Again :-"I believe it may be laid down as a principle, from which there is really no exception, that if any two or more countries have governments that are about equally tolerant and liberal, and give equal protection to property, their prosperity will be in proportion to the rate of profit in each. Wherever profits are high, capital is rapidly augmented, and there is a comparatively rapid increase of wealth and population; but, on the other hand, wherever profits are low, the means of employing additional labour are comparatively limited, and the progress of society rendered so much the slower."

"It is not, therefore, by the absolute amount of its capital, but by its power of employing that capital with advantage, a power which, in all ordinary cases, is correctly measured by the common and average rate of profit — that the capacity of any country to increase in wealth and population is to be estimated."

"

And, again, the great and important truth is conveyed in language stronger and more significant by the following passage:

"No certain conclusion respecting the prosperity of any country can ever be drawn from the magnitude of its commerce or revenue, or the state of its agriculture or manufactures. Every branch of industry is liable to be affected by secondary or accidental causes. They are always in a state of flux or reflux; and some of them are frequently seen to flourish when others are very much depressed. The average rate of profit is the best barometer — the best criterion of national prosperity. A rise of profits is, speaking generally, the effect of industry having become more productive; and it shows that the power of the society to amass capital and to

*

Principles of Political Economy, by J. R. M'Culloch, p. 109.

add to its wealth and population, has been increased, and its progress accelerated: a fall of profits, on the contrary, is the effect of industry having become less productive, and shows that the power to amass capital has been diminished, and the progress of the society has been clogged and impeded. However much a particular, and it may be an important, branch of industry is depressed, still if the average rate of profit be high, we may be assured that the depression cannot continue, and that the condition of the country is really prosperous. On the other hand, though there should be no distress in any particular branch-though agriculture, manufactures, and commerce, should be carried to a greater extent than they have ever been carried before, though a nation should have numerous, powerful, and well-appointed armies and fleets, and though the style of living amongst the higher classes should be more than ordinarily sumptuous, still, if the rate of profit have become comparatively low, we may pretty confidently affirm, that the condition of such a nation, however prosperous in appearance, is bad and unsound at bottom; that the plague of poverty is secretly creeping on the mass of her citizens; that the foundations of her power and greatness have been shaken; and that her decline may be anticipated, unless measures be devised for relieving the pressure on the national resources by adding to the productiveness of industry, and, consequently, to the rate of profit.”

The following is by Malthus: "What is now wanted in this country is, an increased national revenue an increase in the exchangeable value of the whole produce estimated in bullion, and in the command of this bullion over labour. When we have attained this, which can only be attained by

Principles of Political Economy, by J. R. M'Culloch, p. 111.

increased and steady profit, we may then begin again to accumulate, and our accumulation will then be effectual."

By the matter which I have now quoted, the character and office of profit are as strongly and as fully admitted and described as it is required that they should be; for, the two essential courses -the one positive and the other negative – are advanced. By the positive or progressive course, the gradual increase of capital by means of profit, and the good rate of profit, are maintained as all-essential for sustaining national welfare; whilst, by the negative or retrogressive course, the gradual decline of profit, and the low rate in which it prevails, are assigned as proof of the operation of causes that are fraught, inevitably, with the destruction of national welfare.

On examining carefully the matter thus supplied by Mr. M'Culloch on the great feature profit, or the increase of capital, the reader will be able to detect a very important deficiency of view, and weakness of reasoning, which pervade the description. The deficiency and weakness to which I allude are not exhibited in respect of profit, or the result itself, but they are exhibited in reference to the course by which the result, or profit, is to be attained. The writer has adopted the assumption that an increase of production and profit are identical. Now, an error of a more fatal character, of a character more directly contravening the truth of the whole science, could not have been adopted. This error arose, as I have before shown, by reason of this writer, like the whole of the modern school of writers, having failed to discover the cause of value. The law of proportions, that law which is indispensably necessary for constituting value, was undiscovered by the

* Principles of Political Economy, by T. R. Malthus, A. M., sect. 10, p. 424.

He

writer; hence arose that which I have before declared. discerned and acknowledged the object required, or the great result which his inquiry involved, this being profit; but although discerning the result, in its character of a fact, he did not discern the course by which it was to be attained.

When the character and office of profit are understood, and acknowledged to be such as I have now shown them to be, it will have become evident that no other sign whereby to test practically the working of commercial policy is so fit to be adopted by statesmen. As increase of capital is the object desired and intended by every man who is able to reason on the subject, and as this end can be acquired only in the shape of profit-profit constituting the one result predicated by every statesman who shall propose a course of commercial policy for the benefit of his country-so profit should be set up as the agreed proof to which all policy is to be submitted, and by which its character is to be determined. If the result of a new course of policy be an increased rate of profit, that is, general profit, that policy is proved to be good; if, on the contrary, the course of policy should eventuate in a diminished rate of profit, then proof is given that the policy adopted is false and bad.

There is another part of Mr. M'Culloch's reasoning that deserves especial notice. The writer has alluded to that condition of a nation's circumstances, where great and unusual activity and progress are exhibited in agriculture, manufactures, and commerce, and where improvements in the state of living amongst some of the more wealthy classes are seen to be great and rapid, at the same time that the general capital is seen to be increasing at a diminished rate; thus necessitating that many members of a nation must be reduced to a condition of want, distress, and destitution, whilst some members are raised to an enjoyment of increased

luxuries. So that, simultaneously with great activity of commerce and manufactures, and an increase of wealth in the instances of many members, prevailing in a nation, yet a far larger number of the people of the nation are become distressed, because they find little or no demand for their labour, and so are seeking to quit the society where their presence is not only not wanted, but is felt to be a burden from which the wealthier classes are glad to be relieved, and are seeking to be relieved.

This unnatural, unnational, and bad condition, is like that of a family where the parents, or those who have control of the family property or capital, are seen to be indulging themselves in costly and extravagant living, in foreign travel, in frequent changes of residence, in the possession of luxuries, ornaments, pictures, and rich furniture, whilst they are neglecting the due maintenance, education, and moral and spiritual nurture of their children. The answer of these wretched persons against any objection that may be raised against their unjust and sensual courses being, "Are we not free? Have we not a right to act freely? Do we not possess the right of doing what we like with our own?"

A false and bad answer, delivered in the form of satanic questions.