quires more of that species of service whence the profit of the proprietor is derived. A cotton-spinning establishment in which the small wheel is used, as it was formerly in many parts of Normandy, scarcely merits the name of a factory; whilst a cotton-spinning house on a large scale, is a factory of the first consequence. comes- -whether they live by their labour, their capitals, or their landed possessions, reduce the portion of their expenses devoted to paying for the making of meal, in the proportion of sixteen to six, or by five-eighths. Where a man must formerly have expended eight francs a year in food, he will now have to lay out only three, which is exactly equivalent to an increase of income for the five francs saved in this article may be spent on any other. If equal improvements had occurred in every article of produce in which we expend our incomes, those incomes would actually have been increased by fiveeighths; and a man who gets 3000 francs a year, whether by grinding corn, or in any other manner, would really be as rich as if he had gained 8000 before these improvements were made. These considerations must have escaped the attention of M. Sismondi, when he wrote the following passage: "* Whenever the demand for consumption exceeds the means of producing, every new discovery in mechanics or the arts is a benefit to society, because it furnishes the means of satisfying existing wants. But when the production is fully equal to the consumption, every such dis1,000 covery is a calamity, because it only adds to the enjoyments of the consumers the opportunity of obtaining them at a cheaper rate, while it deprives the pro3,000 ducers even of life itself. It would be odious to weigh the value of cheapness against that of existence." But the most important, though not the most generally perceived, effect resulting from the use of machinery, and, in general, from every expeditive and facilitating process, is the increase of income which is thereby acquired by the consumers of the articles produced, an increase which costs nothing, and merits some more detailed examination. If people .were now to grind their corn as it was ground by the ancients, by manual labour, I estimate that it would require twenty men to grind as much meal as is ground by a pair of stones in our mills. These twenty met, constantly employed, would cost, in the neighbourhood of Paris, 40 francs per day; and counting 300 working-days in the year, would cost annually-fr. 12,000 The machine and the grindingstones would cost originally 20,000 francs, of which the annual interest is 16,000 2,000 3,000 6,000 instead of 16,000, which it would have cost if the process of the ancients had been still in use. The same population is nevertheless fed; for the mill does not diminish the quantity of meal produced; the profits gained in society still suffice to pay for the new produce; for as soon as the 6000 francs are paid for expenses of production, that moment 6000 francs are gained in profit; and society enjoys this essential advantage, that the individuals of whom it consists, whatever be their means of existence, their in It is plain that M. Sismondi does not adequately appreciate the advantages of cheapness, or conceive that what is saved in the expense of one article, may be laid out in additional purchases of another commodity, beginning with the most indispensable. Hitherto no inconvenience has been known to arise from the invention of com-mills; and their beneficial operation is seen in the diminished price of produce, which is equivalent to an increase of income to all those who make use of the invention. But it is said that this increase of income obtained by the consumers, is taken from the profits of the nineteen unfortunate persons whom the mill has deprived of employment. This I deny. The nineteen labourers retain the possession of their industrious faculties, with the same strength, the same capacity, the same means of work * "Nouveaux Principles," &c. tom. II. p. 317. ing, as before. The mill does not place them under the necessity of remaining without occupation, but only of finding another employment. Many circumstances are attended with this hardship, without producing similar advantages to compensate for it. A fashion which passes away, a war which closes a market, a change in the course of commerce, are a hundred times more ruinous to the labouring class than any new invention whatever. It may still be insisted that, supposing the nineteen discarded labourers were instantly to find capitals to set them to work in some new branch of industry, they would not be able to sell their produce, because the mass of the productions of the society would be thereby increased, while the sum of its revenues would remain without addition. Is it then forgotten that the revenues of the society are increased by the very circumstance that there are nineteen new labourers? The wages of their labour form a revenue which enables them to acquire the produce of their labour, or to exchange it for any other equivalent commodities. This is sufficiently established by my preceding letters. Strictly speaking, then, one disadvantage only remains the necessity for these men to find a new occupation. Now the progress which is made in a particular department of industry, is favourable to industry in general. The increase of income which the public derives from a saving in the expense of one article of consumption, tends to an expenditure on other objects. Nineteen men accustomed to grind corn have been deprived of one particular employment; a hundred new occupations, or extensions of the old branches of industry, have been thrown open to their exertions. I desire no better proof of this than the increase which has taken place in the works and population of every place in which the arts have attained a high degree of cultivation. We are so much accustomed to see the productions of new arts, that we scarcely remark them; but how forcibly would they strike the ancient inhabitants of Europe, could they revisit the earth, and behold the works of its present in habitants. Let us imagine for a moment some, even of the most enlightened, such as Pliny or Archimedes, walking about one of our modern towns; they would think themselves surrounded by miracles. The abundance of our crystals and glasses, the magnitude and number of our mirrors, our clocks, our watches, the variety of our stuffs, our iron bridges, our engines of war, our ships, would astonish them beyond expression. And if they were to visit our workshops, what a multitude of occupations of which they could not have the least idea! Would they ever imagine that thirty thousand men are constantly employed all night, in Europe, in printing newspapers which people read the next morning while they are taking tea, coffee, chocolate, and other refreshments, as strange to the ancients as the newspapers themselves? Doubt not, Sir, that if the arts continue to improve, as I find pleasure in thinking they will, new millions of men will, in a few ages, produce things which, could we rise up to see them, would excite in our minds no less surprise than Archimedes and Pliny would feel if they were to revive amongst us. We who scribble paper in search of truth, must be on our guard : if our writings should go down to our grandchildren, the terror with which we contemplate improvements which they will have greatly excelled, may probably appear to them somewhat laughable. And as to the workmen of your country, at once so ingenious and so miserable, our descendants may, perhaps, look upon them as persons who were forced to dance upon a rope with a weight fastened to their feet, in order to get their livelihood. They will read in history that some new plan was every day proposed to enable them to continue dancing, but unluckily the only one which could have been efficacious was omitted-the simple expedient of taking off the weight. Then our descendants, after having laughed at us, may, perhaps, see reason to pity us. I have said that beneficial improvements may be attended with transient inconveniences. Those hardships which are produced by the invention of expeditious methods, are fortunately mitigated by circumstances which have already been described, and by others to which I have not yet alluded. It has been said, that the cheapness resulting from an economical process, promotes the consumption of the article produced in such a manner, that a greater number of people are employed in its production than before, as has been observed in the spinning and weaving of cotton and you yourself consider this circumstance as alone capable of more than compensating for the injury. I will add, that in proportion as machines and ac celerating methods become more numerous, the difficulty of still discovering new improvements is increased, particularly in an old art in which the workmen are already formed. The most simple machines were first invented; afterwards came others more complex; but as they grow more complex, they are more expensive to establish, and require more human labour in their formation, which, in some degree, indemnifies the labouring classes for the work which they lose through the use of the new machine. The complication and dearness of a machine are obstacles to its being too suddenly adopted. The machine for dressing cloth by means of a rotary movement, cost, originally, from 25,000 to 30,000 francs. Many manufacturers were at first unable to lay out such a sum; others hesitated, and still hesitate, to adopt it, waiting for a more full and satisfactory confirmation of its success. When machines are thus slowly introduced, almost all the inconveniences of such inventions are avoided. In short, I have always found, practically, that new machines produce more alarm than injury. As to the benefit arising from them, it is constant and durable. M. de Sismondi raises an objection founded on what would happen supposing a hundred thousand knitters to make with their needles ten million pair of stockings, and a thousand workmen with stocking-frames to produce the same quantity. The result, according to him, would be, that the consumers of the stockings would only save fifty centimes per pair, and yet that a manufacture which formerly maintained a hundred thousand persons, would now support only twelve hundred. But he obtains this result only by suppositions which are inadmissible. To prove that the consumers of stockings would only pay fifty centimes less than before, he supposes that the costs of production would be, in the first case, as follows: 10 millions for the purchase of the materials. 40 millions for the wages of 100,000 knitters at 400 francs each. 50 millions of francs, of which 40 millions would be distributed amongst the working manufacturers. And in the second case, he sets down the expenses thus: 10 millions for the materials. tal sunk, and profits of the pro. prietors. 2 millions for the interest of the circulating capital. 2 millions for repairs and renovation of machines. 1 million for the pay of 1200 workmen. 45 millions; of which one only would be devoted to the labouring class, instead of forty. Now I observe in this account thirty millions for the interest of capital sunk, and the profit of the proprietors; which is to suppose a capital of two hundred millions for an undertaking capable of supporting twelve hundred men, and paying fifteen per cent for capital : a sup> position truly extravagant. A workman cannot use two frames at once; a thousand workmen would therefore require a thousand frames. A good stocking-frame costs six hundred francs; the thousand would consequently cost six hundred thousand franes. Add to this capital, a like capital for other utensils, workshops, &c., still the capital required will be only twelve hundred thousand francs. Admit that the interest and profits of the proprietors should be fifteen per cent on this capital, which is very fair; for a permanent business, which should produce more, would be reduced by competition to this rate of profit. This being allowed, we shall find for interest and profits of the proprietors one hundred and eighty thousand francs instead of thirty mil lions. A like observation applies to the two millions for the expenses of repairs, &c.; for even if new machines were to be bought every year instead of repairing the old ones, still they would only cost six hundred thousand francs. Nor would the circulating capital cost any thing like two millions; for of what is this sum composed, according to M. Sismondi's hypothesis? Of the original materials, which he estimates at ten millions, and the wages, for which he allows one million: altogether eleven millions, the interest whereof at five per cent is five hundred and fifty thousand francs. But as in this business the manufactures may be completed and sold in less than six months, the capital paid for the year may be employed twice, and would cost each time only two hundred and seventy-five thousand francs instead of two millions. All these expenses together make only 30 millions for the interest of the capi- twelve millions fifty-five thousand francs, instead of fifty millions, which, according to M. de Sismondi's suppositions, would be the costs of the stockings made by the knitting-needles. I am far from supposing that the saving would be so enormous, for while the author has greatly exaggerated the capital requisite for the machines, he has attributed to them a degree of efficacy far beyond their actual power, in supposing they would enable twelve hundred workmen to do the work of a hundred thousand; but I say, that if the saving in this production were really so great, the low price of the stockings, or any other article of clothing produced under similar circumstances, would operate so favourably in extending the consumption, that instead of the hundred thousand supposed labourers being reduced to twelve hundred, their number would in all probability be doubled. And if the consumption of this particular article would not admit of so excessive a multiplication of the same commodity, the demand for other kinds of produce would be increased in proportion; for observe, that after the introduction of the machines, the society retains the same revenues as before; that is to say, the same number of labourers, the same amount of capital, the same landed possessions. Now, if instead of devoting, out of this mass of revenue, fifty millions to the purchase of stockings, the introduction of the frames should make it no longer necessary to lay out more than twelve in this article, the thirty-eight millions remaining would be applicable to the purchase of other articles of consumption, if not to the extension of the same manufacture. These arguments we learn from principles, and they are confirmed by experience. The distress endured by the population of England, which M. de Sismondi laments with the feeling of a true philanthropist, originates in other causes it is chiefly caused by the poorlaws of that country; and, as I have before observed, by a mass of taxes, which renders production too expensive; so that when goods are offered for sale, the incomes of a great proportion of consumers are insufficient to enable them to pay the prices which the manufacturer or producer is absolutely compelled to demand. LETTER V. SIR, IN reading your Principles of Political Economy, the first object which NEW MONTHLY MAG.-No. 83. forcibly attracted my attention, was that You censure, and I think very justly, Lord Lauderdale's definition of wealth, "that it is all that man wishes for, as capable of being useful or agreeable," as too vague. I look for the definition which you propose to substitute for his Lordship's, and I find that you denominate wealth all the material objects which are necessary, useful, or agreeable to man (p. 28). The only difference which I observe between these two definitions, consists in the word material, which you add to that of Lord Lauderdale; and I must own this qualification does not seem to me founded in truth. You must surely anticipate my reasons. The great discovery of political economy, that which makes its everlasting value, is the demonstration that wealth may be created of all sorts of materials. Thenceforward mankind have known, or might have known, how to set about the task of acquiring those desirable means of gratifying their wishes. But, as I have already had occasion to observe, it is beyond the power of man to add one atom to the mass of materials of which the world is composed. If then man creates wealth, wealth cannot be matter; there is no medium. All that man can do, is by means of capital and land to change the combinations of matter, and give it the quality of utility; but utility is an immaterial quality. Nor is this all, VOL. XIV. 4 N Sir; I fear, that your definition does not contain the essential character of wealth. Permit me to enter into some explanations in support of my opinion. Adain Smith, and many others, have long since observed that a glass of water, which may be a most precious thing to a thirsty man, is not wealth. But it is a material object, necessary, useful, or agreeable to man. It agrees with all the terms of your definition; yet it is not wealth; at least, that species of wealth which forms the subject of our studies, and of your book. What is wanting to render it such? To have a value. There are then things which are natural riches, very precious to man; but which are not the wealth which is the subject of political economy. Can they be increased or consumed by its maxims? No; they are regulated by other laws. A glass of water is subject to the laws of physics: the attachment of our friends, our reputation in the world, depend on those of morals, and are uninfluenced by those of political economy. What then is the wealth to which this science relates? That which is susceptible of formation and destruction, of more and less ;—and what is signified by more or less, but value? You have been obliged to admit this in several places. You say, (page 340,) "It appears, then, that the wealth of a nation depends, partly, upon the quantity of produce obtained by its labour," (you should have said it depends wholly on this); and partly on the adaptation of its labour to the wants and means of the population, to the effect of giving value to its produce." And in the following page you are still more positive. After entering more deeply into the question, you allow that "it is evident that, in the actual state of things, the value of commodities may be considered as the only cause of the existence of wealth." How is it then, that this most essential condition of value, is entirely omitted in your definition? But this is not enough; our knowledge of the nature of wealth will be very imperfect, unless we succeed in giving a precise signification to this word value. In order to be very rich, have we only to set a very high value on our possessions? If I have built a house which I consider charming, and I choose to consider it worth a hundred thousand francs, am I really worth a hundred thousand francs as proprietor of this house? We receive a present from a person who is dear to us; this present is inestimable in our eyes: does it follow that it renders us immensely rich? You cannot, of course, imagine so. Before value can constitute wealth, it must be value recognized, not by the possessor only, but by some other person. Now, what unanswerable proof can be given that a value is recognized, except that people are willing to give in exchange for it a certain quantity of other things to which a value is attached. Notwithstanding my valuation of my house at a hundred thousand francs, if I can find no one who will give more than fifty thousand for it, I cannot maintain that it is worth a hundred thousand; it only makes me master of fifty thousand francs, or whatever can be purchased for that sum. Adam Smith, too, immediately after having observed that there are two sorts of values, and named them, (improperly enough, in my opinion,) the one, value in use, the other value in exchange, abandons the former altogether, and alludes, throughout the subsequent parts of his work, to exchangeable value only. You, Sir, have referred to this sort of value only*; so has Mr. Ricardo; so have I; so have we all; for this reason, that no other value is known in political economy; that this alone is subject to fixed laws, is formed, distributed, and destroyed according to invariable rules which may be scientifically studied. It necessarily follows that the price of every article being its exchangeable value estimated in money, there are none but current prices in political economy: what Smith calls natural prices, are not more natural than the rest: they are the costs of production; the current prices of productive services. You have, Sir, in Mr. Ricardo, a powerful and respectable auxiliary: He opposed you on the question of markets; he opposes you in that of values; but notwithstanding the terms on which he and I are, and the mutual esteem which we profess for each other, I have already dared to combat his reasonst; his primary objects as well "It is then evident that the value of commodities, that is to say, the sacrifice in labour, or any other article, which people consent to make for the purpose of obtaining ples of Political Economy, p. 341 them in exchange," &c.—Malthus, Princi + See M. Say's notes annexed to the French translation of Mr. Ricardo's Principles of Political Economy, by M. Constanció. |