this part of the science, and must henceforth be considered as classical.

Wages of labour are no longer to be considered as arbitrary and depending on the high or low price of provisions. The price of labour has its laws, its principles, and its limits in the demand for labour ; and this demand is constantly in proportion to the progressive, stationary, or retrograde state of national wealth.

A rise in the wages of labour, when it is the mere result of these general causes, ought not to occasion any uncasiness. It does not even raise the price of the productions of labour, because, being better paid, the labourer works more, and his productions are both in greater quantity and of better quality.

Thus the price of labour is, after all, independent of human passions and combinations; and it is extremely remarkable, that the principles by which it is regulated are all favourable to the interests of individuals, to the prosperity of nations, and to the progress of national wealth.

CHAP. VIII.

Conclusion of the Second Book.

ON recapitulating the results of our inquiry into the nature and effects of labour, and into the causes which accelerate or impede its progress, we derive a lively satisfaction from the consideration that those doctrines by which labour is rendered barren, insulated, and subjected to restrictive laws, and by which its liberty is obstructed and its wages are reduced and limited, oppose an insurmountable obstacle to the formation and progress of wealth, to the developement of social energy, and to the political power of nations; whilst the theory which is favourable to the efforts of the labourer, which improves labour by sub-dividing it, allows complete liberty to the labourer, and liberally rewards his toils, gives to wealth an unlimited impulse, and is productive of great national benefits. These happy results ought to encourage philosophical inquirers in their meditations, enlighten legislators in their labours, and guide practical statesmen in the choice of their measures.

M

BOOK III.

OF THE VARIOUS SYSTEMS ON CAPITAL.

THE

CHAP. I.

Wherein do Capitals consist?

HE theory of capitals is new, and entirely of Adam Smith's creation. The notions afloat on this subject prior to his time, were confused, partial, and limited. The nature, formation, employment, and general and particular influence of capitals, were so many problems, or gave rise to numberless errors and misconceptions.

The first writers on political economy made capitals consist in metallic currency, and derived them from foreign commerce; which caused their system to be denominated the mercantile system.

The French economists who attacked this system, and substituted the agricultural system, acknowledged no capitals but the advances on cultivation.

Adam Smith took a more extensive view of capitals. He stated them to consist in the advances and prime materials of all labours, in the improvements of the soil, in the implements and machines of agriculture, manufactures, and trade, which comprise both metallic

and paper currencies, and in commodities reserved for general consumption.*

This enumeration of capitals is not absolutely above criticism. It certainly is a matter of surprise, that commodities reserved for consumption and incapable of being accumulated, should be ranked among capitals, which, according to Adam Smith himself, are the produce of accumulation; but as this criticism is of no utility to the science, I shall not dwell upon it.

Some modern French writers appear disposed to assign the rank of capitals to lands, mines, and fisheries, which they regard as instruments of production, and little different from any other machine or implement destined to produce commodities.

Lastly, a Noble English Author limits capitals to the instruments and machines proper to shorten and facilitate labour.t

I think I shall give a correct and comprehensive definition of capital, by stating it to consist in the accumulation of the produce of labour.

According to this definition, lands, mines, and fisheries, in their original state, would not be comprised among capitals; but, stripped of the improvements, instruments, and machines, which render them productive, they scarcely deserve to hold a place in the capital stock of any nation. Their spontaneous produce is but the smallest part of the general produce of

* Adam Smith's Wealth of Nations, vol. i. book ii. chap. 1. and following.

+ De Say and Canard.

The Earl of Lauderdale.

labour, and cannot constitute any separate article in the wealth of nations. If we deduct from agricultural produce, the part which is due to cultivation; from the produce of fisheries, that which is due to the implements and tools for fishing, and particularly to the art of salting, drying, and curing fish; and from the produce of mines, that which is due to the aid of machines and extraordinary labours; there remains so little, that there is no danger of erring in ranking them among the produce of labour, and admitting them only as such among capitals.

Capital, then, consists in the accumulation of the produce of labour.

In theory, capitals offer three different considerations, equally interesting to the science, to its progress, and to its results, viz. their formation, their employment, and their influence upon public and private wealth. Each of these considerations has given birth to various opinions, which it is important to analyse and investigate.