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sumers, and it is only when he is mistaken in these two respects, that non-consumption is detrimental to reproduction. He may produce as much as he pleases, his produce will be consumed, provided it suits the consumers and they have the means of paying for it. Abundance and cheapness, these are the two springs of consumption and reproduction ; and as economy necessarily produces both, it follows that economy is not prejudicial either to consumption or to reproduction : on the contrary, it is beneficial to both. Is the same Noble Author correct, when he states capital to consist only in machines and instruments proper to shorten or facilitate labour, and an economy which tends to multiply capital beyond real wants, to be injurious, because it diverts capital from an useful path to make it flow into an useless channel ? Did the capital of a country consist in nothing but machines and instruments proper to shorten or facilitate labour, it is certain that an economy which should unnecessarily increase their quantity, would be unprofitable and even detrimental to public prosperity. But this kind of accumulation is not commonly that which parsimony has in view, nor is it that which its partisans recommend ; and if a few individuals are saving to obtain a larger number of machines, tools, and instruments, than they have occasion for ; such cases are rare; they are eccentricities and whims undeserving of either the attention of the statesman, or the meditation of the philosophical inquirer. The capital, of which the best writers recommend the increase by parsimony, consists, as has been observed before, in the advances and raw materials necessary to all kinds of labour, in the improvements of the soil, in the instruments and machines proper to abridge or facilitate labour, and in the produce kept in store for present, future, and distant consumptions. This theory seems indeed proof against any criticism. If econom y increase the totality of advances and raw materials wanted in all kinds of labour, the means of labour are increased, and consequently there is more raw and manufactured produce in existence. If it increase the improvements of the soil, the soil is rendered more productive. If it multiply the machines and instruments which abridge or facilitate labour, the productions of industry are more abundant, of a better quality, at a lower price, and within the reach of a greater number of individuals. Finally, if economy augments the totality of commodities, their abundance is a premium to augment population, and a means of private and public wealth. Thus economy, by extending and improving every branch of capital, has the same effect as the productiveness of the soil, the progress of industry, and the speculations of commerce. It augments public and private wealth ; and, as has been very justly observed by Adam Smith, it is economy and not industry which increases the capital of a nation.


How are Capitals employed 2

IN proportion as capital is created, it follows various employments, which divide it into as many distinct branches, of which Dr. Quesnay enumerates four : The original advances, which have cleared the ground; The annual advances, which reward the labour of the husbandmen, preserve the original advances, and provide against the accidents inseparable from that kind of labour; The advances of the unproductive classes, which serve to pay for the raw materials and wages of labour; Lastly, the advances of the merchants who defray carriage and wafehouse expences, which this author considers as a stock distinct from the national capital. Adam Smith took a more enlarged view of the employment of capitals. He assigned them more importance, and, as it were, revealed their power. He devotes part of them to immediate consumption, which he states to consist of food, clothing, household-furniture, dwelling-houses, and all objects of conveniency and comfort. The second of the three portions, into which he divides the general stock of the society, is called the fixed capital, the characteristic of which is, that it affords a revenue or profit without circulating, or changing masters. It consists chiefly of the four following articles: 1st, of all useful machines and instruments of trade which facilitate and abridge labour; 2d, of all those profitable buildings which are the means of procuring a revenue, not only to their proprietor, who lets them for a rent, but to the person who pays that rent for their use; 3d, of the improvements of land; and 4th, of the acquired and useful abilities of all the inhabitants or members of the society.

The third and last of the three portions into which the general capital stock of a community naturally divides itself, is called by Adam Smith the circulating capital: its characteristic is, that it affords a revenue only by circulating, or changing masters. It is composed, 1st, of the money, by means of which all the other three are circulated and distributed to their proper consumers; 2d, of the stock of provisions, from the sale of which a profit is expected ; 3d, of the materials, whether rude or not completely manufactured ; and 4th, of the work which is made up and completed, but not yet disposed of to the proper COIASUI ITT 6-1’S.

This enumeration and classification of capitals appears totally different from that of Dr. Quesnay; and yet it is easy to perceive that they approximate to a certain degree, and are really at no very great distance.

The capital which Adam Smith calls a fixed capital, is partly the same with that which Dr. Quesnay calls original advances to put the ground into a state of cultivation.

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The only difference worthy of remark between these original advances and tie fixed capital is, that Dr. Quesmay calls those advances only original ones which have put the ground into a state of cultivation; while Adam Smith gives the name of fixed capital not only to the improvements of the land, but also to the instruments and machines which facilitate and shorten labour, and to the acquired and useful abilities of all the members of the community. This diversity of opinion is, with these two authors, the just consequence of their different theories concerning the source of wealth, which one places in agriculture, and the other in any labour which fixes and realizes itself in some permanent object. The inquiry which I have made into these two opinions in the preceding book, renders all further discussion unnecessary. Yet it may be useful to observe, in support of the opinion which I have established, that Adam Smith, by assigning to the acquired and useful abilities of all the members of the community a place in the fixed capital, has to a certain degree destroyed the restriction with which he had shackled the productiveness of labour. If it be true, as he has taught, that productive labour is that which fixes and realizes itself in some permanent object, and if it be the essential and distinctive characteristic of a fixed capital to produce a revenue, that is to say, a fixed and permanent object, it would be necessary that acquired and useful abilities should produce a revenue or a fixed and permanent pbject: and as it is certain that the labours of most

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