MR. MALTHUS'S OPINIONS ON RENT.
Although the nature of rent has in the former pages of this work been
treated on at some length; yet I consider myself bound to notice some
opinions on the subject, which appear to me erroneous, and which are the
more important, as they are found in the writings of one to whom, of all
men of the present day, some branches of economical science are the most
indebted. Of Mr. Malthus's Essay on Population, I am happy in the
opportunity here afforded me of expressing my admiration. The assaults
of the opponents of this great work have only served to prove its
strength; and I am persuaded that its just reputation will spread with
the cultivation of that science of which it is so eminent an ornament.
Mr. Malthus too--has satisfactorily explained the principles of rent,
and shewed that it rises or falls in proportion to the relative
advantages, either of fertility or situation, of the different lands in
cultivation, and has thereby thrown much light on many difficult points
connected with the subject of rent, which were before either unknown, or
very imperfectly understood; yet he appears to me to have fallen into
some errors, which his authority makes it the more necessary, whilst his
characteristic candour renders it less unpleasing to notice. One of
these errors lies in supposing rent to be a clear gain and a new
creation of riches.
I do not assent to all the opinions of Mr. Buchanan concerning rent; but
with those expressed in the following passage, quoted from his work by
Mr. Malthus, I fully agree; and therefore I must dissent from Mr.
Malthus's comment on them.
"In this view it (rent) can form no general addition to the stock of the
community, as the neat surplus in question is nothing more than a
revenue transferred from one class to another; and from the mere
circumstance of its thus changing hands, it is clear that no fund can
arise, out of which to pay taxes. The revenue which pays for the produce
of the land, exists already in the hands of those who purchase that
produce; and, if the price of subsistence were lower, it would still
remain in their hands, where it would be just as available for taxation
as when, by a higher price, it is transferred to the landed proprietor."
After various observations on the difference between raw produce and
manufactured commodities, Mr. Malthus asks, "Is it possible then, with
M. de Sismondi, to regard rent as the sole produce of labour, which has
a value purely nominal, and the mere result of that augmentation of
price which a seller obtains in consequence of a peculiar privilege; or,
with Mr. Buchanan, to consider it as no addition to the national wealth,
but merely transfer of value, advantageous only to the landlords, and
proportionably _injurious_ to the consumers?"[51]
I have already expressed my opinion on this subject in treating of rent,
and have now only further to add, that rent is a creation of value, as I
understand that word, but not a creation of wealth. If the price of
corn, from the difficulty of producing any portion of it, should rise
from 4_l._ to 5_l._ per quarter, a million of quarters will be of the
value of 5,000,000_l._ instead of 4,000,000_l._, and as this corn will
exchange not only for more money but for more of every other commodity,
the possessors will have a greater amount of value; and as no one else
will in consequence have a less, the society altogether will be
possessed of greater value, and in that sense rent is a creation of
value. But this value is so far nominal that it adds nothing to the
wealth, that is to say, to the necessaries, conveniences, and enjoyments
of the society. We should have precisely the same quantity, and no more
of commodities, and the same million quarters of corn as before; but the
effect of its being rated at 5_l._ per quarter, instead of 4_l._, would
be to transfer a portion of the value of the corn and commodities from
their former possessors to the landlords. Rent then is a creation of
value, but not a creation of wealth; it adds nothing to the resources
of a country, it does not enable it to maintain fleets and armies; for
the country would have a greater disposable fund if its land were of a
better quality, and it could employ the same capital without generating
a rent.
In another part of Mr. Malthus's "inquiry" he observes, "that the
immediate cause of rent is obviously the excess of price above the cost
of production at which raw produce sells in the market," and in another
place he says, "that the causes of the high price of raw produce may be
stated to be three:--
"First, and mainly, that quality of the earth, by which it can be made
to yield a greater portion of the necessaries of life than is required
for the maintenance of the persons employed on the land.
"2dly. That quality peculiar to the necessaries of life of being able to
create their own demand, or to raise up a number of demanders in
proportion to the quantity of necessaries produced.
"And 3dly. The comparative scarcity of the most fertile land." In
speaking of the high price of corn, Mr. Malthus evidently does not mean
the price per quarter or per bushel, but rather the excess of price for
which the whole produce will sell, above the cost of its production,
including always in the term "cost of production," profits as well as
wages. One hundred and fifty quarters of corn at 3_l._ 10_s._ per
quarter, would yield a larger rent to the landlord than 100 quarters at
4_l._, provided the cost of production were in both cases the same.
High price, if the expression be used in this sense, cannot then be
called a _cause_ of rent; it cannot be said "that the immediate cause of
rent is obviously the excess of price above the cost of production, at
which raw produce sells in the market," for that excess is itself rent.
Rent, Mr. Malthus has defined to be "that portion of the value of the
whole produce which remains to the owner of the land, after all the
outgoings belonging to its cultivation, of whatever kind, have been
paid, including the profits of the capital employed, estimated according
to the usual and ordinary rate of the profits of agricultural stock at
the time being." Now whatever sum this excess may sell for, is money
rent; it is what Mr. Malthus means by "the excess of price above the
cost of production at which raw produce sells in the markets;" and
therefore in an inquiry into the causes which may elevate the price of
raw produce, compared with the cost of production, we are inquiring into
the causes which may elevate rent.
In reference to the first cause of the rise of rent, Mr. Malthus has the
following observations: "We still want to know why the consumption and
supply are such as to make the price so greatly exceed the cost of
production, and the main cause is evidently the _fertility_ of the earth
in producing the necessaries of life. Diminish this plenty, diminish the
fertility of the soil, and the excess will diminish; diminish it still
further, and it will disappear." True, the excess of necessaries will
diminish and disappear, but that is not the question. The question is,
whether the excess of their price above the cost of their production
will diminish and disappear, for it is on this, that money rent depends.
Is Mr. Malthus warranted in his inference, that because the excess of
quantity will diminish and disappear, therefore "the cause of the _high
price_ of the necessaries of life above the cost of production is to be
found in their abundance, rather than in their scarcity; and is not only
essentially different from the high price occasioned by artificial
monopolies, but from the high price of those peculiar products of the
earth, not connected with food, which may be called natural and
necessary monopolies?"
Are there no circumstances under which the fertility of the land, and
the plenty of its produce may be diminished, without occasioning a
diminished excess of its price above the cost of production, that is to
say, a diminished rent? If there are, Mr. Malthus's proposition is much
too universal; for he appears to me to state it as a general principle,
true under all circumstances, that rent will rise with the increased
fertility of the land, and will fall with its diminished fertility.
Mr. Malthus would undoubtedly be right, if, in proportion as the land
yielded abundantly, a greater share of the whole produce were paid to
the landlord; but the contrary is the fact: when no other but the most
fertile land is in cultivation, the landlord has the smallest share of
the whole produce, as well as the smallest value, and it is only when
inferior lands are required to feed an augmenting population, that both
the landlord's share of the whole produce, and the value he receives,
progressively increase.
Suppose that the demand is for a million of quarters of corn, and that
they are the produce of the land actually in cultivation. Now, suppose
the fertility of all the land to be so diminished, that the very same
lands will yield only 900,000 quarters. The demand being for a million
of quarters, the price of corn would rise, and recourse must necessarily
be had to land of an inferior quality sooner than if the superior land
had continued to produce a million of quarters. But it is this necessity
of taking inferior land into cultivation which is the cause of the rise
of rent. Rent, it must be remembered, is not in proportion to the
absolute fertility of the land in cultivation, but in proportion to its
relative fertility. Whatever cause may drive capital to inferior land,
must elevate rent; the cause of rent being, as stated by Mr. Malthus in
his third proposition, "the comparative scarcity of the most fertile
land." The price of corn will naturally rise with the difficulty of
producing the last portions of it; but as the cost of production will
not increase, as wages and profits taken together will continue always
of the same value,[52] it is evident that the excess of price above the
cost of production, or, in other words, rent, must rise with the
diminished fertility of the land, unless it is counteracted by a great
reduction of capital, population, and demand. It does not appear then
that Mr. Malthus's proposition is correct: rent does not immediately and
necessarily rise or fall with the increased or diminished fertility of
the land; but its increased fertility renders it capable of paying at
some future time an augmented rent. Land possessed of very little
fertility can never bear any rent; land of moderate fertility may be
made, as population increases, to bear a moderate rent; and land of
great fertility a high rent; but it is one thing to be able to bear a
high rent, and another thing actually to pay it. Rent may be lower in a
country where lands are exceedingly fertile than in a country where they
yield a moderate return, it being in proportion rather to relative than
absolute fertility--to the value of the produce, and not to its
abundance. Mr. Malthus says, that the "cause of the excess of price of
the necessaries of life above the cost of production, is to be found in
their abundance rather than their scarcity, and is essentially different
from the high price of those peculiar products of the earth, not
connected with food, which may be called natural and necessary
monopolies."
In what are they essentially different? Would not the abundance of those
peculiar products of the earth cause a rise of rent, if the demand for
them at the same time increased? and can rent ever rise, whatever the
commodity produced may be, from abundance merely, and without an
increase of demand?
The second cause of rent mentioned by Mr. Malthus, namely, "that quality
peculiar to the necessaries of life, of being able to create their own
demand, or to raise up a number of demanders in proportion to the
quantity of necessaries produced," does not appear to me to be any way
essential to it. It is not the abundance of necessaries which raises up
demanders, but the abundance of demanders which raises up necessaries.
We are under no necessity of producing permanently any greater quantity
of a commodity than that which is demanded. If by accident any greater
quantity were produced, it would fall below its natural price, and
therefore would not pay the cost of production, together with the usual
and ordinary profits of stock: thus the supply would be checked till it
conformed to the demand, and the market price rose to the natural price.
Mr. Malthus appears to me to be too much inclined to think that
population is only increased by the previous provision of food,--"that
it is food that creates its own demand,"--that it is by first providing
food that encouragement is given to marriage, instead of considering
that the general progress of population is affected by the increase of
capital, the consequent demand for labour, and the rise of wages; and
that the production of food is but the effect of that demand.
It is by giving the workman more money, or any other commodity in which
wages are paid, and which has not fallen in value, that his situation is
improved. The increase of population, and the increase of food will
generally be the effect, but not the necessary effect of high wages. The
amended condition of the labourer, in consequence of the increased value
which is paid him, does not necessarily oblige him to marry and take
upon himself the charge of a family--he may, if it please him, exchange
his increased wages for any commodities that may contribute to his
enjoyments--for chairs, tables, and hardware; or for better clothes,
sugar, and tobacco. His increased wages then will be attended with no
other effect than an increased demand for some of those commodities; and
as the race of labourers will not be materially increased, his wages
will continue permanently high. But although this might be the
consequence of high wages, yet so great are the delights of domestic
society, that in practice it is invariably found that an increase of
population follows the amended condition of the labourer; and it is only
because it does so, that a new and increased demand arises for food.
This demand then is the effect of an increase of population, but not the
cause--it is only because the expenditure of the people takes this
direction, that the market price of necessaries exceeds the natural
price, and that the quantity of food required is produced; and it is
because the number of people is increased, that wages again fall.
What motive can a farmer have to produce more corn than is actually
demanded, when the consequence would be a depression of its market price
below its natural price, and consequently a privation to him of a
portion of his profits, by reducing them below the general rate? "If,"
says Mr. Malthus, "the necessaries of life, the most important products
of land, had not the property of creating an increase of demand
proportioned to their increased quantity, such increased quantity would
occasion a fall in their exchangeable value.[53] However abundant might
be the produce of a country, its population might remain stationary. And
this abundance without a proportionate demand, and with a very high corn
price of labour, which would naturally take place under these
circumstances, might reduce the price of raw produce, like the price of
manufactures, to the cost of production."
"Might reduce the price of raw produce to the cost of production?" Is it
ever for any length of time either above or below this price? Does not
Mr. Malthus himself, state it never to be so? "I hope," he says, "to be
excused for dwelling a little, and presenting to the reader in various
forms the doctrine, that corn, in reference to the quantity _actually
produced_, is sold at its necessary price like manufactures, because I
consider it as a truth of the highest importance, which has been
overlooked by the economists, by Adam Smith, and all those writers, who
have represented raw produce as selling always at a monopoly price."
"Every extensive country may thus be considered as possessing a
gradation of machines for the production of corn and raw materials,
including in this gradation not only all the various qualities of poor
land, of which every territory has generally an abundance, but the
inferior machinery which may be said to be employed when good land is
further and further forced for additional produce. As the price of raw
produce continues to rise, these inferior machines are successively
called into action; and as the price of raw produce continues to fall,
they are successively thrown out of action. The illustration here used
serves to shew at once the _necessity of the actual price of corn to the
actual produce_, and the different effect which would attend a great
reduction in the price of any particular manufacture, and a great
reduction in the price of raw produce."[54]
How are these passages to be reconciled to that which affirms, that if
the necessaries of life had not the property of creating an increase of
demand proportioned to their increased quantity, the abundant quantity
produced would then, and then only, reduce the price of raw produce to
the cost of production? If corn is never under its natural price, it is
never more abundant than the actual population require it to be for
their own consumption; no store can be laid up for the consumption of
others; it can never then by its cheapness and abundance be a stimulus
to population. In proportion as corn can be produced cheaply, the
increased wages of the labourers will have more power to maintain
families. In America, population increases rapidly, because food can be
produced at a cheap price, and not because an abundant supply has been
previously provided. In Europe population increases comparatively
slowly, because food cannot be produced at a cheap value. In the usual
and ordinary course of things, the demand for all commodities precedes
their supply. By saying, that corn would, like manufactures, sink to its
price of production, if it could not raise up demanders, Mr. Malthus
cannot mean that all rent would be absorbed; for he has himself justly
remarked, that if all rent were given up by the landlords, corn would
not fall in price; rent being the effect, and not the cause of high
price, and there being always one quality of land in cultivation which
pays no rent whatever, the corn from which replaces by its price, only
wages and profits.
In the following passage, Mr. Malthus has given an able exposition of
the causes of the rise in the price of raw produce in rich and
progressive countries, in every word of which I concur; but it appears
to me to be at variance with some of the propositions maintained by him
in some parts of his Essay on Rent. "I have no hesitation in stating,
that, independently of the irregularities in the currency of a country,
and other temporary and accidental circumstances, the cause of the high
comparative money price of corn is its high comparative _real price_, or
the greater quantity of capital and labour which must be employed to
produce it; and that the reasons why the real price of corn is higher,
and continually rising in countries which are already rich, and still
advancing in prosperity and population, is to be found in the necessity
of resorting constantly to poorer land, to machines which require a
greater expenditure to work them, and which consequently occasion each
fresh addition to the raw produce of the country to be purchased at a
greater cost; in short, it is to be found in the important truth, that
corn in a progressive country, is sold at the price necessary to yield
the actual supply; and that, as this supply becomes more and more
difficult, the price rises in proportion."
The real price of a commodity is here properly stated to depend on the
greater or less quantity of labour and capital (that is, accumulated
labour) which must be employed to produce it. Real price does not, as
some have contended, depend on money value; nor, as others have said, on
value relatively to corn, labour, or any other commodity taken singly,
or to all commodities collectively; but, as Mr. Malthus justly says, "on
the greater (or less) quantity of capital and labour which must be
employed to produce it."
Among the causes of the rise of rent, Mr. Malthus mentions, "such an
increase of population as will lower the wages of labour." But if, as
the wages of labour fall, the profits of stock rise, and they be
together always of the same value,[55] no fall of wages can raise rent,
for it will neither diminish the portion, nor the value of the portion
of the produce which will be allotted to the farmer and labourer
together, and therefore will not leave a larger portion, nor a larger
value for the landlord. In proportion as less is appropriated for wages,
more will be appropriated for profits, and _vice versa_. This division
will be settled by the farmer and his labourers, without any
interference of the landlord; and indeed it is a matter in which he can
have no interest, otherwise than as one division may be more favourable
than another, to new accumulations, and to a further demand for land. If
wages fall, profits, and not rent, would rise. If wages rose, profits,
and not rent, would fall. The rise of rent and wages, and the fall of
profits, are generally the inevitable effects of the same cause--the
increasing demand for food, the increased quantity of labour required to
produce it, and its consequently high price. If the landlord were to
forego his whole rent, the labourers would not be in the least
benefited. If the labourers were to give up their whole wages, the
landlords would derive no advantage from such a circumstance; but in
both cases the farmer would receive and retain all which they
relinquished. It has been my endeavour to shew in this work, that a
fall of wages would have no other effect than to raise profits.
Another cause of the rise of rent, according to Mr. Malthus, is "such
agricultural improvements, or such increase of exertions, as will
diminish the number of labourers necessary to produce a given effect."
This would not raise the value of the whole produce, and would therefore
not increase rent. It would rather have a contrary tendency, it would
lower rent; for if in consequence of these improvements, the actual
quantity of food required could be furnished either with fewer hands, or
with a less quantity of land, the price of raw produce would fall, and
capital would be withdrawn from the land.[56] Nothing can raise rent,
but a demand for new land of an inferior quality, or some cause which
shall occasion an alteration in the relative fertility of the land
already under cultivation.[57] Improvements in agriculture, and in the
division of labour, are common to all land; they increase the absolute
quantity of raw produce obtained from each, but probably do not much
disturb the relative proportions which before existed between them.
Mr. Malthus has justly commented on an error of Adam Smith, and says,
"the substance of his (Dr. Smith's) argument is, that corn is of so
peculiar a nature, that its real price cannot be raised by an increase
of its money price; and that, as it is clearly an increase of real price
alone, which can encourage its production, the rise of money price,
occasioned by a bounty, can have no such effect."
He continues: "It is by no means intended to deny the powerful influence
of the price of corn upon the price of labour, on an average of a
considerable number of years; but that this influence is not such as to
prevent the movement of capital to, or from the land, which is the
precise point in question, will be made sufficiently evident by a short
inquiry into the manner in which labour is paid, and brought into the
market, and by a consideration of the consequences to which the
assumption of Adam Smith's proposition would inevitably lead."[58]
Mr. Malthus then proceeds to shew, that demand and high price will as
effectually encourage the production of raw produce, as the demand and
high price of any other commodity will encourage its production. In this
view it will be seen, from what I have said of the effects of bounties,
that I entirely concur. I have noticed the passage Mr. Malthus's
"Observations on the Corn Laws," for the purpose of shewing in what a
different sense the term real price is used here, and in his other
pamphlet, entitled "Grounds of an Opinion, &c." In this passage Mr.
Malthus tells us, that "it is clearly an increase of real price alone
which can encourage the production of corn," and by real price he
evidently means the increase in its value relatively to all other
things, or in other words, the rise in its market above its natural
price, or the cost of its production. If by real price this is what is
meant, Mr. Malthus's opinion is undoubtedly correct; it is the rise in
the market price of corn which alone encourages its production, for it
may be laid down as a principle uniformly true, that the only
encouragement to the increased production of a commodity, is its market
value exceeding its natural or necessary value.
But this is not the meaning which Mr. Malthus, on other occasions,
attaches to the term, real price. In the Essay on Rent, Mr. Malthus
says, by "the real growing price of corn, I mean the real _quantity_ of
labour and capital, _which has been employed_ to produce the last
additions which have been made to the national produce." In another part
he states "the cause of the high comparative real price of corn to be
the greater _quantity_ of capital and labour, which must be _employed_
to produce it."[59] Suppose that in the foregoing passage we were to
substitute this definition of real price, would it not then run
thus?--"It is clearly the increase in the quantity of labour and capital
which must be employed to produce corn, which alone can encourage its
production." This would be to say, that it is clearly the rise in the
natural or necessary price of corn, which encourages its production--a
proposition which could not be maintained. It is not the price at which
corn can be produced, that has any influence on the quantity produced,
but the price at which it can be sold. It is in proportion to the degree
of the excess of its price above the cost of production, that capital is
attracted to or repelled from the land. If that excess be such as to
give to capital so employed, a greater than the general profit of stock,
capital will go to the land; if less, it will be withdrawn from it.
It is not then by an alteration in the real price of corn that its
production is encouraged, but by an alteration in its market price. It
is not "because a greater quantity of capital and labour must be
employed to produce it," Mr. Malthus's just definition of real price,
that more capital and labour are attracted to the land, but because the
market price rises above this its real price, and, notwithstanding the
increased charge, makes the cultivation of land the more profitable
employment of capital.
Nothing can be more just than the following observations of Mr. Malthus,
on Adam Smith's standard of value. "Adam Smith was evidently led into
this train of argument, from his habit of considering _labour as the
standard measure of value_, and corn as the measure of labour. But that
corn is a very inaccurate measure of labour, the history of our own
country will amply demonstrate; where labour, compared with corn, will
be found to have experienced very great and striking variations, not
only from year to year, but from century to century; and for ten,
twenty, and thirty years together. _And that neither labour nor any
other commodity can be an accurate measure of real value in exchange_,
is now considered as one of the most incontrovertible doctrines of
political economy; and, indeed, follows from the very definition of
value in exchange."
If neither corn nor labour are accurate measures of real value in
exchange, which they clearly are not, what other commodity
is?--certainly none. If then the expression real price of commodities,
have any meaning, it must be that which Mr. Malthus has stated, in the
Essay on Rent--it must be measured by the proportionate quantity of
capital and labour necessary to produce them.
In Mr. Malthus's "Inquiry into the Nature of Rent," he says, "that,
independently of irregularities in the currency of a country, and other
temporary and accidental circumstances, the cause of the high
comparative money price of corn, is its high comparative real price, _or
the greater quantity of capital and labour which must be employed to
produce it_."[60]
This, I apprehend, is the correct account of all permanent variations in
price, whether of corn or of any other commodity. A commodity can only
permanently rise in price, either because a greater quantity of capital
and labour must be employed to produce it, or because money has fallen
in value; and on the contrary, it can only fall in price, either because
a less quantity of capital and labour may be employed to produce it, or
because money has risen in value.
A variation arising from the latter of either of these alternatives, an
altered value of money, is common at once to all commodities; but a
variation arising from the former cause, is confined to the particular
commodity requiring more or less labour in its production. By allowing
the free importation of corn, or by improvements in agriculture, raw
produce would fall; but the price of no other commodity would be
affected, except in proportion to the fall in the real value, or cost of
production, of the raw produce which entered into its composition.
Mr. Malthus, having acknowledged this principle, cannot, I think,
consistently maintain that the whole money value of all the commodities
in the country must sink exactly in proportion to the fall in the price
of corn. If the corn consumed in the country were of the value of ten
millions per annum, and the manufactured and foreign commodities
consumed were of the value of twenty millions, making altogether thirty
millions, it would not be admissible to infer that the annual
expenditure was reduced to 15 millions, because corn had fallen 50 per
cent., or from 10 to 5 millions.
The value of the raw produce which entered into the composition of these
manufactures might not, for example, exceed 20 per cent. of their whole
value, and, therefore, the fall in the value of manufactured
commodities, instead of being from 20 to 10 millions, would be only from
20 to 18 millions; and after the fall in the price of corn of 50 per
cent., the whole amount of the annual expenditure, instead of falling
from 30 to 25 millions, would fall from 30 to 23 millions.[61]
Instead of thus considering the effect of a fall in the value of raw
produce; as Mr. Malthus was bound to do by his previous admission; he
considers it as precisely the same thing with a rise of 100 per cent. in
the value of money, and, therefore, argues as if all commodities would
sink to half their former price.
"During the twenty years, beginning with 1794," he says, "and ending
with 1813, the average price of British corn per quarter was about
eighty-three shillings; during the ten years ending with 1813,
ninety-two shillings; and during the last five years of the twenty, one
hundred and eight shillings. In the course of these twenty years, the
Government borrowed near five hundred millions of real capital; for
which, on a rough average, exclusive of the sinking fund, it engaged to
pay about five per cent. But if corn should fall to fifty shillings a
quarter, and other commodities in proportion, instead of an interest of
about five per cent., the Government would really pay an interest of
seven, eight, nine, and, for the last two hundred millions, ten per
cent.
"To this extraordinary generosity towards the stockholders, I should be
disposed to make no kind of objection, if it were not necessary to
consider by whom it is to be paid; and a moment's reflection will shew
us, that it can only be paid by the industrious classes of society, and
the landlords, that is, by all those whose nominal income will vary with
the variations in the measure of value. The nominal revenues of this
part of the society, compared with the average of the last five years,
will be diminished one half, and out of this nominally reduced income,
they will have to pay the same nominal amount of taxes."[62]
In the first place, I think, I have already shewn, that the nominal
income of the whole country will not be diminished in the proportion
for which Mr. Malthus here contends; it would not follow, that because
corn fell fifty per cent., each man's income would be reduced fifty per
cent. in value.[63]
In the second place, I think the reader will agree with me, that the
increased charge, if admitted, would not fall exclusively "on the
landlords and the industrious classes of society:" the stockholder, by
his expenditure, contributes his share to the support of the public
burdens in the same way as the other classes of society. If then money
became really more valuable, although he would receive a greater value,
he would also pay a greater value in taxes, and, therefore, it cannot be
true that the whole addition to the real value of the interest would be
paid by "the landlords and the industrious classes."
The whole argument, however, of Mr. Malthus, is built on an infirm
basis: it supposes, because the gross income of the country is
diminished, that, therefore, the net income must also be diminished, in
the same proportion. It has been one of the objects of this work to
shew, that with every fall in the real value of necessaries, the wages
of labour would fall, and that the profits of stock would rise--in other
words, that of any given annual value a less portion would be paid to
the labouring class, and a larger portion to those whose funds employed
this class. Suppose the value of the commodities produced in a
particular manufacture to be 1000_l._, and to be divided between the
master and his labourers, in the proportion of 800_l._ to labourers, and
200_l._ to the master; if the value of these commodities should fall to
900_l._, and 100_l._ be saved from the wages of labour, in consequence
of the fall of necessaries, the net income of the masters would be in no
degree impaired, and, therefore, he could with just as much facility pay
the same amount of taxes, after, as before the reduction of price.[64]
And that wages would fall as much as the mass of commodities, or rather
that the net income remaining to landlords, farmers, manufacturers,
traders, and stockholders, the only real payers of taxes, would be as
great as before, is very highly probable; for nothing would be even
nominally lost to the society by the freest importation of corn, but
that portion of rent of which the landlords would be deprived in
consequence of the fall of raw produce.
The difference between the value of corn and all other commodities sold
in the country, before and after the importation of cheap corn, would be
only equal to the fall of rent; because, independently of rent, the same
quantity of labour would always produce the same value.
The whole reduction which is made in wages, is a value actually added to
the value of the net income before possessed by the society; whilst the
only value which is taken from that net income is the value of that part
of their rent of which the landlords will be deprived by a fall of raw
produce. When we consider that the fall of produce acts upon a limited
number of landlords, while it reduces the wages not only of those who
are employed in agriculture, but of all those who are occupied in
manufactures and commerce, it may well be doubted, whether the net
revenue of the society would suffer any abatement whatever.[65]
But, if it did, it must not be supposed that the ability to pay taxes
will diminish in the same degree, as the money value, even of the net
revenue. Suppose that my net revenue were diminished from 1000_l._ to
900_l._; but that my taxes continued to be the same, to be 100_l._: is
it not probable that my ability to pay this 100_l._ may be greater with
the smaller than with the larger revenue? Commodities cannot fall so
universally as Mr. Malthus supposes, without greatly benefiting the
consumers, without enabling them with a much smaller money revenue to
command more of the conveniences, necessaries, and luxuries of human
life; and the question resolves itself into this--whether those who are
in possession of the net revenue of the country will be benefited as
much by the diminished price of commodities, as they will suffer by the
greater real taxation. On which side the balance may preponderate, will
depend on the proportion which taxes bear to the annual revenue; if it
be enormously large, it may undoubtedly more than counterbalance the
advantages from cheap necessaries; but I trust enough has been said, to
shew, that Mr. Malthus has very greatly over-rated the loss to the
tax-payers, from a fall in one of the most important necessaries of
life; and that if they were not entirely remunerated for the real
increase of taxes, by the fall of wages and increase of profits, they
would be more than compensated, by the cheaper price of all objects on
which their incomes were expended.
That the stockholder is benefited by a great fall in the value of corn,
cannot be doubted; but if no one else be injured, that is no reason why
corn should be made dear: for the gains of the stockholder are national
gains, and increase, as all other gains do, the real wealth and power of
the country. If they are unjustly benefited, let the degree in which
they are so, be accurately ascertained, and then it is for the
legislature to devise a remedy; but no policy can be more unwise than to
shut ourselves out from the great advantages arising from cheap corn,
and abundant productions, merely because the stockholder would have an
undue proportion of the increase.
To regulate the dividends on stock by the money value of corn, has never
yet been attempted. If justice and good faith required such a
regulation, a great debt is due to the old stockholders; for they have
been receiving the same money dividends for more than a century,
although corn has, perhaps, been doubled or trebled in price.[66]
Mr. Malthus says, "It is true, that the last additions to the
agricultural produce of an improving country are not attended with a
large proportion of rent; and it is precisely this circumstance that may
make it answer to a rich country to import some of its corn, if it can
be secure of obtaining an equable supply. But in all cases the
importation of foreign corn must fail to answer nationally, if it is not
so much cheaper than the corn that can be grown at home, as to equal
both the profits and the rent of the grain which it displaces."
_Grounds_, &c. p. 36.
As rent is the effect of the high price of corn, the loss of rent is the
effect of a low price. Foreign corn never enters into competition with
such home corn as affords a rent; the fall of price invariably affects
the landlord till the whole of his rent is absorbed;--if it fall still
more, the price will not afford even the common profits of stock;
capital will then quit the land for some other employment, and the corn,
which was before grown upon it, will then, and not till then, be
imported. From the loss of rent, there will be a loss of value, of
estimated money value, but there will be a gain of wealth. The amount
of the raw produce and other productions together will be increased,
from the greater facility with which they are produced; they will,
though augmented in quantity, be diminished in value.
Two men employ equal capitals--one in agriculture, the other in
manufactures. That in agriculture produces a net annual value of
1200_l._ of which 1000_l._ is retained for profit, and 200_l._ is paid
for rent; the other in manufactures produces only an annual value of
1000_l._ Suppose that by importation, the same quantity of corn can be
obtained for commodities which cost 950_l._, and that, in consequence,
the capital employed in agriculture is diverted to manufactures, where
it can produce a value of 1000_l._ the net revenue of the country will
be of less value, it will be reduced from 2200_l._ to 2000_l._, but
there will not only be the same quantity of commodities and corn for its
own consumption, but also as much addition to that quantity as 50_l._
would purchase, the difference between the value at which its
manufactures were sold to the foreign country, and the value of the corn
which was purchased from it.
Mr. Malthus says, "It has been justly observed by Adam Smith, that no
equal quantity of productive labour employed in manufactures can ever
occasion so great a reproduction as in agriculture." If Adam Smith
speaks of value, he is correct, but if he speaks of riches, which is the
important point, he is mistaken, for he has himself defined riches to
consist of the necessaries, conveniences, and enjoyments of human life.
One set of necessaries and conveniences admits of no comparison with
another set; value in use cannot be measured by any known standard, it
is differently estimated by different persons.
FOOTNOTES:
[1] Chap. xv. part i. "Des Debouches," contains in
particular some very important principles, which I believe
were first explained by this distinguished writer.
[2] Book i. chap. 5.
[3] "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.
[4] Wealth of Nations, book i. chap. 10.
[5] "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.'"--_Economie Politique, par J. B.
Say_, vol. ii. p. 124.
[6] 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.
[7] "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 shew,
in the observations on productive and unproductive
Footnote: 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."
[8] To make this obvious, and to shew 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 4_l._
per quarter, or 720_l._; 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 4_l._ to 4_l._ 4_s._. 8_d._ for 170: 180:: 4_l._:
4_l._ 4_s._ 8_d._; 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 4_l._ to 4_l._ 4_s._ 8_d._ If 10 men be
further employed, and the return be
160, the price will rise to L4 10 0
150, " " " " " 4 16 0
140, " " " " " 5 2 10
Now if no rent was paid for the land which yielded 180
quarters when corn was at 4_l._ per quarter, the value of
10 quarters would be paid as rent when only 170 could be
procured, which, at 4_l._ 4_s._ 8_d._ would be 42_l._
7_s._ 6_d._
20 qrs. when 160 were produced, which at L4 10 0 would be L 90 0 0
30 qrs. " 150 " " " " 4 16 0 " " 144 0 0
40 qrs. " 140 " " " " 5 2 10 " " 205 13 4
{100} { 100
Corn rent then would increase {200} and money rent in the { 212
in the proportion of {300} proportion of { 340
{400} { 485
[9] With Mr. Buchanan in the following passage, if it
refers to temporary states of misery, I so far agree, that
"the great evil of the labourer's condition, is poverty,
arising either from a scarcity of food or of work; and in
all countries, laws without number have been enacted for
his relief. But there are miseries in the social state
which legislation cannot relieve; and it is useful
therefore to know its limits, that we may not, by aiming
at what is impracticable, miss the good which is really in
our power."--_Buchanan_, page 61.
[10] The reader is desired to bear in mind, that for the
purpose of making the subject more clear, I consider money
to be invariable in value, and therefore every variation
of price to be referable to an alteration in the value of
the commodity.
[11] The reader is aware, that we are leaving out of our
consideration the accidental variations arising from bad
and good seasons, or from the demand increasing or
diminishing by any sudden effect on the state of
population. We are speaking of the natural and constant,
not of the accidental and fluctuating price of corn.
[12] The 180 quarters of corn would be divided in the
following proportions between landlords, farmers, and
labourers, with the above-named variations in the value of
corn.
Price per qr. Rent. Profit. Wages. Total.
_L. s. d._ In Wheat. In Wheat. In Wheat.
4 0 0 None. 120 qrs. 60 qrs.}
4 4 8 10 qrs. 111.7 58.3 }
4 10 0 20 103.4 56.6 } 180
4 16 0 30 95 55 }
5 2 10 40 86.7 53.5 }
and, under the same circumstances, money rent, wages, and
profit, would be as follows:
Price per qr. Rent. Profit. Wages. Total.
_L. s. d._ _L. s. d._ _L. s. d._ _L. s. d._ _L. s. d._
4 0 0 None. 480 0 0 240 0 0 720 0 0
4 4 8 42 7 6 473 0 0 247 0 0 762 7 6
4 10 0 90 0 0 465 0 0 255 0 0 810 0 0
4 16 0 144 0 0 456 0 0 264 0 0 864 0 0
5 2 10 205 13 4 445 15 0 274 5 0 925 13 4
[13] See Adam Smith, book i. chap. 9.
[14] It will appear then, that a country possessing very
considerable advantages in machinery and skill, and which
may therefore be enabled to manufacture commodities with
much less labour than her neighbours, may in return for
such commodities, import a portion of the corn required
for its consumption, even if its land were more fertile,
and corn could be grown with less labour than in the
country from which it was imported. Two men can both make
shoes and hats, and one is superior to the other in both
employments; but in making hats, he can only exceed his
competitor by one-fifth or 20 per cent., and in making
shoes he can excel him by one-third or 33 per cent.;--will
it not be for the interest of both, that the superior man
should employ himself exclusively in making shoes, and the
inferior man in making hats?
[15] Book V. ch. ii.
[16] M. Say appears to have imbibed the general opinion on
this subject. Speaking of corn, he says, "thence it
results, that its price influences the price of _all_
other commodities. A farmer, a manufacturer, or a
merchant, employs a certain number of workmen, who all
have occasion to consume a certain quantity of corn. If
the price of corn rises, he is obliged to raise, in an
equal proportion, the price of his productions." Vol. i.
p. 255.
[17] M. Say says, that "the tax, added to the price of a
commodity, raises its price. Every increase in the price
of a commodity, necessarily reduces the number of those
who are able to purchase it, or at least the quantity they
will consume of it." This is by no means a necessary
consequence. I do not believe, that if bread were taxed,
the consumption of bread would be diminished, more than if
cloth, wine, or soap, were taxed.
[18] The following remark of the same author appears to me
equally erroneous: "When a high duty is laid on cotton,
the production of all those goods, of which cotton is the
basis, is diminished. If the total value added to cotton
in its various manufactures, in a particular country,
amounted to 100 millions of francs per annum, and the
effect of the tax was, to diminish the consumption one
half, then the tax would deprive that country every year
of 50 millions of francs, in addition to the sum received
by government." Vol. ii. p. 314.
[19] It is observed by M. Say, "that a manufacturer is not
enabled to make the consumer pay the whole tax levied on
his commodity, because its increased price will diminish
its consumption." Should this be the case, should the
consumption be diminished, will not the supply also
speedily be diminished? Why should the manufacturer
continue in the trade if his profits are below the general
level? M. Say appears here also to have forgotten the
doctrine which he elsewhere supports, "that the cost of
production determines the price, below which commodities
cannot fall for any length of time, because production
would then be either suspended or diminished."--Vol. ii.
p. 26.
"The tax in this case falls then partly on the consumer
who is obliged to give more for the commodity taxed, and
partly on the producer, who, after deducting the tax, will
receive less. The public treasury will be benefited by
what the purchaser pays in addition, and also by the
sacrifice which the producer is obliged to make of a part
of his profits. It is the effort of gunpowder, which acts
at the same time on the bullet which it projects, and on
the gun which it causes to recoil." Vol. ii. p. 333.
[20] "Melon says, that the debts of a nation are debts due
from the right hand to the left, by which the body is not
weakened. It is true that the general wealth is not
diminished by the payment of the interest on arrears of
the debt: The dividends are a value which passes from the
hand of the contributor to the national creditor: Whether
it be the national creditor or the contributor who
accumulates or consumes it, is I agree of little
importance to the society; but the principal of the
debt--what has become of that? It exists no more. The
consumption which has followed the loan has annihilated a
capital which will never yield any further revenue. The
society is deprived not of the amount of interest, since
that passes from one hand to the other, but of the revenue
from a destroyed capital. This capital, if it had been
employed productively by him who lent it to the state,
would equally have yielded him an income, but that income
would have been derived from a real production, and would
not have been furnished from the pocket of a fellow
citizen."--_Say_, vol. ii. p. 357. This is both conceived
and expressed in the true spirit of the science.
[21] "Manufacturing industry increases its produce in
proportion to the demand, and the price falls; _but the
produce of land cannot be so increased_; and a high price
is still necessary to prevent the consumption from
exceeding the supply." _Buchanan_, vol. iv. p. 40. Is it
possible that Mr. Buchanan can seriously assert, that the
produce of the land cannot be increased, if the demand
increases?
[22] I wish the word "Profit" had been omitted. Dr. Smith
must suppose the profits of the tenants of these precious
vineyards to be above the general rate of profits. If they
were not, they would not pay the tax, unless they could
shift it either to the landlord or consumer.
[23] See note, p. 346.
[24] See note, p. 346.
[25] Vol. iii. p. 355.
[26] In a former part of this work, I have noticed the
difference between rent, properly so called, and the
remuneration paid to the landlord under that name, for the
advantages which the expenditure of his capital has
procured to his tenant; but I did not perhaps sufficiently
distinguish the difference which would arise from the
different modes in which this capital might be applied. As
a part of this capital, when once expended in the
improvement of a farm, is inseparably amalgamated with the
land, and tends to increase its productive powers, the
remuneration paid to the landlord for its use is strictly
of the nature of rent, and is subject to all the laws of
rent. Whether the improvement be made at the expense of
the landlord or the tenant, it will not be undertaken in
the first instance, unless there is a strong probability
that the return will at least be equal to the profit that
can be made by the disposition of any other equal capital;
but when once made, the return obtained will ever after be
wholly of the nature of rent, and will be subject to all
the variations of rent. Some of these expenses however,
only give advantages to the land for a limited period, and
do not add permanently to its productive powers: being
bestowed on buildings, and other perishable improvements,
they require to be constantly renewed, and therefore do
not obtain for the landlord any permanent addition to his
real rent.
[27] Adam Smith says, "that the difference between the
real and the nominal price of commodities and labour, is
not a matter of mere speculation, but may sometimes be of
considerable use in practice." I agree with him; but the
real price of labour and commodities, is no more to be
ascertained by their price in goods, Adam Smith's real
measure, than by their price in gold and silver, his
nominal measure. The labourer is only paid a really high
price for his labour, when his wages will purchase the
produce of a great deal of labour.
[28] In vol. i. p. 108, M. Say infers, that silver is now
of the same value, as in the reign of Louis XIV. "because
the same quantity of silver will buy the same quantity of
corn."
[29] "The first man who knew how to soften metals by fire,
is not the creator of the value which that process adds to
the melted metal. That value is the result of the physical
action of fire added to the industry and capital of those
who availed themselves of this knowledge."
"From this error Smith has drawn this false result, that
the value of all productions represents the recent or
former labour of man, _or in other words, that riches are
nothing else but accumulated labour; from which, by a
second consequence, equally false, labour is the sole
measure of riches, or of the value of productions_."[30]
The inferences with which M. Say concludes are his own,
and not Dr. Smith's; they are correct if no distinction be
made between value and riches: but though Adam Smith, who
defined riches to consist in the abundance of necessaries,
conveniences, and enjoyments of human life, would have
allowed that machines and natural agents might very
greatly add to the riches of a country, he would not have
allowed that they add any thing to value in exchange.
[30] Chap. iv. p. 31.
[31] M. Say, _Catechisme d'Economie Politique_, p. 99.
[32] Adam Smith speaks of Holland, as affording an
instance of the fall of profits from the accumulation of
capital, and from every employment being consequently
overcharged. "The Government there borrow at 2 per cent.,
and private people of good credit, at 3 per cent." But it
should be remembered, that Holland was obliged to import
almost all the corn which she consumed, and by imposing
heavy taxes on the necessaries of the labourer, she
further raised the wages of labour. These facts will
sufficiently account for the low rate of profits and
interest in Holland.
[33] Is the following quite consistent with M. Say's
principle? "The more disposable capitals are abundant in
proportion to the extent of employment for them, the more
will the rate of interest on loans of capital fall."--Vol.
ii. p. 108. If capital to any extent can be employed by a
country, how can it be said to be abundant compared with
the extent of employment for it?
[34] Adam Smith says, that "When the produce of any
particular branch of industry exceeds what the demand of
the country requires, the surplus must be sent abroad, and
exchanged for something for which there is a demand at
home. _Without such exportation a part of the productive
labour of the country must cease, and the value of its
annual produce diminish._ The land and labour of great
Britain produce generally more corn, woollens, and
hardware, than the demand of the home market requires. The
surplus part of them, therefore, must be sent abroad, and
exchanged for something for which there is a demand at
home. It is only by means of such exportation, that this
surplus can acquire a value sufficient to compensate the
labour and expense of producing it." One would be led to
think by the above passage, that Adam Smith concluded we
were under some necessity of producing a surplus of corn,
woollen goods, and hardware, and that the capital which
produced them could not be otherwise employed. It is,
however, always a matter of choice in what way a capital
shall be employed, and therefore there can never, for any
length of time, be a surplus of any commodity; for if
there were, it would fall below its natural price, and
capital would be removed to some more profitable
employment. No writer has more satisfactorily and ably
shewn than Dr. Smith, the tendency of capital to move from
employments in which the goods produced do not repay by
their price the whole expenses, including the ordinary
profits, of producing and bringing them to market.[35]
[35] See Chap. 10. Book I.
[36] "All kinds of public loans," observes M. Say, "are
attended with the inconvenience of withdrawing capital, or
portions of capital, from productive employments, to
devote them to consumption; and when they take place in a
country, _the Government of which does not inspire much
confidence_, they have the further inconvenience of
raising the interest of capital. Who would lend at 5 per
cent. per annum to agriculture, to manufacturers, and to
commerce, when a borrower may be found ready to pay an
interest of 7 or 8 per cent.? That sort of income, which
is called profit of stock, would rise then at the expense
of the consumer. Consumption would be reduced by the rise
in the price of produce; and the other productive services
would be less in demand, less well paid. The whole nation,
capitalists excepted, would be the sufferers from such a
state of things." To the question: "who would lend money
to farmers, manufacturers, and merchants, at 5 per cent.
per annum, when another borrower having little credit,
would give 7 or 8?" I reply, that every prudent and
reasonable man would. Because the rate of interest is 7 or
8 per cent. there where the lender runs extraordinary
risk, is this any reason that it should be equally high in
those places where they are secured from such risks? M.
Say allows, that the rate of interest depends on the rate
of profits; but it does not therefore follow, that the
rate of profits depends on the rate of interest. One is
the cause, the other the effect, and it is impossible for
any circumstances to make them change places.
[37] In another place he says, that "whatever extension of
the foreign market can be occasioned by the bounty, must,
in every particular year, be altogether at the expense of
the home market; as every bushel of corn which is exported
by means of the bounty, and which would not have been
exported without the bounty, would have remained in the
home market to increase the consumption, and to lower the
price of that commodity. The corn bounty, it is to be
observed, as well as every other bounty upon exportation,
imposes two different taxes upon the people; first, the
tax which they are obliged to contribute, in order to pay
the bounty; and, secondly, the tax which arises from the
advanced price of the commodity in the home market, and
which, as the whole body of the people are purchasers of
corn, must in this particular commodity be paid by the
whole body of the people. In this particular commodity,
therefore, this second tax is by much the heaviest of the
two." "For every five shillings, therefore, which they
contribute to the payment of the first tax, they must
contribute six pounds four shillings to the payment of the
second." "The extraordinary exportation of corn,
therefore, occasioned by the bounty, not only in every
particular year diminishes the home, just as much as it
extends the foreign market and consumption, but, by
restraining the population and industry of the country,
its final tendency is to stunt and restrain the gradual
extension of the home market, and thereby, in the long
run, rather to diminish than to augment the whole market
and consumption of corn."
[38] The same opinion is held by M. Say. Vol. ii. p. 335.
[39] See Chap. on Rent.
[40] M. Say supposes the advantage of the manufacturers at
home to be more than temporary. "A Government which
absolutely prohibits the importation of certain foreign
goods, establishes a monopoly _in favour of those_ who
produce such commodities at home, _against those_ who
consume them; in other words, those at home who produce
them having the exclusive privilege of selling them, may
elevate their price above the natural price; and the
consumers at home, not being able to obtain them
elsewhere, are obliged to purchase them at a higher
price." Vol. i. p. 201.
But how can they permanently support the market price of
their goods above the natural price, when every one of
their fellow citizens is free to enter into the trade?
they are guaranteed against foreign, but not against home
competition. The real evil arising to the country from
such monopolies, if they can be called by that name, lies,
not in raising the market price of such goods, but in
raising their real and natural price. By increasing the
cost of production, a portion of the labour of the country
is less productively employed.
[41] Are not the following passages contradictory to the
one above quoted? "Besides, that home trade, though less
noticed, (because it is in a variety of hands) is the most
considerable, it is also the most profitable. The
commodities exchanged in that trade are necessarily the
productions of the same country." Vol. i. p. 84.
"The English Government has not observed, that the most
profitable sales are those which a country makes to
itself, because they cannot take place, without two values
being produced by the nation; the value which is sold, and
the value with which the purchase is made." Vol. i. p.
221.
I shall, in the 24th chapter, examine the soundness of
this opinion.
[42] See page 198.
[43] M. Say is of the same opinion with Adam Smith: "The
most productive employment of capital, for the country in
general, after that on the land, is that of manufactures
and of home trade; because it puts in activity an industry
of which the profits are gained in the country, while
those capitals which are employed in foreign commerce,
make the industry and lands of all countries to be
productive, without distinction.
"The employment of capital, the least favourable to a
nation, is that of carrying the produce of one foreign
country to another." _Say_, vol. ii. p. 120.
[44] "It is fortunate that the natural course of things
draws capital, not to those employments where the greatest
profits are made, but to those where their operation is
most profitable to the community."--Vol. ii. p. 122. M.
Say has not told us what those employments are, which,
while they are the most profitable to the individual, are
not the most profitable to the state. If countries with
limited capitals, but with abundance of fertile land, do
not early engage in foreign trade, the reason is, because
it is less profitable to individuals, and therefore also
less profitable to the state.
[45] "The use of gold and silver then establishes in every
place a certain necessity for these commodities; and when
the country possesses the quantity necessary to satisfy
this want, all that is further imported, not being in
demand, is unfruitful in value, and of no use to its
owners."--_Say_, vol. i. p. 187.
In page 196, M. Say says, that supposing a country to
require 1000 carriages, and to be possessed of 1500--all
above 1000 would be useless; and thence he infers, that if
it possesses more money than is _necessary_, the overplus
will not be employed.
[46] Whatever I say of gold coin, is equally applicable to
silver coin; but it is not necessary to mention both on
every occasion.
[47] "In the transactions of Government with individuals,
and in those of individuals between themselves, a piece of
money is never received, whatever denomination may be
given to it, but at its intrinsic value, increased by the
value of the utility which the impression it bears has
added to it."--_Say_, vol. i. p. 327.
"Money is so little a mark of value, that if the pieces of
money lose a part of their value by friction, from use, or
by the knavery of the clippers of money, all goods rise in
price in proportion to the alteration which they have
experienced; and if Government orders a recoinage, and
restores each piece to its legal weight and fineness,
goods will fall to their former price; if they have not
been exposed to variations from other causes."--_Say_,
vol. i. p. 346.
[48] M. Say recommends that the seignorage should vary
according to the quantity of business that the mint might
be called upon to perform.
"Government should not coin the bullion of individuals
except on payment, not only of the expenses, but also of
the profits of coining. This profit might be carried to a
considerable height, in consequence of the exclusive
privilege of coining; but it must vary according to the
circumstances of the mint, and the quantity required for
circulation." Vol. i. p. 380.
Such a regulation would be extremely pernicious, and would
expose us to considerable and unnecessary variation in the
bullion value of the currency.
[49] If with the quantity of gold and silver which
actually exists, these metals only served for the
manufacture of utensils and ornaments, they would be
abundant, and would be much cheaper than they are at
present; in other words, in exchanging them for any other
species of goods, we should be obliged to give
proportionally a greater quantity of them. But as a large
quantity of these metals is used for money, and as this
portion is used for no other purpose, there remains less
to be employed in furniture and jewellery; now this
scarcity adds to their value.--_Say_, vol. i. p. 316. See
also note to p. 78.
[50] An Inquiry into the Nature and Origin of Public
Wealth, page 13.
[51] An Inquiry into the Nature and Progress of Rent, p.
15.
[52] See page 124, where I have endeavoured to shew, that
whatever facility or difficulty there may be in the
production of corn; wages and profits together will be of
the same value. When wages rise, it is always at the
expense of profits, and when they fall, profits always
rise.
[53] Of what increased quantity does Mr. Malthus speak?
Who is to produce it? Who can have any motive to produce
it, before any demand exists for an additional quantity?
[54] Inquiry, &c. "In all progressive countries, the
average price of corn is never higher than what is
necessary to continue the average increase of produce."
Observations, p. 21.
"In the employment of fresh capital upon the land, to
provide for the wants of an increasing population, whether
this fresh capital is employed in bringing more land under
the plough, or improving land already in cultivation, the
main question always depends upon the expected returns of
this capital; and no part of the gross profits can be
diminished, without diminishing the motive to this mode of
employing it. Every diminution of price, not fully and
immediately balanced by a proportioned fall in all the
necessary expenses of a farm, every tax on the land, every
tax on farming stock, every tax on the necessaries of
farmers, will tell in the computation; and if, after all
these outgoings are allowed for, the price of the produce
will not leave a fair remuneration for the capital
employed, according to the general rate of profits, and a
rent at least equal to the rent of the land in its former
state, no sufficient motive can exist to undertake the
projected improvement." Observations, p. 22.
[55] See p. 124.
[56] See p. 70, &c.
[57] It is not necessary to state on every occasion, but
it must be always understood, that the same effect will be
produced by employing different, but equal portions of
capital on the land already in cultivation, with different
results. Rent is the difference of produce obtained with
equal capitals, and with equal labour on the same, or on
different qualities of land.
[58] Observations on the Corn Laws, p. 4.
[59] Upon shewing this passage to Mr. Malthus, at the time
when these papers were going to the press, he observed,
"that in these two instances he had inadvertently used the
term _real price_, instead of _cost of production_." It
will be seen from what I have already said, that to me it
appears, that in these two instances he has used the term
_real price_ in its true and just acceptation, and that in
the former case only it is incorrectly applied.
[60] Page 40.
[61] Manufactures, indeed, could not fall in any such
proportion, because, under the circumstances supposed,
there would be a new distribution of the precious metals
among the different countries. Our cheap commodities would
be exported in exchange for corn and gold, till the
accumulation of gold should lower its value, and raise the
money price of commodities.
[62] The Grounds of an Opinion, &c. page 36.
[63] Mr. Malthus, in another part of the same work,
supposes commodities to vary 25 or 20 per cent. when corn
varies 33-1/3.
[64] In Chap. 24. I have observed, that the real resources
of a country, and its ability to pay taxes, depend on its
net, and not on its gross income.
[65] This is on the supposition that money continued at
the same value. In the last note, I have endeavoured to
shew that money would not continue of the same
value,--that it would fall, from increased importation; a
fact which is much more favourable to my argument.
[66] Mr. M'Culloch, in an able publication, has very
strongly contended for the justice of making the dividends
on the national debt conform to the reduced value of corn.
He is in favour of a free trade in corn, but he thinks it
should be accompanied by a reduction of interest to the
national creditor.
THE END.
ERRATA.
_Page_ 190, _line_ 8, _for_ obtained, _read_ attained.
521, _line_ 20, _for_ twenty-one shillings, _read_ forty-two
shillings.
543, _last line_, _for_ give, _read_ spend.
555, _last line_, _for_ rent money, _read_ money rent.
INDEX.
A.
_Accumulation_ of capital, effects of, on the relative value of
commodities, 16-42.
And on profits and interest, 398-416.
_Agriculture_, effects of improvements in, on rents, 70-76.
Is affected by the distress proceeding from sudden revulsions
of trade, 368-372.
Agricultural improvements, no cause of the increase of rent,
570, 571.
B.
_Banks_, establishment of, affects the sole power of the state
in coining money, 502.
Consequence of the Bank of England issuing too great a quantity
of paper, 503-506.
The assistance given by the Bank of England to commerce, accounted
for, 513, 514.--See _Paper Currency_.
_Bounties_, on the exportation of corn, lower its price to the foreign
consumer, 417-427.
Effects of a bounty in raising the price of corn, illustrated, 428.
Though such bounty may cause a partial degradation in the value
of money, yet such degradation cannot be permanent, 432-434.
Bounties on the exportation of manufactures raise their _market_ but
not their _natural_ price, 436-438.
The sole effect of bounty is to divert a portion of capital to an
employment which it would not naturally seek, 438.
Evils of such a system, 439-445.
A bounty on the production of corn, will produce no real effect on
the annual produce of the land and labour of the country, though
it would make corn relatively cheap, and manufactures relatively
dear, 449-455.
But the effect of a tax on corn, in order to afford a fund for a
bounty on the production of commodities, would be to enhance the
price of corn, and render commodities cheap, 456, 457.
_Buchanan_ (Mr.), observations of, on Adam Smith's doctrine of
productive and unproductive labour, 64-66, _note_.
Remarks on his opinions respecting bounties on exportation, 440-442.
C.
_Capital_, nature of, effects of the accumulation of, on the relative
value of commodities investigated, 16.
Effects of, in a savage or infant state of society, 17, 18, 23, 24.
And in a more advanced state of society, 19-21.
The relative values of _circulating_ and _fixed_ capitals
considered, 22, 23.
The distinction between circulating and fixed capitals difficult
to be strictly defined, 186, 187.
Considerations on the different modes of employing it, 83-88.
The increase of capital in quantity and value, productive of a
rise in the natural price of wages, 94, 95.
Increase of capital in quantity only, productive of a rise in
the market price of wages, _ibid._
Effects of the accumulation of capital on profits and interest,
398-416.
The sole effect of bounties on exportation, upon capital, is to
divert a portion of it to an employment which it would not
naturally seek, 438. Remarks on such effect, 439-445.
The profits, made by the employment of capital, regulate the rate
of interest for money, 512, 513.
_Carrying trade_, observations on, 407.
_Circulation_ of money can never overflow, and why, 500, 501.
Circulation of Paper, see _Paper Currency_.
_Colonial Trade_, observations on, 476, 477.
Proofs, that trade with a colony may be so regulated as to be less
beneficial to the colony, and more beneficial to the mother
country, than a perfectly free trade, 477-486.
Benefits of a colonial trade, 487-490.
_Commodities_, gold and silver an insufficient medium for determining
the varying value of, 7, 8.
Corn, an inadequate standard of the value of, 9-12.
The effects of an accumulation of capital on the relative value of
commodities, considered, 16-42.
Effects of a rise in wages on their value, 43, 44, and of the
payment of rent, 45, 46.
Their exchangeable value regulated by the greater quantity of labour
bestowed on their production by those who labour under the most
unfavourable circumstances, 59, 60.
The prices of commodities not necessarily increased by a rise in the
price of labour, 109, 110.
The cost of production regulates the price of commodities, 542, 567,
568, 572, 573.
_Corn_, a variable standard for determining the varying value of
things, 7-12.
Effects of the price of, on rent, 67-70.
Corn-rents materially affected by tithes, 227.
Advantage resulting from the relatively low price of corn, 373.
Bounties on the exportation of it, lower its price to the foreign
consumer, 417-427.
Effects of a bounty in raising the price of corn, 428.
A bounty on the production of, productive of no real effect on the
annual produce of the land and labour of the country, 449-455.
The price of corn enhanced by a tax on it, in order to afford a fund
for a bounty on the production of commodities, 456, 457.
Benefit of a high price of corn to landlords, 474, 475.
Investigation of the comparative value of corn, gold, and labour, in
rich and in poor countries, 527-537.
The production of corn encouraged by alteration in its market price,
574, 575.
A fall in the value of corn beneficial to the stockholder, 586.
_Cultivation_, not discouraged by a tax on land and its produce, 238.
_Currency_. See _Gold_ and _Silver_, _Paper Currency_.
D.
_Demand_ and supply, influence of, on prices, considered, 542.
Opinion of M. Say on this subject, 544.
And of the Earl of Lauderdale, 545-547.
Observations thereon, 547, 548.
E.
_Economy_ in labour, reduces the relative value of commodities, 21.
Illustration of this principle, 22-42.
_Exchange_, no criterion of the increased value of money, 178.
To be ascertained by estimating the value of the currency in
the currency of another country, 181,
and also by comparing it with some standard common to both
countries, 181-184.
Effects of paper currency on exchange, 310-314.
_Exportation_ of corn, bounties on, lower its price to the foreign
consumer, 417-427.
Effects of, in raising the price of corn, illustrated, 428.
Bounties on the exportation of manufactures raise the market,
but not the natural, price of these, 436-438.
F.
_Farmers_ pay more poor-rate than the manufacturers, 359-362.
_Foreign Trade_, effects of an extension of, 146, 147.
Proofs that the profits of the favoured trade will speedily subside
to the general level, 148-154.
_Funded Property_, the price of, no steady criterion by which to
judge of the rate of interest, 413-415.
G.
_Gold_, and Silver, an insufficient medium for determining
the _variable_ value of commodities, 7, 8.
But, upon the whole, the least inconvenient standard
for money, 80, 81.
On whom a tax upon gold would ultimately fall, 249, 250.
The value of gold ultimately regulated by the comparative
facility or difficulty of producing it, 251.
Effects of a tax upon gold, 252-261.
Evils of prohibiting a free trade in the precious metals,
when the prices of commodities are raised, 309.
The value of gold and silver proportioned to the quantity
of labour necessary to produce them and bring them to
market, 499.
Remarks on the employment of these metals in currency, 516.
Their relative values at different periods, accounted for,
516-526.
Investigation of the comparative value of gold, corn,
and labour, in rich and in poor countries, 527-537.
_Gross Revenue_, advantages of, over-rated by Adam Smith, 491.
And by M. Say, 492, _note_.
Examination of this doctrine, 492-498.
A diminution of gross income, no diminution of net income, 579-583.
H.
_Holland_, low rate of interest in, accounted for, 400, note.
_Houses_, rents of, distinguished into two parts, 263.
Difference between rent of houses and that of land, 264.
Taxes on houses by whom ultimately borne, 266.
I.
_Importation_ of corn, effects of a prohibition of, considered,
437, 438.
_Interest_, low rate of, in Holland, accounted for, 400, _note_.
Effects of accumulation on profits and interest, 398-410.
Observations on the rates of interest, 412-416.
The interest for money is regulated by the rate of profits which
can be made by the employment of capital, 512, 513.
L.
_Labour_, the quantity of, requisite to obtain commodities,
the _principal_ source of their exchangeable value, 4, 5.
Effects of machinery on, considered, 9-11.
Economy in labour reduces the relative value of a commodity,
21, 22.
Illustrations of this principle, 22-42.
Adam Smith's theory of productive and unproductive labour,
considered, 64-66, _notes_.
Natural price of, explained, 90, 91.
Market price of, what, 92.
Its influence on the happiness of the labourer, 92, 93.
Investigation of the comparative value of labour, gold, and corn,
in rich and in poor countries, 527-537.
_Land_, the division of the whole produce of, between landlords,
capitalists, and labourers, is the criterion of rent, profits,
and wages, 44-48.
Its different productive qualities, a cause of rent, 54-58.
Effects of increasing its productive powers by agricultural
improvements, 70-76.
_Landlords_, tithes injurious to, 229, 230.
Benefit of a high price of corn to them, 474, 475.
_Land-Tax_, virtually a tax on rent, 232.
Effects of an equal land-tax, imposed indiscriminately on all land
cultivated, 234, 235.
Error of Dr. Adam Smith, on the inequality of land and all other
taxes, accounted for, 236-238.
Tax on land and its produce, no bar to cultivation, 238, 239.
Operation of the land-tax of Great Britain, considered, 239, 240.
Mistake of M. Say, corrected, 241, 242-246.
_Lauderdale_ (Earl of), opinion of, on the influence of demand and
supply on prices, 545-547.
Remarks thereon, 547, 548.
_Luxuries_, observations on the taxing of, 314.
Advantages and disadvantages of taxing them, considered, 327-329.
M.
_Machinery_, effects of, in fixing the relative values of commodities,
34-41.
_Malthus_ (Mr.), examination of the opinions of, on rent, 549-566.
The real cost of production regulates the price of commodities, 567,
568, 572, 573.
Increase of population no cause of the rise of rent, 569;
nor agricultural improvements, 570, 571.
His supposition, that net income is diminished, in proportion to a
diminution of gross income, disproved, 579-583.
Loss of rent, the effect of a low price of corn, 587, 588.
_Manufactures_, improvement of, in any country, tends to alter the
distribution of the precious metals among the nations of the world,
157-170.
Manufacturers pay less poor rate than farmers, 359-362.
The market price of manufactures, but not their natural price,
raised by bounties on their exportation, 436-438.
_Mines_, distinguished by their fertility or barrenness, 77-79.
Effect of discovering the rich mines of America on the price of the
precious metals, 80.
Observations on the rent of mines, 462-467.
_Money_, effects of the rise of, in value, on the price
of commodities, 43, 44.
The rate of profit not affected by variations in the value of
money, 46-48.
Different value of money in different countries, accounted for,
170-173.
The value of money, _generally_, diminished by improvements in
the facility of working the mines of the precious metals, 178.
The demand for, regulated by its value, and its value by its
quantity, 250, 251.
Low value of, in Spain, prejudicial to the commerce and manufactures
of that country, 307.
Observations on the rates of interest for money, 412-416, 512, 513.
The value of, though partially degraded by a bounty on corn, yet not
permanently degraded, 432-434.
The quantity of, employed in a country, dependant upon its value,
500.
Effects of the state charging a seignorage on coining money, 501,
524, 525.
_Monopoly-price_, observations on, 340-345.
N.
_National Debt_, observations on, 340.
_Net Revenue_, advantages of, unduly estimated by Adam Smith, 491,
and by M. Say, 492, _note_.
Examination of their doctrines, 492-498.
Is not diminished by a proportionate diminution of gross revenue,
579-583.
P.
_Paper Currency_, circulation of, explained, 501.
Paper-money not necessarily payable in specie, to secure its value,
502.
But the quantity issued must be regulated according to the value
of the standard metal, _ibid._ 503.
The Bank of England, why liable to be drained of specie for its
paper currency, 504-506.
Compelling the issuers of paper money to pay their notes either
in gold coin or bullion, is the only control upon their abusing
their power of issuing such money, 507.
Provided there were perfect security against such abuse, it is
immaterial by whom paper money is issued, 509.
Illustration of this point, 510-516.
_Poor-Laws_, pernicious tendency of, as they now exist, 111, 112, 115.
Remedies for, 113, 114.
_Poor-Rates_, nature of, 355.
How levied, 356-358.
More falls on the farmer than on the manufacturer, in proportion
to their respective profits, 359-362.
_Population_, increase of, no cause of the rise of rent, 569.
_Price_ (real), of things, distinguished, 4.
Natural and market prices distinguished, and how governed, 82-89.
The prices of commodities not necessarily raised by a rise in the
price of labour, 109, 110.
Rise of price on raw produce, the only means by which the cultivator
can pay the tax imposed thereon, 195.
The market, but not the natural price of manufactures, raised by
bounties on their exportation, 436-438.
The influence of demand and supply on prices, considered, 542-548,
567, 568, 572, 573.
Alteration in the market price of corn encourages its production,
574, 575.
_Produce_ of land, and labour of the country, must be divided between
capitalists, landlords, and labourers, to afford a criterion of
rent, profits, and wages, 44-48.
Effect of taxes on raw produce, 194.
Tax on raw produce raises the price of wages, 199.
Objections against taxing the produce of land, considered, 201-224.
Remarks on the inconveniences supposed to result from the payment
of taxes by the producer, 538-541.
_Production_, difficulty of, benefits the landlord, 76.
The cost of production, the regulator of the price of commodities,
542, 567, 568, 572, 573.
_Profits_ of stock difficult to ascertain, 410.
The quantity of labour necessary to obtain the produce of land,
is the criterion by which to estimate the rate of profit, wages,
and rent, 44-48.
A rise in the price of corn, productive of a diminution in the
money value of the farmer's profits, 117-122.
A rise in the price of raw produce, if accompanied by a rise of
wages, lowers the agricultural and manufacturing profits, 125-130.
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, 131-144.
Effects of an extension of foreign trade on profits, 146, 147.
Proofs, that the profits of the favoured trade will speedily
subside to the general level, 148-154.
And so with respect to home trade, 155-157.
Further proofs that profits depend on real wages, 173-175.
Tax on necessaries virtually a tax on profits, 269, 270.
Effects of a taxation of profits, considered, 270-284.
The profits of stock diminished by a tax on wages, 285.
Effects of accumulation on profits and interest, 398-416.
_Prohibition_ of importation of corn, effects of, considered, 437,
438.
_Provisions_, causes of the high prices of, 203.
First, a deficient supply, _ibid._--204.
Secondly, a gradually increasing demand, ultimately attended with
an increased cost of production, 205.
Thirdly, a fall in the value of money, 209.
Fourthly, a tax on necessaries, 210.
R.
_Rent_, nature of, 49, 50, 52, 362, _note_.
Adam Smith's doctrine of rents, considered, 50, 51.
The different productive qualities of land and increase of
population, the cause of rents, 54-58.
Rise of, the _effect_ of the increasing wealth of a country,
65, 66.
Influence of the prices of corn on rent, 67-69.
Effects of agricultural improvements on rent, 70-76.
Observations on the rent of mines, 77-81.
Tax on rent falls wholly on the landlords, 220-224.
Corn-rents materially affected by tithes, 227.
Examination of Dr. Adam Smith's doctrine concerning the rent of
land, 458-475.
And of Mr. Malthus's opinions on rent, 549-566.
Increase of population is no cause of the rise of rent, 569.
Neither are agricultural improvements, 570, 571.
Loss of rent, the effect of low price of corn, 587, 588.
_Riches_, defined, 377.
Difference between value and riches, 377-386.
Means of increasing the riches of a country, 386-388.
Erroneous views of M. Say on this subject considered, 388-397.
S.
_Say_ (M.), erroneous views of, concerning the principles of the
land-tax in Great Britain, corrected, 241-244.
Examination of some of his principles of taxation, 319-324, 330,
331, _notes_.
Remarks on his mistaken view of value and riches, 388-397.
Examination of his doctrine concerning bounties on exportation,
443-448.
And on gross and net revenue, 492-498.
Danger resulting from his recommendation respecting the charging
of seignorage for coining money, 525, 526, _notes_.
Observations on his statement of the inconveniences resulting
from payment of taxes by the producer, 538-540.
His opinion on the influence of demand and supply on prices,
considered, 544, 545.
_Scarcity_, a source of exchangeable value, 2.
_Seignorage_, effects of, on the value of money, 501, 524, 525.
_Simonde_ (M.), remarks on the opinion of, concerning the
inconveniences resulting from the payment of taxes by the producer,
540, 541.
_Silver._ See _Gold_ and _Silver_.
_Sinking fund_, in England, merely nominal, 340.
How conducted, 510.
_Smith_ (Dr. Adam), on the meaning of the term value, 1.
His doctrine that corn is a proper medium for fixing the varying
value of other things, examined, 7-9.
Strictures on his doctrine relative to labour being the _sole_
ultimate standard of the exchangeable value of commodities, 10,
11, 575, 576.
And on his definitions of rent, 49, 50.
His theory of productive and unproductive labour considered,
64-66, _notes_.
Correction of his erroneous view of the inequality of taxes on
land, and all other taxes, 236-238.
His opinion on the taxes upon the wages of labour, 286.
Examination thereof by Mr. Buchanan, 287-292.
Observations thereon by the author of this work, 293-306.
Correction of his mistaken view of taxes upon luxuries, 314-319.
Remarks on his doctrine concerning bounties on exportation,
420, 422-439.
Examination of his doctrine concerning the rent of land, 458-475.
And on gross and net revenue, 492-498.
Strictures on his principles of paper-currency, 503-508.
His statement respecting the advantages of the Scottish mode of
affording accommodation to trade, disproved, 515, 516-523.
Remarks on his doctrine relative to the comparative value of
gold, corn, and labour, in rich and in poor countries, 529-537.
_Spain_, commerce and manufactures of, injured by the low value of
money there, 307.
_Stamp-duty_, weight of, a bar to the transfer of landed property,
267, 268.
T.
_Taxes_, nature of, explained, 186.
Impolicy of taxes on capital, 190.
Taxes upon the transfer of property, 191.
On whom the several kinds of taxes principally fall, 192.
Objections to taxes on the transference of property, 192, 193.
Effect of taxes on raw produce, 194.
A rise of price in raw produce the only means by which
the cultivator can pay the tax, 195.
Such tax in fact paid by the consumer, 196-198.
Tax on raw produce and on the necessaries of the labourer,
raises the price of wages, 199.
Objections against the taxation of the produce of land,
considered and refuted, 201-224.
Tithes, an equal tax, 225.
Difference between them and a tax on raw produce, 226.
Objections to them, 227-231.
Tax on land, virtually a tax on rent, 232.
They ought to be clear and certain, 233, 234.
Effects of taxes on gold, considered, 247-261.
Ground rents, not a fair subject of taxation, 267. Taxes
on houses by whom ultimately borne, 266.
Taxes on necessaries, virtually a tax on profits, 269, 270.
Effects of taxation of profits considered, 270-284.
Taxes upon luxuries, 314.
Advantages and disadvantages of, 327-329.
Supposed absurdities in taxation, explained and obviated,
315-317.
Proper objects of taxation, 326.
Observations on the taxation of other commodities than raw
produce, 330.
Effect of taxes to defray the interest of loans, 332-334.
Remarks on the tax upon malt, and every other tax on raw
produce, 346-353.
Nature and operation of the poor-rate, 355-362.
Examination of the inconveniences supposed to be sustained
by the payment of taxes by the producer, 538-541.
_Tithes_, nature of, 225.
Are an equal tax, _ibid._
Difference between tithes and a tax on raw produce, 226.
Tithes materially affect corn-rents, 227.
They act as a bounty on importation, and therefore are
injurious to landlords, 229, 230.
Do not discourage cultivation, 237, 238.
_Trade_, general causes of sudden changes in the channels of, 363-365.
More particularly the commencement of war after a long peace,
or vice versa, 365-368.
The effects of such revulsions on agriculture, considered, 369-376.
Observations on the carrying trade, 407.
See _Foreign Trade_.
U.
_Utility_, essential to exchangeable value, 2.
V.
_Value_, definition of, 1.
The distinctive properties of value and riches considered, 377-397.
See _Labour_.
Utility essential to exchangeable value, 2.
Scarcity, one source of such value, _ibid._
The quantity of labour required to obtain commodities, the principal
source of their exchangeable value, 3-15.
The effects of accumulation of capital on relative value, 16-42.
Effects of a rise in wages, on relative value, 43, 44.
Effects of payment of rent, on value, 45, 46. Variations in
the value of money make no difference in the _rate_ of profits,
46, 47.
The value of gold and silver is in proportion to the labour
necessary to produce and bring them to market, 499, 500.
Investigation of the comparative value of gold, corn, and labour,
in rich and in poor countries, 527-537.
W.
_Wages_, effects of a rise in, on relative value, 27-33, 43, 44, 48.
Natural and market prices of labour, 90-93.
Increase of capital in quantity and value, increases the natural
price of wages, 94, 95.
Increase of capital, but not in value, augments the market price
of wages, _ibid._
Proofs that the increasing difficulty of providing an additional
quantity of food with the same proportional quantity of labour,
will raise wages, 97-104.
A rise in wages not necessarily productive of comfort to
the labourer, 105-108.
A rise of wages not _necessarily_ productive of a rise in the prices
of commodities, 109, 110, 286-289.
Wages will be raised by a tax on necessaries, 269-270.
And by a tax on wages, 285.
Effects of a tax upon wages, considered, 297-306.
_Wealth_, causes of the increase of, 66.
J. M^{c}Creery, Printer,
Black-Horse-court, London.
_Albemarle-street, London,
May, 1817._
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