No More Learning

This
restless desire on the part of all the employers of stock, to quit a
less profitable for a more advantageous business, has a strong tendency
to equalize the rate of profits of all, or to fix them in such
proportions, as may in the estimation of the parties, compensate for
any advantage which one may have, or may appear to have over the other.
It is perhaps very difficult to trace the steps by which this change is
effected: it is probably effected, by a manufacturer not absolutely
changing his employment, but only lessening the quantity of capital he
has in that employment. In all rich countries, there is a number of men
forming what is called the monied class; these men are engaged in no
trade, but live on the interest of their money, which is employed in
discounting bills, or in loans to the more industrious part of the
community. The bankers too employ a large capital on the same objects.
The capital so employed forms a circulating capital of a large amount,
and is employed, in larger or smaller proportions, by all the different
trades of a country. There is perhaps no manufacturer, however rich, who
limits his business to the extent that his own funds alone will allow:
he has always some portion of this floating capital, increasing or
diminishing according to the activity of the demand for his commodities.
When the demand for silks increases, and that for cloth diminishes, the
clothier does not remove with his capital to the silk trade, but he
dismisses some of his workmen, he discontinues his demand for the loan
from bankers and monied men; while the case of the silk manufacturer is
the reverse: he wishes to employ more workmen, and thus his motive for
borrowing is increased: he borrows more, and thus capital is transferred
from one employment to another, without the necessity of a manufacturer
discontinuing his usual occupation. When we look to the markets of a
large town, and observe how regularly they are supplied both with home
and foreign commodities, in the quantity in which they are required,
under all the circumstances of varying demand, arising from the caprice
of taste, or a change in the amount of population, without often
producing either the effects of a glut from a too abundant supply, or an
enormously high price from the supply being unequal to the demand, we
must confess that the principle which apportions capital to each trade
in the precise amount that it is required, is more active than is
generally supposed.

A capitalist, in seeking profitable employment for his funds, will
naturally take into consideration all the advantages which one
occupation possesses over another. He may therefore be willing to forego
a part of his money profit, in consideration of the security,
cleanliness, ease, or any other real or fancied advantage which one
employment may possess over another.

If from a consideration of these circumstances, the profits of stock
should be so adjusted that in one trade they were 20, in another 25, and
in another 30 per cent. , they would probably continue permanently with
that relative difference, and with that difference only; for if any
cause should elevate the profits of one of these trades 10 per cent.
either these profits would be temporary, and would soon again fall back
to their usual station, or the profits of the others would be elevated
in the same proportion.

Let us suppose that all commodities are at their natural price, and
consequently that the profits of capital in all employments are exactly
at the same rate, or differ only so much as, in the estimation of the
parties, is equivalent to any real or fancied advantage which they
possess or forego. Suppose now, that a change of fashion should
increase the demand for silks, and lessen that for woollens; their
natural price, the quantity of labour necessary to their production,
would continue unaltered, but the market price of silks would rise, and
that of woollens would fall; and consequently the profits of the silk
manufacturer would be above, whilst those of the woollen manufacturer
would be below, the general and adjusted rate of profits. Not only the
profits, but the wages of the workmen would be affected in these
employments. This increased demand for silks would however soon be
supplied, by the transference of capital and labour from the woollen to
the silk manufacture; when the market prices of silks and woollens would
again approach their natural prices, and then the usual profits would be
obtained by the respective manufacturers of those commodities.

It is then the desire, which every capitalist has, of diverting his
funds from a less to a more profitable employment, that prevents the
market price of commodities from continuing for any length of time
either much above, or much below their natural price. It is this
competition which so adjusts the exchangeable value of commodities, that
after paying the wages for the labour necessary to their production, and
all other expenses required to put the capital employed in its original
state of efficiency, the remaining value or overplus will in each trade
be in proportion to the value of the capital employed.

In the 7th chap. of the Wealth of Nations, all that concerns this
question is most ably treated. Having fully acknowledged the temporary
effects which, in particular employments of capital, may be produced on
the prices of commodities, as well as on the wages of labour, and the
profits of stock, by accidental causes, without influencing the general
price of commodities, wages, or profits, since these effects are equally
operative in all stages of society, we may be permitted to leave them
entirely out of our consideration, whilst we are treating of the laws
which regulate natural prices, natural wages, and natural profits,
effects totally independent of these accidental causes. In speaking
then of the exchangeable value of commodities, or the power of
purchasing possessed by any one commodity, I mean always that power
which it would possess, if not disturbed by any temporary or accidental
cause, and which is its natural price.




CHAPTER V.

ON WAGES


Labour, like all other things which are purchased and sold, and which
may be increased or diminished in quantity, has its natural and its
market price. The natural price of labour is that price which is
necessary to enable the labourers, one with another, to subsist and to
perpetuate their race, without either increase or diminution.

The power of the labourer to support himself, and the family which may
be necessary to keep up the number of labourers, does not depend on the
quantity of money, which he may receive for wages; but on the quantity
of food, necessaries, and conveniences become essential to him from
habit, which that money will purchase. The natural price of labour,
therefore, depends on the price of the food, necessaries, and
conveniences required for the support of the labourer and his family.
With a rise in the price of food and necessaries, the natural price of
labour will rise; with the fall in their price, the natural price of
labour will fall.

With the progress of society, the natural price of labour has always a
tendency to rise, because one of the principal commodities by which its
natural price is regulated, has a tendency to become dearer, from the
greater difficulty of producing it. As, however, the improvements in
agriculture, the discovery of new markets, whence provisions may be
imported, may for a time counteract the tendency to a rise in the price
of necessaries, and may even occasion their natural price to fall, so
will the same causes produce the correspondent effects on the natural
price of labour.

The natural price of all commodities excepting raw produce and labour
has a tendency to fall, in the progress of wealth and population; for
though, on one hand, they are enhanced in real value, from the rise in
the natural price of the raw material of which they are made, this is
more than counterbalanced by the improvements in machinery, by the
better division and distribution of labour, and by the increasing skill,
both in science and art, of the producers.

The market price of labour is the price which is really paid for it,
from the natural operation of the proportion of the supply to the
demand; labour is dear when it is scarce, and cheap when it is
plentiful. However much the market price of labour may deviate from its
natural price, it has, like commodities, a tendency to conform to it.

It is when the market price of labour exceeds its natural price, that
the condition of the labourer is flourishing and happy, that he has it
in his power to command a greater proportion of the necessaries and
enjoyments of life, and therefore to rear a healthy and numerous family.
When however, by the encouragement which high wages give to the increase
of population, the number of labourers is increased, wages again fall to
their natural price, and indeed from a re-action sometimes fall below
it.

When the market price of labour is below its natural price, the
condition of the labourers is most wretched: then poverty deprives them
of those comforts which custom renders absolute necessaries. It is only
after their privations have reduced their number, or the demand for
labour has increased, that the market price of labour will rise to its
natural price, and that the labourer will have the moderate comforts,
which the natural price of wages will afford.

Notwithstanding the tendency of wages to conform to their natural rate,
their market rate may, in an improving society, for an indefinite
period, be constantly above it; for no sooner may the impulse, which an
increased capital gives to a new demand for labour be obeyed, than
another increase of capital may produce the same effect; and thus if the
increase of capital be gradual and constant, the demand for labour may
give a continued stimulus to an increase of people.

Capital is that part of the wealth of a country, which is employed in
production, and consists of food, clothing, tools, raw material,
machinery, &c. necessary to give effect to labour.

Capital may increase in quantity at the same time that its value rises.
An addition may be made to the food and clothing of a country, at the
same time that more labour may be required to produce the additional
quantity than before; in that case not only the quantity, but the value
of capital will rise.

Or capital may increase without its value increasing, and even while its
value is actually diminishing; not only may an addition be made to the
food and clothing of a country, but the addition may be made by the aid
of machinery, without any increase, and even with an absolute diminution
in the proportional quantity of labour required to produce them. The
quantity of capital may increase, while neither the whole together, nor
any part of it singly, will have a greater value than before.

In the first case, the natural price of wages, which always depends on
the price of food, clothing, and other necessaries, will rise; in the
second, it will remain stationary, or fall; but in both cases the market
rate of wages will rise, for in proportion to the increase of capital
will be the increase in the demand for labour; in proportion to the work
to be done will be the demand for those who are to do it.

In both cases too the market price of labour will rise above its natural
price; and in both cases it will have a tendency to conform to its
natural price, but in the first case this agreement will be most
speedily effected. The situation of the labourer will be improved, but
not much improved; for the increased price of food and necessaries will
absorb a large portion of his increased wages; consequently a small
supply of labour, or a trifling increase in the population, will soon
reduce the market price to the then increased natural price of labour.

In the second case, the condition of the labourer will be very greatly
improved; he will receive increased money wages, without having to pay
any increased price, and perhaps, even a diminished price for the
commodities which he and his family consume; and it will not be till
after a great addition has been made to the population, that the market
price of wages will again sink to their then low and reduced natural
price.

Thus, then, with every improvement of society, with every increase in
its capital, the market wages of labour will rise; but the permanence of
their rise will depend on the question, whether the natural price of
wages has also risen; and this again will depend on the rise in the
natural price of those necessaries, on which the wages of labour are
expended.

It is not to be understood that the natural price of wages, estimated
even in food and necessaries, is absolutely fixed and constant. It
varies at different times in the same country, and very materially
differs in different countries. It essentially depends on the habits and
customs of the people. An English labourer would consider his wages
under their natural rate, and too scanty to support a family, if they
enabled him to purchase no other food than potatoes, and to live in no
better habitation than a mud cabin; yet these moderate demands of nature
are often deemed sufficient in countries where "man's life is cheap,"
and his wants easily satisfied. Many of the conveniences now enjoyed in
an English cottage, would have been thought luxuries at an early period
of our history.

From manufactured commodities always falling, and raw produce always
rising, with the progress of society, such a disproportion in their
relative value is at length created, that in rich countries a labourer,
by the sacrifice of a very small quantity only of his food, is able to
provide liberally for all his other wants.

Independently of the variations in the value of money, which necessarily
affect wages, but which we have here supposed to have no operation, as
we have considered money to be uniformly of the same value, wages are
subject to a rise or fall from two causes:

1st. The supply and demand of labourers.

2dly. The price of the commodities on which the wages of
labour are expended.

In different stages of society, the accumulation of capital, or of the
means of employing labour, is more or less rapid, and must in all cases
depend on the productive powers of labour. The productive powers of
labour are generally greatest when there is an abundance of fertile
land: at such periods accumulation is often so rapid, that labourers
cannot be supplied with the same rapidity as capital.

It has been calculated, that under favourable circumstances population
may be doubled in twenty-five years; but under the same favourable
circumstances, the whole capital of a country might possibly be doubled
in a shorter period. In that case, wages during the whole period would
have a tendency to rise, because the demand for labour would increase
still faster than the supply.

In new settlements, where the arts and knowledge of countries far
advanced in refinement are introduced, it is probable that capital has a
tendency to increase faster than mankind: and if the deficiency of
labourers were not supplied by more populous countries, this tendency
would very much raise the price of labour. In proportion as these
countries become populous, and land of a worse quality is taken into
cultivation, the tendency to an increase of capital diminishes; for the
surplus produce remaining, after satisfying the wants of the existing
population, must necessarily be in proportion to the facility of
production, viz. to the smaller number of persons employed in
production. Although, then, it is probable, that under the most
favourable circumstances, the power of production is still greater than
that of population, it will not long continue so; for the land being
limited in quantity, and differing in quality; with every increased
portion of capital employed on it, there will be a decreased rate of
production, whilst the power of population continues always the same.

In those countries where there is abundance of fertile land, but where,
from the ignorance, indolence, and barbarism of the inhabitants, they
are exposed to all the evils of want and famine, and where it has been
said that population presses against the means of subsistence, a very
different remedy should be applied from that which is necessary in long
settled countries, where, from the diminishing rate of the supply of raw
produce, all the evils of a crowded population are experienced. In the
one case, the misery proceeds from the inactivity of the people. To be
made happier, they need only to be stimulated to exertion; with such
exertion, no increase in the population can be too great, as the powers
of production are still greater. In the other case, the population
increases faster than the funds required for its support. Every exertion
of industry, unless accompanied by a diminished rate of increase in the
population, will add to the evil, for production cannot keep pace with
it.

In some countries of Europe, and many of Asia, as well as in the islands
in the South Seas, the people are miserable, either from a vicious
government or from habits of indolence, which make them prefer present
ease and inactivity, though without security against want, to a moderate
degree of exertion, with plenty of food and necessaries. By diminishing
their population, no relief would be afforded, for productions would
diminish in as great, or even in a greater, proportion. The remedy for
the evils under which Poland and Ireland suffer, which are similar to
those experienced in the South Seas, is to stimulate exertion, to create
new wants, and to implant new tastes; for those countries must
accumulate a much larger amount of capital, before the diminished rate
of production will render the progress of capital necessarily less rapid
than the progress of population. The facility with which the wants of
the Irish are supplied, permits that people to pass a great part of
their time in idleness: if the population were diminished, this evil
would increase, because wages would rise, and therefore the labourer
would be enabled, in exchange for a still less portion of his labour, to
obtain all that his moderate wants require.

Give to the Irish labourer a taste for the comforts and enjoyments which
habit has made essential to the English labourer, and he would be then
content to devote a further portion of his time to industry, that he
might be enabled to obtain them. Not only would all the food now
produced be obtained, but a vast additional value in those other
commodities, to the production of which the now unemployed labour of the
country might be directed. In those countries, where the labouring
classes have the fewest wants, and are contented with the cheapest food,
the people are exposed to the greatest vicissitudes and miseries. They
have no place of refuge from calamity; they cannot seek safety in a
lower station; they are already so low, that they can fall no lower. On
any deficiency of the chief article of their subsistence, there are few
substitutes of which they can avail themselves, and dearth to them is
attended with almost all the evils of famine.

In the natural advance of society, the wages of labour will have a
tendency to fall, as far as they are regulated by supply and demand; for
the supply of labourers will continue to increase at the same rate,
whilst the demand for them will increase at a slower rate. If, for
instance, wages were regulated by a yearly increase of capital, at the
rate of 2 per cent. , they would fall when it accumulated only at the
rate of 1-1/2 per cent. They would fall still lower when it increased
only at the rate of 1, or 1/2 per cent. , and would continue to do so
until the capital became stationary, when wages also would become
stationary, and be only sufficient to keep up the numbers of the actual
population. I say that, under these circumstances, wages would fall, if
they were regulated only by the supply and demand of labourers; but we
must not forget, that wages are also regulated by the prices of the
commodities on which they are expended.

As population increases, these necessaries will be constantly rising in
price, because more labour will be necessary to produce them. If, then,
the money wages of labour should fall, whilst every commodity on which
the wages of labour were expended rose, the labourer would be doubly
affected, and would be soon totally deprived of subsistence. Instead,
therefore, of the money wages of labour falling, they would rise; but
they would not rise sufficiently to enable the labourer to purchase as
many comforts and necessaries as he did before the rise in the price of
those commodities. If his annual wages were before 24_l. _, or six
quarters of corn when the price was 4_l. _ per quarter, he would probably
receive only the value of five quarters when corn rose to 5_l. _ per
quarter. But five quarters would cost 25_l. _; he would therefore receive
an addition in his money wages, though with that addition he would be
unable to furnish himself with the same quantity of corn and other
commodities, which he had before consumed in his family.

Notwithstanding, then, that the labourer would be really worse paid, yet
this increase in his wages would necessarily diminish the profits of the
manufacturer; for his goods would sell at no higher price, and yet the
expense of producing them would be increased. This, however, will be
considered in our examination into the principles which regulate
profits.

It appears, then, that the same cause which raises rent, namely, the
increasing difficulty of providing an additional quantity of food with
the same proportional quantity of labour, will also raise wages; and
therefore if money be of an unvarying value, both rent and wages will
have a tendency to rise with the progress of wealth and population.

But there is this essential difference between the rise of rent and the
rise of wages. The rise in the money value of rent is accompanied by an
increased share of the produce; not only is the landlord's money rent
greater, but his corn rent also; he will have more corn, and each
defined measure of that corn will exchange for a greater quantity of all
other goods which have not been raised in value. The fate of the
labourer will be less happy: he will receive more money wages, it is
true, but his corn wages will be reduced; and not only his command of
corn, but his general condition will be deteriorated, by his finding it
more difficult to maintain the market rate of wages above their natural
rate. While the price of corn rises 10 per cent. , wages will always rise
less than 10 per cent. , but rent will always rise more; the condition of
the labourer will generally decline, and that of the landlord will
always be improved.

When wheat was at 4_l. _ per quarter, suppose the labourer's wages to be
24_l. _ per annum, or the value of six quarters of wheat, and suppose
half his wages to be expended on wheat, and the other half, or 12_l. _,
on other things. He would receive

£24. 14. } { £4. 4. 8. } { 5. 83 qrs.
25. 10. } when wheat { 4. 10. } or the { 5. 66 qrs.
26. 8. } was at { 4. 16. } value of { 5. 50 qrs.
27. 8. 6 } { 5. 2. 10 } { 5. 33 qrs.

He would receive these wages to enable him to live just as well, and no
better, than before; for when corn was at 4_l. _ per quarter, he would
expend for three quarters of corn,

at 4_l. _ per qr. £12
and on other things 12
--
24

When wheat was 4_l. _ 4_s. _ 8_d. _, three quarters,
which he and his family consumed, would
cost him £12. 14
other things not altered in price 12
-----
24. 14

When at 4_l. _ 10_s. _, three quarters of wheat
would cost £13. 10
and other things 12
-----
25. 10

When at 4_l. _ 16_s. _, three qrs. of wheat £14. 8
Other things 12
----
26. 8

When at 5. 2. 10_l. _ three quarters of wheat
would cost £15. 8. 6.
Other things 12
------
27. 8. 6

In proportion as corn became dear, he would receive less corn wages, but
his money wages would always increase, whilst his enjoyments on the
above supposition, would be precisely the same. But as other commodities
would be raised in price in proportion as raw produce entered into their
composition, he would have more to pay for some of them. Although his
tea, sugar, soap, candles, and house rent, would probably be no dearer,
he would pay more for his bacon, cheese, butter, linen, shoes, and
cloth; and therefore, even with the above increase of wages, his
situation would be comparatively worse. But it may be said that I have
been considering the effect of wages on price, on the supposition that
gold, or the metal from which money is made, is the produce of the
country in which wages varied; and that the consequences which I have
deduced agree little with the actual state of things, because gold is a
metal of foreign production. The circumstance however, of gold being a
foreign production, will not invalidate the truth of the argument,
because it may be shewn, that whether it were found at home, or were
imported from abroad, the effects ultimately and indeed immediately
would be the same.

When wages rise, it is generally because the increase of wealth and
capital have occasioned a new demand for labour, which will infallibly
be attended with an increased production of commodities. To circulate
these additional commodities, even at the same prices as before, more
money is required, more of this foreign commodity from which money is
made, and which can only be obtained by importation. Whenever a
commodity is required in greater abundance than before, its relative
value rises comparatively with those commodities with which its purchase
is made. If more hats were wanted, their price would rise, and more gold
would be given for them. If more gold were required, gold would rise,
and hats would fall in price, as a greater quantity of hats and of all
other things would then be necessary to purchase the same quantity of
gold. But in the case supposed, to say that commodities will rise,
because wages rise, is to affirm a positive contradiction; for we first
say that gold will rise in relative value in consequence of demand, and
secondly, that it will fall in relative value because prices will rise,
two effects which are totally incompatible with each other. To say that
commodities are raised in price, is the same thing as to say that money
is lowered in relative value; for it is by commodities that the relative
value of gold is estimated. If then all commodities rose in price, gold
could not come from abroad to purchase those dear commodities, but it
would go from home to be employed with advantage in purchasing the
comparatively cheaper foreign commodities. It appears then, that the
rise of wages will not raise the prices of commodities, whether the
metal from which money is made be produced at home or in a foreign
country. All commodities cannot rise at the same time without an
addition to the quantity of money. This addition could not be obtained
at home, as we have already shewn; nor could it be imported from abroad.
To purchase any additional quantity of gold from abroad, commodities at
home must be cheap, not dear. The importation of gold, and a rise in the
price of all home-made commodities with which gold is purchased or paid
for, are effects absolutely incompatible. The extensive use of paper
money does not alter this question, for paper money conforms, or ought
to conform to the value of gold, and therefore its value is influenced
by such causes only as influence the value of that metal.

These then are the laws by which wages are regulated, and by which the
happiness of far the greatest part of every community is governed. Like
all other contracts, wages should be left to the fair and free
competition of the market, and should never be controlled by the
interference of the legislature.

The clear and direct tendency of the poor laws, is in direct opposition
to these obvious principles: it is not, as the legislature benevolently
intended, to amend the condition of the poor, but to deteriorate the
condition of both poor and rich; instead of making the poor rich, they
are calculated to make the rich poor; and whilst the present laws are in
force, it is quite in the natural order of things that the fund for the
maintenance of the poor should progressively increase, till it has
absorbed all the neat revenue of the country, or at least so much of it
as the state shall leave to us, after satisfying its own never failing
demands for the public expenditure. [9]

This pernicious tendency of these laws is no longer a mystery, since it
has been fully developed by the able hand of Mr. Malthus; and every
friend to the poor must ardently wish for their abolition. Unfortunately
however they have been so long established, and the habits of the poor
have been so formed upon their operation, that to eradicate them with
safety from our political system requires the most cautious and skilful
management. It is agreed by all who are most friendly to a repeal of
these laws, that if it be desirable to prevent the most overwhelming
distress to those for whose benefit they were erroneously enacted, their
abolition should be effected by the most gradual steps.

It is a truth which admits not a doubt, that the comforts and well being
of the poor cannot be permanently secured without some regard on their
part, or some effort on the part of the legislature, to regulate the
increase of their numbers, and to render less frequent among them early
and improvident marriages. The operation of the system of poor laws has
been directly contrary to this. They have rendered restraint
superfluous, and have invited imprudence by offering it a portion of the
wages of prudence and industry.

The nature of the evil points out the remedy. By gradually contracting
the sphere of the poor laws; by impressing on the poor the value of
independence, by teaching them that they must look not to systematic or
casual charity, but to their own exertions for support, that prudence
and forethought are neither unnecessary nor unprofitable virtues, we
shall by degrees approach a sounder and more healthful state.

No scheme for the amendment of the poor laws merits the least attention,
which has not their abolition for its ultimate object; and he is the
best friend to the poor, and to the cause of humanity, who can point out
how this end can be attained with the most security, and at the same
time with the least violence. It is not by raising in any manner
different from the present, the fund from which the poor are supported,
that the evil can be mitigated. It would not only be no improvement, but
it would be an aggravation of the distress which we wish to see removed,
if the fund were increased in amount, or were levied according to some
late proposals, as a general fund from the country at large. The present
mode of its collection and application has served to mitigate its
pernicious effects. Each parish raises a separate fund for the support
of its own poor. Hence it becomes an object of more interest and more
practicability to keep the rates low, than if one general fund were
raised for the relief of the poor of the whole kingdom. A parish is much
more interested in an economical collection of the rate, and a sparing
distribution of relief, when the whole saving will be for its own
benefit, than if hundreds of other parishes were to partake of it.

It is to this cause, that we must ascribe the fact of the poor laws not
having yet absorbed all the net revenue of the country; it is to the
rigour with which they are applied, that we are indebted for their not
having become overwhelmingly oppressive. If by law every human being
wanting support could be sure to obtain it, and obtain it in such a
degree as to make life tolerably comfortable, theory would lead us to
expect that all other taxes together would be light compared with the
single one of poor rates.
The principle of gravitation is not more
certain than the tendency of such laws to change wealth and power into
misery and weakness; to call away the exertions of labour from every
object, except that of providing mere subsistence; to confound all
intellectual distinction; to busy the mind continually in supplying the
body's wants; until at last all classes should be infected with the
plague of universal poverty. Happily these laws have been in operation
during a period of progressive prosperity, when the funds for the
maintenance of labour have regularly increased, and when an increase of
population would be naturally called for. But if our progress should
become more slow; if we should attain the stationary state, from which I
trust we are yet far distant, then will the pernicious nature of these
laws become more manifest and alarming; and then too will their removal
be obstructed by many additional difficulties.




CHAPTER V*.

ON PROFITS.


The profits of stock in different employments, having been shewn to bear
a proportion to each other, and to have a tendency to vary all in the
same degree and in the same direction, it remains for us to consider
what is the cause of the permanent variations in the rate of profit, and
the consequent permanent alterations in the rate of interest.

We have seen that the price[10] of corn is regulated by the quantity of
labour necessary to produce it, with that portion of capital which pays
no rent. We have seen too that all manufactured commodities rise and
fall in price, in proportion as more or less labour becomes necessary
to their production. Neither the farmer who cultivates that quality of
land, which regulates price, nor the manufacturer, who manufactures
goods, sacrifice any portion of the produce for rent. The whole value of
their commodities is divided into two portions only: one constitutes the
profits of stock, the other the wages of labour.

Supposing corn and manufactured goods always to sell at the same price,
profits would be high or low in proportion as wages were low or high.
But suppose corn to rise in price because more labour is necessary to
produce it; that cause will not raise the price of manufactured goods in
the production of which no additional quantity of labour is required. If
then wages continued the same, profits would remain the same; but if, as
is absolutely certain, wages should rise with the rise of corn, then
profits would necessarily fall.

If a manufacturer always sold his goods for the same money, for 1000_l. _
for example, his profits would depend on the price of the labour
necessary to manufacture those goods. His profits would be less when
wages amounted to 800_l. _ than when he paid only 600_l. _ In proportion
then as wages rose, would profits fall. But if the price of raw produce
would increase, it may be asked, whether the farmer at least would not
have the same rate of profits, although he should pay an additional
price for wages? Certainly not: for he will not only have to pay, in
common with the manufacturer, an increase of wages to each labourer he
employs, but he will be obliged either to pay rent, or to employ an
additional number of labourers to obtain the same produce; and the rise
in the price of raw produce will be proportioned only to that rent, or
that additional number, and will not compensate him for the rise of
wages.

If both the manufacturer and farmer employed ten men, on wages rising
from 24_l. _ to 25_l. _ per annum. per man, the whole sum paid by each
would be 250_l. _ instead of 240_l. _ This is, however, the whole addition
that would be paid by the manufacturer to obtain the same quantity of
commodities; but the farmer on new land would probably be obliged to
employ an additional man, and therefore to pay an additional sum of
25_l. _ for wages; and the farmer on the old land would be obliged to pay
precisely the same additional sum of 25_l. _ for rent; without which
additional labour, corn would not have risen. One will therefore have to
pay 275_l. _ for wages alone, the other, for wages and rent together;
each 25_l. _ more than the manufacturer: for this latter 25_l. _ they are
compensated by the addition to the price of raw produce, and therefore
their profits still conform to the profits of the manufacturer. As this
proposition is important, I will endeavour still further to elucidate
it.

We have shewn that in early stages of society, both the landlord's and
the labourer's share of the _value_ of the produce of the earth, would
be but small; and that it would increase in proportion to the progress
of wealth, and the difficulty of procuring food. We have shewn too, that
although the value of the labourer's portion will be increased by the
high value of food, his real share will be diminished; whilst that of
the landlord will not only be raised in value, but will also be
increased in quantity.

The remaining quantity of the produce of the land, after the landlord
and labourer are paid, necessarily belongs to the farmer, and
constitutes the profits of his stock. But it may be alleged, that though
as society advances, his proportion of the whole produce will be
diminished, yet as it will rise in value, he, as well as the landlord
and labourer, may, notwithstanding, receive a greater value.

It may be said for example, that when corn rose from 4_l. _ to 10_l. _,
the 180 quarters obtained from the best land would sell for 1800_l. _
instead of 720_l. _; and therefore, though the landlord and labourer be
proved to have a greater value for rent and wages, still the value of
the farmer's profit might also be augmented. This however is impossible,
as I shall now endeavour to shew.

In the first place, the price of corn would rise only in proportion to
the increased difficulty of growing it on land of a worse quality.

It has been already remarked, that if the labour of ten men will, on
land of a certain quality, obtain 180 quarters of wheat, and its value
be 4_l. _ per quarter, or 720_l. _; and if the labour of ten additional
men, will on the same or any other land, produce only 170 quarters in
addition, wheat would rise from 4_l. _ to 4_l. _ 4_s. _ 8_d. _; for 170:
180:: 4_l. _: 4_l. _ 4_s. _ 8_d. _ In other words, as for the production of
170 quarters, the labour of ten men is necessary, in the one case, and
only that of 9. 44 in the other, the rise would be as 9. 44 to 10, or as
4_l. _ to 4_l. _ 4_s. _ 8_d. _ In the same manner it might be shewn, that if
the labour of ten additional men would only produce 160 quarters, the
price would further rise to 4_l. _ 10_s. _; if 150, to 4_l. _ 16_s. _, &c.
&c.

But when 180 quarters were produced
on the land paying no rent, and its
price was 4_l. _ per quarter, it sold for £720

And when 170 quarters were produced
on the land paying no rent, and the
price rose to 4_l. _ 4_s. _ 8_d. _ it still sold for 720

So, 160 quarters at 4_l. _ 10_s. _ produce 720

And 150 quarters at 4_l. _ 16_s. _ produce the
same sum of 720

Now it is evident, that if out of these equal values, the farmer is at
one time obliged to pay wages regulated by the price of wheat at 4_l. _,
and at other times at higher prices, the rate of his profits will
diminish in proportion to the rise in the price of corn.

In this case, therefore, I think it is clearly demonstrated that a rise
in the price of corn, which increases the money wages of the labourer,
diminishes the money value of the farmer's profits.

But the case of the farmer of the old and better land will be in no way
different; he also will have increased wages to pay, and will never
retain more of the value of the produce, however high may be its price,
than 720_l. _ to be divided between himself and his always equal number
of labourers; in proportion therefore as they get more, he must retain
less.

When the price of corn was at 4_l. _, the whole 180 quarters belonged to
the cultivator, and he sold it for 720_l. _ When corn rose to 4_l. _ 4_s. _
8_d. _ he was obliged to pay the value of ten quarters out of his 180 for
rent, consequently the remaining 170 yielded him no more than 720_l. _:
when it rose further to 4_l. _ 10_s. _ he paid twenty quarters, or their
value, for rent, and consequently only retained 160 quarters, which
yielded the same sum of 720_l. _

It will be seen then, that whatever rise may take place in the price of
corn, in consequence of the necessity of employing more labour and
capital to obtain a given additional quantity of produce, such rise will
always be equalled in value by the additional rent, or additional labour
employed; so that whether corn sells for 4_l. _, 4_l. _ 10_s. _, or 5_l. _
2_s. _ 10_d. _, the farmer will obtain for that which remains to him,
after paying rent, the same real value. Thus we see, that whether the
produce belonging to the farmer be 180, 170, 160, or 150 quarters, he
always obtains the same sum of 720_l. _ for it; the price increasing in
an inverse proportion to the quantity.

Rent then, it appears, always falls on the consumer, and never on the
farmer; for if the produce of his farm should uniformly be 180
quarters, with the rise of price, he would retain the value of a less
quantity for himself, and give the value of a larger quantity to his
landlord; but the deduction would be such as to leave him always the
same sum of 720_l. _

It will be seen too that, in all cases, the same sum of 720_l. _ must be
divided between wages and profits. If the value of the raw produce from
the land exceed this value, it belongs to rent, whatever may be its
amount. If there be no excess, there will be no rent. Whether wages or
profits rise or fall, it is this sum of 720_l. _ from which they must
both be provided. On the one hand, profits can never rise so high as to
absorb so much of this 720_l. _, that enough will not be left to furnish
the labourers with absolute necessaries; on the other hand, wages can
never rise so high as to leave no portion of this sum for profits.

Thus in every case, agricultural, as well as manufacturing profits are
lowered by a rise in the price of raw produce, if it be accompanied by
a rise of wages. [11] If the farmer gets no additional value for the corn
which remains to him after paying rent, if the manufacturer gets no
additional value for the goods which he manufactures, and if both are
obliged to pay a greater value in wages, can any point be more clearly
established than that profits must fall, with a rise of wages?

The farmer then, although he pays no part of his landlord's rent, that
being always regulated by the price of produce, and invariably falling
on the consumers, has however a very decided interest in keeping rent
low, or rather in keeping the natural price of produce low. As a
consumer of raw produce, and of those things into which raw produce
enters as a component part, he will in common with all other consumers,
be interested in keeping the price low. But he is most materially
concerned with the high price of corn as it affects wages. With every
rise in the price of corn, he will have to pay out of an equal and
unvarying sum of 720_l. _, an additional sum for wages to the ten men whom
he is supposed constantly to employ. We have seen in treating on wages,
that they invariably rise with the rise in the price of raw produce. On
a basis assumed for the purpose of calculation, page 106, it will be
seen that if when wheat is at 4_l. _ per quarter, wages should be 24_l. _
per annum.

£ _s. _ _d. _ £ _s. _ _d. _
{ 4 4 8 } { 24 14 0
When Wheat { 4 10 0 } wages would be { 25 10 0
is at { 4 16 0 } { 26 8 0
{ 5 2 10 } { 27 8 6

Now, of the unvarying fund of 720_l. _ to be distributed between
labourers and farmers,

£ _s. _ _d. _ _s. _ _d. _ £ _s. _ _d. _
When the { 4 0 0 } the { 240 0 } the { 480 0 0
price of { 4 4 8 } labourer { 247 0 } farmer { 473 0 0
Wheat is { 4 10 0 } will { 255 0 } will { 465 0 0
at { 4 16 0 } receive { 264 0 } receive { 456 0 0
{ 5 2 10 } { 274 5 } { 445 15 [12]

And supposing that the original capital of the farmer was 3000_l. _, the
profits of his stock being in the first instance 480_l. _, would be at
the rate of 16 per cent. When his profits fell to 473_l. _, they would be
at the rate of 15. 7 per cent.

465_l. _ 15. 5
456_l. _ 15. 2
445_l. _ 14. 8

But the _rate_ of profits will fall still more, because the capital of
the farmer, it must be recollected, consists in a great measure of raw
produce, such as his corn and hay-ricks, his unthreshed wheat and
barley, his horses and cows, which would all rise in price in
consequence of the rise of produce. His absolute profits would fall from
480_l. _ to 445_l. _ 15_s. _; but if from the cause which I have just
stated, his capital should rise from 3000_l. _ to 3200_l. _ the rate of
his profits would, when corn was at 5_l. _ 2_s. _ 10_d. _, be under 14 per
cent.

If a manufacturer had also employed 3000_l. _ in his business, he would
be obliged in consequence of the rise of wages, to increase his capital,
in order to be enabled to carry on the same business. If his commodities
sold before for 720_l. _, they would continue to sell at the same price;
but the wages of labour, which were before 240_l. _, would rise when corn
was at 5_l. _ 2_s. _ 10_d. _ to 274_l. _ 5_s. _ In the first case he would
have a balance of 480_l. _ as profit on 3000_l. _, in the second he would
have a profit only of 445_l. _ 15_s. _, on an increased capital, and
therefore his profits would conform to the altered rate of those of the
farmer.

There are few commodities which are not more or less affected in their
price by the rise of raw produce, because some raw material from the
land enters into the composition of most commodities. Cotton goods,
linen, and cloth, will all rise in price with the rise of wheat; but
they rise on account of the greater quantity of labour expended on the
raw material from which they are made, and not because more was paid by
the manufacturer to the labourers whom he employed on those commodities.

In all cases, commodities rise because more labour is expended on them,
and not because the labour which is expended on them is at a higher
value. Articles of jewellery, of iron, of plate, and of copper, would
not rise, because none of the raw produce from the surface of the earth
enters into their composition.

It may be said that I have taken it for granted, that money wages would
rise with a rise in the price of raw produce, but that this is by no
means a necessary consequence, as the labourer may be contented with
fewer enjoyments. It is true that the wages of labour may previously
have been at a high level, and that they may bear some reduction. If
so, the fall of profits will be checked; but it is impossible to
conceive that the money price of wages should fall, or remain stationary
with a gradually increasing price of necessaries; and therefore it may
be taken for granted that, under ordinary circumstances, no permanent
rise takes place in the price of necessaries, without occasioning, or
having been preceded by a rise in wages.

The effects produced on profits, would have been the same, or nearly the
same, if there had been any rise in the price of those other
necessaries, besides food, on which the wages of labour are expended.
The necessity which the labourer would be under of paying an increased
price for such necessaries, would oblige him to demand more wages; and
whatever increases wages, necessarily reduces profits. But suppose the
price of silks, velvets, furniture, and any other commodities, not
required by the labourer, to rise in consequence of more labour being
expended on them, would not that affect profits? certainly not: for
nothing can affect profits but a rise in wages; silks and velvets are
not consumed by the labourer, and therefore cannot raise wages.

It is to be understood that I am speaking of profits generally. I have
already remarked that the market price of a commodity may exceed its
natural or necessary price, as it may be produced in less abundance than
the new demand for it requires. This however is but a temporary effect.
The high profits on capital employed in producing that commodity will
naturally attract capital to that trade; and as soon as the requisite
funds are supplied, and the quantity of the commodity is duly increased,
its price will fall, and the profits of the trade will conform to the
general level. A fall in the general rate of profits is by no means
incompatible with a partial rise of profits in particular employments.
It is through the inequality of profits, that capital is moved from one
employment to another. Whilst then general profits are falling, and
gradually settling at a lower level in consequence of the rise of wages,
and the increasing difficulty of supplying the increasing population
with necessaries, the profits of the farmer, may, for an interval of
some little duration, be above the former level. An extraordinary
stimulus may be also given for a certain time, to a particular branch of
foreign and colonial trade; but the admission of this fact by no means
invalidates the theory, that profits depend on high or low wages, wages
on the price of necessaries, and the price of necessaries chiefly on the
price of food, because all other requisites may be increased almost
without limit.

It should be recollected that prices always vary in the market, and in
the first instance, through the comparative state of demand and supply.
Although cloth could be furnished at 40_s. _ per yard, and give the usual
profits of stock, it may rise to 60 or 80_s. _ from a general change of
fashion, or from any other cause which should suddenly and unexpectedly
increase the demand, or diminish the supply of it. The makers of cloth
will for a time have unusual profits, but capital will naturally flow to
that manufacture, till the supply and demand are again at their fair
level, when the price of cloth will again sink to 40_s. _, its natural or
necessary price. In the same manner, with every increased demand for
corn, it may rise so high as to afford more than the general profits to
the farmer. If there be plenty of fertile land, the price of corn will
again fall to its former standard, after the requisite quantity of
capital has been employed in producing it, and profits will be as
before; but if there be not plenty of fertile land, if, to produce this
additional quantity, more than the usual quantity of capital and labour
be required, corn will not fall to its former level. Its natural price
will be raised, and the farmer, instead of obtaining permanently larger
profits, will find himself obliged to be satisfied with the diminished
rate which is the inevitable consequence of the rise of wages, produced
by the rise of necessaries.

The natural tendency of profits then is to fall; for, in the progress of
society and wealth, the additional quantity of food required is obtained
by the sacrifice of more and more labour. This tendency, this
gravitation as it were of profits, is happily checked at repeated
intervals by the improvements in machinery, connected with the
production of necessaries, as well as by discoveries in the science of
agriculture which enable us to relinquish a portion of labour before
required, and therefore to lower the price of the prime necessary of the
labourer. The rise in the price of necessaries and in the wages of
labour is however limited; for as soon as wages should be equal (as in
the case formerly stated) to 720_l. _, the whole receipts of the farmer,
there must be an end of accumulation; for no capital can then yield any
profit whatever, and no additional labour can be demanded, and
consequently population will have reached its highest point. Long indeed
before this period, the very low rate of profits will have arrested all
accumulation, and almost the whole produce of the country, after paying
the labourers, will be the property of the owners of land and the
receivers of tithes and taxes.

Thus, taking the former very imperfect basis as the grounds of my
calculation, it would appear that when corn was at 20_l. _ per quarter,
the whole net income of the country would belong to the landlords, for
then the same quantity of labour that was originally necessary to
produce 180 quarters, would be necessary to produce 36; since 20_l. _ :
4_l. _ :: 180 : 36.