this portion is more or less considerable according as the state of wealth is progressive, stationary, or retro

grade. Beyond these rules there is nothing but doubt, obscurity, and uncertainty. These are the bounds of the science.

The laws then which regulate the distribution of the annual produce of labour in the shape of wages of labour, profit of stock, and rent of land, are plain and positive, and can no longer be mistaken.

Of all the authors that have recommended a strict attention to those laws and developed their advantages, none, I think, have done it more successfully than the Earl of Lauderdale and Count Verri.

Commerce," says the latter, "is so much the more active, as wealth is more equally distributed and diffused among a greater number of individuals. We see indeed, that in countries where wealth is badly distributed, where a naked and famished multitude afford a striking contrast with a small number of individuals overflowing with riches, the dealers in foreign and national commodities are few, and the prices of goods so high that little is exported. The annual re-production is reduced exactly to the absolute necessary. The soil where generations of oppressors and oppressed succced each other, is barren or uncultivated; every thing withers, every thing is dead, until an enlightened legislator has the inclination and the power to point out the true road, and to cause it to be followed.*

*Della Econom. Polit. § 6.

The Earl of Lauderdale presents the same opinion in a stronger and still more striking light.

"The distribution of wealth," says the noble Earl, "not only regulates and decides the channels in which the industry of every country is embarked, and of course the articles in the production of which it excels; but a proper distribution of wealth insures the increase of opulence by sustaining a regular progressive demand in the home-market, and still more effectually by affording to those whose habits are likely to create a desire of supplanting labour, the power of executing it." To support this opinion, Lord Lauderdale quotes a passage of Bacon, which proves that this vast and profound genius had a glimpse of every useful truth. "Above all things," said Bacon, "good policy is to be used, that the treasure and monies in a state

For, otherwise, a

be not gathered into few hands. state may have a great stock, and yet starve. And money is like muck, not good except it be spread." *

Lord Lauderdale has not contented himself with rendering sensible the advantages of the distribution of wealth and of its circulation through all classes of civilized society; he has carried his views farther, and inferred, from the present tendency of all nations to favour this circulation, that the industry which is employed in supplying the wants of the multitude, must always prosper more and more, whilst that which labours only for the luxury, pomp, and vanity of the higher and opulent classes, must insensibly decline. This consequence, which affords to his Lordship

*Lord Lauderdale's Inquiry, chap. 5, page 349, 353.

an opportunity of congratulating his country for the useful direction it has given to its industry, points out to other nations the conduct which they ought to pursue to increase or preserve their wealth.

Thus the public and private income consist of the annual produce which is distributed in the shape of wages of labour, profits of stock, and rents of land; and this distribution is regulated by the progressive, stationary, or retrograde state of national wealth. The observation of these laws is of the utmost importance to the progress of wealth, and forms one of the fundamental principles of political economy.

CHAP. II.

Of Consumption.

CONSUMPTION bears a necessary and indispensable proportion to the national income; but that proportion has not yet been invariably fixed.

The French economists think that consumption ought to be equal to the income, and allow no economy but in that part of the annual income reserved for the land-owners as the net produce of their lands*.

Adam Smith, on the contrary, teaches that consumption ought to be inferior to income; it is on the surplus of income that he chiefly founds the progress of national wealth. He even goes so far as to say,

Physiocratic, Tableau Economique.

that "parsimony, and not industry, is the immediate cause of the increase of capital.” *

Finally, some authors condemn economy, regard consumption as the measure of re-production, insinuate that income proportions itself to expenditure, and that people are the richer the more they spend. Whence it follows, that luxury, that superlatively extravagant consumer, is the most powerful spring of wealth; a consequence this, which renders the theory a little suspicious, and obliges us to investigate it with careful attention.

When an individual consumes more than his income, the surplus must be taken from his capital, which is gradually diminishing, and the diminution of which diminishes his income in the same proportion. If his expence exceed his income every year, a time must come when that individual, having neither income nor capital left, is obliged to labour for his subsistence, or to be indebted for his maintenance to public charity. What is true of one individual, is equally so of several individuals, and even of a whole nation. If, which is impossible, all the individuals composing a nation should spend every year more than their income, the period might be foretold when they would be absolutely ruined; or when the population would be so much diminished, that, on the same soil on which there stood formerly great cities, numerous towns, and numberless boroughs and villages, there would scarcely be seen a few scattered villages and some wretched hamlets.

*Wealth of Nations, vol. ii. page 14.

Those who are unacquainted with the progress of wealth, and do not understand how it is formed or how it is destroyed, find some difficulty in conceiving this result of expenditure above income: but it may easily be rendered obvious and evident even to the most ignorant.

The surplus consumed beyond the individual income is taken from that portion of the annual produce reserved for the advances of labour, or, in other words, from the fixed and the circulating capital. Deprived of this portion of capital, the merchant suffers his vessels, his waggons, his warehouses to decay, and no longer circulates the same quantity of merchandize; the manufacturer does not keep his machines, his tools, his work-shops in repair, he no longer selects his raw material with the same care, and employs no longer the same number of hands; the farmer witnesses the decrease of his cattle, the decay of his farm buildings, of his plantations, of his ploughs, of his implements and instruments of husbandry, and can no longer bestow the same manure. and the same labour upon his fields; lastly, government suffers national monuments, high roads, canals, harbours, and public establishments, to go to ruin. The communications are interrupted, the various districts of the country are isolated and impoverished through this isolated state; the annual produce is successively diminished, so that, at no very distant and much less remote period than is generally supposed, the cattle destined for agriculture and the conveyance of commodities disappear, public and private buildings tumble in ruins, the soil is left