per annum, when another
borrower
having little credit,
would give 7 or 8?
would give 7 or 8?
Ricardo - On The Principles of Political Economy, and Taxation
_ to 4_l.
_ 4_s.
_ 8_d.
_ If 10 men be
further employed, and the return be
160, the price will rise to £4 10 0
150, " " " " " 4 16 0
140, " " " " " 5 2 10
Now if no rent was paid for the land which yielded 180
quarters when corn was at 4_l. _ per quarter, the value of
10 quarters would be paid as rent when only 170 could be
procured, which, at 4_l. _ 4_s. _ 8_d. _ would be 42_l. _
7_s. _ 6_d. _
20 qrs. when 160 were produced, which at £4 10 0 would be £ 90 0 0
30 qrs. " 150 " " " " 4 16 0 " " 144 0 0
40 qrs. " 140 " " " " 5 2 10 " " 205 13 4
{100} { 100
Corn rent then would increase {200} and money rent in the { 212
in the proportion of {300} proportion of { 340
{400} { 485
[9] With Mr. Buchanan in the following passage, if it
refers to temporary states of misery, I so far agree, that
"the great evil of the labourer's condition, is poverty,
arising either from a scarcity of food or of work; and in
all countries, laws without number have been enacted for
his relief. But there are miseries in the social state
which legislation cannot relieve; and it is useful
therefore to know its limits, that we may not, by aiming
at what is impracticable, miss the good which is really in
our power. "--_Buchanan_, page 61.
[10] The reader is desired to bear in mind, that for the
purpose of making the subject more clear, I consider money
to be invariable in value, and therefore every variation
of price to be referable to an alteration in the value of
the commodity.
[11] The reader is aware, that we are leaving out of our
consideration the accidental variations arising from bad
and good seasons, or from the demand increasing or
diminishing by any sudden effect on the state of
population. We are speaking of the natural and constant,
not of the accidental and fluctuating price of corn.
[12] The 180 quarters of corn would be divided in the
following proportions between landlords, farmers, and
labourers, with the above-named variations in the value of
corn.
Price per qr. Rent. Profit. Wages. Total.
_£. s. d. _ In Wheat. In Wheat. In Wheat.
4 0 0 None. 120 qrs. 60 qrs. }
4 4 8 10 qrs. 111. 7 58. 3 }
4 10 0 20 103. 4 56. 6 } 180
4 16 0 30 95 55 }
5 2 10 40 86. 7 53. 5 }
and, under the same circumstances, money rent, wages, and
profit, would be as follows:
Price per qr. Rent. Profit. Wages. Total.
_£. s. d. _ _£. s. d. _ _£. s. d. _ _£. s. d. _ _£. s. d. _
4 0 0 None. 480 0 0 240 0 0 720 0 0
4 4 8 42 7 6 473 0 0 247 0 0 762 7 6
4 10 0 90 0 0 465 0 0 255 0 0 810 0 0
4 16 0 144 0 0 456 0 0 264 0 0 864 0 0
5 2 10 205 13 4 445 15 0 274 5 0 925 13 4
[13] See Adam Smith, book i. chap. 9.
[14] It will appear then, that a country possessing very
considerable advantages in machinery and skill, and which
may therefore be enabled to manufacture commodities with
much less labour than her neighbours, may in return for
such commodities, import a portion of the corn required
for its consumption, even if its land were more fertile,
and corn could be grown with less labour than in the
country from which it was imported. Two men can both make
shoes and hats, and one is superior to the other in both
employments; but in making hats, he can only exceed his
competitor by one-fifth or 20 per cent. , and in making
shoes he can excel him by one-third or 33 per cent. ;--will
it not be for the interest of both, that the superior man
should employ himself exclusively in making shoes, and the
inferior man in making hats?
[15] Book V. ch. ii.
[16] M. Say appears to have imbibed the general opinion on
this subject. Speaking of corn, he says, "thence it
results, that its price influences the price of _all_
other commodities. A farmer, a manufacturer, or a
merchant, employs a certain number of workmen, who all
have occasion to consume a certain quantity of corn. If
the price of corn rises, he is obliged to raise, in an
equal proportion, the price of his productions. " Vol. i.
p. 255.
[17] M. Say says, that "the tax, added to the price of a
commodity, raises its price. Every increase in the price
of a commodity, necessarily reduces the number of those
who are able to purchase it, or at least the quantity they
will consume of it. " This is by no means a necessary
consequence. I do not believe, that if bread were taxed,
the consumption of bread would be diminished, more than if
cloth, wine, or soap, were taxed.
[18] The following remark of the same author appears to me
equally erroneous: "When a high duty is laid on cotton,
the production of all those goods, of which cotton is the
basis, is diminished. If the total value added to cotton
in its various manufactures, in a particular country,
amounted to 100 millions of francs per annum, and the
effect of the tax was, to diminish the consumption one
half, then the tax would deprive that country every year
of 50 millions of francs, in addition to the sum received
by government. " Vol. ii. p. 314.
[19] It is observed by M. Say, "that a manufacturer is not
enabled to make the consumer pay the whole tax levied on
his commodity, because its increased price will diminish
its consumption. " Should this be the case, should the
consumption be diminished, will not the supply also
speedily be diminished? Why should the manufacturer
continue in the trade if his profits are below the general
level? M. Say appears here also to have forgotten the
doctrine which he elsewhere supports, "that the cost of
production determines the price, below which commodities
cannot fall for any length of time, because production
would then be either suspended or diminished. "--Vol. ii.
p. 26.
"The tax in this case falls then partly on the consumer
who is obliged to give more for the commodity taxed, and
partly on the producer, who, after deducting the tax, will
receive less. The public treasury will be benefited by
what the purchaser pays in addition, and also by the
sacrifice which the producer is obliged to make of a part
of his profits. It is the effort of gunpowder, which acts
at the same time on the bullet which it projects, and on
the gun which it causes to recoil. " Vol. ii. p. 333.
[20] "Melon says, that the debts of a nation are debts due
from the right hand to the left, by which the body is not
weakened. It is true that the general wealth is not
diminished by the payment of the interest on arrears of
the debt: The dividends are a value which passes from the
hand of the contributor to the national creditor: Whether
it be the national creditor or the contributor who
accumulates or consumes it, is I agree of little
importance to the society; but the principal of the
debt--what has become of that? It exists no more. The
consumption which has followed the loan has annihilated a
capital which will never yield any further revenue. The
society is deprived not of the amount of interest, since
that passes from one hand to the other, but of the revenue
from a destroyed capital. This capital, if it had been
employed productively by him who lent it to the state,
would equally have yielded him an income, but that income
would have been derived from a real production, and would
not have been furnished from the pocket of a fellow
citizen. "--_Say_, vol. ii. p. 357. This is both conceived
and expressed in the true spirit of the science.
[21] "Manufacturing industry increases its produce in
proportion to the demand, and the price falls; _but the
produce of land cannot be so increased_; and a high price
is still necessary to prevent the consumption from
exceeding the supply. " _Buchanan_, vol. iv. p. 40. Is it
possible that Mr. Buchanan can seriously assert, that the
produce of the land cannot be increased, if the demand
increases?
[22] I wish the word "Profit" had been omitted. Dr. Smith
must suppose the profits of the tenants of these precious
vineyards to be above the general rate of profits. If they
were not, they would not pay the tax, unless they could
shift it either to the landlord or consumer.
[23] See note, p. 346.
[24] See note, p. 346.
[25] Vol. iii. p. 355.
[26] In a former part of this work, I have noticed the
difference between rent, properly so called, and the
remuneration paid to the landlord under that name, for the
advantages which the expenditure of his capital has
procured to his tenant; but I did not perhaps sufficiently
distinguish the difference which would arise from the
different modes in which this capital might be applied. As
a part of this capital, when once expended in the
improvement of a farm, is inseparably amalgamated with the
land, and tends to increase its productive powers, the
remuneration paid to the landlord for its use is strictly
of the nature of rent, and is subject to all the laws of
rent. Whether the improvement be made at the expense of
the landlord or the tenant, it will not be undertaken in
the first instance, unless there is a strong probability
that the return will at least be equal to the profit that
can be made by the disposition of any other equal capital;
but when once made, the return obtained will ever after be
wholly of the nature of rent, and will be subject to all
the variations of rent. Some of these expenses however,
only give advantages to the land for a limited period, and
do not add permanently to its productive powers: being
bestowed on buildings, and other perishable improvements,
they require to be constantly renewed, and therefore do
not obtain for the landlord any permanent addition to his
real rent.
[27] Adam Smith says, "that the difference between the
real and the nominal price of commodities and labour, is
not a matter of mere speculation, but may sometimes be of
considerable use in practice. " I agree with him; but the
real price of labour and commodities, is no more to be
ascertained by their price in goods, Adam Smith's real
measure, than by their price in gold and silver, his
nominal measure. The labourer is only paid a really high
price for his labour, when his wages will purchase the
produce of a great deal of labour.
[28] In vol. i. p. 108, M. Say infers, that silver is now
of the same value, as in the reign of Louis XIV. "because
the same quantity of silver will buy the same quantity of
corn. "
[29] "The first man who knew how to soften metals by fire,
is not the creator of the value which that process adds to
the melted metal. That value is the result of the physical
action of fire added to the industry and capital of those
who availed themselves of this knowledge. "
"From this error Smith has drawn this false result, that
the value of all productions represents the recent or
former labour of man, _or in other words, that riches are
nothing else but accumulated labour; from which, by a
second consequence, equally false, labour is the sole
measure of riches, or of the value of productions_. "[30]
The inferences with which M. Say concludes are his own,
and not Dr. Smith's; they are correct if no distinction be
made between value and riches: but though Adam Smith, who
defined riches to consist in the abundance of necessaries,
conveniences, and enjoyments of human life, would have
allowed that machines and natural agents might very
greatly add to the riches of a country, he would not have
allowed that they add any thing to value in exchange.
[30] Chap. iv. p. 31.
[31] M. Say, _Catechisme d'Economie Politique_, p. 99.
[32] Adam Smith speaks of Holland, as affording an
instance of the fall of profits from the accumulation of
capital, and from every employment being consequently
overcharged. "The Government there borrow at 2 per cent. ,
and private people of good credit, at 3 per cent. " But it
should be remembered, that Holland was obliged to import
almost all the corn which she consumed, and by imposing
heavy taxes on the necessaries of the labourer, she
further raised the wages of labour. These facts will
sufficiently account for the low rate of profits and
interest in Holland.
[33] Is the following quite consistent with M. Say's
principle? "The more disposable capitals are abundant in
proportion to the extent of employment for them, the more
will the rate of interest on loans of capital fall. "--Vol.
ii. p. 108. If capital to any extent can be employed by a
country, how can it be said to be abundant compared with
the extent of employment for it?
[34] Adam Smith says, that "When the produce of any
particular branch of industry exceeds what the demand of
the country requires, the surplus must be sent abroad, and
exchanged for something for which there is a demand at
home. _Without such exportation a part of the productive
labour of the country must cease, and the value of its
annual produce diminish. _ The land and labour of great
Britain produce generally more corn, woollens, and
hardware, than the demand of the home market requires. The
surplus part of them, therefore, must be sent abroad, and
exchanged for something for which there is a demand at
home. It is only by means of such exportation, that this
surplus can acquire a value sufficient to compensate the
labour and expense of producing it. " One would be led to
think by the above passage, that Adam Smith concluded we
were under some necessity of producing a surplus of corn,
woollen goods, and hardware, and that the capital which
produced them could not be otherwise employed. It is,
however, always a matter of choice in what way a capital
shall be employed, and therefore there can never, for any
length of time, be a surplus of any commodity; for if
there were, it would fall below its natural price, and
capital would be removed to some more profitable
employment. No writer has more satisfactorily and ably
shewn than Dr. Smith, the tendency of capital to move from
employments in which the goods produced do not repay by
their price the whole expenses, including the ordinary
profits, of producing and bringing them to market. [35]
[35] See Chap. 10. Book I.
[36] "All kinds of public loans," observes M. Say, "are
attended with the inconvenience of withdrawing capital, or
portions of capital, from productive employments, to
devote them to consumption; and when they take place in a
country, _the Government of which does not inspire much
confidence_, they have the further inconvenience of
raising the interest of capital. Who would lend at 5 per
cent. per annum to agriculture, to manufacturers, and to
commerce, when a borrower may be found ready to pay an
interest of 7 or 8 per cent. ? That sort of income, which
is called profit of stock, would rise then at the expense
of the consumer. Consumption would be reduced by the rise
in the price of produce; and the other productive services
would be less in demand, less well paid. The whole nation,
capitalists excepted, would be the sufferers from such a
state of things. " To the question: "who would lend money
to farmers, manufacturers, and merchants, at 5 per cent.
per annum, when another borrower having little credit,
would give 7 or 8? " I reply, that every prudent and
reasonable man would. Because the rate of interest is 7 or
8 per cent. there where the lender runs extraordinary
risk, is this any reason that it should be equally high in
those places where they are secured from such risks? M.
Say allows, that the rate of interest depends on the rate
of profits; but it does not therefore follow, that the
rate of profits depends on the rate of interest. One is
the cause, the other the effect, and it is impossible for
any circumstances to make them change places.
[37] In another place he says, that "whatever extension of
the foreign market can be occasioned by the bounty, must,
in every particular year, be altogether at the expense of
the home market; as every bushel of corn which is exported
by means of the bounty, and which would not have been
exported without the bounty, would have remained in the
home market to increase the consumption, and to lower the
price of that commodity. The corn bounty, it is to be
observed, as well as every other bounty upon exportation,
imposes two different taxes upon the people; first, the
tax which they are obliged to contribute, in order to pay
the bounty; and, secondly, the tax which arises from the
advanced price of the commodity in the home market, and
which, as the whole body of the people are purchasers of
corn, must in this particular commodity be paid by the
whole body of the people. In this particular commodity,
therefore, this second tax is by much the heaviest of the
two. " "For every five shillings, therefore, which they
contribute to the payment of the first tax, they must
contribute six pounds four shillings to the payment of the
second. " "The extraordinary exportation of corn,
therefore, occasioned by the bounty, not only in every
particular year diminishes the home, just as much as it
extends the foreign market and consumption, but, by
restraining the population and industry of the country,
its final tendency is to stunt and restrain the gradual
extension of the home market, and thereby, in the long
run, rather to diminish than to augment the whole market
and consumption of corn. "
[38] The same opinion is held by M. Say. Vol. ii. p. 335.
[39] See Chap. on Rent.
[40] M. Say supposes the advantage of the manufacturers at
home to be more than temporary. "A Government which
absolutely prohibits the importation of certain foreign
goods, establishes a monopoly _in favour of those_ who
produce such commodities at home, _against those_ who
consume them; in other words, those at home who produce
them having the exclusive privilege of selling them, may
elevate their price above the natural price; and the
consumers at home, not being able to obtain them
elsewhere, are obliged to purchase them at a higher
price. " Vol. i. p. 201.
But how can they permanently support the market price of
their goods above the natural price, when every one of
their fellow citizens is free to enter into the trade?
they are guaranteed against foreign, but not against home
competition. The real evil arising to the country from
such monopolies, if they can be called by that name, lies,
not in raising the market price of such goods, but in
raising their real and natural price. By increasing the
cost of production, a portion of the labour of the country
is less productively employed.
[41] Are not the following passages contradictory to the
one above quoted? "Besides, that home trade, though less
noticed, (because it is in a variety of hands) is the most
considerable, it is also the most profitable. The
commodities exchanged in that trade are necessarily the
productions of the same country. " Vol. i. p. 84.
"The English Government has not observed, that the most
profitable sales are those which a country makes to
itself, because they cannot take place, without two values
being produced by the nation; the value which is sold, and
the value with which the purchase is made. " Vol. i. p.
221.
I shall, in the 24th chapter, examine the soundness of
this opinion.
[42] See page 198.
[43] M. Say is of the same opinion with Adam Smith: "The
most productive employment of capital, for the country in
general, after that on the land, is that of manufactures
and of home trade; because it puts in activity an industry
of which the profits are gained in the country, while
those capitals which are employed in foreign commerce,
make the industry and lands of all countries to be
productive, without distinction.
"The employment of capital, the least favourable to a
nation, is that of carrying the produce of one foreign
country to another. " _Say_, vol. ii. p. 120.
[44] "It is fortunate that the natural course of things
draws capital, not to those employments where the greatest
profits are made, but to those where their operation is
most profitable to the community. "--Vol. ii. p. 122. M.
Say has not told us what those employments are, which,
while they are the most profitable to the individual, are
not the most profitable to the state. If countries with
limited capitals, but with abundance of fertile land, do
not early engage in foreign trade, the reason is, because
it is less profitable to individuals, and therefore also
less profitable to the state.
[45] "The use of gold and silver then establishes in every
place a certain necessity for these commodities; and when
the country possesses the quantity necessary to satisfy
this want, all that is further imported, not being in
demand, is unfruitful in value, and of no use to its
owners. "--_Say_, vol. i. p. 187.
In page 196, M. Say says, that supposing a country to
require 1000 carriages, and to be possessed of 1500--all
above 1000 would be useless; and thence he infers, that if
it possesses more money than is _necessary_, the overplus
will not be employed.
[46] Whatever I say of gold coin, is equally applicable to
silver coin; but it is not necessary to mention both on
every occasion.
[47] "In the transactions of Government with individuals,
and in those of individuals between themselves, a piece of
money is never received, whatever denomination may be
given to it, but at its intrinsic value, increased by the
value of the utility which the impression it bears has
added to it. "--_Say_, vol. i. p. 327.
"Money is so little a mark of value, that if the pieces of
money lose a part of their value by friction, from use, or
by the knavery of the clippers of money, all goods rise in
price in proportion to the alteration which they have
experienced; and if Government orders a recoinage, and
restores each piece to its legal weight and fineness,
goods will fall to their former price; if they have not
been exposed to variations from other causes. "--_Say_,
vol. i. p. 346.
[48] M. Say recommends that the seignorage should vary
according to the quantity of business that the mint might
be called upon to perform.
"Government should not coin the bullion of individuals
except on payment, not only of the expenses, but also of
the profits of coining. This profit might be carried to a
considerable height, in consequence of the exclusive
privilege of coining; but it must vary according to the
circumstances of the mint, and the quantity required for
circulation. " Vol. i. p. 380.
Such a regulation would be extremely pernicious, and would
expose us to considerable and unnecessary variation in the
bullion value of the currency.
[49] If with the quantity of gold and silver which
actually exists, these metals only served for the
manufacture of utensils and ornaments, they would be
abundant, and would be much cheaper than they are at
present; in other words, in exchanging them for any other
species of goods, we should be obliged to give
proportionally a greater quantity of them. But as a large
quantity of these metals is used for money, and as this
portion is used for no other purpose, there remains less
to be employed in furniture and jewellery; now this
scarcity adds to their value. --_Say_, vol. i. p. 316. See
also note to p. 78.
[50] An Inquiry into the Nature and Origin of Public
Wealth, page 13.
[51] An Inquiry into the Nature and Progress of Rent, p.
15.
[52] See page 124, where I have endeavoured to shew, that
whatever facility or difficulty there may be in the
production of corn; wages and profits together will be of
the same value. When wages rise, it is always at the
expense of profits, and when they fall, profits always
rise.
[53] Of what increased quantity does Mr. Malthus speak?
Who is to produce it? Who can have any motive to produce
it, before any demand exists for an additional quantity?
[54] Inquiry, &c. "In all progressive countries, the
average price of corn is never higher than what is
necessary to continue the average increase of produce. "
Observations, p. 21.
"In the employment of fresh capital upon the land, to
provide for the wants of an increasing population, whether
this fresh capital is employed in bringing more land under
the plough, or improving land already in cultivation, the
main question always depends upon the expected returns of
this capital; and no part of the gross profits can be
diminished, without diminishing the motive to this mode of
employing it. Every diminution of price, not fully and
immediately balanced by a proportioned fall in all the
necessary expenses of a farm, every tax on the land, every
tax on farming stock, every tax on the necessaries of
farmers, will tell in the computation; and if, after all
these outgoings are allowed for, the price of the produce
will not leave a fair remuneration for the capital
employed, according to the general rate of profits, and a
rent at least equal to the rent of the land in its former
state, no sufficient motive can exist to undertake the
projected improvement. " Observations, p. 22.
[55] See p. 124.
[56] See p. 70, &c.
[57] It is not necessary to state on every occasion, but
it must be always understood, that the same effect will be
produced by employing different, but equal portions of
capital on the land already in cultivation, with different
results. Rent is the difference of produce obtained with
equal capitals, and with equal labour on the same, or on
different qualities of land.
[58] Observations on the Corn Laws, p. 4.
[59] Upon shewing this passage to Mr. Malthus, at the time
when these papers were going to the press, he observed,
"that in these two instances he had inadvertently used the
term _real price_, instead of _cost of production_. " It
will be seen from what I have already said, that to me it
appears, that in these two instances he has used the term
_real price_ in its true and just acceptation, and that in
the former case only it is incorrectly applied.
[60] Page 40.
[61] Manufactures, indeed, could not fall in any such
proportion, because, under the circumstances supposed,
there would be a new distribution of the precious metals
among the different countries. Our cheap commodities would
be exported in exchange for corn and gold, till the
accumulation of gold should lower its value, and raise the
money price of commodities.
[62] The Grounds of an Opinion, &c. page 36.
[63] Mr. Malthus, in another part of the same work,
supposes commodities to vary 25 or 20 per cent. when corn
varies 33-1/3.
[64] In Chap. 24. I have observed, that the real resources
of a country, and its ability to pay taxes, depend on its
net, and not on its gross income.
[65] This is on the supposition that money continued at
the same value. In the last note, I have endeavoured to
shew that money would not continue of the same
value,--that it would fall, from increased importation; a
fact which is much more favourable to my argument.
[66] Mr. M'Culloch, in an able publication, has very
strongly contended for the justice of making the dividends
on the national debt conform to the reduced value of corn.
He is in favour of a free trade in corn, but he thinks it
should be accompanied by a reduction of interest to the
national creditor.
THE END.
ERRATA.
_Page_ 190, _line_ 8, _for_ obtained, _read_ attained.
521, _line_ 20, _for_ twenty-one shillings, _read_ forty-two
shillings.
543, _last line_, _for_ give, _read_ spend.
555, _last line_, _for_ rent money, _read_ money rent.
INDEX.
A.
_Accumulation_ of capital, effects of, on the relative value of
commodities, 16-42.
And on profits and interest, 398-416.
_Agriculture_, effects of improvements in, on rents, 70-76.
Is affected by the distress proceeding from sudden revulsions
of trade, 368-372.
Agricultural improvements, no cause of the increase of rent,
570, 571.
B.
_Banks_, establishment of, affects the sole power of the state
in coining money, 502.
Consequence of the Bank of England issuing too great a quantity
of paper, 503-506.
The assistance given by the Bank of England to commerce, accounted
for, 513, 514. --See _Paper Currency_.
_Bounties_, on the exportation of corn, lower its price to the foreign
consumer, 417-427.
Effects of a bounty in raising the price of corn, illustrated, 428.
Though such bounty may cause a partial degradation in the value
of money, yet such degradation cannot be permanent, 432-434.
Bounties on the exportation of manufactures raise their _market_ but
not their _natural_ price, 436-438.
The sole effect of bounty is to divert a portion of capital to an
employment which it would not naturally seek, 438.
Evils of such a system, 439-445.
A bounty on the production of corn, will produce no real effect on
the annual produce of the land and labour of the country, though
it would make corn relatively cheap, and manufactures relatively
dear, 449-455.
But the effect of a tax on corn, in order to afford a fund for a
bounty on the production of commodities, would be to enhance the
price of corn, and render commodities cheap, 456, 457.
_Buchanan_ (Mr. ), observations of, on Adam Smith's doctrine of
productive and unproductive labour, 64-66, _note_.
Remarks on his opinions respecting bounties on exportation, 440-442.
C.
_Capital_, nature of, effects of the accumulation of, on the relative
value of commodities investigated, 16.
Effects of, in a savage or infant state of society, 17, 18, 23, 24.
And in a more advanced state of society, 19-21.
The relative values of _circulating_ and _fixed_ capitals
considered, 22, 23.
The distinction between circulating and fixed capitals difficult
to be strictly defined, 186, 187.
Considerations on the different modes of employing it, 83-88.
The increase of capital in quantity and value, productive of a
rise in the natural price of wages, 94, 95.
Increase of capital in quantity only, productive of a rise in
the market price of wages, _ibid. _
Effects of the accumulation of capital on profits and interest,
398-416.
The sole effect of bounties on exportation, upon capital, is to
divert a portion of it to an employment which it would not
naturally seek, 438. Remarks on such effect, 439-445.
The profits, made by the employment of capital, regulate the rate
of interest for money, 512, 513.
_Carrying trade_, observations on, 407.
_Circulation_ of money can never overflow, and why, 500, 501.
Circulation of Paper, see _Paper Currency_.
_Colonial Trade_, observations on, 476, 477.
Proofs, that trade with a colony may be so regulated as to be less
beneficial to the colony, and more beneficial to the mother
country, than a perfectly free trade, 477-486.
Benefits of a colonial trade, 487-490.
_Commodities_, gold and silver an insufficient medium for determining
the varying value of, 7, 8.
Corn, an inadequate standard of the value of, 9-12.
The effects of an accumulation of capital on the relative value of
commodities, considered, 16-42.
Effects of a rise in wages on their value, 43, 44, and of the
payment of rent, 45, 46.
Their exchangeable value regulated by the greater quantity of labour
bestowed on their production by those who labour under the most
unfavourable circumstances, 59, 60.
The prices of commodities not necessarily increased by a rise in the
price of labour, 109, 110.
The cost of production regulates the price of commodities, 542, 567,
568, 572, 573.
_Corn_, a variable standard for determining the varying value of
things, 7-12.
Effects of the price of, on rent, 67-70.
Corn-rents materially affected by tithes, 227.
Advantage resulting from the relatively low price of corn, 373.
Bounties on the exportation of it, lower its price to the foreign
consumer, 417-427.
Effects of a bounty in raising the price of corn, 428.
A bounty on the production of, productive of no real effect on the
annual produce of the land and labour of the country, 449-455.
further employed, and the return be
160, the price will rise to £4 10 0
150, " " " " " 4 16 0
140, " " " " " 5 2 10
Now if no rent was paid for the land which yielded 180
quarters when corn was at 4_l. _ per quarter, the value of
10 quarters would be paid as rent when only 170 could be
procured, which, at 4_l. _ 4_s. _ 8_d. _ would be 42_l. _
7_s. _ 6_d. _
20 qrs. when 160 were produced, which at £4 10 0 would be £ 90 0 0
30 qrs. " 150 " " " " 4 16 0 " " 144 0 0
40 qrs. " 140 " " " " 5 2 10 " " 205 13 4
{100} { 100
Corn rent then would increase {200} and money rent in the { 212
in the proportion of {300} proportion of { 340
{400} { 485
[9] With Mr. Buchanan in the following passage, if it
refers to temporary states of misery, I so far agree, that
"the great evil of the labourer's condition, is poverty,
arising either from a scarcity of food or of work; and in
all countries, laws without number have been enacted for
his relief. But there are miseries in the social state
which legislation cannot relieve; and it is useful
therefore to know its limits, that we may not, by aiming
at what is impracticable, miss the good which is really in
our power. "--_Buchanan_, page 61.
[10] The reader is desired to bear in mind, that for the
purpose of making the subject more clear, I consider money
to be invariable in value, and therefore every variation
of price to be referable to an alteration in the value of
the commodity.
[11] The reader is aware, that we are leaving out of our
consideration the accidental variations arising from bad
and good seasons, or from the demand increasing or
diminishing by any sudden effect on the state of
population. We are speaking of the natural and constant,
not of the accidental and fluctuating price of corn.
[12] The 180 quarters of corn would be divided in the
following proportions between landlords, farmers, and
labourers, with the above-named variations in the value of
corn.
Price per qr. Rent. Profit. Wages. Total.
_£. s. d. _ In Wheat. In Wheat. In Wheat.
4 0 0 None. 120 qrs. 60 qrs. }
4 4 8 10 qrs. 111. 7 58. 3 }
4 10 0 20 103. 4 56. 6 } 180
4 16 0 30 95 55 }
5 2 10 40 86. 7 53. 5 }
and, under the same circumstances, money rent, wages, and
profit, would be as follows:
Price per qr. Rent. Profit. Wages. Total.
_£. s. d. _ _£. s. d. _ _£. s. d. _ _£. s. d. _ _£. s. d. _
4 0 0 None. 480 0 0 240 0 0 720 0 0
4 4 8 42 7 6 473 0 0 247 0 0 762 7 6
4 10 0 90 0 0 465 0 0 255 0 0 810 0 0
4 16 0 144 0 0 456 0 0 264 0 0 864 0 0
5 2 10 205 13 4 445 15 0 274 5 0 925 13 4
[13] See Adam Smith, book i. chap. 9.
[14] It will appear then, that a country possessing very
considerable advantages in machinery and skill, and which
may therefore be enabled to manufacture commodities with
much less labour than her neighbours, may in return for
such commodities, import a portion of the corn required
for its consumption, even if its land were more fertile,
and corn could be grown with less labour than in the
country from which it was imported. Two men can both make
shoes and hats, and one is superior to the other in both
employments; but in making hats, he can only exceed his
competitor by one-fifth or 20 per cent. , and in making
shoes he can excel him by one-third or 33 per cent. ;--will
it not be for the interest of both, that the superior man
should employ himself exclusively in making shoes, and the
inferior man in making hats?
[15] Book V. ch. ii.
[16] M. Say appears to have imbibed the general opinion on
this subject. Speaking of corn, he says, "thence it
results, that its price influences the price of _all_
other commodities. A farmer, a manufacturer, or a
merchant, employs a certain number of workmen, who all
have occasion to consume a certain quantity of corn. If
the price of corn rises, he is obliged to raise, in an
equal proportion, the price of his productions. " Vol. i.
p. 255.
[17] M. Say says, that "the tax, added to the price of a
commodity, raises its price. Every increase in the price
of a commodity, necessarily reduces the number of those
who are able to purchase it, or at least the quantity they
will consume of it. " This is by no means a necessary
consequence. I do not believe, that if bread were taxed,
the consumption of bread would be diminished, more than if
cloth, wine, or soap, were taxed.
[18] The following remark of the same author appears to me
equally erroneous: "When a high duty is laid on cotton,
the production of all those goods, of which cotton is the
basis, is diminished. If the total value added to cotton
in its various manufactures, in a particular country,
amounted to 100 millions of francs per annum, and the
effect of the tax was, to diminish the consumption one
half, then the tax would deprive that country every year
of 50 millions of francs, in addition to the sum received
by government. " Vol. ii. p. 314.
[19] It is observed by M. Say, "that a manufacturer is not
enabled to make the consumer pay the whole tax levied on
his commodity, because its increased price will diminish
its consumption. " Should this be the case, should the
consumption be diminished, will not the supply also
speedily be diminished? Why should the manufacturer
continue in the trade if his profits are below the general
level? M. Say appears here also to have forgotten the
doctrine which he elsewhere supports, "that the cost of
production determines the price, below which commodities
cannot fall for any length of time, because production
would then be either suspended or diminished. "--Vol. ii.
p. 26.
"The tax in this case falls then partly on the consumer
who is obliged to give more for the commodity taxed, and
partly on the producer, who, after deducting the tax, will
receive less. The public treasury will be benefited by
what the purchaser pays in addition, and also by the
sacrifice which the producer is obliged to make of a part
of his profits. It is the effort of gunpowder, which acts
at the same time on the bullet which it projects, and on
the gun which it causes to recoil. " Vol. ii. p. 333.
[20] "Melon says, that the debts of a nation are debts due
from the right hand to the left, by which the body is not
weakened. It is true that the general wealth is not
diminished by the payment of the interest on arrears of
the debt: The dividends are a value which passes from the
hand of the contributor to the national creditor: Whether
it be the national creditor or the contributor who
accumulates or consumes it, is I agree of little
importance to the society; but the principal of the
debt--what has become of that? It exists no more. The
consumption which has followed the loan has annihilated a
capital which will never yield any further revenue. The
society is deprived not of the amount of interest, since
that passes from one hand to the other, but of the revenue
from a destroyed capital. This capital, if it had been
employed productively by him who lent it to the state,
would equally have yielded him an income, but that income
would have been derived from a real production, and would
not have been furnished from the pocket of a fellow
citizen. "--_Say_, vol. ii. p. 357. This is both conceived
and expressed in the true spirit of the science.
[21] "Manufacturing industry increases its produce in
proportion to the demand, and the price falls; _but the
produce of land cannot be so increased_; and a high price
is still necessary to prevent the consumption from
exceeding the supply. " _Buchanan_, vol. iv. p. 40. Is it
possible that Mr. Buchanan can seriously assert, that the
produce of the land cannot be increased, if the demand
increases?
[22] I wish the word "Profit" had been omitted. Dr. Smith
must suppose the profits of the tenants of these precious
vineyards to be above the general rate of profits. If they
were not, they would not pay the tax, unless they could
shift it either to the landlord or consumer.
[23] See note, p. 346.
[24] See note, p. 346.
[25] Vol. iii. p. 355.
[26] In a former part of this work, I have noticed the
difference between rent, properly so called, and the
remuneration paid to the landlord under that name, for the
advantages which the expenditure of his capital has
procured to his tenant; but I did not perhaps sufficiently
distinguish the difference which would arise from the
different modes in which this capital might be applied. As
a part of this capital, when once expended in the
improvement of a farm, is inseparably amalgamated with the
land, and tends to increase its productive powers, the
remuneration paid to the landlord for its use is strictly
of the nature of rent, and is subject to all the laws of
rent. Whether the improvement be made at the expense of
the landlord or the tenant, it will not be undertaken in
the first instance, unless there is a strong probability
that the return will at least be equal to the profit that
can be made by the disposition of any other equal capital;
but when once made, the return obtained will ever after be
wholly of the nature of rent, and will be subject to all
the variations of rent. Some of these expenses however,
only give advantages to the land for a limited period, and
do not add permanently to its productive powers: being
bestowed on buildings, and other perishable improvements,
they require to be constantly renewed, and therefore do
not obtain for the landlord any permanent addition to his
real rent.
[27] Adam Smith says, "that the difference between the
real and the nominal price of commodities and labour, is
not a matter of mere speculation, but may sometimes be of
considerable use in practice. " I agree with him; but the
real price of labour and commodities, is no more to be
ascertained by their price in goods, Adam Smith's real
measure, than by their price in gold and silver, his
nominal measure. The labourer is only paid a really high
price for his labour, when his wages will purchase the
produce of a great deal of labour.
[28] In vol. i. p. 108, M. Say infers, that silver is now
of the same value, as in the reign of Louis XIV. "because
the same quantity of silver will buy the same quantity of
corn. "
[29] "The first man who knew how to soften metals by fire,
is not the creator of the value which that process adds to
the melted metal. That value is the result of the physical
action of fire added to the industry and capital of those
who availed themselves of this knowledge. "
"From this error Smith has drawn this false result, that
the value of all productions represents the recent or
former labour of man, _or in other words, that riches are
nothing else but accumulated labour; from which, by a
second consequence, equally false, labour is the sole
measure of riches, or of the value of productions_. "[30]
The inferences with which M. Say concludes are his own,
and not Dr. Smith's; they are correct if no distinction be
made between value and riches: but though Adam Smith, who
defined riches to consist in the abundance of necessaries,
conveniences, and enjoyments of human life, would have
allowed that machines and natural agents might very
greatly add to the riches of a country, he would not have
allowed that they add any thing to value in exchange.
[30] Chap. iv. p. 31.
[31] M. Say, _Catechisme d'Economie Politique_, p. 99.
[32] Adam Smith speaks of Holland, as affording an
instance of the fall of profits from the accumulation of
capital, and from every employment being consequently
overcharged. "The Government there borrow at 2 per cent. ,
and private people of good credit, at 3 per cent. " But it
should be remembered, that Holland was obliged to import
almost all the corn which she consumed, and by imposing
heavy taxes on the necessaries of the labourer, she
further raised the wages of labour. These facts will
sufficiently account for the low rate of profits and
interest in Holland.
[33] Is the following quite consistent with M. Say's
principle? "The more disposable capitals are abundant in
proportion to the extent of employment for them, the more
will the rate of interest on loans of capital fall. "--Vol.
ii. p. 108. If capital to any extent can be employed by a
country, how can it be said to be abundant compared with
the extent of employment for it?
[34] Adam Smith says, that "When the produce of any
particular branch of industry exceeds what the demand of
the country requires, the surplus must be sent abroad, and
exchanged for something for which there is a demand at
home. _Without such exportation a part of the productive
labour of the country must cease, and the value of its
annual produce diminish. _ The land and labour of great
Britain produce generally more corn, woollens, and
hardware, than the demand of the home market requires. The
surplus part of them, therefore, must be sent abroad, and
exchanged for something for which there is a demand at
home. It is only by means of such exportation, that this
surplus can acquire a value sufficient to compensate the
labour and expense of producing it. " One would be led to
think by the above passage, that Adam Smith concluded we
were under some necessity of producing a surplus of corn,
woollen goods, and hardware, and that the capital which
produced them could not be otherwise employed. It is,
however, always a matter of choice in what way a capital
shall be employed, and therefore there can never, for any
length of time, be a surplus of any commodity; for if
there were, it would fall below its natural price, and
capital would be removed to some more profitable
employment. No writer has more satisfactorily and ably
shewn than Dr. Smith, the tendency of capital to move from
employments in which the goods produced do not repay by
their price the whole expenses, including the ordinary
profits, of producing and bringing them to market. [35]
[35] See Chap. 10. Book I.
[36] "All kinds of public loans," observes M. Say, "are
attended with the inconvenience of withdrawing capital, or
portions of capital, from productive employments, to
devote them to consumption; and when they take place in a
country, _the Government of which does not inspire much
confidence_, they have the further inconvenience of
raising the interest of capital. Who would lend at 5 per
cent. per annum to agriculture, to manufacturers, and to
commerce, when a borrower may be found ready to pay an
interest of 7 or 8 per cent. ? That sort of income, which
is called profit of stock, would rise then at the expense
of the consumer. Consumption would be reduced by the rise
in the price of produce; and the other productive services
would be less in demand, less well paid. The whole nation,
capitalists excepted, would be the sufferers from such a
state of things. " To the question: "who would lend money
to farmers, manufacturers, and merchants, at 5 per cent.
per annum, when another borrower having little credit,
would give 7 or 8? " I reply, that every prudent and
reasonable man would. Because the rate of interest is 7 or
8 per cent. there where the lender runs extraordinary
risk, is this any reason that it should be equally high in
those places where they are secured from such risks? M.
Say allows, that the rate of interest depends on the rate
of profits; but it does not therefore follow, that the
rate of profits depends on the rate of interest. One is
the cause, the other the effect, and it is impossible for
any circumstances to make them change places.
[37] In another place he says, that "whatever extension of
the foreign market can be occasioned by the bounty, must,
in every particular year, be altogether at the expense of
the home market; as every bushel of corn which is exported
by means of the bounty, and which would not have been
exported without the bounty, would have remained in the
home market to increase the consumption, and to lower the
price of that commodity. The corn bounty, it is to be
observed, as well as every other bounty upon exportation,
imposes two different taxes upon the people; first, the
tax which they are obliged to contribute, in order to pay
the bounty; and, secondly, the tax which arises from the
advanced price of the commodity in the home market, and
which, as the whole body of the people are purchasers of
corn, must in this particular commodity be paid by the
whole body of the people. In this particular commodity,
therefore, this second tax is by much the heaviest of the
two. " "For every five shillings, therefore, which they
contribute to the payment of the first tax, they must
contribute six pounds four shillings to the payment of the
second. " "The extraordinary exportation of corn,
therefore, occasioned by the bounty, not only in every
particular year diminishes the home, just as much as it
extends the foreign market and consumption, but, by
restraining the population and industry of the country,
its final tendency is to stunt and restrain the gradual
extension of the home market, and thereby, in the long
run, rather to diminish than to augment the whole market
and consumption of corn. "
[38] The same opinion is held by M. Say. Vol. ii. p. 335.
[39] See Chap. on Rent.
[40] M. Say supposes the advantage of the manufacturers at
home to be more than temporary. "A Government which
absolutely prohibits the importation of certain foreign
goods, establishes a monopoly _in favour of those_ who
produce such commodities at home, _against those_ who
consume them; in other words, those at home who produce
them having the exclusive privilege of selling them, may
elevate their price above the natural price; and the
consumers at home, not being able to obtain them
elsewhere, are obliged to purchase them at a higher
price. " Vol. i. p. 201.
But how can they permanently support the market price of
their goods above the natural price, when every one of
their fellow citizens is free to enter into the trade?
they are guaranteed against foreign, but not against home
competition. The real evil arising to the country from
such monopolies, if they can be called by that name, lies,
not in raising the market price of such goods, but in
raising their real and natural price. By increasing the
cost of production, a portion of the labour of the country
is less productively employed.
[41] Are not the following passages contradictory to the
one above quoted? "Besides, that home trade, though less
noticed, (because it is in a variety of hands) is the most
considerable, it is also the most profitable. The
commodities exchanged in that trade are necessarily the
productions of the same country. " Vol. i. p. 84.
"The English Government has not observed, that the most
profitable sales are those which a country makes to
itself, because they cannot take place, without two values
being produced by the nation; the value which is sold, and
the value with which the purchase is made. " Vol. i. p.
221.
I shall, in the 24th chapter, examine the soundness of
this opinion.
[42] See page 198.
[43] M. Say is of the same opinion with Adam Smith: "The
most productive employment of capital, for the country in
general, after that on the land, is that of manufactures
and of home trade; because it puts in activity an industry
of which the profits are gained in the country, while
those capitals which are employed in foreign commerce,
make the industry and lands of all countries to be
productive, without distinction.
"The employment of capital, the least favourable to a
nation, is that of carrying the produce of one foreign
country to another. " _Say_, vol. ii. p. 120.
[44] "It is fortunate that the natural course of things
draws capital, not to those employments where the greatest
profits are made, but to those where their operation is
most profitable to the community. "--Vol. ii. p. 122. M.
Say has not told us what those employments are, which,
while they are the most profitable to the individual, are
not the most profitable to the state. If countries with
limited capitals, but with abundance of fertile land, do
not early engage in foreign trade, the reason is, because
it is less profitable to individuals, and therefore also
less profitable to the state.
[45] "The use of gold and silver then establishes in every
place a certain necessity for these commodities; and when
the country possesses the quantity necessary to satisfy
this want, all that is further imported, not being in
demand, is unfruitful in value, and of no use to its
owners. "--_Say_, vol. i. p. 187.
In page 196, M. Say says, that supposing a country to
require 1000 carriages, and to be possessed of 1500--all
above 1000 would be useless; and thence he infers, that if
it possesses more money than is _necessary_, the overplus
will not be employed.
[46] Whatever I say of gold coin, is equally applicable to
silver coin; but it is not necessary to mention both on
every occasion.
[47] "In the transactions of Government with individuals,
and in those of individuals between themselves, a piece of
money is never received, whatever denomination may be
given to it, but at its intrinsic value, increased by the
value of the utility which the impression it bears has
added to it. "--_Say_, vol. i. p. 327.
"Money is so little a mark of value, that if the pieces of
money lose a part of their value by friction, from use, or
by the knavery of the clippers of money, all goods rise in
price in proportion to the alteration which they have
experienced; and if Government orders a recoinage, and
restores each piece to its legal weight and fineness,
goods will fall to their former price; if they have not
been exposed to variations from other causes. "--_Say_,
vol. i. p. 346.
[48] M. Say recommends that the seignorage should vary
according to the quantity of business that the mint might
be called upon to perform.
"Government should not coin the bullion of individuals
except on payment, not only of the expenses, but also of
the profits of coining. This profit might be carried to a
considerable height, in consequence of the exclusive
privilege of coining; but it must vary according to the
circumstances of the mint, and the quantity required for
circulation. " Vol. i. p. 380.
Such a regulation would be extremely pernicious, and would
expose us to considerable and unnecessary variation in the
bullion value of the currency.
[49] If with the quantity of gold and silver which
actually exists, these metals only served for the
manufacture of utensils and ornaments, they would be
abundant, and would be much cheaper than they are at
present; in other words, in exchanging them for any other
species of goods, we should be obliged to give
proportionally a greater quantity of them. But as a large
quantity of these metals is used for money, and as this
portion is used for no other purpose, there remains less
to be employed in furniture and jewellery; now this
scarcity adds to their value. --_Say_, vol. i. p. 316. See
also note to p. 78.
[50] An Inquiry into the Nature and Origin of Public
Wealth, page 13.
[51] An Inquiry into the Nature and Progress of Rent, p.
15.
[52] See page 124, where I have endeavoured to shew, that
whatever facility or difficulty there may be in the
production of corn; wages and profits together will be of
the same value. When wages rise, it is always at the
expense of profits, and when they fall, profits always
rise.
[53] Of what increased quantity does Mr. Malthus speak?
Who is to produce it? Who can have any motive to produce
it, before any demand exists for an additional quantity?
[54] Inquiry, &c. "In all progressive countries, the
average price of corn is never higher than what is
necessary to continue the average increase of produce. "
Observations, p. 21.
"In the employment of fresh capital upon the land, to
provide for the wants of an increasing population, whether
this fresh capital is employed in bringing more land under
the plough, or improving land already in cultivation, the
main question always depends upon the expected returns of
this capital; and no part of the gross profits can be
diminished, without diminishing the motive to this mode of
employing it. Every diminution of price, not fully and
immediately balanced by a proportioned fall in all the
necessary expenses of a farm, every tax on the land, every
tax on farming stock, every tax on the necessaries of
farmers, will tell in the computation; and if, after all
these outgoings are allowed for, the price of the produce
will not leave a fair remuneration for the capital
employed, according to the general rate of profits, and a
rent at least equal to the rent of the land in its former
state, no sufficient motive can exist to undertake the
projected improvement. " Observations, p. 22.
[55] See p. 124.
[56] See p. 70, &c.
[57] It is not necessary to state on every occasion, but
it must be always understood, that the same effect will be
produced by employing different, but equal portions of
capital on the land already in cultivation, with different
results. Rent is the difference of produce obtained with
equal capitals, and with equal labour on the same, or on
different qualities of land.
[58] Observations on the Corn Laws, p. 4.
[59] Upon shewing this passage to Mr. Malthus, at the time
when these papers were going to the press, he observed,
"that in these two instances he had inadvertently used the
term _real price_, instead of _cost of production_. " It
will be seen from what I have already said, that to me it
appears, that in these two instances he has used the term
_real price_ in its true and just acceptation, and that in
the former case only it is incorrectly applied.
[60] Page 40.
[61] Manufactures, indeed, could not fall in any such
proportion, because, under the circumstances supposed,
there would be a new distribution of the precious metals
among the different countries. Our cheap commodities would
be exported in exchange for corn and gold, till the
accumulation of gold should lower its value, and raise the
money price of commodities.
[62] The Grounds of an Opinion, &c. page 36.
[63] Mr. Malthus, in another part of the same work,
supposes commodities to vary 25 or 20 per cent. when corn
varies 33-1/3.
[64] In Chap. 24. I have observed, that the real resources
of a country, and its ability to pay taxes, depend on its
net, and not on its gross income.
[65] This is on the supposition that money continued at
the same value. In the last note, I have endeavoured to
shew that money would not continue of the same
value,--that it would fall, from increased importation; a
fact which is much more favourable to my argument.
[66] Mr. M'Culloch, in an able publication, has very
strongly contended for the justice of making the dividends
on the national debt conform to the reduced value of corn.
He is in favour of a free trade in corn, but he thinks it
should be accompanied by a reduction of interest to the
national creditor.
THE END.
ERRATA.
_Page_ 190, _line_ 8, _for_ obtained, _read_ attained.
521, _line_ 20, _for_ twenty-one shillings, _read_ forty-two
shillings.
543, _last line_, _for_ give, _read_ spend.
555, _last line_, _for_ rent money, _read_ money rent.
INDEX.
A.
_Accumulation_ of capital, effects of, on the relative value of
commodities, 16-42.
And on profits and interest, 398-416.
_Agriculture_, effects of improvements in, on rents, 70-76.
Is affected by the distress proceeding from sudden revulsions
of trade, 368-372.
Agricultural improvements, no cause of the increase of rent,
570, 571.
B.
_Banks_, establishment of, affects the sole power of the state
in coining money, 502.
Consequence of the Bank of England issuing too great a quantity
of paper, 503-506.
The assistance given by the Bank of England to commerce, accounted
for, 513, 514. --See _Paper Currency_.
_Bounties_, on the exportation of corn, lower its price to the foreign
consumer, 417-427.
Effects of a bounty in raising the price of corn, illustrated, 428.
Though such bounty may cause a partial degradation in the value
of money, yet such degradation cannot be permanent, 432-434.
Bounties on the exportation of manufactures raise their _market_ but
not their _natural_ price, 436-438.
The sole effect of bounty is to divert a portion of capital to an
employment which it would not naturally seek, 438.
Evils of such a system, 439-445.
A bounty on the production of corn, will produce no real effect on
the annual produce of the land and labour of the country, though
it would make corn relatively cheap, and manufactures relatively
dear, 449-455.
But the effect of a tax on corn, in order to afford a fund for a
bounty on the production of commodities, would be to enhance the
price of corn, and render commodities cheap, 456, 457.
_Buchanan_ (Mr. ), observations of, on Adam Smith's doctrine of
productive and unproductive labour, 64-66, _note_.
Remarks on his opinions respecting bounties on exportation, 440-442.
C.
_Capital_, nature of, effects of the accumulation of, on the relative
value of commodities investigated, 16.
Effects of, in a savage or infant state of society, 17, 18, 23, 24.
And in a more advanced state of society, 19-21.
The relative values of _circulating_ and _fixed_ capitals
considered, 22, 23.
The distinction between circulating and fixed capitals difficult
to be strictly defined, 186, 187.
Considerations on the different modes of employing it, 83-88.
The increase of capital in quantity and value, productive of a
rise in the natural price of wages, 94, 95.
Increase of capital in quantity only, productive of a rise in
the market price of wages, _ibid. _
Effects of the accumulation of capital on profits and interest,
398-416.
The sole effect of bounties on exportation, upon capital, is to
divert a portion of it to an employment which it would not
naturally seek, 438. Remarks on such effect, 439-445.
The profits, made by the employment of capital, regulate the rate
of interest for money, 512, 513.
_Carrying trade_, observations on, 407.
_Circulation_ of money can never overflow, and why, 500, 501.
Circulation of Paper, see _Paper Currency_.
_Colonial Trade_, observations on, 476, 477.
Proofs, that trade with a colony may be so regulated as to be less
beneficial to the colony, and more beneficial to the mother
country, than a perfectly free trade, 477-486.
Benefits of a colonial trade, 487-490.
_Commodities_, gold and silver an insufficient medium for determining
the varying value of, 7, 8.
Corn, an inadequate standard of the value of, 9-12.
The effects of an accumulation of capital on the relative value of
commodities, considered, 16-42.
Effects of a rise in wages on their value, 43, 44, and of the
payment of rent, 45, 46.
Their exchangeable value regulated by the greater quantity of labour
bestowed on their production by those who labour under the most
unfavourable circumstances, 59, 60.
The prices of commodities not necessarily increased by a rise in the
price of labour, 109, 110.
The cost of production regulates the price of commodities, 542, 567,
568, 572, 573.
_Corn_, a variable standard for determining the varying value of
things, 7-12.
Effects of the price of, on rent, 67-70.
Corn-rents materially affected by tithes, 227.
Advantage resulting from the relatively low price of corn, 373.
Bounties on the exportation of it, lower its price to the foreign
consumer, 417-427.
Effects of a bounty in raising the price of corn, 428.
A bounty on the production of, productive of no real effect on the
annual produce of the land and labour of the country, 449-455.
