Capital: A Critique of Political Economy, Vol. III. The Process of Capitalist Production as a Whole

Karl Marx
Marx, Karl
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Frederick Engels, ed. Ernest Untermann, trans.
First Pub. Date
Chicago: Charles H. Kerr and Co.
Pub. Date
Das Kapital, based on the 1st edition.

1. [1] In volume I, chapter IX, 3, we have shown by the example of N. W. Senior what confusion this may create in the head of the economist.

2. [2] "From what has gone before, we know that surplus-value is purely the result of a variation in the value of v, of that portion of the capital which is transformed into labor-power; consequently, v + s equals v + v', or v plus an increment of v. But the fact that it is v alone that varies, and the conditions of that variation, are obscured by the circumstance that in consequence of the increase of the variable component of the capital there is also an increase in the sum total of the advanced capital. It was originally 500 and becomes 590" (Volume I, chapter IX, 1.)

3. [3] Malthus, Principles of Political Economy, second edition, London, 1836, pages 267, 268.

4. [4] "Capital: that which is expended with a view to profit." Malthus, Definitions in Political Economy. London, 1827, page 86.

5. [5] Compare volume I, chapter XVII, I.

6. [6] R. Torrens, An Essay on the Production of Wealth. London, 1821, pages 51-53, and 70-71.

7. [7] Malthus, Definitions in Political Economy. London, 1853, pages 70, 71.

8. [8] "The masses of value and surplus-value produced by different capitals—the value of labor-power being given and its degree of exploitation being equal—vary directly as the amounts of the variable constituents of these capitals, i.e., as their constituents transformed into living labor-power." (Volume I, Chapter IX.)

Part I, Chapter III.

9. [9] The manuscript has the following note at this point: "Investigate later in what manner this case is connected with ground-rent."

10. [10] The manuscript contains also very detailed calculations of the difference between the rate of surplus-value and the rate of profit (s'—p'); these show very interesting peculiarities and their movement indicates the cases in which the two rates draw apart or approach one another. These movements may be represented by curves. I do not reproduce this material, because it is of less importance for the immediate purposes of this work. It is enough to call the attention of those readers to this fact who wish to follow up this line of inquiry.—F. E.

Part I, Chapter V.

11. [11] Since in all factories a very large amount of fixed capital is invested in buildings and machinery, the gains will be so much larger the greater the number of hours during which this machinery can be kept employed." (Reports of Factory Inspectors, October 31, 1858, p. 8.)

12. [12] See Ure on the progress in factory construction.

Part I, Chapter VI.

13. [13] The Factory Question and the Ten Hours Bill. By R. H. Greg. London, 1837, page 115.

14. [14] The report makes a mistake in the last sentence. Instead of 6d. for loss, through waste, only 3d. should be allowed. This loss amounts indeed to 25% with Indian, but only to 12½ to 15% with American cotton, and this last kind is meant, the same percentage being correctly stated for the price of 5 to 6d. It is true, however, that the percentage of waste increased at times considerably, for American cotton brought to Europe during the closing years of the Civil War.—F. E.

15. [15] For illustrations see Babbage, among others. The usual expedient, a reduction of wages, is employed also in this instance, and so this continual depreciation works out quite contrary to the dreams of the harmonious brain of Mr. Carey.

16. [16] Since the above was written (1865), competition on the world-market has been considerably intensified by the rapid development of industry in all civilized countries, especially in America and Germany. The fact that the rapidly and enormously growing productive forces grow beyond the control of the laws of the capitalist mode of exchanging commodities, inside of which they are supposed to move, this fact impresses itself nowadays more and more even on the minds of the capitalists. This is shown especially by two symptoms. First, by the new and general mania for a protective tariff, which differs from the old protectionism especially by the fact that now the articles which are capable of being exported are the best protected. In the second place it is shown by the trusts of manufacturers of whole spheres of production for the regulation of production, and thus of prices and profits. It goes without saying that these experiments are practicable only so long as the economic weather is relatively favorable. The first storm must upset them and prove, that, although production assuredly needs regulation, it is certainly not the capitalist class which is fitted for that task. Meanwhile the trusts have no other mission but to see to it that the little fish are swallowed by the big fish still more rapidly than before.—F. E.

17. [17] It goes without saying that we do not, with Mr. Baker, explain the wool crisis of 1857 out of the disproportion between the raw material and the product. This disproportion was itself but a symptom, and the crisis was general.—F. E.

18. [18] A careful distinction is made in England between the woollen manufacture, which spins carded yarn from short wool and weaves it (main centre Leeds), and the worsted manufacture, which makes worsted yarn from long wool and weaves it (main seat Bradford, in Yorkshire).—F. E.

19. [19] This rapid expansion of the manufacture of linen yarn by machinery, in Ireland, gave the death-blow to the exportation of the linen made of hand-made yarn in Germany (Silesia, Lusatia, and Westphalia).—F. E.

Part II, Chapter VIII.

20. [20] The above is briefly developed in the third edition of volume I, in the beginning of chapter XXV. Since the two first editions did not contain this passage, it was so much more necessary to repeat it at this place.—F. E.

21. [21] It follows from chapter IV that the above statement is correct only in the ease that the capitals of A and B are differently composed so far as their values are concerned, but that the percentages of their variable capitals are proportioned as their times of turn-over, or inversely as their numbers of turn-over. Let capital A have the following percentages of composition: 20 c fixed and 70 c circulating, a total of 90 c, so that the total capital is 90 c + 10 v, or 100. At a rate or surplus value of 100% the 10 v produce in one turn-over 10 s, making the rate of profit for one turn-over 10%. Let capital B have the composition 60 C fixed and 20c circulating, so that we have 80 c + 20 v, or 100. The 20 v produce in one turn-over, at the above rate of surplus-value, 20 s, making the rate of profit for one turn-over 20%, which is double that of A. But if A is turned over twice per year, and B only once, then 2 × 10 also make 20 per year, and the annual rate of profit is the same for both, namely 20%.—F. E.

Part II, Chapter IX.

22. [22] Cherbuliez.

23. [23] Corbett, page 174.

24. [24] Of course, we leave aside the question of the probability of securing an extra profit by cutting wages, monopoly prices, etc., at least for the moment.

25. [25] Malthus.

26. [26] Corbett

Part II, Chapter X.

27. [27] In 1865, when Marx wrote these lines, they expressed as yet merely his "view." To-day, since we have the extended researches into the nature of primitive societies made from Maurer to Morgan, these things are accepted facts which hardly anyone cares to deny.—F. E.

28. [28] Karl Marx, Critique of Political Economy, Berlin, 1859.

29. [29] Karl Marx, Critique of Political Economy, Berlin, 1859.

30. [30] The controversy between Storch and Ricardo, incidental to their discussion of ground rent (a controversy which is merely referring to the same object, while the two opponents take no notice of one another) whether the market-value (or rather what they call market-price and price of production respectively) is regulated by the commodities produced under the least favorable conditions (Ricardo), or by those produced under the most favorable circumstances (Storch), resolves itself into the fact that both are right and both wrong, and that both of them have left out of consideration the average case. Compare Corbett on the cases, in which the price is regulated by the commodities produced under the most favorable conditions.—"It is not meant to be asserted by him (Ricardo) that two particular lots of two different articles, as a hat and a pair of shoes, exchange with one another when those two particular lots were produced by equal quantities of labor. By 'commodity' we must here understand the 'description of commodity', not a particular individual hat, pair of shoes etc. The whole labor which produces all the hats in England is to be considered, for this purpose, as divided among all the hats. This seems to me not to have been expressed at first, and in the general statements of this doctrine. (Observations on some verbal disputes in Political Economy, etc. London, 1821, pages 53, 54.)

31. [31] The following sagacious statements are great nonsense: "Where the quantity of wages, capital, and land, required to produce an article, have become different from what they were, that which Adam Smith calls the natural price of it, is also different, and that price which was previously its natural price, becomes, with reference to this alteration, its market-price; because, though neither the supply, nor the quantity wanted may have changed"—both of them change here, just because the market-value, or, in the case of Adam Smith, the price of production, changes in consequence of a change of value—"that supply is not now exactly enough for those persons who are able and willing to pay what is now the cost of production, but is either greater or less than that; so that the proportion between the supply, and what is, with reference to the new cost of production, the effectual demand, is different from what it was. An alteration in the rate of supply will then take place, if there is no obstacle in the way of it, and at last bring the commodity to its new natural price. It may then seem good to some persons to say that, as the commodity gets to its natural price by an alteration in its supply, the natural price is as much owing to one proportion between the demand and supply, as the market-price is to another; and consequently, that the natural price, just as much as the market-price, depends on the proportion that demand and supply bear to each other. (The great principle of demand and supply is called into action to determine what A. Smith calls natural prices as well as market-prices, Malthus.)"—Observations on certain verbal disputes, etc., London, 1821, pages 60 and 61.—The good man does not grasp the fact that it is precisely the change in the cost of production, and thus in the value, which caused a change in the demand, in the present case, and thus in the proportion between demand and supply, and that this change in the demand may bring about a change in the supply. This would prove just the reverse of what our good thinker wants to prove. It would prove that the change in the cost of production is by no means due to the proportion of demand and supply, but rather regulates this proportion.

32. [32] "If each man of a class could never have more than a given share, or aliquot part of the gains and possessions of the whole, he would readily combine to raise the gains" (he does it as soon as the proportion of demand to supply permits it); "this is monopoly. But where each man thinks that he may any way increase the absolute amount of his own share, though by a process which lessens the whole amount, he will often do it; this is competition." An Inquiry into those Principles respecting the Nature of Demand, etc. London, page 105.

33. [33] Malthus.

Part II, Chapter XI.

34. [34] It is very peculiar that Ricardo (who naturally proceeds differently from us, since he did not understand the compensation of values to prices of production) did not even think of this eventuality, but considered only the first case, that of a rise of wages and its influence on the prices of production of commodities. And the servile herd of imitators did not even make an attempt to advance so much as to apply the practical, or even tautological, test.

Part III, Chapter XIII.

35. [35] "We should also expect that, however the rate of the profits of stock might diminish in consequence of the accumulation of capital on the land and the rise of wages, yet the aggregate amount of profits would increase. Thus, supposing that, with repeated accumulations of 100,000, the rate of profits should fall from 20 to 19, to 18, to 17%, a constantly diminishing rate; we should expect that the whole amount of profits received by those successive owners of capital would be always progressive; that it would be greater when the capital was 200,000, than when 100,000; still greater when 300,000,; and so on, increasing, though at a diminishing rate, with every increase of capital. This progression, however, is only true for a certain time; thus 19% on 200,000 is more than 20 on 100,000; again 18% on 300,000, is more than 19% on 200,000; but after capital has accumulated to a large amount, and profits have fallen, the further accumulation diminishes the aggregate of profits. Thus, suppose the accumulation should be 1,000,000, and the profits 7%, the whole amount of profits will be 70,000; now if an addition of 100,000 capital be made to the million, and profits should fall to 6%, 66,000 or a diminution of 4,000 will be received by the owners of the stock, although the whole amount of stock will be increased from 1,000,000 to 1,100,000,"—Ricardo, Political Economy, chapter VII (in Works, McCulloch Edition, 1852, page 68).—The fact is, that the assumption has here been made that the capital increases from 1,000,000 to 1,100,000, that is, by 10%, while the rate of profit falls from 7 to 6%, or 14 2/7%. Hence those tears!

Part III, Chapter XIV.

36. [36] Adam Smith was right in this respect, contrary to Ricardo, who said: "They contend the equality of profits will be brought about by the general rise of profits; and I am of opinion that the profits of the favoured trade will speedily submit to the general level. (Works, MacCulloch ed., p. 73.)

Part III, Chapter XV.

37. [37] The foregoing is placed between brackets, because it passes in some points beyond the scope of the original material, which I found in a note of the original manuscript, a revision of which I undertook.

Part IV, Chapter XVI.

38. [38] In order to be able to classify merchant's capital as a productive capital, Ramsay confounds it with the transportation industry and calls commerce "the transport of commodities from one place to another." (An Essay on the Distribution of Wealth, p. 19.) The same mistake was committed by Verri in his Meditazionisull' Economia Politica, § 4, and by Say in his Traite d'Economie Politique, I, 14, 15. In his Elements of Political Economy, J. P. Newman says: "In the existing economical arrangements of society, the very act which is performed by the merchant of standing between the producer and the consumer, advancing to the former capital and receiving products in return, and handing over these products to the latter, receiving back capital in return, is a transaction which both facilitates the economical process of the community, and adds value to the products in relation to which it is performed (P. 174)." The producer and the consumer thus save time and money through the intervention of the merchant. This service requires an advance of capital and labor, and must be rewarded, "since it adds value to the products, for the same products, in the hands of the consumers, are worth more than in the hands of the producers." And so commerce appears to him, as it does to Mr. Say, as "strictly an act of production" (P. 175). This view of Newman is fundamentally wrong. The use-value of a commodity is greater in the hands of the consumer than in those of the producer, because it is realised by the consumer. For the use-value of a commodity does not serve its end until this commodity enters the sphere of consumption. So long as it is in the hands of the producer, it exists only potentially. But one does not pay twice for a commodity, one does not pay first for its exchange value, and then an extra price for its use-value. By paying for its exchange-value, I appropriate its use-value. And its exchange value is not in the least increased by transferring it from the hand of the producer or middleman to that of the consumer.

Part IV, Chapter XVII.

39. [39] John Bellers.

40. [40] How well this prognosis of the fate of the commercial proletariat, written in 1865, has stood the test can be corroborated by hundreds of German clerks, who, trained in all commercial operations and acquainted with three or four languages, in vain offer their services in London City at 25 shillings per week, far below the wages of a good machine maker. A blank of two pages in the manuscript indicates, that this point was to be further elaborated. For the rest, we refer the reader to volume II, chapter VI (The Expenses of Circulation), where various things belonging under this head have already been discussed.—F. E.

Part IV, Chapter XVIII.

41. [41] "Profit, on the general principle, is always the same, whatever be price; keeping its place like an incumbent body on the swelling or sinking trade. As, therefore, prices rise, a tradesman raises prices; as prices fall, a tradesman lowers price." (Corbet, An Inquiry into the Causes, etc., of the Wealth of Individuals. London, 1845, p. 15.) Here, as in the text of our work generally, we speak only of ordinary commerce, not of speculation. The analysis of speculation, as well as everything else pertaining to the division of mercantile capital, falls outside of the circle of our inquiry. "The profit of trade is a value added to capital which is independent of price, the second (speculation) is founded on the variation in the value of capital or in price itself." (L. c., p. 12.)

42. [42] It is a very naive, but also very correct remark that "Surely the fact that one and the same commodity may be had from different sellers at considerably different prices is frequently due to mistakes of calculation." (Feller and Oldermann, Das Ganze der kaufmannischen of Arithmetik, 7. Aufl., 1859.) This shows how purely theoretical, that is abstract, the determination of prices becomes.

Part IV, Chapter XIX.

43. [43] Critique of Political Economy, p. 53.

44. [44] "The great differences of coins themselves, as concerns their grain, and their coinage by many privileged princes and towns, necessitated the establishment of a business, which should enable merchants to use local money wherever any compensation between different coins was necessary. In order to be able to make cash payments, merchants who traveled to a foreign market provided themselves with uncoined pure silver, or perhaps with gold. In the same way they exchanged the money received by them in local markets for uncoined silver or gold, when they prepared to return home. The business of exchanging money, the exchange of uncoined precious metals for local coins, and vice versa, thus became a widespread and paying business." (Hullmann, Stadtewesen des Mittclalters. Bonn, 1826-29, I, p. 437.) "Banks of exchange do not owe their name to the fact that they issue bills of exchange,...but to the fact that they used to exchange coins. Long before the establishment of the Amsterdam Bank of Exchange in 1609, there existed in the Dutch merchant towns money changers and exchange houses, even exchange banks....The business of these money changers consisted in exchanging the numerous varieties of coin, that were brought into the country by foreign traders, for the current coin of the realm. Gradually their circle of activity extended....They became the bankers and cashiers of modern times. But the government of Amsterdam saw a danger in the combination of the cashier business with the exchange business, and in order to meet this danger, it was resolved to establish a large institution, which should be able to perform both the cashier and the exchange operations. This institution was the famous Amsterdam Bank of Exchange of 1609. In like manner, the exchange banks of Venice, Genoa, Stockholm, Hamburg, owe their origin to the continual necessity of changing money. Of all these, the Hamburg Exchange is the only one that is still doing business, because the need of such an institution is still felt in that merchants' town, which has no Mint of its own. Etc." (S. Vissering, Handboek van Praktische Staathuishoudkunde. Amsterdam, 1860, I, 247.)

45. [45] "The institution of cashiers has probably nowhere preserved its original and independent character so pure as in the Dutch merchant towns (see on the origin of the cashier business in Amsterdam, E. Lusac, Hollands Rykdom, part III). Its functions partly coincide with those of the old Amsterdam Bank of Exchange. The cashier receives from the merchants, who employ his services, a certain amount of money, for which he opens a 'credit' for them in his books. Furthermore they send him their due bills, which he collects for them and credits to their account. On the other hand, he makes payments on their notes (Kassiers brieffes) and charges their accounts with their current bills. He charges a small provision for these credits and debits, which yields him a corresponding remuneration for his labor only by the amount of business, which he can turn over between them. If payments are to be balanced between two merchants, who both deal with the same cashier, then such payments are simply settled by booking them mutually, while the cashiers balance their mutual claims from day to day. The cashier's business, then, consists at bottom of this promotion of payments. Therefore it excludes industrial enterprises, speculations, and the opening of blank credits; for it must be a rule in this business that the cashier makes no payment to any one keeping an account with him above his credit." (Vissering, l. c., p. 134.) On the banking associations of Venice: "The requirements and locality of Venice, where the carrying of cash is more inconvenient than in other places, induced the large merchants of that town to found banking associations under due safeguards, supervision, and management. The members of such an association deposited certain sums, on which they drew checks for their creditors, whereupon the paid sum was deducted on the page of the debtor in the book kept for that purpose and added to the sum, which was credited in the same book to the creditor. This is the first beginning of the socalled giro banks. These associations are indeed old. But if they are attributed to the 12th century, they are confounded with the State Loan Institute, which was established in 1171." (Hüllmann, l. c. 550.)

Part IV, Chapter XX.

46. [46] Smart Mr. Roscher has figured out that, since certain people designate trade as a mediation between producers and consumers, "one" might just as well designate production itself as a mediation of consumption (between whom?), and this implies, of course, that the merchants' capital is as much a part of the productive capital as agricultural and industrial capital. In other words, because I can say, that man can mediate his consumption only by means of production (and he has to do this even without getting his education at Leipsic), or that labor is required for the appropriation of the products of nature (which might be called a mediation), it follows, that a mediation arising from a specific form of production—a real mediation—has the same absolute character and rank of a necessity. The word mediation settles everything. Moreover, the merchants are not mediators between producers and consumers (leaving out of consideration consumers which do not produce), but mediators of the exchange of products of producers among themselves. They are but middle men in an exchange, which in a thousand cases takes place without them.

47. [47] Mr. W. Kiesselbach (in his "Der Gang des Welthandels im Mittelalter," 1860) is indeed still living in the conceptions of a world, in which the merchants' capital is the general form of capital. He has not the least inkling of the modern meaning of capital, any more than Mommsen has, when he speaks in his history of Rome of "capital" and "the rule of capital." In modern English history, the commercial estate proper and the merchant towns are also political reactionaries and in league with the landed and financial aristocracy against industrial capital. Compare, for instance, the political role of Liverpool as against Manchester and Birmingham. The complete rule of industrial capital was not acknowledged by English merchants' capital and moneyed interests until after the abolition of the duties on corn, etc.

48. [48] The inhabitants of merchant towns imported refined manufactured goods and expensive articles of luxury from rich countries, and thus offered incentives to the vanity of the large landowners, who eagerly bought these goods and paid large quantities of raw materials from their lands for them. Thus the commerce of a large part of Europe during this period consisted in an exchange of the raw materials of one country for the manufactured products of some industrially developed country. As soon as this taste became general and created a considerable demand, the merchants, in order to save the expenses of freight, began to establish similar manufactures in their own countries. (Adam Smith, Book III, chapter III.)

49. [49] "Now there is among merchants much complaint about the nobles or robbers, because they must trade under great danger and run the risk of being kidnapped, beaten, blackmailed, and robbed. If they suffered these things for the sake of justice, the merchants would be saintly people...But since such great wrong and unchristian thievery and robbery are committed all over the world by merchants, and even among themselves, is it any wonder that God should procure that such great wealth, gained by wrong, should again be lost or stolen, and they themselves hit over their heads or made prisoners?...And the princes should punish such unjust bargains with due rigor and take care that their subjects shall not be so outrageously abused by merchants. Because they don't do so, God employs knights and robbers, and punishes through them the merchants for the wrongs committed, and uses them as his devils, just as he plagues Egypt and all the world with devils, or persecutes with enemies. In the same way he beats one boy through another, without thereby insinuating that knights are any the less robbers than merchants, although the merchants daily rob the whole world, while a knight may rob one or two once or twice in a year." "Go by the word of Esau: Thy princes have become the companions of robbers. For they hang the thieves, who have stolen a gulden or a half gulden, but they associate with those, who rob all the world and steal with greater assurance than all others, that the proverb may remain true: Great thieves hang little thieves; and as the Roman senator Cato said: Mean thieves lie in prisons and stocks, but public thieves are clothed in gold and silks. But what will God say finally? He will do as he said to Ezekiel, he will amalgamate princes and merchants, one thief with another, like lead and iron, as when a city burns down, leaving neither princes nor merchants." (Martin Luther, Bücher vom Kaufhandel und Wucher. Vom Jahr, 1527.)

50. [50] How overweening fishing, manufacture, and agriculture were as a basis in the development of Holland, aside from other circumstances, has already been explained by writers of the 18th century, for instance, by Massic. In contradistinction to the former view, which underrated the volume and importance of the commerce of Asia, of antiquity, and of the Middle Ages, it has now become the custom to overestimate it extraordinarily. The best remedy against this conception is a study of the imports and exports of England in the beginning of the 18th century and their comparison with modern imports and exports. And yet this 18th century commerce was incomparably greater than that of any former trading nation. (See Anderson, History of Commerce.)

51. [51] If any nation's history, then it is the history of the English management of India which is a string of unsuccessful and really absurd (and in practice infamous) experiments in economics. In Bengal they created a caricature of English landed property on a large scale; in southeastern India a caricature of small allotment property; in the Northwest they transformed to the utmost of their ability the Indian commune with common ownership of the soil into a caricature of itself.

52. [52] Since Russia has begun making frantic exertions to develop its own capitalist production, which is exclusively dependent upon its home market and the neighboring Asiatic states, this is also gradually changing.—F. E.

53. [53] The same is true of the ribbon and basting makers and silk weavers in the Rhine districts. Near Crefeld even a railroad has been built for the intercourse of these rural hand weavers with the "manufacturer" in the city, but has later been tied up, together with the handloom weavers themselves, by the mechanical weaving industry.—F. E.

54. [54] This system has been developed since 1865 on a still larger scale. Details concerning it are contained in the First Report of the Select Committee of the House of Lords on the Sweating System, London, 1888.—F. E.

Part V, Chapter XXI.

55. [55] At this place, some passages should be quoted, in which the economists conceive the matter in this way. "You (the Bank of England) are very large dealers in the commodity capital?" is a question presented to a director of this bank on the witness stand. (See Report on Bank Acts, H. of C., 1857.)

56. [56] "That a man, who borrows money with the intention of making a profit on it, should give a portion of the profit to the lender, is a self-understood principle of natural justice." (Gilbart, The History and Principles of Banking, London, 1834, p. 163.)

57. [57] "A house," "money," etc., are not to be loaned as "capital," if Proudhon can have his way, but to be sold as " cost-price" (page 44). Luther stood somewhat higher than Proudhon. He knew at least that the making of profits does not depend on the manner of lending or buying: "They turn buying also into usury. But this is really too much for one bite. We must first confine ourselves to one thing, usury in lending, and after we shall have stopped that (after judgment day), we will not fail to preach against usury in buying." (Martin Luther. An die Pfarherrn wider den Wucher zu predigen, Wittenberg, 1525.)

58. [58] The equitableness of taking interest depends not upon a man's making or not making profit, but upon its being capable of producing profit, if rightly employed. (An Essay on the Governing Causes of the Natural Rate of Interest, wherein the sentiments of Sir W. Petty and Mr. Locke, on that head, are considered. London, 1750. P. 49.) The author of this anonymous work is J. Massie.

59. [59] Rich people, instead of employing their money themselves...let it out to other people for them to make profit of, reserving for the owners a proportion of the profits so made. (L. c., p. 23.)

60. [60] "The expression 'value' applied to currency has three meanings...secondly, currency actually in hand, compared with the same amount of currency, which will come in at some later day. Then its value is measured by the rate of interest, and the rate of interest determined by the ratio between the amount of loanable capital and the demand for it." (Colonel R. Torrens: On the Operation of the Bank Charter Act of 1844, etc., 2nd. ed., 1847.)

61. [61] "The ambiguity of the term 'value of money' or 'of the currency,' when employed indiscriminately as it is, to signify both value in exchange for commodities and value in use of capital, is a constant source of confusion." (Tooke: Inquiry into the Currency Principle, p. 77.) The main confusion (implied by the question itself) that value as such (interest) should be considered as the use-value of capital, has escaped Tooke.

Part V, Chapter XXII.

62. [62] "The natural rate of interest is governed by the profits of trade to particulars." (Massie, l. c., p. 51.)

63. [63] At this place the manuscript contains the following statement: "The course of this chapter shows, that it is preferable, before analysing the laws of the distribution of profits, to ascertain first the way in which the division of quantities becomes one of quality. In order to make a transition to this end from the preceding chapter, nothing is needed but the provisional assumption, that interest is a certain indefinite portion of the profit.

64. [64] "In the first period, immediately after a time of depression, money is plentiful without any speculation; in the second period money is plentiful and speculation flourishing; in the third period speculation begins to let up and money is in demand; in the fourth period money is scarce and the depression starts in." (Gilbart, l. c., p. 144.)

65. [65] Tooke explains this by "the accumulation of surplus capital necessarily accompanying the scarcity of profitable employment for it in previous years, by the release of hoards, and by the revival of confidence in commercial prospects." (History of Prices from 1839 till 1847. London, 1848, p. 54.)

66. [66] "An old customer of a banker was refused a loan upon a 200,000 pounds sterling bond; when about to leave to make known his suspension of payment, he was told there was no necessity for the step, under the circumstances the banker would buy the bond at 150,000 pounds sterling." (The Theory of the Exchanges. The Bank Charter Act of 1844, etc. London, 1869, p. 80.)

67. [67] Since the rate of interest is on the whole determined by the average rate of profit, extraordinary swindling may often go hand in hand with a low rate of interest. Instance the railroad swindle in the summer of 1844. The rate of interest of the Bank of England was not raised to 3% until October 16th, 1844.

68. [68] For instance, J. G. Opdyke, in his "Treatise on Political Economy" (New York, 1851) makes a very unsuccessful attempt to explain the general extension of a rate of interest of 5% by eternal laws. Still more naively proceeds Mr. Karl Arnd in "Die naturgemässe Volkswirthschaft gegenüber dem Monopoliengeist und dem Kommunismus, etc., Hanau, 1845." There we may read: "In the natural course of the production of goods there is only one phenomenon, which, in the fully settled countries, seems to be destined to regulate in some measure the rate of interest; this is the proportion, in which the quantities of wood of the European forests increase through their annual new growth. This new growth takes place, quite independently of their exchange value, at the rate of 3 or 4 to 100." (How queer that the trees should arrange for their new growth independently of their exchange value!) "According to this a fall of the rate of interest below its present level in the richest countries cannot be expected." Page 124. (He means, because the new growth of the trees is independent of their exchange value, even though their exchange value may depend on their new growth.) This deserves to be called "the primordial rate of forest interest." Its discoverer has made further meritorious contributions in this work to "our science" as the "philosopher of the dog tax."

69. [69] The Bank of England raises and lowers the rate of its discount, always, of course, with due consideration of the rate prevailing in the open market, according to the imports and exports of gold. "By which gambling in discounts, by anticipation of the alterations in the bank rate, has now become half the trade of the great heads of the money centre"—that is, of the London money market. (The Theory of the Exchanges, etc., p. 113.)

70. [70] "'The price of commodities fluctuates' continually; they are all made for different uses; the money serves for all purposes. The commodities, even those of the same kind, differ according to quality; cash money is always of the same value, or at least is assumed to be so. Thus it happens that the price of money, which we designate by the term interest, has a greater stability and uniformity than that of any other thing." (J. Steuart, Principles of Political Economy, French translation, 1789, IV, p. 27.)

71. [71] "This rule of dividing profits is not, however, to be applied particularly to every lender and borrower, but to lenders and borrowers in general...remarkably great and small gains are the reward of skill and the want of understanding, which lenders have nothing at all to do with; for as they will not suffer by the one, they ought not to benefit by the other. What has been said of particular men in the same business is applicable to particular sorts of business; if the merchants and tradesmen employed in any one branch of trade get more by what they borrow than the common profits made by other merchants and tradesmen of the same country, the extraordinary gain is theirs, though it required only common skill and understanding to get it; and not the lenders,' who supplied them with money...for the lenders would not have lent their money to carry on any business or trade upon lower terms than would admit of paying so much as the common rate of interest; and therefore they ought not to receive more than that, whatever advantage may be made by their money." (Massie, 1. c., p. 50, 51.)

72. [72] [Bank rate 5%. Market rate of discount 60 days' drafts, 5 3/8%. The same for 3 months' drafts 3½%. The same for 6 months' drafts 3 5/16%. Loans to bill brokers, day to day, 1 to 2%. The same for one week 3%. Last rate for fortnightly loans to stockholders 4¾ to 5%. Deposit allowance (banks) 3½%. The same (discount houses) 3 to 3¼%. How large this difference may be for one and the same day is shown by the preceding figures of the rate of interest of the London money market on December 9th, 1889, taken from the city article of the Daily News of December 10th. The minimum is 1%, the maximum 5%. F. E.]

Part V, Chapter XXIII.

73. [73] "The profits of enterprise depend upon the net profits of capital, not the latter upon the former." (Ramsay, l. c., p. 214. Net profits with Ramsay always mean interest.)

74. [74] "Superintendence is here (in the case of the farm owner) completely dispensed with." (J. E. Cairnes, The Slave Power, London, 1862, p. 48.)

75. [75] "If the nature of the work requires that the workmen (namely the slaves) should be dispersed over an extended area, the number of overseers, and, therefore, the cost of the labor which requires this supervision, will be proportionately increased." (Cairnes, l. c., p. 44.)

76. [76] A. Ure, Philosophy of Manufactures, French translation, 1836, I, p. 68, where this Pindarus of the manufacturers at the same time testifies that most of the manufacturers have not the slightest understanding of the mechanism, which they set in motion.

77. [77] In one case known to me, after the crisis of 1868, a bankrupt manufacturer became the paid wage-laborer of his own former employes. This factory was operated after the bankruptcy of its owner by a laborers' co-operative, and its former owner was employed as manager.—F. E.

78. [78] The accounts quoted here go no farther than 1864, since the above was written in 1865.—F. E.

79. [79] "Masters are laborers as well as their journeymen. In this character their interest is precisely the same as of their men. But they are also either capitalists, or the agents of capitalists, and in this respect their interest is decidedly opposed to the interest of the workmen." (P. 27.) "The wide spread of education among the journeymen mechanics of this country diminishes daily the value of the labor and skill of almost all masters and employers by increasing the number of persons who possess their peculiar knowledge." (P. 30, Hodgskin, Labor defended against the Claims of Capital, etc., London, 1825.)

80. [80] "The general relaxation of conventional barriers, the increased facilities of education tend to bring down the wages of skilled labor instead of raising those of the unskilled." (J. St. Mill, Principles of Political Economy, 2nd ed., London, 1849, I, p. 463.)

Part V, Chapter XXIV.

81. [81] Richard Price, An Appeal to the Public on the subject of the National Debt, 2nd ed., London, 1772. He cracks the naive joke: "A man must borrow money at simple interest, in order to increase it at compound interest." (R. Hamilton, An Inquiry into the Rise and Progress of the National Debt of Great Britain, 2nd ed., Edinburgh, 1814.) According to this, borrowing would be the safest means for private people to gather wealth. But if I borrow 100 pounds sterling at 5% annual interest, I have to pay 5 pounds at the end of the year, and even if the loan lasts for 100 million years, I have meanwhile only 100 pounds to loan every year and 5 pounds to pay every year. I can never manage by this process to loan 105 pounds sterling when borrowing 100 pounds sterling. And how am I going to pay the 5 pounds? By new loans, or, if it is the state, by new taxes. Now, if the industrial capitalist borrows money, and his profit amounts to 15%, he may pay 5% interest, spend 5% for his private expenses (although his appetite grows with his income), and capitalise 5%. In this case, 15% are the premise on which 5% interest may be paid continually. If this process continues, the rate of profit, for the reasons indicated in former chapters, will fall from 15% to, say, 10%. But Price forgets wholly that the interest of 5% pre-supposes a rate of profit of 15%, and assumes it to continue with the accumulation of capital. He does not take note of the process of accumulation at all, but thinks only of the loaning of money and its return with compound interest. How that is accomplished is immaterial to him, since for him it is the innate faculty of interest-bearing capital.

82. [82] See Mill and Carey, and Roscher's mistaken commentary on them.

83. [83] "It is clear, that no labor, no productive power, no ingenuity, and no art, can answer the overwhelming demands of compound interest. But all saving is made from the revenue of the capitalist, so that actually these demands are constantly made and as constantly the productive power of labor refuses to satisfy them. A sort of balance is, therefore, constantly struck." (Labour defended against the Claims of Capital, p. 23. By Hodgskin.)

Part V, Chapter XXVI.

84. [84] In other words, formerly the dividend was first determined and then the income tax deducted on payment of the dividend to the individual stockholder; but after 1844 the income tax was first paid out of the total profit of the bank, and then the dividend paid "free of income tax." The same nominal percentages are therefore higher in the latter case by the amount of the tax.—F. E.

85. [85] Further remarks on Overstone's confusion of terms in the matter of capital will be found at the close of chapter XXXII.

Part V, Chapter XXVII.

86. [86] The average circulation of notes of the Bank of France was 106,538,000 francs in 1812 and 101,205,000 francs in 1818; while the circulation of money, the total amount of all receipts and payments, was 2,837,712,000 francs in 1812 and 9,665,030,000 francs in 1818. The activity of the circulation in France in 1818 compared to that of 1812 was therefore, as 3 to 1. The great regulator of the velocity of the circulation is credit...This explains, why a heavy pressure on the money-market generally coincides with a full circulation." (The Currency Question Reviewed, etc., p. 165.) "Between September, 1833, and September, 1843, nearly 300 banks were established in Great Britain, which issued their own notes, the consequence was a restriction of the circulation of notes by two and a half millions, it was 36,035,244 pounds sterling at the end of September, 1833, and 33,518,544 pounds sterling at the end of September, 1843." (L. c., p. 53.) "The wonderful activity of the Scotch circulation enables it to transact with 100 pounds sterling the same amount of business, which requires 420 pounds sterling in England." (L. c., p. 55. This last statement refers only to the technical side of the operation.)

87. [87] "Before the establishment of banks the amount of capital required for the function of the circulating medium was always greater than the actual circulation of commodities demanded." Economist, 1845, p. 238.

88. [88] See for instance, in the Times the list of business failures of a critical year like 1857, and compare the private property of the bankrupts with the amount of their debts. "In truth the purchasing power of people, who have capital and credit, exceeds by far anything conceivable by those who have no practical acquaintance with speculative markets." (Tooke, Inquiry into the Currency Principle, p. 73.) "A man who has the reputation of having enough capital for his regular business, and who enjoys good credit in his line, if he has sanguine ideas concerning the rising constellation of the articles carried by him, and if he is lucky in the beginning and course of his speculation, may make purchases of a truly enormous extent compared to his capital" (Ibidem, p. 136). "The manufacturers, merchants, etc., all carry on transactions which exceed their capital by far...Capital is to-day rather the basis, on which a good credit is built up, than the limit of the transaction of any commercial business." (Economist, 1847, p. 333.)

89. [89] Th. Chalmers.

Part V, Chapter XXVIII.

90. [90] The business of bankers, setting aside the issue of promissory notes payable on demand, may be decided into two branches, corresponding with the distinction pointed out by Dr. (Adam) Smith of the transactions between dealers and dealers, and between dealers and consumers. One branch of the bankers' business is to collect capital from those who have no immediate employment for it, and to distribute or transfer it to those who have. The other branch is to receive deposits of the incomes of their customers, and to pay out the amount, as it is wanted for expenditure by the latter in the objects of their consumption....the former being a circulation of capital, the latter of currency." Tooke, Inquiry into the Currency Principle, p. 36. The former is "the concentration of capital on the one hand and the distribution of it on the other," the latter is "administering the circulation for local purposes of the district." Ibidem, p. 37. The correct conception is far more approached in the following passage from Kinnear: "Money is used to accomplish two essentially different operations. As a medium of exchange between dealer and dealer it is the instrument, by which transfers of capital are accomplished; that is, the exchange of a certain amount of capital in money for an equal amount of capital in commodities. But money expended in the payment of wages and in the purchase and sale between dealer and consumer is not capital, but revenue; that portion of the revenue of the community, which is used for daily expenditures. This money circulates continually in daily use, and it is this alone, which is strictly called currency. Advances of capital depend exclusively on the will of the bank or other capitalists, for there are always borrowers to be found; but the amount of currency depends on the needs of the community, within which the money circulates for the purpose of daily expenditure." (J. G. Kinnear, The Crisis and Currency. London, 1847.)

91. [91] "It is a great error, indeed, to imagine that the demand for pecuniary accommodation (i.e. for the loan of capital) is identical with a demand for additional means of circulation, or even that the two are frequently associated. Each demand originates in circumstances peculiarly affecting itself, and very distinct from one another. It is when everything looks prosperous, when wages are high, prices on the rise, and factories busy, that an additional supply of currency is usually required to perform the additional functions inseparable from the necessity of making larger and more numerous payments: whereas it is chiefly in a more advanced stage of the commercial cycle, when difficulties begin to present themselves, when markets are overstocked, and returns delayed, that interest rises, and a pressure comes upon the Bank for advances of capital. It is true that there is no medium through which the Bank is accustomed to advance capital except that of promissory notes; and that, to refuse the notes, therefore, is to refuse the accommodation. But the accommodation once granted, everything adjusts itself in conformity with the necessities of the market; the loan remains, and the currency, if not wanted, finds its way back to the issuer. Accordingly, a very slight examination of the Parliamentary Returns may convince any one, that the securities in the hand of the Bank of England fluctuate more frequently in an opposite direction to its circulation than in concert with it, and the example, therefore, of that great establishment furnishes no exception to the doctrine so strongly pressed by the country bankers, to the effect that no bank can enlarge its circulation, if that circulation be already adequate to the purposes to which a banknote currency is commonly applied; but that every addition to its advances, after that limit is passed, must be made from its capital, and supplied by the sale of some of its securities in reserve, or by abstinence from further investment of such securities. The table compiled from the Parliamentary Returns for the interval between 1833 and 1840, to which I have referred in a preceding page, furnishes continued examples of this truth; but two of these are so remarkable that it will be quite unnecessary for me to go beyond them. On the third of January, 1837, when the resources of the Bank were strained to the uttermost to sustain credit and meet the difficulties of the money-market, we find its advances on loan and discount carried to the enormous sum of 17,022,000 pounds sterling, an amount scarcely known since the war, and almost equal to the entire aggregate issues which, in the meanwhile, remain unmoved at so low a point as 17,076,000 pounds sterling! On the other hand, we have, on the fourth of June, 1833, a circulation of 18,892,000 pounds sterling, with a return of private securities in hand, nearly, if not the very lowest on record for the last half-century, amounting to no more than 972,000 pounds sterling!" (Fullarton, l. c., pages 97 and 98.) That a demand for pecuniary accommodation need not be identical by any means with a demand for gold (what Wilson, Tooke and others call capital) may be seen by the following testimony of Mr. Weguelin, Governor of the Bank of England): "The discounting of bills to this amount" (one million per day for three successive days) "would not reduce the reserve" (of banknotes), unless the public should demand a greater amount of active circulation. The notes issued in the discounting of bills would flow back by way of banks and by means of deposits. Unless such transactions have for their purpose the export of gold, or unless a panic reigns in the inland market, of such character as to cause the public to hold on to the notes instead of depositing them in the banks, the reserve would not be touched by such tremendous transactions. "The Bank can discount one and a half millions daily, and this takes place continually, without touching its reserve in the least. The notes come back as deposits, and the only change that takes place is the mere transfer from one account to the other." (Report on Bank Acts, 1857.) Evidence No. 241,500. The notes serve here merely as means of transferring credit accounts

92. [92] The passage following here is unintelligible in the original in this connection, and it has been worked over by the editor and inclosed in brackets. In another connection this point has already been touched upon in chapter XXVI.—F. E.

Part V, Chapter XXIX.

93. [93] "The laborer has a value as capital, which is found by considering the money-value of his annual wages as income from interest...By capitalising the average daily wages at 4% we find the average value of an agricultural laborer of the male sex to be: German Austria, 1500 Thalers; Prussia, 1500; England, 3750; France, 2000; Interior Russia, 750 Thalers." Von Reden, Vergleichende Kulturstatistik. Berlin, 1848, p. 134.

94. [94] [Immediately after the February Revolution, when commodities and securities were extremely depreciated and utterly unsaleable, a Swiss merchant in Liverpool, Mr. R. Zwilchenbart—who told my father about it—cashed all his belongings traveled with his cash to Paris and went to Rothschild, offering to do a joint business with him. Rothschild looked at him fixedly, rushed towards him, caught both his shoulders in his hands and asked: "Have you money in your possession?" "Yes, Baron." "Then you are my man." And both of them made a great haul.—F. E.]

95. [95] [This duplication and triplication of capital has developed considerably further in recent years, for instance through financial trusts, which already occupy a column of their own in the London bank reports. A society is organised for the purchase of a certain class of interest-bearing papers, say, of foreign government bonds, English municipal or American public bonds, railroad stocks, etc. The capital, for instance, 2 million pounds sterling, is secured by stock subscriptions. The Board of Directors buys the desired values up, or speculates more or less actively in them, and distributes the annual amounts of interest as dividends among the stockholders, after deducting the expenses. Furthermore, some stock companies have adopted the custom of dividing the ordinary shares into two classes, preferred and deferred. The preferred receive a fixed rate of interest, say 5%, provided that the total profit permits it; if there is anything left after that, the deferred get it. In this way the "solid" investment of capital is more or less separated by preferred shares from the speculation with the deferred shares. Since a few large enterprises have been unwilling to adopt this new mode, the expedient has been resorted to of organising new companies, that invest one or several millions of pounds sterling in shares of the first company and then issue new shares to the amount of the nominal value of the first shares, but make half of them preferred and the other half deferred. In this case the original shares are doubled, by serving as a basis for a new issue of shares.—F. E.]

96. [96] To what extent this has since increased is proved by the following official tabulation of the bank reserves of the fifteen largest London banks in November, 1892, taken from the Daily News of December 15, 1892:

City... £9,317,629 £746,551 8.01
Capital and Counties... 11,392,744 1,307,483 11.47
Imperial... 3,987,400 447,157 11.21
Lloyds... 23,800,937 2,966,806 12.46
London & Westminster... 24,671,559 3,818,885 15.50
London & S. Western... 5,570,268 812,353 13.58
London Joint Stock... 12,127,993 1,288,977 10.62
London & Midland... 8,814,499 1,127,280 12.79
London & County... 37,111,035 3,600,374 9.70
National... 11,163,829 1,426,225 12.77
National Provincial... 41,907,384 4,614,780 11.01
Parrs & the Alliance... 12,794,489 1,532,707 11.93
Prescott & Co... 4,041,058 538,517 13.07
Union of London... 15,502,618 2,300,084 14.84
Williams, Deacon & Manchester, etc. 10,452,381 1,317,628 12.60
  Total... £232,655,823 £27,845,807 11.97

Of this sum of almost 28 millions of reserve, at least 25 millions are deposited in the Bank of England, and at most 3 millions of cash in the strongboxes of the 15 banks themselves. But the cash reserve of the banking department of the Bank of England never exceeded 16 millions during that same November of 1892.—F. E.]

97. [97] The suspension of the Bank Acts of 1844 permitted to the Bank to issue any quantity of bank notes regardless of any backing by the gold reserve in its possession; to create, in this way, an arbitrary quantity of fictitious money-capital made of paper, and use it for the purpose of making loans to banks, exchange brokers, and through them to commerce.

Part V, Chapter XXX.

98. [98] The public funds are nothing else but an imaginary capital, which represents that portion of the annual revenue, which is set aside to pay the debt. A capital of the same amount has been spent; it is this which serves as a denominator for the loan, but it is not this which is represented by the public funds; for this capital does not exist any longer. However, new wealth must be created by the work of industry; a portion of this wealth is annually set aside in advance for those, who have loaned that wealth, which has been spent; this portion is taken by means of taxes from those who produce it, and is given to the creditors of the state, and, according to the customary proportion between capital and interest in this country, an imaginary capital is assumed of the same magnitude as that which could give rise to the annual income which these creditors are to receive. Sismondi, Nouveaux Principles, II, p. 230.

99. [99] A portion of accumulated loanable money-capital is indeed merely an expression of the industrial capital. For instance, when England, in 1857, had invested 80 million pounds sterling in American railroads and other enterprises, this investment was transacted almost throughout by the export of English commodities for which the Americans did not have to make payment in return. The English exporter drew bills of exchange for these commodities on America, the English stock subscribers bought these bills and used them to pay the amount of their stock subscriptions to America.

100. [100] [I have already stated in another place, that a change has taken place in the character of commercial crises since the last great universal one. The acute form of the periodical process, with its former decennial cycle, seems to have given way to a more chronic, long drawn, alternation between a relatively short and slight business improvement and a relatively long, undecided, depression, both of them differently distributed over the various industrial countries. But perhaps it is merely a matter of a prolongation of the duration of the cycle. In the childhood of world commerce, 1815-1847, it can be shown that a crisis occurred about every fifth year; from 1847-1867 the cycle is decidedly decennial; is it possible, that we are now in the preparatory stage of a new world crash of unparalleled vehemence? Many things seem to indicate this. Since the last great universal crisis of 1867 many profound changes have taken place. The colossal extension of the means of transportation and communication—seagoing steamers, railroads, electric telegraphs, the Suez Canal—have made a real world market a fact. The former monopoly of England in industry has been matched by a number of competing industrial countries; infinitely greater and varied fields have been opened in all parts of the world for the investment of superfluous European capitals, so that it is far more distributed, and local overspeculation may be more easily overcome. By means of these things, the old breeding grounds of crises and opportunities for the growth of crises have been eliminated or strongly reduced. At the same time competition in the internal markets recedes before Kartels and trusts, while it is restricted in the international market by protective tariffs, with which all great industrial countries, England excepted, surround themselves. But these protective tariffs are nothing but preparations for the ultimate general industrial war, which shall decide the supremacy on the world market. Thus every element, which works against a repetition of the old crises, carries the germ of a far more tremendous future crisis in itself.—F. E.]

Part V, Chapter XXXII.

101. [101] B. A. 1857. Testimony of Twells, banker, 4516. "As a banker, do you deal in capital or in money?"—"We deal in money."—4517. "How are the deposits paid into your bank?"—"In money."—4518. "How are they paid out?"—"In money."—"Might it be said, then, that they are anything else but money?"—"No."

Overstone (see chapter XXVI) tangles himself up continually between "capital" and "money." Value of money signifies with him also interest, in so far as it is determined by the mass of money; value of capital is supposed to be interest, so far as it is determined by the demand for productive capital and the profit made by it. He says, 4140. "The use of the term capital is very dangerous."—4148. "The gold exports from England are a reduction of the quantity of money in the country, and this must naturally cause an increased demand in the money-market in general" [but not in the capital-market, according to this]—4112. "In proportion as money leaves the country its quantity in the country is diminished. This diminution of the quantity remaining in the country creates an increased value of this money" [this signifies originally in his theory an increase in the value of money as money through a contraction of the currency, as compared to the values of commodities; in other words, an increase in the value of money is the same as a fall in the value of commodities. But since meanwhile even he has been convinced beyond peradventure, that the mass of the circulating money does not determine prices, it is now the contraction of money as a medium of circulation, which is supposed to raise its value as interest bearing capital, and thus the rate of interest]. "And this increased value of the still remaining money checks the export and continues, until it has brought back as much money as is necessary to restore the equilibrium."—A continuation of Overstone's contradictions follows later.

102. [102] At this point the confusion starts in to the effect that both of these things are "money," namely the deposit as a claim to a payment from the banker, and the deposited money in the hands of the banker. Banker Twells, before the Committee on Bank Acts of 1857, takes the following example: "I start in business with 10,000 pounds sterling. With 5000 pounds sterling I buy commodities and place them in my stock. The other 5000 pounds sterling I deposit with some banker, in order to draw upon them as I need them. But I still consider the total as my capital, although 5000 pounds sterling exist in the form of a deposit or money." (4528)—This gives rise to the following nice debate.—4531. "Well, you have given your 5000 pounds sterling in bank notes to somebody else"—"Yes, Sir."—4532. "Then he has 5000 pounds sterling in deposits?"—"Yes, Sir."—4533. "And you have 5000 pounds sterling in deposits?"—"Quite right."—4534. "He has 5000 pounds sterling in money, and you have 5000 pounds sterling in money?"—"Yes, Sir."—4535. "But it is ultimately nothing but money?"—"No, Sir." This confusion is due, partly to the circumstance, that A, who has deposited 5000 pounds sterling, can draw on them and dispose of them as though he still had them. To that extent they serve him as a potential capital. In all cases, in which he draws on them, he destroys his deposit to that extent. If he draws out real money, and his own money has already been loaned to some one else, he is not paid with his own money, but with that of some other depositor. If he pays a debt to B with a check on his banker, and if banker of A has also a check on the banker of B, so that the two bankers merely exchange checks, then the money deposited by A has performed the function of money twice; first, in the hands of him who received the money deposited by A; secondly, in the hands of A himself. In this second function it is a balancing of claims of indebtedness (the claim of A on his banker, and the claim of this banker on the banker of B) without the intervention of money. Here the deposit acts twice as money, namely once as real money, and then as a claim on money. Mere titles to money may take the place of money only by a balancing of claims of indebtedness.

Part V, Chapter XXXIII.

103. [103] Average number of days, during which a bank note remained in circulation:

Year 5 p. Note 10 p. Note 20-100 p. 200-500 p. 1000 p.
1798 ? 236 209 31 22
1818 148 137 121 18 13
1846 79 71 34 12 8
1856 70 58 27 9 7

Tabulation made by Marshall, Cashier of the Bank of England, in Report on Bank Acts, 1857, II, Appendix, p. 301-302.

104. [104] In the general meeting of the stockholders of the Union Bank of London, on January 17, 1894, President Ritchie relates that the Bank of England raised the discount in 1893 from 2½% in July to 3 and 4% in August, and when it lost fully 4½ million pounds sterling in gold in spite of this, it raised the rate of interest to 5%, whereupon gold flowed back to it and the bank rate was reduced to 4% in September and 3% in October. But this bank rate was not recognized in the market. "When the bank rate was 5%, the market rate was 3½% and the rate for money 2½%; when the bank rate fell to 4%, the rate of discount was 2 3/8% and the money rate 1¾%; when the bank rate was 3%, the rate of discount was 1½% and the money rate a trifle lower." (Daily News, January 18, 1894.)—F. E.

Part V, Chapter XXXIV.

105. [105] Karl Marx, A Contribution to the Critique of Political Economy, Berlin, 1859, pages 236 and following.

Part V, Chapter XXXV.

106. [106] What effect this had on the money market, is shown by the following testimony of Newmarch: 1509. "Toward the close of 1853 considerable apprehension was felt by the public; in September the Bank of England raised its discount three times in the first days of October...a considerable degree of anxiety and alarm showed itself among the public. These apprehensions and this restlessness were largely alleviated before the end of November, and were almost wholly removed by the arrival of five millions in precious metal from Australia. The same thing was repeated in the fall of 1854, when almost six millions in precious metals arrived in October and November. And in the fall of 1855, a time of excitement and restlessness, the same thing was repeated on the arrival of about eight millions in precious metals during the months of September, October and November. At the end of 1856 we find the same thing takes place. In short, I could very well appeal to the experience of nearly every member of this committee as to whether we have not become accustomed to see a natural and complete remedy for a financial stringency in the arrival of a gold ship."

107. [107] According to Newmarch, a drain of gold to foreign countries may arise from three causes: 1) from purely commercial conditions, that is, if the imports have exceeded the exports, as was the case during the time from 1836 to 1844, and again in 1847, principally a heavy import of corn; 2) from a desire to secure the means for the investment of English capital in foreign countries, as in 1857 for railroads in India; and 3) from a necessity of making definite expenditures in foreign countries, as in 1853 and 1854 for purposes of war in the Orient.

108. [108] 1918. Newmarch. "If you take India and China together, if you take into account the transactions between India and Australia, and the still more important ones between China and the United States, and in these instances the business is a three-cornered one and the equilibration takes place through our intervention...then it is correct that the balance of trade was not only against England, but also against France and the United States."—(B. A., 1857.)

109. [109] See, for instance, the ridiculous answer of Weguelin, who says that five millions of drained gold is so much capital less, and who attempts to explain in this way certain phenomena, which do not appear when the actual industrial capital is infinitely more raised or depressed in price, expanded or contracted. On the other hand, it is just as ridiculous to attempt to explain these phenomena directly as symptoms of an expansion or contraction of the mass of real capital (that is, the material elements of capital).

110. [110] Newmarch, B. A., 1857, No. 1364: "The metal reserve in the Bank of England is in fact...the central reserve or the central metal board, on the basis of which the entire business of the country is carried on. It is so to say the cardinal point, around which the entire business of the country has to turn; all other banks in the country consider the Bank of England as the central treasury, or the reservoir, from which they have to draw their reserves of hard cash; and the effect of the foreign rates of exchange falls always precisely upon this treasury and this reservoir."

111. [111] "Practically, therefore, both Tooke and Loyd would meet an excessive demand for gold by a premature limitation of credits by raising the rate of interest and reducing advances of capital. Only Loyd causes by his illusion inconvenient and even dangerous [legal] limitations and rules." (Economist, 1847, p. 1417.)

112. [112] "You quite agree that there is no other way to modify the demand for gold than by raising the rate of interest?"—Chapman, associate member of the great bill brokers' firm of Overend Gurney & Co.: "That is my opinion. If our gold falls to a certain point, the best we can do is to ring the alarm bell at once an to say: We are on the decline, and whoever sends gold abroad, must do so at his own peril."—B. A. 1857, Evidence No. 5057.

113. [113] Old style German money, now discarded.—TRANSLATOR.

Part V, Chapter XXXVI.

114. [114] "It is in consequence of frequent pawning and redeeming within the same month, and of pawning one article in order to redeem another, and of thus obtaining a small difference in money, that the pawnshop interest becomes so excessive. In London there are 240 authorized pawnshop owners, and in the provinces about 1450. The employed capital is estimated at about one million. It is turned over at least three times per year, and every time at an average of 33½%; so that the lower classes of England pay 100% annually for the temporary loan of one million, aside from losses due to lapses of pawned articles." (J. J. Tuckett, A History of the Past and Present State of the Labouring Population. London, 1846, I, p. 114.)

115. [115] Even in the titles of their works they state as their principal purpose "the general welfare of the landed proprietors, the great appreciation of the value of real estate, the liberation of the nobility and of the gentry, etc., from taxation, the augmentation of their annual income, etc." Only the usurers were to lose, those worst enemies of the nation, who had done more injury to the nobility and yeomanry than an army of invasion from France could have done.

116. [116] "Charles II. of England, for instance, still had to pay enormous interest of usury and agios to the gold smiths" (the precursors of the bankers), "as much as 20 to 30%." A business so profitable induced "the gold smiths to make more and more loans to the King, to anticipate the entire income on taxes to get a lien on every concession of Parliament in the way of money as soon as it had been made, also to compete against one another in buying up and giving pawn on bills, orders and tallies, so that in reality all incomes of the state passed through their hands." (John Francis, History of the Bank of England, London, 1848, I p. 31.) "The erection of a bank had been suggested several times before that. It was at last a necessity" (L. c., p. 38). "The bank was a necessity for the government itself, sucked dry by usurers, in order to obtain money at a reasonable rate of interest, on the security of parliamentary concessions." (L. c., p. 59 and 60.)

117. [117] Marx would surely have modified this passage considerably, if he had worked his manuscript over. It was inspired by the role of the ex-Saint-Simonists under the second empire in France, where just at the time when Marx wrote the above the world-redeeming credit-phantasies of this school, by force of history as irony, were being realised in the shape of a swindle of a magnitude never witnessed before. Later Marx spoke only with admiration of the genius and encyclopedic brain of Saint-Simon. The peculiarity of this writer in ignoring the antagonism between the bourgeoisie and the proletariat that was just then coming into existence in France, and of counting that part of the bourgeoisie, which was active in production, among the travailleurs, corresponds to Fourier's conception, who wanted to reconcile capital and labor. This explains itself out of the economic and political conditions of France in those days. The fact that Owen was more farseeing in this respect is due to his different environment, for he lived in a period of industrial revolution and of class antagonism which were becoming acute.—F. E.

118. [118] Karl Marx, The Poverty of Philosophy, 1847.—Karl Marx, Critique of Political Economy, p. 107.

Part VI, Chapter XXXVII.

119. [119] Nothing could be more comical than Hegel's development of private property in land. According to him, man as an individual must give reality to his will as the soul of external nature, and to this end he must take possession of nature and make her his private property. If this were the destiny of "the individual," of man as an individual, it would follow that every human being must be a land-owner, in order to materialise as an individual. Free private property in land, a very recent product, is not a definite social relation, according to Hegel, but a relation of man as an individual to "nature, an absolute right of man to appropriate all things." (Hegel, Philosophy of Law, Berlin, 1840, p. 79.) So much at least, is evident, that the individual cannot maintain himself as a landowner by his mere "will" against the will of another individual, who likewise wants to materialise himself in the same piece of land. It requires a good many other things besides the good will. Furthermore, it is absolutely beyond any one's ken to decide, where "the individual" should draw the line for the realisation of his will, whether the presence of his will should materialise in one whole country, or whether it should require a whole bunch of countries by whose appropriation I might "manifest the supremacy of my will over the thing." Here Hegel breaks down. "The appropriation is of a very individual kind; I do not take possession of more than I touch with my body, but the second point is at the same time that external things have a greater extension than I can grasp. While I thus have possession of a thing, something else is likewise in touch with it. I exercise my appropriation by my hand, but its scope may be extended." (P. 90.) But this other thing is again in touch with still another, and so the boundary disappears, within which I might pour my will as the soul of the soil. "If I own anything, my reason at once passes on to the idea that not only this property, but also the thing it touches is mine. Here positive right must fix its boundaries, for nothing more can be deduced from the conception." (P. 91.) This is an extraordinarily naive confession of the "conception," and it proves that this conception, which makes at the outset the mistake of regarding a very definite legal conception of landed property belonging to bourgeois society as an absolute one, does not understand anything of the actual articulations of this property. This implies at the same time the confession, that the "positive" law may, and must, alter its decisions in proportion as the requirements of social, i.e. economic development, change.

120. [120] Very conservative agricultural chemists, for instance Johnston, admit that a really rational agriculture meets everywhere insurmountable barriers through the existence of private property. So do writers, who are confessedly advocates of the monopoly of private property on the globe, for instance Charles Comte in his work of two volumes, which has for its special aim the defense of private property. "A nation," says he, "cannot attain to the degree of prosperity and power compatible with its nature, unless every portion of the soil nourishing it is assigned to that purpose which agrees best with the general interest. In order to give to its wealth a strong development, one sole and highly enlightened will should, if possible, take it upon himself to assign to each piece of his domain its task and make every piece contribute to the prosperity of all others. But the existence of such a will...would be incompatible with the division of the land into private plots...and with the ability of each owner to dispose of his property in an almost absolute manner, according to constitutional guarantees."—Johnston, Comte, and others, have in mind only the necessity of tilling the land of a certain country as a whole, when they speak of an antagonism of private property to a rational system of agronomics. But the dependence of the cultivation of particular products of the soil upon the fluctuations of market prices, and the continual changes of this cultivation with these fluctuations of prices, the whole spirit of capitalist production, which is directed toward the immediate gain of money, contradicts agriculture, which has to minister to the entire range of permanent necessities of life required by a network of human generations. A striking illustration of this is furnished by the forests, which are occasionally managed in a way befitting the interests of society as a whole, when they are not private property, but subject to the control of the state.

121. [121] The Poverty of Philosophy, p. 148. There I have made a distinction between land-capital and material land. "By merely applying additional capital to land already transformed into means of production land-capital may be augmented without adding anything to the material land, that is to say, to the extent of the land....As capital, land is not more eternal than any other capital....Land-capital is fixed capital, but fixed capital is used up as well as circulating capital."

122. [122] I say "may," because under certain circumstances this interest is regulated by the law of ground-rent and may disappear, for instance, in the case of competition between lands of great natural fertility.

123. [123] See James Anderson and Carey.

124. [124] See the anti-corn law prize essays. However, the corn laws always kept prices at an artificially higher level. For the better situated tenants this was favorable. They profited by the stationary condition, in which the protective duties kept the great mass of tenants, who relied with or without reason on the exceptional average price.

125. [125] John C. Morton, The Forces Used in Agriculture. Lecture in the London Society of Arts, 1860, based upon authentic documents, collected by about 100 tenants from 12 Scotch and 35 English counties.

Part VI, Chapter XXXVIII.

126. [126] As to the extra profit, see the "Inquiry" (against Malthus).

Part VI, Chapter XXXIX.

127. [127] [It is precisely the rapidly growing cultivation of such prairie or steppe districts which of late turns the renowned statement of Malthus, that the population "presses upon the means of subsistence," into ridicule, and has created the reverse of it in the complaints of the agrarians, who wail that agriculture and with it Germany will be ruined, unless the means of subsistence which are pressing upon the population are kept out by force. The cultivation of these steppes, prairies, pampas, Hanos, etc., is only in its beginnings; its revolutionising effect on European agriculture will, therefore, make itself felt later on even more than hitherto.—F. E.]

Part VII, Chapter XLII.

128. [128] The above Tables IV a to IV d had to the figured over on account of an error of calculation which ran though all of them. While this did not affect the theoretical conclusions drawn from these Tables, it carried monstrous figures concerning the production per acre into them. Even these would not be objectionable on principle. In all maps showing geographical conditions in relief or giving a view of altitudes in profile it is customary to choose a much larger scale for the vertical then for the horizontal lines. Nevertheless, should any one feel that his agrarian heart is injured thereby, he is at liberty to multiply the number of acres with any figure that will satisfy him. One might also choose 10, 12, 14, 16 bushels (8 bushels = 1 quarter) per acre instead of 1, 2, 3, 4 quarters in Table I, and in that case the figures of the other Tables which are developed out of them would remain within the limits of probability; it will be found that the result, the proportion of increase in the rent compared to the increase in capital, comes to the same thing. This has been done in the following Tables, which were added by the editor.—F. E.

Part VI, Chapter XLV.

129. [129] Wakefield, England and America, London, 1833. Compare also Capital Volume I, Chapter XXVII.

130. [130] See Dombasle and R. Jones.

131. [131] Ricardo passes over this very superficially. See his remarks against Adam Smith on Forest rent in Norway, in Principles, chapter II, in the beginning.

Part VI, Chapter XLVI.

132. [132] Laing, Newman

133. [133] Crowlington Strike. Engels, The Condition of the Working Class In England, page 256, Swan Sonnenschein edition

134. [134] The paving of the London streets has enabled the proprietors of some naked rocks on the Scotch coast to draw a rent out of formerly absolutely useless stone soil. Adam Smith, Book I, Chapter XI, 2.

135. [135] It is one of the merits of Rodbertus whose important work on rent we shall discuss in volume IV ("Theories of Surplus-Value," volume II, Part I), to have enlarged upon this point. He commits the mistake, however, to assume, in the first place, that in the case of capital the increase in profits is always expressed by an increase of capital, so that the ratio remains the same, when the mass of the profits increase. But this is an error, since the rate of profit may increase when the composition of the capital is changed, even if the exploitation of labor remains the same, just because the proportional value of the constant portion of capital, compared to its variable portion, may fall. In the second place he commits the mistake of dealing with the ratio of the money rent to a quantitatively limited piece of land, for instance to an acre, as though it had been the general assumption of classic economics in its analysis of the rise or fall of rent. This, again, is wrong. Classic economics always treats the rate of rent, so far as it considers rent in its natural form, with reference to the product, and so far as it considers rent as money rent, with reference to the advanced capital, because these are in fact its rational expressions.

136. [136] Concerning a fall in the price of land as a fact when the rent rises, see Passy.

Part VI, Chapter XLVII.

137. [137] Adam Smith emphasizes the fact that at his time (and this applies also to the plantations in tropical and subtropical countries in our own time) rent and profit were not yet separated, for the landlord was at the same time a capitalist, just as Cato, for instance, was upon his estates. But this separation is precisely the premise of the capitalist mode of production. Moreover, the basis of slavery stands in contradiction with the nature of capitalist production.

138. [138] Mr. Mommsen, in his Roman history, does not use the term capitalist in the sense in which modern economics and modern society does, but rather in the way peculiar to popular conception, such as still continues to vegetate, not in England or America, but upon the European continent, as an ancient tradition of past conditions.

139. [139] After a country had been conquered, the next step for the conquerer was always to take possession of the human beings also. Compare Linguet. See also Möser.

140. [140] Compare Buret, Tocqueville, Sismondi.

141. [141] See the speech of the king of France in Tooke.

142. [142] See Mounier and Rubichon.

143. [143] Dr. H. Maron (Extensive or Intensive?) [No further information given about this pamphlet]. He starts from the false assumption of those whom he combats. He assumes that the capital invested in the purchase of land is "first capital," and engages in a controversy about first capital and running capital that is, fixed and circulating capital. His wholly amateurish conceptions of capital, which may be excused in one who is not an economist in view of the condition of German political economy, conceal from him the fact that this capital is neither first nor running capital, any more than the capital, which some one may invest at the Stock Exchange in the purchase of consols or state bonds, and which represents a personal investment of capital for him, is "invested" in any productive line of industry.

Part VII, Chapter XLVIII.

144. [144] The following three fragments were found in different places of the manuscript for Part VI.—F. E.

145. [145] Beginning of Chapter XLVIII according to the manuscript.

146. [146] Wages, profit, and rent are the three original sources of all revenue, as well as of all exchangeable value (A. Smith).—In this way the causes of material production are at the same time the sources of the existing primitive revenues. (Storch, I., p. 259.)

Part VII, Chapter XLIX.

147. [147] Ricardo makes the following very apt comment on thoughtless Say: "Of net produce and gross produce, Mr. Say speaks as follows: 'The whole value produced is the gross produce; this value, after deducting from it the cost of production, is the net produce. (Vol. II, p. 491.) There can, then, be no net produce, because the cost of production, according to Mr. Say consists of rent, wages and profits. In page 508 he says: 'The value of a product, the value of productive service, the value of the cost of production, are all, then, similar values, whenever things are left to their natural course.' Take a whole from a whole and nothing remains." (Ricardo, Principles, Chapter XXII, p. 512, Note.)—By the way, we shall see later that Ricardo nowhere refuted the false analysis made by Smith of the price of commodities, its reduction to the sum of the values of the revenues. He does not take notice of it, and assumes it to be correct to such an extent that he "abstracts" from the constant portion of the value of commodities. He also falls back now and then into the same conception.

148. [148] "In every society the price of every commodity finally resolves itself into some one or the other, or all of those three parts (viz. wages, profits, rent)....A fourth part, it may perhaps be thought, is necessary for replacing the stock of the farmer or for compensating the wear and tear of his laboring cattle, and other instruments of husbandry. But it must be considered that the price of any instrument of husbandry, such as a labouring horse, is itself made up of the same three parts: the rent of the land upon which he is reared, the labour of tending and rearing him, and the profits of the farmer, who advances both the rent of his land and the wages of his labour. Though the price of corn, therefore, may pay the price as well as the maintenance of the horse, the whole price still resolves itself either immediately or ultimately into the same three parts of rent, labour (meaning wages) and profit." (Adam Smith.)—We shall show later on, that Adam Smith himself felt the inconsistency and insufficiency of this subterfuge, for it is nothing but a subterfuge on his part to send us from Pontius to Pilate while he nowhere indicates the real investment of capital, in the case of which the price of the product resolves itself ultimately into these three parts, without any remainder and any further progression.

149. [149] Proudhon, incapable of grasping this, exposes his incapableness in the formula: The laborer cannot buy back his own product, because the interest is contained in it, which is added to the purchase price. But how does Mr. Eugene Forcade teach him to know better? "If Proudhon's objection were true, it would strike not only the profits of capital, but would annihilate the possibility of all industry. If the laborer is compelled to pay 100 for each article for which he has received only 80, if his wages can buy back only the value which he has put into it, it would be as well to say that the laborer cannot buy back anything, that wages cannot pay for anything. In fact, there is always something more than the wages of the laborer contained in the purchase price, and always more than the profits of enterprise in the selling price, for instance, the price of the raw materials, which often goes to foreign countries....Proudhon forgot about the continual increase of the national capital; he forgot that this increase refers to all laborers, the enterprising industrials as well as the hand laborers." (Revue des deux Mondes, 1848, tome, 24, p. 99.) Here we have the optimism of bourgeois thoughtlessness in the form of wisdom corresponding to it. First Mr. Forcade believes that the laborer could not live, if he did not receive a higher value than that which he produces, whereas the capitalist mode of production, on the contrary, could not exist, if he received all the value which he really produces. In the second place he correctly generalizes the difficulty, which Proudhon expressed only under a more narrow point of view. The price of the commodities contains not only more than the wages, but also more than the profit, namely the constant portion of value. According to Proudhon's reasoning then, the capitalist could not buy back the commodities with his profit. And how does Forcade solve this riddle? By means of a meaningless phrase: The increase of capital. The continual increase of capital is supposed to manifest itself, among other things, also in the fact that the analysis of the price of commodities, which is impossible for the political economist in the case of a capital of 100, becomes superfluous in the case of a capital of 10,000. What would he say of a chemist, who, on being asked: How is it that the product of the soil contains more carbon than the soil? would answer: It comes from the continual increase of the product of the soil. The well-meaning good will to discover in the bourgeois world the best of all worlds takes the place, in vulgar economy, of any necessity to cultivate love of truth and scientific methods of research.

150. [150] "The circulating capital invested in materials, raw products and machinery is itself composed of merchandise, the necessary price of which is formed of the same elements; so that, viewing the total merchandise in a certain country, it would mean using the same thing twice to count this portion of the circulating capital among the elements of the necessary price." (Storch, Cours d'Economie Politique, II, page 140.)—By these elements of circulating capital Storch means the constant capital (the fixed capital is for him merely a different form of the circulating). "It is true that the wages of the laborer, the same as that portion of the profits of enterprise which stands for wages, provided we consider them as a part of the means of subsistence, also consist of merchandise bought at current prices and comprise likewise wages, interest on capital ground rent and profit of enterprise....But this observation merely proves that it is impossible to resolve the necessary price into its simplest elements." (Ibidem note.)—In his Considerations sur la nature du revenu national (Paris, 1824). Storch realizes in his controversy with Say to what absurdity the false analysis of the value of commodities leads, when it resolves value into mere revenues. He points out the folly of such results, not from the point of view of the individual capitalist, but from that of a nation, but he does not go a step further himself in his analysis of the "prix nécessaire," saying in his "Cours" that it is impossible to resolve it into its simplest elements and tracing it back into an endless progression. "It is evident that the value of the annual product is distributed partly among capital and partly among profits, and that each one of these parts of the value of the annual product buys regularly the products needed by a nation, as much for the purpose of preserving its capital as for the purpose of renewing its consumable fund (pages 134, 135)....Can a self-employing peasant's family live in its barns or its stables, eat its seed and forage, clothe itself with its laboring cattle, dispense with its agricultural implements? According to the thesis of Mr. Say all these questions would have to be answered in the affirmative (pages 135, 136)...If it is admitted that the revenue of a nation is equal to its gross product, that is, if no capital has to be deducted from it, then it must also be admitted that a nation can spend the entire value of its annual product unproductively without impairing its future income in the least (147). The products which constitute the capital of a nation cannot be consumed." (p. 150.)

Part VII, Chapter L.

151. [151] In separating the value added to the constant portion of value into wages, profit and ground rent, it is a matter of course that these are portions of value. One may, indeed conceive them as existing in the direct product created by laborers and capitalists in some particular sphere of production, for instance, yarn produced in a spinnery. But in fact they do not materialize in this product any more or any less than in any other commodity, in any other part of the material wealth having the same value. And in practice wages are paid in money, that is, in the pure form of value; likewise interest and rent. For the capitalist, the transformation of his product into the pure expression of value is indeed very important; in the distribution itself its existence is already assumed. Whether these values are reconverted into the same product, out of whose production they arose, whether the laborer buys back a part of the product directly produced by himself or the product of some other labor of a different kind, has nothing to do with the matter itself. Mr. Rodbertus quite unnecessarily goes into a passion about this.

152. [152] "It will be sufficient to remark that the same general rule, which regulates the value of raw produce and manufactured commodities, is applicable also to the metals; their value depending not on the rate of profits, nor on the rate of wages, nor on the rent paid for mines, but on the total quantity of labor necessary to obtain the metal and to bring it to market." (Ricardo Principles, Chapter III, p. 77.)

Part VII, Chapter LI.

153. [153] J. Stuart Mill: Some Unsettled Questions in Political Economy, London, 1884.

154. [154] See the work on Competition and Co-operation (1832?).

Part VII, Chapter LII.

155. [155] F. List remarks correctly: "Prevalence of self-management in the case of large estates proves only a lack of civilization, of means of communication, of home industries and rich cities. For this reason it is found everywhere in Russia, Poland, Hungary, Mecklenburg. Formerly it prevailed also in England. But with the rise of commerce and industry came their division into medium-sized farms and their occupancy by tenants." (The Agrarian Constitution, the Petty Farm, and Emigration, 1842, p. 10.)

End of Notes

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