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FOUR LECTURES 
 
 ON THE 
 
 ORGANIZATION OF INDUSTRY; 
 
 BEING PART OF A COURSE DELIVERED 
 
 IN THE UNIVERSITY OF CAMBRIDGE 
 
 IN EASTER TERM 1844. 
 
 BY 
 
 T. C. BANFIELD, Esq. 
 
 LONDON: 
 PUBLISHED BY RICHARD AND JOHN E. TAYLOR, 
 
 RED LION COURT, FLEET STREET, 
 
 SOLD ALSO BY DEIGHTON AND SONS, 
 
 PUBLISHERS TO THE UNIVERSITY OF CAMBRIDGE. 
 1845. 
 
<' 
 
 GENERAL 
 
TO THE 
 
 RIGHT WORSHIPFUL THE VICE-CHANCELLOR, 
 THE HEADS OF HOUSES, AND THE MEMBERS 
 
 OP 
 
 THE UNIVERSITY OF CAMBRIDGE, 
 
 AS A MARK OF UNFEIGNED ESTEEM, 
 
 AND IN GRATITUDE FOR THEIR LIBERAL SUPPORT 
 
 AFFORDED TO A 
 
 MEMBER OF A FOREIGN UNIVERSITY, 
 
 THIS WORK 
 
 IS RESPECTFULLY II^SCRIBED 
 BY THEIR OBEDIENT AND HUMBLE SERVANT 
 
 THE AUTHOR, 
 
 QQilR 
 
PREFACE. 
 
 The chief desire of the author of the following Lectures 
 was to call attention to the opinions recently promul- 
 gated by some continental Economists. This subject 
 has grown upon him as he proceeded, and he has per- 
 haps deduced more from the positions of those authors 
 when combined, than they ventured to attach to them 
 while they remained isolated. M. de Rossi's assertion, 
 that value is essentially subjective, or conferred by the 
 estimating party rather than an inherent quality in 
 the object valued, causes a total revolution in econo- 
 mical science. It makes the wants, the tastes and the 
 feelings of men the standard of value, whose exponent 
 is then to be sought in the extent to which an object 
 is consumed. This view demands of producers at least 
 as much attention to the physical and mental improve- 
 ment of their consuming fellow-citizens as to the me- 
 chanical operations by which production is promoted. 
 
 The second novel proposition to the English reader 
 contained in these lectures, is M. Hermann's adoption 
 of the relations that grow up between man and man, as 
 a portion of the wealth and capital both of individuals 
 and of nations. This is indeed a natural sequence of 
 the former proposition, which it illustrates and com- 
 pletes. It recognizes the economical value of the family 
 
VI PREFACE. 
 
 and of the national ties. The finer feelings are not de- 
 graded to the level of sordid calculation by this assertion ; 
 but the science is raised out of the narrow sphere of 
 material calculations, to the more elevated region of the 
 prouder attributes of man. It is on this ground alone 
 that the discrepancies which now render social life so 
 difficult a problem can be reconciled. The author trusts 
 that he has done no violence to this new and welcome 
 idea, by applying it generally to the results of associa- 
 tion. He has endeavoured to point out the true value 
 of association, which has been so falsely appreciated by 
 many ardent philanthropists. The aim of association is 
 to obtain and secure individual liberty. Thus associa- 
 tion stands in some measure in the same relation to 
 freedom that capital does to income, — in that of cause 
 to effect. Association is but a means wherewith to 
 attain the end, — individual freedom of action and of 
 enjoyment. Upon this argument the author rests his 
 objection to Fourier's and Owen's doctrines, which re- 
 commend the sacrifice of individual freedom for the 
 purpose of obtaining an effective association. This is 
 indeed no other than the doctrine of conquerors and 
 centralizers generally, who recognize no union save one 
 of form. It is however needless to point to the whole 
 course of history, as proving that the natural progress of 
 society is one leading from what is oppressive in forms 
 to independence on external distinctions ; while at the 
 same time a tendency to intellectual conformity is the 
 more certain, in proportion as the pressure of outward 
 restraint is the less felt. Hence the strong patriotic 
 feeling in republics, and hence the ambitious feeling in 
 all men to strive after equality, where all are equally at 
 liberty to exert their abilities and to enjoy the fruits of 
 their labour. 
 
PREFACE. Vll 
 
 The classification of human wants, as the shape in 
 which the element of necessity presents itself in econo- 
 mical science, is only new in the place here assigned to 
 it, as is shown by the references to ancient writers. 
 This classification presents us with the true ladder of 
 industry, and throws light upon many important ques- 
 tions now in agitation. By establishing a hmitation to 
 the power of estimating conferred on man, it gives a 
 positive direction to his activity, and thus aflfords a basis 
 for scientific calculations in political economy. 
 
 A pleasing result of this classification is, that while, on 
 the one side, it takes cognizance of the lowest wants of 
 man, it is, on the other, unbounded in the height which 
 it can reach, and fixes no limit to the aspirations of the 
 human mind. The importance of this addition to the 
 maxims of MM. de Rossi and Hermann will not be mis- 
 taken. The bold truths those writers have advanced 
 are reconciled with the dependent position of man to- 
 wards his Maker by a fixed classification of the slight 
 burdens attaching to his existence. 
 
 The author will feel truly happy if he has in any way 
 contributed to demonstrate the folly of imposing arti- 
 ficial burdens, in addition to those inevitable restraints. 
 Unlike the slight burdens pointed out as inherent in 
 man's nature, and which are the source of pleasurable 
 emotions when lightened, the artificial restrictions im- 
 posed by men upon their fellow- creatures are barren of 
 joy as they are of utility. The amount of wealth (in 
 the comprehensive sense of the word, which extends it 
 to intellectual as well as physical enjoyment,) that man 
 is destined by nature to command has never yet been 
 fathomed in any age. But for the present our specula- 
 tions are confined to the means most likely to lead us 
 into a position, where we can safely allow our thoughts 
 
VIU PREFACE. 
 
 to stray into the boundless vista of intellectual refine- 
 ment, in anticipation of the time when our progress in 
 it will alone be deemed worthy of attention. 
 
 If some readers think the author has gone out of his 
 way to attack what is known by the name of the 
 '* Ricardo Theory of Rent," after the complete expo- 
 sure of the fallacy upon which it is founded by the Rev. 
 Professor Jones, they must bear in mind that it has 
 recently been reproduced in a prominent manner in 
 Mr. M*Culloch's Notes to Adam Smith's Works, and 
 that it forms the sole ground of the lamentable, but 
 equally erroneous, notion that high prices of corn are 
 necessary to ensure high rents. Foreign political econo- 
 mists have not given themselves the trouble to refute 
 this theory in detail, which never was admitted abroad 
 to bear even a semblance of truth. But that all the 
 mischief to which it is said in the following lectures to 
 be likely to lead, was equally appreciated on the Conti- 
 nent, may be inferred from the remark of M. Eugene 
 Buret, — " PourM. Ricardo les hommes ne sont rien, les 
 produits sont tout." 
 
 The author is aware that he owed the honour of being 
 allowed to publish his opinions at the distinguished 
 University, to whose liberality he is proud to acknow- 
 ledge himself deeply indebted, to his promise that, he 
 would communicate the views of continental writers. 
 He will therefore be excused if he has chiefly confined 
 his quotations to foreign authors, and has not every- 
 where acknow^ledged his obligations to the better-known 
 works of English Economists. 
 
 Wiesbaden, June 30th, 1845. 
 
ON THE 
 
 ORGANIZATION OF INDUSTRY. 
 
 LECTURE I. 
 
 GENERAL PRINCIPLES. 
 
 1. In availing myself of the liberal permission granted by your 
 Vice-Chancellor, with the concurrence of the Professor of Political 
 Economy in this University, to invite your attention to some 
 subjects connected with that science, it cannot be my intention 
 to offer a complete course of its principles. For acquiring a 
 general knowledge of the principles of political economy, you 
 command, gentlemen, sufficient means ; and the attendance with 
 which you have today honoured me shows that you do not need 
 to have the importance of this study impressed upon you. 
 
 I propose on this occasion to confine myself to the consider- 
 ation of some points which have a direct bearing on production 
 and consumption, and in which I find it essential to modify or 
 to dissent from views propounded by several English writers. 
 Without establishing these points in a satisfactory manner, it is 
 useless to attempt an analysis of the resources of producers or 
 of the claims of consumers. Some principles that foreign authors 
 have laid down seem to guide us nearer to the economical foun- 
 dation of productive industry than our own authorities have done, 
 and to the works of these writers I wish especially to direct your 
 attention. 
 
 It is singular that the compound term Political Economy 
 should be used to express the same idea which the Greeks 
 indicated by the simpler expression olicovo^ila. In antiquity the 
 whole activity of the citizen was absorbed in the idea of the State, 
 from the interests of which the interest of no individual was re- 
 garded as distinct. Modern history records the introduction of 
 
many considerations into the elements that constitute a State, 
 which, in rendering the idea more comphcated than it was for 
 the ancients, admit a wider sphere for the activity of individuals. 
 A citizen^s moral as well as material relations to other States 
 besides that which he inhabits are recognized*, and form no less 
 an object of solicitude for modern statesmen than the relation in 
 which the citizen stands to his own country. That this exten- 
 sion of individual exertion, and the consequent enlarged sphere 
 of the economist, does not necessarily efface the influence of 
 national distinctions, is in part proved by the substitution of the 
 term political economy for the simpler expression of the Greeks. 
 
 The Greek V0//.09 most nearly translates the English word 
 " rule.'^ If oiKovojjbia may be translated " house-rule," our term 
 ^' political economy " denotes " the rule of the household of a 
 State/' — a phrase that is used instead of ^' political economy'' in 
 Germany t. The term rule suggests the idea of something 
 ordered with a view to organization. It is essential to bear in 
 mind this interpretation of the word rule throughout all specula- 
 tions of political economy, chiefly because in common discourse 
 the synonymous term economy has acquired a different significa- 
 tion, — that of saving or abstinence. But, important as the saving 
 or sparing of resources must prove to the economist, I need 
 hardly add, that mere abstinence is but a part of the rule which, 
 either in the household of a state or of an individual, is to lead to 
 wealth, to dignity, or to power. In the course of these Lectures 
 I shall use the terms economy and to economize in the sense of 
 rule and to rule. 
 
 2. What the political economist aspires to, and what the laws 
 of his science must teach, is to economize power. 
 
 The term pawer is used by the politician and by the mechanic 
 iniwo different although analogous senses. The acceptation in 
 which the political economist uses the word power, includes and 
 combines both, inasfar as they contribute to the welfare of so- 
 ciety. A highly successful and justly respected searcher after 
 principles in another scientific field, M. Liebig, remarks: — 
 " Civilization is the economy of power ; science teaches the 
 simplest means of obtaining the greatest result with the least 
 exertion of power. Every useless exertion of power in agriculture 
 or the other branches of industry, as in science and in politics, is 
 
 * See J. B. Say, Cours Complef, &c. Paris. 1840. I. 10, p. 134. 
 f Staatshaubhaltung — Staatswirthschaft. 
 
3 
 
 characteristic of barbarism, and marks a deficiency of civiliza- 
 tion/' 
 
 The faculty of calculating the economy of power is essen- 
 tially an attribute of the human species. Were it not so, some 
 of the animal creation would be able to compete successfully 
 with man. Man's power is therefore intellectual in its nature. 
 Man is unable to enter into bodily conflict with the greatest 
 number of the other animals, while against the forces of nature 
 at large he may be said to be physically powerless. It is the 
 intellect of man which enables him to form combinations to 
 withstand the forces of animals or of the elements. Each step 
 forward in the exertion of this power lays a foundation for future 
 progress *. Reason, therefore, the distinguishing attribute of man, 
 is the source of human power, and since without knowledge man 
 is unable usefully to exert the gift of reason, it is evident that 
 knowledge is essential to economical power. The experience of 
 this truth has given rise to the popular saying, " Knowledge is 
 power.'' 
 
 3. But in the adaptation of animal, mechanical or chemical 
 force to means for obtaining his ends, man exerts no godlike or 
 creative power. The efforts of inventive genius that we most 
 admire are nothing but discoveries within the pale of nature. 
 The sail spread to the wind, the weight of water applied to a 
 wheel, the pressure of steam upon a more complicated mecha- 
 nism, the galvanic fluid set in motion, or the pressure of the at- 
 mospheric column upon a vacuum, — what are these but natural 
 forces, adapted by man to his special purposes ? Man could not 
 have invented them, nor could he have organized their operation 
 in the manner in which we see them in nature so beautifully 
 harmonize, or so beneficially counteract each other's might. 
 
 The discovery of these agents, and of their proper use, con- 
 Btitutes but a part of economical knowledge. The knowledge 
 that confers power is not alone the knowledge of books or of 
 the traditions of crafts, not the skill of the practitioner of any 
 art, or even the wisdom of the naturalist who lays open the my- 
 steries of the animal or vegetable creations, or of any other single 
 portion of the universe,- but that transcendent knowledge which 
 comprehends all these, and goes beyond them, — the knowledge 
 
 * Mr. Senior founds ihe whole science of political economy on a moral pro- 
 pensity in man, in his first axiom : " Every man desires to obtain additional 
 wealth with as little sacrifice as possible." — Oufline, p. 139. 
 
 B 2 
 
 V 
 
4 
 
 of man's place on earth as the favoured creature of Heaven, the 
 deputed master of the globe that he inhabits*. In proportion 
 to the skill with which man uses this knowledge, which enables 
 him to work through the agency of secondary causes, he realizes 
 the bold assertion, that he is made after the image of his Creator. 
 The faculty of discerning the means wherewith to attain his ends 
 is the source of his sovereignty upon earth. Endowed with 
 this faculty, he is thrown naked into a world rife with animal, 
 chemical and mechanical conflict : his portion is that which he 
 subdues and appropriates from the vast fund of nature. 
 
 4. Every addition to human power is the result of a discovery 
 s/^ either of some new agent, or of the combinations of which known 
 agents are susceptible. It is therefore more correct to say that 
 these forces are economized, than to suppose that they are pro- 
 duced, by discoverers and inventors. The process of advance- 
 ment in the economy of power is that of analysing the field of 
 nature, or of a simplification of the uses to which we put the 
 agents already known. We can only save and turn to better 
 account the means already at our disposal, or adapt to our use 
 means that have hitherto been wasted or neglected. In short, 
 improved processes rather remove obstructions to the use of any 
 force than add to its intensity. Since the perfection of mecha- 
 nical or chemical processes can extend no further than the over- 
 coming of all the difhculties that impede the exertion of human 
 power, and we are authorized to suppose that the mind of man 
 is capable of devising means to overcome all physical obstruc- 
 tions, we must conclude that the exercise of human power, when 
 raised to its highest pitch, must have a field of action that lies 
 beyond the conflict with difhculties. We must then acknowledge 
 that the true sphere in which human power ought to be exerted 
 is in enjoyment. To imagine that there will be no tasks or duties 
 for the employment of our power when the impediments to its 
 exertion are overcome, is to estimate the position of man below 
 that of the brute, whose necessities are provided for without 
 other exertion on its part than of its instinct. Man's proper 
 task and fitting duties cannot be limited to the contest with 
 difficulties which he is destined to overcome ; and these diffi- 
 culties, which are, economically considered, mere impediments 
 
 * " Or c'est la connaissance de ces lois naturelles et constantes, sans lesquelles 
 les societes humaines ne sauraient subsister, qui constitue cette nouvelle 
 science que Ton a designee par le nom d'Economie Politique." — J, B, Sap, 
 Introd, i. 3. 
 
to his progress, can have no moral value. (For the political 
 economist, these difficulties present a field of contest on which 
 he feels convinced that human intelligence must be victorious ^ v 
 whereas the store of wealth provided for man will remain to be 
 enjoyed when all impediments to its appropriation are removed. 
 
 5. From the nature of human power must be concluded that 
 it is not, hke the power of brutes, confined to any particular 
 organ of the body, or to any instrument natural or artificial. 
 Neither the forehead, as in the bull, nor the shoulder, as in the V 
 horse, nor the digital members, as in the feline tribe, can be 
 pointed out in man as the seat of his power. The attainment of 
 skill in the exercise of any member of the body cannot there- 
 fore belong to the economical means of attaining any object. 
 Neither is human power limited to any instrument or natural 
 force. Neither land, nor water, nor steam, nor any chemical 
 agent, can be regarded as the exclusive seat of power. Human 
 reason has at its disposal all the forces of nature and all the 
 combinations of art. Nor is this power inseparably bound to 
 any of those social combinations to which man resorts under 
 the pressure of necessity, or by which he seeks to gratify his 
 aspiration after power. As long as the circumstances in which 
 they originated continue, such combinations may be a means of 
 power, but no such arrangements are invariable and at all times 
 useful. 
 
 Man is not alone a powerful being, — he is above all a free 
 agent. Upon the freedom which is given to him is based his 
 responsibility, which is individual. He would not be free, if in 
 every exertion of his power he was fettered to the use of some 
 particular instrument or combination. 
 
 6. 1 have remarked that man is destined to attain his ends 
 by the means of secondary agents. This is confirmed by the 
 well-known distinction that prevails between the human species 
 and the brute creation. No animal but man uses a tool to work! 
 with : consequently no action of any brute animal demands a] ^/ 
 reasonable calculation. With man, on the contrary, every acti 
 requires a calculation of the fitness of the means employed ta 
 the end sought ; and the exertion of reason is indispensable inj 
 all he does. 
 
 We may conclude that the greater power is given to man, that 
 he may command a greater number of objects for the gratifica- 
 tion of his desires, and such as are of a different nature from 
 
those sought by the other animals. As in nature all means are 
 beautifully and exactly suited to their ends, we cannot but infer 
 that the full exercise of human power, and the complete enjoy- 
 ment of the benefits it can command, are indispensable to place 
 man in his proper position. Any circumscription of this larger 
 measure of advantages, any curtailment of the enjoyments they 
 produce, must be painful and humiliating to man, and must 
 limit his intellectual power. 
 
 The lowest state of physical degradation'is that in which man 
 is compelled to work as an unthinking instrument for his fellow- 
 men. To this state men have invariably been reduced where 
 slavery prevailed. Slavery has ever been based on a wrong esti- 
 mate of human power. Had human power been acknowledged 
 as intellectual in its nature, slavery would never have existed. 
 
 The lowest state of moral degradation which society attains is 
 when man so little respects his fellow-man, and appreciates his 
 aid so low, as wilfully to destroy him. 
 
 7. The most convincing proof that can be found of the im- 
 propriety of looking to man^s bodily force as an instrument of 
 power, is deduced from this fact, that his force is nearly useless 
 without the aid of a tool or machine of some kind. The simple 
 bodily force of a labourer is the worst requited of any that can 
 be borrowed. A slave is a burden to a man who cannot supply 
 him with a tool to work with. According to the utility of the 
 instrument, of which a man understands the use, will the wages 
 which he receives be high or low. The labour of the helmsman 
 is better requited than that of the common sailor : the captain 
 is more highly esteemed than either. It is difficult, in the pre- 
 sent confused view of this subject that prevails, to trace the 
 exact proportions in which labour is requited : the most eco- 
 nomical use of power would, however, everywhere bring about 
 a gradation of wages based upon this principle. That a man 
 exerting mere muscular strength has a right to as high or a higher 
 remuneration than one who exempts himself from bodily labour, 
 cannot be asserted, because, bodily force being the weakest 
 agent of human power, man has his reason bestowed upon him 
 to enable him to use more efficacious means. In accordance 
 with their ability to free themselves from bodily labour, will be 
 the remuneration of men who employ intermediate agents in 
 seeking their own ends or the furtherance of those of others. 
 A simple economical calculation shows that where most is 
 
produced^ there must be the most to divide amongst the pro- 
 ducers. 
 
 8. The necessity for employing involuntary manual labour 
 is a result either of ignorance, which has prevented our devising 
 mechanical processes to supersede it, or of indolence, which re- 
 mained contented with its results. The latter was chiefly the 
 case in antiquity, where the large proportion of slaves maintained 
 in every state afforded the free citizens the advantages attending 
 freedom from labour. The example of antiquity was stronger 
 in the first ages of modern history than the precepts of Chris- 
 tianity, with which the practice of the Church of Rome did not 
 accord. The contests of the Italian cities for freedom with the 
 Popes and with other temporal powers, show the difficulties with 
 which the aspiring mind had to contend in the middle ages. 
 Before their reduction under the yoke of despotism, the Italians 
 had just time to communicate the inventions which they had 
 either brought direct from the East, or to which they obtained 
 the clue in Asia to the cities of Germany and the Low Countries. 
 The secure position of these corporations during a certain period 
 allowed of the practical adoption of these inventions in industry, 
 and they laid the foundation of that intellectual freedom which 
 the succeeding age achieved. But only in the last and the pre- 
 sent centuries have we attained confidence in treading the path 
 that must lead to the full consciousness of our power, which is 
 by the substitution of machinery for hand labour. 
 
 We have no reason to dread any want of occupation from the 
 removal of those restraints on human freedom which now con- 
 demn men to drudgery. On the contrary, man^s keenest spur 
 to activity will be only felt when constraint ceases to paralyse 
 his aspirations. The need of bodily exertion to preserve health, 
 and the inducement to mental activity which the prospect 
 of success holds out, will cause greater because cheerful and 
 voluntary labour to be undertaken by men than they performed 
 when under the bondage of ignorance. The example of the 
 ancient Greeks and of the emancipated classes of all ages shows, 
 that games, sports, chivalrous or warlike enterprise, ever suc- 
 ceeded where the necessity for labour ceased. There can be 
 no reason why all the tasks that, under the pressure of necessity, 
 bear an ignominious stamp, should not, when that pressure is 
 removed, be considered attractive exercises of the mind or the 
 body. Daily experience furnishes examples of this change. The 
 
difference in the feeling with which an oar is handled by a galley 
 slave and by a gentleman in a boat-race, is a type of the change 
 to which we may look forward when machinery shall have re- 
 moved the necessity for manual labour. The inspiring toil of 
 enjoyment will only succeed to the dispiriting drudgery under 
 the yoke of necessity that now prevails. Another contrast, by 
 no means foreign to the range of economical speculation, is 
 afforded by the labour wdiich men under the influence of love 
 freely undertake when compared with any forced drudgery. 
 
 9. The most rapid progress in economizing power is made by 
 means of association. 
 
 The combined intellectual exertions of any number of men 
 who freely unite to accomplish an end, exceed by far in power 
 the exertions of the same number w hen isolated. The power 
 w^e command is augmented in a rapid progression wdth con- 
 stantly increasing ratio, in proportion to the numbers that 
 unite to attain a common end. Upon the experience of this 
 truth the social tendencies of man are based. Hence a sound 
 system of economy is at the same time a good social system ; 
 but, in order to be effective, it must be freely chosen by those 
 who adopt it. No economy or organization of power is accept- 
 able to man which militates against his proudest attribute, 
 his freedom of choice. The name Political Economy (§ 1.) is de- 
 rived from the present most prominent species of associations in 
 states or political combinations. A state cannot be otherwise 
 defined than as an association into which men enter for the 
 attainment of common ends. These ends may however be at- 
 tained under different circumstances, according as knowledge 
 provides various means for their attainment. Hence history 
 presents us with a constant series of changes in the size and 
 organization of states, which can generally be traced to the dif- 
 ference in the wants of men, and in the means of satisfying them, 
 which increasing or diminishing knowledge brought about. Po- 
 litical divisions must therefore be regarded as arbitrary, or as 
 dependent upon man's momentary necessities, and as such they 
 offer no sound foundation for economical speculations*. The 
 principles of political economy must be true in all states, whether 
 
 * " L'organisation artificielle des nations change avec les temps et avec les 
 lieux. Les lois naturelles qui president a leur entretien et operent leur con- 
 servation sont les memes dans tons les pays et a toutes les epoques.*' — J. B. Sai/, 
 Considerations Gen., i. p. 2, 
 
large or small^ and must be best illustrated when all states com- 
 bine to attain the common end, the welfare of mankind. There 
 can therefore be no more an exclusive national system of political 
 economy, than there can be a conventual or a communal system, 
 as distinct from the general science. National exclusive distinc- 
 tions may serve some momentary purposes, as conventual asso- 
 ciations once did, and as it is conceivable that under certain cir- 
 cumstances of oppression communal exclusive associations might 
 likewise be beneficial. These limitations of the natural law of 
 association, which is based upon the increased power that men 
 by associating command, are however each an evil, to which men 
 only resort in order to escape from some greater evil. 
 
 The world now contains political associations of every possible 
 size, varying from the few families that compose a horde of Af- 
 ghans or Kurds, to the hundreds of millions of inhabitants that 
 form the British and Chinese empires. The laws of political 
 economy must be true in each, and for all of these associations, 
 and can depend upon the size of none. The number of mem- 
 bers united to economize power by association is therefore a 
 means, and not an end, for the political economist. A natural 
 tendency of man is to associate in large masses, because in such 
 power is best economized. A disposition to separate, and to 
 break up into smaller masses, is an irrefragable proof of some 
 error in the guidance of the economical progress of a state which 
 demands careful investigation. The size of an association is 
 however only indifferent to the political economist when this 
 circumstance offers no impediment to the multiplication of power 
 by further association. The object of all associations of reason- 
 able beings is to obtain, by united power, what each when isolated 
 could not command. An association formed with a view to iso- 
 late its members from their countrymen, or from the rest of the 
 world, involves an absurd economical contradiction. Such an 
 association recognizes, on one side, the increase of power derived 
 from association, but rejects the principle when it would prove 
 most efficacious. 
 
 The leading characteristic of modern political associations is of 
 an intellectual kind. It is formed by the languages spoken in 
 different countries ; from the intellectual nature of human power, 
 language, as the organ by which knowledge is communicated, can- 
 not fail to assert prominent importance in economical experience. 
 
 10. If the necessity to associate for the purpose of augmenting 
 
»^ 
 
 10 
 
 his power be deemed a limitation of man's freedom, his right to 
 individuality in action is recognized in a second grand economi- 
 ' cal principle, division of labour. Both of these principles were 
 known to antiquity*, and their importance has been of late years 
 sufficiently recognized by modern authors. The attempts prac- 
 tically to act upon each, without sacrificing the one principle to 
 the other, have been less successful, and the failure of these at- 
 tempts has been the cause of much of the suffering that oppresses 
 civilized communities. Where human power is recognized as 
 being of intellectual nature, it will easily be conceived that asso- 
 ciation must be the result of agreement in views, and the conse- 
 quent conviction of the utility of cooperative action. The greater 
 the freedom of exertion that is secured to individuals thus asso- 
 ciated, the more durable an association is likely to prove. All 
 forms that constitute arbitrary distinctions are disturbing ele- 
 ments, and militate against the object of association, by control- 
 ling the free agency of the members., Instances of the possibi- 
 lity of reconciling these principles in the political world, are the 
 establishment and recognition of fixed principles of international 
 law by the states of Europe and of America. The German and 
 Swiss Confederations, and the constitution of the United States, 
 are national exemplifications on a smaller scale. But every vil- 
 lage, and every commercial or charitable association, every fac- 
 tory, is in itself an illustration of this principle. Liberty of 
 action must never militate against the chief purpose of the asso- 
 ciation, and can therefore not degenerate into negligence or 
 anarchy without defeating the end of the union. A great safe- 
 guard against such degeneration lies in the division of labour, 
 which, by allowing the members each to attain the highest pos- 
 sible skill in the management of his peculiar tool, adds to the 
 profits of the association, and encourages the foundation of others. 
 From this view of the necessity of leaving freedom of exertion 
 to the members of an association, we can without difficulty con- 
 clude, that an association by which all mankind, as members, 
 are bound to a common pursuit of an object beneficial to all, 
 can alone be founded on the greatest conceivable freedom of ac- 
 tion for each individual. Such an association, founded on the 
 most liberal basis, religion has all along held up to man, — that is 
 to say, that true religion which enjoins as a moral duty the co- 
 operation of every individual in this fraternal spirit. 
 * Plato, Resp. ed. Bekker, c. 370. 
 
•J- 
 
 1 1. Notwithstanding the high range of human power, there is 
 an inseparable connection between the bodily and intellectual 
 wants and enjoyments of man. The important economical result 
 to be deduced from this is, the classification of our wants *. The 
 lower wants man experiences in common with brutes. The era- ^^ 
 vings of hunger and thirst, the effects of heat and cold, of drought 
 and damp, he feels with more acuteness than the rest of the 
 animal world f. His sufferings are doubtless sharpened by the 
 consciousness that he has no right to be subject to such inflic- 
 tions. Experience however shows that privations of various kinds 
 affect men differently in degree, according to the circumstances 
 in which they are placed. For some men the privation of certain 
 enjoyments is intolerable, whose loss is not even felt by others.^^ 
 Some again sacrifice all that others hold dear for the gratification 
 of longings and aspirations that are incomprehensible to their 
 neighbours. Upon this complex foundation of low wants and 
 high aspirations the political economist has to build the theory of^^ 
 production and consumption. 
 
 An examination of the nature and intensity of man's wants 
 shows that this connexion between them gives to political 
 economy its scientific basis. The first proposition of the theory 
 of consumption is, that the satisfaction of every lower want ^ 
 in the scale creates a desire of a higher character. If the 
 higher desire existed previous to the satisfaction of the pri- 
 mary want, it becomes more intense when the latter is re- 
 moved. The removal of a primary want commonly awakens the 
 sense of more than one secondary privation : thus a full sup- 
 ply of ordinary food not only excites to delicacy in eating, but 
 awakens attention to clothing. The highest grade in the scale ^ 
 of wants, that of pleasure derived from the beauties of nature or 
 of art, is usually confined to men who are exempted from all the 
 lower privations J. Thus the demand for, and the consumption 
 of, objects of refined enjoyment has its lever in the facihty with 
 which the primary wants are satisfied. LThis therefore is the key w 
 to the true theory of value. Without relative values in the objects 
 to the acquirement of which we direct our power, there would 
 
 <7 
 
 * Plato, Eesp. ed. Bekker, c, 559. .^y* 
 
 ■f Liebig declares the composition of the human body, as far as flesh and blood) 
 are concerned, to be organically identical with the bodies of the quadrupeds. — 1 . 
 Chemical Letters, \9. ' 
 
 X This differs from Storch's distinction between " besoms natureh et factices." 
 — Cours, i..2. Both are founded in nature. 
 
12 
 
 be no foundation for political economy as a science*. It is the 
 constancy of a relative value in objects of desire, and the fixed 
 order of succession in Avhich this value arises, that makes the 
 satisfaction of our wants a matter of scientific calculation, accord- 
 ing to which we have to economize or to rule our power. 
 
 12. The acuteness with which the primary wants are felt by 
 all classes offers the first and the largest market to the producer. 
 The industrial occupations of every country include a far greater 
 number of individuals devoted to the production of the rudest 
 v articles of food, clothing and dwellingf, than are occupied in pro- 
 >y^ducing articles of luxury or in intellectual pursuits. As the 
 proportions existing between the persons employed in these re- 
 spective occupations can only be changed with advantage by 
 setting some free from the lower to be employed in the higher 
 spheres of production, all economy in these proportions depends 
 Nj-upon rendering the labour of those employed in the lower tasks 
 more effective, j This is the aim of all mechanical and chemical 
 inventions.! But in order to effect this aim, the mechanical pro- 
 cess substituted for human labour must multiply the commodity 
 used to satisfy the primary want, that, by cheapening this ob- 
 ject, the higher wants to which the labour liberated is to be di- 
 rected may find a market or fund of remuneration. 
 
 In this manner, the advance to the exercise of human power in 
 its true sphere, that of voluntary exertion, is made dependent upon 
 the satisfaction of the lower wants of man. The removal of every 
 impediment that clogs our path to this elevated position is an ob- 
 ject of natural solicitude, and forms the limit within which econo- 
 mical speculation in the present stage of civilization is confined. 
 
 Many nations, at different epochs of their history, have made 
 great progress in the arts which tend to satisfy the primary 
 
 * The author who has approached the nearest to the economical law of value 
 is J. B. Say, i. chap. 2. He had seized the phenomena which are the result 
 of this law, hut did not trace them to their cause, as is proved by the following 
 passage : — " La valeur d'une chose est une quantite positive, mais elle ne I'est 
 que pour un instant donne. Sa nature est d'etre perp6tuellement variable, de 
 changer d'un lieu a Fautre, d'un temps a I'autre. Iiie7i ne pent la fixer invaria- 
 blement, parce qii'elle est fondle sur des besoins et des moyens de production 
 qui varient a chaque minute. Cette variaUlite complique les pMnomenes de 
 Veconomie politique ; elle les rend souvent fort difficiles a observer et a resoudre. 
 Je ne saurais y porter remede ; il n'est pas en notre pouvoir de changer la na- 
 ture des choses." The reader must see that, after stating the phenomena, 
 the detection of the law appears to present to the writer unconquerable diffi- 
 culties. 
 
 f Mr. Senior adopts this succession. — Outline, 133. Plato puts dwellingf 
 oiKrjms, before dress or clothing, TpiTrj 6' eaOriros, — Pol. ed. Bekker, 
 
13 
 
 wants. We may instance the Romans, of whose technical skill 
 the Museo Borbonico at Naples furnishes such striking proof. 
 The Phoenicians, Arabs, Venetians, and other Italian States in the 
 middle ages, the Belgians at the same period, and the leading Eu- 
 ropean states at the present day, have all in their turn attained 
 to admirable skill in the mechanical arts, that varied according 
 to the freedom allowed to intellectual exertion and the security 
 afforded to the rights of citizens in each. But to the full en- 
 joyment of human power, economized as it ought to be, none 
 of these states attained, from the want of a clear insight into the 
 economical connection subsisting between the two phases of na- 
 tional development. It has nowhere been clearly recognized, 
 and consequently nowhere adopted as a practical rule, that the 
 end of labour being enjoyment, — or, in other words, the end of 
 obligatory labour being the attainment of free and voluntary 
 labour, — the more productive forced labour is made, the nearer a 
 nation approaches the consummation of its wishes. 
 
 The economist here borders on the sphere of the moralist, as 
 in other parts of his theory he encroaches on the political field ; 
 because a sound system of political economy is unattainable 
 without sound political and moral principles. The religion pro- 
 fessed by a country, and the constitution by which it is go- 
 verned, are primary conditions in estimating the progress it will 
 make in economical development. The best religious tenets 
 and the soundest political principles are requisite, as we learn 
 from history, to admit of any considerable economical progress. 
 Sound moral and political doctrines both favour, and are strength- 
 ened, by the development of the industry of a country, in strict 
 proportion to that classification of the wants of the citizens that 
 has been described. Hence we see that the range of human 
 desires which passes the limit of physical wants, and includes 
 moral advantages as well as objects of sense, does not lie beyond 
 the sphere of the political economist. 
 
 13. The first step in the progress to wealth is the recognition 
 of property ; and the political economist can take no notice of 
 what is not appropriated. Without the recognition of a moral 
 principle — security of property — no accumulation of riches is 
 practicable*. In their anxiety to obtain this grand foundation 
 
 * " Ce secours mutuel, ce travail commun trouventleur recompense, partoiit 
 on la justice preside aux rapports sociaux dans line retribution proportionnel." 
 — Rossi, ]. 3. 
 
14 
 
 of industrial progress, nations have submitted to almost every 
 conceivable form of religious guidance and judicial government. 
 Property has however its natural phases, that are developed with 
 the growth of value*, and hence modes of society, that were well 
 enough suited to the protection of one kind of property, have been 
 found intolerable as soon as another species of property rose in 
 value. The Christian command which enjoins equal respect of 
 persons and of possessions for all men, includes all the phases of 
 the growth of value, and is the most comprehensive economical 
 law. But since laws only become effective in proportion as the 
 consciousness awakens of the application of which they admit to 
 cases in detail, men have constantly refused to acknowledge the 
 application of the Christian command to growing modifications 
 of property and of society in which they had no experience. 
 Hence the conflicts which have at various times arisen respect- 
 ing the due protection which property can claim. As long as 
 thtt supply of food was a matter of difficulty, we have seen that 
 the other wants of man offered no sure field of industry, and 
 the claims of property which arose from the attempts to satisfy 
 the higher wants were dreaded as dangerous or disregarded as 
 unimportant. In the dark ages Europe presented the picture 
 of whole nations enslaved to the production of their ow^n food 
 and that of their rulers and oppressors. Relief came from the 
 exertions of a few enterprising communities who w^ere obliged 
 to seek protection from the aggressions of the Knights in the 
 swamps of Venice and of Flanders, and in the rocky fastnesses 
 of Amalfi and Genoa. The success of these traders awakened 
 calculation and imitation. With the sea code of Amalfi com- 
 mercial activity spread, and finally agricultural prosperity in- 
 creased. The rise of manufactures took place under the aegis 
 of municipal independence. With the fall of the great cities, 
 manufactures were lost for countries that had long enjoyed 
 them; but they were taken up in other lands, where the go- 
 vernment recognized the right of the peaceable citizen to enjoy 
 industrial liberty. 
 
 The attribute property is as little limited to land or to water, 
 as it is to steam or to galvanic currents. No man can claim 
 more than the use of what he has appropriated, and he can be 
 protected in the use of the share that has fallen to him, be- 
 
 * Storch, i. 3. 
 
15 
 
 cause he cannot employ it advantageously to himself without 
 conferring benefit on all around him. But this is only true 
 where the greatest freedom of thought and of action is allowed 
 to all men. No man must have the privilege of repressing the 
 growth of power amongst his fellow-men. No increase of that 
 power can be otherwise than advantageous to him if he uses it 
 properly. The right of thought and of action is however as 
 sacred for the poorest citizen as for the greatest proprietor 
 of accumulated wealth. When the labourer's rights are not 
 respected^ accumulated property is not secure. 
 
 While industry and interchange are unrestricted, there can be 
 no fear of a glut in any stage of production. If the lower wants 
 are not satisfied, their pressure offers the most remunerating field 
 of exertion. The variety of remunerating occupations that pre- 
 sent themselves where enterprise is unfettered, as the primary 
 wants are successively satisfied, divide the exertions of producers 
 and adapters, and prevent an accumulation of unnecessary power 
 in any one branch of industry*. 
 
 When, on the other hand, this play of industry, that follows 
 and suits itself to the natural and gradual growth of human 
 wants, is impeded, either by legislative restrictions or by the fear 
 of insecurity, the exertions of the industrious are prevented from 
 embracing the greatest possible number of branches of industry, 
 and a glut can easily occur in each or in all of the various stages. 
 Again, if the supply of means for the satisfaction of the primary 
 wants is suddenly checked, the producers of objects, whose value 
 depends upon that supply, find their market taken from them, 
 and a momentary glut may take place in those departments of 
 industry. A glut arising from this last-named cause cannot 
 however be of long duration, because the pressure of the primary 
 wants draws the producers and adapters from higher branches 
 to the supplying of the primary wants, by the improved remu- 
 neration which these offer when they grow urgent. Such a re- 
 trograde movement in the industry of a country infers, however^ 
 
 * Mr. Senior's illustration of a glut taken from the book trade, besides want- 
 ing precision, inasmuch as the quality of the book is not specified, wants the 
 connecting link by means of which the value of books must be shown to depend 
 on the satisfaction of nearly every necessary want of man. — See Outline, 8ic. 
 The Bible is a book that experience has shown to be most generally suited to 
 the intellectual wants of all classes. Since the Bible Societies have suited 
 its price to the power of purchasing that all ranks of society command, there 
 has been no glut of Bibles, 
 
16 
 
 a diminution of the national wealth, as well as of that of indi- 
 viduals. 
 
 The accordance of the interests of consumers and producers is 
 proved by means of this classification of the wants^ of the spheres 
 of industry and of the property of individuals. Since the satis- 
 faction of any lower want only awakens the desire to satisfy some 
 want that was before neglected, and thus opens new fields of 
 industry that divide the exertions of producers and adapters, it 
 follows that the greatest possible supply of any object of desire is 
 so far from being an evil, that it is the only means of widening 
 the field of industry and increasing the demand for labour. 
 
 14. A hmitation of the scope of the science of political eco- 
 nomy to the study of the means of producing some particular 
 kinds of riches, has been induced by neglect of the important 
 fact, that all productions stand in a fixed economical relation to 
 each other. The economical value of a thing is no more inherent 
 in the object itself, than is the attribute of property which is the 
 foundation of all wealth. Gold and silver are not wealth to the 
 man who has no bread, nor does any man sacrifice the means 
 of stilling hunger or of clothing himself, for pictures, Italian 
 operas, or dancing. And yet no one will deny that the fine arts 
 are elements of wealth, and that those who have it in their 
 power do well to indulge their love for them*. The works of 
 the artist, however, like those of the manufacturer and of the 
 agriculturist, receive their value from the relative demand for 
 and supply of each, which arise in a fixed order, as I have 
 pointed out. The chain that may develope itself of our wants 
 and power of supplying them is yet unmeasured ; because no 
 nation has as yet reached the limit of the economy of power. 
 Few have advanced so far as to banish suffering from the ma- 
 jority of the people. 
 
 We have therefore no scientific ground for stopping short at 
 any stage of production,. or of the enjoyment which it admits of. 
 We have no right to limit our ideas of wealth to the conceptions 
 of our own times, any more than any preceding age would have 
 been right in so doing. The science of political economy has 
 to deal with the relative value which one kind of production 
 creates for all others, and in this calculation the solution of the 
 
 * " La valeur, encore une fois, est I'expression du rapport qui existe entre 
 les besoins cle riiomme et les choses." — Ross'i, Coiirs d'Economie Politique, 
 lecon iv. 
 
17 
 
 most of the social problems that have been found difficult is 
 contained. The value that one species of production receives 
 from its relations to the rest, is based upon the gradations of 
 the wants of man, and on these gradations, as I have said, the 
 science of political economy is founded. 
 
 The necessities and even the desires of man that form the mo- 
 ving principle and ultimately the measure of value are subject to 
 great and almost incalculable fluctuations. The change from a 
 state of security to insecurity, from peace to war and the converse, 
 the hifluence of education, under which the slavery to fashion must 
 be comprised, all tend to fix the direction which the develop- 
 ment of our wants takes when they pass the first stages of food and 
 clothing. When aggression is threatened by an enemy, the means 
 of defence obtain a preponderating value. When peace is esta- 
 blished, the civil authorities, and all that aids the judicial power 
 in maintaining order, take precedence of military preparations. 
 Fashion brings objects into favour that sound sense would reject, 
 or the influence of a popular orator causes whole nations to 
 abandon habits that appeared to have grown inveterate. In all 
 these changes it is evidently not any intrinsic qualities in the 
 objects sought or refused, but the utility which the consumer 
 expects to derive from them that gives to each its value. In a 
 besieged town, diamonds are willingly exchanged for bread, which 
 at other times would be sought with the sacrifice of enoniious 
 quantities of corn*. 
 
 15. This origin of value, according to which it does not depend 
 so much upon the nature of the object to which it attaches, or 
 upon any difficulty in obtaining it, as upon the supply of and de- 
 mand for other objects, or the general economical condition of a 
 community, does not admit of any distinction being established 
 between value in use and value in exchange. When freedom of 
 exertion and security of property exist in the full sense of the 
 terms, value in use and value in exchange coincide. Value 
 being in all cases a subjective quality, must differ between indi- 
 viduals as between nations f. It is in all countries fixed by the 
 
 * Mr. Senior instances the change in vahie of hemp, that before the revo- 
 hitionary war sold for 50/. per ton, during the war rose to 130/., and fell after 
 the peace to its old price. — Outline. 
 
 t " La valeur en echange existe parcequ'il y a valeiir en usage; elle dis- 
 parait des le moment ou cesse toute valeur en usage." — Rossi, lecon iv. 
 
 See the limited and conflicting definitions of value enumerated by Mr. Senior 
 in the note to * Archbishop Whateley's Logic/ last edition. 
 
 C 
 
18 
 
 economy of power that each has attained. Where this economy- 
 is far advanced, more is consumed of every article than in such as 
 have not economized their power. As the production is greater 
 in well-ruled countries than in others, there is more in such to 
 exchange for the different objects of desire, and the value in ex- 
 change of each object is therefore greater. 
 
 The endeavours of political economists have therefore been 
 uselessly directed to the establishment of a general standard of 
 value by which to measure the fluctuations in the exchangeable 
 value of objects at various times and in different places. The 
 precious metals have as yet been found the most convenient 
 standard for practical use, although, like every other product of 
 industry, they are subject to the influences that give value to all 
 objects. Corn was long supposed to be produced with equal 
 cost in long periods of time, and, as remaining unvaried in its 
 average worth, to offer a standard of value for long calculations. 
 The experience of late years has not confirmed this supposition, 
 which has at all times been contradicted by the discrepancies in 
 the corn prices in the various countries of Europe. Labour has 
 been suggested as a standard of value, but it was found too diffi- 
 cult to define. The various kinds of labour differ too much from 
 each other to afford a point of comparison, independently of the 
 tendency of economy of power to dispense with mere manual 
 labour, unaccompanied by skill or trust, in every operation. The 
 remuneration of labour is, moreover, like the price of corn and 
 the precious metals, subject to vary with the supply and demand 
 for the different products of industry in every country. Where 
 power is economized, the production is great in proportion to the 
 number of producers, and wages are higher than where means 
 are wastefully or negligently applied. It is therefore evident that 
 a different measure of value from those hitherto adopted must be 
 sought. The only safe mode of estimating value must point out 
 rather the nature of the wants felt by the body of consumers and 
 the means available for supplying them, than any quality inhe- 
 rent either in the object valued or in the standard applied as a 
 test. M. Rossi has given the key to this essential improvement 
 in the remark that value is an essentially subjective quality. 
 The value of an object is therefore in the estimation of the per- 
 son and is not inherent in the object itself. 
 
 1 . Value in exchange and value in use in fact coincide econo- 
 mically, and are. both expressed by the price of an object, or by 
 
19 
 
 the quantity of any given product for which it will exchange. 
 Price nowhere measures any intrinsic value in an object, but 
 only the value of that object for the class of. consumers with 
 whom it is in demand. An article that some individuals are 
 willing to pay dear for, is often quite unsaleable amidst a dif- 
 ferent class of consumers*. Articles of indispensable necessity, 
 like articles of luxury, are unsaleable when the supply exceeds 
 the quantity required for consumption. The price however 
 correctly indicates the relative value of each when a demand 
 occurs, that is to say, the price of the total quantity consumed. 
 When the price of necessaries, as usually quoted in small 
 weights and measures, declines, it is common to say that they 
 have fallen in value : such a mode of expression is erroneous. 
 Even measured in money they have usually risen in value on 
 such occasions, and the sum paid for the quantity consumed 
 is larger than the sum paid for what is consumed at a higher 
 price. The political economist must frame his calculation for the 
 consumption of the whole market ; he cannot follow isolated spe- 
 culations in trade, in which small quantities of any commodity may 
 undoubtedly exchange for more of any other commodity when 
 the price is high than when it is low. But as a rise in price, 
 quoted in fractional quantities, may spring from two different 
 causes, it is necessary to distinguish between the effects of both. 
 
 A rise in price resulting from a scai-city of supply never in- 
 creases the sum spent on the diminished consumption of the com- 
 modity thus affected so as to equal the expenditure on the same 
 object when the price is low, if trade be unrestricted. One reason 
 of this is, that a rise in price brings the object affected to a level 
 with other objects of equal utiUty, the cost of production of which 
 prevents their being sold lower ; these enter into competition at 
 the advanced price, and check the rise : thus, when corn grows 
 dear, sugar and other substitutes are resorted to, that are less 
 sought when grain is cheap. 
 
 If prices rise in consequence of the general increased produc- 
 tion and distribution of labour occasioned by an economy of 
 power, then the rule is only true of the prices that follow the 
 change thus produced. The consumption under the changed cir- 
 cumstances will still be greater when prices are low, and the total 
 quantity consumed will exchange for more than the quantity 
 consumed when prices are raised by a deficient supply. Where 
 
 * Rossi, Cours, le9on ix. 
 
 C2 
 
20 
 
 liberty of exertion is respected, prices cannot fall for a conti- 
 nuance so low as to destroy this rule, because the new wants 
 awakened by the glut of one commodity would draw off the 
 producers, and the price w ould rise to its legitimate level. 
 
 17. Where the market is not free, the price of an article, or 
 what it will exchange for in any arbitrarily fixed commodity, 
 affords no criterion by which to judge of the value of that arti- 
 cle. In addition to the effects of restrictions of the right of 
 purchase and sale, price is subject to modifications arising from 
 the unequal diffusion of knowledge and the irregular progress 
 made by different nations in the economy of power. 
 
 The subject of price has been nearly exhausted by Professor 
 Hermann*. According to this author, the following are the 
 influences to which price is subject : — 
 
 On the side of the buyer. 
 
 1st, The value in use of the object desired. 
 2ndly, The power of paying on the side of the purchaser. 
 3rdly, The cost of procuring the same object from any., 
 other market. 
 
 On the side of the seller. 
 1st, The cost of production, 
 
 2ndly, The power of selling at any other market. 
 3rdly, The value in use of the goods obtained in exchange. 
 
 Any one of these conditions on either side can, in turn, become 
 the leading one, and can fix the price. If we analyse the relation 
 in which these influencing causes stand to each other, we find two 
 on each side that coincide and that are of an extrinsic character. . 
 These are the value in use of the two objects exchanged, and the 
 influence of competition, or the power of buying and selling in 
 an7 other market. With regard to the remaining influences it 
 may be remarked, that the cost of production acts in a contrary 
 direction upon the price to the ability of the purchaser to pay. 
 Between the limits fixed by these two elements of price, the 
 economical problem is contained, as there is a constant tendency 
 on the part of buyers to lower prices to the limit of the cost of 
 production, and on that of sellers to exact the most that the 
 consumer can afford to payf. A due economy of power tends 
 in a double manner to reconcile these conflicting views; for, as 
 improved processes of production on the one hand cheapen the 
 
 * Hermann, StaatswirthschoftUche Vntermchungen, 
 t See Storch, i., Introd. p. 90. 
 
21 
 
 articles for the producer, the new spheres of industry that open 
 with every want that is progressively better satisfied supply the 
 consumer with increased funds for purchasing. Hence the value 
 of an object for a political economist is expressed by the product of 
 its fractional price multiplied with the extent of the demand for 
 it. In the richest country the sum of these products is greatest. 
 
 Arbitrary interference for the purpose of keeping up prices 
 necessarily diminishes the consumer's fund, and eventually de- 
 stroys the producer by inducing him to neglect his proper study, 
 that of reducing the cost of production. The producer is ex- 
 cited to this study by the facility the consumer enjoys of seeking 
 a distant market. To curtail this power, which forms a right 
 (§ 13.) that is as inviolable as the right of property, is to throw 
 the whole economical edifice into confusion without a prospect 
 of benefit to any class. 
 
 18. Individuals are induced to embark in new branches of 
 industry by the greater rate of profit that these offer in com- 
 parison with old ones. The fund which provides the new pro- 
 fits is no other than what is saved to the consumer by the 
 cheapening of old processes. In order that any new process 
 may become of national importance, it must in its turn be im- 
 proved; that is to say, must be made to produce gradually 
 cheaper. By this means the producer in the new process not 
 only profits by the original fund with which he started, but is 
 aided by the economy that is daily effected in all the branches 
 upon the good management of which his branch of production 
 is dependent. From this rule it follows that an economy ef- 
 fected in the production of food improves the condition of every 
 branch of both production and adaptation, as all are dependent 
 upon supplies of food. A better economy introduced into any 
 higher branch of industry re-acts upon the lower grades, by in- 
 creasing the sum of profits and of capital at the disposal of the 
 industrious generally. The common effect of improvements in 
 the higher branches of industry is to raise the scale of remu- 
 neration in the primary grades of production, by abstracting 
 hands from them. 
 
 Since this rule is tantamount to teaching the producer or 
 adapter to look for greater profits in a reduced price, an inti- 
 mate acquaintance with the market or field of consumption is 
 necessary to give it weight. This rule is best illustrated by 
 a calculation founded, on the great disproportion subsisting 
 
between the number of consumers in the lower and in the higher 
 regions of society. 
 
 19. Markets must be regarded by the producer as pyramids, the 
 base of which is composed of the poorer classes whose material 
 wants are as yet but moderately developed, and who have but 
 few higher aspirations. In lands that have rich soils and fine 
 climates, the number of citizens in a state to enjoy intellectual 
 development is greater than in less-favoured countries, where 
 food is more difficult to obtain and the necessity for abundant 
 clothing is more urgent. Such countries therefore, if education 
 taught the inhabitants the true use of these advantages, would 
 soon obtain an ascendency in political powei: over poorer lands, 
 if the latter were to curtail the right of trade which keeps all 
 upon an equality. The freedom of traffic being an inalienable 
 right of man, it must be desirable for the producer to feel that 
 the domestic market, which he cannot, without violating the dic- 
 tates of religion and the tenets of justice, close against foreign 
 competition, offers, with every successive improvement of his 
 processes, a prospect of greater remuneration than before. In 
 other words, it must be cheering to see that all producers are 
 encouraged to seek to produce more and more cheaply by the 
 prospect of the greater share of profits which low prices hold 
 out, than can be realized with high prices. 
 
 We possess but from few states statistical data respecting the 
 population of sufficient authenticity to describe the proportions 
 of the various classes of the population ; an approximate degree 
 of accuracy will however serve to illustrate the principle here 
 laid down ; I have attempted a classification of the population of 
 England from data furnished by the poor-law commission, in 
 the report on the sanitary condition of the country. 
 
 The proportions subsisting between the classes in those di- 
 stricts in which the average age of mortality was noted, the agri- 
 cultural and manufacturing districts being taken together, were 
 the following : — 
 
 Nobility and gentry 1,181,000 
 
 Tradesmen, farmers, &c 4,221,000 
 
 Labourers, paupers, &c 9,567,000 
 
 Total population of England by enumeration 14,995,138 
 
 From a scale of this kind the effect of a rise or fall in price 
 can be calculated. The commonest articles of necessity have 
 
fiS 
 
 in England a market to the extent of the whole population, or 
 of 14,969,600 individuals. Bread must be produced in suffi- 
 cient quantity to satisfy the demand of this number; meat, 
 cheese, eggs, butter and beer come into demand amongst the 
 adults in proportion as corn or potatoes are abundant ; sugar, 
 tea and coffee, although more easily dispensed with, are exten* 
 sively consumed by the labouring classes when wages are good. 
 
 The consumption of wine, silk, silver, table furniture, super- 
 fine cloth, and of many expensive articles of household use, may 
 be presumed to have its lowest hmit in the second class : this 
 class united w^ith that above it number 5,402,000 souls, and 
 although proportionately more numerous in England than in any 
 other country, is here not so much exaggerated in number as 
 the highest class ; yet, were a tradesman to calculate the differ- 
 ence which it would make to him if he could by a lower price 
 secure the consumption of the last class instead of confining his 
 sale to the second, he would find that it was in the proportion 
 of 5 to 15. The difference between the extent of the consump- 
 tion of the highest and the lowest class is as 1 to 15. 
 
 From such a survey of his marl^t a tradesman may calculate, 
 that if he sacrificed two-thirds of his rate of profit in order to 
 secure the custom of the largest body of consumers, he would 
 increase the amount of his gains fivefold in comparison with 
 what the custom of the highest class alone would yield him. 
 He would double his profits if he reduced the rate by two-thirds, 
 which in the second class would yield him any given sum. 
 
 This calculation is often adopted in trade in isolated instances, 
 although it has nowhere been consistently followed up as a gene- 
 ral rule. Examples are familiar in the book trade, which have 
 been eminently successful : the most remarkable is, perhaps, af- 
 forded by the sale of the Bible. Hence too an author's works 
 become most accessible to the public, and yield the greatest profit 
 to publishers, when the copyright expires, as the numerous edi- 
 tions of Shakspeare, Milton, Hume, Gibbon, and of the works 
 of other popular writers prove. 
 
 An analogous style of reasoning clearly shows the inutility 
 both of copyright privileges and of patents for inventions. Since 
 the greatest profit is the result of the most extended sale, com- 
 bined with the cheapest process of production, whoever avails him- 
 self of any excuse to raise the price of a commodity limits his mar- 
 ket in a more rapid proportion than his rate of profit increases. 
 
24 
 
 20. The chief cause of the obscurity which prevails in the 
 explanations that have been given of the origin and growth of 
 profits, arises from the want of a due distinction between the 
 manner in which producers and adapters are affected by the rate 
 of profit. A high rate of profit is an almost infallible index that 
 the amount of profit which it admits of collecting is small. 
 Since all gain is but the result of economy, either on the part of 
 the producer or of the consumer, it follows that where most is 
 saved the fund for expenditure will be greatest. 
 
 If however producers' gains are to increase in proportion as 
 they lower their rate of profit, their numbers must not augment 
 in proportion to the extent which their business, at the low 
 prices, attains. The natural provision against an unnecessary 
 accumulation of power in any branch of industry, lies, we have 
 seen (§ 12), in the new fields that open as soon as prices and 
 profits fall in the old ones. Where exertion is unrestricted and 
 property secure, the play of industry will never fail to relieve 
 each branch in its turn, and will thus admit of an extension of 
 trade in a greater proportion than the rate of profit is reduced. 
 The first effect of low prices, where industry is free, is to throw 
 production into the hands of large establishments : hence the first 
 operation of a cheapening of corn, by the abolition of the corn- 
 laws in England, must be to increase, if not the size of corn- 
 growing estates, at least the scale on which they are cultivated*. 
 Wherever a great subdivision of landed property occurs, with- 
 out a corresponding refinement of cultivation, we may conclude 
 either that prices are kept unnaturally high by artificial means, 
 or that industry is restricted, or finally that the property, to 
 the production of which the superfluous hands would in a na- 
 tural course of things be drafted off from the land, is insecurc. 
 The first of these causes operates in Ireland, the last in most of 
 the continental states. Were it not for this power of extending 
 industrial undertakings when prices fall, a community would 
 derive no advantage from machinery and the simplification of 
 processes ; the double result of such improved processes tends 
 rapidly to enrich a state. By cheapening the cost to the con- 
 sumer, a fund is spared for the encouragement of new producers: 
 hence the advantage for the producers themselves of competi- 
 tion, and of a reduction in the rate oi" profit as well as in the 
 
 * This would be the case only if corn continued to form the principal object 
 of cultivation, 
 
25 
 
 cost of production. The limit below which profits cannot fall is 
 fixed by the profits that arise in new branches of industry when 
 the rate falls in others ; thus, the limit below which the profits 
 on food cannot fall is fixed by the growth of profits on clothing 
 and building, and every other art which becomes profitable in 
 proportion as food grows cheap. 
 
 Many people, who have an undefined notion of the power a 
 nation can apply to the increase of production in any single 
 branch of industry, seem to forget that the number of producers 
 can nowhere exceed the number of consumers*. 
 
 21. The growth of the fund which is to remunerate new in- 
 dustrial enterprises out of the economy effected in older branches 
 of industry may be exemplified by an equation, which, at the 
 same time, exhibits an analysis of the economical problem. Let 
 A represent the natural advantages which knowledge has placed 
 at the command of any community, and let the letters a, b, c, d 
 express the cost of tillage, of adaptation, of carriage, and of dis- 
 tribution (including the profits on each to the undertakers), which 
 are requisite to place these advantages commodiously at the dis- 
 posal of the members of the community. B will then represent 
 the amount of wealth in its adapted shape of which the com- 
 munity can dispose. With every successive economy of power 
 in any branch of industry this fund increases as follows : — 
 A— («+6 + c + 6?) = B, 
 
 A-(| + ^» + c + ^) = B-|-C, 
 
 a-^|h-|+c+^)=b+c+d, 
 
 The increase in the one term corresponds with the saving effect- 
 ed in the other term. Any increase of A, by means of extended 
 knowledge, augments the general wealth still more rapidly ; thus, 
 
 * An ordinary water-mill near Paris grinds 36 hectolitres of corn daily. It 
 would require 168 men to turn this quantity into flour by hand labour. Their 
 wages would now amount to 300 francs, whereas the whole cost of the water- 
 mill does not exceed 10 francs per diem. M. Say, in reply to the question, 
 " What are the men thus freed from grinding to do? " answers that they must 
 produce other objects. To the question, " Who is to purchase these other ob- 
 jects ? " he replies, "Those who hold corn ground at a saving of 290 francs daily.'* 
 
It will easily be understood that economy effected in any part 
 of the equation usually has a more complex operation than is here 
 represented. Improved means of carriage frequently cheapen 
 food, fuel, and other necessaries, and thus lower the cost of the 
 other expenses. Inasfar as b may be a function of a, any change 
 in a will necessarily affect the value of b, without any special 
 economy taking place in b. 
 
 This equation shows us, moreover, that there are but two 
 modes of economizing our wealth ; one consists in discovering 
 new materials in the fund that nature presents us with, the 
 other is by improved combinations effected with what we have 
 discovered. 
 
 The result of this statement of the economical problem is, 
 that the supply afforded by Providence in nature, for the use of 
 man, greatly exceeds what he has at any time enjoyed, the draw- 
 backs to his enjoyment being occasioned by his ignorance and 
 consequent weakness. The diminution of the force, or the total 
 removal of all these impediments, if it were practicable, is the 
 only mode of placing this fund at the unrestricted disposal of 
 mankind. 
 
 22. We have here subtracted the cost of cultivation, of adapta- 
 tion, and of distribution from the gross fund presented to us by 
 nature, whence it appears that the arts which aid us in the per- 
 formance of these different operations detract from the original 
 wealth of man instead of adding to it. On this account a di- 
 stinction has been sought between different branches of indus- 
 try, and some have been called productive and others unproduc- 
 tive, according as writers have more closely observed the utility 
 that springs directly from one or the other. All these interme- 
 diate arts represent equally the labour which man must exert in 
 appropriating the gifts of nature, and this is the real price that 
 he has to pay for them : to diminish this price he has reason 
 given to him, and the legitimate exercise of his reason, until he 
 shall have conquered these difficulties, is directed to their dimi- 
 nution. The gross fund, instead of dechning in proportion as 
 the necessity for labour is lessened, augments by the means of 
 the increased intellectual power that is then directed to analy- 
 sing the realms of nature and discovering new means of subsist- 
 ence and enjoyment. 
 
 Inasfar therefore as we are ignorant of better modes of satis- 
 fying our wants than those which the state of the industrial arts 
 
27 
 
 in every country affords to its inhabitants, the persons exercising 
 those arts are all producers who contribute to preserve the gifts 
 of nature, and to present them when and where the consumers 
 most require them. In countries where the industrial arts are 
 few and badly cultivated, the inhabitants have few means of 
 subsistence, and few instruments of power ; they consequently 
 extract less from the general fund than those countries who 
 command more means: this is one reason why economy of 
 power (§ 1.) cannot be said to consist in mere saving or absti- 
 nence. The expenditure in these intermediate offices is in pro- 
 portion to the state of knowledge in a community, and can only 
 increase (where power is economized) at a rate that affords a 
 proportionately greater increase of the national wealth. There 
 is therefore nothing to regret in the loss of the means that were 
 used in imperfect processes, as soon as improved processes ren- 
 der them useless. Restrictions imposed on trade or on industry, 
 for the purpose of perpetuating imperfect processes and keeping 
 inefficient means in use, would therefore be absurd, were they 
 not unjust and criminal. The productiveness of every useful 
 art is measured b}^ its tendency to remove the difficulties felt in 
 that particular art. When the cyclus of improvement in the arts 
 is completed, we may expect that manual labour will be almost 
 dispensed with in all offices of drudgery. The most productive 
 labourer is he who, by extending the bounds of knowledge, mul- 
 tiplies the general fund at our disposal. 
 
 23. The economy of power which liberates men from one spe- 
 cies of toil and opens a field of activity in some other direction, 
 is usually effected by the substitution of a machine or instrument 
 of some kind for the manual labour that is rendered superfluous. 
 Men must therefore employ a portion of what they appropriate 
 from the fund of nature and adapt to their wants, in the per- 
 formances of offices that were previously performed by hand. 
 The substitution of the plough for a spade requires iron to be 
 gained and worked up in sufficient quantity to allow of the sub- 
 stitution of the new instrument for the old one, and that a suffi- 
 cient quantity of food be raised to feed horses or oxen besides 
 men. For the substitution of machine for animal power upon 
 a railroad, not only was an increased quantity of metal required, 
 but the number of scientific labourers whose united intellectual 
 labour devised the improved processes of founding, which made 
 
28 
 
 iron abundant, was indispensable. Hence the importance of 
 saving or abstinence. 
 
 Wealth bestowed by nature or accumulated by abstinence, if 
 it be employed in reproduction, is termed capital. The name, 
 which is taken from the capitation tax of earlier times that was 
 levied on personal property, indicates the origin of the common 
 limitation of the term to that description of property. Hence 
 indistinct notions prevail respecting the nature of capital, which 
 some suppose to consist wholly in accumulations of objects of 
 sense. Money, buildings, machinery, cattle, water, air, land, are 
 all capital, in as far as they are used to produce objects of neces- 
 sity or enjoyment. Knowledge is, however, a far more valuable 
 ' acquisition than all. To these visible and tangible objects M. 
 Hermann* adds all the advantages resulting from association. 
 These are of two kinds ; such as appertain to individuals from 
 their isolated exertions, as for instance, the custom of an esta- 
 blished shop, which often sells for more than the shop itself; or 
 family connexions. The effort to establish factitious gradations 
 in society has ever been based upon the economical value of the 
 results of association. 
 
 The second species of capital gained by association differs only 
 in degree from this. A nation, a province or a city commands 
 many advantages beyond the sum of the capital that each sub- 
 ject or citizen possesses. Plato early pointed out the fact, that 
 it was for the purpose of obtahiing these advantages by uniting 
 which man could not command when scattered that men asso- 
 ciated to form states and cities. The institutions of religion, 
 law and education are the most valuable portions of the national 
 capital, where they contribute to this result. Knowledge is so 
 valuable an element of national prosperity, because the use of 
 capital is chiefly to substitute artificial for human labour, and 
 the devising of good substitutes is more difficult than their em- 
 ployment when devised. 
 
 24. Land, water, air, and the various powers which nature 
 places at the disposal of man, and which form part of the gene- 
 ral capital, are not distinguished from the artificial capital which 
 is the result of man's industry and abstinence in their subjection 
 to the economical laws which give value to all. In order that 
 an extensive tract of land shall obtain value, it must be brought 
 * Hermann's Staatswirthsckaftliche Untersuchungen, p. 6. 
 
29 
 
 into use, and this can only be effected by means of economy of 
 power. While man is kept in that low stage of intellectual de- 
 velopment in which food forms his only object of desire, all land 
 that exceeds the extent requisite to produce food is comparatively 
 valueless. With every extension of the scale of wants, artificial 
 as well as natural, land, as capital, comes into demand, and 
 new varieties of property arise. Where sufficient security of the 
 rights of individuals favours the generad progress, the advance 
 in value of all kinds of capital will be simultaneous. Waterfalls 
 and choice sites for the growth of the vine or of other delicate 
 plants are sought when manufactures are founded, and augment 
 the fund that a nation can spend in delicacies. There is no 
 separation practicable between the owners of the natural portion 
 of capital and those who possess the knowledge and the instru- 
 ments requisite to turn the gifts of nature to the best account. 
 The union of the two is what alone gives value to either, and 
 this union can only be cordial when the right of each is secured. 
 
 It is by some considered a hardship that a rent must be paid 
 for natural advantages which the owner did not create, and 
 which he, perhaps, often has not purchased ; this is of no con- 
 sequence to the person paying rent, because what he hires is 
 a temporary right of property, to have which respected he must 
 recognise the right of property in the owner. No rent is paid 
 for any natural capital until the gain that can be drawn from it 
 covers both the rent and the usual rate of profit that can be ob- 
 tained elsewhere. 
 
 But in this, as in every other description of property, the free- 
 dom of the individual seeking the use of natural capital must 
 be inviolate. Every man has a right to choose his market, and 
 since it may be presumed that, if unrestrained, each will choose 
 that which is most profitable, he forwards by such a choice the 
 general good. In this, as in every other case, the simple 
 Christian precept is the wisest economical law. 
 
 The capital of the labourer is his labour ; over this he has a 
 right to dispose freely. In any union for industrial purposes 
 the labourer is a partner, whose share of the profits is a matter 
 of free contract. Where power is best economized, the labour- 
 er's share is greatest ; but it is in all cases proportioned to the 
 efficacy of the instrument which he knows how to wield. In- 
 tellectual only differs economically from manual labour in its 
 superior efficacy. 
 
30 
 
 Where the right of property is recognised in all the phases 
 under which it presents itself^ credit, a most important kind of 
 capital, arises. Credit is, next to knowledge, the grand facilitator 
 of association for the purpose of creating wealth. Credit has its 
 grades like property, and in many countries is confined to a few 
 privileged individuals. That country is the richest in which 
 credit is enjoyed by the poorest class, that is to say, by the great 
 bulk of the inhabitants. 
 
 25. Owing to the great number of the inhabitants of every 
 country that forms the lowest stage of consumers, we have seen 
 that from this class the greatest remuneration may be expected 
 by producers. For the same reason, the mass of savings effected 
 by that class may be expected to exceed that of the higher 
 classes. There can however be no doubt about the greater eco- 
 nomy of power, taken in the comprehensive sense in which I 
 have used the term, that can be effected in this class than in 
 any other. The right of property consisting in the free use of 
 their labour, is therefore for the labouring classes and for a com- 
 munity in general, the grand lever of progress to wealth. All 
 interference with this right, whether by parliamentary legisla- 
 tion or that of combinations and unions, is to be deplored as 
 unjustifiable. 
 
 Without the aid of the labourer (whether intellectually or 
 manually occupied), the property of the owner of land, water, 
 cattle and other gifts of nature is valueless : hence the desire 
 to concentrate on certain portions of land, the labour which 
 can alone render it valuable in the first instance. Where cir- 
 cumstances favour the effectuating of this policy by unjust 
 means, such as nearly every page of history shows us was the 
 result of an erroneous estimate of human power, both the class 
 that resorts to such, and the community at large, suffer by its 
 adoption. Communities that adhere to the prescriptions of jus- 
 tice and humanity cannot fail therefore, within a short space, to 
 acquire so much greater wealth and power than a state which 
 admits of injustice towards any class of citizens, that this alone 
 compels the rival state to abandon its impolitic course. 
 
 Political power, which is one test of good state economy, has, 
 under the influence of these circumstances, found a supreme 
 seat in almost every country of Europe and Asia successively. 
 America might have had its turn if sound education and respect 
 for the rights of individuals had been equally cultivated with the 
 
31 
 
 industrial arts in that quarter of the globe, and if the influence 
 of the free institutions of some of the American states had not 
 been speedily recognised in the leading states of Europe. 
 
 26. The progress in the economy of power, in every coun- 
 try that does not wish to have its industrial edifice shaken and 
 its social condition endangered, must be more rapid than the 
 rate at which the population increases. Since a cheap supply 
 of food is the condition of the prosperity of all other branches 
 of industry, means must be devised by those whose wealth 
 derives from the higher grades of production to keep the sup- 
 ply of food in a due proportion to the increasing consumption. 
 Where power is duly economized, the development of the other 
 branches of industry, such as improved means of carriage and 
 mechanical inventions, reacts upon the production of food. 
 
 A more probable economical difficulty than threatens from a 
 scarcity of food may arise from the rapid increase of knowledge 
 and the corresponding demand for labour, which may cause it 
 to grow scarce before machinery can relieve a sufficient number 
 of hands from unprofitable processes. In this latter case the 
 labourer would demand a great increase of wages, and in this 
 shape the question that has been raised, as to the conflict of 
 w-ages with profits, presents itself in the clearest manner. 
 
 If the reduction of the rate of profit necessarily reduced the 
 amount of profits taken by a producer, the labourer could only 
 obtain an increase of wages at the cost of his employer. We 
 have seen how, by extending undertakings, profits may augment 
 in amount while they fall in rate. The manufacturer who raises 
 his w^orkmen's wages fifty per cent, is no loser if he proportion- 
 ately increases his sale. By paying higher wages he adds to the 
 fund which is to purchase his wares. Had he reduced his price 
 instead of raising wages, he would have made the fund already 
 at the labourer's disposal go further than before. On the other 
 hand, although a labourer when using an improved machine re- 
 ceives a higher salary than before, he really has reduced the price 
 of labour by giving more efficient labour within the same space 
 of time. Thus the labourer follows the principle that is pre- 
 scribed for all producers : he reduces his rate of profit on his 
 capital in order to increase its amount. There is no conflict be- 
 tween the interests of employers and their assistants in this re- 
 spect, where industry is free. The rapidly opening spheres of 
 industry, where power is duly economized, provide for all. The 
 
32 
 
 success of the employer ensures the labourer a demand for his 
 cooperation. The natural consequence of unimpeded improve- 
 ment is ultimately to place both upon an equality. 
 
 The theory ^Yhich maintains that wages can only rise when 
 profits diminish, is true as regards the rate of profit only, which 
 we have seen varies inversely in proportion to the amount of pro- 
 fits. But although this theory originated under circumstances 
 of restricted industry, it was understood and is by some still 
 thought to apply to profits generally. Where trade is restricted 
 wages can only rise by a reduction in the rate of profit, which 
 then is not compensated by increased trafiic. 
 
 27. The necessity for the constant increase of the size of 
 establishments to keep up a due proportion between wages and 
 profits, proves that producers are equally interested in freedom 
 of trade with consumers, whose indefeasible right it is to choose 
 their market. From the gradual rise of wants that I have de- 
 scribed, there must always be some, the circle of consumption 
 for which embraces a limited class in diiferent countries. A 
 sufficient supply for these can often be furnished from one or 
 two establishments. The greater part of the diamonds now used 
 in Europe have, I believe, been cut by a few Jewish families re- 
 siding in Holland. There is no advantage to be derived from 
 prescribing a home market for these objects of limited demand. 
 If they are produced at a dearer rate at home than they can be 
 obtained abroad, the rise of some other demand which might be 
 better suited to the country is prevented. Objects of necessity 
 in the same manner constantly extend their range beyond the 
 political boundaries that separate nations. Wine can only be 
 obtained in Russia from the Rhine or from Bordeaux, on the 
 condition of some country's taking hides, tallow, flax and grain 
 from Russia. Were the Bordeaux wine-merchants to turn a 
 portion of their grounds into pasture, and the Rhenish vineyards 
 to be ploughed up to grow flax, the loss would be obvious, be- 
 cause under such circumstances the Russian could not obtain an 
 article for which he was willing to pay more than its worth on 
 the spot where it is produced, in produce of which he had a su- 
 perfluity. Freedom of interchange is thus indispensable to a 
 highly advanced stage of civilization. By its means both the 
 best provision is secured for the supply of the primary wants, 
 and it furnishes in some cases the only means of awakening and 
 satisfying desires of the most elevated character. Freedom of 
 
33 
 
 trade, therefore, supplies all the advantages that are promised 
 by the communal and other systems professedly founded on co- 
 operation, with others that these systems do not include. It has 
 besides the invaluable advantage of suiting itself to every stage of 
 wants, and of ensuring that degree of individual freedom which 
 man regards as the highest of his prerogatives. 
 
 28. M. Hermann's distinction between fixed and circulating 
 capital is clear and simple. 
 
 Fixed capital being only used, and not consumed, in producing 
 an object, the interest of its value, with an allowance for wear and 
 tear, are all that enter into the estimate of the cost of the object 
 produced. According to their nature, tools of various kinds must 
 be classed under these heads. If a hammer or a saw serve a 
 carpenter in building several houses, they belong to his fixed 
 capital. The nails that he purchases to consume in building 
 form part of his circulating capital while in his possession. If 
 wine be kept so long that the cask grows rotten, it becomes 
 necessary to look upon it as part of the circulating capital of the 
 wine-merchant. Such too are the casks that are exported with 
 wine, the sacks that enclose wool, and all similar packages. The 
 wages of labour are paid with circulating capital, and their whole 
 amount enters into the cost of production. 
 
 The holder of fixed capital (especially of land and water) and 
 the labourer, or he who looks only to the temporary hire of 
 his manual or intellectual aid in producing, are clearly both be- 
 nefited by every change that renders circulating capital — whether 
 tools, machinery, coin, or other means of facilitating production 
 — more effective than before. 
 
 This rule is more comprehensive than one given by M. Her- 
 mann, who admits of a certain gain to the owner of fixed from 
 the increase of circulating capital, only when the former is of a 
 nature that precludes its being increased. There is perhaps no 
 point in political economy of more importance to clear up than 
 this. The apprehension that any change in the nature of the 
 fixed capital existing, or any extension it might admit of, would 
 prove prejudicial to its owners, has been in all ages the greatest 
 obstacle to improvement. M. Hermann instances water-mills,- 
 and supposes, that if they could be monopolized in a district 
 where circulating capital increased, a higher rate of profit might 
 be secured to the owners than prevailed in other trades. To this 
 I object, for two reasons. Were the scarcity of mills to render 
 
a4 
 
 corn dear^ the value of all other products would certainly fall ; 
 but this would occasion emigration, or at least prevent an accu* 
 mulation of population, and lower the value of fixed capital. 
 On the other hand, were an importation of cheap corn allowed, 
 all other products of industry would come into such demand, 
 that the waterfalls, instead of turning corn-mills, would un- 
 doubtedly be worth much more for other purposes. The dis- 
 position to consider man bound to some particular use of objects 
 is another great obstacle to social progress. Everything is given 
 to man for the best use he can put it to. In nearly every case 
 it is less the power than the use which is made of it that deter- 
 mines the amount of prosperity we command. In every suc- 
 ceeding lecture the importance of this truth will be impressed 
 upon us. Through every phase in the growth of property it 
 will at once account for the numerous errors that have so 
 strangely circumscribed the power and happiness of nations, 
 and will point to the dangers which we have in future to avoid. 
 
 The tendency of circulating capital to merge into fixed capital 
 is an infallible index of improvement. It corresponds with the 
 substitution of houses for tents, of pastoral life for hunting and 
 fishing, of crops raised in rotations that preserve the soil in vigour 
 for nomadic cultivation. Above all, it corresponds with the 
 grand element of civilization, the substitution of machinery for 
 manual labour. This tendency must be hailed as the chief pro- 
 moter of the happiness of man, for we shall see that all parties 
 are gainers where it is encouraged. It will be acknowledged as 
 at least a correctly logical conclusion, if value be imparted to 
 commodities through the estimation of the consumer, that it is 
 good policy both to increase the number of estimators and to 
 elevate to the utmost the standard by which they judge. This 
 personal and moral elevation is effected by setting men free from 
 degrading toil, which is mainly effected through fixed capital. 
 
 Another distinction that has been remarked by M. Hermann 
 is the circumstance that fixed capital is often useless for other 
 than one purpose. Circulating capital, on the contrary, can be 
 turned at pleasure from one branch of industry to another. This 
 is, however, not true of land^ which can be applied to almost any 
 conceivable species of production by the aid of art. Machinery, 
 in the present imperfect state of knowledge, is more liable to 
 suffer by the fluctuations of trade. In estimating the value of 
 machines, this inconvenience must be taken into account, and 
 
35 
 
 perhaps it admits of a remedy. Buildings are generally more 
 easily exempted from the operation of unfavourable conjunctures 
 that change their destinations than machines. 
 
 It behoves every speculator with capital clearly to discern what 
 use he is making of his investment^ — that is to say, to ascertain 
 whether he embarks it as fixed or as circulating capital, — when 
 he builds, constructs machines, or purchases shares in any joint- 
 stock undertaking. Mr. Babbage tells us that the rapid succes- 
 sion of improvements in machinery of late years has caused a 
 calculation amongst manufacturers, according to which the value 
 of a new process is not worth more on an average than three 
 years' purchase. All the investments in objects of so short a 
 tenure, whether buildings, machines, or other utensils, must be 
 regarded as circulating capital, and their full value must be added 
 to the cost of production estimated within that period. If the 
 buildings and machinery can be adapted to any other purpose 
 after the process for which they were destined has been super- 
 seded, they may be considered as fixed capital. In this case 
 their wear and tear only is included in the cost of production. 
 In such a case, too, the value of this investment will improve in 
 consequence of the improvements or of the new process that has 
 exploded the former one. 
 
 By a judicious calculation respecting the nature of the invest- 
 ment in which a speculator embarks his savings, both the public 
 and the landlord are made to share his fortune. His price, where 
 his tenure is precarious, must be high enough to cover the out- 
 lay for his investment ; and to avoid overstraining the price, he 
 can neither afford high rent nor wages, except under the con- 
 dition of an extended sale, and a great efficiency of labour. The 
 possession of this circulating capital is therefore not so desirable 
 on its own account, as because it renders labour efficient, and at 
 the same time augments the fund for the remuneration of all. 
 Capital is a means, and not an end, and therefore no class either 
 of producers or consumers can be interested in retaining imper- 
 fect processes, to the exclusion of better methods, or of the cheap 
 produce which these bring forth. 
 
 d2 
 
36 
 
 LECTURE II. 
 
 RENT, AGRICULTURAL PROFITS, AND WAGES. 
 
 From the importance of food, as the source which gives vahie 
 to all other productions, it is natural. Gentlemen, that agriculture 
 should be the first art practised in every country. It is, how- 
 ever, quite unnatural that the production of food should be 
 deemed the chief object of the agriculturist's care. Providence 
 did not deliver man into the hands of food- growers without an 
 appeal. And what more beautiful ordination could have been 
 devised for our emancipation than that which makes every other 
 product of the earth valuable only w^hen food is accessible? 
 Thus, from the first beginnings of society, when the earth pro- 
 duced spontaneously more than could be consumed, provision 
 was there for the enjoyments of refined industry, even when in- 
 tellectual enjoyments were lost sight of. So far from estimating 
 the value of the earth, given to man to enjoy, by its reluctance 
 to produce food, it is clear that from the earliest time the value 
 of all land was exactly proportioned to the ease with which the 
 means of sustenance were procured. Where food was cheap, 
 every other product was a more profitable crop than food ; w^hen 
 food rose in price, every other product lost value. 
 
 The original capital of every country, therefore, is the land, 
 with its products, and all that attaches to it, such as water, air, 
 and the other natural forces. These are given to man, not to 
 be limitations to his enjoyments as an intellectual being, but to 
 minister to him as such. 
 
 In the misconceptions that arose on this point, the misery of 
 man originated. Either the earth is there to be used by man 
 as his reason directs, and he is to dictate what it shall produce, 
 or he is a slave to the quantity and quality of the land on which 
 he lives, consequently no free agent, and, as some theorists have 
 correctly inferred from such premises, is not morally responsible 
 were this the case. The inhabitants of no country can, in an 
 ignorant age, increase, excepting where nature has furnished 
 them with a prolific soil and a genial climate. Hence, in rude 
 
37 
 
 antiquity, power and wealth w-ere monopolized by such favoured 
 lands. Babylonia, Egypt, and the valleys of the Ganges still 
 bear tokens of the ancient power and wealth that history or tra- 
 dition records of the empires of which they were the seat. The 
 countries adjacent to these became the seat of pastoral hus- 
 bandry. But the dependence of this second step of the industrial 
 ladder upon the primary grade is forcibly illustrated by the im- 
 migration of the pastoral Israelites into the corn-growing Egypt, 
 after a succession of years of suffering from scarcity of corn. 
 
 Such dependence upon soil and climate is, however, only ne- 
 cessary when the knowledge of a population is limited. The 
 first successful attempt to remedy the evil is recorded in the 
 history of the Phoenicians. These, inhabiting cities perched 
 like sea-birds^ nests upon the shelving rocks of Syria — without 
 territorial possessions surrounding them, and defended by forests 
 from the attacks of their powerful neighbours — soon discovered 
 that the acquisition of food was matter of calculation. They re- 
 cognised the great truth, that, since no man can consume more 
 than sufficient for his nourishment, it was possible to obtain this 
 indispensable supply by the sacrifice of only a portion of the 
 labour of a country. Rocky sites, in situations only favourable for 
 commerce, were the positions chosen by the founders of Athens 
 and Corinth. We know the dependence in which these states, 
 at the acme of their power, stood for supplies of grain on the 
 countries bordering on the Black Sea ; yet we do not find the 
 Greek writers complain of this dependence as a national ca- 
 lamity. The legislature of Athens favoured the importation of 
 grain from all parts of the Levant and the Black Sea, — a measure 
 which seems to have sufficed to ensure abundance. In the Pe- 
 loponnesian war, the crops in the country round Athens were 
 frequently destroyed. The Athenian statesmen seem only to 
 have regarded their supremacy at sea and the state of the public 
 treasury. 
 
 Nearly all the countries that I have mentioned as wielding 
 powers derived from abundance of food, furnish the first exam- 
 ples of the increase of human power that results from association. 
 The fertility of ancient India, Mesopotamia and Egypt, depended 
 on a command of water. When the demand for produce grew 
 urgent, it was found practicable to satisfy it by carrying the 
 water of the rivers Ganges, Euphrates and Nile over the adja- 
 cent country. For this purpose either the inundations caused by 
 
38 
 
 the periodical rains were used, or the river being dammed up at a 
 high level, its water was led through canals, over commanding 
 elevations, whence it ran over the lower country. Of this latter 
 mode of irrigating, the Greek historian, Xenophon, gives us 
 some description as it was practised between the Tigris and the 
 Euphrates. The traveller Chardin has described it in Persia ; 
 the missionary Du Halde has given an account of the mode 
 used in China. But whether, as in Egypt and India, the inun- 
 dations were used, or, as in Mesopotamia, advantage was taken 
 of a high level to feed irrigating canals, the economical use of 
 water demanded the first proof of civilization in man — associa- 
 tion. No selfish barrier, in the first case, must have opposed 
 the equal flow of the beneficent flood. In the second, no ego- 
 tistic neighbour can have impeded the drainage of a field arti- 
 ficially flooded. We require for a thoroughly economical system 
 of either irrigation or drainage, a unity of purpose in the owners 
 of land, which is unattainable until they are convinced that it in 
 no way interferes with the exclusive property and dispositions 
 of the lands of each. Thus the principle of association is 
 strengthened by combining it with division of labour. In Per- 
 sia, India and the Levant, at the present day, wherever irri- 
 gation is practised, agriculture flourishes. Abundant crops of 
 rice, indigo, cotton, sugar, cocoa, and other tropical plants, are 
 only attainable where water can be commanded as well as land, 
 either in the east or in the west. But with this progress in 
 knowledge, which thus increased the power of man, a new spe- 
 cies of property arose : an accumulation of artificial capital was 
 unavoidable in embankments, in flood-gates, sluices and drains. 
 This improved state of agriculture demanded security for this 
 additional property. Such an advance in agriculture was only 
 practicable when government was organized in a stable manner, 
 — when rulers acknowledged that they were there for the benefit 
 of the ruled, and their subjects submitted to organization for the 
 welfare of all. With the downfall of the ancient empires, whether 
 from internal competition or foreign ascendency, these works of 
 necessity and art decayed. But the pride of every successful race 
 of rulers was to renew them. Under Persian, Median, Greek, 
 Roman, Mahomedan sway in the East, irrigation, when restored, 
 testified to the sound foundation which the power of the ruling 
 house had attained, and to the security of property for which 
 the subjects acknowledged themselves indebted to it. 
 
39 
 
 In modern history irrigation plays a very conspicuous part in 
 agriculture, but under exactly similar circumstances. The first 
 step the Saracens took when their rule was fixed in Sicily and 
 southern Spain, was to adapt this art, which was familiar to 
 them, to the spacious plains that lay at the foot of the moun- 
 tains. The luxury of the courts of Grenada and Cordova is 
 famihar to most of my hearers. Some have, perhaps, visited the 
 magnificent ruins of the Alhambra and admired the splendour 
 of the mosques, that now are used as Christian cathedrals. 
 This magnificence owed its birth to the application of intelligence 
 to the cheap production of food under the principle of associa- 
 tion, combined with security of property. It was undoubtedly 
 forwarded even amongst the Mahomedans by an economy of 
 power, which made the classes whose fortunes exempted them 
 from toil apply to the study of the sciences and the useful 
 arts. 
 
 The downfall of the Moorish power was owing to a moral 
 cause, which belongs also to political economy, but to another 
 of its chapters. 
 
 In countries where no artificial impediments have been raised 
 to obstruct the simple views of the people, the system of agri- 
 culture practised agrees, at the present day, with the results of 
 the experience of ages. The food-producer raises as much as 
 he can, and that in the cheapest manner. This allows the cul- 
 tivators of all other crops the highest price for what they grow, 
 and the food-grower, in the principle developed in my last lec- 
 ture, is remunerated by a constantly extending market for his 
 grain. The land is regarded as capital, and where it is very 
 abundant is allowed to work with the smallest amount of ex- 
 penditure, being re-invigorated by frequent fallows. When 
 population increases, the production of grain is removed to a 
 distance to make room for the gardens, dairies, and other crops 
 that are more remunerating for small capitals, as demanding 
 skill and personal attention. By these means a good organiza- 
 tion is introduced into agriculture, and rents grow high upon 
 land that is devoted to green and fibrous crops. Grain, upon 
 the cheapness of which these crops depend for their value, is 
 removed to parts where, from the want of population, land is to 
 be had on easy terms. 
 
 Rent being a share of the profits of cultivation, which the 
 farmer is wiUing to give for the use of the land, the profits on 
 
40 
 
 farming may reasonably be supposed to be high where high 
 rents are paid. At all events, this will be admitted to be a prac- 
 tical test of the landowner's interest in good farming, and it is 
 easy to show that this is consulted where the natural system 
 that 1 have described is followed. Money-rents prevail, as a 
 general rule, but in few parts of Europe. Belgium, Holland, 
 and the north of Italy are countries where, as in England, they 
 are common. 
 
 The climate of Belgium is too moist to demand irrigation for 
 more than its meadows ; and as products connected with manu- 
 facturing processes pay better than meadowing, excepting in 
 certain districts, there is little irrigation on a large scale de- 
 manding association. Every advantage is taken of the relative 
 value created for all objects by the abundance of others. Thus, 
 while wheat is imported at a moderate duty (although too high) 
 from the Baltic and the Black Seas, a large tract of land be- 
 tween Ghent and Bruges and Ostend is devoted to growing but- 
 ter. Cheese of superior quality is made in the highlands of 
 Limburg, which are too distant from the coast to be able to 
 export butter. The hills of Limburg, on which no corn what- 
 ever is grown, and where the climate is ruder than on our ex- 
 posed uplands, yield rents of 100 to 150 francs per bonnier of 
 three acres, or £l : 4^. to £2 per acre. 
 
 In Flanders, where a dense population has laboriously culti- 
 vated a large sandy tract, and made it remarkably productive, 
 flax is the produce that pays best. The arable crops follow in 
 rotations that prepare the land for flax. It is true the high 
 price obtained for his flax by the Belgian depends most upon 
 the treatment of the plant when grown ; and this process is per- 
 formed by intermediate hands, who purchase the crop standing 
 on the ground. The rent paid in Flanders, however, shows that 
 the landowner always participates in the improved intelligence 
 and industry of the other classes of society. Two hundred francs 
 per bonnier (£2 : 7s. per acre) is a common rent for this land, 
 which, considering the enormous land-tax {£l : 105. per acre), and 
 the cost of cultivation (estimated at £13 : 13^. per acre), is very 
 high. Dung and hay are in these parts imported from Hol- 
 land; and it must be obvious that the profit in flax and every 
 other market crop, such as rape, linseed, cheese, butter and 
 meat, must depend upon the cheapness of the two imported 
 articles — hay for cattle, and corn for the inhabitants. The 
 
41 
 
 Belgian farmer is, therefore, under no obligation to the minister 
 who taxes either, under the pretext of protecting him. He has 
 as little reason to laud the commercial policy which of late years 
 has restricted the trade of Belgium ; for this prevents the na- 
 tural draft of hands from agriculture to other occupations, which 
 freedom of trade causes — in other words, the organization of 
 industry. The owners of vineyards and olive-groves in France 
 are equally interested in the acquisition of cheap grain and cattle. 
 It is a perversion of reason to insist upon their ploughing or 
 meadowing to supply themselves with food. 
 
 The agriculture of Holland is no less admirable and profitable 
 than that of Belgium. The country is so much lower in level than 
 Belgium, that the whole land has to submit to one grand system 
 of draining, with which, however, irrigation is at the same time 
 extensively combined. 
 
 The province of Holland, situated between the rivers Maas, 
 Leek, and Y, forms one combined system of drainage, the out- 
 lets to which are in the Maas and the canal near Catwyk, which 
 communicates with the lake of Haarlaem, and is considered the 
 true mouth of the Rhine. This outlet, through the downs that 
 form the bulwark of Holland towards the ocean, is carefully 
 defended by successive flood-gates and sluices, which are sup- 
 ported by water on the land side against the pressure of the 
 high tide. When the tide is at ebb these flood-gates are opened, 
 and the pent water, the drainage of the country at the back, 
 issues out with a violent eruption that carries off any sand or 
 stones that the tide may have left in the channel. 
 
 All the canals in the interior are leveled with regard to these 
 outlets, and serve both for agricultural and commercial purposes. 
 From the lands that lie below their level, the water is raised by 
 windmills that turn screws or work pumps, and the quantities 
 to be discharged and the time of working are fixed by a board 
 (the Waterstaat), which is one of the most important depart- 
 ments of the government. Under such circumstances, it wpuld 
 be a real misfortune if landlords and farmers were convinced that 
 profits and rent were only to be drawn from the cultivation of 
 Cereales. Meadow produce, hay, butter, cheese, bleaching, and 
 the more artistic branches of cultivation, fruit and flowers, are 
 w^hat the Dutch farmers and landlords look to. These modes 
 of using the land yield the more profit the cheaper grain is in 
 price. In consequence of the good selection of crops, and the 
 
48 
 
 skill with which they are cultivated, agricultural rents equivalent 
 to £2 and £3 per acre are current. These rents do not include 
 such land as that near Haarlaem, which is totally unfit for the 
 growth of wheat, but brings its owners perhaps the largest pro- 
 fits in the world as flower-beds. To the rent the high land-tax 
 has here to be added. 
 
 In addition to the illustration of the principle of association 
 thus afforded by Holland, a no less curious and interesting union 
 of interests takes place between Holland and Belgium. 
 
 The rich lowlands of Holland that are occasionally inundated 
 by the sea are known under the name of the Polders. Being 
 saturated with salt, they yield not only fine grain-crops, but 
 can be meadowed for many successive years without the use of 
 manure. Holland is, however, in possession of abundance of 
 manure, from the great stocks of cattle held everywhere, and 
 the number and extent of the towns. The refuse of the towns 
 has therefore become a matter of trade, and is regularly sold at 
 high prices to Belgium. To this importation of manure from 
 Holland, and to the care bestowed on utilizing the sweepings of 
 their own towns, the Belgians owe the power of growing flax 
 upon the light sandy soil of Flanders. The greater part of both 
 East and West Flanders was originally not better land than the 
 worst part of Norfolk, and much of it is sandy down land re- 
 claimed and fertilized by cultivation and manure. At about 
 twenty miles from Antwerp, up the Sehelde, the reservoirs may 
 be seen for the manure that is brought from Holland. The 
 trade is managed by a company of capitalists, and the Dutch 
 boats are so constructed that they are loaded by tilting from the 
 carts in the towns, and discharge their cargoes without hand- 
 labour. It is worth the while of every agricultural traveller to 
 visit these depositaries, where the suggestions that have only 
 recently been made by the Health of Towns' Commission for 
 the benefit of English farmers have long been carried out prac- 
 tically by the Flemings. 
 
 The plan recommended by the Health of Towns' Commission 
 will undoubtedly lead to a most desirable association in these 
 islands. It will, I trust, heal the division now raging between 
 town and country. The suggestion of the Commission is, that 
 the systematic drainage of our towns should be carried in a 
 fluid state into the fields, and then placed at the disposal of the 
 farmers by irrigation. Under such a plan, it would be unquestion- 
 
43 
 
 ably possible to double or treble the actual production of Great 
 Britain. I am, therefore, in recommending the plan, doubly 
 bound to show that increased production is no evil where intel- 
 ligence and free exertion combine to utilise it. England is not 
 without instances of judicious association for agricultural pur- 
 poses. The extensive operations carried on in Lincolnshire and 
 the Isle of Ely for the drainage of the fens, and known by the 
 name of the Bedford Level, is one instance. But the principle 
 has been far less adopted than is practicable, and we are more 
 indebted now to that organization which secures growing pro- 
 perty, and induces people to utilise it in trade and manufactures, 
 than to the skill with which we employ our agricultural resources. 
 The association between town and country which the Health of 
 Towns' Commission has suggested will do the most where it is 
 adopted to place us as far before the rest of the world in agri- 
 culture, as we undoubtedly are in the other branches of in- 
 dustry. 
 
 The agriculture of the north of Italy deserves even a more 
 intimate study than that of Holland and Belgium. Like the 
 farmer in these two industrious countries, the Italian prefers the 
 culture of high-priced articles to ordinary crops, but he refines 
 on the best northern husbandry. 
 
 Lombardy, situated at the foot of the Alps, and overlooked 
 by the glaciers of that mountain chain, has, perhaps, the greatest 
 fall of rain of any country in Europe. It was probably the incon- 
 venience occasioned from the swelling of the streams that made 
 the Milanese early turn their attention to the construction of 
 canals. The " Naviglio Grande " was commenced in 1 1 78, six- 
 teen years after Frederick Barbarossa had destroyed the city, 
 but only two years after the Milanese citizens had again defeated 
 that intruder, and forced him to conclude an ignominious peace. 
 The Naviglio Grande was destined to water the fields only, and 
 was constructed for that purpose at a high level. The success 
 of the experiment occasioned its repetition, and before the close 
 of the fifteenth century the little state of Milan possessed five 
 canals of considerable size, chiefly intended to assist the agricul- 
 ture of the country. 
 
 The Saracens were, as I have said, the teachers of the art of 
 irrigation, in modern times, in Spain, Sicily, and Southern Italy. 
 In Lombardy, the monks were the first who practised the art. 
 As early as the year 1138, a document still existing confers on 
 
44 
 
 the monastery of Chiaravalle and Vicoboldone * the privilege of 
 carrying water for the purpose of irrigation through any lands 
 they pleased. To induce general consent to this expropriation, 
 which, at a very early period, was found necessary, and with the 
 aid of which all the grand improvements in that beautiful district 
 situated between the Po and the Adda have been effected, a feel- 
 ing of security was indispensable, and the division of labour was 
 thus ensured. No landowner can now refuse another permission 
 to carry a water-course through his land to another which is bar- 
 ren from drought. An understanding is therefore easily brought 
 about, by which those proprietors who lie nearest to the canal 
 or Alpine springs, that are now almost preferred, take the water 
 in the first instance and sell it, when it runs off their fields, to 
 the next neighbour, who, in his turn, disposes of what he has to 
 spare to a third. 
 
 A systematic arrangement of this kind of course requires a 
 methodical laying down of the land. The fields are, conse- 
 quently, laid down, in Lombardy, in a scientific manner that no 
 other country has to show. A class of agricultural engineers is 
 found in Lombardy almost exclusively. The water, which dou- 
 bles the production of the land, of course sells for as much as 
 the land itself. Sometimes land and the water that irrigates it 
 form investments for two capitalists, the landowner paying the 
 water-owner a rent for the use of the water. 
 
 In this manner the wonderfully productive meadows that 
 yield the Parmesan and Strachino cheeses, with the delicately 
 flavoured Italian rice, are treated. On some meadows a con- 
 stant flow of water is kept up through the winter, and suffices 
 to allow the grass to grow under the mild frost of Italy. These 
 winter meadows are called " Prati a Marcita,^^ a title of unknown 
 derivation. 
 
 Meadows of this kind can be mowed as often as nine times in 
 the year. Berraf, the chief scientific authority on the subject of 
 these irrigated meadows, estimates that eighteen to twenty acres 
 will furnish fodder for fifty cows. It is owing to this abun- 
 dant supply of green food, that upon a surface not much exceed- 
 ing the extent of Wales, between 400,000 and 500,000 head of 
 
 * Ut monasterium possit ex Vectabia trahere lectum [a canal'] ubi monas- 
 terium vokierit, et si fuerit opus liceat facere eidem monasterio fossata super 
 terrain ipsius, Johannis [the seller's'], ab una parte vise et ab alia, etc., et possit 
 firmare et habere clusam in prato ipsius Johannis. 
 
 t Dei' Prati del Basso Milanese — 1828. 
 
45 
 
 horned cattle are found, besides a large proportion of sheep and 
 horses*. M. Berra himself had cows in his stables that weighed 
 eighty stone, while giving upwards of 2000 quarts of milk in the 
 year. But the quantity of dairy produce is not more remark- 
 able than the quality of the products which are prepared from 
 it for exportation, and which bring the highest prices in all 
 parts of Europe. Guicciardini, in an old description of the 
 Netherlands, published by him at Antwerp in 1567? mentions 
 Parmesan cheese as an article largely imported into the lower 
 countries from Lombardy. How generally this delightful cheese 
 is used in the whole of Italy is well known. In the kitchens of 
 the rich it can now neither be missed at Paris nor at St. Peters- 
 burgh. This article, which is thus universally prized, and which 
 brings a higher price than the finest English cheese (which is 
 little sought on the continent), is made from the skimmed milk, 
 so that the farmer reaps the profit of his butter in addition to 
 the cheese. According to M. Berra, 100 lbs. of milk give, near 
 Milan, of butter 2*38 lbs., and of cheese 6*17 lbs. Near Lodi, 
 the yield is something greater. The high value of Italian farming 
 produce is owing to the remarkable division of labour. It is rare 
 to find the actual farmer or manager of the ground at the same 
 time the cheese-maker. The " Casaro ^^ is justly esteemed an 
 important personage, and, even where he forms part of a large 
 establishment, is quite independent of the other farming ser- 
 vants. A great deal of the cheese is made in Lombardy by 
 wandering "Casari,'^ who contract for the milk of a season 
 often from more than one dairy, and make the cheese in an out- 
 house on their own account. 
 
 Rice is extensively cultivated in Northern Italy. Instead of 
 the flax of Belgium and Holland, the Italian produces another 
 material for the loom, which is even of higher value. The dry 
 lands that are not adapted to irrigation combine the culture of 
 the mulberry-tree with that of the vine. The production of silk 
 is again facilitated by a division of labour that is peculiar to 
 Italy. The owner of the eggs, or, as they are termed, '^the 
 seed,'^ appears at a farmer's residence, and contracts for his 
 mulberry leaves as the " Casaro '' does for his milk. He receives 
 a shed, which is emptied for him, and remains six weeks — until 
 his w^orms have attained their growth and spun. He then dis- 
 
 • The land-tax estimate was 407,895 in 1837. 
 
46 
 
 appears with his crop of cocoons to seek the most skilful spin- 
 ners, on whose work the value of what he has obtained very 
 much depends. On the whole, it is scarcely possible to imagine 
 a more pleasing instance of association, combined with division 
 of labour in agriculture, than Northern Italy presents. The 
 financial side of the picture is also a remarkable one. 
 
 A comparison between the rents specified as paid in Northern 
 Italy and the rents of England, or even of Scotland, will show 
 how much more the Italian landlord receives than the English 
 landlords, although the price of wheat is not higher than 38^. Sd, 
 per quarter, and wine is only rated at 6d. per gallon. 
 
 Northern Italy (like Holland and Belgium) is a countr}^ where 
 land can be let to farm. The mode adopted generally is the 
 metayer system. Thus one-half of the gross produce of the 
 richest soil under the finest climate in Europe, and the produce 
 of which is turned to the best account by the concentration of 
 intelligence I have attempted to describe, is the landlord's share, 
 if he find the stock. If the tenant find stock, the landlord 
 draws but one-half of the nett return. 
 
 As an illustration of money rents, I may quote, from a good 
 source, the rent of sixteen estates in the province of Vicenza, 
 containing 10,027 jochs, or 1100 acres, amounting, in 1825, to 
 34,309/. 41^., being at the rate of 34/. 2k, per joch, or £3 per 
 acre*. 
 
 The market for produce being very limited in Germany, 
 Austria and Russia, the whole endeavour of the farmer is in 
 those countries directed, not to produce the most he can, but to 
 obtain everything at the least possible cost. These are the coun- 
 tries, therefore, where grain ought to be grown, and large farms 
 ought to prevail there. A mistaken view of the economical 
 position of the farmer has led to a very minute division of the 
 soil in these lands. The consequence is, that the peasant holders 
 of ten to twenty acres, in order to obtain even the little money 
 required to pay their taxes, are obliged to farm on a large scale, 
 which they accomplish by association. The fields of a village 
 are apportioned into three lots : those tilled for winter corn lie 
 contiguous to each other, and are manured ; the fields for sum- 
 mer corn lie also in one batch ; and the third portion is left in 
 
 * See Burger's admirable account of the agriculture of Lombardy and 
 Venice, where the rents of no less than thirty-three farms are specified, and 
 which vary from £2 to ^3 : 10*. per acre, exclusive of land-tax. 
 
47 
 
 fallow. This is done that the fallow may afford a common pas- 
 ture for the flocks and herds of the village, under the care of 
 one herdsman. The principle of association is, however, not 
 carried so far as to make them employ but as many hands and 
 as many horses or oxen as would be requisite to till that land. 
 The proprietary rights are still scrupulously insisted upon ; and 
 a man, with but a few acres, finds a motive for keeping two, or 
 even four horses to till them in the bad state of the roads leading 
 to or from the lands to the village. In Hungary, a plough may 
 be seen to go out with eight oxen and two men, to till a few acres 
 at a distance of some miles from the peasant^s house. Hence 
 the production of food demands an enormous sacrifice of labour. 
 The market price is no index of value, and no accumulation of 
 wealth takes place, notwithstanding the abundance of food. The 
 benefits arising from society, which, in countries badly provided 
 with means of communication, might soon be altogether lost, if 
 not maintained at some sacrifice, are secured to the peasants by 
 the system of living in villages, and are justly appreciated as the 
 means of keeping the people civilized. 
 
 In the long evenings, the village ale-house serves the purpose 
 of a club, where the men usually meet, and the newspaper cir- 
 culates intelligence respecting the events of the day. In remote 
 parts of Hungary, German papers may be found, besides the 
 papers of the country and light periodicals, whose moderate 
 price is suited to the resources of the villagers on the scale that 
 I have described them. The price paid for these advantages is, 
 however, a high one, as it takes the farmer off" his land ; and if 
 close economical calculations were made, this would appear to 
 cause him a serious loss. These small farms are experiments of 
 division of labour uncombined with an efiicient system of com- 
 bination. Even where the peasants^ farms are managed in 
 the systematic manner I have described, the little gain that 
 accrues to them at the end of the year is frequently anni- 
 hilated by floods, hailstones, epidemics amongst the cattle, and 
 other accidents. On such occasions, the government makes 
 an abatement on the land-tax. Existence is thus supported by 
 the aid of the females and children of a family, who invai-iably 
 work with the men in the fields by day, and at night and in the 
 winter spin the flax and wool for clothing. Of course, in a 
 country where such a system prevails, there is no such thing as 
 money-rent. This is the stage of society, and these are the 
 
48 
 
 countries, where labour-rents prevail. The large landowners 
 vary their productions by brewing and distilling, or making 
 sugar from beet-root. Oil is made from poppies and rape, 
 and fruit and tobacco are grown in the parts near the Rhine and 
 in central Germany, where trade has improved agriculture. In 
 these parts of Germany, as in Italy, an estate is occasionally, 
 but rarely, let in partnership to a farmer, who is furnished with 
 stock and seed, and who takes a share of the nett produce as the 
 return for his labour. But these contracts are rare ; and w^here 
 money-rents are found, they are ridiculously low. I have heard 
 of an estate of 100,000 acres let in Hungary, by the crown, to 
 a large farmer, at the rent of one florin, or two shillings per 
 acre. 
 
 In times when Englishmen were accustomed to allow some 
 influence to the opinions current in other parts of Europe, 
 there was no difference between our agricultural system and 
 those followed by neighbouring lands that were on a par w ith 
 us in point of intelligence. All bought where produce was 
 cheap, and sold in the best market. France then imported wheat 
 from Ireland in exchange for wines. Each producer suited his 
 crops to the demand, and bought and sold in the best market he 
 could hear of. Under these views. Dr. Smith gave his short 
 but comprehensive definition of rent, as the portion of the gains 
 of the person employing the land which he finds it worth his 
 while to pay for its use. This definition makes the value of land 
 depend on its cultivation. On the farmer^s intelligence in ar- 
 ranging his crops, no less than increasing the efficiency of his 
 labour, depends the profit that the land can yield. This defini- 
 tion. Gentlemen, the production of the last century, acknow- 
 ledges that human power is intellectual. Had its author but 
 had a glimpse of the mighty substitutes for his muscular pow-er 
 that man w^as on the point of commanding, we should not have 
 owed to him the labour-test of value. 
 
 The instances I have adduced show that two calculations 
 are necessary respecting the value of land. These calculations 
 correspond to the principles laid down in the last lecture. The 
 first consideration for the farmer is, not what the land is able 
 to produce, but what the best market demands. The consumer 
 gives the law, which the producer follows as w^ell as he can; 
 Having chosen the most profitable system of cropping, the 
 farmer next directs his intelligence to the best mode of exe- 
 
49 
 
 cuting it. In no part of central Europe are crops prescribed by 
 legislative enactments, or bad systems supported against experi- 
 ence. These examples prove too that agricultural profits are every- 
 where in direct proportion to the intelligence displayed, to the 
 security obtained, and to the competition experienced by farmers 
 and landowners. But I must trace our fall from this simple and 
 admirable view of agriculture. While it prevailed, we were on 
 good commercial terms with our neighbours — our labouring po- 
 pulation was considered the happiest in Europe. The deplorable 
 change that came over this empire sprang from a theory that I 
 must now explain. It is a remarkable instance of the dependence 
 of those who call themselves practical men upon principles. After 
 many years of war and an unusual isolation from the rest of 
 Europe, the supply of corn expected to appear in our markets 
 began to be calculated according to the quantity raised at home. 
 The importance of the home crops was enhanced by the rapid 
 increase of the population. It was found that foreign importa- 
 tions, impeded as they were by the circumstances of the war, were 
 not able to affect prices seriously. The bad supplies that could 
 be commanded in the two years of famine, 1816 and 181 7^ con- 
 firmed the notion that our supply of grain was limited, and 
 could only be increased at great sacrifices. On these obser- 
 vations, a theory was reconstructed by Mr. Ricardo, which it 
 seems had been put forward and was rejected during the life of 
 Adam Smith. 
 
 Dr. Smithes theory, as we have seen, attributes to the land no 
 inherent quality, by means of which rent can be obtained from 
 its cultivator, beyond its general usefulness*. Mr. Ricardo deems 
 rent only to be yielded by food. 
 
 The Ricardo theory of rent applies this principle in the fol- 
 lowing manner. It asserts that of five parcels of land, of vary- 
 ing qualities, rents will only rise on the best according as it be- 
 comes indispensable to cultivate the worst land for the produc- 
 tion of the same crop. Thus, if 
 
 No. 1 
 
 yields 
 50 bushels 
 per acre. 
 
 No. 2 
 
 yields 
 
 40 bushels 
 
 per acre, 
 
 No. 3 
 
 yields 
 
 30 bushels 
 
 per acre. 
 
 No. 4 
 
 yields 
 
 20 bushels 
 
 per acre, 
 
 No. 5 1 
 
 yields 
 10 bushels 
 per acre. 
 
 ♦ " Had land always yielded the same or a greater proportional return to 
 every fresh outlay of capital and labour, the entire supply of food required by 
 the most populous nation might, it is obvious, have been raised from ten acres, 
 
^0 
 
 This theory, applied as it has been to the growth of corn, 
 declares that a farm of the quality of No. 1 will yield a rent of 
 £500 only, when a farm of the same size, but of the quality of 
 No. 5, yields £100 ; — that as soon as rent for wheat grown on 
 No. 1 becomes £400, No. 5 will yield no rent, and the other 
 numbers proportionately less. Now we know that no practical 
 farmer restricts his cultivation to any one crop. Besides, to 
 make this theory true, the cost of cultivation, even of wheat, 
 must be the same upon all the soils, which is not the case. If 
 this theory therefore, which we find must have been known to 
 and rejected by Adam Smith, had not been practically rendered 
 important in England by its adoption by the legislature, we 
 might dismiss it here, as all foreign political economists have 
 done. It will, however, be useful for us to look at it a little 
 more closely. 
 
 Let us test the Ricardo theory in detail by my account of 
 value. We may suppose five lots of land of various descriptions 
 offered to farm. One shall be a rich loam, suited to the growth 
 of wheat in all seasons ; a second shall be a heavy clay; a third 
 shall be a light sandy soil, hke part of Norfolk ; a fourth may 
 be fen land, like the Isle of Ely ; the fifth may be heath, like 
 Bagshot Heath or Chat Moss. 
 
 The farmer who bids for lot No. 1, before he lays himself out 
 to grow wheat, will, if he be wise, inquire the comparative 
 value of flax and rapeseed, and other crops, the price of which is 
 commonly high when wheat is cheap. The landlord would, 
 from a skilful farmer, obtain a higher rent for these crops off the 
 best land, if wheat could be cheaply grown elsewhere, than 
 wheat itself could afford ; but he would only get this rent as 
 long as wheat continued cheap. The farmer of the clay soil would 
 probably give a rent equal to that of the first lot, if the cheap- 
 ness and abundance of wheat allowed him to pasture profitably. 
 Were he obliged to compete with the other in growing wheat, 
 he would have to marl and under- drain the heavy land, and 
 would not, of course, pay the same rent for it. Enormous sums 
 are daily spent in fitting land to grow wheat, that is not by na- 
 ture suited to produce such a crop. But these are only En- 
 glish calculations. In Germany and France, the clay soil would 
 
 or even from one acre, as easily as from millions, in such a state of things 
 prices could not have risen and rent must have been wholly luiknown." — Mr. 
 McCulloch's Note 3. to Adam Smith, p. 440. 
 
51 
 
 suit the vine. In Italy, the fen would be invaluable for rice or 
 cheese. Even in England^ it is paid high for as dairy land. 
 The light sandy soil in the hands of a Fleming would produce 
 the finest flax and artificial grasses. Bagshot Heath, under the 
 hands of Dutch gardeners, would yield high rents, but only if 
 the cheapness of wheat allowed people in England to spend a 
 good deal of money in flowers. Now, what has become of the 
 relative fertility of all these soils ? Each is suited to some par- 
 ticular kind of cultivation — the value of the majority of which 
 depends upon cheapness of food. All change their crop, what- 
 ever be their quality, with the growth of population and the 
 spread of towns. The demand thus occasioned causes a continual 
 transition from one series of crops to another. Each becomes in 
 succession more remunerating the cheaper the preceding one is 
 produced. The moment that we introduce the element of scarce 
 and dear food into the calculation, we destroy the natural value of 
 all soils ; for even what are considered to be wheat soils yield most 
 in flax or rapeseed crops when wheat is low in price. In this 
 manner has it been possible for an erroneous economical calcu- 
 lation to unhinge the agriculture of these islands ; to transplant 
 to Holland a large portion of our dairy farming, to Russia and 
 Belgium our flax crops, to America our tobacco and our apples ; 
 to expel the poultry from our farm-yards to France, that now 
 supplies us with eggs and fowls, and to limit the enjoyments of 
 our population by depriving them of fruit and flowers. The 
 true diagram to illustrate the theory of rent would therefore show 
 the rates of profit as follows: — 
 
 Grain, 
 10. 
 
 Raw materials 
 
 for clothes, 
 
 20. 
 
 Dairy 
 
 produce, 
 
 30. 
 
 Gardening, 
 40. 
 
 The great responsibility incurred by the author and the 
 teachers of the Ricardo theory of rent, the error of which has been 
 exposed by Professor Jones, of Haileybury, arises from the evils 
 to which every slight of the power of human reason inevitably 
 leads*. The most imminent danger threatening a nation that 
 adopts it is that of the slavery of the mass of the people. As 
 food gradually advances in price, the value of all other commo- 
 dities declines. Rapid improvements in manufacturing industry 
 
 * See * Essay on the Distribution of Wealth.' Mr. Rieardo's theory of rent 
 was never adopted by any foreign political economist. Say, Storch, Rossi, 
 Hermann, Ran, adopt Adam Smith's theory. 
 
 E 2 
 
52 
 
 may retard^ but cannot preclude the ultimate catastrophe. The 
 constant advance in the price of the great necessary of life, which 
 is inevitable, were the Ricardo theory true, must in time absorb 
 all the industry of the country to pay for food. I venture to 
 appeal to our own experience during the last five years, and ask 
 whether we have not in that interval had a foretaste of what 
 this system leads to ? This is the true key to the mystery of the 
 distressed condition of the agricultural labourer. His master is 
 doing bad business, and cannot afford high wages. It is not 
 because the labourers do not combine that they are ill-paid. 
 
 To save what they could in the alarm caused by this theory, 
 the English landowners resorted to the prevention of foreign 
 competition. It is to this that we must ascribe the want of 
 machinery, for an improved grain cultivation. There can be no 
 doubt that if the wholesome pressure from which the other na- 
 tions of Europe have not shrunk (at least, not to the extent that 
 we have shunned it) could be applied to our farmers, they would 
 long since have endeavoured to substitute mechanical for human 
 muscular force. The agricultural labourer would then be raised 
 in the social scale as the factory operative has been, while the 
 saving occasioned by the change would have opened new fields 
 for industrial enterprise. In England, indeed, it w ould proba- 
 bly have been found useful to leave the culture of grain, like that 
 of sugar, to the colonies, or other tropical lands. The demand 
 consequent upon the cheapening of corn w^ould then soon have 
 absorbed all the disposable land in these islands for the far more 
 profitable cultivation of crops, that would then, and only tlien^ 
 remunerate better. 
 
 My wish is now not merely to expose the fallacy of the 
 Ricardo theory of rent ; I wish to assert that its reverse alone 
 is true. But why is it that dear corn is a source of loss to all 
 parties ? It is because we can only gain by economising. What 
 a man saves in his outlay for bread is what he has to spend in 
 linen, in oil, in butter, in cheese, in meat, in cloth, and in beer, 
 or in wine or sugar. Who are the consumers of all these 
 objects at once ? Of course, the rich. At the rich man^s table 
 you meet all articles of food. In his wardrobe you find cottons, 
 "woollens and silks piled up together. The poor man chooses 
 between beer and tea for his meals, between meat and cheese, 
 between cottons and woollens. Then what does the agriculturist 
 evidently reject in England — what does he undervalue as a 
 
53 
 
 source of profit when he builds his hopes of gain upon dearnes s 
 of food ? Does he not put this out of the power of the largest 
 class of his fellow-citizens ? The difference between the sum 
 laid out in the purchase of 20,000,000 of quarters of wheat in 
 1839 and in 1834, amounted to £20,000,000 sterling. This 
 was abstracted from other crops and from manufactures. Who 
 can wonder that a general stagnation of trade took place ? It 
 is to the outlay of what the poor would save in the price of 
 bread, if they got it cheap, that the agriculturist must look to 
 pay for the flax, the rapeseed, the hemp, the hay, the butter, the 
 cheese, the meat, the hides, and the wool, which he would then 
 grow with more profit than grain. The cultivation of wheat, as 
 too expensive and unprofitable, we might well leave to distant 
 lands, for it would bring back far more remunerating crops, 
 many of which are now banished from our islands. The farmer 
 and the landlord are, therefore, the parties most interested in the 
 rejection of our present corn-laws, which make wheat a profit- 
 able crop at the expense of every other. They ought to be 
 clamorous for their repeal ; for no one can deny that cheapness 
 of corn will increase the demand for every other article of agri- 
 cultural produce. The agricultural labourer ought to join in the 
 cry, for these laws prevent the extension of the scale upon which 
 grain is grown ; they prevent a demand for those more costly 
 articles which can be grown upon a small scale. The corn-laws 
 thus deprive us of the only means of raising wages. We have 
 seen continental landlords fare well by acting on this principle. 
 Rent is the share of profits derived from the use of the land 
 which the party hiring is willing to give to the owner of the soil. 
 Rent, therefore, is measured as a general rule by the rate of pro- 
 fit obtained in all branches of industry in the same country. It 
 fluctuates therefore according to the good or bad legislation, the 
 state of knowledge, of morality, — in short, of all that influences 
 the growth of wealth and of prosperity. 
 
 But rent, hke farming profits, follows the law laid down, and 
 both must often, where land abounds, be reduced in rate that 
 they may be increased in amount. Hence in thinly peopled 
 countries where soil and climate are favourable, crops of gross 
 produce would be cheaply raised on a large scale with advantage 
 both to the landlord and the farmer. For all other countries 
 who can avail themselves of this aid, the prolific nature of a great 
 portion of Europe and America cTught to prove beneficial. There 
 
54 
 
 are however peculiar limitations on the size of farms, even where 
 land is of the least value. The time of men and cattle spent in 
 going from the homestead to outlying fields is a loss to the 
 cultivator, and where cattle are the only propelling force, the 
 scale of farming operations is much more limited than where 
 canals or other machines are available. Calculations have been 
 made by good farmers in Germany of the loss sustained by the 
 distance of fields from the homestead*. A similar calculation is 
 the loss sustained by distance from the market for produce. 
 But the force employed makes the greatest difference in these 
 calculations, and grain is more easily brought from Odessa to 
 London by sea, than it is transported in many parts of Germany 
 thirty miles by land-carriage. It is on this account that all fixed 
 rates, such as tithes, land-tax, county and poor-rates, and even 
 turnpike-tolls, press so variously upon farms in different situa- 
 tions. The operation of these imposts has the greatest influence 
 upon the rise and fall of rents. 
 
 I have alluded to the state of the laws in those parts of Eu- 
 rope that are most backward in agriculture, as having impeded 
 progress. This applies to other legislative enactments than 
 those which directly fetter exertion. Some attempts at improve- 
 ment have been, perhaps, even more mischievous in their effects. 
 The transition from one state of economical progress to another 
 is easy, and need not be accompanied by the least inconvenience 
 where property is secured, intelligence promoted, and exertion 
 unrestricted. It was in some attempts to force a hasty improve- 
 ment by means in which these indispensable requisites were lost 
 sight of, that the German legislators of the last and the present 
 centuries went astray. 
 
 The inevitable snare into which all theorists fall who ascribe 
 inherent value to objects of use, and who deny the power of in- 
 tellect to confer on them a higher value, is that of rendering 
 property insecure. If the power of producing food lay in the 
 earth, and not in the man who tills it, the problem of the proper 
 distribution of property might be one of mathematical calcula- 
 tion ; but if the production of food depends, as I say, upon the 
 individual tastes, feelings, and wants of men, the only way to 
 spur them to exertion is to secure to each the enjoyment of the 
 share he gains in the manner he likes best : to enjoy the most, 
 he has only to produce the most. What he does not want he 
 * See Von Thiinen, Der Isolirte Staat. 
 
55 
 
 exchanges for other objects, and in doing so his inclinations are, 
 or ought to be, unfettered. Wheatcji flour is precisely the same 
 article, whether produced in Canada, in Buckinghamshire, or in 
 Podolia. To all who buy in markets, it must be indifferent who 
 grows the grain produced and where it was raised. We can, 
 therefore, trace the rise of certain opinions unfavourable to the 
 security of property and the exertion of individual industry 
 solely to the interference of landowners with the liberty of 
 others. It is, as I say, indifferent to a Liverpool merchant and 
 a Manchester manufacturer where the raw produce is grown 
 that he requires, provided he can get it everywhere on equal 
 terms ; but the attempt to prescribe a market to him to buy in 
 is one which inevitably leads to retaliation. If he is obliged to 
 purchase certain crops, nobody can deny his right to prescribe 
 the mode of growing those crops. If wheat is not to be made 
 more accessible than it has been for some time to our growing 
 population, we may rest assured that the people will resort to 
 modes of controlling the use of the land, in terms incompatible 
 with security of property. It is to be lamented that philan- 
 thropic characters, like Robert Owen and Fourier, saw no way 
 but this to meet the exigencies of the crisis. But it must be 
 evident that no argument regarding the loss for all, that would 
 ensue from the destruction of all other kinds of property, would 
 be heeded, were a social revolution brought about by deamess 
 of food. When food grows scarce, all things else lose their value, 
 as we have seen. Their loss would therefore be little regretted, 
 and all remonstrance in their favour would be powerless. 
 
 It is a singular piece of inconsistency in our times, that some, 
 who set the highest value upon the free agency, and con- 
 sequently upon the responsibility of man, support the notion 
 that he is dependent upon particular qualities of soil for food*. 
 Others, again, who wish to escape from the yoke of responsibi- 
 lity, would throw off all that appears to interfere with the most 
 effective cultivation of the land, in order to remove the difficulty 
 of procuring food. Were the latter successful in obtaining sup- 
 plies of food on easy terms, they do not see that, from the mo- 
 ment it is provided, the responsibility of man commences. 
 
 Thus in Owen^s and Fourier's systems, the more certain a 
 body of men are of obtaining food and clothing by means of as- 
 sociation, the more imminent is the temptation to gratify the 
 
 * Dr. Chalmers's Treatise on Political Economy is a curious instance of this 
 conflict between necessity and responsibility. 
 
56 
 
 longing after liberty. It seems to have escaped the notice of 
 these theorists, that the scheme of dividing the land of a country 
 amongst the bulk of the population has really been tried in 
 several countries. I cannot, from my investigation, report fa- 
 vourably of the experiment. 
 
 The experiment was tried directly by open rapine in France, 
 when the lands of the crown, of the church, and of the nobles 
 were divided into lots and sold at low prices. In Germany the 
 project oi fixity of tenure^ was tried nearly half a century pre- 
 vious to the French revolution. In Prussia — whose overthrow 
 in 1806 is in a great measure to be accounted for by the demora- 
 lization consequent upon the violation of property — matters were 
 carried even farther than in Austria. The suit and service 
 chargeable on the land, as well as the corn and money rents, 
 were declared redeemable for a quantity of land that was to be 
 ceded in lieu of them to the landlord. This last measure has 
 only been partially carried into execution. A division of the 
 soil amongst those who till it without profit, inverts the natural 
 process by which hands ought to be constantly removing from 
 the land into more profitable occupations, until the increase in 
 the value of fibrous, green, and other crops recalls attention, and 
 induces men to cultivate small holdings. This natural progress 
 in cultivation has been checked in all those countries of Europe 
 where security of property w^as shaken by the ill-judged legis- 
 lation mentioned above. Hence the poverty of the small land- 
 owners both in France and in Germany, and the difficulty ex- 
 perienced in those countries of economizing labour so as to 
 enable them to manufacture. The peasants w^ere in fact, by re- 
 ceiving a gift of the soil, bribed to continue an unprofitable occu- 
 pation. 
 
 I hope that my arguments showing that by consigning the 
 growth of grain and gross articles of food to countries where 
 they can be produced on a large scale, at low prices, is the way 
 to ensure high remuneration for other crops, will lead to a care- 
 ful consideration of the defects of our present agricultural system. 
 Not only is the assumed natural disparity of soils no source of 
 rent, but if it existed, the sterility of the poor soils would take 
 aw^ay all value from the richer. The richer soils w'ould then, as 
 the Ricardo theory supposes, be condemned to grow food only; 
 that is to say, the product which must always be sold cheap if 
 
 * This subject has been discussed in the article on Mr. Laing's " Notes of 
 a Traveller/' in the ' British and Foreign Review,' No. 32. 
 
57 
 
 any other product is to have value. I hope I have succeeded 
 in giving the farmer a practical rule by showing that the value 
 of all his other crops increases in proportion to the cheapness of 
 food. The landowner is still more deeply interested in this mode 
 of estimating the value of land. For the landowner it is neces- 
 sarily a matter of indifference from what use of the land he draws, 
 provided he gets, the highest rent. This is clearly to be ex- 
 pected from building land. With the accumulation of popula- 
 tion land comes into demand for building, and a due proportion 
 is then also abstracted from what is farmed on a large scale, to 
 be used for dairy farming and as gardens. That the increase of 
 towns is mainly dependent on the cheap price of food, I need 
 scarcely prove. Hence, all the landowner has to cultivate is the 
 general advance to prosperity of the country at large. He can- 
 not miss his share of the benefits derived from improvement when 
 they do come. But in the present state of things in England, 
 the landlords can do the most that is requisite to hasten its pro- 
 gress. 
 
 The first step to improvement will be to discard the prejudice 
 that now vitiates all calculations, and assumes that food alone 
 produces high rents*. 
 
 * To eke out the Ricardo theory, the monopoly theory was superadded. It 
 is thus stated by Mr. McCulloch : — 
 
 " The two sources of rent above described, fertility and proximity to market, 
 are totally distinct from those peculiarities of soil or situation which afford a 
 rent on the principle of monopoly. Tokay, fine Hock, Chambertin, Constantia, 
 or any particular kind of produce obtainable only from particular soils and in 
 limited quantities, may, from deficiency of supply, fetch a price exceeding in 
 any possible proportion the cost of production. The whole of this excess, after 
 deducting the ordinary profit upon the capital, naturally goes to the landlord. 
 Land occupied with dwelling-houses, gardens or parks, and possessing peculiar 
 beauties of situation or disposition, is also of the nature of a monopolized article, 
 and its rent is entirely governed by the demand. It cannot indeed yield less 
 rent than if it were devoted to agricvdture, but it may yield a vast deal more. 
 When any situation affords greater facilities for business, as for example when a 
 shop, by being in a fashionable part of the town, enables the occupier to obtain 
 greater prorits than could be made in a shop possessing no such peculiar ad- 
 vantage, this extra profit will be added to its rent. The reader will easily trace 
 how much is analogous to rent, properly so called." — McCulloch's Notes to 
 Adam Smith, p. 447. 
 
 A calculation quoted in the ' British and Foreign Review,' No. XX XI I., shows 
 that in Belgium the land cultivated under the influence of town neighbourhood 
 brings in a larger sum to the owners than the agricultural rental of the rest of 
 the kingdom. It is not improbable that a similar calculation might be made 
 for England. In these cases, which is legitimate and which monopoly rent ? 
 Besides, the so-called monopoly rents go on increasing with the prosperity of 
 the country, and the agricultural rents decreasing. What becomes at last of 
 the rule, and what of the exception ? 
 
58 
 
 We often hear the uncultivated land in England alluded to, 
 sometimes with surprise, more frequently in terms of indigna- 
 tion. Why land should remain unused can only be explained 
 by the fact of its being unsuited to the sole use that can now be 
 made of it. Wheat is now the crop sought, and wheat cannot 
 be profitably grown on Chat Moss or on Woking Common. 
 To produce grain in these districts, years of sacrificed labour 
 and large masses of capital would be required. But can nothing 
 else be grown ? Would a Fleming, a Dutchman, or an Italian 
 be deterred from cultivating these tracts of land? We know 
 they would not ; nor would Enghshmen have let them lie waste 
 if the demand for the crops which they would produce were not 
 limited by the high price of grain. The receipt I should give 
 for getting our waste land into cultivation is, therefore, a different 
 one from that sometimes proposed. I would not unsettle pro- 
 perty by taking it away from the present owners in order to give 
 it to some who might chance to use it better. I would rather 
 see it made worth the while of the owners to cultivate it by 
 creating a demand for all kinds of crops, which can only be done 
 by cheapening the price of grain. 
 
 If the plan of encouraging competition, which will alone sti- 
 mulate our domestic production, be not resorted to, the alterna- 
 tive is inevitable. With the growth of population the pressure 
 of distress must go on increasing, until it overwhelms us all in 
 common destruction. 
 
 It cannot be denied that our excellent trading and manufac- 
 turing organization have deferred the crisis which thus threatens. 
 Other nations that do not enjoy these advantages are on a par 
 with us in general prosperity. They would be before us if they 
 had cultivated trade as we do. 
 
 But where there is no security of property and no due or- 
 ganization of labour, even abundance of food is of no advantage 
 to a country. On the contrary, the desire for progress w^hich 
 exists everywhere, even when repressed, is fostered by a con- 
 sciousness of the power to gratify it, and causes dangerous fer- 
 ments that usually explode on any favourable occasion. In this 
 position are the Russian and Austrian empires, and the southern 
 states of Italy : this accounts for the present disturbed state of 
 Spain and Portugal. Our Indian empire is perpetually on the 
 brink of such a crisis, which, if not anticipated, may lead to fear- 
 ful scenes in that quarter of the world. 
 
69 
 
 The countries of Europe in which agriculture is backward are 
 those where cities are few and far between. A town of 2000 in- 
 habitants is considered remarkable in Germany. Belgium, Hol- 
 land, the North of Italy, and England are, on the other hand, 
 studded with cities, while the rural population is scattered over 
 the face of the country, but not in such a manner as to be lost 
 to society. Here, too, the rents in cities are high, and the ground 
 about them in great demand. The agricultural rents near Milan 
 are nearly as high as near Edinburgh and London. Building 
 land sells at Brussels at £10,000 per acre. In the larger Ger- 
 man towns it is rare to find any such value ; and if a speculator 
 in many parts were to build on a large scale, he would run the 
 risk of finding his houses as little sought by the inhabitants, as 
 the rivers, waterfalls and mines that abound and are turned to 
 no account. Besides the want of a due insight into the value of 
 the organization of labour, which would make all classes anxious 
 to draft supernumerary hands off the land in order to employ 
 them in other occupations, the state of the laws and of the public 
 communications have hitherto prevented the development of the 
 resources in the German and Slavonic states. The sovereigns 
 withhold the pohtical rights which the educated classes demand. 
 The nobles, too, oppose all concessions to their fellow-subjects, 
 not seeing, that with the manufacturer and trader a new species 
 of property arises, which the citizen feels is not secure when he 
 has no share in legislation. If the landowner understood his 
 own interest, he would favour every new claim of property in- 
 stead of opposing it ; for when he does the utmost to render his 
 land valuable, he is dependent eventually upon the co-operation 
 of the citizen for success. 
 
 In matters of legislation, as in matters of business, the land- 
 owner who allows a proper share of influence to every new and 
 enterprising class of industrious occupiers that comes forward to 
 propose a new mode of using the land, will find his interests 
 best consulted by so doing. As his rental can only gain by the 
 increase of competition for the employment of the land, his 
 moral ascendency must increase if he devote the leisure thus 
 left him to encouraging and aiding the new-comer, instead of 
 thwarting his exertions. 
 
60 
 
 LECTURE III. 
 
 MANUFACTURES— PROFITS— WAGES. 
 
 We have seen that the manner in which the agriculturist fills 
 his post at the opening of the industrial scale, fixes the number 
 and proportionate importance of all other branches of industry. 
 Food, as the primary want, must first be satisfied, whatever 
 sacrifice it may cost. Until food is provided, no other want is 
 urgent, nor were it ever so distressing, could it be regarded. 
 But in proportion as food grows abundant, the other wants lise 
 in importance, and a constantly expanding series of desires is 
 awakened, which are, however, classified, as we have seen, ac- 
 cording to their different grades of pressure. In the first in- 
 stance, rude clothing and mean dwellings, — then delicacies for 
 the palate, ornaments for the person, commodious, rapid, and 
 elegant conveniences for travelling, succeed each other, as wants 
 demanding satisfaction. The enjoyment derived from the gra- 
 tification of cultivated feelings and tastes closes the list for ra- 
 tional beings. 
 
 If the moralist is struck with admiration at the contemplation 
 of this beneficent dispensation of Providence, by which our 
 wants may, in some measure, be said to be created by the means 
 of satisfying them ; the political economist prizes no less the 
 united bounty and wisdom which thus opens to man the pro- 
 spect of indefinite enjoyments, to which the sole condition an- 
 nexed is, that he shall appropriate them. 
 
 The labour saved in agriculture by exertions of intelligence, 
 whether directed to the improvement of processes, to moi'al 
 progress, or to wise social combinations, is all that a community 
 commands for manufacturing industry. Knowledge and exer- 
 tion make this fund go farther in some countries than in others. 
 It is most efficacious where security of property enables large 
 bodies of men to abandon other modes of production altogether 
 and to devote themselves to one task. This division of labour, 
 far from militating against the principle of association, is im- 
 
practicable unless the true association ensures an interchange of 
 the productions that are multiplied by its means. 
 
 But were this multiplication of our producing power to be 
 dreaded as an evil, were wealth to be measured by the cost of 
 production J and value to be estimated solely by the labour used 
 in producing processes, then must the economy in agriculture 
 on which manufacturing industry is based be dreaded as an evil. 
 Every improved process in manufacturing would diminish the 
 wealth of a community. 
 
 It must however be evident that as the manufacturer requires 
 food as well as the farmer, there can be no room for him until 
 superabundant food is provided wherewith to nourish him. 
 Again, if the farmer is to have clothes, he must either devote 
 some of his time to make them, or must grow food for those 
 who do so for him. Both plans have been tried, and the latter 
 has been found the most efficacious. Men are brought to adopt 
 this arrangement by means of that capability of the mind which 
 I have pointed out to increase its desires where there is a possi- 
 bility of satisfying them. Until food is supplied, man scarcely 
 feels any other want. Hence the manufacturer takes the second 
 rank in the industrial scheme. The demand for what he pro- 
 'duces grows in proportion as food and raw materials cheapen. 
 The farmer, by extending his scale of production and reducing 
 his rate of profit, both increases its amount, and forcing his com- 
 petitors into the new fields of industry which he thus opens, the 
 increased profit is divided amongst fewer claimants. 
 
 The important place in political economy which manufac- 
 turing industry is entitled to occupy has not yet been clearly 
 pointed out. The celebrated treatises on the science of the last 
 century, in which the largest views have been propounded, were 
 composed before manufactures had attained that development 
 which makes them for some countries a matter of so high an in- 
 terest, as to absorb many other economical considerations. Even 
 in recent treatises we do not find manufactures clearly distin- 
 guished from handicraft arts. And yet it is of the utmost im- 
 portance that this distinction should be fully comprehended. 
 Factory industry, to the products of which the common term 
 ^^ manufactures^^ is still generally applied, differs from handicraft ^Jy 
 industry in the nature of the foi'ce which it employs to work . 
 tools. The mere use of machinery does not sufficiently charac- ) 
 terize a factory, because we ought then to look upon the work I 
 
62 
 
 V/ done by a turner at an ordinary lathe, or even the process of 
 pumping by hand, as factory work, because performed with the 
 aid of machines. The distinction is an important one which 
 appHes to the force used to set an instrument in motion, rather 
 than to the use of any particular tool or machine, because any 
 other power than that of the human hand is capable of indefinite 
 augmentation, and replaces corporal drudgery by an appeal to 
 human intelligence. 
 
 In order to define clearly the respective fields of factory and 
 handicraft industry, it may be well to confine even the term 
 machinery to the engines set in motion by other agents than the 
 human hand, and to call utensils worked by hand-power tools, 
 even though they magnify the power of the human muscles. In 
 this manner the common pump, forcing-pump, and lathe would 
 be termed tools, because the force applied to them is manual 
 labour. They would become machinery as soon as animal force, 
 air, water, steam, or chemical agents are used as their impelling 
 forces. Thus, wind, horse, and water-mills, watches, ships, Mr. 
 Clegg's atmospheric pressure tube, the galvanic trough, steam- 
 engines, and the instrument named the Daguerreotype, are all 
 machines, notwithstanding that they vary from gigantic dimen- 
 sions to the compass of a pocket instrument. Thus, literally, 
 handicraft labour is but the first stage of the development of 
 power ; machinery is the last and highest. The moving prin- 
 ciple of machinery is a secondary means, not created, but disco- 
 vered, and applied by human intellect. After a scientific distinc- 
 tion of this kind between handicraft and factory industry has 
 been adopted, it becomes easy to follow the economical laws by 
 which the growth of both is regulated. 
 
 According to our theory of power by means of handicraft skill, 
 the usefulness of an individual to his fellow-creatures is exhibited 
 in its most limited form. For ages the world had little other 
 than manual power to command for the supply of some wants 
 of the first necessity. The preparation of clothing, as we know, 
 both in ancient and modern times, was long a domestic occupa- 
 tion, and as few were supplied by the labour of others with 
 clothes and linen as with food. But as the spinning-wheel only 
 made men more choice in their style of dress when it was sub- 
 stituted for the spindle, so the progress to machinery has only 
 furnished a better supply of clothes than before existed. 
 
 The erroneous estimate of the value of man, which so much 
 
63 
 
 retarded the progress of agriculture, impeded, in a proportionate 
 degree, the detection of the grand source of human freedom and 
 enjoyment, — the mechanical and chemical agents. Even the 
 water-mill was unknown to the ancients, whose slaves pounded 
 the corn in mortars, that furnished the household meal. 
 
 It has been the custom to call a factory any assemblage of 
 workmen united by a single master, and to distinguish by 
 the name of manufacturers all workmen who adapt the raw ma- 
 terials furnished by the earth for other purposes than food. 
 There can be no good reason alleged for distinguishing the maker 
 of butter and cheese, or of wine, from the spinner of cotton, and 
 it would be useful if the agriculturist looked upon both in the 
 same light. The thresher by hand, and the dairymaid, are of 
 the same class of labourers with the hand-weaver and hand- 
 printer. These are handicraft arts, and differ in the points 1 
 have mentioned from manufactures. Strictly speaking, an irri- 
 gating canal and a drain are machines. But it is easy to show 
 the distinction between handicraft and manufacturing industry 
 in every branch of production. The economical rule to which 
 it leads in practice is the following : — Manufacturing industry 
 depending upon forces that are capable of almost infinite multi- 
 plication, the sole limit to the extension of factories lies in the 
 state of the market. It is, therefore, the business of the manu- 
 facturer to study the rule which I laid down in my first lecture, 
 and to endeavour to augment his profits by extending his sales. 
 Manufactures for this reason ought, in the first instance, to em- 
 brace all articles of necessity. Indispensable articles of food, 
 especially grain, ought to be cultivated on a manufacturing scale. 
 The greater the success of the manufacturer on a large scale, 
 the larger will be the savings of his customers. This fund is what 
 must defray the cost of handicraft industry, which, being prac- 
 tised on a small scale, proportioned to its more limited market, 
 requires a higher rate of profit than will repay the manufacturers. 
 In this position should our dairy farming and market garden- 
 ing stand to the production of grain and cattle fodder. In the 
 same relative positions should plain weaving, dyeing, and print- 
 ing, stand to embroidery and painting. In many branches of 
 production the first stages are effected by manufacturing, and 
 the last by handicraft processes. Thus, to allow of profits in 
 watchmaking and in cutlery, the miners and founders ought to 
 be manufacturers. The more cheaply they furnish copper and 
 
64 
 
 steel, the more the cutler will sell worked up into polished blades. 
 The cheaper bobbinet is produced, the more employment there 
 will be for embroiderers. The more abundant cloth grows, the 
 higher tailors^ profits and their journeymen's wages are likely to 
 be. 
 
 The substitution of machines for manual power, which forms 
 the great boast of our age, is the most successful result of the 
 application of intelligence to industry. The first apparent 
 change effected by it is to transfer production from small to large 
 establishments. The spinning-wheel and lace-cushion give way 
 to mills and factories. 
 
 This substitution being the foundation of a new social and 
 political scheme, demands a precurring fulfilment of several of 
 the conditions which I stated in my first lecture to be indispen- 
 sable, where industry is to make progress. 
 
 The outlay that machinery requires, and the great number of 
 hands which it collects in one establishment, make it necessary 
 that the disposition to associate should prevail, and its advan- 
 tages be thoroughly known, before it can be adopted. Again, 
 the extent of these investments makes the security of this de- 
 scription of property a matter of greater importance than the 
 smaller investments in tools, where hand labour prevails. The 
 history of industry, in almost every nation, records instances of 
 the attraction of manufacturers to new, and of their banishment 
 from old seats ; sometimes by the oppression of rulers, and at 
 others by the violence of factions. As a result of the turbulence 
 of the popular factions in the cities of Bruges and Ghent, in the 
 fifteenth century, many of the trades migrated to Antwerp and 
 to the Forest of the Ardennes, where tlie flourishing town of 
 Verviers now stands. The popular commotions in Cologne drove 
 weavers from that city into the same neighbourhood. The revo- 
 cation of the edict of Nantes, which was the charter of religious 
 liberty, cost France the bloom of her manufacturing population. 
 Under the reign of the bloody Queen Mary many cloth-weavers 
 migrated from England to Frankfort on the Maine, and had 
 they not been recalled under Elizabeth, would, doubtless, have 
 added a new element of wealth to that industrious city. 
 
 Factories and machinery moved by mechanical power cannot 
 be removed, and therefore will not be erected where there is no 
 prospect of security. The example of the continent, where, 
 until long after the peace of 1815, machinery was but sparingly 
 
65 
 
 introduced, shows that a feeling of security is an essential con- 
 dition of the establishment of manufacturing industry. Even in 
 France, of 1969 steam-engines at work in 1837, only 59 were 
 erected before 1820; 1368 were built after the revolution of 1830. 
 In the last century no other country in Europe could have adopted 
 machinery to the extent that it was introduced into England. 
 
 It is the exposure to the ravages of war that renders our con- 
 tinental neighbours timid in embarking in manufacturing. The 
 land cannot well be taken away from its owners, even if it change 
 its political bond. But this very circumstance may prove fatal 
 to a manufacturing establishment. The commercial policy, or 
 domestic laws of the state, to which a country, after a war, may 
 chance to be annexed, may differ with regard to the object it 
 produces. They may discourage its use, or they may stifle all 
 demand for it by what is called protection. But the danger to 
 be dreaded from war is rapidly diminishing before a better in- 
 sight into the interests of individuals and of nations. We must 
 not shut our eyes to the inevitable consequences, in this re- 
 spect, of the advance of civilization. The certainty of peace will 
 be accompanied by certain competition. But are we to shun 
 this test of intellectual power ? Assuredly not. As no cham- 
 pion can be recognized in trials of muscular strength, but 
 he who courts opponents that he may display his prowess ; so 
 there can be no triumph of intelligence — even no assurance of 
 security — for those who withdraw from the race of mind and 
 shun competition. 
 
 Manufacturing is likewise impeded in the majority of the states 
 of the continent by the legislative systems of those countries. In 
 all, the welfare of the people is supposed to depend rather upon 
 certain modes of dividing the land, and of carrying on trade, than 
 on the general state of intelligence. In some, a singular inconsist- 
 ency is observable, the governments encouraging the spread of 
 knowledge and the development of intellectual power, but with- 
 holding from the people the privilege of using the power thus 
 obtained for their own benefit. The refusal to allow a share of 
 political power to large and useful classes nourishes a feeling of 
 insecurity, because these nations do not repose confidence in the 
 classes that now arrogate the right to decide upon their country's 
 fate. The manufacturer who belongs to a high state of civiliza- 
 tion distrusts political forms that were a useful resource in less 
 cultivated periods, when land was the only property. The greatest 
 
 p 
 
66 
 
 detriment to manufacturing industry has, however, been occa- 
 sioned by the distribution of the mass of the people in small 
 agricultural establishments, where each grows little more than 
 his own food, and that of course at the sacrifice of nearly all his 
 labour. The dearest corn raised in Europe is perhaps to be found 
 in some parts of Germany, where, on the other hand, grain can 
 scarcely be sold at market. In such countries, there being no 
 saving which can accumulate and provide capital to be employed 
 in reproduction, the progress to wealth is necessarily slow. 
 
 On the banks of the navigable rivers, and in places where the 
 traditions of manufacturing industry were preserved from the 
 middle ages, factories have within a few years sprung up. 
 Saxony, Rhenish Prussia, Silesia, Belgium, Alsace and Nor- 
 mandy in France, and some of the cantons of Switzerland have 
 made considerable progress in organizing manufactures. Under 
 simpler systems of government and protection against legislative 
 interference, these attempts would soon prove successful and 
 would induce imitation. It is chiefly to the measures adopted 
 to force their success, that they owe the difficulties which they 
 contend with. 
 
 In my next lecture, I shall point more in detail to the nature and 
 extent of the competition we have to expect from our continental 
 neighbours. Here I shall confine myself to the results which 
 rivalry fortunately produces upon manufacturing industry. 
 
 The dread of competition, that is so general, arises from the 
 proneness of the most practical mind to error in calculations of 
 detail. Were manufacturers, agriculturists and labourers ac- 
 customed to reason from general principles, they would be put 
 upon their guard against the dangerous fluctuations of prices : 
 they would analyse the causes of their advance and decline, and 
 would measure their exertions and their expenditure by a sound 
 standard. 
 
 The cheapness of iron, the result of economy in mining and 
 foundry processes, has at once stimulated and nourished the de- 
 sire to substitute machinery for manual labour in England. To 
 the invention of the hot blast for iron furnaces, and the conse- 
 quent increased production of that metal, we are probably in- 
 debted for railroads. The late low prices of iron promised to 
 cover the ocean with iron ships. We can set no bounds to the 
 probable extent to which consumption may extend, because, 
 even when our calculation of the nature of the home demand is ex- 
 
67 
 
 hausted, we find nearly every country around us denuded of the 
 means of obtaining wealth and enjoyment by a limited supply 
 of iron. No instance can illustrate more forcibly than the iron 
 trade the truth of the important proposition, — that the con- 
 sumption of a necessary commodity will always keep pace with 
 increased production at reduced prices. 
 
 The beneficial effects of competition are as evident, when di- 
 rected on engineering processes, as they are in the case of food. 
 On the success in engineering, and the precurring processes, 
 mining and smelting, depend the production of every country, 
 the wealth and happiness of mankind. How gratifying then to 
 the mind is it to see, that the exertions to which the engineer is 
 urged, by the force of competition, are accompanied by the re- 
 ward that an extended market must yield ! Every practicable 
 decrease in his rate of profit must augment the amount of profit 
 that he takes. To the recognition of this providential ordination, 
 and its adoption as an economical law, we must owe the trium- 
 phant reflection that slavery can never again hurl man from the 
 proud position in nature that is his birthright. 
 - The masters' as well as the labourers' profits are increased 
 by cheapening the cost of production : it is, therefore, no won- 
 der that in a stirring age a vast number of minds are directed to 
 invention. There is, consequently, no security for any one that 
 the process he has adopted may not be hourly superseded ; and 
 this is, fortunately, the view taken of their position by both ar- 
 tisans and manufacturers of England, as is proved by the evi- 
 dence given before the parliamentary committee in 1830. A 
 current estimate has even been formed of the probable dura- 
 tion of a process ; and it enters generally as a factor into the 
 calculations of profit. This is as it should be. But such a cal- 
 culation only determines a mean between two extremes, the low- 
 est of which, if experienced where no due precautions have been 
 taken, may entail the destruction of the fixed capital employed. 
 
 Perhaps a more scientific mode of planning manufacturing 
 edifices would protect the capitalist from the heavy losses often 
 incurred by the adoption of new processes. But the danger the 
 manufacturer thus incurs shows the necessity for his making 
 the strictest economical calculation before fixing a large amount 
 of capital. Hence the weakness of building upon so unstable a 
 foundation as prices, and the importance to the manufacturer of 
 a general view of the laws governing production and consumption, 
 
 f2 
 
68 
 
 Protecting duties, monopolies, and bounties are all lures to 
 the unsound investment of capital, as the experience of our own 
 country, and the ill-chosen sites of numberless factories abroad, 
 testify. Even patents, if speculated upon too far, are liable to 
 lead into this error. Nor does there seem any encouragement 
 held out to inteUigence beyond that of an assuredly extended 
 market, which is exempt from the chance of misleading. As an 
 instance of incautious investment, I may mention that the very 
 last large spinning-mill erected in Germany is at Augsburg, a city 
 to which there are two hundred miles of land-carriage from the 
 nearest navigable point on the Rhine. 
 
 Independently of the direct dangers to which the property of 
 the manufacturer is exposed, from the elements and the decay of 
 prosperity amongst his customers, we see that his is a position 
 which especially demands an exertion of intelligence. This obli- 
 gation becomes more and more urgent in every early branch, and 
 the manufacturer of machinery is more affected by it than any 
 one else. He may be said io feed the other branches of manu- 
 factures. They must have machinery, as we must have food. 
 There can be no protection for machinery, or for metals, because 
 any country suffering under such an infliction would immediately 
 see its manufactures carried off by intelligent neighbours, who 
 had cheaper and more efficient machinery. Cheapness, from 
 competition, always leads to improvement. Belgium has pro- 
 tected its machinery, and almost ruined its manufactures ; 
 Prussia and Austria have done the same, with the same result. 
 We were foolish enough to exclude, by high duties, foreign ma- 
 nufactured metal, and the result has been a deterioration in the 
 quality of British iron that is notorious. Now one most evident 
 conclusion that we must draw from these facts is, that the engineer, 
 above all manufacturers, is bound to study the only sound rule 
 for the tradesman, which compels him on all occasions to reduce 
 his prices to the utmost, the certainty of increasing his sales 
 being the premium held out to him to do so. The capital embarked 
 in this species of manufacture is, therefore, altogether dependent 
 on the insight obtained by all connected with those establish- 
 ments into the nature of the association they form. The em- 
 ployer must see that he can only obtain sales by meeting the 
 most active competition in the market : the whole manufacturing, 
 the w^hole consuming world are leagued against him. The 
 manufacturers cannot meet their rivals in the home or in foreign 
 
69 
 
 markets^ unless they have equally cheap machinery ; the con- 
 sumer will everywhere take from the cheapest manufacturer. 
 
 It is clear then, that if operatives are to get good wages, they 
 can only find work by the willingness on the part of capitalists 
 to enter into this stirring race. The possibility of manufacturing 
 depends upon the intelligence of the few men possessing large 
 capitals, «*«i^. It is the concentration of capital that makes it 
 effective. Pre-eminent intellectual and social capabilities are 
 required in those who are to make even concentrated capital 
 efficient. It is — I will not say the operative's duty — it is to his 
 interest, to lend every possible aid to the men who undertake this 
 task — to those who make the sacrifices which, under present cir- 
 cumstances, the manufacturer does make ; since it is to the in- 
 telligence, to the diligence, to the perseverance, to the patience 
 of the employers, that the operative owes the possibiUty of ob- 
 taining improved work and good wages. 
 
 I know it will be said that this most useful class of our fellows- 
 citizens is not actuated by patriotic motives in subjecting them- 
 selves to all the risk, to all the toil, they now encounter in pro- 
 secuting their occupations. Gentlemen, all we have to consider 
 is the happy circumstance that any inotive will induce a man 
 W'Orth £50,000 to devote himself to the accomplishment of the 
 great scheme that confers such benefits on humanity. Whatever 
 may be the motives that actuate manufacturers individually, the 
 result is the same : they create abundance for the consumer, 
 and combine that abundance with high wages for their associates, 
 who are, in their turn, consumers. That their profits are likely 
 to be large where property is secure, is only another and a 
 beautiful dispensation of Providence, which has made the pros- 
 perity of one man the condition of the prosperity of another. 
 
 But this law is one that requires to be studied by those who 
 derive benefit from it. This is no law intended to release us 
 from the smallest exertion of intelligence. We must seek to 
 comprehend its scope, to secure its operation in daily life. 
 
 I invite you now to the most important part of my subject, — 
 the theory of Wages. Here we shall again see the importance of 
 establishing correct principles as forcibly illustrated as in the 
 case of Rent, which I treated in my last lecture. The notion that 
 rent could only be obtained from food, and that to obtain rent 
 food must constantly rise in price, has led to the following con- 
 clusions respecting wages : " The profits in trade being the fund 
 
70 
 
 to be divided between labourers and employers, profits can only 
 rise when wages are reduced, and wages can only rise by en- 
 croaching on profits/^ Now, were this strictly true, it would 
 still be the operative's best plan to assist in forw^arding all im- 
 provements, for, if they did not add to the amount of his wages, 
 they would very much increase their value *. As a consumer he 
 would, with every improvement, be able to purchase more for 
 the same sum. It is however not true and rests upon two gross 
 errors. One of these assumes an inevitable constant rise in the 
 price of food — a fallacy that I exposed in my last lecture. The 
 other, to which I have also generally alluded, lies in confounding 
 the rate with the amount of wages and profits. 
 
 Profits, of course, form the fund out of which wages are to be 
 drawn. Now^ the manufacturer is not exempted from the general 
 obligation that, we have seen, includes the agriculturist. In 
 manufacturing industry the number of objects that must be pro- 
 duced, upon an extensive scale, in order to secure their general 
 consumption, is quite as great as in agriculture. But for these 
 we have no new worlds that we can resort to. The unpeopled 
 savannahs of America and the waste tracts of Europe give us little 
 direct aid for the extension of manufactures. They must grow 
 food cheap enough to attract inhabitants before occupations, 
 requiring little space, can be removed to them, or spring up 
 there. 
 
 In this case, it is to the moneyed capitalist that we resort, to 
 men whose industry has created, and whose enterprising spirit 
 prompts them to venture, a large accumulated property, must 
 we look to take this upon themselves. They alone can reduce 
 their rate, to augment their amount, of profit ; and we know that, 
 by following this plan, abundance is universally diffused. Both 
 money and land are capital when employed to assist reproduc- 
 tion. But a serious distinction has to be drawn between land 
 and buildings, or machinery. Land can be applied to all pur- 
 
 * The following is Mr. M'CuUoch's view of the subject:— "It has been 
 already seen that the cost of raw produce has a natural tendency to rise in the 
 progress of society, and as the greater part of the wages of labour is laid out 
 on its purchase, it is plain that the rate of wages, though occasionally reduced 
 by improvements in agriculture, manufactures, &c., must also have a natural 
 tendency to rise as society advances and population becomes denser." — Note vi. 
 to Adam Smith's Works, p. 474. 
 
 This is tantamount to saying that the amount of wages taken generally must 
 fall. If therefore the cost of raw produce can be made to fall as population 
 increases, not only will the amount paid for wages rise as their rate falls, but it 
 will go further than before. 
 
71 
 
 poses. It can be planted, tilled, grazed, converted into a garden, 
 or built upon. Hence in my first lecture I drew the conclusion, 
 that those must be very narrow-sighted landowners who think 
 they are only interested in the success of farming. The land- 
 lord's interest is involved in the success of all industrial under- 
 takings. It is most deeply concerned in the rise and spread of 
 cities, towns, and villages. The landlord who feels all the im- 
 portance, all the responsibility, attaching to this position, is 
 advantageously situated when compared with the manufacturer. 
 He should in all phases of progress be looked to by his fellow- 
 citizens as their natural ally, their encourager, their friend. This 
 position however does not result from his merely owning the 
 land ; it clearly can only be gained by his applying it to the 
 proper use. The landlord's test is also an intellectual one. His 
 possession, under circumstances of free competition, will only be 
 valuable where intelligence is exerted, and then it will be more 
 valuable than any other. 
 
 But the manufacturer's investment represents, usually, only 
 one phase of industry. The concentration of intelligence upon 
 manufacturing processes perpetually endangers his hold upon 
 our wants. New inventions unexpectedly supersede the most ap- 
 proved processes, and I believe that, in the current estimate, any 
 approved engine or manipulation is only valued at three years' 
 purchase. It is worthy of notice, that the first large factory for 
 plating by the galvanic process was established at Birmingham, 
 a town whose prosperity has hitherto been assured by a com- 
 mand of coals for steam power and for foundries. Of course, 
 the notion of protecting a branch of industry thus open to the 
 most active competition at home from the wholesome stimulant 
 of foreign rivalry, resembles rather the conduct of those old wo- 
 men who smother children with swaddling clothes, lest the air 
 of heaven should harm them, than the calculations of reasoning 
 men. 
 
 In the risk arising from rival skill, the operative is only con- 
 cerned as a gaining party. A new invention, if successful, de- 
 mands hands to work it ; and if it is so triumphant as altogether to 
 supersede its predecessors, the market being extended by it, the 
 amount both of wages and of profits increases, although their 
 7'ate may fall. The operative does not share the risk arising 
 from chances of war to the full extent. Men are always worth 
 a certain sum for bayoneting or to be shot at, — not thirty shil- 
 
lings a week, but at least something. In a hostile invasion the 
 greater part of factory industry would be destroyed. The ex- 
 perience of the continent proves this, where the factories were 
 ruined at the period when what is called protection was rigo- 
 rously enforced under Napoleon^s continental blockade. 
 
 But there are risks which the labourer shares with his em- 
 ployer : these are all such as spring from bad legislation, or 
 the disturbance of social order at home. Whole branches of 
 manufactures are suppressed; others find their markets destroyed, 
 or limited by duties imposed on erroneous principles. Our glass 
 works produce none of the beautiful coloured glass that is now 
 common in Austria and Germany. The excise laws hitherto 
 prohibited it. Soap and other articles of the. first necessity after 
 food, and of which the consumption would, at a cheap price, be 
 unlimited, are much restricted in use by the duties imposed 
 upon them. In Austria a direct tax is levied on traders and 
 manufacturers of all kinds, varying in the large towns from 
 £10 to £150 per annum, — levied for the mere privilege of being 
 industrious. A very natural result of such taxation, coupled 
 with delays in licensing, is to discourage small beginners in 
 trade. A curious declaration has been elicited by this state of 
 things from the Austrian nobles and landowners, respecting the 
 value of manufactures for the landed interest. Nearly all have 
 taken to manufacturing themselves, and the greater part of the 
 large Austrian factories are carried on in the names of the 
 nobles. Count Salm, Prince Dietrichstein and Prince Coburg 
 are iron-founders and engineers, Counts Bucquoy and Harrach 
 are glass manufacturers. Baron Dalberg and numerous other 
 nobles make beet-root sugar. All large landowners are both 
 brewers and distillers, and many enjoy the privilege of retailing 
 malt and spirituous liquors on their own estates. I do not men- 
 tion this in a depreciating spirit. I can see no difference between 
 the production of grain or of glass, iron or clothing, excepting 
 inasmuch as one may require more ingenuity than the other. 
 The testimony of these nobles to the advantage derived from 
 manufacturing industry by all classes is what I wish to point 
 out, because it shows the folly of legislating to discourage them ; 
 and that the operatives, to whom they give employment, are 
 served by their enterprising spirit, cannot be doubted. Another 
 and a serious cause of danger to capital invested in manufactu- 
 ring undertakings arises from social misunderstandings, which 
 
73 
 
 have frequently the effect of changing their seat. Corporation 
 restrictions to preserve monopoly, or to favour irresponsibility, 
 are a constant barrier to manufacturing progress. Limitations 
 of the right of settlement in towns, by preventing the accumu- 
 lation of operatives in favourable situations, are also injurious, 
 and are a constant impediment to their introduction into many 
 continental states. 
 
 But the most singular danger they are exposed to arises from 
 the false theory, which assumes that the profits of manufacturers 
 are amassed at the expense of the operatives whom he associates 
 with him in his undertaking. 
 
 It is strange that this doctrine should be directed against 
 parties who, by large investments in machinery and build- 
 ings, give a guarantee that they intend to carry on business 
 on the fairest terms. Whatever advantages the manufacturer 
 starts with, whether of connexion or of particular skill, he can- 
 not be protected against that competition which large profits are 
 sure to invite. Now, if I have made out my scale of profits, or 
 rather, of the modes of creating them correctly, the manufacturer 
 can only escape from this competition by extending his enter- 
 prise — by reducing his rate of profit to obtain larger sales. This 
 he cannot do at the operatives' expense, because the lowering of 
 his price opens new fields of trade, which compete with him for 
 workmen. Power-looms did not reduce weavers' wages: they 
 created such a demand for bleaching, dyeing, and printing, — for 
 packing, carting, shipping, shopkeeping and dressmaking, — 
 that the manufacturers were obliged to give their workmen 
 treble the amount of wages that hand-weavers of plain calicoes 
 could get. Now, I would ask, what combination could treble 
 wages ? The improved machinery did it for those countries of 
 Europe and for those counties of England, where capitalists were 
 induced to come forward and erect machinery. On no other 
 terms could it have been accomplished ; in no other places has 
 it been done. As the source of the low wages of the agricultural 
 labourer is to be sought in the bad business done by his em- 
 ployer, so the fund from which alone high w ages can be obtained 
 by the factory operative is the profit of the capitalist. 
 
 A similar diagram to that which I used in my last lecture to 
 illustrate the theory of rent, will serve to explain the economical 
 progress of manufactures. If we represent the rate of profit as 
 indicated by the figures in each compartment, the various branches 
 
74 
 
 of production will stand in a position with regard to each other 
 in some measure thus : 
 
 Mining 
 10 
 
 Engineering. 
 20 
 
 Ships 
 
 and 
 
 Roads. 
 
 30 
 
 Mills 
 
 and 
 
 Factories. 
 
 40 
 
 Distributing 
 Shops. 
 
 50 
 
 The figures indicating various proportional rates of profit are 
 of course arbitrary ; but we must acknowledge that the engineer 
 has the better prospect of profit when mines are cheaply worked, 
 as the millowner has when the means of transport and machinery 
 cost him little. The distributing shops may represent all the 
 handicraft trades that depend upon the perfection of the other 
 processes, both for supplies to distribute and for savings where- 
 with to form the fund required for increasing production. We 
 saw in my first lecture that the amount of the miner's profits 
 need not be less than those of the engineer or millowner, although 
 there is so great a difference in the rate obtained by each. The 
 important point to hold fast is^ that in any of the primary pro- 
 cesses this amount can only be increased by lowering the rate. 
 The amount would diminish if the rate were raised, because the 
 sale would fall off" in a more rapid proportion than the price could 
 be augmented. Of course, the lower the rate of profit, the larger 
 will be each estabhshment where the organization of industry is 
 well understood. 
 
 A similar diagram will illustrate the position that one manu- 
 facturing process stands in with regard to the others. They 
 may be said to stand thus : 
 
 Engineering, 
 
 Cotton- \ 
 Milling. 
 
 Moulding, 
 Cleaning. 
 
 r Turning "1 
 
 < and I- 
 
 [ Planing, J 
 
 Roving. 
 
 Fitting, 
 Spinning. 
 
 Polishing, 
 Weaving. 
 
 An increased efficiency imparted to the labour used in any 
 of these processes re-acts upon the rest and stimulates all. Any 
 saving in moulding or in cleaning, and in roving cotton, would 
 create a greater proportionate demand for hands in the later 
 processes than were previously required, for the simple reason 
 that the improvement, having reduced the cost of production, 
 would increase the demand for the object produced. 
 
 But the operatives may complain that it is hard for them to 
 
75 
 
 be dependent on the goodwill and abilities of the capitalist, for 
 the means of using their power effectively. To this I would re- 
 ply, that their powder really only lies in their intelligence. Their 
 arms are only substitutes for machinery, until inventions super- 
 sede them. I would not here be mistaken. Men do not become 
 dispensable generally by the introduction of machinery : their 
 occupation is changed, their task is elevated, their share of profit 
 is enlarged, where machines are used. 
 
 Even skill in hand manipulation is superseded by machinery 
 as manual labour is. The most skilful hand could not accom- 
 pUsh the precision of copies that machinery effects. The exact 
 thickness of bars or of threads, the exact spread of colours, in- 
 dependent of exact calculations of time, can only be attained 
 satisfactorily by machinery. No coining engine wall produce a 
 medal so exact as can be obtained by the galvanic process. 
 
 But you may object, gentlemen, that I am taking away from 
 the operative all claim upon the interests of employers ; that I 
 am destroying all the distinctions that study and diligence raise 
 up for the reward of the good workman. 
 
 No, I am^not doing this ; I am only calling your attention to 
 those qualities in man which machinery cannot supersede — to 
 that power which is exclusively his own — to the value of his 
 reason, of his intelligence. The extending scale upon w^hich all 
 processes have to be performed, the exactness with which copies 
 are multiplied, open for the skilful a new field of exertion — that 
 of originality of design. When copies are to be had for little 
 trouble and cost, then will original productions of every kind 
 acquire their true value, and thus will man's intelligence ulti- 
 mately triumph over machinery. The road to this field of spon- 
 taneous exertion can, however, only be found through the per- 
 fection of machinery ; for the necessities of all must be satisfied 
 before all can indulge in the luxury of intellectual exertion. 
 
 For the operative who contributes to this grand consummation 
 by giving machinery its proper efficiency, an early opportunity 
 is afforded of using intellectual powder. If manual dexterity is 
 superseded by the machines he w ields, another and a more beau- 
 tiful field is opened for him, — one which extends w^ith the growth 
 of establishments — that of trust. As an associate, every opera- 
 tive in a factory is entrusted more or less with the prosperity of 
 all engaged in it. Whatever be the difference in the nature of the 
 work assigned to each operative, the trust that is reposed in him 
 
76 
 
 is now the true measure of his value. It is by displaying a con- 
 sciousness of this hold upon capitalists that operatives command 
 the highest wages. Where they are trustworthy, the greatest 
 number of persons will engage in trade, and the demand for 
 hands must improve wages. Where there can be no trust there 
 will be no enterprise, and competition from other parts will soon 
 transfer industry from districts that reject this test of moral effi- 
 ciency*. 
 
 It is because strikes and combinations are incompatible with 
 this test, which gives every man the means of displaying those 
 qualities that adorn humanity, that I must declare my sorrow at 
 seeing them anywhere advocated. The interference with the 
 right of any man to earn his living in the way he chooses cannot 
 be delegated to any of his fellow-creatures ; the right to carry 
 his skill to any market he may select, he must be free to exercise. 
 Restriction in this case is robbery ; but to threaten and intimi- 
 date any who exercise their right of practising a moral quahty, 
 of showing themselves to be trustworthy, cannot be tolerated in 
 a civilized community. The interference of any third party in 
 the free compact between capitalist and operative is a despotism 
 that, if established anywhere at the present day, must inevitably 
 entail ruin upon the community that submits to it. 
 
 You may reply, that I have myself advocated the principle that 
 every man must do his own work and take care of himself. The 
 indication I have given of the field in which the operative cannot 
 do anything but aid and stimulate the efforts of the capitalist, does 
 not preclude my inviting, nay urging, him to activity in another 
 sphere, where he can do much, and must do it himself. I shall 
 best explain my meaning by at once pointing out what I think 
 
 * What else can account for the different wages paid in the same places? 
 Mr. Finch gave the earnings of 4387 families in one ward of Liverpool in 
 1840, as follows:— 
 
 1342 families are without visible income. 
 310 ... earn less than bs. per week. 
 845 ... earn from 5s. to \0s. per week. 
 610 ... ... 10s. to 15s. ... 
 
 727 ... ... 15s. to 20s. ... 
 
 512 ... ... 20s. to 30s. ... 
 
 41 ... ... 30s. to 405. ... 
 
 4387 
 The earnings of these 4387 families amount to £2023 19s. per week, being 
 9.^. od. per family on the average; which, reckoning four persons to each family, 
 will give an average of 4(/. per day for 17,548 individuals. — Statistics of Vaux- 
 hall Ward. 
 
77 
 
 lies within his power. We can trace the notion that labourers 
 can only be remunerated at the expense of their employers, while 
 profits are extracted from the sinews of the operative classes, to 
 the original error that assumes all rent to proceed from dear food. 
 The economists of this limited school, who have descended from 
 the intellectual height upon which man was placed by his Creator, 
 and have acknowledged their moral and physical dependence on 
 the earth they tread, declare that food must constantly be raised 
 with increasing difficulty. Dear food leading to restrictions in 
 trade of course makes it desirable, because necessary, that la- 
 bourers should be few in number. Hence, in the eye of an eco- 
 nomist of this school, it is moral to abstain from marriage. This 
 beautiful morality, like the view of wages, which supposes them 
 to detract from profits, has its origin in that fearful theory of rent 
 which I exposed in my first lecture. 
 
 There we saw that the dread of lowering rents by cheapening 
 corn discouraged education, lest it should lead to improvements 
 in farming. Here you are told that the welfare of the nation, 
 and of the labourers themselves, depends upon their numbers 
 being thinned. To men possessed with these views, the ships 
 that leave our shores annually with thousands of industrious 
 fellow- subjects confer a benefit on us, — the mortality that pre- 
 vails in insalubrious trades must be an advantage. 
 
 Now the whole of this fabric falls to the ground together with 
 the theory that rent is necessarily dependent upon high wheat 
 prices. Dismiss this notion, and you find no difficulty in every 
 man's earning his own food, and a great deal more besides. Look 
 upon every Increase of productive power as the stimulant to new 
 wants, and as causing new demand for labour ; then will master 
 and labourer see that. Instead of there being too many hands to 
 employ, there will be rather too few ; then shall we realize the 
 good old English proverb which says, " The more the merrier." 
 
 Every operative commands means of raising the wages of la- 
 bour that derive from the principle that has been adhered to 
 through all these lectures. Saving Is the source of abundance ; 
 if saving can anywhere be effected, a fund of wealth is at once 
 created. Now, although many may think they are not extrava- 
 gant, yet the fact is undoubted that every inhabitant of these 
 realms squanders large resources. A delightful instance of the 
 power of savings is afforded by the practice of temperance. A 
 deficiency is noted in the excise duties of £800,000, which is 
 
78 
 
 ascribed to temperance in the use of spirits. This amount of 
 duty corresponds to a consumption of perhaps I540O5OOO gallons 
 of spirits in Scotland and Ireland, and 800,000 gallons in En- 
 gland. The gain from this abstinence, allowing for adulteration, 
 cannot be estimated at less than one million and a half sterling. 
 What combination, may I ask, could have procured so large an 
 addition to wages as this moral exertion ? If we carry this mode 
 of saving further in an account that every man may open with 
 himself, we find that the spirit duty still exceeds £4,000,000. 
 This shows, on a very moderate calculation, that £8,000,000 may 
 still be saved by temperance w ithout inconvenience. Now another 
 very legitimate field of exertion for workmen is the saving that re- 
 sults from an amelioration of our system of taxation. I have al- 
 luded to the fund of £20,000,000 created this year by the reduc- 
 tion in our corn prices since 1840. The result you can judge 
 from the improved condition of our factories, as compared wdth 
 their state in 1840 and 1841. All w^ere then working short 
 time ; all are now at full work. Now free competition in corn, by 
 which I have shown that the farmer w^ould be benefited, would, 
 it may be assumed, reduce our average price of wheat to 30^. 
 per quarter. This would add another twenty millions to the 
 former, and would secure both as a permanent benefit. 
 
 Sugar is another article of necessity that might be lowered at 
 least 20*. per cwt., under the influence of competition, with be- 
 nefit to all parties. On four miUion cwts. this would amount to 
 £4,000,000. Then soap, bricks, paper, glass, starch, and other 
 exciseable articles, wdth all raw materials for manufacturing, now 
 subject to import duties, ought to be freed from these restrictions 
 on industry. The gain from this source cannot be estimated at 
 less than £3,000,000.. Every man^s account with himself in 
 these kingdoms would therefore stand thus, as compared with 
 1840, if by simultaneous exertion w^e obtained a change of our 
 agricultural and commercial systems : — 
 
 Dr. To amount to be saved on w^heat . . £40,000,000 
 
 To ditto on sugar 4,000,000 
 
 To ditto on exciseable articles of 
 
 necessity and raw produce .... 3,000,000 
 To temperance in the use of spirits . . 8,000,000 
 
 £55,000,000 
 To this may be added the amount of saving possible under the 
 suggestions of the Health of Towns Committee, 
 
79 
 
 This, divided amongst five-and-a-half millions of families, gives 
 £10:10^. per annum, or five shillings a week, additional to each. 
 I am inclined to estimate the money saving that may be achieved 
 by improving the health of towns at a sum equal to this. That 
 all would receive their share, and that the operative classes would 
 most benefit by the change, is certain. The stimulus to trade 
 that must result from the creation of such a fund would cause a 
 demand for labour, and again raise wages. But by the same 
 process that raised the money price of wages, the value of that 
 price would be improved. All necessary articles being reduced 
 to half their price, wages would virtually double. What combi- 
 nation against masters could lead to this result, which is daily, 
 nay hourly, to be obtained ? 
 
 In my last lecture 1 spoke of the variety of crops which the land 
 is capable of bearing, as the reason of the independent position of 
 the landowner. I stated reasons for supposing that his most pro- 
 fitable crop was a crop of houses. This crop, gentlemen, is the 
 true triumph of intelligence. When houses grow, man has well 
 asserted his sovereignty on earth. But let no landowner believe 
 that houses ^vill grow like corn or grass at his bidding : this crop 
 will only grow on conditions — on the condition of civilization. 
 
 Now where a crop of this kind is to thrive, the principle that 
 every man has his task allotted to him, that none can do but 
 himself, is usually most clearly illustrated. Its very productive- 
 ness debauches and enervates those who profit by it. We have 
 seen that the boon of irrigation, and a proper application of the 
 refuse of towns, is only to be obtained from the farmer by the aid 
 of competition. How then are we to obtain irrigation and the 
 appUcation of machinery and drainage to town constructions from 
 those who draw the profits of a crop of houses ? Competition 
 alone will secure this, — a competition based upon individual ex- 
 ertion. I will venture to give directions how to secure the com- 
 fort — the luxuries of large supplies of water and of gas, and of 
 complete and cheap sewerage. To obtain them, the poorest tenant 
 has only to demand them. To cause these indispensable requisites 
 to be added to every house, you have only to make public your 
 desire to enjoy them. No landlord will mistake the value of the 
 opportunity you afford him of improving his property. It has 
 been the notion that the working classes would show no prefer- 
 ence for such advantages, that has hitherto prevented their being 
 offered to them. 
 
80 
 
 But I go further than this^ and can even tell you why all 
 can obtain, without paying for them, not only the comforts 
 enumerated, but also the blessings of health and cheerfulness 
 which they bring with them. An interesting calculation has 
 been made of the extra sum that landlords demand as rent on 
 account of the insecurity of their receipts. The causes of this 
 insecurity are the chances of death, of failures, of stagnations in 
 trade, the risk of fire, and other casualties that are preventible. 
 A town supplied with the comforts I have named is, in a great 
 measure, freed from the physical evils apprehended by land- 
 lords. 
 
 Those arising from moral causes are within our own control. 
 A careful study of the theory of profits and wages, such as I have 
 submitted to you, must show it to be the interest of all men to re- 
 sist every attempt to disturb the harmony that should prevail be- 
 tween all classes of the industrious. A pubhc declaration of this 
 conviction on the part of the working classes, and steady repres- 
 sion of all attempts to excite unlawful aggression, would inspire 
 such confidence that landlords would willingly make the necessary 
 investments. The outlay, if judiciously directed, w^ould not exceed 
 eight per cent, on rent, or the sum now charged over the current 
 rates of interest for the extra risk attending house rents. How 
 high you may be inclined to rate this saving, which may be effected 
 by a moral exertion like that which temperance has demanded, I 
 shall not estimate. There can be no doubt that such a course, when 
 once adopted, would lend to all, who entertain the views of rea- 
 soning men, a moral force in their capacity of electors, parish- 
 ioners and members of associations. 
 
 In the language of Scripture, the labourer is worthy of his 
 hire. We here see in what manner the benefit of the commu- 
 nity is linked to the advantage of those who labour in its cause. 
 Clear views of the field which in every country is open to the in- 
 dustrious man, according to the capital and the intelhgence that 
 he commands, ought to be imparted to all early in life. The ma- 
 nufacturer must especially distinguish between fixed and circu- 
 lating capital, if he would escape loss. But above all he must 
 seek to eliminate that element of gambling in his occupation 
 which is induced by the uncertainty of our supplies of food. 
 Much that is supposed to be mere speculation arises from 
 this. 
 But I shall be asked, is there then no such thing as over-compe- 
 
^1 
 
 tition. Do speculators never ruin one another, and throw num* 
 bers of poor men out of work? This brings us. to quite another 
 field of investigation, but one which at the present moment is 
 of peculiar interest. What is often called over-speculation — and 
 really is so— proceeds more frequently from the fact, that the 
 market is taken away from speculators, than from an erroneous 
 calculation on their part. As the fund to be expended in com- 
 forts is only composed of the savings effected in necessaries, so 
 the fund to be spent in luxuries must be supplied by good eco- 
 nomy in the two more urgent branches of demand. Anything 
 that interferes with this natural arrangement must destroy a 
 market somewhere. We have experienced this fluctuation within 
 four years. In 1840, 1841 and 1842, there was great stagnation 
 of trade ; whole branches of industry were destroyed, thousands 
 of operatives were without employment. If at that time there 
 had been no competition, — that is to say, if no one had exerted 
 himself to produce cheaply, or if many had not greatly reduced 
 their rate of profit to effect sales, — there must have been still less 
 employment, and many more thousands must have starved. The 
 speculators were all at fault, not because people required less 
 iron, less cotton, less cloth, less hosiery, or less lace, but because 
 the fund that was to pay for all these less essential requisites in 
 life was absorbed by the cost of the indispensable requisite, food. 
 If the fund to be spent in all these things, and which creates a 
 demand for labour, has been augmented by £20,000,000 in the 
 present year, and has given increased prosperity to those who 
 take advantage of it, a further reduction of 20^. per quarter 
 would manifestly add as much more to the fund. Now, were 
 the efforts that are directed to extorting high wages from em- 
 ployers, without creating any fund whence profits and wages are 
 to be increased, concentrated on the improvement of the fund 
 that w^e have pointed out,' wages must inevitably rise, because 
 there would be wherewith to pay them. The concentration of 
 efforts in this direction, however, can only be based upon a con- 
 viction of the benefit of competition. It is only by subjecting 
 the landowner to fair competition that the fund can be aug- 
 mented, which is now curtailed by the high price of food. 
 
 There cannot be a better illustration of the advantages of 
 competition than is afforded by the landed interest, which has 
 long been in a stationary condition, and unable to raise such a 
 fund to divide with the labourer as manufactures have yielded. 
 
8^ 
 
 By averting competition from the growth of grain, those crops 
 which are most suited to thcsoil and climate of the British Isles 
 have, to a great extent, been banished to the Continent or to 
 America. Butter, cheese, eggs, wool, flax, hemp, tobacco, rape 
 and clover seeds, are imported in gradually increasing quantities 
 from other countries, some of which could send us grain at 
 about half the price. Again, the value of all these crops, as 
 well as of garden produce, would naturally increase if food 
 were cheap, because there would be a fund for them, as for 
 manufactured goods, when money could be saved from the cost 
 of bread. By opening competition in grain, the value of a wheat 
 crop would then rate like barley or oats, and the farmers' pay^ 
 ing crop would be one that had little value while corn was dear. 
 It may be assumed that farmers would be no objects of compas- 
 sion, if they were compelled to an exertion of intelligence that 
 would fill their pockets. The manufacturer is obliged to exert 
 intelligence, and they ought likewise to be forced to do so. Thus 
 increased wealth springs up with sharpened intelligence, increased 
 knowledge, stimulated activity. There is no close field for com- 
 batants, where they can choose their weapons and exclude com- 
 petitors : the field is open for all ; the most active has a right 
 to the largest share of the spoil. 
 
 1 venture to hope that ere long many of those processes 
 which now deform the persons and narrow the intellects of 
 our operatives will be transferred to machinery, and the only 
 labour required will be that of the intellect*. That the path 
 through which the industrial world is now advancing leads 
 
 * Mr. M'Culloch in his first note says, " It follows therefore that all effects 
 may properly be considered as the product or the sequence of labour of some 
 sort or other ; but their value is entirely dependent on the quantity of the labour 
 of man, or of capital, that is, of the accumulated produce of the labour of man 
 and of machinery expended in bringing them about." Mr. Senior has refuted 
 this fallacy by alluding to the ease with which Sir Walter Scott wrote a novel, 
 »nd which yet sold for more than the productions of much harder labour. 
 Were Mr. M'Culloch's proposition true, it would follow that sugar or other food 
 grown by slave or hand labour ought to sell for more than what is produced by 
 the new machinery. A number of slaves capable of producing lOhhds. per 
 week would cost about double the price of the vacuum pans suited for that 
 quantity. The hire of so many Coolies would amount to double the interest of 
 such an investment. It would also follow that the greatest demand for all 
 commodities would be while the processes of producing them were rudest. 
 How then would he explain the fact, tliat the exports and imports of all coun- 
 tries increase in value, even measured in coin, in proportion as processes of 
 production improve and labour is economized? It is time to discard once for 
 all the notion that man is destined to fill the place of a beast of burden. 
 
88 
 
 eventually to this consummation, is undoubted. The prospect 
 before us is one of constantly diminishing physical dependence 
 and suffering, where an appeal from bodily to intellectual ex- 
 ertion is allowed. As what has sometimes been called the in- 
 trinsic value of a man's arms and shoulders for mechanical pro- 
 cesses diminishes, the exchangeable value of his intellectual 
 power increases, for the simple reason that more is produced 
 wherewith to reward its exertion. 
 
 Now that this improvement has not been more rapidly per- 
 ceptible, may be explained partly from the disturbing cause of the 
 labour absorbed in procuring dear food. It is partly also to be 
 accounted for by a natural effect of that cause — the slow accumu- 
 lation of capital to be used in reproduction. Instead of com- 
 plaining of a superabundance of capital now keeping down wages, 
 we are inclined to think it is because we have too little capital 
 that wages are depressed. More money, more machinery, more 
 factories, would be our cry, if we thought that these beneficial 
 adjuncts to our power would be obtained by any other means 
 than the slow but sure process of industry, economy, and respect 
 for property. The exercise of these qualities must be supported 
 on the side of the wealthy by a corresponding moral course. 
 Neither selfish sophistry, nor the plea of expediency, can any 
 longer withhold from the working population the boon of cheap 
 food, which would double wages at once for all the families of our 
 operatives. 
 
 The skill and pertinacity with which altercations respecting 
 the rights of employers and employed are carried on would, if 
 transferred to the field where the universal enemy sloth lies 
 coiled up within the wall of protection, soon furnish the means 
 of restoring harmony with the growth of wealth, independence 
 and intelligence. 
 
 G 2 
 
84 
 
 LECTURE IV. 
 
 TRADE— PROFIT— WAGES. 
 
 We have traced the laws that govern consumption and produc- 
 tion through the two great fields of agriculture and manufactures: 
 we have seen that they go hand-in-hand through the successive 
 stages of our wants and enjoyments ; and that while production, 
 by furnishing constantly increasing abundance, attracts con- 
 sumption, it is consumption, or the use made of what has been 
 produced, that determines the field of production which it shall 
 next be profitable to cultivate. 
 
 We have seen the independent position which man, by the 
 bounty of Providence, occupies with respect to what are called 
 natural resources. We have seen many countries rise into 
 power without internal agricultural resources. We have found 
 lands possessing manufacturing skill, transformed into vast 
 workshops, whence half the world has drawn supplies of goods, 
 the raw material for which has been supplied by the consumers. 
 We have seen agriculture, obedient to the call of trade, expel the 
 culture of one description of produce to make room for another, 
 and agriculture itself make way for manufacturing industry. 
 Finally, even manufacturing power is transient. An effort of 
 genius suffices to fix the seat of manufactures in a sandy plain, 
 on the banks of a stream, or at the mouth of a coal-pit. One 
 of our last adaptations to mechanical uses is that of the electric 
 fluid, — a substance of the subtlest nature, — to convey an im- 
 pulse greater than is communicated by the fall of a ponderous 
 mass. Nothing seems fixed, nothing stationary : the law of in- 
 dustry, like that of nature, decrees constant change, ceaseless 
 activity, unrelaxed exertion, continuous motion. 
 
 But, independently of the silent and gradual changes thus con- 
 stantly in operation, almost beyond our control, the surface of the 
 earth is the scene of an unceasing activity, resulting from the 
 daily wants of man. These, when left unrestrained, are constant 
 and measurable, and we can both define and guide the activity 
 w'hich they call into play : they give rise to the current of inter- 
 change between man and man, between nation and nation, be- 
 tween hemisphere and hemisphere : they are the cause of trade. 
 
B5 
 
 By the aid of the trader, productive capital in distant countries 
 is associated for the general good. The increased efficiency re- 
 sulting from this association, which allows full division of labour, 
 furnishes the fund upon which the trader relies, and it has at all 
 times proved a rich one. If the Russian is to drink French wine, 
 he must exchange for it, either directly or indirectly, the produce 
 of fields, mines or forests, which form the capital of that empire. 
 Of the imports of Great Britain, 60 per cent, are articles of food, 
 30 per cent, are raw materials for manufactures. They are paid 
 for by the exports of manufactured goods produced in the fac- 
 tories which form the chief capital of England. If the association 
 between the farmer and manufacturer, by multiplying the effi- 
 ciency of the capital of each, enriches a country, the alliance of 
 both with the trader again multiplies the former product. Hence 
 we cannot wonder at the important part the trader plays in the 
 progress of civilization. 
 
 We have seen that the Phoenicians emancipated themselves 
 from dependence on their powerful neighbours, the Egyptians, 
 by making their supplies of food a matter of calculation. This 
 was effected by an intellectual effort, by the application of ma- 
 chinery to trade : their machine was the ship. With the aid of 
 navigation. Tyre, and its great colony Carthage, attained a rank 
 amongst the leading powers. The political influence of Greece 
 depended upon the supremacy at sea asserted by her leading 
 states. It was on the ocean that Rome had to contend with 
 Carthage for the supremacy of the world. 
 
 The sovereignty of the ocean is the stepping-stone to political 
 supremacy, because the successful power can become a protector 
 of trade. Trade affords nations in a backward state the means 
 of improving their condition : it presents to lands in which 
 industry has made some progress, the means of turning this 
 advantage to the best account. The trader is the universal 
 friend ; consequently he is the most powerful ally and the most 
 dangerous rival. Yet his first appearance on any new field of 
 activity has been constantly a cause of apprehension, and his 
 property has usually been no more secure than that of the 
 manufacturer. From the circumstance of trade creating wealth, 
 it has at all times been taken for wealth itself, and has been 
 exposed to rapine from kings, legislative bodies, and mobs. 
 
 The secret of the great extension of the Roman empire, and of 
 its duration long after the decay of its capital and the turpitude 
 
86 
 
 of its leaders was notorious, may perhaps be traced to the fact 
 of its name having served as an excuse for unrestricted traffic to 
 more than one half of Europe. The Roman empire was in fact 
 an immense " Zollverein," and its capital, we know, was fur- 
 nished with supplies of all kinds from the more productive 
 regions of the earth. Had intellectual cultivation been studied 
 so as to raise the people above the dangers arising from this 
 abundance that surrounded them, what could have overturned 
 the Roman sway ? The decay of the Roman empire dates from 
 the period of its moral decline ; this involved many economical 
 errors. It fell as soon as the system of taxation, so ably described 
 by M. Guizot, pressed with destructive rapacity upon the rich 
 citizens, and checked the ardour of commercial enterprise. 
 
 Under all the powers that have attempted to rule on the 
 earth, has the trader sought a shelter from his foes. In ancient 
 India, in ancient Egypt, the religious festivals were periods of 
 trading interchange, and even now the Mecca pilgrimage per- 
 petuates in Mahomedan lands the remembrance of the sanctity 
 attaching to the character of the trader. The Roman military 
 stations rendered the trader the same service, who repaid the 
 obligation by conciliating the goodwill of the conquered, and 
 presenting to them the means of paying their tribute. The 
 overthrow of this protecting power, by its own demoralization, 
 deprived the finest part of Europe, for centuries, of all the 
 advantages of trade, — a circumstance that undoubtedly favoured 
 the extension of the Mahomedan conquests. Rude warriors from 
 the North, jealous of any influence but that which they could 
 control, would not suffer an appeal to social relations which they 
 did not understand, and still less to an element over which they 
 had no power. 
 
 The extent to which insecurity of property arising from these 
 oppressive circumstances impeded the development of the prospe- 
 rity of Europe, is strongly exemplified by the fact, that the first 
 cities and states which emerged from barbarism were such as by 
 their position were inaccessible from the shore. 
 
 Amalfi can, to this day, be reached from the land side only, 
 by a mule-path, that passes over a high and steep rock. Half a 
 dozen resolute mountaineers, in ancient times, must have suf- 
 ficed to guard its passage against the most rapacious or in- 
 vulnerably clad men-at-arms. In the Saracenic cities of Sicily, 
 Syracuse and Messina, the merchants of Amalfi learned the hos- 
 
pitality that fosters, and the arts that promote, trade. In the 
 tenth century they had warehouses at Cairo and Alexandria, and 
 the Syrian coast was known to their mariners. In 1020 the 
 venturers of Amalfi received permission to build a church, and 
 found the celebrated hospital at Jerusalem, which proved after- 
 wards so splendid a monument of their fame. Their code of 
 naval law was a pattern for the other States of Italy and the 
 Levant, as they rose in succession, and long formed the standard 
 of justice for the Christian powers in the Mediterranean. From 
 their intercourse with the Saracens it is now supposed that the 
 Amalfitans learned the use of the mariner's compass, which they 
 long had the credit of inventing ; and it is an established fact, 
 that the use of the compass was known to the Chinese in the 
 third century of our aera. From these intelhgent orientals it is 
 probable that the Arabs learned its use, and of course it was im- 
 mediately adopted by the Saracen navigators of the Mediter- 
 ranean. It seems probable however that Flavius Gioja, or Gisia, 
 a native of Positanum in the duchy of Amalfi, made the improve- 
 ment in the compass of suspending the needle on a polished 
 pivot : before this change the needle swam in water, but per- 
 formed its functions, even then, in a serviceable manner. In the 
 fourteenth century Amalfi disappears from history, having, like the 
 Phoenicians of old, served as the pioneer for states of greater or 
 better cultivated resources. Neither Genoa nor Venice possessed 
 originally more agricultural resources than Amalfi. Like the 
 last-named city, Genoa stands inclosed by rocks that defy ap- 
 proach from the land side; but its site is on a grander scale, 
 and offered more resources available to art than the position of 
 Amalfi. Pisa, lying in a limited but fertile plain, was in the 
 first instance more independent of trade for supplies of food 
 than either of the other cities : Pisa too conquered and took the 
 fertile island of Sardinia from the Saracens ; but these advan- 
 tages did not give her any superiority, — Pisa sank under the 
 rising influence of the Ligurian republic. 
 
 A trait that strikes us in the early commercial history of all 
 the Italian seafaring states, is their readiness to fraternize with 
 the Mahomedan powers, when a hospitable reception was oflfered 
 them. The tendencies of trade are humanizing. There is no- 
 thing in the distinction of creeds which need prevent the exer- 
 cise of the simple duties of the trader. During the period of 
 the Crusades, the road through Trebisond, from the East, con- 
 
88 W 
 
 tinued to be the most secure from interruption. The trade with 
 the Black Sea, therefore, engaged a large share of the attention 
 both of Genoa and Venice. Venice directed its influence more 
 to the cultivation of the trade with Syria and Egypt. The trade 
 through the Dardanelles was there long considered as but of 
 secondary importance. Genoa, on the other hand, had from the 
 beginning endeavoured to secure all the advantages of the Black 
 Sea traffic. Her aUiances w^ith the Greek emperors caused the 
 suburb of Pera at Constantinople to be ceded to her merchants, 
 and their vessels were allowed to trade, and even to settle colo- 
 nies on the coast of Tartary. Grain, which then {as now) was 
 to be procured at the mouths of the Dnieper and the Don at the 
 lowest possible price, proved one of the best articles of traffic at 
 the great trading staples of the Mahomedans. In most of the 
 treaties of commerce and friendship concluded by the Geneose, 
 a stipulation is found, both for a freedom from duties on the 
 corn which they carry, and for the liberty to re-export freely 
 what they do not sell in any harbour. The possession, by the 
 Genoese, of this key to traffic wherever they went, could not be 
 eventually a matter of indifference to the Venetians, and the 
 more so as their rivals enjoyed the same immunities and pri- 
 vileges in the Syrian harbours as they did. 
 
 All along the Proven9al and Spanish coasts, the Genoese had 
 consuls and commercial establishments in every harbour, whether 
 Christian or Mahomedan. From Syria to the Straits of Gibraltar 
 their vessels were everywhere w^ell-received on the African coast. 
 They had passed the Straits, and stood in communication with 
 Lisbon, Flanders, and England. After the fall of Pisa, they 
 acted as carriers for the merchants of the rising Florentine re- 
 public. To the westward the Genoese felt but little the rivalry 
 of Venice ; but new competitors in those parts entered the field. 
 Marseilles and Barcelona, which rose on the fall of the Mahome- 
 dan Almeria (as Seville became famous as a Christian place of 
 trade after the conquest of Grenada), extended the commerce of 
 the East to the Iberian peninsula. In short, at no former period 
 of history was so much commercial activity witnessed in the 
 w^estern world as then. The land routes from Genoa, through 
 Switzerland, and along the Rhine to Flanders, across the Tyrol, 
 through Augsburg and Nuremberg, into central Germany, 
 through Aquileia and Carinthia to Vienna, Prague and Cracow, 
 were all alive with trade. The most enlightened sovereigns, the 
 
89 
 
 kings of Castile and Arragon in Spain, the Plantagenets of 
 England, the Suabian emperors in Germany, favoured and in 
 every way promoted the traffic that brought refinement and hap- 
 piness on its wings. This was the age of the Berengers of Pro- 
 vence, of Alphonso of Castile, of Frederick II. of Germany, the 
 age of Trouveres and Troubadours, of Dante, of Simon de Mont- 
 fort, of Edward I., of Robert Bruce, of Swiss independence. 
 
 In the first years of the fourteenth century the Portuguese 
 appear as navigators. One of the first historical notices of their 
 trade is contained in a letter given in Rymer's Foedera from king 
 Edward II. of England to Dinas king of Portugal, in which 
 allusion is made to existing treaties of commerce. Lisbon of 
 course was a convenient station for all trading between the 
 Mediterranean and the German Ocean. From the Baltic, the 
 ships of the Hans Towns came also to Lisbon. The trade 
 carried on by the Hanseatic League extended through Russia 
 into central Asia. The factory at Great Novgorod in Russia 
 was even more important than those of Bergen, Bruges, or 
 London. In the fourteenth century the exports of wine from 
 Lisbon were estimated at 12,000 tons, which very nearly equals 
 the quantity exported at the present day. The moderate duties 
 then imposed on wares exported and imported sufficed to enable 
 the kings of Portugal to amass great treasures. Thus, with the 
 aid of the trader, civilization arose out of the darkness that 
 covered Europe. In the trading cities manufactures sprang up, 
 and in the adjacent districts agriculture flourished. The growth 
 of intelligence kept pace with the spread of industry, and in 
 the period called the Middle Ages reached the proud height on 
 which we still look back with wonder. In this school were 
 nursed Columbus and Vasco de Gama, who extended our sphere 
 of activity to the Eastern and Western Indies. 
 
 It must strike every thinking person as a remarkable circum- 
 stance, that the first product which proves valuable to traders 
 in all ages is some article of food. The Italian traders had long 
 been the purveyors of sugar and spices to Europe from the Le- 
 vant. Spices were the chief article of trade with which Lisbon 
 supplied us after the discovery of the passage round the Cape 
 of Good Hope ; they furnished an improved mode of treating 
 animal food. The extent to which the trade in pepper is can-ied 
 on is recorded by a declaration in a chronicle of Augsburg, 
 that the house of Welser, of that city, owned pepper to the 
 
value of 20,000/. on board a Spanish fleet that was destroyed 
 by the Dutch in the war of independence. The reason why food 
 is so powerful an engine is, that it releases labour from the cul- 
 tivation of the soil, to be employed in other branches of pro- 
 duction. How far the command of such vast mercantile re- 
 sources favoured the extension of the power of Charles V. over 
 one half of Europe, historians have not as yet inquired. It is 
 however certain that the Venetians, who had long been jealous of 
 the Spanish trade, and sought, in a very modern spirit, to repress 
 it by high differential duties, owed the destruction of their poli- 
 tical power to this absurd policy. It is striking that, even then, 
 no part of Europe sympathized with the destroyed monopolists. 
 
 But the great stimulus that trade received in the fifteenth 
 century was owing to two inventions that are scarcely less re- 
 markable for their results than the discovery of the magnetic 
 guide, — printing and paper-making. To these inventions we 
 owe the power of extending associations across the barriers that 
 political distinctions, mountain-chains, and oceans interposed 
 between men. From a mistaken fear of this new instrument of 
 power, its influence, like that of all progress, was at first viewed 
 with jealousy and dread. Its enemies could not at once seize 
 the fact, that the very circumstances which prevented political 
 barriers from being felt as a restriction, must tend to confirm 
 their duration. Had the policy of courts conformed to this 
 view, and had they made the right use of the weapon thus prof- 
 fered to them by the trader, there would have been as few changes 
 in the divisions of political power, since paper became abundant, 
 as there have been in the denominations and the size of coins. 
 
 The primary feature of the new element which paper intro- 
 duced into trade, was the employment of concentrated asso- 
 ciated capital in commerce. The great houses, — amongst which 
 the Medici at Florence, the Fuggers and Welsers of Augsburg, 
 and our own Sir Thomas Gresham, the founder of the Royal 
 Exchange and of a College in London, are conspicuous, — were 
 the levers of the great commercial enterprises that embraced 
 the empire of Russia, North and South America, and the East 
 and West Indies, in the reign of (olueen Elizabeth. From that 
 period, the trader, although in a great measure emancipated 
 from the union which formerly tied his movements to the wheels 
 of governments, in reality also emancipated the governments 
 from their dependence upon him. The power of trade became 
 
91 
 
 so much enlarged, that even political follies and vices could not 
 destroy it. The wickedness and absurdity of courts and mini- 
 sters interrupted its progress, and caused losses both to indi- 
 viduals and to nations. Still the share of prosperity enjoyed 
 by Europe from trade, under all its restrictions, has ever been 
 great since the commencement of modern history, in comparison 
 with what nations commanded at any previous epoch. 
 
 It is to this fact that we owe the patience of the people under 
 the numerous and conflicting economical experiments that have 
 been tried at their expense. But the increase of population — 
 the unfailing spur to progress — has at length broken up the 
 schools which, on artificial foundations, pretended to create sy- 
 stems of restricted trade more beneficial than the humanizing 
 intercourse which Providence has ordained to be as beneficial, 
 when it is as free, as the light of heaven to all. 
 
 I shall not detain you with an inquiry into the merits of the 
 various systems of " physiocrats,^^ " economists,^^ and " national 
 protectionists." We are now in an age about discarding all re- 
 strictions on enterprise, all narrow calculations. To this we are 
 forced by the necessities of an accumulating population, for 
 which these schools of economists have been found incapable of 
 providing. But as the main impression that we have inherited 
 from them is a dread of competition, as injurious to individual, 
 although not so always to national interests, I have given my 
 reasons for assuming that the competition induced by trade — 
 that of one nation with another — is not injurious to either. To 
 what class can the utmost competition be regarded as dangerous? 
 To the agriculturist? We have seen that agriculture is con- 
 stantly changing its character in every country, — that the gross 
 crops of grain and fodder are banished from one soil to another, 
 by the demand for more remunerating products from the soil 
 that demands the most expensive cultivation, — consequently, 
 that such a change entails no loss, where it is studied and taken 
 advantage of. Whatever facilitates such a change must benefit 
 both landlord and farmer, and it is upon this ground I expressed 
 my expectation that they will lose no time in putting the agri- 
 culture of these islands into the condition of benefiting by the 
 competition that would cheapen corn and sugar. 
 
 Can competition injure the manufacturer? His occupation 
 offers, like agriculture, a series of divisions, each of which is be- 
 nefited by the cheapening of the process that precedes it. Thus 
 
92 
 
 the millowner gains by all reductions in the price of engineering : 
 the engineer is served by improvements in mining. How is the 
 miner served by competition ? 
 
 Besides the cheapening of all articles of consumption conse- 
 quent upon the improvements that result from cheap mining, 
 the miner has, if his trade be interfered with, the new branches 
 of production to resort to for which demand is created by the 
 savings of all parties. Should a miner, who has invested capital 
 under some false system of protection, complain that he is not 
 indemnified for his loss by the power of changing his occupation, 
 the reply is, that it is more essential to prevent others from in- 
 curring a similar loss than to bear him harmless. Whether he has 
 a claim on the legislative body, whose wisdom led him astray, or 
 not, I cannot decide ; he can have no right to demand the conti- 
 nuance of a system which must lead others to destruction. The 
 indemnity paid to slave-owners is a curious case in point, upon 
 which history will sit in judgement. 
 
 But can the operative lose by competition ? If the fund cre- 
 ated by savings, whether in manufactures or agriculture, has no 
 other destination than to be spent in additional consumption, the 
 demand for labour to supply the additional articles thus sought 
 must increase the price of labour. Thus wages must rise, while 
 their value in purchasing will be augmented. No operative 
 therefore, who knows his own interest, will seek anything but 
 the fullest and most general competition, for this is the grand 
 stimulant to wages. 
 
 If competition be admitted to create wealth, instead of ruining 
 the country that is exposed to it, we should act prudently in 
 courting it for such objects especially as lend value to all others 
 when they are cheapened in price. I pointed out two objects 
 as chiefly influencing the pow ers of production and consumption 
 in every country — grain and metals. Grain feeds the workman, 
 metals furnish him with tools. We shall have reason to rejoice 
 at the prospect of abundant supplies of both of these indispen- 
 sable objects, and a reference to the map will disclose where they 
 are to be bought on the best terms. 
 
 Besides the large quantity of rice and cocoa that can be ob- 
 tained from tropical climates, and which form the most nutritive 
 food that man can enjoy, more populous districts in Europe 
 possess the means of supplying us largely with wheat, for which 
 they would take our manufactured goods in return. Of these, 
 
the most accessible are the southern provinces of Russia on the 
 Black Sea, to which we have seen that, from the time of the Phoe- 
 nicians of old, all grain-importing lands have constantly resorted. 
 The low lands of Podolia and the Ukraine are a vast level district, 
 which were once unquestionably submerged by the ocean, and are 
 still saturated with salt and soda, which in the vegetable soil is a 
 prolific source of fertility, Mr. Jacob, in his reports, has stated 
 that grain grown in these parts can be delivered at Odessa at 
 I4s. 6d, per quarter. From personal knowledge of a second 
 similar district, the plain of the Theiss in Hungary, which Mr. 
 Jacob did not visit, I firmly believe this to be the case. I copied 
 from a farmer's books in the Banat, the estimated cost of the pro- 
 duction of wheat, and found that it did not exceed 11*. per quar- 
 ter. This fertile district is growing rapidly populous, and, were 
 the communication with the sea by a railroad which was proposed 
 in the last Hungarian Diet realized, wheat could be delivered at 
 the Hungarian port of Fiume on the Adriatic at 15^. per quarter in 
 average years. A desire to open this market for trade, that would 
 bring us into direct contact with a population of fifteen millions 
 of Hungarians and of Turkish subjects, led to the last treaty 
 concluded with Austria in 1839. This treaty proved a failure, 
 on account of a geographical error upon which it was based ; 
 for it assumed the Danube to be the outlet for Hungarian trade, 
 whereas all the wheat of the Banat in Hungary is shipped at 
 Fiume on the Adriatic. The error led to the awkward seizure 
 of the only two Austrian vessels that attempted to trade under 
 its provisions. But this untoward circumstance extended our 
 commercial knowledge ; for as the cargoes of these vessels were 
 found, on inquiry, to be Wallachian instead of Hungarian, the 
 fact was proclaimed in England that Wallachia could export corn 
 as well as Hungary. As these three districts alone contain an 
 area, available for growing wheat on the cheapest terms, of far 
 greater extent than the British Isles, the chance of a cheap sup- 
 ply is improved by the prospect of its being a regular one. The 
 climates are also different in the cycles of their seasons, and the 
 resources of Wallachia and the adjoining provinces were first 
 discovered in Turkey when a failure of the grain crop in southern 
 Russia cut off" the supplies from Odessa, on which Constantinople 
 until then depended. Russia has itself two distinct climates, as 
 was proved in 1838, when, the harvest having failed on the lands 
 near the Upper Wolga, wheat was sent from Odessa and Dant- 
 
94 
 
 zic to St. Petersburgh. To these well-known resources in Eu- 
 rope, it is scarcely necessary to add the vast uncultivated tracts 
 of Asia, Africa and America, in order to prove that any distress 
 which we experience from scarcity of food is clearly the result of 
 choice and not of necessity. 
 
 Next to supplies of food. Providence has furnished man with 
 the most abundant supplies of iron. By a strange fatality, the 
 aberration of reason which so often induces famine in countries 
 that are best able to command supplies of food, constantly dooms 
 men to inefficient labour from want of tools in countries where 
 iron is most abundant. The erroneous notion that England is 
 specially favoured, by abundance of iron in immediate contact 
 with fossil coal, is fast dispelling before the spread of knowledge. 
 In Belgium, in the districts of Aix-la-Chapelle, and of the Ruhr, 
 on the Upper Moselle, and in Silesia in Prussia, coals are as 
 abundant, and as cheaply raised in sufficient contiguity with 
 iron, as in any part of England. The coal-beds on the Upper 
 Moselle and the Saar extend into France, and furnish materials 
 for the engineers of Alsace. The name of Koechlin of Miihl- 
 hausen, and that of Cockerill of Liege, are perhaps better known 
 in the most remote parts of Europe than any single English firm ; 
 and when orders are in the market, it is not often that anything 
 short of a very low price will secure them for our workshops. 
 
 But these districts, which are the best known to us, give a 
 very small insight into the mineral wealth of the continent. 
 The chain of the Alps, from the boundary of the Austrian em- 
 pire towards Switzerland to where these mountains run out to- 
 wards Hungary, is abundantly supplied with ores of all kinds. 
 Amongst these, the iron ores of Stiria and Carinthia are pro- 
 minent for the superior quality of the metal. I have seen cy- 
 linders at Vienna that were made in Carinthia for the mint of 
 Stockholm, — assuredly a curious testimony on the part of Sweden 
 to the superiority of the iron of another country. At Vienna a 
 hanging bridge is constructed of this material, which weighs but 
 two-thirds of the burden of a chain-bridge near it that was con- 
 structed in England of ordinary iron. 
 
 Entering Hungary, we find the Carpathians charged with veins 
 and beds of metal of a similar superior quality. Amongst the 
 names of the Austrian nobles who, as I said in my last lecture, 
 supplied the place of manufacturers by establishing works on their 
 own estates, I mentioned that of Prince Coburg, the uncle of the 
 
Clueen of England. This prince has iron-works on a large scale, 
 which are managed with a skill not easy to be surpassed. They 
 ai'e situated on his large estates in the mountainous districts of 
 northern Hungary; and when the communications are improved, 
 which in that country is an easy matter, we shall probably 
 find that we have submitted so long from mere ignorance to the 
 monopoly which Sweden has hitherto maintained of our market. 
 Since we have no more a monopoly of iron than we have of 
 food, we possess no advantage over our neighbours beyond se- 
 curity of property and a better manufacturing organization than 
 they now possess. In my last lecture I pointed out the danger 
 of disturbing this organization ; and if any are inclined to make 
 light of the warning, it may be enforced by a description of the 
 means that have been resorted to on the continent within the last 
 five years for making these resources available. 
 
 The invention of ships, as we have seen, emancipated the sea- 
 faring countries of the world from dependence upon rich soils 
 and fine climates : it became possible, by judicious exchanges, 
 to procure food and other necessaries on an unproductive rock 
 at a cheaper cost than they could be produced together by either 
 of the exchanging nations. This invention was rendered more 
 powerful by the addition of the mariner's compass. The invention 
 of these maritime machines transferred power from the land to the 
 ocean. The supremacy at sea was rendered, by the art of navi- 
 gation, the throne of political ascendency. The reason why this 
 was the case I have already explained : it was because the trader 
 is the most powerful ally that a ruler can attach to his cause. 
 
 The invention of roads to be travelled by the agency of ma- 
 chinery has restored the balance that was thus disturbed. The 
 largest continent is clearly independent of maritime aid, when it 
 adopts this means of making its resources available, however 
 distant they may be from each other. Of the power created by 
 this exertion of intelligence, the map again instructs us. 
 
 In the course of the present year a railroad will be completed 
 from Hamburg to Saxony, which branches off in one direction 
 to Berlin, and is continued in another to Silesia : thus the Saxon 
 manufacturers can now reach Hamburg in one day, whereas but 
 last year the communication demanded weeks, and often months. 
 The Silesian iron, cloth and cotton w^orks have not this outlet 
 alone. A second, passing along the valley of the Oder, connects 
 
96 
 
 them with the Baltic at Stettin. These two lines of railroad are 
 available for the silk manufacturers and dyers of Berlin, Avho 
 derive another benefit from them. Berlin, situated in a vast sandy 
 plain, was one of the dearest cities in Europe. Corn now can be 
 introduced at the Dantzic prices, fish is conveyed to it from the 
 sea, and cattle are sent from the meadows along the Elbe. Elber- 
 feld, the great seat of the cotton manufactures on the Rhine, will 
 soon be brought within a few hours' drive of Antwerp by the Bel- 
 gian and Rhenish railroad. This line is also available for the silk- 
 weavers of all Rhenish Prussia, and for all the manufacturers of 
 Belgium. Of all the railroads now constructing on the continent, 
 those projected in Austria would be of the greatest use in ex- 
 tending the trade of this country ; and no time ought to be lost, 
 either by the legislature in manifesting an early intention to adopt 
 the principle of reciprocity on the most unlimited scale, or on the 
 part of our people in demanding such a course of their represen- 
 tatives. It is evident that a slight difference in prices must turn 
 the scale against us, and we cannot continue, as we have done for 
 years, to throw away all the advantages of our position to secure 
 petty advantages to individuals and factions. 
 
 Our rivals in trade are henceforward not to be sought in ma- 
 ritime states alone. Every continental power that connects itself 
 with its neighbours by railroads is emancipated from the sea, 
 as the maritime states were anciently from the land, by the ships 
 with which they tracked the ocean. What are petty selfish in- 
 terests in comparison with this march of intelligence ? Who in 
 this grand scheme of mutability and unfettered power, has a vest- 
 ed interest in any earthly possession that does not demand an 
 exertion of intelligence to secure it ? Can any man wish to sub- 
 stitute a dependence upon brute matter, as the true foundation 
 of political or commercial advantages, for the rule of mind, to 
 partake in which no other qualifications are requisite than know- 
 ledge and judgement, — those sources of intellectual power which 
 will command the greatest material enjoyments for those who 
 possess them ? 
 
 THE END. 
 
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