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two great results desired; namely, abundant production on the one hand, and a just law of diffusing or distributing this fund of production on the other.
As the matter here involved is matter possessing a most important practical character, and as the utmost degree of correctness should be adopted in attaining a comprehension of it, I will again refer to the statistical diagram of population and capital, in order that the working of facts now laid down may be seen in the clearest point of view. In this table there is presented the population of a community or nation, which population is of the number five millions; and there is presented also the capital of the same community, which is of the value of one hundred millions. There is presented, moreover, the several divisions and subdivisions of employment, the productions accruing from each being exchanged generally amongst the members, forming the substance of support, or the power which each class possesses to buy or to enjoy. Now, it must be remembered, that the agreed object involved in the science of Social and Political Economy, is that of finding out the method whereby a constant increase of the fund here exhibited may be insured, in order that subsistence may be afforded adequate to the constant increase of the people who are to be sustained by the fund. Upon applying the great law of demand, in the form in which it has been established by the body of evidence adduced in my preceding argument, to all the sources of production which are set out in this table, the result will be a continuity of this power or demand, for conserving existing interests or capital; then, this capital constituting the basis, an advancement may be made from this basis adequate to the increase which is added to each fund by reason of the new portion of it, or the added production having value imparted to it by the general demand made for it. Thus, if the increase or profit of the 100 millions capital
be 10 per cent. during a year, in that case, there will be a fund of ten millions, by means of which the changes undertaken by the entire community are to be accomplished. More than this is prevented by the nature of things from being accomplished. If more be attempted, the attempt must be followed by the supercession of things previously educed and enjoyed, and so be the means of depriving of enjoyment some members who have been in possession of it.
The rule, measure, or law of progress, which I have here laid down, must be well known in the simple practical virtue of its character to every man whose condition of life has made him intimately conversant with commercial transactions. It will be well known, that if a person conducts a trade with a capital of 10,000l., the course he has to pursue, if he should be desirous of increasing his trade, is that of increasing, in the first place, this capital. If he should be so fortunate as earn an annual profit of 15 per cent., and so make an aggregate profit of 1500l. a-year, and should he likewise be so prudent as to restrict the expenditure for his maintenance to the sum of 500l. a-year, he will then have, at the end of the year, 1000l. additional capital, wherewith to embark in a larger trade; but then, again, this increase of trade must be only in proportion to his increase of capital, and so he may continue to do year by year; increasing his trade just in that degree in which he increases his capital, and only in that degree.
Again. The principle is equally apparent in the case of the private expenditure of capital, and of income the fruit of capital. I will suppose that a man possesses an income of 1000l. a-year and that he expends all of it on his general household necessaries, comforts, and luxuries. He is desirous, however, of increasing these enjoyments by the addition of other enjoyments, one of which I will suppose to be a carriage. It
is evident that before entering upon this new enjoyment an increase of means must be acquired adequate to the increased expenditure which will have to be incurred. If this additional expenditure be entered upon before the additional means are provided, derangement must inevitably ensue. Whether we argue the case of the unit, the congregate, or the aggregate, the reasoning equally applies. The simple and perfect character of the natural law can neither be changed nor relaxed. Multiplication of cases exercises no control whatever over law. It was right and salutary in the beginning; it is right and salutary in the middle; and it will be right and salutary to the end. It is right, salutary, and unchangeable in the case of an individual; it is equally right, salutary, and unchangeable in the case of any number whatever of individuals of which a nation may be composed.
With regard to the adducement of evidence in corroboration of the important branch of social economy of which I have just treated, it is to be accomplished by a reference to the works of the chief writers on Political Economy. But, at the same time that I adduce and apply evidence derived from the chief members of the modern school, showing that their minds were led, in their investigation of this, as also in their investigation of other branches of the science, to pursue the same course and to adopt the same conclusions as those pursued and adopted by me, yet I have to remind the reader, that these writers were led, as I have before had occasion to remark, notwithstanding their adoption of these analogous inductions and conclusions, to pursue courses very different from those which I have pursued. Of the inconsistent and contrariant character of these courses, I have already given a thorough examination and explication.
I now proceed to adduce from the writings of some of the modern school of Political Economists evidence in corrobora
tion of that important branch of social science which constitutes the subject-matter of this chapter, whereby it is maintained that a new creation of capital must precede improvements, or changes, if the general welfare of communities be the object desired; and that all improvements and changes must be kept within or proportioned to the degree, quantity, or amount of capital that has been newly formed, or added to the preceding stock, this increase constituting the fund by which alone improvements and changes can be beneficially effected.
The evidence which I will adduce first is from the writings of Adam Smith, thus: "As it is the power of exchanging that gives occasion to the division of labour, so the extent of this division must always be limited by the extent of that power, or, in other words, by the extent of the market."
"The extent of their market, therefore, must for a long time be in proportion to the riches and populousness of that country, and consequently their improvement must always be POSTERIOR to the improvement of that country.' 99*
Again, by the same writer: "The demand for those who live by wages necessarily increases with the increase of the revenue and stock of every country, and cannot possibly increase without it. The increase of revenue and stock is the increase of national wealth. The demand for those who live by wages, therefore, naturally increases with the increase of national wealth, and cannot possibly increase without it. It is not the actual greatness of national wealth, but its continual increase, which occasions a rise in the wages of labour. It is not accordingly, in the richest countries, but in the most thriving, or in those which are growing rich the fastest, that the wages of labour are highest."†
And again :-"A weaver cannot apply himself entirely to
* The Wealth of Nations, by Adam Smith, book 1, ch. iii.
his peculiar business, unless there is BEFOREHAND stored up somewhere, either in his own possession or in that of some other person, a stock sufficient to maintain him, and to supply him with the materials and tools of his work, till he has not only completed, but sold his web. This accumulation must, evidently, be previous to his applying his industry for so long a time to such a peculiar business. As the accumulation of stock must, in the nature of things, be previous to the division of labour, so labour can be more and more subdivided in proportion only as stock is previously more and more accumulated." *
By Malthus there is as follows: "It must ever be true that the surplus produce of the cultivators, taken in its most enlarged sense, measures and limits the growth of that part of the society which is not employed upon the land. Throughout the whole world the number of manufacturers, of merchants, of proprietors, and of persons engaged in the various civil and military professions, must be exactly proportioned to this surplus produce, and cannot in the nature of things increase beyond it. If the earth had been so niggardly of her produce, as to oblige all her inhabitants to labour for it, no manufacturers or idle persons could ever have existed. But her first intercourse with man was a voluntary present, not very large indeed, but sufficient as a fund for his subsistence till he could procure a greater. And the power to procure a greater was given to him in that quality of the earth, by which it may be made to yield a much larger quantity of food, and of the materials of clothing and lodging, than is necessary to feed, clothe, and lodge the persons employed in the cultivation of the soil. This quality is the foundation of that surplus produce, which peculiarly distinguishes the in
* The Wealth of Nations, by Adam Smith, introduction, book 2.