Chapter 94 of 97 · The Works of David Ricardo by David Ricardo

INDEX

29,594 words · All 97 chapters

n signifies Note at the bottom of the page.

A.
Accumulation of Capital, effects of the labour required for, on the value of commodities, 16. Effects of, in an early or rude state of society, 16. And in a more advanced state, 17. Capital may lie accumulated in two ways. By increased revenue, or diminished consumption, 74, 87. Foreign trade, how conducive to, 75. Evidences of an increase of capital, and of annual production, 88. Effects of, on profits and interest considered, 174-180. Only case, and that temporary, where accumulation of capital may be attended with a fall of profits, 176. Effects of machinery in accumulating capital, 241-2. Table, showing the progress of rent and profit under nn assumed augmentation of capital, 376.—See also Capital.
Agriculture, effects of improvements in, onrent,41. Improvements in, of two kinds, 42. One increasing the productive power of land; the other obtaining its produce with less labour by improvements in machinery, 42. Both lead to a fall in the price of raw produce, 42. Both affect rent, but not equally, 42. Ultimately of immense advantage, but at first may be injurious to landlords, 43, n. Capital expended in agricultural improvements becomes amalgamated with the land, and cannot afterwards be separated from it, 158, n. Not exposed to the temporary reverses and contingencies to which manufuctures are subject, 159. Evil effects of a transition from war to pence on ngriculture, 161. Suggestions for their remedy quoted from Encyclopaedia Britanniea, and approved, 16), n. Considerations which lead to the' investment of capital in agricultural improvements, 249, n. Agricultural improvements no cause of the immediate increase of rents, 251-2. Improvements in, one of the causes of a fall in the exchangeable value of iood, 379. Protection to agriculture considered. 459494. Question “Cnn the present state ol agricultural distress be attributed to taxation?” considered, 487-491. Keport oi Committee on Agriculture quoted, 481, 484.—See also Cultivation and Land.
America, fallacy of the supposed premium on English currency iu America, proved, 319-320.

B.
Ballot, speech of the author in Parliament on the plan of voting by ballot, printeil in the Scotsman of 17th July 1824, 559-564.
Banks, the establishment of, deprived the State of the sole power of coining or issuing money, 214. Consequence of the Bank of England issuing too great a quantity of paper, 214-5. Regulations that should be adopted at the Mint and the Bank of England, quoted from the author's “Proposals for an Economical and Secure Currency,” 215-8. Provided there be perfect security against abuse of the power, it is immaterial whether paper money be issued by the State or a bank, 218-9. The assistance supposed to be given by the Bank to commerce, by lending money under the market rate of interest, rather a disadvantage than otherwise, 220-1. The superiority awarded by Adam Smith to the Scotch mode of affordingaccommodation to trade by cash accounts, fanciful, 221. The establishment of a bank, how similar in its effects to the discovery of a mine, 2G4-5 Effect of Bank restriction bill to remove the salutary checks ngainst an over-issue of notes, 276. Mr Thornton's account of the conduct of the Bank before the restriction, quoted, 276. The Bank of England the great regulator of the country paper, 283. The run on the Bank in 1797 caused by political alarm, 289. Observatioas on the prolits of the Bank of England as they Edition: current; Page: [568] regard the public and the proprietors of hank stock, 393-454. Banks have no security on any system against general panics, 406. Proposal that Government should compel country banks to give some proof of their ability to fulfil their engagements, 409. Public services of the Bank excessively overpaid, and remedy proposed for this evil, 411 -23. Quotation from resolutions proposed to Parliament by the governor of the Bank, as to the fidvatitnges it derived from the public, 418. Statement of the misapplication of the profits and savings of the Bank, and remedy proposed, 423-435. Table showing the profits and surplus capital of the Bank from 1797 to 1816, 427. Difference between n Bank and all other trades is. that the real advantage of the former never commences until it employs the capital of others, 431. Table showing the amount annually received by the Bank, from 1797 to 1815, for receiving contributions on loans, 437. Estimate of the profits of the Bank of England in different years, 439451. .Resolutions proposed concerning the Bank of England by Mr Grenfell, 451. Resolutions proposed by Mr Mcllish, 4 5-2-4. The rate of interest cannot be controlled by any bank, 474. Representation, in 1819, by the directors of the Bank of England laid before the Chancellor of the Exchequer, 495-7. Plan for the establishment of a National Bunk, 503-512.
Bank Notes, high price of bullion a proof of the depreciation of, 263-,'}01. Statements of the amount of bank-notes in circulation at various periods, 297-9. Remedy for their depreciation, 366. Table showing the average amount of Bank of England notes, including bank post bills, in circulation from 1797 to 1815, 439. Amount of notes of 5/., and above that sum, in circulation from 1815 to 1822, 473.— See also Paper Money.
Barton, Mr, his opinion as to the effects of an increased fixed capital on the condition of the labouring class, refuted, 241, n.
Blake, Mr, his opinion as to the effects of an increase in paper currency on the value of gold us an exportable commodity, quoted and commented on, 337-9.
Bosanquet, Mr, statement of his objections to the conclusions of the Bullion Committee, 305-7. His alleged facts drawn from the history of the state of exchangeconsidered, 30S-322. His alleged facts adduced against the conclusion that a rise in the market above the Mint price of bullion proves a depreciation of the currency, considered, 323-333. His objections to the statement that the balance of payment? has been in favour of Great Britain, examined, 334-339. Consideration of his argument to prove that the Bank has not the power of forcing the. circulation of notes, 340-4. Consideration of his objections to the proposition, that the circulation of the Bank regulates that of the country banks, 348-53. Consideration of his opinion that years of scarcity and taxes have been the sole cause of the rise of prices, 354-9. His opinion that evil would result from the resumption of cash payments, considered, 360-1. Remarks on his supplementary observations, 363-6.
Bounties, on the exportation of com lower its price to the foreign consumer, but haie no permanent effect on its price in the home market, 181-2. Temporary effects of, in raising the price of corn, considered, 184-7. May cause partial, but not permanent degradation, in the value of money, 186-7. Bounties on the exportation of manufactures will raise for a time their market, but not their natural price, 188-9. Pernicious effect of; in diverting a portion of capital from its natural emplovment, considered, 189-192. A tax on commodities, to afford a bounty on the production of corn, would raise the relative price of commodities, and lower that of corn, 193-5. A bounty on the production of corn, will produce no real effect on the annual produce of the land and labour ol the country, 195. A tax on corn to afford a bounty on the production of commodities, would raise the price of corn, and rendi'i commodities cheap, 195. Ruinous effects of bounties on production, in conjunction with a free foreign commerce, 196.
Buchanan,Mr, hisobservationson Adam Smith's theory of productive and unproductive labour, quoted, 40, n. Quoted as to relief of the poor, 58, n. His objections to Adam Smith's opinion on the effect of a direct tax on the wages of labour, 129-133. His mistake in considering corn and raw produce at a monopoly price, because they yield a rent, exposed, 151. His erroneous statement that the produce of land cannot be increased if the demand increases, 152, n. His contradictory opinions as to the effects of taxes on malt and bread placed in juxtaposition, 153. His judicious remarks on the fallacy of Adam Smith's arguments respecting bounties, 189. Incorrect views of, as to the influence of n rise in the price of labour on manufactured commodities, 189-190. His remarks on the cause of the drain of the specie from the Bank, 215. His remark on variations in the relative value of gold and silver currency, 224. Some of his opinions as tc rent, quoted, and approved of, 243.
Bullion, high price of, a proof of the doprcciation Edition: current; Page: [569] of bank notes, 2fi3-301. Evils of prohibiting the melting or exportation of coin, and at same time allowing the exportation of bullion, 265-320. Effects of the debasement of the coinage on the price of bullion, 273. Causes of the excess of the market over the Mint price of gold and silver bullion, considered, 277, and n. —See also Gold and Silver.
Bullion Committee, statements of the amount of bank notes in circulation, and the rates of Hamburgh exchange contained in the appendix to their report, 297-9. Mr Bosunquet's objections to their conclusions stated, 305-7. Causes of the low exchange stated, and remedy proposed by them, 312. Examination of their statement concerning the par of exchange, 321-2.

C.
Capital, nature of that which is necessary in an early .state of society, 16. Effects of the accumulation of, on the relative value of commodities—in n savage state of society, 10. and in a mure advanced state, 17. Classed under the heads of circulating and fixed capital, 21. This division not essential, 21, n. Their employment and relative powers of production explained and considered, 21-25. Effects of the unequal durability of, on the value of commodities, 25-28. Circulating capital of the monied class, how employed, 47-19. How the desire to employ it advantageously, nfi'ects the price of commodities, 47, 48, 49. Definition of, 51. Increase of, in quantity and value, raises the natural and market prices of labour, 51. Increase of, in quantity, but not in value, raises the market price of labour only, 51. 15elative increase of capital and population in countries differently situated, considered, 53-54. Capital may be accumulated in two ways—by increased revenue, or diminished consumption, 74, 87. Foreign trade, how conducive to the accumulation of, 75. Causes which check the efflux of, 77. Difficult to define where the distinction between circulating and fixed capital begins, 87. Evidences of an increase of, 88. Taxes not necessarily taxes on capital or income, because laid on these respectively, 88. Illustration of this principle, 88. Impolicy of taxes inevitably falling on, 89. The loss to a country sustained by employing a portion of its capital unproductively, the sole disadvantage of retaining gold and silver in it by prohibitory laws, 139. Capital expended in increasing the productive powers of land becomes amalgamated I with, and cannot afterwards be separated' from it, 158, n. Not so difficult to with draw a circulating as a fixed capital from the employment in which it is engaged, 161. Effects of the accumulation of; on profits and interest, 174-180. No limits placed by nature to the amount of capital that may be employed in procuring “the conveniences and ornaments of life,” 177. Inequality of profit always the inducement to remove capital from one employment to another, 185. Pernicious effect of high duties on importation, or of a bounty on exportation, in diverting a portion of capital from its natural employment, 189. The profits made by the employment of capital regulate the rate of interest for money, 220. The demand for labour depends on the increase of circulating, and not of fixed capital, 241, n. Profits can only be lowered by a competition of capitals, not consisting of circulating medium, 286. Table showing the progress of rent and profit under an assumed augmentation of capital, 376.—See also Accumulation of Capital.
Capitalists.—See Stockholders.
Carrying Trade, origin and nature of, considered, 177-8.
Cash Accounts, the superiority of this, the Scotch mode of affording accommodation to trade, doubted, 221.
Causes and effects of sudden changes in the channels of trade considered, 159-164.
Circulation, why a circulation of money can never be so abundant as to overflow, 213-4, 285. Depreciation of a circulating medium the necessary consequence of its redundance, 270. Cause of uniformity the cause of goodness in the medium of circulation, 397-400.
Circulation of Paper —See Paper Money.
Coin, evils of prohibiting the melting or exportation of coin, and at same time allowing the exportation of bullion, 26j, 326. Law ineffectual to prevent the melting and exportation of gold coin, 265, 279, 301, 323-6 —See also Gold and Silver, and Money.
Colonial Trade, observations on, 204-9. Injustice of mother countries towards their colonies, by restricting their trade, 204. A mother country may be more benefited by the restraints she lays on her colonies, than by a free trade, 204-7. Disadvantages of a monopoly of the colony trade, 208-9.
Commerce, a free system of, how beneficial to the civilized world, 75-76. All commerce, both foreign and domestic, really a trade of barter, 137. Effects of commercial treaties considered, 205-7.— See also Colonial Trade, Fokeigs Trade, Free Trade, and Trade.Edition: current; Page: [570]
Commodities, utility not the measure, though absolutely essential to the exchangeable value of, 9. Commodities possessing utility derive value from scarcity, and the quantity of labour required to obtainp them, 9. The value of some determined by scarcity alone, 9. The real price of every thing as defined by Adam Smith, 10. Insufficiency of gold and silver as a medium for determining the variable value of other commodities, 11. Corn or labour no less variable a medium than gold and silver, 11, 253. Effects of improvements in machinery on the value of, 12. Effects of the accumulation of capital on the value of, 17. Economy in labour reduces the value of, 18. Those having the same quantity of labour bestowed on them will differ in exchangeable value if they cannot be brought to market in the same time, 24. The price of those on which durable capital is employed varies inversely as wages, 28. The prices of those produced chiefly by labour vary according to the quantity of labour expended upon them, 28. Gold, a commodity obtained under the same contingencies as every other, and requiring labour and fixed capital for its production, 28, 263. The exchangeable value of, regulated by the quantities of labour necessarily bestowed on their production under the most unfavourable circumstances, 37, 38. Natural and market price of, distinguished, and how affected by the circulating capital of the monied class, 47, 48, 49. A rise of wages not necessarily productive of a rise in the price of commodities, 57. A diminution in wages raises profits, but has no effect on the price of commodities, 75. The tame rule which regulates the value of commodities in one country, does not regulate the value of those exchanged between two or more, 75. Why the prices of home commodities are higher in those countries where manufactures flourish, 81. Evils of prohibiting a free trade in precious metals when the prices of commodities are raised, 138. Commodities are at a monopoly price when no device can augment their quantity, 150. A tax on, to afford a bounty for the production of corn, would make corn relatively cheap, and manufactures dear, 193-195. A tax on corn for a bounty on the production of commodities, would have the opposite effect, 195. The cost of production regulates the price of commodities, 232-250. Monopolised commodities vary in value, and why, 234. Effects of machinery in reducing the price of commodities, 242. The production of corn encouraged by a rise in its market, and not in its real price, 253. Objections to the use of a standard commodity considered, 400-2. Commodities generally, can never become a standard to regulate the quantity and value of money, 401. Effects of taxes on a particular commodity, considered 4C3-5.
Consumers, they, and not the growers, pay taxes on raw produce, 91.
Corn, or labour as a medium of value, as variable and insufficient as gold and silver, 11, 253. fluctuations to which corn is subject, 11. Influence of the prices of, on rent, 40. A rise in the price of corn which increases the money wages of the labourer, diminishes the money value of the fanners' profits, 62. A country enabled to manufacture commodities with much less labour than her neighbours, may, in return for these commodities, take a portion of the corn she requires, though more fertile, and producing com with less labour than that from which she imports it, 77, n. The prices of corn and labour will be relatively higher in a country excelling in manufactures, so as to occasion an influx of money, than in any other, 83. Corn rents materially affected both by tithes and a money tax, 104. A temporary restriction on the importation of, when advisable, 161-2. Advantage resulting from a relatively low price of com, 163. Effects of a low price of corn on wages and profits, 163. Bounties on the exportation of, lower its price to the foreign consumer, but have no permanent effect on its price in the home market, 181-2. Temporary effects of a bounty on its exportation, in raising its price, 184-7. A bounty on its production raised from a tax on commodities, would make corn relatively cheap and manufactures dear, 193195. A bounty on the production of commodities raised from a tax on corn would have the opposite effect, 195. A bounty on the production of, would have no real effect on the annual produce of the land and labour of the country, 195. Benefit of a high price of, to landlords, 202-3. Investigation of the comparative value of gold, corn, and labour, 226-9. A fall in the value of com not so beneficial to stockholders as to farmers, manufacturers, and other employers of labour, 258-9. Loss of rent the effect of a low price of corn, 259. Importation of foreign corn considered, 259-260. Essay on the influence of a low price of corn on the profits of stock, 371-390. A remunerating price of corn considered, 459-461. Influence of a rise of wages on the price of corn, 461-3. Effect of abundant crops on the price of corn, 465-7. Effect produced on the price of corn by Mr Peel's bill for restoring the ancient standard, 467-475. Effects ofEdition: current; Page: [571] a low value of corn on the rate of profits, 475-8. Under a system of protecting duties giving the monopoly to the homegrowers of corn, prices must be fluctuating, 478-486. Project of advancing money on loan to speculators in com at a low interest, considered, 486-7. Quantities of oats, wheat, and wheat flour imported from Ireland from 1818 to 1821, 490. Account of the corn that arrived in the port of London from ports in Great Britain and Ireland, from 1817 to 1822, and of the quantities sold in Mark Lane from Nov. 1818 to Nov. 1822, 498.
Cultivation, discouraged by a tax on the rent of land,102. Not discouraged more by tithes and taxes on land and its produce, than by other modes of taxation, which raise the exchangeable value of any commodities in very general demand, 105-9. Tendency to discourage both cultivation and production, an evil inseparable from all taxation, 109.—See also Agriculture and Land.
Currency, — Exchange ascertained by estimating the value of the currency of one country in that of another, 84. The currency may as effectually be increased oy paper as by coin, 214. Extracts from the author's pamphlet, entitled, “Proposals for an Economical and Secure Currency,” 215-8. A currency is in its most perfect state when it consists wholly of paper money of an equal value with the gold it professes to represent, 218. Tendency of the law against the exportation of coin, to depreciate the currency, 265-328. A redundant currency the only temptation to export money for goods, 267-8. Exchange affords a tolerably accurate criterion of the debasement of the currency, 274. The depreciation of our currency no cause (tlie high price of the funds, 287. Different effects of its depreciation, on the value of land, and on that of the funds, 287. Remedy proposed for evils in the currency, 287,300-1, 366. Consequences that would follow the diminution or increase by onehalf of the currencies of other countries (exclusive of England), derr.onstrated, 326-8. Proposals for an economical and secure currency, 393-454.—See also Gold and Silver, and Paper Monet.

D.
Debt.—See National Debt.
Decker, Sir Matthew, — his opinion (approved by Adam Smith), that certain taxes are. repeated and accumulated four or five times, is absurd, 140-1.
Demand and Supply. The effect of, on prices only temporary, 232. Opinion of M. Say on this subject, quoted. 233. That of Lord Lauderdale, quoted, 233-4. Strictures thereon, 234. The demand for labour depends on the increase of circulating and not of fixed capital, 241, n.
De Tracy, M.,—correct in saying that labouris a common measure of the relative value of its products, 171-2. Has fallen into the same error as M. Say as to the definitions of value, riches, and utility, 171, n.
Distress. Whether the present state of agricultural distress can be attributed to taxation, considered, 487-491.
Dividends. Remedy proposed for the mercantile inconvenience caused by the quarterly payments of, to the public creditors, 410-1.
Duties.—See Taxes.

E.
Economy, in labour, reduces the relative value of a commodity, 18. Illustrations of this principle, 18.
Edinburgh Review,—Quotation from vol. v. on the subject of a bounty on the exportation of corn, 182. Argument in vol. i., p. 183, that an increase in the paper currency will nuse the paper but not the bullion price of commodities, combated, 270, n. Edinburgh Reviewers mistaken in supposing that the exportation or importation, of bullion takes place without reference to exchange, 275. The principles laid down in the Review of the author s pamphlet on the High Price of Bullion, examined and controverted, 291801.
Encyclopedia Britannica. Quotation from article “Corn Laws and Trade” as to withdraw al of capital from poor soils, 161, n. The same article quoted as to the advantages of Free Trade, 191, 7;. Essay on the Funding System written by the author for the Supplement to the sixth edition of, 515-548.
Exchange,—the rate of, no criterion of the increased value of money, 83-84. Ascertained by estimating the value of the currency of one country in the currency of another, 84. May be ascertained also by comparing it with some standard common to both, 84. When exchanges between countries .are at par, 138. The effect of the exchange would counterbalance the effect of high prices caused by detaining gold and silver in a country by prohibitory laws, 139. Effects on exchange, of the debasement of the gold and silver currency by clipping, or of a depreciation of paper money, 273-4. Statements of the rate of exchange with Hamburgh at various periods, 298-9. How an unfavourable exchange may be ultimately corrected, 301. The variations of exchange with foreign couutries canncter Edition: current; Page: [572] for any considerable time exceed the expense of transporting and insuring the precious metals, 306. Exchange with Hamburgh considered, 308-315. Exchange with Paris considered, 316-9. Fallacy of the supposed premium on English currency in America, proved. 319320. Causes of the favourable exchange with Sweden explained, 320-1, and n. The par of exchange between two countries, one using gold and the other silver as a principal measure of value, cannot be estimated without taking into account their relative value, 310-322.
Exportation. Bounties on the exportation of com lower its price to the foreign consumer, but have no permanent etfecton itspriceinthehomemarket, 181-2. Temporary effects of bounties on, in raising the price of corn, considered, 184-7. Bounties on the exportation of manufactures, raise their market, but not their natural price, 188-9. Pernicious effect of a bounty on the exportation of manufactures or corn stated, 189. Evils of prohibiting the melting or exportation of coin, and at same time allowing the exportation of bullion, 265, 326. Depreciation of the circulating medium counteracted by the exportation of the precious metals, 270 Law ineffectual to prevent the melting and exportation of gold coin. 265, 279, 301, 323-6.

F.
Farmers, a rise in the price of corn, which increases the money wages of the labourer, diminishes the money value of the farmer's profits, 62. Kent a'lways falls on the consumers, and not on the farmers, 63. Interest of, to keep the price of rawproduce low, 63, 188, 477. A tax on the farmer's profits how beneficial to the landlord, 126-7. Pay more poor rates than manufacturers, in proportion to their reepective profits, 157. Injurious effects on tlie condition of the farmer, of the constantly fluctuating prices of corn under a system of protective duties, 477-486.
Foreign Trade, effects of an extension of, 72. Proofs that the profits of a favoured trade will speedily subside to the general level, 73-4. Foreign trade, though highly beneficial to a country, has no tendency to raise the profits of stock, unless the commodities imported are those on which the wages of labour are expended, 75.
France, the faille in, before the revolution, a tax of the objectionable description, that takes out and keeps out of the pockets of the people, more than it brings to the state, 108. Rates of seignorage in France at different periods, 318, n. l)uty on the coinage of, and its effect on exchange, 318, n.
Free Trade, importance of, to Great Britain, 190, 191, n.
Funded Property, the price of, not a steady criterion of the rate ofinterest, 179, 180. The holders of, how benefited by the low value of corn, 258-9. The funds not indebted for their high price to the depreciation of our currency, 287. Opposite effects of a depreciated currency on the value of land, und of funded propertv, 287.
Funding System, Essay on the, written by the author for the Supplement to the sixth edition of the Encyclopedia Britannica, 515-548.

G.
Gilchrist, Mr, quotation from his evidence as to the effect of the restriction of the issues of the Bank of England on the issues of the Scotch banks, 348-9.
Gold and Silver, being variable, insufficient as a medium for determining the varying value of other things, 11. Fluctuations to which they are subject, 11. Gold a commodity obtained under the same contingencies as ever)' other, and requiring labour and fixed capital for its production. 28, 263. Gold approaches more nearly to an invariable standard of value than any other commodity, 29. Effects of the discovery of the American mines on the value of, 46. Various advantages they possess as a standard for money, 46. The value of paper money influenced by such causes only as influence the value of gold, 57. Improvements of manufactures in any country tend to alter the distribution of the precious metals among the nations of the world, 78-80. On whom a tax on gold would temporarily and ultimately fall, 114, 118. The market value of gold is ultimately regulated by the comparative facility or difficulty of producing it, 114. Effects of a tax on gold, 115-8. Evils of prohibiting a free trade in precious metals when the prices of commodities are raised, 138-9. Value of gold and silver proportioned to the quantity of labour necessary to produce and bring them to market, 213. The obligation to pay their notes in gold coin or bullion, the only proper control over the abuse of their power by issuers of paper money, 215. A currency is in its most perfect state when it consists wholly of paper money of an equal value with the gold it professes to represent, 218. The use of paper instead of gold substitutes the cneapest for the most expensive medium, 218. Remarks on the employment of these metals in currency, 221-2. Their Edition: current; Page: [573] relative values at different periods accounted for, 221-4. Inconvenience of using each of the two metals as a legal tender for debts of any amount demonstrated, 223-4. Checks against an excessive quantity of silver coin, 225, n. Investigation of “the comparative value of gold, corn, and labour, 226-9. Effects of variations in the relative value of gold and silver considered, 270-5. Evident intention evinced by the Legislature to establish gold as the btandard of currency in this country, 272. Cause of the trifling rise in the price of gold on the Continent, 328-332. Prices of gold in Hamburgh, Holland, and England at different times, 329. Statement of the advantages of silver over gold as a standard, 403. — See also Bullion, Metals, and Money.
Grcnl'ell, Mr, his resolutions proposed to Parliament on the advantages derived by the Bank from the management of the Rational Debt, and ihe balances of public money in their hands, quoted, 417-451.
Grenville, Lord, extract from his speech of 15th March 1815, on the impolicy of protection to agriculture, 484.
Gross Revenue, See Revenue.

H.
Hamburgh, rates of exchange between England and Hamburgh considered, 308315. Silver, the standard of value in, 311.
Hamilton, Professor, his “Inquiry concerning the rise and progress, the redemption, and present state of the National Debt of Great Britain,” quoted, 515-7, 520, 531, 547-8.
Holland, low rates of profits and interest in, accounted for, 175, n. Silver the currency of, 329.
Houses, rent of, distinguished into two parts—building rent, and ground rent, 119. Difference between rent of houses and rent of land, 119-120. By whom taxes on houses are borne, 119-120.
Huskisson, Mr, his opinion as to the effect of an increase in the paper currency on the value of gold, as an exportable commodity, quoted and commented on, 337-339. His speech on the state of the finance and sinking fund of 25th March 1813, quoted, 518-9, 526.

I.
Importation, effects of high duties on the importation of corn, considered, 187192. Pernicious effect of high duties on the importation of manufactures or of corn, stated, 189. Inexpediency of restrictions on importation, considered, 371390. Quantities of oats, wheat, aud wheat flour imported from Ireland, from 1818 to 1; 490.
Improvements, effects of improvements in agriculture, on rent, 41. Importance of agricultural improvements considered, 43, n. Effects of improvements in manufactures, on the distribution of the precious metals, 78-80.
Income, taxes not necessarily taxes on income or capital, because laid on these respectively, 88. Illustrations of this principle, 88. How the objects of an income tax may be obtained without its inconveniences, 94. Tithes a very burdensome and intolerable tax, because they increase with the gross and fall on the net income, 105. Efi'ect of an income tax, if fairly levied, 357.
Interest, effects of the accumulation of capital on profits and interest, considered, 174-180. Low rate of profits and interest in Holland accounted for, 175. Some notion may be formed of the rate of profits, from the market rate of interest, 178. In all countries the State has interfered to prevent a fair and free market rate of, 179. Legal rates of interest in tins country at different remote periods, stated, 179. The rate of, though ultimately governed by the rate of profit, is subject to temporary variations from other causes, 179. Causes of these variations considered, 179180. The price of funded property not a steady criterion of the rate of interest, 179. The rate of interest for money regulated by the rate of profits derived from the employment of capital, 220. The assistance supposed to be given by the Bank to commerce, by lending money under the market rate of interest, rather a disadvantage than otherwise, 220-1. Kate of interest not affected by the abundance or scarcity of money, hut of that part of capital not consisting of money, 284. Rate of, cannot be controlled by any bank, 474. Project of advancing money on loan, at a low interest, to speculators in corn, considered, 486-7.

L.
Labour, the original purchasemoney paid for all things, 10. The foundation of their exchangeable value, except where they cannot be increased by human industry, 10. The quantity of labour bestowed on the production of any object, and the quantity it can command in the market, used by Adam Smith, as if they were equivalent expressions, 11. Labour or corn as variable a medium of value as gold and silver, 11,253. Fluctuations towliich it is subject, 12. Effects of improvements in machinery on the value of, 12. The relative value of different qualities of, depends much on the comparative skill of the labourer, and the intensity of tho Edition: current; Page: [574] labour performed, 15. The exchangeable value of commodities is iu proportion to the labour bestowed not only on their immediate production, but on all implements, #c., required to assist that labour, 17. Economy of labour, whether in its manufacture or the formation of the capital for its production, reduces the relative value of a commodity, 18 Illustrations of this principle, 18. Unequal effect of a rise in the wages of, on commodities produced by circulating and by fixed capital, 21. No rise in the value of, without a full of profits, 23. The price of, rises with every difficulty of providing for the maintenance of labourers, 27, n. With every rise iu the price of, new temptations are offered to the use of machinery, 27, n. The quantity of, necessary to obtain the produce of land, regulates the rate of rent, profit, and wages, 31. Adam Smith's theory of productive and unproductive labour considered, 39, n. Mr Buchanan's observations thereon quoted, 40, n. Natural and market prices of, defined, 50. Increase of capital in quantity and value raises the natural and market prices of labour, 51. Increase of capital in quantity, but not in value, raises the market price of labour only, 51. Causes of the difference between the natural prices of labour in different countries, 52, and n. A diminution in the wages of, raises profits, but has no effect on price, 75. The prices of corn and labour will be relatively higher in a country excelling in manufacture, so as to occasion an influx of money, than in any other, 83. Investigation of the comparative value of gold, corn, and labour, 226-9. The demand for, depends on the increase, of circulating, and not of fixed capital, 241. n.
Labourers, how their happiness and comfort are affected by the relation between the natural and market prices of labour, 51. The supply of, and demand for labourers one of the causes of a rise or fall of wages, 53. A rise in wages not always productive of comfort to, 55-56. Influence of machinery on the interests of the labouring classes, considered, 236-242. When and how the use of machinery may be injurious to their interests, 238.
Land, the division of the whole produce of, between landlords, capitalists, and labourers, the criterion of the rise or fall of i rent, profit, and wages, 31. The quantity of labour necessary to obtain the produce of, regulates the rate of rent, profit, and wages, 31. Nature of the rent of, considered, 34. The cultivation of inferior, one of the causes of the origin of rent, 36. Kffects of improvements which increase its productive powers, and obtain its produce with less labour, 42. One of the objections to tithes is, that it increases with the gross and falls on the net produce ot land, 105. Different modes in which a land-tax may be levied, 107. Capital expended iu increasing the productive power of land becomes incorporated with, and cannot afterwards be separated from it, 158, n. Examination of Adam Smith's doctrine concerning the rent of land, 197203. Different effects of a depreciated currency on the Talue of land, and that of the funds, 287.
Landlords, agricultural improvements, though at first injurious, are ultimately beneficial to, 43, n. Difficulty of production, how beneficial to, 44. Illustrations of this, 44, 71. A tax on rent would fall wholly on, 102-107. As rent is constituted, it would be a tax on the profits of the landlord, and would discourage cultivation, 102. As landlords are compensated by the rise of raw produce, and as wages, and through them profits are affected, they are the class peculiarly exempted from the effect of tithe, and every other land-tax of that kind, 109. A tax on the farmer's profits, how beneficial to the landlord, 126-7. A tax on wages does not fall on the landlords as such, but on the profits of stock, 136-140. So far only as landlords directly employed labour in the expenditure of their revenues, by supporting menial servants, #c., would they be subject to its operation, 140. Have u decided interest in the rise of the natural price of com, 189, 378. Benefit of a high price of corn to them, 202-3, 378.
Land Tax, virtually a tax on rent, 107. Different modes in which a land-tax may be levied, 107.
Lauderdale, Lord, bis theory that the scarcity and monopoly of a commodity increase wealth, controverted, 167. Inconclusive in his arguments as to the effect of the Mint regulation on the relative value of gold and silver, 224-5, n. Opinion of. on the influence of demand and supply on prices, quoted and commented on, 233-4.
Legislature, wages should never be controlled by the. 57.
Liverpool, Lord, his Letter to the King on the coinage, quoted, 333.
Loans, observations on loans to the State, 146-9,180, n. Project of advancing money on loan at low interest to speculators in com, considered, 486-7.—See also National Debt.
Locke, Mr, the inconvenience of employing each of two metals as legal tender demonstrated by, 223. Of opinion that th? law forbidding the melting and exporting Edition: current; Page: [575] coin was inoperative, 324. His theory relative to the recoinage in 1696, considered, 332-3.
Luxuries, the advantages and disadvantages of taxes on, stated, 144-5. The only effect of a tax on, is to raise their price, 146. It falls wholly on the consumer, and neither increases wages nor lowers profits, 146.

M.
Machinery, effects of improvements in, on the value of labour, 12. Every rise in the price ot'labour offers new temptations to the use of, 27, n. How beneficial to the public, 27. When wages rise, commodities made by machines fall, and that in proportion to their durability, 27. Kffects of improvements in agricultural machinery on the price of raw produce, and on rent, 42. Means of abridging labour, either in the manufacture or conveyance of goods, operate on price, but not on profits, 75. The discovery of, tends to raise the relative value of money, and to encourage its importation, 128. Machinery, and natural agents acting gratuitously, add to a commodity value in use, but not value in exchange, 172-3. Its influence on the interests of the different classes of society considered, 235-242. The author's former views on this subject corrected, 235-237. The use of, though advantageous to landlords and capitalists, often injurious to the interests of the labouring class, 236. When and how injurious to the latter, 238. Advantages of, in accumulating capital and reducing prices, considered, 241-2.
Malt, observations on the tax on, 152-3.
Malthus, Mr. In 1815, his “Enquiry into the Nature and Progress of Kent,” and the “Essay on the Application of Ciipital to Land,” by a Fellow of University College, Oxford, presented, nearly at the same moment, the true doctrine of rent, 5. His remarks on the doctrine that the relative values of commodities will be governed by the relative quantities of labour bestowed on their production, 30, n. Quoted as to the price of labour being indicative of the wants of society respecting population, 131. Examination of his opinions on rent, 243249. His exposition of the causes of the rise in price of raw produce in rich and progressive countries, quoted, 250. Wrong in supposing that increase of population, and agricultural improvements are causes of the increase of rent, 250-2. His supposition that the net income of the country is diminished in proportion to its gross income disproved, 256-7. Kemarks on his “Inquiry into the Nature and Progress of Kent,” and “The Grounds of an Opinion on the Policy of Restricting the Importation of Foreign Corn,” 371-390. His definition of the rent ofland, 371.
Mansfield, Sir James, his opinion as to the mode of compelling the Governor and Directors of the Bank to produce their books, #c., quoted, 434.
Manufactures, improvements of, in any country tend to alter the distribution of the precious metals among the nations of the world, 78-80. Why the prices of home commodities are higher in those countries where manufactures flourish, 81. Are subject to reverses and contingencies from which agriculture is free, 159. Bounties on the exportation of, will raise for a time their market, but not their natural price, 188. The inconveniences resulting from levj ing a tax on manufactured commodities at an early period of their manufacture, are greatlv magnified, 230231.
Manufacturers. They pay less poor rates than farmers, in proportion to their respective profits, 137. Have no interest in the rise of the natural price of their commodities, 188. Are benefited while the market price of their productions exceeds their natural price, 189.
Metals, the value of, subject to variations like that of every other commodity, 45. Effects of the discovery of the American mines on the value of, 46. Inconvenience demonstrated, of employing each of two metals as legal tender for debts of any amount, 223-4. Laws which regulate the distribution of the precious metals throughout the world, 270. A circulating medium consisting of two metals, not conducive to the existence of a permanent measure of value, 270.
Mellish, Mr, his resolutions proposed concerning the Bank of England, 452-4.
Mines. The principle which regulates the rent ofland governs also that of mine.-, 45, 199. Value of their produce subject to variation like that of every other commodity, 45. Effects of discovering America and its rich mines, on the value of metals, 46. Improvement in the facility of working the mines of precious metals will diminish the value of money generally, 83. Observations on the rent of mines-, 198-200.
Mint, regulations that should be adopted at the Mint, and the Bank of England, 215-8.
Money, not an invariable measure of value, 2S. Variations to which it is subject, 28. Effects of variations in the value of, on the price of commodities, 31. A Edition: current; Page: [576] rise in wages, from an alteration in its value, produces a general effect on price, and none on profits, 81. Variations in its value, however great, do not affect the rale of profits, 32. Advantages possessed by gold and silver as a standard for money, 46. Improvements of manufactures in any country tend to alter the distribution of money among the nations of the world, 78-80. Different value of money in different countries accounted for, 81-3. No effect produced on the rate of profits either from the influx or efflux of money, 81. Improvement in the facility of working the mines of precious metals will diminish the value of money generally, 83. The rate of exchange no criterion of the value of, 84. A fall in the value of, one of the onuses of the high price of provisions, 94. The demand for, regulated entirely by its vnlue. and its value, by its quantity, 114. The discovery of machinery tends to raise the relative value of money, and encourage its importation, and all taxation to lower it, and encourage its exportation, 128. Low value of, in Spain, prejudicial to its manufactures and commerce, 137. Observations on the rates of interest for, 178180. The value of, though partially, not permanently degraded by a bounty on corn, 18C-7. The quantity of, employed in a country, dependent on” its value, 213. Effects of the State charging a seignorage on coining money, 213-4, 220. The establishment of banks deprived the State of the sole power of coining or issuing money, 214. An obligation to pay their notes in gold coin or bullion, the only proper control over the abuse of their power by the issuers of paper money, 215. Temptation to export money in exchange for goods, never arises but from a redundant currency, 267. The rate of interest not nffected by the abundance or scarcity of money, but of that part of capital not consisting of money, 284. Adam Smith's distinction between money and revenue, quoted. 284. Commodities, generally, can never become a standard to regulate the quantity and value of money, 401. Project of advancing money on loan at a low interest to speculators in com, considered, 486-7.—See also Currency, Gold and Silver, Mines, and Paper Money.
Monopoly, definition of monopoly price, 150. On what it depends, 150. Why monopolized commodities vary in value, 234.
Mushet, Mr, his acknowledgment of the inaccuracy of his first tables as to exchange, quoted, 310-1. The principle on which his amended tables are constructed, 310. Objections stated to the accuracy of his amended tables, 311.

N.
National Debt, nature and effects of, considered, 14(1-150. Melon's definition of the nature and effects of a national debt, as given by Say, quoted, 147. Best mode of diminishing it, considered, 149. No sinking fund can be efficient for diminishing the debt, unless derived from the excess of the public revenue over the expenditure, 149. Mercantile inconvenience resulting from the quarterly payment of dividends to the public creditors, and remedy suggested, 410-411. Table showing the amount annually paid by the public, from 1797 to 1815, for management of the British, Irish, German, and Portuguese debt, 437. Table showing the total amount annually received by the Bank, from 1797 to 1815, for receiving contributions 011 loans, 437. Table showing the total amount of unredeemed debt on 1st February 1815, 438. Hamilton's “Inquiry concerning the Ease and Progress, the Redemption, and Present State of the National Debt of Great Britain,” 515-7, 520, 531. Consideration of the best mode of providing for our annual expenditure in war and peace, and whether a fund raised for the purpose of paying debt will not be misapplied by ministers, 538-548.
Net Hevcnue.—See Revenue.
Newton, Sir Isaac, his report on the causes of the exportation of silver coin, 333.

P.
Paper Money, value of, influenced by such causes only as influence the value of gold, 57. Circulation of, explained, 214. The currency may as effectually be increased by paper as by coin, 214. Payment in specie not necessary to secure its value, 214. The quantity issued must be regulated according to the value of the standard metal, 214, 403-4. Why the Bank of England was liable to be drained of specie for its paper currency, 214-5. An obligation to pay their notes in gold or bullion, the only proper control over the abuse of their power by issuers of paper money, 215. A currency is in its most perfect state, when it consists wholly of paper money of an equal value with the gold it professes to represent, 218. The use of paper instead of gold substitutes the cheapest for the most expensive medium, 213. Provided there be perfect security against abuse of the power, it is immaterial whether paper money is issued by the State or by banks. 218-219. Illustrations of this, 219-220. Effect of redundancy on the value of pnper money, 278. The Bank of England is thegreatregulator of country paper, 283. Advantages attending die Edition: current; Page: [577] nsc of, 397-9.—See also Currency and Money.
Paris, exchange between England and Paris considered, 31G-9.
Parliamentary Reform, observations on, bv the author, printed in the Scotsman of the 24th April 1824, 551-556.
Peace, the commencement of, after a long war, or the commencement of war after a long peace, how productive of distress in trade, 160. The transition from war to peace, how injurious to agriculture, 161.
Pearse, Mr, his statement presented to the Bullion Committee, 298.
Pool, Mr (now Sir Robert), effect of his bi.. tor restoring the ancient standard, on the price of corn, 467-175.
Perceval, Mr, his letter, in 1808, to the Governor and Deputy Governor of the Bank, as to the participation of the public in its advantages, 419. His proposals to the Bank, 420.
Petty, Lord Henry, his speech in 1807 on the accumulation of the sinking fund, quoted, 532-3.
Pitt, Mr, quoted as to the relief of the poor, 58, n. Remonstrance of the Bank to Mr Pitt, as to their embarrassment, 277, n. His speech, on the sinking fund, of 17th February 1792, 521. Comparison of the effects of his plan, and that of Mr Vansittart, on the sinking fund, 523-C. His speech in 1786 on the sinking fund, 542-3.
Political Economy, principal problem in, to determine the laws regulating the distribution of the earth's produce, 5. Many of the errors in, have arisen from considering an increase of riches and an increase of value as synonymous, and from unfounded notions as to a standard measure of value, 166.
Poor Laws, pernicious effects of, considered, 57, 58, 59. Their evil tendency developed by Mr Malthus, 58. Remedy pointed out, 58.
Poor Kates, nature of, 155. Their operation under different circumstances, considered, 155-8. How levied, 155-6. A much larger amount falls on the farmer than on the manufacturer, in proportion to their respective profits, 157.
Population, increase of, one of the primary causes of the origin of rent, 36. Tb.8 difficulty of providing food for an augmented population one of the causes of a rise of rent, 40. Improvements in agriculture give a great stimulus to population, 48, n. Relative increase of population and capital in countries differently situated, considered, 53-54. The demand of an increasing population, ultimately attended by increased cost of production, one of the causes of the high price of provisions, 94. Price of labour indicative of the wants of society respecting population, 131. Why population increases more rapidly in America than in Europe, 249. Increase of, no cause of the rise of rent, 250.
Precious Metals.—See Gold and Silver.
Price, Adam Smith's definition of real, quoted, 10. Of labour necessarily rises with every difficulty of providing for the maintenance of men, 27, n. With every rise in the price of labour new temptations are offered to the use of machinery, 27, n. Effects of variations in the value of money, on the price of commodities, 31. A rise in wages from an alteration in the value of money, produces a general effect on price, and none on profits, 31. Of corn is regulated by that produced with the greatest quantity of labour, 40. Kent docs not enter as a component part into the price of corn, 40. Effects of agricultural improvements on the price of raw produce, 42. Natural and market price of commodities distinguished, and how affected by the circulating capital of the monied class, 47-8-9. Natural and market prices of labour defined, 50. How the relation between its market and natural prices affect the comfort and happiness of the labourer, 51. Increase of capital in quantity and value, raises the natural and market prices of labour, 51. Increase of capital in quantity, but not in value, raises the market price only, 51. Causes of the difference between the natural prices of labour in different countries, 52, and n. The price of commodities on which wages and labour are expended, one of the causes of their rise or fall, 53. A rise in the price of commodities not necessarily produced by a rise in wages, 57. Interest of the farmer to keep the price of produce low, 63, 477. Means of abridging labour, either in the manufacture or conveyance of goods, operate on price, but not on profits, 75. A diminution of the wages of labour raises profits, but produces no effect on price, 75. Explained why the prices of home commodities are higher in those countries where manufactures nourish, 81-3. A tax on raw produce raises its price, 91. Monopoly price considered, 150-1-2-3. Difference between the regulation of the price of corn, and of the price of manufactured commodities, 150. The influence of demand and supply on prices only temporary, 232. The cost of production regulates the real price of commodities, 232-250. Effects of machinery in reducing the price of commodities, 242. A rise in the market price of Edition: current; Page: [578] corn encouiagesus production, 253. High price of bullion a proof of the depreciation nf bank notes. 263-290. Causes of the exces of the market over the Mint price of gold and silver bullion considered, 277, and n. Influence of a low price of corn on the profits of stock considered, 371-390. A remunerating price of corn considered. 459-461. Influence of a rise of wages on the price of corn, 461-3. Effect of abundant crops on the price of corn, 465-7. Effect produced on the price of corn by Mr Peel's bill for restoring the ancient standard, 467-475. Injurious effects of the constantly fluctuating prices of corn, 477. Under a system of protective duties giving the monopoly to the home growers of corn, prices must be fluctuating, 478-486.
Produce, the division of the produce of land among landlords, capitalists, and labourers, the criterion of the rise or fall of rent, profit, and wages, 31. The quantity of labour necessary to obtain it, regulates the rate of rent, profit, and wages. 31. Effects of agricultural improvements on the price of raw produce, 42. A rise in the price of raw produce lowers agricultural as well as manufacturing profits. 63. Nature and effects of a tax on raw produce, 91. The price of raw produce rises in proportion to the tax, which thus falls on the consumer, 91-3. Objections to taxing the produce of land considered, and answered, 91-101. A tax on raw produce, and on the necessaries of the labourer, raises wages and lowers profits, 93. One of the objections to tithes is, that they increase with the gross, and fall on the net produce of land, 105. A land tax imposed on all cultivated land is a tax on produce, and will raise its price, 107. Mr Malthus' exposition of the causes of the rise in price of raw produce in rich and progressive countries, quoted, 250.
Producer, remarks on the inconveniencies supposed to result from the payment of taxes by the, 230-1.
Production, agricultural improvements which increase it, though at first injurious, are ultimately beneficial to landlords, 43, n. Difficulty of, how beneficial to andlords, 44. Illustration of this, 44, n. Tendency to discourage both cultivation and production, an evil inseparable from all taxation, 109. The cost of, ultimately regulates the price of commodities, 232-250.
Profits. No rise in the value of labour, without a fall of, 23. A rise in wages, from an alteration in the value of money, produces a general effect on price, and therefore none on profits, 31. Quantity of labour in obtaining the produce of hind, the proper criterion fur judging of the r.ite of protit, rent, and \vuges, 31. 2iale of, not affected by variations in the value of money, 32. How affected by the circulating capital ol the inonied class, 47, 48, 49. A rise in the price of corn, uhich increases the money wages of the labourer, diminishes the money value of the farmer's profits, 62. Agricultural, as well us manufacturing profits, are lowered by a rise in the price of raw produce, if accompanied byarise of wages, 63. Proofs that profits depend on the quantity of labour requisite to provide necessaries for labourers on that land, or with that capital, which yields no rent, 65-70. Effects of an extension of foreign trade on profits, 72. Proofs that the profits of a favoured trade will speedily subside to the general level, 73-74. These apply equally to home trade, 75. Foreign trade has no tendencv to raise the profits of stock, unless tbe commodities imported are those on which the wages of labour are expended, 75. Means of abridging labour, either in the manufacture or conveyance of goods, operate on price, but not on profits, 75. In one and the same country profits are always on the same level, hut not so between differen t countries, 7 6. No effect produced on the rate of, either from the influx or efflux of money, 81. Profits depend, not on nominal, but real wages, 82. A tax on raw produce, and the necessaries of the labourer, raises wages and lowers profits, 93. Taxes on necessaries virtually taxes on profits, 122. Taxes on profits considered, 122-8. A tax on the profits of the farmer, how beneficial to the landlord, 126-7. A tax on wages, in fact, a tax on profits, 136. Effects of a low price of corn on wages and profits, 163. Effects of the accumulation of capital on profits and interest, considered, 174-180. Low rate of profits and interest in Holland accounted for, 175, n. Only case, and that temporary, in which the accumulation of capital may be attended with a fall of profits, 176. Extremely difficult to determine the rate of the profits of stock, 178. Some notion of the rate of profits may be formed from the market rate of interest, 178. Inequality of profit always the inducement to remove capital from one employment to another, 185. Profits can only be lowered by a competition of capitals not. consisting of circulating medium, 286. Influence of a low price of corn on the profits of stock considered, 371-390. Table showing the progress of rent and profit under an assumed augmentation of capital, 376. Observations on the profits of the Bank of England, 393. Statements as tc then-misapplication, and remedy proposed. Edition: current; Page: [579] 423-435. Table showing the profits of the Bank from 1797 to 1816, 427. Estimate of the profits of the Bank in different years, 439-451. Effects of a low value of corn on the rate of profits, 475-8.
Prohibition. Effects of prohibiting the importation of corn considered, 188-9.
Property. Impolicy of taxes on the transference of, 89. Too much facility cannot be given to the conveyance and exchange of, 89.
Protection. Agriculturalprotectionconsidered, 4 59-494. Under a system of protecting duties giving the monopoly to the home growers of corn, prices must be fluctuating, 478-486.
Provisions. Causes of the high price of, 94. 1st, A deficient supply, 94-5. 2 A gradually increasing demand, ultimately attended with increased cost of production, 95-6. 3d, A fall in the value of money, 9G. 4th, Taxes on necessaries, 96-7.

R.
Rent, definition of, 34. The nature of, in the strict sense, and in the popular one, 35. The term, as used by Adam Smith, 34. Circumstances from which it originates, 36. Progress of, considered, 36. Rise of, the effect of the increasing wealth of the country, and the difficulty of providing food for its augmented population, 40. Influence of the prices of corn on, 40. Effects of agricultural improvement on, 41, 42, 43. The principle which regulates the rent of land, governs also that of mines, 45. The increasing difficulty of providing an additional quantity of food with the same proportional quantity of labour, which raises rent, also raises wages, 55. Difference between the rise of rent and the rise of wages explained, 55. Always falls on the consumer, and not on the farmer, 63. A tax on. would fall wholly on landlords, and could not be shifted to any class of consumers, 102. A tax on rent, as it is constituted, would discourage cultivation, 102. Corn rents materially affected both by tithes and amoney tax, 104. A land tax levied in pronortion to, and varying witn us rent, is in effect a tax on rent, and full on the landlord, 107. Of houses distinguished into two parts, building rent, ami ground rent, 119. Ground rents, and the ordinary rent of land, not fit subjects for exclusive taxation, 121. Examination of Adam Smith's doctrine concerning the rent of land, 197203. Examination of Mr Malthus's opinions on rent, 243-9. Neither increase of population, nor agricultural improvements, onuses the rise of rent, 250-1. Loss of rent the effect of a low price of corn, 259-260. Table showing the progress of rent and profit under an assumed augmentation cf capital, 376.
Revenue. Advantages derived by a country from a large gross, rather than a large net revenue, constantly magnified by A dam Smith, 210, and by M. Say, 210, n. Examination of their doctrine, 210-212. The labouring classes have an interest in the manner in which the net income of the country is expended, 239. A diminution of gross, not necessarily followed by a diminution of net income, 256-8. Adam Smith's distinction between money and revenue, 284.
Riches, definition of, 165. Difference between value and riches explained and considered, 165-173. May be increased in two ways,—by employing a greater portion of revenue for the maintenance of productive labour, thereby adding to the quantity and valne of commodities; or by making the same quantity of labour more productive, thereby adding to the abundance of commodities, but not to their value, 168. Why the last mode of increasing them is preferable, 168-9. Erroneous views of M. Say in regard to value and riches, considered, 169-173.

S.
Say, M. “Economic Politique “cited, 6. Quoted as to the use of natural agents, 35, n. As to the regulation of price 38, n. His opinion that taxes on the transference of property are impolitic, 89. His mistaken views of the nature and effects of the English land tax considered and corrected, 110-1. His error as to taxes iu kind, rectified, 111-2. His erroneous opinion that the price of corn influences the price of all other commodities, 136, n. His maxim as to the best plans of finance and taxation, quoted and commended, 141-5. His remarks as to the operation of taxes on commodities, quoted, 142-3-6, notes. His opinion as to the effect of credit, quoted and controverted, 150, n. Fallacy of his argument, that taxes on raw produce fall on the landlord, 153-4. Overstates the advantages of commerce, 160, n. False inference he has drawn as to the value of silver, 166, n. Remarks on the fallacy and inconsistency of his views as to value and riches being synonymous, 169-173. Overlooks the essential difference between value in use, and value in exchange, 172-3. His reasoning on the inconvenience of public loans, inconclusive, 180, n. Wrong in supposing that prohibition of importation enables producers at home permanently to raise the market over the natural price, 190-191, note. His contradictory opinions as to the profits of Edition: current; Page: [580] home and foreign trade, 191-2, notes; Magnifies (as docs also Adam Smith) the advantages of a large gross rather than a large net revenue, 210, n. Observations on his overstatement of the inconveniences of taxes paid by the producer, 230-1. His opinion on the influence of demand and supply on prices, quoted, 233. Mistaken in his view of gross and net produce, 256, n.
Scarcity. One of two sources of the exchangeable value of useful commodities, 9. The value of some commodities determined by scarcity alone, 9.
Scotsman. Observations of the author on Parliamentary Reform, printed in the Scotsman of the 24th April, 1824, 551-556. Speech of the author in Parliament, on the plan of Voting by Ballot, printed in the Scotsman of 17th July 1824, 559-564.
Scignorage. Effects of the State charging a seignorage on the coining of money, 213-4, 225. Rates of seignorage in France at different periods, 318, n. Observations on the principles of, 345-7. Limits beyond which a seignorage cannot be advantageously extended, 345.
Silver.—See Gold and Silver.
Simonde, M., remarks on the opinion of, as to the inconveniences attending a tax paid by the producer, 231.
Sinking Fund. None can be efficient for diminishing the national debt, unless derived from the excess of public revenue over expenditure, 149. How managed in England, 219. Account of the rise, progress, and modifications of the Sinking Fund, with observations as to the probability of its accomplishing the object for which it was instituted, 515-538. Mr Huskisson's speech of 25th March 1813, on the state of the finance and Sinking j Fund, 518-9. Mr Pitt's speech of 17th! February 1792, on the Sinking Fund, 521. Effect of Mr Vansittart's plan, on the Sinking Fund, 523, u. Comparison of the plans of Mr Pitt and Mr Vansittan, 523-6. Lord Henry Petty's speech in 1807, on the accumulation of the Sinking Fund, 532-3. Mr Pitt's speech in 1786, on the Sinking Fund, 542-3. The Sinking Fund has greatly increased the debt instead of diminishing it, 545. Mr Vansittart's speech in 1813, on the Sinking Fund, 546-7.
Smith, Dr Adam, not having viewed correctly the principles of rent, has, in consequence, overlooked many important truths, 5. His definition of value, 9. His definition of real price, 10. Com or labour, his standard measure of value, alleged to be as variable as gold and silver, 11. Incorrect in saving that labour alone, never varying in its own value, is the sole ultimate, and real standard, 12. His doctrine correct, that the proportion between the quantities of labour necessary for acquiring different objects, is the only circumstance which can afford any rule for exchanging them, 13. Quoted as to the difficulty of ascertaining the proportion between different quantities and sorts of labour, 15, n. His statement, that the proportion between different rates of wages and profits, is not much affected by revolutions in the public welfare, quoted, 15. His doctrine, that u rise in the price of labour is uniformly followed by a rise in the price of all commodities, unsound, 30. Strictures on his defhiitiou of rent, 34. His theory of productive and unproductive labour considered, 39, n. Mr Buchanan's observation thereon, 40, n. Cited, 49,72. His opinion that taxes on the transference of property are oppressive, 89. His four maxims, to which all taxes should conform, 107-8. His erroneous view of taxes on the produce of land, corrected, 108-9-10. His opinion that ground rents, and the ordinary rent of land are fit subjects for peculiar taxation, quoted and objected to, 120-1 His opinion as to the immediate effect of a tax on the wages of labour, 129. Mr Buchanan's objections thereto confuted, 129-133. Though correct in his view of the immediate, is incorrect in his view of the eventual, operation of a tax on wages, 133-6-140. Correction of his mistaken view of taxes on necessaries, 140. Ably explains the disadvantage of a low value of the precious metals proceeding from forced abundance, 137. His argument just, that the labouring classes cannot materially contribute to the burdens of the State, 141. Correct in his statement, that the malt tax falls on the consumer, 152-3. Mr Buchanan's remarks thereon, 153. Quoted as to the difference between the real and the nominal price of commodities and labour, 166, n. Gives an incorrect, as well as a correct description of riches, 168. Cites Holland as affording an instance of the fall of profits from the accumulation of capital, without considering her peculiar position, 175. Wrong in saying that when the produce of any particular branch of industry exceeds the demand, the surplus must be sent abroad, 175, n. Mistaken as to the origin of the carrying trade, 177-8. Quoted as to the difficulty of determining the rate of profits, 178. Remarks on hitobjectionable doctrines, as to bounties on exportation and prohibitions of importation, 183-9. Falls into error from thinking that the money price of corn regulates that of all other home made commodities, Edition: current; Page: [581] 185. His correct account of the nature of value, 186. Right in saying that n bounty causes a partial degradation in the value of money, 186. Wrong inference he has drawn from the great difference existing between corn and other goods, 188. Strictures on his doctrine concerning the rent of land, 197-203. Has admirably explained the principle of rent, when treating of mines, but has not applied the same to land, as be should have done, 199. Observations on the evils of a monopoly of the colony trade, 204. He overrates those evils, 208. Quoted as to the effect of treaties of commerce, 205. Constantly magnifies the advantages derived by a country from a large gross, rather than a large net revenue, 210. His argument fallacious, that though the returns of the foreign trade of consumption be as quick as the home trade, the former gives but half the encouragement to the industry or productive labour of the country, 212. Strictures on his principles of paper currency, 214-5. The superiority he awards to the Scotch mode of affording accommodation to trade by cash accounts, 'anciful, 221. Not aware of the inconvenience of employing each of two metals in currency as legal tender for debts of any amount, 223-4. Examination of his doctrine relative to the comparative value of gold, corn, and labour in rich and poor countries, 226-9. His error in supposing the value of corn to be constant, 227. Quoted as to the foundation of the high price of precious metals, 263. His distinction between money and revenue, 284. Quoted as to the pernicious effects of a State disguising its bankruptcy by debasing its coin, 288-9. Quoted as to the duty for coinage in France, 318, n. His principle, that the paper money of every kind which can easily circulate in a country can never exceed the value of the gold and silver, of which it supplies the place, 344.
Spain, low value of money in, prejudicial to its manufactures and commerce, 137.
Specie.—Sec GOLD and Silver, and Money.
Stamp Duties, the levying of, impolitic, as a tax on the transference of property, 89-131.
Standard, an invariable standard of value imaginary, 41-2. Objections to the use of a standard commoditv considered, 400-2. Imperfections of the standard, 402-403. Effects of variations of the currency below the standard, without allowance for the countervailing variations above it, 403. Correspondence with the standard, the rale for paper money, 403-4. F.ffect of Mr Peel's 'liiii for restonng tlie ancient standard, on the price of corn, 467-475.
Stock, essay on the influence of a low price of corn on the profits of stock, 371390.
Stockholders, less benefited than farmers and manufacturers by the low value ol corn, 258-9. Remedy proposed for the mercantile inconvenience caused by the quarterly payments of dividends to the public creditors, 410-11.
Steuart, Sir James, quoted as to testing the value of the currency by exchange, 275.
Supply and Demand.—See Demand and Supply.
Sweden, causes of the favourable exchange with Sweden considered, 320-1, n.

T.
Taxes, on what, the ability to pay them depends, 7. Their nature, and from what sources they are ultimately paid, 87. In what the great evil of taxation consists, 88. Taxes not necessarily taxes on capital or income, because laid on these respectively, 88. Illustrations of this principle, 88. Impolicy of taxes inevitably falling on capital, 89. Of this nature are taxes, on the transference of property, borrowed money, and legal proceedings, 89. On whom and what, such taxes generally fall, 89. Facility of their collection some compensation for their injurious effects, 90. Nature and effects of a tax on raw produce, 91. A rise in price, the only means by which the cultivator can pay this tax, 91. It thus falls on the consumer, 91-3. Objections to this tax considered and answered, 91-101. A tax on raw produce, and on the necessaries of the labourer, raises wages and lowers profits, 93. Taxation either must act on profit, or other sources of income, or it must act on expenditure, 98. Taxes on the profits of stock applied directly or indirectly, provided all other income be taxed, have this advantage over others, that no one can escape them, and each contributes according to his means, 98. A tax on rent would fall wholly on landlords, and could not be shifted to any class of consumers, 102. A tax on rent, as it is constituted, would discourage cultivation, 102. Nature of tithes, and difference between them, and taxes on rent, and on raw produce, 104. Tithes an equal tax, 104. Corn rents ' materially affected both by tithes and a money tax, 104-5. Objections to tithes, i 105-6. Different modes in which a land,' tax may be levied, 107. If levied in proportion to, and varying with the rent of land, it is in effect a tax on rent, nnd falls on the landlord. 107. If imposed on nil Edition: current; Page: [582] cultivated land, it is a tax on produce, and will therefore raise its price, 701. A tax on all cultivated land may be in proportion to its quality and produce, in the saine way as tithes, or it may be a fixed tax per acre, 107. The latter contrary to one of the maxims to which all taxes should conform, 107-8. The faille in France before the Revolution, a tax of this objectionable description, 108. Tendency to discourage cultivation and production, an evil inseparable from all taxation, 109. On whom a tax on gold would temporarily and ultimately fall, 114-8. Effects of a tax on gold, 115-8. Taxes on houses, by whom borne, 119-120. Ground rents not 11 fair subject for exclusive taxation, 120-1. Taxes on necessaries, virtually taxes on profits, 122. Taxes on profits considered, 122-128. Tax on the farmer's profits, how beneficial to the landlord, 126-7. All taxation tends to lower the relative value of money, and to encourage its exportation, 128. Effects of taxes on wages. 129. Difference between a tax on necessaries and a tax on wages, 129. The results of a tax on wages, will be the same as those of a direct tax on profits, 129136. What commodities are the fittest objects of taxation, 144. The advantages and disadvantages of taxes on luxuries stated, 144-5. Effect of taxes to defray the interest of loans, 145. Effect of a tax on luxuries, 146. Nature of poor rates, and their operation under different circumstances, considered, 155-8. High duties on the importation of manufactures or of com, or a bounty on their exportation, the worst species of taxation, 189. A bounty on the production of com, raised from a tax on commodities, would make corn relatively cheap and manufactures dear, and vice versa, 195. The inconveniences supposed to result from the levying of a tax on manufactured commodities at an early period of their manufncture, are greatly magnified, 230-1. Considerable additions may be made to the taxes of a country without a corresponding increase in its circulating medium. 355. Effects of taxes imposed on a particular commodity, 463-5. Question—Can the present state of agricultural distress be attributed to taxation? considered, 487-491.
Tenants.—See Farmers.
Thornton, Mr, quoted as to the embarrassment of the Bank, caused by an over issue of notes payable in specie, 267. His error, from confusing an increase in the value of gold and an increase in its money price, exposed, 267-8. Quoted as to the conduct of the Bank before the restriction, 276. Quoted as to the non-depreciation of circulating paper, 278. Quoted as to the inefficiency of the law to prevent the exportation of gold coin, 280. Fallacy of his argument, that the gains of the Bank were in proportion to theirnotes incircu'...tion, and that no advantage was derived from the public deposits, except that they could thereby maintain more notes in circulation, 412-3.
Tithes, nature of, 104. Difference between them and a tax on rent, 104. They are an equal tax, 104. Difference between them, and taxes on raw produce, 104. Effects of, in different states of society, 104. Corn rents materially affected by. 104-5. Objections to, 1st, they are not a permanent and fixed tax, but increase in value, as the difficulty of producing corn increases; 2d. they increase with the gross, and fall on the net produce of land; and, 3d, they are injurious to landlords, as they act as a bounty on importation, 105-6. They do not discourage cultivation more than an equal amount would do, if raised in any other manner, 105.
Torrens, Colonel, his Essay on the external corn trade quoted, as to the difference between the natural prices ol labour in different countries, 52, n. The arguments in his Essay on the impolicy of restricting the importation of corn commended, and declared unanswerable, 164, n.
Trade. The profits of a favoured trade, whether foreign or home, speedily subside (o the general level, 73-5. Illustrations of this principle, 73-5. General causes of sudden changes in the channels of, 159-160. How injuriously affected by the commencement of war after a long peace, or of peace after a long war, 160. A revulsion in, more severely felt in rich, than in poorer countries, 161. Nature and origin of carrying trade considered, 177-8. Importance of free trade to Great Britain, 190-1, 71. Observations on colonial trade, 204-9. Temptation to export money for goods, termed an unfavourable balance of trade, 267. Two ways in which a country may be benefited by trade, 380-1.—See also Carrying Trade, Colonial Trade, Commerce, Foreign Trade, and Free Trade.
Treaties. Effects of commercial treaties considered, 205-7.

U.
Utility, though not the measure of exchangeable value, essential to it, 9.

V.
Value, the sources of defined by Adam Smith, 9. “Utility, though not the measure of, essential to exchangeable value, Edition: current; Page: [583] E. Exchangeable value of useful commodities derived from their scarcity, and the quantity of labour required to obtain them, 9. Value of some commodities determined by scarcity alone, 9. Corn or labour as variable a medium of value as gold and silver, 11. Effects of accumulation of capital on, 16. Exchangeable value of commodities is in proportion to the labour bestowed, not only on their immediate production, but on that of all the implements and capital required to give effect to the producing labour, 17. Economy in labour reduces the relative value of a commodity, 18. Illustrations of this principle, 18. Effects of a rise in wages on value, 19. The principle that value does not vary with a rise or fall of wages, how modified by the unequal durability of capital, 25. Impossible to have an invariable standard measure of, 28. Gold approaches nearer to an invariable standard of, than any other commodity, 29-46. Variations in the value of money do not affect the rate of profits, 32. The value of commodities regulated by the quantity of labour necessarily bestowed on their production under the most unfavourable circumstances, 37.' The general rule which regulates the value of raw produce and manufactured commodities, is applicable also to metals, 45. Effects of the discovery of American mines on the value of metals, 46. The same rule which regulates the value of commo-' dities in one country does not regulate the value of those exchanged between two or more, 75. Different value of money in different countries accounted for, 81-3. Improvement in the facility of working the mines of precious metals will diminish the value of money generally, 83. Difference between value and riches explained and considered, 165-173. Machinery, and natural agents acting gratuitously, add to a commodity, value in use, but not Milue in exchange, 172-3. The value of gold and silver proportioned to the labour necessary to produce and bring them to market, 213. The quantity of money employed in a country must depend on its value, 213. Payment in specie not necessary to secure the value of paper money, 214. Only necessary that its quantity should be sufficiently limited, 214. A currency is in its most perfect state when it consists wholly of paper money, of an equal value with the gold it professes to represent, 218. Investigation of the comparative value of i gold, corn, and labour, in rich and poor; countries, 226-9. A fell in the value of: com net so beneficial to stockholders, as to farmers and manufacturers, 258-9. The intrinsic value of gold and silver, from what sources derived, 263. Different effects of a depreciated currency on the value of land, and of the funds, 287 Causes of a fall in the exchangeable value of food, 379. Effects of a low value of corn on the rate of profit, 475-8.
Vansittart, Mr, his application, in 1814, to the Bank, in which he alludes to the participation of the public in its advantages, 420. Effect of his plan on the sinking fund, 523, n. Comparison of the effects of his plan, and that of Mr Pitt, 523-6. His speech in 1813 on the sinking fund, 546-7.
Voting by Ballot, speech of the author in Parliament on this question, printed in the Scotsman of 17th July 1824, 559-564.

W.
Wages. Effects of a rise in, on relative value, 19. Natural and market rates of wages distinguished, 50-51. Increase of capital in quantity and value, raises the natural and market rates of wages, 51. Increase of capital in quantity, but not in value, raises the market rate of wages only,. 51. Causes of the difference between the natural rates of wages in different countries, 52, and n. Wages subject to a rise or fell from two causes,—from variation in the supply of and demand for labourers, and from variation in the price of commodities on which wages of labour are expended, 53. The increasing difficulty of providing an additional quantity of food with the same proportional quantity of labour, which raises rent, also raises wages, 55. Illustrations of this principle, 55-6. Difference between the rise of rent, and the rise of wages explained, 55. A rise in wages not always productive of comfort to the labourer, 55-6. Arise of wages not necessarily productive of a rise in the price of commodities, 57. Should never be controlled by the interference of the legislature, 57. The rate of profits can never be increased but by a fall in wages, 75. No permanent fall of wages, but in consequence of a fall of the necessaries on which wages are expended, 75. A diminution in the wages of labour raises profits, but produces no effect on the price of commodities, 75. Profits depend not on nominal but real wages, 82. A tax on raw produce and the necessaries of the labourer, raises wages, 93. Effects of taxes on, 129-136. Difference between a tax on necessaries, and a tax on wages, 129. The results of a tax on, the same as those of adirect tax on profits, 129-136. Effects of a low price of corn on wages Edition: current; Page: [584] and profits, 163. influence of a rise of wages on the price of corn, 461-3.
War, the commencement of, after a long peace, or the commencement of peace after a long war, how productive of distress in trade. 1 GO. Evil effects of a transition from war to peace on agriculture, 161. Suggestions for their remedv quoted from theEncyclopiedia Britamiica, and approved of, 161.
Wealth, a rise of rent always the effect offincreasing wealth, 4Gf The rise of rent is a symptom, but never a canse of, 40. Causes of the increase of, 40-166.

THE END.

Morrison and Gibb, Edinburgh, Printers to Her Majesty's Stationery Office.

∗

See an Account of the Life of Mr Ricardo in the Annual Obituary for 1823, supposed to be written by one of his brothers.

∗

First Letter to the Right Hon. Robert Peel, by one of his Constituents, p. 61.

∗

Mr Ricardo made the first of his prominent appearances on the 24th of May 1819, in the debate on the resolutions proposed by Mr (now Sir Robert) Peel respecting the resumption of cash payments. He did not rise until he was loudly called upon from all sides of the House.

∗

Chap. xv. Part i., “Des Débouchés,” contains, in particular, some very important principles, which I believe were first explained by this distinguished writer

∗

Book i. chap. 5.

∗

“But though labour be the real measure of the exchangeable value of all commodities, it is not that by which their value is commonly estimated. It is often difficult to ascertain the proportion between two different quantities of labour. The time spent in two different sorts of work will not always alone determine this proportion. The different degrees of hardship endured; and of ingenuity exercised, must likewise be taken into account. There may be more labour in an hour's hard work, than in two hours' easy business; or, in an hour's application to a trade, which it costs ten years' labour to learn, than in a month's industry at an ordinary and obvious employment. But it is not easy to find any accurate measure, either of hardship or ingenuity. In exchanging, indeed, the different productions of different sorts of labour for one another, some allowance is commonly made for both. It is adjusted, however, not by any accurate measure, but by the higgling and bargaining of the market, according to that sort of rough equality, which, though not exact, is sufficient for carrying on the business of common life.”—Wealth of Nations, book i. chap. 10.

∗

Wealth of Nations, book i. chap. 10.

∗

A division not essential, and in which the line of demarcation cannot be accurately drawn.

∗

We here see why it is that old countries are constantly impelled to employ machinery, and new countries to employ labour. With every difficulty of providing for the maintenance of men, labour necessarily rises, and with every rise in the price of labour, new temptations are offered to the use of machinery. This difficulty of providing for the maintenance of men is in constant operation in old countries, in new ones a very great increase in the population may take place without the least rise in the wages of labour. It may be as easy to provide for the 7th, 8th, and 9th million of men as for the 2d, 3d, and 4th.

∗

Mr Malthus remarks on this doctrine, “We have the power indeed, arbitrarily, to call the labour which has been employed upon a commodity its real value, but in so doing, we use words in a different sense from that in which they are customarily used; we confound at once the very important distinction between cost and value; and render it almost impossible to explain with clearness the main stimulus to the production of wealth, which in fact depends upon this distinction.”

Mr Malthus appears to think that it is a part of my doctrine, that the cost and value of a thing should be the same; it is, if he means by cost, “cost of production” including profits. In the above passage, this is what he does not mean, and therefore he has not clearly understood me.

∗

“The earth, as we have already seen, is not the only agent of nature which has a productive power; but it is the only one, or nearly so, that one set of men take to themselves, to the exclusion of others; and of which, consequently, they can appropriate the benefits. The waters of rivers, and of the sea, by the power which they have of giving movement to our machines, carrying our boats, nourishing our fish, have also a productive power; the wind which turns our mills, and even the heat of the sun, work for us; but happily no one has yet been able to say, the ‘wind and the sun are mine, and the service which they render must be paid for.’”—Economic Politique, par J. B. Say, vol. ii. p. 124.

∗

Has not M. Say forgotten, in the following passage, that it is the cost of production which ultimately regulates price? “The produce of labour employed on the land has this peculiar property, that it does not become more dear by becoming more scarce, because population always diminishes at the same time that food diminishes, and consequently the quantity of these products demanded, diminishes at the same time as the quantity supplied. Besides, it is not observed that corn is more dear in those places where there is plenty of uncultivated land, than in completely cultivated countries. England and France were much more imperfectly cultivated in the middle ages than they are now; they produced much less raw produce: nevertheless, from all that we can judge by a comparison with the value of other things, corn was not sold at a dearer price. If the produce was less, so was the population; the weakness of the demand compensated the feebleness of the supply.” Vol. ii. 338. M. Say being impressed with the opinion that the price of commodities is regulated by the price of labour, and justly supposing that charitable institutions of all sorts tend to increase the population beyond what it otherwise would be, and therefore to lower wages, says, “I suspect that the cheapness of the goods which come from England is partly caused by the numerous charitable institutions which exist in that country.” Vol. ii. 277. This is a consistent opinion in one who maintains that wages regulate price.

∗

“In agriculture. too,” says Adam Smith, “nature labours along with man; and though her labour costs no expense, its produce has its value, as well as that of the most expensive workman.” The labour of nature is paid, not because she does much, but because she does little. In proportion as she becomes niggardly in her gifts, she exacts a greater price for her work. Where she is munificently beneficent, she always works gratis. “The labouring cattle employed in agriculture, not only occasion, like the workmen in manufactures, the reproduction of a value equal to their own consumption, or to the capital which employs them, together with its owner's profits, but of a much greater value. Over and above the capital of the farmer and all its profits, they regularly occasion the reproduction of the rent of the landlord. This rent may be considered as the produce of those powers of nature, the use of which the landlord lends to the farmer. It is greater or smaller according to the supposed extent of those powers, or, in other words, according to the supposed natural or improved fertility of the land. It is the work of nature which remains, after deducting or compensating every thing which can be regarded as the work of man. It is seldom less than a fourth, and frequently more than a third of the whole produce. No equal quantity of productive labour employed in manufactures, can ever occasion so great a reproduction. In them nature does nothing, man does all; and the reproduction must always be in proportion to the strength of the agents that occasion it. The capital employed in agriculture, therefore, not only puts into motion a greater quantity of productive labour than any equal capital employed in manufactures, but in proportion too, to the quantity of the productive labour which it employs, it adds a much greater value to the annual produce of the land and labour of the country, to the real wealth and revenue of its inhabitants. Of all the ways in which a capital can be employed, it is by far the most advantageous to the society.”—Book II. chap. v. p. 15.

Does nature nothing for man in manufactures? Are the powers of wind and water, which move our machinery, and assist navigation, nothing? The pressure of the atmosphere and the elasticity of steam, which enable us to work the most stupendous engines—are they not the gifts of nature? To say nothing of the effects of the matter of heat in softening and melting metals, of the decomposition of the atmosphere in the process of dyeing and fermentation. There is not a manufacture which can be mentioned, in which nature does not give her assistance to man, and give it too, generously and gratuitously.

In remarking on the passage which I have copied from Adam Smith, Mr Buchanan observes, “I have endeavoured to show, in the observations on productive and unproductive labour, contained in the fourth volume, that agriculture adds no more to the national stock than any other sort of industry. In dwelling on the reproduction of rent as so great an advantage to society, Dr Smith does not reflect that rent is the effect of high price, and that what the landlord gains in this way, he gains at the expense of the community at large. There is no absolute gain to the society by the reproduction of rent; it is only one class profiting at the expense of another class. The notion of agriculture yielding a produce, and a rent in consequence, because nature concurs with human industry in the process of cultivation, is a mere fancy. It is not from the produce, but from the price at which the produce is sold, that the rent is derived; and this price is got not because nature assists in the production, but because it is the price which suits the consumption to the supply.

∗

The clearly understanding this principle is, I am persuaded, of the utmost importance to the science of political economy.

∗

I hope I am not understood as undervaluing the importance of all sorts of improvements in agriculture to landlords—their immediate effect is to lower rent; but as they give a great stimulus to population, and at the same time enable us to cultivate poorer lands with less labour, they are ultimately of immense advantage to landlords. A period, however, must elapse, during which they are positively injurious to him.

∗

To make this obvious, and to show the degrees in which corn and money rent will vary, let us suppose that the labour of ten men will, on land of a certain quality, obtain 180 quarters of wheat, and its value to be 4l. per quarter, or 720l.; and that the labour of ten additional men will, on the same or any other land, produce only 170 quarters in addition; wheat would rise from 4l. to 4l. 4s. 8d. for 170: 180:: 4l.: 4l. 4s. 8d.; or. as in the production of 170 quarters, the labour of 10 men is necessary in one case, and only of 9.44 in the other, the rise would be as 9.44 to 10, or as 4l. to 4l. 4s. 8d. If 10 men be further employed, and the return be

160	the price will rice to	£4	10	0
150		4	16	0
140		5	2	10

Now, if no rent was paid for the land which yielded ISO quarters, when corn was at 4l. per quarter, the value of 10 quarters would be paid as rent when only 170 could be procured, which, at 4l. 4s. 8d. would be 42l. 7s. 6d.

20 quarters when 160 were produced, which at £4	10	0 would be £90	0	0
30 quarters . 150 . . . . . . . . 4	16	0 . . . 114	0	0
40 quarters . 140 . . . . . . . . 5	2	10 . . . 205	13	4

∗

“The shelter and the clothing which are indispensable in one country may be no way necessary in another; and a labourer in Hindostan may continue to work with perfect vigour, though receiving, as his natural wages, only such a supply of covering as would be insufficient to preserve a labourer in Russia from perishing. Even in countries situated in the same climate, different habits of living will often occasion variations in the natural price of labour, as considerable as those which are produced by natural causes.”—P. 68. An Essay on the External Corn Trade, by R. Torrens, Esq.

The whole of this subject is most ably illustrated by Colonel Torrens.

∗

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, p. 61.

†

The progress of knowledge manifested upon this subject in the House of Commons since 1796, has happily not been very small, as may be seen by contrasting the late report of the committee on the poor laws, and the following sentiments of Mr Pitt, in that year:—“Let us,” said he, “make relief in cases where there are a number of children a matter of right and honour, instead of a ground of opprobrium and contempt. This will make a large family a blessing, and not a curse; and this will draw a proper line of distinction between those who are able to provide for themselves by their labour, and those who, after having enriched their country with a number of children, have a claim upon its assistance for support.”—Hansard's Parliamentary History, vol. xxxii. p. 710.

∗

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.

∗

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.

∗

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.

and, under the same circumstances, money rent, wages, and profit, would be as follows:

∗

See Adam Smith, book i. chap. 9.

∗

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?

∗

It must be understood that all the productions of a country are consumed; but it makes the greatest difference imaginable whether they are consumed by those who reproduce, or by those who do not reproduce another value. When we say that revenue is saved, and added to capital, what we mean is, that the portion of revenue, so said to be added to capital, is consumed by productive instead of unproductive labourers. There can be no greater error than in supposing that capital is increased by non-consumption. If the price of labour should rise so high, that notwithstanding the increase of capital, no more could be employed, I should say that such increase of capital would be still unproductively consumed.

∗

It may be doubted whether commodities, raised in price, merely by taxation would require any more money for their circulation. I believe they would not.

∗

18 Quarters at 4l. 8s. 14 d.[Editor: Illegible Text].

†

9 [Editor: Illegible Text.] Quarters at 4l. 8s. 10 [Editor: Illegible Text.]d.

∗

Book v. Chap. ii

∗

That the profits of the farmer only should be taxed, and not the profits of any other capitalist, would be highly beneficial to landlords. It would, in fact, be a tax on the consumers of raw produce, partly for the benefit of the State, and partly for the benefit of landlords.

†

On further consideration, I doubt whether any more money would be required to circulate the same quantity of commodities, if their prices be raised by taxation, and not by difficulty of production. Suppose 100,000 quarters of corn to be sold in a certain district, and in a certain time, at 4l. per quarter, and that in consequence of a direct tax of 8s. per quarter, corn rises to 4l. 8s., the same quantity of money, I think, and no more, would be required to circulate this corn at the increased price. If I before purchased 11 quarters at 4l., and, in consequence of the tax, am obliged to reduce my consumption to 10 quarters, I shall not require more money, for in all cases I shall pay 44l. for my corn. The public would, in fact, consume one-eleventh less, and this quantity would be consumed by Government. The money necessary to purchase it, would be derived from the 8s. per quarter, to be received from the farmers in the shape of a tax, but the amount levied would at the same time be paid to them for their corn; therefore the tax is in fact a tax in kind, and does not make it necessary that any more money should be used, or, if any, so little, that the quantity may be safely neglected.

∗

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.

∗

So far from this being true, they would scarcely affect the landlords and stockholder.

∗

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.

∗

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.

∗

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 be then 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.

∗

“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.

∗

“Credit, in general, is good, as it allows capitals to leave those hands where they are not usefully employed, to pass into those where they will be made productive: it diverts a capital from an employment useful only to the capitalist, such as an investment in the public funds, to make it productive in the hands of industry. It facilitates the employments of all capitals, and leaves none unemployed.”—Economie Politique, p. 463. 2 Vol. 4th Edition.—This must be an oversight of M. Say. The capital of the stockholder can never be made productive—it is, in fact, no capital. If he were to sell his stock, and employ the capital he obtained for it, productively, he could only do so by detaching the capital of the buyer of his stock from a productive employment.

∗

“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?

†

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.

∗

Vol. iii. p 355.

∗

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.

∗

“Commerce enables us to obtain a commodity in the place where it is to be found, and to convey it to another where it is to be consumed; it therefore gives us the power of increasing the value of the commodity, by the whole difference between its price in the first of these places, and its price in the second.”—M. Say, p. 458, vol. ii.—True, but how is this additional value given to it? By adding to the cost of production, first, the expenses of conveyance; secondly, the profit on the advances of capital made by the merchant. The commodity is only more valuable, for the same reasons that every other commodity may become more valuable, because more labour is expended on its production and conveyance, before it is purchased by the consumer. This must not be mentioned as one of the advantages of commerce. When the subject is more closely examined, it will be found that the whole benefits of commerce resolve themselves into the means which it gives us of acquiring, not more valuable objects, but more useful ones.

∗

In the last volume of the supplement to the Encyclopædia Britannica, article “Corn Laws and Trade,” are the following excellent suggestions and observations:—“If we shall at any future period think of retracing our steps, in order to give time to withdraw capital from the cultivation of our poor soils, and to invest it in more lucrative employments, a gradually diminishing scale of duties may be adopted. The price at which foreign grain should be admitted duty free may be made to decrease from 80s., its present limit, by 4s. or 5s. per quarter annually till it reaches 50s., when the ports could safely be thrown open, and the restrictive system be for ever abolished. When this happy event shall have taken place, it will be no longer necessary to force nature. The capital and enterprise of the country will be turned into those departments of industry in which our physical situation, national character, or political institutions fit us to excel. The corn of Poland and the raw cotton of Carolina will be exchanged for the wares of Birmingham and the muslins of Glasgow. The genuine commercial spirit, that which permanently secures the prosperity of nations, is altogether inconsistent with the dark and shallow policy of monopoly. The nations of the earth are like provinces of the same kingdom—a free and unfettered intercourse is alike productive of general and of local advantage.” The whole article is well worthy of attention; it is very instructive, is ably written, and shows that the author is completely master of the subject.

∗

Whatever capital becomes fixed on the land must necessarily be the landlord's, and not the tenant's, at the expiration of the lease. Whatever compensation the landlord may receive for this capital on re-letting his land, will appear in the form of rent; but no rent will be paid if, with a given capital, more corn can be obtained from abroad than can be grown on this land at home. If the circumstances of the society should require corn to be imported, and 1000 quarters can be obtained by the employment of a given capital, and if this land, with the employment of the same capital, will yield 1,100 quarters, 100 quarters will necessarily go to rent; but if 1,200 can be got from abroad, then this land will go out of cultivation, for it will not then yield even the general rate of profit. But this is no disadvantage, however great the capital may have been that had been expended on the land. Such capital is spent with a view to augment the produce—that, it should be remembered, is the end; of what importance, then, can it be to the society, whether half its capital be sunk in value, or even annihilated, if they obtain a greater annual quantity of production? Those who deplore the loss of capital in this case, are for sacrificing the end to the means.

∗

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.

∗

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.”

∗

Elemens d'Ideologie, vol. iv. p. 99.—In this work M. de Tracy has given a useful and an able treatise on the general principles of Political Economy, and I am sorry to be obliged to add, that he supports, by his authority, the definitions which M. Say has given of the words “value,” “riches> “and “utility.”

∗

“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. “—Chap. iv. p. 31. 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, and in this passage M. Say makes none: but though Adam Smith, who defined riches to consist in the abundance of necessaries, convenience 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 anything to the value of those riches.

∗

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.

†

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?

‡

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 shown 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.—See Chap. x. Book. i.

∗

“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.

∗

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 extra-ordinary 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.”

∗

The same opinion is held by M. Say.—Vol. ii. p. 335.

∗

See Chapter on Rent.

∗

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.

∗

“A freedom of trade is alone wanted to guarantee a country like Britain, abounding in all the varied products of industry, in merchandise suited to the wants of every society, from the possibility of a scarcity. The nations of the earth are not condemned to throw the dice to determine which of them shall submit to famine. There is always abundance of food in the world. To enjoy a constant plenty we have only to lay aside our prohibitions and restrictions, and cease to counteract the benevolent wisdom of Providence.”—Article “Corn Laws and Trade,” Supplement to Encyclopædia Britannica.

∗

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 26th chapter, examine the soundness of this opinion.

∗

See p. 92.

∗

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.

†

Perhaps this is expressed too strongly, as more is generally allotted to the labourer under the name of wages, than the absolutely necessary expenses of production. In that case a part of the net produce of the country is received by the labourer, and may be saved or expended by him; or it may enable him to contribute to the defence of the country.

∗

Mr. Say has totally misunderstood me in supposing that I have considered as nothing the happiness of so many human beings. I think the text sufficiently shows that I was confining my remarks to the particular grounds on which Adam Smith had rested it.

†

“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 the 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.

∗

Whatever I say of gold coin, is equally applicable to silver coin; but it is not necessary to mention both on every occasion

∗

This, and the following paragraphs, to the close of the bracket, p. 218, is extracted from a pamphlet entitled “Proposals for an Economical and Secure Currency,” published by the author in the year 1816.

∗

The price of 3l. 17s. here mentioned is of course an arbitrary price. There might be good reason, perhaps, for fixing it either a little above or a little below. In naming 3l. 17s., I wish only to elucidate the principle. The price ought to be so fixed as to make it the interest of the seller of gold rather to sell it to the Bank than to carry it to the Mint to be coined.

The same remark applies to the specified quantity of twenty ounces. There might be good reason for making it ten or thirty.

∗

It has lately been contended in Parliament by Lord Lauderdale, that, with the existing Mint regulation, the Bank could not pay their notes in specie, because the relative value of the two metals is such, that it would be for the interest of all debtors to pay their debts with silver and not with gold coin, while the law gives a power to all the creditors of the Bank to demand gold in exchange for Bank notes. This gold, his Lordship thinks, could be profitably exported, and if so, he contends that the Bank, to keep a supply, will be obliged to buy gold constantly at a premium and sell it at par. If every other debtor could pay in silver, Lord Lauderdale would be right; but he cannot do so if his debt exceed 40s. This, then, would limit the amount of silver coin in circulation (if Government had not reserved to itself the power to stop the coinage of that metal whenever they might think it expedient); because if too much silver were coined it would sink in relative value to gold, and no man would accept it in payment for a debt exceeding 40s., unless a compensation were made for its lower value. To pay a debt of 100l., 100 sovereigns, or bank notes to the amount of 100l., would be necessary, but 105l. in silver coin might be required, if there were too much silver in circulation. There are, then, two checks against an excessive quantity of silver coin; first, the direct check which Government may at any time interpose to prevent more from being coined: secondly, no motive of interest would lead any one to take silver to the Mint, if he might do so, for if it were coined, it would not pass current at its Mint but only at its market value.

∗

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 scarcely adds to their value.—Say, vol. ii. p. 316. See also note to p. 78.

∗

An inquiry into the Nature and Origin of Public Wealth, p.13.

∗

“The demand for labour depends on the increasing of circulating, and not of fixed capital. Were it true that the proportion between these two sorts of capital is the same at all times, and in all countries, then, indeed, it follows that the number of labourers employed is in proportion to the wealth of the State. But such a position has not the semblance of probability. As arts are cultivated, and civilization is extended, fixed capital bears a larger and larger proportion to circulating capital. The amount of fixed capital employed in the production of a piece of British muslin is at least a hundred, probably a thousand times greater than that employed in the production of a similar piece of Indian muslin. And the proportion of circulating capital employed is a hundred or a thousand times less. It is easy to conceive that, under certain circumstances, the whole of the annual savings of an industrious people might be added to fixed capital, in which case they would have no effect in increasing the demand for labour.”—Barton, “On the Condition of the Labouring Classes of Society,” page 16.

It is not easy, I think, to conceive that, under any circumstances, an increase of capital should not be followed by an increased demand for labour; the most that can be said is, that the demand will be in a diminishing ratio. Mr Barton, in the above publication, has, I think, taken a correct view of some of the effects of an increasing amount of fixed capital on the condition of the labouring classes. His Essay contains much valuable information.

∗

An inquiry into the Nature and Progress of Rent, p. 15.

∗

See page 66, where I have endeavoured to show, 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.

∗

Mr Malthus has observed in a late publication, that I have misunderstood him in this passage, as he did not mean to say, that rent immediately and necessarily rises and falls with the increased or diminished fertility of the land. If So, I certainly did misunderstand him. Mr Malthus's words are, “Diminish this plenty, diminish the fertility of the soil, and the excess (rent) will diminish; diminish it still further, and it will disappear.” Mr Malthus does not state his proposition conditionally, but absolutely. I contended against what I understood him to maintain, that a diminution of the fertility of the soil was incompatible with an increase of rent.

∗

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?

∗

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 proportionate 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.

∗

See p. 67.

∗

See p. 43, &c.

†

It is not necessary to state, on every occasion, but it must be always understood, that the same results will follow, as far as regards the price of raw produce and the rise of rents, whether an additional capital of a given amount, be employed on new land, for which no rent is paid, or on land already in cultivation, if the produce obtained from both be precisely the same in quantity.—See p.37.

M. Say, in his notes to the French translation of this work, has endeavoured to show that there is not at any time land in cultivation which does not pay a rent and having satisfied himself on this point, he concludes that he has overturned all the conclusions which result from that doctrine. He infers, for example, that I am not correct in saying that taxes on corn, and other raw produce, by elevating their price, fall on the consumer, and do not fall on rent. He contends that such taxes must fall on rent. But before M. Say can establish the correctness of this inference, be must also show that there is not any capital employed on the land for which no rent is paid (see the beginning of this note, and pages 34 and 38 of the present work); now this he has not attempted to do. In no part of his notes has he refuted, or even noticed that important doctrine. By his note to page 182 of the second volume of the French edition, he does not appear to be aware that it has even been advanced.

∗

Observations on the Corn Laws, p. 4.

∗

Upon showing 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.

∗

Page 40.

†

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.

∗

The Grounds of an Opinion, &c., p. 36.

†

Mr Malthus, in another part on the same work, supposes commodities to vary 25 or 20 per cent. when corn varies 33 1/3.

∗

Of net produce and gross produce, M. Say speaks as follows;—“The whole value produced is the gross produce; this value, after deducting from it the cost of production, is the net produce.”—Vol. ii. p. 491. There can, then, be no net produce, because the cost of production, according to M. Say, consists of rent, wages, and profits. In page 508, he says, “the value of a product, the value of a productive service, the value of the cost of production, are all, then, similar values, whenever things are left to their natural course.” Take a whole from a whole and nothing remains.

∗

They might, strictly speaking, rather exceed that quantity, because as the Bank would add to the currency of the world, England would retain its share of the increase.

∗

This is strongly corroborated by the statement of Mr Rose in the House of Commons, that our exports exceeded our imports by (I believe) 16 millions. In return for those exports no bullion could have been imported, because it is well known that the price of bullion having been, during the whole year, higher abroad than in this country, a large quantity of our gold coin has been exported. To the value of the balance of exports, therefore, must be added the value of the bullion exported. A part of the amount may be due to us from foreign nations, but the remainder must be precisely equal to our foreign expenditure, consisting of subsidies to our allies, and the maintenance of our fleets and armies on foreign stations.

∗

It has been observed, in a work of great and deserved repute, the Edinburgh Review, Vol. i. p. 183, that an increase in the paper currency will only occasion a rise in the paper or currency price of commodities, but will not cause an increase in their bullion price.

This would be true at a time when the currency consisted wholly of paper not convertible into specie, but not while specie formed any part of the circulation. In the latter case the effect of an increased issue of paper would be to throw out of circulation an equal amount of specie; but this could not be done without adding to the quantity of bullion in the market, and thereby lowering its value, or, in other words, increasing the bullion price of commodities. It is only in consequence of this fall in the value of the metallic currency, and of bullion, that the temptation to export them arises; and the penalties on melting the coin is the sole cause of a small difference between the value of the coin and of bullion, or a small excess of the market above the mint price. But exporting of bullion is synonymous with an unfavourable balance of trade. From whatever cause an exportation of bullion, in exchange for commodities, may proceed, it is called (I think very incorrectly) an unfavourable balance of trade.

When the circulation consists wholly of paper, any increase in its quantity will raise the money price of bullion without lowering its value, in the same manner, and in the same proportion, as it will raise the prices of other commodities, and for the same reason will lower the foreign exchanges; but this will only be a nominal, not a real fall, and the will not occasion the exportation of bullion, because the real value of bullion will not be diminished, as there will be no increase to the quantity in the market.

†

Strictly speaking, there can be no permanent measure of value. A measure of value should itself be invariable; but this is not the case with either gold or silver, they being subject to fluctuations as well as other commodities. Experience has indeed taught us, that though the variations in the value of gold or silver may be considerable, on a comparison of distant periods, yet, for short spaces of time, their value is tolerably fixed. It is this property, among other excellences, which fits them better than any other commodity for the uses of money. Either gold or silver may therefore, in the point of view in which we are considering them, be called a measure of value.

∗

When the gold coin was debased, previously to the recoinage in 1774, gold and silver bullion rose above their Mint prices, and fell immediately on the gold coin attaining its present perfection. The exchanges were, owing to the same causes, from being unfavourable rendered favourable.

∗

An excess in the market above the Mint price of gold or silver bullion, may, whilst the coins of both metals are legal tender, and there is no prohibition against the coinage of either metal, be caused by a variation in the relative value of those metals; but an excess of the market above the Mint price proceeding from this cause will be at once perceived by its affecting only the price of one of the metals. Thus, gold would be at or below, while silver was above, its Mint price, or silver at or below its Mint price, whilst gold was above.

In the latter end of 1795, when the Bank had considerably more notes in circulation than either the preceding or the subsequent year, when their embarrassments had already commenced, when they appear to have resigned all prudence in the management of their concerns, and to have constituted Mr Pitt sole director, the price of gold bullion did for a short time rise to 4l. 3s., or 4l. 4s. per oz.; but the directors were not without their fears for the consequences. In a remonstrance sent by them to Mt Pitt, dated October 1795, after stating, “that the demand for gold not appearing likely soon to cease,” and “that it had excited great apprehension in the court of directors,” they observe, “The present price of gold being 4l. 3s. to 4l. 4s.† per ounce, and our guineas being to be purchased at 3l. 17s. 10½d., clearly demonstrates the grounds of our fears; it being only necessary to state those facts to the Chancellor of the Exchequer. “It is remarkable that no price of gold above the Mint price is quoted during the whole year in Wetenhall's list. In December it is there market 3l. 17s. 6d.

†

It is difficult to determine on what authority the directors made this assertion, as by a return lately made to parliament it appears that during the year 1795 they did not purchase gold bullion at a price higher then 3l. 17s. 6d.

∗

The relative value of gold and silver is, on the Continent, nearly the same as in London.

†

It must be meant they every guinea in the Bank would leave the country; the temptation of 15 per cent. is amply sufficient to send those out which can be collected from the circulation.

∗

They might, on some occasions, displace Bank of England notes, but that consideration does not affect the question which we are now discussing

∗

In the following observations, I wish it to be understood as supposing always the same degree of confidence and credit to exist.

∗

I have already allowed that the Bank, as far as they enable us to turn our coin into “materials, provisions, &c.” have produced a national benefit, as they have thereby increased the quantity of productive capital; but I am here speaking of an excess of their notes, of that quantity which adds to our circulation without effecting any corresponding exportation of coin, and which, therefore, degrades the notes below the value of the bullion contained in the coin, and which they represent.

∗

At that period the price of gold kept steadily under its Mint price

∗

We are here speaking of a balance of trade abstracted from a balance of payments. A balance of trade may be favourable whilst a balance of payments is unfavourable. It is the balance of payments only which operates on the exchange.

∗

Part of the produce of the provinces is exported without any return, as it constitutes the revenue of absentees, but this consideration can have no effect on the question of currency.

†

That an increase of bank notes under 5l. should be considered as a substitute for the coins exported, rather than an actual increase of circulation, is often and justly maintained by those who oppose the reasoning of the bullion report; but when these same gentlemen want to establish their favourite theory, that there is no connexion between the amount of the circulation and the rate of exchange, they do not forget to bring to their aid these small notes which they had before discarded.

∗

It is not meant to be denied, that the sudden invasion of an enemy, or a convulsion in a country of any kind which renders the possession of property insecure, may form an exception to this rule, but the exchange will in general be unfavourable to a country thus circumstanced.

∗

I have omitted as much of Mr Pearse's paper as regarded the amount of bank notes in circulation before the restriction on bank payments, because whilst the public possessed the power of obtaining specie for their notes, the exchange could not but be momentarily lowered by the amount of the bank issues.

∗

By Mr——'s evidence to the Bullion Committee (Appendix, page 74,) it appears that the course of exchange from Hamburgh to London in ordinary times differs 1 Flemish schilling from the course of London to Hamburgh, to compensate the 2½ usances and commission allowed on bills both ways; when the difficulties of communication existed to the greatest extent, the difference of exchange was full 2s. Flemish.

∗

Mr Huskisson has commented with great ability upon the few transactions—few comparatively—which take place in bullion, and has observed, that those transactions are principally confined to the distribution of the produces of the mines to the different countries where gold and silver are in use.

∗

Lord King satisfactorily accounted for the long duration of an exchange favourable to this country with Hamburgh, from the circumstance of the demands of the India Company for silver bullion for their settlements in the East. Mr Blake comments, in his late publication, upon what he calls “the erroneous opinions” entertained by Lord King on this subject, and observes, “that the exportation of bullion is affected like that of any other commodity, when there is such a difference in its real prices, at any two places, as will afford a profit on its transit; an occurrence that will frequently take place with an exchange at par.” An occurrence, I should say, which can never take place with an exchange at par. Who would send bullion from Hamburgh to London at an expense of 4 or 5 per cent., whilst the exchange was at par, when by means of a bill he could obtain the same amount of bullion in London free from all charges?

I am happy that an opinion similar to that which I have expressed is also entertained by Mr Bosanquet, page 12:—“In the event of an unfavourable balance of payments, the depression of the exchange must necessarily attain this limit (the expenses of conveying and insuring the precious metals from one country to the other) before the balance can be adjusted by the exportation of gold.”

†

Mr Mushet's calculations take for granted, that the relative value of gold and silver was the same in both countries, and that the gold and silver were of the same description, viz. in bars. But it is chiefly by the value of gold in coin that a foreigner determines whether he shall export gold to this country, or make a remittance by bill; and the price of gold in coin in England must necessarily enter into his calculation. On a reference to the Appendix of the Bullion Report, No. 6, it will appear that the transactions in gold with the Continent are mostly confined to gold in coin. For fifteen months, ending in March 1810, the whole amount of sales of bar gold, by private dealers, transacted through the Bullion Office at the Bank, did not exceed in value 60,867l., whilst the sales of gold in coin during the same period amounted to 683,067l.

∗

I have read in a small French tract, “Sur l'Institution des Principales Banques de l'Europe,” that on one occasion the Bank of Hamburgh was obliged to suspend its payments, in consequence of having made too great advances on gold bullion. I have in vain endeavoured to find out in what year this occurred. It is evident that a circumstance of this sort must have had some influence on the exchange,—and it is not impossible that it might have happened in the years 1766, 1767.

∗

The Bullion Committee, as well as Mr Huskisson, consider gold as the standard measure of value, in consequence of the 39th of the King, which declares that silver shall not be a legal tender for sums exceeding 25l., except by weight, at the rate of 5s. 2d. per ounce. But this law would not have prevented the coinage of silver when under its Mint price, and, therefore, under its Mint relative value to gold. In 1798, for example, when the price of silver was 5s. per ounce, and the relative market value of silver to gold as 1 to 15.57, and when therefore silver could be profitably coined, the new silver fresh from the Mint would have been a legal tender to any amount.

∗

Since writing the above, I have seen an extract from a Moniteur of the year 1803, by which it appears that the seignorage in France was

And was fixed in 1803 at ⅓ per cent. for gold, and 1½ for silver.

†

It is only whilst the currency of France was kept at its proper level that the price of gold could continue 8 per cent. under the Mint price, in the same manner as the price of gold would and did continue under the Mint price of England. The currency of England was rather above its level when gold was 3l. 17s. 6d., as 4d. an ounce is not sufficient compensation for the delay of the Mint. It follows, therefore, that the principle here contended for can only have its full force whilst the currency is not excessive.

‡

As silver is the currency of Hamburgh, it would be silver, and not gold, which an English creditor would be entitled to send from Hamburgh to Paris.

“In France, a duty of 8 per cent. is deducted for the coinage, which not only defrays the expense of it, but affords a small revenue to the Government. In England, as the coinage costs nothing, the current coin can never be much more valuable than the quantity of bullion which it actually contains. In France, the workmanship, as you pay for it, adds to the value, in the same manner as to that of wrought plate. A sum of French money, therefore, containing a certain weight of pure silver, is more valuable than a sum of English money containing an equal weight of pure silver, and must require more bullion, or other commodities, to purchase it. Though the current coin of the two countries, therefore, were equally near the standards of their respective Mints, a sum of English money could not well purchase a sum of French money, containing an equal number of ounces of pure silver, nor, consequently, a bill upon France for such a sum. If, for such a bill, no more additional money was paid than what was sufficient to compensate the expense of French coinage, the real exchange might be at par between the two countries, their debts and credits might mutually compensate one another, while the computed exchange was considerably in favour of France. If less than this was paid, the real exchange might be in favour of England, while the computed was in favour of France.”—Wealth of Nations, Chap. iii. Book iv

∗

The weight of the American dollar in circulation is not more, according to Mr William's evidence, than 17 dwt. 6 gr., which would make the true par somewhat lower than 4s. 3½d.; and, according to Ede's book of Coins, the American dollar is 11 grains worse than standard, and contains no more pure silver than 4s. 2¼d. of English standard silver coin.

∗

Before, however, it can be admitted that the exchange with Sweden is 24 per cent. in favour of London, we must be informed whether both gold and silver be legal tender in Sweden, and, if so, at what relative value those metals are rated in the Swedish Mint, I suspect that a part of this favourable exchange may be accounted for by the rise in the relative value of gold to silver.

∗

It appears that it was in 1795, and most probably in October, that the Bank gave 4l. 8s. for gold, as stated by Mr Newland. On being asked concerning the time by the Lords' Committee, he answered, “I believe it was about two years since the Bank gave about 4l. 8s. per ounce for gold; it was but a small quantity, it was soon stopt on account of its price. The Bank at that time thought it expedient to obtain gold from Portugal, which their agent could not do at a less price than 4l. 8s.”

Mr Newland was speaking on the 28th March 1797.

It is a case by no means improbable that the Bank may frequently have bought foreign gold above the Mint price, at the same time that they could have obtained gold in bars, not exportable, at a comparatively cheaper price. They might flatter themselves that, by not purchasing English gold they would lessen the temptation to melt the guineas: at the same time their diminished stock required them to replenish their coffers. This opinion is very much confirmed by an examination of the account in the Appendix of the Bullion Report, No. 19, where it appears, that from 1797 to 1810, the amount in value of gold coined at his Majesty's Mint, was 8,960,113l., of which only 2,296,056l. was coined from English gold, the remainder was coined from foreign gold. It appears, too, that since 1804, 1,402,542l, has been coined from foreign gold, and not one guinea from British gold. During the whole of this period the price of foreign gold in the market exceeded the price of English gold. Is it not probable, therefore, that the Bank, who are the only importers of gold into the Mint, have been guided by some such policy as I have supposed.

∗

That commodities would rise or fall in price, in proportion to the increase or diminution of money, I assume as a fact which is incontrovertible. Mr Bosanquet, in his admission of the effects on prices from the discovery of a mine, shows that he has no such doubts on this subject as the governor of the Bank, who, when asked by the Committee, “Do you conceive that a very considerable reduction of the amount of the circulating medium would not tend in any degree to increase its relative value compared with commodities, and that a considerable increase of it would have no tendency whatever to augment the price of commodities in exchange for such circulating medium?”—Answered, “It is a subject on which such a variety of opinions are entertained, I do not feel myself competent to give a decided answer.”

∗

The Bank could not on their own principles, then, urge that most erroneous opinion, that the rate of interest would be affected in the money market if their issues were excessive, and would therefore cause their notes to return to them, because, in the case here supposed, the actual amount of the money of the world being greatly diminished, they must contend that the rate of interest would generally rise, and they might therefore increase their issues. If, after the able exposition of Dr Smith, any further argument were necessary to prove that the rate of interest is governed wholly by the relation of the amount of capital with the means of employing it, and is entirely independent of the abundance or scarcity of the circulating medium, this illustration would, I think, afford it.

∗

This expression has been noticed by Mr Bosanquet as extremely theoretical, but I consider it so exceedingly correct that I have taken the liberty of using it after the Committee.

∗

See last note, page 316.

∗

It may be said, that, although guineas were by law prohibited from passing at more than 21s. 6d., they were not declared a legal tender till 1717; and, therefore, that no creditor was obliged to accept of them in discharge of a debt at that rate. But if Government received them in the payment of taxes at such value, the effects would be nearly the same as if they had by act of Parliament been made a legal tender.

†

Lord Liverpool's letter to the King.

‡

Since this was sent to the press I have seen the second edition of Mr Bosanquet's work, in which this inaccuracy is corrected.

∗

The Committee asked Mr Stuckey, “Is it not your interest as a banker to check the circulation of Bank of England notes; and with that view do you not remit to London such Bank of England notes as you may receive beyond the amount which you may think it prudent to keep as a deposit in your coffers?” Ans. Unquestionably.

∗

If we add to these 3 millions the increase in the country circulation, and bear in mind the economy in the use of circulating medium, so ably and so clearly explained by Mr Bosanquet, it would appear to me that, granting all the facts for which Mr Bosanquet contends, the circulating medium has increased in an undue proportion.

∗

Mr Bosanquet has remarked as incorrect my having used the words “length of time” in reference to a discount on bank notes, because Mr Mushet's tables did not indicate a very unfavourable exchange for more than a year before I wrote, in December 1809. We should once have thought a year a considerable time, when speaking of a discount on bank notes; but as I have constantly maintained that the high price of bullion was the test on which I most relied for the proof of depreciation, and as the price of gold has not been under the Mint price for about ten years, the correctness of my conclusion cannot, I think, on my principles, be questioned.

∗

It is to be understood that I am supposing no increased or diminished confidence operating so as to give a diminished or increased value to the coin.

∗

Mr Malthus considers, that the surplus of produce obtained in consequence of diminished wages, or of improvements in agriculture, to be one of the causes to raise rent. To me it appears that it will only augment profits.

“The accumulation of capital, beyond the means of employing it on land of the greatest natural fertility, and the greatest advantage of situation, must necessarily lower profits; while the tendency of population to increase beyond the means of subsistence must, after a certain time, lower the wages of labour.

The expense of production will thus be diminished, but the value of the produce, that is, the quantity of labour, and of the other products of labour besides corn, which it can command, instead of diminishing, will be increased.

There will be an increasing number of people demanding subsistence, and ready to offer their services in any way in which they can be useful. The exchangeable value of food will therefore be in excess above the cost of production, including in this cost the full profits of the stock employed upon the land, according to the actual rate of profits at the time being. And this excess is rent.”—An Inquiry into the Nature and Progress of Rent, page 18.

In page 19, speaking of Poland, one of the causes of rent is again attributed to cheapness of labour. In page 22 it is said that a fall in the wages of labour, or a reduction in the number of labourers necessary to produce a given effect, in consequence of agricultural improvements, will raise rent.

†

It is not meant, that strictly the rate of profits on agriculture and manufactures will be the same, but that they will bear some proportion to each other. Adam Smith has explained why profits are somewhat less on some employments of capital than on others, according to their security, cleanliness, and respectability, &c., &c.

What the proportion may be, is of no importance to my argument, as I am only desirous of proving that the profits on agricultural capital cannot materially vary, without occasioning a similar variation in the profits on capital employed on manufactures and commerce.

∗

Profits of stock fall, because land equally fertile cannot be obtained, and through the whole progress of society profits are regulated by the difficulty or facility of procuring food. This is a principle of great importance, and has been almost overlooked in the writings of Political Economists. They appear to think that profits of stock can be raised by commercial causes, independently of the supply of food.

∗

In all that I have said concerning the origin and progress of rent, I have briefly repeated, and endeavoured to elucidate the principles which Mr Malthus has so ably laid down, on the same subject, in his “Inquiry into the Nature and Progress of Rent;” a work abounding in original ideas,—which are useful not only as they regard rent, but as connected with the question of taxation; perhaps, the most difficult and intricate of all the subjects on which Political Economy treats.

†

It is scarcely necessary to observe, that the data on which this table is constructed are assumed, and are probably very far from the truth. They were fixed on as tending to illustrate the principle, which would be the same, whether the first profits were 50 per cent. or 5,—or, whether an additional capital of 10 quarters, or of 100, were required to obtain the same produce from the cultivation of new land. In proportion as the capital employed on the land, consisted more of fixed capital, and less of circulating capital, would rent advance, and property fall less rapidly.

∗

This would be the effect of a constantly accumulating capital, in a country which refused to import foreign and cheaper corn. But after profits have very much fallen, accumulation will be checked, and capital will be exported to be employed in those countries where food is cheap and profits high. All European colonies have been established with the capital of the mother countries, and have thereby checked accumulation. That part of the population, too, which is employed in the foreign carrying trade, is fed with foreign corn. It cannot be doubted, that low profits, which are the inevitable effects of a really high price of corn, tend to draw capital abroad: this consideration ought therefore to be a powerful reason to prevent us from restricting importation.

†

By rent I always mean the remuneration given to the landlord for the use of the original and inherent power of the land. If either the landlord expends capital on his own land, or the capital of a preceding tenant is left upon it at the expiration of his lease, he may obtain what is indeed called a larger rent, but a portion of this is evidently paid for the use of capital. The other portion only is paid for the use of the original power of the land.

‡

Excepting, as has been before observed, the real wages of labour should rise, of a worse system of agriculture be practised.

∗

The low price of corn, caused by improvements in agriculture, would give a stimulus to population, by increasing profits and encouraging accumulation, which would again raise the price of corn and lower profits. But a larger population could be maintained at the same price of corn, the same profits and the same rents. Improvements in agriculture may then be said to increase profits, and to lower for a time rents.

†

The causes, which render the acquisition of an additional quantity of corn more difficult are, in progressive countries, in constant operation, whilst marked improvements in agriculture, or in the implements of husbandry, are of less frequent occurrence. If these opposite causes acted with equal effect, corn would be subject only to accidental variation of price, arising from bad seasons, from greater or less real wages of labour, or from an alteration in the value of the precious metals, proceeding from their abundance or scarcity.

‡

Though the price of all commodities is ultimately regulated by, and is always tending to, the cost of their production, including the general profits of stock, they are all subject, and perhaps corn more than most others, to an accidental price proceeding from temporary causes.

∗

It has been thought that the price of corn regulates the prices of all other things. This appears to me to be a mistake. If the price of corn is affected by the rise or fall of the value of the precious metals themselves, then indeed will the price of commodities be also affected, but they vary, because the value of money varies, not because the value of corn is altered. Commodities, I think, cannot materially rise or fall, whilst money and commodities continue in the same proportions, or rather whilst the cost of production of both estimated in corn continues the same. In the case of taxation, a part of the price is paid for the liberty of using the commodity, and does not constitute its real price.

∗

Mr Malthus has supplied me with a happy illustration—he has correctly compared “the soil to a great number of machines, all susceptible of continued improvement by the application of capital to them, but yet of very different original qualities and powers.” How, I would ask, can profits rise whilst we are obliged to make use of that machine which has the worst original qualities and powers? We cannot abandon the use of it; for it is the condition on which we obtain the food necessary for our population, and the demand for food is by the supposition not diminished; but who would consent to use it if he could make greater profits elsewhere?

∗

Excepting when the extension of commerce enables us to obtain food at really cheaper prices.

‡

If by foreign commerce, or the discovery of machinery, the commodities consumed by the labourer should become much cheaper, wages would fall; and this, as we have before observed, would raise the profits of the farmer, and therefore, all other profits.

∗

This principle is most ably stated by Mr Malthus in page 42 of “An Inquiry,” &c.

‡

It is this latter opinion which is chiefly insisted upon by Mr Malthus, in his late publication, “The Grounds of an Opinion,” &c.

∗

As London is to be a depôt for foreign corn, this store might be very great.

∗

If it be true, as Mr Malthus observes, that in Ireland there are no manufactures in which capital could be profitably employed, capital would not be withdrawn from the land, and then there would be no loss of agricultural capital. Ireland would in such case have the same surplus corn produce, although it would be of less exchangeable value. Her revenue might be diminished; but if she would not or could not manufacture goods, and would not cultivate the ground, she would have no revenue at all.

∗

I by no means agree with Adam Smith, or with Mr Malthus, respecting the effects of taxation on the necessaries of life. The former can find no term too severe by which to characterise them. Mr Malthus is more lenient. They both think that such taxes, incalculably more than any other, tend to diminish capital and production. I do not say that they are the best of taxes, but they do not, I think, subject us to any of the disadvantages of which Adam Smith speaks in foreign trade; nor do they produce effects very different from other taxes. Adam Smith thought that such taxes fell exclusively on the landholder; Mr Malthus thinks they are divided between the land-holder and consumer. It appears to me that they are paid wholly by the consumer.

‡

Page 22, “Grounds,” &c.

∗

Grounds, &c. p. 32.

∗

See Appendix, No. III.

∗

The writings of Sir James Steuart on the subject of coin and money are full of instruction, and it appears surprising that he could have adopted the above opinion, which is so directly at variance with the general principles he endeavoured to establish.

∗

The price of 3l. 17s. here mentioned, is, of course, an arbitrary price. There might be good reason, perhaps, for fixing it either a little above, or a little below. In naming 3l. 17s., I wish only to elucidate the principle. The price ought to be so fixed as to make it the interest of the seller of gold rather to sell it to the Bank than to carry it to the Mint to be coined.

The same remark applies to the specified quantity of twenty ounces. There might be good reason for making it ten or thirty.

‡

I have already observed that silver appears to me to be best adapted for the standard of our money. If it were made so by law, the Bank should be obliged to buy or sell silver bullion only. If gold be exclusively the standard, the Bank should be required to buy or sell gold only; but if both metals be retained as the standard, as they now by law are, the Bank should have the option which of the two metals they would give in exchange for their notes, and a price should be fixed for silver rather under the standard, at which they should not be at liberty to refuse to purchase.

∗

Economie Politique, livre i. chap. 17.

∗

By some of my readers the words “including bank notes deposited in the Exchequer” may not be understood. They are bank notes never put into circulation; neither are they included in any return made by the Bank. They are called at the Exchequer special notes, and are mere vouchers (not having even the form of bank notes) of the payment to the Bank from the Exchequer of such monies as are daily received at the latter office. They are the record, therefore, of a part of the public deposits lodged with the Bank.

∗

In 1797 the Bank stated their finances to be as follows:—

Bank-notes in circulation,	£8,640,000
Public and private deposits,	5,132,140
Surplus capital,	3,826,890
	£17,597,030

On the other side of the account they showed in what securities these funds were invested, and, with the exception of cash and bullion, and a small sum for stamps, they were all yielding interest and profit to the Bank.

‡

See Appendix.

∥

The one without charge is the calculating the deduction from each dividend warrant for property tax.

The other is receiving contributions from those who pay their property tax into the Bank, for which the Bank receives 1,250l. per million, or one-eighth per cent.

If the collector had gone from house to house to receive this money, he would have had an allowance of five pence per pound, which would have cost the public 58,007l. instead of 3,480l. paid to the Bank.

Perhaps no part of the business of the Bank is more easily transacted than this which they have pointed out. Instead of being under-paid, it appears to me to be paid most liberally.

The saving to the public is really effected by the money being brought to one focus, instead of being collected from various quarters. The Bank appear to consider the rule, by which they are to measure the moderation of their charges, to be the saving which they effect to their employer, rather than the just compensation for their own trouble and expense. What would they think of an engineer, if in his charge for the construction of a steam-engine he should he guided by the value of the labour which the engine was calculated to save, and not by the value of the labour and materials necessary to its construction.

∗

Since the first edition of this work was published, the first Lord of the Treasury, and the Chancellor of the Exchequer, have proposed to the Bank that they shall continue the advance of 3 millions, which would have been due in April next, for two years without interest:—and further, that the Bank shall advance the sum of 6 millions at 4 per cent. for two years certain, and shall continue the same for three years longer from such period, subject to repayment upon six months' notice, to be given at any time between the 10th October in any year and the 5th of April following, either by the Lords of the Treasury to the Bank, or by the Bank to their Lordships. This proposal was agreed to by a General Court of Proprietors of Bank Stock, held, on the 8th of February, for the purpose of considering the same.

At this general court, on asking for some explanation respecting the deposit of the public money at the end of the two years, I noticed with approbation the departure of the Bank from the claim which they had set up in the above resolutions, in which they appeared to me to assert the right of the Bank to the custody of the public money without paying any remuneration whatever; to which the governor of the Bank, Mr Mellish, replied, that I had totally misconceived the meaning of those resolutions, and he was sure if I read them again with attention, I should be convinced that no such construction could be put on them. I am glad the Bank disclaim having had the intention of depriving the public of the advantage which they have enjoyed since the report of the Committee on Public Expenditure; though I regret, that they have expressed themselves so obscurely, as to have given me and many others a different impression. The resolutions still appear to me to assert that the privilege of being public banker was for a valuable consideration secured to the Bank during the continuance of their charter, and that at the expiration of that engagement, and not before, it might be proper to consider of a new arrangement.

∗

Report, page 104.

∗

It has been remarked, that a sufficient allowance is not made in my calculations for the losses of the Bank by bad debts in consequence of the bad bills which they occasionally discount. Their losses from this source, I am told, are often very large. On the other hand, I have been informed that the profits of the Bank from private deposits, for which I have taken no credit, must be considerable, as the East India Company and many other public boards keep their cash at the Bank.

A deduction from the Bank profits should have been made for their loss by Aslett, and for the expenses attending their military corps. My argument will not be affected by their surplus capital being only 12 or 11 instead of 13 millions.—Note to Second Edition.

∗

The Committee on public expenditure calculated these expenses at 119,500l. in 1807, and stated the increase from 1796 to 1807 at about 35,000l.

†

The Committee of Secrecy reported to Parliament, that the cash and bullion in the Bank, in November 1797, had increased to an amount more than five times the value of that at which they stood on the 25th of February 1797. They stated, too, that the bankers and traders of London, who had a right, by the Act of Parliament, to demand three-fourths of any deposit in cash, which they had made in the Bank, of 500l. and upwards, after the 25th of February 1797, had only claimed in November 1797, about one-sixteenth.

∗

Allardyce's Address to the proprietors of the Bank of England, Appendix, No. 11.

∗

The accounts in the Appendix are made up from January to January. The bonus in question was paid in April 1801. The net profits of the Bank for the whole year 1801 were 1,526,019l., consequently for the quarter ending in April they may be stated at . . . . . . . . .	£381,504
Which, added to the surplus capital of January 1801,	4,553,209
Gives the total of the surplus capital in April 1801, before paying the dividend and bonus,	£4,934,713
Deduct—
dividend 3 ½ per cent. for half a year....	£407,484
Bonus 5 per cent.,	582,120
	989,604
Leaving a surplus capital in April 1801 of. . .	£3,945,109
And exceeding that in 1797 of....	3,826,890
By........	£118,219

∗

For the account of cash and bullion in the Bank in the above years I trust to the calculations to which I have already alluded, page 425. I can see no reason to doubt their general accuracy.

∗

The particulars in the above table are taken from the annual finance book, printed by order of the House of Commons. They include not only what is paid to the bank, but to the Exchequer and South Sea Company. The annual charge of the South Sea Company is now about 14,5601. In 1797 it was 14,657l. Tim Exchequer charge was as high as 6760l.. 6s. 8d., m 1807 it fell gradually to 2485l. and has now I believe, ceased.

The Bank have also been paid for management of life annuities sinoe 1810,—and since 1812, about 1200l. or 1300l. per annum for management of a loan ot 2½ months, raised for the East India Company, which are not included in this table.

∗

Till 1811, the above are extracted from the report of the bullion commitee; since that year from made to Parliament.

†

This sum was returned by the Bank to Parliament at their surplus capital, February 26, 1797.

∗

The composition for stamps was raised this year to 247000l.; in 1803-4, to 32000l; in 1806-7,to 42000l.; and in 1815-16,to b7,500l.

†

The Bank lent to Government this year 3 millions, without interest for six year, and afterwa, nl continued the same loan for eight years at 3 per cent. interest.

∗

The property tax was paid by the proprietors till 1806, when the Bank agreed to pal, on their whole profits to Goverment and not to make any deduction from the dividend warrant.

∗

See note, p. 44,.

∗

see note, p. 441.

∗

Report, Agricultural Committee, 1821, page 338.

∗

With 4l. 2s. in bank notes, any one could purchase precisely the same quantity of commodities as with the gold in 3l. 17s. 10½d.; the object of the plan was to make 3l. 17s 10½d. in bank notes, as valuable as 3l. 17s. 10½d. in gold. To effect this object, could it have been necessary, could it, indeed, have been possible, to lower the value of goods more than 5 per cent., if the value of gold had not been raised?

∗

See Appendix A.

∗

The Bank are now in advance many millions to the Government on exchequer bills at 3 per cent., besides the fixed advance of their capital, also at 3 per cent., which latter they are, by their charter, obliged to lend at that rate of interest.

∗

To that cause it will have been seen I ascribe a fall of 10 per cent.

∗

See Appendix B.

∗

The whole amount of taxes paid to the public creditor and sinking fund, is 36 millions; suppose the other fixed charges to be 4 millions, then the whole taxation on which the altered value of money has operated, is 40 millions. I estimate the increase 10 per cent., or 4 millions, which falls on all classes—landlords, merchants, manufacturers, labourers, and, though last not least, stockholders.

∗

Mr Huskisson's Speech on the State of the Finance and Sinking Fund, 25th March 1813.

∗

Mr Pitt's Speech. 17th February 1792.

∗

The effect of this clause was to give a sinking fund of 1½ instead of 1 per cent. on such excess of loan above the sinking fund if the loan were raised in a 3 per cent. stock, and of 2½ per cent. if raised in a 5 per cent. stock.

†

Mr Vansittart's plan has added to the sinking fund 1 per cent. on a capital of 86,796,300l.,	L.867,936
On 56 millions of exchequer bills outstanding 5th January 1818, 1 per cent.,	560,000
By attaching a sinking fund of one half the interest, instead of 1 per cent. on a part of the capital created by loans, he has added to the sinking fund,	793,343
	——————
Total added,	L.2,221,311
From stock cancelled and available for public service,	7,632,969
	——————
Total deduction from sinking fund on 5th January 1819,	L.5,411,658

On the 3d of February 1819 the Commissioners certified that there had been transferred to them 378,519,969l. 5s. 3¾d. capital stock, the interest on which was 11,448,564l. 10s. 6¼d., and that the debt created prior to and by the 37th Geo. III. amounted to 348,684,197l. 1s. 5¾d., with a yearly interest of 11,446,736l. 3s. 4¾d.; and consequently the excess redeemed was 29,835,772l. 3s. 9¼d., with a yearly interest of 1828l. 7s. 1¼d.

∗

Some of the following observations refer to the period when this article was originally composed.—ED.

The Works of David Ricardo

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