willingly exchanged; when public authority contents itself with guaranteeing, as it were, this preferred commodity against the frauds, adulterations, and deteriorations to which it may be liable, money becomes the most active agent, the most powerful spring, and the most useful instrument of circulation.

But it is especially by giving rise to credit that metallic money renders the greatest service to circulation. As soon as it has established credit metallic money appears in circulation merely to regulate the march and to insure the results of credit. Even the liquidation of credit is frequently effected without the aid of metallic money. Banks, when confined to the liquidation of commercial credit, supply the place of coin most successfully, or at least derive but a feeble and trifling assistance from the metallic currency of the country.

The different methods of circulating the produce of labour, such as corporations and privileged companies, the monopoly of colonial commerce, exclusive commercial treaties, and every combination that has been contrived to give another direction to the course. of commerce, when it is supposed unfavourable or less beneficial, or to enlarge it when supposed to be favourable, are as many obstacles which restrict and skackle the progress of commerce, and are equally fatal to public and private wealth.

In short, nations ought never to forget that the circulation of the produce of labour is always beneficial, and that the only way to reap all its benefits is to render commerce safe, free, easy, and general.

BOOK V.

ON THE

VARIOUS SYSTEMS CONCERNING THE NATIONAL INCOME AND CONSUMPTION.

CHAP. I.

Of the National Income.

ALL systems of political economy agree in making the national income consist in the produce of annual labour. The spontaneous productions of the soil, of mines, and of the waters, are not very considerable, and require besides a certain portion of labour to be gathered and brought to market; they must, of course, be ranked among the produce of labour.

Income is either private or public. But these two denominations are merely two different manners of viewing income; they neither alter its nature nor its quantity. All authors, on subjects connected with political economy, unanimously teach, that the national încome is composed of the private income of the members of the nation.*

* Sir William Petty-George King-Mr. Hooke-Sir William Pulteney-Adam Smith-Dr. Becke-Physiocratic, page 113.Philosophie Rurale, page 150.

One noble author alone thinks that this opinion, "though universally prevalent, must be deemed false and unfounded by every man who considers the subject, after having formed and familiarized himself to an accurate and distinct opinion of the nature of value."

"It must appear," says the Earl of Lauderdale, "that a commodity being useful or delightful to man, cannot alone give it value; that to obtain value, or to be qualified to constitute a portion of private riches, it must combine with that quality the circumstance of existing in a certain degree of scarcity. Yet the common sense of mankind would revolt at a proposal for augmenting the wealth of a nation by creating a scarcity of any commodity generally useful and necessary to man.

"Let us for a moment suppose it possible to create as great an abundance of any species of food as there exists of water; what would be thought of the advice of a man, who should cautiously recommend, even at the moment of the pressure of scarcity, to beware of creating this boasted abundance? For, however flattering it might appear as a remedy for the immediate evil, it would, inevitably, diminish the wealth of the nation. Yet, ridiculous as this opinion might appear, as every thing which partakes of the abundance of water or air must at once cease to possess value; it follows that, by occasioning such an abundance, the sum total of individual riches would most certainly be diminished to an extent equal to the total value of that species of food, the value of which would by this means be destroyed.

"At present, the capital of the national debt of Great Britain amounts nearly to five hundred millions sterling. We have seen, and know, that war, even in the course of the first year, may sink the value of this capital twenty per cent. ; that is, that it may diminish the mass of individual fortunes one hundred millions; and thus impose upon any man, who made up the account of public wealth on the principle that an accurate statement of it was to be derived from adding together the fortunes of individuals, the necessity of saying that one hundred millions of our wealth had vanished.

But this is not all. The value of many things sinks at the same time. In the value of land in particular, we have seen a considerable diminution, which would create the necessity of a further reduction in this statement of public wealth. Yet the surface of the national territory remains unaltered; the landlord receives the same rent; the stock-holder is paid the same interest; and there is no one thing on which a man can lay his hand as an article of national wealth, which does not appear to retain the same qualities that rendered it either useful or desirable.

"If we could further suppose nature to bestow on any community, or art to procure for them, such an abundance, that every individual should find himself in possession of whatever his appetites could want, or his imagination wish or desire, they would possess the greatest degree of national wealth; though under such circumstances it is impossible that any commodity could obtain the attribute of value: for, like water and air, all commodities that partake of their abun

F F

dance, must at once be divested of value, or of the possibility of constituting any part of individual riches."*

I shall not follow the noble Earl in the very extensive developements which he has given to his opinion; they would add nothing either to the distinctness or demonstration of his thoughts, and would not render the question, which he has started, either more difficult or more important, as the most simple reflection is sufficient to resolve it.

The produce of general labour, whether in the hands of individuals, where it forms private income, or diffused all over the country in the shape of national income, is partly consumed by the producers, and partly exchanged, with the view of the objects obtained in exchange being consumed either by the producers or other classes of consumers.

If the produce consumed in the place of its production be abundant, its plenty contributes alike to public and private wealth, and establishes no difference between those two sorts of wealth.

If, on the contrary, that produce be rare, its scarcity impoverishes alike the individual and the public, and public and private wealth is equally a sufferer.

With regard to the produce exchanged by the producers, if the exchange takes place with a foreign country, its abundance turns to the benefit of the foreigners, who purchase it with the same values which they used to give for it, unless the foreign

* An Inquiry into the Nature and Origin of Public Wealth, and into the Means and Causes of its Increase, by the Earl of Lauderdale, chap. ii. pages 43, 45, 48.