A Treatise on Political Economy

Jean-Baptiste Say
Say, Jean-Baptiste
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C. R. Prinsep, trans. and Clement C. Biddle., ed.
First Pub. Date
Philadelphia: Lippincott, Grambo & Co.,
Pub. Date
6th edition. Based on the 4th-5th editions.

Notes to the Electronic Edition:

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Notes to Book I Notes to Books II-III Table of Contents


1. The following extract of a letter from M. Say, to the American editor, it may not be improper to subjoin, as it contains the author's opinion of the value he attaches to the preliminary discourse.

"Your translation and restoration of the preliminary discourse adds, in my eyes, a new value to your edition. It could only have been from a narrow calculation of the English publisher, that it was omitted in Mr. Prinsep's translation. Ought that portion of the work to be deemed unuseful, whose aim is to unfold the real object of the science, to present a rapid sketch of its history, and to point out the only true method of investigating it with success? Mr. George Pryme, professor of political economy in the university of Cambridge, in England, makes this very discourse the principal topic of several of his first lectures."


2. From Greek oikos a house, and Greek nomos a law; economy, the law which regulates the household. Household, according to the Greeks, comprehending all the goods in possession of the family; and political, from Greek polis, civitas, extending its application to society or the nation at large.

Political economy is the best expression that can be used to designate the science discussed in the following treatise, which is not the investigation of natural wealth, or that which nature supplies us with gratuitously and without limitation, but of social wealth exclusively, which is founded on exchange and the recognition of the right of property both social regulations.

3. Experimental science, in order to establish why events take place in a certain manner, or to be able to assign a particular cause for a particular effect, to a certain extent must be descriptive. Astronomy, in order to explain the eclipses of the sun, must demonstrate the opacity of the moon. Political economy, in like manner, in order to show that money is a means of the production of wealth, but not the end, must exhibit as true nature.

4. In France, the minister of the interior, in his exposé of 1813, a most disastrous period, when foreign commerce was destroyed, and the national resources of every description rapidly declining, boasted of having proved by indubitable calculations, that the country was in a higher state of prosperity than it ever before had been.

5. By the term practice, is not here meant the manual skill which enables the artificer or clerk to execute with greater celerity and precision whatever he performs daily, and which constitutes his peculiar talent; but the method pursued in superintending and administering public or private affairs.

6. Hence it is that nations seldom derive any benefit from the lessons of experience. To profit by them, the community at large must be enabled to seize the connexion between causes and their consequences; which at once supposes a very high degree of intelligence and a rare capacity for reflection. Whenever mankind shall be in a situation to profit by experience, they will no longer require her lessons; plain sound sense will then be sufficient. This is one reason of our being subject to the necessity of constant control. All that a people can desire is that laws conducive to the general interest of society should be enacted and carried into effect; a problem which different political constitutions more or less imperfectly solve.

7. "The controversies," says Col. Torrens, in his 'Essay on the Production of Wealth,' published in 1821, "which at present exist amongst the most celebrated masters of political economy, have been brought forward by a lively and ingenious author as an objection against the study of the science. A similar objection might have been urged, in a certain stage of its progress, against every branch of human knowledge. A few years ago, when the brilliant discoveries in chemistry began to supersede the ancient doctrine of phlogiston, controversies, analogous to those which now exist amongst political economists, divided the professors of natural knowledge; and Dr. Priestley, like Mr. Malthus, appeared as the pertinacious champion of the theories which the facts established by himself had so largely contributed to overthrow. In the progress of the human mind, a period of controversy amongst the cultivators of any branch of science must necessarily precede the period of their unanimity. But this, instead of furnishing a reason for abandoning the pursuits of science, while its first principles remain in uncertainty, should stimulate us to prosecute our studies with more ardour and perseverance until upon every question within the compass of the human faculties, doubt is removed and certainty attained. With respect to political economy, the period of controversy is passing away, and that of unanimity rapidly approaching. Twenty years hence there will scarcely exist a doubt respecting any of its fundamental principles."

And in the preface of the third edition of his 'Essay on the External Corn Trade,' published in 1826, Col. Torrens makes these further remarks: "On a former occasion, the author ventured to predict, that at no distant period, controversy amongst the professors of political economy would cease, and unanimity prevail, respecting the fundamental principles of the science. He thinks he can already perceive the unequivocal signs of the approaching fulfillment of this prediction. Since it was hazarded, two works have appeared, each of which, in its own peculiar line, is eminently calculated to correct the errors which previously prevailed. These publications are, 'A Critical Dissertation on the Nature, Causes, and Measures of Value, by an anonymous author;' and 'Thoughts and Details on High and Low Prices, by Mr. Tooke.' "—American Editor

8. We may, for example, know that for any given year the price of wine will infallibly depend upon the quantity to be sold, compared with the extent of the demand. But if we are desirous of submitting these two data to mathematical calculation, their ultimate elements must be decomposed before we can become thoroughly acquainted with them, or can, with any degree of precision, distinguish the separate influence of each. Hence, it is not only necessary to determine what will be the product of the succeeding vintage, while yet exposed to the vicissitudes of the weather, but the quality it will possess, the quantity remaining on hand of the preceding vintage, the amount of capital that will be at the disposal of the dealers, and require them, more or less expeditiously, to get back their advances. We must also ascertain the opinion that may be entertained as to the possibility of exporting the article, which will altogether depend upon our impressions as to the stability of the laws and government, that vary from day to day, and respecting which no two individuals exactly agree. All these data, and probably many others besides, must be accurately appreciated, solely to determine the quantity to be put in circulation; itself but one of the elements of price. To determine the quantity to be demanded, the price at which the commodity can be sold must already be known, as the demand for it will increase in proportion to its cheapness; we must also know the former stock on hand, and the tastes and means of the consumers, as various as their persons. Their ability to purchase will vary according to the more or less prosperous condition of industry in general, and of their own in particular; their wants will vary also in the ratio of the additional means at their command of substituting one liquor for another, such as beer, cider, &c. I suppress an infinite number of less important considerations, more or less affecting the solution of the problem; for I question whether any individual, really accustomed to the application of mathematical analysis, would even venture to attempt this, not only on account of the numerous data, but in consequence of the difficulty of characterizing them with any thing like precision, and of combining their separate influences. Such persons as have pretended to do it, have not been able to enunciate these questions into analytical language, without divesting them of their natural complication, by means of simplifications, and arbitrary suppressions, of which the consequences, not properly estimated, always essentially change the condition of the problem, and pervert all its results; so that no other inference can be deduced from such calculations than from formula arbitrarily assumed. Thus, instead of recognizing in their conclusions that harmonious agreement which constitutes the peculiar character of rigorous geometrical investigation, by whatever method they may have been obtained, we only perceive vague and uncertain inferences, whose differences are often equal to the quantities sought to be determined. What course is then to be pursued by a judicious inquirer in the elucidation of a subject so much involved? The same which would be pursued by him, under circumstances equally difficult, which decide the greater part of the actions of his life. He will examine the immediate elements of the proposed problem, and after having ascertained them with certainty, (which in political economy can be effected,) will approximately value their mutual influences with the intuitive quickness of an enlightened understanding, itself only an instrument by means of which the mean result of a crowd of probabilities can be estimated, but never calculated with exactness.

Cabanis, in describing the revolutions in the science of medicine, makes a remark perfectly analogous to this. 'The vital phenomena,' says he, 'depend upon so many unknown springs, held together under such various circumstances, which observation vainly attempts to appreciate, that these problems, from not being stated with all their conditions, absolutely defy calculation. Hence whenever writers on mechanics have endeavoured to subject the laws of life to their method, they have furnished the scientific world with a remarkable spectacle, well entitled to our most serious consideration. The terms they employed were correct, the process of reasoning strictly logical, and, nevertheless, all the results were erroneous. Further, although the language and the method of employing it were the same among all the calculators, each of them obtained distinct and different results; and it is by the application of this method of investigation to subjects to which it is altogether inapplicable, that systems the most whimsical, fallacious, and contradictory, have been maintained.'

D'Alembert, in his treatise on Hydrodynamics, acknowledges that the velocity of the blood in its passage through the vessels entirely resists every kind of calculation. Senebier made a similar observation in his Essai sur l'Art d'observer, (vol. 1, page 81.)

Whatever has been said by able teachers and judicious philosophers, in relation to our conclusions in natural science, is much more applicable to moral; and points out the cause of our always being misled in political economy, whenever we have subjected its phenomena to mathematical calculation. In such case it becomes the most dangerous of all abstractions.

9. Republic, Book II.

10. When we find almost every historian, from Herodotus to Bossuet, boasting of this and other similar laws, it will be seen how important it is that all who undertake to write history should have some knowledge of the science of political economy.

11. See Sully's Memoirs, Book XVI.

12. Breve Trattato delle cause che possono far abondare li regni d'oro et d'argento dove non sono miniere

13. "Entro ora a dire della factica, la quale, non solo in tute le opre qœe sono intieramente dell' arte come le pitture, sculture, intagli, etc., ma anchi in molti corpi, come sono i minerali, i sassi, le piante spontanee delle selve, etc., é l'unica che d valore alla cosa. La quantità della materia non per altro coopera in questi corpi al valore se non parché aumenta o sema la fatica." (Galiani, della Moneta. Lib. I, cap. 2.)

"In relation to labour I will remark, that not only in productions which are entirely the work of art, as in painting, sculpture, engraving, etc., but likewise in productions of nature, as on metals, minerals, and plants, their value is entirely derived from the labour bestowed on their creation. The quantity of matter affects the value of things only so far as it requires more or less labour."

In the same chapter Galiani also remarks, that man, that is to say his labour, is the only correct measure of value. This, also, according to Dr. Smith, is a principle; although considered by me as an error.

14. This same Galiani remarks, in the same work, that whatever is gained by some must necessarily be lost by others; in this way proving, that a very ingenious writer may not even know how to deduce the most simple conclusions, and may pass by the truth without perceiving it. For, if wealth can be created by labour, there may then be a new description of wealth in the world, not taken from anybody. Indeed, this author in his Dialogues on the Corn Trade, published in France a long time afterwards, has himself, in a very peculiar manner, pronounced his own condemnation. "A truth," he observes, "which is brought to light by pure accident, like a mushroom in a meadow, is of no value; we cannot make use of it, if we are ignorant of its origin and consequences; or how and by what chain of reasoning it is derived."

15. From my own inability of judging of the merits of such of these writers whose works have not been translated, I have availed myself of the opinions of one of the translators of this Treatise into the Spanish language, Don Jose Queypo, an individual alike distinguished by his abilities and patriotism, whose remarks I have only copied.

16. When they maintain, for example, that a fall in the price of food is a public calamity.

17. Among the discussions they provoked, we must not forget the entertaining Dialogues on the Corn Trade, by the abbé Galiani, in which the science of political economy is treated in the humorous manner of Tristram Shandy. An important truth is asserted, and when the author is called upon for its proof, he replies with some ingenious pleasantry.

18. The belief that moral and political science is founded upon chimerical theories, arises chiefly from our almost continually confounding questions of right with matters of fact. Of what consequence, for instance, is the question so long agitated in the writings of the economists, whether the sovereign power in a country is, or is not, the co-proprietor of the soil? The fact is, that in every country the government takes, or in the shape of taxes the people are compelled to furnish it with, a part of the revenue drawn from real estate. Here then is a fact, and an important one; the consequence of certain facts, which we can trace up, as the cause of other facts (such as the rise in the price of commodities) to which we are led with certainty. Questions of right are always more or less matters of opinion; matters of fact, on the contrary, are susceptible of proof and demonstration. The former exercise but little influence over the fortunes of mankind; while the latter, inasmuch as facts grow out of each other, are deeply interesting to them; and, as it is of importance to us that some results should take place in preference to others, it is, therefore, essential to ascertain the means by which these may be obtained. The Social Contract of J. J. Rousseau, from being almost entirely founded upon questions of right, has thereby become, what I feel no hesitation in avowing, a work of at least but little practical utility.

19. Du Commerce et du Gouvernement considérés l'un relativement à l'autre.

20. See the syllabus of his lectures, which was printed for the first time in the year 1804, in the valuable collection published at Milan by Pietro Custodi, under the title of Scrittori classici italiani di economia politica. It was unknown to me until after the publication of the first edition of this work in 1803.

21. During the same year that Dr. Smith's work appeared, and immediately before its publication, Browne Dignan published in London, written in the French language, his Essai sur les principes de l'Economie publique, containing the following remarkable passage: "The class of reproducers includes all who, uniting their labour to that of the vegetative power of the soil, or modifying the productions of nature in the processes of their several arts, create in some sort a new value, of which the sum total forms what is called the annual reproduction."

This striking passage, in which reproduction is more clearly characterised than in any part of Dr. Smith's writings, did not lead its author to any important conclusions, but merely gave birth to a few scattered hints. A want of connexion in his views, and of precision in his terms, have rendered his Essay so vague and obscure, that no instruction whatever can be derived from it.

22. This difficult and abstruse subject has not, perhaps, been treated by Dr. Smith with sufficient method and perspicuity. Owing to this circumstance, his intelligent and acute countryman, lord Lauderdale, has composed an entire treatise, in order to prove that his lordship had completely failed in comprehending this part of the Wealth of Nations.

23. In the article Grains, in the Encyclopedie, Quesnay had remarked, that "commodities which can be sold, ought always to be considered without distinction, either as pecuniary or real wealth, applicable to the purposes of whoever may make use of it." This, in reality, is Dr. Smith's exchangeable value. De Verri had observed, (chapter 3) that reproduction was nothing more than the reproduction of value, and that the value of things constituted wealth. Galiani, as has been already noticed, had said, that labour was the source of all value; but Dr. Smith, nevertheless, made these views his own by exhibiting, as we see, their connexion with all the other important phenomena, and in demonstrating them even by their consequences.

24. Sir James Stewart, author of a Treatise on Political Economy.

25. See Chapter third, Book second.

26. Dr. Smith has, in a satisfactory manner, established the difference between the real and nominal prices of things, that is to say, between the quantity of real values which must be given to obtain a commodity, and the name which is given to the sum of these values. The difference here alluded to, arises from a more perfect analysis, in which the real price itself is decomposed.

27. It is not, for example, until after the manner in which production takes place is thoroughly understood, that we can say how far the circulation of money and commodities has contributed towards it, and consequently what circulation is useful, and what is not; otherwise, we should only talk nonsense, as is daily done, respecting the utility of a quick circulation. My being obliged to furnish a chapter on this subject (Book I, Chap. 16.) must be attributed to the inconsiderable advancement made in the science of political economy, and to the consequent necessity of directing our attention to some of its more simple applications. The same remark is applicable to the twentieth chapter, in the same book, on the subject of temporary and permanent emigration, considered in reference to national wealth. Any person, however, well acquainted with the principles of this science, would find no difficulty in arriving at the same conclusions.

The time is not distant when not only writers on finance, but on history and geography, will be required to possess a knowledge of at least the fundamental principles of political economy. A modern treatise on Universal Geography, (vol. 2, page 602,) a work in other respects denoting extensive research and information, contains the following passage: "The number of inhabitants of a country is the basis of every good system of finance; the more numerous is its population, the greater height will its commerce and manufactures attain; and the extent of its military force be in proportion to the amount of its population." Unfortunately, every one of these positions may be erroneous. National revenue, necessarily consisting either of the income of the public property, or of the contributions, in the shape of taxes, drawn from the incomes of individuals, does not depend upon the number, but upon the wealth, and above all, upon the incomes of the people. Now, an indigent multitude has the fewer contributions to yield, the more mouths it has to feed. It is not the numerical population of a state, but the capital and genius of its inhabitants, that most conduce to the advancement of its commerce; these benefit population much more than they are benefited by it. Finally, the number of troops a government can maintain depends still less upon the extent of its population than upon its revenues; and it has been already seen that revenue is not dependent upon population.

28. Witness Turgot's Reflections sur la formation et la distribution aes richesses, in which he has introduced various views on both these subjects, either entirely erroneous, or very imperfect.

29. Many other points of doctrine, besides those here noticed, have been either overlooked, or but imperfectly analyzed by Dr. Smith.

30. Since the time of Dr. Smith, both in England and France, a variety of publications on political economy have made their appearance; some of considerable length, but seldom containing anything worthy of preservation. The greater part of them are of a controversial character, in which the principles of the science are merely laid down for the purpose of maintaining a favourite hypothesis; but from which, nevertheless, many important facts, and even sound principles, when they coincide with the views of their authors, may be collected. The "Essai sur les finances de la Grand-Bretagne," by Gentz, and apology for Mr. Pitt's system of finance, is of this description; so also is Thornton's Inquiry into the nature and effects of paper credit, written with a view to justify the suspension of cash payments by the bank of England; as well as a great number of other works on the same subject, and in relation to the corn laws.

31. By a popular treatise, I do not mean a treatise for the use of persons who neither know how to read, nor to make any use of it. By this expression, I mean a treatise not exclusively addressed to professional or scientific cultivators of this particular branch of knowledge, but one calculated to be read by every intelligent and useful member of society.

32. Ricardo, Sismondi, and others. The fair sex begin also to perceive that they had done themselves injustice, in supposing that they were unequal to a branch of study destined to exercise so benign an influence over domestic happiness. In England, a lady (Mrs. Marcet) has published a work, Conversations on Political Economy," since translated into French, in which the soundest principles are explained in a familiar and pleasing style.

33. Every branch of knowledge, even the most important, is but of very recent origin. The celebrated writer on agriculture, Arthur Young, after having bestowed uncommon pains in the collection of all the observations that had been made in relation to soils, one of the most important parts of this science, and which teaches us by what succession of crops the earth may be, at all times, and with the greatest success, cultivated, remarked, that he could not find that anything had been written on this subject prior to the year 1768. Other arts, not less essential to the happiness and prosperity of society are still also in their infancy.

34. In the year 1826, a professorship of political economy was founded at the university of Oxford, and a highly able and instructive course of lectures has since been delivered before that university, by Nassau William Senior, A. M., the first professor of political economy. We have rarely read a more masterly and entertaining performance than the professor's discussion of the mercantile theory of wealth, which occupies three of his lectures. American Editor.

35. The present Emperor Nicholas.

36. I here suppose the higher orders of society to be actuated by a sincere desire to promote the public good. When this feeling, however, does not exist, when the government is faithless and corrupt, it is of still greater importance that the people should become acquainted with the real state of things, and comprehend their true interests. Other wise, they suffer without knowing to what causes their distresses ought to be attributed, or indeed, by attributing them to erroneous causes, the views of the public are distracted, their efforts disunited, and individuals, thus deprived of general support, fail in resolution, and despotism is strengthened; or what is still worse, where the people are so badly governed as to become desperate, they listen to pernicious counsels, and exchange a vicious order of things for one still worse.

37. In how many instances have not great pains been taken, and considerable capital expended, to increase the evils mankind have been desirous of shunning! How many regulations are just so far carried into execution as to produce all the injury restrictions possibly can effect, and, at the same time, just as far violated as to retain all the inconveniences arising from their infringement!

38. This arises from our not being able, without serious losses, to displace the capital and talents, which, owing to an erroneous system, have received a faulty direction.

39. "They would wish, so to express myself, that I might be able to demonstrate that my proofs are conclusive, and that they are not wrong in submitting to them. The soundness of my reasoning has produced a momentary conviction; but they afterwards feel the habitual influence of their former opinions return with undiminished authority, although without any adequate cause, as in the case of the apparent increase in the diameter of the moon at the horizon. They would wish to be freed by me from these troublesome relapses, of whose delusiveness they are sensible, but which nevertheless importune them. In a word, they are desirous that I should be enabled to effect by reason what time alone can accomplish; which is impossible. Every cause has an effect peculiar to itself. Reason may convince, opinions carry us along, and illusions perplex us; but time alone, and the frequent repetition of the same acts, can produce that state of calmness and ease which we call habit. Hence it is, that all new opinions are such a length of time in spreading themselves. If an innovator has ever had immediate success, it is only from having discovered and promulgated opinions already floating in every mind." Destutt-Tracy, Logique, chap. 8.

Book I, Chapter I

40. The numerous and difficult points arising out of the confusion of positive and relative value are discussed in different parts of this work; particularly in the leading chapters of Book II. Not to perplex the attention of the reader, I confine myself here to so much as is absolutely necessary to comprehend the phenomenon of the production of wealth.

41. It would be out of place here to examine, whether or no the value mankind attach to a thing be always proportionate to its actual utility. The accuracy of the estimate must depend upon the comparative judgment, intelligence, habits, and prejudices of those who make it. True morality, and the clear perception of their real interests, lead mankind to the just appreciation of benefits. Political economy takes this appreciation as it finds it—as one of the data of its reasonings; leaving to the moralist and the practical man, the several duties of enlightening and of guiding their fellow-creatures, as well in this, as in other particulars of human conduct.

42. This position will hereafter be further illustrated. For the present it is enough to know, that, whatever be the state of society, current prices approximate to the real value of things, in proportion to the liberty of production and mutual dealing.

43. It will be shown in Book III. of this work, what proportion of the tax is paid by the producer, and what by the consumer.

Book I, Chapter II

44. Since matter can only be modified, compounded, or separated, by means either mechanical or chemical, all branches of manufacturing industry may be subdivided into the mechanical and the chemical arts, according to the predominance of the one or the other in their several processes.

45. Alagrotti in his Opuscula, by way of exemplifying the prodigious addition of the value given to an object by industry, adduces the spiral springs that check the balance-wheels of watches. A pound weight of pig-iron costs the operative manufacturer about five cents. This is worked up into steel, of which is made the little spring that moves the balance-wheel of a watch. Each of these springs weighs but the tenth part of a grain; and when completed, may be sold as high as three dollars, so that out of a pound of iron, allowing something for the loss of metal, 80,000 of these springs may be made, and a substance of five cents value be wrought into a value of 240,000 dollars.

46. Mercier de la Riviere, in his work entitled "Ordre Naturel des Sociétés Politiques," tom. ii. p. 255, while labouring to prove, that manufacturing labour is barren and unproductive, makes use of an argument, which I think it may be of some service to refute, because it has been often repeated in different shapes, and some of them specious enough. He says, "that if the unreal products of industry are considered as realities, it is a necessary inference, that an useless multiplication of workmanship is a multiplication of wealth." But because human labour is productive of value, when it has an useful result, it by no means follows, that it is productive of value, when its result is either useless or injurious. All labour is not productive; but such only as adds a real value to any substance or thing. And the futility of this argument of the economists is put beyond all question by the circumstance, that it may be equally employed against their own system and that of their opponents. They may be told, "You admit the industry of the cultivator to be productive; therefore he has only to plough and sow his fields ten times a year to increase his productiveness ten-fold," which is absurd.

47. [Our author, in here asserting, "that more savings are made, and more capital accumulated from the profits of trade and manufacture, than from those of agriculture," has fallen into an error, which it is proper to notice. In the absence of prohibitions and restraints, the profits of agriculture, manufactures and commerce, will all be on an equality, or always nearly approaching towards it; for any material difference will cause a diversion of capital and industry to the more productive channel, and by that means restore the equilibrium. In overthrowing the hypothesis of the economists, the author has inadvertently, for a moment, lost sight of his own general principles, which so clearly establish the equality of profits in all the different branches of industry.] American Editor.

48. Genovesi, who lectured on political economy at Naples, defines commerce to be "the exchange of superfluities for necessaries." He gives as his reason, that in every transaction of exchange, the article received appears to each of the contracting parties more necessary than that given. This is a far-fetched notion, which I think myself called on to notice, because it has obtained considerable currency. It would be difficult to prove, that a poor labourer, who goes to the alehouse on a Sunday, exchanges there his superfluity for a necessary. In all fair traffic, there occurs a mutual exchange of two things, which are worth one the other, at the time and place of exchange. Commercial production, that is to say, the value added by commerce to the things exchanged, is not operated by the act of exchange, but by the commercial operations that precede it.

The Count de Verri is the only writer within my knowledge, who has explained the true principle and ground-work of commerce. In the year 1771, he thus expresses himself: "Commerce is in fact nothing more than the transport of goods from one place to another." (Meditazioni sulla economia politica, § 4.) The celebrated Adam Smith himself appears to have had no very clear idea of commercial production. He merely discards the opinion, that there is any production of value in the act of exchange.

49. This circumstance has escaped the attention of Sismondi, or he would not have said, "The trader places himself between the producer and the consumer, to benefit them both at once, making his charge for that benefit upon both." (Nouveaux Principes d'Economie Pol. Liv. ii. ch. 8). He would make it appear as if the trader subsisted wholly upon the value produced by the agriculturist and the manufacturer; whereas he is maintained by the real value he himself communicates to commodities by giving them an additional modification, an useful property. It is this very notion that stirs up the popular indignation against the dealers in grain.

L. Say, of Nantes, has fallen into the same mistake (Principales Causes de la Richesse, &c. p. 110). By way of demonstrating the value conferred by commerce to be unreal, he alleges it to be absorbed by the charges of transport. By this incidental process of reasoning, the economist concluded manufacture to be unproductive; not perceiving, that in these very charges consists the revenue of the commercial and manufacturing producers; and that it is in this way that the values raised by production at large are distributed amongst the several producers.

50. See his work entitled, "Le Commerce et le Gouvernment considérés relativement l'un a l'auire." 1re. partie, ch. 6.

51. We may consider as agents of the same class of industry, the cultivator of the land, the breeder of cattle, the woodcutter, the fisherman that takes fish he has been at no pains in breeding, and the miner who, from the bowels of the earth, extracts metal, stone, or combustibles, that nature has placed there in a perfect state; and, to avoid multiplicity of denominations, the whole of these occupations may be called by the name of agricultural industry, because the superficial cultivation of the earth, is the chief and most important of all. Terms are of little consequence, when the ideas are clear and definite. The wine-grower, who himself expresses the juice of his grapes, performs a mechanical operation, that partakes more of manufacture than agriculture. But it matters little whether he be classed as a manufacturer or agriculturist; provided that it be clearly comprehended in what manner his industry adds to the value of the product. If we wish to give separate consideration to every possible manner of giving value to things, industry may be infinitely subdivided. If it be the object to generalize to the utmost, it may be treated as one and the same; for every branch of it will resolve itself into this: the employment of natural substances and agents in the adaptation of products to human consumption.

52. See the numberless writings of that sect.

53. We shall find in the sequel, that, if any one nation can be said to be in the service of another, it is that which is the most dependent; and that the most dependent nations are, not those which have a scarcity of land, but those which have a scarcity of capital.

54. Essay on Political Economy, b. ii. c. 26.

55. Elemens de Commerce.

Book I, Chapter III

56. Arthur Young, in his "Journey in France," in spite of the unfavourable view he gives of French Agriculture, estimates the total capital employed in that kingdom, in that branch of industry alone, at more than 2200 millions of dollars; and states his belief, that the capital of Great Britain, similarly employed, is in the proportion of two to one.

57. Observations on the produce of the income-tax.

58. Pitt, who is supposed to have overrated the quantity of specie, states the gold at forty-four-millions; and Price estimates the silver at three millions, making a total of forty-seven millions.

59. [The following summary recapitulation of the value of property in Great Britain and Ireland, in the year 1833, is extracted from "Table XVI. General Estimate of the Public and Private Property of England and Wales, Scotland and Ireland, (1833)," from "Pebrer on the Taxation, Debt, Capital, Resources, &c. of the whole British Empire," a work of the highest authority, published in London, April, 1833.

Productive Private Property, £2,995,000,000
Unproductive do. 580,700,000
Public Property, 103,800,000
Total, £3,679,500,000
Equal to dollars, 17,661,600,000
  Productive Private Property, £2,054,600,000
  Unproductive do. 374,300,000
  Productive Private Property, 318,300,000
  Unproductive do. 51,100,000
  Productive Private Property, 622,100,000
  Unproductive do. 116,400,000
  Do. do. in Great Britain and Ireland, 38,900,000
  Public Property in England and Wales, 42,000,000
  Do. in Scotland, 3,900,000
  Do. in Ireland, 11,900,000
   Do. in common to Great Britain
and Ireland, as the Navy, Military, and
Ordnance Stores, &c.

Grand Total, £3,679,500,000
  Equal to dollars, 17,661,600,000

American Editor.

Book I, Chapter IV

60. It is for the proprietor of the land and of the capital respectively, when the ownership is in different persons, to settle between them the respective value and efficacy of the agency of these two productive agents. The world at large may be content to comprehend, without taking the trouble of measuring, their respective shares in the production of wealth.

61. A wheel in the form of a drum, turned by men walking inside, (roue a marchre.)

62. Take his own words: "It is the great multiplication of the productions of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society, that universal opulence, which extends itself to the lowest ranks of the people." Wealth of Nations, b. i. c. 1.

63. Amongst other dangerous consequences of the system of the economists, is the notable one of substituting a land-tax in lieu of all other taxation; in the certainty, that this tax would affect all produced value whatever. Upon a contrary principle, and in pursuance of the maxims laid down by Smith, the net produce of land and of capital ought to be exempted from taxation altogether, if with him we take for granted, that they produce nothing spontaneously; but this would be as unjust on the opposite side.

64. Although Smith has admitted the productive power of land, he has disregarded the completely analogous power of capital. A machine, an oil-mill for example, which employs a capital of 4000 dollars, and gives an annual net return of 200 dollars, after paying all expenses, gives a product quite as substantial as that of a real estate, that cost 4000 dollars, and brings an annual rent or net produce of 200 dollars, all charges deducted. Smith maintains, that a mill which has cost 4000 dollars, represents labour to that amount, bestowed at sundry times upon the different parts of its fabric; therefore, that the net produce of the mill is the net produce of that precedent labour. But he is mistaken: granting for argument sake, the value of the mill itself to be the value of this previous labour; yet the value daily produced by the mill is a new value altogether; just the same as the rent of a landed estate is a totally different value from the value of the estate itself, and may be consumed, without at all affecting the value of the estate. If capital contained in itself no productive faculty, independent of that of the labour which created it, how is it possible, that capital could furnish a revenue in perpetuity, independent of the profit of the industry that employed it? The labour that created the capital would receive wages after it ceased to operate—would have interminable value; which is absurd. It will be seen by-and-by, that these notions have not been mere matter of speculation.

Book I, Chapter V

65. The term entrepreneur is difficult to render in English; the corresponding word, undertaker, being already appropriated to a limited sense. It signifies the master-manufacturer in manufacture, the farmer in agriculture, and the merchant in commerce; and generally in all three branches, the person who takes upon himself the immediate responsibility, risk, and conduct of a concern of industry, whether upon his own or a borrowed capital. For want of a better word, it will be rendered into English by the term adventurer. Translator.

Book I, Chapter VI

66. Agronome: I am not aware of any corresponding English term, denoting the student in that branch of geology conversant with the properties of the surface of the earth; in other words, the scientific agriculturist. Translator.

67. Besides the direct impulse, given by science to progressive industry, and which indeed is indispensable to its success, it affords an indirect assistance, by the gradual removal of prejudice; and by teaching mankind to rely more upon their own exertions, than on the aid of superhuman power. Ignorance is the inseparable concomitant of practical habits, of that slavery of custom which stands in the way of all improvement; it is ignorance that imputes to a supernatural cause the ravages of an epidemical disease, which might perhaps be easily prevented or eradicated, and makes mankind recur to superstitious observances, when precaution, or the application of the remedy, is all that is wanted. Sciences, like facts, are linked together by a chain of general connexion, and yield one another mutual support and corroboration.

68. See Œuvres de Poivre, p. 77, 78.

69. The cotton manufacture did not exist in England in the 17th century. In 1705, we see by the returns of the English customs, that the raw cotton manufactured in that country then amounted to no more than 1,170,880 pounds weight. In 1785, the quantity imported was 6,706,000 lbs.; but in 1790 it had got up to 25,941,000 lbs., and in 1817 to as much as 131,951,000 lbs., for the English market and for re-exportation. The quantity of cotton imported in 1831 into the United Kingdoms, was 288,708,453 lbs.

70. Voyage Commerciel et Politique aux Indes Orientales, par M. Felix Renouard de Sainte Croix.

71. Thanks to the art of Printing, the names of the benefactors of mankind will henceforward be lastingly recorded; and if I mistake not, with more veneration than those which derive lustre from the deplorable exploits of military prowess. Among these will be preserved the names of Olivier de Serres, the father of French agriculture; the first who established an experimental farm; of Duhamel, of Malsherbes, to whom France is indebted for many vegetables now naturalized in her soil and climate: of Lavoisier, whose new system of chemistry has effected a still more important revolution in the arts; and of the numerous scientific travellers of modern times; for travels, with an useful object, may be regarded as adventures in the field of industry.

Book I, Chapter VII

72. Generalization may at pleasure be carried still further; a landed estate may be considered as a vast machine for the production of grain, which is refitted and kept in repair by cultivation: or a flock of sheep as a machine for the raising of mutton or wool.

73. Without having recourse to local or temporary restrictions on the use of new methods or machinery, which are invasions of the property of the inventors or fabricators, a benevolent administration can make provision for the employment of supplanted or inactive labour in the construction of works of public utility at the public expense, as of canals, roads, churches, or the like; in extended colonization; in the transfer of population from one spot to another. Employment is the more readily found for the hands thrown out of work by machinery because they are commonly already inured to labour.

74. Paradoxical as it may appear, it is nevertheless true, that the labouring class is of all others the most interested in promoting the economy of human labour; for that is the class which benefits the most by the general cheapness, and suffers most from the general dearness of commodities.

75. Homer tells us, in the Odyssey, b. xx., that twelve women were daily employed in grinding corn for the family consumption of Ulysses, whose establishment is not represented as larger than that of a private gentleman of fortune of modern days.

76. Since the publication of the third edition of this work, M. de Sismondi has published his Nouveaux Principes d'Economie Politique. This valuable writer seems to have been impressed with an exaggerated notion of the transient evils and a faint one of the permanent benefits of machinery, and to be utterly unacquainted with those principles of the science, which place those benefits beyond controversy.*

    * Our author, in his recent argument with Malthus, upon the subject of the excess of manufacturing power and produce, appears to me to have completely vindicated his own positions against the attacks of Sismondi and Malthus; and to have exposed the fallacy of the appalling doctrine, that the powers of human industry can ever be too great and too productive.—Vide Letters à M. Malthus. Translator.

Book I, Chapter VIII

77. Beccaria, in a public course of lectures on political economy, delivered at Milan in the year 1769, and before the publication of Smith's work, had remarked the favourable influence of the division of labour upon the multiplication of products. These are his words: "Ciascuno prova coll' esperienza, che, applicando la mano e l'ingegne sempre allo stesso genere di opere e di prodotti, egli piu facilli, piu abondanti e migliori ne travo i resultati, di quello, che se ciascuno isolatamente le cose tutte a se necessarie soltanto facesse: onde altri pascono le pecore, altri ne cardano le lane, altri le tessonoe: chi coltiva biade, chi ne fa il pane: chi veste, chi fabrica agli agricoltorie la voranti; crescendo e concatenandosi le arti, e dividendosi in tal maniera, per la commune e privata utilità gli nomini in varie classi e condizioni." "We all know, by personal experience, that, by the continual application of the corporeal and intellectual faculties to one peculiar kind of work or product, we can obtain the product with more ease, and in greater abundance and perfection, than if each were to depend upon his own exertions for all the objects of his wants. For this reason, one man feeds sheep, a second cards the wool, and a third weaves it: one man cultivates wheat, another makes bread, another makes clothing or lodging for the cultivators and mechanics: this multiplication and concatenation of the arts, and division of mankind into a variety of classes and conditions, operating to promote both public and private welfare."

However, I have given Smith the credit of originality in his ideas of the division of labour; first, because, in all probability, he had published his opinions from his chair of professor of philosophy at Glasgow before Beccaria, as it is well known he did the principles that form the ground-work of his book; but chiefly because he has the merit of having deduced from them the most important conclusions.**

    * [All the fundamental doctrines contained in the Inquiry into the Wealth of Nations, were comprehended in Dr. Smith's course of political lectures, delivered at Glasgow as early as the year 1752; "at a period surely," says Dugald Stewart, "when there existed no French (and he might have added, nor Italian) performance on the subject, that could be of much use to him in guiding his researches." A short manuscript, drawn up by Dr. Smith in the year 1755, fully establishes his exclusive claim to the most important opinions detailed in his treatise on the Wealth of Nations, which did not appear until the beginning of the year 1776. "A great part of the opinions enumerated in this paper, (he observes,) is treated of at length in some lectures which I have still by me (1755,) and which were written in the hand of a clerk who left my service six years ago. They have all of them been the constant subject of my lectures, since I first taught Mr. Craigie's class, the first winter I spent in Glasgow, down to this day, without any considerable variation.—They had all of them been the subject of lectures which I read in Edinburgh the winter before I left it, and I can adduce innumerable witnesses, both from that place and from this, who will ascertain them sufficiently to be mine." Vide Mr. Stewart's Account of the Life and Writings of Adam Smith, LL. D. read before the Royal Society of Edinburgh, January 21 and March 18, 1793.] American Editor.

78. But though many important discoveries in the arts have originated in division of labour, we must not refer to that source the actual products that have resulted, and will to eternity result, from those discoveries. The increased product must flow from the productive power of natural agents, no matter what may have been the occasion of our first becoming acquainted with the means of employing those agents. Vide supra, Chap. IV.

79. The combination of operations which at first sight appears to be distinct, is far more practicable in what our author calls the branch of application, than in either the theoretical or the executive branch. A general merchant, by means of clerks and brokers, will combine a vast variety of different commercial operations, and yet prosper. Why? Because his own peculiar task is that of superintendence of commercial dealings; which superintendence may be extended over a greater surface of dealing without incongruity, being on a closer inspection, but a repetition of the same operation. Translator.

80. The low price of sugar in China is probably occasioned, in part, by the circumstance of the grower leaving to a separate class the extraction of the sugar from the cane. This operation is performed by itinerant sugar pressers, who go from house to house, offering their services, and provided with an extremely simple apparatus Vide Macartney's Embassy, vol. iv. p. 198.

81. The country markets of France not only exhibit extreme inertness in particular channels of consumption; but a very cursory observation is sufficient to show, that the sale of products in them is very limited, and the quality of what are sold very inferior. Besides the local products of the district, one sees nothing there, except a few tools, woollens, linens, and cottons of the most inferior quality. In a more advanced stage of prosperity, one would find some few objects of gratification of wants peculiar to a more refined state of existence: some articles of furniture combining convenience and elegance of form; woollens of some variety of fineness and pattern; articles of food of a more expensive kind, whether on account of their preparation or the distance they may have been brought from; a few works of instruction or tasteful amusement; a few books besides mere almanacs and prayer-books. In a still more advanced stage, the consumption of all these things would be constant and extensive enough to support regular and well-stocked shops in all these different lines. Of this degree of wealth examples are to be found in Europe, particularly in parts of England, Holland, and Germany.

82. It is not common to meet with such large concerns in agriculture, as in the branches of commerce and manufacture. A farmer or proprietor seldom undertakes more than four or five hundred acres; and his concern, in point of capital and amount of produce, does not exceed that of a middling tradesman, or manufacturer. This difference is attributable to many concurrent causes; chiefly to the extensive area this branch of industry requires; to the bulky nature of the produce, and consequently difficulty of collecting it at one point from the distant parts of the farm, or sending it to very remote markets; to the nature of the business itself, which is not susceptible of any regular and uniform system, and requires in the adventurer a succession of temporary expedients and directions, suggested by the difference of culture, of manuring and dressings, and the variety of each labourer's occupations, according to the seasons, the change of weather &c.

83. This consideration makes it peculiarly incumbent upon the government of a manufacturing nation to diffuse the benefits of early education, and thus prevent the degeneration from being intellectual as well as corporeal. Translator.

84. ["The extensive propagation of light and refinement," says Dugald Stewart, "arising from the influence of the press, aided by the spirit of commerce, seems to be the remedy to be provided by nature against the fatal effects which would otherwise be produced, by the subdivision of labour accompanying the progress of the mechanical arts: nor is any thing wanting to make the remedy effectual, but wise institutions to facilitate general instruction, and to adapt the education of individuals to the stations they are to occupy. The mind of the artist, which, from the limited sphere of his activity, would sink below the level of the peasant or the savage, might receive in infancy the means of intellectual enjoyment and the seeds of moral improvement; and even the insipid uniformity of his professional engagements, by presenting no object to awaken his ingenuity or to distract his attention, might leave him at liberty to employ his faculties on subjects more interesting to himself, and more extensively useful to others."] American Editor.

Book I, Chapter IX

85. Products that are bought to be re-sold, are called merchandise; and merchandise bought for consumption is denominated commodities.*

    * This distinction has been discarded in the translation, for the sake of simplification; the general term products being sufficiently intelligible and specific. Translator.

86. The banker's business is not confined to dealings in metal, coined or uncoined, but is extended to dealings in paper-money, and dealings in credit, as we shall see when we come to the chapter upon money, infrà.

87. A complete treatise on commerce is still a desideratum in literature, notwithstanding the labours of Melon and Forbonnais, for hitherto the principles and consequences of commerce have been little understood.*

    * The Society for the Diffusion of Useful Knowledge, in London, in 1833, published a Treatise on Commerce, by J. R. M'Culloch, Esq. the eminent political economist, in which the grand principles, practice and history of Commerce, are unfolded and explained with great ability. It is a work that should be read by every well-educated merchant. American Editor.

88. The ordinary proportions of this division will be explained, infrà, Book II. Chap. 7.

89. It has been often asked, Why not combine commercial with agricultural and manufacturing productions? Why, for the same reason that makes a wholesale cotton spinner, if he have a surplus of time and capital, more apt to extend his spinning concern, than to employ his labour and capital in the working up of his own filiature into muslin and printed calicoes.

90. It would be impossible to estimate the proportion with any tolerable accuracy, even in countries where calculations of this kind are most in vogue. Indeed, the attempt would be a sad waste of time. To say the truth, statistical statements are of little real utility; for, be their accuracy ever so well assured, they can only be correct for the moment. The only knowledge really useful is, the knowledge of general principles and laws, that is to say, the knowledge of the connexion between cause and effect, which alone can safely teach us what measures it is best to adopt in every possible emergency. The sole use of statistics in political economy is, to supply examples and illustrations of general principles. They can never be the basis of principles, which are grounded upon the nature of things; whereas statistics, in the most improved state, are only an index of their quantity.

91. This position may be correct or not, according to circumstances. The national wants must always, in the long run, be supplied by the national industry and exertions: but what is there to prevent a nation from exchanging the larger portion of its domestic products for the products of other nations? The people of Tyre probably consumed more products of external than of domestic industry, although indeed those external must have been purchased with domestic products. Tyre, it is true, was rather a city than a nation. Holland resembled her in many particulars. The observation applies to every community, the chief part of whose production is, the modification of external products. Translator.

92. [The author has here, in common with Dr. Smith, fallen into an error. Capital, whether employed in the home or foreign trade, is equally productive. If, for example, the home trade realized greater profits than foreign commerce, every cent of capital employed in the latter would, in a very little time, be withdrawn from so comparatively disadvantageous an investment. Capital will flow into the foreign, instead of the home trade, only because it will thereby yield a larger profit. The internal commerce of a country cannot therefore be said to be "the most advantageous."] American Editor.

93. Douanes. Translator.

94. Octrois. Translator.

95. Commerce de reserve. There is no corresponding term in English; it is intelligible enough. Translator.

96. The carrying trade of Holland is now almost extinct. In fact, whether or no it be suited to a given nation at a given time, depends upon a great variety of circumstances. The advantage of the neutral character gave a very large proportion of it for some years to the American Union, though notoriously deficient in capital for the purposes of internal cultivation. Translator.

97. [The operation of the British Navigation-acts, like all other restrictive regulations, has been prejudicial to the growth of national wealth, without, at the same time, having contributed in any degree to the establishment of the naval preponderance of Great Britain. "If it can be made to appear," says a highly distinguished political economist, "that the greater wealth which we should, in the absence of these laws, have possessed, would have supplied a revenue adequate to the maintenance of an equal number of seamen in the navy, it would follow that we are no gainers by these acts; and if it further appear that this additional revenue would have been equal to the maintenance of twice or three times as many seamen, it would be clear that we are losers by them. It is acknowledged by many of the advocates for these laws, that their tendency has not been to increase the national revenue, but in some degree the reverse.

"Our national preponderance," says, we believe, Mr. Horner, "rests on a very different basis. Our national energy and wealth originate in our freedom, and in that security of property which is its happy consequence. The number of our seamen in merchant shipping is owing to the spirit and capital of our traders, and to our great extent of coast. The magnitude of our navy is due neither to navigation-acts, nor to colonial monopolies, but to the resources of an industrious country.

"How different are the ideas suggested by such observations, from the narrow theories of those who trace our naval superiority to the operation of a few acts of Parliament! They remind us of the technical philosophy of the judge, who gravely ascribed the lamentable prevalence of duelling, not to the violence of human passions, but to a misapprehension of the law of the land! Besides, our naval greatness, as it is well remarked by Dr. Smith, was conspicuous before our navigation laws were framed. It existed then, as it had done before, and has done since, in a degree commensurate with our commerce, and with the extent of our national prosperity. These circumstances, and not navigation laws, will be found the regulators of naval power in all countries. They determine its extent among the Dutch, to whom, even in the season of their greatest strength, navigation laws were entirely unknown." Vide Edinburgh Review, vol. xiv. page 95.] American Editor.

Book I, Chapter X

1. Arthur Young, in his View of the Agriculture of France, makes no estimate of this item of capital permanently vested in the land of France within its old limits; but merely reckons it to be less than the capital so vested in England, in the proportion of 36 livres tournois per English acre. So that, in the very moderate supposition, that half as much capital is vested in permanent amelioration of the land in France as in England, the capital so vested in Old France, reckoned at 7 dollars per acre, would amount, upon 131 millions of acres, to 817 millions of dollars for this item of French capital alone.

2. The same writer (Young) estimates, that in France, these two last items of capital, viz. implements, beasts of husbandry, stores of provisions, &c. may be set down at 9 dollars per acre, one acre with another; making an aggregate of 1179 millions of dollars; which, added to the former estimate, shows a total of 1996 millions of dollars, capital engaged in the agricultural industry of Old France. He estimates the same items of capital in England at twice as much per acre.

Book I, Chapter XI

3. On the subject of saving, Sismondi, and after him our own Malthus, have adopted a different opinion. According to them, the powers of production have already outrun the desire and the ability to consume; consequently, every thing that tends to reduce that desire is injurious, because it is already too inert for the interests of production. Wherefore, inasmuch as the desire of accumulation is the direct opposite of that of consumption, it must of necessity be injurious in the highest degree. On these principles, it might be proved without difficulty, that the prodigality of public authority, war, or the poor law of England, is a national benefit: for all of them stimulate consumption. Indeed they leave their readers to draw this inevitable conclusion; for they maintain in plain terms, that the enlargement of the productive powers of man, by the use of machinery or otherwise, makes the existence of unproductive consumers a matter, not of mere possibility or probability, but of actual necessity and expedience. (Vide Sismondi, Nouv. Prin. liv. ii. c. 3. and liv. iv. c. 4. Malthus, Prin. of Pol. Econ.) These maxims would justify the prodigality of Louis XIV. of France, and of the Pitt system of England. But fortunately they are erroneous; and if the contrary principles laid down by our author here and infrà Chap. XV., needed further illustration or support, they have been rendered still more clear and convincing by his recent Lettres à M. Malthus.—It is true, that the enlargement of productive power naturally leads to the multiplication of unproductive consumers: why? because the desire of barren consumption, instead of being inert, is always active in the human breast. But that multiplication is not necessary; for the consumer may be made a producer, if not of material, at least of immaterial products, which latter are capable of infinitely more multiplication and variety, as well as of more general diffusion than material products. While this field remains open, a national administration never need despair of finding occupation for the human labour supplanted by machinery. And what is the parsimony of modern days? It is not the hoarding of coin or other valuables, which, though as our author observes, it subtracts nothing from the national capital, is yet a social mischief, because it suspends the utility of an existing product, or at any rate, prevents it from yielding the human gratification, which its barren consumption would afford. The accumulations of the miser are now either vested in reproduction which is beneficial, or in the ownership of the sources of production, land, &c. &c. which it matters not to public wealth who may be possessed of, or in the incumbrances of those sources, mortgages, national funds, &c. &c., which are but portions of that ownership, and to which the same observation applies. Translator.

4. The savings of a rich contractor, of a swindler or cheat, of a royal favourite, saturated with grants, pensions, and unmerited emoluments, are actual accumulations of capital, and are sometimes made with facility enough. But the values thus amassed by a privileged few, are, in reality, the product of the labour, capital, and land, of numbers, who might themselves have made the saving, and turned it to their own account, but for the spoliation of injustice, fraud, or violence.

5. Wealth of Nations, b. ii. c. 3. Lord Lauderdale, in a work entitled, "Enquiry into the Nature and Origin of Public Wealth," has proved, to his own conviction, in opposition to Smith, that the accumulation of capital is adverse to the increase of wealth: grounding his argument on the position that such accumulation withdraws from circulation values which would be serviceable to industry. But this position is untenable. Neither productive capital, nor the additions made to it, are withdrawn from circulation: otherwise they would remain inactive, and yield no profit whatever. On the contrary, the adventurer in industry, who makes use of it, employs, disposes of, and wholly consumes it, but in a way that reproduces it, and that with profit. I have noted this error of his lordship, because it has been made the basis of other works on political economy, which abound in false conclusions, having set out on this false principle.

6. Wealth of Nations, b. ii. c. 3.

7. Except during the continuance of ruinous wars, or excessive public extravagance, such as occurred in France under the domination of Napoleon. It cannot be doubted, that, at that disastrous period of her history, even in the moments of her most brilliant military successes, the amount of capital dilapidated exceeded the aggregate of savings. Requisitions and the havoc of war, in addition to the compulsory expenditure of individuals, and the pressure of exorbitant taxation, must unquestionably have destroyed more values than the exertions of individual economy could devote to reproductive investment. This sovereign, wholly ignorant of political economy himself, and consequently affecting to despise its suggestions, encouraged his courtiers, like himself, to squander the enormous revenues derived from his favour, in the apprehension that wealth might make them independent.*

    * [We are told by Dr. Bowring and Mr. Villiers, in their valuable report on the Commercial Relations between France and Great Britain, published during the present year (1834), that the best authorities agree in declaring that the national riches of France were greatly diminished by the Imperial Régime, and, probably, a much larger amount was sacrificed in increased prices and diminished trade than was lost by the more direct operation of Napoleon's policy.] American Editor.

8. It is not, however, to be supposed, that the internal economy of ancient and of modern states is so widely different as some may be led to imagine. There is a striking similarity between the rise and fall of the opulent cities of Tyre, Carthage, and Alexandria, and those of the Venetian, Florentine, Genoese, and Dutch republics. The same cause must ever be attended with the same effect. We read of the wonderful riches of Crœsus, king of Lydia, even before his conquest of some neighbouring states: whence we may infer, that the Lydians were an industrious and frugal people; for a king can draw his resources solely from his subjects. The dry study of political economy would lead to this inference; but it happens to be also confirmed by the historical testimony of Justin, who calls the Lydians a people once powerful in the resources of industry; (gens industriâ quandam potens;) and gives a notion of their enterprising character, when he tells us that Cyrus did not complete their subjugation, until he had habituated them to indolence, gaming and debauchery. (Jussique cauponias et ludicras artes et lenocinia exercere.) It is clear, therefore, that they must have before been possessed of the opposite qualities. Had Crœsus not taken a turn for pomp and military renown, he would probably have remained a powerful monarch, instead of ending his days in misfortune. The art of connecting cause with effect, and the study of political economy, are probably as conducive to the personal welfare of kings, as to that of their subjects.

9. This increase of expenditure has not been altogether nominal, and consequential upon the reduction in the standard of the silver coinage of France; a greater quantity and variety of products were consumed, and those of a better and more expensive quality. And though refined silver is now intrinsically worth nearly as much as in the days of Louis XIV., since the same weight of silver is given for the same quantity of wheat; yet the same ranks of society now actually expend more silver in weight as well as in denomination.

10. Reflex sur la Form. et la Distrib. des Rich. § 81.

11. It is to be feared, that taxation will ultimately deprive the consumer of the advantage of such improvements. The increase of the internal taxes (droits reunis), of the stamps on patents, of the taxes and impediments affecting the internal transport of commodities, have already brought the price of these vegetable oils almost to a par with the article they had so beneficially supplanted.

12. It is to be regretted that people should be so little attentive to merit in their testamentary dispositions. There is always a degree of discredit thrown upon the memory of a testator, by his bounty to an unworthy object; and, on the contrary, nothing endears him more to the survivors than a bequest dictated by public spirit, or the love of private virtue. The foundation of a hospital, of an establishment for the education of the poor, of a perpetual premium for good actions, or a bequest to a writer of eminent merit, extends the influence of the wealthy beyond the limits of mortality, and enrols his name in the records of honour.*

    * This laudable ambition is always proportionate to the wealth, the civil liberty, and the intelligence of a nation. In England, scarcely a year passes over our heads without more than one instance of useful and extensive munificence. The bequests to the elder Pitt, to Wilberforce, and other public men, the frequent foundations and enlargements of institutions of relief or education, reflect equal honour on the character of the nation, and the memory of the individuals. Translator.

Book I, Chapter XII

13. It was my first intention to call these perishable products, but this term would be equally applicable to products of a material kind. Intransferable would be equally incorrect, for this class of products does pass from the producer to the consumer. The word transient does not exclude all idea of duration whatever, neither does the word momentary.

Book I, Chapter XIII

14. Wherefore de Verri is wrong in asserting, that the occupations of the sovereign, the magistrate, the soldier, and the priest, do not fall within the cognizance of political economy. (Meditazioni sulla Economia Politica, § 24.)

15. This error has already been pointed out by M. Germain Garnier, in the notes to his French translation of Smith.

16. Some writers, who have probably taken but a cursory view of the positions here laid down, still persist in setting down the producers of immaterial products amongst the unproductive labourers. But it is vain to struggle against the nature of things. Those at all conversant with the science of political economy, are compelled to yield involuntary homage to its principles. Thus Sismondi, after having spoken of the values expended in the wages of unproductive labourers, goes on to say, "Ce sont des Consummations rapides qui suivent immediatement la production," Nouv. Princ. tom. ii. p. 203; admitting a production by those he had pronounced to be unproductive!

17. What, then, are we to think of those who assert in substance, if not in words, that such a formality or such a tax is productive of one benefit at least, namely, the maintenance of such or such an establishment of clerks and officers?

18. Traduction de Smith, note 20.

19. I will not here anticipate the investigation of the profits of industry and capital, but confine myself to observe, en passant, that capital is thrown away upon the physician, and his fees improperly limited, unless, besides the recompense of his actual labour and talent, (which latter is a natural agent gratuitously given to him,) they defray the interest of the capital expended in his education, and not the common rate of interest, but calculated at the rate of an annuity.

20. The wages of the mere labourer are limited to the bare necessaries of life, without which his agency cannot be continued and renewed; there is no surplus for the interest on capital. But the subsistence of his children, until old enough to earn their livelihood, is comprised in the necessaries of the labourer.

21. An indolent and inert people is always little addicted to amusements resulting from the exercise of personal faculties. Labour is attended with so much pain to them, as very few pleasures are intense enough to repay. The Turks think us mad to find pleasure in the violent motions of the dance; without reflecting, that it causes to us infinitely less fatigue than to themselves. They prefer pleasures prepared by the fatigue of others. There is, perhaps, as much industry expended on pleasures in Turkey as with us; but it is exerted in general by slaves, who do not participate in the product.

22. If it entail a further charge of 300 dollars for annual repairs and maintenance, the public consumption of pleasure or utility may be set down at 10,200 dollars per annum. This is the only way of taking the account, with a view to compare the advantage derived by the payers of public taxes, with the sacrifices imposed on them for the acquisition of such conveniences. In the case put above, the public will be a gainer, if the outlay of 10,200 dollars have effected an annual saving in the charge of national production, or, what is the same thing, an annual increase of the national product, of still larger amount. In the contrary supposition, the national administration will have led the nation into a losing concern.

23. In many countries, an exaggerated notion seems to prevail, of the damage done by timber-trees, to other products of the soil; yet it should seem, that they rather enhance than diminish the revenue of the landholder; for we find those countries most productive, that are the best clothed with timber: witness Normandy, England, Belgium and Lombardy.

24. The leaves of trees absorb the carbonic-acid gas floating in the atmosphere we breathe, and which is so injurious to respiration. When this gas is super-abundant, it brings on asphyxia, and occasions death. On the contrary, vegetation increases the proportion of oxygen, which is the gas most favourable to respiration and to health. Ceteris paribus, those towns are the healthiest, which have the most open spaces covered with trees. It would be well to plant all our spacious quays.

25. The American cultivator might be said, with much greater semblance of truth, on the birth of a daughter, to cut down "a little wood," instead of planting one. American Editor.

Book I, Chapter XIV

26. The strength of an individual is so little, when opposed to that of the government he lives under, that the subject can have no security against the exactions and abuses of authority, except in those countries where the guardianship of the laws is entrusted to the all-searching vigilance of a free press, and their violation checked by an efficient national representation.

27. Although, according to our author, it is the province of speculative philosophy to trace the origin of property, the existence of which, in all politico-economical inquiries, is assumed as the foundation of national wealth, it may not here be improper to introduce a few observations on the Right of Property, illustrating its historical origin, and pointing out its true character. Most writers on natural law, among whom may be named Grotius, Puffendorff, Barbeyrac, and Locke, ascribe, in general, the origin of property to priority of occupancy, and have much perplexed themselves in attempting to prove how this act should give an exclusive right of individual enjoyment to what was previously held in common Blackstone, although he does not enter into the dispute about the manner, as has been remarked, in which occupancy conveys a right of property, expresses no doubt about its having this effect, independent of positive institutions.

Later writers on jurisprudence have adopted other theories on the subject of property, which being altogether unsatisfactory, we will not notice, except to remark that the most refined and ingenious speculations, although equally inconclusive, respecting the nature and origin of property, are those of Lord Kames, in the Essay on Property, in his Historical Law Tracts.

Dugald Stewart, however, is the first inquirer who has taught us to think and reason with accuracy on this subject, and it is to his observations on the Right of Property, contained in the supplement to the chapter, "Of Justice," in his work on the "Philosophy of the Active and Moral Powers of Man," that we must refer the reader who is desirous of possessing just and unanswerable arguments for the true foundations on which property rests. We must here content ourselves with extracting a few passages, which will exhibit this illustrious philosopher's views of the origin of the acquisition of property, which he traces to two distinct sources.

"It is necessary," says Stewart, "to distinguish carefully the complete right of property, which is founded on labour, from the transient right of possession which is acquired by mere priority of occupancy; thus, before the appropriation of land, if any individual had occupied a particular spot, for repose or shade, it would have been unjust to deprive him of possession of it. This, however, was only a transient right. The spot of ground would again become common, the moment the occupier had left it; that is, the right of possession would remain no longer than the act of possession. Cicero illustrates this happily by the similitude of a theatre. 'Quemadmodum theatrum, cum commune sit, recte tamen dici potest ejus esse cum locum quem quisque occuparit.' The general conclusions which I deduce are these:—1. That in every state of society labour, wherever it is exerted, is understood to found a right of property. 2. That, according to natural law, labour is the only original way of acquiring property. 3. That, according to natural law, mere occupancy founds only a right of possession; and that, whenever it founds a complete right of property, it owes its force to positive institutions."

After premising these leading propositions, he proceeds with what he terms a slight historical sketch of the different systems respecting the origin of property, from which we have only room to copy the following passage, which, however, contains this eminent author's views of the right of property, as recognised by the law of nature; and the right of property, as created by the municipal regulations, and demonstrating the futility of the attempts hitherto made to resolve all the different phenomena into one general principle.

"In such a state of things as that with which we are connected, the right of property must be understood to derive its origin from two distinct sources; the one is, that natural sentiment of the mind which establishes a moral connexion between labour and an exclusive enjoyment of the fruits of it; the other is the municipal institutions of the country where we live. These institutions everywhere take rise partly from ideas of natural justice and partly (perhaps chiefly) from ideas of supposed utility,—two principles which, when properly understood, are, I believe, always in harmony with each other, and which it ought to be the great aim of every legislator to reconcile to the utmost of his power. Among those questions, however, which fall under the cognizance of positive laws, there are many on which natural justice is entirely silent, and which, of consequence, may be discussed on principles of utility solely. Such are most of the questions concerning the regulation of the succession to a man's property after his death; of some of which it perhaps may be found that the determination ought to vary with the circumstances of the society, and which have certainly, in fact, been frequently determined by the caprice of the legislator, or by some principle ultimately resolvable into an accidental association of ideas. Indeed, various cases may be supposed in which it is not only useful, but necessary, that a rule should be fixed; while, at the same time, neither justice nor utility seem to be much interested in the particular decision."—American Editor.

28. Adam Smith has asserted, that the security afforded to property by the laws of England has more than counteracted the repeated faults and blunders of its government. It may be doubted, whether he would now adhere to that opinion.

29. It would be vain to say to him, why not employ your works in some other way? Probably, neither the spot nor the works of a refinery could be otherwise employed without enormous loss.

30. The industrious faculties are, of all kinds of property, the least questionable; being derived directly either from nature, or from personal assiduity. The property in them is of higher pretensions than that of the land, which may generally be traced up to an act of spoliation; for it is hardly possible to show an instance, in which its ownership has been legitimately transmitted from the first occupancy. It ranks higher than the right of the capitalist also; for even taking it for granted, that this latter has been acquired without any spoliation whatever, and by the gradual accumulations of ages, yet the succession to it could not have been established without the aid of legislation, which aid may have been granted on conditions. Yet, sacred as the property in the faculties of industry is, it is constantly infringed upon, not only in the flagrant abuse of personal slavery, but in many other points of more frequent occurrence.

A government is guilty of an invasion upon it, when it appropriates to itself a particular branch of industry, the business of exchange and brokerage for example; or when it sells the exclusive privilege of conducting it. It is still a greater violation to authorize a gendarme, commissary of police, or judge, to arrest and detain individuals at discretion, on the plea of public safety or security to the constituted authorities; thus depriving the individual of the fair and reasonable certainty of having his time and faculties at his own disposal, and of being able to complete what he may begin upon. What robber or despoiler could commit a more atrocious act of invasion upon the public security, certain as he is of being speedily put down, and counteracted by private as well as public opposition?

31. This is merely an instance of the necessity of counteracting one poison by another. Translator.

32. Probably, also, were it not for maritime wars, originating, sometimes in puerile vanity, and sometimes in national errors of self-interest, commerce would be the best purveyor of timber for ship-building; so that, in reality, the abuse of the interference of public authority, in respect to the growth of private timber, is only a consequence of a previous abuse of a more destructive and less excusable character.

33. [If no one knows so well as the proprietor, how to make the best use of his property, as our author has just remarked, what advantage can result to society from the interference, in any case, of public authority, with the rights of individuals in the business of production. Nothing but the absolute maintenance of the social order should ever be permitted, for an instant, to violate the sacred right of private property. Quite as specious, though equally unsound reasons may be assigned for imposing restraints upon a variety of other employments besides mining.] American Editor.

Book I, Chapter XV

34. Even when money is obtained with a view to hoard or bury it, the ultimate object is always to employ it in a purchase of some kind. The heir of the lucky finder uses it in that way, if the miser do not; for money, as money, has no other use than to buy with.

35. By bills at sight, or after date, bank-notes, running-credits, write-offs, &c. as at London and Amsterdam.

36. I speak here of their aggregate consumption, whether unproductive and designed to satisfy the personal wants of themselves and their families, or expended in the sustenance of reproductive industry. The woollen or cotton manufacturer operates a two-fold consumption of wool and cotton: 1. For his personal wear. 2. For the supply of his manufacture; but, be the purpose of his consumption what it may, whether personal gratification or reproduction, he must needs buy what he consumes with what he produces.

37. Individual profits must, in every description of production, from the general merchant to the common artisan, be derived from the participation in the values produced. The ratio of that participation will form the subject of Book II., infrà.

38. The reader may easily apply these maxims to any time or country he is acquainted with. We have had a striking instance in France during the years 1811, 1812, and 1813; when the high prices of colonial produce of wheat, and other articles, went hand-in-hand with the low price of many others that could find no advantageous market.

39. These considerations have hitherto been almost wholly overlooked, though forming the basis of correct conclusions in matters of commerce, and of its regulation by the national authority. The right course where it has, by good luck been pursued, appears to have been selected by accident, or, at most, by a confused idea of its propriety, without either self-conviction, or the ability to convince other people.

Sismondi, who seems not to have very well understood the principles laid down in this and the three first chapters of Book II. of this work, instances the immense quantity of manufactured products with which England has of late inundated the markets of other nations, as a proof, that it is impossible for industry to be too productive. (Nouv. Prin. liv. iv. c. 4.) But the glut thus occasioned proves nothing more than the feebleness of production in those countries that have been thus glutted with English manufactures. Did Brazil produce wherewithal to purchase the English goods exported thither, those goods would not glut her market. Were England to admit the import of the products of the United States, she would find a better market for her own in those States. The English government, by the exorbitance of its taxation upon import and consumption, virtually interdicts to its subjects many kinds of importation, thus obliging the merchant to offer to foreign countries a higher price for those articles, whose import is practicable, as sugar, coffee, gold, silver, &c. for the price of the precious metals to them is enhanced by the low price of their commodities, which accounts for the ruinous returns of their commerce.

I would not be understood to maintain in this chapter, that one product can not be raised in too great abundance, in relation to all others; but merely that nothing is more favourable to the demand of one product, than the supply of another; that the import of English manufactures into Brazil would cease to be excessive and be rapidly absorbed, did Brazil produce on her side returns sufficiently ample; to which end it would be necessary that the legislative bodies of either country should consent, the one to free production, the other to free importation. In Brazil every thing is grasped by monopoly, and property is not exempt from the invasion of the government. In England, the heavy duties are a serious obstruction to the foreign commerce of the nation, inasmuch as they circumscribe the choice of returns. I happen myself to know of a most valuable and scientific collection of natural history, which could not be imported from Brazil into England by reason of the exorbitant duties.*

    * The views of Sismondi, in this particular, have been since adopted by our own Malthus, and those of our author by Ricardo. This difference of opinion has given rise to an interesting discussion between our author and Malthus, to whom he has recently addressed a correspondence on this and other parts of the science. Were any thing wanting to confirm the arguments of this chapter, it would be supplied by a reference to his Lettre 1, à M. Malthus. Sismondi has vainly attempted to answer Ricardo, but has made no mention of his original antagonist. Vide Annales de Legislation, No. 1. art. 3. Geneve, 1820. Translator.

40. The capitalist, in spending the interest of his capital, spends his portion of the products raised by the employment of that capital. The general rules that regulate the ratio he receives will be investigated in Book II., infrà. Should he ever spend the principal, still he consumes products only; for capital consists of products, devoted indeed to reproductive, but susceptible of unproductive consumption; to which it is in fact consigned whenever it is wasted or dilapidated.

41. A productive establishment on a large scale is sure to animate the industry of the whole neighbourhood. "In Mexico," says Humboldt, "the best cultivated tract, and that which brings to the recollection of the traveller the most beautiful part of French scenery, is the level country extending from Salamanca as far as Silao, Guanaxuato, and Villa de Leon, and encircling the richest mines of the known world. Wherever the veins of precious metal have been discovered and worked, even in the most desert part of the Cordilleras, and in the most barren and insulated spots, the working of the mines, instead of interrupting the business of superficial cultivation, has given it more than usual activity. The opening of a considerable vein is sure to be followed by the immediate erection of a town; farming concerns are established in the vicinity; and the spot so lately insulated in the midst of wild and desert mountains, is soon brought into contact with the tracts before in tillage." Essai pol. sur. la Nouv. Espagne.

42. It is only by the recent advances of political economy, that these most important truths have been made manifest, not to vulgar apprehension alone, but even to the most distinguished and enlightened observers. We read in Voltaire that "such is the lot of humanity, that the patriotic desire for one's country's grandeur, is but a wish for the humiliation of one's neighbours;—that it is clearly impossible for one country to gain, except by the loss of another." (Dist. Phil. Art. Patrie.) By a continuation of the same false reasoning, he goes on to declare, that a thorough citizen of the world cannot wish his country to be greater or less, richer or poorer. It is true, that he would not desire her to extend the limits of her dominion, because, in so doing, she might endanger her own well-being; but he will desire her to progress in wealth, for her progressive prosperity promotes that of all other nations.

43. This effect has been sensibly experienced in Brazil of late years. The large imports of European commodities, which the freedom of navigation directed to the markets of Brazil, has been so favourable to its native productions and commerce, that Brazilian products never found so good a sale. So there is an instance of a national benefit arising from importation. By the way, it might have perhaps been better for Brazil if the prices of her products and the profits of her producers had risen more slowly and gradually; for exorbitant prices never lead to the establishment of a permanent commercial intercourse; it is better to gain by the multiplication of one's own products than by their increased price.

44. If the barren consumption of a product be of itself adverse to re-production, and a diminution pro tanto of the existing demand or vent for produce, how shall we designate that degree of insanity, which would induce a government deliberately to burn and destroy the imports of foreign products, and thus to annihilate the sole advantage accruing from unproductive consumption, that is to say the gratification of the wants of the consumer?

45. Consumption of this kind gives no encouragement to future production, but devours products already in existence. No additional demand can be created until there be new products raised; there is only an exchange of one product for another. Neither can one branch of industry suffer without affecting the rest.

Book I, Chapter XVI

46. The term circulation, as well as many others employed in the science of political economy, is daily made use of at random, even by persons that pride themselves upon their precision. "The more equally circulation is diffused," says La Harpe, in one of his works, "the less indigence is to be found in the community." With great deference to the learned academician, what possible meaning can the word circulation have in this passage?

47. The trade of speculation, as we have before observed, (suprà, Chap. IX.) is sometimes of use in withdrawing an article from circulation, when its price is so low as to discourage the producer, and restoring it to circulation, when that price is unnaturally raised upon the consumer.

Book I, Chapter XVII

48. The greatest sticklers for adhering to practical notions, set out with the assertion of general principles: they begin, for instance, with saying, that no one can dispute the position, that one individual can gain only what another loses, and one nation profit only by the sacrifices of another. What is this but system? and one so unsound, that its abettors, instead of possessing more practical knowledge than other people, show their utter ignorance of many facts, the acquaintance with which is indispensable to the formation of a correct judgment. No man, who understands the real nature of production, and sees how new wealth may be, and is daily created, would attempt to advance so gross an absurdity.

49. At the disastrous period in question, there was no actual want of wheat; the growers merely felt a disinclination to sell for paper money. Wheat was sold for real value at a very reasonable rate; and, though a hundred thousand acres of pasture land had been converted into arable, the disinclination to exchange wheat for a discredited paper-money would not have been a jot reduced.

50. Of course, in extraordinary cases, like that of a siege or a blockade, ordinary rules of conduct must be disregarded. However irksome the necessity, violent obstructions to the natural course of human affairs must be removed by counteracting violence; poison is in dangerous cases resorted to as a medicine; but these remedies require extreme care and skill in the application.

51. M. de Humboldt has remarked, that seven square leagues of land in a tropical climate, can furnish as much sugar as the utmost consumption of France, in its best days, has ever required.

52. In the sequel of this chapter, it will be shown, that values exported give precisely the same encouragement to domestic industry, as if they are consumed at home. In the instance just cited, suppose that wine had been grown instead of the sugar of beet-root; or the blue dye of woad, the domestic and agricultural industry of the nation would have been quite as much encouraged. And, since the product would have been more congenial to the climate, the wine produced from the same land would have procured a larger quantity of colonial sugar and indigo through the channel of commerce, even if conducted by neutrals or enemies. The colonial sugar and indigo would have been equally the product of our own land, though first assuming the shape of wine; only the same space of land would have produced them in superior quantity and quality. And the encouragement to domestic industry would be the same, or rather would be greater; because a product of superior value would reward more amply the agency of the land, capital, and industry, engaged in the production.

53. One is obliged every moment to turn round and combat objections, that never could have been started, if the science of political economy had been more widely diffused. It will here, for instance, in all probability, be said,—granting that the sacrifice made in the purchase of the raw flax for manufacture, and that made in the purchase of cotton, is to the manufacturer or merchant equal in the one case and the other,—still, in the one case, the amount of the sacrifice is expended and consumed in the nation itself, and conduces to the national advantage; in the other, the whole advantage goes to the foreign grower. I answer, the advantage goes to the nation in either case; for the foreign raw material, cotton, cannot be purchased, except with a domestic product, which must be bought of the national grower before the merchant can go to market; whether flax or any thing else, it must be some value of domestic creation. Why may he not buy with money? Money itself must have been originally purchased with some other product, which must have employed domestic industry, as much as the growth of flax. Turn it which way you will, it comes to the same thing in the end. Wealth can only be acquired by the production of value, or lost by its consumption; and, putting absolute robbery out of the question, the whole consumption of a nation must always be supplied from its internal resources, its land, capital, and industry, even that portion of it which falls upon external objects.

54. No one cries out against them, because very few know who it is that pays the gains of the monopolist. The real sufferers, the consumers themselves, often feel the pressure, without being aware of the cause of it, and are the first to abuse the enlightened individuals, who are really advocating their interests.

55. What has been said of one trader, may be said equally of two—three,—in short, of all the traders in the nation. As far as concerns the balance of commerce, the operations of the whole will resolve themselves into what I have just stated. Individual losses may occur on either side, from the folly or knavery of some few of the traders engaged; but we may take it for granted, that they will, on the average, be inconsiderable, in comparison with the total of business done; at all events, the losses on the one side will commonly balance those on the other.

It is of very little importance to our purpose to inquire, by whom the charge of transport is borne: usually, the English trader pays the freight of the goods he buys, and imports from France, and the French trader does the same upon his purchases from England; both of them look for the reimbursement of this outlay to the value added to the articles by the circumstance of transport.

56. It may be well here to point out a manifest blunder of some partisans of the exclusive system. They look upon nothing that a nation receives from abroad as a national gain, except what is received in the form of specie; which is in effect, to maintain, that a hatter who sells a hat for 5 dollars gains the whole 5 dollars, because he receives it in specie. But this cannot be; money, like other things, is itself a commodity. A French merchant consigns to England, brandies to the amount of 20,000 fr.: his commodity was equivalent in France to that sum in specie; if it sell in England for 1000l. sterling, and that sum remitted in gold or silver be worth 24,000 fr. there is a gain of 4000 fr. only, although France has received 24,000 fr. in specie. And, should the merchant lay out his 1000l. sterling in cotton goods, and be able to sell them in France for 28,000 fr. there would then be a gain to the importer and to the nation of 8000 fr., although no specie whatever had been brought into the country. In short, the gain is precisely the excess of the value received above the value given for it, whatever be the form in which the import is made.

It is curious enough, that the more lucrative external commerce is, the greater must be the excess of the import above the export; and that the very thing, which the partisans of the exclusive system deprecate as a calamity, is of all things to be desired. I will explain why. When there has been an export of 10, and an import in return of 11 millions, there is in the nation a value of 1 million more than before the interchange. And, in spite of the specious statements of the balance of commerce, this must almost always be so, otherwise the traders would gain nothing. In fact, the value of the export is estimated at its value before shipment, which is increased by the time it reaches its destination: with this augmented value the return is purchased, which also receives a like accession of value by the transport. The value of this import is estimated at the time of entry. Thus, the result is the presence of a value equal to that exported, plus the gains outward and homeward. Wherefore, in a thriving country, the value of the total imports should always exceed that of the exports. What then are we to think of the Report of the French Minister of the Interior of 1813, who makes the total exports to have been 383 millions of francs, and the total imports, exclusive of specie, but 350 millions; a statement upon which he felicitates a nation, as the most favourable that had ever been presented. Whereas, this balance shows, on the contrary, what everybody felt and knew, that the commerce of France was then making immense losses, in consequence of the blunders of her administration, and the total ignorance of the first principles of political economy.

In a tract upon the kingdom of Navarre in Spain, (Annales des Voyages, tom. I. p. 312,) I find it stated, that, on the comparison of the value of the exports with that of the imports of that kingdom, there is found to be an annual excess of the former above the latter of 120,000 dollars. Upon which the author very sagely observes, "that if there be one truth more indisputable than another, it is this, that a nation which is growing rich cannot be importing more than it is exporting, for then its capital must diminish perceptibly. And, since Navarre is in a state of gradual improvement, as appears from the advance of population and comfort, it is clear,"—that I know nothing about the matter, he might have added;—"for I am citing an established fact to give the lie to an indisputable principle." We are every day witnessing contradictions of the same kind.

57. 564 millions of dollars.

58. It is a necessary inference from these positions, that a nation gains in wealth by the partial export of its specie, because the residue is of equal value to the total previous amount, and the nation receives an equivalent for the portion exported. How is this to be accounted for? By the peculiar property of money to exhibit its utility in the exercise, not of its physical or material qualities, but those of its value alone. A less quantity of bread will less satisfy the cravings of hunger; but a less quantity of money may possess an equal amount of utility; for its value augments with the diminution of its volume, and its value is the sole ground of its employment.

Whence it is evident, that governments should shape their course in the opposite direction to that pursued at present, and encourage, instead of discouraging, the export of specie. And so they assuredly will, when they shall understand their business better: or rather, they will attempt neither the one nor the other, for it is impossible that any considerable portion of the national specie can leave the country, without raising the value of the residue. And when it is raised, less of it is given in exchange for commodities, which are then low in price, so as to make it advantageous again to import specie and export commodities, by which action and reaction the quantity of the precious metals is, in spite of all regulations, kept pretty nearly at the amount required by the wants of the nation.

59. No one but an entire stranger to these matters would here be inclined to object, that money can never be burthensome, and is always disposed of easily enough. So it may be, indeed, by such as are content to throw its value away altogether, or at least, to make a disadvantageous exchange. A confectioner may give away his sugar-plums, or eat them himself; but in that case he loses the value of them. It should be observed, that the abundance of specie is compatible with national misery; for the money, that goes to buy bread, must have been bought itself with other products. And, when production has to contend with adverse circumstances, individuals are in great distress for money, not because that article is scarce, which oftentimes it is not, but because the creation of the products, wherewith it is procurable, can not be effected with advantage.

60. A merchant's leger for two successive years may show him richer in the end of the second, than at the end of the first, although possessed of a smaller amount of specie. Suppose the first year's amount to stand thus:—

Ground and buildings 8000
Machinery and movables 4000
Stock in hand 3000
Balance of good credits 1000
Cash 4000
Total 20,000

And the second year's thus:—

Ground and buildings 8000
Machinery and movables 5000
Stock in hand 6000
Balance of good credits 2000
Cash 1000
Total 22,000

Exhibiting an increase of 2000 dollars, although his cash be reduced to one quarter of the former amount.

A similar account, differing only in the ratios of the different items, might be made out for the whole of the individuals in the community, who would then be evidently richer, though possessed of much less specie or cash.

61. The transfer of capital by bills on foreign countries, comes precisely to the same thing. It is a mere substitute in the place of the individual making the export of commodities, who transfers his right to receive their proceeds, the value of which remains abroad.

62. In Book III., which treats of consumption, it will be seen, that the slowert kinds of unproductive consumption are preferable to the more rapid ones. But, in the reproductive branch, the more rapid are the better; because, the more quickly the reproduction is effected, the less charge of interest is incurred, and the oftener the same capital can repeat its productive agency. The rapidity of consumption, moreover, does not affect external products in particular; its disadvantages are equal, whether the product be of home or foreign growth.

63. The returns of British commerce from the commencement of the 18th century down to the establishment of the existing paper money of that nation, show a regular annual excess, more or less received by Great Britain in the shape of specie, amounting altogether to the enormous total of 347 millions sterling (more than 1600 millions of dollars.) If to this be added the specie already in Great Britain at the outset, England ought to have possessed a circulating medium of very near 400 millions sterling. How happens it, then, that the most exaggerated ministerial calculations have never given a larger total of specie than 47 millions, even at the period of its greatest abundance? Vide Suprà, Chap. III.

64. All of them have acted under the conviction, 1. That the precious metals are the only desirable kind of wealth, whereas they perform but a secondary part in its production: 2. That they have it in their power to cause their regular influx by compulsory measures. The example of England (Vide note preceding,) will show the little success of the experiment. The pre-eminent wealth of that nation, then, is derived from some other cause than the favourable balance of her commerce. But what other cause? Why from the immensity of her production. But to what does she owe that immensity? To the frugality exerted in the accumulation of individual capital; to the national turn for industry and practical application; to the security of person and property, the facility of internal circulation, and freedom of individual agency, which, limited and fettered as it is, is yet, on the whole, superior to that of the other European states.

65. In a note, here inserted, in the earlier editions of this work, the American editor referred to the laudable exertions made by Mr. Huskisson, with the support of Mr. Canning and other then prominent members of the British government, to expose the impolicy and injustice of restrictions and prohibitions on commerce, and to the success of some of their measures to relieve the industry of the country from the shackles imposed in a less enlightened age. We also then quoted the observations of the Edinburgh Review, "that Mr. Huskisson, in particular, against whom every species of ribald abuse had been cast, had done more to improve the commercial policy of England during the short period that he was President of the Board of Trade, than all the ministers who had preceded him for the last hundred years. And it ought to be remembered to his honour, that the measures he suggested, and the odium thence arising, were not proposed and incurred by him in the view of serving any party purpose, but solely because he believed, and most justly, that these measures were sound in principle, and calculated to promote the real and lasting interests of his country."

Since that time all the successive administrations in England, both Tory and Whig, have at least uniformly recognized the soundness of the doctrines of free trade, and some of them, by various important commercial enactments, have given a still wider application to these beneficial truths; and such, too, has been the effect of their liberal measures upon the state of opinion and of legislation throughout Great Britain, that both in and out of parliament, a most gratifying change has taken place. Commercial questions everywhere now occupy a large share of attention, are discussed with the greatest ability and acuteness in almost all the public journals, and must therefore lead to the emancipation of commerce from the fetters which have so long and so perniciously bound it.

In France, however, and other countries which might be named, the state of knowledge, and the state of opinion, are not yet in favour of liberal commercial views. "For thirty years," we are told by the English Commissioners, Messrs. Villiers and Bowring, "nearly every law passed on Custom House matters had been intended either to establish or to consolidate the system of protection and prohibition. Under the encouragement of the legislature, much capital has been invested in the establishment and extension of protected manufactures, whose now tottering and uncertain position (the natural and necessary consequence of the system itself) has made their proprietors most feelingly alive to any change which might affect them." American Editor.

66. Ricardo, in his Essay on the Principles of Political Economy and Taxation, published in 1817, has justly remarked on this passage, that a government can not, by prohibition, elevate a product beyond its natural rate of price: for in that case, the home producers would betake themselves in greater numbers to its production, and, by competition, reduce the profits upon it to the general level. To make myself better understood, I must therefore explain, that, by natural rate of price, I mean the lowest rate at which a commodity is procurable, whether by commerce or other branch of industry. If commercial can procure it cheaper than manufacturing industry, and the government take upon itself to compel its production by the way of manufacture, it then imposes upon the nation a more chargeable mode of procurement. Thus, it wrongs the consumer, without giving to the domestic producer a profit, equivalent to the extra charge upon the consumer; for competition soon brings that profit down to the ordinary level of profit, and the monopoly is thereby rendered nugatory. So that, although Ricardo is thus far correct in his criticism, he only shows the measure I am reprobating to be more mischievous; inasmuch as it augments the natural difficulties in the way of the satisfaction of human wants, without any counteracting benefit to any class or any individual whatever.

67. There is a sort of malicious satisfaction in the discovery, that those who impose these restrictions are usually among the severest sufferers. Sometimes they attempt to indemnify themselves by a further act of injustice; the public functionaries augment their own salaries, if they have the keeping of the public purse. At other times they abolish a monopoly, when they find it press peculiarly on themselves. In 1599, the manufacturers of Tours petitioned Henry IV. to prohibit the import of gold and silver silk stuffs, which had previously been entirely of foreign fabric. They cajoled the government by the statement, that they could furnish the whole consumption of France with that article. The king granted their request, with his characteristic facility; but the consumers, who were chiefly the courtiers and people of condition, were loud in their remonstrances at the consequent advance of price; and the edict was revoked in six months. Memoires de Sully, liv. ii.

68. Bulletin de la Societé d' Encouragement pour l'Industrie Nationale, No. 4.

69. The national convention of France prohibited the import of raw hides from Spain, on the plea that they injured the trade in those of France; not observing, that the self-same hides went back to Spain in a tanned state. The tanneries of France being obliged to procure the raw article at too dear a rate, were quickly abandoned; and the manufacture was transferred to Spain, along with great part of the capital, and many of the hands employed. It is next to impossible for a government, not only to do any good to national production by its interference, but even to avoid doing mischief.

70. It is not my design to insinuate by this, that it is desirable that all minds should be imbued with all kinds of knowledge; but that every one should have just and correct notions of that, in which he is more immediately concerned. Nor is the general and complete diffusion of information requisite for the beneficial ends of science. The good resulting from it is proportionate to the extent of its progress: and the welfare of nations differs in degree, according to the correctness of their ideas upon those points, which most intimately concern them respectively.

71. There is no great weight in this plea of justification. For experience has shown, that saltpetre is stored against the moment of need, in the largest quantity, when it is most an article of habitual import. Yet the legislature of France has saddled it with duties amounting to prohibition.

72. The transatlantic colonies, that have within these few years thrown off their colonial dependence, amongst others, the provinces of La Plata, and St. Domingo or Haiti, have opened their ports to foreigners, without any demand of reciprocity, and are more rich and prosperous than they ever were under the operation of the exclusive system. We are told that the trade and prosperity of Cuba have doubled since its ports have been opened to the flags of all nations, by a concurrence of imperious circumstances, and in violation of the system of the mother-country. The elder states of Europe go on like wrong-headed farmers, in a bigoted attachment to their old prejudices and methods, while they have examples of the good effects of an improved system all around them.

73. Mr. Villiers and Dr. Bowring, in their very valuable report on the commercial relations between France and Great Britain, presented to both Houses of Parliament, during the present year, (1834,) in remarking upon the disappointments which had been experienced from treaties of commerce between France and Great Britain, point out the true causes of the failure of these arrangements, however usefully they were intended; and as it is of importance in other countries to guard against a recurrence to similar experiments which might present a formidable barrier against any permanent or solid change to a more liberal international intercourse, we cannot do better, in this place, than to copy their excellent observations on this head.

"These arrangements, however usefully intended, were productive of so much inconvenience and suffering from the sudden shifting of capital, as to induce an unwillingness to await patiently for their ultimate but somewhat remote advantages. Every treaty of commercial change must, it is certain, affect some interest or other, and by these treaties, particularly the treaty of 1786, so many interests were suddenly and severely affected, that they were enabled, by combining together, to overthrow all the expectations of future good which would have inevitably followed the removal of restrictions and prohibitions."

"It may also be observed, that treaties of commerce are generally agreements for mutual preferences; and in so far, are encroachments upon sound commercial principles. They are intended to benefit the contracting parties by common intercourse, to the exclusion (and consequently to the detriment) of other nations. They ordinarily propose exclusive advantages, which, if they open some channels of commercial profit, necessarily close others, and prevent the negotiating nations from availing themselves of the improvements or accommodating themselves to the changes which the fluctuations of agriculture, manufactures, or trade demand. The Methuen treaty, for example, bound Great Britain to take the produce of a particular country at diminished duties, whatever superior advantages any other country might chance to offer; while Portugal was, at the same time, compelled to receive the manufactures of England, whether or not she might have supplied herself more profitably elsewhere. A treaty, therefore, with France, proffering reciprocal advantages, that is to say, giving to France peculiar privileges in the English market, or obtaining peculiar privileges for England in the markets of France, did not appear to offer any prospect of permanent utility; but, if it were possible that each country should, for itself, and, with a special view to its own interests, remove those impediments to intercourse which had grown out of hostile feelings or erroneous calculations, and by comparing the facts which each government was enabled to furnish for the elucidation of the inquiry, each should find that it could safely and judiciously prepare for more extended transactions; if, in a word, it could be shown that each possessed sources of wealth which might be made productive to the other, while they lost nothing of their productiveness to the nation that possessed them, we believed that, in selecting such topics for our examination, and such objects for their result, we were best discharging the duty which had devolved on us." American Editor.

74. The political circumstances of England, during the late war, and her practice of supporting and subsidizing military operations on the continent, furnished her with a more plausible excuse for attempting to export, in the shape of manufactured produce, those values, which she thus expended without return. But she had no need to be at any expense for that purpose. Had England charged a seignorage upon the coinage of gold and silver, as she ought to have done, she needed not to have given herself any trouble about the form of the values she exported to meet her foreign subsidies and expenditure: guineas would themselves have been an object of manufacture.*

    * So they were without the imposition of a seignorage, which, however, should have been charged. But England had no occasion to give bounties with a view to facilitate her foreign expenditure. The discount of her bills was a sufficient premium to the manufacturer; and, where that expenditure was large, greatly exceeded either drawbacks or bounties. Had specie been directly procurable, perhaps it might have saved something to the government, in the reduced profit payable to the merchants upon a mere complex operation. But the merchants must have made their profit upon bullion. The sole difference occasioned by the absurdity of gratuitous coinage was, the expense incurred in that coinage; but the imposition of a seignorage would neither have promoted the import of bullion, nor facilitated its transport to the scene of expenditure. Translator.

75. We already have had occasion to remark (note 1, page 104) that there can be few or no cases in which it would ever be politic to incur a loss by the payment of bounties, even with the expectation of insuring the production of objects necessary to the public safety. For the end aimed at never can be attained by such means. The naval preponderance of England, as we before observed, was not owing to any act of parliament, but can satisfactorily be traced to those causes we have mentioned in the note referred to. Holland, besides, rose to the highest point of European maritime power, without any navigation laws, or bounties to her shipping; and France, it must be remembered, notwithstanding the famous Ordonnance in 1664, of Louis XIV., "to engage builders and merchants to construct French vessels," never obtained the so much desired superiority in ships and in seamen. American Editor.

76. Wealth of Nations, book iv. c. 2.

77. I am far from equally approving all the encouragements of this kind held out by this minister; particularly the sums lavished on several establishments of pure ostentation, which, like that of the Gobelin tapestry, have constantly cost more than they have produced.

78. Our author, here, has permitted, although with some slight qualification, an observation to escape from his pen, in direct contradiction with his own general principles, and which, therefore, it is necessary to point out and refute "France," he remarks, in speaking of her manufactures of silk and woollen, "is probably indebted for them to the wise encouragement of Colbert's administration." What is this but admitting that beneficial consequences to manufactures necessarily flow from a protecting system? Now, this we deny, and, in support of this denial, fortunately can at present invoke the highest authority. In the report on the commercial relations between France and Great Britain, which we cannot too often refer to in support of sound principles, Mr. Villiers and Dr. Bowring, both on this point, and regarding the merits and character of Colbert's administration, supply us with the following admirable strictures, which we have great satisfaction in presenting to our readers. They will be found to contain a complete answer to the gratuitous assumption of M. Say, of the wisdom herein displayed by Colbert "by this species of encouragement" to manufactures.

"France thus became the country which adopted and still exhibits the consequences of a protecting system on a large scale. Its introduction may be traced, or rather its extension as far as possible, to Colbert, a minister to whose name and administration a great portion of applause has been given, but whose system of encouragement was based on a complete ignorance of the true principles of commercial legislation. How small an amount of manufacturing prosperity Colbert produced, and how great an amount of agricultural, commercial, and manufacturing wealth he either destroyed or checked in its natural progress, will be obvious to any observer who looks at the immense natural resources and the active intelligence of France. It may be safely asserted, that the whole of the bounties by which he induced adventurers to enter into remote speculations, as well as the excessive duties which he imposed on cheaper foreign articles, were almost uncompensated sacrifices; while, on the other hand, of the manufactures which he transplanted into France, and which he protected by the exclusion of rival productions, scarcely one took permanent root; and of those which still exist, and which he intended to support, there is perhaps none which would not have been more prosperous and extensive, but for those regulations with which his zeal encumbered the early march of manufacturing industry. The popularity in France of Colbert's commercial legislation, and the erroneous deductions drawn from the consequences of his interference, have produced a most prejudicial effect on the minds of a large portion of the French public. Colbert's system was a vain attempt to force capital in new directions. Thus, in order to compel the establishment of a trade with the West Indies, he made the French people pay a premium of thirty francs upon every ton of goods exported, and of fifty francs for every ton of goods imported, independently of other encouragements. In the same spirit, he incited manufacturing settlers, by large rewards, to establish themselves in different parts of France, and boasted of his having set up more than 40,000 looms, whose produce was protected by legal enactments; and no one was found to estimate the counterbalance of loss, while the most flattering pictures were drawn of enormous gain. He began in miscalculation; he brought the most despotic interference to support his errors; and, if their consequences be faithfully traced, they will be found little creditable to his own sagacity, while greatly ruinous to the nation for whose benefit they were intended. The French Revolution broke down many of the absurd and pernicious regulations which Colbert had introduced, but the vestiges of others remain; and although they have become habitual, they interfere with improvement, and give superiority to countries where the action of industry and capital is unfettered."

"Having stated thus much, it would be unjust to withhold from Colbert the credit to which he is entitled for the admirable order he established in the finances, the efforts which he made to improve, in many particulars, the system of taxation, and his opposition to the inconsiderate plan of funding adopted by Louvois. The commercial and maritime legislation of France owes to him the compilation of the ordonnance of 1681, a body of maritime law unrivalled to this moment."

As there is, also, another error, in the same paragraph, we must be allowed briefly to notice it. By advancing to the manufacturers 2000 francs for every loom at work, our author thinks Colbert displayed a degree of wisdom hardly to be expected, inasmuch, as in this instance, "a part of the advance would be employed in reproduction," whereas, according to him, "in ordinary cases, whatever the government levies upon the products of individual exertion is wholly lost to future production." Now, nothing can be more clear, than that the tax levied, for the payment of this advance, is a pure loss to the tax-paying people, and with this peculiar aggravation, that a large class of the tax-payers are not even the consumers of the "encouraged" product. Nor is it exactly true, that in "ordinary cases whatever the government levies is wholly lost to future production," for whether the tax be advanced for every loom at work, or for the work of the looms themselves, is precisely the same thing; and, as to the destination of the tax, a portion of it is quite as likely to be employed in reproduction in the latter as in the former case. Finally, where the tax is simply an "encouragement" to the products, the amount of it will be limited by the effective demand for them, whereas, when the advance is made for every loom at work, there is no such limit to a useless tax. American Editor.

79. Under the old règime of the canton of Berne, every proprietor of land was required to furnish, in the proper season of the year, so many bushels of cockchafers, in proportion to the extent of his property. The rich landholders were in the habit of buying their contingents from the poorest sort of people, who made it their business to collect them, and did it so effectually, that the district was ultimately cleared of them. But the extreme difficulty, that even the most provident government meets with in doing good by its interference in the business of production, may be judged of by a fact of which I am credibly assured, viz. that this act of paternal care gave rise to the singular fraud of transporting these insects in sacks from the Savoy side of the Leman lake into the Pays de Vaud.

80. When industry made its first start in the middle ages, and the mercantile classes were exposed to the rapacity of a grasping and ignorant nobility, incorporated trades and crafts were useful in extending to individual industry the protection of the association at large. Their utility has ceased altogether of late years: for governments have, in our days, been either too enlightened to encroach upon the sources of financial prosperity, or too powerful to stand in awe of such associations.

81. Wealth of Nations, book i. c. 10.

82. Wealth of Nations, book iv. c. 7.

83. Baert. vol. 1. p. 107.

84. Remarks on the Advantages and Disadvantages of France and of Great Britain, 12mo. 1754, § 4, p. 142.*

    * This work was originally published in French in 1752, with great success, under the fictitious name of Sir John Nickols, and is supposed to have been the production of a foreigner employed about the court of Versailles. It contains many judicious remarks upon the internal policy of Britain. Translator.

85. "Why not get himself made free of the company?" say those who are ever ready to palliate or justify official abuse. The corporation, which had the control over admissions, was itself interested in thwarting a dangerous competitor. Besides, why compel the ingenious inventor to waste in a personal canvass, that time which would be so much more profitably occupied in his calling!

86. Liv. xix.

87. Colbert's early education in the counting-house of the Messrs. Mascrani, of Lyons, a very considerable mercantile establishment, very early imbued him with the principles of the manufacturers. Commerce and manufacture thrived prodigiously under his powerful and judicious patronage; but, though he liberated them from abundance of oppression, he was himself hardly sparing enough of ordinances and regulations; he encouraged manufacturers at the expense of agriculture, and saddled the people at large with the extraordinary profits of monopolists. We cannot shut our eyes to the fact, that to this system, acted upon ever since the days of Colbert, France owed the striking inequalities of private fortune, the overgrown wealth of some, and the superlative misery of others; the contrast of a few splendid establishments of industry, with a wide waste of poverty and degradation. This is no ideal picture, but one of sad reality, which the study of principles will help us to explain.

88. The loss of this trade has been erroneously imputed to the liberty of commerce, consequent upon the revolution. But Felix Beaujour, in his Tableau du Commerce de la Grèce, has shown that it must be referred to an earlier period, when restrictions were still in force.

89. "Every restraint, imposed by legislation, upon the freedom of human action must inevitably extinguish a portion of the energies of the community, and abridge its annual product."—Verri, Refl. sur l'Econ. Pol. c. 12.

90. Vide the laws dated 7th Jan. and 25th May, 1791, and 20th Sept. 1792 Also the arret of the government, dated 5 Vandemaire, an. ix.

91. This has been exemplified in the commercial relations of the United States with China. The American traders conduct themselves at Canton with more discretion, and are regarded by the Chinese authorities with less jealousy than the agents of the English company. The Portuguese, for upwards of a century, carried on the trade with the Eastern seas, without the intervention of a company, and with greater success than any of their contemporaries.

92. It is well known, that, when the Dutch were in possession of the Moluccas, they were in the habit of burning part of the spices they produced, for the sake of keeping up the price in Europe.

93. The answer of La Bourdonnais to one of the directors of the French East India Company, who asked how it was, that he had managed his own interests so much better than those of the company, will long be remembered:—"Because," said he, "I manage my own affairs according to the dictates of my own judgment, but am obliged to follow your instructions in regard to those of the company."

94. The first French East India Company was established in the reign of Henry IV. A. D. 1604, at the instance of a Fleming of the name of Gerard Leroi. It met with no success.

95. The commercial monopoly of the English East India Company was finally abolished by three acts of Parliament, passed during the year 1833, namely, chapters 85, 93, and 101 of the 3d and 4th William IV. The first is entitled, an act for effecting an arrangement with the East India Company, and for the better government of His Majesty's Indian territories, till the 30th day of April, 1854; the second, an act to regulate the trade of China and India; and the third, an act to provide for the collection and management of duties on tea.

By these acts the trade with both China and India is thrown open, for the first time, to British enterprise and capital, and British subjects are also permitted to take up their residence in these countries. It is needless to point out the vast importance of these enactments, and the great advantages that must result from them, not only to British subjects, but to the whole commercial world. The resources of regions of rich countries that have hitherto lain dormant will now be called into activity, and the general wealth of the country, and its capacity of absorbing foreign commodities, immensely increased. American Editor.

96. Taylor's Letters on India.

97. Raynal. Hist. phil. et polit, des Establ. des Européens, dans les deux Indes iv. iv. § 19.

98. Siècle de Louis XV.

99. Vide infrà. Book II. chap. 11.

100. It is singular, that, after the very careful revision which this section has undergone in the last edition, this paragraph should have been suffered to stand. Indeed, one would almost suspect that our author had left it rather in compliment to the popular notions of his own country, than from personal conviction of the propriety of the measure he suggests; which is impugned by the whole context of the remaining part of the section. The best security against famine is, the total absence of all official interference whatever, whether permanent or temporary, as the example of Great Britain will testify. There the government has at all times abstained from taking a personal part in the supply either of town or country, and has limited its interference to the mere export and import, which have only been cramped and impeded by ill-advised operations. Another important ground of security is, the variety of the national food. Upon this our author has observed.—Vide, infrà. Translator.

101. Lamarre, who was a great advocate for the interference of authority in these matters, and was commissioned by the government, in the scarcities of the years 1699-1709, to discover all concealed hoards, and bring to light the monopolists, frankly confesses, that he was not able to make seizure of so much as 100 quarters altogether.—Traitè de la Police, Supplement au tome 11.

102. The French minister of the interior, in his report, presented in December, 1817, admits that the markets were never so ill supplied as immediately after the decree of May 4, 1812, prohibiting all sales out of open market. The consumers crowded thither, having nowhere else to resort to; while the farmers, being obliged to sell below the current price, pretended to have nothing for sale.

103. In all ages and in all places this effect will follow. The Emperor Julian, A. D. 362, caused to be sold at Antioch 420,000 modii of wheat imported from Chalsis and Egypt for the purpose, at a price lower than the average of the market; the supplies of private commerce were immediately stopped in consequence, and the famine was aggravated. Vide Gibbon, c. 24. The principles of political economy are eternal and immutable; but one nation is acquainted with them, and another not.

The metropolis of the Roman empire was always destitute of subsistence, when the government withheld the gratuitous largesses of grain drawn from a tributary world; and these very largesses were the real cause of the scarcity felt and complained of.

104. One of the most frequent causes of famine is, indeed, of human creation, and that is war, which both interrupts production, and wastes existing products. This cause is, therefore, within human control; but we can hardly expect it to be effectually exerted, until governments shall entertain more accurate notions of their own, as well as of the national interests; and nations be weaned of the puerility of attaching sentiments of admiration and glory to perils encountered without necessity or reason.

105. It is mere mockery to talk of the paternal care, solicitude, or beneficence of government, which are never of any avail, either to extend the powers of authority, or to diminish the suffering of the people. The solicitude of the government can never be doubted; a sense of intense personal interest will always guide it to the conservation of social order, by which it is sure to be the principal gainer. And its beneficence can have little merit; for it can exert none, but at the expense of its subjects.

106. Custom, the tyrant of weak minds, and of such, unfortunately, is the great mass of mankind, and of the lower classes in particular, is always a formidable opponent to the introduction of a new article of food. I have observed in some provinces of France, a decided distaste for the paste prepared in the Italian method, although a most nutritious substance, and well calculated for keeping the flour sound and good. Probably, nothing but the frequent recurrence of scarcity during the political agitations of the nation could have extended the cultivation and consumption of the potatoe, so as to have made it a staple article of food in many districts. The appetite for that vegetable would be still more general, were a little more attention bestowed upon preserving and ameliorating the species, and the practice of raising it from the seed rather than the root more strictly observed.

107. Humboldt tells us, in his Essai pol. sur la Nouvelle Espagne, c. ix. that an equal area of land in that country will produce bananas, potatoes, and wheat, in the following proportions of weight:—

Bananas 106,000
Potatoes 2,400
Wheat 800

The product of bananas is, therefore, in weight, 133 times that of wheat, and 44 times that of potatoes. But a large deduction must be made for the aqueous particles of the banana.

A demi-hectare of fertile land in Mexico, by proper cultivation of the larger species of banana, may be made to feed more than 50 individuals; whereas the same extent of surface in Europe, supposing it to yield eight-fold, will give an annual product of no more than 576 kils. of wheat flour, which is not enough for the sustenance of two persons. It is natural that Europeans, on their first arrival in a tropical region, should be surprised at the very limited extent of cultivated ground, encircling the crowded cabins of the native population.

108. The same author informs us, that, in St. Domingo, a superficial square of 3403 toises, is reckoned at an average capable of producing 10,000 lbs. weight of sugar; and that the total consumption of that commodity in France, taking it at the fair average of 20,000,000 kils. might be raised upon a superficial area of seven square leagues.

109. Malthus.—Inquiry into the Nature and Progress of Rent. Grounds of an Opinion, &c. on Foreign Corn.

110. Ricardo.—Essay on the Influence of the Low Price of Corn, &c.

111. The question of a free trade in corn is itself of such magnitude and importance, that it would not be practicable to discuss it within the compass of a note. As our author, however, has in this paragraph intimated at least doubts of the superior advantages of entire freedom in the trade in grain, and even speaks of the "many serious inconveniences to be apprehended from the ruin of internal tillage," and deems it "neither prudent nor safe to become dependent upon distant supply," it would not be proper to withhold from the reader some notice of the labours of the more recent political economists and practical inquirers, who have poured a flood of light over this whole inquiry, and satisfactorily demonstrated the entire inexpediency, as well as injustice, of restrictions and prohibitions on the importation of foreign corn.

The first work to which we refer, is the "Essay on the External Corn Trade, by R. Torrens, Esq. M. P. F. R. S., fourth edition, London, 1827." It is entitled to distinguished notice, as a profound and masterly investigation of the principles relating to the trade in grain, and explains the manner in which restrictive and prohibitive laws on this subject have contributed to create revulsions and embarrassments, from which England has experienced so much suffering in her commerce and manufactures. The doctrines unfolded by Colonel Torrens, in relation to the foreign trade in corn, have been sanctioned and confirmed by the authority of all the principal writers on political economy, who have of late directed their attention to the same important topic. He condemns these laws as unwise, unjust, and wholly inexpedient.

Next in order we name Mr. James Mill, the author of the "Elements of Political Economy," and the "History of British India." In a pamphlet, which he published in London, in 1823, entitled an "Essay on the Impolicy of a Bounty on the Exportation of Grain, and on the Principles which ought to regulate the Commerce of Grain," he has given a most able examination of these questions. He notices most of the arguments urged in favour of restrictions and prohibitions in the corn trade, and successfully combats them. He, moreover, presents many new and luminous views, and discusses the whole subject with a fairness and candour that cannot fail to produce conviction in any unprejudiced mind.

Among the numerous works, to which this important subject has given birth in England, none has awakened more attention, or had a more extensive circulation than the "Catechism on the Corn Laws, by T. Perronet Thompson, of Queen's College, Cambridge." It was first published in 1827, and we believe has now passed through ten editions. The author has given a candid and complete exhibition of the fallacies that, from time to time, have been advanced by any writer or journalist of celebrity in support of the English corn laws, and has annexed to them respectively the most triumphant and conclusive answers. No point at issue in the controversy has been left untouched, and every objection to the freedom of trade in grain, we think, removed.

We must not omit to mention the "Address to the Landowners of England on the Corn Laws, by Viscount Milton, (now Earl Fitzwilliam,) published in London in 1832." This is an appeal by Lord Fitzwilliam to his fellow proprietors, for he is said to be one of the largest landowners in England, against the course they are pursuing on this great question, and beseeching them, by every consideration of their country's peace and welfare, to consent to the abolition of what he so satisfactorily proves to be a vicious system. Passing over the anti-commercial character of the corn laws and their effects upon the expenses of government, he confines himself to exposing the pernicious consequences which a high price of corn produces upon the population at large, and upon the operations of industrious capitalists, abridging the comforts of the former, frustrating the exertions of the latter, and not even promoting the welfare of the agriculturists themselves. The impartial review this author has taken of the controversy, the careful manner in which he has sifted the arguments on either side, and the known bias of the order to which he belongs in favour of the corn laws, must convince every dispassionate and honest inquirer, that the same process which changed his opinions must change theirs. Years may elapse in England, from the undue influence of the landed aristocracy in legislation, before these restrictive laws can be repealed; but the force of truth is too great to be resisted very long, and must ultimately prevail.

The last writer we shall refer to is William Jacobs, Esquire, F. R. S., the author of the "Tracts relating to the Corn Trade and Corn Laws: including the Second Report ordered to be printed by the two Houses of Parliament," published in London, in 1828. Mr. Jacobs has peculiar claims to the reader's attention on this subject. He has been for many years devoted to the examination of the corn trade, is the Comptroller of Corn Returns, and, from his great knowledge and experience, was selected by the English Board of Trade to proceed to the continent, and there carefully examine the actual condition of the agriculture and trade in corn of the principal grain-growing countries in the North of Europe. This work contains the results of his observations and laborious researches, and is entirely a practical view of the past and present state of the trade in corn, supported by a variety of curious and entirely authentic documents. In this place it would be impracticable to give any detailed account of its great merits as a statistical view of the subject; and this is not its only excellence. From the comprehensive and careful survey the author took of the actual condition of agriculture and trade in corn, in Europe, he became thoroughly satisfied of the inexpediency of the corn laws, and declares it to be his deliberate conviction that the fair and honest trade of speculation in corn should be by law restored, as the only means by which the due price between the producer and consumer can be equitably adjusted; and he adds, that the destruction of this trade has been the chief cause of the depression of the agricultural proprietors both in England and on the continent of Europe. American Editor.

Book I, Chapter XVIII

1. It must not be forgotten, that the consumption of the value of the productive agency, exerted in the course of production, is quite as real as that of the raw material. And under this term, productive agency, I comprise that of capital as well as of human beings.

2. This is equally true, when the government speculates with its own private or peculiar funds, as with the produce of the national lands; for whatever is thus expended might have gone towards alleviating the public burthens.

3. The same may be observed of commercial enterprises undertaken by the public authority. During the scarcity of 1816-17, the French government bought up corn in foreign markets; the price of corn rose to an exorbitant rate in the home market, and the government resold at a very high rate, although somewhat below the average of the market. Individual traders would have found this a very profitable venture; but the government was out of pocket 21 millions of francs and upwards.—Rapport au Roi du 24 Dec. 1818.

4. Suprà, Chap. 6.

5. Smith, in his recapitulation of the real causes of the prosperity of Great Britain, places at the head of the list, "That equal and impartial administration of justice, which renders the rights of the meanest British subject respectable to the greatest; and which, by securing to every man the fruits of his own industry, gives the greatest and most effectual encouragement to every sort of industry."—Wealth of Nations, b. iv. c. 7.—Poivre, who was a great traveller, tells us, that he never saw a country really prosperous, which did not enjoy the freedom of industry as well as security of person and property.

6. This security is in fact the main duty of all government. Were it not for the imperfections of human nature—the propensity of mankind to vice—society might exist without government, for no man would injure another. It is to protect one against the vices of another that the forms and institutions of society are established or supported; thus arming individual right with the aggregate of social strength. But the same moral imperfections which drive mankind into the bonds of society, undermine and vitiate its institutions. The very engine erected to protect, is directed to the injury and spoliation of individuals, and becomes occasionally more dangerous than individual wrong. Translator.

Book I, Chapter XIX

7. The distinction of the two systems is more imaginary than real. Most of the early establishments of the Europeans in the West were made with the view of absolute migration. The French at St. Domingo, the English at Barbadoes, the Spaniards almost universally, settled without the intention of returning home. The introduction of negro labour was an after-thought. Slavery was an established practice in all the ancient world, and colonies either made prize of the indigenes, or imported slaves from abroad, as soon as they were rich enough to buy them. Translator.

8. Vide infrà, under the head of Population, Book II. c. 11.

9. There have been many exceptions in North America and elsewhere. The colonies of Spain and Portugal in the New World were of an ambiguous character. Some of the colonists contemplated a return: others went to establish themselves and their posterity; but the whole plan of them has been subverted, since the commencement of the struggle for emancipation.

10. Stewart (Sir Jas.) Inquiry into the Prin. of Pol. Econ. book ii. c. 607. Turgot. Reflections sur la Formation et la Distribution des Richesses, § 23. Smith. Wealth of Nations, book i. c. 8; book iii. c. 2.

11. In this calculation no account has been taken of the housing of the negro, the tools and implements supplied to him, or the clothing furnished by the master; neither does our author seem to make any allowance for the probable increase of agricultural production, which free negro labour might afford. Free European labour would doubtless be far more expensive, were it practicable. The interest of money is also estimated far too low, and the infant and the aged must be provided for by the master. Translator.

12. It should be observed here, that the free labourers, who are so much better paid, are commonly engaged in occupations which, though less laborious, require a greater degree of intelligence and personal skill. Tailors and watch-makers are generally free men. And the mere existence of slavery itself enhances the price of free field labour by driving all competition out of the market.

13. What reference can this inequality have to the relative position of the proprietor and the different productive agents one to another? It is a mere question of difference of interest of capital. Capital in the West Indies brings a return very different, in its ratio, to rent or the profit of land, from what it yields in Europe. Land, the source of production, sells cheap, because of the greater unhealthiness of climate, insecurity of tenure, abundance, &c. &c. Translator.

14. So it is now from Hindostan, where labour is free and most abundant. Cotton will flow towards machinery, which has become too powerful for the competition of human labour, even where it is the cheapest. That is, therefore, not the effect of the toleration of slavery in those states. Translator.

15. Therefore our author has come to this correct conclusion, his reasoning is neither logical nor satisfactory; indeed, the whole of this important subject is dismissed with a precipitation little suited to its importance. There are two motives of human industry, the hope of enjoyment, and the fear of suffering. The slave is actuated principally by the latter, the free agent by the former. Neither of these motives should have been thus cursorily adverted to in the analysis of actual production, but have been fairly set forth in the outset, immediately after the detail of the sources of production; being both of them the stimuli which give activity to those sources. After all that our author and others have done, much yet remains for the organization of the science. Translator.

16. Or equinoctial; the term is applied to the ordinary products of equinoctial latitudes.

17. Poivre, a writer of great information and probity, assures us, that white sugar of the best quality is sold in Cochin-China, at the rate of about 3 dollars per quintal of the country, which is little more than two cents per pound, and that more than 80 millions of pounds are thence exported annually to China at that rate. Adding 300 per cent. for the charges and profits of trade, which is a most liberal allowance, the sugar of Cochin-China might, under a free trade, be sold in France at from 8 to 9 cents a pound.

The English already derive from Asia a considerable quantity both of sugar and indigo, at a cheaper rate than those of the West Indies. And, doubtless, if the Europeans were to plant independent and industrious colonies along the northern coast of Africa, the culture of equinoctial products there would rapidly gain ground, and supply Europe in greater abundance at a still cheaper rate.

18. Arthur Young, in 1789, estimated the annual charge entailed on France, by the possession of St. Domingo, at 9 millions of dollars. He has gone into detail to prove, that, if the sums spent on her colonies for 25 years only had been devoted to the improvement of any one of her own provinces, she would have acquired an annual addition of 24 millions of dollars, net revenue, consisting of actual products, without loss to any body. Vide his Journey in France.

19. Œuvres de Poivre, p. 209. In this estimate he takes no account of the charge of the military and marine establishment of France herself, of which a part should be set down to the colony.

20. Vide the works of Benjamin Franklin, vol. ii. p. 50, for the opinion of that celebrated man, who had so much experience in these matters. I find it stated in the Travels of Lord Valentia that the Cape of Good Hope, in 1802, cost England an excess of from 1,000,000 to 1,200,000 dollars per annum above its own revenue.

21. "Bristol was one of the chief entrepots of North American commerce. Her principal merchants and inhabitants joined in a most energetic representation to parliament, that their city would be infallibly ruined by the acknowledgment of American independence; adding, that their port would be so deserted, as not to be worth the charge of keeping up. Notwithstanding their representations, peace became a matter of necessity, and the dreaded separation was consented to. Ten years had scarcely elapsed after this event, when the same worthy persons petitioned the parliament for leave to enlarge and deepen the port, which, instead of being deserted, as they had apprehended, was incapable of receiving the influx of additional shipping, that the commerce of independent America had given birth to." De Levis, Lettres Chinoises.

22. These remarks are not altogether applicable to the British dependencies in the East; because there the nation is rather a conqueror than a colonist, having the domination over thirty-two millions of inhabitants, and the absolute disposal of the revenue levied upon them. But the clear national profits derived from the acquisition is by no means so considerable, as may be generally supposed; for the charges of administration and protection must be deducted. Colquhoun, in his Treatise on the Wealth, Power, and Resources of the British Empire, which gives an exaggerated picture of them, states the total revenue of the sovereign company, at 18,051,478l. sterling; and its expenditure at 16,984,271l.; leaving a surplus of 1,067,207l.

In all probability were India in a state of national independence, the commerce between her and Great Britain would increase so much, as to produce to the latter an additional revenue; larger than the amount of that surplus, to say nothing of the increase of individual profits.

23. The population of France, notwithstanding the interruption to industry, and the drains occasioned by the long wars, has increased since the commencement of the Revolution. According to calculations made by the National Assembly in 1791, France contained 26,363,074 inhabitants, and in 1831 it contained 32,560,000 within the same limits. The annual increase is about 200,000 individuals. (Vide Annuaire pour l' An 1834.) American Editor.

24. The vast continent of New Holland, with its surrounding islands, is now generally considered by geographers as a distinct portion of the globe, under the denomination of Australia or Australasia, which has been given to it on account of its position exclusively within the southern hemisphere.

Book I, Chapter XX

25. A strange country has some advantages over the traveller, and its dealings with him may be considered as lucrative; for his ignorance of the language and of prices, and often a spice of vanity, make him pay for most of the objects of his consumption above the current rate. Besides, the public sights and exhibitions, which he there pays for seeing, are expenses already incurred by the nation, which he nowise aggravates by his presence. But these advantages, though real and positive, are very limited in amount, and must not be over-rated.

26. This has become a matter of some interest to England, whose unproductive capitalists and proprietors have absolutely overwhelmed the society of France and a great part of Italy, where they consume an immense revenue, derived from Britain by the export of her manufactures without any return. Thus their native country is, pro tanto, a producer without being a consumer—the scene of exertion but not of enjoyment. This circumstance, although nowise prejudicial to her productive powers, is extremely so to the comfort and enjoyment and content of her population; for there are few enjoyments so personal and selfish, as not to be diffused in some degree or other at the moment and place of consumption. Besides, the presence of the proprietor is always a benefit, especially in Great Britain, where so many public duties are gratuitously performed. Ireland suffers in a worse degree; her gentry are attracted by England as well as the continent; and the consequences have long been matter of regret and complaint. Though it might be impolitic to check the efflux by authoritative measures, it should at least not be directly encouraged and stimulated, as it really is, by the financial system, which the English ministry so obstinately persevere in. Almost the whole of the taxation is thrown immediately upon consumption; whilst the permanent sources of production and the clear rent they yield to the idle proprietor are left untouched. The proprietor has, therefore, an obvious interest in effecting his consumption where it is least burthened with taxation; that is to say, anywhere but in England. His property is protected gratuitously, and the charge of its protection defrayed by the productive classes, who thus are compelled to pay for the security of other people's property as well as their own, and are themselves unable to imitate their unproductive countrymen, by running away from domestic taxation. A more unjust and discouraging system could not have been devised. Its evils are daily increasing, and threaten the most serious diminution of the national resources. But the ministers neither see the mischief themselves, nor will listen to the warnings of others. Many of them, indeed, have an interest in perpetuating an exemption, by which they benefit personally. Translator.

27. In 1790, when the new authorities of France indemnified the holders of suppressed offices in paper-money, these discarded functionaries for the most part converted their assignats into specie, or other commodities of equal value, which they took or sent out of the country. The consequent national loss to France was nearly as great, as if they had received their indemnities in cash; for its paper representative had not then suffered any material depreciation. Even when the individual remains himself in the country, he can not be prevented from transferring his fortune thence, if he be determined on so doing.

Book I, Chapter XXI

28. The utility of money is intense, in the compound ratio of the division of labour and the variety of individual consumption. A sugar colony in the West Indies, though highly productive in proportion to its population, requires little money to facilitate the transfer of the produce; because the bulk of the population, the negroes, have very little variety of consumption: they are fed, clothed, &c. in the wholesale, and in the plainest and most uniform manner. Yet, possibly, the division both of agricultural and manufacturing labour on each plantation may be carried to considerable length. Translator.

29. Raynal, Hist. phil. et pol. lib. vi.

30. When the intercourse between the Europeans and the negroes of the river Gambia first commenced, the commodity most in request with them was iron, for the purposes of war and of tillage. Iron, therefore, became the standard of comparison of value. In a little time, it became a mere nominal standard in their mercantile dealings; and a bar of tobacco consisting of 20 or 30 leaves of that herb, was given for a bar of rum consisting of four or five pints, according to the abundance or scarcity of the article. In such a state of society, each product successively performs the functions of money in reference to all other products; which leaves the community subject to all the inconveniences of barter in kind, the chief of which is, the inability to offer any one article in general request and acceptation, and capable of ready apportionment in amount to other commodities at large. Vide Travels of Mungo Park, vol. i. c. 2.

31. Wealth of Nations, book i. c. 4.

32. The money of Lacedæmon is a proof of the position, that public authority is incompetent of itself to give currency to its money. The laws of Lycurgus directed the money to be made of iron, purposely to prevent its being easily hoarded, or transferred in large quantities; but they were inoperative, because they went to defeat these, the principal purposes of money. Yet no legislator was ever more rigidly obeyed than Lycurgus.

33. The present silver coin of France contains one part copper to nine parts fine silver; the relative value of copper to silver being as 1 to 60, or thereabouts. So that the copper contained in the whole silver coinage, amounts to about 1/600 of the total value of the silver coin, or 1 cent in 6 fr. Supposing it were attempted to disengage the copper, it would not pay the expenses of the process of separation; to say nothing of the value of the impression that must be destroyed. Wherefore, it is reckoned for nothing in the valuation of the coin. A piece of 5 fr. presents the idea of the 22½ grammes of fine silver contained in it, though actually weighing 25 gr. inclusive of the alloy.*

    * The values of the gold, silver, and copper coins of the United States, were first regulated by the act of Congress of the 2d of April, 1792, establishing the mint. By that act, the eagle contained 247.5 grains of pure gold and 22.5 grains of alloy, making together 270 grains of standard gold; and the half eagle and the quarter eagle, their respective fractional proportions of the same metals. By the act of Congress of the 30th of June, 1834, this standard has been debased, and the weight of the gold coins reduced: the eagle now contains 232 grains of pure gold and 26 grains of alloy, making together 258 grains of standard gold; and the half eagle and the quarter eagle are reduced in like proportions. By the act of 1792, the standard of gold was eleven-twelfths of pure gold to one-twelfth of alloy, or 22 carats fine. By the act of the present year, the relative fineness or number of carats has been reduced to about 21.58, equivalent to a debasement of about 1.9 per cent.; and the actual quantity of pure metal in the coin has been diminished more than 6.25 per cent.—(6.262626+). The alloy of standard gold is composed of silver and copper, not exceeding one half silver.

    In the silver coins of the United States, no change has been made, since the act of 1792, which regulated their value. The dollar, by that act, is made the unit, of the same value as the Spanish milled dollar then current. The dollar of the United States contains 371.25 grains of pure silver and 416 grains of standard silver; the half dollar 185.625 grains of pure silver and 208 grains of standard silver; the quarter dollar 92.8125 grains of pure silver and 104 grains of standard silver; the dime 37.125 grains of pure silver and 41.6 grains of standard silver; and the half dime 18.5625 grains of pure silver and 20.8 grains of standard silver. The standard of silver is 1485 parts of fine to 179 parts alloy; accordingly, 1485 parts in 1664 parts of the entire weight of the silver coins are of pure silver, and the remaining 179 parts of alloy. The alloy of standard silver is wholly composed of copper.

    The copper coins of the United States are the cent and the half cent; the weight of which, since the act of 1792, has been twice reduced. By the act of 1792, the cent contained 264 grains, and the half cent 132 grains, of copper, and the cent was fixed at the value of the hundredth part of the dollar, or unit. By an act of the 14th of January, 1793, the cent was reduced to 208 grains, and the half cent to 104 grains, of copper; and by an act of the 3d of March, 1795, the President was authorized by proclamation, and accordingly, on the 26th of January, 1796, reduced the cent to 168 grains, and the half cent to 84 grains of copper, their present weight. The proportional mint value of gold to silver, by the act of 1792, was as 1 of pure gold to 15 of pure silver; and by the act of the present year the proportional mint value of gold to silver is as 1 of pure gold to 16.002112+ of pure silver. American Editor.

34. The other property of money, the capability of subdivision, and apportionment of the value parted with, must not be lost sight of: by it the jeweller is enabled to exchange a minute portion of his precious commodity for the smallest item of his household expenditure.

35. This point has been well observed upon by Turgot. Refl. sur la Form. et Distrib. des Rich. Translator.

36. Ricardo and some other writers maintain, that the charges of obtaining the metal wholly determine its price or relative value in exchange for all other commodities. According to their notions, therefore, the want or demand nowise influences that price; a position in direct contradiction to daily and indisputable experience, which leads us invariably to the conclusion, that value is increased by increase of demand. Supposing that, by the discovery of new mines, silver were to become as common as copper, it would be subject to all the disqualifications of copper for the purposes of money, and gold would be more generally employed. The consequent increase of the demand for gold would increase the intensity of its value; and mines would be worked, that are now abandoned, because they do not defray the expense. It is true that the ore would then be obtained at a heavier rate; but will any one deny, that the increased value of the metal would be owing to the increased demand for it? It is the increased intensity of that demand, that determines the miner to incur the increased charge of production.

37. Before the Bank of England can pay off its notes in cash, the government, its principal debtor, must discharge its debts in specie; which it can not do unless it purchase the specie, either with its savings, or with the proceeds of further taxation. In doing so, it would, in effect, substitute a new and very costly engine of circulation, which must be purchased by the state, for the present one, which, although much out of order, and altogether destitute of intrinsic value, is yet made to do the business well enough.*

    * The Bank of England, notwithstanding the opinion expressed by the author in this note, has long since resumed and continued the payment of its notes on demand in specie; and, it must be added, without any intention having been expressed, or attempt made, by the British government, to "discharge its debts in specie." which M. Say seemed here to think must be previously effected.

    By an act of parliament, passed in July 1819, generally known as Mr. Peel's Act, the Bank of England was required, from the 1st of May, 1823, to pay its notes on demand, in the legal coins of the realm. The final resumption of cash payments by the Bank of England took place, however, at a still earlier period; for, finding itself in possession of sufficient gold to make payments in cash sooner than this law prescribed, the bank obtained the passage of another act, which made it imperative upon the institution to pay all demands in the legal coin of the realm on the 1st of May, 1822, since which time it has never ceased to "discharge its debts in specie" when required. American Editor.

38. It must not be supposed, that our author is ignorant of the wide difference between Bank of England and country bank paper, viz: that the one is paper-money, the principal; the other, its convertible representative. This position is perfectly correct. The credit, embodied, as it were, in the provincial paper, is equally an agent of circulation with the inconvertible principal, the paper-money; which, but for its presence and rivalry, would be required in double the quantity, to maintain the same scale of money-prices. Great confusion has hitherto prevailed on this subject for want of a clear conception of the concurrent operation of coin and its rival, credit. Translator.

39. For the consequence of an excessive issue of paper-money, vide infrà, Chap. XXII. sect. 4. where the subject of paper-money is discussed.

40. The multiplication of paper-money, and its consequent depreciation, effects no augmentation of the wealth of the community, although it makes necessary a more liberal use of figures in the estimation; just in the same way as its valuation in wheat instead of silver would do. The total of national wealth might be 20,000,000,000 kilogr. of wheat, and but 25,000,000 kilogr. of silver, and yet the value precisely the same. If the value of the money be less intense, it will require more of it to express the same degree of value.

41. Garnier de Saintes, translator of the Wealth of Nations. Translator.

42. Abregé des Principes d'Economie Publique, 1re partie, c. 4, and the advertisement prefixed.

43. That is to say, to receive the certificate of coinage, for use, not in the character of money, but as an article of commerce. The assay is charged for at the English mint, upon bullion re-delivered without coinage. And, before the export of coin was made free, the risk was probably equal to the value of the certificate conferred by coinage. These remarks apply to the coinage of gold only, silver being now subject to a seignorage of 4s. in 66s. But silver is no longer the material of the metallic money, except for minute and fractional exchanges. Translator.

44. It is hardly necessary to repeat, that the specie exported is not so much value lost to the community; for nobody will feel inclined to make a present of it to the foreigner. Its value is transmitted, for the purpose of obtaining a corresponding value in return; but the nation loses the value of the coinage in this operation. When guineas are exported from England, she receives in exchange the value of the metal only, and nothing for the impression it bears.*

    * This is hardly true to the full extent. The Spanish dollars pass current in many countries at a considerable advance on bullion of equal weight and fineness, and constitute the legal currency of some communities, that have not undertaken the business of coinage themselves; as in Hayti, and elsewhere. The difference is the local value of the coinage, which is paid for sometimes very liberally. But to whom is it paid? to the Spanish individual or to the Spanish government. If to the former, it is an undue advantage to the individual at the expense of the community; if to the latter, it is the recompense of productive agency. Were the gold coinage of England subject to a seignorage like the silver, it would never be exported habitually, but to such nations as were content to pay the extra value of the coinage. Indeed, our author presently says in express terms, that the value of the coinage is not always lost on importation. Translator.

45. Wealth of Nations, book i. c. 5.

46. One of my German translators, the learned Professor Morstadt, of Heidelberg, has observed upon this passage, that since 1810, the Russian government has made no charge for the coinage. It might with equal reason execute gratuitously the business of letter-carriage, instead of charging for it to the individuals.

I am perhaps incorrect in saying, that most governments make a profit over and above the expense of execution. The French government charges a seignorage, equal at most to defray the expense of the mere process. But the interest and wear and tear of the capital vested in buildings, machinery, &c. and the charge of administration, &c. are so much dead loss to the government; and probably many other governments are in the same predicament.

47. The value of the coinage, or fashion of the metal, is not always lost in the export. The impression is, to a certain degree, a recommendation beyond the limits of the authority which executes it, and raises the value somewhat higher than that of bullion in bars.

48. The 5 fr. pieces of France, have, by their invariable uniformity of weight and standard since their first issue, acquired a similar currency in many parts of the world.

49. This paragraph contains three errors in relation to the coinage of dollars by the United States, and the exportation of specie, which it is of importance to point out: 1st. Spanish dollars are not, and never have been, simply restamped at our mint, without varying their weight or standard: 2d. A pound, troy, of Spanish dollars, contains 10 oz. 15 dwts. of fine silver: a pound, troy, of American dollars contain 10 oz. 14 dwts. 5 grains of fine silver: 3d. No law has ever been enacted by Congress, directing the exportation of specie to be made in dollars of our own coinage; nor has the executive the power to regulate, or in any manner interfere with the exportation of specie from the United States. American Editor.

50. In Spanish America, a higher duty is charged, amounting, according to Humboldt, to 11½ per cent. on silver, and 3 per cent. on gold, over and above the actual charges of coinage; for the government allows no bullion to be exported in an uncoined state. So that, in fact, this is not a seignorage, but a duty on exportation, exacted at the time of converting the bullion into coin.

51. The measure of weight called a livre contained 12 oz. in the time of Charlemagne.

52. According to the principles established suprà, sect. 3 of this chapter, there is reason to believe, that the value of the adulterated livre of 8 oz. of fine silver might have been kept up to that of the old livre of 12 oz., if the volume of the coin had not been augmented. But the rise of money prices, consequent upon the adulteration of the coin, is a ground of presumption, that the government, with a view to profit by this momentary operation, ordered a recoinage, and made 12 pieces out of 8, by the addition of alloy, so as to increase the total quantity proportionately to the reduction of the standard of quality.

53. We find in the Prolégomènes of Le Blanc, 25, that the silver sol of St. Louis weighed 1 gros.grains, which, multiplied by 20, makes 2 oz. 6 gros 6 grains, the livre.

54. The same expedient was resorted to by that monster of prodigality, the Roman emperor Heliogabalus. The taxes of the empire were payable in specific gold coin, called aurei, and not in gold by the tale: and the emperor, to enlarge his receipts, made a new issue of aurei, weighing as much as 24 oz. each. The virtuous Alexander Severus, actuated by an opposite motive, made a considerable reduction of the weight.

55. Philip de Valois, in his official instructions to the officers of the mint, A. D. 1350, enjoins the utmost secrecy on the subject of the purposed adulteration, even with the sanction of an oath, for the express purpose of taking in the commercial classes; directing them "to put a good face upon the matter of the course of exchange of the mark of gold, so that the intended adulteration might not be discovered." Many similar instances are to be met with in the reign of King John. Le Blanc, Traité Hist. des Monnaies, p. 251.

56. Le Blanc, Traité Hist. des Monnaies, p. 27.

57. Matthieu Villani.

58. Montesquieu, Esprit des Lois, liv. xxii. c. 11.

59. Smith's Wealth of Nations, book ii. c. 2.

60. Stewart's Inquiry into the Princ. Pol. Econ. 8vo. 1805, vol. ii. p. 306.

61. Vide the several ordinances of Philip le Bel in 1303; of Philip de Valois in 1329 and 1343; of John in 1354; and of Charles VI. in 1421.

62. The term, "representative," or "sign," of silver or specie, as applied to bank-notes, has no precise or definite meaning. A bank-note, with no sort of accuracy can be said to be "the representative of money;" and as such loose metaphorical expressions have given occasion to most of the vague and mystical notions respecting paper-money which have been too long current, and only serve to involve the subject in obscurity and confusion, they cannot too soon be discarded.

We have already seen, that coins are neither more nor less than commodities, which are bought and sold for their value, like other commodities. Bank-notes are not, any more than bills of exchange, or other transferable engagements for the payment of money, the representatives or symbols of these commodities, but are actual obligations for the payment, on demand, or at a stated time, of the quantity of the coins expressed on the face of them, and are themselves received in payment as readily as specie itself, only when it is perfectly understood, that the specie can be obtained for them, or when it is generally known, that they will be as readily received in the market as the coins which they specify. American Editor.

63. If credit-paper be thrown into the scale, it will not help us over this difficulty. The agent of circulation, whether in form of specie or of paper, can never exceed in amount the total utility vested in it. The expansion of the volume of a national money, whether of metal or of paper, is sure to be followed by a proportionate dilution of its value, which disables the whole from being equal to the purchase of a greater portion of commodities at large: and the value, devoted to the business of circulation, is always a trifle, compared with the value it is employed to circulate. Vide infrà, under the head of Bank-notes.

64. Esprit des Lois, liv. xxii. c. 7.

65. Esprit des Lois, liv. xxii. c. 3.

66. Wealth of Nations, book i. c. 5. On this point, Smith observes, that "labour was the first price, the original purchase-money, that was paid for all things. It was not by gold or silver, but by labour, that all the wealth of the world was originally purchased." I think I have succeeded in proving that he is mistaken. Nature executes an essential part of the production of values; and her agency is in most cases paid for, and forms a portion of the value of the product. The profit of land, which is called rent, is paid to the proprietor, who does nothing himself, and stands in place of the original occupant; and it affects the value of the product, raised by the joint agency of nature and industry; the portion of value contributed by nature is not the product of human labour. Capital also, which is, for the most part, the accumulated product of labour, concurs, like nature, in the business of production, and receives in recompense a portion of the product; but the gains, accruing to the capitalist, are quite distinct from the accumulated labour vested in the capital itself, which can be expended or consumed in toto, by one set of persons; while its share in the product, in other words, the interest paid for its use, may be consumed by another.

67. Humboldt reckons it at from 3 fr. 50 cents to 4 fr. of our money. Essai Pol. sur la Nouvelle Espagne, tom. iii. p. 105. oct. ed.

68. The difference of value in different objects has, throughout this work, been noted in money-price or what they will fetch in money; extreme correctness not being necessary for illustration. Even in the exact science of geometry, the figures are given merely to make the demonstrations more intelligible; strict accuracy is necessary in the reasoning and conclusions only.

69. After the appearance of three editions of this work, Sismondi published his Nouveaux Principes d'Econ. Pol.; wherein amongst many excellent chapters, there is one entitled, "money, the sign, token, and measure of value." Liv. v. c. 1.

70. Edit. de Kehl, oct. tom. xvii. p. 394.

71. Rapport entre l'Argent et les Denrèes, p. 35.

72. For these calculations I am indebted to the Essai sur les Monnaies, and the Variations dans les Prix, both by Dupré de Saint Maur.

73. Book II. Chap. 4.

74. 12 oz. of silver were given for 1 oz. of gold, in Cæsar's time. Wherefore, silver having fallen in the ratio of 4 to 1, 1 oz. of gold was worth as much in his days, as 48 oz. of pure silver at the present period. But 48 oz. of silver are now worth 3 oz. of gold or thereabouts: so that gold must have fallen in the ratio of about 3 to 1.

75. The same error of calculation has led these translators involuntarily to underrate the prodigality of the worst of the emperors. Thus we are told, that Caligula, in less than a year, squandered the whole of the treasure accumulated by Tiberius, amounting to 2700 millions of sestertii, which La Harpe translates into no more than 540 millions of livres: whereas, supposing the value of gold to have varied little between the days of Cæsar and of Caligula, which is probable enough, it will be found to amount to very nearly 3000 millions of livres. Indeed, it seems hardly possible, that a less sum would have sufficed for the monstrous extravagancies recorded of him.

Horace, Epist. 2. lib. ii. speaks of an estate, that, from the context, must have been a considerable one, as being of the value of 300,000 sestertii, which, according to my view, amounted to 303,600 fr. (about 56,470 dollars) of our present money. His commentator, Dacier, perverts the meaning of the passage, by estimating the estate in question, at 22,500 fr. only, or 4185 dollars.

76. Le Blanc. Traité Monnaies, p. 3. estimates the Roman lb. of 12 oz. at the actual weight of only 10 2/3 oz. of our standard, taking as a guide, the weight of some of the coins of the emperors which are in a state of high preservation. The valuation I have here given of the oz. of gold, takes it at the mint standard, viz. with a proportion of 1/10 alloy; for I take it for granted, that the gold, thus laid hands upon by Cæsar, was not pure gold, but coin with a mixture of alloy.

77. Until the period specified, the ratio of gold to silver in Europe was 1 to 12. At present, it is in most nations of Europe 1 to 14, or 1 to 15; so that taking the average ratio in ancient times at 1 to 11 ¼ and in modern times at 1 to 15, gold will have increased in relative value to silver in the proportion of 4 to 3. Wherefore, if gold be multiplied by 3, and silver by 4, the result will be equal.

78. I am disposed to believe, that the value of both gold and silver began again to decline about the commencement of the present century; for more gold and silver are now given for most of the commodities least liable to vary in the costs of production.*

    * In the very able and laborious "Historical Inquiry into the Production and Consumption of the Precious Metals, by William Jacobs, Esq. F. R. S. London, 1831," we are furnished with a chapter (xxv.) on the production of gold and silver from the end of the year 1809 to the end of 1829. The author remarks, "that it was at the first named period, 1809, when a great change took place in the production of the mines of gold and silver, in every part of the western continent, after a space of more than three centuries, during the whole of which there had been a constant increase of the quantities obtained; each succeeding decennial period yielding a larger portion than the similar number of years that preceded it; and though they have in some measure been restored, it has been by slow degrees, and they are yet very far from having approached the copious produce which they yielded before their general abruption from European government."

    After then examining the productiveness of the mines of Mexico, Colombia, including New Grenada, Peru, Buenos Ayres, Chili, and Brazil, in gold and silver, and also after taking notice of the gold found in North and South Carolina and Georgia, from 1824 to 1830, he sums up the whole of the amount of the gold and silver supplied by the late Spanish dominions in America, during the twenty years, from the end of the year 1809 to the end of 1829, thus:—

      Divisions. Amount in dollars
    in twenty years.
    Mexico, 220,043,200
    Guatimala, 2,893,710
    Colombia, 33,564,267
    Peru, 64,688,429
    Buenos Ayres, 30,000,000
    Chili, 16,618,880
    Or in sterling, at 4s. 2d. the dollar, l.76,626,768
    To this may be added the produce of Brazil, 4,110,000
    Whole produce of America, l.80,736,768

    "In Europe," he states, likewise, "the produce of gold and silver has declined, when the average of the last twenty years is compared with that of the one hundred and ten years which preceded it. The value of the gold produced in Europe, he estimates about 720,000l. and of the silver 530,000l., being together 1,250,000l. annually, or in the period of twenty years from 1810 to 1829, 23 millions; to this the supply from America, 80,736,768l., will make together, 103,736,768 pounds sterling." Mr. Jacobs estimates the diminution in the mass of metallic money, during the twenty years mentioned, at 13 per cent. American Editor.

79. The relative position of gold and silver, in respect to value, is by no means determined by the respective supply of each from the mines. Humboldt states, in his Essai Pol. sur la Nouvelle Espagne, tom. iv. p. 222, oct., that silver is produced from the mines of America and Europe jointly, in the ratio to gold, of 45 to 1. Now the ratio of their value, instead of being 45 to 1, is only,

In Mexico, 15 5/8 to 1
France, 15½ 1
China, from 12 to 13 1
Japan, 8 to 9 1

The difference is probably owing to the superior utility and demand of silver for the purposes of plate, &c. as well as of money. It would seem, that this cause operates more forcibly in the East than in the West; for gold jewellery is relatively cheaper there than in our part of the world.

80. Traité Hist. des Monnaies de la France, Prolegom. p. 4.

81. Vide our author's pamphlet, entitled, de l'Angleterre, et des Anglais, 1815. 3d edition, p. 50, et seq.

82. Proposals for an economical and secure Currency, by D. Ricardo, 1816. It seems, the British legislature has since adopted the expedient of that writer, in 1819. The experiment is yet in progress; and whatever be its ultimate result, it must needs advance the interests of the science.

83. Billon, a compound of copper and silver, containing ¼ or ½ only of the latter and the residue of the former. It is used in the fractional coinage of France, to supersede the employment of copper in large quantities.

84. Suprà, p. 166.

85. Mongez, Consider. sur les Monnaies, p. 31.

Book I, Chapter XXII

86. If the credit on London be payable in paper-money instead of specie, the course of exchange with Paris of the pound sterling, may, perhaps, fall to 21 fr., 18 fr., or even less, in proportion to the discredit of the paper of England.

87. In that expense I include the charge and risk of transport and of smuggling also, if the export of specie be prohibited; which latter is proportionate to the difficulty of the operation. The risks are estimated in the rate of insurance.

88. This position applies to foreign commerce only; the monopoly-profits of individuals in the home-market are not entirely national gains. In internal dealings, the sum of the utility obtained is all that is acquired by the community.

89. Venice, Genoa, Amsterdam, and Hamburgh had each an establishment of this nature. All have been swept away by the torrent of the revolutionary war; but there may be some use in examining the nature of institutions that may some day or other be re-established. Besides, the investigation will throw light upon the history of the communities that established them, and of commerce in general. At any rate, it was necessary to enumerate all the various expedients that have been resorted to as substitutes for money.

90. Public banks of deposit are now quite obsolete, and will probably never be revived. In fact they are clumsy expedients, suited only to the early stages of commercial prosperity, and are liable to many inconveniences. They hold out a strong temptation to internal fraud and violence, as well as to external rapacity; they withdraw from active utility a large portion of the precious metals, which might perhaps be turned to better account elsewhere; and they yield a degree of facility of circulation nowise superior to what may be afforded by the common process of banking, except perhaps in security, and infinitely more expensive to the public and to individuals. They have accordingly been everywhere supplanted by banks of circulation, or by the expedient of an inconvertible paper-money. Translator.

91. The two methods resolve themselves practically into one; for merchants of good credit can always procure discountable paper; and the sole essential difference is, that, in one case, the credit is individual and unevidenced, in the other, evidenced, and, in most cases, joint also. The bank of England requires the names of more than one firm on the paper it discounts. Country bankers often content themselves with the security, or note of hand, of the borrower alone. Translator.

92. No account is here taken of the money hoarded, which, for the national interest, might just as well have remained in the mine.

93. Wealth of Nations, book ii. c. 2.

94. Since the first publication of this passage, this very circumstance has happened in respect to the bank of Paris, in 1814 and 1815, when that capital was besieged and occupied by the allied armies. The advances of the bank to the government, and to individuals, which could not be recalled immediately, did not exceed the capital of the establishment, for which the shareholders can not be called upon; and its paper-issues, payable to bearer, were all covered, either by specie in hand, or by commercial paper of short dates. By this means, notwithstanding the very critical circumstances of the moment, the merchants continued to employ its notes: which they could not well do without; and they were paid as usual in cash without interruption, during the whole of the hostile occupation: which shows at once the utility of a bank of circulation, and the advantage of leaving inviolate the convertibility of paper-issues.

95. In 1803, the land-bank of Paris was, for this reason, obliged to suspend the payment of its notes in cash; and to give notice, that they would be paid off by instalments out of the proceeds of its real securities.

96. That is to say, advances its notes. A bank, like an individual, may advance its capital, which then becomes more or less vested and fixed. The whole capital of the bank of England has been thus advanced; and there would have been no danger, had it not advanced its notes also. When the advances of paper are made upon transferable securities, stock, exchequer bills, and the like, those securities may be sold for cash, or for the notes of the bank itself, so long as they retain their value, and thus the safety and solvency of the bank maintained. But this operation is unnecessarily complex; for the government might itself have sold, and thus have saved the brokerage or profit accruing upon the operation to the bank. Translator.

97. Thornton, in his tract on the Paper Credit of Great Britain, written expressly with a view to justify the suspension of cash-payments by that establishment, has attacked the positions of Smith upon this subject. He tells us, that the extraordinary run upon the bank, which brought about the suspension, was occasioned, not by the excess of its issues, but, on the contrary, by their partial contraction. "An excessive limitation of bank-notes," he observes, "will produce failures, failures must cause consternation, and consternation must lead to a run upon the bank for guineas." By this reference to an extreme case, he endeavours to support his paradoxical opinions. When a convertible paper has succeeded in driving out of the country too large a portion of the metallic money, and the confidence in the paper happens suddenly to decline, great confusion and embarrassment will doubtless ensue, because the remaining agent of circulation is insufficient to effect the business; but it is a great mistake to suppose, that the deficiency can be remedied by the multiplication of a paper, not enjoying the confidence of the public. If the bank of England was able to survive the shock, it was because of the indispensable necessity of some agent of transfer, of some money or other, of paper in default of all others, in so commercial a country; because the government and the bankers of London, who were interested in the safety of the bank, unanimously agreed not to call upon it for cash, until it should be in a condition to pay; that is to say, until the government should have paid its advances in actual value. The bank had lent to the government more than its whole capital; for to that extent it might have gone with safety, its capital not being wanted for the discharge or convertibility of its paper; had it not so done, the short bills in its possession would have been sufficient for the extinction of its convertible paper.

98. Wealth of Nations, book ii. chap. 2.

99. Wherever a paper-money has been established, the difference between its value in the home market, where it has utility, and its value in foreign markets, where it has no utility, has afforded a fruitful field for speculation, that has enriched many adventurers. In 1811, 100 guineas in gold would purchase at Paris a bill of exchange on London, for 140l. sterling, payable in the paper which was the only currency of England. Yet the difference between gold and paper in the London market at the same period, was only 15 per cent. It was in this way, that the paper was of higher value in England than abroad. Accordingly, I find from returns with which I have been favoured, that gold in guineas or bullion was smuggled into the ports of Dunkirk and Gravelines alone, in the years 1810, 11, 12, and 13, to the amount of 33,875,090 dollars. There was a similar speculation in other commodities at large; but it was attended with more risk and difficulty; the import into France being very hazardous, although the export from England was encouraged in every possible way. Yet this traffic would soon have found its level, for it must have produced bills on England in such quantity, as to have brought the exchange to par at least, had not the continental subsidies of England furnished a continual supply of bills on London without any return.

100. This work was translated into French while Law continued in the office of Controller-General of France; and is entitled Considerations on Commerce and Money.

101. Vide Dutot. tom. ii. p. 200, for a detail of the beneficial effects of the institution, as originally conducted.

End of Notes to Book I

Notes to Book I Notes to Books II-III Top of File
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