would remain the same ; but as they would have to maintain their wives and chil- dren as well as themselves, they would not fare so well. Mrs B. And if there was not food enough for them all, the most weakly of the children would die, not pre- cisely of hunger, but of some of those diseases which want of sufficient and proper food engenders. It is evident, therefore, that a laborer ought not to marry unless his wages are adequate to the maintenance of a 298. What evil does Caroline suggest as possible in the second year of this colony ? 2.99. How does Mrs B. reply to this sup- position ? 300. What question does Mrs B. ask in relation to the shipwrecked mariners? 301. When does Mrs B. say a labor- er ought to marry. ON WAGES AND POPULATION. 95 family ; or unless he haSj-like your gardener, some little provision in store to make up the deficiency. Suppose now after several years of prosperity, that a hurricane makes such devastation amongst the crops of our colonists as to reduce the harvest to one half what it was the preceding year. What effect would this have on the wages of labor ? Caroline. It would of course reduce them, for the subsistence would be diminished. But in what manner the reduction would take effect I do not exactly see. Mrs B. In order to trace its consequences step by step, we may suppose that John, finding his capital will not maintain more than one half the number of labor- ers he before employed, reluctantly discharges the other half. These poor men wander about the colony seeking for work, but instead of finding any, they meet only with companions in distress who have lost their employ- ment for similar reasons; thus without resource they return to their masters, and intreat to be employed on lower terms. John, who had discharged these men, not for want of work to give them, but for want of funds to pay them, is happy in his reduced circumiStances to em- ploy laborers at lower wages. He therefore makes a new agreement with them, and determines to discharge those whom he had originally retained in his service un- less they will consent to work for him on the same terms. These men, aware of the difficulty of finding employ- ment elsewhere, are compelled by necessity to accept the conditions, and thus wages are reduced to one half their former rate throughout the colony. Caroline. It appears as evident as possible. I have only one objection to make, which is, that though this may be the case in our colony, it certainly is not so in 802. What supposition does Mrs B. make of a hurricane, and what question does she ask in relation to it ? 303. In what man- ner would the hurricane operate in reducing the price of labor ? 304, What objection does Caroline offer to this ? 96 ON WAGES AND POPULATION. Other places. Wages, so far from being reduced, are, I believe, frequently raised during a scarcity ; at least there are great complaints amongst the poor if that is not done. Mrs B. In countries where money is used, the re- duction of wages does not take place in the manner I have described. In such countries it is unnecessary to make any change in the rate of wages, because the high price of provisions during a scarcity produces a similar effect. If you continue to pay your laborer the same wages when the articles of provision on which he subsists have doubled in price, his wages are really di- minished one half, because he" can procure with them only one half of what he did before the scarcity. Caroline. But this is a kind of imposition upon the poor laborers, who, I suppose, are at least as ignorant as I am of political economy, and do not know that a shilling is worth more at one time than it is at another, and therefore during a scarcity continue to work at the usual rate of wages for want of knowing better. Mrs B. Knowledge in this instance would only teach them that they must bear with patience an una- voidable evil. The alternative, for the capitalist, when his capital is diminished, is to reduce, either the number of his laborers, or the rate of their wages — or rather, I should say, the remuneration of their labor ; for the wages remain nominally the same. Now is it not more equitable to divide the maintenance amongst the whole of the laboring class, than to feed some of them amply ; whilst the remainder starve ? 305. How does the case differ where money is used ? 306, What is said of paying the laborer the same wages, when the price of provisions on which he subsists is doubled ? 307. What does Caroline call this mode of paying the poor for their labor ? 308. Of what advantage, in this case, would knowledge of the principles of political economy be to laborers ? ON WAGES AND POPULATION. 97 Caroline. No doubt it is ; but would it not, in this instance, be allowable for the legislature to interfere, and oblige the capitalist to raise the rate of wages in propor- tion to the rise of price of provisions, so as to afford the laborers their usual quantity of subsistence ? I think the rate of wages ought to be regulated by the price of bread, as that is the principal subsistence of the poor 5 so as to enable them to purchase the same quantity of bread whatever its price may be. Mrs B, Or, in other words, that every man may eat his usual quantity of bread, however deficient the harvest is in its produce ; for unless you could find means to increase the quantity of subsistence, it will avail nothing to raise the rate of wages. Caroline. Very true ; yet two shillings will pur- chase twice the quantity of bread that one will 5 is not that true also, Mrs B. ? and yet these truths appear in- compatible. Mrs B. One of them must therefore be an error ; two shillings would not purchase twice the quantity of bread that one did if wages were doubled, because pro- visions would continue to rise in price in proportion to the advance on wages. Caroline. But I would prohibit the farmer from raising the price of his corn and his cattle, and then there would be no necessity for the butcher and the baker raising the price of meat and bread. It is not just that the farmer, when he has a bad crop, should throw his misfortune on the public, and be the only per- son who does not suffer from it ; which is the case if he raises the price of his produce in proportion to its scarcity. 310. What does Caroline suppose the legislature might pro- perly do relating to the price of labor ? 311. To what does Mrs B. suppose this legislative provision would be equivalent ? — 312. Why would not such a provision remedy the evil supposed ? -313. What further legislative provision for the relief of the poor would Caro- line have made ? 9 98 ON WAGES AND POPULATION. Mrs B. The farmer consumes, as well as produces provisions ; and as a consumer he partakes of the evil of the advance of price. If he sell his corn for twice the usual price, what he consumes at home stands him in the same value, for such is the price it would fetch at market. But supposing it possible to prevent the rise in price during the scarcity, what consequences would ensue ? Keep in mind the important point, that the harvest has yielded but half its usual product ; that whilst the wages of labor and the price of provisions undergo no altera- tion, the laborers purchase and consume the usual quan- tity of food, and at the end of six months Caroline. You need not finish the sentence, Mrs B. ; at the end of six months the whole stock of provisions would be consumed, and the people who excited my com.miseration would be starved. Mrs B. This would infallibly be the case, were such a measure persevered in; but though it has often been attempted by sovereigns more benevolent than wise, to set limits to the price of provisions, the consequences soon became so formidable as to compel the legislature to put a stop to a remedy which was ineffectual as it was pernicious. *" In the year 1315 England was afflicted by a famine, grievous beyond all that ever were known before, which raised the price of provision far above the reach of the people of middling classes. The par- liament in compassion to the general distress, ordered that all articles of food should be sold at moderate prices, which they took upon themselves to prescribe. The *Macpherson's Annals of Commerce. 314. In what manner does the farmer suffer from the scarcity of crops ? 315. What would be the evil, were it practicable to have the price of labor and of provisions to undergo no changes, in time of scarcity ? 316. When was such an experiment made ? 317. What did the parliament of England to mitigate the evils of the famine in 1315 ? ON WAGES AND POPULATION. 99 consequence was, that all things, instead of being sold at or under the maximum price fixed by them, became dearer than before, or were entirely withheld from the market. Poultry were rarely to be seen. Butchers' meat was not to be found at all. The sheep were dying of a pestilence, and all kinds of grain were selling at most enormous prices. Early the next year parlia- ment, finding their mistake, left provisions to find their own price. " Thus you see the rise in the price of provisions is the natural remedy to the evil of scarcity. It is the means of husbanding the short stock of provisions, and making it last out to the ensuing harvest. Government should never interfere, either with the price of provisions or the rate of wages ; they will each find their respective level if left uncontrolled. But to return to our colony. What effect would it produce on wages, were some contagious malady to carry off one half of the laborers? Caroline. It would increase the demand for tb- labor of those which remained, and consequently raise their wages. Mrs B. We generally state, therefore, that when the number of laborers remains the same, the rate of wages will increase with the increase of capital, and lower with the diminution of it ; and that if the amount of capital remain the same, the rate of wages will fall as the num- ber of laborers increase, and rise as the number of laborers diminish ; or, as mathematicians would express it, the rate of wages varies directly as the quantity of capital, and inversely as the number of laborers. Macpherson mentions that "a dreadful pestilence, 318. What was the consequence of the interference of parlia- ment ? 319. What is the natural and effectual remedy to the evil of scarcity ? — r-320. What supposition is made as to the occurrence of a contagious malady in the island?-—- 321. How would mathe- maticians state the rate of wages ? 100 ON WAGES AND POPULATION. which originated in the eastern regions, began its rava- ges in England in the year 1 348, and is said to have carried off the greater part of the people, especially in the lower ranks of life. The surviving laborers took advantage of the demand for labor, and the scarcity of hands to raise their prices. The king, Edward I., there- upon enacted the statute of laborers, which ordained that ail men and women under 60 years of age, whether of free or servile condition, having no occupation or pro- perty, should serve any person of whom they should be required, and should receive only the wages which were usual before the year 1346, or in the five or six prece- ding years, on the pain of imprisonment ; the employers being also punishable for giving greater wages. Artifi- cers were also prohibited from demanding more than the old wages ; and butchers, bakers, brewers, &:c. were ordered to sell their provisions at reasonable prices. The ' servants having no regard to the said ordinance, but to their ease and singular covetise,' refused to serve unless for higher wages than the law allowed them. Therefore the parliament, by another statute, fixed the yearly and daily wages of agricultural servants, artificers, and laborers, the payment of tlireshing corn by the quar- ter, and even the price of shoes. They also forbade any person to leave the town in summer wherein he had dwelt in the winter, or to remove from one shore to another. "Thus were the lower classes debarred by laws, which in their own nature must be inefficient, from making any effort to improve their situation in life." Caroline. I had always imagined that a great demand for labor was occasioned by some great work that was to be executed, such as digging a canal, making new roads, 322. What account is given of the pestilence in England, 1348 ? 323. What enactment did Edv/ard I. make ? 324. What statute was passed in relation to servants ? ON WAGES AND POPULATION. 101 cutting through hills, &z;c ; but it seems that the demand for labor depends, not so much on the quantity of work to be done as on the quantity of subsistence provided for the workmen. MrsB. Work to be performed is the immediate cause of the demand for labor ; but however great or im- portant is the work which a man may wish to undertake, the execution of it must always be limited by the extent of his capital; that is to say, by the funds he possesses for the maintenance, or payment of his laborers. The same observation applies to the capital of a country, which is only an aggregate of the capital of individuals; it can- not employ more people than it has the means of main- taining. All the waste land capable of cultivation in the country might be called work to be done, but there can be no demand for laborers to do that work, until a sufficient quantity of subsistence has been raised to sup- port such an additional number of laborers as would be required for that purpose. In our conversation on cap- ital we observed, that in countries of large capital, great works were undertaken, such as public buildings, bridges, iron rail-ways, canals, &:c. All these things are a sign of redundance of wealth. Caroline, In Ireland I understand that the wages of common laborers are much lower than in England : is it on account of the capital of that country being less adequate to the maintenance of its population ? J\Irs B. That is, no doubt, one of the principal causes of the low price of labor in that country ; but there are many other causes which affect the price of labor, arising from the imperfection of its government. The Irish are 325. On what does the execution ofany undertaking requiring labor depend ? 326. Mrs B. says tbe same observation applies to the capital of a country — what illustration does she give .'' 327. What observation is made of public improvements in countries of great capital? 328. Why is labor lower priced in Ireland than in England ? 9* 102 ON WAGES AND POPULATION. far less industrious than the English. Arthur Young, in his travels througli Ireland, observes, that " husband- ry labor is very low priced but not cheap. Two shillings a day in Suffolk is cheaper than sixpence a day, in Cork. If a Huron would dig for twopence a day, Ihave little doubt but that it may be dearer than the Irishman's sixpence. Caroline. But, Mrs B., the price of labor does not only vary in different countries, but very considerably in different parts of the same country. In purchasing some cutlery a few days ago, I was shown country and town made knives and forks, apparently the same, yet the difference in price was considerable. Upon inquiring the cause, I was informed that it was owins; to the waees being so much higher in London than in the country. Mrs B. And if you had inquired the cause of the high rate of wages in London workmen, you would have heard that it was on account of their being better workmen ; the ablest artificers generally resort to Lon- don, as the place where their skill will be most duly appreciated, and where their employers can best afford to reward it. It is but just to remunerate laborers according to their ability. Your head gardener does less work than any of the men under him ; yet he has the highest wages, on account of the skill and experience he has acquired. A working silversmith has on this account higher wages than a tailor or a carpenter. But where skill is not requisite, the hardest and most disagreeable kinds of labor are best paid : this is the case with blacksmiths, iron founders, coal heavers, Sic. A consideration is also had for arts of an unwhole- some, unpleasant, or dangerous nature, such as painters, 329. What does Arthur Young say of the Irish ? 330. Why- do workmen in large cities, as in London, have high wages ? 331. Why do some mechanics receive higher wages than those of other trades ? 332. V/here skill is not requisite how is labor paid ? ON WAGES AND POPULATION. 103 niirierSj gunpowder makers, and a variety of other analo- gous employments. CONVERSATION IX. ON WAGES AND POPULATION CONTINUED. High wages not invariably accompanying great capital. — Great capital and low wages in China. — Small capital and high wages in America. — Advantages of new settled countries. — Poverty the natural check to population. — Great population advantageous only when resulting from plenty . — Increasing wealth pre- ferable to any stationary capital. — Mistake in en- couraging population. — Population of manufactur- ing towns. — Industry. — Piecework. CAROLINE. I HAVE been reflecting a great deal on our last con- versation, Mrs B., and the conclusions 1 have drawn from it are, that the greater the capital a country pos- sesses, the greater number of people it can maintain, and the higher the wages of labor will be. Mrs B. The greater the stock of subsistence, the more people may be maintained by it, no doubt ; but your second inference is not at all a necessary conclu- sion. China is a very rich countryj and yet wages I believe nowhere so low. The accounts v»/hicn travel- lers give of the miserable state of the inferior classes, are painful to hear ; and their poverty is not the result of idleness, for they run about the streets with tools in their hands, begging for work. 333. What determines the number of persons that can be em- ployed in a-country ? 334. What accounts do travellers give of the lower classes of people in China ? 1 04 ON WAGES AND POPULATION* Caroline. That is owing to the immense population of China ; so that, though the capital of the country may be very considerable, still it is insufficient for the main- tenance of all its inhabitants. Mrs B. You should therefore always remember that the rate of wages does not depend upon the absolute quantity of capital, but upon its quantity relative to the number of people to be maintained by it. This is a truth which, however simple, is continually lost sight of, and hence arise errors without number in political economy. If China had ten times the wealth it actu- ally possesses, and its population were at the same time tenfold as numerous, the people would not be better fed. America on the other hand, is a country of very small capital, and yet wages are remarkably high there. Caroline. How do you account for that ? for the demand for labor, you know, can be only in proportion to the extent of capital. Mrs B. The capital of America, though small when compared with (hat of the countries of Europe, is very considei'able in proportion to the number of people to be maintained by it. In America and in all newly set- tled countries, as yet thinly inhabited, the wages of labor are liigh, because capital increases with prodigious rapid- ity. When land is plentiful and productive, and laborers to cukivate it scarce, the competition amongst the land- holders to obtain laborers is so great as to enable this class to raise their demands, and the higher the wages the laborer receives, the sooner he has it in his power to purchase a piece of land and become landholder him- self. Thus the class of laborers is continually passing into the class of proprietors, and making room for a fresh 335, On What is it here said that the rate of wages depends ?^ 336. What country is mentioned in contrast with China ? 337. What is said of America in comparison with Europe ? — — 338. Why is labor high in America and other thinly inhabited countries ? ON WA*GES AND POPULATION. 105 influx of laborers, both from the rising generation and from emigrations from foreign countrie&. Caroline. America has then the double advantage of high wages and low price of land 5 no wonder that it is so thriving a country. Mrs B. The progress of wealth and improvement is nowhere so rapid, as in the settlement of a civilized people in a new country; provided they establish laws for the security of their property, they require no other incitement to industry. In the new settlements of Amer- ica, where the experienced farmer with his European implements of husbandry is continually encroaching on the barren wilderness, want is almost unknown, and a state of universal prosperity prevails. Y^e may form some judgment of the rapid increase of their capital by that of their population. The facility with which the Americans acquire a maintenance sufficient to bring up a family encourages early marriages, and gives rise to numerous families; the children are well fed, thriving, and healthy ; you may imagine how small are the pro- portion that die in comparison to the number born, when I inform you that their population doubles itself in about twentythree years ! Caroline. But does not such an immense increase of population reduce the rate of wages ? Mrs B. No, because their capital increases in a still greater proportion ; and as long as that is the case, wages, you know, will rise, rather than fall. But what I have said relative to America refers only to the United States of that country ; which have the advan- tage of a free government protecting the property of all 339. Where is the progress of wealth and of improvement most rapid ? 340. What is said to be the consequence of the facihly with which persons in America can bring up a family? 341. In what length of time is our population said to double ? 342. Why does not the great increase of population in America reduce the rate of wages ? 106 ON WAGES AND POPULATION. classes of men. In the Spanish settlements, where the government is of a very different description, the condi- tion of the people is far less flourishing. The popula- tion of Mexico, one of the finest provinces of Spanish America, does not double itself in less than fortyeight years. Caroline. Yet I do not well understand why the poor should be worse off in England w^here there is a large capital, than in America where there is a small one. Mrs B. Because you are again forgetting the fun- damental rule which I have laid down for you, that capi- tal must always be considered with reference to the number of people to be employed and maintained by it. In England, and all the old established countries of Europe, the population has gradually increased till it has equalled the means of subsistence; and as Europe no longer affords the same facility for the growth of capi- tal as a newly settled country, if the population goes on augmenting, it may exceed the means of subsistence, and in that case the wages of labor will fall instead of rising, and the condition of the poor become very miserable. Caroline. But how is it possible for population to in- crease beyond the means of subsistence ^ Men cannot live without eating. Mrs B. No ; but they may live upon a smaller portion of food than is necessary to maintain them in health and vigor; children may be born without their parents having the means of providing for them. In- crease of population therefore under such circumstances 343. Why has not Mexico flourished as much as the United States? — 344, In what time does the population of Mexico double ? — 345. Why are the poor in countries of Europe where there is a large capital worse off than in America ? 343. What is said in reply to the question — How it is possible for population to increase J)eyoncl means of subsistence ? ON WAGES AND POPULATION. 107 cannot be permanent ; its progress will be checked by distress and disease, and this 1 apprehend to be one of the causes of the reduced state of the poor in this country. Caroline. I declare I always thought that it was very desirable to hav^e a great population. All rich thriving countries are populous : great cities are popu- lous ; wealth, which you esteem so advantageous to a country, encourages population ; and population in its turn promotes wealth, for laborers produce more than they consume. You recollect how rich our colony be- came by the acquisition of the labor of the shipwrecked crew ; their first arrival was attended with some incon- venience, it is true ; but 1 should say as you do with re- spect to machinery, the inconvenience is small and tem- porary, the advantage both durable and extensive. Mrs B, You are much mistaken if you imagine that I do not consider a great population as highly advanta- geous to a country, where there is a capital which will afford wages sufficient for a laborer to bring up his chil- dren ; for population is not usually increased by the ac- quisition of a number of able laborers, (as was the case in our colony,) but by the birth of helpless infants who depend entirely upon their parents for subsistence. Sf this subsistence is not provided, the children are born merely to languish a 'lqsn years in poverty, and to fall early victims to disease brought on by want and wretch- edness. They can neither increase the strength, the wealth, nor the happiness of the country. On the con- trary, they weaken, impoverish, and render it more miserable. They consume without reproducing, they suffer without enjoying, and they give pain and sorrow to 347. What reasons does Caroline give in favor of a large popula- tion ? 348. Under what circumstances does Mrs B. consider a large population desirable ? 349. How is population usually in- creased ? 350. What is the consequence if population, by births, increases beyond the means of subsistence ? 108 ON WAGES AND POPULATION. their parents without ever reaching that age when they might reward their paternal cares. Yet such is the fate of thousands of children wherever population exceeds the means of subsistence. Caroline. What a dreadful reflection this is ! But; you do not suppose that there are any children actually starved to death ? Mrs B. I hope not, but the fate of those poor in- fants is scarcely less deplorable who perish by slow degrees for want of proper care and a sufficiency of wholesome food. A large family of young children would require the whole of a mother's care and atten- tion ; but that mother is frequently obliged to leave them to obtain by hard labor their scanty meal. Want of good nursing, of cleanliness, of fresh air, xmd of whole- some nourishment, engenders a great variety of diseases which either carry them off, or leave them in such a state of weakness, that they fall a sacrifice to the first contagious malady which attacks them. It is to this state of debility, as well. as to the want of medical ad- vice and judicious treatment, that must be attributed the mortality occasioned by the small pox and measles amongst the lower classes of children, so much greater than in those of the upper ranks of society. Nor are the fatal effects of an excess of population confined to children. A sick man, who might be restored to health by medical assistance and a proper diet, perish- es because he can afford to obtain neither. A delicate or an infirm woman requires repose and indulgence which she cannot command. The necessaries ofUfevary not only with the climate and customs of a country, but with the age, sex, and infirmities of the individuals who 351. How are diseases among the lower classes of children gene- rated ? 352. What diseases in particular are thus produced ? 353. In what manner does mortality from similar causes extend to adult persons ? ON WAGES AND POPULATION. 109 inhabit it ; and wherever these necessaries are deficient, mortality prevails. Do you understand now why the rate of wages and the condition of the poor is better in countries which, like America, are growing rich ; than in those which, like England, have long accumulated large capitals, but whose wealth is either stationary or making but slower progress ? Caroline. Yes; it is because when capital augments very rapidly, plenty precedes the increase of population, and labor is in great demand and well rewarded. But when wealth, however great, has long been stationary, population has risen up to the means of subsistence, or perhaps gone beyond it, so that wages fall and distress comes on. Mrs B. This is what I formerly alluded to when I told you that you would find that the acquisition of wealth was more advantageous to a country as well as to an individual, than the actual possession of it. I must read you a passage of Paley on this subject, in which he expresses himself with remarkable per- spicuity. " The ease of subsistence and the encouragement of industry depend neither upon the price of labor, nor upon the price of provisions ; but upon the proportion which the one bears to the other. Now the influx of wealth into a country naturally tends to advance this proportion ; that is, every fresh accession of wealth raises the price of labor, before it raises the price of provisions. " It is not therefore the quantity of wealth collected into a country, but the continual increase of that quanti- 354. What answer does Caroline give to this question — Why is the rate of wages and the condition of the poor better in countries now growing rich, than in those, where large capitals have already been accumulated and where wealth is now stationary ? 355. What author does Mrs B. quote in proof of what Caroline has said upon the subject? 356. What are Paley's remarks upon it? 10 no ON WAGES AND POPULATION. ty, from which the advantages arise to employment and population. It is only the accession of wealth which produces the effect ; and it is only by wealth constantly flowing into, or springing up in a country, that the effect can be constant." You must not, however, imagine that the capital of this country remains stationary ; on the contrary, we are making rapid advances in wealth, though we cannot pretend to equal the progress of a new settled country. In confirmation of this, Arthur Young observes, that wages had risen about one third, both in England and Ireland, within the last twenty years ; which proves that capital has been increasing in a greater ratio than popu- lation. But it must be observed, that it is about thirty years since he gave diis account ; and the severe checks which 'industry has received since that period through- out the greater part of Europe, from a constant state of the most expensive warfare, has, I fear, greatly retarded the progress of capital ; without equally affecting that of population ; but if the increase of the latter has occa- sionally outstripped the means of subsistence, it is no less owing to the ill-judged conduct of the upper classes than to the imprudence of the lov^er orders of people. Caroline. You allude, I suppose, to the encourage- ment of early marriages amongst the poor ?" Mrs B. Yes ; we observed that whe a great popu- lation springs from ample means of subsistence, it is the highest blessing a country can enjoy ; the children brought up in plenty, attain a healthy and vigorous man- hood, with strength to defend, and industry to enrich their country. Those who have not reflected on the subject, have frequently confounded cause and effect, and have, with you, considered a great population under all 357. is wealth supposed to be increasing in England ? -358. What does Arthur Young say about it ? 359. What in late years has checked the increase of wealth in Europe generally .-' 360. What is said of children brought up in plenty ? ON WAGES AND POPULATION. 1 1 1 circumstances as the cause of prosperity. Hence the most strenuous efforts have been made, not only by indi- viduals, but even by the legislature, to encourage early marriages and large families, conceiving that by so doing they were promoting the happiness and prosperity of their country. ^ Caroline. This is a most unfortunate error. But when population is again reduced, the evil corrects itself; for capital being thus rendered more adequate to the maintenance of this diminished population, the wages of labor will again rise. Mrs B. Certainly. But it often happens that as soon as the laboring classes find their condition im- proved, whether by diminution of numbers, or an aug- mentation of capital, which may spring up from some new source of industry, marriages again increase, a greater number of children are reared, and population once more outstrips the m.eans of subsistence ; so that the condition of the poor, after a temporary improve- ment, is again reduced to its former wretchedness. Caroline. That is precisely what has occurred in the village near which we live. It was formerly, I have heard, but a small hamlet, the inhabitants of which gained a livelihood as farmers' laborers. Many years ago a cottoiT manufacture was set up in the neighbor- hood, which afforded ample employment for the poor ; and even the children, who v^ere before idle, could now earn something towards their maintenance. This, during some years, had an admirable effect in raising the con- dition of the laboring classes. I have heard my grand- father say that it was wonderful to see how rapidly the village improved, how many new cottages were built 361. How is it said, that individuals and legislatures have some times unwisely attempted to increase population? 362. What will be the consequence upon population when the laboring classes find their condition improved by an increase of wages ? 363. What account is given of the establishment of a cotton factory that was favorable to the poor ? 112 ON WAGES AND POPULATION. and what numerous families they contained. But this prosperous state was not of long duration : in the course of time the village became overstocked with laborers, and it is now sunk into a state of poverty and distress worse than that from which it had so recently emerged. Mrs B. You see, therefore, that this manufacture, which at first proved a blessing to the village, and might always have continued such, was, by the improvidence of the laborers, converted into an evil. If the population had not increased beyond the demand for labor, the manufacture might still have afforded them the advan- tages it at first produced. Caroline. This then must be the cause of the misery which generally prevails amongst the poor in manufacturing towns, where it would be so natural to expect that the facility of finding work would produce comfort and plenty. Mrs B. And it proves that no melioration of the condition of the poor can be permanent, unless to in- dustry they add prudence and foresight. Were all men as considerate as your gardener Thomas, and did they not marry till they had secured a provision ^m family, or could earn a sufficiency to maintain it ; in short, were children not brought into the world until there was bread to feed them, the distress which you have just been describing would be unknown, excepting in cases of unforeseen misfortunes, or unless produced by idleness or vice. Caroline. And is it not to these latter causes that a great part of the misery in manufacturing towns should be ascribed ? I have heard it observed that skilful workmen, who could earn a livelihood by three or four 364. In what way has that same business become hurtful to the poor in this village ? 365. How might this evil have been avoid- ed ? 366. In what way can improvements in the condition of the poor be made permanent ? ON WAGES AND POPULATION. 113 days' labor in a week, would frequently spend the re- mainder of it in idleness and profligacy. Mrs B. I believe that it is much more common for great gains to act as a stimulus to industry. Like every other human quality industry improves in proportion to the encouragement it receives, and it can have no greater encouragement and reward than high wages. It some- times happens, it is true, that workmen act in the way you mention, but such conduct is far from being com- mon; the greater part when their wages are liberal, keep steadily to their work, and if they are paid by the piece, are even apt to overwork themselves. Caroline. That I have observed. My father lately agreed to pay a certain sum for digging a sunk fence in our pleasure grounds ; and two of the under-gar- deners engaged to do it after the day's work was over. 1 thought they would repent of their undertaking, when they came to such hard labor, after having performed their usual task ; but I was astonished at their alacrity and perseverance : in the course of a week they , com- pleted the job, and received the price in addition to their usual wages. I wonder that work is not always paid by the piece, it is such an encouragement to industry. Mrs B. All kinds of work are not susceptible of being so paid ; for instance, the care of a garden could not be divided into jobs, and the gardener be paid so much for planting trees, so much for cleaning borders, so much Tor mowing grass, &zic. Besides, I doubt whether it would be desirable that this mode of payment should be generally adopted, on acount of the tempta- tion it affords to laborers to overwork themselves ; for 367. What is calculated to excite to habits of industry ? 368. What contrary effects does an increase of wages sometimes have on laborers ? 369. Whai case does Caroline mention where an in- crease of wages excited to greater industry ? 370. What would be the evil consequence if laborers were always to be under such an excitement ? 10* 114 ON WAGES AND POPULATION. notwithstanding all the advantages of industry, one would never wish it to be pushed to that extreme which would exhaust the strength of the laboring classes, and bring on disease and infirmity. The benefits resulting from industry are an increase of the comforts and con- veniences of life ; but it would be paying too dear for these to purchase them by a sickly and premature old age. In order to be of permanent service to the laboring classes we must not rest satisfied with encouraging indus- try ; but we should endeavor by instruction to awaken their minds to a sense of remote consequences, as well as of immediate good, so that when they have succeeded in rendering their condition more comfortable, they may not rashly and inconsiderately increase their numbers beyond the means of subsistence. Caroline, But if population be constantly kept within the limits of subsistence, would it not always remain stationary ? Mrs B. Certainly not ; if the people are industrious capital will increase ; and the increase of population will follow of course, and with advantage. Caroline. I now see evidently, that population should never be encouraged but where there is great plenty of subsistence and employment. Mrs B. And then it requires no encouragement. !f men so often marry without having made any provis- ion for a family, there is no danger of their not marrying when a subsistence is easily obtained ; and their children will be healthy and long lived in proportion as they are well fed, clothed, and taken care of. 371. What are the benefits resulting from industry ? 372. How may we render ourselves permanently useful to the laboring classes of the community, in exciting them to habits of industry? 373. Would not population remain stationary if kept within the limits of subsistence ? 374. What will always be a sufficient inducement in society for persons to marry .? ON THE CONDITION OF THE POOR. 115 CONVERSATION X. ON THE CONDITION OF THE POOR. Of the cultivation of commons and waste lands. — Of Emigration. — Education of the lower classes. — Ben- efit clubs. — Savings Banks. — Parochial relief — Alms and private charities. — Rewards. CAROLINE. In our last conversation, Mr. B., you pointed out the evils arising from an excess of population ; they have left a very melancholy impression on my mind. I have been reflecting ever since whether there might be any means of 'averting them, and of raising subsistence to the level of population, rather than suffering population to sink to the level of subsistence. Though we have not the same resource in land as America ; yet we have large tracts of waste land, which by being brought into cultivation would produce an additional stock of subsist- ence. Mrs B. You forget that industry is limited by the extent of capital, and that no more laborers can be em- ployed than we have the means of maintaining ; they work for their daily bread, and without obtaining it, they neither could nor would work. All the laborers which the capital of the country can maintain being disposed of, the only question is, whether it be better to employ them on land already in a state of cultivation, or in breaking up and bringing into culture new lands; and this point may safely be trusted to the decision of the landed proprietors, as it is no less their interest than thai 375. What inquiry does Caroline make in the beginning of the tenth conversation ? 376. What does Mrs B, in reply say Car- oline has forgotten ? 377. What does Mrs B. consider the only question, admitted in relation to the melioration of the condition of the poor in England ! 116 ON THE CONDITION OF THE POOR. of the laboring classes that the greatest possible quantity of produce should be raised. To a certain extent it has been found more advantageous to lay out capital in im- proving the culture of old land, rather than to employ it in bringing new land into tillage | because the soil of the waste land is extremely poor and ungrateful, and requires a great deal to be laid out on it before it brings in a return But there is often capital sufficient for both these purposes, and of late years vve have seen not only prodigious improvements in the processes of agri- culture throughout the country, but a great number of commons inclosed and cultivated. / Caroline. 1 fear you will think me inconsistent, but ! cannot help regretting the enclosure of commons ; they are the only resource of the cottagers for the main- tenance of a {^w lean cattle. Let me once more quote my favorite Goldsmith : " Where then, ah where shall poverty reside. To 'scape the pressure of contagious pride ? If to some common's fenceless limits stray'd. He drives his flock to pick the scanty blade, Those fenceless fields the sons of wealth deride, And ev'n the bare worn common is deny'd." Mrs B. You should recollect that v.'e do not admit poets to be very good authority in political economy. If instead of feeding a few lean cattle, a common can, by being inclosed, fatten a much greater number of fine catttle ; you must allow that the quantity of subsistence will be increased, and the poor, though in a less direct manner, will fare the better for it. Laborers are re- quired to inclose and cultivate those commons, the neigh- boring cottagers are employed for that -purpose, and this additional demand for labor turns to their immediate ad- 378. What changes in agriculture does she say have recently taken place ? 379. What objection does Caroline make to the enclo- sure of commons ? 380. How does Mrs B. in reply say the inclo- sure of commons is beneficial to the poor ? ON I'HE CONDITION of THE POOR* 117 vantage. They not only receive an ideranity for their loss of right of common, but they find purchasers for the cattle they can no longer maintain in the proprietors of the new inclosures. When Finchley Common was enclosed, it was divided amongst the inhabitans of that parish ; and the cottagers and little shopkeepers sold the small slips of land which fell to their share to men of greater property, who thus became possessed of a sufficient quantity to make it answer to them to inclose and cultivate it; and the poorer classes were amply remunerated for their loss of comon- age by the sale of their respective lots. Caroline, But if we have it not in our power to pro- vide for a redundant population by the cultivation of our waste lands, what objection is there to sending those who cannot find employment at home, to seek a maintenance in countries where it is more easily obtained, where there is a greater demand for labor ? Or why should they not found new colonies in the yet unsettled parts of Amer- ica ? Mrs B. Emigration is undoubtedly a resource for an overstocked population : but one that is adopted in general with great reluctance by individuals ; and is com- monly discouraged by governments, from an apprehen- sion of its diminishing the strength of the country. Caroline, It might be wrong to encourage emigra- tion to a very great extent ; I meant only to provide abroad for those whom we cannot maintain at home, Mrs B. Under an equitable government there is little danger of emigration ever exceeding that point. The attachment to our native land is naturally so strong, and there are so many ties of kindred and association 381. What account is given of Finchley Common in relation to this subject? 382. What other method does Caroline propose to improve the condition of the poor.' 383. What does Mrs B. say of emigrations ? — r. — 384. Why are governments opposed to them ? 385. W^hat is there to prevent emigrations so great as to be hurtful ? 118 ON THE CONDITION OF THE POOR. to break through before we can quit it, that no slight mo- tive will induce a man to expatriate himself. An author deeply versed in the knowledge of the human mind says, " La seule bonne loi centre les emigrations, est celle que la nature a grave dans nos coeurs." On this subject I am very willing to quote the Deserted Village : "Good heaven ! what sorrows gloom'd that parting day. That call'd them from their native walks away." Besides, the difficulties with which a colony of emi- grants have to struggle before they can effect a settle- ment ; and the hardships they must undergo, until they have raised food for their subsistence, are so discoura- ging, that no motive ess strong than that of necessity is likely to induce thern to settle in an uncultivated land. Some capital too is required for this as well as for all undertakings ; the colonists must be provided with imple- ments of husbandry and of art ; and supplied with food and clothing until they shall have succeeded in produ- cing such necessaries for themselves. Were emigration therefore allowed, instead of being checked, scarcely any would abandon their country but those who could not find a maintenance in it. But should emigration ever become so great as to leave the means of subsistence easy and plentiful to those who remain, it would naturally cease, and the facility of rearing children, and maintaining families, would soon fill up the vacancy in population. There are some emigrations which are extremely detrimental to the wealth and prosperity of a country ; these however was not occasioned by poverty, but result 386. What, besides attachment to one's native country, is likely to check emigrations ? 387. With what must emigrants be pro- vided ? 388. Who are the persons generally that would emi- grate to a foreign country ? 389. How might the evil be reme- died if an emigration too great should take place? 390. What emigrations are particularly detrimental to wealth and national pros- perity ? ON THE CONDITIONS OF THE POOR. 119 from the severity and hardships imposed by arbitrary governments on particular classes of men. Want of tole- ration in religion has caused the most considerable and numerous emigrations of this description. Such was that of the Hugonots from France at the revocation of the edict of Nantz. They were a skilful and industrious people, who carried their arts and manufactures into Germany, Prussia, Holland, and England, and deprived France of some of her most valuable subjects. Spain has never recovered the blow which her industry re- ceived by the expulsion of the Moors, under Ferdinand and Isabella ; not all the wealth of America has repaid her for this loss. But to return to the population of England ; the more we find ourselves unable to provide for an overgrown population, the more desirous w^e should be to avail our- selves of those means which tend to prevent the evil ; — such, for instance, as a general diffusion of knowledge, which would excite greater attention in the lower classes to their future interests. Caroline^ Surely you would not teach political econ- omy to the laboring classes, Mrs B.? Mrs B. No ; but I would endeavor to give the rising generation such an education as would render them not only moral and religious, but industrious, frugal, and provident. In proportion as the mind is informed, we are able to calculate the consequences of our actions : it is the infant and the savage who live only for the present moment ; those whom instruction has taught to think, reflect upon the past and look forward to the future. Education gives rise to prudence, not only by enlarging 891. What countries were benefited by the Hugonots leaving France ? 392. In what manner was Spain injured in the time of Isabella? 393. How is it thought that the evils of an over- grown population in England can be prevented in part ? 394. How much of an education would Mrs B. give the poor for this pur- pose ? 120 ON THE CONDITION OF THE POOR. our understandings, but by softening our feelings, by humanizing the heart, and promoting amiable affections. The rude and inconsiderate peasant marries without either foreseeing or caring for the miseries he may entail on his wife and children ; but he who has been taught to value the comforts and decencies of life, will not heed- lessly involve himself and all that is dear to him in pov- erty, and its long train of miseries. Caroline. I am very happy to hear that you think instruction may produce this desirable end, since the zeal for the education of the poor that has been display- ed of late years gives every prospect of success 5 and in a few years more, it may perhaps be impossible to meet with a child who cannot read and write. Mrs B. The highest advantages, both religiouSj moral, and political, may be expected to result from this general ardor for the instruction of the poor. No great or decided improvement can be effected in the manners of the people but by the education of the rising generation. It is difficult if not impossible, to change the habits of men whose characters are formed and set- tled ; the prejudices of ignorance that have grown up with us, will not yield to new impressions; whilst youth and innocence may be moulded into any form you choose to give them. But independently of schools and the various institutions for the education of youth, there is an establishment among the lower classes which is peculiar- ly calculated to inculcate lessons of prudence and econ- omy. I mean the Benefit Clubs, or Friendly Societies ; the members of which, by contributing a small stipend monthly, accumulate a fund which furnishes them relief and aid in times of sickness or distress. These associa- 395. What is said of the rude and inconsiderate peasant in rela- tion to this subject ? 396. How alone does Mrs B. suppose that improvement in the manners of the people can be effected ? 397. What societies in England are mentioned as having been pi'oductive of much good ? ON THE CONDITION OF THE POOR. 121 lions have spread throughout the country, and their good effects are rendered evident by comparing the con- dition of such of the laboring classes as. belong to them with those of the same district who have no resource in times of distress, but parochial relief or private charity. The former are comparatively cleanly, industrious, sober, frugal, respecting themselves, and respected by others ; depending in times of casual sickness or accident on funds created by their own industry, they maintain an honorable pride and independence of character : whilst the latter, in a season of distress, become a prey to dirt and wretchedness ; and being dissatisfied with the scan- tiness of parish relief, they are often driven to the com- mission of crimes. It is above a century since these clubs were first instituted ; they have received encour- agement both from government and individuals, and have spread throughout the country. I dare say that your prudent gardener Thomas is a member of one of them. Caroline. Yes ; and he belongs to one which can boast of peculiar advantages, as most of the gentlemen in the neighborhood subscribe to it ; in order, by increas- ing the fund, and consequently the amount of the relief which the distressed members can receive, to encourage the poor to belong to it. Mrs B. That is an excellent mode of bestowing charity, for you are not only sure that you relieve the necessitous, but also the industrious poor. A similar plan has been adopted, within these few years, in a vil- lage in the neighborhood of London, and has been at- tended with the greatest success. Various schemes had been devised by the charitable inhabitants of this village to relieve the necessities of the poor, and so much was done for them by the opulent, that they found little need 398. What good effects are said to have resulted from them ? 399. How long since they were established ? 400. What inju- ry will result from too great charity bestowed upon the poor ? 11 J 22 ON THE CONDITION OF THE POOfi. to exert their own industry; whilst the poor in the neigh- boring parishes, attracted by the magnificence of the charitable donations, flocked to the place; so that not- withstanding all their bounty, the rich still found them- selves surrounded by objects of penury and distress. Convinc"5d at length that they created as much poverty as they relieved, they came to a resolution of complete- ly changing their system. They established benefit clubs ; and the sums which they before gave away in alms, were now subscribed to these societies, so as to afford very ample relief to its members in cases of dis- tress. The consequence was, that the idle poor aban- doned the place, and the industrious poor were so well provided for, that the village has assumed quite a new aspect, and penury and want are scarcely any more to be seen. An institution has within a short time been established in Scotland, and is, i understand, now rapidly spreading in England, which is likely to prove still more advan- tageous to the lower classes than the benefit clubs. " The object of this institution," says the Edinburgh Re- view, No. 49, is to open to the lower orders a place of deposit for their small savings, with the allowance of reasonable monthly interest, and with full liberty of v;ithdrawing their money, at any time, either in whole or in part — an accommodation which it is impracticable for the ordinary banks to furnish. Such an establish- ment has been called a Saving Banky These institutions give the greatest encouragement to industry, by securing the property of the laboring poor. How frequently it happens that an industrious man, after 401. What led to the establishment of charitable clubs in a vil- lage near London ? 402. What was the consequence of these clubs in that village ? 403. What other institution has been established for the benefit of the poor— first in Scotland ? 404. What is the plan of it? 405. How do Saving Banks promote industry ? ON THE CONDITION OF THE POOR. 123 having toiled to accumulate a small sum, is tempted to lay it out in a lottery ticket, is inveigled by sharpers to a gambling table, or induced by adventurers to engage in some ill-judged and hazardous speculation ; to lend it to a distressed or a treacherous friend, — not to mention the risk of its being lost or stolen. If we succeed in estab- lishing banks in different districts in England, where the poor may without difficulty or trouble deposit the trifle they can spare from their earnings, and where, as an additional inducement, some interest is allowed them for their money, all this mischief will be avoided, and we may hope that the influence of prudential habits will gradually raise the poor above the degrading resource of parochial assistance ; and enable us in the course of time to abolish the poor rates ; a tax which falls so hea- vily on the middling classes of people, and which is said to give rise to still more poverty than it relieves. Caroline. 1 cannot understand that. Mrs B. The certainty that the parish is bound to succor their wants, renders the poor less apprehensive of indigence than if they were convinced that they must suffer all the wretchedness it entails. When a young man marries without having the means of supporting his family by his labor, and without having saved some lit- tle provision against accidents or sickness, he depends upon the parish as a never-failing resource. A profligate man knows that if he spends his wages at the public house- instead of providing for his family, his wife and children can at worst but go to the poor house. Parish relief thus becomes the very cause of the mischief which it professes to remedy. Caroline. It appears to me to encourage the worst species of poverty, that arising from idleness and ill- conduct. 406. What is said of the poor tax in England ? 407. In what way does the parish relief of England cause poverty and wretched- uess ? 408. What illustration is given ? 124 ON THE CONDITION OF THE POOR. Mrs B. The greatest evil that results from this pro- vision for the poor is, that it lowers the price of labor ; the sum which the capitalist is obliged to pay as poor rates necessarily reduces the wages of his laborers ; for if the tax did not exist, his capital being so much more considerable, the demand for labor, and consequently its remuneration, would be greater. But the poor rates bestow, in the form of alms, but too frequently on the idle and profligate, that wealth which should be the reward of active industry ; if the amount of the poor rates were added to the circulating capital of the coun- try, the independent laborer might earn a better liveli- hood for himself and his family than he can now do ; and, without the degrading resource of parish relief, might lay by a portion to provide for sickness and old age. When it was once proposed to establish a poor's rate in France, the committee of mendicity, in rejecting it, thus expressed themselves on that of England : " Get exemple est une grande et importante lecon pour nous, car independamment des vices qu^elie nous presente et d\ine depense monstreuse, et d'un encour- agement necessaire a la faineantise, elle nous decouvre la plaie politique de I'Angleterre la plus devorante, qu'il est egalement dangereux pour sa tranquillite, et son bonheur, de detruire ou de laisser subsister." Caroline. But what is to be done } the poor cannot be allowed to starve, even when idle and vicious. Mrs B. Certainly not; and besides, the wife and children of a profligate man are often the innocent vic- tims of his misconduct. Then there are frequently cases of casual distress, which no prudence could fore- 409. How does this parish relief lower the price of labor ? 410. In what way might the poor be more benefited by another application of the same capital ? 411. What is said of the Engl^h poor rates by the committee of mendicity in France ?- — -4121, Why ought not poor rates to be abolished I ON THE CONDITION OF THE POOR. 125 see nor guard against ; under these circumstances the poor rates could not be abolished without occasioning the most cruel distress. I know therefore of no other remedy to this evil than the slow and gradual effect of education ; by enlightening the minds of the lower classes their moral habits are improved, and they rise above that state of degradation in which all the feelings of dignity and independence are extinguished. Caroline. But, alas ! how many years will elapse before these happy results can take place ! 1 am impa- tient that these benefits should be immediately and uni- versally diffused ; their progress is in general so slow and partial, that there is but a small chance of our living to see their effects. Mrs B. There is some gratification in looking for- ward to an improved state of sociely, even if we should not live to witness it. Caroline. Since it is so little in our power to accele- rate its progress, w^e must endeavor to be contented : but I confess that I cannot help regretting the want of sovereign power to forward measures so conducive to the happiness of mankind. Mrs B. You might possibly fail in your projects by attempting too much. The emperor Joseph II. endea- vored at once to transform a bad government into a good one, and by adopting arbitrary and violent measures to accomplish his purpose, without paying any regard to the habits and manners, the prejudices and ignorance of his subjects, created ill-will and opposition, instead of cooperation ; and ended by leaving them but Httle m.ore advanced than he found them. I cannot too often re- peat to you that gradual improvement is always prefera- 413. How can the condition of the poor be effectually improved ? -414. Can this be done speedily ? 415. What did the Em- peror Joseph II. attempt to do ? 416. What was his success ?- 417. What description of improvement is best ? 326 ON THE CONDITION OF THE POOB* ble, and more likely to be permanent than that which is effected by sudden revolution. But of all modes of bestowing charity, that of indis- criminate alms is the most injudicious. It encourages both idleness and imposition, and gives the bread which should feed the industrious poor, to the indolent and profligate. By affording certain support for beggars, it trains up people to those wretched means of subsistence as regularly as men are brought up to any respectable branch of industry. This is more especially notorious in catholic countries, where alms-giving is* universally considered as a religious duty ; and particularly in those towns in which richly endowed convents and religious establishments dispense large and indiscriminate dona- tions. Townsend, in his travels in Spain, tells us, that "The archbisljop of Grenada once had the curiosity to count the number of beggars to whom he daily distributes bread at his doors. He found the men 2000, the women 3024, but at another time the women were 4000. ".Leon, destitute of commerce, is supported by the church. Beggars abound in every street, all fed by the convents and at the bishop's palace. Here they get their breakfast, there they dine. Besides food at St Marca's they receive every other day, the men a farthing, the women and children half as much. On this pro- vision they live, they marry, and they perpetuate a miserable race. Were it possible to banish poverty and wretchedness by any other means than by industry and unlimited application, benevolence might safely be per- mitted -to stretch forth the hand, and without distinction 418. 'vVhat is said of indiscriminate alms.? 419. What evils result from it ? 420. In what countries is this especially the case ? 421. What did Townsend say of the beggars in Grenada ? 422. V/hat description is given of the poverty of Leon, by the same writer ? ON THE CONDITION OF THE POOR. 127 to clothe the naked, feed the hungry, give drink to the thirsty, and furnish habitations to the desolate. But the misfortune is, that undistinguishing benevolence offers a premium to indolence, prodigality, and vice." Caroline. All this is very true : but you must allow that it is extremely painful to pass so frequently as we do, objects of distress in the streets, without affording them some trifling assistance. Mrs B. I cannot blam,e any one for indulging feelings of humanity ; to pity and relieve the sufferings of our fellow creatures is one of the first lessons which nature teaches us : but our actions should be regulated by good sense, not blindly directed by undistinguishing compassion. We should certainly consider it as a duty to ascertain whether the object whom we relieve is in real want, and we should proportion our charity not only to his distress, but also to his merits. We ought to do much more for an industrious family, whom unforeseen or unavoidable accidents have reduced to poverty, than for one who has brought on distress through want of a well regulated conduct. When we relieve objects of this latter description, it would be well at the same time to bestow a trifling reward on some individual among the laboring classes of the neighborhood distinguished for his industry and good conduct. This would counteract the pernicious effect which cannot fail to be produced by assisting the indolent, while we suffer the industrious to remain without reward. Caroline. But the advantages and comforts derived from industry constitute its natural recompense, and it seems to require no other reward. Mrs B. Nor would it, if a similar result could not 423. What does he say of undistinguishing benevolence ? 424 . What does Mrs B. say is one of the first duties taught us by nature ? 425. What description of needy individuals are entitled to our greatest regards ? 426. In giving to such as are in want through their own misconduct, what does Mrs B. advise ? 128 ON THE CONDITION OF THE POOR. be obtained without effort ; but when a hard-working laborer observes that the family of his idle neighbor is as well provided for as his own — that the hand of charity supplies them with what he earns by the sweat of his brow— such reflections are apt to produce discontent, and tend to check his industry. While, therefore, we tacitly encourage idleness by relieving the distress it pro- duces, we at the same time discourage that laborious in- dustry which passes unnoticed. The value of pecuni- ary rewards is increased by their being bestowed as a mark of approbation ; so far from exciting a sense of hu- miliating dependence, they produce a feeling of a very opposite nature, which raises and improves the charac- ter — a consciousness of merit seen and approved by those to whom the poor look up. Such sentiments sof- ten whilst they invigorate the labors of the industrious. Thus if help for the distressed, and rewards for the me- ritorious poor were to go hand in hand, the one would be as much towards the prevention of poverty as the other towards relieving it. Caroline. I had an opportunity last summer of wit- nessing a mode of improving the condition of the labor- ing poor, in which the system of rewards was introduced with the happiest effect. An extensive piece of ground was laid out in gardens by a great landed proprietor in Hertfordshire, for such of his laborers as had none at- tached to their cottages. He let the ground to them at the low rate of sixpence a year each. These gardens were sufficiently large to provide an ample supply of com- mon vegetables for the laborer's family, and to employ his leisure hours in its cultivation ; but not so extensive as to tempt him to withdraw his attention from his daily 427. How is the industrious affected when he sees charily he- stowed upon the idle ? 428. How is it said that the value of pe- cuniary rewards are increased ? 429. What account is given of an experiment in Hertfordshire to improve the condition of the poor ? ON REVENUE. 129 labor, and render the produce an article of sale. As a further means of exciting industry, the proprietor annu- ally distributes three prizes as rewards to those whose gardens are found to be in the highest state of cultiva- tion. This judicious mode of rewarding industry has been beneficial also in producing a spirit of emulation amongst the rival gardeners, whose grounds being sepa- rated only by paths, the comparative state of each is easily determined. Mrs B. This is indeed an excellent plan ; the lei- sure hours which the laborers might probably have pass- ed at the alehouse are occupied in raising an additional stock of wholesome food, and the money which v/ould have been spent in drinking is saved for a better pur- pose — it may form perhaps the beginning of a capital, and in process of time secure a litde independence for himself and his family. CONVERSATION XI. ON REVENUE. Modes of employing capital to produce revenue. — Which of these is most advantageous. — J^aries according to the state of the country. — Garnierh observations on the employment of capital.-— -Equality of profits af- fords a criterion of the due distribution of capital. — JVatural arrangement of the distribution of capital. — Equality of profits in agriculture^ manufactures, and trade. — Why those profits appear unequal. MRS B. In our last conversation we have in some measure di- 430. What does Mrs B. say of this plan ? 130 ON REVENUE. gressed from our subject ; but I trust that you have not forgotten all we have said upon the accumulation of cap- ital. Let us now proceed to examine more specifically the various modes in which it may be employed in order to produce a revenue or income. Capital maybe invested — in Agriculture, Mines, Fisheries, Manufac- tures, and Trade. Caroline. Of all these ways of employing capital, agriculture, no doubt, must be the most advantageous to the country, as it produces the first necessaries of life. Mrs B. In these northern climates it is almost as es- sential to our existence to be clothed and lodged as to be fed ; and manufactures are, you know, requisite for these purposes. Caroline. True ; but then agriculture has also the advantage of furnishing the raw materials for manufac- tures ; it is the earth which supplies the produce with which our clothes are made and our houses built. JMi's S. Yet without manufactures these materials would not be produced ; it is the demand of the manu- facturer for such ardcles which causes them to be raised by the farmer ; agriculture and manufactures thus react on each other to their mutual advantage. Caroline. It may be so ; but still it does not appear to me that they can be equally beneficial to the country. Manufactures do not, like agriculture, actually increase the produce of the earth ; they create nothing new, but merely put together under another form the materials with which they are supplied by agriculture. Mrs B. True; but by such operations they fre- quently increase the value of these materials a hundred 431. In what is it said that capital may be invested ? 432. What investment does Caroline consider best ? 433. What is the reply of Mrs B. ? 434. What further consideration does Caroline offer in favor of agriculture ? 435. But what makes the raw materials valuable ? 436. What reason does Caroline still give why manufactures cannot be equally beneficial with agricul^ ture f ON REVENUE. 131 fold. And you are mistaken if you suppose that agri- culture can do more than arrange and combine the par- ticles of bodies under a new form. In this respect it differs from manufactures merely from the circumstance of the process being performed by nature in the bosom of the earth, and in a manner which eludes our obser- vation. But agriculture is no more capable than manu- factures of creating a single new particle of matter ; it is merely by a chemical change of combination that it al- ters their form and nature, and increases their value. Caroline. But in agriculture nature facilitates the labors o!" man ; she seems to work together with the husbandman ; and provided that he but ploughs the field and sow the seeds, she performs all the remainder ofthe task. It is nature that unfolds the germe, and raises up the plant out of the ground ; she nourishes it with genial showers, she ripens it with sun-beams, and leaves the farmer little more to do than to gather in the fruits of her labors. How different is the case in manufactures ! There man must perform the whole of the work himself; and notwithstanding the aid he derives from his mechanical inventions, it is all the result of his own toil ; whether it be the labor of the head or the hands, it is all art. Mrs B. We are accustomed to speak of art in op- position to nature, without considering that art itself is natural to man. He is endowed with the faculties of invention and contrivance, which give him a considera- ble degree of command over the powers of nature, and render them in a great measure subservient to his use. 437. How does Mrs B. say that agriculture differs from manu- factures in the production of materials ? 438. By the operation of what scientific principle are agricultural products perfected ? 439. What comparison does Caroline make between the opera- tions of nature and of art ? 440. How does Mrs B. say we are accustomed to speak of art ? 441. How is man said to have com- mand over the powers of nature. 132 ON REVENUE. He studies the peculiar properties of bodies in order to turn them to his advantage ; he observes that, hght bo- dies float on the surface of the water, and he builds himself a boat ; he feels the strength of the wind, and he raises sails ; he discovers the powers of the magnet, and he directs his course by it to the most distant shores : but the water which supports the vessel, the wind which wafts it on, and the magnet which guides it, are all na- tural agents compelled by the art of man to serve his purposes. We cannot, therefore, say that it is in agri- culture alone that nature lends us her assistance. The miller is as much indebted to nature for grinding his corn as the farmer is for raising it. In manufactures her share of the labor is sometimes even more considerable than in agriculture. You may recollect our observing that the effect of machinery in facilitating labor, consisted chiefly in availing ourselves of the powers of nature to perform the principal part of the work ; and there are some processes of art for which we seem almost wholly indebted to nature. In bleaching, it is the air and light which perform the entire process ; in the preparation of fermented liquors, we are ignorant even of the means vrhich nature employs to accomplish this wonderful ope- ration. In short, it would be difficult to point out any species of labor in which nature did not perform a share of the task. Caroline. That is very true ; and it requires only a little reflection to discover how much we owe to her as- sistance in every work of art. We could not make a watch without the property of elasticity natural to steel, which enables us to construct a spring ; nor could the spring be fabricated without the natural agency of fire, rendered subservient to art. 442. How do nature and art cooperate in navigation ? 443. What is said. of the miller in illustration of this subject? 444. What is said of bleaching and the fermentation of liquors ? 445. What cases does Caroline mention in which the operations of na- ture are necessary to the productions of art.' ON REVENUE. 133 But, Mrs B., in agricuhure we avail ourselves of ma- chinery as well as of those secret operations of nature Which produce vegetation. Mrs B, Undoubtedly we do ; for every tool which facilitates manual labor is a machine — the spade and hoe, which save us the trouble of scratching up the earth with onr hands— the plough and harrow, which still more facilitate the process — the flail, which prevents the ne- cessity of rubbing out the corn— --and the threshing ma- chine, which again diminishes the labor. Machinery is however, not susceptible of being applied to rural occu- pations with the same degree of perfection as to the arts, because the processes of agriculture are extremely di- versified, carded on over an exTtensive space, and de- pendent to a very considerable degree on the vicissi- tudes of the seasons over which we have no control. Agriculture, manufactures, and commerce, are all es- sential to the well being of a country ; and the question is not wnether an exclusive preference should be given to any one of these branches of industry, but what are the proportions which they should bear to each other in order to conduce most to the prosperity of the com- munity. Caroline. That is all I ask. I never imagined that every other interest should be sacrificed to that of agri- culture : but I feel persuaded that in this country at least, trade and manufactures meet with greater encou- ragement than agriculture. Mrs B. That is a point on which T cannot pretend to decide ; and when you are a little better acquainted with the subject, you will be more aware of its diffi- culty. 446. What instances are there in which machinery is subservient to the purposes of agriculture ? 447. Why is not machinery as susceptible of being applied to rural occupations as to the arts ? 448. What does Mrs B. say is a proper question in relation to agriculture, manufactures, and commerce ? 12 134 ON REVENUE. Caroline, But surely political economists ought to know in what proportions the capital of a country should be distributed among these diiFerent branches of in- dustry. ^ Mrs B. It is not easily ascertained, because these proportions vary exceedingly in different countries ac- cording to their local situation or peculiar circumstances. In America, for instance, or any new country in which land is cheap, population but thinly scattered, and capital scarce, the prevailing branch of industry will be agricul- ture. For in such countries, when a laborer accumulates a little money, which (where wages are so high) he is soon enabled to do, he is immediately tempted by the cheapness of land, to lay it out in a farm ; and though the wealth of the Americans is so rapidly increasing, they have hitherto found it more advantageous to import the greater part of their manufactured goods, than to establish manufactures at home, a circumstance not so much to be ascribed to a deficiency of capital, as to their having a more profitable use for it. Caroline, And in England, where the population is abundant and land comparatively scarce, we must find it advantageous to take their corn in exchange for our manufactures. Mrs B. No doubt ; if old countries were not to purchase elsewhere some part of the agricultural pro- duce they consume, new countries would not raise more than they required for their own consumption, for want of a foreign market to dispose of it. 449. What does Caroline say political economists ought to know ? 450. Why is it not easily ascertained in what proportions the capital of a country should be distributed among the different branches of industry? 451. Why is agriculture the prevailing branch of industry in new countries ? 452. On what account does Mrs B. say, that most attention has been paid to agriculture to the neglect of manufactures ? 453. What would be the conse- quence to new countries if old ones did not purchase some part of their agricultural produce ? ON REVENUE. 135 In thislpuntry, where land is dear, if a laborer makes a little money, he never thinks of purchasing land ; he cannot even afford to rent a farm ; but he may set up a shop, or invest his capital in the manufacturing line. There are other circumstances which affect the des- tination of capital ; such as the local situation of a coun- try ; if it abounds with rivers and seaports, so great a facility for the disposal of its manufactures in foreign parts, will render that branch peculiarly advantageous. Caroline, So then if agriculture suits one country best, manufactures are more profitable to another, and thus they mutually accommodate each other. Mrs B, Exactly. If in England the proportion of capital employed in manufactures be more than is required for our own use, it is because we find our advantage in supplying other countries with manufactured pro- duce; were that not the case, we should be at a loss for employment for so large a capital as the country pos- sesses. In proportion therefore as the channel of agri- culture fills, capital overflows, into those of manufactures and trade. Agriculture thus leads to manufacture and trade as youth leads to manhood ; the progress of the former is the most rapid, the latter adds the vigor and stability of mature growth. Gamier, in his introduc- tion to his French edition of Adam Smith's Essay, remarks on this subject, that, "It is almost in every instance an idle refinement to distinguish between the labor of those employed in agriculture, and those employed in manufactures and commerce; for wealth is necessarily the result of both descriptions of labor, and consumption can no more take place independently of the one than of the 405. What does a laborer in England who obtains a little money beforehand? 455. What other circumstances affect the destination of capital? 456. What would be the consequence to capital in England were it not for the extensive manufactures there ? 457. What comparison is made between agriculture and manufactures and epmiKerce?- — 458, What does Garnier say is an idle rejfinement ? 136 ON BEVENDE, Other. It is by their siniultaneous concurrence that anjr thing becomes consumable, and of course that it comes to constitute wealth. The materials of all wealth origin- ate in the bosom of the earth, but it is only by the aid of labor that they can ever truly constitute wealth; it is industry and labor which modify, divide, and combine the various productions of the soil.^ so as to render them fit for consumption." Caroline. But, Mrs B., though political economists cannot specify the proportion of capital which should be employed in the several branches of industry, have they no means of judging whether they are actually employed in that proportion which is n^ost conducive to the welfare of a country? Men follow their own taste and inclination in the employment of their capital, and I fear the public benefit has very little weight in the scale. Mrs B. Fortunately there is a better guide than mere inclination to regulate our choice in the employ- ment of capital, and that is interest. Men are induced to invest their capital in those branches of industry which yield the greatest profits ; and the greatest profits are offered by those employments of which the country is most in need. CarQiine, I do not exactly understand why there should be such a perfect coincidence between the wants of the public and the interests of the capitalist ? Mrs B. The public are willing to give the highest price for things of which they stand in greatest need. Let ns suppose there is a deficiency of clothing for the people, the competition to obtain a portion of it raises the price of clothing, and increases the profits of the 459. What does he say of wealth and the materials of wealth r 460. What does Caroline say that men will follow ? 461. What does Mrs B. say is a better guide than inclination in the choice of employment? 462. From what employments proceed the greatest profits ? 463. ^ What supposition does Mrs B, make m illustration of this subject ? ON REVENUE. ] 37 manufacturer of clothes. What will follow ? Men who are making smaller profits by the cultivation of land will transfer some of their capital to the more advan- tageous employment of manufacturing clothes ; in con- sequence of this more clothes will be made, and the deficiency will no longer exist and the eager competi- tion to purchase them will subside, they will fall in price, and reduce the profits of the manufacturer to those of agriculture — or should these profits fall still lower, the farmer will take back the capital he had placed in the manufactures to restore it to agriculture. Caroline. Then the profits of agriculture and man- ufactures will always be, or at least tend to be, upon a footing of equality. JMrs B. Yes ; tend to be ; that is a very proper qualification, for these changes are not produced on a sudden. The tendency to equalization of profits takes place not only in agriculture and manufactures, but in every other branch of industry. In a country where capital is allowed to follow its natural course, it will always flow into that channel which affords the highest profits, till all employments of capital are nearly upon the same level. Caroline. You say nearly, why not exactly tlie same. Mrs B. Because, generally speaking, agricultural pursuits are more congenial lo the taste of the majority of mankind than manufactures or commerce ; and hence in countries where fertile land is to be obtained at an easy rate, a man no sooner acquires a little capital than he is desirous of purchasing land, and retiring even to remote and almost unpeopled districts, where be can 464. To what do the profits of agriculture and commerce tend ? 465. Why are they not always equal? 466. How long will capital flow into that channel which affords the highest profits ? 467. Why not flow into it till all employments are exactly upon a level ? 12* 138 ON REVENUE. live as the lord of his little domain; as is the casre in America at present. Yet this preference will not lead beyond a certain limit, therefore it may be stated that the profits of different employments of capital are nearly upon a level. Caroline. How admirably nature makes all her arrangements I The more I learn of political economy, the more it appears to me, that the institution of laws which control her operations are generally productive of greater evil than good. Mrs B. That may frequently be the case, but gene- rally is too comprehensive a term. Every law that is enacted infringes more or less upon the natural order of things; and yet J should not hesitate to say that the worst system of laws is preferable to no government at all. Art, we have observed, is natural to man ; it is the result of reason, and leads him onward in the pro- gressive path of improvement ; instead of being chained down like the brute creation by instinct, he is free to follow where inclination leads. But as soon as he enters into a state of society he feels the necessity of a control which nature has not imposed, and his reason enables him to devise one. He enacts laws, vi-hich are more or less conducive to his good, in proportion as his rational faculties are developed and cultivated. Many of these laws, no doubt, are inimical to his welfare ; the advantages resulting from the single law of the institution of property has conferred a greater benefit on mankind than all the evils which spring from the worst system of government. Caroline. But this level — this equality of profit to which you say every branch of industry naturally tends, 468. What does Caroline say of the institution of laws ? 469. What does Mrs B. say of laws ? 470. What is said of art ? 471, What will man do as soon as he enters into a state of society ? 472. What does Caroline say of the profits of trade, manufac- tures, and agriculture in England ? ON REVENtfE. 139 cannot .yet have taken place in England, since manu- factures and trade are here allowed to yield greater profits than agriculture. Mrs B. You are mistaken in that opinion. It is true that it is more common to see merchants and manu- facturers accumulate large and rapid fortunes than farm- ers. They are a class who generally employ capital upon'a much larger scale, hence their riches make a greater show. Yet, upon the whole, trade and manu- factures do not yield greater profits than agriculture. Caroline. I cannot understand why the merchant and manufacturer should grow richer than the farmer, unless they make larger profits. Mr B. You must observe that though a farmer does not- so frequently and rapidly amass wealth as a mer- chant, neither is he so often ruined. The risks a man encounters in trade are much greater than in farming. The merchant is liable to severe losses arising from contingencies in .trade, such as war, changes of fashion, bad debts, v/hich scarcely affect the farmer ; he must therefore have a chance of making proportionally great- er profits. ' Caroline. That is to say, that the chances of gain must balance the chances of loss ? Mrs B. Yes; the merchant plays for larger stake. If therefore he be so skilful or so fortunate as to make more than his average share of gains, he will accumu- late wealth with greater rapidity than a farmer; but should either a deficiency of talents or of fortunate cir- cumstances occasion an uncommon share of losses, he' may become a bankrupt. Caroline. But, Mrs B. you should, on the other hand, consider that the farmer is exposed, to the risk 473. How does Mrs B. reply to her? 474. Why should a merchant make larger profits than a farmer ? 475. On what does a merchant's success depend ? 476. To what risks is the farmer exposed ? 140 ON Revenue. attending the uncertainty of the seasons, a cause which is continually operating, and over which we have no con- trol. Mrs B. Yet, in these climates, the losses occasioned by such causes are seldom attended with ruinous conse- quences ; for seasons which prove unfavorable to one kind of produce are often advantageous to another. And besides, the produce of agriculture consisting chiefly of the necessaries of life, the demand for it cannot well be diminished ; the price, therefore, will rise in proportion to the sc-arcity. Farmers, you know, are sometimes accused of making the greatest gains in a bad harvest ; though I do not believe that to be the case. We may then conclude that though agriculture, manu- factures, and trade, do upon the whole afford similar profits, these profits are amongst farmers more equally shared than amongst merchants and manufacturers, some of whom amass immense wealth whilst others be- come bankrupts. The rate of profits, therefore, upon any employment of capital is proportioned to the risks with which it is attended ; but if calculated during a sufficient period of time, and upon a sufficient number of instances to afford an average, all these different modes of employing capi- tal will be found to yield similar profits. It is thus that the distribution of capital to the several branches of agriculture, manufactures, and trade, pre- serve a due equilibrium, which, though it may be acci- dentally disturbed, cannot, whilst allowed to pursue its natural course, be permanently deranged. If you are well convinced of this, you will never wish to interfere with the natural distribution of capital. 477. AVhat does Mrs B. say of these lisks of the farmer ? 478. What security has the farmer against losses in this way, from the rise of provisions ? 479. How are the profits of agriculture shared among farmers, as to equality ? 480. When will all the different modes of employing capital, be found to yield similar pro- fits? ON REVENUE. 141 You must not, however, consider this general equal- ity of profits as being fixed and invariable, even in coun- tries where government does not interfere with the di- rection of capital. A variety of circumstances occasion a temporary derangement of it. The invention of any new branch of industry, or the improvement of an old one, will raise the profits of capital invested in it ; but no sooner is this discovered, than others, who have capital that can be diverted to the new employment, engage in this advantageous concern, and competition reduces the profits to their due proportion. A remarkably abundant harvest may occasionally raise the rale of agricultural profits, or a very bad season reduce them below their level. The opening of a trade with a new country, or the breaking out of a war which impedes foreign eom^ merce, will affect the profits of the merchant : but these accidents disturb the equal rate of profits, as the winds disturb the sea ; and when they cease, it returns to its natural level. CONVERSATION XII. ON REVENUE DERIVED FROM PROPERTY IN LAND. On rent. — High price of agricultural produce the effect, not the cause of rent. — Causes of rent ; 1 . The fer- tility of the earth ; 2. Diversity of soil and situation requiring different degrees of expense to raise simiz lar produce. — Origin of rent. — Rent increases posi' tively in a progressive country, and diminishes rela- tively. — High price of raw produce necessary to proportion the demand, to the supply. — Monopoly of land. — Monopoly defined. CAROLINE. I HAVE been reflecting much upon the subject of re- 481. Is this equality of profits fixed and invariable? 482, What circumstances cause variatios ? 142 REVENUE FROM LANDED PROPERTY. venue, Mrs B. ; but I cannot comprehend how farmers can afford to pay their rent if they do not make more than the usual profits of capital. I had imagined that they began by raising greater produce from the same capital than merchants or manufacturers, but that the deduction of their rent eventually reduced their profits below those of other branches of industry. Mrs B. You were right in the first part of your conjecture, but how did you account for the folly of farmers in choosing a mode of employing their capital which after payment of their rent yielded them less than the usual rate of profit ? Caroline. I believe that I did not consider that point. I had some vague idea of the superior securit}^ of landed property; and then I thought they might be influenced by the pleasures of a country life. Mrs B. Vague ideas will not enable us to trace inferences with accuracy, and to guard against them we should avoid the use of vague and indeterminate expressions. For instance — when you speak of the security of landed property being advantageous to a far- mer, you do not consider that in the capacity of farmer a man possesses no landed property ; he rents his farm ; \{ he purchases it, he is a landed proprietor as well as a farmer. It is not therefore the security of landed proper- ty which is beneficial to a farmer, but the security or small risk in the raising and disposing of his crops. A farmer when he reckons his profits, takes his rent into consideration ; he calculates to make so much by the produce of his farm as will enable him to pay his rent besides the usual profits of his capital ; he must expect therefore to sell his crops so as to afford that 483. What difficulty has Caroline suggested as to farmers paying their rent? 484. What distinction is made between a farmer and a landed proprietor ?— ^ — 485. W^hat is the principal security of the farmer against loss ? 486. What is said of the relative profit? produced by farmers ? REVENUE' FROM LANDED PROPERTY. 143 profit, otherwise he would not engage in the concern. Farmers then really produce more by the cultivation of land than the usual rate of profit ; but they are not great gainers by it, because the surplus is paid to the landlord in the form of rent. Caroline. So then they are obliged to sell their produce at a higher price than they would otherwise do, in order to pay their rent : and every poor laborer who eats bread contributes towards the maintenance of an idle landlord ! Mrs B. You may spare your censure, for rent does not increase the price of the produce of land. It is because agricultural produce sells for more than it costs to produce, that the farmer pays a rent. Rent is there- fore the effect and not the cause of the high price of agricultural produce. Caroline. That is very extraordinary ! If landed proprietors exact a rent for their farms, how can farmers afford to pay it, unless they sell their crops at a higher price for that purpose ? Mrs B. A landlord cannot exact what a tenant is not willing to give ; the contract between them is volun- tary on both sides. If the produce of a farm can he sold for such a price as will repay the farmer the usual rate of profit on the capital employed, and yet leave a surplus, farmers will be found who will willingly pay that surplus to the landlord for the use of his land. Caroline. But if the profits of agriculture are not the effect of rent, why are they not reduced by com- petition, and brought down to the usual rate of profit ? Why does not addittonal capital flow into that channel, 487. Are farmers enriched by these profits ? 488. Does Mrs B. suppose that rent increases the price of land ? 489. Why not ? 490. What does Mrs B. say of the contract between the landlord and the tenant? 491. What question does Caroline ask in rela- tion to the profits of agriculture ? 144 REVENUE FROM LANDED PROPERTY* and by increasing the supply of agricultural produce reduce its price ? Mrs B. In the first place, agriculture is not suscep- tible of an unlimited augmentation of supply, like manu- factures. If hats and shoes are scarce, and sell at extraordinary high prices, a greater number of men will set up in the hat and shoemaking business, and by increasing the quantity of those commodities reduce their price. But land being limited in extent, farmers can- not with equal facility increase the quantity of corn and cattle. It might however be done to a very consider- able extent by improvements in husbandry, and bring- ing new lands into cultivation. But, in the second place, to whatever extent this were accomplished, it would not have the effect of permanently diminishing the price of those commodities, which constitute the necessaries of life, because population would increase in the same pro- portion, and the additional quantity of subsistence would therefore be required to maintain the additional number of people ; so that there would remain (after allowing a short period for the increase of population) the same relative proportion between the supply and the demand of the necessaries of life, and consequently no perma- nent reduction of price would take place ; the neces- saries of life therefore differ in this respect from all other commodities ; if hats or shoes increase in plenty they fall in price, but the necessaries of life have the peculiar property of creating a demand in proportion to the augmentation of the supply. Caroline. But what is it that makes agricultural produce sell at so high a price as to afford a rent f If 492. Is agriculture susceptible of an unlimited augmentation ? 493. How is this illustrated ? 494. If agriculture were susceptible of great augmentation, what would be the consequence, so far as the price of the necessaries of life is considered ? 495. What peculiar property have the necessaries of life ? REVENUE FROM LANDED PROPERTY* l45 k is not rent th^t occasions tlie high prices, there must be some other cause for it. Mrs B. There are several circumstances which concur to raise and maintain the price of agricultural produce above its cost of production, and enable the farmer to pay rent. Its first source is what upon a superficial view would seem to have the effect of diminishing price; it is that invaluable quality with which Providence has blessed the earth, of bringing forth food in abundance; an abundance more than sufficient to maintain the people who cultivate it. For if those who occupy the land and raise the crops con- sume the whole of them, there would be no surplus to sell at any price to others ; and under such circum- stances it would be impossible that the cultivator of the soil should pay rent. But tlie natural fertility of the earth ^is such as to render almost all soils capable of yielding some surplus produce which remains after the farmer has paid all the expenses of cultivation, including the profits of his capital. It is from this fund that he pays his rent. The quantity of this surplus produce varies extremely, according to the degree of fertility of the soil, and enables a farmer to pay a higher or lower rent. Caroline. But, Mrs B., in countries newly settled, where the greatest choice of fertile land is to be had, and where we are told that the harvests are so produc- tive, as in many parts of America, no rent is paid. Mrs B. Wherever land is so' plenriful that it may be cultivated by any one who takes possession of it, of course no man will pay a rent. But the cultivator nevertheless makes such a surplus produce as would enable him to pay rent. The only difference is, that 496. What is said of the fertility of the earth ? 497. How does this tend to raise the price of agricultural products ? 498, What objection does Caroline offer to this ? 499. What is the difference whether the farmer pay rent or not ? 13 iid REVENUE FBOM LANDED PROPERTY, instead of transferring it to a landlord, he keeps the whole himself. This is the reason that such rapid fortunes are made by new settlers in a fine climate and a fertile soil. It is the fertility of the soil then which enables the cultivator to pay rent ; but we must look for another cause which induces him to do so. Caroline. You speak as if it were left to his option, Mrs B. ; and if that were the case, I do not think that rent would ever be paid. Mrs B. We shall see presently how far you are right. — When a newly settled country increases in capi- tal and in population, fresh land is taken into cultivation, and after all the most fertile districts are occupied, soil of an inferior quality, or less advantageously situated, will be brought under tillage. Now, corn, or any agri- cultural produce, raised upon less fertile soils, will stand the farmer in a greater expense, more labor, more manure ; and more attention will be required to raise a less abundant crop, and the cost of its production will upon the whole be greater. Caroline. The original settlers who had the first choice of the land have then an advantage over the oth- ers ; they will make the greatest profits, and accumulate fortunes soonest. For the several crops, when brought to market, if of the same quality, will sell for the same price, whatever difference there may have been in the cost of their production. Nay, it is even likely that the crops which cost the least in their production, may fetch the highest price ; for the most fertile soil will, in all probability, yield the finest produce. Mrs B. The first settlers have also another advan- tage ; they will have selected the most favorable situa- 500. What will be the state of agriculture in a newly settled country, as capital and population increase ? 501. What advan- tage in agriculture have the original settlers of a country over others ? REVENUE FROM LANDED PROPERTY. 147 tions as well as the most fruitful soil ; their fields will flourish on the borders of a navigable river, or surround the town which they have built ; affording them a re- source both for a home and a foreign market. Whilst those who cultivate land in more remote parts must add all the charges of conveyance to the market where the produce is sold, or the port from whence it is exported. Let us suppose that the first settlers make 30 per cent, whilst the latter make only 20 per cent of their capital. With the double advantage of the most fertile soil, and free from rent, it is no wonder if the first settlers should rapidly amass large capitals, and it is not improbable that towards the decline of life they may be desirous of retiring from the fatigues of an active life, yet without wishing to sell their property. Under these circum- stances, do you not think that they would readily find new settlers, who, rather than undertake to cultivate re- mote districts, of perhaps a still inferior soil, would pay an annual sum for the use of their land, and become their tenants ? Caroline. That is very true : it would answer to the new comers to give the 10 per cent which the first set- tlers make above the others, in consequence of having the most eligible land. Mrs B. This, then, is the origin of rent. If the tenant pay 10 per cent, which is equal to the one third of what the proprietor made by cultivation, his profits will be reduced to 20 per cent, and will consequently be upon a level with those of the second setders, who remain both proprietors and farmers ; and thus the pro- fits of the farmer are reduced from 30 to 20 per cent. Caroline. And those of other branches of industry 502. What advantage of situation as well as of choice in soil have the first settlers of a country ? 503. What illustration is given of this ? 504. What supposition does Mrs B. make of agriculturists who become rich ? 505. What comparison is made between farmers and those who are land proprietors and farmers too .' 148 REVENUE FROM LANDED PROPERTT. Will, I suppose, be reduced to the same rate, in order to maintain the level of equality of profits? Mrs B. Of course. But when the profits of agri- culture are 20 per cent, accumulation will still proceed with rapidity ; and as the country grows rich and popu- lous, the demand for corn will increase, and fresh land will be required to be brought into cultivation. The new land being either more remote, or of an inferior quality, will be cultivated under still greater disadvan- tages, and will not yield, let us suppose, above 10 per cent profits. As soon as this happens, the second set- tlers will be able to obtain a rent for their land. For it will be as advantageous to a farmer to pay 10 per cent whilst he makes 20, as to give nothing for the use of the land when he makes only 10 per cent of his capital. The general profits of capital are thus again reduced, from 25 to 10 per cent. Caroline, But do not those who first rented land continue making 20 per cent by cultivating it? Mrs B. Only as long as their leases last ; for as soon as their landlords find that the profits of capital are reduced to 10 per cent, they will not allow their tenants to make more, but require all the surplus profits above that sum to be paid them in the form of rent. Thus every fresh portion of, land that is taken in cultivation, either of inferior quality or less favorably situated, pro- duces the double effect of raising rents and reducing the profits of capital. Caj'oline. But if profits continue to decrease with 506. When the profits on agriculture are 20 per cent, what is said of the accumulation of wealth ? 507. How is it supposed that the profits will be reduced from 20 to 10 per cent ? 508. Under what circumstances may the farmer as well pay rent as to cultivate land without rent? 509. Do those, who first rented land, in the case supposed, continue making their 20 per cent ? • 510. What will be the consequence when a fresh supply of land is taken into cultivation ? KEVENUE FROM LANDED PROPERTY. 149 every fresh portion of land that is ploughed up, they will, in the course of time, be reduced to nothing ; and then the progress both of cultivation and of population must stop, else there will be a scarcity of food. Mrs B, As soon as that scarcity is felt, corn will rise in price, and this by increasing the profits of the farmer will induce him again to take new land into cul- tivation. This occurs more or less at every progressive step made in agriculture, and prevents the profits from being reduced to nothing. Every time that new land is brought into culture, the price of raw produce, and con- sequently the profits of farming, must have previously risen. No new land can be cultivated till capital has accumulated to maintain and employ a greater number of laborers. And no new land will be cultivated till population has so far increased as to raise the price of corn, and make it answer to the agricuhurist to break up new land for tillage. Caroline. And when the crops from the new land come to market, I suppose corn will again be reduced in price ? Mrs B. Yes ; or what comes to the same, wages will rise : but the fall from this cause will only be tem- porary ; for when higher wages enable a laborer to rear a greater number of children, population will, in the course of time, again outstrip the progress of capital, and the same consequences will again recur. Thus agricultural produce and population alternately take the lead. But independently of the temporary rise and fall in the price of corn which they occasion, every fresh portion of land, that is taken into cultivation, diminishes the profits of capital, and raises the rent of land, and the 511. When will corn rise in price ? 512. When can new land be cultivated ? 513. When will it be cultivated ? 514. What will be the consequence when crops from the new lands come to market ? 515. How are the profits of capital affected by the cultivation of new lands ? IS* 150 REVENUE FROM LANDED PROPERTY. price of raw produce ; for in proportion as recourse must be had to land of an inferior quality to provide food for the increasing population, the expense of pro- ducing it is increased. For every quartern of corn, and loaf of bread, whether raised on the finest soils at the least cost of production, or yielded by land the most unfavorably circumstanced, will fetch the same price in the market. Caroline. It is curious enough to think that of two similar loaves of bread brought on table, the cost of pro- duction of one of them may perhaps have been nearly twice as much as that of the other; and that one may have paid three pence, whilst the other has only paid a halfpenny towards the rent. The price of rav^ produce in general is then regulated by the expense of producing it on soils of the worst qual- ity, or the most disadvantageously situated? ^ Mrs B. Yes; provided you include in the cost of production the profits of the farmer, for though the worst soils may not afford a rent, they must bring the cultiva- tor a profit ; and if the produce of such land ceased to aiford him profits, it would be thrown out of cultivation. Caroline, The high price of agricultural produce is then owing to the necessity of raising part of it at an ad- ditional expense on inferior soils. Mrs B. Yes; for this has at the same time the effect of raising the rents of the land of superior quality. We may, therefore, define rent to be that part of the surplus produce of the land which remains after all the expenses of cultivation are deducted. Caroline. Under such disadvantages I only wonder that the price of corn, and of rav.^ produce, should not be higher than il is. 516. What does Caroline mention as a curious fact? 517. By what is the price of raw produce regulated ? 518. To what is the high price of agricultural produce owing? 519. What definition is given of rent? REVENUE FROM LANDED PROPERTY. 151 Mrs B. The natural rise in the price of raw pro- duce, owing to the cultivation of inferior soils, is in a great measure counterbalanced by other circumstance ' Every year improvements are made in agriculture, which increase the produce without proportionally increasing the expenses of cultivation, and enable corn to be brought cheaper to market. Besides, though land of an inferior quality is at first cultivated at an additional expense, it improves by tillage, so that the cost of production grad- ually diminishes, and by draining, manuring, and other meliorating processes of agriculture, an ungrateful soil is in the course of time not unfrequently rendered fertile. Disadvantages of situation are also remedied with the progress of society, the neighborhood increases in popula- tion, new towns are built and new markets opened ; if therefore it were not indispensably necessary to continue bringing fresh land into cultivation to provide for an ever growing population, corn would be produced at less ex- pense, and would fall instead of rising in price. Caroline. But if all the surplus produce which remains, after the expenses of production are deducted, go to the landlord in the form of rent, improvements in agriculture will not lower the price of raw produce, but will increase the rent. Mrs B. I beg your pardon ; you have just observed that the price of raw produce in general is regulated by the expense of producing it on soils of the worst quality, and the most disadvantageously situated ; therefore, the more we diminish the expet^se of raising it on such soils, and the more we can remedy the disadvantages of situa- 520. What consequences result' from improvements in agricul- ture ? 521. What is said of poor soils, when improved by culti- vation ? 522. Yiow are disadvantages of situation remedied ? 523. Vvhat does Caroline say of the effect on the price of raw pro- duce from improvements in agriculture? 524. What reply does Mrs B. make to this .' 152 REVENUE FROM LANDED PROPERTY. tion, the lower we shall fix the standard price of raw produce. The cost of production of a loaf of bread raised on land of the lowest description is now one shil- ling ; if by improvements in agricultural labor we could reduce it to tenpence, bread in general would sell at that price. Caroline. All this is perfectly clear ; but I am not at all pleased to learn that as a country advances in the accumulation of wealth, rent, the portion of the idle landlord, augments, while profits, the proportion of the industrious farmer, diminishes. Mrs B. The idle landlords, of whom you complain, neither lower the profits of capital nor raise the price of agricultural produce. If you understand what I have said on rents, you must be aware that the reduction of profits is occasioned by the diversity of soils successively brought into cultivation, and that the natural high price of agricultural produce is owing to the surplus which remains after all the expenses of cultivation are defrayed. Were rents, therefore, to be abolished, the only effect produced would be to enable the farmers to live like gentlemen, as they would be enriched by that share of the produce of their farms which before fell to the lot of the landlord. Caroline. And would not that be a very desirable change? Is it not better that those who labor should grow rich, rather than those who live upon the fruits of the labor of others ? Mrs B. The yeomanry are a class of farmers who cultivate their own property ; and if you vvish to encour- age their industry you must a low them to reap the full 525. What is said of the price of bread in illustration of this ? 526. V/ith what does Caroline say she is not pleased ? 527. Does Mrs B. think th3 landlords to blame ? 528. By, what is the reduction of profits occasioned ? 529. What would be the con- sequence if rents were abolished ? 530. What question is pro- posed by Caroline in relation to abolition of rents ? 531, Who are the yeomanry. REVENUE FROM LANDED PROPERTY. 153 r sward of their labors, — to accumulate wealth, and when wealthy to indulge in ease and repose, and to let their land to others, they prefer this plan to that of cultivating it themselves. Were landed proprietors prohibited from letting their land when rich, they would nevertheless become idle, and would neglect the farming business, which, being left to the care of servants, the cultivation would suffer, and the country, as well as the proprietor, be injured by the diminution of produce. In civilized countries, landed property has been obtained by industry, or by wealth, the fruits of industry, and should be se- cured in its full value, not only to the individual who has earned it but to his heirs for ever. Besides though it is true that rents rise as a country advances in prosperity, this rise is not in proportion to the increasing produce of the soil. Rent formerly used to bring in to the landlord one third of the produce of his land ; it has since fallen to one fourth, and has lately been estimated as low as one fifth; so that the landlord, whilst he receives a higher rent, has a smaller share of the whole produce. Caroline. That is some consolation. But could no means be devised to abolish rents, and compel farmers to reduce in consequence the price of their produce, so that neither the landlord nor the farmer, but the pub- lic, should enjoy the benefit of the surplus produce, which constitutes rent.'' Surely this would reduce the price of provisions, and of all agricultural produce. Mrs B, Admitting that it did so, what advantages do you expect would result from the reduction of prices ? When a measure of compulsion, especially one so com"' 532. How are they to be encouraged to industry ? 533. What would be the consequence if landed proprietors on becoming rich, were prohibited from letting their lands ? 534. How is landed property said to be acquired ? 535. What is said of the ratio which the rise of rents bears to the value of the whole produce I ^ — 536. How does Caroline propose to reduce the price of pro.. vision for the tteijefit of the public? 537. How does Mrsi 15, reply to it ? 154 REVENUE FROM LANDED PROPERTY. plicated, is proposed, I am always suspicious of its con- sequences. Caroline, But the good that would result is so evi- dent; if food were cheaper, people would be able to consumf^ more, and the poor would have plenty. Mrs B. How so ; would the land be more produc- tive in consequence of the abolition of rent? and if more should not be produced, how could the people consume more f An increased consumption without an increased supply will, as we have remarked on a former occasion, lead to a famine. The price of a quartern loaf is now one shilling ; I conclude therefore, that at that price the consumption of bread will be so proportioned to the quan- tity wanted, that the stock of wheat will last till the next harvest. The adoption of your compulsory measures might reduce the price of a quartern loaf to ninepence, and every poor family being thus enabled to increase their consumption of bread, the stock of wheat would not last out till the ensuing harvest. Then the following year, instead of raising more corn to make up the de- ficiency, the poorest land which yields no rent, and but just affords the profits of capital at the present price of raw produce, would, by such a diminution of price, be thrown out of cultivation ; and the produce of the coun- try would thus be considerably diminished. Caroline. Very true. I did not foresee that conse- quence. And a scarcity would perhaps raise the price of bread higher than it was before. Mrs B. How much would it be necessary for bread to rise in price in order to make the corn last till the next crops came in ? Caroline, To the price at which it now sells, one shilling. 538. What would be the consequence of an increased consump- tion without an increased supply of provisions ? 539. How would Caroline's scheme affect the price of a loaf of bread, and what would be the consequence .' — ^— ?540, What would follow the next year I HE VENUE FROM LANDED PROPERTY. 155 Mrs B, We return then to the rent-price, though no rent is paid,: you see, therefore, the fallacy of your mea- sures. The high price, of which you so bitterly com- plain, is the price necessary to proportion the consump- tion to the supply, so as to make it last till the ensuing harvest. Caroline. So far from being mortified, Mrs B. I am delighted with my disappointment, as it has been the means of convincing me that if the poor are obliged to pay a high price for the necessaries of life, it is for their own benefit, as well as that of the mighty lords of the land ; since it ensures them a uniform supply throughout the year. And 1 the more willingly acquit rent of the accusation of high prices, since I find that there are two other sources from whence that evil may spring. J\Irs B, I think you may add, that as these high prices are necessary to regulate the consumption and prevent scarcity, or even famine, you no longer consider them as an evil. An inquiry into the effects of human laws and institutions often discovers error; but whatever flows in the course of nature springs from a pure source, and the more accurately we examine it, the more admi- ration we shall feel for its author. Thus though rent cannot in itself be considered as an evil, since we have traced it to the natural fertility of the earth, and its diversity of soil ; yet every artificial measure which tends to raise the price of agricultural produce, so as to enable the farmer to pay a higher rent, is certainly injurious. Therefore restrictions on the free importation of corn, or any other species of raw pro- duce, which raises the price of those articles at home, is taking an additional sum out-of the pockets of the con- 541. For what does Mrs. B. say the high price of bread is neces- sary ? 542. Does she think the high price of bread an evil ? 543. To what is rent to be traced ? 544. What does Mrs B. «ay is certainly injurious in relation to the price of agricultural pro- ducts? 545. What is said of restrictions on the importation of corn into a country ? 1 56 REVENUE FROM LANDED PROPERTY* sumer to put into that of the landlord. For rent may be considered as a necessary tax which the consumer pays to the landlord ; the farmer is merely the vehicle of conveyance from the one to the other. Caroline. And has such a measure immediately the effect of raising rents ? Mrs B. Not until the leases are expired ; during their existence the farmer enjoys all the adventitious gains or suffers all the losses that may occur, but when his lease is renewed it must correspond with the rate of profit, and rise or fall in proportion to the gains which the farmer expects to make, so as to give the whole of the surplus produce to the landlord, and leave only the usual profits of capital to the farmer. It may happen, indeed, either from ignorance or carelessness, and some- times from motives of humanity, that the landlord does not exact all that the farmer can afford to pay ; but these are accidental circumstances, and the whole of the surplus produce is considered as the fair and usual rent. The contract between the farmer and the landlord is naturally in favor of the latter, for this reason : every man possessed of a litde capital is capable of engaging in a farm, and as the land to be let is limited in extent, there are always more men desirous of renting farms than there are farms to be let. The landholders may, therefore, be considered as exercising a species of mono- poly towards farmers, being possessed of a commodity the demand for which exceeds the supply ; competition to obtain it therefore, enables the landholder to exact the highest rent which the farmer can afford to pay ; that is, 546. For how long time does the farmer enjoy the adventi- tious gains, or suffer all the losses which occur, from such restric- tions ? 547. What is considered the fair and usual rent of lands ? 548. Why is the contract between the farmer and the landlord usually in favor of the latter ? 549. What monopoly do landholders exercise towards the farmers ? REVENUE FROM LANDED PROPERTY. ] 57 to relinquish the whole of the surplus produce of agricul- ture to the landlord. Caroline, 1 do not exactly know the meaning of the term monopoly ; but I had always understood it to be a very unjust and improper thing. Mrs B. Monopoly is the exclusive privilege of any person, or set of persons, to possess or sell any particular commodity. When sanctioned by government it is gen- erally prejudicial, because it prevents the free compe- tition of other sellers, which would tend to the reduction of the price of the commodity in question. Thus if any set of men were exclusively privileged to deal in tea or coffee, there being no rival traders to enter into compe- tition with and -undersell them, they can raise the price of those articles higher than will afford the usual profits, and the extra profit is unfairly taken from the consumers of tea and sugar. Granting a monopoly is therefore a very improper measure of government, excepting in cases in which it can be proved that the restrictions imposed are of general benefit to the community. Caroline. I cannot conceive any case in which gen- eral good can result from giving one set of men such an advantage over the rest of the community. Mrs B. To grant a patent for a useful discovery or invention is authorizing a temporary monopoly, which is decidedly advantageous, from the encouragement it affords to ingenuity, investigation, and perseverance ; qualities which are highly beneficial to the progress of industry. But I wonder that you should hesitate respect- ing the advantages derived from the monopoly of land; for this monopoly simply means, that the land shall not 550. What is to be understood by the term monopoly? 551. When is it chiefly detrimental ? 552. What case of monopoly is mentioned in illustration ? 553. In what cases may government with propriety grant a monopoly ? 554. What is said of patents for useful discoveries } 555. What is to be understood by monopoly in lands ? 14 158 REVENUE FROM CULTIVATION OF LAND. belong in common to all mankind, as nature designed it, but that it shall be exclusively possessed, sold, or disposed of by a particular set of men ; — in short, it is nothing more than the institution of property in land, the advanta- ges of which are so unquestionable. It is perhaps the only monopoly of a permanent nature which the law ought to sanction. If the monopoly extended to the pro- duce of the earth, it would then indeed partake of the evil effect of monopolies in general — excess of price, owing to deficiency of competition. Caroline. But can land be a monopoly, without the price of its produce being affected by it ? Mrs B. Yes : because the produce of the land depends not so much upon the quantity of land as upon the quantity of capital employed on it, and this is com- paratively unlimited and perfectly free from monopoly. Property in land, is therefore a monopoly of a very pecu- liar nature, confined entirely to one of the instruments of production ; and so far is it from raising the price of the fruits of the earth, that it is absolutely necessary both to tbeir production and to their preservation. CONVERSATION XIII. ON REVENUE DERIVED FROM THE CULTIVATION OF LAND. Two capitals employed on land. — Tivo revenues derived from it. — Of the capital and profits of the farmer. — Of the duration and terms of leases. Of tythes. — Extract from Paley. — Of proprietors farming their own estates. — Extract from Toumsend^s travels. — Farms held in administration. — Advantage of an 556. Why would excess of price result from monopoly in the price of provisions? 557. Why can there be a monopoly in land without raising the price of its productions ? REVENUE FROM CULTIVATION OF LAND. 169 opulent tenantry. — Metayer system of farming. — Small landed properties. — Extract from Arthur Young's travels. — Dairy establishments in Switzer- land. — Small farms. — Size of farms in Belgium and Tuscany. — Of min es . — Of fisheries. CAROLINE. From what you said in our last conversation I per- ceive that agriculture yields two distinct incomes ; one to the proprietor, the other to the cuhivator of the land. Mrs B. And it employs also two capitals to produce those incomes ; the one to purchase, the other to cultivate the land. A man who lays out money in the purchase of land becomes a landed proprietor, and obtains a rev- enue in tiie form of rent. He who lays out capital in the cultivation of land, becomes a farmer, and obtains a revenue in the form of produce. Caroline. What do you mean by the capital of the farmer, Mrs B.? I thought that the land vvustl)e capital from which he derived his profits. Mrs B. You mistake ; the land is the capital of its proprietor, and as such yields him a revenue ; whatever the farmer obtains from it, is derived from cultivation ; that is to say, from the labor and expense he bestows on the soil. The land is the machine with which he fabricates agricultural produce, and the income he derives from it is the revenue of the capital employed in working this machine. A farmer requires capital to pay his laborers, and to purchase his farming-stock, such as cattle, wag- ons, ploughs, &c. It is the bare land and the farming buildings which he rents. The crops which are upon the ground when the agreement is niade are paid for independently, and become the property of the farmer. 558. What division is there in the income from agriculture ? 559. What division is there in the capital employed in agriculture ^ 560. For what does the farmer need capital.' 160 REVENUE FROM CULTIVATION OF LAND. Unless therefore he has a capital to defray these ex- penses, he cannot take the lease of a farm. Caroline. I always supposed that the produce of a farm was sufficient to defray its expenses 3 nor can I understand how profits are to be derived from a farm, if the cultivation and rent cost more than its produce will repay. Mrs B. It is not so. The capital of the farmer is employed as the means of cultivating his farm : and when at the end of the year, after paying his rent, his labor- ers, and keeping, his stock in j-epair, he finds himself in possession not only of his original capital, but also of a surplus or profit; it is a proof that the farm produces more than the cost of its rent and cultivation. The case is similar in all employment of capital. The manufac- turer who lays it out in the purchase of raw materials, and in paying the labor which is afterwards expended on them ; or the merchant whose capital is employed in the purchase of goods for sale, could not carry on their respective occupations without first laying out their cap- ital : but it is returned to them, together with the profits that have accrued by its employment. Each of these occupations brings in more than is laid out, but none of them could be carried on without a capital. Caroline. Oh yes ; I recollect the laborer produces for his employer more than he receives from him as wages, and this surplus is the source of his master's profit ; but if the farmer had not wherewithal to pay his laborers' wages, he could norsetthem to work. It is then upon the capital which the farmer employs on his land, that he calculates his profits ^ Mrs B. Yes. Let us suppose that a farmer employs 561. Why must a farmer have capital when he takes the lease of a farm ? 562. What is found to be the condition of the farmer at the end of the year? 563. Why is capital needed by the manu- facturer? 564. Why is it needed by the merchant ? 565. Upon what does the farmer calculate to receive his profits ? REVENUE FROM CULTIVATION OF LAND. 161 a capital of the value of 3000/. on his farm ; he may, possibly, after deducting the rent and the expenses of cultivation, make ten per cent, or 300/. profit. Caroline. That is to say, that at the end of the year he would find himself 300/. richer than he was before.^ Mrs B. Provided he had spent none of his gains during the course of the year. But as his family are commonly maintained by the produce of the farm, he will at the end of the year be actually richer or poorer according to the proportion which his domestic expenses have borne to his gains. But these cannot be con- sidered as a deduction from his profits, as the expense of the maintenance of his family must fall upon his reve- nue in whatever way it is obtained. Caroline. And what is the usual rent paid for such a farm ? Mrs B. It depends in a great measure upon the extent and condition of the land. A considerable farm, in a good state of cultivation, and possessing the advan- tage of a fertile soil, may not require a capital of more than 3000/. to carry it on ; whilst a farm of only half that extent, if in a bad condition, and with an ungrateful soil, may require as large a capital to be laid out on it. But a very different rent would be paid for these two farms. Caroline. Of course the large productive farm must pay a higher rent than the smaller ill-conditioned one ? Mrs B. And a difference of rent will equalize the profits which a farmer would derive from employing the same quantity of capital on each of these farms. Tak- ing an average of the state of culture, a farm which 566. What case is mentioned in illustration of this ? 567. Will then the farmer supposed with his 300Z. of annual profit be that sum richer at the end of the year than he was at the beginning of it ? 568. On what does the amount of capital depend needed in the cultivation of a farm ? 569. What is stated to be the average rent of farms ? 14 * 162 REVENUE FROM CULTIVATION OF LAND. requires 4000Z. capital may pay a rent of about 200/. the sliare of the farmer being nearly half as much again as that of the landlord, Caroline, You said in our last conversation, that the rent of land had lately been estimated as low as one fifth of the produce. A farm, such as you have de- scribed, would therefore yield produce worth 1000/., in which case the profits of the farmer would be above three times as great as those of the landlord. Mrs B. You forget that from the total produce must be deducted not only the rent, but also the expen- ses of cultivation ; these are generally estimated at one half of the produce, after deducting the rent ; there will remain therefore 400/. which is 10 per cent profit on the 4000/. capital employed on the farm. If from this sum the farmer saves 50/. he may lay it out in the im- provement of his land, which will render the produce more plentiful the following year ; an advantage of which be will derive the full benefit, as his rent will remain the same to the end of the lease. Caroline. But on granting a new lease, the propri- etor, I suppose would expect a higher rent for a farm that had been thus improved ? Mrs B. No doubt I it is therefore desirable that land should not be let on short leases, because farmers would have no inducement to improve the condition of their land without the prospect of reaping the benefit of it for some years to come. Caroline. But towards the end of the lease, this objection would remain in force .^ 570. Under what mistake is Caroline as to the profits of the far- mer compared with the profits of the landlord? 571, What is computed to be the average expense of the cultivation of farms ? — 572. How may a farmer advantageously expend what of his profits remain after paying for the support of his family ? 573. On what account is it desirable that farms be rented on long leases ? REVENUE FROM CULTIVATION OE LAND. 163 Mi's B. True ; but to prevent this farmers generally obtain "a renewal of their leases sometime before they are elasped. Besides it would be contrary to the inter- est of the landlord to deal hardly with his tenants on such occasions, as it would discourage them from im- proving their farms ; an advantage in which the landlord must eventually partake. In Staffordshire, Nottinghamshire, and some other parts of the country, it is not customary to grant leases; the tenants hold their farms at the will of the landlord. There is, however, a sort of conventional agreement between the parties, that except in cases of misconduct, the farmer shall not be removed, nor have his rent raised daring a certain period. Some people are of opinion that this mode of letting land is preferable to granting a lease ; because they say the industry of the farmer is stimulated both by hope and fear; the hope of profit from his labors, and the fear of being turned out should he neg- lect the improvement of his farm : but in arguing thus they do not consider that this fear must operate in two ways, for in proportion to the improvement which the farmer makes, so is the temptation to the landlord, if he be needy or illiberal, to turn him out, or to exact an increase of rent. In short, there can be no greater check to industry than the insecurity of the profits it pro- duces ; and how can a farmer feel his interest secure whilst he is dependent on the will of his landlord ? Caroline. Besides, though a farmer may repose great confidence in the character of the individual whose land he holds, the uncertainty of life renders him depend- ent also upon his heir, and this may perhaps be some 574. Caroline supposes that if the farmer spends his surplus income upon the farm, when the lease expires, the landlord will raise the rent — how is this to be guarded against? 575. In what places is it customary not to grant leases ? 576. How do tenants there hold their farms ? 577. What are the advantages, and what are the disadvantages of this mode of letting farms ? 578. What is the greatest check to industry ? 579. What fur- ther objection does Caroline offer to this mode of letting farms? 164 REVENUE FROM CULTIVATION OF LAND. wild extravagant youth, who without regard to his ulti- mate interest, will exact the highest rents from his ten- ants. Mrs B. Security is, no doubt, the most important point for the encouragement of industry; and the great- est, indeed the only encouragement which government can give to agriculture, is to secure to the farmer all the power over the soil that is necessary for its perfect cultiva- tion, and to ensure him the profits of every improvement he may make. I will read you a passage from Paley on this subject. " The principal expedient by which laws can promote the encouragem.ent of agriculture, is to adjust the laws of property as nearly as possible by the following rules ; 1st, To give to the occupier all the power over the soil which is necessary for its perfect cultivation. 2dly, To assign the whole profit of every improvement to the per- sons by wiiom it is carried on. Now it is indifferent to the public in whose hand this power of the land resides, if it be rightly used; it matters not to whom the land belongs if it be well cultivated. "Agriculture is discoui'aged by every constitution of landed property which lets in those who have no con- cern in the improvement to a participation of the profit. This objection is applicable to all such customs of manors as subject the proprietor, upon the death of the lord or tenant, or the alienation of the estate, to a fine apportion- ed to tlie improved value of the land. But of all institu- tions which are in this way adverse to cultivation and improvement, none is so noxious as that of tythes. When years [)erhaps of care and toil have matured an improvement, wb.en the husbandman sees his new crops ripening to his industry, the moment he is ready to put 580. What is the greatest encouragement government can give to agricuhure ? 581. What rules does Paley give on this sub- ject ? 582. What does he say is the only thing ')f importance in agriculture ? 5S3. By what"^ constitutions is agriculture dis- couraged ? 584. What does he say of tythes ? REVENUE FROM CULTIVATION OF LAND. 165 his sickle to the grain, he finds himself compelled to divide his harvest with a stranger. Tythes are a tax not only upon industry, which feeds mankind, but upon that species of exertion which it is the aim of all wise laws to cherish and promote." Caroline. It is indeed much to be regretted that a provision for the clergy should not be raised in some other manner- Mrs B. Since all right of property, is derived from legal institutions, the clergy have an equal right to their tythes as the landed proprietors to their estates; yet so severely does this law fall upon the cultivators of land, that 1 believe few of the clergy venture to levy tythes to the extent of their right ; they cannot do it without incur- ring the ill will and opposition of their parishioners. Hovs^ defective then must that institution be, which dis- possesses one man of the fruits of his industry, whilst it will not allow another to take, without exciting vexation and disturbance, that which the law has assigned him as his property. Tythes are a portion of the surplus produce of agri- culture, destined for the maintenance of the clergy. They should be considered, therefore, as a portion of rent, for if the farmer did not pay tythes to the rector of his parish, his rent would be raised proportionally ; and indeed lands tythe free always yield a higher rent. Would it not be better then, that tythes should be paid by the farmer to his landlord in the form of rent, and that they should be through him transmitted to the clergyman ; the tythes would then bear a proportion to the rent, and not the annual produce of the land f By 585. What is said of the right of the English clergy to their tythes ? 586. Why do they not levy them to the extent of their rights ? 587. What is mentioned as a defect of such a government ? 588. What are tythes ? 589. Andhow^ may they be consi- dered as to rent ?- 590. What better mode of paying the clergy than the one now existing is mentioned ? 166 REVENUE FBOM CULTIVATION OF LAND. such a regulation the clergy would know on what income to depend, and the farmer would not have the vexation of seeing any part of the fruits of his labor gathered by another. It would destroy that source of ill will and contention between the clergy and their parishioners, and that opposition of interests which are so prejudicial both to religion and morals; and it would remove that con- stant check on industry, which is so severely felt in the present mode of levying tythes. Caroline. Such an alteration would certainly be ad- vantageous to all parties. Since it is so desirable for the cultivator to have unlim- ited power over the soil, I should have thought that it would have been particularly advantageous for landed proprietors to cultivate their own estates, instead of letting them to farmers ; and yet it is a common observ- ation that gentlemen make the least profits by agriculture. This is the more unaccountable, because, being both landlord and farmer, the proprietor must receive the two incomes comprised in the produce of the land, rent and profit. , Mrs B. But recollect that he also employs two cap- itals, in order to make the two incomes ; the one to pur- chase the land, the other to cultivate it. The reason why gentlemen who cultivate their own estates do not usually make profits equal to those of a common farmer, is either because they do not understand the business so well, or that they do not bestow the same care and atten- tion upon it. The common farmer usually devotes the whole of his time to his farm, either in the capacity of bailiff, or that of laborer; while the gendeman farmer never earns the wages of a laborer, and generally leaves 591. What woulAbethe advantage of such an alteration ? 592. V/hat is said of the profits of the landlord who cultivates his own farm? 593. Why does he not make equal profits with the farmer ? REVENUE FROM CULTIVATION OF LAND. 167 the important office of bailiff to be performed by a sub- stitute ; therefore were the gentleman to raise as plentiful crops as the farmer, they would be produced at a more considerable expense, and his gains would be proportion- ally diminished. •As to the value of the rent, it must be reckoned independently, as he receives it in his quality oflandlord. Caroline' It would then probably increase the agri- cultural produce of the country, if gentlemen were always to let their land instead of farming it themselves. Mrs B, On the contrary, I believe it to be very desirable that some few gentlemen, in different parts of the country, should cuhivate their own estates. Being generally men of greater information than common far- mers, they are more willing to make experiments, and adopt any new mode in the various agricultural processes which may appear eligible. Besides the land is frequent- ly better improved in the hands of the proprietor than in those of a laboring farmer; as the proprietor has usually the advantage of a larger capital to lay out on his land, and then he is DOt restrained by the apprehension that his rent will be ultimately raised in proportion to the additional value which he gives to the land. Townsend, in his travels in Spain, has made some very judicious observations on English gentlemen far- mers. " By residing," he says, " on their own estates, they not only spend money among their tenants which by its circulation sets every thing in motion, and becomes pro- ductive of xiew wealth, but their amusement is to make improvements. By planting, draining, and breaking up 594. Is it not chiefly because they do not labor themselves ? 595. What does Caroline think would increase agricultural pro- duce ? 596. What does Mrs B. consider would be better than to have lands entirely rented? 597. What reason is given by Mrs B. why it would be better for a few gentlemen in different parts of the country to cultivate their own farms ? 598. What travel- ler is quoted on this subject? 168 REVENUE FROM CULTIVATION OF LAND. lands v^^hich would have remained unprofitable, they try new experiments, vi^hich their tenants could not afford, and which, if successful, are soon adopted by their neighbors. They introduce the best breed of catde, the best implements of husbandry, and#the best mode of agriculture ; they excite emulation, they promote the mending of the roads, and secure good police in the vil- lages around them. Being present, they prevent their tenants from being plundered by their stewards. They encourage those who are sober, diligent, and skilful; and they get rid of those who would impoverish their estate. Their farmers, too, finding a ready market for the produce of the soil, become rich, increase their stock, and by their growing wealth make the land more produc- tive than it was before." Caroline. You have enumerated so many advanta- ges on the opposite side of the question, that I begin to think that it would be more beneficial to the country that all landed proprietors should cultivate their own estates ; for though they might not be great gainers by it them- selves, yet the country would derive all the advantages from the improvements of the soil, and the introduction of scientific agriculture. Mrs B. A few gentleman farmers in each country will be sufiScient for the latter purpose. Were it com- mon for proprietors to farm their own estates, I am con- vinced that is would be extremely injurious to agricultural produce; for no command of capital, no scientific know- ledge, can, in a general point of view, compensate for the keen and vigilant eye of the industrious farmer, who sees that everything is turned to the best account. Caroline. J should suggest as a medium between 599. What are his remarks ? 600, What reply does Caroline make to the remarks of Townsend ? 601. What would be the consequence if it were common for proprietors to farm their own es- tates ? 602. Why would it be hurtful ? REVENUE FROM CULTIVATION OF LAND. 169 these two modes, that a landed proprietor should nei- ther farm bis estate, nor let it, but employ an agent to cultivate it for him, whose salary should be proportioned to the produce which he raises on the land. Mrs B, Such 1 believe was the species of tenure by which farms were held by the vassals of the nobles when they were first emancipated from slavery, and that mili- tary services were no longer, as in feudal times, consi- dered as a sufficient remuneration for the occupancy of land. To give the cultivator any interest in the pro- duce he raises acts certainly as a spur to his industry; but it is one much less powerful than the security and in- dependence of the leasehold fai-mer, who after paying a stipulated rent enjoys the whole advantage of the efforts of his industry. Townsend informs us, that most of the great estates in Spain are held in administration, that is cultivated by agents or stewards for the account of the proprietor; and it is principally to this cause that he attributes the low state of agriculture. *' No country," he observes, " can suffer more than Spain for want of a rich tenantry, and perhaps none in this respect can rival England. We find universally that wealth produces wealth, but then to produce it from the earth, a due proportion of it must be in the pocket of the farmer. Many gentlemen among us, either for amusement, or whh a view to gain, have given attention to agriculture, and have occupied much land : they have produced luxuriant crops, and have in- troduced good husbandry; but I apprehend few can boast of having made much profit ; and most are ready to confess that they have suffered some loss. If, then, residing on their own estates, with all their attention they 603. — What medium does Caroline put between Ihe two methods named for cultivating land ? 604. When and by whom did such a practice exist ? 605. What does Mrs B. think of this prac- tice ? 606. How are great estates held in Spain ? 607. How does Townsend say that Spain has suffered ? 15 170 REVENUE FROM CULTIVATION OF LAND. are losers, how great would be the loss if in distant pro- vinces they employed only stewards to plough, to sow, to sell, and to eat up the produce of their lands." There are, however, in warmer climates, some spe- cies of produce, which from their peculiar nature far- mers would not venture to undertake to cultivate on their own account, and proprietors would be unwilling to trust entirely to their management. Such is the culture of the vine and the olive, plants which require the utmost care and attention during a number of years before they begin to yield any fruit, and farmers are seldom suffi- ciently opulent to engage in a species of husbandry, the profits of which are so long protracted. On the other hand, as those plants may be very materially injured by being allowed to bear fruit either prematurely or too lux- uriantly 5 and as the interest of the farmer looks rather to immediate than remote profits, it is not considered' safe to 'trust such plantations entirely to his care. Vine- yards and olive-grounds are therefore, I am informed, cultivated by the farmer in half account with the propri- etor, who shares with him equally the expenses and the profits. This is called the Metayer system of cultivation 5 it was formerly very common on the continent for all kinds of produce, and still prevails in Italy, where the land is so extremely subdivided, that the metayer far- mers, frequently subsisting upon half the produce of not more than three or four acres of land, are scarcely supe- rior in condition to our peasantry. In France and Switzerland this system of farming is confined almost ex- clusively to the culture of the vine and the olive. But how requisite soever the system may be for particular plan- tations, the usual mode in this country of granting leases, 608. Why could not common farmers cultivate the vine and the olive, on their own account? 609. Why might not the farmer be trusted with the entire culture of them ? 610. How then are they cultivated ? 611. What is this system called? 612. What is said oi this system in France and Switzerland ? re: VENUE FROM CULTIVATION OF LAND. 171 I conceive to be, not only most advantageous to the far- mer, but ultimately so to the landed proprietor, who can procure the highest rent for the land best cultivated ; and it is also most beneficial to the country by yielding the greatest produce. But in Spain this mode could not be adopted for want of an affluent tenantry. The weahh of the country is chiefly engrossed by the nobles and cler- gy ; there is a total deficiency of yeomen, or- farmers who cultivate their own land ; and the middling classes are few in number, and so destitute of capital, that they are incapable of taking a lease of land. Caroline. I often wish that the property of land was more subdivided in this country. How delightful it would be to see every cottage surrounded by a few acres be- longing to the cottager, which would enable him to keep a cow^, a {qw pigs, and partly at least to support his fa- mily on the produce of his litde farm. Do you recollect Goldsmith's lines ? "A time there was, ere England's grief began. When every rood of ground maintain'd its man : But now alas! Along the lawn where scatter'd hamlets rose, Unwieldy wealth and cumbrous pomp repose, And every want to luxury allied." Mrs B. I shall point out to you a passage in Arthur Young's Travels in France, in which this question ap- pears to be ably discussed. Caroline reads. " 1 saw nothing respectable in small properties except most unremitting industry. Indeed it is necessary to impress on the reader's mind that though the husbandry I met with in a great variety of instances was as bad as can well be conceived, yet the industry of the possessors was so conspicuous and meri- 613. Why could not the same system of cultivation be practised in Spain that exists in England ? 614. What does Caroline say she would like to siee ? 615. To what author does Mrs B. refer Caroline for instruction on this particular ? 616. What did Young say that he saw which was respectable .-' 172 REVENUE FROM CULTIVATION OF LAND. torioLTS that no commendations would be too great for it. It was sufficient to prove that property in land is the most active instigator to severe and incessant labor. And this truth is of such force and extent that I know no way so snre of carrying tillage to a mountain top as by permitting the adjoining villagers to acquire it in property; in fact we see tliat in the mountains in Lan- guedoc they have conveyed earth in baskets on their backs to form a soil where nature has denied it." Mrs B. Land that is loo poor to afford a rent may still yield sufficiently to pay the proprietor for its culti- vation ; it is therefore the properly of such soils alone which will ensure their being culiivated. — But go on. Caroline reads. " But great inconveniency arises in small properties from tlie universal division which lakes place after the death of the proprietor. Thus I have seen some farms wliich originally consisted of forty or fifty acres reduced to half an acre, w'th a family as much attached to it as if it were an hundred acres. The population flowing from this extreme division is often but tliC multiplication of wretchedness. Men increase be- yond the demand of towns and manufactures, and the consequence is distress and numbers dying of diseases arising from insufficient nourishment. Hence small pro- perties much divided form the greatest source of misery that can be conceived. '' In England small properties are exceedingly rare ; our laborin.g poor are justly emulous of being the proprie- ters of their cottages, and that scrap of land which forms the garden ; but they seldom think of buying land enough to employ themselves. A man that has two or 617. What did he say would be the effects of property in land ? — — 61S. What is mentioned concerning the mountains of Langue- doc ? 619. How much does he say'he has seen farms divided ? 620. What account does he give of the miseries he has seen from such divisions of land ? 62X. What are the poor in Englanf the public 5 actors, singers, dancers, and ali those who are maintained by the productive labor of others, are of this descrip- tion. Caroline. Is it not to be regretted that these people cannot be compelled to a more useful mode of employ- ment? J\Irs B. Their labor, though of an unproductive na- ture, is generally useful. Servants, for instance, by relieving the productive laborer of much necessary work, enable him to do more than he could otherwise ac- complish. Thus a man engaged in the employment of a considerable capital can spend his time to greater ad- vantage, both to himself and to the community, than in cleaning his own shoes and cooking his own dinner. Caroline. The use of servants is evidently attended wit!) some of the benefits of the division of labor. Mrs B. You will probably be surprised to hear that many of the most valuable ranks of society are included in the class of unproductive laborers. The divine, the physician, the soldier, ministers of state, and magistrates, are of this description. Caroline. I did not imagine that the class of unpro- ductive laborers had been so respectable. And al- thoug'i tiieir labor is of an unproductive nature, they are, 735. Who are called unproductive laborers besides menial ser- vants ? 736. What question does Caroline ask in relation to un- productive laborers ? 737. What cases are mentioned to show- that the labor of servants is necessary ? 738. What are some of the higher classes of unproductive laborers? 739. What com- parison does Caroline make between such unproductive laborers, and certaiu others which are considered productive .' I! ON VALUE AND PRICE, 190 I think, in many instances more valuable members of society tiian some of the productive laborers. A magis- trate, who faithfully administers justice; a physician, who restores health ; a clergyman, who teaches religion and morals 5 are certainly of more essential benefit to society than the confectioner or the perfumer, or any of those producti^i?e laborers who are employed in the fab- rication of luxuries. Mrs B. No doubt they are. I do not, however, consider luxuries as wholly devoid of advantage. In a future conversation we shall treat of the subject of ex- penditure ; we shall then have an opportunity of exam- ining how far luxury is beneficial, and under what cir- cumstances it is prejudicial to the welfare of society. CONVERSATION XV. ON VALUE AND PRICE. Of the value of commodities.' — Of the distinction between exchangeable value and price. — Of utility considered as essential to value. — Of the cost of production, or natural value of commodities.-^— Of the component parts of the cost of production, rent, profit, and wages. — Of their iinperfection as a measure of value. — Of supply and demand. — Of the component parts of the exchangeable value of commodities. — High price of commodities arising from scarcity. — Low price arising from excessive supply. — Low price arising from diminution of cost of production. 740. Does Mrs B. consider luxuries wholly devoid of advan- tage ? 200 ON VALUE AND PRICE. MRS B. Before we proceed to the subject of trade, it is ne- cessary that you should understand what is meant by the value of commodities. Caroline. That cannot be very difficult ; it is one of the first things we learn. Mrs B. What is learnt at an age when the under- standing is not yet well developed, is not always well learnt. What do you understand by the value of com- modities ? Caroline. We call things valuable which cost a great deal of money ; a diamond necklace, for instance, is very valuable. J\Irs B. But if, instead of money, you gave in ex- change for the necklace, silk or cotton goods, tea, sugar, or any other commodity, would you not still call the necklace valuable ? Caroline. Certainly I should ; for, supposing the necklace to be worth 1000/., it is immaterial whether I give 1000/. in money, or 1000/. worth of anything else in exchange for it. JVLrs B. The value of a commodity is therefore esti- mated by the quantity of other things generally for which it will exchange, and hence it is frequently called exchangeable value. Caroline. Or in other words, the price of a com- modity. Mrs B. No ; price does not admit of so extensive a signification. The price of a commodity is its ex- 741. What should loe understood before proceeding to the sub- ject of trade ? 742. What answer does Caroline give to the question — What is to be understood by the value of commodities? 743. What case does Mrs B. suppose, in substituting some other article in the place of money ? 744. How does Caroline illustrate this supposition ? 745. How does Mrs B. say the value of commodities is to be estimated ? 746. How does the price differ from the value of a commodity ? ON VALUE AND PRICE. 201 changeable value, estimated in money only. It is neces- sary that you should remember ihis distinction. Caroline. But what is it that renders a commodity valuable ? I always thought that its price was the cause of its value ; but 1 begin to perceive that 1 was mistaken : for things are valuable independently of money ; it is their real intrinsic value which induces people to give money for them. Mrs B. Certainly ; money cannot impart value to commodities ; it is merely the scale by which their value is measured ; as a yard measures a piece of cloth. Caroline. I think the value of things must consist in their utility, for we commonly value a commodity ac- cording to the use we can make of it. Food, clothing, houses, carriages, furniture, have all their several uses. Mrs B. That is very true ; yet there are some things of the m.ost general and important utility, such, for instance, as light, air, and water, which, however in- dispensable to our welfare, have no exchangeable value; nothing is given for them, nor can anything be obtained in exchange for them. Caroline. No one will give anything for what is so plentiful, and so readily obtained that every one may have as much as he requires, without making ai'iy sacri- fice ; but as light, air, and water, are essential even to our existence, surely they should be esteemed valuable. Mrs B. \n political economy we can consider as valuable such commodities only as are susceptible of re- ceiving a value in exchange ; for this purpose the com- modity must neither be produced in so unlimited a man- ner, nor so easily obtained that it may be had for nothing. 747. What gives value to commodities? 74S. What is said of money ia relation to the value of commodities ? 749. What articles are mentioned which have no exchangeable value ' 750. Why is this the case ? 751. In political economy what objects are considered valuable ? 202 ON VALUE AND PRICE. It must on the contrary, be in such request that men are willing to give something for it. Thus clothes, houses, furniture, tliough certainly less useful than light, air, and water, have exchangeable value. Nature works for us gratuitously ; and when she sup- plies us with articles in such abundance that no labor is required to procure them, those articles have not ex- changeable value : but no sooner does the labor of man become necessary to procure us the use and enjoyment of any commodity, than that commodity acquires a value ; either a price is paid for it in money, or other things are given in exchange for it. Light, air, and water, are the free and bountiful gifts of nature, but if a man constructs a lamp, we must pay for the light it diffuses : if we are indebted to his labors for a ventilator, or even a fan, we pay for the air they procure us ; and when water is con- veyed through pipes into our houses, raised by pumps, or brought to us in any manner by the art of man, a price is paid for it. Caroline. Workmen must of course be paid for the labor they bestow, whether it be in the production of a commodity or merely in its conveyance. But it appears to me, Mrs B., that it is labor rather than utility that constitutes value, for however we may enjoy the utility, it is the labor we pay for. Mrs B. That labor, you will observe, is valuable only if it gives utility to an object. Were a man to construct or fabricate commodities which had neither utility, curiosity, or beauty, the labor he bestowed upon them would give them no value, and if he exposed them for sale, he would find no purchasers. 752. How does nature work for us ? 753. When does any- particular commoiJity acquire a value ? 754. What cases of illus- tration are given to show the difference between articles that have an exchangeable value and those which have not ? 755. What does Caroline suppose gives value to a commodity rather than Utility ? ON VALUE AND PRICE. 203 Caroline. That is true ; but the words beauty and curiosity, which you have just used, have raised another objection in my mind, to utility being essential to Value. I recollect your defining wealth, to be every article of utility, convenience, or luxury ; wealth, no doubt, always implies value, but there are many articles of luxury that are perfectly devoid of utility, and which are valued either for their beauty, their curiosity, or their rarity. What for instance, is more valuable than diamonds ? and yet they are of no use. Mrs B. When we say that utility is essential to value, the expression is used in the most enlarged sense. Those who wear diamonds find them useful to gratify their vanity or pride, or to support their pride in life. The utility of luxuries must generally be considered in this point of view. 1 should, however, tell you, that Adam Smith distinguishes two kinds of value ; the one arising from utility, the other from what can be obtained in* exchange. He says, " The word value, it is to be observed, has two different meanings : it sometimes expresses the utility of some particular object, and some- times the power of purchasing other goods which the possession of that object conveys. The one may be called value in use, the other value in exchange. The things which have the greatest value in use, have fre- quently little or no value in exchange ; and, on the con- trary, those that have the greatest value in exchange, have frequently little or no value in use. Nothing is more useful than water, but it will purchase scarce any- thing ; scarce anything can be had in exchange for it. A diamond on the contrary, has scarce any value in use, 757. What does Caroline mention as possessing value, but is without utility ? — 758. When a^e we to say utility is essential to value? 759" In what sense are luxuries valuable? 760. What distinction does Adam Smith make in the meaning of the term value ? 761. What illustration does he give of the value in use^ and the value in exchange ? 204 ON VALUE AND PBICE. but a very great quantity of other goods may frequently be had in exchange for it." Later writers on political economy, whose opinion I have followed, have rather gone farther than differed in opinion from Adam Smith, by tracing all value to the same source utility, a doctrine which leads to the con- clusion that it is the application of the labor of man to commodities which gives them exchangeable value. The exchangeable value of a commodity estimated in money, we have said, constitutes its price. This gene- rally corresponds with the cost of production of the commodity, that is to say, to the expense that has been bestowed on a com.modity in order to bring it to a sale- able state. You can tell me now, I suppose, why this bookcase is more valuable than that table. Caroline. Because more workmanship has been bestowed upon it, therefore more labor must be paid for. But, Mrs B., the money which this bookcase cost does not all go to the workmen who made it ; the materials of which it is made must be paid for : the upholsterer who sold it derives a profit from it. Mrs B. It was his capital which purchased the raw materials, which furnished the tools, and set the journey- men to work ; without his aid the bookcase could not have been made. The price of commodities is the reward not only of those who prepared or fabricated them, but also of every productive laborer who has been employed in bringing them to a saleable state, for each of these concurred in giving value to the commodity. We have formerly observed that no work can be undertaken without the use of capital, as well to niain- 762. What have some later writers done in explaining this sub- ject ? 763. To what does the exchangeable value of a commo- dity generally correspond ? 764. What objection does Caroline made in regard to the bookcase ? 765. How does Mrs B. reply to this objection ? 766. Without the use of what is it said that ro work can be done ? ON VALUE AND PRICE. 205 tain the laborer as to supply him with the implements to work with, and the materials to work upon. Subsisting upon this maintenance, and working with these imple- ments, he is to transform the useless trunk of a tree into a useful piece of furniture, which acquires value in pro- portion as it acquires utility. The profit of capital is, therefore, a component part of the value of a commodity, as well as the wages of labor. There remains yet a third component part of the value of a commodity, which a little reflection will, I think, enable you to discover. Caroline. Agricultural produce must, besides the wages of labor, and profit of capita], pay the rent of the land on which it is raised. But this will not be the case with manufactured goods. Mrs B. The raw materials for manufactures are all, or almost all, the produce of land, and consequently must defray the expense of rent, the same as corn or hay. But rent does not enter into the price of commo- dities in the same manner as the profit of capital or the wages of labor, because, as you may recollect, rent is the effect, not the cause of the high price of commodi- ties. Dr Smith observes that " high or low wages are the causes of high or low price ; high or low rent is the effect of it. It is because high or low wages or profit must be made, in order to bring a particular commodity to market, that its price is high or low. But it is because its price is high or low, a great deal more, or very little more, or no more than what is sufficient to pay those wages and profit that it affords a high rent, or a low rent, or no rent at all." Let us now observe how the value of a commodity resolves itself into these three component parts. Take, 767. What is the profit of capital termed ? 768. What is a third component part of the value of a commodity? 769. Where- in does not rent enter into the price of commodities in the same man- ner as the profit of capital or the wages of labor ? 18 206 ON VALUE AND PRICE. for instance, a load of hay ; its price pays, first, the wages of the laborer who cut down the grass and made it into hay ; then the profits of the farmer who sells it ; and lastly, the rent of the field in which it grew. This therefore, constitutes the whole costof production of the load of hay ; and may be called its natural value, Caroline. Pray let me try whether I could trace the various payments made to the several persons concerned in the production of a loaf of bread. — Its price must first pay the wages of the journeyman baker who made it ; then the profits of capital of the master baker who sells it ; next the wages of. the miller who ground the corn, and the profits of the master who employs him ; after- wards the wages of the several husbandmen who culti- vated the field of corn ; the profits of the farmer ; and lastly, a portion of the rent of his farm. Mrs B. Extremely well. Thus you see that the value of a commodity is composed of three parts, rent, p'o/i^, and wages ; the rent of the proprietor of the land, the profits of the several employers of capital, and the wages of the various laborers who give it value by ren- dering it useful, whence it becomes an object of desire, and consequently a saleable commodity. It sometimes happens that the proprietor of land, and farmer, and even the laborer, are united in one individ- ual. We have already observed that in many parts of America the cultivators of the land are botji proprietors and laborers, and reap the reward of rent, profit, and wages. Caroline. And in this country a cottager who pos- 770. How does the value of commodity resolve itself into the three component parts ? 771. What may this value be called? 772. How does Caroline trace the various payments made to the several persons concerned in the production of a loaf of bread ? 773. What union of interests does Mrs B. say sometimes takes place ? ON VALUE AND PRICE. 207 sesses a little garden cultivated by his own hands, and of which he brings the produce to market, likewise con- centrates in himself all the advantages of proprietor, capitalist, and laborer ; for he sells his vegetables for the same price as a market gardener, who has to deduct from the price the rent of the garden and the wages of the laborer. Mrs B. But he is not therefore the greater gainer, for if he has no rent to pay, it is because he has laid out a capital in the purchase of the land ; if he pays no wages, it is because he works himself, and employs that labor which might otherwise bring him wages : then some capital is used to purchase garden tools, manure, or whatever may be requisite for the cuhure of his gar- den. Caroline. I think I now understand perfectly well how rent, profit, and wages enter into the value of every commodity. I may say, for instance, so much rent, profit^ and wages has been expended in the pro- duction of this carpet, that therefore I must pay a sum of money for it, if I wish to purchase it ; but how am I thence to infer what sum of money it is worth-? Mrs B. By applying the same scale or measure to estimate the value of money, that you have applied to estimate the value of the carpet. Examine what quan- tity of rent, profit, and wages was bestowed uponlhepro- duction of the money, and you will be able to ascertain how much of it should be given in exchange for the carpet, or in other words, what the carpet is worth in money. I paid twenty guineas for this carpet ; I con- clude therefore that the cost of production of the carpet is equal to the cost of production of twenty guineas. 775. Why is not the cottager a gainer by this union of interests ? 776. What question does Caroline ask concerning the value of 9. carpet ? 777. How does Mrs B. answer this question I 208 ON VALUE AND PRICE. Caroline. But it would be impossible to calculate with any degree of accuracy the quantity of rent, profit, and wages which a commodity cost, and still less that of the fj^old or silver for which, it is sold. Mrs B. Nor is it necessary to enter into this calcula- tion ; it is by long experience only that the world forms an estimation of the relative value of different commo- dities sufficiently accurate for the purposes of exchange. The calculations to which we have been alluding, though true in principle, are by no means susceptible of being brougltt into common use. Caroline. Yet when barter was first introduced, one savage might say to another : "It is not just to offer me a hare, which is the produce of a day's hunting, in ex- change for a bow which I have spent three days in mak- ing 5 1 will not part with it unless you give me also the fruit which you gathered in the woods yesterday, and the fish you caught the day before; in short, I will not ex- change the produce of my toil andtrouble, for less than the produce of an equal share of your toil and trouble." And surely this is much more clear and siniple reason- ing than to say, that the bow is worth so fuuch money? Mrs B. To a savage unacquainted with money it certainly is ; but I believe that in the present times peo- ple understand better the value of a commodity esti- mated in money. Caroline. But if it were practicable to calculate with precision the quantity of rent, profit, and wages which had been expended on the production of commo- dities, that 1 suppose, would constitute an accurate mea- sure of their value. 779. Wliat does Caroline say it would be impossible to do ? 779. Does Mrs B. tliink it necessary to go into this calculation ? 780. How is it, that the world forms a value of the relative value of different commodities ? 781. How aoes Caroline say a savage would reason when barter was first introduced ? 782. What does Caroline say would constitute an accurate measure of cpminpdities .'' ON VALUE AND PRICE. 209 Mrs B, No ; because there are other circumstan- ces, which, as we shall presently observe, affect the va- lue of commodities. Besides, it would be impossible to calculate with any degree of accuracy the cost of pro- duction of a commodity, since rent, profit, and wages are all liable to vary in their own value ; and we cannot adopt as di fixed standard, a measure which is itself sub- ject to change. If we were to measure a piece of cloth ^ by a yard measure, which lengthened at one season of the year and shortened at another, it would not enable us to ascertain the length of the piece of cloth. Now rent varies much according to the situation of the land, and the nature of the soil ; profit according to the abundance or scarcity of capital ; but nothing fluctuates more than the wages of labor ; it differs not only in different coun- tries, but even in the same town, according to the strength, the skill, and the ingenuity of the laborer. A skilful artisan may not only do more work, but may do it in a superior manner, and he will require payment in the articles of his workmanship, not only for the labor he has bestowed on them, but also for the pains he has taken, and the time he has spent in acquiring his skill; the wages of a superior workman are for this reason much higher than those of a common laborer. Since therefore neither the quantity nor the quality of the la- bor bestowed on a commodity can be determined by the number of days or hours employed in producing it, time is not a measure of the value of labor; we must take into account the degrees of skill and attention which the work may require, as also the healthy, pleasant or un- pleasant, easy or severe nature of the employment, all of which are to be paid accordingly. 783. Does Mrs B. think it possible to do this ? 784. Why does she say it cannot be done? 785. How does rent, profit, and wages of labor vary? 786. What must be tkken into the account in estimating the wages of labor ? 18* 210 ON VALUE AND PRICE. ' Caroline. Thus the bow which employed the savage during three days, might be worth twice the labor of ihe other savage during the same period of time; for much less skill is required to be a huntsman, than to be a fabricator of bows and arrows. Mrs B. On the other hand, we find that eight hours of the labor of a coal-heaver will be paid much higher than the same number of hours of a weaver's labor, be- cause although the latter requires more^ skill, the first is much more severe and unpleasant labor. But the wea- ver will receive greater wages than the farmer's laborer, because the work of the latter is both more healthy and requires less skill. Now since it is impossible to enter into a calculation of all the shades of these various difficulties, rent, profit, and labor can never form an accurate standard of value. Caroline. They have at least enabled me to acquire a much more clear and precise idea of value than I had before. Mrs B. Your idea of value is however yet far from being complete ; for there are, as I have just observed, odier circumstances to be considered independently of the cost of production, which materially influence the va- lue of commodities. In a besieged town, for instance, provisions have frequently risen to twenty or thirty times their natural value, and have increased proportionally in price. Caroline. Their increased price in this case is owing 787. How does Caroline apply this in the case of the bow of the savage ? 788. What comparison is made between the labor of the coal-heaver and the weaver ? -789. And what one is made between the weaver and the farmer's laborer ? 790. What is the object of Mrs B. in these comparisons? 791. What other circumstance is mentioned as entering materially into the value of commodities ? ON VALUE AND PRICE. 21 I merely to the scarcity, not to any increase of value, for were they as plentiful as usual they would sell at the ■usual price. Mrs B. Their high price is the consequence of tlieir increased value, for they would not only sell for a greater sum of money, but also exchange for a greater quantity of any commodities, except such as are convert- ible into food, Caroline. Unless perhaps it were gunpowder, or any kind of ammunition, which in a besieged town might be as much in request as food. Mrs B. Certainly ; in that case ammunition would rise in value as well as provisions. Plenty and scarcity are then circumstances which considerably affect the value of commodities. Tell me whether you understand the meaning of the words, plen- ty and scarcity _? Caroline. Yes, surely ; when there is a great quan- tity of any thing, it is said to be plentiful; — when very little, it is scarce. Mrs B. If there was very little corn in a desert island, should you say there was a scarcity of corn there .f* ■ Caroline. No ; because as there would be no one to eat it, none would be wanted ; and scarcity implies an insufficiency. MrsB. And when a few years ago there was a scar- city of corn in this country, do you think that the whole of the island produced only a small quantity ? 792 To what does Caroline say the increased price of provisions is owing ? 793. What does Mrs B. say of their high price ? 794. What other article would also under like circumstances in- crease in value ? 795. What does Caroline understand by the terms plenty and scarcity ? 796. Wh^t question does Mrs B. ask in relation to a desert island ? 797. How does Caroline reply to this question ? 798. What question does Mrs B. ask Caroline concerning the scarcity of corn in Great Britain a few years before ? 212 ON VALUE AND PRICE. Caroline. No, not positively a small quantity, but a smaller quantity than v^^as required to supply the whole of the population of the country with bread. Mrs B. Plenty and scarcity are therefore relative terms : a scarcity neither implies a small quantity, nor plenty a large one ; but the first implies an insufficiency, or less than is wanted ; the last as much, or perhaps more than is required. When there is plenty, the sup- ply of the commodity being at least equal to the demand, every one who can pay the cost of its production will be able to purchase it. If, on the contrary, the commo- dity is scarce, some of these must go without it, and the apprehension of this privation produces competition amongst those who are desirous of buying the commodity, and this raises its value above the cost of production. Caroline, This then is the cause of the rise in the price of provisions in a besieged town ? Mrs B. Yes; or during a famine, or in any case of scarcity. Whenever on the contrary, the supply exceeds the demand, the price will fall below the natural value of the commodity. You see, ihereTore, that the natural value and ex- changeable value do not always coincide. The exchangeable value consists of the natural value, subject either to augmentation or duninution ; in propor- tion as the commodity is scarce or plentiful. Caroline. When you say that the supply exceeds the demand, you do not, I suppose, mean that there is more of the article than the whole of the population can consume or use ; but more than can be consumed by those who can afford to pay its natural ^ric^ ? 799. What was Caroline's reply ? 800. What does Mrs B. say of the meaning of the terms plenty and scarcity ? 801. How will be the price, when the supply exceeds the demand of the com- modity ? 802. Of what does the exchangeable value of an arti- cle consist ? 803. What is meant when it is said the supply of an article exceeds the demand ? ON VALUE AND PRICE ^ 2lS Mrs B, Certainly. Those, therefore, who have the commodity to dispose of, rather than allow a surplus to be left unsold, Will lower its price, so as to render it attainable to a class of people who could not otherwise afford to purchase it. Hence the demand is increased, and becomes by degrees proportioned to the redundant supply. To illustrate this let us suppose that, by the breaking out of a continental war, our foreign trade sliould meet with such obstructions, that great part of the manufac- tured goods we had prepared for exportation will re- main at iiome and overstock the market. The supply in this case exceeding the demand, the goods will fall in price below their natural value, in order to attract a greater number of purchasers ; the consumption will thus be increased, but the manufacturers and dealers, having been obliged to sell the goods for less than they cost to produce, will be losers instead of gainers by their industry. Caroline. I recollect that calicoes and English mus- lins were much cheaper during the last war than they are at present ; and the shopkeepers then said that at the price at which they sold them, they did not pay for the workmanship independently of the materials. Mrs B. The cheapness of these goods, although it arose from plenty, so far from being a sign of prosperity, entailed ruin on the manufacturers and their laborers. Caroline. But you observed that if the price of a commodity would not defray nil the expenses of rent, profit and wages, ii would not be produced ^ 804. How does the demand become proportioned to the redun- dant supply ? 805. What illustration does Mrs B. give ? 306. What case does Caroline give in the confirmation of Mrs B.'s state- ment ? 807. What does Mrs B. say of the cheapness of those 214 ON VALUE AND PRICE. Mrs B. In the case we have alluded to, the fall in price did not take place till after the production of the commodities; and the expense of labor having been al- ready bestowed on them, it is better to sell them at any price than to lose entirely their value. But the manu- facturers would in future take care to fabricate a smaller quantity, in consequence of which, many of their labor- ers would be deprived of work, and part of their capital be thrown out of employ. Plenty and cheapness are really advantrgeous only when they arise from a diminution of the cost of produc- tion. Thus when the use of any new machinery, or other improvement in the process of labor, enables far- mers or manufacturers to produce commodities at less expense, the reduction of price is beneficial both to the producer and the consumer; to the former, because cheapness increases the number of purchasers ; to the latter, because he obtains the commodity at less expense. Caroline. But when nature gives us a superabundant supply of corn, the fall in price it occasions is not I sup- pose attended with disadvantage? Mrs B. No, not in general; because the farmer, if not a gainer, is at least usually repaid, by the abundance j of his crops, for the reduction of price ; but if (from m whatever cause) he should be under the necessity of selling below the cost of production, the low price is no longer a benefit; for the evil arising from the check given to industry far surpasses the immediate advantage of cheapness of corn. The farmers and their laborers 80S. It has been said if the price of a commodity would not pay the expense of rent, profit, and wages, it would not be produced — what reply does Mrs B. make to this ? 809 What precaution would the manufacturers take for the future ? 810. When are plenty and cheapness really advantageous ? 811. What illustra- tion is given of this ? 812. Caroline asks, if the fall in price is attended with disadvantage when there is an unusually large crop of com—what is Mrs B.'s reply ? ON VALUE AND PRICE. 215 would be the first sufferers ; but it is probable that, in the end, the whole community would severely feel the effects the following season. Caroline. True; for farmers would grow cautious, and cultivate less wheat, in order that it might not sell below its natural value 5 and whilst they would be endea- voring exactly to proportion the supply to the demand, the season might chance to be less productive than usual so as to occasion a scarcity of corn, which would be fol- lowed by a rise in the price of bread above the ex- pense of its production. ' Mrs B. Thus, you see, when the supply equals the demand, the commodity is sold for its natural value, the producer making just the usual rate of profit. If the supply exceed the demand, it is sold below that value, the competition of producers or dealers, to dispose of their goods, lowering tlie price. If the supply is less than the demand, the competition of purchasers raises the price of the commodity above its natural value, and the dealers make extraordinary profits. Caroline. It must then be the interest of the farmer thai corn should sell above its natural value; and the in- terest of the people that it should sell below it ? Mrs B. If we extend our views beyond the present moment, it will appear that the interest of the producer and consumer of any commodity are the same ; and that it is for the advantage of both diat the price and natural value should coincide. If the consumer pay less for a commodity than its cost of production, the producers 813. Who would be the suffei-ers ?- 814. How does Caro- line suppose the whole community might suffer from such an event .-' 815. What is Mrs B.'s remark, when the supply equals the de- mand — when it exceeds the demand— and when it is less than the demand ? 816. What does Caroline say would be for the inte- rest of the farmer; and what for the interest of the people } 817. But what does Mrs B say will be the fact, if we take a prospective view of the subject ? 216 ON VALUE AND PRICE. will take care to diminish the quantity in future, in order that competition may raise the price ; for they could not, without exposing themselves to ruin, continue to supply the public with a commodity which did not repay them. If, on the other hand, the consumers pay more for an ar- ticle than its natural value, the producers will be encou- raged by their great profits to increase the supply, and the price will consequently fall until it is reduced to the natural value. Caroline. 1 do not understand why the producers af a commodity should increase the supply, if the conse- quence is to lessen their profits ? Mrs B. We are arguing under the supposition that competition is free and open, and in that case, you know, capital will immediately flow towards any branch of in- dustry that affords extraordinary profits. If, therefore, the original producers of the profitable commodity did not increase the supply, they would soon meet with com- petitors, which would compel them to lower their price without increasing their sale. " Price," Mr Buchanan observes with great happi- ness of expression, "is the nicely poised balance with which nature weighs and distributes to her children their respective shares of her gifts, to prevent waste, and make them last out till reproduced." We have dwelt a long lime upon the subject of value; and we may now conclude, that though a fluctuation in the exchangeable value of commodities may be occasion- ed by various circumstances, it will seldom deviate much from the natural value, to which (when the employment 818. How does she show this to be true ? 819. Caroline asks^ wh}' the producers of a commodity should increase the supply, if the consequence is to lessen their profits — How does Mrs B. answer this question ? 820. What does Buchanan say price is ? 821. Does the exchangeable value of commodities usually vary much from the natural value ? ON MONEY. 217 of capital is left open) the exchangeable value will always tend to approximate. CONVERSATION XVf. ON MONEY. Of the use of money as a medium of exchange. — Of coin- ing. — ■Use of money as a standard of value. — Of the variation of the exchangeahle value of Gold and Sil- ver. — In what manner it affects the price of commo- dities. -Of nominal and real cheapness. — What classes of people are affected by the variation in the value of Gold and Silver. — How far money constitutes a part of the ivealth of a country. — Of the exportation of money. — Of the means by which the value of the precious metals equalises itself in all parts of the civilized world, MRS B. Having obtained some knowledge of th ena ture of value, we may now proceed to examine the use of money. Without this general medium of exchange, trade could never have made any considerable progress 5 for as the subdivisions of labor increased, insuperable diffi- culties would be experienced in the adjustment of ac- counts. The butcher perhaps would want bread, at a time that the baker did not want meat ; or they might each be desirous of exchanging their respective commo- dities, but these might not be of equal value. Caroline. It w^ould be very difficult, I believe, at i 822. What 'n the subject of the sixteenth conversation ? 823. ' Why is money necessary ? 19 < 218 ON MONEY. any time to make such reckonings exactly balance each other. Mrs B. In order to avoid this inconvenience, it be- came necessary for every man to be provided with a commodity which would be willingly taken at all times in exchange for goods. Hence arose that useful repre- sentative of commodities, money, which, being exclu- sively appropriated to exchanges, every one was ready either to receive or to part with for that purpose. Caroline. When the baker did not want meat he would take the butcher's money in exchange for his bread, because that money would enable him to obtain from others what he did want. Mrs B. Various commodities have been employed to answer the purpose of money, Mr Salt, in his Tra- vels in Abyssinia, informs us, that wedges of salt are used in that country for small currency, coined money being extremely scarce. A wedge of rock-salt, weigh- ing between two and three pounds, was estimated at l-30ihofa dollar. Caroline. How extremely inconvenient such a bulky article must be as a substitute for money ; the carriage of it to any distance would cost almost as much as the salt was worth. Mrs B, A commodity of this nature could be used for the purpose of money in those countries only where very few mercantile transactions take place, and where labor is very cheap. Tobacco, shells, and a great variety of other articles, have been used at different times, and in different countries, as a medium of ex- 824. To what is money exclusively devoted ? -825. Have various commodities been used for money?- 826. What does Mr Salt say is used in Abyssinia ? 827. Why would salt be in- convenient for such a use ? 828. Where could a commodity of such a nature be used ? 829. What other articles have been used ? ON MONEY. 219 change ; but uotWng has ever been found to answer this end so well as the metals. They are the least perish- able of all commodities ; they are susceptible, by the process of fusion, of being divided into any number of parts without loss, and being the heaviest, they are the least bulky of all bodies. All these properties render them peculiarly appropriate for the purposes of com- merce and circulation. Caroline. The use of metals as money must be very ancient, for mention is made in history of the iron coin of the Greeks, and the copper coins of the Romans. Mrs B. Nor are gold and silver coins of modern date ; but they were scarce before the discovery of the American mines. The first gold coins were struck at Rome, about 200 years before Christ. Those of silver about 65 years earlier. Previous to that period the as, which was of copper, was the only coin in common use. Caroline. It is said in the Bible that Abraham gave 400 shekels of silver for the purchase of the field of Machpelah, to bury Sarah in. Was that, do you sup- pose, coined money ? Mrs B. No ; I believe there was no coined money of so ancient a date as the time of Abraham. The metals were originally used for the purpose of money in bars ; and you may recollect that Abrahana weighed the silver for the purchase : which would have been un- necessary had it been coined. Before the invention of coining, the use of the metals as a medium of exchange was attended with great inconvenience *, it being neces- 830. Why are the metals preferable to all other articles for mo- ney ? 831. When were the first gold coins struck? 832. When were silver ones first struck ? 833. What does Caroline mention of the use of money in the time of Abraham ?— — 834. Why does Mrs B. suppose the 400 shekels mentioned by Caroline were not coined money ? 835. How were metals originally used for money ? 836. What was the inconvenience of this ? 220 ON MONEY. sary not only to weigh, but also to assay the metal, to ascertain both its quantity and its degree of purity. The invention of coining superseded this inconve- nience ; for coining money is affixing to a piece of metal a particular stamp or impression, which declares that it is of a certain weight and quality. Thus the im- pression on a guinea signifies that it is a piece of gold of a certain fineness, weighing 107 grains nearly. Caroline. Money must also be of great use in fixing the value of commodities; before its introduction the butcher and the baker might dispute which was worth most, the joint of meat or the loaf of bread which they wished to exchange, Mrs B. Yes, money became useful not only as a medium of exchange, but also as a common measure of value. You will learn hereafter that it is not, any more than labor, a very accurate measure, when the values of one period are compared with the values of another dis- tant period ; but for the common purposes of traffic it answers sufficiently well. Previous to the invention of money, men were much at a loss how to estimate the value of their property. In order to express that value'lhey were necessarily obliged to compare it to something else, and having no settled standard, they would naturally choose objects of known and established value. Accordingly we read both in Scripture and in the ancient poets, of a man's property being worth so many oxen and so many flocks and herds. Dr Clarke informs us, that even at the present day the Calmuc Tartars reckon the value of a coat of mail from 837. What is the advantage of coinina; metals ? 838. Is mo- ney an accurate nieasm-e of the value of commodities in different and distant periods? 839. Before the invention of money how did men express the value of their propeily ? 840. What facts relating to this subject are mentioned in Scripture? 841. What does Dr Clarke observe of the Calmuc Tartars ? ON MONEY. 221 six to eight, and up to the value of fifty horses. In civilized countries every one eslinfiates his capital by the quantity of money it is worth ; he does not really pos- sess the sum in money, but his property, whatever be its nature or kind, is equivalent to such a sum of money. Caroline, For instance, a man who is worth a capi- tal of 20,000/. may perhaps not be possessed of 20/. in money ; but his property, whether land or commodities, if sold, would bring him 20,000/. When gold is brought into this country, pray how is it paid for ? Something must be given in exchange for it ; and yet that something cannot be money ? Mrs B. Certainly not. A bullion merchant would derive no advantage from a trade in which he would be employed in exchanging a certain weight of gold and silver in one country, for a similar weight of gold and silver in another country, he would lose not only all the profits of trade, but the expenses of the freight, &z;c. ; so that in fact he would be exchanging 100/. for 90/. or 95/. We pay for gold and silver in woollen cloths, hard- ware, calicoes, and linens, and a variety of other com- modities. Caroline. Then we purchase gold with goods just as we purchase goods with gold. Mrs B. Exactly 5 those who take our goods in exchange for gold bullion, buy goods with gold ; only as the g^old is not coined, it may rather be called an ex- change of commodities than a purchase. Caroline, And if the mines should prove less pro- ductive than usual, or any circumstance should render gold scarce, and thus raise its exchangeable value, we 842. What is done in civilized countries ? 848. With what do the English obtain their money ? 844. In obtaining gold why would Mrs B. call it an exchange of commodities rather than a purchase ? 19* 222 ON MONEY. must export a greater quantity of goods to exchange for the same quantity of gold ? Mrs B. Undoubtedly. The natural value of gold bullion, like that of any other commodity, may be esti- mated by the rent, profit, and labor bestowed upon it ; and its exchangeable value fluctuates according to the proportion of the supply to the demand. This fluctua- tion, however, can be discovered only by the greater or smaller quantity of goods for which the same quantity of gold will exchange. For as gold and silver m'ay be bought with any kind of goods, they are not susceptible of a standard of value like that of other commodities which is estimated in one particular article — money. Caroline. As gold and silver are the standard of value of all other commodities, all other commodities, I conceive, must be affected by an alteration in the ex- changeable value of gold and silver.^ Mrs B. And this is the reason why money is not an accurate standard of the value of commodities. For if money by its plenty diminish in value, it enhances the price of commodities, and renders them dearer. Whilst if money by its scarcity increase in value, it lowers the price of commodities, that is to say, their exchangeable value estimated in money, and renders them che'aper. To illustrate this by an example ; let us suppose the supply of bread to be exactly equal to the demand, so that its exchangeable and natural value should coin- cide ; in what manner would a scarcity of money affect it? • Caroline. A deficiency of any article raises its ex- 845. How may the natural value of gold bullion be estimated ? . 846. How can the fluctuation in natural value of gold bullion be discovered ? 847. Is gold and silver susceptible of a standard in value ? -848. Why is not money an accurate standard of the value of commodities ? 849. How does the plenty or scarcity of money affect the value of commodities .' ON MONEY. 223 changeable value, and consequently its price, above its natural value : thus a deficiency of gold or silver would make a smaller quantity exchange for the same quantity of goods as before ; and therefore a loaf of bread would sell for less money, or, in other words v/ould be cheaper. Mrs B. Yes ; and not only bread, but meat, clothes, furniture, houses, in short everything would be cheaper, in consequence of the scarcity of the precious metals. Caroline. It would appear then that a scarcity qf money is advantageous to a country by rendering things cheap. Mrs B. When the cheapness of commodities arises from that plenty which results from a reduction of the cost of production, it is very advantageous ; but not when it proceeds from a scarcity of money. In the lat- ter case, the supply not being increased, commodities are cheaper, without any alteration in their general ex- changeable value. They may, therefore, be considered rather as nominally than really cheaper. If," for instance, a loaf of bread should sell for a penny, though there should not be a single loaf more in the country than when it sold for a shilling, the cheapness would not make bread more plentiful. Caroline. But if the price of bread were so low as a penny, though the supply should not be-increased, the laboring classes would increase their consumption of it so considerably as to produce a scarcity, if not a famine, before the next harvest. This nominal, or I would call li false, cheapness, must therefore be prejudicial instead of being beneficial to a country. .850. How is tl\is illustrated ? 851. When is the cheapness of commodities advantageous? 852. When is it hurtful? 853. In what respect are commodities cheaper from the scarcity of money ? 854. What erroneous conclusion does Caroline draw from this nominal cheapness in relation to the poor ? 224 ON MONEY. M's B. The consequence you have drawn from It is erroneous; for the laboring classes would not be able to purchase a greater quantity of bread than usual, ow- ing to the scarcity of money. The wages of labor would not be exempted from the general fall in price which this scarcity would produce : the laborers as well as the bread they eat, would be paid in pence instead of shil- lings, and their power of purchasing bread would neither be increased nor diminished. Caroline, True ; I did not consider that. I sup- pose then that if the contrary case occurred, that is, if the quantity of money were considerably augmented, either by the discovery of a mine in the country, or by any other means, a general rise in the price of com- modities would be the consequence. Mrs B. Undoubtedly ; but without producing any scarcity. Therefore though commodities would rise in price, their value would not be increased, and the com- modities being the same in quantity, the public would be equally well supplied ; but as money fell or became depreciated in value from its excess, fewer commodities would be given in exchange for the same sum ; of more money must be paid for the same commodity. A loaf of bread might cost two shillings instead of one, but as the wages of labor would at the same time be doubled, the laborer would suffer no privation from the increase of price. You now see the propriety of making the dis- tinction between the value and \\\q price of a com- modity. It is very possible for the price of a commodity to rise, whilst its value foils. A loaf of bread may rise in 855. Wherein does her error consist ? 856. What does Ca- roline then suppose would be the case if money should become very plenty ? 857. In the case of the loaf of bread which costs the laborer two shillings instead of one, wherein does he suffer no loss ? 858. Does the price of an article ever rise whilst it falls in value ? ON MONEY. 225 price from one to two shillings ; but money may be so depreciated by excess that two shillings may not pro- cure so much meat, butter, and cheese as one shilling did before ; therefore a loaf of bread would no longer exchange for so much of those commodities, and its ex- changeable value compared with other things generally would have fallen ; while i[s price or exchangeable value estimated in money only would have risen. Caroline. And when the price alters, how can we distinguish whether it is the goods or the money which changes in value ? Mrs B. There is no point so difficult to ascertain as a variation of value, because we have no fixed standard measure of value ; neither nature nor art furnishes us with a commodity whose value is incapable of change ; and such alone would afford us an accurate standard of value. Caroline. How useful such a commodity would be ; for we cannot estimate the value of anything without comparing it with the value of something else ; and if that something else is liable to variation, it is but of little assistance to us : it is supporting the earth by the ele- phant, and the elephant by the tortoise ; but we still re- main in the same dilemma. When a man says he is worth 500 acres of land, we can form scarcely any judgment of his wealth unless he tells us what the acres are worth ; his land may be situated in the most fruitful parts of England, or it may be in the wilds of America, or the deserts of Arabia ; and if he values his land in money, and says my acres are worth, or would sell for 1000/., we can form some notion of their real value, but 859. What illustration of this is given? 860. When the price alters how can it be ascertained whether it is the goods or the money which changes in value ? 861. What case does Caroline mention of a landed proprietor to show the difficulty in determining the real value of different commodities ? 226 'ON MONEY. not an accurate one ; for we do not know what is the real value of the money, whether it is plentiful or scarce, cheap or dear ; nor can we ever learn it unless we had some invariable standard by which to measure it. JVLrs B. Now supposing money to be depreciated in value 25 per cent, and that the expense of manufac- turing a piece of muslin, from some improvement in the process, fell from four to three shillings a yard, at what price would the rnuslin sell? Caroline. It would retain its original price of four shillings, though it would really be cheaper ; for the diminution of the value of money would exactly coun-, terbalance the diminution of the cost of production of the muslin. Mrs B. Very well. And if on the contrary, money should become scarce at the same time as the cost of production of a commodity diminished, then these two causes, acting in conjunction instead of oppo- sition, the commodity would be both nominally and really cheaper. Caroline. The muslin in that case would fall from four to two shillings a yard. Mrs B. In order sull further to reduce the price of the muslin^ we may suppose the supply to exceed the demand, so as to oblige the manufacturer to sell it be- low its cost of production ; and tlius the price might fall so low as one shilling or even sixpence a yard. But of all these reductions of price, that which pro- ceeds from a diminished cost of production is the only 862. What question does Mrs B. ask concerning the price of a yard of muslin, the cost of manufacturing which has lessened, and at a time when money is depreciated in value ? 863. Why would the money sell for its original price ? 864. What would be the fact, as to price, if the cost of production should be diminished, and at the same time money should become scarce ? 865. In what way does Mrs B. suppose the price of the muslin might fall to a shil- ling, or even sixpence a yard ? ON MONEY. 227 one from which general advantage is derived. That arising from the depreciation of money producing merely a nominal cheapness ; and that which resuhs from an excess of supply being decidedly an evil, inasmuch as it creates distress and discourages industry. Caroline. It appears then from what you have said, that an increase or diminution of money in a country does not really affect the pecuniary circumstances of any one ? Mrs B. I beg your pardon ', all classes of men are temporarily affected when the change is abrupt ; be- cause the due level is not immediately ascertained, and until that takes place the pressure falls unequally. But independently of this, there are many classes of people who would be very sensibly and permanently injured by an alteration in the exchangeable value of money. Let us suppose, for instance, that the proprietor of a field lets it for a long lease at a rent of 20/. a year ; and that some years afterwards, money having risen in value, and he being in want of hay for his horses, purchases the crop of hay for \bl. In this case the landlord will continue to receive 20Z. a year for the rent, and yet pay but 15Z. for the produce, so that the farmer will lose 5Z. besides the profits of his capital. Is not this a very serious injury ^ Caroline. No doubt ; and this would be the case with all leases; for it is immaterial to whom the farmer sells his crops ; if the market price has fallen he must be a loser. Mrs B. Yes. Were money raised to double its former value, the rent would purchase double the quan- 866. From what reduction of price only does a general advan- tage result ? 867. What evil may result from a sudden increase or diminution of money ? 868. What supposition does Mrs B. make of a landed proprietor to show the evil that may come from isuch a change in the condition of money ? 869. How would it be if the value of money were raised to double what it formerly was > 228 ON MONEY. tity of commodities that it did before; for lOOZ. in mo- ney would exchange for a quantity of goods which was reckoned worth 2001. previous to the alteration ; so that rents though nominally the same, would in reality be doubled, and it would be so much unjustly taken out 'of the pocket of the tenant to put into that of the landlord. Caroline. This evil, however, admits of a remedy when a new lease is made ? Mrs B. True ; but should the old one have several years to run the farmer may be ruined first ; and though it is true it does not violate any law, it is a manifest in- fraction on the security of property, which we have ob- served to be the foundation of all wealth, and the strong- est motive for its accumulation. There is no more active and steady stimulus to industry than the certainty of reaping the fruits of our labor. Caroline. Then I suppose that when money is de- preciated in value in consequence of being more plenti- ful, the case would be reversed ; the farmer would be benefited and the landlord would be the loser : for the rent would not be really worth so much as it was be- fore. Mrs B. Undoubtedly. Another class of people who are materially affected by an alteration in the value of money, are the unproductive laborers. Their pay is generally a regular stipend, not liable to the same varia- tion as the wages of productive laborers. The pay of the army and navy, of all the officers under govern- ment, and of the learned professions, is fixed ; those persons must therefore sliffer all the evil, or enjoy all 870. How could this evil be remedied ? 871. But in what case might the farmer be ruined ? 872. What is mentioned as being a great stimulus to industry ? 873. What change is named by Caroline in which the farmer would be benefited and the land- lord would be the loser ? 874. What other class of persons is materially affected by an alteration in the value of money? 875. Why are unproductive laborers affected by this change? ON MONEY. 229 the benefit arising frona an alteration in the value of money. Caroline, The higher classes of the unproductive laborers might be able to support the hardship resulting from a depreciation of the value of money ; but how can the common sailor or soldier do so ? It is absolutely necessary that their pay should enable them to procure a suitable subsistence. Mrs B, They are usually paid, partly in money and partly in provisions and clothing, and are not therefore such sufferers by a depreciation of money as they would be if paid entirely in currency. It has nevertheless been found necessary of late to augment the pay of both army and navy. Caroline. The value of money has then fallen ^ Mrs B, Yes, it has ; but I must defer explaining the reason of this fall till our next interview. A third class of people who are considerably injured by a de- preciation of the value of money, are those who have lent money at interest for a long period of time, persons who live on annuities, and particularly the stockholders in the public funds. Not only is the interest they receive depreciated, but also the value of their capital. The in- terest they receive for their stock remains nominally the same, whatever diminution may have taken place in the value of money ; and their income being thus apparent- ly stationary, they partake in the general disadvantages of the rise of prices, without being enabled to avail them- selves of the compensation arising from the greater abundance of money. Professional men, and all those who receive salaries, have ultimately the remedy of an ; 576. How are the lower classes of unproductive laborers in part secured against the effects of such a change ?— — 877. Who are a third class of persons that are injured by the depreciation in the va- lue of money ? 878. Why do they lose ? 879. What relief have professional men ? 20 230^ ON MONEY. increase of pay ; but the stockholder has no resource 5 his income wastes away, and he perceives his means of procuring his accustomed enjoyments gradually diminish, without being able to trace the source from whence the evil springs ; for as his income remains nominally the same, he is not aware of any diminution of wealth. Caroline. How very much I have been mistaken in my idea of money ! Instead of being the only, or at least the principal article which (as I thought) constituted wealth ; it seems on the contrary, to be the only one which is unworthy of that tide, since it does not contri- bute to the riches of a country. An excess of money renders other things dear ; a deficiency of it makes them cheap; but it appears to me that a country is not one atom the richer for all the money it possesses. Money, therefore, I think, cannot be called wealth, but merely its representative, like the counters at cards ; and its chief use seems to consist in its affording us a conveni- ent medium of exchange, and a useful, though imperfect standard of value. Mrs B. Money cannot with justice be compared to counters, for it is not, like them, a sign or representative of value, but really possesses (or ought to possess) the value for which it exchanges. A bank note, which has no intrinsic value, is simply a sign of value ; but when you purchase goods for a guinea, you give a piece of gold of equivalent value in exchange. In order to judge whether money forms any part of the wealth of a nation, let us refer to our definition of wealth. I believe we said that every article, either of utility or luxury, constituted wealth. Now I leave you 880. In what mistake does Caroline acknowledge herself to have been? 881. What does she consider the chief use of money ? 882. What does Mrs B. say of a bank note ? 883. How does she say we are to judge whether money forms any part of the wealth of a nation ? ON MONEY. 231 to judge whether money, considered either as a niedium of exchange, or as a standard of value, is not eminently useful ; since by facilitating the circulation of commodi- ties it indirectly contributes to their multiplication. Caroline. That is true, certainly, with regard to the money actually required for circulation ; but should it exceed that sum, the surplus would be of no value to us. Mrs B. The same might be said of a superfluous quantity of any kind of wealth : more tables and chairs, or a greater quantity of gowns and coats than are wanted would be equally useless, and would equally be depre- ciated in value. Caroline. But then we could export such commodi- ties, and exchange them for goods which we did want. Mrs B. And why should we not do the same with money? When we have more money than is required for the purpose of circulation, we should export it, by purchasing foreign goods ; without this resource, a su- perfluity of money is perfectly useless, and will no more contribute to the production of wealth, than a superflu- ous number of mills would contribute to the production of flour. Caroline. I had always imagined that the more mo- ney a country possessed, the more affluent was its con- dition. Mrs B. And that usually is the case. The error lies in mistaking the cause for the effect. A great quan- tity of money is necessary to circulate a great quantity of commodities. Rich flourishing countries require abun- dance of money, and possess the means of obtaining it ; but this abundance is the consequence, not the cause of 884. WJiat comparison is made between a surplus of money and other articles of wealth ? 885, To what use may a surplus of naoney be converted ? 886. What does Caroline say she had always imagined as Xo the condition of a country? 887. Wherein lies her mistake ?— — 888. How is it illustrated, that the cause is piist^ken for the effect ? 232 ON MONEY. their wealth, which consists in the commodities circulated, rather than in the circulating medium. Specie, we have just said, constitutes wealth, so far as it is required for circulation ; but if a country possesses one guinea more than is necessary for that purpose, the wealth which purchased that guinea has been thrown away. Caroline. Yet what a common observation it is, that plenty of money animates the industry of a country, and encourages commerce ; and this seems to be proved by the miserable and barbarous state of Europe previous to the discovery of the American mines. Mrs B. The discovery of America was certainly a very efhcient cause, in rousing the industry of Europe from the state of stagnation into which it was sunk by ignorance and barbarism. But had America possessed no mines, I doubt whether the advantages we have de- rived from our connexion with that country would not have been equally great ; we could easily find a substi- tute for the specie with which she supplies us, but never for the abundance and variety of wealth which she is in- cessantly pouring in upon us. The increase of Euro- pean comforts, of affluence, of luxury, is attributed to the influx of the treasures of the new world^-and with reason ; but those treasures are the sugar, the coffee, the indigo, the tobacco, the drugs, &cc. which America exports, to obtain which we must send her commodities that have been produced by the employment of our poor. Gold and silver, though they have greatly excited our avarice and ambition, have eventually contributed but litde to sti- mulate our industry. 889. What does Caroline say is a common observation, as to the plenty of money ?^ — 890. What effect had the discovery of Ame- rica on the industry of Europe ? 891. What does Mrs B. sup- pose might have been the case as to the comparative condition of European prosperity had America possessed no mines ? 892. What does she say has been the effect of the Anaericao g9l4 aft4 siU ver in Europe ? ON MONEY. 233' It is not to the multiplication of the precious metals that we are indebted for our improved agriculture, our pros- perous commerce, and the variety and excellence of our manufactures ; nor do 1 believe that it was their scarcity which deprived our ancestors of these advantages. It was because they were ignorant and barbarous, and that we are comparatively enlightened and civilized ; — com- paratively I may indeed say, for error is still active in retarding the progress of improvement, and this is no- where more evident than in the anxiety of governments, to prevent the exportation of specie, although it is now above thirty years since Adam Smith fully proved the impolicy of this prohibition. Caroline. If the exportation of specie be prohibited, the only use that can be made of a superfluous quantity of it, is to melt it down and convert it into bullion. Mrs B. But melting the coin is, in this country, equally illegal. A superfluous quantity of money, there- fore, (were these laws never infringed) would be neces- sarily added to the circulation, and depreciate the value of the whole. How diflJerent is the situation of a country where no such prohibitory laws exist ! There no sooner does mo- ney accumulate, so as to occasion a depreciation of its value, or, in other words, an advance in the price of commodities, than the merchants of that country export specie, and purchase with it foreign goods ; while at the same time foreign merchants send their goods to the country where prices have risen, and exchange them, not for other goods, which are dear, but for money, which is cheap. 893. To what does Mrs B. ascribe the s^reater prosperity which now exists in Great Britain ? — -894. What does she say Adam Smith proved more than thirty years ago ? 895. Is the melting of coin allowed in England ? 896. What advantages are de- scribed to exist where there are no prohibitory laws, in relation to nioney ? 2Q* 234 ON MONET. Caroline, That is to say, they will sell, but not pur- chase ? Mrs B. Precisely : — ^^it is thus that a country is drained of its superfluous specie j as this traffic goes on, money rises in value, commodities fall in price, and fo- reign merchants again exchange their goods for commo- dities of the country, instead of receiving payment for it in specie. No apprehension need therefore be entertained of ill consequences arising either from the melting down or ex- porting the coin of the country. This exportation will take place secretly whenever there is a superfluity, how- ever severe the law may be against it; the only differ- ence is, that instead of being carried on in an open and regular manner by merchants of respectability, it is thrown into the hands of men of despicable character, who are tempted by extraordinary profits to engage into this illicit traffic. Could Spain and Portugal, countries which receive all the precious metals imported from America into Eu- rope, have carried into effect the absurd restrictive laws, by which they attempted to keep their gold and silver at home, tliose metals would evidently have become of little more value to them than lead and copper. If you have understood what 1 have said, you will now be able to tell me what effect will be produced in the mercantile transactions of a country, which is not shack- led by restrictive laws, when a scarcity of money pro- duces a fall in the price of commodities. 897. Ts any lasting evil to be apprehended from the melting down, or exportation of specie ? 898. Does exportation ever take place if there are prohibitory laws ? 899. What is the dif- ference as to its being done, whether under the sanction of the laws or secretly ?^ 900. What would be the effect, in those countries, were Spain and Portugal able to carry into effect their restrictive laws in regard to specie ? ON MONEY. 235 Caroline. In that case the very reverse will happen of what we before observed. Foreign merchants will come and buy goods, and instead of offering merchan- dise in exchange, will bring money in payment ; for they will be willing to make purchases, but not sales at a cheap market. Mrs B. It is thus that the value of gold and silver equalises itself in all parts of the civilized world ; wher- ever there is a deficiency, it flows in from every quarter ; and wherever there is a redundancy, the tide sets in an opposite direction. It is the regular diffusion of the pre- cious metals, and their constant tendency to an equality of value, which renders them so peculiarly calculated for a general standard. Were money as liable to variation of value as the commodities for which it serves as a me- dium of exchange, it would be totally unfit for a stan- dard. CONVERSATION XVII. SUBJECT OF MONEY CONTINUED. Of the depreciation of Gold and Silver. — Of the adul- teration and depreciation of coined money. — Of banks. — Of paper money. — Effects of paper money when not payable in specie on demand. — Of the pro- portion of currency to the commodities to be circu- lated by it. 901. What does Caroline say will take place in the mercantile transactions of a country, which is not shackled by restrictive laws, when a scarcity of money produces a fall in the price of commodi- ties ? 902. How do silver and gold equalise themselves ? r- 903. What renders them so peculiarly calculated for a general standard ? 236 ON MONET. CAROLINE. I HAVE been reflecting much upon the subject ofour last conversation, Mrs B. ; and it has occurred to me that though there may be no permanent excess and depre- ciation of specie in any particular country, yet it must gradually decrease in value throughout the world : for money is very little liable to wear ; a great quantity of the precious metals is annually extracted from the mines, and though a considerable portion of it may be converted into plate and jewellery, yet the greater part, I suppose, goes to the mint to be coined, and this additional quan- tity must produce a depreciation of value ? Mrs B. An increase of supply will not occasion de- preciation of value, if there should be at the same time a proportional increase of demand, and we must recollect that the consumable produce of the earth increases as 3vell as that of the mines — the commodities to be circu- lated as well as the medium of circulation ; and it is not the actual quantity of money, but the proportion which it bears to the quantity of commodities for which it is to serve as a medium of exchange, that regulates the price of those commodities. Let us suppose the price of a loaf of bread to be one shilling; and say, if 1000 more loaves of bread be pro- duced every year by agriculture, and such an additional number of shillings be obtained from the mines as will be necessary to circulate them, the price of a loaf will then remain the same, and the value of money, will not by this additional quantity of specie, be depreciated. Caroline, But, Mrs B., you do not consider that 904. What reason does Caroline give for supposing that there will be throughout the world a gradual decrease in value of money ? 905. What will prevent this decrease ?— ^906. If not the actual qiantity of money what does regulate the price of exchange^ able commodities ? 907. What illustration is given of this ? ON MONEY. 237 when the thousand additional loaves are eaten, the addi- tional shillings will remain. Mrs B. The greater part of these loaves will be eaten by those who will not only reproduce them, but probably increase the number the following year. ^Caroline. In that case it would be very possible that the progress of agriculture and manufactures should keep pace with, or even precede that of the mines. Mrs B. If the quantity of the precious metals an- nually extracted from the mines be exactly what is re- quired for the arts, and for the additional specie neces- sary to circulate the increasing produce of the land, there will be no change in the value of money, and commodi- ties will continue to be bought and sold at their former prices. If less gold and silver be extracted than is re- quisite for these purposes, goods will fall in price ; and if, on the contrary, a greater quantity be produced, goods will rise in price, the fluctuations in the price of commo- dities gradually and constantly conforming to the varia- tions of the scale by which their value is measured. Dr Adam Smith was of opinion that for many years past the supply of gold and silver did not exceed the de- mand ; but several later writers conceive that he was mistaken on this point. I am very far from being a competent judge of such a question, but I confess that I feel inclined to favor the opinion of a general deprecia- tion. Previous to the discovery of America the exchangea- ble value of money was certainly much greater than it 908. Caroline says, that when the 1000 additional loaves are eaten, the additional shillings will remain — What reply does Mrs B. make ? 909. Under what circumstances will the value of money remain the same ? 910. Under what circumstances, so far as the quantity of gold and silver is considered, will goods fall in price ; and under what ones will they rise ic price? 911. What was Adam Smith's opinion as to the existing quantity of gold and silver ? 912. What is said of the exchangeable value of money previous tq the discovery of America ? 238 ON MONEY. has been since that period. Some notion may oe form- ed of the difference of the value of money in ancient and in modern times from the amount of the revenue which Xerxes king of Persia derived from his wealthy and extensive empire, and which enabled him to main- tain his mighty fleets and armies i it is said in histor3^to have amounted to only three millions sterling. Cm^oUne. The prodigality and extravagance of the Romans was then in fact still greater than it appears, since the immense sums they expended upon luxuries were then more valuable than they would be at the pre- sent times. Mrs B. As the wealth of the Romans arose in a great measure from the spoliation of the countries they conquered, gold and silver formed an essential part of their plunder; specie, therefore, might possibly be of less value there than in any other parts of the world at the same period. Independently, however, of the increase of quantity which produces a depreciation in the value of the pre- cious metals themselves, there are causes quite foreign to this, which have considerable effect on the value of the money into which they have been coined. One of these is the adulteration of the coin. A pound sterling, or twenty shillings, originally weighed a pound of silver ; hence its denomination. But sovereigns, in making new coinages, frequently found it convenient to adulterate the metal by mixing it with alloy. It was a means of in- creasing the value of their treasures, by paying their debts with a much less quantity of the precious metals. 913. What reference is made to Xerxes in illustration of the subject ? 914. What does Caroline say of the prodigality and extravagance of the Romans ? 915. Why does Mrs B. think Ca- roline's opinion may be incorrect ? 916. Whence did a pound sterling receive its denomination ? 917. Why has the metal been adulterated ? ON MONEY. 339 and thus defrauding their creditor-subjects, who in the first instance were not aware of the change. In the year 1351, Edward the Fourth, distressed by the debts he had incurred in his chimerical attempts to conquer France, adopted this mode of paying his credi- tors with less money than he borrowed of them. He ordered a pound of silver to be coined into 266, instead of 240 pennies. Having experienced the beneficial ef- fects of this expedient, he soon after coined 270 pennies out of the same pound. By this imposition, not only the creditors of the crown, but all other creditors were de- frauded of about a tenth of their property ; being com- pelled to receive in payment money of less value than that they had lent. Considerable inconvenience was also experienced from the alteration in the standard of value ; as soon as it was discovered, it produced a general rise in the price of commodities, and the poor were greatly distressed by the enhancement of prices of the necessa- ries of life. Caroline. But did not wages rise in the same pro- portion ? Mrs B. Eventually they did, no doubt; but after such a revolution in prices as an event of this nature pro- duces, a length of time is required to restore the due level; and the rich always resist the rise of wages as long as they can. In the instance I have mentioned it does not appear that the laboring class made any effort to obtain a compensation by a rise of wages, until a dreadful pestilence, which originated in the east, extended its ravages to England, and carried off the greater part of the lower classes. The survivors then took advan- 918. What took place in the year 1351 in relation to this subject ? 919. Of how much were creditors thus defrauded ? 920. When the cheat was discovered what change in the price of commo- dities took place ?— — 921. V/hy did not a rise in wages immediately take place ? 922. What finally caused them to rise ? 240 ON MONEY. tage of the scarcity of hands to raise their terms : but the king, instead of allowing the remedy to pursue its natu- ral course, considered this attempt of the laborers to raise their wages as an unwarrantable exaction ; and in order to prevent it, enacted the statute of laborers. This sta- tute ordained that laborers should receive no more than the wages which were paid previous to the adulte- ration of the coin. It would be difficult to conceive a law more calculated to repress the efforts of industry. But Edward, urged by the weight of his accumulated debts, continued to de- preciate the value of the coin; endeavoring to conceal the fraud by the introduction of a new silver coin called 2i groat, but in value only 3 3-4d. : and in 1358 he made 75 groats, or 300 pennies, out of a pound of silver. Caroline. What a prodigious depreciation in the course of so short a period of time ! and have similar expedients been resorted to by successive sovereigns ? Mrs B. Yes ; so repeatedly that 20 shillings, or a pound sterling, instead of containing, as formerly, a pound of silver, now weighs rather less than four ounces of that metal. Caroline. But this is but a partial depreciation, which affects only the coin of Great Britain. Have other coun- tries also adopted so unjust and pernicious a measure? Mrs B. It is so tempting an expedient for sovereigns, that it has been resorted to in almost all countries where money is used. In the time of Charlemagne, the French livre weighed a pound, of 12 ounces. Philip the First adulterated it with one-third of alloy. Philip ofValois practised the same fraud on gold coin, and it has been 923. What was then done to prevent the rise of wages ?-< — 924. Why was Edward led to make this statute ? 925. What is the present weight of a pound sterling ? 926. Have other countries adulterated their coins ? 927. What was the weight of a French livre in the time of Charlemagne ? 928. What two sovereigns are mentioned to have adulterated the coins in use ? ON MONEY. 241 repeated by successive sovereigns till the depreciation of the French louis is even greater than that of our pound sterling, and their livre is now worth not more than ten- pence. As far back as the tin:ie of the Romans this surrep- titious mode of obtaining wealth had been discovered, and was practised. The Roman as, which originally contained a pound of brass, was in the course of time diminished to half an ounce. Caroline, But now that the world must be fully aware of the imposition, I should think that governments would not venture to have recourse to such expedients. Mrs B. This country has increased so much in wealth, that in the present times less difficulty is expe- rienced in raising taxes, and the facility of making loans has induced government to give the preference to that mode of obtaining money during a time of war, or when- ever any remarkable expenses are incurred. Of late years a new mode of augmenting the currency of the country has been invented ; by substituting for the precious metals a more convenient and more economical medium of exchange^ under the form of paper money. Caroline. Paper money ! What value can there be in money made of paper ^ Mrs B. None whatever intrinsically, yet it has been found to answer most of the purposes of specie. You remember that money was first invented to avoid the inconvenience of barter. When a commodity is sold for money, it is under a confidence, on the part of the seller, that he will be able with the money to purchase any other commodity of equal value that he may want. It 929. What is its present value ? 930. What instance of adul- teration by the Romans is mentioned? 931. What new mode of augmenting the currency of a country has been invented ? 932. For what was money invented ? 933. What is the only thing of importance in giving value to money ? 21 242 ON MONEY. is of no consequence to him of what material the money be made, provided it have this quality. Caroline. True ; but paper can never have that quality : who would part with anything of value for a bit of paper ? Mrs B. Suppose I were to give you a paper con- taining my promise to pay you 100/. in money whenever you demanded it ; would you not consider the promise so formally given, nearly of the same value as the mo- ney itself? Caroline. Yes ; because I have perfect confidence in you ; but a stranger would not. J\Irs IB. Suppose that instead of my promise to pay you 100/., I should give you a piece of paper containing a promise to the same effect of some of the wealthiest and best known merchants in London ? Caroline. My confidence in the value of such paper would be in proportion to the reliance I could place on the promise of such merchants. Mrs B. Exactly so. Such confidence is the foun- dation of all banking establishments, which are in gene- ral a partnership of weahhy and respectable merchants, in whom the public repose so great a confidence that they are willing to take their promissory note, commonly called a hank-note, instead of money. Caroline. A bank-note then is a written engagement or promise, to pay the sum, whatever it be, that is spe- cified in the note ? Mrs B. It is ; and these notes become current as a medium of exchange, having no intrinsic value, they are merely the sign or representative of wealth ; but are re- 934. What is the object of Mrs B. in the question she asks Ca- roline about the 100/. note ? 935. What variation does she make in the lOOZ. note ? 936. What are]banking establishments ? 937. What is a bank-note ? 938. Why are they received by the public ? ON MONEY. 243 ceived by the public under the persuasion that they will be paid in money by the bank, whenever required. Caroline. This is indeed an excellent invention ; what a saving of expense ! The establishment of a bank of paper money appears to me very similar to the disco- very of a mine of gold in the country ; or indeed the bank has even some advantages over the mine, for it is certain of being productive, and yet it is attended with much less expense. Is the invention of paper money quite of modern date ? Mrs B. There is, I believe, no vestige of anything of the kind in ancient history ; unless we should consider, as such, a species of stamped leather used as money by the Carthaginians ; and as they had also coined money, it is possible that their stamped leather might be consi- dered merely as a sign or representative of real value, analogous to our paper money. Caroline. The leather was probably a species of parchment, the substance commonly used for writing on, before the invention of paper, and the impression stamp- ed on it might signify the sum of money, which the piece of leather was to represent, or pass for. Mrs B. These are points upon which, in the im- perfect state of our knowledge of Carthaginian currency, it would be difficult to determine; it is fortunate, there- fore, that they are questions more of curiosity than of utility. The first bank we are distinctly acquainted with was established at Amsterdam in the year 1609 ;* but this * It is said, however, that a bank was established at Venice at least two centuries before. 939. To what does Caroline compare a bank? 940. Did paper money exist in ancient times? 941. What was therein Carthage apparently analogous to our paper money ? 942i When and where was the first bank established ? 244 ON MONEY. Institiilion was rather of a different kind from what I have been describing. It issued no paper, but received the deposit of coined money, an account of which was taken in the books of the bank ; and through the medium of these books transfers of property were made from one individual to another, as occasion required, without the money being once removed from the strong chests in which it was originally deposited. Caroline. There does not seem to be any economy in this species of bank ; whilst those that issue bank- notes, by the su^bstitution of a cheap circulating medium, render that of gold and silver superfluous, and enable it to be sent abroad to purchase foreign commodities. Mrs B. And, should foreign countries adopt the same economical expedient, and send us their superflu- ous specie, .....? Caroline. True, I did not consider that. If paper money were generally adopted, every country would be overstocked with specie ; for though the establishment of a bank in any one country may force the superfluous money into others, this cannot happen if banks are set up in every country. They are far therefore from be- ing attended with the advantages I at first imagined. Mrs B. By issuing paper money, so much is, in fact, added to the circulation throughout the civilized world ; and inasmuch as it supersedes the use of the precious metals, and therefore lessens the demand, it must to a certain degree lessen their value. The im- mediate eflect of opening a new bank is certainly to drive some portion of the specie out of the country in which 943. What was the plan of it? 944. What advantage does Caroline suppose may result from banks ? 945. What circum- stances had she overlooked, connected with the general establish- ment of banks ? 946, What effect does a bank have on thc'^*a- lue of specie i* 947. What is the immediate effect of opening .a new bank ? ON MONEY. 245 the bank is established. It does not, however, force out the whole quantity which the paper represents, for inde- pendently of the general excess to which we have allu- ded, a bank must keep a certain quantity of specie in reserve to be enabled to fulfil the promise of paying its notes on demand. Caroline. You do not mean to say that a bank will keep a fund of specie, like that of Amsterdam, equal to the value of its notes, for that purpose ; for if so, no saving would result from the use of paper money. Mrs B, Certainly not. The profits of the bank arise from the employment of the capital thus saved, which consists of the difference between the amount of notes issued and the specie reserved in the bank. It is so improbable that every person possessed of notes should apply at once for payment, that there is no neces- sity for providing a fund equal to the amount of the notes in circulation in order to fulfil the engagement. Banks discover from experience what is the proportion of specie requisite to enable them to answer the average demand made upon them ; and they regulate the quan- tity of Dotes they issue accordingly ; for if they failed in their engagement to pay them in cash on demand, they would become bankrupt, Caroline. Yet I understand that the Bank of En- gland no longer pays its notes in specie ? Mrs B. That is true ; but it is owing to an act of parliament having been passed purposely to grant this privilege to the Bank of England for a specified time. Caroline, And if a Bank of England note can no 948. Why does not a bank entirely supersede the necessity of specie ? 949. Must a bank keep a fund of specie equal to the Amount of its bills in circulation ? 950. From what do the pro- -fits of a bank arise? 951. What do bankers learn from experi- ence ? 952. In what respect was the bank of England exempt from the usual regulations of such establishments ? 21* 246 ON MONEY. longer be exchanged at pleasure for specie, in what does its value consist? Mrs B. In the expectation that it will one day be paid in gold, or something equivalent to gold ; this opi- nion renders bank-notes still current ; were such confi- dence destroyed, their value would be reduced to that of the paper of which they are made. Caroline. But since the Bank of England is not obliged to pay its notes in cash, it is at liberty to issue any quantity however great. In short, it seems to have discovered the philosopher's stone, for though it may not have found the means of making gold, it possesses a substitute which answers the purpose equally well. Mrs B. Excepting that, as it ha~s no intrinsic value, it cannot be exported in case of excess ; and you may re- collect our observing, that no use could be made of any superfluous quantity of money but to exchange it for foreign goods. An excess of currency produced by an over-issue of bank-notes must therefore remain in the country, and cause a depreciation in the value of money, which would be discovered by a general rise in the prices of commodities, and would be attended with all the evils enumerated in our last conversation. Caroline. And is there not great danger of a bank issuing an excess of notes, when it is not restricted by the obligation of paying them in specie ? Mrs B. A very considerable risk is certainly incur- red by such an exemption. When a bank issues more notes than are required for the purpose of circulation, its efiects in depreciating the 953. What then rendered the bills of that bank valuable ? 954. How does Caroline compare the Bank of England to the philoso- pher's stone ? 955. In what respects does the Bank of England not answer as a substitute for gold and silver ? 956. Is there not great danger of a bank issuing an excess of notes, when it is not restricted by an obligation of paying them with specie ? ON MONEY. 247 value of the currency, and raising the price of commo- dities, is at first, very trifling, because as soon as that effect is perceived, the coined money begins to disap- pear. Notwithstanding the prohibition of law, it never fails to make its escape out of the country. It is either clandestinely sent abroad, or privately melted, and ex- ported in bullion. As long therefore as an over-issue of notes serves to replace the coin which it forces out of the country, there is but little augmentation of the circu- lating currency ; but if after the specie has disappeared, the bank still continue to force an additional quantity of notes into circulation, the excess will be absorbed in it, the value of the currency will be proportionally de- preciated, and will produce a corresponding rise in the price of commodities. Caroline. But is it known whether the Bank of En- gland has m.aterially increased its issue of notes, since it has been exonerated from the obligation of paying them in cash f Mrs B. Of that there is no doubt ; but it is the opinion of many people that the supply of notes has not exceeded the demand;— that the paper-mine (as you call it) has increased its produce only in proportion to the increase of the produce of the country, and the pe- culiar exigencies of the times, political circumstances having deranged the natural order of things, and render- ed, during the late revolutions of Europe, a more than usual quantity of currency necessary. 937. What takes place when a bank issues more notes than are required for the purpose of circulation ? 958. For how long time will there be but little augmentation of the circulating currency ? 959. What will be the consequence, if the bank continues to force an additional quantity of notes into circulation, after the specie has disappeared ? 960. Did the Bank of England materially in- crease its issue of notes, after being exonerated from the obligation of paying them in cash ? 961. What circumstances were given as a justifying cause of such issue of notes ^. 248 ON MONEY* Caroline. But was it not during the late war that all our gold coin disappeared, and was supposed to be melted down or exported ? And was there not a general rise in the price of provisions and all commodities at the same period ? Mrs B. That is true ; and the question is very much disputed whether these circumstances were owing to the war, and the taxes it entailed upon us, or to an over-issue of bank-notes. England was under the ne- cessity of payij3g her troops on the continent, and of subsidizing foreign sovereigns ; this, some people are of opinion, was a sufficient reason to account for the disap- pearance of our specie, and to render an additional issue of banknotes necessary. Then the rise in the price of provisions they attributed to the difficulty of importing foreign agricultural produce, which naturally raised the price of the home supply. Foreign commodities also became dear from their scarcity, and this enhanced the price of such goods as would serve as a substitute for them at home. Caroline. And commodities of English manufacture, so far from rising in price, were, I recollect, much cheaper during the last war. Now if the currency were depre- ciated, it should produce a general rise in the price of all commodities. I begin therefore to think that the bank may not have issued more notes than were required. Mrs B. The rise of price produced by a deprecia- tion of the value of money is general, but not universal ; for other circumstances may not only counterbalance the effect of the depreciation of currency, in regard to par- 962. What question does Caroline ask respecting specie and the price of provisions in the late war? 963. How does Mrs B. an- swer this inquiry ; and what question does she say is very much dis- puted ? 964. What was England under the necessity of doing ? 965. And to what other cause has the rise of provisions been attributed ? 966. Is the rise of price produced by the deprecia- tion of the value of money general? ON MONEY. 249 tlcular commodities, but even render them cheaper not- withstanding. You must recollect that there are other causes which affect the price of goods. Caroline. True, the proportion of the supply to the demand ; but we have just been observing, that during a war there is a deficiency of supply, which increases in- stead of counteracting the effect of the depreciation of currency, as it would make commodities still dearer. Mrs B. During a war there is generally a deficiency of foreign commodities, and there may also be of agri- cultural produce for our own consumption ; but ot English manufactures intended for exportation, there must, as we have before observed, be a redundancy, owing to the difficulty of exporting them. Supposing, therefore, that a depreciation of the value ot money should produce a general rise in the value of commo- dities of 10 per cent, whilst on the other hand the excess of the supply occasioned a reduction of value of English manufactures of 20 per cent, at what rate would such goods sell ? Caroline. Ten per cent must be added on accouiit of the depreciation of money, and 20 per cent deducted on account of the excess of supply ; the goods would therefore sell 10 per cent lower than before. The cheap- ness of our own manufactures, then, affords no proof against a depreciation of the currency. This makes me again waver in my opinion, Mrs B. and I feel at a loss which side of the question to adopt. Mrs B. The strongest argument in favor of a de- preciation of the currency is, that guineas no longer 967. Of what in England must there be a deficiency in the time of war ? 968. And of what is there a redundancy ? 969. What question does Mrs B. ask in relation to the effects from a ge- neral depreciation in the value of money ? 970. How is this question answered ? 971. What is the strongest argument in fa,- vorof a depreciation of currency ? 250 ON MONEY. passed for the same value as gold bullion, which is the natural standard of the value of coined money. Caroline. Was the gold then adulterated, and an ounce of gold coined into more than 3Z. 175. lOjc?. ? Mrs B. No ; but gold bullion partook of the general rise of commodities, and instead of selling for 3Z. 175. lOJ^., it sold for four, and even once as high as 5/. an ounce. Caroline. But why did not guineas rise in the same proportion ? I cannot conceive how they can be less valuable than a similar weight of the gold of which they are made. Mrs B. The coined and uncoined gold remain in reality of the same value, but as it is not lawful for a guinea to pass for more than a pound-note and a shilling, the guineas are compelled to share the fate of the paper currency ; and if that be depreciated, all the coined money of the country, whether gold or silver, must be so likewise. Caroline. Then if it were not illegal, every one would melt his depreciated guineas and shillings, and convert them into gold and silver bullion ? Mrs B. Certainly. It is this which causes our specie to disappear, and transports it to foreign coun- tries, where it is freed from the shackles of a depreciated paper currency, and enabled to fetch its real value in exchange for goods ; it is this also which, as we before observed, brings foreign goods to be sold at our market, because it is dear ; and sends our money to purchase goods at foreign markets, because they are cheap. 972. Why was this unless the guineas were adulterated ? 973. Why did not the guineas rise in the same proportion P-^ 974. What does Caroline suppose would be done if it were lawful ? 975. What becomes of this gold and silver currency which in England cannot be melted down ? ON MONEY. 251 Caroline. But if an ounce of gold rises in price from 3/. 175. lOjc?. to 5/., is it not rather the value of the bullion that has risen, than the currency that has fallen ? Mrs B. Gold bullion, like every other commodity, rises in price only, not in value ; and that rise is owing to the depreciation of the currency in which its price is estimated; were there no depreciation, bullion and guineas would both be worth 3/. 175. lO^d. an ounce. Caroline. This then I think seems to decide the point of depreciation. Mrs B. You must recollect that when I undertook to assist you in acquiring a knowledge of the principlies of political economy, we agreed to confine our inquiries to such points as were well established. We cannot, therefore, venture to decide upon questions which are yet in dispute. It is very easy to acquire some knowledge of the prin- ciples of a science, but extremely difficult to know how to apply them. I would particularly caution against hasty conclusions or inferences ; the errors arising from the misapplication of sound principles, are scarcely less dangerous than those that proceed from total ignorance. Let us now conclude our observations on currency, which we may henceforth consider as consisting not merely of specie, but of coined and of paper money. Caroline. Pray is it necessary that the value of the currency of a country should be equal to the value of the commodities to be circulated by it ? Mrs B. By no means. The same guinea or bank- note will serve the purpose of transferring from one in- 976. What question does Caroline propose concerning an ounce of gold which rises in price from 3Z. 17s. 10 l-2d. to 5Z. ? 977. How is this question answered? 978. What does Mrs B. tell Caroline she must recollect ? 979. Wliat does she say is easy . imd what extremely difficult in poUtical economy ? 980. Is it liecessary that the value of the currency of a country should be kqual to the value of the commodities to be circulated by it ? 252 ON MONEY. dividual to another several hundred pounds worth of goods in the course of a short time. There are besides many expedients for economizing money, the most re- markable of which is an arrangement made amongst bankers. Their clerks meet every day after the hours of business to exchange the draughts made on each other for the preceding day. If for instance, the bank- ing-house A. has draughts to the amount of 20,000/. on the banking-house B., the latter has also, in all probabil- ity, draughts upon the former, though they may not be to the same amount; the two houses exchange these draughts as far as they will balance each other, and are thus prevented the necessity of providing money for the payment of the whole. By this economical expedient, which is carried on amongst all the bankers in London east of St Paul's, I understand that about 200,000/. per- forms the function of four or five millions. Caroline. And what do you suppose to be the pro- portion^of the money to the value of the commodities to be circulated by it ? Mrs B. That, 1 believe, it would be impossible to ascertain. Mr Sismondi, in his valuable Treatise on Commercial Wealth, compares these respective quan- tities to mechanical powers, which though of different weights, balance each other from the quantity of their momentum ; and, to follow up the comparison, he observes that though commodities are by far the most considerable in quantity, yet that the velocity with which currency circulates compensates for its deficiency. Caroline. This is an extremely ingenious compa- rison, and I should suppose the analogy to be perfectly 981. Why not? 982. What is mentioned as one of the best expedients for economising in the use of money ? 983. What amount of money is used by the bankers in London, east of St Paul's ? 984. What does Sismondi say of the proportion of the money to the value of the commodities to be circulated by it ? ON COMMERCE. 253 correct ; for the less money there is in circulation, the more frequently it will be transferred from one to another in exchange for goods. Perfectly correct is rather too strong a term. The analogy will only bear to a certain extent ; otherwise, whatever were the proportions of currency and of com- modities, they would always balance each other, and the price of commodities would never be affected by the increase or diminution of the quantity of currency. CONVERSATION XVIII. ON COMMERCE. Difference of wholesale and retail trade, — General ad- vantages of trade. — How it enriches a country. — • Advantages of retail trade. — Great profits of small capitals explained. — Advantages of quick return of capital to farmers and manufacturers. — Advantages of roads, canals, ^c. — Difference of the home trade, foreign trade, and carrying trade. — Of the home- trade, it employs two capitals at home, and puts in motion double the quantity of home industry. — It re- turns capital quicker. MRS B. We mentioned commerce as one of the modes of employing capital to produce a revenue ; but deferred investigating its effects until you had acquired some knowledge of the nature and use of money. We may nov/, therefore, proceed to examine in what manner 985. What qualification does Mrs B. make to the ingenious com- parison of Sismondi ? 986. What is to be examined in the eighteenth conversation ? 22 254 ON COMMERCE. comraerce enriches individuals, and augments the wealth of a country. Those who engage their capitals in commerce or trade act as agents or middle-men between the pro- ducers and the consumers of the fruits of the earth; they purchase them of the former, and sell them to the latter ; and it is by the profits of the sale that capital so em- ployed yields a revenue. There are two distinct sets of men engaged in trade ; merchants, who purchase commodities (either in a rude or a manufactured state) of those who produce them — this is called wholesale trade ; and shopkeepers, who purchase goods in smaller quantities of the merchants, and distribute them to the public according to the de- mand — this constitutes the retail trade. Caroline. Trade will no doubt bring a revenue to those who employ their capital in it ; but I do not con- ceive how it contributes to the wealth of the country : for neither merchants nor shopkeepers produce anything new ; they add nothing to the general stock of wealth, but merely distribute that which is produced by others. It is true that mercantile men form a considerable part of the community ; but if their profits are taken out of the pockets of their countrymen, they may make fortunes without enriching their country. Mrs B. Trade increases the wealth of a nation, not by raising produce, like agriculture, nor by working up raw materials, like manufactures : but it gives an addi- tional value to commodities by bringing them from places where they are plentiful to those where they are scarce ; 987. In what capacity do those act who employ their capital in commerce ? -988. It is said there are two distinct sets of men employed in trade — what are they ? 989. What objection does Caroline make to trade in a national point of view ? 990. In what manner does Mrs B. say that trade increases the wealth of a nation ? ON COMMERCE. 265 and by providing the means of a more extended distribu- tion of commodities, it gives a spur to the industry both of the agricultural and manufacturing classes. Caroline. Do you mean to say that the merchant and tradesmen encourage farmers and manufacturers to increase their productions, by finding purchasers for them ? Mrs B. Yes. It would be impossible, you know, for every town or district to produce the several kinds of commodities required for its consumption ; different soils and climates, and various species of skill and industry are requisite for the purpose. Some lands are best calculated for corn, others for pasture ; some towns are celebrated by their cotton manufactures, others for their woollen cloths. Every place has, therefore, an excess of some kind of commodities and a deficiency of oth- ers ; which renders a system of exchanges necessary, not only between individuals (as we observed in treat- ing of the origin of barter,^ but between towns and coun- tries to the most distant regions of the earth. Now it is the business of merchants to exchange the surplus produce of one place for that of another. A man who deals in any particular commodity makes it his business to find out in what parts that commodity is most abundant, and will be sold at the lowest price ; and in what parts it is most scarce, and will fetch the highest price, and then to ascertain the least expensive mode of conveying it from the one to the other market. Caroline. In this they consult their own interest ; since to purchase at the cheapest and sell at the dearest market will give them the greatest profits. 991. What question does Caroline then ask? 992. Would it be possible for every town and district to produce the several kinds of commodities required for its consumption ? 993. What is said of the diflferent kinds of soil and skill ? 994. What is the consequence of this difference ? — r^995. What is the business of the merchant? 256 ON COMMERCE. Mrs B. No doubt ; but it is wisely and beneficially ordained that by consulting their own interest they are at the same time favoring that of th^^mmunity. When merchants hasten to send their^go^Jil^lo a market where they will sell at a high price, they supply those who are in want of such goods : the higher the price, the more urgent is the demaj^; it is a deficiency that has rendered them dear, and by furnishing the market with an ample supply, merchants not only satisfy the wants of the purchasers, but ultimately lower the price of the commodity. Do you think that manufacturers would be able to dispose of an equal quantity of goods without the inter- vention of mercantile men ? In such a case Manchester would be reduced to distribute its cottons merely within its own precincts and environs, instead of supplying, as it now does, not only the demand of all England, but even that of the most remote provinces in America. Trade encourages industry, in the second place, by rendering commodities cheaper. The merchant by dealing in large quantities, is enabled to bring goods to market at a less expense of conveyance, and can there- fore afford to sell them on lower terms than if the con- sumer were obliged to send for them to the places where they are produced. Caroline. Yet things may generally be bought at the lowest price, where they are produced or manufac- tured ? Mrs B. True ; but if you add the charges of a private conveyance, they will cost you much dearer. Had we no means of procuring coals, than by sending 996. How do merchants, at the same time of most advancing their own interests, most benefit the public ? 997. What would be the consequence to the manufacturer were it not for the mer- ehaut ? 998. How is it that trade makes commodities cheaper ? 999. What objection does Caroline make to this statement ? 1000. Hq vV is the objection in the expense of conveyance ? ON COMMERCE. 257 a wagon to Newcastle, though we should pay less for them there than in London, they would, from the expense of carriage, cost us more. Merchants who deal in large quantities have a regular system of conveyance for their goods, which considerably diminishes the charges. The coals are by them transported in ships to the dif- ferent sea-ports, and thence conveyed in barges to the inland parts of the country wherever water carriage is practicable. Caroline, It would, to be sure, not only be very expensive, but extremely inconvenient, were we obliged to send to distant parts for the commodities they pro- duce. If, for instance, it were necessary to send to Sheffield to purchase a set of knives and forks ; to Leeds for a coat, and to Norv;ich for a shawl ; — or, without going so far, were it requisite to send into the country for corn, meat, hay, in short, everything which the country produces, these things would cost us much more than if we bought them of shopkeepers. But admitting that trade, by facilitating the distribution of commodities, promotes their consumption, I cannot understand how that can conduce to the wealth of a coun- try : it increases its comforts and enjoyments, but it seems to me, to encourage expenditure, rather than pro- duction. Mrs B. To increase the comforts and enjoyments of a country is the ultiinate aim of national wealth ; and whilst trade promotes consumption, by rendering com- modities cheaper, it does not engender prodigality in the consumer, but encourages industry in the producer, to 1001. Why can merchants transport goods cheaper than private individuals? 1002. What cases does Caroline mention of in- creased convenience from the business of merchandise ? 1003. But what objection does she still suggest, respecting expenditure and production ? 1004. What is the ultimate aim of national wealth ? 22* 258 ON COMMERCE. augment the supply. A reduction of price brings a commodity within the reach of a greater number of persons, which increases the demand for it; the man who can afford to wear only a linen frock, will, when commodities are cheaper, be able to wear a coat. He who could allow himself but one coat in the year, can now without extravagance wear two. This increasing demand for commodities spurs the industry of the farmer and manufacturer, and they en- rich themselves by furnishing the requisite supplies. With their wealth their consumption also augments; for the wants of men increase with their means of satisfy- ing them ; and when they add to their income, they usually add also to their expenditure. The farmer has more to satisfy the desires of the manufacturer; and the manufacturer produces more to supply the demands of the farmer : so that each is enabled to give and receive a greater quantity of things in exchange. These ex- changes it is true, are made through the agency of mer- chants, and by means of money, but they are effectually exchanges of commodities, as really as if the manufac- turer supplied the farmer with clothing in exchange for provisions. The increase of saleable commodities affects in a similar manner all classes of people. The proprietor of land improves his fortune by the increasing value of his rents, which the prosperous state of agricul- ture enables the farmer to pay ; and the laborer bet- ters his condition by, the rise in the rate of wages result- ina: from the increased demand for labor. The whole may be summed up by saying, that, the quantity of 1005. What good effects are enumerated as coining from a reduction of price ? 1006. In what ratio do the wants of men increase ? 1007. What mutual correspondence is there between the farmer and the manufacturer ? 1008. Through whose agen- cy are these exchanges made ? 1009. How is the fortune of the proprietor of land improved ? ON COMMERCE. 259 commodities being increased, a larger portion will fall to the lot of every consumer who has any share in their production. Caroline, I now begin to understand the general advantages resulting from commerce. The retail trade carried on by shopkeepers must be attended with t^e same happy effects. It would be extremely inconve- nient to the rich, and impracticable for the poor, to'pur- chase the commodities they wanted in such large quan- tities as are disposed of by merchants and wholesale dealers. Were there no such trade as a butcher, for instance, every family would be obliged to purchase a whole sheep or a whole ox of the farmer. Mrs B. Retail trade is one of the most useful subdivisions of labor. Nothing can be more desirable than that the poor, who are maintained by daily or weekly wages, should be able to purchase their pro- visions in as small quantities as possible. Caroline, Yet I have often regretted the high price which the lower orders of people are obliged to pay for fuel, candles, grocery, and various little articles with which they are supplied by the chandlers' shops ; whilst the higher ranks, who can afford to purchase the same goods in larger quantities, obtain them of more exten- sive dealers, at a cheaper rate. Mrs B. You must consider that were there no small shopkeepers, the lower classes would be reduced to the utmost distress ; and these petty dealers cannot afford to sell their pennyworths without being paid for the ad- ditional labor and trouble such kind of traffic requires. 1010. How is the laborer benefited? 1011. What advanta- ges does Caroline say result from the retail trade ? 1012. What does Mrs B. say of it? 1013. What apparent evil to the poor does Caroline say she has always regretted? 1014. What does Mi's B. say of this supposed evil ? 260 ON COMMERCE. Their profits cannot be exorbitant, otherwise competi- tion would in lime reduce them to their natural stan- dard. Caroline. But by selling small quantities at a higher price, they must make more than the usual rate of pro- fit ; and how do you reconcile this to the common level of profit in all employment of capital ? Mrs B. By reckoning whatever gains they make above the usual profits of capital, as ivages, that is to say, the reward of their personal labor. The smaller is the capital which a man employs, the greater is the proportion which his wages will bear to the profits of his capital. A man who sells oranges in the streets has laid out perhaps a capital of twenty or thirty shillings on the goods in which he deals ; the usual profits of trade on such a sum is two or three shillings a year ; but if he did not carry about oranges for sale, he would work as a laborer, and get perhaps two shil- lings a day wages ; these two shillings a day, or six hundred and twentysix shillings a year, the man must make by the sale of his oranges, in addition to the usual profits of trade ; the whole of his gains go, how- ever, under the name of profits, because the distinction can be made only in theory. Caroline. But all tradesmen and mercantile men devote their fime and attention to their business: should not, therefore, a portion of their gains be considered as the reward of their personal labor, which must be valuable in proportion to the extent and importance of the concern in which they are engaged. 1015. What will always prevent exorbitant profits in the sale of goods ? 1016. How are the profits in the retail of goods recon- ciled to the common level of profit in all employment of capital ? 1017. What illustration is made of this in the case of the person who retails oranges ? ON COMMERCE. 261 Mrs B. No doubt ; yet it will bear but a small pro- portion to their profits compared with that of petty dealers. A merchant who makes in trade an income of 5000/. a year, were he to engage himself as clerk, would probably not obtain a salary of above 500/. ; his wages would therefore be equal to only one-tenth of his profits, whilst those of the man who sold oranges would be above 200 times the amount of the profits of his capital. Another advantage resulting to the farmer and manu- facturer, from the disposal of their goods to merchants, is the quick return of the capital they have employed in their production ; for they receive the price of their goods from the merchants much sooner than they would, were they obliged to collect it gradually from the consumers. Let us suppose a cotton manufacturer who devotes a capital of a thousand pounds to the employment of as many laborers as. it will maintain, and sells their work to a wholesale dealer for 1100/, With this money he immediately sets his men and his mills to work again ; whilst if he retailed the goods himself, though instead of J 100/. he might perhaps get 1200/. for them, yet, as the money would come in very slowly, he and his work- men would necessarily be kept a long time out of employ. Caroline. To the farmer such delays would prove ruinous if he could not sell his crops in time to proceed with the necessary cultivation of the farm for the ensu- ing season. 1018. Should not a portion of the gains in business, with all tradesmen and mercantile men, be considered as the reward of their personal labor ? 1019. What cases are mentioned to illustrate this ? 1020. What is another advantage to the farmer and manu- facturer from the disposal of their goods to the merchant? 1021. What illustration is given of the benefits resulting from this quick return ? 1022. How would such delays prove ruinous to the farmer ? 262 ON COMMERCE. Mrs B. In order to avoid such extremities both the fanner and the manufacturer would be obliged to divide their capital into parts, and employ the one in raising or manufacturing commodities and the other in disposing of them. To the occupations of agriculture or manu- factures, they would find it necessary to add that of trade, a complication which would be equally injurious to each of the concerns. Commerce is one of the economical divisions of labor ; if it sets apart a certain number of men, for the purpose of circulating and dis- tributing the produce of the earth, it is in order that those who are engaged in raising and manufacturing that produce, should be able to devote the whole of their capital, their time and their talents, to their respective employments. It is worthy of observation, too, that none of these divisions are enforced by law, but exist under the choice of the parties, and has been adopted from a view to their general interest. But although it is advantageous to separate commerce from other branches of industry, it is desirable that its operations should be facilitated as much as possible, both in order that the agriculture and manufactures should not be deprived of too many laborers, and that commodities should be brought to market with the least possible expense. Good and numerous roads and navi- gable canals are extremely conducive to this end, as they enable the produce of the country to be conveyed with ease and expedidon to the several markets; for ease and expedition economize time and labor, and economy of time and labor is productive of cheapness. 1023. In order to avoid such extremities to what would they be obliged to resort ? 1024. What is said of Commerce ? 1025. What is here worthy of observation ? 1026. Is it advan- tageous to separate commerce from agriculture ? 1027. Why is it desirable that its operations should be facilitated ? 1028. In TV hat way ar^ canals and roads conducive to this end ? ON COMMERCE. , 265 Caroline. Were there no roads, the farmer being without means of sending his crops to market would not produce more than could be consumed by his family, and perhaps some few customers in his neighborhood, and he must be content to clothe himself with the fleece of his flocks and the skins of his herds, for he would be unable to procure manufactured articles. Nor would the manufacturers be better off, as the market for the disposal of their goods would be equally limited. Mrs B. Neither towns nor manufactures could exist in such a state of things, because they could not be supplied with the produce of the country, which is still more necessary to their existence, than the work- manship of the towns is to the farmer. It is the. surplus produce of the country which pays for the workmanship of the towns, and the surplus workmanship of the towns that pays for the produce of the coimtry. The greater therefore the intercourse between town and country, the greater is the! encouragement given to the industry of both. History teaches us that in all old settled countries, no material improvement has taken place in the cultivation of the lands, without a considerable advance in the state of manufactures and commerce; and Adam Smith even goes so far as to say, that " through the greater part of Europe the commerce and manufactures of cities instead of being the efl?ect, have been the cause and occasion of the improvement and cultivation of the country." But as the forms of governments, and the manners and customs of our barbarous ancestors, have constantly 1029. What would be the consequence were there no roads ? 1030. What pays for the workmanship of the towns? 1031. What for the produce of the country ? 1032. What does history teach us relative to the cultivation of lands in old settled countries ? 1033. What is the observation of Adam Smith. 264 ON COMMERCE. interfered with and restricted the progress of wealth and civilization of Europe, the natural order of things has fre- quently been reversed, and towns have arisen, not from the surplus wealth of the country, but as citadels and for- tresses in which the people found shelter from the oppression of their superiors, and the incursions of their warlike neighbors. We must look to America for the natural effects of the progress of wealth and civilization, and we shall there behold the habitations of farmers scattered over the face of the country, and towns built only after cultivation was far advanced. Caroline. In expatiating on the advantages of facility of conveyance, it must not, however, be forgotten, that the land which is converted into roads is taken from til- lage ; and could we calculate the quantity of corn and hay which the roads, in a state of culture, might have produced, it would perhaps be found that some of them have occasioned more loss than gain. To take land from cultivation for the purpose of roads appears to me very analogous to taking laborers from agriculture for the purpose of trade. Mrs B. The result is in both cases similar ; for there can be no doubt but that the general effect of roads and canals is to increase the produce of the country. If we are indebted to merchants for the advantages of trade, roads and canals are the instruments with which they carry it on. Deprived of such means their operations would be very circumscribed ; there would be no trade but at sea-ports, and along the course of rivers. The charges of conveyance from Liverpool to Man- chester on the duke of Bridgewater's canal is six shil- 1034. To what country must we look for the effect of progress in wealth and civilization ? 1035. What shall we behold there .' 1036. In expatiating on the advantages of facility of conveyance , what must not be forgotten .' 1037. What are the charges of conveyance from Liverpool to Manchester on Bridgewater canal ? ON COMMERCE* 265 lings a ton, whilst the price of land carriage is forty shillings. Caroline. If there had been a river from one of those towns to the other, the expense of carriage would have been still less than that of the canal. Mrs B. I beg your pardon ; a river is seldom uni- formly navigable, and is always more or less circuitous in its course ; and where the stream is powerful, it will admit of navigation only in one direction, as is the case in some of the American rivers. Before the Bridge- water canal was dug, the usual mode of conveyance of goods was along the Mersey and the Trevell, and the cost was twelve shillings a ton, just double that of con- veyance on the canal. Macpherson observes, that " this spirited and patriotic enterprise of the duke of Bridgewater is rewarded by a vast revenue arising from his water carriage and his formerly useless coal-mine ; and the surrounding country is benefited a pound at least in every shilling paid to the duke." Caroline. This reminds me of a circumstance that occurred during a tour in Wales ; we were admiring a neat fountain which supplied a village with water, and were informed by the landlord of the inn, that he had constructed it, and had had the water conveyed from a distant spring, whence the people of the village had for- merly been under the necessity of fetching it. A tri- fling sum was annually paid by each family for liberty to use this water, and the landlord thought it necessary to make many apologies for not allowing it them free of expense, and talked much of the money he h?d laid out in the enterprise. My father assured him that he was convinced the speculation was still more beneficial to the 1038. Before that canal was dug what was the mode of convey- ance ? -1039. At what expense ? 1040. What does Mac- pherson here observe concerning the revenue ? 1041. What cir^ cumstance is mentioned as having occurred in Wales ? 23 266 ON COMMERCE. villa2;e than it was to himself ; that as the inhabitants had the option of fetching water for themselves, the payment proved that it was because they could turn the time and labor they bestowed on the conveyance of water to bet- ter account ; and upon inquiry we found the village had been in an improving state ever since the erection of this fountain. It had not only become more opulent, but had acquired habits of cleanliness, which had proved very beneficial to the health of the people. Mrs B. There are three species of commerce in which merchants engage their capitals. The home trade, foreign trade, and the carrying trade. The home trade comprehends all the internal and coasting trade of a country. The foreign trade is that in which we exchange our commodities for those of foreign countries ; and the carrying trade consists in conveying the commodities of one foreign country to another. Let us at present confine our observations to the home trade.' Caroline. The home trade, I conclude, must be the most advantageous to the country, because it encourages the industry of our own people. Mrs B. But what difference is there whether our laborers are employed to work for us, or for foreigners ? for if we export English goods, we receive an equal amount of foreign goods in exchange 5 so that foreign laborers work equally for us in return. It is true, however, that the home trade possesses over the foreign trade the advantage of employing a greater quantity of our own capital. As trade consists in an exchange of commodities, two capitals must be employed in the purchase of the different commodities to be ex- 1042. How many species of commerce are there in which mer- chants engage their capitals? 1043. What does the home trade comprehend ? 1044. What the foreign trade ? 1045. Of what does the carrying trade consist ? 1046. In what way does home trade possess an advantage over foreign trade ? ON COMMERCE. 267 changed ; in the home trade both these capitals are our own, and both of them are employed in the purchase of British goods, the produce ofBrhish laborers; thus affording the means of maintaining and continuing their industry. In the foreign trade, only one of the capitals engaged is our own ; the other is foreign. When, for instance, the hardware of Birmingham is exchanged for the cot- ton goods of Manchester, the country benefits by the profits of the capitals of both the parties concerned in the exchange. But if the Birmingham merchant sends his goods to France, to be exchanged for cambrics, this country will benefit only by the profits of one of the par- ties, those of the French merchant enriching his own country. Caroline. And it must be desirable that the second capital should be English instead of foreign, not only on account of the capitalist, but also of the laborers whom it employs. Mrs B. Another advantage of the home trade is, that it affords a quicker return of capital, which is a fur- ther means of promoting industry. The nearer is the market at which the merchant disposes of his goods, the sooner will his capital be returned to him, and the sooner will he be able to take other goods from the hands of the farmer or manufacturer. If a London merchant trades with Sheffield or Manchester, his capital may be returned to him in the course of a few weeks ; if with America or the East Indies, it may be a year or two, or more, before he gets it back. The greater the vicinity of the market, therefore, the greater the number of sales and purchases he will be able to make in a given time. A capital of 1000/., for instance, might in the home 1047. What illustration is given of this? 1048. What other advantage is derived fromtiome trade ?- — -What illustration of this is given in the case of a London merchant ? 1049. How is this pr.ove,d in the supposition of the 1000?. useid as a capital,' 268 ON COMMERCE. trade be returned once a month, and enable the mer^ chant, during the course ofthe year, to purchase 12,000Z. worth of goods; whilst, if he sent his nnerchandise to India, two years would probably elapse before he got his capital returned. In the first case, therefore, the 1000/. capital would afford twenty four times more en- couragement to industry than it would in the latter. Caroline. You do not thence mean to infer, that in the first case the profits would be twentyfour times greater ? Mrs B. Certainly not. Competition is, you know, perpetually tending to equalise the profits of capital, in whatever way it is employed. Profits will consequently be proportioned to the slow return of capital ; and must therefore, be reckoned annually, and not calculated upon every time the capital is returned. Caroline. The period of the return of capital ap- plies, then, not so much to the home or foreign trade, as to the distance of the market ; for capital might be re- turned quicker in trading, with Calais or Dunkirk than vWth Edinburgh or Cork.'' Mrs B. It is very true ; and how much is it to be regretted that jealousies and dissensions should so fre- quently impede and restrict the trade between neighbor- ing nations, which would otherwise be carried on with such great and reciprocal advantage ! But we shall re- serve til! our next interview the observations we have to make on foreign trade. 1050. To what are profits proportioned ? 1051. How often must they be reckoned ? 1051. What does Mrs B. say should be regretted ? ON FOREIGN TRADE. 269 CONVERSATION XIX. ON FOREIGN TRAPE. Advantages of foreign trade, — It employs the surplus of capital, and disposes of a surplus of commodities. — ) Cff bounties. — Effects of restrictions on foreign trade. — Extract from Sayh Political Economy. — Extract from Franklin's Works, CAROLINE. At our last interview, Mrs B., you were regretting that any restraint should be imposed on our trade with foreign countries ; but since you have explained to me the superior advantages arising from the home trade, I should have supposed that every measure tending to discourage foreign commerce, and promote our own industry, would be extremely useful. Mrs B. You would find it difficult to accomplish both those objects ; for in order to encourage our own industry we must facilitate the means of selling the pro- duce of our manufactures, and extend their market as much as possible. Oh the other hand, if we prohibit exportation we limit the production of our manufactures to the supply which can be consumed at home. No measure tending to the discouragement of foreign trade, can, therefore, be said to promote the industry of the country. Caroline. But foreign trade cannot be both advan- tageous and disadvantageous to a country ? Mrs B. It is never disadvantageous, but only less beneficial than the home trade. It is only after the de- mand at home is supplied, that our surplus produce is sent to foreign markets. When we have more capital 1052. In order to encourage our own industry what means must we facilitate ? 1053. Can foreign trade ever be disadvantageous to a country ? 23* 270 ON FOREIGN TRADE* to dispose of than is required in the home trade, instead of leaving it useless, and the laborers it would employ idle, we set them to work for foreign markets. Jf, for instance, the woollen manufacturers of Leeds, after having supplied the whole demand of England for broad- cloths, have any capital left, they will use it in the pre- paration of woollen goods for exportation. Caroline. Why not rather employ it in the fabrica- tion of other commodities which may be consumed at home ? Mrs B. If there were a deficiency of capital in any other branch of industry at home, the redundancy would naturally be drawn to that branch ; but if all the trade, that is, all the exchanges that could be made at home, have been made, we send the residue of our commodi- ties to foreign markets for sale. Caroline. Yet it appears a great hardship on the poor to send goods abroad, which so many of them are in want of at home. Mrs B. The poor are at first supplied with what- ever they can afford to purchase ; and without the means of purchase you must recollect, that there can be no effectual demand. It is not to be expected that farmers and manufacturers should labor for them merely from charitable motives, and were they so disposed, they would not long possess the means of continuing their benevolence. It would be very wrong, therefore, to consider this surplus produce as taken from the poor ; for it would not have been produced had there been no demand for it in foreign countries. Caroline. That is very true. In all employment of capital men labor with a view to profit; they work, 1054. What instance is here mentioned?— — 1055. Why n-ot employ it in the fabrication of other commodities which may be consumed at home ? 1056. Without the means of purchase can there be any effectual demand ? 1057. In all employment of capital with what view do men labor ? ON FOREIGN TRADE. 271 therefore, only for those who will pay them the value of their produce. And it is easy to conceive that those who have no further want of English commodities may yet wish to procure foreign goods. The English mer- chant will therefore say, " Since there is no more demand for the goods I deal in, I will export the remainder, which will be' purchased abroad, and I shall get foreign commodities in exchange ; — though my countrymen do not require any more cotton goods, 1 know that they will purchase wines, coffee, sugar, &z:c." Airs B. Very well. Let us examine now what would be the effect of confining the employment of com- mercial capital to the home trade. If the inhabitants of the West Indian islands, Jamaica, for instance, were to prohibit the exportation of coffee and sugar, and the planters were obliged to trade only within the island, the consequence would be that the demand for coffee and sugar would be very insignificant, and that an inconsi- derable part only of the capital of the colony would find employment. The same effect would take place in -Russia, if foreign merchants were not allowed to pur- chase the hemp and flax so abundantly produced in that country. If in Peru and Chili the exportation of indigo, bark, and other drugs, was prohibited, the Europeans who purchase them, would not be the only sufferers ; the Americans would be impoverished for want of employ- ment for their capital. Caroline. All this is very clear, I admit. But what security have we that merchants will not employ their capital in foreign commerce, before the demand for it in the home trade is fully supplied? 1058. What illustration- is given of this? 1059. What is now to be the subject of our examination ? 1060. What instance is given of the inhabitants of the West Indian islands? 1061- What regarding Russia ? 1062. What in Peru and Chili? 272 ON FOREIGN TRADE. Mrs B. That security is derived from the natural distribution of capital according to the rate of profit. If foreign commerce employed more capital than the coun- try could spare, the demand for it at home would raise the profits of the home trade, and the temptation of these increased profits would soon restore that portion of capi- tal which had been unnecessarily withdrawn from it. Caroline. What an excellent criterion the rate of profit affords of the employment of capital most advan- tageous to the community ! When foreign commerce then offers greater profits than the home trade, it proves that there is a greater demand for capital in that branch of industry ? Mrs B. Yes, it proves that the country possesses a surplus quantity of produce either agricultural or manu- factured, which cannot be disposed of in the home mar- ket 5 and if the owners of this surplus were prevented from exchanging it for foreign commodities, it would not in future be produced, and those who produced it would be thrown out of employment. The first commodities a country usually exports is agricultural produce, which she exchanges for manu- factured goods ; this is still the case with America, on account of its being a newly setded nation ; it is also the case with Poland and Russia, those countries having made slower progress in wealth and population than the other communities of Europe. When nations are con- siderably advanced in wealth and population, all the food 1063, What security have we that merchants will not employ their capital in foreign commerce before the demand for it in the home trade is fully supplied? 1064. If foreign commerce em- ployed more capital than the country could spare, what effect would the demand for it have upon the home trade ? 1065. How would that portion of capital which had been withdrawn from it be restored ? 1086. When foreign commerce offers greater profits than the home trade what does it prove ? 1067. W^hat are the first commodities which a country usually exports ? 1068. With what nations is this still the case .•• ON FOREIGN TRADE. 273 they can raise is required at home, and manufactures are established in order to employ the increased numbers of people 5 in the course of time they find it expedient to export manufactured goods in return for corn, the home supj)ly5 which was at first so redundant, being no longer sufficient to maintain the increased population. And it is at this point that England is now arrived. Caroline. I am surprised that foreign commerce with distant countries should ever offer sufficient profits to afford a compensation to the merchant for the disad- vantages arising from the slow return of capital. Mrs B. If it did not, no merchant would engage in it. The greater the distance of the market to which he* sends his goods the greater must be the profits on their sale, to make up not only for the tardy return of his capital, but also for the charges of conveyance of the goods. Freight and insurance from sea risks are both to be deducted from the profits of the merchant in foreign trade. Caroline. Then since we are obliged to sell our goods at such high prices in distant markets, I wonder that we should find purchasers for them : would it not answer better for those countries to produce them at home ? Mrs B. You may be assured that no nation will purchase from abroad what may be procured of the same quality and for less expense at home. But all coun- tries are not equally capable of producing the same kind of commodities, either rude or manufactured. The gifts of nature are still more diversified in the different climates of the earth, than the habits and dispositions of men. It would be impossible for us at any expense to 1069. When nations are advanced in wealth and population, for what are manufactures established ? 1070. What are to be de- ducted from the profits of the merchant in foreign trade ? 1071. Are all countries capable of producing the same kind of commo- dities ? 274 ON FOREIGN TRADE. produce the wines of Portugal, on account of the cold- ness of our climate. We can procure them only by an exchange of conamodities ; the Portuguese take our broadcloth in return ; this, it is true, they might manu- facture at home ; but as our climate is peculiarly favora- ble to pasturage, and our workmen particularly skilful in manufactures, broadcloths could not be made in Portu- gal equally good at the same expense, including the charges of freight and insurance ; and whilst the Portu- guese can purchase them of us for less than they can fabricate them at home, it is certainly their interest to procure them in exchange for commodities, the culture or fabrication of which is more suited to the nature of their climate and the habits of the people. But the difference of price of our manufactured goods at home or abroad is not so great as you would imagine 5 in articles of small bulk it is very trifling. 1 recollect some years since purchasing an English pocket-book at Turin for nearly the same price that it would have cost in London. Caroline, How then was the expense of conveyance defrayed ; and what compensation was there for the slow return of capital? Mrs B. These expenses probably did not more than counterbalance the high rent and taxes paid by London shop-keepers, which I believe are comparatively insignificant at Turin. There might, perhaps, also be some bounty on the exportation of such goods, which would enable the merchant to sell them at a lower price. Caroline. Pray what is a bounty on goods ^ Mrs B. It is a pecuniary reward given by govern- 1072. Why does Mrs B. say it would be impossible to produce the wines of Portugal ? 1073. How then can they be procur- ed ? 1074. Why do not the Portuguese manufacture cloths ? 1075. How is the expense of conveyance defrayed, and what compensation is there for the slow return of capital ? 1076. What is a bounty on goods ? ON FOREIGN TRADE. 275 ment for the exportation of certain goods. Governments so far from partaking of your prejudices against foreign trade, often think it right to encourage the exportation of their manufactures by such artificial measures. Caroline. A bounty then on any commodity has the effect of inducing merchants to export more of it than they would otherwise do, as it raises their profits. But in consequence of this, capital will be drawn into this trade beyond its due proportion ? J\J?s B. Certainly ; a bounty often tempts merchants to invest capital in a trade which otherwise would not answer; that is, to export goods which would not yield" a profit, after paying the expenses of conveyance, with- out such encouragement; and this capital, were it not artificially drawn out of its natural course, would flow into channels which would yield profits, without any expense to government. Caroline. Here then my apprehension of foreign trade is well founded ; for more capital is drawn into it than is required to preserve the equality of profits. Mrs B. That is sometimes the case ; but it may also be unduly drawn from one branch of foreign com- merce to another. The effect of bounties, however, is generally counteracted by the nations with whom we trade. Alarmed at our thus forcing our goods upon them, and dreadfully apprehensive of its interfering with the sale of their own manufactures, they immediately lay a duty on the commodity on which we grant a bounty, and oblige it to pay, on entering their territory, a sum at least equivalent to that, which we bestow on it on quitting our own. 1077. What is a bounty on goods ? 1078. What effect has bounty on the exportation of goods ? 1079. What is the conse- quence ? 1080. What would become of this capital were it not artificially drawn out of its natural course ? 1081. Is the effect of bounties counteracted ? 1082. In what manner is it counter- acted ? 276 ON FOREIGN TRADE* Caroline. What a pity that either party should inter- fere to check and restrain the natural course of com- merce ! The disease, however, seems to call for the remedy ; as it is sometimes expedient to take one poi- son as an antidote to another. Mrs B. If we are so generous, or so foolish, as to enable foreigners to purchase our commodities at a cheaper rate, by paying a part of the price for them,' are we not doing them a service, and ourselves an injury ? and is it wise in them to endeavor to counteract such a measure ? Caroline. True ; I did not consider it in that point of view. It is really laughable to see two nations, the one strenuously endeavoring to injure itself, whilst the other studiously avoids receiving a benefit ; and thus, by the mutual counteraction of each other's artifice, they leave the trade to follow its natural course. I am now perfectly satisfied of the advantage of obtaining by means of foreign commerce, such articles as cannot be produced at home ; but I confess I do not feel the same conviction with regard to commodities, which might be produced at home, though with some additional expense. Mrs B. Why should it not be the interest of a coun- try as well as that of an individual, to purchase commo- dities wherever they canbe procured cheapest.^ It might be very possible, as it has been observed by an ingenious writer,^ for England to produce at a great expense of labor the tobacco which we now import from Virgi- nia ; and the Virginians, with no less difficulty, might fabricate the broadcloths with which we furnish them. But if our climate is better adapted to pasturage, and * Sir Francis Divernois. 1082. In what way does Mrs B. suppose the English are doing other nations a service and themselves an injuiy ? 1083. How is it evident that the exchange of commodities is a mutual advan- tage ? ON FOREIGN TRADE. 277 ibat of Virginia to the culture of tobacco, it is evident that the exchange of these commodities is a mutual ad- vantage. Caroline. But are not the goods exchanged in trade of equal value ? If we send the Virginians a thousand pounds worth of broadcloths, they will send us a thou- sand pounds worth of tobacco in return. It may be a convenient measure, and the exchanging merchants will each make their profits ; but I cannot perceive how the country can derive any accession of wealth from such traffic. Mrs B, Recollect that we said trade gives an ad- ditional value to commodities by bringing them from places where they are plentiful, to those where they are scarce. When we ship off 1000/. worth of broadcloths for Virginia, and the Virginians export 1000?. worth of tobacco for England, the commodities exchanged are of equal value ; but they each acquire an additional value during the transport : the tobacco was not worth so much' in Virginia as it is when it arrives in England, because not being cultivated here, it is more scarce and in great- er demand with us. The broadcloth was not worth so much in England as it is when it reaches Virginia, because, not being fabricated in that country, it is more scarce and in greater demand there. Caroline. Very true ; but if we both cultivated tobacco and fabricated broadcloths ; and if the Virgi- nians did the same, each country would be supplied at home, and the expense of conveyance of the two cargoes exchanged would be saved. Mrs B. If we could raise tobacco at as little expense as it is done in Virginia, and the Virginians could manufacture broadcloths as cheap as they can 1084. Are the goods exchanged in trade of equal value? 1085. How can the country derive any accession of wealth from such traffic ? 1086. By what example is this illustrated .?-; 1087. Can the English raise tobacco with as little expense as it is done in Virginia ? 24 278 ON FOREIGN TRADE. purchase them of us, your argument would be just ; but that is not the case. To make this clear to you, let us examine what quantity of labor is bestowed upon the production of these'^several commodities. If the broad- cloth which we send to Virginia cost us the labor of one man, we will say for 1000 days, while the tobacco which we receive in exchange would have cost us 2000 days' labor to produce at home, do we not save a thou- sand days' labor ? and is not the advantage to the Virgi- nians similar, if the tobacco which cost them 1000 days' labor to raise will exchange for English broadcloth, which they could not have manufactured under 2000 days' labor ? Caroline. By such an exchange, then, each country saves 1000 days' labor? Mrs B. Yes ; and to save is to gain ; for the thou- sand days' labor thus economized are employed in the production of some other commodity, which is so much clear gain to each country. Caroline. Then each country procures the commo- dity it wants at half the expense which would have been required to produce it at home ? Mrs B. Just so. To put the question in other words, we may say, if by the employment of 50,000Z. in the Virginia trade we can obtain as much tobacco as would require 100,000Z. if cultivated at home, there is 50,000Z. economized, which v/ill be employed in pro- ducing something else. The advantages of foreign com- merce, it is true, are seldom carried so far as a saving of half the expenses of production; but they must always exist in a greater or less degree ; for it is evident that no nation will purchase from abroad, what can be produced equally cheap and good at home. 10S8. How is this illustrated by example ? 1089. By such an exchange how many day's labor would each country sa^^ ? 1090. Does each country procure the coram,odity it wants athalf the expense which would be required to produce it at home ? 1091. Are the advantages of foreign commerce carried so far as to save half the expenses of production ? ON rOREIGN TRADE. 279 Caroline. When goods are equally good and cheap I certainly prefer buying them of shops in the neighbor- hood rather than at a distance, because it is more con- venient ; but why merchants should feel the same pre- ference I do not clearly see ; provided the goods they receive in their warehouses are of the same quality and price, I should think it would be immaterial to them from whence tliey came ? Mrs B. They, like you, find advantages in dealing with their neighbors 5 it enables them to ascertain better the character of the persons of whom they make their purchases ; it affords them the means of protecting themselves against imposition, and of applying a legal remedy in case of necessity. As long as profits are equal, therefore, (independently of risk) a merchant will always prefer employing his capital in the home trade ; and it is only superior profits that can tempt him to enter on a trade in which he is exposed to greater risks. You may recollect we formerly observed ihat the chances of gain must always be proportioned to the chances of loss. Caroline, I confess that before this explanation I never could comprehend how foreign trade could be a mutual advantage to the countries engaged in it, for I imagined that what was gained by the one was lost by the other. Mrs B. All free trade, of whatever description, must be a mutual benefit to the parties engaged in it ; the only difference that can exist with regard to profit is, that it may not always be equally divided between them. An opposition of interests takes place not between mer- chants or countries exchanging their commodities, but 1092. How long will a merchant prefer employing his capital in the home trade ? 1093. To what must the chances of gain be proportioned ? 1094. What is the only difference that can exist with regard to profit ? 1095. Between whom does an opposition of interest take place ? 280 ON FOREIGN TRADE. between rival dealers in the same commodity ; and it is from that circumstance probably that you have been led to form such an erroneous idea of commerce. Do you not recollect our observing, some time since, that com- petition amongst dealers to dispose of their commodities renders them cheap, whilst competition amongst purcha- sers renders them dear. When you make any purchase, are you not sensible that the greater the number of shops in the same neighborhood dealing in the same commo- dity, the more likely you are to purchase it at a low price f Caroline. Yes ; because the shopkeepers endeavor to undersell each other. Mrs B, It is therefore the interest of the dealer to narrow competition, whilst it is that of the consumer to enlarge it. Now which do you suppose to be the in- terest of the country at large ? Caroline. That of the consumer ; for every man is a consumer, even the dealers themselves, who, though they are desirous of preventing competition in their own individual trade, must wish for it in all other species of commerce. Mrs B. No doubt ; it is by free and open competi- tion alone that extravagant prices and exorbitant profits are prevented, and that the public are supplied with commodities as cheap as the dealer can afford to sell them. Caroline. But in regard to luxuries, Mrs B., may we not be allowed to encourage those of our own pro- 1094. What is tiie only difference that can exist with regard to profit ? 1095. Between whom does an opposition of interests take place ? 1096. Why is it that when you make a purchase you are more likely to obtain it at a low price, when there are in the same neighborhood a great number of shops dealing in the same commodi- ty ? 1097. Which is the interest of the country at large ? 1098. By what is it that extravagant prices are prevented? 1099. May we not be allowed to encourage the luxuries of our own pro- duction in preference to those other countries ? ON FOREIGN TRADE. 281 ductlon in preference to those brought from foreign countries ? Mrs B, The commercial state of France during Bonaparte's system of prohibition will furnish a very satisfactory answer to your question. The West Indian produce, which the French were prohibited from pur- chasing, consists chiefly of certain luxuries of which they could not endure to be deprived ; so that, for instance, they were employed, at an immense expense of capital, in extracting a saccharine juice from various fruits and roots to answer in an inferior degree the purpose of sugar ; they cultivated bitter endives, the root of which supplied them with a wretched substitute for coffee ; their tea was composed of indigenous herbs of a very inferior flavor to that of China. In a word, labor was multiplied to produce commodities of inferior value ; or they would have been altogether deprived of a variety of comforts to which they had been accustomed, and which, besides the pleasure derived from the enjoyment of them, we have observed to be one of the strongest in- citements to industry. But the privation of the consumers of luxuries is but a trifling evil compared with the consequences of such restrictions upon the laboring classes ; for its effect is to inrcease the difficulty of i-aising produce, and, conse- quently, to diminish the quantity of capital, the fund upon which the poor subsist. M. Say, who witnessed all the pernicious effects of this system, thus expresses himself: " C'est un bien mauvais calcul que de vouloir obliger la zone temperee a fournir des produits a la zone torride. Nos terres produisent peniblement en petite quantite, et en qualite mediocre, des matieres sucrees et colorantes, qu'un 1100. What is the privation to consumers of luxuries compared with the consequences of such restrictions upon the laboring classes ? 1101. What opinion is given by M. Say upon this subject ? 24* 282 ON FOREIGN TRADfi. autre clirnat donne avec profusion ; mais elles produlsent, au contraire avec facilite, des fruits, des cereales que leur poids et leur volume ne permettent pas de tirer de bien loin. Lorsque nous condamnons nos terres a nous donner ce qa'elles produisent avec desavantage aux de- pends de ce qu'elles produisent plus volontiers ; lorsque nous achetons fort cher, ce que nous payerions a fort bon marche, si nous ie tirions des lieux ou il est produit avec avantage, nous devenons nous memes victimes de notre propre folic. Le comble de Fhabilite est de tirer le parti le plus avantageux des forces de la nature ; et Ie comble de la demence est de lutter centre elles ; car c'est employer nos peines a detruire une partie des forces qu'elle voudroit nous preter." Caroline. The prohibition of foreign commodities has then an effect precisely the reverse of that of ma- chinery ; for it increases instead of diminishing the quan- tity of labor ; and produces inferior instead of more perfect commodities. Mrs B. And consequently the wealth, prosperity, and enjoyments of a country so situated, instead of aug- menting would decline. Let us hear what Dr Franklin says on the subject of restrictions and prohibitions. " Perhaps in general, it would be better if government meddled no further with trade than to protect it, and let it take its course. Most of the statutes or acts, edicts, arrets, and placards, of parliaments, princes, and states, for regulating, directing, or restraining of trade, have, we think, been either political blunders, or jobs obtained by artful men, for private advantage, under pretence of pub- lic good. When Colbert assembled some wise old mer- chants of France, and desired their advice and opinion how he could serve and promote commerce ; their an- swer, after consultation, was in three words only, ' Lais- 1102. What effect has the prohibition of foreign commodities ? 1103. What opinion is expressed by Dr Franklin on the subject of restrictions and prohibitions ? ON FOREIGN TRADE. 283 sez nous faire.^ It is said by a very solid writer of the same nation, tliat he is well advanced in the science of politics who knows the full force of that maxim, pas trop gouverner, which perhaps would be of more use when applied to trade, than in any other public concern. It were therefore to be wished, that commerce were as free between all the nations in the world, as between the several counties of England. So would all, by mutual communication, obtain more enjoyment. Those coun- ties do not ruin each other by trade, neither would the nations. No nation was ever ruined by trade, even seem- ingly the most disadvantageous. Whenever desirable superfluities are imported, industry is thereby excited and superfluity produced." Caroline. Well, I abandon the exclusive use of Eng- lish luxuries ; but the very argument you have used against them makes me think that it must be advisable to rely on home produce for the necessaries of life. Were we dependent on foreign countries for a supply of corn, what would become of us if those countries, in time of war, prohibited its exportation ? Mrs B. Your question will lead us into a discussion on the corn-trade, which it is too late for us to enter up- on today ; we will, therefore, reserve it for our next meeting. CONVERSATION XX. CONTINUATION OF FOREIGN TRADE. On the corn trade. — Consequences of depending upon a home supply of corn in countries of great capital and population. — It produces high prices in ordinary 1104. What farther is mentioned by a French writer ? 1105. "What therefore is to be wished regarding commerce among all nations ? 1106. Was any nation ever ruined by trade ? 1107. What is the subject of the twentieth conversation ? 284 ON FOREIGN TRADE. seasons, and great fluctuation of prices in times of scarcity and of abundance. — Why this is not the case in newly settled countries. — Propriety of free trade in general. — Danger of introducing a new branch of industry 'prematurely. — Extract from Mirabeau^s Monarchic Prussieyme on the advantages of free commercial intercourse. MRS B. When we last parted, you expressed a wish that we should raise all our corn at home, in order to be com- pletely independent of the casualties attending a foreign supply. Caroline. Yes ; for were we at war with those countries which usually furnished us with corn, they would withhold the supply. Or, should they experience a dearth, they would no longer have it in their power to send us corn. Mrs B. We occasionally import corn from different parts of America, from the shores of the Baltic, and those of the Mediterranean seas. Now it is very im- probable that w^e should be in a state of wai'fare with those various countries at the same period of time, or that they should all be afflicted with a dearth of pro- duce in the same season. There is much greater chance of a scarcity prevailing in any single country than in every part of the world at once ; and should we depend wholly on that country for our supply, where would be our resource in case of a deficiency ? Caroline. Under such circumstances it would cer- tainly be right to import corn ; I object only to doing so habitually, and not depending, in ordinary times, on the produce of our own country. 1108. Why would it seem expedient to be independent of the cas- ualties attending a foreign supply ? 1109. From what places is corn occasionally imported ? 1110. What is it improbable to ON FOREIGN TRADE. 285 Mrs B. If we apply to corn countries only in sea- sons of distress, we shall find it very difficult to obtain relief. Those countries raise corn expressly for the na- tion which they usually supply with that article ; but they will have but little to spare for a new customer, who, from a dearth at home, is compelled to seek for food abroad ; and we could obtain it only by outbidding other competitors. The supply, therefore, would be both scanty, and at a price which the lower ranks of people could ill afford to pay ; so that there would be a great distress if not danger of a famine. Caroline. To prevent such a calamity we have only to raise so large a quantity of corn at home as will afford a plentiful supply in years of average produce ; then in seasons of abundance we have the resource of exporta- tion, and in bad seasons we might still have a sufficiency. Mrs B. It is impossible to raise at all times a suffi- ciency without having often a superfluity. This is par- ticularly the case with corn, as it is the most variable of almost all kinds of agricultural produce. If, therefore, we wish to raise such a quantity as will always secure us against want, we must in common seasons have some to spare, and in abundant years a great superfluity. Now the more corn land we cultivate, the higher will the price of corn be in average seasons. You start, Caroline; but paradoxical as this may appear, if you reflect upon the causes which occasion the regular high price of corn ; independently of the variations of supply and demand, you will understand it. The more corn is grown in a country, the greater will be the quantity of inferior land brought into cultivation, in order to produce it; and the price of corn, you know, must pay the cost of its production on the worst soil in 1111. If we apply to corn countries in seasons of distress only, why should we find it difficult to obtain relief? 1112. In what proportion will the price of corn be raised ? 1113. What must the price of corn pay ? 286 ON FOREIGN TRA.DE. which it is raised,* otherwise it would cease to be pro- duced. If, therefore, in order to insure a home supply, we force an ungrateful soil, at a great expense of capi- tal, to yield a scanty crop, we raise the price of all the corn of the country to that standard, and we thus enable the landed proprietors to increase their rents. — By en- hancing the price of the first necessaries of life we raise the rate of wages, in order to enable the laboring classes to live ; and we raise the price of all manufactured goods, the produce of their labor. Caroline. This is indeed a long catalogue of ruinous consequences. Mrs B. Nor is this all ; when the home supply proves superabundant, what is to become of it ? The unnatural high price at which it usually sells in our market, owing to the forced encouragement given to agriculture, renders it unsaleable in foreign markets until the price is fallen so low as to be ruinous to farmers. Caroline. I cannot easily bring myself to look upon a superfluity of the necessaries of life as a calamity ;— if it is injurious to the farmer, what an advantage it is to the lower classes of people ! J\Irs B. The advantage is of a very temporary nature. The farmer who cultivates poor land in hopes of a remunerating price, must be ruined if he continues to cultivate at the low price occasioned by superfluity ; he will therefore throw up the inferior lands, and the consequence will be that less corn will be produced in succeeding years than is requisite for the supply ; and * See conversation on Rent. 1114. How are the landed proprietors enabled to increase their rents ? 1115. Why do we enhance the price of the first neces- saries of life? 1116. When the home supply proves super- abundant, what is to become of it ? 1117. What is the nature of the advantage to the lower classes from asuperfluity of the neces- saries of life ? 1118. What would be the consequence to the farmer ? ON FOREIGN TRADE. 287 the superfluity will be succeeded by dearth or famine. Thus the price of corn will be continually fluctuating between the low price of a glutted market and the high price of scarcity. A redundance of the necessaries of hfe is in some re- spects attended with more pernicious consequences than the excess of any other species of commodity. If the market were overstocked with tea and coffee, those ar- ticles would fall in price, and would not only be more freely consumed by the people accustomed to enjoy them, but the reduction of price would bring them within reach of a lower and more extensive class of people. Now this cannot happen with bread, because it is al- ready the daily and most common food of the lowest ranks of society ; and though in seasons of great plenty they may consume somewhat more than usual, the dif- ference will not be very considerable ; they will rather avail themselves of the cheapness of bread to devote a larger share of their wages to other gratifications ; they will eat more meat, drink more spirits, or wear better clothes. The superabundance of corn will therefore remain in the granary of the farmer, instead of supply- ing him with the means of carrying on the cultivation of his land ; the laborers who raised that corn will probably be driven to the parish for want of work, and the conse- quences which will ensue to the community who would have been fed by the fruits of their industry, it is easy to conceive. Caroline, But do you then regard a low price of corn, under all circumstances, as an evil. Mrs. B. Oh the contrary, I consider it in general as highly advantageous ; it is attended with injurious con- sequences only when it will not remunerate the farmer. But wlien corn can be raised at a small expense, it can 1119. With what is a redundance of the necessaries of life sometimes attended? 1120. Can this happen with bread ? 1121. What will become of the superabundance of corn? 1122. What answer does Mrs B. make to this question — Do you consider a low price of corn, under all circum?tances, as an evil ? S88 ON FOREIGN TRADE. afford to be sold at a low price. It is this which ren- ders it desirable to bring only good land under tillage, and not to force poor soils to yield scanty and expensive crops. Countries that have plenty of good land and but little capital find no branch of industry so advantageous as the productions of agriculture ; and the exportation of corn we have observed, is their first attempt at foreign com- merce. Thus America, being a newly settled country, and as yet but thinly inhabited, has great choice of fine soils, and can raise corn at a very small expense of pro- duction ; accordingly we find that she not only feeds her own population, but regularly exports corn. Old established countries, on the contrary, such as England, whose population is too great to be maintained by the produce of her good soils, will find it answer bet- ter to import some portion of the corn they consume, and to convert their inferior lands into pasture. This would not only lower the price of bread, but also that of meat, milk, butter, and cheese, the supply of which would be increased by the conversion of corn land into pasture. When the home crops proved abundant, they would import less : when scanty, they would import more. Thus without difficulty they would proportion the supply to the demand, and keep both bre^ and wages steadily at moderate prices. Caroline. But with the additional expenses of freight and insurance, can w^e import corn from Ameri- ca cheaper than we can produce it at home ? Mrs B. In ordinary seasons we certainly can ; but not at the present price of corn. Caroline. And do you suppose that the present low 1123. In what countries is agriculture an advantageous branch of industry ? 1124. What is mentioned v/here this is the fact ? 1125. Yfhatis said of old countries, such as England, in relation to this subject ? 1126. ¥/hat advantage would result from im- portation of agricultural products into such countries? 1127. What question does Caroline ask as to expense of corn imported into England from America ?~ — 1128. What reply is made ? ON FOREIGN TRADE. 289 price of corn, and the distressed state of agriculture, are owing to our producing too much corn at home. Mrs B. 1 have no doubt but that is one of the causes, but it is connected with many others, which render the question so confiplicated and intricate that we must leave it to wiser heads than our own to unravel it. The system of growing a home supply of corn, in countries where great capital affords the means of main- taining a very large population, is attended not only with the disadvantage of keeping the price of corn high, in average seasons, but likewise occasions greater fluctu- ations of price, in times of dearth or abundance, than if those casualties were diminished by a free corn trade with other countries. It would perhaps be difficult to say whether we have suffered most from a high or a low price of corn, within these last twenty years ; but we have acquired sufficient experience of the evils arising from both these extremes to think, that the wisest mea- sures we could pursue, would be to adopt such as would prevent great fluctuations of price. Nothing is more injurious to the interests of the labor- ing classes, than great and sudden fluctuations in the price of bread ; they are either distressed by unexpected poverty, or intoxicated by sudden prosperity ; but if that prosperity is the effect but of one fruitful season, it gives rise to expenses they are unable to maintain. It is but a gleam of sunshine on a wintry day, and the buds it untimely developes are nipped by the succeeding frost. Caroline. Well, Mrs B., I see that you will not allow of any exception in favor of the corn trade, and that I must consent to admit of the propriety of leaving all trade whatever perfectly free and open. 1129. Is the low price of corn in England and depressed condition of agriculture there owing to the great quantity raised? 1130. How might the great fluctuations in the price of corn there be pre- vented ? 1131. What does Mrs B. say it would be difficult to decide ? 1132. How are laborers affected by great and sudden fluctuations in the price of bread ? 25 290 ON FOREIGN TRADE. Mrs B. That is certainly the wisest way. Instead of struggling against the dictates of reason and nature, and madly attempting to produce everything at home, countries should study to direct their labors to those departments of industry for which their situation and circumstances are best adapted. Caroline. Yet you must allow me to observe, that tiiere are numerous instances of our having established flourishing manufactures of goods which we formerly procured entirely from foreign commerce ; such, for instance, as china-ware, muslins, damask linen, and a variety of others. Now, does not this imply that we may sometimes direct our labor to a new branch of in- dustry, with greater advantage than by importing the goods from foreign countries ? Mi's B. It certainly does ; and it shows also, that as soon as we are able to cultivate or fabricate the com- modities we have been accustomed to procure from foreign parts as cheap as we can import them, we never fail to do so. But the period for the introduction of any new branch of industry should be left to the experi- ence and discretion of the individuals concerned in it, and not attempted to be regulated or enforced by go- vernment. James I. attempted to compel his subjects to dye their woollen cloths in this country, instead of sending them to the Netherlands, as had been the usual practice ; but the English dyed woollen cloths proved both of worse quality, and dearer than those of the Ne- therlands, and Jatnes was obliged to abandon his plan. Had the sovereign not interfered, dyers would have es- 1133. What does Mrs B. say nations should study to do ? 1134. What articles does Caroline mention, now manufactured by the British, which were formerly procured from other countries ? — 1135. What question does she then ask ? — 1136. What does Mrs B. say that this shows ? 1137. By what should it be determined when any new branch of industry should be introduced into a coun- try ? 1138. What fact is mentioned of James I. to show the folly of compulsory measures in relation to this subject ? ON FOREIGN TRADE. 291 tablished themselves in this country as soon as the people had acquired sufficient skill to undertake the business ; but the discouragement produced by an unsuccessful attempt probably retarded the natural period of adopt- ing it.^ . . If it were possible for a country both to cultivate and manufacture all kinds of produce with as little labor as it costs to purchase them from other countries, there would be no occasion for foreign commerce ; but the remarka- ble manner in which Providence has varied the produc- tions of nature in different climates, appears to indicate a design to promote an intercourse between nations, even to the most distant regions of the earth ; an intercourse which would ever prove a source of reciprocal benefit and happiness, were it not often perverted by the bad passions and blind policy of man. Caroline. And independently of the diversity of soils, climates, and natural productions, 1 do not suppose that it would be possible for any single country to succeed in all branches of industry, any more than for a single indi- vidual to acquire any considerable skill in a great variety of pursuits? Mi's B. Certainly not. The same kind of division of labor which exists among the individuals of a commu- nity, is also in some degree observable among different countries; and when particular branches of industry are not formed by local circumstances, it will generally be found the best policy to endeavor to excel a neighboring nation in those manufactures in which we are nearly on a par, rather than to attempt competition in those in which by long habit and skill they have acquired a de- cided superiority. Thus will the common stock of pro- 1139. AVhen does Mrs B. say there would be no occasion for foreign commerce ? 1140. What inference does she draw from Providence upon the subject? 1141. What comparison is made as to division of labor among nations ? 1142. What does Mrs Jl. say will generally be found best as to this division of labor ? 292 ON FOREIGN TRA.r>E. ductions be most improved, and all countries most bene- fited. Nothing can be more illiberal and short-sighted than a jealousy of the progress of neighboring countries, either in agriculture or manufactures. Their demand for our commodities, so far from diminishing, will always be found to increase with the means of purchasing them. It is the idleness and poverty, not the wealth and indus- try of neighboring nations, that should excite alarm. Caroline. A tradesman would consider it more to his interest to set up his shop in the neighborhood of opulent customers than of poor people who could not afford to purchase his goods; and why should not coun- tries consider trade in the same point of view? Mrs B. Mirabeau, in his " Monarckie Prussienne,^^ has carried this principle so far, that it has made him doubt whether the trade of France was injured by the revocation of the edict of Nantz, which drove so many skilful manufacturers and artificers out of the country. " II est en general un principe sur en commerce ; plus vos acheteurs seront riches, plus vous leur vendrez ; ainsi les causes qui enrichissent un peuple augmente toujours I'industrie de ceux qui out des affaires a negocier avec lui. Sans doute c'est un deniencefrenetique de chasser 200,000 individus de son pays pour enricher celui des autres ; mais la nature qui veut conserver son ouvrage ne cesse de reparer par des compensations insensibles, les erreurs des hommes, et les fautes les plus desastreuses ne sont pas sans remedes. La grande verite que nous offre cet example memornble, c'est qu'il est insense de detruire I'industrie et le commerce deses voisins, puis- qu'on aneantit en meme terns chez soi meme ces tresors. Si de tels efforts pouvoient jamais produire leur efFet, ils depeupleroient le monde, et rendroient tres infortunee la nation qui auroit eu le malheur d'engloutir toute i'indus- 1143. What does she say would be most illiberal? 1144. What should most excite alarm? 1145. What French writer is quoted ? -1146. Vfhat sentiment has he expressed ? ON FOREIGN TRADE, 293 trie, tout le commerce du globe, et de vendie tonjours sans jamais acheter. Heureusement la Providence a tellement dispose les chose que les delires des souverains ne sauroient arreter entierement ses vues de bonheur pour notre espece." Caroline, The more I learn upon this subject, the more I feel convinced that the interests of nations, as well as those of individuals, so far from being opposed to each other, are in the most perfect unison. Mrs B, Liberal and enlarged views will always lead to similar conclusions, and teach us to cherish sendments of universal benevolence towards each other ; hence the superiority of science over mere practical knowledge. CONVERSATION XXI. SUBJECT OF FOREIGN TRADE CONTINUED. Of hills of exchange. — Of the balance of trade. — Cause of the real variation of the exchange. — Dispropor- tion of exports and imports. — Cause of the nominal variation of the exchange, — Depreciation of the value of the currency of the country. MRS B. I HOPE that you are now quite satisfied of the advan- tages which result from foreign commerce ' Caroline. Perfectly so ; but there is one thing that perplexes me. In a general point of view I conceive that trade consists in an exchange of commodides ; but I do not understand how this exchange takes place be- 1147. Of what does Caroline feel convinced? 1148. What will teach us to cherish sentiments of universal benevolence towards each other? 1149. With what is Caroline perplexed in regard to foreign commerce ? 25* 294 ON FOREIGN TRADE. tvveen merchants. The w'me merchaDt, for Instance, who imports wine from PortLigal, does not export goods in return for it ; his trade is confined to the article of wine f Mrs B. There are many general merchants who both export and import various articles of trade. Thus the Spanish merchant, the Turkey merchant, and the West Indian -merchant, import all their different com- modities which we receive from those countries, and generally export English goods in return. It is, how- ever, the countries, rather than the individuals, who ex- change their respective productions ; for both the goods exported and imported are in all cases bought and sold, and never actually exchanged. Caroline. But since the merchants of the respective countries do not literally exchange their goods, they must each of them send a sum of money in payment ; and these sums of money will be nearly equivalent. If the London merchant has J 000/. to pay for wines at Lisbon, the Lisbon merchant will have nearly the same sum to pay for broadcloth in London. It is to be re- gretted, therefore, that the goods should not be actually exchanged, or that some mode should not be devised of reciprocally transferring the debts, in order to avoid so much useless expense and trouble. Mrs B. Such a mode has been devised, and these purchases and sales are usually made without the inter- vention of money, by means of written orders called bills of exchange. Caroline. Is not then a bill of exchange a species of paper money like a bank note ? Mrs B. Not exactly ; instead of being a promissory 1150. Who are called general merchants? 1151. Why is it the countries rather than the individuals that exchange their re- spective productions ? 1152. How does Caroline say these exchanges must be made ? 1153. "What does she say is to be regretted ? 1154. What substitute it there for the intervention of money in these exchanges? ON FOREIGN TRADE. 296 note, it is an order addressed to the person abroad to whom the merchant sends his goods, directing him to pay the amount of the bill, at a certain date, to some third person mentioned in the bill. Thus, when a woollen merchant sends broadcloths to Portugal, he draws such a bill on the merchant to whom he consigns them; but instead of sending it with the goods to Portugal, he disposes of it in London: that is to say, he inquires whether any person wants such a bill for the purpose of discharging a debt in Portugal. He accordingly applies to some wine merchant who owes a sum of money to a mer- cantile house at Lisbon for wines imported from that country, and who finds it convenient to avail himself of this mode of payment in order to avoid the expense of send- ing money to Portugal. He therefore gives the woollen merchant the value of his bill, and having his own name or that of his correspondent in Portugal inserted in the bill as the third person to whom the amount of the bill is to be paid, transmits it to his correspondent in Portugal, who receives the money from the person on whom it is drawn. Caroline. The same bill then is the means of pay- ing for both commodities, the broadcloth and the wine ; and it supersedes the necessity of transmitting two sums of money for that purpose. A bill of exchange is a most convenient and economical contrivance, and I feel very much inclined to avail myself of it. A friend of mine at York owes me a sum of money for purchases I have made for her in London ; and my sister Emily is in- debted about the same sum to a glover at York. I might, therefore, draw a bill of exchange on my friend, which Emily would buy of me and forward it to the 1155. What is a biir of exchange? 115$. What case is supposed of the English woollen merchant, who draws a bill on a merchant in Portugal, in illustration of this mode of payment of debts ? 1157. Of what do bills of exchange supersede the neces- sity? 1158. In what way does Caroline propose to avail herself of the advantacje of bills of exchange ? 296 ON FOREIGN TRADE. glover at York, for the purpose of discharging her debt for the gloves; and he would receive the money from my friend, on whom it v^as drawn. It is, if I understanil you right, by such transfers of debts that commodities are really exchanged between merchants ? Mrs B. I am glad to see that you understand the use of a bill of exchange so well. It will therefore be evident to you that if, when two countries are trading together, the value of the goods exported and imported be equal, the amount of the bills of exchange in pay- ment of those goods will be so likewise ; and the debts will be mutually settled without the necessity of trans- mitting money. Caroline. That is quite clear : but it must, I sup- pose, frequently happen, that the value of the goods exported and imported is not equal, and in that case the bills of exchange will not settle the whole of the respec- tive debts, and some balance or sum of money will re- main due from one country to the other. Mrs B. This is called the balance af trade. In order to explain to you in what manner such a debt is settled, let us take, for example, our trade with Russia : — if, in trading with that country, our exports and im- ports are exactly equal in value, the exchange between Russia and England is said to be at par, or equal. But if the value of our imports should have exceeded our exports, so that, for instance, we should have receiv- ed more hemp and tallow from, than we have sent broadcloths and hardware ^o Russia, there Will be a greater amount of bills drawn by Russian merchants on England, than by English merchants on Russia. After 1159. "What does Mrs B. say would be evident to Caroline in relation to this subject ? 1160. What does Caroline suppose frequently happens ? 1161. "When a balance of money is due from one country to another, what is it called ? 1162. When is the exchange between two countries said to be equal or at par ? 1163. What case of exchange is supposed between England and Russia, where it is not at par or equal ? ON FOREIGN TRADE. 297 their reciprocal debts are settled, therefore as far as the bills will enable them to do so, there will remain a sur- plus of Russian bills drawn on England, which will require to be paid in money. Caroline. Then some of our merchants will be under the necessity of sending money to Russia in payment of their debts. Mrs B. This every merchant endeavors to avoid, on ac- count of the heavy expenses of freight and insurance of the money ; as soon, therefore, as there appears to be a scar- city of English bills on Russia, every English merchant who is indebted to that country for hemp and tallow is eager to procure them. The competition of merchants for these bills raises their price, for they find it answer to give something more than the amount of the bill, rather than send gold to Russia. The sum thus given for a bill above its amount is called a premium, and our exchange with Russia is, in this case, said to be unfa- vorable^ or below par. Caroline. That is to say, that a man who owes a sum of money to Russia, must give something more than the, amount of the debt in order to pay it ? MrsB. Yes ; and the amount of the premium given depends, of course, on the degree of scarcity of the bills. Caroline. But the exchange, I suppose, can never fall below what it would cost to transport gold to Russia ; for as it is optional with our merchants to pay either in bills or money, if the premium on the bill were greater than the expense of sending money, they would prefer the latter mode of payment. Mrs B. Undoubtedly ; and as the expense of send- 1164. What does every merchant endeavor to avoid ? 1165. How will he endeavor to do it? 1166. What raises the price of hills of exchange ? 1167. What is called a premium on a hill of exchange ? 1168. On what does the amount of premium depend? 1169. How low may exchange fall? 298 ON FOREIGN TRADE. ing gold to different countries varies according to the distance, and to the facility Or difficulty of our intercourse with them, a favorable or unfavorable exchan2;e with those countries will vary accordingly. CaroUne. But the premium given for bills of exchange, after all, does not supersede the necessity of our paying the balance of debt in gold; it merely removes the difficulty from one individual to another; for those mer- chants who finally cannot obtain bills must transmit money in payment. Mrs B. I beg your pardon : an unfavorable ex- change in a great measure corrects itself : but this, it is true, requires some explanation. There are merchants who make it their business to trade in bills of exchange ; that is to say, to buy them where they are abundant and cheap, and sell them where they are scarce and dear. Thus bills of exchange become an article" of commerce like gold, or any other commodity. There- fore, when English bills on Russia are scarce, those merchants buy up the bills drawn by other coun- tries on Russia, and supply the English market with them. Caroline, But when English bills on Russia are scarce, there may perhaps be no surplus of bills on Russia in other countries to supply the English market. MrsB. Generally speaking, when there is a defi- ciency of bills on Russia in one country, there will be a redundancy of them in some other ; for though the exportations and importations of Russia with any par- ticular country may be unequal, her general exporta- tions and importations will upon the whole, nearly ba- 1170. How does the expense of sending money from one coun- try to another vary ? 1171. What suggestion does Caroline make as to the insufficiency of bills of exchange to meet the evils for which they were designed.' 1172. When bills of exchange on any particular country become high, how is the evil corrected .' -1173. What further difficulty does Caroline suggest, as to ob» taining bills of exchange from other countries ? ON FOREIGN TRADE. 299 lance each other ; because if there was a constant excess of inmportation, Russia would be drained of money to pay for it; if, on the contrary, there was an excess of exportations, the money received in payment would accumulate, and depreciate the value of the currency of the country. The goods which Russia purchases, there- fore, from foreign countries, must, upon the long run, be to the^ same amount as the goods which she sells in exchange for them ; so that if there is a balance of debt due to Russia from one country, there must be a ba- lance of debt due from Russia to another country. The bills of exchange, therefore, drawn by Russia on for- eign countries, and those drawn by foreign countries on Russia, will balance each other ; and it is the business of the dealers in bills to discover where there is a super- fluity, and where a deficiency of these bills, with a view to buy them in the one place, and sell them in the other. Caroline. If then the bill merchants instead of sup- plying the English market with bills on Russia, bought up the surplus of Russian bills on England, it would equally answer the purpose of paying our debt to that country ? Mrs B. Exactly. In our trade with Italy, for in- stance, we import large quantities of silk, olive oil, and various other articles, and our exportations are manufac- tured goods only to a trifling • amount. The exchange would, in this case, be so unfavorable as to reduce us to the necessity of exporting gold in payment for the excess of imports, did not the bill merchants come to our as- sistance. This useful class of men buy up the surplus of Italian bills on England, and send them for sale to 1173. What is it the business of dealers in bills to discover ? 1174. If the bill merchant, instead of supplying the English market with bills on Russia, bought up the surplus of Russian bills on Eng- land, would it answer the purpose of paying debts to that coun- try ? 1175. Give an instance of this. 1176. To what would this change reduce the English ? 300 ON FOREIGN TRADE. Germany, France, Spain, or wherever there is a defi- ciency of bills on Italy, and where they will consequent- ly sell with profit. Caroline. Thus Germany, France, or Spain, dis- charge our debt to Italy ? Mrs B. Yes; provided any of those countries are in our debt ; otherwise, you know they would not pur- chase our bills of exchange. Caroline. One would imagine that these operations of the bill merchants would invariably have the effect of counteracting the fluctuations of exchanges, and keep them constantly at par. Mrs B. If the business of the bill merchant couM be transacted vvith the same celerity and regularity as that of the bankers in London, who meet together every day after the hours of business, to settle their respective ac- counts, it might influence the exchanges in the manner you suppose. But the speculations of the bill merchant embrace so wide a sphere, and so many circumstances occur in the course of trade, or of political events, by which the exchanges are effected, that no individual prudence or foresight can prevent great fluctuations. Caroline. Are then merchants often reduced to the necessity of sending abroad money in payment of foreign goods? Mrs B. Scarcely ever, I believe, excepting where there is a greater demand for money than for goods ; for independently of the operations of the bill merchants, there is yet another means of preventing that expense. When the English merchants who export goods to Russia, find that the excess of imports over exports pro- 1177. Where do English merchants send them ? 1178. Will these countries discharge their debt to Italy } 1179. What effect would one imagine that the operations of bill merchants would have upon exchange ? 1180. How could it influence them in this manner ? 1181. Why does it not? 1182. Are mer- chants often reduced to the necessity of sending money abroad in payment of foreign goods .' ON FOREIGN TRADE. 301 duces a scarcity of their bills on Russia, which enables them to sell them to the importing merchants at a pre- mium, such an addition to their usual profits of trade induces them to increase their exportations, and has, in fact, the effect of a bounty ; for they can now afford to export goods which, before, did not yield sufficient pro- fits to enable them to do it. Whilst, on the contrary, our importing merchants of Russian commodities, who are obliged to purchase these bills at a premium, (which has the effect of a duty, since it is a clear deduction from their profits,) will confine their importations to such commodities only as will leave them their usual profits, after deducting the premium upon the bills with which they were to be paid. Caroline. The premiums, then, which our importing merchants lose, our exporting merchants gain. This must undoubtedly have a considerable effect in encou- raging exportation, and restraining importation, and tend rapidly to restore the equality of the exchange. Mrs B. The evil, then, of an unfavorable exchange immediately gives rise to the remedy which corrects it, and actually tends to equalise the exports and imports. But in order to have completely that effect, it would be necessary that the country with whom the exchange is unfavorable should require as much of our productions as we do of theirs, which is not always the case. The unfavorable exchange, however, enables the exporting merchant to afford his goods abroad at a lower rate, because a part of his profit is derived from the premium on the exchange, and thus more persons abroad being able to purchase at the reduced price, the market for the goods is enlarged, and a much greater quantity consumed. 1183. Independent of the operations of bill merchants what other means are there of preventing that expense ? 1184. What has a great effect in encouraging exportation and restraining importation? 1185. But in order to have conjpletely that effect what would be necessary ?— ^ — 1186. What advantage irises from this Unfavor- able change ? 26 302 ON FOREIGN TRADE. Caroline* All these circumstances then together must nearly supersede the necessity of sending money to balance the account ? Mrs B. Very nearly so, I believe, except with such countries as, having mines of their own^ may be said to produce money. If Spain and Portugal were to retain all the gold and silver which they derive from their mines, it would fall so much in value in those countries, that no laws could prevent its conveyance to others, where its value was greater. It would be the most profitable ar- ticle a Spanish or Portuguese merchant could export in payment for the goods imported; and indeed, we find that they supply Europe wiib gold and silver, in the same manner as we supply it with the produce of our West Indian colonies, coffee and sugar. We have, in a former conversation, observed how the precious metals were diffused throughout all civilized nations, and the supply everywhere so proportioned to the demand, as to admit of no other variation of value than the small difference arisieg from the expense of bringing them from the mines to the different countries where they are wanted. Caroline. But have I not heard of the exchange having been much below what it would cost to send money abroad ? JWrs B, That is true ; but I believe it is principally to be ascribed to another and a totally different cause, which nominally influences the exchanges to a very great extent. We formerly observed that a depreciation of value of the currency of a country raises the price of 1187. Do all these circumstances supersede the necessity of sending money to balance the account? 1188. With what exceptions ? 1189. What would be the consequence to other countries if Spain and Portugal were to retain all the silver and gold they obtain from their mines ? 1190. Would it be profitable for them to export it in payment for the goods imported? 1191. Is not the exchange sometimes below what it would cost to send money abroad ? 1192. What has been formely observed on the depreciation of the value of currency? ON FOREIGN TRADE. 303 commodities in that country. Whether the depreciation arises from an unnecessary increase of currency, from an adulteration of the coin, or from any other cause, it inva- riably produces this effect. Let us suppose the currency of England to be depre- ciated 25 per cent; that is to say, that a sum worth 100/. previous to the depreciation, is now really worth only 75/., though it retains its nominal value of 100/. An English bill of exchange, which represents a certain portion of the currency, will partake of this depreciation, and will no longer be equal in value to a foreign bill of the same amount. It would require an English bill of 125/. to exchange for a foreign one of 100/. ; therefore, if before the depreciation the exchange were at par, this circumstance would make it immediately fall 25 per cent. Caroline. Would not the evil then be remedied by increasing the exports and diminishing the imports, as when the unfavorable state of the exchange arises from the unequal balance of trade ? J\lrs B. Certainly not. For though it is true that in both cases the exporting merchant can sell his bills at a premium, yet when this premium arises from a depre- ciation of the currency, it cannot be considered as any gain to him, because it is exactly balanced by the advanced price of the goods he exports, which operates as a loss. Caroline. I think I understand it. The depreciation of currency which produces the premium on the bill of exchange produces also an increase in the price of the merchandise, and these effects, resulting from the same cause, must always correspond and be felt in the same proportion. Thus if a merchant exports cloth to Ham- 1193. Does it invariably produce this effect? 1194. What illustration is given of this ? 1195. Would the evil be remedied by increasing the exports, and diminishing the imports ? 1196. Why would it not ? 1197. What farther does the depreciation of currency produce ? 304 ON FOREIGN TRADE. burgh which costs him 200/., whatever profits he might expect under the ordinary state of the currency must be diminished 25 per cent, in consequence of his giving 50Z. more for his cloth than he would otherwise have done. Yet as he will sell the bill of exchange which he draws on Hamburgh for the payment of his cloth at a premium of 50/., his profits will remain precisely the same, upon the whole transaction, as if everything had gone on its regular way. Mrs B. You have explained it perfectly well. Re- member therefore, that when the exchange is unfavorable in consequence of the depreciation of the currency, it is only nominally^ not really unfavorable j for it may take place when the exports and imports are perfectly equal. And recollect also that the difference the exchange pro- duces in the sale or purchase of bills is neither a loss nor a gain to the parties, and that it has no effect either on exportation or importation. Caroline, But is it easy to distinguish between two causes which are so similar in their effects, and to ascer- tain at any time which of them it is that influences the exchange ^ Mrs B. Far from it : this .has been a subject of much discussion, particularly during the late war. If it be true that the currency of the country has been increased beyond what was required, it must be considered as depreciated, and as having nominally affected the exchange. On the other hand, as the system of warfare was re- markably unfavorable to our exportations, the balance of foreign debt was very much against us, and the expense of transmitting gold considerably increased ; — so far the exchange may be said to have been really unfavorable. 1198. Illustrate this.-- — 1199. What therefore is to be remem- bered ? 1200. What effect has the difference of exchange on exportation or importation? 1201. Is it easy t;o distinguish between two causes so similar in their effects ? ON FOREIGN TRADE. 305 It is probable that both these causes contributed to the very low rate of our exchange during the late war. Notwithstanding all the investigation which these sub- jects have undergone, there still prevails, even amongst our legislators, the old popular error respecting the balance of trade. Even at this day we find persons congratulating the country, that the exports exceed the imports, and that in consequence a balance of money remains due to us, which is considered as so much gain to the country. Caroline, But do those who maintain such an opinion know, that this money would not be due to us, unless we had exported a surplus of merchandise to an equal amount ? Mrs B. It is from that circumstance they conceive the advantage arises. They assert that since the poor are maintained by labor, the more work we perform for other countries, and the more money we receive for our work, the richer we must be. Caroline. Not if we export the fruits of their labor and receive only gold in return : for the poor are main- tained, not by the act of labor, but by its produce; and if all the produce were exported, and nothing but gold received in exchange, we should be much in the situa- tion of king Midas, who was starved because everything he touched was converted into gold. But do not the bill merchants prevent this importa- tion of gold, by transferring the bills of exchange from one country to another ? for if our balance of trade is favorable with one country, it must be unfavorable with another. Mrs B. No doubt they do. If it were possible to 1202. What erroneous opinion is still held concerning the balance of trade ? 1203. From what circumstance is it conceived that the advantage arises ? 1204. What is asserted .' 1205. In what situation should we be placed if nothing but gold was exported ? 1206. Do not bill merchants prevent this importation of gold by transferring bills of exchange from one country to another? 26* 306 ON FOREIGN TRADE. have what is called a favorable balance of trade with every country, we should accumulate a quantity of the precious metals which would answer no other purpose than to depreciate our currency. The most advantageous trade for both parties con- cerned is, when the exports and imports are equal, so that the balance does not preponderate on either side ; for it is as injurious to one country to part with money which is wanted at home for the purposes of currency, as it is to the other to receive it when it is not wanted. When a country receives bullion, it should not be in payment of a balance of debt, but as a commodity for which there is a demand. This demand will always take place in thriving countries, not only because gold and silver bullion are wanted by jewellers and silver- smiths for the purpose of luxury ; but also because, as the saleable produce of the country increases, an addi- tional quantity of currency is required for its circulation. Caroline. According to this theory of the balance of trade, it should always be against Spain and Portugal, and favorable to every other country ; because it is through Spain and Portugal that all the treasures of the new world flow into Europe. Ms B. True ; but they are not sent immediately from those countries to the most distant parts of Europe, but are transferred through the intermediate countries. Thus France sends Louis to Geneva to pay for the watches she imports from that place ; or to Italy, in payment of raw silks, olive oil, &c. So that the countries most distant from Spain and Portugal would constantly have what is absurdly called the balance of trade in their favor : whilst the intermediaie countries would have it favorable with those which were nearer 1207. What is the most advantageous trade for both parties con- cerned ? 1208. When a country receives bu'lion should it be in payment of a balance of debt? 1209. Why should it not ? 1210. According to this theory against what country should the balance of trade be ? 1211. Why ? ON FOREIGN TRADE. 307 Spain than themselves, and unfavorable with those which were more distant. This, however, is a general principle, which, though true in theory, requires modification, if applied to prac- tice. A great variety of circumstances occasion fluctua- tions in the regular distribution of the wealth of Amer- ica. However extraordinary it may appear, it is not very long since we sent considerable quantities of specie to Spain and Portugal, to maintain our troops in those countries: so much does war reverse the natural order of things. Instead of exporting our manufactures to bring back gold, we were obliged to drain our circulation to send money in order to support our troops, whilst our manufacturers were either starving, or become members of that very army which caused liieir ruin. Caroline. But if Spain, from the abundance of her gold and silver, imports such large quantities of manu- factured goods, is it not a check to her industry at home ? Mrs B. It certainly is ; though not so much as you would imagine, because she does not obtain the gold and silver of America free of cost : she obtains it partly in the form of a tax imposed by the mother country, or rent for the royal mines ; and the rest by payment in produce of manufactured good. But these goods are not necessa- rily manufactured in Spain or Portugal. A Spanish mer- chant having imported goods from England and sent them to America, receives back gold and silver in pay- ment, which are transmitted to England if wanted there. Spain and Portugal being the entrepot, in consequence of the strict regulations by which the gold and silver are compelled to be brought to the mother country. 1212. Is this general principle true in theory ? 1213. But what does it require before applied to practice ? 1214. If Spain imports such large quantities of manufactured goods, is it not a check to her industry at home? 1215. Does she obtain the gold and silver of America free of cost? 1216. How does she obtain it? 308 ON FOREIGN TRADE. The want of industry in Spain, though it proceeds in a great measure from the nature of its religion and go- vernment, is also in part attributable to the effect which the influx of the precious metals has produced. In Townsend's Travels in Spain, which abound with philosophical observations, it is stated " that the gold and silver of America, instead of animating the country and promoting industry, instead of giving life and vigor to the whole community, by the increase of arts, of manu- factures, and of commerce, had an opposite effect, and produced in the event weakness, poverty, and depopula- tion. The wealth which proceeds from industry resem- bles the copious yet tranquil stream, which passes silent, and almost invisible, enriches the whole extent of coun- try through which it flows; but the treasures of the new world, like a swelling torrent, were seen, were heard, were felt, were admired ; yet their first operation was to desolate and to lay waste the spot on which they fell. The shock was sudden ; the contrast was too great. Spain overflowed with specie, whilst other nations were comparatively poor in the extreme. The price of la- bor, of provisions, and of manufactures, bore propor- tion to the quantity of circulating cash. The conse- quence is obvious; in the poor countries industry ad- vanced ; in the more wealthy it declined. " Even in the present day (1806,) specie being about 6 per cent less valuable in Spain than it is in other coun- tries, operates precisely in the same proportion against her manufactures and her population." We may here, I think, conclude our observations on the principles of trade; and having now explained the different sources from which a rev^enue may be derived, we shall, at our next meeting, make a few inquiries into the nature and effects of expenditure. 1217. From what does the want of industry in Spain proceed ? 1218. What fact is stated in Townsend's travels in Spain ? 1219. What will be the subject of the next conversation ? ON EXPENDITURE. 309 CONVERSATION XXII. ON EXPENDITURE. Of the disposal of revenue. — Of the expenditure of indi- viduals. — Effects of consuming capital. — Increase of revenue of a country beneficial to all classes of peo- ple. — Except in cases where government interferes with the disposal of capital. — Of sumptuary laws. — Of luxury. — Industry promoted by luxury. — Pas- sages from Paley on luxury. — Sudden increase of wealth prejudicial to the laboring classes. — Passages from Bentham on legislation. — Luxury of the Ro- mans not the result of industry. — Of the disadvan- tages arising from excess of luxury. MRS B. I TRUST that you now understand both the manner in which capital is accumulated, and the various modes of employing it to produce a revenue. It remains for us to examine how this revenue may he disposed of. Caroline. 1 have already learnt that a revenue may either be spent, or accumulated and converted into cap- ital; and that the more a man economizes for the lat- ter purpose, the richer he becomes. Jilrs B. This observation is equally applicable to the capital of a country, which may be augmented by indus- try and frugality, or diminished by prodigality. Caroline. The capital of a country, I think, you said, consisted of the capital of its inhabitants taken col- lectively ? Mrs B. It does ; but you must be careful not to estimate the revenue of a country in the same manner, for it would lead to very erroneous calculations. Let us for instance suppose n)y income to be 10,000/. a 1220. Of what does the capital o.f a country consist? 1221. Why cannot we estimate the revenue in the same manner ? 1222. What instance is given ? 310 ON EXPENDITURE. year and that I pay, 500Z. a year for the rent of ray house — It is plain that this bOOl, constitutes a portion of the inconie of my landlord ; and si^ce therefore the same property by being transferred from one to another, may successively form the income of several individuals, the revenue of the country cannot be estimated by the aggre- gate income of the people. Caroline. And does not the sam^ reasoning apply to the expenditure of a country ; since the 500Z. a year which you spend in house rent will be afterwards spent by your landlord in some other manner ? Mrs B. True, because spending money is but ex- changing one thing against another of equal value ; — is giving, for instance, one shilling in exchange for a loaf of bread, five guineas in exchange for a coat ; instead of a shilling we are possessed of a loaf of bread ; instead of five guineas, of a coat ; we are therefore as rich before as after these purchases are made. Caroline. If so, how is it that we are impoverished by spending money. Mrs B. It is not by purchasing, but by consuming the things we have purchased, that we are impoverished. When we have eaten the bread and worn out the coat, we are the poorer by five guineas and a shilling than we were before. A baker is not poorer for purchasing a hundred sacks of flour, nor a clothier for buying a hundred pieces of cloth, because they do not consume these commodities. When a man purchases commodities with a view of reselling them, he is a dealer in such commodities, and it is capital which he lays out. But when he purchases commodities for the purpose of using and consuming 1223. Why cannot the revenue of a country be estimated by the aggregate income of the people? 1224. Does the same reasoning apply to the expenditure? 1225. Give some instances? 1226. If so, how is it we are impoverished by spending money ? 1227. What is called expenditure ? ON EXPENDITURE. 311 them, it is called expenditure. Expenditure therefore, always implies consumption. Caroline. I understand the difference perfectly. The one lays out capital with a view of reselling his goods with profit. The other spends money with the view of consuming the goods, with loss; — that is to say, the loss of the value of the goods he consumes. Mrs B, Just so. Thus, though the sum of money you spend will serve the purpose of transferring commo- dities successively from one purpose to another, yet the commodities themselves can be consumed but once. Therefore the consumption of a country may, like its capital, be estimated by the aggregate consumption of its inhabitants ; and the great question relative to the prosperity of the country, is, how far that consumption takes place productively, and how far unproductively. Caroline. That certainly is a very important point ; for in the former case it increases wealth, in the latter it destroys it. Yet, Mrs B., supposing a man were so prodigal as to spend not only the whole of his income, but even the capital itself, provided that it were spent in the mainte- nance of productive laborers, though it would ruin the individual, I do not conceive that it would injure the country ; for whether a man lay out his capital in the maintenance of productive laborers with a view to pro- fit, or whether he spend it in purchasing the fruits of their industry for the purpose of enjoyment, I can perceive no difference relative to the country •, in both cases an equal number of people would be employed, and conse- quently an equal quantity of wealih produced. Mrs B. I have a strong suspicion that the difficulty you feel in understanding clearly the distinction between 122S. What does it always imply? 1229. How may the consumption of a country be estimated ? 1230. What is a great question relative to the prosperity of a country? 1231. From what does the difficulty in understanding the distinction between employment and expenditure arise ? 312 ON EXPENDITURE. the employment and expenditure of capital, arises from confounding capital with money ? Caroline, Indeed 1 think not ; my notion of capital is, that it consists of any kind of commodity useful to man. Mrs B. Well, then, suppose that two persons are possessed of such commodities to the value of 5000/. each ; — that the one distributes them out to industrious workmen, furnishing them with food and materials to work upon, and that by the time the various commo- dities have been finally distributed, the workmen have fashioned them into objects of another form, but of supe- rior value to what has been consumed. Let the other distribute his capital amongst his servants, who in return amuse their employer with theatrical representations, fire-works, or any other species of enjoyment, which, by the time the commodities have been consumed, leave no other traces than the recollection that they have existed. Can you see no difference in these two instances ? Caroline. Oh yes ; I see a very material difTerence : one of the capitals of 5000/. is destroyed, and the person who has consumed it thus idly is reduced to beggary. But this is not the case I put. Let the prodigal, instead of consuming his capital in the way you have described, spend it amongst tradesmen, who will furnish him with articles for his enjoyment, such as magnificent apparel, splendid equipages, sumptuous entertainments. He will then replace the capital that those tradesmen have been consuming, in order to produce these commodities, vvhich capital will again be usefully employed in producing more. Mrs B. That is very true ; and so far the prodigal has done no harm. In spending his capital amongst tradesmen, he has exchanged his various commodities, for others of equal value, and the same quantity of capi- 1232. What do you understand by capital? 1233. What illustration is given of the difference in expenditure of capital .-' ON EXPENDITURE. 313 tal exists as before the exchange took place ; but what is the prodigal to do with the new stock that he has acquired ? Caroline. It will be applied to the gratification of his desires ; he will regale with his friends at the sumptuous feasts, he will use the equipages, and clothe himself and his servants in the rich apparel. Mrs B. Then don't you see that you have only removed the evil one step farther ? He and his friends will consume amongst servants and dependents in fetes and entertainments, what the tradesmen furnished him with, instead of that which he gave in exchange for it; and that as much capital will be lost to himself and to the community in the one case as in the other. The spending of capital is a steril consumption of it, whilst its employment is a reproductive consumption. Caroline. But if money were not thus spent, what would the tradesman do with the luxuries which he had prepared for the purpose of supplying the demand of persons who spend in order to enjoy .^ Mrs B. Such tradesmen would certainly find less employment; but you would not thence conclude that the community would be injured. You have already seen that capital cannot produce revenue unless it is consumed ; if it be consumed by industrious persons, who work whilst they are consuming it, something of superior value v^^ill be produced, and that product, whatever it miiy be, will be exchanged against other productions ; it will be distributed amongst another order of tradesmen, and will afford precisely the same amount of encouragement, though of a different kind. Whatever is saved from the extravagant consumption of the rich, 1 234. If money were not spent in procuring luxuries, what would the tradesman do with those he had prepared for the demand of persons who spend in order to enjoy? 1235- Can capital pro- duce revenue unless it is consumed ? 1236. What will be the effect if consumed by industrious persons? 1237. What becomes of that portion of capital saved from the consumption of the rich ? 27 314 ON EXPENDITURE. is a stock to contribute to the comforts of the middling and lower ranks of society. Caroline. Yet how often has it been said that a generous and liberal expenditure, however injurious to the individual, was a source from which the middling and lower classes drew their principal nieans of subsist- ence. Mrs B. There is not a more fatal delusion in political economy. By such wanton extravagance as we have been describing, the capital, which should annually furnish a subsistence to laborers, is wasted and destroyed, and the industrious are reduced to idleness and want. They are covered with rags, because the prodigal has clothed himself in gorgeous apparel ; they wander without a home, because the prodigal has erected a palace; they must starve, because the wealth that should have fed them has been squandered in sumptuous feasts. It is easy to comprehend that the prevalence of such conduct in a state must be followed by the gradual decay of its wealth and population. Caroline. This is a most painful reflection ; but on the other hand it would not, I suppose, be possible for a country to make any progress in wealth by which the poor were not more or less benefited ? Mrs B. Certainly not, if things are allowed to follow their natural course. Where property is secure, there is a general tendency to accumulation of capital. The great majority are governed by good sense and prudence, and their efforts to save and better their condition more than counterbalance the occasional loss that arises from the extravagance of spendthrifts. Besides, if expen- diture w^ere directed in too large a proportion towards the production of mere luxuries, and the number of 1238. What has been often said respecting a generous and Hberal expenditure ? 1239. Is the opinion just"? 1240. Why is it not ? 1241. W^ould it be possible for a country to make any progress in wealth by which the poor would not be more or less benefited ? ON EXPENDITURE. 315 persons employed in producing them were to be increased without at the same time augmenting the number of persons employed in producing articles of subsistence, the same quantity of provisions must be divided amongst a greater number of consumers ; and as provisions, in consequence of being more scarce, would increase in price, the profits of agriculture would become so great, that the capital which had been applied to the production of luxuries would flow to the more advantageous employ- ment of agriculture, and thus the natural distribution of capital would be restored. Caroline. The more I hear on this subject, and the better I understand it, the greater is my admiration of that wise and beneficent arrangement which has so closely interwoven the interests of all classes of men ! Airs B. We are accustomed to trace the hand of Providence chiefly in the natural world, but it is no less conspicuous in moral life, and cannot be more strongly exen[)plified than in that order of things, which renders it essential to the interests of the rich not to turn the labor of the poor to the production of superfluities, until they have provided an ample supply of the necessaries of life. But these wise dispensations are often in a great measure subverted by the folly end ignorance of man. An injudicious interference of government, for instance, may give peculiar advantages to the employment of capital in one particular branch of industry, to the preju- dice of others, and thus destroy that natural and useful distribution of it, which is so essential to the prosperity of the community. Caroline. If ever the legislature could interfere with advantage, I should think it would be in some regu- 1242. If expenditure were directed in too large a proportion towards the production of luxuries, what would be the consequence ? 1243. What effect would this have on agriculture? 1244. What effect may an injudicious interference of government some- times have upon particular branches of industry? 1245. When does Caroline think that the legislature may interfere with advantage ? 316 ON EXPENDITURE. lations respecting expenditure. I should be strongly tempted to restrain the use of luxuries, in order to induce the owners of capital to employ it in agriculture, and such homely manufactures as are suited to the consump- tion of the poor ; such a measure could not fail to pro- duce a more equal distribution of the comforts of life. Mrs B. Sumptuary laws have been instituted with that view in many countries. But after all we have said of the benefits resulting from the natural distribution of capital when unrestrained and uninfluenced by political regulations, I am surprised at your wishes to compel people to enjoy it in one way rather than another. Caroline. But if that one way should prove the right way ? Mrs B. Then capital will follow that direction by its natural impulse, without requiring any foreign aid. Be assured that the only right way is to leave the use of capital to the care of those to whom it belongs 5 they will be the most likely to discover in what line it can be employed to the greatest advantage. Caroline. Of their own advantage they are no doubt the best judges; but are you sure that they will be equally attentive to the advantage of the poor? Sump- tuary laws appear to me to afford peculiar encourage- ment to the production of the necessaries of life. But the principal advantage of sumptuary laws would be to repress the expenditure of revenue. And since it is so desirable that capital should not be dissipated, surely the same principles will apply to revenue ; w^ould it not be advantageous to save that also, in order to convert it into capital ? Mrs B. Capital, you know, has arisen solely from savings from revenue ; but you are aware that there must be a limit to such savings. 1246. Have laws ever been instituted with that view ? -1247. Have they been beneficial ? 124S. Which is the only right way ? 1249. What would be the principal advantage of sumptuary laws ? . 1250. From what has capital solely arisen? ON EXPENDITURE. 317 Caroline. Certainly there is a limit, because we could not live without consuming some part of it ; but the less we consume, and the more we save, the better. Mrs B. That is pushing the principle too far : we accumulate wealth for the purpose of enjoying it ; and if by a liberal though prudent expenditure, social affec- tions are cultivated, and the happiness of mankind promoted and extended, I see no reason why we should be debarred from indulging in some of the best feelings of our nature. The two extremes of parsimony and prodigality are perhaps equally pernicious ; the one as destructive of the social and benevolent affections, the other as wasting the provision which nature has destined for the mainte- nance and employment of the poor. But there is another point of view in which sunnptuary laws have a dangerous tendency. By diminishing objects of desire you run some risk of giving a general check to industry. Tell me v/hy do the rich employ the poor ? Caroline. In order to derive an income from the profits of their labor. Mrs B. And what use do the rich make of this income ? Caroline. They either spend the whole, or they economize part in order to augment their capital. Mrs B. But why should they be desirous of in- creasing their capital ? Caroline. There are so many reasons for wishing to be rich, that I scarcely know how to enumerate them. The pride of wealth is a motive with some men, the love of independence with others ; the apprehension of future reverses incites a third to accumulate ; the wish 1251. Why must there be a limit to these savings? 1252. In what point of view do sumptuary laws have a dangerous tenden- cy .' 1253. Why do the rich employ the poor ? 1254. What use do they make of this income ? 27* 318 ON EXPENDITURE. to increase his means of doing good stimulates the industry of another ; the desire of providing for a family and leaving them in affluence, is a powerful inducement with many; but the ambition of improving tlieir situation in life, and of increasing their enjoyments by a more liberal expenditure, is, I think, the most general, and perhaps the strongest of all the motives for accumulating riches. Mrs B. If, then, laws be enacted which restrain a man from spending any part of his income in luxuries, you take away one of his motives for vvishing to augment his capital ; and a growing capital is, you know, an increase of subsistence for the poor. Caroline. I would wish to prohibit only that excess of luxury which you have censured as pernicious. Mrs B. It is extremely difficult to draw the line between necessaries and luxuries 5 these form a scale which comprehends all the various comforts and conve- niencies of life, the graduations of which are too numer- ous and too minute to be distinct. We have considered ss necessaries whatever the rate of wages of the lowest ranks of people have enabled them to command ; they would consider as luxuries whatever they have not been accustomed to enjoy ; though when they can afford it there is no excess. ^ Excess, I conceive, depends not so much on the quantity or nature of the luxury, as upon its relative proportion to the means of the individual. A daily mieai of meat is an excess of luxury to the family of a common laborer, because they are not used to it, and their wages will not enable them to com.mand it; w^hilst a table abounding with expensive delicacies can scarcely be 1255. What is the strongest motive for increasing capital ? 1256. What therefore follows ? 1257. Between what is it said to be extremely difficult to draw a line of distinction ? 1258. On what does excess depend ? 1259. What cases are mentioned in illustration of excess ? ON EXPENDITURE. 319 called excess of luxury to a man whose income is so large that such gratifications do not prevent his making considerable savings. Caroline. Since then it is impossible to define what are and what are not luxuries, no general line of prohi- bition can be drawn. Mrs B, The ruin which extravagance entails on the prodigal is his natural punishment, and serves as a warning to deter others from similar imprudence. Any attempt to prevent such partial evil by sumptuary laws, would generally, tend to depress the efforts of industry. The desire of increasing our enjoyments, and of improv- ing our situation in life, as it is one of the strongest sentiments implanted in our nature, so T conceive it to be essentially conducive to the general welfare. It is the active zeal of each individual exerted in his own cause ', which, in the aggregate, gives an impulse to the progressive improvement of the world at large. The desire of bettering his condition is justly considered as a laudable disposition in a poor man, and it is a feeling dangerous to repress in any classes of society. Caroline. " The man of wealth and pride Takes up a space that many poor supplied ; Space for his lake, his park's extensive bounds. Space for his horses, equipage, and hounds : The robe that wraps his limbs in silken cloth. Has robb'd the neighboring fields of half their growth : His seat, where solitary sports are seen, Indignant spurns the cottage from the green.'' What can you reply to these beautiful lines, Mrs B. ? I fear they are but too faithful a representation of the state of society. Mrs B. I must first inquire whether this man of wealth 1260. Why may not luxuries-be defined ? 1261. What is the natural punishment of the prodigal ? 1262. What evil would result from laws designed to restrain extravagance ? 1263. What is mentioned explanatory of the subject, as being one of the strongest sentiments planted in our nature ? 1264. What gives impulse to the progressive improvement of the world at large ? 320 ON EXPENDITURE. and pride either spends or produces capital in order to procure these gratifications. If the former, he deserves all the censure we have bestowed upon the spendthrift. If the latter, his wealth may possibly be more increased by his industry, than diminished by his luxury. Caroline. In all probability he does neither ; but being possessed of a considerable property, he lives upon his income ; and such an expensive style of living must greatly diminish, if not wholly absorb what he might otherwise economize. Mrs B. Still I cannot approve of compulsory mea- sures to lessen his expenses. If it be desirable to stimu- late and encourage the industry of man, and induce him to accumulate wealth, he must be at full liberty to dispose of it according to his inclinations. It is unquestionably true that unless the rich impoverish themselves by spending their capital, they cannot impoverish their country. Caroline. That is not enough ; the question is, what are the best means of enriching their country ? ' Mrs B. One man sits down contented with his little property ; brings up his children with humble views and desires ; and every year lays up something to provide for their future support in life. Another of a more ambitious character rises early and labors hard, exerting every faculty of his mind to turn his capital to the best account ; he likewise makes savings from his income, but they do not prevent his growing w^ealth from enabling him to spend more liber- ally, and enjoy more freely ; and none of his enjoyments 1265. What reply does Mrs B. make to Caroline's poetic quota- tion? 1266. What objection does Caroline make to Mrs B.'s reply? 1267. What does Mrs B. say is necessary if we would stimulate and encourage a man to industry ? 1268. Without what does she say it is impossible for the rich to impoverish their country ? 1269. What does Caroline say is the proper question in discussing this subject? 1270. What description does Mrs B. give of the different views with which different persons pursue the business of life ? i ON EXPENDITURE. 321 is more heartfelt, than that of having raised his family in the world by the exertions of his industry. Caroline. Every man who is striving to acquire wealth is certainly more or less actuated by the prospects of the various enjoyments which he hopes his increasing income will enable him to command. One wishes to become rich enough to marry ; another to keep a car- riage, or a country house ; a third to be able to settle his children respectably in the world. Mrs B. Such motives are strong incitements to industry and frugality 5 and these useful habits often remain when the cause which gave rise to them no longer exists ; it is far from uncommon to see men retain the taste for accumulating long after they have lost the inclination for spending. Dr Adam Smith observes, that before the introduction of refined luxuries, the English nobles had no other means of spendin-g their wealth, than by maintaining in their houses a train of dependents, either in a state of absolute idleness, or whose only business was to indulge the follies or flatter the vanity of their patron ; and this is in a great measure the case in Russia, Poland, and several other parts of Europe, even at the present day. We find that the consumption of provisions by the house- hold of an English nobleman some centuries ago was perhaps a hundred times greater than it is at present. But you must not thence infer that the estate, which maintained such numerous retainers, produces less now than it did in those times ; on the contrary, it is perhaps as much increased as the consumption of the household 1271. With what motives does Caroline suppose that different persons labor to acquire wealth ? 1272. What does Mis B. say of these and similar motives ? 1273. What does she say of the industrious habits which grow out of them ? 1274. What does Adam Smith say of the manner in which the English nobles for- merly spent their wealth ? 1275. In what countries is this now the case r -1276. How does the consumption of provisions by the household of an English nobleman compare with what it for- merly was ? 322 ON EXPENDITURE. is diminished. The difference is, that the produce, instead of supporting a number of lazy dependents, maintains probably a hundred times that number of industrious, independent workmen, part of whom are employed in raising the produce of the estate, and part in supplying the nobleman with all the luxuries he requires : it was to obtain these luxuries that he dis- missed his train of dependents, that he improved the culture of his. land, and that, whilst studying only the gratification of his wishes, he contributed so essentially to the welfare of his country. Here is a passage in Paiey's Political Philosophy on the subject of luxury, extremely well worth your reading. Caroline reads. " It appears that the business of one half of mankind is to set the other half at work ; that is, to provide articles, which by tempting the desires, may stimulate the industry, and call forth the activity of those upon the exertion of whose industry, and the application of whose faculties, the production of human provision depends. It signifies notiiing to the main purpose of trade how superfluous the articles which it furnishes are, whether the w^ant of them be real or imaginary ; whether it be founded in nature or in opinion ; in fashion, habit, or emulation; it is enough that they be actually desired and sought after. Flourishing cities are raised and supported by trading in tobacco; populous towns subsist by the manufacturing of ribbons. A watch may be a very unnecessary appendage to the dress of a peasant, yet if the peasant will till the ground in order to obtain a watch, the true design of trade is answered; and the watchmaker, whilst he polishes the case and files the wdieels of his machine, is contributing to the production 1277. What is the difference as to the amount of produce from an estate, now and at the time named ? 1278. What does Paley say appears to be the business of one half of mankind ?— 1279. What does lie say is matter of no consequence in relation to this subject? 1280. How does he say that the watchmaker and fisherman contribute to the promotion of agriculture ? ON EXPENDITURE. 323 of corn, as effectually, though not so directly, as if he handled the spade or the plough. If the fisherman will ply his nets, or the mariner fetch rice from foreign coun- tries, in order to procure the indulgence of the use of tobacco, the market is supplied with two important articles of provision by the instrumentality of a merchan- dise which has no other apparent use than the gratification of a vitiated palate." This reminds me of an anecdote in Dr Franklin's works. He describes the admiration which was excited by a new^ cap worn at church by one of the young girls of Cape May. This piece of finery had come from Philadelphia ; and with a view of obtaining similar orna- ments, the young girls had all set to knitting worsted mittens, an article in request at Philadelphia, the sale of which enabled them to gratify their wishes. Mrs B. We often hear the poor reproached for aiming at things above their situation ; but J own that I delight in seeing them strive to ornament their cottages, to raise a few flowers amongst the nutritious vegetables in their gardens, to deck their room, though it be but with rows of broken china, cups, and plates, or a few gaudy prints ; it shows a desire of creditable appear- ance, and of aiming at something beyond the bare means of subsistence. Caroline. The desire of improving their conditions is not however, in all cases a sufficient motive to rouse the industry of the lower classes. I once knew an easy, indulgent landed proprietor, who having no ambition to increase his income could never be induced to raise his rents; his tenants, finding that they could pay their landlord and maintain their families as well as their neighbors, with nruch less labor, neglected their farms, 1281. What anecdote is related in Dr Franklin's works ? 1282, For what does Mrs B. say the poor are often reproached ? 1283. In what does she delight respecting the poor ? 1284. What case does Caroline mention to show that the desire of improving their condition, does not always rouse the poor to industry ? 324 ON EXPENDITURE. and became so idle and disorderly, that the estate was the least productive of any in the country. Mrs B. The country thus suffered from the well- meant, but ill-judged indulgence of this landlord. Caroline. But why was not the industry of these tenants stimulated by the desire of raising themselves in the world, which the forbearance of their landlord enabled them so easily to do ? JV[rs B. In the course of time it probably would have had that effect ; but when uneducated m.en obtain -an increase of wealth, the first use they generally make of it is to procure indulgences and exemption from labor ; it is only after becoming sensible that idleness leads them back to poverty, that they think of turning their wealth to better account. Well educated people seldom require the experience of so severe a lesson, but amongst the lower classes it is not uncommon to find that a great, and especially a sudden accession of riches, terminates in ruin. Caroline, There are frequently instances of poor people being ultimately ruined by a high prize in the lottery. Mrs B. And the lower the state of ignorance and degradation of mind of the poor man who gains the prize, the more certain is his ruin. The different slate of improvement of the lower classes in England, in Scot- land, and in Ireland, are strongly exemplified in this respect. If you were to give a guinea to a Scotch peasant, he would consider long how he could turn it to the best account ; he would perhaps buy a pig, or some- thing that would bring a future profit. An English 1285. Why were these tenants not stimulated to avail themselves of the advantages placed within their reach ? 1286. What is said usually to be the result of a sudden accession of riches? 1287. By v.'hat do poor people often become ruined ? 1288. On what does the greater ceriainty of ruin in such cases depend .'' 1289. In whatcountries is the different state of improvement of the lower classes strongly exemplified ? ON EXPENDITURE. 325 peasant is not quite so long sighted, yet he would contrive to derive some substantial advantages from the gift of a guinea ; he would probably lay it out in repairing his cottage, or in purchasing some new clothes for his chil- dren. But the Irishman, whose joy would be the greatest of the three at such an unexpected acquisition of wealth, would in all likelihood spend the whole of it in drinking whiskey with his friends, and thus disable himself for the labor of the following day. Caroline. And do you suppose that a sudden and considerable increase of wages would be attended with mischievous effects to the laboring poor ? JWrs IB. In the first instance it probably would. In manufactures it is generally found that an accidental increase of wages arising from a sudden demand for workmen, is productive of intemperance and disorderly conduct ; and this has been urged as a general objection to high wages ; but this bad effect seldom takes place unless the augmentation be sudden and unlocked for, and it discontinues when the high wages become regularly established. You may almost consider it as certain, that uneducated men will derive no advantage from such an augmentation of income as raises them suddenly above their accustomed habits of life. The beneficial effects, I have described to you in one of our preceding conversations as arising from increasing wealth and demand for labor, must be gradual, in order to prove useful to the lower classes. Caroline. All that you have said reconciles me, in a great measure, to the inequality of the distribution of wealth ; for it proves that, however great a man's pos- sessions may be, it is decidedly advantageous to the 1290. What case of illustration is mentioned in the use made of a guinea, hy the three persons ? 1291. What evil^ would result from a sudden and considerable increase of wages in manufactures? 1292. What does Mrs B. consider as almost certain with uneducated persons ? 1293. What reconciles Caroline to the inequality of wealth ? 28 326 ON EXPENDITURE. country ibat he should stiJl endeavor to augment them. Formerly I imagined that whatever addition was made to the wealth of the rich was so much subtracted from the pittance of the poor ; but now I see that it is, on the contrary, an addition to the general stock of wealth of the country, by which the poor benefit equally with the rich. J\Irs B. Yes ; every accession of wealth to a coun- try must have not only employed laborers to produce it, but will in future employ other laborers in order that the proprietor may derive an income from it. For every increase of capital is the result of a past and the cause of a future augmentation of produce ; therefore whatever a man's property niay be, he should be encouraged to im- prove it. I will read you an eloquent passage in Ben- tham's Theorie de la Legislation on the subject of luxury. " L'attrait du plaisir, la successions des besoins, le de- sir actif d'ajouter au bien etre, produiront sans cesse, sous le regime de la surete, de nouveaux efforts verse des nouvelles acquisitions. Les besoins les jouissances, ces agens universels de la societe apres avoir fait eclore les premieres gerbes de hies, eleveront peu a peu les maga- zins de I'abondance toujours croissans et jamais remplis. Les desirs setendent avec les moyens ; I'horizon s'ag- grandit, a mesure qu'on s'avance, et chaque besoin nou- veau egalement accompagne de sa peine et de son plaisir devient un nouveau principe d'action ; I'opulence qui n'est qu'un terme comparatif n'arrete pas memo ce mouve- ment, une fois qu'il est imprime, au contraire plus on opere en grand, plus la recompense est grande, et par consequent plus est grande aussi la force du motif qui anime I'homme au travail. " On a vu que I'abondance se forme peu a peu par 1294. What is said of the accession of wealth to a country in connexion with the employment of labor ? 1295. Of what is every increase of capital the result? 1296. From what French writer is a quotation made ? m ON EXPENDITURE. 327 I'operation continue des memes causes qui ont produit la subsistence. U n'y a donee point d'opposition entre ces deux buts. Au conlrairie plusl'abondance augmente plus on est sur de la substance. Ceux qui blament I'abondance sous le nom de Luxe n'ont jamais saisi celte considera- tion. " Los intemperies, les guerres, les accidens de toute espece attaquent souvent le fond de la subsistence ; en- sorte qu'une societe qui n'auroit pas de superflue et me- me beaucoup de superflu seroit sujette a manquer sou- vent de necessaire ; c'est ce qu'on voit obez les peuples sauvages. C'est ce qu'on a vu frequemment cbez toutes les nations dans les terns de I'antique pauvrete. C'est ce qui arrive encore de nos jours dans les pays peu favorises de la nature, tel que la Suede, et dans ceux ou le gou- vernement contrarie les operations du commerce au lieu de se borner a le proteger. Mais les pays ou Ics luxe abonde et ou I'administration est eclairee, sont a I'abri de la famine. Telle est I'heureuse situation de I'Angleterre. Des manufactures de luxe deviennent des bureaux d'as- surances contre la disette. Une fabrique de bierre ou d'amidon se convertira en moyen de subsistence. Que de fois n'a t'on pas declame contre les cbevaux et les chiens comme devorant la subsistence des hommes ! Ces profonds politiques ne s'elevenl que d'un degre au dessus de ces apotres du desinteressement qui pour ramener I'abondance des bles ccurent incendier les magazins." Caroline, We, had not yet considered luxury under this point of view; I confess I was of the opinion of those who thought that dogs and horses devoured the subsistence of man, but I am much better pleased to think that the food which luxury raises for the nourish- naent of those animals may, in case of necessity, become nourishment for the human species ; and, if a famine should take place, even the animals themselves would afford a resource. 1297, What does Caroline say of this extract ? 328 ON EXPENDITURE. Mrs B. Hair powder we may consider as a kind of granary for the preserv^ation of wheat, for though the powder would not, unless in cases of very great urgency, be converted into food, the quantity of corn annually grown for the purpose of making hair powder would, during a moderate scarcity, find its way more readily to the baker's than to the perfunier's shop. Caroline. And pray, Mrs B., what do you think of the luxury of the Romans ? We read in Pliny of a Roman lady who was dressed in jewels to the amount of 300,000/. I recollect also, an account of a dish offish having cost 64/. Mrs B. These are but trifling instances of profusion, in comparison of some some others related of the Romans. Mark Anthony expended 60,000/. in an entertainment given to Cleopatra. And the suppers of Heliogabalus cost 6000/. every night. But; nothing can be said in apology for the luxuries ofthe Romans ; they were extremely objectionable, because their wealth did not proceed from industry, but from plunder. Their extravagance and profusion, therefore, far from being a spur to industry, acted in a contrary direction; it encou- raged the love of rapine in themselves, whilst it depressed the spirit of industry in the countries subject to their power, by destroying the strongest of all inducements to labor, the security of property. It has been well observed by Macpherson, that "The luxuries of the Romans cannot be considered as the summit of a general scale of prosperity ; it was a scale graduated but by one division, which separated immense wealth and power from abject slavery, wretchedness, and want." In considering the advantages to be derived from - 1298. What does Mrs B. say of hair powder? 1299. What instances of extravagance does Caroline mention to have existed among the Eomans? 1300. What greater instances does Mrs B. mention ? 1301. Is there any apology for the luxuries of the Romans ? 1302. Why is there no apology for them ? 130E» What does Macpherson say of the luxuries of the Romans ? ON EXPENDITURE. ~ 329 luxury, we must, however, carefully remember, that it acts in a twofold manner; whilst on the one hand, it encourages industry, on the other, it increases expen- diture ; so far as its productive powers prevail over its prodigal effects, it is beneficial to mankind ; but in the contrary case it becomes an evil, and when it encroaches on capital we have seen that it is an evil of the greatest magnitude. The grand object to be kept in view in order to promote the general prosperity of tiie country, is the increase of capital. But it is not in the power of the legislature to promote this end in any other way than by providing for the security of property ; any attempts to interfere either with the disposal of capital or with the nature and extent of expenditure, are equally discour- aging to industry. Caroline, Whoever, I conceive, augments bis capital by savings from his income, increases the general stock of subsistence for the laboring classes ; whilst he who spends part of his capital diminishes that slock of sub- sistence, and consequently the means of employing the laboring classes in its reproduction. Every man ouglit, therefore, to consider it ns a moral duty, independently of his private interest, to keep his expenditui-e so far within the limits of his income, that he may be enabled every year to make some addition to his capital. Mrs B. And the question what tliat addition should be, must depend entirely upon the extent of his income, and his motives for expenditure. We can only point out illiberal parsimony, and extravagant prodigality as 1304. How far is it here said that luxury is beneficial, and how far is it an evil ? 1305. What is said to be the grand object to be kept in view in order to promote the prosperity of a country? ■ 1306. What does Caroline say of the person who augments his capital, and of the person who diminishes it ? 1307. What, in relation to this subject, does she consider a moral duty? 1308. On what must the addition to one's capital depend ? 28^ 330 ON EXPENDITURE. extremes to be avoided ; there are so many gradations in the scale between them, that every man must draw the line for himself, according; to the dictates of his good sense and his conscience, and in so doing should consult perhaps, the moral philosopher as well as the political economist. He who has a large family to maintain and establish in the world, though more strict economy be required of him, c^^nnot be expected to make savings equal to those of a man of a similar income, who has not the same calls for expenditure. ^ But however large a man's income may be, he has no apology for a neglect of economy. Economy is a virtue incumbent on all ; a rich man may have sufficient motives to authorize a liberal expenditure, but he can have none for negligence and waste ; and however immaterial to himself the loss which waste occasions, he should con- sider it as so much taken from that fund, which provides maintenance and employment for the poor. 1309. What extremes in the case can be pointed out ? 1310, What case is mentioned, where under dissimilar circumstances a difference of savings is made ? 1311. What is said of economy ? SCHOOL BOOKS. BOWLES AND DEARBOR^T, 72 WASHINGTON STREET, BOSTON, Keep a complete assortment of SCHOOL BOOKS, which they will sell as cheap as can be purchased elsewhere. School Committees and Instructers may at all times receive copies of works for examination, gratis. They have lately published, THP JUVENILE COMPANION,by Rev. J. L.Blake, A.M. This work is intended for a reading Book for Second and Third Classes. By the annexed extract from the preface, it will be seen that great care has been taken by the author in the selection of materials. The first edition, consisting of 2000 copies, has been nearly all disposed of in the course of a few months — the publishers are about stereotyping it, and will be able to answer orders to any amount. School Committees and Instructers, who have not yet exam- ined this work, are invited to do so — and may receive a copy gratis for that purpose, on application to the publishers. The Companion contains 300 pages — is printed on a fine pa- per, and will be sold at a less price than any other school book in the market containing the same quantity of matter. EXTRACT FROM THE PREFACE. "The object of this volume is to make the reader acquainted with particularly interesting and important events in history and biography, presuming that an inclination will thereby be formed in the minds of young persons, for connected and extensive reading upon those subjects. Moreover, in the selection of materials, such have been taken as were of a decided charac- ter in their moral tendency. Whether a good or bad quality were to be represented, unless it were so strongly marked, that a child would be led of his own accord, and instantaneously to admire the one, and abhor the other, it was deemed unfit for use. Thus a literary and moral purpose is accomplished at the same time, and by the same labor. It is an undoubted truth, that there is no better way to inculcate the principles and the love of what is excellent, than by the exhibition of real excellence ; and that there is no better way to guard one 9,gainst the commission of what is ofa contrary character, than by the display from real life of vicious and vile conduct. * * " The object of the author has been to furnish young persons, both in families and in schools, with a compilation that will never fail to be interesting — that will always be found instructive— that will always leave on the mind of the reader an impression favorable to virtue and piety." The following are among the recommendations received by the publishers. From Barnum Field, A. M. Master of the Hawes Grammar School, Boston, Mass. Messrs Bowles & Dearborn, Gentlemen — I have with great pleasure examined the "Ju- venile Companion," and hesitate not to say, that I think it bet- ter calculated than any book with which I am acquainted, to interest and instruct the youthful reader. It is well adapted for a class book, and its merits only need to be known to bring it into extensive use. June 12th, 1827. BARNUM FIELD. From the lastructers of the Providence High School. Providence, June 23d, 1827. Messrs Bowles & Dearborn, Gentlemen — We have examined the book you sent us enti- tled " The Juvenile Companion," and we are so well pleased with it, that we shall immediately introduce it into our semina- ry as one of our reading books — we have consequently de- sired our bookseller to procure a quantity for us forthwith. From the Rev. Calvin Wvlcoit, Preceptor of the Academy^ Hano- ver, Mci^s. Hanover, Mat, 28, 1827. Messrs Bowles & Dearborn, I have examined the " Juvenile Companion," and am happy to inform you that I consider it one of the best books for prima- ry schools that I have seen. It cannot fail of meeting the ap- probation of parents and teachers as far as it is known. — Yours respectfully, &c. CALVIN WOLCOTT. From the Principal of a Seyninary in Roxhury, Mass. Messrs Bowles & Dearborn, Having with much pleasure examined the " Juvenile Com- panion," transmitted to me a short time since, I cheerfully give it as my opinion, that it is well calculated for the instruc- tion of youth, and as an introduction to the Historical Reader. The judicious selection and happy arrangement both of prose and poetry, the purity and simplicity of diction, the historical facts infused, and above all the moral sentiments inculcated, inspire a belief, that the author's most sanguine expectations will be realized. — Very resnectfully yours, THOMAS SNOW. From the Rev. Charles H. Jllden, Teacher of Classical School in Providence, R. I. Olney Place, Providence, June 18. Messrs Bowles and Dearborn, I have examined with considerable attention the "Juvenile Companion;" and have to say that I deem it well calculated for the purposes intended: adding to the many obligations un- der which our youth have long been to the Rev. Author. There can be no question, I think, of its general reception into our common schools, fc Very respectfully, gentlemen, your obedient servant, CHARLES HENRY ALDEN. Extract frojn the American Journal of Education. " This compilation possesses all the recommendations of the Historical Reader, in addition to the consideration of its being well adapted to an earlier stage of educatiop, and one in w^hich the scarcity of good reading books has been much felt. The moral uses of the lessons have, we think, been kept very steadily in view ; and the natural vivacity of the narra- tives facilitates an easy and animated style of reading." PRIMARY CLASS BOOK. THE EASY READER, desisneH to be used next in course after the spelling book, in schools and families. By John Frost. recommendations. Frotn G. B. Emerson, A. M. Principal of a Seminary for Young Ladies, in Boston, to the compiler. March 1, 1828. Dear Sir — I have examined your "Easy Reader" with great pleasure. The selection is exceedingly well adapted to children who have just overcome the first difficulties of learning to read. The moral tone of the instruction conveyed, the purity of the style, the variety and simplicity of the sub- jects, suit it at once to form good readers, and to improve the mind and the feelings of children. Yours with great esteem, G. B. EMERSON. FroniA. Andrews, JL. M. Principal of the Bowdoin School, Eoston. Bowdoin School, Feb. 26, 1828. To Mr John Frost, Sir — I have, ^vitli great pleasure, examined your " Easy- Reader." The reading lessons appear to me to be judiciously selected from the best authors, who have written for the amusement and instruction of youth. They treat of subjects, interesting to children, conveyed in language within their com- prehension, and well adapted to arrest their attention, and to cherish in their minds, sentiments of virtue. In our schools, books are frequently put into the hands of children, far abov^ their capacit}'- ; this makes the task of teaching them to read correctly, very difficult, not to say impossible. "The Easy Reader" will, it is confidently believed, render the task of primary instruction, comparatively, a light and pleasant one, both to teacher and pupil. Yours respectfully, ABRAHAM ANDREWS. Fro7n Mr J. H. Ptice, Principal of a Private Academy, Boston. Mr J. Frost, Dear Sir — I have examined with much interest your late publication, — The Easy Reader. It appears to me admirably calculated to supply that deficiency in reading books, of which Instructers have so long complained. I cheerfully recom- mend it for the use of that class of children for whom it is in- tended. J. H. PRICE. Salem Street Academy, Boston, March 15, 1878. Mr John Frost, Dear Sir — I have looked over yolir little book called the Easy Reader, and am very Vv^ell pleased v>dth it. I have for some time past been familiar with most of the ma- terials of which it is made, and have considered them the best productions, to which chililren can have access. I think it well selected and well arranged, and a much better book than most of those, which occupy the place for which this is intended. You have my cordial wishes for its success, as I think it cal- culated to be useful. Yours most respectfully, SILAS BLAISDALE. From Berijaniin F. Farnswnrth, Principal and Professor in the Institution at JYew Hampton, J\\ H. Messrs Boavles and Dearborn, The little volume, entitled the " Easy Reader," lately sent me for examination, is well adapted to the purpose for which it was designed. There has been a deficiency of compilations, suitable to succeed the Spelling Book in our Primary Schools. It is quite important, that children should be furnished with exercises in reading, perfectly intelligible, and as interesting as possible ; otherwise, they cannot be expected to learn to read with propriety, even with the best instruction. Mr Frost has judiciously given the preference to pieces of a moral and historical description ; he has combined a pleasing variety ; and the compositions ai'e generally, both pure and sim])le in their style. I would recommend the work to the attention of the managers of elementary instruction, in both our public and our private schools. BENJAMIN F. FARNSWOiiTH. J^ew Hampton, May 5th, 1828. AN ABSTRACT OF BrBLE HfSTORY, For the use of Young Persons, with Questions for Examina- tion, a scheme of Scripture Chronology, &c. First American, revised and altered, from the Seventh London edition. EXTRACTS FROM THE PREFACE. "A small Abridgment of the Scripture History, originally drawn up for a Sunday School, beyond vv'hich the author had not flat- tered himself that it would find its way, having been several times called for by the public, advantage has been taken of each return to press, to make such additions and improvements as occurred to the author and his friends. As it was originally intended for a First Book, a few les- sons were prefixed, composed in words of one syllable ; which might at once be easy to young readers, and convey some tolerably accurate, but familiar and intelligible idea of God, and man's duty to him, previous to their becoming acquainted with his works of creation and providence, in the way of his- torical narration ; a mode of religious instruction which is the most entertaining and captivating, as well as the most suited to the capacity of the youthful mind, which can perceive the connexion of a story with its moral, before it can follow an ab- struse argument, or take an interest in a systematic summary of rules. These lessons are still retained ; and a slight sketch of scripture geography is added to the whole, with a view to excite, but not to satisfy, curiosity. Newcastle, March 1, 1824. The return of this little v/ork a seventh time to press, has given the Author an opportunity of a further revisal and cor- rection, by which he hopes that it will be found in many re- spects considerably improved. — A short introduction, explana- tory of the words Bible, Testament, Covenant, Scripture, Ca- non, &c. is prefixed ; and a short Scheme of Scnpture Chro- nology is added. ^ / On the first reading, the Author would recommend that children be indulged with reading, or hearing read, the full account as it stands in the Bible, of any particular history which may strike them. But the Author submits it to the consideration of Parents and Teachers, that it should not be made a First Book, and then be thrown aside ; but that after a subsequent perusal of the Scriptures at large (perhaps after more than one) it may very profitably be taken up again and again ; and that thus the several incidents contained in Scripture history may be more deeply, imprinted on the mind, together with the instruction intended to be conveyed by them." The best recommendation the publishers can add to the above, is, that the v^^hole of the first edition has been sold in about two months. OUTLINES OF SCHIPTURE GEOGRAPHY, with an Atlas. By J. E. Worcester. The author of this little treatise on Scripture Geography, has prepared it under the impression that a work of the kind was wanted, and if well executed, would be useful. He is not acquainted with any treatise on the subject, that is at once concise, comprehensive, and well adapted to elementary instruction. Some knowledge of the countries and places in which the memorable transactions recorded in the Bible took place, can- not but be regarded as important ; yet it is a branch of learn- ing that has been much neglected ; and nothing is more com- nion than to meet with well educated persons, who have little acquaintance with the subject. The Outlines, and the accompanying Atlas, are designed to be used throughout in connexion. The plan on which the work has been formed, will be found simple; easy both to the instructor and the pupil ; and well adapted, it is hoped, to ele- mentary instruction in schools and families. The subject is treated, in a great measure, chronologically ; the circumstances by which many of the places had been ren- dered memorable, are briefly mentioned ; and the nature of the work wiU render it useful in facilitating the study of Sa- cred History. It has been the design of the author to follow the best guides. He has noticed such matters as he deemed most im- portant; but has avoided all discussion of doubtful topics. " The Atlas v/ill be found of great use in illustrating the sub- ject. The difi:erent maps which have been published by dif- ferent authors, for the illustration of the geography of the Scriptures, differ from each other in many particulars. The laSt five maps in this Atlas have been formed substantially fi-om maps contained in Palmer's " Bible Atla,s."