THE UNIVERSITY 
 
 OF ILLINOIS 
 
 LIBRARY 
 
 "BSTS 
 S.6
 
 REFUTATION 
 
 or 
 
 SOME DOCTRINES RKLATING TO TUf. 
 
 SINKING FUND, 
 
 CONTAINED IN A WORK LATELY PUBLISUBO 
 
 EARL OF LAUDERDALE ^ 
 
 ORIGINAL REMARKS 
 
 DIFFEllENT SUBJECTS OF POLITICAL 
 ECONOMY. 
 
 By A MEMBER of the MIDDLE-TEMPLE. 
 
 LONDOx\ : 
 
 PmUtd hij W. Flint, Old Bailttj; 
 
 i."<I> SOLn BY JOHN GINGER, NO. 169, PICCADILLY. 
 
 1804.
 
 A REFUTATION, &c. 
 
 JlHE science of political economy, as far as wealth 
 can affect the interests of a state, is a part of knowledge 
 more essential than any other to the welfare of every 
 community. The acting upon ooe false principle may 
 abridge the comforts, or be the cause of even misery 
 to a whole people. In proportion, therefore, as the 
 interests of mankind are dependent upon anenhghtened 
 system of political economy, it becomes more im- 
 portant, that in it no false reasoning be suffered to 
 delude the public ,^mind, by advancing erroneous hy- 
 potheses, or maintaining principles not founded in 
 nature, and confirmed by experience. 
 
 These considerations have given rise to the following 
 critique of a work lately published by the Earl of Lau- 
 derdale, entitled "An Inquiry into the Nature and 
 Origin of Public Wealth, and into the Means and 
 Causes of its Increase." In this disquisition we haVe 
 freely, but, we trust, fairly, canvassed the justness of 
 the noble Earl's reasonings, and the soundness of the 
 
 B
 
 principles which he has deduced from them. The re- 
 sult of our inquiry has been to detect, in repeated in- 
 stances, what we conceive sophistry in argument, 
 and a deduction from thence of principles, from their 
 very nature highly detrimental. 
 
 The proposed object of the noble author is explained 
 to us in the following extracts from the introduction 
 prefixed to his book. 
 
 " "As a clear understanding of the relation which public 
 wealth and individual riches bear to each other, appears of 
 the highest importance in securing accuracy in every subject 
 that relates to the science of political economy : the first and 
 second chapters of this inquiry are therefore devoted to the 
 consideration of the nature of value, the possession of which 
 alone qualifies any thing to form a portion of individual 
 riches ; — to an explanation of what public wealth is, and of 
 what constitutes individual riches ; — and to an examination of 
 the relation in which they stand to each other. 
 
 - " The meaning annexed in this work to the phrase publie 
 ^wealth, being thus explained, the third chapter contains an 
 investigation of the sources of vvealth, in which land, labour 
 and capital, are separately treated of as the sources of wealth; 
 an opinion which, though it has been announced by some, 
 and hinted at by others, does not seem to have made on any 
 author so strong an impression as to be uniformly adhered t» 
 in the course of his reasonings. 
 
 " An idea which has generally prevailed, (though it seemc 
 in itself a paradox), that wealth may be increased by meai» 
 
 • Page 9.
 
 y which it is not produced, in particular by parsimony, or 
 deprivation of expenditure, has made it necessary to investi- 
 gate this subject in the fourth chapter, as a preliminary to sn 
 inquiry into the means and causes of the increase of -wealth ; 
 which is the object of the fifth chapter." 
 
 In the prosecution of this plan, the noble author has 
 advanced doctrines so new, and different from every 
 writer who has preceded him, as to warrant the con- 
 clusion, that they have been selected from an affecta- 
 tion of novelty rather than from a love of truth. The 
 following are the principal of those to which we mor« 
 particularly allude. 
 
 1. That the whole wealth of a community is not 
 made up of the wealth of all the individuals com- 
 posing the community. 
 
 %. Thatevery kind of labour is productive of wealth. 
 
 3. That the frugal man is not a public benefactor^ 
 and that parsimony does not increase the public 
 wealth. 
 
 4. That the sinking fund is a delusion, and, if con- 
 tinued to be acted upon, will inevitably ruin the 
 country. 
 
 These we shall shew to be some of the doctrines of 
 the noble Earl, and, we confess, they entitle him to 
 the merit of originality. But of each of them we prw- 
 Ji 2
 
 pose to demonstrate, either, that it is false ; or, if 
 true, that its truth is not established by the reasonings 
 of the noble Earl. 
 
 The foregoing are the errors of greater moment. 
 There are others of minor consideration, which, how- 
 ever, we shall but slightly notice. Such are inaccura- 
 cies of expression, different meanings improperly at- 
 tached to the same word, loose definitions, &,c. &.c. — ■ 
 faults, which the noble author himself has forcibly 
 complained of, in works on political economy. — Of 
 these we extract the following : — 
 
 In page 121 it is asserted, that '' consumption, most 
 undoubtedly, must always precede production." The 
 term consumption must mean the consumption of some 
 particular commodity or commodities ; but how is it 
 possible that in any age or state of society whatever, 
 any one commodity can have been consumed before 
 it was produced ? — which it must have been if con- 
 sumption precedes production. Perhaps the desire or 
 necessity of consumption might have been intended to 
 be expressed by the noble author. 
 
 In a note, page 1 85, the noble Earl says — 
 
 " It is a strange confusion of ideas that has led Dr. Smith 
 to describe the operation of capital as increasing the produc- 
 tive powers of labour. The same process of reasoning would 
 lead a man to describe the effect of shortening a circuitous 
 road between any two given places, from ten miles to five 
 miles, as dhubling the vdocitij of the walker."
 
 Dr. Smith has not been often accused of possessing 
 #1 strange confusion of ideas', but if to describe the 
 operation of capital as increasing the productive powers 
 of labour, be, in the noble Earl's mind, tlie conse- 
 quence of a strange confusion of ideas, a much more 
 strange confusion of ideas must, in the mind of common 
 sense, have led the noble Earl to the foregoing illus- 
 tration. The effect of capital in the production of a 
 commodity should have been likened to the effect of 
 some machine in rendering the actual bodily exer- 
 tion less in passing the same distance. Such being the 
 comparison, the same commodity is produced, and 
 the same distance passed, with the exertion of a smal- 
 ler quantity of bodily labour. But an equal effect from 
 a smaller quantity of labour is the same as a propor- 
 tionably greater effect from the same quantity of la- 
 bour. The same quantity of labour would by the same 
 means have produced a greater effect ; and, judging of 
 the productive power of labour by the quantity of effect 
 produced, that power has been augmented ; which 
 augmentation having been effected by capital, capital 
 may therefore be said to increase the productive powci* 
 of labour. 
 
 We instance the following loose propositions from 
 page £78 : — 
 
 " In civilized society, thereforp, with the exception of 
 what he derives from the ocean, the wealth of man can alone 
 be increased : 
 
 "1. By labjur, whether personal, or performed by ca-
 
 p:tal, employed in increasing the quantity, and mdioratin* 
 the qnality of the objects of his desire ; that is, bij agriculture, 
 
 ** 2. By labour, whether personal or performed by capita! 
 employed in giving form to, and adapting commodities for 
 consumption ; that is, ty manufacturing industry " 
 
 "We are to suppose then under the first definition, a$ 
 increasing the quantity, and meliorating the quality cf 
 the objects of man's desire, is attributed only to agri- 
 cuHaval labour, that the iron forger, whose business it 
 is to extract from the earth, and convert a quantit}"^ of 
 ©re into iron, does not increase the quantity of iron, 
 one of the object^ of man's desire; or, that the clothier 
 who converts wool into cloth, or the miller who sepa- 
 rates the bran from the flour, do not meliorate the 
 «^ualitj of the commodities on which they are re- 
 spectively employed, ^y meliorating, we mean giving 
 a commodity a farm adapted to answer in a better 
 manner the purposes of man : we know of no other 
 sense than this, in which agricultural labour can me- 
 liorate \he quality of a commodity. The labour of the 
 farmer in threshing his corn from the sheaf, is em- 
 ployed in gi-ciiigform to, and adapting a commodit}/ for 
 consumption, as much as the labour of the miller in 
 grinding it into flour, or the spinner of wool into a 
 thread. But if the noble Earl regards the general bu- 
 sdness of the farmeras agricultural, he excludes this la- 
 bour from the second definition. 
 
 We have selected these passages as examples of the, 
 less important faults above mentioned.
 
 Where the noble author has contented himself, witS 
 illustrating points "already established, h > hai b^cri 
 more fortunate. What he has said of value, bj' which, 
 however, he means nothing more than market price, 
 is generally pretty just. And, using the term value ia 
 this sense, he is right in maintaining, that no commo- 
 dity whatever is intrinsically valuable. But we protest 
 against the practice of unnecessarily attaching to words 
 a different meaning from that commonly signified by 
 them. Market price or exchangeable value would 
 here have been the proper terms. This practice in the 
 present instance leads to the maintaining, that water 
 in itself is of no value ; that beef and corn are of no 
 value; and that articles of cloathing are of no value; 
 commodities without which we cannot subsist. If such 
 a practice be permitted, we may mean, that a man 
 enjoys good health, when we say he is sick ; or, that a 
 body is of a shining brightness, when we call it 
 black. 
 
 But we proceed to the main object of our under- 
 taking. 
 
 I. That the doctrine, that the whole wealth of a 
 community is not made up of the wealth of all the indi- 
 viduals composing the C07n7numty, is one of the points 
 maintained by the noble author, may be collected from 
 the following passages of his work, 
 
 " The terras • we use, in talking of tlie wealth of a nation, 
 »r of the nche« of individuals, are in all languages exactly th«
 
 same. Tliey denote, that private riches are universally con* 
 iidered in no other light than as a portion of nafional wealth^ 
 The sum total of the riches of those who form the community ^^ 
 is thus regarded as necessarily conveying an accurate state- 
 ment of the wealth of a nation ; and this idea has become so 
 tiniversally prevalent, that, even by philosophers, ex- 
 changeable value has been announced as the basis of wealth. 
 An increase of the fortune of any member of the society, if not 
 at the expcnce of any individualbelonging to the same com- 
 munity, is uniformly deemed an augmentation of national 
 wealth ; and a diminution of any man's property, if not pro- 
 ducing an increase of the riches of some of his fellow subjects, 
 has been considered as of necesisity occasioning a concomitant 
 diminution of national wealth."' 
 
 " *That public wealth, however, ought not to be considered 
 as merely representing the sum of individual riches, is un- 
 doubted; and that much of obscurity, and even of error, has 
 existed in economical reasoning from confounding them, will 
 be made apparent.'' 
 
 " It is, t however, impossible to subscribe to the idea, that 
 the sum total of individual riches forms an accurate statement 
 of public wealth. Thoug-h the opinion has been universally 
 prevalent, it must be deemed false and unfounded by every 
 rnan who considers the subject, after having formed, and fa- 
 miliarized himself to, an accurate and distinct opinion of the 
 Bature of value." 
 
 " 5; When we reflect on the situation of this country, it ap- 
 pears, indeed, almost seff-eviuent, that the sum total of in- 
 dividual riches cannot be consider»d as aftbrding an accurate 
 
 statement of public wealth." 
 
 • rage 8. t Page 43. § Page i^.
 
 Having thus shewn such to be the notion of the 
 noble author, let us proceed to examine the means by 
 which he endeavours to establish it. But first we read 
 in a note — 
 
 " * The words wealth and riches are, in common language, 
 used as synonymous. There is no term by which we can de- 
 sign the wealth of a nation, which is not equally applicable to 
 the riches of individuals. In treating of private fortune, how- 
 ever, the word riches will be uniformly used ; and in expres- 
 sing public opulence, the word wealth. To be more distinct, 
 private or individual will be generally prefixed to riches, and 
 public or national to wealth," 
 
 Now to describe two words as signifying the same 
 thing, but to tell us that, nevertheless, one of them 
 •will be employed constantly for one purpose, and the 
 other for another purpose, carries with it no evidence 
 of sound or fair reasoning ; and in the present instance 
 we object to it altogether. We object to it, because we 
 detect in it a covert attempt at raising a distinctioa 
 between private wealth and private riches, which leave« 
 the noble Earl at liberty to say, that he does not dis- 
 pute the position that the mass of private wealth, but 
 that the mass of private riches makes up the wealth of 
 agnation. But if the noble Earl's aim be only to create 
 s fanciful distinction between wealth aod riches, his 
 pursuit has been mere trifling. And at best the dis- 
 tinction would be subterfuge ; for the noble author 
 
 • Page 8.
 
 10 
 
 USPS the terms fortunes, property/, and riches indiscri- 
 minately, and perhaps he will not dispute, but that, 
 by a man's fortune or property is meant his wealth. 
 He says also, " private or individual will be generally 
 prefixed to riches, and public or national to wealth," 
 meaning thereby to express in relation to individuals 
 and the public the same thing. But we will attach the 
 same ideas to wealth as the noble Earl has done to 
 riches, which renders the distinction immaterial, but 
 meets the sense in which the noble Earl has used 
 riches : both terms will therefore be used indiscrimi- 
 nately. 
 
 By the way, it should seem, that this tenet of the 
 noble Earl's might be refuted in five words. Can any 
 part of the wealth of a nation be destroyed without di- 
 minishing the wealth of some individual of that nation? 
 No. Can any individual of a community be possessed 
 of wealth which does not constitute a portion of the 
 whole mass of wealth of that community ? No. How 
 then can it be said, that the sum of private wealth 
 does not compose the whole wealth of a community ? 
 
 But, to prove his position, the noble Earl urges the 
 following arguments. Having supposed the case of a 
 country, possessing every thing *' in such an abun- 
 dance, that every individual should find himself in pos- 
 session of whatever his appetites could want, or his 
 imagination wish or desire :" he says, 
 
 ^' * The inhabitants pf a country thus abounding in all th^t 
 » Page 48,
 
 man can desire, would, without the possibility of possessing 
 riches, ctijoy all the wealth and comforts which the largest 
 fortunes can secure." 
 
 Tills indeed, is saying, the inhabitants of a country 
 may, every one of them, be wealthy, and yet not be 
 rich. But the noble Earl has supposed a situation of 
 mankind contrary to the fundamental laws of nature, 
 which, therefore, not only never will, but, even with 
 the wonderful lamp of Aladdin, never could take place. 
 Thus every man's imagination may suggest to him as 
 desirable, the exclusive possession of this unlimited 
 abundance; a desire impossible to be satisfied by the 
 Deity himself. Or men might sigh for the enjoyment 
 of so many houses as could notbe contained in the whole 
 earth, to gratify which is another kind of impossibility. 
 Nothing can be concluded in argument from data like 
 these. But allowing the situation supposed by the noble 
 Earl to be that, of mankind enjoying an abundance the 
 greatest jjossibk J consistent with the first laws of nature ; 
 tlie conclusion which he has drawn is false. For, ad- 
 mitting the possibility that every individual could be 
 possessed of a house as large as St. Paul's, yet ex- 
 changeable value (which is the criterion of riches with 
 the noble Earl) would still exist. For, even then, men 
 would barter their commodities ; and a house as large 
 sis St. Paul's would not then be exchanged, for example, 
 for a horse. The exchangeable value of such a house 
 would even then (the quantity of all commodities being 
 equallj/ increased) bear th« same proportion to the 
 value of a horso as it does npw. And whether, in such 
 c 2
 
 12 
 
 a situation, the value which is now represented by a 
 guinea, be then represented by a halfpenny, or the 
 value of a halfpenny by a guinea, is perfectly imma- 
 terial ; for the desirableness of such house would still 
 bear as high a proportion as now to the desirableness 
 of ahorse. The lower class of industrious Englishmen, 
 compared with the starving savage of New Zealand, 
 or Terra del Fuego, may, at this time, in some sense, 
 be said to live in the greatest abundance ; but they have 
 not arrived a step the nearer to the extinction of ex- 
 changeable value. On the contrary, it has ramified 
 into an infinitely greater number of parts. 
 
 By this argument, however, the noble Earl puts the 
 question of private wealth, or riches, on the ground of 
 exchangeable value ; and on this ground also we shall 
 shew, that he has failed in the proof of the proposition. 
 
 He has supposed two cases; one taken from the 
 funded property (we should have said more properly, 
 the funded dtht) of the country ; and the other, that 
 of a failure of 3-lOths of the produce of grain. As to 
 the first, he says — 
 
 " At present • the capital of the national debt amounts 
 nearly to 500 millions. We have seen, and know, that war 
 even in the course of the first year, may sink the value of this 
 capital 20 per cent. ; that is, that it may diminish the mass of 
 individual fortunes one hundred millions ;-and thus impose upon 
 any man, who made up the account of public wealth on th* 
 
 • page 4fi.
 
 IS 
 
 principle, that an accurate statement of it was to be derived 
 from adding together the fortunes of individuals, the necessity 
 of saying, that 100 millions of our wealth had vanished." 
 
 But does the noble author mean seriously to assert, 
 that the proprietors of the public funds are possessed 
 of property to the amount of nearly 500 millions? or 
 that this supposed property actually exists? This pro- 
 perty once indeed had existence, but it ^vasadvanced^ 
 to government, who consumed it. Will the noble Earl 
 maintain that when an individual has lent 40^0001. to 
 a spendthrift, who has totally dissipated it, but who 
 still pays interest from another fund ; will the noble 
 Earl maintain, that in such a case, either of the parties 
 is possessed of the fifty thousand pounds ? Surely the 
 uoble Earl's principles of political economy can never 
 lead him to such a position as this. Neither, therefore, 
 can it be said, that the proprietors of the public fund* 
 are really possessed of this supposed sum, amounting 
 nearly to 500 millions ; whatever may be the nominal 
 amount of their imaginary wealth. But, if there is no 
 such wealth in existence, 100 millions of it cannot have 
 ▼anished. 
 
 The other case put by the noble author is equally 
 fallacious. He supposes a deficiency of-j?^ of the pro- 
 «luce of grain, which he calculates would increase the 
 value of a certain quantity of it from 3001. to 6401. 
 As to which he remarks : 
 
 " Thus tb« * wealth of the nation being diminished by th« 
 ♦ Pag* 5«.
 
 14 
 
 loss of ^ of the whole of its produce of grain, the value of 
 its grain would thereby be increased from 3001. to 54-61. ; and 
 there would, by that means, be added to the mass of indi- 
 vidual riches, a sum nearly equal to the value which the 
 whole grain of the country bore when no such scarcity ex- 
 isted." 
 
 We argue this point under the admission, that the 
 mass of private wealth is to be computed from the ex- 
 changeable value it bears ; but it will be admitted on 
 the other hand^ that the amount of its exchangeable 
 value must be measured by some invariable standard. 
 The noble author s mewhere holds^ (what we will not 
 dispute) that, at the same time and place, money" is 
 the real measure of the relative value of any two other 
 commodities. But, in the case above supposed, money 
 itself is compared with the commodity grain ; and 
 in the comparison its value is affected. It becomes ne- 
 cessary then to keep in our minds some ideal commo- 
 dity, whose value shall be unaltered. Let the value 
 of this commodity bear a certain proportion to the 
 value of all the commodities belonging to a community. 
 Silver may still [he the circulating medium. In the 
 case supposed by the noble Earl, silver, and all other 
 commodities, which are purchased with silver, will 
 procure a smaller quantity of corn ; and corn of course 
 will procure a proportionably larger quantity of silver 
 and the other commodities. Silver and the "other com- 
 modities, therefore, have lost as much in value as corn 
 has gained. But the aggregate value of corn, silver, 
 and all the other commodities, which together com- 
 pose the wealth of a community, bears the same pro-
 
 15 
 
 portion to this invariable measure as before : which 
 was the point to be proved. And this point is, that the 
 value of all the commodities possessed by a community, 
 bears the same proportion to an invariable measure of 
 value, whether the diminished quantity of corn ex- 
 changes for 3001. or 5461. Thus the second argument 
 ©f the noble Earl's in favour of the position, that the 
 mass of national wealth is not niade up of the aggre- 
 gate of private, is overturned ou the ground of ex- 
 changeable value itself. 
 
 If. As to the second position, that evtry kind of la* 
 hour is productive of zcealth, we may collect it to be 
 one of the noble Earl's maxims from the following 
 passage. After having stated the arguments in favour 
 of each side of the question, he draws this conclusion. 
 
 " It appears*, therefore, impossible to contend, that the 
 labour ot the manufacturer and artist, or even the labour of 
 that class whuse services perish at the moment, are not, as well 
 as that of the husbandman, to be considered as productive of 
 M-ealth." 
 
 We shall refute this position, not by simply over- 
 turning the particular arguments of the noble Earl, 
 (indeed they partake so largely of the properties of the 
 cameleon's skin, that we should be at a loss what par- 
 ticular assertions to contest :) but by proposing a defini- 
 tion of our own, diflcrent from the noble Earl's notions, 
 en which to found adistiiK;lion. 
 
 * Page 153.
 
 1^ 
 
 We shall however, by the tray, remark on the 
 noble author's manner of arguing, from an example 
 taken from a passage in support of this point, that all 
 labour is productive of wealth. 
 
 In every branch of political economy. Dr. A. Smith 
 is universally looked up to as the great authority. But, 
 of late, it has become the fashion for every scribbler, 
 on any subject bearing the least relation to political 
 economy, to point out errors of Dr. Smith. Amongst 
 others, the noble Earl is by no means sparing of his 
 attacks on the doctrines of this writer. Now it is not 
 to be supposed, that the Wealth of Nations is wholly 
 free from error, (for that would be allowing it a more 
 than human perfection) : but all opposers of the prin- 
 ciples contained in that work would do well to be sa- 
 tisfied, that they previously understand what they are 
 about to contest. These authors in condemning the 
 Dr.'s principles, seem to run into the same fault, 
 wi a the man, who, having never looked into Euclid's 
 Elements, should call a mathematical demonstration, 
 nonsense. It would be unjust to rank the noble Earl 
 generally with such writers ; but, in the instance we 
 are about to consider, he has evidently misunderstood, 
 and misrepresented, the meaning of his author. 
 
 He states, that Dr. Smith considers, as unproductive 
 labours, all those whose 
 
 *' * Services perish in the very instant of theii performance, 
 and does not tix or realize itse/f in any vendable commodity, 
 
 • Page 148.
 
 i7 
 
 which can replace thcvalue of their wages and maintenance ; 
 [Wealth of Nations, volume II. page 273.] Productive labour, 
 on the contrary, he describes as fixing and realising itself in 
 some particular subject and vendible commodity. It is as it 
 were a certain quantity of labour stocked and stored up to be 
 employed, if necessary, upon some other occasion. That sub- 
 ject, or which is ihe same thing, the price of that subject, can 
 afterwards, if necessary, put into motion a quantity of labovu" 
 equal to that which had originally produced it." 
 
 This is Dr. Smith's distinction between productive 
 and unproductive labour ; and we conceive it to be 
 well founded. From hence the Dr. generally concludes 
 the labour of servants to be unproductive, M'hich per- 
 haps may want a little of his usual perspicuity. But 
 the meaning ma}- be, that the labour of servants, whose 
 labour generally does not realize itself in any vendible 
 commodity, is therefore generally unproductive ; and 
 not, that their labour is unproductive, M'hen employed 
 upon and realized in some vendible commodity ; for 
 then, in fact, it becomes the labour of manufacturers* 
 But the noble Earl, in his eagerness to refu c Dr* 
 Smith, and not understanding the literal sense of the 
 foregoing passage, has remarked on it in the following 
 manner : 
 
 " Unfortunately*, however, a little consideration makes 
 this distinction appear nowise founded on the nature of labouij 
 but merely dependent upon the vic ll.at is made ui' i(3 pro- 
 duce. Thus the same labour mi.y appear either { roductive 
 
 • Page 149. 
 O
 
 18 
 
 or unproductive, according to the use subsequently made of 
 the commodit}' on which it was bestowed. If my cook, for 
 example, maizes a tart which I immediately consume, he is 
 conbidered as iin unproductive labourer ; and the act of making 
 the tart as unproductive labour ; because thai service has 
 perished at the moment of its perform ait ce ; but if the same 
 labour is performed in a pastry cook's shop, it becomes pro- 
 ductive labour, because it is a quantity of labour stocked and 
 stored up, to be employed, if necessary, upon some other occasion : 
 th? price of it, if necessary, can afterwards put into motion a 
 quantity of labour equal to that which had originally produced 
 it. Again : a piece of cloth burnt immediately alter it was 
 formed, would immediately bestow, according to this defini- 
 tion, the character of unproductive on the labour of the cloth 
 manufacturer. Thus a tart being placed in a cook's shop* 
 would give to the labour of the cook the character of produc- 
 tive, and the cloth being put in the fire, bestows that of un- 
 productive on the labour of the manufacturer." 
 
 But is this REASONING ? — Productive labour is de- 
 fined to be that which realizes itself in some vendible 
 commodity. What is the meaning of vendible com- 
 modify ? Why it means a thing which may be sold ; 
 not a thing actually sold or even intended for sale. 
 Well then, the labour of the cook has realized itself in 
 a vendible commodity. But the noble Earl says, that the 
 aetof making the tart is considered ^' as unproductive 
 labour, because that service has perished at the moment of 
 its performance." But that service has not perished at 
 the moment of its performance, but itbas realized itself 
 in a vendible commodity, which the noble Earl can- 
 not have consumed before it had e.vistence ; and if it 
 ha,d existence but for a moment, it comes within the
 
 J9 
 
 definition of Dr. Smith. The noble Earl goes on to 
 sa}^ " but if the same labour is performed in a pastry- 
 cook's shop, it becomes productive labour ; because 
 it is a quantiUj of labour stocked, and stored up" S^c, 
 Why did the noble Earl garble this extract, by leaving 
 out the words ^' as it were ?" — but because he saw the 
 real sentence did not warrant the conclusion he pro- 
 posed to draw. Dr. Smith no more says that it must 
 be stocked and stored up with intent to be employed 
 upon some other occasion, than that the vendible com- 
 modity must be actually sold. But the tart is stocked 
 and stored up, though perhaps the noble Earl's appe- 
 tite may not suffer it to continue so more than five mi- 
 nutes ; and its price, if the noble Earl chose to sell it, 
 and, if nectssar;i/, could Siherwards put into motio7i a 
 quatitity of labour equal to that which had originally 
 produced it. ''Again: apiece of cloth burnt imme- 
 diately after it was formed, would ineviiubly bestow, 
 according to this definition, the character of unpro- 
 ductive on the labour of the cloth manufacturer." Here 
 again the noble Earl forgets the meaning of vendible 
 commodity; for otherwise, he argues, that because a 
 commodity has been consumed without having rendered 
 benefit to any individual, it has never been produced; 
 in as much as by the definition, if it has been produced, 
 the labour employed upon it mustnecessaril} have been 
 productive. The noble Earl's " little consideration" 
 has therefore failed to make the distinction of Dr. Smith 
 " appear no wise founded on the nature of labour, but 
 merely dependent upon the use that is made of its pro-- 
 ^uce.'* 
 
 d2
 
 20 
 
 So much for the noble Earl's ftianner of arguing : 
 and as in this point he has not reasoned logically, so in 
 others as well as this^ he betrays a desire of discovering 
 errors ; which he attempts, either from not under- 
 standing, or by perverting, the real meaning of the 
 Dr.'s passages. 
 
 But let us proceed to the statement of our own ideas 
 respecting the productiveness of labour. 
 
 We are to recollect, that labour is termed productive, 
 or unproductive, as it affects the wealth of a commu- 
 nity. But (as we see) no distinction; accurate enough 
 not to be disputed, has hitherto been drawn, between 
 what is properly productive, and what is unprodnctive 
 labour. As to this point, the following contradictory 
 maxims have been entertained. 
 
 Some have maintained, that agricultural labour is 
 the sole source of wealth, the only labour which can 
 be termed productive. Others have held, that, as well 
 as agricultural, manufacturing labour, which realizes 
 itself in some vendible commodit}', is likewise produc* 
 live ; but (as we see of Dr. Smith) these have excluded 
 domestic servants from the list of productive labourers 
 The noble Earl again maintains, that every kind of la- 
 bour is productive. 
 
 The first and third of these principles we shall shew 
 to be wrong ; and the second to be either wrong, or to 
 require elucidation.
 
 I. The supporters of the agricultural system seem to 
 attach ideas to the term productive, when applied to 
 agricultural labour, which imply, that this labour 
 actually creates the very matter, the very elements of 
 which the body produced is composed. In no other 
 sense of the term productive, do we see, what pretence 
 the agriculturists can have, for conceiving any diffe- 
 rence between the productiveness of agricultural and 
 manufacturing labour. The ploughman, it is true, 
 prepares the land and sows the corn ; and perhaps nine 
 months afterwards, collects the increase which hasbeea 
 effected by the vegetative powers of nature. It is un- 
 doubtedly true, that, if the seed had not been sown, 
 nature could not have given the Increase. But it no 
 more follows, that the labourer himself actually created 
 this increase, than it does, that if we give a man an 
 axe with which he is enabled to fell a tree, it is our la- 
 bour which has felled the tree ; or then that, if we give 
 a man money which enables him to go to London, it 
 is we who make thejourney. 
 
 It may be said, " the corn would not have been in 
 existence without the labour of the farmer." " Neither 
 would a pair of bellows without the labour of the bel- 
 lows maker." *'But the wood and leather, of which a 
 pair of bellows is composed, did exist before." *^ So 
 did the matter, which, by vegetation, has assumed the 
 form of wheat; but wood and leather no more consti- 
 tute a pair of bellows, than this matter does wheat." 
 The labour of the chemist, in producing water from a 
 combination of oxygen and hydrogen gases seems to 
 be indeed more creative than the labour of the agricul-
 
 tarist. For, neither oxygen nor hj-Jrogen are anv 
 more like water, than the primitive matter of wheat 
 (whatever it may be) is like wheat, and are equally 
 invisible ; but the labour of the chemist seems to have 
 the advantage, because its effect is immediate, while 
 that of the farmer's does not take place for many 
 months'. The labours of the bellows-maker and chemist 
 are, however, the labours of manufacturers. On ini- 
 quiry, therefore, agricultural labour does not appear 
 to possess the slightest primarily creative power, 
 any more than the labour of the manufacturer. 
 
 But, independently of the false ideas attached to 
 the term productive, the supporters of the agricultural 
 system, in denying the labour of manufacturers the 
 property of productiveness, are driven to main- 
 tain the absurdity, that England (or any coun- 
 try) would be equally rich with the bare rude produce 
 of her soil, as with that and her imn^ense quantity of 
 manufactured commodities together ; that she would 
 have been as v/ealthy as she is at this moment, if her 
 bricks and stones, now forming a component part of 
 her buildings, had remained in their original statie of 
 earth, or in the quarry; if her broad cloths had been 
 still wool on the sheep's back ; if her manufactures of 
 iron had still rested in the shape of ore in the moun- 
 tains of Wales; or if her men of war had been still 
 growing, or rotting, in her own, or in the forests of 
 ^Norway : — for none of these are the produce of the 
 labour of the mere agriculturist. The principle there- 
 fore that agricultural labour is alpnc productive of 
 lyealth is fundamentally wrong.
 
 U3 
 
 9.. The definition of tliose, who maintain, that 
 labour is productive, which realizes itself in some ven- 
 dible commodity, v.'e conceive to be just; but tlie 
 general exclusion of the labour of servants from this 
 class requires some elucidation. If we are to under- 
 stand that every kind of labour performed by a servant, 
 is to be considered as unproductive, from the circum- 
 stance of its being the labour of a servant, then we 
 looi< upon the exclusion to be erroneous. The labour 
 of domestic servants is often employed on commodi- 
 ties, and then it may be productive, being then indeed 
 manufacturing labour. The servant who has, from a 
 quantity of malt and hops, brewed a quantity of beer, 
 has exerted prouuctive labour; his labour has added 
 to the wealth ot ti)e community. But the author of 
 the IVealih of Nations might have intended to exclude 
 only that, more properly the labour of servants, which 
 does not realize itscli in any vendible commodity ; and 
 might have considered the other kind, though per- 
 formed. by servants, as manufacturing labour. Taking 
 the exclusion in tliis sense, notwithstanding, as we 
 said, the passage is wanting in tlie Doctor's usual per- 
 spicuity, we loot: upon thedefr.iiiion altogether as just, 
 aoJour own will be, in substance, the same. 
 
 3. As to tlie doctrine of the noble Earl, that every 
 kin 1 of labour is productive, or, to use his own words, 
 ** oven the labour. of that class \vho:5e services perish 
 at tiie moment," we shall be short in our remarks. 
 Supposing wc should for a moment be iuclined to 
 allow, that the labour of a servant, w'uo fetches a book 
 from Charmg-cross to his master's liousc, is productive
 
 S4 
 
 labour, (which we should do on the ground that his 
 labour in gratifying his master's mind from having 
 possession of the book, may have added to the desir- 
 ableness of a commodity) supposing we should be in- 
 clined to allow even this, how will the noble Earl shew, 
 that the labour of the same servant is productive (we 
 are to recollect productive of wealth) in awaking his 
 master at a certain hour in the morning, or in deliver- 
 ing a verbal invitation to a party ? Oh ! it may.be an- 
 swered, his labour is productive of gratification to his 
 master's mind. Ay, but this gratification is not a gra- 
 tification arieing from the enjoyment of a desirable 
 commodity ; and we hold the production of mere 
 mental gratification to be no production of wealth. If 
 mere mental gratification be wealth, a nation of hermits 
 may be possessed of greater wealth than England ; the 
 wealth of an empire may be augmented by the silly 
 circumstance of a country loon having been delighted 
 with a kind look from the mistress of his foolish af- 
 fections. 
 
 Having thus shewn the first and third of these propo- 
 sitions to be erroneous, and the second being disputed, 
 we must endeavour to substitute a definition of our own, 
 which shall raise against itself no objections. In order 
 to this, we must have in remembrance, that wealth, 
 both individual and public, is not a creature of the 
 mincl, but something substantial, something which has 
 a real existence in nature, something visible or tan- 
 gible: and we conceive it to consist of such desirable 
 substances as have been appropriated by human labour* 
 With this idea of wealth, we define that to be pro-
 
 25 
 
 ductive labour, which is employed on some rationally 
 desirable substance, either in collecting it, or in ren- 
 dering it more desirable, after it has been collected. 
 We are not aware at present that this definition is 
 open to an}' objections; we shall make a few remarks, 
 on it, but not with a view to a complete illustration. 
 
 B}' the definition it will be observed, that to con- 
 stitute labour productive, our notion is, that it must 
 not only be employed on some desirable substance, 
 but, if bestowed on a substance already appropriated, 
 that it must add to its desirableness. If the labour 
 render a commodity less desirable thap before, it has 
 been on the contrary destructive of wealth. Still if it 
 be an improvement in ever so small a degree, it is in 
 that degree productive, notwithstanding, (if we may 
 judge of the desirableness added to a commodity, by 
 the increased price it will obtain) in the employment 
 of capital, for instance, it might not have added 
 enough to the price to secure the ordinary profits of 
 trade ; and notwilhstanding the proprietor might, in 
 consequence, have comparativclij suffered a loss, For 
 this only proves that the degree of increase of his wealth 
 has not been proportional to the increase of the wealth 
 of others, and not that his wealth has suffered no aug- 
 mentation. 
 
 As the labour is productive, which adds to the utili- 
 ty of a commodity, notwithstanding the increased 
 value might not have secured to its employer the ordi- 
 nary pjofits of trade ; so in like manner is such laboui 
 
 c
 
 26 
 
 proclnctIv<» notwithstanding the labourer might, in the 
 mean time, have consumed more than he has produced. 
 This circumstance onl}' proves, that the v^'ealth of the 
 community is not on the whole greater (but is even 
 less) than it would have been had such a maji never 
 existed ; and not that the community would have been 
 equally rich, if the labourer had consumed the same 
 quantity of wealth, without having added to the value 
 of any commodity. But if not, his labour is pro- 
 ductive. It is not to be said, that the labour of the 
 farmer, in having collected from the earth a certain 
 quantity of wheat, has been unproductive, because 
 perhaps he has wasted more in living bej'ond his in- 
 come. 
 
 The distinction between the labour which adds to the 
 desirable properties of a commodit}'^, and the labour 
 which conveys only mental gratification to the employ- 
 er, is perfectly obvious. But, it is true, the two kinds 
 of labour may in their effects approach each other 
 so near, that it may be difficult or impossible to mark 
 with sufficient exactness their boundaries. And hence 
 «ome have taken occasion to maintain (which indeed is 
 the notion of tlie noble Earl) that there is no such dis- 
 tinction as productive and unproductive labour. Thus, 
 though it may be readily acknowledged, that labour 
 which adds considerably to the exchangeable value of 
 a commodity, is productive labour, or that the labour 
 of a washerwoman, who makes a shirt more desirable, 
 and thereby increa«es its value, is productive labour; 
 yet it is questionable, whether the labour of a servant
 
 27 
 
 in presenting a hillet-doiix to his master is productive ; 
 notwitlistanding it might perhaps he said, that his la- 
 bour in conveying it, has rendered the paper more va- 
 luable to his master. These difficulties may certainly 
 occur in ascertaining in every case what is productive 
 labour, or unproductive ; but they argue nothing 
 against the definition. In the productions of nature 
 no man will dispute the existence of an animal, and a 
 vegetable kingdom ; and that man belongs to the for- 
 mer, and a cabbage to the latter. Yet there are sub- 
 stances, which not onl}'^ common e^-es cannot denomi- 
 nate animal or vegetable ; but, we believe, there are 
 substances found attached to rocks under the sea, en- 
 joying the power of moving some of their parts, which 
 naturalists themselves are at a loss whether to class 
 amongst animals or vegetables. Since then we find dif- 
 ficulties like these of discovering the proper classes of 
 things, where it is not doubted that there are principles 
 of distinction, it is not to be said, that, because we do 
 nol know whether to call some particular labour 
 productive or unproductive ; therefore, there is no 
 such distinction as productive and unproductive la- 
 bour; and that, consequently, labour which can only 
 gratify the mind, is productive of wealth, as well as 
 that which adds, perhaps lOOOl. to the value of a com- 
 modity. 
 
 In support of the notion that all labour Is productive, 
 
 it has been argued, strangely enough, that the labour 
 
 of judges and soldiers is productive of wealth, because 
 
 \t preserves wealth, or renders it more secure. It might 
 
 K 2
 
 28 
 
 as well be argued; that bread and beer produce men, 
 because tbey support human life, or medicine, because 
 it renders life more secva-e. The labour of judges and 
 soldiers has been likened to the labour of a farmer in 
 making a hedge for preserving corn and cattle ; but, 
 independently of its property of preserving, a hedge is 
 itself wealth ; and no man has hitherto hazarded the 
 notion that labour itself is wealth, but only productive 
 of wealth. Some classes of labourers however, for ex- 
 ample, players and opera dancers, have not this claim 
 to make ; it would be difficult to shew in what manner 
 their laboui' tends to preserve wealth ; but if all labour 
 be productive, theirs, surely, cannot be excluded. 
 
 III. We come now to the examination of the third 
 point of the noble -Earl's, that the frugal man is not a 
 public benefactor, and that parsimony does not increase 
 the public zcealth. That this doctrine is in fact main- 
 tained by the noble author, we prove by the following 
 extracts from his work. 
 
 " But popular * prejudice, which has ever regarded the sura- 
 total of individual riches to be synonymous with public wealth, 
 and which has conceived every means of increasing the riches 
 of individuals to be a means of increasing public wealth, has 
 pointed out parsimony or accumulation by a man's depriving 
 himself of the objects of desire, to which his fortune entitles 
 him (the usual means of increasi/ig private fortune) as the 
 most active means of increasing public wealth." 
 
 * Page 208.
 
 29 
 
 " When we reflect that this abstinence from expenditure, 
 and consequent accumulation, neither tends to increase the 
 produce of land, to augment the exertions of labour, nor to 
 perform a portion of labour that must otherwise be executed 
 by the hand of man ; it seems that we might be entitled at 
 once to pronounce, that accumulation may be a method of 
 transferring wealth from A. B. andC. to D. but that it cannot be 
 c method of increasing public xceallh, because wealth can alone 
 be increased by the same means by which it is produced." 
 
 " But when the public prejudice is confirmed by men most 
 admired for talents ; when we are told by the most esteemed au- 
 thority, that everi/ prodigul is a public enemy, and every frugal 
 man a public benefactor ; that parsimony, and not industry, 
 increases capital, (meaning wealth) ; and that, as frugality 
 increases, and prodigality diminishes, the public capital ; so 
 the conduct of those whose expence just equals their revenue, 
 jieither increases nor diminishes it ; it becomes necessary to 
 enter into a more minute examination of this opinion; and 
 the more so, as it has given birth to an erroneous system of 
 legislation, which, if persisted in, must infallibly ruin the 
 country that adopts or perseveres in it." 
 
 " Fortunately, however*, for mankind, the mechanism of 
 society is so arranged, that the mischief done by the parsimo- 
 ny and disposition to accumulation of one individual is almost 
 uniformly counteracted by the prodigality of some other; so 
 that in practice nothing is found more nearly commensurate 
 than the expenditure and revenue of every society." 
 
 These passages we think suflicient to shew one of 
 the noble Earl's maxims to be, that the frugal jnan U 
 
 * Page 2i'8.
 
 so 
 
 not a public benefactor,, and that parsimony does not. 
 increase the public wealth. But the noble Earl has 
 left the question so comfortably confused^ that we find 
 it necessary to ascertain, what is meant b\' writers, 
 when they hold, that parsimony increases public 
 wealth. The meaning seems to be pretty apparent^ 
 name]}', that (allowing of course the production of 
 Avealth by other means to go on as before) when par- 
 simony has saved, for eiiivUiple a sum of lOOOl. there 
 is more wealth in a country, than there would have 
 been, had that sum of lOOOl. been dissipated. To ex- 
 press this idea the term increase is used, but without 
 an intention of conveying the notion, that any thing, 
 which did not exist before, has been created. The 
 noble author has himself used the Avord increasing, in 
 this sense. In a parenthesis, he says of parsimony, " the 
 usual means of increasing private fortune." And in 
 page 41, '^Parsimony, which experience teaches us, 
 is the most usual means of increasing private fortune, 
 &c." Increasing in these passages can only bear the 
 sense we have attached to it; for parsimony, the mere 
 act of preserving what has been already obtained, can 
 DO more add to the possessions of an individual, than it 
 can to what constitutes the public Avealth. Yet the 
 individual, who saves a certain sum, is possessed of 
 more than he otherwise would have been ; which is all 
 that the noble author could have intended by the word 
 increasing, and all which is meant by the term when 
 applied to public w^ealth. Since then the noble author 
 admits that private fortuue may be increased by parsi- 
 mony ; if (as we believe is pretty clear) the wealth of a 
 community is made up of the mass of private wealth j^
 
 31 
 
 parsimony can also increase the wealth of the puhlJc. 
 Thisulcnc refutes the position; but we will follow the 
 noble Earl's statements. 
 
 He lays clown, "that accumulation maybe a method 
 of transferring v/ealthfrom A. B. and C. to D. but that 
 it cannot be a method of increasing public wealth, be- 
 cause wealth" (private we suppose as well as public) 
 *' can alone be increased by the same means by which 
 it is produced." Here, independently of the luminous, 
 and classically beautiful manner, in which the state- 
 ment is made, he forces a construction on the term in- 
 creased, dilTerent from that which it is universally un- 
 derstood to bear, and which he himself just before put 
 upon it in res|)ect to private fortune, by making it ex- 
 press the production of something new. And he con- 
 tradicts his former admission, that parsimony increases 
 private fortune, namely private wealth, by saying, ge- 
 nerally, tnat wealth can alone be increased by the 
 means by which it is produced. 
 
 Having said thus much on the possibility of increas- 
 ing public wealth by parsimony, he labours to expose 
 the " public prejudice" that every prodigal is a public 
 enemy, and every frugal man a public benefactor. But 
 liow does he endeavour to compass his object: — Whj, 
 jn a most curious manner. 
 
 He distinguishes the property of a society into three 
 kinds J the land the farmer cultivates; the vegetable 
 and animal substances reserved for immediate or remote 
 £Qjisumption ; and its capital, consisting of machinery,
 
 52 
 
 Sec. Sec. But after making this division of property, 
 and after stating it to be advantageous to increase ca- 
 pital wiien necessary, he says ; 
 
 "If, on * the other hand, however, he is already in pos- 
 session of as much capital, as, in the existing state of liis 
 knowledge, he can use for the purpose of supplanting labour 
 in cultivating the quantity of land he possesses, it can neither 
 be advantageous for himself nor for the public that he should 
 abridge his consumption of food, clothing, and the other ob- 
 jects of his desire, for the purpose of accumulating a much 
 greater quantity of capital, (that is, of live and d<'ad stock 
 for performing labour) than can by possibility be employed in 
 supplanting labour. The extension of his lands, or the in- 
 vention of new, means of supplanting labour, would justify a 
 desire for increasing his capital ; but, otherwise, accumu- 
 lation, iby deprivation of expenditure, must be detrimental to 
 himself as well as to the public." 
 
 " To the farmer it must be disadvantageous, becaiLse he 
 deprives himself and his family of what they naturally desire 
 and would otherwise enjoy, for the purpose either of acquir- 
 ing a larger quantity of labouring cattle than he could usefully 
 employ, (the maintenance of which demands farther sacrifices 
 of what his family would wish to enjoy), or of accumulating 
 a hoard of spades, ploughs, and other utensils of husbandry^ 
 with which he was acquainted, infinitely greater than hecould 
 use; thus depriving himself of substantial enjoyments, for the 
 purpose of acquiring an additionalquantity of that of which an 
 increase, afteracertain portion is obtained^ can be of no further 
 utility." 
 
 « Page 214.
 
 33 
 
 By this passage the noble Earl sbew^^ that capital 
 may be increased disadvantageoiisly, as for example, 
 hy accumulating more spades, ploughs. Sec. than can 
 be employed. By the bye, we must observe, that we 
 by no means assent to the noble Earl's dertnition of 
 capital; but, for the sake of argument, we will admit 
 all he has said of augmenting capital to an unlimited 
 extent. And, after all, what does it prove against 
 parsimony, which is the act of preserviug, and laying 
 by, wealth'^ 
 
 The noble author has divided wealth into three 
 kinds ; he proves that one of them, capital, may be 
 increased to a disadvantageous amount; and he logi- 
 cally concludes from thence, that the increase of the 
 two other kinds of wealth, which, as well as the aug- 
 mentation of capital, is the office of parsimony, beyond 
 a certain extent, must be equally detrimental : that is, 
 because one thing is bad, two others must be bad also; 
 or, because a cook may be un profitably employed in 
 making a tart, it is impossible that be can be bene- 
 ficially engaged in any thing ! These, however, are 
 the argatnenis on which the noble Earl seems mainly 
 to defend, for ])roofof the impossibility of parsimony 
 increasing public wealth, and of the notion '' that every 
 prodigal is a public enemy, and every frugal man a 
 public benefactor" being a" \)\x\iV\c prejudice." 
 
 But we have lost our time in exposing their fallacy; 
 for, unluckily, the noble author admits, both the pos- 
 sibility of increasing the public wealth by paisimonyj 
 
 r
 
 34 
 
 and that its effects are beneficial. The following sen- 
 tences shew the former admission. 
 
 te • Fortunately, however, for mankind, the mechanism of 
 society is so arranged, that the mischief done by the parsi- 
 mony and disposition to accumulation of one individual is al- 
 jnoit uniformly counteracted by the prodigality of some other ;' 
 $0 that in practice nothing is found more nearly commensu-' 
 rate than the expenditure and revenue of every society. This 
 enquiry, therefore, if mankind were left to regulate their con- 
 duct by their inclinations, would be rather a matter of curio- 
 sity than utility ; for if the effects of parsimony are vniformly 
 counteracted by prodigality, the public wealth can neither bein^ 
 creased nor diminished by it." 
 
 Then, we suppose, if prodigality comZ«? be prevented, 
 the public wealth would be increased by parsimony. 
 And to say, that, because the effects of a certain agent 
 are counteracted by another, these effects have never 
 been produced, which, without acknowledging this 
 disputed property of parsimony, must be the meaning 
 of the noble Eai"d, is like saying, that, because the 
 noble Earl might throw this pamphlet behind the fire, 
 the pamphlet has never been written. 
 
 That the effects of parsimony are not detrimental, 
 but even beneficial, is pretty clearly maintained in the 
 following sentence of the noble Earl's. 
 
 " t If, even by all these various methods, the increased 
 yroduce is nut consumed, experience shews that abundance 
 
 * Page 32?. t Page 824.
 
 '35 
 
 .•f the liecessaries of life has a direct tendency to increase 
 population, and by this means to restore the proportion be- 
 twixt the demand and the quantity of the increased commodi- 
 ties j thus maintaining their value notwithstanding their 
 abundance, and perpetuating the encouragement to repro- 
 duction/' 
 
 For, if, when the increased produce is not consumed, 
 &c. 8cc. (the consequence of parsimony) population la 
 increased, and encQuragement to reproduction perpe- 
 tuated, surely, the effect may be regarded as bene- 
 ficial. 
 
 We may, however, observe, that, notwithstanding 
 his broad assertion that parsimony cannot be a method 
 of increasing public wealth, and his attempted expo- 
 sure of the prejudice, that every prodigal is a public 
 enemy, and every frugal man a public benefactor ; 
 with a recollection of his own statements truly wonder- 
 ful the noble Earl fancies he has not been arguing 
 against the general claim to merit of a frugal man, 
 and for the character of a prodigal ; but with admi- 
 rable consistency talks of having only shewn the disad- 
 vantages of too great parsimony. From some of these 
 passages it may appear, as if we had been contesting 
 notions, as the notions of the noble Earl, opposite to 
 what he has written. We acknowledge that some sen- 
 tences warrant such a conclusion ; and in consequence 
 of the noble author's contradictions of himself; but the 
 Boble Earl cannot be allowed the subterfuge of takinjf. 
 j^dvantage of his own inconsistencies. 
 F 2
 
 56 
 
 IV, Impelled by his spirit of enmity to parsimony, 
 the noble author proceeds to la}' down the last, and, 
 in the present situation of England, the most dangerous 
 point of all — that the sinking fund is a delusion, and if 
 continued to he acted upon, will ineintahly ruin the 
 cowitry. We call it the most dangerous point of all, 
 because it may be pleaded as excuse, by some future 
 weak or traitorous minister, tor violating the sacredness 
 of that, which ought to be regarded by England as her 
 best hope. We should consider the man, who, as 
 Chancellor of the Exchequer, should propose to defeat 
 the operation of the sinking fund, if he proposed it un- 
 advisedly with a view to the public good, we should 
 consider such a man with pity and contempt ; if he 
 should persist in defiance of warning, we should still 
 regard him with contempt, but alsa as the greatest 
 enemy to his country; as we should detest the traitor 
 who would, by this means, wilfully seek the i'ubversion 
 of its constitution. 
 
 But, to shew that the doctrine maintained by the 
 noble Earl is really such as w^ehave stated it to be, we 
 select the following passages. Of a plan proposed by 
 Mr. Pitt ,for hastening the operation of the sinking 
 fund, he says ; 
 
 *' * Had an opportunity existed, in profound peace, of 
 applj'ing this sum of 15,000,0001. but for two years, to the 
 uses to which by law it was appropriated, the ruin it must 
 have prodivced would have practically exhibited »tfd ex- 
 plained the folly of the attempt." 
 
 * Pag« U%,
 
 Again : 
 
 *' ♦ And that this is a calculation as accurate, and as true, 
 as any \\ith which Parliament has been furnished in the pro- 
 gress of this delusion." 
 
 " Dismal as + the consequences of this experiment must 
 have been in diminishing the reproduction and revenue, there 
 appear, on the other hand, no good effects likely to have re- 
 sulted from it in relation to the capital of the country, to 
 counteract its evil effects on the revenue." 
 
 Before we examine the noble Earl' s arguments, we 
 will extract the statement of a fact on which the argu- 
 ments are founded. After a detailed history of the 
 sinking fund, and Mr. Pitt's income tax, he says, (the 
 truth of which we will not dispute :) 
 
 " § Under the law of this country, therefore, as it was then 
 constituted, had this income tax produced 10,000,0001. 
 15,000,0001. of the revenue of the country would, on the 
 return of peace, have been devoted to accumulaliou." 
 
 He proceeds ; 
 
 " This statement will not, in substance, be contradicted 
 either by Mr. Pitt or his admirers. He took credit to himself 
 for the device ; and they uniformly asserted, that the merits 
 of the plan, which they stated to be of more importance to 
 Great Britain'than the possession of all the mines of America, 
 
 * P«g<J «43, t Page «50. $ Page 840.
 
 38 
 
 would hand down his name with glory to posterity. This, too, 
 wasthe object of those daring projectors of the tower of Babel 
 ■who are recorded in sacred history to have said, 'Goto, 
 let us build us a tower whose top may reach unto heaven, and 
 let us make us a name.' And striking as the similarity may 
 be in the object, tht re will be found a still more glaring re- 
 semblance in the design." 
 
 Striking as the similarity in the object may appear to 
 the noble Earl, we confess ourselves so dull as to see 
 no similarity at all. The object of the one was to effect 
 an impossibility without the view to public good ; the 
 other is to pay a debt, by increasing the public resources 
 at a compound ratio, (a thing perfectly possible) whose 
 professed end is the highest national advantage. The 
 statement by Mr. Pitt's admirers, whatever may be 
 our general opinion of that Right Honourable Gentle- 
 man's measures, that the plan is of more importance to 
 Great Britain than the possession of all the mines of 
 America, we cordially agree in. 
 
 But the noble Earl urges various arguments; some 
 indeed not very uncommon, though not exactly valid. 
 Amongst these, we observe the following puerility. 
 
 "* — lest the reader should be disposed to thjnk with the ge- 
 nerality of mankind, that what is true in figures, and the re- 
 sult of accurate calculation, must be . true in practice, . and 
 possible in execution, he is dcsrred to reflect, that one penny 
 put out, at our Saviour's birth, at 5 per cent, compound 
 
 * Page 243.
 
 39 
 
 interest, would, before this time, haveincreased to a greater 
 sum than could be contained in five hundred millions of earths, 
 all of soliol gold; and that this is a calculation as accurate, 
 anel as true, as any with which Parliament has been furnished 
 in tiie progress of this delusion." 
 
 The noble Earl will not dispute, that, if a penny 
 could be put out at compound interest in this manner, 
 the eft'ect would be the alledgcd increase ; and lie can- 
 not deny, that, as long as any part oFthe 500 millions 
 remains owing by government, the government can 
 put out money at compound interest ; and that, if they 
 do put out whatever money they receive at compound 
 interest in the proposed manner, the estimated effect will 
 take place. But the conclusion, which seems lobe in- 
 ferred by the noble Earl, is, that because we cannot 
 collect 500,000,000 of earths all of solid gold, we can- 
 not collect a sum not equal to a five hundred millionth 
 part of a five hundred millionth part of the sum : and 
 lie infers this, notwithstanding the evidence of facts 
 shews, that such a payment is constantly going oa 
 V ith a rapidity daily accelerated. 
 
 The succeeding passages, however, are those we in- 
 tend more sc^/7o«s/// to contest — the false reasoning of 
 them not being so palpable. 
 
 " • If 15,000,0001. a year extraordinary were levied by 
 the governnunt from the revenue of its subjects, to defray the 
 charge of warfare or any other extraordinary expenditure ; as
 
 40 
 
 this money would be expended in articles of consiumption, 
 as fast as assumed, the expence of the government would ef- 
 fectually counteract the effects of the parsimony it render* 
 necessary, and creates in the subject. The only mischief, 
 therefore, that could ensue, would arise from the extensive 
 <lemand it must suddenly occasion for one class of commodi- 
 ties, and from th'e consequent abstraction of so large a portion 
 of the revenue of the subjects from the acquisition of those? 
 articles in which it is usually expended ; a mischief in itself 
 nowise trifling, as recent experience has taught the merchants 
 of this country," 
 
 *' Very different, however, must have been the effect of 
 Taising fifteen millions for the purpose of accumulation, or of 
 forcibly converting fifteen millions of revenue into capital. In 
 this, as in the former case, there would have ensued all the 
 mischief occasioned by abstracting a portion of demand re- 
 presented by fifteen millions a year, from the commodities 
 which the sul jects were accustomed to acquire with this part 
 of their revenue : but, in this case, there would, unfortunate- 
 ly, have existed no extraordinary expenditure, to counteract 
 the public effects of this forced parsimony ; for it would have 
 been difficult to persuade the proprietors of stock, from whom 
 such extensive purchases would have been made by the com- 
 missioners of the sinking- fund, all at once to spend, as re- 
 venue, that which ha!)it had taught than to regard as capital ; 
 or, in other words, all at once to ruin themselves, in order 
 to counteract the bad effects of this miserly policy in govern- 
 ment." 
 
 " Unless, however, the stockholder could have been per- 
 suaded thus to expend his capital, fifteen millions a year less 
 must have been expended in the different articles the country 
 produced of manufactured j that is, a portion of demand
 
 41 
 
 would at once have been withdrawn from commodities of 
 British growth or manufacture, nearly equal to the whole de« 
 mand created by the foreign trade of the country in the year 
 17S6, when the million was first set aside to accumulate, as 
 the exports from England amounted in that year to the sum 
 of 15,38o,987K" 
 
 He goes on to say^ which we allow ; 
 
 " But if it is true, (which all writers on political economy, 
 however much the}' may differ on other subjects, concur 
 in asserting), that the whole quantity of industry employed 
 to bring any commodity to the market, naturally suits itself 
 to the effectual demand, and constantly aims at bringing the 
 precise quantity thither that is sufficient to supply the demand ; 
 it follows, that this diminution of demand must occasion a 
 similar diminution of the productions of the country." 
 
 But let us examine what would be the real state of 
 things, and we shall be astonished that a nobleman of 
 distinction should have ventured to hazard assertions 
 so destitute of foundation. He supposes, that, by pay- 
 ing off iinnnally 15 millions of the national debt, fif- 
 teen millions a year would be taken from the public ex- 
 penditure, and forced into capital. To substantiate 
 this supposition, it must be shewn, that, at present, 
 the income of all interests in the funds is spe^it as re- 
 venue, and that the person, whose demand is paid off, 
 will employ the whole sum as capital. 
 
 G
 
 42 
 
 To overturn the first point, it need only be recol- 
 lected, that, when either public bodies, or individuals, 
 are desirous ol" accumulating a sum of money at com- 
 pound interest, they almost invariably vest it in the 
 funds. A part only of the annual income arising from 
 the funds, can therefore be spent as revenue in com- 
 modities for consumption. 
 
 For the second point, let us consider, what would 
 be the change in situation of those holders of that part 
 of the funds^ the interest of which has been customari- 
 h' laid out as revenue, in consequence of the sinking 
 fund ; and inquire what effect the change would pro- 
 bably (for we can decide only on probabilities) operate 
 on their expenditure. 
 
 To make a due estimate of their change of situation^ 
 by the operation of the sinking fund, we are not to 
 consider, what their situation at the time of paying ofF 
 is, in comparison with theirs whose demands are not 
 paid off, but what in all probability it would have been, 
 had the sinking fund never existed. We will suppose 
 it would have been as it is at this time ; a supposition, 
 however, too favourable. The holder of lOOOl. 3 per 
 cent, consols receives an income of 301. ; their price 
 now is 57 per cent. : he could therefore sell his one 
 thousand for 570l. Under the operation of the sinking 
 fund, he will continue to receive 30L per annum till 
 he is paid his demand at par, when he will obtain the 
 whole lOOOl. Such would be the relative situations of 
 the party: in the oae case he is possessed of a security
 
 43 
 
 for which he can obtdn 5701. under the shiking fund 
 lOOOl. are put into h,s pocket. 
 
 We are to inquire, what effect^ this change would 
 probably have on a man's expenditure ; which can on- 
 ly be collected fron tlie experience of what the minds 
 of men commonly impel them to under similar circum- 
 stances. Judging then by this rule, we think ourselves 
 justified in maintiining the probability that a man pos- 
 sessed of a thoaand pounds, although for this year it 
 might procure lim no interest, will bestow more on his 
 present mainleiance than an annuitant of 30L who 
 cannot possibl obtain for his right to tiiat annuity a 
 larger sum thai 5701. And if so, the public expendi- 
 ture will be increased, instead of being diminished. 
 But the nobl Earl's argument will be overturned, not 
 only, if thepossessor of lOOOl. does not, in the mean 
 time, expeid more than, or as much as, the annuitant 
 ofSOl. buteven if he should bestow a single particle 
 of it, onliis present maintenance. 
 
 We hr;e, therefore, shewn the impossibilitv that 
 fifteen iiillions should be taken from the national 
 expendiUre by paying off fifteen millions of national 
 debt, anl the probability that the expenditure would 
 be even ncreased. But as lo the dismal consequences 
 then to Ic apprehended from a diminution of demand, 
 in consequence of the operation of the sinking fund, 
 they ne<d not be dreaded, if no diminution of demand 
 ensiles. 
 
 G Q.
 
 4i 
 
 Such are some of the argumer.ts against the sinking 
 fund, which have heen submitted to the public ; and 
 which, probably, have succeedec in deluding the su-. 
 perficial, or inconsiderate. 
 
 We find also the following : 
 
 "The* only means, therefore, thost stockholders could 
 have had of forcing the capital in their hards into employment, 
 must have been by offering to supplant latnur, at a cheaper 
 rate than that at which it was antecedenty performed. A 
 competition would thus have arisen; the pi'oit of capital must 
 Jiave been diminished ; the interest paid for stock or money 
 must have fallen, and of course the value oifixed annuities, 
 or government securities, must have risen : arj this must hava 
 continued progressively, till capital became scabundant, and 
 its profits so diminished, that the proprietors w^uld have been 
 induced to remove it to other countries, wherehigher profits 
 might be made; and France would inevitabb have been 
 amply supplied with capital, the want of which \s the great 
 drawback on her industry." 
 
 We agree with the noble Earl, thatlowness of profit 
 in consequence of abundance of capital is tie legiti- 
 mate effect to cause. But the complaint aganst low- 
 Bess of profit on capital, like that of the high»vages of 
 labour, is a complaint against one ofthosethirgs which 
 are the surest proofs of universal opulence, and the 
 most flourishing condition of society. Let us ask, 
 what condition of society is to be accounted ilie n;iost
 
 flourishing ? — that in which the great body of a nation 
 is most comfortably fed and cloathed ; not in thedis-^ 
 proportioned wealth of a particular class of individuals. 
 
 The price of commodities is regulated by tUeit" 
 abundance in proportion to the demand. If the sup« 
 ply be small, the possessors of them can obtain d 
 higher price, and of course gain a higbei- profit oA 
 their capital. If the supply be abundant, the con- 
 sumers obtain them for a lower price, and the profit on 
 capital of the possessors is of course diminished. Id 
 the first case the proprietors of capital seem to be, iii 
 the latter, the consumeis of commodities are behefiled. 
 But the consumers of commodities are the great masi 
 of the nation. In the first case, therefore, a part only 
 seem to reap, in the second the great body of the na- 
 tion really reap benefit; 
 
 But the noble Earl concludes, tliat, by a great in- 
 crease, capital would be withdrawn from England, 
 and that France, in consequence, would be inevitably 
 and amply supplied with it. The noble Earl must 
 mean, either, that so much capital would be withdrawn 
 as to render England less rich and powerful than she 
 was before the increase, or at least prevent her from 
 continuing richer, (for otherwise the increase must be 
 advantageous) ; or, his advice must be, that we are to 
 injure ourselves rather than not keep France for ever 
 poor. As we will not suppose of the noble Earl a policy 
 so narrow and illiberal as the latter, he must mean the 
 former point ; but in this he is warranted by the history 
 pf no countrv.
 
 A6 
 
 The profits of capital in France, from the very cir- 
 cumstance of its being scarce, must be higher than in 
 England, Vi here it abounds : but England has never 
 ye., en this account suffered by the removal of her ca- 
 pital. ^ The nmrket interest of money is governed by 
 the profits of capital. Now the legal interest of money 
 in our own possessions in the East Indies is 12 per 
 cent, which we believe can be obtained in the market, 
 while at home it is but five ; yet the proprietors of 
 ready money in England are not very eager to vest it 
 in Indian securities ; for otherwise, though the legal in- 
 terest might continue to be 12 per cent, the abun- 
 dance of money to be placed at interest would reduce 
 the obtainable sum to an amount not much higher than 
 the legal interest home. But there is a striking case 
 ^till more in ppint. Before the asra of the French 
 revolution the interest of money in Holland, in 
 consequence of the lowness of profit, was not more 
 than 2y or 3 per cent. Yet that was acknow- 
 ledged to be the most flourishing period of her history, 
 and I^Qlland was, then the richest country of Europe, 
 and, consequently her situation could not, by the re- 
 ijioy.al of capital, have been rendered worse, than 
 wh^T) the interest of money was 5 per cent, and her ca- 
 pital of coqise much smaller. These examples furnish 
 the fact, that nodetriment is to be apprehended by a 
 gountry, in consequence of her wealth being augmentf- 
 ed so as to make her profit on capital low. Having 
 then established the fact, let us search for its cause. 
 
 One reason why men may be contented with a low 
 profit in one country, when an appearance is held out
 
 47 
 
 to them, that more can be obtained abroad, maybe on 
 account of less security where the larger profit is held 
 out. But, admitting the security of property to be in 
 all countries the same, we shall endeavour to shew, 
 not only that the capitalists themselves reap no real ad- 
 vantages from a universal high rate of profit, but tliat 
 such a change in the rate of profit is beneficial to them, 
 as well as the consumers. 
 
 We are to recollect, the lowness of profit is occa- 
 sioned by the diminished price of commodities. If we 
 suppose the demand for commodities not to be increased 
 in consequence of their price beino- lower, in a degree 
 sufficient to require an addition to the capital employed, 
 the income of the employer of capital is indeed be- 
 come smaller. But the lowness of profit in the pro- 
 duction of commodities being universal, the price of 
 all commodities is lessened in the same proportion; 
 which decrease of price is equal to the diminution of 
 profit. The employer of capital, therefore, with his 
 diminished income can obtain as many of the necessa- 
 ries, comforts, or hixuries of life as formerly, and, 
 with respect to the real wealth of which hejs possessed, 
 his situation is exactly the same as formerly. Let the 
 diminution of his profit be from 15 per cent, to 10. 
 Fifteen per cent, profit in England may be supposed to 
 have been as advantageous as 15 per cent, profit in 
 France; but if, in consequence of the lower price of 
 commodities, a profit of 10 per cent, in England is 
 equally advantageous with the former 15 per cent, pro- 
 fit, and if the former 15 'per cent, profit in England 
 was equal to the 15 per cent, profit in France, the JO
 
 43 
 
 percent, profit in England is likewise equal to the 15 
 per cent, profit in France. Not only at home, but on 
 'comparison with other countries, therefore, his situa- 
 tion in respect to wealth remains the same. The only- 
 possible change is, that his comparative rank in life 
 must be lower, in consequence of the condition of the 
 poorer class having been bettered. 
 
 We made the foregoing argument under the suppo- 
 sition, that the capital employed in the production of 
 Commodities was not increased. But not only demand 
 ' increases with lowness of price ; but we are arguing on 
 the very ground of a great increase having taken place 
 in the quantity of capital employed. Now we have 
 shewn, that, when a general lowering of the profits of 
 capital takes place, the owner continuing to employ 
 the same quantity, can obtain as many desirable com- 
 modities with his profit of 10 per cent, as, in the for- 
 mer state of things, with his 15 per cent, profit, and 
 that, in this respect therefore, his situation must re- 
 main unaltered ; but that his rank in life must be com- 
 paratively lower, the condition of the labouring class 
 having been advanced. But, as a larger capital is em- 
 ployed, the whole money profit of his business is not 
 diminished in proportion to the diminution of from 15 
 to 10 per cent, (if indeed, his capital be proportionally 
 increased the profit of his whole business is as much 
 as formerly ;) and therefore, as his real situation, with 
 respect to the conveniencies of life, would have con- 
 tinued the same, with such a diminution, with a 
 smaller diminution, it must be improved. The con- 
 dition of the capitalist then, as well as of the labouring
 
 class, is improved b}' an increase of capital, notwilh-r 
 standing its profits per cent- arc lowered ; and, if it 
 be improved in the s;\nic degree, wbicli we have no 
 reason to doubt, his comparative rank of life is main- 
 tained. It will of course be scca, that our argument 
 applies to the aggregate of the employers of capital iu 
 a community, which is the only just light in which the 
 question can be viewed ; for the condition of some in- 
 dividuals is always different from the condition of the 
 body collectively, and to conclude any tiling from 
 auch would be productive of error. 
 
 One passage more of the noble Earl's, and we have 
 done. Of a former sinking fund he says; 
 
 — " that •in the year 1733, we learn from authority, that 
 the * sinking fund was now grown to a great raaturiry, and 
 produced annually about 1,200,0001.; and was become al- 
 most a terror to all the individual proprietors of the public 
 debt. The high state of credit, the low rate of interest of 
 money, and the advanced price of all public stocks and funds 
 above par, made the great monicd companies and all their 
 proprietors, apprehend nothing more than being obliged to 
 receive their principal too fast; and it became almost the uni- 
 versal consent of mankind, that a million a year was as much as 
 the creditors of the public could bear to receive in discharge of 
 part of their principal. [By Sir Robert Walpole.}" 
 
 We do not wonder, that the proprietors were thei> 
 • Pago t53.
 
 5t? 
 
 Unwilling lo have tlieir stock paid oiT, because thtj 
 funds being above par, they received a larger income 
 tJ^ui tliey would do after their demands were discharged. 
 But we can discover in this no reason, wliy the na- 
 tion, vv'ho owed a certain sum to these proprietors of 
 funds, should be so generous as to pay, in the shape of 
 a higher than the ujarket interest of money, more than 
 Avas really due. As for the idle notion attributed to 
 Sir Robert Walpole, we are not to suppose that prime 
 tfiinisters always speak what they think; but, if such 
 were really his own opinion, it only makes against 
 his pretensions to the character of a political econo- 
 mist. 
 
 Thus we have endeavoured to prove, and wG think 
 have succeeded in proving, the falseness of four of the 
 noble Ecirl's principal doctrines, the fallacy of his po- 
 -sitions in general, and the sophistry of his arguments. 
 Our design in this has been to prevent the unthinking 
 from paying the work more than its merited regard- 
 The public will Judge for itself; but, as for ourselves, 
 We have found so much wrong, that we think no man 
 ought to regard any thing he may read there as autho- 
 rity, because it is there. The texture of the noble 
 Earl's mind appears indeed to us not to have been 
 formed formatters on political economy ; at any rate, 
 lie must think and write more accurately, and vievr 
 things in a much more clear, correct, and comprehen- 
 sive light, before men will be disposed to conclude that 
 a thing probably is so, because Lord Lauderdale lay^ 
 it dowusj
 
 ?1 
 
 To the noble Rail linnseU" we iiave to address oialy 
 pne word, namely, that Uet'ore he puts into action his 
 threatened obstinacy in defence of the work, provided 
 he be conviiice<l ot'itstruth, our advice to him is, that 
 he will be careful not to forget his professed readiness, 
 in acknowledging its real defects. We presume to 
 give the nob.e Earl this advice, because our treatment 
 of obstinacy in defence of error is by no means more 
 partial than our treatment of error with good iti~ 
 teutions. 
 
 jtim^. 
 
 ERRATA. 
 
 Page 6, 1. 17. (or farm rend— form. 
 
 Page 11,1. V2, after .sa«i.«/(e(/, insert — us to vu'L 
 
 Page 16, 1. i;(5, tot labours, read — labourers. 
 
 1, last, for vendable, read — vendiiU 
 
 Page til, 1. 18. fo? thvh r«ad — thuu 
 
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