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 THE UNIVERSITY 
 OF ILLINOIS 
 LIBRARY
 
 PRACTICAL 
 OBSERVATIONS 
 
 ON 
 
 Mr. RICARDO's 
 
 PRINCIPLES 
 
 OP 
 
 POLITICAL ECONOMY AND TAXATION. 
 
 BY 
 
 JOHN STUCKEY REYNOLDS, ESQ, 
 
 " In the case of Corn, the average quantity is sufficient for the supply of erery 
 indindual — all beyond that, is an absolute depression of the market for 
 a great length of time." 
 
 Tooke's evidence before the Agricidtural Committee, 1821, p. 240. 
 
 LONDON: 
 
 PRINTED FOR 
 
 LONGMAN, HURST, REES, ORME, AND BROWN, 
 
 PATERNOSTER-ROW. 
 
 
 1822."
 
 LoKSOK : 
 
 Printed by A. & R. Spottiswoode^ 
 
 New>Street-Square.
 
 CONTENTS. 
 
 CHAP.I. WAGES. ^'^' 
 
 Sect. 1. On Mr. Ricardo's opinion that a rise in 
 wages does not increase the price of 
 commodities - - - 1 
 
 2. On Mr. Ricardo's opinion as to the 
 manner in which a rise of wages 
 affects the profits of fixed capital - 18 
 
 II. ON PROFITS. 
 
 Sect. 1. On Mr. Ricardo's opinion as to the 
 manner in which profits are affected 
 by a rise of wages - - - 22 
 
 2. On Mr. Ricardo's opinion as to the 
 causes which regulate profits 
 
 m. RENT 
 
 IV. TAXES. 
 
 Sect. 1. - - - 
 
 2. Tax on wages 
 
 3. Tax on profits - - _ 
 
 4. Tax on rent - . _ 
 
 5. Taxes on luxuries, &c. 
 
 6. On the effect of taxes on circulation 
 
 7. On the general effects of taxes 
 
 V. NATIONAL DEBT 
 VI. CONCLUSION 
 
 Postcript 
 
 - 35 
 
 - 43 
 
 - 46 
 
 - 56 
 
 - 59 
 
 - 62 
 
 - 64 
 66 
 
 - 70 
 
 - 74 
 
 - 84 
 
 - 97
 
 CHAPTER I 
 
 WAGES. 
 
 SECTION I. 
 
 Ov Mr. Ricardo's opinion that a rise in "wages does not 
 ijicrease the j^^'ice of commodities. 
 
 In the following extracts, Mr. Ricardo has clearly 
 defined the nature of wages : 
 
 Page 86.* — " Labour, like all other things which are 
 " purchased and sold, and which may be increased or di- 
 " minished in quantity, has its natural and its market price. 
 " The natural price of labour, is that price which is neces- 
 " sary to enable the labourers one with another to subsist, 
 *' and to perpetuate their race without either increase or 
 " diminution." 
 
 " The power of the labourer to support hiniselfj and the 
 " family which may be necessary to keep up the number of 
 " labourers, does not depend on the (juantity of money 
 *' which he may receive for wages, but on the quantity of 
 ** fond, necessaries, and conveniences become essential to 
 
 * This and the folluwiiv^ extracts ure made from tlie third 
 edition. 
 
 B
 
 .'2 WAGES. LCHAP. I. 
 
 " him from habit, which that money will purchase. The 
 *' natural price of labour therefore depends on the price of 
 "the food, necessaries, and conveniences required for the 
 '^ support of the labourer and his family; with a rise in the 
 " price of food and necessaries, the natural price of labour 
 <* will rise ; with the fall in their price, the natural price of 
 " labour will fall." 
 
 Page 87. — " The market price of labour, is the price 
 " which is really paid for it, from the natural operation of 
 *' the proportion of the supply to the demand; labour is dear 
 " when it is scarce, and cheap when it is plentiful. How- 
 " ever much the market price of labour may deviate from 
 " its natural price, it has, like commodities, a tendency to 
 " conform to it." 
 
 " It is when the market price of labour exceeds itsnatural 
 '-' price that the condition of the labourer is flourishing and 
 " happy, that he has it in his power to command a greater 
 *' proportion of the necessaries and enjoyments of life, and 
 " therefore to rear a healthy and numerous family ; when, 
 " however, by the encouragement which high wages give to 
 " the increase of population, the number of labourers is 
 "increased, wages again fall to their natural price, and 
 " indeed from a re-action sometimes fall below it." 
 
 Page 88. — " When the market-price of labour is below its 
 " natural price, the condition ofthelabourers is most wretch- 
 " ed ; then poverty deprives them of those comforts which 
 " custom renders absolute necessaries. It is only after their 
 " privations have reduced their number, or the demand for 
 " labour has increased, that the market price of labour will 
 " rise to its natural price, and that the labourer will have 
 " the moderate comforts which the natural rate of wages 
 <' will afford."
 
 SECT. I.] WAGES. S 
 
 Mr. Ricardo proceeds — 
 
 Pnge 100. — ^' When wages rise, it is genenilly because 
 " the increase of wealth and capital have occasioned a new 
 ^' demand for labour, which will infallibly be attended 
 *' with an increased production of commodities. To cir- 
 *' culate these additional commodities, even at the same 
 " prices as before, more money is required, more of this 
 " foreign commodity from which money is made, and which 
 " can only be obtained by importation. 
 
 " Whenever a commodity is required in greater abun- 
 " dance than before, its relative value rises comparatively 
 " with those commodities with which its purchase is 
 " made. 
 
 " If more hats were wanted, their price would rise, and 
 " more gold would be given for them. If more gold were 
 " required, gold would rise, and hats would fall in price, as 
 " a greater quantity of hats and of all other things would 
 " then be necessary to purchase the same quantity of gold. 
 *< But in the case supposed, to say that commodities will 
 " rise because wages rise,, is to affirm a positive contradic- 
 " tion, for we first say, that gold will rise in reh\five value 
 " in consequence of demand ; and secondly, that it will fall 
 " in relative value, because prices will rise, two cflfeclswhieh 
 '•' are totally incompatible with each other. 
 
 " To say that commodities are raised in price, is the 
 •' same thing as to say that money is lowered in relative 
 *' value, for it is b}' commodities that the relative value of 
 " fTold is estimated. II" then all commodities rose in price, 
 •^ gold could not come from abroad to purchase those dear 
 " commodities; but it would go from home to be employed 
 '' with advantage in purchasing tlic comparatively cheaper
 
 4} WAGES. [chap. I. 
 
 *' foreign commodities. It appears then, that the rise of 
 ** wages will not raise the prices of commodities, whether the 
 " metal from which money is made be produced at home 
 '* or in a foreign country. All commodities cannot rise at 
 '* the same time without an addition to the quantity of 
 " money. This addition could not be obtained at home, 
 *' as we have already shewn ; nor could it be imported from 
 '' abroad. To purchase any additional quantity of gold from 
 " abroad, commodities at homemust be cheap, not d^ar. The 
 " importation of gold, and a rise in the price of all home- 
 " made commodities, with which gold is purchased or paid 
 " for, are effects absolutely incompatible. The extensive 
 " use of paper money does not alter this question, for paper 
 *' money conforms, or ought to conform to the value of 
 " gold, and therefore its value is influenced by such causes 
 " only as influence the value of that metal." 
 
 A similar theory, as to the relative value of gold 
 and commodities, is advanced at greater length in 
 the following extract, and, more or less, pervades 
 the whole of Mr. Ricardo*s work : — 
 
 Page 186. — " In the first place, corn and all other 
 *' home-made commodities, could not be materially raised 
 " in price, without an influx of the precious metals, for the 
 *' same quantity of money could not circulate the same 
 " quantity of commodities at high as at low prices, and the 
 " precious metals never could be purchased with dear com- 
 " modities. When more gold is required, it must be ob- 
 *' tained by giving more, and not fewer commodities, in ex- 
 " change for it. Neither could the want of money be sup- 
 *' plied by paper ; for it is not paper that regulates the 
 " value of gold as a commodity, but gold that regulates the 
 " value of paper. Unless, then, the value of gold could be
 
 SECT. I.] WAGES. 5 
 
 " lowered, no paper could be added to the circulation, 
 *' without being depreciated. And that the value of gold 
 " could not be lowered, appears clear when wc consider 
 " that the value of gold as a commodity, must be regu- 
 " lated by the quantity of goods which must be given to 
 ** foreigners in exchange for it. When gold is cheap, com- 
 " modities are dear ; and when gold is dear, commodities 
 *f are cheap, and fall in price. Now, as no cause is shewn 
 " why foreigners should sell their gold cheaper than usual, 
 " it does not appear probable that there would beany influx 
 " of gold. Without such an influx, there can be no in- 
 " crease of quantity, no fall in its value, no rise in thege- 
 *' neral price of goods. 
 
 " The probable effect of a tax on raw produce would be 
 ^' to raise the price of raw produce, and of all commodities 
 " in which raw produce entered, but not in any degree 
 <' proportioned to the tax ; while other commodities in 
 " which no raw produce entered, such as articles made of 
 " the metals and the earths, would fall in price ; so that the 
 *' same quantity of money as before would be adequate to 
 " the whole circulation. 
 
 ** A tax, which should have the effect of raising the price 
 *' of all home productions, would not discourage cxporta- 
 *' tion, except during a very limited time. If they were 
 " raised in price at home, they could not immediately 
 " be profitably exported, because they would be sub- 
 '* ject to a burthen here, from which abroad they were 
 *« free. 
 
 " The tax would produce the same effect as an alteration 
 *' in the value of money, which wns not general and common 
 " to all countries, but confined to a single one. If England 
 ** were that country, she might not be able to sell, but she 
 " would be able to buy, because importable commodities 
 ** would not be raised in price. Under these circumstances 
 II 3
 
 6 WAGES. [chap. I. 
 
 '' nothing bul money could be expoited in return for fo- 
 *' reign commodities; but this is a trade which could not 
 " long continue : a nation cannot be exhausted of its money, 
 " for after a certain quantity has left it, the value of the re- 
 " mainder will rise, and such a price of commodities will 
 " be the consequence, that they will again be capable of 
 " being profitably exported. When money had risen, 
 '^ therefore, we should no longer export it in return for 
 ^' go(xls, but we should export those manufactures which 
 *' had been first raised in price by the rise in the price 
 " of the raw produce from which they were made, and 
 " then again lowered by ihe exportation of money. 
 
 " But it may be objected, that when money so rose in 
 " value, it would rise with respect to foreign as well as home 
 *' commodities, and therefore that all encouragement to 
 *' import foreign goods would cease. Thus, suppose we 
 " imported goods which cost 100^. abroad, and which sold 
 *' for 120Z. here, we should cease to import them when 
 *' the value of money had so risen in England that they 
 " would only sell for 100/. here ; this, however, could never 
 " happen. 
 
 *' The motive which determines us to import a commo- 
 " dity is the discovery of its relative cheapness abroad; it 
 *•■ is the comparison of its price abroad with its price at 
 *' home. If a country exports hats, and imports cloth, it 
 " does so because it can obtain more cloth by making hats 
 " and exchanging them tor cloth, than if it had made the 
 " cloth itself. 
 
 " If the rise of raw produce, occasions any increase cost of 
 " production in making hats, it would occasion also an in- 
 " creased cost in making cloth. If, therefore, both commodi- 
 " ties were made at home, they would both rise. One how- 
 " ever, being a commodity which we import, would not rise.
 
 SECT. I.] WAGKS. 7 
 
 *^ neither would it fall when the value of money rose ; for by 
 " not falling it would regain its natural relation to the ex- 
 " ported commodity. The rise of raw produce makes a 
 " hat rise from 30s. to 33i'. or 10 per cent.; the same cause, 
 " if we manufactured cloth, would make it rise from 20s. to 
 *' 22s. per yard. This rise does not destroy the relation 
 *' between cloth and hats ; a hat was and continues to be 
 " worth one yard and a half of cloth. But if we import cloth, 
 " its price will continue uniformly at 20s. per yard, unaf- 
 " fected first by the fall and then by the rise in the value of 
 " money, whilst hats, which had risen from 30s. to 33s., 
 '• will again fall from 33s. to 30s., at which point the rela- 
 
 tion between cloth and hats will be restored.' 
 
 This theory does not appear to me correct : 
 whether it be so or not, however, I am sure 
 Mr. llicardo will admit its importance deserves 
 discussion. 
 
 To avoid confusion, I shall follow tlie example 
 of Mr. Ricardo, and use the word "gold," instead 
 of gold and silver, or the precious metals, or 
 money.* 
 
 I apprehend, that the natural price or value of a 
 given quantity of gold is regulated by the amount 
 of fixed capital employed, and the value of the 
 necessaries consumed by the labourers during 
 its production and conveyance to market. 
 
 •^ It is, of course, unnecessary to mention my concurrence in 
 Mr. Ricardo's opinion that :i paper circulation can in no respect 
 •liter this question. 
 
 B 4
 
 8 WAGES. [chap. 1. 
 
 The precise value of such given quantity of gold 
 in other countries, will be a given quantity of any 
 other commodity, in the production of which the 
 same amount of fixed capital has been employed, 
 and the same value of necessaries consumed by 
 the labourers, within the same period. 
 
 The natural value of those necessaries in any 
 countiy, depends on the ease or difficulty with 
 which they are produced. This ease or difficulty, 
 however, although it fixes ** natural value," 
 appears to me to be regulated and controlled, 
 with reference to *' exchangeable value," by the 
 portion of the produce of the earth, or perhaps, in 
 better words, of " necessaries" obtained and con- 
 sumed by the labourers. 
 
 In countries where the soil is poor, the exchange- 
 able vahie of corn and other commodities would 
 be high, m reference to gold, because they re- 
 quire fbi- their production a considerable quantity 
 of labour. The portion of produce or necessaries, 
 however, obtained and consumed by the labourers 
 ^is small; in common with all other classes of a 
 community so situated, they suffer fi"om the sterility 
 of the soil. 
 
 On the contrary, in countries where the soil is 
 rich and fertile, exchangeable value would be low 
 in reference to gold ; the labourers, however, obtain 
 and consume a larger share.
 
 SECT. I.] WAGES. 9 
 
 In considering tiie state of different countries, 
 it may be curious to observe the effect, the capa- 
 bihties of the soil have had on their internal reffula- 
 tions, and how far those regulations, and the habits 
 consequent upon situation, have tended to equalize 
 the different gifts of the Almighty. 
 
 In France, natural fertility is in some degree 
 counterbalanced by the comparative idleness of 
 the people ; whilst, in England, habits of in- 
 dustry overcome the disadvantages of climate. 
 
 To return to the subject. A merchant, taking 
 gold from the mines, and requiring corn, would, 
 no doubt, take that gold where the *' exchange- 
 able value" of corn was lowest in reference 
 to gold ; in other words, where his gold exchanged 
 for the largest quantity of corn. If natural circum- 
 stances, however, or the state of society made the 
 exchangeable value of corn low in the country 
 to which the merchant had recourse, it appears to 
 me, the gold so imported would have no efiect in 
 raising that exchangeable value, but would speedily 
 be exported toother countries. If requisite to circu- 
 late commodities, or otherwise, in a country having a 
 poor soil, would it not find its way thither in ex- 
 change for mineral productions, or, in sliort, any 
 commodity of a lower *' exchangeable value" in 
 that country, than in the country where the ** ex- 
 changeable" value of corn was low ? W it did not, 
 would not corn soon be of the same price or 
 " value in gold" throughout the world ?
 
 10 WAGES. [chap. I, 
 
 If, when gold is at its natural value in any coun- 
 try in reference to commodities, fi'om an altered 
 climate, having recourse to worse soils, taxation, 
 or any other cause, the " natural value" of com- 
 modities be increased, there is no doubt the effect 
 would be to call for an influx of the precious metals ; 
 and the ^'market-price,'' or, in other words, the 
 *' exchangeable value" of gold would rise, for a 
 time, according to the principle laid down by Mr. 
 Ricardo in the extract before quoted. 
 
 " Whenever a commodity is required in greater 
 " abundance than before, its relative value rises 
 " comparatively with those commodities with which 
 " its purchase is made." — Page 100. 
 
 I cannot agree with Mr. Ricardo, however, that 
 this rise in the '' market-price'' of gold could coun- 
 teract or keep down the rise in the ''natural value" 
 of commodities. 
 
 To me it appears, that this increased " natural 
 value" would in practice be so far counteracted, 
 either by situation, machinery, or other cause, 
 as to leave many commodities of a lower " natural 
 value" than gold ; and if this were the case, it 
 will be admitted the latter might be profit- 
 ably imported, -ii'l a sufficient supply of gold ob- 
 tained to reduce its market price; and to enable 
 the natural value of commodities to assume their 
 real limit or " natural value" as compared with gold.
 
 SECT. I, J WAGES. I 1 
 
 The commodities not increased in "natural value" 
 would continue to be exported; the capital of the 
 country would go to their manufacture, and be 
 withdrawn from the manufacture of commodities in- 
 creased in natural value, the required supply of the 
 latter being obtained, at a lower rate, from foreign 
 countries. 
 
 If, in the case put by Mr. Ricardo, hats rose from 
 305. to 33s. in the country where "natural value" was 
 increased, I readily admit imported cloth would still 
 remain at 20s. per yard. The merchant exporting 
 cloth, however, took hats in exchange, because their 
 natural value was lower than at home. Suppose the 
 natural value of hats at home to be 3ls. Gd., the mer- 
 chant importing cloth necessarily ceases at once to 
 export hats ; he endeavours to find some article, 
 the natural value of which is lower than in his own 
 country, and such a commodity takes the place 
 of hats. The commercial intercourse between the 
 two countries is consequently altered, not annihi- 
 lated. 
 
 I will admit, however, for the purposes of this im- 
 portant argument, what in practice appears to me 
 impossible — that, for a time, two nations shall be 
 without any commodity not increased (doubled for 
 example) in natural value, that this increase shall 
 take })lace suddenly, and not be in any way coun- 
 terbalanced. 
 
 Suppose a nation so situated, with(nit accu-
 
 1^ WAGES. [chap. I, 
 
 miilated capital, poor from the barrenness of the 
 soil, and the extreme labour of the day producmg 
 barely sufficient to enable the inhabitants to exist — 
 if that barrenness were increased, so as to double the 
 difficulty of producing food, or in other words, " na- 
 tural value," could the same number of persons 
 be any longer maintained ? Could any diminution 
 in the circulation of gold counteract the operations 
 of nature? Or any remedy be found for such 
 an infliction of providence, other than the reduc- 
 tion of the population to the limited numbers the 
 impoverished land would maintain ? 
 
 It does not alter the argument, to suppose the na- 
 tural value of commodities increased by taking a 
 part of them in the shapeof taxes. The remedy, how- 
 ever, would probably be rebellion instead of death. 
 
 Suppose the natural value of the annual productions 
 doubled, in a country where there was considerable 
 accumulated labour, and where unrestrained com- 
 merce was permitted ; it appears to me, according to 
 the most ordinary principles of political economy, the 
 supplies annually required would be obtained from 
 foreign countries. Would individuals employ labour- 
 ers to produce commodities, whose labour was 
 doubled in natural value^ if they could obtain the 
 same commodities produced by labour not so 
 doubled ? 
 
 I cannot but think the accumulated labour 
 and capital of a country so situated, would
 
 SECT. I.] WAGES. 1^^ 
 
 be annihilated with great rapidity ; and that its 
 progress towards poverty could not be arrested 
 until a tax were levied on foreign commodities, so 
 as to double their '* natural value'* to the con- 
 sumer, or the cause of the increased natural value 
 of home commodities were counteracted either by 
 the increased exertion of, or diminished payments 
 to, the labourer. 
 
 The gold in circulation would in the first in- 
 stance increase in " market price," or exchange- 
 able value, and the price of commodities would 
 not apparently rise : on the principles before laid 
 down, however, gold would be brought to exchange 
 for some other species of pre-existing accumulated 
 labour, until a quantity was obtained sufficient to 
 enable the rise in *' natural value" to take effect. 
 
 In the gradual exportation of the actual capital 
 of the rich country, I see no reason to suppose 
 accumulated labour would be preferred in the form 
 of gold, rather than in any other form, nor can I 
 think the " natural value" of the annual produc- 
 tions could be materially influenced by such ex- 
 portation. 
 
 If Mr. Ricardo's theory be correct, the following 
 extracts from his work appear to require explana- 
 tion : — 
 
 Page 158. — " When each country lias precisely die 
 " quantity of money which it ought to have, money will 
 " not indeed be of the same value in each, for with respect
 
 14 WAGES. [chap. I. 
 
 " to many commodities, it may differ 5, 10, or even 20 per 
 ♦' cent., but the exchange will be at jiar : one hundred 
 " pounds English, or the silver which is in 100/., will pur- 
 " chase a bill of 100/., or an equal quantity of silver in 
 " France, Spain, or Holland." 
 
 Page 190.— " Although then the rise in the price of most 
 " of our commodities would for a time check exportation 
 " generally, and might permanently prevent the exporta- 
 *' tion of a few commodities, it could not materially intcr- 
 '^ fere with foreign trade, and would not place us under 
 " any comparative disadvantage as far as regarded compe- 
 " tition in foreign markets." 
 
 Supposing the first to be true, which I cannot 
 doubt, the second, so ingeniously levelling all 
 prices, and annihilating the effects of taxation, must 
 necessarily be erroneous. 
 
 My view of this subject, as it regards a rich 
 country, appears to be very clearly stated in the 
 following extract, where Mr. Ricardo, with 
 admirable precision, states the consequences of 
 raising the natural price of cloth. 
 
 Page 199. — "If thetrade ofcloth were left perfectly free, 
 " our manufacturers might be able to sell cloth cheaper 
 " than we could import it. If a tax were laid on the home 
 " manufacturer, and not on the importer of cloth, capital 
 " might be injuriously driven from the manufacture of cloth 
 " to the manufacture of some other conmiodity, as cloth 
 " might then be imported cheaper than it could be made 
 " at home. If imported cloth also be taxed, cloth would 
 " again be manufactured at home. The consumer first
 
 SECT. I.] WAGES. 1.5 
 
 ** bought cloth at home, because it was cheaper than foreign 
 " cloth ; he then bought foreign cloth, because it was 
 *' cheaper, untaxed, than home cloth taxed ; he lastly 
 " bought it again at home, because it was cheaper when 
 " both home and foreign cloth were taxed. It is in the 
 *' last case that he pays the greatest price for his cloth, but 
 " all his additional payment is gained by the state. In the 
 " second case he pays more than in the first, but all he pays 
 " in addition is not received by the state; it is ait increased 
 ^^ price caused hy difficullij of production, which is in- 
 " curred, because the easiest means of production are 
 " taken away from us by being fettered with a tax." 
 
 It would not be difficult to trace Mr. Ricardo's 
 theory to consequences inconsistent with the good- 
 ness of Providence, and to the scheme of Divine go- 
 vernment ; surely, however, Mr. llicardo on further 
 consideration will admit, that a circulation of gold 
 never can have more than a temporary influence on 
 " natural value;** and that whatever commodity is 
 raised in natural value in any given country, whe- 
 ther by taxation, or other cause, above the natural 
 valueof the same commodity in other nations, will 
 immediately cease to become an object of export, 
 and cannot again be made so by any unforced 
 distribution of the precious metals. 
 
 The disco\ ery of machinery, increased industry, 
 lessening the reward of the labourer, diminished 
 taxation, drawbacks, or bounties, may decrease "na- 
 tural value," but until it is decreased*, it seems to 
 
 * or course I place out ol view an accidental glut, forcinf; 
 down the " market, price" below the natural value. I am speakin;^ 
 only i>l' fixed pi';iicij)lcs.
 
 16 WAGES. [chap. T. 
 
 me almost self-evident that commercial intercourse 
 must be suspended. * 
 
 I almost wish I had more doubt upon this sub- 
 ject : I feel how much the country is indebted to 
 Mr. Ricardo for his exertions on its currency. I 
 was an enthusiastic admirer of his plan for restoring 
 that currency to its true standard, and only regret 
 it was not completely carried into effect. 
 
 If, as Mr. Ricardo recommended, the bank had 
 been compelled to purchase gold at sixpence per 
 ouncebelow the price at which they issued it, lean- 
 not but think many of the inconveniences attending 
 this great national measure would have been 
 avoided. 
 
 The omission, however, appears to have resulted 
 from imposing a confidence which it would have 
 been difficult to withhold, though it was easy 
 
 * Since these observations were written, my attention lias been 
 called to the "Elements of Political Economy," by James Mill, Esq. 
 This work proposes only to develope the principles of others, I was 
 not, therefore, surprised to find repeated many of Mr. Ricardo's 
 positions, to which I cannot but object. 
 
 The following sentence, however, is of a different character, 
 and bears on the present question : 
 
 Page 128. — " In ordinary language, it is immediately acknow- 
 " ledged that those commodities alone can be exported, which 
 " are cheaper in the country from which they go than in the- 
 " country to which they are sent ; and that those commodities 
 " alone can be imported, which are dearer in the country to whicl* 
 " thev Cotwe than in the country from whieli lliey are sent."
 
 SECT. II,] WAGES. 17 
 
 to foresee the consequences, and the tribute of na- 
 tional gratitude must not, in consequence, be with- 
 held from Mr. Ricardo. 
 
 It will be seen, in a subsequent part of these observations, 
 that I attribute the present state of the country to causes, in a great 
 degree independent of the measures taken to restore the currency, 
 the probable effect of which, it is foreign to my present purpose 
 to discuss.
 
 18 VVAGKS. [CHAP. I, 
 
 SECTION IL 
 
 On Mr. Ricardo's ojmiiofi as to the manner in ixihich a rise 
 of wages affects the ■profits ofjixed capital. 
 
 Page 37. — " But a rise in the wages of labour would 
 " not equally affect commodities produced with machinery 
 " quickly consumed, and commodities produced with ma- 
 " chinery slowly consumed. 
 
 '* In the production of the one a great deal of labour 
 '^ would be continually transferred to the commodity pro- 
 " duced, in the other very little would be so transferred. 
 *' Every rise of wages, therefore, or, which is the same 
 " thing, every fall of profits, would lower the relative value 
 " of commodities which were produced with a capital of a 
 " durable nature, and would proportionally elevate those 
 " which were produced with capital more perishable. 
 
 " It appears too, that in proportion to the durability of 
 *' capital employed in any kind of production, the relative 
 " prices of those commodities on which such durable capital 
 " is employed, will vary inversely as wages; they will fall 
 " as wages rise, and rise as wages fall. 
 
 " A fall of wages would have precisely a contrary 
 « effect." 
 
 Mr. Ricardo states, in other parts of his work, 
 that a rise of wages, occasioned by a transfer of an 
 increased share of produce to the labourers, 
 will cause a corresponding fall in the profits 
 of those who employ them, and be without ef- 
 fect on the price of the commodities produced.
 
 SECT. II.] WAGES. 19 
 
 To this I entirely agree, it being understood that 
 the rise in wages results from a diminution in the 
 number of labourers, production remaining the 
 same ; or a permanently increased production, the 
 number of labourers remaining the same. 
 
 I differ with Mr. Ricardo, however, as to the ef- 
 fect such a rise would have on the profits of com- 
 modities produced by machinery. 
 
 It appears to me, the owner of a machine would 
 be precisely in the situation of a manufacturer whose 
 labourers agreed to work at the old wages ; his pro- 
 fits would continue the same as before. 
 
 The employer of labourers might continue to 
 manufacture at the same prices, and at less profit 
 than heretofore : if the owner of a machine, how- 
 ever, lowered the *' market price'* of his goods, 
 in the same proportion as the wages of labour 
 increased, in order to bring his profits to a level 
 with those of the employer of labourers, the latter 
 would be driven out of the market, unless he also 
 lowered the price ; and if he did this, it is evident, 
 he must give up a second portion of his profits. 
 
 I see no reason however, why, when wages rise, 
 the owner of a machine may not, for a time, ob- 
 tain larger profits than the individual employing la- 
 bourers. Capital, under such circumstances, would 
 be employed to erect machinery, until competition 
 reduced its profits ; and the ultimate effect would 
 be, either altogether to exclude manual labour from 
 the manufacture, or so reduce the market price of 
 c2
 
 so WAGES. [chap. I. 
 
 that labour, as to enable it again to compete with 
 machines. 
 
 It is thus we invariably see a rise in the wages 
 of labour add to the number and use of 
 rmachines. 
 
 On the contrary, diminish the real wages of la- 
 bour, the employer of a labourer obtains an 
 increased share of the produce, the share of the 
 owner of the machine remains stationary ; if the 
 profits of the two were before equal, it follows that 
 no more machines are erected. 
 
 Whether the machine be more or less durable, 
 does not appear to aifect the question. 
 
 The rise or fall of wages would, of course, affect 
 the profits of the machinist ; the capital advanced 
 for a machine would be differently distributed, but 
 the profits of its employer could not, I think, 
 be afiected by the direct operation of either a 
 rise or fall of wages. 
 
 Mr. Rlcardo repeats the same argument. 
 
 Page 45 " Before I quit this subject, it may be proper 
 
 ** to observe that Adam Smith, and all the writers who have 
 " followed him, have, without one exception that I know 
 *' of, maintained that a rise in the price of labour would 
 *' be followed by a rise in the price of commodities. 
 
 *' I hope I have succeeded in shewing that there are no 
 *^ grounds for such an opinion, and that only those com- 
 " modities would rise which had less fixed capital employed 
 " upon them than the medium in which price was esti-
 
 5ECT. IL] WAGES. ^1 
 
 *' mated, and that all those which had moix; would positively 
 *' fall in price when wages rose; on the contrary, if wages 
 *' fell, those commodities only would fall which had a less 
 *' proportion of fixed capital employed on them than the 
 ** medium in which price was estimated. All those which 
 ** had more would positively rise in price/' 
 
 rf my theory be correct, a rise of wages, affecting 
 only profits, would have less effect on such profits, 
 in proportion as fixed capital was employed upon 
 them ; if there were any commodities, entirely the 
 produce of fixed capital, on thein 1 cannot think 
 any direct effect whatever could be ju-oduced. 
 
 The commodities manufactured, equal of course 
 to the produce of a certain number of labourers for a 
 definitive period, would come into the market on the 
 same terms as before a rise in the wages of labour : 
 whilst the profits of the employer of labourers, tliere- 
 forCj would diminish, that of the owner of fixed 
 capital would remain stationary. 
 
 A fall in tlie wages of labour would, in like man- 
 ner, be without effect on the profits of fixed ca- 
 j)ital. 
 
 c 3
 
 CHAPTER II. 
 
 ON PROFITS. 
 
 SECTION I. 
 
 Ofi Mr. Ricardo's opinion as to the manner in iXjhich profits 
 are affected by a rise of wages. 
 
 Page 48. — " A rise in wages, from an alteration in the 
 " value of money, produces a general effect on price, and 
 " for that reason it produces no real effect whatever on 
 " profits. On the contrary, a rise of wages, from the cir- 
 " cumstance of the labourer being more liberally rewarded, 
 " or from a difficulty of procuring the necessaries on which 
 " wages are expended, does not, except in some instances, 
 " produce the effect of raising price, but has a great effect 
 " in lowering profits. In the one case, no greater propor- 
 " tion of the annual labour of the country is devoted to the 
 " support of the labourers; in the other case, a larger 
 " portion is so devoted." 
 
 Page 108. — " Supposing corn and manufactured goods 
 " always to sell at the same price, profits would be high or 
 " low in proportion as wages were low or high. But sup- 
 " pose corn to rise in price, because more labour is ne- 
 " ccssary to produce it, that cause will not raise the price 
 " of manufactured goods in the production of which no
 
 SECT. I.] ON riiOFlTS. 23 
 
 ** additional quantity of labour is required. If then wages 
 " continued the same, the profits of manufacturers would 
 " remain the same ; but if, as is absolutely certain, wages 
 " should rise with the rise of corn, then their profits would 
 " necessarily fall." 
 
 Page 107. — " We have seen that the price of corn is re- 
 " gulated by the quantity of labour necessary to produce it, 
 " with that portion of capital which pays no rent; we have 
 " seen, too, that all manufactured commodities rise and fall 
 '• in price in proportion as more or less labour becomes 
 " necessary to their production. Neither the farmer who 
 *' cultivates that quantity of land which regulates price, 
 " nor the manufacturer who manufactures goods, sacrifice 
 " any portion of the produce for rent. The whole value of 
 *' their commodities is divided into two portions only ; one 
 '' constitutes the profits of stock, the other the wages of 
 " labour. 
 
 *' We have shewn that in early stages of society both the 
 " landlord's and the labourer's share of the value of the 
 " produce of the earth would be but small, and that it 
 '* would increase in proportion to the progress of wealth 
 " and the difficulty of procuring food. We have shewn, 
 *' too, that although the value of the labourer's portion will 
 *' be increased by the high value of food, his real siiare will 
 " be diminished, whilst that of the landlord will not only 
 *' be raised in value, but will also be increased in 
 " quantity. 
 
 '* The remaining quantity of the produce of the land, 
 " after the landlord and labourer are paid, necessarily 
 *' belongs to the farmer, and constitutes the profits of his 
 " stock. 
 
 c 4)
 
 24 ON PKOFiTSi [CHAP. 11^ 
 
 ** But it may be alleged, that though, as society advances^ 
 ** his proportion of the whole produce will be diminished, 
 <* yet as it will rise in value, he, as well as the landlord 
 *' and labourer, may, notwithstanding, receive a greater 
 *' value. 
 
 *' It may be said, for example, that when corn rose from 
 *' 4/. to 10/., the 180 quarters obtained from the best land 
 " would sell for 1800/. instead of 720/.; and therefore, 
 *' though the landlord and labourer be proved to have 
 " a greater value for rent and wages, still the value of the 
 ** farmer's profit might also be augmented. 
 
 " This, however, is impossible, as 1 shall now endeavour 
 *' to shew. 
 
 " In the first place, the price of corn would rise only in 
 *' proportion to the increased difficulty of growing it on 
 *' land of a worse quality. 
 
 *f It has been already remarked, that if the labour often 
 *« men will, on land of a certain quality, obtain 180 quarters 
 ** of wheat, and its value be 4/, per quarter, or 720/., and 
 " if the labour of ten additional men will on the same or 
 '* any other land, produce only 170 quarters in addi- 
 " tion, wheat would rise from 4/. to 4/. 45. 8d.; for 170 : 
 <* 180: : 4/. to 4/. 45. 8d. In other words, as for the pro- 
 «' duction of 170 quarters, the labour of ten men is neces- 
 " sary, in the one case, and only that of 9.44 in the other, 
 " the rise would be as 9.44 to 10, or as 4/. to 4/. 45. 8c?. 
 " In the same maimer it might be shewn, that if the labour 
 ** often additional men would only produce 160 quarters, 
 " the price would further rise to 4/. IO5.; if 150, to 4/. I65., 
 « &c. &c.
 
 SECT. I.] ON PROFITS. 25 
 
 *• But when 180 quarters were produced on the 
 *' land paying no rent, and its price was 4/. per 
 ** quarter, it is sold for - - - j^ 720 
 
 « And when 170 quarters were produced on the 
 ** land paying no rent, and the price rose to 
 ** 4Z. 4s. 8d. it still sold for _ - - 720 
 
 ** So 160 quarters at 4/. IO5. produce - - 720 
 
 " And 150 quarters at 4l. 16^. produce the same 
 
 ** sum of ______ j'20 
 
 " Now it is evident, that if out of these equal values the 
 *' farmer is at one time obliged to pay wages regulated by 
 ♦< the price of wheat at 4/., and at other times at higher 
 «* prices, the rate of his profits will diminish in proportion 
 ** to the rise in the price of corn. 
 
 <* In this case, therefore, I think it is clearly demon- 
 *< strated that a rise in the price of corn, which increases 
 *• the money wages of the labourer, diminishes the money 
 *' value of the farmer's profits." 
 
 ]Page 259. — '^ I hope I have succeeded in shewing that 
 ** any tax which shall have the effect of raising wages, will 
 «* be paid by a diminution of profits, and therefore that 
 ^* a tax on wages is in fact a tax on profits." 
 
 In the last section, I stated my concurrence with 
 Mr. Ricardo, that a rise of wages, occasioned by 
 the transfer, under certain circumstances, of a
 
 ii6 ON PROFITS. [CHAP. II. 
 
 larger share of produce to the labourer, affects 
 profits only, and not price. 
 
 When a rise in wages, however, takes place in 
 consequence of a rise in the "natural value" of corn, 
 resulting from an increased difficulty of production, 
 the case appears to me materially altered. 
 
 In the early stages of society, the share of the 
 produce of the earth coming to the farmer and to 
 each labourer must, of course, have been governed 
 by the fertility of the soil of the different countries, 
 and the general industry exerted; in proportion 
 as families settled to agriculture, and the people 
 became more industrious, there would be an in- 
 creased net surplus. This surplus, the labourers 
 having already as much as they required for con- 
 sumption, would no doubtj without a struggle, get 
 into the hands of the farmer. 
 
 It cannot be denied that its real value, that is, 
 the labour it cost, would be precisely the same as 
 that of the corn obtained by the labourers ; there 
 would not, however, be the same efficient demand 
 for it: the farmer and his family, unable to consume 
 the whole themselves, would naturally be disposed 
 to give a part to any labourers who might contri- 
 bute to their individual comfort or gratification. 
 This corn not being the result of the farmer's la- 
 bour, and being in fact in excess, individuals 
 would soon find, that to make tables, chairs.
 
 SECT. I.] ON PROFITS. 27 
 
 hats, &c. would obtain for them larger portions 
 of agricultural produce than to labour for its 
 production. 
 
 As society advanced, supply and demand, 
 would occasion the labourers to go from the culti- 
 vation of the soil to the manufacture of tables, &c. 
 and again from the manufacture of tables, &c.to the 
 cultivation of the soil, in proportion as the one or 
 the other enabled individuals to acquire the greatest 
 quantity of the necessaries of life with the least 
 exertion. 
 
 The increase of population would gradually bring 
 all land of the first quality into cultivation, and, (if it 
 still continued progressive, of which if unchecked 
 there can be no doubt,) a competition for employ- 
 ment would necessarily arise among the labourers, 
 farmer be, in consequence, enabled to reduce their 
 and the share, and increase his own. 
 
 Suppose, for example, a farm of five acres pro- 
 duced 150 bushels of corn, of which 40 went to the 
 farmer, and 110 to the labourers. 
 
 If, from the progress T)f population, and conse- 
 quent competition, the labourer's share could be 
 reduced to 100 bushels, the farmer's would increase 
 
 to 50. '■ 
 
 Population continuing to increase, the relative 
 proportions would change yet further in favour of 
 the farmer and again.st the labourers, until from
 
 28 ON PKOFITS. [CIlAPi If-/ 
 
 the share of the latter becoming insufficient to main- 
 tain a family, population received a check. 
 
 Let it be supposed, however, that there may be 
 inferior land uncultivated, and that five acres 
 of the second quahty (No. 2.) would, with the 
 same labour as No. 1, produce 140 bushels of corn. 
 "When the surplus of the farmer of No. 1 . increased 
 to 50 bushels, it is evident No. 2. would be imme- 
 diately cultivated, because it would yield the same 
 surplus as No. 1. yielded previous to the increase of 
 population. A surplus to which, as before observed, 
 the fertility of the country, and the habits of the po- 
 pulation, had placed what may be called "natural 
 limits." * 
 
 A similar increase of population would bring lands 
 of a proportionably worse and worse quality into 
 cultivation ; the difference between the fertility of 
 the soils becoming what is called " rent," in the 
 manner so ably stated by Mr. Ricardo, in his chapter 
 on that subject. 
 
 In a subsequent part of these observations, I shall 
 advert to the effect of a recourse to worse soils, on 
 the surplus of the farmer. • I speak now only of the 
 general principle, according to which population 
 would go on increasing, and recourse would be had 
 to worse soils, until the share of the labourer were 
 reduced as low as it could be, or until, in the words 
 of Mr. Ricardo, his wages attained " tliat price 
 
 ^ It will readily be seen that my figures in this and other instances 
 are entirely arbitrary, and assumed merely iht the purjioscs of 
 illustration.
 
 SECT. I.] ON PROFITS. '29 
 
 <* which is necessary to enable the labourers one 
 ** with another to subsist, and to perpetuate their 
 ** race."— Page 8G. 
 
 In proportion as corn required more labour in its 
 production, it appears to me its exchangeable value, 
 in reference to other commodities, would rise. 
 If a labourer got one bushel of corn for six days la- 
 bour, he would exchange it for a hat, requiring 
 six days to manufacture it ; but when he got only 
 a bushel of corn for nine days labour, he would no 
 longer exchange it for the same hat ; he would have 
 a hat wliich had required nine days labour. In 
 order to place all labourers in the same situation, 
 the maker of the hat must diminish his consump- 
 tion of corn, in the same degree as the agricultural 
 labourer ; instead of consuming a bushel of corn 
 in six days, he must consume two-thirds of a bushel 
 onlj : the two articles would then become of the 
 same relative value. 
 
 If the value of corn and hats, however, had been 
 previously estimated in any foreign medium, 
 " gold " for example, not affected by the 
 increased value of corn, it would be apparent 
 that both had risen in " natural value," and 
 that in consequence of the sterility of the soil, 
 each labourer must give an increased quantity of 
 labour to enable him to consume the same com- 
 modities as before.
 
 so ON PROFITS. [CHAP. II. 
 
 If, when the "naturalvalue" of corn rose, its "mar- 
 ket price" or exchangeable value did not rise, the 
 agricultural labourer when paid in corn would, it is 
 evident, be in a worse situation than the maker of 
 hats, and be without the means of restoring the 
 equilibrium. 
 
 If gold were the medium of exchange between 
 the labourers, in the first case, a quantity represent- 
 ing six days labour would have been sufficient j in 
 the second, a quantity representing nine days la- 
 bour becomes necessary. 
 
 It is of course admitted, that, if from a demand 
 for labour, or a diminished population, the labour- 
 ers of No. 1. were enabled to obtain and consume 
 120 bushels instead of 110, no increase in the ex- 
 changeable value of corn would take place; 
 unfortunately, however, this is a state of things 
 not common, whilst the opposite principle demands 
 the most anxious attention. 
 
 To return to Mr. Ricardo's theory. 
 
 Whilst a labourer is making a hat or any other 
 article, is it of no importance whether he eat a loaf 
 of bread, requiring in its production one or two days 
 labour ; and would not the natural price of the hat 
 be increased or diminished in consequence ?
 
 SECT. I.] ON PROFITS. 31 
 
 If, from having recourse to soils of a worse de- 
 scription, or taxation, two days labour for the loaf 
 instead of one become necessary, and the money 
 wages of the labourer are consequently increased, 
 in order to enable him to make the purchase of the 
 loaf at its advanced price, is not the hat indi- 
 rectly taxed, and would not its relative value be 
 proportionably raised according to the theory laid 
 down in the following extracts ? 
 
 '*The natural price of labour, therefore, depends 
 ** on the price of the food, necessaries, and conve- 
 «' niencies required for the support of the labourer 
 «« and his family." — Page 86. 
 
 '* Taxes on corn then would fall on consumers 
 ** of corn, and raise its value as compared with all 
 ** other commodities, and in a degree proportioned 
 " to the tax. In proportion as raw produce en- 
 " tered into the composition of other commodities, 
 «♦ would their value also be raised, unless the tax 
 *' were countervailed by other causes. They would 
 " in fact, be indirectly taxed, and their value would 
 " rise in proportion to the tax." — Page 173. 
 
 Must not the raw produce, consumed by the la- 
 bourer in manufacturing a hat, be considered as en- 
 tering into the composition of the " hat j" and in 
 ascertaining its exchangeable value, must not 
 the manufacturer estimate the money wages
 
 32 ON PROFITS. [CHAP. II. 
 
 he pays the labourer, to enable him to consume 
 that raw produce ? 
 
 If the principles I have attempted to establish be 
 correct, it follows, that the increased value of corn 
 occasioned by a difficulty of production, in no way 
 affects "profits." It raises the natural price of 
 labour, and every commodity the produce of 
 labour, not as compared with each other in the 
 same country, but as compared with «* gold," or 
 any other commodity of another country not raised 
 in natural value. 
 
 It is not easy to discover the error of Mr. 
 Ricardo's ingenious position, in the extract before 
 quoted, page IO7. 
 
 A moment's reflection, however, is sufficient to 
 shew, that it throws all the consequences of an in- 
 creased population, or sterility of soil, on the pos- 
 sessors of active capital only, and that it is quite 
 opposed to daily experience. 
 
 The fallacy appears to arise from considering the 
 72/. in each of the cases mentioned " equal va- 
 lues," — ^720/. in gold, compared at the same time
 
 SFXT. I.] OXraOFITS. -JJ 
 
 with 720/. in gold, will always be of the same value, 
 and in argument, it may be assumed, to be of the 
 same value in reference to a given quantity of corn, 
 but surely 720/. as compared at the same time with 
 180 quarters, and 160 quarters of wheat m.ust be of 
 a different value; either the 160 or 180 quarters of 
 wheat must be of the same value, or the 7^0/. cannot 
 have the same relation to both. — 
 
 " Things which are equal to the same, are equal to one another.'* 
 
 If the farmer obtained 180 quarters of wheat, 
 when the price was 4/., and paid the proceeds to 
 labourers, it would give 30 labourers 24/. each, and 
 enable them to consume 180 quarters of wheat, at 4/. 
 
 If, at a subsequent period, the same farmer got 
 150 quarters of wheat at 4/. Ids. and paid it in like 
 manner, it would, it is true, give 30 labourers 24/. 
 each, but there would be this evident distinction, it 
 would only enable those labourers to consume one 
 hundred and Jijh/ quarters of wheat Sit Jour pounds 
 siJcteen shillings. 
 
 To enable the farmer to place his labourers in the 
 same relative situation, that is to say, to give them 
 the same command over corn, as they had when 
 wheat was at 4/. per quarter, the 160 quarters must 
 be sold for 86i/. instead of 720/., or 5/. 15.s. 2^. in- 
 stead of 4/. \C)s. per quarter. And the wages in- 
 stead of being 24/., must be 28/. \(Js. 
 
 If, in the first case, the farmer paid 30 out of 
 180 quarters of corn for rent, it does not alter the 
 
 D
 
 34 ON PROFITS. [chap. If. 
 
 que^ion ; it is necessary that he should sell the re- 
 maining 150 quarters for the sum above mentioned, 
 to place the labourers in the situation they were 
 when corn was at 4/. 
 
 If, as Mr. Ricardo supposed, the " invariable 
 fund" remained at 720/. what possible motive could 
 there be for raising the 1.50 quarters of corn? 
 
 The ordinary process, on the principles before ex- 
 plained, appears to be this. 
 
 In the first instance, 180 quarters of corn are 
 grown at 4/. The increase of population in- 
 creases the demand, and its exchangeable value 
 rises : competition among the labourers at the 
 same time increases the surplus in the hands of 
 the farmer; these two operating causes enable 
 the farmer to obtain profits so high, that land of the 
 next quality will produce corn sufficient to give the 
 cultivator the usual profits of stock. This land, in 
 consequence, is brought into cultivation, and the 
 difference between the two soils thereafter becomes 
 *< rent." 
 
 In reference to this subject, it will create some 
 surprise that Mr. Ricardo, with the experience of 
 the last 20 years before him, should state his 
 opinion, " that a rise in the price of corn, ijohich in- 
 creases the money "wages of the labourer, diminishes 
 the money value of the farmer's profits," even as- 
 suming, as he does, that money remained at an in- 
 variable value.
 
 SECT, ir.] ON PKoriTs. 35 
 
 SECTION II. 
 
 0« Mr. Bicardo's opinion as to the causes which regulate 
 profits. 
 
 Page 127. — " Although a greater value is produced, a 
 ' greater proportion of what remains of that value, after 
 ' paying rent, is consumed by the producers ; and it is 
 
 ■ this, and this alone, which regulates profits. Whilst 
 ' the land yields abundantly, wages may temporarily rise, 
 ' and the producers may consume more than their accus- 
 ' tomed proportion ; but the stimulus which will thus be 
 
 given to population will speedily reduce the labourers to 
 
 ■ their usual consumption. But when poor lands are 
 taken into cultivation, or when more capital and labour 
 are expended on the old land, with a less return of pro- 
 duce, the effect must be permanent. A greater propor- 
 tion of that part of the produce which remains to be 
 divided, after paying rent, between the owners of stock 
 and the labourers, will be apportioned to the latter. 
 
 " Each man may, and probably will, have a less absolute 
 quantity ; but as more labourers are employed in pro- 
 portion to the whole produce retained by the farmer, the 
 value of a greater proportion of llie whole produce will 
 be absorbed by wa^^es, and consequently tiie value of a 
 smaller proportion will be devoted to profits. This 
 will necessarily be rendered permanent by the laws of 
 nature, which have limited the productive powers ofth<% 
 land."
 
 Od ON PROFITS. [CHAP. II. 
 
 In the above extract, I understand Mr. Ricardo 
 to state, that agricultural profits depend on the net 
 surplus which is left to the cultivator of land pay- 
 ing no rent, after defraying the labour and other 
 expences incident thereto. 
 
 If this surplus be considerable, his profits will be 
 large, if otherwise, small. 
 
 When the share of the labourer is so low as to 
 allow of no further deduction, it is evident that re- 
 course to soils of a worse description must diminish 
 the net surplus of the farmer. 
 
 It is equally obvious that an increased quan- 
 tity of the produce of the better land will as- 
 sume the shape of rent; I cannot agree with 
 Mr. Ricardo, however, as to the effect this will have 
 on profits. 
 
 If the recourse to land of a worse quality be met 
 by a demand for corn increasing in a yet greater 
 proportion, so as still to elevate its market price, or 
 " exchangeable value" above its " natural value," it 
 appears to me agricultural profits might increase, 
 not diminish. 
 
 The profits of the farmer, I think, depend not on 
 the quantity of his surplus produce, but on the accu- 
 mulated labour of other descriptions for which that 
 * surplus will exchange.
 
 SECT, n.] ON PROFITS. 37 
 
 A farmer, for example, cultivating, five acres of 
 land, may have a net surplus of fifty bushels, and 
 sell it for 5s. per bushel, or 12/. 10*. If the state 
 of the population or other cause, forced recourse 
 to worse soils, he may pay ten bushels for rent, 
 but at the same time the demand for corn may so 
 increase, as to enable him to sell the remaining 
 forty bushels for 105. per bushel, or 20/. ; so that 
 his profit may be greater in the last than in the 
 first case. 
 
 In all discussions on political economy, it is most 
 important to distinguish profits from accumulations; 
 it is admitted at once, that when recourse is had to 
 worse soils, the nation will not have equal means to 
 accumulate from those soils, but this does not 
 appear to me necessarily to affect " profits." 
 
 A man loses, when he cannot obtain for an arti- 
 cle manufactured, the value or accumulated labour, 
 contained in the corn and other necessaries con- 
 sumed by him j he is even when he gets the exact 
 value ; he makes a profit when he gets more. 
 
 An individual may make large profits, or in 
 other words, get a large quantity of the annual 
 productions or accumulated labour of the coun- 
 try into his hands, yet by a still larger expen- 
 diture become poor. The individuals of a nation 
 D 3
 
 38 ON PROFITS. [chap. II. 
 
 may do the same, or so much may be taken 
 from them in the shape of taxes and loans, to 
 maintain persons in idleness, that the national 
 accumulations may be diminished rather than in- 
 creased. 
 
 Corn is grown in one county, and the grower re- 
 munerated by obtaining for it 6s. per bushel j it is 
 carried to an adjoining county at an expence of 6d. 
 per busliel, and sold for 8s. per bushel ; a profit is 
 thus made of Is. 6d. per bushel, in other words, a 
 transfer is made from the accumulated labour of 
 the individual purchasing the corn, to a middle 
 man ; it wdll not however be argued that the nati- 
 onal wealth is increased to that extent ; the same 
 mass of commodities (so often defined to be national 
 wealth) will exist as previous to the transfer ; the 
 value in use, only is increased. 
 
 Individuals in a besieged town having consider- 
 able quantities of corn, may make a profit of all the 
 accumulated labour in tliat town ; 100 or 1000 
 times the value or natural price of their corn : on 
 the contrary, circumstances may create such a glut 
 of corn, as completely to take away all '' profit," 
 and almost all " exchangeable value," the cir- 
 cumstances of ihe present times afford abundant 
 proof that a farmer may have a considerable net 
 surplus of corn, and in fact lose, or in other 
 words be unable to replace the value it has cost 
 him.
 
 SECT. II.] ON PROFITS. 39 
 
 What are called " profits " do not therefore in 
 any country depend on the annual productions or 
 revenue of the year, they may, nay must, frequently 
 be paid from labour already accumulated. 
 
 When the land in cultivation yields a consider- 
 able net surplus, and the exchangeable value of corn 
 is yet so high, that further land is required, the 
 profits made by the farmer, in other words the 
 transfer of accumulated labour from otlier classes 
 to the farmers, must be great. 
 
 The profits of manufacturers, traders, &c. must 
 in like manner keep pace with those of the farmer, 
 or their capitals would seek the employment of 
 agriculture. 
 
 So far as the farmers, manufacturers, traders, 
 &c. are concerned, they obtain an additional share 
 of the accumulated labour of others. Demand 
 gives a premium to active capital j the national 
 wealth, however, may remain unaffected ; its in- 
 crease depending neither on the excess of one 
 species of labour which shall be given for another, 
 or in other words, on the rate of pro/it, nor on 
 the transfer of accumulated labour, but on the net 
 annual addition made from the annual revenue to 
 the existing accumulations. 
 
 It follows, if the view I have taken of this sub- 
 ject be correct, that the necessity of mamtaining a 
 D 4
 
 40 ON PROFITS. [CH Al'. II, 
 
 large and continually increasing number of the 
 people in idleness, and the consequent extended 
 demand for corn and other necessaries, will in- 
 crease rents and the profits of "active capital ;'* 
 a larger portion of the accumulated labour of the 
 other classes will be transferred to the possessors 
 of that capital, but this transfer depending on 
 relative demand, will be without effect on national 
 wealth or accumulation. 
 
 Demand appears to me to depend in a great de- 
 gree on the state of population — it is affected, 
 however, by war or peace, moral habits, public 
 opinion, and various other causes ; some under 
 human control, and others entirely beyond it.* 
 
 * Since these observations were written, I have read, without 
 receiving much assistance from, the following definition of " de- 
 mand and supply," — Mr. Mill, chap. 4, p. 190. 
 
 •' Demand and supply are terms related in a particular manner, 
 " A commodity which is supplied is always at the same time a 
 •' commodity which is the instrument of demand. A commodity 
 " which is the instrument of demand is always at the same time 
 " a commodity added to the stock of supply. Every commodity 
 •' is always at one and the same time matter of demand and. 
 " matter of supply. Of two men who perform an exchange, 
 " the one does not come with only a supply, the other with only 
 " a demand; each of them comes with both a demand and a 
 " supply. The supply which he brings is the instrument of his 
 " demand, and his demand and supply are of course exactly equal 
 *' to one another. 
 
 " But if the demand and supply of every individual are always 
 " equal to one another, the demand and supply of all the indi-
 
 SECT. II.] ON PROFITS. 41 
 
 " viduals in the nation, taken aggregately, must be equal. What- 
 " ever therefore be the amount of the annual produce, it never 
 " can exceed the amount of the annual demand. The whole of 
 " the annual produce is divided into a number of shares, equal to 
 " that of the people to whom it is distributed. The whole of the 
 " demand is equal to as much of the whole of the shares as the 
 " owners do not keep for their own consumption. But the whole 
 " of the shares is equal to the whole of the produce. The demon- 
 " stration, therefore, is complete. 
 
 " How complete soever the demonstration may appear to be, 
 " that the demand of a nation must always be equal to its supply, 
 " and that it never can be, without a market sufficiently enlarged 
 " for the whole of its produce ; this proposition is seldom well 
 " understood, and is sometimes expressly contradicted." 
 
 To me it appears, that demand (except for mere neces- 
 saries) is almost exclusively the creation of the mind, whilst supply 
 is something present and tangible. To compare, much more 
 to balance the two, I cannot help thinking like an attempt to 
 compare matter and motion. Various commodities are daily 
 produced which are not the instrument of demand, and commodi- 
 ties the produce of vast labour become at one moment the instru- 
 ment of demand, and cease to be so the next. 
 
 I think I want, or in other words, that I have a demand for a 
 gun, requiring forty days labour to produce it, and I am willing to 
 give in exchange a table of that value. I go into the market and 
 there is no gim, I am offered a hat, however, the produce of forty 
 days labour, would this be called balancing the supply and demand ? 
 the gun does not exist, and cannot be manufactured under forty 
 days. 
 
 In a nation having a large quantity of accumulated commodities, 
 though the tendency of demand and supply is to equality, yet 
 they may be at variance for one or two, nay, even for a serie» of 
 years.
 
 42 ON PROFITS. [chap. II. 
 
 The sudden breaking out of a dangerous war or a rebellion may 
 create a vast demand for arms. There may be a quantity of accu- 
 mulated labour In the country, sufficient, under ordinary circum- 
 stances, to maintain individuals whilst manufacturing any given 
 supply. The case, however, is urgent, the demand immediate, 
 all the existing supply of other commodities would be given for 
 arms. In what way is the account to be balanced ?
 
 CHAPTER III. 
 
 RENT. 
 
 Page 57.— " Thus suppose land— No. 1, 2, 3,— to yield, 
 " with an equal employment of capital and labour, a net 
 " produce of 100, 90, and 80 quarters of corn. In a new 
 " country, where there is an abundance of fertile land com- 
 " pared with the population, and where therefore it is only 
 " necessary to cultivate No. 1, the whole net produce will 
 " belong to the cultivator, and will be the profits of the 
 «' stock which he advances. As soon as population has so 
 " far increased as to make it necessary to cultivate No. 2., 
 " from which ninety quarters can only be obtained after 
 " supporting the labourers, rent would commence on No. 1 . 
 " for either there must be two rates of profit on agricul- 
 «* tural capital, or ten quarters, or the value of ten quarters 
 *' must be withdrawn from the produce of No. 1, for some 
 " other purpose. Whether the proprietor of the land, or 
 *« any other person, cultivated No. 1, these ten quarters 
 " would equally constitute rent; for the cultivator of No. 2. 
 " would get the same result with his capital, whether he 
 *' cultivated No. 1, paying ten quarters for rent, or conti- 
 " nued to cultivate No. 2, paying no rent. In the 
 *' same manner it might be shown that when No. 3. is 
 " brought into cultivation, the rent of No. 2. must be ten 
 " quarters, or the value often quarters, whilst the rent of
 
 44 RENT. [CHAP. III. 
 
 " No. 1. would rise to twenty quarters; for the cultivator 
 " of No. 3. would have the same profits whether he paid 
 «' twenty quarters for the rent of No. 1. ten quarters for 
 " the rent of No. 2., or cultivated No. 3. free of all rent.'' 
 
 It seems impossible to doubt the correctness of 
 the general principle laid down in the above extract, 
 and there does not now appear any point, in politi- 
 cal economy, more unanswerably established, than 
 that " rent" does not and cannot enter into or be- 
 come a component part of the price of corn ; it is 
 equally certain that the corn grown on land paying 
 no rent, (for which there is such an efficient demand 
 as to reimburse the producer), regulates the na- 
 tural value, though not always the " marketprice'* 
 of corn. 
 
 If my theory be correct, the price of corn is also 
 equally independent of " profits." Agricultural 
 profits, that is to say, the portion of the accumu- 
 lated labour, or annual revenue which shall be 
 transferred to the farmer in exchange for his sur- 
 plus corn, depends, it is true, entirely on the 
 market price of that corn ; the farmer, however, 
 whether his profits be high or low, is unable to 
 elevate that "market price," or exchangeable 
 value; it must be regulated by the relative de- 
 mand. 
 
 From this explanation of the laws which regu- 
 late wages, profits, and rent, it follows that under 
 ordinary circumstances, an increase of population
 
 CHAP. III.] RENT. 45 
 
 injures the labourer and benefits the landlord, 
 leaving the profits of the farmer to depend on the 
 nature of the soil in cultivation, and the various cir- 
 cumstance affecting supply and demand. 
 
 The manufacturers, traders, &c. also benefit by 
 the distribution of the actual produce of the land 
 becoming more favourable to their interests. 
 
 When agricultural produce is in a great degree 
 divided amongst tiie labourers, it is consumed in the 
 shape of bread, beer, &c. &c. and nothing but the 
 ruder sorts of clothing can be in demand. When 
 a larger share of this produce, however, gets into 
 the hands of the farmer and the landlord, its con- 
 sumption by them is impracticable, and in conse- 
 quence it comes to be exchanged with the manufac- 
 turers, traders, &c.
 
 CHAPTER IV. 
 
 TAXES. 
 
 SECTION I. 
 
 Piige 162. — " Taxes are a portion of the produce of the 
 *' land and labour of a country, placed at the disposal of 
 " the government j and are always ultimately paid either 
 " from the capital or from the revenue of the country." 
 
 Page 163. — *' If the consumption of the government, 
 " when increased by the levy of additional taxes, be met 
 <' either by an increased production, or by a diminished 
 " consumption on the part of the people, the taxes will fall 
 " upon revenue, and the national capital will remain un- 
 " impaired ; but if there be no increased production or 
 " diminished unproductive consumption on the part of the 
 ^' people, the taxes will necessarily fall on capital, that is 
 " to say, they will impair the fund allotted to productive 
 " consumption. 
 
 " In proportion as the capital of a country is diminishe4, 
 ^^ its productions will l>e necessarily diminished ; and, there- 
 '^ fore, if the same unproductive expenditure on the part of 
 *' the people and of the government continue, with a con- 
 " stantly diminishing annual re-production, the resources 
 " of the people and the state will fall away with increasing 
 " rapidity and distress, and ruin will follow.
 
 SECT. I.] TAXES. 47 
 
 " Taxes are not necessarily taxes on capital, because 
 " they are laid on capital ; nor on income, because they 
 ** are laid on income. If, fi*om my income of 1000^. per 
 " annum, I am required to pay 100^., it will really be a tax 
 " on my income, should I be content with the expenditure 
 " of the remaining 900/. ; but it will be a tax on capital, if 
 *' I continue to spend lOOOZ. 
 
 *' The capital from which my income of 1000/. is derived 
 " may be of the value of 10,000/. ; a tax of one per cent. 
 " on such capital would be 100/.; but my capital would 
 " be unaffected if, after paying this tax, 1 in like manner 
 " contented myself with the expenditure of 900/. 
 
 *' The desire which every man has to keep his station in 
 life, and to maintain his wealth at the height which it 
 has once attained, occasions most taxes, whether laid on 
 capital or on income, to be paid from income." 
 
 c« 
 
 Page 214-. — " The rise in the price of commodities, in 
 " consequence of taxation, or of difficulty of production, 
 « will in all cases ultimately ensue ; but the duration of 
 " the interval, before the market price will conform to the 
 " natural price, must depend on the nature of the com- 
 " modity, and on the facility with which it can be reduced 
 " in quantity. If the quantity of the commodity taxed 
 *' could not be diminished j if the capital of the farmer or 
 *'" the hatter, for instance, could not be v/ithdrawn to other 
 •' employments, it would be of no consequence that their 
 " profits were reduced below the general level by means of 
 " a tax J unless the demand for their commodities should 
 *' increase, they would never be able to elevate the market 
 '• price of com or of hats up to their increased natural 
 '* price. Their threats to leave their employments, and
 
 48 TAXES. [chap. IV. 
 
 '« remove their capitals to more favoured trades, would be 
 <» treated as an idle menace, which could not be carried into 
 " effect ; and consequently the price would not be raised 
 f< by diminished production. Commodities, however, of all 
 " descriptions can be reduced in quantity, and capital can 
 " be removed from trades which are less profitable to those 
 *' which are more so, but with different degrees of rapidity . 
 " In proportion as the supply of a particular commo- 
 *' dity can be more easily reduced without inconvenience 
 " to the producer, the price of it will more quickly rise 
 " after the difficulty of its production has been increased 
 " by taxation, or by any other means." 
 
 If by " capital" in the first extract from page 162, 
 Mr. Ricardo means accumulated labour already 
 in existence, and by ** revenue" the annual produce 
 of the labour of the country ; I entirely agree in 
 his view of the subject, in that and the subsequent 
 extracts. 
 
 There appears to me, however, a considerable 
 distinction between " accumulated labour '* and 
 " capital ;" houses, tables, chairs, and a vast num- 
 ber of other articles, are of course " accumulated 
 labour" and will exchange for " capital," but, 
 until so exchanged, are they in any respect 
 " capital ?" Will they maintain a labourer ? Or 
 reproduce? Or in any great degree assist re- 
 production ? 
 
 For the purposes of political economy, I think 
 capital should have a more limited definition ; as I 
 am not aware of any, however, I have been com-
 
 SECT. I.] TAXES. 49 
 
 pelled to use the words " active capital" to express 
 my meaning.* 
 
 The same remark applies to the term ** repro- 
 ductive labour.'* The labourer whilst employed 
 in making a chair, for example, annihilates ten 
 bushels of corn ; so far as the chair is concerned, 
 he is a productive labourer ; that chair, however, 
 cannot in any way assist reproduction, the corn con- 
 sumed is gone for ever. If a single individual on 
 an island having only ten bushels of corn, were to 
 employ himself in making a chair, he must after- 
 wards starve, whilst if he cultivated the soil, so as 
 to reproduce ten bushels of corn, he might 
 provide the means of existence and again re- 
 produce. 
 
 In exact proportion as the land, fisheries, &c. of 
 any country yield a surplus of necessaries, after 
 providing for the subsistence of the labourers 
 employed (whether such surplus is occasioned by 
 natural position, high cultivation, machinery, or 
 otherwise) will the inhabitants of that country 
 
 * Mr. Mill, I observe, has drawn a distinction somewhat 
 similar. 
 
 ** It is evident that whatsoever part of the national property goes 
 " to provide the medium of exchange, is wholly inoperative with 
 " regard to production. Nothing produces, but the immediate 
 " instruments of production ; the food of the labourer, the tools 
 " or machinery with which he labours, and the raw material which 
 " he fabricates. Page 108." 
 
 E
 
 50 TAXES. [chap. IV. 
 
 have the means of manufacturing conveniencies, 
 luxuries, &c. This species of labour may be 
 called productive: it is, however, in no respect 
 reproductive, except to the limited extent to which 
 the conveniencies and luxuries manufactured, aid 
 reproduction. 
 
 Whilst employed upon them, the labourers are 
 maintained by the net surplus I have mentioned, 
 to which they may be said to give " exchangeable 
 value." 
 
 That, manufacturers and traders, although " pro- 
 ductive," are in no respect " reproductive labou- 
 rers," will be evident, when it is remembered that 
 if agriculture, fisheries, &c. ceased to yield a net 
 surplus, the manufacturers and traders would be 
 without the means of existence, whilst the agri- 
 culturists, in the interval which nature has inter- 
 posed between their different labours, would, without 
 difficulty, be enabled to provide themselves with the 
 scanty accommodation absolutely necessary to their 
 existence. 
 
 Soldiers, sailors, and other persons taken into the 
 service of government, and maintained by produce, 
 purchased with the taxes, may perhaps be consi- 
 dered " unproductive labourers." 
 
 They defend those employed in agriculture, ma- 
 nufactories, &c. and enable them to enjoy in peace, 
 the benefits they respectively confer on each other.
 
 SECT. I.] TAXES. 51 
 
 and on the community : they do not however pro- 
 duce any thing tangible. 
 
 In the number of unproductive labourers, it may 
 be right also to include, not only the soldiers, 
 sailors, &c. but all those who are employed in pro- 
 viding the clothing, arms, and other commodities 
 required and consumed by them. This mass of la- 
 bourers in no respect add to the conveniencies or 
 luxuries of the remainder of the nation, and towards 
 them their labours cannot therefore be called pro- 
 ductive. 
 
 To return to the subject, — It may be stated as 
 the general result of taxes, that, under ordinary cir- 
 cumstances, they take accumulated labour from in- 
 dividuals, or annual produce from productive la- 
 bourers, whether employed in agriculture, manu- 
 factories, or otherwise, and transfer it to labourers 
 who do not produce, and that they require from all 
 the different classes of society either additional 
 labour or diminished consumption. 
 
 If one out of every four labourers be employed 
 in a way not productive, and three in consequence 
 increase their labour, and produce the same com- 
 modities, without consuming more necessaries, the 
 result, as far as the country is concerned, will be 
 the same. To the individuals, however, it would 
 of course be more desirable to have four to do the 
 labour instead of three, and on the principles before 
 explained, if three only were employed, the na-
 
 >52 - TAXES. [CHAP. rV. 
 
 tural value of the commodity would rise in reference 
 to " gold,** supposing labour in the country where 
 gold is produced to remain unaltered. 
 
 Taxes on articles of necessity appear to fall 
 on rent, profits, and wages, differently, in propor- 
 tion as the society, where they are levied, is in an 
 advancing, stationary, or declining state, but to have 
 always a direct tendency to apportion themselves to 
 the actual consumption of the parties, between 
 whom wages, profits, and rent are distributed. 
 
 Whether accumulated labour or annual revenue 
 be collected in the shape of taxes, or obtained in the 
 shape of loans, the result, as far as the science of 
 political economy, and as far as the annual revenue 
 and expenditure of the nation are concerned, is 
 precisely the same. 
 
 The payment of interest on the loan relates to the 
 annual revenue of a future year, and will be spoken 
 of separately. 
 
 A government may, by taxation and loans, take 
 from the people not only the net surplus of their 
 revenue, but a portion of their accumulated labour, 
 and even of their " active capital.*' A nation may 
 in consequence be put to inconvenience or distress*, 
 but it does not admit of argument, that by no 
 
 * With reference to Mr.Ricardo's statement, p. 164, I am not 
 quite sure that this was not the case in Great Britain during the 
 latter part of 1814, and the beginning of 1815; if it were so, 
 however, the deficiency was speedily made up by the diminished 
 expenditure of the government in the months inimediately ensuing.
 
 SECT. I.] TAXES. 53 
 
 means, except by contracting debts in a foreign 
 country, can a nation in one year anticipate the 
 revenue of a future year. 
 
 Whatever is raised by taxes, whatever is ob- 
 tained by loans and expended within the year, must 
 come either out of the revenue of that year, or from 
 the accumulated labour pre-existing in the country. 
 An individual may anticipate his next year's in- 
 come and expend it, but thanks to the Almighty, 
 with a nation this is impossible. 
 
 A very slight knowledge of political economy 
 will therefore be sufficient to carry conviction to 
 the mind, that no loan negociated three or four 
 years ago can have any effect on the existing state 
 of this country. 
 
 In reference to the general subject of taxation, 
 I must recommend the following extract from 
 Mr. Ricardo's work to the consideration of the 
 Chancellor of the Exchequer ; — the objections at 
 the conclusion do not appear to me of much im- 
 portance at any time, and of none certainly at the 
 present moment. 
 
 Page 277. " Ofall commodiiies, none are perhaps so pro- 
 " per for taxation as tliose which, either by the aid of nature 
 " or art, are produced with peculiar facility. With respect 
 " to foreign countries, such commodities may be classed 
 *' under the head of those which are not regulated in their 
 '' price by the quantity of labour bestowed, but rather by 
 '^ the caprice, the tastes, and the power of the purchasers. If 
 
 Ed
 
 54 TAXES. [CHAP. IV. 
 
 " England had more productive tin mines than other countries, 
 *' or if, from superior machinery or fuel, shehad peculiar facili- 
 ** ties for manufacturing cotton goods, the prices of tin and 
 " of cotton goods would still in England be regulated by 
 " the comparative quantity of labour and capital required 
 *' to produce them, and the competition of our merchants 
 *' would make them very little dearer to the foreign con- 
 *' sumer. Our advantage in the production of these commb- 
 *' dities might be so decided that probably they could bear a 
 *' very great additional price in the foreign market, with- 
 *' out very materially diminishing their consumption. This 
 " price they never could attain, whilst competition was 
 *' free at home, by any other means but by a tax on their 
 '* exportation. This tax would fall wholly on foreign con- 
 ** sumers, and part of the expences of the government of 
 *' England would be defrayed by a tax on the land and la- 
 ** bour of other countries. The tax on tea, which at present 
 ** is paid by the people of England, and goes to aid the 
 *' expences of the government of England, might, if laid in 
 " China on the exportation of the tea, be diverted to the 
 ** payment of the expences of the government of China.'* 
 
 " Taxes on luxuries have some advantage over taxes on 
 ** necessaries. They are generally paid from income, and 
 " therefore do not diminish the productive capital of the 
 " country. If wine were much raised in price in conse- 
 *' quence of taxation, it is probable that a man would rather 
 *' forego the enjoyments of wine, than make any important 
 *' encroachments on his capital, to be enabled to purchase 
 *' it. They are so identified with price, that the contributor 
 " is hardly aware that he is paying a tax. But they have 
 " also their disadvantages. First, they never reach capital, 
 *' and on some extraordinary occasions, it may be expe- 
 *' dient that even capital should contribute towards the 
 " public exigencies ; and secondly, there is no certainty as
 
 SECT. 1.3 TAXES. 55 
 
 " to the amount of the tax, for it may not reach even in- 
 ** come. A man, intent on saving, will exempt himself 
 ** from a tax on wine by giving up the use of it.'* 
 
 <f The income of the country may be undiminished, and 
 ** yet the state may be unable to raise a shilling by the 
 « tax." 
 
 E 4«
 
 56 TAXES. [chap. IV. 
 
 SECTION II. 
 
 Tax on Wages. 
 
 Before I proceed to remark on the effect of some 
 of the taxes mentioned by Mr. Ricardo, it is 
 necessary to state, that throughout his work he 
 supports the opinion, that the effect of taxation 
 is counterbalanced by an alteration in the circula- 
 tion of gold. I have already given my reasons for 
 coming to a different conclusion, and of course it 
 is unnecessary again to enter upon that part of the 
 subject. 
 
 Page 234?. — ** Adam Smith, as we have seen, has fully 
 *' allowed, that the effect of a tax on wages would be to 
 " raise wages by a sum at least equal to the tax, and would 
 *« be finally, if not immediately, paid by the employer of 
 «< labour." 
 
 Page 271. — " Dr. Smith uniformly, and I think justly 
 f* contends, that the labouring classes cannot materially 
 " contribute to the burthens of the state. A tax on neces- 
 " saries, or on wages, will therefore be shifted from the 
 " poor to the rich." 
 
 I cannot entirely agree with Mr. Ricardo and 
 Dr. Smith. It appears to me, the effect of a tax
 
 SECT. II.] TAXES. 57 
 
 on wages would depend on the progressive, sta- 
 tionary, or declining state of society. 
 
 In a progressive state, that is, where the number 
 of labourers was not equal to the demand, they 
 would be enabled to raise their wages to the full 
 extent of the tax : the effect of this would be to 
 increase the natural price of commodities produced 
 by labour, and to throw the tax entirely on the 
 consumers. In proportion only as each labourer 
 consumed, would he contribute to the tax. To 
 enable him to consume to the same extent as 
 before the tax, however, he must labour a greater 
 number of hours ; and these additional hours 
 labour would, in fact, be his contribution to the 
 country. * 
 
 In a stationary state of society, where the supply 
 of labourers was equal to the demand, presum- 
 ing the tax to make no alteration, it would fall 
 equally on the labourer and on the profits of those 
 who employed them. The price of commodities 
 would not rise, the demand for them remaining the 
 same ; and as the labourer could not increase his 
 labour, he must contribute his portion of the tax 
 by diminishing his consumption. 
 
 The capitalist or employer of labour must do 
 the same, and the tax, would, as far as it went, 
 
 * It seems a singular argument, that labourers do not contribute 
 to the burthens of the state, when they are allowed to be the 
 source of all riches.
 
 58 TAXES. [chap. IV, 
 
 diminish the comforts and luxuries of the whole 
 people, in exact proportion to the extent of their 
 previous enjoyment. 
 
 In a declining state, where the supply of labour- 
 ers exceeded the demand, the tax would fall wholly 
 on the labourers, until the superabundant popula- 
 tion were reduced.
 
 SECT. III.] TAXES. 59 
 
 SECTION III. 
 
 Tax on profits. 
 
 Page 231. — " A tax on hats will raise the price of hats, 
 " a tax on shoes, the price of shoes; if this were not 
 " the case, the tax would be finally paid by the manu- 
 " facturer ; his profits would be reduced below the general 
 *' level, and he would quit his trade. A partial tax on 
 " profits will raise the price of the commodity on which 
 " it falls ; a tax, for example, on the profits of the hatter, 
 '* would raise the price of hats ; for if his profits were 
 *' taxed, and not those of any other trade, his profits, un- 
 " less he raised the price of his hats, would be below the 
 " general rate of profits, and he would quit 'his employ- 
 «* ment for another." 
 
 ** In the same manner, a tax on the profits of the farmer 
 ** would raise the price of com ; a tax on the profits of 
 " the clothier, the price of cloth ; and if a tax in proper* 
 " tion to profits were laid on all trades, every commodity 
 " would be raised in price." 
 
 Presuming society to be in a progressive state, 
 there can be no doubt each individual whose profits 
 were taxed, would shift the tax from himself to the 
 consumer ; and in the result it would be paid out 
 of the accumulated labour of some individuals, 
 and the increased labour of others, each paying
 
 60 TAXES. [chap. IV. 
 
 the tax in proportion only to his absolute con- 
 sumption. 
 
 For example : an individual having his income 
 from the profits of manufacturing hats amounting 
 to 100/. per annum, taxed ten per cent., would 
 immediately raise his prices so as to increase his 
 profits to 110/., the 10/. would be paid to govern- 
 ment, and the tax would fall only on the individual 
 in proportion to his bondjide consumption of hats. 
 
 In a stationary state of society, however, where 
 the tax was not met by increased labour, it must 
 diminish consumption. 
 
 If capital remained the same, and the demand 
 lessened, the tax would fall therefore equally on 
 profits and on consumers. 
 
 In a declining state of society, when demand 
 and consequently '* profits " were going back, the 
 tax would fall wholly on " profits", or it may even 
 go beyond profits, and fall on capital. 
 
 If these principles be correct, it follows that an 
 undistinguishing tax on income, in a progressive 
 state of the country, though apparently just and 
 equitable, falls most oppressively on those persons 
 whose incomes are fixed, and in no way depending 
 on " profits j" they pay the direct tax, and also
 
 SECT. III.] TAXES. 6l 
 
 their proportion of the indirect tax, occasioned 
 by the rise in prices. It is to this circumstance, 
 probably, more than to any other, that the income 
 tax owes its unpopularity in England.
 
 62 TAJtES. fCHAP* IV. 
 
 SECTION IV. 
 
 Tax on Rent. 
 
 Page 191. — " A tax on reirt would affect rent only ; it 
 " would fall wholly on landlords, and could not be shifted 
 *' to any class of consumers." 
 
 In this definition of a tax on rent I entirely con^ 
 cur. I cannot, however, agree with Mr. Ricardo^ 
 that " a tax on rent, as rent is constituted, would 
 " discourage cultivation,'* page 192. It might, 
 and probably would, for a time discourage the fur- 
 ther erection of buildings, &c. by the landlord, and 
 in part interfere with the application of his capital to 
 the land, because, as rent is constituted, it would be 
 a tax on the profits of the landlord's stock so em- 
 ployed. So far as capital already laid out on the 
 buildings, &c. was concerned, it would be a tax, 
 in the first instance, on its profits j and ultimately, 
 it would depend on the progressive, stationary, or 
 declining state of society, whether that tax should 
 be borne by the consumer of raw produce, by the 
 consumer and landlord jointly, or by the landlord 
 only. If the demand for corn continued in- 
 creasing, however, such buildings and capital as 
 were required on newly cultivated lands would in 
 fact be advanced by the tenant, and separate 
 accounts of it kept ; the only effect of the tax 
 would then be, to fetter the distribution of the
 
 SECT. IV.] TAXES. 63 
 
 landlord's capital, and call capital from other 
 sources into the hands of tenants. 
 
 Before I dismiss the subject of rent, I cannot 
 help quoting the following passage, as appearing 
 to me decisive of the theory of the question relating 
 to foreign corn, and leaving the legislature nothing 
 to determine, but to decide, as nearly as may be 
 necessary for practical purposes, the effect of the 
 existing internal taxation, tithes, poor rates, &c. on 
 the ** natural value" or price of corn. After 
 stating that tithes fall on the consumers of corn, 
 Mr. Ricardo adds : 
 
 ** Tithes, however, may be considered as injurious to 
 ** landlords, inasmuch as they act as a bounty on impor- 
 " tation, by taxing the growth of home corn, while 
 " the importation of foreign corn remains unfettered. 
 ** And if, in order to relieve the landlords from the effects 
 " of the diminished demand for land, which such a bounty 
 ** must encourage, imported corn were also taxed, in an 
 *' equal degree with corn grown at home, and the produce 
 *' paid to the state, no measure could be more fair and 
 " equitable, since whatever were paid to the state by this 
 "tax, would go to diminish the other taxes which the 
 *' expences of government make necessary." Page 198.
 
 64 TAXES. [chap. IV. 
 
 SECTION V. 
 
 Taxes on Luxuries^ Sfc. 
 
 Agreeing as I do with Mr. Ricardo that taxes 
 on luxuries fall wholly on consumers,* and have no 
 direct effect either on wages, profits, or rent, it is 
 unnecessary to enter into any details upon them. 
 
 The following extract as to the legacy duty ap- 
 pears to me to admit of a question. 
 
 Page 166. — " If a legacy of 1,000Z. be subject to a tax 
 " of lOOZ., the legatee considers his legacy as only 900/., 
 ** and feels no particular motive to save the J OOl. duty from 
 " his expenditure, and thus the capital of the country is 
 ** diminished ; but if he had really received 1,000/., and 
 ** had been required to pay lOOZ. as a tax on income, on 
 " wine, on horses, or on servants, he would probably have 
 «' diminished, or rather not increased, his expenditure by 
 " that sum, and the capital of the country would have 
 " been unimpaired." 
 
 I would venture to ask, if, in the case in 
 question, the knowledge that the tax would be 
 levied, is not likely to have an effect on the per- 
 son leaving the legacy? 
 
 * Consumers in this case must of course be understood in an 
 enlarged sense : if I obtain a dozen of wine from my wine mer- 
 chant, and do not pay for it, the wine merchant pays the tax ; I 
 do not.
 
 SECT* v.] TAXE6. 65 
 
 To me it appears, that an individual desiring to 
 leave another 1,000/., and aware that government 
 would make a deduction of 100/. from that sum, 
 would be stimulated to make that 1,000/. 1,100/. ; 
 and I would ask Mr. Ricardo, whether, generally 
 speaking, the country is not likely to increase its 
 accumulations more from the savings of the per- 
 son who originally accumulated the legacy, than 
 from the savings of the person receiving it ?
 
 66 TAXES. [chap. IV. 
 
 SECTION VI. 
 
 Oh the effect of Taxes on circulation. 
 
 In a note, page 242, Mr. Ricardo says : 
 
 " On further consideration, I doubt whether any more 
 " money would be required to circulate the same quantity 
 " of commodities, if their prices be raised by taxation and 
 ** not by difficulty of production. * Suppose 100,000 quar- 
 " ters of corn to be sold in a certain district, and in a 
 " certain time, at 4/. per quarter, and that in consequence 
 " of a direct tax of 85. per quarter corn rises to 4Z. 85. ; 
 «« the same quantity of money, I think, and no more, would 
 *' be required to circulate this corn at the increased price. 
 *' If I before purchased 11 quarters at 4Z., and in conse- 
 " quence of the tax am obliged to reduce my consumption 
 "to 10 quarters, I shall not require more money ; for in 
 « all cases I shall pay 44Z. for my corn. The public would, 
 " in fact, consume one-eleventh less ; and this quantity 
 " would be consumed by government. The money neces- 
 " sary to purchase it would be derived from the 8s. per 
 " quarter to be received from the farmers in the shape of 
 " a tax, but the amount levied would, at the same time, be 
 " paid to them for their corn ; therefore the tax is, in fact, 
 " a tax in kind, and does not make it necessary that any 
 *' more money should be used ; or if any, so little that the 
 ♦* quantity may be safely neglected." 
 
 * Perhaps Mr. Ricardo will explain what is meant by the words 
 *' not hy difficulty of production ;' as they stand, they appear 
 give up his argument relative to the circulation of gold.
 
 SECT. VI.] TAXES. 67 
 
 I cannot agree in this theory. To me it appears 
 that the necessity for an increase to the currency 
 will depend entirely on the manner in which the 
 tax is met. 
 
 Take the example quoted : corn cost originally 
 4/. per quarter, government lays a tax of 85. per 
 quarter, making it 4/. 8s. ; the effect of this is to 
 take, in the first place, from tlie dealer, and ulti- 
 mately from the community, a portion of their ac- 
 cumulated labour in the shape of money, and 
 transfer it to the government ; government, it is 
 reasonable to presume, will give back this money in 
 return for labour not productive. If that be the 
 case the capital will be annihilated, " accumu- 
 lated labour" being diminished, the same circulat- 
 ing gold will be sufficient, though the " natural 
 price" of corn be advanced. 
 
 If, however, in a progressive state of society, the 
 tax in corn be met by a diminished consumption of 
 either corn or other articles, or by increased labour, 
 so that the capital or accumulated labour consumed 
 by government has no absolute effect in diminish- 
 ing the general capital and mass of commodities, 
 they will remain as before the tax, one only will be 
 increased in what may be considered " natural 
 value," and the circulation or transfer of that 
 will require an increased quantity of circulating 
 gold. 
 
 F'2
 
 6s TAXES. [chap. IV. 
 
 I place out of view, of course, any saving in the 
 use of circulating gold, &c. by which this cause 
 may be counteracted and even overpowered j I 
 speak only of the natural result of the tax. 
 
 If I differ with Mr. Ricardo in the above con- 
 usion, 
 follows. 
 
 elusion, still less can I agree with him in what 
 
 Page 243. — ^' The discovery of machinery, which ma- 
 "^ terially improves home manufactures, always tends to 
 " raise the relative value of money, and therefore to en- 
 '* courage its importation. All taxation, all increased im- 
 '^ pediments, either to the manufacturer or the grower of 
 ** commodities, tend, on the contrary, to lower the relative 
 " value of money, and therefore to encourage its ex 
 " portation. 
 
 To me it appears that to lower the value oT 
 commodities will render less (money) gold ne- 
 cessary, and however it may be brought to pur- 
 chase goods manufactured with machinery, it 
 will be immediately exported, because not wanted 
 to circulate commodities, the relative value of 
 which, as compared with gold, has fallen. 
 
 On the contrary, all increase of ** natural value*' 
 will make an increased quantity of gold neces- 
 sary, to circulate commodities at the advanced 
 rate J their relative value having risen, an increased 
 quantity of gold is necessary to circulate them.
 
 SECT. VI.] TAXES. 60 
 
 Perhaps th© following extract from Mr. Rfcardo, 
 will place the matter in a clearer point of view : 
 
 ** If gold were of double the value, half the quantity 
 " would perform the same functions in circulation ; and if 
 " it were of half the value, double the quantity would be 
 *' required. If the market value of corn be increased one- 
 " tenth by taxation or by difficulty of production, it is 
 " doubtful whether any effect wliatever would be produced 
 ** on the quantity consumed, because every man's want is 
 " for a definite quantity, and, therefore, if he has the 
 " means of purchasing, he will continue to consume as 
 " before ; but for money, the demand is exactly propor- 
 " tioned to its value. No man could consume twice the 
 " quantity of corn which is usually necessary for his sup- 
 " port ; but every man purchasing and selling only the 
 " same quantity of goods, may be obliged to employ twice, 
 *' tbrice, or any number of times the same quantity of 
 " money." — Page 216. 
 
 ft3
 
 70 TAXES. [chap. IV. 
 
 SECTION VIL 
 
 On the ge?ieral Effects of Taxes. 
 
 Page 2*76. — " Wlietber taxes be taken from capital or 
 " revenue, they diminish the taxable commodities of the 
 '' state. If I cease to expend 100/. on wine, because by 
 '* paying a tax to that amount, I have enabled government 
 " to expend 100/., instead of expending it myself, 100/, 
 *' worth of goods are necessarily withdrawn from the list 
 " of taxable commodities. If the revenue of the indivi- 
 " duals of a country be ten millions, they will have at least 
 " ten millions worth of taxable commodities. If by taxing 
 " some one million be transferred to the disposal of go- 
 " vernment, their revenue will still be nominally ten mil- 
 " lions, but they will remain with only nine millions 
 *' worth of taxable commodities. There are no circum- 
 " stances, under which taxation does not abridge the en- 
 " joyments of those on whom the taxes ultimately fall, and 
 " no means by which those enjoyments can again be ex- 
 " tended, but the accumulation of new revenue." 
 
 I cannot see that a tax falling on revenue only, 
 necessarily diminishes the taxable commodities of 
 a state. 
 
 If I had purchased and consumed wine to the 
 value of 100/., it appears to me, the capital, or 
 " accumulated labour," would have been annihi- 
 lated, precisely in the same way as if I paid go- 
 vernment the tax, and it had been employed unpro-
 
 SECT. VII.] TAXES. 71 
 
 ductively ; in purchasing for example, — the same 
 wine I sliould have purchased, for the consumption 
 of the foot guards. 
 
 As far as the national capital is concerned, there 
 does not appear to me any difference whatever in 
 the two cases ; the difference as it concerns my in- 
 dividual enjoyment, will I admit be considerable, 
 and against this I will not place the enjoyment of 
 the foot guards ; but it must be admitted, whether 
 it regards reproduction, or the taxable commodities 
 of the state, the tax will make no alteration. 
 
 Page 206. — " It is not to be inferred from this view of 
 *' tithes, and taxes, that they do not discourage cultivation. 
 " Every thing which raises the exchangeable value of com- 
 " modities of any kind, which are in very general demand, 
 *' tends to discourage both cultivation and production ; but 
 " this is an evil inseparable from all taxation, and is not 
 " confined to the particular taxes of which we are noAv 
 " speaking." 
 
 *' This may be considered indeed as the unavoidable 
 " disadvantage, attending all taxes received and expended 
 " by the state. Every new tax becomes a new charge on 
 " production and raises natural price." 
 
 ** A portion of the labour of the country, which was be- 
 " fore at the disposal of the contributor to the tax, is placed 
 *' at the disposal of the state, and cannot therefore be em 
 " ployed productively." 
 
 To the first part of this conclusion I must also 
 object. Taxes do not appear to me to discourage 
 cultivation or production. 
 
 F 4
 
 72 TAXES. [CHA1\ IV. 
 
 To continue the example as to the wine ; if go- 
 vernment, by a tax take from me 100/. which I other- 
 wise intended to lay out in wine, and with that sum 
 purchase sufficient corn to maintain two soldiers a 
 year, this transaction it appears to me would en- 
 courage the cultivation and production of corn, 
 and discourage that of wine. 
 
 If instead of corn, however, the government pur- 
 chased a ship or guns, or if they paid the amount 
 in wages, and part of it was laid out in durable 
 commodities, the national wealth would be in- 
 creased rather than diminished. The capital would 
 have assumed a permanent shape, whilst, if it had 
 remained in my hands, its entire annihilation would 
 have beeq certain, 
 
 I cannot but think a more accurate examination 
 will lead Mr. Ricardo to a different opinion a» to 
 the effect of taxation. 
 
 The following extract is expressed more in the 
 spirit of such an examination, and is of peculiar 
 importance with reference to the present situation 
 of this country. I will only add to it, that when 
 taxes are paid by increased industry, and not by 
 diminished consumption, which it appears to me 
 they have been in this country during the late 
 war, they tend to increase cultivation and produc- 
 tion ; and when government expend them in com- 
 modities of a more durable nature, than they would 
 have been expended by the contributors, or pay
 
 SECT. VII.] TAXES. 7'^ 
 
 the amount to individuals by whom they are so 
 expended, they add to, instead of diminishing, the 
 national wealth : 
 
 Page273. — " If a tax, however burthensome itmay be, falls 
 " on revenue, and not on capital, it does not diminish de- 
 " mand, it only alters the nature of it. ]t enables government 
 " to consume as much of the produce of the land and labour 
 " of the country as was before consumed by the individuals 
 " who contribute to the tax, an evil sufficiently great, with- 
 ** out overcharging it. If my income is .^1000 per annum, 
 " and I am called upon for ^ 100 per annum for a tax, I 
 " shall only be able to demand nine-tenths of the quantity 
 " of the goods which I before consumed, but I enable 
 " government to demand the other tenth. If the com- 
 " modity taxed be corn, it is not necessary that my de- 
 " mand for corn should diminish. As I may prefer to 
 " pay ^100 per annum more for ray corn, and to the 
 " same amount abate in my demand for wine, furniture, 
 *' or any other luxury. Less capital will consequently be 
 " employed in the wine or upholstery trade, but more will 
 " be employed in manufacturing those commodities on 
 " which the taxes levied by government will be ex- 
 " pended."
 
 CHAPTER V. 
 
 NATIONAL DEBT. 
 
 Page 282. — " Taxes which are levied on a country lor 
 ^' the purpose of supporting wai*, or for the ordinary pur- 
 " po8es of the state, and which are chiefly devoted to the 
 " support of unproductive labourers, are taken from the 
 '* productive industry of the country ; and every saving 
 " which can be made from such expences will be generally 
 " added to the income, if not to the capital of the contri- 
 '^ butors, M'hen, for the expences of a year's war, twenty 
 " millions are raised by means of a loan, it is the twenty 
 " millions which are withdrawn from the productive capital 
 ^,« of the nation. The million per annum which is raised 
 " by taxes to pay the interest of this loan, is merely trans- 
 " ferred from those who pay it to those who receive it, 
 ^' from the tontributor to the tax, to the national creditor. 
 " The I'eal expence is the twenty millions, and not the 
 " interest which must be paid for it.* 
 
 * Melon says, " that the debts of a nation are debts due from 
 " tlie right hand to the left, by which the body is not weakened. 
 " It is true that the general wealth is not diminished by the pay- 
 " ment of the interest on arrears of the debt : the dividends are a 
 << value which passes from -the hand of the contributor to the
 
 CHAP, v.] NATIONAL DEBT. 7-5 
 
 " Whether the interest be or be not paid, tlie coinitry 
 " will neither be richer or poorer. Government might at 
 " once have required the tvi^enty millions in the shape of 
 *' taxes; in which case it would not have been necessary to 
 "• raise annual taxes to the amount of a million. This, 
 '* however, would not have changed the nature of the 
 *• transaction. An individual, instead of being called upon 
 " to 100/. per annum, might have been obliged to pay 
 " 2,000/. once for all. It might also have suited his con- 
 " venience rather to borrow this 2,000/., and to pay 100/. 
 " per annum for interest to the lender, than to spare the 
 " larger sum from his own funds. In one case, it is a 
 " private transaction between A. and B., in the other, 
 " government guarantees to B. the payment of interest to 
 
 " national creditor: whether it be the national creditor or the 
 
 " contributor who accumulates or consumes it, is, I agree, of 
 
 " little importance to the society ; but the principal of the debt 
 
 " — what has become of that? It exists no more. The con- 
 
 " sumption which has followed the loan has annihilated a capital 
 
 " which will never yield any further revenue. The society is de- 
 
 " prived not of the amount of interest, since that passes from 
 
 " one hand to the otlier, but of the revenue from a destroyed 
 
 " capital. This capital, if it had been employed productively by 
 
 " him who lent it to the state, would equally liave yielded him an 
 
 " income, but that income would have been derived from a real 
 
 " production, and would not have been furnished from tlie pockei. 
 
 " of a fellow citizen." — Say, vol. 2. p. 357. *' This is both con- 
 
 •' ceived and expressed in the true spirit of the science." 
 
 Note. — Perhaps Mr.llicardo will be good enough to say whether 
 the effect on the animal production of this country, would not have 
 been the same, if the oaj)ital in question had been expended in 
 building houses.
 
 76 NATIONAL DEBT. [CHAP. V. 
 
 « be equally paid by A. If the transaction had been of a 
 <* private nature, no public record would be kept of it, and 
 " it would be a matter of comparative indifference to the 
 *' country, whether A. faithfully performed his contract to 
 " B., or unjustly retained the lOOl. per annum in his own 
 " possession. The country would have a general interest 
 " in the faithful performance of a contract; but with respect 
 " to the national wealtl), it would have no other interest 
 " than whether A. or B. would make this 100/. most pro- 
 " ductive; but on this question it would neither have the 
 " right nor the ability to decide. It might be possible, 
 " that if A. retained it for his own use, he might squander 
 " it upproductively ; and if it were paid to B., he might add 
 *.' it to his capital, and employ it unproductively. And the 
 " converse would also be possible; B. might squander it, 
 " and A. might employ it productively. With a view to 
 " wealth only, it might be equally or more desirable that 
 '^ A. should or should not pay it; but the claims of justice 
 " and good faith, a greater utility are not to be compelled 
 *' to yield to those of a less; and accordingly, if the state 
 <f were called upon to interfere, the courts of justice would 
 *' oblige A. to perform his contract. A debt guaranteed 
 " by the nation, differs in no respect from the above trans- 
 ^f action. Justice and good faith demand that the interest 
 " of the national debt should continue to be paid, and that 
 " those who have advanced their capitals for the general 
 " benefit, should not be required to forego their equitable 
 '* claims on the plea of expediency. 
 
 " But independently of this consideration, it is by no 
 *5 means certain, that political utility would gain any thing 
 *' by the sacrifice of political integrity ; it does by no means 
 '' follow, that, the party exonerated from the payment ©f 
 " the Interest of the national debt, would employ it more
 
 CHAP, v.] NATIONAL DEBT. 77 
 
 " productively than those to whom indisputably it is due. 
 " By cancelling the national debt, one man's income might 
 " be raised from 1000/., to 1,500/. but another man's would 
 *^ be lowered from 1,500/. to 1000/. These two men's 
 " incomes now amount to 2,500/., they would amount to no 
 " more then. If it be the object of government to raise 
 '* taxes, there would be precisely the same taxable capital 
 *' and income in one case, as in the other. It is not, then, 
 " by the payment of the interest of the national debt, that 
 " a country is distressed, nor is it by the exoneration 
 " from payment that it can be relieved. It is only by 
 " saving from income, and retrenching in expenditure, 
 *^ that the national capital can be increased ; and neither 
 " the income would be increased, nor the expenditure 
 *' diminished by the annihilation of the national debt. It 
 " is by the profuse expenditure of government, and of 
 " individuals, and by loans, that the country is im- 
 " poverished ; every measure, therefore, which is calcu- 
 " lated to promote public and private economy, will relieve 
 " the public distress ; but it is error and delusion to suppose, 
 " that a real national difficulty can be removed, by shifting 
 «' it from the shoulders of one class of the community, who 
 " justly ought to bear it, to the shoulders of another class, 
 " who upon every principle of equity, ought to bear no 
 " more than their share. 
 
 To the above clear and masterly statement, it 
 might be added, that if this measure should ever 
 take place, particularly in time of peace, it will 
 disarrange demand and supply, and consequently 
 tlie employment of ca})itai, and considerably in- 
 crease instead of diminish any distress that may 
 then exist. For example, tlie man whose income
 
 78 NATIONAL DEBT. [CHAP. V. 
 
 is 1,500/. a year is accustomed to a certain ex- 
 penditure, to keep servants and horses, should his 
 income be reduced to 1000/. per annum he will 
 necessarily retrench. Is it probable, however, that 
 the person whose income is increased from 1000/. 
 to 1,500/. a year, by tlie diminution of taxes, will 
 expend that increase on the same articles which 
 the other will give up, and if he does not, would 
 not this derange demand and supply, and create 
 distress ? In what way can this transaction increase 
 the national wealth ? 
 
 Page 287. — " A country which has accumulated a large 
 " debt, is placed in a most artificial situation ; and although 
 " the amount of taxes, and the increased price of labour, 
 " may not, and I believe does not, place it under any 
 'f other disadvantage with respect to foreign countries, ex- 
 *' cept the unavoidable one of paying those taxes ; yet it 
 '« becomes the interest of every contributor to withdraw 
 « his shoulder from the burthen, and to shift this payment 
 " from himself to another, and the temptation to remove 
 " himself and his capital to another country, where he will 
 " be exempted from such burthens, becomes at last irresist- 
 " able, and overcomes the natural reluctance which every 
 'f man feels to quit the place of his birth, and the scene of 
 " his early associations. A country which has involved 
 " itself in the difficulties attending this artificial system, 
 '' would act wisely by ransoming itself from them, at the 
 " sacrifice of any portion of its property which might be 
 " necessary to redeem its debt. That which is wise in an 
 " individual, is wise also in a nation. A man who has 
 " 10,000/. paying him an income of 500/., out of which he 
 '^ has to pay 100/. per annum towards the interest of the
 
 CHAP, v.] NATIONAL DEBT. 79 
 
 *' debt, is really worth only 8,000/., and would be equally 
 *' rich, whether he continued to pay 100/. per annum, or 
 ** at once, and for only once, sacrificed 2,000/. ; but where, 
 *' it is asked, would be the purchaser of the property 
 ^' which he must sell to obtain this 2,000/. ? The answer 
 " is plain, the national creditor, who is to receive this 
 " 2,000/. will want an investment for his money, and will 
 " be disposed either to lend it to the landholder or manu- 
 " facturer, or to purchase from them ^ part of the property 
 " of which they have to dispose. To such a payment the 
 " stockholders themselves would largely contribute. This 
 " scheme has been often recommended, but we have I 
 " fear neither wisdom enough, nor virtue enough to adopt 
 " it. It must however be admitted, that during peace, 
 " our unceasing efforts should be directed towards paying 
 " off that part of the debt which has been contracted dur- 
 " ing war; and that no temptation of relief, no desire of 
 *' escape from present, and I hope temporary distresses, 
 " should induce us to relax in our attention to that great 
 « object." 
 
 ** No sinking fund can be efficient for the purpose of 
 " diminishing the debt, if it be not derived from the excess 
 " of the public revenue over the public expenditure. It is 
 " to be regretted, that the sinking fund in this country is 
 " only such in name ; for there is no excess of revenue 
 " above expenditure. It ought by economy to be made 
 *' what it is professed to be, a really efficient fund for the 
 " payment of the debt. If, on the breaking out of any 
 *f future war, we shall not have very considerably reduced 
 " our debt, one of two things nuist happen, either the whole 
 " expences of that war must be delVayed by taxes raised 
 " from year to year, or we must, at the end of that war, if 
 " not before, submit to a national bankruptcy ; not that we
 
 80 NATIONAL DEBT. [CHAP. V. 
 
 " shall be unable to bear any large additions to the debt, 
 " it would be difficult to set limits to the powers of a great 
 " nation, but assuredly there are limits to the price which, 
 " in the form of perpetual taxation, individuals will submit 
 " to pay for the privilege merely of living in their native 
 " country." /'' 
 
 All taxes, no doubt, place a nation under some 
 disadvantage in its foreign trade ; but, generally 
 speaking, this appears to be a point of minor im- 
 portance, and is probably, as it regards this country, 
 counterbalanced by the assistance which art has 
 given to human labour. 
 
 A country accumulates a debt, not from neces- 
 sity, but entirely from a regard to the feelings of 
 the community. Borrowing accumulated labour, 
 instead of requiring it in the shape of taxes, may 
 probably by acting upon opinion, stimulate labour 
 and reproduction ; but Mr. Ricardo Will, I am 
 sure admit, that whether ten millions are raised 
 by loan or taxes in the same year, the immediate 
 effect on the national wealth is precisely the 
 same. 
 
 There are few subjects which men in general 
 are disposed to view more irrationally than the 
 " national debt ;'* although it is the representative 
 of " accumulated labour," during the whole period 
 of its expenditure, the national wealth or accumu- 
 lation has continued to increase.
 
 CHAP, v.] NATIONAL DEBT. 81 
 
 If the nation has annually borrowed forty mil- 
 lions, it has saved twice that sum ; and unless the 
 evidence of every sense we have means nothing, 
 the nation is now richer, in all that constitutes 
 riches, than it was before the first 100/. was borrowed. 
 
 The payment of the interest on the debt is 
 only a transfer of a part of the labour of the whole 
 community to a select number, who either by them- 
 selves or their ancestors, have preferred lending 
 the state their accumulated labour rather than ex- 
 pend it themselves. If they had so expended it, I 
 may be allowed to doubt, whether, taking into the 
 estimate the increased labour which has resulted 
 from taxation, the nation would have had greater 
 riches than it has now. Under any circumstances, 
 however, Mr. Ricardo ably proves, that although 
 some individuals would lose to the same amount 
 that others gain, the nation could not directly or 
 indirectly profit, by ceasing to pay the interest ; or 
 in other words, by ceasing to transfer accumulated 
 labour from some individuals of the community to 
 others of the same community. 
 
 With the produce the dividends will purchase, 
 persons may live in idleness ; but, generally speak- 
 ing, the fundholders are active men, and it may 
 even be questioned, whether the accumulated la- 
 bour transferred to them, is not as well, and as pro- 
 fitably, employed in their hands, as it would be if left 
 in the hands of the payers of taxes ; and still more, 
 
 G
 
 82 NATIONAL DEBT. [CHAP. V. 
 
 whether the extent to which machinery has been 
 carried in this country to the abridgement of human 
 labour, is not in its annual results equal to the 
 labour of all the individuals the dividends would 
 enable to live in idleness. 
 
 I can by no means think Mr. Ricardo's plan of 
 paying off the national debt, wise, even if it were 
 practicable. Because a nation has a debt of 
 1000 millions, it by no means follows that all the 
 commodities in it are worth that sum, nor do the 
 amount of those commodities materially affect the 
 means of paying the interest. A nation with 
 annual productions equal to 100 millions, and re- 
 quiring only the expenditure of fifty millions to 
 produce the 100, would be enabled to pay the in- 
 terest of a debt of 2000 millions, without perhaps 
 being able to transfer accumulated labour to the ex- 
 tent of 100 millions in repayment of the principal. 
 In this respect a nation may be said to resemble a 
 professional man, whose income arising from his 
 professional labour, may enable him to pay 100/. 
 per annum, the interest of 2,000/. expended on 
 his education, though, at the same time, it 
 would be utterly out of his power to pay the 
 principal. 
 
 It might be exceedingly rational to call on an 
 individual (on whom a capital of 2,000/. had been 
 expended), when he arrived at the age of eighteen, 
 to pay 100/. per annum from the produce of his 
 abour as the interest on that capital, and some-
 
 CHAP, v.] NATIONAL DEBT. 83 
 
 thing towards the principal ; but it would be in the 
 highest degree irrational to insist on his at once 
 paying the 2,000/. 
 
 This appears to me precisely the case of the 
 nation. I am not prepared to say there is not 
 accumulated labour enough to transfer for the pur- 
 pose of paying off the national debt, I cannot 
 think any arrangement for that object however 
 necessary, or that its details can be regulated with 
 any regard to justice. 
 
 G Q
 
 CHAPTER VI. 
 
 CONCLUSION. 
 
 It was my original intention to have offered 
 observations on other parts of Mr. Ricardo's 
 valuable work, particularly on what he has said on 
 tithes and poor rates — the circumstances of the 
 present moment, however, are so favourable to the 
 discussion of the general principles I advocate, and a 
 practical decision on them is become so important, 
 that I willingly risk the charge of haste, and sub- 
 mit what I have already written to the decision of 
 the public. 
 
 Earnestly, I wish Mr. Ricardo had preceded me 
 in the hazardous attempt, to apply practically the 
 true principles of political economy and taxation, 
 to the present situation of the world — I cannot 
 but think, the work on which I have ventured to 
 offer these remarks, would have acquired an additional 
 claim to public favour, if, from the principles it 
 lays down, Mr. Ricardo had satisfactorily elucidated 
 the causes of that agricultural distress, which now 
 commands, as it deserves, universal attention. 
 
 Should the principles I have endeavoured to 
 establish be well founded, it would follow, that —
 
 CHAP. VI.] CONCLUSION. 85 
 
 War causes a demand for labourers to fill the 
 ranks of the army and navy, &c. ; and also for 
 labourers to provide the army and navy with corn, 
 clothing, arms, &c. 
 
 These labourers are maintained from the surplus 
 produce of the nation, which governments are 
 enabled to obtain, through the means placed in 
 their hands by taxes and loans. 
 
 The expenditure of these taxes and loans in 
 payments to labourers, and in tlie purchase of corn, 
 clotli, &c., causes a demand for agricultural pro- 
 duce, and the surplus of the nation in consequence 
 takes that form. 
 
 To obtain the supplies necessary recourse is 
 had to worse soils, the ordinary effect of which 
 is, to increase the landlord's rent, diminish the share 
 of the labourer, and leave the profits of the farmer 
 unaffected. 
 
 The war demand however, takes labourers out of 
 the market, and enables those who remain to raise 
 wages — the increased demand for agricultural, and 
 other produce, allows tliem at the same time to 
 work any number of hours to which their strength 
 may be equal. 
 
 By the operation of these combined causes, 
 labourers are by increased industry enabled to meet 
 the effects of taxation, and worse soils, and to ob- 
 tain and consume even an additional share of 
 produce. 
 
 c 3
 
 86 CONCLUSION. [chap. VI. 
 
 This increased demand on the part of the 
 labourers, added to that of the government, neces- 
 sarily keeps the " market price " of com, above 
 its " natural value," the farmer in consequence 
 obtains rather an increased, than a diminished 
 quantity of accumulated labour for his surplus, in 
 other words, his profits are increased. 
 
 Landlords are even more benefitted than 
 farmers or labourers, they obtain an increased quan- 
 tity of produce, and are enabled to exchange it 
 for a larger quantity of accumulated labour, than 
 under other circumstances, they could have done. 
 
 War likewise causes a demand for different 
 manufactures — even if that were not the case, 
 however, the transfer of capital to agriculture, 
 would enable manufacturers to increase the 
 " exchangeable value" of their produce, or in 
 other words, add to their profits. 
 
 The annual productions of what may be caUed 
 the active classes of society, become from these 
 co-operating causes, high in exchangeable value, 
 not when compared with each other, but when 
 compared with " gold," or any other commodity 
 unaffected by similar events. 
 
 The possessors of " accumulated labour," in 
 addition to the amount required from them for 
 taxes, suffer from the high exchangeable value of 
 the commodities required for daily consumption.
 
 CHAP. VI.] CONCLUSION. 87 
 
 Accumulated labour in the result changes 
 hands with great rapidity, active capital is at a 
 high premium, and increased industry and activity 
 become the only means of arresting the progress 
 of individual distress and ruin. 
 
 In this country, during the late war, extraordi- 
 nary and unprecedented exertions were made by 
 all classes, and machinery, steam, and various other 
 important agents were called into action, to increase 
 the power of human labour. 
 
 If war occasioned an enormous consumption, it 
 occasioned a still larger cultivation, and production ; 
 and it is impossible not to agree with Mr. Ricardo, 
 that " the national capital has not merely been 
 " unimpaired, it has been greatly increased, and 
 " the annual revenue of the people, even after 
 " payment of their taxes, is probably greater than 
 " at any former period of our history." — P. l6l'. 
 
 If there had been no war, it is not probable 
 population would have received the same stimulus, 
 or increased to any thing like the same extent ; 
 before recourse could have been had to the soils 
 now in cultivation, the competition among the 
 labourers, would have enabled the farmer to reduce 
 the wages of labour so low, as to preclude the further 
 increase of labourers. I will not, however, now 
 discuss the state of things which might have resulted 
 under different circumstances, but proceed to trace 
 G i
 
 88 CONCLUSION. [chap. VI, 
 
 the consequences of peace after a war, having the 
 effects I have endeavoured to describe. 
 
 When the war ceased, if the demand of govern- 
 ment for different commodities materially and sud- 
 denly diminished, the result must have been a glut, 
 and a consequent fall in the market price of all those 
 articles which government had either consumed 
 itself, or enabled individuals to consume. 
 
 The effect of this, as it regarded manufactures, 
 would have been to enable other classes to obtain a 
 large portion of the accumulated labour contained, 
 in their commodities for a less return. 
 
 The manufacturers and their labourers would have 
 lost, other classes would have gained — the national 
 wealth however would have remained unimpaired, 
 except inasmuch as it would be affected by the alter- 
 ed destination of capital; some manufacturers would 
 have changed the nature of their manufacture, others 
 withdrawn a part, or the whole of their capitals, 
 until the supply ceased to exceed the demand. 
 
 The same results would have followed, though 
 more slowly, as to agricultural produce. 
 
 The fall in price would, for a time, have placed 
 the labourers even in a better relative situation than 
 they were when the war existed, their exertions 
 would have diminished, and at the same time.
 
 CHAP. VI.] CONCLUSION. 89 
 
 population would have received a considerable im- 
 pulse ; these two operating causes, added to the 
 annually diminishing capital of the farmer, would 
 no doubt, in a few years, have equalised supply and 
 demand. 
 
 The fall in the market price of corn, after one or 
 two plentiful harvests, elucidates this principle, 
 although its effects are but temporary. 
 
 At the close of the late war, however, it became 
 necessary, that whilst government ceased to de- 
 mand their usual war supply of agricultural 
 produce, manufactures, &c. they should reduce 
 the army, navy, &c. and thus add to the mass of 
 active, though previously unproductive labourers, 
 in the market.* 
 
 * The lowest parliamentary estimate I have seen, makes the 
 number of individuals discharged by government 500,000. If 
 400,000 be taken for Great Britain, and the persons employed to 
 provide them with necessaries be estimated at 000,000, the effect 
 is to throw 1,000,000 of men, with their wives and famiHes, on 
 the existing population. 
 
 The operation of this enormous increase on our population 
 has not been calculated ; but if the principle be correct, it is only 
 necessary to direct public attention to the subject, in order to 
 secure its full and accurate investigation. 
 
 The efTect of an addition to the population of Ireland, in 
 lowering wages already too low, does not appear to have been 
 adverted to in considering the existing evils of that unfortunate 
 country.
 
 90 CONCLUSION. [chap. VI. 
 
 The fust effect of the peace was felt in the manu- 
 facturing districts where war had stimulated pro- 
 ductions no longer necessary. 
 
 The manufacturers attempted to meet the evil, 
 by obtaining an increased quantity of labour for the 
 same wages,* a proceeding to which the number of 
 labourers thrown upon the market by the mea- 
 sures of government, gave every facility ; this, how- 
 ever, only increased the supply, the distress soon 
 became almost overwhelming, and it continued, 
 notwithstanding a parliamentary enquiry, until ex- 
 perience taught the manufacturers, that the real 
 cause of their loss, was "an excess of production •" 
 they then changed their principle, wisely with- 
 drew a part of their capitals, and whilst they dimi- 
 nished wages, diminished at the same time, the 
 number of hours the labourers were accustomed 
 to work. 
 
 This had its effect, and the prices or exchange- 
 able value of their manufactures, slowly recovered 
 their natural level. 
 
 The fall in manufacturing wages however, 
 necessarily diminished the consumption of agricul- 
 tural produce, and the diminished demand of 
 government, and of the persons employed dii-ectly 
 
 * It is hardly necessary to observe, that the war demand for 
 labourers had raised wages to a very unusual extent, during the 
 last two or three years preceding the peace.
 
 CHAP. VI.] CONCLUSION. 91 
 
 and indirectly by government, began also to be 
 sensibly felt. 
 
 The farmers having obtained, during the war, 
 considerable accumulated labour, or in other words 
 large profits, were enabled to keep back the sup- 
 ply, and for some time they refused to exchange 
 their produce at a low rate, still the price was sen- 
 sibly affected, and it was evident the farmers profits 
 were diminishing. 
 
 The increased and increasing quantity of labour- 
 ers thrown on the market, now enabled the farm- 
 ers to take, what appeared the most obvious means 
 of increasing those profits. 
 
 The wages of agricultural labour were lowered, 
 even to a greater extent than those of manufac- 
 turing labour, and this necessarily operated further 
 to diminish the consumption of agricultural produce, 
 far from being enabled to consume more than they 
 did during the war, labourers were obliged to con- 
 sume less — and thousands came on the different 
 parishes. 
 
 The stock of corn continuing to increase, 
 the markets have fallen more rapidly 5 the usual 
 distribution of rent, profits, and wages, has 
 been altered ; the share of the labourer, after 
 all the great consumer, is diminished ; the share 
 of the landlord and tenants, though, if taken 
 in corn it would be increased in quantity, is 
 diminished in " exchangeable value," because the
 
 92 CONCLUSION. [chap. VI» 
 
 state of wages has left it almost without con- 
 sumers, and consequently without a market. 
 
 The expenditure of landlords and farmers is of 
 course diminished, and adds to the derangement 
 between supply and demand : All other classes, 
 not connected v/ith agriculture, however, gain 
 what the agriculturists lose ; the former ob- 
 tain agricultural produce for less labour than 
 it actually costs, and have consequently more 
 of their own labour to bring to market, to ex- 
 change for comforts and luxuries. The national 
 wealth remains unimpaired, the consumption of 
 luxuries is increased not diminished. 
 
 The tendency of supply and demand to equality, 
 might have done something towards remedying 
 the evil under which the agriculturists must ne- 
 cessarily suffer, the large and increasing reduc- 
 tions made in the military and naval force, and in 
 the other departments of government each year, 
 however, since the peace, have added so materially 
 to a market previously overstocked with labourers, 
 that v/ages have fallen stiil lower, and consequently 
 the consumption of agricultural produce has di- 
 minished far beyond the diminished amount of the 
 supply. 
 
 The agriculturists, accustomed to speak against 
 taxation during the war, when by its operation, 
 their rents were increased, infinitely beyond the 
 amount they paid in taxes, now feel the difference,
 
 CHAP. VI.] CONCLUSION. 93 
 
 and universally join in deprecating taxation, they 
 call for a reduction in the " wasteful and extrava- 
 gant expenditure" of government; or, in other 
 words, a reduction of consumption, in order to re- 
 medy — what ? 
 
 An evil, arising from ej^cess of production be- 
 yond demand. * 
 
 If the amount received for taxes were expended 
 by government on luxuries only, to take off those 
 taxes and discontinue the expenditure, would dimi- 
 nish the consumption of luxuries — the producers 
 might be ruined — the accumulated labour, how- 
 ever, instead of being consumed, would remain with 
 individuals — it would soon operate to raise wages, 
 more than the discharge of those employed to pro- 
 duce luxuries could diminish them — it would 
 therefore increase the consumption of agricultural 
 produce. 
 
 The very reverse however is the fact, the main 
 bulk of the taxes is expended in agricultural pro- 
 duce, or in the payment of such moderate wages 
 to individuals as enable them to consume flew 
 other things. The persons who now pay taxes, 
 are in general enabled to command the necessaries 
 of life ; any diminution in those taxes, therefore, 
 though it may, and as we see by the revenue does 
 increase the demand for luxuries, cannot increase 
 the demand for agricultural produce — whilst the 
 
 * Surely the readers of Mrs. Marcet must be amused with this 
 profound specimen of modern logic.
 
 94 CONCLUSION. [chap. VI, 
 
 direct and obvious tendency of all reductions in 
 the Army, Navy, or in other departments of govern- 
 ment, is to prevent the individuals reduced, from 
 consuming the agricultural produce they have been 
 accustomed to do — to increase the number of 
 labourers in the market — to lower the wages of 
 labour — and consequently to diminish the con- 
 sumption of agricultural produce, and increase 
 the existing distress of that important class of the 
 community. 
 
 If all existing taxes, and with them all the na- 
 tional debt were swept away, the only effect would 
 be, to enable some individuals to consume more, and 
 to require others to consume less, and in the existing 
 state of society the direct effect of such a measure, 
 would be to diminish and not increase the con- 
 sumption of agricultural produce. * 
 
 To put the case in another view : 
 
 If the government of a nation take a part of its 
 annual produce for many years, to maintain a 
 portion of the people in idleness, and suddenly 
 
 * It might be curious to trace how far the presence of, and 
 contributions to the allies, assisted the agriculture of France, 
 by withdrawing capital, &c., and enabling the supply to suit itself 
 to the demand, delaying, if not entirely mitigating the evils the 
 agriculturists of other nations are suffering. It might be equally 
 curious to enquire how far the late discussions on the poor laws 
 (thought to be so necessary for the farmers relief), have operated 
 to prevent the consumption of agricultural produce in this 
 country, and thereby assisted to overload the market, and add to 
 the existing evils under which the agriculturists are suffering. 
 
 " A man's heart deviseth his way ; but the Lord directeth 
 his steps.'' — Proverbs xvi, v. 9.
 
 CHAP. VI.] CONCLUSION. 95 
 
 cease to take that annual produce, and to maintain 
 the people ; is it not evident, that such produce will 
 remain in the hands of some of the individuals 
 of that nation ? 
 
 If the government during the period in question, 
 had given the people it maintained, sufficient to 
 enable them to live well, to be well clothed, and 
 well armed, and had taken the surplus produce of 
 the nation in the shape of corn, cloth, &c. for that 
 purpose, would not those be the commodities which 
 would be left in the hands of the individuals until 
 the direction of the capital employed in producing 
 them, had been changed ? * 
 
 Is there any process by which the persons so 
 ceasing to be paid by the government, could ob- 
 tain corn and cloth from the individuals in whose 
 possession it remained, except by labouring for it ? 
 If the state of society I have mentioned had 
 existed many years, would not the demand and 
 supply have suited themselves to the operations of 
 government ? Would not the progress of popula- 
 tion have done this? Would not the labourers 
 discharged by government, and those employed to 
 furnish them with necessaries, consequently come 
 in excess on the market ? If the individuals dis- 
 charged by government were provided as I have 
 
 * It must be observed, that this is the state of things existing 
 more or less throughout Europe, and even in America ; of course 
 this prevenfs the market here from recovering itself by exporting 
 corn, which it is granted, under other circumstances, might have 
 offered relief, and enabled suj)plj' and demand to assimilate.
 
 96 CONCLUSION-. [chap. VI. 
 
 supposed, would they not consume less corn, and 
 wear less clothes, when they came to have only the 
 ordinary wages of labour ? Would not the differ- 
 ence between the two consumptions come into the 
 market in excess ? Would not these labourers, and 
 a great portion of the labourers previously employed 
 to provide them with corn and clothes, &c. add to 
 the number of labourers, lowering thereby the 
 market price of labour, and enabling the employers 
 of labour to diminish wages, or in other words, tlie 
 quantity of produce usually given to labourers ? 
 
 Would not this diminish the consumption of 
 agricultural produce, and evidently make a glut 
 in the corn and cloth markets ? If that were the 
 case, would not the market price of both fall below 
 the natural value ? Would not profits vanish, and 
 rents be annihilated ? 
 
 If any taxes were charged on corn and cloth, 
 instead of being paid by the consumer, would they 
 not be paid by the farmer and clothier out of their 
 capitals ? Would not the community be receiving 
 from these two classes a larger portion of labour 
 for a less. 
 
 Lastly, Would a remedy for the evils thus affect- 
 ing the producers of corn and cloth be found in 
 the further discharge of individuals by govern- 
 ment? 
 
 If then these conclusions be correct, can I be 
 wrong in stating,, that the leading cause of the
 
 CHAP. VI.] CONCLUSION. 97 
 
 existing agricultural distress arises from the manner 
 in which the vast employment of labour, and con- 
 sequent expenditure of the different governments 
 in war, and the discontinuance of that employment 
 and expenditure since the peace, have interfered 
 with the laws, which would otherwise have regulated 
 the production and consumption of the agricul- 
 tural produce of the world. 
 
 POSTCRIPT. 
 
 Since the above observations were written, my 
 attention has been called to the following extract 
 from Mr. Ricardo's chapter on machinery ; [ can- 
 not say I did not read it before, but certainly it 
 never struck me so forcibly as it now does. 
 
 Page 176. — " In the same manner, a country engaged 
 *' in war, and which is under the necessity of maintaining 
 " large fleets and armies, employs a great many more men 
 " than will be employed when the war terminates, and the 
 " annual expence which it brings with it, ceases. 
 
 " If I were not called upon for a tax of 500^. during the 
 " war, and which is expended on men in the situations of 
 *' soldiers and sailors, I might probably expend that por- 
 " tion of my income on furniture, clothes, books, &c. he. ; 
 " and whether it was expended in the one way or in the 
 
 II
 
 98 POSTSCRIPT. 
 
 ** .other, there would be the same quantity of labour em- 
 ** ployed in production ; for the food and clothing of the 
 *^ soldier and sailor would require the same amount of in- 
 " dustry to produce it as the more luxurious commodities ; 
 " but in the case of war, there would be the additional de- 
 " mand for men as soldiers and sailors ; and, consequently, 
 " a war which is supported out of the revenue, and not from 
 " the capital of a country, is favourable to the increase of 
 '^ population. 
 
 " At the termination of the war, when part of my revenue 
 " reverts to me, and is employed as before in the purchase 
 " of wine, furniture, or other luxuries, the population 
 *' which it had before supported, and which the war called 
 " into existence, will become redundant, and by its effect 
 " on the rest of the population, and its competition with 
 *' it for employment, will sink the value of wages, and very 
 " materially deteriorate the condition of the labouring 
 " classes." 
 
 It will be seen how little Mr. Ricardo and I 
 differ in the important conclusions I have attempted 
 to establish. 
 
 Mr. Ricardo will perhaps explain — 
 
 1st. Whether the wine, furniture, &c. last men- 
 tioned, might not in the case put, be provided to 
 a considerable extent by the increased labour of 
 individuals previously in the employment, so as 
 to leave the soldiers, sailors, &c. in excess on the 
 market ? 
 
 2dly, Whether the food, clothing, &c. of the 
 soldiers and sailors could be the same in quality
 
 POSTSCRIPT. 99 
 
 or quantity after, as before their discharge, or 
 require the same amount of human labour to 
 produce them ? 
 
 3dly, Whether, when tlie condition of the 
 labouring classes be deteriorated, the consumption 
 of corn is not likely to be exchanged for that of 
 potatoes, &c., and the consumption of meat dimi- 
 nished ? 
 
 And lastly, Whether these causes alone are 
 not sufficient to create considerable agricultural 
 distress ? 
 
 FINIS. 
 
 LONBOK : 
 
 Printed by A. & R. Spottiswoodc, 
 New-street Square.
 
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