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By J. R. MCCULLOCH, Esq., 


Xon eiiiin mecuiquamniancipavi, nullius nomen fero ; multum maguorum viroiiuu j udicio 
credo, aliquid et raeo vindico. Nam illi quoque, non inventa, sed quserenda nobis 
reliqiierunt." — .Seneca. 









The present edition of this work has been prepared 
on the plan explained in the annexed preface. 
It has been carefully revised; and while we have 
endeavoured to set its theoretical doctrines in the 
clearest point of view, our main object has been still 
better to elucidate the practical operation of the 
principles of the science, and to show how they are 
liable to be influenced by the action of secondary and 
contino-ent circumstances. Numerous additions have 
been made to the chapter which treats of the cir- 
cumstances that determine the common and ave- 
rage rate of wages ; partly because of the magnitude 
and importance of the class dependent on wages, 
and partly because of the prevalence of doctrines 
regarding the employment of labour which appear 
to be alike false and dangerous. And without pre- 
tending to anything like completeness in these 
respects, we venture to think that there are but few 
really important economical questions which are not 
touched upon, more or less fully, in this volume.^ 

We have made no material change in any prin- 
ciple or doctrine advanced in the later editions of 

1 We excejit from this remark those havhig reference to taxation, 
\vhich we have made the subject of a separate work. 


this treatise : not that we should have had the small- 
est hesitation in doing so, had we been satisfied that 
such change was required ; but we have seen 
nothing to lead us to any such conclusion. In 
some instances we have varied the exposition a 
little, and have occasionally introduced new illus- 
trations, and modified some of the less important 
inferences ; but the leading doctrines developed in 
the last two editions continue unaltered in this. 

A very complete and elaborate index is now 
added to the work. 

London, January 1849. 


The first edition of this work, which appeared in 
1825, was principally a reprint of the article on 
Political Economy in the Supplement to the " En- 
cyclopsedia Britannica," edited by the late Mr 
Macvey Napier. That article was necessarily, from 
the limited space within which it had to be com- 
pressed, confined to a statement of the fundamental 
principles of the science, prefaced by a short sketch 
of its history, and admitted of but few illustrations 
of the practical working of different systems and 
measures. If this were a defect in the original 
essay, it was but slightly amended on its first repub- 
lication in a separate volume. But, on further 
reflection, we were led to believe that the work 
would gain in utility and interest, and that the dis- 
tinguishing doctrines of the science would, at the 
same time, be better understood, if more attention 
were paid to practical considerations, and it were 
shown how the interests of society were affected, as 
well by the neglect as by the application of its 
theories. Hence the second edition of the work. 


published in 1830, has much more of a practical cha- 
racter than tlie first ; and while we endeavoured to 
simplify the theoretical investigations, and to set the 
general principles and conclusions in a clearer point 
of view, we added a chapter on the Interference of 
Government, and greatly extended those portions 
wliich treat of the application of the science, or of the 
influence which its principles, if acted upon, would 
most likely exert over some of the more important 
departments of national economy. 

Other engagements, while they prevented the 
publication of a new edition of this work, which has 
been long out of print, afforded time for additional 
observation and consideration ; and these have far- 
ther strengthened the conviction, that the principle 
on wliich we proceeded in drawing up the edition 
of 1830 is, on the whole, the best. In this edition, 
consequently, a still greater extension has been given 
to the practical parts, or to inquiries respecting the 
real or probable influence of different systems of 
economical legislation, over the wealth and wellbeing 
of society. The work, indeed, is no longer to be 
regarded as a mere attempt to trace and exhibit the 
principles of Political Economy ; but also as an 
attempt, however imperfect, to exhibit their more 
important applications. 

We are aware that, in adopting this course, it may 
be said that we have stepped beyond the proper 
limits of the science, and encroached on ground 
belonging to the legislator and politician. But the 
truth is, that Political Economy and Politics are so 
very closely allied, and run into and mix with each 


other in so many ways, that they cannot always be 
separately considered. Mr Senior,^ the ablest and 
most distinguished defender of what may be called 
the restricted system of Political Economy, says 
" that wealth, and not happiness," is the subject with 
which the economist has to deal. But, supposing 
this to be the case, the latter, in explaining the 
circumstances most favourable for the production of 
wealth and its accumulation, is not to content him- 
self with showing the influence of the security of 
property, the division and combination of employ- 
ments, and the freedom of industry over its produc- 
tion. If he stopped at this point, he would have done 
little more than announce a few barren generalities, 
of no real utility. It is not enough to point out the 
general rule or principle to be appealed to on any 
given occasion ; the really useful and important part 
is to show how the objections that may be made 
to the application of such rule or principle may be 
repelled, to point out its limitations, and to estimate 
its practical operation and real influence. Every 
one admits, for example, that security of property, at 
least to some extent, is indispensable to the produc- 
tion of wealth ; but security is not to be confined to 
the mere freedom to dispose at pleasure of property 
during one's own life. It is further necessary that 
individuals should be permitted to exert some degree 
of authority over the disposal of property in the 
event of their death ; and this being admitted, it 
follows that all the knotty questions respecting con- 

* See his able "Essay on Political pjconomy" in the "Encyclo- 
pedia Metropolitana." 


ditions in wills, the influence of primogeniture and 
entails, compared Avitli tlie system of equal partition, 
and so forth, come legitimately within the scope of 
the inquiries belonging to this science ; the economist 
being bound to show the bearing of each system that 
may be proposed over the production and distribu- 
tion of wealth. 

It would be easy to give innumerable examples of 
the w^ay in which this science necessarily involves 
discussions and inquiries extending beyond what may, 
at first sight, be supposed to be its natural limits. 
It may, for example, be laid down as a general rule, 
that the more individuals are thrown on their own 
resources, and the less they are taught to rely on 
extrinsic and adventitious assistance, the more in- 
dustrious and economical will they become, and the 
greater, consequently, will be the amount of public 
wealth. But even in mechanics, the engineer must 
allow for the friction and resistance of matter ; and it 
is still more necessary that the economist should make 
a corresponding allowance, seeing that he has to deal 
not only with natural powers, but with human beings 
enjoying political privileges, and imbued with the 
strongest feelings, passions, and prejudices. Although, 
therefore, the general principle as to self-reliance be 
as stated above, the economist or the politician who 
should propose carrying it out to its full extent in 
all cases and at all hazards, would be fitter for bed- 
lam than for the closet or the cabinet. When any 
great number of work-people are thrown out of 
employment, they must be provided for by extra- 
neous assistance in one way or other ; so that the 


various questions with respect to a voluntary and com- 
pulsory provision for the destitute poor, are as neces- 
sary parts of tliis science as the theories of rent and 
of profit. 

It is obvious, too, that all the complicated and 
difficult questions, with respect to the influence of 
taxes and loans over the wealth and wellbeing of 
the public, come within the scope of this science, and 
form, indeed, one of its most attractive departments. 
But, owing to their extent and difficulty, we have 
been unable to profit by the interest they might have 
given to this work. We hope, however, to be able, 
at some not very distant period, to investigate, in 
detail, the various matters connected witli taxation ; 
and to embody the results of our researches in a 
supplementary volume on its principles and practical 

We are also inclined to dissent from Mr Senior, 
when he lays it down that the economist " is not 
to give a single syllable of advice," and that " his 
business is neither to recommend nor dissuade, but 
to state general principles ! " This, no doubt, is a 
part of his business ; but we cannot bring ourselves to 
believe that it is either the whole or even the greater 
part of it. On the contrary, it appears to us that the 
economist is bound, whenever he sees cause, to dis- 
suade, censure, and commend, quite as much as the 
politician, or any one else. In treating, for example, 
of the influence of restrictions, is he not to censure 
those which, by fettering the freedom of industry, 

^ In 18-4o we publislied an 8vo volume " On the Principles and 
Practical Influence of Taxation and the Funding System." 


hinder the production of wealth ? and is he not to 
commend the measures by which, and the ministers 
by whom, such restrictions are abolished? The eco- 
nomist who confines himself to the mere enunciation 
of general principles, or abstract truths, may as well 
address himself to the Pump in Aldgate, as to the 
British public. If he wish to be anything better 
than a declaimer, or to confer any real advantage on 
any class of his countrymen, he must leave general 
reasoning, and show the extent of the injury entailed 
on the community by the neglect of his principles ; 
how their application may be best effected ; and the 
advantages of which it will be productive. This 
science has its practical as well as its theoretical 
portion ; and the economist will abdicate his principal 
functions if he do not call the public attention to 
every institution or regulation which appears, on a 
careful inquiry, to be adverse to the increase of 
public wealth and happiness. Unless he do this, he 
can be little else than a mere ideologist, about whose 
speculations most people will, very properly, care 
little or nothing. 

We have elsewhere (Introductory Discourse) en- 
deavoured to point out the distinction between Poli- 
tics and Political Economy; and here we shall merely 
observe, that, though all inquiries into the consti- 
tution and character of Governments be foreign 
to the business of the economist, it is his pro- 
vince to examine such laws or regulations as may 
appear (whether directly or indirectly is immaterial) 
to influence the production and distribution of wealth. 
It may be inexpedient for him to give any opinion 


upon the policy of measures involving various con- 
siderations; but, if he make a fair estimate of their 
influence in an economical point of view, and show 
their probable operation over the w^ealth and com- 
forts of the people, he is acting strictly in his sphere, 
and is entitlinn; himself to the gratitude of his 

Besides improperly limiting the sphere of the 
science, and depriving it of all practical utility, Mr 
Senior appears to take an erroneous view of the 
evidence on which its principles and conclusions are 
founded. He affirms, for example, that the facts on 
which its general principles rest may be stated in a 
very few sentences, or rather in a very few words; and 
that the difficulty is merely in reasoning from tliem. 
But while we admit the difficulty of drawing correct 
inferences, we greatly doubt whether the general 
principles can be so easily established as Mr Senior 
supposes. He lays it down, for example, as a general 
principle, or rather axiom, that, supposing agricul- 
tural skill to remain the same, additional labour 
employed on the land will, speaking generally, yield 
a less return. But though this proposition be un- 
doubtedly true, it is at the same time quite as true 
that agricultural skill never remains the same for 
the smallest portion of time ; and that its improve- 
ment may countervail, for any given period, the 
decreasing fertility of the soils to which recourse is 
necessarily had in the progress of civilisation. It 
would, indeed, be easy to show, that the worst lands 
now under tillage in England, yield more produce 
per acre, and more as compared with the outlay, than 


the best lands did in the reigns of the Edwards and 
the Henrys. It is, therefore, to no purjjose to say, 
that the science rests on principles of this description. 
They, no doubt, form a part of its foundation ; but 
as they are modified in different degrees by others, 
the only general principles of any practical value are 
those deduced from observations made on their com- 
bined action ; or, in other words, on the phenomena 
really manifested in the progress of society. " II ne 
suffit" to use the words of M. Say, " de partir des 
fails: il faut se placer dedans, marcher avec eiLv, et 
comparer incessamment les consequences que Ton tire 
avec les effets qu^on observe. L'economie politique, 
pour etre veritablement utile, ne doit pas enseicfner, 
fut-ce par des raisonnemens justes, et en partant des 
preinisses certaines, ce qui doit necessairement arriver; 
elle doit montrer comment ce qui arrive reellement est 
la consequence d\n autre fait reel. Elle doit decouvrir 
la cJiaine que les lie, et toujours constater par V obser- 
vation, Vexistence des deux points oil la cliaine jdes 
raisonnemens se r attache!'^ 

That a free commercial intercourse amonsfst differ- 
ent nations would be for their mutual advantage, is 
a proposition which is very generally true; and being 
so, every proposal for a restriction on commerce may 
be fairly presumed to be inexpedient till the reverse 
be established. There can, however, be no manner 
of doubt that there are cases, though but few in num- 
ber, in which nations would grossly overlook their 
own interests if they permitted a free intercourse with 

^ Traite D'Economie Politique, Discours Preliminaire. 


their neigliboiirs. Suppose, for example, we had a 
monopoly of the supply of coal, it would not be diffi- 
cult to show that it would be good policy, with a 
view to the increase of national wealth and security, 
either wholly to prohibit, or to lay a high duty on 
its exportation ; and so in other instances. 

The recent history of the tlieory of population 
aftbrds a strikino; instance of the abuse of oeneral 
principles, or rather of the folly of building exclu- 
sively upon one set of principles, without attending 
to the influence of the antagonist principles by which 
they are partly or wholly countervailed. The 
principle of increase, as explained by Mr Malthus,^ 
and more recently by Dr Chalmers, appeared to form 
an insuperable obstacle to all permanent improve- 
ment in the condition of society, and to condemn the 
great majority of the human race to a state approach- 
ing to destitution. But farther inquiries have shown 
that the inferences drawn by these and other autho- 
rities from the principle now referred to, are contra- 
dicted by the widest experience ; that the too rapid 
increase of population is almost always prevented by 
the influence of principles which its increase brings 
into activity; that a vast improvement has taken place 
in the condition of the people of most countries, 
particularly of those in which population has in- 

' Esclave d'une idee dominante, I'auteur de I'E.isai stir la Popu- 
lation s'y abandonne sans reserve ; en combattant des exaggera- 
tions, il se livre k des exaggerations contraires ; a des verites utiles, 
se mele des apper^us qui ne sent que specieux ; et pour vouloir 
en tirer des applications absolues, il en fausse les consequences. — 
Degerando Bienfaisance Publiquc, i. Introd. p. 2.^. 


creased with the greatest rapidity/ and that, so far 
from being inimical to improvement, we are really 
indebted to the pi-inciple of increase for most part of 
our comforts and enjoyments, and for the continued 
progress of arts and industry.^ 

The real difficulty does not, therefore, lie in dis- 
cussing matters connected with this science, in the 
statement of general principles, or in reasoning fairly 
from them ; but it lies in the discovery of the secon- 
dary or modifying principles, which are always in 
action, and in making proper allowance for their 
influence. Food is indispensable to existence ; and 
it may, therefore, be laid down as a general principle, 
that this necessity on the one hand, and the difficulty 
of getting food on the other, tend to make every man 
die of hunger. Such, however, and so powerful are 
the countervailing influences, that not one individual 
out of 10,000 dies of want ; and such being the 
case, a theory whicli should overlook these influences 
would not, we think, be good for much. 

We have had occasion, in several parts of the 
following work, to regret that the evidence to which 

' La population do la Boheine a triple en 70 ans. EUe s'est 
elevee de 1,361,000 ames a 4,040,000 dans I'intervalle de 1762 a 
1835 ; et jamais ses habitans n'ont joui d'une plus grande aisance. 
— {Degerando Bienfaisance Puhlique, i. 204.) A similar progress, 
though not always in quite so striking a degree, has been made 
during the same period in most Continental states, and in Great 
Britain and the United States. And Ireland would have been no 
apparent exception to the principle, but for the pernicious toleration 
given to the mendicant agitation by which she has been so long 
disturbed and disgraced. 

^ See the chapter on Population in this work. 


it is in our power to appeal, is insufficient to enable 
any certain conclusions to be come to with respect 
to some of the more important questions involved 
in the application of the science. Generally, indeed, 
we may predicate, with considerable confidence, the 
more immediate results that would follow the adop- 
tion of any novel system of measures ; but it is ex- 
tremely difficult, or rather, perhaps, impossible, with- 
out an extensive analogous experience, to foretell its 
remoter consequences ; because we must, in the ab- 
sence of such experience, be necessarily in the dark 
respecting the nature and influence of the modifying 
principles which a change of measures w^ould no 
doubt bring into action. Notwithstanding the pre- 
tensions so frequently put forward by politicians 
and economists, some of the more interesting por- 
tions of the sciences which they profess are still 
very imperfectly understood ; and the important 
art of applying them to the affairs of mankind, so 
as to produce the greatest amount of permanent 
good, has made but little progress, and is hardly, 
indeed, advanced beyond infancy. Initiatos nos 
credimus dtim in vestibulo hwremus. Nor, consider- 
ing the totally different circumstances under which 
society is now placed, from those under which it was 
placed in previous ages, and the consequent want of 
applicable experience, is this deficiency of knowledge 
to be wondered at The Leges Legum, to which Lord 
Bacon says appeal may be made, to learn cjuid in 
sincjulis Icgibus bene aid perperam positinn ant consti- 
tutum sit, have yet, in great measure, to be ascer- 
tained. However humiliating the confession, it is 


certainly true that, owing to the want of information, 
not a few of the most interesting problems in econo- 
mical legislation are at present all but insoluble ; 
and it must be left to the economists of future ages, 
who will, no doubt, be able to appeal to principles 
that have not yet developed themselves, or that 
have escaped observation, to perfect the theoretical, 
and to complete or reconstruct the practical part of 
the science. 

But, however we may differ from Mr Senior in 
our view of the principles of the science, and the 
mode of its application to the business of life, we 
cordially agree in all that he has stated as to the 
duty of every one who attempts to explain its prin- 
ciples, or to show how they should be applied : — 
" Employed as he is upon a science in which error, 
or even ignorance, may be productive of such intense 
and extensive mischief, he is bound, like a juryman, 
to give deliverance true according to the evidence, 
and to allow neither sympathy with indigence, nor 
disgust at profusion or at avarice ; neither reverence 
for existino- institutions, nor disoust at existino- 
abusps ; neither love of popularity, nor of paradox, 
nor of system, to deter him from stating what he 
believes to be the facts, or from drawing from those 
facts what appear to be the legitimate conclusions." 

We have endeavoured as well as we cOuld to 
conduct our investigations under a deep sense of the 
obligations so forcibly set forth in this admirable 
paragraph. Where, however, the subjects are so 
very difficult, and the evidence not unfrequently 
conflicting, incomplete, and questionable, we doubt 


whether we have been always sagacious enough to 
arrive at a " true deliverance." But we have done 
our best to avoid error ; and while we have not 
hesitated to speak with the utmost freedom of the 
institutions, systems, and opinions we have had to 
review, we are not conscious of having, in any in- 
stance, allowed our judgment to be warped by per- 
sonal feeling or political prejudice. 

London, Nacember 1842. 


Besides this Treatise, Mr M'Cullocu has published the following 
Works, viz. : — 


Illustrated with Maps and Plans. A New Edition, in one very thick 
and closely printed vol. 8vo. London, 1849. 
N.B. — A Supplement to the edition of 1847 may be had separately. 


TORICAL, of the various Countries, Places, and principal Natural Ob- 
jects in the World. Third Edition. 2 thick vols. 8vo. Illustrated with 
Maps. London, 1849. 
N.B. — A Supplement to the previous edition may be had separately. 


BRITISH EMPIRE, exhibiting its Extent, Physical Capacities, Popu- 
lation, Industry, and Civil and Religious Institutions. Third and greatly 
improved Edition, 2 thick vols. 8vo. London, 1847. 

4. SMITH'S WEALTH OF NATIONS ; with a Life of the Author, Notes, 

and Supplemental Dissertations. New Edition. 1 vol. 8vo, double 
columns. London, 1846. 


1 voL 8vo. London, 1845. 


Catalogue of Select Publications in the different Departments of that 
Science ; with Historical, Critical, and Biographical Notices. 1 vol. 8vo. 
London, 1845. 


BY DEATH ; including Inquiries into the Influence of Primogeniture, 
Entails, Compulsory Partition, Foundations, &c., over the Public In- 
terests. 1 vol. 8vo. London, 1848. 




Definition of the Science — its Importance — Causes of its being 
neglected in Greece and Rome, and in the Middle Ages — 
Evidence on which its Conclusions are founded — Rise of the 
Science in Modern Europe — Mercantile System — System of 
M. Quesnay and the French Economists — Publication of the 
"Wealth of Nations" — Distinction between Politics and 
Statistics and Political Economy, .... 




Definition of Production — Labour the only Source of Wealth, 61 


Progressive Nature of Man — Means by which the Productive 
Powers of Labour are increased. — Section I. Right of Pro- 
perty. — Section II. Division of Employments. — Section III. 
Accumulation and Employment of Capital — Definition and 
Source of Profit — Circumstances most favourable for the 
Accumulation of Capital, . • . • • • '^ 




Definition and Growth of Credit — Contributes to facilitate Pro- 
duction by distributing Capital in the most advantageous 
manner — Circulation of Bills, &c., .... 126 


Circumstances which led to the Introduction and Use of Money 
— Qualities which a Commodity used as Money should pos- 
sess — Coinage — Variations in the Value of Money— Intro- 
duction and Use of Paper Money and Bills of Exchange, 131 


Division of Employments among different Countries, or Com- 
merce — Wholesale and Retail Dealers — Influence of Im- 
proved Means of Communication — Mode in which Commerce 
contributes to increase Wealth — Restrictions on Commerce, 
for the Promotion of Domestic Industry and National Secu- 
rity — Influence of these Restrictions — Duties on Imports, 1 39 


Different Employments of Capital and Labour — Agriculture, 
Manufactures, and Commerce, equally advantageous — The 
Investment of Capital in diff'erent Businesses determined by 
the Rate of Profit which they respectively yield — Manufac- 
tures not productive of increased Mortality, nor unfavourable 
to the Intelligence of the Work-people — Dangers incident 
to the excessive growth of Manufactures — Influence of Com- 
merce on Public Spirit, ...... 171 


Improvements in Machinery similar in their Effects to Im- 
provements in the Skill and Dexterity of the Labourer — 
Do not occasion a Glut of Commodities — Sometimes force 
Workmen to change their Employments — Have no Tendency 
to lessen, but most commonly increase the Demand for La- 
bour — Case supposed by Mr Ricardo — Causes of Gluts — Not 
occasioned by a deficiency of Money, but are frequently 
occasioned by sudden changes in its Quantity and Value — 
Circumstances which occasion Miscalculations on tlie Pair 
of the Producers, . . . . . . . 197 




Population proportioned to the Means of Subsistence — Moral 
Restraint — Capacity of the Principle of Population to repair 
the Ravages of Plagues and Famines — Comparative Increase 
of Population in New and Old-settled Countries — Law of 
Increase a powerful Incentive to Industrj^ — Promotes the 
Civilisation and Happiness of Mankind — Practice of Infan- 
ticide — Foundling Hospitals, ..... 227 


Object of Insurance — Calculation of Chances — Advantages of 
Insurance — Amount of Property Insured — Life Insui'ance ; 
Objections to, and Advantages of, ... . 249 


Interference of Government with the Pursuits and Property of 
Individuals — Cases in, and Objects for which such Inter- 
ference is necessary — Limits within which it should be 
confined, ........ 262 



Exchangeable Value — How it is determined — Conditions re- 
quired to render a Commodity invariable in its Exchangeable 
Value — Cost or Real Value — How it is determined — Condi- 
tions required to render a Commodity invariable in its Cost 
— Quantity of Labour required to produce a Commodity 
different from the Quantity for which it will exchange — 
Corn not invariable in its Value — Changes in the Value of 
Money, 312 


Cost of Production the grand regulating Principle of exchange- 
able Value and Price — Influence of Variations in the De- 
mand for and Supply of Commodities over Prices — Influence 
of Monopolies — Average Price coincident with Cost of Pro- 
duction, , . . 828 




Influence of Mercantile Speculations on Price — Difference be- 
tween Speculation and Gambling — Speculations in Corn 
beneficial to the Public, but dangerous to the Dealers- 
Imitative Speculation — Influence of Knowledge on Specu- 
lation, ........ . 336 


Eff^ect of the Employment of Capital in Production, and of 
Variations in the Rates of Wages and Profits on Value — 
(1) When the Capitals employed in Production are of the 
same Degree of Durability ; and (2) when they are of diff"erent 
Degrees of Durability — A High Rate of Wages does not lay 
the Commerce of a Country under any Disadvantage, . 353 



Wages in the difi^erent Departments of Industry — Causes of 
their Apparent Discrepancy — Really approach very near to 
Equality, " . . . . 381 


Circumstances which determine the Rate of Wages. Sec- 
tion I. Market or Actual Wages — Depend on the Pro- 
portion between Capital and Population — Identity of the 
interests of the Capitalists with those of the Labourers. Sec- 
tion II. Natural or Necessary Wages — Depend on the 
Species and Quantity of Food and other Articles required 
for the Consumption of the Labourer. Different in different 
Countries and Periods — Effect of Fluctuations in the Rate 
of Wages on the Condition of the Labouring Classes — Ad- 
vantage of a High Rate of Wages — Disadvantage of having 
the Labourers dependent for support on the cheapest Species 
of Food — Circumstances affecting the Condition of the La- 
bourers — Education — Influx of Irish Labourers — Task-work 
— Limiting the Hours of Labour — High Wages not a Cause of 
Idleness — Comparative Cheapness of Free and Slave Labour. 



Section III. Proportional Wages — Depend partly on the 
Amount and Species of the Articles consumed by the La- 
bourers, and partly on the Productiveness of Industry. Seo 
TioN IV. Difference in their Influence over Wages 
between a Demand for Labour, and a Demand for the 
Products of Labour, ....... 396 


Impotent Poor sliould be provided for by a Poor's Rate — Ques- 
tions as to the best means of providing for the Able-bodied 
Poor — Arguments in favour of a Compulsory Provision — Ob- 
jections to it — May be so administered as to obviate most of 
these Objections — Operation of the English Poor Laws — 
New Poor Law, ........ 445 


Education of the Poor — Importance of a National System of 
Education — Difficulties in the way of its Establishment — 
Influence of Friendly Societies and Savings Banks, . 473 


Conflicting Opinions with respect to the Origin of Rent — Theory 
of Dr Anderson — Nature and Progress of Rent — Not a Cause 
but a Consequence of the High Value of Raw Produce — 
Does not enter into Price — Distinction between Agriculture 
and Manufactures — Rents depend partly on the Extent to 
which Tillage has been carried, and partly on Situation — 
Inequality of Mischievous Operation of Taxes on Rent, . 482 


Influence of Improvements — Slowness with which they s])read 
— Beneficial to all Classes — Different Methods of Letting 
Lands — Remarks upon those Methods — Increase and Reduc- 
tion of Rents — Regulations as to Management — Size of Farms 
— Influence of the granting of the Elective Franchise to 
Tenants over Agriculture — Profits of Farmers, . . .503 


Division of the Produce of Industry, under Deduction of Rent, 
between Capitalists and Labourers — Definition of Profits — Mr 
Ricardo's Theor\ of Profits ; Sense in which it is ti ut- — 



Causes which occasion a Rise or Fail of Profits — Accu- 
muhition not tlie Cause of a Fall of Profits — Influence of the 
decreasing Fertility of the Soil, and of Taxation on Profits — 
Influence of Loans to Government and of Changes in the 
Value of Money on Profits, ..... 528 


Interest and Nett Profit identical — Circumstances which occa- 
sion Variations in the Rate of Interest — Impolicy of Usury 
Laws, ......... 5(53 



Definition of Consumption — Consumption tlie End of I'roduc- 
tion — Test of advantageous and disadvantageous Consump- 
tion — Sumptuary Laws — Advantage of a Taste for Luxuries 
— Error of Dr Smith's Opinion with respect to unproductive 
Consumption — Error of those who contend, that to facilitate 
Production it is necessary to encourage wasteful Consumption 
— Statement of Montesquieu — Consumption of Government — 
Conclusion, ........ 569 

Appendix, ......... 597 

Index, 60S 





Definition of the Science — its Tmjjortance — Causes of its beinj 
neglected in Greece and Rome., and in the Middle Ages — 
Evidence on which its Conclusions are founded — Rise of the 
Science in Modern Europe — Mercantile System — Si/stem of 
M. QuesnuT/ and the French Economists — Publication of the 
" Wealth of Nations " — Distinction heticeen Politics and 
Statistics and Political Economy. 

Political Economy ^ may be defined to be the 
science of the laws which regulate the production, 
accumulation, distribution, and consumption of those 
articles or products that are necessary, useful, or 
agreeable to man, and which at the same time possess 
exchangeable value. 

' Economy., from iii%()i, a house, or family, and vo,aog, a law — the 
government of a family. Hence, Political Economy may be said 
to be to the State what domestic economy is to a family. 



When it is said that an article or product is pos- 
sessed of exchangeable value, it is meant that there 
are individuals disposed to give some quantity of 
labour, or of some other article or product, obtainable 
only by means of labour, in exchange for it. 

The power or capacity which particular articles 
or products have of satisfying one or more of the 
various wants and desires of which man is suscep- 
tible, constitutes their utility, and renders them 
objects of demand. 

An article may be possessed of the highest degree 
of utility, or of power to minister to our wants and 
enjoyments, and may be universally made use of, 
without possessing exchangeable value. This is an 
attribute or quality of those articles only which it 
requires some portion of voluntary human labour to 
produce, procure, or preserve. Without utility of 
some kind or other, no article can ever become an 
object of demand; but how necessary soever any 
article may be to our comfort, or even existence, still, 
if it be a spontaneous production of nature — if it 
exist independently of human agency — and if every 
individual may command it in indefinite quantities, 
without any voluntary exertion or labour, it is desti- 
tute of value, and can afford no basis for the reason- 
ings of the economist. A commodity, or product, is 
not valuable, merely because it is useful or desirable; 
but it is valuable wdien, besides being possessed of 
these qualities, it can only be procured through the 
intervention of labour. It cannot justly be said, 
that the food with which we appease the cravings of 


hunger, or the clothes by which we defend ourselves 
from the inclemency of the weather, are more useful 
than atmospheric air ; and yet they are possessed of 
that exchangeable value of which the latter is totally 
destitute. The reason is, that food and clothes are 
not, like air, gratuitous products ; they cannot be 
had at all times, and in any quantity, without exer- 
tion ; on the contrary, labour is always required for 
their production, or appropriation, or both ; and as 
no one will voluntarily sacrifice the fruits of his in- 
dustry without receiving an equivalent, they are truly 
said to possess exchangeable value. 

The economist does not investigate the laws which 
determine the production and distribution of such 
articles as exist, and may be obtained in unlimited 
quantities, independently of all voluntary human 
agency. The results of the industry of man are 
the only subjects which engage his attention. Poli- 
tical Economy might, indeed, be called the science 
of values; for, nothing destitute of exchangeable 
value, or which will not be received as an equivalent 
for something else which it has taken some labour to 
produce or obtain, can ever properly be brought 
within the scope of its inquiries. 

The word value, has, no doubt, been frequently em- 
ployed to express, not only the exchangeable worth 
of a commodity, or its capacity of exchanging for 
other commodities, but also its ntilitij, or capacity of 
satisfying our w^ants, or of contributing to our com- 
forts and enjoyments. But it is obvious, that the 
utility of commodities — that the capacity of bread, 


for example, to appease hunger, and of water to 
quench thirst — is a totally different and distinct 
quality from their capacity of exchanging for other 
commodities. Smith perceived this difference, and 
showed the importance of carefully distinguishing 
between utility, or, as he expressed it, " value in iise" 
and value in exchange. But he did not always keep 
this distinction in view, and it has been very often 
lost sight of by subsequent writers. There can be 
no doubt, indeed, that tu3 confounding of these op- 
posite qualities has been a principal cause of the 
confusion and obscurity in which many branches 
of the science, not in themselves difficult, are still 
involved. When, for example, it is said that water 
is highly valuable, the phrase has a very different 
meaning from what is attached to it when it is 
said that gold is valuable. Water is indispensable to 
existence, and has, therefore, a high degree of utility, 
or of " value in use ; " but as it can generally be 
obtained in large quantities, without much labour or 
exertion, it has, in most places, a very low value in 
exchange. Gold, on the other hand, is of compara- 
tively little utility ; but as it exists only in limited 
quantities, and requires a great deal of labour for its 
production, it has a comparatively high exchangeable 
value, and may be exchanged or bartered for a pro- 
portionally large quantity of most other commodities. 
Those who confound qualities so different can hardly 
fail to arrive at the most erroneous conclusions. And 
hence, to avoid all chance of error from mistaking 
the sense of so important a word as value, we shall 


not use it except to signify exchangeable worth, or 
value in exchange ; and shall always use the word 
utility to express the power or capacity of an article 
to satisfy our wants, or gratify our desires. 

Political Economy has sometimes been termed 
" the science which treats of the production, distri- 
bution, and consumption of wealth ; " and if by 
wealth be meant those useful or agreeable articles 
or products which possess exchangeable value, the 
definition would seem to be unexceptionable. If, 
however, the term wealth be understood in either a 
more enlarged or contracted sense, it will be faulty. 
Mr. Malthus, for example, has supposed wealth to 
be identical with "those material objects which are 
necessary, useful, and agreeable to man."^ But the 
inaccuracy of this definition is evident, though we 
should waive the objections which may perhaps be 
justly taken to the introduction of the qualifying 
epithet " material." In proof of this, it is sufficient 
to mention, that atmospheric air, and the heat of the 
sun, are both material, necessary, and agreeable pro- 
ducts ; though their independent existence, and their 
incapacity of appropriation, by depriving them of 
exchangeable value, place them, as already seen, 
without the pale of the science. 

Dr. Smith nowhere states the precise meaning he 
attached to the term wealth ; but he most commonly 
describes it to be "the annual produce of land and 
labour." Mr. Malthus, however, has justly objected 

1 " Principle? of Political Economy," p. 28. 


to this definition, that it refers to the sources of 
•wealth before it is known what wealth is, and that 
it includes all the useless products of the earth, as, 
well as those appropriated and enjoyed by man. 

The definition previously given does not seem to 
be open to any of these objections. By confining 
the science to a discussion of the laws regulating 
the production, accumulation, distribution, and con- 
sumption of articles or products possessed of ex- 
changeable value, we give it a distinct and definite 
object. When thus properly restricted, the researches 
of the economist occupy a field exclusively his own. 
He runs no risk of wasting his time in inquiries 
Avhich belo^ig to other sciences, or in unprofitable 
investigations respecting the production and con- 
sumption of articles which cannot be appropriated, 
and which exist independently of human industry. 

No article can be regarded as forming a portion of 
the wealth either of individuals or states, unless it 
be susceptible of appropriation. We shall, therefore, 
endeavour invariably to employ the term wealth to 
distinguish such products only as are obtained by the 
intervention of human labour, and which, conse- 
quently, may be appropriated by one individual, and 
enjoyed exclusively by him. A man is not said to 
be wealthy because he has an indefinite command 
over atmospheric air, or over the articles with which 
he, in common with others, is gratuitously supplied 
by nature ; for, this being a privilege which he enjoys 
along with every one else, it can form no ground of 
distinction : but he is said to be wealthy, according 


to the degree in which he can aflPord to command 
those necessaries, conveniencies, and luxuries, that 
are not the gifts of nature, but the products of human 

The object of Political Economy is to point out 
the means by which the industry of man may be 
rendered most productive of those necessaries, com- 
forts, and enjoyments, which constitute wealth ; to 
ascertain the circumstances most favourable for its 
accumulation ; the proportions in which it is divided 
among the different classes of the community ; and 
the mode in which it may be most advantageously 
consumed. The intimate connexion of such a science 
with all the best interests of society is abundantly 
obvious. There is no other, indeed, which comes so 
directly home to the every-day occupations and busi- J 
ness of mankind. The consumption of wealth is 
indispensable to existence ; but the eternal law of 
Providence has decreed, that wealth can only be pro- 
cured by industry ; that man must earn his bread in 
the sweat of his brow. This twofold necessity ren- 
ders the acquisition of w^ealth a constant and principal 
object of the exertions of the vast majority of the 
human race; has subdued the natural aversion of 
man from labour ; given activity to indolence ; and 
armed the patient hand of industry with zeal to 
undertake, and perseverance to overcome, the most 
irksome and disagreeable tasks. 

But when wealth is thus necessary, and when the 
desire to acquire it is sufficient to make us submit to 


the greatest ])rivations, the science which teaches the 
moans by which its acquisition may be best promoted, 
and we may obtain the greatest amount of wealth 
with the least difficulty, must certainly deserve to 
be carefully studied and meditated. There is no class 
of persons to whom it can be considered as either 
extrinsic or superfluous. There are some, doubtless, 
to whom it may be of more advantage than to others ; 
but it is of the utmost consequence to every one. The 
prices of all sorts of commodities ; the profits of the 
farmer, manufacturer, and merchant ; the rent of the 
landlord ; the employment and wages of the labourer; 
the influence of regulations aftectino- the freedom of 
industry ; the incidence and operation of taxes and 
loans, — all depend on principles which it belongs to 
this science to ascertain and elucidate. 

Neither is wealth necessary only because it aflfords 
the means of subsistence : without it we should never 
be able to cultivate and improve our higher and nobler 
faculties. Where wealth has not been amassed, 
individuals, being constantly occupied in providing 
for their immediate wants, have no time left for the 
culture of their minds ; so that their views, senti- 
ments, and feelings, become alike contracted and 
illiberal. The possession of a decent competence, 
or the power to indulge in other pursuits than those 
which directly tend to satisfy our animal wants and 
desires, is necessary to soften the selfish passions ; 
to improve the moral and intellectual character ; and 
to ensure any considerable proficiency in liberal 
studies and pursuits. And hence, the acquisition of 


wealth is not desirable merely as the means of pro- 
curing immediate and direct gratifications, but is 
indispensably necessary to the advancement of society 
in civilization and refinement. Without the tran- 
quillity and leisure afi'orded by the possession of 
accumulated wealth, those speculative and elegant 
studies which expand and enlarge our views, purify 
our taste, and lift us higher in the scale of being, 
can never be successfully prosecuted. Barbarism and 
refinement depend far more on the amount of their 
wealth than on any other single circumstance in the 
condition of a people. It is impossible, indeed, to 
name a na^tion, distinguished in philosophy or the fine 
arts, that has not been, at the siime time, celebrated 
for its riches. Pericles and Phidias, Petrarch and 
Raphael, immortalized the flourishing ages of Grecian 
and Italian commerce. The influence of wealth is, 
in this respect, almost omnipotent. It raised Venice 
from the bosom of the deep ; and made the desert 
and sandy islands on which she is built, and the 
unhealthy swamps of Holland, the favoured abodes 
of literature, science, and art. In our own country 
its eff'ects have been equally striking. The number 
and eminence of our philosophers, poets, scholars, 
and artists, have increased proportionally to the 
increase of the public wealth, or to the means of 
rewarding and honourino: their labours. 

The possession of wealth being thus indispensable 
to individual existence and comfort, and to the ad- 
vancement of nations in civilization, it may justly 
excite our astonishment, that so few eflbrts should 


have been made, down to a very late period, to in- 
vestigate its sources; and that the study of this 
science is not even yet considered as essential in a 
comprehensive system of education. A variety of 
circumstances mio-ht be mentioned which have con- 
tributed to its unmerited neglect ; but the institution 
of domestic slavery in the ancient world, and the 
darkness of the period when the plan of education 
in the universities of modern Europe was first formed, 
seem to have had the greatest influence. 

The citizens of Greece and Rome considered it 
degrading to engage in those occupations which form 
the principal business of the inhabitants of modern 
Europe. Instead of endeavouring to enrich them- 
selves by their own exertions, they trusted to the 
reluctant labour of slaves, or to subsidies extorted 
from conquered countries. In some Grecian states, 
the citizens were prohibited from engaging in either 
manufactures or commerce ; and though this pro- 
hibition did not exist in Athens and Rome, these 
employments were, notwithstanding, regarded by 
their citizens as unworthy of freemen, and were, in 
consequence, carried on only by slaves, or by the 
very dregs of the people. Even Cicero, who had 
mastered all the philosophy of the ancient world, and 
raised himself above many of the prejudices of his 
age and country, does not scruple to affirm, that there 
can be nothing ingenuous in a workshop ; that com- 
merce, when conducted on a small scale, is mean and 
despicable; and when most extended, barely tolerable 


— non admodiim vitupermida ! ^ Agriculture, inclee(], 
was treated witli more respect. Some of the most 
distinguished characters in the earlier ages of Roman 
history had been actively engaged in rural affairs ; 
but, despite their example, the cultivation of the 
soil, in the flourishing period of the Republic, and 
under the Emperors, was mostly carried on by slaves, 
belonging to the landlord, and employed on his 
account. The mass of Roman citizens either ensjaoed 
in the military service,^ or derived a precarious and 
dependent subsistence from the supplies of corn 
furnished by the conquered provinces. In such a 
society the relations subsisting in modern Europe 
between landlords and tenants, masters and servants, 
were nearly unknown ; and the ancients were, in 
consequence, all but entire strangers to those inte- 
resting and important questions arising out of the 
rise and fall of rents and wages, which form so impor- 
tant a branch of economical science. The philosophy 

' " Illiberalcs auteiu et sordid! questus mercenariorum, om- 
niumque quorum operse, non quorum artes emuntur. Est cniai 
illis ipsa merccs auctoramentura servitutis. Sordidi etiara putaudi, 
qui inercantur a niercatoribus quod statim vendant, nihil enim 
jirojiciunt^ nisi admodum mentiantur ! Opificesque omnes in 
sordida arte versantur, ^^c enim quidqriam iur/enuum ]>otest 
habere afficina. * * * Mercatura autem, si tenuis est, sordida 
])utanda est ; sin autem magna et copiosa, multa uudique ai>por- 
fans, multisque sine vanitale impertiens, non est admodum vitu- 
peranda." — De Oj/iciis, lib. i. sect. 42. 

^ " Rei militaris virtus prajstat ca?teris omnibus; ba^c populo 
Romano, ba3C huic urbi teternam gloriam poperit." — CrcERoy^yo 


of antiquity was also extremely unfavourable to tbe 
cultivation of Political Economy. The luxurious or 
more refined mode of living of the rich was regarded 
by the ancient moralists as an evil of the first mag- 
nitude.^ They considered it as subversive of those 
warlike virtues which were the principal objects of 
their admiration ; and they, therefore, denounced the 
passion for accumulating wealth as fraught with the 
most injurious consequences. It was impossible that 
this science could become an object of attention to 
minds imbued with such prejudices; or that it could 
be studied by those who contemned its objects, and 
vilified the labour by which wealth is produced. 

At the establishment of our universities, the clergy 
being almost the exclusive possessors of the little 
knowledge then in existence, their peculiar feelings 
and pursuits naturally had a marked inflQence over 
the plans of education they were employed to 
frame. Grammar, rhetoric, logic, school divinity, 
and civil law, comprised the whole course of study. 
To have appointed professors to explain the prin- 
ciples of commerce, and the means by which labour 
might be rendered most efiicient, would have been 
considered as at once superfluous and degrading 
to the dignity of science. The ancient prejudices 
against commerce, manufactures, and luxury, retained 
a powerful influence in the middle ages. None then 

' " Paulatim," says Tacitus, speaking of the effects of the in- 
creasing wealth of the Romans, "discessum ad delinamenta vic- 
torum, balnea, et conviviorum elegantiam, idque apud imperitos 
hiimcniitas vocatur." — Annal. lib. ii. 


possessed any clear ideas in regard to the true sources 
of national wealth, happiness, and prosperity. The 
intercourse among states was extremely limited, and 
was maintained rather by marauding incursions and 
piratical expeditions in search of plunder, than by a 
commerce founded on the gratification of real and 
reciprocal wants. 

These circumstances sufficiently account for the 
late rise of the science, and the little attention paid 
to it down to a very recent period. And since it 
has become an object of more general attention and 
inquiry, the differences which have subsisted among 
the more eminent of its professors have proved ex- 
ceedingly unfavourable to its progress, and have 
generated a disposition to distrust its best estab- 
lished conclusions. 

It is clear, however, that those who distrust the 
conclusions of Political Economy, because of the 
variety of systems that have been advanced to explain 
the phenomena about which it is conversant, might 
on the same ground distrust the conclusions of almost 
every other science. The discrepancy between the 
various systems that have successively been sanctioned 
by the ablest physicians, chemists, natural philo- 
sophers, and moralists, is quite as great as the dis- 
crepancy between those advanced by the ablest 
economists. But who would therefore conclude, 
that medicine, chemistry, natural philosophy, and 
morals, rest on no solid foundation, or that they are 
incapable of being formed into systems of well- 
established and consentaneous truths ? We do not 


refuse our assent to the demonstrations of Newton 
and Laplace, because they subverted the hypotheses 
of Ptolemy, Tycho Brahe, and Descartes ; and why 
should we refuse our assent to the demonstrations of 
Smith and Ricardo, because they have subverted 
the false theories that were previously advanced 
respecting the sources and the distribution of wealth ? 
Political Econom}^ has not been exempted from the 
fate common to the other sciences. None of them 
has been instantaneously carried to perfection ; more 
or less of error has always insinuated itself into the 
speculations of their earliest cultivators. But the 
errors with which this science was formerly infected 
are now fast disappearing ; and a few observations 
will suffice to show, that it really admits of as much 
certainty in its conclusions as any science founded on 
fact and experiment can possibly do. 

The principles ou which the production and ac- 
cumulation of wealth and the progress of civilization 
depend, are not the offspring of legislative enactments. 
Man must exert himself to produce wealth, because 
he cannot exist without it ; and the desire implanted 
in the breast of every individual, of rising in the 
world and improving his condition, impels him to 
save and accumulate. The principles v/hich form 
the basis of this science make, therefore, a part of 
the original constitution of man, and of the physical 
world; and their operation may, like that of the 
mechanical principles, be traced by the aid of obser- 
vation and analysis. There is, however, a material 


distinction between the physical and the moral and 
political sciences. The conclusions of the former 
apply in every case, while those of the latter apply 
only in the majority of cases. The principles whicli 
determine the production and accumulation of wealth 
are inherent in our nature, and exert a powerful, 
<Cthpugh not always the same degree of influence over 
the conduct of every individual ; and the theorist 
must, therefore, satisfy himself with framing rules to 
explain their operation in the majority of instances, 
leaving it to the sagacity of the observer to modify 
them so as to suit individual cases. Thus it is an 
admitted principle in Morals, as well as in Political 
Economy, that by far the largest portion of mankind 
have a clearer view of what is conducive to their 
own interests, than it is at all likely any other man 
or select number of men should have ; and, conse- 
quently, that it is sound policy to allow each indivi- 
dual to follow the bent of his inclination, and to 
conduct his affairs in any way he may think proper. 
This is the general theorem ; and it is one which is 
established on the most comprehensive experience. 
It is not, however, like the laws which regulate the 
motions of the planetary sysjtem ; it will hold in nine- 
teen out of twenty instances, but the twentieth may 
be an exception. But it is not required of the eco- 
nomist, that his theories should square with _the. 
peculiarities of particular persons. His conclusions 
are drawn from observing the principles which are 
found to determine the conduct of mankind, as pre- 
sented on the large scale of nations and empires. 


He has to deal with man in the aggregate ; with states, 
and not with families ; with the passions and pro- 
pensities which actuate the bulk of the human race, 
and not with those which are occasionally found to 
influence a solitary individual. 

It should always be borne in mind, that it is never 
any part of the business of the economist to inquire 
into the means by which the fortunes of individuals 
have been increased or diminished, except to ascer- 
tain in how far they have affected the public interests. 
These should alwa3^s form the exclusive objects of 
his attention. He is not to frame systems, and 
devise schemes, for increasing the wealth and enjoy- 
ments of particular classes; but to apply himself to 
discover the sources of national wealth and universal 
prosperity, and the means by which they may be ren- 
dered most productive. 

Nothing, indeed, is more common than to hear it 
objected to some of the best established truths in 
political and economical science, that they are at 
variance with certain facts, and that therefore they 
must be rejected. Most frequently, however, these 
objections originate in an entire misapprehension of 
the nature of the science. It would be easy to pro- 
duce thousands of instances of individuals who have 
been enriched by monopolies, as they are sometimes 
by robbery and plunder ; though it would be not a 
little rash thence to conclude, without further inquiry, 
that the community may be enriched by such means ! 
This, however, is the single consideration to which 
the economist has to attend. The question never is. 


whetlier a greater or smaller number of persons may 
be enriched by the adoption of a particular measure, 
or by a particular institution, but whether its ten- 
dency be to enrich the public. Admitting that 
monopolies and restrictive regulations frequently 
enable individuals to accumulate ample fortunes, in- 
stead of this being, as is often contended, any proof 
of their real advantageousness, it is quite the reverse. 
It has been demonstrated over and over again, that 
if monopolies and exclusive privileges enrich the few, 
they must, to the same^extent, impoverish the many; '^ p^U-V^A 
and are, therefore, as destructive of that national 
WEALTH, to promote which should be the principal 
object of every institution, as they are of the freedom 
of industry. ^ 

To arrive at a well-founded conclusion in this 
science, it is not, therefore, enough to observe results 
in particular cases, or as they affect particular indi- 
viduals; we must further inquire whether these results 
be constant and universally applicable, and whether 
the same circumstances which have given rise to them 
in one instance, would in every instance, and in every 
state of society, be productive of the same or similar 
results. A theory which is inconsistent with a uni- 
form and constant fact must be erroneous ; but the 
observation of a particular result at variance with 
our customary experience, especially if we have not 
had the means of discriminatinu' the circumstances 
attending it, should not induce us hastily to modify 
or reject a principle which accounts satisfactorily for 
the greater number of appearances. 


The example of the few arbitrary princes who 
have been equitable, humane, and generous, is not 
enough to overthrow the principle which teaches, 
that it is the nature of irresponsible power to de- 
bauch and vitiate its possessors — to render them 
haughty, cruel, and suspicious : nor is the example 
of those who, attentive only to present enjoyment, 
and careless of the future, lavish their fortunes in 
boisterous dissipation or vain expense, sufficient to 
invalidate the conclusion, that the passion for accu- 
mulation is infinitely stronger and more universally 
operative than the passion for expense. Had this 
not been the case, mankind could never have emerged 
from the condition of savages. The multiplied and 
stupendous improvements made in different ages and 
nations — the forests that have been cut down — the 
marshes and lakes that have been drained and sub- 
jected to cultivation — the harbours, roads, and 
bridges, that have been constructed — the cities and 
edifices that have been raised — are all consequences 
of a saving of income ; and establish, despite a thou- 
sand instances of prodigality, the vast ascendency and 
superior force of the accumulating principle. 

The want of attention to these considerations has 
occasioned much of the error and- misapprehension 
with which this science has been infected. Almost 
all the absurd theories and opinions that have suc- 
cessively appeared, have been supported by an ap- 
peal to facts. But a knowledge of facts, without a 
knowledge of their mutual relation, without being 
^ble to show why the -one is a cause and the other 


.aiLeffecl^-iSrtflL-use-tW illustration af M.- Say,- really 
BO-better -than the undigested erudition of an alma- 
-ttaek-maker, and can afford no means of judging of 
the truth or falsehood of a principle. 

Neither should it be forgotten, that the alleged 
facts so frequently brought forward to show the fal- 
lacy of general principles, are, in most cases, so care- 
lessly observed, and the circumstances under which 
they have taken place so indistinctly defined, as to 
be altogether unworthy of attention. To observe 
accurately, requires a degree of intelligence and 
acuteness, a freedom from prejudice, and a patience 
of investigation, belonging to a few only. " There 
is," to borrow the words of Dr. Cullen, " a variety 
of circumstances tending to vitiate the statements 
dignified with the name of experience. The simplest 
narrative of a case almost always involves some 
theories. It has been supposed that a statement is 
more likely to consist of unsophisticated facts, when 
reported by a person of no education ; but it will be 
found an invariable rule, that the lower you descend 
in the medical profession, the more hypothetical are 
the prevailing notions. Again, how seldom is it 
possible for any case, however minutely related, to 
include all the circumstances with which the event 
was connected ! Indeed, in what is commonly called 
experience, we have only a rule transferred from a 
case imperfectly known, to one of w^hich we are 
equally ignorant. Hence, that most fertile source 
of error, the applying deductions drawn from the 
result of one case to another case, the circumstances 


of which are not precisely similar. Without princi- 
ples deduced from analytical reasoning, experience 
is a useless and a blind guide." ^ 

Every one who has had occasion to compare the 
discordant statements of the mass of common obser- 
vers, with respect to the practical bearing and real 
influence of any measure affecting the public economy, 
must be convinced that Dr. Culleii's reasoning is still 
more applicable to political and economical science 
than to medicine. Circumstances which altogether 
escape the notice of ordinary observers, often ex- 
ercise a powerful influence over national prosperity; 
and those again which strike them as most impor- 
tant, are often comparatively insignificant. The 
condition, too, of nations is afi'ected by so many cir- 
cumstances, that without the greatest skill and cau- 
tion, joined to a searching and refined analysis, and 
a familiar acquaintance with scientific principles, it 
is, in most cases, quite impossible to discriminate 
between cause and eff'ect, and to avoid ascribing^ re- 
suits to one set of causes that have been occasioned 
by some other set. No wonder, therefore, when such 
is the difiiculty of observing, that " the number of 
false facts afloat in the world, should infinitely ex- 
ceed that of the false theories."^ And after all, 
how carefully soever an isolated fact may be observed, 
it can never, for the reasons already stated, form 
a foundation for a theorem either in the moral or 
political sciences. Those, indeed, who bring forward 

• CuUen's MS. Lectures. - A remark of Dr. Cullen. 


theories resting on so narrow a basis, are almost in- 
variably empirics, whose vanity or interest prompts 
them to set up conclusions drawn from their own 
limited range of observation, in opposition to those 
that have been sanctioned by the general experience 
of mankind. 

But although we are not to reject a received prin- 
ciple because of the apparent opposition of a few 
results, with the particular circumstances of wdiich 
we are unacquainted, we should place no confidence 
in its solidity unless it have been deduced from 
a very comprehensive and careful induction. The 
economist will not arrive at any thing like a true 
knowledge of the laws regulating the productid., 
accumulation, distribution, and consumption of wealth, 
if he do not draw his materials from a very wide sur- 
face. He should study man in every different situa- 
tion ; he should have recourse to the history of 
society, arts, commerce, and civilization ; to the 
works of legislators, philosophers, and travellers ; 
to every thing, in short, that can throw light on the 
causes which accelerate or retard the progress of 
nations: he should mark the chansjes which have 
taken place in the fortunes and condition of the 
human race in different reojions and acres of the 
world ; he should trace the rise, progress, and decline 
of industry ; and, above all, he should carefully 
analyze and compare the effects of different institu- 
tions and regulations, and discriminate the various 
circumstances wherein an advancing and declining 
society differ from each otlier. These investigations 


rlisclose the real causes of national opulence and re- 
finement, and of poverty and degradation ; and pro- 
vided tbey are suflSciently comprehensive, and that 
the circumstances under which observed events have 
taken place, correspond in the more essential respects 
with those under which it is meant to apply the 
experience deduced from them, they furnish the 
statesman with the means of devising a scheme of 
administration calculated to ensure the continued 
advancement of the society. 

But at the same time it must be acknowledged, 
that however extensive our investigations, the expe- 
rience to which we are at present able to appeal, 
appears to be insufficient for the satisfactory solution 
of some of the more difficult practical problems in- 
volved in the application of the science. The state of 
society in antiquity, when the bulk of the labouring 
classes consisted of slaves, and its state in the middle 
ages, and down almost to our own times, was extreme- 
ly different from its present state ; so that the 
lessons derived from past experience, the only sure 
ground on which to build in such matters, are, un- 
fortunately, but little applicable to the new order of 
things. With respect, indeed, to the mere production 
of wealth, and to what may be called the strictly scien- 
tific parts of the science, there is now but little, if any, 
room for doubt or hesitation. But it is otherwise with 
many practical questions in which the public pros- 
perity is deeply interested. Some of these will be 
noticed in other parts of this work ; and at present 
we shall content ourselves with merely referring, bv 


way of illustration, to such questions as those re- 
specting the consequences of the excessive growth of 
manufactures in particular countries ; the practice of 
equally dividing the fixed property belonging to 
individuals, on their demise, among their (Jjfferent' 
children, as compared with the practices of primo- 
geniture and entail ; the interference with parental 
authority, in regulating the labour and education of 
children; the principle and administration of the 
laws for the support of the poor, and of those for the 
establishment of public works, &c. These are all 
questions of vast importance, in regard to which 
we are at this moment, perhaps, without the means 
of coming to any conclusions on which it would be 
_altogether safe to rely. We must, it is true, 
despite our imperfect means of information, legislate 
upon some or all of these matters ; and should, -ef- 
CDurse, adopt such measures as may, on a careful 
consideration of the circumstances, seem, on the 
whole, most likely to secure the object in view. 
But we should think, that but few who reflect, though 
it were only cursorily, on the novelty, (for they are 
but of yesterday,) and consequently the difficulty as 
well as importance of these and similar questions, 
will be inclined to adopt a dogmatical tone, or to 
pronounce confidently in regard to the results of 
any measures, however well considered, that may at 
present be proposed with respect to them. 

But, notwithstanding the uncertainty with which 
they must sometimes be mixed up, such inquiries 
cannot fail to excite the deepest interest in every 


ingenuous mind. The laws by wliicli the motions of 
the celestial bodies are regulated, and over which 
man cannot exercise the smallest influence, are yet 
universally allowed to be noble and rational objects 
of study. But the laws which regulate the move- 
ments of human society — which cause one people to 
advance in opulence and refinement, at the same time 
that another is sinking into the abyss of poverty and 
barbarism — have an infinitely stronger claim on our 
attention ; both because they relate to objects which 
exercise a direct influence over human happiness, and 
because their efi'ects may be, and in fact are, con- 
tinually modified by human interference. National 
prosperity does not depend nearly so much on advan- 
tageous situation, salubrity of climate, or fertility of 
soil, as on the adoption of measures, fitted to stimu- 
late the genius of the inhabitants, and to give per- 
severance and activity to industry. The establish- 
ment off^a wise system of public economy XJompen- 
sates for almost every other deficiency ; and has 
rendered regions naturally inhospitable and unpro- 
ductive, the comfortable abodes of a refined, a crowd- 
ed, and a wealthy population : but where it is want- 
ing, the best gifts of nature are of little value ; and 
countries possessed of the greatest capacities of im- 
provement, and abounding in all the materials neces- 
sary for the production of wealth, with difficulty 
furnish a miserable subsistence to hordes distin- 
guished only by their barbarism and wretchedness. 

Tliose who reflect on the variety and extent of 


knowledge required for the construction of a sound 
theory of Political Economy, will cease to feel any 
surprise at the errors into which its cultivators liave 
been betrayed, or at the discrepancy of the opinions 
that are still entertained on a few important points. 
Political Economy is of very recent origin. Though 
various treatises of considerable merit had previously 
been published on some of its detached parts, it was 
not treated as a whole, or in a scientific manner, until 
about the middle of last century. This circumstance 
is of itself enouo;h to account for the number of 
erroneous systems that have since appeared. Instead 
of deducing their general conclusions from a compari- 
son of particular facts, and a careful examination of 
the phenomena attending the operation of different 
principles, and of the same principles under different 
circumstances, the first cultivators of almost every 
branch of science begin by framing their theories on 
a very narrow and insecure basis. Nor is it really 
in their power to go to work differently. Observa- 
tions are scarcely ever made, or particulars noted, for 
their own sakes. It is not until they begin to be I 
sought after, as furnishing the only test by which to I 
ascertain the truth or falsehood of some popular ; 
theory, that they are made in sufficient numbers, ^ 
and v>'ith sufficient accuracy. It is, in the peculiar 
phraseology of this science, the effectual demand of 
the theorist that occasions the production of the facts 
or raw materials he is afterwards to work into a 
system. The history of the science strikingly ex- 
em. plifies the truth of this remark. Being, as already 


observed, entirely unknown to the ancients, and but 
little attended to by our ancestors down to a com- 
paratively late period, most of those circumstances 
which would have enabled us to judge of the wealth 
and civilization of the most celebrated states of 
antiquity, and of Europe during the middle ages, 
have either been thought unworthy of notice by the 
historian, or have been very imperfectly and carelessly 
detailed. Those, therefore, who first began to trace 
its general principles, had but a comparatively limited 
and scanty experience on which to build their con- 
clusions. Nor did they even avail themselves of the 
few historical facts with which they might easily 
have become acquainted; but, for the most part, con- 
fined their attention to such as happened to come 
within the narrow sphere of their own observation. 

The circumstance of the money of all civilized coun- 
tries having principally consisted of gold and silver, 
naturally gave birth to the once prevalent opinion that 
wealth consisted exclusively of the precious metals. 
Having been used both as standards by which to 
measure the value of different commodities, and as 
the equivalents for which they were most frequently 
exchanged, they acquired an artificial importance, not 
merely in the estimation of the vulgar, but in that also 
of persons of the greatest discernment. The simple 
and decisive consideration, that to buy and to sell is 
merely to barter one commodity for another — to 
exchange a certain quantity of corn or cloth, for 
example, for a certain quantity of gold or silver, and 
vice versa. — was entirely overlooked. The attention 


was gradually transferred from the money's worth to 
the money itself; and the wealth of individuals 
and of states came to be measured by the quantity 
of the precious metals actually in their possession ; 
and not, as it should have been, by the abundance 
of their disposable products, or by the quantity and 
value of the commodities with which they could 
afford to purchase these metals. And hence the 
policy, as obvious as it was universal, of attempthig 
to increase the amount of national wealth by forbid- 
ding the exportation of gold and silver, and encourag- 
ing their importation. 

It appears from a passage of Cicero, that the ex- 
portation of the precious metals from Rome had been 
frequently prohibited during the Republic;^ and this 
prohibition was repeatedly renewed, though to very 
little purpose, by the Emperors.^ Neither, perhaps, 
has there been a state in modern Europe which has 
not expressly forbidden the exportation of gold and 
silver. It is said to have been interdicted by the 
law of England previously to the Conquest ; and 
various statutes were subsequently passed to the same 
effect ; one of which, (3d Henry VIII. cap. 1,) enacted 

' '"'' Exportari aurum non oportcre, cum sa'pe antea senatus, 
turn, me consule, (/ravissime judicavit." — Orat. pro L. Flacco, 
cap. 28. 

^ Pliny, when enumerating the silks, spices, and other 
Eastern products imported into Italy, says, ^^ Minimaque co?n- 
putatione millies centena millia scstertium annis omnibus, India 
et Seres^ jyeninsulaqtte ilia f Arabia J imperio nostra adimunt. 
Tanto nobis delicios et fcemince constant" — Hist. Nat. lib. xii. 
cap. 18. 


SO late as 1512, declared, that all persons carrying 
over sea any coins, plate, jewels, &c. should, on 
detection, forfeit double their value. 

The extraordinary extension of commerce during 
the fifteenth and sixteenth centuries occasioned the 
substitution of a more refined and complex system 
for increasing the supply of the precious metals, in 
the place of the coarse and vulgar one that had previ- 
ously obtained. The establishment of a direct inter- 
course with India by the Cape of Good Hope, seems 
to have had the greatest influence in effectino- this 
change. The precious metals have usually been 
among the most advantageous articles of export to 
the East : and, notwithstanding the old and deeply- 
rooted prejudices against their exportation, the East 
India Company obtained, when first instituted, in 
1600, leave annually to export foreign coins, or 
bullion, of the value of £30,000 ; on condition, how- 
ever, of their importing, within six months after the 
termination of every voyage, except the first, as much 
gold and silver as they exported. But the enemies 
of the Company contended, that this condition was 
not complied vv^ith ; and that it was besides contrary 
to all principle, and highly injurious to the public 
interests, to permit gold and silver to be sent out of 
the kingdom. Tlie merchants, and others interested 
in the support of the Company could not controvert 
the reasonings of their opponents, without openly 
impugning the ancient policy of absolutely preventing 
the exportation of the precious metals. They did 
not, indeed, venture to contend, and it probably did 


not occur to tlieiu, that tbe exportation of bullion to 
India was advantageous, because the commodities 
bought bj it were of greater value in England ; 
but the}^ contended, that its exportation was advan- 
tageous, because the commodities brought from India 
were chiefly re-exported to other countries, from 
which a greater amount of bullion was obtained in 
payment for them than had been originally required 
for their purchase in the East. Mr. Thomas Mun, 
the ablest of the Company's advocates, ingeniously 
compares the operations of the merchant in conduct- 
ing a trade carried on by the exportation of gold and 
silver, to the seed-time and harvest of agriculture. 
" If we only behold," says he, " the actions of the 
husbandman in the seed-time, when he casteth away 
much good corn into the ground, we shall account 
him rather a madman than a husbandman. But 
when we consider his labours in the harvest, which 
is the end of his endeavours, we shall find the worth 
and plentiful increase of his actions." ^ 

Such was the origin of what has been called the 
MERCANTILE SYSTEM : and, when compared with the 
previous prejudice, for it hardly deserves the name 
of system, which wholly interdicted the exportation 

' " Treasure by Foreign Trade," orig. cd. p. 50. — This work 
was published in 1G64, a considerable j)eriod after Mr. Muu's 
death. Most probably it had been written about 1635 or 1640. 
Mun had previously advanced the same doctrines, nearly in the 
same words, in his Defence of the East India Trade, originally 
published in 1621, and in a petition drawn up by him, and pre- 
sented by the East India Company to Parliament, in 1628. 


of gold and silver, it must be allowed that its adoption 
was a considerable step in the progress to sounder 
opinions. The supporters of the mercantile system, 
like their predecessors, held that gold and silver alone 
constituted wealth ; but they argued that sound policy 
dictated the propriety of allowing their exportation 
to foreigners, provided the commodities imported in 
their stead, or a portion thereof, were afterwards sold 
to other foreigners for more bullion than had been 
expended on their purchase ; or provided the impor- 
tation of the foreign commodities occasioned the 
exportation of so much more native produce than 
would otherwise have been exported, as should more 
than equal their cost. These opinions necessarily 
led to the famous doctrine of the Balance of 
Trade. It was obvious that the precious metals 
could not be obtained in countries destitute of 
mines, except in return for exported commodities ; 
and the grand object of the supporters of the mercan- 
tile system being the monopoly of the largest possible 
supply of the precious metals, they adopted various 
schemes for encouraging the exportation, and restrain- 
/ ing the importation of almost all products, except 
\ gold and silver, that were not intended for future 
exportation. When the value of the exports exceeded 
that of the imports, tlie excess was denominated a 
favourable balance ; and was regarded as forming, at 
one and the same time, the sole cause and measure 
of the progress of countries in the career of wealth : 
for, it was taken for granted, that the equivalent of 
the balance must inevitably be brought home in gold 


and silver, or iu those metals which were then believed 
to be the only real riches individuals or nations could 

These principles and conclusions, tliough absolutely 
erroneous, afford a tolerable explanation of a few 
very obvious phenomena; and what did more to re- 
commend them, they were in perfect unison with the 
popular prejudices on the subject. The merchants 
and practical men, who founded the mercantile system, 
did not consider it necessary to subject the principles 
they assumed to any very refined analysis or examin- 
ation. But, taking for granted that the common 
consent of mankind was a sufficient guarantee for 
their truth, they applied themselves to the discussion 
of the practical measures calculated to give them the 
greatest efficacy. 

" Although a kingdom," says Mr. Mun, " may be 
enriched by gifts received, or by purchase taken, from 
some other nations ; yet these are things uncertain, 
and of small consideration when they happen. The 
ordinary means, therefore, to increase our wealth and 
treasure, is by foreign trade ; wherein we must ever 
observe this rule — to sell more to strangers yearly 
than we consume of theirs in value. For, suppose, 
that when this kingdom is plentifully served with 
cloth, lead, tin, iron, fish, and other native commodi- 
ties, we do yearly export the overplus to foreign 
countries to the value of £2,200,000, by which means 
we are enabled, beyond the seas, to buy and bring in 
foreign wares for our use and consumption to the 
value of £2,000,000 : by this order duly kept in our 


trading, we may rest assured that the kingdom shall 
be enriched yearly £200,000, which must be brought 
to us as so much treasure ; because that part of our 
stock which is not returned to us in wares must 
necessarily be brought home in treasure." ^ 

The advantage of foreign commerce is here sup- 
posed to depend wholly on the amount of gold and 
silver which, it is assumed, must be brought home in 
payment of the excess of exported products. Mr. 
Mun lays no stress whatever on the circumstance of 
its reducing the price of almost every description of 
commodities, by giving birth to the territorial division 
of labour amongst different countries ; and of its also 
enabling each particular people to obtain an infinite 
variety of useful and agreeable products, of wliich 
they would, otherwise, be wholly destitute. We are 
desired to consider all this accession of wealth, all 
the vast additions made by commerce to the motives 
which stimulate, and the comforts and enjoyments 
which reward the labour of the industrious, as no- 
thing, and to fix our attention exclusively on the 
balance of £200,000 of gold and silver ! This is 
much the same as if we were to estimate the com- 
fort and utility of clothes, by the number and glare 
of the metal buttons by which they are fastened. 
And yet Mr. Mun's rule for estimating the advanta- 
geousness of foreign commerce was long regarded, by 
most merchants, writers, and practical statesmen, as 
infallible ; and such is the inveteracy of ancient 
prejudices, that we are still, every now and then, 

^ "Treasure by Foreign Trade," p. 11. 


congratulated on the excess of our exports over our 
imports ! 

There were many circumstances, however, besides 
the factitious importance ascribed to the precious 
metals, which led to the enactment of reo-ulations 
restricting the freedom of industry, and secured the 
ascendency of the mercantile system. The feudal 
governments established in the countries that had 
formed the western division of the Roman empire, 
having speedily lost their authority, their subjects 
were involved in confusion and anarchy. The princes, 
unable of themselves to restrain the usurpations 
of the greater barons, endeavoured to strengthen 
their influence and consolidate their power, by at- 
tachino- the inhabitants of cities and towns to their 
interests. For this purpose, they granted them 
charters, which abolished every existing mark of 
servitude, and formed them into corporations, or 
bodies politic, governed by councils and magistrates 
of their own selection. The order and good govern- 
ment that were, in consequence, established in cities 
and towns, and the security enjoyed by their inhabi- 
tants, while the rest of the country was a prey to 
rapine and disorder, stimulated their industry, and 
gave them a decided superiority over the cultivators 
of the soil. It was from them that the princes 
derived the greater part of their supplies of money ; 
and it was by their co-operation that tliey were 
enabled to subdue the pride and independence of 
the barons. But the citizens did not render this 
continued assistance to their sovereigns merely by 




way of compensation for the original gift of their 
charters. They were continually soliciting new 
privileges. And it was not to be expected that 
those whom they had laid under so many obligations, 
and who justly regarded them as forming the most 
industrious and deserving portion of their subjects, 
should feel any great disinclination to gratify their 
wishes. Hence, the exportation of corn, and of the 
raw materials used in their manufactures, was pro- 
hibited, that they might obtain cheap provisions, and 
be able to carry on their industry under the most 
favourable circumstances ; at the same time that 
heavy duties and absolute prohibitions were employed 
to prevent the importation of manufactured articles 
from abroad, and to secure them the monopoly of 
the home market. The privilege was, also, granted 
to the citizens of towns-corporate, of preventing, 
within their limits, any individual from carrying on 
any branch of industry without their leave. These, 
with a variety of subordinate regulations intended 
to force the importation of the raw materials required 
in manufactures, and the exportation of manufactured 
goods, were the principal features of the system of 
public economy adopted, in the view of encouraging 
domestic industry, in every country of Europe, in 
the fourteenth, fifteenth, sixteenth, and seventeenth 
centuries. The freedom of intercourse, that had 
been partially recognised by their ancient laws, was 
almost totally destroyed ; and the spirit of invention 
was restrained still more, perhaps, by vicious systems 
of legislation than by the real difficulties that opposed 


its development. To such an excess was the j^ro- 
tective system at one time carried, that it was not 
uncommon to forbid the use of new manufactures, 
even when produced at home, lest they might interfere 
w^ith those already established. So late as 1721, the 
wearing of calicoes was prohibited, for the avowed 
purpose of encouraging the woollen and silk manu- 
factures, by the imposition of a penalty of £20 on 
the seller, and of £5 on the wearer. In 1736 this 
law was repealed as to British calicoes, provided, 
however, that the w'arp were of linen yarn. It is 
almost superfluous to add, that, without the repeal of 
these absurd statutes, the cotton manufacture could 
not have made any progress amongst us. 

But the exclusion of all competition, and the mo- 
nopoly of the home market v\'ere not enougli to satisfy 
the manufacturers and merchants. Having obtained 
all the advantage they could from the public, they 
next attempted to prey on each other. Such of them 
as possessed most influence procured the privilege of 
carrying on particular branches of industry to the 
exclusion of every one else. This abuse was carried 
to a most oppressive height in the reign of Elizabeth, 
who granted an infinite number of new patents ; and 
the grievance became at length so insupportable as 
to make all classes join in petitioning for its aboli- 
tion ; and this, after much opposition on the part of 
the Crown, wdiich looked upon the power to erect 
monopolies as a very valuable branch of the preroga- 
tive, was eftected by an act passed in 1024, (21 Jac. 
I. cap. 3.) By abolishing a number of oppressive 


monopolies, and restoring the freedom of interna,! 
industry, this act did more, perhaps, than any other 
in tlie statute-book to accelerate the progress of im- 
provement ; but it touched none of the fundamental 
principles of the mercantile or manufacturing system ; 
and the privileges of all bodies-corporate were ex- 
empted from its operation. 

In France the interests of the manufacturers were 
warmly espoused by the celebrated M. Colbert, 
minister of finance during the most splendid period 
of the reign of Louis XIV. ; and the year 1664, 
when the famous tariflF, compiled under his direction, 
was promulgated, has been sometimes considered, 
though, as has been seen, erroneously, as the era of 
the mercantile system.^ 

The restrictions in favour of the manufacturers 
were all zealously supported by the advocates of the 
mercantile system and the balance of trade. The 
facilities given to the exportation of goods manu- 
factured at home, and the obstacles thrown in the 
way of importation from abroad, seemed peculiarly 
well fitted for making the exports exceed the imports, 
and procuring a favourable balance. Instead, there- 
fore, of these regulations being regarded as the off- 
spring of a selfish, monopolizing spirit, they were 
looked upon as having been dictated by the soundest 
policy. The interests of the manufacturers and 
merchants were universally supposed to be identified 
with each other, and also with those of the public- 
The acquisition of a favourable balance of payments 

' See Mengotti, " Dissertazione sul Colbertismo," cap. xi. 


was the grand object to be accomplished ; and heavy 
duties and restrictions on importation, and bounties 
on exportation, were the means by which it was to 
be attained. It cannot excite surprise, that a system 
having so many popular prejudices in its favour, and 
which afforded a plausible apology for the exclusive 
privileges enjoyed by the manufacturing and com- 
mercial classes, should have early attained, or that 
it should still preserve, notwithstanding the over- 
throw of its principles, much practical influence.^ 
■ "It is," says M. Storch, "no exaggeration to affirm, 
that there are very few political errors which have 
produced more mischief than the mercantile system. 
Armed with power, it has commanded and forbid, 
where it should only have protected. The regulating 
mania which it has inspired, has tormented industry 
in a thousand ways, to force it from its natural chan- 
nels. It has made each nation regard the welfare of 
its neighbours as incompatible with its own ; hence 
the reciprocal desire of injuring and impoverisliing 
each other ; and hence that spirit of commercial 
rivalry which has been the immediate or remote cause 
of the greater number of modern wars. This system 
has stimnlated nations to employ force or cunning to 
extort commercial treaties, productive of no real 
advantage to themselves, from the weakness or igno- 

' Melon and Forbonnais in France; Genovesi in Italy; Jlun, 
Sir Joslali Child, Dr. Davenant, the authors of the British ]\Ier- 
chant, and Sir James Steuart, in England, are the ablest writers 
who have espoused, some with more, and some with fewer excep- 
tions, the leading principles of the mercantile system. 


ranee of others. It has formed colonies, that the 
mother country might enjoy the monopoly of their 
trade, and force them to resort only to her markets. 
In short, where this system has been productive of 
the least injury, it has retarded the progress of 
national prosperity; every where else it has deluged 
tlie earth with blood, and has depopulated and ruined 
some of those countries whose power and opulence 
it was supposed it would carry to the highest 
pitch." ' 

The shock given to previous prejudices and systems 
by those great discoveries and events, which will for 
ever distinguish the fifteenth and sixteenth centuries, 
and the greater attention which the progress of civi- 
lization and industry naturally drew to the sources 
of national power and opulence, prepared the way 
for the downfal of the mercantile system. The 
: advocates of the East India Company, whose 
interests had first made them question the prevailing 
doctrines as to the exportation of bullion, gradually 
assumed a higher tone; and at length boldly contended 
that bullion was nothing but a commodity, and that 
there was no good reason for restraining its free 
exportation. Similar opinions were soon after avowed 
by others. Many eminent merchants began to look 
with suspicion on several of the received maxims ; 
and acquired more correct and comprehensive views 
of the principles of commercial intercourse. The 

' Storcli, " Cours (I'Economie Politique," torn. i. p. 102. Paris 


new ideas ultimately made their way into the House 
of Commons ; and in 1663, the statutes prohibiting 
the exportation of foreign coin and bullion were re- 
pealed ; full liberty being given to the East India 
Company and to private traders, to export them in 
unlimited quantities. 

In addition to the controversy about the East 
India trade, the discussions respecting the founda- 
tion of the colonies in America and the West Indies, 
the establishment of a compulsory provision for the 
support of the poor, the prohibition of the export of 
wool, &c., attracted, in the seventeenth century, an 
extraordinary portion of the public attention to ques- 
tions connected with the commercial and domestic 
policy of the country. In its course a more than 
usual number of tracts were published on economical 
subjects. And though the authors of the greater 
number were strongly imbued with the prejudices of 
the age, it cannot be denied, that several amongst them 
emancipated themselves from their influence, and have 
an unquestionable right to be regarded as the founders 
of the modern theory of commerce — as the earliest 
expositors of those sound and liberal doctrines, which 
show that the prosperity of states can never be pro- 
moted by restrictive regulations, or by the depression 
of their neighbours — that the genuine spirit of com- 
merce is inconsistent with the selfish and shallow 
policy of monopoly — and that the self-interest of 
mankind, not less than their duty, requires them to 
live in peace, and to cultivate a fair and f ieudly 
intercourse with each other. 


Besides Miin, Sir Josiah Child,^ (whose work, 
tliough founded on the principles of the mercantile 
system, contains many sound and liberal views,) Sir 
William Petty,^ and Sir Dudley North, are the 
most distinguished economical writers of the seven- 
teenth century. The latter not only rose above the 
established prejudices of the time, but had sagacity 
enough to detect the more refined and less obvious 
errors that were newly coming into fashion. His 
tract, entitled, " Discourses on Trade, principally 
directed to the Cases of Interest, Coinage, Clipping, 
and Increase of Money," published in 1691, contains 
a far more able statement of the true principles of 
commerce than any that had then appeared. North 
is throughout the intelligent and consistent advocate 
of commercial freedom. He is not, like the most 
eminent of his predecessors, well informed on one 
subject, and erroneous on another. His system is 
consentaneous in its parts, and complete. He shows 
that, in commercial matters, nations have the same 
interests as individuals ; and forcibly exposes the 
absurdity of supposing, that any trade adA^antageous 
to the merchant can be injurious to the public. His 
opinions respecting a seignorage on coinage and 
sumptuary laws, then very popular, are equally en- 

^ "A New Discourse of Trade," first published in 1668; but 
greatly enlarged and improved in the second edition, published in 

" "Quantulumcunque," published in 1682; "Political Anatomy 
of Ireland," published in 1672 ; and other works. 


The general principles laid down and illustrated in 
this tract, are announced in the preface as follows : — 

" That the world as to trade is but as one nation 
or people, and therein nations are as persons. 

" That the loss of a trade with one nation is not 
that only, separately considered, but so much of the 
trade of the world rescinded and lost, for all is com- 
bined together. 

" That there can be no trade unprofitable to tlie 
public; for if any prove so, men leave it oflP; and 
wherever the traders thrive, the public, of which they 
are a part, thrive also. 

"• That to force men to deal in any prescribed 
manner, may profit such as happen to serve them ; 
but the public gains not, because it is taken from one 
subject to give to another, 

" That no laws can set prices in trade, the rates 
of which must and will make themselves. But when 
such laws do happen to lay any hold, it is so mucii 
impediment to trade, and therefore prejudicial. 

" That money is a merchandise, whereof there may 
be a glut as well as a scarcity, and that even to an 

" That a people cannot want money to serve the 
ordinary dealing, and more than enough they will not 

" Tluit no man will be the richer for the making 
much money, nor have any part of it, but as he buys 
it for an equivalent price. 

" That the free coynage is a perpetual motion 
found out, whereby to melt and coyn without ceasing, 


and SO to feed goldsmiths and coyners at the public 

" That debasing the cojn is defrauding one another, 
and to the public there is no sort of advantage from 
it ; for that admits no character, or value, but in- 

" That the sinking by alloy or weight is all one. 

" That exchange and ready money are the same, 
nothing but carriage and recarriage being saved. 

" That money exported in trade is an increase to 
the wealth of the nation ; but spent in war, and pay- 
ments abroad, is so much impoverishment. 

" In short, that all favour to one trade, or interest, 
is an abuse, and cuts so much of profit from the 

Unluckily, this admirable tract never obtained any 
considerable circulation. There is good reason, in- 
deed, for supposing that it was designedly suppressed.^ 
At all events, it speedily became excessively scarce ; 
and we are not aware that it was ever quoted by 
any subsequent writer previously to the first edition 
of this work. 

The same enlarged views that had found so able 
a supporter in Sir Dudley North, were afterwards 
advocated to a greater or less extent by Locke,^ the 
anonymous author of a pamphlet on the East India 

^ See the Honourable Roger North's " Life of his Brother, the 
Honourable Sir Dudley North," p. 179. 

^ " Considerations on the Lowering of Interest and Raising the 
Value of Money," 1691 ; and " Further considerations on Raising 
the Value of Money," 1695. 


Trade/ Vanderlint,^ Richardson,^ Hume,* and Har- 
ris.^ But their efforts were ineffectual to the sub- 
version of the mercantile system. Their notions 
respecting the nature of wealth were confused and 
contradictory ; and as they neither attempted to in- 
vestigate its sources, nor to trace the causes of national 
opulence, their arguments in favour of a liberal system 
of commerce had somewhat of an empirical aspect, 
and failed of making the impression that is always 
made by reasonings logically deduced from well- 
established principles, and shown to be consistent 
with experience. The opinions entertained by Locke, 
respecting the paramount influence of labour in the 
production of wealth, were at once original and cor- 
rect ; but he did not prosecute his investigations in 
the view of elucidating the principles of the science, 
and made no reference to them in his subsequent 
writings. And though Harris adopted Locke's views, 
and deduced from them some important practical in- 
ferences, his general principles are merely introduced 
by way of preface to his Treatise on Money ; and 
are not explained at any length, or in that syste- 
matic manner necessary in scientific investigations. 

* "Considerations on the East India Trade," 1701. This is a 
very remarkable pamphlet. The author has successfully refuted 
the various arguments advanced in justification of the prohibition 
of importing East Indian manufactured goods; and has given a 
very striking illustration of the effects of the division of labour. 

2 " Money Answers all Things," 1734. 

^ "Essay on the Causes of the Decline of Foreign Trade," 1 744. 

* "Political Essays," 1752. 

^ " Essay on Money and Coins," 1757. 


But what had thus been left undone by others, 
was now attempted by a French philosopher, equally 
distinguished for the subtlety and originality of his 
understanding, and the integrity and simplicity of his 
character. The celebrated M. Quesnay, a physician 
attached to the court of Louis XV., has the merit 
of being the first who attempted to investigate and 
analyze the sources of wealth, in the view of ascer- 
taining the fundamental principles of Political 
Economy : and who, in consequence, gave it a sys- 
tematic form, and raised it to the rank of a science. 
Quesnay 's father was a small proprietor ; and having 
been educated in the country, he was naturally in- 
clined to regard agriculture with more than ordinary 
partiality. At an early period of his life he was 
struck with its depressed state in France, and set 
himself to discover the causes which had prevented 
its making that progress which the industry of the 
inhabitants, the fertility of the soil, and the excellence 
of the climate, seemed to ensure. In the course of 
this inquiry he speedily discovered that the preven- 
tion of the exportation of corn, and the preference 
given in the policy of Colbert to manufactures and 
commerce over agriculture, formed the most powerful 
obstacles to the progress and improvement of the 
latter. But Quesnay was not satisfied with exposing 
the injustice of this preference, and its pernicious 
consequences: his zeal for the interests of agriculture 
led him, not merely to place it on the same level with 
manufiictures and commerce, but to raise it above 
them, bv endeavouring to show tliat it is the onlv 


species of industry which contributes to the riches 
of a nation. Founding on the indisputable fact, that 
every thing which either ministers to our wants or 
desires, must be originally derived from the earth, 
Quesnay assumed as a self-evident truth, and as the 
basis of his system, that the earth is the only source 
of wealth ; and held that labour is altogether incapable 
of producing any new value, except when employed 
in agriculture, includino; under that term fisheries 
and mines. The changes produced by the powerful 
influence of the vegetative powers of nature, and 
his inability to explain the origin and causes of rent, 
confirmed him in this opinion. The circumstance, 
that of all who engage in industrious undertakings, 
none but the cultivators of the soil pay rent for 
the use of natural agents, appeared to him to 
prove that agriculture is the only species of industry 
which yields a nett surplus {produit net) over and 
above the expenses of production. Quesnay allowed 
that manufacturers and merchants are highly useful ; 
but, as they realize no nett surplus in the shape of 
rent, he contended that the value which they add to 
the raw material of the commodities they manufac- 
ture, or carry from place to place, is barely equivalent 
to the value of the capital or stock consumed by 
them during the time they are necessarily engaged 
in these operations. These principles being estab- 
lished, Quesnay proceeded to divide society into 
three classes; the Jirst, or productive class, by whose 
agency all wealth is produced, consists of the farmers 
and labourers engaged in agriculture, who subsist on 


a portion of the produce of tlie land reserved to them- 
selves as the wages of their labour, and as a reason- 
able profit on tlieir capital : the second, or proprietar?/ 
class, consists of those who live on the rent of the 
land, or on the nett surplus produce raised by the 
cultivators after their necessary expenses have been 
deducted: and the third, or unproductive class, con- 
sists of manufacturers, merchants, menial servants, 
&c., who subsist entirely on the wages paid them by 
the other two classes; and whose labour, though ex- 
ceedingly useful, adds nothing to the national wealth. 
It is obvious, supposing this classification to be made 
on just principles, that all taxes must fall on the land- 
lords. The third, or unproductive class, have nothing 
but what they receive from the other two classes, 
who pay them only what is required to enable them 
to subsist and continue their services; and if any 
deduction were made from the fair and reasonable 
profits and wages of the husbandmen, or productive 
class, it would paralyze their exertions and spread 
poverty and misery throughout the land, by drying 
up the only source of wealth. Hence it necessarily 
follows, on this theory, that the entire expenses of 
government, and the various public burdens, must, 
however imposed, be in the end defrayed out of the 
produit net, or rent of the landlords ; and consistently 
with this principle, Quesnay proposed that all the 
existing taxes should be repealed, and that a single 
tax, {impot unique,) laid directly on the nett produce, 
or rent, of the land, should be imposed in their stead. 
But, however much impressed with the importance 


of agriculture over every other species of industry, 
Quesnay did not solicit for it any exclusive favour 
or protection. He successfully contended, that the 
interests of the agriculturists, and of all the other 
classes, would be best promoted b}'' establishing a 
system of perfect freedom. " Qu'on maintienne," 
says he, in one of his general maxims, "I'entiere 
liberte du commerce ; car la 'police du commerce inte- 
rieur et e.vterieur la plus sure, la phis eaKicte, la plus 
profitable a la nation et a Vetat, consiste dans la pleine 
LIBERIE DE LA coNCVRRENCEr ^ Quesuay showed 
that it could never be for the interest of the pro- 
prietors and cultivators of the soil to fetter or dis- 
courage the industry of merchants, artificers, and 
manufacturers ; for the greater their liberty, the 
greater will be their competition, and their services 
will, in consequence, be rendered so much the 
cheaper. Neither, on the other hand, can it ever be 
for the interest of the unproductive classes to harass 
or oppress the agriculturists, by preventing the free 
exportation of their products, or by any sort of 
restrictive regulations. When the cultivators enjoy 
the greatest degree of freedom, their industry, and, 
consequently, their nett surplus produce — the only 
fund whence any accession of national wealth can 
ever be derived — will be auomented to the greatest 
possible extent. According to this " liberal and 
generous system,"- the establishment of perfect 
liberty, perfect security, and perfect justice, is the 

^ " Physiocratie," premiere partic, p. 119. 
^ " Wealth of Nations," 1 vol. 8vo, p. 303. 


only, as it is the infallible, means of securing the 
highest degree of prosperity to all classes. 

" On a vii," says the ablest expositor of this sys- 
tem, M. Mercier de la Riviere, " qu'il est de I'essence 
de I'ordre que I'interet particulier d'un seul ne piiisse 
jamais etre separe de Tinteret commun de tous ; nous 
en trouvons une preuve bien convaincante dans les 
efi'ets que produit naturellement et necessairement la 
plenitude de la liberte qui doit regner dans le com- 
merce, pour ne point blesser la propriete. L'interet 
personnel, encourage par cette grande liberte, presse 
vivement et perpetuellement chaque honime en par- 
ticulier de perfectionner, de multiplier les choses dont 
il est vendeur ; de grossir ainsi la masse des jouis- 
sances qu'il pent procurer aux autres hommes, afin de 
grossir, par ce moyen, la masse des jouissances que 
les autres hommes peuvent lui procurer en echange. 
Le monde alors va de lui-meme ; le desir de jouir, et 
la liberte de jouir, ne cessant de provoquer la multi- 
plication des productions et I'accroissement de I'in- 
dustrie, ils impriment a toute la societe un raouve- 
ment qui devient une tendance perpetuelle vers son 
meilleur etat possible." ^ 

As other opportunities will be afforded of examin- 
ing the principles of this very ingenious theory, it is 
sujfficient at present to remark, that, in assuming 
agriculture to be the only source of wealth, because 
the matter or substance of commodities must be 
originally derived from the earth, Quesnay and his 

' "• L'Ordre Nat. et Essent. des Societes Politiques," ii. 444, 


followers mistook altogether the nature of produc- 
tion, and really supposed wealth to consist of matter; 
whereas, in its natural state, matter is very rarely 
possessed of any immediate or direct utility, and is 
inA-ariably destitute of value. The labour required to 
appropriate matter, and to fit and prepare it for our 
use, is the only means by which it acquires value, 
and becomes wealth. The latter is not produced by 
making any additions to the matter of our globe, that 
being a quantity susceptible neither of augmentation 
nor diminution. All the operations of industry are 
intended to create wealth by giving utility to matter 
already in existence ; and it w^ill be afterwards seen, 
that the labour employed in manufactures and com- 
merce is, in all respects, as creative of utility, and 
consequently of wealth, as the labour employed in 
agriculture. Neither is the cultivation of the soil, as 
M, Quesnay supposed, the only species of industry 
which yields a surplus after the expenses of produc- 
tion are deducted. So long as none but the best of 
the good soils are cultivated, no rent, or produit net, 
is obtained from the land; and it is only after recourse 
has been had to poorer soils, and when, consequently, 
the productive powers of the labour and capital em- 
ployed in cultivation begin to diminish, that rent 
begins to appear : so that, instead of being a conse- 
quence of the superior productiveness of agricultural 
industry, rent is in fact a consequence of one piece of 
land being more productive than others ! 

The " Tableau Economique," comprising a set of 
formulae constructed by M. Quesnay, intended to 



exhibit the various phenomena accompanying the 
production of wealth, and its distribution among the 
productive, proprietary, and unproductive classes, 
was published at Versailles, with accompanying 
illustrations, in J 758 ; and the novelty and inge- 
nuity of the theory which it expounded, its syste- 
matic shape, and the liberal system of commercial 
intercourse which it recommended, speedily obtained 
for it a very high degree of reputation.^ It is to 
be regretted, that the friends and disciples of Ques- 
nay, among whom we have to reckon the Marquis 
de Mirabeau, Mercier de la Riviere, Dupont de 
Nemours, Saint Peravy, Turgot, and other distin- 
guished individuals in France, Italy, and Germany, 
should, in their zeal for his peculiar doctrines, 
which they enthusiastically exerted themselves to 
defend and propagate, have exhibited more of the 
character of partisans, than of (what they really 
were) sincere and honest inquirers after truth. Hence 
it is that they have always been regarded as a sect, 
known by the name of Economists, or Physiocrats ; 
and that their works are characterized by an unusual 
degree of sameness." 

' See Appendix, Note A, for some further remarks ou the 
economical theory. 

® The following are the principal works published by the 
French Economists : — 

" Tableau Economique, et Maximes Generales du Gouverne- 
ment Economique," par Francois Quesnay. 4to, Versailles, 1758. 

" Theorie de I'lmpot," par M. de Mirabeau. 4to and 1 2rao, 1760. 

" La Philosophie Rurale," par M. de Mirabeau. 4to, and 3 
torn. 12mo, 1763. 


But, despite their defects, there can be no question 
that the labours of the Economists powerfully con- 
tributed to accelerate the progress of the science. 
It was now found to be necessary, in reasoning on 
subjects connected with national wealth, to subject 
its sources, and the laws which regulate its produc- 
tion and distribution, to a more accurate and search- 
ing analysis. In the course of this examination, it 
was speedily ascertained that both the mercantile and 

"L'Ordre Naturel et Essentiel des Societes Politiques," par 
Mercier de la Riviere. 4to, and 2 torn. 12mo, 1767. 

" Sur rOrigine et Progres d'une Science Nouvelle," par Dupont 
de Nemours. 1767- 

" La Physiocratie, ou Constitution Naturelle du Gouveruemcnt 
le plus avantageux au Genre Humairi ; Recueil des Principaux 
Ouvrages Economiques de M. Quesnay," redige et publie par 
Dupont de Nemours, deux parties. 1767. 

" Lettres d'un Citoyeu a un ]Magistrat, sur les Vingtiemes et 
les autres Impots," par I'Abbe Baudeau. 12mo, 1768. 

"Memoire sur les EfFets de I'lmpot indirect; qui a remporte 
le Prix propose par la Societe Royale d' Agriculture de Limoges," 
(par Saint Peravy.) 12mo, 1768. 

" Reflexions sur la Formation et la Distribution des Richesses," 
par Turgot. 8vo, 1771. This is the best of all the works founded 
on the principles of the Economists ; and is, in some respects, the 
best work on the science published previously to the " Wealth of 

The " Journal d'Agriculturc," and the " Ephemerides du 
Citoyen," contain many valuable articles contributed by Quesnay 
and other leading Economists. The " Ephemerides " was begun 
in 1767, and was dropped in 177 j : it was first conducted by the 
Abbe Baudeau, and afterwards by Dupont. 

The reader will find a jjrctty full account of the life of Quesnay, 
which, unlike that of most literary men, abounded in incident and 
adventure, in the new edition of the Encyclopaedia Britannica. 


economical theories were erroneous and defective ; 
and that, to establish the science on a firm founda- 
tion, it was necessary to take a much more extqnsive 
survey, and to seek for its principles, not in a few 
partial and distorted facts, or in metaphysical abstrac- 
tions, but in the connexion subsisting among the 
various phenomena manifested in the progress of 
civilization. The Count di Verri, whose Mcditazioni 
Stella Economia Politica were published in 1771, 
demonstrated the fallacy of the opinions entertained 
by the Economists respecting the superior produc- 
tiveness of the labour employed in agriculture ; and 
shoAved that all the operations of industry really 
consist of modifications of matter already in exis- 
tence/ But Verri did not trace the consequences 
of this important principle ; and j)0Ssessing no clear 
and definite notions of what constituted wealth, 
did not attempt to discover the means by which 
labour might be facilitated. He made some valuable 
additions to particular branches of the science, and 
had sufficient acuteness to detect errors in the 
systems of others; but the task of constructing a 
better system in their stead required talents of a far 
higher order. 

At length, in 1776, our illustrious countryman, 

^ " Aecostare e seperare sono gli iinici elemeuti che I'ingegno 
uraano ritrova analizanclo 1' idea della riproduzione ; e tanto e 
riproduzione di valore e di richezza se la terra, 1' aria, e 1' aqua ne 
campi si trasmutino in grano, come se colla mauo dell' iiomo il 
gluttine di un insetto si trasmiiti in velluto, o vero alcuni pezzetti 
di metallo si organizziuo a formare una ripetizione." — Meditazioni 
sulla Economia Politica, § 3. 


Adam Smith, published the " Wealth of Nations," 
— a work which has done for Political Economy 
what the treatise of Grotius, De Jure Belli ac Pads, 
did for public laws. In this work the science 
was, for the first time, treated in its fullest extent ; 
and the fundamental principles on which the produc- 
tion of wealth depends, established beyond the reach 
of cavil and dispute. In opposition to the Economists, 
Smith has shown that labour is the only source of 
wealth ; and that the wisli to augment our fortunes 
and to rise in the world — a wish that comes with us 
into the world, and never leaves us till we sink 
into the grave — is the cause of wealth being saved 
and accumulated : he has shown that labour is pro- 
ductive of wealth when employed in manufactures 
and commerce, as well as when it is employed in the 
cultivation of the land ; he has traced the various 
means by which labour may be rendered most effi- 
cient ; and has given an admirable analysis and 
exposition of the prodigious addition made to its 
powers by its division among different individuals 
and countries, and by the employment of accumulated 
wealth, or capital, in industrious undertakings. He 
has also shown, in opposition to the commonly re- 
ceived opinions of the merchants and statesmen of 
his time, that wealth does not consist in the abun- 
dance of gold and silver, but in that of the various 
necessaries, conveniencies, and enjoyments of human 
life ; that it is in every case sound policy to leave 
individuals to pursue their own interests in their own 
way; that, in prosecuting branches of industry 


advantageous to themselves, tbey necessarily prose- 
cute such as are, at the same time, advantageous to 
the public ; and that every regulation intended to 
force industry into particular channels, or to deter- 
mine the species of commercial intercourse to be 
carried on between different parts of the same 
country, or between distant and independent coun- 
tries, is impolitic and pernicious, subversive of the 
rights of individuals, and adverse to the progress 
of real opulence and lasting prosperity. 

The fact that the distinct statement of some of 
the more important of these principles, and that 
traces of them all, may be found in the works of 
previous writers, does not detract in any, or but in 
a very inconsiderable degree, from the merits of Dr. 
Smith. In adopting the discoveries of others, he 
made them his own ; he demonstrated the truth of 
principles on which his predecessors had, in most 
cases, stumbled by chance ; separated them from the 
errors by which they had been encumbered ; traced 
their remote consequences ; pointed out their limita- 
tions, mutual dependence, and practical importance ; 
and reduced tliem into a harmonious and beautiful 

But, however excellent, still it cannot be denied 
that there are errors, and those too of no slight im- 
portance, in the " Wealth of iVations." Smith does 
not say that, in prosecuting such branches of industry 
as are most advantageous to tliemselves, individuals 
necessarily prosecute such as are, at the same time, 
most advantageous to the public. His leanino- to the 


system of the Economists, (a leaning perceptible in 
every part of his work,) made him so far swerve from 
the sounder principles of his own system, as to admit 
that the preference shown by individuals in favour of 
particular employments, is not always a true test of 
their public utility. He considered that agriculture, 
though not the only productive employment, is the 
most productive of any ; that the home trade is more 
productive than a direct foreign trade ; and the 
latter than the carrying trade. It is clear, however, 
that these distinctions are fundamentally erroneous. 
A state being formed of the individuals inhabiting 
a particular country, it follows, that whatever is 
most for their separate advantage, must also be most 
for the advantage of the state or of themselves col- 
lectively considered ; and it is obvious, that the 
interest of the parties will prevent their engaging in 
manufacturing and commercial undertakings, unless 
they yield as large profits, and are, consequently, as 
publicly beneficial, as agriculture. Dr. Smith's 
opinion with respect to the unproductiveness of 
labour not realized in a fixed and vendible commo- 
dity, appears, at first sight, to rest on no better 
foundation than the opinion of the Economists with 
respect to the unproductiveness of commerce and 
manufactures ; and its fallacy will be fully established 
in the sequel of this work. Perhaps, however, the 
principal defect of the " Wealth of Nations " consists , 
in the erroneous doctrines laid down with respect to / 
the invariable value of corn, and the influence of flue- j 
tuations of wages and profits over prices. These 


prevented Dr. Smith from acquiring clear and ac- 
curate notions respecting the nature and causes of 
rent, and the laws which govern the rate of profit ; 
and liave, in consequence, vitiated the theoretical 
conclusions in those parts of his work which treat 
of the distribution of wealth and the principles of 

But, after every reasonable allowance has been made 
for these and other defects, enough still remains to 
justify us in considering Smith as the real founder of 
the modern theory of Political Economy. If he have 
not left a perfect work, he has, at all events, left one 
w^hich contains a greater number of useful truths than 
has ever been given to the world b}' any other indi- 
vidual ; and he has pointed out and smoothed the 
route, by following which, subsequent philosophers 
have been able to perfect much that he had left incom- 
plete, to rectify the mistakes into which he fell, and 
to make many new and important discoveries. 
Whether, indeed, we regard the soundness of its 
leading doctrines, the liberality and universal appli- 
cability of its practical conclusions, or its powerful 
and beneficial influence over the progress of the 
science, and, above all, over the policy and conduct 
of nations, the " Wealth of Nations " must be placed 
in the foremost rank of those works that have helped 
to liberalize, enlighten, and enrich mankind. 

Political Economy was long confounded with 
politics ; and it is undoubtedly true that they are 
very intimately connected, and that it is frequently 
impossible to treat questions which belong to the 


one, without referring more or less to the principles 
and conclusions of the other. But in their leading 
features they are, notwithstanding, sufficiently dis- 
tinct. The laws which regulate the production and 
distribution of wealth are the same in every country 
and stage of society. Those circumstances which 
are favourable or unfavourable to the increase of 
riches and population in a republic, may equally 
exist, and will have exactly the same influence, in a 
monarchy. That security of property, without which 
there can be no steady and continued exertion ; that 
freedom of engaging in every different branch of 
industry, so necessary to call the various powers and 
resources of human talent and ingenuity into action ; 
and that economy in the public expenditure, so con- 
ducive to the accumulation of national wealth, are not 
attributes which belong exclusively to any particular 
species of government. If free states have usually 
made the most rapid advances in wealth and poi)u- 
lation, it is an indirect, more than a direct conse- 
quence of their political constitution : it results 
rather from the right of property being in general 
more respected, the exercise of industry less fettered, 
and the public income more judiciously levied and 
expended, under popular governments, than from the 
circumstance merely of a greater proportion of the 
people being permitted to exercise political rights and 
privileges : give the same securities to the subjects 
of an absolute monarch, and they will make the same 
advances. Industry does not require to be stimulated 
by extrinsic advantages : the additional comforts and 


enjoyments which it procures have always been found 
sufficient to ensure the most persevering exertions ; 
and whatever may have been the form of government, 
those countries have always advanced in the career 
of improvement, in which the public burdens have 
been moderate, the freedom of industry maintained, 
and every individual allowed peaceably to enjoy the 
fruits of his labour, to cultivate his mind, and to 
communicate his ideas to others. The wealth of a 
country does not, therefore, depend so much on its 
political organization, as on the talents and spirit of 
its rulers. Economy, moderation, and intelligence, 
on the part of those in power, have frequently ele- 
vated absolute monarcliies to a very high degree of 
opulence and prosperity ; while, on the other hand, 
the various advantages derived from a more liberal 
system of government have not always been able to 
preserve free states from being impoverished and 
exhausted by the extravagance, intolerance, and 
short-sighted policy of their rulers. 

This science is, therefore, sufficiently distinct from 
Politics. The politician examines the principles on 
which government is founded ; he endeavours to 
determine in whose hands the supreme authority may 
be most advantageously placed ; and unfolds the 
reciprocal duties and obligations of the governing 
and governed portions of society. The political 
economist does not take so high a flight. It is not 
of the constitution of the government, but of its 
ACTS only, that he presumes to judge. Whatever 
measures afi'ect the production and distribution of 


wealth, necessarily corae within the scope of his 
observation, and are freely canvassed by him. He 
examines whether they are in unison with the prin- 
ciples of the science, and fitted to promote the public 
interests : if they are, he shows the nature and extent 
of the benefits of which they will be productive; while, 
if they are not, he shows in what respect they are 
defective, and to what extent they will most probably 
be injurious. But he does this without inquiring 
into the constitution of the government which has 
enacted these measures. The circumstance of their 
having emanated from the privy council of an arbi- 
trary monarch, or the representative assembly of a 
free state, though in other respects of supreme im- 
portance, cannot affect the immutable principles by 
which he is to form his opinion upon them. 

Besides being confounded with Politics, Political 
Economy has sometimes been confounded with Sta- 
tistics ; but they are still more easily separated and 
distinguished. The object of the statist is to describe 
the condition of a country at some given period ; 
while the object of the economist is to discover the 
causes which have brought it into that condition, 
and the means by which its wealth and population 
may be indefinitely increased. He is to the statist 
wliat the physical astronomer is to the mere observer. 
He takes the facts furnished by the researches of 
statists ; and after comparing them with each other, 
and with those deduced from other sources, he 
applies himself to discover their relation and depen- 
dence. By a patient induction, by carefully observing 


the circumstances attending the operation of parti- 
cular principles, he discovers the effects of which 
they are really productive, and how far they are 
liable to be modified by the operation of other 
principles. It is thus that the various general laws 
which regulate and connect the apparently conflicting, 
but really harmonious interests of every different order 
in society, may be discovered, and established with 
all the certainty that belongs to conclusions derived 
from experience and observation. 





Definition of Production — Labour the onlj/ Source of Wealth. 

All the operations of nature and art are reducible to, and 
really consist of, transmutations, that is, of changes of form 
and of place. By production, in this science, is not meant 
the production of matter, that being the exclusive attribute 
of Omnipotence, but the production of utility, and conse- 
quently of value, by appropriating and modifying matter 
already in existence, so as to fit it to satisfy our wants, and 
contribute to our enjoyments.^ The labour which is thus 

' This point has been forcibly stated by M. Destutt Tracy. " Non-seule- 
ment," says he, " nous ne croons jamais rien, mais il nous est meme impos- 
sible de concevoir ce que c'est que ereer ou antantlr, si nous entendons 
rigoureusement par ces laois, faire qnelqiie chose de rien, ou reduire queJque 
chose a rien; car nous n'avons jamais vu un etre quelconque sortir du ne'ant 
ni y rentrer. De-la cet axiome admis par toute I'antiquite, — rien ne vient 
de rien,et ne peut redevenir rien. Que faisons-nous done par notre travail, 
par notre action sur touts les etres qui nous entourent ? Jamais rien, qu'- 
op(5rer dans ces etres des changemens de forme ou de lieu qui les approprient 
a notre usage, qui les rendeut utiles a la satisfaction de nosbesoins. Voiliice 
que nous devons entendre par produire ; c'est donuer aux choses une utilit(5 
qu'elles n'avoient pas. Quel que soit notre travail, s'il n'en r(?sulte point 
d'utilitc, il est infructueux ; s'il en re'sulte, il est productif."-- Traife rf' Eco- 
nomic Politique, p. 82. 


employed is the ouly source of wealth. Nature sponta- 
neously furnishes the matter of which all commodities are 
made ; but until labour has been applied to appropriate that 
matter, or to adapt it to our use, it is wholly destitute of 
value, and is not, nor ever has been, considered as forming 
wealth.^ Place us on the banks of a river, or in an or- 
chard, and we shall infallibly perish, of thirst or hunger, if 
we do not, by an eSbrt of industry, raise the water to our 
lips, or pluck the fruit from its parent tree. It is seldom, 
however, that the mere appropriation of matter is sufficient. 
In the vast majority of cases, labour is required not only 
to appropriate it, but also to convey it from place to place, 
and to give it that peculiar shape, without which it may be 
totally useless and incapable of ministering either to our 
necessities or our comforts. The coal used as fuel is buried 
deep in the bowels of the earth, and is absolutely worthless 
until the miner has extracted it from the mine, and 
brought it into a situation where it may be made use of. 
The stones and mortar used in building houses, and the 
rugged and shapeless materials that have been fashioned 
into the various articles of convenience and ornament with 
which they are furnished, were, in their original state, des- 
titute alike of value and utility. And of the innumerable 
variety of animal, vegetable, and mineral products, which 
form the materials of food and clothes, none was origi- 
nally serviceable, while many were extremely noxious to 
man. It is his labotir ili^t has given them utility, that has 
subdued their bad qualities, and made them satisfy his 
wants, and minister to his comforts and enjoyments. 

' The writer of an article in " The Quarterly Review," (No. 60, Art. I.,) 
contends, that the earth is a source of wealth, because it supplies us with the 
matter of commodities. But this, it is obvious, is the old error of the econo- 
mists reproduced in a somewhat modified shape. It would, in truth, be 
quite as correct to say that the earth is a source of pictures and statues, 
because it supplies the materials made use of by painters and statuaries, 
as to say that it is a source of wealth, because it supplies the matter of 



" Labour was the lirst price, the original purchase-money 
that was paid for all things. It was not by gold or by 
silver, but by labour, that all the wealth of the world was 
originally purchased."' 

Those who observe the progress and trace the history of 
the human race, in dift'erent countries and states of society, 
will find that their comfort and happiness have, in all cases, 
been principally dependent on their ability to appropriate 
the raw products of nature, and to adapt them to their use. 
The savage, whose labour is confined to the gathering of 
w'ild fruits, or the picking up of shell-fish on the sea-coast, 
is placed at the very bottom of the scale of civilization, and 
is, in point of comfort, decidedly inferior to many of the 
lower animals. The^r^^ step in the progress of society is 
made when man learns to hunt wild animals, to feed himself 
with their flesh, and clothe himself with their skins. But 
labour, when confined to the chase, is extremely barren and 
unproductive. Tribes of hunters, like beasts of prey, whom 
they closely resemble in their habits and modes of sub- 
sistence, are but thinly scattered over the surface of the 
countries Avhich they occupy ; and notwithstanding the 
fewness of their numbers^any unusual deficiency of game 
never fails to reduce them to the extremity of want. The 
second step in the progress of society is made when the 
tribes of hunters and fishers apply themselves, like tlie 
ancient Scythians and modern Tartars, to the domestication 
of wild animals and the rearing of flocks. The subsistence 
of herdsmen and shepherds is much less precarious than that 
of hunters, but they are almost entirely destitute of those 
comforts and elegancies which give to civilized life its chief 
value. The third and most decisive step in the progress of 
civilization — in the great art of producing the necessaries and 
conveniencies of life — is made when the wandering tribes of 
hunters and shepherds renounce their migratory habits, and 
become agriculturists and manufacturers. It is then that 

1 '• Wealth of Nations," p. 1 4. My edition, in ouc vol., is uniformly quoted. 


man begins fullj to avail himself of his productive powers. 
He then becomes laborious, and, by a necessary conse- 
quence, his wants are then, for the first time, fully supplied, 
and he acquires an extensive command over the articles 
necessary for his comfort as well as his subsistence.' ^ 

The importance of labour in the production of wealth 
was very clearly perceived by Hobbes and Locke. At the 
commencement of the 24th chapter^ of the " Leviathan," 
published in 1651, Hobbes says, " The nutrition of a 
commonwealth consisteth in the plenty and distribution of 
onateriah conducing to life. 

" As for the plenty of matter, it is a thing limited by 
nature to those commodities which (from the two breasts 
of our common mother) land and sea, God usually either 
freely giveth, or for labour selleth to mankind. 

" For the matter of this nutriment, consisting in animals, 
vegetables, minerals, God hath freely laid them before us, in 
or near to the face of the earth ; so as there needeth no more 
but the labour and industry of receiving them. Insomuch 
that plenty dependetlt (next to God's favour) on the labour 
and industry of man.'''' 

But Mr. Locke had a much clearer apprehension of this 
doctrine. In his " Essay on Civil Government," published 
in 1689, he has entered into a lengthened, discriminating, 
and able analysis, to show that it is from labour that the 
products of the earth derive almost all their value. "Let 
any one consider," says he, " what the difference is between 

' This progress has been pointed out by Varro : — " Gradura fuisse natu- 
ralem, ciim homines viveruut ex iis rebus qu?c inviolata ultro ferret terra. 
Ex hilc vita iu secuudara descendisse pastoritiam, ciim, propter utilitatem, 
ex animalibus qufe possent sylvestria, deprehenderent, ac concluderent, et 
mansuescerent. In queis primum, non sine causa, putant oves assumptas, et 
propter, utilitatem et propter placiditatem. Tertio denique gradu, a vita 
pastorali ad agriculturam descenderunt; in qua ex duobus gradibus superi- 
oribus retinuerunt multa, et quo descenderunt ibi processerunt longe, dum 
ad nos perveniret." — De Re Rustica, lib. ii. cap. 1. 

' " Of the Nutrition and Procreation of a Commonwealth." 


an acre of laud planted with tobacco or sugar, sown with 
wheat or barley, and an acre of the same land lying in com- 
mon, without any husbandry uj3on it, and he will find that 
the improvement of labour makes the far greater part of the 
value. I think it will be but a very modest computation to 
say, that of the products of the earth useful to the life of 
man, nine-tenths are the effects of labour; nay, if we will 
rightly consider things as they come to our use, and cast 
up the several expenses about them, what in them is purely 
owing to nature, and what to labour, we shall find, that in 
most of them ninety-nine hundredths are wholly to be put on 
the account of labour. 

" There cannot be a clearer demonstration of any thing, 
than several nations of the Americans are of this, who are 
rich in land, and poor in all the comforts of life; whom nature 
having furnished as liberally as any other people with the 
materials of plenty, i. e. a fruitful soil apt to produce in 
abundance what might serve for food, raiment, and delight; 
yet, for want of improving it by labour, have not one-hun- 
dredth part of the conveniencies we enjoy ; and the king of 
a large and fruitful territory there, feeds, lodges, and is clad 
worse than a day-labourer in England. 

" To make this a little clearer, let us but trace some of 
the ordinary provisions of life through their several pro- 
gresses, before they come to our use, and see how much they 
receive of their value from human industry. Bread, wine, 
and cloth, are things of daily use and great plenty ; yet, 
notwithstanding, acorns, water, and leaves or skins, must be 
our bread, drink, and clothing, did not labour furnish us 
with these more useful commodities ; for, whatever bread is 
more worth than acorns, wine than water, and cloth or silk 
than leaves, skins, or moss, that is solely owing to labour 
and industry ; the one of these being the food and raiment 
which unassisted nature furnishes us with ; the other pro- 
visions which our industry and pains prepare for us ; which 
how much they exceed the other in value, when any one 
hath computed, he will then see how much labour makes the 




far greatest part of the value of things we enjoy in this world ; 
and the ground which produces the materials is scarce to be 
reckoned in as any, or, at most, but a very small part of it; 
so little, that even amongst us, land that ;s wholly left to 
nature, that hath no improvement of pasturage, tillage, or 
planting, is called, as indeed it is, waste : and we shall find 
the benefit of it amount to little more than nothing. 

" An acre of land that bears here twenty bushels of wheat, 
and another in America which, with the same husbandry, 
would do the like, are, without doubt, of the same natural 
intrinsic value (utility.) But yet, the benefit mankind 
receives from the one in a year is worth five pounds, and 
from the other possibly not worth a penny, if all the profit 
an Indian received from it were to be valued and sold here ; 
^ at least, I may truly say, not toVo. 'Tis labour, then, which 
1 puts the greatest part of value upon land, without which it 
' would scarcely be worth any thing. ""Tis to that we owe the 
greatest part of all its useful products; for all that the straw, 
bran, bread, of that acre of wheat, is more worth than the 
product of an acre of as good land which lies waste, is all the 
effect of labour. For 'tis not barely the ploughman"'s pains, 
the reaper''s and thrasher"'s toil, and the baker''s sweat, is to 
be counted into the bread we eat ; the labour of those who 
broke the oxen, who digged and wrought the iron and stones, 
who felled and framed the timber employed about the plough, 
mill, oven, or any other utensils, which are a vast number, 
requisite to this corn, from its being seed to be sown, to its 
being made bread, must all be charged on the account of 
labour, and received as an effect of that : nature and the 
earth furnishing only the almost worthless materials as in 
themselves. ""Twould be a strange catalogue of things that 
industry provided and made use of about every loaf of bread, 
before it came to our use, if we could trace them. Iron, wood, 
leather, barks, timber, stone, bricks, coals, lime, cloth, dye- 
ing-drugs, pitch, tar, masts, ropes, and all the materials made 
use of in the ship that brought away the commodities made 
use of by any of the workmen to any part of the work ; all 


which 'twould bo ahiiost iuipossible, at least too long, to 
reckon up."^ 

Locke has here all but established the fuudaniental 
principle on which the science rests. Had he carried his 
analysis a little farther, he could not have failed to perceive 
that neither water, leaves, skins, nor any one of the spon- 
taneous productions of nature, has any value, except what 
it derives from the labour required for its appropriation. The 
utility of sucli products makes them be demanded ; but it 
does not give them value. This is a quality which can be 
communicated only through the agency of voluntary labour 
of some sort or other. An object which it does not require 
any portion of labour to appropriate or to adapt to our use, 
may be of the very highest utility; but, as it is the free gift 
of nature, it is utterly impossible that it should possess the 
smallest value.- 

' "Of Civil Government," book 11. §§ 40, 41, 42, and 43. This is a very 
remarkable passage. It contains a more distinct and comprehensive state- 
ment of the fundamental doctrine, that labour is the constituent principle of 
value, than is to be found in any other writer jn-evious to Smith, or than is 
to be found even in the "Wealth of Nations." But Locke does not seem to 
have been sufficiently aware of the real value of the principle he had eluci- 
dated, and has not deduced from it any important practical conclusion. On 
the contrary, in his tract on " Raising the Value of Money," published in 
1G91, he lays it down broadly, that all taxes, however imposed, must ulti- 
mately fall on the land ; whereas it is plain he ought, consistently with the 
above principle, to have shown, that they would fall, not exclusively on the 
produce of land, but generally on the p rod uce of industry, or on all species 
of commodities. ~ " 

^ Bishop Berkeley entertained very just opinions respecting the source of 
wealth. In his " Querist," published in 1735, he asks, — "Whether it were 
not wrong to suppose land itself to be wealth I And whether the industry 
of the people is not first to be considered, as that which constitutes wealth, 
which makes even land and silver to be wealth, neither of which would have 
any value, but as means and motives to industry ? Whether, in the wastes 
of America, a man might not possess twenty miles square of land, and yet 
want his dinner, or a coat to his back ? " — Querist, Numbers 38 and 39. 

M. Say appears to think (" Discours Pre'liminaire," p. 37) that Galiani 
was the first who showed, in his treatise " Delia Moneta," published in 1 750, 
that labour is the only source of wealth. But the passages now laid before 
the reader prove the erroneousness of this opinion. Galiani has entered into 


That commodities could not be produced without the 
co-operation of the powers of nature, is most certain ; and 
we are very far, indeed, from seeking to depreciate the 
obligations we are under to our common mother, or from 
endeavouring to exalt the benefits man owes to his own 
exertions by concealing or underrating those which he 
enjoys by the bounty of nature. But it is the distinguish- 
ing characteristic of the services rendered by the latter, that 
they are gratuitous. They are infinitely useful, and they 
are, at the same time, infinitely cheap. They are not, like 
human services, sold for a price ; they are merely appro- 
priated. When a fish is caught, or a tree is felled, do the 
nereids or wood-n^nnphs make their appearance, and stipu- 
late that the labour of nature in its production should be 
paid for before it be carried off and made use of by man 
When the miner has dug his way down to the ore, does 
Plutus hinder its appropriation? Nature is not, as so 
many would have us to suppose, frugal and grudging. 
Her rude products, and her various capacities and powers, 
are all offered freely to man. She neither demands nor 
receives a return for her favours. Her services are of 
inestimable utility ; but being granted freely and uncondi- 
tionally, they are wholly destitute of (value,; and are conse- 
quently without the power of communicating that quality 
to any thing. 

The utility of water, or its capacity to slake thirst, is 
equal at all times and places ; but this quality being com- 
municated to it by nature, adds nothing to its value, which 
is, in all cases, measured by the labour required for its 
appropriation, A very small expenditure of labour being 
required to raise water from a river to the lips of an indi- 

no analysis or argument to prove the correctness of his statement; and as 
it appears from other parts of his work that he was well acquainted with 
Locke's " Tracts on Money," a suspicion naturally arises that he had seen 
the " Essay on Civil Government," and that he was really indebted to it for 
a knowledge of this principle. This suspicion derives strength from the cir- 
cumstance of Galiani being still less aware than Locke of the value of the 
discovery.— See Trattato della Moneta, p. 39, ediz. 1780. 



vidual on its banks, its value, under such circumstances, ia 
very trifling indeed. But when, instead of being upon its 
banks, the consumers of the water are five, ten, or twenty 
miles distant, its value, being increased proportionally to 
the greater expenditure of labour upon its conveyance, may 
become very considerable. This principle holds universally. 
The utility of coal, or its capacity of furnishing heat and 
light, makes it an object of demand ; but this utility, being 
a free gift of nature, has no influence over its value or price: 
this depends entirely on the labour required to extract the 
coal from the mine, and to convey it to the place where it 
is to be consumed. 

"Si je retranche," to use a striking illustration of this 
doctrine given by M. Canard, " de ma montre, par la pensee, 
tons les travaux qui lui ont ete successivenient appliques, 
ii ne restera que quelques grains cle mineral places dans 
Tiuterieur de la terre, (Ton on les a tires, et oil lis n'ont 
aucune valeur. De meme, si je decompose le pain que je 
mange, et que j'en retranche successivenient tons les travaux 
successifs qu'il a re^us, il ne restera que quelques tiges 
d''herbes graminees, eparses dans des deserts incultes, et sans 
aucune valeur."^ 

Those who contend, as almost all the continental econo- 
mists do, that the agency of natural powers adds to the 
value of commodities^ uniformly confound utility and value 
— that is, as was formerly observed, they confound the 
power and capacity of articles to satisfy our wants and 
desires with th'e quantity of labour required to produce 
them, or the quantity for which the}^ would exchange. 
These qualities are, however, as radically different as those 
of weight and colour. To confound them is to stumble at 
the very tlireshold of the science. It is but too clear, that 
those who do so have yet to make themselves acquainted 
v.'ith its merest elements. 

It is true that natural powers ujay sometimes be appro- 

' " Priiicipes d'Economie Politique," p. 6. 


priated or engrossed by one or more individuals to the 
exclusion of others, and those by whom they are so engrossed 
may exact a price for their services ; but does that show 
that these services cost the engrossers any thing 1 If A have 
a waterfall on his estate, he may, probably, get a rent for it. 
It is plain, however, that the work performed by the water- 
fall is as completely gratuitous as that which is performed by 
the wind that acts on a windmill. The only difference 
between them consists in this, that all individuals having 
it in their power to avail tliem selves of the services of the 
wind, no one can intercept the bounty of nature, and exact 
a price for that which she freely bestows ; whereas A, by 
appropriating the waterfall, and consequently acquiring a 
command over it, may prevent its being used at all, or 
sell its services. He can oblige B, C, and D, to pay for 
liberty to use it ; but as they pay for that which costs 
him nothing, he gains the whole that they lose ; so 
that the services rendered by the waterfall are plainly so 
much clear gain, so much work performed gratuitously for 

Had Mr. Senior attended to this illustration, he would not 
have said, at least without the necessary qualification, that 
if serolithes consisted wholly of gold, they would, according to 
the principles now laid down, be destitute of value.^ If, 
indeed, they were so very abundant as to furnish every one 
with as much gold as he desired, they would have no value 
whatever, other than what they might derive from the 
trouble of gathering them : but if they existed only in 
limited quantities, and were quite incapable of supplying 
the demand for gold, the fortunate finder of one of tliem 
would be able to sell or exchange it for the same quantity 
of produce it would have commanded had it been produced, 
like other gold, by the labour of the miner, smelter, &c. 
It is obvious, however, that its value is in this case derived 
from circumstances which, though extrinsic to itself, depend 

' Art. Political Economy, Encyclop?edia Metropolitnna. 


wholly on the expenditure of labour ; and that, in fact, it 
is measured or determined by the quantity of labour 
ordinarily required to produce goIH, precisely in the same 
way that the value of the waterfall is determined by the 
quantity of labour it will save to the party by whom it 
may be bought or rented. 

It is to labour, therefore, and to it only, that man owes 
every thing possessed of value. Dii laboribtis omnia ven- 
diint. Labour is the talisman that has raised him from 
the condition of the savage, that has changed the desert 
and the forest into cultivated fields, that has covered the 
earth with cities, and the ocean with ships, that has given 
us plenty, comfort, and elegance, instead of want, misery, 
and barbarism. What was said of the enchantress Enothea, 
may be truly applied to labour : 

Quicquid iu orbe vides, paret mihi. Florida tellus, 
Cum volo, fundit opes; scopulique, atque horrida saxa 
Niliades jaculantur aquas. 

The advantages of industry have never been set in so 
striking a light as by Dr. Barrow. The following extract 
from one of his sermons, will show that such is the case, 
and will gratify alike and instruct the reader : — 

" It is industry whereto the public state of the world, 
and of each commonweal therein, is indebted for its being, 
in all conveniencies and embellishments belonging to life, 
advanced above rude and sordid barbarism ; yea, whereto 
mankind doth owe all that good learning, that morality, 
those improvements of soul, which elevate us beyond 

" To industrious study is to be ascribed the invention 
and perfection of all those arts whereby human life is 
civilized, and the world cultivated with numberless accom- 
modations, ornaments, and beauties. 

" All the comely, the stately, the pleasant, and useful 
works which we do view with delight, or enjoy with comfort, 
industrv did contrive tliem, iudustrv did frame them. 


" Industry reared those maguificent fabrics, and those 
commodious houses ; it formed those goodly pictures and 
statues ; it raised those convenient causeys, those bridges, 
those aqueducts ; it planted those fine gardens with various 
flowers and fruits ; it clothed those pleasant fields with 
corn and grass ; it built those ships, whereby we plough 
the seas, reaping the commodities of foreign regions. 

" It hath subjected all creatures to our comniand and 
service, enabling us to subdue the fiercest, to catch the 
wildest, to render the gentler sort most tractable and useful 
to us. It taught us from the wool of the sheep, from the 
hair of the goat, from the labours of the silkworm, to weave 
us clothes to keep us warm, to make us fine and gay. It 
helpeth us from the inmost bowels of the earth to fetch 
divers needful tools and utensils. It collected mankind 
into cities, and compacted them into orderly societies, and 
devised wholesome laws, under shelter whereof we enjoy 
safety and peace, wealth and plenty, mutual succour and 
defence, sweet conversation and beneficial commerce. 

" It by meditation did invent ^ all those sciences whereby 
our minds are enriched and eiiobled, our manners are 
refined and polished, our curiosity is satisfied, our life is 
benefited. What is there which we admire, or wherein we 
delight, that pleaseth our mind, or gratifieth our sense, for 
the which we are not beholden to industry ? 

" Doth any country flourish in wealth, in grandeur, in 
prosperity 1 It must be imputed to industry, to the 
industry of its governors settling good order, to the industry 
of its people following profitable occupations : so did Cato, 
in that notable oration of his in Sallust,^ tell the Roman 
senate, that it was not by the force of their arms, but by 
the industry of their ancestors, that commonwealth did 
arise to such a pitch of greatness. When sloth creepeth 
in, then all things corrupt and decay ; then the public 

' Ut varias usus meditando extunderet artes. — Virg. Georg. I. I'A 
^ Cat. apnd Sallust, in bello Catll. 


state doth sink into disorder, pemiry, and a disgraceful 
condition." ' 

The fundamental principle, that it is only through the 
agency of labour that the various articles and conveniencies 
required for the use and accommodation of man can be 
obtained, being thus established, it necessarily follows, that 
the great practical problem involved in that part of the 
science which treats of the production of wealth, must re- 
solve itself into a discussion of the means by which labour 
mav be rendered most efficient, or bv w'hich the areatest 
amount of necessary, useful, and desirable products may be 
obtained with the least outlay of labour. Every measure 
that has any tendency to add to the power of labour, or, 
which is the same thing, to reduce tiie cost of connnodities, 
must add proportionally to our means of obtaining wealth ; 
while every measure or regulation that has any tendi-ncy 
to waste labour, or to raise the cost of commodities, must 
equally lessen these means. Here, then, is the simple and 
decisive test by which we are to judge of the expediency of 
all measures affecting the wealth of the country, and of the 
value of all inventions. If they make labour more produc- 
tive — if by reducing the value of commodities, they render 
them more easily obtainable, and bring them within the 
command of a greater portion of society, they must be ad- 
vantageous ; while, if their tendency be different, they must 
as certainly be disadvantageous. Considered in this point 
of view, that great branch of the science which treats of 
the production of wealth will be found to be abundantly 
simple, and easily understood. 

Labour, according as it is applied to the raising of raw 
produce — to the fashioning of that raw produce when raised, 
into articles of utility, convenience, or ornament — or to the 
conveyance of raw and wrought produce from one country 
or place to another, and their distribution among the con- 
sumers, — is said to be agricultural, maniifiicturing, or com- 

^ Barrow's Second Sermon on Industry. 


mercial. An acquaintance with the particular processes and 
most advantageous methods of applying labour in each of 
these grand departments of industry, forms the peculiar and 
appropriate study of the agriculturist, manufacturer, and 
merchant. It is not consistent with the objects of the 
political economist to enter into the details of particular 
businesses and professions. He confines himself to an in- 
vestigation of the means by which labour in general may 
be rendered most productive, and how its powers may be 
increased in all the departments of industry. 

Most writers on Political Economy have entered into 
lengthened discussions with respect to the difference between 
what they have termed productive and unproductive labour. 
But it is not easy to discover any real ground for most of 
those discussions, or for the distinctions that have been set 
up between one sort of labour and another. The subject is 
not one in which there is apparently any difficulty. It is 
not at the sj^ecies of labour carried on, but at its results, 
that we should look. So long as an individual employs 
himself in any way not detrimental to others, and accom- 
plishes the object he has in view, his labour is obviously 
productive ; while, if he do not accomplish it, or obtain 
some sort of equivalent advantage from the exertion of the 
labour, it is as obviously unproductive. This definition 
seems suflSciently clear, and leads to no perplexities ; and it 
will be shown, in another chapter, that it is not possible to 
adopt any other without being involved in endless diffi- 
culties and contradictions. 

In thus endeavouring to exhibit the importance of labour, 
and the advantages which its successful prosecution confers 
on man, it must not be supposed that reference is made to 
the labour of the hand only. This species, indeed, comes 
most under observation ; it is that, too, without which we 
could not exist, and which principally determines the value 
of commodities. It is questionable, however, whether it be 
really more productive than the labour of the mind. There 
are other instruments beside the plough, tlie spade, and the 


shuttle. The hand is not more necessary to execute than 
the head to contrive. Some very valuable discoveries have 
no doubt been the result of accident ; while others have 
naturally grown out of the progress of society, without 
being materially advanced by the eflForts of any single indi- 
vidual. These, however, have not been their only, nor, 
perhaps, their most copious sources ; and every one, how 
little soever he may be acquainted with the history of his 
species, is aware that we are indebted to the labour of the 
mind, to patient study and long-continued research, for 
numberless inventions, some of which have made almost 
incalculable additions to our powers, and changed, indeed, 
the whole aspect and condition of society. 



Progressive Nature of Man — Means hy which the Productive Powers 
of Labour are increased. — Section I. Right of Property/. — Section 
II. Division of Emploi/ments. — Section III. Accumulation and 
Employment of Capital — Definition and Source of Profit — Circum- 
stances most favourable for the Accumulation of Capital. 

It is the proud distinction of the human race, that their 
conduct is determined by reason, which, though limited and 
fallible, is susceptible of indefinite improvement. In the 
infancy of society, indeed, being destitute of that knowledge 
which is the result of long experience and study, without 
that dexterity which is the effect of practice, and without 
the guidance of those instincts which direct other animals, 
man seems to occupy one of the lowest places in the scale 
of being. But the faculties of most animals come rapidly 
to maturity, and admit of no further increase or diminution; 
whereas, the human species is naturally progressive. In 
addition to the necessity which obliges man to exert himself 
to provide subsistence, he is, almost uniformly, actuated by 
a wish to improve his condition ; and he is endowed with 
sagacity adequate to devise the means of gratifying this 
desire. By slow degrees, partly by the aid of observation, 
and partly by contrivances of his own, he gradually learns 
to augment his powers, and to acquire an increased command 
over the necessaries, con veniencies, and enjoyments of human 
life. Without the unerring instinct of the ant, the bee, or 
the beaver, he becomes, from a perception of their advantage, 
the greatest storemaster and builder in the world; and with- 
out the strength of the elephant, the swiftness of the hound, 
or the ferocity of the tiger, he subjects every animal to his 
power. Having felt the advantages resulting from improved 


accommodations, he becomes more desirous to extend them. 
The attainment of that which seemed, at the commencement 
of the undertaking, to be an object beyond which his wishes 
could not expand, becomes an incentive to new efforts. 
*' Man never is, but always to be blessed." The gratifica- 
tion of a want or desire is merely a step to some new pursuit. 
In every stage of his progress, he is destined to contrive and 
invent, to engage in new undertakings, and, when these are 
accomplished, to enter with fresh energy upon others. 
" Even after he has attained to what, at a distance, appeared 
to be the summit of his fortune, he is in reality only come 
to a point at which new objects are presented to entice his 
pursuits, and towards which he is urged with the spurs of 
ambition, while those of necessity are no longer applied. 
Or, if the desire of any thing better than the present should 
at any time cease to operate on his mind, he becomes listless 
and negligent, loses the advantages he had gained, whether 
of possession or skill, and declines in his fortune, till a sense 
of his own defects and his sufferings restore his industry."^ 

It has been said that nations, like individuals, have their 
periods of infancy, maturity, decline, and death. But though 
the comparison strikes at first, and history affords many 
apparent instances of its truth, it is, notwithstanding, inap- 
plicable. The human body is of frail contexture and limited 
duration; but nations are perpetually renovated; the place 
of those who die is immediately filled up by others, who, 
having succeeded to the arts, sciences, and wealth of those 
by whom they were preceded, start with unprecedented 
advantages in their career. It is plain, therefore, that if the 
principle of improvement were not countervailed by hostile 
aggression, vicious institutions, or some other adventitious 
circumstance, it would always operate, and would secure the 
constant advancement of nations. 

Powerful, however, as is the passion to rise — to ascend 
still higher in the scale of society — the advance of the arts 

' Ferguson's " Principles of Moral and Political Science," rol. i. p. 56. 


has not been left wholly to depend on ity agency. Had such 
been the case, it is reasonable to suppose that the earlier 
' inventions and discoveries would, by rendering others of 
comparatively less importance, have slackened the progress 
of civilization. But in the actual state of things, no such 
relaxation can ever take place. The principle of increase 
implanted in the human race is so very powerful, that 
population never fails of speedily expanding to the limits of 
subsistence, how much soever they maybe extended. Indeed, 
its natural tendency is to exceed these limits, or to increase 
the number of people faster than the supplies of food and 
other necessary accommodations provided for their support. 
This tendency, as will be afterwards shown, is, in civilized 
societies, checked and regulated by the prudential considera- 
tions to which the difficulty of bringing up a family neces- 
sarily gives rise. But, despite their influence, the principle 
of increase is at all times, and under every variety of cir- 
cumstances, so very strong as to call forth unceasing efforts 
to increase the means of subsistence. It forms, in fact, a 
constantly operating principle to rouse the activity and 
stimulate the industry of man. The most splendid inven- 
tions and discoveries do not enable him to intermit his 
efforts ; — if he did, the increase of population would speedily 
change his condition for the worse, and he would be com- 
pelled either to sink to a lower station, or to atone for his 
indolence by renewed and more vigorous exertions. The 
continued progress of industry and the arts is thus secured 
by a double principle : man is not merely anxious to advance ; 
he dares not, without manifest injury to himself, venture to 
stand still. But, because such is our lot, because we are 
constantly seeking an imaginary repose and felicity we are 
never destined to realize, are we, therefore, as some have 
done, to arraign the wisdom of Providence ? Far from it. 
In the words of the able and eloquent philosopher to whom 
we have just referred, " We ought always to remember 
that these labours and exertions are themselves of principal 
value, and to be reckoned amongst the foremost blessings to 


which human nature is competent ; that mere industry is 
a blessing apart from the wealth it procures ; and that the 
exercises of a cultivated mind, tliough considered as means 
for the attainment of an external end, are themselves of 
more value than any such end whatever."^ 

In tracing the progress of mankind from poverty and 
barbarism to wealth and civilization, there are three cir- 
cumstances, the vast importance of which must strike even 
the most careless observer; and without whose conjoined 
existence and co-operation, labour could not have become 
considerably productive, nor society made any perceptible 
progress. The^r^^ is the establishment of a right of property, 
or the securing to every individual the quiet enjoyment of 
his natural powers, and of the products, lands, and talents he 
may have inherited or acquired by labour or industry. The 
second is the introduction of exchange or barter, and the 
consequent appropriation of particular individuals to par- 
ticular employments. And the third is the accumulation 
and employment of the produce of labour, or, as it is more 
commonly termed, of capital, or stock. All the improve- 
ments that ever have been, or ever can be made, in the 
art of producing necessaries, comforts, and conveniencies, 
may be classed under one or other of these three heads. 
It is, therefore, indispensable that principles so important, 
and which lie at the very bottom of the science, should 
be well understood. 


It would occupy the reader''s time to no good purpose were 
we to state the different theories that have been advanced 
by jurists, and writers on public law, to account for the 
origin of the right of property. This, indeed, appears to 
be sufficiently obvious. All the rude products furnished by 
nature have to be appropriated; and, as already seen, not 
one in a thousand, perhaps, of these products is, in its natural 

' Ferguson's "Principles of Moral and Political Science,"' vol. i. p. 250. 


state, capable either of supplying our wants or administering 
to our comforts. Hence the necessity, not only of applying 
labour to appropriate natural products, but to fashion and 
prepare them so as to be useful ; and hence, also, the origin 
of the right of property. 

If a number of individuals be set down together on the 
shore of an unoccupied and unappropriated island, each will 
have quite as good a right as another to take the game or 
the fruit. But those w^ho do so, or who, through their skill 
and industry, appropriate a portion of the common stock, 
will obviously be entitled to the exclusive use of such portion. 
We shall not undertake to decide w'hether there be or be 
not a principle inherent in man that at once suggests to 
every individual not to interfere with what has been pro- 
duced or appropriated by the labour of others ; it is sufficient 
to know that the briefest experience would point out to every 
one the necessity of respecting this principle. If A climb 
a tree and bring down fruit, which, as soon as he comes 
to the ground, is taken from him by others, he will not 
a^ain en^aoe in anv similar undertakins:, till lie be well 
assured that he shall be permitted exclusively to profit by 
what has been obtained through his sole exertions; nor will 
others engage in any such undertaking without a similar 
assurance. No doubt, therefore, the right of property 
had a very remote origin. The necessity for its establish- 
ment is so very obvious and urgent, that it must have been 
all but coeval with the formation of societies. All have 
been impressed with the reasonableness of the maxim which 
teaches, that the produce of a man's labour and the work 
of his hands are exclusively his own. Even among the 
rudest savages the principle oimeum and tuum is recognised; 
the bows and arrows of the huntsman, and the game he has 
killed, being regarded by him as his own, and his right to 
their exclusive possession being respected by his fellows. 
The right of property, like other rights, is, no doubt, per- 
fected only by degrees. Thus, among hunters, the ferce 
nattirce on which thev subsist, not being bred under the 


care or inspection of individuals, are, so long as tlicy run 
wild in tliG forest, the common property of the tribe, and 
only become the property of individuals after they have 
been appropriated or taken by their labour or ingenuity. 
As society advances, the right of prop'erty expands. The 
modern Tartars, like the ancient Scythians, estimate their 
wpalth by the number of their cattle. Their right to the 
animals which they have domesticated and reared is deemed 
sacred and inviolable ; but the pasture-grounds belong, like 
the hunting-grounds of the Indians, to the whole society; 
and as the flocks are driven from one place to another, the 
grounds may be successively depastured by the cattle of 
every different individual. The moment, however, that 
men began to renounce the pastoral for the agricultural 
mode of life, a right of property in land began to be estab- 
lished. The soil cannot be cultivated, its fertility cannot 
be increased, nor can it be made to produce those crops 
which yield the largest supplies of food, and other neces- 
sary accommodations, without continuous labour and per- 
severing attention. Hence the origin of property in land. 
Nothing, it is plain, would ever tempt any one to engage 
in a laborious employment ; he would neither domesticate 
wild animals nor clear and cultivate the ground, if, after 
months and years of toil, when his flocks had become 
numerous and his harvests were ripening for the sickle, a 
stranger were allowed to rob him of the reward of his in- 
dustry. The utility, or rather necessity, of making some 
general regulations, that should secure to every individual 
the peaceable enjoyment of the produce he had raised, and 
of the ground he had cultivated and improved, is so very 
obvious that it suggested itself to the first legislators. The 
author of the book of Job places those who removed their 
neighbours' landmarks at the head of his list of wicked men; 
and the early Greek and Roman legislators placed these 
marks under the especial protection of the god Terminus, 
and made their removal a capital oftence.^ 

' Gogiiet, " Dc I'Origine dea Loix," ^c, lib. i. art. 2. 



It is obvious, from what has uow been stated, that the 
law of the land is not, as Dr. Paley has affirmed, the real 
foundation of the right of propert3^ It rests on a more 
remote and a more solid basis. It grows out of the 
circumstances under which man is placed; and could not be 
overthrown or set aside without depopulating the earth, and 
throwing mankind back into primeval barbarism. The 
obvious utility of securing to each individual the peaceable 
enjoyment of the produce acquired by his industry, and of 
the land he had cultivated and improved, undoubtedly formed 
the irresistible reason that induced every people emerging 
from barbarism to establish this right. It is, in fact, the 
foundation on which the other institutions of society mainly 
rest ; and as Cicero has truly stated, it was chiefly for the 
protection of property that civil government was instituted. 
Hanc enim oh causam maxime^ ut sua tuerentur^ respuhlicw 
civitatesqtie constitutcu sunt. Nam etsi duce naturw, congre- 
gahantur homines., tamen spe custodiw rerum siiarum, urbium 
prwsidia quasrebant} Where property is not publicly guaran- 
teed, men must look on each other as enemies rather than 
as friends. The idle and improvident are always desirous 
of seizing on the wealth of the laborious and frugal ; and, 
were they not restrained by the strong arm of the law from 
prosecuting their attacks, they would, by generating a feeling 
of insecurity, effectually check both industry and accumu- 
lation, and sink all classes to the same level of hopeless 
misery as themselves. The security of property is, indeed, 
quite as indispensable to accumulation as to production. 
No man ever denies himself an immediate gratification when 
it is within his power, unless he believe that by doing so he 
has a fair prospect of obtaining a greater accession of comforts 
and enjoyments, or of avoiding some considerable evil, at 
some future period. Where property is protected, an indi- 
vidual who produces as much by the labour of one day as 
is sufficient to maintain him two, is not idle during the 

' " De Officiis," lib. ii. cap. 21. 


second day, but accuuiulate.s the surplus above his wants as 
a reserve stock ; the increased security and enjoyments which 
tlie possession of such stock or capital brings along with it, 
being, in the great majority of cases, more than sufficient to 
counterbalance the desire of immediate gratification. But, 
wherever property is insecure, W'e look in vain for the ope- 
ration of this principle. " It is plainly better for us,"'' is 
then invariably the language of the people, " to enjoy while 
it is in our power, than to accumulate property which we 
shall not be permitted to dispose of, and wdiich will either 
expose us to the extortion of a rapacious government, or to 
the unrestrained depredations of those who exist only by the 
plunder of their more industrious neighbours." 

But it must not be imagined that the security of property 
is violated only when a man is deprived of the power of 
peaceably enjoying the fruits of his industry : it is also 
violated, and perhaps in a still more unjustifiable manner, 
when he is prevented from using the powers given him 
by nature, in any way, not injurious to others, he con- 
siders most beneficial for himself. Of all the species of 
property which a man can possess, the faculties of his mind 
and the powers of his body are most particularly his own. 
He should, therefore, be permitted to enjoy, that is, to use 
or exert, these faculties and powers at his discretion. And 
hence this right is as much infringed upon when a man is 
interdicted from engagingin a particular brancii of business, 
as when he is unjustly deprived of the property he has 
produced or accumulated. All monopolies which give to 
a few individuals the power of carrying on certain branches 
of industry to the exclusion of others, are thus, in fact, 
established in direct violation of the property of every one 
else. They prevent them from using their natural capa- 
cities or powers in what they might have considered the 
best manner ; and, as every man not a slave is justly held 
to be the best, and, indeed, only judge of what is advan- 
tageous for himself, the most obvious principles of justice 
and the right of property are both subverted when he is 


excluded IVom luiy employment. In like manner, this rii;ht 
is violated whenever any regulation is made to force an 
individual to employ his labour or capital in a particular 
way. The property of a landlord is violated when he is 
compelled to adopt any system of cultivation, even though 
it were really preferable to that which he was previously 
following ; the property of a capitalist is violated when he 
is obliged to accept a particular rate of interest for his 
stock ; and the property of a labourer is violated when he 
is obliged to employ himself in any particular occupation, 
or for a fixed rate of wages. 

The finest soil, the finest climate, and the finest intel- 
lectual powers, can prevent no people from becoming bar- 
barous, poor, and miserable, if they have the misfortune 
to be subjected to a government which does not respect 
and maintain the right of property. This is the greatest 
of calamities. The ravages of civil war, pestilence, and 
famine, may be repaired ; but nothing can enable a nation 
to contend against the deadly influence of an established 
system of violence and rapine. The want of security, or of 
any lively and well-founded expectation among the inhabi- 
tants of their being permitted freely to dispose of the fruits 
of their industry, is the principal cause of the present 
wretched state of the Ottoman dominions, as it was of the 
decline of industry and arts in Europe during the middle 
ages. When the Turkish conquerors overran those fertile 
and beautiful countries in which, to the disgrace of the 
European powers, they are still permitted to encamp, they 
parcelled them among their followers, on condition of their 
performing certain military services, on a plan correspond- 
ing, in many important particulars, to the feudal system of 
our ancestors. But none of these possessions, except such 
as have been assigned to the church, or left to it in trust, 
are hereditary. The others revert, on the death of the 
present possessors, to the sultan, the sole proprietor of all 
the immovable property in the empire. The majority of 
the occupiers of land in Turkey, having, in consequence of 

^ /tv^i ^f^'- 


this vicious system, no adequate security that tlieir posses- 
sions will be allowed to descend, on their death, to their 
children or legatees, are comparatively careless of futurity ; 
and as none can feel any interest in the fate of an unknown 
successor, no one ever executes any improvement of which 
he does not expect to reap all the advantage during his own 
life. This is the cause why the Turks are so extremely 
careless about their houses : they seldom construct them of 
solid or durable materials ; and it would be a gratification 
to them to be assured that they would fall to pieces the 
moment after they have breathed their last. Under tliis 
miserable government, the palaces have been changed into 
cottages and the cities into villages. The long-continued 
want of security has extinguished the very spirit of industry, 
and destroyed not only the power, but even the desire to 
emerge from barbarism.^ 

Had it been possible for arbitrary power to profit by the 
lessons of experience, it must long since have perceived that 
its own wealth, as well as the wealth of its subjects, would 
be most etfectually promoted by maintaining the inviolability 
of property. Were the Turkish government to establish a 
vigilant system of police — to secure to each individual the 
power freely to dispose of the fruits of his labour, and to 
substitute a regular plan of taxation in the place of the 
present odious system of extortion and tyranny, industry 
would revive ; capital and population would be augmented; 
and moderate duties, imposed on a few articles in general 
demand, would bring a much larger sum into the coffers of 
the treasury than all that is now obtained by force and 
violence. The stated public burdens to which the Turks 

' Thornton's "Account of the Turkish Empire," vol. ii. p. C3. "The 
Turks," says Denon, " batissent le moins qu'ils peuvent ; ils ne rcparent 
jamais rien : un mur menace ruine, ils I'ctayeut ; il s'e'boule, ce scut quel- 
ques chambres de moins dans la maison; ils s'arrangent a cote deb decombres : 
I'edifice tonibe enfin, ils en abaudonnent le sol, oil, s'ils sont oblige's d'en 
dcblayer I'emplacement, ils n'emportent lo ph'itras (|uc le moins loin (ju'lls 
penvent." — Tom. i. p. 193. 


are subject arc light compared witli tliose imposed on the 
English, the Hollanders, or the French. But the latter 
know that when they have paid the taxes due to govern- 
ment, they will be permitted peaceably to enjoy or accumu- 
late the residue of their wealth ; whereas, the subjects of 
Eastern despotisms have, generally speaking, no security 
that the moment after they have paid the stated contribu- 
tions, the pacha, or one of his satellites, may not strip them 
of every remaining farthing ! Security is the foundation, 
the principal element in every well-digested system of 
finance. When maintained inviolate, it enables a country 
to support, without much difficulty, a very heavy load of 
taxes ; but where there is no security, where property is a 
prey to rapine and spoliation, to the attacks of the needy, 
the powerful, or the profligate, the smallest burdens are 
justly regarded as oppressive, and uniformly exceed the 
means of the impoverished and spiritless inhabitant. 

Mr. Brydone states, that it was customary for the more 
intelligent Sicilians with whom he conversed respecting the 
natural riches of their celebrated island and its capacities of 
improvement, to observe, — " Yes, if these were displayed, 
you would have reason, indeed, to speak of them. Take a 
look of these mountains, they contain rich veins of every 
metal, and many of the Koman mines still remain. But to 
what end should we explore them 1 It is not we that should 
reap the profit. Nay, a discovery of any thing very rich 
might possibly prove the ruin of its possessor. No, in our 
present situation, the hidden treasures of the island must 
ever remain a profound secret. Were we happy enough to 
enjoy the blessings of your constitution, you might call us 
rich indeed. Many hidden doors of opulence would then 
be opened, which now are not even thought of, and we should 
soon reassume our ancient name and consequence." ' 

The Jews have been supposed to afford an instance of a 
people whose property has been long exposed to an almost 

^ " Tour in Sicily and Malta," p. ?>bl. 


uninterrupted series of attacks, and who have, notwith- 
standing, continued to be rich and industrious. But when 
rightly examined, it will be found that the case of the Jews 
forms uo exception to the general rule. The strong preju- 
dices which have been almost universally entertained against 
them, have, in most countries, prevented their acquiring 
property in land, and have also excluded them from all 
participation in their charitable institutions. Having, 
therefore, no extrinsic support on which to depend, in the 
event of their becoming infirm or destitute, they had a 
powerful additional motive to save and accumulate ; and 
being driven from agriculture, they were compelled to 
addict themselves to commerce and the arts. In an age 
when the mercantile profession was generally looked upon 
as mean and sordid, and when, of course, they had com- 
paratively few competitors, they, no doubt, made con- 
siderable profits ; though these have been very greatly 
exaofferated. It was natural that those indebted to the 
Jews should represent their gains as enormous ; for this 
inflamed the existing prejudices against them, and aftorded 
a miserable pretext for defrauding them of their just claims. 
There are a few rich Jews in most of the large cities of 
Europe ; but the majority of that race has ever been, and 
still is, as poor as its neighbours. 

Let us not, therefore, deceive ourselves by supposing 
that it is possible for any people to emerge from barbarism, 
or to become wealthy, prosperous, and civilized, without 
the security of property. Security is indispensable to 
the successful exertion of the powers of industry. Where 
it is wanting, it is idle to expect either riches or civiliza- 
tion.' " The establishment of property is in fact,"' to 

' " Ce u'est que la. oii les propriete's sont aasured, ou I'emploi ties capitaux 
est abandonne au choix de ceux qui les possedeut ; ce n'est que la dis-je, 
que les particuliers seront encourages a se soumettre aux privations les plus 
dures pour compenser par leurs epargnes les retards que la profusion du 
gouvernement pent apporter aux progres de la richesse uationale. Si 
I'Augleterre, inalgre' ses guerres ruineuses, est parvenue a uu haut degr^ 


borrow the statement of one of the ornaments of the English 
church, " the source from which all the arts of civilization 
proceed. Before this establishment takes place, the indolent 
suffer no inferiority, the active receive no gain ; but from 
the date of the recognition of property to the individual, 
each man is rich, and comfortable, and prosperous, setting 
aside the common infirmities which flesh is heir to) accord- 
ing to his portion of effective industry or native genius. 
From this period he is continually impelled by his desires 
from tlie pursuit of one object to another, and his activity 
is called forth in the prosecution of the several arts which 
render his situation more easy and agreeable." ^ 
- It is clear from what has been previously stated, and 
from the nature of the thing, that nothing can become 
property unless it be susceptible of appropriation ; and, on 
this ground, it has sometimes been objected to the game 
laws, that they make a property of that which, being 
"incapable of appropriation, should belong to the community, 
or to the captors. In support of this view of the matter, 
the rule of the Roman law has been appealed to, where it 
is laid down — Fei'ce igitur bestice, et volucres, et pisces, et 
omnia animalia quce mari^ coelo, et terra nascuntur, shnidatqiie 
ah aliquo capta faerint, jure gentium statim illius esse 
incipiunt ; quod e?iim ante nullius est, id naturale ratione 
occupanti conceditur? But it is distinctly laid down in the 
same article, whence we have borrowed this paragraph, that 
the proprietor of an estate has full power to prohibit any 
one from entering on it to kill wild animals. Without 
this proviso, there would not, in fact, be any such thing as 
a real property in land ; and this is, in truth, all that is 

d'opulence; si, malgr^ les contributions enormes dont le peuple y est chr^rge, 
son capital est pourtant accru dans le silence parl'e'conomie des particulieiv, 
il ne faut attribuer ces effets qu'a la liberttJ des pcrsonnes et a ia surete des 
pvopriet^s qui y r^gnent, plus que dans aucun autre pays de I'Europe, la 
Suisse excepte'e." — Storch, Cours d'Economie Politique, torn. i. p. 2(i(». 

' Sumner's " Records of the Creation," 4th ed. vol. ii. p. 51. 

2 InstUAih. ii. tit. i. § 12. 


meant when it is said that game is property. A partridge 
or hare is mine so long as it remains on my estate; hut 
the moment it transfers itself to another estate, it becomes 
the property of its owner. Poachers are pmii&^hed not 
because they have killed wild animals, but partly and 
principally because in doing so they invade the right of 
j)roperty by killing it without leave on lands belonging to 
other parties, on which they have no right to enter, and 
partly because they have not paid the tax demanded by 
government from all who kill game. 

It is sometimes indispensable, for the interests of society, 
to appropriate the whole, or a portion of the landed property 
of one or more individuals to some public purpose, as the 
formation of a road, a canal, &c. But property should 
never be wantonly taken for such purposes, nor till the 
advantages to be obtained by its cession have been fully 
established before some competent tribunal ; and when this 
has been done, full compensation should in every case be 
made to those who are thus called upon to give up their 
property for the promotion of the public interests. 

Before dismissing this subject, we may observe, that 
Rousseau and the Abbe Mably have made an objection to 
the right of private property, which has been, in some 
measure, sanctioned by Beccaria and others.^ They allow 
that its institution is advantageous for the possessors of 
property ; but they contend, that it is disadvantageous for 
those. who are poor and destitute. It condemns, they 
affirm, the greater portion of mankind to a state of misery, 
and provides for the exaltation of the few by the de- 
pression of the many ! The sophistry of this reasoning 
is so apparent, as hardly to require being pointed out. 
The right of property has not made poverty, but it 
has powerfully contributed to make wealth. Previously 
to its establishment, the most civilized nations were sunk 

' Speaking of theft, Beccaria calls it, " 11 delitto di quella infelicc parte 
di uomini, a cui il diritto di proprieta {terribile, eforse non necessario diritto,) 
von ha InnrAafo, rlie una nuda csifiM'riza." — Dei Dcl'Utl e delle Pene, § 22. 


to the same level of wretchedness and misery as the 
savages of New Holland and Kamtchatska. All classes 
have been benefited by the change ; and it is mere error 
and delusion to suppose that the rich have been bene- 
fited at the expense of the poor. The right of property 
gives no advantage to one over another. It deals impar- 
tially by all. It does not say, Labour and I shall reward 
you ; but it says, " Labour, and I shall take care that none 
he permitted to rob you of the produce of your exertions^ The 
protection afibrded to property by all civilized societies, 
though it has not made all men rich, has done more to 
increase their wealth than all their other institutions put 
f together. But, the truth is, that differences of fortune 
i are as consonant to the nature of things, and are as really a 
part of the order of Providence, as difi'erences of sex, com- 
plexion, or strength. No two individuals will ever be 
equally fortunate, frugal, and industrious ; and supposing 
an equality of fortunes were at any time forcibly estab- 
lished, it could not be maintained for a week : some would 
be more inclined to spend than others ; some would be 
more laborious and inventive ; and some would have larger 
families. The establishment of the right of property 
enables industry and forethought to reap their due reward; 
but they do this without its inflicting the smallest 
imaginable injury upon any thing else. There may, no 
doubt, be institutions which tend to increase those inequali- 
ties of fortune that are natural to society, but the right of 
property is not one of them. Its effects are altogether 
beneficial. It is a rampart raised by society against its 
common enemies — against rapine and violence, plunder and 
oppression. Without its protection, the rich would become 
poor, and the poor would be totally unable to become rich 
— all would sink to the same bottomless abyss of barbarism 
and poverty. " The security of property," to use the just 
and forcible expressions of an able writer, " has overcome 
the natural aversion of man from labour, has given him the 
empire of the earth, has given him a fixed and permanent 


residence, has implanted in his breast the love of his 
country and of posterity. To enjoy immediately — to 
enjoy without labour, is the natural inclination of every 
man. This inclination must be restrained : for its obvious 
tendency is to arm all those who have nothing against those 
who have something. The law which restrains this in- 
clination, and which secures to the humblest individual the 
quiet enjoyment of the fruits of his industry, is the most 
splendid achievement of legislative wisdom — the noblest 
triumph of which humanity has to boast." ^ 


The division and combination of employments can only 
be imperfectly established in rude societies and thinly- 
peopled countries. But in every state of society, in the 
rudest as well as the most improved, we may trace its 
operation and efiects. The various physical powers, talents, 
and propensities, with which men are endowed, fit them for 
different occupations ; and a regard to mutual interest and 
convenience naturally leads them, at a very early period, to 
establish a system of barter and a division of employments. 
It was speedily seen, that by separating and combining their 
efforts, so as to bring about some desirable end, they might, 
with ease, accomplish tasks that could not otherwise be 
attempted. Even in the simplest businesses this co-operation 
is required ; neither hunting nor fishing, any more than 
agriculture or manufactures, can be advantageously carried 
on by solitary individuals. Man is the creature of society; 
and is compelled, in every stage of his progress, to depend 
for help on his fellows. Quo alio fortes summ, qucim quod 
mutuis juvamur officiis? Instead of trusting to his own 
efforts for a provision of the various articles required 
for his subsistence, comfort, and security, he instinctively 
associates himself with others, and finds in this association 

1 iJeutham, " Traiti? de Legislation," torn. ii. p. 37. 


tlie principal source of his superior power. Perceiving that 
he can obtain an incomparably greater command of all that 
he deems useful or desirable by applying himself in prefer- 
ence to some one department of industry, he limits his 
attention to it only. As society advances, this division 
extends itself on all sides : one man becomes a tanner, or 
dresser of skins ; another a shoemaker ; a third a weaver ; 
a fourth a house-carpenter ; a fifth a smith, and so on ; one 
undertakes the defence of the society, and one the distribu- 
tion of justice; and each endeavours to cultivate and bring 
to perfection whatever talent or genius he may possess for 
the particular calling in which he is engaged : the wealth 
and comforts of all classes are, in consequence, prodigiously 
augmented. In countries where the division of labour is 
carried to a considerable extent, aoriculturists are not oblio;ed 
to spend their time in clumsy attempts to manufacture their 
own produce; and manufacturers cease to interest themselves 
about the raising of corn and the fattening of cattle. The 
facility of exchanging is the vivifying principle of industry : 
it stimulates agriculturists to adopt the best system of 
cultivation and to raise the largest crops, because it enables 
them to exchange whatever portion of the produce of their 
lands exceeds their wants, for other commodities contri- 
buting to their comforts and enjoyments ; and it stimu- 
lates manufacturers and merchants to increase the quantity 
and variety, and to improve the quality of their goods, 
that they may thereby obtain greater supplies of raw pro- 
duce. A spirit of industry is thus universally diffused ; 
and the apathy and languor which characterize a rude state 
of society, entirely disappear. 

But the facility of exchanging, or the being able readily 
to barter our own surplus produce for such parts of the 
surplus produce of others as we may wish to obtain and 
they may choose to part with, is not the only advantage of 
the separation of employments. Besides enabling each 
individual to addict himself in preference to those depart- 
ments which- suit his taste and disposition, it adds very 

^^. -"^^/^ 


largely to the efficacy of his powers, and enables him to 
produce a much greater quantity of useful and desirable 
articles than if he engaged indiscriminately in different 
businesses. Dr. Smith, who has treated this subject in 
the most masterly manner, has classed the circumstances 
which conspire to increase the productiveness of industry, 
when labour is divided, under the following heads : — First, 
the increased skill and dexterity of the workmen ; second, 
the saving of time which is commonly lost in passing from 
one employment to another ; and, third, the circumstance 
of the division of employments having a tendency to facili- 
tate the invention of machines and processes for saving 
labour. A few observations on each of these heads are 

1st, With respect to the improvement of the skill and dexterity 
of the labourer : — it is sufficiently plain, that when a person's 
whole attention is devoted to one branch of business, when 
all the energies of his mind and powers of his body are made 
to converge, as it were, to a single point, he must attain to 
a degree of proficiency in that particular branch, to which 
no individual engaged in a variety of occupations can be 
expected to reach. A peculiar play of the muscles, or 
sleight of hand, is necessary to perform the simplest opera- 
tion in the best and most expeditious manner ; and this can 
only be acquired by habitual and constant practice. Dr. 
Smith has given a striking example, in the case of the nail- 
manufacturer, of the extreme difference between training a 
workman to the precise occupation in which he is to be 
employed, and training him to a similar and closely allied 
occupation. " A common smith," says he, " who, though 
accustomed to handle the hammer, has never been used to 
make nails, if, upon some particular occasion, he is obliged 
to attempt it, will scarce, I am assured, be able to make 
above two or three hundred nails in a day, and those, too, 
very bad ones. A smith who has been accustomed to make 
nails, but whose sole or principal business has not been that 
of a nailer, can seldom, with his utmost diligence, make 


more than eight hundred or a thousand nails in a day. But 
I have seen several boys, under twenty years of age, who 
had never exercised any other trade but that of making 
nails, and who, when they exerted themselves, could make, 
each of them, upwards of two thousand three hundred nails 
in a day ;'''' ^ or nearly three times thd number of the smith 
who had been accustomed to make them, but who was not 
entirely devoted to that particular business ! 

2d, The influence of the division of labour in preventing 
that waste of time in morAng from one employment to another, 
which must always take place when an individual engages 
in diSerent occupations, is even more obvious than its in- 
fluence in improving his skill and dexterity. When the 
same person carries on difterent employments, in difl^erent 
and perhaps distant places, and with diflercnt sets of tools, 
he must plainly lose a considerable portion of time in passing 
between them. If the difterent employments in which he 
has to engage be carried on in the same workshop, the 
loss of time will be less, but even in that case it will be 
considerable. " A man," as Dr. Smith has justly observed, 
" commonly saunters a little in turning his hand from one 
sort of employment to another. When he first begins the 
new work, he is seldom very keen and hearty ; his mind, 
as they say, does not go along with it, and for some time 
he rather trifles than applies to good purpose. The habit 
of sauntering and of indolent careless application, v/hich is 
naturally, or rather necessarily acquired by every <jountry 
workman, who is obliged to change his work and his tools 
every half hour, and to apply his hand in twenty difierent 
ways almost every day of his life, renders him almost always 
slothful and lazy, and incapable of any vigorous application, 
even on the most pressing occasions. Independent, there- 
fore, of his deficiency in point of dexterity, this cause alone 
must always reduce considerably the quantity of work which 
he is capable of performing." - 

' " Wealth of Nations," p. 4. '' lb. p. 5. 


It injiy, perhaps, be worth while to remark in passing, 
that something similar to this efiect in mechanical opera- 
tions takes place with respect to the intellectual powers : 
when we pass abruptly from one speculation or study to 
another, some time always elapses before the attention is 
re-engaged, and the new train of ideas and facts brought 
fully under our view. Most persons must have experienced 
this ; and it appears to form an insuperable objection to 
a practice which has been sometimes recommended, of dis- 
tributing the day into different portions, appropriated to 
the study of different branches of literature and science. 
AVhere mere accomplishment, or the obtaining of a superfi- 
cial acquaintance with a variety of subjects, is the object, 
this plan is, perhaps, the best of any. But those who read 
or study in the view of making themselves masters of any 
art or science, will, if we may so speak, get through much 
more intellectual work, and to much better purpose, in a 
given time, by preserving the train of thought unbroken, 
so as to bring one speculation or investigation to a close 
before commencing another. 

od. With regard to the influence of the division of em- 
ployments \xi. facilitating the invention of machines and pro- 
cesses for sating labour, it is obvious that those engaged in 
any branch of industry will be more likely to discover easier 
and readier methods of carrying it on, when their whole 
attention is devoted exclusively to it, than when it is dissi- 
pated upon a variety of objects. 13ut it is a mistake to 
suppose, as has been sometimes done, that the inventive 
genius of workmen and artificers only is whetted and im- 
proved by the division of labour. As society advances, 
the study of particular branches of science and philosophy 
becomes the principal or sole occupation of the most inge- 
nious men. Chemistry becomes a distinct science from 
natural ])hilosophy ; the physical astronomer separates 
himself from the astronomical observer, the political econo- 
mist from tiie politician ; and each, meditating exclusively 
or principally on his peculiar department of science, attains 


to a degree of proficiency and expertness in it which the 
general schohir seldom or never reaches. 

It would be invidious to refer to living, or even very 
recent instances, in proof of the error of those who endea- 
vour to distinguish themselves by their attainments, not in 
one or two only, but in many departments of human know- 
ledge. The reputation of such individuals is almost always 
ephemeral ; for though they may be superficially acquainted 
with more things than most men, they seldom or never 
acquire that deep and thorough comprehension of any one 
art or science that is acquired by those who make it the 
principal or the exclusive object of their study. Great as 
is the fame of Leibnitz, perhaps the most universally in- 
formed and versatile genius of modern times, there is reason 
to think that it would have been greater and more durable 
had his energies been more concentrated. " But," to borrow 
the language of Gibbon, " even his powers were dissipated 
by the multiplicity of his pursuits. He attempted more 
than he could finish ; he designed more than he could 
execute ; his imagination was too easily satisfied with a 
bold and rapid glance on the subject which he was impa- 
tient to leave ; and Leibnitz may be compared to those 
heroes, whose empire has been lost in the ambition of uni- 
versal conquest."^ 

But, if these remarks may be justly applied even to 
Leibnitz, what can ordinary men expect who engage indis- 
criminately in every line of study ? They may have a 
smattering of many things, but they can have no solid 
knowledge. If we would attain to eminence, we must husband 
our resources ; and apply them so as to perfect ourselves 
as much as possible in some one pursuit. 

And hence, in labouring to promote our own ends by 
applying ourselves to the study or the practice of some parti- 
cular art or science, we necessarily follow that course which 
is most advantageous for all. Like the different parts of a 

^ i\IiacL'llaiieoua Works, iii. o(>.j, 8vo. edition. 


well- constructed engine, the inhabitants of a civilized 
country are all mutually dependent on, and connected with 
each other. Without any previous concert, and obej^ing 
only the powerful and steady impulse of self-interest, they 
universally conspire to the same great end ; and contribute, 
each in his respective sphere, to furnish the greatest supply 
of necessaries, conveniencies, and enjoyments. 

This dependence and combination is not found only or 
principally in the r:iechanic;i,l emploj'mcnts : it extends to 
the labours of the head as well as to those of tne hands ; 
and pervades and binds together all classes and degrees of 
society. " The oreat author of order hath so distributed 
the ranks and offices of men, in order to mutual benefit and 
comfort, that one man should plough, another thrash, an- 
other grind, another labour at the forge, another knit or 
weave, another sail, another trade, another supervise all 
these, labouring to keep them all in order and psace ; that 
one should work with his hands and feet, another with his 
head and tongue ; all conspiring to one common end, the 
welfare of the whole, and the supply of what is useful to 
each particular member; every man so reciprocally obliging 
and being obliged, the prince being obliged to the husband- 
man for his bread, to the weaver for his clothes, to the 
mason for his palace, to the smith for his sword ; those 
being all obliged to him for his vigilant care in protecting 
them, for their security in pursuing the work, and enjoying 
the fruit of their industry."^ 

One of the most advantageous results of the division of 
labour is to be found in the circumstance of its enabling manu- 
facturers or others engaged in any complicated business, or 
department of industry, to employ work-people of very vari- 
ous degrees of skill and force. In the cotton manufacture, 
for example, some processes that are indispensable may be 
quite as well performed by children and women as by the 
most expert and powerful workmen. It is clear, however, 
that but for the distribution of the labour required to bring 
' Barrow's Second Sermon on Industrv. 


about any result among different individuals possessing the 
degree of skill and strength necessary in each particular part 
of the process, none could be employed but those who possessed 
the skill and strength required in the most difficult and 
laborious ; and consequently workmen at 30s. or 40s. a-week 
would have to engage in tasks that might be as well or better 
performed by girls at 5s. or 6s. a-week. Hence, in all the 
great departments of industry, the more able, dexterous, and 
skilful labourers are employed only in the processes which 
require peculiar strength, dexterity, and skill ; those which 
require these qualities in a less degree being carried on by 
sets of inferior and, consequently, cheaper labourers. The 
success of most industrious undertakings depends, indeed, in 
a great measure, on the sagacity with which this distribution 
of employments is made, or with which the skill and power 
of the work-people are proportioned to the results to be 

It is necessary to bear in mind, that the advantages de- 
rived from the division of labour, though they may be, and 
in fact are, partially enjoyed in every country and state of 
society, can only be carried to their full extent where there 
is a great power of exchanging, or an extensive market. 
There are many employments which cannot be separately 
carried on without the precincts of a large city ; and, 
in all cases, the division becomes more perfect, according as 
the demand for the produce is extended. It is stated by 
Smith, that ten labourers, employed in different departments 
in a pin manufactory, could produce 48,000 pins a-day, and 
since his time the number has been doubled ; but it is evi- 
dent, that if the demand were not sufficient to take off this 
number, ten men could not be constantly employed in the 
pin-making business ; and the division of employments in 
it could not, of course, be carried so far. The same principle 
holds universallv. A cotton mill could not be constructed 

^ For a further illuatration of this principle see Babhage's Ecoiwmi^ uf 
Manufactures,]). 172. 


ill a small country having no intercourse witli its neighbours. 
The demand and competition of Europe and America have 
been necessary to carry the manufactures of Glasgow, Man- 
chester, and Birmingham, to their present state of improve- 

The various provisions made by society for its protection, 
and for securing and preserving the rights and privileges of 
individuals, owe their origin to this principle. " Government 
itself is wholly founded on a sense of the advantages result- 
ing from the division of employments. In the rudest state 
of society each man relies principally on himself for the pro- 
tection both of his person and of his property. For these 
purposes he must be always armed, and always watchful ; 
what little property he has must be movable, so as never 
to be far distant from its owner. Defence or escape occupy 
almost all his thoughts, and almost all his time ; and after 
all these sacrifices, they are very imperfectly effected. ' If 
ever you see an old man here,*" said an inhabitant of the 
confines of Abyssinia to Bruce, ' he is a stranger : the 
natives all die young by the lance."* 

" But the labour which every individual, who relies on 
himself for protection, must himself undergo, is more than 
sufficient to enable a few individuals to protect themselves, 
and also the Avhole of a numerous community. To this may 
be traced the origin of governments. The nucleus of every 
government must have been some person who offered pro- 
tection in exchange for submission. On the governor, and 
those with whom he is associated, or whom he appoints, is 
devolved the care of defending the community from violence 
and fraud; and so far as internal violence is concerned, and 
that is the evil most dreaded in civilized society, it is won- 
derful how small a nuuiber of persons can provide for the 
security of multitudes. About 15,000 soldiers, and not 
15,000 policemen, watchmen, and officers of justice, protect 
the persons and property of the eighteen millions of inhabi- 
tants of Great Britain. There is scarcely a trade that does 
not engross the labour of a greater number of persons than 



are employed to perform this the most important of all ser- 

tt 1 
vices, '■ 

The influence of the division of labour in augmentinf^ 
and perfecting the products of industry, had been noticed 
by several writers who preceded Dr. Smith, especially 
by Harris and Turgot ; but none of them did what 
Smith has done. None of them fully traced its opera- 
tion, or showed that the power of engaging in difi"erent 
evnployments depends on the power of exchanging; and 
that, consequently, the advantages derived from the divi- 
sion of labour are dependent upon, and regulated by, 
the extent of the market. This is a principle of the 
greatest value ; and by establishing it Smith shed a new 
light on the science, and laid the foundation of many 
important practical conclusions. " Presentee de cette ma- 
niere," says M. Storch, "Fidee de la division du travail 
etoit absolument neuve ; et Teflet qu''elle a fait sur les con- 
temporains de Smith, prouve bien qu'elle Fetait reellement 
pour eux. Telle qu'elle se trouve indiquee dans les passages 
que je viens de citer, elle n'a fait aucune impression. Deve- 
loppee par Smith, cette idee a d*'abord saisi tous ses lecteurs; 
tons en ont senti la verite et Timportance ; et cela suflit 
pour lui en assurer Fhonneur, lors memo que son genie eut 
ete guide par les indications de ses devanciers."- 



The capital of a country consists of those portions of the 
produce of industry existing in it, u'hich may he directly 
employed either to support human beings, or to facilitate pro- 
duction. This definition differs from that of Smith, which 
has been adopted by most economists. He divides the 
whole produce of industry belonging to a country, or its 
stock, into capital and revenue ; the first consisting of such 

' Senior on Political Economy. 

2 Toiu. iv. p. 9. 


portions of stock as are employed in the view of reproduc- 
ing some species of commodities ; and the second consistini;- 
of whatev^er is employed to maintain or gratify the inhabi- 
tants, without any ulterior object. According to Smith, 
all this latter part is unproductively consumed, and contri- 
butes nothing to the increase of wealth. But these distinc- 
tions seem to be for the most part imaginary. Portions of 
stock employed without any immediate view to production, 
are often by far the most productive. Consistently with 
Smith's definition, the stock that Arkwright and Watt 
made use of themselves, must be said to have been employed 
unproductively, or as revenue; and yet it is certain that, 
by enabling them to subsist and continue their operations, 
it contributed incomparably more to increase their wealth, 
and that of the country, than any equal amount of stock 
expended on the artisans in their service. It is always ex- 
tremely difficult to say when stock is, or is not, productively 
employed ; and any definition of capital which involves the 
determination of such a point, serves only to embarrass 
and obscure what is otherwise abundantly simple. In our 
view of the matter, it is enough to entitle an article to be 
considered capital, that it can directly contribute to the 
support of man, or assist him in appropriating or producing 
commodities. It may not, it is true, be employed for 
either of these purposes ; and though it were, it might not 
be employed so as to produce the anticipated results. But 
the mode of employing an article, and the consequences 
of that employment, are perfectly distinct considerations 
from the question, whether that article be capital. For 
any thing that can ci priori be known to the contrary, a 
horse yoked to a gentleman's coach may be as productively 
ei;nployed as if it were yoked to a brewer's dray ; but what- 
ever difference may obtain in the cases, the identity of the 
animal is not affected, — it is equally possessed, in the one 
and the other, of the capa city to assist in production ; and 
should, therefore, be regarded, independently of other con- 
siderations, as a part of the capital of the country. 


It is usual to distribute capital into two great divisions, 
one denominated circulatina ^ and the other fixed capital ; 
the former comprising those portions of capital that are most 
rapidly consumed — such as the food, clothes, and otlier 
articles necessary for the subsistence of man, the corn used 
as seed and in the feeding of horses, coal, &c. ; while the 
lower animals, the houses, and the various instruments and 
machines, that either are or may be emploj^ed in production, 
are classed under the head of fixed capital. But, though 
this distinction be convenient for some purposes, no clear 
line of demarcation can be drawn between the difterent 
varieties of capital, all of which are indispensable to the suc- 
cessful prosecution of most branches of industry. Without 
circulating capital, or food and clothes, it v/ould plainly be 
impossible to engage in any sort of undertaking where the 
return was at all distant ; and without fixed capital, or 
tools and engines, there are very few sorts of labour that 
could be carried on at all, or with any advantage. But the 
foresight and inventive faculty of man, lead him, in the 
earliest ages and rudest states of society, to provide a re- 
serve of food, and to contrive tools and instruuients to assist 
him in his operations. The American hunters make use of 
clubs and slings to abridge their labour, and facilitate the 
acquisition of game ; and the same principle which prompts 
them to construct and avail themselves of those rude instru- 
ments, never ceases to operate ; it is always producing new 
improvements ; and, in an advanced period, substitutes 
ships for canoes, muskets for slings, steam-engines for clubs, 
and cotton-mills for distaffs. 

Hence it is only by the employment and co-operation of 
both descriptions of capital, that wealth can be largely 
produced, and universally difiused. An agriculturist might 
have an ample supply of carts and ploughs, of oxen and 
horses, and, generally, of all the instruments and animals 
used in his department of industry ; but were he destitute 
of circulating/ capital, or of food and clothes, he would be 
unable to avail himself of their assistance, and instead of 


tilling the ground, would have to resort to some species ol' 
appropriative industry : and, on the other hand, supposing 
he were abundantly supplied with provisions, what could he 
do without the assistance oi fixed capital, or tools ? What 
could the most skilful husbandman perform without his 
spade and his plough I — a weaver without his loom I — a 
carpenter without his saw, his hatchet, and his planes I 

The division and combination of employments cannot be 
carried to any considerable extent without the previous 
accumulation of capital. Before labour can be divided, " a 
stock of goods of different kinds must be stored up some- 
where, sufficient to maintain the labourer, and to supply him 
with materials and tools. A weaver cannot apply himself 
entirely to his peculiar business, unless there is beforehand 
stored up somewhere, either in his own possession or in 
that of some other person, a stock sufficient to maintain 
him, and to supply him with the materials and tools of 
his work, till he has not only completed but sold his web. 
This accumulation must, evidently, be previous to his 
applying himself for so long a time to such a peculiar 
business." ^ 

As the accumulation of capital must have preceded any 
very extensive division and combination of employments, 
so their subsequent division and combination can only be 
perfected as capital is more and more accumulated. Ac- 
cumulation and division act and re-act on each other. The 
greater the amount of their capital, the better, speaking 
generally, can the employers of labour distribute the work 
to be done among the individuals in their employment, who, 
consequently, have, as already explained, a greater chance 
of discovering machines and processes for facilitating their 
various tasks. The industry, therefore, of every country 
not only directly increases with the increase of the stock or 
capital which sets it in motion ; but, by means of this in- 
crease, the division of labour is extended, new and more 

1 " Weal til of Nations" p. 119. 


j)Owerful implements and machines are invented, and the 
same quantity of labour is made to produce a much greater 
quantity of commodities. 

Besides enabling labour to be divided, capital contributes 
to facilitate labour and produce wealth in the three following 
ways : — 

First., — It enables work to be executed that could not be 
executed, or commodities to be produced that could not be 
produced, without it. 

Second, — It saves labour in the production of almost every 
species of commodities. 

Third, — It enables work to be executed better, as well as 
more expeditiously. 

With regard to the first advantage derived from the 
employment of capital, or the circumstance of its enabling 
commodities to be produced that coidd not be produced without 
it, it is plain, as has been already observed, that the pro- 
duction of such conmiodities as require a considerable period 
for their completion, could not be attempted unless a stock 
of circulating capital, or of food and clothes sufficient for 
tiie maintenance of the labourer while employed on them, 
were previously provided. But the employment of fixed 
capital, or of tools and machines, is frequently as necessary 
to the production of commodities as the employment of 
circulating capital. Stockings, for example, could not be 
produced without wires ; and, although the ground might 
be cultivated without a plough, it could not be cultivated 
without a spade or a hoe. If we run over the vast cata- 
logue of the arts practised in a civilized country, it will be 
found that extremely few can be carried on by the mere 
employment of the fingers, or rude tools with which man 
is furnished by nature. It is almost always necessary to 
provide ourselves with the results of previous industrv 
and invention, and to strengthen our feeble hands by arm- 
ing them, if we may so speak, " with the force of all the 

In the second place, besides supplying many species of 


commodities that could not be produced without its co-opera- 
tion, the employment of capital occasions a saving of labour 
in the production of many others ; and, by lowering their cost, 
briuofs them within reach of a far greater number of con- 
sumers. We have been so long accustomed to command 
the services of the most powerful machines, that it requires 
a considerable effort of abstraction to become fully aware 
of the advantages they confer on us. But if we com- 
pare the arts practised by highly civilized societies and 
those in a less advanced state, we can hardly fail of being 
convinced that we are indebted to the employment of 
machinery for a very large proportion of our su[)erior com- 
forts and enjoyments. Suppose, that, like the Peruvians, 
and many other people of the New as well as of the Old 
World, we were destitute of iron,' and unacquainted with 
the method of domesticating and employing oxen and horses, 
how prodigious a change for the worse would be made in 
our condition ! It was customary, in some countries, to 
make cloth by taking up thread after thread of the warp, 
and passing the woof between them by the unassisted 
agency of the hand ; so that years were consumed in the 
manufacture of a piece which, with the aid of the loom, 
may be produced in as many days.- Nothing, perhaps, 

' Mv. Locke has the following striking observations on the use of iron: — 
'* Of what consequence the discovery of one natural body, and its properties, 
may be to human life, the whole great continent of America is a convincing 
instance ; whose ignorance in useful arts, and want of the greatest part of 
tlie conveniencies of life, in a country that abounded with all sorts of natural 
plenty, I think may be attributed to their ignorance of what was to be 
found in a very ordinary, despicable stoue, I mean the mineral of iron. Aiu! 
whatever we think of our parts, or improvements, in this part of the world, 
where knowledge and plenty seem to vie with each other; yet, to any one 
that will seriously reflect upon it, I suppose it will appear past doubt, that, 
were the use of iron lost among us, we should in a few ages be unavoidably 
reduced to the wants and ignorance of the ancient savage Americans, whose 
natural ondowments and provisions came no way short of those of the moat 
flourishing and polite nations; so that he who first made use of that one 
contemptible mineral, may be truly styled the father of arts and author of 
plenty." — Essay on the Understanding, book iv. cap. 12. 

^ Ulloa, " Voyage de I'Am^rique," torn. i. p. 336. Ed. Amst. 1752. 


has contributed so much to accelerate the progress and 
diti'use tlie blessings of civilization, as tlie establishment of 
a commercial intercourse between different and distant 
nations. But how could this be effected without the con- 
struction of vessels and the discovery of the art of naviga- 
tion ? And if we compare the early navigators, creeping 
timidly along the shore in canoes, formed out of trees partly 
hollowed by fire, and partly by the aid of a stone hatchet, 
or the bone of some animal, with those who now boldly 
traverse the trackless ocean in noble ships laden with the 
produce of every climate, we shall have a faint idea of the 
advance of the arts, and of what we owe to machinery and 
science. Those who have distinguished themselves in this 
career, though they have rarely met with that gratitude 
and applause to which they had a just claim, have been 
the great benefactors of the human race. By pressing the 
powers of nature into our service, and subjecting them to 
our control, they have given man almost omnipotent power, 
and rendered him equal to the most gigantic undertakings. 
Without their assistance we should be poor indeed ! Such 
as we now find the naked and half- famished savage of New 
Holland, such would the Athenian, the Roman, and the 
Englishman have been, but for the invention of tools and 
machines, and the employment of natural agents in the 
great work of production. 

The third advantage derived from the employment of 
capital consists in its enabling work to be done better, as 
well as more expeditiously. Cotton, for example, ma}^ be 
spun by the hand ; but v.liile the admirable machines 
invented by Hargreaves, Arkwright, and others, spin a 
hundred or a thousand times as much yarn as could be spun 
by means of a common spindle, they have, at the same 
time, improved its quality, and given it a degree of fineness 
and of evenness, or equality, which was not previously 
attainable. A painter would require months, or it might 
be years, to paint with a brush the cottons, or printed 
cloths, used in the hanginji of a single room ; and it would 


l>e very difficult, if not impossible, for the best artist to 
i^ive that perfect identity to his figures, which is given to 
them by the machinery now made use of for that purpose. 
Not to mention the other and more important advantages 
resulting from the invention of movable types and printing, 
the most perfect manuscript — one on which years of 
patient and irksome labour have been expended — is unable, 
in point of delicacy and correctness, to match a well-printed 
work, executed in the hundredth part of the time, and at a 
hundredth part of the expense. The great foreign demand 
for English manufactured coods results no less from the 
superiority of their manufacture than from their greater 
cheapness ; and for both these advantages we are principally 
indebted to the excellence of our machinery. 

There are other considerations which equally illustrate 
the extreme importance of the accumulation and employ- 
ment of capital. The food and other accommodations 
enjoyed by a nation cannot be increased except by an increase 
in the number of its labourers, or in their productive powers ; 
but without an increase of capital, it is in most cases 
impossible to employ more workmen with advantage. If 
the articles applicable to the support of the labourers, and 
the tools and machines with which they are to operate, be 
re<{uired for the maintenance and efficient employment of 
those already in existence, there can be no demand for 
others. Under such circumstances the rate of wages cannot 
rise ; and if the number of inhabitants be increased, they 
must be worse provided for. Neither is it at all probable 
that the powers of the labourer should be augmented, unless 
capital have been previously increased. Without the better 
education and training of workmen, the greater subdivision 
of their employments, or the improvement of machinery, J 
their productive energies can never be materially augmented ; 
and in almost all these cases, additional capital is required. 
It is seldom, unless by its means, that workmen can be 
better trained, or that the undertaker of any work can either 
provide them with better machinery, or make a more proper 



(listi'ibution of labour among them. Should the work to be 
(lone consist of a number of parts, to keep a workman con- 
stantly employed in one only requires a much larger stock 
than when he is occasionally employed in every diiferent 
part. " When," says Dr. Smith, " we compare the state of 
a nation at two different periods, and iind that the annual 
produce of its land and labour is evidently greater at the 
latter than at the former, that its lands are better cultivated, 
its manufactures more numerous and more flourishing, and 
its trade more extensive, we may be assured that its capital 
must have increased during the interval between these two 
periods, and that more must have been added to it, by the 
good conduct of some, than had been taken from it, either 
bv the private misconduct of others, or hy the public extra- 
vagance of government." ^ It is therefore apparent, that no 
country can ever reach the stationary state, so long as 
she continues to add to her capital. While she does this, 
she will have an increasing demand for labour, and will 
be uniformly augmenting the mass of necessaries and cou- 
veniencies, and consequently, also, the immbers of her 
people. But when no additions are made to capital, no 
more labour will be, or, at least, can be advantageously 
employed. And should the national capital diminish, the 
condition of the great body of the people will deteriorate ; 
the wages of labour will be reduced ; and pauperism, with 
its attendant train of vice, misery, and crime, will spread 
its ravages throughout society. 

Having thus endeavoured to show what capital is, the 
importance of its employment, and the manner in which 
it assists in facilitating production, we proceed to explain 
its origin, and the circumstances most favourable for its 

Had it been a law of nature that the quantity of produce 
obtained from industrious undertakings should merely suffice 

' " Wep.lth of Nations," p. 152. 


to replace that which had been expended in carrying them 
on, society would have made no progress, and man would 
have continued in the state in which he was originally 
placed. But the established order of things is widely dif- 
ferent. It is constituted so that, in the vast majority of 
cases, more wealth or produce is obtained through the 
agency of a given quantity of labour, than is required to 
carry on that labour. This surplus, or excess of produce, 
has been denominated profit ; and it is from it that capital 
is wholly derived. It is not enough that a man's iui mediate 
wants are supplied, he looks forward to the future. Even 
the savage who kills more game in a day than he can consume, 
does not throw the surplus away ; experience has taught 
hi ni that he maybe less fortunate on another occasion; 
and he, therefore, either stores it up as a reserve against 
any future emergency, or barters it with his fellows for 
something else. Experience, too, would speedily show, 
that without a stock of provisions no one could engage in 
any undertaking, however productive in the end, that re- 
quired any considerable time before it made a return. No 
doubt, therefore, the principle which prompts to save and 
amass, which leads man to sacrifice an immediate gratifi- 
cation for the sake of increased security, or of greater en- 
joyment at some future period, manifested itself in the 
earliest ages. At first, indeed, its operation must have 
been comparatively feeble. But it gathered fresh strength 
and consistency, according as the many advantages of which 
it is productive gradually disclosed themselves. The dried 
fish, canoes, and spears of the wretched inhabitants of 
Tierra del Fuego exhibit the first fruits of that powerful 
passion, to which we owe all the riches of the world. 

Seeing, therefore, that capital is formed out of the excess 
of the produce realized by those who engage in industrious 
undertakings, over and above the produce necessarily ex- 
pended in carrying them on, it plainly follows, that the 
means of amassing capital will be greatest where this excess 
is greatest ; or, in other words, that they will be greatest 


where the rate of proHt is greatest. This is so obvious a 
proposition as hardly to require illustration. The man who 
produces a bushel of wheat in two days, has it evidently 
in his power to accumulate twice as fast as the man who, 
either from a deficiency of skill, or from his being obliged 
to cultivate a bad soil, is forced to Idhonr four days to pro- 
duce the same quantitj^ ; and the capitalist who invests 
stock so as to yield a profit of iei\ per cent, has it equally in 
his power to accumulate twice as fast as the capitalist who 
cannot find a mode of investment that will yield more than 
five per cent} It is true that high profits give the means 
only of amassing capital ; and had men always lived up to 
their incomes, that is, had they always consumed the whole 
produce of their industry in satisfying their immediate wants 
or desires, there could have been no such thing as capital in 
the world. But experience shows, that while high profits 
afford greater means of saving, they, at the same time, give 
additional force to the parsimonious principle. Economy is 
in no respect different from the other virtues ; and it would 
be unreasonable to expect that it should be strongly mani- 
fested, where it does not bring along with it a corresponding- 
reward. Before a man can accumulate, he must live : 
and if the sum that remains, after his necessary expenses 
are deducted, be but trifling, the probability is, that he 
will choose rather to consume it immediately, than to 
hoard it up in the expectation, that, by the addition of 
farther savings, it may, at some future and very distant 
period, become the means of making a small addition to his 
income. But wherever profits are high, that is, wherever 
there is a great power of accumulation, we deny ourselves 
immediate gratifications, because we have a certain prospect 
that, by doing so, we shall speedily attain to comparative 
affluence ; and that our future means of obtaining an in- 
creased supply of conveniencies and luxuries will be greatly 

' This is understated. It is plain, inasmuch as all parties must live on 
their profits, that those who gain double may accumulate more than twice 
as fast as the others. 


increased by our present forbearance. Give to any people 
the power of accumulating, and you may depend upon it 
they will not be disinclined to use it effectively. Those 
wjio inquire into the circumstances which have determined 
the state of the different countries of the world, will find 
that the power of accumulation, or, which is the same thing, 
the rate of profit, has uniformly been greatest in those 
which have made the most rapid advances. In the United 
.States, for example, the rate of profit is commonly twice as 
high as in Great Britain or Holland ; and it is to its 
greater magnitude that the comparatively quick progress of 
tlie former in wealth and population is wholly to be ascribed. 
The desire of adding to our fortune, and improving our 
condition, is inherent in the human constitution, and is, in 
fact, the fundamental principle, the causa causans, of every 
improvement. It is impossible to specify an instance of any 
people having missed an opportunity of amassing. Whenever 
tlie bulk of the community have the power of adding to their 
stock, they never fail to make additions. " No measure of 
fortune, or degree of skill, is found to diminish the supposed 
necessities of human life ; refinement and plenty foster new 
desires, while they furnish the means or practise the methods 
to gratify them."^ 

Perhaps it will be said, in opposition to these statements, 
tiiat the rate of profit is high in Eastern countries, and that 
they are, notwithstanding, either retrograding or advancing 
only by imperceptible degrees. It may be questioned, how- 
ever, whether the rate of profit be really higher in them than 
in Europe. No doubt the rate of interest is higher ; but 
that is a consequence of the hazard to which the principal 
is exposed, because of the prejudices against usury, and the 
vicious and defective nature of Eastern governments. All 
taking of interest is prohibited by the Koran ; and this is 
really one of the chief causes of its being so very high in 
the countries which respect its authority. " L"'usure,'''' says 

1 Ferguson's " Essay on Civil Society," p. 360. 


Montesquieu, "augmente dans les pays Mahometans a pro- 
portion de la severite de la defense. Le preteur s'indeni- 
nise du peril de la contravention." ^ It is not meant, how- 
ever, to affirm, that great productiveness of industry, or a 
high rate of profit, is necessarily, and in every instance, 
accompanied by a great degree of prosperity. Countries 
v»'ith every imaginable capacity for the profitable employ- 
ment of industry and stock may have the misfortune to be 
subjected to governments which do not respect or uphold 
the right of property ; and the insecurity thence resulting, 
may suffice to paralyze the exertions of those who are 
otherwise placed in the most favourable situation for the 
accumulation of wealth. But we believe it may be laid 
down as a principle, which hardly admits of exception, that 
if two or more countries, nearly in the same physical cir- 
cumstances, have about equally tolerant and liberal govern- 
ments, and give equal protection to property, their pro- 
sperity will be proportioned to the rate of profit in each. 
Wherever, cceteris paribus, profits are high, capital is rapidly 
augmented, and there is a comparatively rapid increase of 
wealth and population ; but, on the other hand, wherever 
profits are low, the means of employing additional labour 
are proportionally limited, and the progress of society ren- 
dered so much the slower. 

It is not, therefore, by the absolute amount of its capital, 
/'. but by its power of employing that capital with advantage 
; — a power which, in all ordinary cases, is correctly measured 
by the common and average rate of profit — that the capacity 
of a country to increase in wealth and population is to be 
estimated. Before the laws regulating the rate of profit 
and the increase of capital were thoroughly investigated, 
the great wealth and commercial prosperity of Holland, 
where profits, from 1650 downwards, were comparatively 
low, were considered by Sir Josiah Child, and many later 
writers, as the natural result, and were consequently re- 

' " Esprit des Loix," liv. xxi. chap. 10. 


garded by them as a convincing proof of the superior advan- 
tages of low profits and interest. But this, as will be after- 
wards seen, was to mistake the efl'ect of heavy taxation for 
the cause of wealth ! A country where profits are low, may, 
notwithstanding, abound in wealtli, and be possessed of im- 
mense capital ; but it is the height of error to suppose, that 
the lowncss of profits facilitated their accumulation. The 
truth is, that the low rate of profit in Holland during the 
eighteenth century was at once a cause and a symptom 
of her decline. Sir William Temple mentions, in his Ob- 
servations on the Netherlands, written about 1670, that the 
trade of Holland had then passed its zenith ; and the vast 
capitals of the Dutch merchants had been principally 
amassed previously to the wars in which the republic was 
successively engaged with Cromwell, Charles II., and 
Louis Xiy., when the rate of profit was higher than at 
any subsequent period. 

But without referring to the example of America, 
Holland, or any other country, the smallest reflection on 
the motives to engage in any branch of industry is sufficient 
to show that the advantages derived from it are alwavs 
supposed, cwteris ixtrihus^ to be directly as the rate of profit. 
AVhy does a man employ himself or his capital in an indus- 
trious undertaking ? Is it not because he expects he will 
thereby realize the greatest reward for his labour, or the 
greatest rate of profit on his capital ? One branch 
of industry is said to be peculiarly advantageous, for 
the single and sufficient reason that it yields a compara- 
tively largo profit ; and another is, with equal propriety, 
said to be peculiarly disadvantageous, because it yields a com- 
paratively small profit. It is always to this standard, to 
the high or low rate of profit which they respectively yield, 
that every individual refers in comparing different under- 
takings ; and it is hardly necessary to add, that what is 
true of individuals, must be true of states. 

No certain conclusion respecting the prosperity of any 
country can be drawn from the magnitude of its commerce 



or revenue, or the state of its agriculture or manufactures. 
Every branch of industry is liable to be affected by second- 
ary or accidental causes. They are always in a state of 
ilux or reflux ; and some of them are frequently seen to 
flourish when others are very much depressed. The aver- 
age RATE OF PROFIT would seem to be, on the whole, the best 
barometer — the best criterion of national prosperity. A rise 
of profits is, speaking generally, occasioned by industry 
having become more productive ; and it shows that the 
power of the society to amass capital, and to add to its 
wealth and population, has been increased, and its progress 
accelerated : a fall of profits, on the contrary, is occasioned 
by industry having become less productive, and shows that 
the power to amass capital has been diminished, and that 
the progress of the society has been clogged and impeded.^ 
However much a particular, and it may be an important, 
branch of industry is depressed, still, if the average rate of 
profit be high, we may be assured that the depression cannot 
continue, and that the condition of the country is really 
prosperous. On the other hand, though there were uo 
distress in any particular branch — though agriculture, 
manufactures, and commerce were carried to- a greater 
extent than thev have ever been carried before — though a 
nation have numerous, powerful, and well-appointed armies 
and fleets, and the style of living among the higher classes 
be more than ordinarily sumptuous, — still, if the rate of 
profit have become comparatively low, we may pretty con- 
fidently affirm, that the condition of such nation, how 
prosperous soever in appearance, is bad and unsound at 
bottom ; that the plague of poverty is secretly creeping on 
the mass of her citizens ; that the foundations of her great- 

' We are here only laying down the leading principles on the subject. In 
the chapter on the " Circumstances which determine the Rate of Profit," we 
shall endeavour to investigate the influence of fluctuations in the value of 
money, of loans to government, &c., on profits. The doctrine advanced in 
the text is meant only to apply in cases where these disturbing causes are 
not in operation. 


ness have been shaken ; auJ that her decline may be 
anticipated, unless measures be devised for relieving the 
pressure on the national resources, by adding to the pro- 
ductiveness of industry, and, consequently, to the rate of 

It has been wisely ordered, that the principle which 
prompts to save and amass should be as powerful as it is 
advantageous. " With regard to profusion,"''' says Smith, 
" the principle which prompts to expense is the passion for 
present enjoyment ; which, though sometimes violent, and 
very ditiicult to be restrained, is in general only momentary 
and occasional. i3ut the principle which prompts to save 
is the desire of bettering our condition ; a desire which, 
though generally calm and dispassionate, comes with us 
from the womb, and never leaves us till we go into the 
grave. In the whole interval which separates these two 
moments, there is scarce, perhaps, a single instant in which 
any man is so perfectly and completely satisfied with his 
situation as to be without any wish of alteration or improve- 
ment of any kind. An augmentation of fortune is the means 
by which the greater part of men propose and wish to better 
their condition. It is the means the most vulgar and the 
most obvious ; and the most likely way of augmenting their 
fortune is to save and accumulate some part of what they 
acquire, either regularly and annually, or upon some extra- 
ordinary occasion. Though the principle of expense, there- 
fore, prevails in almost all men upon some occasions, and in 
some men upon almost all occasions, yet in the greater part 
of men, taking the whole course of their life at an average, 
the principle of frugality seems not only to predominate, 
but to predominate very greatly." ^ 

It is this principle which carries society forward. The 
spirit of parsimony, and the eftorts of the frugal and indus- 
trious classes to improve their condition, in most instances 
balance not only the profusion of individuals, but also the 

1 « Wealth of Nation?," p. 151. 


Jiiore wasteful profusion and extravagance of governments. 
This spirit has been happily compared by Smith to the 
unknown principle of animal life — the vis medicatrix naturce 
— which frequently restores health and vigour to the con- 
stitution, in spite both of disease and of the injudicious 
prescriptions of the physician. So powerful indeed is its 
influence, that it may well be doubted, supposing the late 
war, and the enormous expenditure which it occasioned, 
had not occurred, whether the existing capital of the country 
would have been really greater than it is ! 

But, however great the capacity of the principle of accu- 
mulation to repair the waste of capital, we must take care 
not to fall into the error of supposing, as very many have 
done, that its operations are in all cases promoted by a large 
public expenditure. To a certain extent, indeed, this is 
true. A moderate increase of taxation has the same ejfFect 
on the habits and industry of a nation, that an increase of 
his famil}^, or of his necessary and unavoidable expenses, has 
upon a private individual. Man is not influenced solely by 
hope ; he is also powerfully operated upon by fear. Taxa- 
tion brings the latter principle into the field. To the desire 
of rising in the world, inherent in the breast of every indi- 
vidual, an increase of taxation superadds the fear of being 
cast down to a lower station, of being deprived of conveni- 
encies and gratifications which habit has rendered almost 
indispensable ; and the combined influence of the two prin- 
ciples produces efi'orts that could not be produced by the 
unassisted agency of either. They stimulate individuals 
to endeavour, by increased industry and economy, to repair 
the breach taxation has made in their fortunes ; and it not 
unfrequently happens that their efforts do more than this, 
and tliat, consequently, the national wealth is increased 
through the increase of taxation. But we must be on our 
guard against the abuse of this doctrine. To render an 
increase of taxation productive of greater exertion, economy, 
and invention, it should be slowly and gradually brought- 
about ; and it should never be carried to such a height as to 


incapacitate individuals from meeting the sacrifices it im- 
poses, by such an increase of industry and economy as it 
may be in their power to make without requiring any very 
violent change of their habits. The increase of taxation 
must not be such as to make it impracticable to overcome 
its influence, or to induce the belief that it is impracticable. 
Difficulties that are seen to be surmountable sharpen the 
inventive powers, and are readily grappled with ; but an 
apparently insurmountable difficulty, or such an excessive 
weight of taxation as it was deemed impossible to meet, 
would not stimulate but destroy exertion. Instead of pro- 
ducing new efforts of ingenuity and economy, it would pro- 
duce only despair. Whenever taxation becomes so heavy 
that the produce it takes from individuals can no longer be 
replaced by fresh efforts, they uniformly cease to be made ; 
the population becomes dispirited ; industry is paralyzed ; 
and the country rapidly declines. 

A striking illustration of what has now been stated, 
may be derived from observing the influence of fair and 
low rents on the industry of farmers. It might seem, on a 
superficial view of the matter, that the circumstance of a 
farm being low-rented would not lessen the enterprise or 
industry of the tenant, seeing that every thing he could 
make it produce over and above the rent, by diligence and 
economy, would belong to himself. Such, however, is not 
found to be really the case ; and it is difficult to say whether 
the over or under-renting of land be most injurious. If a 
farm be too high-rented, that is, if no exertion of skill, or 
reasonable outlay on the part of the tenant, will enable him 
to pay his rent and obtain a fair return for his trouble, he 
gets dispirited. The farm is, in consequence, ill-managed ; 
scourging crops are resorted to ; and ultimately it is thrown 
on the landlord's hands, in an impoverished and deteriorated 
condition. But the disadvantages attending the under- 
renting of land are hardly less obvious. To make farmers 
leave those routine practices to which they are very strongly 
attached, and become really industrious and enterprising, 


they must not only have the power of rising in the world, 
but their rents must he such as to impress them with a 
conviction, that if they do not exert themselves their ruin 
will assuredly follow. Estates that are under-rented are» 
uniformly almost, farmed in an inferior style compared with 
those that are let at their fair value ; and the tenants are 
not generally in good circumstances. " 1 have not," says 
Mr. Young, " seen an instance of rent being very low, and 
husbandry, at the same time, being good. Innumerable 
are the instances of farmers living miserably, and even 
breaking, on farms at very low rents, being succeeded by 
others, on the same land, at very high rents, who make 
fortunes. Throughout my journey I have universally 
observed, that such farms as were the most wretchedly 
managed were very much under-let." ^ 

What an increase of rent is to the farmers, an increase 
of taxation is to the public. If it be carried beyond due 
bounds, or to such an extent that it cannot be fully balanced 
by increased efforts to produce and save, it is productive 
of national poverty and decline ; but so long as it is con- 
fined within moderate limits, it acts as a powerful stimulus 
to industry and economy, and most commonly occasions the 
production of more wealth than it abstracts. 

That capital is formed out of profit, and that profit is 
itself the surplus obtained from industrious undertakings, 
after the produce expended in carrying them on has been 
fully replaced, are propositions which, though universally 
true, are, at least the latter, at variance with the common 
notions on the subject. Instead of supposing profits to 
originate in the manner now stated, they are almost uni- 
formly supposed to depend on the sale of produce, and to be 
made at the expense of the purchaser. Thus, to take a 
familiar instance, the hat-maker who sells a hat for thirty 

• Young's " Tour in the North of England," vol. iv. p. 376. See also 
" Analysis of the Statistical Account of Scotland," part i. p. 258, &c., for 
proofs of the same principle. 


shillings, which cost him twenty-five shillings of outlay, 
believes he has made the five shillings of profit at the ex- 
pense of the individual who bought the hat, and this is the 
universal belief of others. In truth and reality, however, 
he has done no such thing. He produced, in a given time, 
a hat equivalent to, or worth, in silver, thirty shillings, 
while the various expenses necessarily incurred in its manu- 
facture only amounted to twenty-five shillings. But then 
it must be borne in mind that, speaking generally, the various 
individuals who deal with the hat-maker are placed in the 
like situation : the farmer, the clothier, the bootmaker, &c. 
are all making the same profits in their respective busi- 
nesses ; that is, they are all producing quantities of corn, 
cloth, boots, &c., equivalent to thirty shillings, by an out- 
lay of twenty-five shillings. It is clear, therefore, that in 
exchanging the precious metals for commodities, or in ex- 
changing one sort of commodities for another, one party 
gains nothing at the expense of the other. Profit is, in all 
cases, the excess of the produce raised in given periods over 
that which has been consumed in those periods. The 
introduction of exchanges would not be advantageous, if it 
merely enabled one set of persons to prey upon some other 
set. This, however, is not its effect. It enables labour 
to be divided, and individuals to addict themselves in 
preference to some one pursuit ; and by thus separating 
and combining their efforts, adds, as already seen, pro- 
digiously to the facilities of production ; but it does no- 
thing more. 

If the popular opinions with respect to the source of 
profits were well founded, it would inevitably follow, inas- 
much as they take for granted that all producers make their 
profits at the expense of some one else who buys their 
commodities, not only that no additions could be made to 
capital, but that the capital now in the world would be very 
soon annihilated. Were such a really correct view of the 
circumstances under which we are placed, our'lot would be 


any thing but enviable. Happily, however, this is not our 
situation. The produce of labour, during any given time, 
is almost always greater than the produce we are obliged to 
consume during the same time ; and the surplus or profit 
being accumulated, becomes, in its turn, a new instrument 
of production. 

There is really, therefore, no class of industrious indivi- 
duals which lives at the expense of the other classes. The 
retail dealer, for example, is in no respect more indebted 
to his customers than they are to him. It is not his, but 
their own interest they have in view, when they resort to 
his shop. Society is, in truth, as M. Destutt Tracy has 
remarked, nothing but a series of exchanges ; ' but they are 
exchanges in which full equivalents are always given for 
whatever is received. Profits. are a consequence of the bounty 
of Nature ; and do not in any degree depend on the superior 
acuteness of those who sell, or on the weakness and simplicity 
of those who buy. The advantages observed to result from 
the separation of employments has occasioned the division 
of society into particular classes, which interchange com- 
modities and services ; this intercourse, from its reducing 
the cost, increasing the number, and improving the quality 
of all sorts of useful and desirable articles and services, 
being of the greatest advantage to every individual. This, 
however, it must always be kept in view, is the whole 
effect of the division of labour, and of the introduction of 
exchanges. How far soever that division may be car- 
ried, it is still true that profits depend not on it, or on 
exchanges, but on the excess of the commodities produced 
in a given period, over those that are consumed in the same 

However extended the sense previously attached to the 
term capital may at first sight appear, we are inclined to 

^ " Economic Politique," p. 78. 


think that it should be interpreted still more comprehensively. 
Instead of understanding by capital all that portion of the 
produce of industry which may be applied to support man, 
and to facilitate production, there does not seem to be any 
good reason why man himself should not, and very many 
why he should, be considered as forming a part of the 
national capital. Man is as much the produce of previous 
outlays of wealth expended on his subsistence, education, 
&c., as any of the instruments constructed by his agency ; 
and it would seem, that in those inquiries which regard 
only his mechanical operations, and do not involve the con- 
sideration of his higher and nobler powers, he should be 
regarded in the same point of view. Every individual who 
has arrived at maturity, though he may not be instructed 
in any particular art or profession, may yet, with perfect 
propriety, be viewed, in relation to his natural powers, as a 
machine which it has cost twenty years of assiduous atten- 
tion, and the expenditure of a considerable capital, to con- 
struct. And if a farther sum be expended in qualifying 
him for the exercise of a business or profession requiring 
unasual skill, his value wll be proportionally increased, and 
he will be entitled to a greater reward for his exertions ; 
as a machine becomes more valuable when it acquires new 
powers by the expenditure of additional capital or labour in 
its construction. 

Smith has fully admitted the justice of this principle, 
though he has not reasoned consistently from it. The 
acquired and useful talents of the inhabitants should, he 
states, be considered as making part of the national capital. 
" The acquisition of such talents," he justly observes, 
" during the education, study, or apprenticeship of the 
acquirer, always costs a real expense, which is a capital 
tixed and realized, as it were, in his person. Those talents, 
as they make a part of his fortune, so do they likewise of 
that of the society to which he belongs. The improved 
dexterity of a workman may be considered in the same 



li*;lit as a machine or instrumeut of trade, which facilitates 
and abridges hibour, and which, thongli it costs a certain 
expense, repays that expense with a profit."^ 

Instead, then, of being- entirely overlooked, as is most 
frequently the case, the dexterity, skill, and intelligence of 
the mass of its inhabitants should be most particularly at- 
tended to in estimating the capital and pi'oductive capacities 
of a country. Much stress is uniformly and justly laid on 
the efficacy of the machines which man has constructed to 
assist in his undertakings ; but he is himself the most 
important of all machines, and every addition made to his 
skill and dexterity is an acquisition of the utmost conse- 
quence. The discrepancies that actually obtain in the phy- 
sical organization of the various races of men, are seldom 
very considerable ; and yet, how vast is the difference, in 
other points of view, between an Indian of Mexico, and an 
Englishman or a Frenchman ! The former, ignorant and 
uninstructed, is poor and miserable, though placed in a 
country blessed with a soil of exhaustless fertility and a 
genial climate ; the latter, intelligent and educated, is 
wealthy, prosperous, and happy, though placed under 
comparatively unfavourable circumstances. Lord Bacon's 
aphorism, that hioidedge is poxcer^ is true in a physical as 
well as in a moral sense. It gives its possessors an ascen- 
dency over their less instructed neighbours, and makes 
immeasurable additions to their productive capacities. An 
ignorant and uneducated people, though possessed of all the 
materials and powers necessary for the production of wealth, 
are uniformly sunk in poverty and barbarism : and until 
their mental powers begin to expand, and they have learned 
to exercise the empire of mind over matter, the avenues to 
improvement are shut against them, and they have neither 
tlie power nor the wish to emerge from their degraded con- 

•* Wealth of Nations," p. 122. 


It has beeu said, and perhaps truly, that it was the rapid 
growth of the cotton manufacture that bore us triumphantly 
through the contest with revolutionary France, and gave 
us wealth and power sufficient to overcome the combined 
force of almost all Europe, though wielded by a chief of 
consummate talent. But what is the cotton manufacture? 
Is it not wholly the result of the discoveries and inventions 
of Hargreaves, Arkwright, Crompton, Cartwright, and a 
few others l^ It was their sagacity that discovered and 
explored this mighty channel for the profitable employment 
of millions upon millions of capital, and of thousands upon 
thousands of workmen ; so that the vast advantages derived 
from it, are to be ascribed to them as to their original authors 
and inventors. 

To those who are impressed with a conviction of the 
truth of the principles thus briefly stated, who are duly 
sensible of the importance of science to the advancement of 
nations, nothing can be more gratifying than the progress 
made of late years in difiusing instruction among the great 
mass of the community. The discoveries of Bell and Lan- 
caster, and the schools founded on their principles, have 
powerfully contributed to spread a knowledge of the ele- 
mentary branches of instruction ; while the Mechanics' 
Institutions formed in the metropolis, and other great towns, 
afford the labouring part of the population an opportunity 
of perfecting themselves in their respective arts, by making 
them acquainted with the principles on which they depend, 
and from the better application of which every new improve- 
ment must be derived. It is impossible to form any accurate 
estimate of the influence of this general instruction over the 
future fortunes of the empire ; but it can hardly fail to be 
alike great and beneficial. More discoveries will be made, 
according to the degree in which more individuals are placed 

^ For an account of the rise, progress, and present state of the cotton 
manufacture, see Coramercial Dictionary, art. Cotton, and the authorities 
there referred to. 


in a situation to make them. And it is neither impossible, 
nor at all improbable, that the lustre which now attaches 
to the names of Arkwright and Watt may be dimmed, 
though it can never be wholly effaced, by the more numerous, 
and, it may be, more important discoveries, that will, at no 
distant period, be made by those who would have passed 
from the cradle to the tomb in the same obscure and beaten 
track that had been trodden by their unambitious ancestors, 
liad not the education now so generally diffused, served to 
elicit and ripen the seeds of genius implanted in them for 
the common advantage of mankind. 

CREDIT. 125 


Definition and Grovoth of Credit — Contributes to facilitate Production 
bi/ distributing Capitalinthe most advantageous manner — Circulation 
of Bills, &;c. 

Having seen, in the last chapter, the effects resulting from 
the accumulation and employment of Capital, our attention 
is next called to the subject of Credit. This is most com- 
monly represented as a very effective agent in the production 
of wealth; and though its influence has been, in this respect, 
a good deal exaggerated, it is, notwithstanding, of very con- 
siderable importance. 

Credit is the term used to express the trust or confidence 
placed by one individual in another when he assigns him 
property in loan, or without stipulating for its immediate 
payment. The party who lends is said to give credit, and 
the party who borrows to obtain credit. 

In the earlier stages of society credit is in a great measure 
unknown. This arises partly from the circumstance of verj 
little capital being then accumulated, and partly from govern- 
ment not having the means, or not being sufficiently careful 
to enforce that punctual attention to engagements so indis- 
pensable to the existence of confidence or credit. But as 
society advances, capital is gradually accumulated, and the 
observance of contracts is enforced by the public authority. 
Credit then begins to grow up. On the one hand, indivi- 
duals who have either more capital than they can conveni- 
ently employ, or who are desirous of withdrawing from 
business, are disposed to lend, or to transfer a part or the 
whole of their capital to others, on condition of their 
obtaining a certain stipulated premium or interest for its 
use, and what they consider sufficient security for its 
repayment ; and on the other hand, there are always 

] 26 CREDIT. 

individuals to be met with disposed to borrow, partly and 
principally iu order to extend their businesses beyond the 
limits to which they can be carried by means of their own 
capital, or to purchase commodities on speculation, and 
partly to defray debts already contracted. These different 
classes of individuals mutually accommodate each other. 
Those desirous of being relieved from the fatigues of 
business, find it very convenient to lend their capital to 
others ; while those who are anxious to enlarge their 
businesses, obtain the means of prosecuting them to a 
greater extent. 

It is in the effects resulting from this transference of 
capital from those who are willing to lend to those who are 
desirous to borrow, that we must seek for the advantages 
derivable from credit. All the operations supposed to be 
carried on by its agency, how extensive and complicated 
soever they may appear, originate in a change in the actual 
holders or employers of stock. Nothing, indeed, is more 
common than to hear it stated, that commodities are pro- 
duced, and the most expensive operations carried on, by 
means of credit or confidence ; but this is an obvious 
mistake. Wealth cannot be produced, nor can any sort of 
industrious undertaking be entered upon or completed, 
without the aid of labour and capital ; and all that credit 
does, or can do, is, by facilitating the transfer of capital 
from one individual to another, to bring it into the hands 
of those who, it is most probable, will employ it to the 
greatest advantage. A few remarks will render this 

It is plain, that to whatever extent the power of the 
borrower of a quantity of produce, or of a sum of money, 
to extend his business, may be increased, that of the lender 
must be equally diminished. The same portion of capital 
cannot be employed by two indivi.duals at the same time. 
If A transfer his capital to B, he necessarily, by so doing, 
deprives himself of a power or capacity of production which 
B acquires. It is most probable, indeed, that this capital 

CREDIT. 127 

will be more productively employed by B than by A ; for 
the fact of A having lent it, shows that he either had no 
means of employing it advantageously, or was disinclined to 
take the trouble ; while the fact of B having borrowed it, 
shows that he conceives he can advantageously employ it, 
or that he can invest it so as to make it yield an interest to 
the lender and a profit for himself. It is obvious, however, 
that except in so far as credit may thus bring capital into 
the possession of those who, it may be fairly presumed, will 
employ it most beneficially, it can contribute nothing to the 
increase of wealth. 

The most common method of making a loan is by selling 
commodities on credit, or on condition that they shall be 
paid at some future period. The price is increased propor- 
tionally to the length of credit given ; and if any doubt be 
entertained with respect to the punctuality or solvency of 
the buyer, a farther sura is added to the price, to cover the 
risk that the seller or lender runs of not recoverintr the 
price, or of not recovering it at the stipulated period. This 
is the usual method of transacting business where capital 
is abundant and confidence general ; and there can be no 
manner of doubt that the amount of property lent in Great 
Britain, Holland, and other commercial countries, in this 
way, is decidedly greater than all that is lent in every 
other way. 

When produce is sold in the way now described, it is 
usual for the buyers to give bills to the sellers for the 
price, payable at the expiration of the credit ; and it is 
in the effects jrrowing; out of the negotiation of these bills 
that much of that magical influence that has sometimes 
been ascribed to credit is believed to consist. Suppose, to 
illustrate this, that a paper-maker. A, sells to a printer^ B, 
a quantity of paper, and that he gets his bill for the sum, 
payable at twelve months after date : B could not have 
entered into the transaction had he been obliged to pay 
ready money ; but A, notwithstanding he has occasion for 
the money, is enabled, by the facility of negotiating or 

128 CREDIT. 

discounting bills, to give the requisite credit, without dis- 
abling himself from prosecuting his business. In a case 
like this, both parties are said to be supported bj credit ; 
and as cases of this sort are exceedingly common, it is 
contended that half the business of the country is really 
carried on by its means. All, however, that such state- 
ments really amount to is, that a large proportion of those 
engaged in industrious undertakings do not employ their 
own capital merely, but also that of others. In the case 
in question, the printer employs the capital of the paper- 
maker, and the latter employs that of the banker or broker 
who discounted the bill. This person had, most likely, 
the amount in spare cash lying beside him, which he might 
not well know what to make of; but the individual into 
whose hands it has now come, will immediately apply it to 
useful purposes, or to the purchase of the materials, or the 
pa3"ment of the wages of the workmen employed in his 
establishment. It is next to certain, therefore, that the 
transaction will be advantageous. But still it is essential 
to bear in mind that it will be so, not because credit is of 
itself a means of production, or because it can give birth to 
capital not already in existence ; but because, through its 
agency, capital finds its way into those channels in which 
it has the best chance of being profitably employed. 

The real advantage derived from the use of bills and 
bank-notes as money, consists, as Avill be afterwards seen, 
in the substitution of so cheap a medium of exchange as 
paper, in the place of one so expensive as gold, and in the 
facilities which they give to the transacting of commercial 
affairs. If a banker lend A a note for d£'100 or dPlOOO, he 
will be able to obtain an equivalent portion of the land or 
produce of the country in exchange for it ; but that land or 
produce was already in existence. The issue of the note 
did not give it birth. It was previously in some one's pos- 
session ; and it will depend wholly on the circumstance of 
A"'s employing it more or less advantageously than it was 
previously employed, whether the transaction will, in a public 

CREDIT. 1 29 

point of view, be profitable or not. On aual^'^zing any 
case of this kind, we shall invariably find that all that the 
highest degree of credit or confidence can do, is merely to 
change the distribution of capital — to transfer it from one 
class to another. Occasionally, too, these transfers are 
productive of injurious results, by bringing capital into the 
hands of spendthrifts : this, however, is not a very common 
efl'ect ; and there can be no doubt that they are, in the 
majority of instances, decidedly beneficial. 

The following extract from the evidence of Mr. Ricardo 
before the Committee appointed by the House of Lords in 
1819, to inquire into the expediency of the resumption of 
cash payments by the Bank of England, sets the principles 
Ave have been endeavouring to establish in a very clear point 
of view. 

" Do you not know," Mr. Ricardo was asked, "that when 
there is a great demand for manufactures, the very credit 
which that circumstance creates enables the manufacturer 
to make a more extended use of his capital in the produc- 
tion of manufactures ?"" To this Mr. Ricardo answered, " I 
have no notion of credit being at all effectual in the produc- 
tion of commodities ; commodities can only be produced by 
labour, machinery, and raw materials ; and if these are to 
be employed in one place, they must necessarily be with- 
drawn from another. Credit is the means, which is alter- 
nately transferred from one to another, to make use of 
capital actually existing ; it does not create capital ; it 
determines only by whom that capital shall be employed : 
the removal of capital from one employment to another 
may often be very advantageous, and it may also be very 

Mr. Ricardo was then asked, " May not a man get credit 
from a bank on the security of his capital which is proiit- 
ably employed, whether vested in stock or land? and may 
he not, by means of that credit, purchase or create an addi- 
tional quantity of machinery and raw materials, and pay an 
additional number of labourers, without dislodging capital 


1 30 CREDIT. 

from any existing employment in the country ?" To this 
Mr. Kicardo answered, " Impossible ! an individual can 
purchase machinery, &c. with credit ; he can never create 
them. If he purchase, it is always of some one else ; and, 
consequently, he displaces some other from the employ- 
ment of capital." ^ 

1 " Lords' Report," p. 192. 

MONEY. 131 


Circumstances ichich led to the Introduction and Use of Mmiej/ — 
Qualities which a Commodity used as Money should possess — Coinage 
— Variations in the Value of Money — Introduction and Use of 
Paper Money and Bills of Exchange. 

When the division of labour was first introduced, commo- 
dities were directly bartered for each other. Those, for 
example, who had a surplus of corn, and were in want of 
Avine, endeavoured to find out those who were in the oppo- 
site circumstances, or who had a surplus of wine and wanted 
corn, and then exchanged the one for the other. It is obvious, 
however, that the power of exchanging, and, consequently, 
of dividing employments, must have been subjected to per- 
petual interruptions, so long as it was restricted to mere 
barter. A carries produce to market, and B is desirous to 
purchase it ; but the produce belonging to B is not suitable 
for A. C, again, would like to buy B's produce, but B is 
already fully supplied with the equivalent C has to ofi"er. 
In such cases, and they must be of constant occurrence 
wherever money is not introduced, no direct exchange could 
take place between the parties ; and it might be very diffi- 
cult to bring it about indirectly.^ 

The extreme inconvenience attending such situations must 
early have forced themselves on the attention of every one. 
Efforts would, in consequence, be made to avoid them ; and 
it would speedily appear that the best, or rather the only 
way in which this could be effected, was to exchange either 
the whole or a part of one's surplus produce for some com- 

^ The difficulties that would arise on such occasions, and the devices that 
would be adopted to overcome them, have been very well illustrated by 
Colonel Torrens, in his work on the " Production of Wealth," p- 291. 

1.S2 MONEY. 

niodity of known value, and in general demand ; and which, 
consequently, few persons would be disinclined to accept as 
an equivalent for whatever they had to dispose of. After 
this commodity had begun to be emplo^^ed as a means of 
exchanging other commodities, individuals would become 
willing to purchase a greater quantity of it than might be 
required to pay for the products they were desirous of im- 
mediately obtaining ; knowing that should they, at any 
future period, want a further supply, either of these or other 
articles, they would be able readily to procure them in ex- 
change for this universally desirable commodity. Though 
at first circulating slowdy and with difficulty, it would, as 
the advantages arising from its use were better appreciated, 
begin to pass freely from hand to hand. Its value, as com- 
pared with other things, would thus come to be universally 
known ; and it would at last be used, not only as the common 
equivalent for other things, but as a standard by which to 
measure their value. 

Now this commodity, whatever it may be, is money. 

An infinite variety of commodities have been used as 
money in different countries and periods. But none can be 
advantageously used as such, unless it possess several very 
peculiar qualities. The slightest reflection, on the purposes 
to which it is applied, must, indeed, be sufficient to convince 
every one that it is indispensable, or, at least, exceedingly 
desirable, that the commodity selected to serve as money 
should (] .) be divisible into the smallest portions ; (2.) that 
it should admit of being kept for an indefinite period with- 
out deteriorating ; (.3.) that it should, by possessing great 
value in small bulk, be capable of being easily transported 
from place to place ; (4.) that one piece of money of a cer- 
tain denomination, should always be equal, in magnitude 
and quality, to every other piece of money of the same de- 
nomination ; and (5.) that its value should be comparatively 
steady, or as little subject to variation as possible. Without 
the first of these qualities, or the capacity of being divided 
into portions of every different magnitude and value, money, 

MONEY. ] 33 

it is evident, would be of almost no use, and could only be 
exchanged for the few commodities that might happen to be 
of the same value as its indivisible portions, or as whole 
multiples of them : without the second., or the capacity of 
being kept or hoarded without deteriorating, no one would 
choose to exchange commodities for money, except only 
when he expected to be able speedily to re-exchange that 
money for something else : without the tJiircl, or facility of 
transportation, money could not be conveniently used in 
transactions between places at any considerable distance : 
without the fourth., or perfect sameness, it would be ex- 
tremely difficult to appreciate the value of different pieces 
of money : and without the ffth quality, or comparative 
steadiness of value, money could not serve as a standard by 
which to measure the value of other commodities ; and no 
one would be disposed to exchange the produce of his in- 
dustry for an article that might shortly decline considerably 
in its power of purchasing. 

The union of the different qualities of comparative steadi- 
ness of value, divisibility, durability, facility of transporta- 
tion, and perfect sameness, in the precious metals, doubtless 
formed the irresistible reason that has made every civilized 
community employ them as money. The value of gold 
and silver is certainly not invariable, but, generally speak- 
ing, it changes only by slow degrees : they are divisible 
into any number of parts, and have the singular property of 
being easily reunited, by means of fusion, without loss ; 
they do not deteriorate by being kept ; their firm and com- 
pact texture makes them difficult to wear ; their cost of 
production, especially that of gold, is so considerable, that 
they possess great value in small bulk, and can, of course, 
be transported with comparative facility ; and an ounce of 
pure gold or silver, taken from the mines of Mexico or Peru, 
is precisely equal, in point of quality, to an ounce dug from 
the mines in any other part of the world. No wonder, 
therefore, when the principal qualities necessary to consti- 
tute money are possessed in so eminent a degree by the 

1 34 MONEY. 

precious metals, that they have been used as such in civilized 
societies, from a very remote sera. " They became universal 
money," as M. Turgot has observed, "not in consequence 
of any arbitrary agreement among men, or of the interven- 
tion of any law, but by the nature and force of things." 

When first used as money, the precious metals were in 
an un fashioned state, in bars or ingots. The parties having 
agreed about the quantity of metal to be given for a com- 
modity, that quantity was then weighed off". But this, it 
is plain, must have been a tedious and troublesome process. 
Undoubtedly, however, the difficulty of determining the 
degree of their purity with sufficient precision, must have 
formed, in early ages, the greatest obstacle to the use of 
gold and silver as money ; and the discovery of some means 
by which their weight and fineness might be readily and 
correctly ascertained, would be felt to be indispensable to 
their extensive use as media of exchange. Fortunately, 
these means were not long in being discovered. The fabri- 
cation of coins, or the practice of impressing pieces of the 
precious metals v/ith a public stamp indicating their weight 
and purity, belongs to the remotest antiquity.' And it 
may safely be affirmed, that there have been few inventions 
of greater utility, or that have done more to promote im- 

It is material, however, to observe, that the introduction 
and use of coins does not affect the principle on which 
exchanges were previously conducted. The coinage saves 
the trouble of weighing and assaying gold and silver, but 
it does nothing more. It declares the weight and purity 
of the metal in a coin ; but the vahie of that metal or coin 
depends, in all cases, on the same principles that determine 
the value of other commodities ; and would be as little 
aff'ected by being recoined with a new denomination, as the 
burden of a ship by a change of her name. 

Inaccurate notions with respect to the influence of coinage 

' Gogiiet, " De I'Oiigiiie de? Loix," i^-o. torn. i. p. 26'J). 

MONEY. 135 

seem to have given rise to the opinion, so long entertained, 
that coins were merely the signs of values ! But they 
have really no more claim to this designation than bars 
of iron or copper, sacks of wheat, or any other commodity. 
They exchange for other things, because they are desirable 
articles, and are possessed of real intrinsic value. A draft, 
check, or bill, may not improperly, perhaps, be regarded as 
the sign of the money to be given for it. But that money 
is itself a commodity ; it is not a sign, it is the thing 

Money, however, is not merely the universal equivalent, 
or marchandise bannale, used by the society : it is also the 
standard used to compare the values of all sorts of products ; 
and the stipulations in the great bulk of contracts and deeds, 
as to the delivery and disposal of property, have all reference 
to, and are commonly expressed in quantities of money. 
It is plainly, therefore, of the utmost importance that its 
value should be as invariable as possible. Owing, how- 
ever, to improvements in the arts, and to the exhaustion 
of old and the discovery of new mines, the value of the 
precious metals is necessarily inconstant ; though, if we 
except the effects produced in the sixteenth century by the 
discovery of the American mines, it does not appear to have 
varied so much at otlier times as might have been anticipated. 
Great mischief has, however, been repeatedly occasioned by 
the changes that have been made in most countries in the 
weight, and sometimes also in the purity of coins ; and since 
the impolicy of these changes has been recognised, similar, 
and still more extensive, disorders have sprung from the 
improper use of substitutes for coins. It is, indeed, quite 
obvious, that no change can take place in the value of 
money, without proportionally affecting the pecuniary con- 
ditions in all contracts and agreements. Much, however, 
of the influence of a change depends on its direction. An 

' The Count di Verri was one of the first who showed clearly what money 
is, and what it is not. — See " Meditazioni sulla Economia Politica," § '2. 


increase in the value of money is, for reasons that will 
afterwards be stated, uniformly more prejudicial in a public 
point of view than its diminution : the latter, though 
injurious to individuals, may sometimes be productive of 
national advantage ; but such can never be the case with 
the former.^ 

But notwithstanding the precious metals are in many 
respects admirably fitted to serve as a medium of exchange, 
they have two very serious drawbacks — their cost, and the 
difficulty and expense of carrying them from place to place. 
If the currency of Great Britain consisted of gold only, it 
would amount to at least sixty millions of sovereigns ; and 
the expense attending such a currency, allowing only i per 
cent for wear and tear and loss of coins, could not be reckoned 
at less than .^^3,250,000 a-year. It is obvious, too, were 
there nothing but coins in circulation, that the conveyance 
of large sums from place to place to discharge accounts, 
would be a very laborious process, and that even small sums 
could not be conveyed without considerable difficulty ; and 
hence it is that most civilized nations have endeavoured 
to fabricate a portion of their money of less costly mate- 
rials, and have resorted to various devices for economizing 
the use of coin. Of the substitutes for coin hitherto 
suggested, paper is by far the most generally used, and 
is in all respects the least objectionable. Instead of dis- 
charging their debts by a payment of the precious metals, 
individuals, on whose solvency the public may rel}^ 
pay them by giving a bill or draft for the sum, payable 
in coin at sight, or at so many days after date ; and as this 
bill or draft passes currently from hand to hand as cash, it 
performs all the functions of coin, while it saves its expense 
to the public. A sense of the advantages that might bo 
derived from the circulation of such bills or drafts led to 
the institution of banks for their regular issue. A banker, 
on being applied to for a loan, does not make the advance 

' See Chapter on Profits. 

MONEY. ] 37 

in gold or silver, but in his own notes ; and while these 
serve equally well as cash to the borrower, the issuer derives 
the same rate of interest from them that he would have 
derived from an advance of cash ; his profits consisting of 
the excess of interest derived from the notes he has issued, 
over the interest of the cash or unproductive stock he is 
obliged to keep in his coffers to meet the demands of the 
public for payment of his notes, and the expenses of his 
establishment. Besides this sort of banks, there are also 
banks of deposit, or banks for keeping the money of indi- 
viduals. A merchant using a bank of this sort makes all 
his considerable payments by drafts upon his bankers, and 
sends all the bills due to him to them to be presented, and 
noted if not duly paid. By this means he saves the expense 
of keeping money at home, while he, also, avoids the risk of 
receiving coins or notes that are not genuine, and of making 
mistakes with respect to the presentation of due bills ; 
and in consequence of the saving that is thus effected, a 
much less quantity of money serves for the demand of the 

But the great advantage of banks, in a commercial point 
of view, consists in the facility they afford for making pay- 
ments at distant places, and for the negotiation of bills of 
exchange. ]\Iany of the banking companies, established in 
different districts, have a direct intercourse with each other; 
and they all have correspondents in London. Hence, an 
individual residing in any part of the country, who may wash 
to make a payment in any other part, however distant, may 
effect his object by applying to the bank nearest to him. 
Thus, suppose A of Penzance, has a payment to make to 
B of Inverness. To send the money by post would be 
hazardous ; and if there were fractional parts of a pound in 
the sum, it would hardly be practicable to make use of the 
post. How then will A manage ? He will pay the sum to 
a banker in Penzance, and his creditor in Inverness will 
receive it from a banker there. The transaction is very 
simple : the Penzance banker orders his correspondent in 

138 MONEY. 

London to pay to the correspondent of the Inverness banker 
the sum in question on account of B ; and the Inverness 
banker, being advised in course of post of what has been 
done, pays B. A small commission, charged by the Pen- 
zance banker, and the postages, constitute the whole expense. 
There is no risk whatever ; and the affair is transacted in 
the most commodious and cheapest manner. 

Bills of exchange are most commonly used in the settle- 
ment of transactions between merchants residing in different 
countries ; but they are also frequently used among mer- 
chants of the same country. They are merely orders 
addressed by a creditor to a debtor, directing the latter to 
pay his debt to some specified party in his vicinity. It is 
generally found, that the debts mutually due by cities or 
countries trading together, approach, for the most part, near 
an equality. There are at all times, for example, a con- 
siderable number of persons in London indebted to Ham- 
burg ; but, speaking generally, there are about an equal 
number of persons in London to whom Hamburg is in- 
debted ; and hence, when A of London has a payment to 
make to B of Hamburg, he does not remit an equivalent 
sum of money to the latter ; but goes into the market and 
buys a bill on Hamburg for an equal amount, — that is, he 
buys ah order from C of London, addressed to his debtor 
D of Hamburg, directing him to pay the amount to A or 
his oi'der. A having endorsed this bill or order, sends it 
to B, who receives payment from his neighbour D. The 
convenience of all parties is consulted by a transaction of 
this sort. The debts due by A to B, and by D to C, are 
extinguished without the intervention of any money. A 
of London pays C of do., and D of Hamburg pays B of do. 
The debtor in one place is substituted for the debtor in the 
other ; and a postage or two, and the stamp for the bill or 
order, are the only expenses.^ 

' For an account of the measures necessary to ensure the ready con- 
Tersion of paper into the precious metals, see Chapter on the Interference 
of Government. 



Division of Emploj/ments among different Countries, or Commerce — 
Wholesale and Retail Dealers — Influence of improved Means of 
Communication — Mode in which Commerce contributes to increase 
Wealth — Restrictions on Commerce, for the Promotion of Domestic 
Industry and National Security — Influence of these Restrictions — 
Duties on Imports. 

The division of labour is not necessarily confined to limited 
societies, but is of universal application ; and may be ex- 
tended so as to enable the inhabitants of entire districts, 
and even nations, to addict themselves, in preference, to 
certain branches of industry. On this, which has been 
appropriately termed by Colonel Torrens, the territorial 
division of labour, is founded the commerce carried on 
between different districts of the same country, and between 
different countries. The different soils, climates, and 
capacities of production, possessed by the different provinces 
of an extensive country, fit them for being appropriated, in 
preference, to different species of industry. A district 
abounding in coal, having an easy access to the ocean, and 
a considerable command of internal navigation, is the 
natural seat of manufactures. Wheat and other species 
of grain are the proper products of rich arable soils ; and 
cattle, after being reared in mountainous districts, may be 
most advantageously fattened in meadows and low grounds. 
It is clearly as little for the advantage of the inhabitants of 
different districts, as it would be for that of an individual, 
to engage indiscriminately in every possible employment. 
Who can doubt that vastly more manufactured goods, corn, 
cattle, and fish, are produced by the people of Lancashire 
confining their principal attention to manufactures, those 
of Kent to agriculture, those of Argyle to the raising of 


cattle, and those of the Shetland Isles to the catching of 
fish, than if they had respectively endeavoured directly to 
supply themselves with these or similar productions, with- 
out the intervention of an exchange ? 

A commercial intercourse between the inhabitants of 
different countries and districts, and even between those of 
the same district, is most commodiously carried on by a 
distinct class of individuals denominated merchants, from 
that commutatio mercium which forms their business. This 
class is, for the most part, subdivided into two subordinate 
classes — icholesale dealers and retailers. The principal busi- 
ness of the first consists in conveying commodities from 
places where they are cheap to those where they are dear. 
Generally speaking, they buy at the first hand, or from the 
producers ; but instead of selling directly to the consumers, 
they most commonly sell to the retailers. The business 
of the latter is to keep assortments of the goods that are 
wanted in the places where they reside ; serving them out 
in such quantities, and at such times, as may best suit the 
convenience of their customers, or of the public. This 
subdivision is exceedingly beneficial for all parties. It 
would be next to impossible for a wholesale merchant to 
retail the goods he has collected in distant markets ; but, 
supposing he were to attempt it, he would, it is clear, have 
to establish agents in different parts of the country ; so 
that, besides requiring an additional capital, he would be 
compelled, from inability to give that undivided attention 
to any single department of business, so indispensable to 
secure its being conducted with due economy and in the 
best way, to lay a higher price on his goods. The objec- 
tions that have sometimes been made to the intervention 
of retailers between the wholesale dealers, or the producers, 
and the consumers, are plainly, therefore, without any 
real foundation. It is essential that s'oods should be 
retailed. Of what use would it be to bring to London a 
cargo of tea from China, of tobacco from Virginia, of salt 
from Liverpool, of beef from Cork, or of coal from the 


Tyne, were it not divided and sold in such portions as may be 
suited to the wants of the citizens ? And it admits of demon- 
stration, that this necessary business will be done best and 
cheapest by a class distinct from the wholesale dealers. 

It is frequently, indeed, alleged, that the number of 
retailers is in most places unnecessarily great, and that, in 
order to subsist, they charge an enormous profit. But it is 
easily seen, that there is no real ground for these state- 
ments. A regard to their own interest prevents too many 
individuals from becoming retailers, in the same way that 
it prevents too many from engaging in other employments ; 
while the competition of each other, and of the public, 
hinders them from realizing more than the ordinary rate of 
pi-ofit. That they sometimes appear to realize more than 
this rate, is, no doubt, true ; but this arises from confound- 
ing wages and profits. Besides deriving a profit from the 
capital which he employs, an individual should, in the 
event of his superintending its employment, obtain, in 
addition, a remuneration or wages for that superintendence. 
Suppose, for the sake of illustration, that a grocer in a small 
country town employs a capital of dPlOOO, that profits are 
10 per cent, and that he could earn, by hiring himself to 
another, £50 a-year of salary : in this case it is plain the 
goods must be sold at 15 per cent advance, that being the 
lowest rate that will yield 10 per cent of profits and ^^50 of 
wages. Had the grocer been able to employ a capital of 
<i£'2000, he would have obtained the same profits and wages 
by selling his goods at an advance of 12g per cent. Hence 
the difference in the price of goods when retailed in large 
and small towns. In the former there is scope for the em- 
ployment of large capitals in the business of retailing, so 
that a comparatively small per centage, over and above the 
customary rate of profit, suffices to defray the wages of 
those engaged in carrying it on ; while, in the latter, owing 
to the limited field for the employment of capital, a com- 
paratively large per centage is necessary as wages. Profits 
are, evidently, the same in both cases. 


It is plain, from these statements, that the formation of 
a separate mercantile class adds very materially to the 
advantages resulting from commerce. It gives, in fact, an 
uninterrupted motion to the plough and the loom. The 
intervention of wholesale and retail dealers enables every 
one to apply himself exclusively to his particular calling. 
Agents and warehouses being established all over the coun- 
try for the purchase and sale of commodities, agriculturists 
and. manufacturers know beforehand where they may 
always find a market for what they have to sell, and pro- 
cure, at the current prices of the day, Avhat they wish to 
buy. They are able, in consequence, to devote their whole 
time and energies to their respective businesses ; con- 
tinuity is given to their operations ; and the powers of 
production are augmented to an extent that could hardly 
have been conceived possible previously to the rise of the 
mercantile class. 

The formation of roads and canals, or of easy methods of 
communication between difl'erent parts of a country, contri- 
butes powerfully to facilitate commercial operations, and is 
in the highest degree beneficial. A diminution of the ex- 
pense of conveyance, has, it is evident, the same direct 
influence over prices as a diminution of the expense of pro- 
duction ; though, perhaps, its indirect influence be most 
advantageous. The great workshops, (for so we may truly 
call Manchester, Leeds, Birmingham, Sheffield, Glasgow, 
Paisley, Dundee, &c.) with which Great Britain is studded, 
could not exist without improved roads and canals ; but the 
latter, besides enabling the inhabitants of cities and towns to 
supply themselves with the bulky products of the soil and 
the mines almost as cheaply as if they lived in the country, 
give them the means of carrying on their employments on 
a large scale; of subdividing, combining, and perfecting their 
various operations ; and of conveying their products to the 
remotest quarters at an extremely small advance of price. 
Roads and canals are thus productive of a double benefit — 
cheapening, at one and the same time, raw produce to the 


inhabitants of towns, and manufactures to those of the 
country. In a moral point of view, their efiects are equally 
salutary. They give the same common interest to evez*y 
part of a widely extended empire ; and, by promoting the 
intercourse of the citizens, and exciting emulation and com- 
petition, impart new life and vigour to society. 

Foreign trade, or the territorial division of labour be- 
tween different and independent countries, contributes to 
increase their wealth in the same way that internal trade 
contributes to increase the wealth of the different districts 
of the same kingdom. It would seem, indeed, from there 
being a far greater variety in the productive powers with 
which nature has endowed different and distant countries 
than there is in those of the provinces of any single coun- 
try how extensive soever, that a free intercourse between 
them must be proportionally more advantageous. There 
are, indeed, myriads of products, some of which are of the 
greatest utility, that exist only, or can only be raised in 
particular countries. Were it not for foreign commerce, 
we should be wholly destitute of gold bullion, tea, coffee, 
cotton, silk, spices, and many other equally useful and 
valuable commodities ; at the same time that we should 
have to pay a greatly increased price for a much larger 
number of other and hardly less important articles. Pro- 
vidence, by giving different soils, climates, and natural 
products to different countries, has evidently intended that 
they should be mutually dependent upon and serviceable 
to each other. If no artificial obstacles were thrown in the 
way of their intercourse, every people would naturally 
engage, in preference, in those employments in which they 
have a superiority, exchanging such parts of their own pro- 
duce as they could conveniently spare for the productions 
they could more advantageously bring from others. And 
thus, by exciting industry, rewarding ingenuity, and using 
most efficaciously the peculiar powers bestowed by nature, 
commerce distributes labour as best suits the genius and 


capacities of every people. By making mankind acquainted 
with numerous products of which they would otherwise be 
entirely ignorant, it gives them new tastes and new appe- 
tites, at the same time that it aftords the means, and ex- 
cites the desire of gratifying them. It enables the inhabi- 
tants of each country to profit by the inventions and dis- 
coveries of those of all other countries ; and, by bringing 
the home producers into competition with foreigners, it 
stimulates their industry and invention, and forces routine 
to give way to emulation. The division of labour is in 
this way carried to the farthest extent ; the mass of 
necessary and useful products vastly augmented ; and 
opulence generally diffused. Nor is the influence of com- 
merce, in other respects, less powerful and salutary. It is 
the grand engine by which the blessings of civilization are 
diffused, and the treasures of knowledge and of science con- 
veyed to the remotest corners of the habitable globe; 
while, by making every people dependent on others for a 
large share of their comforts and enjoyments, it forms a 
powerful principle of union, and binds together the univer- 
sal society of nations by the common and powerful ties of 
mutual interest and reciprocal obligation. 

" Combien," to use the words of a late French writer, 
" le spectacle de tons les travaux concourant a la production 
de la richesse, sans autre preeminence ni distinction que celle 
que leur assure Techange de leurs produits, est encourageant 
pour les classes laborieuses, stimulant pour les peuples, 
favorable a la civilisation, honorable pour Thumanite ! Dans 
ce systfeme tons les hommes suivent leur penchant, develop- 
pent, perfectionnent leurs facultes, s''eucouragent par une 
noble emulation, sont avertis a chaque instant du besoin 
qu'ils ont les uns des autres, se lient entre eux par des 
rapports habituels, s\attachent par leurs interets reciproques, 
et renouent les liens de la grande famille du genre humain 
que la separation des families nationales avoit brises. Ces 
families, eparses sur le globe, ne sont plus etrang^res entre 
elles, travaillent Tun pour Fautre, et correspondent ensemble 

COMMERCE. 1 4-5 

malgre les goufFres des mers ct Tasperite des climats, les 
montagnes iuaccessibles, et les deserts inhospitaliers. Graces 
au genie du commerce, et aux inepuisables ressources de 
rindustrie, tons les perils sont braves, toutes les difficultes 
sont valncues, tous les obstacles sont surmontes, et les bien- 
faits du travail general circulont dans le monde entier." ' 

It cannot, indeed, be denied, that mistaken views of 
commerce, like those so frecjuently entertained of reli'j,ion, 
have been the cause of many wars and of much bloodshed. 
But the folly of the monopoly system, and the ruinous 
nature of the contests to which it has given rise, have 
been made obvious. It has been shown, over and over 
aofain, that nothina' can be more irrational and absurd, 
than that dread of the progress of others in wealth 
and civilization that was once so prevalent ; and that the 
true glory and real interest of every people will be more 
certainly advanced by endeavouring to outstrip their neigh- 
bours in the career of science and civilization, than by 
engaging in schemes of conquest and aggression. 

The direct influence of foreign commerce in giving in- 
creased efficacy to labour, and augmenting national wealth, 
may be easily illustrated. The superiority of British wool, 
for exaniple, our command of coal, of skilful workmen, 
improved machinery, and of all the instruments and means 
of manufacturing industry, enable us to produce cloth at a 
much cheaper rate than the Portuguese; while, on the other 
hand, the soil and climate of Portugal being peculiarly 
favourable for the cultivation and growth of the vine, she 
can produce wine incomparably cheaper than it could be 
produced here. Hence it is obvious, on the one hand, that 
by confining ourselves to the manufacture of cloth, and 
exchanging it with the Portuguese for wine, we shall obtain 
a far larger supply of that desirable beverage than if we 

' Ganilh, "Des Systeuies d'Economie Politiqtie," torn. i. p. 173. Ed. 18-21 . 


attempted to cultivate the viue at home ; while, on the otluT 
haiicl, the Portuguese, by exchanging wine for English cloth, 
will obtain a much greater quantity of the latter, at a much 
less price than they would do, were they, in contradiction 
of the wise arrangements of nature, and the obvious dic- 
tates of common sense, to withdraw a portion of their 
capital and industry from the culture of the vine, in which 
they have so great an advantage, to employ it in the manu- 
facture of cloth, in which the advantage is wholly on the 
side of others. 

V/hat has been already stated is sufficient to expose the 
sophism of the Economists, who contended, that as a full 
equivalent must be always given for commodities brought 
from abroad, it was impossible foreign commerce could add 
any thing to national wealth. How, they asked, can the 
wealth of a country be increased by giving equal values for 
equal values I They admitted that commerce made a better 
distribution of the wealth of the world ; but as it did no- 
thing more than substitute one sort of wealth for another, 
they denied it could make any addition to its amount. 
At first sight, this sophistical and delusive statement 
appears sufficiently conclusive ; but a few words will suf- 
fice to demonstrate its fallacy. Those who suppose that 
commerce cannot be a means of increasing the wealth of 
both parties engaged in it, and that if one of them gains 
any thing, it must be at the expense of the other, entirely 
misconceive its nature and objects. It may cost as much 
to produce the cloth with which the English purchase the 
wine of Portugal, as it does to produce the latter ; and it 
may even cost more. But then it must be observed, that, 
in making the exchange, the value of the wine is estimated 
by its cost in Portugal, which has peculiar facilities for its 
production, and not by what it would cost to produce it in 
England were the trade put an end to ; while, in like man- 
ner, the value of the cloth is estimated by its cost in Eng- 
land, and not by what it would cost were it produced in 
Portugal. The advantage of the intercourse consists in its 


enabling each country to obtain commodities, which it could 
either not produce at all, or which it would cost a compara- 
tively large sum to produce directly at home, for what it 
costs to produce them under the most favourable circum- 
stances, and with the least possible expense. In no respect, 
therefore, can the gain of the one be said to be a loss to the 
other. Their intercourse is evidently productive of mutual 
advantage. Through its means each is supplied with pro- 
duce for which it has a demand, by a less sacrifice of labour 
and expense than would otherwise be required ; so that the 
wealth of both parties is not only better distributed, but is, 
at the same time, vastly augmented, by thus judiciously 
availing themselves of each other's peculiar capacities and 

To set this principle in a clearer point of view, let it be sup- 
posed that, with a certain outlay, we may either manufacture 
10,000 yards of cloth or raise 1000 quarters of wheat, and 
that with the same outlay the Poles can manufacture 5000 
yards of cloth or raise 2000 quarters of wheat. Under 
these circumstances, it is plain, were a free intercourse 
established between this country and Poland, that we 
should, by exporting cloth to the latter, get twice the 
quantity of corn in exchange for any given outlay that we 
should get by employing the same sum in the culture of 
land at home ; while, on their side, the Poles would get, 
through this exchange, twice as much cloth in return for 
their expenditure on corn as they would have got had they 
tried directly to manufacture it. Now, this supposed case 
being identical, in respect of principle, with every case that 
really occurs in the practice of commerce, every one must 
see how ridiculous it is to contend that the latter is not a 
means of adding to tlie productiveness of labour, and, con- 
sequently, of increasing wealth ! Were our intercourse 
with Portugal and the West Indies put an end to, it would 
be impossible, perhaps, to produce port wine, sugar, and 
coftee, directly in this country ; and though it were possible, 
it would, at any rate, cost fifty or a liiuidred tiinrs as much 


to produce them here as it costs to produce the equivalents 
exported to pay for them. 

The influence of foreign commerce in stimulating industry 
by multiplying its rewards, is also of great importance. 
Were our command of wealth limited to that produced 
in a particular district or province, we should be less 
industrious, because we should have fewer motives to 
prompt our industry. A man might, w^itli comparatively 
little difRculty, procure sufficient supplies of corn, cloth, 
and beer ; and if the greatest exertions of skill and economy 
merely procured him additional supplies of these articles, 
they would soon cease to be made. No sooner, however, is 
a commercial intercourse established with foreignei-s, than 
conveniencies and accommodations of all sorts are prodi- 
giously multiplied. In addition to the products of its imme- 
diate vicinity, every considerable market is then abundantly 
supplied with those of all the countries and climates of the 
world. And there is no fortune so great that its owner 
can be without a motivoto increase it still more, seeing the 
immeasurable variet}^ of desirable objects it maybe employed 
to obtain. 

To form a faint idea of what we owe to foreign commerce, 
imagine it prohibited, and then reflect for a moment on the 
tremendous deduction that would be made from our means of 
subsistence, comfort, and enjoyment. The cotton and silk 
manufactures would be annihilated ; instead of breakfasting 
on the products of China and the West Indies, we should 
have to content ourselves with the pottage of our ancestors ; 
beer would take the place of claret, and gin of champagne ; 
when our crops were redundant, the surplus would be com- 
paratively useless, and when deficient, there would be no 
foreign supplies with which to stay the ravages of famine. 
Our maritime preponderance w'ould fall with the fall of our 
commerce ; and from occupying the most prominent place 
in the first rank among nations, we should speedily sink to 
the level of the secondary or third-rate powers. 

We shall not imitate the example of most writers on 


conjtnerce, by entering into a lengthened examination of the 
question, whether tlie home or foreign trade be most advan- 
tageous. It is indeed quite obvious that it admits of no 
satisfactory'' solution. AVithout some species of home trade, 
it would be altogether inijDOssible to divide and combine 
employments, or to emerge from barbarism ; and Avithout 
foreign trade, and the innumerable products, arts, and 
improvements, which it brings along with it, the progress 
made by society would be comparatively trifling. The 
former might, perhaps, have raised us to the condition of 
our ancestors in the days of Richard II. ; but we are mainly 
indebted to the latter for the almost incredible advances we 
have since made, as well as for those we are yet destined to 

It would be superfluous, even were it not inconsistent 
with the objects and limits of this work, to enter on a de- 
tailed investigation of the policy of restrictions on commerce. 
TJiose which were intended to increase the importation, or 
to hinder the exportation of the precious metals, have been 
admitted, almost universally, to be founded on erroneous 
principles, and have either fallen into disuse or been re- 
pealed. The few observations that follow, will, therefore, 
be confined to the policy of the restrictions intended to 
promote the industry and independence of particular 
countries, by partially or wholly preventing the importa- 
tion of such articles from abroad as may be produced at 

If either the whole or any considerable portion of an 
article in extensive demand be imported from foreign coun- 
tries, the prevention of its importation will undoubtedly give 
an immediate advantage to the home producers of the article. 
It can hardly, however, be necessary to say, that the legis- 
lature should have nothing to do with the interests of any 
one class, unless in the view of rendering them conducive 
to those of the society. The circumstance of a restriction 
beina; advantageous to a greater or smaller number of indi- 


viduals, is no proof of its expediency. To establish this, it 
must also be shown that it is advantageous, or at least not 
injurious, to the public — that it does not sacrifice the 
interests of the community to those of a favoured few. No 
system of commercial policy deserves to be preferred to 
another, except in so far as it may be better fitted to 
advance the welfare of the nation. If a restricted will do 
this more eftectually than a free and unfettered trade, it 
should be restricted ; but if othei'wise, not. Neither free- 
dom nor prohibition is, in itself, good or bad. The influ- 
ence which each exercises over the public is the only thing 
to be attended to. The supply of its wants is the real end 
and purpose of all sorts of industrious undertakings ; and 
the interests of those engaged in them should occupy the 
attention of government only, when it is believed that they 
may be made, through its interference, more subservient to 
their legitimate object. 

We have already seen, that the workmen employed in a 
country cannot exceed the numbers which its capital can 
feed and maintain. But it is plain that no regulation can 
directly add any thing to capital. It most frequently, in- 
deed, diverts a portion of it into channels into which it 
would not otherwise have flowed. This, however, is its only 
eftect ; and the real question for consideration is — Whether 
the artificial direction which is thus given to a portion of 
the national capital, renders it more or less productive than 
it would have been, had it been left at liberty to seek out 
channels of employment for itself? 

In discussing this question it may be observed, in the 
first place, that every individual is constantly endeavouring 
to find out the most advantageous methods of employing 
his ca2')ital and labour. It is true that it is his ov,n 
advantage, and not that of the society, which he has in 
view ; but a society being merely a collection of indivi- 
duals, it is plain that each, in steadily pursuing his own 
aggrandizement, is following the line of conduct most for 
the general advantage. Hence, were no particular branches 

COMMERCE, ' 151 

of industry encouraged more than others, those would be 
preferred which naturally afforded the greatest facilities for 
acquiring fortunes, and, consequently, for increasing the 
riches of the country. Self-interest is the most powerful 
stimulus that can be applied to excite the industry, and to 
sharpen the intellect and ingenuity of man ; and no propo- 
sition is more true, than that each individual can, in 
his local situation, judge better what is advantageous and 
useful for himself than any other person. " The states- 
man," says Smith, " who should attempt to direct private 
people in what manner they ought to employ their capitals, 
would not only load himself with a most unnecessary at- 
tention, but assume an authority which could safely be 
trusted, not only to no single person, but to no council or 
senate whatever, and which would nowhere be so dangerous 
as in the hands of a man who had folly and presumption 
enough to fancy himself fit to exercise it."^ 

But, in the second place, it is evident, that the prevention 
of importation has in effect the consequence, so justly cen- 
sured by Smith, of dictating to individuals how they shall 
employ their capital and labour. It deprives them of such 
articles as cannot be raised at home; and it compels them 
to pay a higher price for such as may be so raised, though 
with comparative difficulty. But to prohibit an individual 
from using any article merely because it is the product of 
another country, or to compel him to pay an unnecessarily 
enhanced price for it, is at once oppressive and impolitic. 
Were there no restraints on importation, we should import 
all those articles which may be bought at a lower price 
from the foreigner than from the home producers. Our 
conduct as a nation would then bo regulated by the prin- 
ciples that regulate the conduct of individuals in private 
life ; and it is the maxim of every prudent master of a 
family, not to attempt to make at homo what it would cost 
more to make than to buy. The tailor, as Smith has 

' " Wealth of Nations," p. 200. 


remarked, does not attempt to make his own shoes, but 
buys them from a shoemaker ; the shoemaker, on his part, 
does not attempt to make his own clothes, but employs a 
tailor; and the farmer makes neither the one nor the other, 
but obtains them in exchange for corn and cattle. In 
civilized societies, every individual finds it for his advan- 
tage to employ himself in some particular business, and 
to exchange a part of his peculiar produce for such parts 
of the produce of others as he may have occasion for. And 
it has not yet been shown that that conduct which is 
universally admitted to be wise and proper in individuals, 
should be unwise or absurd in the case of a state, — that is, 
in the case of the individuals inhabiting a particular tract 
of country ! 

The repeal of restrictions will not enable foreigners to 
supply any part of those commodities that may be as 
cheaply produced at home as abroad. And home producers, 
it sliould be borne in mind, have great advantages on their 
side. The price of their commodities is not so much 
enhanced by the expense of conveyance ; and they are 
intimately acquainted with the language, laws, fashions, 
and credit of those with whom they deal. A foreigner has 
none of these circumstances in his favour; and, conse- 
quently, comes into the home market under disadvantages 
with which nothing but the greater cheapness of his goods 
can enable him to contend. But if a Frenchman, or an 
American, can supply us with any article cheaper than we 
can raise it, why should we not buy it of him ? Why not 
extend the same principle to foreigners that is found to 
be so extremely advantageous in dealing with our imme- 
diate neighbours? Though our ports were open for tlio 
reception of all the commodities of all the commercial 
nations of the world, none would be purchased ujtless 
the purchasers concluded it to be for their advantage ; 
that is, unless they obtained the article from the foreigners 
at a less price tlian they could obtain it for from their own 

COMMERCE. ] .')8 

The fact that we are able to import a commodity from a 
particular foreign market at a lower price than it can be 
raised for here, or imported from any other place, shows 
that some of our peculiar productions fetch a higher price 
in that market than ariy where else. The price of a com- 
modity is merely the quantity of money, or of some other 
commodity, given for it. No one doubts tliat we may buy 
claret cheaper in Bordeaux than in any other place ; but, 
if so, it necessarily follows that we are able to dispose of 
the produce given for claret to greater advantage there 
than elsewhere. There is no test of high or low price, 
except the quantity of other things for which an article 
exchanges. And thus it is evident, that when we pro- 
hibit buying in the cheapest markets, we, at the same 
time, and by the same act, prohibit selling in the dearest 
markets. Suppose that, by sending a certain quantity of 
cottons or hardware to Brazil, we might get in exchange 
150 hogsheads of sugar; and that the same quantity, if 
sent to Jamaica, will only fetch ] 00 hogsheads : is it not 
obvious, that by preventing the importation of the former 
w'e force our goods to be sold for two-thirds the price they 
would otherwise have brought ? To suppose that a system 
productive of such results should be a means of increasing 
national wealth, is to suppose wdiat is evidentW contradic- 
tory and absurd. 

When a restriction is laid on the importation of any de- 
scription of commodities, their price rises, and the home 
producers of the same or similar articles get an immediate 
advantage : but what they gain in this way is of very trifling 
importance. For, as additional capital is drawn to the 
business, prices are speedily reduced to the level that barely 
affords the ordinary' rate of profit. This level may be either 
identical with that at which prices previously stood, or it 
may be higher. If the former should happen to be the case, 
little, though something, will have been lost, but nothing 
whatever will have been gained by the restriction. Capital 
will have been transferred from one employment to another ; 


and while a greater quantity of the produce formerly imported 
from abroad will henceforth be produced at home, there will 
be a corresponding diminution in the production of that 
which had been exported to the foreigners in payment of the 
imports. But, in the vast majority of cases, the price is 
not the same after a prohibition has been enacted, but is 
permanently raised ; for, if an article may be as cheaply 
produced at home as abroad, its prohibition would be un- 
necessary, and would not be thought of. Suppose that the 
importation of a foreign article for which we paid a million 
sterling is prohibited, and that it costs a million and a 
quarter to raise it at home : it is clear that the prohibition 
will have precisely the same effect on the consumers of the 
article, as if, supposing the trade to have continued free, 
a peculiar tax of d£'25(),000 a-year had been laid on them. 
But it will be observed, that had such a tax been imposed, 
its produce would have come into the hands of government, 
and have formed a portion of the national income ; whereas 
the increased cost of the article being, under the circum- 
stances supposed, occasioned by an increased difficulty of 
production, is of no advantage to any one. 

It consequently results, that even in those rare cases in 
which a restrictive regulation has no tendency to raise prices, 
it is hurtful, by changing the natural distribution of capital, 
and lessening the foreign demand for the produce of industry 
to the same extent that it increases the home demand. Bat 
in that incomparably more numerous class of cases in which 
restrictions occasion a rise in the price of the articles which 
they affect, they are infinitely more injurious. Besides 
varying the natural distribution of capital, and circumscrib- 
ing foreign trade, they then impose a burden on the con- 
sumers, for no purpose of general or public utility ; they 
tempt individuals to withdraw from really advantageous 
businesses, to engage in those that cannot be prosecuted 
without national loss, and which must be abandoned the 
moment the prohibition ceases to be enforced ; and are thus, 
in the end, productive of the most grievous injury, even to 


those whose interests they were intended to promote, .as 
well as to those of the public. 

It has been said, though perhaps without due considera- 
tion, that, but for restrictions on importation, several manu- 
factures that now furnish employment to a considerable 
population, would most probably never have had any exis- 
tence amongst us. But, supposing this statement to bo 
admitted, it would not form any valid objection to the prin- 
ciples now laid down. No7i omnia recte possumus. It is 
quite as much for the interest of communities as of single 
families, to respect the principle of the division of labour. 
Every people will always find it for their advantage to addict 
themselves, in preference, to those branches of industry in 
which they are superior to others : for, it is by this means 
only that they can ever fully avail themselves of their pecu- 
liar facilities of production, and employ their capital, hus- 
bandmen and artisans, most beneficially. 

It is certainly true, that, after an artificial system has 
been long acted upon, its abolition seldom fails of producing 
considerable, though temporary, embarrassment and hard- 
ship ; and for this reason, no prudent government will ever 
rashly adopt any measure, how unexceptionable soever in 
point of principle, that might occasion any serious injury to 
a considerable class of its subjects. Every change in the 
public economy of a great nation should be cautiously and 
gradually eflected. Those who have capital employed in 
businesses, protected by restrictive regulations, should bo 
aftbrded a reasonable time and every facility, either to with- 
draw from them or to prepare for withstanding the free 
competition of foreigners. But this is all they can justly 
claim. The fact of a departure having been made, on one 
or more occasions, from the sound principle of the freedom 
of industry, can never be alleged as a sufficient reason for 
obstinately persevering in a course of policy which has been 
ascertained to be inimical to the public interests, or for 
refusing to embrace the earliest opportunity of reverting 
to a better system. To act on such a principle would be to 


perpetuate the worst errors and absurdities, and would be a 
proceeding utterly inconsistent with all the ends and objects 
of government. 

It is abundantly certain, too, that the loss and inconve- 
nience which unavoidably follow every change in an estab- 
lished system of commercial policy, have been greatly 
exaggerated. The fear of being crushed by the competition 
of the foreigner, calls forth every latent energy, and makes 
routine processes give way to those that are more efficient 
and more economical. Notwithstanding all the predictions 
of ruin that were so confidently made b}^ the silk manufac- 
turers and others, when JNlr. Huskisson introduced his com- 
mercial reforms in 1825, the various departments to which 
they applied are now, without a single exception, more 
flourishing, and employ a greater number of hands than at 
any former period. Such, also, has been the result of the 
modifications of the protective system introduced in 1842; 
and such, also, we have little doubt, will be the case with 
the still greater and more important changes that were 
effected in the course of the year 1846. But admit- 
ting it were otherwise, and that the total abolition of 
the protective system were to force a few thousand work- 
people to withdraw from their present occupations, it would 
necessarily, at the same time, open equivalent new ones 
for their reception. Such a measure could not diminish 
the aggregate demand for labour. Suppose that under a 
system of low duties, or of perfectly free trade, we imported 
the whole or a part of the silks and linens now manufactured 
at home : it is clear, inasmuch as neither the French nor 
Germans would send us their commodities gratis, that we 
should have to give them an equal amount of British com- 
modities in exchange ; so that such of our artificers as had 
been engaged in the silk and linen manufactures, and were 
thrown out of them, would, in future, obtain employment 
in the production of the articles that must be exported as 
equivalents to the foreigner. A country in which com- 
merce has been restricted may, by giving it additional 
freedom, partially change the species of labour in demand, 

COMMERCE. ].">7 

and make it be employed more productively ; but it can- 
not lessen its quantity. Should the imports of such country 
this year amount to five or ten millions more than they 
did last year, it will have to provide for their payment, 
either directly or indirectly, by an equal increase in the 
exports of its peculiar products. And, therefore, if exporta- 
tion be desirable — and the most ardent admirers of the 
restrictive system admit it to be such — importation must be 
so also, for the two are indissolubly connected ; and to 
separate them, even in imagination, implies a total ignorance 
of the most obvious principles. All commerce, whether 
carried on between individuals of the same or of different 
countries, is founded on a fair principle of reciprocity. 
BujMug and selling are in it what action and reaction are 
in physics, equal and ccntrar3^ Those who will not buy 
from others, render it impossible for others to buy from 
them. Every sale infers an equal purchase, and every 
purchase an equal sale. Hence, to prohibit buying is 
exactly the same thing, in effect, as to prohibit selling. No 
merchant ever exports, except in the view of importing 
products of greater value. But he cannot do this, if foreign 
commodities be excluded! In whatever degree, therefore, 
an unfettered trade may lead us to receive supplies from 
other countries, in the same degree it will render them our 
customers, will promote our manufactures, and extend our 
trade. To suppose that commerce may be too free, is to 
suppose that the channel into which labour is turned ma}' 
be too productive, that the objects of demand may be too 
much multiplied, and their price too much reduced : it is 
like supposing that agriculture may be too much improved 
and the crops rendered too luxuriant ! 

The principles now established, demonstrate the ground- 
less nature of the complaints so frequently made, of the 
prevalence of a taste for foreign commodities. We get 
nothing from abroad except as an equivalent for something 
else ; and the individual who uses only Polish wheat, Saxon 
cloth, and French silks and wine, gives, by occasioning the 
exportation of an equal amount of British produce, precisely 


the same encouragement to industry here, that he would 
give were he to consume nothing not directly produced 
amongst us. The Portuguese do not send us a single 
bottle of port, without our sending to them, or to those to 
whom they are indebted, its worth in cottons, hard-ware, 
or some sort of produce ; so that whether we use the wine, 
or its equivalent, is, except as a matter of taste, of no im- 
portance whatever. 

What has now been stated goes far to settle the disputed 
question in regard to the influence of absentee expendi- 
ture. If an English gentleman, living at home, and using 
none but foreign articles, gives the same encouragement 
to industry that he would do were he to use none 
but British articles, he must, it is obvious, do the same 
should he go abroad. Whatever he may get from the 
foreigner, when at Paris or Brussels, must be paid for, 
directly or indirectly, in British articles, quite in the same 
way as when he is resident in London. Nor is it easy to 
imagine any grounds for pronouncing his expenditure in the 
latter more beneficial to this country than in the former.^ 

' We do not mean, by any thing now stated, nor did we ever mean, by 
any thing we have stated on other occasions, to maintain that absenteeism 
may not be, in several respects, injurious. It would be easy, indeed, to show 
that England and Scotland have been largely benefited by the residence of 
the great landed proprietors on their estates. No one can doubt that they 
have been highly instrumental in introducing the manners, and in diffusing 
a taste for the convenieucies and enjoyments of a more refined society; and 
that the improved communications between different places, the expensive 
and commodious farm-buildings, and the plantations with which the country 
is sheltered and ornamented, are to be, in a great degree, ascribed to their 
residence. It may be doubted, however, considering the circumstances under 
which most Irish landlords acquired their estates, the difference between 
their religious tenets and those of their tenants, the peculiar tenures under 
which the latter hold their lands, and the political condition of the country, 
whether their residence would have been of any considerable advantage. 
But, whatever conclusion may be come to as to this point, cannot affect what 
has been stated in the text. The question really at issue refers merely to 
the i'peudiiii/ of revenue, and has nothing to do with the improvement of 
estates; and, notwithstanding all the clamour that has been raised on the 
uuhject, we have yet to learn that absenteeism is, in this respect, in any 
degree iujurious. 


Restrictions on the commercial iutercourse between dif- 
ferent nations have not, however, always originated in 
mistaken notions with respect to the superior importance of 
the precious metals, nor in a desire to advance the interests 
of the home producers. A considerable number owe their 
existence to more patriotic, though, as they seem to us, 
hardly less mistaken views — to the wish to be independent 
of foreign supplies, to avenge the prohibitions of foreign 
states by retaliatory measures, and to provide for the public 

There is something very seductive in the idea of inde- 
pendence ; and it is not surprising that a system of policy 
which promises to place a country in this enviable situation, 
should enjoy considerable popularity. But national inde- 
pendence rests on far other foundations than the miserable 
machinery of custom-house regulations. The independence 
of individuals does not depend exclusively on their being 
able directly to supply their own wants by the produce of 
their own labour ; but it depends indifferently either on their 
ability to do this, or to furnish an equivalent for the various 
necessaries and conveuiencies they may wish to obtain : and 
we have already seen that those who apply themselves to 
the callings or occupations for which they have any natural 
or acquired aptitude, will enjoy a greater command over the 
necessaries and conveniencies of life, through the intervention 
of an exchange with others, or, in other words, will be more 
opulent, and, consequentl}'', more independent than if they 
directly produced the various articles for which they have 
a demand. The same is the case with nations. We import 
tea from China, cotton from America, timber from the north 
of Europe, and claret from France ; but the fact of our 
doing this shows that we send commodities to those coun- 
tries on which they set a higher value. We are not, there- 
fore, in any respect more dependent on them than they are 
on us ; and if we understand by independence the power to 
supply our wants without being under any obligation to any 
other ])eople, Ave are completely independent. The com- 


mercial intercourse we carry on with foreigners, like that 
which we carry on with each other, is bottomed on a 
principle of mutual convenience : we give and receive 
equivalents, supply reciprocal wants, and confer reciprocal 

To wish to be wholly unconnected with foreigners, and 
at the same time to continue as rich and prosperous as ever, 
is to wish what is contradictory and inconsistent with the 
nature of things. It is equivalent to wishing that we had 
the soil and climate of China to produce tea, those of France 
to produce wine, and those of America to produce cotton. 
These, and thousands of equally useful and desirable pro- 
ducts, can only be obtained through an intercourse with 
foreigners. We may, no doubt, become independent of this 
intercourse ; but if we do, we must also submit to be in- 
dependent of the wealth and power to which it has raised 
us. The individual who prefers swimming across the river, 
is, of course, independent of the bridges, in the same way 
that the nation, who should prefer poverty and barbarism to 
wealth and refinement, would be independent of foreign com- 
merce. But this is the independence of the savage. To 
be truly independent in the enlarged, and, if we may so 
speak, civilized sense of the term, that is, to have the 
greatest command of necessaries and conveniencies, a nation 
must avail itself of the productive energies of every other 
people, and deal with all the world on fair and liberal 

Nations, like individuals, are very apt to be influenced by 
feelings of animosity. Having experienced the injury 
arising from the prohibitory enactments of some foreign 
power, we endeavour, in the irritation of the moment, to 
retaliate by similar prohibitions directed against her 
commerce. We seldom take time to reflect upon the 
probable influence of these measures upon ourselves ; but 
enact them in the belief that, however they n)ay aSect us, 
they will, at any rate, inflict a much more serious injury 
on those against whoin thev are directed. 


The commerce between this country and France was, for 
a lengthened period, all but completely sacrificed to this 
jealous and vindictive spirit. Louis XIV. having espoused 
the cause of the exiled family of Stuart, the British govern- 
ment and people took fire at the insult, and, in the irrita- 
tion of the momeiit, had recourse to every species of hosti- 
lity. Without reflecting that the blow aimed at the French 
would infallibly recoil upon ourselves, we declared the trade 
■with France " a nuisance ; " prohibiting, at the same time, 
the importation of most descriptions of French produce, and 
imposing high discriminating duties on wine, and on the 
greater number of the few articles it was still permitted to 
import. Unhappily the provisions in the Methuen treaty 
gave permanence to those oftensive enactments, which the 
French were not slow to retaliate. Custom-house regula- 
tions were used by both parties as effective warlike engines : 
a prohibition on the one side was instantly met by a counter 
prohibition on the other, until the commerce between the 
two countries — a commerce which, had it not been violently 
interfered with, would have afforded a profitable field for the 
employment of millions upon millions of capital, and of 
thousands upon thousands of individuals — was all but 
wholly suppressed. 

Mr. Pitt endeavoured, by means of the commercial treaty 
he negotiated with France in J 786, to introduce a more 
rational system into the trade, between the two countries, 
and to make them mutually beneficial to each other. But 
the Revolutionary war, which, unfortunately, broke out 
soon after, put an end to this improved state of things, and 
revived and imbittered all the old hostile feelings and preju- 
dices inherited b}'- both parties. Since the peace of 1815 
the animosities and prejudices in question have, however, 
been much mitigated, and the British trade with France has 
attained to very great importance, though still far inferior 
to what it mio;ht and should be. The abolition of the dis- 
criminating duty on French wine in 1831 had a considerable 
influence in bringing about tlii.s improved state of things ; 



and the late reduction of the high duty on brandy, and 
still more, the example set by the legislature of this country 
in renouncing the prohibitive system, will doubtless lead, 
in the end, to some corresponding relaxation on the side of 
the French : and if so, the trade between the two countries 
will be immeasurably increased. 

We would not, however, be understood as meaning, by 
any thing now stated, to lay it down absolutely that restric- 
tions, imposed for the purpose of retaliation, are always 
injurious to those who have recourse to them. This, cer- 
tainly, has hitherto been their ordinary eflect ; but their 
policy depends wholly on circumstances. If there be ap- 
parently good grounds for thinking that a prohibition will 
so distress those against whom it is levelled, as to make them 
withdraw or materially modify the prohibition or high duty 
it is intended to avenge, it may be prudent to enact it ; for, 
the recovery of an extensive branch of foreign trade, or the 
permanent relief of commerce from vexatious restraints, 
may more than countervail the additional inconvenience 
which every nation must in the meantime entail upon her- 
self, when she seeks to procure the abolition of a prohibition 
or restriction by a retaliatory proceeding. But unless there 
be reasonable grounds for concluding that the repeal or 
modification of the original prohibition will be brought about 
by the retaliation, it would be most impolitic to embark in 
any such hostile course. If a retaliatory prohibition acted 
'only upon others it would be different ; but the benefits of 
connnerce are reciprocal ; and as we neither sell nor buy, 
except to promote our own interest, when we prohibit or 
fetter our intercourse with others, we necessarily injure 
ourselves, it may be even to a greater extent than we injure 
them. It is clear, therefore, that to enact or maintain a 
proliibitiou when there is no prospect of its occasioning the 
repeal or modification of that enacted by the foreigner, is 
to inflict an injury on ourselves without securing any corre- 
sponding advantage. The government of a foreign country 
does an injury to its subjects by obstinately excluding some 


of our peculiar products ; but is that any reason why our 
o-overnnient should do the same? — that it should exclude 
desirable products which may be brought from that country 
cheaper than from any other place, or than they can be 
produced at home ? To act in this way, is not to retaliate 
on the foreigner, but on ourselves ! It is erecting the blind 
and ferocious impulses of revenge into maxims of state 
policy. It is no part of our business to inquire respecting 
the markets resorted to by others ; but to hud out and 
resort to those where we may be supplied at the lowest price 
with the articles for which we have a demand. We rarely 
hear of foreigners refusing to sell ; and as there can be no 
selling without an equal buying, by steadily acting on a 
liberal system ourselves, we shall not only reap an imme- 
diate advantage, but through the influence of our example, 
will, most probably, lead others gradually to abandon their 

With respect to what may be called political restrictions, 
or those imposed for the sake of national security, or the 
annoyance of some hostile power, we may observe, without 
undervaluing their occasional importance, that their influ- 
ence has been much exaggerated. If a single nation had 
a monopoly of any article necessary to her own defence and 
well-being, or to the defence or well-being of others, she 
would be able, by prohibiting its exportation, to provide 
for her own security, and, at the same time, to inflict a 
serious injury on her enemies. But it is doubtful whether 
there be any such article. We do not appear to be masters 
of a single product, the prohibition of the export of which 
would not be more injurious to ourselves than to any one 
else. And of the various commodities which we import, 
there is not one, with perhaps the single exception of tea, 
which, supposing its exportation were prohibited by a foreign 
power in one quarter of the globe, might not be obtained 
from others, either in the same or in some other quarter. 
It is true, indeed, that the prohibition of the export of 
tea by the Chinese, or of cotton by the Americans, sup- 


posing it could be made effectual, would lay us under 
considerable temporary difficulties. But it is abundantly 
certain that no prohibition, affecting any important article, 
on the sale of which a large population is dependent, could 
be maintained in any country even for the shortest period : 
if such an experiment were tried in America, it would, no 
doubt, occasion an immediate disruption of the union. But, 
supposing it could be made effectual, the injury done us 
would not be nearly so great as might at first be 
supposed. The cessation of the supplies of tea would do 
some violence to our taste, and oblige us to import larger 
supplies of coffee, cocoa, and such like articles ; and 
the cessation of the supplies of cotton from the United 
States, though productive at first of more inconvenience, 
would so powerfully stimulate its growth in and exportation 
from India, Egypt, Brazil, and elsewhere, that, at no distant 
period, we should be able to dispense with the supplies from 
the United States. In truth and reality, however, the 
dangers to be apprehended from foreigners refusing to sell 
are quite imaginary. We never, even during the hottest 
periods of war, had the least difficulty in procuring ample 
supplies of flax and hemp ; though, had it been possible to 
intercept them, it would have been a serious blow to our 
maritime power. The commercial commonwealth is now of 
too vast an extent, and the political views and biasses of its 
rulers too various and discordant, to admit of any thing like 
concert or combination ever obtaining amongst them. If 
the usual channels of commercial intercourse be choked or 
obstructed on one side, it will force a passage for itself in 
some other quarter. The products of art and industry are 
too widely diffused to be materially affected by the monopoly 
or hostility of any single state. Though one country should 
not deal with us, there is no cause for alarm ; another 
will be less scrupulous, and will be glad to have the oppor- 
tunity of supplying us with whatever we want. Nothing, 
indeed, can be a greater error than to imagine that, in the 
present state of the world, the security of any particular 


country, or her means of defence or aggression, can be 
materially increased by prohibitory regulations. The war- 
like implements made use of, and the character of the con- 
tests carried on in modern times, occasion an enormous 
expense. There is no longer any doubt of the maxim that 
money is the sinews of war ; that the wealthiest nation is, 
cceteris paribus, the most powerful. Those who possess 
wealth in sufficient quantities will never want for " man and 
steel, the soldier and his sword ;" they have a talisman by 
which they may cover the land with armies and the ocean 
with fleets, and against whose powerful influence the purest 
patriotism and the most unflinching courage will with 
difficulty struggle. But when such is the case, when it is 
admitted on all hands that wealth is the main source of 
power and influence, and when it admits of demonstration, 
that a free and extended commerce is the most prolific 
source of wealth, can any thing be more contradictory than 
to attempt to increase the defence or security of a country 
by enacting measures that must necessarily fetter and narrow 
its commerce ? The possession of wealth is the best security; 
and as the freedom of commerce is, of all others, the most 
efficacious means of increasing wealth, it follows that those 
who are exerting themselves to give every facility to com- 
merce, are, at the same time, exerting themselves in the most 
effectual manner to add to the power and independence of 
the country ; and it also follows, that the apologists and 
defenders of restrictions and prohibitions are, though with- 
out knowing it, labouring to sap the foundations of our 
power, and to cast us down from our high place amongst 
the nations of the earth. 

We may be assured, that if our commercial prosperity be 
ever endangered, it will not be by foreigners refusing to 
deal with us, but by our becoming unable to supply tiicm 
with equivalents so cheaply as others. This may bo brought 
about by a decline of industry at home, occasioned by a 
want of security or other cause, or by the greater opportu- 
nities or more rapid progress made by others. That this is 


a possible, and, perhaps, not even an extremely improbable 
danger, few will deny ; and the vast extent to which our 
commerce and manufactures have been carried, would make 
its occurrence a fearfully destructive calamity. It is, there- 
fore, our bounden duty to adopt such measures as may, on 
the whole, appear best fitted to strengthen the foundations 
of our commercial fabric, and to guard against its decline; 
and of these, none hitherto suggested seems likely to be so 
effectual as the abolition of restrictive regulations and the 
carrying out, in so far as it depends on us, of the principle 
of free trade. 

Before dismissing this part of our subject, it may be worth 
while, perhaps, to mention, that attempts have sometimes 
been made to defend or apologize for restrictions on importa- 
tion, by endeavouring to show, that they oblige foreigners 
to contribute to the revenue of the nation which has 
sagacity to profit by them ! But this apology, though 
farther fetched, is quite as futile as the others. It is obvious, 
indeed, that if a particular nation successfully adopted a 
policy of this sort, it would speedily be adopted by every 
one else ; so that, whatever one party might gain by laying 
duties on the importation of products from others, would be 
lost by the duties which the latter would, no doubt, lay on 
the importation of its produce into their markets. The 
truth, however, is, that the project is wholly visionary, and 
that duties on imports are always paid by the importers and 
never by the exporters. The price of every freely produced 
commodity is determined here, and every where else, by the 
competition of the producers. Taking all things into 
account, the articles disposed of to foreigners and to native 
buyers, fetch about the same prices. The circumstance of 
the commodities which we send abroad, being subject in 
France, the United States, and elsewhere, to certain duties, 
lessens, of course, the demand for them in those countries ; 
but otherwise, it is not of the slightest consequence to the 
producers here. They sell their goods indifierently to the 


foreign merchant, and to their nearest neighbour, for a 
price sufficient to defray the cost of their production, in- 
cluding profits ; and the duties imposed on them abroad, 
whether they be high or low, make a farther addition to 
their cost, which must obviously be paid by the foreign 
consumers. It is singular, how a different opinion should 
ever have been entertained ; it is obviously without so much 
as the shadow of a foundation. 

It is true, indeed, that if a country which has a monopoly 
of their supply, or a peculiar facility of producing any 
articles in extensive demand abroad, lay a duty on them 
when exported, such duty will make an equivalent addition 
to their price, and will fall wholly on the foreigners. There 
are, however, but few cases in which it would be prudent 
to attempt to raise any considerable revenue in this way ; 
for the duty, by increasing the cost of the articles on which 
it is laid, is in so far a discouragement to their exportation, 
and an encouragement to the exportation of the same or 
similar articles from other countries. Hence, if duties of this 
sort be ever resorted to for the sake of revenue, (and they 
are seldom if ever resorted to in any other view,) they 
should be cautiously confined to those articles in the pro- 
duction of which the exporting country has a decided advan- 
tage, and should not be carried so far as to endanger that 
advantage. Except in the case of articles of this peculiar 
description, of which, speaking generally, most countries have 
very few, duties on exportation are incomparably more 
hostile to commerce, and the industry to which it gives 
birth, than moderate duties on importation. The truth is, 
that when the latter are imposed for the sake of revenue, 
and are not carried to an oppressive extent, or to such a 
height as to give any overpowering stimulus to smuggling, 
or to form any serious obstacle to commercial transactions, 
they are amongst the best means of raising a revenue. The 
finance ministers of this and other countries have seldom, 
indeed, been sufficiently alive to the importance of modera- 
tion, in imposing customs duties ; and, partly from a wish 


to make theni subservient to pui'poses of protection, and 
partly from mistaken views as to the nature of taxation, 
have often carried them to an injurious extent. This, 
however, is not of their essence ; and supposing they are 
kept within reasonable limits, and judiciously assessed, we 
are not aware that any less exceptionable duties can be 
imposed. No doubt they tend, whatever be their magnitude, 
to narrow commercial operations, and consequently to pre- 
vent the best distribution of capital and labour. But in 
taxation we have only a choice of difficulties ; and no tax 
fitted to produce a large amount of revenue has yet been 
suggested, the assessment and collection of which is not 
accompanied with many serious inconveniencies. The nett 
customs revenue of the United Kingdom, which is nearly all 
derived from duties on imports, amounted in 1845 to no less 
than <iP21, 706,1 97 ; and, notwithstanding the exorbitant' 
duties on tea, tobacco, and a few other articles, (which would 
be more productive were they reduced a half,) it would be 
easy to show, were this a proper place for such inquiries, that 
no equal amount of revenue was ever raised in any country 
or period of time with so little inconvenience; and that 
there are no grounds for believino- it could be so advan- 
tageously collected in any other Avay. 

It is essential, therefore, that the distinction between 
moderate duties on imports for the sake of revenue, and 
duties and prohibitions for the sake of protection, should 
be kept steadily in view. The former supply, in most cases, 
one of the least exceptionable means of raising a revenue ; 
but oppressive duties, whatever be their object, and all duties 
and prohibitions imposed for protective purposes, are, 
speaking generally, subversive of every sound principle, 
and productive only of national injury. 

Reasonings similar to those now laid before the reader, to 
show the benefits of commercial freedom, and the impolicy of 
attempting to promote industry at home by laying restraints 
on importation from abi'oad, have been repeatedly advanced. 


The advantages resulting from the freedom of commerce 
were exhibited, as already stated, in a very striking point 
of view, by Sir Dudley North, above one hundred and 
fifty years ago ; and Richardson, Hume, and others, 
subsequently illustrated and enforced the same doctrines, 
and showed the mischievous influence of the prohibitive 
system. But its complete overthrow was reserved for Dr 
Smith. He examined and refuted the leading arofuments 
in its favour in the most masterly manner, and with an am- 
plitude of illustration that left little to be desired. Such, 
however, and so powerful, were the prejudices on the side 
of restrictions, and such the obstacles to the progress 
of more enlarged and liberal opinions, that notwithstand- 
ing the " Wealth of Nations" has been in general cir- 
culation since 1776, it is only within these few years 
that statesmen and merchants have practically assented 
to its doctrines, and begun to act upon them. But a new 
era has at length arisen — 

*' Magnus ab integro soeculorum nascitur ordo." 

The principles of free trade are no longer viewed as 
barren and unprofitable speculations — as the visions of 
theorists, dreaming in their closets of public happiness 
never to be realised. They have been sanctioned by the 
people and parliament of England. Sir Robert Peel has 
been in practice what Adam Smith was in theory. The 
former has vindicated in the senate, and embodied in acts 
of parliament, those great principles which the latter esta- 
blished in his study. To the glory of being the first 
to promulgate and demonstrate the wisdom and beneficent 
influence of commercial freedom, we are now entitled to 
the higher praise of being the first by whom it has been 
carried into effect, and made a part of the national policy. 
The few remains of the protective system still to be 
found in the statute-book will, no doubt, be speedily 
weeded out ; at the same time that our example will pro- 
gressively, though perhaps slowly, liberalise the commer- 


cial legislation of every other country. The time will 
assuredly come, 

" When, free as seas or wind, 
Unbounded Thames shall flow for all mankind ; 
Whole nations enter with each swelling tide. 
And seas but join the regions they divide." ^ 

1 Pope, " Windsor Forest," line 397. 



Different Employments of Capital and Labour — Agriculture, Manufac- 
tures, and Commerce, equally advantageous — The investment of Capital 
in different Businesses determined by the Rate of Profit which they 
respectively yield — Manufactures not productive of increased Mor- 
tality, nor unfavourable to the Intelligence of the Work-people — 
Dangers incident to the excessive growth of Manufactures — Influence 
of Commerce on Public Spirit. 

In treating of the accumulation of capital, it was shown, 
that the ratio of its increase is the circumstance which 
chiefly determines national prosperity ; that an augmenta- 
tion of capital is equivalent to an augmentation of the 
means of supporting and employing additional labourers ; 
and that its diminution equally diminishes the comforts 
and enjoyments, and perhaps also the necessaries, of the 
labouring classes, and diftuses poverty and misery over a 
country : and it was also shown, that the increase or 
diminution of the rate of profit is the great cause of the 
increase or diminution of capital. Now, such being the 
case, it seems impossible to resist coming to the conclusion, 
that the employments which yield the greatest profit, or 
in which industry is most productive, are at the same time 
most advantageous. But Dr. Smith, Mr. Malthus, and 
others, have objected to this standard. They admit, that 
if two capitals yield equal profits, the employments in 
which they are engaged are equally beneficial for those 
who carry them on ; but they contend, that if one of these 
capitals be employed in agriculture, it will be productive 
of greater public advantage. It is not difficult, however, 
to discover that this opinion rests on no good foundation ; 
and to show that the average rate of profit is, under all 
circumstances, the test by which we are best able to judge 
which employment is most and which is least advantageous. 


A capital may be employed in four diiferent ways ; viz. 
first, iu the production of raw produce ; or, second, in 
manufacturing and preparing raw produce for use and 
consumption ; or, third, in transporting raw and manu- 
factured products from one place to another according to 
the demand ; or, fourth, in dividing particular portions 
of either into such small parcels as may suit the conve- 
nience of those who want them. The capital of those who 
undertake the improvement or cultivation of lands, mines, 
or fisheries, is employed in the first of these ways ; that of 
master-manufacturers in the second; that of wholesale mer- 
chants in the third ; and that of retailers in the fourth. It 
is ditficult to conceive that a capital can be employed in 
any way which may not be classed under one or other of 
these heads. 

It is unnecessary to enlarge on the importance of em- 
ploying capital in the acquisition of raw produce, and espe- 
cially in the cultivation of the soil. It is from the latter, 
including therein mines and fisheries, that the matter of 
all commodities that minister to our necessities, comforts, 
and enjoyments, is originally derived. The industry which 
appropriates the raw products of the earth, as they are 
offered to man by nature, preceded every other. But 
these are always extremely limited. And it is by agri- 
culture only, or by the application of labour and capital 
to the cultivation of the ground, that large supplies of 
those raw products, which form the principal part of the 
food of man, can be obtained. It is not quite certain that 
any species of grain, as wheat, barley, rye, oats, &c. has 
ever been discovered growing spontaneously ; and, although 
this must originally have been the case, the extreme 
scarcity of such spontaneous productions in every country 
with which we are acquainted, and the labour required to 
raise them in considerable quantities, prove, beyond all 
question, that it is to agriculture that we are almost ex- 
clusively indebted for them. The transition from the pas- 
toral to the agricultural mode of life is decidedly the most 


important step in the progress of society. Whenever, in- 
deed, we compare the quantity of food, and of other raw 
products, obtained from a given surface of a well-cultivated 
country, with those obtained from an equal surface of an 
equally fertile country occupied by hunters or shepherds, 
the powers of agricultural industry in increasing useful 
productions appear so extraordinary, that we cease to feel 
surprise at the preference so early and generally given to 
agriculture over manufactures and commerce ; and are dis- 
posed to subscribe, without hesitation, to the panegyric of 
Cicero, when he says, " Omnium autem rerum ex quihiis 
aliqiiid acquiritui\ nihil est agi'icultiird melius^ nihil tcberius, 
Qiihil dulcius, nihil homine lihero digniusr 

But are there any just grounds for this preference I Are 
manufactures and commerce really less advantageous than 
agriculture ? Without the latter we could have no con- 
siderable supply of the materials out of which food and 
clothes are made ; but were we unacquainted with the arts 
by which these materials, when procured, may be con- 
verted into food and clothes, the largest supply of them 
would be of little or no service. The labour of the miller 
who grinds the corn, and of the baker who bakes it, is as 
necessary to the production of bread, as that of the hus- 
bandman who tills the ground. It is the business of the 
agriculturist to raise flax and wool ; but did not the spin- 
ner and weaver give them utility, and fit them for being 
made into a comfortable dress, they would be nearly, if not 
entirely worthless. But for the miner who digs the 
mineral from the bowels of the earth, we should not be sup- 
plied with the matter out of which many of our most use- 
ful implements and splendid articles of furniture are 
made: those, however, who compare the ore when dug 
from the mine with the finished articles, will, most likely, 
be convinced that the services of the purifiers and refiners 
of the ore, and of the artisans who have converted the 
metal to useful purposes, have been as indispensable as those 
of the miners. 


Not only, however, is manufacturing industry, or that 
species of industry which fits and adapts the raw products 
of nature to our use, requisite to render their acquisition of 
any considerable value ; but it is farther evident, that 
without its assistance these could not be obtained in any 
considerable quantity. The mechanic who fabricates the 
plough contributes as efficaciously to the production of 
corn as the husbandman who guides it. But the plough- 
wright, the ]nill-wright, the smith, and all those artisans 
who prepare tools and machines for the husbandman, are 
really manufacturers, and differ in no respect from those 
employed to give utility to wool and cotton, except that 
they work on harder materials. Tools and machines are 
the result of the labour and ingenuity of the tool and 
engine manufacturer ; and without their aid, it is impos- 
sible that any sort of labour should ever become consider- 
ably productive. 

" Distinguer," says the Marquis Garnier, " le travail des 
ouvriers de Fawriculture d'avec celui des autres ouvriers, est 
une abstraction presque toujours oiseuse. Toute richesse, 
dans le sens dans lequel nous la concevons, est necessaire- 
ment le resultat de ces deux genres de travail, et la consom- 
mation ne pent pas plus se passer de Fun que de Tautre. 
Sans leur concours simultanee il ne peut y avoir de chose 
consommable, et par consequent point de richesse. Com- 
ment pourrait-on done comparer leurs produits respectifs, 
puisque, en separant ces deux especes de travail, on ne 
peut plus concevoir de veritable produit, de produit con- 
sommable et ayant une valeur reelle ? La valeur du ble 
sur pied resulte de Findustrie du moissouneur qui recueil- 
lera, du batteur qui le separera de la paille, de meunier 
et du boulanger qui le convertiront successivement en 
farine et en pain, tout com me elle resulte du travail du 
laboureur et du semeur. Sans le travail du tisserand, le 
lin n'aurait pas plus le droit d'etre compte au nombre des 
richesses, que Tortie ou tout autre vegetal inutile. A. quoi 
pourrait-il done servir do rechercher lequel de ces deux 


genres de travail coiitribuc le plus a ravancement de la 
richesse nationale I N'est-ce pas comme si Ton disputait 
pour savoir lequel, du pied droit ou du pied gauche, est 
plus utile dans Taction de marcher 2" ' 

In fact, there is not at bottom any real distinction be- 
tween agricultural and manufacturing industry. It is, as 
has been already seen, a vulgar error to suppose that the 
operations of husbandry add any thing to the stock of 
matter in existence. All that man can do, and all that 
he ever does, is merely to give to matter that particular 
form which fits it for his use. But it was contended by 
M. Quesnay and the Economists, and their opinions have in 
this instance been espoused by Smith, that the husbandman 
is powerfully assisted, in adapting matter to our use, by the 
vegetative powers of nature, whereas the manufacturer has 
to perform every thing himself without any such co-opera- 
tion. — " No equal quantity of productive labour or capital 
employed in manufactures," says Dr. Smith, " can ever 
occasion so great a reproduction as if it were employed in 
agriculture. In them nature does nothing, 772an does all; 
and the reproduction must always be proportioned to the 
strength of the agents that occasion it. The capital em- 
ployed in agriculture, therefore, not only puts into motion 
a greater quantity of productive labour than any equal 
capital employed in manufactures, but in proportion, too, 
to the quantity of productive labour which it employs, it 
adds a much greater value to the annual produce of the 
land and labour of the country, to the real wealth and 
revenue of its inhabitants. Of all the ways in which a 
capital can be employed it is by far the most advantageous 
to the society." - 

This is perhaps the most objectionable passage in the 
" Wealth of JXations ;" and it is really astonishing that so 
acute and sagacious a reasoner as Smith should have main- 

' See page 58 of the " Discours Preliminaire " to the second edition of 
the translation of the " Wealth of Nations," by tlie jManiuis Gamier. 
2 " Wealth of Nations," p. 1G2. 


tained a doctrine so manifestly erroneous. It is, indeed, 
true, that nature powerfully assists the labour of man in 
agriculture. The husbandman prepares the ground for the 
seed and deposits it there ; but nature unfolds the germ, 
feeds and ripens the growing plant, and brings it to a state of 
maturity. In point of fact, however, we are not less indebted 
to nature in every department of industry. The powers 
of water and of wind which move our machinery, support 
our ships, and impel them over the deep, the pressure of 
the atmosphere, and the elasticity of steam, which enable 
us to work the most stupendous engines, are they not spon- 
taneous gifts of nature ? Machinery is advantageous only 
because by its means we press some of the powers of nature 
into our service, and make them perform the principal 
part of what we must otherwise have wholly performed 
ourselves. In navigation, is it possible to doubt that the 
powers of nature — the buoyancy of the water, the im- 
pulse of the wind, and the polarity of the magnet, contri- 
bute fully as much as the labour of the sailor to waft 
ships from one hemisphere to another ? In bleaching and 
fermentation, the whole processes are carried on by natural 
agents. And it is to the influence of heat in softening and 
melting metals, preparing food, and warming houses, that 
we owe many of our most powerful and convenient instru- 
ments, and that these northern climates have been made to 
afford a comfortable habitation. So far, indeed, is it from 
being true that nature does much for man in agi-iculture, 
and nothing in manufactures, that the fact is more nearly 
the reverse. There are no limits to the bounty of nature 
in manufactures : but there are limits, and those not very 
remote, to her bounty in agriculture. The greatest amount 
of capital might be expended in the construction of steam- 
engines, or of any other sort of machinery ; and after they 
had been multiplied indefinitely, the last would be as power- 
ful and efficient in producing commodities and saving labour 
as the first. Such, however, is not the case with the soil. 
Lands of the first quality are speedily exhausted ; and, not- 


withstanding the powerful influence of improvements, it ia 
found to be impossible to apply capital indefinitely even to 
the best soils, without, in the long run, obtaining from it a 
diminished return. The rent of the landlord is not, as 
Smith conceived it to be, the recompense of the work 
of nature remaining, after all that part of the product is 
deducted which can be regarded as the recompense of the 
work of man. It is, as will be afterwards shown, the excess 
of produce obtained from the best soils in cultivation, over 
that which is obtained from the worst : it is, in fact, a con- 
sequence not of the increase, but of the diminution of the 
productive powers of the land. 

If, however, the giving of utility to matter be, as it really 
is, the object of every species of industry, it is plain that the 
capital and labour employed in carrying commodities from 
where they are produced to where they are to be consumed, 
and in dividing them into minute portions, so as to suit the 
wants of the consumers, are reallj^ as productive as if they 
were employed in agriculture or manufactures. The miner 
gives value to matter — to coal for example — by bringing it 
from the bowels of the earth to its surface ; and the mer- 
chant or carrier who transports this coal from the mine 
whence it has been dug to the city, or place, where it is to 
be burned, gives it a further and perhaps a more consider- 
able value. We do not owe our fires exclusively to the 
miner, or exclusively to the coal-merchant. They are the 
result of the conjoined operations of both, as well as of those 
of the various parties who furnished them with the tools and 
implements used in their respective employments. 

It is probably unnecessary to do more than refer to 
what has been previously stated with respect to the utility 
of retail dealers. But the following extract from the 
" Wealth of Nations " sets it in a somewhat difterent point 
of view : — " If there was no such trade as a butcher, every 
man would be obliged to purchase a whole ox or a whole 
sheep at a time. This would generally be inconvenient to 
the rich, and much more so to the poor. If a poor workman 



was obliged to purchase a month's or six months'* provisions 
at a time, a great part of the stock which he employs as a 
capital in the instruments of his trade, or in the furniture 
of his shop, and which yields him a revenue, he would be 
forced to place in that part of his stock which is reserved 
for immediate consumption, and which yields him no reve- 
nue. Nothing can be more convenient for such a person 
than to be able to purchase his subsistence from day to day, 
or even from hour to hour, as he wants it. He is thereby 
enabled to employ almost his whole stock as a capital. He 
is thus enabled to furnish work to a greater value ; and the 
profit which he makes by it in this way much more than 
compensates the additional price which the profit of the 
retailer imposes upon the goods. The prejudices of some 
political writers against shopkeepers and tradesmen are 
altogether without foundation. So far is it from being 
necessary either to tax them, or to restrict their numbers, 
that they can never be multiplied so as to hurt the public 
interests, though they may so as to hurt one another. The 
quantity of grocery goods, for example, which can be sold 
in a particular town, is limited by the demand of that town 
and its neighbourhood. The capital, therefore, which can 
be employed in the grocery trade, cannot exceed w^^hat is 
sufficient to purchase that quantity. If this capital is 
divided between two different grocers, their competition will 
tend to make both of them sell cheaper than if it were in 
the hands of one only ; and if it were divided among twenty, 
their competition would be just so much the greater, and the 
chance of their combining together in order to raise the price 
just so much the less. Their competition might, perhaps, 
ruin some of themselves ; but to take care of this is the 
business of the parties concerned, and it may safely be 
trusted to their discretion. It can never hurt either the 
consumer or the producer ; on the contrary, it must tend 
to make the retailers both sell cheaper and buy dearer, than 
if the whole trade was monopolized by one or two persons. 
Some of them, perhaps, may occasionally decoy a weak cus- 


tomer to buy what he has no occasion for. This evil is, 
however, of too little importance to deserve the public 
attention, nor would it necessarily be prevented by restrict- 
ing their number." ' 

It appears, therefore, that the various modes in which 
capital is employed in productive industry, or, in other 
words, that the raising of raw produce, the fashioning of 
that produce into useful and desirable articles, the carry- 
ing of the raw and manufactured products from place to 
place, and their distribution in such portions as may suit 
the public demand, are equally advantageous : that is, the 
industi'y employed in any one of these departments con- 
tributes, equally with that employed in the others, to 
increase the mass of necessaries, conveniencies, and luxuries. 
Without supplies of raw produce, we could have no manu- 
factures ; and without manufactures and commercial in- 
dustry, the greater part of these supplies would be entirely 
worthless. Manufacturers and merchants are to the body 
politic what the digestive powers are to the human body. 
We could not exist without food ; but the largest supplies 
of food cannot lengthen our days, should the machinery by 
which it is adapted to our use, and incorporated with our 
body, become vitiated and deranged. Nothing, therefore, 
can be more silly and childish than the estimates, so fre- 
quently put forth, of the comparative advantageousness of 
agricultural, manufacturing, and commercial industry. 
They are inseparably connected, and depend upon, and grow 
out of each other. The agriculturists raise raw produce for 
the manufacturers and merchants, while the latter manu- 
facture and import necessary, convenient, and ornamental 
articles for the use of the former. Whatever, consequently, 
contributes to promote or depress the industry and enterprise 
of one class, must have a beneficial or injurious influence over 
the others. " Land and trade," to borrow the just and 
forcible expressions of Sir Josiah Child, " are twins, and 

1 " Wealth of Natioua," p. IGO. 


have always, and ever will, wax and wane together. It 
cannot be ill with trade but land will fall, nor ill with land 
but trade will feel it." ^ Hence the absurdity of attempting 
to exalt one species of industry, by giving it factitious 
advantages, at the expense of the rest. Every preference 
given to agriculturists over manufacturers and merchants, 
or to the latter over the former, is sure to occasion mis- 
chievous consequences. Individuals should always be left 
to' be guided by their inclinations in the employment of 
their stock and industry. Wherever this is the case their 
interests are identified with those of the public ; and those 
who succeed best in increasing their own wealth, must then 
necessarily also contribute most effectually to increase the 
wealth of the state to which they belong. 

This mutual dependence of the different branches of 
industry on each other, and the necessity of their co-opera- 
tion to the progress of civilization, have been ably illus- 
trated in one of the early numbers of the " Edinburgh 
Review." " It may safely be concluded, that all those 
occupations which tend to supply the necessary wants, 
or to multiply the comforts and pleasures of human life, 
are equally productive in the strict sense of the word, 
and tend to augment the mass of human riches ; meaning, 
by riches, all those things which are necessary, or con- 
venient, or delightful to man. The progress of society has 
been productive of a complete separation of employments 
originally united. At first, every man provided, as well as 
he could, for his necessities as well as his pleasures, and for 
all his wants, as well as all his enjoyments. By degrees, a 
division of these cares was introduced ; the subsistence of 
the community became the province of one class, its comforts 
of another, and its gratifications of a third. The different 
operations subservient to the attainment of each of these 
objects were then intrusted to different hands ; and the 
universal establishment of barter connected the whole of 

' " New Discourse of Trade." Glasg. ed. p. 15, 


these divisions and subdivisions tofjether — enabled one man 
to manufacture for all, without danger of starving by not 
ploughing or hunting, and another to plough or hunt for all, 
without the risk of wanting tools or clothes by not manu- 
facturing. It has thus become as impossible to say exactly 
who feeds, clothes, or entertains the community, as it would 
be to say which of the many workmen employed in the 
manufacture of pins is the actual pin -maker, or which of the 
farm-servants produces the crop. All the branches of useful 
industry work together to the common end, as all the parts 
of each branch co-operate to its particular object. If you 
say that the farmer feeds the community, and produces all 
the raw materials which the other classes work upon, we 
answer, that unless those other classes worked up the raw 
materials, and supplied the farmer^s necessities, he would be 
forced to allot part of his labour to his employment, whilst 
he forced others to assist in raising raw produce. In such 
a complicated system, it is clear that all labour has the same 
effect, and equally increases the whole mass of wealth. Nor 
can any attempt be more vain than theirs who would define 
the particular parts of the machine that produce the motion, 
which is necessarily the result of the whole powers combined, 
and depends on each particular one of the mutually con- 
nected members." ^ 

Besides underrating the importance of manufactures in 
promoting the increase of national wealth, it has been said 
that they are most unfavourable to the health of the people. 
But this statement, though in accordance with popular 
prejudice, does not appear to have any good foundation. 
That some peculiar processes, in a few branches of manu- 
facture, are unhealthy, is no doubt true ; but that such is 
not the general character of manufacturing industry is 
evinced by the fact, that the period during which manu- 
factures have made the most astonishing progress, has been 

' Vol. iv. p. 362. 


marked by an extraordinary diminution of the rate of 
mortality. The number of burials estimated by averages of 
five years, did not differ considerably during the entire 
period from 1780 to 1815, though the population increased 
about 3,800,000 in the interval.^ Neither was this increase 
occasioned by any increase in the number of births as com- 
pared with the bearing women, but by the increased number 
of children that were reared, and passed through the dif-' 
ferent stages of life. "About 100 years back," says Mr. 
Griffith Davies, " if any dependence can be placed on the 
registers, the number of annual births did not exceed the 
number of annual burials, so that the population could not 
then have been on the increase. The increase since that 
period must, therefore, be attributed to an increased fruit- 
fulness of the female sex, to immigration, to a diminution 
in the rate of mortality, or to two or more of these causes 
combined. But it does not appear that the first of these 
causes has had any sensible operation, and the second can 
have had none, otherwise the number of burials must have 
increased in comparison with the number of births, which 
is contrary to the fact : the increase of population must, 
therefore, be entirely attributed to a diminution in the rate 
of mortality." ^ The improvement began about the middle 
of last century, and has, doubtless, been owing partly to 
the greater prevalence of habits of cleanliness and sobriety 
amongst the poor, and to meliorations of their diet, dress, 
and houses ; partly to the improvement of the climate, re- 
sulting from the drainage of bogs and marshes ; and partly, 
and since 1800 chiefly, perhaps, to discoveries in medical 
science, and the extirpation of the small-pox. But to 
whatever causes this increased healthiness may be ascribed, 
there is conclusive evidence to show that they have 
not been counteracted by the extension of manufactures. 
Had such been the case, the improvement would have been 

^ " Preliminary Discourse to Census of 1831," p. 35. 
2 "Report of 1827 ou Friendly Societies," p. 38. 


greater iu the country than in the towns, whereas it has, 
speaking generally, been decidedly less. The mortality in 
London, during the first half of last century, is supposed to 
have been as high as 5 per cent. ; while, notwithstanding 
its extraordinary increase, it does not at present (184i6) 
exceed 2-6 or 2-7 per cent. The rate of mortality in Man- 
chester in 1770, as deduced from the careful observations 
made by Dr. Percival, was 1 in 28 ; whereas, notwith- 
standing the prodigious increase of manufacturing estab- 
lishments that has taken place in the interval, the mortality 
does not exceed, at this moment, 1 in S3. According to 
Dr. Enfield, the population of Liverpool, in 1778, was 
found, by actual enumeration, to be 32,450 ; and dividing 
this number by 1,191, the annual burials at that period, 
we have the proportion of deaths to the whole population 
as 1 to 27^. But, at present, the mortality is not supposed 
to exceed 1 in 33 or 34 ; and in Glasgow, Birmingham, 
and other great towns, there has been a corresponding- 

It must, however, be admitted, that the mortality in 
Lancashire, which is at the rate of 1 in 37, over the whole 
population, very considerably exceeds its ratio in any other 
county of England, and that generally the mortality is 
greatest in the manufacturing counties. This excess 
cannot, however, be fairly ascribed to the nature of the 
employments carried on in them, but to other circum- 
stances ; such, for example, as the influx of swarms of Irish 
and other labourers, many of whom are in a state of all 
but utter destitution, and the bad and overcrowded state 
of the lodgings occupied by the poor. Every where, indeed, 
the greatest carelessness has been evinced in devising and 
enforcing police and statutory regulations with regard to 
the construction of the inferior buildings in largo towns, 
and the mortality in them is in consequence comparatively 
great. In Manchester and Liverpool, for example, a large 
portion of the work-pcoplo reside in under-ground cellars, 
which are at once damp, dark, and ill ventilated ; and, in 


all the srreat manufacturins: towns, the lod^inir-houses are 
crammed with occupants, many of whom are afflicted with 
contagious diseases ; and entire streets of cottages are 
built without any provision being made for their drainage, 
or for furnishing them with adequate supplies of water. 
These abuses, which have mostly originated in the culpable 
inattention of the authorities, should, in as far as possible, 
be obviated ; and regulations should, at the same time, 
be adopted to prevent their recurrence in future. And, 
were this done, there can be no manner of doubt that the 
mortality in the manufacturing districts would be very 
materially reduced.^ 

But, notwithstanding these statements be more than 
sufficient to show the groundless nature of the allegations 
respecting the general unhealthiness of manufacturing em- 
ployments, it is not to be denied that some very serious 
abuses formerly existed in many factories. Owing to the 
lightness of the labour to be performed in various depart- 
ments of tlie cotton, woollen, silk, and linen trades, but espe- 
cially the first, children have been largely employed in tliem ; 
and there can be no doubt that they have not unfrequently 
been employed at too early an age, and that their powers have 
sometimes been tasked beyond what their strength could 
fairly bear. It was, however, objected to any interference 
in such matters, that the parents of the children knew best 
what was for their advantage, and that it would be oppres- 
sive and inexpedient to interfere with the arrangements 
they had sanctioned. But though parental affection may, 
speaking generally, be trusted to for the kindly treatment 
of children, it is not alwa3's, nor under all circumstances, 
to be depended on. In this particular case the parents, 
whose wages were frequently very low, were sometimes 
tempted, or driven by necessity, to endeavour to eke out 
their scanty means by employing their children in subordi- 

' See the able Reports of Edwin Chadwick, Esq., on " The Sanitary Con- 
dition of the Labouring Classes;" and see also the articles on Manchester, 
Liverpool, Glasgow, &c., in the " Geographical Dictionary." 


nate departments ; and after the practice had once begun, 
it was alike easy to extend it, and difficult (notwithstanding 
the interference of the legislature on one or two occasions) 
to guard against its abuse. It has, indeed, been shown, 
over and over again, that many of the statements embodied 
in the Report of the Committee of the House of Commons, 
in 1832, in regard to the mischievous consequences resulting 
from the employment of children in factories, were either 
false or very much exaggerated ; but still enough was estab- 
lished, in that Report, and in the Report of the Commission 
subsequently appointed to inquire into the same subject, 
to show that very great inattention to cleanliness, and 
some revolting abuses, prevailed in various factories, espe- 
cially those belonging to the smaller class of manufacturers. 
And in order to obviate these, and other abuses, an act was 
passed (3 & 4 William IV., cap. 103) which, among other 
regulations, prohibited the employment of children under 
nine years of age in factories ; limited the hours of labour 
of young persons between nine and eighteen years of age ; 
and prohibited their employment at night. This act also 
authorized the appointment of Inspectors, under whose 
superintendence its provisions have been carried into effect ; 
and though, perhaps, it may not, in some respects, have 
gone far enough, its operation has been, on the whole, 
highly beneficial. 

It was attempted to ingraft on the above act some sort 
of provision for the education of the children emplo^'ed in 
factories ; but it is admitted that its provisions, in this 
respect, have had but little success. It were, however, 
much to be wished, that this important matter should 
not be neglected. Most girls brought up in factories are 
singularly ill-fitted for becoming mistresses of families ; 
being, for the most part, extremely ignorant of most 
matters connected with domestic economy. This defect 
might be partially, at least, obviated, by giving them 
instruction in the arts fitted to make them useful house- 
wives. The acquisition of some such knowledge, though 


hitherto strangely neglected, would be of the greatest im- 
portance to themselves and their families. 

Besides, supposing that the health of the population is 
injured by the extension of manufactures, it has been sup- 
posed that the extreme subdivision of labour in manufac- 
turing establishments, and the undivided attention which 
every one employed in them must give to the single opera- 
tion in which he is engaged, have a most pernicious 
influence over the mental faculties. The genius of the 
master is said to be cultivated, while that of the workman 
is condemned to perpetual neglect. " Many mechanical 
arts," says Ferguson, " require no capacity ; they succeed 
best under a total suppression of sentiment and reason ; and 
ignorance is the mother of industry as well as of super- 
stition. Reflection and fancy are subject to err ; but a 
habit of moving the hand or the foot is independent of 
either. Manufactures, accordingly, prosper most where 
the head is least consulted, and where the workshop may, 
without any great efibrt of imagination, be considered as an 
engine, the parts of which are men.""^ Similar statements 
have been made by others. Even Dr. Smith, who has 
given so beautiful an exposition of the benefits derived from 
the division and combination of employments, has, in this 
instance, concurred with the popular opinion, and has not 
hesitated to affirm, that constant application to a particular 
occupation in a large manufactory, " necessarily renders 
the workman as stupid and ignorant as it is possible to make 
a human being.'''' Nothing, however, can be more marvel- 
lously incorrect than these representations. Instead of 
its being true that the work-people in manufacturing estab- 
lishments are less intelligent and acute than those employed 
in agriculture, the fact is distinctly the reverse. The 
spinners, weavers, and other mechanics of Glasgow, 
Manchester, and Birmingham, are cleverer and better 
informed than the agricultural labourers of any part of the 

" Essay on Civil Society," p. 303. 


empire. And this is really what a less prejudiced con- 
sideration of the subject would have led us to anticipate. 
The various occupations in which the husbandman suc- 
cessively engages, their constant liability to be affected by so 
variable a power as the weather, and the perpetual change in 
the appearance of the objects which daily meet his eyes, and 
with which he is conversant, occupy his attention, and render 
him a stranger to that ennui and desire for adventitious ex- 
citement which must ever be felt by those who are constantly 
engaged in burnishing the point of a pin, or in performing the 
same endless routine of precisely similar operations. This 
want of excitement cannot, however, be so cheaply or effec- 
tually gratified in any way as it may be by cultivating or 
stimulating the mental powers. Most workmen have no time 
for dissipation ; and though they had, the wages of labour 
are too low, and the propensity to save and accumulate too 
powerful, to allow of their generally seeking to divert them- 
selves by indulging in riot and excess. The majority are in 
this way compelled, as it were, to resort for recreation to 
mental excitement ; for the enjoyment of which their situa- 
tion affords every facility. Agricultural labourers, spread 
over a wide extent of country, are without the means of 
assembling, except on rare occasions, either for amusement 
or instruction ; but, by working together, those employed in 
manufacturing establishments have constant opportunities 
of discussing all topics of interest and importance. They 
are thus gradually trained to habits of thinking and re- 
flection ; their intellects are sharpened by the collision of 
conflicting opinions ; and a small contribution from each 
individual enables them to establish lectureships and 
libraries, and to obtain ample supplies of newspapers and 
periodical publications. But whatever doubt may exist 
respecting the cause, whether it be ascribed to the better 
elementary instruction of the lower classes in towns and 
villages, or to the circumstances under whicli they are 
placed in after life, there can be none of the fact, that 
the intellisrence of manufacturing workmen has increased 


according as their numbers have increased, and as their em- 
ployments have been more and more subdivided. Tliere is 
not, we apprehend, any real ground for supposing that they 
were ever less intelligent than the agriculturists ; though, 
"whatever may have been the case formerly, none will 
now venture to affirm that they are inferior to them in 
intellectual acquirements, or that they are mere machines 
without sentiment or reason. 

But assuming, what, indeed, can no longer be denied, 
the superior intelligence of the manufacturing population, 
we are not thence to conclude that it will be in general 
orderly, and disposed to respect and support the right of 
property and the established institutions of the country. 
The acquisition of information is valuable for the direct 
gratification it brings along with it, and for the assistance 
it affords to those who are improving their condition ; but 
it is by no means clear that it is at all fitted to reconcile 
the labourino; classes to their lot. A stupid or an io-norant 
individual most commonly regards the privations incident 
to his situation as the effect of circumstances beyond human 
control, and submits to them as to the dispensations of 
Providence, without reflection or murmur; but he who is 
instructed, who is acquainted with the constitution of 
society, and with the privileges and advantages enjoyed by 
other classes, will not be so apathetic, nor, probably, so 
resigned to his fate. We are not, we confess, of the number 
of those who can contemplate the condition and pi'ospects 
of the labourers in our great manufacturing towns without 
serious apprehensions. Owing to the greater scale on 
which employments are now mostly carried on, workmen 
have less chance than formerly of advancing themselves or 
their families to any higher situation, or of exchanging the 
character of labourers for that of masters. But, under 
these circumstances, can any thing be more natural, than 
that instructed w^orkraen, who ai'e thus condemned as it 
were to perpetual helotism, to continued poverty and hard 


labour, should become discontented l It would, in fact, be 
extraordinary were such not the case. It is all very well 
for those who are at ease in their possessions, or who can 
by industry and exertion raise themselves to an improved 
situation, to profess their attachment to the existing order 
of things, and their determination to support it at all 
hazards. But, if called upon, such persons would, perhaps, 
be not a little puzzled to show that a poor collier, cotton- 
spinner, or hand-loom weaver, has any very palpable in- 
terest in its support ; or that he would be seriously injured 
by its overthrow. Something, perhaps, may be done to 
strengthen the existing institutions of the country, by im- 
proving the education of the poor, and showing them how 
closely their interests are identified Avith those of their 
employers, and with the preservation of tranquillity and 
good order. But, after all, we incline to think that but 
little stress can be safely laid on education. A man must 
have a lively and grateful sense of the advantages he derives 
from established institutions before any species of training 
will make him anxious for their preservation. But a poor 
manufacturing workman, who contrasts his abject and hope- 
less condition, and that of his family and class, with the 
boundless wealth, luxury, and varied enjoyments of other 
portions of the community, will be very apt to conclude that 
there is something radically wrong in a system productive 
of such results, and will be disposed to lend a willing ear 
to those dangerous counsellors, who tell him that he is the 
victim of vicious political and social arrangements, and that 
he must look to a change in them for an improvement of 
his situation. No one acquainted with the history of the 
country since the Peace, or with its present state, can doubt 
that there is much deep-seated, and, we believe, growing 
discontent among the manufacturing work-people. Radi- 
calism, Chartism, and so forth, are merely the modes in 
which this discontent manifests itself, and seeks to appease 
its irritation. 

The observations we have now ventured to make on the 


state of the manufacturing population, seem to be warranted 
bj what may be called their ordinary condition, without 
taking into account the extent to which they may be affected 
by the vicissitudes of trade. These, however, are far too 
important to be left out of view. A population dependent, 
in so great a degree as that of Great Britain, on the wages 
of manufacturing labour, is especially liable to be seriously 
influenced and to have its interests deeply compromised, not 
merely by the occurrence of scarcities and pecuniary de- 
rangements at home, but also by whatever may affect the 
sale of its products in those foreign countries to which 
they are largely exported. It is not to be denied that a 
large population so situated is in a very perilous position. 
So long as the population dependent on manufacturing 
industry is not very large as compared with the rest of the 
population, the occurrence of the vicissitudes alluded to is 
of comparatively little importance. But when the manu- 
facturing work-people become so very numerous as in 
Great Britain, and increase with such extraordinary, not 
to say frightful rapidity, as they have done here during the 
last forty years, the occurrence of any circumstance that 
tends to reduce the wages of labour, to raise the prices of 
provisions, or to throw any considerable number of persons 
out of employment, becomes an evil of the greatest magni- 
tude, and is not only productive of great immediate distress 
to those directly affected by it, but is very likely seriously 
to endanger the public tranquillity. Demagogues, and the 
workshop agitators so frequently met with in the manufac- 
turing districts, never fail to take advantage of the excite- 
ment produced by the occurrence of distress, to instil their 
poisonous nostrums into the public mind ; to vilify the in- 
stitutions of the country ; and to represent the privations of 
the work-people, which, in the vast majority of cases, spring 
from accidental and uncontrollable causes, as the necessary 
consequence of a defective system of domestic economy, 
having regard alone to the interests of the higher classes. 
It would be useless to refer to particular instances, in 


confirmation of what is now stated. These, unhappily, are 
too numerous and too recent not to have forced themselves 
on the attention of every one. And yet, critical as is the 
condition of society from the vast increase of manufacturing 
labourers, it would really seem as if we had done little more 
than enter on this new and hazardous career. At present, 
notwithstanding the vicissitudes and revulsions that occa- 
sionally recur, manufactures are extending themselves on 
all sides, and it may be estimated, that an addition of about 
250,000 individuals is annually made to the population of 
Great Britain. 

In such a novel and unprecedented state of things the 
rules and inferences drawn from the contemplation of society 
in antiquity, or in more modern times, are wholly inappli- 
cable ; and we are left with little or no light from experience 
to speculate on the probable course and results of this new 
state of society. The prospect, we fear, is not very flatter- 
ing, either as regards the tranquillity of the country, or 
the comfort and well-being of the bulk of the people. 
There may, however, be principles at work, which have not 
yet developed themselves, capable of educing good out of 
seeming evil, and of counteracting those sources of distress 
and turbulence which are so obviously prolific of mischief. 
We may be permitted to hope, that a system which at its 
outset was productive of so great an increase of wealth, 
prosperity, and enjoyment, may not end in national ruin 
and disgrace. 

Perhaps it may, in the end, be found that it was unwise to 
allow the manufacturing system to gain so great an ascen- 
dency as it has done in this country, and that measures 
should have been early adopted to check and moderate 
its growth. At present, however, nothing of this sort can 
be thought of. Whether for good or for evil, we are now 
too far advanced to think of retreating. We have no 
resource but to give it full scope, taking care, however, at 
the same time, to do all that is possible by judicious legis- 
lation to give stability to industry, and to avert or modify 


the influence of revulsions. In this respect, the measures 
introduced and carried into effect bv Sir Robert Peel, for 
giving full freedom to our commercial intercourse with 
foreigners, and for improving our defective monetary sys- 
tem, are of the greatest importance. And if, in addition to 
these wise and salutary measures, tranquillity should be 
maintained at home and abroad, oppressive imposts be 
modified or abolished, and such a scheme of public charity 
be organized as may fully relieve the distresses without 
insulting the feelings or lessening the industry of the 
labouring classes, or bringing them into collision with 
government, all, perhaps, will be done to give stability to 
industry and good order of which legislation is capable. 
But that these things will be done, or that, if done, they 
will be adequate to meet the exigencies of the case, is more 
than any man of sense would choose to affirm. They, 
however, are things which government may endeavour to 
accomplish ; and provided it succeed in its efforts, the 
event may be, or rather must be, left to time and Provi- 

In estimating the influence of manufactures over the 
prosperity and happiness of nations, it would seem that they 
are, if at all, injurious or hazardous only in their excess, or 
when a very large proportion of the population has been, 
through their agency, rendered dependent on foreign demand 
and on the caprices and mutations of fashion. Down to a 
certain point, the progress of manufactures is productive, if 
not of unalloyed advantage, at all events of a great prepon- 
derance thereof. It is to their progress and that of com- 
merce that we owe the growth of cities ; and mankind are 
mainly indebted to the latter, not only for the rapid 
advances they have made in civilization, but also for the 
diffusion of just notions of government and of liberal prin- 
ciples. Men seldom entertain a just sense of their own 
importance, or acquire a knowledge of their rights, or are 
able to defend them with courage and success, till they 
have been congregated into cities. An agricultural popu- 


lation, thinly distributed over an extensive country, and 
without any point of reunion, rarely opposes any very 
vigorous resistance to the most arbitrary and oppressive 
measures. But such is not the case with the inhabitants 
of towns ; they are actuated by the same spirit, and 
derive courage from their numbers and union ; the bold 
animate the timid ; the resolute confirm the wavering ; the 
redress of an injury done to one citizen becomes the 
business of all ; they take their measures in common, and 
prosecute them with a vigour and resolution, that generally 
makes the boldest minister pause in an unpopular career. 
The most superficial, as well as the most profound reader 
of history must acknowledge the truth of this statement ; 
the establishment of extensive manufactures and commerce 
having every where been consentaneous with the rise of 
public freedom, and with the introduction of an improved 
system of government.' 

But, if we be right in the previous statements, it will 
appear that the beneficial influence of manufactures depends, 
in a great degree, on their being subordinate, in point of 
extent, to agriculture and other more stable businesses ; 
and there is much reason to fear that their influence is of a 
decidedly less salutary description, when they constitute 
the paramount interest. We have noticed the tendency, 
so apparent in the progress of manufactures, to the increase 
of great establishments, where a few individuals superin- 
tend great numbers of work-people. But we doubt whether 
any country, how wealthy soever, should be looked upon 
as in a healthy, sound state, where the leading interest con- 
sists of a small number of great capitalists, and of vast 
numbers of work-people in their employment, but uncon- 
nected with them by any ties of gratitude, sympath}', or 
affection. This estrangement is occasioned by the great 
scale on which labour is now carried on in most businesses; 
and by the consequent impossibility of the masters becom- 

^ For some farther illustrations of this last-mentioned topic, see Miller's 
" Historical View of the English Government," vol. iv, pp. 102-i;j7. 



ing acquainted, even if thej desired it, with the great bulk 
of their work-people. Generally, indeed, they do not so 
much as know their names ; they look only to their con- 
duct when in the mill or factory ; and are wholly ignorant 
of their mode of life when out of it, and of the condition of 
their families. The kindlier feelings have no share in 
an intercourse of this sort ; speaking generally, every 
thing is regulated on both sides by the narrowest and most 
selfish views and considerations ; a man and a machine 
being treated with about the same sympathy and regard. 
It is mere drivelling to suppose that a population of this 
sort should not be at all times extremely prone to dis- 
content. The work-people having little or nothing to 
lose, and caring extremely little for, or, it may be, hating 
those who have, will be easily misled, and be exceedingly 
apt, in periods of distress, to adopt violent resolutions, 
destructive of the interests of others, and probably, also, of 
their own. 

We have not made these statements because we enter- 
tain any doubts of the continued advantages resulting from 
the progressive improvement of the arts. What we 
have stated has reference only to the excessive growth 
of manufactures in particular countries, and not to im- 
provements of any kind. The facilities for the produc- 
tion of cottons, woollens, and hardware, for example, 
cannot assuredly be too much increased ; but it does 
not, therefore, ' follow that the cotton, woollen, and hard- 
ware manufactures of England may not be dispropor- 
tionally extended, or rather that they may not be so in- 
creased as to place a large proportion of our people, and 
with them the best interests of the country, in a very 
hazardous situation ; in the same way that the safety of 
the largest and best built ship may be endangered by 
crowding too much sail. Supposing, however, that this 
were admitted, it might be asked, would you then pro- 
pose, when a business is rapidly increasing, and when 
that very circumstance shows that it is, at the time, the 


best suited to the country, that its progress should be 
checked by artificial means ? Practically, it is abundantly 
certain that all questions of this sort, supposing them to 
be put, will, for a lengthened period, be decided in the 
negative. But looking at it in a scientific point of view, 
every thing, it is plain, would depend on our being able 
to form a correct estimate of the character and con- 
tingent circumstances connected with the business referred 
to. Certainly, however, our experience is at present far 
too limited to enable any one to cast the horoscope of any 
great department of industry ; and, notwithstanding its 
vast importance, the solution of this class of questions must 
be left to the economists of some future age. 

That hostility to commercial pursuits so generally enter- 
tained by the philosophers of antiquity, and which has been 
inherited by many of their successors in more modern times, 
seems to have originated principally in the idea that com- 
merce is unfavourable to the patriotic virtues, and that those 
who are familiar with foreign countries cease to entertain any 
very peculiar regard for their own. That there is some foun- 
dation for this statement is true ; but it is not true that com- 
merce tends to weaken that love of country which is founded 
upon just grounds. It merely moderates that excessive pre- 
ference of ourselves to every other people, which is the surest 
proof of ignorance and barbarism : and in this respect it dif- 
fers nothing from the acquaintance with foreigners obtained 
through the medium of books. The merchant who visits a 
foreign country, and the individual who reads an account of 
it, naturally compares its institutions with those of his own 
country. Certainly, however, there is no reason for sup- 
posing that this will make him unjustly depreciate the 
latter, though it may satisfy him that they are not quite 
so super-excellent as he previously imagined ; and if it 
should appear, on a careful comparison, that any of our 
laws or practices are not so well suited as those of some 
foreign states to promote the public interests, what can be 


more desirable than to have the means of rectifying and 
amending them, not upon speculative or doubtful grounds, 
but according to the experience of other nations ? A Turk, 
or a Spaniard, may be as intensely patriotic as an English- 
man ; but the patriotism of the former is a blind indiscri- 
minating passion, which prompts him to admire and support 
the very abuses that depress and degrade himself and his 
country ; whereas the patriotism of the latter is of a com- 
pai-atively sober and rational description. He prefers his 
country, not merely because it is the place of his birth, 
but because of the many ennobling recollections connected 
with its history, and because, upon contrasting it with 
others, he sees, that though not faultless, its institutions 
are comparatively excellent. 

The idea that the patriotism of those engaged in com- 
mercial pursuits is less ardent than that of agriculturists, 
never could have been entertained by any one acquainted 
with history, unless he were, at the same time, blinded by 
prejudice. Were the Athenians or Corinthians less patriotic 
than the Spartans or Thebans ? Alexander the Great had 
moi'e difficulty in conquering Tyre than in subduing the 
whole Persian empire; and Carthage had nearly arrested the 
Romans in their progress to universal dominion. But it is 
needless to go back to antiquity for examples to prove the 
beneficial influence of commerce on the patriotic virtues. 
The^ Hollanders and the English have been less distin- 
guished among the nations of Europe for their vast com- 
merce and wealth, than for the extraoi-dinary sacrifices and 
exertions they have made for the sake of private freedom 
and national independence. 



Imprc/vements in Machinery similar in their Effects to Improvements in 
the Skill and Dexterity of the Labourer — Do not occasion a Glut ot 
Commodities — Sometimes force Workmen to change their Employ- 
ments — Have no Tendency to lessen, but most commonly increase the 
Demand for Labour — Case supposed by Mr. Ricardo — Causes of 
Gluts — Not occasioned by a deficiency of Money, but are frequently 
occasioned by sudden changes in its Quantity and Value — Circum- 
stances which occasion Miscalculations on the Part of the Producers. 

Various bad consequences have been supposed to result from 
the continued extension and improvement of machinery. 
But a presumption arises at the outset, that they must be 
in a great degree fallacious, inasmuch as they would equally 
follow from the continued improvement of the skill and in- 
dustry of the labourer. If the construction of a machine 
that would manufacture two pairs of stockings for the same 
expense that was previously required to manufacture one 
pair, be in any respect injurious, the injury would, obviously, 
be equal were the same thing accomplished by increased 
dexterity and skill on the part of the knitters ; were 
the females, for example, who knitted two or three pairs 
in the week, able in future to knit four or six pairs. 
There is really no difterence in the cases. And supposing 
the demand for stockings were already supplied, M. 
Sismondi could not, consistently with the principles he 
has advanced,^ hesitate about condemning such an improve- 
ment as a very great evil — as a means of throwing half the 
people engaged in the stocking manufacture out of employ- 
ment. The question respecting the improvement of machin- 
ery is, therefore, at bottom, the same with the question 
respecting the improvement of the skill and industry of 

^ " Nouveaux Principes," torn. ii. p. 318. 


the labourer. The principles which regulate our decision 
in the one case, must regulate it in the other. If it 
be advantageous that the manual dexterity of the labourer 
should be indefinitely extended — that he should be able to 
produce greater quantities of commodities with the same, or 
a less quantity of labour, it surely must be advantageous 
that he should avail himself of such aids as may be most 
effectual in enabling him to bring about that result. 

In order the better to appreciate the efiect of increased 
skill and dexterity on the part of the labourer, or of an 
improvement in tools and machines, let us suppose that 
the powers of production are universally augmented, and 
that the workmen engaged in different employments can, 
with the same exertion, produce twice the former quantity of 
commodities : is it not evident that this increased facility of 
production would double the wealth and enjoyments of all 
individuals ? The shoemaker who had previously manufac- 
tured only one pair of shoes a-day, would now be able to 
manufacture two pairs ; and as an equal improvement is 
supposed to have taken place in all employments, he would 
obtain twice the quantity of every other thing in exchange 
for shoes. In a country thus circumstanced, every workman 
would have a great quantity of the produce of his own work 
to dispose of, beyond what he had occasion for; and as every 
one else would be in the same situation, each would be able 
to exchange his own goods for a great quantity, or, what 
comes to the same thing, for the price of a great quantity 
of those of others. The condition of such a society would 
be vastly improved. All the necessaries, luxuries, and con- 
veniencies of life, would be comparatively abundant. 

It may, however, be asked, would the demandhQ sufficient 
to take off this increased quantity of commodities? Would 
their extraordinary nmltiplication not cause such a glut of 
the market, as to force their sale at a lower price than would 
suffice to repay even the diminished cost of their production? 
But it is not necessary, in order to render an increase in 
the powers of production advantageous, that they should 


always be fully exerted. Were the labourer''s command 
over necessaries and comforts suddenly doubled, his con- 
sumption as well as his savings would doubtless be very 
greatly increased : but it is not at all likely that he should 
continue to exert his full powers. He would then be able, 
■without endangering his means of subsistence, to give a 
greater portion of his time to relaxation and amusement. 
It is only where the powers of industry are feeble or very 
much loaded, where supplies of food have to be drawn from 
soils of inferior fertility, or where population is in excess, 
that workmen are compelled to make every possible exer- 
tion. High wages are advantageous only because of the 
increased comforts they bring along with them ; and of 
these, an addition to the time which may be devoted to 
amusement is certainly not one of the least. Wherever 
wages are high, and little subject to fluctuation, labourers 
are found to be active, intelligent, and industrious. But 
they rarely prosecute their employments with the same in- 
tensity as those who are obliged, by the pressure of necessity, 
to strain every nerve to the utmost. They are enabled to 
enjoy their intervals of ease and relaxation ; and they would 
be censurable if they did not enjoy them. 

Suppose, however, that the productive powers of indus- 
try are doubled ; nay, suppose they are increased in any 
greater proportion, and that they are exerted to the utmost, 
it would not occasion any lasting glut of the market. It 
is true, that those individuals who are most industrious 
may produce commodities which those who are less indus- 
trious — who prefer indolence to exertion — may not have 
the means of purchasing, or for which they may not be 
able to furnish an equivalent. But the glut arising from 
such a contingency must speedily disappear. In exerting 
his productive powers, every man intends either to consume 
the entire produce of his labour himself, or to exchange it, or 
portions of it, for such commodities or services as he wishes 
to obtain from others. Suppose, now, that he directly 
consumes every thing he produces : it is obvious that, in 


such a case, there can be no glut or excess ; for, to suppose 
that commodities, iuteuded for direct consumption by the 
producers, may be in excess, is equivalent to supposing 
that production may be carried on without a motive, that 
there may be an effect without a cause ! When individuals, 
instead of directly consuming the produce of their industry, 
offer it in exchange to others, their miscalculation may 
occasion a glut. Should A, for example, produce com- 
modities which are not wanted, he will not be able to 
exchange them for those he wished to obtain, and his 
miscalculation will occasion a glut : he should, it is 
obvious, have produced such commodities as would have 
been taken off his hands by others, or have applied him- 
self to the production of those which he wanted. This, 
however, is an error that will speedily be rectified ; for, if 
A find that he caimot attain his object by prosecuting his 
present employment, he will not fiiil to abandon it, pro- 
ducing, in time to come, such commodities only as he may 
find a merchant for, or as he means to consume. It is 
clear, therefore, that a universally increased facility of pro- 
duction cannot give rise to a permanent overloading of 
the market. Suppose that the capital and labour, engaged 
in diflerent employments, are adjusted according to the 
effectual demand, and that they all yield the same nett 
profit : if the productive powers of labour were universally 
increased, the commodities produced would all preserve 
the same relation to each other. Double or treble the 
quantity of one commodity would be given for double 
or treble the quantity'- of every other commodity. There 
would be a general augmentation of the wealth of the 
society, but there would be no excess of commodities in 
the market ; the increased equivalents on the one side being- 
balanced by a corresponding increase on the other. But 
if, while one class of producers were industrious, another 
chose to be idle, there would be a temporary excess. It is 
clear, however, that this excess would be occasioned by 
the den(Mont production of the idle class. It would not be 


a consequence of production being too much, but of its being 
too little increased. Increase it more — make the idle class 
equally productive with the others, and then it will be able 
to furnish them with equivalents for their commodities, and 
the surplus will immediately disappear. It was in vain 
that Mr. Malthus attempted to defeat this reasoning by 
supposing the existence of an indlsjyosition to consume '. 
There is no such indisposition in any country in the world; 
not even in Mexico, to which Mr. Malthus referred.^ The 
indisposition is not to consume, but to produce. In Mexico, 
as elsewhere, no one can command the products or services 
of others unless he furnish them with an equivalent ; and 
the Mexican prefers indolence to the gratification derivable 
from the commodities or services he might procure by means 
of labour. Malthus mistook this indisposition to produce 
for an indisposition to consume ; and, in consequence, denied 
the proposition, that effective demand depends upon pro- 

Mr. Malthus has justly stated, that the demand for a 
commodity depends " on the tcill combined with the poicer 
to purchase it ; " that is, on the power to furnish an equi- 
valent for it. But did any one ever hear of a want of will 
to purchase I If it alone could procure the necessaries 
and luxuries of life, every beggar would be as rich as 
Croesus, and the market would constantly be understocked. 
The poicer to purchase is the real desideratum. It 
is the inability to furnish equivalents for the products 
necessary to supply our wants, that " makes calamity of 
so long life." The more, then, that this inability is dimin- 
ished, or, which is the same thing, the more industrious 
every individual becomes, and the more the facility of pro- 
duction is increased, the more will the condition of society 
be improved. 

It is visionary to suppose that a decline in the foreign 
demand for any species of produce is ever occasioned by 

1 " Principles of Politicnl Eoonomy," p. .''-(>2. 


an increase of productive power. Such decline, when it 
does occur, is invariably occasioned by the too high price 
of our commodities, or by restrictions on the importation 
of British goods into foreign countries, and of foreign goods 
into Britain. Now it is obvious, that if the falling off in 
the foreign demand proceed from the former of these causes, 
it would have been proportionally greater had the cost of 
production not been diminished. If, notwithstanding all 
the contrivances of our Arkwrights and Watts for reducing 
the cost of commodities, we are still in any danger of being 
undersold by foreigners, it is certain that, without them, 
we should not be able to withstand their competition for a 
moment. It would be not a little inconsequential, first to 
complain that our goods were too high-priced for the foreign 
market, and then to declaim against the only means by 
which their prices may be reduced and the demand in- 
creased ! 

It is not to increased facilities of production, but to the 
derangements that have been occasioned by changes in the 
quantity and value of money, and by the restraints imposed 
on the freedom of trade, that the difficulty, so frequently 
experienced, of disposing of commodities in the foreign 
market, is, in most cases, to be ascribed. The people of 
Poland, Russia, France, China, Brazil, &c., are desirous 
to exchange their corn, timber, wine, silks, tea, sugar, 
&;c., for our products. These commodities, too, are parti- 
cularly well-fitted for our markets, and form, indeed, the 
very articles we are most anxious to import. It is plain, 
therefore, that the decline that has sometimes taken place 
in the foreign demand for our products, and the revulsions 
thereby occasioned, have not been owing to their excessive 
supply, but to the pernicious influence of sudden changes 
in the value of money, and to those impolitic and injurious 
regulations which fetter the commercial intercourse of dif- 
ferent countries. But it may be confidently expected that 
the frequency and violence of these revulsions will be 
diminished in future. We have not, it is true, any right 


or power to interfere iu such matters with the policy of 
other countries. But our example will, probably, have a 
good deal of influence ; and, at all events, the many im- 
provements made during the administration of Sir Robert 
Peel in our commercial legislation, more especially the 
increased stability given to our monetary system by the 
measures of 1844, and the abolition of the sliding scale 
and the introduction of a free trade in corn, in 1846, cannot 
fail to give additional security to industrial undertakings, 
and to deepen and enlarge the channels of commerce. 

It is said, indeed, that whatever relief we may derive 
from the adoption of a more enlarged commercial system 
will only be temporary ; that our powers of production are 
so vast, that we shall speedily glut even the market of the 
world ! This, it must be confessed, looking to the extra- 
ordinary progress of America and Australia, and the new 
and all but boundless markets that are daily opening in 
them, as well as in many parts of Asia and Europe, is 
rather an improbable supposition ; but, assuming that we 
could, by means of our improved machinery, manufacture a 
sufficient supply of cottons to serve every country, and even 
to sink their price below the cost of production, it could 
have no permanently bad consequence. Were such the 
case, the manufacturers would gradually begin to narrow 
their business, and would, perhaps, withdraw part of their 
capital, and employ it in some other way. Now that we 
are about to revert to the sound principle of free trade, the 
demand for commodities will be comparatively steady. 
It will not, in time to come, be so seriously affected by the 
circumstance of our harvests being more or less productive 
than ordinary ; or by sundry other contingencies which 
have hitherto exerted a very great influence over our trade. 
And if it should be found that, at an average of two or 
three years, we have not been able to dispose of our cottons, 
woollens, &c., with a sufficient profit, it will be a proof 
that their production has been carried too far ; and as there 
will be no rational prospect of the demand being speedily 


increased, manufacturers will not be tempted, as they have 
been, to linger on in a disadvantageous employment, but 
will transfer a portion of their capitals to other businesses ; 
and the supply of goods being thus diminished, their price 
will rise to its proper level. 

Still, however, it may be urged, that, under a free com- 
mercial system, we may not only manufacture too much of 
one, but of all commodities demanded by foreigners. But, 
admitting that such were the case, still there would be no 
ground whatever for doubting, that an increase of the 
powers of production would even then be attended with un- 
mixed advantaire. If foreioners are unable or unwilling to 
furnish equivalents for the products sent abroad, we must 
relinquish their production, and produce, in their stead, 
those we intended to import, or substitutes for them. Now, 
the real question comes to be — if a question can be raised 
on sucli a subject — Whether it be advantageous that we 
should have the means of producing these commodities 
cheaply, or not ? Foreign trade is beneficial, because a 
country, by exporting the produce of those branches oi 
industry in which it has some peculiar advantage, is able 
to import the produce of those branches in which the 
advantaiie is on the side of the foreigner. But, to ensure 
this benefit, it is not necessary that the whole capital o. 
the country should be vested in those particular branches. 
England furnishes better and cheaper cottons than any 
other country ; but it is not, therefore, contended that she 
should produce nothing else. Were she able to furnish the 
same supply of cottons as at present with half the capital 
and labour, would not her means of produch;:: all other 
commodities be prodigiously augmented ? 

But it is contended, that these means would not be put 
in requisition ; and that it is impossible so great a saving 
of labour could take place in a branch of industry employ- 
ing nearly a million of people, with any rational prospect ot 
such an increase in the demand for labour in other employ- 
ments, as would take up the hands that would be thrown 


idle. As this is an objection which has been reproduced 
in a thousand different shapes, and on which much stress 
has been laid, it may be proper to examine it somewhat in 

In the first place, it may be observed, that an improve- 
ment which reduced the price of cottons a half, that is, 
which enabled half the capital and labour engaged in their 
manufacture to furnish the same quantity of goods that is 
now furnished, WDuld not throw the other half wholly out 
of employmcut The demand for cottons, instead of remain- 
ing stationary, would, under such circumstances, be very 
greatly increased. Those who subsist by their labour, and 
whose command over necessaries and luxuries is always 
comparatively limited, form an immense majority of the 
population of every country. And any considerable reduc- 
tion in the price of an article in general use, has uniformly 
almost been found to extend the demand for it in a still 
greater proportion. This has been strikingly evinced in 
the case of the cotton manufacture. It is impossible, per- 
haps, to name another branch of industry in which the 
powers of production have been so much increased ; and 
yet the extension of the market consequent on every new 
invention, has always occasioned the employment of an 
additional number of hands. Such a farther reduction of 
price as has been supposed would give a prodigious stimu- 
lus to the manufacture. Our cottons would obtain a 
still more incontestable superiority in every market than 
they now enjoy, and would be brought within the command 
of an immensely increased number of consumers. Foreign 
governments would in vain attempt to prohibit their intro- 
duction. Cheap goods never fail of making their way 
through every barrier, per medios ire satellites amant. In 
the words of Sir Josiah Child, " They that can give the 
best price for a commodity, shall never fail to have it 
by one means or other, notwithstanding the opposition of 
any laws, or interposition of any power by sea or land ; of 


such force, subtiltj, and violence, is the general course of 
trade." 1 

But, in the second place, it is easy to show that the ad- 
vantages attending the introduction of machinery do not, 
as many suppose, depend on the circumstance of the market 
extending proportionally to the reduction in the price of 
commodities. They are nearly as great when no such exten- 
sion can take place. Suppose the price of cottons were 
reduced a half ; if the demand for them were not at the 
same time extended, half the individuals engaged in their 
manufacture would, no doubt, be thrown out of that employ- 
ment ; but it is demonstrable that there would, under such 
circumstances, be a corresponding increase in the demand for 
the products of other employments. The wealth of the buyers 
of cottons would not be impaired by their production being 
facilitated and their price red uced. They would still have the 
same capitals, and the same revenue. The only difference 
would be, that they would now purchase with one sovereign, 
as large a supply of cottons as they previously purchased 

j with two, and that the surplus sovereign would be applied to 
the purchase of other things. That it would be so applied is 
certain ; for, though we may have enough of one commodity, 

I we can never have what we reckon enough of all sorts of 
commodities. There are no limits to the passion for 
accumulation : 

Nee Croesi fortuna unquam nee Persica regna 
SufiSeient animo — 

The revenue set free by the fall in cottons would not be 
permitted to lie idle in our pockets. It would be applied 
to purchase, either directly by the parties themselves, or 
indirectly by those to whom they might lend it, an addi- 
tional quantity of something else. The total effective 
demand for labour, or the produce of labour, would not, 
therefore, be in the least degree impaired. Employment 
would be found for the capital and workmen disengaged 
' " Discourse about Trade," p. 129. Ed. 1690. 


from the cotton manufacture in the production of the 
articles for which an equivalent increase of demand had 
taken place ; so that, after the lapse of such a period as 
would permit of their transfer to new businesses, labour 
would be in as great demand as before, at the same time 
that every individual would get twice the former quantity 
of cottons for the same quantity of labour, or of any other 
commodity whose cost had remained constant. 

It has, however, been contended,^ that when machinery is 
employed to perform work that was previously performed 
by work-people, the price of the produce is seldom or never 
diminished to such an extent as to render the reduction of 
price equivalent to the wages of the labourers thrown out 
of employment. The invention of machinery, says M. 
Sismondi, by which cottons could be supplied five per cent 
below their present prices, would occasion the dismissal of 
every cotton spinner and weaver in England ; while the 
increased demand for other commodities, occasioned by 
this trifling saving, would barely afibrd employment for 
five per cent, or one-ticentleth part of the disengaged hands ; 
so that were an improvement of this kind to take place, the 
vast majority of these persons must either be starved out- 
right, or provided for in the workhouse. But, in making 
this statement, M. Sismondi has neglected one most impor- 
tant element — he has not told us how his machines are 
produced. If, as he has tacitly assumed, they cost nothing; 
if, like atmospheric air, they were the free gift of Provi- 
dence, and required no labour to procure them — then, 
instead of prices falling five per cent., they would fall to 
nothing; and every farthing formerly applied to purchase 
cottons would be set at liberty, and made available for the 
purchase of other things. But if, by stating that the intro- 
duction of new machinery has reduced the price of cottons 
five per cent., M. Sismondi meant, as he must have done, 
that .£'20,000 vested in an improved machine will produce 

^ Sismondi " Nouveaux Principes," torn. ii. p. 325. 


the same supply of cottons as ^£^21,000 employed in the 
payment of wages, or in the machinery now in use, it is 
plain, that twenty out of every twenty-one parts of the 
capital and labour formerly employed in the cotton manu- 
facture will henceforth be employed in the manufacture of 
machinery, and that the other part will be employed in 
producing the commodities for which, owing to the fall of 
five per cent in the price of cottons, a proportionally greater 
demand will be experienced. In this case, therefore, it is 
plain that, instead of twenty out of every twenty-one 
labourers engaged in the cotton manufacture being thrown 
out of employment, there would not be a single individual 
in that situation. But as this reasoning proceeds on the 
supposition that the machines would last only one year, M. 
Sismondi might have contended, that supposing them to 
be fitted to last ten or twenty years, there would be a defi- 
ciency of employment. The truth, however, is, that the 
reverse holds ; and that, instead of being diminished, the 
demand for labour would be increased, according to the 
greater durability of the machines. Suppose profits are 
ten per cent : when a capital of ^^20,000 is vested in a 
machine fitted to last one year, the goods produced by it 
must sell for ^22,000, viz. de'2000 as profits, and i?20,boO 
to replace the machine itself. But were the machine fitted 
to last ten years, then the goods produced by it, instead of 
selling for .£'22,000 would only sell for ,£'3254, viz. 
^£^2000 as profits, and ^1254 to accumulate as an annuity 
for ten years, to replace the original capital of <£'20,000. 
Hence it appears, that by introducing a machine, con- 
structed with an equal capital, which should last ten years 
instead of one year, the price of the commodities produced 
by it would be sunk to about one-seventh part of their former 
price. Hence the consumers of cottons would, by means 
of their equally increased demand for other articles, afibrd, 
in future, employment for six-sevenths of the disengaged 
labourers. Nor is this the only eftect that would be pro- 
duced. The proprietor of the machine would have, exclu- 


sive of the ordinary profit on his capital, at the end of the 
first year, an additional stock of dCl,2o4, or one-sixteenth 
part of the value of his machine, which he must necessarily 
expend in some way or other in the payment of wages ; 
at the end of the second year, this additional revenue or 
stock would be increased to about one-eighth part of the 
value of the machine ; and, in the latter years of its exis- 
tence, it is plain that, instead of having declined, the 
demand for labour would have very nearly doubled. 

But there is another circumstance which must not be lost 
sight of in treating this question. A fall in the price 
of commodities effected by the introduction of improved 
machinery, while it invariably occasions an increase of 
consumption, occasions also an increase of capital. A dimi- 
nution in the cost of an article in extensive demand, is 
really equivalent to an increase in the revenue of all classes ; 
and it is difficult to believe that the means of saving should 
be increased without a greater accumulation taking place. 
Persons in the middle and upper classes, who have been 
pretty fully supplied with a high-priced article, do not, when 
its price is reduced, materially extend their purchases of it. 
Neither do they, generally speaking, lay out the whole 
saving on other articles required for immediate use. Many, 
no doubt, do this ; but many, also, accumulate a portion 
of the saving, and form out of it a fresh capital. In this 
way all considerable inventions and discoveries contribute 
to augment the stock of the country ; and their advantage 
consists as much, perhaps, in this as in any other circum- 

It is plain, therefore, that every improvement in 
machinery increases the aggregate demand for labour ; at 
the same time that, by reducing their cost, it gives the 
labouring class, in common with others, a greater command 
over necessaries and conveniences. It sometimes, no doubt, 
though rarely, happens, that the introduction of improved 
machinery is immediately injurious to the labourers in 
particular departments, and that it sometimes obliges a 



greater or smaller number of them to change their employ- 
ments. In the majority of businesses, this is not, perhaps, 
so great a hardship as might at first be supposed ; for, as 
they have, for the most part, many things in common, an 
individual who has attained to any considerable proficiency 
in one, has seldom much difficulty in employing himself in 
another. A weaver of woollens easily becomes a weaver of 
cottons or silks, and conversely ; and a worker in brass 
may, with a little training, become a worker in iron, and 
so on. But there are instances in which a change of em- 
ployments may be productive of serious hardship. The 
case of the hand-loom weavers is, unluckily, one of this 
description. The facility with which the art of weaving 
is learned, the lightness of the work, and the freedom from 
surveillance oi those engaged in it, make it, notwithstand- 
ing the lowness of wages, be followed by a very large class 
of persons, many of whom are of weakly constitutions, and 
singularly ill-fitted, from the nature of their employment, 
for engaging in any thing else. But the probability is, that 
the spread of power-looms will, in the end, effect the all but 
total destruction of the weaving business ; and there can 
be no question that society in general, including the 
labourers, will be materially benefited by the change. No 
doubt, however, the weavers have, in the meantime, 
strong claims on the public sympathy ; and every practi- 
cable means should be tried that may seem most likely 
to abridge and facilitate the painful state of transition in 
which they are involved, by introducing their children to 
other businesses, and by facilitating their emigration, or 

But, how severe soever, cases of this sort cannot be of 
permanent duration. In the instance under consideration, 
it is plain that the means of those who buy the products of 
the power-looms are not affected by the change ; and what- 
ever, therefore, they may save through the reduction of 
their price will be laid out on other things, the production 
of which will, in the end, fully absorb the unemployed 


hand-loom weavers, at the same time that the cheaper 
products being brought within the command of new classes 
of purchasers, the demand for them will be proportionally 
increased ; and this, as already seen, will open a new field 
for the employment of additional hands in the construction 
of machinery, and in the subordinate departments connected 
with the manufacture. It is not, in fact, possible that the 
improvement of machinery should be in the end otherwise 
than beneficial to all classes.-^ 

Mr. Malthus, however, was not satisfied with this 
reasoning. "In withdrawing capital," he says, "from one em- 
ployment, and placing it in another, there is almost always 
a considerable loss. Even if the whole of the remainder 
were directly employed, it would be less in amount. Though 
it might yield a greater produce, it would not command the 
same quantity of labour as before ; and, unless more menial 
servants were used, many persons would be thrown out of 
employment ; and thus the power of the whole capital to 
command the same quantity of labour would evidently 
depend upon the contingency of the vacant capitals being 
withdrawn, undiminished, from their old occupations, and 
finding immediately equivalent employment in others."^ 
This statement implies, that, though the eff"ective demand of 
the Society would not be diminished by an increased facility 
of production, (for it is admitted that no such diminution 
would take place,) yet, unless the fixed capital, which had 
been rendered useless by the improvement, could be wholly 
withdrawn, and vested in some other branch, there would 
be no means of supplying this demand, or of employing the 
same quantity of labour as before. But this view of the 
matter proceeds on a mistake, into which it is rather sur- 
prising Mr. Malthus should have fallen. A manufacturer's 
power to employ labour is not measured by the total amount 
of his capital, but by the amount of that portion only 

' See Note B, at the end of the Vohime. 
2 " Principles of Political Economy," p. 404. 


which is circulating. A capitalist possessed of a huudred 
steam-engines and of <iP50,000 of circulating capital, has no 
greater demand for labour, and does not, in fact, employ a 
single workman more, than the capitalist who has no 
machinery, and only ^£'50,000 devoted exclusively to the 
payment of wages. All this portion could, however, be 
withdrawn ; and as it determines the power to employ 
labour, it is not necessarily true, that, when capitals are 
transferred from one business to another, " many persons 
are thrown out of employment." 

An individual who is obliged to move his capital from 
one business to another, necessarily loses whatever profit 
he may have derived from such poi'tions of it as cannot be 
transferred. But the introduction of improved machinery 
is not to be prevented because the old clumsy machinery 
previously in use may be superseded, and in part destroyed. 
Individuals may lose ; but society always derives an acces- 
sion of wealth from the adoption of every device for saving 
labour. It has been already seen, that neither the power 
nor the will to purchase commodities is affected by the 
introduction of improved machines ; and as the employ- 
ment of workmen depends on the amount of circulating 
capital which may, in all cases, be withdrawn without loss, 
it would not be diminished by their introduction. Wages 
would, therefore, continue as high as before, while the fall 
of prices effected by the saving of labour in production, 
would make them exchange for a greater share of necessaries 
and comforts, at the same time that it occasioned a more 
rapid accumulation. Hence it appears, how much soever 
it may be at variance with popular opinion, that improve- 
ments in machinery are always more advantageous to 
the labourers, regarded as a class, than to the capitalists. 
In particular cases they may reduce the profits of the latter, 
and destroy a portion of their capital ; but they cannot, in 
any case, diminish the average wages of labour, while they 
must lower the value of commodities, and improve the con- 
dition of the labourers. 


It is true that, were the foreign demand for cottons and 
hardware to cease or be greatly reduced, it would be very 
difficult, or rather, perhaps, impossible, to find equally 
advantageous employments for the capital and labour that 
would consequently be disengaged. But though this be a 
good reason for being cautious about the adoption of any 
measures that may tend to make our foreign customers try 
to manufacture for themselves, or to exclude us from their 
markets, it is not easy to see why it should have led Mr. 
Malthus to question the advantage of improvements of 
machinery. An increased facility of production would seem 
to be quite as advantageous in a country surrounded b^ 
Bishop Berkeley's wall of brass, as in one that maintains an 
extensive intercourse with others. Suppose (which is pos- 
sible) that foreigners should decline sending us the articles 
we get from abroad in exchange for cottons, woollens, hard- 
ware, and so forth ; it is plain that, in such a case, we 
must either offer them other things, which they may be 
disposed to accept, or, if that be impossible, we must 
endeavour to supply ourselves directly with the commodities 
we have been accustomed to import, or with substitutes for 
them. Now, should we have to resort to this alter- 
native, and, instead of importing the wines of Portugal, 
the sugars of the West Indies, and the corn of Poland, be 
obliged to produce these or equivalent articles at home, 
is it possible to doubt the vast advantage of the discovery 
of processes by which we miglit obtain them, or their sub- 
stitutes, as cheap or cheaper than before ? It has indeed 
been said, that there are no grounds for supposing that any 
such discoveries could be made ; and we are not disposed 
to dissent from this opinion. But the question is not, 
whether they can be made ; but whetlier, if made, they 
would not be signally beneficial ? — and whether every such 
discovex-y be not advantageous ? 

In arguing this question, it has been supposed through- 
out that the object in constructing a machine is to lower 
the cost or to increase the quantity of the commodities to 


be produced by its agency. But Mr. Kicardo has sup- 
posed^ that a machine might be introduced, not to reduce 
the cost of commodities, but that it might yield the same, 
or, at all events, only a very little more nett profit, than 
was derived from laying out the capital vested in it on 
labour ; and in such a case, its introduction would, no 
doubt, be injurious to the labourer. To render this more 
intelligible, let us suppose that profits are 10 per cent, and 
that a capitalist has .£'10,000 employed in paying the 
wages of workmen, who produce as much cloth as sells 
at the end of the year for o^l 1,000, that is ^^10,000 to 
replace the capital, and ddOOO as profits. Mr, Ricardo 
says, that this individual may, with equal advantage to 
himself, vest his capital in a very durable machine, that 
will produce only one-eleventh part of the cloth, or as much 
as will yield the dS'lOOO of profits ; though, if he do this, 
it is obvious that all the workmen he employed will be turned 
adrift, and there will no longer be either a demand for their 
services, or a fund for their maintenance. But though a 
case of this sort may be supposed, it may, at the same time, 
be safely afiirmed, that it has never actually occurred, and 
that it is extremely unlikely it ever should occur. Capi- 
talists resort to machines only when they expect to produce, 
by their means, the usual supply of commodities with less 
outlay. Were they to act in the way supposed by Mr. 
Ricai'do, those who had brought 110,000 yards of cloth to 
market, of which 10,000 were profits, would, in future, 
bring only these 10,000 : so that, under such circumstances, 
every fresh introduction of machinery would inevitably be 
followed by a diminished supply of commodities, and a rise 
of prices ! But hitherto, as every one knows, the opposite 
effects have uniformly followed, and, it may be confidently 
predicted, will continue to follow, the extension of machinery. 
No man would choose to vest capital in an engine from 
which it could not be withdrawn, were it only to yield the 

' " Principles of Political Economy and Taxation," 3d ed. p. 46G. 


same, or but a little more profit, than it did when employed 
in supporting labourers ; for this would expose his fortune 
to very considerable hazard from the caprices of fashion, at 
the same time that it would greatly lessen his influence and 
consideration in the country. The case under review is 
barely possible. In the actual business of the world, 
machines never lessen, but always augment gross produce ; 
for, they are introduced only when it is believed that the 
demand for the products, in the manufacture of which they 
are to be employed, may be supplied by their agency at a 
cheaper rate ; and it has been sufficiently proved that while 
they do this, their introduction cannot inflict any serious 
injury on the labouring class, but that, on the contrary, 
it will certainly contribute to their lasting advantage. 

It appears, therefore, allowing for the temporary inconve- 
niencies resulting, in rare cases, from changes of employments, 
that the greatest improvements, and the utmost facility of 
production, can never be injurious, but must always be of the 
greatest advantage to all classes. " Augmenter la reproduc- 
tion annuelle, la porter aussi loin qtCelle pent aller^ en debar- 
rassant de toutes entraves, et en animant Vactivite des hommes, 
wild le grand but que doit se proposer le gouternementr ^ An 
excess of a particular commodity, or of a few commodities, 
may be occasionally produced ; but it is quite impossible that 
there should be an excess of every commodity. Setting apart 
for the moment the influence of sudden changes in the quan- 
tity and value of money, and of political regulations, if the 
market be encumbered and a difficulty be experienced 
in efl"ecting the sale of commodities, we may be assured 
that the fault is not in producing too much, but in pro- 
ducing commodities which either do not suit the tastes of 
the buyers, or which we cannot ourselves consume. If we 
attend to these two grand requisites, if we produce only 
such commodities as may be taken oft" by those to whom 

^ Dignan, "Essai sur 1' Economic Politique," p. 131. 


they are offered, or such as may be directly available to 
our own use, we may increase the power of production ten 
or twenty times, and be as free of all excess as if we dimi- 
nished it in the same proportion. A glut never originates 
in an increase of production ; but is, in every case, a con- 
sequence of the misapplication of productive power, or of 
the producers not properly adapting their means to their 
ends. They wished, for example, to obtain silks, and 
offered cottons in exchange : the holders of silks did not, 
however, want cottons but woollens. Hence the origin of 
the glut, which is not occasioned by over-production, but 
by the production of cottons which were not wanted, in- 
stead of woollens which were. Let this error be rectified, 
and the glut will disappear. Even though the holders of 
silks should be supplied with cottons, cloth, and every 
other commodity in the power of the demanders to offer, 
the principle for which we are contending would not be 
invalidated ; for, if those who want silks cannot obtain them 
in exchange for woollens, or for such other commodities as 
they either have or can produce, they will abandon the pro- 
duction of the things which they do not want, and apply 
themselves to the production of those which they do want, 
or of substitutes for them. In no case, therefore, can an 
increased facility of production be attended with incon- 
venience. We might with equal truth pretend, that we 
should be inconvenienced by an increased fertility of soil, 
and an increased salubrity of climate. Such commodities 
as are carried to market, are produced only that they may 
be exchanged for others ; and the fact of their being in 
excess, affords a conclusive proof that there is a correspond- 
ing deficiency in the supply of those they were intended to 
buy, or to be exchanged for. A universal glut of all sorts 
of commodities is impossible : every excess in one class 
must be countervailed by an equal deficiency in some other 
class. " To suppose that there may be a production of 
commodities without a demand, provided these commodities 
be of the right species, is as absurd as to suppose that the 


revenues of the several individuals composing the society 
may be too great for their consumption." ^ 

Before dismissing this subject, it may be observed, that 
gluts are not unfrequently ascribed to a deficiency of money. 
But though the quantity of money in circulation determines 
the price of commodities, or their value estimated in money, 
it does not exercise the smallest influence over the quantity 
of other commodities for which any one in particular will 
exchange. It is, however, the acquisition of those others, 
and not of money, that is the end which every man has in 
view who carries any thing to market. The money that 
individuals receive for what they sell, is immediately laid 
out, either directly by themselves, or indirectly by those to 
whom they lend it, on purchases : and if it should happen 
that the produce which one has to dispose of is redundant, 
while that which he wishes to procure is deficient, he will 
experience loss and inconvenience. But these, it is obvious, 
are circumstances that are wholly independent of the value 
of money. It is, no doubt, true, that sudden changes in 
its value exert, in consequence of their aflecting and varying 
the terms of existing contracts, a powerful temporary in- 
fluence over every class of persons, and may occasion the 
greatest distress ; but whether money bear a permanently 
high or low value, is, in as far as the occurrence of gluts is 
concerned, of no importance. 

It may further be observed, that though no complaint be 
more common, than that of a scarcity of money, there is 
hardly one so uniformly ill-founded. Like other valuable 
products in universal demand, money will always be scarce 

' " Sketch of the Advance and Decline of Nations," p. 82. M. Say was 
the first -who showed, in a full and satisfactory manner, that effective 
demand depends upon production (see his chapter de Dibouches ;) and that 
gluts are the result of the misapplication, and not of the increase, of pro- 
ductive power. But the same principle had been noticed by many previous 
writers : by Dean Tucker, in his " Queries on the Naturalization Bill," p. 13, 
published in 1752; by Mengotti, in his " Dissertazione eul Colbertismo, 
p. 31, published in 1792; and still more distinctly in the tract just quoted, 
published in 1795. 


to those who cannot aftord to buy it, and who are destitute 
of credit. But when any one who has really valuable 
produce is unable to get it disposed of, he will, in the vast 
majority of instances, find the cause in something else than 
a scarcity of money, — in its having been thrown in too 
great quantities upon the market, or in an actual, or appre- 
hended falling off in the demand ; none of which circum- 
stances would be affected by an increase of currency. How- 
ever rich, individuals purchase no more of any article than 
is required to supply their wants ; and if more be produced, 
the surplus must either lie on the hands of the producers, 
or be sold at a reduced price. It is plainly, therefore, to no 
purpose to ascribe gluts and revulsions of the market to a 
permanent deficiency of money. A whist-player might as 
well ascribe his losses to a deficiency of counters. The mis- 
calculation of producers is, in the absence of fluctuations in 
the value of money, their real cause ; if they produce such 
articles as others are able and willing to buy, or such as they 
can themselves make use of, there will be no glut ; and if 
they do not, there will be a glut, though a Potosi were 
discovered in every county. 

It must, however, be borne in mind, that in the previous 
statements we have taken for granted that the value of 
money in the countries or districts whose producers have 
dealings with each other, has been invariable, or that, at all 
events, it has not been sensibly affected by sudden changes 
in its quantity and value. These changes may, as already 
stated, exert a powerful influence ; and have frequently, 
indeed, occasioned the most extensive derangement in the 
ordinary channels of commercial intercourse. An increase 
of money occasions a corresponding increase in the prices of 
commodities, at the same time that it affords additional faci- 
lities for obtaining credit, and for indulging in speculation. 
But the influence of any sudden diminution of the quan- 
tity, and consequent rise in the value of money, is usually 
of a more decided character, and leads sometimes to the 
most extensive revulsions. Such changes cannot, it is plain, 


take place without entailing the most serious losses on all 
who have on hand considerable stocks of produce ; it is also 
very apt to involve those who have been carrying on their 
business by the aid of borrowed money in the most serious 
difficulties ; and if the rise be very considerable, the influ- 
ence of the shock given to industry, and the consequent 
disturbance in the ordinary channels of commercial inter- 
course, may be such as materially to abridge the power 
of the society to make their accustomed purchases, and thus 
to occasion a glut of the market, not only in the country 
which is the seat of the revulsion, but also in those countries 
whence she has been accustomed to draw any considerable 
portion of her supplies. It is almost unnecessary to lay any 
examples of what is, unfortunately, so common before the 
reader. Revulsions in the value of money in this country 
have, over and over again, been productive of wide-spread 
misery and distress. Probably, however, they have been 
most injurious in the United States, where indeed they 
recently, (in 1842,) went far to destroy all public and all 
private credit. Owing to the vicious nature of the American 
banking system, the Union is sometimes gorged, as it were, 
with money ; whereas, at other times, it is reduced almost to 
a state of barter ! Perhaps no instance is to be found in 
the liistory of commerce, of such a wanton over-issue of 
paper-money, as took place in the United States in 1835 
and 1836, when all individuals, how bankrupt soever in 
fortune and character, had no difficulty in obtaining loans 
with which to embark in the most gigantic projects. The 
revulsion which necessarily grew out of this state of things 
was on an equally extensive scale ; and, besides compelling 
every bank in the Union to stop payments, it produced a 
universality of bankruptcy and distress, that has had no 
parallel, except perhaps in the denouement of the Mississippi 
and Assignat schemes in France. To show its powerful 
influence in a public point of view, we may state, tliat the 
sales of public lands, which in 1836 produced 25,167,833 
dollars, produced in 1841, only 2,252,202 dollars! And 


the exports from this country to the United States, which 
in 1836 amounted to .£'12,425,605, were reduced in 1840 
to .^5,283,020 ! This shows, in the most striking manner, 
the powerful influence that sudden changes in the quantity 
and value of money exert over commercial transactions, and 
the wide-spread disorder they seldom fail to occasion. 
Indeed, the whole of the commercial distress with which 
the United States has lately been visited, and a very large 
portion of that which was experienced in this country pre- 
viously to 1844, is to be ascribed to the sudden diminution 
of the money afloat in the Union in 1837, and the conse- 
quent rise in its value. 

This, we may observe by the way, is what Lord Bacon 
would call an instantia crucis, and strikingly exemplifies the 
vast importance to the well-being of commercial nations of 
having their monetary systems established on a solid basis ; 
or on such a basis that the value of bank-notes and other 
legalized substitutes for specie, shall be always identical 
with that of the specie they profess to represent ; and it, 
consequently, shows the value of the measures adopted in 
this country in this view in 1844. 

But, apart from fluctuations in the value of money, it is 
clear, from what has been previously stated, that the mis- 
calculation of producers, or the misapplication of productive 
power, is in every case the specific cause of gluts ; and such 
being the case, we shall now shortly inquire into the cir- 
cumstances which most commonly occasion this miscalcula- 
tion or misapplication. In a practical point of view this is 
an inquiry of much importance. 

Miscalculations seem generally to originate in some pre- 
vious change in the usual proportion between the supply 
and demand of commodities. Every exertion of industry 
involves a certain degree of speculation. The individual 
who buys raw cotton or raw silk, in the intention of manu- 
facturing it into articles of dress or furniture, supposes that 
the articles, when manufactured, will sell for a price suffi- 


cient to indemnify hira for his expenses, and to leave the 
customaiy profit on his capital. There is, however, a good 
deal of risk in an adventure of this sort : were the fashion 
to change while the articles are in preparation, it might be 
impossible to get them disposed of, except at a considerable 
loss ; or, were new facilities given in the interim to the 
commerce with countries whence similar articles might be 
procured, or any discovery made by others which diminished 
the cost of their production, their price would certainly fall, 
and the speculation be unprofitable. But, how singular 
soever, it will be found that miscalculations and gluts are 
more frequently produced by an increase than by a decline 
in the demand for produce. Suppose that, owing to the 
opening of new markets, to a change of fashion, or to 
any other cause, the demand for hardware were suddenly in- 
creased : the consequences of such increased demand would 
be, that its price would immediately rise, and that the 
manufacturers, and those having stocks on hand, would 
realize comparatively high profits. But, unless monopolies 
prevent or counteract the influence of competition, the rate 
of profits cannot continue for any considerable period higher 
or lower in one employment than in others. As soon, there- 
fore, as this rise in the price of hardware had taken place, ad- 
ditional capital would be employed in its production. Those 
engaged in the trade would endeavour to extend their busi- 
ness by borrowing fresh capital ; while some of those 
encased in other businesses would witlidraw from them, and 
enter into it. Unluckily, however, it is next to certain that 
this transfer of capital would not stop at the point when it 
would sufiice to produce the additional supply of hardware 
at the old prices, but that it would be carried so much 
farther as to produce a glut, and a consequent revulsion. 
A variety of causes conspire to produce this effect : the 
advantages which any class of producers derive from an 
increased demand for their peculiar produce, are uniformly 
exaggerated, as well by that portion of themselves who are 
anxious, in order to improve their credit, to magnify their 


gains, as by those engaged in other employments. The 
adventurous and sanguine, who are particularly disposed to 
take omne ignotum pro magnijico^ crowd into a business which 
they readily believe presents the shortest and safest road to 
wealth and consideration ; at the same time that many of 
that generally numerous class who have their capitals lent 
to others, and are waiting until a favourable opportunity 
occurs for vesting them in some industrious undertaking, 
are tempted to follow the same course. It occurs to few, 
that the same causes which impel one or two to enter into 
a department that is yielding comparatively high profits, 
are most probably impelling thousands. Confident in his 
own good fortune, the adventurer leaves a business to which 
he had been bred, and with which he was well acquainted, 
to enter as a competitor on a new and untried arena ; while 
those already engaged in the advantageous business stretch 
their credit to the utmost, to acquire the means of extend- 
ing their concerns, and of increasing the supply of the 
commodity in unusual demand. The result, that every 
unprejudiced observer would anticipate, almost invariably 
takes place. A disproportionate quantity of capital being 
attracted to the lucrative business, a glut of the market, 
and a ruinous depression of prices, unavoidably follow. 

Those who investigate the history of industry, in this or 
any other ountry, will find, that a period of peculiar pros- 
perity in any one branch is the almost uniform harbinger 
of mischief. If we turn, for example, to the history of agri- 
culture, the alternation between periods of high prices and 
great agricultural prosperity, and of low prices and great 
agricultural distress, is so striking, that it cannot fail to 
arrest the attention of every one. The high prices of 1800 
and 1801 gave an extraordinary stimulus to agricultural 
industry. Nearly double the number of acts of parliament 
were passed in 1 802 for the enclosure and drainage of land 
that had been passed in any previous year ; and a consi- 
derable extent of old land was at the same time subjected 
to the plough. This extension of cultivation, co-operating 


with the improvements that were then entered upon and 
completed, and with favourable harvests, increased the 
supply of corn so much, that, in 1804, prices sunk consider- 
ably below their previous level ; and an act was then passed, 
in consequence of the representations made by the agricul- 
turists of their distressed condition, granting them additional 
protection against foreign competition. The high prices of 
1810, 1811, 1812, and 1813, had a precisely similar result. 
They attracted so much additional capital to the land, and 
occasioned such an extension of tillage, that we grew, in 1812 
and ]813, an adequate supply of corn for our consumption. 
And, under such circumstances, it is certain that the price 
of corn must inevitably have fallen, in consequence of the 
unusually abundant harvest of 1814, though the ports had 
been entirely shut against importation from abroad. 

The history of the West India trade may also be referred 
to for convincing proofs of the truth of this principle. The 
devastation of St. Domingo by the Negro insurrection, 
which broke out in 1792, by first diminishing, and in a 
very few years entirely annihilating, the supply of about 
115,000 hhds. of sugar, which France and the Continent 
had previously drawn from that island, occasioned an ex- 
traordinary rise of prices, and gave a proportional encou- 
ragement to its cultivation in other parts. So powerful 
was its influence in this respect, that Jamaica, which, at an 
average of the six years preceding 1799, had exported only 
83,000 hhds., exported in 1801 and 1802 upwards of 286,000, 
or 143,000 a-year! But the duration of this prosperity was 
as brief as it was signal. The rise of price which produced 
such effects in the British islands, occasioned a similar, 
though less rapid, extension of cultivation in tbe colonies 
of the continental powers. The increased supplies of sugar 
and coffee that were in consequence obtained from Cuba, 
Porto-Rico, Martinique, Guadaloupe, Brazil, &c., became, 
in no very long time, not only sufficient to fill up the vacuum 
caused by the cessation of the supplies from St. Domingo, 
but actually to overload the continental market. The great 


foreign demand for British plantation sugar, which had been 
experienced after the destruction of the St. Domingo trade, 
gradually diminished until 1805 or 1806, when it almost 
entirely ceased ; and the whole extra quantity, raised in 
consequence of that demand, being thrown upon the homo 
market, its price, which had been 663, a cwt. in 1798, ex- 
clusive of duty, fell, in 1 806, to 34s ; a price which the Com- 
mittee that was then appointed by the House of Commons 
to inquire into the distresses of the planters, states, was 
not only insufficient to yield them any profit, but even to 
indemnify them for their actual outlay. And we may add, 
that, owing to the ill-advised measures which were soon 
after adopted for creating a forced demand for sugar, by 
substituting it instead of barley in the distillery, its supply 
was prevented from being diminished in proportion to the 
diminution of the effective demand ; so that, some short 
intervals only excepted, the planters were long after involved 
in difficulties.'- 

The history of the silk-trade, of distillation, and, indeed, 
of every branch of industry, furnishes but too many proofs 
of the constant operation of this principle. The greater and 
more signal the peculiar prosperity of any one department, 
the greater, invariably, is the subsequent recoil. Such an 
increased demand for any commodity as would raise its price 
10 per cent above the common level, would certainly make 
it be produced in excess, and would in consequence occasion 
a revulsion. But were the price to rise 80 or 40 per cent 
above the common level, the temptation to employ addi- 
tional capital in its production would be so very great, that 
the revulsion would both take place sooner, and be incom- 
parably more severe. 

Revulsions of the sort now described will necessarily 
occur, to a greater or less extent, under all systems of public 
economy. Perhaps, however, there is nothing that would 
tend so much to lessen their frequency and violence as a 

^ Spence on the " Distresses of the West India Planters," p. 7-26. 


determination on the part of government to withhold all 
relief, except in exti*eme cases, from those who have the 
misfortune to be involved in them. It must, indeed, be 
acknowledged that this seems, at first sight, a harsh doc- 
trine ; but, on examination, it will be found to be the only 
safe and really practicable line of conduct that government 
can follow. Some most objectionable restrictions and prohi- 
bitions originated in government stepping out of its proper 
province and interfering to relieve those who had got them- 
selves entangled in difficulties. Much of the industry of 
this and other countries was consequently placed on an 
insecure foundation ; and, notwithstanding the reforms that 
have been effected, a good deal is still in that situation. The 
natural responsibility under which every man should act, 
was weakened in the case of large classes of producers, who 
became less considerate because of their trusting to the sup- 
port usually afforded by government in the event of their 
speculations giving way. Were it possible, indeed, to grant 
such assistance without injury to the rest of the community, 
none w^ould object to it; but as this cannot be done, it would 
appear, not only that sound policy, but also that real 
humanity, would dictate the propriety of its being systema- 
tically withheld. 

The establishment of a free commercial system would 
be the next best thing that could be done to prevent 
improvident speculations. Under such a system, nations 
would engage only in those branches of industry for the 
prosecution of which they had some natural or acquired 
advantage, and which would, in consequence, be compara- 
tively secure against those unfavourable contingencies that 
are always affecting businesses fenced round with restric- 
tions. In illustration of this statement, we may observe, 
that foreign silk goods, that were formerly either prohibited, 
or charged with an oppressive duty, are at present admitted 
under a moderate duty of 15 per cent ad valorem; and we 
now export supplies of all those mixed fabrics of wool and 
silk, and of gloves and hosiery, in the production of which 



we have an advantage ; at tlie same time that the greater 
part of our demand for fancy and other descriptions of light 
silk goods is supplied by the foreigner. If, on the one 
hand, therefore, the demand for silks should, through a 
change of fashion, or any other cause, suddenly increase, 
the competition of the foreign manufacturers will prevent 
prices attaining any very extravagant height, and will 
thereby prevent the inordinate extension of the manufac- 
ture, in the first place, and its subsequent recoil; and if, 
on the other hand, the demand for silks in this country 
happen to decline, the various foreign markets resorted to 
by our manufacturers will give them the means of disposing 
of their surplus goods at a small reduction of price com- 
pared to what would take place were they confined to the 
home market. 

This reasoning is consistent with the most comprehensive 
experience. Restrictions and prohibitions are uniformly 
productive of uncertainty and fluctuation. Every artificial 
stimulus, whatever may be its momentary effect on the de- 
partment of industry to which it is applied, is immediately 
disadvantageous to others, and ultimately injurious even to 
that which it was intended to promote. No arbitrary regu- 
lation, no act of the legislature, can add any thing to the 
capital of the country; it can only force it into artificial 
channels. And, after a sufticient supply has flowed into 
them, a reaction must commence. There can be no foreign 
vent for their surplus produce; so that, whenever changes of 
fashion occasion a falling ofl" in the demand, the warehouses 
are filled with commodities which, in a state of freedom, 
would not be produced. The ignorant and the interested 
always ascribe such gluts to the employment of machinery, 
or to the want of sufiicient protection against foreign com- 
petition. The truth is, however, that they are most fre- 
quently the results of an artificial and exclusive system, by 
which the natural and healthy state of the public economy 
is vitiated and deranged. 



Population proportioned to the Means of Subsistence — Moral Restraint 
— Capacity of the Principle of Population to repair the Ravages of 
Plagues and Famines — Comparative Increase of Population in New 
and Old-settled Countries — Law of Increase a poioerful Incentive to 
Industry — Promotes the Civilisation and Happiness of Mankind — 
Practice of Infanticide — Foundling Hospitals. 

The circumstances most favourable for the production of 
wealth being thus traced and exhibited, we shall now shortly 
investigate those that appear to determine the increase and 
diminution of man himself. 

From the remotest period down to our own times, it Avas 
the policy of legislators to give an artificial stimulus to 
population, by encouraging early marriages, and bestowing 
rewards on those who brought up the greatest number of 
children.^ But the mischievous nature of such interfer- 
ences has been shown by Mr Malthus ; who, though with- 
out any claim to the discovery of the tendency of population 
to keep up with or to outrun the means of subsistence, was 
certainly the first to establish it by an extensive induction 
of facts, and to point out some of its more important effects. 
His researches have made it manifest, that every increase 
in the numbers of a people, occasioned by artificial expe- 

' By a singular contradiction, at the very moment that the Roman laws 
authorised the exposure of infants, and vested fathers with the power to 
decide whether they should bring up their children, the censors were in- 
structed to impose a tax {ces tixorium) on bachelors ; and different laws were 
passed, bestowing various privileges upon those who reared the greatest 
number of children. The famous Lex Papia Poppcea, (so called from the 
consuls M. Papius Mutilus and Q,. Poppajus Secundus, by whom it was 
introduced,) enacted during the reign of Augustus, exempted such Roman 
citizens as had three children from all public charges and contributions. — 
Terasson', " //J*<oi>t' de la Jurbpnidincf Romaine," p. 5f>. 


clients, and which is not either preceded or accompanied by 
a corresponding increase of the means of subsistence, can be 
productive only of misery, or of increased mortahty ; that 
the difficulty never is to bring human beings into the world, 
but to feed, clothe, and educate them when there; that 
mankind do every where increase their numbers, till their 
multiplication is restrained by the difficulty of providing 
subsistence, and the poverty of some part of the society; 
and that, consequently, instead of attempting to strengthen 
the principle of increase, we should rather endeavour to 
strengthen the principles by which it is controlled and 

If the efforts most governments have made to increase 
population were not positively pernicious, it is pretty evi- 
dent that they were, at least, uncalled-for and unnecessary, 
Man does not require any adventitious inducement to enter 
into matrimonial connexions. He is impelled to engage in 
them by one of the most powerful instincts implanted in 
his nature. Still, however, this instinct or passion is, in 
civilised communities, controlled in a greater or less degree 
by prudential considerations. To occasion a marriage, it is 
not always enough that the parties should be attached to 
each other. The obligation to provide for the children that 
may be expected to spring from it, is one that cannot fail 
to awaken the forethought, and to influence the conduct, of 
all but the most improvident and thoughtless. If the situa- 
tion of those who might be disposed to enter into a matri- 
monial alliance be such as to preclude all reasonable expec- 
tation of their being able to bring up and educate their 
children, without exposing themselves to privations, or to 
the risk of being cast down to a lower place in society, they 
may, not improbably, either relinquish all thoughts of form- 
ing a union, or postpone it till a more convenient opportunity. 
No doubt, there are very man 3^ individuals in every country 
unaffected by such considerations, and who, seeing the 
future through tiie deceitful medium of the passions, are 
not deterred from gratifying their inclinations by any fear 


of the consequences. Others, however, are more prudent ; 
and it is abundantly certain, that the greater number of 
persons in the more elevated stations of life, as well as of 
those who are peculiarly ambitious of rising in the world, 
and those of all ranks who have learned to look to the con- 
sequences of their actions, are invariably influenced, to 
some extent or other, by the circumstances alluded to. 
Hence, in civilised countries, the proportion of marriages to 
the population may fairly be expected, on general grounds, 
to depend, in a considerable degree, on the facility of 
acquiring subsistence, or of bringing up a family : and 
experience shows that such is the case ; for it is found, 
that where food and other accommodations are abundant, 
marriages are at once early and numerous, and conversely. 
" Partout," says Montesquieu, " oil il se trouve une place oil 
deux personnes pen vent vivre commodement, il se fait un 
mariage. La nature y porte assez lorsqu'elle n'est point 
arretee par la diiBculte de la subsistance." ^ The same 
principle has been laid down by Smith : — " The demand for 
men," says he, " like that for any other commodity, neces- 
sarily regulates the production of men, quickens it when it 
goes on too slowly, and stops it when it advances too fast. 
It is this demand which regulates and determines the state 
of population in all the different countries of the world — in 
North America, in Europe, and in China; which renders 
it rapidly progressive in the first, slow and gradual in the 
second, and altogether stationary in the last."" ^ The most 
comprehensive observation confirms the truth of this state- 
ment. Those who inquire into the past and present state 
of the world, will find that the population of all countries 
has been principally determined by their means of subsis- 
tence. Whenever these have been increased, population 
has also been increased, or been better provided for ; and 
when they have been diminished, the population has been 

' " Esprit de Loix," liv. xxiii. cap. 10. 
2 « Wealth of Nations," p. ^6. 


worse provided for, or has sustained an actual diminution 
of numbers, or both effects have followed. 

But notwithstanding the influence of prudential consider- 
ations, or of the checks to marriage from the fear of not being- 
able to provide for a family, the principle of increase is so 
very strong, as not only to keep the population of the most 
favoured countries, or of those in which industry is most 
productive, on a level with the means of subsistence, but to 
give it a tendency to exceed them. This arises partly and 
principally from the little attention paid by most indivi- 
duals to whatever does not beoin to be felt till some future 
and undefined period — a circumstance which leads them to 
engage in improvident unions, at the same time that it 
hinders them from making adequate provision, even when 
they have the means, against sickness and old age ; partly 
from the violence of passion, occasionally subverting the 
resolutions of those who are most considerate ; and partly 
from accident or misfortune, disappointing the expectations 
of those who married with a reasonable prospect of being 
able to support themselves and their families. The number 
of the poor may be diminished, but it were vain to expect 
that they should ever entirely " cease out of the land." 
Even in those countries that are making the most rapid 
advances, not a few of the inhabitants have to maintain a 
constant struggle with poverty, and are but insufficiently 
supplied with the articles indispensable for the support of a 
family. But when the natural tendency to increase is so 
very powerful, it is not easy to believe that the attempts 
to promote it by artificial stimuli can be otherwise than 
pernicious. Subsistence is the grand desideratum. If it 
be supplied in sufficient abundance, population may safely 
be left to take care of itself. Instead of there being the 
least risk of its falling below the means of subsistence, the 
danger is all on the other side. There are no limits to the 
prolific power of plants and animals. They are endued with 
a principle which impels them to increase their numbers 
beyond the nourishment prepared for them. The whole 


surface of the earth might be gradually covered with shoots 
derived from a single plant ; and though it were destitute of 
all other inhabitants, it might, in a few ages, be replenished 
from a single nation, or even from a single pair. 

" Throughout the animal and vegetable kingdoms," says 
Mr Malthus, " nature has scattered the seeds of life with a 
most profuse and liberal hand : but has been comparatively 
sparing in the room and nourishment necessary to rear 
them. The. germs of existence contained in this earth, if 
they could freely develope themselves, would fill millions of 
worlds in the course of a few thousand years. Necessity, 
that imperious, all-pervading law of nature, restrains them 
within the prescribed bounds. The race of plants and the 
race of animals shrink under this great restrictive law, and 
man cannot by any efforts of reason escape from it."^ 

Wars, plagues, and epidemics, those "terrible correc- 
tives," as Dr Short justly terms them, of the redundance 
of mankind, set the operation of the principle of population 
in the most striking point of view. They lessen the number 
of the inhabitants, without, in most cases, proportionally 
lessening the capital that feeds and maintains them. And 
the increased power over subsistence that is thus acquired 
by the survivors, accelerates the period of marriage and 
the rate of increase. The Netherlands, which has been 
so often the seat of the most destructive wars, has, after a 
respite of a few years, always appeared as rich and populous 
as ever. Notwithstanding the massacres of the Revolution, 
and the sanguinary wars in which France was incessantly 
engaged for more than twenty years, her population was 
considerably augmented in the interval between the expul- 
sion and the restoration of the Bourbons in 1815. The 
abolition of the restraints previously laid on internal com- 
merce, of the feudal privileges of the nobles, and of several 
oppressive and unequal burdens, improved the condition and 
stimulated the industry of the people. The means of sub- 

' " Essay on Population," vol. i. p. ?,. .5th ed. 


sistence were thus considerably increased ; at the same time 
that the continued drafts for the military service, by lessen- 
ing the supply of labour in the market, and raising the rate 
of wages, gave such a stimulus to the principle of increase, 
that at the close of the war the population was supposed to be 
about three millions g-reater than in 1 789. The establishment 
of a tyrannical or vicious system of government, by para- 
lysing industry and diminishing the supplies of food and 
other accommodations, necessarily occasions a corresponding 
diminution in the number of inhabitants. But an accidental 
calamity, such as a war or a pestilence, how afflicting 
soever to humanity, does not appear to exercise any lasting 
influence over population ; though the void, occasioned by 
its occurrence, be not so rapidly filled up as some have ima- 
gined. The bigotry and oppressiveness of the government, 
and the want of security and freedom, and not the plague, 
are the real causes of the depopulation of Turkey, Persia, 
and other Mohammedan countries. 

The progress of population in countries with different 
capacities for providing food and other accommodations, 
illustrates, at once, the operation of the law of increase, and 
the degree in which it is modified by a change of circum- 
stances. In newly-settled countries, and especially in those 
which have a large extent of fertile and unoccupied land, 
population invariably increases with extraordinary rapidity. 
The settlers in such countries bring with them the arts 
practised in others in a comparatively advanced state of 
civilisation ; and as they apply them to the culture of the 
best soils, they necessarily obtain a very large return. 
Each cultivator in such societies has not only a great deal 
more corn and other raw produce than he can consume ; 
but, as this produce is raised at a much less cost than in 
old settled countries, where inferior soils are under culti- 
vation, he is able to exchange part of it, with the greatest 
advantage, for the manufactured goods of the latter ; so that 
the society rapidly increases in wealth, and has a propor- 
tionally great demand for labour. There is, consequently, 


in such countries, every motive to form early marriages ; 
while the comfortable situation of the parents enables 
them to bestow due attention on the rearing of their chil- 
dren, and lessens the mortality so destructive in the early 
period of life. 

The truth of what has now been stated is proved by the 
rapid progress made by the Greek colonies in antiquity, 
which, in no long time, equalled, and in some cases far 
surpassed, their mother cities in population, power, and im- 
portance ; and it is still more convincingly proved by the 
extraordinary progress of the colonies founded in modern 
times in America and Australia. The population of some 
of the states of North America has, after making every 
reasonable allowance for immigrants, continued for upwards 
of a century to double in evei'y twenty, or, at most, five- 
and-twenty years ! And there seems little reason to doubt, 
had the supplies of food and other articles necessary for the 
accommodation of man been increased in a more rapid pro- 
portion, that population would have kept pace with their 
progress. But without entering upon any hypothetical 
reasonings as to what might have been the progress of popu- 
lation in the United States under other circumstances, its 
actual increase shows that when the means of subsistence 
are supplied in sufficient abundance, the principle of increase 
is powerful enough to make population increase in a geome- 
trical proportion, or in the ratio of the numbers 1, 2, 4, 8, 
16, 82, 64, 128, 256, &c., the term of doubling being five- 
and-twenty years. 

But the principle, whose operation under favourable cir- 
cumstances has thus developed itself, is, in the language of 
geometers, a constant quantity. The same power that 
doubles the population of Kentucky, Illinois, and New 
South Wales every five-and-twenty years, exists every 
where, and is equally energetic in England, France, and 
Holland. Man, however, is not the mere unreasoning slave 
of instinct. The facility with which he can command supplies 
of food and other accommodations in the countries now 


referred to is widely different; and this ditierence has a cor- 
responding influence over the conduct of the bulk of tlieir 
inhabitants. In densely-peopled countries, such as Britain, 
France, and Holland, the more fertile lands having been, 
long since, brought under tillage, recourse must now be had 
to those of inferior quality, requiring greater outlays of 
capital and labour to make them yield the same quantity 
of produce. This decrease in the fertility of the land may, 
no doubt, be, and indeed very frequently is, countervailed to 
a greater or less extent by the influence of improvements. 
But this influence is, uniformly, overcome in the end ; 
bad or inferior lands are taken into cultivation ; and the 
ability to increase supplies of food, after population be- 
comes pretty dense, as rapidly as when it is comparatively 
thin, being diminished, a corresponding check is given to 
the increase of population ; so that, instead of being doubled 
in five-and-twenty years, it may not be doubled in less than 
fifty or a hundred, or upwards. Such, however, is the wise 
arrangement of Providence, that this change in the circum- 
stances under which they are placed, never fails to bring 
along with it a corresponding change in the habits of the 
people, so that their numbers are proportioned to the greater 
difficulty experienced in procuring supplies of food, not by 
an increase of mortality, but by a diminution of births. The 
prudential considerations, previously alluded to, gain new 
strength, and exhibit their powerful influence in a still more 
striking manner, according as the circumstances under which 
a people is placed become less favourable for tlieir multipli- 
cation. In the United States every industrious individual 
who has attained a marriageable age may enter into the 
matrimonial contract without fear of the consequences ; the 
largest family being there an advantage rather than other- 
wise. But such is not the case here ; nor will it be the case in 
America after she has become comparatively populous. And 
hence the diflerent habits of our people ; and the fact that 
marriages in England, and generally throughout Europe, 
are mostly deferred to a later period than in newly-settled 


countries, and that a much larger proportion of the popula- 
tion find it expedient to pass their lives in a state of celibacy. 
And it is fortunate that such is the case, and that the 
good sense of the people, and their laudable desire to pre- 
serve their place in society, have made them control the 
violence of their passions. INIan cannot increase beyond 
the means of subsistence provided for his support : and it is 
obvious, that if the tendency to multiplication, in countries 
advanced in the career of civilisation, and where there is, 
in consequence, an increased diflSculty of providing addi- 
tional supplies of food, were not checked by the prevalence 
of moral restraint, or of prudence and forethought, it would 
be checked by the prevalence of vice, misery, and famine. 
There is no alternative. The population of every country 
has the power, supposing food to be adequately supplied, to 
go on doubling every five-and-twenty years. But as the 
limited extent and limited fertility of the soil render it im- 
possible to go on permanently producing food in this ratio, 
it is obvious, unless the passions were moderated, and a 
check given to the increase of population, that the standard 
of human subsistence would be reduced to the lowest assign- 
able limit ; and that famine and pestilence would be per- 
petually at work to relieve the population of wretches born 
only to be starved. 

The only criterion, then, of a beneficial increase in the 
population of a country, is an increase in the means of its 
subsistence. If these means be not increased, an increase 
in the number of births can be productive only of increased 
misery and mortality. " Other circumstances being the 
same," says Malthus, " it may be affirmed, that countries 
are populous according to the quantity of food they can 
produce or acquire ; and happy, according to the liberality 
with which this food is divided, or the quantity which a 
day's labour will purchase. Corn countries are more popu- 
lous than pasture countries, and rice countries more populous 
than corn countries. But their happiness does not depend 
either upon their being more or less densely peo[)led, upon 


their poverty or their riches, their youth or their age, but 
on the proportion which the population and the food bear 
to each other." ^ 

Mr Malthus did not lay sufficient stress on the influence 
of the circumstances under which population is placed, and 
of the prudential considerations which they invariably 
bring along with them, in determining the rate of in- 
crease ; and they have been all but overlooked by several of 
his followers. Hence the theory of population gave rise 
for a while to the most unreasonable fears and unfounded 
conclusions. It was said to be at variance with the best- 
established doctrines as to the goodness of the Deity, and 
to oppose an insuperable barrier to any lasting improvement 
in the condition of the bulk of society. Population, it was 
aiErmed, invariably rises to the highest level of subsistence, 
so that in the end the greatest improvements merely leave 
a greater instead of a smaller number of wretched families. 
But the principle of increase is not the bugbear, the invin- 
cible obstacle to all real improvement, supposed by those who 
put forth such statements. 

It is always a difficult matter suddenly to change the 
habits of a people with respect to marriage ; and though 
they are, no doubt, influenced by every change in their con- 
dition, a vis inertice has to be overcome, that usuallyprevents 
them from chanwino- to the extent that circumstances chano;e. 
Suppose that, in consequence of the introduction of some 
new species of vegetable, some new or more powerful ma- 
nure, or some other cause, the average annual produce of 
our agriculture were doubled, this would certainlj' increase 
the number of marriages ; but there is no reason to think 
they would be doubled ; and though they were for a year or 
two immediately following the increase, they could hardly 
be so for more. But whatever might be the influence of the 
change on marriages, the population could not be doubled 
for very many years ; and a period of at least eighteen or 

1 "Essay on Population," vol. ii. p. 214. 


twenty years would have to elapse before the stimulus given 
by the improved condition of the population could bring a 
single fresh labourer into the field. It is clear, therefore, 
that during all this lengthened period, the labouring class 
would enjoy an increased command over necessaries and con- 
veniences ; their notions of what is required for their comfort- 
able and decent subsistence would consequently be raised ; 
and they would acquire those improved tastes and habits 
that are not the hasty product of a day, a month, or a year, 
but the late result of a long series of continuous impressions. 
There would, in consequence, be a greater prevalence of 
moral restraint ; and the increase of population would be 
adjusted, so as permanently to maintain the bulk of the 
people in possession of their augmented comforts. 

A fact mentioned by Sussmilch, and refen-ed to in the 
former editions of this work, has been much relied on by 
those who contend that population is always sure not merely 
to increase, but to increase exactly in the same proportion 
that the means of subsistence are augmented. Sussmilcli 
states, that the marriages in a district of Prussia amounted, 
during the six years ending with 1708, to 6,082 a-year. In 
1709 and 1710 this district was visited by a severe plague, 
which is said to have swept oft' about a third prrt of the 
population ; and yet, notwithstanding this excessive mortal- 
ity, in 171 J, the first year after it had subsided, the mar- 
riages amounted to 12,028, or to nearly double their amount 
previously to the pestilence ! This is a greater immediate 
increase than we should have anticipated; and, perhaps, were 
we acquainted with all the facts, there might be circum- 
stances to explain it. But the number of marriages imme- 
diately fell off; and they did not again rise to their amount 
previously to the plague, till about 1750, or forty years after 
it had laid waste the district.^ It is reall}', therefore, the 
greatest imaginable error to suppose that any sudden and 
considerable diminution of the population can be rapidly 

^ See Sussmilch's table in Malthus on Population, 5th ed., vol. ii. p. 170. 


filled up. This can only be effected in a long course of 
years ; and during that period, the comforts of the inhabi- 
tants being increased, they acquire improved tastes and 
habits, so that the population does not again approach so 
near the level of subsistence. 

That the tendency to increase is not inconsistent with 
the improvement of society, is a fact as to which there can 
be no dispute. Without going back to antiquity, let any 
one compare the state of this or of any other European 
country 500 or 1 00 years ago, with its present state, and he 
will be satisfied that prodigious advances have been made ; 
that the means of subsistence have increased more rapidly 
than the population ; and that the labouring classes are 
now generally in the possession of a great variety of con- 
veniences and luxuries that were formerly not enjoyed 
even by the richest lords : and it would be unphilosophical 
to suppose that the case should be different in time to come ; 
that those circumstances which have hitherto confined the 
increase of population within proper limits, and occasioned 
the improvement of society, should lose their influence, or 
that society should cease to advance. 

In point of fact, however, the principle of increase is not 
merely consistent with the continued improvement of the 
bulk of society, but is itself the great cause of this improve- 
ment, and of the wonderful progress made in the arts. Not 
only are industry and forethought natural to man, but his 
advancement depends on their culture and improvement. 
We should infallibly die of hunger and cold, did we not 
exert ourselves to provide food and clothes. But could 
any thing be more absurd than to object to those who simply 
state a fact of this sort, that they are impeaching the order 
of Providence ? The powers and capacities implanted in 
man seem capable of an almost indefinite improvement; but 
instinct did not direct him in their use. The more remote 
the epoch to which we carry our researches, the more bar- 
barous and uncomfortable do we find his condition. Pressed, 


on the one side, by the strong hand of necessity, and stimu- 
lated, on the other, by a desire to rise in the world, our 
powers have been graduall}' developed according as observa- 
tion or accident tauoht us the best method of effectino^ our 
ends. Wa7it and ambition are the powerful springs that 
gave the first impulse to industry and invention, and which 
continually prompt to new undertakings. It is idle to 
suppose that men will be industrious without a motive ; 
and though the desire of bettering our condition be a very 
powerful one, it is less so than the pressure of want, or the 
fear of fallino^ to an inferior station. Were this not the 
case, invention and industry would be exhibited in the same 
degree by the heirs of ample fortunes, as by those educated 
in humbler circumstances and compelled to exert themselves. 
But every one knows that the fact is not so. The peerage 
cannot boast of having given birth to an Arkwright, a Watt, 
or a Wedgwood. Extraordinary exertions, whether of mind 
or body, are rarely made by those who are able, without 
their assistance, to live comfortably. The principle of in- 
crease has, however, prevented this from ever becoming the 
condition of a large portion of mankind, and unceasingly 
applies the most powerful stimulus — i\i.e durisurgens in rebus 
egestas — to industry and invention. Much, indeed, of the 
effect usually ascribed to the desire of rising in the world, 
may be traced to the operation of this principle. It is not 
solely on the lower classes, nor by the actual pressure of 
necessity, that it exerts its beneficial influence. At that 
period of life when habits are formed, and man is best fitted 
for active pursuits, a prospect is presented to every one, 
whatever his rank or station, who is either married, or in- 
tends to marry, of an indefinite increase of his necessary 
expenses ; and unless his fortune be very large indeed, he 
finds that economy and industry are virtues which he must 
not admire merely, but practise. With the lower classes 
the existence of present, and with the middle and upper 
classes the fear of future want, are the principal motives that 
stimulate intelliirence and activitv. The desire to maintain 


a family in respectability and comfort, or to advance their 
interests, makes the spring and summer of life be spent, 
even by the moderately wealthy, in laborious enterprises. 
And thus it is that, either for ourselves, or for those with 
whose welfare our own is inseparably connected, the prin- 
ciple of increase is perpetually urging individuals to new 
efforts of skill and economy. Had this principle not existed, 
or been comparatively feeble, activity would have been 
superseded by indolence, and men, from being enterprising 
and ambitious, would have sunk into a state of torpor; for in 
that case, every additional acquisition, whether of skill or 
wealth, would, by lessening the necessity for fresh acquisi- 
tions, have infallibly occasioned a decline in the spirit of 
improvement ; so that, instead of proceeding, as it became 
older, with accelerated steps in the career of discovery, the 
fair inference is, that society would either have been entirely 
arrested in its progress, or its advance rendered next to 
imperceptible. But it is so ordered that, whatever may at 
any time occasion a decline of the inventive powers, must 
be of an accidental and ephemeral character, and cannot 
originate in a diminution of the advantafjes resultino- from 
their exercise. Even in the most improved societies, the 
principle of increase inspires by far the largest class — those 
who depend on their labour for the means of support — with 
all those powerful motives to contrive, produce, and accu- 
mulate, that actuated the whole community in more early 
ages. No people can rest satisfied with acquisitions already 
made. The increase of population, though generally sub- 
ordinate to the increase of food, is always sufficiently power- 
ful to keep invention on the stretch, rendering the demand 
for fresh inventions and discoveries as great at one time as 
at another, and securing the forward progress of the species. 
A deficiency of subsistence at home leads to migrations to 
distant countries ; and thus not only provides for the 
gradual occupation of the earth, but carries the languages, 
arts, and sciences of those who have made the farthest ad- 
vances in civilisation to those that are comparatively bar- 


barous. It may perhaps, happen, though v,e doubt whether 
it be possible to specify any instance of the kind, that popu- 
lation should continue, for a while, so far to outrun produc- 
tion, that the condition of society is changed for the worse. 
But, if so, the evils thence arising will bring with them a 
provision for their cure : they will make all classes better 
acquainted with the circumstances which determine their 
situation ; and while they call forth fresh displays of inven- 
tion and economy, they will, at the same time, dignify and 
exalt the character, by teaching us to exercise the prudential 
virtues, and to subject the passions to the control of reason. 

It does, therefore, seem reasonable to conclude, that the 
law of increase, as previously explained, is in every respect 
consistent with the beneficent arrangements of Providence ; 
and that, instead of being subversive of human happiness, 
it has increased it in no ordinary degree. Happiness is not 
to be found in apathy and idleness, but in zeal and activity. 
It depends far more on the intensity of the pursuit than on 
the attainment of the end. The " progressive state" is 
justly characterised by Smith " as being in reality the cheer- 
ful and hearty state to all the difierent orders of society ; 
the stationary is dull, the declining melancholy." But had 
the principle of increase been less strong, the progress of 
society would have been less rapid. While, however, its 
energy is, on the one hand, sufficient to bring every faculty 
of the mind and body into action, it is, on the other, so far 
subject to control, that, speaking generally, its beneficial far 
outweigh its pernicious consequences. 

To suppose, as some have done, that the astonishing im- 
provements in the arts, and the all but immeasurable addi- 
tions that have in consequence been made to the comforts 
and enjoyments of man, would have been equal or greater 
had the principle of increase been less powerful, is, in truth, 
equivalent to supposing, that industry and invention would 
not be aftected by weakening the motives to their exercise, 
and lessening the advantages of which they are productive ! 
There might, perhaps, though that be very doubtful, have 



been less squalid poverty amongst the dregs of the popula- 
tion, had there been no principle of increase; but it is a con- 
tradiction to pretend, had such really been the case, that the 
powers and resources of industry would have been so as- 
tonishingly developed, that scientific investigations would 
have been prosecuted with equal perseverance and zeal, that 
so much wealth would have been accumulated by the upper 
and middle classes, or that the same circumstances which 
impelled society forward in its infancy, should have con- 
tinued, in every subsequent age, to preserve their energy 
unimpaired : and it may well be doubted whether an ex- 
emption from the evils incident to poverty would not be 
dearly purchased, even by the lowest classes, by the sacri- 
fice of the hopes and fears attached to their present condi- 
tion, and the gratification they now reap from successful 
industry, economy, and forbearance. 

If these conclusions be well founded, it follows that the 
schemes proposed in the ancient and modern world for 
directly repressing population, besides being, for the most 
part, atrocious and disgusting, have really been opposed to 
the ultimate objects their projectors had in view. Could we 
subject the rate of increase to any easily applied physical 
control, few, comparatively, among the poorer classes, would 
be inclined to burden themselves with the task of providing 
for a family ; ' and the most effective stimulus to exertion 
being destroyed, society would gradually sink into apathy 
and languor. It is, therefore, to the principle of moral re- 
straint, or to the exercise of the prudential virtues, that we 
should exclusively trust for the regulation of the increase 
of population. In an instructed society, where there are no 
institutions favourable to improvidence, this check is suffi- 
ciently powerful to confine the progress of population within 
due limits, at the same time that it is not so powerful as to 
hinder it from uniformly operating as the strongest incen- 
tive to industry and economy. 

' The readiness with which the lower classes semi their children to found- 
ling hospitals seems a sufficient proof of this. 

ropuLATiox. 24;] 

Those who wish to enter more at large into the discussion 
of the interesting topics now briefly touclied upon, would 
do well to consult the second volume of the valuable work of 
Dr Sumner, Archbishop of Canterbury, on the " Records 
of the Creation." This learned prelate has not endeavoured 
" to show that the human race is in the best conceivable 
condition, or that no evils accompany the law which regu- 
lates their increase ; but that this law makes, upon the 
whole, an effectual provision for their general welfare, and 
that the prospective wisdom of the Creator is distinguish- 
able in the establishment of an ordinance which is no less 
beneficial in its collateral efl:ects, than it is efficacious in 
accomplishing the first and principal design of its enact- 
ment." ' 

" If then," says the Archbishop in another place, " the 
wisdom is to be estimated by the fitness of the design to its 
purpose, and the habitual exercise of the energies of mankind 
is allowed to be that purpose, enough has been said to con- 
firm the original proposition. The Deity has provided, that 
by the operation of an instinctive principle in our nature, 
the human race should be uniformly brought into a state in 
which they are forced to exert and improve their powers : 
the lowest rank to obtain support ; the one next in order to 
escape from the difficulties immediately beneath it ; and all 
the classes upwards, either to keep their level, while they are 
pressed on each side by rival industry, or to raise themselves 
above the standard of their birth by useful exertions of their 
activity, or by successful cultivation of their natural powers. 
If, indeed, it were possible that the stimulus arising from 
this principle should be suddenly removed, it is not easy to 
determine what life would be except a dreary blank, or the 
world except an uncultivated waste. Every exertion to 
which civilisation can be traced, proceeds, directly or indi- 
rectly, from its effects ; either from the actual desire of 
having a family, or the pressing obligation of providing for 

' " Records of the Creation," vol. ii. p. 160. 4th ed. 


one, or from the necessity of rivalling the efforts produced 
by the operation of these motives in others." ' 

However inexplicable it may now seem, it is a fact no less 
true than melancholy, that the practice of infanticide has 
prevailed to a very great extent even in some highly civilised 
countries. It may, indeed, be said to have been general 
throughout the ancient world. The laws of Sparta ordered 
that every child that was either weakly or deformed should 
be put to death. ^ And this practice was not merely legal- 
ised by the savage enactments of a barbarous code, but was 
vindicated by the ablest Greek philosophers. Aristotle, in 
his work on government, does not so much as insinuate a 
doubt of the propriety of destroying such children as are 
maimed or deformed, and carries still farther his " stern 
decisions," as they are gently termed by Dr Gillies.^ Even 
the " divine" Plato did not scruple to recommend the same 
monstrous practices. Thebes alone, of all the Grecian cities, 
seems to have been free from this infamy.* The existence 
of infanticide in Athens is established beyond a doubt, by 
the allusions of the poets, and their descriptions of the pre- 
vailing manners.5 

Every one is aware that a Roman citizen had the unre- 
strained power of life and death over his children, whatever 
might be their age. And there are abundant examples to 
prove that this right was not suffered to fall into disuse, but 
was frequently exercised with the most unrelenting seve- 

' " Records of the Creation," vol. ii. p. 152. 4th ed. 

^ Cragius " de Republica Lacedsemoniorum," lib. iii. cap. 2. 

' Aristotle's " Ethics and Politics," by Dr Gillies, vol. ii. p. 287. 3d edition. 

■* " Travels of Anacharsis," vol. iii. p. 277. Eng. ed. 

•"' Gourofi", "Essai sur I'Histoire des Eufans Trouves," p- 19. 

•^ " Les Romains ae mirent point des bornes a I'empire des peres sur leurs 
enfans ; quelque age qu'ils eussent, et a quelque dignity qu'ils fussent ^lev^s, 
ils e'toient toujours soumis a la correction de leurs peres. Ceux-ci avoient 
droit de les frapper, de les envoyer enchaine's cultiver la terre, de les de'sh^- 
riter, de les vendre comme des esclaves, et meme de leur donner la mort." — 
Terasson, Histoire de la Jurisprudence Romaine, p. .54. 


At the birth of a child the father decided whether he 
should bring it up (tollere) or expose it. But it did not 
always happen that exposed children lost their lives. It 
was common to expose them in public places, where there 
was a chance of their attracting the notice of the benevolent, 
who might be incited to undertake the task of bringing them 
up. The greater number of these unhappy creatures were 
not, however, so fortunate as to fall into the hands of persons 
of this sort. They were declared by law to be the slaves, 
or absolute property, of those by whom they were reared. 
And several were saved from death, not from humane mo- 
tives, but that their foster-fathers might, by mutilating 
their persons, and exhibiting them in the streets, derive an 
infamous livelihood from the alms given them by the pas- 
sengers. This detestable practice seems to have been carried 
on pretty extensively ; and if any thing could, more strik- 
ingly than the practice itself, display the sanguinary man- 
ners of the Romans, it would be the fact, that there is in 
Seneca a lengthened discussion of the question. Whether 
the mutilation of exposed children can be deemed an offence 
against the state ? which is conducted with the greatest 
imaginable coolness, and decided in the negative, upon the 
ground of their being slaves ! " Gallio fecit illam questionem. 
An in expositis Icedi possit respiiblica ? Non potest, inquit. 
An Icedi possit in aliqud sua parte ? Hcec nulla reipublicoe 
pars est ; non in censu illos intenies, non in testamentis.^''^ 

The period when the practice of infanticide was prohibited 
at Rome is not well ascertained ; but the more probable 
opinion seems to be, that it continued till the 374th year 
of the Christian era. The exposure of children was, how- 
ever, practised long afterwards. Constantino made some 
ineffectual efforts to provide for these unfortunates ; but 
their slavery continued till the year 530, when it was 
abolished by an edict of Justinian. 

Infanticide has, most properl}', been made a capital crime 

' " Senerre Controvers," lib. v. rap. .33. 


in all modern states; and to take away the motives to its 
perpetration, and at the same time to provide an asylum 
for such poor children as might be exposed through the 
inhumanity or poverty of their parents, foundling hospitals 
have been very generally established. But there are the 
best reasons for thinking that the influence of these estab- 
lishments has been incomparably more pernicious than 
beneficial. That they have prevented a few eases of infan- 
ticide is, perhaps, true ; but the facility for the disposal of 
children which they afford, weakens the principle of moral 
restraint, and increases the number of illegitimate unions 
and births, at the same time that it occasions a prodigious 
sacrifice of infant life. The mortality in foundling hospitals 
is quite excessive. They open wide their doors for the 
reception of deserted and illegitimate children, but there 
are pauca vestigia retrorsum. In the Foundling Hospital 
at Dublin, of 12,786 children admitted during the six years 
ending with 1797, there were no fewer than ] 2,561 deaths ! 
It appears, says M. de Ohateauneuf, from the official reports, 
that the mortality amongst foundlings at Madrid, in 1817, 
was at the rate of 67 per cent ; at Vienna, in 181 1, it 
amounted to 92 per cent ; at Brussels, at an average of 
the period from 1802 to 1817, it amounted to 79 per cent; 
but in consequence of improvements subsequently adopted, 
it had been reduced in 1824 to 56 per cent. M. de Oha- 
teauneuf adds, that in France, in 1824, about three-fifths^ 
or 60 per cent, of the foundlings perished in \\v% first year of 
their life ! ' and the proportion is not now very materially 
different. In Moscow, of 87,607 children admitted in the 
course of twenty years, only 1,020 were sent out ! ^ 

Such is the appalling mortality in these establishments, 
the total suppression of which would be a signal benefit to 
society. It does not even appear that they lessen the 
practice of infanticide — a result which could not, indeed, be 

^ " Considerations sur les Eufaus Trouves," p. 66. 

^ Book's " Medical .Jurisprudence," p. 1.03. Lond. ed. 


reasonably expected b}'' any one wlio reflects upon their 
operation on the lower class of females. Beckniann men- 
tions that, subsequently to the establishment of an hospital 
for foundlings at Cassel, hardly a year elapsed without some 
children being found murdered, either in that city or its 
vicinity. 1 

The establishment of a foundling hospital in London was 
recommended, no doubt from the most benevolent motives, 
by Addison, in the reign of Queen Anne.^ It was not, 
however, established till 1739. Experience was not long 
in developing its pernicious effects; and in 1760 a total 
change was effected in its constitution by authority of the 
legislature. It then ceased to be a receptacle for foundlings. 
No child whose mother does not personally appear, and who 
cannot satisfactorily answer the questions put to her, is 
received : if, however, the mother can show that she had 
previously borne a good character, and that, owing to the 
desertion of the father, she is unable to maintain the child, 
it is admitted, but not otherwise. As now conducted, there 
does not seem to be much reason for thinking that this 
establishment is productive of any but beneficial effects. 

In London, during the five years ending with 1823, there 
were 151 children exposed ; and the number of illegitimate 
children received into the different workhouses in various 
parts of the city, during the same period, amounted to 
4,668, about a fifth part of whom were maintained by their 
parents. But in Paris, whose population does not amount 
to two-thirds of that of London, there were, in the five 
years now referred to, no fewer than 25,277 children carried 
to the foundling hospitals ! And even this profligacy, and 
consequent waste of human life, is not greater, in propor- 
tion to the population, than is found to prevail at Madrid, 
Vienna, and other large cities where such establishments 
are permitted to exist. 

^ Beckmaiui " on Inventions," vol. iv. p. 456. Eng. ed. 
" "Guardian," No. 105. 


It is stated by M. GourofF, that at Mentz, where there 
was no foundling hospital, 30 children were exposed in the 
interval between 1799 and 181 1. Napoleon, who imagined 
that, by multiplying these establishments, he was increasing 
population, and providing for the future supply of his armies, 
ordered that one should be opened in Mentz, which was 
done accordingly in November 1811. It subsisted till the 
month of March 1815, when it was suppressed by the Grand 
Duke of Hesse-Darmstadt. During the three years and 
four months it had been open, it received 516 children. But 
as time had not been given for the complete formation of 
the vicious habits which such institutions are certain to 
engender, as soon as the hospital had been suppressed, the 
previous order of things was restored, only seven children 
being exposed in the nine following years ! ' 

It is plain, therefore, that these establishments utterly 
fail of accomplishing their object. They do not preserve, 
but destroy myriads of children. Instead of preventing 
crime, they scatter its seeds and spread its roots on all 
sides. There is, however, reason to think that more cor- 
rect opinions are beginning to be entertained on the Con- 
tinent with respect to their real operation. It is difficult, 
indeed, to suppose that they can be allowed to exist much 
longer. And, perhaps, no measure could be suggested that 
would do so much to improve the morals of those among 
whom they are established, and to lessen the frequency of 
crime and the destruction of infant life, as their abolition. 

' " Essai sur I'Histoire des Enfans Trouvds," p. 153. 



Object of Insurance — Calculation of Chances — Advantages of Insurance 
— Amount of Property Insured — Life Insurance, Objections to, and 
Advantages of. 

It is the duty of government to assist, by every means in 
its power, the efforts of individuals to protect their pro- 
perty. Losses do not always arise from accidental circum- 
stances, but are frequently occasioned by the crimes and 
misconduct of individuals ; and there are no means so effec- 
tual for their prevention, when they arise from this source, 
as the establishment of a vigilant system of police, and of 
such an administration of the law as may afford those 
who are injured a ready and cheap method of obtaining 
every practicable redress ; and, as far as possible, of insur- 
ing the punishment of culprits. But in despite of all that 
may be done by government, and of the utmost vigilance 
on the part of individuals, property is always exposed 
to a variety of casualties from fire, shipwreck, and other 
unforeseen disasters. And hence the importance of inquir- 
ing how such unavoidable losses, when they do occur, may 
be rendered least injurious. 

The loss of a ship, or the conflagration of a cotton-mill, 
is a calamity that would press heavily even on the richest 
individual. But were it distributed among several indivi- 
duals, each would feel it proportionally less; and provided 
the number of those among whom it was distributed were 
very considerable, it would hardly occasion any sensible 
inconvenience to any one in particular. Hence the advan- 
tage of combining to lessen the injury arising from the 
accidental destruction of property; and it is the diffusion of 
the risk of loss over a wide surface, and its valuation, that 
forms the employment of those engaged in insurance. 


Though it be impossible to trace the circumstances whicli 
occasion those events that are, on that account, termed 
accidental, they are, notwithstanding, found to obey certain 
laws. The number of births, marriages, and deaths ; the 
proportions of male to female, and of legitimate to illegiti- 
mate births ; the ships cast away ; the houses burned ; and a 
great variety of other apparently accidental events, are yet, 
when our experience embraces a sufficiently wide field, found 
to be nearly equal in equal periods of time ; and it is easy, 
from observations made upon them, to estimate the sum 
which an individual should pay, either to guarantee his 
property from risk, or to secure a certain sum for his heirs 
at his death. 

It must, however, be carefully observed, that no confi- 
dence can be placed in such estimates, unless they are de- 
duced from a very wide induction. Suppose, for example, 
that it is found, that during the present year one house is 
accidentally burned, in a town containing a thousand houses, 
this would aft'ord very little ground for presuming that the 
average probability of fire in that town was as one to one 
thousand ; for it might be found that not a single house 
had been burned during the previous ten years, or that ten 
were burned during each of these years. But supposing it 
were ascertained, that at an average of ten years one house 
had been annually burned, the presumption that one to one 
thousand was the true ratio of the probability of fire would 
be very much strengthened ; and if it were found to obtain 
for twenty or thirty years together, it might be held, for 
all practical purposes at least, as indicating the precise 
degree of probability. 

Besides its being necessary, in order to obtain the true 
measure of the probability of any event, that the series of 
events, of which it is one, should be observed for a rather 
lengthened period, it is necessary, also, that the events 
should be numerous, or of pretty frequent occurrence. 
Suppose it were found, by observing the births and deaths 
of a million of individuals taken indiscriminately from amony- 


the whole population, that the mean duration of human life 
was forty years, we should have but vcr}' slender grounds 
for concluding that this ratio would hold in the case of the 
next ten, twenty, or fifty individuals that are born. Such 
a number is so small as hardly to admit of the operation of 
what is called the law of average. When a large number of 
lives is taken, those that exceed the medium term are bal- 
anced by those that fall short of it ; but when the number is 
small, there is comparatively little room for the principle of 
compensation, and the result cannot, therefore, be depended 

It is found, by the experience of all countries in which 
censuses of the population have been taken with considerable 
accuracy, that the number of male children born is to that 
of female children in the proportion nearly of twenty-two 
to twenty-one. But unless the observations be made on a 
very large scale, this result will not be obtained. If we 
look at particular families, they sometimes consist wholly 
of boys, and sometimes wholly of girls ; and it is not pos- 
sible that the boys can be to the girls of a single family in 
the ratio of twenty -two to twenty-one. But when, instead 
of confining our observations to particular families, or even 
parishes, we extend them so as to embrace a population of 
half a million or upwards, these discrepancies disappear, 
and we find that there is, invariably, a small excess in the 
number of male over female births. 

The false inferences that have been drawn from the 
doctrine of chances, have uniformly almost proceeded from 
generalising too rapidly, or from deducing a rate of proba- 
bility from such a number of instances as do not give a fair 
average. But when the instances on which we found our 
conclusions are sufficiently numerous, it is seen that the 
most anomalous events, such as suicides, deaths by accident, 
the number of letters put into the post-office without any 
address, &c., form pretty regular series, and, consequently, 
admit of being estimated a priori. 

The business of insurance is founded upon the principles 


thus briefly stated. Suppose it has been remarked that of 
forty ships of the ordinary degree of sea-worthiness, em- 
ployed in a given trade, one is annually cast away, the 
probability of loss will plainly be equal to one-fortieth. 
And if an individual wish to insure a ship, or the cargo on 
board a ship, engaged in this trade, he ought to pay a 
premium equal to the one-fortieth part of the sura he insures, 
exclusive of such additional sum as may be required to 
indemnify the insurer for his trouble, and to leave him a 
fair profit. If the premium exceed this sum, the insurer 
is overpaid : and he is underpaid if it fall below it. 

Insurances are effected sometimes by societies and some- 
times by individuals, the risk being in either case diffused 
amongst a number of persons. Companies formed for 
carrying on the business have generally a large subscribed 
capital, or such a number of proprietors as enables them to 
raise, without difficulty, whatever sums may at any time 
be required to make good losses. Societies of this sort do 
not limit their risks to small sums ; that is, they do not 
often refuse to insure a large sum upon a ship, a house, a 
life, &c. The magnitude of their capitals affords them the 
means of easily defraying a heavy loss ; and their premiums 
being proportioned to their risks, their profit is, at an 
average, independent of such contingencies. 

Individuals, it is plain, could not act in this way unless 
they were possessed of very large capitals ; and besides, the 
taking of large risks would render the business so hazardous 
that few would be disposed to engage in it. Instead, there- 
fore, of insuring a large sum, as ,^20,000 upon a single 
ship, a private underwriter or insurer may not probably, in 
ordinary cases, take a greater risk than dP200 or ,£'500 ; 
so that, though his engagements may, when added together, 
amount to .£20,000, they will be diffused over from forty 
to a hundred ships ; and supposing one or two ships to be 
lost, the loss would not impair his capital, and would only 
lessen his profits. Hence it is, that while one transaction 
only may be required in getting a ship insured by a com- 


pany, ten or twenty separate transactions may be required 
in getting the same thing done at Lloyd''s, or by private 
individuals. When conducted in this cautious manner, the 
business of insurance is as safe a line of speculation as any 
in which individuals can engage. 

To establish a policy of insurance on a fair foundation, 
or in such a way that the premiums paid by the insured 
shall exactly balance the risks incurred by the insurers, and 
the various necessary expenses to which they are put, in- 
cluding, of course, their profit, it is necessary, as previously 
remarked, that the experience of the risks should be pretty 
extensive. It is not, however, at all necessary, that either 
party should inquire into the circumstances that lead to 
those events that are most commonly made the subject of 
insurance. Such research would indeed be entirely fruit- 
less : we are, and must necessarily continue to be, wholly 
ignorant of the causes of their occurrence. 

It appears, from the accounts given by Mr Scoresby, in 
his work on the Arctic Regions, that of 586 ships which 
sailed from the various ports of Great Britain for the north- 
ern whale fishery, during the four years ending with 1817, 
eight were lost, ^ being at the rate of about one ship out of 
every seventy-three of those employed. Now, supposing this 
to be about the average loss, it follows that the premium 
required to insure against it should be £1, 7s. 4d. per cent, 
exclusive, as already observed, of the expenses and profits of 
the insurer.- Both the insurer and the insured would gain 
by entering into a transaction founded on this fair principle. 
When the operations of the insurer are extensive, and his 
risks spread over a considerable number of ships, his profit 
does not depend upon chance, but is as steady, and may be 
as fairly calculated upon, as that of a manufacturer or a mer- 
chant; while, on the other hand, the individuals who have 
insured their property have exempted it from any chance of 

' Vol. ii. p. 131. 

^ In point of fact, the average loss in the northern whale fishery is much 
greater than this. See art. Whale Fishery in " Commercial Dictionary." 


loss, and placed it, as it were, in a state of absolute secu- 

It is easy, from the brief statement now made, to perceive 
the immense advanta^'es resulting- to navigation and com- 
merce from the practice of marine insurance. Without the 
aid that it affords, comparatively few individuals would be 
found disposed to expose their property to the risk of long 
and hazardous voyages ; but by its means insecurity is 
changed for security, and the capital of the merchant, whose 
shi])s are dispersed over every sea, and exposed to all the 
perils of the ocean, is as secure as that of the agriculturist. 
He may combine his measures and arrange his plans as if 
they could no longer be affected by accident. The chances 
of shipwreck, or of loss by unforeseen occurrences, enter not 
into his calculations. He has purchased an exemption from 
the effects of such casualties ; and applies himself to the 
prosecution of his business with that confidence and energy 
which a feeling of security can alone inspire.^ 

Besides insuring against the perils of the sea, and losses 
arising from accidents caused by the operation of natural 
causes, it is common to insure against enemies, pirates, 
thieves, and even the fraud, or, as it is technically termed, 
barratry of the master. The risk arising from these sources 
of casualty being extremely fluctuating and various, it is 
not easy to estimate it with any considerable degree of 
accuracy ; and nothing more than a rough average can, in 
most cases, be looked for. In time of war, the fluctuations 

' " Les chances de la navigation entravaient le commerce. Le systeme 
des assurances a paru ; il a consulte les saisons ; il a porte ses regards sur la 
mer ; il a interroge ce terrible element ; il en a juge I'inconstance ; il en a 
pressenti les orages ; il a epie la politique ; il a reconnu les ports et les cotes 
des deux mondes ; il a tout soumis a des calculs savans, a des theories ap- 
proximatives ; et il a dit au commer9ant habile, au navigateur intrepide — 
Certes, il y a des d^sastres sur lesquels I'humanite ne peut que ge'mir ; mais 
quant a votre fortune, allez, franchissez les mers, de'ployez votre activite et 
votre Industrie ; je me charge de vos risques. Alors, Messieurs, s'il est per- 
mis de le dire, les quatre parties du monde se sont rapproche'es." — Code dc 
Commerce, Expose des Motifs, liv. ii. 


in the rates of insurance are particularly great; and the 
intelligence that an enemy's squadron, or even that a single 
privateer, is cruising in the course which the ships bound 
to, or returning from any given port, usually follow, causes 
an instantaneous rise of premium. The appointment of 
convoys for the protection of trade during war, necessarily 
tends, by lessening the chances of capture, to lessen the 
premium on insurance. Still, however, the risk in such 
periods is, in most cases, very considerable ; and as it is 
liable to change very suddenly, great caution is required on 
the part of the underwriters. 

Provision may be made, by means of insurance, against 
almost all the casualties to which property on land is sub- 
ject. Fire insurance has been carried, in this country, to a 
very great extent ; and might, but for the duty with which 
it is burdened, be carried much farther. It appears, from 
the accounts printed by order of the House of Commons, 
that the nett duty received on policies of insurance against 
fire, amounted, for the United Kingdom, in 1845, to 
66*1,032,188; which, if the duty were universally 3s. per 
cent on the property insured, would show that the latter 
amounted to the prodigious sura of ^£'688,125, 333 — a sum 
which, vast as it is, would very probably be doubled in a 
few years were the duty only Is. per cent. At present, if 
a person wish to insure <£'1000 on a dwelling-house, shop, 
warehouse, or other commonly hazardous property, he pa3's 
15s. to an insurance office as an indemity for the risk, and 
30s. to oovernment for leave to enter into the transaction ! 
So exorbitant a duty cannot be too severely condemned. It 
is the cause of much property not being insured, and of 
what is insured not being sufiiciently covered. Were the 
duty reduced to a half, or a third part of its present 
amount, it is all but certain that the business of insu- 
rance would be very much extended ; and as it could not 
be extended without an increase of security, and a dimi- 
nution of the injurious consequences arising from the 
casualties to which property is exposed, the reduction 


would be productive of the best consequences in a public 
point of view; while the increase of business would prevent 
the revenue from being diminished, and would, most pro- 
bably, indeed, occasion its increase. Insurances on farm 
stock, barn-yards, &c., are exempted from the duty, and 
do not, therefore, appear in the above estimate of insured 

The tax upon policies of marine insurance varies accord- 
ing to the amount of the premium and the length of the 
voyage. It produced, in the United Kingdom, in 1847, 
the sum of <£ 162, 739. 

But notwithstanding what has now been stated, it must 
be admitted, that the advantages derived from the practice 
of insuring against losses by sea and land are not altogether 
unmixed with evil. The security which it affords tends to 
relax that vigilant attention to the protection of property 
which the fear of its loss is sure otherwise to excite. This, 
however, is not its worst effect. The records of our courts, 
and the experience of all who are largely engaged in the 
business of insurance, too clearly prove that ships have 
been repeatedly sunk, and houses burned, in order to de- 
fraud the insurers. In despite, however, of the temptation 
to inattention and fraud which is thus created, there can 
be no doubt that, on the whole, the practice is, in a public 
as well as a private point of view, decidedly beneficial. The 
frauds which are occasionally committed raise, in some 
degree, the rate of insurance. But it is, notwithstanding, 
exceedingly moderate; and the precautions adopted by the 
insurance offices for the prevention of fire, especially in 
great towns, where it is most destructive, countervail, to a 
considerable extent, if they do not wholly outweigh, the 
chances of increased conflagration arising from the greater 
tendency to carelessness and crime. 

The business of life insurance has been carried to a far 
greater extent in Great Britain than in any other country, 
and has been productive of the most beneficial effects. Life 


insurances are of various kinds. Individuals without any 
very near connexions, and possessing only a limited fortune, 
are sometimes desirous, or are sometimes, from the neces- 
sity of their situation, obliged, annually to encroach on their 
capitals. But should the life of such persons be extended 
beyond the ordinary term of existence, they might be totally 
unprovided for in old age ; and to secure themselves against 
this contingency, they make over to an insurance company 
the whole or a part of their capital, on condition of its 
guaranteeing them, as long as they live, a certain annuity, 
proportioned partly, of course, to the sum made over, and 
partly to their age when the transaction takes place. But 
though sometimes serviceable to individuals, it may be ques- 
tioned whether insurances of this sort are, in a public point of 
view, really advantageous. So far as their influence extends, 
it obviously tends to weaken the principle of accumulation ; 
and tempts individuals to consume their capitals during 
their own life, without thinking or caring about the interest 
of their successors. Were such a practice to become 
general, it would have the most mischievous consequences. 
The interest which most men take in the welfare of their 
families and friends affords, indeed, a pretty strong secu- 
rity against its becoming injuriously prevalent. There 
can, however, be little doubt that this selfish practice may 
be strengthened by adventitious means ; such, for example, 
as the opening of government loans in the shape of life 
annuities, or in the still more objectionable form of tontines. 
But when no extrinsic stimulus of this sort is given to it, 
there do not seem to be any very good grounds for thinking 
that the sale of annuities by private individuals or associa- 
tions can materially weaken the principle of accumulation. 
Such, at all events, is the case in this country, the 
species of insurance now referred to being practised amongst 
us to an inconsiderable extent compared with that which has 
accumulation for its object. All professional persons, or per- 
sons living on salaries orwages — such as lawyers, physicians, 
military and naval officers, clerks in public and private 



offices, &c., whose incomes must, of course, terminate with 
their lives, and a host of others, who are either without capi- 
tal, or, though they possess it, cannot dispose of it at plea- 
sure — must naturally be desirous of providing, in as far as 
they may be able, for the comfortable subsistence of their 
families in the event of their death. Take, for example, a 
physician or lawyer, without fortune, but making, perhaps, 
dC'lOOO or ^£'2000 a-year by his business; and suppose that 
he marries and has a family: if this individual attain to the 
average duration of human life, he may accumulate such a 
fortune as will provide for the adequate support of his family 
at his death. But who can presume to say that such will be the 
case? — that he will not be one of the many exceptions to the 
general rule? And suppose he were hurried into an untimely 
grave, his family would necessarily be destitute. Now, it 
is against such calamitous contingencies that life insurance 
is intended chiefly to provide. An individual possessed of 
an income terminating at his death, agrees to pay a certain 
sum annually to an insurance office; and this office binds it- 
self to pay to his family, at his death, a sum equivalent, under 
deduction of the expenses of management and the profits of 
the insurers, to what these annual contributions, accumu- 
lated at compound interest, would amount to, supposing the 
insured to reach the common and average term of human 
life. Though he were to die the day after the insurance 
has been effected, his family would be as amply provided 
for as it is likely they would be by his accumulations, were 
his life of the ordinary duration. In all cases, indeed, in 
which those insured die before attaining to an average age, 
their gain is obvious. But even in those cases in which 
their lives are prolonged beyond the ordinary term, they 
are not losers — they then merely pay for a security which 
they must otherwise have been without. During the whole 
period, from the time when they effect their insurances down 
to the time when they arrive at the mean duration of human 
life subsequently to that term, they are protected against 
the risk of dying without leaving their families sufficiently 


provided for ; and the sum which they pay after having 
passed this mean term is nothing more than a fair com- 
pensation for the security they previously enjoyed. Of those 
who insure houses against fire, a very small proportion 
only have occasion to claim an indemnity for losses actually 
sustained ; but the possession of a security against loss in 
the event of accident, is a sufficient motive to induce every 
prudent individual to insure his property. The case of life 
insurance is in no respect different. When established on 
a proper footing, the extra sums which those pay whose 
lives exceed the estimated duration is but the value of the 
previous security. 

In order to adjust the terms of an insurance so that the 
part}"^ insuring may neither pay too much nor too little, it is 
necessary that the probable duration of human life, at every 
different age, should be ascertained with as much accuracy 
as possible. 

This probable duration, or, as it is frequently termed, 
expectation of life, means the period when the chances that 
a person of a given age will be alive, are precisely equal to 
those that he will be dead. The results deduced from the 
observations made to determine this period in different 
countries and places, have been published in the form of 
tables; and insurances are calculated by referring to them. 
Thus, in the table of the expectation of life at Carlisle, 
framed by Mr Milne, of the Sun Life office,^ and which is 
believed to represent the average law of mortality in Eng- 
land with considerable accuracy, the probable future life of 
a person of thirty years of age is thirty-four years and four 
months ; or, in other words, it has been found by observa- 
tions carefully made at Carlisle, that at an average, half 
the individuals of thirty years of age attain to the age of 
sixty-four years and four months. If, therefore, an indivi- 
dual of thirty years of age were to insure a sum payable at 
his death, the insurers who adopt the Carlisle table would 

' See his very valuable work on Annuities, vol. ii. p. SCI. 


assume that he would live for thirty-four years and a third, 
and would make their calculations on that footing. If he 
did not live so long, the insurers would lose by the transac- 
tion; and if he lived longer, they would gain proportion- 
ally. But if their business be so extensive as to enable the 
law of average fully to apply, what they lose by premature 
deaths will be balanced by the payments received from those 
whose lives are prolonged beyond the ordinary degree of 
probability; so that the profits of the society will be wholly 
independent of chance. 

Besides the vast advantage of that security against dis- 
astrous contingencies afforded by the practice of life insu- 
rance, it has an obvious tendency to strengthen habits of 
accumulation. An individual who has insured a sum on 
his life, would forfeit all the advantages of the insurance 
did he not continue regularly to make his annual pay- 
ments. It is not, therefore, optional with him to save a 
sum from his ordinary expenditure adequate for this pur- 
pose. He is compelled, under a heavy penalty, to do so; 
and havino; thus been led to contract a habit of saving to a 
certain exent, it is most probable that the habit will ac- 
quire additional strength, and that he will either insure an 
additional sum or privately accumulate. 

England is, perhaps, the only state in which the insur- 
ance of lives has never been prohibited. Notwithstanding 
the sagacit)"^ of the Dutch, insurances of this sort were not 
legalised in Holland till a comparatively recent period. 
In France they were long deemed illegal ; ^ and though now 

^ It is said, in article 334 of the " Code de Commerce," that an insurance 
may be effected upon any thing estimable a pr'ix d'argent. Count Corvette, 
in his speech on laying this part of the " Code " before the legislative body, 
stated, that the above expressions had been introduced in order to make the 
article harmonise veith the 9th and 10th articles of the ordinance of 1681, 
qui permettent, he says, d'assurer la liberte des hommes, et qui defendent de 
faire des assurances sur leur vie. La liberte. est estimable a prix d'argent; la 
Tie de Phomme ne Pest pas. 

It is singular that such an article should be found in the Code de Com- 
merce, more especially as the prohibition in the ordinance of 1681 had been 


effected to a certain extent, we are not sure whether 
they are authorised by any positive law. They wore for- 
bidden by the famous ordinance of 1681, (arts. 9 and 10,) 
because, says its commentator, Valin, "it is an offence 
against public decency to set a price upon the life of a man, 
particularly the life of a freeman, which is above all valu- 
ation." Probably, however, the fear lest individuals might 
be tempted to destroy themselves, to enrich their families 
at the expense of those with whom they had insured their 
lives, has had most influence in dictating the attempts to 
prevent life insurance.-' It is needless, however, to say, 
that this apprehension is the most futile imaginable. At- 
tempts are, indeed, frequently made to get insurances effected 
upon lives by false representations as to the health of the 
parties ; but it is doubtful whether the insurance offices 
have ever lost any thing from the cause previously alluded 
to. To prevent the possibility of its occurrence, most 
English offices stipulate, that death by suicide or in a duel 
shall cancel the insurance. 

virtually repealed by an arret of the Council of State, dated the 3d Novem- 
ber 1787, in which the advantages of life insurance are ably pointed out. 
Practically, however, the interpretation of Count Corvetto has been over- 
ruled ; the legality of life insurance being now admitted, and the business 
practised to some, though but a small, extent in France. 
^ " Forbonnais, Siemens du Commerce," tom. ii. p. 51, 



Interference of Government with the Pursuits and Property of Indivi- 
duals — Cases in, and Objects for which such interference is necessary 
— Limits within which it should be confined. 

The discussions in which we have been engaged in the pre- 
vious chapters, sufficiently evince the vast importance of the 
administration being powerful, and at the same time liberal 
and intelligent — that is, of its having power to carry its 
laws and regulations into effect, and wisdom to render them 
consistent with sound principles. Far more, indeed, of the 
prosperity of a country depends on the nature of its govern- 
ment than on any thing else. If it be feeble, and unable to 
enforce obedience to the laws, the insecurity thence arising 
cannot fail of being most pernicious ; while, on the other 
hand, if its laws, though carried into effect, be founded on 
erroneous principles, their operation cannot be otherwise 
than injurious ; and though they may not actually arrest, 
they must, at all events, retard the progress of the society. 
An idea seems, however, to have been recently gaining 
ground, that the duty of government in regard to the 
domestic policy of the country is almost entirely of a nega- 
tive kind, and that it has merely to maintain the security 
of property and the freedom of industry. But its duty is 
by no means so simple and easily defined as those who sup- 
port this opinion would have us to believe. It is certainly 
true, that its interference with the pursuits of individuals 
has been, in very many instances, exerted in a wrong direc- 
tion, and carried to a ruinous excess. Still, however, it is 
easy to see that we should fall into a very great error 
if we supposed that it might be entirely dispensed with. 
Freedom is not, as some appear to think, the end of gov- 
ernment : the advancement of the public prosperity and 


happiness is its end ; and freedom is valuable in so far only 
as it contributes to bring it about. In laying it down, for 
example, that individuals should be permitted, without let 
or hindrance, to engage in any business or profession they 
may prefer, the condition that it is not injurious to others 
is always understood. No one doubts the propriety of 
government interfering to suppress what is, or might 
otherwise become, a public nuisance ; nor does any one 
doubt that it may advantageously interfere to give facilities 
to commerce by negotiating treaties with foreign powers, 
and by removing such obstacles as cannot be removed by 
individuals. But the interference of government cannot be 
limited to cases of this sort. However disinclined, it is 
obliged to interfere, in an infinite variety of ways, and for an 
infinite variety of purposes. It must, to notice only one or 
two of the classes of objects requiring its interference, decide 
as to the species of contracts to which it will lend its sanc- 
tion, and the means to be adopted to enforce their perfor- 
mance ; it must decide in regard to the distribution of the 
property of those who die intestate, and the effect to be given 
to the directions in wills and testaments ; and it must 
frequently engage itself, or authorise individuals or associa- 
tions to engage, in various sorts of undertakings deeply 
affecting the rights and interests of others, and of society. 
The furnishing of elementary instruction in the ordinary 
branches of education for all classes of persons, and the 
establishment of a compulsory provision for the support of 
the destitute poor, are generally, also, included, and appa- 
rently with the greatest propriety, among the duties incum- 
bent on administration. And, in addition to these duties 
and obligations, government has to undertake the onerous 
task of imposing and collecting the taxes required to defray 
the public expenditure, and of providing for the indepen- 
dence and the security of the nation. It is not easy to 
exaggerate the difficulty and importance of properly dis- 
charging such duties, and the powerful influence which 
the policy pursued in regard to them must necessarily 


exercise over the public wellbeing. But without further 
insisting on these considerations, it is at all events 
obvious, when the subjects requiring, or supposed to 
require, its interference are so very numerous, and when 
we also take into view the necessity of accommodating 
the measures of administration to the changes which are 
perpetually occurring in the internal condition of nations, 
and in their external relations in respect of others — that it 
is iinpracticable to draw any thing like a distinct line of 
demarcation between what may be called the positive and 
negative duties of government; or to resolve what Mr Burke 
has truly termed " one of the finest problems in legislation, 
namely, to determine what the state ought to take upon 
itself to direct by the public wisdom, and what it ought to 
leave, with as little interference as possible, to individual 

It is, indeed, obvious, that no solution of this problem 
can be applicable at all times, and under all circumstances. 
But dismissing for the present all reference to the subject of 
taxation, which we have endeavoured to treat in another 
work,^ we may observe generally, that though it may not 
be possible previously to devise the measures proper to be 
adopted in particular emergencies, we may, notwithstanding, 
decide on pretty good grounds in regard to the description 
of objects which require the interference of government 
upon ordinary occasions, and give some idea of the extent 
to which it should be carried. The discussion of this in- 
teresting, though comparatively neglected department of 
the science, involves many difficult and delicate ques- 
tions ; and to enter fully into their examination would 
require a lengthened treatise. We shall merely, therefore, 
endeavour to lay down a few leading principles, touching- 
very briefly upon such topics only as seem most interesting. 

The principles already established show, that without 
security of property, and freedom to engage in every 

' A " Treatise on the Principles and Practical Influence of Taxation and 
the Funding System," 8yo, London, 1845. 


employment not hurtful to others, society can make no con- 
siderable advances. Government is, therefore, bound to take 
such measures as may be effectual to secure these objects. 
But we have just seen that it must not rest satisfied when 
this is accomplished. It will fail of its duty if it do not 
exert itself to prevent that confusion and disorder in the 
distribution of property, and in the prosecution of indus- 
trious employments, that could either not be prevented 
without its interference, or not so easily and completely. 
It is also bound to give every due facility to individuals 
about to engage in such useful undertakings as cannot be 
carried on without its sanction ; and it should not only 
endeavour to protect its peaceable and industrious subjects 
from the machinations of the idle and profligate, but also 
against those accidents arising from the operation of natural 
causes to which their persons or properties may otherwise 
be exposed. The expediency of interfering to accomplish 
the objects thus briefly enumerated, is so very obvious, that 
it may be said to constitute a perfect obligation on govern- 
ment. But the expediency of a compulsory provision for 
the support of the poor, and of a national system of educa- 
tion, not being so obvious, we shall refer their consideration 
to a subsequent chapter. 

At present, therefore, we ha,ye,^rst, to consider the means 
of obtaining security and protection. 

Second^ the species of contracts and of testamentary dis- 
positions to which government ought to give legal effect. 

Thirds the means of adjusting such disputes as may arise 
among the citizens, and of enforcing the observance of con- 

Fourth^ the means of obviating confusion and fraud in the 
dealings of individuals. 

Fifths the species of industrious undertakings in which 
government may engage, or to which it should lend some 
peculiar sanction. 

Sixth, the means proper to be adopted to secure the pro- 
perty and persons of the citizens from such casualties as 


they would be subject to without the interference of govern- 

I. With respect to the first of these heads, or the pro- 
vision of a force adequate to afford security and protection, 
its necessity is too obvious to require illustration. The 
best laws can be of little use if they may be insulted with 
impunity. All governments ought, therefore, to have a 
force at their command sufficient to carry their orders into 
effect at home, as well as to defend their territories from 
hostile attack. The question how this force may be most 
advantageously raised is one of deep importance. Perhaps, 
however, its investigation belongs rather to politics, pro- 
perly so called, than to political economy ; and, at any rate, 
our narrow limits forbid our engaging in it here. It may, 
however, be remarked, that in nothing, perhaps, has the 
beneficial influence of the division of labour been more per- 
ceptible than in the employment of a distinct class of indi- 
viduals to maintain national tranquillity and security. To 
be a good soldier, or a good police-officer, a man should be 
nothing else. It is hardly possible for an individual taken, 
to serve as a militia-man, from one of the ordinary employ- 
ments of industry, to which after a short time he is to be 
restored, to acquire those habits of discipline, and of prompt 
and willing obedience, so indispensable in a soldier. It is 
now very generally, if not universally admitted, that when a 
military force must be employed to suppress any disturbance, 
it is always best to employ troops of the line, and to abstain 
as much as possible from the employment of yeomanry or 
local militia. The former have neither pai'tialities nor 
antipathies; they do what they are ordered, and they do no- 
thing more: but the latter are more than half citizens; and 
being so, are inflamed with all the passions and prejudices 
incident to the peculiar description of persons from among 
whom they are taken. When they act, they necessarily 
act under a strong bias, and can with difficulty be kept to 
the strict line of their dutv. 


II. The discussion of the second of the previously men- 
tioned heads may be conveniently divided into two branches : 
i\iQ first having reference to the description of contracts be- 
tween individuals to which government should give a legal 
sanction ; and the second, how far it should legalise the in- 
structions in wills and testaments. 

1. It ma}'' be laid down in general, that government is 
bound to assist in enforcing all contracts fairly entered 
into between individuals, unless they are made in opposition 
to some existing law, or are clearly such as cannot fail of 
being prejudicial to the public interests. 

Contracts or obligations arising out of purely gambling 
transactions, have been supposed to be of this latter descrip- 
tion, and it has been customary to refuse giving them a 
legal sanction. The wisdom of this custom seems abundantly 
obvious. No one doubts that gambling, by withdrawing 
the attention of those engaged in it from industrious pur- 
suits, and making them trust to chance, instead of exertion 
and economy, for the means of rising in the world, is, both 
in a public and private point of view, exceedingly pernicious. 
And we are not aware that any means have been suggested 
for checking the growth of this destructive habit, so easy of 
adoption, and, at the same time, so effectual, as the placing 
of gambling engagements without the pale of the law, and 
depriving the parties of any guarantee other than their 
own honour. To interfere further than this, might perhaps 
be inexpedient ; but there appears no good reason for think- 
ing that the interference of government is not benefically 
carried to this extent. 

We shall afterwards endeavour to show the impolicy of 
the restraints imposed on the rate of interest, and the in- 
jury which they occasion. And it is now pretty generally 
admitted, that the laws formerly enforced in this country, 
and still acted upon in various quarters, for restricting the 
freedom of those engaged in the internal corn-trade, by the 
prevention of forestalling, engrossing, and regrating, are 
both oppressive and inexpedient. It has been shown, over 


and over again, that the interest of the corn-dealer is in all 
cases identical with that of the public ; and that, instead of 
being injurious, his speculations are uniformly productive 
of advantage.^ 

It is unnecessary, perhaps, to say any thing about the 
attempts that have occasionally been made to fix the price 
of commodities by law. Every one must see that it is not 
in the nature of things that such attempts should have 
any but pernicious results. The price of commodities is 
continually var^dng, from innumerable causes, the opera- 
tion of which can neither be foreseen nor prevented. If, 
therefore, an attempt were made to fix prices, it would follow, 
that when the natural price of commodities sunk below their 
legal price, the buyers would have to pay more than their fair 
value; and, on the other hand, when their natural price 
happened to rise above their legal price, the producers, to 
avoid the loss they would incur by carrying on their busi- 
ness, would withdraw from it, so that the market would no 
longer be supplied. Nothing, consequently, can be more 
obvious than that the interference of government in the 
regulation of prices is productive only of mischief. It will 
be shown, in a subsequent chapter, that wherever industry 
is free, the competition of the producers makes commodities 
be uniformly sold at their natural and proper price. 

It was usual in this country, until recently, to punish 
workmen for combining to raise the rate of wages, or to 
diminish the hours of working. The inexpediency of such 
a law is so very obvious as hardly to require being pointed 
out. The individual is nothing but a slave who may not 
fix, in concert with others, the conditions on which he 
will sell his labour. No bad consequences can result from 
the exercise of this power on the part of the workmen. If 
the price they demand for their labour be unreasonable, the 
masters may, and always do, refuse to employ them ; and 
as they cannot afford to live for any considerable period 

' For some illustrations of what is now stated, see the Chapter on the 
" Influence of Speculation on Prices." 


without employment, it is plain that all combinations to 
obtain an undue rise of wages, or to effect an improper pur- 
pose, carry in their bosom a principle of dissolution, and 
must speedily fall to pieces. But when workmen may 
refuse to work except upon such conditions as they choose 
to prescribe, they have, in this respect, obtained all which 
they can justly claim ; and when they go farther, and 
attempt, as they too frequently do, to carry their point by 
violence, — by threatening the property of their employers, 
or obstructing such of their fellow-labourers as have refused 
to join the combination, or have seceded from it, — they are 
guilty of an offence which deeply affects the security of 
property and freedom of industry, and which should be 
instantly repressed by prompt and suitable punishment. 

2. Various questions, some of which are of the greatest 
interest, arise in deciding how far government should go 
in giving effect to instructions in wills and testaments. 
There is no doubt, indeed, of the reasonableness and ad- 
vantage of allowing individuals to bequeath their property 
to their children and nearest surviving relatives. And, 
without stopping to make any observations on what is so 
very clear, we shall proceed to inquire — -first, whether indivi- 
duals should be permitted to leave their fortune to strangers, 
to the exclusion of their children and relatives ; second, 
whether, in distributing a fortune amongst children, the 
testator should be left to follow his own inclination, or be 
obliged to abide by any fixed rule ; and third, whether an 
individual should be authorised to fix the conditions under 
which his property shall in future be enjoyed, or the pur- 
poses to which it is to be always applied. 

(1.) The power freely to bequeath property by will or 
testament (the libera testameiiti factio) is not recognised in 
the earlier stages of society. A man's property is then 
usually divided in equal shares among his children, who 
succeed to it as matter of right ; and in their default, it is 
inherited by his surviving relations or nearest of kin. But 
experience gradually discloses the inconveniences resulting 


from the enforcement of this strict rule of succession, and 
power is, in consequence, given to persons possessed of pro- 
perty to make testaments, or to dispose by will of a part, 
at least, of their personal or real estate. At first, however, 
this power is usually confined within very narrow limits, 
being in general restricted to the making of alterations in 
the shares falling to the children or kinsmen of the testa- 
tor ; that is, to the increasing of the portion of some, and 
the diminution of that of others. In Athens there was 
no power to devise property from the natural heirs pre- 
viously to the age of Solon ; and that legislator confined 
the privilege to those who died without leaving issue. In 
Rome, three centuries elapsed before a citizen could dispose 
of his property by a deed mortis causa, except in an assembly 
of the people ; and in that case his will, as Montesquieu 
has remarked, was not really the act of a private individual, 
but of the legislature. " With us in England, till modern 
times, a man could only dispose of one-third of his move- 
ables from his wife and children ; and in general, no will 
was permitted of lands till the reign of Henry VIII,, and 
then only of a certain portion : for it was not till after the 
Restoration that the power of devising real property became 
so universal as at present."^ In Scotland, down to a com- 
paratively recent period, almost all landed property was 
inalienable from the lineal heir. 

Not only, however, is the power of testators usually aug- 
mented as society advances, but in some countries the}"- are 
permitted to exercise a nearly absolute control over the 
disposal of their property, and even to bequeath the whole, 
or the greater part of it, to strangers, to the exclusion of 
their children and relations, as is substantially the case at 
this moment in England. A great diversity of opinion is, 
however, entertained in regard to the expediency of giving 
this power to testators. It is contended, that, indepen- 
dently altogether of their merit or demerit, every one is 
under the most sacred obligations to the beings he has been 
' Blackstoiie, book ii. c. 1. 


the means of bringing into the world ; and that no one who 
has any property should be permitted to throw his children 
destitute upon society, but should be obliged to make some 
provision for their support. But, though the question be 
not free from difficulty, we are inclined to think that they 
are right who argue in favour of the uncontrolled power 
of bequeathing. A legal provision for children cannot 
be enforced without weakening that parental authority 
which, though sometimes abused, is yet, in the vast majo- 
rity of instances, exerted in the best manner and with 
the best effect. The relations of private life should as 
seldom as possible be made the subject of legislative enact- 
ments. If children be ordinarily well-behaved, we have, in 
the feeling of parental affection, a sufficient security that 
they will rarely be disinherited. The interference of the 
legislator in their behalf seems, therefore, quite unnecessary. 
In countries where the greatest extension is given to the 
power of the testator, nothing is more uncommon than to 
hear of the disinherison of a really dutiful family ; and it 
would surely be most inexpedient to attempt to remedy an 
evil of such rare occurrence, by exempting children from 
the influence of a salutary check over their vicious propen- 
sities ; and forcing individuals to bestow that property on 
profligacy and idleness, which is usually the fruit, and 
should always be the reward, of virtue and industry. 

(2.) The same reasons which show that it is inexpe- 
dient to prevent individuals from leaving their fortunes to 
strangers, show that it is inexpedient to compel them to 
adopt any fixed rule in the division of their fortunes 
amongst their children. 

It has long been customary in this, as well as in many 
other countries, when estates consist of land, to leave them 
either wholly or principally to the eldest son, and to give 
the younger sons and daughters smaller portions in money. 
Many objections have been made to this custom ; but mostly, 
as it would appear, without due consideration. That it has 
its inconveniences is, no doubt, true; but they seem to be 


trifling compared with the advantages which it exclusively 
possesses. It forces the younger sons to quit the home of 
their ftither, and makes them depend for success in life on 
the exercise of their talents ; it helps to prevent the splitting 
of landed property into too small portions ; and stimulates 
the holders of estates to endeavour to save a moneyed fortune 
adequate for the outfit of the younger children, without 
rendering them a burden on their senior. Its influence in 
these and other respects is equally powerful and salutary. 
The sense of inferiority as compared with others, is, next to 
the pressure of want, one of the most powerful motives to 
exertion. It is not always because a man is absolutely 
poor that he is industrious, economical, and inventive ; in 
many cases he is already wealthy, and is merely wishing to 
place himself in the same rank as others who have still 
larger fortunes. The younger sons of our great landed 
proprietors are particularly sensible to this stimulus. Their 
inferiority in point of wealth, and their desire to escape 
from tliis lower situation, and to place themselves upon a 
level with their elder brothers, inspires them with an energy 
and vigour they could not otherwise feel. But the advan- 
tage of preserving large estates from being frittered down 
by a scheme of equal division, is not limited to its influence 
over the younger children of their owners. It raises uni- 
versally the standard of competence, and gives new force 
to the springs which set industry in motion. The manner 
of living among the great landlords is that in which every 
one is ambitious of being able to indulge ; and their habits 
of expense, though sometimes injurious to themselves, act 
as powerful incentives to the ingenuity and enterprise of the 
other classes, who never think their fortunes sufficiently 
ample, unless they will enable them to emulate the splendour 
of the richest landlords ; so that the custom of primogeni- 
ture seems to render all classes more industrious, and to 
augment, at the same time, the mass of wealth and the scale 
of enjoyment. 

It is said, indeed, that this eager pursuit of wealth, and 


the engrossing interest which it inspires, occasion every thing 
to be undervalued that does not directly conspire to its ad- 
vancement, and make the possession of money be regarded 
as the only thing desirable. But this is plainly a very 
exaggerated and fallacious representation. It is not meant 
to say, that a desire to outstrip our neighbours in the accu- 
mulation of wealth is the best motive to exertion, or that 
it might not be preferable, could the same spirit of emula- 
tion be excited by a desii-e to excel in learning, benevolence, 
or integrity. After all, however, it usually happens that 
the game itself is of far less value than the stimulus afforded 
by the chase. But though it were otherwise, there seems 
very little reason to think that the love of superiority in 
mental acquirements will ever be able to create that deep, 
lasting, and universal interest, that is created by a desire 
to mount in the scale of society, and to attain the same 
elevation in point of fortune that has been attained by the 
richest individuals, or by those at the summit of society. 
It is false, however, to affirm that the prevalence of this 
spirit makes the virtues of industry and frugality be culti- 
vated to the exclusion of the rest. Every one, indeed, who 
is acquainted with what is going on around him, must know 
that such is not the fact. The business of those who inherit 
large fortunes is rather to spend than to accumulate : and 
while, on the one hand, the desire to attain to an equality of 
riches with them is a powerful spur to industry; the manner 
of living, which they render fashionable, prevents, on the 
other hand, the growth of those sordid and miserly habits 
that are subversive of every generous impulse. Many 
holders of large fortunes, and many who are still striving to 
attain that distinction, influenced partly, no doubt, by vanity 
and ostentation, but in a far greater degree by worthier 
motives, are the liberal patrons of the arts, and are emi- 
nently distinguished by their benevolence. The example 
thus set by the higher ranks reacts on those below them ; 
being communicated from one class to another, until it per- 
vades the whole society. And hence, though the spirit of 



emulation, industry, and invention, be stronger here, perhaps, 
than in any other country, it has not obhterated, but seems, 
on the contrary, rather to have strengthened, the social 
and generous sympathies. 

But, to whatever cause it may be owing, we may safely 
affirm, that an interest in the welfare of others has never 
been more strongly manifested in any age or country than 
in our own. Those who contrast the benevolent institutions 
of England and Holland, (the country which has the nearest 
resemblance to England,) and the efforts made by the middle 
and upper classes in them to relieve the distresses and to 
improve the condition of those in inferior circumstances, with 
the institutions and the efforts of the same classes in France 
and Austria, will pause before affirming that the strong 
spirit of emulation, inspired by our peculiar laws and cus- 
toms, has rendered us comparatively indifferent to the hap- 
piness of our fellowmen. In the United States, properties, 
whether consisting of land or moveables, are almost invariably 
divided in equal portions amongst the children, and there 
are no very large estates. But notwithstanding these appar- 
ently favourable circumstances, has any one ever alleged 
that generosity is a prominent feature in the character of 
the Americans ? or that they are in this respect superior to 
the English ? 

In France, previously to the Revolution, different pro- 
vinces had different customs as to the division of landed 
property by will ; but soon after the Revolution one uniform 
system was established. According to this new system, 
individuals having families, who make wills, are obliged to 
divide their fortunes, whether they consist of land or move- 
ables, in nearly equal portions among their children ; and in 
the event of their dying intestate, they are equally distri- 
buted amongst their descendants without respect of sex or 

The principles already established show that this law is 
radically bad. It necessarily weakens the desire to accu- 
mulate a fortune, over the disposal of which it allows so 


very little influence ; it goes far to emancipate the children 
of persons possessed of property from any efficient control ; 
it gives them the certainty of getting a provision, whatever 
be their conduct ; and it is difficult to see how it should do 
this without paralysing their exertions and checking their 
enterprise. But its worst effect consists, perhaps, in the 
influence it has had, and will most likely continue to have, 
in occasioning the too great subdivision of landed property. 
In this respect its operation has been most pernicious ; and 
if it be not repealed, some method of evading it discovered, 
or some countervailing principle be called into operation, it 
bids fair, in no very lengthened period, to reduce the agri- 
culturists of France to a condition little, if at all, better 
than those of Ireland. 

In distributing the property of those who die intestate, it 
seems natural to conclude that the same rule should be 
adopted which experience has shown is most advantageous 
in the making of wills. When, therefore, there is a landed 
estate, it should go to the eldest son ; being, however, 
burdened with a reasonable provision for the other children. 
If the fortune consist of money or moveables, it may be 
equally divided. 

(3.) We have now to inquire whether an individual, in 
leaving a fortune by will, should be allowed to fix by whom, 
and under what conditions, it shall always be held, and the 
purposes to which it shall always be applied. 

Every man should have such a reasonable degree of power 
over the disposal of his property as may be necessary to 
excite his industry, and to inspire him with the desire of 
accumulating. But if, in order to carry this principle to 
the farthest extent, individuals be allowed to chalk out an 
endless series of heirs, and to prescribe the conditions under 
which they shall successively hold the property, it might be 
prevented from ever coming into the hands of those who 
would turn it to the best account ; and it could neither be 
farmed nor managed in any way, however advantageous, 
that happened to be inconsistent with the directions in the 


will. To establish such a system would evidently be most 
impolitic ; and hence, in regulating the transfer of property 
by will, a term should be fixed beyond which the instruc- 
tions of the testator should have no effect. It is, of course, 
impossible to lay down any general rule for determining 
this period. According to the law of England, a man is 
allowed to fix the destination of his property until the first 
unborn heir be twenty-one years of age, when his will ceases 
to have any farther control over it. This is, perhaps, as 
judicious a term as could be devised. It appears to give 
every necessary inducement to accumulation, at the same 
time that it hinders the tying-up of property for too long a 

In Scotland it has been lawful, since 1685, to settle or 
entail estates upon an endless series of heirs ; but a bill is 
now before parliament (June 1848) which, if passed into 
a law, as seems most probable, will place the Scotch law of 
entail nearly on the same footing as the English. 

The bequeathing of property by charitable individuals 
for the endowment of hospitals, libraries, schools, and other 
purposes of public utility, is of the greatest importance in a 
national point of view ; and it would be easy to show that 
England has derived, and is at present deriving, the greatest 
advantages from bequests for such objects. Still, however, 
it is abundantly obvious that these should be subjected 
to the control of government. It is difficult, indeed, or 
rather, perhaps, impossible, to define a priori how far 
interference should be carried in respect to them ; but that, 
speaking generally, it is indispensable even to the proper 
carrying out of the views of the testator is sufficiently 

To regard the instructions in the wills of those who have 
established foundations as immutable laws, which are in no 
case to be altered, is, in truth, to permit the ignorance, 
folly, presumption, or dotage of an individual to become a 
standard for all future ages ; and to regulate the studies and 
the institutions of a more advanced and enlightened period 


by his crude conceptions and views. Surely, however, it is 
needless to say, that no select number of men, and still 
less individuals, should be allowed to erect themselves into 
infallible legislators for every succeeding generation. The 
regulations of the great Alfred, and of the various benevolent 
parties who founded and endowed the universities of Oxford 
and Cambridge, may have been excellent at the time when 
they were framed ; but had they been strictly adhered to, 
the chairs in these institutions must now have been filled 
with Aristotelian doctors, and lecturers on the Ptolemaic 
system of the world, and the infallibility of the Pope ! 

It is impossible to doubt the piety and generosity of many 
of those who, in the middle ages, left their property to 
monastic institutions ; but still less is it possible to hesitate 
applauding the conduct of the Reformers, who diverted this 
property to other purposes ; and who justly considered that 
the terms of wills dictated in a comparatively barbarous 
age, should not be permitted to consecrate and uphold a 
system which had been discovered to be most inimical to 
the interests of true religion, and to be productive only of 

The establishment of foundling hospitals is another in- 
stance of the same kind. They were projected and have 
been kept up with the best intentions ; but, as already seen, 
{ante^ pp. 246-8,) it admits of demonstration, and is now 
indeed generally conceded, that they have been productive 
of a greater amount of crime and of mortality than they 
have obviated. 

Even as respects the educational foundations established 
in London and most parts of England, none can doubt that 
their utility is in many instances greatly narrowed, and in 
not a few all but wholly nullified, by the injudicious rules 
laid down for their government, and the jobbing and cor- 
ruption by which their revenues are frequently wasted. 
Every unprejudiced person acquainted with the circuui- 
stances will readily admit, that there are no institutions 
that stand more in need of a careful revision and remodel- 


ling than the foundations in question. Tiie sphere of their 
iitility might be very greatly extended, at the same time 
that the education which the greater number of them afford, 
might be greatly improved. And it will not, surely, be 
contended, that more regard is due to the whims, caprices, 
or mistaken though benevolent views of the founders, than 
to the interests and welibeing of the successive generations, 
to whom they might be made to furnish an education suited 
to the varying exigencies and demands of the periods in 
which they live.' 

III. The third duty of government is, to provide the 
means of adjusting such disputes as may arise among its 
subjects, and of enforcing the observance of contracts. 

To do this, it is necessary to establish convenient and 
proper tribunals, accessible at all times, at a moderate ex- 
pense, to all who have occasion to appeal to them. 

Every practicable effort should also be made to simplify 
the law, and to render it as clear and precise as possible. 

Nothing tends more to paralyse the spirit of commercial 
enterprise than the existence of any doubt in the minds of 
parties with respect to the nature and effect of the laws 
bearing on the transactions in which they happen to be en- 
gaged. " The property and daily negotiations of merchants 
ought not to depend upon subtleties and niceties, but upon 
rules easily learned and easily retained."- It is mentioned, 
in a report by a Committee of the House of Commons on 
the foreign trade of the country, printed in 1820, that no 
fewer than two thousand laws with respect to commerce 
had been passed at different periods ; that many of these 
had originated in temporary circumstances ; and that eleven 
hundred viQVQ actually in force in the year 1815, exclusive 

^ We have discussed the various questions incident to the devising of pro- 
perty by will, including those respecting primogeniture, entails, compulsory 
distribution, foundations, &c., in a separate treatise on " The Succession to 
Property vacant by Death," published in 1848. And we beg to refer the 
reader to it for more ample information with respect to those topics which 
we have here been merely able to glance at. 

- Speech of Lord Mansfield in an insurance case. 


of the additions made in the subsequent j&ve years ! The 
committee justly and strong!}^ condemned this excessive 
multiplication. They stated, that the difficulty of deciding 
between legal and illegal transactions was so very great, 
that the most experienced merchants could seldom venture 
to act without consulting a lawyer ; and that it was quite 
impossible for them to proceed in their speculations with 
tliat promptitude and confidence so necessary to their 
success. And they declared that, in their opinion, no more 
valuable service could be rendered to the trade of the empire 
than an accurate revision of this vast and confused mass of 
legislation, and the establishment of some certain, simple, 
and constant principles, to which all commercial regulations 
might be referred, and under which all transactions might 
be conducted with facility, safety, and confidence. 

Since this report was compiled, a great deal has been 
done in the way of simplifying and consolidating our com- 
mercial law. A good deal, however, still remains to be 
accomplished ; and as it is an object of the highest impor- 
tance, it is to be hoped that it may be kept steadily in view, 
and that nothing may be left undone to give precision, clear- 
ness, and simplicity, to every branch of the law, but espe- 
cially to that aflfecting industrious undertakings. 

Government is bound to lend every reasonable facility 
towards enforcino- the fulfilment of contracts. Were it 
to evince any backwardness in this respect, there would 
be an immediate diminution of confidence, and compara- 
tively few engagements would be entered into. But when 
an individual is either unable or unwilling to abide by 
the stipulations into which he has entered, there is often 
great difficulty in determining the extent to which govern- 
ment should go in its attempts to enforce performance. 
The questions that occur with respect to bankruptcy exem- 
plify this. 

All classes of individuals, even those who have least to 
do with industrious undertakings, are exposed to vicissitudes 
and misfortunes, the occurrence of which may render them 


incapable of making good the engagements into which they 
have entered. . Individuals in this situation are said to be 
bankrupt or insolvent. But though bankruptcy be most 
frequently, perhaps, occasioned by uncontrollable causes, it 
is still more frequently occasioned by the recklessness and 
extravagance of individuals, and by their repugnance to 
make those retrenchments which the state of their affairs 
demands ; and sometimes, also, by fraud or bad faith. 
Hence the laws with respect to bankruptcy occupy a promi- 
nent place in the judicial system of every state in which 
commerce has made any progress, and credit been introduced. 
They differ exceedingly in different countries and stages of 
society ; and it must be acknowledged that they present 
very many diflBculties, and that it is not possible, perhaps, 
to suggest any system against which some pretty plausible 
objections may not be made. 

The execrable atrocity of the early Roman laws as to 
bankruptcy is well known. According to the usual inter- 
pretation of the law of the Twelve Tables, which Cicero has 
so much eulogised,' the creditors of an insolvent debtor 
might, after some preliminary formalities, cut his body to 
pieces, each of them taking a share proportioned to the 
amount of his debt ; and those who did not choose to resort 
to this horrible extremity, were authorised to subject the 
debtor to chains, stripes, and hard labour ; or to sell him, 
his wife, and children, to perpetual slavery, trans Tyherim I 
This law, and the law giving fathers the power of inflicting 
capital punishments on their children, strikingly illustrate 
the ferocious sanguinary character of the early Romans. 

There is reason to think, from the silence of historians, 
that no unfortunate debtor ever actually felt the utmost 
severity of this barbarous statute ; but the history of the 
republic is full of accounts of popular commotions, some of 

' " Fremant omnes, licet ! dicam quod seiitio : bibliothecas, mehercule, 
omnium philosophorum unus mihi videtur Duodecim Tabularum libellus ; 
si quis legum fontes et capita viderit, et authoritatis pondere et utilitatis 
ubertate superare." — De Oratore, lib. i. 


which led to very important changes, occasioned by the 
exercise of the power given to creditors of enslaving their 
debtors, and subjecting them to corporal punishments. The 
law, however, continued in this state till the year of Rome 
427, 120 years after the promulgation of the Twelve Tables, 
when it was repealed. It was then enacted, that the per- 
sons of debtors should cease to be at the disposal of their 
creditors, and that the latter should merely be authorised to 
seize upon the debtor's goods, and to sell them by auction 
in satisfaction of their claims. In the subsequent stages of 
Roman jurisprudence, further changes were made, which 
seem generally to have leaned to the side of the debtor ; 
and it was ultimately ruled, that an individual who had be- 
come insolvent, without having committed any fraud, should, 
upon making a cessio bonorum, or a surrender of his entire 
property to his creditors, be exempted from all personal 

The law of England disting-uishes between the insolvencv 
of persons engaged in trade, and that of others. The former 
can alone be made bankrupts, and are dealt with in a com- 
paratively lenient manner. " The law," says Blackstone, 
" is cautious of encouraging prodigality and extravagance 
by indulgence to debtors ; and, therefore, it allows the 
benefit of the laws of bankruptcy to none but actual traders, 
since that set of men are, generally speaking, the only per- 
sons liable to accidental losses, and to an inability of paying 
their debts, without any fault of their own. If persons in 
other situations of life run in debt without the power of 
payment, they must take the consequences of their own 
indiscretion, even though they meet with sudden accidents 
that may reduce their fortunes ; for the law holds it to be 
an unjustifiable practice for any person but a trader to 
encumber himself with debts of any considerable value. If 
a gentleman, or one in a liberal profession, at the time of 
contracting his debts has a sufficient fund to pay them, the 

Terasson, '■ Histoire de la .Jurisprudence Romaine," p. 117. 


delay of payment is a species of dishonesty, and a temporary 
injustice to his creditor ; and if at such time he has no suf- 
ficient fund, the dishonesty and injustice is the greater. He 
cannot, therefore, murmur if he suffer the punishment he 
has voluntarily drawn upon himself. But in mercantile 
transactions the case is far otherwise : trade cannot be car- 
ried on without mutual credit on both sides : the contract- 
ing of debts is here, therefore, not only justifiable, but 
necessary; and if, by accidental calamities, as by the loss 
of a ship in a tempest, the failure of brother traders, or by 
the non-payment of persons out of trade, a merchant or 
trader becomes incapable of discharging his own debts, it 
is his misfortune and not his fault. ^ To the misfortunes, 
therefore, of debtors, the law has given a compassionate 
remedy, but denied it to their faults ; since, at the same 
time that it provides for the security of commerce, by en- 
acting that every considerable trader may be declared a 
bankrupt, for the benefit of his creditors as well as himself, 
it has also, to discourage extravagance, declared that no one 
shall be capable of being made a bankrupt but only a trader, 
nor capable of receiving the full benefit of the statutes but 
only an industrious trader.*" ^ 

The objects the legislature have endeavoured to attain 
by the bankruptcy laws have been threefold : viz., 1st, To 
make a seizure of all the debtor's property ; 2d, To 
distribute this property, rateably, among all the creditors ; 

' The opinion of Puffendorff upon this point is opposed to that of Black- 
stone ; and being entitled to considerable respect, we subjoin it : — " II faut 
encore considerer ici la raison ou la necessite qui a oblige un homme a s'en- 
detter ; car, selon qu'elle est plus ou moins grande, on doit avoir plus ou 
moins de support et de compassion pour un debiteur reduit a la pauvrete'. 
Ainsi, ce n'est pas sans sujet que Ton traite les marchands avec plus de 
rigueur, lors meme qu'un cas fortuit les a rendus insolvables, que d'autres 
qu'un besoin pressant a mis dans la ne'cessite' d'emprunter; car il n'y a que 
le de'sir du gain qui porte les premiers a s'endetter : et comme ils font pro- 
fession de I'art de s'enricher, ils ne sont gueres excusables lorsqu'ils n'ont 
pas bien pris leurs precautions meme contre les accidens fortuits." — Droit <ie 
la Nature et des Gens, par Barbeyrac, liv. iii. cap. 7, § 3. 

^ " Commentaries," book ii. cap. 31. 


and, 3d, To discharge the debtor, provided nothing be 
found to impeach his honesty, from all future liability for 
the debts owing by him when the bankruptcy took place. 
Practically, however, it has been found very difficult to 
carry these views into effect. 

After the various proceedings, with respect to a bank- 
ruptcy case, have been gone through, if the conduct of the 
bankrupt has been such as to satisfy the court in which they 
have taken place, they will grant him a certificate,' or dis- 
charge, which may be confirmed or disallowed by the Court 
of Review. In the event of its being confirmed, the bank- 
rupt is entitled to a reasonable allowance out of his eflects; 
which is, however, made to depend partly on his former 
good behaviour, and partly on the magnitude of his divi- 
dend. Thus if his effects will not pay half his debts, or 
10s. in the pound, he is left to the discretion of the com- 
missioners and assignees, to have a competent sum allowed 
him, not exceeding 3 per cent on his estate, or ^CSOO in all; 
but if his estate pays 10s. in the pound, he is to be allowed 
5 per cent, provided such allowance do not exceed .^400 ; 
if 1 2s. 6d., then 7^ per cent, under a limitation, as before 
of its not exceeding ^500 ; and if 15s. in a pound, then 
the bankrupt shall be allowed 10 per cent upon his estate, 
provided it do not exceed ^£^600. 

According to our present law, when a person not a trader 
becomes insolvent, he may, after being actually imprisoned, 
at the suit of some of his creditors, for fourteen days, present 
a petition to the court to be relieved ; and upon his sur- 
rendering his entire property, he is, unless something frau- 
dulent be established against him, entitled to a discharge. 
While, however, the certificate given to a bankrupt relieves 
him from all future claims on account of debts contracted 
previously to his bankruptcy, the discharge given to an in- 
solvent only relieves him from imprisonment : in the event 

' Formerly, it was necessary that the certificate should be signed by a 
certain proportion of the creditors ; but this is no longer required. See .5 it 
G Vict., c. 122. 


of his afterwards accuinulatiug any property, it may be 
seized in payment of the debts contracted anterior to his 
insolvency. This principle was recognised in the cessio 
honorum of the Romans, of which the insolvent act is nearly 
a copy. 

It may be questioned, however, notwithstanding what 
Blackstone has stated, whether there be any good ground 
for making a distinction between the insolvency of traders 
and other individuals. There are very few trades so hazard- 
ous as that of a farmer ; and yet, should he become insolvent, 
he is not entitled to the same privileges he would have en- 
joyed had he been the keeper of an inn or a commission 
agent ! The injustice of this distinction is obvious ; but, 
without dwelling upon it, it seems pretty clear, that certi- 
ficates should be granted indiscriminately to all honest 
debtors. Being relieved from all concern as to his previous 
encumbrances, an insolvent who has obtained a certificate 
is prompted to exert himself vigorously in future, at the 
same time that his friends are not deterred from comino- 
forward to his assistance. But when an insolvent continues 
liable for his previous debts, no one, however favourably 
disposed, can venture to aid him with a loan, and he is dis- 
couraged, even if he had the means, from attempting to 
earn more than a bare livelihood ; so that, while the cre- 
ditors do not in one case out of a hundred gain the small- 
est sum by this constant liability of the insolvent, his 
energies and usefulness are for ever paralysed. 

The policy of imprisoning for debts, honestly contracted, 
seems also exceedingly questionable, and is now, indeed, all 
but abandoned. Notwithstanding the deference due to the 
great authorities who have endeavoured to vindicate this 
practice, we confess ourselves unable to discover any thing 
very cogent in the reasonings advanced in its favour. Pro- 
vided a person in insolvent circumstances intimate his 
situation to his creditors, and make a voluntary surrender 
of his property, he has, as it appears to us, done all that 
should be required of him, and should not undergo any 


imprisonment. If he have deceived his creditors by false 
representations, or if he conceal or fraudently convey away 
any part of his property, he should, of course, be subjected 
to the pains and penalties attached to swindling ; but when 
such practices are not alleged, or cannot be proved, sound 
policy, we apprehend, would dictate that creditors should 
have no power over the persons of their debtors, and that 
they should be entitled only to their effects. The maxim 
career non solvit, is not more trite than true. It is said, 
indeed, that the fear of imprisonment operates to prevent 
persons from getting into debt ; and this, no doubt, is the 
case. But then it must, on the other hand, be borne in 
mind, that the power to imprison tempts individuals to 
trust to its influence to enforce payment of their claims, 
and makes them less cautious in their inquiries as to the 
condition and circumstances of those to whom they give 
credit. The carelessness of tradesmen, and their extreme 
earnestness to obtain custom, are, more than any thing- 
else, the great causes of insolvency ; and the power of im- 
prisoning merely tends to foster and encourage these 
habits. If a tradesman trust an individual with money 
or goods which he is unable to repay, he has made a 
bad speculation. But why should he, because he has 
done so, be allowed to arrest the debtor's person ? If he 
wished to have perfect security, he either should not have 
dealt with him at all, or dealt only for ready money : such 
transactions are, on the part of tradesmen, perfectly volun- 
tary ; and if they place undue confidence in a debtor who 
has not misled them by erroneous representations of his 
affairs, they have themselves only to blame. 

It would really, therefore, as it appears to us, be for the 
advantage of creditors, were all penal proceedings against 
the persons of honest debtors abolished. The dependence 
placed on their efficacy is deceitful. A tradesman should 
rather trust to his own prudence and sagacity to keep him 
out of scrapes than to the law for redress: he may deal upon 
credit with those whom he knows, but he should deal for 


ready money only with those of whose circumstances and 
character he is either ignorant or suspicious. By bringing 
penal statutes to his aid, he is rendered remiss and negligent. 
He has the only effectual means of security in his own hand; 
and it seems highly inexpedient that he should be taught 
to neglect them and to put his trust in prisons. 

It is pretty evident, too, that the efficacy of imprison- 
ment in deterring individuals from running into debt, has 
been greatlv overrated. Honest insolvents must have suf- 
fered from misfortune, or been disappointed in the hopes 
they entertained of being able, in one way or other, to dis- 
charge their debts. The fear of imprisonment does not 
greatly influence such persons ; for when they contract debts 
they have no doubt of their ability to pay them. And the 
abolition of the imprisonment of honci fide insolvents could 
not, under a reasonably well contrived system, give any 
encouragement to the practices of those who endeavour to 
raise money by false representations, or who conceal or con- 
vey away their property to the prejudice of their creditors; 
for these are to be regarded as swindlers, and should, as 
such, be subjected to adequate punishment. At present, 
indeed, the law is much too indulgent to this description of 
persons. Traders or others who endeavour, by concealing 
or misrepresenting the real state of their afiairs, to obtain 
goods or loans of money ; or who, having obtained such 
goods or loans, pervert them to spendthrift or disho- 
nest purposes, are about the very worst species of cheats ; 
and the temptation to resort to such practices, and the faci- 
lity with which they may be carried into effect, should make 
them, when detected, be visited with a proportionally in- 
creased severity of punishment, on the principle laid down 
by Cicero, that ea sunt animadvertenda peccata maxime, quae 
difficillime prcecaventur} But honesty and dishonesty are 
not to be treated alike ; and unless fraud of some sort or 
other be established, the imprisonment or penal pursuit of 

' Oratio pro Sexto Moscio, § 40. 


debtors appears to be alike oppressive and inexpedient. 
The legislature appears, indeed, to have come round to 
this way of thinking ; for, under the act 5 & 6 Victoria, 
cap. 116, all persons not liable to the bankrupt laws, and 
those liable to them, whose debts are under <j£'oOO, may, on 
giving certain notices, and making over all their property, 
present and future, for the benefit of their creditors, obtain 
from the Bankruptcy Court, a protection against all pro- 
cess whatever, unless fraud or other offence of that kind be 
proved against them ; and a still later act, the 7 & 8 Vic- 
toria, cap. 96, takes from creditors the power to incarcerate 
debtors for debts under =£^20. 

The regulations with respect to bankruptcy and insol- 
vency differ materially in other respects. Until the act 
1 & 2 Victoria, cap. 110, an individual could not be 
subjected to the insolvent law except by his own act, that 
is, by his petitioning for relief from actual imprisonment 
for debt. But under that act, any creditor who may have 
taken a debtor in execution, may, unless his debt be 
satisfied within twenty-one days from the date of the 
debtor's imprisonment, get the latter subjected to the in- 
solvent laws, and procure the vesting of his property in an 
assignee for the benefit of his creditors, in the same way 
as if the debtor had himself petitioned for relief. An indi- 
vidual cannot, however, in any case, be made a bankrupt, 
and subjected to the bankrupt law, except by the act of 
another, that is, of a petitioning creditor,^ as he is called, 
swearing that the individual in question is indebted to him, 
and that he believes he has committed what is termed an 
act of bankruptcy. 

While, however, the law of England has always given 
the creditor an unnecessary degree of power over the debtor's 
person, it did not, till very recently, give him sufficient 
power over his property. In this respect, indeed, it was so 
very defective, that one is almost tempted to think it had 

' One creditor whose debt is to the amount of i'oO or upwards, or two 
whose debts amount to £70, or three whose debts amount to £100. 


been intended to promote the practices of fraudulent debtors. 
The property of persons subject to the bankrupt and in- 
solvent laws, was, it is true, nominally placed at the dis- 
posal of assignees or trustees, for the benefit of their cre- 
ditors ; but when a person possessed of property, but not 
subject to the bankrupt laws, contracted debt, if he went 
abroad, or lived within the rules of the King's Bench or the 
Fleet, or remained in prison without petitioning for relief, 
he continued, most probably, to enjoy the income arising 
from that property without molestation. 

The law, no doubt, said, that creditors should be autho- 
rised to seize the debtor's lands and goods, a description 
which an unlearned person would be apt to conclude was 
abundantly comprehensive ; but the law used to be so in- 
terpreted, that funded property, money, and securities for 
money, were not considered goods : if the debtor had a 
copyhold estate, it could not be touched in any way what- 
ever ; if his estate were freehold, the creditor might, after a 
tedious process, receive the rents and profits, but no more, 
during the lifetime of his debtor. If the debtor died before 
judgment against him in a court had been obtained, then, 
unless the debt were on bond, the creditor had no recourse 
upon the land left by the debtor, whatever might be its 
tenure ; " nay, though his money, borrowed on note or bill, 
had been laid out in buying land, the debtor's heir took 
that land wholly discharged of the debt ! " ^ 

In consequence of the facilities thus afforded for swindling, 
an individual known to have a large income, and enjoying 
a proportionally extensive credit, was able, if he went to 
Paris or Brussels, or confined himself within the rules of 
the King's Bench or the Fleet, to defraud his creditors of 
every farthing he owed them, without their being entitled 
to touch any part of his fortune. All owners of funded, 
moneyed, and copyhold property, had thus, in fact, a license 
given them to cheat with impunity ; and the onl}-^ wonder 

^ Brougham's " Speech on the State of the Law," p. 108. 


is, not that some did, but that a vast number more did not 
avail themselves of this singular privilege. 

But we are glad to have to state that this preposterous 
system has been materially changed within the last few 
years. The acts 3 & 4 William IV., cap. 104, and the 
1 &u 2 Victoria, cap. 110, have made the copyhold as well as 
the freehold estates, with the moneyed, funded, and other 
property of deceased and living debtors, against whom 
judgment has been obtained, available for the satisfaction 
of their just debts. Hence it is no longer in the power 
of any knave, who chooses to reside abroad or in prison, 
to preserve his property from the grasp of those to whom 
he is really indebted. Indeed there is now little to object 
to in this department of the law, unless it be the ex- 
pensive machinery (Court of Chancery) under which the 
administration of a deceased debtor's effects is conducted in 
litigated cases. Speaking generally, however, the various 
proceedings with respect to bankruptcy and insolvency are 
still, perhaps from their extreme difficulty, in an unsatisfac- 
tory state ; and it is probable they will, at no distant date, 
be materially changed. 

Too much lenity in questions of bankruptcy is generally 
shown to extravagant speculators, and to parties, whether 
enoaaed in business or not, who continue for considerable 
periods to live beyond their means. A party who embarks 
in speculative transactions to three, five, or ten times the 
amount of his capital, is a gambler, and not a merchant, 
and should be dealt with as such. And, though their evi- 
dence was not necessary to establish the fact, the disgraceful 
disclosures that were made in the bankruptcies which took 
place in 1846-47, show conclusively that such parties are by 
no means rare ; and that some stringent measures are required 
to obviate the abuse of the existino; facilities for obtaining 
credit. The same disclosures have also shown that the 
partners of various establishments, which had been for years 
substantially insolvent, continued, down to the period of 
their final explosion, to live in the most expensive style, 



with town and country houses, horses, carriages, and so 
forth. Such conduct, though admitting of no apology, is 
extremely prevalent — the fact being, that more than four- 
fifths of all the bankruptcy and insolvency that takes place 
has its source in excessive expenditure. And while the 
necessity of providing means to carry it on, tempts those 
engao-ed in business to embark in the most hazardous adven- 
tures, it makes all parties less scrupulous than they would 
otherwise be about the means they resort to in order to 
obtain credit. The wide-spread mischief that has been, and 
may be, occasioned by indulging in such practices, requires 
that they should, as much as possible, be discouraged. 
They exhibit a decided want of honesty and of sound prin- 
ciple. And it is but fair and reasonable that those who, to 
the grievous injury of others, engage in them, should be 
treated with the severity they deserve. 

IV. The fourth duty of government is to adopt such 
means as may be most effectual for the prevention of con- 
fusion and fraud in the dealings of individuals. 

In furtherance of this object, the government of every 
civilised country has endeavoured to enforce the equality 
of all weights and measures of the same denomination. By 
its attention in this respect, additional facilities are given 
to commercial transactions: and that confusion and difficulty 
are obviated that could not fail to arise in the making of 
bargains and the adjustment of contracts, were the standards 
to which reference is usually made not legally and clearly 

For the same reasons, governments have every where re- 
served to themselves the privilege of issuing coined money; 
and it is obvious, were individuals allowed to exercise this 
privilege, that the confusion that would be occasioned by 
the issue of coins of different denominations, and of the 
same denomination, but of different degrees of purity and 
weight, would go far to deprive society of the advantage 
it has derived from the introduction and use of money. 
Government should not, however, confine its attention 


wholly to the issue of coined money ; it is equally bound 
to extend it to the issue of paper money. 

The signal advantages derivable from the substitution of 
notes or paper to serve as money instead of gold, depend, 
in a very great degree, on the fact of such notes l)eing 
issued by parties of unquestionable solvency, and of their 
being readily exchangeable for the gold they profess to re- 
present. We have already noticed the mischiefs occasioned 
by the vicious banking system established in the United 
States ; but, unluckily, it is not necessary to travel across 
the Atlantic for illustrations of this grievance. The per- 
mission, so Ions: granted in this countrv, to individuals 
and associations, to issue notes to be used as money, with- 
out requiring any guarantee for their payment, has been 
productive of the most disastrous results ; the destruction 
of country bank paper having, on different occasions, with- 
in the course of the last sixty years — in 1793, in 1814, 
1815, and 1816, in 1826, and to a considerable extent, 
also, in 1836 — overspread the empire with bankruptcy and 
ruin. That the recurrence of such calamities should, if 
possible, be prevented, is a proposition that will hardly 
be disputed, and the simplest and most effectual way of 
doing this, would be to prohibit the issue of all notes 
payable on demand, except by those who give security for 
their payment. There are, however, great practical diffi- 
culties in the way of such a project ; and the objects to be 
effected by it, with others of hardly less importance, were to 
a great extent secured, by the measures for the improvement 
of the currency, carried through parliament in 1844. These 
effected a separation between the issue and banking depart- 
ments of the Bank of England. The former is permitted to 
issue notes of the value of .£'14,000,000 upon securities ; but 
whatever she may issue more than this, must be in exchange 
for an equivalent amount of coin or bullion. The issues of 
the country banks were at the same time limited ; so that 
they are no longer able to increase their amount, as was 
their former practice, in periods of speculation and excite- 


ment, to any improper extent. The establishment of new 
banks for the issue of notes without the assent of government, 
was then also prohibited; and as the number of existing 
banks will be gradually diminished, provision will ultimately 
be made, if this regulation be maintained, for confining, as 
would be most desirable, the issue of notes to a single 
bank or department. These important measures, notwith- 
standing they deeply affected many powerful private inter- 
ests, were passed with little difficulty, and were very gene- 
rally approved of. 

In this respect, however, the public opinion has to some 
extent changed ; and the act of 1844 has been charged with 
having aggravated the pressure of the crisis of 1847. That, 
however, was almost wholly a consequence of the railway 
mania, and of the failure of the potato crop of the pre- 
vious year. This failure deprived more than two-thirds 
of the people of Ireland, and a considerable portion, also, 
of those of Great Britain, of their accustomed supplies of 
food. In consequence of this deficiency, and of govern- 
ment having come forward to provide the means for its 
relief, there was an unprecedented importation of all sorts 
of corn ; and the demand for bullion for exportation to 
meet this importation, occurring simultaneously with a vast 
railway expenditure, pecuniary accommodations were ob- 
tained with the greatest difficulty, and the rate of interest 
rose to an extravagant height. Instead, however, of being 
increased by the act of 1844, it is pretty certain that the 
operation of the latter contributed to alleviate the severity 
of the crisis. The restraints it imposed on the issues 
of the country banks hindered them from embarking to 
any great extent in railway adventures, so that they 
were better able to assist their customers ; and it also 
prevented the Bank of England from attempting to meet 
the exigencies of the case, otherwise than by raising the rate 
of interest and restricting her issues. And besides being 
the natural and proper, these were, in fact, the only means 
by which the drain for bullion for foreign remittance could 


be checked, and the exchange turned in our favour. A 
great many mercantile houses that had been trading upon 
very insufficient capitals, or which had previously been 
virtually insolvent, were, of course, swept oft' during the 
crisis ; and the alarm that was thereby occasioned, though, 
for the most part, without any good foundation, gave rise 
to a species of panic. During the prevalence of the latter, 
government consented to a temporary suspension of the act 
of 1844 ; but there is now, we believe, little doubt that this 
was an unwise proceeding. When it took place, the vio- 
lence of the crisis had abated. The drain for gold for the 
Continent had not only ceased, but had begun to set in our 
favour ; and the probability is, that in a very few days all 
alarm would have passed off", without the dangerous prece- 
dent which was then set by the interference of ministers. 
Hence, in our view of the matter, the experience afforded 
by the crisis of 1847 tells in favour of the act of 1844. 
And should it be subjected to any modifications, it is 
to be hoped that they may be such as may tend to 
carry out and strengthen the principles on which it is 

The prevention of the sale of all articles of gold or silver 
not marked with a public stamp, seems a judicious regula- 
tion. It is very difficult to ascertain when these metals 
are really pure ; and to prevent the frauds that might 
in consequence happen, government performs this difficult 
operation for its subjects, and gives them a guarantee on 
which they may rely. 

The enactments against the adulteration of articles of 
food with deleterious ingredients, seem to be highly proper. 
Those who are detected in carrying on such nefarious prac- 
tices, besides being exposed to the loss of employment, 
should be made to feel the vengeance of the law. 

It was formerly customary to regulate the mode of pre- 
paring or manufacturing various articles; but such attempts 
at regulation are now admitted, by all competent judges, 
to be injurious. They contribute to check invention and 


discovery, to render the arts stationary, and to occasion 
the decline of every branch of industry subject to their 

The registration of deeds and contracts affecting fixed 
property, give additional facilities to its transfer, and to 
the negotiation of loans upon it. 

Persons possessed of landed property, who wish to borrow, 
most commonly endeavour to attain their end by granting 
a bond for the sum, or a mortgage over their estates. When 
the title under which the granter of the bond holds the 
estate is perfectly clear, this forms a very unexceptionable 
species of security; and in Scotland money can be raised 
upon such bonds at a comparatively low rate of interest. 
But in this part of the island there are several circum- 
stances which tend very much to limit the practice, and to 
render it less advantageous than it might be. The main 
defect lies in the want of any means of readily ascertaining 
what the estate, and the title to it, really are, upon which 

' The influence of corporations, statutory apprenticeships, regulations as 
to the mode of manufacturing articles, &c., has been ably investigated in a 
Report presented by M. Vital Roux to the Chamber of Commerce of Paris 
in 1805. We subjoin the following extract: — "II y a tres peu d'objets 
manufactures qui puissent etre soumis a la censure ou a I'examen d'un in- 
specteur ; par la grande raison que cette censure n'aurait aucun effet, et que 
I'inspecteur le plus sur et le plus impartial, c'est le consommateur. Toutes 
vos inspections, toutes vos regies, toutes les precautions de vos syndics, ne 
pourront pas faire que j'emploie de I'etoffe qui ne me conviendra pas, quand 
elle aurait les attestations les plus authentiques qui m'en garantiraient la 
bonte. Le consommateur est le juge souverain en ces matieres ; c'est le 
seul tribunal competent, et dont il n'y a point d'appel. II est done inutile 
de cre'er moyeus de conciliation ; car on ne pent faire changer la volonte de 
celui qui consomme, on ne pent etre plus habile que son experience. C'est 
au manufacturier a la rendre profitable a ses interets, s'il veut avoir du 
debit. Nous croyons done, que I'interet meme du manufacturier est le 
meilleur moyen de police pour les manufactures, et que les inspecteurs, les 
surveillans les plus surs, ce sont les consommateurs. II ne faut pas chercher 
des chemins d^tourn^s, quand la route est connue de tout le monde : laissons 
done aller les choses, puisqu'elles marchent sans secours, qu'elles arrivent par 
la force meme de leurs courans au but que chacun se propose, et ne domions 
pas des guides a ceux qui savent se conduire." 


it is proposed to borrow. With the exception of York and 
Middlesex, no register is kept in Enoland of the settle- 
ments, mortgages, conveyances, and bonds, by which pro- 
perty may be affected ; so that it becomes impossible, as 
Mr Justice Blackstone has observed, for either the pur- 
chaser or the lender of money upon an estate to know the 
burdens that may attach to it. This is necessarily a great 
obstacle to the lending of money upon land, as well as to 
the conveyance of estates from one individual to another. 
Blackstone has stated, that in the previously mentioned 
counties, where registers are kept, as many disputes arise, 
from the inattention and omissions of parties, as would 
most probably have arisen had they wanted registers.^ But 
this must be occasioned by some defect in the plan of regis- 
tration, which no doubt might be easily repaired. Were 
it, for example, declared that no deed or bond, affecting 
landed property, should be good against a third party 
unless it were entered in a public register, the rights of 
those who either purchased an estate, or advanced money 
upon it, would cease to be influenced by the circumstance 
of any previous but unregistered bond or conveyance being 
subsequently brought to light. A regulation of this sort 
would speedily teach parties the necessity of registering 
every deed or instrument affecting landed property, and 
would give that security to its purchasers, and to the 
lenders upon it, that is in all respects so desirable. 

This system, which was adopted in Scotland at a very 
early period, has been productive of the best effects. There 
all deeds touching landed property are regularly registered, 
a special register being kept for the entry of deeds of entail. 
These registers are open to the inspection of the public ; 
and the first thing that is done by the bidder for an estate, 
or by a lender of money on bond upon it, is to desire his 
agent to inspect the register, to ascertain whether there arc 
any burdens affecting it, and their nature and extent. In 

' " CommentarieSj" book ii. chap. 20. 


this way every man is made exactly aware of what he is 
doing ; and if he either buy an estate with a vitiated title, 
or lend money upon one that is already encumbered up 
to its value, he has himself only to blame. A degree of 
security is thus given, both to purchasers and lenders, that 
is at once highly advantageous, and is not otherwise at- 

The practice, called the truck system, under which some 
masters either directly supply their work-people with cer- 
tain descriptions of goods to account of wages, or open or 
have an interest in shops to which they compel them to 
resort, has given rise to a great deal of controversy. Occa- 
sionally, no doubt, the practice has been adopted by the 
masters from a sincere desire to benefit those engaged in 
their service, by furnishing them, at a reduced price, with 
some of the principal articles of subsistence. But a system 
of this sort may be easily perverted to fraudulent purposes ; 
and there cannot, we apprehend, be a question that it has 
been, in very many instances, employed to cheat the work- 
people out of a portion of their just claims ; and also, by 
allowing them to become indebted to the accommodation 
shops, to deprive them, in some degree, of their free agency. 
The legislature took this view of the practice, which was 
forbidden, in most trades, by the act 1 & 2 William IV., 
cap. 32. It is still, however, extensively practised ; and, 
notwithstanding its injurious influence, and the advantage 
it gives to the dishonest manufacturer, it is no easy matter, 
especially when trade is depressed, to prevent its being 
acted upon. 

V. We have, in the ffth place, to consider the species of 
industrious undertakings which government may engage in 
or control, or to which it may lend some peculiar sanction. 

Perhaps, with the single exception of the conveyance of 
letters, there is no branch of industry which government 
had not better leave to be conducted by individuals. It 
does not, however, appear, that the post-office could be so 
well conducted by any other party as by government : the 


latter can alone enforce perfect regularity in all its subor- 
dinate departments ; can carry it to the smallest villages, 
and even beyond the frontier ; and can combine all its 
separate parts into one uniform system, on which the public 
may rely for security and despatch. Besides providing for 
the speedy and safe communication of intelligence, the post- 
office has every where almost been rendered subservient to 
fiscal purposes, and made a source of revenue ; and pro- 
vided the duty on letters be not so heavy as to oppose 
any very serious obstacle to the frequency and facilit}'^ of 
correspondence, it seems to be a most unobjectionable tax, 
and is paid and collected with little trouble and incon- 

The construction and police of roads, harbours, &c,, are 
among the most important objects to which the attention 
of oovernment should be directed. In some countries, as 
France, the administration of roads is placed in the hands 
of government ; while in others, as England, it is placed 
in the hands of the gentry of the different counties, acting 
under authority of the legislature. Each plan has its pecu- 
liar advantages and defects ; but the balance on the side of 
advantage seems, on the whole, to preponderate in favour 
of the English system. The French system is perhaps 
preferable, were it applied only to the great lines of road ; 
but these bear a very small proportion to the cross and 
other roads with which every extensive kingdom either is or 
should be intersected. And it seems reasonable to suppose 
that, when the gentry, and those most directly interested 
in having good roads, and on whom the expense of tlieir 
construction and maintenance principally falls, have to 
superintend their execution and repair, they will be made 
and maintained better, and at a cheaper rate, than if their 
management were left wholly to the care of engineers em- 
ployed by government, and responsible to it only. 

It is the duty of government to take care that the tolls 
be not oppressive ; and to assist, by makiug grants, in en- 
abling roads to be carried through districts, and bridges to 


be constructed, where the necessary funds could not other- 
wise be raised. The money advanced on account of the 
Menai bridge is of this description, and has been judiciously 

Generally, however, government should be exceedingly 
shy about advancing funds for the prosecution of under- 
takings that have failed in the hands of private individuals, 
or that will not be engaged in by them. Grants for such 
purposes are frequently, indeed, little better than bonuses 
to political partisans ; and are almost always unprofitably 
expended. The money laid out on the Caledonian Canal, 
on Leith harbour, and on several canals and river works in 
Ireland, executed by government, has been, in so far as the 
public interests are concerned, all but thrown away. 

There are some branches of industry which must be 
carried on in some degree in common, but with respect to 
the prosecution of which the views and interests of indivi- 
duals are so very various, that government is obliged to 
interfere to regulate their respective pretensions. The 
salmon fishery is an instance of this sort. Government has 
not only to fix when the fishery shall begin and terminate, 
but it has also to decide how far the proprietors, near the 
mouths of rivers, shall be entitled to carry weirs and other 
fishing machinery into their channels. 

Undertakings in which the hazard is considerable, or that 
require, in order to their successful prosecution, a larger 
amount of capital than can be conveniently furnished by 
individuals, are usually carried on by companies, which 
frequently require the sanction of the legislature to their 
formation. And when these bodies claim no peculiar pri- 
vileges, but are formed on the principle of coming into fair 
and open competition with each other and with individuals, 
there does not seem, in ordinary cases, to be any good 
reason for opposing their incorporation. But in the event 
of their claiming any peculiar privileges, or if the purpose 
for which they seek to be incorporated would necessarily 
give them such privileges, the fair presumption being that 


they will employ them to promote their own private in- 
terests, in preference to those of the public, they should 
not be incorporated without the niaturest deliberation. 
Still, however, there are many cases in which it is for the 
public advantage that companies with such privileges should 
be established, under proper regulations. A city is ill sup- 
plied with water ; there is a copious spring ten or twenty 
miles distant, and a company offer to bring this water into 
the city, on tlieir getting an act authorising them to appro- 
priate the spring, and to lay pipes or to construct an 
aqueduct for the conveyance of the water. In this case 
the object in view is most desirable ; but it is plain that, 
were the authority they require given unconditionally to 
the company, it would be in their power to raise the price 
of water to the highest level, and perhaps to make an 
enormous profit, to the great injury of the inhabitants. 
The same is the case with railways and canals. It is of 
the greatest importance that the best means of communi- 
cation should be established between all great towns ; and 
every facility should be given for the formation of com- 
panies for their construction. But then it is to be borne 
in mind, that there is always some one line between any 
two places decidedly better fitted for a railway or canal 
than any other line ; and if a company get an act of par- 
liament, authorising them to appropriate this line, they get, 
in fact, a substantial monopoly of the traffic between the 
places connected by the railway or canal, and may, in con- 
sequence, supply the public with inferior accommodation, 
and add proportionally to their charges. And hence, in 
authorising the establishment of companies for such pur- 
poses, such conditions should be inserted in the acts as may 
be adequate for the protection of the public interests. This 
important consideration has, however, been far too little 
attended to. In this country, we have in most cases con- 
tented ourselves with endeavouring to provide against 
overcharges, by fixing maximum rates of profit on the com- 
pany's stock, and maximum rates of charge for the services 


to be performed by them. But overcharges are not the 
only evils to be guarded against ; and if they were, expe- 
rience has shown that the restrictions referred to are ill 
fitted to attain their object. A limitation of the rate of 
dividend tempts a prosperous company to engage in sub- 
sidiary undertakings, though of doubtful utility and profit ; 
and it farther tempts them to countenance an extravagant 
system of management ; to give, by underhand methods, 
unfair advantages to their proprietors ; and, in short, to 
adopt every device by which they may retain the highest 
(or unnecessarily high) rates of charge, without apparently 
raising their revenue above the sum required to defray the 
maximum rate of dividend. A limitation of the rates of 
charge is equally ineffectual. The rates are uniformly such 
as it is supposed will yield, when the railway or other 
public work is about to be constructed, an adequate remu- 
neration for the capital to be vested in it. But the fair 
presumption is, that the country will continue to increase 
in wealth and population, for an indefinite period, with the 
same rapidity that she has increased since the close of the 
American War; and if so, these rates will, in a few years, 
yield a profit or interest far beyond any that was in the 
contemplation of the parties when the work was entei'ed 
upon. Now, it is plain that in such cases there will be no 
way of abating the company's profits, or, which is the same 
thing, its charges against the public, except by the forma- 
tion, at a vast expense, of a new, and otherwise, perhaps, 
a perfectly unnecessary road ! Hence the obvious expe- 
diency, in passing acts for the formation of railways, canals, 
docks, water and gas companies, and other public works, of 
reserving power to government to make periodical revisions 
of the tolls or rates of charge for the services to be per- 
formed ; to control their management, in the view of pro- 
viding for the greater security and convenience of the 
public ; and, if needs be, to purchase up the works on 
reasonable terms. 

The French (under the late regime) adopted the plan, in 


legislating for railways, of fixing upon lines and rates of 
toll, with plans for their construction, &c. ; and of sub- 
mitting these lines to public competition, and assigning 
them to those who offered to construct them and work them 
for the shortest lease or term of years, at the expiration 
of which they were to become the property of the public. 
This plan is preferable, perhaps, in some respects, to that 
previously mentioned. But we have neither adopted the one 
system nor the other ; and it is all but universally admitted 
that our legislation, with regard to railways and other 
public works, has evinced a highly culpable inattention to 
the public interests, and been discreditable to the intelli- 
gence of the country. Latterly, however, the extraordinary 
extension of railway projects has forcibly attracted atten- 
tion to the subject : and though very many important lines 
have been, others still remain to be conceded, while the 
older companies are frequently obliged to come to parlia- 
ment for new acts ; so that, by adopting a well-devised 
system, we may check abuse, and provide for the public 
interests in the lines that remain to be granted ; and may 
probably, also, be able to repair, in part at least, the errors 
already committed in the cession of the others.^ 

It is sometimes necessary, in order to encourage the for- 
mation of a company for some desirable object — such as the 
lighting of a middling-sized town with gas — that it should 
get an exclusive privilege for a given number of years. But 
this should in no case be ceded without due examination, 
and without the insertion of conditions, to protect the public 
from any extortion on the part of the company. 

No exclusive company should ever be established for 
carrying on any sort of manufacture, or for conducting any 
branch either of internal or external commerce. No such 
institution, formed for such an object, has ever been any 
thing else than a public nuisance. If it be necessary that 

^ The subjects now alluded to have been treated with great ability in 
different tracts, by James Morrison, Esq., of which a collected edition was 
published in the course of the present year. 


those engaged in any particular trade should contribute to 
defray some public expenses required for its prosecution, they 
may be formed into a regulated company ; that is, a company 
into which every one may enter on paying a moderate fine, 
or annual premium, being then at liberty to trade on his 
own account, and to act in all respects according to his own 
judgment and discretion. The necessity of providing for 
the expense of the armaments, without which it was alleged 
the trade with India could not be conducted, formed, during 
a lengthened period, the only circumstance urged in defence 
of the exclusive privileges granted to the East India 
Company. But admitting that these armaments were 
necessary, and that government declined to provide them, 
their cost might have been defrayed by a peculiar duty on 
Indian exports and imports appropriated to that object, or 
by forming the traders into a regulated company. The 
latter, indeed, was the mode in which the Levant and 
Russian trades were long conducted, and the expenses of 
a public nature attached to them provided for. And had 
either of these plans been adopted in conducting the East 
India trade, it is abundantly certain that it would have 
proved more extensive and beneficial than it has done. 

The businesses of insurance and banking are those which 
are most commonly prosecuted in this country by companies. 
With the exception of the Bank of England, none of these 
companies enjoy any peculiar privilege. But the monopoly 
granted to the Bank is one which may, under certain condi- 
tions, be advantageously continued to that establishment. 

No authority should ever be granted to companies or 
individuals to undertake any work, however useful, by which 
the private property of others may be affected, without 
providing for their full indemnity. To act on any other 
principle would be to shake the security of property ; it 
would be injuring one set of individuals for the benefit of 
some other set. 

The law with respect to patents for new inventions and 
discoveries in the arts, is encumbered with several difficulties. 


The expediency of granting patents has been disputed, 
though, as it would seem, without sufficient reason. Were 
they refused, the inducement to make discoveries would, in 
many cases, be very much weakened ; at the same time 
that it would plainly be for the interest of every one who 
makes a discovery to endeavour, if possible, to conceal it. 
And, notwithstanding the difficulties in the way of conceal- 
ment, they are not insuperable ; and it is believed that 
several important inventions have been lost, from the secret 
dying with their authors. On the other hand, it is not 
easy to decide upon the term for which the patent or 
exclusive privilege should be granted. Some have proposed 
that it should be made perpetual ; but this would be a 
serious obstacle to the progress of improvement, and would 
lead to injurious results. Perhaps the term of fourteen 
years, to which the duration of a patent is limited in 
England, is as proper a one as could be suggested. It may 
be too short for some inventions, and too long for others, 
but, on the whole, it seems a pretty fair average. 

Previously to the reign of Queen Anne, it was common 
to grant patents without any condition, except that they 
should be for really new inventions. But it was then 
ordered, that those who obtained patents should deliver a 
minute and accurate description or specification of the inven- 
tion for which the patent is granted, into the Court of 
Chancery. This is a judicious regulation. It secures the 
invention from being lost, and the moment the patent 
expires every one is in a condition to profit by it.i 

VI. We have now, in t\vQ sixth and last place, to consider 
the means proper to be adopted for securing the property 
and persons of the citizens from such casualties as they might 
be subject to without the interference of government. 

Of the measures of a public character, devised for the 

1 For farther iuformation on this subject the reader is referred to God- 
son's work on the " Law of Copyrights and Patents ;" and to the " Report of 
the Committee of the House of Commons on Patents," particularly the evi- 
dence of Mr Farey. 


protection of property from casualties, a principal class is 
intended to give security to navigation. Without the co- 
operation or sanction of government, light-houses could not 
be erected or managed on any general system, nor safe and 
convenient harbours be constructed. To defray the expense 
of such works, a revenue of some sort or other must be pro- 
vided ; and as it belongs to the legislature to say how this 
revenue shall be raised, it must also belong to it to decide upon 
the propriety of their construction. No doubt can be enter- 
tained that great additional facility and security has been 
given to navigation by the erection of light-houses, and by the 
formation and improvement of docks and harbours, during 
the last half century. At the same time, however, it is highly 
expedient, with a view to the encouragement of commerce, 
that the charges laid on shipping, on account of these works, 
should be kept as low as possible. Where they are heavy, 
the navigator is tempted to resort to less expensive though 
less secure channels. 

Except in so far as they may be obviated by the establish- 
ment of a good system of police, government can do but 
little to protect property on land from casualties. It may, 
indeed, enact regulations to guard against fire, respecting 
the thickness of party-walls in cities, the materials to be 
used in roofing, &c. ; but farther than this it had better 
not interfere, but leave the care of property to the vigilance 
of its owners. 

The measures of a public character, contrived to protect 
the persons of the citizens against casualties, are princi- 
pally intended to prevent the spread of contagious diseases, 
and to secure the proper education of medical men. 

From a belief that the plague is contagious, and that the 
infection may be conveyed to a great distance, it has long 
been usual, in all civilised countries, to adopt precautions to 
hinder its importation. For this purpose, ships coming 
from places where the plague is prevalent, are usually 
obliged to anchor for forty days in some particular port or 
road : and the individuals coming from them are obliged 


to resort, for the same period, to a public building prepared 
for their reception, denominated a lazaretto, where they are 
placed under surveillance, and are not allowed to have any 
intercourse with any one except the officers of health. The 
ships and individuals so confined are said to be performing 
quarantine. If at the end of forty days no symptoms of 
disease appear, they are set at liberty. 

It should, however, be stated, that the fact of the plague 
being contagious has been denied, and that the precautions 
referred to have been said to be useless, and to have no other 
effect than the imposition of some very vexatious and bur- 
densome restraints on commerce. Perhaps, indeed, these 
precautions may, in some instances, have been carried too 
far ; but in a matter of this sort, innovations should not be 
rashly adopted : and better evidence than any hitherto 
laid before the public would seem to be necessary to war- 
rant the abolition of all restraints on the intercourse with 
infected countries. 

When a virulent contagious disease breaks out in any 
particular district, it is the duty of government, by sur- 
rounding it with a cordon of troops, to prevent, if possible, 
its further progress. Such a measure may, indeed, 
occasion a greater intensity of mortality within the infected 
district ; but the safety of a few individuals is not to be 
purchased by seriously endangering the lives of many 

Much difference of opinion has existed in regard to the 
extent to which government should go in recommending 
or enforcing the adoption of any efficient remedy against a 
mortal disease ; such, for example, as vaccination. In such 
cases it had better, perhaps, confine its attention to the in- 
stitution of experiments and examinations as to the facts, 
laying the result before the public, and leaving individuals 
to use their own discretion with respect to them. 

It has been argued, that government is only imposing on 
itself a needless task when it interferes to regulate and as- 
certain the qualifications of those engaged in the medical 



profession ; inasmuch as the desire of promoting their own 
interest will, in that as in all other businesses, ensure 
proficiency. But there is a wide difference between the 
emplojmient of those who exercise their art on the bodies of 
men, and those who exercise it on some sort of raw or 
manufactured produce. If an individual employ a tailor to 
make him a coat, he will not employ him again unless it be 
made to his mind ; nor, though the cloth were spoiled, 
would the loss be considerable : but if an individual em- 
ploy a physician, surgeon, or apothecary, to prescribe for 
him, he may, in the event of the person so employed being 
ignorant of his art, lose his life; while, owing to the 
difficulty of ascertaining when death is occasioned by the 
natural progress of disease, or by the unskilfulness of 
the practitioner, the business of the latter may not be 
materially diminished ; and he may continue, for an 
indefinite period, to prosecute his destructive career. It 
does, therefore, seem that government is bound to take such 
measures as may be effectual to secure the proper education 
of medical men ; and that none should be permitted to 
practise who have not been properly educated, and have not 
been examined and obtained a certificate of their capacity 
from some public board constituted for that purpose. All 
individuals, though very many are nowise fitted to judge 
of their qualifications, must occasionally resort to medical 
men ; and it is the duty of government to provide that the 
lives of its subjects be not sacrificed to ignorance, cupidity, 
or quackery. 

In some countries it is usual to prohibit the sale of 
poisons, except under certain regulations ; and the many 
crimes that are perpetrated by means of arsenic, seem to 
evince the propriety of making its sale illegal, except 
when the buyer brings a note from a physician, specifying 
the quantity required, and the purpose for which it is 

It has been usual, in order to ouard asainst accidents, 
to limit the number of passengers to be carried by stage- 


coaches, and to subject packet-boats and other public con- 
veyances to examination. 

Notwithstanding the introduction of Sir Humphry Davy's 
safety-lamp into mines, explosions still frequently take 
place in them, which occasion the most frightful disasters ; 
while, owing to the recklessness and apathy of the work- 
men, there is but little prospect of these calamities being 
abated by greater care or attention on their part. But 
what will not be done by the miners might, perhaps, be 
done by making the masters responsible for the injuries in- 
flicted on the former by explosions and suchlike accidents. 
By throwing the support of the families and others depen- 
dent on workmen killed or injured in the mines on the 
masters, the latter would be compelled to enforce those 
regulations by which alone accidents may be averted. And 
though the measure might, perhaps, make some addition to 
the cost of mineral produce, it would be too trifling to have 
any very sensible effect. 

For the same reasons we are, also, disposed to think that 
the proprietors of mills and factories should be made re- 
sponsible for the accidents that occur in them. 

We have alluded, in a previous part of this work, to the 
serious injury done to the public health by the bad state 
of the dwellings of the poor. (Ante, p. 188.) This is espe- 
cially the case in the great manufacturing towns ; and it is 
not easy to imagine that there can be any subject with 
stronger claims on the public attention. It is in vain to 
trust, in a matter of this sort, to the judgment of indivi- 
duals. If private parties be left to construct houses at 
discretion, we shall no doubt have, in time to come, as we 
have had hitherto, thousands upon thousands of cottages 
erected without any provision for their drainage, for fur- 
nishing them with adequate supplies of water, or even for 
their ventilation ; and such cottages, being cheap, are 
always sure to find occupiers. Nothing, however, can be 
more obvious than that it is the duty of government to take 
measures for the prevention and repair of an abuse of this 


sort. Its injurious influence is not confined to the occu- 
piers of the houses referred to, though, if it were, that would 
be no good reason for declining to introduce a better system. 
But the diseases engendered in these unhealthy abodes 
frequently extend their ravages through all classes of 
the community ; so that the best interests of the middle 
and higher orders, as well as those of the lowest, are 
involved in this question. And on the same principle 
that we adopt measures to guard against the plague, we 
should endeavour to secure ourselves against typhus, and 
against the brutalising influence, over any considerable 
portion of the population, of a residence amid filth and 

There cannot, one should think, be much difficulty in 
devising measures fitted to prevent the farther extension 
of the evils complained of. There seems, however, to be 
no good reasons for being satisfied with the mere prevention 
of their progress ; but very many why we should also 
endeavour to efl"ect their eradication. 

As already stated, we shall briefly touch, in another part 
of this work, on the interference of government with respect 
to public education, and the support of the poor. It be- 
longs to the politician and moral philosopher to discuss 
how far, and in what way, it should interfere to strengthen 
and promote moral and religious habits. 

The previous observations may, perhaps, suffice to give 
a general idea of the sort of objects with respect to Avhich 
the interference of government is required, in conducting 
the ordinary business of society, and the extent to which 
it should be carried. It cannot, however, be too strongly 
impressed upon those in authority, that non-interference 
should be the leading principle of their policy, and inter- 
ference the exception only ; that in all ordinary cases indi- 
viduals should be left to shape their conduct according to 
their own judgment and discretion ; and that no interfer- 
ence should ever be made on any speculative or doubtful 


grounds, but ouly when its necessity is apparent, or when 
it can be clearly made out that it will be productive of 
public advantage. The maxim, pas trop goiiterner, should 
never be absent from the recollection of legislators and 
ministers. Whenever they set about regulating, they are 
treading a path encompassed with difficulties ; and while 
they advance with caution, they should be ready to stop 
the moment they do not see the way clearly before them, 
and are not impelled, by a strong sense of public duty, to 
go forward. But, so long as this is the case, they should 
never hesitate in their course. There are many cases in 
which government must, and many more in which it should 
interfere. And it is the duty of the legislature, having 
once fully satisfied itself, by a careful inquiry, of the expe- 
diency, all things considered, of any measure, resolutely to 
carry it into effect. 






The various methods by which labour may be rendered 
most productive, and the relation and dependence of the 
different kinds of industry being previously traced and 
exhibited, we now proceed to the second dividon of our sub- 
ject, or to an investigation of the laws which regulate the 
value and price of the products of industry. 

In treating of the production of wealth, it was not neces- 
sary to inquire whether the labour required to appropriate 
and produce commodities, was the sole source and measure 
of their value ; or whether it was not partly derived from 
other causes, and partly only from labour. But an ac- 
quaintance with the circumstances which determine tlie 
value of commodities, in the different stages of society, is 
necessary to enable us to ascertain, with due precision, the 
principles which regulate their distribution. 

312 VALUE. 


Exchangeable Value — How it is determined — Conditions required to 
render a Commodity/ invariable in its Exchangeable Value — Cost or 
Real Value — How it is determined — Conditions required to render 
a Commodity invariable in its Cost — Quantity of Labour required 
to produce a Commodity different from the Quantity for which it will 
exchange — Corn not invariable in its Value — Changes in the Value 
of Money, 

We endeavoured to show, at the commencement of this 
work, that the value and the utility of commodities are 
totally distinct qualities, and cannot be confounded, or 
regarded in the same point of view, without leading to the 
most erroneous conclusions. An article is useful, or pos- 
sessed of utility, when it has the power or capacity of ex- 
citing, satisfying, or gratifying one or more of the various 
wants and desires of man. But an article is not valuable, 
or possessed of value, unless it may be exchanged for 
some quantity of voluntary labour, or of some other article 
or product, obtainable only through the exertion of such 

Without utility of some sort or other, no article will 
ever be desired. But the most useful article, if it be a 
spontaneous production of nature, and may be freely 
enjoyed by every individual, is wholly destitute of value ; 
for none will either labour, or give the produce of labour, 
for that which Providence gratuitously supplies. That an 
article may have value, it is indispensable that some expen- 
diture of labour, or, which is the same thing, some sacrifice 
of toil and trouble, should be required for its acquisition. 
The maximum of utility, if it be obtained independently of 
this sacrifice, can give no value to any thing. What can 

VALUE. 313 

be more useful than atmospheric air and the rays of the 
sun ? and what can be more completely destitute of value ? 

An article or product possessed of utility and value must 
derive the latter from one of two sources, or from both. 
Labour must have been required for the production or appro- 
priation of a valuable article, or it must exist in a limited 
quantity, or under such circumstances that the supply is 
inferior to the demand. All those articles and products of 
which the supply may be indefinitely increased, and which 
are not subject to any artificial restraints, derive their value 
either wholly from the labour expended upon them, or partly 
from that cause, and partly from the accidental circum- 
stance of their supply being inferior to the demand; but the 
value of such articles and products as exist only in limited 
quantities, and the supply of which, not admitting of an 
indefinite extension, is really subjected to a natural or an 
artificial monopoly, is altogether independent of the labour 
required to produce them ; and is derived partly, as in the 
case of waterfalls, from the labour they are fitted to save, 
and partly, as in the case of antique gems, statues, &c., 
from the mere competition of those who wish to obtain 
them . 

We must, therefore, carefully distinguish between the 
exchangeable value of an article, or the quantity of produce 
or labour for which it will exchange, and its cost, or, as it is 
sometimes termed, its real value ; meaning, by cost or real 
value, the quantity of labour originally required to produce 
or acquire an article. 

I. Exchangeable or Marketable Value. — The capa- 
city of exchanging for or buying other things is inherent 
in all commodities, which are not spontaneous productions, 
when they happen to be in demand ; but it can neither be 
manifested nor appreciated except when they are compared 
with each other, or with labour. It is, indeed, quite im- 
possible to speak of the value of a commodity without refer- 
ring to some other commodity, or to labour, as a standard. 

314 VALUE. 

No article or product can have exchangeable value, except 
in relation to something else that is or may be exchanged 
for it. We might as well talk about absolute height or 
absolute depth, as about absolute value. A is said to pos- 
sess value, because it exchanges for some quantity of B or 
C ; and it is evident, that the quantity of B or C for which 
A exchanges, forms the only attainable measure of, or 
expression for, the value of A ; just as the quantity of A 
forms the only attainable measure of, or expression for, the 
value of B or 0. 

Exchangeable value being the power which a commodity 
has of exchanging for other commodities, or for labour, it 
follows that the exchangeable value of no single commodity 
can vary without occasioning a simultaneous variation in 
the exchangeable value of those with which it is compared. 
Suppose a bushel of wheat exchanged, in ] 750, for an ounce 
of silver, and that it now exchanges for two ounces : on 
this hypothesis, it is evident that wheat has doubled in 
value as compared with silver ; or, which is the same thing, 
that silver has lost half its value as compared with wheat. 
This case is, mutatis mutandis, the case of all commodities 
or products exchanged for each other. If A rise, it must 
be in relation to something else, as B ; and if B fall, it 
must be in relation to something else, as A ; so that it is 
obviously impossible to change the relation of A to B, 
without, at the same time, changing that of B to A. 

It appears, therefore, that no commodity can be constant 
or invariable in its exchangeable value, unless it will at all 
times exchange for, or purchase, the same quantity of all 
other commodities and of labour. Suppose A exchanges 
for 1 B, 2 0, 3 D, &c., its exchangeable value will be con- 
stant, provided it always preserves its present relation to 
them, but not otherwise. And it is obvious, that to com- 
municate this constancy of value to A, it is indispensable 
that those circumstances, whatever they may be, that now 
determine its relation to, or power of exchanging for or pur- 
chasing B, C, D, &c., should, in all time to come, continue 

VALUE. 31 5 

to exert precisely the same influence over it and them.' 
Experience, by exhibiting the values of commodities, as 
compared with each other, in a state of constant fluctuation, 
sufliciently proves that the circumstances under which they 
are respectively produced, are perpetually varying. Perhaps, 
however, it may be worth while to observe, that had differ- 
ent commodities been always produced under the same 
circumstances or conditions, not A only, but every other 
commodity, would have been an invariable standard ; as 
any given commodity in a market may be used as a standard 
to which to refer the value of every one else. It is evident, 
too, that the possession of such an invariable standard would 
be of no use whatever ; all that it would teach us would be, 
that the circumstances which first made A exchange for B, 
C, &c., continued equally to aflect them all ; but of the 
nature of those circumstances, and the intensity of their 
operation, it would leave us wholly in the dark. 

II. Cost or Real Value. — Having thus seen that the 
exchangeable value of any given commodity is expressed by 
the relation it bears to some other commodity or to labour, 
the next subject claiming our attention is, the investigation 
of the circumstances which determine this relation, or of the 
source and regulating principle of value. 

A person destitute of an article, and wishing to acquire 
it, has only two ways of effecting his object ; he may set 
about producing the article, or he may exchange a quantity 
of labour, or the produce or equivalent of a quantity of 
labour for it. In either case, the cost of the article is to be 
estimated by the quantity of labour directly or indirectly 
expended on its acquisition. Demand may, therefore, be 
considered as the ultimate source or origin of both exchange- 
able and real value ; for the desire of individuals to possess 
themselves of articles, or rather the demand for them 

^ The conditions essential to an invariable measure of exchangeable value 
were first clearly pointed out in the " Dissertation on the Nature, Measures, 
and Causes of Value," p. 17. 


originating in that desire, is the sole cause of their being 
produced or appropriated ; and the quantity of labour, or of 
sweat and toil, required to render a demand eftectual — that 
is, to produce or obtain articles or products — forms the single 
principle b3'" which their cost or real value is, in all cases, 
regulated and determined. 

It has been already stated, that some commodities exist 
only in limited quantities, and are, consequently, subject to 
a natural monopoly ; while the production of others, the 
supply of which might be indefinitely increased, is sometimes 
subject to artificial restraints. The marketable or exchange- 
able value of such commodities bears no definite proportion 
to their cost or real value, but varies in every different 
degree, according to the closeness of the monopoly, and the 
competition for them. They may, however, be always 
readily discriminated from those that may be freely pro- 
duced in unlimited quantities ; and are but few and unim- 
portant compared with the latter. 

If the demand and supply of freely produced commodities 
were always exactly proportioned to each other — that is, if 
the supply brought to market were uniformly such as could 
be taken oiX by those who were desirous of obtaining them, 
and willing to pay the cost of their production, their ex- 
changeable value would always bear the same proportion to 
their real value, or cost. That this would be so is obvious ; 
for, under the circumstances supposed, there is nothing that 
could affect the value of commodities, except the labour 
expended upon them. 

Practically speaking, the supply of commodities is, owing 
to an infinity of causes — such as changes of fashions, of sea- 
sons, and of the usual channels of commercial intercourse, 
the miscalculations of producers, the speculations of mer- 
chants, &c. — seldom or never adjusted precisely in pro- 
portion to the eff'ectual demand, or the demand of those who 
are able and willing to buy them. But it will be shown in 
the next chapter, that fluctuations of value, arising from 
these causes, are confined within certain limits ; that the 

VALUE. 817 

producers always exert themselves to reduce the value of 
those that yield more than the fair average rate of profit, 
and to elevate those that do not ; and that the common level 
of value and price which is thus attained, may be considered 
as identical with the cost of production, being, generally 
speaking, determined by the quantity of labour required to 
produce commodities. But as we are only endeavouring 
at present to establish the leading or constant principles 
with respect to value, we shall suppose that these accidental 
causes of variation do not exist, or that allowance has been 
made for them, and confine ourselves to an investigation of 
the circumstances which determine the value of freely pro- 
duced commodities, when their supply is about commen- 
surate with the demand. 

Suppose that a commodity, A, the supply of which is 
neither in excess nor defect, varies in relation to some other 
commodity, B, supplied in a similar way ; the cause of 
this variation will be found in the fact of the labour re- 
quired to produce them having varied in the same propor- 
tion. Thus, suppose A and B are now equal : if, twelve 
months hence, A should be worth 2 B, this change must 
be occasioned by the quantity of labour required to produce 
A having doubled, while that required to produce B has 
remained stationary ; or by that required to produce B 
having diminished a half, while that required to produce A 
has been constant ; or the labour required to produce them 
both may have varied in the same or in opposite directions, 
but so that the quantity required to produce A has doubled 
as compared with the quantity required to produce B. 
There cannot, however, be, in most cases, much practical 
difficulty in deciding in which of these modes the variation 
has been really brought about. An improvement is made 
in the manufacture of cotton, for example, and its value 
immediatel}' declines as compared with other things in which 
no improvement has been made, or in which the improve- 
ment has been less ; and it will obviously do this, not 
because these others have increased in cost or real value, 

318 VALUE. 

but because it has sunk. Thus, if we suppose that a still 
greater improvement had been, at the same time, made in 
the woollen manufacture, cottons would rise as compared 
with woollens, not because they had risen in real value, but 
because they had not fallen so much as woollens.^ 

The products obtained by equal quantities of sweat and 
toil are not always equal : but their cost depends on the 
labour expended, and not on the mode on which it is ex- 
pended, or on the degree of its productiveness. The inven- 
tions and discoveries which augment the productiveness of 
labour, add nothing either to its value, or to that of the 
commodities produced by its means. A day's labour in a 
rude state of society, when the arts are in their infancy, 
and machinery unknown or inefficient, yields a very dif- 
ferent quantity of produce from a day's labour in an 
advanced period, when the arts are highly improved, 
and the most powerful machinery universally introduced. 
Nothing, however, can be more obvious than that the sacri- 
fice made by the labourer is as great in the former case as 
in the latter. The variation is not in the amount of phy- 
sical force, or of labour, exerted by the agent that produces, 
but merely in the mode in which that force is applied. But, 
however the same amount of labour may be laid out, and 

1 The acute and ingenious author of the " Templars' Dialogues" (" Lon- 
don Magazine/' May 1824, p. 551) has stated, that " It is possible for A 
continually to increase in value — in real value observe— and yet command a 
continually decreasing quantity of B." This statement has been disputed 
by the author of the " Critical Dissertation on the Nature, Measures, and 
Causes of Value ; " but without any just ground, for nothing can be more per- 
fectly correct. A and B have been produced by certain quantities of labour ; 
but more labour is now required to produce A, and a still greater proportional 
quantity to produce B : under these circumstances, A must obviously have 
increased in real value, for it has cost its producers a greater sacrifice of 
toil and trouble ; but as the cost of A has not increased so much as that of 
B, it will now exchange for, or purchase a less quantity of the latter. Had 
the author of the " Dissertation " perceived this distinction, he would, most 
probably, have spared not a few of his remarks on the statements advanced 
by Mr Ricardo, as well as by the author of the " Dialogues." — Dissertation 
on the Nature, ^c. p. 41. 

VALUE. 319 

whatever may be its produce, it unavoidably occasions the 
same sacrifice to those by whom it is performed ; and hence 
it follows, that the products of equal quantities of labour or 
of toil and trouble, how great soever the differences amongst 
them, are identical in their cost, and consequently, also, in 
their real value. Nothing that is valuable can be obtained 
except by the exertion of labour, or physical force. This is 
the price that man must pay for all things with which he is 
not spontaneously furnished ; and it is by the magnitude of 
the price so paid, and not by the magnitude, shape, or qua- 
lity of the things themselves, that their cost or real value 
is to be estimated. 

A given quantity of labour is not, therefore, to be con- 
sidered in the same light as a given quantity of its produce, 
or of commodities: for, whether the quantity of commodities 
produced by a fixed quantity of labour does or does not vary, 
the value of that quantity, in the estimation of the producer, 
is necessarily constant ; and he will always be disposed to 
exchange it for an equal quantity, or for the produce of an 
equal quantity, of other men's labour. Suppose an individual 
could produce two pecks of wheat by a day's labour in 1830 ; 
but that, owing to his being obliged to cultivate a compa- 
ratively poor soil, he can now produce only one peck by the 
same expenditure of labour ; this single peck will be deemed 
by him, and by every one else, of exactly the same value 
that the two pecks were before ; for it has cost the same 
amount of sweat and toil to raise it ; and it will, conse- 
quently, exchange for, or buy the same quantity of those 
commodities that continue to require the same labour for 
their production, that the two pecks did in 1830. 

In an open market, when the supply of freely produced 
commodities is nearly proportioned to the efiectual demand, 
the labour required for their production determines the 
proportions in which they exchange for each other, and for 
labour. It is material, however, to observe, tliat, speaking 
generally, commodities uniformly exchange for or buy more 
labour, or the produce of more labour, than was required 

320 VALUE. 

for their production. And unless such were the case, a 
capitalist would have no motive to lay out stock on the 
employment of labour ; for his profit depends on his getting 
back the produce of a greater quantity of labour than he 
advances. When he buys labour, he gives the produce of 
that which has been performed for that which is to he per- 
formed. It is obvious, too, inasmuch as there is no fund 
except capital, or the commodities already produced and 
actually existing in a country, to feed and support labourers, 
that the quantity of produce they receive in exchange for 
their labour, or their wages, must vai*y with the variations 
in the amount of that capital, and in their number. At 
one period, they may be so numerous, compared with capital, 
that a labourer may be willing to offer a future day's work 
for the produce of five or six hours' work already performed ; 
while, at another period, their number, as compared with 
capital, may be so much reduced, that they may be able to 
obtain the produce of ten hours' performed labour for twelve 
hours' future labour. But the cost, and, in all ordinary 
states of the market, the exchangeable value, of commodities 
is not affected by these variations. The change is not in 
the principle that regulates and determines value — that is, 
in the physical exertion, or sweat and toil of the labourer — 
but in what he obtains for it. What he produces, or ac- 
quires by equal quantities of labour, always costs him the 
same sacrifice, and, has, therefore, the same real value, 
whether it be large or small. He gives a constant, but 
receives a variable quantity in its stead. 

The statements now made show the error of the opinion 
held by Smith, that the quantity of labour required to pro- 
duce any article, might be taken as the measure of the 
quantity for which it would exchange. Owing to variations 
in the efficacy of the labour required in production, or rather 
in the efficacy of the modes in which it is applied, to changes 
of fashion, and other causes, it may happen, that an article 
that required a day's labour for its production no very long 
time ago, would not now exchange for one whose production 

VALUE. -821 

cost an hour's labour. " It is," says Mr Ricardo, " the 
comparative quantities of commodities which labour will 
produce, that determines their present or past relative value, 
and not the comparative quantities of commodities given 
to the labourer in exchange for his labour." ^ 

In stating that the quantity of labour required to produce 
commodities is the only determining principle and measure 
of their cost, and generally, also, of their exchangeable value, 
it is, of course, taken for granted, that all sorts of labour 
are reduced to the same common standard of intensity. 
The inequalities in the physical force of those individuals 
who have attained to their full growth, and are perfectly 
formed, are in themselves not very material, and when con- 
sidered in a general point of view entirely disappear, inas- 
much as any superiority that may obtain among a few on 
the one hand, is sure to be balanced by a corresponding 
deficiency amongst as many on the other. 

It will be shown, in a subsequent chapter, that the circum- 
stance of certain sorts of labour being of the description 
called skilled, and of their being paid at a higher rate than 
those common sorts that all may perform, does not affect 
the correctness of the principles we have been endeavouring 
to establish with respect to the value of commodities. 

The result of these investigations may be thus briefly 
recapitulated : — 

1st, That nothing can possess exchangeable value, unless 
it be in demand, and unless some portion of voluntary 
human labour be required for its production or appropriation, 
or both. 

2d, That the cost, or, as it is sometimes called, the real 
value of a commodity, is dependent on, and exactly propor- 
tioned to, the quantity of labour required for its production 
or appropriation. 

3d, That the exchangeable value of a commodity is de- 
pendent partly and principally on its cost, and partly on 

1 " Principles of Economy and Taxation," p. '». 

822 VALUE. 

accidental variations of supply and demand ; and is mea- 
sured by the quantity of any other commodity, or of labour, 
for which it will exchange. 

The amount of labour expended on the production of 
commodities being the sole measure of their cost, it follows 
that, if any commodity required at all times the same 
quantity of labour for its production, its cost would be in- 
variable. It is obvious, however, that there can be no such 
commodity. The varying fertility of the soils, mines, &c., 
to which recourse must successively be had, and the im- 
provements that are constantly being made in the applica- 
tion of labour, occasion perpetual variations in the quantities 
thereof required for the production of commodities. And, 
therefore, it is not to any one commodity, or set of commo- 
dities, but to some given quantity of labour, that we must 
refer for an unvarying standard of cost or real value. 

It has sometimes been said, that if any commodity were 
invariable in its value, it might be appealed to on all occa- 
sions as an unerring standard by which to ascertain the 
exchangeable value of other things. But it is obvious that 
it could not be so appealed to, unless the value of commo- 
dities and their cost were always identical. This, however, 
as will be more fully shown in the next chapter, is but oc- 
casionally and rarely the case. The value of commodities 
may be raised above their cost, either by a sudden increase 
of the usual demand, or by a sudden deficiency of the usual 
supply, and may be depressed below it by the opposite 
circumstances. And though it be true that any given 
fluctuation is seldom of considerable duration, yet, as the 
causes of fluctuation are perpetually recurring, a special 
inquiry must be made in each particular instance, to ascer- 
tain whether they are really in operation, and the extent 
of their disturbing influence. We should, therefore, draw a 
most inaccurate conclusion, were we to assume that the mere 
equality of the labour required for the production of a com- 
modity, rendered it, in all cases, an accurate measure or 
standard of marketable value ; for the value of that com- 

VALUE. 323 

modity might vary from the influence of causes affecting 
itself, though extrinsic to, and independent on, the quantity 
of labour required for its production ; or it might vary from 
similar causes operating on the commodities with which it 
was compared. If A were always produced by the same 
quantity of labour, and if B and C were produced by vary- 
ing quantities of labour, then, if value in exchange depended 
on nothing but quantities of labour, or if it always bore the 
same proportion to these quantities, we should be able, by 
comparing B and C with A, to say at once whether their 
value had remained constant, or to point out the precise 
extent to which it had varied. But when there are other 
causes which may affect the value of A itself, as well as the 
values of B and C, it is obvious we should not be able, 
by merely comparing A with the others, to say when a 
variation took place in the relation that previously obtained 
amongst them, whether it had been occasioned by causes 
exclusively affecting A, or exclusively affecting B and C, 
or whether they had all been affected, though in different 

But, notwithstanding what has now been stated, Smith, 
and, more recently, Say, Gamier, and others, have contended 
that corn may be assumed as an invariable standard of 
value ; and that, taking the prices of corn for a few years 
together, to get rid of the disturbing effects of variable 
harvests, whatever fluctuation may take place in them 
must be in the value of the money or commodity in which 
the price of corn is estimated, and not in the value of corn 
itself, which they regard as constant. Founding upon 
this hypothesis, attempts have been made, by comparing 
the prices of corn with the prices of other things mentioned 
in history, to determine the fluctuations of their value. It 
is, however, to be regretted that the learning and ingenuity 
displayed in this research have not been more profitably 
employed. It is hardly necessary, after what has been 
previously stated, to make any observations to show that 

324 VALUE. 

the hypothesis referred to is altogether visionary. Smith 
says, that the value of corn is invariable, because the demand 
is always proportioned to the supply ; increasing when it 
increases, and diminishing when it diminishes. Now, ad- 
mitting that such is the case, what has this constancy of 
demand to do with the value of corn ? It will not, it is true, 
be produced if it be not demanded ; but its value, when 
produced, depends not on the demand, but on the quantity 
of labour required for its production. The growers of corn 
in Kentucky, Gallicia, Holland, and England, have all an 
effectual demand for their produce ; but owing to the 
different fertility of the soils which they cultivate, or the 
different quantities of labour required to make them yield 
the same quantities of corn, its cost, and consequently, also, 
its marketable value and price, is hardly half so great in 
some of those countries as in others. 

If we knew the quantity of labour required, in any period 
of antiquity, to produce a quantity of wheat in Italy or 
Greece, and what is now required for its production in 
England, we should be able readily to determine its value, 
as compared with other things the relation of which to corn 
was known at both periods. It is plain, however, that if we 
knew the quantity of labour required to produce any other 
commodity at the periods in question, it would serve for a 
standard quite as well as corn. There is nothing about the 
latter to render it invariable more than there is about most 
other things. M. Say, indeed, supposes that the influence of 
improvements in agriculture in reducing the price of corn 
is about equal to the influence which the necessity of 
resorting to poorer soils has in raising it 1^ But if this were 
really the case, agricultural industry would be always about 
equally productive ; and capital, and consequently popula- 
tion, would increase with nearly the same rapidity, whatever 
might be the quality of the soils under tillage. We shall 
afterwards endeavour to trace and exhibit the real influence 

' " Cours d'Economie Politique," torn, iii, p. 7. 

VALUE. 325 

of improvements ; at present it is enough to remark, that 
the supposition that they are in all cases capable of neutraliz- 
ing the influence of increasing sterility, is inconsistent with 
the best established principles, and contradicted by the 
experience of every nation. 

Although, however, the mere comparison of corn and 
silver be incapable of communicating any information with 
respect to the variations that have taken place in the value 
of either or both of them, still it i.s, on several accounts, 
desirable to know the proportion which the one has borne 
to the other. According to Say,' or rather to Garnier," 
the hectolitre of wheat exchanged, at an average, in anti- 
quity, for 289 grains of pure silver ; and for 

245 grains, under Charlemagne, 



under Charles VII. of France, to- 
wards 1450, 



in 1514 — (America was discovered 
in 1492,) 



in 1536, 



in 1610, 



in 1640, 



in 1789, 



in 1820. 

There is, however, reason to think that Garnier has 
undervalued the price of wheat in antiquity. The learned 
M. Letronne^ has endeavoured to show, that the price of 
the hectolitre of wheat in Greece, in the age of Socrates, 
should not be reckoned at less than 468 grains of pure sil- 
ver ; and that its price at Rome, in the reign of Augustus, 
was about 550 grains. The statements of L<^tronne seem 
to be fully established ; and if so, it will follow that the 

^ " Cours d'Economie Politique," vol. iii. p. 24. 
' " Richesse des Nations," vol. v. p. 152-184. 

■* " Considerations Ge'ndrales sur I'Evaluation des Monnoies Grecques et 
Romaines," p. 113-124. 

• 326 VALUE. 

value of silver, as compared with corn, instead of having, 
as M. Say supposes, fallen to a sixth part of its value in 
antiquity, has not fallen to quite a fourth part of its value 
in Greece, about 400 years before the Christian era, and 
to about a third part only of its value in Rome, at its 

We are, also, inclined to think that the difference between 
the values of corn, as compared with silver, in ] 789 and 
1820, in the foregoing statement, is a good deal overrated. 
The latter, indeed, was hardly a fair term to be taken for a 
comparison ; for agriculture had not then fully i-ecovered 
from the disturbance occasioned by the previous war, com- 
merce had not resumed its old channels, and the paper 
money issued during the contest had not been wholly with- 
drawn from circulation. But at present, (1848,) and for 
some years past, the value of corn, as compared with silver, 
has not differed materially, in most European markets, from 
its value in 1 789 : certainly it is not more than from 10 to 
12 per cent higher. 

The influence caused by the discovery of the American 
mines over prices in Europe, appears to have ceased by the 
middle of the seventeenth century ; and we doubt whether 
the value of money, compared with the mass of commo- 
dities usually brought to market, has fallen in the interval. 
It is commonly, indeed, supposed that dClOO or dPlOOO was 
worth as much in the reigns of William III., Anne, and 
George I., as ^£^200 or £2000 at present. There is really, 
however, no such difference in the value of money at these 
epochs. Corn is not materially higher at this moment than 
it was a hundred or a hundred and fifty years ago ; and 
though the prices of butchers'' meat, beer, leather, and a few 
other articles have risen in the interval, that rise has been 
nearly if not wholly countervailed by the extraordinary fall 
that has taken place in the price of almost all sorts of 
manufactured goods, colonial products, &c. We admit, 
indeed, that ,^100 or .^1000 will not go nearly so far in 
housekeeping at present as it would have done in the first 

VALUE. 327 

lialf of last century. That, however, is not a consequence 
of the enhanced cost of commodities, but of the vastly im- 
proved and more expensive mode of living ; the better 
quality of houses, the superiority of their furniture and 
other accommodations, the better tables that are now kept, 
the improved and more costly education of children, the 
greater number and cost of servants, &c. Those who 
should now live as our forefathers did in the reigns of 
Anne and the first George, would, we apprehend, find that 
.£'100 would go about as far as it did then. 

The wages of household servants have risen most mate- 
rially during the last century and a half; but it is ques- 
tionable whether the services of agricultural labourers, 
artisans, &c., cost more now than in 1700 or 1750. These 
parties receive, it is true, a far higher rate of wages, if esti- 
mated by the day ; but when compared with the services 
rendered, or the work done, it is doubtful whether their 
wages have increased. We are well satisfied that, speaking 
generally, the Scotch labourers of the present day execute 
in a given time from three to four times the work that was 
executed by their predecessors previously to the peace of 
Paris in ] 763 ; and during the same period a great, though 
not an equal, increase has also taken place in the labour 
performed in England. 



Cost of Production the grand regulating Principle of Excliangeable 
Value and Price — Influence of Variations in the Demand for and 
Supply/ of Commodities over Prices — Influence of Monopolies — 
Average Price coincident with Cost of Production. 

We endeavoured, in the foregoing chapter, to elucidate the 
leading and fundamental principles with respect to value, by 
investio-atino; the circumstances which determine the value 
of commodities, when their supply is adjusted according to 
the effective demand. In the present chapter we shall 
endeavour to appreciate the influence of variations in the 
demand and supply of commodities on their value and price, 
whatever may be the source of these variations. 

To render what has to be stated on these subjects, and 
those that will be discussed in the following chapter, per- 
fectly intelligible, we shall anticipate so far on what will 
hereafter be more fully proved, as to assume that the wages 
earned by the labourers engaged in the diff'erent branches 
of industry are, all things considered, nearly equal, or differ 
only by an amount so small, that it may be neglected with- 
out occasioning any material error ; and that the profits 
realised by those who undertake difii'erent businesses are in 
the same predicament. It is obvious, indeed, that such 
must be the case : if, on the one hand, the profits or wages 
of those who undertake or employ themselves in difficult, 
hazardous, dirty, unhealthy, or disagreeable businesses, were 
materially to exceed what was necessary to afford them a 
reasonable compensation for the greater skill required, or 
the peculiar inconveniences to which they are exposed, they 
would be in a better situation than others; and there would, 
consequently, be an influx of capital and labourers into 
those businesses, until the natural equilibrium that, at an 


average, always subsists amongst the difFereut branches of 
industry had been restored : and if, on the other hand, the 
inconveniences attending any particular business be not 
sufficiently compensated, some of those who carry it on will 
gradually withdraw from it, till, by the diminution of the 
supply, the price of the article is raised, so as to yield the 
necessary indemnification. The law of competition, or the 
attention paid by every individual to his own interest, will 
not allow this principle to be infringed upon for any consi- 
derable period ; and, speaking generally, will insure the 
near equality, all things taken into account, of wages and 
profits in different occupations. 

The cost, or real value, of commodities — denominated by 
Smith and Grarnier natural or necessary price — is, as already 
seen, identical with the quantity of labour required to pro- 
duce them and bring them to market. Now, it is quite 
obvious that this cost is the permanent and ultimate regu- 
lator of the exchangeable value or price of all commodities 
not subjected to monopolies, or of which the supply may be 
indefinitely increased with the increase of demand. That 
the market price of such commodities and their cost do not 
always coincide, is certain ; but they cannot, for any con- 
siderable period, be far separated, and have a constant ten- 
dency to equality. If, owing to any single circumstance or 
combination of circumstances, a commodity be brought to 
market and exchanged for a greater amount, either of other 
commodities or of money, than is required to defray the 
cost of its production, including the common and average 
rate of nett profit at the time, its producers will obviously 
be placed in a relatively advantageous situation ; and there 
will, in consequence, be an influx of capital into that parti- 
cular department, until competition has sunk the value or 
price of the article to the level that will yield only the 
customary rate of profit on the capital employed in its pro- 
duction. And, on the other hand, were a commodity 
brought to market which did not exchange for so great an 
amount of other commodities, or of money, as was required 


to cover the cost of its production, its producers would be 
placed in a relatively disadvantageous situation ; and would, 
consequently, withdraw from its production, until its value 
or price had risen so as to place them in the same situation 
as their neighbours, or to yield them the same rate of 
profit. No man will continue to produce commodities that 
sell for less than they cost ; that is, for less than will in- 
demnify him for his outlay, including therein the common 
and average rate of profit on his capital. This is a limit 
below which prices cannot be permanently reduced ; and if 
they were, for any considerable period, to rise above it, 
additional capital would be attracted to the advantageous 
business, and the competition of the producers would lower 

A demand, to be effectual, must be such as will cover the 
expense of production. If it be insufficient to do this, it 
will not occasion the production of commodities or make 
them be brought to market. But it is of importance to 
bear in mind, that whether the effectual demand, or the de- 
mand of those who have the power and the will to purchase, 
become ten or twenty times more extensive, or decline in 
the same proportion, still, if the cost of producing the com- 
modities in demand continue the same, no permanent vari- 
ation will be occasioned in their price. Were the ordinary 
demand for hats suddenly doubled, their price would be very 
greatly increased, and the hatters would, of course, make 
large profits; but these would immediately attract additional 
capital to the hat manufacture ; an increased supply of hats 
would, consequently, be brought to market, and if no vari- 
ation took place in their cost, their price would infallibly 
sink, in a very short time, to its former level. Suppose, on 
the other hand, that the demand for hats is increased ten- 
fold, and that the cost of their production is diminished in 
the same proportion — we should, notwithstanding the in- 
creased demand, be able, before any very lengthened period 
had elapsed, to buy a hat for a tenth part of what it now 
costs. Again, suppose the demand for hats to decline, and 


the cost of their production to increase — the price would, 
notwithstanding the diminished demand, gradually rise, till 
it reached the point at which it would yield the hatters the 
customary rate of profit on the capital employed in their 
business. It is admitted that variations of demand and 
supply occasion corresponding variations of price ; but it is 
essential to remark that these variations are temporary 
only. The cost of production is the grand regulator of price 
— the centre of all those transitory and evanescent oscilla- 
tions on the one side and the other. Wherever industry 
is free, the competition of the producers is always directed 
to elevate or sink prices to this level. 

In certain branches of industry, such, for example, as 
agriculture, which are liable to be seriously affected by 
changes of the seasons, and from which capital cannot be 
easily withdrawn, there is a longer interval than in others, 
before the market price of produce, and the cost of its pro- 
duction, are equalised ; but that this equalisation must take 
place in the end, is sufficiently plain. Neither farmers, nor 
any other class of producers, will continue to bring produce 
to market, unless it sell for a price sufficient to remunerate 
them for the expense of its production, including the average 
rate of profit on their outlays. Nemo enim sanus debet velle 
impensam ac sumptuia facer e in culturam^ si videt non posse 
refici} The cost of production is a limit below which prices 
cannot permanently sink, and above which they cannot per- 
manently rise. When, on the one hand, an excess of supply 
depresses the price of corn below this limit, the occupiers of 
poor land are involved in the greatest difficulties ; some of 
them are, in consequence, driven from their employment, 
and a smaller supply of corn being brought to market, prices 
are again elevated so as to yield the customary rate of profit 
to the cultivators of the poorest soils that are still kept 
under tillage. And when, on the other hand, prices rise 
above this natural limit, the cutivators gain more than the 

' Varro " de Re Rustica," lib. i. § 2. 


average rate of profit, which necessarily attracts more indi- 
viduals and more capital to agriculture, until the supply is 
so far increased, and the price so far depressed, that the 
cultivators obtain only ordinary profits. This is the point 
at which average prices continue stationary, and about which 
market prices oscillate. If any great discovery were made 
in agriculture — such, for instance, as should reduce the cost 
of cultivation a half — the price of agricultural produce would 
fall in the same proportion ; and it would continue to sell at 
that reduced rate until the increase of population forced 
recourse to soils of a less degree of fertility. Whenever this 
took place, prices would again rise. Why is the price 
of corn almost invariably higher in this country than in 
Poland I Is it not because of the greater cost of its produc- 

A pound weight of gold is at present worth about fifteen 
pounds of silver. It cannot, however, be said, that this is 
a consequence of the demand for gold being greater than the 
demand for silver ; for the reverse is the fact. Neither can 
it be said to be occasioned by an absolute scarcity of gold ; 
for those who choose to pay a sutScieut price for it may 
obtain it in any quantity they please. The cause of the 
difi'erence in the price of the two metals consists entirely in 
the circumstance of its costing about fifteen times as much 
to produce a pound of gold as to produce a pound of silver. 
That this is really the case, is plain from the admitted fact, 
that the producers of gold do not gain any greater profit 
than those of silver, iron, lead, or any other metal. They 
have no monopoly of its production. All individuals may 
send capital to Russia and Brazil, and become producers 
of gold ; and wherever this is the case, the principle of com- 
petition never fails of forcing the product to be sold at such 
a price as will merely pay the expenses of its production. 
Were a gold mine discovered of equal productiveness with 
the silver mines, the production of gold would immediately 
become an exceedingly advantageous business ; an immense 
supply would, in consequence, be thrown upon the market. 


and its price would, iu no very long time, be reduced to the 
same level as silver. 

Were a set of men brouo-ht tog-ether from various coun- 
tries, ignorant of each other's wants, and of the labour and 
expense required to produce the commodities we may sup- 
pose each of them to possess, these would be bought and 
sold according to the wants and fancies of the parties. 
Under such circumstances, a pound of gold might be given 
for a pound of iron, and a gallon of wine for a gallon of 
small beer. As soon, however, as a system of commercial 
intercourse is established, and the wants of society and the 
powers of production come to be generally known, an end is 
put to this capricious method of bartering. Thousands of 
sellers then enter the market ; and when such is the case, 
it is no longer possible to sell a pound of iron for a pound 
of gold ; for the producers of iron will undersell each other, 
until, by their competition, they reduce its exchangeable 
value, or price, to the level of the cost of its production. 
This, in every civilised society, is the pivot on which ex- 
changeable value always turns. It is usual for voyagers 
who touch at countries occupied by savages, to obtain valu- 
able products in exchange for toys or trinkets, which it cost 
infinitely less to produce; but in all civilised and commercial 
countries, the proportion in which, generally speaking, com- 
modities exchange for each other, depends on the compara- 
tive cost of their production. 

Thus, then, it appears, that no variation of demand, 
unaccompanied by a variation in the cost or real value of 
commodities, has any lasting influence over prices. If 
the cost of commodities be diminished, their price will be 
equally diminished, though the demand should be increased 
to any conceivable extent ; while, if their cost be increased, 
their price will be equally increased, though the demand 
should sink to the lowest assignable limit. 

It must always be remembered, that this reasoning ap- 
plies to those commodities only which may be freely pro- 
duced, and the quantity of which may, at the same time, be 


increased to any extent by fresh outlays of capital and 
labour. But there are circumstances under which the sup- 
ply of commodities is strictly limited ; and when such is 
the case, their price is no longer determined by their cost, 
but by the degree of their real or supposed iitility, compared 
with the means and necessities of the buyers. In a desert, 
or a besieged city, a barrel of water or a pound of bread may 
be more valuable than a pipe of Burgundy or a pound of 
gold.^ And though artificial monopolies be rarely carried 
to so oppressive a height, the same principle holds with 
respect to the value of all commodities produced under them. 
When an individual, or company, obtains the exclusive pri- 
vilege of furnishing any species of goods, the principle of com- 
petition is suspended with respect to them, and their price 
depends, in consequence, on the proportion in which they are 
brought to market, compared with the demand, and is not 
affected by anything else. If monopolists supplied the mar- 
ket liberally, or kept it as fully stocked as it would be were 
there no monopoly, commodities would sell at their natural 
price, and the monopoly would have no disadvantage further 
than the exclusion of the public from an employment which 
every one should have leave to carry on. In point of fact, 
however, the market is seldom or never fully supplied with 
monopolised commodities. All classes endeavour to get the 
highest price for their products ; and, in this view, those 
who are protected by a monopoly against the risk of being 
undersold by others, uniformly keep the market under- 
stocked, or supply it with inferior articles, or both. Under 
such circumstances, the price of commodities, if they cannot 
be easily smuggled from abroad, or clandestinely produced 

' Pliny (" Hist. Nat." lib. viii. cap. 57) and Valerius Maximus (lib. vii. 
cap. 6) relate that, during the siege of Casilinum by Hannibal, the scarcity 
of provisons became so extreme, that a rat was sold for 200 denarii ! They 
add, that the seller had the worst of the bargain, having died of hunger, 
while the rat was the means of preserving the life of the buyer. " Avaro 
enim," says Valerius, " fame consumpto, manubiis sordium suarum frui non 
licuit ; sequi animi vir, ad salutarem impensam faciendara ; care qiiidem, 
verum necessarie, comparato cibo vixit." 


at home, may be elevated to the highest point to which the 
competition of the buyers can raise it ; and may, conse- 
quenth^, amount to five, ten, or twenty times the sum it 
woukl amount to, were competition permitted to operate on 
their production and sale. The will and the power of the 
purchasers to ofier a high price forms the only limit to the 
rapacity of monopolists. 

Besides the commodities produced under artificial mono- 
polies, there is another class, the supply of which cannot 
be increased by means of human industry, and whose price 
is not, therefore, dependent on the cost of their production. 
Ancient statues, vases, and gems, the pictures of the great 
masters, some varieties of wine produced in limited quan- 
tities on soils of a particular quality and exposure, and a 
few other commodities, belong to this class. As their 
supply cannot be increased, their price varies as the demand, 
and is independent on any other circumstance. 

But with these exceptions, which, when compared to the 
mass of commodities, are of no great importance, wherever 
industry is unrestricted, and competition allowed to operate, 
the average price of the various products of art and industry 
always coincides with the cost of their production. When 
a fall takes places in the market price of a commodity, we 
cannot say whether it is really advantageous, or whether a 
part of the wealth of the producers be not gratuitously 
transferred to the consumers, until we learn whether the 
cost of production be equally diminished. If this be the 
case, the fall of price will not be disadvantageous to the 
producers, and will be permanent ; but if this be not the case 
— if the cost of production continue the same, the fall must 
be injurious to the producers, and prices will, in conse- 
quence, speedily regain their former level. In like manner, 
no rise of prices can be permanent, unless the cost of pro- 
duction be proportionally increased. If that cost has re- 
mained stationary, or has not increased in a corresponding 
ratio, prices will decline as soon as the ephemeral causes of 
enhancement have disappeared. 



Influence of Mercantile Speculations on Price — Difference betiveen 
Speciilation and Gambling — Speculations in Corn beneficial to the 
Public, but dangerous to the Dealers — Imitative Sp)eculation — 
Influence of Knowledge on Speculation. 

The proposition so universally assented to, that market 
prices depend upon the proportion which the supply of com- 
modities bears to the demand, would be more accurate were 
it expressed with some modifications. It rarely happens 
that either the actual supply of any species of produce in 
extensive demand, or the intensity of that demand, can be 
exactly measured. Every transaction in which produce is 
bought that it may be afterwards sold, is, in fact, a spe- 
culation. The buyer anticipates that the demand for the 
article he has purchased will be such, at some future period, 
either more or less distant, that he will be able to dispose 
of it with a profit ; and the success of the speculation de- 
pends, it is evident, on the skill with which he has esti- 
mated the circumstances that will determine the future 
price of the commodity. It follows, therefore, that in all 
highly commercial countries, where merchants are possessed 
of large capitals, and where they are left to be guided in the 
use of them by their own discretion and foresight, the prices 
of commodities will frequently be very much influenced, 
not merely by the actual occurrence of changes in the accus- 
tomed relation of the supply and demand, but by the anti- 
cipation of such changes. It is the business of the merchant 
to acquaint himself with every circumstance affecting the 
particular description of commodities in which he deals. 
He endeavours to obtain, by means of an extensive corre- 
spondence, the earliest and most authentic information 
with respect to every thing that may afi:ect their supply or 


demand, or the cost of their production : and if he learned 
that the supply of an article had failed, or that, owing to 
changes of fashion, or to the opening of new channels of 
commerce, the demand for it had been increased, he would 
most likely be disposed to become a buyer, in anticipation 
of profiting by the rise of price, which, under the circum- 
stances, could hardly fail of taking place ; or if he were a 
holder of the article, he would refuse to part with it unless 
for a higher price than he would previously have accepted. 
If the intelligence received by the merchant were of a con- 
trary description — if, for example, he learned that the 
article was now produced with greater facility, or that there 
was a falling off in the demand for it, caused by a change 
of fashion, or by the shutting up of some of the markets to 
which it had previously been admitted — he would act dif- 
ferently : in this case he would anticipate a fall of prices, 
and would either decline purchasing the article, except at a 
reduced rate, or endeavour to get rid of it, supposing him 
to be a holder, by offering it at a lower price. In conse- 
quence of these operations, the prices of commodities, in 
different places and periods, are brought comparatively near 
to equality. All abrupt transitions, from scarcity to abun- 
dance, and from abundance to scarcity, are avoided : an 
excess in one case is made to balance a deficiency in 
another, and the supply is distributed with a degree of 
steadiness and regularity that could hardly have been 
deemed attainable. 

It is obvious, from these statements, that those who 
indiscriminately condemn all sorts of speculative engage- 
ments, have never reflected on the circumstances inci- 
dent to the prosecution of every undertaking. In truth 
and reality, they are all speculations. Their undertakers 
must look forward to periods more or less distant, and their 
success depends entirely on the sagacity with which they 
have estimated the probability of certain events occurring, 
and the influence which they have ascribed to them. Specu- 
lation is, therefore, really only another name for foresight ; 



and though fortunes have sometimes been made by a lucky- 
hit, the character of a successful speculator is, in the vast 
majority of instances, due to him only who has skilfully 
devised the means of effecting the end he had in view, and 
who has outstripped his competitors in the judgment with 
which he has looked into futurity, and appreciated the ope- 
ration of causes producing distant effects. Even in those 
businesses, such as agriculture and manufactures, that are 
apparently the most secure, there is, and must be, a great 
deal of speculation. Those engaged in the former have to 
encounter variations of seasons, while those engaged in the 
latter have to encounter variations of fashion ; and each 
is, besides, liable to be affected by legislative enactments, by 
discoveries in the arts, and by an endless variety of circum- 
stances which it is always very difficult, and sometimes 
quite impossible, to foresee. On the whole, indeed, the 
gains o^the undertakers are so adjusted, that they obtain, 
at an average, the common and ordinary rate of profit. 
But the inequality in the gains of individuals is most com- 
monly very great ; and while the superior tact, industry, 
or good fortune of some enable them to realise large for- 
tunes, the want of discernment, the less vigilant attention, 
or the bad fortune of others, frequently reduce them from 
the situation of capitalists to that of labourers.^ 

It is by no means an easy task to draw a distinct line of 

^ The necessity of speculation in the ordinary affairs of life has been well 
illustrated by Seneca : " Huic respondebimus, nunquam expectare nos cer- 
tissimam rerum comprehensiouem : quoniam in arduo est veri exploratio ; 
sed ea ire qua ducit veri similitudo. Omne hac via procedit officium. Sic 
serimus, sic navigamus, sic militamus, sic uxores ducimus, sic liberos tolli- 
mus ; quanquam omnium horum incertus sit eventus. Ad ea accedimus, de 
quibus bene sperandum esse credimus. Quis enim pollicetur serenti pro- 
ventum, naviganti portum, militanti victoriam, marito pudicam uxorem, 
patri pios liberos ? Sequimur qua ratio, non qua Veritas trahit. Expecta, 
ut nisi bene cessura non facias, et nisi comperta veritate nihil moveris, 
relicto omni actu, vita consistit. Dum verisimilia me in hoc aut illud im- 
pellant, non verebor beneficium, dare ei, quem verisimile erit gratum esse." — 
De Benefic.f lib. iv. cap. .3.3. 


demarcation between speculation and gambling. The truth 
is, that they run into one another by almost imperceptible 
degrees. Practically, however, that may be termed a safe, 
and, therefore, a legitimate speculation, in which, on a fair 
and careful estimate of the favourable and unfavourable 
contingencies, the former preponderate ; while that may be 
termed a gambling adventure in which the contingencies 
are unknown, or in which they are nearly equal. Suppose 
a race-horse and a dray-horse were matched to run against 
each other ; an individual who betted that the race-horse 
would win, could not be deemed a gambler ; for he, it is 
plain, would encounter little or no risk. But if two race- 
horses, each in high estimation, were matched against each 
other, the risk would become very great ; and the success 
of either would, most likely, depend on so many accidental 
and almost inappreciable circumstances, that those who 
betted on the event might fairly be denominated gamblers. 

Among the various speculations carried on by merchants, 
there are few that have exposed them more to the public 
odium, while, at the same time, there are few more really 
beneficial, than those of the dealers in corn. Not only do 
they distribute the produce of the harvest equally through- 
out the country, according to the wants of different districts, 
but they manage their operations so as to reserve a portion 
of the surplus produce of plentiful years as a resource 
against future emergencies ; and when a scarcity occurs, 
they distribute its pressure equally over the year, and pre- 
vent society from ever actually feeling the extremity of 
want. We shall briefly endeavour to show how speculation 
produces these effects. 

Were the harvests always equally productive, nothing- 
would be gained by storing up supplies of corn ; and all 
that would be necessary would be to distribute the crop 
equally throughout the country, and throughout the year. 
But such is not the order of nature. The variations in the 
aggregate produce of a country in different seasons, though 


not, perhaps, so great as are commonly supposed, are still 
very considerable; and experience has shown, that two or 
three unusually luxuriant harvests seldom take place in 
succession ; or that when they do, they are invariably fol- 
lowed by those that are deficient. The speculators in corn 
anticipate this result. Whenever prices begin to give wa}', 
in consequence of an unusually luxuriant harvest, specula- 
tion is at work. The more opulent farmers withhold either 
the whole or a part of their produce from market ; and the 
more opulent dealers purchase largely of the corn brought 
to market, and store it up in expectation of a future 
advance. And thus, without intending to promote any 
one's interest but their own, speculators in corn become 
benefactors of the public. They provide a reserve stock 
against those years of scarcity which are sure, at no distant 
period, to recur ; while, by withdrawing a portion of the 
redundant supply from immediate consumption, prices are 
prevented from falling so low as to be injurious to the 
farmers, or at least are maintained at a higher level than 
they would otherwise have reached ; provident habits are 
maintained amongst the people ; and that waste and extra- 
vagance are checked which always take place in plentiful 
years, but which would be carried to a much greater extent 
were the whole produce of an abundant crop consumed 
within the season. 

It is, however, in scarce years that the speculations of the 
corn-merchants are principally advantageous. Even in the 
richest countries, a very large proportion of the individuals 
engaged in agriculture are comparatively poor, and are 
totally without the means of withholding their produce from 
market, in order to speculate upon any future advance. In 
consequence, the markets are always most abundantly sup- 
plied with produce immediately after harvest ; and in coun- 
tries where the merchants engaged in the corn-trade are not 
possessed of large capitals, or where their proceedings are 
restricted, or regarded with suspicion, there is then, almost 
invariably, a heavy fall of prices. But as the vast majority 


of the people buy their food in small quantities, or from 
day to day as they want it, their consumption is necessarily 
extended or contracted according to its price at the time. 
Their views do not extend to the future ; they have no 
means of judging whether the crop is or is not deficient ; 
they live, as the phrase is, from hand to mouth, and are 
satisfied if, in the meantime, they obtain abundant supplies 
at a cheap rate. But it is obvious that, were there nothing 
to control or counteract this improvidence, the consequences 
would, very often, be fatal in the extreme. The crop of one 
harvest must support the population till the crop of the 
succeeding harvest has been gathered in ; and if that crop 
should be deficient — if, for instance, it should only be ade- 
quate to afiord, at the usual rate of consumption, a supply 
of nine or ten months' provision instead of twelve — it is 
plain, that unless the price were so raised immediately after 
harvest as to enforce economy, and put, as it were, the 
whole nation upon short allowance, the most dreadful famine 
would be experienced previously to the ensuing harvest. 
Those who examine the accounts of the prices of wheat and 
other grain in England, from the Conquest downwards, 
collected by Bishop Fleetwood, Sir F. M. Eden, and others, 
will meet with abundant proofs of what has now been stated. 
In those remote periods, when the farmers were generally 
without the means of withholding their crops from market, 
and when the trade of a corn-dealer was proscribed, the 
utmost improvidence was exhibited in the consumption of 
grain. There were then, indeed, but few years in which a 
considerable scarcity was not experienced immediately before 
harvest, and many in which there was an absolute famine. 
The fluctuations of price exceeded every thing of which we 
can now form an idea ; the price of wheat and other grain 
being often four and five times as high in June and July 
as in September and October. Thanks, however, to the 
increase of capital in the hands of the large farmers and 
dealers, and to the freedom given to the operations of the 
corn-merchants, we are no longer exposed to such ruinous 


vicissitudes. Whenever the dealers, who, in consequence 
of their superior means of information, are better acquainted 
with the real state of the crops than any other class of per- 
sons, find the harvest likely to be deficient, they raise the 
price of the corn they have warehoused, and bid against 
each other for the corn which the farmers are bringing to 
market. In consequence of this rise of prices, all ranks 
and orders, but especiall}' the lower, who are the principal 
consumers of corn, are obliged to use greater economy, and 
to check all improvident and wasteful consumption. Every 
class being thus immediately put upon short allowance, the 
pressure of the scarcity is distribited equally over the year ; 
and instead of indulging, as was formerly the case, in the 
same scale of consumption as in seasons of plenty, until the 
supply became altogether deficient, and then being exposed 
without resource to the attacks of famine and pestilence, the 
speculations of the corn-meichants warn us of our danger, 
and compel us to provide against it. 

It is not easy to suppose that these pi'oceedings of the 
corn-merchants should ever be injurious to the public. It 
has been said, that in scarce years they are not disposed to 
bring the corn they have purchased to market until it has 
attained an exorbitant price, and that the pressure of the 
scarcity is thus often very much aggravated : but there is 
no real ground for any such statement. The immense 
amount of capital required to store up any considerable 
quantity of corn, and the waste to which it is liable, render 
most holders disposed to sell as soon as they can realise a 
fair profit. In every extensive country in which the corn 
trade is free, there are infinitely too many persons engaged 
in it to enable any sort of combination or concert to be formed 
amongst them ; and though it were formed, it could not be 
maintained for an instant. A large proportion of the farmers 
and other small holders of corn are always in straitened 
circumstances, more particularly if a scarce year has not 
occurred so soon as they expected ; and they are, conse- 
quently, anxious to relieve themselves, as soon as prices 


rise, of a portion of the stock on their hands. Occasionally, 
indeed, individuals are found who retain their stocks for too 
long a period, or until a reaction takes ^lace, and prices 
begin to decline. But, instead of joining in the popular cry 
against such persons, every one who takes a dispassionate 
view of the matter will immediately perceive that, inasmuch 
as their miscalculation must, under the circumstances sup- 
posed, be exceedingly injurious to themselves, we have the 
best security against its being carried to such an extent as 
to be productive of any material injury, or even inconveni- 
ence, to the public. It should also be borne in mind, that 
it is rarely, if ever, possible to determine beforehand when 
a scarcity is to abate in consequence of new supplies being 
brought to market ; and had it continued a little longer, 
there would have been no miscalculation on the part of the 
holders. At all events, it is plain that, by declining to 
bring their corn to market, they preserved a resource on 
which, in the event of the harvest being longer dela^'ed than 
usual, or of any unfavourable contingency taking place, the 
public could have fallen back ; so that, instead of deserving 
abuse, these speculators are justly entitled to every fair 
encouragement and protection. A country in which there 
is no considerable stock of grain In the barn-yards of the 
farmers, and the warehouses of the merchants, is in a 
most perilous situation, and may be exposed to the 
severest privations, or even famine. But so long as the 
sagacity, the miscalculation, or the avarice, of merchants 
and dealers, retain a stock of grain in the warehouses, 
this last extremity cannot take place. By refusing to sell 
till it has reached a very high price, they put an effectual 
stop to all sorts of waste, and husband for the public those 
supplies which they could not have so frugally husbanded 
for themselves. 

The advantage of the speculative purchases of corn made 
by merchants in plentiful years, and of the immediate 
rise of price which their operations occasion in years when 
a scarcity is apprehended, have been very clearly stated in 


a Report by the Lords of the Privy Council, in 1790, on 
the Corn Laws. — " In other countries," say their lordships, 
" magazines of corn are formed by their respective govern- 
ments, or by the principal magistrates of great cities, as a 
resource in times of scarcity. This country has no such 
institution. The stores of corn are here deposited in the 
barns and stacks of wealthy farmers, and in magazines of 
merchants and dealers in corn, who ought by no means to 
be restrained, but rather encouraged in laying up stores of 
this nature ; as, after a deficient crop, they are thereby 
enabled to divide the inconvenience arising from it as equally 
as possible through every part of the year ; and by checking 
improvident consumption in the beginning of scarcity, 
prevent famine, which might otherwise happen before the 
next harvest. The inland trade of corn ought, therefore, to 
be perfectly free. This freedom can never be abused. To 
suppose that there can be a monopoly of so bulky and perish- 
able an article, dispersed through so many hands, over every 
part of the country, is an idle and vain apprehension." 

The regulations once so prevalent with respect to the 
assize of bread, were originally devised and intended as 
measures of security, lest, owing to the small number of 
bakers in most towns, they should combine together, and 
artificially raise the price of bread. According, however, as 
sounder notions upon these subjects were diffused throughout 
the country, these regulations fell gradually into disuse; and 
we are not aware that any ill effects have, in any instance, 
been found to result from their neglect. The assize of bread 
in London was abolished by an act of the legislature in 
1815 ; and it is well known, that no such thing as a com- 
bination amongst the bakers has ever since been thought 
of, and that the public have always had an ample supply of 
bread, at the lowest prices, all things considered, that the 
state of the corn-market would admit. And when such has 
been the case, when no combination has ever been even so 
much as attempted amongst the bakers of a single town, can 
any thing be more perfectly visionary, than to suppose 


that it should be attempted among the vast multitudes of 
farmers and corn-dealers dispersed over an extensive coun- 
try ! " The unlimited, unrestrained freedom of the corn 
trade," says Adam Smith, " as it is the only eftectual 
preventive of the miseries of a famine, so it is the best 
palliative of the inconveniences of a dearth. No trade 
deserves more the full protection of the law, and none 
requires it so much, because none is so much exposed to 
undeserved popular odium." ^ 

But though the speculations of the corn-merchants be 
in every case beneficial to the public, they are very often 
injurious to themselves. The corn trade is, indeed, one of 
the most hazardous businesses in which it is possible to 
engage. This arises partly and principally from the extreme 
difficulty of procuring correct information with respect to 
the productiveness of the harvests in difi'erent countries 
and districts, and of the supplies of corn that may be made 
available in case of deficiency ; partly from the difficulty of 
estimating the effect of weather on the crops; and partly 
from the difficulty of estimating how much any given rise 
of price may affect consumption. When the elements of 
speculation are so very uncertain, or when, at least, they 
are so difficult to disentangle and appreciate, it requires no 
ordinary prudence for a merchant to avoid very heavy 
losses ; and how cautious soever, he can never be secure 
against unfavourable chances. A few days' rain, imme- 
diately before or during harvest, have often, by exciting 
what were apparently the best-founded apprehensions with 
respect to the safety of the crop, occasioned a sudden rise 
of prices, which have again as suddenly fallen back to their 
former level when the weather improved. It is idle to 
suppose that these causes of risk and uncertainty should 
ever be completely obviated ; but it is pretty evident that 
nothing will tend so much to weaken their frequency and 
force, as the establishment of a free corn trade with other 

' " Wealth of Nations," p. 234. 


countries. Such is the wise arrangement of Providence, 
that the seasons most unfavourable to the crops in one 
country or district, are generally the most favourable to 
those in countries or districts having a different soil or 
climate.^ There is no reason, indeed, for supposing that 
the harvests throughout the commercial world differ mate- 
rially in different years ; and when, after 1849, the external 
corn trade will be freed from restrictions, the facility of 
importing additional supplies from foreign countries when 
the home supply happens to be unusually deficient, or of 
exporting to them in unusually abundant years, will pro- 
bably give greater steadiness to prices;^ and if so, the 
hazard to which the dealers have hitherto been exposed 
will be proportionally lessened. 

The great risk to which all classes of merchants are 
exposed, who offer an unusually high price for any descrip- 
tion of commodities, in anticipation of a future advance of 
price, is a consequence, principally, of the difficulty of truly 
appreciating the grounds on which a deficient supply or an 

^ The admirable paragraph which follows is from the " Commercio di 
Grani " of the Count di Verri — " La terra che abitiamo riproduce ogni anno 
una quantita corrispondente alia universale consumazione ; il commercio 
supplisce col superfluo di una terra al bisogno dell' altra e colla legge de 
continuita si equilibrano, dopo alcune oscillazioni, periodicamente bisogno 
ed abbondanza. Quel che suggeriscono i vincoli risguardono gli uomiui suUa 
terra come ridotti a gettar il dado a chi debba morir di fame ; risguardi- 
amoli con occhio tranquillo e riceveremo idee piu consolanti e vere, cono- 
sendoci fratelli di una vasta famiglia sparza sul globo, spinti a darei vicen- 
devolmente soccorso, e provveduti largamente dal gran motore della vege- 
tazione a quanto fa d' uopo per sostenere i bisogni della vita. I soli vincoli 
artificiali, immaginati dalla timida ignoranza o dall' astuta ambizione, hanno 
ridotti gli stati ai timori della fame ed a soffrirla." — P. 33, ed. 1818. 

^ We do not mean by this to state that the measures, with regard to the 
corn trade, carried through parliament in 1846, were the best that might 
have been adopted. Probably, indeed, they were the only measures that 
could be carried ; but it may easily be shown that the interests of all classes 
would have been better promoted by imposing a moderate fixed duty on 
importation, accompanied with a corresponding drawback — See Post and 
Commercial Dictionary, art. Corn Trade and Corn Laws. 


increased demand is expected.^ This, however, is entirely 
a practical question, for the solution of the merchant, whose 
success depends on the skill and sai^acity which he evinces 
in conducting his speculations under such circumstances. 
The great cotton speculation of 1825 took its rise partly 
and chiefly from a supposed decrease in the supply of 
cotton, originating in the previous low prices, and partly 
from an idea that there was a greatly increased demand for 
raw cotton in this country and the Continent, and that the 
stocks on hand were unusually low. Now it is obvious, 
that the success of those who embarked in this speculation 
depended entirely on two circumstances : viz. first, that 
they were right in the fundamental supposition on which 
the speculation rested, that the supply of cotton was no 
longer commensurate with the demand ; and second, that 
their competition did not raise the price so high as to 
diminish the consumption by the manufacturers in too 
great a degree to enable them to take off the quantity 
actually brought to market. If the merchants had been 
well-founded in their suppositions, and if their competition 
had not raised the price of cotton too high, the speculation 
would have been successful. But, instead of being w^ell- 
founded, the hypothesis on which they proceeded was all 
but visionary. There was no decrease in the supply of 
cotton, but, on the contrary, a considerable increase ; and 

^ The famous philosopher Thales, of Miletus, who flourished about 550 
years before the Christian era, is reported to have engaged in at least one 
successful speculation. " His poverty," says Aristotle, " viras thought to 
upbraid his studies as serving no gainful, and therefore no useful purpose. 
But Thales, by his skill in meteorology, contrived to wipe off the reproach ; 
for as his science enabled him to foresee that next season there would be an 
extraordinary crop of olives, he hired in the winter all the oil-presses in 
Chios and Miletus, employing his little fortune in giving earnest to their 
respective proprietors. When the gathering season approached, and the 
olives were seen loading the branches, all men wished to provide oil-presses 
at the same time, and suddenly : but Thales, being master of the whole 
number, let them separately at a high price ; and thereby accumulating vast 
wealth, proved that philosophers might be rich if they pleased, but that 
riches were not the object of their pursuit." — Gillies' Ar'utotle, vol. ii. p. 54. 


though there had been a decrease, the excess to which the 
price was carried must have checked consumption so as to 
occasion a serious revulsion.^ 

When a few leading merchants purchase, in anticipation 
of an advance, or sell, in anticipation of a fall, the specula- 
tion is often pushed beyond all reasonable limits, by the 
operations of those who are influenced by imitation only, 
and who have never, perhaps, reflected for a moment on the 
grounds on which a variation of price is anticipated. In 
speculation, as in most other things, one individual derives 
confidence from another. Such a one purchases or sells, 
not because he has any peculiar or accurate information in 
regard to the state of the demand and supply, but because 
some one else has done so before him. The original impulse 
is thus rapidly extended ; and even those who are satisfied 
that a speculation, in anticipation of a rise of prices, is 
unsafe, and that there will be a recoil, not unfrequently 
adventure, in the expectation that they will be able to with- 
draw before the recoil has begun. 

The only guarantee against the spread of imitative specu- 
lations, if we may so term them, must be sought for in the 
diffusion of sounder information, and, consequently, of a 
more searching spirit of analysis, amongst the mercantile 
class. The crowd who engage in speculative adventures, 
once set on foot, consist partly of determined gamblers, who 

■* Several well-informed merchants embarked in this speculation, and 
suffered by it. The falling off in the imports of cotton from America, 
in 1824, seems to have been the source of the delusion. It was supposed 
that this falling off was not accidental, but that it was a consequence 
of the price of cotton having been for a series of years so low as to be 
inadequate to defray the expenses of its cultivation. The result showed 
that this calculation was most erroneous, the imports, in 1825, from the 
United States, having exceeded those in any previous year. And besides, 
in entering on the speculation, no attention was paid to Egypt and Italy, 
countries from which only about 1,400,000 lbs. of cotton were obtained in 
1824, but from which 23,800,000 lbs. were obtained in 1825 ! This unlooked- 
for importation was of itself almost enough to overturn the combinations of 
the speculators ; and, coupled with the increased importation from the 
United States and other countries, actually occasioned a heavy glut. 


having, for the most part, nothing of their own to lose, are 
at all times ready to embark in any adventure, however 
hazardous, by which they imagine they have a chance of 
rapidly making a fortune ; but the far greater number of 
those who quit their ordinary employments to enter into 
such speculations, though partly, no doubt, actuated by a 
spirit of gambling, are mainly influenced by the principle 
of imitation : and it is difficult to see how this dangerous 
tendency can be lessened otherwise than by the better 
education of merchants, and by impressing on every one 
who may be tempted to speculate either on a rise or fall of 
prices, the necessity, if he would provide any security 
against extreme risk, of carefully investigating the causes 
of any anticipated variation, and estimating for himself the 
probability of success in the adventure, instead of embark- 
ing in it in imitation of others. 

It may, we believe, speaking generally, be laid down as 
a sound practical rule, to avoid having any thing to do with 
speculations in which many have already engaged. The 
competition of the speculators seldom fails speedily to 
render an adventure that might have been originally safe, 
extremely hazardous. If a commodity happen to be at an 
unusually reduced price in any particular market, it will 
rise the moment that different buyers appear in the field ; 
and supposing, on the other hand, that it is fetching an 
unusually high price, it will fall, perhaps far below the cost 
of production, as soon as supplies begin to be poured in by 
different merchants. Whatever, therefore, may be the suc- 
cess of those who originate a speculation, those who enter 
into it at an advanced period are almost sure to lose. To 
have been preceded by others should not, in such matters, 
inspire confidence ; on the contrary, it should, unless there 
be something special in the case, induce every considerate 
person to decline interfering with it. 

The pernicious effects of miscalculation and ignorance 
are strikingly exhibited in the overstocking of such new 
markets as are occasionally opened, and in filling them with 


articles wholly unsuited to the wants and habits of the 
people. When the continental markets were opened in 
1814 and 1815, the first shippers of colonial and other pro- 
duce made large profits ; but in consequence of the crowd- 
ing of fresh speculators, many of whom were strangers to 
commercial affairs, into the field, the markets were quite 
overloaded ; and such a recoil took place, that Leith, and 
some other towns, did not for some years recover from the 
bankruptcy and ruin of which it was productive. But the 
exportations consequent upon the first opening of the trade to 
Buenos Ayres, Brazil, and the Caraccas, were, in this re- 
spect, still more extraordinary. Speculation was then 
carried beyond the boundaries within which even gambling 
is usually confined ; and was pushed to an extent and into 
channels that could hardly have been deemed practicable. 
We are informed by Mr Mawe, an intelligent traveller, re- 
sident in Rio Janeiro at the period in question, that more 
Manchester goods were sent out in the course of a few 
weeks than had been consumed in the twenty years pre- 
ceding ; and the quantity of English goods of all sorts 
poured into the city was so very great, that warehouses 
could not be found to contain them, and that the most 
valuable merchandise was actually exposed for weeks, on 
the beach, to the weather, and to every sort of depredation I 
But the folly and ignorance of those who crowded into this 
speculation was still more strikingly evinced in the selec- 
tion of the articles sent to South America. Elegant ser- 
vices of cut-glass and china-ware were off'ered to persons 
whose most splendid drinking-vessels consisted of a horn 
or the shell of a cocoa-nut ; tools were sent out having a 
hammer on the one side and a hatchet on the other, as if 
the inhabitants had had nothing more to do than to break 
the first stone they met with, and then cut the gold and 
diamonds from it ; and some speculators actually went so 
far as to send skates to Rio Janeiro ! ' 

The distress and ruin which followed these exportations 
1 Mawe's "Travels in Brazil," p. 453-458. 


is plainly to be ascribed to the almost inconceivable folly 
of those by whom they were made. If there be one species 
of knowledge more essential to those who embark in mer- 
cantile speculations than another, it is that they should be 
acquainted with the various products of the different com- 
mercial countries of the world, and with those which are in 
demand in them. And when ships are freighted and com 
modities sent abroad by persons so entirely destitute of this 
elementary instruction as to send skates to Rio, the wonder 
is, not that they should sometimes calculate wrong, but that 
they ever calculate right. 

But, as has been before observed, the maintenance of a 
free intercourse amongst different countries, and the more 
general diffusion of sound instruction, seem to be the only 
means by which these miscalculations can be either obviated 
or mitigated. The effects consequent on improvident spe- 
culations being always far more injurious to the parties 
engaged in them than to any other class, the presumption 
is, that they will diminish both in frequency and force, ac- 
cording as the true principles of commerce come to be better 
understood. But whatever inconvenience may occasionally 
flow from them, it is abmidautly plain, that instead of 
being lessened, it would be very much increased, were any 
restraints imposed on the freedom of adventure. When 
the attention of many individuals is directed to the same 
line of speculation ; when they prosecute it as a business, 
and are responsible in their own private fortunes for any 
errors they may commit, they acquire a knowledge of the 
various circumstances influencing prices, and give them, by 
their combinations, a steadiness not attainable by any other 
means. It is material, too, to bear in mind, as was pre- 
viously stated, that many, perhaps it might be said most^ of 
those who press so eagerly into the market, when any new 
channel of commerce is opened, or when any considerable 
rise of price is anticipated, are not merchants, but persons 
engaged in other businesses, or living, perhaps, on fixed 
incomes, who speculate in tlie hope of suddenly increasing 


their fortune. This tendency to gambling seldom fails to 
break out upon such occasions ; but fortunately, these are 
only of comparatively rare occurrence ; and in the ordinary 
course of afiairs, mercantile speculations are left to be con- 
ducted by those who are familiar with business, and who, 
in exerting themselves to equalise the variations of price 
caused by variations of climate and of seasons, and to dis- 
tribute the supply of produce proportionally to the effective 
demand, and with so much providence that it may not at 
any time be wholly exhausted, perform functions that are 
in the highest degree important and beneficial. They are, 
it is true, actuated only by a desire to advance their own 
interests ; but the results of their operations are not less 
advantageous than those of the agriculturists who give 
greater fertility to the soil, or of the mechanists who invent 
new and more powerful machines.' 

In the first chapter of this Part, we endeavoured to show 
that the quantity of labour required for the production of 
commodities forms the grand principle which determines 
their exchangeable worth, or the proportion in which any 
one commodity exchanges for others ; and in the second 
chapter, and the present, we have endeavoured to trace the 
influence of variations of demand and supply, and of spe- 
culation, on prices. These seem to exhaust all the really 
important practical questions involved in this part of the 
science. But as it is necessary, in order fully to understand 
the various questions involved in the theory of value, that 
the precise influence of variations in the rates of wages and 
profits, and in the species of capitals employed, should be 
appreciated, we shall devote the following chapter to an 
investigation of these matters. Being principally, however, 
intended for the use of the scientific reader, it may, without 
impropriety, be passed over by others. 

' The reader will find a great deal of valuable information, with respect 
to most of the points touched upon in this and the previous chapter, in Mr 
Tooke's excellent work on the " History of Prices." 



Effect of the Emploi/ment of Capital in Production, and of Variations 
in the Rates of Wages and Profits on Value — (1) When the Capitals 
employed in Production are of the same Degree of Durability ; and 
(2) when they are of different Degrees of Durability — A High Rate 
of Wages does not lay the Commerce of a Country under any Dis- 

It is admitted on all hands, that in the earlier stages of 
society, before capital is accumulated, the quantity of labour 
required to produce a commodity and bring it to market 
determines its value in exchange. But capital is only 
another name for that portion of the produce of industry 
which may be directly employed to support man, or to 
facilitate production. It is the result of anterior labour ; 
and when it is employed in the production of commodities, 
their value is determined, not by the immediate labour 
only, but by the total quantity, as well of immediate as 
of prior labour, the latter being embodied in the capital, 
necessarily laid out upon tiiem. Suppose an individual 
can, in a day, without the help of weapons, kill a deer ; but 
that it requires a day's labour to construct the weapons 
necessary to kill a beaver, and another day's labour to kill 
it : it is evident, supposing the weapons are worn out or 
rendered useless in killing the beaver, that the labour re- 
quired to kill it would suffice to kill two deer, and that 
it is, therefore, worth twice as much. The durability of 
the implements, or of the capital employed in any under- 
taking, is, consequently, an element of the greatest im- 
portance in estimating the value of its produce. Had the 
weapons employed by the beaver hunter been more durable 
than has been supposed — had they served, for example, 
to kill twenty beavers instead of one — then, the labour 

2 A 


required to kill a beaver being only one-twentieth part greater 
than that required to kill a deer, the value of the animals 
would have been regulated accordingl}'^ ; and it is plain 
that, with every extension of the durability of the weapons, 
their values would be brought still nearer to equality. 

It appears, therefore, inasmuch as capital is the result of 
anterior labour, that its employment does not affect the 
principle that the value of commodities depends on the 
quantities of labour required for their production. A 
commodity may be altogether produced by capital, without 
the co-operation of any immediate labour : inasmuch, how- 
ever, as the value of capital is determined by the labour 
required for its production, it is obvious that the value of 
the commodities produced by its means is also, at bottom, 
determined by this same labour : or a commodity may be 
partly produced by capital, and partly by immediate labour, 
and then its exchangeable value will be proportioned to the 
sum of the two ; or, which is still the same thing, to the 
total quantity of labour bestowed upon it. These principles 
are almost self-evident, and it is not easy to see how they 
can be made the subject of dispute or controversy; but con- 
siderable differences of opinion are entertained respecting 
the influence overvalue, of the employment of workmen by 
capitalists, and of fluctuations in the rate of wages. 

It does not, however, seem that there is really much 
room for these differences. Suppose that some quantity of 
goods, a pair of stockings for example, freely exchanges 
for a pair of gloves, both articles being manufactured by 
independent workmen ; it is easy to see that they would 
continue to preserve this relation, or to exchange for each 
other, provided the labour required for their production 
continued stationary, though the workmen were to be em- 
ployed by a master-manufacturer. In the first case, it 
is true, as Dr Smith has observed, that the whole goods 
produced by the workmen belong to themselves, and that, 
in the second case, they have to share them with their 
employers. But it must be recollected, that in the first 


case the capital made use of in the production of the com- 
modities belongs also to the workmen, and that, in the 
latter case, it is furnished to them by other parties. The 
question then comes to be, Does the fact of labourers volun- 
tarily agreeing to relinquish a portion of the produce 
raised by them, as an equivalent for the use of the capital 
lent them by others, afford any ground for raising the value 
of such produce ? It is evident it does not. The pro- 
fits of capital are only another name for the wages of 
prior labour, and make a part of the price of every 
article in the production of which capital has been use- 
fully expended. But whether this capital belong to the 
labourer, or is supplied by another, is obviously of no 
consequence. If the capital do not belong to him, the 
commodities which he produces will be divided into two 
portions, one representing the produce of his own labour, 
and the other of the capital, or prior labour, laid out 
upon them. But provided the same amount of labour be 
required for the production of commodities, their value will 
continue constant, whether that labour be supplied by one 
individual or by fifty. A shoemaker who makes shoes on 
his own account, obtains the same rate of profit on their 
sale that would accrue to a master shoemaker were he 
employed by the latter ; for, besides possessing a capital 
adequate to maintain himself and his family until the 
shoes be disposed of, he must further be able to furnish 
himself with a workshop and tools, to advance money to 
the tanner for leather, and to provide for other outgoings. 
If, then, he did not, exclusive of the ordinary wages of 
labour, realise a profit, or compensation for the employment 
of his capital, equal to the profit obtained by the master 
shoemaker, it would obviously be for his advantage to lend 
it to him, and to work on his account ; and it is plain, 
inasmuch as his shoes would not sell for a higher price than 
those of the capitalist, that he could not realise a greater 

Hence it follows, that the circumstance of the accumu- 


lated labour or capital, and of the manual labour, required 
in production, being supplied by different parties, has no 
influence over the value of commodities. This depends on 
the total quantity of every sort of labour laid out, and not 
on those by whom it is laid out. It now only remains to 
trace the influence of fluctuations in wages and profits 
on value. When this has been done, this subject will be 

To simplify this inquiry, it had best be divided into two 
branches : we shall therefore inquire, j'^rs^, whether fluctua- 
tions in the rate of wages have any, and, if ^ny, what in- 
fluence over the value of commodities produced by the aid 
of capitals of equal degrees of durability, or returnable in 
equal periods ; and, second, whether these fluctuations have 
any, and, if any, what influence when the capitals employed 
are of unequal degrees of durability, or are returnable in 
unequal periods. 

The better to understand what follows, it may be neces- 
sary to premise that the term durability is applied to those 
capitals that are denominated fixed, or that consist of ma- 
chines, houses, &c. It means the period required for their 
consumption, or during which they may be expected to 
last ; and this, of course, varies according to the nature of 
the article. One machine may be capable of lasting tw^enty 
years, another fifteen, a third ten, and so on ; while a 
granite dock or bridge may last for five hundred or a thou- 
sand years. 

Circulating capital, or capital employed in the payment 
of wages, is said to be returnable in given periods, which 
are estimated from the time when the wages are advanced 
by the capitalist, to the time when he receives payment 
of the produce. 

When it is said that capitalists are placed under the 
same circumstances, it is meant that they employ fixed 
capitals of the same degree of durability, or circulating 
capitals returnable in equal periods. 


I, Supposing, now, that they are in this situation, they 
will be equally affected by a rise or fall of wages. This 
proposition is self-evident, and must be assented to by 
every one. But were such the case, it is impossible that 
a variation of wages should occasion any variation in the 
value or price of commodities. Suppose, for example, that 
a hat, produced when wages are 2s. a- day, freely exchanges 
for a pair of boots ; and let us suppose that, from some 
cause or other, wages rise to 3s. : the question is, will this 
rise of wages affect the value or price of hats and boots ? It 
is obvious that it will not. The relation of A to B cannot 
vary, unless one of them be operated upon by some cause 
which does not extend its influence, or the same degree 
of influence, to the other. But fluctuations in the rate of 
wages are not of this description. They cannot be confined 
to one department. Competition never fails to elevate or 
depress their rate in different trades to what is really, when 
all things are taken into account, the common level. If 
wages rise Is. a-day in the hat trade, they must, and cer- 
tainly will, in the end, unless restrictive regulations inter- 
pose, rise Is. in every other business. It is, consequently, 
plain, that the hatter could not urge the circumstance of 
his paying higher wages to his workmen as a reason why 
the bootmaker should give him more boots than formerly 
in exchange for hats ; for the bootmaker would have it in 
his power to reply, that the same rise of wages affected him 
to precisely the same extent. If, therefore, a hat were pre- 
viously worth, or exchanged for a pair of boots, the one will 
continue to preserve this relation to the other, until some 
variation takes place in the quantities of labour required to 
produce them and bring them to market. So long as these 
quantities continue the same, wages may rise from 5s. to 
10s., or they may fall from Is. to sixpence a-day, without 
either the rise or the fall having the slightest influence 
over their value. 

But it may perhaps be thought, that though the ex- 
changeable value of commodities produced by the aid of 


capitals of equal degrees of durability, may not be affected 
by fluctuations in the rate of wages, these fluctuations may, 
notwithstanding, aff'ect their price, or value estimated in 
money. But if the variation in the rate of wages be real, 
and not nominal — that is, if the labourer get either a 
greater or less proportion of the produce raised by his exer- 
tions, or a greater or less quantity of money of the same 
value — this will not happen. Money is itself a commodity, 
whose value depends on the same principles that determine 
the value of other commodities. If the mine which supplies 
the ofold and silver, of which monev is made, be situated 
in the country, then it is clear, that the rise of wages which 
affects other producers will affect those engaged in the pro- 
duction of o-old and silver; and if gold and silver be im- 
ported from abroad, it is clear that no more of them will 
be obtained, in exchange for commodities produced by the 
dearer labour, than was previously obtained for those pro- 
duced by the cheaper labour ; for, if those who export com- 
modities to foreign countries, and exchange them for the 
precious metals, were to obtain more of these metals after 
wages rose than previously, they would be, in so far, in a 
better situation than their neighbours at home, whose com- 
petition would speedily compel them to give the same 
quantity of goods produced by the dear labour, for that 
quantity of the precious metals they had obtained previously 
to the rise in the rate of wages. 

But if the value of money fluctuate, if it become more 
or less difficult of production, or if its supply be suddenly 
increased or diminished, then, undoubtedly, the rate of 
wages and the price of commodities will vary. But they 
will do so, not because the labourer gets a greater or 
less amount of wages, but because the value of the com- 
modity, or standard, in which wages and prices are esti- 
mated, has varied. The wages of the work-people engaged 
in agriculture and manufactures, though commonly paid 
and rated in money, really consist of a portion of the pro- 
duce raised by their labour ; consequently they bear a high 


proportional, or cost value, when workmen get a compara- 
tively large share of such produce, and a low proportional 
value when they get a comparatively small share. Instead 
of being identical with wages estimated in money or com- 
modities, proportional wages sometimes rise when money 
wages fall, and vice versa. And hence, to avoid falling into 
endless mistakes, it is best, in theoretical investigations 
with respect to value, to consider wages as forming a cer- 
tain proportion of the produce raised by labour, — as being 
invariable, so long as this proportion continues unchanged 
— and as having really risen when it is increased, and 
really fallen when it is diminished. 

The mistaking of fluctuations in the rate of money wages 
for fluctuations in the rate of real or proportional wages, 
has been the source of much error and misapprehension. 
A man whose wages are Is. a-day, must get 2s. to keep 
them at the same level, when the value of money declines a 
half; and the hat which sold for 10s. must then, for the 
same reason, sell for 20s. It is obviously false to call 
this a real rise, either of wages or prices ; though this be 
generally done. The manufacturer who gives sixpence 
a-day more to his men, and who sells his goods at a propor- 
tionally higher price because of a fall in the value of money, 
rarely suspects there has been any such fall, and almost 
invariably concludes that the rise of wages has been the 
cause of the rise of prices, overlooking entirely the real 
cause of the rise of both — the decline in the value of the 
money or article in which wages and prices are estimated. 

Even if it were true, which most certainly it is not, that 
when money is constant in its value, a rise of wages occa- 
sions an equal rise in the money price of commodities, it 
would be no advantage to the producers. Commodities are 
always bought either by other conmiodities or by labour, 
and it is almost superfluous to add, that it is impossible 
they can be bought by any thing else. Of what benefit, 
then, would it be to a capitalist, a cotton-manufacturer, 
for example, to sell his cottons for an advance of 10 per 


cent when wages rise 10 per cent, he being, at the same 
time, obliged to give so much more for every other ar- 
ticle? When wages really rise, it is indifferent to the pro- 
ducers whether they sell the commodities they have to 
spare, and purchase those they have occasion for, at their 
former price, or whether they are all raised proportionally 
to the rise of wages. 

This principle may be further illustrated by supposing 
an equal proportional increase to take place in the labour 
required for the production of all sorts of commodities : 
under such circumstances, their marketable values would 
clearly remain unaltered. A bushel of corn would not 
then exchange for a greater quantity of muslin or of broad- 
cloth than it did before its increased expense of production ; 
but each would cost more, because each would be the produce 
of a greater quantity of labour. Under these circumstances, 
the prices of commodities would remain stationary, while 
the wealth and comforts of society would be materially di- 
minished. Every person would have to make greater exer- 
tions to obtain a given quantity of any single commodity ; 
but as the expense of producing all commodities is, by the 
supposition, equally increased, it would not be necessary 
to make any greater exertions to obtain one than another, 
and their values, as compared with each other, would be 
totally unaffected. 

But if an equal increase of the labour required for the 
production of commodities cannot alter their relation to 
each other, how can this relation be altered by an equal in- 
crease of the wages paid for that labour I A real rise of 
wages affects the proportion in which the produce of indus- 
try (under deduction of rent) is divided between capitalists 
and labourers — diminishing the proportion belonging to the 
capitalists when they rise, and increasing it when they fall. 
But as these changes in the distribution of commodities 
neither add to nor take from the labour required to produce 
them and bring them to market, they do not affect either 
tlieir cost or exchangeable value. 


II. The arguments now brought forward, to show that 
fluctuations in the rate of wages do not affect the value of 
commodities produced by capitals of the same durability, 
were first advanced by Mr Kicardo. He, too, was the first 
who endeavoured to discover and analyse the influence of 
fluctuations in the rate of wages over the value of commo- 
dities, when the capitals employed in their production are 
not of the same durability. The results of his researches 
in this more difficult inquiry were still more important, and 
more at variance with received opinions : for Mr Ricardo 
not only showed that it is impossible for any rise of wages 
to raise the price of all commodities, but he also showed 
that in most cases a rise of wages leads to a, fall in the price 
of some descriptions of commodities, and a fall of wages to 
a rise in the price of others. 

It must be admitted, that this proposition appears, when 
first stated, not a little paradoxical ; but the paradox is 
only in appearance. On adverting to the means by which 
difi'erent classes of commodities are produced, it is immedi- 
ately seen that no proposition can, apparently, be more 
reasonable, or consistent with probability ; and it may be 
easily shown that there is none more certain. 

Some commodities are almost exclusively produced by the 
expenditure of accumulated labour, or capital, and others by 
that of the immediate labour of man. Nearly the whole of 
the first class must consequently belong to capitalists, and 
the latter to labourers. Suppose a manufacturer has a 
highly durable machine worth .^£'20,000, which manufac- 
tures commodities without any, or with but little manual 
labour: in this case the goods produced by the machine 
form the profits of the capital vested in it ; and their 
value in exchange, or their price rated in money, must, 
therefore, var}' with every variation in the rate of pro- 
fit. If profits were at ten per cent, the goods annually 
produced by the machine must sell for oC2000, with a small 
additional sum to cover its wear and tear ; should pi-ofits 
rise to fifteen per cent, the price of the goods must rise to 


i?3000, for otherwise the manufacturer would not obtain 
the common average rate of profit; and if, on the other 
hand, profits should fall to five per cent, the price of the 
goods must, for the same reason, fall to .£'1000. If, there- 
fore, it can be shown that a rise of wages reduces the rate 
of profits, it necessarily follows that it must also reduce the 
value and price of such commodities as are chiefly produced 
by machinery, or fixed capital of a considerable degree of 
durability, or by circulating capitals returnable at distant 
periods, and vice versa. 

Now it is easy to show that, supposing no variation takes 
place in the labour required for the production of commodi- 
ties,^ every rise of wages must reduce profits, and must, 
therefore, reduce the value of those commodities which are 
chiefly produced by the aid of fixed capital or machinery. 
It is plain, from what has been previously stated, that to 
whatever extent wages rise, no set of producers, whether 
their capitals be returnable in a day, a week, a year, or a 
hundred years, can obtain a larger share of the commodities 
produced by others belonging to the same class, that is, who 
have capitals returnable in the same periods as their own. 
This is evidently as impossible as it is to change the relation 
of numbers by multiplying or dividing them by the same 
number ; and, therefore, it is certain, that a rise of wages 
cannot raise the value of any single commodity as compared 
with every other commodity. But, if it cannot do this, it 
must universally lower profits. Suppose, to illustrate this 
principle, that wages really rise 5 or 10 per cent, and that 
two manufacturers of the class who employ the least portion 
of capital in the payment of wages have each i^l 0,000, of 
which they respective!}' lay out ^£"9000 on durable machin- 
ery, and riC'lOOO on the payment of wages : it is obvious, 
inasmuch as these manufacturers are aff'ected by the rise of 
wages to precisely the same extent, that their products will 
continue to exchange for each other exactly as they did be- 

' The reason for this limitation will be subsequently explained. 


fore it took place ; and that, in fact, it will make an equivalent 
deduction from their profits. But if this rise of wages will 
not enable the manufacturers in question to obtain any larger 
share than formerly of the products belonging to others of 
their own class, still less, it is clear, can it enable them to 
obtain any larger share of the produce of any other class of 
manufacturers, who are all assumed to employ more labour 
in proportion to their machinery ; and who, consequently, 
must be more aftected by the rise of wages. There can, 
therefore, be no manner of doubt that, under the circum- 
stances supposed, the profits of the manufacturers, and con- 
sequently of all other producers, will be reduced by this rise 
of wages ; and whenever this reduction takes place, the 
value of the commodities, chiefly produced by the aid of 
fixed capital or machinery, will be diminished as compared 
with those chiefly produced by the hand. 

Suppose that the numbers 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 
&c., represent the various descriptions of capitals, classed 
according to the respective degrees of their average durabi- 
lity ; that No, 1 represents that class of capitals which are 
wholly employed in the payment of wages, and which are 
most speedily consumed and reproduced ; No. 2, that class 
which is next in durability ; and so on until we come to No. 
11, which represents that class of capitals which chiefly 
consist of highly durable machinery, and are longest in 
being consumed and reproduced. Let us further suppose 
that the commodities produced by the agency of these capi- 
tals are all yielding the same common and average rate of 
profit ; and let us endeavour to discover what would, under 
these circumstances, be the influence of fluctuations in 
the rate of wages on the value of commodities. If wages 
rise, it is plain that the holders of the least durable capi- 
tals, (No. 1,) who may be supposed to use no machinery, 
will be more afiected by the rise than the holders of 
the second class, (No. 2,) who may be supposed to employ 
some little machinery ; and these again more than the hold- 
ers of the third class, (No. 3 ;) and so on till we come to the 


holders of the capital of the hii^hest degree of durability, 
(No. 11,) which may be supposed to consist almost wholly 
of very durable machinery ; and who will, on that account, 
be comparatively little affected by the rise. Suppose, now, 
to illustrate the principle, that wages have so risen that the 
increased rate paid by the proprietors of the most durable 
capitals to the few labourers they employ — for they must 
employ a few to superintend their machinery — has reduced 
their profits one per cent : there is obviously no mode in 
v/hich these capitalists can indemnify themselves for this 
fall of profits ; for, as they employ the fewest labourers, they 
are least of all affected by the rise of wages, the profits of 
all other capitalists being more reduced than theirs because 
of the greater number of their labourers. Thus, supposing 
the proprietors of the most durable capitals, or of No. 11, 
to employ a certain number of labourers ; the proprietors 
of the next class, or of No. 10, to employ twice that number ; 
and those of No. 9, three times that number, and so on ; 
then, on the hypothesis that the rise of wages has reduced 
the profits of the most durable capitals, or No 11, otie per 
cent, it will have reduced those of No. 10 two per cent, those 
of No. 9 three per cent, and so on till we come to the least 
durable class. No. 1, whose profits will be reduced eleven 
per cent. It is plain, however, that this discrepancy in the 
rate of profit can only be of temporary duration. For the 
undertakers of those businesses in which either the whole 
or the greater portion of the capital is employed in paying 
the wages of labour, observing that their neighbours, who 
have laid out the greater portion of their capital on machi- 
nery, are less affected by the rise of wages, will immediately 
begin to withdraw from their own businesses, to engage 
in those that are more lucrative. The commodities pro- 
duced by the most durable capitals, Nos. 7, 8, 9, 1 0, &c., 
will, therefore, become redundant, as compared with those 
produced by the least durable capitals, Nos. 1, 2, 3, 4, 
&c. ; and this increase on the one hand, and diminution 
on the other, will sink the value of the former, com- 


pared with the latter, till they all yield the same rate of 

The value of the commodities produced by capital of the 
medium degree of durability, or by No. 6, would not be 
affected by the rise; for, whatever tliey lost in exchangeable 
value as compared with the commodities produced by the 
less durable capitals, they would gain as compared with 
those produced by the more durable capitals. 

It has, liowever, been contended, that though the equali- 
sation in the rate of profit now alluded to might be effected 
by the destruction of a portion of the less durable capital, 
or by the comparatively great accumulations that would 
henceforth be made by the holders of the more durable 
capitals, who are but little affected by the rise of wages, 
it could not be effected by such a transference of capital 
from the one class of businesses to the other as has been 
supposed ; for it is said, that the fixed stock, or machinery, 
belonging to the holders of capitals of the greatest degree 
of durability, being itself the produce of labour, it would 
not be possible to obtain this machinery at its former price 
after wages rose, so that the profits of the existing holders 
of Nos. 7, 8, 9, &c. could not be beaten down to a common 
level with those of the holders of the less durable capitals, 
by an influx of new competitors. But it is easy to see that 
this view of the matter is incorrect. Suppose, which is 
the strongest case for the argument we are combating, that 
the machines belonging to the capitalists of class No. 11, 
are made by the labourers employed by the capitalists of 
class No. 1 : when wages rise, it is evident the machines 
and other comniodities produced by No. 1 cannot rise 
in value, as compared with money, or any other commo- 
dity produced under different circumstances, until they are 
diminished, or the others increased in quantity. And 
hence there are two very sufficient reasons why the pro- 
ducers of the machines should not be disposed to sell them 
after wages rise ; for, in the first place, if they sell them 
they will get no more for them than they got before the rise; 


and, in the second place, as the more lucrative businesses, 
or those that are least affected by the rise of wages, can only 
be carried on by means of machinery, they could not, if they 
sold the machines, transfer circulating capital to them, but 
would be compelled to continue in those businesses that had 
become relatively disadvantageous. Instead, therefore, of 
selling the machines, it may be fairly presumed that a con- 
siderable number of those by whom they are constructed 
would be tempted to employ them in the businesses for which 
they were intended, and would thus come into competition 
with the holders of the capitals Nos. 7, 8, 9, 10, &c., on the 
same footing that they stand, or with machines that have 
cost the same price as theirs ; nor would this transference 
cease until the commodities produced on the least durable 
side of the scale had been so much diminished, and their 
value so much increased, as compared with those produced 
on the more durable side, that they were all brought to 
yield the same common and average rate of profit. 

If wages, instead of rising, were to fall, the opposite ef- 
fects would be produced. The holders of the capitals Nos. 
1, 2, 3, &c., who employ a comparatively large proportion 
of labourers, deriving a greater advantage from the fall 
of wages than the holders of the capitals Nos. 7, 8, 9, 
&;c., their profits would be raised above the level of the 
latter. In consequence, capital would begin to move from 
those businesses that employ the fewest to those that em- 
ploy the greatest number of labourers ; and the average 
equilibrium of profit would be restored by an increase of the 
value of the commodities produced by the most durable, as 
compared with those produced by the least durable capitals. 

It is abundantly certain, therefore, that no rise of wages 
can ever occasion a general rise of prices, and no fall of 
wages a general fall of prices ; but, supposing the produc- 
tiveness of industry, or the quantity of labour required to 
produce commodities, to continue stationary, a rise of wages, 
instead of occasioning a general rise of prices, will occasion 
a general fall of profits ; and a fall of wages, instead of 


reducing prices, will occasion a general rise of profits. 
Owing, however, to the different and ever-varying degrees 
of the durability of the machinery, or fixed capital, em- 
ployed in production, and the varying relation which 
the portion of capital employed as wages, or in the 
payment of immediate labour, bears to the whole capital 
employed, it is very difficult to determine, a priori^ the ex- 
tent to which any given fluctuation in the rate of wages 
will affect the rate of profit, and the value of commodities. 
But when due pains are taken, this may be approximated 
with sufficient accuracy for practical purposes ; and the fol- 
lowing three cases will briefly, and we hope satisfactorily, 
elucidate the manner in which fluctuations in the rate of 
wages always operate, and the method to be followed in 
estimating their influence over profits and prices. 

1. If all commodities were produced by immediate la- 
bour, or by capital employed in the payment of wages, it is 
obvious, supposing the productiveness of industry not to 
vary, that every rise of wages would cause an equal fall of 
profits. A capitalist who employs df 1000 in the payment 
of wages, must, if profits are at 10 per cent, sell the com- 
modities for £1100. But when wages rise 5 per cent, or to 
dC'lOSO, he would not be able to sell his commodities for 
more than dPllOO ; for money is itself a commodity ; and 
as, by the supposition, all commodities are produced by im- 
mediate labour, the rise of wages would affect the producers 
of money in the same way that it affected the producers of 
other things. In this case, therefore, it is plain that every 
rise of wages will equally sink profits, and every fall of wages 
will equally raise them. 

2. If all commodities were produced, one-half by imme- 
diate labour, and the other half by capital, profits would only 
fall to half the extent that wages rose. Suppose a capital- 
ist employs .sS'oOO in the payment of wages, and £500 as a 
fixed capital, when profits are at 10 per cent, the commodi- 
ties produced must, as before, sell for ^S'llOO. If wages 
rose 5 per cent, the capitalist would have to pay £525 as 


wages, and would, consequently, only retain .^'TS as profits. 
In this case, therefore, a rise of wages to the extent of 5 
per cent would, because of the employment of equal quan- 
tities of capital and immediate labour in the production of 
commodities, only sink profits 2|-per cent. 

3, If all commodities were produced by capital of a very 
high degree of durability, capitalists, it is obvious, would not 
be sensibly affected by a rise of wages, and profits would, 
of course, continue nearly as before. 

Now, suppose that commodities, instead of being wholly 
produced by immediate labour, as in the first case ; or 
wholly by equal quantities of immediate labour and of 
capital, as in the second ; or wholly by fixed capital, as in 
the third, — are partly produced in the one mode, and partly 
in the other ; and let us see what effect an increase of 5 
per cent in the rate of wages would have on their values, 
supposing, as before, that the productiveness of industry 
continues constant. To facilitate this inquiry, let us dis- 
tinguish these three descriptions of commodities by the 
Nos. 1, 2, and 3. Now it is evident that the rise of wages 
has affected No. 1 2^ per cent more than it has affected 
No. 2, and 5 per cent more than it has affected No. 3. No. 
1 must, therefore, as compared with No. 2, have risen 2^ 
per cent in exchangeable value, and, as compared with No. 
3, it must have risen 5 per cent ; No. 2 must have fallen 
2^ per cent as compared with No. 1, and risen 2^ per cent 
as compared with No. 3 ; and No. 3 must have fallen 5 
per cent as compared with No. 1, and 2^ per cent as 
compared with No. 2. If wages, instead of rising, had fallen, 
the same effects would obviously have been produced, but 
in a reversed order. The proprietors of the commodities of 
the class No. 1 would gain 5 per cent by the fall ; those of 
No. 2 would gain 2^ per cent ; and those of No. 3 nothing ; 
and the marketable values of these commodities would be 
adjusted accordingly.* 

* These examples are substantially the same with those given by Mr 
James Mill — "Elements of Political Economy," 2d edit. p. 103. 


Thus, then, it appears, inasmuch as any commodity taken 
for a standard by which to estimate the values of other com- 
modities must itself be produced by capital returnable in 
a certain period, that when wages rise, the commodities 
produced by less durable capitals than that which produces 
the commodity taken for a standard will rise in value, 
while those produced by more durable capitals will fall ; 
and conversely when wages are reduced. Suppose, as 
before, that the Nos. 1, 2, 8, 4, 5, 6, 7, 8, 9, 10 and 11, 
represent capitals of corresponding degrees of durability : 
If a commodity produced by the least durable capital, No. 
1, which may be supposed to be wholly employed in the 
payment of wages, be taken for a standard, all commo- 
dities produced by the other and more durable capitals, 
would fall in value when wages rose ; and if we suppose 
those produced by No. 2 to decline 1 per cent, those pro- 
duced by No 3 would decline 2 per cent, those produced by 
No. 4, 3 per cent, and so on until we arrive at No. 11, which 
will have fallen 10 per cent. If, on the other hand, a com- 
modity, produced by the most durable capital, No. 11, and 
which may be supposed to consist wholly of highly durable 
machinery, be made the standard, when wages rise, all the 
commodities produced by the other less durable capitals 
would also rise ; and if those produced by No. 10, rose 1 per 
cent, those produced by No. 9 would rise 2 per cent, and 
those produced by No. 1, 10 per cent. If a commodity, 
produced by a capital of the medium degree of durability, 
as No. 6, and which may be supposed to consist half of cir- 
culating capital employed in the payment of wages, and 
half of fixed capital or machinery, be taken as a standard, 
the commodities produced by the less durable capitals, Nos. 
5, 4, 3, 2, and 1, will rise with a rise of wages, on the former 
hypothesis, the first, or No, 5, 1 per cent, the second, or 
4, 2 per cent, &c. ; while those produced by the more durable 
capitals, Nos. 7, 8, 9, 10, and 11, WiWfall, the first, or No. 
7, 1 per cent, the second, or No, 8, 2 per cent, &c., exactly 
the reverse of the other. 

Hence it is obvious, that the effect which variations in the 

9 n 


rate of wages have on the pj-ice of commodities must princi- 
pally depend on the nature of the capital employed in the 
production of gold and silver. Whatever may be the pro- 
portions of circulating capital appropriated to the payment 
of wages, and of fixed capital employed in the production of 
the material of which money is made, those commodities 
which are produced by the agency of a greater quantity of 
circulating capital, and with less fixed capital or machinery, 
will rise when wages rise, and fall when wages fall ; but 
those that are produced by the agency of a less quantity of 
circulating capital, and with more fixed capital or machinery, 
will fall when wages rise, and rise when wages fall ; while 
those that are produced under nearly the same circum- 
stances, or by the agency of the same quantities of circu- 
lating and fixed capital as money, will not be affected by 
these fluctuations. 

It should be observed, however, that the variations in the 
exchangeable value of most commodities, caused by varia- 
tions in the rate of proportional wages, are confined within 
comparatively narrow limits. We have already seen that, 
if commodities were either produced wholly by immediate 
labour, or wholly by capital, or wholly by equal quantities 
of both, no variation in the rate of wages would have any 
influence over their value. But in point of fact, a very 
large class of commodities are produced by means of 
nearly equal portions of fixed and circulating capital ; and 
as every rise of proportional wages that may take place 
must, under such circumstances, be balanced either by a 
fall in the rate of profit or by a proportional increase in 
the productiveness of industry, it is evident that the value 
of the commodities in question, as compared with each other, 
would remain nearly stationary. Although, therefore, a 
rise of wages has a necessary tendency to raise the ex- 
changeable value of one class of commodities, and conse- 
quently to lower that of another class, the fall of profits, 
which inevitably follows every rise of wages that is not 
accompanied by an increased productiveness of industry has 
a contrary effect, and tends to sink the value of the com- 


modities which the increased rate of washes would raise, 
and to elevate the value of those which the same in- 
creased rate would sink. And it is only in extreme cases, 
or in the case of commodities produced almost wholly 
by direct manual labour, on the one hand, or in that of 
those produced almost wholly by the aid of fixed capital 
or machinery on the other, that a variation in the rate of 
proportional wages occasions a considerable variation in their 

It should also be observed, that though fluctuations in the 
rate of wao'es occasion some variation in the exchanoreable 
value of particular commodities, they neither add to nor take 
from the total value of the entire mass of commodities. If 
they increase the value of those produced by the least dur- 
able capitals, they equally diminish the value of those pro- 
duced by the more durable capitals. Their aggregate value 
continues, therefore, always the same. And though it may 
not be strictly true of a particular commodity, that its ex- 
changeable value is directly as its cost, or as the quantity 
of labour required to produce it and bring it to market, it is 
most true to affirm this of the mass of commodities taken 

In thus endeavouring to trace the value of all descriptions 
of non-monopolised commodities to the quantity of labour 
required for their production, it is not meant to deny that 
a very large portion of the useful or desirable qualities of 
such commodities may be the result of the action or influ- 
ence of natural agents. But it is, as was formerly stated, 
the peculiar and distinguishing feature of natural agents, 
or powers, that they render their services gratuitously. 
Whatever is done by them is done without fee or reward. 
And hence, though their assistance and co-operation be 
necessary to the production of every species of useful and 
desirable articles, they add nothing to their value. This 
is a quality that can be communicated only by the labour 
of man, or by the instrumentality of that capital that has 
been appropriated or accumulated by his labour. In esti- 


mating the value of a quantity of corn, for example, we 
include only the value of the labour of the individuals 
employed, as ploughmen, reapers, thrashers, &c., with that 
of the corn used as seed, and of the services rendered by 
the horses and instruments made use of in the different 
operations. Nothing is set down on account of the aid 
derived from the vegetative powers of nature, and the influ- 
ences of the sun and showers ; for though without them 
the crop could not be obtained, and our utmost exertions 
would be altogether fruitless, yet, as they are the free gift 
of Providence, they add nothing to the cost or value of the 
produce, or to its power of exchanging for or buying labour, 
or other things produced by its intervention. 

It may be thought, perhaps, that this principle is at 
variance with what is observed to take place in the produc- 
tion of certain descriptions of commodities. Thus, if a cask 
of new wine be kept for a definite period, or till it arrive at 
maturity, it will acquire a higher value; now, as the change 
produced in the wine is entirely brought about by the 
operation of natural agents, and as, without the change, the 
wine would have no higher value, it has been contended 
that this is a case in which the labour of natural agents is 
plainly productive of an increased value. But it is easy to 
see that this is a mistake. The cask of wine is a capital, or is 
the result of the labour employed in cultivating, gathering, 
pressing, and otherwise preparing, the grapes from which 
it has been made. But it is necessary, in order to give 
time for the processes of fermentation, decomposition, &c., 
to effect the desired changes in the wine, that it should 
be laid aside until they are completed. The producer of 
wine would not, however, employ his capital in this way, 
unless it were to yield him the same return that is derived 
from capital employed in other businesses. And hence 
it follows, that though the processes carried on by nature 
render the wine more desirable, or bestow on it a greater 
degree of utility, they add nothing to its value ; the addi- 
tional value which it acquires being a consequence of the 


profit accruing on the capital req_uire(l to enable the processes 
to be carried on. 

Besides the objection now stated, it has been contended 
by Colonel Torrens, in his work " On the Production of 
Wealth," in opposition to the theory we have been endea- 
vouring to establish, that, after capital has been accumu- 
lated, the value of commodities is no longer, as in the early 
stages of society, determined by the quantities of labour 
required to bring them to market, but by the quantities of 
capital required for that purpose. At bottom, however, this 
theory is but nominally different from that just explained ; 
for capital, being nothing but the accumulated produce of 
anterior labour, its value, like the value of every thing else, 
is estimated by the quantity of labour required for its pro- 
duction. In this respect, too, there is no difference, as has 
been already shown, between the work of labourers and 
that of machines. A labourer is himself a portion of the 
national capital, and may, without impropriety, be con- 
sidered, in theoretical investigations of this sort, (which 
merely regard his physical, and have no reference to his 
mental and moral powers,) in the light of a machine which 
it has required a certain outlay of labour to construct ; the 
wages which he earns are a remuneration for his services, 
and, if we may so speak, yield him, at an average, only 
the common and ordinary rate of profit on his capital, ex- 
clusive of a sum to replace its wear and tear, or, which is 
the same thing, to supply the place of old and decayed 
labourers with new ones. Whether, therefore, a commo- 
dity has been produced by the expenditure of a capital 
which it cost a certain quantity of labour to provide, or has 
been produced by the expenditure of that labour directly 
upon it, is of no moment : in either case, it is produced 
by exactly the same amount of labour, or, if it should be 
deemed a better phrase, of capital. In so far as their purely 
physical powers are concerned, and it is such only that are 
now in question, men are to be looked upon as capital, or 
are to be considered in the same point of view as the tools 


or engines with which they perform their tasks ; and to say 
that the value of commodities depends on the quantities of 
capital expended on their production, is not to contradict, 
but is, in fact, only another way of expressing the identical 
proposition we have been endeavouring to illustrate. 

Many important practical conclusions may be deduced 
from the principles developed in this chapter. It was, for 
example, long and universally supposed, that a country 
where wages are comparatively low would be able, pro- 
vided it possessed the same facilities for the production 
of commodities, to undersell other countries in markets 
equally accessible to all parties. But the principles now 
laid down show the fallacy of this opinion. Suppose, to 
exemplify the mode in which variations in the rate of wages 
aftect foreign commerce, that England and France have 
equal facilities for producing all sorts of commodities, and 
that the rates of wages are equal in both countries ; and let 
the following numbers represent the different classes of capi- 
tal, ranged according to the different degrees of their dura- 
bility employed in production in England and France, viz. — 

Nos. 1, 2, 8, 4, 5, 6, 7, 8, 9, 10, ll, &c., England. 

Nos. 1', 2', 3', 4', 5', 6', 7', 8', 9', 10', 11', &c., France. 

Now, as the two countries are supposed to have equal 
facilities of production, and as wages in them both are also 
supposed to be the same, the commodities they respectively 
produce will sell equally well in any third market, as in 
that of the United States, equally open to both : but sup- 
pose that, while wages continue stationary in France, they 
rise in England, and mark the result. All those commo- 
dities produced in England by the capitals Nos. 7, 8, 9, 10, 
&c., which are above the medium degree of durability, and 
may be supposed to consist chiefly of machinery, will fall, 
while those produced by the less durable capitals, Nos. 1, 2, 
3, 4, &c., will rise. The former will not, however, fall only 
as compared with the commodities produced in England by 
less durable capitals, but they will also fall as compared 
with the commodities produced in France by the correspond- 


ing and equally durable capitals, Nos. 7', 8', 9', 10', &c. ; 
while the latter, or the commodities produced in England 
bj the capitals Nos. 1, 2, 3, 4, &c., will rise in value as 
compared with the commodities produced in France by the 
corresponding capitals, Nos, 1', 2', 3', 4', &c. The mer- 
chants of England and France will, therefore, no longer 
come into the American market on the same terms as 
formerly ; for England will henceforth have a decided ad- 
vantage over France in the production and sale of those 
commodities that are produced chiefly by machinery ; while 
France will, on her part, have an equally decided advantage 
over England in the production and sale of those commo- 
dities that are chiefly the direct produce of the hand. And 
such, in point of fact, is the case. The bulk of our exports 
consists of cotton goods and other products of machinery ; 
whereas the bulk of the exports of France consists of the 
productions of her soil, and of jewellery and fancy articles, 
principally the product of manual labour. It is, therefore, 
difficult to suppose that a rise of wages should be fatal to 
the foreign commerce of a country, except by reducing profits, 
and creating a temptation to employ capital abroad. It can 
hardly fail, however, to turn it, to some extent at least, into 
new channels : for if, on the one hand, it raises the value of 
certain descriptions of commodities and checks their exporta- 
tion, on the other, it proportionally lowers the value of other 
descriptions, and fits them the better for the foreign market. 
The truth, therefore, is, that instead of our high wages 
laying our cotton manufacturers under any disadvantage in 
the sale of their goods, their effect is distinctly the reverse. 
The high wages paid to workmen in England, and the 
weight of the public burdens, occasion comparatively low 
profits ; and as the principal part of the value of cottons 
and other commodities chiefly produced by the agency of 
machinery, consists of profits, it must necessarily be low 
where the latter are low. Suppose, for example, that two 
highly durable machines, of equal efficiency, and which 
may be used with but little manual labour, are erected, the 
one in France and the other in England : if the machines 


cost =£*20,000 each, and if the rate of profit in France were 
six and in England five per cent, the work done by the 
French machine would be worth <£']200, whereas that done 
bj the English machine would only be worth .£'1000. It 
should also be observed, inasmuch as one description of 
machinery is for the most part largely employed in the 
production of another, that it is most probable, in the event 
of one of the machines bein^ made in Eng-land and the other 
in France, that the English one would not cost so much as 
<£*20,000 and that its produce might on that account be sold 
under £1000. Independently, however, of this circum- 
stance, the advantage that our manufacturers, who are large 
employers of machinery, must have over those of France, 
and still more over those of the United States, in conse- 
quence of their profits being lower, is obvious and decided. 
This principle shows that restrictions on the exportation of 
machinery, even if they could be enforced, and the emi- 
gration of the makers prevented, are of less consequence 
than the manufacturers suppose ; for, though the United 
States possessed every facility for manufacturing cottons 
we now enjoy, though Massachusetts were a second Lanca- 
shire, and Lowell a fac-simile of Manchester, it is plain 
their manufacturers could not enter into a successful com- 
petition Avith those of England. The possession of better 
machinery would not lower profits in New England ; and, 
till this be done, we must, supposing we continue to possess 
equal facilities of production, always have an ascendency 
over the Americans, the French, and every other people 
among whom profits are higher than in England, in the sale 
of such articles as are mainly produced by means of machinery. 
The statement now made is not, however, meant to con- 
vey the impression that low profits are really advantageous. 
On the contrary, the tendency of a low rate of profit is 
not only to make the countries in which it obtains advance 
slowly as compared with those in which it is higher, but it 
also, as previously stated, forms a strong temptation to con- 
vey capital from them. A reduction of taxation, or a reduc- 
tion of wages, following a reduction in the price of corn, 


or any of the principal necessaries which enter into the con- 
sumption of the labourer, would raise the rate of profit, 
and might, consequently, by raising their price, narrow the 
demand for cottons. But a diminution in our exports 
to foreign countries, arising from this cause, if it did 
take place, would be beneficial rather than otherwise. It 
would be a consequence of industry having become more 
productive ; and any capital that had previously been em- 
ployed in the production of goods for the foreign market, 
that could not, under the supposed change of circumstances, 
be advantageously sent abroad, would have little difficulty 
in meeting with more profitable employment in other 
branches. In so far, however, as the cotton manufacture 
is concerned, there can be little doubt that the depression 
in the rate of profit has contributed to its extraordinary 
extension. And, how paradoxical soever it may seem, it is 
nevertheless true that, were wages to rise and profits to 
sustain a further decline, additional capital would be at- 
tracted to the manufacture, and the price of cottons would 
experience a further reduction ; whereas, were wages to fall 
and profits to rise, capital would be diverted from the ma- 
nufacture to those businesses that employ less machinery, 
and the price of cottons would rise.^ 

^ Sir William Petty seems to have been one of the earliest writers 
who has distinctly stated, that the value of commodities depends on the 
quantities of labour required for their production. " If," says he, " a 
man bring to London an ounce of silver out of the earth in Peru, in the 
same time that he can produce a bushel of corn, the one is the natural price 
of the other : now if, by reason of new and more easie mines, a man can get 
two ounces of silver as easily as formerly he did one, then corn will be as 
cheap at ten shillings the bushel as it was before at five shillings, cceteris 
paribus." — Treatise of Taxes and Contributions, ed. 1679, p. 31. At page 24 
he says, " Let a hundred men work ten years upon corn, and the same 
number of men the same time upon silver ; I say that the neat proceed of 
the silver is the price of the whole neat proceed of the corn, and like parts 
of the one the price of like parts of the other :" and at page 67 he says, 
" Corn will be twice as dear when there are two hundred husbandmen to do 
the same work which a hundred could perform." These passages are inte- 
resting, as exhibiting the first germs of the theory which Mr Ricardo did so 
much to perfect. 






The inhabitants of such countries as have made any consi- 
derable progress in civilisation and the arts, may be divided 
into the three classes of labourers, landlords, and capitalists; 
and whatever be the condition of any society — whether rude 
or refined, rich or poor — every person belonging to it, who 
is not a pauper, or who does not subsist on the bounty of 
others, may be reckoned in one or other of these classes. 
They divide amongst them all the wealth of the com- 
munity. Public functionaries of all sorts, and the various 
individuals engaged in what are called liberal or learned 
professions, exchange their services for valuable considera- 
tions. The whole subsistence of such persons, in so far as 
they depend upon their employments, is derived from wages; 
and they are as evidently labourers as if they handled a 
spade or a plough. " Every man," says I)r Paley, " has 
his work. The kind of work varies, and that is all the 
difference there is. A great deal of labour exists besides 
that of the hands ; many species of industry beside bodily 


operation — equally necessary, requiring equal assiduity, 
more attention, more anxiety. It is not true, therefore, 
tliat men of elevated stations are exempted from work ; it 
is only true that there is assigned to them work of a dif- 
ferent kind : whether more easy or more pleasant may be 
questioned ; but certainly not less wanted, nor less essen- 
tial to the common good."^ Hence it is that the inquiry 
into the distribution of wealth among the different orders 
of the society, resolves itself into an investigation of the 
laws which regulate wages, rent, and profit, and of the best 
methods of providing for the exigencies of the poor, or of 
those who are unable to provide for themselves. We shall 
begin by endeavouring to lay before the reader a view of 
the circumstances which determine the wages of labour in 
different employments. 

^ "Assize Sermon," 29th July 1795. 



Wages in the different Departments of Industry — Causes of their Ap- 
parent Discrepancy — Really approach very near to Equality. 

The wages paid to the labourers engaged in different em- 
ployments differ so very widely, that, at first sight, it may 
seem to be impossible to lay down any principles that should 
be applicable to them all. Such, however, is not the case. 
The differences in question are apparent rather than real ; 
and when the various favourable and unfavourable circum- 
stances connected with different employments are taken into 
account, it will be found, that the wages or earnings of 
those engaged in them are very nearly the same. 

If all employments were equally agreeable and healthy ; 
if the labour to be performed in each was of the same inten- 
sity ; and if each required the same degree of dexterity and 
skill on the part of those employed, it is evident, supposing 
industry to be quite free, there could be no permanent 
or considerable difference in the wages of labour. For if 
those employed in a particular business were to earn either 
more or less than their neighbours, labourers would, in the 
former case, leave other businesses to engage in it ; and in 
the latter they would leave it to engage in others, until the 
increase or diminution of their numbers had lowered or ele- 
vated wages to the common level. In point of fact, how- 
ever, the intensity of the labour to be performed in differ- 
ent employments, the degree of skill required to carry them 
on, their healthiness, and the estimation in which they are 
held, differ exceedingly ; and these varying circumstances 
necessarily occasion proportional differences in the wages of 
the workmen engaged in them. Wages are the price paid 
for the exei-tion of the physical powers, skill, and ingenuity 


of the labourer. They, therefore, necessarily vary according 
to the severity of the labour, and the degree of skill and in- 
genuity required. A jeweller or engraver, for example, 
must be paid higher wages than a common farm-servant or 
scavenger ,• for, a long course of training being necessary to 
instruct a man in the art of jewelling and engraving, were 
he not indemnified for its cost by a higher rate of wages, 
others, instead of learning so difficult an art, would addict 
themselves, in preference, to such employments as hardly 
require any instruction. Hence, the discrepancies that 
actually obtain in the rate of wages are confined within 
certain limits — increasing or diminishing it only so far as 
may be necessary fully to countervail the unfavourable or 
favourable peculiarities attending any employment. 

The following, according to Smith, are the principal 
circumstances which make the rate of wages in some employ- 
ments fall below or rise above the medium or average rate of 
wages : — 

1st, The agreeableness and disagreeableness of the em- 
ployments : 

2u, The easiness or cheapness, or the difficulty and ex- 
pense, of learning them : 

3d, The constancy or inconstancy of the employments : 

4th, The small or great trust that must be reposed in 
those who carry them on : 

5th, The probability or improbability of succeeding in 

First, The agreeableness of an employment may arise 
either from physical or moral causes — from the lightness of 
the labour, its healthiness or cleanliness, the degree of esti- 
mation in which it is held, &c. ; and its disagreeableness 
from the opposite circumstances — that is, from the severity 
of the labour, its unhealthiness or dirtiness, the degree of 
odium attached to it, &c. The rate of wages must obvi- 
ously vary with the variations in circumstances which exert 
so powerful an influence over the labourer. It is, indeed, 
quite out of the question to suppose, that any individual 


should be so blind to his own interest, as to engage in an 
occupation considered as mean and disreputable, or where 
the labour is severe, if he obtain only the same wages he 
may get by engaging in employments in higher estimation, 
and where the labour is comparatively light. The labour 
of the ploughman is not unhealthy, nor is it either irksome 
or disagreeable ; but being more severe, and requiring greater 
skill than that of the shepherd, it is uniformly better re- 
warded. The same principle holds universally. Miners, 
gilders, typefounders, smiths, distillers, and all who carry 
on unhealthy, disagreeable, and dangerous businesses, 
invariably obtain higher wages than those who, with equal 
skill, are engaged in more desirable employments. The 
unfavourable opinion entertained respecting certain busi- 
nesses operates on wages as if the labour to be performed in 
them were unusually unhealthy or severe. The trade of a 
butcher, for example, is generally looked upon as rather 
low and discreditable ; and this feeling occasions such a 
disinclination on the part of young men to enter it, as can 
only be overcome by the high wages that butchers are said 
to earn, notwithstanding the lightness of their labour : this, 
also, is the reason that the keeper of a small inn or tavern, 
who is never master of his own house, and who is exposed 
to the brutality of every drunkard, exercises one of the most 
profitable of the common trades. The contrary circum- 
stances have contrary efTects. Hunting and fishing form, 
in an advanced state of society, among the most agreeable 
amusements of the rich ; but from their being held in this 
degree of estimation, and from the lightness of their labour, 
those who practise them as a trade generally receive very 
small wages, and are proverbially poor : and the agreable- 
ness and healthiness of the employments, rather than the 
lightness of their labour, or the little skill which they 
require, seem to be the principal cause of the redundant 
numbers, and consequent low wages, of common farm- 
servants, and generally of all workmen employed in ordi- 
nary field labour. 


The severe discipline and various hardships to which 
common soldiers are exposed, and the little chance they 
have of arriving at a higher station, are unfavourable cir- 
cumstances, which, it might be supposed, could only be 
countervailed by a high rate of wages. It is found, how- 
ever, that there are few common trades in which labourers 
can be procured for such low wages as those for which 
recruits are willing to enlist in the armv. Nor is it difficult 
to discover the causes of this apparent anomaly. Except 
when actually engaged in warlike operations, a soldier is 
comparatively idle ; while his free, dissipated, and generally 
adventurous life, the splendour of his uniform, the imposing 
spectacle of military parades and evolutions, and the mar- 
tial music by which they are accompanied, exert a most 
seductive influence over the young and inconsiderate. The 
dangers and privations of campaigns are undervalued, while 
the chances of advancement are proportionally exaggerated 
in their sanguine imaginations. "Without regarding the 
danger," says Adam Smith, " soldiers are never obtained so 
easily as at the beginning of a new war ; and though they 
have scarce any chance of preferment, they figure to them- 
selves, in their youthful fancies, a thousand occasions of 
acquiring honour and distinction which never occur. These 
romantic hopes make the whole price of their blood. Their 
pay is less than that of common labourers, and in actual 
service their fatigues are much greater."^ 

It is observed by Smith, that the chances of succeeding 
in the sea service are greater than in the army. "The son 
of a creditable labourer or artificer may frequently go to sea 
with his father's consent ; but if he enlists as a soldier, it 
is always without it. Other people see some chance of his 
making something by the one trade : nobody but himself 
sees any of his making any thing by the other." But the 
allurements to enlist in the army are, notwithstanding, 
found to be much greater than those which prompt young 

1 "Wealth of Nations," p. 49. 


men to enter the navy. The life of a sailor is perhaps more 
adventurous than that of a soldier ; but he has no regular 
uniform, his employment is comparatively dirty and 
disagreeable, his labour more severe, and while at sea he 
he suffers a species of imprisonment, and cannot, like the 
soldier, excite either the envy or admiration of his country- 
men. In consequence, the wages of seamen almost invariably 
exceed those of soldiers, and there is a greater difficulty of 
obtaining recruits at the breaking out of a war. 

In England, the disadvantages and drawbacks natiirally 
incident to a seafaring life have been considerably increased 
by the practice of impressment. The violence and injustice 
to which this practice exposes sailors, tend to prevent 
young men from entering on board ship, and consequently 
tend, by artificially lessening the supply of sailors, to raise 
their wages above their natural level, to the injury both of 
the king's and the merchant service. " The custom of im- 
pressment," says Mr Richardson, " puts a free-born British 
sailor on the same footing as a Turkish slave. The Grand 
Seignior cannot do a more absolute act than to order a man 
to be dragged away from his family, and against his will 
run his head against the mouth of a cannon ; and if such 
acts should be frequent in Turkey, upon any one set of useful 
men, would it not drive them away to other countries, and 
thin their numbers yearly ? and would not the remaining 
few double or treble their wages ? which is the case with 
our sailors, in time of war, to the great detriment of our 
commerce." ' 

In corroboration of this statement, it may be mentioned, 
that while the wages of labourers and artisans are uniformly 
higher in the United States than in England, those of sailors 
are most commonly lower. The reason is, that the navy of 
the United States is manned by means of voluntary enlist- 
ment only. The Americans are desirous of becoming a 
great naval power, and they have wisely relinquished a 

1" Essay ou the Causes of the Decline of Foreign Trade." Ed. 1756, p, 24. 



practice which would have driven their best sailors from 
their service, and have forced them to man their fleet with 
the sweepings of their jails. 

It is believed that there were above 16,000 British sailors 
on board American ships at the close of last war ; and the 
wages of our seamen, which in time of peace rarely exceed 
40s. or 50s. a-month, had then risen to 100s. and 120s. ! 
This extraordinary influx of British seamen into the Ameri- 
can service, and the no less extraordinary rise in their wages 
at home, can be accounted for only by our continuing the 
practice of impressment, which has been abandoned by the 
United States. Formerly, our seamen were in the habit, 
on the breaking out of a war, of deserting to Holland. The 
difference of language was, however, an insuj)erable obstacle 
to this being done to any very injurious extent : but with 
America the case is diff"erent. Our sailors know that in the 
States they are sure of finding a safe asylum among a kindred 
people, whose language, religion, customs, and habits are 
identical with their own — and who will anxiously hold out 
every temptation to draw them to their service. Nothing 
but the abolition of impressment can countervail such in- 
ducements to desertion, and effectually reduce the wages 
of our seamen. And as it has been shown that it is nowise 
necessary to the manning of the fleet,^ it is to be hoped 
that it may speedily be abolished ; and that the eff"orts of 
the Americans to increase their naval power may not be 
assisted by our obstinately clinging to a system fraught 
with injustice and oppression. 

The officers of the army and navy, and many of those 
functionaries who fill situations of great trust and respon- 
sibility, receive a very inadequate pecuniary remuneration. 
The consideration attached to such offices, and the inffuence 
they confer on their possessors, form a principal part of 
their salary. 

Secondly. The wages of labour, in particular businesses, 

^ See Note on Impressment, in the edition of the " Wealth of Nations," 
pp. 536-539, by the author of this work. 


vary according to the comparative facility with which they 
may be learned. 

There are several sorts of labour which a man may per- 
form without any, or with but little, previous instruction ; 
and in which he will, consequently, gain a certain rate of 
wages from the moment he is employed. But, in civilised 
societies, there are many employments which can be carried 
on by those only who have been regularly instructed in them ; 
and it is evident, that the wages of such skilled labour 
should so far exceed the wages of that which is comparatively 
rude, as to afford the workmen a sufficient compensation for 
the time they have lost, and the expense they have incurred, 
in their education. Suppose that the education of a skilled 
labourer — a jeweller, or engraver, for example — and his 
maintenance down to the period when he begins to support 
himself, cost <£*300 more than is required for the maintenance 
of an unskilled labourer down to the same period ; it is 
plain that, to place these individuals in the same situation, 
the skilled labourer should earn as much over and above the 
wages earned by the one that is unskilled as may be suffi- 
cient, not only to yield the usual rate of profit on the extra 
sum of .ifi'SOO expended on his education, but also to replace 
the sum itself, previously to the probable termination of his 
life. If he obtain less than this he will be underpaid, and 
if he obtain more he will be overpaid, and there will be an 
influx of new entrants, until their competition has reduced 
wages to their proper level. 

The policy of most European nations has added to the 
necessary cost of breeding up skilled labourers, by forcing 
them to serve as apprentices for a longer period than is com- 
monly required to obtain a knowledge of the trades they 
mean to exercise. But as the wages of labour are always 
proportioned, not only to the skill and dexterity of the 
labourer, but also to the time he has spent, and the diffi- 
culties and expense he has had to encounter, in learning his 
business, it is plain that, if an individual be compelled to 
serve an apprenticeship of seven years to a business which 


he might have learned in two or three years, he will obtain 
a proportionally higher rate of wages after the expiration of 
his apprenticeship. The institution of unnecessarily long 
apprenticeships is, therefore, productive of a double injury: 
in the Ji7'st place, it injures the employers of workmen, by 
artificially raising wages ; and, in the second place, it in- 
jures the workmen from its tendency to generate idle and 
dissipated habits, by making them pass so large a por- 
tion of their youth without any sufficient motive to be in- 

The common law of England authorises every man to 
employ himself at pleasure in any lawful trade. But this 
sound principle was almost entirely subverted by a statute 
passed, in compliance with the solicitations of the corporate 
bodies, in the fifth year of the reign of Queen Elizabeth, 
commonly called the statute of apprenticeship. It enacted 
that no person should, for the future, exercise any trade, 
craft, or mystery, at that time exercised in England or 
Wales, unless he had previously served to it an apprentice- 
ship of seven years at least ; so that what had before been a 
by-law of a few corporations, became the general and statute 
law of the kingdom. Fortunately, however, the courts 
were always singularly disinclined to enforce the provisions 
of this statute. Though the words of the act plainly include 
the whole kingdom of England and Wales, it was interpreted 
to refer to market toicns only, and to those trades which had 
been practised in England when the statute was passed, 
without any reference to such as had been subsequently in- 
troduced. This interpretation gave occasion to several very 
absurd and even ludicrous distinctions. It was adjudged, 
for example, that a coachmaker could neither himself make, 
nor employ a journeyman to make his coach wheels, but 
must buy them of a master wheelwright, this latter trade 
having been exercised in England before the 5th of Eliza- 
beth. But a wheelwright, though he had never served an 
apprenticeship to a coachmaker, might either make himself, 
or employ journeymen to make coaches, the trade of a coach- 


maker not being within the statute, because not exercised 
in England at the time when it was passed. The absurdity 
of these distinctions, and the injurious operation of the 
statute, were long obvious ; but so slow is the progress 
of sound legislation, and so powerful the opposition to every 
change affecting private interests, that its repeal did not 
take place till 1814. The act for this purpose did not, 
nowever, interfere with the existing rights, privileges, and 
by-laws of corporate bodies ; but wherever these do not in- 
terpose, the conditions in apprenticeships, and their duration, 
are now left to be adjusted by the parties. 

Thirdly. The wages of labour, in different employments, 
vary with the constancy and inconstancy of employ- 

Employment is touch more constant in some businesses 
than in others. Many trades can only be carried on in par- 
ticular states of the weather and seasons of the year ; and 
if the workmen engaged in these trades cannot easily find 
employment in others during the time they are thrown 
out of them, their wages must be proportionally aug- 
mented. A jeweller, weaver, shoemaker, or tailor, for ex- 
ample, may, under ordinary circumstances, reckon upon 
obtaining constant employment ; but masons, bricklayers, 
paviors, and, in general, all those workmen who carry on 
their business in the open air, are liable to perpetual inter- 
ruptions. Their wages must, however, not only suffice for 
their maintenance while they are employed, but also during 
the time they are necessarily idle ; and the}'^ should also 
afford them, as Smith has remarked, some compensation for 
those anxious and desponding moments which the thought 
of so precarious a situation must sometimes occasion. 

This principle shows the fallacy of the opinion so generally 
entertained respecting the great earnings of porters, hackney- 
coachmen, watermen, and generally of all workmen employed 
only for short periods, and on particular occasions. Such 
persons frequently make as much in an hour or two as a 
regularly employed workman makes in a day ; but this 


greater hire, during the time they are employed, is found 
to be only a bare compensation for the labour they perform, 
and for the time they are necessarily idle : instead of making 
money, such persons are almost invariably poorer than those 
engaged in more constant occupations. 

The interruption to employments occasioned by the cele- 
bration of holidays, has a similar effect on wages. There 
are countries in which the holidays, including Sundays, 
amount to about half the year ; and the necessary wages of 
labour must there be about double what they would be were 
these holidays abolished. 

Fourthly, The wages of labour vary according to the small 
or great trust which must be reposed in the workmen. 

" The wages of goldsmiths and jewellers are every where 
superior to those of many other workmen, not only of equal, 
but of much superior ingenuity, on account of the precious 
materials with which they are intrusted, 

" We trust our health to the physician ; our fortune, and 
sometimes our life and reputation, to the lawyer and attorney. 
Such confidence could not safely be reposed in people of a 
very mean or low condition. Their reward must be such, 
therefore, as may give them that rank in society which so 
important a trust requires. The long time and the great 
expense which must be laid out in their education, when 
combined with this circumstance, necessarily enhance still 
further the price of their labour."^ 

Fifthly, The wages of labour in different employments 
vary according to the probability or improbability of success 
in them. 

This cause of variation chiefly affects the wages of the 
higher class of labourers, or of those who practise what are 
usually denominated liberal professions. 

If a young man be bound apprentice to a shoemaker or 
a tailor, there is hardly any doubt he will attain to an ordinary 
degree of proficiency and expertness in his business, and 

' "Wealth of Ncations," p. 47. 


that he will be able to live bj it. But if he be bound ap- 
prentice to a lawyer, a painter, a sculptor, or a player, there 
are five chances to one ag-ainst his ever attaining to such a 
degree of proficiency in any of these callings as will enable 
him to subsist on his earnings. But in professions where 
many fail for one who succeeds, the fortunate one should 
not only gain such a rate of wages as may indemnify him 
for the expenses incurred in his education, but also for all 
that has been expended on the education of his unsuccessful 
competitors. It is abundantly certain, however, that the 
wages of lawyers, players, sculptors, &c., taken in the ag- 
gregate, never amount to so large a sum. The lottery of 
the law and other liberal professions has many great prizes ; 
but there is, notwithstanding, a large excess of blanks. 
" Compute," says Smith, " in any particular place, what is 
likely to be annually gained, and what is likely to be an- 
nually spent, by all the different workmen in any common 
trade, such as that of shoemakers or weavers, and you will 
find that the former sum will generally exceed the latter. 
But make the same computation with regard to all the 
counsellors and students of law, in all the difierent inns of 
court, and jon will find that their annual gains bear but 
a very small proportion to their annual expense, even though 
you rate the former as high, and the latter as low as can 
well be done. The lottery of the law, therefore, is very far 
from being a perfectly fair lottery ; and that, as well as 
many other liberal and honourable professions, is, in point 
of pecuniary gains, evidently under-recompensed." 

But the love of that wealth, power, and consideration, 
whicli most commonly attend superior excellence in any of 
the liberal professions, and the overweening confidence placed 
by each individual in his own good fortune, are sufficient to 
overbalance all the disadvantages and drawbacks that attend 
them, and never fail of crowding their ranks with all the 
most generous and aspiring spirits. 

The pecuniary wages or earnings of scientific and liter- 
ary men are, with a few rare exceptions, very inconsiderable. 


This arises from a variety of causes ; but principally, per- 
haps, from the indestructibility, if we may so term it, and 
rapid circulation of their works and inventions. The cloth 
of the manufacturer, and the corn of the agriculturist, are 
speedily consumed, and there is a continued demand for 
fresh supplies of the same articles. Such, however, is not 
the case with new inventions, new theories, or new literary 
works. They may be universally made use of, but they 
cannot be consumed. The moment that the invention of 
logarithms, the mode of spinning by rollers, and the dis- 
covery of the cow-pox, had been published, they were 
rendered imperishable, and every one was in a condition to 
profit by them. It was no longer necessary to resort to 
their authors. The results of their researches had become 
public property, had conferred new powers on every indivi- 
dual, and might be applied by any one. The institution of 
patents does not materially affect what is now stated. That 
the progress of the arts may not be checked, their duration 
is limited to a comparatively short period. And as the 
invention is known in other countries to which the patent 
does not extend, if the discoverer were to exact a high price 
for the produce of his invention, it would be clandestinely 
imported from abroad. 

The condition of purely literary men, in a pecuniary 
point of view, is still less to be envied. However profound 
and learned, if a work be not at the same time popular and 
pleasing, its sale will be but limited. And as principles 
and theories may be developed in an endless variety of 
ways, whatever is new and original may be appropriated by 
others, and served up in what may probably prove a more 
desirable form. 

Hence, though a work should have the greatest influence 
over the legislation of the country, or the state of the arts, 
it may redound but little to the advantage of the author. 
A scientific work is seldom very attractive in point of style; 
and unless it have this recommendation, it will be read only 
by a few. It may have a great reputation among those 


capable of appreciating its merits, but it will not have a 
great sale. It will be bought, or rather, perhaps, borrowed 
and consulted by those who are anxious to profit by its 
statements and discussions ; but the generality of readers 
will know it only by report. It is not, therefore, so much 
on the depth, originality, and importance of its views, as 
ou the circumstance of its being agreeable to the public 
taste, that the success, and consequently the productiveness, 
of a book to the author must depend. The value of the 
work of a man's hands is generally proportioned to the 
quantity of labour expended upon it ; but in works of the 
mind no such correspondence can be traced between the toil 
and the recompense. Many a middling novel has produced 
more money than the " Principia," or the " Wealth of 
Nations;" and in this respect, the "Decline and Fall of 
the Roman Empire" has been far inferior to the "Arabian 
Nights" ! Works of fancy are at once the most popular 
and the least easily superseded. Success in them is not, 
however, common ; and except when it is very decided, it 
rarely confers much celebrity. It is fortunate, therefore, 
that a few individuals should be at all times captivated by 
the delights of study, and eager in the pursuit of learned 
and scientific researches for the gratification resulting from 
them. Had the taste for study depended only on the 
pecuniary emoluments which it brings along with it, it may 
well be doubted whether it would ever have found a single 
votary ; and we should have been deprived, not only of 
very many of our most valuable and important discoveries 
in the arts, as well as in philosophy and legislation, but of 
much that refines and exalts the character, and supplies 
the best species of amusement. 

It is unnecessary to enter upon any further details with 
respect to this part of our subject. It has been suffi- 
ciently proved, that the permanent difi"erences that obtain 
in the wages paid to those engaged in diff'erent employ- 
ments in countries where industry is perfectly unfettered. 


are rarely more than sufficient to balance the favourable or 
unfavourable circumstances attending them. When the 
cost of their education, the chances of their success, and 
the various disadvantages incident to their professions, are 
taken into account, those who receive the highest wages are 
not really better paid than those who receive the lowest. 
The wages earned by the different classes of workmen are 
equal, not when each individual earns the same number of 
shillings, or of pence, in a given space of time, but when 
each is paid in proportion to the severity of the labour he 
has to perform, to the degree of education and skill that it 
requires, and to the other causes of variation already speci- 
fied. So long, indeed, as the principle of competition is 
allowed to operate without restraint, or as individuals may 
employ themselves as they please, we may be assured, 
that the higgling of the market will adjust the rates 
of wages in different employments on the principle now 
stated, and that they will be, all things considered, nearly 
equal. If wages in one employment be depressed below 
the common level, labourers will leave it to go to others ; 
and if they be raised above that level, labourers will be 
attracted to it from those departments where wages are 
lower, until their increased competition has sunk them to 
the average standard. A period of greater or less duration, 
according to the peculiar circumstances affecting each 
employment, is always required to bring about this equali- 
sation. But all inquiries that have the establishment of 
general principles for their object, either are or should be 
founded on periods of average duration ; and whenever 
such is the case, we may always, without falling into any 
material error, assume that the wages earned in different 
employments are, all things taken into account, about 

It may further be observed in reference to these prin- 
ciples, that wherever industry is unfettered, and knowledge 
generally diffused, the talents of all are turned to the best ac- 
count. Indeed it may be safely affirmed, that of the myriads 


of individuals engaged in industrious undertakings in 
Great Britain, as conductors, overseers, or workmen, the 
situation occupied by each is, in the vast majority of cases, 
that which is best suited to his capacity, and his salary or 
wages such as he is fairly entitled to by his services. Agri- 
culturists, manufacturers, and merchants, whether their 
businesses be large or small, are always most anxious 
to give the greatest efficacy to their establishments; to 
adapt their means properly to their ends ; and to select the 
parties that are, all things considered, the most suitable for 
their purposes. In a society like this, integrity, skill, and 
industry are sure to be duly prized and appreciated ; and 
the fund that should feed labour is never (or, if ever, only for 
a moment) diverted to the support of idleness. And yet 
there have been, and still are, persons calling themselves 
social reformers and friends to the poor, who propose that 
this admirable system should be subverted, and a meddling 
despotism substituted in its stead ; that the rewards of 
industry should no longer be apportioned according to the 
fair and equitable arrangement of the parties concerned ; 
but that the employment and the wages of every man should 
be determined by agents nominated by government for the 
purpose ! We should show but little respect for our readers 
were we to waste their time in refuting such palpable ab- 
surdities. The abuses to which the adoption of such a 
scheme would infallibly lead would be such that it could 
not be maintained for any considerable period : if it were, 
it would fill the land with robbery, injustice, and ruin. 



Circumstances which determine the Rate of Wages. Section I. 
Market or Actual Wages — Depend on the Proportion between 
Capital and Population — Identity of the i?iterests of the Capitalists 
with those of the Labourers. Section II. Natural or Necessary 
Wages — Depend on the Species and Quantity of Food and other 
Articles required for the Consumption of the Labourer. Different 
in diff'erent Cozmtries and Periods — Effect of Fluctuations in the 
Rate of Wages on the Condition of the Labouring Classes — Advan- 
tage of a High Rate of Wages — Disadvantage of having the 
Labourers dependent for support on the cheapest Species of Food — 
Circumstances affecting the Condition of the Labourers — Education — 
Influx of Irish Labourers — Task-work — Limiting the Hours of La- 
bour — High Wages not a Cause of Idleness — Comparative Cheap- 
ness of Free and Slave Labour. Section III. Proportional 
Wages — Depend partly on the Amount aud Sjyecies of the Articles 
consumed by the Labourers, and partly on the Productiveness of 
Industry. Section IV. Difference in their Influence over 
Wages between a Demand for Labour, and a Demand for the 
Products of Labour. 

It has just been seen that the wages earned by the labourers 
engaged in different employments may, when all things are 
taken into account, be considered about equal ; and there- 
fore, without regarding the difference that actually exists 
in the amount of money, or of commodities, earned by differ- 
ent sets of workmen, we shall suppose that the wages of all 
soi'ts of labour are reduced to the same common standard, 
and shall endeavour to discover the principle which deter- 
mines this common or average rate. 

This inquiry, which, as it relates to the means of sub- 
sistence of the largest and not least valuable portion of 
society, is practically one of the most important in the 
science, will be facilitated by dividing it into three branches ; 
the object in tlie^r^^ being to discover the circumstances 


which determine the market or actual rate of wages at any 
given moment ; in the second, to discover the circumstances 
which determine tlie natural or necessary rate of wages, or the 
wages required to enable the labourer to subsist and con- 
tinue his race ; and in the thirds to discover the circum- 
stances which determine proportional wages, or the share of 
the produce of his industry falling to the labourer. 



The capacity of a country to support and employ labourers 
is not directly dependent on advantageousness of situation, 
richness of soil, or extent of territory. These, undoubtedly, 
are circumstances of very great importance, and have a 
powerful influence over the rate at which a people advance, 
or may advance, in refinement and civilisation. But it is 
not on them, but on the amount of its wealth, or of its capital 
applicable to the employment of labour, and on the dis- 
position of the owners of capital so to apply it, that the 
capacity of a country to support work-people at any given 
period, and the amount of their wages, wholly depend. A 
fertile soil may be made rapidly to add to the means of 
subsistence ; but that is all. Before it can be cultivated, 
capital must be provided for the support of the labourers 
employed upon it, as it must be provided for the support of 
those engaged in manufactures, or in any other department 
of industry. 

It is further evident, that the quantity of produce ap- 
portioned to each labourer, or his wages rated in commo- 
dities, is determined by the ratio which the capital of the 
country bears to its labouring population. When, on the 
one hand, capital is increased without an equivalent increase 
of population, the portions of it that go to individuals, or 
their wages, are necessarily augmented in the same ratio ; 
and when, on the other hand, population happens to increase 
more rapidly than capital, the latter having to bo distributed 


among a comparatively great number of persons, their wages 
or shares are proportionally reduced. 

To illustrate this, let it be supposed that the capital of 
a country appropriated to the payment of wages, would, 
if reduced to the standard of wheat, be equivalent to 
10,000,000 quarters, and that it has 2,000,000 labourers : 
it is evident in such case that the yearly wages of each, 
reducing them all to the same common standard, would be 
five quarters ; and it is further evident that this rate of 
wages could not be increased, unless the amount of capital 
were increased in a greater proportion than the number of 
labourers, or the number of labourers diminished more than 
the amount of capital. So long as capital and population 
march abreast, or increase or diminish in the same pro- 
portion, so long must the rate of wages, and, consequently, 
the condition of the labourers, continue unaffected : and it 
is only when the proportion of capital to population varies, 
by its being either increased or diminished, that wages sus- 
tain a corresponding advance or diminution. The well-being 
of the labouring classes is, therefore, especially dependent 
on the relation which they bear to capital. If they increase 
faster than it, their condition is deteriorated ; and if they 
increase more slowly, it is improved. This oscillation 
determines their " weal and their woe." There are no possible 
means by which the command of the labourers over neces- 
saries and conveniences can be enlarged, other than by 
accelerating the increase of capital as compared with popula- 
tion, or by retarding the increase of population as compared 
with capital ; and we may be assured that every scheme for 
improving their condition which is not bottomed on this 
principle, or which has not an increase of the ratio of capital 
to population for its object, must be nugatory and ineifectual. 

And yet it has been said, that an increase of capital may 
be hostile to the working classes, and that their interests 
and those of the capitalists may be, and in fact are, fre- 
quently opposed to each other ! But there is no real room 


or ground for any such statement. Capital and labour are 
alike dependent upon, and necessary to each other : without 
the former the latter cannot exist, and without the latter 
the former would be valueless. The notion that an increase 
of machinery, food, and clothing, (for of such articles does 
capital consist,) can be injurious to the labourer, is too 
plainly contradictory and absurd to be entitled to any notice. 
The truth is, that whatever tends to promote accumulation, 
to increase the desire for, and the means of, amassing 
additional wealth, and to give confidence and security to 
its possessors, contributes in the most effectual manner to 
advance the interests of the labourers. A capitalist cannot 
increase his own stock without at the same time, and to the 
same extent, increasing the wealth, or the means of subsis- 
tence, of the working classes. Hoarding is no longer 
practised in any country in which property is protected. 
Wherever this is the case, all savings go to swell, directly 
or indirectly, the amount of the fund for the employment 
of labour. Industry is benefited in the same way, though 
not to the same extent, by the thrift of the poor widow, 
the savings of the retail-tradesman, and the successful 
enterprises of the manufacturer and merchant. An 
increase of capital is but another name for an increased 
demand for labour ; and it is the only way in which it can 
be really and permanently increased. 

But, supposing this to be admitted, it will perhaps be 
alleged that capitalists endeavour to reduce wages to the 
lowest possible limits ; that, being able to stop their works 
for a time, they have a great advantage in the deadly struggle 
which they are always carrying on against the labourers, 
who can rarely afford to be idle — at least for any consider- 
able period — and that, consequently, the latter are too often 
reduced to a state bordering on helotism and wretchedness. 
While, however, we admit that the condition of the labour- 
ing class is not such as it were desirable it should be, and 
that they have not reaped the advantages which it might 
have been expected they would have derived, from the extra- 


ordinary progress in arts and industry since the peace of 
1815, we deny that that is in any degree owing to the 
efforts of the capitalists to reduce wages. These efforts 
hinder the work-people engaged in given employments from 
receiving larger wages, all things considered, than those 
engaged in other employments — but that is their entire 
effect. A capitalist has a certain sum of money to expend 
on wages ; and it is, of course, his object to get as large an 
amount as possible of labour in exchange. But thousands 
of other capitalists are in the same situation ; all of them 
are employers of labour, and have certain sums to expend 
upon it. Inasmuch, however, as the supply of labour in 
the market is limited, wages cannot be artificially reduced. 
All the capital is sure, through the higgling of the market, 
to be equitably divided among all the labourers ; and with 
every increase of the former, as compared with the latter, 
wages will necessarily rise. 

Suppose that the stock of any single capitalist, or of a 
number of capitalists, is increased — that increased amount is 
of no value till it has been made available in the employ- 
ment of additional labour. And how is that to be effected ? 
Plainly by its owner or owners offering such an increased 
rate of wages as may suffice to draw the required supply of 
labour from other employments. But the amount of the 
labour engaged in the various departments of industry being 
limited to that which is necessary to carry them on, a heavy 
loss would be entailed on their undertakers were the numbers 
of their work-people materially diminished ; and, to avert 
this result, they would, under the supposed circumstances, 
offer them higher wages. It is idle, therefore, to suppose 
that the efforts of capitalists to cheapen labour can have the 
smallest influence over its medium price. The customers 
of bakers, butchers, grocers, and other tradesmen, are all 
most anxious to cheapen the articles they buy of them. 
But every one knows that this anxiety has no effect, save 
only to keep the prices of different tradesmen at or about, 
all things considered, the same level ; and that the prices 


of the articles in which they deal depend on wholly differ- 
ent principles. And such, also, is the case with the price 
of labour. It depends on the number of labourers seeking 
employment, compared with the capital or fund which is to 
pay their wages, and is alike independent of the schemes 
and combinations of the buyers on the one hand, and of 
those of the sellers on the other. 

It may, probably, be said, that an increase of capital is 
not always synonymous with an increase of the means of 
employing labour ; and that, on the contrary, it may 
consist of machines, by the introduction of which labour 
may be superseded. But it is unnecessary again to repeat 
what we have previously stated, perhaps at too great length, 
in regard to the employment of machinery, (see ante, 
pp. 197-226.) Here it is enough to observe, that the in- 
troduction and improvement of machiner}' is in every case 
advantageous to the labouring classes ; that it uniformly 
increases the aggregate demand of society for labour and 
the rate of wages ; and that, while it does this, it re- 
duces the cost and price of commodities, making in this way 
indefinite additions to the wealth, comforts, and enjoyments 
of all ranks and orders of the couimunity. 

The wages of labourers being most commonly paid 
and estimated in money, it may be thought that they will, 
in consequence, depend more on the amount of money 
in circulation than on the amount of capital. It is, how- 
ever, nearly indifferent to the labourer whether the sum of 
money he receives as wages be great or small. He will 
always receive such a sum as will suffice to put him in pos- 
session of the portion of capital or produce falling to his share. 
Men cannot subsist on coin or paper. Labourers whose wages 
are paid in money, immediately exchange it for necessaries 
and conveniences ; and it is by the quantity of these, and 
not of the money paid them, that their wages are to be 
measured. If the money in Great Britain were reduced a 
half, the rate of wages, estimated in money, would decline 
in the same proportion ; but unless some change were, at 

2 D 


the same time, made in the magnitude of that portion of our 
capital which consists of food, clothes, and other articles 
consumed by the labourer, he would continue in substan- 
tially the same situation. He would carry fewer pieces of 
gold and silver to market ; but these would exchange for the 
same quantity of commodities as previously. 

Whatever, therefore, may be the rate of money wages — 
whether they fall to Is. or rise to 5s. a-day — if capital and 
population continue the same, or increase or diminish in 
the same proportion, no real variation will take place in the 
amount of wages estimated in produce. These never really 
rise unless the proportion of capital to population be en- 
larged ; and they never really fall unless that proportion be 

The influence of the varying ratios of the increase of 
capital and population over the condition of the latter, 
may be strikingly exemplified by comparing the increase 
and condition of the people of Great Britain with the in- 
crease and condition of the people of Ireland. There can 
be no doubt that the capital of Ireland increased con- 
siderably during the century ending with 1831 ; though 
no one, in any degree acquainted with the circumstances, 
has ever pretended that this increase amounted to a 
lialf^ or even to a third part of the proportional increase 
of capital in England and Scotland during the same period. 
But notwithstanding this difference in the increase of their 
means of supporting inhabitants, the population of Ireland 
increased, during the century in question, nearly twice as 
fast as that of Great Britain. According to the tables given 
in the Parliamentary Returns, the population of this part 
of the empire amounted, in 1731, to about 7,000,000, and 
in 1831 it amounted to 16,539,318, having increased 2^ 
times in the course of the century ; while it appears, from 
the same returns, that the population of Ireland, whose 
capital Jiad increased so very slowly, amounted to little more 
than two millions in 1731, and to near eiffht millions in 


1831 ; having nearly quadrupled in the same time that the 
population of Britain had little more than doubled. 

Without entering upon any lengthened inquiries respect- 
ing the causes of this difference, it may be observed that, 
on the first introduction of the potato into Ireland, in 
1610, the peasantry, then very much degraded, and without 
any elevated notions of what was necessary for comfort 
or subsistence, eagerly resorted to so cheap a species of 
food ; and, owing to their habitual improvidence, and to 
the unfortunate circumstances under which they have 
since been placed, they have never endeavoured to attain to 
any thing higher. Provided they have sufficient supplies 
of potatoes, they are content to vegetate, for they can 
hardly be said to live, in rags and wretchedness. But 
whatever may have been the causes which occasioned the 
disparity in the increase of population in Great Britain 
and Ireland, as compared with the increase of their 
capitals, there cannot be so much as the shadow of a 
doubt that its excessive augmentation in Ireland is the 
immediate cause of the limited demand for labour in that 
country, and of the misery and extreme poverty of the 
people. The number of persons soliciting employment, 
compared with the means of employing them, is so very 
great, that wages are reduced to the lowest pittance that 
can afford a scanty supply of the coarsest and cheapest 
variety of food capable of supporting human life. The 
evidence collected by the Commission for inquiring into 
the condition of the Irish poor, and also by the more 
recent Commission regarding the occupation of the land, 
proves that the condition of the peasantry is in the last 
degree wretched. Their cabins, which are of the most 
miserable description, are mostly unprovided with any 
thing that can be called furniture ; many families have no 
such things as bed-clothes ; in some instances, the children 
have not a single rag to cover their nakedness ; the corn 
which they may have grown, and their pigs, have always 
gone to the owners of the soil, as rent : so that whenever 


the potato crop has been even in a slight degree deficient, 
the scourge of famine and disease has been felt in every 
corner of the island. In such cases the cottiers quit their 
habitations in search of employment, offering to work for 
the merest subsistence that can be obtained — for twopence 
a-day ; in short, for any thing that will purchase food 
enough to keep them alive for the ensuing twenty-four hours. 
And it is not to be supposed that this state of things is only 
or principally a consequence of the late failures of the potato. 
On the contrary, it may be said to have been the customary 
state, for a century or more, of the peasantry in Kerry, 
Clare, Galway, and other western counties, in the period be- 
tween the planting of the potatoe and its maturity. And 
when the seasons have been adverse and the crops deficient, 
as in 1741, ] 817, and 1821, famine and disease have extended 
their ravages over the entire countrv. The distress in 1846-7 
was better known, and greater efi"orts were made for its 
mitigation, than on any former occasion ; but, as compared 
with the population, it may be doubted whether it was more 
extensive or severe than sundry previous visitations. 

The passing of the act against subletting, in 1825, gave 
a check to the baneful and previously universal practice 
of splitting farms ; and the landlords having latterly 
become more alive to the many pernicious consequences 
resulting from the too rapid increase of population, have 
pretty generally exerted themselves to oppose its pro- 
gress. In consequence of these and other countervailing 
influences, the increase of population in Ireland was slower, 
during the 10 years ending with 1841, than it had been 
during any equal period of the previous century. But the 
division of the land is still carried on, and the excess of 
population is so very great, that the check given to its 
increase has had little or no influence over the condition 
of the bulk of the people. The statements in the Second 
Report of the Railway Commissioners for Ireland, com- 
piled in 1838, in the Reports of the Commissioners on 
the Occupation of Land in Ireland, in 1845, and in those 


of the officers employed in the relief of the late scarcity, 
show coDclusively that, notwithstanding the improvements 
introduced into agriculture, the condition of the peasantry 
is still, in most districts, as wretched as ever ; and that, 
by displacing numerous small occupants and cottiers, these 
improvements have really made it, in many parts, worse 
even than formerly ! But, should the check given to popu- 
lation be maintained, the farther splitting of the land be 
by any means prevented, and the dealers in agitation and 
sedition be effectually put down, the presumption is, tliat the 
condition of the peasantry will be gradually though slowly 
meliorated ; and that the}' will ultimately participate in the 
advantages of improvements which have hitherto, if any 
thing, been injurious to them. 

But, whatever may be its future state, the statements 
now laid before the reader, and which, were it necessary and 
did our space permit, might be multiplied a thousand-fold, 
show that there has been a vast increase of population in 
Ireland, and that it is both superabundant and miserable in 
the extreme. And hence the obvious inference, that, in 
the event of the population having increased less rapidly, 
there would have been fewer individuals soliciting employ- 
ment, and that, consequently, the rate of wages would 
have been higher, and the condition of the poor so far 
improved. No proposition, then, can be more undeniable, 
than that the unexampled misery of the Irish people 
is directly owing to the excessive augmentation of their 
numbers ; and nothing can be moi-e futile, than to expect 
any real or lasting amendment in their situation, otherwise 
than through the influence of an increase of capital as com- 
pared with population. It is obvious, too, that the degraded 
condition of the people of Ireland, is that to which every 
people may expect to be reduced whose numbers continue, 
for a lengthened period, to increase faster than the means 
of providing for their comfortable and decent subsistence ; 
and such will, most probably, be the case in all old settled 
countries in which the principle of increase is stimulated, 


as it has been in Ireland, by the facility of obtaining small 
patches of land, or in which there is an extremely low 
standard of comfort, and little or no prudence or forethought 
manifested in the formation of matrimonial connexions. 



There are certain limits, however difficult it may be to 
specify them, to the extent to which wages may be reduced. 
The cost of producing labour, like that of every thing else, 
must be paid by the purchasers. The race of labourers 
would become extinct were they not supplied with the food 
and other articles sufficient, at least, for their support and 
that of their families. This is the lowest limit to which 
the rate of wages can be permanently reduced ; and for this 
reason it has been called the natural or necessary rate of 
wages. The market, or actual rate of wages, may sink to 
the level of this rate ; but it is impossible it should continue 
below it. It is not, as has been already shown, on the 
quantity of money received by the labourer, but on the 
quantity of food and other articles which that money will 
buy, that his ability to maintain himself, and rear children, 
must depend. Hence the natural or necessary rate of 
wages is determined by the cost of the food, clothes, fuel, 
&c., required for the use and accommodation of labourers.-^ 
And though a rise in the market or current rate of wages 
be seldom exactly coincident with a rise in the price of 
necessaries, they can never, except when the market rate 

^ "L'ouvrier mineur en Saxe re9oit 10 sols par jour de salaire, tandis 
que I'ouvrier employe au meme genre de travail dans la province de Choeo 
au Perou recoit en argent six a sept fois plus. Mais ce dernier paie aussi 
six a sept plus cher le pain dont il se nourrit, parceque le farine des Etats- 
Unis y est transportee a dos de mulct a une longue distance des cotes, par 
des routes monteuses et difficiles. Ce que le maitre doit fournir a I'ouvrier 
c'est la subsistance, et I'argent donn^ ne pent jamais etre que la repre'sen- 
tation de cette subsistance." — Garnier, Richesse des Nations, torn. v. p. 351. 


of wages greatly exceeds the natural or necessary rate, be 
far separated. However high its price, the labourers must 
always receive a supply of produce adequate for their sup- 
port ; if they did not obtain this much, they would be 
destitute ; and disease and death would continue to thin 
the population, until the reduced numbers bore such a 
proportion to the national capital as enabled them to obtain 
the means of subsistence. 

The opinion of those who contend that the rate of wages 
is in no degree influenced by the cost of the articles con- 
sumed by the labourers, has obviously originated in their 
confounding the principles which determine the market 
rate of wages at any given period, with those which deter- 
mine their natural or necessary rate. No proposition can 
be better established than that the market rate of wages, 
at any given moment, is exclusively determined by the 
proportion between capital and population. But in every 
inquiry of this nature, we should not only refer to particular 
points of time, but also to periods of some considerable 
duration ; and if we do this, it will be immediately seen 
that the average rate of wages does not depend wholly 
on this proportion. The price of shoes, hats, &c., in 
this or that market, is plainly dependent on the extent 
of their supply compared with the demand of those who 
have the means of purchasing ; but it is quite obvious, 
that if this price sink below the sum required to pay the 
cost of producing shoes, &c., and bringing them to market, 
they will no longer be supplied — and such is the case with 
labourers. They neither will, nor in fact can, be furnished, 
unless their wages be such as will, at an average, suffice 
to bring them up and maintain them. From whatever point 
of the economical compass we may set out, the cost of pro- 
duction is the principle to which we must always come at 
last. This cost determines the natural or necessary rate 
of wages, just as it determines the natural or necessary price 
of commodities. However low the demand for labour, still 
if the price of the articles necessary for the maintenance of 


the labourer be increased, the natural or necessary rate of 
wages must, in the end, be increased also. Let it be sup- 
posed that, owing to a scarcity, the price of the quartern 
loaf rises to 4s. or 5s. In this case it is plain, inasmuch 
as the same number of people would be seeking for em- 
ployment after the rise as before — and as a rise in the 
price of bread, occasioned by a scarcity, could not increase 
the demand for labour — that wages would not be increased. 
The poor would, in consequence, be forced to economise ; 
and the rise of price, how injurious soever in several 
respects, would be in so far advantageous, that it would 
immediately lessen consumption, and distribute the pres- 
sure equally over the year. But suppose that the rise, 
instead of being occasioned b}'^ the accidental occurrence 
of a scarcity, has been occasioned by an increased difficulty 
of production, and that it will be permanent, the question 
is, — will money wages continue at their former elevation, or 
will they rise ? Now, in this case, it may be easily 
shown that they will rise ; for it is abundantly obvious 
that the comforts of all classes of labourers would be greatly 
impaired by the rise in the price of bread ; and those who, 
previously to its taking place, had only enough to subsist 
upon, would now be reduced to a state of destitution. Under 
such circumstances, an increase of mortality could not fail 
of taking place, while the greater difficulty of providing 
subsistence would interpose a powerful check to the forma- 
tion of matrimonial connexions and the increase of popula- 
tion. By these means, therefore, the amount of the popu- 
lation, or the ratio of its increase, or both, would be dimin- 
ished ; and this diminution, by lessening the number of 
labourers, would, in the end, increase the proportion of 
capital to population, and enable them to obtain higher 

The statements now made are not advanced on any arbi- 
trary or supposed grounds, but have been deduced from, and 
are consistent with, the widest experience. Those who 
examine the registers of births, marriages, and deaths, in 


large and populous cities, will find that there is invariably 
a diminution of the former, and an increase of the latter, 
whenever the price of corn, or of the principal necessaries, 
sustains any very material advance. "It will be observed," 
says Mr Milne, in his "Treatise on Annuities," in reference 
to the prices of wheat in England, "that any material 
reduction in the price of wheat is almost always accompanied 
by an increase both of the marriages and births, and by a 
decrease in the number of burials ; consequently, by an 
increase in the excess of the births above the deaths. Also, 
that any material rise in the price is generally attended by 
a corresponding decrease in the marriages and births, and 
by an increase in the burials ; therefore by a decrease in 
the excess of the births above the deaths. Thus it appears, 
that an increase in the quantity of food, or in the facility 
with which the labouring classes can obtain it, accelerates 
the progress of the population, both by augmenting the 
number of births and diminishing the rate of mortality ; 
and that a scarcity of food retards the increase of the people, 
by producing in both ways opposite effects." And in proof 
of the correctness of this statement, ]\Ir Milne gives, among 
others to the same effect, the following account of the 
number of births and deaths within the London bills of 
mortality, in ] 798, 1800, and 1802 :— 

Births. Deaths. Price of wheat. 
1798 19,581 — 20,755 — £2 10 3 per qr. 
1802 21,308 — 20,260— 3 7 5 

Medium of these two years, . 20,445 — 20,508— 2 18 10 
1800 18,275 — 25,670— 5 13 7 

Differences, . . '2,170- 5,162— 2 14 9 
Decrease. Increase. Increase.^ 

M. Messance, the author of a valuable work on the 
population of France,^ collected some important information 
on the same subject. " It has been established," says he, 
"by the various investigations that have been made, that 

^ Milne on Annuities, vol. ii. p. 402. 

^ "Recherches sur la Population," p. 291. 


those years in which corn has sold at the highest price, 
have also been those in which mortality was greatest and 
disease most prevalent ; and that those, on the contrary, 
in which corn has been cheapest, have been the healthiest 
and least mortal.''' The tables M. Messance has published 
of the number of deaths and the prices of wheat, for a con- 
siderable number of years, in Paris, Lyons, Rouen, and 
other cities, bear unequivocal testimony to the truth of 
this doctrine. In 1744, for example, when the price of 
wheat in Paris was 11 livres 15 sols the septier, the 
number of deaths amounted to 16,205 ; and in 1753, 
when the price of wheat was 20 livres 3 sols, the deaths 
amounted to 21,716. In the four years of the greatest 
mortality in Paris, in the interval between 1743 and 1763, 
the average price of the septier of wheat was 19 livres 1 
sol, and the average annual number of deaths 20,895 ; and 
in the fotir years of the least mortality during the same 
interval, the average price of the septier was ]4 livres 18 
sols, and the average annual number of deaths 16,859.^ 

It may here, perhaps, be proper to mention, that it has 
been long observed that, in unusually dear years, the ten- 
dency of wages is not to rise, but rather to fall ; and several 
of the witnesses examined before the committees of the 
Lords and Commons, on the state of agriculture, in 1814, 
endeavoured to prove, by comparing wages with the prices 
of corn and other necessaries, that there was no such con- 
nexion between the two as had been supposed ; and that, 
so far from their varying in the same way, wages were 
generally lowest in years when the price of corn was highest. 
But it is not difficult to explain the causes of this apparent 
anomaly. The truth is, that the number of labourers, 
which is in no case immediately reduced, is, in most cases, 
immediately increased by a rise of prices. In dear years, 
an increased number of females, and of such poor children 
of both sexes as are fit to work, are obliged to quit their 

1 " Recherches sur la Population," p. 31 1. 


homes to engage in some species of employment ; while 
the labourers who work by the piece, endeavour, by in- 
creasing the quantity of their work, to obtain the means 
of purchasing a greater quantity of food. Inasmuch, there- 
fore, as the immediate effect of a rise of prices is to increase 
the supply of labour, it is natural that it should lower 
wages. But it is the greatest imaginable error, to suppose 
that, because this is the immediate, it is also the lasting 
effect of such rise ! It is obvious, indeed, that the fall 
of wages, and the greater exertions which the rise of 
prices forces the labourers to make, must tend, as well 
by lessening their supplies of food as by adding to the 
severity of their labour, to increase the rate of mortality; 
and consequently, by diminishing their number, to hasten 
that rise of wages that will certainly take place in the end, 
if prices continue high. 

But, in endeavouring to show that the market rate can- 
not be permanently reduced below the natural or neces- 
sary rate of wages, it is not meant to represent the latter 
as fixed and unvarying. If a specified quantity of certain 
articles were absolutely necessary to enable labourers to 
subsist and continue their race, such quantity could not 
be diminished. But such is not the case. By the natural 
or necessary rate of wages, is meant only, in the words 
of Adam Smith, such a rate as will enable the labourer to 
obtain, "not only the commodities that are indispensably 
necessary for the support of life, but whatever the custom 
of the country renders it indecent for creditable people, even 
of the lowest order, to be without."*^ Now it is plain, from 
this definition, that there can be no absolute standard of 
natural or necessary wages. It is impossible to say what 
commodities are indispensable for the support of life ; for 
these, as well as the other articles required for the use of 
the lower orders, depend essentially on the physical circum- 
stances under which every people is placed, and on custom 
and habit. The differences of climate, for example, by 
giving rise to different physical wants in the inhabitants of 


different countries, necessarily occasion corresponding varia- 
tions in the necessary rate of wages. Work-people in cold 
climates, who must be warmly clad, and whose cottages 
must be built of solid materials and heated with fires, could 
not subsist on the same wages that would suffice to supply 
all the wants of those who inhabit more genial climates, 
where clothing, lodging, and fire are of inferior importance. 
Humboldt mentions, that there is a difference of nearly a 
third part in the cost of maintaining individuals and conse- 
quently in necessary wages, between the hot and temperate 
districts of Mexico; and there is a still greater discre- 
pancy in the rates of necessary wages in distant quarters. 
The food, too, of the labourers in different countries 
varies extremely. In some it is both expensive and 
abundant, compared to what it is in others. In Eng- 
land, for example, they principally subsist on bread and 
beef, in Ireland on potatoes, and in China and Hindostan 
on rice. In many parts of France and Spain, an allowance 
of wine is considered indispensable to existence ; and in 
England, the labouring class entertain nearly the same 
opinion with respect to beer ; whereas the Chinese and 
Hindoos drink nothing but water. In Ireland the peasan- 
try live, for the most part, in mud cabins, no better than 
the wigwams of the American Indians, without, in many 
instances, either a window or a chimney ; while in England 
the cottages of the peasantry have all glass windows and 
chimneys, are well furnished, and are as much distinguished 
for their neatness, cleanliness, and comfort, as those of the 
Irish for their filth and misery. In consequence of these 
different habits, there is in these countries, an extreme 
difference, not in the rate of necessary wages merely, but in 
their actual or market rate — so much so, that while the 
average market price of a day's labour in England may be 
taken at from 20d. to 2s., it cannot be taken at more than 
6d. or 7d. in Ireland, and 3d. in Hindostan ! The customs of 
the people of the same countries, and the standard by which 
the natural rate of wages is determined at diffei'ent periods, 


have been equally fluctuating and various. The habits of 
the English and Scotch labourers of the present day differ 
as widely from those of their ancestors in the reigns of 
Elizabeth, James I., and Charles I., as from those of the la- 
bourers of France and Spain . The standard of n ecessary wages 
has been raised ; there has been a greater prevalence of moral 
restraint ; the proportion of capital to population has been 
increased ; and the poor have happily learned to form more 
elevated opinions respecting the amount and species of the 
necessaries and conveniencies required for their subsistence. 
The natural or necessary rate of wages is not, therefore, 
fixed and unvarying ; and though it be true that the mar- 
ket rate of wages can never sink permanently below its 
contemporary necessary rate, it is no less true that the 
latter has a tendency to rise when the market rate rises, 
and to fall when it falls. The reason is, that the supply of 
labourers is neither speedily increased when wages rise, 
nor speedily diminished when they fall. When wages rise, 
a period of eighteen or twenty years must elapse before the 
influence of the increased stimulus given by the rise to the 
principle of population can be felt in the labour market. 
During all this period, therefore, work-people have an 
increased command over necessaries and conveniences; their 
habits are, in consequence, improved ; and as they learn to 
form higher notions of what is required for their support, 
the necessary rate of wages is augmented. But, on the 
other hand, when wages decline, either in consequence of a 
diminution of the capital appropriated to their payment, or 
of a disproportionate increase of population, no corresponding 
diminution takes place in the number of labourers, unless 
they have previously been subsisting on the smallest quantity 
of the cheapest species of food required to support mere 
animal existence. If the labourers have not been placed so 
very near the extreme limit of subsistence, their numbers 
will not be immediately reduced when wages fall, by an in- 
crease of mortality ; but they will be gradually reduced, 
partly, as has been already shown, in that way, and partly 


by a dimished number of marriages and births : and in most 
countries, unless the fall were both sudden and extensive, 
it would require some years to make the effects of increased 
mortality, in diminishing the supply of labour in the market, 
sensibly felt ; while the force of habit, and the ignorance of 
the people with respect to the circumstances which determine 
wages, would prevent any effectual check being given to the 
formation of matrimonial connexions, and consequently to 
the rate at which fresh labourers had previously been com- 
ing into market, until the misery occasioned by the re- 
stricted demand on the one hand, and the undiminished 
supply on the other, had been generally and widely felt. 

It is this circumstance — the impossibility which usually 
obtains of speedily adjusting the supply of labour propor- 
tionally to variations in the rate of wages — that gives to 
these variations their peculiar and extraordinary influence 
over the wellbeino- of the labourino; classes. Wei'e the 
supply of labour suddenly increased when wages rise, the 
rise would be of little or no advantage to the existing 
labourers. It would increase their number, but it would not 
enable them to mount in the scale of society, or to acquire 
a oreater command over necessaries and conveniences : 
and, on the other hand, were the supply of labourers 
suddenly diminished when wages fall, the fall would merely 
lessen their number, without having any tendency to 
degrade the habits or to lower the condition of those that 
survived. But, in the vast majority of instances, before 
a rise of wages can be in any degree countervailed by the 
increased number of labourers it may be supposed to bring 
into the market, time is afforded for the formation of new 
and improved tastes and habits. After the labourers 
have once acquired these tastes, population advances 
in a slower ratio, as compared with capital, than formerly ; 
and the labourers will be disposed rather to defer the period of 
marriage, than, by entering on it prematurely, to depress 
their own condition and that of their children. But if the 
number of labourers cannot be suddenly increased when 


wages rise, neither can it be suddenly diminished when they 
fall ; a fall of wages has, therefore, a precisely opposite effect, 
and is, in most cases, as injurious to the labourer as their 
rise is beneficial. In whatever way wages may be restored 
to their former level after they have fallen, whether it be 
by a decrease in the number of marriages, or by an increase 
in the number of deaths, or both, it is never, except in the 
exceedingly rare case already mentioned, suddenly effected. 
It must, generally speaking, require a considerable time 
before it can be brought about ; and, in consequence, an ex- 
treme risk arises, lest the tastes and habits of the labourers, 
and their opinions respecting what is necessary for their 
comfortable subsistence, should be lowered in the interim. 
When wages are considerably reduced, the poor are obliged 
to economise, or to submit to live on a smaller quantity of 
necessaries and conveniences, and those, too, of an inferior 
species ; and the danger is, that the coarse and scanty fare 
which has thus been, in the first instance, forced on them 
by necessity, should in time become congenial from habit. 
Should this, unfortunately, be the case, the condition of 
the poor would be permanently depressed, and there 
would be nothino; left that could raise wa^es to their former 
level — for the labourers would no longer have a motive to 
exercise an increased degree of moral restraint ; and unless 
they did this, they would have but little chance of again 
emerging from their depressed condition. Under the cir- 
cumstances supposed, the cost of raising and supporting- 
labourers would be reduced ; and it is by this cost that 
the natural or necessary rate of wages, to which the market 
rate is generally proportioned, is always regulated. This 
lowering of the opinions of the labouring class with respect 
to the mode in which they should live, is perhaps the most 
serious of all the evils that can befall them. Let them once 
become contented with a lower species of food, and an inferior 
standard of comfort, and they may bid a long adieu to any 
thing better. And every redaction in the rate of wages, 
which is not of a very transient description, will most likely 


have this effect, if its debasing influence be not countervailed 
by an increased prevalence of moral restraint, and a dimi- 
nished increase of population, or by the opening of new 
markets, or the discovery of new and improved processes by 
which the cost of necessaries and conveniences may be 
reduced. Should any such reduction take place, the con- 
dition of the labourers may not be injuriously affected by 
the fall of wages ; but if nothing of this kind occur, the 
labourers can only regain their former command over neces- 
saries and conveniences by the exercise of additional economy 
and forethought. 

The example of such individuals, or bodies of individuals, 
as submit quietly to have their wages reduced, and who are 
content if they get only mere necessaries, should never be 
held up for public imitation. On the contrary, every thing 
should be done to make such apathy be esteemed discredit- 
able. The best interests of society require that the rate of 
wages should be elevated as high as possible — that a taste 
for comforts and enjoyments should be widely diffused, and, 
if possible, interwoven with national habits and prejudices. 
Very low wages, by rendering it impossible for increased 
exertions to obtain any considerable increase of advantages, 
effectually hinder them from being made, and are of all others 
the most powerful cause of that idleness and apathy that con- 
tents itself with what can barely continue animal existence. 

The state of the peasantry of Ireland strikingly exem- 
plifies the disastrous consequences resulting from the neces- 
sary rate of wages being determined by a very low standard. 
Having no taste for conveniences or luxuries, they are 
satisfied if they obtain sufficient supplies of potatoes. But 
as the potato is raised at less expense than any other 
variety of food cultivated in Europe, and as wages, where 
it forms the main article of subsistence, are, of course, 
chiefly determined by its cost, it is easy to see that those, 
who depend entirely on the potato, must be reduced to a 
state of extreme and indeed almost irremediable distress, 
whenever it happens to be deficient. When the standard 


of natural or necessary wages is high — when wheat and heef, 
for example, form the principal part of the food of the 
labourers, and porter and beer the principal part of their 
drink, they can bear to retrench in periods of scarcity. 
Such men have room to fall ; they may give up their beer 
and resort to cheaper sorts of food — such as barley, oats, 
rice, and potatoes. But those who are habitually fed on the 
cheapest food have nothing to fall back upon when deprived 
of it, and are cut off from every resource. You may take 
from an Englishman, but you cannot take from an Irishman. 
The latter is at all times placed on the very verge of exis- 
tence. His wages, being determined by the price of potatoes, 
will not buy wheat, or barley, or oats ; and whenever, there- 
fore, the supply of potatoes fails, it is next to impossible he 
should escape, by any efforts of his own, from starving. 

The history of the scarcities that so frequently occur in 
Ireland affords many illustrations of the accuracy of the 
statements now made. Owing, for example, to the failure 
of the potato crop of 1821, the bulk of the peasantry 
of Clare, Limerick, and other counties bordering on the 
Shannon, Avere reduced to a state of almost absolute desti- 
tution, and had nothing but a miserable mixture, consist- 
ing of a little oatmeal, nettles, and water-cresses, to sub- 
sist upon. In some instances, the potatoes, after being 
planted, were dug up, and eaten ; and in consequence of 
the insufficiency and bad quality of food, disease became 
exceedingly prevalent ; and typhus fever, in its most ma- 
lignant form, carried its destructive ravages into every 
corner of the country. The price of potatoes rose in Lim- 
erick, in the course of a few weeks, from about 2d. to 5d. 
and 7d. a-stone, while the price of corn sustained no material 
elevation, — none at least to prevent its being sent to the 
then overloaded markets of Enfrland ! 

But it is unnecessary to go back to 1821 for an example 
of this sort. We have, unhappily, had one very recently 
before us. Notwithstanding the all but total failure of the 
potato crop of 1846 in all parts of Ireland, and the con- 

2 E 


sequent destitution of the peasantry, there was no very 
considerable falling off in the exports of corn and other 
articles of provision to England, till the contributions of 
government and of the public were applied to purchase 
supplies for the people. And it is indeed obvious that, to 
whatever extremity the Irish peasantry may be reduced, 
they cannot relieve themselves by purchasing corn. If 
wheat, barley, or oats, formed the principal part of their food, 
corn would be poured into Ireland in the same way that it 
is poured into England, whenever the crop is known or 
supposed to be materially deficient. But a people habitually 
dependent on the potato cannot become purchasers of corn; 
nor can they even become purchasers of foreign potatoes, 
inasmuch as the freight of so bulky a commodity would 
raise its price far above their limited means. In a period 
of scarcity men cannot go from a low to a high level ; they 
must always go from a higher to a lower. But to the Irish 
this is impossible : they have already reached the lowest 
point in the descending scale ; and a scarcity of potatoes is 
in their case synonymous with famine. 

It is, therefore, essential to the protection of the peo- 
ple from famine, in seasons when the crops happen to be 
deficient, that they should not subsist principally on so 
cheap a species of food as the potato. They may advan- 
tageously use it in limited quantities, as a subsidiary and 
subordinate article ; but if they once adopt it for the prin- 
cipal part of their diet, their wages will be regulated accord- 
ingly; and whenever a deficient supply occurs, they will be 
absolutely without resource. 

The previous statements are sufficient to show the para- 
mount importance, with a view to the wellbeing of the 
community, of the increase of population being subordinate 
to that of capital. But, how desirable soever, legislation 
can do but little to bring about this result. When govern- 
ment has secured the property and the rights of individuals, 
and has given that freedom to industry which is so essential, 


it has done nearly all it can to promote the increase of 
capital. If it interfere in industrious undertakings, its 
proceedings will be productive only of injur}'". The reliance 
of individuals on their own efforts, and their desire to ad- 
vance themselves, are the only principles on which any 
dependence can be safely placed : and it has been fully 
shown, in the previous parts of this work, that, except in a 
few peculiar cases, all interference with these fundamental 
principles, either by government undertaking to carry on 
certain branches of industry, or to assist those engaged in 
them, must necessarily, in so far as the influence of its 
measures extends, weaken the industry, enterprise, and 
forethought of its subjects ; occasioning, at one and the same 
time, a waste of capital and a diminution of its produce. 

It is needless, therefore, to expect any advantageous re- 
sults from the efibrts of government directly to increase 
capital. It may, however, exercise a considerable indirect 
influence. Notwithstanding what has been done of late 
years to give greater scope to enterprise, by opening new 
channels of trade, and by relieving industry from oppressive 
burdens, there is still room for additional efl"orts of the same 
kind ; and it may be hoped that they will be made. But 
supposing them to be made, and that they are completely 
successful, it is problematical whether the results will be 
of a very decided character, and whether they will have any 
very material influence over wages, by increasing the pro- 
portion of the national capital to the labouring classes. 

But if there be but slender grounds for anticipating an 
improvement in the condition of the labourers, from measures 
having an increase of capital for their object, it may be 
inquired whether their improvement may not be expected 
from a change in their habits, and, consequently, in the 
progress of population ? While, however, we do not re- 
nounce all expectations from this source, they are not, we 
confess, of a very sanguine description. It is no doubt true, 
as has been stated over and over again by Malthus and 
others, that what government and the employers of labour 


can do for the labourers is but as the dust of the balance, 
compared with what the latter can do for themselves ; that, 
however reduced, they have the means of raising wages to 
any higher level ; that if, on the one hand, they under- 
stock the market with labour, wages will be high, notwith- 
standing the means of employment should be diminished ; 
while, on the other hand, if they overstock the market with 
labour, wages will be low, however much these means may 
be increased. But though a statement of this sort be per- 
fectly well-founded and easily made, it is very difficult to 
turn the principle it involves to any practical account. The 
conduct of individuals is influenced by circumstances pecu- 
liar to the narrow sphere in which they move, and which 
directly affect themselves, and not by considerations having 
reference to societ}'. Though a considerable proportion of 
the population were to acquiesce in the abstract truth of 
the doctrine now stated, their acquiescence would, most 
likely, have little or no practical influence. An individual 
may see what would be of advantage to society, but, to 
secure that advantage, the co-operation of vast numbers is 
required ; and as he is one only among several millions, he 
justly concludes that all that he could do would avail 
nothino; in brinsfino- about a general result, and that, conse- 
quently, he should act as he thinks best for himself, without 
regard to others. Ninety-nine out of every hundred per- 
sons act on this principle. Combination to bring about a 
remote or general result is in such cases impossible. But 
if you satisfy any one that his peculiar interests, or those 
of his immediate connexions and dependants, will be ad- 
vanced by his following a certain line of conduct, in prefer- 
ence to another, there is some probability of his profiting 
by your reasonings. On this principle it may be fairly pre- 
sumed, that a well-contrived and judicious system of public 
instruction would have a considerable influence. Were it 
brought universally, as it should be, within reach of the 
poor, and made a means of explaining those principles on 
which their wellbeing really depends, a good deal, though 


less, we fear, than is coinuionly supposed, would most pro- 
bably be done to check improvidence, and, by improving 
their conduct, gradually to amend their condition. If you 
point out the quicksands and pitfalls that encumber a path, 
a greater or less number of those who pass along it will try 
to avoid them. The duty of postponing marriage till the 
parties be in such a position that they may reasonably ex- 
pect to be able to discharge the duties which they owe to 
their children should be clearly set forth ; and it should be 
shown that a man's situation is in all cases mainly depen- 
dent on his own conduct ; that industry and economy may 
always be practised, and can never be without their reward ; 
that the most prosperous state of things is of little service 
to the lazy or dissolute ; whereas the laborious, provident, 
and frugal workman is able to avail himself of every ad- 
vantageous circumstance, and to maintain a successful 
struggle with difficulties that would overwhelm every one 
else. The establishment of a system of education that 
should impress these doctrines on the minds of the young 
would, at all events, seem to be the duty of government, 
and is perhaps as necessary, with a view to its security, 
as to the welfare of the majority of its subjects.^ 

But in this, as in most other questions in regard to our 
domestic policy, Ireland is the grand difficulty. Had we 
only to deal with the poor of Great Britain, means for their 
improvement might be devised with comparative facility ; 
but, unluckil}^ we have also to deal with the poor of Ireland; 
and the degraded state of the latter, their improvidence 
and recklessness, make the expectation of their improvement 
alike feeble and remote. In the mean time, however, they 
are impelled, partly by the impossibility of providing for 
themselves at home, and partly by the temptation of com- 
paratively high wages, to emigrate in vast numbers to 
this country ; and at this moment, from a fourth to a third 
part of the population of Manchester, Liverpool, Glasgow, 

' For some further remarks on National Education see post. 


Paisley, and other great towns on the west side of Great 
Britain, consists of native Irish and their descendants. 
Recently this immigration has been greater than at 
any former period ; and at present there is but little 
prospect of its being materially reduced for years to come. 
Certainly, however, few things could exercise so destruc- 
tive an influence over the condition and prospects of 
the English and Scottish labourers. Their forethought 
and industry have, in fact, tended rather to facilitate the in- 
vasion of this pauper horde, than to improve their own condi- 
tion. Their wages have been reduced by the competition of 
the famished serfs cast upon our shores; and, which is still 
worse, their tastes and opinions in regard to what is necessary 
for their subsistence have been lowered by the contamin- 
ating influence of example, and by familiar intercourse with 
those who are content to live in destitution and misery. It 
is difiicult to see how, with the existing facilities of commu- 
cation between the two countries, the condition of the 
working classes in them should not be pretty much ap- 
proximated ; and there is too much reason to fear that, if 
left to itself, the equalisation will be brought about by the 
degradation of the English and Scotch rather than by the 
elevation of the Irish. Hitherto the latter have been very 
little, if at all, improved by their residence in Britain ; but 
the native population with whom they associate have been 
not a little deteriorated. Though painful and difficult, the 
subject is one that must be grappled with. It were better 
that measures should be adopted for the improvement, if 
that be possible, of the Irish people in Ireland ; and we would 
fain hope that such may be devised. But if their improve- 
ment at home be either impracticable, or can only be eftected 
by slow degrees at some distant period, justice to our own 
people requires that measures should be adopted to hinder 
Great Britain from being overrun with the outpourings of 
this offici7ia pauperum, to hinder Ireland from dragging us 
down to the same hopeless abyss of pauperism and wretched- 
ness in which she is sunk. 


In this view it would appear to be expedient to inter- 
fere to direct some portion of the tide of pauper emigration 
which sets against our shores to our colonial possessions. 
Those who voluntarily emigrate from Ireland, as from most 
other parts of Europe, to America and Australia, seldom 
consist of the individuals that might be most advantageously 
spared. And though the emigration of paupers, and their 
settlement in distant colonics, on any thing like a large scale, 
would be a work of great difficulty and expense, still we are 
disposed to think that, under the peculiar circumstances of 
the United Kingdom, it should be attempted. There is now, 
thanks to the introduction of something like an efficient 
pour- law into Ireland, but little chance that the blank made 
by the removal of any considerable number of cottiers would 
be again filled up ; so that their emigration, while it would 
most likely be of service to themselves, would be a perma- 
nent gain to the country. 

Wages are sometimes paid by the day or other term, and 
sometimes by the piece or job — that is, by the quantity of 
work done. Where the latter mode can be introduced, it 
exactly proportions the reward to the amount of labour, 
and not only takes away all temptation to idleness, but 
prompts workmen to put forth all their energies. In some 
cases, indeed, it has been thought necessary, in the view of 
preventing labourers by the piece from over-working them- 
selves, to limit the sums which they shall be permitted to 
earn in a given time. But, except in this respect, piece-work 
seems to be in all others the preferable mode of hiring labour. 
Knowing that his wages will entirely depend upon his dili- 
gence and perseverance, the undertaker of any piece of job- 
work is naturally most anxious for the speedy termination 
of liis task ; whereas the labourer who is hired by time has 
no such anxiety, but, on the contrary, tries to save himself 
as much as he can. Labourers engaged at piece-work are 
also more their own masters than those engaged for certain 
terms. They are, in truth, contractors as well as labourers ; 


and provided they execute their work within the term 
stipulated, (if such stipulation be made,) they may choose 
their own time for working, and may begin and leave off 
when they please.' 

It has sometimes been said, that it would be good policy 
to endeavour to interest labourers in the zealous prosecu- 
tion of the tasks in which they may be engaged, by mak- 
ing their wages depend, in part at least, on the result of 
their exertions. But, except in a few limited cases, this 
could not be done. The wages of sailors may be, and indeed 
usually are, made to depend on the successful termina- 
tion of the voyage ; but how could the wages of the work- 
people employed on a farm, or in a cotton-mill, be made to 
depend on the result of their exertions ? Very frequently, 
however, the work-people now referred to are paid by the 
piece ; and when such is the case, they have a plain and 
tangible motive, not depending on any remote or uncertain 
contingency, to make every exertion. 

But, supposing that the practical difficulties in the way 
of making the wages of the labourer dependent on the result 
of the employment in which he is engaged, were less for- 
midable than they appear to be, we should not, in the great 
majority of cases, anticipate any advantages from the scheme 
being adopted. On the contrary the presumption is, that 
it would be most injurious. If labourers are to parti- 
cipate in the advantages of successful enterprises, they must 
also participate in the losses resulting from those of a con- 
trary description ; and must, consequently, be every now 
and then deprived of their accustomed and necessary means 
of subsistence. The hazard to which they would thus be 
exposed might, it is true, be lessened by making a part only 
of their remuneration depend on the issue of the enterprise. 
But if it were really an advantage to be allowed to participate 
in a chance of this sort, the fixed portion of their wages would 
be proportionally diminished. And at every failure of an 

^ We state the principle generally : but it is affected in this country by the 
late Act for regulating the hours of labour. 


enterprise, the labourers engaged in it would be thrown upon 
the workhouse, or on the contributions of the benevolent. 

It is further obvious, that if work-people are to be in- 
terested in the result of an undertaking, they must also 
have some control over its conduct, and be authorised to 
inquire into the accounts and proceedings of those by whom 
the undertakin"; is manaoed. All the advantages of indi- 
vidual enterprise and responsibility would, in consequence, 
be lost, and the most necessary and judicious steps, in the 
conduct of a business, might be objected to or censured by 
those most incompetent to form a judgment upon such 
matters. At present, when a capitalist engages in any 
undertaking, he knows beforehand that he will reap all the 
advantage if it be successful, and that, if otherwise, he will 
have to bear all the loss. He is consequently determined, 
by the most powerful motives, to act discreetly, to proscribe 
all useless expense, and to avail himself of every means or in- 
cident that may present itself, to facilitate his projects. Ex- 
cept in a very few cases, which have been noticed in a previous 
part of this work, {ajite, p. 296,) all industrious undertakings 
are sure to be carried on most efficiently and economically 
by individuals. But of all sorts of interference, that of the 
workmen would be the most objectionable. It would hardly, 
indeed, be more absurd for a general to take the opinion of 
the privates of his army on questions of strategy, than it 
would be for a capitalist to call his labourers to his councils, 
and mould them according to their opinions, " Le surcroit 
d''interet qu'auraient les ouvriers a la reussite des operations, 
ne saurait corapenser ce qui manquerait a Taction du gerant; 
car ils ne pourraient participer en rien a la direction de 
Tentreprise, a moins que Ton ne voulut entraver sa marche, 
la rendre plus versatile et plus incertaine, et renoncer aux 
avantages de I'unite de gestion, si essentielle au succ^s. 
L'application des moyens semblables, loin d''ameliorer le sort 
des ouvriers, n'aboutirait doncqu'ale rendre plus miserable; 
Texcedant de remuneration qu'ils pourraient obtenir en cas 
de reussite des operations serait pen important pour chacuu 


d*'eux, et il serait loin d''etablir uue compensation suffisante 
pour leur participation aux chances des pertes accrues, dans 
ce sjst^me par Taffaiblissement de Finteret des gerants.' 

The number of hours during which labourers are em- 
ployed in the day is usually fixed by custom ; and in 
industrious countries, where the term is left to be agreed 
upon by the parties concerned, the hours of labour may be 
taken, cceteris paribus, as a pretty fair test of the condition of 
the lower classes — short hours being indicative of high, and 
long hours of low wages. Whenever the demand for labour 
is brisk and increasing, the hours of work are gradually 
lessened ; and whenever, on the contrary, the demand for 
labour is slack and diminishing, they are gradually length- 
ened ; work-people endeavouring, under these circumstances, 
to avert the fall of wages that would otherwise take place, 
by undertaking to extend the term of their employment, 
or, which is the same thing, to give a greater quantity of 
work for the same amount of wages. Occasionally, however, 
governments have not left the hours of work to be settled 
by the free competition of the parties interested, but have 
interfered to fix a maximum limit, beyond which it should 
not be lawful for the individuals engaged in certain branches 
of industry to be employed in them. And in so far as this 
rule applies to children and women, the former of whom are 
naturally, and the latter have been rendered, through custom 
and the institutions of society, unable to protect themselves, 
it appears, when not carried to an extreme, to be alike 
expedient and proper. (See ante, p. 184.) But it is other- 
wise when government interferes in behalf of the labourer 
who is sui juris. And where women and young persons are 
extensively employed, as in the cotton and other factories, 
a restriction on their labour may be, and in practice occa- 
sionally is, equivalent to a restriction on the entire body of 
labourers. Under these circumstances, a compromise of 

^ Seethe excellent essay of M. Clement, "Recherches surles Causes de 
rindigence," p. 252. 


some sort or other had better be effected ; such, for ex- 
ample, as that carried out by the Acts 3 & 4 Will. IV. 
c. 103, and 7 & 8 Vict. c. 15, which, amongst other things, 
limited the labour of young persons under eighteen years of 
age, and of women, to twelve hours a-day. This arrange- 
ment seems, on the whole, to have satisfied the claims of 
humanity on the one hand, and to have been consistent, on 
the other, with the interests of the manufacturers, and the 
circumstances under which the labourers are placed. But 
we doubt whether so much can be truly said in favour of 
the provision of the Act 10 and 11 Vict. c. 29, limiting the 
working hours of women and of young persons under eighteen 
years of age, to ten hours a-day. Had it been practicable 
to confine the operation of the Act to the parties now speci- 
fied, we should have hesitated befoi*e we questioned its policy. 
But such is not, and could not be the case ; and in truth it 
has limited the labour of all, or of almost all, the work-people 
engaged in a great variety of factories, about as effectually as 
if a restriction had been laid on the power by which their 
machinery is set in motion. And we must, therefore, regard 
the measure not as applying to a class, but as really reducing 
most sorts of factory labour to ten hours a-day. 

In remarking upon this important subject, it is needless 
to inquire whether eight, ten, or twelve hours be the more 
proper period during which labourers should be employed. 
If, however, the longer be introduced by the custom of the 
country, in preference to the shorter period, it is a proof that 
there is, if not an excess, at all events an extremely copious 
supply of labour ; and that the labourers are, in con- 
sequence, obliged to submit to the drudgery of lengthened 

Now, such being the case, the question is, will their 
condition be really improved by the legislature interfering 
to reduce the hours of labour ? To this question an an- 
swer must, we apprehend, be given in the negative. A 
deduction of a fourth, a fifth, or a sixth part from the hours 
of labour would no doubt be a signal boon to the labouring 


classes, provided no corresponding deduction were made 
from their wages ; but, if the latter should be the case, the 
shortening of the hours may be not a little injurious to 
them. It is difficult, however, to perceive how the hours of 
work — of those, at least, who are engaged by time and not 
by the piece — should be lessened by a legislative enact- 
ment without, at the same time, and by the same act, re- 
ducing wages. It is true that, in the event of the trade 
and capital of the country rapidly increasing, wages may 
not be perceptibly affected by reducing the period of employ- 
ment from 12 to 10 hours. But if such should be the case, 
the increased demand for labour would, without the inter- 
ference of government, have enabled the working-classes, had 
they thought fit, to shorten the hours of labour. But in the 
event of the law having this object in view, not being accom- 
panied or followed by any decided increase of trade or capital, 
the results will be very different. In such case, capitalists 
will, most probably, endeavour to carry on their employ- 
ments by relays of work people, that is, by getting one set to 
succeed another; and if that be impracticable, and they 
are obliged by the influence of the law to pay the wages of 12 
hours' work for only 10 hours, they will, it is plain, be 
placed in a most unfavourable position compared with their 
foreign rivals engaged in the same businesses, and compared, 
also, with their fellow- subjects at home, whose businesses are 
not subject to the limitation. These, however, it is needless 
to say, are circumstances of grave import, and such as may 
endanger the total loss of the branch of industry in which the 
limitation is enforced; and, though it should continue to be 
carried on, there can be no manner of doubt that the capital 
vested in it will, in the end, be adjusted so that the work-peo- 
ple shall only be paid in proportion to the time during which 
they are engaged. It is idle, indeed, to suppose it should 
be otherwise. Parliament can do many things, but it cannot 
take a fifth or a sixth part from the time during which day- 
labourers are employed, and secure for them their former 
wages. This is as impossible as it is to make degraded 


coins exchange for the same quantities of produce as those 
of the standard weight and purity. 

With labourers employed by the piece or the job, the re- 
sults of the limitation will be different. They will endeavour, 
by increased exertion, to accomplish in ten hours the same 
amount of work which had previously occupied them for 
twelve hours ; and where this can be done, the consequence 
to the masters and to the public will be comparatively im- 
material. And such is said to be the practical effect of the 
measure in weaving factories, and generally in those depart- 
ments which are principally or wholly carried on by piece- 
work. But it may well be doubted whether, even under 
these circumstances, the restriction of the hours of labour 
be advantageous ; and whether the greater exertion for ten 
hours be not more severe upon the labourer, than a less 
degree of exertion extended over twelve hours. 

But, admitting the truth of these statements, still it may 
be contended that, on the whole, the interests of the com- 
munity will be promoted by the labouring class having a 
little more time at their disposal, though it should be pur- 
chased by a sacrifice of wages or of labour. This, however, 
is a matter for the consideration of the parties. Where 
labourers may employ themselves for longer or shorter hours, 
some will prefer the one and some the other ; and the fair 
presumption is, that they will, in so doing, form a more 
correct estimate of what is most conducive to their interests, 
than can be formed by any one else. 

It is not by shortening by acts of parliament the hours 
of labour, nor by any measures of that description, that 
the condition of the lower classes can be really im- 
proved. Nothing, as already seen, can do this, unless the 
proportion of capital to population be increased ; and 
this result is not very likely to be facilitated by in- 
terfering with and abridging the labour by which capital is 
produced ! The great length of the hours of labour is, 
we willingly admit, an evil much to be deplored. It is a 
proof and a consequence of the excess of population as com- 


pared with capital ; and till the former be diminished, or the 
latter be increased, it is not possible to shorten the hours 
of work, and to maintain wages at their old level. Those 
who really desire to bring about this desirable result should 
exert themselves, by giving new vigour to industry, and 
opening new markets, on the one hand, and by furthering 
emigration, and restraining the increase of population on the 
other, to enlarge the amount of capital and the field for em- 
ployment, as compared with the number of labourers. This 
is the only mode in which wages can be really increased, 
the hours of work reduced, and the condition of the work- 
people permanently improved. All measures not founded 
on these principles, and contributing to these results, how 
benevolent soever the motives in which they have origi- 
nated, and how much soever their real operation may be 
concealed, merel}^ aggravate existing evils. They do not 
touch the sources of the disease, and only tend, by disguising 
and perverting its symptoms, to make the public believe 
that it is being cured, when, in fact, this very treatment is 
giving it new strength and virulence. 

It has been contended by Dr Franklin, and by many 
very intelligent persons, of whose benevolence no doubt can 
be entertained, and to whose opinions on most subjects great 
deference is due, that high wages, instead of encouraging 
industry, and improving the habits of the labourers, usually 
become a fruitful source of idleness and dissipation, and are, 
in fact, injurious alike to themselves and their masters. 
Nothing, however, can be more entirely incorrect than these 
representations — more completely opposed both to principle 
and experience. It is true, indeed, that we meet, in every 
country and situation of life, with individuals careless of the 
future, and intent only on present enjoyment ; but these 
always form a small and mostly even an inconsiderable 
minority of each particular class. Whatever may be the 
case with a few persons, the principle of accumulation always 
predominates in numerous bodies over the passion for 


expense. Wherever wages are so low as to render it impos- 
sible for any ordinary increase of exertion to add materially 
to their comforts and conveniences, the labourers either sink 
into idleness or become factious and discontented. As soon, 
however, as labour is rendered more productive, as an in- 
crease of industry brings a visible increase of comforts and 
enjoyments along with it, indolence uniformly gives place 
to exertion; a taste for improved accommodations is dif- 
fused; increased exertions are made to obtain them; and, 
in the end, the work-people consider it discreditable to be 
without them, and are less disposed to be factious. 

" The liberal reward of labour," says Dr Smith, " as it 
encourages the propagation, so it increases the industry of 
the common people. The wages of labour are the encourage- 
ment of industry, which, like every other human quality, 
improves in proportion to the encouragement it receives. A 
plentiful subsistence increases the bodily strength of the 
labourer; and the comfortable hope of bettering his con- 
dition, and of ending his days, perhaps, in ease and plenty, 
animates him to exert that strength to the utmost. Where 
wages are high, accordingly, we shall always find the work- 
men more active, diligent, and expeditious, than where they 
are low — in England, for example, than in Scotland — in 
the neighbourhood of great towns, than in remote country 
places. Some workmen, indeed, when they can earn in four 
days what will maintain them through the week, will lie 
idle the other three. This, however, is by no means the 
case with the greater part. Workmen, on the contrary, 
when they are liberally paid by the piece, are very apt to 
overwork themselves, and to ruin their health and constitu- 
tion in a few years. A carpenter in London, and in some 
other places, is not supposed to last in his utmost vigour 
above eight years. Something of the same kind happens 
in many other trades, in which the workmen are paid by 
the piece ; as they generally are in manufactures, and even 
in country labour, wherever wages are higher than ordinary. 
Almost every class of artificers is subject to some peculiar 


infirmity, occasioned by excessive application to their peculiar 
species of work. Raniazzini, an eminent Italian physician, 
has written a particular book concerning such diseases. We 
do not reckon our soldiers the most industrious set of 
people amongst us : yet when soldiers have been employed 
in some particular sorts of work, and liberally paid by the 
piece, their officers have, frequently, been obliged to stipu- 
late with the undertaker, that they should not be allowed 
to earn above a certain sum every day, according to the rate 
at which they were paid. Till this stipulation was made, 
mutual emulation, and the desire of greater gain, frequently 
prompted them to overwork themselves, and to hurt their 
health by excessive labour. Excessive application during 
four days of the week is frequently the real cause of the idle- 
ness of the other three, so much and so loudly complained of. 
Great labour, either of mind or body, continued for several 
days together, is, in most men, naturally followed by a 
great desire of relaxation, which, if not restrained by force, 
or by some necessity, is almost irresistible. It is the call 
of nature, which requires to be relieved by some indulgence, 
sometimes of ease only, but sometimes, too, of dissipation 
and diversion. If it is not complied with, the consequences 
are often dangerous and sometimes fatal, such as almost 
always, sooner or later, bring on the peculiar infirmity of 
the trade. If masters would always listen to the dictates of 
reason and humanity, they have frequently occasion rather 
to moderate than to animate the application of many of 
their workmen. It will be found, I believe, in every sort 
of trade, that the man who works so moderately as to be 
able to work constantly, not only preserves his health the 
longest, but in the course of the year executes the greatest 
quantity of work."' 

We may add, that labourers have the same common 
sense, and are actuated by the same passions, feelings, and 
principles as other men ; and such being the case, it seems 

1 " Wealth of Nations," p. .S7. 


a contradiction to pretend that, if they be able to earn, by 
an ordinary degree of labour, more than is sufficient for 
their support, they only, of all the various ranks and orders 
of the community, will spend the surplus in riot and 
debauchery. There is, no doubt, in many places much intem- 
perance ; and, besides its other mischievous consequences, 
the poor spend a great deal of money on gin, that would be 
far better spent in providing improved accommodations for 
themselves and their families. But it is an error to suppose, 
that the mere desire to indulge a vitiated appetite is the 
only, or even the principal cause, that sends so many people 
to gin-shops. Ardent spirit is really, as Burke has stated, 
in very many cases, a medicine both for the mind and the 
body,^ and is, in truth, abused only by the dregs of the 
populace — by those who, if they could not intoxicate 
themselves with gin, would most likely resort to opium, 
or some other stupifying drug. It would indeed be easy, 
were this a proper place for such investigations, to show 
that, notwithstanding its prevalence, gin -drinking, as 
compared with the population, is less diffused now than 
formerly, and that the bulk of the labouring poor have 
become more sober and temperate. A taste for reading 
and political discussion has begun to furnish amusement 
and excitement for the working-classes, to a much greater 
extent than in bygone times. We can, however, merely 
indicate the fact ; it would be premature to attempt, with 
our limited experience, to estimate the influence of so im- 
portant a change over their interests, and those of the other 
classes of society. 

But, laying aside general reasoning, the state of industry 
in countries where wages are low, compared with its state 
in those where they are high, proves all we have said in 
favour of the liberal reward of labour. Have the low 
wages of the Irish, Poles, and Hindoos, made them indus- 
trious ? or the high wages of the English, Americans, and 

1 " Tlionghts and Details on Scarcity," p. 42. 



Hollanders made them lazy, riotous, and profligate l Just 
the contrary. The former are as proverbially indolent as 
the latter are laborious and enterprising. This is not a 
point about which there can be any doubt. The experience 
of all ages and nations proves that high wages are at once 
the most powerful stimulus to exertion, and the best means 
of attaching the people to the institutions under which they 
live. It was said of old, '•^ nihil Icetius est populo Bomano 
saturo ;''"' and the same maybe said of the English, the 
French, and indeed of every people. Dans aucune histoire, 
on ne rencontre une seule trait qui prouve que Vaisance du 
peuple par le travail a nui a son obeissance} It is not when 
wages are high and provisions abundant, but when wages 
are low, the harvest less productive than usual, and food 
deficient, that the manufacturing and thickly-peopled dis- 
tricts are disturbed by popular clamour and commotions. 
It is, in truth, quite visionary to suppose that security and 
tranquillity should ever exist in any considerable degree, in 
countries where wages are very much depressed, and the 
mass of the people sunk in poverty and destitution. Those 
who have little or no property of their own, and little 
or no prospect of acquiring any, will never entertain any 
real respect for that of others ; nor can any country be 
so ripe for revolution as that where the mass of the people 
may hope to gam something, while they feel they can lose 
nothing, by subverting the existing institutions. Nothing, 
therefore, can be so signally disastrous as a permanent 
depression in the rate of wages. It is destructive alike of 
the industry of the people, and of that security which is 
indispensable to the advancement of society. 

These statements sufficiently show that it is as much for 
the interest of governments, with a view to their own 
security, as it is their duty, with a view to the happiness 
of their subjects, to make every exertion to improve the 

' Forboniiais, " Recherches sur les Finaiirps," i. lOf). 


condition of the labouring classes, by adopting such mea- 
sures as may be most favourable to the increase of capital 
as compared with population, and as may contribute most, 
by elevating the tastes and opinions of the people, to raise 
the standard of wages. It will be found, too, on taking 
an enlarged view of the subject, that the wellbeing of the 
capitalists will be best promoted by their adopting a similar 
course. At first sight, indeed, it does appear as if their 
interests were opposed to those of the labourers ; but 
such is not the case. The interests of both are at bottom 
identical ; and it has been already seen that all the 
wealth of the country, applicable to the payment of wages, 
is uniformly, in all ordinary cases, divided among the 
labourers. It is true that, when wages are increased, a less 
share of the produce of industry remains to the capitalists, 
and that profits are in so far reduced ; but it does not 
therefore follow that the capitalists would be placed in a 
really preferable situation were wages to fall and profits to 
rise. The rate of profit, how important soever, is not the only 
thing to which they have to look : security and tranquillity 
are still more indispensable than high profits to the success- 
ful prosecution of industrious undertakings. And these 
are never found in countries where wages are low, and the 
mass of the people immersed in poverty and destitution. 
In such countries, the poor are deterred by nothing save 
the fear of the law from engaging in all sorts of dan- 
gerous projects ; and are alwaj'^s ready to listen to those 
who tell them that their unhappy condition is a conse- 
quence of misgovernment, and of the misconduct of their 
employers. Under such unfortunate circumstances, in- 
dustry and enterprise are paralysed ; and the condition 
of the capitalists is, if any thing, worse than that of the 

Hence, while it is impossible for the employers of labour 
artificially to reduce the rate of wages, it is farther obvious 
that such reduction, could it be effected, would rarely, if 
ever, be for their advantage : for unless wages were at an 


extraordinarily high elevation, it would necessarily be fol- 
lowed by a diminution of that security which is so essential 
to their interests. The conduct of those who pretend to 
wish for the improvement of the poor, and who, at the same 
time, complain of high wages, is, in fact, contradictory ; 
and must be ascribed to hypocrisy, or folly, or both : the 
former, because an increase of wages is the only, or at all 
events the most eflectual and ready means by which the 
condition of the poor can be really improved ; and the 
latter, because high wages are incomparably the best defence 
and safeguard of the estates and property of the rich. 

But, supposing the conduct of government and of the 
wealthier classes, as regards the poor, to be all that could 
be wished for, still, as has been already seen, it usually 
has but little influence over the condition of individuals. 
Whatever may be the character of the administration 
and of the public institutions, every man is always, 
in a great degree, responsible for his own situation. In- 
dustry, frugality, and forethought, can never be dispensed 
with; and, however unpromising in other respects the situa- 
tion of the parties, these virtues will, speaking generally, 
insure the comfort and happiness of those by whom they 
are practised. The indolent and improvident, on the con- 
trary, though placed under the most favourable circum- 
stances, are uniformly poor and miserable : Ubi socordice te 
atque ignavice tradideris, neqiiicquam Deos implores; irati 
infestique sunt. " If," says Barrow, " wit or wisdom be the 
head, if honesty be the heart, industry is the right hand 
of every vocation ; without which the shrewdest insight 
and the best intention can execute nothinsr.'" ^ 

In making these statements, we have not certainl}'' been 
actuated by any desire to apologise for, or palliate the faults 
or errors of governments. But, how well soever they may 
be governed, those who are deficient in industry and fore- 
thought can never be well oflF. The eternal law of Providence 

^ "2d Sermon on Industry." 


has decreed, that the hand of the diligent shall alone make 
rich. Wherever indolent habits prevail, wherever the poor 
grasp at immediate gratifications, without regard to the con- 
sequences — wherever they rely on others, rather than on 
themselves, and depend more on the wretched resource of 
agitation than on labour and frugality — they will unavoid- 
ably sink into the abyss of poverty, and become objects, not 
of pity, but of contempt. 

A controversy has been carried on with respect to the 
comparative cheapness and efficiency of free and slave labour, 
upon which it may be proper to offer a few remarks. In so 
far, indeed, as regards the labour of freemen and slaves, 
supposing them to be indiscriminately engaged in the same 
employments, and supposing them both to be natives of, or 
to belong to the country in which they are employed, and to 
be equally well fitted for the labour carried on in it, there 
is little room for controversy. In such cases, the widest 
experience has proved that the labour of freemen is cheapest ; 
the apathy, idleness, and carelessness of slaves being, in all 
cases, more than sufficient to countervail the lower rates at 
which their services may sometimes be procured. This, 
however, is not the point of view under which the inquiry 
with respect to free and slave labour is commonly regarded in 
this country. Here we generally consider it with reference 
to the West Indies, or some other intertropical region ; 
the question being — whether the products peculiar to such 
regions, and more especially sugar, may be more cheaply 
raised by free or by slave labour ? Now, in this case, we ap- 
prehend that slave labour will be found to be the cheaper of 
the two — at least if the question be restricted to the growth 
of sugar. We doubt, indeed, whether any considerable 
quantity of sugar could be raised in the intertropical regions 
of the western hemisphere without the aid of slaves, or of 
compulsory labour of one sort or other. The inhabitants 
of these countries have few wants. Many articles indis- 
pensable in cold or temperate climates, would be there an 


encumbrance. Hence, the ciii'ls acuens mortalia corda, so 
powerful among the nations of Europe, is but feebly felt by 
the blacks. Their necessities and desires are of a very 
limited description ; and are generally, indeed, fully sup- 
plied by the produce of a small patch of land, requiring but 
little labour in its cultivation. And such being the case, it 
would be contradictory to suppose that they should volun- 
tarily employ themselves in the hard labour necessary to 
produce sugar. Consistently with what is now stated, we 
find that Hayti or St Domingo, though the most fruitful 
of the West Indian islands, and though it furnished when 
a colony of France immense supplies of sugar, no longer 
exports a single ton ! And what ground have we for suppos- 
ing that the result would be different in Brazil or Cuba, 
were the blacks emancipated, and were they able easily 
(which is not the case in Jamaica and most of our islands) 
to obtain patches of land ? The possession of the latter is 
requisite, to enable them to exist without engaging in labo- 
rious service ; and in the event of their not being able to 
obtain land, they may be forced to employ themselves in 
the culture of sugar — though, as it is against their inclina- 
tion, they will withdraw from their work on the first oppor- 
tunity, and will, while employed, indulge as much as pos- 
sible in idleness. It therefore appears that the question 
with respect to the cheapness and efficiency of free and 
slave labour is one that depends, in great measure, on cir- 
cumstances — that is, on the locality where, and the parties 
by whom, it is to be carried on, and whether the labour be 
of that description in which freemen would be disposed 
voluntarily to engage. It is impossible to bring whites into 
competition with blacks, in field labour in tropical countries, 
the constitution of the former not beius; suited to such an 
employment in hot climates : and as there are no good 
grounds for thinking that really free blacks will ever, of 
their own accord, undertake the drudgery of sugar-planting, 
it would seem that slave labour is not the cheapest only that 
fan be so employed, but that it is really all but indis- 


pensable to the prosecution of the business. We do not 
state this as any vindication of slavery, but as being the 
only legitimate solution of the question at issue. We are, 
indeed, strongly impressed with the conviction that, in the 
end, the culture of the sugar-cane, on a large scale, will 
have to be abandoned in all those parts of the New World 
in which slavery is suppressed. 


Proportional wages, or the share of the produce raised 
by his industry which goes to the workman, depend partly 
on the magnitude of the market rate of wages at the 
time, and partly on the difficulty of producing the commo- 
dities which enter into and really form this market rate. 
Suppose, to illustrate this, that the wages of labourers in 
England and the United States are, when reduced to the 
standard of wheat, about equal. Under these circumstances, 
the condition of the labourer, or his power over necessaries 
and luxuries, will also be about equal in both countries; 
but the rate of proportional wages will, notwithstanding, be 
higher in England than in the United States; for, owing to 
the greater fertility of the inferior soils under cultivation 
in America, the same quantity of labour that would there 
produce 100 quarters of wheat will not probably produce 
more than 80 quarters in England; and as the labourers 
in both countries are supposed to get the same quantity of 
produce in return for a given quantity of work, they are 
obviously getting a greater proportion of the produce of 
their labour in England than in the United States. 

Hence it is plain, that proportional wages may, as was 
previously remarked, be increased, at the same time that 
wages, if estimated in silver, corn, or any other commodity, 
are reduced ; and such, in point of fact, is almost uniformly 
found to be the case when tillage is extended over inferior 
soils. Wherever the best lands only are cultivated, the 


proportion, or share of the produce falling to the labourer, 
is, generally speaking, but small ; but as labour is, under 
such circumstances, comparatively productive, a small share 
of its total produce gives a large absolute quantity of neces- 
saries and conveniences : while in the more advanced stages 
of society, when cultivation is widely extended over lands 
of inferior fertility, proportional wages are almost invariably 
high ; but, owing to the increased difficulty that then obtains 
of producing supplies of food, these high proportional wages 
rarely afford a large supply of necessaries and conveniences. 



It is very generally supposed that the influence of a demand 
for labour, and of a demand for the products of labour, over 
the rate of wages and the condition of the labouring class, are 
all but equivalent; and most generally, indeed, they are used 
as synonymous expressions. There is, however, no such 
identit}' between them. A demand for labour always differs 
in a less or greater deo-ree from a demand for commodities — 
the extent of the difference depending principally on the 
description of commodities for which there is a demand. 

It is plain that an increased demand for labour in general, 
or for a particular variety of labour, necessarily makes a 
proportional addition to the wages, and, consequently, to 
the comforts and conveniences of the labouring class. If 
the increased demand comprise all sorts of labour, the im- 
provement occasioned by it will be immediately experienced 
by all sorts of labourers ; and if it be for one or a few sorts 
only, its beneficial influence will be gradually diftused over 
the whole class, in the way previously pointed out. 

But the influence of an increased demand for commodities, 
or for the produce of labour, is by no means identical with 
an increased demand for labour, and would depend partly 
on whether the commodity was wholly or in part the pro- 


duce of labour or of machinery, and partly on its being 
suited or unsuited to the employment and subsistence of 

1. If a sura be expended on commodities wholly produced 
by labour, its influence will, in so far, be nearly the same as 
if it Avere directly expended upon labour. It is contended, 
indeed, that if the commodities be partly produced by the 
aid of machinery or capital, the result will be different; and 
that the sum expended upon them will not, in such case, 
wholly go to replace labour, but will partly go to replace 
the wear and tear of the capital employed in their produc- 
tion, and the profits of the capitalist. But though this be 
true, the difference is of little importance ; for, capital being 
itself the result of antecedent labour, whatever is expended 
upon it really goes to replace labour, and in the end is 
identical in its effects with a direct expenditure upon the 

2. The influence of an increased demand for commodities 
over the wages and condition of the labouring class depends 
materially on their nature, and the uses to which they may 
be applied. 

(a.) Suppose an individual has ^dOO or .^^1000 to expend, 
and that he lays it out in the purchase of pictures, statues, 
mirrors, books, jewellery, or some such articles : In such 
case, it is plain that the =£?100 or ^1000 so expended can 
aflord no farther employment or means of subsistence to 
any one. The articles for which it has been exchanged yield, 
no doubt, a gratification to their owner, and their accumu- 
lation and difl"usion may, and most probably will, improve 
the public taste. But they cannot do more than this : 
they cannot serve as capital, or as food, or clothes, 
for the farther employment or support of the labouring 
classes. They supply moral and intellectual, not physical 

(b.) But suppose that, instead of expending his oPlOO or 
riPlOOO upon pictures, statues, &c., the owner expends it 
upon food and clothes, and brings these into his house : 


in this case he may employ a number of individuals, either 
as menial servants, or as manufacturing or agricultural 
labourers, giving them portions of his stock of food and 
clothes in return for their services. Hence it results that 
the influence of a demand for commodities over the condition 
of the labourers depends to a considerable extent on the de- 
scription of commodities in demand. This, we think, must 
be already sufliciently obvious ; but, to set it in a clearer 
point of view, let it be supposed that two capitalists, A 
and B, go to market with equal sums, and replace by their 
purchases equal amounts of previous labour, or expenditure. 
Thus far they both give the same encouragement to the 
employment of labour. But suppose, farther, that A buys 
articles that can neither be used as food nor as capital in 
industrious undertakings, and that B buys articles that 
may be and are intended to be so used, it is evident their 
means of employing labour will henceforth be different. A 
has his books, his pictures, his cabinets, vases, gems, and so 
forth, which he shuts up, enjoys himself, and exhibits to 
his friends ; but how much soever this may purify or refine 
the taste, the possession of the greatest amount of such 
articles does not give him the means of supporting or 
employing a solitary individual. B, on the contrary, who 
bought provisions, or machinery, or both, has it plainly 
in his power to employ an additional number of menials, 
or of manufacturing or agricultural work-people, occa- 
sioning in either case an immediate demand for labour, 
and providing, in the latter, for its continued extension. 
The expenditure of the latter must, therefore, have a dif- 
ferent effect upon wages, and be more beneficial to the 
labouring class, than the expenditure of the former. 

Precisely the same effects would follow were those who 
buy food and clothes, and assign portions thereof to 
menials or other dependants, to buy the services of such 
parties directly with money, leaving it to them to supply 
themselves with Jiecessaries. Thus, suppose that an indi- 
vidual who has JPoOO or dClOOO to expend, employs it in 


paying the wages of labourers, the latter will carry the sums 
paid to them to market, and buy food and clothes with 
them, exactly as the owner would have done had he carried 
the amount there himself, and subsequently employed the 
produce in boarding the parties in his house. 

It therefore results — should there be a preference among 
the more opulent classes for fine houses, costly furniture, 
or generally for the products of the fine arts — that any 
circumstance that should tend to change such fashion, or 
should lessen the demand for these articles, and increase 
that for gardeners, grooms, footmen, and other servants, 
would add proportionally to the employment of the labour- 
ing class. And upon this ground Mr Ricardo has con- 
cluded that the produce of the additional taxes imposed 
upon the richer classes during war, being mostly expended 
upon soldiers and sailors, affords subsistence to a greater 
number of persons than it would have done had it been left 
with its original owners — the probability in such case being 
that it would have been, partly at least, expended on uncon- 
sumable articles. And the preceding statements show that 
there can be no reasonable doubt that Mr Ricardo is well 
founded in his conclusion.' 

But in showing the greater influence of expenditure upon 
certain descriptions of articles than upon others, over the 
demand for labour, we should not wish to be understood as 
expressing any opinion in favour of expenditure upon menial 
services over expenditure upon articles of virtu, or of 
luxurious accommodation. It is much better, we think, 
for the interests of the public, as well as of the wealthier 
classes, that there should be an excess of expenditure upon 
houses, pleasure-grounds, costly furniture, »fcc., than upon 
footmen and menials. The latter are the true friiges con- 

1 Mr Senior has attempted (art. Tolitical Economy, " Encyc. Metropoli- 
tana") to show the error of this conclusion. But his statements and reason- 
ings on this subject seem to be in no ordinary degree fallacious. It is sin- 
gular, indeed, that so clear-sighted a writer should have supported a doctrine 
po erroneous. 


sumere nati; and though their services, when confined within 
due limits, be necessary to the wellbeing of society, any 
excess of expenditure upon them is the most wasteful 
imaginable. As a class they are proverbial for want of 
industry, enterprise, and foresight ; and the circumstances 
under which they are placed go far to preclude the expec- 
tation of their making any considerable improvement. Un- 
necessary expenditure upon them tends merely to nourish 
idleness and improvidence ; whereas an expenditure upon 
houses, ornamental grounds, works of art, and costly fur- 
niture, enriches and beautifies the country, improves the 
tastes and habits of the people, and powerfully contributes 
to the progress of civilisation. 



Impotent Poor should he provided for hy a Poofs Rate — Question as to 
the best Means of providing for the Able-bodied Poor — Arguments in 
favour of a Compulsory Provision — Objections to it — May he so ad- 
ministered as to obviate most of these Objections — Operation of the 
English Poor Laws — New Poor Law. 

How prosperous soever the condition of the bulk of the 
inhabitants, still it is found, even in the most favoured 
countries, that poverty and destitution are the lot of a con- 
siderable number of persons ; and the questions whether, 
and to what extent, the public should interfere to relieve 
those in this unfortunate condition, are among the most 
important that the legislature has to resolve. 

The poor and destitute may be divided into two great 
classes : ih.Q first comprising maimed and impotent persons, 
or those whom natural or accidental infirmities disable from 
working ; and the second those who, though able and will- 
ing to work, are unable to find employment, or do not receive 
wages adequate for their own support and that of their 
families. There is a wide difference between these classes ; 
and the same means of relief that may be advantageously 
afforded to the one, may not, in various respects, be suited 
to the other. 

I. With respect, however, to the first class, or the impo- 
tent poor, there does not seem to be much room for doubt 
as to the policy, as well as humanity, of giving them a legal 
claim to relief. It has sometimes, indeed, been contended, 
that by affording relief to those who are unable, from age or 
the gradual decay of their bodily powers, to provide for them- 
selves, the motives that prompt individuals, while in health, 
to make a provision against future contingencies, are weak- 


ened ; so tliat, in attempting to protect a few iVom tlie eftects 
of their own improvidence, an injury is done to the whole 
community. This statement is, probably, true to a cer- 
tain extent ; though it is difficult to imagine that any 
considerable portion of a moderately intelligent population 
will ever be tempted to relax in their efforts to save and 
accumulate, when they have the means, from a knowledge 
that the workhouse will receive them in old age ! ' But 
whatever may have been the faults or follies of individuals, 
it would be abhorrent to all the feelings of humanity to al- 
low them to suffer the extremity of want. An individual 
is unfortunate, perhaps, or he may not have been as thrifty 
or as prudent as he ought — but is he, therefore, to be allowed 
to die in the streets ? It is proper, speaking generally, to 
do nothing that may weaken the spirit of industry ; but if, 
in order to strengthen it, all relief were refused to the 
maimed and impotent poor, the habits and feelings of the 
people would be degraded and brutalised by familiarity with 
the most abject wretchedness ; at the same time that, by 
driving the victims of poverty to despair, a foundation would 
be laid for the most dreadful crimes, and such a shock given 
to the security of property and of life, as would very much 
overbalance whatever additional spur the refusal of support 
might give to industry and economy. It does, therefore, 
appear sufficiently clear, that this class of poor should be 
supported in some way or other ; and that, when the parties 
are without relatives or friends, or when these do not come 
voluntarily forward to discharge this indispensable duty, the 
necessary funds should be provided by a tax or rate, made 
equally to affect all classes ; for, if they are not so raised, 
the poor will either not be provided for, or the burden 
of their support will fall wholly on the benevolent, who 
should not, in such a case, be called upon to contribute 
more than their fair share. 

' Mr Hewlett has some forcible observations on this point in his Tract on 
the Poor Laws, p. fi. 


II, The only question, then, about which there seems to 

be any real ground for doubt or difference of opinion, is — 
whether any legal claim for relief should be given to the 
able-bodied poor, or to those who, though able and ready to 
work, cannot find employment, or cannot earn wages ade- 
quate for their support ? Now this, it must be confessed, is, 
abstractly considered, rather a difficult question, and does 
not, perhaps, admit of any very satisfactory solution. But, 
whatever theoretical objections may be alleged against it, 
the necessity of the case not unfrequently overwhelms every 
other consideration, and compels the institution of a com- 
pulsory provision for this class of paupers. This necessity 
may not probably be felt, and is always comparatively gentle 
in agricultural countries, like Austria, Prussia, or Riissia ; 
but it seldom fails to manifest itself, in its most unreasoning 
and sternest form, in countries far advanced in manufac- 
tures and commerce : a compulsory provision for the able- 
bodied poor may, indeed, be regarded as an indispensable 
part of their domestic economy. 

In the first place, it may be observed that, owing to changes 
of fashion, to variations in the supply and value of money, 
to the miscalculation of producers and merchants, and to 
unforeseen political events, those engaged in manufacturing- 
employments are necessarily exposed to many vicissitudes. 
And when their number is so very great as in this country, 
it is quite indispensable that a resource should be provided 
for their support in periods of adversity. In the event of 
no such provision being made, and of the distress being at 
the same time extensive and severe, the public tranquillity 
would, most likely, be seriously endangered. "Of all rebel- 
lions," says Lord Bacon, "those of the belly are the worst ;" 
or, as Seneca has it, Cum ventre humano tibi negotium est, nee 
rationem patitur, nee oequitate, mitigatur, nee idla prece flec- 
titur populus esuriens} It would be visionary indeed to 
imagine, that those who have nothing should quietly submit 

^ " De Brevitate Vitm," cap. Hi. 


to suffer the extremity of want without attacking the pro- 
perty of others. And hence, if we would preserve unimpaired 
the internal peace, and consequently the prosperity of the 
country, we must beware of allowing any considerable por- 
tion of the population to fall into a state of destitution. 
But without the establishment of a compulsory provision 
for the support of the unemployed poor, it is difficult to see 
how they could avoid occasionally falling into this state. 
Through its instrumentality, however, they are sustained in 
periods of adversity, without being driven by necessity to 
attack the property of others and to commit outrages. It is, 
no doubt, true that a provision of this sort is extremely liable 
to abuse. Means have, however, been devised for checking 
this tendency ; and whatever imperfections may, after all, 
attach to it, it has not yet been shown how security and good 
order could be maintained in periods when either employ- 
ment or food is deficient, were it abolished. 

In the second place, supposing it were possible (which it 
is not) to maintain tranquillity without making a legal pro- 
vision for the support of the unemployed poor, the privations 
to which, under such circumstances, they would be forced 
to submit, would, in all probability, lower their estimate of 
what is required for their comfortable and decent subsistence, 
and exert a most pernicious influence over their conduct and 
character. It is perhaps unnecessary, after wdiat has been 
advanced in the preceding chapter, to enter into any further 
statements to show the importance of endeavouring to guard 
against any such results. But the observations of Mr 
Barton on this point are so striking and conclusive, that 
we cannot forbear laying them before the reader. " It is 
to be remembered," says he " that even those who most 
strongly assert the impolicy and injurious tendency of our 
poor laws, admit that causes wholly unconnected with these 
laws do, at times, depress the condition of the labourer. 
Poor families are often thrown into a state of severe neces- 
sity by long-continued illness or unavoidable misfortunes, 
from which it would be impossible for them to return to the 


enjoyment of decent competence, if not supported by extra- 
neous means. It is well known, too, that a general rise in 
the price of commodities is seldom immediately followed by 
a rise in the wages of country labour. In the mean time, 
great suffering must be endured by the whole class of 
peasantry, if no legislative provision existed for their relief; 
and when such a rise of prices goes on gradually increasing 
for a series of years, as sometimes happens, the suffering 
resulting from it must be proportionally prolonged. The 
question at issue is simply this — whether that suffering be 
calculated to cherish habits of sober and self-denying pru- 
dence, or to generate a spirit of careless desperation ? 

" During these periods of extraordinary privation, the 
labourer, if not effectually relieved, would imperceptibly 
lose that taste for order, decency, and cleanliness, which 
had been gradually formed and accumulated in better times, 
by the insensible operation of habit and example. And no 
strength of argument, no force of authority, could again in- 
stil into the minds of a new generation, growing up under 
more prosperous circumstances, the sentiments and tastes 
thus blighted and destroyed by the cold breath of penury. 
Every return of temporary distress would, therefore, vitiate 
the feelings and lower the sensibilities of the labouring 
classes. The little progress of improvement made in happier 
times would be lost and forgotten. If we ward off a few of 
the bitterest blasts of calamity, the sacred flame may be 
kept alive till the tempest be past ; but if once extinguished, 
how hard is the task of rekindling it in minds long inured 
to degradation and wretchedness !""' 

In the third place, it will, we suppose, be admitted that, 
when a considerable number of destitute poor persons are 
thrown out of employment, a provision of some sort or other 
should, or rather must, be made for their support. Suppose 
now that it is made, not by a compulsory rate, but by the 
voluntary contributions of the benevolent — it is contended 

' " Inquiry into the Causes of the Depreciation of Agricultural Labour," 
p. 32. 


4;)0 POOR LAWS. 

that such a mode of relieving their distress tends to nourish 
the better feelings of the poor; and that many would rather 
submit to the greatest privations than solicit a share of these 
contributions, who yet would make no scruple of claiming 
relief had the state legalised their right to support. But, 
admitting the truth of this statement, it has been already 
seen that it is not for the advantage of society that the poor 
should be forced to submit to extraordinary privations. It 
is, besides, abundantly certain that many would not be 
influenced by the motives alluded to ; and in the event of 
the distress being either very severe or long-continued, those 
most disinclined to become a burden on others might be 
forced, if they did not resort to outrage, to beg a pittance. 
And it is pretty obvious, notwithstanding all that has been 
said to the contrary, that the necessary result of such a 
state of things would be far more prejudicial to the charac- 
ter of the poor — that it would do more to prostrate their 
pride and independence, and to sink them in their own esti- 
mation, than the acceptance of relief from a poor's rate. It 
is idle, indeed, to talk about the independence of a man who 
is receiving charity ; but an individual supported by the 
poor's rate cannot fairly be regarded in such point of view. 
He is merely sharing in a public provision made by the 
state ; and as all property has been acquired with the know- 
ledge that it is responsible to this claim on the part of 
the poor, it cannot justly be considered as entailing any 
burden on any particular individual. It may, therefore, 
one should think, be fairly presumed, that the decent pride 
and independence of the poor will be more likely to be sup- 
ported under a system of this sort, than if they were 
obliged to depend, in periods of distress, on the bounty of 
others. Wherever the poor have not, either de jure or de 
facto, a claim for support, they must unavoidably, in such 
periods, be allowed to beg. But of the scourges that afflict 
and disgrace humanity, there is, perhaps, none more de- 
structive than the prevalence of mendicity. A common beg- 
gar is the most degraded of beings ; and the experience of 


Ireland, France,^ Italy, Spain, and, in short, of every 
country where there is no established provision for the sup- 
port of the poor, shows, that wherever they are compelled to 
depend on so precarious a resource as charity, we look in vain 
for that manliness and independence of character which dis- 

' A committee of the National Assembly, appointed to inquire into the 
state of the poor of France, described our poor laws as la plate politique la 
plus dtvorante de VA ngleterre — an expression that has been often quoted on 
this side the Channel. There are, however, pretty good grounds for thinking 
that the condition of all classes in France would have been decidedly im- 
proved had she been subjected to the operation of a similar code. Very 
large sums have been expended by government, and by individuals in that 
country, in efforts to relieve the distresses of the poor ; but as the burden of 
their support was removed from those who could, by their interference, 
have prevented the misapplication of the funds, and the undue increase of 
the poor, the efforts in question have been of very little use. In despite of 
the repeated enactment of laws of the most extreme severity, mendicity has 
been at all times the scourge and disgrace of France. It is stated, in a 
valuable communication addressed by one of the ministers of Orleans to Mr 
Howlett, immediately before the Revolution, that no season of " uncommon 
scarcity occurs but vast numbers of entire families, especially in the coun- 
try, perish for want, being literally starved and frozen to death !" — (Mr 
Howlett's " Tract," p. 18.) At the Revolution, the property of the hospitals, 
and other establishments for the support of the poor, was confiscated ; and 
the seductive, but dangerous and inapplicable principle laid down, that the 
care and support of the poor was the duty of government, and not of muni- 
cipalities. Practically, indeed, owing to the confusion of the times, this 
declaration had no effect. When, however, order was again restored, the 
attention of government was forcibly drawn to the wretched condition of the 
poor, who had for some years been wholly neglected. In consequence, depots 
de viendicite, and bureaux de bienfaisance, were established, the prefects being 
at present authorised, in the event of the funds derived from charitable con- 
tributions being inadequate for their support, to levy in aid thereof, octrois 
municipaux, or duties on some of the principal articles conveyed into the 
towns where they are established. This is plainly a species of poor's rate; 
but it is a most objectionable one, inasmuch as it does not lay the burden 
upon those who alone have power to prevent the multiplication of the poor. 
But this new system has only been introduced into the more considerable 
towns; so that, in the country, pauperism and mendicity are still as prevalent 
as ever, licenses to beg being frequently granted even by the public authori- 
ties. It is affirmed by the Baron Dupin, (" Secours Publics," p. 460,) that 
*' in the country, in the dead season, want and misery abound, and there are 
no means of relief." Whenever, therefore, there is a deficient crop, famine 
and disease prevail to a frightful extent. Farther information as to the state 


tinguish the poor of England, and find in their stead all 
the degrading vices which beggary is sure to produce. 

But whatever may be the disadvantages incident to chari- 
table contributions for the support of the able-bodied poor, 
it is contended, by some who admit them fully, that they 
are the only means that can be resorted to without leading 
to still more destructive consequences than any previously 
pointed out. A regard for their own interest, were there 
no other motives to be depended upon, will, it is affirmed, 
teach those who possess property the advantage of pro- 
viding for the really necessitous, and will consequently 
prevent the outrages to which allusion has been made. 
Such contributions will, however, cease with the necessity 
which gave them birth. When the pressure has passed 
away, they will not remain to tempt the idle and dissipated 
to linger on in their vicious courses. It is alleged that 
the labouring class would, under such circumstances, feel 
that they had nothing real to depend upon but their own 
efforts ; and that no one would hesitate about saving a little 
stock when in his power, by trusting to the precarious and 
humiliating resource of mendicancy. But such, we are 
assured, is not the case with an established compulsory pro- 
vision; and granting all that has been urged in its defence, 
it is contended, that the evils inseparable from it outweigh 
its advantages. It is acknowledged by all parties to be in 
most cases quite impossible to discriminate between the 
poverty and misery which has originated in accidental and 
uncontrollable causes, and that which has originated in folly 
or ill conduct. And yet it is said to be obvious, that, 
unless this be done, the establishment of a provision on 
which every pauper has a legal claim, must, by placing the 
industrious and the idle, the frugal and the dissipated, on 

of the French poor will be found in the work just quoted of M. Dupin, 
entitled, "Histoire de 1' Administration des Secours Publics;" in the " Visiteur 
de Pauvre" of M. Degerando; and in the excellent and elaborate work of 
the latter, " Sur la Bienfaisance Publique." 


the same footing, powerfully tend to weaken the motives to 
good conduct in the virtuous part of the community, and to 
strengthen the vicious propensities in those that are bad. 

But supposing that it were possible to organise a system 
which should prevent all poor persons, except the really 
deserving, from participating in the parish funds, still its 
operation would, it is affirmed, be most objectionable. We 
are desired to remember that no man loves exertion and 
industry for their own sakes ; that every one has some end 
or object in view, the accomplishment of which is to repay 
the toils and privations to which he submits in bringing it 
about ; that the desire to provide subsistence, and to amass 
a little capital for the support of old age and infirmity, are 
the principal motives that impel the great body of mankind 
to industry and economy ; and that whatever tends, like 
the establishment of a poor's rate, to weaken or rather to 
destroy these motives — whatever tends to make a man trust 
to others instead of himself must, in so far, paralyse his 
exertions, and render him less industrious and economical. 
" Languescet industrla, intendetur socordia, si nullus ex se 
metus aut spes, et securi omnes aliena suhsidia expectahunt, 
sibi ignati^ nobis gravest ^ 

But, though apparently formidable, it will be found, on 
a little examination, that the objections to a compulsory 
provision for the support of the able-bodied poor are not 
really entitled to much weight. And though they were, 
no one acquainted, in any degree, with the perilous situa- 
tion in which a large portion of the population of England 
is placed, can doubt that here, at least, such provision is alto- 
gether indispensable. Without it the peace of society could 
not be preserved; and those who possess property would, 
every now and then, have to defend it, at the point of the 
sword, against the attacks of myriads of paupers, impelled 
by necessity, and made desperate by despair. Under sucli 
circumstances, it is fortunate that the inconveniences sup- 
> Taciti " Annal." lib. ii. cap. 38. 


posed to be inherent in the principle of compulsory provi- 
sion may be obviated by regulations in respect to its man- 
agement, and that its advantages may be secured without 
any material alloy. 

A statutory provision, for all who cannot support them- 
selves, has been established in this country for nearly two 
hundred and fifty years ; and we are bound to avail ourselves 
of this experience, and to decide with respect to its effects, 
not upon theoretical grounds, or conclusions drawn from 
imaffinino; what the conduct of the labouring class will be 
when they have a recognised claim to public support in 
seasons of difficulty, but by looking to what that conduct 
really has been during this lengthened period of probation. 
Now the fact is, that there was no considerable increase 
of pauper population in England from the period when the 
poor laws were established down to the middle of last century; 
and it is alleged, that its recent increase has been wholly 
owing to the prodigious extension of manufactures and com- 
merce, and has not exceeded its increase in Scotland, where 
the system of compulsory provision has made very little pro- 
gress. It is farther affirmed, that the labouring population 
of England have never discovered anv want of forethousrht 
and consideration ; that in bygone times they were eminent- 
ly distinguished for these virtues ; and that, notwithstand- 
ing the unfavourable influence of the rise of prices, and 
the revulsions of industry, since the commencement 
of the late war, they will still bear an advantageous com- 
parison in these respects with the people of any other 
country : and, in proof of this, we are referred to returns 
obtained under authority of the House of Commons, which 
show that in 1815 there were no fewer than 925,439 indi- 
viduals in England and Wales, being about one-eleventh 
part of the then existing population, members of friendly 
societies, formed for the express purpose of aflbrding protec- 
tion to the members during sickness and old age, and 
enabling them to subsist without resorting to the parish 
funds ; and that the sums deposited by individuals, exclu- 


sive of those deposited by charitable and friendly societies, 
in savings' banks amounted, in England and Wales, on 
the 20th November 1844, to .£'2:3,987,719. It is alleged, 
that no such unquestionable proofs of the prevalence of a 
spirit of providence and independence are exhibited in any 
other European country. If the poor have in some dis- 
tricts become degraded, this, it is affirmed, has not been 
owing to the poor laws, but to extrinsic and adventitious 
causes, such as an increased dependence on the potato, and 
an excessive influx of paupers from Ireland, a country 
where, till very recently, there were no poor laws ; and the 
condition of which affords, it is said, a decisive proof of 
the fallacy of the complaints of their injurious operation. 

Independently, too, of these considerations, the circum- 
stance of a legal provision existing for their support, by 
binding the poor to the state, and giving them, as it has 
been termed, a staJce in the hedge, interests them in the 
public tranquillity, and inspires them with an attachment 
to their country and its institutions, which they could 
not otherwise feel. In densely -peopled manufacturing- 
districts, where the poor have nothing but their wages to 
depend upon, and where hardly one in a hundred can reason- 
ably hope to attain to a more elevated situation, the poor 
laws are their only security against falling a sacrifice to 
absolute want. They constitute a bulwark raised by the 
state to protect its subjects from famine and despair ; and 
Avhile they support them in seasons of calamity, and prevent 
their being driven to excesses ruinous alike to them- 
selves and others,' they do not degrade them by making them 
depend on what is often the grudging and stunted charity 
of others. A wise statesman will pause before attempting 

1 It was stated in the debates in the House of Commons on the corn laws, 
in 1 84 G, that Mr Canning had, more than once, expressed his conviction tliat 
the poor laws had preserved this country from revolution. And though this 
may, perhaps, be ascribing too great an influence to them, there can be no 
manner of doubt that they have, on various occasions, preserved it from 
being a theatre of outrage, crime, and disorder. 

4r)G rooR LAWS. 

to pull down so venerable and so useful an institution ; and 
will prefer exerting himself to repair the defects that have 
been discovered in its structure, and to make it effectual to 
its truly benevolent object of aflfording an asylum to the 
really necessitous, without at the same time becoming an 
incentive to sloth and improvidence. 

Such, in a few words, is the substance of the statements 
that have been or may be put forth by the apologists of the 
poor laws ; and it is impossible to deny that they are well 
founded. From the period (1601) when the act of the 
43d of Elizabeth, the foundation of the existing poor 
laws, was promulgated, to the commencement of the late 
war, there was scarcely any increase of pauperism ; and few 
or none of those pernicious consequences had resulted from 
their operation which we might suppose, looking only to 
some of the principles they involve, they must have neces- 
sarily produced. This apparent anomaly, may, however, 
be satisfactorily explained. A compulsory provision for 
the support of the poor would, undoubtedly, have the effects 
commonly ascribed to it, unless it ivere accom'panied by some 
very powerful countertailmg checks. But a very little con- 
sideration will show that the establishment of such provision 
can hardly, unless some formidable barrier be thrown in 
the way, fail of speedily producing these checks. The error 
into which the opponents of the poor laws have universally 
fallen, does not consist so much in their having made any 
false estimate of their operation on the labouring classes, 
as in their having fixed their attention exclusively on it, 
without adverting to their operation on others. It is plain, 
however, that the rates affect the payers as well as the re- 
ceivers ; and that no sound conclusion can be drawn as to 
their real operation, without looking carefully at the circum- 
stances under which both parties are placed, and at the con- 
duct which they respectively follow.^ If the object of the 

' Public attention was, we believe, firat directed to this view of the sub- 
ject by Mr Black, the late learned and able editor of the " Morning Chronicle." 


one party be, speaking generally, to increase the rates to 
the highest limit, that of the other is to sink them to the 
lowest ; and it not un frequently happens that the latter is 
the more powerful of the two. The act of the 43d of 
Elizabeth laid the burden of providing for the poor on the 
landlords and tenants of the country ; but (unlike the new 
poor law) it wisely left them to administer that relief in the 
way they thought best ; and it stimulated them to take 
measures to check the growth of a pauper population, 
which not only prevented it from increasing in an unnatural 
proportion, but which, there are good grounds for thinking, 
confined it within decidedly narrower limits than it would 
have attained had the poor laws not been in existence. 

The truth is, that the act of the 43d of Elizabeth has 
not been bond fide carried into execution. The act says, 
that employment and subsistence shall be found for all 
who are unable to find them for themselves. But those 
who had the interpretation of the act were long in the 
habit, when they suspected fraud and imposture, of tender- 
ing relief in workhouses ; and there are very many needy 
persons who would be eager to claim assistance from the 
public, if it could be obtained without any extraordinary 
sacrifice, who would yet reject it when coupled with the 
condition of imprisonment in workhouses, and of submitting 
to the rules enforced in such establishments. 

In 1723 the workhouse system was placed on a greatly 
improved footing by the act 9 Geo. I., cap, 7, which autho- 
rised parishes to unite for building workhouses, and also 
gave them power, if they saw cause, to refuse relief except 
in a workhouse. This act formed, during the next half 
century, a principal bulwark against the progress of pauper- 
ism. It is stated by Sir F. M. Eden, that when workhouses 
began to be generally erected, after the above-mentioned 
act, great numbers of persons, who had previously received 
a pension from the parish, preferred depending on their own 
exertions, rather than take up their abode in them ; and 
the aversion of the poor to these establishments was so 


great, that we are told, by the same excellent authority, of 
some whose humanity seems to have exceeded their good 
sense, proposing, by way of weakening this aversion, '■Ho call 
u'orkhouses by some softer' and more inoffensive name.'''' ' 

But of all the circumstances which have contributed to 
retard the growth of pauperism in England, the most power- 
ful, perhaps, has been, that the system of compulsory pro- 
vision made their opposition to the too rapid increase of the 
labouring population the obvious policy of the landlords 
and occupiers of land. They saw that if, by the erection of 
cottages, the splitting of farms, or otherwise, the population 
upon their estates or occupancies was augmented unneces- 
sarily, they would, through the operation of the poor laws, 
be burdened with the support of all who, from old age, sick- 
ness, want of employment, or other cause, might, at any 
future period, be unable to provide for themselves. The 
wish to avoid incurring such an indefinite responsibility, not 
only made landlords and farmers cautious about admitting 
new settlers upon their estates and farms, but it farther 
stimulated them to take visrorous measures for diminishing 
the population, wherever the demand for labour was not 
pretty brisk and constant. The complicated system of laws 
with respect to settlements owed its origin to this principle ; 
and, until relaxed, it opposed a formidable barrier to the in- 
crease of population. There is, indeed, great reason to 
doubt whether the rural population of England was not 
rather diminished than increased in the interval between 
the Revolution and 1770. And it is to the operation 
of the poor laws, more than to any thing else, that we 
find so few small occupancies in England, and that she 
has been saved from that excessive subdivision of the 
land that has been, and eV, the curse of Ireland. Con- 
sidering, indeed, the high rents that cottagers will offer 
for slips of land, and the circumstance that the law of 
England, by granting the elective franchise to all persons 

' "State of the Toor," vol. i. p. 28o. 

rOOR LAWS. 459 

possessed of a cottage and a piece of laud valued at 40s. 
a-year, gave a strong stimulus to the increase of cottages, 
we must be satisfied that it required some powerful counter- 
vailing principle to render their multiplication so inconsider- 
able. Political influence is as dear to an English as to an 
Irish gentleman ; but the former, had he manufactured 
voters by the hundred or the thousand, would have made 
himself directly responsible for their maintenance ; and he 
has been, consequently, determined by a motive which had 
no influence over the latter, to abstain from so ruinous a 
practice. Most landlords early saw the consequences that 
would in the end result, unless they adopted the necessary 
precautions, from their being bound to provide for the 
settlers on their estates who, through misfortune or mis- 
conduct, could not provide for themselves ; and since 
they could not subvert the principle of the compulsory 
system, they exerted themselves to prevent its abuse, by 
adopting every device for checking the undue increase of 
population, and by administering relief in such a mode as 
might hinder any but the really indigent from having re- 
course to it. 

The truth is, that down to 1795 it was not said that the 
poor laws had increased population and lowered wages, but 
that they had diminished it and raised wages. A host of 
authorities, some of which are referi'ed to below, ^ might be 
quoted in proof of this statement, and explanatory of the 
means by which so singular a result was brouglit about ; 
but the following passage from Young's " Farmer's Letters" 
will probably be deemed sufiicient. 

" The law of settlement,'''' says Young, " is attended with 
nearly as many ill consequences as that of maintenance. 

^ "Britannia Languens, or a Discourse of Trade," &c., p. 155. Lond. 
]()80. Alcock's " Observations on the Effects of the Poor Laws," pp. 19,20. 
Loud. 1752. Burn's "History of the Poor Laws," p. 211. Lond. 1764. 
Arthur Young's work, quoted in the text. Brown's " Agricultural Survey 
of the West Riding of Yorkshire," p. 1 .3. Lond. 1793, &c. Debates in the 
House of Commons, 28th April, 1773. 

4()() POOR LAWS. 

I have said enough to prove of how great importance our 
labouring poor are to the public welfare : the strength of 
the state lies in their numbers ; but the prodigious restric- 
tions thrown on their settlements tend strongly to prevent 
an increase. One great inducement to marriage is the find- 
ing, without difficulty, a comfortable habitation ; and another, 
nearly as material, when such requisite is found, to be able 
to exercise in it whatever business a man has been educated 
to or brought up in. The first of these points is no easy 
matter to be accomplished ; for it is too much the interest 
of a parish, both landlords and tenants, to decrease the 
cottages in it, and, above all, to prevent their increase, so 
that, in process of time, habitations are extremely difficult 
to be procured. There is no parish but had much rather 
that its young labourers would continue single : in that 
state they are not in danger of becoming chargeable, but 
when married the case alters ; all obstructions are, therefore, 
thrown in the way of their marrying ; and none more im- 
mediately than that of rendering it as difficult as possible 
for the men, when married, to procure a house to live in ; 
and this conduct is found so conducive to easing the rates, 
that it universally gives rise to an open war against cottages. 
How often do gentlemen who have possessions in a parish, 
when cottages come to sale, purchase them, and immediately 
raze them to the foundation, that they may never become 
the nests, as they are called, of beggars'' brats I by which 
means their tenants are not so burdened in tlieir rates, and 
their farms let better ; for the rates are considered as much 
by tenants as the rent. In this manner cottages are the 
perpetual objects of jealousy, the young inhabitants are 
prevented from marrying, and population is obstructed." ' 

It may perhaps be said, had the poor laws never existed 
— had they not tempted the poor to place a deceitful trust 
in parish assistance — their natural sagacity would have 
led them to act with prudence and consideration, and pre- 

1 " Farmer's Lettevs to the Teople of Eiiglaud," 3d ed. vol. i. pp. 300-302. 


vented the multiplication of their numbers be3^ontl the 
demand. That such would have been, in some measure, the 
case, is perhaps true ; though, considering the state of depres- 
sion in which the poor have usually been involved, and their 
total ignorance of the most efficient causes of poverty, there 
are but slender orounds for thiukiu"- that the influence of the 
prudential check would have been very sensibly felt. A man 
must be in what is called a comfortable situation before he 
is likely to be much influenced by prospective considerations. 
The pressure of actual, not the fear of future want, is the 
great incentive to the industry of the poor. Those who 
have speculated upon the operation of the poor laws over 
the prudential virtues, have usually belonged to the upper 
classes, and have supposed that the lower classes are 
actuated by the same motives that actuate those to whom 
they belong. But the circumstances under which these 
classes are placed are so very different, that, in questions of 
this sort, it is exceedingly difficult to draw any accurate con- 
clusion in regard to the conduct of the one, from observa- 
tions made upon the conduct of the other. A man who is 
in easy circumstances, must, if he would not lose caste, and 
secure a continuance of the advantages which he enjoys, 
exercise a certain degree of prudence ; but those who 
possess few comforts, who are near the extreme verge of 
society, and have but little to lose, do not act under any 
such serious responsibility. A want of caution, and a reck- 
lessness of consequences, are in their case productive of 
comparatively little injury, and are less guarded against. 
The widest experience proves that this is the case. The 
lower we descend in the scale of society, the less considera- 
tion and forethought do we find to prevail. When we either 
compare difl"ereut classes in the same country, or in different 
countries, we invariably find that poverty is never so little 
dreaded as by those who are most likely to become its victims. 
The nearer they approach it, the less is it feared by them. 
And that generally numerous class who are already so low 
that they can fall no lower, scruple not to plunge into excesses 


that would be shunned by others, and often indulge in 
i>ratifications productive of the most injurious consequences. 

On the whole, therefore, there seems little reason for 
thinking that the fear of being left destitute in old age, had 
a compulsory provision not existed, would have operated 
with any thing like the same force, in deterring the lower 
classes from entering into improvident unions, as the for- 
midable restraints that grew out of the poor laws, "A 
labouring man in his youth," it has been justly observed, 
"is not disposed to look forward to the decline of life, but 
listens to the impulses of passion. He sees the picture 
through the deceitful mirror which his inclinations hold up 
to him. Hence those restraints which persons of property, 
interested in keeping down poor rates, will infallibly impose 
upon him, are far more likely to be efficacious than those 
which he will impose on himself." 

It may be inferred, from the statements of contemporary 
writers, that the poor's rates amounted to about a million 
at the commencement of last century.^ In 1776 they 
amounted, according to the official returns, to =£'1,720,3] 6 ; 
and at an average of the years 1783, 1784, and 1785, being 
those immediately subsequent to the American war, they 
amounted to ^£'2,167, 748. This, when we consider the rise 
in the price of food, the great increase of population, and the 
distressed situation of the country at the termination of a 
disastrous contest, if it be really an increase, is certainly a 
very small one, and shows that the checks that had grown 
out of the system were quite sufficient to hinder the growth 
of factitious pauperism. 

But notwithstanding; the unanswerable evidence that was 
thus afforded of the advantageous working of the old system, 
some of its strongest bulwarks were unfortunately removed 
in the interval between 1782 and 1795, and a door was 
consequently opened for the growth of abuses under which 
the country still sufters. At the first of the epochs now 
referred to, the act (commonly called Gilbert's Act from the 
' Sir F. M. Eden on the "State of the Poor," vol. i. p. 408. 


n<ame of its author) 22 Geo. III., cap. 83, repealed the salu- 
tary statute of 1723, authorising parishes, if they thought 
fit, to refuse relief except in workhouses ; and enacted, that 
in future no able-bodied paupers should be obliged to resort 
to those establishments, but that work should be provided 
for them at or near their own houses ! This throwing down 
of one of the principal barriers that had hitherto prevented 
the growth of factitious pauperism, could hardly have failed, 
under any circumstances, to be in the end productive of 
the worst consequences ; but its injurious operation was 
accelerated by accidental occurrences, and by the folly of the 

The price of corn, which, at a medium of the three years 
ending with 1794, averaged 48s. 2d., rose, in 1795, to 75s. 
2d. As wages continued stationary at their former eleva- 
tion, the distress of the poor was very great ; and many 
able-bodied labourers, who had rarely before applied for 
parish assistance, became claimants for relief. Instead of 
meeting this emergency, as it should have been met, by 
temporary expedients, and grants of relief proportioned to 
the exigency of each case, a uniform system was adopted.^ 
The magistrates of Berks, and some other southern counties, 
issued tables, showing the wages which, as they affirmed, 
every labouring man should receive, according to the number 
of his family, and the price of bread ; and they accompanied 
these tables with an order directing the parish officers to 
make up the deficit to the labourer, in the event of his wages 
falling short of the tabular allowance ! 

As might have been expected, this practice did not cease 
with the temporary circumstances which gave it birth, but 
continued to be acted upon down to the passing of the Poor 
Law Amendment Act. It was, in fact, very generally 
established in the southern half of England, in large districts 
of which there were no longer any independent labourers to 
be found ; and produced an extent of artificial pauperism, 
and moral degradation, that could hardly have been con- 
ceived possible. 


Under these circumstances, the necessity of making- a 
vigorous eftbrt for the extirpation of the abuses that had 
been ingrafted on the system of compulsory provision, be- 
came obvious ; and the previous statements show that the 
desired reform might have been brought about with but 
little difficulty. No doubt it is always unsafe, in matters 
of this sort, to trust wholly to general principles, how well 
soever they may appear to be established. But, in this 
case, we had the safe and solid ground of a lengthened 
experience, Avhence to conclude that the abuses, of which 
we have briefly traced the growth, might have been 
extirpated, by reverting to the system which obtained pre- 
viously to their origin, or to 1782 ; the efficacy of which 
might also, it is generally admitted, have been very greatly 
increased by amending the constitution of vestries, so as to 
give their due influence to people of property, and by 
lessening or suppressing the interference of the Justices of 
Peace. Nothing, in fact, is ever required to insure the 
economical administration of a compulsory provision for the 
poor, beyond vesting its management in the hands of those 
by whom it must be wholly or principally paid. We may 
be quite sure that, if this be done, relief will be furnished 
with the greatest economy. Those who have to be generous 
at their own expense, are usually models of circumspection, 
and have seldom, indeed, injured their fortunes by their 
liberality to the unfortunate. In this, as in most other 
tilings, we may safely trust to the judgment and interest of 
individuals. In Scotland, where this system has been long 
established, the complaint is, not that the poor get too 
much, but that they get too little ; that the funds intended 
for their support are too economically laid out ; that, in 
many cases, relief is altogether withheld from necessitous 
individuals ; and that, when granted, the allowances are 
generally too small. Had the English poor laws been 
amended in the way now suggested, it would have been 
necessary, to prevent the too great reduction of their allow- 
ances, to give the poor a right of appeal, from the parochial 


authorities, to some easily accessible and less interested tri- 
bunal. Under the supposed circumstances this would have 
been the only danger to provide against. 

But Diis aliter visum! Any thing so simple as this, so con- 
sistent with experience and the plainest principles, did not 
suit the taste of the day, or the prevalent rage for innovation. 
In 1832 a Commission was appointed to inquire into the 
operation and administration of the laws for the relief of the 
poor ; and the commissiouers-in-chief employed a number 
of sub-commissioners, who proceeded to different parts of 
the country to collect information. The reports of these 
functionaries, and the evidence taken before them, fill 
several folio volumes ; and contain a curious medley of 
authentic, questionable, and erroneous statements. The 
commissioners, with but few exceptions, appear to have set 
out with a determination to find nothing but abuses in the 
old poor law, and to make the most of thera ; and this, after 
all, was only what might have been expected, seeing that 
it was the most likely way to efiect its abolition, and to 
secure employment for themselves, under the system pro- 
posed to be adopted in its stead. Hence the exaggeration, 
partiality, and quackery so glaringly evident in most of 
their reports. But, such as they were, they became the 
foundation of, or rather the pretext for, a measure of the 
most sweeping description, by which, with few exceptions, 
every vestige of the old system for managing the affairs of 
the poor was wholly abolished. It is, however, much easier 
to subvert what is established than to construct any thing- 
better in its stead; and the statute 4 and 5 Will. IV. 
c. 76, commonly called the Poor Law Amendment Act, is 
a striking example of this ; no statute ever having been 
passed more contradictory of the best established principles, 
or more productive of mischievous results. 

Down to this period, it had been generally supposed that 
individuals would take better care of their estates and inter- 
ests than any one else, and that those could nowhere be so 
safe as in their own keeping. But the Poor Law Amend- 


4()(; POOR LAWS. 

ment Act is bottomed on the assumption, that a regard 
to self-interest is not a principle on which any stress can 
safely be laid ; and that the interests of individuals will be 
best protected by salaried officers appointed by government, 
and responsible to it only ! To carry this principle, if we 
may so call it, into effect, in the administration of the poor 
laws, a Central Board of three commissioners was estab- 
lished in London, empowered to control and direct parishes 
and unions (collections of different parishes) in the mode of 
relieving the wants of the poor. For this purpose the com- 
missioners were authorised to decide upon the kind and 
amount of pauper relief; to issue rules and regulations with 
respect to the treatment of the poor, which all inferior offi- 
cers are bound to obey ; to determine in regard to the 
erection and government of workhouses, and the education 
of parish children ; to form unions of parishes for the better 
administration of the law, &c. Boards of guardians, con- 
sisting, for the most part, of people of property and respec- 
tability, are chosen in the different unions for superintending 
the workhouses and administering relief. But these func- 
tionaries to whom, from their local knowledge, and their in- 
terest in the proper administration of the rates, much power 
might have been safely conceded, are, in fact, rendered all 
but ciphers : they cannot, however well satisfied of their 
expediency, adopt any rules or modes of relief not sanctioned 
by the Central Board in London ; and are substantially 
mere tools or instruments in the hands of the latter and its 
officers. Justices of the Peace have been properly prohi- 
bited from interfering, in any way, with the rules laid down 
by the Central Board, or with the proceedings of the various 
parties acting under its orders. 

It would be to no purpose to enter into any lengthened 
inquiries with respect to the working of this system. It 
has filled the country with well-founded complaints, and has 
been productive of much irritation and disgust. But what 
else could any rational person anticipate ? Adam Smith 
has said, that it is the highest impertinence in kings and 


ministers to pretend to instruct private people how they 
should employ their capital and industry. But this pre- 
tension, like every other put forward by the advocates of 
the mercantile system, appears to be modesty itself com- 
pared with the pretensions put forward by the authors and 
abettors of the new poor law. They take for granted that 
the country gentlemen, and people of property in England, 
are simpletons, incapable of managing their own affairs; that 
they are wholly unfit to take care of their estates and most 
obvious interests ; and unable to do that which every kirk- 
session in Scotland is admitted to do admirably well ! It 
may be questioned whether, in the whole history of the legisla- 
tion of the least enlightened and most despotically-governed 
nations, any instance can be pointed out in which the rage 
for interference (inflamed no doubt by the scent of the pa- 
tronage it was to bring along with it) has been carried to 
such an extreme, not to say offensive, extent. 

The administration of the act has been, also, very unsuc- 
cessful. Differences of opinion, in regard to some funda- 
mental points, speedily manifested themselves between those 
functionaries who were inclined to proceed cautiously and 
prudently, and those who were inclined to carry out the 
principles of the measure with less regard to circumstances. 
These difierences, having attained to a most unseemly 
height, were at length fully investigated, and brought under 
the notice of the public, by a committee of the House of 
Commons, appointed to inquire into alleged abuses in the 
Andover Union. Some of the disclosures made by the com- 
mittee were of a very revolting description ; and, having 
roused the public indignation, led to a reconstruction of 
the Central Board, and to some other changes, effected 
by the act 10 and 11 Vict. c. 109. But though this 
act embodies some improvements, it touches none of the 
principles on which the Poor Law Amendment Act was 
founded. We therefore anticipate little advantage from its 
being enacted. It is probable, indeed, that the functionaries 
employed under it, profiting by the errors of their prede- 

4(j8 POOR LAWS. 

cessors, will act with greater discretion, and defer more to 
public opinion ; but all the really objectionable parts of the 
system continue unchanged. 

Among other consequences, the Poor Law Amendment 
Act may be truly said to have given birth to a new political 
power of the most dangerous description. Previously to its 
being passed, the management of the poor belonging to the 
different parishes was the private affair of the parties resi- 
dent in them, and interested no one else ; so that, if the poor 
of a particular parish felt themselves aggrieved, they had 
nothing for it but to appeal to the parochial authorities, or 
to the courts, for redress. But the present state of things 
is totally different. The poor, no doubt, are distributed over 
different unions ; but these being all subject to similar 
rules and regulations, enforced by government agents, 
the interests of the poor in them, and in the kingdom gene- 
rally, have been substantially identified. Instead of the 
authorities, in any single parish, having to deal with some 
twenty or fifty paupers, the Central Board, or rather 
the government, by whose orders it is directed, has to 
deal with all the paupers in the kingdom. It has made 
itself their dry-nurse and foster-mother ; is responsible for 
every real or fancied abuse that may any where exist in 
their treatment, and must stoop to interfere in every work- 
house squabble ! Can the mischievous consequences of 
such a state of things be exaggerated ? Had the framers 
of the measure wished to bring government into contempt, 
by loading it with impracticable and odious duties, they 
could not have adopted any course more likely to be success- 
ful. People of property on the spot, acquainted with the 
peculiar circumstances of every case, and interested in the 
judicious and economical treatment of the poor on their 
estates and in their neighbourhood, are the only parties to 
whom the administration of workhouses, and of the public 
charity, can be safely intrusted. Government and its agents 
are as completely unfit for any such duty, as they are for 
managing the private affairs of individuals. In a country 


like England, with an immense manufacturing population 
exposed to the greatest vicissitudes, could any one imagine 
that the agents of the Central Board would be permitted, 
in periods of difficulty, to carry its repulsive theories into 
etiect ? The suppression of out-door relief was announced 
as one of the grand objects of the new law ; and this was 
to be effected by making workhouses " tests of destitution,"" 
and refusing assistance to all who did not choose to accept 
it in thein. But it admits of demonstration that relief 
may, in very many cases, be more economically aflorded 
otherwise than in workhouses ; and, in such cases, where is 
the advantage of compelling really necessitous parties to 
resort to them i Waiving, however, all considerations of 
this sort, and admitting that the rule now referred to might 
be enforced in thinly-peopled country parishes, what sane 
person could suppose that this could be so much as attempted 
in populous towns, in seasons of commercial or manufacturing 
distress ? Any government that should have endeavoured 
to carry such a regulation into effect, under such circum- 
stances, would have been overthrown in six weeks. The 
truth of this statement was, indeed, admitted by the 
warmest advocates of the new system, who boasted, during 
the discussions in 1844, on the Act 7 and 8 Vict. c. 101, 
for amending the poor laws, that relief was every where 
administered, to a vast extent, out of workhouses, and that 
it never had been intended it should be otherwise ! And 
such is uniformly the case when attempts are made to enforce 
impracticable regulations. The moment any difficulty arises, 
we hear little or nothing of the " stern path of duty ;" but, 
on the contrary, are told that, tempori cedere, id est necessi- 
tati parere, semper sapientis est habitum. And, when once 
begun, occasions for fresh relaxations are never wanting. 
The new poor law could not be, and has not been, honestly 
acted upon. Ng_. go.vernment will incur the odium of 
seriously attempting to carry out its provisions. In such 
matters, present convenience is sure to outweigh every 
other consideration. It is not often that we have a 


Timoleon at the head of the home department ; and we 
may be pretty well assured that this, like every similar 
project attempted to be carried into etiect by salaried agents, 
in the teeth of public opinion, will terminate by being made 
a screen for all sorts of jobbing and mal-practices. 

The smaller, speaking generally, the divisions into which 
a country is parcelled, and the more directly the burden of 
providing for the poor is brought home to the door of those 
upon whom it must fall, the greater will be the security 
against the mismanagement of the rates, and the less room 
will there be for imposture, menace, and cabal, on the part 
of the poor. But the authors of the new poor laws treat 
such considerations with contempt ! They say, in eflect, it 
matters not how well the affairs of the poor in one parish 
may have been administered, or how badly they may have 
been administered in another ; we shall combine these and 
a dozen more parishes into the same union, and subject them 
to the same rates and mode of management ! This is taking 
away, in as far as can be done, every motive to the prudent 
and economical treatment of the poor by parishes and in- 
dividuals, who are no longer to profit by it, and giving 
a corresponding encouragement to abuse. Under the old 
system, parishes might, if they thought it would be for 
their interest, join together, and erect workhouses, managing 
their poor in common. But it was reserved for the legis- 
lators of the nineteenth century, who pique themselves upon 
their devotion to free principles, to make such junctions 
imperative — to force ill-omened unions between well-managed 
and badly managed parishes, between prudence and folly, 
economy and waste ! 

It has been said that, without the supervision of a Central 
Board, it would be impossible to introduce any sort of uni- 
formity into the treatment of the poor ; and this, perhaps, 
is true. But why should there be any uniformity ? Any 
one who reflects for a moment on the subject, must see that 
the treatment of the poor should vary in dift'erent parishes 
and parts of the countr^^ and that it would be the climax 

rOOR LAWS. 471 

of folly to treat the poor of a manufacturing and of an agri- 
cultural district in the same way. Why should it not be 
left to those who pay the rates, and are, consequently, 
most interested in their proper outlay, to decide upon the 
best means of maintaining the poor ? It is, if any thing 
can be, an insult to common sense to pretend that any 
three, or any three hundred individuals, resident in London, 
should be able to instruct private parties resident in the 
different parishes of England, how the poor in them may 
be best and most economically provided for ! 

It is needless to inquire into the abstract merit of the 
various rules and regulations framed by the Central Board ; 
though it seems rather difficult to discover the wisdom or 
possible utility of the greater number. But the treatment of 
the poor is, obviously, a matter in which the most carefully 
drawn up general rules can, speaking generally, be of little 
or no service : it is one in which we have to deal with con- 
flicting interests and opinions, conflicting and perpetually 
varying circumstances, in which expediency must be allowed 
quite as much weight as right or principle, a)id in which 
most cases have something peculiar. And, such being the 
fact, can there be a doubt that all attempts to apply the same 
rules to so many different and opposite interests and cases 
are fraught with gross injustice and extreme danger? 

It is sometimes said, by way of apology for the new 
system, that, under its influence, the rates have been 
materially reduced, and that, therefore, it must at least be in 
so far advantageous. While, however, we admit the fact, we 
deny the inference. All changes in