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 UNIVERSITY OF ILLINC^ LIBRARY AT URBAN^-Oj^BAIGN
 
 PRINCIPLES OF POLITICAL ECONOMY 
 
 CONSIDERED WITH A VIEW TO THEIR 
 
 PRACTICAL APPLICATION 
 
 V 
 
 -^^f/ 
 
 REV. T. R. MALTHUS, M.A. F.R.S. 
 
 PROFESSOR OF iriSTORY AND POLITICAL ECONOMY IN TH F. 
 EAST INDIA COLLi:0E HERTFORDSIIIRr. 
 
 SECOND EDITION WITH CONSIDERABLE ADDITIONS FROM 
 
 THE AUTHOR'S OWN MANUSCRIPT AND 
 
 AN ORIGINAL MEMOIR 
 
 LONDON 
 
 WILLIAM PICKERING 
 1836
 
 C. WHirriNOHAM, TOOK.S COURT, CHANCERY UANK.
 
 3 ^ <-J 
 
 CONTENTS. 
 
 Introduction 1 *^ 
 
 Chapter I. — Of the Definitions of Wealth and of 
 
 Productive Labour T 21 *^ 
 
 § 1 . On the Definitions of Wealth 21 -^ 
 
 2. On Productive Labour 34 ^ 
 
 Chapter II. — On the Nature, Causes, and Mea- 
 sures OF Value .". / 50 
 
 § 1 . On the different sorts of Value 50"^ 
 
 2. Of Demand and Supply as they affect Exchangeable 
 
 Value 61-^ 
 
 3. Of the Cost of Production as affected by the De- 
 
 mand and Supply, and on the Mode of repre- 
 senting Demand 69 "^ 
 
 4. Of the Labour which has been employed on a 
 
 Commodity considered as a Measure of its Ex- 
 changeable Value 83 
 
 5. Of the Labour which a Commodity will command, 
 
 considered as a Measure of Value in Exchange 93 
 
 6. On the Practical Application of the Measure of 
 
 Value, and its general Use and Advantages . . Ill 
 
 7. On the Variations in the Value of Money in the 
 
 same, and different Countries 122 
 
 Chapter III. — Of the Rent of Land 136 
 
 § 1 . Of the Nature and Causes of Rent 136 *-^ 
 
 2. On the necessary Separation of the Rent of Land 
 
 from the Profits of the Cultivator and the Wages 
 
 of the Labourer 148 
 
 3. Of the Causes which tend to raise Rents in the 
 
 ordinary Progress of civilized and improved 
 [u--, Societies 157V 
 
 4. Of the Causes which tend to lower Rents 173 
 
 5. On the Dependance of the actual Quantity of Pro- 
 
 duce obtained from the Land, upon the existing 
 Prices of Produce, and existing Rents, under 
 the same Agricultural Skill and the same Value 
 of Money 177 ^
 
 iv CONTENTS. 
 
 Page 
 ^ 6. Of the Connexion between great comparative 
 Wealth, and a high comparative Price of raw 
 Produce 184 
 
 7. On the Causes which may mislead the Landlord 
 
 in letting his Lands, to the Injury both of himself 
 and the Country 190 
 
 8. On the strict and necessary Connection of the In- 
 
 terests of the Landlord and of the State 194 
 
 ^^. General Remarks on the Surplus Produce of the 
 
 Land 207 
 
 Chapter IV. — Of the Wages of Labour 217 
 
 » § 1. On the Definition of the Wages of Labour, and 
 
 their Dependance upon Supply and Demand. . 217 
 
 2. Of the Causes which principally affect the Habits 
 
 of the Labouring Classes 223 
 
 3. Of the Causes which principally influence the De- 
 
 mand for Labour, and the Increase of the Po- 
 pulation 231 
 
 4. A Review of the Corn Wages of Labour from the 
 
 Reign of Edward III 240 
 
 5. On the Conclusions to be drawn from the pre- 
 
 ceding Review of the Prices of Corn and Labour 
 during the five last Centuries 252 
 
 Chapter V. — Of the Profits of Capital 262 
 
 *•% 1. Of the Nature of Profits, and the Mode in which 
 
 they are estimated 262 
 
 2. Of the limiting Principle of Profits 271 
 
 3. Of the regulating Principle of Profits 276 
 
 4. Of Profits as affected by the Causes practically in 
 
 operation , , 282 
 
 ^^. Remarks on Mr. Ricardo's Theory of Profits 291 
 
 Chapter VI. — Of the Distinction between Wealth 
 AND Value 299 
 
 BOOK II. 
 
 Chapter I. — On the Progress of Wealth 309 
 
 ^ 1. Statement of tlie particular Object of Inquiry 309 
 
 2. Of the Increase of Population considered as "a Sti- 
 
 mulus to the continued Increase of Wealth . . 311 
 
 3. Of Accumulation, or the Saving from Revenue to 
 
 add to Capital, considered as a Stimulus to the 
 Increase of ^Vealth 314 
 
 4. Of the Fertility of the Soil, considered as the Sti- 
 
 mulus to the continued Increase of Wealth . . 331
 
 CONTENTS. V 
 
 Page 
 ^ 5. Of Inventions to save Labour, considered as a 
 
 Stimulus to the continued Increase of Wealth.. 351 
 i6. jOf the Necessity of a Union of the Powers of Pro- 
 duction with the Means of Distribution, in order 
 to ensure a continued Increase of Wealth .... 361 
 
 7. Of the Distribution occasioned by the Division of 
 
 landed Property considered as the Means of in- 
 creasing the exchangeable Value of the whole 
 Produce 372 
 
 8. Of the Distribution occasioned by Commerce, in- 
 
 ternal and external, considered as the Means 
 of increasing the exchangeable Value of Pro- 
 duce 382 
 
 9. Of the Distribution occasioned by personal services 
 
 and unproductive Consumers, considered as the 
 Means of increasing the exchangeable Value of 
 
 the whole Produce 398 
 
 10. Application of some of the preceding Principles to 
 the Distresses of the Labouring Classes since 
 1815, with General Observations 413 
 
 Index 439
 
 ADVERTISEMENT 
 
 SECOND EDITION. 
 
 Not many years had elapsed after the first edi- 
 tion of this work, when it became known to all 
 with whom Mr. Malthus had the opportunity of 
 communicating on the subject, or who were ac- 
 quainted with his last publications, that his opi- 
 nions on the subject of value had undergone some 
 change. 
 
 Having formerly assumed, in common with 
 most other Economists, that there was no per- 
 fectly accurate and unvarying measure of value, 
 he had proposed a mean between corn and la- 
 bour, as being the nearest approximation to it, 
 which could be found. 
 
 But maturer reflection led him to a different 
 view ; and he subsequently became convinced 
 that the standard of which he had been in search 
 must necessarily reside in some one unalterable 
 object, which had a fixed and permanent exist- 
 ence ; rightly judging, that it would be impossible 
 to establish any satisfactory conclusions respect- 
 ing the rise or fall in the value of commodities, 
 unless there existed a real test, which could, at 
 all times, be practically referred to.
 
 Mil ADVERTISEMENT TO THE 
 
 Jt was not, however, till after loii^ inetlitatioii, 
 and tlie most cardiil consideration of the subject, 
 that he finally adopted the measure proposed by 
 the author of the Juijuiry into the Wealth of 
 Nations, and became a convert to the doctrine, 
 that as " Labour was the first price, the original 
 purchase money that was paid for all things,"* 
 tlie value of every thing must be greater or less 
 in proportion " as it is worth more or less of this 
 original purchase money."' 
 
 That many eminent writers since the time of 
 Adam Smith, should have re-jected this measure, 
 has probably arisen from their having given to 
 the term value, a sense dit!'erent from that which 
 he gave to it, and which it is usually meant to 
 express. According to their notion of value, it 
 consists in the geiieval power of purc/iasuig','\ or 
 expresses the relation m liich commodities bear to 
 each other, from which it would necessarily follow, 
 that if the cost of producing all things were either 
 increased or diminished, their value would never- 
 theless remain unaltered, provided they conti- 
 nued to exchange with each other in the same 
 proportion as before ; and by the same rule, that 
 when a rise or fall takes place in any commodity 
 or commodities, all other commodities must ex- 
 perience a corresponding fall or rise, or that, 
 when some become cheaper, the rest must neces- 
 sarilij become dearer, and vice versa. 
 
 Now this detinition makes the value of a com- 
 modity to depend as much upon the causes af- 
 fecting all others which may be exchanged for 
 
 * Wealth of Nations, Book I. ch. v. 
 
 t It is true that Adam Smith has also defined value (Book I. 
 ch. iv.) as the power of purclidsiiuj ; but it is clear from the 
 context, and from the whole tenor of his work, that he meant 
 the power of purchasing which a commodity derives from causes 
 peculiar to itself, and which depend upon the cost of procuring 
 it. This limitation is most essential ; but it has not been gene- 
 rail v made.
 
 SECOND EDITION. IX 
 
 it, as upon those which may aftect itself; and of 
 vakie so understood, it is perfectly obvious that 
 there can be no standard, since there is no one 
 object which can at all times purchase or ex- 
 change for an uniform quantity of all others ; 
 and if there were any such object, it would not 
 be a better measure of others, than they would 
 be of it. "N. 
 
 But value in its popular signification, and in 
 the sense in which it has been for the most part 
 used by Adam Smith, expresses a very different 
 sort of relation, namely, that which subsists be- 
 tween commodities and their cost, (including pro- 
 fit) or the sacrifice that must be made in order 
 to procure them ;* and if the quantity of labour 
 which they are worth, or which must be given 
 in exchange for them, be the proper measure 
 of that sacrifice, it becomes the very standard 
 souo'ht for. ^ -^ 
 
 So thought latterly Mr. Malthus, and his co- 
 incidence with Adam Smith, on so important a 
 point, founded as it appears to have been upon 
 entirely distinct grounds, was first made known 
 by him in a pamphlet, entitled The Measure of 
 Value, stated and illustrated with an application 
 of it to the alterations in the value of the English 
 
 * That this is what is commonly meant by value, every prac- 
 tical man perfectly well knows. If, for instance, the question is 
 asked what is the value of corn, no one ever supposes it to mean, 
 what is the relation or proportion which it bears to oil, or wine, 
 or hides, or cloth, or linen, or to other commodities generally, 
 bu t what w ill i t cost to any one desirous of purchasing it, or giving 
 ai requrva r eiificTr it. Now of this, the quantity of other com-' 
 modities which it will exchange for, can give no idea, unless tlieir 
 cost happens to be previously known ; but the cos tjjf ^bt^ailliag 
 t»nnm^^^2lill^'1 f^ , '"^ fl i y/ays known, nr at least easi l y asrertnined 
 being clearly indicated by the money price of labour in each 
 couritry! It is oiTthis account, that the object of the (piestion 
 IS, in almost every instance, suflficiently answered by a reference 
 to the money price of the article concerning which the in(piiry is 
 made, (See three lectures on the cost of ubtainhuj money, Inj 
 N. W. Senior, Esq.)
 
 X ADVERTISEMENT TO TMF. 
 
 cunency since 17})0, wliicli lie published in the 
 yenr 1»2:J. 
 
 But the siibjcet, notwithstanding the Author s 
 practical application of it was, at the time, re- 
 garded chiefly as a theoretical one; and it conse- 
 quently attracted but little attention, being seldom 
 alluded to, except in the immediate circles where 
 such questions were discussed. 
 
 The more, however, Mr. Malthus reflected 
 upon it, the more did it acquire importance in 
 his eyes; and in 1827, he took another opportu- 
 nity of enforcing his views respecting it in a 
 small volume, which he published. On Defini- 
 tions in Politicdl Economy, in which some of 
 the leading principles of the science are likewise 
 to be found, admirably explained, in a concen- 
 trated form. 
 
 The intervention of these minor publications 
 and Mr. Malthuss other pursuits prevented him 
 from sooner devoting himself to the second edi- 
 tion of his Political Econonii/. The first edition 
 had been long out of print, and the work could 
 not of course again make its appearance, until 
 the author had remodelled it, so as to adapt it to 
 his new opinions on value. 
 
 In doing this, if he had contented himself (as 
 he at one time intended) with making such alte- 
 rations only as were strictly necessary, the task 
 would have been comi)aratively easy. His new 
 views, so far from interferins: with his ijeneral 
 train of reasoning, or affecting any of his main 
 conclusions, sensed only to confirm and establish 
 them. A fresh section in the chapter on value, 
 in place of the sixth and seventh sections of the 
 former edition, together with a few slight changes 
 in other parts of the book, chiefly of a verbal 
 kind, would have been all that was absolutely 
 required to preserve the unity and consistency 
 of the work. 
 
 But this did not satisfv Mr. ^Malthus. He
 
 SECOND EDITION. XI 
 
 conceived that to pass over so main a doctrine 
 thus sUghtly, would not be treating it in a way, 
 which its importance seemed to demand. Being- 
 persuaded that it was not a mere matter of no- 
 menclature, but a most fundamental principle, 
 which affected more or less all other parts of the 
 subject, he was desirous of imparting to others, 
 the like conviction of its utility and importance^ 
 In this new Edition, therefore, he has gone more 
 largely into the question of value than before, 
 having preferred to incur the charge of tedi- 
 ousness and prolixity, rather than omit saying 
 anything that might render it more clear and in- 
 telligible to his readers, or meet the objections 
 which had been urged against it by those whose 
 opinions differed from his own. But before he 
 had completed the whole of the alterations which 
 he had in contemplation, and while he was yet 
 occupied in correcting and improving the latter 
 parts of the work, his mortal career was sud- 
 denly closed, and an end for ever put to his 
 earthly labours. 
 
 What other changes he might have made, had 
 his days been prolonged, it is of course not pos- 
 sible to say ; but from the state in which his 
 manuscripts were found, there is reason to be- 
 lieve that he had done all, or nearly all, that he 
 considered essential. 
 
 Very little indeed has been required to put 
 the work in a state fit for publication. The text 
 has in some places been slightly varied, where 
 a regard to perfect clearness or precision seemed 
 to require it, some passages have been omitted, 
 where the sense of them appears to have been 
 better expressed in other parts of the work, and 
 a few notes have been interspersed here and 
 there, which if they add nothing to the force of 
 the Author's reasonings, may serve still further 
 to elucidate the several subjects to which they 
 refer.
 
 XII AUVEKTISEMENT TO THE SECOND EUIllON. 
 
 If, notwithstanding, the -care which has been 
 taken to tree the present copy from imperfection, 
 some discrepancies should be found to exist, and 
 some needless repetitions and verbal inaccura- 
 cies to occur, whicli have escaped the Editors 
 notice, (and which, considerin<2: the insertion of so 
 much new matter, is far from being improbable,) 
 the Reader will bear in mind, that he is perusing 
 a work, to which, the last touches have not been 
 given by the hand of the Master.
 
 MEMOIR 
 
 ROBERT MALTHUS. 
 
 It is matter of general observation that the lives 
 of literary men, especially of the good and virtuous, 
 are rarely fruitful in that class of incidents which 
 are wont to be most attractive in the public eye. 
 With the minds of such persons, however, it may 
 be far otherwise : of these the march is often va- 
 ried and eventful ; and to describe faithfully their 
 state and condition at the different stages of their 
 being, the steps by which they have advanced, 
 the helps and hindrances they have experienced, 
 and the influences which have most contributed 
 to form or to fix their character, would be a task 
 not less interesting than instructive; but the mis- 
 fortune is that it is one which can only be per- 
 formed adequately by the subject himself, and, 
 as great merit is usually accompanied with great 
 modesty, they who are best qualified to execute 
 the office, are generally the least disposed to un- 
 dertake it. In neither of these respects can Mr. 
 Malthus be considered as an exception : the tenor 
 of his life was one of the most even serene and 
 peaceful that can be well imagined ; and such 
 was his diffidence and habitual disregard of self, 
 that he has left nothing upon record intended di- 
 rectly as a memorial of his life, and little else 
 which can be made subservient to such a pur- 
 pose by others. But this reserve, so becoming
 
 XIV AIKMOIi; OF 
 
 and characteristic in himself, would be almost 
 culpable in his friends. They are well aware that 
 such a man could not depart from a scene, in 
 M liicli as an author he had borne so conspicuous 
 a part, without exciting much curiosity respect- 
 ing the j)rinciples and the conduct of his private 
 life ; and as tliey have nothing to communicate 
 but what is honourable to himself and edifying 
 to the public, there is no reason why they should 
 be silent. It happens too, fortunately, that the 
 materials at their disposal are quite sufficient in 
 this respect; for as the recollections of his friends, 
 still fresh and vivid, are fully competent to ex- 
 hibit his character and manners in his later years, 
 so also his own filial piety, by treasuring up every 
 record of his father, has undesignedly furnished 
 more particulars for the history of his early youth 
 than are usually found in the annals of literary 
 men. 
 
 '' Nor will the task of recording these memorials 
 be an unprofitable one. No one could have been 
 intimate with Mr. Malthas without deriving much 
 instruction as well as pleasure from his conversa- 
 tion, and many salutary lessons from the con- 
 templation of his character under the trials he 
 underwent. To review therefore the course of his 
 life is to bring back these intluences to the me- 
 mory, and, impressed as they must be now with 
 the sad reflection that the spirit which imparted 
 them is gone, they will return with more force 
 than when they first came from the living man. 
 But liigher interests than these are con- 
 cerned in this memorial. The character of IMr. 
 Malthas has been so industriously mixed up with 
 his writings, and for so long a time; and the 
 writings themselves have been so egregiously 
 misinterpreted and misunderstood, that it be- 
 comes an act of common justice to rescue his 
 name from the obloquy in which it has been in- 
 volved.
 
 ROBERT MALTHUS. XV 
 
 To the Author himself, who is now far beyond 
 the reach of earthly praise or blame, it is matter 
 of no importance what the world may judge ; 
 but to his family it is otherwise. To them the 
 memory of his virtues is much more precious than 
 that of his literary fame ; it is connected with 
 more tender recollections, and cheered with nobler 
 prospects ; besides it is an inheritance more especi- 
 ally their own ; and it would be matter of future 
 shame and sorrow to those who shared in his re- 
 gard, if, while so much has been said by others 
 to whom he was little known, no friendly voice 
 should be raised to speak of him as he really 
 was, and to lessen the w eight of those calumnies, 
 which, though they passed lightly over his fa- 
 mily while he was alive, are calculated to aggra- 
 vate their grief now they are deprived of him. 
 Their own conviction of his worth, is indeed the 
 most unfailing source of comfort under his loss, 
 but next to this is the assurance that others will 
 partake of it ; and, under this impression, it will 
 be pleasing to them to know, that, in whatever 
 age or country his works may hereafter be studied, 
 they will carry with them a memorial of the 
 spirit in which they were composed, and of the 
 objects they were intended to accomplish. 
 
 But there is another and a far more important 
 purpose which the diffusion of this memoir may 
 be made to serve, and one still more congenial 
 to the mind of the author himself, if yet cogni- 
 zant of earthly things ; and that is the vindica- 
 tion of truth itself, by procuring for his WTitings 
 a calmer and more impartial hearing than they 
 have hitherto received. No intelligent and well- 
 educated person can have observed what has 
 been passing in the civil economy of this country 
 for the last forty years without being convinced 
 that a great change has been gradually wrought 
 into the public mind respecting the poor laws, 
 and their administration, and that the works of
 
 XVI MKMOIU OF 
 
 Mr. Malthus have been exceedingly influential 
 in bringing it about. To this pre-eminence, whe- 
 ther it be good or evil, neither friends nor ene- 
 mies will be disposed to dispute his claim; and 
 though the natural course of events in our 
 domestic history has singularly concurred in 
 illustrating the principles of the " Essay on Po- 
 pulation," and daily experience has practically 
 exhibited its conclusions, it is to Mr. Malthus 
 chiefly we are to attribute the improved know- 
 ledge we now possess, and the advanced position 
 in which we stand. His was the warning voice 
 which first roused the public attention to the 
 errors which prevailed upon the subject ; his 
 the sagacious and patient mind which reduced 
 the various and perplexing phenomena of social 
 life to the law he had laid down ; and from his 
 works was derived the light which has given va- 
 lue to the experience and confidence to the 
 lessons which have been drawn from it. For 
 some time, indeed, he may be said to have stood 
 alone upon the ground he had taken ; nor is it too 
 much to affirm, that there is scarcely any other 
 instance in the history of the world of so impor- 
 tant a revolution effected in public opinion, within 
 the compass of a single life and by a single mind. 
 It was not likely, however, that a victory like this 
 could be achieved without a contest ; still less 
 that a contest of such a nature, against opinions 
 venerable by age and usage, and backed by a 
 formidable host of prejudices, interests, and feel- 
 ings, could possibly be carried on for so long a 
 period without exciting a great degree of irri- 
 tation and abuse, of which a large portion would 
 naturally be poured out upon the leader. 
 
 Accordingly, we find that while, even by the 
 intelligent and candid, every step was yielded 
 slowly, and reluctantly, the tide of public opi- 
 nion ran obstinately against him ; the Malthu- 
 sian code and the Malthusian doctrines became
 
 ROBERT MALTHUS. XVll 
 
 by-words of ominous import in thepeople'smouths, 
 and thousands were ready to join in the cry, who 
 knew nothing of Mr. Malthus, and had never read 
 a line of his works. But this was not the worst 
 feature of the case : many estimable and pious men 
 there were, whose concurrence and approbation 
 he would have been delighted to obtain, who read 
 his work, and were at once convinced and offended 
 by it. Misled by the turn the controversy had at 
 first unfortunately taken, and too intent upon the 
 evil involved in the "principle of population" to 
 discern or even to enquire after the many bless- 
 ings which are bound up with it, and overbalance 
 it, they could not be in charity with a work which 
 at once shook their confidence in the Divine 
 Benevolence, and dissipated those visions of per- 
 fectibility in which they had indulged. Their 
 faith was weak, because it was founded upon a 
 narrow basis, and instead of enquiring how far 
 they were in fault themselves, they laid the whole 
 blame upon the author : irritated and suspicious 
 they turned away impatiently from the truth be- 
 cause its first aspect was forbidding to them ; and 
 while some obstinately closed their eyes against 
 the facts, and others eagerly caught at any em- 
 pyrical solution of them which was offered, they 
 ail came hastily to the conclusion that Mr. Mal- 
 thus was a cold and heartless, if not an impious 
 man . From these first impressions, notwithstand- 
 ing the light which has been lately thrown upon 
 the subject from various quarters, many have 
 found it impossible to recover ; hence it has 
 happened, that though the cause has triumphed, 
 the author is still odious in their eyes, and in- 
 stances may be pointed out even at the present 
 day, where in the same work, and even in the 
 same page, the fruits of Mr. Malthus' labours 
 are recorded with entire approbation, while the 
 man and his works are treated with unqualified 
 abuse. 
 
 b
 
 XVIIl :SILM()1U Ol 
 
 Now nothing, it is believed, can serve more ef- 
 fectually to soften these feelings, and to remove 
 these prejudices, in whatever quarter they may 
 exist, than to exhibit the author himself as he 
 really was, and to prove what manner of spirit 
 he was of. " A good tree can not bring forth 
 evil fruit ;" and to shew indisputably that Mr. 
 Malthus was an enlightened, and benevolent 
 man, is to furnish a strong argument a priori 
 in favour of the principle, and the tendency of 
 the work ; at all events it will be an irresistible 
 reason with all candid minds for not rejecting 
 it at once. And if under this impression, pro- 
 ceeding one step further, they would fairly ex- 
 amine the principle of population laid down by 
 him under all its aspects, and in all its influences, 
 direct and indirect, upon the moral conduct of 
 man in social life, there is reason to hope that 
 every thing would appear different to them ; they 
 would find their sense of the Divine Goodness 
 improved and strengthened rather than dimi- 
 nished by their acquiescence in his views, and 
 they would be thankful to an author, who, while 
 he has developed at so much cost and pains a 
 law of deep practical importance to the welfare 
 of mankind, has brought into view a fresh and 
 striking instance of the Divine Economy, in per- 
 fect harmony with that state of discipline and 
 trial by which the scripture teaches us we are to 
 be improved and purifled for a higher and hap- 
 pier state hereafter. Hence, then, the great ad- 
 vantage which the difl'usion of this memoir may 
 produce ; imperfect notions of Mr. Malthus' 
 writings have been the means of casting a shade 
 over his name, and it is reasonable to hope that 
 a better knowledge of his character may bring 
 about a fairer estimate of his work. 
 
 But the benefit by no means stops here. Were 
 this a question of a speculative nature, and re- 
 ferring only to some imaginary constitution of
 
 ROBERT MALTHUS. XIX 
 
 things, Ave might safely commit it to that tribunal 
 which, sooner or later, never fails to do justice to 
 the truth ; but this is not the case, it is in reality 
 identified with a subject novA^ occupying a great 
 share of the public mind, and coming home to 
 every man's business and bosom, and under 
 this view it is quite essential that no unneces- 
 sary delay should intervene in the removal of 
 all errors respecting it. The struggle about the 
 Poor Laws has ended as most political struggles 
 happily do in England, not by the subversion of 
 an institution which, however corrupted by abuse, 
 or injured by time, is yet congenial to the in- 
 stitutions of the country, and founded upon 
 christian principles ; but by the renewal of its 
 spirit, the correction of its errors, and the sup- 
 ply of its defects. With these views the Poor 
 Laws Amendment Bill has been framed and 
 passed into a law ; and a great experiment is 
 now making throughout the country under its 
 authority, upon the result of which, the due 
 and harmonious adjustment of the relations be- 
 tween the rich and the poor will hereafter 
 mainly depend. But this act is founded upon 
 the basis of Mr. Malthus' work. The Essay 
 on Population and the Poor Laws Amendment 
 Bill, will stand or fall together. They have the 
 same friends and the same enemies, and the re- 
 lations they bear to each other, of theory and 
 practice, are admirably calculated to afford mu- 
 tual illumination and support. Nor can it be 
 said that this cooperation is not needed. Not- 
 withstanding the favourable auspices under which 
 the working of the bill has commenced, it is still 
 a question with many how much of this ad- 
 vantage is owing; to the intrinsic merits of the act, 
 and how much to the unexampled state of pros- 
 perity we now enjoy, and the increasing demand 
 for labour which accompanies it : at all events a 
 strong and lively opposition is still daily carried
 
 XX MKMOIR OF 
 
 on against it, as well in the metropolis as in the 
 conntry ; and so lonp: as any influential persons 
 are found disposed to dispute the truth' of Mr. 
 Malthus" principles, or the force of his conclu- 
 sions, so long must the Poor Laws Amendment 
 Bill expect hostility and mistrust. It is true, 
 indeed, that the best testimony to the soundness 
 of the measure w ill be a general experience of 
 its blessin":s throughout the country under a 
 wise, a moderate, and, above all, a Christian 
 administration of its provisions — blessings, in- 
 deed, not such simply or mainly as result to 
 the wealthier classes of society, from the dimi- 
 nution of their burdens, and the assignment of 
 parochial odium to others, but such as the poor 
 themselves will derive and eventually be con- 
 scious of, in^ the elevation of their minds, the 
 bettering of their condition, the improvement 
 of their morals and habits, and especially the 
 softening of that harsh temper and disposition to- 
 wards the other classes of society, at present one 
 of the worst features of the times, and of which 
 the flatterers and disturbers of the people are 
 always ready to take advantage. Such are the 
 ends which must finally consecrate this measure 
 in the hearts of the British public, as well as 
 in the sight of God, and of such were the visions 
 which cheered the labours of Mr. Malthus, and 
 consoled him for the ingratitude with which they 
 were received. Nor is the day far distant, we 
 trust, when these visions will, humanly speak- 
 ing, be realized; meanwhile, it cannot be denied 
 that a juster appreciation of the author and his 
 works cannot fail of being of the greatest service, 
 as well in the actual operation of the bill, as in 
 facilitating its favour and acceptance with the 
 public. 
 
 It remains for us to say a few words respecting 
 the authority on which this Memoir rests. It 
 was written, for the most part, immediately after
 
 ROBERT MALTHUS. XXI 
 
 liis death, by an early and intimate friend of 
 Mr. Malthns, thoroughly acquainted with his 
 character and views, and, what is more, familiar 
 with the rise and progress of those opinions 
 which have so often brought his name before the 
 world ; and though many months have elapsed 
 since this event, and calmer reflexion has suc- 
 ceeded to the excitement under which it was 
 drawn up, there is nothing in it which the writer 
 is disposed either to abandon or to change. On 
 the contrary, the more he considers and reflects, 
 the more he is convinced that all that is here per- 
 sonal to Mr. Malthus is simply just, and nothing 
 else. Nor is there wanting to this conviction the 
 testimony of others, less liable to suspicion than 
 his own. Defective as the sketch may be, there 
 has been no question respecting its fidelity and 
 truth. The general form and character and the 
 leading features of his mind are there : they 
 have been recognized by his friends, and have 
 not been disputed by his adversaries ; and what- 
 ever difference of opinion may arise respecting 
 the judgment here pronounced upon Mr. Mal- 
 thus as an author, from \\hich, ho\vever, his 
 friend is by no means willing to recede, there is 
 reason to hope that this statement may go forth 
 as an undoubted and authentic testimony to his 
 character as a man. 
 
 Thomas Robert Malthus was born in 1766, at 
 the Rookery, in the county of Surrey, a small but 
 beautiful estate at that time in the possession of 
 his family, and now well known throughout the 
 neighbourhood of Guildford and Dorking. His 
 father was Daniel Malthus, a gentleman of good 
 family and independent fortune, attached to a 
 country life, but much occupied in classical and 
 philosophic pursuits, and with a strong bias to- 
 wards foreign literature. He was the friend and 
 correspondent of Rousseau, and one of his execu-
 
 XXll MEMOIR OF 
 
 tors, and in some of his tastes, especially that of 
 botany, is said to have resembled him. His habits 
 and manners were retired, and his character so 
 unostentatious, that though he was the author of 
 several works which seem to have succeeded in 
 their day, he never could be persuaded to put his 
 name to any of them. In the obituary of the 
 Monthly ^Magazine for 1800, in which his death is 
 noticed, he is described as the translator of some 
 pieces from the French and German ; an error 
 which was visited by the subject of this memoir 
 with more indignation than he ever shewed towards 
 his own persecutors.* Of this gentleman, Robert 
 Malthus was the second son, and in early life 
 seems to have displayed so fine a promise of cha- 
 racter and abilities, as to have excited a strong 
 interest in his father's mind ; insomuch, that he 
 undertook the conduct of his education in a great 
 measure himself, directing his youthful studies, 
 and entering with him into the details of his plea- 
 sures and amusements for the purpose of forming 
 his habits and disposition. At what school the 
 first years of his youth were passed, does not ap- 
 pear, but whether from the changes which took 
 place about this time in the residence of his fa- 
 mily, or from some peculiar opinions m hich his 
 father seems to have entertained respecting edu- 
 
 * TO THE EDITOR OF THE MONTHLY MAGAZINE. 
 SIR, Feb. 19. 
 
 I SHALL esteem it as a particular favour if you will allow me tO) 
 correct an erroneous paragraph which appeared in your obituaryf 
 for last month. Daniel Malthus, Esq. is there mentioned as the: 
 translator of some pieces from the French and German. I cam 
 say, from certain knowledge, that he did not translate them; norr 
 was he born to copy the woiks of others. — Whatever lie wrote wasj 
 drawn from the original and copioussource of his own fine under- 
 standing and genius; but, from his character, which was so sin- 
 gularly unostentatious, as to shun everything that might attracti 
 notice, it will probably never be known as his. 
 
 I am, Sir, yours, &c. 
 Robert Malthxts.
 
 ROBERT MALTHUS. XXIll 
 
 cation, he was never sent to any public school ; 
 and in this respect, is one, amongst many other 
 remarkable instances in the present time, of men 
 who have risen into eminence under the disad- 
 vantage of an irregular and desultory education . 
 
 From the age of nine or ten, until the time of 
 his admission at Cambridge, with the exception 
 of a short period which he spent at the academy 
 at Warrington, he remained always under private 
 tuition, and was sometimes a solitary pupil in 
 his tutor's house. It must be allowed, however, 
 that his instructors were men of no common 
 minds; for besides his father, whose watchful 
 care never deserted him, one of them was Rich- 
 ard Graves, and another, Gilbert Wakefield — 
 the first, the author of the Spiritual Quixote, 
 a gentleman of considerable learning and hu- 
 mour ; the last, a person very prominent in his 
 day, in several departments of literature — a scho- 
 lar, a politician, and a divine ; a classical corres- 
 pondent also of Charles Fox; but wild, restless, 
 and paradoxical in many of his opinions, a prompt 
 and hardy disputant, and, unhappily for himself, 
 deeply engaged in several of those violent con- 
 troversies, to which the French Revolution had 
 given birth. 
 
 It is difficult to believe that a youth like Ro- 
 bert' Maltlms, naturally sensitive and intelligent, 
 could be brought in frequent contact with men 
 of such qualities and attainments without deriv- 
 ing great advantages, and incurring some dan- 
 ger. From the last, however, his natural good 
 sense, and his early habits of observation, hap- 
 pily protected him. He was not born, indeed, as 
 he himself said of his father, readily to mould his 
 own character and opinions upon those of the 
 first person under whose influence he might be 
 accidentally thrown. On the contrary, he began 
 very early to judge for himself, even in matters 
 relating to his education, and in this respect as
 
 XXIV MKMOIK OF 
 
 well as others, was a proof in how short a time, 
 and at what an early period of life, a fund of 
 useful experience may be laid up by an intelligent 
 and observing mind, thrown upon its own re- 
 sources, and disi)Osed to make the most of them. 
 It is curious to observe in looking back upon 
 this period of his life, with what singular discre- 
 tion he seems to have steered his course amid the 
 critical circumstances which surrounded him — 
 how much he owed in the formation of his cha- 
 racter to influences which were never taken into 
 the account, and how few marks and signs it bore 
 when grown into maturity of the scenes and per- 
 sons to whicli he had been entrusted for the spe- 
 cific purpose of education. INIore than one in- 
 stance occurred, as appears from his correspon- 
 dence of this date, in which, without any injury 
 to their mutual affection, the advice of the father 
 was successfully combated by the superior dis- 
 cretion of the son. Nor was the moral influence 
 of his otiicial instructors in any respect more de- 
 cisive; he left the house of Mr. Graves, indeed, 
 at an early period, before any lasting impressions 
 from sympathy or antipathy were likely to have 
 been made, and though he remained with Gilbert 
 Wakefield till his admission at college, and al- 
 ways upon the kindest terms, and by his own 
 acknowledgement derived great benefit frorii the 
 course of study which he pursued with him, there 
 seems to have been no great community of senti- 
 ment or opinion bet^^ een them upon the graver 
 subjects connected with the conduct of human 
 life. In truth their characters were altogether 
 very difl'crent, nor was there ever anything in 
 the truly catholic spirit of Mr. Malthas which 
 could be traced to his training in that school. 
 
 It would be unjust, however, to the kindness 
 of an excellent parent, to deny that to him he 
 was more indebted than to any other person who 
 had mingled in his education for the form and
 
 ROBERT MALTHUS. XXV 
 
 condition of his mind, and this, not so much 
 from any instructions directly conveyed, as from 
 the opportunities which their intimacy afforded 
 of stimulating the faculties of the son, of encou- 
 raging him to think for himself, and of first im- 
 planting in his mind that love of truth and inde- 
 pendence of spirit, which were ever afterwards 
 so remarkable in him. If the nature of this 
 memoir would permit, it might be pleasing to 
 lay before the reader many specimens of that 
 happy intercourse of mutual good feeling, and of 
 amicable and frank discussion between the father 
 and the son to Avhich we have referred ; but we 
 may venture to insert extracts from two or three 
 letters, which will serve to contirm what has been 
 \ said. The first was written just after the father 
 i?ad removed from his former residence in Surry 
 to Albury, where a new one was preparing : 
 
 June 16, 1787. 
 
 " You must find your way to us over bricks and tiles, and 
 meet with five in a bed, and some of us under hedges ; but every 
 body says, they will make room for Robert. May I take the 
 liberty of sending my compliments to Mr. Frend, with my most 
 grateful thanks for the attention he has been so kind as to shew 
 you. You will guess the pleasure I have in returning thanks 
 for that notice which you would not have had without deserving it. 
 
 " Everything I have heard of you has given me the most heart- 
 felt satisfaction. I have always wished, my dear boy, that you 
 sh'^uid have a love of letters, that you should be made indepen- 
 dent of mean and trifling amusements, and feel a better support 
 than that of the next man who is idle enough to offer you his 
 company. I have no doubt that you will be able to procure any 
 distinction from them you please. I am far from repressing your 
 ambition ; but I shall content myself with their adding to your 
 happiness. Every kind of knowledge, every acquaintance with 
 nature and art, will amuse and strengthen your mind, and I am 
 "^■^erfectly pleased that cricket should do the same by your legs 
 and arms. I love to see you excel in exercises of the body, and 
 I think myself that the better half, and much the most agreeable 
 one, of the pleasures of the mind is best enjoyed while one is 
 upon one's legs ; — this is pretty well for me to say, who have 
 little else left but my bed and my arm-chair. May you long 
 enjoy all the delights of youth and youthful spirits, of an im- 
 proving mind, and of a healthful body, — but ever and above all, 
 my dear boy, with virtue and its best affections in your heart. 
 
 "Adieu! " Daniel Malthus." 
 
 \
 
 XXVI MEMOIR OF 
 
 It is pleasing to observe in what a prophetic 
 spirit this prayer of an affectionate father in the 
 close of his letter was drawn up ; for such, in all 
 these particulars, was Mr. Malthus, and such he 
 remained to the last moment of his life. 
 
 To illustrate still farther the remark we have 
 made of tlie manner in which the jTraver instruc- 
 tion of his father was mingled with lighter matters 
 intended for the same purpose, it may be inte- 
 resting to add another extract from one of his 
 letters to him at Cambridge : 
 
 " MY DEAR BOB, 
 
 *' I find you are not yet in your new rooms. I heartily hope 
 they will prove agreeable to you. We should have been truly 
 glad to have seen you here in the leisure of Christmas, and would 
 have subscribed to your journey ; not that I used to think Oxford 
 the less pleasant, and certainly not the less useful for being dis- 
 burthened of some of its society : I imagine you will say the same 
 of Cambridge. 
 
 " I have always found that one of my greatest comforts in life 
 was the delight I have ever taken in solitude — if, indeed, one 
 can give that name to anything which is likely to happen to you 
 or me. A true hermitage for any length of time is, 1 believe, 
 an unnatural stale ; it would be a cruel deprivation of what Ave 
 have both experienced to be the heart's dearest happiness. But 
 even this at certain seasons will always strengthen and refresh 
 the mind, and suffer her wings to grow, which 
 
 In the various bustle of resort. 
 Were all too rufiled and sometimes impair'd. 
 
 The skating has been good this year. Did you go to Ely ? By 
 the way have you learnt the heart and cross roll ? All the other 
 tricks, such as skating backwards, &c. are absurd ; but I like 
 these as they amuse one upon a small piece of ice, and they are 
 very clever in society either for two or four ; four make this 
 figure, ogo. The frost was harder than is usual in England. 
 January 2, at sunrise, 14 Fahr. January 3, at 9)s post merid. 
 14 again. Ask Mr. how it was ai Cambridge. My ther- 
 mometer was upon a north wall at a distance from the house. 
 Did not I ask you whether you had got my Theocritus with you ? 
 Have you got Rutherford's Philosophy, 2 vols, quarto ? I would 
 advise you to read something of that kind, wiiile you are engaged 
 in mathematical studies; and constantly to use yourself to apply 
 your tools. I hate to see a girl working curious stitches upon 
 a piece of rag. I recommend Sanderson's Optics to you, and 
 Emerson's Mechanics; Long's Astronomy you certainly have. 
 There are papers of the mathematical kind in the Royal Society
 
 ROBERT MALTHUS. XXVU 
 
 transactions which are generally worth readnig. How do you 
 manage about books? What good book on mensuration have 
 you met with ? Have you seen Bougner's mensuration of the 
 degree in South America ? I suppose Sir I's Principia to be 
 your chief classical book after the elementary ones. 
 
 " We are all pretty well ; but Charlotte will write in a day or 
 two. All send love. Adieu, my dear boy ! 
 
 " D. M." 
 
 It was this eagerness of the father to engage his 
 son in the practical application of mathematics, 
 expressed in otlier places as well as this, which 
 produced the following sensible observations in 
 reply. 
 
 " The plan of mathematical and philosophical reading pursued 
 at Cambridge is perhaps too much confined to speculation ; the 
 intention seems to be to ground you well in the principles sup- 
 posing you to apply them at leisure after your degree. In going 
 through this course of study if 1 read popular treatises upon 
 every branch, it will take up my whole time, and absolutely ex- 
 clude all other kinds of reading whatever, which I should by no 
 means wish. I think therefore it will be better for me to pursue 
 the general courses adopted by the university, seeing the general 
 application of everything I read without always descending to 
 particulars. 
 
 " When I mentioned popular treatises I did not mean to refer 
 to the books you recommended in your last letter, but to what 
 you said in a former one, expressing a wish to see me a practical 
 surveyor, mechanic, and navigator; a knowledge of which kind 
 would be difficult to obtain before I took my degree, while en- 
 gaged in the plan of mathematical reading adopted by the uni- 
 versity. 
 
 " i am by no means, however, inclined to get forward without 
 wishing to see the use and application of what I read. On the 
 contrary I am rather remarked in college for talking of what 
 actually exists in nature, or may be put to real practical use. 
 With regard to the books you mentioned in your last, as it is 
 absolutely necessary to read those which our lecturer makes use 
 of, it is difficult to find time to apply to other tracts of the same 
 nature, in the regular manner they deserve : particularly as many 
 other books are required to be read during our course of lectures 
 to be able to understand them as we ought. For instance, we 
 have had no lectures of any consequence in algebra and fluxions, 
 and yet a man would find himself very deficient in going through 
 the branches of natural philosophy and Newton''s Principia, 
 without a decent knowledge of both. As I attended lectures with 
 the vear above me, and the course only continues three years, I
 
 XXVIU MEMOIR OF 
 
 shall be entirely my own master after the next summer vacation, 
 and then will be my time to read different authors, make compa- 
 risons, and properly digest the knowledge I have taken in. 
 
 " I believe from what 1 have let fall at different times, you 
 have conceived the Senate House examination to be more con- 
 fined to mathematical speculations than it really is. The greatest 
 stress is laid on a thorough knowledge of the branches of natural 
 philosophy, and problems of every kind in these as well as in 
 mathematics are set during the examination ; such a one as the 
 asceitaining the distance of the Sun by a transit of Venus is not 
 unlikely sometimes to be among the number. 
 
 " If you will giveme leave to proceed in my own plans of 
 reading for the next two years, (I speak with submission to your 
 judgment,) I promise you at the expiration of that time to be a 
 decent natural philosopher, and not only to know a few prin- 
 ciples, but to be able to apply those principles in a variety of 
 useful problems. I hope you will excuse me for detaining you 
 so long upon this subject, but I thought I had not sufficiently 
 explained myself in my last letter, and that you might possibly 
 conclude from what I there said, that I intended to go on in the 
 beaten track, without once reflecting on the use and application 
 of the study in which I was engaged." 
 
 The last extract we shall give is from a letter 
 written we believe on the election of Mr. Malthus 
 to a fellowship : 
 
 " I heartily congratulate upon your success ; it gives me a 
 sort of pleasure w hich arises from my own regrets. The things 
 which I have missed in life, 1 should the more sensibly wish for 
 you. 
 
 " Alas ! my dear Bub, I have no right to talk to you of idleness, 
 but when I wrote that letter to you with which you were dis- 
 pleased, I was deeply impressed with my own broken purposes 
 and imperfect pursuits ; 1 thought I foresaw in you, from the 
 memory of my own youth, the same tendency to lose the steps 
 you had gained, with the same disposition to self-reproach, and 
 I wished to make my unfortunate experience of some use to you. 
 It was, indeed, but little that you wanted it, which made me the 
 more eager to give it you, and I wrote to you with more tender- 
 ness of heart than I would in general pretend to, and committed 
 myself in a certain manner which made your answer a rough dis- 
 appointment to me, and itdrove me back into myself. You have, 
 as you say, worn out that impression, and vou have a good right 
 to have done it; for 1 have seen in you the most unexceptionable 
 character, the sweetest manners, the most sensible and the kindest 
 conduct, always above throwing little stones into my garden, 
 which you know I don't easily forgive, and uniformly making 
 every body easy and amused about you. Nothing<'an have been
 
 ROBERT MALTHUS. XXIX 
 
 wanting to what, if I were the most fretful and fastidious, 1 could 
 have required in a companion ; and nothing even to my wishes 
 for your happiness, but where they were either whimsical, or un- 
 reasonable, or most likely mistaken. I have often been on the 
 point of taking hold of your hand and bursting into tears at the 
 time that I was refusing you my affections : my approbation 1 was 
 precipitate to give you. 
 
 " Write to me, if I could do any thing about your church, and 
 you want any thing to be done for you, such as I am, believe me, 
 dear Bob, yours most affectionately, 
 
 " Daniel Malthus." 
 
 There is a strain of tender remonstrance, sin- 
 gularly mingled with diffidence and self-accusa- 
 tion throughout this letter which exhibits in a 
 strong and very amiable light the character of 
 the father, nor is it less interesting as an encou- 
 ragement to youthful instruction, by shewing 
 how early those virtues were planted in the son, 
 to which his character remained faithful ever 
 afterwards. 
 
 Changes there were in him, indeed, as there 
 generally have been in all persons whose minds 
 have laboured with great questions of moral in- 
 terest ; and some of them certainly remarkable. 
 They who had seen him only in his later years, 
 and had been accustomed to the calm and peace- 
 ful tenor of his life, his kind and gentle manners, 
 and the earnest and serious tone of his general 
 conversation, would scarcely credit that the two 
 features most remarkable in his boyhood were 
 a pugnacious spirit and a keen perception of 
 the ludicrous. And yet such was the report 
 made to his father by his earliest tutor, Mr. 
 Graves: the former being evinced in his uncon- 
 querable love of fighting for fighting's sake, 
 the latter in the ease and delight wirii which 
 he entered into many refined and unexpected 
 strokes of wit in classic poets, which were en- 
 tirely lost upon the minds of others much older 
 than himself. " Don Roberto," says this gentle- 
 man in one of his letters, speaking of the first
 
 XXX MEMOIR OF 
 
 quality, " though most peaceably inclined, and 
 seeming even to give up his just rights, rather 
 than to disj)ute with any man, yet, ])aradox as it 
 may seem, loves iighling for fighting's sake, and 
 delights in bruising; he has but barely recovered 
 his eye-sight, and yet I have much ado to keep 
 him from trying again the chance of war ; and 
 yet he and his antagonist are the best friends in 
 the Avorld, learn together, assist each other, and 
 I believe, love each other better than any two 
 boys in the school." It would not be difficult, in- 
 deed, to trace this unyielding spirit through diffe- 
 rent changes of his being, under the guidance of 
 christian discipline, till it reached its maturity in 
 the moral courage which enabled him to contend 
 patiently and manfully for the truth, in deiiance of 
 a virulent opposition which ceased not even with 
 his life; but it may suffice to say here, that in 
 every stage of the progress it was entirely exempt 
 from all malice and ill will, that no man living 
 was ever less disposed to give a provocation, or 
 more prone to overlook one, and that as far as the 
 physical part of the quality was concerned, the 
 only remnant of it, even in his youth, was a calm 
 fortitude which inspired respect, and a desirable 
 presence of mind, in all the difficulties and 
 emergencies of life. 
 
 Of his taste for humour, however, which has 
 been truly said to be almost always allied to 
 genius, something more deserves to be said. Mr. 
 Graves, who must be considered as no mean 
 judge of these matters, thus speaks of the dawn 
 of this quality in his pupil's mind : " He has 
 finished Horace, and has read five satires in 
 Juvenal with apparent taste, and I never saw a 
 boy of his age enter more instantaneously into 
 the humour of the fifth satire, which describes 
 so feelingly the affronts and mortifications which 
 a parasite meets with at a great man's table." 
 
 ** I never saw a boy shew a quicker sense of
 
 ROBERT MALTHUS. XXXI 
 
 the beauties of an author, or at least of any hu- 
 morous and unexpected strokes. They are read- 
 ing the Hecyra of Terence, and I was willing to 
 see whether any one in the class was struck m illi 
 that characteristic stroke of humour which Dr. 
 Hurd laysso great stress upon,' Turn tu igitur nihil 
 adduxisti hue plus una sententia,' and though 
 there were two boys of 15 years old, Bob was 
 the only one that discovered a smile of approba- 
 tion, as he did at Phidippus' reproach in the 
 same scene, ' Quia paululum vobis accessit pe- 
 cuniae sublati animi sunt ;' though it is not clear 
 I think whether Phidippus intended a sneer upon 
 their disappointment, or envied their fancied good 
 luck."' 
 
 Such were the early indications of this quality 
 as observed by Mr. Graves, but it did not end 
 here ; it was prevalent throughout his youth, and 
 even survived a portion of his manhood, and at 
 Cambridge in particular, set off as it used to be 
 by a very comic expression of features, and a most 
 peculia/ intonation of voice when he was in the 
 vein, was often a source of infinite delight and 
 pleasantry to his companions. In his riper 
 years however this taste gradually faded away, 
 and at last had so entirely disappeared, as to in- 
 duce his later friends to say, that if any thing 
 were wanting to his mind, it was a more expan- 
 sive play of the imagination, and a more vivid 
 exercise of the memory. But the reason is ob- 
 vious. From the moment the principle of popu- 
 lation had been struck out from his mind, and 
 had taken hold of the public attention, it became 
 to him the predominant and absorbing subject 
 of his thoughts, constraining him to grave reflec- 
 tion, and causing every other tendency to yield 
 to it. From this time too, most of his writings 
 took of necessity a controversial turn : and as 
 the constant exercise of the reasoning faculty, 
 which this required, could not be carried on but
 
 XXXU MliMOIR OF 
 
 at the exi>ense of tliose lighter graces whicli 
 have their origin in the fancy, it is no wonder 
 that tlie taste for humour became less and 
 less intluential in his mind. But there was 
 notliing in all this to regret ; the change was 
 gradual and even graceful, every step of it being 
 suited to his advancing years, and in harmony 
 with the new relations he had contracted in 
 the progress of his life ; and while the world at 
 large, and this country in particular, was greatly 
 benetited by the concentration of his faculties 
 upon a sul)ject of such deep interest to the public, 
 welfare, for the accomplishment of which he- 
 seemed almost to have been destined by his 
 verv nature, the kindly source of his innocent 
 and cheerful humour (for such it always was) 
 remained as fresh and as abundant as ever. Its 
 spirit, indeed, was somewhat subdued, and its 
 course became more steady in proportion as its 
 aims and objects were enlarged ; and instead of 
 appearina: in titful bursts of fancy, which were 
 wont to set the table in a roar, it tlowed on in a 
 perpetual stream of cheerfulness and benevo- 
 lence, gladdening the walks of domestic life, and 
 diffusing itself over all his conduct as well as his 
 conversation . To return, however, to the progress 
 of his life. 
 
 In 1784 he removed from Mr. Wakefield's 
 house to Jesus College, Cambridge, where he was 
 admitted at the recommendation of that gentle- 
 man, formerly a fellow of the society. At this 
 time, he was generally distinguished for gen- 
 tlenumlike deportment and feelings, a polished 
 hunianity which remained with him through life, 
 and a degree of temperance and prudence, very 
 rare at that period, and carried by him even into 
 his academical pursuits. In these he was always 
 more remarkable for the steadiness than for the 
 ardour of his application, preferring to exert his 
 mind equably in the various departments of lite-
 
 UOBERT MALTHUS. XXXUl 
 
 rature then cultivated in the college, rather than 
 to devote it exclusively or eminently to any one, 
 and evidently actuated more by the love of ex- 
 cellence than by the desire of excelling. For this 
 happy disposition he seems to have been indebted 
 next to his own gracious nature to the peculiar 
 character of his education, which while it had 
 employed higher motives with good effect, had 
 rarely brought into action the principle of com- 
 petition, so generally resorted to in colleges and 
 schools ; and the consequence was, that he read 
 in a better spirit, reflected more freely and more 
 usefully and acquired more general information 
 than any of his contemporaries. Under this view, 
 it is difficult to suppress a wish that the persons 
 appointed to the important task of superintending 
 education, could be induced to apply this stimulus 
 of emulation with more caution and restraint : 
 at all events, that they would exercise some 
 discrimination in its use, and especially that they 
 would accompany it with frequent and cogent me- 
 morials, that there are other things in the world 
 in store for diligence and virtue, and of higher 
 value, than worldly emolument or applause. 
 
 To exclude emulation indeed altogether from 
 our means and instruments would be as imprac- 
 ticable as the attempt would be unwise ; it is a 
 natural remedy for the natural evils of our youth, 
 indolence and the love of pleasure, and the ad- 
 vantages are as obvious and immediate as they 
 are comprehensive ; nor can it be denied that 
 an impulse upwards is often given by it to 
 sluggish minds which afterwards continued under 
 better auspices, leads to great acquirements, and 
 enables them to look down with indifference upon 
 the vantage ground from which the spring was 
 taken. But generally speaking it is otherwise : 
 the course of a youth chiefly actuated by this 
 stimulus, is irregular and uneven, and at the best 
 liable to frequent crosses and disappointments ; 
 
 c
 
 XXXVl MEMOIR OF 
 
 impugn the measures and general government of 
 Mr. Pitt. We have made extracts of one or two 
 passages from this little work, which will be ac- 
 ceptable to those who can compare the opinions 
 here delivered, respecting the treatment of the 
 poor, with the conclusions of his maturer years.* 
 In IZliB appeared his first printed work, an 
 octavo volume, upon Population, under the fol- 
 lowing title, " An Essay on the Principle of Po- 
 pulation as it affects the future improvement of 
 Society, with remarks on the speculations of Mr. 
 Godwin, M. Condorcet, and other writers ;" in 
 which the general principle was laid down and 
 explained, and some very important consequences 
 deduced from it ; but his documents and illustra- 
 tions were imperfect, and he himself perhaps at 
 that time scarcely aware of the whole extent and 
 bearings of the subject. The book was received 
 with some surprise, and excited considerable at- 
 tention, and while the minds of the generality 
 were in suspense, the author left the country in 
 search of materials to complete it. In 1799 he 
 sailed for Hamburg with three other members of 
 his college, of whom Dr. Edward Clarke was 
 
 *" But though it is by no means to be wished that any depen- 
 dent situation should be made so agreeable, as to tempt those 
 who might otherwise support themselves in independence ; yet 
 as it is the duty of society to maintain such of its members as 
 are absolutely unable to maintain themselves, it is certainly de- 
 sirable that the assistance in this case should be given in the 
 way that is most agreeable to the persons who are to receive it. 
 An industrious woman who is left a widow with four or five 
 children that she has hitherto brought up decently, would often 
 gladly accept of a much less sum, than the family would cost in 
 the work-house, and with this assistance added to her own ex- 
 ertions, might in all probability succeed in keeping herself and 
 her children from the contamination of a society that she has 
 surely just reason to dread. And it seems peculiarly hard upon 
 old people, who perhaps have been useful and resj)ectable mem- 
 bers of society, and in their day, " have done the state some 
 service," that as soon as they are past their work, they should be 
 obliged to quit the village where they have always lived, the 
 cottage to which time has attached them, the circle of their 
 friends, their children and their grand-children, and be forced to
 
 ROBERT MALTHUS. XXXVll 
 
 one: the party separated in Sweden, and Dr. 
 Clarke and Mr. Cripps having proceeded rapidly 
 to the north, Mr. Malthus with Mr. Otter con-' 
 tinned leisurely their tour through Sweden, Nor- 
 way, Finland, and a part of Russia, these being 
 the only countries at the time open to English 
 travellers. Of this tour he has left other memo- 
 rials besides those embodied in his own work ; 
 amongst which may be mentioned many valuable 
 notes which have since served to enrich the last 
 volume of Dr. Clarke's Travels. During the short 
 peace of 1802 he again left England, and visited 
 with some of his relations, France and Switzer- 
 land ; exploring with them, all that was most 
 interesting in nature or art in those countries, but 
 always continuing, wherever he went, to collect 
 facts and documents for the illustration of the 
 principle he had announced and for the comple- 
 tion of his work. In 1805, he married Harriet, 
 the eldest daughter of Mr. Eckersall, a gentle- 
 man now resident at Bath, and soon after was 
 appointed to the professorship of Modern History 
 and Political Economy, at Haileybury, in which 
 situation he remained till his death. In 1825, he 
 
 spend the evening of their days in noise and unquictness among 
 strangers, and wait their last moments forlorn and separated from 
 all they hold dear." 
 
 " It is an old saying that home is home, be it ever so homely ; 
 and this sentiment certainly operates very strongly upon the 
 poor. Out of the reach of most of those enjoyments that amuse 
 the higher ranks of society, what is there that can attach them 
 to life, but their evening fire-side with their families in a house of 
 their own ; joined to the consciousness that the more they exert 
 themselves the better they shall support the objects of their 
 affection. What is it but a sentiment of this kind that tempts 
 many who have lived in the ease and luxury of service, to forego 
 these advantages, to marry, and submit to the labour, the diffi- 
 culties, the humbler condition and hard fare, that inevitably 
 attend the change of situation ? And surely no wise legislature 
 would discourage these sentiments, and endeavour to weaken 
 this attachment to home, unless indeed it were intended to de- 
 stroy all thought and feeling among the common people, to break 
 their spirit, and prepare them to submit patiently to any yoke 
 that might be imposed upon them,"
 
 xxxviii mj:moiu of 
 
 lost a beloved and affectionate daughter in the 
 bloom of youth, who was carried off by a rapid 
 decline, " a sad break in," as he said, " upon their 
 small and happy family circle ;' he bore it, how- 
 ever, with his usual resignation, but for the sake 
 of Mrs. Malthus, who felt her loss most acutely, 
 and in the hope of bringing more composure to all 
 their minds, he made a tour upon the continent 
 with his family, but returned in the autumn to his 
 ordinary duties at Haileybury, and his usual do- 
 mestic habits. 
 
 It has been sometimes insinuated by persons 
 who have been desirous to depreciate the merits 
 of Mr. Malthus as an original writer, that he 
 was indebted to his father for those new views 
 of population which appeared in his first essay 
 and have since excited tso much attention in the 
 w orld. There is no foundation whatever for this 
 report; but it is not ditbcult to explain in what 
 manlier it took its rise. The mind of Mr. Mal- 
 thus was certainly set to work upon the subject 
 of population, in consequence of frequent discus- 
 sions between his father and himself respecting 
 another question, in which they differed entirely 
 from each other. The former, a man of romantic 
 and somewhat sanguine temper, had warmly 
 adopted the opinions of Condorcet and Godwin 
 respecting the perfectibility of man, to which the 
 sound and practical sense of the latter was always 
 opposed ; and when the question had been often 
 the subject of animated discussion between them, 
 and the son had rested his cause, principally upon 
 the obstacles which the tendency of population to 
 increase faster than the means of subsistence, 
 would always throw in the way ; he was desired 
 to put down in writing, for maturer considera- 
 tion, the substance of his argument, the con- 
 sequence of which was, the Essay on Population. 
 Whether the father w^as converted or not we do 
 not know, but certain it is that he was strongly
 
 ROBERT MALTHUS. XXXIX 
 
 impressed with the importance of the views and 
 the ingenuity of the argument contained in the 
 MS., and recommended his son to submit his la- 
 bours to the public. This is the substance of the 
 story as it was related by the author himself to 
 the writer of this memoir; and if any confirma- 
 tion were wanting of the fact, there is suffi- 
 cient in the internal evidence of the works them- 
 selves. The main object of the octavo volume, 
 being the refutation of Godwin and Condorcet, it 
 is against them that his arguments are throughout 
 chiefly directed ; while the chapter on the poor 
 laws occupies a very minor portion of the work, 
 and was in truth only a branch of the subject 
 into which he was involuntarily led. Upon re- 
 flexion, however, he soon found that the field 
 into which he had now entered was of infinitely 
 more interest than that on which he had at first 
 set out. In this therefore he wisely continued 
 his researches, and finding the subject grow upon 
 him both in extent and importance as he ad- 
 vanced, he insensibly assigned to it the ascen- 
 dancy which it deserved. Accordingly it will be 
 found that in his quarto volume which he pub- 
 lished upon his return from the continent, the 
 order as well as the proportions of the matter is 
 reversed. The state and prospects of the poor 
 become the prominent feature, and occupy the 
 principal portion of his book, while Mr. Godwin, 
 and the perfectibility of man, are treated as mat- 
 ters of less moment, and are restricted to a much 
 smaller space. These facts will furnish an inter- 
 esting key to many passages in these works as 
 well as to the forms and order in which they are 
 put. They shew how curiously one thought was 
 pushed out from another, till the whole grew 
 together into the goodly system in which it now 
 appears. 
 
 Qual ramicel a ramo 
 Tal da pensier pensiero 
 In lui germogliava.
 
 Xlii MEMOIR OF • 
 
 he died, but he was in the full enjoyment of all 
 his faculties, and his death was totally unexpected 
 by his friends. He left London a few days before 
 his death, on a visit to his father-in-law at Bath, 
 in good spirits, and apparently in strong health, 
 anticipatino; a cheerful Christmas with his chil- 
 dren and other members of his family, who were 
 invited to meet him ; but Providence had or- 
 dained otherwise — the meeting took place, but 
 the joy was not there ; Mr. Malthus was taken 
 ill soon after his arrival, with a disorder of the 
 heart, of which it is believed he was never con- 
 scious, and which in a few days hurried him to 
 the grave. He has left a widow, and a son and 
 daughter both grown up. 
 
 Below is subjoined a list of his works in the 
 order in which they were published.* A slight 
 attention to the subjects of these works, in con- 
 nection with the occasions on which they were 
 written, will suffice to shew how anxious the au- 
 thor always was to make a practical application 
 of his labours, for the public good, and how rea- 
 dily he came forward on every national emer- 
 gency that arose. 
 
 * An Essay on the Principle of Population, as it affects the 
 Future Improvement of Society : with Remarks on the Specu- 
 lations of Mr. Godwin, M. Condorcet, and other Writers. 1798. 
 (Anon.) 
 
 An Investigation of the Cause of the Present High Price of 
 Provisions, containing an Illustration of the Nature and Limits 
 of Fair Price in Time of Scarcity, and its Application to the par- 
 ticular Circumstances of this country. (3rd Edit.) 1800. 
 
 An Essay on the Principle of Population, or a View of its 
 past and present effects on human happiness, with an Enquiry 
 into our prospects respecting the future removal or mitigation of 
 the evils which it occasions. (A new Edit, very much enlarged,) 
 1803. 
 
 A Letter to Samuel Whitbread, on his proposed Bill for the 
 Amendment of the Poor Laws. 1807. 
 
 A Letter to Lord Grenvillc, occasioned by some Observations 
 of his Lordship on the East India Company's Establishment for 
 the Education of their Civil Servants. (181 3.)
 
 ROBERT MALTHUS. xlui 
 
 Upon his character as an author, in which he 
 stands most prominent, our observations will 
 be brief; his principal work has been long 
 known, not only in this country, but in every 
 civilized portion of the globe, and the judgment 
 generally pronounced upon it by intelligent men 
 has been such as to satisfy the warmest and most 
 admiring of his friends. One or two remarks only 
 we shall venture to make, and these chiefly with 
 a view of placing his literary claims upon a proper 
 basis, and of throwing a clearer light upon the 
 motives with which his labours were undertaken. 
 
 It was one consequence of his professional en- 
 gagement at the East India College, that, for 
 many of his later years, the studies of Mr. Mal- 
 thusVere chiefly directed to Political Economy, 
 and especially in accordance with the turn the 
 subject took to the discussion of certain subtle 
 and controverted points of the science, in which 
 an unavoidable ambiguity of language had added 
 greatly to the natural obscurity of the subject, 
 and increased the difficulty of arriving at a clear 
 
 Observations on the Effects of the Corn Laws, and of a Rise 
 or Fall in the Price of Corn on the Agriculture and General 
 Wealth of the Country. 1814. (3rd Edit. 1815.) 
 
 The Grounds of an Opinion on the Policy of restricting the 
 Importation of Foreign Corn ; intended as an Appendix to the 
 " Observations on the Corn Laws." 1815. 
 
 An Inquiry into the Nature and Progress of Rent, and the 
 Principles by which it is regulated. 1815. 
 
 Statements respecting the East India College, with an Appeal 
 to Facts in Refutation of the Charges lately brought against it in 
 the Court of Proprietors. 1817. 
 
 Principles of Political Economy considered, with a view to 
 their practicable application, 1820. (2nd. Edit. 1836.) 
 
 The Measure of Value Stated and Illustrated, with an Appli- 
 cation of it to the Alteration in the Value of the English Currency 
 since 1790. 1823. 
 
 Definitions in Political Economy, preceded by an Enquiry into 
 the Rules which ought to guide Political Economists in the 
 Definition and Use of their Terms. 1827. 
 
 A Summary View of the Principle of Population. 1830. (From 
 the Supplement to the Encyclopedia Britannica.)
 
 Ixiv MEMOIR OF 
 
 uuderstandinjL^ ; siiclias the measure of value, the 
 excess of coiiunodities, &c. In this field Mr. 
 Malthiis will be always .classed with the most 
 distinguished of his fellow-labourers; and we 
 may venture to add, that his " Theory of Rent," 
 a discovery of the greatest importance, and al- 
 ways spoken of in the highest terms by Mr. Ri- 
 cardo, is of itself sufficient to place him in the 
 foremost rank. It is not, however, upon his suc- 
 cess in this department, in which he shares the 
 palm with many, but upon his " Essay on Popu- 
 lation," that his reputation ought to rest. In this 
 work he stands alone as the expounder and illus- 
 trator of a branch of knowledge, heretofore little 
 thought of or cultivated in any country, but now, 
 by liis labours, raised to a degree of eminence in 
 men's minds, corresponding with its vast impor- 
 tance, and brought with great efficacy to bear 
 upon the morals and welfare of mankind. To 
 inquire, as many have done, whether he were 
 really the discoverer of the principle of popula- 
 tion, on which the Essay rests, is something worse 
 than idle, especially as the author himself never 
 laid claim to such a title : undoubtedly many 
 scattered notices of it may be found in other 
 works, particularly in the " Travels of Mr. Town- 
 shend in Spain," which Mr. Malthus was ever 
 ready to acknowledge ; but the practical use, and 
 the full developement and application of the prin- 
 ciple, are entirely his own. Of the time in which 
 this work first appeared, and of the circumstances 
 which led to it, an account has been already 
 given, but it is well worthy of observation, that 
 the system then came from him in so complete 
 and perfect a form, so guarded on every side, so 
 clearly explained, and so correctly and carefully 
 exhibited under all its aspects and in all its con- 
 sequences, as to require little or no alteration 
 afierwards, either from himself or any other per- 
 son. It went rapidly through a great number of 
 
 I
 
 ROBERT MALTHUS. xlv 
 
 editions in this country, and lias been translated 
 into almost every language of the civilized world. 
 
 We are well aware, indeed, of the diiFerent 
 judgments which have been formed of this Essay, 
 and of the calumnies with which the author has 
 been assailed. We know that coldness, harsh- 
 ness, and even cruelty, have been frequently 
 imputed to the most humane and considerate of 
 men, and that a design of degrading the poor has 
 been charged upon a work whose sole motive and 
 tendency was to increase their comforts, and to 
 raise their moral and intellectual condition ; — 
 it is a consolation, however, to remember that the 
 most reflecting and cultivated minds in this, as 
 well as in every other country, have almost una- 
 nimously adopted and approved both the prin- 
 ciple and the reasoning of his work, whilst its 
 most violent opponents and vilifiers have been, 
 with one or two exceptions, either persons who 
 have not read it at all, or who have grossly mis- 
 understood or misrepresented it. Its greatest tri- 
 umph, indeed, has been reserved for our own 
 times, in which it has been solemnly adopted as 
 a principle of legislation ; nor can we hesitate to 
 believe, that at no distant period, when the cloud 
 of prejudice and passion in which the subject is 
 involved shall have been dispersed, the humanity 
 of the Essay will be as apparent to all mankind 
 as its usefulness and truth. 
 
 It has been sometimes said and repeated pub- 
 licly, since the author's death, that the view Mr. 
 Malthus himself took of the principle of popula- 
 tion, was a gloomy one. The remark is true, 
 though somewhat uncharitable, for the fault was 
 in the position of the author, not in his mind. It 
 would be easy, no doubt, to separate certain pro- 
 positions from his work, and construing them 
 strictly to make out a case of cheerlessness and 
 gloom against the author. But this is not deal- 
 ing fairly with him ; it is a maxim in philoso-
 
 Xlvi MEMOIR OF 
 
 phy to interpret the positions of a work not only 
 in connection witli other parts of it, but also with 
 a special reference to the circumstances of the 
 times, and the opinions which prevailed in them, 
 or preceded them. These circumstances and opi- 
 nions do, in point of fact, constitute a portion of 
 the positions themselves, or rather they are the 
 conditions on which their truth depends, and if 
 the former are changed, the latter must change 
 with them, or be no longer true. Why then should 
 we deny to Mr. Malthus, a writer upon a new 
 and difficult subject, that indulgence w hicli is so 
 freely granted to the moralist and the divine ? Let 
 it be remembered that at the time when the Es- 
 say on Population was published, now more than 
 thirty years ago, there were two great dangers 
 threatening the peace of society, with which he 
 had to deal; on the one hand, Mr. Godwin and 
 his followers were striking at the reverence for all 
 social institutions, by holding out delusive visions 
 of perfectibility which could never be realized, and 
 on the other a real and practical pauperism was 
 diffusing itself widely and rapidly over the land, 
 and undermining more surely the basis both of 
 property and law, by an ignorant and indolent 
 reliance upon their omnipotence — that foresight 
 and frugality, the special virtues of their station, 
 were fast losing ground in the estimation of the 
 poor, and that they were recklessly sinking into 
 a state of entire dependence on the parish rate ; 
 while the conduct and opinions of those above 
 them, so far from repressing their error, rather 
 tended to encourage it. With these facts before 
 him, and the consequences strongly impressed on 
 his mind, we cannot wonder that Mr. Malthus, 
 having laid down and demonstrated the great law 
 of nature respecting population, should have 
 thought it necessary in the first instance to point 
 out, in all their naked deformity, the dangers 
 it would always involve, and the sin and misery
 
 ROBERT MALTHUS. xlvil 
 
 which would inevitably attend an habitual dis- 
 regard of it ; and that under this aspect he 
 himself should have chiefly regarded it. That 
 there is a bright side to this law of nature, is 
 most true ; and they who have read the work 
 of Bishop Sumner upon the " Records of the 
 Creation," will remember how ingeniously and 
 beautifully he has shown that, in the hands of 
 a gracious Providence, this principle is made 
 subservient to the most beneficial and improv- 
 ing ends ; being the great moving cause, which, 
 by the necessities it creates, and the fears and 
 hopes it suggests, excites the best energies of 
 mankind into action, overcomes their natural 
 indolence, and gives spirit and perseverance to 
 their most valuable labours. But this view of 
 the subject, however favourable to the argument 
 of Dr. Sumner, was not adapted to the adversary 
 which Mr. Malthus had to encounter. Finally 
 it is necessary to remember, that whatever might 
 have been the author's view of the evils incident 
 to the principle, temperance, frugality, foresight, 
 and especially self-control — virtues strictly scrip- 
 tural and evangelical — were the sole remedies 
 recommended by him. Nor can it be said at pre- 
 sent that these gloomy views, and these strong 
 statements, were unnecessary ; notwithstanding 
 all the warnings of the " Essay on Population," 
 the evil it contemplated had lately risen to so 
 great a height as to threaten the most serious 
 mischief to society, and to call for the strongest 
 measures ; and we believe, firmly, that had it not 
 been for this book of Mr. Malthus, and all the 
 wise and salutary parochial regulations which 
 have sprung from it, the danger would have been 
 infinitely greater, and our way out of it much 
 more obscure and difiicult, — if any way could 
 have been found at all, short of a convulsion of 
 society. 
 
 It must always however be a matter of regret
 
 Xlviii MEMOIR OF 
 
 that Mr. Maltlius was led to tlie important con- 
 clusions of his essay, through the avenue of such 
 a controversy ; had he been at liberty to select 
 his o\vn path it Nsould have been a more cheer- 
 ful and consolatory one, more bright with the 
 rays of divine benevolence,* more congenial in 
 tnith to his own mind. The goodness of the 
 Deity was a theme on which he loved to dwell, 
 and if any thing were wanting to testify to his 
 piety and humanity it might be drawn from that 
 very work which has been the subject of so much 
 animadversion. After all it must be allowed that 
 the great, we had almost said the only, fault of 
 Mr. Malthus with the public was that his opinions 
 were in advance of his age. Nor should it be for- 
 gotten that in this respect his reputation has in 
 many instances suffered more from the headlong 
 zeal of his followers and imitators than from the 
 mistakes and even malice of his enemies ; by the 
 former his propositions have not only been af- 
 firmed more generally than he himself intended, 
 but they have been pushed, contrary to his own 
 practice, to extremes, and applied indifferently 
 without any modification or reserve. Hence it 
 has happened that the author has been made res- 
 ponsible for consequences which he never con- 
 templated, and for opinions which we know he 
 reprobated and abjured. f 
 
 * " Life is, generally speaking, a blessing independent of a 
 future state. It is a gift wliich the vicious would not always be 
 ready to throw away, even if they had no fear of death. The 
 partial pain, therefore, that is inHictcd by the Supreme Creator, 
 while he is forming numberless beings to aca])acitv of the highest 
 enjoyments, is but as the dust of the balance in comparison of 
 the happiness that is communicated ; and we have everv reason 
 to think, that there is no more evil in the world than what is 
 absolutely necessary as one of the ingredients in the mightv 
 process." 8vo. edit. Essay on Population, page 391. 
 
 t " The sorrows and distresses of life form another class of 
 excitements, which seem to be necessary by a jxculiar train of im- 
 pressions, to soften and humanize the heart, to awaken social sym-
 
 K015ERT MALTHUS. xlix 
 
 Of his character in a social and domestic 
 view, it would be difficult to speak in terms which 
 would be thought extravagant by those who knew 
 him intimately, and Mho, after all, are the only 
 judges of it. Although much conversant with the 
 world, and engaged in important labours, his life 
 was, more than any other we have ever witnessed, 
 a perpetual flow oi enlightened benevolence, con- 
 tentment, and peace ; it was the best and purest 
 philosophy, heightened by Christian views, and 
 softened by Christian charity. His temper was 
 so mild and placid, his allowances for others so 
 large and so considerate, his desires so moderate, 
 and his command over his own passions so com- 
 plete, that the writer of this article, who has 
 known him intimately for nearly fifty years, 
 scarcely ever saw him ruffled, never angry, never 
 above measure elated or depressed. Nor were 
 
 pathy, to generate all the Christian virtues, and to afford scope for 
 the ample exertion of benevolence. The general tendency of an 
 uniform course of prosperity is rather to degrade, than exalt the 
 character. The heart that has never known sorrow itself will 
 seldom be feelingly alive to the pains and pleasures, the wants 
 and wishes of its fellow beings. It will seldom be overflowing 
 with that warmth of brotherly love, those kind and amiable af- 
 fections, which dignify the human character, even more than the 
 possession of the highest talents. Talents, indeed, though un- 
 doubtedly a very prominent and fine feature of mind, can by no 
 means be considered as constituting the whole of it. There are 
 many minds which have not been exposed to those excitements 
 that usually form talents, that have yet been vivified to a higii 
 degree by the excitements of social sympathy. In every rank of 
 life, in the lowest as frequently as in the highest, characters are 
 to be found, overflowing with the milk of human kindness, breath- 
 ing love towards God and man ; and though without those pecu- 
 liar powers of mind called talents, evidently holding a higher 
 rank in the scale of beings than many who possess them. Evan- 
 gelical charity, meekness, piety, and all that class of virtues, 
 distinguished particularly by the name of Christian virtues, do 
 not seem necessarily to include abilities ; yet a soul possessed of 
 these amiable qualities, a soul awakened and vivified by these 
 delightful sympathies, seems to hold a nearer commerce with the 
 skies than mer# acuteness of intellect." Essay on Population, 
 8vo. edit. chap. xix. p. 372. '"^ 
 
 d
 
 1 MEMOIR OF 
 
 ins patience and forbearance less remarkable — 
 no unkind word or uncharitable expression re- 
 specting any one, either present or absent, ever 
 fell from his lips ; and though doomed to pass 
 through more censure and calumny than any 
 author of this or perhaps of any other age, he was 
 little disposed to advert to this species of injury, 
 still less to complain of it, and least of all to re- 
 tort it. Indeed, he had this felicity of mind, in 
 a degree almost peculiar to himself, that, being 
 singularly alive to the approbation of the wise 
 and good, and anxious generally for the regard 
 of his fellow-creatures, he was impassive to abuse 
 — so conscious was he of his integrity of pur- 
 pose, so firmly convinced of the truth of the prin- 
 ciples he advocated, and so thoroughly prepared 
 for the repugnance with which, in some quarters, 
 they would be heard. But never was his equa- 
 nimity so striking as when towards the close of 
 his life, in the plenitude of his success, he saw his 
 doctrines adopted and propagated in every part 
 of Europe, and heard himself called the greatest 
 benefactor to mankind since the days of Adam 
 Smith ; then to his honour be it spoken, he was 
 never known to betray, even to his most intimate 
 friends, the slightest symptom of vanity, triumph 
 or self-applause. 
 
 The most remarkable feature of his mind was 
 the love of truth, and it was also the most influ- 
 ential : it was this which enabled him patiently 
 to investigate, and fearlessly to expose, an inve- 
 terate and popular error ; and it was this which, 
 in his private life, was the parent or the nurse of 
 many other virtues conspicuous in him — ^justice, 
 prudence, temperance, and simplicity. It is 
 almost unnecessary to add, that in his domestic 
 relations, all these qualities appeared under their 
 fairest form, and with their sweetest influence. 
 All the members of his family loved and honoured 
 him ; his servants lived with him till their mar-
 
 ROBERT MALTHUS. 11 
 
 riage or settlement in life, and the humble and 
 poor within his influence always found him dis- 
 posed, not only to assist and improve them, but 
 to treat them with kindness and respect. 
 
 His conversation naturally turned upon those 
 important subjects connected with the welfare of 
 society which were his peculiar study ; in them 
 he was always earnest, serious, and impressive, 
 producing his opinions in such a clear and intel- 
 ligible way, as to show that they were the fruit 
 of considerable thought and reflection, and always 
 impressing you with the notion that he was speak- 
 ing in sincerity and truth ; apart from these he was 
 habitually cheerful and playful, and as ready to 
 engage in all the innocent pursuits and pleasures 
 of the young, as to encourage them in their studies. 
 By his intelligent colleagues at Haileybury, his 
 loss will be long and sincerely felt — few persons 
 knew so well as they how to appreciate his worth, 
 and none had so many opportunities of observing 
 its influence. His good-breeding, candour, and 
 gentlemanly conduct were felt in everything; 
 and his sound judgment and conciliatory spirit, 
 were not less remarkable in the councils of the 
 college, than his manners and attainments were 
 delightful and improving in their social intercourse 
 and relations. To his intimate friends his place 
 will rarely, if ever, be supplied ; there was in him 
 an union of truth, judgment, and warmth of heart, 
 which at once invited confidence, and set at nought 
 all fear of being ridiculed or betrayed. You were 
 always certain of his sympathy, and wherever 
 the case allowed it, his assistance was as prompt 
 and efiective as his advice was sound and good. 
 In politics he was a firm, consistent, and decided 
 Whig, the earnest advocate of salutary improve- 
 ment and reform, but strongly and sincerely at- 
 tached to the institutions of his country, and fear- 
 ful of all w^ton experiment and innovations. 
 In controversy which he never invited, nor
 
 lii MEMUIU OF 
 
 ever shunned when the truth was likely to be 
 elicited, he was calm, clear and logical, fertile 
 in argument, and thoutih sufficiently tenacious, 
 just and open to conviction ; and being- always 
 deliberate in composition, and habitually dis- 
 posed to weigh well every opinion beibre he 
 submitted it to the public, he was rarely called 
 upon to retract, but whenever the case required 
 it, no one could do it with more candour, or with 
 a better grace. He expunged two whole chap- 
 ters from his first work, in deference to the opi- 
 nions of some distinguished persons in our 
 church ; and after the publication of Dr. Sumner's 
 work, On the Records of the Creation, he did not 
 hesitate in a subsequent Edition of his Essay, to 
 modify, correct, and even to omit several expres- 
 sions, at the suggestion of the author for whom he 
 had a profound respect ; and all this, in a tone 
 and spirit which proved that it was not victory, 
 but truth for which he was contending.* 
 
 The same spirit was shewn in the correspon- 
 dence between Mr. Malthiis and ^Ir. Ricardo, 
 which would form, if laid before the public, a 
 perfect model of benevolent and enlightened 
 controversy, and though at last each retired with 
 
 * " It is probable, that liavino; found the bow bent too much 
 one way, I was induced to bend it too much the other, in order 
 to make it straight. But I shall always be quite ready to blot 
 out any part of the work which is considered, by a competent 
 tribunal as having- a tendency to prevent the bow I'rom becoming 
 finally straight, and to impede the progress of truth. In defe- 
 rence to this tribunal I have already expunged the passages which 
 have been most objected to, and I have made some few further cor- 
 rections, of the same kind, in the present Edition. By these al- 
 terations, I hope, and believe, that the work has boon improved, 
 without impairing its principles. But I still trust, that whether 
 it is read with or without these alterations, every reader of candour 
 must acknowledge that the practical design uppermost in the 
 mind of the writer, with whatever want of judgment it may have 
 been executed, is to improve the condition, and increase the hap- 
 piness of the lower classes of society." Vol. iii^^ 4'28. 5th Edi- 
 tion of an Essay on Population.
 
 ROBERT MALTHUS. 
 
 mi 
 
 his own opinion, the effect of the whole was rather 
 to improve than to diminish the respect and af- 
 fection which each bore to the other. The dis- 
 cussion between the author and Mr. Senior was 
 brief, and rather concerning words than things; 
 it ended, however, as few controversies do, in 
 mutual agreement, and was creditable to both ; 
 and in no part of his works has Mr. Malthus ex- 
 pressed himself with more clearness, or reasoned 
 with more sagacity and strength than in this. . 
 
 Mr. Malthas was a clergyman of the Church '\y 
 of England, and during a large portion of his life ^ 
 read prayers and preached regularly in turn with 
 the other professors in the chapel of the East 
 India College at Haileybury : in these services, 
 and, indeed, in every other ordinance of religion, 
 his manner was uniformly serious and devout ; 
 nor could he ever say grace at his own table, 
 without inspiring those present with a sense of 
 his piety. Of his sermons, it may be said, that 
 they were calculated to make a strong impression 
 on the minds of the young men, for whose edifi- 
 cation they were chiefly intended ; and it is now 
 particularly pleasing to record, that they became 
 more earnest and more edifying every year he 
 lived. In religion, indeed, as well as in other 
 things, he was always unobtrusive and unosten- 
 tatious, but it was easy to perceive that the spirit 
 of the Gospel had shared largely in forming his 
 character, and that both the precepts and doc- 
 trines of Christianity had made a deep impression 
 upon his mind. 
 
 In the latter period of his life, his temper and 
 character were subjected to a peculiar trial : the 
 government, by adopting the principles of his 
 work, as the basis of their Poor Laws Amend- 
 ment Bill, recalled in a remarkable manner the 
 public attention towards him, which had before 
 begun to <0cline ; and the praise lavished upon 
 him during the discussion in parliament, only
 
 liv MEMOIR OF ROHERT MALTflUS. 
 
 served to connect him more intimately with the 
 measure. Tlic consequence was, that from all 
 quarters a fresii flood of calumny and abuse was 
 poured upon him, which has continued without 
 intermission to the present day ; and though he 
 was never consulted about any of the provisions 
 or enactments of the bill, yet every real or sup- 
 posed defect which was discovered in the construc- 
 tion of it, every rub or difficulty which was found 
 in the working of it, were without ceremony at- 
 tributed to him. We verily believe that if the 
 late ministry* had remained longer in power, 
 some solid mark of favour or encouragement would 
 have been bestowed upon him or his, as well to 
 vindicate their adoption of his views, as to express 
 their sense of the support he had so long and con- 
 sistently given to the principles upon which their 
 administration was founded ; and further, that it 
 is a subject of deep regret to them now, that, as 
 far as he himself is concerned, the opportunity is 
 lost for ever. At all events, we know well, Mr. 
 Malthus himself was never heard to utter the 
 slightest murmur or complaint : with his usual 
 equanimity he bore the neglect of one party and 
 the abuse of the other ; and, whatever might have 
 been his apprehensions and feelings respecting 
 the change of the ministry, as far as regarded the 
 country, he never for a moment spoke of it as 
 affecting, or likely to affect, himself. 
 
 * The first ministry of Lord Melbourne.
 
 PRINCIPLES OF POLITICAL 
 ECONOMY.
 
 PRINCIPLES 
 
 OF 
 
 POLITICAL ECONOMY. 
 
 INTRODUCTION. 
 
 It has been said, and perhaps with truth, that tlie 
 conclusions of Political Economy partake more of the 
 certainty of the stricter sciences than those of most 
 of the other branches of human knowledge. Yet we 
 should fall into a serious error if we were to suppose 
 that any propositions, the practical results of which 
 depend upon the agency of so variable a being as 
 man, and the qualities of so variable a compound as 
 the soil, can ever admit of the same kinds of proof, 
 or lead to the same certain conclusions, as those which 
 relate to figure and number. There are indeed in 
 political economy great general principles, to which 
 exceptions are of the most rare occurrence, and pro- 
 minent land-marks which may almost always be de- 
 pended upon as safe guides ; but even these, when 
 examined, will be found to resemble in most parti- 
 culars the great general rules in morals and politics 
 founded upon the known passions and propensities of 
 human nature : and whether we advert to the quali- 
 ties of man, or of the earth he is destined to cultivate, 
 we shall be compelled to acknowledge, that the sci- 
 ence of political economy bears a nearer resemblance 
 to the science of morals and politics than to that of 
 mathematics.
 
 INTRODUCTION'. 
 
 This conclusion, wliicli could hardly fail to be for- 
 med merely from a view of the subjects about which 
 political economy is conversant, is further strength- 
 ened by the dift'erences of opinion which have pre- 
 vailed among those who have directed a large share 
 of talent and attention to this study. 
 
 During the prevalence of the mercantile system, the 
 interest which the subject excited was confined almost 
 exclusively to those who were engaged in the details 
 of commerce, or expected immediate benefit from its 
 results. The differences which prevailed among mer- 
 chants and statesmen, which were differences rather 
 in practice than principle, were not calculated to at- 
 tract much attention. But no sooner was the subject 
 raised into a science by the works of the French Eco- 
 nomists and of Adam Smith, than a memorable schism 
 divided, for a considerable time, the students of this 
 new branch of knowledge, on the fundamental ques- 
 tions — What is wealth? and from what source or 
 sources is it derived ? 
 
 Happily for the interests of the science and its use- 
 fulness to society, the Economists and Adam Smith 
 entirely agreed on some of those great general prin- 
 ciples which lead to the most important practical con- 
 clusions ; such as the freedom of trade, and the leav- 
 ing every person, while he adheres to the rules of 
 justice, to pursue his own interest his own way, toge- 
 ther with some others : and unquestionably their 
 agreement on these principles afl:brds the strongest 
 presumption of their truth. Yet the ditlerences of 
 the Economists and Adam Smitli were not mere dif- 
 ferences in theory ; they were not different interpre- 
 tations of tlie same phenomena, which would have no 
 influence on practice ; but they involved such views 
 of the nature and origin of wealth, as, if adopted, 
 would lead, in almost every country, to great prac- 
 tical changes particularly on the very important sub- 
 ject of taxation. 
 
 Since the sera of these distinguished writers, the 
 subject has gradually attracted the attention of a
 
 INTRODUCTION. 3 
 
 greater number of persons, particularly during the 
 last twenty or thirty years. All the main proposi- 
 tions of the science have been examined, and the 
 events which have since occurred, tending either to 
 illustrate or confute them, have been repeatedly dis- 
 cussed. The result of this examination and discus- 
 sion seems to be, that on some very important points 
 there are still great differences of opinion. Among 
 these, perhaps, may be reckoned — The definitions of 
 wealth and of productive labour — The nature and 
 measures of value — The nature and extent of the 
 principles of demand and supply — The origin and 
 progress of rent — The causes which determine the 
 wages of labour and the profits of stock — The causes 
 which practically retard and limit the progress of 
 wealth — The level of the precious metals in different 
 countries — The principles of taxation, &c. On all 
 these points, and many others among the numerous 
 subjects which belong to political economy, diffe- 
 rences have prevailed among persons whose opinions 
 are entitled to attention. Some of these questions 
 are to a certain degree theoretical ; and the solution 
 of them, though obviously necessary to the improve- 
 ment of the science, might not essentially affect its 
 practical rules ; but others are of such a nature, that 
 the determination of them one way or the other will 
 necessarily influence the conduct both of individuals 
 and of governments ; and their correct determination 
 therefore must be a matter of the highest practical 
 importance. 
 
 In a science such as that of political economy, it is 
 not to be expected that an universal assent should be 
 obtained to all its important propositions ; but, in 
 order to give them their proper weight and justify 
 their being acted upon, it is extremely desirable, in- 
 deed almost necessar}^, that a considerable majority 
 of those who, from their attention to the subject, are 
 considered by the public as likely to be the most 
 competent judges, should agree in the truth of them. 
 
 Among those writers who have treated the subject
 
 4 INTROnUCTIOX. 
 
 scientifically, there is not perhaps, at the present mo- 
 ment, so general an agreement as would be desirable 
 to give effect to their conclusions ; and the writers 
 who peculiarly call themselves practical, either draw 
 no general inferences, or are so much influenced by 
 narrow, partial, and sometimes interested views, that 
 no reliance can be placed on them for the establish- 
 ment of general rules. The last twenty or thirty years 
 have besides been marked by a train of events of a 
 most extraordinary kind ; and there has hardly yet 
 been time so to arrange and examine them as to see 
 to what extent they confirm or invalidate the received 
 principles of the science to which they relate. 
 
 The present period, therefore, seems to be unpro- 
 pitious to the publication of a new systematic treatise 
 on political economy. The treatise which we already 
 possess is still of the very highest value ; and till a 
 more general agreement shall be found to take place, 
 both with respect to the controverted points of Adam 
 Smith's work, and the nature and extent of the addi- 
 tions to it, which the more advanced stage of the 
 science has rendered necessary, it is obviously more 
 advisable that the different subjects which admit of 
 doubt should be treated separately. When these dis- 
 cussions have been for some time before the public, 
 and a sufiicient opportunity has been given, by the 
 collision of different opinions and an appeal to expe- 
 rience, to separate what is true from what is false, 
 the different parts may then be combined into a con- 
 sistent whole, and may be expected to carry with it 
 such weight and authority as to produce the most 
 useful practical results. 
 
 The principal cause of error, and of the diflVrences- 
 which prevail at present among the scientific writers 
 on political economy, appears to me to be a precipi- 
 tate attempt to simplify and generalize. While their 
 more practical opponents draw too hasty inferences 
 from a frequent appeal to partial facts, these writers 
 run into a contrary extreme, and do not sufficiently 
 try their theories by a reference to that enlarged and
 
 INTRODUCTION 
 
 comprehensive experience which, on so complicated 
 a subject, can alone establish their truth and utility. 
 
 To minds of a certain cast there is nothing so cap- 
 tivating as simplification and generalization. It is 
 indeed the desirable and legitimate object of genuine 
 philosophy, whenever it can be effected consistently 
 with truth ; and for this very reason, the natural ten- 
 dency towards it has, in almost every science with 
 which we are acquainted, led to crude and premature 
 theories. 
 
 In political economy the desire to simplify has 
 occasioned an unwillingness to acknowledge the ope- 
 ration of more causes than one in the production of 
 particular effects ; and if one cause would account 
 for a considerable portion of a certain class of pheno- 
 mena, the whole has been ascribed to it without suf- 
 ficient attention to the facts, which would not admit 
 of being so solved. I have always thought that the 
 late controversy on the bullion question presented a 
 signal instance of this kind of error. Each party 
 being possessed of a theory which would account for 
 an unfavourable exchange, and an excess of the mar- 
 ket price above the mint price of bullion, adhered to 
 that single view of the question, which it had been 
 accustomed to consider as correct ; and scarcely one 
 writer seemed willing to admit of the operation of 
 both theories, the combination of which, sometimes 
 acting in conjunction and sometimes in opposition, 
 could alone adequately account for the variable and 
 complicated phenomena observable.* 
 
 It is certain that we cannot too highly respect and 
 venerate that admirable rule of Newton, not to admit 
 more causes than are necessary to the solution of the 
 phenomena we are considering; but the rule itself 
 implies, that those which really are necessary must be 
 
 * It must be allowed, however, that the theory of the Bullion- 
 ists, though too exclusive, accounted for mucli the largest propor- 
 tion of the phenomena in question ; and perhaps it may be said 
 with truth that the Bullion Report itself was more free from the 
 error I have adverted to than any other work that appeared.
 
 C) INTRODUCTION'. 
 
 admitted. Before the slirine of trutli, as discovered 
 by facts and experience, tlie fairest theories and the 
 most beautiful classifications must fall. The chemist 
 of thirty years ago may be allowed to regret, that new 
 discoveries in the science should disturb and confound 
 his previous systems and arrangements; but he is not 
 entitled to the rank of philosopher, if he does not give 
 them up without a struggle, as soon as the experi- 
 ments which refute them are fully established. 
 
 The same tendency to simplify and generalize, pro- 
 duces a still oreater disinclination to allow of modifi- 
 cations, limitations, and exceptions to any rule or 
 proposition, than to admit the operation of more causes 
 than one. Nothing indeed is so unsatisfactory, and 
 gives so unscientific and unmasterly an air to a propo- 
 sition as to be obliged to make admissions of this 
 kind ; yet there is no truth of which I feel a stronger 
 conviction than that there are many important propo- 
 sitions in political economy which absolutely require 
 limitations and exceptions ; and it may be confidently 
 stated that the frequent combination of complicated 
 causes, the action and reaction of cause and effect on 
 each other, and the necessity of limitations and ex- 
 ceptions in a considerable number of important pro- 
 positions, form the main difiiculties of the science, and 
 occasion those frequent mistakes which it must be 
 allowed are made in the prediction of results. 
 
 To explain myself by an instance. Adam Smith 
 has stated, that capitals are increased by parsimony, 
 that every frugal man is a public benefactor,* and 
 that the increase of wealth depends upon the balance 
 of produce above consumption. t That these propo- 
 sitions are true to a great extent is perfectly vmques- 
 tionable. No considerable and continued increase of 
 wealth could possibly take place without that degree 
 of frugality which occasions, annually, the conversion 
 of some revenue into capital, and creates a balance of 
 produce above consumption; but it is quite obvious 
 
 * Wealth of Nations, Book IT. c. iii. pp. 15 — 18, 6th edit, 
 t Book IV. c. iii. p. '250. 
 
 I
 
 INTRODUCTION. 7 
 
 that they are not true to an indefinite extent, and 
 that the principle of saving, pushed to excess, would 
 destroy the motive to production. If every person 
 were satisfied with the simplest food, the poorest 
 clothing, and the meanest houses, it is certain that no 
 other sort of food, clothing, and lodging would be in 
 existence ; and as there would be no adequate motive 
 to the proprietors of land to cultivate well, not only 
 the wealth derived from conveniences and luxuries 
 would be quite at an end, but if the same divisions of 
 land continued, the production of food would be pre- 
 maturely checked, and population would come to a 
 stand long; before the soil had been well cultivated. 
 If consumption exceed production, the capital of the \ ^ 
 country must be diminished, and its wealth must be \ 
 gradually destroyed from its want of power to pro- I 
 duce ; if production be in a great excess above con- 1 
 sumption, the motive to accumulate and produce must \ 
 cease from the want of an effectual demand in those 
 who have the principal means of purchasing. The 
 two extremes are obvious ; and it follows that there 
 must be some intermediate point, though the resources 
 of political economy may not be able to ascertain it, 
 where, taking into consideration both the power to 
 produce and the will to consume, the encouragement 
 to the increase of wealth is the greatest. 
 
 The division of landed property presents another 
 obvious instance of the same kind. No person has 
 ever for a moment doubted that the division of such 
 immense tracts of land as were formerly in possession 
 of the great feudal proprietors must be favourable to 
 industry and production. It is equally difHcult to 
 doubt that a division of landed property may be carried 
 to such an extent as to destroy all the benefits to be 
 derived from the accumulation of capital and the 
 division of labour, and to occasion the most extended 
 poverty. There is here then a point as well as in the 
 other instance, though we may not know how to place 
 it, where the division of property is best suited to the 
 actual circumstances of the society, and calculated to
 
 8 IXTIIODUCTIOX. 
 
 give the best stimulus to production and to the in- 
 crease of wealth and population. It follows clearly 
 that no general rule can be laid down respecting the 
 advantage to be derived from saving, or the division 
 of property, without limitations and exceptions ; and 
 it is particularly worthy of attention that in cases of 
 this kind, where the extremes are obvious and striking, 
 but the most advantageous mean cannot be marked, 
 that in the progress of society etfects may be produced 
 by an unnoticed approximation to this middle point, 
 which are attributed to other causes, and lead to false 
 conclusions. 
 
 The tendency to premature generalization occasions 
 also, in some of the principal writers on political eco- 
 nomy, an unwillingness to bring their theories to the 
 test of experience. I should be the last person to lay 
 an undue stress upon isolated facts, or to think that a 
 consistent theory, which would account for the great 
 mass of phenomena observable, was immediately in- 
 validated by a few discordant appearances, the reality 
 and the bearino;s of which there mi^ht not have been 
 an opportunity of fully examining. But certainly no 
 theory can have any pretension to be accepted as cor- 
 rect, which is inconsistent with general experience. 
 Such inconsistency appears to me at once a full and 
 sufficient reason for its rejection. Under such circum- 
 stances it must be either radically false, or essentially 
 incomplete ; and in either case, it can neither be 
 adopted as a satisfactory solution of existing pheno- 
 mena, nor acted upon with any degree of safety for 
 the future. 
 
 The first business of philosophy is to account for 
 things as they are ; and till our theories will do this, 
 they ought not to be the ground of any practical con- 
 clusion. I should never have had that steady and 
 unshaken confidence in the theory of population 
 which I have invariably felt, if it had not appeared 
 to me to be confirmed, in the most remarkable manner, 
 by the state of society as it actually exists in every 
 country with which we are acquainted. To this test
 
 INTRODUCTIOX. i) 
 
 I appealed in laying* it down ; and a frequent appeal 
 to this sort of experience is pre-eminently necessary 
 in most of the subjects of political economy, where 
 various and complicated causes are often in operation, 
 the presence of which can only be ascertained in this 
 way. A theory may appear to be correct, and may 
 really be correct under given premises ; it may further 
 appear that these premises are the same as those under 
 which the theory is about to be applied ; but a diffe- 
 rence which might before have been unobserved, may 
 shew itself in the difference of the results from those 
 which were expected ; and the theory may justly be 
 considered as failing;, whether this failure arises from 
 an original error in its formation, or from its general 
 inapplicability, or specific misapplication, to actual 
 circumstances. 
 
 Where unforeseen causes may possibly be in ope- 
 ration, and the causes that are foreseen are liable to 
 great variations in their strength and efficacy, an accu- 
 rate yet comprehensive attention to facts is necessary, 
 both to prevent the multiplication of erroneous theo- 
 ries, and to confirm and sanction those that are just. 
 
 The science of political economy is essentially 
 practical, and applicable to the common business of 
 human life. There are few branches of human know- 
 ledge where false views may do more harm, or just 
 views more good. I cannot agree, therefore, with a 
 writer in one of our most popular critical journals, 
 who considers the subjects of population, bullion, and 
 corn laws in the same light as the scholastic questions 
 of the middle ages, and puts marks of admiration to 
 them expressive of his utter astonishment that such 
 perishable stuff" should engage any portion of the 
 public attention.* 
 
 In the very practical science of political economy 
 perhaps it might be difficult to mention three subjects 
 more practical than those unfortunately selected for a 
 comparison with scholastic questions. But in fact, 
 most of the subjects which belong to it are peculiarly 
 * Qiuuterlv Review, No. xxix. Art. viii.
 
 1 1 NTRODUCTIOX. 
 
 applicable to the common concerns of mankind. What 
 shall we say of all the questions relating to taxation, 
 various and extensive as they are ? It will hardly be 
 denied that they come home to the business and bo- 
 soms of mankind. What shall we say of the laws 
 which regulate exchangeable value, or every act of 
 purchase and exchange which takes place in our 
 markets ? What of the laws which regulate the pro- 
 fits of stock, the interest of money, the rent of land, the 
 value of the precious metals in different countries, the 
 rates of exchange, &c. &c. ? 
 
 The study of the laws of nature is, in all its bran- 
 ches, interesting. Even those physical laws by which 
 the more distant parts of the universe are governed, 
 and over which, of course, it is impossible for man to 
 have the slightest influence, are yet noble and rational 
 objects of curiosity ; but the laws wdiich regulate the 
 movements of human society have an infinitely stron- 
 ger claim to our attention, both because they relate 
 to objects about which we are daily and hourly con- 
 versant, and because their effects are continually mo- 
 dified by human interference. 
 
 There are some eminent persons so strongly attached 
 to the general rules of political economy, that, though 
 they are aware that in practice some exceptions to 
 them may occasionally occur ; yet they do not think 
 it wise and politic to notice them, for fear of directing 
 the public attention too much and too frequently to 
 exceptions, and thus weakening the force and utility 
 of the general rules. In this conclusion, however, I 
 cannot agree with them. If the consequences of not 
 attending to such exceptions were of sufficient magni- 
 tude and frequency to be conspicuous to the public, 
 I should be decidedly of opinion that the cause of 
 general principles was much more likely to lose than 
 to gain by concealment. 
 
 It is, for instance, a just and general rule in political 
 economy, that the wealth of a particular nation is in- 
 creased by the increasing wealth and prosperity of 
 surrounding states ; and unquestionably there cannot
 
 INTRODUCTION. 1 1 
 
 be a more obvious truth than that, if these states are 
 not successful competitors in those branches of trade -^ 
 in which the particular nation had excelled, their in- 
 creasing wealth must tend to increase the demand for 
 its products, and call forth more effectively its re- 
 sources. But if this rule be repeatedly insisted upon 
 without noticing the above most important limitation, 
 how is the student in political economy to account 
 for some of the most prominent and best attested facts 
 in the history of commerce. How is he to account for 
 the rapid failure of the resources of Venice under the 
 increasing wealth of Portugal and the rest of Europe, 
 after the discovery of a passage to India by the Cape 
 of Good Hope ; the stagnation of the industry of Hol- 
 land, when the surrounding nations grew sufficiently 
 rich to undertake their own carrying trades, the in- 
 creasing trade and wealth of Great Britain, during the 
 war of the French Revolution, under the diminishing 
 trade and increasing poverty of the greatest part of 
 Europe, and the comparative distress of America, when 
 other states were enabled to participate in those trades, 
 which as a neutral she had carried on during a great 
 -part of the late war with such signal success. It is 
 not favourable to the science of political economy, that 
 the same persons who have been laying down a rule 
 as universal should be obliged to found their expla- 
 nations of most important existing phenomena on the 
 exceptions to it. It is surely much better that such 
 a rule should be laid down at first with its limitations. 
 Nothing can tend so strongly to bring theories and 
 general principles into discredit as the occurrence of 
 consequences, from particular premises, which have 
 not been foreseen. Though in reality such an event 
 forms no just objection to theory, in the general and 
 proper sense of the term ; yet it forms a most valid 
 objection to the specific theory in question, as proving 
 it in some way or other wrong; and with the mass of 
 mankind this will pass for an impeachment of general 
 principles, and of the knowledge or good faith of those 
 who are in the habit of inculcating them. It. appears
 
 12 INTRODUCTION'. 
 
 to me, I confess, that the most perfect sincerity, toge- 
 ther with tlie greatest degree of accuracy attainable, 
 founded upon the most compreliensive view of all the 
 circumstances of the case, are necessary to give that 
 credit and circulation to general principles which is 
 so desirable. And no views of temporary advantage, 
 nor, what is more likely to operate, the fear of destroy- 
 ing the simplicity of a general rule, should ever tempt 
 us to deviate from the strict line of truth, or to conceal 
 or overlook any circumstances that may interfere with 
 the universality of the principle. 
 
 There is another class of persons who set a very 
 high value upon the received general rules of political 
 economy, as of the most extensive practical use. They 
 have seen the errors of the mercantile system refuted 
 and replaced by a more philosophical and correct view 
 of the subject ; and having made themselves masters 
 of the question so far, they seem to be satisfied with 
 what they have got, and do not look with a favorable 
 e3^e on new and further inquiries, particularly if they 
 do not see at once clearly and distinctly to what be- 
 neficial effects they lead. 
 
 This indisposition to innovation, even in science, 
 may possibly have its use, by tending to check crude 
 and premature theories ; but it is obvious that, if car- 
 ried too far, it strikes at the root of all improvement. 
 It is impossible to observe the great events of the last 
 twenty-five years in their relation to subjects belonging 
 to political econoni)'', and sit down satisfied with what 
 has been already done in the science. But if the sci- 
 ence be manifestly incomplete, and yet of the highest 
 importance, it would surely be most unwise to restrain 
 inquiry, conducted upon just principles, even where 
 the immediate practical utility of it was not visible. 
 In mathematics, chemistry, and every branch of na- 
 tural philosophy, how many are the inquiries neces- 
 sary to their improvement and completion, which, 
 taken separately, do not appear to lead to any speci- 
 fically advantageous purpose ! How many useful in- 
 ventions, and how much valuable and improving know-
 
 INTRODL'CTIOX. 13 
 
 ledge would have been lost, if a rational curiosity and 
 a mere love of information had not generall}' been al- 
 lowed to be a sufficient motive for the search after 
 truth ! 
 
 I should not, therefore, consider it as by any means 
 conclusive against further inquiries in political eco- 
 nomy, if they would not always bear the rigid appli- 
 cation of the test of ciil bofio? But such, in fact, is 
 the nature of the science, so intimately is it connected 
 with the business of mankind, that I really believe more 
 of its propositions will bear this test than those »f any 
 other department of human knowledge. 
 
 To trace distinctly the operations of that circle of 
 causes and effects in political economy which are act- 
 ino- and re-actino- on each other, so as to foresee their 
 results, and lay down general rules accordingly, is, in 
 many cases, a task of very great difficulty. But there 
 is scarcely a single inquiry belonging to these subjects, 
 however abstruse and remote it may at first sight ap- 
 pear, which in some point or other does not bear di- 
 rectly upon practice. It is unquestionably desirable, 
 therefore, both with a view to the improvement and 
 completion of the science, and the practical advan- 
 tages which may be expected from it, that such in- 
 quiries should be pursued ; and no common difficulty 
 or obscurity should be allowed to deter those who 
 have leisure and ability for such researches. 
 
 In many cases, indeed, it may not be possible to 
 predict results with certainty, on account of the com- 
 plication of the causes in action, the different degrees 
 of strength and efficacy with which they may operate, 
 and the number of unforeseen circumstances which 
 are likely to interfere ; but it is surely knowledge of 
 the highest importance to be able to draw a line, with 
 tolerable precision, between those cases where the ex- 
 pected results are certain, and those where they are 
 doubtful ; and further to be able satisfactorily to ex- 
 plain, in the latter case, the reasons of such uncer- 
 tainty. 
 
 To know what can be done, and how to do it, is
 
 14 INTRODUCTIOX. 
 
 beyond a doubt, the most valuable species of infor- 
 mation. The next to it is, to know what cannot be 
 done, and why we cannot do it. The first enables us 
 to attain a positive good, to increase our powers, and 
 augment our happiness : the second saves us from the 
 evil of fruitless attempts, and the loss and misery oc- 
 casioned by perpetual failure. 
 
 But these inquiries demand more time and appli- 
 cation than the practical statesman, whom of all others 
 they most nearly concern, can give to them. In the 
 public measures of every state all are, no doubt, in- 
 terested ; but a peculiar responsibility, as well as in- 
 terest, must be felt by those who are the principal 
 advisers of them, and have the greatest influence in 
 their enactment ; and if they have not leisure for such 
 researches themselves, they should not be unwilling, 
 under the guidance of a sound discretion, to make use 
 of the advantages which may be aflbrded by the leisure 
 of others. They will not indeed be justified in taking 
 any decided steps, if they do not themselves see, or 
 at least think they see, the way they are going ; but 
 they may be fairly expected to make use of all the 
 lights which are best calculated to illumine their way, 
 and enable them to reach the object which they have 
 in view. 
 
 It may perhaps be thought that, if the great prin- 
 ciple so ably maintained by Adam Smith be true, 
 namely, that the best way of advancing a people to- 
 wards wealth and prosperity is 720t to interfere with 
 them, the business of government, in matters relating 
 to political economy, must be most simple and easy. 
 
 But it is to be recollected, in the first place, that 
 there is a class of duties connected with these subjects, 
 which, it is universally acknowledged, belongs to the 
 Sovereign ; and though the line appears to be drawn 
 with tolerable precision, w^hen it is considered gene- 
 rally ; yet when we come to particulars, doubts may 
 arise, and certainly in many instances have arisen, as 
 to the subjects to be included in this classification. 
 To what extent education and the support of the poor
 
 IXTRODUCTIOX. 15 
 
 should be public concerns 1 What share the Govern- 
 ment should take in the construction and maintenance 
 of roads, canals, public docks? What course it should 
 adopt with regard to colonization and emigration, and 
 in the support of forts and establishments in foreign 
 countries ? On all these questions, and many others, 
 there may be differences of opinion ; and on all these 
 questions the sovereign and his ministers are called 
 upon to decide. 
 
 Secondly, every actual government has to administer 
 a body of laws relating to agriculture, manufactures, 
 and commerce, which was formed at a period com- 
 paratively unenlightened, and many of which, there- 
 fore, it must be very desirable to repeal. To remain 
 inactive in such a state of things, can only be justified 
 by a conviction, founded on the best grounds, that in 
 any specific change contemplated, taken in all its con- 
 sequences, the balance of evil will preponderate ; while 
 to proceed straight forward in the rigid application of 
 general principles without any reference to the diffi- 
 culties created by the existing laws of the country, and 
 its actual situation and circumstances, might plunge 
 it into such complicated distress, as not only to excite 
 the public indignation against the authors of such 
 measures, but to bring permanent discredit upon the 
 principles which had prompted them.* 
 
 Thirdly, there is one cause in every state which 
 absolutely impels the government to action, and puts 
 an end to the possibility of letting things alone. This 
 is the necessity of taxation ; and as taxes cannot, in 
 the nature of things, be imposed without interfering 
 with individual industry and wealth, it becomes a 
 matter of the very highest importance to know how 
 they may take place with the least possible prejudice 
 to the prosperity of the state, and the happiness of 
 
 individuals. 
 
 * Measures calculated to terminate in a rise in the value of 
 money might be little felt in a country without a national debt ; 
 but with a large money amount to be paid annually to public 
 creditors, they might occasion a distribution of property most un- 
 favourable to production.
 
 16 IXTRODUCTrON'. 
 
 With regnrd to tliis latter subject indeed, it bears i 
 on so many points, that the truth or falsehood of the f 
 theories on all the principal questions in political 
 economy would occasion, or at least ought to occasion, 
 a practical difference in the mode of raising some of 
 the actual taxes. It is well known that, if the theory 
 of the Economists were true, all taxes should be laid 
 on the land ; and it depends entirely upon tiie general 
 laws which regulate the wages of labour, the profits 
 of stock, the rent of land, exchangeable value, the 
 currencies of different countries, the production and 
 distribution of wealth, Sec. &c. whether any existing 
 system of taxation be the best, or whether it might 
 be altered for the better. 
 
 It is obviously, therefore, impossible for a govern- 
 ment strictly to let things take their natural course; 
 and to recommend such a line of conduct, without 
 limitations and exceptions, could not fail to bring dis- 
 grace upon general principles, as totally inapplicable 
 to practice. 
 
 It may, however, safely be asserted, that a pro- 
 pensity to govern too much is a certain indication of 
 ignorance and rashness. The ablest physicians are 
 the most sparing in the use of medicine, and the most 
 inclined to trust to the healing power of nature. The 
 statesman, in like manner, who knows the most of his 
 business, will be the most unwilling to interrupt the 
 natural direction of industry and capital. But both 
 are occasionally called upon to interfere, and the more 
 science they respectively possess, the more judiciously 
 will they do it ; nor will the acknowledged propriety 
 of interfering but little supersede, in any degree, the 
 use of the most extensive professional knowledge in 
 both cases. 
 
 One of the specific objects of the present work is 
 to prepare some of the most important rules of political 
 economy for practical application, by a frequent re- 
 ference to experience, and by endeavouring to take a 
 comprehensive view of all the causes that concur in 
 the production of particular phenomena.
 
 INTRODUCTIOX. 17 
 
 In this mode of conducting inquiry, there is, no 
 doubt, a chance of falling- into errors of an opposite 
 kind to those which arise from a tendency to sim- 
 plification. Certain appearances, which are merely 
 co-existent and incidental, may be mistaken for 
 causes ; and a theory formed upon this mistake will 
 unite the double disadvantage of being both complex 
 and incorrect. Adam Smith has occasionally fallen 
 into this error, and drawn inferences from actual 
 appearances, not warranted by general principles. 
 From the low price of wheat, for instance, during the 
 first half of the last century, he seems to have in- 
 ferred that wheat is generally cheaper in rich than in 
 poor countries ; and from the small quantity of corn 
 actually imported during that period, even in the 
 scarcest years, he has inferred generally, that the 
 quantity imported can never be such as to interfere 
 with the home growth. The actual state of things at 
 a subsequent period, and particularly during the last 
 twenty-five years, has sufficiently shewn that these 
 appearances were merely incidental ; that a very rich 
 country may have its corn extremely dear, as we 
 should naturally expect ; and that importation in 
 Eno^land has amounted to more than t^ instead ofrTT* 
 part of the crop raised in the country ; and may, 
 therefore, to a considerable extent, interfere with the 
 home growth. 
 
 Aware, however, of my liability to this error on the 
 one side, and to the error of not referring sufficiently 
 to experience on the other, my aim will be to pursue, 
 as far as I am able, a just mean between the two ex- 
 tremes, and to approach, as near as I can, to the great 
 object of my research — the truth. 
 
 Many of the doctrines of Adam Smith, which had 
 been considered as settled, have lately been called in 
 question by writers entitled to great attention ; but 
 they have often failed, as it appears to me, to make 
 good their objections ; and in all such cases I have 
 
 * Wealth of Nations, B. IV. c. ii. p. 190. 6th edit. 
 
 C
 
 18 INTRODUCTIOX. 
 
 thought it desirable to examine anew, with reference 
 to such objections, the grounds on which his doctrines 
 are founded. 
 
 It has been my wish to avoid giving to my work a 
 controversial air. Yet to free it entirely from contro- 
 versy, while one of my professed objects is to discuss 
 controverted opinions, and to try their truth by a re- 
 ference to an enlarged experience, is obviously not 
 possible. There is one modern work, in particular, of 
 very high reputation, some of the fundamental princi- 
 plesofvvhichhaveappearedtome,afterthemostmature 
 deliberation, to be erroneous ; and I should not have 
 done justice to the ability with which it is written, to 
 the high authority of the writer, and the interests of 
 the science of which it treats, if it had not specifically 
 engaged a considerable portion of my attention. I 
 allude to Mr. Ricardo's work, " On the Principles of 
 Political Econojny and Ta.vation.'' 
 
 I have so very high an opinion of Mr. Ricardo's 
 talents as a political economist, and so entire a con- 
 viction of his perfect sincerity and love of truth, that 
 I frankly own I have sometimes felt almost staggered 
 by his authority, while I have remained unconvinced 
 by his reasonings. I have thought that I must un- 
 accountably have overlooked some essential points, 
 either in my own view of the subject, or in his ; and 
 this kind of doubt has been the principal reason of my 
 delay in publishing the present volume. But I shall 
 hardly be suspected of not thinking for myself on these 
 subjects, or of not feeling such a degree of confidence 
 in my own conclusions, after having taken full time to 
 form them, as to be afraid of submitting them to the 
 decision of the public. 
 
 To those who are not acquainted with Mr. Ricardo's 
 work, and do not properly appreciate the ingenuity 
 and consistency of the system which it maintains and 
 developes with so much ability, I am apprehensive 
 that I shall appear to have dwelt too long upon some 
 of the points on which we differ. But as they are, 
 for the most part, of great importance both theoreti-
 
 IXTRODUCTIOK. 19 
 
 cally and practically, and as it appeared to me ex- 
 tremely desirable, with a view to the interests of the 
 science, that they should, if possible, be settled, I did 
 not feel myself justified in giving less time to the con- 
 sideration of them. 
 
 I am far from saying that I may not be wrong in 
 the conclusions at which I have arrived, in opposition 
 to those of Mr. Ricardo. But I am conscious that I 
 have taken all the means to be right, which patient 
 investigation and a sincere desire to get at the truth 
 can give to the actual powers of my understanding. 
 And with this consciousness, both with respect to the 
 opinions I have opposed, and those which I have at- 
 tempted to establish, I feel no reluctance in commit- 
 ting the results to the decision of the public. 
 
 T. R. MALTHUS. 
 
 East India College, 
 Dec. 1,1819.
 
 CHAPTER I. 
 
 OF THE DEFINITIONS OF WEALTH AND OF PRODUCTIVE 
 LABOUR. 
 
 Section I. — On the Definitions of Wealth. 
 
 Of the subjects which have given rise to differences 
 of opinion among political economists, the defitiition 
 of wealth is not the least remarkable. Such differ- 
 ences could hardly have taken place, if the definition 
 had been obvious and easy ; but in reality, the more 
 the subject is considered, the more it will appear dif- 
 ficult, if not impossible to fix on one not liable to 
 some objection. In a work, however, on a science, the 
 great object of which is, to inquire into the causes 
 which influence the progress of wealth, it must be of 
 use to describe as distinctly as the nature of the sub- 
 ject will admit, what is meant by that wealth the 
 increase or decrease of which we are about to esti- 
 mate : and if we cannot arrive at perfect accuracy, 
 so as to embrace all we wish, and to exclude all we 
 wish in some short definition, it seems desirable to 
 approach as near to it as we can. It is known not 
 to be very easy to draw a distinct line between the 
 animal, vegetable, and mineral kingdoms ; yet the 
 advantages of such a classification are universally 
 acknowledged ; and no one on account of a diflSculty, 
 in a few cases of little importance would refuse to 
 make use of so convenient an arrangement. 
 
 It has sometimes been said, that every writer is at 
 liberty to define his terms as he pleases, provided he
 
 22 OF THE DEFINITIONS OF AVEALTH [CH. I. 
 
 always uses them strictly in the sense proposed. Such 
 a liberty however may be fairly questioned ; at least, 
 it must be allowed that if a person chooses to give a 
 very unusual and inadequate definition in reference 
 to the subject on which he proposes to treat, he may 
 at once render his inquiries completely futile. If for 
 instance, a writer professing to treat of the wealth 
 of nations were to define wealth as consisting- ex- 
 clusively of broad cloth, it is obvious that however 
 consistent he might be in the use of his terms, or 
 however valuable a treatise he might produce on this 
 one article, he would have given very little informa- 
 tion to those who were looking for a treatise on wealth 
 according to any common or useful acceptation of the 
 term. 
 
 So ipipQitant i ndeed is an appropria te _d££iiitionT 
 tha t perhaps it is not going too far t o say, tl\at tbcj 
 com parat ive merits of the system of the E couomlsts. ^ 
 a nd of t hat of Adam Smith depend upon their d JH 
 feren t definitions of wealth, and of productive l abourj 
 TTtFcTdefinitions which the economists have given of 
 wealth and of productive labour, be the most useful anc 
 correct, their aifstem, which is founded on them, is the 
 correct one. If the definitions which Adam Smitl 
 has given of these terms accord best with the sense 
 in which they are usually applied, and embrace mori 
 of the objects, the increase or decrease of which w« 
 wish to*make the subject of our inquiry, his systei 
 must be considered as superior both in utility am 
 correctness. 
 
 Of those writers who have either given a regulal 
 definition of wealth, or have left the sense in whicl 
 they understand the term to be collected from theii 
 works, some appear to have confined it w^ithin to( 
 narrow limits, and others to have extended it greatlj 
 too far. In the former class the Ecofwmists stand pre 
 y> 
 
 w * The reader will understand that when the term the Econc 
 
 . mists is used, it is intended to apply to the French economists, 
 of the school of Qiiesnay. In order the better to mark th<_ 
 distinction from other economists, without circumlocution, itahcs 
 are used.
 
 SEC. I.] AND OF PRODUCTIVE LABOUR. 23 
 
 eminent. They have^ confined wealth citri c hes to 
 the neat pi-oduce derived from Uie land, and in so 
 doing~fliey liave greatly diminished the value of 
 their inquiries in reference to the most familiar and 
 accustomed sense in which the term wealth is un- 
 derstood. 
 
 Amono^ the definitions which have extended the 
 meaning of the term wealth too far, Lord Lauder- 
 dale's may be taken as an example. He defines 
 wealth to be, " All that man desires as useful and 
 delightful to him." 
 
 This definition obviously includes every thing 
 whether material or intellectual, whether tangible or 
 otherwise, which contributes to the advantage or 
 pleasure of mankind, and of course includes the bene- 
 fits and gratifications derived from religion, from mo- 
 rals, from political and civil liberty, from oratory, from 
 instructive and agreeable conversation, from music, 
 dancing, acting, and all personal qualities and ser- 
 vices. It is certain, however, that an inquiry into the 
 nature and causes of all these kinds of wealth, would 
 not only extend beyond the bounds of any single 
 science, but would occasion so great a change in the 
 use of common terms as to introduce the utmost con- 
 fusion into the language of political economists. It 
 would be impossible to form any judgment of the 
 state of a country from the use of the terms rich or 
 richer. A nation might be said to be increasing in 
 wealth, when to all common eyes, and in all common 
 language, it might be growing poorer. This would 
 be the case, according to the definition, if a diminu- 
 tion of the manufacturing and mercantile products had 
 been balanced in the opinions of some persons by the 
 gratifications derived from the intellectual attain- 
 ments, and the various personal qualities and services 
 of the inhabitants. But how is this balance to be 
 ascertained ? how is it possible to estimate the degree 
 of wealth derived from these sources? Yet it is 
 quite obvious that we cannot practically apply any 
 discussions respecting the relative increase in the 
 wealth of different nations, without having some
 
 24 OF THE DEFINITIONS OF AVEALTH [CH. I. 
 
 means, however rough, of estimating the amount of 
 such increase. 
 
 Some modern writers who do not choose to adopt 
 the language of Adam Smith, and yet see the confu- 
 sion which would arise from including under the head 
 of wealth, every kind of benefit or gratification of 
 which man is susceptible, have confined the defini- 
 tion to those objects alone, whether material or imma- 
 terial, which have value in exchange. 
 
 This definition is certainly preferable to the more 
 comprehensive one just noticed, but by no means to 
 the extent which might at first be supposed. When 
 it is considered attentively, it will be found to be open 
 to a very great portion of the objections to which the 
 more general one is liable, and to draw the line of 
 demarcation between what ought, and what ought 
 not to be considered as wealth, in the most indistinct 
 and unsatisfactory manner. 
 
 Passing over the incorrectness of introducing a term 
 open to so much controversy as value into a definition 
 of wealth, it may be observed, 
 
 1st. Tliat if by an object which has value in ex- 
 change, be understood its susceptibility of being pur- 
 chased or hired, then there is scarcely any quality or 
 accomplishment of the mind or body that would not 
 come under the category of wealth. The possessor of 
 the lowest species of literary knowledge, that of read- 
 ing and writing, may be hired to teach others ; and 
 as all or nearly all who had acquired these useful arts 
 are susceptible of such employment, an estimate of 
 national wealth ought to include the value of these 
 attainments, however various in degree, and widely 
 extended. 
 
 2dly. All the knowledge acquired by a superior 
 education and superior talents, on account of a similar 
 susceptibility, would have a greater claim to be in- 
 cluded in the estimate. The possessors of religious and 
 moral knowledge, though obtained without any view 
 to the instruction of others for a pecuniary remunera- 
 tion, would be ready to sell such instruction under a
 
 SEC. I.] AND OF PRODUCTIVE LABOUR. 25 
 
 reverse of fortune. The same may be said of a know- 
 ledge of classical literature, matliematics, history, 
 natural philosophy, chemistry, geology, mineralogy, 
 botany, &c. &c. On the same principle, those who 
 had learnt to dance, to sing, or to fence for their 
 amusement might more or less imperfectly teach 
 dancing, singing, or fencing, for money. 
 
 In short, if we include under the denomination of 
 wealth all the qualities of the mind and body which 
 are susceptible of being hired, we shall find that by 
 the restriction of the term wealth, to that which has 
 exchangeable value, we have advanced but little to- 
 wards removing the confusion and uncertainty at- 
 tendant upon the former definition ; and all idea of 
 estimating the increase of wealth in any country, or 
 making any moderate approaches towards it, must be 
 absolutely hopeless. 
 
 On the other hand, if we confine the definition of 
 wealth to those objects which either have been ex- 
 changed, or are specifically intended to be exchanged, 
 we shall attempt to draw a broad line of demarcation 
 between things which in regard to their qualities are 
 precisely similar ; and further exclude from the cate- 
 gory of wealth a great mass of articles, which have 
 been included, and most correctly so, by Adam Smith, 
 and by almost every person who makes use of the 
 term, either in writing or conversation. 
 
 The various information acquired by private study, 
 and destined for private use and enjoyment, may be 
 exactly of the same kind as that which is intended to 
 be let out if any body will hire it ; yet the first, in 
 this classification, is not to be called wealth, and the 
 other is. The person who buys instruction, buys an 
 amount of wealth, which it must be presumed is 
 equal in value to what he has paid for it, while the 
 self-taught person, who is in possession of much su- 
 perior knowledge, has acquired no wealth. Accord- 
 ing to this definition wealth cannot be given ; it can 
 only be bought. The instructions of the schoolmaster 
 are wealth ; the same instructions given by a friend 
 
 )
 
 26 OF THE DEIIXITIOXS OF WP:ALTII [cH. 1. 
 
 or father are not wealth. This is sufficiently inconsis- 
 tent ; but this is not all. By this definition of" wealth, 
 a very large and most important portion of material 
 commodities is excluded from the denomination. In 
 the business of agriculture, a considerable share of 
 the produce is always destined to be consumed on 
 the spot without being exchanged. The common 
 farmer calculates how much of what he produces 
 must go the support of his own family and working- 
 cattle, before he can determine how much he will 
 have to sell. The gentleman farmer supports per- 
 haps a large private establishment upon his farm, 
 lives hospitably, receives numerous guests, and sells 
 comparatively very little. Our feudal ancestors pur- 
 sued this course in a much greater degree. In fact 
 it was the only way in which they could spend the 
 principal part of the products of their large posses- 
 sions. The great Earl of Warwick is said to have 
 supported thirty thousand people daily on his dif- 
 ferent manors ; and at an earlier period, the elder 
 Spencer in his petition to Parliament complains of 
 the ravages made by the barons on his estates, and 
 enumerates 20,000 sheep, 1,000 oxen and heifers, 
 12,000 cows with their breed for two years, 560 cart 
 horses, 2,000 hogs, 10 tons of cyder, together with 
 GOO bacons, 80 carcasses of beef, and 600 muttons in 
 the larder. From this enumeration, Hume observes, 
 " the plain inference is, that the greater part of 
 Spencer's vast estates, as well as the estates of the 
 other nobility was farmed by the landlord himself, 
 managed by his stewards or bailifl's, and cultivated by 
 his villains." 
 
 Little or none of it was let on lease to husband- 
 men. Its produce was consumed in rustic hospitality 
 by the baron, or his officers. 
 
 Now this largo mass of material commodities, in- 
 creased as it would be by the flax and wool raised, 
 spun, and wove for home consumption, few, it is con- 
 ceived, would venture to exclude from the denomi- 
 nation of wealth ; and yet this produce has neither
 
 StC. I.] AND OF PRODUCTIVE LABOUR. 27 
 
 actually been exchanged for money or other goods, 
 nor has it been raised with the intention of being so 
 exchanged, and therefore, according to the last defini- 
 tion, it ought not to be considered as wealth. 
 
 It must be allowed nevertheless, that it has ex- 
 changeable value ; and here one of the great cha- 
 racteristic differences between material objects and 
 objects which are not material appears in a striking 
 point of view. Of the quantity and quality of the 
 material commodities here noticed it would not be dif- 
 ficult to make an inventory. Many household books 
 indeed furnish one; and knowing pretty nearly the 
 quantity and quality of such articles, a fair approxi- 
 mation to their value might be attained by estimating 
 them according to the market prices of the district at 
 the time. But in regard to immaterial objects, the 
 difficulty seems to be insurmountable. Where is an 
 inventory to be found, or how is one to be made of 
 the quantity and quality of that large mass of know- 
 ledge and talents reserved for the use and consumption 
 of the individual possessors and their friends. Or 
 supposing it were possible to form such an inventory, 
 how could we make any moderate approaches towards 
 a valuation of the articles it contained. 
 
 Consequently, if by objects w^hich have value in 
 exchange we mean objects which are susceptible of 
 being exchanged, we shall include such a mass of the 
 mental and physical qualities of mankind as to make 
 the term wealth convey no tolerably distinct and use- 
 ful meaning. 
 
 And if by objects which have value in exchange we 
 mean only those objects which have actually been, or 
 are specifically intended to be exchanged, we shall 
 exclude from the denomination of wealth a large mass 
 of material commodities which have always, and most 
 justly, been classed under that head ? 
 
 To get rid of these obvious embarrassments, j.t .hiis,. 
 snmpjjmfs_hpeo the practice to consider the labour 
 wliich_is hired , as the wealth wh ich i>-i pinrhaspH 
 without reference to its result s. But it seems very
 
 28 OF THP: DEl'IMTIONS OF WEALTH [CH. I. 
 
 strange and incorrect to consider mere labour as 
 wealth" No one a ould Of ive anythin g for it if Jie 
 were sure that it wou ld yield no gratifying result. 
 It is i n the expectation of tliis resuU alone jiialJabour 
 is_em2lo^^di_ The sick man t inploys a physician, not 
 because he is pleased with the trouble which he gives 
 him, but because he expects that his health may be 
 benefited by the advice which he receives. The 
 lawyer is consulted and feed, only because his client 
 expects to derive some advantage from the opinion to 
 be given, or the cause to be pleaded. And even the 
 menial servant is not hired on account of the desire to 
 see a man work, but on account of the trouble which 
 he will save his master in performing certain offices 
 for him, or the gratification afforded to his vanity by 
 the shew of having a person at his command. 
 
 The natura l consequenc es of these^ifficulties is, 
 that the ablest writers whoTiave deserted matter^ in 
 tlieTr definr tronl)T wealth ,n[iave fallen a] niost ineyita- 
 bly into coritradictions and inconsistencies. 
 
 TVr. ^ay, for instance, in his chapter on immaterial 
 products, which he defines to be, " des valeurs qui 
 sont consommees au moment de leur production," and 
 of such a nature " qu'on ne saurait les accumuler,"* 
 can only refer to the personal services which are 
 hired, or to some particular kinds of immaterial pro- 
 ducts. He cannot refer to immaterial products in 
 general, because it is quite impossible to deny that 
 knowledge, talents, and personal qualities are capable 
 of being accumulated. Yet he says, " Une nation ou il 
 se trouverait une foule de musiciens, de pretres, d'em- 
 ployes pourrait etre une nation fort divertie, bien en- 
 doctrinee, et admirablement bien administree ; mais 
 voila tout ; son capital ne recevrait de tons les travaux 
 de ces hommes industrieux aucun accroissement di- 
 rect, parce que leurs travaux seraient consommes a 
 mesure qu'ils seraient crees."t A few pages fur- 
 ther on, he observes that most immaterial products 
 
 * Traite d'Econ. Polit. Liv. I. c. xiii. 5th edit, 
 t Id. lb. p. 148.
 
 SEC. I.] AND OF PRODUCTIVE LABOUR. 29 
 
 " sent le resultat d'lm talent ; tout talent suppose une 
 etude prealable ; et aucune etude ne pent avoir lieu 
 sans des avances." He applies this to the advice of 
 the physician, the consultation of the lawyer, and the 
 song of the musician, and then expressly states that, 
 " le talent d'un fonctionnaire public lui-meme est un ^ 
 capital accumule."* Now if it be true that the ta- 
 lents which produce music and good administrations 
 are accumulated capitals, on what possible ground 
 can it be asserted that musicians and employes, who 
 can alone be the teachers of their arts to others, do 
 not increase the national capital, particularly as the 
 rapid consumption of the products of such capitals, so 
 far from impeding accumulation, tends greatly to fa- 
 cilitate it, and to increase the number and skill of the 
 capitalists. 
 
 M. Say, in a note to the second part of M. Storch s 
 Cours d'Economie Politique, adverting to those ob- 
 jects which he thinks should be considered as riches, 
 observes, " que, ce n'est que la possibilite de les de- 
 terminer, de connaitre par consequent quand, et com- 
 ment les biens augmentent, quand et comment ils dimi- 
 nuent, et dans quelles proportions ils se distribuent 
 qui a fait de leconomie politique une science positive 
 qui a ses experiences, et fait connaitre des resultats."t 
 Nothing can be more just ^han this. It is the main 
 criterion to which, with a view to useful and prac- 
 tical conclusions, I should wish to refer. But ^. Saj^ 
 b oth in_the^jast_gdition of his Traite.d'Economie Poli- 
 ti que, and still later in his Cours Complete includes _ 
 u nder the name of richesT all talents, natural and ac-^ 
 quilled ; and I would ask in reference to such quali- 
 ties, how it is possible to ascertain, "quand et comment 
 ils augmentent, quand et comment ils diminuent, et 
 dans quelles proportions ils se distribuent." In every 
 improved country there must always be a vast mass of 
 natural and acquired talents, which are never made the 
 subject of regular exchange or valuation ; and of this 
 
 * Traite d'Econ. Polit. pp. 150, 151. 
 
 t Livre 1. c. ii. p. 229. t Tome I. \>. 7.
 
 30 OF THE DEFIXITIOXS OF WEALTH [CH. I. 
 
 vast mass wliicli would be included in M. Say's defi- 
 nition of riches, it may safely be atiirmed tliat it is not 
 composed of objects, " dont la quantite soit rigoureu- 
 sement assignable, et dont Taccroissement ou le declin 
 soit soumis a des lois determinees."'* 
 
 One motive which seems to have induced M. Say 
 to force into his definition of riches, " les plus nobles 
 vertus, et les plus rare talens, "'|' is to enlarge and exalt 
 the domain of political economy, which he says has 
 been reproached with occupying itself upon worldly 
 goods, and encouraging a spirit of avarice. But even 
 if such a classification would give the subject more im- 
 portance, this additional importance would be dearly 
 purchased at the expense of the precision of its con- 
 clusions. The question, however, is not whether the 
 results of useful labours may not very properly find 
 a place in a Treatise on Political Economy, as they 
 have done in the Inquiry of Adam Smith ; but whe- 
 ther the specific term wealth should be so defined, as 
 to make not only its own meaning quite indistinct, 
 but to introduce still greater indistinctness into the 
 terms of the science of morals. 
 
 Every moral writer, from the most ancient to the most 
 modern, has instructed us to prefer virtue to wealth ; 
 and though it has been generally allowed that thev 
 may be united in the same person ; yet it has always 
 been supposed that they were essentially different in 
 themselves, and that it was often necessary to place 
 them in direct contradistinction one to the other. 
 
 If, however, virtue be wealth, how are we to inter- 
 pret all those moral admonitions which instruct us to 
 underrate the latter in comparison with the former ? 
 What is the meaning of not setting our hearts upon 
 riches, if virtue be riches ? What do we intend to ex- 
 press when wc say of a person of our acquaintance, 
 that he is a very virtuous and excellent man, but poor. 
 The commonest terms used in moral discussions will 
 become quite uncertain without constant circumlocu- 
 tions, and the meanings of virtue, morals, rich and 
 
 * Coursd'Eoon. Pol. Tome I. p. 99. f Id. lb. p. 100.
 
 SEC. I.] AND OF PRODUCTIVE LABOUR. 31 
 
 poor, in our dictionaries, if applied in the ordinary 
 way, and according to the best authorities, will lead 
 us into perpetual error. 
 
 It will be recollected that it has never been a ques- 
 tion, whether a preacher of the gospel, or a lecturer 
 in moral philosophy who is remunerated for his in- 
 structions obtains wealth in exchange for them. The 
 only question is, whether it would be a convenient 
 and useful classification to consider all that was ob- 
 tained by his hearers, as wealth under the absolute 
 impossibility of appreciating it. That such know- 
 ledge has not in the ordinary language of society 
 been called wealth, except metaphysically, must be al- 
 lowed, and it is equally certain that there is no way 
 of arriving at its amount, "[p pgtimating-±l^£> /^i^^i^j 
 co st of a material o bject, we are pretty sure of coming 
 near to its usual prire. jGeneraJJiy .speaking, those^ 
 co mmodities, the conditions of the^u^ply of which 
 ITave been the same, are found to have nearly the sarne 
 excha ngeable value, or if not, the estimate is v ery soon 
 rectifie d by an appeal to the next market. But in re- 
 gard to moral and intellectual qualities, the same ex- 
 penses of production terminate in results as different 
 as can w^ell be imagined. Even in the learned profes- 
 sions of law and physic, in wdiich the students acquire 
 their knowledge for the express purpose of exchanging 
 it, an attempt to estimate the skill and attainments of 
 each person by the expenses of his education would 
 lead to the most fallacious conclusions. And in the 
 more general education obtained by the great mass of 
 the higher classes of society, such an attempt would 
 be perfectly ridiculous. Those who have paid the 
 most for their instruction, are often those who have 
 the least profited by it. If the products were mate- 
 rial, and sold with a view to gain, their production 
 would very soon come to an end ; but education still 
 goes on, and most properly so, although the inequality 
 of possessions arising from the same outlay is known 
 to be prodigious, while in reference to the great mass 
 of them, there are no means of rectifying the estimate
 
 32 OF THE DEMXITIONS OF WEALTH [cil. I. 
 
 founded on cost, by an appeal to their market values. 
 How then is it possible to say with any truth, that mo- 
 rals, talents, and personal attainments may be placed 
 with propriety in the category of wealth, because 
 they are capable of being rigorously appreciated. 
 
 On the other hand, there seems to be no kind of 
 incongruity in allowing that wealth, according to the 
 most common acceptation of the term, may be em- 
 ployed in obtaining gratifications which it would be ' 
 most inconvenient and embarrassing to call by the 
 same name as the material products which were given 
 for them. A man of fortune has the means of pur- 
 chasing the gratification of leisure ; he has often the 
 means of collecting at his table persons from whom ■ 
 he is likely to hear the most agreeable and instructive 
 conversation ; he has the means of travelling into dif- 
 ferent countries, seeing the beauties of nature in her 
 grandest forms, coiitemplating the finest models of 
 art, ancient and modern, studying the character and 
 polity of different nations, and laying in a stock of 
 taste and information calculated to refine, improve, 
 and enlarge his mind. 
 
 It will not be denied, that these are some of the 
 modes of employing wealth, which are always, and 
 most justly, considered as much superior in respectabi- 
 lity, to the purchase of fine clothes, splendid furniture, 
 or costly jewels. It is equally certain that the power of 
 wealth to purchase these sources of intellectual grati- 
 fication forms a most natural encouragement to the 
 acquisition of it, and may therefore, with perfect pro- 
 priety, be said to be indirectly productive of it. But 
 it is a wide step in advance of these concessions, at 
 once to place in the category of wealth, leisure, agree- 
 able conversation, cultivated tastes, and general infor- 
 mation. And yet if the gratification and information 
 derived from a lecture on chemistry or the belles let- 
 tres, are to be considered as wealth, in consequence 
 of a specific sum being paid for attendance, why should 
 the taste and information acquired by a larger outlay 
 in foreign travels be refused the same title.
 
 SEC. ll.J AXD OF PROnrCTIVF. lABOFt?. 33 
 
 The fa ct really is, that if we once, desert matter in 
 the ^definit ion of wjealth, t here is no subsequent linp 
 of dem arcation which has any^.tolerable degree of 
 distinctness, or ca n be maintained with any tolerable 
 consistency^ till we havejncluded such a mass of im- 
 material objects as utterly to confuse the meaning of 
 the term,^and render it impossible to speak with any 
 a pproach t owaids precisioiij either of the wealth of 
 ditlerent individuals, or different nations. 
 
 If then we wish, with M. Say, to make political 
 economy a positive science, founded on experience, 
 and capable of making known its results, we must 
 be particularly careful in defining its principal term, 
 to embrace only those objects, the increase or de- 
 crease of which is capable of being estimated ; and the 
 line which it seems most natural and useful to draw, 
 is that which separates material from immaterial ob- 
 jects. 
 
 A dam Smith has nowhere given a very regular 
 ancTTorm al dejinition of wealth ; bu t that the m eaning 
 w hich he attaches to the term is confined to material 
 objec ts is. throughout his work, snffieient.ly manifest. 
 His p revailing descripti on of wealth may be s aid to 
 He, ^' tTie annual p roduce^the land and labou n"" The 
 objections to it as a definition are, that it refers to the 
 sources of wealth before we are told what wealth is, 
 and that it is not sufficiently discriminate, as it would 
 include all the useless and unappropriated products of 
 the earth, as well as those which are appropriated 
 and enjoyed by man. 
 
 To avoid these objections, and to keep at an equal 
 distance from a too confined, or a too indiscriminate 
 sense of the term, I should define vvealthtq be the 
 material objects^ nec^sary, useful^ or agreeable to 
 man,_jvlij.c^are_.vpluatarily appropriated by indivi- 
 duals* or nations. The definition thus limited includes 
 
 * In my little work on the " De(initions in Political Economy," 
 published in 1827, I defined wealth to be "The material objects 
 necessary, useful, or agreeable to man, which have required some 
 portion of human industry to appropriate or produce. The latter 
 
 D
 
 34 or THE DEFINITIONS OF WEALTH [CH. I. 
 
 nearly all the objects which usually enter into our 
 conceptions when we speak of wealth or riches — an 
 advantage of considerable importance, as long as we 
 retain these terms both in common use, and in the 
 vocabulary of political economy. 
 
 A coiuitn/ will t herefore be rich or poor, accojxling 
 to tlie ab undanc e or scarcity wltirrvTiTcTi tliese ma- 
 ^ terial objects a re_supplied, comp ared with UTe lexjent 
 
 ot terr itory.; an3~~ti re~people will be rich or poor, 
 a ccording to the abun d ance or s carcity witir^Tiich 
 they are s upplied, compared withlHe populat ion ._ 
 
 Section II. — On Productive Labour. 
 
 The question of productive labour is closely con- 
 nected with the definition of wealth. Both the Eco- 
 7i07nists and Adam Smith have uniformly applied the 
 term productive to that species of labour, which di- 
 rectly produces what they call wealth, according to 
 their several views of its nature and origin. The 
 Economists therefore, who confine Avealth to the pro- 
 ducts of the soil, mean by productive labour, that 
 labour alone which is employed upon the land. Adam 
 Smith, who considers all the material objects which 
 are useful to man as wealth, means by productive 
 labour, that labour which realizes itself either in the 
 production or increased value of such material ob- 
 jects. 
 
 This mode of applying the term productive labour 
 to that labour which is directly productive of wealth, 
 
 part was added, in order to exclude air, light, rain, &c. ; but 
 there is some objection to the introduction of the term industry 
 or labour into the definition, because an object might be consi- 
 dered as wealth which has had no labour employed upon it. A 
 diamond accidentally found on the sea shore might have a high 
 value; and the fruit at the top of a tree must be considered by 
 the savage as necessary or agreeable to him, before he will make 
 the exertions required to obtain it.
 
 SEC. II.] AND OF PRODUCTIVE LABOUR. 35 
 
 however wealth may be defined, is obviously of" the 
 greatest use in explaining the causes of the increase 
 of wealth. The only essential objection to it is, that 
 it seems to underrate the importance of all other 
 kinds of labour — at least the term unproductive la- 
 bour, used by Adam Smith to express all other kinds 
 of labour, has been frequently so interpreted, and has 
 formed in consequence the great objection to his clas- 
 sification. To remove this objection to a classifica- 
 tion in other respects sufficiently correct for practical 
 purposes, and beyond comparison more useful in ex- 
 plaining the causes of the wealth of nations, than any 
 otJier which has hitherto been suggested, it mi^'ht be 
 d esirable to sub stitute the term personal sei^vic es for" 
 unprodu ctiveTabour. ^^ 
 
 Labour may then be distinguished into two kinds, 
 productive labour, and personal services, meaning by 
 productive labour that labour which is so directly 
 productive of material wealth as to be capable of 
 estimation in the quantity or value of the object pro- 
 duced, which object is capable of being transferred 
 without the presence of the producer ; and meaning 
 by personal services that kind of labour or industry, 
 which however highly useful and important some of 
 it may be, and however much it may conduce in- 
 directly to the production and security of material 
 wealth, does not realize itself on any object which 
 can be valued and transferred without the presence 
 of the person performing such service, and cannot 
 therefore be made to enter into an estimate of na- 
 tional wealth. 
 
 This, though differing in name, is essentially the 
 doctrine of Adam Smith. It has been controverted 
 by two opposite parties, one of which has imputed 
 to him an incorrect and unphilosophical extension of 
 the term productive to objects which it ought not to 
 include, and the other has accused him of a similar 
 want of precision, for attempting to establish a dis- 
 tinction between two different sorts of labour where 
 , no distinction is to be found.
 
 3G OF THE DEFINITION'S OF WEALTH [CH. I. 
 
 Ill proceeding to give my reasons for adopting the 
 opinion of Adam Smith with the modification above 
 sutriicstcd, I shall Hist endeavour to show that some 
 such classification of the different sorts of labour is 
 I'caliy called for in an inquiry into the causes of the 
 wealth of nations, and that a considerable degree of 
 confusion would be introduced into the science of 
 political economy by an attempt to proceed without 
 it. We shall be less disposed to be disturbed by 
 plausible cavils, or even by a few just exceptions to 
 the complete accuracy of a definition, if we are con- 
 vinced that the want of precision which is imputed 
 to it, is beyond comparison less in amount and im- 
 portance than the want of precision which would re- 
 sult from the rejection of it. 
 
 In the first place, then, it will readily be granted, 
 thfft as material capital is the specific source of that 
 great department of the national revenue, peculiarly 
 called profits, and is further absolutely necessary 
 to that division of labour, and extended use of ma- 
 chinery, which so wonderfully increases the produc- 
 tive powers of human industry, its vast influence on 
 the progress of national wealth must be considered 
 as incontrovertibly established. But in tracing the 
 cause of the different effects of the produce which is 
 employed as capital, and the produce which is con- 
 sumed as revenue, we shall find that it arises princi- 
 pally from the different kinds of labour directly main- 
 tained by each, ^.t is obv iou s, for in ^ance , that i t is 
 o nly th e productive labour of Adam^mitl^ whicli.£aiJ 
 ■ keop^up, restorejj)r increase, th e material capita l of 
 a_coimtiy. I_Lisalso_lhisJand_of labour alone, that 
 is, the labour which is realized in the^ pi^ oduc tion^ or 
 increa^id value of mater iajjilij£cl^ which jiegm 
 '"c onsid erablo amount of capital for its continued env 
 j)loyment ; l)iit that, fur which there is an eftectual 
 demand, will generally be supplied, and the practical I 
 consequence is such as might naturally be expected. . 
 In those countries which abound in the number, and I 
 especially in the skill of their productive labourers,
 
 SKC. 11.] AND OF PUODUCTIVE LABOUR. Sf 
 
 capital and wealth abound. In those where personal U- 
 services predominate, capital and wealth are compa- 
 ratively deficient. 
 
 It is true, that what is called capital, is sometimes 
 employed in the maintenance of labour, which is not 
 called productive ; as by the managers of theatrical 
 exhibitions, and in the payment of the expenses of 
 education. In regard to the first kind of expenditure, 
 however, it would be excluded from coming under 
 the head of capital, if capital w ere define d, as I hav e 
 defined jt, namely, that portion of the stock or mate- 
 riajhpossessions of^a country which is kept or em^ 
 
 ployed with a view to profit in tbe jjroduction or dis- 
 
 tribution of wealth . But at all events, the amount of 
 it is too inconsiderable to be allowed to interfere with 
 a classification in other respects correct, and in the 
 highest degree useful. 
 
 In regard to the expense of education, it should be 
 recollected that no small portion of it is employed in 
 acquiring the skill necessary to the production and 
 distribution of material objects, as in the case of most 
 apprenticeships ; and as the persons who have the 
 means of teaching this skill, are themselves employed 
 in this sort of production and distribution ; and that 
 the skill so acquired will finally be realized, accord- 
 ing to its value on material objects, the capital so 
 employed must clearly be considered as maintaining 
 productive labour, in the most natural sense of the 
 term. The same may be said of all that is expended 
 in- the maintenance of those kinds of labour which, 
 though they appear to have the same general cha- V^ 
 racter as personal services, are yet so necessary to the 
 production and distribution of material objects, as to 
 be estimated in the value of those objects when they 
 reach the consumer. 
 
 In regard to the remaining expenditure in educa- 
 tion, it will be excluded from coming under the de- 
 nomination of capital, by the definition of capital 
 above adverted to : and it may fairly be questioned 
 whether the expenses of general education, and even,
 
 38 OF THE DEFINITIONS OF WEALTH [CH. I. 
 
 for the most part, the education for the learned pro- 
 fessions, ought not properly to be considered as being 
 paid from revenue rather than from capital. Practi- 
 cally they seem to be so considered. But in whatever 
 light we view the expenditure upon these services, 
 which are not realized upon any material products, 
 i t must be allo wed tha t the great source of wha t Js 
 pec_uUarlj called profits, and the great mass of what 
 is usually called wealth, is directly derived from the 
 employment of material capital in the maintenanc£ of 
 wharAd am_ Smith has called productive lab our. In 
 speaking therefore, and treating of capital, it seems 
 highly useful to have some term for the kind of la- 
 bour which it generally employs, in contradistinction 
 to the kind of labour which in general is employed 
 directly by revenue, in order to explain the nature of 
 productive labour, and its peculiar efficiency in caus- 
 ing the increase of wealth. 
 
 Secondly, it is stated by Adam Smith, that the 
 produce which is annually saved is as regularly con- 
 sumed, as that which is annually spent, but that it is 
 consumed by a different set of people. If this be the 
 case, and if saving be allowed to be the immediate 
 cause of the increase of capital, it must be desirable 
 ^ in all questions relating to the progress of wealth, to 
 distinguish by some particular title a set of people 
 who appear to act so important a part in accelerating 
 this progress. Almost all the lower classes of people 
 of every society are employed in some way or other, 
 and if there were no grounds of distinction in their 
 employments with reference to their effects on the 
 national wealth, it is difficult to conceive what would 
 be the use of saving from revenue to add to capital, 
 as it would be merely employing one set of people in 
 preference to another. How in such a case are we 
 to explain the nature of saving, and the different ef- 
 fects of parsimony and extravagance upon the national 
 capital ? No political economist of the present day 
 can by saving mean mere hoarding ; and beyond this 
 contracted and inefficient proceeding, no use of the
 
 SEC. II.] AND OF PUODUCTIVE LABOUR. 39 
 
 term in reference to the national wealth can well be 
 imagined, but that which must arise from a different 
 application of what is saved, founded upon a real dis- 
 tinction between the different kinds of labour main- 
 tained by it. 
 
 If the labour of menial servants be as productive 
 of wealth as the labour of manufacturers, why should 
 not savings be employed in their maintenance, not 
 only without being dissipated, but with a constant 
 increase of their amount ? But menial servants, law- 
 yers, or physicians, who save from their salaries are 
 fully aware that their savings would be immediately 
 dissipated again if they were advanced to persons like 
 themselves, instead of being employed in the mainte- 
 nance of persons of a different description. To con- 
 sider the expenditure of the unproductive labourers 
 of Adam Smith as advances made to themselves, and 
 of the same nature as the advances of the master 
 manufacturer to his workmen, would be at once to 
 confound the very useful and just distinction be- 
 tween those who l ive upon wag es, and those who li ve 
 u pon proHts , and""would render it quite impossible to 
 explain the frequent and important operations of sav- 
 ing from revenue to add to capital, so absolutely ne- 
 cessary to the continued increase of wealth. 
 
 Some writers who refuse to adopt the classification 
 of Adam Smith, endeavour to explain the nature of 
 saving by substituting the term productive, or repro- 
 ductive consumption for productive labour; but it 
 does not seem to be agreed who are to be called the 
 productive or reproductive consumers. 
 
 If, as some affirm, every person is a reproductive 
 consumer who obtains for himself a value equal to 
 that which he consumes, it is obvious that all menial 
 servants kept for pomp or pleasure will be productive 
 consumers ; but it is quite impossible that a saving, 
 or an increase of wealth and capital can result to any 
 individual from the employment of a great number 
 of such reproductive consumers. 
 
 If, on the other hand, a more correct meaning be 
 
 L^
 
 40 OF THE DEriMTIONS OF MEALTH [CH. I. 
 
 ^iven to the expression productive consumption, if it 
 be considered as a present sacrifice with a view to a 
 future advantage, still every species of education would 
 be included in the definition ; and certainly it would 
 be impossible to explain the nature of saving by sta- 
 ting that a country gentleman would equally increase 
 liis own and the national wealth and capital, whether 
 he em ployed a considerable part of his rexcmiQ, in 
 i mprov ing his farms and increasing their saleal)le 
 valu e, or in paying masters to teach his sons and 
 daughters the most fashionable accomplishments. The 
 latter sort of expenditure, to a certain extent, might 
 be quite as proper and creditable as the former, or 
 even more so ; but that is not the question. The 
 question is, what is saving? Now e very body wou ld 
 read il y pronounce j haiFthe first kind of expendit ure 
 judicio usly appliedT was a savmg from revenue tQ 
 add to capital ; but few, I apprehend, could expect 
 to be understood, if they pronounced that the second 
 expenditure, in proportion to its extent, was an equal 
 saving from revenue, and an equal addition to indi- 
 vidual and national capital. 
 
 It appears then upon examination, that the use of 
 the term productive consumption will not enable us 
 to explain what is most usually and most correctly 
 meant by individual and national saving, unless when 
 it is so defined as to mean the very same thing that 
 Adam Smith means by the employment of productive 
 labour. 
 
 It has been said, that many of the unproductive la- 
 bourers of Adam Smith save, and add to the national 
 capital in the usual sense of the term. This is no 
 doubt true ; and it is equally true that any person who 
 received a portion of wealth as a gift might save some 
 of it, and add to the national capital. The jpumei- of 
 saving, which is ecjually possessed by both, is not ne- 
 cessarily connected with the, m£ans-by, jybich their. 
 w ealtli_ was obtaimd. Hut on this point there is ano- 
 ther circumstance notsuthciently noticed, which draws 
 a marked line of distinction between productive labour
 
 StC. II.] AND OF PRODUCTIVE LABOUU. 4f 
 
 and personal services. Workmen and mechanics who 
 receive the common wages, and various higher salaries, 
 which are realized upon material objects, have the 
 means of saving just in the same manner as menial 
 servants, and ethers engaged in personal services. In 
 this respect the two classes are precisely on a level. 
 ^ut the productive labourers at the same time that 
 they obtain wealth, a nd the means of a ccu m ulati on for 
 ffiemseives, furn ish a la r Q-e surplus to that other nioM 
 i mportant class of societywhich lives upon the profits i^ 
 qfJca^itaH This d istinction alone^ij^ jj uit^ suliicient 
 to place iiLa different point of view the productive la- 
 b ourers of Adam Sm ith^nd those engagecTinpeFsoiiaT' 
 s ervices. 
 
 Thirdly, it has been stated by Adam Smith, and it 
 is allowed to have been stated truly, that there is a 
 balance very different from the balance of trade, which 
 according as it is favourable or unfavourable, occa- 
 sions the prosperity or decay of every nation. This 
 is the balance of the annual production and consum p- 
 tion. If in given periods the produce of a country 
 exceeds in a certain degree the consumption of those 
 employed in its production, the means of increasing- 
 its capital will be provided ; its population will in- 
 crease, or the actual numbers will be better accommo- 
 dated, and probably both. If the consumption in such 
 periods fully equals the produce, no means of increas- 
 ing the capital will be afforded, and the society will be 
 nearly at a stand. If the consumption continually ex- 
 ceeds the produce, every succeeding period will see the 
 society worse supplied, and its prosperity and popu- 
 lation will be evidently on the decline. 
 
 But if a balance of this kind be so important; if 
 upon it depends the progressive, stationary, or declin- 
 ing state of a society, surely it must be of importance to 
 distinguish those who mainly contribute to render this 
 balance favourable, from those who chiefly contribute 
 to make the opposite scale preponderate. Without 
 some such distinction we shall not be able to trace the 
 causes why one nation is thriving, and another is de-
 
 42 OK THK DEFINITIONS OF WEALTH [CH. I. 
 
 dining ; nor will the superior riches of those countries 
 where merchants and manufacturers abound, com- 
 pared with those in which the retainers of a court and 
 of a feudal aristocracy predominate, admit of an intel- 
 ligible explanation. To such an explanation it is a^-. 
 solutelj_necesiar}vthat by the balance of production 
 and coiisumption, we should mean thejrodu ctioi i^nd, 
 consumpt ion of materiaTo^jects i^Tor, Jfj-jljiie^grati- 
 fications^envedftwi^^^^^ services were.iiLbe iri- 
 cluded i n the term produce, it would be quite impos- 
 s ible eit her to estim ate sucb_a^^l ance. or eve n to^ay 
 what wa^o be understood by it . 
 
 IT a taste for idle retainers, and a profusion of me- 
 nial servants, had continued among the great land- 
 holders of Europe from the feudal times to the present, 
 the wealth of its different kingdoms would have been 
 very different from what it is now. Adam Smith has 
 justly stated that the growing taste of our ancestors 
 for material conveniences and luxuries, instead of 
 personal services, was the main cause of the change. 
 While the latter continue to be the predominant taste, 
 few comparatively will be living on the profits of ca- 
 pital. The great mass of society will be divided chiefly 
 into two classes, the rich and the poor, one of which 
 will be in a state of abject dependance upon the other. 
 But a taste forjpaterial obje cts, h oweyer^friYolqus,^ al-. 
 most always requires for its gratificatiori the^ accumu- 
 laHonof capitaT, and tlie existence of a much greater 
 number of manufacturers, merchants, wholesale dea- 
 lers, and retail dealers.* The face of society is thus 
 wholly changed. A middle class of persons, living 
 upon the profits of stock, rises into wealth and conse- 
 quence ; and an increasing accumulation of capital, 
 almost exclusively derived from the industry of the 
 
 * There can hardly be a more important inquiry in political 
 economy than that which traces the etiects of ditferent proportions 
 of productive labour, and personal services in society ; but this 
 inquiry cannot be conducted without the application of different 
 terms to these two difterent kinds of labour ; and the distinction 
 made by Adam Smith appears to me to be the simplest and the 
 most convenient.
 
 SJ.C. II.] AND OF PRODUCTIVE LABOUR. 43 
 
 mercantile and manufacturing classes, effects to a con- 
 siderable extent the division and alienation of those 
 immense landed properties, which, if the fashion of 
 personal services had continued, might have remained 
 to this time nearly in their former state, and have pre- 
 vented the increase of wealth on the land, as well as 
 elsewhere. 
 
 Surely then some distinction between the different 
 kinds of labour, with reference to their different effects 
 on national wealth, must be admitted to be not only 
 useful, but necessary ; and if so, the question is what 
 this distinction should be, and where the line between 
 the different kinds of labour should be drawn. 
 
 The opinion that the term productive labour should 
 be exclusively confined to the labour employed upon 
 the land, has been maintained by a particular class of 
 French Economists, and their followers. Without en- 
 tering upon the general merits of their system, it will 
 only be necessary to observe here, that whatever advan- 
 tages their definition may claim in point of precision 
 and consistency, yet for the practical and useful pur- 
 pose of comparing different countries together, with re- 
 gard to all these objects, which usually enter into our 
 conception of wealth, it is much too confined. Two 
 countries of the same territory and population might 
 possess the same number of agricultural labourers, and 
 even direct the same quantity of skill and capital to 
 the cultivation of the soil, and yet if a considerable 
 proportion of the remaining population in one of them 
 consisted of manufacturers and merchants, and in the -^ 
 other of menial servants and soldiers, the former might 
 have all the indications of wealth, and the latter all 
 the symptoms of poverty. The number and skill of 
 theagricultural labourers, tlierefofe,~canriof alone de- 
 te rm m e the national wealth. We^ evidently want some 1 
 definition of productiveness, which refers to the effects 
 of manufacturing and mercantile capital and skill ; 
 and unless we consider the labour which produces 
 these most important results as productive of riches, 
 we shall find it quite impossible to trace the causes of
 
 l^ 
 
 44 OF THE DEFIXITIONS OF WEALTH [cH. I. 
 
 those diticreiit appearances indifferent nations, which 
 all persons, whatever may be their theories on the 
 subject, universally agree in calling different degrees 
 of wealth. 
 
 The opinion which goes to the opposite extreme of 
 the one here noticed, and calls all labour ecjually pro- 
 ductive, has already been suthciently considered, in 
 the endeavour to shew that a distinction between the 
 different kinds of labour is really wanted, in an inquiry 
 into the nature and causes of the wealth of nations. 
 
 This distinction must be considered as so clearly the 
 corner stone of Adam Smith's work, and the founda- 
 tion on which the main body of his reasonings rests, 
 that, if it be denied, the superstructure which he has 
 raised upon it, must fall to the ground. Of course it 
 is not meant to be said that his reasonings should not 
 fall, if they are erroneous ; but it appears inconsistent 
 in those who allow of no distinction in the different 
 kinds of labour, to entertain a very high opinion of an 
 ' JiKjuirii i/ito the nature and causes of the Wealth of 
 Nations," in which, the increase of the quantity and 
 skill of what is called productive labour is the main 
 hinge on which, the progress of national opulence and 
 prosperity is^made to turn.* 
 
 If in calling personal services productive of wealth, 
 we do not look to the character of what is produced, 
 but merely to its effect in stimulating other produ- 
 cers, this is introducing a new and separate consider- 
 ation, which has no relation to the direct production 
 of wealth. In thi s view, it will be seen that I consider 
 personal services to a certam extent as very effici ent ; 
 but this is evidently not as beino- productive the m- 
 selves, but as encouraging the production of ma teij al 
 ob jects to be exch an ged for t1i(^ni , and as majd ng^a 
 
 * The annual produce of the land and labour of any country, 
 can be increased in its value by no other means than by increasing: 
 either the number of its productive labourers, or the jirodurtive 
 powers of those labourers who had before been employed. 
 (Wealth of Nations, B. II. c. iii.) This is the general doctrine 
 of the work. 
 
 I
 
 SEC. II.] AND OF PRODUCTIVE LABOUR. 45 
 
 demand in proportion to the payments receive d. It is 
 no doubt true, that the desire to enjoy the convenience 
 or parade of personal attendance, and the advantages 
 of legal and medical advice, has a strong tendency to 
 stimnlate industry. But though the tendency of per- 
 soiial serv ices to act as a stimulus to the production 
 of( ^ealth^ be fully allowed, they can never be said 
 directly to create it, so long as the definiti on is con-^ 
 fined to material objects . Under the circumstances 
 most favourable to their influence, their operation can 
 only be indirect ; and if ^ we were to include under 
 th e hea d of productive labour, all tlie exertions which 
 may contribute, however indirectly,, to the production_ I 
 ^ of wealth, the term would cease to have any definite 
 a nd useful signification, so as to admit of being ap- 
 plied with advantage to an explanation of the causes 
 of the wealth of nations. It would at once confound 
 the effects even of production and consumption, as 
 there is certainly no indirect cause of production so 
 powerful as consumption. 
 
 When we consider then the diflficulties which pre- 
 sent themselves on every supposition we can make, 
 it mayfai rjy be doubted whether i t is probable that 
 we shallbe able to find a distinction more useful for 
 practical purposes, and on the whole less objection- x^ 
 
 aEle in point of precision than that of Adam Smith ; 
 wh iclTcrraws the line that distingu ishes riches from_ 
 o ther kinds of value, b etween what is matter and 
 what is not matter, between ^ li at is susceptible o f 
 accu m u la t ion_^and definj te valuation, arid what is wit h- 
 out eithe r one or bot h of th ese essentia l prnpertips . 
 
 Some degree of duration an d a consequent suscep- 
 tibili ty of accumulation seem s to be essential to our 
 usual conceptions of wealth, not only because pro- 
 duce of this kind seems to be alone capable of form- 
 ing those accumulations which tend so much to faci- 
 litate future production, but because they so essen- 
 tially contribute to increase that store reserved for 
 consumption, the possession of which is certainly one 
 of the most distinguishing marks of riches compared 
 
 *--
 
 46 
 
 OF THE DEFIXITIONS OF WEALTH 
 
 \y 
 
 [cH. r. 
 
 with poverty. The characteristic of poverty seems to 
 be, to live from liand to mouth : tlie characteristic of 
 riches is, to have a store to apply to for the commodi- 
 ties wanted for immediate consumption ; but in every 
 case of productive labour as explained by Adam 
 Smith, there is always a period, though in some cases 
 it may be very short, when either the stock destined 
 to replace a capital, or the stock reserved for imme- 
 diate consumption is distinctly augmented by it ; and 
 to this quality of adding to the national stock, the 
 term enriching, or productive of riches seems to be 
 peculiarly appropriate. 
 
 But it is not enough that it should be susceptible 
 of accumulation, and of adding to the national stock, 
 to entitle it to be called productive according to the 
 meaning of Adam Smith, jn order to make the ter m 
 useful for practical purpos e s, the resu lts of the Tcm^ 
 ofj abour to whicTi it refers should be susceptibl e of 
 some sort ofj^definite .val uatio n. ' The laws of the 
 legislator, the precepts of the moralist, and the con- 
 clusions of the natural philosopher may certainly be 
 said to be susceptible of accumulation and of receiv- 
 ing assistance from past labour ; but how is it possible 
 to estimate them, or to say to what amount the coun- 
 try has been enriched by them ? On the other hand, 
 thejabo ur, which is the necessary condition of th e 
 suppl y of mateTIal objects is estimated in the pricel it 
 wliichjhey are sold, a nd may fairly be presumed to 
 add^ to the^vealth of the country an amount a^ least 
 equaTtp the vaTue^aid^Tdr inShlabour ; .flnd prob?bj,y 
 with few or no exce ptions, the labour which is realized 
 upon material p roduc ts is the only kind that is at jonce 
 s^Jscentihle_of^cc^m^lation ;yid.jgfijji te valuatio n . 
 
 It has been observed by M. Garnier, in his valuable 
 edition of the Wealth of Nations, that it seems very 
 strange and inconsistent to denominate musical instru- 
 ments riches, and the labour which produces them 
 productive, while the music which they yield, and 
 which is the sole object for which they are made, is 
 not to be considered in the same light ; and the per- 
 formers who can alone put them to their proper use,
 
 SEC. II.] AND OF PRODUCTIVE LABOUR. 47 
 
 are called unproductive labourers.* But the differ- 
 ence between material products and those which are 
 not matter, sufficiently warrants the distinction, in 
 point of precision and consistency ; and the utility of 
 it is immediately obvious from the facility of giving 
 a definite valuation to the instruments, and the abso- 
 lute impossibility of giving such a valuation to all 
 the tunes which may be played upon them. 
 
 It has also been observed by the same authority, 
 that it is still more inconsistent to denominate the 
 clerk of a merchant a productive labourer, and a 
 clerk employed by government, who may in some 
 cases have precisely the same kind of business to do, 
 an unproductive labourer.* To this, however, it may 
 be replied, that in all business conducted with a view 
 to the profit of individuals, it may be fairly presumed 
 that- there are no more clerks, or labourers of any 
 kind employed, nor with higher salaries than neces- 
 sary ; but the same presumption cannot be justly 
 entertained in regard to the business of government : 
 and as the results of the labours of its servants are 
 not brought to market, nor their salaries distributed 
 with the same rio-id attention to the exchano-eable 
 value of their services, no just criterion is afforded for 
 determining this value. t 
 
 At the same time it may be remarked, that if a ser- 
 vant of government perform precisely the same kind 
 of labour in the preparation or superintendence of 
 material products as the servant of a merchant, he 
 ought to be considered as a productive labourer. He 
 is one among the numerous instances which are al- 
 ways occurring, of productive labourers, or labourers 
 
 * Vol. V. note xx. 
 
 t The application of Adam Smith's distinction, is in this, as in 
 most other cases, preeminently clear. The merchant's clerk in- 
 creases his master's wealth. He adds a value to the subject on 
 which his labour is bestowed, for if he did not, he would not be 
 employed. The same thing cannot be said of the Government 
 clerk ; however useful or necessary his services may be, he contri- 
 butes nothing to the fund from whence be derives his remuneration. 
 He lives at the expense of his employers, the nation at large, and 
 is paid cut of a tax or dutv, not out of a profit or reproduction. 
 
 Ed.
 
 48 01" THE DEFIMTIOXS OF WEALTH [cil. I. 
 
 occasionally productive, to he found among' those 
 classes of society, which, in reference to the great 
 mass of their exertions, may with propriety be cha- 
 racterized as unproductive. This kind of exception 
 must of course frequently happen, not only among- 
 the servants of government, but throughout the wiiole 
 range of menial service, and in every other situation 
 in society. Almost every person, indeed, must occa- 
 sionally do some productive labour; and the line of 
 separation which Adam Smith has drawn between 
 productive and unproductive labour may be perfectly 
 distinct, although the denomination which he has 
 given to the different classes of society, founded on 
 their general character, must unavoidably be inaccu- 
 rate with regard to the exertions of some individuals. 
 It should also be constantly borne in mind, that 
 Adam Smith fully allows the vast importance of many 
 sorts of labour, which he calls unproductive. From 
 the enumeration, indeed, which he has made of these 
 different sorts, he must have been aware, that some 
 of them produce advantages to society, with which the 
 results of the labour employed in making ribands 
 and laces, or indeed of any other labour than that 
 which directly supplies our most pressing physical 
 wants, cannot for a moment be compared. Indirectly 
 indeed, and remotely, there cannot be a doubt that 
 even the supply of these physical wants, is most pow- 
 erfully promoted by the labours of the moralist, the 
 legislator, and those who have exerted themselves to 
 obtain a good government ; but a great part of the 
 value of their labours, evidently depends upon the 
 encouragement they give to the full development of 
 industry, and their consequent invariable tendency to 
 increase the quantity of material wealth. So far as 
 they contribute! to promote tliis supply, their general 
 effect, though not the precise amount, will be esti- 
 mated in the quantity of these material objects, which 
 the country can command ; and so far as they contri- 
 bute to other sources of happiness, besides those which 
 are derived from matter, it may be more correct, and 
 more useful to consider them as belonging to a class
 
 SEC. II.] AND OF PRODUCTIVE LABOUR. 49 
 
 of objects, most of which, cannot without the great- 
 est confusion, enter into the gToss calculations which 
 relate to national wealth. To estimate the value of 
 Newton's discoveries, or the delight communicated by 
 Shakespeare and Milton, by the price at which their 
 works have sold, would be but a poor measure of the 
 degree in which they have elevated and enchanted 
 their country ; nor would it be less groveling and in- 
 congruous to estimate the benefit which the country 
 has derived from the Revolution of 1688, by the pay 
 of the soldiers, and all other payments concerned in 
 effecting it. 
 
 On the whole, therefore, allowing that the labours 
 of the moralist and the manufacturer, the legislator 
 and the lacemaker, the agriculturist and the vocal per- 
 former, have all for their object the gratification of 
 some want or wish of mankind, it may still be the most 
 natural, the most correct, and pre-eminently the most 
 useful classification which the subject will admit, first 
 to separate under the name of wealth or riches, every 
 thing which gratifies the wants of man by means of 
 material objects, and then to denominate productive 
 every kind of labour which is directly productive of 
 wealth, that is, so directly, as to be estimated in the 
 quantity or value of the objects produced. 
 
 The reader will see that this discussion is not in- 
 troduced with a view to the establishment of any 
 nice and subtle distinctions, without a practical object. 
 Its purpose is to shew, that there is really some dif- 
 ficulty in the definitions of wealth and of productive 
 labour; but that this diflRculty should not deter us 
 from adopting any classifications which are obviously 
 useful in conducting inquiry ; that in treating of the 
 nature and causes of the wealth of nations, a distinc- 
 tion between the different sources of gratification, and 
 the different kinds of labour, seems to be not only 
 useful, but almost absolutely necessary ; and conse- 
 quently that we should be satisfied with the best classi- 
 fication which we can get on these subjects, although 
 it may not in all its parts be unobjectionable. 
 
 E
 
 50 
 
 CHAPTER II. 
 
 ON THE NATUKE, CAUSES, AND MEASURES OF VALUE. 
 
 Section I. — On the different soi^ts of Value. 
 
 Most writers in treating of value, have considered it 
 as having two different meanings ; one, value in use, 
 mnd the other, value in exchange. We are not, how- 
 ever, much in the habit of applying the term in the 
 first of these two senses. We do not often hear of the 
 value of air and water, although they are bodies in 
 the highest degree useful, and indeed essentially ne- 
 cessary to the life and happiness of human beings. 
 Yet it may be admitted that the term, taken perhaps 
 in a metaphorical, rather than in a literal sense, may 
 imply, and is sometimes used to imply, whatever is in 
 any way beneficial to us, and in this sense may apply 
 without impropriety to an abundant spring of water, 
 or to a fine air, although no question could arise res- 
 pecting their value in exchange. 
 
 As this meaning therefore of the word value has 
 already been admitted by many writers into the voca- 
 bulary of political economy, it may not be worth while 
 to reject it; and it need only be observed, that as the 
 application of the word value in this way, is very much 
 less frequent than in the other, it should never appear 
 alone, but should always be marked by the addition 
 in use. 
 
 Value^ in ex change is the relation of one object to 
 s ome otherj )r_otliers i n e xchange. To determine this 
 relation accurately in any particular case, an actual 
 exchange must take place ; and every exchange must 
 imply not only the power and will to give some object 
 in exchange for one more wanted, but a reciprocal 
 desire in the party possessing the commodity wanted,
 
 SEC. I.] MEASURES OF VALUE. 51 
 
 for the commodity or the labour proposed to be ex- 
 changed for it. 
 
 [ When this reciprocal desire exists, the rate at which 
 the exchange is made, or the portion of one object 
 
 I which is given for an assigned portion of the other, 
 will depend upon the estimation in which each is held 
 by the parties concerned, founded on the desire to pos- 
 
 \ sess, and the difficulty of procuring possession of it. 
 Owing to the necessary difference of the desires of 
 individuals, and their powers of producing, or pur- 
 chasing, it is probable that the contracts thus made 
 were, in the first instances, very different from each 
 other. Among some individuals it might be agreed 
 to give six pounds of bread for a pound of venison, 
 and among others only two. But the man who was 
 ready and willing to give six pounds of bread for a 
 pound of venison, if he heard of a person at a little 
 distance who would take two pounds for the same 
 quantity, would of course not continue to give six ; 
 and the man who would consent to give a pound of 
 venison for only two pounds of bread, if he could any 
 where else obtain six, would not continue to make an 
 exchange by which he could obtain only two. 
 
 After a cer tain time it might be expected that a so rt 
 of ^vem ge would be formed^ ounded on all the ofTers 
 o F~brea d, ^om^red with all the otier^jof yemson ; 
 and thus, as Ts very Eapp7Ty~described by Turgot, a 
 current relative^ value of all commodities in freq uenF 
 use would be established. 
 
 It would be known not only that a pound of venison 
 was worth four pounds of bread, but that it was also 
 worth perhaps a pound of cheese, a quarter of a peck 
 of wheat, a quart of wine, a certain portion of leather, 
 &c. &c. each of an average quality , the estimation in 
 which each of these several objects was ordinarily 
 held by the society, being determined by the ordinary 
 desires of individuals to possess it, and the ordinary 
 difficulty of procuring possession of it. 
 
 Each comm odity would in this way meas ure the 
 retative values of all others, and would in its turn be 
 
 y„ OF IU« LIB.
 
 52 ox THE NATURE, CAUSES, AXD [CH. IF. 
 
 measured by any one of them . Each comm oditY^woujd 
 ^nTsQ he a re prespntativp of v^lne. The possessor of a 
 quart of wme might consider himself in possession of 
 a value equal to four pounds of bread, a pound of 
 cheese, a certain portion of leather, &c. &c. .a gd thu s 
 each commodity would^ witli^more or less.accuiacy 
 and coD^enience^-posses^ two esse ntial properties .of 
 m oney, tliat of being- both a representative and amea- 
 sure of value. 
 
 But long before it is conceivable that this general 
 valuation of commodities, with regard to each other 
 should have taken place to any considerable extent, 
 or with any tolerable degree of accuracy, a great dif- 
 ficulty in making exchanges, and in the determination 
 of relative value would be constantly recurring from 
 the want of a reciprocal demand. The possessor of 
 venison might want bread, but the possessor of bread 
 to whom he applied might not want venison, or not 
 that quantity of it which the owner would wish to 
 part with . TJii s_yyant of reciprocal d emand 5YPuld,9C- 
 casio n in many instances, and in plac ^sjiot yi^ry-nemote 
 
 from ^each other, thf most nnpqvml p\rhanops;^ and 
 
 except in large fairs or mark ets where a great quajotjty 
 and variet^'^^of commodities were^brought together, 
 \yo uH seem almo st tO-preclude the possibilityjof any 
 thmg like such a general average valuation a^ has 
 BeeiTjusTdesc r i bed i 
 
 Every man, therefore, in order to secure this reci- 
 procal demand, would endeavour, as is justly stated 
 by Adam Smith, so to carry on his business, as to 
 have by him, besides the produce of his own parti- 
 cular trade, some commodity for which there was so 
 general and constant a demand, that it would scarcely 
 ever be refused in exchange for what he wanted. In 
 order that each individual in a society should be fur- 
 nished with tliat share of the whole produce, to which 
 he is entitled, by his wants and powers, it is not only 
 necessary that there should be some measure of this 
 share, but some medium by which he can obtain it in 
 the quantity and at the time best suited to him. 
 
 The constantly recurring want of some such medium
 
 SEC. I.] MEASURES OF VALUE. 53 
 
 occasioned the use of various commodities for this pur- 
 pose in the early periods of society. 
 
 Of these, cattle seem to have been the most general. 
 Among- pastoral nations, they are not only kept with- 
 out difficulty or loss by those who obtain them, but 
 as they form the principal possessions and wealth of 
 society in this stage of its progress, they must natu- 
 rally have been the subject of frequent exchanges, 
 and their exchangeable value in consequence com- 
 pared with other commodities would be pretty gene- 
 rally known. 
 
 It seems to be quite necessary indeed that the com- 
 modity chosen for a medium of exchange should, in 
 addition to the other qualities which may fit it for that 
 purpose, be in such frequent use that the estimation 
 in which it was held, founded on the desire to possess 
 it, and the difficulty of obtaining it, should be toler- 
 ably well established. 
 
 A curious and striking proof of this is, that not- 
 withstanding the peculiar aptitude of the precious 
 metals to perform the functions of a medium of ex- 
 change, they had not been used for that purpose in 
 Mexico at the period of its conquest by the Spaniards, 
 although these metals were in some degree of plenty 
 as ornaments, and although the want of some medium 
 of exchange was clearly evinced by the use of the 
 nuts of cacao for that purpose.* 
 
 It is probable, that as the practice of smelting and 
 refining the ores of the precious metals had not yet 
 been resorted to, the supply of them was not suffi- 
 ciently steady, nor was the use of them sufficiently 
 general, or the degree of difficulty with which they 
 were obtained sufficiently known, to fit them for the 
 purpose required. 
 
 In Peru, where the precious metals were found by 
 the Spaniards in much greater abundance, the prac- 
 tice of smelting and refining the richest ores had 
 begun to prevail, although no shafts had been sunk to 
 any depth in the earth.j" But in Peru the state of 
 
 * Robertson's America, Vol. iii. Book vii. page 215. 
 t Ibid, page 252.
 
 54 ox THE NATUUE, CAUSES, AND [CH. 11. 
 
 property was so peculiar, and there was so little com- 
 merce of any kind, that a medium of exchange seems 
 not to have been called for ; at least there is no account 
 of the use of either of the precious metals, or of any 
 other commodity in the capacity of money. 
 
 In the old world the art of smelting and refining 
 the ores of gold, silver, and copper, seems to have 
 been known to some of the most improved nations of 
 which we have accounts, from the earliest ages ; and 
 as soon as the means used to obtain these metals, and 
 a certain accumulation of them had rendered their 
 supply in the market steady, and they had been in- 
 troduced into common use in the shape of ornaments 
 and utensils, th eir other p eculiar and app ropriate 
 qualities, s u cji" a£llieii^durabili^ ..uni- 
 
 fomiTty^nrvnbstnnp.p^ and grpai value- in ^a-Small Com- 
 paq would jiaturally-poittt them ou^as the best com- 
 modity that could be_seleiLt£d-tQ answer. the purpose 
 oTa medium of exchange, and measure -of value. 
 
 But when they were adopted as the general mea- 
 sure of value, it would follow, of course, that all other 
 commodities would be most frequently compared with 
 this measure. The nomin al value of a commodity 
 is strictly speaking its value in any one commodity 
 named ; but as the precious metals are on almost all 
 occasions the commodity named, or intended to be 
 named, the nominal value of a commodity, \xhen no^^ 
 objecti sspec ificallyreferred to, is always understood 
 to mean its value in exchange lor the precious metars': 
 
 This sort oTvalueJhas been^sefully designate^ by 
 the name oi pi^ice. It is, properly speaking, another 
 term for nominal value ; and as such we may apply 
 it to any particular commodity named, and say price 
 in corn, price in cloth, or price in any other article, 
 with which we wish to compare any given object ; 
 but whenever it occurs without the above additions^ 
 it is always understood to mean the value of a com- 
 modity estimated in the precious metals, or in the 
 currencies of dift'erent countries which profess to re- 
 present them.
 
 SEC. I.] MEASURES OF VALUE. 55 
 
 The introduction of a measure which determined 
 the nominal and relative values of commodities with 
 a medium which would be readily accepted by all 
 persons, was a most important step in the progress of 
 society, and tended to facilitate exchanges and sti- 
 mulate production to an extent which, without such 
 an instrument, would have been perfectly impossible. 
 
 It is very justly observed by Adam Smith, that it 
 is the nominal value of goods, or their prices only^ 
 which enter into the consideration of the merchant.* 
 It matters very little to him whether a hundred pounds, 
 or the goods which he purchases with this sum, will 
 command more or less of the labour, or of the neces- 
 saries and conveniences of life in Bengal than in Lon- 
 don. What he wants is an instrument by which he 
 can obtain the commodities in which he deals, and 
 estimate the relative values of his sales and purchases. 
 His returns come to him wherever he lives.; and whe- 
 ther it be in London or Calcutta, or whether they 
 come to him in goods, bills, or bullion, his gain will 
 be in proportion to the excess of their money value 
 above the amount which he has expended to obtain 
 them. T he variations which may take place in th e 
 VctlufLof mone y during the short period of a merca n- 
 tile transact i on will, in general, be so inconsidera ble, 
 that theymay safely be neglect ed. ~ ~~ 
 
 ^^ut_thqugh thejprecious^ metds j,re an_a^urate 
 an d unexcep tionable measure of value at the same 
 placej_and nearly aTthe same limCPan^ those parts 
 of the world where they are in general use answer 
 the important purpose of determining the rate at 
 which the products of the most distant countries shall 
 exchange with each other, when brought to the same 
 spot, and thus give the greatest encouragement to the 
 production and distribution of wealth throughout the 
 commercial world ; ^;et_we__kno:aL.ibim--jeLKp£rieiice, 
 that at diffe rent pe rjod s and in differe nt countries. 
 they are liable Jo_gL eat changes of value owing to th e 
 grea ter or less fer t ility of the mines, or the greater o r 
 * Book I, ch. V. p. 55 ; 6th edit.
 
 56 ON THE NATURE, CAUSES, AND [CH. II. 
 
 less fqrjiity of piirrliasing^tlieip ; and that conse- 
 quently given portions of them will, in many cases, 
 express most imperfectly the difficulty of obtaining 
 possession of the numerous objects for which they 
 may be exchanged. 
 
 if we are told that a certain cjuantity of cloth in a 
 particular country will exchange for ten ounces of 
 silver, or that the revenue of a particular sovereign, 
 seven or eight hundred years ago, was £400,000 a 
 year, these statements of nominal value do not tell us 
 whether the cloth is obtained with facility or diffi- 
 culty, or whether the resources of the sovereign are 
 abundant or scanty. Without further information on 
 the subject, we should be quite at a loss to say, whe- 
 ther it would be necessary to sacrifice the worth of 
 ten days labour to obtain the cloth, or a hundred days; 
 whether the king in question might be considered as 
 having a very inadequate revenue ; or whether the 
 sum mentioned was so great as to be incredible.* 
 
 It is quite obvious that in cases of this kind, and 
 they are of constant recurrence, the values of commo- 
 dities or incomes estimated in the precious metals, or 
 in other conHuodities which are subject to considerable 
 variations in the difficulty of obtaining them, may 
 imply an increase or decrease of value merely in name, 
 and would be of little use to us alone. 
 
 What we want further to know, is the estimation 
 in which the cloth and money were held in the coun- 
 try, and at the time in question, founded on the desire 
 to possess, and the difficulty of obtaining possession 
 of them. 
 
 It is truly stated by Mr. Senior, that in com- 
 paring two commodities together, the power of one 
 to purchase the other must depend upon two sets of 
 causes, that is, upon the causes which affect the 
 desire to possess, and the difficulty of obtaining pos- 
 session of one of them, and the causes which affect the 
 
 * Hume very reasonably doubts the possibility of William the 
 Conqueror's revenue being £400,000 a year, as represented by an 
 ancient historian, and adopted by subsequent writers.
 
 SEC. I.] MEASURES OF VALUE. 67 
 
 desire to possess, and the difficulty of obtaining pos- 
 session of the other. The causes which affect the de'- 
 sire to possess, and the difficulty of obtaining- posses- 
 sion of any one commodity, may with propriety be 
 denominated the intrinsic causes of its power of pur- 
 chasing ; because the more these causes increase, the 
 greater power will the commodity possess of purchas- 
 ing all those objects which continue to be obtained 
 with the same facility. The causes which affect the 
 desire to possess, and the difficulty of obtaining pos- 
 session of all the different commodities with which the 
 first commodity might be exchanged, may with pro- 
 priety be denominated the extrinsic causes of its power 
 of purchasing ; because while the desire to possess, 
 and the difficulty of obtaining possession of the first 
 commodity remains precisely the same, its power of 
 purchasing other commodities may vary in any degree, 
 owing to the variations in the desire to possess, and 
 the difficulty of obtaining possession of all the other 
 commodities with which it might be exchanged, that 
 is, owing to causes eitrinsic to those which operate 
 on the first commodity. 
 
 Now it is obvious that these extrinsic causes must, 
 from their nature, and the variety of commodities to 
 which they would apply, be almost innumerable ; and 
 though it would certainly be desireable to have some 
 measure of the power of purchasing the mass of com- 
 modities, or at least the principal necessaries and con- 
 veniences of life, as it would enable us to form an 
 estimate of the wealth of those persons who were in 
 possession of particular commodities, or of certain re- 
 venues in money, yet when we consider what such a 
 measure implies, we must feel assured that no one 
 object exists, or can be supposed to exist with such 
 qualities as would fit it to become a standard measure 
 of this kind. It would imply steadiness in the desire 
 to possess, and the difficulty of obtaining possession, 
 not merely of one object, but of a great variety of ob- 
 jects, which is contrary to all theory and experience. 
 
 But even if such a measure were attainable, though
 
 58 ox THE NATURE, CAUSES, AND [CH. IF. 
 
 it might be very desireable as a measure of wealth, 
 it would not be a measure of value according to the 
 most general use of the term. 
 
 When it is said that the exchangeable value of a 
 commodity is proportioned to its general power of 
 purchasing,* if the expression has any definite mean- 
 ing, it must imply that while a commodity continues 
 to purchase the same quantity of the mass of commo- 
 dities, it continues of the same exchangeable value. 
 If it will purchase more, it rises proportionally in 
 value, if it will purchase less, it falls proportionally 
 in value. 
 
 Now let us suppose, what is continually occurring, 
 that from improvements in machinery, the fall of pro- 
 fits, and the increase of skill both in manufactures and 
 agriculture, a large mass of manufactured articles can 
 be obtained with -much greater facility than before, 
 while the increase of skill in agriculture prevents any 
 increase in the difficulty of obtaining raw produce, 
 can it be asserted with any semblance of correctness, 
 that an object which under these changes would com- 
 mand the same quantity of agricultural and manufac- 
 tured products of the same kind, and each in the same 
 proportion as before, would be practically considered 
 by the society as of the same exchangeable value. On 
 the supposition here made, no person would hesitate 
 for a moment to say, that cottons had fallen in value, 
 that linen had fallen in value, that silks had fallen in 
 value, that cloth had fallen in value, &c. and it would 
 be a direct contradiction in terms, to add that an 
 object which would purchase only the same quantity 
 of all these articles, which had confessedly fallen in 
 value, had not itself fallen in value. 
 
 The general po wer of purchasing, therefore, pos- 
 s esseTTyaTpar tipiilfly p^^mmnHityj pannf^t jEgjth^ any 
 sort ojTpropriety be consid ered as repres enting the va- 
 jriations ^In its ex f^hnngeahle vnlne^ nc^nrdingjhn the 
 most usual meanin g_attadlfid-lci the term. The ex- 
 
 * Adam Smith defines the value of an object in exchange to 
 » / be, " the power of purchasing other goods, which the possession 
 ^ of that object conveys." Book I. ch. iv. p. 42 ; 6lh edit.
 
 SEC. I.] MEASURES OF VALUE. 59 
 
 changeable value of a commodity can only be propor- 
 tioned to its general power of purchasing so long as 
 the commodities with which it is exchanged continue 
 to be obtained with the same facility. But as it is 
 known by experience that no considerable mass of com- 
 modities ever continues to be obtained with the same 
 facility, it is observable that when we speak of the 
 variations in the exchangeable value of a particular 
 commodity, we refer almost invariably to its power of 
 purchasing arising from intrinsic causes. 
 
 That this is so, is incontrovertibly proved by the 
 manner in which we practically estimate the variations 
 of value by money. In the same places, and for short 
 periods, money is universally considered as a correct 
 measure of value in the ordinary sense in which the 
 term is used. If from any cause whatever the mem- 
 bers of the society are willing and able to make a 
 greater sacrifice in money, in order to obtain a parti- 
 cular commodity, we say that it has risen in value, 
 without stopping to inquire into the state of other com- 
 modities. If corn be dear, on account of a deficient 
 supply, we say that corn has risen in value ; but if 
 we still pay the same money for our coats, shirts, and 
 shoes, we never think of saying that they have fallen 
 in value, although on account of the rise in a great 
 mass of raw produce, they will have diminished most 
 essentially in their general power of purchasing. The 
 corn is said to have risen in exchangeable value, be- 
 cause its power of purchasing has been affected by a 
 cause mtrinsic to the article itself, namely, a deficiency 
 of its supply. The coats, shirts, and shoes, are said 
 to have remained of the same value, because their 
 supply, compared with the demand, appears to have 
 remained the same, and nothing has operated to in- 
 crease or diminish their power of purchasing arising 
 from intrinsic causes. In neither case do we trouble 
 ourselves about the e.vtrinsic causes of their power of 
 purchasing. J)uring the short periods in which we 
 consider the value of money as nearly constant, we^ 
 m variably refer to the power of particular commodities 
 to command, at different times, different quantities of
 
 1 
 
 60 ON THE NATURE, CAUSES, AND [cH. II. 
 
 money, as expressing distinctly the variations in their 
 exchangeable values. But as a rise or fall of a commo- 
 dity in money during the periods in which money is 
 considered as constant, cannot indicate any other va- 
 riations than those which arise from intrinsic causes, 
 it follows necessarily, that when we refer to the vari- 
 ations in the values of commodities, in the ordinary 
 sense in which the term is used, we refer exclusively i 
 to their purchasing power arising from intrinsic causes, 
 or to that kind of value which may be denominated 
 their intrinsic value in exchange. 
 
 If then^ve continue to apply the term value in the 
 fir ^sense ^jnent ^ned^we shall Have three so rts of 
 value : 
 
 1. Value^n use^jrvliich may_be definedjo be the 
 intrinsjc utility of an object. 
 
 2. J^ominaL-mlue in exchange, or price, w hich, 
 ujjlesss omethi ng else is spedficajly referred to, may 
 be d efined~to be the v alue of commcLditi£s_estimated 
 in the p recious metals. 
 
 3. Tntrm sic value in exchan ge, which mayjbe de- 
 fined to be the power of purc hasing arising from in- 
 trinsic causes, in which sense, the value of an object 
 i s understood when nothing furth er is added.* This 
 definit ion is precisely eq uivalent to — The estimation 
 irTwIiich a commodity is held, founded o n the__desire 
 to jgossess^_anji J^he mfficulty of o_btaining possession 
 of itj and accords entirely with the definition of the 
 exchangeable value of a commodity, given in my work 
 On definitions in Political Economy, namely, — ^Thf 
 estimat ion in which a ,comnpdity is held aj;_any place 
 ariH tim e, determined in all- cases by the state of the 
 su pply coin pared-BJth-the dpmnnd^ ^rid ord ipjgjl'jy ^ 
 the elementary cost of production. 
 
 * There has been no more fruitful source of error in the very 
 elements of political economy, than the not distinguishing between 
 the power of purchasing generally, and the power of purchasing 
 arising from intrinsic causes ; and it is of the highest importance 
 to be fully aware that, practically, when the rise or fall in the 
 value of a commodity is referred to, its power of purchasing arising 
 from extrinsic causes is always excluded.
 
 SEC. II.] MEASURES OF VALUE. 61 
 
 Section II. — O f Demand and Su pply as they affect 
 E xchans:eahle V alue. 
 
 The terms demand and supply are so familiar to the 
 ear of every reader, and their application in single 
 instances so fully understood, that in the slight use 
 which has hitherto been made of them, it has not been 
 thought necessary to interrupt the course of the rea- 
 soning by definitions and explanations. These terms, 
 however, though in constant use, are by no means 
 applied with precision. And before we proceed fur- 
 ther, it may be advisable to clear this part of the 
 ground as much as possible, that we may be certain 
 of the footing on which we stand. This will appear 
 to be the more necessary, as it must be allowed that 
 of all the principles of political economy, there is 
 noiie which bears so large a share in the phenomena 
 which come under its consideration as the principle 
 of suppl}^ and demand. 
 
 It has been already stated, that exchangeable value 
 is the relation of one object to some other or others in 
 exchange. And when, by the introduction of a me- 
 dium of exchange and measure of value, a distinction 
 has been made between buyers and sellers, _t he d e- 
 rnand for any sort of commod ities may be d efined to 
 be^;_{H£]wITljDf j)erso ns to purchase them, combined 
 with the ir genera l means_Qf. purchasing : and suppl y, 
 t he "quantity of the comrn oditif!.? for sale, rnmbine(T~ 
 wi th the desire to sell them.* 
 
 It is further evident, that when the use of the pre- 
 cious metalsy as a medium of exch ange and measure 
 of value, has become g;eneral, and during those perio ds 
 
 * There may be sometimes a comparatively small quantity of 
 certain commodities ready for sale, but if a large supply is soon 
 expected, the desire to sell will be great, and the prices low. On 
 the other hand, there may be a comparatively large quantity of 
 the commodities ready for sale, yet if a future scanty supply is 
 looked forward to, the dealers will not be anxious for an imme- 
 diate sale, and the prices may be high.
 
 62 ON THE NATURE, CAUSES, AND [CH. U. 
 
 when their value is considerejd^^sj;emaining the same, 
 tlie'deman(rj\ ill Be represented and measured by*the 
 sacrifice in jnoney whicli tlie Jemauders are wulThg' 
 and aGIe to make in order to satisfy their wants. 
 
 In this sta te of things, the value of commodities in 
 l yioney or their prices are_il^emTined_.bj_lhe_jiemand 
 forjjiem, co mpared w ith tjifi_sii{iply of Lhem. And 
 this law appears to be so general, that probably not 
 a single instance of a change of price can be found, 
 which may not be satisfactorily traced to some pre- 
 vious change in the state of the demand or supply. 
 
 In examining the truth of this position, we must 
 constantly bear in mind the terms in whicli it is ex- 
 pressed ; and recollect, that when prices are said to 
 be determined by demand and supply, it is not meant 
 that they are determined either by the demand alone, 
 or by the supply alone, but by their relation to each 
 other. 
 
 But how is this relation to be determined ? It has 
 sometimes been said, that demand is always equal to 
 supply ; because no supply of any commodity can 
 take place for which there is not a demand, which 
 will take off all that is offered. In one sense of the 
 terms in which demand and supply have been used, 
 this position may be granted. The actual Cdtent of 
 the demand, compared with the actual extent of the 
 supply are always nearly equal to each other. If the 
 supply be ever so small, the e.vteut of the demand 
 cannot be greater ; and if the supply be ever so 
 great, the e.vteut of the demand will in most cases in- 
 crease in proportion to the fall of price occasioned by 
 the desire to sell, and the consumption will finally 
 equal the production. It cannot, therefore, be in this 
 sense that a change in the proportion of demand to 
 supply takes place ; because in this sense demand and 
 supply always bear nearly the same relation to each 
 other. And this uncert9,inty in the use of these terms, 
 renders 'it an absolutely necessary preliminary in the 
 present inquiry, clearly to ascertain what is the nature 
 of that change in the relation of demand and supply
 
 S^C. II.] MEASURES OF VALUE. 63 
 
 on wjiich the prices of commodities so entirely de- 
 pend. 
 
 Demand has been defined to be the will to pur- 
 chase, combined with the means of purchasing. 
 
 The greater is the degree of this will, and of these 
 means of purchasing when directed to any particular 
 commodity wanted, the greater or the more intense 
 may be said to be the demand for it. But, however 
 great this will and these means may be among the 
 de manders of a commo dity, none o f them will be dis- 
 
 posed_to give aJiigb. .price for it. if they can obtain it 
 
 at a low one ; and as long as the means and compe- 
 tition of the sellers continue to bring the quantity 
 wanted to market at a low price, the whole intensity 
 of the demand will not show itself. 
 
 If a given number of commodities attainable by 
 labour alone, were to become more difficult of acqui- 
 sition, as they would evidently not be obtained unless 
 by means of increased exertion, we might merely con- 
 sider such increased exertion, if applied, as an evi- 
 dence of a greater intensity of demand, or of a will 
 and power to make a greater sacrifice in order to ob- 
 tain them. 
 
 In the same manner, if while money is c onsidered 
 as of the sa me value, certain co mmodities, either from 
 scarc ityTor the greater co st o f production become more 
 diffi cult of acquisition, as_they will certainly not be 
 acquire d exce pt by^tho§e who are willing and able to 
 sacrifice a grea ter amoJ umLoLmoney in order to obtain^ 
 them^_such _sacrifi££.,_i£.inade, musl,ba-considered_as.^ 
 an evidencejof^reaterinjtensity of demand. , 
 
 In fact, it may be said, that the giving a greater 
 price for a commodity, while the difficulty of obtain- 
 ing money remains the same, necessarily implies a 
 greater intensity of demand ; and that the real ques- 
 tion is, w hat are t he causes which determine the in- 
 cre ase or^iminution of this intensity of dem nand ^hich 
 s Kows its elf iri~a rise or fall of prices. 
 
 It has been justly stated that the causes which tend 
 to raise the price of any article estimated in some com-
 
 64 ON THE NATURE, CAUSES, AND [CH. II. 
 
 modity named, and supposed, for short periods, not 
 essentially to vary in the difficulty of its production, 
 or the state of its supply compared with the demand, 
 are, an increase in^ tlie number, wants, and means of 
 the_demanders, or a ^ ^Hciency in^tlie supply ; and 
 th e causes which lo wer th e price a re a diminution iii 
 tlie number, wants, an3^ means of tjie deman ders^^df" 
 "a n incre ased abundance in its^ supply. 
 
 Now the firsf class of tliese causes is obviously cal- 
 culated to call forth the expression of a greater in- 
 tensity of demand, and the other of a less. 
 
 If, for instance, a commodity which had been ha- 
 bitually demanded and consumed by a thousand pur- 
 chasers, were suddenly to be wanted by two thousand, 
 it is clear that before this increased extent of demand 
 can be supplied, some must go without what they 
 want; and it is scarcely possible to suppose that the 
 intensity of individual demand should not exist in such 
 a desfree amons' a sufficient number of these two thou- 
 sand demanders, as to take off the whole of the com- 
 modity produced at an increased price. At the same 
 time, if we could suppose it possible, that the wills 
 and means of the demanders, or the intensity of their 
 demand would not admit of increase, it is quite certain 
 that however the matter might be settled among the 
 contending competitors, no rise of price could take 
 place.* 
 
 In the same manner, if a commodity were to be 
 diminished one half in quantity, it is scarcely possible 
 to suppose that a sufficient number of the former de- 
 manders would not be both willing and able to take 
 off the diminished quantity, at a higher price ; but 
 if they really would not or could not do this, the price 
 could not rise. 
 
 * Sir Edward West seems to think, that a demand in posse 
 cannot be called demand ; but it does not appear to me that there 
 is any impropriety in so applying the term ; and it is quite certain 
 that if tWre were not a greater intensity of demand in posse than 
 in. esse, no failure of supply could raise prices. In reality prices 
 are determined by the demand in posse compared with the supply 
 in esse.
 
 SEC. II.] MEASURES OF VALUE. 65 
 
 On the ot h er hand^ iLt^ie ^eiinaneivt cosLoLprQ- 
 duc ing the commodit y were doubled^^ it i s evident that 
 such a_^i]ajitit^Qnly_i^uld_be per^^ 
 to market, a s would supply the wants of those who 
 were jboth able and willing' to ma ke a sacrifice for the 
 "at tainmen t of their wishes, e(jual_to__dQiible_jif-AdiaL 
 f hey did befor e. The quantity of the commodity which 
 would be brouofht to market under these circum- 
 stances might be extremely different. It might b e 
 reduced to the supply of a single in dividua l, oi mig ht 
 re main precisely the same as before. K it were re- 
 duced to the supply of a single individual, Jt_would 
 M_a p roWt liat only one oral TtTieTormer purchasers 
 was bothjble anH vyilling tomake an eftectual demand 
 Tor it at the advanced pric e, ^f the supply remained 
 th e same, it would be a proof that all the purchasers 
 we re in this state , but that the expression of this in- 
 ten sity of dema nd had not before been ren dered n e- 
 ce ssary on account oFtHe Tacility wiTli wlii clithe article 
 had been prev ious ly produced, and the competition of 
 the sellers. In the latter case there would be exactly" 
 the same quantity of the commodity supplied, and ex- 
 actly the same eftectual demand for it in regard to ex- 
 tent. But there would be a much greater intensity 
 of demand called forth, the value brought to market to 
 exchange for the commodity in question would have 
 greatly increased ; and this may be fairly said to be 
 a most important change in the relation between the 
 demand and the supply of the commodity. Without 
 the increased intensity of demand, which in this case 
 takes place, the commodity would cease to be produced, 
 that is, the failure of the supply would be contingent 
 upon the failure of the will or power to make a greater 
 sacrifice for the object sought.* 
 
 * Adam Smith says, that " when the quantity of any com- 
 modity which is brought to market falls short of the effectual de- 
 mand, all those who are willing to pay the whole value of the rent, 
 wages, and profits, which must be paid in order to bring it thither, 
 cannot be supplied with the quantity which they want. Rather 
 than want it altogether some of them will be willing to give more." 
 Now this willingness, on the part of some of the demanders, to 
 
 F
 
 6(5 
 
 ox THE XATUllE, CAUSES, AND 
 
 [cii. 
 
 II. 
 
 Upon the same principles, if, owing to an unusual 
 supply, a commodity were to become much more abun- 
 dant compared with the former number of purchasers, 
 this increased supply could not be all sold, unless the 
 price were lowered. Each seller wishing to dispose 
 of that part of the commodity which he possessed 
 under the fear of its remaining upon his hands, would 
 go on lowering it till he had effected his object ; and 
 though the wills and means of the old purchasers 
 might remain undiminished, yet as the commodity 
 could be obtained without the expression of the same 
 intensity of demand as before, this demand would of j 
 course not then show itself. 
 
 A similar effect would obviously take place from 
 the consumers of a commodity requiring a less quan- 
 tity of it. 
 
 If instead of a temporary abundance of supply com- 
 pared with the demand, the cost of producing any 
 particular commodity were greatly diminished, the 
 fall of price would in the same manner be occasioned 
 by an increased abundance of supply, either actual or 
 contingent. In almost all practical cases it would be 
 an actual and permanent increase ; because the com- i 
 petition of the sellers would lower the price, and ,it^ 
 
 make a greater sacrifice than before, in order to satisfy their wants, 
 is what I have called a greater intensity of demand. As no in- 
 crease of price can possibly take place, unless the commodity be 
 of such a nature as to excite in a certain number of purchasers 
 this species of demand, and as this species of demand must al- 
 ways be implied whenever we speak of demand and supply as! 
 determining prices, I have thought that it ought to have a name., 
 It is essentially different from effectual demand, which, as defined ! 
 by Adam Smith, is the quantity wanted by those who are willing | 
 and able to pay the natural price ; and this demand will of course 
 generally be the greatest when the natural price is the least. ButJ 
 the increased intensity of demand, when actually called forth,] 
 uniformlv implies an increased value offered, compared with the! 
 quantity of the commodity supplied, and is equally applicable toj 
 an article which is accidentally scarce, and one which has in- 
 creased in its natural price. It is invariably and exclusively the 
 intensity of demand, and not the effectual demand, which is re- 
 ferred to, when it is said, and correctly, that the prices of com-^ 
 modities vary as the demand directly, and the supply inversely.
 
 SEC, 11. J MEASURES OF VALUE. 67 
 
 ver y rarely ha ppens that aj a ll of price does not oc- 
 casion an increased con sumption. On the supposition 
 however, of the very rare case that a definite quantity 
 of the commodity only was required, whatever might 
 be its price, it is obvious that from the competition of 
 the producers, a greater quantity would be brought 
 to market tlian could be consumed, till the price was 
 reduced in proportion to the increased facility of pro- 
 duction; and this temporary excess of supply would 
 be always contingent upon the circumstance of the 
 price being at any time higher than that which would 
 return average profits. In this case of a fall of prices, 
 as in the other of a rise of prices, the actual quantity 
 of the commodity supplied and consumed may pos- 
 sibly, after a short struggle, be the same as before ; 
 yet it cannot be said that no change has taken place 
 in the demand. It may indeed exist latently in the 
 same degree, and the actual consumers of the com- 
 modity might be perfectly ready to give what they 
 gave before rather than go without it ; but such has 
 been the alteration in the means of supply, compared 
 with the former demand, that the competition of the 
 producers renders the making of the same sacrifice 
 no longer necessary to effect the supply required ; and 
 not being necessary, it is of course not made, and the 
 price falls. 
 
 It is evidently, therefore, not merely the extent of 
 actual demand, nor even the extent of actual demand 
 compared with the extent of the actual supply, which 
 raises prices, but such a change in the relation be- 
 tween demand and supply, as renders necessary the 
 expression of a greater intensity of demand, or the 
 offer of a greater value compared with the quantity 
 supplied, in order either peaceably to divide an actual 
 produce, or to prevent the future produce of the same 
 kind from failing. 
 
 And in the same manner, it is not merely the ex- 
 tent of actual supply, nor the extent of the actual sup- 
 ply compared with the extent of the actual demand, 
 (which are generally nearly equal) that lowers prices ;
 
 G8 0\ TML VATIRE, CAUSES, A\D [cil. II, 
 
 but such a clianfre in the relation of tlie supply com- 
 pared with tlie tleniand as renders a fall of price ne- 
 cessary, in order to take off a temporary abundance, 
 or to prevent a constant excess of supply contino;ent 
 upon a diminution in the costs of production, without , 
 a proportionate diminution in the price of produce. 
 
 If the terms demand and supply be understood, and 
 used in the way here described, there is no case of 
 price, whether temporary or permanent, which they 
 will not dcteiTnine ; and in every instance of bargain 
 and sale, it will be perfectly correct to sav, that the 
 prices of commodities will d epend u pon the relation 
 of the demand to the supply ; or wHpvar^''^as_the*'cTe- 
 mand (t hat is, tlie money read^y to be oBered) direct lJ^ 
 and the supply inversely. 
 
 I wish it to be particularly observed, that in this 
 discussion, 1 have not oiven a meanino- to the terms 
 demand and supply different from that in which they 
 have been most frequently applied before. In the 
 use which I have made of the words intense and in- 
 tensity as applied to demand, my purpose has been to 
 explain the meaning which has hitherto always been 
 attached to the terms demand, when it is said to raise 
 prices. Mr. Ricardo, in his chapter " On the in- 
 Jiuencc of demaud and siipph/ on prices,'' observes, 
 that " the demand for a commodity cannot be said to 
 increase, if no additional quantity of it be purchased 
 or consumed." But it is obvious, as I have before 
 remarked, that it is not in the sense of mere extent of 
 consumption that demand raises prices, because it is 
 almost always when prices are the low^est, that the 
 extent of demand and consumption is the greatest. 
 This, therefore, cannot be the meaning hitherto at- 
 tached to the term demand, when it is said to raise 
 prices. Mr. Ricardo, however, subsequently quotes 
 Lord Lauderdale's statements respecting value, and 
 allows them to be true, as applied to monopolized 
 commodities, and to the market prices of all other 
 commodities, for a limited period. He would allow, 
 therefore, that a deficiency in the usunl (juantity of
 
 SEC. HI.] MEASURES OF VALUE. 69 
 
 an article in a market would occasion a greater de- 
 mand for it compared with the supply, and raise its 
 price, although in this case less than usual of the ar- 
 ticle must be purchased by the consumers. Demand 
 in this sense is obviously quite different from the 
 sense in which Mr. Ricardo had before used the term. 
 The one is a demand in regard to extent, the increase 
 of which implies a greater quantity of the commodity 
 purchased ; the other is demand in regard to inten- 
 sity, the increase of which implies the will and power 
 to make a greater sacrifice in order to obtain the ob- 
 ject wanted. It is in this latter sense, I think, that 
 the term is most frequently applied ; at any rate, it is 
 in this latter sense alone that demand raises prices.* 
 It is in the nature of things absolutely impossible 
 that any demand, in regard to extent, should raise 
 prices, unaccompanied by a will and power on the 
 part of the demanders to make a greater sacrifice, in 
 order to satisfy their wants. And my object is to 
 shew that, whenever we talk of demand and supply 
 as determining prices, whether market, or natural, 
 the terms must always be understood in the sense in 
 which Mr. Ricardo, and every other person, has 
 hitherto understood them, when speaking of commo- 
 dities bought and sold in a market. 
 
 Sectiox III. — Of the Cost of Production as affected 
 by the Demand and Supplij, and on the mode of 
 representing Demand. 
 
 It m ay be said , perhaps, that even according to the 
 view given of demand and supply in the preceding 
 section , the ^permanent ' prices _of jhe_ _greaLmass_QiL 
 co mmodi tjes vvillbe determined by the prdinaryjcost 
 of_their_productiqn. This isj iiKUiestiojiablyJrue, if_ 
 wejncludfi-^i- llii£jc£map£^ 
 
 * Of course it must often happen that an increased intensity 
 of demand, and an increased extent of demand go together. In 
 fact, an increased intensity of demand, when not occasioned by 
 an increased difficulty of production, is the greatest encourage- 
 ment to an increase of produce and consumption.
 
 70 ox THE NATURE, CAUSES, AND [CH. II. 
 
 Adam Smit h. Yet, still it is tr ue, that in all transac- 
 tio ns of bargain an d sale, there is 3, jrinrip]p in rnn- 
 stant operation, which can jletermine, and d^ es ac- 
 tually determinerthe~prices o f commod ities, indep en - 
 dently of any considerations of cost, or of the ordin ary 
 wages, profits , and rent expend ed in their pro duc- 
 ticn. And this is found to operate, not only perma- 
 nently upon that class of commodities which may be 
 considered as monopolies, but temporarily and imme- 
 diately upon all commodities, and strikingly and pre- 
 eminently so upon all sorts of raw produce. 
 
 It has never been a matter of doubt, that the prin- 
 ciple of demand and supply determines exclusively, 
 and very regularly and accurately, the prices of mo- 
 nopolized commodities, without reference to the ordi- 
 nary cost of their production ; and our daily and 
 uniform experience shows us that the prices of raw 
 products, particularly those which are most affected 
 by the seasons, are at the moment of their sale deter- 
 mined always by the higgling of the market, and 
 differ widely in different years, and at different times, 
 while the outgoings required to produce them, may 
 have been very nearly the same, and the general rate 
 of profits has not varied. 
 
 \V itli regard, therefore, to a class of commod i t ies 
 of tTie greatest extent, it is acknow ledge d that t he 
 existing market prices are, at the moment they^ are 
 fi xed, dete rmin£d upon a principle distinct from th e 
 cost of produ cti on, and that these pricf's arp in re^lit;y. 
 almost^alvvnys different from what they would have 
 been, if this c<3st had exclusively regu l ated them . 
 
 There is indeed another class of commodities, such 
 as manufactures, particularly those in which the raw 
 material is cheap, where the existing market prices 
 much more frequently coincide with the costs of pro- 
 duction, and may appear therefore to be exclusively 
 determined by them. Even here, however, our fami- 
 liar experience shews us, that any alteration in the 
 proportion of the demand to the supply quite over- 
 comes for a time the influence of these costs ; and 
 
 i
 
 SEC. III. J MEASURES OF VALUE. 71 
 
 further, when we come to examine the subject more 
 cl osely, we find tha t the cost o^f j>roduct|on^itself pnlj!:^ 
 influences^ the prices of these^commodities, as the 
 payme nt of this cost is tlie necessary condition of 
 th eir continued supply in proportion to the extent of 
 the e ffectual dem and for them. 
 
 But if this be true, it follows that the great law of 
 demand and supply is called into action to determine 
 what Adam Smith calls natural prices, as well as what 
 he calls market prices. 
 
 It has been shown that no change can take place 
 in the market prices of commodities, without some 
 previous change in the relation of the demand to the 
 supply ; and the question is, whether the same posi- 
 tion is true in reference to natural prices? This 
 question must of course be determined by attending 
 carefully to the nature of the change which an altera- 
 tion in the cost of production occasions in the state 
 of the demand and supply, and particularly to the 
 specific and immediate cause by which the change of 
 price which takes place is effected. 
 
 We all_alk)w that when the cost of ^oduction_dj- 
 minishies, a fall of price is almost unive rsally~tlie con- 
 sequence ; but what Is it, specifically, which forces 
 rice o f the commodity. It has been shown 
 
 in the preceding; section, that it is an actual or coiT 
 
 t ingent e xce ss of supply . 
 
 We all allow that when the cost of production in- 
 creases, the prices of commodities rise. But what is 
 it specifically which forces up the price? It has 
 been shown that it is an actual or contingent failure 
 of supply. Remove these actual or contingent varia- 
 tions of the supply ; that is, let the extent of the sup- 
 ply remain exactly the same, without excess or failure, 
 whether the cost of production rises or falls ; and 
 there is not the slightest ground for supposing that 
 any variation of price would take place. 
 
 If, for instance, all the commodities which are pro- 
 duced in this country, whether agricultural or manu- 
 factured, could be produced during the next ten years
 
 72 0\ THE NATURE, CAUSES, AND [CH. II. 
 
 without labour, but could only be supplied exactly in 
 the same quantities as they would be in the actual 
 state of things ; then, supposing the wills and means 
 of the purchasers to remain the same, there cannot 
 be a doubt that all prices would also remain the same. 
 But if this be allowed, it follows that the relation of 
 the supply to the demand is the dominant principle 
 in the determination of prices whether market or na- 
 tural, and that tliej;ost of prod uction can do nothing 
 but in subo rdination to it, that is, merely a s_it_ affects 
 th e_ ordinary relation which the supply bears to, the 
 \demand. 
 
 It is not, however, necessary to resort to imaginary 
 cases in order to fortify this conclusion. Actual ex- 
 perience shows the principle in the clearest light. 
 
 In the well known instance noticed by Adam Smith 
 of the insufficient pay of curates, notwithstanding all 
 the efforts of the legislature to raise it, a striking proof 
 is afforded that the permanent price of an article is 
 determined by the demand and supply, and not by 
 the cost of production. TJie real cost of the edu- 
 cation would in this case be more likely to be in- 
 creased than diminished by the subscriptions of bene- 
 factors ; but a large part of it being paid by these 
 benefactors, and not by the individuals themselves, it 
 does not regulate and limit the supply ; and this sup- 
 ply, on account of such encouragement, becoming and 
 continuing abundant, the price is naturally low, what- 
 ever may be the real cost of the education given. 
 
 The effects of the poor-rates, in lowering the wages 
 of independent labour, present another practical in- 
 stance of the same kind. It is not probable that 
 public money should be more economically managed 
 than the income of individuals. Consequently the 
 cost of rearing a family cannot be supposed to be di- 
 minished by parish assistance ; but a part of the ex- 
 pense being borne by the public, and applied more 
 largely to labourers with families, than to single men, 
 a fair and independent price of labour, adequate to 
 the maintenance of a certain family, is no lonoer a
 
 SEC. III.] MEASURES OF VALUE. 73 
 
 necessary condition of a sufficient supply. As by 
 means of parish rates so applied, this supply can be 
 obtained without such wages, the real costs of sup- 
 plying- labour no longer regulate the ordinary wages 
 of independent labour. 
 
 In fact, in every kind of bounty upon production, 
 the same effects must necessarily take place ; and just 
 in proportion that such bounties tend to lower prices, 
 they show that prices depend upon the supply com- 
 pared with the demand, and not upon the costs of 
 production. 
 
 But the most striking instance which can well be 
 conceived to show that the cost of production only 
 influences the prices of commodities, as it influences 
 their supply compared with the demand, is continually 
 before our eyes in the artificial value which is given 
 to bank-notes by limiting their amount. Mr. Ri- 
 cardo's admirable and efficient plan for this purpose 
 proceeded upon the just principle, that if you can 
 limit the supply of notes, so that they shall not ex- 
 ceed the quantity of gold which would have circu- 
 lated if the currency had been metallic, you will keep 
 the notes always of the same value as gold. And I 
 I am confident he would have allowed, that if this li- 
 i mitation could be completely eftected without the 
 paper being exchangeable for gold, the value of the 
 notes would not be altered, while the same demand 
 for a circulating medium continued. But if an article 
 which costs comparatively nothing, though it per- 
 forms the most important function of gold, can be 
 kept to the value of gold, by being supplied in the 
 same quantity ; it is the clearest of all possible proofs 
 that the value of gold itself no further depends upon 
 the cost of its production, than as this cost influences 
 I the supply compared with the demand : and that if 
 I the cost were to cease, provided the supply were not 
 I increased compared with the demand, the value of 
 
 gold in this country would still remain the same. 
 i It does not, however, in any degree follow from 
 T what has been said, that the costs of production have
 
 74 ()\ THE NATURE, CAUSES, AND [CH. II. 
 
 not u most powerful effect upon prices. BiLLtlieJrue 
 way of considerinff th ese costs is as the necessar y con- 
 dition of the supply of the o bjects wanted. 
 
 Although at the time of the actual purchase of a 
 commodity, no circumstance affects it but the rela- 
 tion of the supply to the demand ; yet as almost all 
 the objects of human desire are obtained by the in- 
 strumentality of human exertion, it is clear that the 
 supply of these objects must be regulated — First, by 
 the quantity, skill, and direction of this exertion ; 
 Secondly, by the assistance which it may receive 
 from previous accumvdations ; and Thirdly, by the 
 abundance oi' scarcity of the materials on which it 
 has to work, and of the food of the labourer. It is 
 of Jm£ortanc£_th£]:efor e to consider the different c on- 
 ditions which m ust be fulfilled, in order that any c om - 
 modity should continue to be brought to mar ket in 
 tli£jji2aTrhjy_want.ed^^ the effect u aLdfim an d . 
 
 The first condition is, that the labour expended 
 upon it should be so remunerated in the quantity of 
 desirable objects given in exchange for it, as to en- 
 courage the exertion of a sufiicient quantity of in- 
 dustry in the direction required, as without such 
 adequate remuneration, the supply of the commodity 
 must necessarily fail. If this labour should be of a 
 very severe kind, few comparatively would be willing 
 or able to engage in it ; and upon the common prin- 
 ciples of exchangeable value before explained it would 
 rise in price. If the work were of a nature to require 
 an uncommon degree of dexterity and ingenuity, a 
 rise of price "would take place in a greater degree ; 
 but not merely on account of the esteem which men 
 have for such talents, as stated by Adam Smith, but 
 on account of their rarity, and the consequent rarity 
 of the effects produced by them. In all these cases 
 the rem uneration will he regulated, not by the in- 
 trinsic qualities, or ufility of tlie commodities pro- 
 duced, but by the^ state of Jthe demand for them, com- 
 pared., with the supply ; jind of course by the demand 
 and supply of the sort of labour which p roduced
 
 SEC. III.] MEASURES OF VALUE. 75 
 
 them. If the commodities have been produced by 
 manual labour exclusively, aided at least only by the 
 unappropriated bounties of nature, and brought t5 
 market immediately, the whole remuneration will of 
 course belong to the labourer, and the usual money 
 price of this remuneration in the existing state of the 
 society would be the usual price of the commodity. 
 
 The second condi tion to b-£_fuJLfiIIeiLis, that the _ 
 ass istaiicej^ichjnay Jiaye J^^ 
 by thg-j^rf^yi"'^^ nrrnmnlatinn of abjeots which facjlj- 
 
 t ajte future production, s kauld^ be so remunerated as 
 
 to continue t he^afipljcatimi-Qf-lhis n,s,sistanca-J:Q.the 
 
 pro duction of the commo ditiesj^ec^iied. If by means 
 of certain advances to the labourer of machinery, 
 food and materials previously collected, he can exe- 
 cute eioht or ten times as much work as he could 
 without such assistance, the person furnishing them 
 might appear at first to be entitled to the difference 
 betw^een the powers of unassisted labour, and the 
 powers of labour so assisted. But the prices of com- 
 modities do not depend upon their intrinsic utility, 
 but upon the supply and demand. The increased 
 
 pow ers of Jal)pur„\yDJLAkL, naturally produce an in- 
 
 crea sed su pply »f .TPrDmoditiRs ; thei r prices would 
 CQ nsequentl y_ialJ^ and t he remuneration for the ca - 
 pit al advan c£d,-A^D-uM-sonn he, rpdn^^d tn what wag ^/ 
 necessary_in__th_e existing state of the society, tQeii-_ 
 cou rage the application of suchca^ital to the _p^rg-_ 
 duction in que stion,^ in t he quantity req^uired by the 
 , eflfectualdemand. With regard to the labourers 
 {employed, as neither their exertions, nor their skill 
 1 would necessarily be greater than if they had worked 
 unassisted, their remuneration in money would be 
 nearly the same as before, and would depend entirely 
 upon the kind of labour employed, estimated in the 
 usual way, by the money demand compared with the 
 supply. But the price of labour so determined 
 would, under the influence of good machinery, give 
 the labourer a greater quantity than before of the pro- 
 duce obtained, though not necessarily a greater pro- 
 
 b
 
 76 ox THE NATURE, CAUSES, AND [CH. II. 
 
 portion of it. ^ t i^s not, therefore, correct to repre- 
 sent, as Adam Snntli f]pps, t]<^ pmfits; nf (-^^jiitnf^ a 
 ^eduction^jromJiip prnfliire of Inhnur. They are only 
 a fair rem uneration for that part of the productionjcon- 
 t ntjutecTbyThe capitahst, estimafeJ ex actlyi n the same 
 way as the contribution of the labourer . 
 
 The third condition to be fulfilled is, that the prices 
 of commodities should be such as to effect the con- 
 tinued supply of the food and raw materials used by 
 the labourers and capitalists ; and we know that this 
 price cannot be paid without yielding a rent to the 
 landlord on almost all the land actually in use. In 
 speaking- of the landlords, Adam Smith's language* is 
 again exceptionable. He represents them, rather in- 
 vidiously, as loving to reap where they have not sown, 
 and as obliging the labourer to pay for a license to 
 obtain those natural products which, when land was 
 in common, cost only the trouble of collecting.* But 
 he would himself be the first to acknowledge, that if 
 land were not appropriated, its produce would be very 
 much less abundant compared with the demand, and 
 that consequently the prodtTcers and consumers would 
 be much worse off; and if it be appropriated, some 
 persons or other must necessarily be the proprietors. 
 It matters not to the society, whether these persons 
 are the same or different from the actual cultivators 
 of the land. The price of the produce will be deter- 
 mined by the general supply compared with the ge- 
 neral money demand, and w^ill be the same, or very 
 nearly so, whether the cultivator pays a rent, or usesj 
 the land without rent. The only difference would be,| 
 that, in the latter case, what remains of this price! 
 after paying the necessary labour and profits, will goj 
 to the same person that advanced the capital, which] 
 is equivalent to saying that the farmer would be better] 
 off if he were also the possessor of land, a fact not to] 
 be disputed ; but it can not imply, that the l abourer] 
 o r farmer , who in thclot tery of human life has notj 
 drawn a p rize of land, suft'ers any hardship or iiijusticej 
 * Wealth of Nations, B. I. ch. vii. p. 74, f>th edit.
 
 SEC. III.] MEASURES OF VALUE. 77 
 
 in being; obliged to give somethm g in exch ang e for the 
 'use of what belong's to another. . The possessors of 
 land, whoever they may be^ conduct themselves, with 
 rega^ to their possessions, exactl y in the same way 
 as the possessors of labour and of cap ital, and let out 
 or exchange what tliey Lave for as muc h money as the 
 dema nders are ^Yilling to giyethem for it. 
 
 The three conditions, therefore, above s pecified, 
 mustnecessarily^be fulfilledin every society, in order 
 to~obtam the cqntinued_sup ply of by far the greater 
 part of the co mmodities which it wants ; and the com- 
 ije nsation which fulfils these conditions, or the ordi- 
 nary price of any exchangeable commodity, may be 
 considered as consisting of three parts ; that which 
 pays the wages of the Tabou rers employed, in it s pro - 
 
 duction ; that which pays the, profits ofjhe .capjialj 
 
 i ncluding the advances to the labour ers, by which sucli 
 production has been facilitated ; an d that which~pays 
 thejienLofJand,* or the compensation for the use of 
 those powers attached to the soil which are in the pos- 
 session of the landlord ; the price of each of t hese 
 component parts being d elenmn£(l£xadiM^^th£-sam 
 causes as those which determin e the price of the whole. 
 
 The price which fulhlls these conditions is precisel y 
 what Ad a m Smith calls the natura l price ; and when 
 a commodity is sold at this price, ne says it is sold 
 for precisely what it is worth. But here I think he 
 has used the term worth in an unusual and improper 
 sense. Commodities are continually said to be worth 
 more than they have cost, ordinary profits included ; 
 and according to the customary and proper use of the 
 term worth, we could never say that a given quantity 
 
 * Though it is quite true, as will appear in the next chapter, . 
 that rent has little effect in determining the prices of raw produce, K 
 yet, in almost all commodities, a part of the price is resolvable 
 into rent. The reason is, that the same kinds of products which 
 sell for exactly the same prices, have a very different quantity and 
 value of rent in them ; but the greater is the value of the rent, the 
 less is the value of the labour and profits ; and therefore the vary- 
 ing value of rent in commodities has but little effect on their 
 prices.
 
 78 ON THE NATURE, CAUSES, AXD [cH. 11. 
 
 of claret, of corn, or of any other article, was not worth 
 more when it'was scarce, although the cost of its pro- 
 duction, on the supposition of ordinary profits, had re- 
 mained the same. The worth of a commodity, in the 
 place where it is estimated, is its market price, not its 
 natural price. It is its intrindc value in exchange, 
 determined by the state of the supply compared with 
 the demand at the time, and not its ordinar}^ cost. JiX^ 
 need hardj y be observed, that the p ay nientof taxes of 
 anyjkind^ where require d, is a n incidentaLcondition 
 of the supply of commodities wh ich_contjikute,§LjjQ_.i.n- 
 cr ease their cost of production and lim it their jj^uantity. 
 But if it appear generally that the ordinary cost of 
 production only determines the usual prices of com- 
 modities, as the payment of this cost is the necessary 
 condition of their supply ; and that the component 
 parts of this cost are themselves determined by the 
 same causes which determine the whole, it is obvious 
 that we cannot get rid of the principle of demand and 
 supply, by referring to the cost of production.* Na- 
 tural and necessary prices appear to be regulated by 
 this principle, as well as market prices ; and the only 
 difference is, that the former are regulated by the or- 
 dinary and average relation of the supply to the de- 
 mand ; and the latter, when they differ from the former, 
 are determined by the extraordinary and accidental 
 relations of the supply to the demand. 
 
 It has sometimes been said that there is no such 
 thing as natural price ; but explained as Adam Smith 
 has explained it, it is not only a very intelligible, but 
 a very useful term. If the natural price of a com- 
 modity be considered as made up of all the money 
 wages which have been paid in the various parts of 
 
 * One of the two main elements of the cost of production, 
 namely, the rate of profits, is peculiarly variable and pre-emi- 
 nently dependent on supply and demand. Under the greatest 
 variations in the rates of wasrcs, we may suppose many commo- 
 dities still to require in their production the same quantities of 
 labour of the same kind ; but under great variations in the rate 
 of profits, we cannot suppose that any commodities should still 
 require for their production the same amount of profits.
 
 SEC. III.] MEASURES OF VALUE. 79 
 
 the process of its production for the specific kinds of 
 labour required, of all the ordinary money profits of 
 the other capitals employed during the periods of 
 various lengths for which they have been advanced, 
 and of all the money rent concerned in the necessary 
 materials and food obtained by the assistance of those 
 powers of nature which are attached to the soil, then 
 supposing things to be in their ordinary and average 
 state and untaxed, it is quite certain that this price, 
 and the ordinary and average prices of commodities, 
 will be found to agree. To this price, which may 
 fairly and usefully be called the natural, necessaryj_or_ 
 brd inary^ricej thejnarket prices are always tending. 
 And this price determines the rate at which commo- 
 dities usually exchange for each other. So understood, 
 nothing can be more simple, or more generally appli- 
 cable. The natural price of an acre of copse wood, or 
 of a hundred sheep from the highlands of Scotland, 
 which in a country generally well cultivated must be 
 composed chiefly of rent, is as easily explicable as the 
 natural price of corn on the last land taken into culti- 
 vation, where rent is quite inconsiderable. And the 
 natural price of those sorts of goods where a large pro- 
 portion of fixed capital is employed, and the returns 
 of the circulating capital are unusually slow, and where 
 consequently the price must consist chiefly of profits, 
 may be as satisfactorily accounted for as the price of 
 a straw bonnet, or piece of Brussels lace. Where the 
 materials are of scarcely any value, the capital required 
 is quite inconsiderable, and the expense of production 
 must consist almost entirely of labour. 
 
 It is obvious that when, from any cause whatever, 
 the money cost of producing a commodity increases, 
 without some increased facility of obtaining money, 
 the estimation in which such a commodity is ordina- 
 rily held, or its exchangeable value arising from in- 
 trinsic causes, proportionally increases. 
 
 In explaining the efl^ects of demand and supply on 
 the values of commodities, whether arising from tem- 
 porary causes, or from the ordinary costs of produc-
 
 BO ON THE NATURE, CAUSES, AND [CH. II. 
 
 tion, I have thought that the subject would be best 
 ilhistrated by referring first to those periods in whicli 
 the value of money is practically considered as con- 
 stant ; and it is allowed that during such periods, it 
 is the uniform practice of society to represent demand 
 by money. But it is evident that we cannot extend 
 these periods to any considerable length. We well 
 know, that although the precious metals, from their 
 durability, and the consequent steadiness of their sup- 
 ply, are subject to slow changes of value ; yet that at 
 distant periods, and in different countries, their value 
 has been, and is, essentially different. 
 
 It is absolutely necessary, therefore, to consider how 
 a demand may be represented and measured under 
 any changes which may take place in the value of 
 money. 
 
 An effectual demand for a commodity, is such a 
 demand as will fulfill the natural and necessary con- 
 ditions of the supply ; or, as it has been defined, it is 
 the sacrifice which tlie demanders must make in order 
 to effectuate the continued supply of the commodity 
 in the quantity required under the actual circum- 
 stances. 
 
 Now Jt is obvious, that i f money varies essentially, 
 as compar ed^witji thejiaturgLTSndjiecesscUJy^co^ iion s 
 of the S ppljr nf_xnriininditipSj a given amnp nt of 
 money cannot possib ly represent a giv e n demand , or 
 a_gTven_ sac r i fi c e . 
 
 In every country there are a few commodities ob- 
 tained by labour alone ; and, if the advance of a cer- 
 tain quantity of labour be the necessary condition of 
 the supply of a particular commodity, then the money 
 which will command such labour will represent the 
 effectual demand for the commodity ; that is, a de- 
 mander able and williiio; to make such a sacrifice as 
 will effectuate the supply. But if, subsequently, 
 money falls in value in relation to the required labour, 
 the same quantity of money obviously ceases to repre- 
 sent the same demand. No one, I apprehend, would 
 venture to affirm that an ounce of pure silver, applied
 
 SEC. III.] MEASURES OF VALUE. 81 
 
 as a demand, would at the present time effectuate the 
 supply of the same quantity of a commodity produced 
 by labour alone, as an equal weight of silver would 
 have effectuated under similar circumstances in the 
 reign of Edward III. ; since which period the value 
 of silver, as compared with labour, has fallen five or 
 six times. 
 
 Under any changes, however, which may take place 
 in money, if the conditions of the supply of any com- 
 modity, or the elementary costs of its production, re- 
 quire a certain quantity of labour of a given descrip- 
 tion, the power of setting to work that quantity of 
 labour, whether paid for by a larger or smaller quan- 
 tity of produce or money, will be an effectual demand 
 for it. Now it is obvious that this cannot be said of 
 any product of labour whatever. 
 
 In the first place, there is no product of labour 
 which is the sole condition of the supply of any one 
 commodity. Consequently, while the necessary con- 
 ditions of the supply of any commodity are a given 
 quantity of labour of a certain description, no given 
 quantity of any product of labour can continue, like 
 a given quantity of labour itself, always to represent 
 the same effectual demand for such commodity. 
 
 Secondly, there is no product of labour, which, ap- 
 plied directly, enters, as labour itself does, into the 
 composition of all commodities that have value, and 
 constitutes the chief element in the conditions of their 
 supply. Consequently there is no product of labour 
 which can represent the most important condition of 
 the supply of all commodities, namely the quantity of 
 labour absolutely necessary to their production ; and 
 we cannot say that a definite quantity of money, a 
 definite quantity of corn, a definite quantity of cloth, 
 or a definite quantity of any product of labour, subject, 
 as they all are, to variations in their relation to labour, 
 can continue to afford an effectual demand for that 
 definite quantity of labour, without which the mass of 
 commodities cannot by possibility be produced. 
 
 But if, when commodities are selling at their natu- 
 
 G
 
 ir. 
 
 82 ox THE NATURE, CAUSES, AND [CH. 
 
 ral prices, the quantity of labour directly applied to 
 the production of a particular article were to absorb 
 exactly one half, three fourths, or any definite pro- 
 portion of the whole value, as the demand for this 
 proportion, whatever it might be, the half we will 
 suppose, might be represented and measured by an 
 amount of labour equal in quantity and quality to that 
 which had been actually employed upon the commo- 
 dity, it is obvious that an equivalent to double the 
 quantity of such labour would be an efl:ectual demand 
 for the whole article produced, involving profits, rent, 
 taxes, or any other accession to the difiiculty of bring- 
 ing the commodity to market, besides that which is 
 occasioned by the necessary quantity of labour to be 
 advanced. 
 
 Having this tts cttw, this foundation to go upon, in 
 all commodities, namely, the quantity of immediate 
 labour actually worked up in them, the above conclu- 
 sion seems to follow necessarily ; that is, if a certain 
 quantity of labour will represent and measure the de- 
 mand for an aliquot part of the value of a commodity,- 
 the proper multiple of that quantity of labour must 
 represent and measure the demand for the whole ; and 
 as there is no object but labour which can represent 
 and measure the demand for that aliquot of the value 
 of a commodity which consists of immediate labour, 
 it follows necessarily that there is no object but labour 
 which can represent and measure the demand for the 
 w^hole of a commodity, the value of which is made up 
 of various ino;redients besides labour. 
 
 When, therefore, owing to changes in the yajue of 
 money, relatively to^Tabour, we_can no longer jrepre- 
 sent a given demand by a given quantity of money, 
 it appe ars that we m^^withajccuracy xepxeseiit-such 
 demand^b^ a given qiianlitj _ of lab-Q ur^- 
 
 IlToTTows, ttiefefbre, t hat the power of commanding 
 a given quantity of labour^f a given cliaractei^ togg- 
 tlier with rhlZ^^n^ _tp_ advimce il+.represents_a_given' 
 demanHT It should be particularly observed, however, 
 that tTils power is never possessed by the labourers
 
 SEC. irr.] MEASURES OF VALUE. 83 
 
 themselves, but by those employers of labour who are 
 both able and willing to pay the quantity of money 
 or of commodities, whether great or small, which is 
 necessary in the actual circumstances of the society to 
 command the required quantity of labour. 
 
 Section IV. — Of the Labour which has been em- 
 ployed on a Commodity considered as a Measure of 
 its Exchangeable Value. 
 
 In the two last sections, the causes which affect and 
 determine the exchangeable values of commodities 
 have been investigated ; and these appear to consist 
 of every circumstance which contributes in any degree 
 to enhance the difficulty of obtaining them : such as, 
 the necessity of paying the wages of a certain quan- 
 tity of labour, without which the commodity cannot 
 be produced, the necessity of certain advances of other 
 capital, which no one will continue to make without 
 the ordinary remuneration in the shape of profits, and 
 the frequent necessity of further payments owing to 
 rents, tithes, taxes, natural and artificial monopolies, 
 and temporary deficiencies of supply, arising from 
 accident, or the state of the seasons. These are all 
 sources of difficulty, which, in proportion to the de- 
 gree in which they prevail, must raise the exchange- 
 able value of commodities arising from intrinsic causes; 
 and it has further appeared, that the result of all these 
 causes of value is expressed in the state of the supply 
 compared with the intensity of the demand. 
 
 We come now to inquire more particularly into the 
 measures of value — an inquiry obviously not identical 
 with an inquiry into the causes of value, as it is only 
 in a very few cases that they can properly be repre- 
 sented by the same object.* 
 
 * The labour worked up in a commodity is the principal cause 
 of its value, but it will appear in this chapter that it is not a 
 measure of it. The labour which a commodity will command is 
 not the cause of its value, but it will appear in the next chapter 
 to be the measure of it.
 
 84 ON THE NATURE, CAUSES, AND [CH. H. 
 
 A measure of value is wanted for two most impor- 
 tant purposes. 
 
 First, to measure easily and conveniently the rela- 
 tive values of all commodities, compared one with 
 another, and to enable all dealers to estimate the pro- 
 fits which they make upon their sales. This purpose 
 is completely answered by money. 
 
 Secondly, to measure the difficulty with which a 
 commodity is obtained, including all the conditions 
 of its supply ; and when two or more commodities 
 have in the course of time altered in their exchange- 
 able relations to each other, to enable us to ascertain 
 in which, and to what extent in each, the change has 
 taken place.* This is most important information, 
 particularly in reference to commodities of the same 
 country, at different times; but it is evident, that as 
 money, in periods of some length, is liable to alter 
 greatly in its exchangeable value, arising from intrinsic 
 causes, it is impossible that, applied as a measure, it 
 can give the information required. 
 
 It remains, therefore, to be considered whether any 
 other object can perform the functions of a general 
 measure of value, and answer the purposes above 
 described. 
 
 Adam Smith, in his chapterf on the real and no- 
 minal price of commodities, in which he considers 
 labour as a universal and accurate measure of value, 
 has introduced some confusion into his inquiry, by 
 not adhering strictly to the same mode of applying 
 the labour which he proposes for a measure. 
 
 Sometimes he speaks of the value of a commodityj 
 as being measured by the quantity of labour which! 
 its production has cost, and sometimes by the quantity] 
 of labour which it will command in exchange. 
 
 It is in the latter sense, however, in which he aj 
 
 * Nothing appears to me more essential, in an " Inquiry intol 
 the nature and causes of the Wealth of Nations," than to havej 
 the means of distinguishing between the rise of one commodityj 
 and the fall of another. 
 
 t Book I. ch. V.
 
 i SEC. IV.] MEASURES OF VALUE. 85 
 
 plies it much the most frequently, and on which he 
 ! evidently lays the chief stress. '* The value of any 
 commodity," he says, " to the person who possesses 
 it, and who means not to use or consume it himself, 
 but to exchange it for other commodities, is equal to 
 the quantitif of labour ichich it enables him to pur- 
 chase or command. Labour, therefore, is the real 
 measure of the exchangeable value of all commodi- 
 ties.''* Other expressions in the same chapter apply 
 labour as a measure of value in the same way;"}" and 
 on another occasion, in his digression on the value of 
 silver during the four last centuries, he takes an op- 
 portunity to say, " Labour, be it remembered, and 
 not any commodity, or mass of commodities, is the 
 sole measure of the value of silver, and of all other 
 commodities."':]: 
 
 These passages may be said to determine the pre- 
 vailing sense in which he considers labour as a gene- 
 ral measure of exchangeable value. It would not 
 then be worth while to inquire how far labour may 
 be considered as a measure of value, when applied in 
 the way which Adam Smith has practically rejected 
 in reference to the more advanced stages of society, 
 if this mode of applying it had not been adopted by 
 some distino^uished modern writers as the foundation 
 of a new theory of value. But as this is the case, 
 the inquiry seems to be called for ; and it shouW be 
 particularly noticed, that the question embraces not 
 merely the propriety of a definition, but the truth of 
 a proposition. It is not merely what should be the 
 definition and the measure of value in exchange, but 
 a question of fact, whether the labour worked up in 
 commodities either determines or measures the rate 
 at which they exchange with each other ; and in no 
 stage of society with which we are acquainted does 
 it do this. At a very early period profits will be found 
 to enter largely into the question of exchangeable 
 value as a necessary condition of the supply. To make 
 
 * Book I. ch. V. p. 44, 6th edit. t P. 54. 
 
 X Book I. eh. xi. p. 303.
 
 86 ON THE NATUKE, CAUSES, A\D [cH. H. 
 
 even a bow and arrow, it is obviously necessary that 
 the wood and reed should be properly dried and sea- 
 soned, and the time which these materials require to 
 be kept by the workman before his work is completed, 
 introduces at once a new element into the computa- 
 tion of value. The varying quickness of the returns is 
 likewise an entirely new element, which has nothing 
 to do with the quantity of labour emplo3^ed upon the 
 capital; and yet in every period of society, the earliest 
 as well as the latest, it is of the utmost importance in 
 the determination of exchangeable value. 
 
 The fixed capital necessary to hollow out a canoe 
 may consist of little more than a few stone hatchets 
 and shell chisels, and the labour necessary to make 
 them might not add much to the labour subsequently 
 employed in the work to which they were applied; but 
 it is likewise necessary that the workman should pre- 
 viously cut down the timber, and employ a great quan- 
 tity of labour in various parts of the process long be- 
 fore there is a possibility of receiving the returns for 
 his exertions, either in the use of the canoe, or in the 
 commodities which he might obtain in exchange for 
 it; and during this time, he must of course advance 
 to himself the whole of his subsistence. But the pro- 
 vidence, foresight, and postponement of present grati- 
 fication for the sake of future benefit and profit, which 
 are necessary for this purpose, have always been con- 
 sidered as rare qualities in the savage ; and it can 
 scarcely admit of a doubt that the articles which were 
 of a nature to require this long preparation would be 
 comparatively very scarce, and would have a great 
 exchangeable value in proportion to the quantity of 
 labour which had been actually employed upon them, 
 and on the capital necessary to their production. On 
 this account it is not improbable that a canoe might 
 in such a state of society possess double the exchange- 
 able value of a number of deer, to produce which 
 successively in the market might have cost precisely 
 the same number of days' labour, including the neces- 
 sary fixed capital, consisting of the bows and arrows,
 
 SEC. IV.] MEASUJIES OF VALUE. 87 
 
 &c. used for killing them ; and the great difference 
 of value in this case would arise from the circum- 
 stance, that the returns for the labour of killing each 
 successive deer always came in within a few days 
 after it had been advanced, while the returns for 
 the labour expended upon the canoe were delayed 
 probably beyond the year. Whatever might be the 
 rate of profits, the comparative slowness of these re- 
 turns must tell proportionally on the price of the ar- 
 ticle ; and, as there is reason to think that among 
 savages, the advances necessary for a work of slow 
 returns would be comparatively seldom made, the 
 profits of capital would be extremely high, and the dif- 
 ference of exchangeable value in different commodities, 
 which had cost in their production and in the pro- 
 duction of the necessary capital the same quantity of 
 labour, would be very great. 
 
 Mr. Ricardo, speaking of the different implements 
 ^ which might be necessary, in an early stage of society, 
 to kill the beaver and the deer, says,* that those who 
 furnished these capitals might, under different circum- 
 stances, " have a half, a fourth, or an eighth of the 
 produce obtained, the remainder being paid as wages 
 to those who furnished the labour ; yet this division 
 could not affect the relative value of these commo- 
 dities, since, whether the profits of capital were greater 
 or less, whether they were 50, 20, or 10 per cent, or 
 whether the wages of labour were high or low, they 
 would operate equally on both employments." But 
 it is quite obvious from what has been said, that if 
 for the employment of killing a deer, we substitute the 
 employment of making a canoe, which would not be 
 completed in less than a year, or perhaps two, and 
 suppose what is here supposed with great probability, 
 that profits might be 50 per cent., the difference be- 
 tween the value of such a product, and the value of 
 a deer, which, on account of its being sold almost the 
 next day, could hardly be affected by profits, would, 
 in reference to the same quantity of labour employed 
 * P. 17. 3id edit.
 
 88 0\ THE \ATUUE, CAUSES, AND [CH. II. 
 
 upon each, be as much as 50 per cent. Consequently, 
 in the early stages of society, the relative values of 
 commodities is not determined or measured by the 
 relative quantities of labour employed upon them. 
 
 In countries advanced in civilization, it is obvious 
 that the same cause of variation in the exchangeable 
 value of commodities, independent of the labour which 
 has been employed upon them, must prevail as in the 
 early periods of society ; and, as might be expected, 
 some others. Tiie profits of capital, indeed, are not 
 so high, and consequently the slowness or quickness 
 of the returns will not, as far as the rate of profits is 
 concerned, produce the same proportionate ditference 
 of prices ; but to make up for this, the difterence in 
 the quantity of fixed capital employed is prodigious, 
 and scarcely the same in any two commodities, and 
 the difference in the returns of capital varies from two 
 or three days, to two or three years, and in some cases 
 many more. 
 
 The proposition of Mr. Ricardo, which states that 
 a rise in the price of labour lowers the price of a large 
 class of commodities, has undoubtedly a very para- 
 doxical air; but it is, nevertheless, true, and the ap- 
 pearance of paradox would vanish, if it were stated 
 more naturally and correctly. 
 
 Mr. Ricardo has allowed, that the effect he contem- 
 plated and attributed to a rise in the wages of labour 
 is produced by a fall of profits, which he considers as 
 the same thing ;* and undoubtedly no one could have 
 thought the proposition paradoxical, or even in the 
 slightest degree improbable, if he had stated that a 
 fall of profits would occasion a fall of price in those 
 commodities, where, from the quantity of fixed capital 
 employed, the profits of that capital had before formed 
 the principal ingredient in the cost of production. 
 But this is what he has in substance said. In a par- 
 
 * " Every rise of wages, therefore, or, which is the same thing, 
 every fall of profits, would lower the relative value of those com- 
 modities which were produced with a capital of a durable nature." 
 P. 37, 3rd edit.
 
 SEC. IV.] MtASURtS OF VALUE. 89 
 
 ticular case which he has taken to illustrate his pro- 
 position, he supposes the application of a very durable 
 machine worth £20,000, which requires very little 
 labour either to work it, or keep it in constant repair ; 
 and, consequently, the price of the yearly produce of 
 this machine would be composed almost entirely of 
 the ordinary profits of the £20,000 which it had cost.* 
 Now it is quite certain, that if, from any cause what- 
 ever, the ordinary profits of stock should fall, the price 
 of the commodity so produced would fall nearly in 
 proportion. A fall of profits from 20 to 10 per cent, 
 would reduce its price nearly one half.f Tliis is suf- 
 ficiently obvious. But the effects arising from an 
 opposite supposition were not at first considered, and 
 the general result was overlooked. 
 
 The state of the case, in a general view of it, seems 
 to be this,- There is a very large class of commodi- 
 ties, in the production of which a great quantity of 
 fixed capital is used, and a long time elapses before 
 the returns of the capital, whether fixed or circulating, 
 come in. In such commodities, the proportion wdiich 
 the capital bears to the quantity of labour which it 
 yearly employs, is in various degrees very consider- 
 able : and, in all these cases, it is natural to suppose 
 that the fall of price, arising from the fall of profits, 
 should in various degrees more than counterbalance 
 the rise of price, which would naturally be occasioned 
 by a rise in the price of labour. Consequently, on 
 the supposition of a rise in the price of labour, and a 
 fall in the rate of profits, all these commodities will, 
 in various degrees, naturally fall in price. 
 
 On the other hand, there is a large class of com- 
 modities, where, from the absence of fixed capital, and 
 the rapidity of the returns of the circulating capital, 
 
 * P. 37, 3rcl edit. 
 
 t In a case of this kind brought forward in the first edition, 
 Mr. Ricardo distinctly allows that a change in the relative values 
 of two commodities might take place to the extent of 68 per cent, 
 from the fall of profits, without any change having taken place in 
 the relative quantities of labour employed on each.
 
 90 ON' THE N'ATUIIK, CAUSES, AND [CH. II. 
 
 the proportion wliicli the capital bears to the quantity 
 of labour it employs is very small. A capital of a 
 hundred pounds, which was returned every week, 
 could employ as much labour annually as £2,(300, the 
 returns of which came in only at the end of the year; 
 and if the capital were returned nearly every day, as 
 it is practically in some few cases, the advance of little 
 more than the wages of a man for a single day might 
 pay above three hundred days' labour in the course 
 of a year. Now it is c[uite evident, that out of the 
 profits of these trifling capitals, it would not only be 
 absolutely impossible to take a rise in the price of 
 labour of 7 per cent., but it would be impossible to 
 take a rise of h per cent. On the first supposition, a 
 rise of only h per cent, would, if the price of the pro- 
 duce continued the same, absorb more than all thai 
 profits of the £100 ; and, in the other case, much morel 
 than all the capital advanced. If, therefore, the prices 
 of commodities, where the proportion of labour is very! 
 great compared with the capital which employs it, 
 do not rise upon an advance in the price of labour, i 
 the production of such commodities must at once be] 
 given up. But they certainly would not be given 
 up. Consequently, upon a rise in the money price of] 
 labour and fall of profits, there will be a large class; 
 of commodities which will rise in price. 
 
 There will undoubtedly, however, be a class of] 
 commodities which, from the eflfects of these two op- 
 posite causes, will remain stationary in price ; but,] 
 from the very nature of the case, this class must theo-j 
 retically form little more than a line. Wherever this] 
 line may be placed, it can embrace but a small class 
 of objects ; and upon a rise in the price of labour and 
 fall of profits, all the rest will either fall or rise inj 
 price, although exactly the same quantity of labour] 
 continues to be employed upon them.* 
 
 * In this discussion, I have assumed money to be obtained iuj 
 the way suggested by Mr. Ricardo; in which case the results will 
 be as 1 have described, and as he has allowed in his third edition 
 ([). 45); but his money, as we shall see, is not so cun.^tilutcd as
 
 SEC. IV.] MEASURES 01" VALUE. 91 
 
 What then becomes of the doctrine that the ex- 
 changeable value of commodities is proportioned to 
 the labour which has been employed upon them ? In- 
 stead of their remaining of the same value while the 
 same quantity of labour is employed upon them, it 
 appears that from well-known causes of constant and 
 universal operation, the prices of all commodities, with 
 very few exceptions, vary with the variations in the 
 rate and quantity of profits. 
 
 There are other causes practically in operation 
 which prevent the exchangeable value of commodities 
 from being proportioned to the quantity of labour 
 which has been employed upon them. But as those 
 which have been already more particularly adverted 
 to, are so very powerful, and so completely decisive 
 of the question, it is not necessary to refer specifically 
 to others. It is scarcely possible, indeed, to take up 
 two commodities of different kinds, which will be found 
 to exchange with each other in proportion to the quan- 
 tity of labour worked up in each. Nothing, indeed, 
 could make such a rate of exchange, in reference to 
 conmiodities generally, approach towards the truth, 
 but the assumption that profits are the wages of accu- 
 mulated labour, and that, therefore, profits may be 
 called labour. But profits are altogether different from 
 wages, and are regulated by quite diflferent principles, 
 as most justly stated by Adam Smith.* Such an as- 
 sumption is so completely unphilosophical, so calcu- 
 lated to defeat all the useful purposes of a just nomen- 
 clature, and to create confusion in the ordinary lan- 
 guage of political economy, that it cannot for a mo- 
 ment be admitted.'!^ We might just as correctly call 
 rent labour. 
 
 to be a proper measure of value. In reality, all commodities ob- 
 tained by the same quantity of labour fall with a fall of profits. 
 
 * Book I. ch. 6. 
 
 f We may measure the value which the element of profits gives 
 to a commodity by labour, as I have said in another place ; but 
 how we can say that more labour has been employed upon a com- 
 modity, merely because it must be kept longer before it is brought 
 to market, is what I cannot understand.
 
 92 ox THE NATURE, CAUSES, AND [CH. II. 
 
 It may be safely affirmed, then, that however curious 
 and desirable it may be to know the exact quantity of 
 labour, accumulated and immediate, which has been 
 employed in the production of commodities, it is cer- 
 tainly not this labour alone which either determines 
 or measures their relative values in exchange at the 
 same place, and at the same time. 
 
 But if, at the same place and at the same time, the 
 relative values of commodities are not measured by 
 the labour which they have cost in production, in- 
 cluding the labour employed on the capitals concerned, 
 it is quite clear that such labour cannot measure their 
 relative values at dilfercnt places and at different 
 times. 
 
 In regard to intrinsic value in exchange, it is still 
 more clear that the value of the labour actually em- 
 ployed in the production of a commodity, never repre- 
 sents or is proportioned to the value of the completed 
 commodity, except in the rare case when labour alone 
 is employed, and the produce is brought to market 
 immediately. In the vast majority of cases, there 
 are other intrinsic causes of value, acting sometimes 
 with great power, which increase the difficulty of ob- 
 taining the object desired, in addition to the labour 
 actually employed. The slightest attention to what 
 is passing around us, at any one period, and in any 
 one place, must convince us of this truth ; and, at 
 different periods, and in different places, the labour 
 actually employed upon a commodity, considered as 
 a measure of its value, must partake of all the inac- 
 curacies which necessarily belong to it at the same 
 time and place. 
 
 It appears, then, that the quantity of labour actually 
 employed in the production of commodities, answers 
 neither of the two great objects of a measure of value. 
 It neither measures the rate at which commodities ex- 
 change with each other at the same place and time, 
 like money, nor docs it measure the whole of the dif- 
 ficulty to be overcome, or the sacrifice to be made, 
 in obtaining commodities at the same or different
 
 SEC. IV.] iVJEASUKES OF VALUE. 93 
 
 times, and in different countries, and enable us to say- 
 when two or more commodities have varied in relation 
 to each other, in which, and to what extent in each, 
 the variations have taken place.* 
 
 Sectiox V. — Of the Labour which a Commodity 
 will command, considered as a Measure of Value 
 in Eixhange. 
 
 When we consider labour as a measure of value in 
 the sense in which it is most frequently applied by 
 Adam Smith, that is, when the value of an object is 
 estimated by the quantity of labour of a given descrip- 
 tion which it can command, it will appear to be a 
 measure essentially distinct from all others, and to 
 approach as near to a standard measure, both of re- 
 
 * Mr. Ricardo, at the conclusion of the sixth section of his 
 first chapter, has the following passage : " It is necessary for me 
 to remark that I have not said, because one commodity has so 
 much labour employed upon it as will cost £1000, and another 
 so much as will cost £2000, that therefore one would be of the 
 value of £1000, and the other of £2000; but I have said that 
 their value will be to each other as 2 to 1, and that in these pro- 
 portions they will be exchanged. It is of no importance to the 
 truth of this doctrine, whether one of these commodities sells for 
 £1100, and the other for £2200, or one for £1500, and the 
 other for £3000 ; into that question I do not at present inquire : 
 I affirm only that their relative values will be governed by the 
 relative quantities of labour bestowed on their production." It 
 is on this view of relative value, that all Mr. Ricardo's calcula- 
 tions in the rest of his book depend, without any modifications, 
 although in two previous sections he had acknowledged that con- 
 siderable modifications were necessary. My object in the present 
 section has been to show that the relative values of commodities 
 are not only not governed, but are very far from being governed, 
 by the relative quantities of labour bestowed on their production, 
 as stated in the passage quoted : and, in the passage itself, it is 
 positively denied, that because a commodity has so much labour 
 bestowed upon it as will cost £1000, that therefore it is of the 
 value of £1000. Mr. Ricardo did not fall into the unaccountable 
 error of calling labour profits, and of confounding the accumu- 
 lated labour actually worked up in fixed capitals and materials 
 with \he profits upon such capitals and materials, things totally 
 distinct.
 
 94 0\ THE NATURE, CAUSES, AXD [cil. If. 
 
 lative and of intrinsic value in exchange, as the nature 
 of the subject will admit. 
 I It is universally allowed that in the same place, 
 i and within moderately short periods of time, the pre- J 
 I cious metals are an unexceptionable measure of the m 
 I relative values of commodities ; but whatever is true I 
 of the precious metals with respect to the relative 
 and nominal values of commodities is true of labour 
 applied in the way proposed. 
 
 It is obvious, for instance, that in the same place, 
 and at the same time, the different quantities of day 
 labour which different commodities can command, 
 will be exactly in proportion to their relative values 
 in exchange ; and if any two of them will purchase 
 the same quantity of labour of the same description, 
 they will invariably exchange with each other. 
 
 The merchant might safely regulate his dealings, 
 and estimate his commercial profits by the excess of 
 the quantity of labour which his imports would com- 
 mand, compared with his exports. Whether the value 
 of the commodity had arisen principally from the limi- 
 tation of its supply, occasioned by a strict or partial 
 monopoly ; whether it had arisen principally from the 
 scarcity of the raw material, the peculiar sort of labour 
 required in its construction, or from unusually high 
 profits ; whether its value had been increased by an 
 increased cost of production, or diminished by the 
 application of improved machinery ; whether its value 
 at the moment depended chiefly upon permanent or 
 temporary causes — ir^ all cases and under all circum- 
 stances, the quantit)' of labour which it will command, 
 or what comes to the same thing, the quantity of j 
 labour's worth which people will give to obtain it, 
 will be a very exact measure of its relative value in 
 exchange. In short, this measure will, in the same 
 place and at the same time, exactly accord with the' 
 money prices of commodities. 
 
 It will probably be objected, that in the same place, 
 and at the same time, every commodity may be con- 
 sidered as an accurate measure of the relative values
 
 SEC. v.] MEASURES OF VALUE. 95 
 
 of others, and that what has just been said of labour 
 may be said of cloth, cotton, iron, hops, or any other 
 article. Any two commodities, which at the same 
 time and in the same place will purchase or command 
 the same quantity of cloth, cotton, iron, or hops of a 
 given quality, will have the same value, or will ex- 
 change even with each other. This is no doubt true, 
 if we take the same time precisely, and if we wish 
 merely to know the relation of one commodity to some 
 other or others in exchange ; but the comparison ut- 
 terly fails if we take different periods, and more espe- 
 cially if w^e refer to the main characteristic of the value 
 of a commodity, namely, the difficulty of obtaining 
 it, or the limitation of its supply compared with the 
 demand. 
 
 One of the most important reasons why practically 
 money makes a much better measure of value than 
 any other commoditi/ is, that its relation to common 
 labour not only changes more slowly than cloth, cot- 
 ton, iron, hops, &c. but that having been adopted as 
 the almost universal medium of exchange, its relation 
 to labour in any particular place must always be 
 known to the inhabitants of that place ; and while such 
 relation is known and remains constant, the money 
 prices of commodities will not only express their re- 
 lations to each other, but also the difficulty of obtain- 
 ing them, the conditions of their continued supply, if 
 they are in an ordinary state, and the supply com- 
 pared with the demand in whatever state they may 
 be, which will include of course their power of pur- 
 chasing arising from all the intrinsic causes of value 
 which may have operated upon them. 
 
 Consequently money, under these circumstances, i,^ 
 that is, while its relation to labour is known and re- 
 mains constant, is a measure both of relative and in- 
 trinsic value in exchange. 
 
 But if the only cause which prevents money from 
 being such a measure is, that its relation to labour is 
 not constant, it would appear, that as the labour which 
 a commodity will command is necessarily a measure
 
 9G ON THE NATURE, CAUSES, AND [cil. IT. 
 
 of relative value like money, the substitution of labour 
 so applied instead of money will give the measure 
 we want. 
 
 It remains, therefore, to be considered more parti- 
 cularly how far the labour which a commodity will 
 command appears to be an adequate measure of value 
 in exchange at different periods and in different coun- 
 tries, according to the most usual and correct sense in 
 which the term is practically applied ; and it wmU be 
 recollected that I have endeavoured to show, and I 
 trust with success, that this sense is not the general 
 power of purchasing possessed by a particular com- 
 modity, but its power of purchasing arising from in- 
 trinsic causes, which includes all the causes, of what- 
 ever kind they may be, which have contributed to the 
 limitation of its supply compared with the demand. 
 
 Keeping in mind, therefore, the meaning attached 
 to the term value of a commoditi) at a particular time 
 and place, let us compare the values of two commo- 
 dities, one of which was produced in the time of 
 Edward III. and the other in the time of William IV. 
 
 And first let us suppose, for the sake of clearness, 
 that the common agricultural labour of each period, 
 which may be taken as the standard, is exactly of the 
 same degree of strength, and is employed for the same 
 number of hours, and further, that there are some 
 commodities which, both at these periods and during 
 the whole of the interval between them, are produced 
 by this kind of labour alone, and brought to market 
 immediately. 
 
 Perhaps these suppositions have not been very far 
 from the truth in this country since the time of Ed- 
 ward III. I should suppose that the physical strength 
 of the men of tliat period was nearly the same as at 
 present, and that an ordinary day's work of agricul- 
 tural labour was nearly of the same length ; and it 
 is generally allowed that at all times there are a few 
 commodities produced by labour alone. 
 
 It is obvious that commodities so produced would, 
 at any particular period, exchange with one another, ,
 
 SEC. v.] MEASURES OF VALUE. 97 
 
 on an average according to the quantity of labour em- 
 ployed to obtain them ; and in comparing the values 
 of commodities so produced at one period with the 
 commodities so produced at the other period, it seems 
 scarcely possible not to allow that those commodities 
 which had been produced at each period with exactly 
 the same quantity of labour of the same description, 
 and brought to market immediately, would be supplied 
 ordinarily in the same proportion to the demand at 
 each period, and be considered as of the same value. 
 
 Now in regard to commodities produced by labour 
 alone, and brought to market immediately, it is evident 
 that the labour employed upon them must on an ave- 
 rage be precisely the same as the labour which they 
 will command. But it is allowed that the relations 
 of all commodities to one another, however variously 
 composed, are at the same time and place, exactly in 
 proportion to the quantity of labour which they will 
 severally command. Consequently if the values of 
 the commodities produced by labour alone in the time 
 of Edward III. be to the values of commodities pro- 
 duced by labour alone in the time of William IV. as 
 the quantities of labour which at each period they 
 will command, it follows necessarily, that the values 
 of all and each of the commodities in the time of Ed- 
 ward III. however variously composed, must be to the 
 values of all and each of the commodities in the time 
 of William IV. however composed, in the proportion 
 of the quantity of labour which all and each will se- 
 verally command. 
 
 The value, therefore, of any commodity at either 
 period, whether arising from the intrinsic cause of la- 
 bour alone, or from labour combined in various pro- 
 portions with profits, rent, and taxes, or affected by 
 temporary scarcity or abundance, will be measured 
 by the quantity of the labour of each period which it 
 will command. 
 
 And that the correctness of so measuring the values 
 of commodities, will not be in any degree disturbed 
 by the varying quantity of produce, or the varying 
 
 n
 
 98 ON THE NATURE, CAUSES, AND [CH. II. 
 
 wages which tlie labourer may receive, will be obvious 
 from the followino: considerations. 
 
 Let us suppose, what is probably not far from the 
 truth, that a man who employs himself in shrimping, 
 earns about the same remuneration as the common 
 agricultural labourer, and let us further suppose, that 
 the shrimper in the time of Edward III. could on an 
 average bring home 800 shrimps a day. Now if at 
 a subsequent period of some extent, shrimps were to 
 frequent the shores in greater abundance, so that 1600 
 might ordinarily be obtained by a day's labour, and 
 the supply of shrimps were doubled, it is quite certain 
 that we should say, and correctly say, that shrimps 
 had proportionably fallen in value, not that labour 
 had proportionably risen. In the same manner, if from 
 a diminished afflux of shrimps to our shores, only 400 
 could be obtained by a day's labour, it is equally cer- 
 tain that we should say, and correctly say, that shrimps 
 had risen in value, not that labour had fallen. 
 
 The value of the shrimps would be determined by 
 the supply compared with the demand. The demand, 
 in this case, for the produce of a day's shrimping would 
 be accurately represented by the power of commanding 
 a day's labour, whether the means of supporting the 
 labourer were abundant or scanty ; and the demand 
 being given, the value of a given number of shrimps 
 would be inversely as the supply. 
 
 If it would take the same man the same quantity 
 of labour to obtain 100 prawns, as it would to obtain 
 400 shrimps, and yet he found it advantageous to con- 
 tinue getting prawns, it would be a great absurdity 
 to say that labour was altered in value on account of 
 the difference in the returns ; and it would be little 
 less absurd in the case previously supposed, if when 
 the labour advanced was exactly of the same charac- 
 ter, and employed for the same time, to say that the 
 difference in the produce obtained, arising from the 
 plenty or scarcity of the article compared with the 
 given demand of a day's labour, would make any kind 
 of difference in the value of the labour advanced.
 
 SEC. v.] .MEASURES OF VALUE. 99 
 
 If the changes were in the quantity of labour em- 
 ployed, not in the quantity of fish obtained, the effects 
 would not be dift'erent. Though the whole demand 
 might be increased in the case of an increased popula- 
 tion, or diminished in the case of a diminished popula- 
 tion, yet the power of commanding a day's labour 
 would still represent a given and unchanged demand in 
 regard to intensity ; and if on account of a greater num- 
 ber of competitors in the one case, and a smaller number 
 in the other, each man could obtain in a day a smaller or 
 greater number offish, the fish would become scanty or 
 abundant as compared with a given demand ; and their 
 value would still vary inversely as their supply, and 
 be measured in both cases by the quantity of labour 
 which a certain quantity of them would command. 
 
 It appears then that the varying quantity of produce 
 obtained by the same quantity of labour of a given 
 character, where labour alone is concerned, while it 
 implies great alterations in the value of a given por- 
 tion of the produce, does not alter the value of a given 
 quantity of labour. 
 
 And it is equally true that the varying wages, 
 whether in corn or money, paid to the labourer at dif- 
 ferent periods for labour of the same character, when 
 this labour enters into the composition of commodities 
 combined with profits, rent, taxes, or any other in- 
 trinsic causes of value, does not alter the value of the 
 labour itself, or disqualify it from being used as a 
 measure. 
 
 In our own country there was a period subsequent 
 to the reign of Edward III. namely from 1444, to the 
 end of the reign of Henry VII. when, as far as the 
 documents on the subject can be trusted, the labourer 
 earned nearly two pecks of wheat a day, while he 
 earned less than a peck in the time of Edward III. 
 and much less than a peck towards the end of the reign 
 of Elizabeth. Now it is quite certain that the labourer 
 could not for so long a time have had his corn wages 
 nearly doubled, if from some cause or other, or probably 
 from a union of different causes, the supply of corn had
 
 100 ox THE NATURE, CAUSES, AND [CH. II. 
 
 not become more abundant in relation to the consu- 
 mers ; and whether this was occasioned by the destruc- 
 tion of the population during- the civil wars, or by the 
 increased growth of corn on the breaking up of the 
 feudal system, or by a union of both, the effect would 
 bejust the same on the supply as compared with the 
 demand. Man, with his wants and powers, it must 
 be always recollected, is the primary source of all de- 
 mand ; and in this respect the increase or decrease of 
 population is distinct from the increase or decrease of 
 any commodity. If the quantity of cotton goods were 
 to be greatly diminished, this would probably create 
 a greater, rather than a less demand for woollen goods, 
 whereas if population be diminished, all the articles 
 before consumed by it will for a time become compa- 
 ratively redundant, and some perhaps may long con- 
 tinue to be produced with greater facility. 
 
 The labourer, therefore, during the period alluded 
 to, was able to command a greater quantity of corn, 
 which was unquestionably an increase of wealth to him ; 
 but he obtained this increase of wealth because corn 
 had fallen in value, not because labour had risen in^ 
 value. 
 
 Any object which continues of the same value musi 
 necessarily purchase more of an object which has 
 fallen in value. 
 
 The same reasoning applies to the labourer's varying 
 money wages. In the time of Edward III. the wages 
 of common labour were about three half-pence a dayJ 
 which allowing for the difference in the quantity oi 
 metal contained in the same nominal sum would be] 
 equal to about four-pence of our money. Consequently,'! 
 supposing, the present money wages of common laboui 
 to be twenty-pence or two shillings, the money price] 
 of labour since the time of Edward III. will appear! 
 to have risen five or six times. But no person, I con-j 
 ceive, imagines that the value of labour has so risen.! 
 We all know very well that the value of money liasj 
 fallen, and if the labour has remained unchanofed in] 
 its character, the conditions of the supply of a givenj 
 quantity of silver, the elementary costs of its produc-
 
 SEC. V.J MEASURES OF VALUE. 1 01 
 
 tion, the average state of its supply as compared with 
 the demand, or its power of purchasing at these dif- 
 ferent periods arising from intrinsic causes, will be ex- 
 actly represented by the quantity of labour which the 
 given quantity of silver will command at each period. 
 
 If we now consider the values of commodities in 
 different countries at the same period, and suppose the 
 character of the agricultural labour to be of the same 
 kind, the same conclusion will necessarily follow. Yet 
 here an actual exchange is practicable ; and it is quite 
 certain that the products of the same quantities of la- 
 bour of the same character, will, under different cir- 
 cumstances exchange for very different quantities of 
 money, while we well know that money prices regu- 
 late the rate at which all actual exchanges are made. 
 
 But in cases of this kind, and they are constantly 
 occuring, it is obvious, that the difference in the mo- 
 ney price of the products of the same quantity of la- 
 bour in different countries, arises from the difference 
 in the value of money, and not from the difference in 
 the value of the labour. Metallic money in all coun- 
 tries which have no mines of the precious metals, is 
 only to be obtained by exportable commodities ; and 
 the soil, situation, and habits of some countries may 
 occasion a comparatively scanty production of exports, 
 although their labourers work with as much energy, 
 and sometimes in regard to domestic commodities with 
 as much skill, as the great mass of the labourers of those 
 countries, where exportable commodities abound. 
 
 If two nations quite unconnected were to employ 
 the same quantity of labour of the same character in 
 working two silver mines, one of which had double 
 the fertility of the other, there can be no doubt that 
 the supply of silver compared with the demand, or its 
 value in exchange arising from intrinsic causes, would 
 be very much lower in the one country than in the 
 other ; and we should not hesitate in saying, that the 
 difference in prices so occasioned, was owing to the 
 difference in the value of money, not in the value of 
 the labour. 
 
 Nor ought the conclusion, in my opinion, to be dif-
 
 102 0\ THE NATLllE, CAUSES, AND [CH. II. 
 
 ferent, if the application of excellent machinery in the 
 one case, and very indifferent machinery in the other 
 mines of the same natural fertility, were to produce 
 the same difference in the state of the supply of silver 
 compared with the demand, and the same purchasing 
 power arising from intrinsic causes as in the former 
 case. In the country of machinery, not only the la- 
 bour of the miner, but all labour would be high in 
 money price ; and in comparing the two countries to- 
 gether, the natural and useful language would be, 
 that while the value of the labour was the same in 
 both countries, the value of silver was most essentially 
 different. The same sacrifice of physical force, sup- 
 posing the profits and other circumstances in both 
 countries to have been the same, had probably pro- 
 duced in one country double the quantity of silver 
 which it had produced in the other. 
 
 From all the accounts we have of the Chinese 
 settlers in different parts of the East, it appears that 
 the labouring classes in China, are remarkable for 
 their industry and energy, and even for their skill in 
 making those domestic articles where superior ma- 
 chinery is not required. We cannot therefore justly 
 say that Chinese labour, independent of machinery, or 
 other particular advantages, is not as eftective as our 
 own. Yet we well know that the money price of labour 
 is extremely low in China, and this is obviously owing 
 to the small amount of exports compared with the po-j 
 pulation, and the prodigious extent of territory, in- 
 cluding a large part of Tartary, over which the pre-l 
 cious metals which are imported into China will be ne- 
 cessarily spread, so as to throw the greatest imaginable! 
 obstacles in the way of a fall in their value ; the con-l 
 sequence of which naturally is, that they have fallen} 
 comparatively but little in value since the discovery of I 
 the American mines ; and the elementary cost of pro-} 
 ducing a pound of silver, the quantity of Chinese la-| 
 hour, profits, rent, ^c. which must be worked up inj 
 the commodities exported to purchase it, are veryl 
 much greater than in Europe. Under these circum-l
 
 SEC. v.] MEASURES OF VALUE. 103 
 
 stances it would surely be most preposterous to mea- 
 sure the value of Chinese labour in China by money, 
 instead of measuring the money by the labour. 
 
 Yet, still it is perfectly true, that a Chinese com- 
 modity carried to Hamburgh would be sold at its 
 China money price, with the addition of the freight, 
 insurance, profits, &c. of the last voyage; and an 
 English merchant purchasing Hamburgh and Chinese 
 goods, would unquestionably estimate their relative 
 values by their cost in money, without the least refe- 
 rence to the very different quantities of labour which 
 had been employed in obtaining them ; or if he chanced 
 to hear something about the greater quantity of Chi- 
 nese labour employed on the articles from China, for 
 which he had paid the same price as for the Ham- 
 burgh goods, he would be inclined, and not very un- 
 naturally, to estimate the value of Chinese labour 
 very low. It is most justly observed by Adam Smith, 
 that the merchant, in all his transactions, has only to 
 consider money prices. 
 
 To a merchant, therefore, living in London and pur- 
 chasing goods at Hamburgh, Chinese labour, if esti- 
 mated at all, would necessarily be estimated at a low 
 value. But he would fall into a gross error if he were 
 to infer that it was therefore low in China. When 
 the value of money, or of any other article in China 
 is spoken of, it would imply a gross perversion of lan- 
 guage to suppose that the person speaking meant the 
 value of Chinese money, Chinese goods, or Chinese 
 labour in Hamburgh or London. The expression in 
 China, cannot mean in Hamburgh, or in London. What 
 alone can be correctly meant by the value of money, 
 or of any other commodity in China is, the estimation 
 in which such money is held in China, determined at 
 all times by the state of the supply compared with 
 the demand, and ordinarily by the elementary costs 
 of its production in China, or what comes to the same 
 thing, the value of money in China, is its power of 
 purchasing in China, arising from intrinsic causes. 
 And as it is obvious, that the quantity of Chinese la- 
 
 /
 
 104 0\ THE NATURE, CAUSES, AXD [CH. II. 
 
 hour which a pound of silver will command, must 
 measure its power of purchasing in China, arising 
 from intrinsic causes ; it follows, that the value of mo- 
 ney or of any other commodity in China, is measured 
 by the quantity of Chinese labour which a given por- 
 tion of it will command. 
 
 It is thought by some persons, that the cheap food 
 and small ([uantity of it which is supposed to be 
 earned by the Chinese labourer, must imply a low 
 value of labour; but if things are in their natural 
 state, what it really implies, is, that this food, how- 
 ever low in value it may appear to us, is of high value 
 in China. The great demanders of the commonest 
 sort of food in all countries are the labouring classes ; 
 and if a labourer in ordinary employment, and work- 
 ing with ordinary energy and skill, can, on an average, 
 only obtain a comparatively small quantity of such 
 food, it is a proof that its permanent supply compared 
 with the demand is very scanty, and on the common 
 principle of supply and demand, it must be of high 
 value there. 
 
 To come to an instance nearer home. There is 
 reason to believe that the connnon labourer of the 
 Netherlands is as strong, and works for as many hours 
 in the day as the English labourer. In the great I 
 business of agriculture, in which so large a part of the 
 population of every country is employed, he is sup- 
 posed to be peculiarly skilful, and in many manufac- 
 tures he has been generally considered as excelling the 
 workmen of most of the countries of Europe. Yet his| 
 wages measured in money are decidedly lower thaa j 
 in England. Is this owing to the lower value of la- 
 bour in the Netherlands, or the higher value of momif 1} 
 To the latter most assuredly ; and the cause of it un- 
 questionably is, that though the great mass of the la- 
 bourers in the Netherlands may work with as much.' 
 energy and skill as the great mass of English la- 
 bourers ; yet a certain proportion of the latter, assisted! 
 by superior machinery, more abundant capitals andi 
 cheaper fuel, are able to produce a larui^ f|unntity ofi
 
 SEC. v.] MEASURES OF VALUE. 105 
 
 exportable manufactures at a lower money price than 
 they can be produced in the Netherlands ; which, to- 
 gether with some superiority in colonial products, ena- 
 bles England to maintain her exchanges, although she 
 pays a higher money price for her labour, the differ- 
 ence in profits being inconsiderable. 
 
 It will be said, perhaps, that the higher money 
 price of corn and labour in England is entirely owing 
 to the corn laws, w^iich prevent the money price of 
 English corn from falling to the price of corn in the 
 Netherlands. It is indeed nearly certain, that if the 
 corn laws were repealed, English labour and the ge- 
 neral scale of English prices would be lower. But it 
 is still more certain, that no possible corn laws could 
 prevent the prices of our corn and labour from falling 
 to the level of the rest of Europe, if w^e possessed no 
 natural or artificial advantages in regard to our ex- 
 portable commodities. Supposing the price of English 
 common labour to be twenty-pence or two shillings, 
 and of continental labour fourteen or sixteen-pence, 
 each bearing the same relation in each country to 
 manufacturing labour, with no more difference of 
 profits than at present prevails, it is quite obvious, 
 that without some peculiar advantages to balance the 
 price of our labour, we could not possibly maintain 
 our exchanges, and could not, in fact, export a single 
 yard of cloth or calico, till the exchanges had con- 
 tinued against us a sufficient time to raise the value 
 of money and lower the money prices of labour and 
 corn to the level of the principal countries with which 
 we were connected in commerce. 
 
 An instance of somewhat a different kind will tend 
 further to illustrate this subject. 
 
 It is generally considered that labour is very scarce, 
 and of very high value in the United States of Ame- 
 rica, and that in consequence the agricultural la- 
 bourer is paid much higher both in wheat and money 
 than in England. In wheat it is supposed that he 
 earns 18 or 20 quarters in the year, while the En- 
 glish labourer only earns 9 or 10. But is it properly
 
 106 ox THE NATURE, CAUSES, A\D [cH. II. 
 
 the American labour whicli is of so much higher 
 value than the English labour ; or the American 
 wheat which is of so much lower value in America, 
 than the Eno-lish wheat in Eng^land ? It is in the 
 nature of things quite impossible, as we have said 
 before, that the labourers of any country can continue 
 to be paid an amount of products of so high a value 
 as the value of what they are themselves able to pro- 
 duce for their employers ; because if they were so 
 paid, their employers would always be losing by so 
 employing them. Consequently the American la- 
 bourers, paid as above stated, must be able to pro- 
 duce considerably more than 18 or 20 quarters ; be- 
 cause, we know that profits are high in the United 
 States ; while it may fairly be presumed that on lands 
 in England which yield the least rent, the English, 
 labourer produces a less excess above the 9 or 10 1 
 quarters than the American labourer above the 18 or 
 20 quarters. Can any thing show more clearly that 
 the difference is in the lower value of the corn, and 
 not in the higher value of the labour. And this dif- 
 ference is obviously occasioned by the great abundance] 
 of fertile land in America, and the consequent faci- 
 lity with which corn is obtained. 
 
 But the American labourer is also paid higher inl 
 bullion, in the currency of the commercial world ; and! 
 how comes it that bullion should be obtained with morel 
 facility in the United States than in England, when it] 
 is well known that the English labourer works for asj 
 many hours in the day, with as much strength, and with] 
 at least as much skill as the American labourer? 
 
 The lower value of money in England compared with! 
 the value of money in most of the states of Europe,! 
 has appeared to arise principally from the cheapness! 
 of our exportable manufactures, derived from our su-j 
 perior machinery, skill, and capital. The still lower] 
 value of money in the United States is occasioned byl 
 the cheapness and abundance of her raw products de-j 
 rived from the advantages of her soil, climate, and si-j 
 tuation. Notwithstanding the scarcity of labour in the]
 
 SEC. v.] MEASURES OF VALUE. 107 
 
 United States, it would be obviously impossible for the 
 country to maintain the money price which she actu- 
 ally pays for her labour, if, in spite of such price, she 
 were not able from her situation, and the state of her 
 soil, to produce raw cotton, tobacco, corn, timber, &c. 
 in large quantities at a lower money price than most 
 of her competitors in the European markets. The state 
 of the demand in these markets for corn, tends to raise 
 the price of the American corn, which is exported to- 
 wards the level of the money prices in Europe. The 
 price of the American corn which is exported natu- 
 rally raises the money price of American corn in ge- 
 neral ; and the very great demand for labour in Ame- 
 rica compared with corn, by aw^arding to the labourer 
 a large quantity of it, necessarily makes the money 
 wages of labour high ; while the abundant exports of 
 other raw products obtained with great facility, afford 
 the means of maintaining the exchanges under so high 
 a bullion price of labour. 
 
 As a matter of unquestionable fact, the elementary 
 cost of obtaining a pound of silver in the United States 
 is less than in any country of Europe. A much smal- 
 ler quantity of labour, of a character and quality hardly 
 equal to that of England, is employed, with other out- 
 goings estimated in the same kind of labour, to pro- 
 duce the articles which purchase it ; and neither the 
 difference in profits, nor the difference in the price of 
 labour, is such as to counterbalance this facility of pro- 
 duction, and prevent the abundance of exports. 
 
 Unquestionably the American labourer is richer, and 
 much better off than the English labourer. He obtains 
 the command of a quantity of food more than sufficient 
 to maintain the largest family ; and from the high bul- 
 lion price of his labour, he can afford in general to pur- 
 chase a fair quantity both of home and foreign manu- 
 factured goods. But he evidently does not purchase 
 what he obtains by a greater sacrifice than the Eng- 
 lish labourer. He does not give more for what he re- 
 ceives, but receives more for what he gives ; and unless 
 we mean to make quantity of products the measure of
 
 108 
 
 ON THE NATURE, CAUSES, AND 
 
 [CH. 
 
 II. 
 
 value, which would lead us into the most absurd and 
 inextricable difficulties, vve must measure the value ofj 
 what the labourer receives in the United States by the 
 labour which he gives for it. We must make the pro- 
 per distinction between value and riches, and say that 
 he is rich, not because he possesses a greater value to] 
 give in exchange for what he wants, but because what! 
 he wants, or the main articles which constitute hisf 
 riches, are obtained with much more facility, and are 
 really more abundant and cheaper than they are in 
 Europe. 
 
 In those numerous cases, therefore, where the great! 
 mass of the day labour of different countries is of the] 
 same character in regard to physical strength and du- 
 ration, such labour must be a measure of value exactly! 
 of the same kind as the labour of the same country at 
 different periods. And while we avoid the gross errorl 
 of confounding the value of money, or of any other! 
 commodity in one country with the value of the samel 
 quantity of money, or of any other commodity in ano- 
 ther country, or in the general market of Europe, it 
 will appear that the labour of each country for which! 
 any commodity will exchange, must measure its ex- 
 changeable value in that country, or its power of pur^ 
 chasing in that country arising from intrinsic causes.l 
 
 Hitherto we have assumed that the labour of thej 
 same description in different periods and countries, it 
 of the same character as to strength, skill, and dura-| 
 tion. It remains to be considered, whether in diiferenlj 
 countries at the same period, where it is known that 
 the character of the labour is essentially different, and] 
 in the same country at different periods, when it ma] 
 be supposed that the character of the labour has chang- 
 ed, the proposed measure may still be considered ad 
 correct. 
 
 And here it is probable that the measure will not b( 
 considered so satisfactory as in those cases where th( 
 labour is exactly of the same character. Yet, whih 
 it is obvious that the relative values of all commodities! 
 in every country may be accurately measured by tin
 
 SEC. v.] MEASURES OF VALUE. 109 
 
 labour which they will command in that country, it 
 must be allowed that there is no other way of approx- 
 imating towards the other great object of a measure 
 of the values of commodities, namely, a knowledge of 
 the desire to possess, and the difficulty of obtaining 
 possession of them, or the limitation of their supply 
 compared with the demand, than by comparing them 
 with the labour of the country in which they are pro- 
 duced or exchanged, whatever may be its character. 
 And it appears, that if we adhere to that definition of 
 the value of a commodity, which on other grounds has 
 been shown to be the most useful and correct, such 
 labour will measure it : and as no other object or ob- 
 jects will approach to such a measure, it may with pro- 
 priety be considered as the standard. 
 
 The definition of the value of a commodity at a 
 particular place and time, is stated to be " the esti- 
 mation in which it is held at that place and time, de- 
 termined in all cases by the state of the supply com- 
 pared with the demand, and, ordinarily, by the ele- 
 mentary costs of its production, which regulate that 
 state ;" or what comes to the same thing, its power 
 of purchasing at that place and time, arising from in- 
 trinsic causes. 
 
 Now supposing that in India the labourers do not 
 work either with so much strength, or for so many 
 hours in the day, as the English labourers, what will 
 be the result ? Will not every article produced by la- 
 bour be more scantily supplied compared with the 
 numbers and wants of the population ? And to obtain 
 such an article must not a greater number of days 
 labour, with the necessary wages to support the la- 
 bourer for the greater number of days, be unavoidably 
 sacrificed ? That is, every such article will be of high- 
 er value, as determined by the state of the supply 
 compared with the demand, and ordinarily by the ele- 
 mentary costs of production. But it has been shown 
 that in every place at any one time, the value of a 
 commodity produced by labour alone is to the value 
 of a commodity hov/ever complicated in its mode of
 
 110 ox THE NATUllK, CAUSES, AXD [cil. II. 
 
 production, as the quantity of labour which the sim- 
 ple commodity will command to the quantity of la- 
 bour that the complicated commodity will command. 
 Consequently, if a certain piece of muslin in England 
 commands five days English labour, and a piece of 
 muslin in India, the same in quantity and quality, will 
 command thirty days Indian labour, the natural in- 
 ference is that the piece of muslin in India is held 
 there in six times greater estimation than in England, 
 founded on the limitation of its supply compared with 
 the demand, and the greater elementary costs of its 
 production ; or, in other words, that its purchasing 
 power in India, arising from intrinsic causes, is six 
 times greater, which, according to the definition, is the 
 same as saying, that the values of two similar pieces 
 of muslin in the two different places, is measured by 
 the quantity of labour in each place which they will 
 respectively command. 
 
 But the value of money at any particular place and 
 time can only be determined and measured exactly in 
 the same way as the value of any other commodity. 
 Consequently, the value of money at any particular 
 place and time in India will be there and then deter- 
 mined by the state of its supply compared with the 
 demand, and ordinarily by the elementary costs of its 
 production, and will be measured by the quantity of 
 the standard labour of the country which it will com- 
 mand. 
 
 It follows, as a necessary consequence, that the money 
 prices of all commodities produced in different coun- 
 tries, at the same elementary costs, and existing in the 
 same state of the supply compared with the demand, 
 will, when brought to a common market in Europe, 
 be proportioned inversely to the value of money in the 
 country where they are produced. And this, I be- 
 lieve, is the rate at which all foreign conmiodities 
 practically sell for in any common mart of Europe, 
 after the money expenses and profits of the last voyage 
 are allowed for. 
 
 Recollecting then always, that I have not been in-
 
 SEC. v.] MEASURES OF VALUE. Ill 
 
 quiring for some object which approximates to a 
 standard measure of value in exchange, on the suppo- 
 sition that the proper definition of the value of a com- 
 modity is its povt^er of purchasing ^■e;?er<2//j/, but upon 
 the supposition that the most usual, the most useful, 
 and therefore the most correct* interpretation of the 
 term, is its povi^er of purchasing arising from intrinsic 
 causes, w^e may safely consider labour as the object 
 which will answer the purpose required ; and say, 
 that the value of a commodity at any time, and at any 
 place, may be measured by the quantity of the stan- 
 dard labour of that time and place, which it will ex- 
 change for or command. 
 
 Section VI. — On the Practical Application of the 
 Measure of Value, and its general Use and Advan- 
 tages. 
 
 The practical application of the measure of value 
 proposed, will not in general be difficult. In this res- 
 pect it has a prodigious superiority over the general 
 power of purchasing, a measure which it is impos- 
 sible practically to apply with any approach towards 
 precision. But when we confine our view to the 
 power of purchasing arising from intrinsic causes, 
 we are able to measure the variations in this poAver, 
 by the varying quantity of a specific object for which 
 it will exchange ; and the practical application of 
 this object is rendered easy, by referring to the money 
 prices of commodities and labour. 
 
 Thus, if the relations of two or three commodities 
 in exchange, such as cloth, silver, and corn, for in- 
 stance, have altered in this country, since the time of 
 
 * I cannot help thinking, that if a certain interpretation of a 
 particular term is at once the most usual, and the most useful, 
 it may justly be considered as the most correct, and the one 
 which ought to be adopted in a proper nomenclature. 
 
 In all the successful instances of entirely new nomenclatures in 
 any science, it is their obvious and pre-eminent utility, which 
 makes up for the disadvantage of their novelty.
 
 112 ON THE NATURE, CAUSES, AND [CH. II, 
 
 Henry VII., and we wish to know, in which, and to 
 what extent in each, a chanj^e ot" value has taken place, 
 we must begin by inquiring what were the money 
 prices of cloth, wheat, and of common labour in the 
 time of Henry VII. compared with what they are now. 
 
 It appears from a statute passed in the fourth of 
 Henry VII. that the ordinary price of a broad yard of 
 the finest scarlet grained, or other grained cloth of the 
 finest make, was 16 shillings, and 16 shillings at that 
 time contained the same quantity of silver as 24 of 
 our shillings, before the late new coinage. At present 
 there is reason to believe that cloth of the same, or 
 probably of superior quality, could be obtained for 
 20 shillings. But the proportion between 24 and 20 
 would express merely the relation between cloth and 
 silver at these difterent periods, and would give us no 
 sort of information as to the relative difficulty with 
 which each of these objects was obtained, or the de- 
 gree in which one or both had altered in value. For 
 this purpose we must refer to the money prices of stan- 
 dard labour. The money price of common agricul- 
 tural labour in the time of Henry VII. was 4 pence a 
 day, containing as much silver as 6 pence of our 
 present money. If we take the present money wages 
 of common labour at 10 shillings a week, or 20 pence 
 a day, and comj)are the price of cloth with this price 
 of labour, it will appear that a yard of fine cloth in the 
 time of Henry VII, would command 48 days labour, 
 and a yard of fine cloth at the present time 1 2 days 
 labour ; from which we may safely infer, that suppo- 
 sing these prices to have been what Adam Smith calls 
 natural prices, the difficulty of obtaining cloth of the 
 same quality, or theordinary supply of cloth compared 
 with the demand, had increased four times. 
 
 Comparing in the same manner silver with labour, 
 it appears that as in the time of Henry VII. 6 pence 
 would command the same quantity of labour of the 
 same character, as 20 pence at tlie present time, sil- 
 ver will appear to have fallen in value 3i times. 
 And further, if we compare corn and labour at these
 
 SEC. VI.] MEASURES OF VALUE. 1 13 
 
 two periods, it will appear that wheat, instead of fal- 
 ling in value like cloth and money, Ijad risen very 
 considerably. In the time of Henry Vll. the price of 
 labour as before stated was 4 pence a day, and the 
 average price of the quarter of wheat was 6s. 3^^. 
 from which it appears that a quarter of wdieat would 
 Duly purchase 18 * days labour, whereas taking labour 
 it 20 pence a day, and the present price of wheat at 
 GO shillings a quarter, the quarter will command 36 
 days labour. The labourer in the time of Henry VH. 
 could purchase a peck and yo of a peck by a day's la- 
 bour ; at present he can only purchase f of a peck ; 
 and altogether the value of wheat has risen in the pro- 
 portion of 10 to above 19, or has nearly doubled.* 
 
 We must of course proceed in the same manner in 
 estimating the values, and the changes in the values of 
 commodities in different countries. 
 
 It is proper, however, to mention, that in taking 
 the average money price of labour in different coun- 
 tries, and at different times, a caution is necessary si- 
 milar to that which is given by Adam Smith, in speak- 
 ing of the general equality of wages. He very justly 
 observes, that they must be in their natural and ordi- 
 lary state, and the sole or principal support of the la- 
 bourer ; and particularly remarks, that the labour of 
 cotters will often be cheaper in appearance than it is 
 in reality. In the cotter system, the labourers receive 
 I certain portion of land from a landlord or farmer, 
 ivhich is paid for in labour, at a very low additional re- 
 muneration when that labour is called for. During 
 the greater part of the year, however, their labour is 
 not wanted, and the cultivation of their own little 
 portion of land not being sufhcient to occupy the time 
 which is left at their own disposal, they are generally 
 
 * The reader should be aware that this refers only to a parti- 
 cular period, from about 1444 to 1.509, when wheat seems to have 
 been unusually plentiful, and low in value. Taking a century 
 earlier, wheat was of about the same value as at present, and a 
 century later it was of much higher value, and the labourer was 
 much worse off than at present. 
 
 I
 
 
 114 ox THE XATURE, CAUSES, AND [CH. 11. 
 
 willing to offer their labour for a very small recom- 
 pense to any body who will employ them. But it is 
 evident that the daily or weekly recompense which 
 such labourers receive in money, either from their 
 proper masters or others, is not the whole price of their 
 labour, though, as Adam Smith observes, it has been 
 considered as the whole of it by many writers ; and 
 in consequence the wages of labour have been in these 
 cases represented as much below the truth. This was 
 the state of things not long since in Scotland ; and it 
 still prevails very generally in Ireland. 
 
 A similar observation applies in those cases wher 
 the wages of labour are paid in part out of the Parish 
 rates. The money which the labourer receives from 
 his employer is not the whole of what goes to the main- 
 tenance of himself and his family. It would not fulfil 
 the necessary conditions of the supply of such labour 
 and cannot therefore be considered as its natural re- 
 muneration in the district in which it is employed. 
 
 A further caution to be noticed is, that in estimatin 
 the price of agricultural labour in any district, it musi 
 be the labour which is actually and with average con 
 stancy employed and paid, and not that the price ol 
 labour which in a temporary deficiency or excess ir 
 the demand for labour, may fall so low, or rise so high 
 that it cannot he maintained. It must not in short b( 
 the average yearly wages of those who are only half 
 employed, or the daily wages of a time of harvest. 
 
 When these circumstances, however, have been pro- 
 perly attended to, and the wages we take as the ordi- 
 nary wages of any particular country or district are 
 the whole of the natural and necessary conditions of 
 the supply of labour, we may fairly presume, that 
 whether the quantity of money, or of necessaries paid 
 to the labourer be great or small, the value of this 
 quantity will be the same. 
 
 In general where the facility of production is great, 
 the labourer will obtain a large quantity of them, as 
 in new colonies favourably circumstanced, and in the 
 United States of America. On the other hand, where
 
 SEC. Vr.] MEASURES OF VALUE. 115 
 
 from the demand of a greatly increased population, cul- 
 tivation is pushed upon poor land, and production is dif- 
 ficult, the labourer, though he may obtain a larger pro- 
 portion of what he produces, will receive a smaller 
 quantity of produce. But it is obvious that the smaller 
 quantity in the latter case is obtained with just as much 
 difficulty as the greater quantity in the former case. 
 
 There are, however, instances where it may at first 
 sight appear that what the labourer receives as wages 
 is produced with facility, and yet the quantity he re- 
 ceives is very small ; but it must always be recollected, 
 that the labour actually employed in the production 
 of wages, is never the sole element of their value. Pro- 
 fits are universally another element, and in some cases, 
 taxes and unnatural rents may raise the value of pro- 
 duce in an unusual proportion beyond the labour em- 
 ployed in its production. In those countries where 
 the sovereign is the proprietor of the soil, if he requires 
 an exorbitant proportion of the produce from all the 
 land that is cultivated, he may leave the poor cultivator 
 only what is just sufficient to support him, although 
 the last land taken into cultivation may be fertile. In 
 this case many of the effects of natural exhaustion and 
 barrenness are produced artificially. Much good land 
 is left uncultivated, and the population presses hard 
 against the limits of that quantity of necessaries which 
 can alone be obtained by the labourer. To earn a very 
 scanty support, he must make a great sacrifice ; and 
 a small quantity of produce thus becomes of great va- 
 lue, owing to the limitation of the supply compared 
 with the demand, notwithstanding the real facility of 
 production. Some parts of India have unquestionably 
 at times exemplified this state of things ;* and such 
 instances form no exception to the general rule, that 
 the value of the wages given to the labourer in any 
 
 * It is said that under Hyder Ally and Tippoo Sultan, f of the 
 produce were often taken as rent. If this were general, much 
 fertile land might be kept out of cultivation, and the labourer might 
 be paid miserably, although the productiveness of labour on the 
 poorest land cultivated was great.
 
 116 ON THE NATURE, CAUSES, AND [CH. II. 
 
 roiintry can only be measured by the quantity of tlie 
 ordinary labour ot" tliat country which he gives in ex- 
 chano-e for them. 
 
 Buttlie Indian labourer receives a smaller quantity 
 of money as well as of necessaries for his days work ; 
 and this is because money also is very difficult of at- 
 tainment in India, the manufactures sent abroad to 
 purchase it, having cost a great mass of labour, pro- 
 fits, and rent. 
 
 It follows that in measuring the value of money at 
 any time and place, and the rise or fall of this value 
 at different times and in dift'erent places, we have only 
 to refer, with the cautions above mentioned, to the 
 money price of common agricultural labour. In every 
 country, this sort of labour, as I have said, may be 
 considered as the standard into which every other kind 
 of labour is resolvable, and no difficulty will arise from 
 the acknowledged fact that a great part of the labour 
 of every country is of a higher value than the standard. 
 If the labour of a common journeyman watchmaker 
 be paid at the rate of ten shillings a day, and that of 
 a common agricultural labourer at twenty-pence, the 
 only eft'ect will be that each day's labour employed on 
 the watch, will communicate to that watch a value in 
 exchano-e arising- from intrinsic causes equivalent to 
 that of six days of the standard labour ; and the power 
 of the standard labour to measure the difficulty of ob- 
 taining the watch will in no degree be impaired. This 
 observation applies to all commodities by whatever 
 kind of labour they are produced. In short, if we are 
 entitled to assume, as I think we are, from what has 
 been said in the preceding sections, that in the natural 
 and ordinary state of things, a given quantity of stan- 
 dard labour applied to the production of any commo- 
 dity, comnumicates to it a given value in exchange 
 arising from intrinsic causes ; and if by value in ex- 
 change, when nothing else is added to the term, we 
 mean value in exchange arising from intrinsic causes, 
 it follows, that, contrary to the usual impressions on 
 the subject, there must be a measHreof the values, of
 
 SEC. VI.] MEASURES OF VALUE. 117 
 
 commodities however composed, and tlia-t measure can 
 only be labour. 
 
 The specific reason, as it appears to me, why it has 
 been generally supposed that there cannot be anything 
 like a standard measure of value, is, that the principal 
 founder of the science of political economy, Adam 
 Smith, has given a definition of value in exchange,* 
 not only different from that meaning in which it is 
 practically, and most frequently, applied, but quite 
 inconsistent with the specific measure of value which 
 he has himself proposed. If by the value of an object 
 in exchange, be meant, as Adam Smith has stated, the 
 power of purchasing other goods which the possession 
 of that object conveys, then, as it is quite certain that 
 such power may increase from the facility of pro- 
 ducing other goods as well as from the difficulty of 
 producing the object in question, it is equally certain 
 that there can be no measure of the value of such ob- 
 ject ; and that when in the same page he speaks of 
 the real measure of this exchangeable value, and af- 
 terwards distinctly proposes the labour which a com- 
 modity will command at that measure, and enters upon 
 an elaborate inquiry into the value of silver during 
 the four last centuries, he proceeds upon a principle 
 in the application of which he contradicts at every 
 step his first definition. These contradictions were no 
 doubt calculated to produce impressions unfavourable 
 to the existence of a standard measure of value. Such 
 at least were the impressions produced on myself. If, 
 however, he had limited his definition of the exchang- 
 able value of a commodity to its power of purchasing 
 arising from intrinsic causes, or the estimation in which 
 it is held determined by the state of the supply com- 
 pared with the demand, and, ordinarily, by the ele- 
 mentary costs of its production, which is unquestion- 
 
 * " The word value, it is to be observed, has two different mean- 
 ings, and sometimes expresses the utility of some particular ob- 
 ject, and sometimes the power of purchasing other goods, which 
 the possession of that object conveys. The one may be called 
 value in use, the other value in exchaiige." Book I. ch. iv. p. 
 42, 6th edition.
 
 118 ON' Tilt NATURE, CAUSES, AND [CH. II. 
 
 ably the sense in which he applies it himself, and in 
 which it is most frequently applied by others, the mea- 
 sure he has proposed would have been consistent with 
 his definition, and both would have been just. 
 
 The question, therefore, of the existence of a mea- 
 sure of value depends upon the sense in which we 
 understand the term value in exchange ; and 1 have 
 fully given my reasons for thinking, not only that the 
 limited sense just adverted to is the sense in which the 
 term is most frequently applied, but that it is the sense 
 in which it is most useful and important to know the 
 exchangeable value of an object, and the only sense 
 in which we can arrive at any practical conclusions 
 approaching towards distinctness and precision, when 
 we speak of a rise or fall in the values of commodities. 
 It is not a little discreditable to a branch of know- 
 ledge wdiich claims to be called a science, that the 
 meaning of a term which is constantly met with in 
 every work on political economy, and constantly heard 
 in every conversation on the subject, should not yet 
 be settled. But while it is most frequently used in a 
 sense diiferent from that in which it has been most 
 frequently defined, it must be allowed that the ques- 
 tion relating to the most correct and useful definition 
 of it, is still open for discussion ; and though it is 
 well known from experience that those who have once 
 publicly supported particular opinions are not likely 
 to change them ; yet looking to the future when it is 
 scarcely possible to suppose that the point should not 
 be settled, every effort to contribute to what is con- 
 ceived to be a just and useful decision on the very 
 elements of the science must be fully warranted. 
 
 The language of political economy has been much 
 facilitated, and much indistinctness and imnecessary 
 circumlocution has been prevented by the definite 
 meaning which has been given to the term price, or 
 nominal value. Though it is allowable to say price 
 in corn, price in cloth, or price in any other article 
 named ; yet, when the term price occurs, as it gene- 
 rally does, without any such adjunct, it is universally 
 understood to mean money price.
 
 SEC. VI.] MEASURES OF VALUE. Ill) 
 
 A similar advantage would be gained, if, when the 
 term value of a commodity, or its value in exchange, 
 were made use of, as it generally is, without any ad- 
 junct, it were universally understood to mean value in 
 exchange arising from intrinsic causes, which value 
 it has been shown may be measured by labour. 
 
 It cannot be too often repeated, that for short pe- 
 riods when the value of money is considered as nearly 
 constant, we uniformly measure the variations of value, 
 as well as the variations of price by money ; and it is 
 quite certain that money, under these circumstances, 
 can only measure the variations in the value of a com- 
 modity arising from intrinsic causes, and has nothing 
 to do with causes which are extrinsic. 
 
 It may indeed sometimes be desirable to know how 
 far a particular commodity, or a certain quantity of 
 money may go in the purchase of other goods ; but 
 even in this case, if it were possible to conceive an 
 article which would represent the mass of all others, 
 it may be doubted whether the power of commanding 
 such an article would give the information wanted. 
 When such inquiries are made, it is generally with a 
 view to the power of the incomes of particular classes 
 to enable them to live in the way they wish.* 
 
 The most interesting and useful inquiry of this kind 
 is to ascertain the amount of necessaries, and of ordi- 
 nary conveniences and luxuries which can be obtained 
 in different countries by the money wages of labour. 
 But if the value of the money wages received by the 
 labourer could be measured by some article which 
 would represent the mass of all purchasable commo- 
 dities, as such a measure would be affected by a large 
 quantity of commodities unconnected with the wants 
 of the poorer classes of purchasers, it would not give 
 us the information required respecting the condition 
 of the labourer. 
 
 On the other hand, if the inquiry related to the power 
 
 * When it is said that the exchangeable value of a commodity 
 is determined by its power of purchasing other goods, it may most 
 reasonably be asked, what ijoods ? It would be absolutely impos- 
 sible to apply all goods as a measure.
 
 120 ox THE NATURE, CAUSES, AND [CH. II. 
 
 of an income of three thousand a year in difierent coun- 
 tries, the prices of many of those commodities which 
 only tended to render the measure incorrect in the for- 
 mer case, would probably be the most important in the 
 latter. 
 
 It is obvious, therefore, that a measure representing- 
 the mass of commodities, or the general power of pur- 
 chasing, even if attainable, which, however, is impos- 
 sible, would not only, as formerly stated, fail entirely 
 in reference to the main characteristic * of value, but 
 would be very unsatisfactory in the inquiries above 
 mentioned. And in such cases we ought never to use 
 the term value, or value in exchange by itself, but add 
 specifically the kind of articles, in the purchaseof which 
 the incomes would be chiefly spent. 
 
 When, therefore, the value of a commodity at any 
 place and time is spoken of, without expressing some 
 object or objects with which it is intended to compare 
 it, we may safely understand by it that value which 
 arises from intrinsic causes ; and if labour, applied in 
 the mode proposed, be considered as the measure of 
 such value, it follows necessarily that neither money, 
 nor any other commodity, can ever correctly perform 
 the functions of such a measure, except while it con- 
 tinues to bear the same relation to labour. 
 
 It has been justly stated by Adam Smith, that corn 
 is a better measure of value from century to century, 
 than money, and the specific reason which he gives for 
 it is, that its relation to labour is more constant than 
 that of any other commodity.'!" But if this be the rea- 
 son why corn at distant periods may be considered as 
 a better measure of value than any other product of la- 
 bour, it implies distinctly that it cannot be so good a 
 measure of value as labour itself. 
 
 It is not a little surprising that the Marquis de Gar- 
 nier, M. Say, and some other writers, seeing the im- 
 possibility of applying the mass of commodities as a 
 
 * The quantity of goods which a commodity will command, does 
 not ascertain the difficulty of getting possession of it. 
 
 t Book I. oh. V. p. 54, fith edit.
 
 SEC. VI.] MEASURES OF VALUE. 121 
 
 measure of value, and wishing, therefore, to refer to 
 someone objectwhich might make the nearest approach 
 to it, should have preferred referring to corn instead 
 of labour, when it is well known that corn not only va- 
 ries greatly in the difficulty of obtaining it, from tem- 
 porary abundance, or scarcity, but that very great al- 
 terations may take place for fifty or sixty years too-e- 
 tlier in the same country, and in diflferent countries, at 
 different periods in the progress of cultivation, for a 
 much longer period. 
 
 Adam Smith himself, in his " Digression concern- 
 ing the value of silver during the four last centuries," 
 by referring most unaccountably to the prices of corn, 
 instead of to the measure which he had himself pro- 
 posed, has fallen into the very gross error of makino- 
 the value of silver ?ise in the proportion of from two 
 to three in the interval between the middle of the four- 
 teenth, and the end of the fifteenth century, instead of 
 falling in the proportion of from three to two, which 
 would have been the just conclusion, if he had applied 
 labour as his measure instead of corn ; and surely he 
 was bound to do this, after saying " Labour, it must 
 always be remembered, and not any commodity, or set 
 of commodities, is the measure not only of silver, but 
 of all other commodities."* In the instance of error to 
 which I have referred, corn had so essentially altered 
 in its relation to labour for fifty or sixty years together, 
 and had fallen so much in value, that a day's labour 
 would purchase nearly two pecks of wheat instead of 
 one. The same quantity of wheat, therefore, instead 
 of representing nearly the same quantity of labour from 
 century to century, as intimated by Adam Smith, re 
 presented very little more than the half of that quan- 
 tity, and his inference respecting the rise in the value 
 of silver was quite reversed. 
 
 Of the doctrine that the term value of a commodity 
 ought never to be used without at the same time spe- 
 cifying distinctly the article with which it is intended 
 to be compared, and that any one article measures this 
 
 * Book I. ch. xi. p. 291, 6th edit.
 
 122 ox THE NATURE, CAUSES, AND [CH. H. 
 
 value as well as any other ; it need only be observed 
 that in this case the term value becomes perfectly su- 
 perfluous and useless. It has exactly the same mean- 
 ing as price, or nominal value, that is, the value of one 
 commodity in any other commodity named ; and if va- 
 lue admits of no other meaning than this, it would cer- 
 tainly be much better to discard it at once from the vo- 
 cabulary of political economy, as only tending to cre- 
 ate confusion. We ought in this case, however, to 
 invent some other term to express what is so much 
 wanted, namely, the relation which commodities bear 
 to the difficulty of obtaining them, or the estimation in 
 which they are held at different times, and in different 
 countries. But as this is the most usual sense in 
 which the term value is now practically applied, we 
 cannot surely do better than retain it in this sense. 
 
 Sectiox VII. — On the Variations in the Value of 
 Money in the same, and different Countries. 
 
 Money is beyond all question the most convenient 
 practical measure of value ; and while its relation to 
 labour is known and constant, it fully answers the pur- 
 pose required. It is, however, subject to variation 
 like all other products ; but this variation is for the 
 most part so slow, that for short periods, as we have 
 stated, its value has been considered as nearly con- 
 stant. 
 
 We cannot be surprised therefore, that writers in 
 tracing the causes of the rise or fall of the values of 
 particular commodities in the progress of society, 
 should be inclined, with a view to illustration, to sup- 
 pose this constancy permanent, in order that they 
 might have a standard to refer to. It was specifically 
 with this view that Mr. Ricardo proposed that gold 
 should be considered as produced always in a parti- 
 cular and uniform manner so as to prevent it from 
 deviating, except in a very trifling degree, from a uni- 
 form value. 
 
 *' If then, (he observes) I may suppose myself to
 
 SEC. VII.] MEASURES OF VALUE. 123 
 
 be possessed of a standard so nearly approaching to 
 an invariable one, the advantage is, that I shall be 
 enabled to speak of the variations of other things w^ith- 
 out embarrassing myself on every occasion vv^ith the 
 consideration of the possible alteration in the value of 
 the medium in which price and value are estimated." 
 
 " To facilitate then the object of this enquiry, al- 
 though I fully allow^ that money made of gold is sub- 
 ject to most of the variations of other things, I shall 
 suppose it to be invariable, and therefore all altera- 
 tions in price to be occasioned by some alterations in 
 the value of the commodity of vv^hich I may be speak- 
 mg. * 
 
 But if, as suggested by Mr. Ricardo, we adopt 
 money obtained under such circumstances as to ren- 
 der profits an element of its value, it is obvious that 
 such a measure must vary with the commodities to be 
 measured when profits either rise or fall. 
 
 We may reasonably enough suppose, by way of il- 
 lustration, that a given quantity of bullion is always 
 obtained by the same quantity of labour, while other 
 commodities may require different quantities, because 
 the circumstance of certain commodities in the pro- 
 gress of society requiring more or less labour in their 
 production, does not necessarily prevent a particular 
 commodity from requiring only the same quantity. 
 But this is not true in regard to the rate of profits, 
 which applies to all commodities, and is allowed to 
 
 * Mr. Ricardo, in the first edition of his work (page 11) has 
 given the following description of an invariable measure of va- 
 lue. " If any one commodity could be found, which now, and 
 at all times required precisely the same quantity of labour to pro- 
 duce it, that commodity would be of unvarying value, and would 
 be eminently useful as a standard by which the variations of other 
 things might be measured. Of such a commodity we have no 
 knowledge, and consequently are unable to fix on any standard of 
 value. It is, however, of considerable use towards attaining a correct 
 theory, to ascertain what the essential qualities of a standard are, 
 that we may know the causes of the variations in the relative va- 
 lues of commodities ; and that we may be enabled to calculate the 
 degree in which they are likely to operate." 
 
 Nothing can be more just and satisfactory than this passage ; 
 but unfortunately it was given up.
 
 124 ox THE XATUKR, CAUSES, AND [ciI. II. 
 
 be nearly tlie same in all tlie different employments 
 of capital. We cannot then make the supposition, 
 that the capitals employed in obtaining' the precious 
 metals always yield 10 per cent., while the capitals 
 engaged in other employments of the same country 
 vary from 20 per cent, to 5 per cent. It is quite cer- 
 tain therefore, that an article chosen for a standard 
 measure of value must not consist of profits as one of 
 its elements. Gold obtained by labour alone, with- 
 out profits would far more completely than on any 
 other supposition, measure the variations in the values 
 of all other commodities. 
 
 It may perhaps be dangerous to dwell much upon 
 any supposition respecting a mode of obtaining the 
 precious metals, which is essentially different from the 
 truth, because high and low prices under such a sup- 
 position will be different from the high and low prices 
 of common language, yet the same terms being used, 
 it will be extremely difficult to avoid confusion. But 
 as Mr. Ricardo was disposed to overlook this objection, 
 and thought that it would on the whole facilitate in- 
 quiry, if he w^ere allowed to consider gold as invariable 
 in value, he was surely bound to adopt such a suppo- 
 sition in regard to the mode of obtaining it, as would 
 make it approach the nearest to the invariability re- 
 quired ; and it cannot be doubted that this would be 
 best accomplished by supposing the same quantity of 
 gold always to be obtained by the same quantity of 
 labour, without the aid of any advances but the food 
 of a single day ; instead of which he has supposed 
 gold to be " produced with such proportions of the 
 two kinds of capital as approach the nearest to the 
 average quantity employed in the production of most 
 commodities."* He is of course compelled to ac- 
 knowledge in the outset, that a measure so consti- 
 tuted, " would be a perfect measure of value for all 
 things produced under the same circumstances pre- 
 cisely as itself, but for no others." But what a pro- 
 digious concession this is ! What a full and entire 
 
 * Principles of Political Economy, ch. I. sec. vi. p. 44, 'kd. 
 edition.
 
 SEC. VII.] (MEASURES OF VALUE. 125 
 
 acknowledgment is it at once that the measure can be 
 of no use. It is really almost like proposing a mea- 
 sure of length which will measure no other commo- 
 dities than those formed of the same materials with 
 itself.* 
 
 What we want is, something to measure the values 
 of commodities under all the variations to which 
 they may be subject ; whether their value consists al- 
 most wholly in the profits of fixed capitals, or in the 
 labour employed by circulating capitals, whether the 
 commodity is completed for sale in two or three days, 
 or two or three years : whether it is composed in part 
 of other ingredients, such as rents, tythes and taxes, 
 or is made up exclusively of labour and profits ; and 
 whether its value is determined by the accidental, or 
 by the ordinary state of the demand and the supply. 
 Now gold obtained by an uniform quantity of labour 
 alone, without capital, would measure all these varia- 
 tions. This then is the measure which Mr. Ricardo, 
 when looking for as near an approximation to a stan- 
 dard measure of value as could be theoretically con- 
 ceived, should have adopted. And of course, if it seems 
 successful with a view to illustration, to assume that 
 the precious metals are invariable in their value in a 
 particular country ; they must be considered as ob- 
 tained by labour without capital, and as always there- 
 fore bearing the same constant relation to labour. 
 
 It may be proper however to observe, that this con- 
 stancy in the money price of labour, can only be a 
 supposition adopted for the sake of illustration ; be- 
 cause money is practically obtained by accumulated 
 labour and profits, as well as immediate labour and 
 profits, which render profits a necessary condition of 
 its supply ; and consequently if the same quantity of 
 labour continue to be applied, while profits rise or 
 
 * The obvious defect of such a measure is, that, whether ap- 
 plied to commodities produced under the same circumstances as 
 itself, or to any others, it can never measure the variations to which 
 they are subject occasioned by the general rise or fall of profits, 
 because it must itself necessarily vary in that respect precisely as 
 they do. — £•(/.
 
 12G ON THE NATURE, CAUSES, AND [CH. IF. 
 
 fall, money must rise or fall like all other commodi- 
 ties in the same predicament. 
 
 With a view to distinguish the necessary tendency 
 to a fail in the value of money occasioned by the ac- 
 cumulation of capital, the progress of cultivation, and 
 the fall of profits, from the incidental fall occasioned 
 by the varying fertility of the mines, and the possession 
 of an abundance of exportable commodities, it might 
 be useful to distino-uish the differences in the value of 
 money into two kinds: first, that which is occasioned 
 by the high or low rate of profit, arising from the pro- 
 gress of capital and cultivation, and which may be de- 
 nominated the necessary cause of the high or low value 
 of money ; and secondly, that which is occasioned by 
 the varying fertility of the mines, the skill w^ith which 
 they are worked, the difficulty or facility of communi- 
 cation with them, and the deficiency or abundance of 
 exportable commodities, which may be denominated 
 the incidental causes of the high or low value of 
 money. These two different kinds of causes will 
 sometimes act in conjunction, and sometimes in oppo- 
 sition, and it may not always be easy to distinguish 
 their separate effects ; but as these effects have really 
 a different origin, it is important to keep them as se- 
 parate as we can. 
 
 The marks which distinguish a fall in the value of 
 the precious metals, arising from what has been called 
 the necessary cause, are, a rise in the money prices of 
 corn, raw produce, and labour, without a general rise 
 in the prices of wrought commodities. All of them, 
 indeed, so far as they are composed of raw products, 
 will have a tendency to rise ; but in a large class of 
 commodities, this tendency to rise will be much more 
 than counterbalanced by the eflfect of the fall of pro- 
 fits. Some, therefore, will rise and some will fall ac- 
 cording to the nature of the capitals employed upon 
 them, compared with those which produce money ; and 
 while tiie money prices of corn and labour very de- 
 cidedly increase, the prices of wrought commodities 
 taken on an average, might possibly remain not far 
 from the same.
 
 SEC. VII.] MEASURES OF VALUE. 127 
 
 On the other hand, when the value of money falls 
 from the incidental causes above noticed, without a 
 fall of profits, there will be a tendency to a propor- 
 tionate rise of all commodities, as well as corn and la- 
 bour, though in some cases it may take a considerable 
 time before the proportionate rise of all objects are 
 completed. This was remarked, at the time of the 
 influx of the precious metals, from the discovery of 
 the American mines, and also on the issue of an abun- 
 dant paper currency, during the war which terminated 
 in 1815. 
 
 As a necessary consequence of the distinction above 
 made, it may be of use to recollect, that whenever a 
 fall in the value of money takes place, without a fall 
 in the rate of profits, an event which is generally open 
 to observation, it is to be attributed to the incidental 
 causes affecting the relations of money and labour, and 
 not to that which is connected with the accumulation 
 of capital, and the necessity of taking poorer land into 
 cultivation, without improvements in agriculture. 
 
 It is certain, however, that those causes operating 
 upon the value of money in different countries and pe- 
 riods, which 1 have called incidental, are much more 
 powerful and prominent than those which take place 
 necessarily in the progress of society, from the fall of 
 profits. Even in such a country as the United States, 
 where capital is scarce and profits are comparatively 
 high, the fall of profits, which will certainly occur, in 
 the progress of wealth and population, will probably 
 be more than counterbalanced by the effect of a dimi- 
 nution in the facility of producing exportable commo- 
 dities. And in reference to the fuller peopled countries 
 of Europe, there is no room for such a fall of profits 
 as can approach to the effects which have arisen, and 
 may yet arise from the increased fertility of the mines ; 
 or the diminished quantity of labour, which in a par- 
 ticular country, owing to superior skill and machinery, 
 is required to purchase the precious metals, while the 
 cost of obtaining them at the mines of America, and 
 the quantity imported into the whole of Europe remain 
 nearly the same.
 
 128 
 
 ox THK XATUUI,, CAUSES, AND 
 
 [cii. 
 
 11. 
 
 The effects of this last cause have never been suffi- 
 ciently appreciated. It is a just and most important 
 observation of Mr. Ricardo, tliat, " Gold and silver 
 having- been chosen for the general medium of circu- 
 lation, are by the competitions of commerce distributed 
 in such proportions amongst the different countries of 
 the world, as to accommodate themselves to the na- 
 tural traffic which would take place if no such metals 
 existed, and the trade between countries was purely 
 a trade of barter."* This distribution is effected by 
 the varying state of the exchanges. If one country 
 possesses peculiar advantages in regard to its export- 
 able commodities, its exchanges will for a time be 
 steadily in its favour, and an influx of the precious 
 metals will take place till the rise in the money price 
 of labour balances the peculiar advantages, and a trade 
 of barter is restored. t On the other hand, if a country 
 loses its advantages in regard to exportable commodi- 
 ties, it will lose a portion of its precious metals by an 
 adverse exchange, and the fall of prices will continue 
 till the reduced money price of labour balances the 
 disadvantages, and the trade of barter returns. 
 
 It is on this principle that the different value of mo- 
 ney in different countries is accounted for. As Mr. Ri- 
 cardo most justly observes, "it will explain to us why 
 the prices of home commodities, and those of great bulk, 
 though of comparatively small value, are, indepen- 
 dently of other causes, higher in those countries where 
 
 * Principles of Political Economy, ch. vii. p. 143, 3rd edit. 
 
 t Practically in countries where a large part of the currency 
 consists of paper, the actual influx of bullion is continually checked 
 by an increased issue of bank notes and bills of exchang-e ; but 
 as long; as there is no difference between paper and gold, the effect 
 in lowering the value of money is precisely the same. Repeated 
 experience appears to have shewn us that in the case of a brisk 
 demand, no difficulty is ever found in furnishing the means of a 
 considerable rise of prices in some classes of commodities, without 
 any tendency to a fall in others. Currency is always at hand. 
 The important question is, whether the exchanges can be main- 
 tained under such prices ; and we know too well that they have 
 often risen higher than the exchanges would allow so as to keep 
 paper and gold together.
 
 SEC. VII.] MEASURES OF VALUE. 129 
 
 manufactures flourish. Of two countries having pre- 
 cisely the same population, and the same quantity of 
 land, of equal fertility in cultivation, with the same 
 knowledge too of agriculture, the prices of raw produce 
 will be the highest in that where the greater skill and 
 the better machinery is used in the manufacture of ex- 
 portable commodities. The rate of profits will proba- 
 bly differ but little ; for wages, or the real reward of the 
 labourer, may be the same in both ; but those wages, 
 as well as raw produce, will be rated higher in money 
 in that country into which, from the advantages atten- 
 ding their skill and machinery, an abundance of money 
 is imported in exchange for their goods." 
 
 The following passage, which occurs in the same 
 chapter of Mr. Ricardo's work, is so just, and so well 
 calculated to dispel some unfortunate prejudices which 
 at present prevail, that I cannot resist the temptation 
 of bringing it afresh before the public* 
 
 "An improvement in the facility of working the 
 mines, by which the precious metals maybe produced 
 with a less quantity of labour, will sink the value of 
 money generally. It will then exchange for fewer com- 
 modities in all countries; but when any particular coun- 
 try excels in manufactures, so as to occasion an influx 
 of money towards it, the value of money will be lower, 
 and the prices of corn and labour will be relatively 
 higher in that country than in any other. 
 
 "This lower value of money will not be indicated by 
 the exchange ; bills may be negotiated at par, although 
 the prices of corn and labour should be ten, twenty, or 
 thirty per cent, higher in one country than another. f 
 
 * I have always considered the first part of Mr. Ricardo's chap- 
 ter (vii) on foreign trade as essentially erroneous ; but the greater 
 part of the chapter is not only new, but unquestionably true, and 
 of the highest importance. 
 
 t Mercantile men are too apt to measure the value of money in 
 different countries by the difference in the exchanges, which merely 
 measures the rate at which the money of one country exchanges for 
 the money of another, and has little to do with the elementary cost 
 of money, or the difficulty of obtaining it in each country, or even 
 with the power of purchasing the mass of those commodities which 
 
 K 
 
 / 
 
 /
 
 130 ON THE XATURE, CAUSES, AND [cil. II. 
 
 Under the circumstances supposed, such a dijfference of 
 })rices is the natural order of things ; and the exchange 
 can only be at par when a sufficient quantity of money 
 is introduced into tlie country excelling in manufac- 
 tures, so as to raise the price of its corn and labour/"* 
 
 If this doctrine be true, and I most firmly believe it 
 is, it appears that a rise in the money price of corn and 
 labour is a necessary consequence of commercial pros- 
 perity ; and though I would distinctly allow, that in 
 reference to our own country at present the corn laws 
 keep the prices of corn and labour higher than they 
 would be, if things were left to take their natural course : 
 yet still it is imquestionable, that the actual prices of 
 corn and labour indicate alow value of money, and not 
 a high value of corn, and that they operate in a totally 
 different way from taxes on the labouring classes. 
 
 It is certainly true that the money wages of indepen- 
 dent labour, notwithstanding their fall of late years, 
 are higher in this country than in any other country in 
 
 are least liable to change in their cost of production. Of all com- 
 modities, those which are exported are the most liable to changes 
 in the cost of their production, and are therefore the last which 
 should be referred to with any view to a measure of the value of 
 money. 
 
 In my first publication on rent in the shape of a pamphlet, which 
 appeared in 1815, two years before the first edition of Mr. Ricar- 
 do's work came out, the following passage occurs in a note : 
 
 " The precious metals are always tending to a state of rest, or 
 such a state of things as to make their movement unnecessary. 
 But when this state of rest has been nearly attained, and the ex- 
 changes of all countries are nearly at par, the value of the precious 
 metals in difierent countries estimated in corn and labour, or in the 
 mass of commodities, is far indeed from being the same. To be 
 convinced of this, it is only necessary to look at England, France, 
 Poland, Ryssia, and India, when the exchanges are at par." 
 
 In reality, the quantity of money in each country is determined 
 by the quantitv wanted to maintain its general exchanges at par; 
 and the greater are the advantages of any country in regard to its 
 exportable commodities, the more money will it retain, and the 
 higher will be the price of its corn and labour, when its exchanges 
 are at par. If England should lose her advantages in this respect, 
 her corn and labour would fall to the level of the rest of Europe, 
 in spite of any corn laws that could be imagined. 
 
 * Ch. vii. p. 156, 3rd edit.
 
 SEC. VII.] MEASURES OF VALUE. 131 
 
 Europe, and there is every reason to believe that the 
 English labourer with his money earning-s can purchase 
 as great a quantity of wheat as any European labourer 
 of the same description. If this be so, it is a distinct 
 proof that the higher price of corn in this country, as 
 compared with the continent, is not at present owing 
 to a greater difficulty of obtaining it, but to a higher 
 scale of money prices, or lower value of money, which 
 operates upon all commodities, though it is more than 
 counterbalanced in that class of commodities where 
 skill and superior machinery have most prevailed, and 
 it is of these that our principal exports will naturally 
 consist. 
 
 In all cases it is of the greatest use and importance 
 to distinguish between a rise or fall in the value of 
 money, and a rise or fall in the values of other com- 
 modities. As long as the varying prices of other com- 
 modities do not affect the money price of the standard 
 labour in any country, we may consider the value of 
 money as remaining the same, and attribute the relative 
 variations between money and commodities to causes 
 exclusively affecting the commodities, such as the 
 cheapness of products arising from the improvements 
 in machinery, or their dearness from an increased 
 elementary cost of production. But if the money price 
 of the standard labour rises generally, it is a sign that 
 the elementary cost of obtaining money has fallen, and 
 that a smaller sum of labour, profits, rent, and taxes, 
 is given to obtain a certain quantity of it. If, on the 
 other hand, the money price of labour falls, it is a sign 
 that the elementary cost of obtaining money has risen, 
 and that a greater sum of labour, profits, rent, and 
 taxes, must be given to obtain the same quantity of 
 it. And we should be aware that these effects may 
 be, and frequently are produced by causes operating 
 in the first instance on commodities. 
 
 This has been practically exemplified in this coun- 
 try of late years. The raised price of corn, commen- 
 cing with the year 1795, and continuing, with but few 
 exceptions, till 1813, occasioned necessarily a rise in
 
 132 ox THK N'ATUUi:, causes, A\D [cH. II. 
 
 the money price of labour. Without such a rise, the 
 conditions of the supply of the quantity of labour de- 
 manded would not have been fulfilled ; and the great 
 relative superiority of our manufacturino- industry at 
 that time over the rest of Europe enabled us to main- 
 tain our exchanges under such a high money price of 
 labour. While this high price continued in the stan- 
 dard labour of the country, with a price of manufac- 
 turing labour generally proportioned to it, it is hardly 
 possible to deny that the elementary cost of obtaining 
 bullion in this country was diminished, whatever might 
 be the case in other countries, or whatever might be 
 the costs of producing bullion at the mouths of the 
 mines from which it was obtained. The fact that the 
 quantity of manufactures which would purchase an 
 ounce of gold would, under the circumstances suppo- 
 sed, purchase a smaller quantity of standard labour 
 than usual, proves at once the fact, that the elements 
 in the cost of obtaining gold in England, consisting of 
 labour, profits, rents, and taxes, were, taken altogether, 
 less in value than before, or, in other words, that the 
 elementar}^ cost of obtaining gold in England had di- 
 minished. 
 
 On the same principle it follows, that the cost of ob- 
 taining gold in England has since decidedly increased. 
 Owing to the great fall in the prices of manufactured 
 goods, a greater quantity of them is required to pur- 
 chase a given quantity of gold — greater than in pro- 
 portion to the cheapness arising from increased skill, 
 and improvements in machinery. Consequently, such 
 goods so exchanged for gold contain a greater value 
 of English labour, profits, rents, and taxes ; and the 
 cost of obtaining gold in England has unquestionably 
 increased. 
 
 How far this increased cost of obtaining bullion may 
 have been aggravated by circumstances, which are 
 known to have diminished considerably the supplies 
 from the American mines since 1810, it is not easy to 
 calculate. It has been said that, reckoning the defal- 
 cation at the highest, it would bear so small a propor-
 
 SEC. VII.] MEASURES OF VALUE. 133 
 
 tion to the whole quantity of bullion in the world, that 
 it could hardly be expected to have a perceptible ef- 
 fect. But the annual supplies of bullion, though they 
 would operate slowly, even in those countries which 
 were most in the way of receiving them, would still 
 operate much more powerfully than in the proportion 
 which they might bear to the whole mass of bullion 
 in the world. We have good reason to believe that 
 it was a very long time before even the great discovery 
 of the mines of America began to operate sensibly on 
 India, China, Tartary, and other parts of Asia, where 
 no inconsiderable part of the bullion of the world is 
 either slowly circulating, or is buried in the earth. It 
 cannot be doubted that the active part of the commer- 
 cial world might be powerfully influenced by the va- 
 rying supply of the American mines, while central Asia 
 was scarcely sensible of any change. 
 
 No very satisfactory conclusion, therefore, can be 
 drawn respecting the cause of the late rise in the va- 
 lue of money in the greater part of Europe, and the 
 United States of America, from the smallness of the 
 defalcation in the mines, as compared with the whole 
 mass of bullion in the world. 
 
 On the other hand, it must be owned that the cir- 
 cumstance of gold having increased in the cost of its 
 production about as much as silver, without our being 
 able to trace an equal defalcation in its supply, seems 
 to indicate that other causes have been more powerful 
 than the state of the mines of gold and silver; and the 
 object of this digression is to shew that such causes are 
 frequently more efficient in altering the value of the 
 precious metals, especially in particular countries, than 
 moderate changes in the state of their annual supply 
 from the mines. 
 
 Adam Smith has justly observed, that the natural 
 effect of the increase of wealth is to raise the value of 
 the precious metals ; and it is quite certain that a great 
 increase of produce and population, supposing the sup- 
 plies of the precious metals, and all other circumstances 
 affecting currency, to remain the same, would render
 
 134 ox THE NATUUE, CAUSES, AXD [CH. II. 
 
 bullion scarcer compared with the demand, and occa- 
 sion the necessity of its being bought at a greater 
 elementary cost. 
 
 Now it is well known that since the war which ter- 
 minated in 1815, there has been a very great increase 
 of produce and population in most of the countries 
 of the commercial world, and from the necessity that 
 has occurred of withdrawing a great part of the paper 
 which was in circulation in these countries during the 
 war, and the frequent failure of credit from overspe- 
 culation subsequently, there is reason to think that the 
 great increase of produce and population has not been 
 balanced by a proportionate increase of currency and 
 credit ; and under these circumstances a fall in the 
 prices of produce and labour was inevitable. 
 
 As long as the price of labour was not affected by 
 these low prices of commodities, the elementary cost 
 of obtaining the precious metals would not be in- 
 creased. Although more cottons would be given for 
 an ounce of gold, this would be merely giving a larger 
 quantity of an article which had fallen in the cost of 
 obtaining it, and tlie elementary cost of obtaining gold 
 might remain the same ; but as soon as the price of 
 the standard labour began generally to fall, more la- 
 bour must be given for the same quantity of silver, 
 and the elementary cost of producing the precious 
 metals would necessarily rise ; and in the actual state 
 of things it seems almost impossible to deny that such 
 an increase of their value has really taken place. 
 
 In all conclusions, however, relating to variations 
 of value, it would be unreasonable to expect that they 
 can be ascertained with the same precision as the va- 
 riations of length and weight. Neither the object to 
 be measured, nor the instrumentof measurement comes 
 within the pale of that certainty which belongs to the 
 stricter sciences. A o-iven lenofth is the same all over 
 the world ; but the estimation in which a commodity 
 is held, its elementary cost of production, and the state 
 of its supply compared with the demand is liable to 
 vary at every ditierent place, and in every different
 
 SEC. VII.] MEASURES OF VALUE. 135 
 
 period. The standard labour also in ditterent coun- 
 tries is neither the same in different districts, nor does 
 it at all times bear the same relation to other kinds of 
 labour ; and it is not always easy to ascertain its mo- 
 ney price, particularly when it is in the act of rising 
 or falling, and the change is not completed. Yet not- 
 withstanding these drawbacks, as great confusion would 
 be occasioned by not distinguishing value from price, 
 as all political economists are constantly in the habit 
 of using the term value ; and as we cannot speak of a 
 rise or fall of value with any consistency, without some 
 kind of measure of it, it is surely of the greatest use 
 at once to adopt that measure which beyond all com- 
 parison approaches the nearest to accuracy, and which 
 in fact may be said to be e.vclusivelij capable of mea- 
 suring value in the sense in which the term is in prac- 
 tice most frequently applied. 
 
 Labour is in this respect entirely distinct from all 
 the pro(^ucts of labour, and the selection of it as a mea- 
 sure of the difficulty of obtaining possession of a com- 
 modity in the place where such commodity is esti- 
 mated, seems to be pointed out by the nature of things, 
 and cannot be called arbitrary. 
 
 A measure, to whatever it may be applied, must it- 
 self increase or decrease according to quantity. The 
 standard labour of a country which is actually em- 
 ployed, and in the district where the demand is made 
 for it, is the only object the value of which is propor- 
 tioned to its quantity^ under the greatest differences 
 both in place and time, both in different countries and 
 in different periods of the same country.
 
 136 
 
 CHAPTER III. 
 
 OF THE RENT OF LAND. 
 
 Section I. — Of the Natio^e and Causes of Rent. 
 
 The rent of land may be defined to be that portion 
 of the value of the whole produce which remains to 
 the owner of the land, after all the outgoings belong- 
 ing to its cultivation, of whatever kind, have been 
 paid, including the profits of the capital employed, 
 estimated according to the usual and ordinary rate of 
 the profits of agricultural capital at the time being. 
 
 It sometimes happens that, from accidental and 
 temporary circumstances, the farmer pays more, or 
 less, than this ; but this is the point towards which 
 the actual rents paid are constantly gravitating, and 
 which is therefore always referred to when the term 
 is used in a general sense. 
 
 Rejit then being the excess of the value of the whole 
 pr oduce, or if estlmatedniTmoneyTlTie e xce^"or the 
 price of the who le produce, above whai is nec^ sary 
 to pay the wagesof the la bour and tlie profits o f the 
 capi tal emp lo yed in cuTtivation, the first ob jecTwh ich 
 presents itself for inquiry, i s, the cause or pauses of 
 this excess of _price. 
 
 IHTer very careful and repeated revisions of the sub- 
 ject, I do not find myself able to agree entirely in the 
 view taken of it, either by Adam Smith, or the Eco- 
 7iomists of the school of M. Quesnay ; and still less, 
 by some more modern writers. 
 
 Almost all these writers^ appear to me to consider 
 reii?*as_J<)ojieaTly^esemb]i in its nature, and the 
 laws by which it is governed,^that-c xc os 6 of -price 
 above the c ost of jjroducti on, which is the charac- 
 teristic of a common monopoly .
 
 v_/ 
 
 SEC. I.] OF THE RENT OF LAND. 137 
 
 Adam Smith, though in some parts of the eleventh 
 chapter of his first book he contemplates rent quite in 
 its true light,* and has interspersed through his work 
 more just observations on the subject than any other 
 writer, has not explained the most essential cause of 
 the ordinary excess of the price of raw produce above 
 its cost of production with sufficient distinctness, 
 though he often touches on it ; and by applying occa- 
 sionally the term monopoly to the rent of land, without 
 stopping to mark its more radical peculiarities, he 
 leaves the reader without a definite impression of the ; 
 real difference between the cause of this excess in the } .,^ 
 pi ice of the necessaries of life, and in common mono- 
 polized commodities. 
 
 Some of the views which the Economists of the 
 school of Quesnay have taken of the nature of rent 
 appear to me also, to be quite just ; but they have 
 mixed them with so much error, and have drawn such 
 unwarranted inferences from them, that what is true 
 in their doctrines has produced little effect. Their 
 great practical conclusion, namely, the propriety of 
 taxing exclusively the neat rents of the landlords, evi- 
 dently depends upon their considering these rents not 
 only as completely disposeable, like that excess of 
 price above the cost of production, which distinguishes 
 a common monopoly, but also that every indirect tax 
 operates as a deduction from neat rents in proportion 
 to its amount. 
 
 M. Say, in his valuable Treatise on Political Eco- 
 nomy, in which he has explained with great clearness 
 - many points not sufficiently developed by Adam Smith, 
 
 * I cannot, however, agree with him in thinking that all land 
 which yields food must necessarily yield rent. The land covered 
 with wood which is successively taken into cultivation in new co- 
 lonies for the production of food, may only pay profits and labour. 
 A fair profit on the capital employed, including, of course, the 
 payment of labour, will always be a sufficient inducement to cul- 
 tivate. But, practically, the cases are very rare, where land is to 
 be had by any body who chooses to take it, and it is true perhaps 
 universally, that all appropriated land which yields food in its na- 
 tural state, yields a rent, whether cultivated or uncultivated.
 
 138 OF THE RENT OF LAND. [CH. 111. 
 
 has not treated the sul^ject of rent in a manner entirely 
 satisfactory. In speaking of thcditierent natural agents 
 which, as well as the land, co-operate with the labours 
 of man, he observes : " Heureusement personne n"a pu 
 dire, le vent et le soleil m'appartiennent, et le service 
 qu'ils rendent doit m'etre paye."* And, though he 
 acknowledges that, for obvious reasons, property in 
 land is necessary, yet he evidently considers rent as 
 almost exclusively owing to such appropriation, and 
 to external demand. 
 
 In the excellent work of M. de Sismondi, De la 
 Ric/iesse Commerciale, he says, in a note on the sub- 
 ject of rent : " Cette partie de la rente fonciere est 
 celle que les Economistes ont decoree du nom du 
 produit )ict, comme etant le seul fruit du travail qui 
 ajoutat quelque chose a la richesse nationale. On 
 pourroit, au contraire, soutenir contre eux, que c'est 
 la seule partie du produit du travail, dont la valeur 
 soit purement nominale, et n'ait rien de reelle : c'est 
 en effet le resultat de Taugmentation de prix qu'ob- 
 tient un vendeur en vertu de son privilege, sans que 
 la chose vendue en vaille reellement davantage."t 
 
 The prevailing opinions among the modern writers 
 in our own country have appeared to me to incline to- 
 wards a similar view of the subject ; and, not to mul- 
 tiply citations, I shall only add, that in a very res- 
 pectable edition of the Wealth of Nations, published 
 by Mr. Buchanan, of Edinburgh, the idea of mono- 
 poly is pushed still farther. And, while former writers, 
 though they considered rent as governed entirely by 
 the laws of monopoly, were still of opinion that this 
 monopoly in the case of land was necessary and useful, 
 Mr. Buchanan sometimes speaks of it even as preju- 
 
 * Vol. ii. p. 124, ^nd edit. In his 5th edition, vol. ii. p. 346, 
 he describes the subject anew, but ho does not seize the ri^ht view 
 of it. He still considers the price of the produce of li\nd which 
 occasions rent too much as the result of a common monopoly. 
 
 t Vol. i. p. 49. M. de Sismondi, in his later work, Nouveuux 
 Principes (V Economic Poiilique, has given a different and more 
 correct view of rent.
 
 SEC 1.] OF THE RENT OF LAND. 139 
 
 dioidl, and as depriving the consumer of what it gives 
 to the landlord. 
 
 In treating of productive and unproductive labour 
 in the last volume, he observes, that,* " The neat sur- 
 plus by which the Economistes estimate the utility of 
 agriculture, plainly arises from the high price of its 
 produce, which, however advantageous to the landlord 
 who receives it, is surely no advantage to the consumer 
 who pays it. Were the produce of agriculture to be 
 sold for a lower price, the same neat surplus would 
 not remain, after defraying the expenses of cultivation ; 
 but agriculture would be still equally productive to 
 the general stock ; and the only difference would be, 
 that, as the landlord was formerly enriched by the high 
 price, at the expense of the community, the community 
 will now profit by the low price, at the expense of the 
 landlord. The high price in which the rent or neat 
 surplus originates, while it enriches the landlord who 
 has the produce of agriculture to sell, diminishes, in 
 the same proportion, the wealth of those who are its 
 purchasers ; and on this account it is quite inaccurate 
 to consider the landlord's rent as a clear addition to 
 the national wealth." 
 
 In other parts of this work he uses the same, or even 
 stronger language, and in a note on the subject of taxes, 
 he speaks of the high price of the produce of land as 
 advantageous to those who receive it, but proportion- 
 ably injurious to those who pay it. " In this view," 
 he adds, " it can form no general addition to the stock 
 of the community, as the neat surplus in question is 
 nothing more than a revenue transferred from one class 
 to another, and, from the mere circumstance of its thus 
 changing hands, it is clear that no fund can arise out 
 of which to pay taxes. The revenue which pays for 
 the produce of land exists already in the hands of those 
 who purchase that produce ; and, if the price of sub- 
 sistence were lower, it would still remain in their hands, 
 where it would be just as available for taxation, as 
 
 * Vol. iv. p. 134.
 
 140 OF THE RENT OF LAND. [CH. III. 
 
 when by a higher price it is transferred to the landed 
 proprietor. '* 
 
 That there are some circumstances connected with 
 rent, which have a strong affinity to a natural mono- 
 i^/ poly, will be readily allowed. The extent of the earth 
 itself is limited, and cannot be enlarged by human de- 
 mand. The inequality of soil occasions, even at an 
 early period of society, a comparative scarcity of the 
 best lands ; and this scarcity is undoubtedly one of 
 the causes of rent properly so called. On this account, 
 perhaps the term partial mojiopohf may be fairly ap- 
 plicable to it. But the scarcity of land, thus implied, 
 is by no means alone sufficient to produce the eft'ects 
 observed. And a more accurate investigation of the 
 subject will show us how different the ordinary excess 
 of the price of raw produce above its cost of produc- 
 tion is, both in its nature and origin, and the laws by 
 which it is governed, from the high price of a common 
 monopoly. 
 
 The causes of the ordinary excess of the price of 
 raw produce above the costs of production, may be 
 stated to be three. 
 
 First, and mainly, That quality of the soil, by which 
 VJ- it can be made to yield a greater quantity of the ne- 
 cessaries of life than is required for the maintenance 
 of the' persons employed on the land. 
 
 Secondly, That ([uality peculiar to the necessaries 
 
 V^ of life, when properly distributed, of creating their 
 
 own demand, or of raising up a number of demanders 
 
 in proportion to the quantity of necessaries produced. 
 
 pv And, thirdly. The comparative scarcity of fertile 
 
 V land, either natural or artificial. 
 
 r The quality of the soil here noticed as the primary 
 
 ^ ycause of the excess in the price of raw produce above 
 
 ^ / the costs of its production, is the gift of nature to man. 
 
 ,It is quite unconnected with monopoly, and yet is so 
 
 . labsolutely essential to the existence of rent, that with- 
 
 T lout it no degree of scarcity or monopoly could have 
 
 /occasioned an excess of the price of raw produce above 
 
 * Vol. iii. p. 212.
 
 SEC. I.] OF THE RENT OE LAND. 141 
 
 what was necessary for the payment of wages and 
 profits. 
 
 If, for instance, the soil of the earth had been such, 
 that, however well directed might have been the in- 
 dustry of man, he could not have produced from it more 
 than was barely sufficient to maintain those whose la- 
 bour and attention were necessary to obtain its pro- 
 ducts ; though, in this case, food and raw materials 
 would have been evidently scarcer than at present, 
 and the land mioht have been in the same manner mo- 
 nopolized by particular owners ; yet it is quite clear, 
 that neither rent nor any essential surplus produce of 
 the land in the form of high profits and high wages 
 could have existed. 
 
 On the other hand, it will be allowed, that in what- 
 ever way the produce of a given portion of land may 
 be actually divided, whether the whole is distributed 
 to the labourers and capitalists, or a part is awarded 
 to a landlord, the ^ower o £,&ucl^-laJtd to-yield- rent j & 
 exactly proportioned to its^ natural or acg nirpd fprti- 
 lityTorto the general surplus whida^it can be made 
 jo^^roduce beyon d^wEaTTs stri ctly necessary to sup- 
 poitthe laboul- and kee ^ju ptLe capital employed upon 
 it. If this surplus be as 1,2, 3, 4, or 5, then its power 
 of yielding a rent will be as 1, 2, 3, 4, or 5 : and no 
 degree of monopoly — no^ possible increase of extenial 
 demand can essentially alter~tEese dif feren t powers. 
 *' But^IT no rent can ex isF without this surpl us, and 
 if the power of part icular so TTs to pay rpnf T>p pr opnr. 
 tioned to this suij)hjs, it follows that this surplus frv^^ 
 the land, ari sing frornlts fertility, must evidentiyLhfi. 
 pon sidered as tlie foundation_or main cause of all rent. 
 
 Still h owever, th is surp lus, necessary and important 
 as it IS, w oiiHliorb e sure oF possessing^a yalue whicL 
 \vould enable it to command a prop ortion ate quantity 
 of labour and oth^ r commoditips, if it ha^l nnt a pnw^y 
 of raisingjiy)_a^pu]atiorLJtajQ£^ ssdj^ by_tli§^ 
 
 artic les produ ced in return^^ cr eating a n effecti vejda- 
 mand for it. 
 
 It has been sometimes argued, that it is mistaking
 
 142 OF THE RENT OF LAND. [cH. III. 
 
 the principle of population to imagine, that the in- 
 crease of food or of raw produce alone can occasion 
 a proportionate increase of population. This is no 
 doubt true ; but it must be allowed, as has been justly 
 observed by Adam Smith, that "when food is provided, 
 it is comparatively easy to find the necessary clothing 
 and lodging.'"* And it should always be recollected, 
 that land does not produce one commodity alone, but 
 in addition to that most indispensable of all articles 
 — food, it produces the materials for clothing, lodg- 
 ing, and firing. t 
 
 hjstherefore. strictly .true,-tliat laud produces the 
 necessaries of life — produces the means by which^ and 
 by which alone, an increase of [)eoj)le may be brought 
 into being and supported. In this respect it is fun- 
 damentally difi^erent from every other kind of machine 
 known to man ; and it is natural to suppose that the 
 use of it should be attended with some peculiar eflfects. 
 
 If an active and industrious family M^ere possessed 
 of a certain portion of land, which they could culti- 
 vate so as to make it yield food, and the materials of 
 clothing, lodging, and firing not only for themselves 
 but for five other families, it follows, from the prin- 
 ciples of population, that, if they properly distributed 
 their surplus produce, they would soon be able to com- 
 mand the labour of five other families, and the value 
 of their landed produce would soon be worth five times 
 as much as the value of the labour which had been 
 employed in raising it. But if, instead of a portion 
 of land which would yield all the necessaries of life, 
 they possessed only, in addition to the means of their 
 
 * Book I. c. xi. p. 255, 6th edit. 
 
 t It is however certain that, if either these materials be wanting, 
 or the skill and capital necessary to work them up be prevented 
 from forming, owing to the insecurity of property or any other 
 cause, the cultivators will soon slacken in their exertions, and the 
 motives to accumulate and to increase their produce will greatly 
 diminish. But in this case there will be a very slack demand for 
 labour : and, whatever may be the nominal cheapness of provi- 
 sions, the whole body of labourers will not really be able to com- 
 mand such a portion of the necessaries of life, including, of course, 
 clothing, lodging, &^c. as will occasion an increase of population.
 
 SEC. I.] OF THE RENT OF LAXD. 143 
 
 own support, a machine which would produce hats 
 or coats for fifty people besides themselves, no efforts 
 which they could make would enable them to ensure 
 a demand for these hats or coats, and give them in re- 
 turn a command over a quantity of labour considerably 
 greater than their fabrication had cost. For a long 
 time, and by possibility for ever, the machine might 
 be of no more value than that which would result from 
 its making hats or coats for the family. Its further 
 powers might be absolutely thrown away from the 
 want of demand ; and even when, from external causes 
 totally independent of any efforts of their own, a po- 
 pulation had risen to demand the fifty hats, other si- 
 milar machines might be made, and the value of the 
 hats in the command of labour and other commodities 
 might permanently exceed but very little the value 
 of the labour employed in making them. 
 
 After the new cotton machinery had been intro- 
 duced into this country, a hundred yards of muslin of 
 a certain quality would not probably command so much 
 labour as twenty-five yards would before ; because the 
 supply had increased in a greater degree than the de- 
 mand, and there was no longer a demand for the whole 
 quantity produced at the same price. But after great 
 improvements in agriculture have been adopted upon 
 a limited tract of land, a quarter of wheat will in a 
 short time command just as much labour as before ; 
 because the increased produce, occasioned by the im- 
 provements in cultivation, if properly distributed, is 
 found to create a demand proportioned to the supply, 
 which must still be limited ; and the value of corn is 
 thus prevented from falling like the value of muslins. 
 Tlius_the^ fertility of th e land gives the power of 
 y ielding a rent, by yieldmg a surplus quantity of ne^ 
 cessaries_ beyond the w ants of the cultivators ; and the '\ 
 peculiar q uality belonging to the necessaries ot life, ; 
 wlien_^roperly _ distributed , tends strong'iy and cor> n 
 st^ ntly to give a value to this surplus by raising up a \\ 1/ 
 po pulation to demand it. 
 
 "These qualities of the soil and of its products have 
 been, as might be expected, strongly insisted upon by 
 
 /"
 
 144 OF THE RENT OF LAND. [CH. III. 
 
 the Economists in different parts of tlieir works ; and 
 they are evidently admitted as truths by Adam Smith, 
 in those passages of the Wealth of Natioiis, in which 
 he approaches the nearest to their doctrines. But 
 modern writers have in general been disposed to over- 
 look them, and to consider rent as regulated upon the 
 principles of a common monopoly, although the dis- 
 tinction is of great importance, and appears obvious 
 and striking in almost any instance that we can take. 
 If the fertility of the mines of the precious metals 
 all over the world were diminished one half, it will 
 be allowed that, as population and wealth do not ne- 
 cessarily depend upon gold and silver, such an event 
 might not only be consistent with an undiminished 
 amount of population and wealth, but with a consider- 
 able increase of both. In this case however it is quite 
 certain that the rents, profits, and wages paid at the 
 different mines in the world might not only not be 
 diminished, but might be considerably increased. But 
 if the fertility of all the lands in the world were to be 
 diminished one half;* inasmuch as population and 
 wealth strictly depend upon the quantity of the ne- 
 cessaries of life which the soil affords, it is quite ob- 
 vious that a great part of the population and wealth 
 of the world would be destroyed, and with it a great 
 part of the effective demand for necessaries. The 
 largest portion of the lands in most improved coun- 
 tries would be thrown completely out of cultivation, 
 and wages, profits, and rents, particularly the latter, 
 would be greatly diminished on all the rest. There 
 is hardly any land in this country employed in pro- 
 ducing corn, which yields a rent equal in value to the 
 
 * Mr. Ricardo has supposed a case (p. 490, third edit.) of a 
 diminution of fertility of one-tenth, and he thinks that it would 
 increase rents by pushing capital upon less fertile land. I think, 
 on the contrary, that in any well cultivated country it could not 
 fail to lower rents, by occasioning the withdrawing of capital from 
 the poorest soils. If the last land before in use would do but little 
 more than pay the necessary labour, and a profit of 10 per cent, 
 upon the capitalemployed, a diminution of a tenth part of the gross 
 produce would certainly render many poor soils no longer worth 
 cultivating, and would therefore reduce rents.
 
 SEC. I.J OF THE REXT OF LAXD. 145 
 
 wages of the labour and the profits of tlie stock uo- 
 cessary to its cultivation. If this be so, then, in the 
 case supposed, the quantity of produce being only 
 the half of what was before obtained by the same la- 
 bour and profits, it may be doubted whether any land 
 in England could be kept in tillage. 
 
 The produce of certain vineyards in France, which, 
 from the peculiarity of their soil and situation, exclu- 
 sively yield wine of a certain flavour, is sold, of course, 
 at a price very far exceeding the cost of production, 
 including ordinary profits. And this is owing to the 
 greatness of the competition for such wine, compared 
 with the scantiness of its supply, which confines the 
 use of it to so small a number of persons that they are 
 able, and, rather than go without it, willing to give 
 an excessively high price. But, if the fertility of 
 these lands were increased so as very considerably to 
 increase the produce, this produce might so fall in 
 value as to diminish most essentially the excess of its 
 price above the cost of production. While, on the 
 other hand, if the vineyards were to become less pro- 
 ductive, this excess might increase to almost any ex- 
 tent.* 
 
 The obvious ^cause of these effects is, that, in all 
 co fnmon monopolies, the demand is exterior to, and in - 
 dependen t of, the production itself. The number of 
 persons, who might have a taste for scarce wines, and 
 would be desirous of entering into a competition for 
 
 * ;\Ir. Ricardo observes, (p. 492, third edit.) in answer to this 
 passage, that, "given the high price, rent must be high in propor- 
 tion to abundance and not scarcity," whether in peculiar vineyards 
 or on common corn lands. But this is begging the whole of the 
 question. The price cannot be given. By the force of external 
 demand and diminished supply the produce of an acre of Cham- 
 paigne grapes might permanently command fifty times the labour 
 that had been employed in cultivating it ; but, supposing the la- 
 bourers employed in cultivation to live upon the corn they produce, 
 no possible increase of external demand or diminution of supply 
 could ever enable the produce of an acre of corn to command per- 
 manently so many labourers as it would support : because in that 
 case the labourer would be absolutely without the means of stip- 
 porting a family, and keeping up the population. 
 
 L
 
 14G OF THE RENT OF LAND. [CH. Ill 
 
 the purchase of them, might increase almost indefi- 
 nitely, while the produce itself was decreasing ; and its 
 price, therefore, would have no other limit than the 
 numbers, powers, and caprices of the competitors for 
 it. 
 
 In the production of the nec^^jres of life, on the 
 co ntraryT tlic deman d is dependent on the produce it- 
 seli, and the etfects are therefore widely diti 'erenll Tn 
 this case it is physically impossible that, beyond a cer- 
 tain narrow limit, the number of demanders should in- 
 crease, while the quantity of produce diminishes, since 
 the demanders can only exist by means of the produce. 
 
 In all common monopolies, an excess of the value of 
 the produce above the value of the labour and ordinary 
 profits required to obtain it, may be created solely by 
 external demand, and a scanty supply. In the partial 
 monopoly of the land which produces necessaries, such 
 an excess can only be permanently created by the fer- 
 tility of the soil. 
 
 In common monopolies, and all productions except 
 necessaries, the laws of nature do very little towards 
 proportioning their value in exchange to their value in 
 use. The same quantity of grapes or cottons might, 
 under different circumstances, be worth permanently 
 three or three hundred days labour. In the production 
 of the necessaries of life alone, the laws of nature are 
 constantly at work to regulate their exchangeable va- 
 lue according to their value in use ; and though from 
 the great difference of external circumstances, and par- 
 ticularly the greater plenty or scarcity of land, this is 
 seldom or never fully effected ; yet the exchangeable 
 value of a given quantity of necessaries always tends 
 to approximate towards the value of the quantity of 
 labour which it can maintain in such a manner as to 
 support at least a stationary population, or in other 
 words, to its value in use. 
 
 In all common monopolies, the price of the produce, 
 and consequently the excess of price above the cost of 
 production, may increase without any definite bounds. 
 I n tlie partial m on<^ pn1y of t h e land which prod uces 
 
 1
 
 SEC. I.] OF THE RENT OF LAND. 147 
 
 nec essaries, the excess of t heir price above the cos t of 
 production is sub jected to nn impnssnhlo Hirnt- This ^ 
 limit is the surplus of necessaries which the land can '''^*-'tV. 
 be made to yield beyond the lowest wants of the cul- ^ j^< 
 tivators, and is strictly dependent upon the natural or 
 acquired fertility of the soil. Increase this fertility, 
 the limit will be enlarged, and the land may be made 
 to yield a high rent ; diminish it, the limit will be con- 
 tracted, and a high rent will become impossible; di- 
 minish it still further, the limit will coincide with the 
 cost of production, and all rent will disappear. 
 
 In short, in the one case, the power of the produce 
 to exceed in price the cost of the production depends 
 upon the degree of the monopoly, and of the external 
 demand, in the other, this power depends entirely 
 upon the degree of fertility, natural or acquired. This 
 is surely a broad and striking distinction.* 
 
 Is it, then, possible to consider the ordinary excess 
 of the price of the necessaries of life above their costs 
 of production as regulated upon the principle of a 
 common monopoly? Is it possible, with M. de Sis- 
 mondi, to regard rent as the sole produce of labour, 
 which has a value purely nominal, and the mere re- 
 sult of that augmentation of price which a seller ob- 
 tains in consequence of a peculiar privilege: or, with 
 Mr. Buchanan, to consider it as no addition to the na- 
 tional wealth, but merely as a transfer of value, ad- 
 vantageous only to the landlords, and proportionably 
 injurious to the consumers ?t 
 
 Must we not, on the contrary, allow that rent is the 
 
 * Yet this distinction does not appear to Mr. Ricardo to be well 
 founded ! c. xxxi. p. 492, 3rd edit. 
 
 t It is extraordinary that Mr. Ricardo (p. 486) should have 
 sanctioned these statements of M. Sismondi and Mr. Buchanan. 
 Strictly, according to his own theory, the price of corn is always 
 a natural or necessary price, and, independent of agricultural im- 
 provements, the natural and necessary condition of an increased 
 supply of produce. In what sense then can he agree with these 
 writers in saying, that it is like that of a common monopoly, or 
 advantageous only to the landlords, and proportionably injurious 
 to the consumers ?
 
 148 OF THE UF.XT OF LAND. [CH. III. 
 
 natural result of a most inestimable quality in the soil, 
 which God has bestowed on man — the (juality of beinpf 
 able to main tain more person s than ar e nece ssary to 
 "work it ? Ts it not a part, ami we shiaJTsee farther on 
 that it is an absolutely necessary part, of that general 
 surplus produce from the land, which has been justly 
 stated to be the source of all power and enjoyment ; 
 and without which, in fact, there would be no cities, no 
 military or naval force, no arts, no learning, none of the 
 finer manufactures, none of the conveniences and luxu- 
 ries of foreign countries, and none of that cultivated 
 and polished society, which not only elevates and dig- 
 nifies individuals, but which extends its beneficial in- 
 fluence through the whole mass of the people?* 
 
 Section tl. — On the necessary Separation of the Rent 
 of Land from the Profits of the Cultivator and the 
 Wages of the Labourer. 
 
 So much of violence, and unjust monopoly has attended 
 the appropriation of land in the early times of all long 
 settled states, that in ord,er to see the natural founda- 
 tion and natural progress of rents, it is necessary to di- 
 
 * After what had been said and written on the subject of rent, 
 I confess I was a good deal surprised that Colonel Perronet Thomp- 
 son should come forward with a pamphlet, entitled " The True 
 Theory of Rent, in opposition to Mr. Ricardo and others," and 
 should state that the simple cause of rent is every where the same 
 as that which gives rise to the rent of the vineyard which produces 
 Tokay. The statement is the more remarkable in Colonel Thomp- 
 son, as in the course of his pamphlet he acknowledges the truth 
 of the main results of the new theory ; which are. 
 
 First, That in a progressive country with gradations of soil, 
 which is the state of almost every known country, the actual ave- 
 rage price of corn is a necessary price, or the price necessary to 
 obtain the actual amount of the home supply under the existing 
 state of agricultural skill, and existing value of money. 
 
 Secondly, That no degree of monopoly could make land which 
 produces the food on which the people live yield a rent, if it did 
 not yield a greater produce than was sufiicicnt to support the cul- 
 tivators. 
 
 Thirdly, Tliat the ordinary price of corn is so stricllv limited that
 
 SEC. II.] OF TilK KENT OF LAND. 149 
 
 rect our attention to the establishment and progressive 
 cultivation of new colonies. In the settlement of a new 
 colony, where the knowledge and capital of an old so- 
 ciety are employed upon fresh and fertile land, the 
 surplus produce of the soil shews itself chiefly in high 
 profits, and high wages, and appears but little in the 
 shape of rent. While fertile land is in abundance, and 
 may be had by whoever asks for it, nobody of course 
 will pay a rent to a landlord. But it is not consistent 
 with the laws of nature, and the limits and quality of 
 the earth, that this state of things should continue. 
 Diversities of soil and situation must necessarily exist 
 in all countries. All land cannot be the most fertile: 
 all situations cannot be the nearest to navigable rivers 
 and markets. But the accumulation of capital beyond 
 the means of employing it with the same returns on 
 land of the greatest natural fertility, and the most ad- 
 vantageously situated, must necessarily lower profits; 
 while the rapid increase of population will tend to 
 lower t the wages of labour. 
 
 it cannot by possibility continue so high as to prevent the ordinary 
 money wages of the labouring classes from purchasing more corn 
 than is required to support the individuals actually employed. 
 
 Now, it is unquestionably true, First, that the price of Tokay 
 is not a necessary price. The same quantity would be produced, 
 although the price were considerably lower. Secondly, That nei- 
 ther the purchasers of Tokay, nor the cultivators of it, live upon 
 the produce. And Thirdly, That there is no limit to the price of 
 Tokay, but the tastes and fortunes of a few opulent individuals. 
 
 How then can it possibly be said with truth, that the simple cause 
 of rent is every where the same as that which gives rise to the rent 
 of the vineyard which produces Tokay; and how entirely inappli- 
 cable is a reference to Tokay as an illustration of the true theory 
 of rent. 
 
 With regard to the grand fallacy on which Colonel Thompson 
 dwells so much, it is obvious that the incautious language in which 
 the new doctrine of rent has been sometimes announced, does not 
 affect its substance. The errors arising from this cause had been 
 pointed out in the first edition of this work long before Colonel 
 Thompson entered upon the question. 
 
 t After what has been stated respecting the constancy of the 
 value of labour in the last chapter, it will be understood that when- 
 ever 1 speak of high or low wages, or of the rise oi fall of wage?, 
 I always mean to refer to their greater or less amount, or to the in-
 
 150 OF THE RENT OF LAND. [ciI. HI. 
 
 The costs of production in corn wages and profits 
 will thus be diminished ; but tlie value of the pro- 
 duce, that is, the quantity of labour which it can com- 
 mand, instead of diminishing, will have a tendency to 
 increase. There will be an increasing number of 
 people demanding subsistence, and ready to otler their 
 services in any way in which they can be useful. The 
 value of food will be in excess above the value of the 
 labour and profits which are the condition of its sup- 
 ply; and this excess is that portion of the general sur- 
 plus derived from land which has been peculiarly de- 
 nominated rent. 
 
 The quality of the earth first mentioned, or its power 
 to yield a greater quantity of the necessaries of life 
 than is required for the maintenance of the persons 
 employed in cultivation, is obviously the foundation 
 of this rent, and the limit to its possible increase. The 
 second quality noticed, or the tendency of an abund- 
 ance of food to increase population, is necessary both 
 to give a value to the surplus of necessaries which 
 the cultivators can obtain on the first land cultivated ; 
 and also to create a demand for more food than can 
 be procured from the richest lands.* And the third 
 cause, or the comparative scarcity of fertile land, 
 which is clearly the natural consequence of the se- 
 cond, is finally necessary to separate a portion of the 
 general surplus from the land, into the specific form 
 of rent to a landlord-t 
 
 crease or diminution of the quantify of necessaries, &c. awarded 
 the labourer, or of the money wherewith he purchases those neces- 
 saries, and which is variable in its value. 
 
 It would, perhaps, have been better, in order to avoid ambi- 
 guity, always to have applied these latter terms to wages, instead 
 of the former ones, but the expressions high and low wages, and 
 the rise and fall of wages, being so constantly used in common 
 conversation, and being always understood in the sense in which 
 I explain them, the retaining them is not likely to create confusion 
 in the mind of the reader. 
 
 * If, conniiencing with a new colony the increase of popula- 
 tion did not create a demand for more food than could be pro- 
 duced with the same profits from the richest lands, no rent could 
 arise, and no inferior laud could be taken into cultivation. 
 
 + Mr. llicardo quite misunderstood me, when he represents me 
 us saying that rent immediately and necessarily rises or falls with
 
 SEC. II.] OF THE RENT OF LAND. 151 
 
 Nor is it possible that in a country increasing in 
 wealth and population, the whole produce could con- 
 tinue to be divided only between the capitalists and 
 labourers, as the profits of capital and the wages of la- 
 bour. If profits and corn wages were not to fall, then, 
 without particular improvements in cultivation, none 
 but the very richest lands could be brought into use. 
 The fall of profits and wages which practically takes 
 place, undoubtedly transfers a portion of produce to 
 the landlord, and forms a part, though, as we shall 
 see farther on, only a part of his rent. But if this 
 transfer can be considered as injurious to the con- 
 sumers, then every increase of capital and population 
 not resulting specifically from improvements in agri- 
 culture, must be considered as injurious ; and a coun- 
 try which might maintain well ten millions of inhabi- 
 tants ought to be kept down to a million. The trans- 
 fer from profits and wages, and such a value of the 
 produce as yields rent, which have been objected to 
 as injurious, and as depriving the consumer of what 
 it gives to the landlord, are absolutely necessary in 
 order to obtain any considerable addition to the wealth 
 and numbers of the first settlers in a new country ; 
 and are the natural and unavoidable consequences of 
 that increase of capital and population for which na- 
 ture has provided in the propensities of the human 
 race. 
 
 the increased or diminished fertility of the land. (p. 489, 3d edit.) 
 How far my former words would bear this interpretation the 
 reader must judge : but I certainly could not be aware that they 
 would be so construed. Having stated three causes as neces- 
 sary to the production of rent, I could not possibly have meant to 
 say that rent would vary always and exactly in proportion to one 
 of them. I distinctly stated, indeed, that in new colonies, the 
 surplus produce from the land, or its fertility, appears but little in 
 the shape of rent. Surely he expressed himself more inadver- 
 tently while correcting me, by referring to the comparative scarcity 
 of the most fertile land as the only cause of rent, (p. 490, 3d edit.) 
 although he has himself acknowledged, that without positive fer- 
 tility, no rent can exist, (p. 491 .) If the most fertile land of any 
 country were still very poor, such country would yield but very 
 little rent, however scarce such land might be ; and if there were 
 no excess of necessaries above what are required for the main- 
 tenance of the cultivators, there would be no excess of price.
 
 152 OF Tilt REST OF LAND. [CH. III. 
 
 When such an accumulation of capital has taken 
 place, as to render the returns of an additional quan- 
 tity employed on the lands first chosen less than could 
 be obtained from inferior land,* it must evidently 
 answer to cultivate such inferior land. But the cul- 
 tivators of the richer land, after profits and wages had 
 fallen, if they paid no rent, would cease to be mere 
 farmers, or persons living- upon the profits of agricul- 
 tural stock ; they would evidently unite the charac- 
 ters of landlords and farmers — a union by no means 
 uncommon, but one which does not alter in any de- 
 gree the nature of rent, or its essential separation from 
 profits and wages. 
 
 If the profits of capital on the inferior land taken 
 into cultivation were thirty per cent., and portions of 
 the old land would yield forty per cent., ten per cent, 
 of the forty would obviously be rent by whomsoever 
 received : and when capital had further accumulated 
 and corn wages fallen f on the more eligible lands of 
 a country, other lands, less favourably circumstanced 
 with respect to fertility or situation, might be occu- 
 pied with advantage. The quantity of produce re- 
 quired to replace wages and profits, having fallen, 
 poorer land, or land more distant from rivers and 
 markets, though yielding at first no rents, might fully 
 repay these expenses, and fully answer to the culti- 
 vator. And again, when either the profits of stock, 
 or the corn wages of labour, or both, have still further 
 fallen, land still poorer or still less favourably situated, 
 
 * The immediate motive for the cultivation of fresh land can 
 only be the prospect of employing an increasing capital to greater 
 advantage than on the old land. 
 
 t When a given value of capital yields smaller returns, whether 
 on new land or old, the loss is generally divided between the la- 
 bourers and capitalists, and wages and profits fall at the same time. 
 This is quite contrary to Mr. Ricardo's language. But the wages 
 we refer to are totally dilierent. He speaks of the mere labour 
 cost of producing the necessaries of the labourer ; I speak of the 
 necessaries themselves. The reader will be aware that when corn 
 wages have fallen, the value of corn has risen, owing to a greater 
 intensity of demand for it, or the power and will to purchuac it by 
 the sacrifice of a greater cpiawtity of labour.
 
 SEC. II.] Ol" THE RENT OF LAND. 153 
 
 might be taken into cultivation. And at every step 
 of this kind it is clear, that the rent of land must rise. 
 It may be laid down, therefore, as an incontrover- 
 tible truth, that as a nation reaches any considerable 
 degree of wealth, and any considerable fullness of po- 
 pulation, the separation of rents, as a kind of fixture 
 upon lands of a certain quality, is a law as invariable 
 as the action of the principle of gravity ; and that 
 I'ents are neither a mere nominal value, nor a value 
 unnecessarily and injuriously transferred from one set 
 of people to another ; but a most important part of the 
 whole value of the annual produce, necessarily result- 
 ing from its continued increase, and placed by the laws 
 of nature on the land, by whomsoever possessed, whe- 
 ther by few or many, whether by the landlord, the 
 crown, or the actual cultivator. 
 
 i This then is the mode in which rent would separate 
 
 I itself from profits and wages, in a natural state of things, 
 the least interrupted by bad government, or any kind 
 of unnecessary monopoly ; but in the different states in 
 which mankind have lived, it is but too well known 
 that bad governments and unnecessary monopolies 
 have been frequent ; and it is certain that they will 
 
 i essentially modify this natural progress, and often oc- 
 
 I casion a premature formation of rent. 
 
 In most of the great eastern monarchies, the sove- 
 
 ! reign has been considered in the light of the owner 
 
 I of the soil. This premature monopoly of the land 
 joined with the two properties of the soil, and of its 
 products first noticed, has enabled the government to 
 claim, at a very early period, a certain portion of the 
 
 I produce of all cultivated land ; and under whatever 
 name this may be taken, it is essentially rent. It is 
 an excess both of the quantity, and of the value of what 
 
 I is produced above the costs of cultivation.* 
 
 * This view of the subject includes all the ditFerent kinds of 
 
 rent referred to by Mr. Jones, in his late valuable account of the 
 
 state of rents, and the various modes of paying labour in different 
 
 parts of the world. Whether the labourer is paid in money, in 
 
 ■ produce, or by a portion of land which he is to work himself with
 
 lo4 OF THE RENT OF LAND. [cil. 111. 
 
 But in most of these nionarcliies tlicre was a p;reat 
 extent of fertile territory ; the natural surplus of the 
 soil was very considerable ; and while the claims upon 
 it were moderate, the remainder was suthcient to alibrd 
 such profits and wages as would allow of a great in- 
 crease of population. 
 
 It is obvious, however, that it is in the power of a 
 sovereign who is owner of the soil in a very rich ter- 
 ritory to obtain, at an early stage of improvement, an 
 excessive rent. He might, almost from the first, de- 
 mand all that was not necessary to allow of a moderate 
 increase of the cultivators, which, if their skill were 
 not deficient, would afford him a larger proportio/i of 
 the whole produce in the shape of a tax or rent, than 
 could probably be obtained at any more advanced 
 period of society ; but then of course only the most 
 fertile lands of the country could be cultivated ; and 
 profits, wages and population would come to a prema- 
 ture stop. 
 
 It is not to be expected that sovereigns should push 
 their rio:hts over the soil to such an extreme extent, 
 as it would be equally contrary to their own interest, 
 and to that of their subjects ; but there is reason to 
 believe that in parts of India, and in many other south- 
 ern and eastern countries, and probably even in China, 
 the progress of taxation on the land, founded upon the 
 sovereign's right to the soil, together with other cus- 
 tomary payments out of the raw produce, have forci- 
 bly and prematurely lowered the profits of capital, 
 and the wages of labour on the land, and have thrown 
 great obstacles in the way of progressive cultivation 
 and population in latter times, while much good land 
 has remained waste. This will always be the case, 
 
 a part of his labour, while he gives the other part to his lord, the 
 foundation of rent is exactly the same, depending always upon the 
 value of the excess of what the whole of the lord's land produces, 
 above that which under the actual circumstances is received by 
 the cultivators, and the amount of rent which can be received from 
 a given extent of land will rise according to all the different de- 
 grees of fertility above that which will only support the actual 
 cultivators.
 
 SEC. II.] OF THE RENT OF LAND. 155 
 
 when, owing to an unnecessary monopoly, a greater 
 portion of the surplus produce is taken in the shape of 
 rent or taxes, than would have been separated by the 
 natural fall of profits and wages occasioned by the in- 
 crease of capital and population. But whatever may 
 be the nature of the monopoly of land, whether ne- 
 cessary or artificial, it will be observed that the power 
 of paying a rent or taxes on the land, is completely 
 limited by its fertility ; and those who are disposed 
 to underrate the importance of the two first causes of 
 rent which I have stated, should look at the various 
 distributions of the produce in kind which take place 
 in many parts of India, where, when once the mono- 
 poly has enabled the sovereign to claim all the pro- 
 duce which remains above what is required for the 
 cultivation of the soil, his resources obviously depend 
 upon the surplus of necessaries which the land yields, 
 and the power of these necessaries to command la- 
 bour. 
 
 It may be thought, perhaps, that rent could not be 
 forcibly and prematurely separated from profits and 
 wages so as unnaturally to reduce the two latter, be- 
 cause capital and labour would quit the land if more 
 could be made of them elsewhere ; but it should be 
 recollected, that the actual cultivators of the soil in 
 these countries are generally in a very low and de- 
 graded condition ; that very little capital is employed 
 by them, and scarcely any which they can remove and 
 employ in another business ; that the surplus produce 
 possessed by the government soon raises up a popu- 
 lation to be employed by it, so as to keep down the 
 price of labour in other departments to the level of 
 the price in agriculture ; and that the small demand 
 for the products of manufacturing and commercial in- 
 dustry, owing to the poverty of the great mass of 
 society, affords no room for the employment of a large 
 capital, with high profits in manufactures and com- 
 merce. 
 
 On account of these causes which tend to lower 
 profits, and the difficulty of collecting money, together
 
 15G OF THE KENT OF LAND. [c». III. 
 
 with the risk of lending it which tends to raise interest, 
 1 have long- been of opinion, that thougli the rate of in- 
 terest in ditierent countries is almost the only criterion 
 from which a judgment can be formed of the rate of 
 profits ; yet that in such countries as India and China, 
 and indeed in most of the eastern and southern reo-ions 
 of the globe, it is a criterion subject to the greatest 
 uncertainty. In China, the legal interest of money is 
 said to be three per cent, per month.* But it is im- 
 possible to suppose, when we consider the state of 
 China, so far as it is known to us, that capital em- 
 ployed on the land can yield profits to this amount ; 
 or, indeed, that it can be employed in any steady and 
 well-known trade with such a return. 
 
 In the same way extraordinary accounts have been 
 given of the high rate of interest in India ; but the 
 state of the actual cultivators completely contradicts 
 the supposition, that, independently of their labour, 
 the profits upon their stock is so considerable ; and 
 the late reduction of the government paper to six per 
 cent, fully proves that, in common and peaceable 
 times, the returns of capital, which can be depended 
 upon in other sorts of business, are by no means so 
 great as to warrant the borrowing at a very high rate 
 of interest. 
 
 It is probable that, with the exception of occasional 
 speculations, the money which is borrowed at the high 
 rates of interest noticed in China and India, is bor- 
 rowed in both countries, rather with a view to expen- 
 diture, the payment of debts, or some pressing neces- 
 sity, than with a view to regular profits. 
 
 Some of the causes, which have been noticed as 
 tending prematurely and irregularly to raise rents and 
 lower profits in the countries of the east, operated 
 without doubt to a certain extent in the early stages 
 of society in Europe. At one period most of the land 
 was cultivated by slaves ; and on the metayer system 
 which succeeded, the division of the crop was so ar- 
 
 • Penal Code, Staunton, p. 158. The market-rate of interest 
 at Canton is said, liowcvcr, to be only from twelve to eighteen 
 l)er cent. Id. note XVII.
 
 SEC. II. J OF THE RENT OF LAXD. 157 
 
 ranged as to allow the cultivator but little more than 
 a scanty subsistence. In this state of things the rate 
 of profits on the land could have but little to do with 
 the general rate of profits. The peasant could not, 
 without the greatest difficult}', realize money and 
 change his profession ; and it is quite certain that no 
 one who had accumulated a capital in manufactures 
 and comiTierce, would employ it incultivatingthe lands 
 of others as a metaijcr. There would thus be little or 
 no interchange of capital between trade and agricul- 
 ture, and the profits in each might in consequence be 
 very unequal. 
 
 It is probable however, as in the case of China and 
 India above mentioned, that profits would not be ex- 
 cessively high. This would depend indeed mainly 
 upon the supply of capital in manufactures and com- 
 merce ; if capital were scarce, compared with the de- 
 mand for the products of these kinds of industry, pro- 
 fits would certainly be high ; and all that can be said 
 safely is, that we cannot infer that they were very high, 
 from the very high rates of interest occasionally men- 
 tioned. 
 
 Rent then has been traced to the same common na- 
 ture with that general surplus from the land, which 
 is the result of certain qualities of the soil and its pro- 
 duce ; and it has been found to commence its separa- 
 tion from profits and wages, as soon as they begin to 
 fall from the scarcity of fertile land whether occasioned 
 by the natural progress of a country towards wealth 
 and population, or by any premature and unnecessary 
 monopoly of the soil. 
 
 Section III. — Of the Causes which teiidto raise Rents 
 in the ordinary Progress of civilized and improved 
 Societies. 
 
 Ix tracing more particularly the laws which govern 
 the rise and fall of rents, the main causes which prac- 
 tically tend to increase the difference between the price 
 of the produce, and the expenses of cultivation in-
 
 158 OF THE RENT OF LAXD. [cH. III. 
 
 cludino^ ordinary profits, require to be more specifically 
 enumerated. The principal of these seem to be four : 
 — 1st, Such an accumulation of capital compared with 
 the means of cmployino- it, as will lower the profits of 
 stock ; 2dly, such an increase of population as will 
 lower the corn wag'es of labour ; 3dly, such agricul- 
 tural improvements, or such increase of exertions as 
 will diminish the number of labourers necessary to 
 produce a given efibct ; and 4thly, such an increase 
 in the price of agricultural produce, from increased 
 demand, as, while it probably raises the money price 
 of labour, or occasions a fall in the value of money, is 
 nevertheless, accompanied by a diminution either tem- 
 porary or permanent, of the money outgoings of the far- 
 mer, compared with his money returns. 
 
 If capital increases in some departments, and the 
 additional quantity cannot be employed with the same 
 profits as before, it will not remain idle, but will seek 
 employment either in the same or in other departments 
 of industry, although with inferior returns, and this 
 will tend to push it upon less fertile soils. 
 
 In the same manner, if population increases faster 
 than the funds for the maintenance of labour, the la- 
 bourers must content themselves with a smaller quan- 
 tity of necessaries. The value of produce will conse- 
 quently rise ; the same quantity of corn will set more 
 labour in motion, and land may be cultivated which 
 could not have been cultivated before. 
 
 These two first causes sometimes act so as to coun- 
 terbalance one another. An increase of capital tends 
 to raise the wages of labour, and a fall of wages tends 
 to raise the profits of stock ; but these are only tem- 
 porary effects. In the natural and regular progress 
 of a country towards its full complement of capital and 
 population, the rate of profits and the corn wages of 
 labour permanently fall together. Practically this is 
 often eflfected by a rise in the money price of corn, 
 accompanied by a rise, but not a proportionate rise, in 
 the money wages of labour. The greater rise in the 
 money price of corn as compared with labour, is more
 
 SEC. III.] OF THE KENT OF LAXD. 159 
 
 than counterbalanced to the cultivator by the dimi- 
 nished quantity of produce obtained by the same agri- 
 cultural capital ; and the profits of all other capitalists 
 are diminished, by having to pay out of the same mo- 
 ney returns higher money wages ; while the command 
 of the labourer over the necessaries of life is of course 
 contracted by the inadequate rise of the price of la- 
 bour as compared with that of corn. 
 
 But this exact and regular rise in the money price 
 of corn and labour is not necessary to the fall of pro- 
 fits. Profits and corn wages may fall, and rent be 
 separated, under any variations of the value of money. 
 All that is necessary to the most regular and perma- 
 nent fall of profits, is, that an increased proportion of 
 the produce obtained by a given quantity of labour 
 should be absorbed in paying that labour. In the con- 
 tinued progress of cultivation, this is generally eflfected 
 by a diminution of the produce, obtained by the same 
 labour without a proportionate diminution of the quan- 
 tity absorbed by labour, which leaves less for profits, 
 at the same time that the com wages of the labourer 
 are diminished. But it is obvious that if a smaller 
 quantity of produce be sufficient to remunerate both 
 the capitalist and the labourer,* the outgoings neces 
 sary to cultivation will be diminished, rents will tend 
 to rise on all the old lands, and poorer lands may be 
 cultivated with advantage. 
 
 The third cause enumerated as tendingto raise rents 
 by lowering the expenses of cultivation compared with 
 the price of the produce is, such agricultural improve- 
 
 * Mr. Ricardo has observed (p. 499, 3rd edit.) in reference to the 
 second cause which I have here stated, as tending to raise rents, 
 ** that no fall of wages can raise rents ; for it will neither diminish 
 the portion, nor the value of the portion of the produce which will 
 be allotted to the farmer and labourer together." And yet in 
 reality there is no other rise in the value of corn, but that which 
 is accompanied by a fall in the corn wages of labour. The fact 
 is, that the value allotted to the farmer and labourer together, 
 measured in labour, or money of a fixed value, is very far from 
 remaining- the same. All his calculations are built upon the 
 fundamental error of omitting the consideration of profits in esti- 
 mating the value of wages, and thus making the value of labour
 
 IGO OF THE KENT OF LAND. [CH. III. 
 
 ments, or such increase of exertions, as will diminish 
 the number of labourers necessary to produce a given 
 eftect. 
 
 In improving and industriouscountries, not deficient 
 in stimulants, this is a cause of great ethcacy. If the 
 improvements introduced were of such a nature as 
 considerably to diminish the costs of production, with- 
 out increasing in any degree the quantity of produce, 
 then, as it is quite certain that no alteration woidd 
 take place in the price of corn, the extravagant pro- 
 fits of the farmers would soon be reduced by the com- 
 petition of capitals from manufactures and commerce; 
 and as the whole arena for the employment of capital 
 would rather have been diminished than increased, 
 profits on the land as well as elsewhere would soon 
 be at their former level, and the increased surplus from 
 the diminished expenses of cultivation would go to 
 increase the rents of the landlords. 
 
 But if these improvements, as must always be the 
 case, would facilitate the cultivation of new land, and 
 the better cultivation of the old with the same capital, 
 more corn would certainly be brought to market. This 
 would lower its price ; but the fall would be of short 
 duration. The operation of that important cause no- 
 ticed in the early part of this chapter, which distin- 
 guishes the surplus produce of the land from all others, 
 namely, the power of the necessaries of life, when pro- 
 perly distributed, to create their own demand, or in 
 other wordsthe tendency of population to press against 
 the means of subsistence, would soon restore the prices 
 
 rise, instead of making it constant. The value obtained by a given 
 quantity of labour, or the value allotted to the farmer and labourer 
 together, must always fall with the fall of profits. If it does not in 
 Mr. Ricardo's money, it is precisely because his money is so con- 
 structed as to vary with the article it measures. The high com 
 wages of America will finally goto rent, not to profits. If labourers 
 were permanently to receive the value of half a bushel of wheat a 
 day, none but the richest lands could pay the expense of working 
 them. An increase of population, and a fall of very high corn 
 wages are absolutely necessary to the cultivation of poor land. 
 How then can it be said that a fall of wages is not one of the causes 
 of a rise of rents ?
 
 SEC. III.] OF THE RENT OF LAND. 161 
 
 of corn and labour, and reduce the profits of stock to 
 their former level, while in the mean time every step 
 in the cultivation of poorer lands facilitated by these 
 improvements, and their application to all the lands 
 of a better quality before cultivated, would universally 
 have raised rents: and thus, under an improving' sys- 
 tem of cultivation, rents might continue rising without 
 any rise in the value of corn, or any fall in the corn 
 wages of labour, or in the general rate of profits. 
 
 The very great improvements in agriculture which 
 liave taken place in this country are clearly demon- 
 strated by the profits of stock having been as high in 
 1813 as they were nearly a hundred years before, 
 when the land supported but little more than half 
 the population. And the power of the necessaries of 
 life, when properly distributed, to create their own 
 demand is fully proved by the palpable fact, that the 
 exchangeable value of corn in the command of labour 
 and other commodities was for many years before that 
 period, undiminished, notwithstanding the many and 
 great improvements which had been successively in- 
 troduced into cultivation, both by the use of better 
 implements, and by a more skilful system of manag- 
 ing the land. In fact, the increase of produce had 
 gone almost wholly to the increase of rents and the 
 payment of taxes, tithes, and poor's rates. 
 
 It may be added that, when in particular districts, 
 improvements are introduced which tend to diminish 
 the costs of production, the advantages derived from 
 them go immediately, upon the renewal of leases, to 
 the landlords, as the profits of stock must necessarily be 
 regulated by competition, according to the general 
 average of the whole country. Thus the very great 
 agricultural improvements which have taken place in 
 some parts of Scotland, the north of England, and 
 Norfolk, have raised, in a very' extraordinary manner, 
 the rents of those districts, and left profits where they 
 were. 
 
 It must be allowed then, that facility of production
 
 162 OF THE RENT OF LAND. [CH. III. 
 
 in necessaries,* unlike facility of j3roduction in all 
 other commodities, is rarely or never attended with a 
 permanent fall of tlieir value. They are the only com- 
 modities of which it can be said that their permanent 
 command of labour has a constant tendency to keep 
 pace with the increase of their quantity. And con- 
 sequently, in the actual state of tilings, all savings in 
 the cost of producing them will permanently increase 
 the surplus which goes to rent. 
 
 The fourth cause which tends to raise rents, is such 
 an increase in the money price of agricultural produce 
 from increased demand, as while it raises the money 
 price of labour, or lowers the value of money, is ac- 
 companied by a comparative diminution, either tem- 
 porary or permanent, in the money outgoings of the 
 farmer.'!' 
 
 I have already adverted to a rise in the money 
 price of V2iw produce, which may take place in con- 
 sequence of a regular increase of capital and popula- 
 tion, and a regular fall of profits and corn wages. 
 But this sort of rise is confined within narrow limits, 
 and has little share in those great variations in the 
 price of corn, which are most frequently the sidjject 
 of observation. The kind of increased price, the ef- 
 fects of which I wish now more particularly to con- 
 sider, is a rise of price from increased demand, termi- 
 nating in a diminished value of the precious metals. 
 
 If a great and continued demand should arise among 
 surrounding nations for the raw produce of a parti- 
 cular country, the price of this produce would of 
 course rise considerably ; and the expenses of culti- 
 
 * Properly speaking, facility of production in necessaries can 
 only be temporary where there are gradations of land as far as 
 barrenness, except when capital is prevented from increasing by 
 the want of power or will to save, arising from bad government. 
 It may then be permanent. But though corn will, "In that case, 
 cost but little labour, the labour which it will command, or its 
 value, will be comparatively high. 
 
 t This cause is partly included in the preceding ones ; but as 
 it frequently occurs, and has a different origin, it is worth while 
 to consider it separately, and trace its practical operation.
 
 SEC. III.] OF THE RENT OF LAND. 163 
 
 vation rising only slowly and gradually to the same 
 proportion, the price of produce miglit for a long 
 time keep so much a head as to give a prodigious 
 stimulus to improvement, and encourage the employ- 
 ment of much capital in bringing fresh land under 
 cultivation, and rendering the old much more pro- 
 ductive. If however the demand continued, the price 
 of labour would ultimately rise to its former level, 
 compared with corn ; a decided fall in the value of 
 money supported by the abundant exportation of raw 
 produce might generally take place, in which case 
 labour would become extremely productive in the pur- 
 chase of all foreign commodities, and rents might rise 
 without a fall of profits or wages. 
 
 The state of money prices, and the rapid progress 
 of cultivation in the United States of America, tend 
 strongly to illustrate the case here supposed. The 
 price of wheat in the eastern states has been often 
 nearly as high as in France and Flanders ; and owing 
 to the continued demand for hands, the money price 
 of day-labour has been at times nearly double what 
 it is in England.* But this high price of corn and 
 labour has given great facilities to their farmers and 
 labourers in the purchase of clothing and all sorts of 
 foreign necessaries and conveniences. And it is cer- 
 
 * According to Pitkin's Statistical View of the United States, 
 (p. 112, 2nd ed.) the average price of the bushel of wheat for 
 eleven years, from 1806 to 1816 inclusive, at the principal places 
 of exportation, was rather above 1 i dollars, or 54 shillings per 
 quarter ; and, according to Fearon's Sketches, common labour 
 was above a dollar a day. 
 
 The state of things in 1821 was essentially different, and shews 
 how much the value of money in any country depends upon the 
 demand and supply of produce. Corn and labour, it is said, 
 had fallen at that time one half. The former high prices were 
 no doubt in part owing to paper, but before the war with En- 
 gland, for seven years out of the eleven referred to, silver and 
 paper were at par, and during this period wheat at the ports of 
 the Eastern States was above 50 shillings a quarter. A rise in 
 the price of corn, and other sorts of raw produce in an exporting 
 country with plenty of good land, enables it to purchase money 
 with a smaller quantity of labour, which is likely to render it 
 cheap, or to make the money price of labour high.
 
 1<J4 OF THt KENT OF LAND. [CH. III. 
 
 tain that it the money prices of corn and labour had 
 been botli lower, yet had maintained the same pro- 
 portion to each other, land of the same quality could 
 not have been cultivated with the same advantage, 
 nor could equal rents have been obtained with the 
 same rate of profits and the same corn wages of 
 labour. 
 
 Effects of a similar kind took place in our own 
 country from a similar demand for corn during the 
 twenty years from 1793 to the end of 1813, though 
 the demand was not occasioned in the same way. 
 For some time before the war, which commenced in 
 1793, we had been in the habit of importing a cer- 
 tain quantity of foreign grain to supply our habitual 
 consumption. The war naturally increased the ex- 
 pense of this supply by increasing the expense of 
 freight, insurance, &c. ; and, joined to some bad sea- 
 sons and the subsequent decrees of the French govern- 
 ment, raised the price, at which wheat could be im- 
 ported, in the quantity wanted to supply the demand, 
 in a very extraordinary manner.* 
 
 This great rise in the price of imported corn, 
 although the import bore but a small proportion to 
 what w^as grown at home, necessarily raised in the 
 same proportion the whole mass, and gave the same 
 sort of stimulus to domestic agriculture as would have 
 taken place from a great demand for our corn in 
 foreign countries. In the mean time, the scarcity of 
 hands, occasioned by an extending war, an increasing 
 commerce, and the necessity of raising more food, 
 joined to the ever ready invention of an ingenious 
 people when strongly stimulated, introduced so much 
 saving of manual labour into every department of in- 
 dustry, that the new and inferior land taken into culti- 
 
 * During the period aUuded to, corn rose far beyond what was 
 necessary to defray the increased expense of freight, insurance, 
 &c., occasioned by the war. The cause of the rise was there- 
 fore, independent of the increased cost of importation. It doubt- 
 less originated in the profuse expenditure of the state, and the 
 increased activity of commercial and manufacturing industry at 
 the time. — Ed.
 
 SEC. III.] OI-' THE HE\T OF I.AXD. 1 G5 
 
 vation, to supply the pressing- wants of the society, was 
 worked at a less expense of labour than richer soils 
 had been some years before. Yet still the price of 
 grain necessarily kept up as long as the most trifling 
 quantity of foreign grain, which could only be ob- 
 tained at a very high price, was wanted in order to 
 supply the existing demand. With this high price, 
 which at one time rose to nearly treble in paper and 
 above double in bullion, compared with the prices 
 before the war, it was quite impossible that the 
 money price of labour should not rise nearly in propor- 
 tion, and with it, of course, as profits had not fallen, 
 all the commodities into which labour had entered. 
 
 We had thus a general rise in the prices of labour 
 and commodities, or a fall in the value of the precious 
 metals, compared with other countries, which our 
 increasing foreign commerce and abundance of ex- 
 portable commodities enabled us to sustain, and this 
 is one of the signal instances in which the value of 
 money arising from incidental causes entirely over- 
 whelmed and obscured the effects arising from the 
 necessary cause. Profits instead of falling rose ; and 
 the value of money ought therefore to have risen, and 
 the money price of labour to have fallen ; but the 
 secondary causes arising from the demand for corn 
 and labour, and the increasing money value of our 
 exported commodities quite overcame the natural 
 effects of the rise of profits, and occasioned a very 
 decided fall, not only in the value of our currency 
 but in the value of our bullion compared with labour. 
 That the last land taken into cultivation in 1813 did 
 not require more labour to work it than the last land 
 improved in the year 1790, is proved by the acknow- 
 ledged fact, that the rate of interest and profits was 
 higher in the later period than the earlier, while the 
 corn wages of labour were nearly the same. But 
 still the profits were not so much higher as not to 
 have rendered the interval extremely favourable to 
 the rise of rents. This rise, during the interval in 
 question, was the theme of universal renrark ; and
 
 I(j6 Ol- THK ULN'T OF LAND. [CH. Iji. 
 
 though a severe check, from a combination of circum- 
 stances, has since occurred ; yet the great drainings 
 and permanent improvements, which were the effects 
 of so powerful an encouragement to agriculture, have 
 acted like the creation of fresh land, and have in- 
 creased the real wealth and population of the country, 
 without increasing the labour and difficulty of raising 
 a given quantity of grain. 
 
 It is obvious then that a fall in the value of the 
 precious metals, commencing with a rise in the price 
 of corn, has a strong tendency, while it is going on, 
 to encourage the cultivation of fresh land and the 
 formation of increased rents. 
 
 A similar effect would be produced in a country 
 which continued to feed its own people, by a great 
 and increasing demand for its manufactures. These 
 manufactures, if from such a demand the money 
 value of their amount in foreign countries was greatly 
 to increase, would bring back a great increase of 
 money value in return, which increase could not fail 
 to increase the money price of labour and raw pro- 
 duce. The demand for agricultural as well as manu- 
 factured produce would thus be augmented ; and a 
 considerable stimulus, though not perhaps to the same 
 extent as in the last case, would be given to every 
 kind of improvement on the land. 
 
 This result generally takes place from the intro- 
 duction of improved machinery, and a more judicious 
 division of labour in manufactures. It almost always 
 happens in this case, not only that the quantity of 
 manufactures is very greatly increased, but that the 
 value of the whole mass is augmented, from the great 
 extension of the demand for them both abroad and at 
 home, occasioned by their cheapness. We see, in 
 consequence, that in all rich manufacturing and com- 
 mercial countries, the value of manufactured and 
 commercial products bears a very high proportion to 
 the increased raw products ; * whereas, in compara- 
 
 * According to the calculations of Mr. Colqulioun, the value 
 of our trade, foreign and domestic, and of our manufactures, ex-
 
 SEC. III.] OF THE RENT OF LAND. 167 
 
 lively poor countries, with few manufactures and little 
 foreign commerce, the value of their raw produce, 
 though small compared with their extent of territory, 
 constitutes almost the whole of their wealth. 
 
 In those cases where the stimulus to agriculture 
 originates in a prosperous state of commerce and 
 manufactures, it sometimes happens that the first step 
 towards a rise of prices is an advance in the money 
 wages of commercial and manufacturing labour. This 
 will naturally have an immediate effect upon the 
 price of corn, and an advance in the price of agricul- 
 tural labour will follow. It is not, however, neces- 
 sary, even in those cases, that labour should rise first. 
 If, for instance, the population were increasing as 
 fast as the mercantile and manufacturing capital, the 
 only effect might be an increasing number of work- 
 men employed at the same money wages, which would 
 occasion a rise in the price of corn before any rise 
 had taken place in the wages of labour. 
 
 We are supposing, however, now, that the price 
 of labour does ultimately rise nearly to its former 
 level compared with corn, that both are considerably 
 higher, and that money has suffered a decided change 
 of value. Yet in the progress of this change, the 
 other outgoings, besides labour, in which capital is 
 expended, can never all rise at the same time, or even 
 finally in the same proportion. A period of some 
 continuance can scarcely fail to occur when the dif- 
 ference between the price of produce and the cost of 
 production is so increased as to give a great stimulus 
 to agriculture ; and as the increased capital, which 
 is employed in consequence of the opportunity of 
 making great temporary profits, can seldom be en- 
 tirely removed from the land, a part of the advantage 
 so derived is permanent ; together with the whole of 
 that which may be occasioned by a greater perma- 
 
 clusive of raw materials, is nearly equal to the gross value derived 
 from the land. In no other large country probably is this the 
 case. — Treatise on the Wealth, Power, and Resources of the 
 British Empire, p. 9G.
 
 168 Ol- THL KENT Ol- LAN J). [cU. I If. 
 
 nent rise in the price of corn tliuii in some of the ma- 
 terials of the farmer's capital. 
 
 It is acknowledged that, when a fall takes place in 
 the value of money, taxed commodities will not rise in 
 the same proportion with others ; and, on the suppo- 
 sition of such fall being peculiar to a particular coun- 
 try, the same must unquestionably be said of all the 
 various commodities which are either wholly or in part 
 imported from abroad, many of which enter into the 
 capital of the farmer. He would, therefore, derive an 
 increased power from the increased money price of 
 corn compared with those articles. A fall in the value 
 of money cannot indeed be peculiar to one country 
 without the possession of peculiar advantages in ex- 
 portation ; but with these advantages, which we know 
 are very frequently possessed, and are often increased 
 by stimulants, such a fall, whether arising generally 
 from an increased supply from the mines, or partially 
 from a demand for corn and labour in a particular 
 country, can scarcely fail to encourage the outlay of 
 more capital in agriculture, to increase the power of 
 cultivating poorer lands, and to advance rents. 
 
 In speaking, however, of the advantages sometimes 
 derived from a fall in the value of money, it should 
 always be recollected, that if it goes to a greater ex- 
 tent than can be permanently maintained — an event 
 very likely to take place, it will surely be followed by 
 a retrograde movement, which, though it may not undo 
 all the effects of the previous encouragement given to 
 production, in reference to the general wealth of the 
 country, will be felt by all the parties concerned, land- 
 lords, capitalists, and labourers, as so painful a reverse 
 that they may well wish that they had not been sub- 
 jected to the stimulus. Still, however, it is proper to 
 consider the effects of such a stimulus during the time 
 it lasts. 
 
 Whenever then, by the operation of the four causes 
 above mentioned, tlie difference between the price of 
 produce and the cost of the instruments of production 
 increases, the rents of land will rise.
 
 SEC. III.] Ol' THE KENT OF LAND. 169 
 
 It is, however, not necessary that all these four causes 
 should operate at the same time ; it is only necessary 
 iliat the difference here mentioned should increase. 
 If, for instance, the price of pi'oduce vvere to rise, 
 while the money wages of labour and the price of the 
 other branches of capital did not rise in proportion,* 
 and at tlie same time improved modes of agriculture 
 were coming into general use, it is evident that this 
 difference might be increased, althougli the profits of 
 agricultural stock were not only undiminished, but 
 were to rise decidedly higher. 
 
 Of the great additional quantity of capital employed 
 upon the land in this country during the twenty years, 
 from 1793 to 1813, by far the greater part is sup- 
 "posed to have been generated on the soil, and not to 
 h'lve been brought from commerce or manufactures. 
 And it was unquestionably the high profits of agricul- 
 tural stock, occasioned by improvements in the modes 
 of agriculture, and by the constant rise of prices, fol- 
 lowed only slowly by a proportionate rise in the ma- 
 terials of the farmer's capital, that afforded the means 
 of so rapid and so advantageous an accumulation. 
 
 In this case, cultivation was extended, and rents 
 rose, although one of the instruments of production, 
 capital, was dearer. 
 
 ^ In the same manner a fall of profits, and improve- 
 ments in agriculture, or even the latter separately, 
 might raise rents, notwithstanding a rise of corn 
 wages. 
 
 It is further evident, that no fresh land can be taken 
 into cultivation till rents have risen, or would allow of 
 a rise upon what is already cultivated. 
 
 Land of an inferior quality requires a greater ad- 
 vance of labour and capital to make it yield a given 
 produce ; and if the actual price of this produce be 
 not such as fully to compensate the cost of produc- 
 
 * This would in fact be a fall in the corn wages of labour, 
 though it might be made up to the labourer by the comparative 
 cheapness of some other articles, and more constant employment 
 for all the members of his family.
 
 170 Ol' lilE RENT OF LAND. [cil. III. 
 
 tion, including profits, the land must remain unculti- 
 vated. It matters not, whether this compensation is 
 effected by an increase in the money price of raw pro- 
 duce, witliout a proportionate increase in the money 
 price of the instruments of production ; or by a de- 
 crease in the price of the instruments of production, 
 without a proportionate decrease in the price of pro- 
 duce. What is absolutely necessary is, a greater rt'- 
 lative cheapness of the instruments of production, to 
 make up for the quantity of them required to obtain a 
 given produce from poor land. 
 
 But whenever, by the operation of one or more of 
 the causes before mentioned, the instruments of pro- 
 duction become relatively cheaper, and the difference 
 between the price of produce and the expenses of cul- 
 tivation increases, rents naturally rise. It follows 
 therefore as a direct and necessary consequence, that 
 it can never answer to take fresh land of a poorer 
 quality into cultivation till rents have risen, or would 
 allow of a rise, on what is already cultivated. 
 
 It is equally true, that without the same tendency 
 to a rise of rents,* it cannot answer to lay out fresh 
 capital in the improvement of old land ; at least upon 
 the supposition, that each farm is already furnished 
 with as nuich capital as can be laid out to advantage, 
 according to the actual rate of profits. 
 
 It is only necessary to state this proposition to make 
 its truth appear. It certainly may happen, (and I 
 fear it happens very frequently) that fai-mers are not 
 provided with all the capital which could be em- 
 ployed upon their farms at the actual rate of agricul- 
 tural profits. But supposing they are so provided, it 
 implies distinctly, that more could not be applied 
 without loss, till, by the operation of one or more of 
 the causes above enumerated, rents had tended to rise. 
 
 It appears then, that the power of extending culti- 
 
 * Rents may be said to liave a tendency to rise, when more 
 capital is ready to be laid out upon the old land, but cannot be 
 laid out without diminished returns. When profits fall in manu- 
 factures and commerce from the diminished })rice of goods, capi- 
 talists will be ready to give higher rent? for old farms.
 
 SEC. III.] OF THE RENT OF LAND. 171 
 
 vation and increasing produce, both by the cuhivation 
 of fresh land and the improvement of the old, depends 
 entirely upon the existence of such prices, compared 
 with the expense of production, as would raise rents 
 in the actual state of cultivation. 
 
 But though cultivation cannot be extended and the 
 produce of a country increased, except in such a state 
 of things as would allow of a rise of rents ;* yet it is 
 of importance to remark, that this rise of rents will 
 not necessarily be in pi^oportioii to the extension of 
 cultivation or to the increase of produce. 
 
 A slight rise in the value of corn may allow of the 
 employment of a considerable quantity of additional 
 capital ; and when either new land is taken into cul- 
 tivation, or the old improved, the increase of produce 
 is often greater than the increase of rents. We fre- 
 quently see in consequence, that, in the progress of a 
 country towards a high state of cultivation, the quan- 
 tity of capital employed upon the land, and the quan- 
 tity of produce yielded by it, bears an increasing pro- 
 portion to the amount of rents, unless counterbalanced 
 by extraordinary improvements in the modes of culti- 
 vation.'!" 
 
 In the early state of cultivation upon the Metayer 
 system, with small capitals, the proportion of the pro- 
 duce which went to the landlord was generally one 
 half. Even in the United States, where profits and 
 
 * This, it must be recollected, is upon tlie supposition above 
 adverted to, that the farmer has had the means and the will to 
 employ all the capital, both fixed and circulating, which can be 
 applied at the actual rate of profits. 
 
 t To the honour of Scotch cultivators it should be observed, 
 that they have applied their capitals so very skilfully and econo- 
 mically, that at the same time that they have prodigiously in- 
 creased the produce, they have increased the landlord's propor- 
 tion of it. The difference between the landlord's share of the 
 produce in Scotland and in England is quite extraordinary — 
 greater than can be accounted for by the absence of tithes and 
 poor's-rates. It must be referred therefore to superior skill and eco- 
 nomy, and improvements in cultivation. — See Sir John Sinclair's 
 valuable Account of the Husbandry of Scotland ; and the General 
 Report, published in 1813 and 14 — works replete with the most 
 useful and interesting information on agricultural subjects.
 
 172 OF THE IlENT OT LAND. [cil. III. 
 
 corn wages have been such as would allow of a large 
 transfer to the landlords, produce seems to have in- 
 creased faster than rents. And according' to the re- 
 turns made to tlie board of agriculture in 1813, the 
 average proportion which rent bears to the value of 
 the whole produce seems to be little more than one- 
 fifth ;* whereas formerly, when there was more land 
 in pasture, less capital employed, and less produce 
 obtained, the proportion amounted to one-fourth, one- 
 third, or even two-fifths, j" Still, however, the nume- 
 rical difference between the price of produce and the 
 expenses of cultivation increases with the progress of 
 improvement ; and though the landlord may have a 
 less shajx of the whole produce, yet this less share 
 from the great increase of the produce, owing to the 
 conversion of natural pastures into arable land, will 
 command more labour, and consequently be of greater 
 value to him. If the produce of land be represented 
 by the nunjber six, and the landlord has one-fourth of 
 it, his share will be represented by one and a half, if 
 the produce of land be as ten, and the landlord has 
 
 * See Evidence before the House of Lords, g;iven by Arthur 
 Young, in the Report respecting the corn laws, 1814, p. 66. 
 
 t In that state of things where land is in great abundance, and 
 rents very low, the capital, and particularly the fixed capital em- 
 ployed, is generally very inconsiderable. Mr. Ricardo, in illus- 
 trating his doctrine of rent, has supposed a capital of £3000 em- 
 ployed with low corn wages to obtain a produce worth £720, 
 before the commencement of rent. But this is so directly con- 
 trary to the real state of things before rent has commenced, as to 
 destroy all just illustration. In the present advanced state of cul- 
 tivation under a large mass of rents, a capital of £1000 is consi- 
 dered as adequate to obtain the above value of produce. It was 
 the very disproportionate amount of capital, with the low corn 
 wages assumed, which enabled Mr. Ricardo to contemplate an 
 extraordinary rise of rents, occasioned exclusivoly by a transfer 
 from profits. This apparent result was further assisted bv the 
 adoption of a money as his measure of value, which, (as I have 
 already shown, p. 124-125) must necessarily vary with the com- 
 modity which it was to measure. When all labour, all raw pro- 
 ducts, and many manufactured products had risen in his money, he 
 still supposed his money to remain of the same value, whereas it had 
 in (act falk-n in value from the fall of profits, without which fall the 
 appearances he contemplates could not possibly take place.
 
 SEC. IV.] OF THE REXT OF f.AXD. 173 
 
 one-fifth of it, his share will be represented by two. 
 In the latter case, therefore, though the proportion of 
 the landlord's share to the whole produce is greatly 
 diminished, the value of his rent, independent of no- 
 minal price, will be increased in the proportion of 
 from three to four. 
 
 We see then that a progressive rise of rents seems 
 to be necessarily connected with the progressive cul- 
 tivation of new land, and the progressive improvement 
 of the old : and that this rise is the natural and ne- 
 cessary consequence of the operation of four causes, 
 which are the most certain indications of increasing 
 prosperity and wealth — namely, the accumulation of 
 capital, the increase of population, improvements in 
 agriculture, and a rising market price of raw produce, 
 occasioned either by a great demand for it in foreign 
 countries, or by the extension of commerce and manu- 
 factures. 
 
 Sectiox IV. — Of the Causes ivhich tend to 
 lower Rents. 
 
 The causes which lead to a fall of rents are, as may 
 be expected, exactly of an opposite description to those 
 which lead to a rise : namely, diminished capital, di- 
 minished population, an operose system of cultivation, 
 and a falling price of raw produce from deficiency of 
 demand. They are almost always* indications of po- 
 verty and decline, and are necessarily connected with 
 the throwing of inferior land out of cultivation, and the 
 continued deterioration of the land of a superior qua- 
 
 The necessary effects of a diminished capital and 
 diminished population in lowering rents, are too ob- 
 vious to require explanation ; nor is it less clear that 
 an operose and bad system of cultivation might pre- 
 vent the formation of rents, even on fertile land, by 
 checking the prooress of population and demand be- 
 yond what could be supplied from the very richest 
 
 * The only practical exception is in the case of importing fo- 
 reign corn, the effects of which will be considered more particu- 
 larly in the next section, and a subsequent part of this chapter.
 
 174 OF THE RENT OF LAND. [CH. III. 
 
 qualities of soil. I will only therefore advert to the 
 fourth cause here noticed. 
 
 We have seen that a rise in the price of corn, ter- 
 minating in a diminished value of the precious metals, 
 would o-ive a considerable stimulus to cultivation for 
 a certain time, and some facilities permanently, and 
 might occasion a considerable and permanent rise of 
 rents. And this case was exemplified by what hap- 
 pened in this country during the period from 1794 to 
 1814. 
 
 It may be stated in like manner, that a fall in the 
 price of corn terminating in a rise in the value of 
 money, must, upon the same principles, tend to throw 
 land out of cultivation and lower rents. And this may 
 be exemplified by what happened in this country at 
 the conclusion of the war. The fall in the price of corn 
 at that period necessarily disabled the cultivators from 
 employing the same quantity of labour on their land. 
 Many labourers, therefore, were unavoidably thrown 
 out of employment ; and, as the land could not be cul- 
 tivated in the same way, without the same number of 
 hands, some of the worst soils were no longer worked, 
 much agricultural capital was destroyed, and rents 
 universally fell ; while this great failure in the power 
 of purchasing, among all those who either rented or 
 possessed land, naturally occasioned a general stagna- 
 tion in all other trades. But the fall in the money 
 price of labour* from the competition of the labourers, 
 and the poverty of the cultivators ; together with the 
 fall of rents, from the want of power to pay the for- 
 mer rents, would tend to restore the former relations 
 of produce, wages, and rents to each other, though 
 
 * This is an instance of the incidental causes of the high or low 
 value of money prevailing over the necessary cause just in an op- 
 posite direction to that noticed in the last section. Profits un- 
 questionably fell after the war, and the value of money ought to 
 have fallen, and the money price of labour to have risen ; but the 
 rise in the value of money, owing to the slackness of the circula- 
 tion, the withdrawing of much paper, and the comparative want 
 of demand for corn and labour, combined with the diminished 
 money value of our exported commodities, quite overcame the na- 
 tural effects of the fall of profits, and occasioned a decided rise 
 in the value of money.
 
 SEC. IV.] OF THE RENT OF LAND. 175 
 
 they would all be lower in price than they were before. 
 The land which had been thrown out of tillage might 
 then again be cultivated with advantage ; but in the 
 progress from the lower to the higher value of money, 
 a period would have elapsed of diminished produce, 
 diminished capital, and diminished rents. The coun- 
 try would recommence a progressive movement from 
 an impoverished state ; and, owing to a fall in the value 
 of corn greater than in taxed commodities, in foreign 
 commodities, and in others which form a part of the 
 capital of the farmer and of the necessaries and con- 
 veniences of the labourer, the permanent difficulties of 
 cultivation would be great compared with the natural 
 fertility of the worst soil actually in tillage. 
 
 It has appeared that, in the progress of cultivation 
 and of increasing rents, it is not necessary that all the 
 t causes which tend to advance rents should operate at 
 I the same time ; and that the difference between the 
 price of produce and the expense of cultivation might 
 I increase, although either the profits of stock or the 
 I wages of labour might be higher, instead of lower. 
 
 In the same manner, when the produce of a coun- 
 1 try is declining from a diminution of demand, and rents 
 in consequence falling, it is not necessary that all the 
 causes which tend to lower rents should be in action. 
 In the natural progress of such a decline, the profits 
 of stock must be low ; because it is specifically the 
 want of adequate returns which occasions this decline. 
 After some capital has been destroyed, money wages 
 will fall ; but the low price of raw produce may more 
 than counterbalance the low money wages of labour, 
 i]and prevent the profitable cultivation of land where 
 much capital is required. 
 
 It has appeared also, that in the progress of culti- 
 I vation, and of increasing rents, if not accompanied by 
 very decided agricultural improvements, rent, though 
 greater in positive amount, often bears a less proportion 
 to the quantity of capital employed upon the land, and 
 the quantity of produce derived from it. According 
 to the same principle, when produce diminishes and 
 rents fall, though the amount of rent will be less, the
 
 170 01- TIIF- REXT OF LAND. [CH. Til. 
 
 proportion wliicli it bears to capital and produce may 
 be greater. And as, in the former case, the diminished 
 proportion of rent was owinjj- to the necessity of yearly 
 takinfj;- fresh land, consisting of rough pasture and 
 wood, into cultivation, and proceeding in the improve- 
 ment of old land, when it would return only the com- 
 mon profits of stock, with little or no rent ; so, in the 
 latter case, the higher proportion of rent is owing to the 
 discouragement of a great expenditure in agriculture, 
 and the necessity of employing the reduced capital of 
 the country in the exclusive cultivation of the richest 
 lands, and leaving the remainder to yield what rent 
 can be got for them in natural pasture, ^\hicl^, tliough 
 small, will bear a large proportion to the labour and 
 other capital employed. In proportion, therefore, as 
 the relative state of prices is such as to occasion a 
 piogressive fall of rents, more and more land will be 
 gradually thrown out of cultivation, the remainder will 
 be worse cultivated, and the diminution of produce 
 will generally proceed still faster than the diminution 
 of rents.* 
 
 If the doctrine here laid down respecting the laws 
 which govern the rise and fall of rents be near the 
 truth, the doctrine which maintains that, if the pro- 
 duce of agriculture were sold at such a price as to 
 yield less neat surplus, agriculture would be equally 
 productive to the general stock, must be very far from 
 the truth. And if, under the impression that the or- 
 dinary excess of the price of raw produce above the 
 costs of production which occasions rent on the great 
 mass of land is as injurious to the consumer as it is 
 advantageous to the landlord, a rich and improved na- 
 tion were determined by law to lower the price of its 
 produce, till no surplus in the shape of rent any where 
 remained, it Avould inevitably throw not only all the 
 poor land, but all except the very best land, out of 
 cultivation, and probably reduce its produce and po- 
 pulation to less than one-tenth of their former amount. 
 
 * It should be recollected, however, that both the results here 
 contemplated will be essentially affected by taxes which fall on 
 the land. ^
 
 SEC. V. OF THK RENT OF LAND. 177 
 
 Section V. — On the Dependance of the actual Quan- 
 tity of Produce obtained from the Land, upon the 
 existing Prices of Produce, and existing Rents, 
 under the same Agricultural Skill and the same 
 Value of Money. 
 
 From the preceding account of the progress of rent, 
 it follows that the actual amount of the natural rent 
 of land in the actual state of agricultural skill, is, with 
 very little drawback, necessary to the actual produce; 
 and that the price of corn in every progressive coun- 
 try, must be just about equal to the cost of produc- 
 tion on land of the poorest quality actually in use, 
 with the addition of the rent it would yield in its na- 
 tural state ; or to the cost of raising additional pro- 
 duce on old land, which additional produce yields 
 only the usual returns of agricultural capital with no 
 rent. 
 
 It is quite obvious that under the existing value of 
 money, the price cannot be less;* or such land would 
 not be cultivated, nor such capital employed. Nor 
 can it ever much exceed this price, because it will 
 always answer to the landlord to continue letting 
 poorer and poorer lands, as long as he can get any 
 thing more than they will pay in their natural state ; 
 
 * The reader will be aware from what was said in the last 
 chapter, that, though in speaking of the relation between the price 
 of the produce and its money cost at any given time, money is 
 alwavs a correct measure ; yet that in speaking of the price of the 
 produce without such reference, it is necessary that the existing 
 value of money should be expressed, or understood ; and I trust 
 that the reader will allow of the latter, when the meaning is clear 
 from the context. As I measure the value of money by labour, 
 the price of the produce under the existing value of money is ex- 
 actly equivalent to the expression value of the produce. In 
 reality it may be said, that in the natural and ordinary state of 
 things, it is the actual value of the produce, or its actual power 
 of commanding labour, which is necessary to the supply of the 
 actual produce. In these cases it might be better at once to use 
 the terra value instead of price ; but I fear it would not yet be so 
 readily understood. 
 
 N
 
 178 OF THE RENT Ol" LAND. [CH. 111. 
 
 and because it will always answer to any farmer who 
 can command capital, to lay it out on his land, if the 
 additional produce resulting? from it will fully repay 
 the profits of his capital, although it yields nothing to 
 his landlord. 
 
 It follows then, that corn, in a cultivated and im- 
 proving country, is sold nearly at its necessary price, 
 that is, at the price necessary to obtain the actual 
 amount of produce if no rents were paid ; although 
 by far the largest part is sold at a price much above | 
 that which is neccessary to its production without 
 rent, owinp; to this part being produced at less ex-| 
 pense, while its price remains undiminished. 
 
 The difference between the price of corn and the| 
 price of manufactures, with regard to natural or ne- 
 cessary price, is this ; that if the price of any manu- 
 facture were essentially depressed, the whole manu- 
 facture would be entirely destroyed ; whereas, if the] 
 price of corn were equally depressed, the quantity o\ 
 it only would be diminished. There would be some! 
 machinery in the country still capable of sending the 
 commodity to market at the reduced price. 
 
 The earth has been sometimes compared to a vast 
 machine, presented by nature to man for the produc- 
 tion of food and raw materials ; but, to make the re 
 semblance more just, as far as they admit of compa-' 
 rison, we should consider the soil as a present to man 
 of a great number of machines, all susceptible of con- 
 tinued improvement by the application of capital to 
 them, but yet of very different original qualities and 
 powers. 
 
 This great inequality in the powers of the ma- 
 chinery employed in obtaining raw produce, forms 
 the most remakable feature which distinguishes the 
 machinery of the land from the machinery employed 
 in manufactures. 
 
 When a machine in manufactures is invented, which 
 will produce more finished work with less expenditure 
 than before, if there be no patent, or as soon as the 
 patent has expired, a sufficient number of such nia-
 
 SEC. v.] OF THE RENT OF LAXD. 179 
 
 chines may be made to supply the whole demand, 
 and to supersede entirely the use of all the old ma- 
 chinery. The natural consequence is, that the price 
 is reduced to the price of production from the best 
 machinery, and if the price were to be depressed 
 lower, the whole of the commodity would be with- 
 drawn from the market. 
 
 The machines which produce corn and raw mate- 
 rials, on the contrary, are the gifts of nature, not the 
 works of man ; and we find, by experience, that these 
 gifts have very different qualities and powers. The 
 most fertile and best situated lands of a country, those 
 which, like the best machinery in manufactures, yield 
 the greatest products with the least expenditure, are 
 never found sufficient, owing to the second main cause 
 of rent before stated, to supply the effectual demand of 
 an increasing population. The price of raw produce, 
 therefore, naturally increases till it answers to pay 
 the cost of raising it with inferior machines, and by a 
 more expensive process ; and, as there cannot be two 
 prices for corn of the same quality, all the other ma- 
 chines, the working of which requires less expendi- 
 ture compared with the produce, must yield rents in 
 proportion to their goodness. 
 
 Every extensive country may thus be considered as 
 possessing a gradation of machines for the produc- 
 tion of corn and raw materials, including in this gra- 
 dation not only all the various qualities of poor land, 
 of which every large territory has generally an abun- 
 dance, but the inferior machinery which may be said 
 to be employed when good land is further and fur- 
 ther forced for additional produce. As the price of 
 raw produce continues to rise, these inferior machines 
 are successively called into action ; and as the price 
 of raw produce continues to fall, they are successively 
 thrown out of action. The illustration here used serves 
 to show at once the necessity of the existing price of 
 corn to the existing produce, in the actual state of most 
 of the countries with which we are acquainted, and the 
 different effect which would attend a great reduction
 
 180 OF TlIK ilEM OF LAND. [cil. IH. 
 
 in the price of any particular manufacture, and a great 
 reduction in the price of raw produce. 
 
 We must not, liowever, draw too large inferences 
 from this gradation of machiner}' on the land. It is 
 what actually exists in almost all countries, and ac- 
 counts very clearly for the origin and progress of rent, 
 while land still remains in considerable plenty. But 
 such a gradation is not strictly necessary, either to 
 the original formation, or the subsequent regular rise 
 of rents. All that is necessary to produce these ef- 
 fects, is, the existence of the two first causes of rent 
 formerly mentioned, with the addition of limited ter- 
 ritory, or a scarcity of fertile land. 
 
 Whatever may be the qualities of any commodity, 
 it is well known that it can have no exchangeable 
 value, if it exists in a great excess above the wants of 
 those who are to use it. But such are the qualities 
 of the necessaries of life that, in a limited territory, 
 and under ordinary circumstances, they cannot if pro- 
 perly distributed be permanently in excess ; and if 
 all the land of this country were precisely equal in 
 quality, and all as rich, as the best, there cannot be 
 the slightest doubt, that after the whole of the land 
 had been taken into cultivation, both the profits of 
 stock, and the real wages of labour, would go on di- 
 minishing till profits had been reduced to what was 
 necessary to keep up the actual capital, and the wages 
 to what was necessary to keep up the actual popula- 
 tion, while the rents would be high, just in propor- 
 tion to the fertility of the soil natural or acquired, and 
 the mass of. rents very much greater than at present. 
 
 Nor would the effect be essentially different, if the 
 capital which could be employed with advantage 
 upon such fertile soil were extremely limited, so that 
 no further outlay were required for it than what was 
 wanted for ploughing and sowing. Still there can 
 be no doubt that capital and population might go on 
 increasing in other employments, till both the profits 
 of capital and the wages of labour had so fallen as to 
 come nearly to a stand, and rents had reached the
 
 SEC. v.] OF THE RENT OF LAND. 181 
 
 limits prescribed by the powers of the soil, and the 
 habits of the people. 
 
 In these cases it is obvious that the rents are not 
 regulated by the gradations of the soil, or the dif- 
 ferent products of capital on the same land ; and that 
 it is an incorrect inference from the theory of rent to 
 conclude with Mr. Ricardo, that " It is only because 
 land is of ditferent qualities with respect to its pro- 
 ductive powers, and because in the progress of popu- 
 lation, land of an inferior quality, or less advantage- 
 ously situated, is called into cultivation, that rent is 
 ever paid for the use of it.'' * 
 
 There is another inference which has been drawn 
 from the theory of rent, which involves an error of 
 much greater importance, and should therefore be 
 very carefully guarded against. 
 
 In the progress of cultivation, as poorer and poorer 
 land is taken into tillage, without improvements in 
 agriculture, the rate of "profits must be limited in 
 amount by the powers of the soil last cultivated, as 
 will be shewn more fully in a subsequent chapter. 
 It has been inferred from this, that when land is suc- 
 cessively thrown out of cultivation, the rate of profits 
 will be high in proportion to the superior natural fer- 
 tility of the land which will then be the least fertile 
 in cultivation. 
 
 If land yielded no rent whatever in its natural 
 state, whether it were poor or fertile, then the whole 
 produce being divided between profits and wages, 
 and the corn wages of labour being supposed to 
 
 * Principles of Political Economy, ch. ii. p. 54. This passage 
 was taken from the first edition. It is altered in the second and 
 third ; but not sufficiently to make it true. In the third, (p. 56) 
 the passage is as follows : " It is only then because land is not 
 unlimited in quantity and uniform in quality, and because in the 
 progress of population land of an inferior quality, or less advan- 
 tageously situated, is called into cultivation, that rent is ever 
 paid for the use of it." Now it is quite obvious, as stated above, 
 that if land as fertile as the best were merely limited in quantity, 
 without being difierent in quality, it would, in the progress of 
 population, yield altogether a much higher rent than the same 
 quantity of land would with gradations of soil.
 
 182 OF THE KENT OF LAND. [CH. III. 
 
 remain nearly the same, the inference would be just. 
 But tlie premises arc not such as are here supposed. 
 In a civilized and appropriated country uncultivated 
 land always yields a rent in proportion to its natural 
 power of feeding cattle or growing wood ; and of 
 course, when land has been thrown out of tillage, 
 particularly if this has been occasioned by the im- 
 portation of cheaper corn from other countries, and 
 consequently without a diminution of population, the 
 last land so thrown out may yield a moderate rent in 
 pasture, though considerably less than before. As 
 was said in the preceding section, rent will diminish, 
 but probably not so much in proportion either as the 
 capital employed on the land, or the produce derived 
 from it. No landlord will allow his land to be culti- 
 vated by a tillage farmer paying little or no rent, 
 when by laying it down to pasture, and saving much 
 yearly expenditure of capital upon it, he can obtain 
 a greater rent. Consequently, as the produce of the 
 worst lands actually cultivated can never be wholly 
 divided between profits and wages, the state of such 
 land or its degree of fertility cannot regulate the rate 
 of profits upon it. 
 
 If to the effect of the cause here noticed we add its 
 natural consequence, viz. a rise in the value of money, 
 and a greater fall of corn than of foreign commodi- 
 ties, taxed commodities and probably of labour and 
 working cattle, it is obvious that permanent difficul- 
 ties may be thrown in the way of cultivation, and 
 that richer land may not yield superior profits. The 
 higher rent paid for the last land employed in tillage, 
 together with the greater expense of the materials of 
 capital compared with the price of produce, may 
 fully counterbalance, or even more than counterba- 
 lance, the difference of natural fertility. 
 
 With regard to the capital which the tenant may 
 lay out on his farm in obtaining more produce with- 
 out paying additional rent for it, the rate of its re- 
 turns must obviously conform itself to the general 
 rate of profits determined l)y other causes. It must
 
 SEC. v.] OF THE RENT OF LAND. 183 
 
 always follow, but can never lead or regulate. It is 
 true that when the price of corn had settled itself, 
 there would be some corn produced on the old culti- 
 vated land, the cost of producing which without rent 
 would be just about equal to such price. But it is 
 quite certain that if instead of laying out so much 
 additional capital on the lands in tillage, the capi- 
 talists could have obtained the untilled land without 
 rents, the price of corn would not have risen so high, 
 or have required so much labour and other capital to 
 produce the actual quantity ; and consequently the 
 rents of such lands clearly add to the price of corn, 
 and form a part of the costs of production. 
 
 It should be added, that in the regular progress of 
 a country towards general cultivation and improve- 
 ment, and in a natural state of things, it may fairly 
 be presumed, that if the last land taken into cultiva- 
 tion be rich, capital is scarce, and profits will then 
 certainly be high ; but if land be thrown out of cul- 
 tivation on account of means being found of obtain- 
 ing corn cheaper elsewhere, no such inference is jus- 
 tifiable. On the contrary, capital may be abundant, 
 compared with the demand for corn and commodities, 
 in which case and during the time that such abun- 
 dance lasts, whatever may be the state of the land, 
 profits must be low. These are all points of great 
 practical consequence which have been much over- 
 looked. The doctrine of the gradations of soils is a 
 most important one, but in drawing practical conclu- 
 sions from it, great care -should be taken to apply it 
 correctly. 
 
 It will be observed, that the rents paid for what 
 the land will produce in its natural state, though 
 they make a diflference in the questions relating to 
 profits and the component parts of price, do not inva- 
 lidate the important doctrine that, in countries in their 
 usual state with gradations of soil, corn is sold nearly 
 at its natural or necessary price, that is, at the price 
 necessary to bring the actual quantity to market. 
 This price must on an average be at the least equal
 
 184 OF THE HEM OF LAND. [til. 1(1. 
 
 to the costs of its production on the worst land slc- 
 tually cultivated, together with the rent of such land 
 in its natural state : because, if it falls in any degree 
 below tliis, the cultivator of such land will not be 
 able to pay the landlord so high a rent as he could 
 obtain from the land without cultivation, and conse- 
 quently the land will be left uncultivated, and the 
 produce will be diminished. In progressive coun- 
 tries, however, this rent is trifling, and the price of 
 corn is little more than is necessary to pay the wages 
 of the labour and the profits of the capital required 
 to obtain it. But in the case of land being thrown 
 out of cultivation under an abundance of capital and 
 labour, the rent of the worst land cultivated for corn 
 might by no means be trifling. Still however the 
 actual price of the corn under the same value of 
 money would be necessary to obtain the actual home 
 supply, because if the farmers paid no rents, it would 
 not answer to them to produce corn which would 
 not yield so profitable a return as the products of 
 rough pasture, or land in copse wood, or plantations. 
 
 I hope to be excused for presenting to the reader 
 in various forms the doctrine, that corn, in reference 
 to the quantity actually produced is sold at nearly its 
 necessary price, like manufactures ; because I consider 
 it as a truth of high importance, which has been en- 
 tirely overlooked by the Economists, by Adam Smith, 
 and by all those writers who have represented raw 
 produce as selling always at a monopoly price. 
 
 Section VI. — Of the Connexion between great com- 
 parative Wealthy and a high coinparative Price of 
 raw Produce. 
 
 Adam Smith has very clearly explained in what 
 manner the progress of wealth and improvement tends 
 to raise the price of cattle, poultry, the materials of 
 clothing and lodging, the most useful minerals, &c. 
 compared with corn ; but he has not entered into the
 
 SEC. VI.] OF THE RENT OE LAND, 185 
 
 explanation of the natural causes which tend to de- 
 termine the price of corn. He has left the reader 
 indeed to conclude, that he considers the price of corn 
 as determined only by the state of the mines, which 
 at the time supply the circulating medium of the 
 commercial world.* But this is a cause, which, 
 though it may account for the high or low price of 
 corn in reference to the whole of the commercial 
 world, cannot account for the differences in its price, 
 in different countries, or as compared with certain 
 classes of commodities in the same country. 
 
 I entirely agree with Adam Smith, that it is of 
 great use to inquire into the causes of high price, as 
 from the result of such inquiries it may turn out, that 
 the very circumstance of which we complain, may be 
 the necessary consequence and the most certain sign 
 of increasing wealth and prosperity. But of all in- 
 quiries of this kind, none surely can be so important, 
 or so generally interesting, as an inquiry into the 
 causes which affect the price of corn, and occasion 
 the differences in this price so observable in different 
 countries. 
 
 The two principal causes of these effects are — 
 
 1. A difference in the value of the precious metals 
 in different countries, in whatever way such difference 
 may have arisen. 
 
 2. A difference in the elementary cost of ptoducing 
 a given quantity of corn. 
 
 The principal causes of the differences in the value 
 of money in different countries have been already 
 stated, in the last section of the preceding chapter; 
 and it is certain that they occasion the greatest por- 
 tion of that inequality in the price of corn which is 
 the most striking and prominent. More than three- 
 fourths of the prodigious difference betvveen the price 
 of corn in Bengal and England is occasioned by the 
 difference in the value of money in the two coun- 
 tries ; and far the greater part of the high price of 
 
 * B. 1. ch. V. p. 53, 6th ed.
 
 186 or THE RENT OE LAXD. [cii. III. 
 
 corn ill this country, compared with its price in most 
 of tlie states of Europe, is occasioned in the same way. 
 If tlie profits of stock in Flanders be nearly the same 
 as in England (which I believe is the case), and the 
 corn wages of labour rather lower than higher, it fol- 
 lows necessarily that the elementary cost of producing 
 com is nearly the same in both countries, and that 
 the higher money price of corn in England is occa- 
 sioned by the lower value of money, and not by the 
 increased quantity of labour and other conditions of 
 supply required to produce corn. 
 
 The second cause of the high comparative price of 
 corn is the greater elementary cost of its production. 
 If we could suppose the value of money, or the money 
 wages of standard labour, to be the same in all coun- 
 tries, then the cause of the higher money price of 
 corn in one country compared with another, would 
 be the greater quantity of labour, and other conditions 
 of the supply required to produce it ; and the reason ; 
 why the price of corn would be high and tend to 
 rise in countries already rich, and still advancing in 
 prosperity and population, would be to be found in 
 the necessity of resorting to poorer land, without pro- 
 portional improvements in agriculture, that is, to ma- 
 chines which would require a greater expenditure to 
 work them ; and which consequently occasion each 
 fresh addition to the raw produce of the country to 
 be purchased at a greater cost — in short it would be 
 found in the important truth that corn in a progres- 
 sive country is sold at the price necessary to yield 
 the actual supply, and that as this supply becomes 
 more difficult the price must rise in proportion. On 
 the supposition which we have made of the value of 
 money being the same in different countries, the price 
 of corn would rise without being followed by a rise 
 in the money price of labour. 
 
 The prices of corn in different countries, as deter- 
 mined by the two causes above mentioned, must of 
 course be affected by every circumstance in each 
 country that afiects either the value of money, or the
 
 SEC. Vr.] OF THE RENT OF LAND. 187 
 
 elementary cost of producing* corn, such as the pros- 
 perity of foreign commerce, improvements in the 
 modes of cultivation ; the saving of labour on the 
 land, direct and indirect taxation ; and particularly 
 the importations of foreign corn. The latter cause, 
 indeed, may do away, in a considerable degree, the 
 usual eft'ects of great wealth on the price of corn ; 
 and this wealth will then shew itself in a different 
 form. 
 
 Let us suppose seven or eight large countries not 
 very distant from each other, and not very differ- 
 ently situated with regard to the mines ; and further, 
 that neither their soils nor their skill in agricul- 
 ture are essentially unlike ; that there are no taxes ; 
 and that every trade is free, except the trade in corn. 
 Let us now suppose one of them very greatly to in- 
 crease in capital and manufacturing skill above the 
 rest, and to become much more rich and populous 
 without increased skill in agriculture. I should say, 
 that this comparative increase of riches could not 
 take place, without a comparative increase in the 
 prices of corn and labour ; and that such increase of 
 prices would, under the circumstances supposed, be 
 the natural sign and necessary consequence, of the 
 increased wealth and population of the country in 
 question. 
 
 Let us now suppose the same countries to have 
 the most perfect freedom of intercourse in corn, and 
 the expenses of freight, &c. to be quite inconsider- 
 able : And let us still suppose one of them to increase 
 very greatly above the rest, in manufacturing capital 
 and skill, in wealth and population : I should then 
 say, that as the importation of corn would prevent 
 any great difference in the prices of corn and labour, 
 it would prevent any great difference in the amount 
 of capital laid out upon the land, and the quantity of 
 com obtained from it ; that consequently, the great 
 increase of wealth could not take place without a 
 great importation of corn from other nations ; and 
 that this importation, under the circumstances sup-
 
 188 OF Tilt: KENT OF LAND. [cil. III. 
 
 posed, would be the natural sign and necessary con- 
 sequence of the increased wealth and population of 
 the country in question. 
 
 These I consider as the two alternatives necessarily 
 belonging to a great comparative uicrease of wealth ; 
 and the supposition here made will, with proper al- 
 lowances, apply to the general state of Europe. 
 
 In most countries the expenses attending the car- 
 riage of corn are considerable. They form a natural 
 barrier to importation ; and even the country, which 
 habitually depends upon foreign corn, must have the 
 price of its food higher than the general level. Prac- 
 tically, also, the prices of raw produce in the different 
 countries of Europe are variously modified by dif- 
 ferent soils, different degrees of taxation, and ditlerent 
 degrees of improvement in the science of agriculture. 
 But the principles laid down are the general princi- 
 ples on the subject ; and in applying them to any 
 particular case, the particular circumstances of such 
 case must always be taken into the consideration. 
 
 With regard to improvements in agricultur(% which 
 in similar soils is the great cause which retards the 
 advance of price under an increase of produce ; al- 
 though they are sometimes most powerful, and of 
 very considerable duration, we know from experience 
 that they have not been sufficient to balance the ef- 
 fects of applying to poorer land, or inferior machines. 
 Corn is obtained with less labour in the United States 
 of America than in any European country. In this 
 respect, raw produce is essentially different from ma- 
 nufactures. 
 
 The elementary cost of manufactures, or the quan- 
 tity of labour and other conditions of the supply 
 necessary to produce a given quantity of them, has a 
 constant tendency to diminish ; while the quantity of 
 labour and other conditions of the supply neces- 
 sary to procure the last addition which has been 
 made to the raw produce of a rich and advancing 
 country, has a constant tendency to increase. 
 
 We see in consequence, from the combined opera- 
 
 «
 
 SEC. VI.] OF THE KENT OI LAND. 189 
 
 tion of the two causes, which have been stated in this 
 section, that in spite of continued improvements in 
 agriculture, the price of com is generally the highest 
 in the richest countries ; wdiile notwithstanding the 
 high prices of corn and labour, the prices of many 
 manufactures still continue lower than in poorer 
 countries. 
 
 I cannot then agree with Adam Smith, in thinking ►'' 
 that the low value of gold and silver is no proof of 
 the wealth and tlourishing state of the country where 
 it takes place. Nothing of course can be inferred 
 from it, taken absolutely, as such high price may de- 
 pend merely upon the abundance of the mines ; but 
 taken relatively to other commodities and in com- 
 parison with the state of other countries at no great 
 distance, and connected with each other, much may 
 be inferred from it. If we are to estimate the value 
 of the precious metals in different countries by the 
 measure which he has himself proposed, it appears 
 to me that whether we consider the first or second 
 cause which has been referred to in this section, there 
 are few more certain signs of wealth than the high i^" 
 average price of raw produce. If the value of money 
 were the same in all countries, then, independently 
 of importation and improvements in agriculture, the 
 wealth and population of similar countries, though 
 not the condition of the labouring classes, would be 
 proportioned to the high price of their corn. And 
 in the actual state of things, with great differences in 
 the value of money, arising from the incidental causes 
 above noticed, as those countries not possessed of 
 mines where the money prices of corn and labour are 
 high must have had very flourishing manufactures, 
 or an abundance of raw products fitted for exporta- 
 tion, such countries will generally be found either 
 rich, or in the way rapidly to become rich. 
 
 It is of importance to ascertain this point ; that we 
 may not complain of one of the most certain proofs 
 of the prosperous condition of a country.
 
 190 or THE rext of land. [cii. hi. 
 
 Section VII. — On tlie causes which may mislead the 
 Landlord in letting his Lands, to the Injury both 
 of himself and the Country. 
 
 In the progress of a country towards a liigli state of 
 improvement, the positive wealth of the landlord 
 ought, upon the principles which have been laid 
 down, gradually to increase ; although his relative 
 condition and influence in society will probably rather 
 diminish, owing to the increasing number and wealth 
 of those who live upon the profits of capital. 
 
 The progressive fall, with few exceptions,* in the 
 value of the precious metals throughout Europe ; the 
 still greater fall, w-hich has occurred in the richest 
 countries, together with the increase of produce which 
 has been obtained from the soil, must all conduce to 
 make the landlord expect an increase of rents on the 
 renewal of his leases. But, in re-letting his forms, 
 he is liable to fall into two errors, which are almost 
 equally prejudicial to his own interests, and to those 
 of his countr3\ 
 
 In the first place, he may be induced, by the im- 
 mediate prospect of an exorbitant rent, offered by 
 farmers biddino- ao-ainst each other, to let his land to 
 a tenant without sufHcient capital to cultivate it in 
 the best way, and make the necessary improvements 
 upon it. This is undoubtedly a most short-sighted 
 policy, the bad effects of which have been strongly 
 noticed by the most intelligent land-surveyors in the 
 evidence brought before Parliament ; and have been 
 particularly remarkable in Ireland, where the impru- 
 dence of the landlords in this respect, combined per- 
 haps with some real difficulty in finding substantial 
 tenants, has aggravated the discontents of the coun- 
 try, and thrown the most serious obstacles in the way 
 of an improved system of cultivation. The conse- 
 
 * Among these exceptions, the period since the war of the 
 French revolution forms an important one.
 
 SEC. VII.] OF THE KENT OF LAND. 191 
 
 quence of this error is the certain loss of all that 
 future source of rent to the landlord, and wealth to 
 the country, which arises from the good farming of 
 substantial tenants. 
 
 The second error to which the landlord is liable, 
 is that of mistaking a mere temporary rise of prices, 
 for a rise of sufficient duration to warrant an increase 
 of rents. It frequently happens that a scarcity of 
 one or two years, or an unusual demand arising from 
 any other cause, may raise the price of raw produce 
 to a height at which it cannot be maintained. And 
 the farmers, who take land under the influence of 
 such prices, will, on the return of a more natural 
 state of things, probably fail, and leave their farms 
 in a ruined and exhausted state. These short periods 
 of high price are of great importance in generating 
 capital upon the land, if the farmers are allowed to 
 have the advantage of them ; but if they are grasped 
 at prematurely by the landlord, capital is destroyed 
 instead of being accumulated ; and both the land- 
 lord and the country incur a loss, instead of gaining 
 a benefit. 
 
 Some delay also is desirable in raising rents, even 
 when the rise of prices seems as if it would be per- 
 manent. In the progress of prices and rents, rent 
 ought always to be a little behind ; not only to afford 
 the means of ascertaining whether the rise be tempo- 
 rary or permanent, but even in the latter case, to 
 give a little time for the accumulation of capital on 
 the land, of which the landholder is sure to feel the 
 full benefit in the end. 
 
 There is no just reason to believe, that if, in the 
 
 present state of this country, the landlords were to 
 
 give the whole of their rents to their tenants, corn 
 
 j would be in any marked degree cheaper. If the 
 
 I view of the subject, taken in the preceding inquiry, 
 
 be correct, the last additions made to our home pro- 
 
 , duce are sold at nearly the cost of production, and 
 
 independent of agricultural improvements the same 
 
 quantity could not be produced from our own soil at
 
 192 OF Till-: UKNT OF LAND. [CH. III. 
 
 an essentially less price, even without rent, supposing 
 the value of money to remain the same. Tiie eti'ect 
 of transferring' all rents to tenants, would be merely 
 the turning them into landlords, and tempting them 
 to cultivate their farms under the superintendence of 
 careless and uninterested bailiffs, instead of the vigi- 
 lant eye of a master, who is deterred from careless- 
 ness by the fear of ruin, and stimulated to exertion 
 by the hope of a competence. The most numerous 
 instances of successful industry, and well-directed 
 knowledge, have been found among those who have 
 paid a fair rent for their lands ; who have embarked 
 the whole of their capital in their undertaking ; and 
 who feel it their duty to watch over it with unceasinsf 
 care, and add to it whenever it is possible. 
 
 But when this laudable spirit prevails among a 
 tenantry, it is of the very utmost importance to the 
 progress of riches, and the permanent increase of 
 rents, that there should be the power as well as the 
 will to accumulate ; and an interval of advancing 
 prices, not immediately followed by a proportionate 
 rise of rents, furnishes the most etfective power of 
 
 ^^this kind. These intervals of advancing prices, when 
 not succeeded by retrograde movements, most effec- 
 tually contribute to the progress of national wealth. 
 And practically I should say, that when once a cha- 
 racter of industry and economy has been established, 
 
 ^temporary high profits are a more frequent and power- 
 ful source of accumulation than any other cause that 
 can be named.* It is the only cause which seems 
 capable of accounting for the prodigious accumula- 
 tion among individuals, which must have taken place 
 
 /in this country during the last war, and which left 
 us with a greatly increased capital, notwithstanding 
 the vast annual destruction of stock for so long a 
 period. 
 
 * Adam Smith notices the bad effects of high profits on the 
 habits of the capitalist. They may perhaps sometimes occasion 
 extravagance ; but generally, I should say, that extravagant ha- 
 bits were a more frequent cause of a scarcity of capital and high 
 profits, than high profits of extravagant habits.
 
 SKC. VII.] OF THE RENT OF LAND. 193 
 
 Among the temporary causes of hig-h price, vvhicli 
 may sometimes mislead tlie landlord, it is necessary 
 to notice changes in the value of the currency from 
 the issue of paper. When they are likely to be of 
 short duration, they must be treated by the landlord 
 in the same manner as years of unusual demand. But 
 when they continue so long as they did atone time in 
 this country, it is impossible for the landlord to do 
 otherwise than regulate his rent accordingly, and take 
 the chance of being obliged to lessen it again, on the 
 return of the currency to its natural state. 
 
 With the cautions here noticed in letting farms, 
 the landlord may fairly look forward to a gradual and 
 permanent increase of rents ; and in general, not only 
 to an increase proportioned to the rise in the j^^^ice of 
 produce, but to the increase of its quantity occasioned 
 by the extension of cultivation, and agricultural im- 
 provements. 
 
 If in taking rents, which are equally fair for the 
 landlord and tenant, it is found that in successive let- 
 tings notwithstanding the increase of cultivation, they 
 do not rise more than in proportion to the price of 
 produce, it will generally be owing to heavy taxa- 
 tion. 
 
 Though it is by no means true, as stated by the 
 Economists, that all taxes fall on the neat rents of the 
 landlords, yet it is certainly true that thc}^ have little 
 power of relieving themselves. It is also true that they 
 possess a fund more disposeable, and better adapted 
 for taxation than any other. They are in consequence 
 more frequently taxed, both directly and indirectly. 
 And if they pay, as they certainly do, many of the 
 taxes which fall on the capital of the farmer and the 
 wages of the labourer, as well as those directly im- 
 posed on themselves, they must necessarily feel it in 
 the diminution of that portion of the whole produce, 
 which undev other circumstances would have fallen 
 to their share.
 
 194 ()!■ I 111; Ul-.\l ol LAND. [Cll. III. 
 
 Section' YlU.^On the strict and iiecessary Connec- 
 tion of the Interests of the Landlord and of the 
 State. 
 
 It lias been stated by Adam Smith, that the interest 
 of the landholder is " strictly and inseparably con- 
 nected with the general interest of the society :" and 
 that whatever either promotes or obstructs the one, 
 necessarily promotes or obstructs the other.* The 
 theory of rent, as laid down in the present chapter, 
 seems strong-ly to confirm this statement. If under 
 any given natural resources in land, the main causes 
 which conduce to the interest of the landholder are 
 increase of capital, increase of population, improve- 
 ments in agriculture, and an increasing demand for 
 raw produce occasioned by the prosperity of commerce, ' 
 it seems scarcely possible to consider the interests of 
 the landlord as separated from the general interests 
 of the society. 
 
 Yet it has been said by Mr. Ricardo that, '^ the in- 
 terest of the landlord is always opposed to that of the 
 consumer and the manufacturer,"'!" that is, to alMhe 
 other orders in the state. To this opinion he has been 
 led, very consistently, by the peculiar view he has taken 
 of rent, which makes him state, that it is for the in- 
 terest of the landlord that the cost attending the pro- 
 duction of corn should be increased,;}: and that im- 
 provements in agriculture tend rather to lower than 
 to raise rents. 
 
 If this view of the theory of rent were just, and it 
 were really true, that the income of the landlord is 
 increased by increasing the difficulty, and diminished 
 
 * Wealth of Nations, Book I. c. xi. p. 394. 6th edit. 
 
 t Mr. Ricardo in his 3id edit. (c. xxiv. p. 399.) allows tliat 
 the Uindloid has a remote interest in improvements ; but slill 
 dwells without sufficient reason on the interval of injury which 
 he sustains. 
 
 : Ibid.
 
 SEC. Vfll.J OF THE REXT OF LAND. 195 
 
 by increasing the facility of production, the opinion 
 would unquestionably be well founded. But if, on 
 the contrary, the landlord's income is practically 
 found to depend chiefly upon natural fertility of soil, 
 improvements in as:^riculture, and inventions to save 
 labour, we may still think, with Adam Smith, that 
 the landlord's interest is not opposed to that of the 
 country. 
 
 It is so obviously true, as to be hardly worth stating, 
 that if the land of the greatest fertility were in such 
 excessive plenty compared with the population, that 
 every man might help himself to as much as he wanted, 
 tliere would be no rents or landlords properly so called. 
 It will also be readily allowed, that if in this or any 
 other country you could suppose the soil suddenly to 
 be made so fertile, that a tenth part of the surface, 
 and a tenth part of the labour now employed upon it, 
 could more than support the present population, you 
 would for some time considerably lower rents. 
 
 But it is of no sort of use to chuell upon, and draw 
 general inferences from suppositions which never can 
 , take place. 
 
 What we want to know is, whether, living as we 
 do in a limited world, and in countries and districts 
 j still more limited, and under such physical laws re- 
 lating to the produce of the soil and the increase of 
 ' population as are found by experience to prevail, the 
 I interests of the landlord are generally opposed to those 
 I of the society. And in this view of the subject, the 
 I question may be settled by an appeal to the most in- 
 controvertible principles confirmed by the most glaring 
 I facts. 
 
 Whatever fanciful suppositions we may make about 
 sudden improvements in fertility, nothing of this kind 
 I which we have ever seen or heard of in practice, ap- 
 proaches to what we know of the power of population 
 to increase up to the additional means of subsistence. 
 Improvements in agriculture, however considerable 
 they may finally prove, are always found to be par- 
 tial and gradual. And as, where they prevail to any ex-
 
 196 OF Tin-: lu.si of land. [cm. hi. 
 
 tent, there is generally an eftectiial demand for labour, 
 the increase of popidation occasioned by the increased 
 facility of procnrino- food, soon overtakes the addi- 
 tional produce. Instead of land being thrown out of 
 cultivation, more land is cultivated, owing to the 
 cheapness of the instruments of cultivation, and under 
 these circumstances rents rise instead of fall. These 
 results appear to me to be so completely confirmed by 
 experience, that I doubt, if a single instance in the 
 history of Europe, or any other part of the world, can 
 be produced, where improvements in agriculture have 
 been practicaUif found to lower rents. 
 
 I should further say, that not only have improve- 
 ments in agriculture never lowered rents, but that they 
 have been hitherto, and may be expected to be in fu- 
 ture, the main source of the increase of rents, in almost 
 all the countries with which we are acquainted.* 
 
 It is a fundamental part of the theory which has 
 been explained in this chapter, that, as most countries 
 consist of a gradation of soils, rents rise as cultivation 
 is pushed on poorer lands ; but still the connexion be- 
 tween rent and fertility subsists in undiminished force. 
 The rich lands are those which yield the mass of rents, 
 not the poor ones. The poor lands are cultivated, be- 
 cause the increasing capital and population are calling 
 for more produce, and if there were no poor soils, there 
 would still be rents ; a limited territory, however fer- 
 tile, would soon be peopled ; and as the demand for 
 
 * In an article of the Edinburgh Review, on Mr. Jones' Theory 
 of Rent, the reviewer alludes to the error of Mr. Ricardo in re- 
 gard to the ctFects of agricultural improvements on the rents of the 
 landlords ; and says, " Had Mr. Jones been the first to j)oint out 
 this mistake of Mr. Ricardo, and to rectify it, he would have 
 done some little service to the science." For the Jirst rectifica- 
 tion of the mistake, a reference is made to what had been published 
 twelve months previouslv to the appearance of Mr. .Jones' work, 
 in the second edition of Mr. M'Culloch's Political Economy. 
 
 Now as the reviewer was so ready to accuse Mr. Jones of not 
 knowing what had been done by others, he shoidd not himself have 
 been ignorant that the mistake had been rectified in this work, 
 not- merely twelve months, but nearly twelve years before, that is, 
 in 1^20, before Mr. Ricardo's 3rd edit, came out. 
 
 I
 
 SEC. VI II.] OF THE KENT OF LAND, 197 
 
 corn increased compared with the supply, rents would 
 rise. 
 
 It is evident then, that difficulty of production has 
 no connection with increase of rent, except as, in the 
 actual state of most countries, it is the natural conse- 
 quence of an increase of capital and population, and 
 a fall of profits and corn wages ; or, in other words, 
 of an increase of wealth. 
 
 But after all, the increase of rents which results 
 from an increase of price occasioned solely by the 
 greater quantity of labour and other conditions of sup- 
 ply, necessary to produce a given quantity of corn on 
 fresh land, is very much more limited than has been 
 supposed ; and b}' a reference to most of the countries 
 with which we are acquainted, it will be seen that, 
 practically, improvements in agriculture and the sav- 
 ing of labour on the land, both have been, and may 
 be expected in future to be, a very much more power- 
 ful source of increasing rents. 
 
 It has already been shown, that for the very great 
 increase of rents which has taken place in this coun- 
 try during nearly the last hundred years, we are 
 mainly indebted to improvements in agriculture, as 
 profits have rather risen than fallen, and little or no- 
 thing has been taken from the wages of families, if 
 we include parish allowances, and the earnings of 
 women and children. Consequently these rents must 
 have been a creation from the skill and capital em- 
 ployed upon the land, and not a transfer from profits 
 and wages, as they existed nearly a hundred years 
 aoro. 
 
 The peculiar increase of rents, which has taken 
 place in Scotland during the last half century, is well 
 known to have been occasioned by improvements in 
 agriculture, a greater expenditure in manure, a better 
 rotation of crops, and the saving of labour on the land. 
 
 In Ireland, neither the waoes of the individual la- 
 bourer, nor the profits of agricultural capital, seem as 
 if they could admit of any considerable reduction ; but 
 there can be no doubt that a great aup:mentation of
 
 JOS OF THE RI.NT OF LAND. [cil. III. 
 
 rents might be eft'ected by an improved system of cul- 
 tivation, and a prosperous commerce, which, at the 
 same time that it would sweep into flourishing cities 
 the idlers which are now only half employed upon the 
 land, would occasion an increasinof demand for the 
 products of agriculture, while the rates of profits and 
 waoes niiiiht remain as hio;h as before. 
 
 Similar observations may be made with regard to 
 Poland, and indeed almost all the countries of Eu- 
 rope. There is not one in which the real wages of 
 labour are high, and scarcely one in which the profits 
 of agricultural capital are known to be considerable. 
 If no improvements whatever in agriculture were to 
 take place in these countries, and the future increase 
 of their rents were to depend upon an increase of price 
 occasioned solely by the increased quantity of labour 
 necessary to produce food, I am inclined to think that 
 the progress of their rents would be very soon stopped. 
 The present rates of profits and wages are not such as 
 would admit of much diminution ; and without in- 
 creased skill in cultivation, and especially the saving 
 of labour on the land, it is probable that no soils much 
 poorer than those which are at present in use, would 
 pay the expense of cultivation. 
 
 Even the rich countries of India and South Ame- 
 rica are not very differently' circumstanced. From all 
 the accounts we have received of these countries, it 
 does not appear that agricultural profits are high, and 
 it is certain that wages in reference to the condition 
 of the labourer are in o-eneral small in amount. And 
 althouo-li rents mis^ht receive some augmentation from 
 such profits and wages, yet I conceive that their pos- 
 sible increase in this way would be quite trifling, com- 
 pared with what it might be under an improved sys- 
 tem of cultivation, a prosperous commerce, and an 
 effectual demand for a greater quantity of raw produce, 
 even without any transfer from the labpurer or culti- 
 vator. 
 
 The United States of America seem to be almost 
 the only country with which w^e are acquainted where 
 
 A
 
 SEC. VIll.j OF THE KENT OF LAN 13. 199 
 
 the present wages of labour and the profits of agri- 
 cultural stock are sufficiently high to admit of a con- 
 siderable transfer to rents without improvements in 
 agriculture. And probably it is only when the skill 
 and capital of an old and industrious country are em- 
 ployed upon a new, rich, and extensive territory, un- 
 der a free government, and in a favourable situation 
 for the export of raw produce, that this state of things 
 can take place. 
 
 In old states, experience tells us that the wages of 
 the individual labourer may be inconsiderable,* and 
 the profits of the cultivator not high, while vast tracts 
 of good land remain uncultivated. It is obvious, in- 
 deed, that an operose and ignorant sj^stem of cultiva- 
 tion, combined with such a faulty distribution of pro- 
 perty as to check the progress of demand, might keep 
 the profits of cultivation low, even in countries of the 
 richest soil. And there is little doubt, from the very 
 large proportion of people employed in agriculture in 
 most unimproved territories, that this is a case which 
 not unfrequently occurs. But in all instances of this 
 kind, it must be allowed, that the great source of the 
 future increase of rents will be improvements in agri- 
 culture, and the demand occasioned by a prosperous 
 external and internal commerce, and not the increase 
 of price occasioned by the additional quantity of la- 
 bour required to produce a given quantity of corn. 
 
 If, however, in a country which continues to grow 
 nearly its own consumption of corn, or the same pro- 
 portion of that consumption, it appears that every sort 
 of improvement which has ever been known to take 
 place in agriculture, manufactures, or commerce, by 
 which a country has been enriched, tends to increase 
 rents, and every thing by which it is impoverished, 
 tends to lower them, it must be allowed that the inte- 
 
 * If, partly fiora indolence, and partly from the want of demand 
 for labour, which is the great parent of indolence in these coun- 
 tries, the labourer works only two or three days in the week, wages, 
 though they may be low in reference to the condition of the la- 
 bourer, may be high in referenre to the outgoings of the capitahst.
 
 200 or THE RENT Ol- LAND. [CH. HI. 
 
 rests of the landlord, and those of the state are, under 
 the circumstances supposed, inseparable. 
 
 Mr. Ricardo, as 1 have before intimated, appears 
 to take only one simple and confined view of the pro- 
 gress of rent. He considers it as occasioned solely by 
 the increase of price, arising from the increased diffi- 
 culty of production.* But if rents in many countries 
 may be doubled or trebled by improvements in agri- 
 culture, while in few countries tliey could be raised a 
 fourth or a fifth, and in some not a tenth, by the in- 
 crease of price arising from the increased difficulty of 
 production, must it not be acknowledged, that such a 
 view of rent embraces only a very small part of the 
 subject, and consec^uently that any general inferences 
 from it must be utterly inapplicable to })ractice? 
 
 It should be further observed, in reference to im- 
 provements in agriculture, that the mode in which 
 Mr. Ricardo estimates the increase or decrease of rents 
 is quite peculiar ; and this peculiarity in the use of 
 his terms tends to separate his conclusions still farther 
 from truth as enunciated in the accustomed language 
 of political economy. 
 
 In speaking of the division of the whole produce of 
 the land and labour of the country between the three 
 classes of landlords, labourers, and capitalists, he has 
 the following passage. 
 
 " It is not by the absolute quantity of produce ob- 
 tained by either class, that we can correctly judge of 
 the rate of profit, rent, and wages, but by the quan- 
 tity of labour required to obtain that ])roduce. By 
 improvements in machinery and agriculture the whole 
 produce may be doubled ; but if wages, rent and pro- 
 fits be also doubled, they will bear the same propor- 
 tions to one another as before. But if wages partook 
 not of the whole of this increase ; if they, instead of 
 
 • Mr. Ricardo always seems to assume, that increased difficid- 
 ties thrown in the wayol" [jrodiiction will be overcome by increased 
 price, and that the same quantity will be produced as would have 
 been produced if no increased difficulty had occurred. But this 
 is quite an unwarranted assumption. 

 
 SEC. VIII.] OF THE KENT OF LAND. 201 
 
 being doubled, were only increased one half; if rent, 
 instead of being doubled, were only increased three- 
 fourths, and the remaining increase went to profit, it 
 would, I apprehend, be correct for me to say, that rent 
 and wages had fallen while profits had risen. For if 
 we had an invariable standard by which to measure 
 the value of this produce, we should find that a less 
 value had fallen to the class of labourers and landlords, 
 and a greater to the class of capitalists than had been 
 given before."* 
 
 A little farther on, having stated some specific pro- 
 portions, he observes, '' In that case I should say, that 
 wages and rent had fallen and profits risen, though, in 
 consequence of the abundance of commodities, the 
 quantity paid to the labourer and landlord would have 
 increased in the proportion of 25 to 44. "'f 
 
 But, to estimate rent and wages by the proportion 
 which they bear to the whole produce, must, in an 
 inquiry into the nature and causes of the wealth of 
 nations, lead to perpetual confusion and error. For 
 
 I what does it require us to say ? We must say that 
 the rents of the landlord have fallen and his interests 
 have suffered, when he obtains as rent above three- 
 fourths more of raw produce than before, and with that 
 produce will shortly be able, according to Mr. Ricar- 
 do's own doctrines, to command three-fourths more 
 labour. In applying this language to our own coun- 
 try, we must say that rents have fallen considerably 
 during the last forty years, because, though rents have 
 greatly increased in exchangeable value, — in the com- 
 mand of money, corn, labour and manufactures, it 
 appears, by the rejurns to the Board of Agriculture, 
 that they are now only a fifth of the gross produce,']: 
 wliereas they were formerly a fourth or a third. 
 
 [ In reference to the price of labour, we must say 
 tha-t it is low in America, althouo;h we have been hi- 
 
 I therto in the habit of considering it as very high. And 
 
 * Principles of Political Economy, oh. i. p. 49, 3id edit. 
 
 t Id. p. 50. 
 
 X Reports from the Lords on the Corn Laws, p. 6G.
 
 202 i)V THE KENT OV LAND. [ciJ. III. 
 
 we must call it high in Sweden ; because, although 
 the labourer only earns low money wages, and with 
 them can obtain but few of the necessaries and conve- 
 niences of life ; yet, in the division of the whole pro- 
 duce of a laborious cultivation on a poor soil, a larger 
 proportion may go to labour.* 
 
 Into this unusual lano;uaoe Mr. Ricardo has been 
 betrayed by the fundamental error of adopting a mea- 
 sure of value, which varied with the thing to be mea- 
 sured. 
 
 If, however, we were to use a really invariable mea- 
 sure, the result would be totally different from that 
 which he has stated. Let us suppose, for instance, 
 that a produce of 110 quarters of corn were divided 
 into 60 quarters for the advances of labour and other 
 capital, 40 for rent, and 10 for the farmer's profits, 
 and that subsequently labour became doubly produc- 
 tive, so that the same quantity of labour and other 
 capital produced 220 quarters instead of 1 10, and were 
 divided as supposed by Mr. Ricardo, that is one half 
 more produce awarded to the labourer, three fourths 
 to rent, and the remainder to profits. The result 
 would be as follows : 
 
 While the produce was 110 quarters, 
 
 The labourers had . . GO 
 
 The landlords . . .40 
 
 The capitalists . . .10 
 
 After the increase to 220 quarters. 
 
 The labourers would have . 90 
 
 The landlords . . . 70 
 
 The capitalists . . .GO 
 
 Now, if we measure these incomes in money of an 
 
 invariable value, and with a view to simplify the cal- 
 
 * It is specifically this unusual application of common terms 
 which has rendered Mr. Ricardo's work so difficult to be under- 
 stood by many people. It requires indeed a constant and labo- 
 rious effort of the niiml to recollect at all times what is meant by 
 high and low rents, and high or low wages. In other respects, it 
 has always appeared to me that the style in wliich the work is 
 written, is perfectly clear. It is never obscure, but when either 
 the view itself is erroneous, or terms are used in an unusual sense.
 
 ;SEC. VIII.] OF THE KENT OF LA\D. 203 
 
 culatioii, suppose that in the first case each quarter is 
 worth £1, that four men are employed for the year in 
 immediate labour, and advances equivalent in value 
 to the wages of two men are made in accumulated la- 
 bour and profits, that the capital employed is there- 
 fore £60, and that the wages of labour are 10 quar- 
 ters, or £10 a year, the following will be the results 
 on the increase of produce. 
 
 . 1. The price of the quarter will fall from £ 1 to 
 TS?. 4^/.,^ £60 being the price of 90 quarters. 
 ji 2. The price of the whole produce will rise from 
 £ 110 to £ 146. 13^. 4<r/., this sum being the price of 
 220 quarters, at 13^. 4d. a quarter. 
 
 3. The money will rise from £40 to £46. 13^. 4d., 
 this sum being the price of 70 quarters, at 13^. 4d. a 
 quarter. 
 
 4. The rate of profits will rise from 161 per cent, 
 to 66| per cent, the difference being the advance of 
 60 quarters with the return of 70, and of 90 with the 
 return of 150. 
 
 5. The corn wages of labour will increase from 10 
 quarters to 15 quarters, 90 quarters instead of 60 be- 
 
 Mng divided among the six labourers; but the price 
 ,:Cf the 90 quarters being the same as that of the 60 
 ijquarfepG, the value of the wages paid will remain ex- 
 j'actly the same. 
 
 I' It will indeed be perfectly true that the 15 quar- 
 fiters of corn now paid to each labourer can be raised 
 at a less expense of mere labour than the 1 quarters 
 were before, and it is on this account specifically that 
 Mr. Ricardo would say that labour had fallen ; but 
 ihe throws quite out of consideration the prodigious 
 difference of profits under which the wages of the 
 labourer are produced in the two cases considered. 
 Now though it may be said that when the value of 
 
 ■■ Mr. Ricardo thought that it would fall to 10s., because he 
 I supposes the same amount of labour and capital to yield double 
 'the amount of corn. But as according to his own supposition, 
 I 90 quarters, instead of 120, will pay the six labourers, it is obvi- 
 ous that the price of the quarter will only fall to 1 35. 4c?. : and the 
 ' values of the whole produce, and of the rent vary accordingly.
 
 204 OF THE RENT OF LAND. [cil. III. 
 
 commodities is made up of labour and profits, if pro-' 
 fits be the same, their relative value will depend ex- 
 clusively on the labour employed, yet it is obviously 
 (piite impossible that this should be the case, when^ 
 profits are most essentially ditierent, as in the cas 
 stated. 
 
 In the present instance the difference is between 
 profit of 1(3 1 per cent., and G6i per cent. Supposing 
 the GO quarters which in the first case pay the wage 
 of 6 men to be produced with a profit of 16| pei 
 cent., the quantity of labour employed to produce" 
 them would be 5.14. Supposing the 90 quarters 
 which in the second case, pay the wages of the 6 
 men to be produced with a profit of- 661 per cent., 
 the quantity of labour employed would be 3.6. Tiiis 
 is no doubt a very great difference ; but the very 
 great difference in the rate of profits exactly counter- 
 balances it, and renders the value of the labour of 6 
 men for the year in both cases just the same. 
 
 Tlie foregoing cases shew further how fundamen- 
 tally erroneous it is to consider the rise of rent, when 
 measured by an invariable standard, as depending 
 entirely upon a rise in the price of corn, which must 
 proportionally injure the consumer. M e have here 
 an instance of the fall of the money price of corn 
 from £1 a quarter to 13*. 4(1., while the money rent 
 rises on the first division proposed, from £40 to 
 £40. 13*. 4^/.* But it is not consistent with the natu- 
 ral tendency to accumulation, and the principle of 
 population, that such profits as 6GI per cent., and 
 such wages as 15 quarters a year, should continue 
 for any length of time ; and if owing to the rapid 
 increase of capital and population which, if the pro- 
 
 * Mr. Ricardo by his proposed division of the produce lias 
 assumed that the demand is such as to occasion the product' to 
 be so divided ; and then the results stated will follow. But in 
 reality if the labour on the land were to become at once doubly 
 productive, there would certainly be a i;bit of corn, and the divi 
 sion of the produce would be very dillereut from that which he 
 has supposed.
 
 SEC. VIII.] 01-" THE RENT OF LAND. 205 
 
 duce were properly distributed, would unquestion- 
 ably take place, we were to suppose them gradually 
 to return to their former rates, and the money price 
 of corn to its former price, we should find that after an 
 interval of great prosperity to all classes, and without 
 any subsequent pressure upon tlie capitalist, tlie la- 
 bourer, or consumer, greater than before the extraor- 
 dinary improvement supposed, corn rent on the same 
 land would have risen from 40 quarters to 1 GO quar- 
 ters, and money rent from £40 to £160. 
 
 Now if we compare this prodigious increase of 
 rent, occasioned by facility of production, with any 
 increase which could have taken place owing to dif- 
 ficulty of production, we shall see the great supe- 
 riority of the former source of rent over the latter. 
 
 The labouring classes could not probably admit of 
 a greater reduction in their corn wages than from 10 
 quarters a year to 8 quarters a year, in which case if 
 corn were estimated in money of a fixed value, the 
 price could not rise higher than from £1 to £1.5,y. 
 Nor is it probable that profits would admit of a greater 
 reduction than from IGj to Of before accumulation 
 would be nearly at a stand. On these suppositions 
 the division of the produce of 1 1 quarters would be 
 as follows : — 
 
 6 labourers at 8 quarters a year . 48 qrs. 
 Profits upon advances of 48 quarters at 
 C| per cent. . . . . 3y 
 
 5H 
 
 I The remainder of the 110 quarters, equal to 58± 
 quarters, will be corn rent; and 58f quarters, at 
 £1. 5s., equal to £73. \0s., will be money rent. 
 I It is obvious that if we had set out with a lower 
 , and more usual rate of profits and corn wages, sucli 
 I as profits of 10 or 9 per cent, and wages of 9 or 8^ 
 quarters, the increase of rent would have been com- 
 paratively trifling, and that in those countries where 
 I the wao'es of labour are at what Mr. Ricardo has
 
 20G OF THE RENT OF LAND. [cH. III. 
 
 called the natural price, that is, at such a price as is 
 only sufficient to maintain a stationary population, 
 no permanent rise in the price of corn or increase of 
 rent arising- solely from the reduction of profits and 
 wages is possible. 
 
 The only doubt which can exist respectino- the 
 strictest union between the interest of the landlord, 
 and that of the state, is in the question of importation. 
 And here it is evident that at all events the landlord 
 cannot be considered as placed in a more invidious 
 situation than other producers. No person has ever 
 doubted that if some foreign nations were to excel us 
 in machinery, the individual interests of the actual 
 manufacturers of woollen, silk, linen, or cotton goods, 
 in this country might be injured by foreign competi- 
 tion ; and few would deny that the importation of a 
 large body of labourers would tend to reduce wages. 
 Under the most unfavourable view therefore that we 
 can take of the subject, the case of the landlord is 
 not separated from that of other producers.* 
 
 And if to this we add that in a state of perfectly 
 free intercourse, it is eminently the interest of those 
 who live upon the rents of land that capital and 
 population should increase, while to those who live 
 upon the profits of stock and the wages of labour, an 
 increase of capital and population is, to say the least 
 of it, a much more doubtful benefit, it may be most 
 safely asserted that the interest of no other class in 
 the state is so nearly and necessarily connected with 
 its wealth, prosperity, and po\ver, as the interest of the 
 landowner. 
 
 * Colonel Toriens concludes the second edition of his Treatise 
 on a Free Corn Trade with the following: passage : " The class 
 of land proprietors have not any more than the capitalists and 
 labourers an interest in imposing restrictions on the importation 
 of foreign corn." If this be so, the identity of the interests of 
 landlords and of the state is even more complete than I had ven- 
 tured to express it. 
 
 f1
 
 SIX. rx.] OF THE UEXT OF LAND. 207 
 
 Sectiox IX. — General Remarks on the Surplus 
 Produce of the Land. 
 
 It seems rather extraordinary that the very great be- 
 nefit which society derives from that surplus produce 
 of the land which, in the progress of society, falls 
 
 'mainly to the landlord in the shape of rent, should not 
 yet be fully understood and acknowledged. I have 
 called this surplus a bountiful gift of Providence, and 
 am most decidedly of opinion, that it fully deserves 
 the appellation. But Mr. Ricardo has the following 
 passage : — 
 
 " Nothino- is more common than to hear of the ad- 
 vantages which the land possesses over every other 
 source of useful produce, on account of the surplus 
 which it yields in the form of rent. Yet when land 
 is most abundant, when most productive and most 
 fertile, it yields no rent ; and it is only, when its powers 
 decay, and less is yielded in return for labour, that a 
 
 I share of the original produce of the more fertile por- 
 tions is set apart for rent. It is singular that this 
 quality in the land, which should have been noticed 
 
 j as an imperfection, compared with the natural agents 
 by w^hich manufactures are assisted, should have been 
 pointed out as constituting its peculiar pre-eminence. 
 
 , If air, water, the elasticity of steam, and the pressure 
 of the atmosphere were of various qualities, if they 
 could be appropriated, and each quality existed only 
 in moderate abundance, they, as well as the land, 
 would afford a rent, as the successive qualities were 
 brought into use. With every worse quality em- 
 ployed, the value of the commodities in the manufac- 
 
 j ture of wdiich they were used would rise, because 
 
 1 equal quantities of labour would be less productive. 
 
 i Man would do more by the sweat of his brow, and 
 nature perform less, and the land would be no longer 
 pre-eminent for its limited powers." 
 
 '• If the surplus produce which the land affords in
 
 k 
 
 208 OF THE RENT OF LAND. [CH. Ill, 
 
 tlie form of lent he an advantage, it is desirable thai 
 every year tlie macliincry newly constructed should be 
 less efficient than the old, as tliat woidd undoubtedly 
 i^ive a greater exchanocable value to the goods manu- 
 factured, not only by that machinery, but by all the 
 other machinery in the kingdom ; and a rent would 
 be paid to all those who possessed the most produc- 
 tive machinery."'* 
 
 What has been stated in the last section, distinctljt 
 shows how very erroneous this view of the subject is ; 
 but additional considerations press upon us here. In 
 referring to a gift of Providence, we should surely 
 speak of its value in relation to the laws and consti- 
 tution of our nature, and of the world in which we 
 live. But, if any person will take the trouble to make 
 the calculation, he will see that if the necessaries of 
 life could be obtained and distributed without limit, 
 and the number of people could be doubled every 
 twenty-five years, the population which might have 
 been produced from a single pair since the Christian 
 aera, would have been sufficient, not only to fill the 
 earth quite full of people, so that four should stand 
 in every square yard, but to fill all the planets of our 
 solar system in the same way, and not only them, but 
 all the planets revolving round the stars which are vi- 
 sible to the naked eye, supposing each of them to be 
 a sun, and to have as many planets belonging to it as 
 our sun has. Under this law of populatio n, which, 
 excessive as it may appear when stated in this way is, 
 I^firmly_believe, ^be st suited t^oJthjLuatnLe.giKl situa- 
 tion of jnan^jEi jpii te_obv ious _tlial some 1 inii^ojhe 
 projductjon olfoodj^or^omfijidicr jof. tke aecess.aries of 
 liFe, must_ex]st. Without a total change in the con- 
 stitution of human natun;, and the situation of man 
 on earth, the whole of the necessaries of life could not 
 be furnished in the same plenty as air, water, the elas- 
 ticity of steam, and the pressure of the atmosphere. 
 It is not easy to conceive a more disastrous present — 
 
 * Princ. of Polit. Eoon. cli. ii. p. 63, 3rd edit. 
 
 I
 
 SEC. IX.] OF THE RKNT Oi' LAND. 209 
 
 one more like|y to plunge the human race in irreco- 
 verable misery, than an unlimited facility of produc- 
 ingnoodTin a limrted space. A benevolent Creator 
 tlien, kiiowing the wants and necessities of his crea- 
 tures, under the laws to which he had subjected them, 
 could not, in mercy, have furnished the whole of the 
 necessaries of life in the same plenty as air and water. 
 This shows at once the reason why the former are li- 
 mited in quantity, and the latter poured out in profu- 
 sion. But if it be granted, as it must be, that a limi- 
 tation in the power of producing food is obviously ne- 
 cessary to man confined to a limited space, then the ^>i-/- L 
 vahie_of tlie j,ctual_£uaiiU_ty_^ which he lias ^-^^^ . 
 
 r eceived , depends u pon the small quantity of labour j/ ^ 
 necessary to w ork it, compared with the number of /^p^^J^' 
 persons wh ich it will sup port ; or, in other words, ^ ^'' 
 upon that specific surplus so much under-rated by 
 Mr. Ricardo, which by the laws of nature terminates 
 in rent. 
 
 If manufactured commodities, by the gradations of 
 machinery supposed by Mr. Ricardo, were to yield a 
 rent, man, as he observes, would do more by the sweat 
 of his brow ;* and supposing him still to obtain the 
 same quantity of commodities, (which, however, he 
 would not,) the increase of his labour would be in 
 proportion to the greatness of the rent so created. But 
 the surplus, which a given quantity of land yields in 
 the shape of rent, is totally different. Instead of being 
 a measure of the increase of labour, which is neces- 
 sary altogether to produce the quantity of corn which 
 
 * That is, supposing the gradations were towards worse ma- 
 chinery, some of which it was necessary to use, as in the case of 
 land, but not otherwise. The reason why manufactures and ne- 
 cessaries will not admit of comparison in regard to rents is, that 
 necessaries, in a limited territory, are always tending to the same 
 exchangeable value, whether they have cost little or much labour ; 
 but manufactures, if not subjected to an artificial monopoly, must 
 fall in value with the facility of producing them. We cannot 
 therefore suppose the price to be given ; but if we could, facility 
 of production would, in both cases, be equally a measure of re- 
 Jifif/rom labour.
 
 210 OF THE RENT OF LAND. [CH. III. 
 
 tlie land can yield, it (i^s__finall v an^xact measure of 
 th e relief f rom_ labour in th e production of food < j ;ia n ted 
 tolTi m by a kind Providence. If this final surplus be 
 smaTT, the labour of a large portion of the society must 
 be constantly employed in procurins:, by the sweat of 
 their brows, the mere necessaries of life, and society 
 must be most scantily provided with conveniences, 
 luxuries, and leisure ; while, if this surplus be large, 
 manufactures, foreign luxuries, arts, letters, and leisure 
 may abound. 
 
 It is a little singular, that Mr. Ricavdo, who has, in 
 general, kept his attention so steadily fixed on per- 
 manent and final results, as even to define the natural 
 price of labour to be that price which would main- 
 tain a stationary population, although such a price 
 cannot generally occur under moderately good go- 
 vernments, and in an ordinary state of things, for 
 hundreds of years, has always, in treating of rent, 
 adopted an opposite course, and referred almost en- 
 tirely to temporary effects. 
 
 It is obviously with this sort of reference, that he 
 has objected to Adam Smith for saying that, in rice 
 countries a greater share of the produce would belong 
 to the landlord than in corn countries, and that rents 
 in this country would rise, if potatoes were to become 
 the favourite vegetable food of the common people, 
 instead of corn.* Mr. Ricardo could not but allow, 
 indeed he has allowed,t that rents would be finally 
 higher in both cases. But he immediately supposes 
 that this change is put in execution at once, and re- 
 fers to the temporary result of land being thrown out 
 of cultivation. Even on this supposition however, all 
 the lands which had been thrown up, would be cul- 
 tivated again in a very much less time, than it would 
 take to reduce the price of labour, in a natural state 
 of things, to the maintenance only of a stationary po- 
 pulation. And therefore, with a view to permanent 
 and final results, which arc the results which Mr. Ri- 
 
 * Wealth of Nations,Vol. I. book i. p. xi. pp. 248—250. 6th ed. 
 t Princ. of Polit. Econ. ch. xxiv. p. 398. 3rd edit.
 
 SEC. IX.] OF THE REXT OF LAND. 211 
 
 cardo has principally considered throughout his work, 
 he ought to have allowed the truth of Adam Smith's 
 statements. 
 
 But, in point of fact, there is every probability that 
 not even a temporary fall of rent would take place. 
 No nation ever has changed or ever will change the 
 nature of its food all at once. The process, both in 
 reference to the new system of cultivation to be adop- 
 ted, and the new tastes to be generated, must neces- 
 sarily be very slow. In the greater portion of Europe, 
 it is probable, that a change from corn to rice could 
 never take place ; and where it could, it would re- 
 quire such great preparations for irrigation, as to give 
 ample time for an increase of population fully equal 
 to the increased quantity of food produced. In those 
 countries where rice is actually grown, the rents are 
 known to be very high. Dr. Buchanan, in his valua- 
 , ble travels through the Mysore, says, that in the wa- 
 tered lands below the Ghats, the government was in 
 the habit of taking two-thirds of the crop.* This is 
 an amount of rent which probably no lands cultivated 
 |in corn can ever yield ; and in those parts of India and 
 other countries, where an actual change has taken 
 place from the cultivation of corn to the cultivation 
 of rice, I have little doubt that rents have not only 
 finally risen very considerably, but have risen even 
 during the progress of the change. 
 
 With regard to potatoes, we have very near to us 
 on opportunity of studying the effects of their becom- 
 ing the vegetable food of the great mass of a people. 
 The population of Ireland has increased faster during 
 the last hundred years, than that of any other country 
 in Europe ; and under its actual government, this 
 fact cannot be rationally accounted for, but from the 
 introduction and gradual extension of the use of the 
 potatoe. I am persuaded, that had it not been for the 
 potatoe, the population of Ireland would not have 
 much more than doubled, instead of much more than 
 
 * Vol. ii. p. 212.
 
 212 or THE KENT OF LAND. [CH. III. 
 
 quadrupled, during the last century. This increase 
 of population has prevented lands from being- thrown 
 out of cultivation, or given greater value to natural 
 pasture, at the same time that it has occasioned a great 
 fall in the comparative money vv^ages of labour. This 
 fall, experience tells us, has not been accompanied by 
 a proportionate rise of profits, and the consequence is 
 a considerable rise of rents. The wheat, oats, and cat- 
 tle of Ireland are sold to England, and bear English 
 money prices, while they are cultivated and tended by 
 labour paid at half the money price ; a state of things 
 which must greatly increase either the revenue de- 
 rived from profits, or the revenue derived from rents ; 
 and practical information assures us, that it is the lat- 
 ter which has derived the greatest benefit from it. 
 
 Although, therefore, it must lead to great errors, not 
 to distinguish very decidedly the temporary rates of 
 wages from their final rates, it would lead to no such 
 error to consider the temporary effects of the changes 
 of food which have been referred to, as of the same 
 kind with their final effects, that is, as tending always 
 to raise rents. And if we make our comparisons with 
 any tolerable fairness, that is, if we compare coun- 
 tries under similar circumstances, with respect to ex- 
 tent, and the quantity of capital employed upon the 
 soil, which is obviously the only fair mode of com- 
 , I paring them, we shall find that rent will be in pro- 
 i/ / portion to the natural and acquired fertility of the 
 / land. 
 
 If the natural fertility of this island had been double 
 what it is, and the people had been equally industri- 
 ous and enterprising, the country would, according tohl 
 all just theory, have been at this time doubly rich and^l 
 populous, and the rents of land much more than doublet 
 what they are now. On the other hand, if the soil of 
 the island had possessed only half its present ferti- 
 lity, a small portion of it only, as I stated on a former 
 occasion, would have admitted of corn cultivation, 
 the wealth and population of the country would have 
 been quite inconsiderable, and rents not nearly one halt 
 
 I
 
 SEC. IX.] or THE RENT OF LAND. 213 
 
 of what they are now. But if, under similar circum- 
 stances, rent and fertility go together, it is no just ar- 
 gument against their natural connexion to say that 
 rent is higher in England, where a great mass of 
 capital has been employed upon the land, than in 
 the more fertile country of South America, where, 
 on the same extent of territory, not a twentieth part 
 has been employed, and the population is extremely 
 scanty. 
 
 Tlie fertility of the land, either natura l or acquired, 
 may b e sa id to be the only source of permanently 
 higlijia tional returns^fof capital. If a country were 
 |i exclusively manufacturing and commercial, and were 
 , to purchase all its corn at the market prices of Eu- 
 rope, it is absolutely impossible that the national re- 
 turns for its capital should for any great length of time 
 be high. In the earlier periods of history, indeed, when 
 
 I large masses of capital were extremely rare, and were 
 
 II confined to very few towns, the sort of monopoly which 
 : they gave to particular kinds of commerce and ma- 
 ; nufactures tended to keep up profits for a much lon- 
 i ger time ; and great and brilliant effects were un- 
 doubtedly produced by some states which were almost 
 exclusively commercial. But in modern Europe, the 
 
 I general abundance of capital, the easy intercourse be- 
 I tween different nations, and the laws of domestic and 
 foreign competition prevent the possibility of large 
 permanent returns being received for any other capi- 
 tals than those employed on the land. No great com- 
 mercial and manufacturing state in modern times, 
 whatever may have been its skill, has yet been known 
 I permanently to make much higher profits than the 
 average of the rest of Europe. But the capitals suc- 
 cessfully employed on moderately good land, may per- 
 manently and without fear of interruption or check, 
 sometimes yield twenty per cent., sometimes thirty or 
 forty, and sometimes even fifty or sixty per cent. 
 
 A striking illustration of the effects of capitals em- 
 ployed on land compared with others, appeared in the 
 returns of the property-tax in this country. The tax-
 
 214 OF THE RENT OF LAND. [CH. HI. 
 
 able income of tlie nation derived from the capitals 
 employed on land, was such as to yield to the pro- 
 perty-tax nearly 6i millions ; while the income derived 
 Irom the nearly equal capitals employed in commerce 
 and manufactures was only such as to yield two mil- 
 lions.* It is probably true, that a larger proportion 
 of the incomes derived from the capitals employed in 
 trade and manufactures, escaped the tax, partly from 
 their subdivision, and partly from other causes ; but 
 the deficiency so occasioned could in no respect make 
 up for the extraordinary productiveness of the capitals 
 employed in agriculture. f And indeed it is quite ob- 
 vious that, in comparing two countries together witli 
 the .same capitals and the sa?fic rate of profits, one of 
 which has land on which to grow its corn, and the 
 other is obliged to purchase it, that which has the 
 land, particularly if it be fertile, must be much richer, 
 more populous, and have a larger disposable income 
 for taxation. 
 
 Another most desirable benefit belonging to a fer- 
 tile soil is, that states so endowed are not obliged to 
 pay so much attention to that most distressing and 
 disheartening of all cries to every man of humanity — 
 the cry of the master manufacturers and merchants 
 for low wages, to enable them to find a market for 
 their exports. If a country can only be rich by run- 
 ning a successful race for low wages, I should be dis- 
 posed to say at once, perish such riches ! But, though 
 a nation which purchases the main ])art of its food 
 from foreigners, is condemned to this hard alternative, 
 it is not so with the possessors of fertile land. The 
 ])cculiar products and manufactures of a country, 
 though never probably suflicient to enable it to im- 
 
 * The Schedule D. included every species of professions. The 
 whole amounted to three millions, of which the professions were 
 considered to be above a million. 
 
 + It must always be recollected, that the national |)rofits, or 
 the increase of value to the nation obtained by the capitals em- 
 ployed on the land, must be considered as including" rents as well 
 as the common agricultural profits.
 
 S£C. IX.] OF THE KENT OF LAND. 215 
 
 port a large proportion of its food as well as of its 
 
 conveniences and luxuries, will generally be sufficient 
 to giv^e full spirit and energy to all its commercial 
 dealings, both at home and abroad ; while a small 
 sacrifice of produce, that is, the not pushing cultiva- 
 tion too far without agricultural improvements, would, 
 with prudential habits among the poor,* enable it to 
 maintain the whole of a large population in wealth 
 and plenty. Prudential habits with regard to mar- 
 riage carried to a considerable extent, among the la- 
 bouring classes of a country mainly depending upon 
 manufactures and commerce, might injure it. In a 
 country of fertile land, such habits would be the great- 
 est of all conceivable blessings. 
 
 Amono- the inestimable advanta2:es which belono; 
 to that quality in the land, which enables it to yield 
 a considerable rent, it is not one of the least, that in 
 the progress of society it affords the main security to 
 man that nearly his whole time, or the time of nearly 
 the whole society, shall not be employed in procuring 
 mere necessaries. Mr. Ricardo seems to think that 
 the whole amount of the revenue derived from profits 
 might be diminishedf in the progress of accumulation ; 
 and the probability I fear is, that the labourer will be 
 
 * Under similar circumstances, with respect to agricultural skill, 
 &c., it is obvious that land of the same degree of barrenness could 
 not be cultivated, if by the prevalence of prudential habits the 
 labourers were very well paid ; but to forego the small increase 
 of produce and population arising from the cultivation of such 
 land, would, in a large and fertile territory, be a slight and im- 
 perceptible sacrifice, while the happiness which would result from 
 it to the great mass of the population, would be beyond all price. 
 
 t Princ. of Polit. Econ. chap. vi. p. 124, 3rd edit. 
 
 The truth of this opinion depends upon the question whether 
 upon increasing the capital of a country in a certain proportion, 
 profits will be diminished in a greater proportion. It is probable 
 that this would be the case if accumulation were pushed to a very 
 great extent, as in the ratio assumed in Mr. Ricardo's instance, 
 which is of course taken at random. For the purpose merely of 
 illustration, 1 am inclined to think, however, that as one very large 
 class of society lives upon the profits of stock, accumulation would 
 cease from the want of power or motive to save, before tlie gene- 
 ral income derived from capital was actually diminished.
 
 216 OF THE RKXT OF LAND. [CH. III. 
 
 obliged to employ a greater quantity of labour to pro- 
 cure that portion of his wages which must be spent in 
 necessaries. Both these great classes of society, there- 
 fore, may be expected to have less power of giving 
 leisure to themselves, or of commanding the labour of 
 those who administer to the enjoyments and intellectual 
 improvement of society, as contradistinguished from 
 those who administer to its necessary wants. But, 
 fortunately for mankind, the neat rents of the land, 
 under a system of private property, can never be dimi- 
 nished by the progress of cultivation. Whatever pro- 
 portion they may bear to the whole produce, the ac- 
 tual amount must always go on increasing, and will 
 always afford a fund for the enjoyments and leisure 
 of the society, sufficient to leaven and animate the 
 whole mass. 
 
 If the only condition on which we could obtain 
 lands yielding rent were, that they should remain with 
 the immediate descendants of the first possessors, 
 though the benefits to be derived from the present 
 would no doubt be very greatly diminished, yet from 
 its general and unavoidable effects on societv, it would 
 be most unwise to refuse it as of little or no value. 
 But, happily, the benefit is attached to the soil, not 
 to any particular proprietors. Rents are the reward 
 of present valour and wisdom, as well as of past 
 strength and abilities. Every day lands are purchased 
 with the fruits of industry and talents.* They aftbrd 
 the great prize, the " ot'mm cum diguitatc " to every 
 species of laudable exertion ; and, in the progress of 
 society, there is every reason to believe, that, as they 
 become more valuable from the increase of capital 
 and population, and the improvements in agriculture, 
 
 * Mr. Ricardo himself was an instance of what I am stating. 
 He became, by his talents and industry, a considerable landholder; 
 and a more honourable and excellent man, a man who for the 
 qualities of his head and heart more entirely deserved what he had 
 earned, or employed it better, I could not point out in tlie whole 
 circle of landholders. 
 
 It is somewhat singular that Mr. Ricardo, a cunsideralile re- 
 ceiver of rents, should have so much underrated their national 
 
 I
 
 SEC. IX.] OF THE RENT OF tAND. 217 
 
 tlie benefits which they yield may be divided among 
 a much greater number of persons. 
 
 In every point of view, then, in which the subject 
 can be considered, that quality of land which, by the 
 laws of our being, must terminate in rent, appears to 
 be a boon most important to the happiness of mankind ; 
 and I am persuaded, that its value can only be under- 
 rated by those who still labour under some mistake, 
 as to its nature, and its effects on society. 
 
 ^ 
 
 CHAPTER IV. 
 
 OF THE WAGES OF LABOUR. 
 
 Slction I. — On the Definition of the Wages of La- 
 bour, and their Dependance upon Supply and De- 
 mand. 
 
 The wasfes of labour are the remuneration to the 
 
 bo urenor Tiis exertions. 
 
 They may be divided into nominal and real. 
 
 Thenoi mn arvvages of labour consist of money ; for 
 it is in money that the labourer is generally paid in 
 civilized countries. 
 
 The real wasfcs of labour consist of the necessaries, 
 
 cuii vcniences, and luxuries of life^ which th e _ money 
 wages^f the^labourer e nable him to purchase. 
 
 It has been shown in the fifth section of the second 
 pter of this work, that the average wages of a given 
 
 i"^ 
 
 importance; while I, who never received, nor expect to receive 
 any, should probably be accused of overrating their importance. 
 Our different opinions, under these circumstances, may serve at 
 least to show our mutual gincerity, and afford a strong presump- 
 tion, that to whatever bias our minds may have been subjected in 
 the doctrines we have laid down, it has not been that, against 
 which perhaps it is most difficult to guard, the insensible bias of 
 situation and interest.
 
 218 Ol- THE WAGES OF LABOUR. [cil. IV. 
 
 number of common agricultural labourers, or what has 
 been called .standard wages, are always of the same 
 value, that is, they are always obtained in each coun- 
 try, a!Kl at all times, at the same elementary cost. 
 But it is well known that the c[uantity of money, of 
 corn, or of the necessaries and conveniences of life, 
 which is awarded to the labourer, is subject to great 
 variations, all dependant upon the demand and supply 
 of these objects compared with the demand and sup- 
 ply of labour. 
 
 If the society can purchase a given quantity of 
 money by commodities which require a smaller sacri- 
 fice of labour, profits, &c. to obtain them than is ne- 
 cessary to purchase or obtain the labour for which that 
 money has before been usually exchanged, the money 
 price of labour will rise. If either from the scarcity 
 of mone}^, or the plenty of labour,* a greater sacrifice 
 must be made to obtain the given quantity of money, 
 the money price of labour will fall. And whatever 
 may be the state of the eflectual demand for labour, 
 it is obvious that the money price of labour must, on 
 an average, be so proportioned to the price of the funds 
 for its maintenance, as to effectuate the desired sup- 
 ply. It is as the co ndition of the supply^that the 
 prices of the^n^c essaries^T iTeliave so important an 
 influence on the p ric e of la bour. A certain portion of 
 these necessaries is required to enable the labourer to 
 maintain a stationary population, a greater portion to 
 maintain an increasing one ; and consequently, wdiat- 
 ever may be the prices of the necessaries of life, the 
 money wages of the labourer must be such as to en- 
 able him to purchase these portions, or the supply 
 cannot take place in the quantity required. 
 
 The corn waoes of labour are still more strikinQ:lv 
 determined by the state of the demand and supply 
 than money wages, on account of the variations in the 
 quantity of corn being much greater in short periods 
 
 * It must always be recollected, that a plenty of labour, iftliat 
 labour be employed, always tends to increase the competition for 
 money, and raise its value.
 
 SEC. I.] OF THE WAGES OF LABOUR. 219 
 
 than in the quantity of money. The great variations 
 in the prices of corn in different seasons, while the 
 money price of labour remains the same, are univer- 
 sally observed and acknowledged ; but the variations 
 of a more permanent kind in corn vvao-es are some- 
 times not much less considerable. When the last 
 land taken into cultivation in any country is fertile, 
 and yet worked with some skill, there will be a large 
 produce to divide between profits and wages, and it 
 will depend upon the abundance of this produce and 
 the manner in which it is divided, but chiefly on the 
 former, whether the average corn wages are high or 
 low. In the United States of America, for instance, 
 the plenty and fertility of the land are such as to 
 enable the farmers to pay to their labourers as much 
 as 18 or 20 quarters of wheat in the year, above 
 double the quantity usually paid in the greatest part 
 of Europe, and yet to retain good profits. But it is 
 known that the labouring classes of a country can 
 more than keep up their numbers when paid only 8 
 or 9 quarters in the year. The question therefore 
 whether the labourer shall be paid, on an average, 8 
 or 18 quarters, or any intermediate quantity, must 
 depend upon the demand and supply of corn com- 
 pared with the demand and supply of labour; and it 
 is obvious that the labourer could not, for many years 
 together, receive the larger quantity in any country 
 where corn was not essentially of low value, that is 
 obtained with a small quantity of labour. 
 
 If instead of corn wages, or wages estimated in the 
 ])rime necessary of life, we consider wages as consist- 
 ing of the general necessaries and conveniences in 
 winch the money earnings of the labouring classes 
 are usually spent, then if we suppose the agricultu- 
 ral labourer to be paid in the first instance in corn, 
 his wages in necessaries and conveniences will depend 
 partly upon the quantity of corn which he earns, and 
 partly upon the value of that corn in exchange for 
 the other necessaries of which he stands in need, such 
 as clothing, housing, firing, soap, candles, leather.
 
 220 OV THE WAGES OF LABOUR. [cil. IV. 
 
 &c. ; the one depending on the varying supply of 
 corn to labour, and the other on the varying supply 
 of corn to the other commodities wanted. Usually 
 wages estimated in general necessaries and conve- 
 niences are more steady than corn wages; because 
 most of the articles besides com, of which they are 
 composed, are less atl'ected by the seasons, and con- 
 sequently more regular in their supply than corn ; 
 but if these articles are compared directly with labour 
 instead of corn, the quantity of them which shall be 
 given to the labourer will still depend not only upon 
 the varying powers of labour in their production, but 
 upon that ordinary state of the demand for them com- 
 pared with the supply which, in any given condition 
 of the productive powers of labour, determines the 
 proportion of such necessaries which is awarded to 
 the labourer. 
 
 Adarn^ Smith is practically quite correct, when he 
 says, that, " the money price of labour is necessarily 
 regulate d b ytwo circumstances ^i- the demand for la- 
 bour ; and th^^rice^ofllie necessaries and conve- 
 nicnces of l ife."* But it is of great importance to a 
 thorough understanding of the subject, to keep con- 
 stantly under our view the causes which determine 
 the relative prices of labour and commodities, and to 
 see clearly and distinctly the constant and j^redomi- 
 nant action of the principle of supply and demand on 
 both. 
 
 In all those cases which Adam Smith has so hap- 
 pily explained and illustrated, j.Yhere._ an,. apparent 
 irregularity tak es plac e in the wages of di fferent kinds 
 oY laEqur^ will be found^ universally, that the causes 
 to whicirjiie justl y attribute s the m, are causes of a 
 nature to infl uence the^^suppl y of labour in the parti- 
 c ular departinenTs m quesCion^a nd jo determine jiuch 
 wages_J)y__tlie__demaiid compared with the supply of 
 tlie kind of labour required. The five principal cir- 
 cumstances, which, according to him, make up for a 
 
 * Wealtli oi Nations, Book i. ch. viii. p. 130, 6th edit.
 
 SEC. I.] OF THE WAGES OF LABOUR. 221 
 
 small pecuniary gain in some employments, and coun- 
 terbalance a great one in others, namely ; 1 .J^lije 
 agreeableness or disa^reeableness of the employments. A /j-v/ 7- 
 'th em selves. ' 2. T he easin ess and cheapness^^r the vSci>o^^ 
 
 difficul ty and expense of learning them, 3. The con:: -' 
 
 stancy or inconstancy of employment in them. 4. 
 The sinall o r great tru st which must be reposed in 
 those who exercise them ; and 5.. The probability or 
 imprabahility_i)f_ success in them,* are all obviously 
 of this description ; and in many of the cases stated, 
 it would not be easy to account for their effects on the • 
 
 price of the different kinds of labour, upon any other 
 principle. One hardly sees, for instance, why the 
 cost of producing a poacher should be less than that 
 of a common labourer, or the cost of producing a 
 coal-heaver much greater ; yet they are paid very 
 differently. It is not easier to resolve the effects on 
 wages of the small or great trust which must be 
 reposed in a workman, or, the probability or impro- 
 bability of success in his trade, into the quantity of 
 labour, profits, &c. which has been employed to bring 
 him into the market. Adam Smith satisfactorily 
 shews, that the whole body of lawyers is not remu- 
 nerated sufficiently to pay the expenses which the 
 education of the whole body has cost ; f and it is ob- 
 vious that particular skill, both in trades and profes- 
 sions, is paid high, with but little reference to the 
 labour employed in acquiring it, which, owing to 
 superior talent, is often less than that which is fre- 
 quently applied to the acquisition of inferior profi- 
 ciency. But all these cases are accounted for in the 
 easiest and most natural manner, upon the principle 
 of supply and demand. Superior artists are paid 
 high on account of the scanty supply of such skill, 
 whether occasioned by unusual labour or uncommon 
 genius, or both. Lawyers, as a body, are not well 
 remunerated, because the prevalence of other motives, 
 
 * Wealth of Nations, B. i. ch. x. part i. p. 152, 6th edit, 
 t Id. p. 161.
 
 222 or TUt. WAGKS of labour. [cH. IV. 
 
 besides more gain, crowds the profession with candi- 
 dates, and the supply is not regulated by the cost of 
 the education ; and in a ll those instanc es^ wliere dis- 
 advantages or_d^fficuTtiesiM!an^EM!acc^^ par- 
 ticular employments, it is obvious that^they must be 
 p aid com paratively hi gh, becau se if tlie addit ional re- 
 mune ration were n ot_auffici£nLto_balance suchjdisad- 
 vantages, tli e suj ^ ply of labour in t hese departments 
 "woukl__b e~^ficient , as, ca'teris paribus, every person 
 would choose to engage in the most agreeable, the 
 least difficult, and the least uncertain occupations. 
 Th e defi ciency so occasioned, whenever it qccurSj^ will 
 naturall y niisc the price of laljour ; and the advance 
 of price, after some little oscillation, will rest at the 
 point where it isjust_s i^fficient to occasion a s upply 
 sui ted to the eftectnal demand 
 
 Adam Sinith has in general referred to the principle 
 of supply and demand in cases of this kind, but he 
 has occasionally forgotten it : — " If one species of la- 
 bour," he says, " requires an uncommon degree of 
 dexterity and ingenuity, the esteem which men have 
 for such talents will give a value to their produce, 
 superior to what would be due to the time employed 
 about it." * And in another place, speaking of China, 
 lie remarks, " That if in such a country, (that is, a 
 country with stationary resources,) wages had ever 
 been more than sufficient to maintain the labourer, 
 and enable him to bring up a family ; the competition 
 of the labourers and the interest of the masters, would 
 soon reduce them to the lowest rate which is consis- 
 tent with common humaniti/."']' The reader will be 
 aware, from what has been already said, that in the 
 first case here noticed, it is not simply the esteem for 
 the dexterity and ingenuity referred to, or a disin- 
 terested wish to reward such skill, which raises the 
 price of the commodity, but their scarcity, and the 
 consequent scarcity of the articles produced by them, 
 compared with the demand. And in the latter case, 
 
 * Wealth of Nations, B. i. ch. vi. p. 71, 6th edit, 
 t Id. ch. vii. p. 108.
 
 SEC. I.] OF THE WAGES OF LABOUR. 223 
 
 it is not common humanity which interferes to pre- 
 vent the price of labour from falling still lower. If 
 humanity could have successfully interfered, it ought 
 to have interfered long before, and prevented any 
 premature mortality from being occasioned by bad or 
 insufficient food. But unfortunately, common huma- 
 nity cannot alter the funds for the maintenance of 
 labour. While these are stationary, and the habits 
 of the lower classes prompt them to supply a sta- 
 tionary population cheaply, the wages of labour will 
 be scanty ; but still they cannot fall below what is 
 necessary, under the actual habits of the people, to 
 keep up a stationary population ; because, by the sup- 
 position, the funds for the maintenance of labour are 
 stationary, not increasing or declining ; and conse- 
 quently the principle of demand and supply would 
 always interfere to prevent such wages as would either 
 occasion an increase or diminution of people. 
 
 Section II. — Of the Causes which principally affect 
 the Habits of the Labouring Classes. 
 
 The natural price of labour has been defined by Mr. 
 Ricardo to be " that price which is necessary to enable 
 the labourers one with another to subsist, and to per- 
 petuate their race, without either increase or diminu- 
 tion,'"* This price I should really be disposed to call 
 a most unnatural price ; because in a natural state of 
 things, that is, without unnatural impediments to the 
 progress of accumulation, such a price could not per- 
 manently occur in any country, till the cultivation of 
 the soil, or the power of importation had been pushed 
 as far as possible. But if this price be really rare, 
 and, in an ordinary state of things, at a great distance 
 in point of time, it must evidently lead to great errors 
 to consider the market-prices of labour as only tem- 
 porary deviations above and below that fixed price, to 
 which they will very soon return. 
 
 * Polit. Econ. c. V. p. 86, 3rd edit.
 
 224 OF THE WAGES OF LABOUR. [CH. IV. 
 
 The natural or necessary price of labour in any 
 country 1 should define to be that price-which, in the 
 actual circumstances of the society, is necessary to 
 occasion an average supply of labourers, sufficient to 
 ttleet the effectual demand,* And tlie market price I 
 .should define to be, the actual price in the market, 
 which from temporary causes is sometimes above, and 
 sometimes below, what is necessary to supply this 
 demand. 
 
 The condition of the labouring classes of society 
 must evidently depend, partly upon the rate at which 
 the funds for the maintenance of labour and the de- 
 mand for labour are increasing ; and partly, on the 
 habits of the people in respect to their food, clothing, 
 and lodging. 
 
 If the habits of the people were to remain fixed, 
 the power of marrying early, and of supporting a large 
 family, would depend upon the rate at which the funds 
 for the maintenance of labour and the demand for la- 
 bour were increasing. And if these funds were to re- 
 main fixed, the comforts of the lower classes of so- 
 ciety would depend upon their habits, or the amount 
 of those necessaries and conveniences, without which 
 they would not consent to keep up their numbers to 
 the required point. 
 
 It rarely happens, however, that either of them re- 
 mains fixed for any great lengih of time together. 
 The rate at which the funds for the maintenance of 
 labour increase is, we well know, liable, under vary- 
 ing circumstances, to great variation ; and the habits 
 of a people though not so liable, or so necessarily 
 subject to change, can scarcely ever be considered as 
 permanent. In general, their tendency is to change 
 together. When the funds for the maintenance of la- 
 bour are rapidly increasing, and the labourer com- 
 mands a large portion of necessaries, it is to be ex- 
 
 * We might with ahiiost as much propriety define the natural 
 rate o^ profits to be that rate which would just keep up the capi- 
 tal without increase or diminution. This is in fact the rate to 
 which profits are constantly tending.
 
 SEC. U.] OF THE M'AGES OF LAliOL'U. 225 
 
 pected that if he has the opportunity of exclianging- 
 his superfluous food for conveniences and comforts, 
 he will acquire a taste for these conveniences, and his 
 habits will be formed accordingly. On the other hand, 
 it g-enerally happens that, when the funds for the 
 maintenance of labour become nearly stationary, such 
 habits, if they ever have existed, are found to give 
 way ; and, before the population comes to a stop, the 
 standard of comfort is essentially lowered. 
 
 Still, however, partly from physical, and partly 
 from moral causes, the standard of comfort differs 
 essentially in different countries, under the same rate 
 of increase in their funds for the maintenance of la- 
 bour. Adam Smith, in speaking of the inferior food 
 of the people of Scotland, compared with their neigh- 
 bours of the same rank in England, observes, " This 
 difference in the mode of their subsistence is not the 
 cause, but the effect, of the difference in their wages, 
 though, by a strange misapprehension, I have fre- 
 quently heard it represented as the cause."* It must 
 be allowed, however, that this correction of a common 
 opinion is only partially just. The effect, in this case 
 as in many others, certainly becomes in its turn a 
 cause ; and there is no doubt, that if the continuance 
 of low wages for some time, should produce among 
 the labourers of any country habits of marrying with 
 the prospect only of a mere subsistence, such habits, 
 by supplying the quantity of labour required at a low 
 rate, would become a constantly operating cause of 
 low wages. 
 
 It would be very desirable to ascertain what are 
 the principal causes which determine the different 
 modes of subsistence among the lower classes of peo- 
 ple of different countries ; but the question involves 
 so many considerations, that a satisfactory solution of 
 it is hardly to be expected. Much must certainly 
 depend upon the physical causes of climate and soil; 
 but still more perhaps on moral causes, the formation 
 
 * Wealth of Nat. Book I. chap. viii. p. 114. 6th edit. ' 
 Q
 
 22G OF THK M'AGES OF LABOUR. [CH. IV. 
 
 and action of which are owing to a variety of circum- 
 stances. 
 
 From high real wages, or the power of command- 
 ing a large portion of the necessaries of life, two very 
 different results may follow ; one, that of a rapid in- 
 crease of population, in which case the high wages 
 are chiefly spent in the maintenance of large and fre- 
 quent families ; and the other, that of a decided im- 
 provement in the modes of subsistence, and the con- 
 veniences and comforts enjoyed, without a propor- 
 tionate acceleration in the rate of increase. 
 
 In looking to these different results, the causes of 
 them will evidently appear to be the different habits 
 existing among the people of different countries, and 
 at different times. In an inquiry into the causes of 
 these different habits, we shall generally be able to 
 trace those which, in old countries,* produce the first 
 result, to all the circumstances which contribute to 
 depress the lower classes of the people, which make 
 them unable or unwilling to reason from the past to 
 the future, and ready to acquiesce, for the sake of pre- 
 sent gratification, in a very low standard of comfort 
 and respectability ; and those which produce the se- 
 cond result, to all the circumstances which tend to 
 elevate the character of the lower classes of society, 
 which make them act as beings who " look before and 
 after," and who consequently cannot acquiesce pa- 
 tiently in the thought of depriving themselves and 
 their children of the means of being respectable, vir- 
 tuous, and happy. 
 
 Among: the circumstances which contribute to the 
 character first described, the most efficient will be 
 found to be despotism, oppression, and ignorance : 
 amono; those which contribute to the latter character, 
 civil and political liberty, and education. 
 
 Of all the causes which tend to generate prudential 
 
 * In new countries, such as the United States, the funds for the 
 maintenance of labour are so ample, and are increasing so rapidly, 
 that for a considerable time the prudential check to early mar- 
 riages may hardly be necessary.
 
 SEC. II. J OF TIN': WAGKS OF LABOUIJ. 227 
 
 habits among- the lower classes of society, the most 
 essential is unquestionably civil liberty. No people 
 can be much accustomed to form plans for the i'uture, 
 who do not feel assured that their industrious exer- 
 tions, while fair and honourable, will be allowed to 
 have free scope ; and that the property which they 
 either possess, or may acquire, will be secured to them 
 by a known code of just laws impartially administered. 
 But it has been found by experience, that civil liberty 
 cannot be permanently secured without political li- 
 berty. Consequently, political liberty becomes al- 
 most equally essential ; and in addition to its being- 
 necessary in this point of view, its obvious tendency 
 to teach the lower classes of society to respect them- 
 selves by obliging the higher classes to respect them, 
 must contribute greatly to aid all the good effects of 
 civil liberty. 
 
 With regard to education, it might certainly be 
 made general under a bad form of government, and 
 might be very deficient under one in other respects 
 good ; but it must be allowed, that the chances, both 
 with regard to its quality and its prevalence, are 
 greatly in favour of the latter. Education alone could 
 do little against insecurity of property ; but it would 
 powerfully assist all the favourable consequences to 
 be expected from civil and political liberty, which 
 could not indeed be considered as complete without it. 
 
 According as the habits of the people had been 
 determined by such unfavourable or favourable cir- 
 cumstances, high wages, or a rapid increase of the 
 funds for the maintenance of labour, would be attended 
 with the first or second of the results before des- 
 cribed ; or at least by such results as would approach 
 to the one or the other, according to the different de- 
 grees in which all the causes which influence habits 
 of improvidence or prudence had been efficient. 
 
 Ireland, during the course of the last century, may 
 be produced perhaps as the most marked instance of 
 the first result. On the introduction of the potatoe 
 into that country, the lower classes of society were in
 
 228 OF THF, WAGES OF I.AllOUU. [CH. IV. 
 
 such a state of oppression and ignorance, were so little 
 respected by others, and had consequently so little 
 respect for themselves, that as long as they could get 
 food, and that of the cheapest kind, they were content 
 to many under the prospect of every other privation. 
 The abundant funds for the support of labour occa- 
 sioned by the cultivation of the potatoe in a favour- 
 able soil, which often gave the labourer the command 
 of a quantity of subsistence quite unusual in the 
 other parts of Europe, were spent almost exclusively 
 in the maintenance of large and frequent families; and 
 the result was, a most rapid increase of population, 
 with little or no melioration in the general condition 
 and modes of subsistence of the labouring poor. 
 
 An instance somewhat approaching to the second 
 result may be found in England, in the first half of the 
 last century. It is well known, that during this period 
 the price of corn fell considerably, while the price of 
 labour is stated to have risen. During the last forty 
 years of the i7th century, and the first twenty of the 
 18th, the average price of corn was such as, compared 
 with the wages of labour, would only enable the la- 
 bourer to purchase, with a day's earnings, about two- 
 thirds of a peck of wheat. From 1720 to 1750 the 
 price of wheat had so fallen, while wages had risen, 
 that instead of two thirds the labourer could purchase 
 the whole of a peck of wheat with a day's labour.* 
 
 This great increase of command over the first ne- 
 cessary of life did not, however, produce a propor- 
 tionate increase of population. It found the people of 
 this country living under a good government, and en- 
 joying all the advantages of civil and political liberty 
 in an unusual degree. The lower classes of people 
 had been in the habit of being respected, both by tlie 
 laws and the higher orders of their fellow citizens, 
 and had learned in consequence to respect themselves. 
 The result was, that their increased corn wages, 
 instead of occasioning an increase of population ex- 
 
 * See Section IV. of this chapter.
 
 SEC. II.] OF THE WAGES OF LABOUR. 229 
 
 clusively, were so expended as to occasion a decided 
 elevation in the standard of their comforts and conve- 
 niences. 
 
 During- the same period, the funds for the main- 
 tenance of labour in Scotland do not appear to have 
 increased so fast as those of England ; but since the 
 middle of the last century, the former country has 
 perhaps made a more rapid progress than the latter ; 
 and the consequence has been, that from the same 
 causes, these increased resources have not produced, 
 exclusively, an increase of population, but a great 
 alteration for the better in the food, dress, and houses 
 of the lower classes of society, in that country. 
 
 The general change from bread of a very inferior 
 quality to the best wheaten bread, seems to have been 
 peculiar to the southern and midland counties of En- 
 gland, and may perhaps have been aided by adventi- 
 tious circumstances. 
 
 The improving cultivation of the country after 1720, 
 together with the state of theforeign markets, as opened 
 by the bounty, appears to have diminished, in some 
 districts, the usual difference in the prices of the diffe- 
 rent kinds of grain. Though barley was largely grown 
 and largely exported, it did not fall in price so much 
 as wheat. On an average of the twenty years ending 
 with 1705, compared with an average of twenty years 
 ending with 1745, the quarter of wheat fell from £1. 
 \6s. 3d. to £i, 9s. lOd. but malt during the same pe- 
 riod remained at the same price, or, if any thing, ra- 
 ther rose ; * and as barley is supposed to be not a 
 cheaper food than wheat, unless it can be purchased 
 at f of the price,! such a relative difference would 
 have a strong tendency to promote the change. 
 
 From the small quantity of rye exported, compared 
 with wheat and barley, it may be inferred that it did 
 not find a ready vent in foreign markets ; and this cir- 
 
 * Eden's State of the Poor. Table, vol. iii. p- 79. In this 
 table, a deduction is made for |. for the quarter of middling wheat 
 of eight bushels, which is too much. 
 
 t Tracts on the Corn Trade, Su[)p. p. 199.
 
 230 oi- TiiK MAc;t;s of laboi k. [ch. iv. 
 
 cumstance, tof^etlicr with the improvin*^ state of the 
 land, cliininished its cultivation and use. 
 
 With regard to oats, the prohibitory laws and the 
 bounty were not so favourable to them as to the other 
 grains, and more were imported than exported. This 
 would naturally tend to check their cultivation in the 
 districts which were capable of growing the sort of 
 g'rain most certainof a market; while the Act of Charles 
 11. respecting the buying up of corn to sell again, 
 threw greater obstacles in the way of the distribution 
 of oats than of any other grain. 
 
 By this Act, wheat might be bought up and stored 
 for future sale when the price did not exceed 4Ss. ; 
 barley, when the price did not exceed 2Ss. ; and oats, 
 when the price did not exceed 13*. 4(/. The limited 
 prices of wheat and barley were considerably above 
 their ordinary and average rates at that period, and 
 therefore did not ofteu'interfere with their proper dis- 
 tribution ; but the ordinary price of oats was supposed 
 to be about 12*. the quarter, and consequently the 
 limit of 13*. 4cL would be very frequently exceeded,* 
 and obstacles would be continually thrown in the 
 way of their transport from the districts of their growth 
 to the districts where they might be Avanted. But if, 
 from the causes here described, the labouring classes 
 of the South of England were partly induced, and 
 partly obliged, to adopt wheat as their main food, ■ 
 instead of the cheaper kinds of grain, the rise of wages ^ 
 would at once be accounted for, consistently with the 
 fall in the price of wheat ; an event which, under an 
 apparently slack demand for labour at the time, has 
 been considered as so improbable by some writers, 
 that the accuracy of the accounts has been doubted. 
 It is evidently, however, possible, either on the sup- 
 position of a voluntary determination on the part of] 
 the labouring classes to adopt a superior description 
 of food, or a sort of obligation to do it, on account of j 
 the introduction of a new system of cultivation adapted 
 
 * Tracts on iLc C\)iii Trade, p. 50.
 
 SEC. II.] OF THE WAGES OF LABOUR. 231 
 
 to a more improved soil : and, in either case, the ef- 
 fects observable from 1720 to 1750 would appear; 
 namely, an increased power of commanding corn, with- 
 out a proportionate increase of population. It is pro- 
 bable that both causes contributed their share to the 
 change in question. When once the fashion of eating 
 wheaten bread had become general in some countries, 
 it would be likely to spread into others, even at the 
 expense of comforts of a different description ; and in 
 all cases where particular modes of subsistence, from 
 whatever causes arisins", have been for anv time esta- 
 blished, though such modes always remain suscep- 
 tible of change, the change must be a work of time 
 and difficulty. A country, which for many years had 
 principally supported its peasantry on one sort of 
 grain, must alter its whole system of agriculture be- 
 fore it can produce another sort in sufficient abun- 
 dance ; and the obstinacy with which habits are ad- 
 hered to by all classes of people, as in some countries 
 it Avould prevent high wages from improving the 
 quality of the food, so in others it would prevent low 
 wages from suddenly deteriorating it ; and such high 
 or low wages would be felt almost exclusively in the 
 great stimulus or the great check which they would 
 give to population. 
 
 Sectiox III. — Of the Causes which pr'mcipally in- 
 fluence the Demand for Labour, and the Increase 
 of the Population. 
 
 There is another cause, besides a change in the ha- 
 bits of the people, which prevents the population of 
 a country from keeping pace with the apparefit com- 
 mand of the labourer over the means of subsistence. 
 It sometimes happens that corn wages are compara- 
 tively high without a proportionate demand for labour. 
 This is the most likely to take place when the price 
 of raw produce has fallen without a fall in the price 
 of labour, so as to disable the cultivators from employ-
 
 232 oi inL \v'A(;i;s of i.Aiiouu. [en. i\-. 
 
 inp; the same quantity of labour as before. If tlie 
 fall be considerable, and not made up in value by in- 
 crease of quantity, so many labourers will be thrown 
 out of work that wages, after a period of great dis- 
 tress, will generally be lowered in proportion. But 
 if the fall be gradual, and partly made up in ex- 
 changeable value by increase of quantity, the money 
 wages of labour will not necessarily sink ; and the 
 result will be merely a slack demand for labour, not 
 sufficient perhaps to throw the actual labourers out 
 of work, but such as to prevent or diminish task-work, 
 to check the employment of women and children, and 
 to give but little encouragement to the rising genera- 
 tion of labourers. In this case the quantity of the 
 necessaries of life actually earned by the labourer and 
 his family, may be really less than when, owing to a 
 rise of prices, the daily pay of the labourer will com- 
 mand a smaller quantity of corn. The command of 
 the labourincr classes over the necessaries of life, thouo-h 
 apparently greater, is really less in the former than 
 in the latter case, and, upon all general principles, 
 ought to produce less effect on the increase of popu- 
 lation. 
 
 This disagreement between apparent wages and the 
 progress of population will be further aggravated in 
 those countries where poor laws are established, and 
 it has become customary to pay a portion of the la- 
 bourers' wages out of the parish rates. If, when corn 
 rises, the farmers and landholders of a parish keep 
 the wages of labour down, and make a regular allow- 
 ance for children, it is obvious that there is no longer 
 any necessary connexion between the apparent corn 
 wages of day labour and the real means which the 
 labouring classes possess of maintaining a family. 
 When once the people arc reconciled to such a sys- 
 tem, the progress of population might be rapid, at a 
 time when the real wages of labour, independently of 
 parish assistance, were only sufficient to support a 
 wife and one child, or even a single man without 
 c ither wife or child, because there might still be both
 
 SEC. 111.] OF THE WAGES OF EABOIH. 233 
 
 encouragement to marriage, and the means of sup- 
 porting children.'* 
 
 When the population of a country increases faster 
 than usual for any time together, the labouring classes 
 must have the command of a greater quantity of food 
 than they had before possessed, or at least than they 
 had before applied to the maintenance of their families. 
 This may be obtained in various ways — by higher 
 corn wages, by saving in conveniences, by adopting a 
 cheaper kind of food, by more task-work and the 
 more general employment of the women and children, 
 or by parish allowances. But the actual application 
 of the greater quantity of food seems to be neces- 
 sary to the increase of population ; and wherever such 
 increase has taken place, some of these causes, by 
 which a greater cpantity of food is procured, will 
 always be in action, and may generally be traced. 
 
 The hiofh wages, both in corn and money, of the 
 United Srates, occasioned by the rapid accumulation 
 of capital, and the power of selling produce, obtained 
 by a comparatively small quantity of labour, at Euro- 
 pean prices, are unquestionably the cause of the very 
 rapid progress of the American population. A very 
 great demand for labour has, in this case, accom- 
 panied a low comparative value of produce, a union 
 not necessary nor frequent, but, when it does occur, 
 calculated to occasion the most rapid increase of po- 
 pulation. 
 
 The peculiar increase of the population of Ireland, 
 compared with other European countries, has ob- 
 viously been owing to the adoption of a cheaper food, 
 which might be produced in large quantities, and 
 which, aided by the Cotter system of cultivation, has 
 
 * It is most fortunate for the country and the labouring classes 
 of society, that the bill which passed the House of Commons, for 
 taking from their parents the children of those who asked for re- 
 lief, and supporting them on public funds, did not pass the House 
 of Lords. Such a law would have been the commencement of a 
 new system of poor laws beyond all comparison worse than the 
 old.
 
 234 OF Till: UAGES Ol' LAIiOUll. [cii. I\ . 
 
 allowed the increase of people greatly to exceed the 
 demand for labour. 
 
 The great increase of population of late years in 
 England and Scotland has been owing to the power 
 of the labouring classes to obtain a greater quantity 
 of food, partly by temporary high wages in manufac- 
 tures, partly by the increased use of potatoes, partly 
 by increased task- work and the increased employment 
 of w^omen and children, partly by increased parish 
 allowances to families, and partly by the increased 
 relative cheapness of manufactures and foreign com- 
 modities. 
 
 In general perhaps more of these causes will be 
 called into action by a rise of prices whichsometimes 
 lowers the command of a day's labour over the neces- 
 saries of life, than by a fall of prices which raises it. 
 
 What is essentially necessary to a rapid increase 
 of population is a great and continued demand for 
 labour; and this is proportioned to the rate of in- 
 crease in the quantity and value of those funds, 
 whether arising from capital or revenue, which are 
 actually employed in the maintenance of labour. 
 
 It has been generally considered, that the demand 
 for labour is proportioned only to the circulating, not 
 the fixed capital of a country. But in reality the 
 demand for labour is not proportio?fcd to the increase 
 of capital in any shape ; nor even, as I once thought, 
 to the increase of the exchangeable value of the 
 whole annual produce. It is proportioned only, as 
 above stated, to the rate of increase in the quantity 
 and value of those funds which are actually employed 
 in the maintenance of labour. 
 
 These funds consist principally in the necessaries 
 of life, or in the means of commanding the food, 
 clothing, lodging, and firing of the labouring classes 
 of society. Now it is quite evident that if the capital 
 of a society were directed in the most judicious and 
 skilful manner to the production of these necessaries, 
 and that the neat surplus above what was required for 
 the maintenance of the persons so employed, and of
 
 SEC. HI.] OF THE WAGES OF I.AHOllt. 235 
 
 their employers, were spent in the maintenance of 
 menial servants, soldiers, and sailors, all the demand 
 for labour that the resources of such a country called 
 out in the most effective manner would admit of, 
 might exist, with little of that great mass of capital, 
 which in most improved countries is employed in 
 producing luxuries and superior conveniences.* But 
 if this be so, it is obvious that capital, and even the 
 exchangeable value of the whole produce may in- 
 crease without any increase in the demand for labour. 
 If the circulating capital applied to the production of 
 luxuries and conveniences employed only those per- 
 sons who would otherwise be maintained as unpro- 
 ductive labourers by the surplus of necessaries, not 
 only no addition is thereby made to the demand for 
 labour, but if the persons before engaged in personal 
 services were dismissed faster than they could be em- 
 ployed in the production of luxuries and superior 
 conveniences a diminished demand for labour might 
 take place under an increasing circulating capital. 
 And if a large portion of the exchangeable value of 
 tlie whole produce of a country cannot be resolved 
 into necessaries, it is clear that the whole produce 
 may increase in exchangeable value without a greater 
 value of the necessaries of life being actually em- 
 ployed in the maintenance of labour. 
 
 But though it is unquestionably true that without 
 the capital employed in luxuries and superior conve- 
 niences the same demand for labour might exist ; yet 
 practically, if the neat revenue of a country could 
 only be employed in the maintenance of menial ser- 
 vants and soldiers, there is every reason to think that 
 the stimulus to production in modern states would be 
 very greatly diminished, and that the cultivation of 
 the soil would be carried on with the same kind of 
 indolence and slackness as in the feudal times. 
 
 * This view of the subject was stated by me above thirty years 
 ago ill the quarto edition of the Essay on Population, p. 421, 
 and by Mr. Ricardo in his 3rd edition, p. 475.
 
 •.^ 
 
 23G OV THE WACLS or LABOLli. [cH. 1\. 
 
 On the other hand, if the whole of the surplus pro- 
 duce beyond what was required for the support of 
 those who were employed in the production of neces- 
 saries could be spent in no other way than in the pro- 
 duction and purchase of 7//r/^f;vV7/ luxuries and conve- 
 niences, if no menial servants could be kept to take 
 care of houses, furniture, carriages, horses, &c. it is 
 quite clear that the demand for material luxuries and 
 conveniences would very soon abate, and the owners 
 of land and capital would have very slender motives 
 to employ them in the most productive manner. 
 
 It is clearly then the operation of both stimulants, 
 under the most favourable proportions, Avhich is likely 
 to S'ive the most effective encouras-cment even to the 
 production of necessaries. And though it is quite 
 certain that an increase in the value of the funds for 
 the maintenance of labour is not strictly proportioned 
 to the increase in the exchancreable value of the whole 
 produce estimated in labour ; yet, in ordinary times, 
 and when no great changes are taking place in the 
 proportion of personal services to productive labour, 
 an increase of such exchangeable value is generally 
 followed by an increased demand for labour, since its 
 ordinary and natural effect is to increase the value of 
 the funds destined for the maintenance of labour. 
 
 Whenever the introduction of fixed capital has for 
 a time the effect of diminishing the demand for la- 
 bour, it will generally be found that the value of the 
 whole annual produce is at the same time dimi- 
 nished : but in general the use of fixed capital is fa- 
 vourable to the abundance of circulating capital ; and 
 if the market for the products can be proportionally 
 extended, the whole value of the capital and revenue 
 of a state is greatly increased by it, as well as the value 
 of the funds for the maintenance of labour, and a 
 great demand for labour created. 
 
 The increase in the whole value of cotton products, 
 since the introduction of the improved machinery, is 
 known to be prodigious ; anil it cannot for a moment 
 be doubted that both the circulating capital and the
 
 SEC. 111.] OF THE WAGES OF LAEOlll. 237 
 
 demand for labour in the cotton business have very 
 greatly increased during the last fifty years. This is 
 indeed sufficiently proved by the greatly increased 
 population of Manchester, Glasgow, and the other 
 towns where the cotton manufactures have most flou- 
 rished. 
 
 A similar increase of value, though not to the same 
 extent, has taken place in our hardware, woollen, and 
 other manufactures, and has been accompanied by an 
 increasino; demand for labour, notwithstandino- the in- 
 creasing use of fixed capital. 
 
 Even in our agriculture, if the fixed capital of horses, 
 which from the quantity of produce they consume, is 
 the most disadvantageous description of fixed capital, 
 were disused, it is probable, that a great part of the 
 land which now bears corn would be thrown out of 
 cultivation. Land of a poor quality would never 
 yield sufficient to pay the labour of cultivating with 
 the spade, of bringing manure to distant fields in bar- 
 rows, and of carrying the products of the earth to dis- 
 tant markets by the same sort of conveyance. Under 
 these circumstances, as there w^ould be a diminution 
 in the quantity of corn produced, there would be a 
 diminution in the whole value of the produce; and 
 the value of the funds for the maintenance of labour 
 being impaired, the demand for labour would be di- 
 minished in proportion.* 
 
 On the other hand, if, by the gradual introduction 
 of a greater quantity of fixed capital, we could culti- 
 vate and dress our soil and carry the produce to mar- 
 ket at a much less expense, we might increase our 
 produce very greatly by the cultivation of all our 
 
 * It has lately been stated, that spade cultivation will yield 
 both a greater gross produce and a greater neat produce. I am 
 always ready to bow to well established experience ; but if such 
 experience applies in the present case, one cannot sufficiently 
 wonder at the continued use of ploughs and horses in agriculture. 
 Even supposing however that the use of the spade might, on 
 some soils, so improve the land, as to make the crop more than 
 pay the additional expense of the labour, taken separately ; 
 yet, as horses must be kept to carry out dressing to. a distance
 
 238 OF TJIL WAGES OF LAliOl II. [CH. 1\ . 
 
 waste lands and tlic improvement of all the land 
 already in cultivation ; and if the substitution of this 
 fixed capital wcie to take place in the only way in 
 which we can suppose it practically to take place, 
 that is, o;radually, there is no reason to doubt that the 
 value of raw produce would keep up nearly to its 
 former level ; and its greatly increased quantity, com- 
 bined with the greater proportion of the people which 
 might be employed in manufactures and commerce, 
 while it would occasion a very great increase in the 
 exchangeable value of the general produce, would in- 
 crease at the same time the value of the funds des- 
 tined for the maintenance of labour, and thus cause a 
 great demand for labour and a great addition to the 
 population. 
 
 There is no occasion therefore to fear that the 
 introduction of fixed capital, as it is likely to take 
 place in practice, will diminish the eflfective demand 
 for labour ; indeed it is to this source that we are to 
 look for the main cause of its future increase. At the 
 same time, it is certainly true, as will be more fully 
 stated in a subsequent part of this work, that if the 
 substitution of fixed capital were to take place much 
 faster than an adequate market could be found for the 
 more abundant supplies derived from it and for the 
 new products of the labour that had been thrown out 
 v/ of employment, a slack demand for labour and dis- 
 tress among the labouring classes of society would be 
 universally felt. But in this case, the whole produce 
 would fall in value, owing to a temporary excess of 
 supply compared with the demand. 
 
 In the formation of the value of the whole funds 
 
 and to convey the produce of the soil to market, it could hardly 
 answer to the cultivator to employ men in digging; his fields, while 
 his horses were standing idle in his stables. As tar as experience 
 has yet gone, T should certainly say, that it is commerce, price 
 and skill, which will cultivate the wastes of large and poor terri- 
 tories — not the spade. 
 
 No inference whatever in regard to the cultivation of a large 
 country can be drawn from what may be done on a few acres in 
 the immediate neighbourhood of houses and manure.
 
 SEC. III.] OF THE WAGES OV LABOLK. 239 
 
 specifically destined for the maintenance of labour, 
 (the rate of the increase of which regulates the de- 
 ma nd for labour,) a part depends upon the value of a 
 given portion of such funds, and a part upon their 
 amount in kind, or in other words, a part depends upon 
 their price, and a part upon their quantity. That part 
 which depends merely upon price is in its nature less 
 durable and less effective than that which depends 
 upon quantity. An increase of price with little or 
 no increase of quantity, has obvious limits, and must 
 be followed very soon in most cases by a nearly pro- 
 portionate increase of money wages ; while the com- 
 mand of these increased money wages over the neces- 
 saries of life going on diminishing, the population 
 must come to a stop, and no further rise of prices can 
 occasion an effective demand for labour. 
 
 On the other hand, if the quantity of produce be 
 increased so fast that the value of the whole diminishes 
 from excessive supply, it may not command so much 
 labour this year as it did in the last, and for a time 
 there will be a very slack demand for workmen. 
 
 These are the two extremes, the one arising from 
 increased value without increased quantity ; and the 
 other from increased cjuantity without increased value. 
 
 It is obvious that the object which it is most de- 
 sirable to attain is the union of the two. There, is 
 somewhere a happy mean, where, under the actual re- 
 sources of a country, both the increase of wealth and 
 the demand for labour may be a maximum. A taste 
 for conveniences and comforts not only tends to create 
 a more steady demand for labour, than 'a taste for 
 personal services ; but by cheapening manufactures 
 and the products of foreign commerce, including many 
 of the necessaries of the labouring classes, it actually 
 enlarges the limits of the effectual demand for labour, 
 and renders it for a longer time effective. 
 
 An increase in the quantity of the funds for the 
 maintenance of labour, with steady prices, or even 
 slightly falling, may occasion a considerable demand 
 for labour; but in the actual state of things, and in
 
 240 OF THE WAGES OF LABOUR. [CH. I\ . 
 
 the way in wliicli the precious metals are actually dis- 
 tributed, some increase of prices generally accompa- 
 nies the most etiective demand for produce and popu- 
 lation. It is this increase both of quantity and prici 
 which most surely increases the value of the funds 
 for the maintenance of labour, creates the greatest de- 
 mand for labourers, excites the greatest quantity of 
 industry, and generally occasions the greatest increase 
 of population. 
 
 Section IV. — A Review of the Corn Wages of La- 
 bour from the Reign of Edward III. 
 
 Some writers of great ability have been of opinion 
 that rising prices, occasioned by an influx of bullion, 
 are very unfavourable to the labouring classes of so- 
 ciety ; and certainly there are some periods of our 
 history which seem strongly to countenance this opi- 
 nion : but I am inclined to think, that if these periods, 
 and the circumstances connected with them, be ex- 
 amined with more attention, the conclusion which has 
 been drawn from them will not appear so certain as 
 has been generally imagined. It will be found that, 
 in the instances in question, other causes were in opera- 
 tion to which the effect referred to might more justly 
 be attributed. 
 
 The period of our history more particularly noticed 
 is the 16th century, from the end of the reign of 
 Henry VII. to the end of the reign of Elizabeth. Du- 
 ring this period it is an unquestionable fact that the 
 corn wages of labour fell in an extraordinary degree, 
 and towards the latter end of the century they would 
 not command much above one-third of the quantity of 
 wheat which they did at the beginning of it. 
 
 Sir F. M. Eden has noticed the price of wheat in 
 nineteen out of the twenty-four years of Henry VII. 's 
 reign, and in some of the years two or three times.* 
 
 * Stato of the Poor, vol. iii. p. xli.
 
 SEC. IV.] OF THE WAGES 01' LABOUR. 241 
 
 Reducing the several notices in the same year first to 
 an average, and then taking the average of the nine- 
 teen prices, it comes to 6s. 'Sid. the quarter, rather less 
 than 9^^/. the bushel, and 2|f/. the peck. 
 
 By a statute passed in 1495 to regulate wages, the 
 price of common day labour seems to have been 4d. 
 or 4^d. without diet. All labourers and artificers, not 
 specifically mentioned, are put down at 4d. ; but in 
 another part of the statute, even a woman labourer (I 
 suppose in hay time) is set down at 4id. and a carter 
 at 5d* 
 
 At the price of wheat just stated, if the wages of 
 the labourer were 4d. he would be able to purchase, 
 by a day's labour, a peck and three quarters of wheat, 
 within half a farthing ; if his wages were 4id. he 
 would be able to purchase half a bushel, within a 
 farthing. 
 
 j The notices of the price of day labour in the sub- 
 sequent years are extremely scanty. There are none 
 in the reigns of Henry VIII., Edward, and Mary. 
 The first that occurs is in 1575, and the price men- 
 tioned is 8f/.t Taking an average of the five preced- 
 ing years in which the prices of wheat are noticed, 
 ! including 1575, having previously averaged the se- 
 I veral prices in the same year, as before, it appears 
 I that the price of the quarter of wheat was 1/. 2^. 2d. 
 , which is 2*. Qid. the bushel, and 8id. the peck. At 
 this price, a day's labour would purchase a peck of 
 corn, within a farthing, or xf of a peck. 
 
 This is a diminution of nearly ahalf in thecorn wages 
 of labour ; but at the end of the century, the diminu- 
 tion was still greater. 
 
 The next notice of the price of labour, with the ex- 
 ception of the regulations of the justices in some of the 
 ; more northern counties, which can hardly be taken as 
 a fair criterion for the south, is in 1601, when it is 
 mentioned as 10^/. Taking an average from the Wind- 
 sor table of five years, which includes, however, one 
 
 ,1 * State of the Poor, vol. iii. p. Ixxxix. 
 
 I t Ibid. vol. iii. p. Ix. 
 
 R
 
 242 OF TIIK \VMrEi> OV I.AliOLU. [CH. I\ . 
 
 excessively dear year, and subtracting ^ to reduce it to 
 \\'inchester measure, it appears that the price of the 
 quarter was 2/. 26'. 0^/. which is 5.y. 3^/. the bushel, and 
 1*. 3icl., the peck. A day's labour would at this price 
 purchase less than 3 of a peck.* 
 
 This is unquestionably a prodigious fall in the corn 
 wages of labour. But it is of great importance to in- 
 quire whether the rate from which they fell was not 
 us extraordinary as the rate to which they sunk ; and 
 here I think we shall find that the wages the most dif- 
 ficult to be accounted for are the high corn wages of 
 the 15th, rather than the low corn wages of the 16th 
 century. 
 
 If we revert to the middle of the 14tli century, at 
 the time when the first general statute was passed to 
 regulate wages, the condition of the labourer will ap- 
 pear to be very inferior to what it was during the 
 greatest part of the 15th century. This fact may be 
 established on unexceptionable evidence. Statutes or 
 regulations to fix the price of labour, though they do 
 not always succeed in their immediate object, (which 
 is generally the unjust one, of preventing it from 
 rising,) may be considered as undeniable testimonies 
 of what the prices of labour had been not long pre- 
 vious to the time of their passing. No legislature in 
 the most iofnorant age could ever be so rash as arbi- 
 trarily to fix the prices of labour without reference to 
 some past experience. Consequently, though the 
 prices in such statutes cannot be depended upon with 
 regard to the future, they appear to be quite conclu- 
 sive with regard to the past. In the present case, in- 
 deed, it is expressly observed, that servants should be 
 contented with such liveries and wages as they re- 
 
 * The year 1597 seems to have been an extraordinary dear 
 one, and ought not to be included in so short an average. If an 
 average were taken of" the five years beginning with 1598, the la- 
 bourer would appear to earn about f of a peck ; and, on an ave- 
 rage of ten years, from the same period, he would earn about -^of 
 a peck. During the five years from 1594 to 1598 inclusive, the 
 price of wheat seems to have been unusually high from unfavour- 
 able seasons.
 
 SEC. IV.] OF THE WAGES OF LABOUR. 243 
 
 ceived in the 20tli year of the king's reign, and two 
 or three years before.* 
 
 From this statute, which was enacted in 1350, the 
 25th of the King, for the most unjust and impolitic 
 purpose of preventing the price of labour from rising- 
 after the great pestilence, we may infer that the price 
 of day labour had been about 1^^/. or 2d. Common 
 agricultural labour, indeed, is not specifically men- 
 tioned ; but the servants of artificers are appointed to 
 take \icL, common carpenters 2d., and a reaper, the 
 first week in August, also 2d., all without diet ; from 
 which we may conclude that the wages of common 
 day labour must have been as often 1 \d. as 2d.-\ 
 
 Sir F. M. Eden has collected notices of the prices 
 of wheat in sixteen out of the twenty-five years of 
 Edward III. previous to the time of the passing of the 
 statute. Taking an average as before, the price of 
 wheat appears to have been about 5^. Ad. the quarter, 
 which is 8^/. the bushel, and 2d. the peck. 
 
 At this price of wheat, if the labourer earned l^^d. 
 a day, he could only purchase by a day's labour i of a 
 peck of wheat ; if he earned 2d. he could purchase 
 just a peck. In the form.er case, he would earn 
 less than half of the corn earned by the labourer of 
 Henry YII. ; and in the latter case, very little more 
 than half. 
 
 But in the subsequent period of Edward III.'s reign, 
 the labourer appears to have been much worse off. 
 The statute of labourers was renewed, and, it is said, 
 enforced very rigidly, notwithstanding a considerable 
 rise in the price of corn.J On an average of the thir- 
 teen years out of twenty-six, in which the prices of 
 wheat are noticed, the quarter is about \\s. 9d. which 
 is about 1^. 5i the bushel, and 4id. the peck. 
 
 At this price, if the money wages of labour had not 
 risen, the condition of the labourer would have been 
 very miserable. He would not have been able to pur- 
 
 * Eden's State of the Poor, vol, i. p. 32. t Ibid. p. 33. 
 
 : Ibid, p. 33. 42.
 
 244 OF THE WAGES Ol" LABOL'H. [cil. IV. 
 
 chase so much as half-a-peck of wheat by a day's la- 
 bour, about a fourth part of what he could subse- 
 quently command in the reign of Henry VII. It is 
 scarcely possible, however, to conceive that the money 
 wages of labour should not have risen in some degree, 
 notwithstanding the statute and its renewal ; but even 
 if they rose one half, they would not have nearly kept 
 pace with the price of corn, which more than doubled ; 
 and during the last twenty-five years of the reign of 
 Edward III. the earnings of the labourer in corn were 
 probably quite as low as during the last twenty-five 
 years of Elizabeth. 
 
 In the reigns of Richard II. and Henry IV. the 
 price of wheat seems to have fallen nearly to what it 
 was in the first half of the reign of Edward HI. From 
 1377 to 1398 inclusive, it was about ds. Id. the quar- 
 ter ; and from 1399 to 1411, about Qs. Id* It is 
 difiicult to ascertain how much the money wages of 
 labour had advanced ; but if they had risen so as to 
 enable the labourer to support himself, through the 
 last twenty-six years of the reign of Edward III. and 
 had not sunk again, in consequence of the subsequent 
 fall, which is probable, the labourer, during these 
 reigns, must have been well paid. 
 
 During the reign of Henry V. and the first part of 
 Henry VI. to the passing of the statutes in 1444, the 
 price of the quarter of wheat was about S.v. Sr/.f This 
 would be \s. Id. the bushel, and 3|r/. the peck. For 
 the greater part of these thirty-two years, the wages 
 of day labour seem to have been about 3d. They did 
 not probably rise to what they were appointed to be 
 in 1444, that is 4d. or A^d., till the ten dear years pre- 
 ceding the statute, during which, the average price of 
 the quarter was lO-y. 8^/. On an average of the whole 
 period of thirty-two years, the wages of day labour ap- 
 pear to have purchased about a peck of corn, rather 
 less perhaps, than more, in reference to the greater 
 portion of the period. 
 
 * Eden's State of the Poor, vol. iii. p. xxv. et seq. 
 + Eden's State of the Poor, Table of Prices, vol. iii.
 
 SEC. IV.] OF THE WAGES OF LABOUR. 245 
 
 From 1444 to the end of the century, the average 
 money price of wheat was about C^. while the wages 
 of day labour continued at 4(1. or 4icl* At the lat- 
 ter of these prices of labour, wages would purchase 
 exactly two pecks of wheat, or half a bushel, and at 
 the former price ^ of half a bushel. 
 
 From the passing of the first statute of labourers 
 in 1350 to the end of the 15th century, a period of 
 150 years, successive changes had been taking place 
 in the quantity of metal contained in the same nomi- 
 nal sum ; so that the pound of silver, which in the 
 middle of the reign of Edward III. was coined into 
 1/. 2s. Gd. was, in the reign of Henry VII., coined into 
 1/. 176-. 6cL 
 
 One should naturally have expected, that this de- 
 preciation of the coin would have shown itself first, 
 and most conspicuously, in some exportable commo- 
 dity, such as corn, rather than labour; and so it pro- 
 bably would, as it did afterwards in the reign of 
 Elizabeth, if wheat had not at the same time been 
 cheap in the rest of Europe, particularly in France. 
 In fact, however, this great fall in the intrinsic value 
 of the coin was in no respect made up by the slight 
 rise in the nominal price of wheat which occurred in 
 the course of that period. This rise was only from 
 about 5s. 4d. to 6s. or 6.5-. 3d. Consequently a very 
 considerable fall had really taken place in the bullion 
 price of wheat. 
 
 But the nominal price of labour, instead of rising 
 in the same slight degree as wheat, rose from lid. or 
 2d. to 4d. or 4id., a rise much more than sufficient to 
 cover the deterioration of the coin ; so that the bullion 
 price of labour rose considerably, during the time that 
 the bullion price of wheat fell. It is singular, that 
 Adam Smith, in his Digression concerning the value 
 of silver during the four last centuries, should not 
 
 * Mr. Hallam, in his valuable Work on the Middle Ages, has 
 overlooked the distinction between the reigns of Edward III. and 
 Henry VI. with regard to the state of the labouringclasses. The two 
 periods appear to have been essculi.illy different in this respect.
 
 l24G ()(• lllE WAGI.S Ol LABOUR. [CH. IV. 
 
 have noticed this circumstance. If he had been aware 
 of tliis rise in tlie bullion price of labour, his princi- 
 ples, which led him to consider corn as a good mea- 
 sure of value, merely because it is the best measure of 
 labour, should have led him to a very different con- 
 clusion from that which he has stated. Referring to 
 labour which, it has been shown in this work, is the 
 true standard measure of value, and in fact, is the 
 standard which Adam Smith himself proposes, it ap- 
 pears that the value of silver from the middle of the 
 14th to the end of the 15th century, when the effect 
 contemplated was the greatest, instead of rising to 
 nearly double in value, fell in the proportion of from 
 about 3 to 2.* 
 
 It was during the favourable part of this period 
 that Sir John Fortesque wrote his work on Absolute 
 and Limited Monarchy, and contrasted the prosperous 
 and happy condition of the peasantry of England with 
 the miserable state of the peasantry of France. t 
 
 But it is not sufficient to show that the condition 
 of the lower classes of people in England during the 
 last half of the 15th century, was much superior to 
 what it was either in the preceding century, or sub- 
 sequently during the depreciation of money occasioned 
 by the discovery of the American mines. To prove 
 that it was peculiar, we must compare it with the condi- 
 tion of the people after the depreciation had ceased. 
 
 According to Adam Smith, the effects of the dis- 
 
 * The nominal price of labour rose from about \\d. or 'id. to Ad. 
 or A\d. If we combine these proportions of 3 to 8, and 4 to 9 to- 
 getlier, and correct the resuh by the diminution of the quantity 
 of metal contained in the same nominal sum in the latter period, 
 which was in the pro])ortions of \l. Ms. 6d. to 1/. 25. 6d., or of 5 
 to 3, it will appear that the Inillion price of labour rose nearly in 
 the proportion of from 2 to 3, and consequently that the value of 
 silver fell nearly in the proportions of from 3 to 2. 
 
 t The rise in the bullion price of labour, while the bullion price 
 of corn was falling, proved not only, that the English labourer 
 could command a greater quantity of corn than usual, but that 
 at the same time there was a great demand for labour, anil all 
 who were willing to work might be employed, two events which do 
 not always go together, but which when they do, are most favour- 
 able to the lal)0uring chisscs.
 
 SEC. IV.] OF THE M'AGES OF LABOUR. 247 
 
 covery of the American mines seemed to be at an end 
 about 1638 or 40. In 1651 the wages of day-labour, 
 as established by the justices in Essex at the Chelms- 
 ford quarter-sessions, were for the summer half year, 
 harvest excepted, 1^. '2d. This is a considerable rise 
 in the money price of labour from the time of Eliza- 
 beth ; but we shall find that it is hardly proportionate 
 to the rise of the price of wheat. If we take an ave- 
 rage of the five years preceding 1651,* the period to 
 which the regulation would probably for the most 
 part refer ; it appears that the price of the quarter of 
 wheat in the Windsor market, deducting ^ to reduce 
 it to Winchester measure, was 3/. 4lS. 7d.'\ the quarter, 
 which would be about 8s. the bushel, and 2^. the 
 peck. At this price of wheat, with wages at lid. the 
 labourer would only earn A of a peck, half a peck, 
 and -jj,. 
 
 In 1661, soon after the accession of Charles II., 
 wages were again regulated by the justices in Essex, 
 at the Easter Sessions, and the price of common day- 
 labour during the summer half year, with the excep- 
 tion of harvest time, was continued at I4d. 
 
 If we take an average of the price of wheat for the 
 five years preceding 1661, as before, it appears that 
 the quarter was 21. 9s. '3d. This is 6s. 2d. the bushel, 
 and I8id. the peck. At this rate the labourer would 
 earn about | of a peck. It is true that the averages of 
 the prices of corn here taken refer to dear times ; but 
 the wages were appointed just at these times : and in 
 the regulations of 1651 it is expressly stated, that they 
 are appointed, " having a special regard and conside- 
 ration to the prices at this time of all kinds of victuals 
 and apparel, both linen and woollen, and all other ne- 
 cessary charges wherewith artificers, labourers and 
 servants have been more grievously charged with than 
 in times past.":]: 
 
 * As the regulation passed in April, the year 1651 is not in- 
 cluded in the average. 
 
 t Encyclopaedia Brit. Supp. Artie. Corn Laws, where a table is 
 given with the I deducted. 
 
 I Eden's State of the Poor, vol. iii. p. 98.
 
 248 OF THE WAGES OF LABOL'K. [cil. IV. 
 
 If we take an average of the twenty years from 
 1646 to 1605 inclusive, we shall find that the price 
 of wheat was rather above than below that of the 
 five years preceding 1661. The average price of 
 the (quarter of wheat during these twenty years was 
 £2. lO.v. Old* which is 6s. 3(i. the bushel, and nearly 
 19^/. the peck. At this price, with wages at \4d. 
 the labourer for these twenty years would hardly be 
 able to earn so much as ^ of a peck. 
 
 After 1665 the price of corn fell, but money wages 
 seem to have fallen at the same time. 
 
 In 1682 wages at Bury in Suffolk were appointed 
 to be 6d. in summer, and 5d. in winter with diet, and 
 double without. Tliis makes the summer wages 1*. ; 
 and according to the price of wheat in the preceding 
 five years, the labourer who earned a shilling a day, 
 could hardly command so much as f of a peck of 
 wheat. 
 
 The average price of the quarter of wheat from 
 1665 to 1700 was about £2. 2*. 6d. If we suppose 
 the wages of labour during this period to have been 
 about is. the earnings of the labourer would be about 
 ■I of a peck of wheat. But there is reason to think 
 that the average money wages were not so high as \s. 
 
 In the regulations of the justices at Warwick in 
 1685,t common labourers were allowed to take only 
 8d. a day for the summer half year. Sir George 
 Shuckburgh puts down only 7 Id. for the period from 
 1675 to 1720; J and Arthur Young estimates the 
 average price of labour during the whole of the 17th 
 century at lOiW.^ If on these grounds we were to 
 estimate the wages of labour from 1665 to the end 
 of the century at lOhd. it would appear that the earn- 
 ings of the labourer, in the 17th century, after the 
 depreciation of money had ceased, were only sufficient 
 to purchase 3 of a peck of wheat. Taking however 
 
 * Windsor Table, deducting ^. 
 
 t Eden's State of the Poor, vol. iii. p. 104. 
 
 I Philosoph. Trans, fur 1708. Part i. p. 176. 
 
 ^ Annals of Agriculture, No. 270, p. 88.
 
 SEC. IV.] OF THE WAGES OF LABOUR. 249 
 
 the more favourable supposition of 1^. a day as the 
 earnings of the labourer, they would purchase, as be- 
 fore stated, about i of a peck. 
 
 During the first twenty years of the 18th century, 
 the price of corn fell, but not much ; and it may be 
 doubted whether the price of labour rose. 
 
 In 1725, a few years later than the period alluded 
 to, the wages of labour were settled by the justices 
 at Manchester. The best husbandry labourer, from 
 the middle of March till the middle of September, 
 was not to take more than ]s. a day without meat 
 and drink ; but common labourers, and hedgers, 
 ditchers, palers, thrashers, or other task-work, only 
 10^. Mr. Howlett, as quoted by Sir F. Eden,* states 
 the price of day-labour, so late as 1737, at only 10^/. 
 a day; and Sir F. Eden, writing in 1796, observes, 
 that from various information he had collected in dif- 
 ferent parts of England, he had reason to think that 
 the wages of labour had doubled * during the last 
 sixty years, which could hardly be true, unless wages 
 in the early part of the century had been lower than 1^. 
 
 The average price of wheat for the first twenty 
 years of the century was rather less than £2. ; and if 
 the wages of labour were only 10^/. or lOuL, the 
 labourer would earn considerably less than f of a 
 peck. If the wages were 1^. he would earn f of a 
 peck. 
 
 From 1720 to 1755 corn fell and continued low, 
 while the wao;es of labour seem to have been about 
 1^. During these thirty-five years the price of wheat 
 was about 33s. the quarter, or a little above 1^. the 
 peck, and the labourer therefore, on an average of 
 thirty-five years together, would be able to earn about 
 a peck of wheat. 
 
 From this time corn began gradually to rise, while 
 wages do not appear to have risen in the same pro- 
 portion. The first authentic accounts that we have 
 of the price of labour, after corn had begun to rise, 
 
 * Vol. i. p. 385.
 
 250 OF illE WAGES OF LABOllJ. [cil. IV. 
 
 is in the extensive Agricultural Tours of Arthur 
 Young, which took place in 1767, 17G8 and 1770. 
 The o-eneral result of the ])rice of labour from tliese 
 tours, on the mean rate of the whole year, was 7^. 4id. 
 a week.* Taking an average of the five years, from 
 17G(j to 1770 inclusive, the price of the quarter of 
 wheat was £2. 7.y. 8^/. or nearly ASs.'f which would 
 be C.V. the bushel, and 1^.6^. the peck. At these 
 prices of labour and wheat, the labourer would earn 
 very nearly f of a peck. 
 
 In 1810 and 1811, accounts from thirty-seven coun- 
 ties, which, according to Arthur Young, were quite 
 satisfactory, make the wages of day-labour for the 
 mean rate of the year \As. Gd.X a week, or nearly 
 2.9. 6cl. a day. The price of wheat for five years end- 
 ing with 1810 was 92.S-. — ending wdth 1811, 966-.§ 
 The prices both of labour and wheat appear to have 
 doubled; and the labourer, in 1810 and 1811, could 
 earn just about the same quantity of wheat as he 
 could about forty years before, that is | of a peck. 
 The intermediate periods must necessarily have been 
 subject to slight variations, owing to the uncertainty 
 of the seasons, and an occasional advance in the price 
 of corn, not immediately followed by an increased 
 price of labour; but, in general, the average must 
 have been nearly the same, and seldom probably for 
 many years together differed much from 4 of a peck. 
 
 Since the accounts given by Artliur Young, there 
 has been no general calculation, that I am acquainted 
 with, of the average money wages of agricultural la- 
 bour, over districts sutliciently extensive to represent 
 
 * Annals of Agriculture, No. 271, p. 215. 
 
 t Deducting x from the prices in tlie Windsor Table. Arthur 
 Young deducts another 9th for the quality ; but this is certainly 
 too much, in reference to the general average of the kingdom to 
 which the latest tables apply. I have therefore i)referrcd ad- 
 hering all along to the Windsor prices; and the reader will make 
 v.hat allowances he thinks fit for the quality, which, according to 
 Mr. Rose, is not much above the average. 
 
 J Annals of Agricidture, No. 271, p. 215 and 216. 
 
 ^ Windsor Table, Supp. to Encyclopaxlia Brit. Art. Corn Laws.
 
 SEC. IV.] OF THE M'AGES OF LABOUU. 251 
 
 the whole. There are great differences in the prices 
 of labour in different counties, and even in different 
 parishes not very distant from each other. But from 
 the numerous statements in the Agricultural Report, 
 and what I have heard from other quarters, I should 
 think that, making allowance for the difference be- 
 tween gold and paper during the high prices, the fall 
 in the money price of standard labour has not been 
 less than between 20 and 25 per cent.* As however 
 the fall in the price of wheat has been much greater, 
 it follows, that the labourer who is fully employed 
 can now earn more wheat than he could at any period 
 of the high prices. According to the calculations 
 just referred to, when wheat on an average of 5 years 
 ending with 1811 was \2.s. a bushel, and 3^. a peck, 
 the labourer with his half crown a day could only 
 earn | of a peck ; whereas now if he earns only 20^/. 
 a day, and wheat is o'2s. a quarter, or G.s. 6d. a bushel, 
 he can purchase a whole peck, and have a halfpenny 
 remaining. If his wages were 2*. a day he could 
 purchase nearly a peck and a quarter. If the price 
 of the quarter of wheat, instead of 52^. were 48^. the 
 quarter, which is higher than it has been for some 
 time latterly, the labourer earning 12.^. a week or 2s. 
 a day could purchase a peck and i, and earning only 
 20d. a day could purchase a peck and i, which is a 
 
 * In many cases the apparent fall has been in the proportion 
 of 15 to 10, and even greater. In the North Riding- of York- 
 shire wages of the same description are said to have fallen from 
 3s. 6d. to 2s. and 25. 3d. (Agricultural Report, Merry, p. 112.) 
 ' In Shropshire from 2s. 4d. to Is. 6d. (White, p. 24.) In North- 
 j amptonshire, Leicestershire, and Nottinghamshire, from 15s. and 
 I 18s. to 10s. since 1824. (Buckly, p. 398.) In Scotland, harvest 
 I wages from 2s. 6d. and 2s. to \s.6d. and Is., and from 15s. and 
 12s. to 10s. and 8s. 6d. (Oliver, pp. 128 and 126.) Generally 
 ! in the Lowlands the principal portion of the wages of labour is 
 paid in kind, and the money value of that portion must therefore 
 I fall with the fall in the price of corn. The part paid in money 
 j has fallen, but not in proportion. In a private account which I 
 j received some years ago from the stewartry of Kircudbright, 
 ! where the wages were all paid in money, it appears that from 
 \ 1811 to 1822 the fall of summer wages was from 22^^ to \5d., 
 1 and of winter wa^jes from I8d. to Is.
 
 252 OF THE WAGES OF LABOUR. [CH. IV. 
 
 greater quantity than the labourer has been able to 
 command since 1575, when the price of labour is 
 first stated in the reign of Elizabeth. 
 
 It is certainly true therefore that for some time, 
 nearly perhaps ever since the war, the fully employed 
 labourers have been able, in spite of the corn laws, to 
 purchase a more than usual quantity of wheat. The 
 specific evil of the present times in regard to agricul- 
 tural labourers is, that from the low price of corn as 
 compared with the price of labour and the other out- 
 goings of the farmer, he is unable to farm with spirit, 
 and the consequence is that a considerable number of 
 men are unemployed except by the parish. Nothing 
 can shew more clearly that a brisk demand for la- 
 bourers depends upon an increase of the funds for 
 their maintenance, ?677//o//^ a proportionate fall in their 
 value. 
 
 Section V. — On the Conclusions to be dratcn from 
 the preceding Revieic of the Prices of Corn and 
 Labour during the Jive last Centuries. 
 
 From this review of the prices of corn and labour, 
 during nearly the five last centuries, we may draw 
 some important inferences. 
 
 In the first place, I think it appears that the great 
 fall in the corn wages of labour which took place in 
 the 16th century, must have been occasioned mainly 
 by the great and unusual elevation which they had 
 previously attained, and not by the discovery of the 
 American mines and the consequent fall in the value 
 of money. When we compare the corn wages of la- 
 bour during the last half of the 15th century, with 
 what they were both before and subsequently, it ap- 
 pears that whatever may have been the cause of these 
 high wages, they were evidently peculiar, and could 
 not therefore be permanent. This indeed is evident, 
 not only by comparing them with previous and sub- 
 sequent periods, but by considering their positive
 
 SEC. v.] OF THE WAGES OF LABOUR. 253 
 
 amount. Earnings of the value of nearly two pecks 
 or half a bushel of wheat a day would allow of the 
 earliest marriages, and the maintenance of the largest 
 families. They are nearly the same as the earnings 
 of the labourer in the United States. In such a 
 country as England was, even at that time, such wages 
 could only be occasioned by temporary causes. Among 
 these we must reckon, a general improvement in the 
 system of cultivation after the abolition of villanage, 
 which increased the plenty of corn ; and the com- 
 paratively rapid progress of commerce and manufac- 
 tures, which occasioned a great demand for labour ; 
 while, owing to the wars in France, the civil wars 
 between the Houses of York and Lancaster, and above 
 all perhaps the slow change of habits among a people 
 lately emancipated, this increase of produce and de- 
 mand had not yet been followed by a proportionate 
 effect on the population. 
 
 Certain it is that corn was very cheap both in 
 France * and England ; and labour in this country 
 could not possibly have risen and kept high for so 
 long a period as between sixty and seventy years, un- 
 less some peculiar cause or causes had restrained the 
 supply of population, compared with the supply of 
 corn and the demand for labour. 
 
 It is with the fact however of the very high wages 
 of labour in the 15th century rather than with the 
 causes of it, that we are chiefly concerned at present, 
 
 * It is a very curious fact, that the bulhon price of corn con- 
 tinued unusually low in France from 1444 to 1510. {Garjiiers 
 Richesse des Nations, vol. ii. p. 184.) just during the same period 
 that it was low in England. Adam Smith is inclined to attribute 
 this fall and low price to a deficiency in the supply of the mines, 
 compared with the demand; (B. i. ch. xi.) but this solution in 
 no respect accounts for the rise of the bullion price of labour in 
 England, at the time that the bullion price of corn was falling. 
 Nothing can account for this fact, but a relative plenty of corn 
 compared with labour — a state of things which has little to do 
 with the mines. The low prices in France were probably con- 
 nected with the abolition of villanage, and an extended cultiva- 
 tion in the reign of Charles VII. and his immediate successors, 
 after the ravages of the Enerlish were at an end.
 
 254 OF THE UAGKS OF LABOL R. [CH. IV. 
 
 and of tlie fact there can be no doubt ; but if the fact 
 be allowed, it follows, that such wages must have 
 very greatly fallen during the course of the following- 
 century, if the mines of America had not been disco- 
 vered. 
 
 What effect the depreciation of money might have 
 had in aggravating that increasing poverty of the la- 
 bouring classes of society, w^hich, with or without such 
 a depreciation, would inevitably have fallen upon 
 them, it is not easy to say. But from the still lower 
 wages which prevailed in the 17th century after the 
 depreciation had ceased, and from what has happened 
 of late years (which shall be more fully noticed pre- 
 sently) I should not be disposed to consider a general 
 rise in the price of corn, occasioned by an alteration 
 in the value of money, and not by bad seasons, as 
 likely to affect the labouring classes prejudicially for 
 more than a few 3'ears. Still, however, it is quite cer- 
 tain that the condition of the labouring classes was 
 growing much w^orse during the time that the depre- 
 ciation of money from the discovery of the American 
 mines was taking place ; and whatever may have been 
 the cause, as the people would always be comparing 
 their situation with what it had been, in their ow^n 
 recollection and that of their fathers, it would inevit- 
 ably excite great complaints ; and, after it had grown 
 comparatively very bad, as in the latter end of the 
 reign of Elizabeth, it w^as likely to lead to those mea- 
 sures relating to the poor, which marked that period 
 of our history. 
 
 Another inference which we may draw from the 
 review is, that during the course of nearly 500 years, 
 the earnings of a day's labour in this country have 
 probably been more frequently below than above a 
 peck of wheat ; that a peck of wheat may be consi- 
 dered as something like a middle point, or a point ra- 
 ther above the middle, about wdiich the corn wages of 
 labour, varying according to the demand and supply, 
 have oscillated ; and that the population of a country 
 may increase with some rapidity, while the wages of 
 labour arc even under this Doint.
 
 SEC. v.] OF THE WAGES OF LABOUR. 255 
 
 The wages of day labour in France during the two 
 last centuries, are said to have been pretty uniformly 
 about the 20th part of a septier of wheat,* which 
 would be a little above j of a peck ; but just before 
 the revolution, at the time of Arthur Young's tour in 
 France, they were only about i of a peck. For some 
 time subsequently to the revolution, they appear to 
 have risen so as to command more than a peck. 
 
 A third inference which we may draw from this 
 i eview is, that the seasons have a very considerable 
 influence on the price of corn, not only for two or 
 tlu'ee years occasionally, but for fifteen or twenty years 
 together, and sometimes much longer. These periods 
 of unfavourable seasons seem to supersede all the other 
 causes which may be supposed to have the greatest 
 influence upon prices. An instance of this occurs after 
 the great pestilence in the time of Edward III. One 
 sliould naturally have thought that the quantity of 
 oood land being abundant, compared with the popu- 
 lation, corn would have been very cheap. It was, 
 however, on the contrary, dear during the tw^enty-five 
 subsequent years, — a fact which cannot be accounted 
 foi' but from unfavourable seasons. 
 
 Another instance of the same kind had occurred in 
 ilie reign of Edward II., during the whole of which, 
 the average price of wheat was more than double what 
 it had been during the greatest part of the reign of 
 Edward I., and the first half of the reign of Edward 
 III. — evidently owing to unfavourable seasons, 
 
 A third instance occurs during the civil wars of the 
 17th century. So far from thinking that civil wars 
 have a necessary tendency to make corn dear, I am 
 disposed to agree with Sir F. Eden, in attributing a 
 part of the high price of labour and the cheapness of 
 corn in the 15th century, to the circumstance of a 
 greater destruction of men than of cultivation having 
 been occasioned in the civil wars of the Houses of 
 York and Lancaster. But in the civil wars of the 17th 
 century, no such cheapness of corn took place. On 
 
 * Wealth of Nations, b. i. c. xi. p. 313.
 
 25G OF THE WAGES OF LABOUR. [CH. IV. 
 
 the contrary, in the period from 1646 to IGGf) the 
 price of corn was hi<i,lier both in France and England 
 than it had ever been known for twenty years together, 
 either before or since, exclusive of the prices in this 
 country during the war of the French Revolution. 
 For shorter periods, these unfavourable seasons are of 
 frequent recurrence, and must essentially affect the 
 condition of the labourer during ten or five years. It 
 depends upon their continuance and other concomitant 
 circumstances, whether they raise money wages, or 
 leave them as they were. 
 
 The periods of the lowest corn wages have been, 
 when a considerable rise in the price of corn has taken 
 place under circumstances not favourable to a propor- 
 tionate rise in the price of labour. This is the most 
 likely to happen in unfavourable seasons, when it 
 would be impossible for the price of labour to rise in 
 proportion to the price of corn. It may also happen 
 when a fall is taking place in the value of money, if 
 any previous causes have given an extraordinary sti- 
 mulus to the progress of population. In this case, 
 though the funds for the maintenance of labour may 
 be increasing fast, the population may be increasing m 
 faster, and the money wages of labour u'ill not rise in 1 
 proportion to the price of com. To this cause I am 
 strongly disposed to attribute the inadequate rise of 
 the money wages of labour during the reigns of Henry 
 VIII., Mary, Edward VI., and Elizabeth. The state 
 of things in the early part of the ICtli century must 
 have given a powerful stimulus to population ; and 
 considering the extraordinary high corn wages at this 
 period, and that they could only fall very gradually, 
 the stimulus must have continued to operate with con- 
 siderable force during the greatest part of the century. 
 In fact, depopulation was loudly complained of at the 
 end of the 15tli and beginning of the 16th centuries, 
 and a redundancy of population was acknowledged at 
 the end of the 16th. And it was this change in the 
 state of the population, and not the discovery of the 
 American mines, which occasioned so marked a fall 
 in the corn wages of labour.
 
 >iEC. v.] OF THE M^AGF.S OF LABOTU. 257 
 
 If the discovery of the American mines had found 
 the labouring classes of the people earning- only the 
 same wages which they appear to have earned in the 
 latter half of the reign of Edward III., and if the same 
 increase of capital and produce had taken place dur- 
 ing the 16th century, as really did take place, there 
 is every probability that the money wages of labour 
 would have increased as much as the money price of 
 corn. Indeed when an increase of currency is accom- 
 panied, as it frequently is, by a rapid increase of ca- 
 pital, there is one reason, why, in the natural state of 
 things, the price of labour should feel it more than 
 other commodities. The encouragement given to po- 
 pulation by such increase of resources, could not ap- 
 pear with any considerable effect in the market under 
 sixteen or eighteen years ; * and before that time the 
 demand compared with the supply of labour might be 
 greater than the demand compared with the supply of 
 most other commodities. 
 
 It is on this account, that in the fall in the value of 
 money which took place from 1793 to 1814, and which 
 was unquestionably accompanied by a great increase 
 of capital, and a great demand for labour, there is 
 strong reason to believe, that if the price of labour had 
 not been kept down by artificial means, it would have 
 risen higher in proportion than the average price of 
 corn. According to the last authentic accounts which 
 had been obtained of the price of labour, previous to 
 1814, it appears by the statements of Arthur Young, 
 that on an average of the returns of thirty-seven coun- 
 ties in 1810 and 1811, the weekly wages of day labour 
 were 14^. Gd., — a price, which, compared with the 
 wages of 1767, 1768 and 1770,t is equal to the rise 
 in the price of wheat during the same period. Now 
 it is known that in many counties and districts in the 
 
 * The increase of the funds for the maintenance of labour would 
 however have some effect soon, by diminishing mortality, both 
 among those rising to the age of puberty, and the full grown la- 
 bourers. 
 
 t Annals of Agriculture, No. 271. pjp. 215 and 21G. 
 
 S
 
 258 OF THE WAGES OF I.ABOLR. [CH. IV. 
 
 southern parts of England, wajres in 1810 and 1811 
 were unnaturally kept down to ['2s., \0s., ds. and even 
 7.y. Gil. by the bani'ful system ot" regularly maintaining 
 the children ot" the poor out of the rates; it may there- 
 fore fairly be concluded that if this system had not 
 prevailed over a large part of England, the money 
 wages of labour would have risen higher than in pro- 
 portion to the price of wheat. 
 
 This conclusion is still further confirmed by what 
 happened in Scotland and some parts of the north of 
 Ens^land. In these districts, all accounts ao:ree that 
 the rise of money wages was in fact greater than the 
 rise of corn, and that the condition of the labourer till 
 1814 was decidedly improved, even in spite of the 
 taxes, many of which certainly bore heavily on the 
 conveniences and comforts of the labourer, though 
 they affected but little his command over strict neces- 
 saries. 
 
 In considering the corn wages of labour in the course 
 of this review, it has not been possible always to make 
 a distinction between tlie eflfects of a fall in the price 
 of corn, and a rise in the money price of labour. In 
 merely comparing the two objects with each other, 
 the result is precisely similar ; but their effects on the 
 demand for labour and the encouragement to popula- 
 tion are sometimes dissimilar, as I have before inti- 
 mated. A great demand for labour is perfectly consis- 
 tent with a fall in the price of raw produce, because, 
 notwithstanding this fall, the W'hole value of the funds 
 for the maintenance of labour may still be increasing ; 
 but it sometimes happens that a fall in the price of raw 
 produce is accompanied by a diminished power on the 
 part of the farmer to employ labour ; and in this case the 
 demand for labour and the encouragement to popula- 
 tion will not be in proportion to the corn wages of la- 
 bour. 
 
 If the labourer commands a peck instead of | of a 
 peck of wheat a day, in consequence of a rise of money 
 wages, all the labourers who are willing and able to 
 work may be employed, and probably also their wives
 
 SEC. v.] OF TIIF. WAGES OF LAUOl'R. 259 
 
 and children ; but if he is able to command this ad- 
 ditional quantity of wheat on account of a fall in the 
 price of corn which diminishes the value of the far- 
 mers' returns, the advantage is more apparent than 
 real, and though the price of labour may not nomi- 
 nally fall for some time, yet as the demand for labour 
 may be stationary, if not retrograde, its current price 
 will not be a criterion of what might be earned by the 
 united labours of a large family, or the increased ex- 
 ertions of the head of it in task-work.* 
 
 It is certain, therefore, that the same current corn 
 wages will, under different circumstances, have a dif- 
 ferent etfect, both on the demand for labour, and the 
 general condition of the labouring classes. f 
 
 It should be observed, that in estimating the corn 
 wages of labour I have uniformly taken wheat, the 
 dearest grain. I have taken one grain to the exclusion 
 of other necessaries, in order to avoid complicating 
 the subject ; and have chosen wheat because it is the 
 main food of the greatest part of the population in 
 England. But it is evident that at those periods, or 
 in those countries, in which the main food of the people 
 does not consist of wheat, the wheat wages which can 
 be earned by a family will not form a just criterion of 
 the encouragement given to population. Although 
 the wheat wages might be very unequal at two diffe- 
 rent periods, or in two different countries, yet if in 
 one case an inferior grain were habitually consumed, 
 the encouragement to the population might be the 
 same. The Irish labourer cannot command the sup- 
 port of so large a family upon wheat as the English 
 labourer, but he can command in general the support 
 of a larger family upon the food on which he is ac- 
 customed to live ; and consequently, population has 
 increased much faster during the last century in Ire- 
 land than in England. 
 
 * Under all ordinary circumstances, more labour may be set 
 in motion, before any increase of population has taken place, 
 t This is frequently noticed in the Agricultural Report.
 
 260 OY IHL M'AGt.S OF LABOLK. [cH. IV. 
 
 It appears then, that in order to form a just esti- 
 mate of the demand for labour, the encouragement to 
 population, and the condition of the labourer, we must 
 first consider the increase of the funds specifically 
 destined for the maintenance of labour, instead either 
 of the increase of wealth, the increase of capital, or 
 the increase in the exchangeable value of the whole 
 produce. 
 
 Secondly, in estimating these funds we must con- 
 sider their whole value, not merely their whole quan- 
 tity, and make a proper allowance for those other 
 parts of the wages of labour which do not consist of 
 corn. 
 
 And thirdly, in estimating the amount of food and 
 necessaries earned by the labouring classes, which 
 amount principally affects their condition, we must 
 make a careful distinction between the earnings of a 
 whole family, when employment is difficult to be 
 found, and their earnings when there is a demand for 
 more work to be done than there are hands to do it. 
 
 It is further of the utmost importance always to 
 bear in mind that a great command over the neces- 
 saries and conveniences of life may be effected in tw^o 
 ways, either by a rapid increase in the quantity and 
 value of the funds destined for the maintenance of 
 labour, or by the prudential habits of the labouring 
 classes; and that as the former mode of improving 
 their condition is neither in the power of the poor to 
 carry into effect themselves, nor can in the nature of 
 things be permanent, the great resource of the la- 
 bouring classes for their happiness must be in those 
 prudential habits which, if properly exercised, are 
 capable of securing to them a fair proportion of the 
 necessaries and conveniences of life, from the earliest 
 stage of society to the latest. 
 
 I have said nothing of the rise or fall of wages ac- 
 cording to the language adopted by Mr. Ricardo. 
 Such wages, namely proportionate wages, only deter- 
 mine, or rather are determined by, the rate of profits, 
 and will be considered in the next chapter. They
 
 SEC. v.] OF THE WAGES OF LABOUR. 2G1 
 
 have often little to do with the condition of the la- 
 bourer, as, in reference to the proportion of the pro- 
 duce which he obtains, his wages are low in the 
 United States of America, and high in countries where 
 he may be starving. If indeed wages as well as 
 profits were estimated by proportions, it would be 
 perfectly true, as stated by Mr. Ricardo, that they 
 could not both rise or fall together. If wages rose, 
 profits must fall, and if wages fell, profits must rise. 
 This is the necessary consequence of the language 
 adopted. But Mr. Ricardo, I believe, was the first 
 who used the term wages in this sense. Profits, in- 
 deed, and interest, had always been, and must always 
 be estimated by proportions ; but wages had always 
 been, and always should be estimated by quantity, 
 either by the quantity of money which the labourer 
 earns, or by the quantity of the necessaries and con- 
 veniences of life, which that money enables him to 
 purchase ; and in reference to a period of any consi- 
 derable length, by the latter, and not by the former. 
 Let it be remembered then, that this is the usual 
 sense aflixed to the term, wages, except when the word 
 proportionate is added for some particular purpose. 
 And consequently, according to the ordinary and 
 most correct language of society, we frequently see 
 high profits and high wages, low profits and low 
 wages going together ; in using which expressions, 
 high and low, as applied to profits, always refer to 
 their rate or proportion, and as applied to wages, to 
 their qiiantiti) or amount.
 
 262 
 CHAPTER V. 
 
 OF THE PROFITS OF CAPITAL. 
 
 Section I. — Of the Nature of Profits, and the Mode 
 in luhich they are estimated. 
 
 It has b een usual in speaking of that portion of the 
 n ational revenue which goes to the capit alist in return 
 for the employment of his ca p ital, to caTF it^ the 
 name of the profits- of^stock. But stock i s not so 
 appropriate subexpre ssion in tl iis_case as capital. 
 Stock is a more general term, and may be defined to 
 be, all the material possessions of a country, or all its 
 actual wealth, whatever may be its destination, while 
 capital is that particular part of these possessions, or 
 of this accumulated wealth, which is destined to be 
 employed with a view to profit in the production and 
 distribution of future wealth. They are often, how- 
 ever, used indiscriminately, and perhaps no great 
 error may arise from it ; but it may be useful to recol- 
 lect, that all stock is not, properly speaking, capital, 
 though all capital is stock ; and consequently that 
 capital may increase by an alteration in the proportion 
 of that part of the whole stock which is employed 
 productively, while the whole quantity of the stock, 
 or the wealth of a country may remain at first the same. 
 
 The profits of capital consist of the difi'evence be- 
 ^^^!^g^^" J*-^^ value of a commodity produced, a nd the 
 value of the advances necessary to pr oduce Jt,^ and 
 tirese advgLncesconaiiiijD.f-acrn mulntioiis generally made 
 up^^^^L'^S^^iX^M?*- tiixes,_interestj and profits. 
 
 The_xal £- of profi ts is the proportion which the dif- 
 fercnce betvveeii the \;;ah]ej)fj:he commodity produced, 
 and the value of the advances necessar y to produce 
 ft, Bears J ojt he value of the adv ances. When the 
 value of the product is great compared with the value 
 of the advances, the excess being considerable, the 
 rate of profits will be high. When the value of the
 
 SEC. I.] OF THE PROFITS OF CAPITAL. 2G3 
 
 product exceeds but little the value of the advances, 
 the difference being small, the rate of profits will be low. 
 
 Th e varying j rates of profit, th erefor e^_o bviously 
 depend upon the causes which alter the_pro|)ortions 
 b etween the^ value oT t he a dvances necess ary to_pro- 
 ducti on, and the value of the product obtained. /;0 a/c/v-*'^ 
 
 Profits, as we all know, are practically estimated by y ^. ^^^ 
 the money prices of the products compared with the 
 money prices of the advances ; and as money for the 
 short periods during which mercantile transactions last, 
 is universally considered as measuring value and not 
 quantity, it follows, that profits, as it has been stated, 
 are always practically estimated by the values of the 
 products compared with the values of the advances, 
 and not by their relative quantities. It would be 
 impossible indeed to compare them as to quantity, 
 because the advances necessary to produce commodi- 
 ties, are never all of the same kind as the commodities 
 produced ; and when they are not the same, their 
 quantities do not admit of a comparison. We cannot 
 compare shoes or cloth with corn or labour in regard 
 to quantity. 
 
 It is of so much importance to be fully aware of 
 the necessity of estimating both the advances and the 
 returns of the capitalist in value and not in quantity, 
 that it may be worth while to illustrate the difference 
 in the results of the two modes of proceeding. 
 
 Of all the articles obtained by human industry, 
 there is not one in which so great a part of the ad- 
 vances is identical with the produce as in the culti- 
 vation of corn. Let us consider what practically takes 
 place in the production of this most important com- 
 modity. 
 
 The farmer practically pays his labourers in money. 
 Let us suppose that this money, with the other money 
 outgoings amounts to £200, that in the year in which 
 the advance is made it will purchase 100 quarters of 
 wheat, the price of wheat being £2 a quarter, and 
 that the rate of profits is 20 per cent, in which case 
 the return must be 120 quarters, or 20 per cent, in
 
 2G4 OF THE ruoFiTs uf capital. [ch. v. 
 
 quantity. Now if in the next year there should be a 
 scanty crop, yieldinj^ only 100 quarters instead of 
 120, then in rcrorcnce to quantity there will be abso- 
 lutely no excess in the returns, as compared with the 
 out^oinjTs, and the capitalist would have actually 
 nothing^^ to live upon. But would he really be so 
 destitute { Far from it. He might perhaps be better 
 off, instead of worse off than usual. Profits, as I have 
 before stated, are always practically estimated by 
 value, not c^uantity ; aiT^igjT al_questi i2ilis aboutljiek 
 ^rice of the produce compared w itl^^ pi'icc^gjjli&i 
 ladvaiicTit ^niiuli oOhelej^ ^ of the fe tiirns in wheatj 
 tbove the advan ces in wheat. Most happily for society 
 such is the naTure of things, that a diminution in the 
 quantity of an article, other circumstances being the 
 same, raises its price; and the diminution of one 
 sixth in the supply of corn would probably raise it 
 considerably more than one fifth. Taking the rise, 
 however, only at one fifth, its value in money would 
 be 48*. the quarter, and the sale of 831 quarters w ould 
 replace the capital expended, and leave 20 per cent, 
 profit to the capitalist, that is, would leave as great 
 a profit to the capitalist w^ien the product in wheat 
 was only equal to the advances in wheat, as when the 
 product in wheat was 20 per cent, greater. 
 
 On the other hand, if the cultivatoradvanced capital 
 of the value of £200 in rather a scarce year, when the 
 price of wheat was 48*'. the quarter, the advances in 
 wheat would be represented by 834 quarters, and if 
 after harvest the produce were 120 quarters, in an 
 estimate by quantity he would appear to gain 45 per 
 cent. ; but as his gains would really be estimated by 
 value not quantity, and the price of wheat would have 
 fallen from 48.y. to 40*., it would take a hundred quar- 
 ters of corn to ro])lace the £200 advanced, and the 
 produce being 120 quarters, profits would be only 20 
 per cent, instead of 45 per cent. 
 
 It appears, thcrcforo, that if the profits of the cul- 
 tivator were estimated by quantity they might vary 
 between nothing and 45 per cent, at the very time 
 when estimated by price or value, as they always are
 
 SEC. I.] OF THE PROFITS OF CAPITAL. 2G5 
 
 practically, the cultivator was in each year making a 
 regular profit of 20 per cent. 
 
 In the above cases, I have supposed the price of 
 tlie whole produce, and the rate of profits to remain 
 the same ; but if the price of the whole produce de- 
 termined by the state of the supply compared with 
 the demand, ceased to be to the prices of the advances 
 in the proportion of 120 to 100, profits would either 
 rise or fall. If the price of the whole produce should 
 advance, that is, if the whole produce, whether con- 
 sisting of 100 quarters or 120 quarters, should sell 
 for £2C0 instead of £240, it is obvious that a smaller 
 proportion of the whole value would be sufficient to 
 replace the £200 advanced, and profits would be 30 
 per cent., instead of 20 per cent.* 
 
 On the other hand, if the price of the whole pro- 
 duce, whether great or small, were to fall, owing to 
 the state of the supply compared with the demand, 
 and instead of selling for £240, were to sell for £220, 
 a larger proportion of the whole produce would be 
 necessary to replace the capital of the £200 advanced, 
 and profits would fall from 20 per cent., to 10 per cent. 
 
 It may be said, perhaps, that these variations in the 
 quantity of produce are only temporary, and that it is 
 the average excess which is referred to, and not the 
 variations of that excess occasioned by the seasons. 
 It may be observed in answer, that, as it is universally 
 allowed that the prices of the farmer's whole crop ne- 
 ver rises in proportion to its abundance, and never 
 falls in proportion to its deficiency, it is certain, that 
 the average excess of value would not be the same as 
 the average excess of produce. 
 
 Corn, on account of its being the main support of 
 
 * It happens not very unfrequently, that the rise in the price 
 of agricultural produce greatly exceeds this. Mr. Tooke in his 
 Details of the High and Low Prices, supposes that, owing to a 
 rise in the price of wheat from about 485. a quarter to 755. in 
 1795 and 1796, with a rise of other agricultural produce nearly 
 in proportion, the farmers and landlords, after an allowance made 
 for every probable deduction, must have divided between them a 
 net additional profit of 12 to 14 millions per annum, and a still 
 greater profit in 1800 and 1801, pp. 303 and 305, 2nd edit.
 
 2G6 OF THE PROFITS OF CAPITAL. [cil. V. 
 
 the labourer, is the only object in the production of 
 wliicli u comj>ari.son may be instituted between the 
 quantity advanced and the quantity produced ; yet 
 even here we have found that the cause which deter- 
 mines profits is their relative values, and not their re- 
 lative quantities. 
 
 In manufacturing and mercantile employments, 
 there is no approach towards a possibility of comparing 
 tlic advances with the products in regard to quan- 
 tity. However, the powers of production in manu- 
 factures may increase, a nearly proportionate fall in 
 the value of the produce determined by the state 
 of the demand and supply prevents any permanent 
 change in the division of produce, and consequently, 
 leaves the capitalist in a short time with the same or 
 nearly the same rate of profits. The workman re- 
 ceives a larger quantity of what he produces, but the 
 same value; and his condition will be benefitted, 
 chiefly in proportion to the utility of the article to him 
 as a consumer. This is equally true in regard to mer- 
 cantile products, cheapened by facility of transport, or 
 the discovery of more abundant sources of foreign 
 supply. 
 
 It is clear therefore, that^'ofits are invariably mea- 
 sured by valuCj and n ever by quantity . 
 
 Now, it has be^ n shown in the second_chapter of 
 this_vvork, that the values o t any co mmodities, or of 
 the^uass o f commodities are always determ ined by 
 the state of the sup ply co mpare d with tjie demand ; 
 andlhat their values may b_e measured. _hy.tlie quan- 
 tTTy^g f standard labour which they w ill command. It 
 is also ob vious frorn what has_been said, thatjduring 
 t he short periods which usua jjy iiiteryeiie between the 
 adyances^f^aprtaland the returns of produce, they 
 jimy~Both be estimated correctly in money. In the^ 
 ^mpToyriicivrorcapital tliefefoi^e, in any business, the 
 ad varicesr wlT^ther mcre asing or Siminislnng jn value, 
 may be known li nd rrieasured"T)efore hanJ7 while the 
 value of the product, and the proportion of that value 
 which ^ocs to replace the advances rema insjo be as- 
 'certauied when the produce is sold.
 
 SEC. I.] OF THE PROirrs OF CAPITAL. 267 
 
 The_yaryi no' rat e of profi ts therefor e^ in the produc- 
 tion ofeye ry comm odity depends upon t he excess of 
 its val ue when sold -above the kno wn value of the adU^ 
 vances, determined in all cases by the state of the sup- 
 plj and the demand. 
 
 This is a universal proposition, equally applicable 
 whether profits are affected by temporary or by more 
 permanent causes, whether the productive powers of 
 labour are great or small, increasing, stationary, or 
 diminishino^. 
 
 And it will be found, that this proposition is essen- 
 tially the same as the proposition which states, that 
 profits depend upon the proportion of the value of the 
 whole produce, which goes to pay the wages of the 
 labour employed to obtain it.* 
 
 The truth of this proposition is quite obvious in 
 the cases where only immediate labour and the pro- 
 fits upon it are concerned. If a hundred pounds be 
 expended in immediate labour, and the returns come 
 in at the end of the year, and sell for £110, £120, or 
 £130, it is evident that in each case the profits will 
 be determined by the proportion of the value of the 
 whole produce which is required to pay the labour 
 employed. 
 
 If the value of the produce in the market be £1 10, 
 the proportion required to pay the labourers will be 
 TT of the value of the produce, and profits will be ten 
 per cent. If the value of the produce be £120, the 
 proportion required to pay the labour employed will 
 be -rl, and profits will be twenty per cent. If the 
 value of the produce be £130, the proportion re- 
 quired to pay the labour advanced will be tj, and 
 profits will be thirty per cent. 
 
 But it will be asked, how are we to compare the 
 value of the produce with the labour required to ob- 
 tain it, when the advances of the capitalist do not 
 consist of labour alone. 
 
 In cases of this kind, the following very simple mode 
 
 * This, though rather differently worded, is Mr. Ricardo's pro- 
 position, but he has applied it incorrectly, as will be seen in a 
 sub&equent section.
 
 2C8 OF THE PUOITTS OF CAPITAL. [CH. V. 
 
 of proceeding presents itself. It will be allowed that 
 the capitalist <::enerally expects an equal profit upon all 
 the parts of the capital wiiich he advances. Let us 
 suppose that a certain portion of the value of his ad- 
 vances, one-fourth for instance, consists of the wages 
 of in)mediate labour, and three-fourths consist of ac- 
 cumulated labour and profits, with any additions which 
 may arise from rents, taxes, or other outgoings. In 
 this case one-fourth of the value of the produce ob- 
 tained replaces with its proportionate profit that part 
 of his capital which has been employed in the pay- 
 ment of immediate labour ; and the other three-fourths 
 replace with the remaining profit all his other ad- 
 vances : and thus it will be strictly true that the 
 profits of the capitalist will vary with the varying 
 value of this one-fourth of the produce compared 
 with the quantity of labour employed ; or, in other 
 words, that profits depend on the proportion of the 
 value of the produce which goes to pay the labour 
 which has been employed. 
 
 As an instance let us suppose that a farmer em- 
 ploys in the cultivation of a certain portion of land 
 £2000, £1500 of which he expends in seed, keep of 
 horses, wear and tear of his fixed capital, interest 
 upon his fixed and circulating capitals, rent, tithes, 
 taxes, kc. and £500 upon immediate labour; and 
 that the returns obtained at the end of the year are 
 worth £2400. It is obvious that the value required 
 to replace the advances being £2000 the farmer's 
 profits will be £400, or twenty per cent. And it is 
 equally obvious that if we took one-fourth of the value 
 of the produce, namely £600, and compared it with 
 the amoimt paid in the wages of immediate labour, 
 the result would shew exactly the same rate of profits. 
 
 There is no case however complicated which may 
 not be easily solved in a similar manner. 
 
 When it is said that profits depend upon the divi- 
 sion of the produce between the labourer and the 
 capitalist, it is not of course meant to exclude the 
 labourers and capitalists who have furnished those 
 large portions of the advances which do not consist
 
 SEC. I.] OF THE PROFITS OF CAPITAL. 269 
 
 of the wages of immediate labour ; and we must 
 either trace accurately the proportions of accumulated 
 labour and accumulated profits in these advances, 
 which it is not always easy to do, or adopt the mode 
 above suggested, which gives at once the proportion 
 of the produce which goes to pay the wages of the 
 immediate labour employed. The result is exactly 
 the same as if we had measured the whole advances 
 in standard labour, and had estimated the rate of 
 profits by the excess of the value of the produce above 
 what was required to pay the wages of that quantity 
 of labour. 
 
 The reader will be aware that if we reckon the 
 value of the fixed capital employed as a part of the 
 advances, we must reckon the remaining value of such 
 capital at the end of the year as a part of the annual 
 returns. Without a correction of this kind it would 
 appear that in those departments of industry in which 
 the greatest quantity of fixed capital had been ap- 
 plied, the value of the capital compared with the value 
 of the produce had been the greatest, from which it 
 would seem to follow that the rate of profits had been 
 the lowest ; but though the capitalist naturally con- 
 siders the whole of what he employs in production as 
 capital advanced ; yet in reality his annual advances 
 consist only of his circulating capital, the wear and 
 tear of his fixed capital with the interest upon it, and 
 the interest of that part of his circulating capital 
 which consists of the money employed in making his 
 annual payments as they are called for. 
 
 The following is a statement in the first Report of 
 the Factory Commissioners, (page 34) in which ano- 
 ther class of advances under the head of contingencies 
 is added : 
 
 Capital sunk in building and machinery £10,000 
 
 Floating capital 7,000 
 
 £500 Interest at 5 per cent, on £10,000 fixed capital. 
 350 Ditto on floating capital. 
 150 Rents, taxes, and rates. 
 
 650 Sinking Fund of 6| per cent, for wear and tear of the 
 fixed capital. 
 
 £1,650
 
 270 OF TIIK PKOHTS OF CAPITAL. [CH. V 
 
 £1,650 
 1,100 Contingencies, carriage, coal, oil, &c. 
 
 2,750 
 
 2,600 Wages and salaries. 
 
 £5,350 
 
 Spun 363,000 lbs. Twist, Value £16,000. 
 Raw cotton required about 400,000 at Gel. 
 
 Equal to £10,000 
 
 Expenses 5,350 
 
 15,350 Value when sold, £16,000. 
 
 Profit 650 or about 4.2 on the advance of £15,350. 
 
 The wages of the operatives or of the immediate 
 labour employed in the production of the twist, form 
 about one-sixth of tlie advances, and the comparison of 
 these advances with one-sixth of the value of the pro- 
 duce will clearly indicate the rate of profit upon the 
 whole of the advances. 
 
 In drawing the particular attention of the reader 
 to the profits, which may be said to belong to the im- 
 mediate labour employed in any production, it is by 
 no means intended to propose a better mode of ascer- 
 taining profits than the ordinary one of comparing the 
 annual money advances, with the annual money re- 
 turns. The object is to show, that the two modes 
 always accord, (except in the rare case of a change in 
 the price of labour or alteration in the value of money 
 during the interval which elapses between the ad- 
 vances and returns) ; and whether we take the most 
 simple case, where the advances consist of immediate 
 labour alone, or the most complex one, where but a 
 small part only of the advances consists of imme- 
 diate labour, it will always be found true that profits 
 vary according to the proportion of the value of the 
 whole produce which goes to pay the wages of the 
 labour employed to obtain it.
 
 SEC. II.] OF THE PROFITS OF CAPITAL. 271 
 
 Section II. — Of the limiting Principle of Profits. 
 
 It has been stated in the preceding section, that the 
 varying rate of profits depends upon the causes which 
 alter the proportion between the vahie of the advances 
 necessary to production, and the value of the produce 
 obtained. 
 
 The two main causes which affect these propor- 
 tions, are, the productiveness, or unproductiveness of 
 the last capitals employed upon the land, by which a 
 smaller, or a greater proportion of the value of the 
 produce is capable of supporting the labourers em- 
 ployed. This may be called the limiting principle of 
 profits. And, secondly, the varying value of the pro- 
 duce of the same quantity of labour occasioned by 
 the accidental or ordinary state of the demand and 
 supply, by which a greater or smaller proportion of 
 that produce falls to the share of the labourers em- 
 ployed. This may be called the regulating principle 
 of profits, this second cause is constantly modifying 
 the first, but it will be desirable to consider them se- 
 parately. 
 
 If then we suppose the first cause to operate singly, 
 and the corn wages of the individual labourer to be 
 always the same, the whole skill in agriculture re- 
 mained unchanged, and there were no taxes nor any 
 means of obtaining corn from foreign countries, the 
 rate of profits must regularly fall, as the society ad- 
 vanced, and as it became necessary to resort to in- 
 ferior machines which required more labour to put in 
 action. 
 
 It would signify little, in this case, whether the 
 last land taken into cultivation for food had yielded a 
 rent in its uncultivated state. It is certain that the 
 landlord would not allow it to be cultivated, unless he 
 could, at the least, obtain the same rent for it as be- 
 fore. This must be considered as an absolute condi-
 
 272 OF THF. I'llOFITS OF CAl'ITAI- [CH. V. 
 
 tion on tlie worst lands taken into cultivation in an 
 improved country. After this payment was made, the 
 remainder ot'tlie produce would be divided almost en- 
 tirely between the capitalists and the labourers, and 
 it is evident that if the number of labourers necessary 
 to obtain a g-iven produce were continually increasing, 
 and the corn wages of each labourer remained the 
 same, the portion destined to the payment of labour 
 would be continually encroaching upon the portion 
 destined to the payment of profits ; and the rate of 
 profits would of course continue regfularly diminishing 
 till, from the want of power or will to save, the pro- 
 gress of accumulation had ceased. 
 
 In this case, and supposing^ an equal demand for 
 all the parts of the same produce,* it is obvious that 
 the profits of capital in agriculture would be in pro- 
 portion to the fertility of the last land taken into cul- 
 tivation, or to the amount of the produce obtained by 
 a given quantity of labour. And as profits in the 
 same country tend to an equality, the general rate of 
 profits would follow the same course. 
 
 But a moment's consideration will shew us, that 
 the supposition here made of a constant uniformity in 
 the corn wages of labour is not only contrary to the 
 actual state of things, but involves a contradiction. 
 
 The progress of population is almost exclusively 
 regulated by the quantity of the necessaries of life 
 actually awarded to the labourer ; and if from the 
 first he had no more than sufficient to keep up the 
 actual population, the labouring classes could not in- 
 
 * It is necessary to qualify the position in this way, because, 
 with regard to the main products of agriculture, it might easily 
 happen that all the parts were not of the same value. If a farmer 
 cultivated his lands by means of domestics living in his house 
 whom he found in food and clothing, his advances might always 
 be nearly the same in quantity and of the same high value in use ; 
 but in the case of a glut from the shutting; up of an accustomed 
 market, or a season of unusul abundance, a part of the crop might 
 be of no value either in use or exchange, and his profits could by 
 no means be determined, by the excess of the quantity produced, 
 above the advances necessary to produce it, as before shewn, 
 page 264.
 
 SEC. I J. J OF THE PROFITS OF CAPITAL. 273 
 
 crease, nor would there be any occasion for the pro- 
 gressive cultivation of poorer land. On the other 
 hand, if the corn wages of labour were such as to 
 admit of and encourage a considerable increase of 
 population, and yet were always to remain the same, 
 it would involve the contradiction of a continued in- 
 crease of population at the same rate after the accu- 
 mulation of capital, and the means of supporting such 
 an increase had entirely ceased. 
 
 We cannot then make the supposition of a natural 
 and constant rate of corn wao^es. And if we cannot 
 fix the wages of labour estimated in necessaries, they 
 must evidently vary with the progress of the funds 
 destined for the maintenance of labour, compared with 
 the supply of labour. 
 
 We may, however, if we please, suppose a uniform 
 progress of capital and population, by which is not 
 meant in the present case the same rate of progress 
 permanently, which is impossible ; but a uniform pro- 
 gress towards the greatest practicable amount, without 
 temporary accelerations or retardations. And before 
 we proceed to the actual state of things, it may be 
 curious to consider in what manner profits would be 
 affected under these circumstances. 
 
 At the commencement of the cultivation of a fertile 
 country by civilized colonists, and while rich land was 
 in great plenty, a small portion only of the value of 
 the produce would be paid in the form of rent. The 
 productiveness of labour being great, if nearly the 
 M'hole were divided between wages and profits, the 
 labourers might obtain a large quantity of produce, 
 while a sufficient proportion of the whole might be 
 left to yield large profits, and wages and profits would 
 both be high at the same time."* 
 
 As the society continued to increase, if the territory 
 were limited, or the soil of different qualities, it is 
 quite obvious that the productive powers of labour as 
 
 * The reader will recollect that wages always refer to quantity, 
 unless otherwise particularly expressed, and profits to proportion. 
 
 T
 
 274 OF THE PIIOFITS OF CAPITAL. [CH. \ 
 
 applied to the cultivation of land must gradually di- 
 minish ; and as a given (quantity ot" labour would yield 
 a smaller and smaller return, there would evidently 
 be a less and less produce to be divided between labour 
 and profits. 
 
 It, as the powers of labour diminished, the physical 
 wants of the labourer were also to diminish in the 
 same proportion, then the same share of the whole 
 produce might be left to the capitalist, and the rate 
 of profits would not necessarily fall. But the physical 
 wants of the labourer remain always the same ; and 
 though in the progress of society, from the increasing 
 scarcity of provisions compared with labour, these 
 wants are in general less fully supplied, and the corn 
 wages of labour gradually fall ; yet it is clear that 
 there is a limit, and probably at no great distance, 
 which cannot be passed. The command of a certain 
 quantity of food is absolutely necessary to the labourer 
 in order to support himself, and such a family as will 
 maintain merely a stationary population. Consequent- 
 ly, if poorer lands which required more labour were 
 successively taken into cultivation, it would not be 
 possible for the corn wages of each individual labourer 
 to be diminished in proportion to the diminished pro- 
 duce ; a greater proportion of the whole would neces- 
 sarily go to pay the wages of labour ; and the rate of 
 profits would continue regularly falling till the accu- 
 mulation of capital had ceased. 
 
 Such would be the necessary course of profits and 
 wages in the progressive accumulation of capital, as 
 applied to the progressive cultivation of new and less 
 fertile land, or the further improvement of what had 
 before been cultivated ; and on the supposition here 
 made, the rates both of profits and of corn wages would 
 be highest at first, and would rcgidarly and gradually 
 diminish together, till they both came to a stand at 
 the same period, and the demand for an increase of 
 produce ceased to be eflfective. 
 
 In the mean time, it will be asked, what becomes 
 of the profits of capital employed in manufactures and
 
 SEC. II.] OF THE PROFITS OF CAPITAL. 275 
 
 commerce, a species of industry not like that employed 
 upon the land, where the productive powers of'labour 
 necessarily diminish ; but where these powers not only 
 do not necessarily diminish, but very often greatly in- 
 crease ? 
 
 In the cultivation of land, the cause of the necessary 
 diminution of profits is the diminution in the quantity 
 of produce obtained by the same quantity of labour. 
 In manufactures and commerce, it is the fall in the 
 exchangeable value of the same amount of produce. 
 
 The labour required to produce corn, has a constant 
 tendency to increase from inevitable physical causes, 
 while the labour required to produce manufactures 
 and articles of commerce sometimes greatly diminishes, 
 sometimes remains stationary, and at all events in- 
 creases much slower than the labour required to pro- 
 duce corn. When, therefore, profits fall in agriculture 
 it becomes obviously more advantageous to employ 
 capital in manufactures and commerce than on the 
 land ; and capital will in consequence be so employed 
 till a fall has taken place in manufactures and com- 
 mercial products from their comparative abundance. 
 But it has been shown that the value of the same 
 quantity of labour will always remain the same ; and 
 it is evident, that if the products fall in value, while 
 the quantity of the labour, or the value of the capital 
 required to produce them, remain the same, profits 
 must fall. It is farther evident, that this fall must 
 necessarily go on, till profits in manufactures and com- 
 merce have been reduced nearly to a level with those 
 in agriculture. And thus it appears that in the pro- 
 gress of improvement, as poorer and poorer land is 
 taken into cultivation, the general rate of profits must 
 be limited by the powers of the soil last cultivated. 
 If the last land taken into cultivation will only yield 
 a certain excess of value above the lowest value of the 
 capital necessary to produce it, it is obvious that pro- 
 fits, generally, cannot possibly be higher than this 
 excess will allow. In the ascending scale, this is a 
 barrier which cannot be passed. But limitation is
 
 27G OF THE I'UOI ITS OF CAPITAL. [CTl. V. 
 
 essentially different from regulation. In the descend- 
 ing scale, while the land is still fertile profits may be 
 lower in any degree. There is here no controlling 
 necessity which determines the rate of profits ; and 
 below the hig-hest limit which the actual state of the 
 land will allow, ample scope is left for the operation 
 of the regulating principle. 
 
 Section III. — Of the regulating Principle of 
 Projits. 
 
 The second cause which affects profits, is the varying 
 value of the produce of the same quantity of labour 
 on the same value of capital, determined by the state 
 of the demand and supply. This may be called the 
 regulating principle of profits, as within the extreme 
 limits prescribed by the state of the land, all the va- 
 riations of profits, whether temporary or durable, are 
 regulated by it. 
 
 Such variations in the value of produce are occa- 
 sioned principally by the abundance or scantiness of 
 capital, including the funds for the maintenance of 
 labour, as compared with the labour wdiich it em- 
 ploys. 
 
 This is obviously a cause which, by awarding a 
 greater or a smaller proportio)) of the produce to the 
 labourer, must have a powerful influence on profits ; 
 and if considerable variations were to take place in 
 the supplies of capital and produce and the supplies 
 of labour, in a rich and unexhausted soil, the same 
 effects might be produced on profits as by the opera- 
 tion of the first cause, and in a much shorter time. 
 
 In order to see more clearly the powerful efi'ects of 
 the second cause on profits, let us consider it for a 
 moment as operating alone ; and suppose, that while 
 the capital and produce of a country continued in- 
 creasing, its population were checked and kept short 
 of the demand for it, by some miraculous infiuence. 
 Under these circumstances, a gradation would take
 
 S£C. III.] OF THE PROFITS OF CAPITAL. 277 
 
 place in the proportion which capital and produce 
 would bear to labour, and we should see in conse- 
 quence a similar gradation take place in the rate of 
 profits. 
 
 As capital and produce increased faster than la- 
 bour, the profits of capital would fall, and if a pro- 
 gressive increase of capital and produce were to take 
 place, while the population, by some hidden cause, 
 were prevented from keeping pace with it, notwith- 
 standing the fertility of the soil and the plenty of 
 food, then profits would be gradually reduced, until, 
 by successive reductions, the power and will to accu- 
 mulate had ceased to operate ; and this state of things 
 might take place rapidly, if a great proportion of 
 those who were engaged in personal services were 
 rapidly converted by saving into productive labourers. 
 
 Profits in this case would experience the same kind 
 of progressive diminution as they would by the pro- 
 gressive accumulation of capital in the present state 
 of things ; but rent and wages would be very dif- 
 ferently aflfected. From what has before been stated 
 on the subject of rent, the amount of it in such a 
 country could not be great. According to the sup- 
 position, the progress of the population is retarded, 
 and the number of labourers is limited, while land of 
 considerable fertility remains uncultivated. The de- 
 mand for fertile land therefore, compared with the 
 supply, would be comparatively inconsiderable ; and 
 in reference to the whole of the national produce, the 
 portion which would consist of rent would depend 
 mainly upon the gradations of more fertile land which 
 had been cultivated before the population had come 
 to a stop, and upon the value of the produce to be 
 derived from the land that was not cultivated. 
 
 With regard to wages they would continue pro- 
 gressively to rise, in necessaries, conveniences, and 
 luxuries, so as to place the labourer in a condition 
 continually and in all respects improving, as long as 
 capital continued to increase. 
 
 In short, of the three great portions into which the
 
 278 or niL I'KOl lis OF CAPITAL. [cii. V. 
 
 mass of produce is divided, rent, profits, and wages, 
 the two first would be low, because both the supply 
 of land and the supply of capital would be abundant 
 compared with the demand ; while the wages of la- 
 bour would be very high, because the funds for the 
 maintenance of labour would be in great abundance 
 compared with tlie supply of labourers ; and thus the 
 value of each would be regulated by the great prin- 
 ciple of demand and supply. 
 
 If, instead of supposing the population to be checked 
 by some peculiar influence, we make the more natu- 
 ral supposition of a limited territory, with all the land 
 of nearly equal quality, and of such great fertility as 
 to admit of very little capital being laid out upon it, 
 the effects upon the profits of capital would be just 
 the same as in the last instance, though they would 
 be very different on rents and wages. After all the 
 land had been cultivated, and no more capital could 
 be employed on it, there cannot be a doubt that rents 
 would be extremely high and profits and wages very 
 low. The competition of increasing capital in manu- 
 factures and commerce would reduce the rate of pro- 
 fits, while the principle of population would continue 
 to augment the number of the labouring classes, till 
 their corn wages were so low as to check their further 
 increase. It is probable that, owing to the assumed 
 fertility of all the soil and the great proportion of 
 persons which might be employed in manufactures 
 and commerce, the exports would be great and the 
 value of money very low. The money price of corn 
 and money wages would perhaps be as high as if the 
 cost of the whole produce in labour had been double 
 or treble ; food would then be a strict monopoly ; 
 rents would rise to an extraordinary height without 
 any assistance from poor lands, and the gradations of 
 soil ; and profits might fall to the point only just suf- 
 ficient to keep up the actual capital without any addi- 
 tional labour being necessary to procure the food of 
 the labourer. 
 
 The efi'ects which would obviously result from the
 
 SEC. III.] Ol' THE PllOl'lTS OF CAPITAL. 279 
 
 two suppositions just made, clearly shew that the in- 
 creasing' quantity of labour required for the successive 
 cultivation of poorer land is not theoretically neces- 
 sary to a fall of profits from the highest rate to the 
 lowest. 
 
 The former of these two suppositions further shews 
 the great power possessed by the labouring classes of 
 society, if they chose to exercise it. The compara- 
 tive check to population, which was considered as 
 occasioned by some miraculous influence, might in 
 reality be effected by the prudence of the poor ; and 
 it would unquestionably be followed by the result 
 described. It may naturally appear hard to the la- 
 bouring classes that, of the vast mass of productions 
 obtained from the land, the capital, and the labour of 
 the country, so small a quantity should fall to the 
 share of each individual. But the quantity is at pre- 
 sent determined, and must always in future be deter- 
 mined, by the inevitable laws of supply and demand. 
 If the market were comparatively understocked with 
 labour, the landlords and capitalists would be obliged 
 to give a larger quantity of produce to each workman. 
 But with an abundant supply of labour, such a quan- 
 tity, for a permanence, is an absolute impossibility. 
 The rich have neither the power, nor can it be ex- 
 pected that they should all have the will, to keep the 
 market understocked with labour. Yet every effort 
 to ameliorate the lot of the poor generally, that has 
 not this tendency, is perfectly futile and childish. It 
 is quite obvious therefore, that the knowledge and 
 prudence of the poor themselves, are absolutely the 
 o?ily means by which any general and permanent im- 
 provement in their condition can be effected. They 
 are really the arbiters of their own destiny ; and what 
 others can do for them, is like the dust of the balance 
 compared with what they can do for themselves. 
 These truths are so important to the happiness of the 
 great mass of society, that every opportunity should 
 be taken of repeating them. 
 
 But, independent of any peculiar efforts of pru-
 
 280 ui TiiJ:: i'Ht)HT.s of capital. [cu. v. 
 
 dence on the part of the labouring classes, it appears 
 from experience that while the productive powers of 
 labour remain nearly the same, the supplies of labour 
 and the supplies of capital and produce do not always 
 keep pace with each other. Practically, they are 
 often separated at some distance, and for a consider- 
 able period ; and sometimes population increases 
 iaster than capital and produce, and at other times ca- 
 pital and produce increase faster than population. 
 
 It is obvious, for instance, that from the very na- 
 ture of population, and the time required to bring full- 
 Gfrown labourers into the market, a sudden increase 
 of capital and produce cannot effect a proportionate 
 supply of labour in less than sixteen or eighteen years. 
 On the other hand, when capital and produce are 
 nearly stationary from the want of will to accumulate, 
 it is well known that population in general is apt to 
 increase faster than the produce which is to support 
 it, till the wages of labour are reduced to that stan- 
 dard which, with the actual habits of the country, 
 are no more than sufficient to maintain a stationary 
 population. 
 
 These periods, in which population and produce 
 do not keep pace with each other, are evidently of suf- 
 ficient extent, essentially to alter the proportion which 
 goes to pay the wages of labour ; and consequently, 
 to influence essentially the rate of profits. 
 
 So entirely, indeed, does the rate of profits depend 
 on the division of the produce, occasioned by the state 
 of the supply and the demand, that in comparing two 
 countries together, the rate of profits will sometimes 
 be found the lowest in that country, in which the pro- 
 ductiveness of labour on the land is the greatest. 
 
 In Poland, and some other parts of Europe, where 
 capital is scarce, profits are said to be higher than in 
 America; yet it is probable that the last land taken 
 into cultivation in America is much richer than the 
 last land taken into cultivation in Poland. But in 
 America the labourer earns perhaps the value of eigh- 
 teen or twenty cjuarters of wheat in the year; in Po- 
 
 I
 
 SEC. HI.] OF TIJE PROFITS OF CAPITAL. 281 
 
 land only the value of eight or nine quarters of rye. 
 This difference in the division of the produce, must 
 make a great difference in the rate of profits ; yet the 
 causes Avhich determine this division, far from being 
 of so temporary a nature that they may be safely over- 
 looked, might operate most powerfully for a great 
 length of time. Such is the extent of America, that 
 the corn wages of its labour may not essentially fall 
 for a long term of years ; and the effects of a scanty 
 but stationary capital on an overflowing but stationary 
 population might last for ever. 
 
 In dwelling thus upon the powerful effects which 
 must inevitably be produced by the proportion which 
 capital and produce bear to labour, and upon the ne- 
 cessity of giving adequate weight to the principle of 
 demand and supply, or competition, in every explana- 
 tion of the circumstances which determine profits, it is 
 not meant to underrate the importance of that cause | 
 which depends upon the diminishing productiveness I V 
 of labour on the last land taken into cultivation. 
 This cause is indeed of such a nature, that, if its ac- 
 tion goes on, it must finally overwhelm every other. 
 Yet, still an attempt to estimate the rate of profits in 
 any country for ten or twenty years together by a re- 
 ference to this cause alone, would lead to the greatest 
 practical errors. 
 
 The value of the government long annuities has a 
 natural and constant tendency to diminish as they ap- 
 proach towards the term for which they were granted ; 
 yet it is well known, that out of the comparatively 
 short term of 90 years, so large a proportion as twenty, 
 has sometimes elapsed not only without any diminu- 
 tion, but with an actual increase of their value. When, 
 however, they approach near to the term at which 
 they expire, they must necessarily so diminish in va- 
 lue on this account alone, that no demand arising from 
 plenty of money could possibly keep up their jjrice. 
 In the same manner, when cultivation is pushed to its 
 extreme practical limits, that is, when the labour of a 
 man upon the last land taken into cultivation will
 
 2S'2 OF IIIE PUOFITS OF CAPITAL. [CJI. V. 
 
 scarcely do more than support such a family as is ne- 
 cessary to maintain a stationary population, it is evi- 
 dent that no other cause or causes can prevent profits 
 from sinking to the lowest rate required to maintain 
 the actual capital. But though this principle is finally 
 of the very greatest power, yet its progress is extremely 
 slow and gradual ; and while it is proceeding with 
 scarcely perceptible steps to its final destination, the 
 second cause is producing effects which entirely over- 
 come it, and often for twenty or thirty, or even 100 
 years together, make the rate of profits take a course 
 absolutely different from what it ought to be accord- 
 ino- to the first cause. 
 
 Section IV. — Of Projits as affected by the Causes 
 pract'icalli/ in operation. 
 
 We come now to the consideration of the various 
 causes which may influence profits in the actual state 
 of things, particularly in this country. And here it is 
 evident that we shall have in operation both the causes 
 already stated, with others which disturb and modify 
 them. 
 
 In the progressive cultivation of poor land, occa- 
 sioned by the increase of capital and population, pro- 
 fits as far as they depend upon natural fertility, will 
 regularly fall ; but if at the same time improvements 
 in agriculture are taking place, they may certainly be 
 suc]j as, for a considerable period, not only to prevent 
 profits from falling, but to allow of a rise. To what 
 extent, and for what length of time, this circumstance 
 might interrupt the progressive fall of profits occa- 
 sioned by the necessity of taking poorer land into cul- 
 tivation, without such improvements, it is not easy to 
 say ; but, as it is certain that in an extensive terri- 
 tory, consisting of soils not very different in their na- 
 tural powers of production, the fall of profits arising
 
 S£C. IV.] OF THE PROFITS OF CAPITAL. 283 
 
 from this cause would be slow, it is probable that for 
 a considerable extent of time agricultural improve- 
 ments, including of course the improved implements 
 and machinery used in cultivation, as well as an im- 
 proved system of cropping and managing the land, 
 might more than balance it. 
 
 A second circumstance which would contribute to 
 the same effect is, an increase of personal exertion 
 amonov the labouring: classes. This exertion is ex- 
 tremely different in different countries, and at different 
 times in the same country. A day's labour of a 
 Hindoo, or a South-American Indian, will not admit 
 of a comparison with that of an Englishman ; and it has 
 even been said, that though the money price of day- 
 labour in Ireland is little more than the half of what 
 it is in England, yet that Irish labour is not really 
 cheaper than English, although it is well known that 
 Irish labourers when in this country, with good ex- 
 amples and adequate wages to stimulate them, will 
 work as hard as their English companions. 
 
 This latter circumstance alone clearly shows how 
 different may be the personal exertions of the labour- 
 ing classes in the same country at different times ; and 
 how different therefore may be the products of a given 
 number of days labour, as the society proceeds from 
 the indolence of the savage to the activity of the ci- 
 vilized state. This activity indeed, within certain 
 limits, appears almost always to come forward when 
 it is most called for, that is, when there is much work 
 to be done without a full supply of persons to do it. 
 The personal exertions of the South American Indian, 
 the Hindoo, the Polish boor, and the Irish agricul- 
 tural labourer, may be very different indeed 500 years 
 hence. 
 
 A third circumstance which has a considerable ef- 
 fect on profits, and not unfrequently occurs, is, the 
 unequal rise of some parts of the farmer's capital, when 
 the price of corn is raised by an increased demand. 
 Under such a rise, (which if it continues is generally
 
 284 01 mi. I'KOFiTs of capital. [cii. v. 
 
 accompanied by an advanced price of standard labour, 
 or a fall in the valueof money,) the prices of many home 
 commodities will be considerably modified for some 
 time, by the unequal pressure of taxation, and the 
 unec[ual rise in the prices of foreign commodities, and 
 of the commodities worked up at home from foreign 
 materials. The rise of corn and labour at home will 
 not proportionally raise the price of such products; and 
 as far as these products together with taxes, form a 
 part of the farmer's capital, a smaller proportion of the 
 produce, owing to its increased value, will replace it. 
 This remark is applicable to leather, timber, soap, can- 
 dles, cottons, woollens, &c. Sec, all of which enter 
 more or less into the capitals of the farmer, or the 
 wasres of the labourer, and are all influenced in their 
 prices more or less by importation. 
 
 A fourth circumstance, which favours a rise of pro- 
 fits is a fall in the prices of some important manufac- 
 tures, as compared with corn, owing to improvements 
 in machinery. This state of things always allows of 
 some diminution in the corn wages of labour without 
 a proportionate diminution of the comforts of the la- 
 bourer : and if the money price of the farmer's pro- 
 duce increases without a proportionate increase in the 
 price of labour, and in the materials of which his ad- 
 vances consist, his profits must necessarily rise. 
 
 It appears then, that practically, and in the actual 
 state of things, the physical necessity of a fall of pro- 
 fits in agriculture arising from the increasing quantity 
 of labour required to produce the same quantity of 
 food, may be so counteracted and overcome, for a 
 considerable time by other causes, as to leave very 
 great play to the influence of the competitions of 
 capital. 
 
 The facts which support this conclusion are nu- 
 merous and incontrovertible. It may be said, indeed, 
 with truth that the diflercnt rates of profits during 
 periods of peace and war, which are observed to tak(> 
 place in all countries, arc chiefly attributable to the
 
 SEC. IV.] OF THE PROFITS OF CAPITAL. 285 
 
 abundance or scarcity of capital and produce com- 
 pared with the demand, and not to the varying pro- 
 ductiveness of labour on the land. To the instances 
 of this kind which have before been stated may be 
 added the following one, which is so remarkably 
 strong as to be alone almost decisive of the question, 
 and having happened in our own country, is com- 
 pletely open to the most minute examination. 
 
 From the accession of George II. in 1727 to the 
 commencement of the war in 1793, the interest of 
 money was little more than 3 per cent. The public 
 securities which had been reduced to 4 per cent, rose 
 considerably after the reduction. According to Chal- 
 mers, the natural rate of interest ran steadily at 3 per 
 cent. ;* and it appears by a speech of Sir John Bar- 
 nard's that the 3 per cent, stocks sold at a premium 
 upon Change. In 1750, after the termination of the 
 war, the 4 per cent, stocks were reduced to 3^, for 
 seven years, and from that time to 3 per cent, perma- 
 nently, t 
 
 Excluding then the interval of war, we have here a 
 period of twenty-two years, during which the general 
 rate of interest was between 34 and 3 per cent. 
 
 The temporary variations in the value of govern- 
 ment securities will not certainly at all times be a cor- 
 rect criterion of the rate of profits or even of the rate 
 of interest ; but when they remain nearly steady for 
 some time together, they must be considered as a fair 
 approximation to a correct measure of interest ; and 
 when the public creditors of a government consent to 
 a great fall in the interest which they had before re- 
 ceived, rather than be paid off, it is a most decisive 
 proof of a great difficulty in the means of employing 
 capital profitably, and consequently a most decisive 
 proof of a low rate of profits. 
 
 After an interval of nearly seventy years from the 
 
 * Estimate of the strength of Great Britain, ch. vii. p. 115. 
 t Ibid. ch. vii. p. 120.
 
 28G OF THE IMtOFITS OF CAPITAL. [CH. V. 
 
 commencement of the period here noticed, and forty 
 years from the end of it, during which a great accu- 
 muhition of capital had taken place, and an unusual 
 (piantity of new land had been brought into cultiva- 
 tion, we find a period of twenty years succeed in which 
 the average market rate of interest was rather above 
 than below 5 per cent. ; and we have certainly every 
 reason to think, from the extraordinary rapidity with 
 which capital was recovered, after it had been de- 
 stroyed, that the rate of profits in general was quite in 
 proportion to this high rate of interest. 
 
 The difficulty of borrowing on mortgage during a 
 considerable part of the time is perfectly well known ; 
 and though the pressure of the public debt might na- 
 turally be supposed to create some alarm, and incline 
 the owners of disposable funds to give a preference to 
 landed security ; yet it appears from the surveys of 
 Arthur Young, that the number of years purchase 
 given for land, was in 1811, 29y, and forty years be- 
 fore, 32 or 324,* — the most decisive proof that can 
 well be imagined of an increase in the profits of ca- 
 pital employed upon land. 
 
 The nature of these facts, and the state of things 
 under which they took place, (in the one case, in a 
 state of peace with a slack demand for capital and 
 produce, and in the other, a state of war with an un- 
 usual demand for both,) obviously and clearly point 
 to the relative redundancy or deficiency of capital and 
 produce as their cause. And the question which now 
 remains to be considered, is, whether the circum- 
 stances which have been stated in this section are 
 suflicient to account theoretically for such a free ope- 
 ration of this principle, notwithstanding the progres- 
 
 • Annals of Acnriculture, No. 270, pp. 96, and 97, and No. 271 , 
 p. 215. Mr. Young expresses considerable surprise at these re- 
 sults, and docs not seem to be sufficiently aware, that the number 
 of years purchase given for land has nothing to do with prices, but 
 expresses the abundance or scarcity of moveable capital compared 
 with the means of employing it.
 
 SEC. IV.] OF THE PROFITS OF CAPITAL. 287 
 
 sive accumulation of capital, and the progressive cul- 
 tivation of fresh land, as to allow of low profits at an 
 earlier period of this progress and higher profits at a 
 later period. At all events, the facts must be ac- 
 counted for, as they are so broad and glaring, and 
 others of the same kind are in reality of such frequent 
 recurrence, that' they must be considered as at once 
 decisive against any theory of profits which is incon- 
 sistent with them. 
 
 In the first period of the two which have been no- 
 ticed it is known that the price of corn had fallen, and 
 that the wages of labour had not only not fallen in 
 proportion, but had been considered by some authori- 
 ties as having risen. Adam Smith states the fall of 
 corn and the rise of labour during the first sixty-four 
 years of the last century as a sort of established fact ;* 
 but Arthur Young, in his very useful inquiries into 
 the prices of corn and labour published in his Annals 
 of Agriculture, seems to think that the fact is not well 
 authenticated, and is inconsistent with the apparently 
 slack demand for labour and produce, and compara- 
 tively slow progress of population, which took place 
 during the period in question. 'j^ Allowing, however, 
 even a stationary price of labour, with a falling price 
 of corn, not arising from improvements, and the fall of 
 agricultural profits is at once accounted for. Such a 
 state of prices might alone be much more than suf- 
 ficient to counteract the effects arising from the cir- 
 cumstance of pretty good land being yet uncultivated. 
 When we add, that the other outgoings belonging to 
 the farmers' capital, such as leather, iron, timber, &c. 
 &c., are supposed to have risen while the price of his 
 main produce was falling, we can be at no loss to 
 account for alow rate of agricultural profits, notwith- 
 standing the unexhausted state of the country. And 
 as to the low rate of mercantile and manufacturing: 
 
 * Wealth of Nations, Book I. ch. xi. p. 309, 313, 6th edit, 
 t Annals of Agriculture, No. 270, p. 89.
 
 288 Ol TIIK PUOI-ITS OF CAPITAL. [cil. V. 
 
 profits, tliat would be accounted for at once by the 
 increase of mercantile and manufactured products 
 com|)arc'd u itli the demand for them, and their con- 
 secjuent diminished ])rices in relation to labour. 
 
 In the subscfjuent period, from 1793 to 1813, it is 
 probable that all the circumstances noticed in this 
 section concurred to give room for the operation of 
 that principle which depends upon the demand com- 
 pared with the supply of capital. 
 
 In the first place, there can be no doubt of the im- 
 provements in aoriculture which were going forwards 
 during these twenty years, both in reference to the 
 general management of the land, and the instrimients 
 which are connected with cultivation, or which in any 
 way tend to facilitate the bringing of raw produce to 
 market. 2dly, the increasing practice of task-work 
 during these twenty years, together with the increasing 
 employment of women and children, unquestionably 
 occasioned a great increase of personal exertion ; and 
 more work was done by the same number of persons 
 and families than before. 
 
 If to these two causes of the increased productive- 
 ness of the powers of labour we add a fall in the prices 
 of manufactures from improved machinery, and arise 
 in the price of corn from increased demand, unaccom- 
 panied by a proportionate rise of most foreign, and 
 many home commodities, the effect of taking poorer 
 land into cultivation is so likely to be counterbalanced 
 under such circumstances, that in the actual state of 
 many countries, or in their probable state for some 
 centuries to come, we may fairly lay our account to 
 such a result when the occasion calls for it. 
 
 I should feel no doubt, for instance, of an increase 
 in the rate of profits in this country for twenty years 
 together, at the beginning of the twentieth century, 
 compared with the twenty years which are now coming 
 on ; provided this near period were a period of pro- 
 found tran(|uillity and peace and abundant capital, 
 and the future period were a period in which capital
 
 SF.C. IV.] or THE PROFITS, ITF CAPITAL. 289 
 
 was scanty in proportion to the demand for it owing- 
 to a war, attended by the circumstances of an increas- 
 ing trade, and an increasing demand for agricultural 
 produce similar to those which were experienced from 
 1793 to 1813. 
 
 But if this be so, and past experience justifies it, 
 it follows, that in the actual state of things in most 
 countries of the world, and within limited periods of 
 moderate extent, the rate of profits will practically 
 depend more upon the causes which afl:ect the relative 
 abundance or scarcity of capital, and the demand for 
 produce compared with the supply, than on the fer- 
 tility of the last land taken into cultivation. And con- 
 sequently, to dwell on this latter point as the sole, 
 or even the main cause which determines profits, 
 nuist lead to the most erroneous conclusions. Adam 
 Smith, in stating the cause of the fall of profits, has 
 omitted this point, and in so doing has omitted a 
 most important consideration ; but in dwelling solelv 
 upon the abundance and competition of capital, he is 
 practically much nearer the truth* than those who 
 dwell almost exclusively on the quality of the last 
 land taken into cultivation. 
 
 In individual cases, the illustration of this principle 
 is constantly before our eyes. If a capital of a hun- 
 dred pounds be expended in producing twelve hun- 
 dred yards of calico, which sell for £120, profits will 
 be 20 per cent. On the other hand, if they sell for 
 £110, profits will be only 10 per cent. ; and whether 
 they sell for £1 10 or £120 will be determined by the 
 state of the supply compared with the demand. The 
 money wages of labour and the value of money may 
 remain the same ; but a different proportion of the 
 produce is required to replace the capital :']' in the 
 
 * It ought to be allowed that .4c]am Smith, in speaking of the 
 eft'ects of accumulation and competition on profits, naturally means 
 to refer to a limited territory, a limited population, and a limited 
 demand ; but accumulation of capital under these circumstances 
 involves every cause that can affect profits. 
 
 t The reader is aware of the corrections to be made for fixed 
 capital.
 
 2U0 OK TMt PKOltl? OF C'AIMTAI.. [ciI. V. 
 
 Hrst case a thousand yards are required, in the second 
 nearly eleven hundred. It is evident however that 
 the increase in the quantity of produce required to 
 replace tlie capital is the consequence, not the cause 
 of the fall of profits. The cause is the fall in the 
 value of the produce of the same quantity of labour, 
 or the same value of capital. 
 
 If instead of supposing that the same quantity of 
 produce is obtained by the same value of capital, and 
 sells at various prices, we suppose that the quantity 
 produced and the prices at which it sells are both 
 variable, which is the actual state of things, as profits 
 depend upon proportion not quantity, it will be still 
 true that profits will be determined by the proportion 
 of the value of the produce which goes to replace the 
 capital, whether the quantity remaining for profits be 
 one hundred yards or four hundred yards, whether 
 the labour employed on the land becomes less pro- 
 ductive or more productive. 
 
 It will be said, perhaps, and truly, that the ordi- 
 nary prices of commodities are not determined by the 
 accidental state of the supply compared with the de- 
 mand, but by the ordinary costs of production ; but 
 ordinary profits are one of the necessary conditions of 
 the continued supply of commodities, and conse- 
 quently one of the elements of their ordinary cost to 
 the consumer; and this element is specifically deter- 
 mined by the ordinary state of the supply compared 
 with the demand of the produce of the same value of 
 capital. If the outlay of £100 for a year will obtain 
 a produce which, on an average of ten or twelve 
 years, sells for £120, the ordinary rate of profits will 
 be 20 per cent. If at a future time the produce of 
 the same value of outlay sells on an average during 
 a similar period for £1 10, the ordinary rate of profits 
 will be 10 per cent. The proportion of the produce 
 which goes to replace the capital will in the latter 
 case be -{-t instead of ^°, and it is obvious that this 
 increased proportion of the same produce which is 
 lec^uired to replace the capital, is specifically occa-
 
 Sl.C. IV.] OF THE PROFITS OF CAPITAL. 291 
 
 sioiied by a fall in the value of the produce of the 
 same capital. 
 
 It appears therefore that whether we refer to imme- 
 diate or to ordinary profits, they must always depend 
 upon the different values of the produce of the same 
 value of capital determined by the state of the supply, 
 immediate or ordinary, compared with the demand. 
 And if labour be the measure of value which I trust 
 has been shewn, this is the same as saying that profits 
 are determined by the proportion of the value of the 
 produce which goes to pay the labour ^vhich has ob- 
 tained it ; and it follows as a direct consequence that 
 profits never fall but when the value of the produce 
 of the same quantity of labour falls, and never rise 
 but when the value of the produce of the same quan 
 tity of labour rises.* 
 
 Six'Tioy V. — Rejnarks on Mr. Ricardo's Theory 
 of Profits. 
 
 AccouDiXG to Mr. Ricardo profits are regulated by 
 wages, and are high or low in proportion as wages 
 are low or high ; j" or as he has expressed himself 
 more fully in another part of his chapter on profits, 
 
 " In all countries, and at all times, profits depend 
 upon the quantity of labour requisite to provide ne- 
 cessaries for the labourers on that land, or with that 
 capital which yields no rent.'':}; 
 
 * It is to be observed, that the various causes which practically 
 affect profits, and which the author has enumerated in this sec- 
 tion, are all reducible to one or the other of the two grand dis- 
 tinctions which are treated of in the two foregoing sections. — 
 For instance, agricultural improvements, or increased personal 
 exertions on the part of the labourer, whereby a larger produce is 
 obtained with the same amount of labour, clearly belong to what 
 he has denominated the limiting principle of profits, whilst the 
 various circumstances which affect the value of the same quantity 
 of produce, the labour employed being also the same, belong to 
 the regulating principle of profits. — Ed. 
 
 \ Principles of Political Economy, ch. vi. p. 108, 3rd edit. 
 
 X Id. p. 128.
 
 292 OI- lilt 1MU)1ITS OF CAIMTAL. [c H. \ . 
 
 It is here understood, that there are no other ad- 
 vances except tliose of wages ; and, under these cir- 
 cumstances, the necessaries required to pay ten la- 
 bourers must liave required fewer than ten hd)ourcrs 
 to produce them, or there would have been no pro- 
 fits. It is further obvious that the profits upon the 
 produce necessary to pay the wages of ten labourers 
 must depend upon the difference between the whole 
 produce, and that portion of it which is required to 
 pay the number of labourers, whether nine, eight, 
 seven, or any other proportion actually employed to 
 produce the wages of the whole ten. 
 
 Mr. Ricardo's proposition therefore will be found 
 to be essentially the same as if he had said that pro- 
 fits are determined by the proportion of the produce 
 which goes to pay the wages of the labour which 
 obtained it. And so far this theory is quite correct. 
 But in its application he combines with it two as- 
 sumptions, which being unfounded renders it as a 
 whole essentially erroneous. He assumes,* 
 
 1st. That the commodities which have cost in their 
 production the same quantity of labour will on an 
 average always be of the same value. And 
 
 2ndly. That the value of the same quantity of la- 
 bour varies in proportion to the share of the produce 
 which goes to pay the labourer ; and the varying 
 value of this labour being thus taken out of the .sv/yj- 
 /(o^cy/ constant value of the produce obtained by them, 
 the remainder determines the rate of profits. 
 
 If these assumptions were well founded the theory 
 would be correct. But it has been shewn, in the 4tli 
 section of the 2nd chapter, that commodities which 
 have cost in their production the same quantity of 
 labour, or the same value of capital, are subject to 
 great variations of value, owing to the varying rate 
 and varying quantity of profits which must he added 
 to the quantity of accumulated and immediate labour 
 employed upon them, in order to make up their value. 
 
 * Principles of Political Economy, ch. vi. p. Ill, 3rd edit.
 
 r 
 
 SKC. v.] OF THE PROFITS OF CAPFIAL. 293 
 
 And it has further been shewn in the 6th section 
 of the same chapter that, however variable may be the 
 quantity or proportion of produce awarded to each 
 labourer, the value of that quantity or proportion will 
 always be the same. 
 
 It is clear then that profits must be regulated upon 
 a principle essentially different from that stated by Mr. 
 Ricardo, and that instead of being determined by the 
 varying value of a certain quantity of labour employed, 
 compared with the given value of the commodity pro- 
 duced, they will be determined by the varying value 
 of the commodity produced compared with the given 
 value of the certain quantity of labour employed. 
 
 This conclusion will appear strikingly obvious, if 
 we adopt that supposition respecting the mode of 
 procuring the precious metals which would certainly 
 maintain them most strictly of the same value, that 
 is, if we suppose them to be procured by a uniform 
 quantity of unassisted labour without any advances 
 in the shape of capital beyond the necessaries of a 
 single day. That the precious metals would in this 
 case retain, more completely than in any other, the 
 same value cannot be denied, as the quantity of la- 
 bour actually employed in their production, and the 
 quantity of labour they would command would be the 
 same. But in this case, as was before stated, the money 
 price of labour must remain permanently the same. 
 We cannot however for a moment imagine that this 
 impossibility of a rise or fall in the money price of 
 labour could in any respect impede or interrupt the 
 natural career of profits. The continued accumula- 
 tion of capital and increasing difficulty of procuring 
 subsistence would unquestionably lower profits. All 
 commodities, in the production of which the same 
 quantity of labour continued to be employed, but 
 with the assistance of capitals of various kinds and 
 amount, would fall in price, and just in proportion to 
 the degree in which the price of the commodity had 
 before been affected by profits; and witl) regctrd to 
 corn, in the production of which more labour would
 
 291 OI- III!:: PKOl lis Ol CAPIiAl.. [c 11 . V. 
 
 be necessary, this uilicle would rise in money price 
 just to tliatpoint whicli would so reduce corn wages 
 as to retard the progress of population in proportion 
 to the diminution of etl'ectual demand ; and thus all 
 the ertects upon profits, attributed by Mr. Ricardo to 
 a rise of money wages, would take place while money 
 wages and the value of money remained precisely the 
 same. It is obvious that, in this case, profits can 
 only be regulated by the principle of competition, or 
 of demand and supply, which would determine the 
 degree in which the prices of commodities would 
 fall ; and their prices, compared with the uniform 
 price of labour, would regulate the rate of profits. 
 
 If however instead of supposing gold to be obtained 
 by immediate labour alone in the way here stated, we 
 suppose with Mr. Ricardo that it is obtained by fixed 
 and circulating capitals in certain proportions, it will 
 be found (as we have before intimated) that the state 
 of prices and the rise of labour, contemplated by hini 
 in the progress of cultivation, are owing to ?i fall in 
 the value of money, and not to a rise in the value of 
 labour. 
 
 As a further illustration of this point so essential 
 to a just theory of profits, let us suppose a country 
 supplied with gold by a mine of its own, from wdiich 
 the same quantity of metal could always be obtained 
 by the same quantity of labour "with the same value 
 of other capital ; and further let us suppose, that at a 
 particular period the accumulation of capital was in- 
 creasing faster than the effectual demand for the pro- 
 duce at its former price ; under these circumstances, 
 let us consider what would be the consequences on 
 the prices of commodities and labour. It is obvious 
 that all those commodities which continued to be ob- 
 tained by the same quantity of labour with the same 
 value of other capital would fall in value from the 
 abundance of the supply ; and gold among the rest 
 becoming more abundant, a different division of the 
 produce would take place between the labourers and 
 the capitalists ; a smaller proportion of it would go
 
 SEC. V.J OF THE PROFITS OF CAPFIAL. 295 
 
 to pay profits, and a larger proportion to pay wages. 
 Profits therefore would fall, and the money wages of 
 labour would rise. And the question is whether the 
 rise in the money wages of labour ought to be con- 
 sidered as a rise in the value of labour, or a fall in the 
 value of money. Mr. Ricardo considers it a rise in 
 the value of labour, and has founded all his calcula- 
 tions in his chapters on rent, wages, and profits, on 
 this assumption. If indeed the value of the produce 
 of the same quantity of labour, or of labour and capi- 
 tal,* were to remain the same, which is what he sup- 
 poses, then it would be quite true that if a larger 
 proportion of this produce went to pay the wages of 
 labour, the value of labour would rise. But if the 
 value of the produce falls, then the circumstance of 
 a larger proportion of the produce going to pay the 
 wages of labour by no means implies that the value 
 of labour has risen. It only implies that the labourer 
 receives a larger quantity of an article which has 
 fallen in value. And that in the present case the 
 article has fallen in value may with certainty be in- 
 ferred both from the state of the supply compared 
 with the demand, and the elementary costs of its 
 production. It has been assumed that the supply is 
 comparatively more abundant than before, on account 
 of the increase of capital, although the productive- 
 ness of labour has remained the same. This must 
 necessarily occasion a fall of profits, and this fall will 
 be permanent if the same competition of capital con- 
 tinues. But if the rate of profits has fallen the ele- 
 mentary costs of production have fallen. In this case, 
 the conditions of the supply of a certain quantity of 
 
 * Mr. Ricardo often uses the terms quantity of labour, and 
 quantity of labour and capital, to express the same thing. Ge- 
 nerally, when on tiie siibject of profits, he means the quantity of 
 labour and capital, although it must be allowed that machinery 
 and materials of different kinds cannot be estimated and com- 
 pared by quantity. The true condensed expressions in regard to 
 the advances on which profits are estimated must be (as it has 
 appeared) either the quantity of labour, or the value of the 
 capital. They are equivalent, and give the same results.
 
 200 OF TllL PROllTS Oi CAl'llAL. [c H. V. 
 
 gold are the iidvauce of the same quantity of labour, 
 with the same value of other capital, as before, and a 
 ks.s remuneration for profits. Consequently the ele- 
 mentary cost of gold to the purchaser is less than be- 
 fore. 
 
 If it be said, as Mr. Ricardo says, that a irreater 
 quantity of labour is required to produce the com 
 which pays the \Yages of the labourer, this may be 
 conceded ; but as a proportionate fall of profits is 
 found to have taken place, the diminution of the ele- 
 ment of profits balances * the increase of the element 
 of labour, leaving the va/ue of labour the same as 
 before, while its increased price is occasioned by the 
 fall in the value of money. And that the value of 
 money must have fallen is further evident from the 
 conclusions of Mr. Ricardo himself, quite indepen- 
 dently of the measure which I have applied to it. 
 According- to his theory the prices of manufactured 
 commodities, which have not been produced by im- 
 proved machinery, will, in the progress of cultivation, 
 remain nearly the same, while labour and all raw pro- 
 ducts will rise. If therefore we measure the value of 
 money by its general power of purchasing, its fall is 
 decidedly established. Of a certain mass of objects 
 it purchases the same quantity as before; of a much 
 larger mass of objects it purchases a smaller quantity. 
 
 If then in the system of Mr. Ricardo commodities 
 obtained by the same quantity of labour appear to be 
 of the same value, it is only because he has adopted 
 as his measure a money, which from the nature of its 
 composition us consisting in part of profits, necessa- 
 rily varies with the variations in the values of the 
 very commodities which it is intended to measure. 
 
 But in reference to the great limiting principle, 
 which in his system is the only one which regulates 
 profits, namely the increasing difficulty of procuring 
 food from the soil, it merely in fact determines the 
 
 • This balance necessarily takes place, as we have said, in the 
 elementary cost of the varying wages of a given number of men, 
 which ahvavs remains the same.
 
 SEC. v.] OF THE PROFITS OF CAPITAL. 297 
 
 range of possible profits ; how high they may by pos- 
 sibility rise, and how low they may by possibility fall. 
 It is indeed always ready to act ; and, if not overcome 
 by countervailing facilities, will necessarily lower the 
 rate of profits on the land, from which it will be ex- 
 tended to all other departments of industry. But even 
 then it always operates according to the laws of de- 
 mand and supply and competition. 
 
 The specific reason w^hy profits must fall as the 
 land becomes more and more exhausted is, that from 
 the intrinsic nature of necessaries, and of the soil 
 from which they are procured, the demand for them 
 and their price cannot possibly go on increasing 
 in proportion to the expense of producing them. 
 Though the value of a given quantity of produce 
 rises on account of the increased quantity of labour 
 required to obtain it, yet the value of the diminished 
 produce of the same quantity of labour, or its effi- 
 ciency in setting fresh labourers to work necessarily 
 falls from the state of the demand and supply. The 
 boundary to the further value of and effectual demand 
 for corn, lies clear and distinct before us. Putting 
 importation out of the question, it is precisely when 
 the produce of the last land taken into cultivation 
 will but just replace the capital and support the 
 population employed in cultivating it. Profits must 
 then be at their lowest theoretical limit. In their 
 progress towards this point, the continued accumula- 
 tion of capital will always have a tendency to lower 
 them ; and at no one period can they ever be higher 
 than the state of the land, under all the circumstances, 
 will admit. 
 
 They may be much lower, however, as was before 
 stated, from an abundant supply of capital compared 
 with the demand for produce, while the soil is still 
 rich. Practically they are very rarely so high as the 
 actual state of the land combined with the smallest 
 possible quantity of food awarded to the labourer 
 would admit of; and very rarely so low as not to 
 allow the means of further accumulation.
 
 298 OF lilt PROFITS OF CAPITAL. [CH. V. 
 
 What would be the effects upon the profits of stock 
 of any given increase of capital, or even of any given 
 increase of the labour necessary to produce a certain 
 quantity of corn, it would be quite impossible to say 
 before hand.* In the case of a mere increase of capi- 
 tal, however large, it has appeared that circumstances 
 might occur to prevent any fall of profits for a great 
 length of time. And, even in the case of an increase 
 in the quantity of labour necessary to produce corn, 
 it would depend entirely upon the principles of de- 
 mand and supply and competition, whether the in- 
 crease in the price of corn would be such as to throw 
 almost the whole of the increased difficulty of pro- 
 duction upon the labourer, or upon the capitalist, or 
 again such as to divide the loss more equally between 
 them, which is what generally happens. 
 
 No theory of profits therefore can approach towards 
 correctness, w^hich attempts to get rid of the principle 
 of demand and supply and competition. 
 
 * It has sometimes been said that profits depend entirely upon 
 the productiveness of labour. If by productiveness of labour be 
 meant what the words usually mean, and what they certainly 
 ought to mean, namely the quantity of produce obtained by a 
 given quantity of labour, every day's experience shews that the 
 statement is quite unfounded. If the words be intended to mean 
 productiveness of value then no doubt profits depend upon the 
 productiveness of labour. This truth is involved in the very defi- 
 nition of profits, namely the excess of the value of the produce 
 above the value of the advances, or of a given quantity of labour 
 advanced. It is exactly what has been here inculcated, but the 
 usual and correct meaning of terms must not be changed on par- 
 ticular occasions.
 
 299 
 
 CHAPTER VI. 
 
 OF THE DISTINCTION BETWEEN WEALTH AND VALUE. 
 
 It has been justly stated by Adam Smith that a man 
 is rich or poor according to the degree in which he 
 can afford to enjoy the necessaries, conveniences, and 
 luxuries of human life. And it follows from this de- 
 finition that, if the bounty of nature furnished all the 
 necessaries, conveniences and luxuries of life to every 
 inhabitant of a country in the fullest measure of pro- 
 portion to his wishes, such a country would be in 
 the highest degree wealthy, without possessing any 
 thing which would have exchangeable value, or could 
 command a single hour's labour. 
 
 In this state of things, undoubtedly, wealth has 
 nothing to do with exchangeable value. But as this 
 is not the actual state of things, nor likely to be so at 
 any future time ; as the bounty of nature furnishes 
 but few of the necessaries, conveniences and luxuries 
 of life to man without the aid of his own exertions ; 
 and as the great practical stimulus to exertion is the 
 desire to possess what can only be possessed by means 
 of some labour or sacrifice, it will be found that, in 
 the real state in which man is placed on earth, wealth 
 and exchangeable value, though still by no means 
 the same, are in many points nearly connected. 
 
 In considering the different quantities of the same 
 commodity which, under different circumstances, have 
 the same exchangeable value, the distinction is indeed 
 perfectly obvious. Stockings do not lose half their 
 power of contributing to the comfort and convenience 
 of the wearer, because by improved machinery they 
 can be made at half the price, or their exchangeable 
 value be reduced one half. It will be readily allowed 
 that the man who has two pairs of stockings of the
 
 300 OF TIIK DISTINCTION BETWKEN [CH. VI- 
 
 same (^utility instead of one pair, possesses, as far as 
 stockings are concerned, a double portion of the con- 
 veniences of life. 
 
 ^'et even in this case he is not /;; all respects 
 doubly rich. If, indeed, he means to use them him- 
 self, lie may have twice as much wealth, though this 
 has been denied by some writers, but if he means to 
 exchano-e them for other commodities, he certainly 
 has not ; as one pair of stockings, under certain cir- 
 cumstances, may command more labour and other 
 commodities than two or even three pairs after very 
 great improvements have been made in the machinery 
 used in producing them. In all cases however of 
 this description, the nature of the difference between 
 wealth and value is sufficiently marked. 
 
 But when we come to compare objects of different 
 kinds, there is no other way of estimating the degree 
 of wealth which the possession and enjoyment of 
 them confer on the owner, than by the estimation in 
 which they are respectively held, evinced by their res- 
 pective exchangeable values. If one man has a cer- 
 tain quantity of tobacco, and another a certain quan- 
 tity of muslin, we can only determine which of the two 
 is the richer by ascertaining their respective command 
 of labour, money, or some other third commodity in 
 the market. And even if one country exports corn, 
 and imports lace and cambrics, notwithstanding that 
 corn has a more marked and definite value in use than 
 any other commodity, the estimate must be formed ex- 
 actly in the same way. Luxuries are a part of wealth 
 as well as necessaries. The country would not have 
 received lace and cambrics in exchange for its corn 
 unless its wealth, or its necessaries, conveniences and 
 luxuries taken together, had been increased by such 
 exchange ; and this increase of wealth cannot possibly 
 be measured in any other way than by the increase of 
 value so occasioned, founded upon the circumstance 
 that the commodities received are more wanted and 
 held in higher estimation than those which were sent 
 
 away .
 
 CH. Vr.] WEALTH AXD VALUE. 301 
 
 The wealth of a country, however, it will be allowed, 
 does not always increase in proportion to the increase 
 of value ; because an increase of value may sometimes 
 take place under an actual diminution of commodi- 
 ties ; but neither does it increase in proportion to the 
 mere quantity of what comes under the denomination 
 of wealth, because the various articles of which this 
 quantity is composed may not be so proportioned to 
 the wants and powers of the society as to give them 
 their proper value. The most useful commodity, in 
 respect of its qualities, if it be absolutely in excess, 
 not only loses its exchangeable value, but its power 
 of supplying the wants of the society to the extent of 
 its quantity, and part of it therefore loses its quality 
 of wealth. If the roads and canals of England were 
 suddenly broken up and destroyed, so as to prevent 
 all passage and interchange of goods, there would at 
 first be no diminution of commodities, but there would 
 be immediately a most alarming diminution both of 
 value and wealth. A great quantity of goods would 
 at once lose their value by becoming utterly useless ; 
 and though others would rise in particular places, 
 yet from the want of power to purchase in those dis- 
 tricts, the rise would by no means compensate for the 
 fall. The whole exchangeable value of the produce 
 estimated in labour, or money, would be greatly dimi- 
 nished ; and it is quite obvious that the wealth of the 
 society would be most essentially impaired ; that is, 
 its wants would not be in any degree so well supplied 
 as before. 
 
 It appears then that the wealth of a country de- 
 pends partly upon the quantity of produce obtained 
 by its labour, and partly upon such an adaptation of 
 this quantity to the wants and powers of the existing 
 population as is calculated to give it value. Nothing- 
 can be more certain than that it is not determined by 
 either of them alone. 
 
 But where wealth and value are perhaps the most 
 nearly connected, is in the necessity of the latter to 
 the production of the former. In the actual state of
 
 302 OF TflE DISTINCTION' BETWEEN [CH. VI. 
 
 tiling's, no considerable quantity of wealth can be 
 obtained except by considerable exertions ; and un- 
 less the value which an individual or the society 
 places on the object, when obtained, fully compensates 
 the sacrifice which has been made to obtain it, such 
 wealth will not be produced in future. If labour 
 alone be concerned in its production, as in shrimping, 
 in the collection of hurts and wild strawberries, and 
 some other exertions of mere manual labour, it is ob- 
 vious that this wealth will not be collected, nor will 
 be used to supply any of the wants of the society, 
 unless its value when collected will, at the least, com- 
 mand as much labour as the collection of it has cost. 
 If the nature of the object to be obtained requires 
 advances in the shape of capital, as in the vast ma- 
 jority of instances, then by whomsoever this capital is 
 furnished, whether by the labourers themselves or by 
 others, the commodity will not be produced, unless 
 the estimation in which it is held by the society or 
 its intrinsic value in exchange be such, as not only to 
 replace all the advances of labour and other articles 
 which have been made for its attainment, but likewise 
 to pay the usual profits upon those advances ; or, in 
 other words, to command an additional quantity of la- 
 bour, equal to those profits. 
 y^ It is obviously therefore the value set upon com- 
 modities, — it is the sacrifice of labour or of labours 
 worth which people are willing to make in order to ob- 
 tain them, that in the actual state of things may be 
 said to be almost the sole cause of the existence of 
 wealth ; and this value is founded on the wants of 
 mankind, and the adaptation of particular commodi- 
 ties to supply these wants, independently of the ac- 
 tual quantity of labour which these commodities may 
 have cost in their collection or production. It is this 
 value which is not only the great stimulus to the pro- 
 duction of all kinds of wealth, but the great regu- 
 lator of the forms and relative quantities in which it 
 shall exist. No species of wealth can be brought to 
 market for a continuance, unless some part of the so-
 
 CII. VI. J WEALTH AND VALUE. 303 
 
 ciety sets a value upon it equal to its natural or ne- 
 cessary price, and is both able and willing to make a 
 sacrifice to this extent in order to obtain it. A tax 
 will entirely put an end to the production of a com- 
 modity, if no one of the society is disposed to value it 
 at a price equal to the new conditions of its supply. 
 And on the other hand, commodities will be continu- 
 ally increased in quantity so long as the demands of 
 those, who are able and willing- to give a value for 
 them equal to this price, continue to increase. 
 
 In short, the market prices of commodities are the^ 
 immediate causes of all the great movements of so- 
 ciety in the production of wealth, and these market 
 prices (when the relation of money to labour is known,) 
 always express clearly and unequivocally the ex- 
 changeable values of commodities arising from intrinsic 
 causes at the time and place in which they are ex- 
 changed, and differ only from the natural and necessary 
 prices, as the actual state of the demand and supply, 
 with regard to any particular article, may differ from 
 its ordinary and average state. 
 
 Mr. Ricardo was, I believe, the first writer of note, 
 who took pains to make a marked distinction between 
 wealth and value ; and in this, he appears to me to 
 have rendered an unquestionable service to the science 
 of political economy : but owing to the peculiar view 
 which he took of exchangeable value as depending 
 exclusively upon the quantity of labour actually em- 
 ployed in production, he has made the distinction 
 much broader than it really is. 
 
 If the great measure of the exchangeable value of 
 a commodity were what he has represented it to be, 
 value would depend exclusively upon difficulty of 
 production, and its power of measuring wealth would 
 be extremely imperfect : while, if the great measure of 
 the value of a commodity is, as I have endeavoured 
 to shew, the quantity of labour which it will command, 
 such a measure will be found to be very much more 
 comprehensive, and to make much nearer approaches 
 to a measure of wealth. It may indeed safely be said
 
 304 OF THE DISTIXCTroy BKTWEEX [cH. Vf. 
 
 that though wealtli and value rarely go on together at 
 an even pace ; yet that when a just view is taken of the 
 mass of value in any country, all the general causes of a 
 permanent nature which are most efl'ective in the pro- 
 duction of wealth will be found also the most effective 
 in the production of value; and in reference to the whole 
 produce of a country, quantity seldom fails to increase 
 value, except in those temporary cases of a general glut, 
 in which it must be allowed that even the wealth of a 
 country is far from being proportioned to the increased 
 quantity of the commodities it has produced. 
 
 It would certainly be desirable to be able to form 
 some estimate of the wealth of different nations with 
 a view to the comparison of them with each other. 
 An attempt to do this by estimating the quantitif of 
 their respective produce without reference to its value 
 would be perfectly futile, as it is obvious, that no- 
 thing could be inferred by comparing the quantity of 
 wine in France with the quantity of tallow in Russia, 
 or the quantity of tin in England with the quantity 
 of raw cotton in the United States. 
 
 On the other hand, if we were to take as our mea- 
 sure of wealth, that measure of value which is deter- 
 mined by the quantity of immediate and accumulated 
 labour, actually worked up in commodities, we should 
 be but little better oft', as all the wealth derived from 
 superior fertility of soil, peculiar products, and the 
 great mass of profits arising from fixed and circulating 
 capitals would at once be left out in the computation. 
 
 But the case would be very different, if we were to 
 take as a rough measure of the wealth of a country 
 the quantity of the standard labour of that country 
 which its whole produce would command, or exchange 
 for. This measure would embrace all the advan- 
 tages derived by different countries from their pe- 
 culiar products, the superior fertility of their soil 
 either natural or acquired, and the mass of their pro- 
 fits occasioned either by the general rate of profits, or 
 by the amount of their fixed and circulating capitals, 
 &c. The quantity of standard labour which the whole
 
 CH. VI.] WEALTH AND VALUE. 305 
 
 yearly produce would exchange for, according to the 
 actual money prices of labour and commodities at the 
 time might be considered as an approximating esti- 
 mate of the gross annual revenue of the country, while 
 the excess of this value above the immediate and ac- 
 cumulated labour advanced in producing it, would be 
 an approximating estimate of what has sometimes been 
 called its neat revenue, or the mass of rents, profits 
 and taxes derived from these advances. 
 
 Dift'erent countries tried in this way by the value 
 of their produce, would in general answer very nearly 
 to the estimates which would be formed of their rela- 
 tive wealth, by the most careful and intelligent prac- 
 tical observations. 
 
 An agricultural country, with a bad soil and the 
 great mass of the population employed on the land 
 would be universally considered as poor; and tried 
 by the test proposed the value of its produce would 
 in the first place appear to be small compared with its 
 extent of territory ; and secondly, the quantity of 
 standard labour which it would command w^ould not 
 much exceed the quantity of labour employed in pro- 
 duction. 
 
 A country almost entirely agricultural, yet posses- 
 sing a rich soil would appear to have a greater gross 
 revenue, and a greater population on the same extent 
 of territory than the country before described ; and 
 further, it would be observed to possess a great body 
 of wealthy landed proprietors maintaining numerous 
 menial servants, and retainers; while the sovereign 
 would probably be rich and powerful, as the state 
 would certainly have the means of keeping up a large 
 military force in proportion to its size. It would be 
 distinguished by the comparative large amount of its 
 neat produce, and the gi'eat excess of the quantity of 
 standard labour, which its produce would command, 
 compared with the quantity which had been actually 
 employed in obtaining that produce. 
 
 Countries almost exclusively manufacturing and 
 commercial, are generally small in extent, and would 
 
 X 
 
 I
 
 liOfi ()!• THK DISTINCTION BEIWKl-.X [CH.VI. 
 
 generally be observed to possess a large amount of 1 
 produce and population in a comparatively small 
 compass ; but that appearance of wealth and neat pro- 
 duce wliich shews itself in leisure, would be but little 
 seen; and the test proposed would exactly show this 
 result. By this test the wealth of the country would 
 appear to be very great compared with its extent of 
 territory : but it would appear at the same time that 
 the quantity of standard labour which the value of 
 the produce would command, would not so much ex- 
 ceed the quantity of labour which it had actually em- 
 ployed, as in the second case comsidered. 
 
 If, as a fourth case, we suppose a large country with 
 a very rich soil well cultivated, and at the same time 
 highly commercial and manufacturing, such a country 
 would to the eye of every observer exhibit all the 
 conceivable appearances of wealth, large landed for- 
 tunes, large mercantile and manufacturing fortunes, 
 considerable leisure, great public establishments, a 
 great public revenue, &c. &c. ; and tried by the test pro- 
 posed, it would undoubtedly measure very rich. On 
 account of the small size of those states which depend 
 almost entirely on commerce and manufactures, and 
 consist chiefly of towns, it is probable that it would 
 not contain so great a produce and population in so 
 small a compass as states similar to those of Holland, 
 Hamburgh and Venice, but it would be richer com- 
 pared with the population. If, owing to the fertility of 
 its soil and the skill with which it was worked, a small 
 proportion of the people were employed upon it, and 
 the tastes of the society were such as to encourage 
 material conveniences and luxuries rather than menial 
 service, the great mass of these objects combined with 
 the raw produce, particularly under the employment 
 of much fixed capital and improved machinery, might 
 be of unusually high value compared with the po- 
 pulation. It is indeed conceivable that under such 
 circumstances the value of the whole produce might 
 be such as to command the labour of 3 or 4 times 
 the number of families in the country actually engaged 
 
 1
 
 C"I1. VI.] WEALTH AND NALIF. 307 
 
 in productive labour, estimated accordino- to the usual 
 earnino-s of apricultural families at the time.* 
 
 It will be readily understood that the labour which 
 commodities will command or purchase, is used en- 
 tirely as a measure, and has little more relation to the 
 actual quantity of labour employed in the country, 
 than a thousand feet in lens^th has to the number of 
 foot rules existing in the town where the length may 
 be measured. 
 
 Neither is it intended to be stated that a measure 
 of value can measure satisfactorily all the variations 
 in wealth. There are some points where it must be 
 allowed to fail. In the first place it does not express 
 correctly the wealth of the labouring classes of so- 
 ciety, which is a very important deficiency. Secondly, 
 as it does not notice the relative value of the precious 
 metals, it does not express the superior power which 
 the labour of one country may possess in commanding 
 the labour and wealth of another. Thirdly, it does 
 not sufficientlv mark the deo^ree of wealth in luxuries 
 and conveniences derived from skill and machinery. 
 Whether with a view to the first of these circum- 
 stances, it might be useful in an estimate of wealth, 
 to take a mean between corn and labour, instead of 
 the measure of value-labour ; and with a view to the 
 second and in some degree to the third, to refer in 
 part to foreign labour instead of domestic labour ex- 
 clusively, may be fairly a subject of consideration.'!" 
 Perhaps by so doing, facility and simplicity might be 
 lost, without gaining a sufficient advantage in point 
 of accuracy. But whether a measure of value can 
 be made a measure of wealth or not, it must be 
 
 * The estimate here made must of course be quite conjectural ; 
 but if the soil were very fertile, and a large part of the value ol 
 the mercantile and manufacturing products of the profits of fixed 
 capital, the conjecture is probably not beyond the truth. In 
 England at present the value of the annual produce wouKl purchase 
 the labour of double the number of families actually existing in 
 the country, if paid at the price of common agricultural labour. 
 
 t This is what 1 did in my former edition of this work.
 
 308 DISTINCTION BETWEEN WEALTH AND VALUE. 
 
 allowed that no approximation towards a measure of 
 wealth can be formed without a reference to value, 
 and that when a just view of value is taken, it is found 
 to have so intimate a connection with wealth, in many 
 points, that the measure of it, without further modifi- 
 cation, may be practically of use, in enabling us to 
 form a judgment of the wealth of different nations 
 which we may wish to compare with each other ; 
 and we shall be little liable to be led into any essen- 
 tial error by the use of this measure, as we know 
 beforehand the points in which its accuracy is the 
 most likely to fail, and are consequently enabled to 
 make proper allowances.* 
 
 * In comparing the wealth of the United States of America 
 with almost any other country, we should underrate her wealth, 
 unless we made an allowance both for the large quantity of corn 
 awarded to the labourer and the high money price of labour, or 
 low value of money, which enables the American labourer to 
 command so much foreign produce. 
 
 In comparing England with the countries on the continent an 
 allowance for the lower value of money would be sufficient.
 
 BOOK II. 
 CHAPTER I. 
 
 ON THE PROGRESS OF WEALTH. 
 
 Section I. — Statement of the particular Object 
 of Inquiry. 
 
 There is scarcely any inquiry more curious, or, from 
 its importance, more worthy of attention, than that 
 which traces the causes which practically check the 
 progress of wealth in diiferent countries, and stop it, 
 or make it proceed very slowly, while the power of 
 production remains comparatively undiminished, or at 
 least would furnish the means of a great and abun- 
 dant increase of produce and population. 
 
 In a former work* I endeavoured to trace the 
 causes which practically keep down the population 
 of a country to the level of its actual supplies. It is 
 now my object to shew what are the causes which | 
 chiefly influence these supplies, or call the powers of j 
 production forth into the shape of increasing wealth. ' 
 
 Among the primary and most important causes 
 which influence the wealth of nations, must unques- 
 tionably be placed, those which come under the head 
 of politics and m^orals. Security of property, without 
 a certain degree of which,, there can be no encourage- 
 ment to individual industry, depends mainly upon the 
 political constitution of a country, the excellence of 
 its laws and the manner in which they are adminis- 
 
 * Essay on the Principle of Population.
 
 :j|() UN rilL l-KDCiUL-^.S OF MEACIH. [cil. I. 
 
 tcred. And those habits which are the most favour- 
 able to regular exertions as well as to general rectitude 
 of character, and are consequently most favourable 
 to the production and maintenance of wealth, depend 
 chiefly upon the same causes, combined with moral 
 and religious instruction. It is not however my in- 
 tention at present to enter fully into these causes, 
 important and effective as they are ; but to confine 
 myself chiefly to the more immediate and proximate 
 causes of increasing wealth, whether they may have 
 their origin in these political and moral sources, or in 
 any others more specifically and directly within the 
 puovince of political economy. 
 
 It is obviously true that there are many countries, 
 not essentially different either in the degree of secu- 
 rity which they afford to property, or in the moral 
 and religious instruction received by the people, which 
 vet, with nearly equal natural capabilities, make a 
 very different progress in wealth. It is the principal 
 object of the present inquiry to explain this ; and to 
 fin-nish some solution of certain phenomena frequently 
 obtruded upon our attention, whenever we take a 
 view of the different states of Europe, or of the world ; 
 namely, countries with great powers of production 
 comparatively poor, and countries with small powers 
 of production comparatively rich. 
 
 If the actual riches of a country not subject to 
 repeated v iolen ces^nd a frequent destiTicrforT of pro- 
 d uce, b e not afte r a certnin per iod~in some, degree 
 pioportio ned to its power of producing riches, this 
 ( reliciency rnustliave arisen Irom the w ant of an adc- 
 o uate ff nnulus to continyed production. The prac- 
 tical question then fdT' our consideration is, what are 
 the most immediate and eft'ective stimulants to the 
 contintvcd creation anJprbgTCSS of "wealth.
 
 ox TME PROGHtSS OF WEALTH. 311 
 
 Section II. — Of the Increase of Population consi- 
 dered as a Stimulus to the continued Increase of 
 Wealth. 
 
 Many writers have been of opinion that an increase 
 of population is the sole stimulus necessary to the 
 increase of wealth, because population, being the great 
 source of consumption, must in their opinion neces- 
 sarily keep up the demand for an increase of pro- 
 duce, which will naturally be followed by a continued 
 increase of supply. 
 
 That a continued increas gjof p opulation is a pow er-, 
 ful and necessary element of increasingjlemand^ will 
 be_jnost Readily allowed ;^_but_thatjthfi_increase of 
 population alone, or, more properly speaking, the 
 pressure of the population hard against the limits of 
 subsistence, does not furnish an effective stimulus to 
 the contin ued increase of wealth, is no t only evident x^' 
 in the ory, but is confirmed by universal expenenceiy' 
 Ifjyant alone, or the desire of the labouring classes 
 to__posse ss th e necessaries and conveniences of life, 
 w^ere a sufficient stimulus to productjon^^there is no 
 state in Europe, or In the world, which wouidTiave 
 fo und any otlier practi cal limit to it s wealth than jts_ 
 power to produce ; and the earth would probably 
 before this peri(M have contained, at the very least, 
 ten times as many inhabitants as are supported on its 
 surface at present. 
 
 But those who are acquain ted w ith the riature^ 
 effectuaT demand, will be fully ajvareThat, where the 
 right of private property is established, and the wants 
 of society are supplied by industry and barter, the 
 desire of any individual to possess t he ne cessaries, 
 conveniences and luxuries of life, ^however intense, _ 
 will availnothing towards their prod uction, i f there 
 be no where a reciprocal demand for something which 
 lie p ossesses^ A nian whose o nl y possessio n is his y 
 labour has, or ^I^not, an effecU\^demaiidJpr pro-
 
 ;;12 ON riiK progkkss of meai.th. [cm. i. 
 
 duce according as his labour is, or is^ not, in demand 
 T)£_those wLo^J^aTe'tlie'diaposaT of produce. And no 
 ^pr oductive labour j;ian.ever be inje^nand with a view 
 ' to pro fit unless the produce whe n obtained js of gieater 
 vafueTthan the labour which obtainedlt. j No fresh 
 hands can be employed in any sort of industry merely 
 in consequence of the demand for its produce occa- 
 sioned by the persons employed. I.No farmer will 
 take the trouble of superintending the labour of ten 
 additional men merely because his whole produce 
 will then sell in the market at an advanced price just 
 equal to what he had paid his additional labourers. 
 There must be something in the previous state of the 
 demand and supply of the commodity in question, or 
 in its price, antecedent to and independent of the 
 demand occasioned by the new labourers, in order to 
 warrant the employment of an additional number of 
 people in its production.^) 
 
 It will be said perhaps that the increase of popu- 
 lation will lower wages, and, by thus diminishing 
 the costs of production, will increase the profits of 
 the capitalists and the encouragement to produce. 
 Some temporary effect of this kind may no doubt 
 take place, but it is evidently very strictly limited. 
 The fall of real wages cannot go on beyond a certain 
 point without not only stopping the progress of the 
 population but making it even retrograde ; and before 
 this point is reached, the increase of produce occa- 
 sioned by the labour of the additional number of 
 persons will have so lowered its value, and reduced 
 profits, as to determine the capitalist to employ less 
 labour. Though the producers of necessaries might 
 certainly be able in this case to obtain the funds re- 
 (juired for the support of a greater number of la- 
 bourers; yet if the effectual demand for necessaries 
 were fully supplied, and an adequate taste for unpro- 
 ductive consumption, or personal services bad not 
 been established, no motive of interest could induce 
 the producers to make an elfectual demand for this 
 greater number of labourers.
 
 SIX. II.] ON THE PROGRESS OF WEALTH. 313 
 
 ^t is )hviong^ the n in theory that an increase of 
 po pulation, when an additionar quantity of lab our is 
 not re qu . red, will s oon b e cliecked by want preni- 
 p lovmen and the sc ant y support of tho se employ^cTT" 
 a nd will not furnish the required stimulus to an in- 
 c rease ot wealth proportioned to the power of pro- 
 d uction. 
 
 But, i" any doubts should remain with respect to 
 the theori on the subject, they will surely be dissi- 
 pated by J reference io ^perienbe. It is scarcely 
 po ssible to ca&t our eyes on any nation of the wor ld 
 w ithout seeing a striking confirmat ion of w hat h as 
 be en advan ced ^ ^mojyimversally^ the_a^c^ 
 of all_th ,ta_tes with which we are acquainted is 
 very far short of their powers of production ; and 
 am ong those states, the s lowest progress in wealth is 
 o ften made whe re the stimulus arising from popula - 
 tipn_alQne is the greatest, that is, where the popula- 
 tion presses the hardest against the actual limits of 
 subsistence. It is quite evident that the only fair 
 way, indeed the only way, by which we can judge 
 of the practical effect of population alone as a stimu- 
 lus to wealth, is to refer to those countries where, 
 from the excess of population above the funds applied 
 to the maintenance of labour, the stimulus of want is 
 the greatest. And if in these countries, which still 
 have great powers of production, the progress of 
 wealth is very slow, we have certainly all the evi- 
 dence which experience can possibly give us, that 
 population alone cannot create an effective demand 
 for wealth. 
 
 To suppose a great and continued increase of po- 
 pulation is to beg the question. We may as well 
 suppose at once an increase of wealth ; becatise such 
 an i ncrease of population cannot take plac e witho ut 
 a prop ortio.nate or nearIy~p roportionate increase ^V' 
 wealth. The question really is, whetheFehcourage- 
 ments to population, or even the natural tendency of 
 population to increase beyond the funds destined for 
 its maintenance, will, or will not, alone furnish an
 
 314 ON Tilt FROGRLSS OF WEALTH. [CH. 
 
 adequate stimulus to the increase of wealtk. Ai 
 this question, Spain, Portuoal, Poland, hun^^ 
 Turkey, and many other countries in Europe, tog^* 
 ther with nearly the whole of Asia and Af ica, and 
 the greatest part of America, distinctly answer in the 
 negative. 
 
 Section' III. — Of Accumulation, or the Scning from 
 Revenue to add to Capital, considered ay a Stimulus 
 to the Increase of Wealth. 
 
 TiiosK who reject mere population ^ r adequa te 
 stimulus^ to tlie increase (jLyyeakh^ are_ gt .^c i-aHy d is- 
 20sed_to make every thing d e]3end_u2or accumula- 
 tion . hjs_certain] y_true t hat no perinanc nt and con- 
 tinued incre ji se of wealth can ta ke pla c j widiout a 
 ronton 11 ptI jncrease of capital ; arid I cann ci a^ree %> jth 
 Lor d Lauderdale in thinking that this liTcrease ca n be 
 eSecte cl in any other way thanby savi ng from the s toc k 
 wlmJTjTTJojitJi aA'e been destined for immediate con- 
 sumption, and ad ding it to that which is to yi eld a 
 pToht ; or in other words, by the c on version of r eve n ue 
 into capital.* 
 
 But Me have yet to inquire what is the state of 
 things which generally disposes a nation to accumu- 
 late ; and further, what is the state of things which 
 tends to make that accumulation the most effective, 
 and lead to a further and continued increase of capital 
 and wealth. 
 j^ It is undoubtedly possible by parsimony to devote 
 at once a much larger share than usual of the produce 
 of any country to the maintenance of productive la- 
 
 * See Lord Lauderdale's Chapter on Parsimony, in his Inquiry 
 into the Nature and Origin of Public Wealth, oh. iv, p. 198, 2d 
 edit. Lord Lauderdale appears to have gone as much too far in 
 deprecating accumulation, as some other writers in recommending 
 it. This tendency to extremes is oiio of the great sources of 
 rrror in puliiical economy, where so much depends upon propor- 
 tions.
 
 SEC. Ill.j ON THE PROGRESS OV WEALTH. 315 
 
 hour ; and suppose this to be clone, it is quite true 
 that the labourers so employed are consumers as well 
 as those enc;aged in personal services, and that as far as 
 the labourers are concerned, there would be no dimi- 
 nution of consumption or demand. But it has already 
 been shewn that the consumption and demand occa- 
 sioned by the workmen employed in productive labour 
 can never aloiie furnish a motive to the accumulation 
 and employment of capital ; and with regard to the 
 capitalists themselves, together with the landlords and 
 other rich persons, they have, by the supposition, 
 agreed to be parsimonious, and by depriving them- 
 selves of their usual conveniencies and luxuries to save 
 from their revenue and add to their capital. Under 
 these circunistances, it is impossible that the increased 
 quantity of commodities, obtained by the increased 
 number of productive labourers, should find pur- 
 chasers, without such a fall of price as would pro- 
 bably sink their value below that of the outlay, or, at 
 least, so reduce profits as very greatly to diminish ^ 
 both the power and the will to save. ^^ 
 
 It has been thought by some very able writers, that 
 although there may easily be a glut of particular com- 
 modities, there cannot possibly be a glut of commodi- 
 ties in general ; because, according to their view of 
 the subject, commodities being always exchanged for 
 commodities, one half will furnish a market for the 
 other half, and production being thus the sole source 
 of demand, an excess in the supply of one article 
 merely proves a deficiency iri'tTiesiippIy of some other, 
 and a general excess is impossible. M. Say, in his 
 distinguished work on political economy, has indeed 
 gone so far as to state that the consumption of a com- 
 modity by taking it out of the market diminishes de- 
 mand, and the production of a commodity porportion- 
 ably increases it. 
 
 This doctrine, however, as generally applied, ap- 
 pears to me to be utterly unfounded, and completely 
 to contradict the o-reat principles which regulate sup- 
 ply and demand.
 
 310 ON iiir: puogiu.ss of wealth. [ch. i. 
 
 It is by no means true, as a matter of fact, that 
 commodities are always exchanged for ct-mmodities. 
 An immense mass of commodities is exchanged di- 
 rectly, either for productive labour, or personal ser- 
 vices : and it is quite obvious, that this mass of com- 
 modities, compared with the labour with which it is 
 to be exchanged, may fall in value from a glut just as 
 any one commodity falls in value from an excess of 
 supply, compared either with labour or money. 
 '^ In tiie case supposed there would evidently be an 
 unusual quantity of commodities of all kinds in the 
 market, owing to those who had been before engaged 
 in personal services having been converted, by the ac- 
 cumulation of capital, into productive labourers; while 
 the number of labourers altogether being the same, 
 and the power and Mill to purchase for consumption 
 among landlords and capitalists being by supposition 
 diminished, commodities would necessarily fall in va- 
 lue compared with labour, so as very greatly to lower 
 profits, and to check for a time further production. 
 But this is precisely what is meant by the term glut, 
 which, in this case, is evidently general not partial. 
 
 M. Say, Mr. Mill,* and Mr.'Ricardo, the principal 
 authors of these new doctrines, appear to me to have 
 fallen into some fundamental errors in the view which 
 they have taken of this subject. 
 
 In the first place, they have considered commodi- 
 ties as if they were so many mathematical figures, or 
 arithmetical characters, the relations of which were to 
 
 * Mr. Mill, in a reply to Mr. Spcnce, published in 1808, has 
 laid down very broadly the doctrine that commodities are only 
 purchased by commodities, and that one half of them must always 
 i'urnish a market for the other half. The same doctrine appears 
 to be adopted in its fullest extent by the author of an able and 
 useful article on the Corn Laws, in the supplement to the Ency- 
 clopaedia Britannica, which has been referred to a previous chapter. 
 These writers do not seem to be aware of what is unquestionably 
 true, that demand is always determined by value, and supply by 
 fpiantity. Two bushels of wheat arc double the quantity of one 
 in regard lo supply ; but in numerous cases, two bushels will not 
 make so great a demand as one bushel. 
 
 \
 
 SEC. III.] OX THE PROGRESS OF WEALTH. 317 
 
 be compared, instead of articles of consumption, which 
 must of course be referred to the numbers and wants 
 of the cflnsiungrs. 
 
 If ^commodi ties were only to be compared and ex- 
 changed with each other, then indeed it would be true 
 that, if they were all increased in their proper propor- 
 tions to any extent, they would continue to bear among- 
 themselves the same relative value ; J^t, if we com- 
 pare tkem, as^ wa certainly ought to do, with the 
 means of producing thern,^nd with the numbers and 
 wants of th e consumers , then a gre at increase^f ^ro- 
 d uce yyith comparatively statio nary numbers_ox-with. y 
 wantsj^imini.shed by_B§rgI^EyjLJ l'l.^^!-. necessa r ily oc- 
 cas ion a great fall of value estimated in labour, so vy 
 that the same produce,^ though it m i o-ht have co^^ t he j 
 same quantity of labour as before, would no longer 'vK 
 C07?imcmd the same quantity; and both the power of j 
 accumulati on an^ the rnQtive to accumulate would be 
 strongly checked^ 
 
 It is asserted that effectual demand is nothing more 
 than the offering of one commodity in exchange for 
 another which has cost the same quantity of labour. 
 But is this all that is necessary to effectual demand ? 
 Though eacli^ commodity may have_ cost lhe_same 
 quantity oi f labou r in its production, and they maybe 
 exactly^equiyale nt to each other in ex change, yet wh^ 
 may not bot h be so plentiful as not to command mo re 
 la bour, than they have cost, that is, to yield no pro fit, 
 a nd in this case, would the demand for them be ef- 
 f ectual? Would it be such as to encourage their con- 
 tinued production ? Unquestionably__not. Thcirj;e^ 
 Tatjnin _to each other may not have chang ed : but_ 
 their relation to the wants of the society, and their re- 
 lation to labour, niay have experiejiced a most impor- 
 tant ^cKa nge.* 
 
 * The variations which take place in the general rate of profits 
 being common to all commodities, will not of course affect their 
 relative values ; that is, whether commodities universally rise to 
 a higher price, or sink to a lower one, or even fall below their 
 cost, they will continue to bear the same proportion to each other
 
 ;il8 ox TIIK I'ROGRESS OF WEALTH. [cil. I. 
 
 It will be readily allowed that a new commodity 
 thrown into the market, which, in proportion to the 
 labour employed upon it, is of higher exchanf^eable 
 value than usual, is precisely calculated to increase 
 demand ; because it implies, not a mere increase of 
 quantity, but an increase of value owing to a better 
 adaptation of the produce to the tastes, wants and con- 
 sumption of the society. But to fabricate or procure 
 commodities of this kind is the grand difficulty ; and 
 they certainly do not naturally and necessarily follow 
 an accumulation of capital and increase of commodi- 
 ties, most particularly when such accumulation and 
 increase have been occasioned by economy of con- 
 sumption, or a discouragement to the indulgence of 
 those tastes and wants, which are the very elements 
 of demand and of value. 
 
 Mr. Ricardoj though _hfi_maintains as a general po- 
 sition t hat capital cannot be redun(Iant, is oblio -ed to 
 makelheJollowing_concession.^ He says, " There is 
 onl y on e^case^^and- thaL.will _beJ;emporary, in which 
 the_ac£umu]3.tiorL xiLcapitaL jvitli_a, low pxice of food 
 
 as they did before. But no one would ever think of saying, that 
 the demand for them (in the ordinary sense of the word) was the 
 same in both cases. When, therefore, Mr. Mill explains the 
 equality of demand and supply to consist in this ;—" that goods 
 which have been produced by a certain quantity of labour, ex- 
 change for goods which have been produced by an equal quantity 
 of labour," (Elements of Polit. Econ. 3rd edit. p. 239.) he uses 
 the term demand in a sense quite ditierent from that which is 
 usually meant by it. The demand and supply, as he understands 
 them, may be equal to each other, when, owing to a general slack- 
 ness of trade, the mass of goods are selling at a price very much 
 below their ordinary costs of production ; or when, in consequence 
 of unusual briskness, they are selling very much above their costs ; 
 that is, when, according to Adam Smith, and to the accuston^ed 
 language of society, the supply would be said, either greatly to 
 exceed the demand, or to fall considerably short of it. 
 
 Throughout the chajjtcr from which the foregoing passage is 
 taken, Mr. Mill uses the term demand, as if it were synonymous 
 \v'\i\\ extent of consumption. By an increase or diminution of the 
 demand, he means to refer simply to the greater or less quantity of 
 goods boiight or sold. What is usually meant by it, is, the rise or 
 fall in the value of any given quantity of them. 
 
 An error, not to the same extent, but somewhat similar in kind,
 
 SEC. HI.] OX THE TROGRESS OF WEALTH. 319 
 
 ma£^ be attended with a fall of profits ; and that is, / 
 when the fund s foxtliejiia intenance of la bour increase / 
 muclijnore^ rapidly than p opulation ; — wages will then I 
 be high and profitslaw. If every nian- w-ereJ:o_fbr£go 4 
 the use of luxuries and be intent only oi^^ ^-cumiTT ?!-. 
 tion^ a_cpj.M!tity of_necessaries might be produced for 1 
 which__thei:e.couldjiQlJDe any immediate consumption^ \ 
 Of c omm odities so limited in number, there might un- \ 
 doubte(lly_be an universal glut : ^nd rnnspgnpnfly 
 fhere^iight neither be dem_and for an additionaj q uan- 
 ti ty of such commodities, jpoi^rofits on t he emp loy^ 
 ment of more capital. If men ceased to consume, they 
 would cease to produce." ^Mr^Ricardo jtlien adds^ 
 " This admission d oes not im pu gn the g-eneraT prin- 
 ci^le / '* InJlusJ as tj'ema rk I caii by^ no _me_ans^X£fi . 
 witiyiini. It.aE£?^''-^ ^^ me mostcompletely to im^g^n 
 the generaTpjincipIe. Even if we suppose with 
 Mr. Ricardo, what is not true, that an increase of po- 
 pulation would certainly remedy the evil ; yet as from 
 the nature of a population, an increase of labourers 
 cannot be brought into the market, in consequence of 
 
 pervades the writings of Col. Torrens. — He represents effectual 
 and profitable demand as consisting in the power of exchanging 
 commodities for a greater quantity of the ingredients of capital 
 than have been expended in their production. (Essay on Weahh, 
 p. 360.) This view of demand, though nearer to the truth than 
 the foregoing one, is nevertheless incorrect. The chief ingre- 
 dients of capital, and frequently by far the largest, are food and 
 clothing ; and this Col. Torrens admits, since he represents the 
 costs of production, as consisting in the advance of a given num- 
 ber of quarters of corn and suits of clothing. Now, although a 
 man should sell his commodity for more corn and clothing than 
 it has cost him, he may, notwithstanding, find himself in this pre- 
 dicament, that, the corn and clothing when obtained, may not, 
 owing to a change in their relation to labour, command the ser- 
 vices of the same number of men as were employed in the pro- 
 duction of the commodity for which they have been exchanged ; 
 in which case the apparent profit would be greatly reduced, or 
 might even disappear altogether. It is then in vain for us to 
 measure the demand for a commodity by the quantity of ai-iy 
 other commodity which can be had in exchange for it, since we 
 must at last resort to labour as the only stand.-ard of the real 
 value of every thing, and of the effectual demj>.ii*i for it. — Ed. 
 * Princ. of Polit. Econ. ch. xxi. p. 343, 3rd edit.
 
 320 ON THE PROGRESS OF WEALTH. [cil. I. 
 
 a particular demand, till after the lapse of sixteen or 
 eighteen years, and the conversion of revenue into 
 capital by saving-, may take place much more ra- 
 pidly ; a country is always liable to an increase in the 
 quantity of the funds for the maintenance of labour 
 faster than the increase of population. But if, when- 
 ever this occurs, there may be an universal glut of 
 commodities, how can it be maintained, as a general 
 position, that capital is never redundant ; and that 
 because commodities may retain the same relative va- 
 lues, a glut can only be partial, not general? 
 
 An other fundamental er ror into which the.w ri ters 
 above-mentioned and^ their followers appear to have 
 fallen is, tHe not taking.into consideration the influence 
 of so generaj^and important a principle in human na- 
 tu re, as •indolej2ce qr lovej)f ease. -. 
 
 It has been suppose3'*~that, if a certain number of 
 farmers and a certain number of manufacturers had 
 been exchanging their surplus food and clothing with 
 each other, and their powers of production were sud- 
 denly so increased that both parties could, with the 
 same labour, produce luxuries in addition to what they 
 had before obtained, there could be no sort of difticulty 
 with regard to demand, as part of the luxuries which 
 the farmer produced would be exchanged against part 
 of the luxuries produced by the manufacturer ; and 
 the only result would be, the happy one of both par- 
 ties being better supplied and having more enjoy- 
 ment^ 
 
 But ^_jth]s intercoiy^se of mutu^l_gra.tificati^^^ two 
 things are taken Jbr granted, which are the very points 
 in dispute .(T^ t is taken for grant e d that luxuries are 
 alwa)'s preferred to indolence, ancfethat an adequate 
 proportion of the profits of each party is consumed as 
 revenucT Wjiat w ould be the effect of a desire to 
 sav e un de r such circumstances, shall be considered 
 pr£sently~ The ei!ecroFarpTeference of indolence to 
 luxuries vrould^ evidently be to occasion a want of de- 
 
 * EdinbuTgh Review, No. LXIV. p. 471.
 
 SEC. Ill.j OX THE PROG KISS Ol' WEALTH. 321 
 
 mand for the returns of the increased powers of pro- 
 duction supposed, and to throw labourers out of em- 
 ployment. The cultivator, being now enabled to ob- 
 tain the necessaries and conveniences to which he had 
 been accustomed, with less toil and trouble, and his 
 tastes for ribands, lace and velvet not being- fully 
 formed, might be very likely to indulge himself in in- 
 dolence, and employ less labour on the land ; while 
 the manufacturer, finding his velvets rather heavy of 
 sale, would be led to discontinue their manufacture, 
 and to fall almost necessarily into the same indolent 
 system as the farmer. That an efficient taste for 
 luxuries and conveniences, that is, such a taste as will 
 properly stimulate industry, instead of being ready to 
 appear at the moment it is required, is a plant of slow 
 growth, the history of human society sufficiently shows ; 
 and that vt'is a most importa nt error to tak e for granted, 
 tha t mankinJ^wirT produce^nd consume all that they 
 l7ave the power to^pi-oduce and con sume, a nd will never 
 prefer indolence to the rewards o f industry, will suf- 
 ficiently appear from a slight review of some of the 
 nations with which we are acquainted. But I shall 
 have occasion for a review of this kind in the next 
 section ; and to this I refer the reader. 
 
 It has been said, that it is specifically the defi- 
 ciency of production on the part of the indolent, which 
 occasions the want of demand for the products of the 
 industrious ; and that, if the idle were made to pro- 
 duce, the surplus would disappear. But this remark 
 is evidently beside the question.'* The real question 
 is, whether under the actual habits and tastes of the 
 society, any number of persons who might be inclined 
 to save and produce, if they suited their produce to 
 
 * This answer of the author will hardly be thought satisfactory. 
 For if the allegation set up be a true one, it certainly falls within 
 the limits of the question. The proper answer is, that it is not 
 a true one. If the idle were to produce, it could only be by means 
 of a larger accumulation, that is, of the conversion of more revenue 
 into capital. But this, though it might make some alteration in 
 the channels of demand, could not possibly increase the sum 
 total of the demand. Ed. 
 
 Y
 
 322 ON THE PUOGRESS OK WEALTH. [CH. I. 
 
 these liabits and tastes, would be secure of finding- 
 such a demand for all they could bring into the mar- 
 ket as to prevent the possibility of what is called a 
 ^lut, or a great fall of profits in a large mass of com- 
 modities. What might happen under different tastes 
 and ha])its is entirely a ditlerent question. 
 
 It has also been said, that there is never an indis- 
 position to consume, that the indisposition is to pro- 
 duce. Yet, what is the disposition of those master 
 manufacturers, and merchants who produce very 
 largely and consume sparingly ? Is their will to pur- 
 chase commodities for their consumption proportioned 
 to their power? Does not the use which they make 
 of their capital clearly show that their will is to pro- 
 duce, not to consume 1 and in fact, if there were not 
 in every country some who were indisposed to con- 
 sume to the value of what they produced, how could 
 the national capital ever be increased ? 
 
 _A tjHrd_y^ixienMS_eiTor_ofjthe_:^^ re- 
 
 ferre d to, a nd_practi cally tlie _niost _iniportant_of the 
 tliree, consists in suppos in_g that accumulation eiisures 
 demand ; or thatt he consumption of the labourers em- 
 ployed by~those" whose objeci is to sav e, will c reate 
 such _an effectual d emand for commoditie s ^s_to,en- ^ 
 courag^a^ntinueH in creaie of produ ce. 
 ' ^rfnicardo observes, that " If £10,000 were given 
 to a man having £100,000 per annum, he would not 
 lock it up in a chest, but would either increase his 
 expenses by £10,000, employ it himself productively, 
 or lend it to some other person for that purpose ; in 
 either case demand would be increased, although it 
 would be for different objects. If he increased his 
 expenses, his effectual demand might probably be for 
 buildings, furniture, or some such enjoyment. If he 
 employed his £10,000 productively, his effectual de- 
 mand would be for food, clothing, and raw materials, 
 which might set new labourers to work. But still it 
 would be demand.^^* 
 
 * Prill, of Polit, Econ. ch. xxi. p. 3G1, ^nd edit. 
 
 II
 
 SEC. III.] ON THK PKOGHESS OF M TALIII. 323 
 
 Up on t h is principle it is supposed that if the ri cher 
 portion of society we re to forego th eir accustomed con- 
 veniences and luxuries \vitlL_a _vie\v_ to ace u mulat ion, 
 tjie only effect would be a direction of nearly the w hole 
 capital of the country to the production of n ecessaries, 
 which would lead to a great increase of cultivation 
 a^cPpopulation. ^ut this is precisely the case in 
 which Mr. Ricardo distinctly allows that there might 
 be a universal glut ; for there would undoubtedly be 
 more necessaries produced than would be sufficient 
 for the existing demand. This state of things could 
 not, however, continue ; since, owing to the fall which 
 would take place, cultivation would be checked, and 
 accumulation be arrested in its progress. 
 
 It is therefore obvious that without an expenditure 
 which will encourage commerce, manufactuies, and 
 personal services, the possessors of land would have 
 no sufficient stimulus to cultivate well ; and .a_cpuntry_ 
 suchjis^ur o_wiij_vdii£hJiad beenjich and populous, 
 wouldi_with too_parsisiQlLious habits, infallibly JiEr- 
 come poorjLnd_co.rnparatLvely_ unpeopled.. 
 
 This reasoning will obviously apply to the case 
 noticed before. While the farmers were disposed 
 to consume the luxuries produced by the manufac- 
 turers, and the manufacturers those produced by the 
 farmers, all would go on smoothly ; but if either 
 one or both of the parties were disposed to save 
 largely, with a view of bettering their condition, and 
 providing for their families in future, the state of 
 things would be very different. The farmer, instead 
 of indulging himself in ribands, lace, and velvets,* 
 would be disposed to be satisfied with more simple 
 clothing, but by this economy he would disable the 
 manufacturer from purchasing the same amount of 
 his produce ; and for the returns of so much labour 
 employed upon the land, and all greatly increased in 
 productive power, there would evidently be no market. 
 The manufacturer, in like manner, instead of indulg- 
 
 * Edinburgh Review, No. Ixiv. p. 471.
 
 324 ON THK I'KOGULSS OF WEALTH. [cH. I. 
 
 \n<^ himself in suoar, grapes, and tobacco, might be 
 disposed to save witli a view to the future, but would 
 be totally unable to do so, owing- to the parsimony of 
 the farmers and the want of demand for manufac- 
 tures.* 
 
 * An accumulation, to a certain extent, of common 
 food and common clothing might take place on both 
 sides ; but the amount must necessarily be extremely 
 confined. It would be no sort of use to the farmer to 
 ^o on cultivating his land with a view merely to give 
 food and clothing to his labourers. He would be 
 doing nothing either for himself or family, if he neither 
 consumed the surplus of what they produced himself, 
 nor could realize it in a shape that might be transmit- 
 ted to his descendants. If he were a tenant, such ad- 
 ditional care and labour would be entirely thrown 
 away ; and if he were a landlord, and were deter- 
 mined, without reference to markets, to cultivate his 
 estate in such a way as to make it yield the greatest 
 neat surplus with a view to the future, it is quite cer- 
 
 * Theoretical writers in Political Economy, from the fear of 
 appearing to attach too much importance to money, have perhaps 
 been too apt to throw it out of their consideration in their reason- 
 ings. It is an abstract truth that we want commodities, not 
 money. But, in reality, no commodity for which it is possible 
 to sell our goods at once, can be an adequate substitute for a cir- 
 culating medium, and enable us in the same manner to provide 
 for children, to purchase an estate, or to command labour and 
 provisions a year or two hence. A circulating medium is abso- 
 lutely necessary to any considerable saving; and even the manu- 
 facturer would get on but slowly, if he were obliged to accumu- 
 late in kind all the wages of his workmen. We cannot therefore 
 be surprised at his wanting money rather than other goods; and, 
 in civilized countries, we may be quite sure that if the farmer or 
 manufacturer cannot sell his products so as to give him a profit 
 estimated in money, liis industry will immediately slacken. The 
 circulating medium bears so important a part in the distribution 
 of wealth, and the encouragement of industry, that it is hardly 
 ever safe to set it aside in our reasonings, and all attempts at 
 illustntion, by siip])osing advances of a certain quantity of corn 
 and cloilung, instead of a certain quantity of money, which every 
 year prac.'cally represents a variable quantity of corn, cannot 
 fail to lead i"s wrong.
 
 SEC. IIJ.] ON THE PROGRESS OF WEALTH. 325 
 
 tain that the large portion of this surplus which was 
 not required either for his home consumption, or to 
 purchase clothing for himself and his labourers, would 
 be absolutely wasted. If he did not choose to use it 
 in the purchase of luxuries or the maintenance of per- 
 sonal services, it might as well be thrown into the sea. 
 To save it, that is to use it in employing more la- 
 bourers upon the land, would be to impoverish both 
 himself and his family, and render it impossible at a 
 future time to obtain a large disposeable produce from 
 his land, without retracing his steps and dismissing 
 half his labourers, who might starve when their labour 
 was no longer wanted. 
 
 It wduld be still more useless to the manufacturers 
 to go on producing clothing beyond what was wanted 
 by the agriculturists and themselves. Their numbers 
 indeed would entirely depend upon the demands of 
 the agriculturists, as they would have no means of 
 purchasing subsistence, but in proportion as there was 
 a reciprocal want of their manufactures. The popu- 
 lation required to provide simple clothing for such a 
 society with the assistance of good machinery would 
 be inconsiderable, and would absorb but a small por- 
 tion of the proper surplus of rich and well cultivated 
 land. There would evidently tlierefore be a general 
 want of demand, both for produce and population ; 
 and while it is quite certain that an adequate passion 
 for consumption may fully keep up the proper pro- 
 portion between supply and demand, whatever may 
 be the powers of production, jt^ap]DeaTSj£_be_quite_a^ 
 certain _that an inoiidinate jpassion^fqr^ accjmiula^ 
 niii st inevitabl y l ead to a supply of commo dities bg: 
 yon d w hat the structure and habits of such a socieiy 
 will permit to be profitably^ consumed.* 
 
 But if this be so, surely it is a most important error 
 
 * The render must already know, that I do not share in the 
 apprehensions of Mr. Owen about the permanent efteots of ma- 
 chinery. But I am decidedly of opinion, that on this point he has 
 the best of the argument with those who think that accumulation 
 ensures effectual demand.
 
 32G ON TUL I'KOOKtSS OF WEALTH. [CH. 1. 
 
 to couple the passion for^expenditjjre and the passion 
 lor accumulation together, as if they were of the same 
 natufeT and to consider the demand for the food and 
 c^otTilno; of the labourer, who is to be employed pro- 
 ductively, as securing such a general demand for com- 
 modities and such a rate of profits for the capital em- 
 ployed in producing them, as will adequately call 
 forth the powers of the soil, and the ingenuity of man 
 in procuring the greatest quantity both of raw and 
 manufactured produce. 
 
 If, in thejprocess^fjaving, all that was lost by the 
 c^gtaljst j\xas__gained_by_lkeJabo.ure to 
 
 "tlieprogress of wealth__would be but temporary, as 
 stated bv Mr. Ricardo^; and tjie cqnseq^uences need 
 not be ajpprehended^ J^^tlt J^]l^ coriyersion of reve- ^ 
 nue into ^pital_ pus hed Feyond a c ertain_poiQt jiiust, 
 by Biiwmslnng^jhe_effect^^ 
 
 t hrow th ^Jabounn^^lasses out of employment, it is 
 obviougjh atlhe adoption of j parsirnonious- liabits be- 
 Yond a certain po int, may^be^LCCompanied by the 
 most distressing effects at first, and' by a marked de- 
 pression of wea]th^ndj)oj)ulatioii afterwards. 
 
 It is not, of course, meant to be stated that parsi- 
 mony, or even a temporary diminution of consump- 
 tion,* is not often in the highest degree useful, and 
 sometimes absolutely necessary to the progress of 
 wealth. A state may certainly be ruined by extra- 
 vagance ; and a diminution of the actual expenditure 
 may not only be necessary on this account, but when 
 the capital of a country is deficient, compared with 
 the demand for its products, a temporary economy of 
 consumption is required, in order to provide that sup- 
 ply of capital which can alone furnish the means of 
 an increased consumption in future. All t hat is con- 
 tended to r is, that no nntion r^n_j)o.y.y;A/// grow rich 
 J)y_a2T3£cuggdTmmv^^ permn- 
 
 nent di tninution oTconsu mption ; because such accu- 
 
 * Parsimony, or tlie conversion of revenue into capital, may 
 lake place without any diiuiuution of consumption, if the revenue 
 incr-^ascs lirst. y
 
 SEC. III.] ON THE PROGRESS OF WEALTH. 327 
 
 mulatiqn_being beyond wliaLos wanted in arder to 
 supply the effectualdeniand fo r produce^ a part of it 
 would very^ oonTose^bothL its use and its v alue, and 
 c ease to p ossess the character of wealth. 
 
 The laws whichTregurate tlie rate of profits and the" 
 progress of capital, bear a very striking and singular 
 resemblance to the laws which regulate the rate of 
 wages and the progress of population. 
 
 Mr. Ricardo has very clearly shewn that t he rate 
 of profits musTdmiinish, and the progress of accuniu- 
 latii)n_be_finally^topped, under the most favourable 
 circumstances, by the increasing difficulty of procu- 
 rin^he Jood of th^labourer. I, in like manner, en- 
 Heavoured to shew in my Essay on the Principle of 
 Population that, under circumstances the most favour- 
 able to cultivation which could possibly be supposed 
 to operate in the actual state of the earth, the real 
 wages of the labourer would gradually become more 
 scanty, and the progress of population be finally stop- 
 ped by the increasing difficulty of procuring the means 
 of subsistence. 
 
 But ^^ Ri£ardaiias not been satisfied with prov- 
 ing the position j ust stated. He has not been satisfie d 
 wjth^slipwirig th^^ thp diffionlty of pror. uring the food 
 of the labourer is the only a bs oluteli/ necessarii cause 
 of JJifi-fialLof 4imfits^ in which I am ready fully and 
 entirely to agree with him: but__he has gQne_Qn_jto 
 say, that there is no other cause o^ \heid\\ of profits 
 in the actual statejif^things_lhat 1ms any decree q^ 
 permanence.* In this latter statement he appears to 
 me to have fallen into precisely the same kind of 
 error as I should have fallen into, if, after having 
 shewn that the unrestricted power of population was 
 beyond comparison greater than the power of the 
 earth to produce food under the most favourable cir- 
 cumstances possible, I had allowed that population 
 could not be redundant unless the powers of the earth 
 
 * By this expression I mean such a degree of permanence as 
 to be called the ordinary rate of profits. 
 
 X
 
 328 0\ TIIL PROGRESS OF WEALTH. [CH. I. 
 
 to keep u)) witli the prot^ress of population had been 
 tried to the uttermost. But I all along- said, that 
 ])opulation might be redundant, and greatly redun- 
 dant, compared with the demand for it and the actual 
 means of supporting it, although it might most pro- 
 perly be considered as deficient, and greatly deficient, 
 (•ompared with the extent of territory, and the powers 
 of such territory to produce additional means of sub- 
 sistence ; that, in such cases, notwithstanding the ac- 
 knowledged deficiency of population, and the obvious 
 desirableness of having it greatly increased, it was 
 useless and foolish directly to encourage the birth of 
 more children, as the effect of such encouragement, 
 without a demand for labour and the means of paying 
 it properly, could only be increased misery and mor- 
 tality with little or no final increase of population. 
 
 Now the same kind of reasonino- ouoht, I think, 
 to be applied to the rate of profits and the prog-ress 
 of capital. Fully acknowledging that there is hardly 
 a country in the four quarters of the globe where 
 capital is not deficient, and in most of them very 
 greatly deficient, compared with the territory and 
 even the number of people ; and fully allowing at the 
 same time the extreme desirableness of an increase of 
 capital, J^4limikl.say--tliat^w]jLere_the^tate ofjthe de- 
 mand Joii_conmTodities was such as to aftbrd much 
 less dian ordinary profits to the jjroducerj^ and._the 
 capitalists were at a loss where and how to employ 
 tlieii- cajDitalsJo^ advantage^ the saving* from revenue 
 to^dd still more To Jhese capitals would only tend 
 prematurely^ t^ojljjm^ the motive to accumu latio n, 
 ancl still further to distress the capitalists,"with littl e^ 
 incMx^isi^ ; of a wliolcsome and effe ctive capital., 
 
 VV'hatis wanted in both these cases, prior to the 
 increase of capital and population, is an effectual de- 
 mand for conunodities, that is, a demand by those 
 who are able and willing to pay an adequate price for 
 them ; and^thoughjiigli profits are not followed by 
 aji increase_of capital, so certainlj' as high wages are 
 by an increase of population, yet it will be found
 
 SEC. III.] ON THt. PKOGIIESS OV M'EALTH. 3l29 
 
 that they are so Jbllowed more genera llyJbaiL-thcy 
 appear toHbe, because, in many countries, profits 
 are often thought to be high, owing to the higli 
 interest of money, when they are really low; and 
 because, universally, ^risk in employing capital has 
 precisely the same effect in diminishing the mo- 
 tive to accumukte and the reward of accumulation, 
 q^ low profits. At the same~Trme itjdll _be, allowed^ 
 that d eterminecT extrayag ance, and a determined in- 
 di sposition t o save, may keep profits per manejitly 
 higli. The most powenur stimulants may, under 
 peculiar circumstances, be resisted ; y et still it will 
 not cea se to b e true that the^aatural and l egitimatp 
 e ncouragem ent to the increase of capital is tliat in:;. 
 crease of the power and will to savejwhich is_^held 
 ofltJj)^(dertaji]ran6 ^sfea(i^ p^ and under circum- 
 
 stances jn any de^ree^simUar^ such^ inc rease of power 
 and will to s ave must almost always be accompanied 
 b y a proportionat e mcrease ^T capTtaTT 
 
 One of the mosFsFriking instances of the truth of 
 this remark, and a further proof of a singular resem- 
 blance in the laws that regulate the increase of capital 
 and of population, is to be found in the rapidity with 
 which the loss of capital is recovered during a war 
 ^vhich does not interrupt commerce. The loans to 
 government convert capital into revenue, and increase^ 
 demand at the same time that they at first diminish 
 the means of supply.* The necessary consequence 
 must be an increase of profits. This naturally in- 
 creases both the power and the reward of accumula- 
 tion ; and if only the same habits of saving prevail 
 among the capitalists as before, the recovery of the 
 lost stock must be rapid, just for the same kind of 
 
 * Capital is withdrawn only from those employments where it 
 can best be spared. It is hardly ever withdrawn from agriculture. 
 Nothing is more common, as I have stated in the Chapter on Rent, 
 than increased profits, not only without any capital being with- 
 drawn from the land, but under a continual addition to it. Mr. 
 Ricardo's assumption of constant prices would make it absolutely 
 impossible to account theoretically for things as they are. If 
 capital were considered as not within the pale of demand and
 
 330 ox iHE PROGRESS OF WEALTH. [CH. 1. 
 
 reason that the recovery of population is so rapid 
 after some great mortality. 
 
 It is now fully acknowledged that it would be a 
 gross error in the latter case, to imagine that, without 
 the previous diminution of the population, the same 
 rate of increase would still have taken place ; be- 
 cause it is precisely the high wages occasioned by the 
 demand for labour, which produce the effect of so 
 rapid an increase of population. On the same prin- 
 ciple it appears to me as gross an error to suppose that, 
 without the previous loss of capital and an increased 
 demand for produce occasioned by the expenditure in 
 question, capital should be as rapidly accumulated ; 
 because it is precisely the high profits of stock occa- 
 sioned by the demand for commodities, and the con- 
 sequent demand for the means of producing them, 
 which at once give the power and the will to accu- 
 mulate. 
 
 Though it may be allowed therefore that the laws 
 which regulate the increase of capital are not quite 
 so distinct as those which regulate the increase of 
 population, yet they are certainly just of the same 
 kind ; >and it is equally vain, with a view to the per- 
 manent increase of wealth, to continue converting re- 
 venue into capital, when there is no adequate demand 
 for the products of such capital, as to continue en- 
 couraging marriage and the birth of children without 
 a demand for labour and an increase of the funds for 
 its maintenance. 
 
 supply, the very familiar event of the rapid recovery of capital 
 would be quite inexplicable. The aniount of capital employed 
 on the land during the revolutionary war, was prodigiously in- 
 creased owing to the great increase of profits ; and although many 
 merchants and manufacturers were occasionally subjected to great 
 losses, yet the high rate of profits generally seemed more than to 
 balance them; and there cannot be a doubt of the increase both 
 of mercantile and manufacturing capitals.
 
 SEC. III.] OX THIi PUOGRESS OF M'EALTM. 331 
 
 Section IV. — Of the Fertility of the Soil, consi- 
 dered as a Stimulus to the co)itinued Increase of 
 Wealth. 
 
 In speaking of the fertility of the soil as not affording- 
 with certainty an adequate stimulus to the continued 
 increase of wealth, it must always be recollected 
 that a fertile soil gives at once the greatest natural 
 capability of wealth that a country can possibly pos- 
 sess. When the deficient wealth of such a country 
 is mentioned, it is not intended to speak positively, 
 but comparatively, that is with reference to its na- 
 tural capabilities; and so understood, the proposition 
 will be liable to few^ or no exceptions. Perhaps, in- 
 deed, it may be said that no instance has occurred, 
 in modern times, of a large and very fertile country 
 having made full use of its natural resources ; while 
 there have been many instances of small and unfertile 
 states having accumulated within their narrow limits, 
 by means of foreign commerce, an amount of wealth 
 very greatly exceeding what could be expected from 
 their physical capabilities. 
 
 If a small body of people were possessed of a rich 
 and extensive inland territory, divided into large por- 
 tions, and not favourably situated with respect to 
 markets, a very long period might elapse before the 
 state became wealthy and populous, notwithstanding 
 the fertility of the soil and the consequent facility of 
 production. The nature of such a soil would make 
 it yield a profit or rent to the owner in its uncultivated 
 state. He would set a value therefore upon his pro- 
 perty, as a source of profit as well as of power and 
 amusement ; and though it was capable of yielding 
 much more raw produce than he and his immediate 
 dependents could consume, he would by no means be 
 disposed to allow others to seize on it, and divide it 
 at their pleasure. He would probably let out consi- 
 derable portions of it for small rents. But the tenants
 
 332 ON THE PROGRESS OF WEALTH. [CH. I. 
 
 of these portions, if there were no foreign vent for the 
 raw produce, and the commodities which contribute 
 to the conveniences and luxuries of life were but little 
 known, would have but small incitement to call forth 
 the resources of his land, and give encouragement to 
 a rapid increase of population. By employing ten 
 families he might perhaps, owing to the richness of 
 the soil, obtain food for fifty ; but he would find no 
 proportionate market for this additional food, and 
 would be soon sensible that he had wasted his time 
 and attention in superintending the labour of so many 
 persons. He would be disposed therefore to employ 
 a smaller number ; or if, from motives of humanity, 
 or any other reason, he was induced to keep more 
 than were necessary for the supply of the market, 
 upon the supposition of their being tolerably indus- 
 trious, he would be quite indifferent to their industry, 
 and his labourers would naturally acquire the most 
 indolent habits. Such habits would probably be 
 generated both in the masters and servants by such 
 circumstances, and when generated, a considerable 
 time and considerable stimulants are necessary to get 
 rid of them. 
 
 It has been said, that those who have food and 
 necessaries at their disposal will not be long in want 
 of workmen, who will put them in possession of some 
 of the objects most useful and desirable to them.* 
 But this appears to be directly contradicted by ex- 
 perience. If the establishment, extension, and refine- 
 ment of domestic manufactures were so easy a matter, 
 our ancestors would not have remained for many 
 hundred years so ill supplied with them, and been 
 obliged to expend the main part of their raw produce 
 in the support of idle retainers. They might be very 
 ready, when they had the opportunity, to exchange 
 their surplus raw produce for the foreign commodities 
 with which they were acquainted, and which they 
 had learnt to estimate. But it would be a very difte- 
 
 * Ricardo's Princ. of Polit, Econ. ch. xxi. p. 342, 3rd edit.
 
 SEC. IV.] ON THE PROGRESS OF WEALTH. 333 
 
 rent thing, and very ill suited to their habits and de- 
 gree of information, to employ their power of com- 
 manding labour in setting up manufactures on their 
 own estates. Though the land might be rich, it 
 might not suit the production of the materials most 
 wanted ; and the necessary machinery, the necessary 
 skill in using it, and the necessary intelligence and 
 activity of superintendance, would all unavoidably be 
 deficient at first, and under the circumstances sup- 
 posed, must be of very slow growth ; so that after 
 those ruder and more indispensable articles were 
 supplied, which are always wanted and produced in 
 an early stage of society, it is natural enough that a 
 great lord should prefer distinguishing himself by a 
 few splendid foreign commodities, if he could get 
 them, and a great number of retainers, than by a large 
 quantity of clumsy manufactures, which involved 
 great trouble of superintendance. 
 
 It is certainly true, however,._taking.as^an instance 
 an individual workman, and supposing him to possess 
 _a,_given degree of industry and skill, that the less 
 tinie he is employed in procuring food, the more time 
 sdUJie be able to devote to the procuring of conve- 
 niences and luxuries ; but to apply this truth to whole 
 nations, and to infer that the greater is the facility of 
 procuring food, the more abundantly will the people 
 '5e~supplied with conveniences and luxuries would be 
 one among the many rash and false conclusions which 
 are often made in the application of a proposition 
 without due attention to all the parts of the premises 
 on which it rests. In the present case, all depends 
 upon the supposition of a given degree of industry 
 and skill, and the encouragement to employ them. 
 But if, after the necessaries of life were obtained, the 
 jw()rkman should consider indolence as a greater lux- 
 ury than those which he was likely to procure by 
 further labour, the proposition would at once cease to 
 be true. And as a matter of fact, confirmed by all 
 the accounts we have of nations, in the different stages 
 of their progress, it must be allowed that this choice
 
 334 0\ THE PROGRESS OF WJiALTH. [cil. I. 
 
 seems to be very general in the early periods of society, 
 and by no means uncommon in tlie most improved 
 states. 
 
 Fevt^ indeed and scanty would be the portion of 
 conveniences and luxuries found in society, if those 
 who are the main instruments of their production had 
 no stronoer motives for their exertions than the desire 
 of enjoying them. K is the want of )icc esmrks which 
 mainly stimulates tlie labouring classes t o produc e 
 luxuries ; and were this stimulus removed or greatly 
 weakened, so that the necessaries of life could be ob- 
 tained with very little labour, instead of more time 
 being devoted to the production of conveniences, there 
 is every reason to think that less time would be so 
 devoted. 
 
 At an early period of cultivation, when only rich 
 soils are worked, as the quantity of corn is the great- 
 est, compared with the quantity of labour required to 
 produce it, we might expect to find a small portion 
 of the population engaged in agriculture, and a large 
 portion engaged in administering to the other wants 
 of the society. And there can be little doubt that 
 this is the state of things which we really should see, 
 were it true, that if the means of maintaining labour 
 be found, there can be no difficulty in making it pro- 
 duce objects of adequate value ; or that when food 
 can be obtained with facility, more time will be de- 
 voted to the production of conveniences and luxuries. 
 But in examining the state of unimproved countries, 
 what do we really see? — almost invariably, a much 
 larger proportion of the whole people employed on 
 the land than in those countries where the increase of 
 population has occasioned the necessity of resorting to 
 poor soils ; and less time instead of more time devoted 
 to the production of conveniences and luxuries. 
 
 Of the great landed nations of Europe, and indeed 
 of the world, England, with hardly an exception, is 
 supposed to have pushed its cultivation the farthest ; 
 and though the natural qualities of its whole soil by 
 no means stand very high in the scale of comparative
 
 SEC. IV.] ON .HE PROGRESS OF WEALTH. 335 
 
 richness, there is a smaller proportion of the people 
 employed in agriculture, and a greater proportion em- 
 ployed in the production of conveniences and luxuries, 
 or living on monied incomes, than in any other agri- 
 cultural country of the world. According to a cal- 
 culation of Susmilch, in which he enumerates the dif- 
 ferent proportions of people in different states, who live 
 in towns, and are not employed in agriculture, the 
 highest is that of three to seven, or three living in 
 towns to seven in the country ;* whereas in England 
 the proportion of those engaged in manufactures and 
 commerce, and other employments not connected with 
 the land, compared with those engaged in agriculture 
 is as much as three to two.f 
 
 This is a very extraordinary fact, and affords a 
 striking proof how very dangerous it is, in political 
 economy, to draw conclusions from the physical qua- 
 lity of the materials which are acted upon, without 
 reference to the moral as well as the physical qualities 
 of the agents. 
 
 It is undoubtedly a physical quality of very rich 
 land, if worked by people possessing a given degree 
 of industry and skill, to yield a large quantity of pro- 
 duce, compared with the number of hands employed; 
 but, if the facility of production which rich land gives 
 has the effect, under certain circumstances, of pre- 
 venting the growth of industry and skill, the land may 
 become practically less productive, compared with the 
 number of persons employed upon it, than if it were 
 not distinguished for its richness. 
 
 Upon the same principle, the man who can procure 
 the necessary food for his family, by two days labour 
 in the week, has the physical power of working much 
 longer to procure conveniences and luxuries, than the 
 man who must employ four days in procuring food ; 
 
 * Susmilch, vol. iii. p. 60. Essay on Population, vol. i. p. 
 459. edit. 5th. In foreign states very few persons live in the 
 country who are not engaged in agriculture ; but it is not so in 
 England. 
 
 t Population Abstracts, 1811.
 
 336 ON THE PROGRESS Ol WEALTH. [CH. I. 
 
 but if the facility of getting food creates Jiabits of in- 
 dolence, tliis indolence may make liim prefer the lux- 
 ury of doing little or nothing, to the luxury of pos- 
 sessing conveniences and comforts ; and in this case, 
 he may devote less time to the working for couveni- 
 ences and comforts, and be more scantily provided 
 with them than if he had been obliged to employ more 
 industry in procuring food. 
 
 Among the crowd of countries which tend more or 
 less to illustrate and confirm by their present state 
 the truth of these positions, none perhaps will do it 
 more strikingly than the Spanish dominions in Ame- 
 rica, of which M. Humboldt has given so valuable an 
 account. 
 
 Speaking of the different plants which are culti- 
 vated in New Spain, he says of the banana, " Je doute 
 qu'il existe une autre plante sur le globe qui, sur un 
 si petit espace de terrain, puisse produire une masse 
 de substance nourrissante aussi considerable."* He 
 calculates in another place more particularly, that 
 " dans un pays eminemment fertile un demi hectare, 
 on un arpent legal cultive en bananes de la grande 
 espece, peut nourrir plus de cinquantes individus, 
 tandis qu'en Europe le meme arpent ne donneroit par 
 an, en supposant le huitieme grain, que 576 kilo- 
 grammes de farine de froment, quantite qui n'est pas 
 suffisante pour la subsistance de deux individus : aussi 
 rien ne frappe plus TEuropeen recemment arrive dans 
 la zone torride que I'extreme petitesse des terrains 
 cultives autour dune cabane qui renferme une famille 
 nombreuse d^indigenes.''^ 
 
 It appears further, that the banana is cultivated 
 with a very trifling quantity of labour, and '* se per- 
 petue sans que I'homme y mette d 'autre soin que de 
 couper les tiges dont le fruit a muri, et de donner a 
 la terre une ou deux fois par an un leger labeur en 
 piochant autour des racines.";]: 
 
 * Essai Politique sur la Nouvelle Espagne, torn. iii. I. iv. c. ix. 
 p. 28. 
 
 t Id. p. 36. : Id. p. '28.
 
 SEC. JV.] OX THE PROGRESS OF M'EALTH. 337 
 
 What immense powers of production are liere des- 
 cribed ! What resources for unbounded wealth, if 
 eftbctively called into action ? Yet what is the actual 
 state of things in this fertile region. M. Humboldt 
 says, " On entend souvent repeter dans les colonies 
 Espagnoles, que les habitans de la region chaude 
 (tieira caliente) ne pourront sortir de Tetat d'apathie 
 dans lequel ils sont plonges depuis des siecles, que 
 lorsqu une ccdule royalc ordonnera la destruction des 
 bananiers. Le remede est violent ; et ceux qui le 
 proposent avec tant de chaleur ne deploient general e- 
 ment pas plus d'activite que le bas-peuple qu'ils veu- 
 lent forcer au travail en augmentant la masse de ses 
 besoins. II faut esperer que I'industrie fera des pro- 
 gres parmi les Mexicains sans qu'on emploie des 
 moyens de destruction. En considerant d'ailleurs la 
 facilite avec laquelle Fhomme se nourrit dans un cli- 
 mat ou croissent les bananiers, on ne doit pas s'eton- 
 ner que dans la region equinoctiale du nouveau con- 
 tinent la civilisation ait commence dans les montagnes, 
 sur un sol moins fertile, sous un ciel moins favorable 
 au developpement des etres organises ou le besoin 
 meme reveille Findustrie. 
 
 " Au pied de la Cordillere dans les vallees humides 
 des Intendances de Vera-Cruz, de Valladolid; ou de 
 Guadalaxara, un homme qui employe seulement deux 
 jours de la semaine a un travail peu penible pent 
 fournir de la subsistance a une famille entiere."* 
 
 It appears then, that the extreme fertility of these 
 countries, instead of affording an adequate stimulus to 
 a rapid increase of wealth and population, has pro- 
 duced, under the actual circumstances in which they 
 have been placed, a degree of indolence which has 
 kept them poor and thinly peopled after the lapse of 
 ages. Though the labouring classes have such ample 
 time to work for conveniences and comforts, they are 
 almost destitute of them. And, even in the necessary 
 article of food, their indolence and improvidence pre- 
 
 * Humboldt's Nouvelle Espagne, torn. iii. 1. iv. c. ix. p. 38. 
 
 z
 
 338 ox THE PROGRESS OF WEALTH. [CH. I. 
 
 vent them from adopting those measures which would 
 secure them against the effects of unfavourable sea- 
 sons. M. Humboldt states that famines are common 
 to almost all the equinoctial regions ; and observes 
 that, " sous la zone torride, ou une main bienfaisante 
 semble avoir repandu le germe de Tabondance, Vhomme 
 insouciant et phlegmatique eprouve period iquement 
 un manque de nourriture que Findustrie des peuples 
 cultives eloigne des regions les plus steriles du 
 Nord."* 
 
 It isjpossible, lip wever, that the heat ofjhe clirnate 
 in these lower regions of New Spain, ancl^^i_iii£erior 
 degree of healthiness compared with the higher re- 
 gions, though by no means such as to preclude a full 
 population, may have assisted in keeping them poor 
 and thinly peopled. But when we ascend the Cor- 
 dilleras, to climates which seem to be the finest in the 
 world, the scene which presents itself is not essentially 
 different. 
 
 The chief food of the lower classes of the inhabi- 
 tants on the elevated plains of the Cordilleras, is 
 maize ; and maize, though not so productive, com- 
 pared with the labour employed upon it, as the ba- 
 nana, exceeds very greatly in productiveness the grains 
 of Europe, and even of the United States. Hum- 
 boldt states, that " La fecondite du thaoUi, ou mais 
 Mexicain, est au-dela de tout ce que Ton pent ima- 
 giner en Europe. La plante, favorisee par de fortes 
 chaleurs et par beaucoup d'humidite, aquiert une 
 hauteur de deux a trois metres. Dans les belles 
 plaines qui s'etendent depuis San Juan del Rio a 
 Quiretaro, par exemple, dans les terres de la grande 
 metairie de I'Esperanza, un fanegue de mais en pro- 
 duit quelquefois huit cents : des terreins fertiles en 
 donnent, annee commune, trois a quatre cents. Dans 
 les environs de Valladolid on regarde comme mau- 
 vaise une recolte qui ne donne que 130 ou 150 fois 
 la semence. La ou le sol est le plus sterile, on compte 
 
 * Id. torn. i. 1. ii. c. v. p. 358.
 
 SEC. IV.] OX THE PROGRESS OF WEALTH. 339 
 
 encore soixante ou quatre-vingt grains. On croit qu'en 
 general le produit du niais pent etre evalue dans la 
 region equinoctiale du royaume de la Nouvelle Es- 
 pagne a cent cinquante pour un."* 
 
 This great fertility produces, as might be expected, 
 its natural eftect of making the maintenance of a fa- 
 mily in ordinary times extremely easy. 
 
 In the town of Mexico itself, where provisions are 
 very considerably dearer than in the country, on ac- 
 count of the badness of the roads, and the expense of 
 carriage, the very dregs of the people are, according 
 to Humboldt, able to earn their maintenance by only 
 one or two days' labour in the week.j" " Les rues de 
 Mexico fourmillent de vingt a trent mille malheureux 
 ( Saragates Guachinaugos), dont la plupart passent 
 la nuit a la belle etoile, et s'etendent le jour au soleil, 
 le corps tout nu enveloppe dans une couverture de 
 flanelle. Cette lie du peuple, Indiens et Metis, pre- 
 sentent beaucoup d'analogie avec les Lazaronis de 
 Naples. Paresseux, insoucians, sobres comme eux, 
 les Guachinangos n'ont cependant aucune ferocite 
 dans le caractere; ils ne demandent jamais Taumone: 
 s'ils travaillent un ou deux jours par semaine, ils gag- 
 nent ce qu'il leur faut pour acheter du pulque, ou de 
 ces canards qui couvrent les lagunes Mexicaines, et 
 que Ton rotit dans leur propre graisse." 
 
 But this picture of poverty is not confined to the 
 dregs of the inhabitants of a large town. " Les In- 
 diens Mexicains, en les considerant en masse, presen- 
 tent le tableau d'une grande misere. Relegues dans 
 les terres les moins fertiles ; indolens par caractere, et 
 plus encore par suite de leur situation politique, les 
 natifs ne vivent qu'au jour le jour.";]; 
 
 With these habits they are little likely to make 
 provision against the occasional failures in the crops 
 of maize, to which these crops are peculiarly liable ; 
 
 * Essai Politique sur la Nouvelle Espagne, torn. iii. 1. iv. c. ix. 
 p. 56. 
 
 t Nouvelle Espagne, torn. ii. 1. ii. c. vii. p. 37. 
 I Tom i. 1. ii. c. vi. p. 429.
 
 340 ox THE PROGRKSS OF WEALTH. [CH. I. 
 
 and consequently, when such failures take place, they 
 are exposed to extreme distress. Speaking generally 
 of the immediate obstacles to the progress of popula- 
 tion in New Spain, Humboldt seems to consider fa- 
 mine and the diseases which it produces, as the most 
 cruel and destructive of all. " Les Indiens Ameri- 
 cains," (he says) " comme les habitans de Tlndostan, 
 sont accoutumes a se con tenter de la moindre quantite 
 dalimens qu'exigele besoin de la vie; ils augmentent 
 en nombie sans que I'accroissement des moyens de 
 subsistance soit proportionel a cette augmentation de 
 population. Indolens par caractere, ct surtout a cause 
 de la position dans laquelle ils se trouvent sous un 
 beau climat, sur un sol generalement fertile, les indi- 
 genes ne cultivent en mais, en pommes de terre, et en 
 froment que ce qu'il leur faut pour leur propre nour- 
 riture, ou tout au plus ce que requiert la consomma- 
 tion des villes et celle des mines les plus voisines." 
 And further on, he says, " le manque de proportion 
 qui existe entre les progres de la population et Tac- 
 croissement de la quantite d'alimens produite par la 
 culture, renouvelle le spectacle affligeant de la famine 
 chaque fois qu'unc grande secheresse ou quel que autre 
 cause locale a gate la recolte du mais."* 
 
 These accounts strikingly shew the indolence and 
 improvidence which prevail among the people. Such 
 habits must necessarily act as formidable obstacles in 
 the way of a rapid increase of wealth and population. 
 Where they have been once fully established, they are 
 not likely to change, except gradually and slowly 
 under a course of powerful and effective stimulants. 
 And while the extreme inequality of landed property 
 continues, and no suihcient vent is found for the raw 
 produce in foreign commerce, these stimulants will be 
 furnished very slowly and inadequately. 
 • That the indolence of the natives is greatly aggra- 
 vated by their political situation, cannot for a moment 
 be doubted ; but that, in spite of this situation, it 
 
 * Nouvelle Espagne, torn. i. liv. ii. o. v. pp. 355 et 356.
 
 SEC. I V.J ON THE PROGRESS OF WEALTH. 341 
 
 yields in a great measure to the usual excitements is 
 sufficiently proved by the rapid cultivation which takes 
 place in the neighbourhood of a new mine, where an 
 animated and effective demand is created for labour 
 and produce. " Bientot le besoin reveille I'industrie; 
 on commence a labourer le sol dans les ravins, et sur 
 les pentes des montagnes voisines, par tout ou le roc 
 est couvert de terreau : des fermes s'etablissent dans 
 le voisinage de la mine : la cherte des vivres, le prix 
 considerable auquel la concurrence des acheteurs 
 maintient tous les produits de Tagriculture, dedom- 
 magent le cultivateur des privations aux-quelles I'ex- 
 pose la vie penible des montagnes."* 
 
 When these are the effects of a really brisk demand, 
 for produce and labour, we cannot be at a loss for the 
 main cause of the slow cultivation which has taken 
 place over the greatest part of the country. Except 
 in the neighbourhood of the mines and near the great 
 towns, the effective demand for produce is not such 
 as to induce the great proprietors to bring their im- 
 mense tracts of land properly into cultivation : and the 
 population, which, as we have seen, presses hard at 
 times against the limits of subsistence, evidently ex- 
 ceeds in general the demand for labour, or the num- 
 ber of persons which the country can employ with 
 regularity and constancy in the actual state of its 
 agriculture and manufactures. 
 
 In the midst of an abundance of fertile land, it 
 appears that the natives are often very scantily sup- 
 plied with it. They would gladly cultivate portions 
 of the extensive districts held by the great proprietors, 
 and could not fail of thus deriving an ample subsist- 
 ence for themselves and families ; but in the actual 
 state of the demand for produce in many parts of the 
 country, and in the actual state of the ignorance and 
 indolence of the natives, such tenants might not be 
 able to pay a rent equal to what the land would yield 
 in its uncultivated state, andin this case they would 
 
 * Nouvelle Espagne, torn. iii. liv. iv. c. ix. p. 12.
 
 342 ox THE PROGRESS OF WEALTH. [CH. I. 
 
 seldom be allowed to intrude upon such domains ; and 
 thus lands which might be made capable of support- 
 ing thousands of" people, may be left to support a few 
 hundreds of cattle. 
 
 Speaking- of a part of the Intendency of Vera Cruz, 
 Humboldt says, " Aujourd'hui des espaces de plu- 
 sieurs lieues carrees sont occupes par deux ou trois 
 cabanes, autour desquelles errent des bceufs a demi- 
 sauvages. Un petit nombre de families puissantes, 
 et qui vivent sur le plateau central, possedent la plus 
 grande partie dii littoral des Intendances de VeraCruz, 
 et de San Luis Potosi. Aucune loi agraire ne force 
 ces riches proprietaires de vendre leurs majorats, s'ils 
 persistent a ne pas vouloir defricher eux-memes des 
 terres immenses qui en dependent." * 
 
 Among proprietors of this description, caprice and 
 indolence might often prevent many from cultivating 
 their lands. Generally, however, it might be expected, 
 that these tendencies would yield, at least in a consi- 
 derable degree, to the more steady influence of self- 
 interest. But a vicious division of territory prevents 
 the motive of interest from operating so strongly as it 
 ought to do in the extension of cultivation. Without 
 sufficient foreio-n commerce to oive value to the raw 
 produce of the land ; and before the general intro- 
 duction of manufactures had opened channels for do- 
 mestic industry, the demand of the great proprietors 
 for labour would be very soon supplied ; and beyond 
 this, the labouring classes would have nothing to give 
 them for the use of their lands. Though the land- 
 holders might have ample power to support an ex- 
 tended population on their estates, the very slender 
 increase of enjoyments, if any, which they might de- 
 rive from it, would rarely be sufficient to overcome 
 their natural indolence, or overbalance the possible 
 inconveniences or trouble that might attend the pro- 
 ceeding. Of that encouragement to the increase of 
 population, which arises from the division and sub- 
 
 * Nouvelle Espagnc, torn ii. 1. iii. c. viii. p. 342.
 
 SEC. IV.] ON THE PROGRESS OF WEALTH. 343 
 
 division of land as new families are brought into be- 
 ing, the country is deprived by the original state of 
 property, and the feudal customs and habits which it 
 necessarily tends to generate. And under these cir- 
 cumstances, if a comparative deficiency of commerce 
 and manufactures, which great inequality of property 
 tends rather to perpetuate than to correct, prevents the 
 growth of that demand for labour and produce, which 
 can alone remedy the discouragement to population 
 occasioned by this inequality, it is obvious that Spa- 
 nish America may remain for ages thinly peopled and 
 poor, compared with her natural resources. 
 
 And so, in fact, she has remained. For though the 
 increase of population and wealth has been conside- 
 rable, particularly of late years, since the trade with 
 the mother-country has been more open, yet altogether 
 it has been far short of what it would have been, even 
 under a Spanish government, if the riches of the soil 
 had been called forth by a better division of landed 
 property, or a greater and more constant demand for 
 raw produce. 
 
 Humboldt observes that " Les personnes qui ont 
 reflechi serieusement sur la richesse du sol Mexicain 
 savent que, par le moyen d'une culture plus soignee, 
 et sans supposer des travaux extraordinaires pour 
 I'irrigation des champs, la portion de terrain deja 
 defriche pourroit fournir de la subsistance pour une 
 population huit a dix fois plus nombreuse." He then 
 adds, very justly, " Si les plaines fertiles d'Atalisco, 
 de Cholula et de Puebla ne produisent pas des recoltes 
 plus abondantes, la cause principale doit etre cherchee 
 dans le manque des consommateurs, et dans les en- 
 traves que les inegalites du sol opposent au commerce 
 interieur des grains, surtout a leur transport vers les 
 cotes qui sont baignees par la mer des Antilles."* In 
 the actual state of these districts, the main and im- 
 mediate cause which retards their cultivation is in- 
 deed the want of consumers, that is, the want of 
 
 * Tom. iii. 1. iv. c. ix. p. 89.
 
 344 0\ THE PROGRESS OF WEAI.TH. [CH. 1. 
 
 power to sell the produce at such a price as will at 
 once encoiu'aoe <rood cultivation, and enable the far- 
 mers to give the landlords something that they want, 
 for the use of their land. And nothing is so likely 
 to prevent this price from being obtained, as any ob- 
 stacles natural or artificial to internal and external 
 commerce. 
 
 That the slow progress of New Spain in wealth and 
 population, compared with its prodigious resources, 
 \i has been more owing to want of demand than want of 
 \ capital, may fairly be inferred from the actual state 
 of its capital, whicli, according to Humboldt, is rather 
 redundant than deficient. Speaking of the cultivation 
 of sugar, which he thinks might be successfully car- 
 ried on in New Spain, he says, " La Nouvelle Es- 
 pagne, outre I'avantage de sa population, en a encore 
 un autre tres important, celui d une masse enorme de 
 capitaux amonceles chez les proprietaires des mines 
 ou entre les mains de negocians qui se sont retires du 
 commerce."* 
 
 Altogether the state of New Spain, as described by 
 Humboldt, clearly shews — 
 
 1st. That the power of supporting labour may exist 
 to a much greater extent than the will. 
 
 2dly. That the time employed in working for con- 
 veniences and luxuries is not always great in pro- 
 portion as the time employed in working for food is 
 small. 
 
 3dly. That the deficient wealth of a fertile country 
 may be more owing to want of demand than want of 
 capital. 
 
 And, in general, that fertility of soil alone is not 
 an adequate stimulus to the continued increase of 
 wealth. 
 
 It is not necessary, however, to go so far as the 
 Spanish dominions in America, to illustrate these pro- 
 positions. The state of the mother-country itself, and 
 of most of the countries of Europe, would furnish the 
 
 * Tom. iii. 1. iv. c. x. p. 178.
 
 SEC. IV.] OX THE PROGRESS OF AVEALTH. 345 
 
 same conclusions. We need not indeed go farther 
 than Ireland to see a confirmation of them to a very- 
 considerable extent. 
 
 The cultivation of the potatoe, and its adoption as 
 the general food of the lower classes of the people in 
 Ireland, has rendered the land and labour necessary 
 to maintain a family, unusually small, compared with 
 most of the countries of Europe. The consequence 
 of this facility of production, unaccompanied by such 
 a train of fortunate circumstances as would give it full 
 effect in the increase of wealth, is a state of things re- 
 sembling, in many respects, countries less advanced 
 in civilization and improvement. 
 
 ^he^^prominent feature of Ireland is, the power 
 which it possesses and actually exercises, of support- 
 ing a much greater population than it can employ, 
 and the natural and necessary effect of this state of 
 things, is the very general prevalence of habits of in- 
 dolence. The landed proprietors and principal tenants 
 bemg possessed of food and necessaries, or at least of 
 the ready means of pi'ocuring them, have found work- 
 men in abundance at their command ; but these work- 
 men not finding sufficient employment in the farms on 
 which they had settled, have rarely been able to put 
 their landlords in possession of the objects "most use- 
 ful and most desirable" to them. Sometimes, indeed, 
 from the competition for land occasioned by an over- 
 flowing population, very high rents have been given 
 for small portions of ground fit for the growth of po- 
 tatoes ; but as the power of paying such rents must 
 depend, in a considerable degree, upon the power of 
 getting work, the number of families upon an estate, 
 who can pay high money rents, must have an obvious 
 limit. This limit, there is reason to believe, has been 
 often found in the inability of the Irish cotter to pay 
 the rent which he had contracted for ; and it is gene- 
 rally understood that the most intelligent Irish land- 
 lords, influenced both by motives of humanity and in- 
 terest, are now endeavouring to check the progress of 
 that redundant population upon their estates, which,
 
 346 ON THE PROGRESS OF WEALTH. [CH. I. 
 
 while it generates an excessive degree of poverty and 
 misery as well as indolence, seldom makes up to the 
 employer, in the lowness of wages, for the additional 
 number of hands which he is obliged to hire, or call 
 upon for their appointed service in labour. He is 
 now generally aware that a smaller number of more 
 industrious labourers would enable him to raise a lar- 
 ger produce for the consumption of towns and manu- 
 facturers, and at the same time that they would thus 
 contribute more largely to the general wealth of the 
 country, would be in a more happy condition them- 
 selves, and enable him to derive a larger and more 
 certain rent from his estates. 
 
 /XThe indolence of the country-labourers in Ireland 
 has been universally remarked. And whether this 
 arises from there being really little for them to do in 
 the actual state of things,* or from a natural tendency 
 to idleness, not to be overcome by ordinary stimu- 
 lants ; it is equally true that the large portion of time 
 of which they have the command, beyond what is 
 employed in providing themselves with necessaries, 
 does not certainly produce the effect of making them 
 abound in conveniences and luxuries. The poor cloth- 
 ing and worse lodging of the Irish peasant are as well 
 known as the spare time which it might be expected 
 would be the means of furnishing him amply with all 
 kinds of conveniences. 
 
 In defence, however, of the Irish peasant, it may be 
 truly said, that in the state or society in which he has 
 been placed, he has not had a fair trial ; he has not 
 been subjected to the ordinary stimulants which pro- 
 duce industiious habits. In almost every part of the 
 island, particularly in the south and west, the popu- 
 
 * In applying labour as a rough measure of wealth, or in mea- 
 suring value in Ireland we must remember, as before intimated, 
 that we must take the price of the labour which is actually, and 
 with average constancy engaged, and not the price at which it 
 may be occasionally offered by a half employed population. The 
 caution which Adam Smith has given about the labour of cotters, 
 already referred to in this work, must be particularly attended 
 to.
 
 SEC. IV.] ON THE PROGRESS OF WEALTH. 347 
 
 lation of the country districts is greater than the ac- 
 tual business to be done on the land can employ. If 
 the people, therefore, were ever so industriously in- 
 clined, it is not possible for them all to get regular 
 employment in the occupations which belong to the 
 soil. In the more hilly parts of the country which 
 are devoted chiefly to pasture, this impossibility is 
 more particularly striking. A small farm among the 
 Kerry mountains may support perhaps a large family, 
 among whom are a number of grow^n-up sons ; but the 
 business to be done upon the farm is a mere trifle. 
 The greatest part of it falls to the share of the women. 
 What remains for the men cannot occupy them for a 
 number of hours equal to a single day in the week ; 
 and the consequence is, they are generally seen loi- 
 tering about, as if time was absolutely of no value to 
 them . 
 
 They might, one should suppose, with all this lei- 
 sure, employ themselves in building better houses, or 
 at least in improving them, and keeping them neat 
 and clean. But with regard to the first, some diffi- 
 culties may occur in procuring materials ; and with 
 regard to the second, it appears from experience, that 
 the object is either not understood, or not considered 
 as worth the trouble it would cost. 
 
 They might also, one should suppose, grow or pur- 
 chase the raw materials of clothing, and work them 
 up at home ; and this in fact is really done to a cer- 
 tain extent. Most of the linen and wollen they wear 
 is prepared by themselves. But the raw materials, 
 when not of home growth, cannot be purchased with- 
 out great diflftculty, on account of the low money 
 prices of labour ; and in preparing them for wear, the 
 temptations to indolence will generally be too power- 
 ful for human weakness, when the question is merely 
 about a work which may be deferred or neglected, 
 with no other effect than that of being obliged to wear 
 old clothes a little longer, where it can be done cer- 
 tainly without any violation of the customs of the 
 country.
 
 348 ox THE PIIOGRESS OF WEALTH. [CH. I. 
 
 If the Irish peasant could find such a market for the 
 result of his in-door occupations as would give him 
 constant employment at a lair money price, his habits 
 miiilit soon chanoe ; but it may be doubted whether 
 any larj^e body of people in any country ever acc^uired 
 reofular and industrious habits, where they were un- 
 able to get regular and constant work, and when, to 
 keep themselves constantly and beneficially employed, 
 it was necessary to exercise a great degree of provi- 
 dence, energy, and self-command. 
 
 It may be said, perhaps, that it is capital alone 
 which is wanted in Ireland, and that if this want were 
 supplied, all her people might be easily employed. 
 That one of the greatest wants of Ireland is capital 
 Avill be readily allowed ; but I conceive it would be 
 a very great mistake to suppose that the importation 
 of a large quantity of capital, if it could be eflected, 
 would at once accomplish the object required, and 
 create a quantity of wealth proportioned to the labour 
 which seems ready to be employed in its production. 
 The amount of capital which could be laid out in 
 Ireland in preparing goods for foreign sale, must 
 evidently depend upon the state of foreign markets ; 
 and the amount that could be employed in domestic 
 manufactures, must as evidently depend upon the 
 domestic demand. An attempt to force a foreign 
 market by means of capital, must necessarily occasion 
 a premature fall of profits, and might, after great 
 losses, be quite ineffectual ; and with regard to the 
 domestic demand, while the habits of the great mass 
 of the people are such as they are at present, it must 
 be quite inadequate to take oft' the products of any 
 considerable mass of new capital. In a country, 
 where the necessary food is obtained with so little la- 
 bour, and the population is still equal or nearly equal 
 to the produce, it is perhaps impossible that the time 
 not devoted to the production of food should create a 
 proportionate quantity of wealth, without a very de- 
 cided taste for conveniences and luxuries among the 
 lower classes of society, and such a power of pur-
 
 SEC. I V.J ON THE PROGRESS OF WEALTH. 349 
 
 chasing: as would occasion an effective demand for 
 them. But it is well known, that the taste of the 
 Irish peasant for articles of this description is yet to 
 be formed. His wants are few, and these wants he 
 is in the habit of supplying- principally at home. 
 Owing to the cheapness of the potatoe, which forms 
 the principal food of the lower classes of the people, 
 his money wages are low ; and the portion which re- 
 mains, after providing absolute necessaries, will go 
 but a very little way in the purchase of conveniences. 
 All these circumstances are most unfavourable to the 
 increase of wealth derived from manufactures destined 
 for home consumption. But the tastes and habits of 
 a large body of people are extremely slow in chang- 
 ing ; and in the mean time the application of capital 
 in larger quantities than was suited to the progress of 
 the change, would certainly fail to yield such profits 
 as would encourage its continued accumulation and 
 application in the same way, \Jn general it may be 
 said that demand is quite as necessary to the increase 
 0?" capital as the increase of capital is to demand. 
 They_mutually act upon aiid^ encourage each^ other, 
 and neitlier of them can proceed with vig our if t he 
 other be Feft far behind. 
 
 In the actual state of Ireland, I am inclined to 
 believe, that the check which the progress of her 
 manufactures has received, has been as much owing 
 to a want of demand as a want of capital. Her pe- 
 culiar distress upon the termination of the late war 
 had unquestionably t\iis origin, whatever might have 
 been the subsequent destruction of capital. And 
 the great checks to her manufactures formerly were the 
 unjust and impolitic restrictions imposed by England 
 which prevented, or circumscribed the demand for 
 them. 
 
 There is indeed in Ireland a fatal deficiency in one 
 of the greatest sources of prosperity, the perfect secu- 
 rity of property ; and till this defect is remedied, it is 
 not easy to so pronounce upon the degree in which the 
 redundant capital of England would flow into Ireland
 
 350 OK THE PROGRESS OF WEALTH. [CH. I. 
 
 with the best effect. Such a change could not fail 
 to produce a great increase in the effectual demand 
 for capital, as well as its supply ; but in the actual 
 state of things, there is reason to think that advances 
 of capital have sometimes been made with little bene- 
 ficial result. A certain definite assistance in parti- 
 cular establishments, or in facilitating the communi- 
 cations between one part of the country and another, 
 may be given by government with advantage ; but 
 any thing approaching to a forced supply of ca- 
 pital with a view to the general employment of the 
 people in the extension of cultivation, would infalli- 
 bly create an unnatural demand for labour which could 
 not be maintained, would tend to paralyse individual 
 efforts, and terminate in increased poverty and distress 
 among the labouring classes. 
 
 The state of Ireland in respect to the time and 
 labour necessary to the production of her food is such, 
 that her capabilities for manufacturing and commer- 
 cial wealth are prodigious. If under a state of things 
 where all kinds of property were secure an improved 
 system of agriculture were to raise the food and raw 
 materials required for the population with the smal- 
 lest quantity of labour necessary to do it in the best 
 manner, and the remainder of the people, instead of 
 loitering about upon the land, were engaged in ma- 
 nufactures and commerce carried on in great and 
 flourishing towns, Ireland would be beyond compa- 
 rison richer than England. This is what is wanted 
 to give full scope to her great natural resources ; and 
 to attain this state of things an immense capital is 
 undoubtedly required ; but it can only be employed 
 to advantage as it is gradually called for ; and a pre- 
 mature supply of it would be much less beneficial and 
 less permanent in its effects, than such a change in 
 the tastes and habits of the lower classes of people, 
 such an alteration in the mode of paying their labour 
 and such an improvement in the structure* of the 
 
 * There is nothing so favourable to effectual demand as a large 
 proportion of the middle classes of society.
 
 SEC. IV.] ON THE PROGRESS OF WEALTH. 351 
 
 whole society as would give both the lower and mid- 
 dle classes a greater will and power to purchase do- 
 mestic manufactures and foreign commodities. 
 
 Tiie state of Ireland then may be said to lead to 
 nearly the same conclusions as that of New Spain, 
 and to shew — ^ 
 
 That the power of employing labour on the part A 
 of landholders may often exist to a much greater ex- 1 
 tent than the will ; 
 
 That the necessity on the part of labourers of em- 
 ploying only a small portion of time in producing 
 food does not always occasion the employment of a I 
 greater portion of time in procuring conveniences and \ 
 luxuries ; | 
 
 That the deficiency of wealth in a fertile country I 
 may be more owing to want of demand than to want | 
 of capital ; ( 
 
 And, in general, that the fertility of the soil alone \ 
 is not an adequate stimulus to the permanent increase 
 of wealth. 
 
 Section V. — Of Inventions to save Laboin\ consi- 
 dered as a Stimulus to the continued Increase of 
 Wealth. 
 
 Inventions to save labour seldom take place to any 
 considerable extent, except when there is a decided 
 demand for them. They are the natural consequence of 
 improvement and civilization, and, in their more per- 
 fect forms, generally come in aid of the failing powers 
 of production on the land. The fertility of the soil, 
 being a gift of nature, exists whether it is wanted or 
 not ; and must often therefore exceed for many hun- 
 dred years the power of fully using it. Inventions, 
 which substitute machinery for manual exertions, 
 being the result of the ingenuity of man, and called 
 forth by his wants, will, as might be expected, seldom 
 exceed those wants. 
 
 But the same law applies to both. They both
 
 1352 ox THE PROGRESS Or WEALTH. [CH. I. 
 
 come under the head of facilities of production ; and 
 in both cases a full use cannot be made of this faci- 
 lity, unless the power of supply which it furnishes be 
 accompanied by an adequate extension of the market. 
 
 When a machine is invented, which, by savincy 
 labour, will bring goods into the market at ajnuch 
 cheaper rate. than before, the most usual effect. is 
 such an extension of the demand for the commodity, 
 by its being brought within the power of a much 
 greater number of purchasers, that the value of the 
 whole mass of goods made by the new machinery 
 greatly exceeds their former value ; and, notwithstand- 
 ing the saving of labour, more hands, instead ot fewer, 
 are required in the manufacture. 
 
 This eff'ect has been very strikingly exemplified in 
 the cotton machinery of this country. The consump- 
 tion of cotton goods has been so greatly extended 
 both at home and abroad, on account of their cheap- 
 ness, that the value of the whole of the cotton goods 
 and twist now made exceeds, beyond comparison, their 
 former value ; while the rapidly increasing population 
 of the towns of Manchester, Glasgow, &c. during the 
 last thirty years, amply testifies that, with a few tem- 
 porary exceptions, tlie demand for the labour con- 
 cerned in the cotton manufactures, in spite of the 
 machinery used, has been increasing very greatly. 
 
 When the introduction of machinery has this effect, 
 it is not easy to appreciate its enriching power, or its 
 tendency to increase both the value and quantity of 
 domestic and foreign commodities. 
 
 When however the commodity to which machinery 
 is applied is not of such a nature that its consumption 
 can extend with its cheapness, the increase of wealth 
 derived from it is neither so great nor so certain. 
 Still however it may be highly beneficial ; but the 
 extent of this benefit*' depends upon circumstances. 
 
 * Considering the manner in which I have expressed myself 
 here, it appears to me not a little extraordinary that I should 
 sometimes have been classed with Mr. Sismondi as an enemy to 
 machinery. If the reader will direct his attention to what I have
 
 SEC. v.] OX THE PROGRESS OF WEALTH. 353 
 
 Let us suppose a number of capitalists in the habit 
 of employing £20,000 each for labour, in a manufac- 
 ture of limited consumption, and that machines were 
 introduced which, by the saving- of labour, would 
 enable them to supply the actual demand for the 
 commodity with capitals of ten thousand pounds 
 each in the purchase of labour, instead of twenty. 
 There would, in this case, be a certain number often 
 thousand pounds, and the men employed by these 
 capitals, thrown out of employment. On the other 
 hand, there would be a portion of revenue set free for 
 the purchase of fresh commodities ; and this demand 
 would undoubtedly be of the greatest advantage in 
 encouraging the employment of the vacant capitals 
 in other directions. At the same time it must be re- 
 collected that this demand would not be a new one, 
 and, even when fully supplied, could only replace the 
 diminution of capital and profits in one department, 
 occasioned by the employment of so many ten thou- 
 sands, instead of twenty thousands. But in with- 
 drawing capital, a part of which must necessarily be 
 fixed, from one employment and placing it in another, 
 there is almost always a considerable loss. The use- 
 lessness of the old fixed capital would be at once a 
 loss of revenue to the amount of the former interest 
 and profits upon it. Even if the whole of the re- 
 mainder could be immediately employed, it would 
 probably be less in value : and on the whole, unless 
 more menial servants were used, many persons would 
 be thrown out of work ; and thus the power of the 
 whole capital and revenue to command the same 
 quantity of labour would evidently depend upon the 
 contingency of the vacant capitals being withdrawn 
 undim'mished from their old occupations, and finding 
 
 said, I think he must allow that it is hardly possible to say more 
 with truth. To maintain that the same extent of benefit will 
 result in all cases, and that there never can be the least difficulty 
 in finding new employments for capital at the same profits, does 
 appear to me, I own, an assertion equally contradicted hy all 
 just theory, and universal experience. 
 
 A A
 
 354 ox IHK PROGRIiSS OF \VEALTH. [CH. ^.c 
 
 immediately equivalent employment in others, ^i^ 
 this assumed facility of finding immediate employment 
 for fresh capital in new occupations with undiminished i 
 profits, appears to me to be contradicted by general | 
 experience ; and the supposition here made must be 
 allowed to present a case essentially distinct from that 
 where, as in most of our great manufactures, the ex- 
 tension of demand, owing to the cheapness occasioned 
 by machinery, has greatly increased the whole value 
 as well as the whole quantity of the produce. 
 
 If, in order to try the principle, we were to push it 
 farther, and to suppose that, without any extension of 
 the foreign market for our goods, we could by means 
 of machinery obtain all the commodities at present 
 obtained at home, with one third of the labour now 
 applied, is it in any degree probable that the mass of 
 vacant capitals could be advantageously employed, or 
 that the mass of labourers thrown out of work could 
 find the means of commanding an adequate share of 
 the national produce ? If there were other foreign 
 trades which, by means of the capital and labour 
 thrown out of employment, might be greatly extended, 
 the case would be at once quite altered, and the re- 
 turns of such trades might furnish stimulants suffi- 
 cient to keep up the value of the national income. 
 But, if only an increase of domestic commodities could 
 be obtained, there is every reason to fear that the ex- 
 ertions of industry would slacken. The peasant, who 
 might be induced to labour an additional number of 
 hours for tea or tobacco, might prefer indolence to a 
 new coat. The tenant or small owner of land, who 
 could obtain the common conveniences and luxuries 
 of life at one tliird of their former price, might not 
 labour so hard to procure the same amount of surplus 
 produce from the land. And the trader or merchant, 
 who would continue in his business in order to be able 
 to drink and give his guests claret and champagne, 
 might think an addition of homely commodities by no 
 means worth the trouble of so much constant atten- 
 tion.
 
 SEC. v.] ON THE PROGRESS OF WEAETH. 355 
 
 It has been said that, when there is an income 
 ready for the demand, it is impossible that there should 
 be any difficulty in the employment of labour and 
 capital to supply it, as the owner of such an income, 
 rather than not spend it, would purchase a table or 
 chair that had cost the labour of a hundred men for 
 a year. This may be true, in cases of fixed monied 
 revenues, obtained by inheritance, or with little or no 
 trouble. We well know that some of the Roman no- 
 bles, who obtained their immense wealth chiefly by 
 the expeditious mode of plunder, sometimes gave the 
 most enormous prices for fancied luxuries. A feather 
 will weigh down a scale when there is nothing in the 
 opposite one. But where the amount of the revenues 
 of a country_ depend, _in a considerable degree, upon 
 the exertion of labour, activity and attention, there 
 must be something in the conim_odi ties to_ be obtained 
 sufficiently desirable to balance this exertion, or the 
 _exertion will cease. And experience amply shews, 
 by the number of persons who daily leave off busi- 
 ness, when they might certainly have continued to im- 
 prove their fortunes, that most men place some limits, 
 however variable, to the quantity of conveniences and 
 luxuries which they will labour for ; and that very 
 few indeed would attend a counting-house six or eight 
 hours a day, in order to purchase commodities which 
 have no other merit than the quantity of labour which 
 has been employed upon them. 
 
 Still however it is true that, when a great revenue 
 has once been created in a country, in the shape of a 
 large mass of rents, profits and wages, a considerable 
 resistance will be made to any essential fall in its 
 value. It is a very just remark of Hume,* that when 
 the aflfairs of a society are brought to this situation ; 
 that is, when, by means of foreign trade, it has ac- 
 quired the tastes necessary to give value to a great 
 quantity of labour not employed upon actual neces- 
 saries, it may lose most of this trade, and yet continue 
 
 * Essays, vol. i, p. 293.
 
 356 ON THE PHOGUESS OF WEALTH. [CH. I. 
 
 great and powerful, on account of the extraordinary 
 efforts which would be made by the spare capital and 
 ingenuity of the country to refine home manufactures, 
 in order to supply the tastes already formed, and the 
 incomes already created. But if we were to allow 
 that the revenue of such a nation might, in this way, 
 by possibility be maintained, there is little chance of 
 its increasing ; and it is almost certain that it would 
 not have reached the same amount, without the mar- 
 ket occasioned by foreign commerce. 
 
 Of this I think we shall be convinced, if, in our 
 own country, we look at the quantity of goods which 
 we export chiefly in consequence of our machinery, 
 and consider the nature of the returns obtained for 
 them. In the accounts of the year ended the 5th of 
 January, 1818, it appears that the exports of three 
 articles alone in which machinery is used — cottons, 
 woollen and hardware, including steel goods, &c. are 
 valued at above 29 millions. And among the most 
 prominent articles of the imports of the same year, w^e 
 find coffee, indigo, sugar, tea, silks, tobacco, wines, 
 and cotton-wool, amounting in value altogether to 
 above 18 millions out of thirty ! Now J wojild .ask 
 how we should have obtained these valuable imports, 
 if the foreign markets for our cottons, woollens, and 
 hardware had not been extended with the use of ma- 
 chinery ? And further, where we could have found 
 substitutes at home for such imports, which would 
 have been likely to have produced the same effects, 
 in stimulating the cultivation of the land, the accu- 
 mulation of capital, and the increase of population ? 
 And when to these considerations we add the fortunes 
 which have been made in these manufactures, the 
 market for which has been continually extending, and 
 continually requiring more capital and more people 
 to be employed in them ; and contrast with this state 
 of things the constant necessity of looking out for new 
 modes of employing the same capital and the same 
 people, a portion of which would be thrown out j6f 
 their old occupations by every new invention ; — we
 
 SEC. V.J OX THE PROGRESS OF WEALTH. 357 
 
 must be convinced that the state of this country would 
 RaveH^een totally different from what it is, and that it 
 would not certainly have acquired the same revenue 
 in rents, profits and wages, if the same ingenuity had 
 been exercised in the invention of machinery, without 
 the saihe extension of the market for the commodities 
 
 It may justly be doubted, whether, at the present 
 moment, upon the supposition of our foreign inter- 
 course being interrupted, we should be likely to find 
 efficient substitutes tor teas, coffee, sugar, wines, silks, 
 indigo, cottons, &c. so as to keep up the value of our 
 present revenue ; but it cannot well be doubted, that 
 if, from the time of Edward the First, and setting out 
 with the actual division of landed property which then 
 prevailed, the foreign vent for our commodities had 
 remained stationary, our revenue from the land alone 
 would not have approached to what it is at present, 
 and still less, the revenue from trade and manufac- 
 tures. 
 
 Even under the actual division of the landed pro- 
 perty in Europe, which is very much better than it 
 was 500 years ago, most of the states of which it is 
 composed would be comparatively unpeopled, if it 
 were not for trade and manufactures. Without the 
 excitements arising from the results of this sort of in- 
 dustry, no sufficient motives could be presented to 
 great landholders either to divide their estates by sale, 
 or to take care that they were well cultivated. 
 
 According to Adam Smith, the most important 
 manufactures of the northern and western parts of 
 Europe were established either in imitation of foreign 
 articles, the tastes for which had been already formed 
 by a previous foreign trade, or by the gradual refine- 
 ment of domestic commodities till they were fit for 
 exportation.*' In the first case, the very origin of the 
 manufacture is made to depend upon a previous ex- 
 tension of market, and the importation of foreign ar- 
 
 ' Wealth of Nations, Vol. ii. B. iii. ch. iii. p, 1 15. 6th edit.
 
 358 ox THE PROGRESS OF WEALTH. [CH. I. 
 
 tides, and in the second case, the main object and 
 use of refining- tlie domestic commodities in an inland 
 country, appears to be the fitting them for an extensive 
 market, without which the local advantages enjoyed 
 ' would be in a o:reat measure lost. 
 
 In carrying on the late war, we were powerfully 
 assisted by our steam-engines, which enabled us to 
 command a prodigious quantity of foreign produce 
 and foreign labour. But how would their eflicacy 
 have been weakened if we could not have exported 
 our cottons, cloths and hardware ? 
 
 If the mines of America could be successfully 
 worked by machinery, and the King of Spain's tax 
 could be increased at will, so as to make the most of 
 this advantage, what a vast revenue might they not 
 be made to afford him ! But it is obvious that the 
 effectsof such machinery would sink into insignificance, 
 if the market for the precious metals were confined to 
 the adjacent countries, and the principal effect of it 
 was to throw capital and labour out of employment. 
 
 In the actual state of things in this country, the 
 population and wealth of Manchester, Glasgow, Leeds, 
 &c. have been greatly increasing ; because, on ac- 
 count of the extending demand for their goods, more 
 people have been continually recjuired to work them 
 up ; but if a much smaller number of people had been 
 re([uired, on account of a saving of labour from ma- 
 chinery, without an adequate extension of the market, 
 it is obvious that these towns would have been poorer, 
 and more thinly peopled. To what extent the spare 
 capital and labour thrown out of employment in one 
 district would have enriched others, it is impossible 
 to say ; and on this subject any assertion may be 
 made, as we cannot be set right by an appeal to facts. 
 But I would ask, whether there are any grounds in 
 the slightest degree plausible for saying, that not only 
 the capital spared at any time from these manufactures 
 would be preserved and employed elsewhere; but that 
 it would be employed as profitably, and create as much 
 exchangeable value in other places as it would have
 
 .SEC. v.] ON THE PllOGUESS OF WEALTH. 359 
 
 done in Manchester and Glasgow, with an extending- 
 market ? In short, are there any plausible grounds 
 whatever for stating that, if the twenty millions worth 
 of cottons which we now export, were entirely stopped, 
 either by successful foreign competition or positive 
 prohibitions, we should have no difficulty in finding 
 employment for our capital and labour equally ad- 
 vantageous to individuals in point of profit, and equally 
 enriching to the country with respect to the exchange- 
 able value of its revenue? 
 
 Unquestionably any country is entitled to consume 
 all that it produces, however great in quantity ; and 
 every man in health has the poiuer of applying his 
 mind and body to productive labour for ten or twelve 
 hours of the day. But these are dry assertions, which 
 do not necessarily involve any practical consequences 
 relating to the increase of wealth. If ju:e_cpuld not_ 
 export our cottons, it is quite„certainihat, though we 
 might have the power, we should not have the will, 
 to consume them all ourselves at such prices as would 
 pay the producers. The quantity produced therefore 
 would be very greatly diminished; and the main- 
 tenance of our national wealth and revenue would 
 depend upon the circumstance whether the capital 
 thrown out of the cotton trade could be so applied as 
 to p^roduce commodities which would be estimated as 
 highly and consumed as Tagefiy as the foreign goods 
 before imported. There is no, magic in. forfiigii. mar- 
 ket^. The final demand and consumption must al- 
 ways be at home ; and if goods could be produced at 
 home, which would excite people to work as many 
 hours in the day, would communicate the same en- 
 joyments, and create a consumption of the same va- 
 lue, foreign markets would be useless. We know 
 however from experience, that very few countries are 
 capable of producing commodities of the same effi- 
 cacy, in this respect, as those which may be obtained 
 by a trade to various climates and soils. Without 
 such a trade, and with a great increase in the power 
 of production, there is no inconsiderable danger that
 
 360 ON TIIL PKOGRtSS OF WEALTH. [CH. I. 
 
 industry, consumption, and exchangeable value would 
 diminish ; and this danger would most unquestionably 
 be realized if the cheapness of domestic commodities 
 occasioned by machinery, were to lead to increased 
 saving rather than to increased expenditure. 
 
 But it is known that facilities of production have 
 the strongest tendency to open markets, both at home 
 and abroad, hi jthe acUial state of things therefore, 
 there are oTeat advantag^es to be looked forward to, 
 and little reason to apprehend any permanent evil 
 from the increase of machinery. The presumption 
 always is, that it will le^d to a great extension both 
 of wealth and value. But still we must allow that 
 the pre-eminent advantages derived from the substitu- 
 s><r tion of machinery for manual labour, depend upon the 
 extension of the market for the commodities produced, 
 and the increased stimulus given to consumption ; 
 and that, without this extension of market and increase 
 of consumption, they must be in a considerable degree 
 diminished. Like the fertility of land, the invention 
 of good machinery confers a prodigious power of pro- 
 duction. But neither of these great powers can be 
 called fully into action, if the situation and circum- 
 stances, or the habits and tastes of the society prevent 
 the opening of a sufficient market, and an adequate 
 increase of consumption. 
 
 The three great causes most favourable to produc- 
 tion are, accumulation of capital, fertility of soil, and 
 inventions to save labour. They all act in the same 
 direction ; and as they all tend to facilitate supply, 
 *y without reference to demand, it is not probable that 
 they should either separately or conjointly afford 
 an adequate stimulus to the continued increase of 
 wealth.
 
 SEC. VI.] ON THE PROGRESS 01" WEALTH. 361 
 
 Section VI. — Of the Necessity of a Union of the 
 Poivers of Production ivith the Means of Distri- 
 bution, in order to ensure a continued Increase of 
 Wealth. 
 
 We have seen that the powers of production, to what- 
 ever^extent they may exist, are not alone sufficient to 
 secure the creation of a proportionate degree of weaUh. 
 Something else seems to be necessgjy in order to call 
 these powers fully into action! y^his is an effectual 
 and unchecked demand for all that is produced. And 
 what appears to contribute most to the attainment of 
 this object, is, such a distribution of produce, and such 
 an adaptation of this produce to the wants of those 
 who are to consume it, as constantly to increase the 
 exchangeable value of the whole mass. In a foi'mer 
 section, relating to the distinction between wealth and 
 value, it was observed, that where wealth and value 
 are perhaps most nearly connected, is in the general 
 necessity of the latter as a stimulus to the production 
 of the former. Unless the, estimation in which an ob- 
 ject is held, or the value which an individual, or the 
 society places on it when obtained, adequately com- 
 pensates the sacrifice which has been made to obtain 
 it, such wealth will not be produced in future. 
 
 In individual cases, the power of producing parti- 
 cular_commodities is called into action, in proportion 
 to the intensity of effectual demand for them; and 
 the greatest stimulus to their increase, independent of 
 improved facilities of production, is a high market 
 price, or an increase of their exchangeable value, be- 
 fore a greater value of capital has been employed 
 upon them. 
 
 In the same manner, the greatest stimulus to the 
 continued production of commodities, taken altoge- 
 ther, is an increase in the exchangeable value of the 
 whole mass, before a greater value of capital has been 
 employed upon them. 
 
 It has been stated in a preceding section, that if all
 
 362 ox THE I'llOGUESS OF WEALTH. [cil. 1. 
 
 the roads and canals of the country were broken up, 
 and the means of distributing its produce were essen- 
 tially impeded, the whole value of the produce would 
 greatly fall ; indeed, it is obvious that if it were so 
 distributed as not to be suited to the wants, tastes, 
 and powers of the actual population in different situa- 
 tions, its value might sink to such a degree as to be 
 comparatively quite inconsiderable. Upon the same 
 principle, if the means of distributingthe produce of the_ 
 country were still further facilitated, and if the adap- 
 tation of it to the wants and powers of the consumers 
 were more complete than at present, and better fitted 
 to inspire new tastes, there can be no doubt that a 
 great increase in the value of the whole produce 
 would follow ; first, in the shape of increased profits, 
 and then of increased quantity, without a propor- 
 tionate fall of value. 
 
 But to illustrate the power of distribution in in- 
 creasing the mass of exchangeable value, we need 
 only refer to experience. Before the introduction of 
 good roads and of canals in England, the prices of 
 produce in many country districts were extremel)Mow 
 compared with the same kind of produce in the Lon- 
 don markets. After the means of distribution were 
 facilitated, the price of country produce in the coun- 
 try, and of some sorts of London produce in London, 
 which were sent into the country in exchange for it, 
 rose ; and rose in a greater degree than the country 
 produce fell in the London markets, or the London 
 produce fell in the country markets ; and consequently 
 the value of the whole produce, or the supply of 
 London and the country together, was increased ; and 
 while encouragement was thus given to the employ- 
 ment of a greater quantity of capital by the exten- 
 {/ sion of demand, the temporary rise of profits, occa- 
 sioned by this extension, would greatly contribute to 
 furnish the additional capital and produce required. 
 It has never, I believe, occurred, that the better dis- 
 tribution of the commodities of a country occasioned 
 . by improved facilities of communiciilioii has failed
 
 SEC. VI.] OS THE PROGRESS OF V.EALTH. 363 
 
 to increase the value as well as the quantity of the 
 whole produce. ' 
 
 In estimating an increase in the value of the whole 
 produce, bullion, our most common measure of value, 
 might, in general, and for short periods, be safely re- 
 ferred to ; and though abstractedly considered, wealth 
 is nearly independent of money ; yet in the actual 
 state of the relations of the different countries of the 
 world with each other, it rarely happens that any 
 great increase or decrease in the bullion value of all 
 the commodities of a country takes place, without an 
 increase or decrease of demand for commodities, com- 
 pared with the supply of them. 
 
 It happens however, undoubtedly that in reference 
 to periods of some length, the value of bullion alters, 
 not only generally, but in particular countries ; and 
 it is not meant to be said that a country cannot -be 
 stimulated to an increase of wealth after a fall has 
 taken place in the money-price of all its commodities. 
 When, therefore, there is any doubt, in regard to a 
 change in the value of money we must refer to that 
 standard, the utility and corapaj-aiive correctness of 
 which I have endeavoured to es ablish ; and in refe- 
 rence to which Adam Smith himself, says, " Labour, be 
 it remembered, and not any particular commodity or set 
 of commodities, is the real measure of the value both 
 of silver and of all other commodities."* 
 
 General wealth, like particular portions of it, will 
 always follow effectual demand. Whenever there is 
 a great demand for commodities, that is, whenever 
 the whole mass will command a greater quantity of 
 standard labour than before, without any greater value 
 of capital having been required to produce them, 
 there is the same kind of reason for expecting a ge- 
 neral increase of commodities, as there is for expect- 
 ing an increase of particular commodities when their 
 market-prices rise ; without a corresponding rise in 
 their money-cost of production. And on the other 
 
 * Book [. ch. xi.
 
 364 ON THE PROGRESS OF WEALTH. [CH. 1. 
 
 hand, whenever the produce of a country cbtimated in -. 
 the labour which it will command falls in value, || 
 while the same value of advances is continued, the 
 power and will to set labourers to work will be di- 
 minished and the increase of produce must, for a 
 time, be checked. 
 
 Mr. Ricardo, in his chapter on Value and Riches, 
 has stated that " a certain quantity of clothes and 
 provisions will maintain and employ the same number 
 of men, and will therefore procure the same quantity 
 of work to be done, whether they be produced by the 
 labour of a hundred or of two hundred men ; but 
 they will be of twice the value, if two hundred have 
 been employed in their production."* But, even 
 taking his own peculiar estimate of value, this state- 
 ment would never be true. The clothes and provi- 
 sions which had cost only one hundred days' labour 
 would never, but in the most unnatural state of things, 
 be able to procure the same quantity of work to be 
 done as if they had cost two hundred days' labour. 
 To suppose it, is to suppose that profits are at cent, 
 per cent., and that the price of labour, estimated in 
 necessaries, is the s; Tie at all times and in all coun- 
 tries, and does not depend upon the plenty or scarcity 
 of necessaries compared with labour, a supposition 
 contradicted by universal experience. Nine quarters 
 of wheat will perhaps command a year's labour in 
 England ; but eighteen quarters will hardly procure 
 the same quantity of work to be done in America. 
 And the great variety of corn wages in different coun- 
 tries at the same time, and in the same country at dif- 
 ferent times shows most clearly that it is not the 
 quantitij of necessaries, but their value which deter- 
 mines their efficiency in setting labourers to work, 
 and that whatever increases their value will at the 
 same time increase their efficiency, and whatever di- 
 minishes their value will diminish it. 
 
 Nor is the remark less applicable to those articles 
 
 ^ Piinc. of Poliu Econ. ch. xx. p. 349.
 
 SEC. VI.] ON THE PROGRESS OF WEALTH. 365 
 
 which are denominated luxuries, than it is to the 
 necessaries of life, for although such commodities do 
 not in kind form any part of the funds which are des- 
 tined for the maintenance of ordinary labour, yet an 
 increase in their value gives to those who produce them 
 a greater command over those funds, which form the 
 most stimulus to an increase of their quantity. In 
 every case, therefore, a continued increase in the value 
 of the whole produce estimated in labour seems to be 
 necessary to a continued and unchecked increase of 
 wealth ; because without such an increase of value it 
 is obvious that no fresh labour can be set in motion. 
 And in order to support this value it is necessary that 
 an effective distribution of the produce should take 
 place, and a due proportion be maintained between 
 the objects to be consumed and the number, wants, 
 and powers of the consumers, or, in other words, be- 
 tween the supply of commodities and the demand for 
 them. 
 
 It has already been shown that the value of the 
 whole produce cannot be maintained in the case of a 
 rapid accumulation of capital occasioned by an ac- 
 tual and continued diminution in the expenditure and 
 consumption of the higher classes of society in the 
 form of revenue.* '^et it will be most readily allowed 
 that the saving from revenue to add to capital is an 
 absolutely necessary step in the progress of wealth. 
 How then is this saving to take place without pro- 
 djJLCins, the dimirmtipn of v^ .? 
 
 (J^may take place, and practically almost always 
 does take place, in consequence of a previous increase 
 in the value of the national revenue, in which case a 
 saving may be effected, not only without any diminu- 
 tion of demand and consumption, but under an actual 
 increase of demand, consumption and value during 
 every part of the process. And it is in fact- this pre- 
 vious increase in the value of the national revenue 
 which both gives the great stimulus to accumulation, 
 
 * Sect. III. of this chapter.
 
 366 ON im-; phogrkss of wkaT-TH. [cii. i. 
 
 , and makes tliat accumulation eftective in the con- 
 / tinned production of wealth. 
 
 M. Sismondi, in his late work, speaking of the li- 
 mits of accumulation, observes, " On ne fait jamais 
 apres tout qu'echanger la total ite de la production de 
 I'annee contre la totalite de la production de Tannee 
 precedente."* If this were really the case, it would 
 be difficult to say how the value of the national pro- J 
 duce could ever be increased. But in fact a great * 
 increase of productions may immediately find an ade- 
 (|uate market, and experience consequently a great 
 increase of exchangeable value, if they are so well 
 distributed and so well adapted to the tastes and 
 wants of the society as to excite the desire of making 
 an adequate sacrifice in order to procure and consume 
 them. In fact, such an increase of value always really 
 takes place on occasion of an increased foreign demand 
 for commodities; and unquestionably a similar in- 
 crease of value would take place in the case of such 
 
 * NouveauxPrincipesd'Economie Politique, torn, i. p. 1-20. I 
 agree with M. Sismondi in some of his principles respecting con- 
 sumption and demand ; but I do not think that the view which he 
 takes of the formation of national revenue, on which all increase 
 of consumption and demand depends, is just ; and I can by no 
 means go with him in the fears which he expresses about ma- 
 chinery, and still less in the opinion which he holds respecting the 
 necessity of a frequent interference on the part of government to 
 protect individuals, and classes, from the consequences of compe- 
 tition. With regard to population, he has misunderstood my 
 work more than I could have expected from so able and distin- 
 guished a writer. He says, that my reasoning is completely so- 
 phistical, because I have compared the virtual increase of popu- 
 lation with the positive increase of food. But surely I have com- 
 pared the virtual increase of population with the virtual increase 
 of food ; and the positive increase of population with the posi- 
 tive increase of food ; and the greater part of my book is taken 
 up with the latter comparison. Practically M. Sismondi goes 
 much farther than I do in his apprehensions of a redundant po- 
 pulation, and proposes to repress it by all sorts of strange means. 
 I never have recommended, nor ever shall, any other means than 
 those of explaining to the labouring classes the manner in which 
 their interests are affected, by too great an increase of their num- 
 bers, and of removing or weakening the positive laws which tend 
 to discourage habits of prudence and foresight.
 
 SEC. VI.] 0\ THE PROGUESS OF WEALTH. 3G7 
 
 a production and distribution of domestic commodities 
 as better to suit the tastes and desires of the domestic 
 consumers. 
 
 Tliejbrtune of a country, though necessarily made 
 more slow, is made in the same way as the fortunes of 
 individuals in trade are generally made, — hyHavhigs, 
 ceptainly ; but by savings which are furnished from 
 im^reased gains, and by no means involve a diminished 
 expenditure on objects of luxury and enjoyment. 
 
 Many a merchant has made a large fortune al- 
 though, during the acquisition of this fortune, there 
 was perhaps hardly a single year in which he did not 
 rather increase than diminish his expenditure in ob- 
 jects of luxury, enjoyment, and liberality. The amount 
 of capital in this .countrjLis_immense, and it certainly 
 receiyed very great additions during the last forty 
 j^.ars; but on looking back, few traces are to be 
 jEound of a diminished expenditure in the shape of re- 
 venue. If some such traces however are to be found, 
 they will be found in exact conformity to the theory 
 here laid down ; they will be found during a period, 
 when, from particular circumstances, the value of the 
 national produce was not maintained, and there was 
 in consequence a diminution of the power of expen- 
 diture, and a comparative check to the production of 
 wealth. 
 
 Perhaps it will be said, that to lay so much stress 
 on distribution, and to measure the increase of de- 
 mand by the increase of the exchangeable value of the 
 whole produce, is to exalt the gross revenue at the 
 expense of the neat revenue of a country, and to fa- 
 vour that system of cultivation and manufacturing 
 which employs on each object the greatest number of 
 hands. But I have already shewn that the saving of 
 labour, and the increase of skill, both in agricultural 
 and manufacturing industry, by enabling a country 
 to push its cultivation over poorer lands, without di- 
 minution of profits, and to extend far and wide the 
 markets for its manufactures, must tend to increase 
 the exchangeable value of the whole ; and there can-
 
 368 ON THE PROGRESS OF WEALTH. [CU. I. 
 
 not be a doubt tliat in this country they must have 
 been the main sources of that rapid and astonishing 
 increase in the value of the national wealth, which 
 has taken place during the last thirty or forty years. 
 
 To dwell therefore mainly on the gross revenue of 
 a country rather than on its neat revenue is in no re- 
 spect to under-rate the prodigious advantage derived 
 from skill and machinery, but merely to give that im- 
 portance to the value of the whole produce to which 
 it is so justly entitled. No description of national 
 wealth, which refers only to neat revenue, can ever 
 be in any degree satisfactory. The economists de- 
 stroyed the practical utility of their works by refer- 
 ring exclusively to the neat produce of the land. 
 And the writers who make wealth consist of rents and 
 profits, to the exclusion of wages, commit an error 
 exactly of the same kind though less in degree. 
 Those who live upon the wages of labour, including 
 of course those engaged in personal services, receive 
 and expend much the greatest part of the annual pro- 
 duce, pay a very considerable sum in taxes for the 
 maintenance of the government, and form by far the 
 largest portion of its physical force. Under the pre- 
 valence of habits of prudence, the whole of this vast 
 mass might be nearly as happy as the individuals of 
 the other two classes, and probably a greater number 
 of them, though not a greater proportion of them, 
 happier. In every point of view therefore, both in 
 reference to that part of the annual produce wdiich falls 
 to their share, and the means of health and happiness 
 which it may be presumed to communicate, those who 
 live on the wag-es of labour must be considered as the 
 most important portion of the society ; and any defi- 
 nition of wealth which should involve such a diminu-' 
 tion of their numbers, as to require for the supply of 
 the whole population a smaller annual produce, must 
 necessarily be erroneous. 
 
 In the First Chapter of this Work, having defined 
 wealth to be " the material objects which are neces- 
 sary, useful, and agreeable to mankind," I stated as a
 
 SEC. Vf.] OX THE PKOGRF.SS OK WEALTH. 369 
 
 consequence that a country was rich or poor accord- 
 ing- to the abundance or scantiness in which these ob- 
 jects were supplied, compared with the extent of ter- 
 ritory. It will be readily allowed that this definition 
 does not include the question of what may be called 
 the amount of disposable produce, or the fund for 
 taxation ; it is nevertheless a much more correct defi- 
 nition of the wealth of a country than any that should 
 refer to this disposable part alone in the sense under- 
 stood, either by the French economists, who confine 
 it to neat rent, or by Mr. Ricardo who confines it to 
 rents and profits. What should we say of the wealth 
 of this country, if it were possible that its rents and 
 profits could remain the same, while its population 
 and produce were reduced two-thirds ? Certainly it 
 would be much poorer according to the above defini- 
 tion ; and surely there are not many that would dissent 
 from such a conclusion. 
 
 That it would be desirable, in a definition of na- 
 tional wealth, to include the consideration of dispo- 
 sable produce, as well as of actual quantity and value, 
 cannot be doubted ; but such a definition seems to be 
 in its nature impossible, because in each individual 
 case it must depend upon opinion, what increase of 
 disposable produce should be accounted equivalent 
 to a given diminution of gross produce. 
 
 We must content ourselves therefore with referring 
 generally to the amount and value of national pro- 
 duce ; and it may be subsequently stated as a sepa- 
 rate, though very important ccnsideration, that par- 
 ticular countries, with the same amount and value of 
 produce, have a larger or smalhr proportion of that 
 produce disposable. In this respect, no doubt, a 
 country with a fertile territory WjU have a prodigious 
 advantage over those whose wealta depends almost en- 
 tirely on manufactures. With tie same population, 
 the same rate of profits and wfcges, and the same 
 amount and value of produce, the hnded nation would 
 have a much larger portion of its wenlth disposable, 
 or in other words, a larger r*-^ - ' f its population
 
 370 ox liiK i>uo(;kl:s.s of wealth. [cm. i. 
 
 niiolit enjoy leisure, or be engaged in personal services 
 without prejudice to its wealth. 
 
 Fortunately, it liappens but seldom that we have to 
 determine the amount of advantage or disadvanta^-^ 
 occasioned by the increase of the neat, at the expense 
 of the gross revenue. The interest of individual ca- 
 pitalists uniformly ^ronipts them to the sayings of la- 
 bour, in whatever business they ^are. engaged ; and 
 both theory and experience combine to shew that 
 their successful efforts in this direction, by increasing 
 the powers of production, afford the means of increas- 
 ing, in the greatest practicable degree, the amount 
 ana value of the gross produce,* provided alwa}'s_that 
 such a distribution and consumption of the increased 
 supnly of commodities takes place as constantly to in- 
 crease their exchangeable value. 
 
 The reader will be aware, from what has been said 
 in this section, that in dwelling on the importance of 
 distribution as a main cause of the immediate progress 
 of wealth, I by no means confine the terms to that 
 process which in reference to commodities in ordinary 
 use, prevents cottons which are }wt wanted from being 
 
 * From what has been here said, the reader will see that I can 
 by no means agree with Mr. Ricardo, in his chapter On Gross and 
 Net Revenue. I should not besitate a moment in saying, that a 
 country with a neat revenue /Vom rents and profits, consisting of 
 food and clothing for five iiiillions of men, would be decidedly 
 richer and more powerful, if such neat revenue were obtained 
 from seven millions of mei, rather than five, supposing them to 
 be equally well supported. The whole produce would be greater ; 
 and the additional two millions of labourers would some of them 
 unquestionably have a part of their wages disposable. I agree, 
 however, with Mr. Ricardo, in approving all saving of labour 
 and inventions in maclr.nery ; but it is because I think that 
 their tendency is to increase the gross produce and to make room 
 for a larger population aid a larger capital. If the saving of la- 
 bour were to be accomvanied by the effects stated in Mr, Ri- 
 cardo's instance, I shoulc agree with M. Sismondi and Mr. Owen 
 in deprecating it as a gr;at misfortune. 
 
 Mr. Ricardo, in his Ust edition, allows in a note that he has 
 perhaps expressed himsdf too strongly on this subject, and that 
 the labourer may liave lome portion of the net produce of the 
 country ; but he ha agrfcixoied the text.
 
 SEC. VI.] ON THE PROGRESS OF WEALTH. 37 J 
 
 brought into the market, instead of woollens winch 
 are wanted. The persevering productiqii^ofcottons, 
 when very much larger prohts miglit "be made by 
 producing woollens is too gross an error not to be soon 
 corrected in any country, and least of all in such a 
 country as this. The distribution, which I mean, is 
 not so readily accomplished. It is that which effects 
 the best adaptation of the supplies of produce, both 
 in quantity and quality, to the actual tastes and wants 
 of the consumers, and creates new tastes and wants 
 by means of greater facilities of intercourse. Such 
 a distribution by new commodities from foreign coun- 
 tries, by the growth of large towns in agriculture, 
 involving, by the increase of the middle classes of 
 society, a gradual improvement in the structure of 
 the society, is of slow and difficult accomplishment. 
 To increase indeed, the proportion of the demand to 
 the supply without a diminution of the produce is no 
 easy task. We may know, that the opening of new 
 channels of trade, and the extension of markets both 
 at home and abroad will give us what we want ; but 
 these are objects which it is rarely in the power of a 
 peopl^^r a government to accomplish at will. 
 
 m general, an increase of produce and an increase \ 
 of value go on together; and tliis is that natural and] 
 healthy state of things, which is most favourable to 
 the progress of wealth. An increase in the quantity of 
 produce depends chiefly upon the power of production, 
 and an increase in the value of produce upon its distri- 
 bution. Production and distribution are the two grand -^ 
 elements of wealth, which, combined in their due 
 proportions, are capable of carrying the riches and 
 population of the earth in no great length of time to 
 the utmost limits of its possible resources; but which 
 taken separately, or combined in undue proportioris, 
 produce only, after the lapse of many thousand years, 
 the scanty riches and scanty population, which are at 
 present scattered over the face of the globe.
 
 372 ox THE PROGRESS OF WEALTH. [CH. I. 
 
 Section VII. — Of the Distribution occasioned hif the 
 Division of landed Property considered as the 
 Aleans of increasing the exchangeable Value of the 
 ichole Produce. 
 
 The causes most favourable to tliat increase of j^bIuc 
 which depends upon distribution are, 1st, the division 
 of landed property ; 2dly, internal and external com- 
 merce ; Sdly, the maintenance of an adequate propor- 
 tion of the society employed in personal services, or 
 otherwise entitled to make a demand for material pro- 
 ducts without contributing directly to their supply. 
 
 In the first settlement and colonization of new coun- 
 tries, an easy division and subdivision of the land is 
 a point of the very highest importance. Without a 
 facility of obtaining land in small portions by those 
 who have accumulated small capitals, and of new 
 proprietors settling upon the soil, as new families 
 branch off from the parent stocks, no adequate effect 
 can be given to the principle of population. This 
 facility of settling upon the soil, as the population in- 
 creases, is still more imperiously necessary in inland 
 countries, which are not favourably situated for ex- 
 ternal and internal commerce. Countries of this de- 
 scription, if, from the laws and customs relating to 
 landed property, great difficulties are thrown in the 
 way of its distribution, may remain for ages very 
 scantily peopled, in spite of the principle of popula- 
 tion ; while the easy division and subdivision of the 
 land as new families arise to be provided for, might, 
 with comparatively little commerce, furnish an eft'ective 
 demand for population, and create a produce which 
 would have no inconsiderable value in exchange. 
 Such a country would probably have a small neat 
 produce compared with its gross produce ; it would 
 also be greatly deficient in the amount of its manu- 
 factures and mercantile products ; yet still its actual 
 produce and population might be respectable ; and
 
 SEC. VJJ.] ON THE PROGRESS OF WEALTH. 373 
 
 for the increase of exchangeable value which had 
 produced these effects, it would be mainly indebted 
 to that distribution of the produce which had arisen 
 from the easy division of land. 
 
 The rapid increase of the United States of Ame- 
 rica, taken as a whole, has undoubtedly been aided 
 very greatly by foreign commerce, and by the power 
 of selling raw produce, obtained with little labour, for 
 European commodities of a kind which, if made at 
 home, would have cost much labour. But the culti- 
 vation of a great part of the interior territory has de- 
 pended essentially upon the easy division of landed 
 property. The facility with which even common 
 workmen, if they were industrious and economical for 
 some years, could become new settlers and small pro- 
 prietors of land, has given prodigious effect to that 
 high money price of labour, which could not have 
 taken place without foreign commerce : and together 
 they have occasioned yearly that extraordinary in- 
 crease of exchano-eable value, which has so distin- 
 guished the progress of the establishments in North 
 America, compared with any others with which we 
 are acquainted. 
 
 Over almost all Europe a most unequal and vicious 
 division of landed property was established by con- 
 quest on the breaking up of the Western Roman 
 Empire, and subsequently during the feudal times. 
 In some states the laws, which protected and per- 
 petuated this division, have been greatly weakened, 
 and by the aids of commerce and manufactures have 
 been rendered comparatively inefficient. But in others 
 these laws still remain in great force, and throw very 
 great obstacles uy the way of increasing wealth and 
 population. A^ery large proprietorj surrounded by 
 very poor peasants, presents a distribution of property 
 most unfavourable to effectual demand. 
 
 Adam Smith has well described the slack kind of 
 cultivation which was likely to take place, and did in 
 fact take place, among the great proprietors of the 
 middle ages. But not only were they bad cultivators
 
 / 
 
 374 ON THE PKOGRtbS Ol' WEALTH. [CH. I. 
 
 and improvers ; and for a time perhaps deficient in a 
 proper taste for manufactured products ; yet, even if 
 they had possessed these tastes in the degree found 
 to prevail at present, their inconsiderable numbers 
 would have prevented their demand from producing 
 any important mass of such wealth. We hear of 
 great splendour among princes and nobles in every 
 period of history. The difficulty was_ not s^ much to 
 inspire the rich with a love of finery, as to break 
 down their immense properties, and to create a greater 
 number of demanders in the middle ranks of life who 
 were able and willing to purchase the results of pro- 
 ductive labour. This, it is obvious, could only be 
 eftected very gradually. That the increasing love of 
 finery assisted considerably in accomplishing this ob- 
 ject is highly probable ; but these tastes alone, unac- 
 companied by a better distribution of property in 
 other respects, would have been quite inefficient. The 
 possessor of numerous estates, after he had furnished 
 his mansion or castle splendidly, and provided him- 
 self with handsome clothes and handsome carriages, 
 would not change them all every two months, merely 
 because he had the power of doing it. Instead of 
 indulging in such useless and troublesome changes, 
 he would be more likely to keep a number of servants 
 and idle dependants, to take lower rents with a view 
 of having a greater command over his tenants, and 
 perhaps to sacrifice the produce of a considerable 
 portion of his land in order to encourage more game, 
 and to indulge, with more etiect and/fess interruption, 
 in the pleasures of the chase. Thirty or forty pro- 
 prietors, with incomes answering to between one thou- 
 sand and five thousand a year, would create a much 
 more effectual demand for the necessaries, conve- 
 niences, and luxuries of life, than a single proprietor 
 possessing a hundred thousand a year. 
 
 It is_ph3'sically possible indeed for a nation, with a 
 comparatively small body of very rich proprietors, and 
 a large body of very poor workmen, to push both the 
 produce of the land and of manufactures (o the greatest
 
 SEC. VII.] ON THE PROGRESS OF WEALTH. 375 
 
 extent, ^hat the resources and ingenuity of the coun- 
 try would admit. But, in order to do this, we must 
 suppose a passion among the rich for the consump- 
 tion of manufactures, and the results of productive 
 labour, much more excessive than has ever been wit- 
 nessed in human society. And the consequence is, 
 that no instance has ever been known of a country 
 which has pushed its natural resources to a great 
 extent, with a small proportionate body of persons of 
 property, however rich and luxurious they might be. 
 Practically it has always been found that the exces- 
 sive wealth of til e few is in no respect equivalent,. 
 with regard to effectual demand, to the more mode- 
 rate wealth of the many. A large body of manu- 
 facturers and merchants can only find a market for 
 their commodities among a numerous class of consu- 
 mers below the rank of the great proprietors of 
 1 and . Alid experience shews us jhat man u factiiring 
 vyealth is at once the consequence of a better distribu- 
 tion of property, and the cause of further improve- 
 ments in such distribution, by the increase in the pro- 
 portion of the middle classes of society, which the 
 growth of manufacturing and mercantile capital can- 
 not fail to create. 
 
 But though it be true that the division of landed 
 property, and the diffusion of manufacturing avid mer- 
 cantile ^capita] to a certain__extent, are of the utmost 
 inrportance to the increase of wealth ; yet it is equally 
 true that, beyond a certain extent, they would impede 
 the progress of wealth as much as they had before 
 accelerated it. There is a certain elevation at which 
 the projectile will go the farthest : but if it be direc- 
 ted either higher or lower, it will fall short. With a 
 comparatively small proportion of rich proprietors, 
 who would prefer menial servants, retainers and ter- 
 ritorial influence to an excessive quantity of manu- 
 factured and mercantile products, the power among 
 capitalists of supplying the results of productive la- 
 bour would be much greater than the will to consume 
 them, and the progress of wealth woidd be checked
 
 37G ON THL PUOGKESS OF WEALTH. [CH. I. 
 
 by the want of eftectual demand.* With an exces- 
 sive proportion of small proprietors both of land and" 
 of capital, all great improvements on tlie land, all 
 great cntcrprizes in conmierce and manufactures, and 
 most of the wonders described by Adam Smith, as re- 
 sulting- from the division of labour, would be at an 
 end ; and the progress of wealth would be checked by_ 
 a failure in the powers of supply. 
 
 It will be found, I believe, true that all the great 
 results in political economy, respecting wealth, de- 
 pend upon proportioufi ;'\ and it is from overlooking 
 this most important truth, that so many errors have 
 prevailed in the prediction of consequences ; that na- 
 tions have sometimes been enriched when it was ex- 
 pected that they would be impoverished, and impo- 
 verished when it was expected that they would be 
 enriched •,X and that such contradictory opinions have 
 occasionally prevailed respecting the most effective 
 encourao-ements to the increase of wealth. But there 
 is no part of the whole subject, where the efficacy of 
 proportions in the production of wealth is so strikingly 
 exemplified, as in the division of landed and other 
 property ; and where it is so very obvious that a di- 
 vision to a certain extent must be beneficial, and be- 
 yond a certain extent prejudicial to the increase of 
 wealth. 
 
 On the effects of a great sub-division of property, 
 a fearful experiment is now making in France. The 
 law of succession in that country allows but a small 
 
 * It is perhaps just possible to conceive a passion for menial 
 service, which would stimulate landlords to cultivate lands in the 
 best way, in order to support the greatest quantity of such atten- 
 dants. This would be the same thing as the passion for popula- 
 tion adverted to in a former section. Such a passion, to the ex- 
 tent here supposed, may be possible ; but scarcely any supposi- 
 tion can be less probable. 
 
 t It is not, however, in political economy alone that so much 
 depends upon proportions, but throughout the whole range of 
 nature and art. 
 
 I This was strikingly illustrated in the predictions, during the 
 late war, of the abimdant wealth which would be tlic immediate 
 result of a ):)eacc.
 
 SEC. Vir.] ox THE PROGRESS OF WEALTH. 377 
 
 portion of a father's property to be disposed of by 
 will, and the rest is equally divided among all the 
 children without distinction of age or sex. 
 
 This law has not yet prevailed long enough to 
 shew what its effects are likely to be on the national 
 wealth and prosperity. If the state of property in 
 France appears at present to be favourable to indus- 
 try and demand, no inference can thence be drawn 
 that it will be favourable in future. *lt is universally 
 allowed that a division of property to a certain extent 
 is_ extremely desirable ; and so many traces yet re- 
 main almost all over Europe of the vast landed pos- 
 sessions which have descended from the feudal times, 
 that there are not many states in which such a law 
 as that of France might not be of use, with a view to 
 wealth, for a certain number of years. But if such a 
 law were to continue permanently to regulate the de- 
 scent of property in France ; if no modes of evading 
 it should be invented, and if its effects should not be 
 weakened by the operation of an extraordinary degree 
 of prudence in marriage, which prudence such a law 
 would certainly tend to discourage, there is every 
 reason to believe that the country, at the end of a 
 century, will be quite as remarkable for its extraordi- 
 nary poverty and distress, as for its unusual equality 
 of property. The owners of the minute divisions of 
 landed property will be, as they always are, pecu- 
 liarly without resource, and must perish in great 
 numbers in every scarcity. Very few will be rich 
 except those who receive salaries from the govern- 
 ment. 
 
 In this state of things, with little or none of the 
 natural influence of property to check at once the 
 power of the crown and the violence of the people, it 
 is not possible to conceive that such a mixed govern- 
 ment as France has now established can be main- 
 tained. Nor can I think that a state of things, in 
 which there would be so much poverty, could be fa- 
 vourable to the existence and duration of a republic. 
 And when, in addition to this, we consider how ex-
 
 378 ON THE PROGRESS OF W'EAJ.TII. [CH. I. 
 
 tremely ditHcult it is, under any circiunslances, to 
 establish a well-constituted republic, and how dread- 
 fully the chances are against its continuance, as the 
 experience of all history shews ; it is not too much to 
 say, that no well-grounded hope could be entertained 
 of the permanent prevalence of such a form of go- 
 vernment. 
 
 But the state of property above described would 
 be the very soil for a military despotism. If the go- 
 vernment did not adopt the Eastern mode of consi- 
 dering itself as sole territorial proprietor, it might at 
 least take a hint from the Economists, and declare it- 
 self co-proprietor with the landlords, and from this 
 source, (which might still be a fertile one, though the 
 landlords, on account of their numbers, might be 
 poor,) together with a few other taxes, the army might 
 easily be made the richest part of the society ; and 
 it would then possess an overwhelming influence, 
 which, in such a state of things, nothing could op- 
 pose. The despot might now and then be changed, 
 as under the Roman emperors, by the Praetorian 
 guards ; but the despotism would certainly rest upon 
 very solid foundations. 
 
 It is hardly necessary to enter into the question, 
 whether the wealth of the British empire would be 
 essentially increased by that division of landed pro- 
 perty which would be occasioned by the abolition of 
 the law of primogeniture, and the power of entail, 
 without any interference with testamentary disposi- 
 tions. It is generally acknowledged that the coun- 
 try, in its actual state and under its actual laws, pre- 
 sents a picture of greater wealth, especially when 
 compared with its natural resources, than any large 
 territorial state of modern times. By the natural ex- 
 tinction of some great families, and the natural im- 
 prudence of some others, but, above all, by the ex- 
 traordinary growth of manufactures and commerce, 
 the immense landed properties which formerly pre- 
 vailed all over the country have been in a great de- 
 gree broken down, notwithstanding the law of primo-
 
 SEC. VII.J OX THE PROGRESS OF WEALTH. 379 
 
 geniture. And tlie few which remain may perhaps 
 be of use in furnishing motives to the merchant 
 and master-manufacturer, to continue tlie exercise of 
 their skill and powers till they have acquired large 
 capitals, and are able to contend in wealth with the 
 great landlords. If, from the abolition of the law of 
 primogeniture, the landed fortunes were all very in- 
 considerable, it is not probable that there would be 
 many large capitals among merchants ; and, in this 
 case, much productive power would unquestionably 
 be lost. 
 
 But however this may be, it is certain, tliat a very 
 large_.b,ody .of _wiiat-Jiiay be-x^alled the , middle classes 
 of_society has been established in this country; while 
 the law of primogeniture, by forcing the younger sons 
 o£tHe nobility and great landed proprietors into the 
 higher divisions of these classes, has^ for all practical 
 purposes, annihilated the distinctions founded on rank 
 ajidjjjrth, and opened the fairest «rew« for the con- 
 tests of personal merit in all the avenues to wealth 
 aiKlJionours. It is probable that the obligation ge- 
 nerally imposed upon younger sons to be the founders 
 of their own fortunes, has infused a greater degree of 
 energy and activity into professional and commercial 
 exertions than would have taken place if property in 
 land had been more equally divided. Altogether, the 
 country possesses a very large class of effective de- 
 manders, who derive their power of purchasing from 
 the various professions, from commerce, from manu- 
 factures, from wholesale and retail trade, from sala- 
 ries of different kinds, and from the interest of public 
 and private debts; and these demanders are likely, 
 perhaps, to acquiie tastes more favourable to the en- 
 couragement of wealth than the owners of small pro- 
 perties on the land. 
 
 Under these circumstances, which, to the extent in 
 which they prevail, it must be allowed are almost pe- 
 culiar to this country, it might be rash to conclude 
 that the nation would be richer if the law of primo- 
 geniture were abolished. But even if we were able
 
 380 ON' Till:: PROGRESS OF WEALTH. [cU. I. 
 
 to determine the question in the affirmative, it would 
 by no means determine the policy of such a change. 
 In all cases of this kind there are higher considera- 
 tions to be attended to than those which relate to mere 
 wealth. 
 
 It is an historical truth which cannot for a moment 
 be disputed, that the first formation, and subsequent 
 preservation and improvement, of our present consti- 
 tution, and of the liberties and privileges which have 
 so long distinguished Englishmen, are mainly due to 
 a landed aristocracy. And we are certainly not yet 
 warranted by any experience to conclude that with- 
 out an aristocracy, which cannot certainly be sup- 
 ported in an effective state but by the law of primo- 
 geniture, the constitution so established can be in 
 future maintained. If then we set a value upon the 
 British Constitution ; if we think that, whatever may 
 be its theoretical imperfections, it has practically given 
 a better government, and more liberty to a greater 
 mass of people for a longer time than any which his- 
 tory records, it would be most unwise to venture upon 
 any such change as would risk the whole structure, 
 and throw us upon a wide sea of experiment, where 
 the chances are so dreadfully against our attaining the 
 object of our search.* 
 
 * This was written in 1820. Imperious circumstances have 
 since brought on a reform of a more sudden and extensive nature 
 than prudence would have perhaps suggested, if the time and 
 the circumstances could have been commanded. Yet it must be al- 
 lowed, tliat all which has been done, is to bring the practical work- 
 ing of the constitution nearer to its theory. And there is every 
 reason to believe, that a great majority of the middle classes of 
 society, among whom the elective franchise has been principally 
 extended, must soon see that their own interests, and the interests 
 and happiness of those who are dependent upon them, will be 
 most essentially injured by any proceedings which tend to encou- 
 rage turbulence and shako the security of property. If they be- 
 come adequately sensible of this most unquestionable truth, and 
 act accordingly, there is no doubt that the removal of those un- 
 sightly blots, of those handles, which, with a fair show of reason, 
 might at any time be laid hold of to excite discontents and to 
 stir up the people, will |)lace the British Constitution upon a 
 much broader and more solid base than ever.
 
 SEC. Vri.] ox THE PROGRLSS OF M^EAI.TII. 381 
 
 It is not perhaps easy to say to what extent the 
 abolition of the law of primogeniture and entails would 
 divide the landed property of this country. If the 
 power of testamentary bequest were left untouched, it 
 is possible that past habits might still keep many 
 estates together for a time ; but the probabilities are, 
 that by degrees a considerable subdivision of land 
 would take place ; and if there were few estates of 
 above a thousand a year, the mercantile classes would 
 either be induced to moderate their exertions in the 
 acquisition of wealth, from the absence of the motive of 
 competition with the landlords, as I stated above ; or, 
 if the merchants and manufacturers were still to ac- 
 quire great wealth, excited either by a competition 
 with each other or by political ambition, they would 
 be the only persons who could possess great influence 
 in the state ; and the government of the country would 
 fall almost wholly into their hands. In neither case, 
 probably, could our present constitution be main- 
 tained. In the first, where the property of individuals 
 would be so inconsiderable, and so equal, the tenden- 
 cies would be either to democracy or military des- 
 potism, wath the chances greatly in favour of the lat- 
 ter. And in the second case, whatever might be the 
 form of government, the merchants and manufacturers 
 would have the greatest influence in its councils ; and 
 it is justly observed by Adam Smith, that the interests 
 of these classes do not always prepare them to give 
 the most salutary advice. 
 
 Although therefore it be true that a better distribu- 
 tion of landed property might exist than that which 
 actually prevails in this country at present ; and al- 
 though it be also true, that to make it better, the dis- 
 tribution should be more equal ; yet it may by no 
 means be wise to abolish the law of p rimogeniture^ 
 which would be likely to lead to a subdivision of land 
 greater probably than would be favourable even to 
 the wealth of the country ; and greater certainly than 
 would be consistent with those higher interests, which 
 relate to the protection of a people equally from the
 
 382 0\ THE PIIOGRESS OF WEALTH. [cil. 1. 
 
 tyranny of despotic rulers, and the fury of a despotic 
 mob. 
 
 But, whatever conduct the wisdom and policy of a 
 legislature may dictate respecting the laws of succes- 
 sion, the principle will still be true, that the division 
 of landed property is one of the great means of the 
 distribution of wealth, which tends to keep up and 
 increase its exchangeable value, and to encourage 
 further production ; and that the distribution so occa- 
 sioned will, as it extends, continue to produce a more 
 favourable effect on wealth, till it meets its antagonist 
 principle, and begins to interfere with the power of 
 production. This will take place sooner or later, ac- 
 cording to circumstances, depending chiefly upon the 
 activity of foreign and domestic commerce, and the 
 mass of effective demanders besides the landlords. 
 If the demand be great, independently of the land, a 
 slight diminution irf'the power of production may turn 
 the scale; and *ny change which is unfayou.rable to 
 accumulation, enterprize, and the division of labour, 
 will be unfavourable to the progress of wealth. But 
 if the country be ill situated for foreign commerce, 
 and its tastes, habits, and internal communications be 
 such as not to encourage an active home trade, no- 
 thing can occasion an adequate demand for produce, 
 but an easy subdivision of landed property; and with- 
 out such a subdivision, a country with great natural 
 resources might slumber for ages with an uncultivated 
 soil, and a scanty yet starving population. 
 
 jur^ 
 
 I SEfcriox VIII.— 0/ the Distribution occasioned by 
 \^JCommercer'iuternal and external, considered as the 
 
 Means of increasing the exchangeab/e Value of 
 
 Produce. 
 
 The second main cause favourable to that increase of 
 exchangeable value, which depends upon distribution, 
 is internal and external commerce. 
 
 Every exchange which takes place in a country,
 
 SEC. VIII.] 0\ THE PROGRESS OF WEALTH. 383 
 
 effects a distribution of its produce better adapted to 
 the wants of the society. It is with regard to both 
 parties concerned, an exchange of what is wanted less 
 for what is wanted more, and must therefore raise the 
 value of both the products. If two districts, one of 
 which possessed a rich copper mine, and the other a 
 rich tin mine, had always been separated by an im- 
 passable river or mountain, there can be no doubt 
 that on the opening of a communication, a greater de- 
 mand would take place, and a greater price be given 
 both for tin and copper ; and this greater price of 
 both metals, though it might only be temporary, 
 would alone go a great way towards furnishing the 
 additional capital wanted to supply the additional de- 
 mand ; and the capitals of both districts, and the pro- 
 ducts of both mines, would be increased both in quan- 
 tity and value to a degree which could not have taken 
 place without this new distribution of the produce, or 
 some event equivalent to it. 
 
 The French Economists, in their endeavours to 
 prove the unproductive nature of trade, always in- 
 sisted that the effect of it was merely to equalize 
 prices, which were in some places too high and in 
 others too low, but in their amount the same as they 
 would be after the exchange had taken place. This 
 position must be considered as unfounded, and capa- 
 ble of being contradicted by incontrovertible facts. 
 The increase of price at first, from the extension of 
 the market, is unquestionable. And when to this we 
 add the effect occasioned by the demand for further 
 produce, and the means thus afforded of rapid accu- 
 mulation for the supply of this demand, it is impos- 
 sible to doubt for a moment the direct tendency of all 
 internal trade to increase both the quantity and value 
 of the national produce. 
 
 If indeed it did not tend to increase the value of 
 the national produce, it would not be carried on. It 
 is out of this increase that the merchants concerned 
 are paid ; and if some London goods are not more va- 
 lued in Glasgow than in London, and some Glasgow
 
 384 ox TliE PROCilllCSS OF WEALTH. [CIl. I. 
 
 goods more valued in London than in Glasgow, llie 
 merchants who exchange the articles in which these 
 towns trade, would neither be doing themselves any 
 oood, nor any one else. It is a mere futile process to 
 exchano-e one set of commodities for another, if the 
 parties, after this new distribution of goods has taken .. 
 place, are not better off than they were before. ^Jtiie || 
 giving one article for another has nothing to do with 
 effectual demand, unless the commodity received so 
 far exceeds in value the labour employed on the com- 
 modity parted with, as to yield adequate profits to the 
 capitalists concerned, and to give them both the power 
 and the will to set fresh labour to work in the same 
 trade. 
 
 It has been said that the industry of a country is 
 measured by the extent of its capital, and that the 
 manner in which this capital is employed, though it 
 may make some difference to the enjoyment of the in- 
 habitants, makes very little in the value of the na- 
 tional revenue. This would be true on one supposi- 
 tion, and on one supposition only ; namely that the in- 
 habitants could be persuaded to estimate their confined 
 productions just as highly, to be as eager to obtain and 
 consume them, and as willing to work hard for them, 
 and to make great sacrifices for them, as for the commo- 
 dities which they obtain from a distance. But are we 
 at liberty to make such a supposition ? It is specifically 
 -to overcome the want of eagerness to purchase domestic 
 commodities that the merchant exchanges them for 
 others more in request. Could we but so alter the wants 
 and tastes of the people of Glasgow as to make them 
 estimate as highly the profusion of cotton goods wliich 
 they produce, as any articles which they could re- 
 ceive in return for them under a piosperous trade, we 
 should hear no more of their distresses. It may be 
 allowed that the quantity of productive industry main- 
 tained in a country is nearly proportioned to the quan- 
 tity of capital employed ; but the value of the revenue 
 will be greater or less, according to the market prices 
 of the commodities produced. These market prices
 
 [sec. Vlir.] ON THE PROGRESS OF WJIALTII. 385 
 
 must obviously depend upon the interchange of goods ; 
 and consequently the value of the revenue, and the 
 power and will to increase it, must depend upon that 
 distribution of commodities which best adapts them 
 to the wants and tastes of the society. 
 
 The whole produce of a nation may be said to have 
 a "market price in money and labour. When this 
 market price is high, that is, when the prices of com- 
 -modities rise so as to command a greater excess of 
 labour above what they had cost in production than 
 before, while the same capital and number of people 
 had been employed upon them, it is evident that more 
 fresh labour will be set in motion every year, and the 
 increase of wealth will be certain and rapid. On the 
 other hand, when the market prices of commodities 
 are such as to be able to command very little more la- 
 bour than the production of them has cost, it is as evi- 
 dent that the national wealth will proceed very slowly, 
 or perhaps be quite stationary. 
 
 In the distribution of commodities, the circulating 
 medium of every country bears a most important part ; 
 and, as I intimated before in a note, we are much 
 more likely to obscure our reasonings than to render 
 them clearer, by throwing it out of our consideration. 
 It is not easy indeed, without reference to a circu- 
 lating medium, to ascertain whether the commodities 
 of a country are so distributed as to give them their 
 proper value. 
 
 It may be said, perhaps, that if the funds for the 
 maintenance of labour are at any time in unusual 
 abundance, it may fairly be presumed that they will 
 be able to command a more than usual q uantity of la- 
 bour. But they certainly will not be able to com- 
 mand more labour, nor even so much, if the distribu- 
 tion of them be defective ; and in a country which 
 has a circulating medium, the specific proof of the 
 distribution being defective is, that the whole pro- 
 duce does not exchange for so large an amount of 
 circulating medium as before, and that consequently 
 
 c c
 
 38G ox THK FKOGRESS OF WEALTH. [CH. I. 
 
 tlie producers have been obliged to sell at a great di- 
 minution of money profits, or a positive money loss. 
 
 From the harvest of 1815 to the harvest of 1816, 
 there cannot be a doubt that the funds for the main- 
 tenance of labour in this country were unusually i 
 abundant. Com was particularly plentiful, and no 
 other necessaries were deficient ; yet it is an acknow- 
 ledged fact, that great numbers were thrown out of 
 employment, partly from the want of power, and 
 partly from the want of will to employ the same 
 quantity of labour as before. How is this fact to be 
 accounted for? It would certainly not be easy to 
 explain it without referring to a circulating medium. 
 But the moment we refer to a circulating medium, 
 the theory of the fact observed becomes perfectly 
 clear. It is acknowledged that there was a fall in 
 the money value of the raw produce, to the amount 
 of nearly one third. But if the farmer sold his pro- 
 duce for only two thirds of the price at which he had 
 before sold it, while the money price of labour had 
 not fallen, it is evident that he would be quite unable 
 to command the same quantity of labour, and to em- 
 ploy the same quantity of capital on his farm as he 
 did the year before. And when afterwards a great fall 
 of money prices took place in almost all manufactured 
 products, occasioned in a considerable degree by this 
 previous fall of raw produce, it is as evident that if 
 the price of labour had not fallen, or not in propor- 
 tion, so large a quantity of produce would be required 
 to pay the labourer, that the manufacturers would be 
 unable to employ the same number of workmen as be- 
 fore. In the midst of the plenty of necessaries, these 
 two important classes of society would really have their 
 power of employing labour diminished, while all those 
 who possessed fixed incomes would have their power of 
 employing labour increased, with very little chance of 
 an increase of will to extend their demand in propor- 
 tion ; and the general result would resemble the effects 
 of that partial distribution of products which would
 
 SEC. Vlir.J ON THE PROGRESS OF WEALTH. 387 
 
 arise from the interruption of accustomed communica- 
 tions. The same quantity of commodities might be 
 produced for a short time ; but the distribution not 
 being such as to proportion the supply in each quarter 
 to the demand, the whole would fall in exchangeable 
 value, and a decided check to production would be ex- 
 perienced in reference to the whole country. It fol- 
 lows, that the labouring classes of society may be 
 thrown out of work in the midst of an abundance of 
 necessaries, if these necessaries are not in the hands 
 of those who are at the same time both able and will- 
 ing to employ an adequate quantity of labour. 
 
 As long as this fall in the money price of produce 
 continues to diminish the power of commanding la- 
 bour, a discouragement to production must obviously 
 continue ; and if, after labour has adjusted itself to 
 the new level of prices, the permanent distribution 
 of the produce and the permanent tastes and habits 
 of the people should not be favourable to an adequate 
 degree of effectual consumption, the clearest princi- 
 ples of political economy shew that the profits of 
 stock might be lower for any length of time than 
 the state of the land rendered necessary ; and that 
 the retarded rate of production might be as perma- 
 nent as the faulty distribution of the produce and 
 the unfavourable tastes and habits which had occa- 
 s ioned J t. 
 
 It is scarcely possible for any essential changes to 
 take place in the value of the circulating medium of 
 a country without occasioning an alteration in the 
 distribution of its produce. The imprudent use of 
 paper money must be allowed to be the principal 
 cause of these changes. But even without a paper 
 currency, or with one always maintaining the same 
 value as bullion, every country is liable to chang-es 
 in the value of its produce, compared with its money ; 
 and as such changes must have a great effect on the 
 distribution of produce, partly temporary and partly 
 permanent, a determination to reason on these sub- 
 jects, without taking into account the effects of so
 
 388 ON THE FUOGRESS OF WEALTH. [CH. I. 
 
 powerful an agent, would be purposely to shut ouFi 
 eyes to the truth. Referring therefore ultimately to 
 the command over labour as the best practical mea- 
 sure of the value of the whole produce, it will be| 
 useful to refer previously to its bullion value, in 
 order to ascertain whether the distribution of the 
 produce is such as to enable it to command labour 
 in proportion to the increase of its quantity. If the 
 bullion value of a country's products so increases as 
 to command yearly an increased quantity of labour 
 without a fall of profits, we may feel pretty well as- 
 sured that it is proceeding without check in wealth 
 and prosperity. But, if there is merely an increase 
 of commodities, it is impossible to say, without fur- 
 ther inquiry, that they may not be so distributed as 
 to retard, instead of promote, the further progress of 
 national wealth. 
 
 ^t has been fully stated and allowed, that a period 
 of comparative stagnation must finally arrive in every^ 
 country from the difficulty of procuring subsistence,. 
 But a deficiency of effectual demand has often occa- 
 sioned a similar stagnation at an early period of a^a- 
 tion's progress. No country with a very confined 
 market, internal as well as external, has ever been 
 able to accumulate a large capital, because such a 
 market prevents the formation of those wants arid 
 tastes, and that desire to consume, which are abso- 
 lutely necessary to keep up the market prices of com- 
 modities, and prevent the fall of profits. The distri- 
 bution of comniodities occasioned by internal trade is 
 the first step towards any considerable increase of 
 wealth and capital ; and if no exchanges could have 
 taken place in this country, at a greater distance than 
 five miles, it is probable that not a fifth part of our 
 present capital could have been employed before the 
 effective encouragement to accumulation and the 
 further progress of wealth had nearly ceased. 
 
 The motives which urge individuals to engage in 
 foreign commerce are precisely the same as those 
 which lead to the interchange of goods between the
 
 SEC. vnr.] o>j the progress of wealth. 389 
 
 more distant parts of the same country, namely, a 
 desire to increase or keep up the market prices of 
 the local products ; and the increase of profits thus 
 made by the individual, or the prevention of that fall 
 of profits which would have taken place if the capital 
 had been employed at home, must be considered as a 
 comparative increase in the value of the national 
 produce. 
 
 Mr. Ricardo begins his Chapter on Foreign Trade 
 by stating that "■ No extension of foreign trade will 
 immediately increase the amount of value in a coun- 
 try although it will very powerfully contribute to in- 
 crease the mass of commodities, and therefore the 
 sum of enjoyments." This statement is quite con- 
 sistent with his peculiar view of value, as depending 
 solely upon the labour which a commodity has cost. 
 However abundant may be the returns of the mer- 
 chant, or however greatly they may exceed his exports 
 in value according to the common acceptation of the 
 term, it is certain that the labour employed in pro- 
 curing these exports will at first remain the same. 
 But, as it is so glaring and undeniable a fact that the 
 returns from an unusually favourable trade will ex- 
 change for an unusual quantity of money, labour and 
 domestic commodities ; as this increased power of 
 commanding money, labour and commodities is in 
 reality what is meant by the merchant when he talks 
 of the extension of the foreign market and a favour- 
 able trade, and as it is known that such a state of 
 things often lasts a sufficient time to produce the 
 most important results, it must be allowed that the 
 statement is quite incorrect. 
 
 Undoubtedly, as Mr. Ricardo observes, the inte- 
 rest of the merchant is no way affected by importing 
 fifty pipes of wine instead of twenty-five, if the fifty 
 pipes be not of greater value. ''Trofits, as I have 
 shown, are always estimated by value, not by quan- 
 tity. The specific object which the merchant has in 
 view when he engages in foreign commerce, is to ob- 
 tain returns for his capital of greater value than if he
 
 390 ON' JiiK i»ro(;rk.ss or wealth. [ch. i. 
 
 liad employed it at home ; and in all cases of a fa- 
 vourable foreign trade from extending markets, this 
 is specifically what he obtains. 
 
 But Mr. Ricardo thinks that value cannot increase 
 in one department of produce without its being dimi- 
 nished in some other.* This again may be true accord- 
 ing to his view of value, but is utterly unfounded ac- 
 cording to that more enlarged view of exchangeable 
 value which is established and confirmed by experi- 
 ence. If any foreign power were to send to a parti- 
 cular merchant commodities of a new description 
 which would sell in the London market for fifty 
 thousand pounds, the wealth of such merchant would 
 be increased to that extent; and who, I would ask, 
 w^ould be the poorer for it ? It is no doubt true that 
 the purchasers of these commodities may be obliged 
 to forego the use of some of the articles which they 
 had before been in the habit of buying, t and so far in 
 some quarters demand may be diminished ; but, to 
 counterbalance this diminution, the enriched mer- 
 chant will become a purchaser of additional goods to 
 the amount perhaps of the whole fifty thousand 
 pounds, and thus prevent any general fall in the 
 value of the native produce consumed in the country, 
 while the value of the foreign produce so consumed 
 has increased to the amount of the whole of the new 
 produce imported. I see no difference between a 
 present from abroad, and the unusual profits of a new 
 foreign trade, in their effects upon the wealth of a 
 state. They are equally calculated to increase the 
 
 * It appears to me that if the two first sentences in Mr. Ri- 
 cardo's Chapter on Foreign Trade were well founded, there 
 would be no intercourse between nations. 
 
 t This, liowever, will not necessarily happen. The greater 
 temptation offered to consumption may induce some persons to 
 spend \vh;\t they otherwise would have saved, and in many cases 
 the wealth of the country, instead of suffering by this change, 
 will gain by it. The increased consumption, as far as it goes, 
 will occasion an increase of market prices and profits, and this 
 increase of profits will soon restore the capital which for a short 
 time had been diverted from its destined office.
 
 SEC. VIII.] ON THE PROGRESS OF WEALTH. 391 
 
 wealth of the community, by an increase both of the 
 quantity and value of the produce obtained. 
 
 It may perhaps be thought that the monei/ value of 
 the whole produce cannot be increased without an 
 importation of money. But, in fact, a successful 
 extension of foreign trade is exactly that state of 
 things which most directly leads to the importation 
 of bullion.* For what is it that the merchant ex- 
 porter specifically considers as a successful extension 
 of foreign commerce in dealing with civilized nations ? 
 Undoubtedly, the power of selling his exports abroad 
 for a greater value than usual, estimated in bullion ; 
 and of course, if the goods which he would import 
 
 * The importation of bullion is not necessary to a rise of prices ; 
 for, there is no necessary connection between a given quantity of 
 moneyZaui_a_^lven scale of prices. — If a certain quantity of 
 money be exchanged for a certain quantity of goods, their price 
 is of course represented by that money ; but if the money is ex- 
 changed for one half on\y of the goods at a time, the whole quan- 
 tity of goods will be worth twice the money ; and if the money 
 be exchanged for one third the goods at a time, their total price 
 will be equal to three times the amount of the money. The 
 quantity of goods, and the quantity of money may therefore re- 
 main the same, and prices may rise or fall notwithstanding. 
 
 This is fully exemplified by what occurs when there is a de- 
 ficiency or an excess of any one commodity which is of very 
 extensive consumption. — Take corn as an instance. — The total 
 money value of a scanty crop is known to be much more, and 
 the total money value of a super-abundant crop much less, than 
 that of an ordinary crop, while the prices of other things re- 
 main the same. In this case, it is obvious, that the price of the 
 whole produce, agricultural and manufactured together, (or its 
 value estimated in money) will be either greater or less than or- 
 dinary, even though there shall be no greater or less quantity of 
 money in circulation. And this is very easily explained. Those 
 who have to pay dearer or cheaper for their corn, have no doubt 
 less or more to spend on other things. But, to counterbalance 
 this, the farmers means of purchasing other things are increased 
 or diminished in the very same proportion. If I have a commo- 
 dity, which, from being in great request, rises fron £10 to £20, 
 the purchaser must forego his demand for other things to the ex- 
 tent of £20 instead of £10 ; but my demand for other things is 
 increased from £10 to £20. All this may take place, and indeed 
 is constantly taking place, without a shilling being added to tlu- 
 circulation. — Ed.
 
 392 0\ HIE PROGRKSN OF \V£A1.1H. [cH. I. 
 
 ill return will not sell at home so much higher 
 as to warrant their importation, a part of the re- 
 turns will finally be imported in money. But if 
 on the whole trade only such an amount be imported 
 as shall bear the same proportion to the returns in 
 goods as the whole of the currency of the country 
 does to the whole of its produce, it is obvious that 
 no difficulty whatever can occur in the circulation of 
 the commodities of the country at their former prices, 
 with the single exception of those articles with which 
 the foreign goods might directly enter into competi- 
 tion, which in this case would never be sufficient to 
 prevent a general increase of value in the whole 
 produce. 
 
 I most distinctly therefore differ from Mr. Ricardo 
 in the conclusion implied in the following passage. 
 " In all cases the demand for foreign and home com- 
 modities together, as far as regards value, is limited 
 -^ by the revenue and capital of the country. If one 
 increases, the other must diminish."* It appears to 
 me that in almost every case of successful foreign 
 trade, it is a matter of unquestionable fact that the 
 demand for foreign and home commodities taken to- 
 gether decidedly increases ; and that the increase in 
 the value of foreign produce does not occasion a pro- 
 portionate diminution in the value of home produce. 
 
 I would still however allow that the demand for 
 foreign and home commodities together is limited by 
 the value of the revenue and capital of the country ; 
 but, according to my view of the subject, the national 
 revenue, which consists of the sum of rents, profits, 
 and wages, is at once decidedly incj'eased by the in- 
 creased profits of the foreign merchant, without a 
 proportionate diminution of revenue in any other 
 quarter ; whereas Mr. Ricardo is evidently of opi- 
 nion that, though the abundance of commodities is 
 increased, the revenue of the country, as far as re- 
 gards value, remains the same. 
 
 * Plinc. of Polit. Econ. ch. vii. p. 138, 2ml edit.
 
 SEC. VIII.] ON THE PROGRESS OF WEALTH. .'393 
 
 It will readily be allowed that an increase in the 
 quantiti/ of commodities is one of the most desirable 
 effects of foreign commerce ; but I wish particularly 
 to press on the attention of the reader that in almost 
 all cases, another most important effect accompanies 
 it, namely, an increase in the amount of exchange- 
 able value. And that this latter effect is so necessary, 
 in order to create a continued stimulus to productive 
 industry, and keep up an abundant supply of commodi- 
 ties, that in the few cases in which it does not take 
 place, a stagnation in the demand for labour is imme- 
 diately perceptible, and the progress of wealth is 
 checked. 'An extension of foreign commerce, accord- 
 ing to the view which Mr. Ricardo takes of it, would, 
 in my opinion, place us frequently in the situation in 
 which this country was in the early part of 1816, when 
 a sudden abundance and cheapness of corn and other 
 commodities, from a great supply meeting a deficient 
 demand, so diminished the value of the income of the 
 country, that it could no longer command the same 
 quantity of labour at the same price ; the consequence 
 of which was that, in the midst of plenty, thousands 
 were thrown out of employment — a most painful but 
 almost unavoidable preliminary to a fall in the money 
 wages of labour, which it is obvious could alone enable 
 the general income of the country to employ the same 
 number of labourers as before, and, after a period of 
 severe check to the increase of wealth, to recommence 
 a progressive movement. 
 
 Mr. Ricardo always seems to think that it is quite 
 the same to the labourer, whether he is able to com- 
 mand more of the necessaries of life by a rise in the 
 money price of labour, or by a fall in the money price 
 of provisions ; but these two events, though appa- 
 rently similar in their effects, may be, and in general 
 are, most essentially different. An increase in the mo- 
 ney wages of labour, generally implies such a distribu- 
 tion of the actual wealth as to give it an increasing va- 
 lue, to ensure full employment to all the labouring 
 <^Ksses, and to create a demand for further produce, and
 
 394 ox THE PROGRESS OF MEALTH. [CH. I. 
 
 for the capital which is to obtain it. In short, it is the 
 infallible sign of health and prosperity. Whereas a 
 general fall in the money price of necessaries ofteii" 
 arises from so defective a distribution of the produce 
 of the countiy, that the general amount of its valug 
 cannot be kept up ; in which case, under the most 
 favourable circumstances, a temporary period of wanF 
 of employment and distress is unavoidable ; and in 
 many cases, (as may be too frequently observed in sur-- 
 veying the different countries of the globe,) this fall ifl^ 
 the money price of necessaries is the accompaniment 
 of a permanent want of employment and the most 
 abject poverty, in consequence of a retrograde and 
 permanently diminished wealth. 
 
 The reader will be fully aware that a great fall in 
 the price of particular commodities, either from im- 
 proved machinery or foreign commerce, is perfectly 
 compatible with a continued and great increase, not 
 only in the exchangeable value of the whole produce 
 of the country, but even in the exchangeable value of 
 the whole produce of these particular articles them- 
 selves. It has been already stated that the whole 
 value of the cottons produced in this country has been 
 prodigiously increased, notwithstanding the great fall 
 in their price. The same may be said of teas, sugars, 
 and many other articles, although when they were 
 first imported, their prices were greatly higher than 
 at present ; and there can be little doubt, that if we 
 were to attempt to make our own wines by means of 
 hot-houses, they would altogether be worth much less 
 money, and would give encouragement to much less 
 industry tha^at present. 
 
 The causes of an increase in the effectual demand 
 for particular commodities are of very easy explana- 
 tion ; but it has been considered, and with reason, as 
 not very easy to explain the cause of that general 
 briskness of demand which is sometimes so very sen- 
 sibly felt throughout a whole country, and is so 
 strikingly contrasted with the feeling which gives rise 
 to the expression of trade bein^ universally very dead. 
 
 I
 
 pEC. VIII.] ON THE PROGRESS OF WEALTH. 395 
 
 As the specific and immediate cause of this general 
 increase of effective demand, I should decidedly point 
 to such a distribution of the produce, and such an 
 adaptation of it to the wants and tastes of the society 
 as will give the money price for which it sells an in- 
 creased command of labour before more labour has 
 been employed on its production ; and I am inclined 
 to think that, if this test be applied to all the striking 
 cases that have occurred, it will rarely or never be 
 found to fail. 
 
 It cannot for a moment be doubted, for instance, 
 that the annual increase of the produce of the United 
 States of America, estimated either in bullion or in 
 labour, has been greater than that of any country we 
 are acquainted with, and that this has been greatly 
 owing to their foreign commerce, which, notwithstand- 
 ing their facility of production, has given a value to 
 their corn and raw produce nearly equal to what they 
 bear in many of the countries of Europe, and has con- 
 sequently given to them a power of commanding the 
 produce and labour of other countries which is quite 
 extraordinary when compared with the quantity of la- 
 bour which they have employed. It can as little be 
 doubted that in this country, from 1793 to 1814, the 
 whole exchangeable value of the produce, estimated 
 either in labour, or in bullion, was greatly augmented 
 every year. In this increase of value, as well as of 
 riches, the extension of our foreign commerce has been 
 considered, almost without a dissentient opinion, as a 
 most powerful agent; and certainly till 1815, no ap- 
 pearances seemed to indicate, that the increasing value 
 of our imports had the slightest tendency to diminish 
 the value of our domestic produce. They both in- 
 creased, together, and increased greatly, estimated 
 either in bullion or labour. 
 
 But while in every country to which it seems pos- 
 sible to refer, an increase of value will be found to 
 accompany increasing prosperity and riches, I believe 
 that no single instance can be produced of a coun- 
 try engaged in a successful commerce, and exhibit-
 
 39G ON THt PKOGRESS 01- WEALTH. [CH. 
 
 ing an increasing plenty of commodities, where th^ 
 value of the whole produce estimated in labour, W£ 
 retrograde or even stationaiy. And of the two way^ 
 in which capital may be accumulated, as stated bj 
 Mr. Ricardo in his chapter on Foreign Commerce 
 namely increase of i^evenue from increased profits, oi 
 a diminished e.iyenditure arising from cheap com- 
 modities,* it will be found that the latter never hi 
 been, nor ever will be, experienced as an effective 
 stimulus to the permanent and continued productioi 
 of increasing wealth. 
 
 It is the natural tendency of foreign trade, (as qI 
 all sorts of exchanges by which a distribution is efj 
 fected better suited to the wants of society,) imm^ 
 diately to increase the value of that part of the na'-J 
 tional revenue which consists of profits, without 
 proportionate diminution elsewhere. It is precisel] 
 this immediate increase of national income arisim 
 from the exchange of what is of less value in th« 
 country, for what is of more value, that furnishes botF 
 the power and will to employ more labour, and occa-^ 
 sions the animated demand for labour, produce and 
 capital, which is a striking and almost universal accom- 
 paniment of successful foreign commerce ; whereas', 
 a mere abundance of commodities falling very greatly 
 in value compared with labour, though it may be 
 called an actual increase of wealth, would obviously 
 at first diminish the power of employing the same 
 number of workmen, and a temporary glut and ge- 
 neral deficiency of demand could not fail to ensue in 
 labour, in produce, and in capital, attended with the 
 usual distress which a glut must necessarily occasion. 
 
 Mr. Ricardo always views foreign trade in the light 
 of means of obtaining cheaper commodities. But this 
 is only looking to one half of its advantages, and I am 
 strongly disposed to think, not the larger half. In 
 our own commerce at least, this part of the trade is 
 comparatively inconsiderable. The great mass of our 
 
 * Princ. of Pol. Econ. ch. vii. p. 132, '2d edit.
 
 SEC. VIII.] ON THE PROGRESS OF WEALTH. 397 
 
 imports consists of articles as to which there can be 
 no kind of question about their comparative cheap- 
 ness, as raised abroad or at home. If we could not 
 import from foreign countries our silk, cotton and in- 
 digo, our tea, sugar, coffee and tobacco, our port, 
 sherry, claret and champagne, our almonds, raisins, 
 oranges and lemons, our various spices and our va- 
 rious drugs, with many other articles peculiar to fo- 
 reign climates, it is quite certain that we should 
 not have them at all. To estimate the advantage 
 derived from their importation by their cheapness, 
 compared with the quantity of labour and other ad- 
 vances which they would have cost, if we had at- 
 tempted to raise them at home, would be perfectly 
 preposterous. In reality, no such attempt would 
 have been thought of. If we could by possibility 
 have made fine claret at ten pounds a bottle, few or 
 none would have drunk it ; and the actual quantity 
 of labour and other advances employed in obtaining 
 these foreign commodities is at present beyond com- 
 parison greater than it would have been if we had not 
 imported them. 
 
 We must evidently therefore estimate the advan- 
 tage which we derive from such a trade upon a very 
 different principle. This is the simple and obvious 
 one often adverted to as the foundation of every act 
 of barter, whether foreign or domestic, namely, the 
 increased value which results from exchanging what 
 is wanted less for what is wanted more. After we 
 had, by our exports of home commodities, obtained in 
 return all the foreign articles above-mentioned, we 
 might be very much puzzled to say whether we 
 had increased or decreased the quantity of our com- 
 modities, but we should feel quite certain that the 
 new distribution of produce which had taken place, 
 by giving us commodities much better suited to our 
 wants and tastes than those which had been sent 
 away, had decidedly increased the exchangeable va- 
 lue of our possessions, our means of enjoyment, and 
 our wealth.
 
 398 ON THE PROGRESS Or WEALTH. [CH. I. 
 
 Taking therefore a very different view of the ef- 
 fects ~bf foreign commerce on exchangeable value 
 from Mr. Ricardo, I should "bring forward the ex- 
 tension of markets as being, in its general tendency,^ 
 pre-eminently favourable to that increase of value 
 and wealth which arises from distribution. 
 
 Section IX. — Of the Distribution occasioned by 
 'personal services and unproductive Consumers, 
 considered as the Means of increasing the ex- 
 changeable Value of the whole Produce. 
 
 The third main cause which tends to keep up and 
 increase the value of produce by favouring its distri- 
 bution is the employment of individuals in personal 
 services, or the maintenance of an adequate propor- 
 tion of consumers not directly productive of material 
 objects. 
 
 It has been already shewn that, under a rapid 
 accumulation of capital, or in other words, a rapid 
 conversion of persons engaged in personal services 
 into productive labourers, the demand, compared j 
 with the supply of material products, would prema- 1 
 turely fail, and the motive to further accumulation be S 
 checked, before it was checked by the exhaustion of 
 the land. It follows that, without supposing the 
 productive classes to consume much more than they 
 are found to do by experience, particularly when 
 they are rapidly saving from revenue to add to their 
 capitals, it is necessary that a country with great 
 powers of production should possess a body of con- 
 sumers who are not themselves engaged in produc- 
 tion. 
 
 In the fertility of the soil, in the powers of man to 
 apply machinery as a substitute for labour, and in 
 the motives to exertion under a system of private 
 property, the laws of nature have provided for the 
 leisure or personal services of a certain portion of
 
 SEC. IX.] ON THE PROGRESS OF WEALTH. 399 
 
 society ; and if this beneficent offer be not accepted 
 by an adequate number of individuals, not only will 
 a positive good, which might have been so attained, 
 be lost, but the rest of the society, so far from being 
 benefited by such self-denial, will be decidedly in- 
 jured by it. 
 
 What the proportion is between the productive 
 labourers and those engaged in personal services, 
 which affords the greatest encouragement to the con- 
 tinued increase of wealth, it has before been said that 
 the resources of political economy are unequal to de- 
 termine. It must depend upon a great variety of 
 circumstances, particularly upon the fertility of the 
 soil and the progress of invention in machinery. A 
 fertile soil and an ingenious people can not only sup- 
 port without injury a considerable proportion of con- 
 sumers not directly productive of material wealth, but 
 may absolutely require such a body of demanders, in 
 order to give effect to the powers of production. 
 While, with a poor soil and a people of little inge- 
 nuity, an attempt to support such a body would 
 throw land out of cultivation, and lead infallibly to 
 impoverishment and ruin. 
 
 Another cause, which makes it impossible to say 
 what proportion of consumers directly productive to 
 those not directly productive is most favourable to the 
 increase of wealth, is the difference in the degree of 
 consumption which may prevail among the producers 
 themselves. 
 
 Perhaps it will be said that there can be no occa- 
 sion for unproductive consumers, if a consumption 
 sufficient to keep up the value of the produce takes 
 place among those who are engaged in production. 
 
 With regard to the capitalists who are so engaged, 
 they have certainly the power of consuming their 
 profits, or the revenue which they make by the em- 
 ployment of their capitals ; and if they were to con- 
 sume it, with the exception of what could be benefi- 
 cially added to their capitals, so as to provide in the
 
 400 ON IMF. PROGRF.SS OF WiALTlI. [CH. 1. 
 
 best way both for an increased production and in- 
 creased consumption, there might be little occasion 
 for unproductive consumers. But such consumption 
 is not consistent with the actual habits of the gene- 
 rality of capitalists. The great object of their lives is 
 to save a fortune, both because it is their duty to 
 make a provision for their families, and because they 
 cannot spend an income with so much comfort to 
 themselves, while they are obliged perhaps to attend 
 a counting-house for seven or eight hours a day. 
 
 It has been laid down as a sort of axiom among 
 some writers that the wants of mankind may be con- 
 sidered as at all times commensurate with their 
 powers ; but this position is not always true, even 
 in those cases where a fortune comes without trouble ; 
 and in reference to the great mass of capitalists, it is 
 completely contradicted by experience. Almos t all 
 merchants and manufacturers save , in prosperous 
 times, much more rapidly than it would be~possible 
 for tlie liationar capital to increase, so as to keep up 
 the val ue ot the produce. But if this be tr ue of thefTT 
 as_a^body, t aken on e^with_anpth er^ it _ismnte obvious 
 that, wit h _their_a£ fnal habits, they could not afforcLsa 
 a dequate market to each other by exchanging their 
 se veral products . 
 
 Tliereniust therefore be a considerable class_iiL. 
 pers ons who" h av e both J lmiv ill '^cnd'^poviefTo c on - 
 s ume more material wealth thanj they_produce, or the 
 merc antile "ctasse scould. "irot continue_^ ro^tablvto 
 produce so much'mor^jhant^ In this 
 
 class tlielandlords n6 doubt~~sfand pre-eminent ; but 
 if they were not assisted by the great mass of indivi- 
 duals engaged in personal services, whom they main- 
 tain, their own consumption would of itself be insuf- 
 ficient to keep up and increase the value of the 
 produce, and enable the increase of its quantity more 
 than to counterbalance the fall of its price. Nor could 
 the capitalists in that case continue with effect the 
 same habits of saving. The deficiency in the value 
 of what they produced would necessarily make them 
 
 \
 
 SEC. IX.] O'V THE PROGRESS OF WEAI^TH. 401 
 
 either consume more, or produce less ; /and when the 
 mere pleasure of present expenditure, without the 
 accompaniments of an improved local situation and 
 an advance in rank, is put in opposition to the con- 
 tinued labour of attending to business during the 
 greatest part of the day, the probability is that a 
 considerable body of them will be induced to prefer 
 the latter alternative, and produce less. But if, in 
 order to balance the demand and supply, a perma- 
 nent diminution of production takes place, rather 
 than an increase of effective consumption, the whole 
 of the national wealth, which consists of what is pro- 
 duced and consumed, will be decidedly diminished. 
 
 Mr. Ricardo frequently speaks, as if saving were 
 an end instead of a means. Yet even with regard to 
 individuals, where this view of the subject is nearest 
 the truth, it must be allowed that the final object in 
 saving is expenditure and enjoyment. But, in re- 
 ference to national wealth, it can never be considered 
 either immediately or permanently in any other light 
 than as a means. If however commodities are al- 
 ready so plentiful that an adequate portion of them 
 is not profitably consumed, to save capital can only 
 be still further to increase the plenty of commodities, 
 and still further to lower already low profits, which 
 can be comparatively of little use. 
 
 National saving, therefore, considered as the means 
 of increased production, is confined within much nar- 
 rower limits than individual saving. While some in- 
 dividuals continue to spend, other individuals may 
 continue to save to a very great extent; but the na- 
 tional saving, in reference to the whole mass of pro- 
 ducers and consumers, must necessarily be limited by 
 the amount which can be advantageously employed in 
 supplying the demand for produce ; and to create 
 this demand, there must be an adequate and effective 
 consumption either among the producers themselves, 
 or other classes of consumers. 
 
 Adam Smith has observed " that the desire of food 
 is limited in every man by the narrow capacity of the 
 
 D D
 
 402 OV THE PROGRESS OF WEALTH. [CH. I. 
 
 human stomach ; but the desire of the conveniences 
 and ornaments of building, dress, equipage, and 
 household furniture, seems to have no limit or cer- 
 tain boundary." That it has no certain boundary is 
 unquestionably true ; that it has no limit must be al- 
 lowed to be too strong an expression, when we con- 
 sider how it will be practically limited by the coun- 
 tervailing luxury of indolence, or by the general 
 desire of mankind to better their condition, and make 
 a provision for a family ; a principle which, as Adam 
 Smith himself states, is on the whole stronger than 
 the principle which prompts to expense.* But surely 
 it is a glaring misapplication of this statement in any 
 sense in Avhich it can be reasonably understood, to 
 say, that there is no limit to the saving and employ- 
 ment of capital except the difficulty of procuring 
 food. It is to found a doctrine upon the unlimited 
 desire of mankind to consume ; then to suppose this 
 desire limited in order to save capital, and thus com- 
 pletely alter the premises, and yet still to maintain 
 that the doctrine is true. Let a sufficient consump- 
 tion always take place, whether by the producers or 
 others, to keep up and increase the exchangeable 
 value of the whole produce ; and I am perfectly ready 
 to allow that, to the employment of a national capital, 
 increasing only at such a rate, there is no other limit 
 than that which bounds the power of maintaining 
 population. But it appears to me perfectly clear in 
 theory, and universally confirmed by experience, that 
 the employment of capital may, and in fact often 
 does, find a limit, long before there is any real diffi- 
 culty in procuring the means of subsistence ; and 
 that both capital and population may be at the same 
 time, and for a period of considerable length, redun- 
 dant, compared with the effectual demand for pro- 
 duce. 
 
 Of the wants of mankind in general, it may be 
 further observed, that it is a partial and narrow view 
 
 * Wealth ol" Nations, vol. ii. 1). ii. ch. ii. p. l;>, {)th edit.
 
 SEC. IX.] ON THE PROGRESS OF WEALTH. 403 
 
 of the subject, to consider only the propensity to 
 spend what is actually possessed. It forms but a 
 very small part of the question to determine that if a 
 man has a hundred thousand a year, he will not de- 
 cline the offer of ten thousand more ; or to lay down 
 g:enerally that mankind are never disposed to refuse 
 the means of increased power and enjoyment. The 
 main part of the question respecting the wants of 
 mankind, relates to their power of calling forth the 
 exertions necessary to acquire the means of expendi- 
 ture. It is unquestionably true that wealth produces 
 wants ; but it is a still more important truth, that 
 wants produce M^ealth. Each cause acts and re-acts 
 upon the other, but the order, both of precedence 
 and of importance, is with the wants which stimulate 
 to industry ; and with regard to these, it appears 
 that, instead of being always ready to second the 
 physical powers of man, they require for their deve- 
 lopement " all appliances and means to boot." The 
 greatest of all difficulties in converting uncivilized 
 and thinly peopled countries into civilized and popu- 
 lous ones, is to inspire them with the wants best 
 calculated to excite their exertions in the production 
 of wealth. One of the greatest benefits which foreign 
 commerce confers, and the reason why it has always 
 appeared an almost necessary ingredient in the pro- 
 gress of wealth, is, its tendency to inspire new wants, 
 to form new tastes, and to furnish fresh motives for 
 industry. Even civilized and improved countries 
 cannot afford to lose any of these motives. It is not 
 the most pleasant employment to spend eight hours 
 a day in a counting-house. Nor will it be submitted 
 to after the common necessaries and conveniences of 
 life are attained, unless adequate motives are pre- 
 sented to the mind of the man of business. Among 
 these motives is undoubtedly the desire of advancing 
 his rank, and contending with the landlords in the 
 enjoyment of leisure, as well as of foreign and domes- 
 tic luxuries. 
 
 But the desire to realize a fortune as a permanent
 
 404 ON THE PROGRESS OF WEALTH. [CH. I. 
 
 provision for a family is perhaps the most general 
 motive for the continued exertions of those whose 
 incomes depend upon their own personal skill and 
 efforts. Whatever may be said of the virtue of par- 
 simony or saving, as a jnihlic duty, there cannot be a 
 doubt that it is, in numberless cases, a most sacred 
 and binding private duty ; and were this legitimate 
 and praiseworthy motive to persevering industry in 
 any degree weakened, it is impossible that the wealth 
 and prosperity of the country should not most mate- 
 rially suffer. But if, from the want of other effective 
 consumers, the capitalists were obliged to consume 
 all that could not be advantageously added to the 
 national capital, under such circumstances the motives 
 which support them in their daily tasks must essen- 
 tially be weakened, and the same powers of produc- 
 tion, would not be called forth. 
 
 At has appeared then that, in the ordinary state of 
 society, the master producers and capitalists, though 
 they may have the power, have not the will, to con- 
 sume in the shape of revenue to the necessary extent. 
 And with regard to their workmen, it must be al- 
 lowed that, if they possessed the will, they have not 
 the power. It is indeed most important to observe 
 that no power of consumption on the part of the 
 labouring classes can ever, according to the common 
 motives which influence mankind, alone furnish an 
 encouragement to the employment of capital. No 
 one will ever employ capital merely for the sake of 
 the demand occasioned by those who work for him. 
 Unless they produce an excess of value above what 
 they consume, which he either wants himself in kind, 
 or which he can advantageously exchange for some- 
 thing which he desires, either for present or future 
 use, it is quite obvious that his capital will not be 
 employed in maintaining them. When indeed this 
 further value is created and affords a sufficient ex- 
 citement to the saving and employment of capital, 
 then certainly the power of consumption possessed 
 by the workmen will greatly add to the whole na-
 
 SEC. JX.] OX THE PROGRESS OF M'EALTH. 405 
 
 tional demand, and make room for the employment 
 of a much greater capital. 
 
 It is most desirable that the labouring classes 
 should be well paid, for a much more important 
 reason than any that can relate to wealth ; namely, 
 the happiness of the great mass of society. But as 
 a great increase of consumption among the working 
 classes must greatly increase the cost of production, 
 it must lower profits, and diminish or destioy the 
 motive to accumulate, before agriculture, manufac- 
 tures, and commerce have reached any considerable 
 degree of prosperity. If each labourer were actu- 
 ally to consume double the quantity of corn which 
 he does at present, such a demand, instead of giv- 
 ing a stimulus to wealth, would unquestionably 
 throw a great quantity of land out of cultivation, 
 and greatly diminish both internal and external com- 
 merce.* 
 
 It may be thought perhaps that the landlords 
 could not fail to supply any deficiency of demand 
 and consumption among the producers, and that be- 
 tween them there w^ould be little chance of any ap- 
 proach towards redundancy of capital. What might 
 be the result of the most favourable distribution of 
 landed property it is not easy to say from experience ; 
 but experience certainly tells us that, under the dis- 
 tribution of land which actually takes place in most 
 of the countries in Europe, the demands of the land- 
 lords, added to those of the producers, have not al- 
 ways been found sufiicient to prevent 'any diflficulty 
 in the employment of capital. In the instance alluded 
 to in a former chapter, which occurred in this coun- 
 try in the middle of last century, there must have 
 been a considerable difliculty in finding employment 
 for capital, or the national creditors would rather 
 
 * The demand created by the productive labourer himself can 
 never be an adequate demand, because it does not go to the full 
 extent of what he produces. If it did, there would be no profit, 
 consequently no motive to employ him. The very existence of a 
 profit upon any commodity presupposes a demand exterior to 
 that of the labour which has produced it. Ed.
 
 406 ON THE PKOGRESS OF WEALTH. [CH. I. 
 
 have been paid off than have submitted to a reduction 
 of interest tVom 4 per cent, to 3i, and afterwards to 
 3. And that this fall in the rate of interest and pro- 
 fits arose from a redundancy of capital and a want of 
 demand for produce, rather than from the difficuhy 
 of production on the land, is fully evinced by the low 
 price of corn at the time, and the very different state 
 of interest and profits which has occurred since. 
 
 A similar instance took place in Italy in 1685, 
 when, upon the Pope's reducing the interest of his 
 debts from 4 to 3 per cent., the value of the principal 
 rose afterwards to 112; and yet the Pope's territories 
 have at no time been so cultivated as to occasion 
 such a low rate of interest and profits from the diffi- 
 culty of procuring the food of the labourer. Under 
 a more favourable distribution of property, there can- 
 not be a doubt that such a demand for produce, 
 agricultural, manufacturing, and mercantile, might 
 have been created, as to have prevented for many 
 many years the interest of money from falling below 
 3 per cent. In both these cases, the demands of the 
 landlords were added to those of the productive 
 classes. 
 
 But if the master-producers, from the laudable 
 desire they feel of bettering their condition, and 
 providing for a family, do not consume their revenue 
 sufficiently to give an adequate stimulus to the in- 
 crease of wealth ; if the working producers, by in- 
 creasing their consumption, supposing them to have 
 the means of so doing, would impede the growth of 
 wealth more by diminishing the power of produc- 
 tion, than they could encourage it by increasing the 
 demand for produce ; and if the expenditure of the 
 landlords, in addition to the expenditure of the 4;wo 
 preceding classes, be found insufficient to keep up 
 and increase the value of that which is produced, 
 where are we to look for the consumption required but 
 among the unproductive labourers of Adam Smith ? 
 
 Every society must have a body of persons engaged 
 in personal services of various kinds ; as every so-
 
 SEC. IX.] ON THE PROGRESS OF WEALTH. 407 
 
 ciety, besides the menial servants required, must have 
 statesmen to govern it, soldiers to defend it, judges 
 and lawyers to administer justice and protect the 
 rights of individuals, physicians and surgeons to cure 
 diseases and heal wounds, and a body of clergy to in- 
 struct the ignorant, and administer the consolations of 
 religion. No civilized state has ever been known to 
 exist without a certain portion of all these classes of 
 society in addition to those who are directly employed 
 in production. To a certain extent therefore they 
 appear to be absolutely necessary. But it is perhaps 
 one of the most important practical questions that can 
 possibly be brought under our view, whether, how- 
 ever necessary and desirable they may be, they must 
 be considered as detracting so much from the mate- 
 rial products of a country, and its power of support- 
 ing an extended population ; or whether they furnish 
 fresh motives to production, and tend to push the 
 wealth of a country farther than it would go without 
 theni/ 
 
 ^le solution of this question evidently depends, 
 first, upon the solution of the main practical ciuestion, 
 whether the capital of a country can or cannot be re- 
 dundant ; that is, whether the motive to accumulate 
 may be checked or destroyed by the want of effective 
 demand long before it is checked by the difficulty of 
 procuring the subsistence of the labourer. And se- 
 condly, whether, allowing the possibiliti/ of such a re- 
 dundance, there is sufficient reason to believe that, 
 under the actual habits of mankind, it is a probable 
 occurrence. 
 
 In the Chapter on Profits, but more particularly in 
 the Third Section of the present Chapter, where I 
 have considered the efifect of accumulation as a sti- 
 mulus to the increase of wealth, I trust that the first 
 of these questions has been satisfactorily answered. 
 And in the present Section it has been shewn that 
 the actual habits and practice of the productive 
 classes, in the most improved societies, do not lead 
 them to consume as revenue so large a proportion of
 
 408 ON THE PICOGKESS Or WEALTH. [CH. I. 
 
 what they produce, even though assisted by the land- 
 lords, as to prevent their findinf^ frequent difficulties 
 in the employment of their capitals. We may con- 
 clude therefore, with little danger of error, that such 
 a body of persons as 1 have described is not only ne- 
 cessary to tlie government, protection, health, and in- 
 struction of a country, but is also necessary to call 
 forth those exertions which are required to give full 
 play to its physical resources. 
 
 With respect to those persons who are not em- 
 ployed in the production or distribution of material 
 objects, it is obvious that such as are paid voluntarily 
 by individuals, will be the most likely to be useful in 
 exciting industry, and the least likely to be prejudi- 
 cial by interfering with the costs of production. It 
 may be presumed that a person will not take a menial 
 servant, unless he can afford to pay him ; and that he 
 is as likely to be excited to industry by the prospect 
 of this indulgence, as by the prospect of buying 
 ribands and laces. 
 
 It is also very important to observe, that menial 
 servants are absolutely necessary to make the resour- 
 ces of the higher and middle classes of society effi- 
 cient in the demand for material products. No per- 
 sons possessing incomes above five hundred pounds a 
 year, would be inclined to have such houses, furni- 
 ture, clothes, carriages and horses, and such eatables 
 and drinkables in their houses as they have at pre- 
 sent, if they were obliged to sweep their own rooms, 
 brush and wash their own furniture and clothes, clean 
 their own carriages and horses, and had none but 
 themselves to make a demand for eatables and drink- 
 ables. And it is farther to be remarked, that all per- 
 sonal services paid voluntarily, whether of a menial 
 or intellectual kind, are essentially distinct from the 
 labour necessary to production. They are paid from 
 revenue, not from capital. They have no tendency 
 to increase cost and lower profits. On the contrary, 
 while they leave the cost of production, as far as re-
 
 SEC. IX.] ON THE PROGRESS OV WEALTH. 409 
 
 gards the quantities of labour required to obtain any 
 particular commodities the same as before, they in- 
 crease profits by occasioning a more brisk demand for 
 material products, as compared with the supply of 
 them. 
 
 Yet to shew how frequently the doctrine of pro- 
 portions meets us at every turn, and how much the 
 wealth of nations depends upon the relation of parts, 
 rather than on any positive rule respecting the ad- 
 vantages of productive labour as compared with per- 
 sonal services, it may be worth while to remind the 
 reader that, though the employment of a number of 
 persons in menial service, varying with the neat re- 
 venue of the society, is in every respect desirable, 
 there could hardly be a taste more unfavourable to 
 the progress of wealth than a strong preference of me- 
 nial service and ill accommodated followers to material 
 products. We may, however, safely trust to the in- 
 clinations of individuals in this respect ; and it will 
 be allowed generally, that there is little difficulty in 
 reference to those classes which are supported volun- 
 tarily, though there may be much with regard to those 
 which must be supported by taxation. 
 
 With regard to these latter classes, such as states- 
 men, soldiers, sailors, and those who live upon the in- 
 terest of a national debt, it cannot be denied that 
 they contribute powerfully to distribution and de- 
 mand ; they frequently occasion a division of property 
 more favourable to the progress of wealth than would 
 otherwise have taken place ; they ensure that effec- 
 tive consumption which is necessary to give the pro- 
 per stimulus to production ; and the desire to pay a 
 tax, and yet enjoy the same means of gratification, 
 must often operate to excite the exertions of industry 
 quite as effectually as the desire to pay a lawyer or 
 physician. Yet to counterbalance these advantages, 
 which so far are unquestionable, it must be acknow- 
 ledged that injudicious taxation might stop the in- 
 crease of wealth at almost any period of its progress,
 
 410 ox THE PROGRESS OE WEALTH. [CH. I. 
 
 early or late;* and that the most judicious taxation 
 mij^ht ultimately he so heavy as to clog all the chan- 
 nels of foreign and domestic trade, and almost pre- 
 vent the possibility of accumulation. 
 
 The eri'ect therefore on national wealth of those 
 classes of unproductive consumers which are supported 
 by taxation, must be very various in different coun- 
 tries, and must depend entirely upon the powers of 
 production, and upon the manner in which the taxes 
 are raised in each country. As great powers of pro- 
 duction are neither likely to be called into action, or, 
 when once in action, kept in activity without a great 
 effective consumption, I feel very little doubt that in- 
 stances have practically occurred of national wealth 
 being decidedly stimulated by the consumption of 
 those who have been supported by taxes. Yet taxa- 
 tion is a stimulus so liable in every way to abuse, and 
 it is so absolutely necessary for tlie general interests 
 of society to consider private property as sacred, that 
 no one would think of trusting to any government the 
 means of making a diflerent distribution of wealth, 
 with a view to the general good. But when, either 
 from necessity or error, a different distribution has 
 taken place, and the evil, as far as it regards private 
 property, has actually been committed, it may not be 
 wise to attempt, at the expense of a great temporary 
 sacrifice, a sudden return to the former distribution, 
 without very fully considering whether, if it were ef- 
 fected, it would be really advantageous ; that is, whe- 
 ther, in the actual circumstances of the country, with 
 
 * The effect of obliging a cultivator of a certain portion of rich 
 land to maintain two men and two horses for the state, might in 
 some cases only induce him to cultivate more, and create more 
 wealth than he otherwise would have done, while it might leave 
 him personally as rich as before, and the nation richer ; but if the 
 same obligation were to be imposed on the cultivator of an equal 
 (piantity of poor land, the property might be rendered at once not 
 worth working, and the desertion of it would be the natural con- 
 sequence. An indiscriminate and heavy tax on gross produce 
 might immediately scatter desolation over a country, capable, 
 under a better system, of producing considerable wealth.
 
 SEC. IX.] OX THE PROGRESS OF HEALTH. 411 
 
 reference to its powers of production, more would not 
 be lost by the want of eftectual demand than gained 
 by the diminution of taxation. 
 
 If there could be no sort of difficulty in finding pro- 
 fitable employment for any amount of capital, pro- 
 vided labour were sufficiently abundant, the way to 
 national wealth, though it might not always be easy, 
 would be quite straight, and our only object need be 
 to save from revenue, and repress unproductive con- 
 sumers. But, if it has appeared that the greatest 
 powers of production afe'rerrderecT comparatively use- 
 less without effectual consumption,* and that a proper 
 distribution of the produce is as necessary to the con- 
 tinued increase of wealth as the means of producing 
 it, it follows that, in cases of this kind, the question 
 depends upon proportions ; and it would be the height 
 of rashness to determine, under all circumstances, that 
 the sudden diminution of a national debt and the re- 
 moval of taxation must necessarily tend to increase the 
 national wealth, and provide employment for the la-r, 
 bourino- classes. 
 
 I am very far, however, from being insensible to the 
 evils of a great national debt. Though, in many res- 
 pects, it may be a useful instrument of distribution, it 
 must be allowed to be a very cumbersome and very 
 dangerous instrument. In the first place, the revenue 
 necessary to pay the interest of such a debt can onl}'- 
 be raised by taxation ; and, as this taxation, if pushed 
 to any considerable extent, can hardly fail of inter- 
 fering with the powers of production, there is always 
 danger of impairing one element of wealth, while we 
 are improving another. A second important objec- 
 tion to a large national debt, is the feeling which pre- 
 vails so very generally among all those not imme- 
 diately concerned in it, and consequently among the 
 great mass of the population, that they would be im- 
 
 * By effectual consumption is meant, a consumption by those 
 who are able and willing to pay such a price for produce, as will 
 effect the continuation of its supply without a fall of profits not 
 required by the state of the land,
 
 412 OS THE PROGRESS OF WEALTH. [CH. I. 
 
 mediately and grerftly relieved by its extinction ; and, 
 whether this impression be Avell founded or not, it 
 cannot exist without rendering the interest paid for it 
 in some degree insecure, and exposing a country to 
 the risk of a great convulsion of property, particularly 
 as it prevents any economy of expenditure which is 
 practicable, from affording such a relief from taxa- 
 tion, as will tell upon the feelings of the people. A 
 third objection to such a debt is, that it greatly ag- 
 gravates the evils arising from changes in the value 
 of money. When the currency falls in value, the an- 
 nuitants, as owners of fixed incomes, are most unjustly 
 deprived of their proper share of the national pro- 
 duce ; when the currency rises in value, the pressure 
 of the taxation necessary to pay the interests of the 
 debt, may become suddenly so heavy as greatly to 
 distress the productive classes;* and this kind of 
 sudden pressure must very much enhance the inse- 
 curity of property vested in public funds. 
 
 On these and other accounts it would be desirable 
 gradually to diminish the debt, and more especially to 
 discourage the growth of it in future, even though it 
 were allowed that its past effects had been favourable 
 to wealth, and that the advantageous distribution of 
 produce which it had occasioned, had, under the ac- 
 tual circumstances, more than counterbalanced the 
 obstructions which it might have given to commerce. 
 
 On the whole it may be observed, that the specific 
 use of a body of unproductive consumers, is to give 
 
 * In a country with a large public debt, there is no duty which 
 ought to be held more sacred on the part of the administrators of 
 the government than to prevent any variations of the currency be- 
 vond those which necessarily belong- to the varying value of the 
 precious metals. I am fully aware of the temporary advantages 
 which niav be derived from a fall in the value of money ; and 
 perhaps it may be true that a part of the distress during the last 
 year, though I believe but a small part, was occasioned by the 
 iiieasure latelv adopted, for the restoration of the currency to its 
 just value. But some such measure was indispensably necessary ; 
 and Mr. Ricardo deserves the thanks of his country for having 
 suggested one which has rendered the transition more easy than 
 couid reasonably have been expected. This was written in 1820.
 
 SEC. IX.] ON THE PROGRESS OF WEALTH. 413 
 
 encouragement to wealth by maintaining such a ba- 
 lance between produce and consumption as will give 
 the greatest exchangeable value to the results of the 
 national industry. If such consumers were to pre- 
 dominate, the comparatively small quantity of mate- 
 rial products brought to market would keep down the 
 value of the whole produce, from the deficiency of 
 quantity. If, on the other hand, the productive classes 
 were in excess, the value of the whole produce would 
 fall from excess of supply. There is therefore a cer- 
 tain proportion between the two which will yield the 
 greatest value, and command for a continuance the 
 greatest quantity of labour ; and we may safely con- 
 clude that, among the causes necessary to that distri- 
 bution, which tends to keep up and increase the ex- 
 changeable value of the whole produce, we must 
 place the maintenance of a certain body of consumers 
 who are not themselves enoao-ed in the immediate 
 production of material objects. This body, considered 
 as a stimulus to wealth, should vary in dift'erent coun- 
 tries, and at different times, according to the powers of 
 production ; and the most favourable result evidently 
 depends upon their numbers being best suited to the 
 natural resources of the soil, and the skill, and ac- 
 quired tastes of the people. 
 
 Sectiox X. — Application of some of the preceding 
 Principles tothe Distresses of the Labouring Classes 
 since 1815, with General Observations. 
 
 It has been said that the distresses of the labourinof 
 classes since 1815 are owing to a deficient capital, < 
 which is evidently unable to employ all that are in 
 want of work. 
 
 That the capital of the country does not bear an 
 adequate proportion to the population ; that the ca- 
 pital and revenue together do not bear so great a pro- 
 portion as they did before 1815 ; and that such a dis- 
 proportion will at once account for very great distress 
 among the labouring classes, I am most ready to al-
 
 414 0\ THE PROGRESS OF WEALTH. [CH. I. 
 
 low. But it is a very different thing; to allow that the 
 capital is deficient compared with the population ; and 
 to allow that it is deficient compared with the demand 
 for it, and the demand for the commodities procured 
 by it.* The two cases are very frequently confounded, 
 because they both produce distress among the labour- 
 ing- classes ; but they are essentially distinct. They 
 are attended with some very different symptoms, and 
 require to be treated in a very different manner. 
 
 If one fourth of the capital of a country were 
 suddenly destroyed, or entirely transferred to a dif- 
 ferent part of the world, without any other cause 
 occurring of a diminished demand for commodities, 
 this scantiness of capital would certainly occasion 
 great inconvenience to consumers, and great distress 
 amono;the workino- classes-, but it would be attended 
 with great advantages to the remaining capitalists. 
 Commodities, in general, would be scarce, and bear 
 a high price on account of the deficiency in the 
 means of producing them. Nothing would be so 
 easy as to find a profitable employment for capital ; 
 but it would by no means be easy to find capital for 
 the number of employments in which it was deficient; 
 and consequently the rate of profits would be very 
 high. In this state of things there would be an 
 immediate and pressing demand for capital, on ac- 
 count of there being an immediate and pressing 
 demand for commodities ; and the obvious remedy 
 would be, the supply, of the demand in the only way 
 in which it could take place, namely, by saving from 
 revenue to add to capital. This supply of capital 
 would, as I have before stated, take place just upon 
 the same principle as a supply of population would 
 
 * It is a contradiction in terms, to say that labour is redun- 
 dant compared with capital, and that capital is at the same time 
 redundant compared with labour: — but it is no contradiction in 
 terms to say that both labourers and capital may be redundant, 
 compared with the means of employing them profitably. I have 
 never maintained the former position, thoiicrh I have been charged 
 with so doing ; but the latter has been so fully established by ex- 
 perience, that I am surprized at the pertinacity with which theo- 
 retical writers continue to refuse their assent to it.
 
 SEC. X.] ON THE PROGRESS OF WEALTH. 415 
 
 follow a great destruction of people on the supposi- 
 tion of there being an immediate and pressing want 
 of labour evinced by the high real wages given to 
 the labourer. 
 
 On the other hand, if the capital of the country 
 were diminished by the failure of demand in some 
 large branches of trade, which had before been very 
 prosperous, and absorbed a great quantity of stock ; 
 or even if, while capital were suddenly destroyed, the 
 revenue of the landlords was diminished in a greater 
 proportion owing to peculiar circumstances, the state of 
 things, with the exception of the distresses of the poor, 
 would be almost exactly reversed. The remaining 
 capitalists would be in no respect benefited by events 
 which had diminished demand in a still greater propor- 
 tion than they had diminished the supply. Commodi- 
 ties would be every where cheap. Capital would 
 be seeking employment, but would not easily find it ; 
 and the profits of stock would be low. There would 
 be no pressing and immediate demand for capital, 
 because there would be no pressing and immediate 
 demand for commodities ; and, under these circum- 
 stances, the saving from revenue to add to capital, 
 instead of afl:ording the remedy required, would only 
 aggravate the distresses of the capitalists, and fill the 
 stream of capital which was flowing out of the 
 country. The distresses of the capitalists would be 
 aggravated, just upon the same principle as the 
 distresses of the labouring classes would be aggra- 
 vated if they were encouraged to marry and in- 
 crease, after a considerable destruction of people, 
 although accompanied by a still greater destruction 
 of capital which had kept the wages of labour very 
 low. There might certainly be a great deficiency of 
 population, compared with the territory and powers 
 of the country, andat might be very desirable that it 
 should be greater ; \but if the wages of labour were 
 still low, notwithstanding the diminution of people, 
 to encourage the birth of more children would be 
 to encourage misery and mortality rather than popu- 
 lation.
 
 4IG ox THE PROGRESS OF WEALTH. [CH. I. 
 
 Now I would ask, to which of these two suppo- 
 sitions does the present state of this country* bear 
 the nearest resemblance? Surely to the latter. 
 That a great loss of capital has lately been sus- 
 tained, is unquestionable. During* nearly the whole 
 of the war, owing to the union of great powers of 
 production with a great effectual consumption and 
 demand, the prodigious destruction of capital by the 
 government was much more than recovered. To 
 doubt this would be to shut our eyes to the compara- 
 tive state of the country in 1792 and 1813. The 
 two last years of the war were, however, years of 
 extraordinary expense, and being followed imme- 
 diately by a period marked by a very unusual stag- 
 nation of effectual demand, the destruction of capital 
 which took place in those years was not probably 
 recovered. But this stagnation itself was much more 
 disastrous in its effects upon the national capital, and 
 still more upon the national revenue, than any pre- 
 vious destruction of stock. It commenced certainly 
 with the extraordinary fall in the value of the raw 
 produce of the land, to the amount, it has been sup- 
 posed, of nearly one third. When this fall had 
 diminished the capitals of the farmers, and still more 
 the revenues both of landlords and farmers, and of 
 all those who were otherwise connected with the 
 land, their power of purchasing manufactures and 
 foreign products was of necessity greatly diminished. 
 The failure of home demand filled the warehouses of 
 the manufacturers with unsold goods, which urged 
 them to export more largely at all risks. But this 
 excessive exportation glutted all the foreign markets, 
 and prevented the merchants from receiving adequate 
 returns ; while, from the diminution of the home 
 revenues, aggravated by a sudden and extraordinary 
 contraction of the currency, even the comparatively 
 scanty returns obtained from abroad found a very 
 insufficient domestic demand, and the profits and 
 consequent expenditure of merchants and manufac- 
 
 * This was written in 1820.
 
 SEC. X.] ON THE PROGRESS OF WEALTH. 417 
 
 turers were proportionably lowered. While those 
 unfavourable changes were taking place in rents and 
 profits, the powerful stimulus which had been given 
 to population by the continued demand for labour 
 during the war, occasioned the pouring in of fresh 
 supplies of labour, which, aided by the disbanded 
 soldiers and sailors, and the failure of demand arising 
 from the losses of the farmers and merchants, reduced 
 generally both wages and profits, and left the country 
 with a greatly diminisiied capital and revenue ; — 
 not merely in proportion to the alteration of the 
 value of the currency, but in reference to the bullion 
 value of its produce, and the command of this bullion 
 value over labour, at the price at which it was actually 
 employed. For the four or five years since the war, 
 on account of the change in the distribution of the 
 national produce, and the want of eflfectual consump- 
 tion and demand occasioned by it, a check has been 
 given to the rate of production, and the population, 
 under its former impulse, has increased, not only 
 faster than the demand for labour, but faster than 
 the actual produce ; yet this produce, though de- 
 ficient, compared with the population, is redundant, 
 compared with the effectual demand for it and the 
 revenue which is to purchase it. Though labour is 
 cheap, there is neither the power nor the will to 
 employ it all ; because not only has the capital of 
 the country diminished, compared with the number 
 of labourers, but, owing to the diminished revenues 
 of the country, the commodities which those labour- 
 ers would produce are not in such request as to 
 ensure tolerable profits to the reduced capital. 
 
 But when profits are low and uncertain, when 
 capitalists are quite at a loss where they can safely 
 employ their capitals, and when on these accounts 
 capital is flowing out of the country ; in short, when 
 all the evidence which the nature of the subject 
 admits, distinctly proves that there is no effective 
 demand for capital at home, is it not contrary to the 
 general principles of political economy, is it not a 
 
 E E
 
 418 ON THE PROGRESS OF WEAETJl. [CH. I. 
 
 vain and iVuitless opposition to that first, greatest, 
 and most universal of all its principles, the principle 
 of supply and demand, to recommend saving, and 
 the conversion of more revenue into capital ? Is it 
 not just the same sort of thing as to recommend 
 marriage when people are starving and emigrating? 
 I am fully aware that the low profits of stock, and 
 the difficulty of finding employment for it, which I 
 consider as an unequivocal proof that the immediate 
 want of the country is not capital, has been attributed 
 to other causes ; but to whatever causes they may be 
 attributed, an increase in the proportion of capital to 
 revenue must aggravate them. With regard to these 
 causes, such as the cultivation of our poor soils, our 
 restrictions upon commerce, and our weight of tax- 
 ation, I find it very difficult to admit a theory of our 
 distresses so inconsistent with the theory of our com- 
 parative prosperity. While the greatest quantity of 
 our poor lands were in cultivation ; while there were 
 more than usual restrictions upon our commerce, and 
 very little corn was imported ; and while taxation 
 was at its height, the country confessedly increased 
 in wealth with a rapidity never known before. Since 
 some of our poorest lands have been thrown out of cul- 
 tivation ; since the peace has removed many of the 
 restrictions upon our commerce, and, notwithstanding 
 our corn laws, we have imported a great quantity of 
 corn ; and since seventeen millions of taxes have been 
 taken off from the people, we have experienced the 
 greatest degree of distress, both among capitalists 
 and labourers, 
 
 ^ I am very far indeed from meaning to infer from 
 (1/ V these striking facts that restrictions upon commerce 
 ^ U^ and heavy taxation are beneficial to a country. But 
 ^, the facts certainly show that, whatever may be the- 
 V future effect of the causes above alluded to in check- 
 \^ ing the progress of our wealth, we must look else- 
 
 M where for the immediate sources of our present 
 
 distresses. How far our artificial system, and par- 
 ticularly the changes in the value of our currency 
 
 ^
 
 49^ ON THE IMMEDIATE CAUSES [CH. Vll.n 
 
 causes they may be attributed, an increase in the 
 proportion of capital to revenue must aggravate 
 them. With regard to these causes, such as the 
 cultivation of our poor soils, our restrictions upon 
 commerce, and our weight of taxation, I find it 
 very difficult to admit a theory of our distresses so 
 inconsistent with the theory of our prosperity. 
 While the greatest quantity of our poor lands were 
 in cultivation ; while there were more than usual 
 restrictions upon our commerce, and very^ little 
 corn was imported; and while taxation was at its 
 height, the country confessedly increased in wealth 
 with a rapidity never known before. Since some . 
 of our poorest lands have been thrown out of cul- 
 tivation; since the peace has removed many of 
 the restrictions upon our commerce, and, notwith- 
 standing our corn laws, we have imported a great 
 quantity of corn ; and since seventeen millions of 
 taxes' have been taken off from the people, we have 
 experienced a degree of distress, the pressure of 
 which has been almost intolerable. 
 4^ I am very fdv from meaning to infer from these 
 striking facts that restrictions upon commerce and 
 heavy taxation are likely in general to be benefi- 
 cial to a country. But the facts certainly shew 
 that, whatever may be the future effect of the 
 causes above alluded to in checking the progress of 
 our wealth, we must look elsewhere for the im- 
 mediate sources of our present distresses. How- 
 far our artificial system, and particularly the 
 changes in the value of our currency operating 
 upon a large national debt, may have aggravated
 
 
 SEC. X.] OF THE PKOGRESS OF WEALTH. 497 
 
 the evils we have experienced, it would be ex- 
 tremely difficult to say. But I feel perfectly con- 
 vinced that a very considerable portion of these 
 evils might be experienced by a nation without 
 poor land in cultivation, without taxes, and with- 
 out any fresh restrictions on trade. 
 
 If a large country, of considerable fertility, and 
 sufficient inland communications, were surrounded 
 by an impassable wall, we all agree that it might 
 be tolerably rich, though not so rich as if it en- 
 joyed the benefit of foreign commerce. Now, 
 supposing such a country gradually to indulge in 
 a considerable consumption, to call forth and em- 
 ploy a great quantity of ingenuity in production, 
 and to save only yearly that portion of its revenue 
 which it could most advantageously add to its 
 capital, expending the rest in consumable com- 
 modities and unproductive labour, it might evi- 
 dently, under such a balance of produce and con- 
 sumption, be increasing in wealth and population 
 with considerable rapidity. But if, upon the princi- 
 ple laid down by M. Say, that the consumption of a 
 commodity is a diminution of demand, the society 
 were greatly and generally to slacken their con- 
 sumption, and add to their capitals, there cannot 
 be the least doubt, on the great principles of de- 
 mand and supply, that the profits of capitalists 
 would soon be reduced to nothing, though there 
 were no poor land in cultivation ; and the popula- 
 tioiy would be thrown out of work and would be 
 starving, although without a single tax, or any 
 restrictions on trade.
 
 r 
 
 498 0\ THE IMIMEDIATE CAUSES [cil. VII. 
 
 The state of Europe and America may perhaps 
 be said, in some points, to resemble the case here 
 supposed; and the stagnation which has been so 
 generally felt and complained of since the war, 
 appears to me inexplicable upon the principles of 
 those who think that the power of production is 
 the only element of wealth, and who consequently 
 infer that if the powers of production be in- 
 creased, wealth will certainly increase in propor- 
 tion. Now it is unquestionable that the powers of 
 production were increased by the cessation of war, 
 and that more people and more capital w^ere ready 
 to be employed in productive labour ; but not- 
 withstanding this obvious increase in the powers 
 of production, we hear every where of difficulties 
 and distresses, instead of ease and plenty. In the 
 United States of America in particular, a country 
 of extraordinary physical resources, the difficulties 
 which have been experienced are very striking, 
 and such certainly as could hardly have been ex- 
 pected. These difficulties, at least, cannot be at- 
 tributed to the cultivation of poor land, restric- 
 tions upon commerce, and excess of taxation. 
 Altogether the state of the commercial world, since 
 the war, clearlj^sfiews that something else is ne- 
 cessary to the continued increase of wealth be- 
 sides an increase in the power of producing. 
 
 That the transition from war to peace, of which 
 so much has been said, is a main cause of the 
 effects observed, will be readily allowed, but not 
 as the operation is usually explained. It is gene- 
 rally said that there has not been time to transfer
 
 SEC. X.] OF THE PROGRESS OF WKALTH. 499 
 
 capital from the employments where it is redun- 
 dant to those where it is deficient, and thus to 
 restore the proper equiHbrium. But I cannot 
 bring myself to believe that this transfer can re- 
 quire so much time as has now elapsed since the 
 war ; and I would again ask, where arc the 
 under-stocked employments, which, according to 
 this theory, ought to be numerous, and fully 
 capable of absorbing all the redundant capital, 
 which is confessedly glutting the markets of 
 Europe in so many different branches of trade ? 
 It is well known by the owners of floating ca- 
 pital, that none such are now to be found ; and if 
 the transition in question is to account- for what 
 has happened, it must have produced some other 
 effects besides that which arises from the difficulty 
 of moving capital. This I conceive to be a great 
 diminution of the whole amount of consumption 
 and demand.- The necessary changes in the chan- 
 nels of trade woUld be effected in a year or two ; 
 but the general diminution of consumption and 
 demand, occasioned by tlie transition from such a 
 war to a peace, may last for a very considerable 
 time. The returned taxes, and the excess of in- 
 dividual gains above expenditure, which were so 
 largely used as revenue during the war, are now in 
 part, and probably in no inconsiderable part, saved. 
 I cannot doubt, for instance, that in our own coun- 
 try very many persons have taken the opportunity 
 of saving a part of their returned property-tax, 
 particularly those wlio liave only life-incomes, and 
 who, contrary to the principles of just taxation, 
 
 K K 2
 
 ( 
 
 500 ON THE IMMEDIATE CAUSES [CH. VII. 
 
 had been assessed at the same rate with those 
 whose incomes were derived from reahzed pro- 
 perty. This saving is quite natural and proper, 
 and. forms no just argument against the removal 
 of the tax ; but still it contributes to explain the 
 cause of the diminished demand for commodities, 
 compared with their supply since the war. If 
 some of the principal governments concerned 
 spent the taxes which they raised in a manner to 
 create a greater and more certain demand for la- 
 bour and commodities, particularly the former, than 
 the present owners of them, and if- this difference 
 of expenditure be of a nature to last for some 
 time, we cannot be surprised at the duration of the 
 effects arising from the transition from war to 
 peace. 
 
 The diminished consumption however, which 
 has taken place so generally, must have operated 
 very differently upon the different countries of the 
 commercial world, according to the different cir- 
 cumstances in which they were placed; and it 
 will be found generally, as the principles which 
 have been laid down would lead us to expect, that 
 those states which have suffered the most by the 
 war have suffered the least by the peace. In the 
 countries where a great pressure has fallen upon 
 moderate or scanty powers of production, it is hardly 
 possible to suppose that their wealth should not 
 have been stopped in its progress during the war, 
 or perhaps rendered positively retrograde. Such' 
 countries must have found relief from that dimi- 
 nution of consumption, which now allows them to
 
 SKC. X.] 01- 1M1-; PUOGIltSS OF WEALTH. ^01, 
 
 accumulate capital, without which no state ca.n 
 permanently increase in wealth. But in those 
 countries, where the pressure of the war found 
 great powers of production, and seemed to create 
 much greater; where accumulation, instead of being 
 checked, was accelerated, and where the .vast con- 
 sumption of commodities was followed by supplies 
 which occasioned a more rapid increase of wealth 
 than was ever known before, the effect of peace 
 would be very different. In such countries it is 
 natural to suppose that a great diminution of con- 
 sumption and demand would decidedly check the 
 progress of wealth, and occasion very general and 
 severe distress, both to capitalists and the labour- 
 ins: classes. En2:land and America come the 
 nearest to the countries of this latter description. 
 They suffered the least by the war, or rather were 
 enriched by it, and they are now suffering the most 
 by the peace. 
 
 I. cannot but consider it as a ver}' unfortunate 
 circumstance that any period should ever have oc- 
 curred in which peace should appear to have been, 
 in so marked a manner, connected with distress ; 
 but it should always be recollected that it is owing 
 to the very peculiar circumstances attending the 
 late war that the contrast has been so striking. 
 It was very different in the American and former 
 wars ; and, if the same exertions had been at- 
 tempted, without the same powers of supporting 
 them, that is, without the command of the greatest 
 part of the commerce of the world, and a more 
 lapid and successful progress in the use of machi- 
 
 K K J
 
 502 ON THE IMMEDIATE CAUSES [CH. VII. 
 
 nery than was ever before known, we might have 
 been in a state to have felt the greatest relief at 
 the ' cessation of hostilities. When Hume and. 
 Adam Smith prophesied that a little increase of 
 national debt beyond the then amount of it,, 
 would probably occasion bankruptcy ; the main 
 cause of their error was the very natural one, of 
 not being able to see the vast increase of pro- 
 ductive power to which the nation would sub- 
 sequently attain. An expenditure, which would 
 have absolutely crushed the country in 1770, might 
 be little more than what was necessary to call 
 forth its prodigious powers of production in 1816. 
 But just in proportion to this power of production, 
 and to the facility with which a vast consumption 
 could be supplied, consistently with a rapid accu- 
 mulation of capital, would be the distress felt 
 by capitalists and labourers upon any great and 
 sudden diminution of expenditure. 
 
 On this account, there is reason to doubt the 
 ])olicy of raising the supplies of a long and ex- 
 pensive war within the year, a policy which has 
 been recommended by very able Avriters. If the 
 country, were poor, such a system of taxation 
 might completely keep down its efforts. It might 
 every year positively diminish its capital, and 
 render it every year more ruinous to furnish the 
 same supplies ; till the country would be obliged 
 to submit to its enemies from the absolute inabi- 
 lity of continmng to oppose them with effect. 
 On the other hand, if the country were rich, and 
 had great powers of production, which were likely
 
 SLC. X.] OF '111 t rUOGKtSS OK WEALTH. 603 
 
 to be still further called forth by the stimulus of a 
 threat consumption, it miijjht be able to pay the 
 lieavy taxes imposed upon it, out of its revenue, 
 and yet find the means of adequate accumulation ; 
 but if this process were Jo last for any time, and 
 the habits of the people were accommodated to 
 this scale of public and private expenditure, it is 
 scarcely possible to doubt that, at the end of the 
 war, when so large a mass of taxes would at once 
 be restored to tiie payers of them, the just balance 
 -, of produce and consumption would be completely 
 I destroyed, and a period would ensue, longer or 
 I shorter, according to circumstances, in which a 
 i very great stagnation would be felt in every branch 
 i of productive industry, attended by its usual con- 
 i comitant general distress. The evil occasioned by 
 ^ imposing a tax is very rarely compensated by the 
 '\ taking it oif. We should constantly keep in mind 
 I that tlie tendency to expenditure in individuals 
 I hiis mcfSt formidable antagonists in the love of in- 
 i dolence, and in the desire of saving, in order to 
 i better their condition and provide for a family ; 
 and that all theories founded upon the assumption 
 that mankind always produce and consume as much 
 as they have the power to produce and consume, are 
 founded upon a want of knowledge of the human 
 character and of the motives by which it is usually 
 influenced. 
 
 It will be said, perhaps, that as it is acknowledged 
 that the capital of this country compared with 
 the population has been diminished since the 
 
 K K 4 
 
 i
 
 504 ON niE IMMEDIATE CAUSES [CH. VII. 
 
 war, partly by the unrecovered destruction which 
 it sustained during the last two years of the con- 
 test, but still more by the sudden want of con- 
 sumption and demand which occurred on its ter- 
 mination; how is the lost capital ever to be re- 
 covered, if we are not active in accumulation? I 
 am very far indeed from saying that we must not 
 accumulate. It is perfectly true that there is no 
 other possible way of recovering our lost capital 
 than by accumulation. All that I mean to say is, 
 tliat, in looking to this most desirable object, the 
 recovery and increase of our capital, we should 
 listen to the dictates of those great general laws 
 which do not often fail to direct us in the ricrht 
 course. If^ population were ever so deficient in a 
 state compared with its territory, yet, if the wages 
 of labour still continued very scanty, and the 
 people were emigrating, the great general laws of 
 demand and supply would instruct us that some 
 previous, change in the state of things Vv^as neces- 
 sary, before we ought to wish for an increased 
 proportion of marriages, which in fact, under the 
 actual circumstances, would not accomplish the 
 object aimed at. In the sartie manner, if a portion 
 of our profits be destroyed, and yet the profits of 
 the remainder are low, and its cm.ployment attended 
 with such frequent losses as, joined to its ten- 
 dency to emigrate, make it stationary or even re- 
 trograde ; sureiy the great general laws of demand 
 and supply cannot more clearly shew us that some- 
 thing else is wanted before we can accumulate 
 with effect.
 
 SEC. X.] OF THE PROGRESS OF WEALTH. 305 
 
 What is now wantetl in this country is an in- 
 creased national revenue. — an increase in the ex- 
 chan2;eable vahie of the wliole produce estimated 
 in bullion. — and in the command of this bullion 
 over domestic and foreign labour. When we have 
 attained this, which can only be attained by in- 
 creased and steady profits, we may then begin 
 again to accumulate, and our accumulation will 
 then be effectual. But if, instead of saving from 
 increased profits, we save from diminished expen- 
 diture ; if, at the ver}' time that the supply of 
 commodities compared with the demand for them, 
 clearly adm.onishes us that the proportion of capi- 
 tal to revenue is already too great, we go on saving 
 from our revenue to add still further to our capital, 
 all general principles concur in shewing that we 
 must of necessity be aggravating instead of al- 
 leviating our distresses. jOAju 
 ■^ But how, it will be asked, are we to obtain this 
 increase of revenue ? What steps are wc to take 
 in order to raise the exchangeable value of the 
 whole produce, and prepare the way for the future 
 savinc: which is ackuowjcd«:cd to be necessarv ? 
 These questions I have endeavoured to answer in 
 the latter Section of this very long Chapter On 
 the immediate Causes of the Progress of JFealth, 
 where it has appeared that a union of the means 
 of (listributiou with the powers of production is 
 absolutely necessary to create an adequate stimulus 
 to the continued increase of wealth ; and that the 
 tlirec causes, which, by favouring distribution, tend
 
 ■ . X.J 0\ THE PROGRESS OF WEALTH. 425 
 
 have attained this, which can only be attained 
 ,v increased and steady profits, we may then hcoin 
 igain to accumulate, and our accumulation will then 
 be effectual. But if, in stead of saviup; from increased 
 profits, we save from diminislied e\])L'nditure ; if, at 
 tlie very time that the supply of commodities com- 
 pared with the demand for them, clearly admonishes 
 'TIS that the proportion of capital to revenue is already 
 too great, we go on saving from our revenue to add 
 still further to our capital, all general principles con- 
 cur in shewing that we must of necessity be aggra- 
 vating instead of alleviating our distresses. ^^^>^ 
 ^'But how, it will be asked, are we to obtain this ^'^i Cl. 
 increase of revenue ? ^Wliat steps are we to take in "A-^"*-^ 
 ' order to raise the exchangeable value of the whole 
 produce, and prepare the way for the future saving 
 which is acknowledged to be necessary? These 
 questions I have endeavoured to answer in the latter 
 "Actions of this very long Chapter On the, immediate 
 Causes of the Progress of Wealthy where it has ap- 
 peared that a union of the means of distribution with -^ 
 the powers of production is absolutely necessary to " ^ 
 create an adequate stimulus to the continued increase 
 of wealth ; and that the three causes, which, by fa- 
 vouring distribution, tend most to keep up and in- 
 crease the exchangeable value of the whole produce, 
 
 ■. tlie division of landed property, the extension of 
 ..uinestic and foreign trade, and the maintenance of 
 such a proportion of unproductive consumers as is 
 best adapted to the powers of production. 
 
 The mention of these causes is alone suflticient to 
 shew that they are much less within our immediate 
 controul than the common process of accimiulation. 
 If it were true that, in order to employ all that are 
 out of work, and to create at the same time a suffi- 
 cient market for what they produce, it is only neces- 
 sary that a little more should be saved fron. the reve- 
 nue and added to the capital of the country, I am 
 fully persuaded that this species of charity would not 
 want conlributofs, ap'l that a chanae would soon be
 
 42G ox THE PROGRESS OF M'EALTH. [CH. I. 
 
 wrought in the condition of the labouring classes. 
 But when we know, both from theory and experience, 
 that this proceeding will not afford the relief sought 
 for, and are referred to an increase in the exchange- 
 able value of the whole produce as the only cause 
 which can restore a healthy and etl'ective demand for 
 labour, it must be allowed that we may be at a loss 
 with respect to the first steps which it would be ad- 
 visable to take, in order to accomplish what we wish. 
 Still, however, it is of the utmost importance to 
 know the immediate object which ought to be aimed 
 at ; that if we can do but little actually to forward it, 
 we may not, from ignorance, do much to retard it. 
 With regard to the first/main cause which 1 have 
 mentioned, as tending\o increase the exchangeable 
 value of the national produce, namely the division of 
 landed property, I have given my reasons for think- 
 ing that, in the actual and peculiar state of this country, 
 the abolition of the law of primogeniture would pro- 
 duce more evil than good ; and there is no other way in 
 which a different division of land could be effected, 
 consistently with an adequate respect for the great 
 fundamental law of property, on which all progress 
 in civilization, improvement, and wealth, must ever 
 depend. But if the distribution of wealth to a cer- 
 tain extent be one of the main causes of its increase, 
 while it is unadvisable directly to interfere with the 
 present division of land in this country, it may justly 
 become a question, whether the evils attendant on 
 the national debt are not more than counterbalanced 
 by the distribution of property and increase of the 
 middle classes of society, which it must necessarily 
 create ; and whether by saving, in order to pay it off, 
 we are not submitting to a painful sacrifice, which, if 
 it attains its object, whatever other good it may effect, 
 will leave us with a much less favourable distribution 
 of wealth ? By greatly rediuiHig-tUejiational debt, if 
 we are able to accomplish it, we may place ourselves 
 perhaps in a more safe position, and this no doubt is 
 a most important consideration ; but grievously will
 
 SKC. X.] ON THE PROGRKSS OF WEALTH. 427 
 
 those be disappointed who think tluit, either by 
 greatly reducing or at once destroying it, we can en- 
 rich ourselves, and employ all our labouring classes. 
 With regard to the second main cause of an in- 
 crease in the exchangeable value of the whole pro- 
 duce — namely, the extension of domestic and foreign 
 trade, it is well known that we can by no means com- 
 mand either of these at pleasure, but we may do much 
 to impede both. We cannot indeed reasonably attri- 
 bute any sudden deficiency of trade to causes which 
 have been of long duration ; yet there can be little 
 doubt that our commerce has been much impaired by 
 unnecessary restraints, and that much benefit might 
 be derived from the removal of them. While it is ne- 
 cessary to raise a large sum by taxation for the ex- 
 penses of the government and the payment of the in- 
 terest of the national debt, it would by no means be 
 advisable to neglect so fair and fruitful a resource as 
 the customs. In regulating these taxes, it is also na- 
 tural that those foreign commodities should be taxed 
 the highest, which are either of the same kind as the 
 native commodities which have been taxed, or such 
 as, for special reasons of health, happiness, or safety, 
 it is desirable to grow largely at home. But there 
 seems to be no reason for the absolute prohibition of 
 any commodities whatever; andihereis little doubt 
 that, upon this principle, a much greater freedom 
 might be given to foreign commerce, at the same time 
 that a greater revenue might be derived from the 
 customs. I have already stated, in more places than 
 one, why, under all the circumstances of the case, I 
 think it desirable that we should permanently grow 
 nearly our own consumption of corn. But I see no 
 sufficient cause why we should permanently prefer 
 the wines of Portugal and the silks of London to the 
 wines and silks of France. For the same reason that 
 more British capital and labour is even now employed 
 in purchasing claret than would be employed in at- 
 tempting to make it at home, we might fairly expect 
 that, in the case of an extended trade with France,
 
 428 ox THE PI{OGHi;.S.S OF WEALTH. [cii. I. 
 
 more British capital would be employed in purchas- 
 ing the wines and silks of France, than is now em- 
 ployed in purchasing the wines of Portugal and 
 making the silks of Spitalfields and Derby. 
 
 At the same time it should be remarked that, in 
 looking forward to changes of this kind, it is always 
 incumbent upon us, particularly in the actual situa- 
 tion of our people, to attend to the wise caution sug- 
 gested by Adam Smith. Fully convinced of the be- 
 nefits of unrestrained trade, he observes, that, " The 
 case in which it may sometimes be a matter of deli- 
 beration how far, and in what manner, it is proper to 
 restore the free importation of foreign goods, after it 
 has been for some time interrupted, is, when parti- 
 cular manufactures, by means of high duties and pro- 
 hibitions upon all foreign goods which can come into 
 competition with them, have been so far extended as 
 to employ a great multitude of hands. Humanity 
 may in this case require that the freedom of trade 
 should be restored only by slow gradations, and with 
 a good deal of reserve and circumspection. Were 
 these high duties and prohibitions taken away all at 
 once, cheaper foreign goods of the same kind might 
 be poured so fast into the home market as to deprive 
 all at once many thousands of their ordinary employ- 
 ment and means of subsistence."* The caution here 
 given by Adam Smith certainly applies in a very 
 marked manner to the silk trade ; and, however desi- 
 rable it may be (and it is so most unquestionably) 
 to open the trade with France, a sudden and incau- 
 tious admission of a large quantity of French silks 
 would tend to aggravate, instead of to relieve the 
 present distresses of our working classes. 
 
 In all cases where, under peculiar circumstances, 
 the distress of the country would be aggravated by 
 the opening of certain trades, which had before been 
 subject to restrictions, the exchangeable value of the 
 whole produce estimated in labour, would for a time 
 
 • Wealth of Nations, Book iv. ch. vii. p. 202, 6lh edit.
 
 SEC. X.] ON THE PROGRESS OF WEALTH. 429 
 
 be diminished. Butj in general, as I Imve endea- 
 voured to shew in' the 8th Section of this Chapter, 
 the natural and permanent tendency of all extension 
 of trade both domestic and foreign, is to increase the 
 exchangeable value of the whole produce. This is 
 more especially the case when, instead of changing 
 the channels of commerce, we are able to make large 
 and distinct additions to them. The good is then un- 
 alloyed by partial and temporary evil. Tliic b'^ftPi- 
 distribut ion of the produce o f the countr}-^^ this better 
 adaptation of it to the wants and tastes of the consu- 
 ^lers, will TTf^dncer gTvelC^a greater market value, and 
 *af~6nce increase the national revenue, the rate of 
 steady profits, and the wages of labour. 
 ■**" With regard to the-^htrd cause of an increase in the 
 exchangeable value of the whole produce, the main- 
 tenance of unproductive consumers — though many 
 have no power to be of use in this respect, others may 
 do something ; and it must certainly be advantageous 
 that the truth, whatever it may be, relating to the 
 effects of unproductive consumers, should be fully 
 known, that we may not aim at what will obstmct the 
 progress of wealth, and clamour at what is calculated 
 to advance it. Whatever it may be thought advisa- 
 ble to do respecting the diminution of unproductive 
 consumers, with a view to the placing ourselves in a 
 safer position, we shall be led to proceed with more 
 deliberation, if we are not hurried on by the impres- 
 sion that, by this diminution, we are affording imme- 
 diate relief to the labouring classes. 
 
 It is also of importance to know that, in our endea- 
 vours to assist the working classes in a period like the 
 present, it is desirable to employ them in those kinds 
 of labour, the results of which do not come for sale 
 into the market, such as roads and public works. 
 The objection to employing a large sum in this 
 way, raised by taxes, would not be its tendency to di- 
 minish the capital employed in productive labour; 
 because this, to a certain extent, is exactly what is 
 wanted ; but it might, perhaps, have the effect of
 
 430 ox THE. PROGRESS OF WEALTH. [CH. I. 
 
 concealino^ too much tlie failure of the national demand 
 for labour, and prevent the population from gradually 
 accommodating itself to a reduced demand. This how- 
 ever might be, in a considerable degree, corrected by 
 the wages given. And altogether 1 should say, that 
 the employment of the poor in roads and public 
 works, and a tendency among landlords and persons 
 of property to build, to improve and beautify their 
 grounds, and to employ workmen and menial ser- 
 vants, are the means most within our power and most 
 directly calculated to remedy the evils arising from 
 that disturbance in the balance of produce and con- 
 sumption, which has been occasioned by the sudden 
 conversion of soldiers, sailors, and various other 
 classes which the war employed, into productive la- 
 bourers. 
 
 If by the operation of these three causes, either se- 
 parately or conjointly, we can make the supply and 
 demand bear a more advantageous proportion to each 
 Other, so as to increase the exchangeable value of the 
 whole produce, the rate of profits may then perma- 
 nently rise as high as the quality of the soil in culti- 
 vation combined with the actual skill of the cultiva- 
 tors will allow, which is far from being the case at 
 present. And as soon as the capitalists can begin to 
 save from steady and improving profits, instead of 
 from diminished expenditure, that is, as soon as the 
 national revenue, estimated in bullion, and in the 
 command of this bullion over labour, begins yearly 
 and steadily to increase, we may then begin safety 
 and effectively to recover our lost capital by the usual" 
 process of saving a portion of our increased revenue' 
 to add to it. 
 
 ^It is, I believe, the opinion of many persons, parti- 
 cularly among the mercantile classes, that nothing 
 would so soon and so effectively increase the revenue 
 and consumption of the country as a free issue of 
 paper. But in holding this opinion, they have mis- 
 taken the nature of the great advantage which the 
 national wealth may sometimes unquestionably derive
 
 SEC. X.] OX THE PROGRESS OF WEALTH. 431 
 
 from a fall in tlie value of the currency. The specific 
 effect of this fall is to take away property from those 
 who have fixed incomes, and give a greater command 
 over the produce of the country to those who buy and 
 sell. When the state of the national expenditure is 
 such that there is a difiiculty of supplying it, then 
 whatever tends to throw a greater proportion of the 
 produce into the hands of capitalists, as it must in- 
 crease the power of production, must be just calcu- 
 lated to supply what is wanted. And, though the 
 continuation of the act of restriction beyond the 
 immediate necessity of the case, can hardly be con- 
 sidered in any other light than that as an act of 
 positive injustice towards the possessors of fixed in- 
 comes ; yet there is little doubt that the fall in 
 the value of money, and the facility of credit which 
 it occasioned, acting in the way described, must have 
 contributed greatly to that rapid recovery of vast ca- 
 pital destroyed, which, in the same degree, never 
 probably occurred in the history of any nation before. 
 But, if we were now to make similar issues of paper, 
 the effect would be very different. Perhaps a sudden 
 increase of currency and a new facility of borrowing 
 might under any circumstances, give a temporary 
 stimulus to trade, but it would only be temporary. 
 Without a large expenditure on the part of the govern- 
 ment, and a frequent conversion of capital into re- 
 venue, the great powers of production acquired by the 
 capitalists, operating upon the diminished power of 
 purchasing possessed by the owners of fixed incomes, 
 could not fail to occasion a still greater glut of com- 
 modities than is felt at present ; and experience has 
 suflficiently shewn us, that paper cannot support prices 
 under such circumstances.' In the history of our paper 
 transactions, it will be found that the abundance or 
 scantiness of currency has generally followed and ag- 
 gravated high or low prices, but seldom or never led 
 them ; and it is of the utmost importance to recollect 
 that, at the end of the war, the prices failed before the 
 contraction of the currency began. It was, in fact, the
 
 432 ox THE PROGRESS OF WEALTH. [CH. I. 
 
 failure of the prices of agricultural produce, which de- 
 stroyed the country banks, and shewed us the frail 
 foundations on which the excess of our paper-currency 
 rested. This sudden contraction no doubt aggravated 
 very greatly the distresses of the merchants and of the 
 country ; and for this very reason we should use our 
 utmost endeavours to avoid such an event in future ; 
 not, however, by vain efforts to keep up prices by 
 forcible issues of paper, in defiance at once of the 
 laws of justice and the great principles of supply and 
 demand, but by the only effectual way, that of steadily 
 maintaining our paper of the same value with the coin 
 which it professes to represent, and subjecting it to no 
 other fluctuations than those which belong to the pre- 
 cious metals. 
 
 In reference to the main doctrine inculcated in the 
 latter part of this work, namely, that the progress of 
 wealth depends upon proportions ; it will be objected, 
 perhaps, that it necessarily opens the way to differ- 
 ences of opinion relating to these proportions, and 
 thus throws a kind of uncertainty over the science of 
 political economy which was not supposed to belong 
 to it. If, however, the doctrine should be found, 
 upon sufficient examination, to be true ; if it ade- 
 quately accounts for things as they are, and explains 
 consistently why frequent mistakes have been made 
 respecting the future, it will be allowed that such 
 objectors are answered. We cannot make a science 
 more certain by our wishes or opinions ; but we may 
 obviously make it much more uncertain in its appli- 
 cation, by believing it to be what it is not. 
 
 Though we cannot, however, lay down a certain 
 rule for growing rich, and say that a nation will in- 
 crease in wealth just in the degree in which it saves 
 from its revenue, and adds to its capital : yet even in 
 the most uncertain parts of the science, even in those 
 parts which relate to the proportions of production 
 and effective consumption, we are not left without 
 guides ; and if we attend to the great laws of demand 
 and supply, they will generally direct us into the
 
 SEC. X.] ON THE PROGRESS OF WEALTH. 433 
 
 right course. It is justly observed by Mr. Ricardo 
 that " the farmer and manufacturer can no more live 
 without profit than the labourer without wages. Their 
 motive for accumulation will diminish with every dimi- 
 nution of profit, and will cease altogether when their 
 profits are so low as not to afford them an adequate 
 compensation for their trouble, and the risk which they 
 must necessarily encounter in employing their capital 
 productively."* Mr. Ricardo applies this passage to 
 the final and necessary fall of profits occasioned by 
 the state of the land. I would apply it at all times, 
 throughout all the variable periods which intervene 
 between the first stage of cultivation and the last. 
 Whenever capital increases too fast, the motive to ac- 
 cumulation diminishes, and there will be a natural 
 tendency to spend more and save less. When profits 
 rise, the motive to accumulation will increase, and 
 there will be a tendency to spend a smaller propor- 
 tion of the gains, and to save a greater. These ten- 
 dencies, operating on individuals, direct them towards 
 the just mean, which they would more frequently at- 
 tain if they were not interrupted by bad laws or un- 
 wise exhortations. If every man who saves from his 
 income is necessarily a friend to his country, it follows 
 that all those who spend their incomes, though they 
 may not be absolute enemies, like the spendthrift, 
 must be considered as failing in the duty of benefiting 
 their country, and employing the labouring classes, 
 when it is in their power ; and this cannot be an 
 agreeable reflection to those whose scale of expendi- 
 ture in their houses, furniture, carriages and table, 
 would certainly admit of great retrenchment, with 
 but little sacrifice of real comfort. But if, in reality, 
 saving is a national benefit, or a national disadvan- 
 tage, according to the circumstances of the period ; 
 and, if these circumstances are best declared by the 
 rate of profits, surely it is a case in which individual 
 interest needs no extraneous assistance. 
 
 * Princ. of Polit. Econ. ch. vi. p. 127 
 F F
 
 434 0\ THE PROGRESS OF WEALTH. [CH. I 
 
 Saving, as I have before said, is, in numerous in- 
 stances, a most sacred private duty. How far a just 
 sense of this duty, together with the desire of better- 
 ing our condition so strongly implanted in the human 
 breast, may sometimes, and in some states of society, 
 occasion a greater tendency to parsimony than is con- 
 sistent with the most effective encouragement to the 
 growth of public wealth, it is difficult to say ; but 
 whether this tendency, if let alone, be ever too great 
 or not, no one could think of interfering with it, even 
 in its caprices. There is no reason, however, for 
 giving an additional sanction to it, by calling it a 
 public duty. The market for national capital will 
 be supplied, like other markets, without the aid of 
 patriotism. And in leaving the whole question of 
 saving to the uninfluenced operation of individual in- 
 terest and individual feelings, we shall best conform 
 to that great principle of political economy laid down 
 by Adam Smith, which teaches us a general maxim, 
 liable to very few exceptions, that the wealth of na- 
 tions is best secured by allowing every person, as 
 long as he adheres to the rules of justice, to pursue 
 his own interest in his own way. 
 
 Still it must be allowed that this very doctrine, and 
 the main doctrines of the foregoing work, all tend to 
 shew, as was stated in the Introduction, that _th£ 
 science of political ecomony bears a nearer resem- 
 blance to the sciences of morals and politics, than to 
 the science of mathematics. But this truth, though 
 it detracts from its certainty, does not detract from 
 its importance. While the science of political eco- 
 nomy involves some of the questions which have the 
 nearest connection with the well-being of society, it 
 must always be a subject of the highest interest. The 
 study of it is calculated to be of great practical use, 
 and to prevent much positive evil. And if its prin- 
 ciples be carefully founded on an experience suffi- 
 ciently extended, we have good reason to believe, 
 from what they have already done, that, when pro- 
 perly applied, they will rarely disappoint our just 
 expectations.
 
 SEC. X.] ON THE PROGRESS OF WEALTH. 435 
 
 There is another objection which will probably be 
 made to the doctrines of the latter part of this work, 
 which I am more anxious to guard against. If the 
 principles which I have laid down be true, it will 
 certainly follow that the sudden removal of taxes will 
 often be attended with very different effects, particu- 
 larly to the labouring classes of society, from those 
 which have been generally expected. And an in- 
 ference may perhaps be drawn from this conclusion 
 in favour of taxation. But the just inference from it 
 is, that taxes should never be imposed, nor to a 
 greater amount, than the necessity of the case justi- 
 fies, and particularly that every effort should be made, 
 consistently with national honour and security to pre- 
 vent a scale of expenditure so great that it cannot 
 proceed without ruin, and cannot be stopped without 
 distress. 
 
 Even if it be allowed that the excitement of a pro- 
 digious public expenditure, and of the taxation ne- 
 cessary to support it, operating upon extraordinary 
 powers of production, might, under peculiar circum- 
 stances, increase the wealth of a country in a greater 
 degree than it otherwise would have increased ; yet, 
 as the greatest powers of production must finally be 
 overcome by excessive borrowing, and as increased 
 misery among the labouring classes must be the con- 
 sequence, whether we go on or attempt to return, it 
 would surely have been much better for the society 
 if such wealth had never existed. It is like the un- 
 natural strength occasioned by some violent stimulant, 
 which, if not absolutely necessary, should be by all 
 means avoided, on account of the exhaustion which is 
 sure to follow it. 
 
 In the Essay on Population I have observed, that 
 " In the whole compass of human events, I doubt if 
 there be a more fruitful source of misery, or one more 
 invariably productive of disastrous consequences, than 
 a sudden start of population from two or three years 
 of plenty, which must necessarily be repressed by the 
 first return of scarcity, or even of average crops."* 
 * Vol. ii. p. 170. 4th edit.
 
 43G ON THE PROGRESS OF AVEALTH. [cH. T. 
 
 The great demand for labour which took place during 
 the war must have had an effect precisely of a similar 
 kind, only aggravated by duration ; and as this is a 
 state of things which cannot in its nature continue, 
 it is obviously the duty of all governments, if they 
 have any regard for the happiness of their subjects, 
 to avoid all wars and excessive expenditure as far as 
 it is possible ; but if war be unavoidable, so to regu- 
 late the necessary expenditure as to occasion the least 
 pressure upon the people during the contest, and the 
 "east convulsion in the state of the demand at the ter- 
 mination of it. We may have good reason to lament 
 that such taxation and consumption should ever have 
 taken place, and that so great an impetus, which 
 could only be temporary, should have been given to 
 the wealth and population of the country ; but it is a 
 very different question, what is the best remedy now 
 that the evil has been incurred? If the population 
 had made a start during a few years of plenty, we 
 should surely make great efforts to prevent, by im- 
 portation, the misery which would be occasioned by 
 the sudden return of average crops. Jf the hum an 
 body had been subjected to a very powertui stimulus, 
 we should surely be cautious not to remove it too 
 suddenly. And, if the country had been unfortu- 
 nately subjected to the excitement of a long continu- 
 ance of excessive expenditure, it surely must be " 
 against all analogy and all general principles, to look' 
 for the immediate remedy of it in a great and sudden "* 
 contraction of consumption. 
 
 There is every reason to believe that the working 
 classes of society would be severely injured by attain- 
 ing the object which they seem so ardently to wish for. 
 To those who live upon fixed incomes, the relief from 
 taxation is a great and unmixed good ; to the mer- . 
 cantile and trading classes it is sometimes a good and | 
 sometimes an evil, according to circumstances ; but 
 to the working classes, no taking off of taxes, nor any 
 degree of cheapness of corn, can compensate a want 
 of demand for labour. If the general demand for la-
 
 SEC. X.] ON THE PROGRESS OF WEALTH. 437 
 
 hour fail, particularly if the failure be sudden, the 
 labouring classes will be wretched in the midst of 
 cheapness ; if the demand for labour be considerable, 
 they will be comparatively rich in the midst of dear- 
 ness.* 
 
 To state these facts is not to favour taxes ; but to 
 give one of the strongesffeasons against them ; namely, 
 that they are not only a great evil on their first im- 
 position, but that the attempt to get rid of them after- 
 wards, is often attended with fresh suffering. They 
 are like those injudicious regulations of the mercan- 
 tile system noticed by Adam Smith, which, though 
 acknowledged to be pernicious, cannot be removed 
 without producing a greater evil for an interval of 
 considerable length. 
 
 Theoretical writers are too apt, in their calcula- 
 tions, to overlook these intervals ; but eight or ten 
 years, recurring not unfrequently, are serious spaces 
 in human life. They amount to a serious sum of 
 happiness or misery, according as they are prosperous 
 or adverse, and leave the country in a very different 
 state at their termination. In prosperous times the 
 mercantile classes often realize fortunes, which go far 
 towards securing them against the future ; but un- 
 fortunately the working classes, though they share in 
 the general prosperity, do not share in it so largely as 
 in the general adversity. They may suffer the greatest 
 distress in a period of low wages, but cannot be ade- 
 quately compensated by a period of high wages. To 
 them fluctuations must always bring more evil than 
 good ; and, with a view to the happiness of the great 
 mass of society, it should be our object, as far as 
 possible, to maintain peace, and an equable expen- 
 diture. 
 
 * When there is no demand for labour, however low the price 
 of food may be, the labouring classes can only obtain it by 
 charity. 
 
 THE END.
 
 1
 
 INDEX. 
 
 Accumulation of capital, influence 
 of, in raising rents, 158 ; accumula- 
 tion, or the saving from revenue to 
 add to capital, considered as a stimu- 
 lus to the increase of wealth, 314 — 
 330. 
 
 Agriculture, influence of improvements 
 in, on raising rents, 159, 160 ; and 
 of an increase in thepriceof agricul- 
 tural produce, 161 — 173; improve- 
 ments in agriculture, a practical 
 source of the increase of rents, 196, 
 197 ; probable efl^ects of disusing 
 horses in agriculture, 237 ; observa- 
 tions on spade-cultivation, ib. note. 
 the distribution occasioned by the 
 division of landed property, consi- 
 dered as a means of increasing the 
 exchangeable value of the whole pro- 
 duce, 372 — 382 ; state of agriculture 
 during the middle ages, 373. 
 
 America, the United States of, almost 
 the only country where rents may be 
 increased without agricultural im- 
 provements, 198, 199 ; their rapid 
 increase accounted for, 373 ; causes 
 of the distresses in those states since 
 1815, 413—422. 
 
 Bank paper, the value given to it, by 
 limiting its quantity, shews that the 
 cost of producing gold only influ- 
 ences its price as it influences its sup- 
 ply, 73. 
 
 British Empire, prosperous state of, 
 378 ; its causes, ib. 379, 380. 
 
 Buchanan, (Mr.), erroneous views of, 
 onthenatureofrent, 138— 140. 147. 
 
 Bullion : — an increasein the exchange- 
 able value of the whole produce, es- 
 timated in bullion, and in the com- 
 mand of this bullion over foreign and 
 domestic labour, absolutely neces- 
 sary to extricate the country from its 
 distresses, 424, 427—436. 
 
 Bullion question, the controversy upon 
 it, an exemplification of the error of 
 a precipitate attempt at simplifica- 
 tion, 5 ; the bullion report was more 
 free from this error than any book 
 that has yet appeared, ib. note. 
 
 Capital, absolute necessity of, to farm- 
 ers, 191, 192; fertility of land the 
 only source of permanently high re- 
 turns for capital, 213 ; striking illus- 
 tration of the efl^ects of capitals em- 
 ployed on land compared with others, 
 ib. 214 ; the use of fixed capital, in 
 general favourable to the abundance 
 of circulating capital, 236, 237 ; the 
 profits of capital, what, 262 ; how 
 they are affected by the increasing 
 difficulty of procuring the means of 
 subsistence, 263 — 276 ; also by the 
 proportion which capital bears to la- 
 bour, 276 — 282 ; and by causes prac- 
 tically in operation, 282 — 286; defi- 
 cient capital the cause of the dis- 
 tresses of the labouring classes, since 
 1815, 386, 387 ; this cause further 
 considered and elucidated, 413, et 
 seq.; injudicious policy of recom- 
 mending the conversion of more re- 
 venue into capital, when profits are 
 low and uncertain ; and when, in con- 
 sequence of capitalists not knowing 
 where they can safely employ their 
 capitals, capital is flowing out of the 
 country, 417, 418. 
 China, high rate of interest in, and its 
 
 cause, 156. 
 Circulating medium of a country, 
 change in the value of, alters the dis- 
 tribution of its produces, 387, 388. 
 Civil liberty produces prudential habits 
 
 in the lower classes of society, 227. 
 Comfort, standard of, vaiious in differ- 
 ent countries, 225. 
 Commerce, internal and external, con- 
 sidered as a means of increasing the 
 exchangeable value of produce, 382 
 —398. 
 Commodities, prices of, depend upon 
 the causes which call forth, or render 
 unnecessary, a great or intense de- 
 mand, 63 ; the prices of conimodities, 
 how influenced by supply and de- 
 mand, 62 — 69 ; also by the cost of 
 production, 69 — 77 ; natural and ne- 
 cessary prices of commodities, what, 
 78, 79 ; the prices of commodities 
 further influenced by the labour
 
 440 
 
 INDEX. 
 
 which they have cost, 80 — 100; and 1 
 by the laliour which they will com- 
 niand, lOl, 116; a mere exchange 
 of commodities useless, 384 ; the ac- 
 tual value uf them how to be esti- 
 mated, 3t>3. 
 
 Consumers ( unproductive), difficulty of 
 ascertainin';^ what proportion of to 
 the productive classes, is most fa- 
 vouiable to the increase of wealth, 
 399 ; the distribution occasioned by 
 them considered as a means of in- 
 creasing the exchangeable value of 
 the whole produce, 400, 413. 
 
 Consumption : — balance of the annual 
 consumption and production accord- 
 ly as it is favouiable or unfavourable, 
 occasions the prosperity or decay of 
 every nation, 41. 
 
 Corn, on the value of, 129 — 131 ; rise in 
 the price of, raises rents, 161, 162 ; 
 fall in its price, terminating in alter- 
 ing the value of the precious metals, 
 lowers rent, 174; on the dependence 
 of the actual quantity obtained from 
 land, upon the existing rents and the 
 existing prices, 177 — 184 ; difference 
 between the pi ice of corn and that of 
 manufactures, with regard to natural 
 or necessary price, 178 ; the price of 
 com, how influenced by a difference '. 
 in the value of the precious metals, j 
 185 ; and by the high comparative 
 cost of production, 186 — 189; corn 
 would not be cheaper or more plenti- 
 ful, if landlords were to give the 
 whole of their rents to their tenants, 
 191, 192; influence of the importa- ' 
 tion of corn, on the connection of the | 
 interests of the landlord, and of the 
 state importing it, 207 — 216 ; influ- 
 ence of the cost of producing corn I 
 on the wages of labour, 218, 219 ; ^ 
 prices of wheat in the 15th and 16th t 
 centuries. 243—245 ; in the 17th , 
 century, 247, 248; in the 18th cen- 1 
 tury, 249 ; and in the former part of I 
 the" 19th century, 250. 251 ; general j 
 observations on the prices of corn j 
 during the last five centuries, 252 — 
 261 ; particularly as affected by the 
 seasons, 252 — 256. 
 
 Cost of production considered as it 
 affects exchangeable value, 69 — 72 ; I 
 the true way of viewing the costs of j 
 production, in their eflects upon I 
 prices, is, as the necessary conditions 
 of the supply of the objects wanted, 
 74 ; these conditions stated, 74, 75, 
 76 ; the high comparative cost of 
 production, how far a cause of the ' 
 high comparative price of corn, 186 
 —189. 
 
 Cotton manufactures of Great Britain, 
 causes of t!ie iocreased demand for, 
 352, 353. 
 
 Cultivation, in what manner the high 
 comparative cost of, aifect« the price 
 of corn, 186— 189. 
 
 Cultivator, on the necessary separation 
 of the profits of, from the rent land, 
 14«j_157. 
 
 Currency, changes in, from the issue 
 of paper a temporary cause of high 
 price that may mislead landloixls in 
 letting their land to their own injury, 
 and to the injury of the country, 193. 
 
 Demand and supply, these terms con- 
 sidered, 61,62 ; the relation between 
 them, how to be asceitained, 62 ; 
 demand and supply, considered as a 
 measure of value, 63 — 69 ; the princi- 
 ple of demand and supply determines 
 both natural prices and market prices, 
 70 — 73 ; intiuence of demand and 
 supply, on the wages of lal)our, 217 — 
 223 ; effective demand will command 
 general wealth, 364. 
 
 Distresses of the labouring classes since 
 1815, caused by dehciencv or loss of 
 capital, 386, 387, 413—424 ; the re- 
 medies for these distresses are, first, 
 an increased national revenue, 424 ; 
 which can be obtained only by an 
 union of the means of distribution 
 with the powers of production, 425, 
 426, 361 — 371 ; and secondly, an 
 increase in the exchangeable value of 
 the whole produce, estimated in bul- 
 lion and in tiie command of this bul- 
 lion over foreisn and domestic labour, 
 425, 427—136. 
 
 Distribution, a union of the means of, 
 with tlie powers of introduction ne- 
 cessary in order to ensure a conti- 
 nued increase of wealth, 361 — 371 ; 
 of the distribution occasioned by the 
 division of landed property, consi- 
 dered as a means of increasing the 
 exchangeable value of the wiiole pro- 
 duce, 372 — 382 ; the distribution oc- 
 casioned by commerce, internal and 
 external, considered as a means of 
 increasing the exchangeable value of 
 produce, 382 — 397 ; the distribution 
 occasioned by unproductive consu- 
 mers, considered as the means of in- 
 creasing the value of the whole pro- 
 duce, 393—413. 
 
 Econonli^ts, stricture* on the differences 
 between, and Adam Smith, 2, 3 ; the 
 comparative merits of thcii' systems 
 and of that of Adam Smith, depend 
 chieflv on their different definitions
 
 INDEX. 
 
 441 
 
 of wealth, 22 ; which terra the Eco- 
 nomists have confined within too nar- 
 row limits, 23 ; the opinion of the 
 Economists, that tlie term productive 
 labour sliould be confined exclusively 
 to labour employed upon land, con- 
 sidered and shewn to be erroneous, 
 34, 35 ; erroneous views of the eco- 
 nomists, respecting the unproductive 
 nature of trade, 383,384. See Poli- 
 tical Eco)W7ni). 
 Education, influence of, on the condi- 
 tion of tlie labouring classes, 227. 
 England, population of, why not in- 
 creased in the same proportion as that 
 of Ireland, during the same period, 
 228, 259; rates of wages there, in 
 the 15th and 16th centuries, with re- 
 marks tiiereou, 241, 242 ; especially 
 in the 16th century, 252, 253 ; prices 
 of wheat there, in the 15th and 16th 
 centuries, 243, 244 ; in the 17th cen- 
 tury, 248 ; in the 18th century, 249 ; 
 and in tiie former part of the 19th 
 century, 250. 
 Exchange, of value in, 50 ; nominal 
 value in exchange, defined, 60 ; real 
 value in exchange, ib. ; of demand 
 and supply, as they affect exchange- 
 able value, 61 — 69 ; cost of produc- 
 tion, as it affects exchangeable value, 
 69 — 79 ; of the labour which a com- 
 modity has cost, considered as a mea- 
 sure of exciiangeable value, 80 ; of 
 the labour which a commodity will 
 command, considered as a measure 
 of real value in exchange, 1 1 1 — 122 ; 
 the exchangeable value of a commo- 
 dity ceases, where such commodity ex- 
 ists in a great excess above the wants 
 of those who use it, 180, 181 ; the dis- 
 tribution occasioned by the division 
 of landed property, considered as a 
 means of increasing the exchangeable 
 value of the whole produce, 372 — 
 382 ; the distribution occasioned by 
 commerce considered as a means of 
 increasing such exchangeable value, 
 382 — 397 ; an increase in the ex- 
 changeable value of the whole pro- 
 duce, necessary to remove the exist- 
 insr distresses of this country, 425, 
 427—436. 
 Exceptions. See Limitations. 
 Exports (British), amount of, in conse- 
 quence of machinery, 356. 
 Fertility of land, the only source of, 
 permanently liigh returns for capital, 
 213, 214; other advantages result- 
 ingfromafertile soil, 214 — 216; fer- 
 tility of soil, considered as a stimulus 
 to the continued increase of wealth, 
 331—351. 
 
 Fortune, the desire of realizing one, a 
 sacred duty in private life, 403, 404. 
 
 France, rates of wages of labour in, for 
 the last two centuries, 255 ; succes- 
 sion to property there, how regulated, 
 377 ; considerations on its probable 
 results, 377—380. 
 
 Garnier (M.), refutation of the opinions 
 of, that performers on musical instru- 
 ments are unproductive labourers, 
 while the instruments themselves are 
 considered riches, 46 ; and that the 
 servants of Government are unpro- 
 ductive labourers, 47. 
 
 Generalization, precipitate, one of the 
 causes of error, 4. 
 
 Gold. See Metals (precious). 
 
 Habits, influence of, on the condition 
 of the labouring classes, 224 — 231. 
 
 Importation of corn, how it affects the 
 price of that commodity, 187, 188 ; 
 its influence on the connection of the 
 interests of the landlord and of the 
 state importing corn, 206. 
 
 Improvements in agriculture, influence 
 of, on rent, 161, 162 ; a main source 
 of the increase of rents, 196, 197 ; 
 the United States of America, almost 
 the only country where rents may 
 be increased without agricultural im- 
 provements, 198, 199. 
 
 Innovation in science, indisposition to, 
 its use and evils, 12, 13. 
 
 Intensity of demand, the meaning of 
 this expression, 66, note. 
 
 Interest, rate of, in China, 156 ; cause 
 of the high rate of, there and in In- 
 dia, ib. ; rate of in England, during 
 the reign of George II., 285 ; reduc- 
 tion of it, accounted for, 406 ; and 
 also the reduction of interest in Italy, 
 in 1685, ib. 
 
 Interference. See Non-interference. 
 
 Ireland, state of wages of labour, and 
 of profits of stock in, cannot be re- 
 duced, and why, 197 ; cause of the 
 increase of its population, 211 — 227, 
 259 ; the power of supporting labour 
 exists there, to a greater extent than 
 the will, 345, 346 ; the character of 
 the Irish peasantry vindicated, 346; 
 the deficiency of wealth in this coun- 
 try, owing more to a want of demand 
 than of capital, 348 — 350 ; prodigious 
 capabilities of Ireland for manufac- 
 turing and commercial wealth, 350, 
 351. 
 
 Labour, di\ ided into productive and 
 unpioduclive, 35 ; Adam Smith's dc-
 
 442 
 
 INDEX. 
 
 finition of productive labour consi- 
 dered, 36, 37 ; a classification of the 
 different kinds of labour necessary, 
 and why, 37 — 39; tlie distinction of 
 the Economists considered, 39, 40 ; 
 real nature of productive labour 
 stated, 42, 49 ; examination of Adam 
 Smith's definition of unproductive 
 labour, 43, 46 ; the labour realized 
 upon material products is the only 
 labour susceptible of accumulation 
 and definite valuation, 46; the la- 
 bour, which a community has cost, 
 considered as a measure of exchange- 
 able value, 83 ; the labour which a 
 commodity will command, considered 
 as a measure of real value in ex- 
 change, 93 — 111; the wages of la- 
 bour dependent on supply and de- 
 mand, 217—223 ; the natural and 
 market prices of labour defined, 223, 
 224 ; labour scarce and of very high 
 value in the United States, 105; the 
 causes which principally influence 
 the demand for labour, 231—240 ; 
 review of the corn wages of labour 
 from the reign of Edward III,, and 
 effect of a fall in the value of money 
 on the demand for labour, 240 — 252 ; 
 the effective demand for labour not 
 likely to be affected by the introduc- 
 tion of fixed capital, 237, 238 ; how 
 far the profits of capital are affected 
 by the proportion which capital bears 
 to labour, 276 — 282 ; inventions to 
 save labour considered as a stimulus 
 to the continued increase of wealth, 
 351—360. 
 Labourer, the wages of, to be necessa- 
 rily separated from the rent of land, 
 148 — 157; influence of the rate, at 
 which the resources of the country 
 and the demand for labour are in- 
 creasing, upon the condition of the 
 labouring classes, 224 ; influence of 
 the habits of the people in respect to 
 their food, clothing, and lodging, on 
 their condition, 225— 229; effect of 
 a fall in the value of money, on the 
 condition of the labourer, 240 — 252 ; 
 difference between the earnings of 
 labourers in Poland and in America, 
 280 ; labourers are stimulated by the 
 want of necessaries to produce luxu- 
 ries, 334 ; deficient capital, the cause 
 of the distresses of labourers, since 
 1815, 386, 387 ; further elucidation 
 of this subject, 413 — 424 ; remedies 
 for these distresses: first, an in- 
 creased national revenue, 424 ; this 
 to be obtained only by an union of 
 the means of distribution with the 
 powers of production, 425,426,361 — 
 
 371 ; lecondly, an locreaie in the ex- 
 changeable value of the whole pro- 
 duce, estimated in bullion, and in 
 the command of this bullion over fo- _ 
 reign and domestic labour, 425, 426 ■ 
 —436. 1 
 
 Land, rent of, defined, 136 ; its nature 
 and causes investigated, 137, etseq. ; 
 in what manner the fertility of land 
 gives a power of yielding rent, 143 — 
 148 ; on the necessary separation of 
 the rent of land from the profits of 
 the cultivator, and the wages of the 
 labourer, 148 — 157 ; causes of the 
 rise of rents of land in the ordinary 
 progress of society, 157 — 173; and 
 of the fall of them, 173—176 ; on the 
 dependence of the actual quantity of 
 produce obtained from the land, upon 
 the existing rents and the existing 
 prices, 177 — 184 ; general i-emarkson 
 the sui-plus produce of land, 207, 
 212 ; fertility of land, the only source 
 of permanently high returns for capi- 
 tal, 213 ; striking illustrations of the 
 effects of capitals employed on land 
 compared with others, 213, 214 ; 
 other advantages resulting from the 
 fertility of land, 214—217 ; its ferti- 
 lity considered as a stimulus to the 
 continued increase of wealth, 331 — 
 351 ; the distribution occasioned by 
 the division of landed property, con- 
 sidered as a means of increasing the 
 exchangeable value of the whole 
 produce, 372—382. See also Bent. 
 Landlord, positive wealth of, ought to 
 increase gradually, in the progress of 
 a country towards a high rate of im- 
 provement, 190; investigation of the 
 causes which may mislead him in 
 letting his lands, to the injury of him- 
 self and of the country, 190—193 ; 
 on the strict and necessary connection 
 of the interests of the landlord and of 
 the state, in a country which supports 
 its own population, 194 — 206. 
 Lauderdale (Lord), definition of wealth 
 
 by, 23 ; remarks on it, ib. 
 Limitations and exceptions, why rejected 
 by some scientific writers on political 
 economy, 6 ; the necessity of them 
 illustrated in the doctrines laid down 
 by Adam Smith, respecting frugalitj', 
 and saving, 6, 7 ; and in the rules 
 which relate to the division of land, 
 7 ; refutation of the opinion of some 
 political economists, that though ex- 
 ceptions may exist to the general 
 rules of political economy, yet they 
 need not be noticed, 10 — 12. 
 
 Machinery, influence of, on the prices
 
 of commodities, 179, 180; machines 
 to save labour, cousidered as a sti- 
 mulus to tlie continued increase of 
 wealth, 351—361. 
 
 Maize, extraordinary productiveness of, 
 in New Spain, 338, 339. 
 
 Alanufactures, diflPerence between the 
 natural or necessary price of, and that 
 of corn, 178 ; effect of machinei-y on 
 their prices, 179, 180. 
 
 Markets, the opening of, promoted by 
 facilities of production, 360 ; market 
 prices, how regulated, 78. 
 
 Measures of value, general observations 
 on, 51 — 60; demand and supply, 
 considered as a measure of exchange- 
 able value, 61 — 69; cost and supply, 
 considered as such a measure, 69 — 
 83 ; also the labour which a commo- 
 dity has cost, 83 — 88 ; and the labour 
 which a commodity will command, 
 97 ; of money, when uniform in va- 
 lue, considered as a measure of va- 
 lue. 122—135. 
 
 Metals, the precious, when uniform in 
 their cost, considered as a measure 
 of value, 124, 135; how a difference 
 in their value, in different countries, 
 and under different circumstances, 
 affects the price of corn, 185; error 
 of Adam Smith's opinion, that the 
 low value of gold and silver is no 
 proof of the wealth and flourishing 
 state of the country where it takes 
 place, 189. 
 
 Mexico, or New Spain, exti-aordinary 
 fertility of, 336 ; indolence of its in- 
 habitants, 337, 340, 341 ; causes of 
 its thin population, 338 ; extraordi- 
 nary productiveness of the Mexican 
 maize, ib. ; poverty of the Mexicans, 
 339 ; obstacles to the progress of po- 
 pulation in this country, ib. ; want 
 demand, the chief cause of the slow 
 progress of New Spain in wealth and 
 population, compared with its prodi- 
 gious resources, 341. 
 
 Money, when uniform in its cost, con- 
 sidered as a measure of value, 122 — 
 135. The effect of a fall in the value 
 of money, on the demand for labour 
 and the condition of the labourer, 
 240—252. 
 
 National Debt, evils of a great one, 
 411 ; reasons why it should be slowly 
 reduced, but not annihilated, 412. 
 
 New Spain. See Mexico. 
 
 Newton, his admirable rule, not to ad- 
 mit more causes than are necessary 
 to the solution of ti>e phenomena we 
 are considering, 5. 
 
 Non-interference, the principle of ne- 
 cessarily limited in practice ; ytVst, by 
 
 INDEX. 443 
 
 some duties connected with political 
 economy, which it is universally ac- 
 knowledged belong to the sovereign, 
 
 14 ; secoudlii, by the almost universal 
 prevalence of bad regulations, which 
 require to be amended or removed, 
 
 15 ; and tlnrdlif, by the necessity of 
 taxation, ib. ; the propriety of inter- 
 fering but little does not supersede 
 in any degree the use of the most ex- 
 tensive professional knowledge, 16. 
 
 Oats, unfavourable operation of prohi- 
 bitory laws, and of bounty on the 
 growth of, 230. 
 
 Personal services, the same which Adam 
 Smith terms unproductive wealth, 35. 
 
 Political economy, importance and na- 
 ture of the science of, 1, 2 ; strictures 
 on the differences between the econo- 
 mists and Adam Smith, 2, 3, 4 ; 
 causes of the differences in opinion 
 among the principal writers on politi- 
 cal economy, 4 — 16 ; motives and de- 
 sign of the present work, 16 — 19. 
 
 Population : progress of population al- 
 most exclusively regulated by the 
 quantity of the necessaries of life, ac- 
 tually awarded to the labourer, 272 ; 
 influence of the increase of, on rents, 
 158, 159 ; cause of the increase of 
 the population of Ireland, 211, 227; 
 why the population of England did 
 not increase in proportion to that of 
 Ireland, during the same period, 228, 
 259 ; causes of the increase of popu- 
 lation in Scotland, 229 ; of the causes 
 which principally influence the in- 
 crease of population, 231 — 240 ; the 
 increase of population, considered as 
 a stimulus to the continued increase 
 of wealth, 311—314; the thin po- 
 pulation of some parts of New Spain 
 accounted for, 338 ; obstacles to the 
 progress of population in that coun- 
 try, 339, 340. 
 
 Potatoes, the culture of, in Ireland, a 
 cause of the increased population of 
 that island, 211,227. 
 
 Prices of commodities, how influenced 
 by demand and supply, 62 — 69 ; by 
 the cost of production, 69 — 83 ; by the 
 labour, which a commodity has actu- 
 ally cost, 83 — 93 ; and by the labour 
 which it will command, 97 ; prices of 
 commodities, how influenced by mo- 
 ney, when unifoiTO in its value, 122 — 
 1 35 ; natural or necessary price, what , 
 77, 78 ; the causes of the ordinary 
 excess of the price of raw produce 
 above tiie costs of produclion, 140 — 
 148 ; the dependence of the actual
 
 444 
 
 INDEX. 
 
 quantity of produce obtained from 
 the land upon the existing prices of 
 produce andexisting rents, 177 — 181 ; 
 a tempKJrary rise of prices, not suffi- 
 cient to warrant an increase of rent, 
 191 ; rent ought always to be a little 
 behind prices, ih. ; the natural price 
 of labour what, 223 ; and what the 
 market price, ih., 224 ; prices of 
 wheat in the 15th and 16th centuries, 
 243, 244, 245 ; in the 17th century, 
 247, 248; in the 18th century, 249 ; 
 and in the former part of the 19th 
 century, 250 ; general observations 
 on the prices of corn during the last 
 five centuries, 252 — 261 ; particularly 
 as affected by the seasons, 255, 256. 
 
 Primogeniture, right of, ought not to be 
 abolished in this country, and why, 
 379, 382. 
 
 Produce (agricultural) influence of the 
 increase of price in, on raising rents, 
 162, 163 ; and also in diminishing 
 them, 175, 176 ; on the dependence 
 of the actual quantity of produce ob- 
 tained from the land upon the exist- 
 ing rents and existing prices, 177 — 
 184 ; the connection between great 
 comparative wealth, and a high com- 
 parative price of raw produce, 184 — 
 189 ; of the dis'.ribution occasioned by 
 the division of landed property, con- 
 sidered as the means of increasing 
 the exchangeable value of the whole 
 produce, 372— 382 ; of the distribu- 
 tion occasioned by commerce, con- 
 sidered as the means of increasing 
 the exchangeable value of produce, 
 382 — 398 ; the distribution occa- 
 sioned by unproductive consumers, 
 considered as a means of increasing 
 the exchangeable value of the whole | 
 produce, 398 — 413; an increase in ' 
 the exchangeable value of the whole 
 
 f)roduce, necessary to extricate the ' 
 abouring classes of this country from 
 their present distresses, 424, 427 — ' 
 436. : 
 
 Production, cost of, considered as it 
 affects exchangeable value, 69 — 72 ; | 
 is subordinate to the relation of the i 
 supply to the demand, 72, 73 ; the • 
 true way of considering the cost of 
 production, 74 — 83 ; in what respects 
 the high comparative cost of produc- j 
 lion is a cause of the high compara- | 
 tivopri(enfcorn,179 — 184; the value ' 
 of the whole produce of a country ' 
 how to be estimated, 235, 236 ; faci- ; 
 lities of production promote the open- ' 
 iiig of markets, ."360 ; an union of the i 
 powers of produrlioi) with the means | 
 of distribution, necessary, in oider to ' 
 
 ensure a continued increase of wealth, 
 361 — 371 ; and to remove the present 
 distresses of the labouring classes, 
 425—427. 
 
 Productive labour, defined, 34 ; exami- 
 nation of Adam Smith's definition of 
 it, 35 — 41 ; definition by the French 
 economists, 43. 
 
 Profits of the cultivator, on the neces- 
 sary separation of, from the rent of 
 land, 148—1.57; refutation of the 
 error, that when land is successively 
 thrown out of cultivation, the rate of 
 profits will be high in proportion to 
 the superior natural fertility of the 
 Innd, which will then be least fertile 
 in cultivation, 182—184. 
 
 Profits of capital defined, 262 ; in what 
 manner they are affected by the in- 
 creasing dirficulty of procuring the 
 means of subsistence, 263 — 270; of 
 the limitingprincipleof profits, 271 — 
 276 ; in what manner profits are af- 
 fected by the proportion which capi- 
 tal bears"to labour, 276—282 ; and by 
 the causes practically in operation, 
 282—291 ; remarks on Mr. Ricardo's 
 theory of profits, 291—298. 
 
 Property, succession to, how regulated 
 in France, 376, 377. See Land, 
 Wealth. 
 
 Proportions, importance of considering, 
 in forming great results on political 
 economy, 376. 
 
 Propositions. — The chief propositions 
 on which economists differ, 3. 
 
 Quality of land, how far a primary 
 cause of the high price of raw pro- 
 duce, 140—142. 
 
 Rent of land defined, 136; its nature 
 and causes, 136 — 148 ; on the neces- 
 sary separation of rent from the pro- 
 fits of the cultivator, and the wages 
 of the labourer, 148—157; what 
 causes tend to raise rents in the ordi- 
 nary progress of society, 157 — 173 ; 
 what causes tend to lower the rents, 
 173 — 176 ; on the dependence of the 
 actual quantity of produce obtained 
 from the land, upon the existingrents 
 and the existing prices, 177 — 184 ; 
 prospect of exorbitant rent, from a 
 competition of farmers, in what res- 
 pect a cause of injury to landlords 
 and to the country, 190; cautions to 
 them in raising their rents, 191 — 193 ; 
 improvements in agriculture, a main 
 source of the rise of rents, 196 — 198. 
 
 Resources of a country cannot be al- 
 teicd by humanity. 222. 223 
 
 Revenue, saving from, to add to the
 
 INDEX. 
 
 445 
 
 capital, considered as a stimulus to 
 the increase of wealth, 314 — 330 ; an 
 increased national revenue wanted to 
 extricate this country from its present 
 distresses, 424 ; an union of the 
 means of distribution with tlie powers 
 of production is absolutely necessary 
 forthispurpose,361— 371,425— 427. 
 Ricardo (IMr.), character of iiis princi- 
 ples of political economy, 18, 202 
 note* ; observations on his opinion 
 on the influence of demand and sup- 
 ply on prices, 68, 69 ; his proposition, 
 that a rise in the price of labour 
 lowers the price of a large class of 
 commodities, proved to be true, 88 — 
 90 ; his opinion considered on the 
 influence of fertility of land on the 
 increase of rents, 144, 145, 150; his 
 theory of rent controverted, 194, 195, 
 200 — 205 ; strictures on his notion of 
 the surplus of land, 207 — 211 ; his 
 definition of the natural price of la- 
 bour erroneous, 223 ; remarks on his 
 theory of profits, 291 — 298 ; and on 
 his theory of accumulation, or saving 
 from revenue to add to capital, con- 
 sidered as a stimulus to the increase 
 of wealth, 318, 323, 326, 327—330 ; 
 correction of his statement as to the 
 effect of the powers of production on 
 the increase of wealth, 364 ; his po- 
 sition controverted that saving is an 
 end instead of a means, 401. 
 Riches defined, 299, 300. 
 
 Saving, national and individual, consi- 
 dered, 401, 404. 
 
 Say (M.), erroneous views of the na- 
 ture of rent, 137. 
 
 Scotland, increase of rents in, account- 
 ed for, 197 ; causes of its increased 
 population, 229. 
 
 Seasons, influence of, on the price of 
 corn, 255, 256. 
 
 Simplification and generalization, pre- 
 cipitate attempts at, are the principal 
 causes of the differences of opinion 
 among scientific writers on political 
 economy, 4 ; this leads them unwil- 
 lingly to admit the operation of more 
 than one cause in the production of 
 effects observed, 5 ; and also to reject 
 limitations and exceptions, which 
 nevertheless are necessary, 6 — 8 ; as 
 well as to be unwilling to bring their 
 theories to the test of experience, 8 — 
 12. 
 Slsrnondi (M.), erroneous views of, on 
 the nature of rent, 138, 147; correc- 
 tion of his sentiments on the limits of 
 accumulation, 366, 367. 
 Smith (Adam), remarks on his system 
 
 of political economy, 2, .3 ; his state- 
 ment tliat capitals are increased by 
 parsimony, that every frugal man 
 IS a pubhc benefactor, and that the 
 increase of wealth depends upon the 
 balance of produce above consump- 
 tion, examined, 6, 7 ; remarks on 
 his definition of wealth, 33 ; exami- 
 nation of his defiirition of produc- 
 tive labour, 34 — 41 ;and of unproduc- 
 tive labour, 47 — 49; his definition of 
 natural price considered, 77, 73 ; his 
 erroneous definition of monopoly, 138, 
 139 ; mistake in his opinion that the 
 low value of gold and silver is no 
 proof of the wealth and flourishing 
 state of tlie country where it takes 
 place, 189. 
 
 Soil, quality of, how far a primary cause 
 of the high price of raw produce, 140 
 —142. 
 
 Spade-cultivation, observations on, 237, 
 note. 
 
 State, interests of, strictly and necessa- 
 rily connected with those of the land- 
 lord, 194—206. 
 
 Stock defined, 262. 
 
 Subsistence, the increasing difficulty of 
 procuring the means of, how it affects 
 profits, 262—270. 
 
 Supplies, impolicy of raising within the 
 year, 423, 424. See Demand and 
 Supply. 
 
 Surplus produce of land, general re- 
 marks on, 207—217. 
 
 Taxation, heavy, whether beneficial to 
 a country or not, considered, 418, 
 419 ; impolicy of raising supplies on 
 taxes, within the year, 423, 424 ; 
 eflfect of taxation, 436, 437 ; evils of 
 taxes, 437. 
 
 Theory, if inconsistent wdth experience, 
 should be rejected, 8. 
 
 Transition from war to peace, effects of, 
 420—422. 
 
 Unproductive labour, Adam Smith's de- 
 finition of, considered, and its real 
 nature stated, 41 — 49; unproductive 
 labourers must necessarily be in so- 
 ciety, 406, 407 ; solution of the ques- 
 tion, whether they must be considered 
 as detracting so much from the ma- 
 terial products of a country, and its 
 power of supporting an extended pro- 
 duction ; orwhethei they furnish fresh 
 motives to production, and tend to 
 push the wealth of a country farther 
 than it would go without them, 407 
 —413. 
 
 Value, different sorts of, 60, 60 ; ot
 
 446 INDEX. 
 
 value in use, i6. ; value in exchange, 
 50; measures of value, 51 — 60; of 
 demand and supply, as they affect ex- 
 changeable values, 61 — 69; cost of 
 production, considered, as it affects 
 exchangeable value, 69 — 80 ; of 
 the labour which a commodity has 
 cost, considered as a measure of ex- 
 changeable value, 83 — 93 ; the labour 
 which a commodity will command, 
 considered as a measure of real value 
 in exchange, 93 — 111 ; money, when 
 uniform in its cost, considered as a 
 measure of real value, in exchange, 
 122—135; the value of the whole 
 funds specifically destined for the 
 maintenance of labour, how to be esti- 
 mated, 238, 239 ; effectof a fall in the 
 value of money, on tlie demand for la- 
 bour, and tlie condition of the labour- 
 er, 240 — 252 ; the distinction between 
 value and wealth, stated, 299—308 ; 
 the distribution occasioned by the di- 
 vision of landed property, considered 
 as the means of increasing the ex- 
 changeable value of the whole pro- 
 duce, 372 — 382; the distribution oc- 
 casioned by commerce, considered as 
 the means of increasing the ex- 
 changeable value of produce, 382 
 — 398 ; the distribution occasioned 
 by unproductive consumers, consi- 
 dered as a means of increasing the 
 exchangeable value of the whole pro- 
 duce, 398 — 413 ; an increase in the 
 exchangeable value of the whole pro- 
 duce, absolutely necessary to extri- 
 cate this country from its present dis- 
 tresses, 424, 425, 427, 436. 
 
 Wages of labour defined, 217 ; on the 
 necessary separation of the wages of 
 the labourer from the rent of land, 
 148 — 157 ; illustrations of the de- 
 pendence of the wages of labour on 
 demand and supply, 217 — 223 ; in- 
 fluence of high wages on population, 
 233 ; review of the corn wages of 
 labour from the reign of Edward III., 
 240—252 ; rates of wages in the 15th 
 
 and 1 6th centuries, with remarks 
 thereon, 241 ; especially on the higii 
 rite of wages in the 16th century, 
 252, 253 ; rates of wages in France, 
 during the last two centuries, 255 ; 
 are not permanently lowered by the 
 increase of population, 312, 313. 
 
 Wealth, its definition and source, a sub- 
 ject of dispute among the economists, 
 2 ; the wealth of a particular nation 
 is increased by the increasing wealth 
 and prosperity of surrounding states, 
 10; wealth defined, 21 ; observations 
 on the different definitions given of it 
 by political economists, 22, 23 ; es- 
 pecially that by Lord Lauderdale, 
 23 ; and Adam Smitii, 24 ; suscep- 
 tibility of accumulation, essential to 
 our usual conceptions of wealth, 45 ; 
 on the connection between great 
 comparative wealth and a high com- 
 parative price of raw produce, 184 — 
 189 ; the distinction between value 
 and wealth stated, 299—308 ; the 
 increase of population considered as 
 a stimulus to the continued increase 
 of wealth, 311 — 314 ; of accumula- 
 tion, or the saving of revenue to add 
 to a capital considered as a. stimulus 
 to the increase of wealth, 314 — 330 ; 
 the fertility of the soil considered as 
 a stimulus to the continued increase 
 of wealth, 331 — 351 ; inventions to 
 save labour considered as a stimulus 
 to the continued increase of wealth, 
 351 — 360; of the necessity of the 
 union of the powers of production 
 with the means of distribution, in or- 
 der to ensure a continued increase of 
 wealth, 361—371. 
 
 Wheat, prices of, in the 15th and 16th 
 centuries, 243, 244; in the 17th 
 century, 248 ; in the 18th century, 
 249 ; and in the former part of the 
 19th century, 250 ; general obser- 
 vations on the prices of wheat during 
 
 ' the last five centuries, 252, et seq. ; 
 particularly on the influence of the 
 season on those prices, 255, 256. 
 
 C. Wiiittingham, Tooks Court, Ciiancery Lane.
 
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