Jean Baptsite Say - Catechism of Political Economy (1817) PDF

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CATECHISM
OF
POLITICAL ECONOMY;
OR,
FAMILIAR CONVERSATIONS
ON THE MANNER
IN
WHICH
WEALTH
IS
PRODUCED, DISTRIBUTED, AND CONSUMED

IN
SOCIETY.
BY JEAN-BAPTISTEj SAY,
PKOFESSOn OF POLITICAI, ECONOMY
niCII,
IN"
TUE " ATHENEE ROYAl" OP PAUIS
WOLODOMIR OF RUSSIA MEMBER OF THE SOCIETIES OF ZCBOLOOXA, &C. ASiD AUTHOR OF A TREATISE ON POEITICAt ECONOMy.
KSIGHT OF
ST.
TRANSLATED FROM THE FRENCH
BY JOHN RICHTER.
PHILADELPHIA
PRINTED AND PUBLISHED BY M. CAREY & SON,
:
No.
126,
Chesnut-street.
il%
17, 1817.
ADVERTISEMENT,
THIS work does

the
not pretend to fiirnish
means of becoming
ly to point
them
out.
rich.
It
professes on-
Wealth cannot be pro-
duced from nothing but a clock may be made

:
with wheels
make
what
and, as
a clock, so they
is
men may be taught to

may be taught to make
called Riches.
Many men have the materials within their

reach, who do not suspect it and as for those
;
who have them

to
know where
they
not, is
it
useless even to
they are to be found, and
them
how
may be employed ?
Some men may

to profit
be better able than others
by the perusal of
C0N0!v:iC3
this little
Work.
ADVERTISEMENT.
iv
venture to assert, that there
But
son
who may
not derive from
it
is
no per-
some advan-
tage.
It
has been asked,
why
did not pubhsh
Catechism, as being more elementary, be-
this
my
fore
reason
" Traite dÊconojnie Politique. ^"^

is
evident.
had not previously
If I
proved in a work of
The
by numerous ex-
detail,
an^ples and strict reasoning, that Pohtical Ecoin the present state of the science, is
nomy,
only the exposition of what
day
and that
all
is
passing every
the facts are so intimately
connected together, that
it
has become easy
to refer to their causes, and to deduce
them
far
every thing must
satisfactory results,
have been taken upon
from pretending
An
my
to so
elementary work
what do gmaticaL
from
credit
much
is
and
am
deference.
necessarily some-
But when truths are not
promulgated under the sanction of an ac-
knowledged
authority,
it is
not only necessa-
ry to be in the right, but to prove that

so.
And how
we
are
could these proofs have been
ADVERTISEMENT.
established in so small a compass,
same time have been rendered

the uninformed
This task
is
and
the
at
intelligible to
however no longer
as the proofs of every thing,
requisite
which might ap-
pear to be mere assertion, are to be found in

a
more extensive work, which has been adopt-
ed by foreigners as well as the French, and

strengthened by the approbation of men, the
most versed
in
Europe, in the practice as well
as the theory of Values.
Those who posses the most elevated minds

have generally most goodness of heart. They
will feel
what a happy influence the true prin-
ciples of Pohtical
Economy,
better understood,
are capable of exerting on the lot of
kind
efforts
and perhaps they

to
man-
will judge, that
my
spread them are not unworthy of
their sanction.
J.
B.
SAY.
CONTENTS,
CHAP.
I.
Page.
On
the Composition of Wealth, and
the use of
^:
II.
vIII.
IV.
Money
V.
VI.
VII.
established,
and of
Charges of Production
On
Land;
tliat is.
Income
38
ducts
43
49
in
general
On Private Consumption
XIII. On Public Consumption
XIV. On Public Property and Taxes
XII.
34
and
XL On Consumption
24
of
On Wages, Interest, and Rent

,/ X. On Incomes founded on immaterial ProIX.
16
tlie
the Profits of Industry, Capital,
13
27
is
21
On Capital and Land

On the Formation of Capital On the Manner in which tlie Value
Products
^ VIII.
On the Utihty and Value of Products

On Production
On the Operations common to all the
Species of Industry
62
54
66
71
CONTENTS.
Viii
P*S
CHAP.
XV. On Public Loans
.^-XVI. On Property and the Nature of Riches
^;ÎI. On Real and Nominal Price
^VIII. On Money
l^XIX. On Signs representing Money
^ykX. On Markets
XXI. On Regulations or Restraints of In-
On
XXIV. On
XXV. On
90
96
105
110
Importations, Duties, and Prohi-
bitions
XXIII.
86
115
dustiy
XXII. On
80
Exportation
Population
Colonies
126
132
120
137
CATECHISM.
CHAPTER THE
On
the Composition
FIRST.
of Wealth and
the
Use of Money.
WHAT do you understand by the word, wealth?

Whatever has a value;
gold,
silver,
land,
mer-
J'^chandise
Are
not gold
That
is
be found.
and
preferable in
which
One himdred and
preferable to one
is
ter than the merchandise ?

fact,
(2)
it is
tlie
prefeiTed.
greatest value
ten s:uineas in
hundred guineas
But, where the value
In
wealth ?
silver preferable to other
equal,
is
com
to
are
in gold.
is
not the
money
bet-
ON THE COMPOSITION OF WEALTH,
10
What
is
the reason
The custom
as a
medium
of it ?
money
generally established of using
exchanges, renders that species of
in
merchandise more convenient than any other for those
who have
What
make
purchases to
that
is,
for every body.
do you mean by money being a medium of
exchanges ?
If
your
for
you
are a farmer,
com
then with that
to
exchange a part of
you begin by procuring money
for cloth,
your corn
and desire
money you buy
cloth.
Without doubt.
You
have
in reality
which you have given
made
com
a double exchange, in
one man, and another
to
has given cloth to you.
That
is true.
The
value of this
afterwards in cloth
com
changed your
diate
com m as
transitorily in
and though you have
for cloth,
money was
form which that value assumed
Such
itself into cloth.
Well! But if
is
all these
money,
in fact ex-
the interme-
in order to
change
the use of money.
values are equals
why
^
is
thai
of money preferred ?
Because,
when
man
once possesses money, he
need make only one exchange,

he
may want
while he
who
in order to obtain
possesses every other
merchandise, has two exchanges to make.

in the first place,
what
He
must,
exchange his merchandise for mo-
ney, and afterwards his
money
for merchandise.
AND THE USE
OF MONEY.
Can you make use of any
11
other thing for this pur-
pose instead of money?
Yes
used
articles are
and
silver, are,
of
be adopted by
Then
all
materials, the
It is that
all civilized
and other
most convenient
which has caused them
and commercial
nations.
objects which, the value being equal,
are preferred
i?i
exchanges ?
are so in effect
more sought
but the precious metals are
than the other monies, because they
after
possess, as merchandise, certain advantages
which
to
much
value in small bulk, which permits tliem
be easily concealed, and carried from place
they do not spoil by keeping
they
may be
reunited at will, almost without loss

valuable
all
over the world
place
we
sure,
on more or
to
divided or
in fine,
they are
and whatever frequented
we
it
less favourable conditions, to
for
\\
/ comprehend the
money of gold and
tltrr
to place
travel to with this sort of wealth,
exchange
in-
They
crease the preference they possess as money.
contain
to
those countries in which shells are used as
money they are the
They
shells
but the metals, and principally gold
be used as money.
to
which
there are countries in
merch&ndise
hatever
reason
silver,
but
As we procure every
exchange when we
we may
more
how can
haA-e not a
and, above
desirable than
ive procure
thing else
be able
want.
why money,
is
tliat
mine
are
it
all,
any
we want by an
that
produces
it
ON THE COMPOSITION OF WEALTH, &C.
12
in the
same way
that
we
procure
possess the tree that bears
How
fruit
when we^do not
it.
can zve obtain a thing in order
to
give
it
in ex-
change for money ?
Produce
it.
Produce a thing
shall
But supposing
I be certain that 1
You may
shall get
tliat possible^
money for
assure yourself of that
that thing?
by giving
vakie.
But how can a
We
how
value be given to things ?
shall see that in the following chapters.
it
13
CHAPTER
0)1 the Utility aiul Value
IL
of Products
WHAT do you understand by the xvord, Products ?

I understand all those things to which
men have con-
sented to give a value.
How
By
is
value given to a thing ?
giving
Hoiv
is
it utility.
the utility
of a thing
the cause
of its having
a value ?
Because persons are then
to
be found
want of this thing
who produce
These, on their
it.
from
it
at in
producing
until they are
of the thing
sition
is
it,
it
are
iji
from those
side, will not part
paid the expenses they have been
including
established
tlieir profits.
by the
The
value
result of this oppo-
between the producer and the consumer.
But
value
they desire to have
who
there are
as, water.
many
things
of great
utility^
and no
Wliy have they no value ?
Because nature gives tliem gratuitouly, and without

gtiiit,
and we are not obliged
to
produce tliem.
If a
ON THE UTILITY AND VALUE OF PRODUCTS
14
person was able to create water, and wished to
no one would buy
it,
Thus
river for nothing.
things
because
all
sell
could be had at the
it
tlie
world enjoys these
but they are not riches to any body.
men
things that
one would be
it,
If all
could desire were in the same case, no

rich,
but no one would be in want of
riches, since each could enjoy all things at his pleasure.

,
But
this is not the case
the greater part of things
which are necessary and even indispensible
to us, are
Human
not given to us gratuitously and unlimitedly.
industry must, with pains and labour, collect, fashion
and transport them.
They
ty they
then
become products. The
utility,
the facul-
have acquired of being serviceable, gives them
a value, and this value
is riches.
When once riches are thus created, they may be exchanged
for other riches,
other values, and
procure the products which

those
we
chapter,
We have
can spare.
how money
in
exchange
facilitates this
gives them value
appear
exchange.
of reason
call
hut
he the only cause -which
which have value, hut
not discover the
because you
for there are products, such as rings
artificial jiowers,
You do
to
for
seen in the preceding
noxv conceive hoxv products alone are riches
their utility does not
and
we want
we may
utility
Jio utility.
of these products,
only useful thdiX. which
is
so to the eye
but you ought to understand by that word
ON THE UTILITY AND VALUE OF TRODUCTS.

whatever
is
15
capable of satisfying the wants and desires
of
man such
to
him wants, sometimes
is
the sole judge of the importance that things are of to
he
as
His vanity and his passions are
is.
as imperious as hunger.
him, and of the want he has of them.
We cannot judge
The value
of
the sole measure of their utility to man. It
is
of it but by the price he puts on them.

things
is
enough for us
give
He
them a
to give
them utility
Now that is
value.
in his
eyes in order to
what we
call to pro-
products.
diicey to create
Recapitulate what you have said.
Give
to
any thing, to a material which has no value,
and you give
utility,
product of
One can
it
you
it
a value
that
is,
you make a
create wealth.
then create wealth ?
Incontestibly.
/ thought
He
man
that
could not create any thing.
cannot create matter
which regulate
natiu'e
he cannot make the laws
but with existing matter and
the laws of nature, such as they are, he can give a value

to certain tilings,
JVIiat country
One
in
and consequently can create wealth,
may
be called a rich country ?
which many things of value, or more briefly,
many values are
to
be found
family which possesses

familv.
in the
same manner
many of these
values,
is
as a
a rich
16
CHAPTER
On
ÔU liave
to things
duce
how
me
Production.
that to
utility
is
produce
given ?
How
is to
are
give
we
utility
pro-
to
In an
may
told
III.
infinity
of ways ; but for our convenience
arrange, in three classes, every
manner of
we
pro-
ducing.
TThat
is
the first manjier
ofproducing
It consists in collecting or
gathering together those
things which nature creates, either without the inter-
vention of man, such as fish and minerals ; or, such as
men
have,
means of
by
the cultivation of the eartli,
seeds, induced
and
and by
assisted nature to pro-
duce. All these works are alike in their object.
They
are called Agricultural Industry.
What
utility is
ready made
fish^ or
to his
given
to
a thing by him who finds
it
hands ; as the fisherman^ who takes a
a miner who
collects
minerals ?
ON PRODUCTION.
He
renders
the sea,
ket,
is
we
it
As soon as
useless.
can
make use of it.
of no
utility
iron in the forge
makes
it fit
tracting
it
from the
is
in
warms
in
it is
vain
while there,
us, nor heats the
the industry of the miner that
it is
for these
it
brought to the mar-
In like manner,
neither
it
it is
while
fish,
bosom of the earth
that coal exists in the

it is
The
for use.
fit
17
purposes.
He
by ex-
creates,
earth, all the value that
it
has
when
extracted.
How does
The
are not
materials, of which a sack of com
corn
The mdustry
and had no value whatever.
aii",
of the cultivator, in taking measures to
bring these different matters together,

grain,
all
JVhat
under the
It is
the
same
the other products of agriculture.

is
the second
It consists in
manner
giving to
try a :great value,
by
first
and afterwards of a sack of com, created
a value which they had not before.
it,
composed,
they were diffused through the earth,
the water, and the
with
is
drawn from nothing; they existed before the
com was
form of
the cultivator create value F
by
tlie
oj"producing ?
product of another indus-
new forms
the
the changes Avhich
it is
made
that
to
we
undergo.
miner procures die metal of which a buckle

but a buckle,
when made,
metal of which
it is
formed.
above that of the metal
(3)
is
is
give to
is
The
made
worth more than the
The
value of the buckle
a value produced, and the
ON PR0DUCTI0^3.
18
buckle is the product of two kinds of industry
of that
of the miner, and that of the manufacturer. This

is
last
called manufacturing industry.
What works
are included in manufacturing indus-
try?
It
included the most ordinary as well as the most ex-
quisite
workmanship, the form given by a rough
lage artisan to a pair of
wooden
given to a piece of jewellery.
work executed by a
What
is
the third
shoes, as well as that

It
includes alike the
single cobler in his
hundreds of workmen
in
vil-
and by
stall,
a vast manufactory.
manner ofproducing?
We produce also by buying a product in one place,

where
it is
of a less value, and conveying
where
it is
of greater value.
This
is
to another
it
the
work of
Cojn?ner'cial Industry.
Honv does commercial industry produce

neither changes the form nor the substance
"which
It
soldjust as
is
it is
it
be used
place, at least,
and
whom we
where
extensive, less precious, to a place

so, or
where
dearer.
its
production
Wood
is less
is little
its
have just
it
i^ânts
cannot
uses are less
where they are more

easy, less abundant,
used, and consequently
of very limited utility in the mountains, where
exceeds the
it
of a product
takes a product from a place where
from a
as
bought ?
acts like the fisherman, of
spoken
utility.,
of the inhabitants, that
so far
it
it is
some-
ON PRODUCTION.
times
left to rot
considerable
this utility,*
however, becomes
when the same wood
Hides are of
city.
19
is
very-
transported into a
value in South America,
little
where they have a great number of wild animals
same
skins have a great value in Europe,
production
is
augments
their value
their price in Brazil
What
is
by
and
all
theii"
where
the
their
much more
expensive, and their uses
Commercial Industry,
multiplied.
in bringing
them,
the difference between

price in Europe.
cQinprchendcd under the term cuinmercial
Industry ?
Every species of industry which takes a product

from one place, and transports
more
precious, and
reach of those
within
grocer,
tlie
to another,
which thus brings
who want
logy, the industry which,

it
it
It
it.
it
whole beasts
to re- sell
by
ana-
by retailing a product, brings
who buys merchandise

same town
it is
within the
includes also,
reach of small consumers.
detail in the
where
Thus
in gross, to re-sell
the
it
in
and the butcher, who buys
them piece by
piece, exercises
Commercial Industry.
Is there not great similarity
betxvee?i these different
modes ofproducing ?
The
in
one
*
We
greatest.
state,
They
all
consist in taking a product
and delivering
must never forget
that,
it
in another,
by the words
ûtility
in
of things,
the faculty they have of serving those pui"poses, to which
proper to apply them.
which
it
we mean
man
thinks
ON PRODUCTION.
20
has a greater
all
reduced
here,
and a higher value. They may be
utility
to
one species.
If
we
distinguish
to facilitate the study of their results
it is
our distinctions,
them
:
but
often very dif-
notwithstanding
all
ficult to separate
one kind of industry from another.
villager,
he
who makes
carries
them
baskets,
to market,
is
it is
a manufacturer
tliat
augment
their
when
he becomes commercial.
But no matter by which means, the moment

create or
that
we
we
we augment the utility of things,

value, wc exercise an industry, we pro-
duce wealth.
For
shortness, Agricultural Industry
Agriculture; Manufacturing Industry
may be
called
may be
called
Manufactures ; and Commercial Industiy, Commerce.
CHAPTER
On
the
Operations
common
to
IV,
all the
Species
of
Industry,
I HAVE just
seen that agriculture, manufactures^
and commerce are productive of wealth : by what means

do they attain that end?
An
industrious undertaking, whatever
an enterprize
in
it
may be,
is
which a man decides, what part of
the material and of the laws of the physical and moral
world he
is
able to apply to the production of a use-
ful thing.
Tf^hat do
you understand by
tlie
laws of the physical
world?
I understand the laws to
which material beings are
subjected ; thus, metals are softened by heat
this is
a physical law.
Give
in
me an example of the
use of this physical law
any industrious enterprize ?
blacksmith,
iron of which he
who
uses heat to soften a piece of
makes a horse-shoe,
is
the undertaker
ON THE OPERATIONS COMMON TO ALL
22
of a manufacturing industrj^
that physical
who
it
law
in the
who
avails himself of
same manner,
the merchant,
out a vessej, uses for the purpose of sending
fits
beyond
seas, the
power of the winds, which are
themselves the effects of some other law of the physical world.
What
do you understand by the laxvs of the moral
world?
They
by
are
the rules to
which we are subjected
the customs, the wants,
and the wiU of man-
kind.
Give me an instance
which the undertaker of any
in
industry consults the laws
He
consults
of the moral world?
them when he informs himself of the
manners, the wants, and the legislation of men, which
may either
enable
him
industi'y, or furnish
Some
ducts.
man, others
which we
human
to procure the materials for his
him with consumers of
of these laws belong to the nature of
to the
manners of the coimtry and age
He who
live.
vanity, rims
little
A hatter who carries on,

ness
among
us,
in
takes into his calculation

risk of deceiving himself.
in a proper
manner, his busi-
has a lucrative occupation.
have gained nothing among the ancients,
wear
his pro-
He would
who
did not
hats.
Who
are those
who study
the laws
of
the physical
world ?
Those who
cultivate the physical
and mathemati^
THE SPECIES OF INDUSTRY.

cal sciences
such as chemists,
23
naturalists, geometri-
&c.
cians,
JVho are those who study the laws of the moral

zvorld?
Those who inform tliemseh es of morals,

history, geography, travels,
I understand
politics,
&c.
the learned serve as guides to the in-
dustrious'^
Just so
other,
ducts.
is
and the work of the one, as well as the
productive, since they concur in creating proIt is
only in civilized and enlightened coun-
we
see a very great and productive industiy.
tries that
It is there
only that
we
find that great
mass of acquired
knowledge, of which the industrious, the agriculturists,
manufacturers, and merchants avaU themselves.
Are
the learned^
and the undertakers of works of in-
dustry^ the only industrious
No.
There are
also
men ?
workmen under
the direction
of the undertakers of works of industry.
When
workman
account,
carries
on an enterprize on
as the knife-grinder in the streets, he
and undertaker.
his
is
ovm
both
workman
24
CHAPTER
On
No
\
"
Capital and Land.
IS it sufficient Jor
the talents
his
an undertaker of industry
and judgment which
judgment
have
would be exercised
possess, besides those, the
which he would employ
materials on
to
constitute his industry ?
aiid his talent
He must
upon nothing.
V.
his industry,
the indispensible implements to carry
and
into effect.
it
All these things have a value previously acquired,
and
this
value
I thought
materials
The
is
called capital.
that capital
and
was a sum
utensils ?
value of a capital at the
moment
in
which
borrowed may have the form of mone^: but

form only transitorily,
in the
which a producer of corn

cloth, is
is to
exchanged
vSec
Chapter
I.
it
it
is
has that
same manner that tlie com

desires to
in the first place for
be again exchanged
'
and not
oj' money,
for
exchange
for
money, which
cloth.^
on the Use of Money,
The
values
ON CAPITAL AND LAND.
25
employed
which we
save, in order to be
are, in the
same manner, products which we succes-
sively
exchange
use them as
money
for
capital,
and when
we exchange them
as capitals,
we
desu'e to
again for pro-
ducts necessary to production.
You say
tJiat
capital is
or values produced by the industry
of things
to say,
man : a
composed of products^ that
capital
is
then always a value which
is
is
of
move-
able ?
No
the products of human industry
moveable or immoveable.
human industry.
is
a product of
In works of agriculture, besides the
value of the land, which
may be
and admirable instrument

which, on
A house
may be either
this account,
clearings, the buildings,
improvements of
this
considered as a great
in tlie
makes
hands of man, and
part of his capital, the
and the inclosures, which are
grand instrument, are products
of industiy.
Are
there not also moveable values in the capital of an
agriculturist ?
Yes
the implements of labour, the cattle, the seed,
as well as the provisions for his family, his servants,
and his animals
for the outgoings
Tell
and even the money
which
me of what
It is
composed of
which may be
(4)
his undertaking requires.
the capital
weaver, for example,
that is destined
of a manufacturer ; a
consists.
the value of his
eitlier cotton, flax,
first
material,
wool, or silk
also
ON CAPITAL AND LAND.
26
of his looms, shuttles, and other implements

fact,
his
of every value which he
o\iTii^
If
is
of
workmen.
the capital he employed in the pur-
chase of all these things^
Because the
and, in
obliged to advance for
rnajntenance as well as that of his
the value
how
is it
that
it is
not lost ?
result of all these things is a riband or
a cloth, the value of which reimburses the capital, and
pays besides, the weaver the
profits of his industry.
In the same manner, the capital of the merchant consists principally
of the value of the merchandise in
which he trades
and
this
merchandise, augmenting
in value in his hands, represents at all times his capital
increased
How does
the value
By
all
by
his profits.
a man, engaged in industry y
of his
capital
an inventory
that
that
he possesses,
according to
its
is
in
knmv whether
increased or diminished?
is,
by a
detailed account of
which every thing
cunrent price.
is
valued
27
CHAPTER
On
I SEE
the Formation
tliat to
create values^ that
that industrious talents
It
but
must be
created
of Capital,
is,
how
is
may
be acquired by study
capital to be
created, or
and
procured
borrowed of those who have
it.
How caji it be created?

To answer this question,
it is
necessary to begin
by giving some notions on consumption,

is
riches^ indus-
I can conceive
and capital are necessary.
trious talents
practice
VI.
not the proper place, and
it
ought
to
altliough this
be developed
hereafter.
Wliat do you understand by consumption
Consumption
is
the opposite of production
destruction of values produced.
We
matter any more than \ve can create

destroy the
utility that
it is
cannot destroy
it
has been given to
but
we
it
and, in
can
ON THE FORMATION OF CAPITAL.
28
destroying
Avhat
is
we
its utility,
destroy
is
That
value.
is,
called " to consiimey
We do not -wantonly destroy

end
its
proposed
in
produce another
is
What
of value.
doing so ?
procure an enjoyment,
Either to
clothing
things
or else to re-
The consumption
alue.
an enjoyment
Reproductive consumption
it
of food or
has no other result.
neither so simple nor so
is
easy.
Li what does
it
consist ?
It consists in the
industrious destruction of one va-
produce another
lue, so as to
in place of that
which
destroyed, and which exceeds the latter in value

ciently to
tion.
pay
Thus
for the industiy
the agriculturist
destroys the value of

the
same manner
it
as he
in
such manner as that
fit
and even
if
it
still
who sows
suffi-
in the opera-
com
a grain of
but he does not destroy
He
it
in
who
eats
shall
be reproduced with pro-
he employ
feeding fowls, he
employed
is
it.
this grain or
destroys
many
grains
it
destroys the value of this grain;
but as he increases the value of the fowls, he produces

a value which usually replaces, with
which was consumed.
This
is
profit, the
value
called ^pgductive
cojisumptlon.
Every
thing that a
man consumes fur
his
own use
is
then an unproductive consumption ?
No,
not
all.
Wlien
eatables,
wearing apparel, are consumed by
di-inkables,
men who
or
are at

the
same time employed
in
producing a value equal,
or superior, to what they consume,

ductive consumption.
It is
29
so
it
much
ductive, as the value of the products,
becomes a
more
the
repro-
repro-
which these men
have created during the consumption, exceeds the value of those tliey have consumed.
Give me examples ofreprnductrve cotisutnptiojj. drawn
from manufacturing
industry ?
Besides the maintenance of his workmen and agents,

a manufacturer consumes the materials which he transforms.
He
consumes,
also,
Thus
the utensils he employs.
sumes, reproductively,
although more slowly,
oil,
soda,
a soap-maker con-
wood, or
coal, caul-
drons, &c. and even the place and workshops in which
he exercises his industry.

Give me examples of reproductive consumption
in
commercial Industry ?
A merchant consumes the value of the maintenance

of his workmen, that
sailors, porters,
of his carriers, lightermen,,
and agents of every
also his mstruments,
warehouses
is,
which
sort.
He consumes
are carts, horses, ships,
and we may even consider,
as part of his
consumption, the advances which he makes for the

purchase of his merchandise.
restored to
to
All these advances are
him by die value of the products which go
out of his hands
that
is,
the merchandise in a state
be sold.
All these undertakers of industry reproduce witli
30
loss,
or without either loss or gain, or with profit,
according as they reproduce values, which are either
which they
or superior to the values
inferior, equal,
have consumed.
What is
the effect
That which
is
of these Jacts, as
respects capital ?
called productive capital^ or, simply,
capital, consists of all those values, or, if
you
will, all
those advances employed reproductively, and replaced
they are destroyed.
in proportion as
easy to see that this term capital has no relation
It is
form of the values of which
to the nature or
(their nature
composed
capital is
and form vary perpetually)
but refers to the use, to the reproductive consumption

thus, a bushel of corn forms
of these values
my
employ
capital, if I
friends
it
but
it
it
does form part of
in maintaining
workmen who
my
are
production of that which will repay

the
my
capital, if I
use
employed on the
me
its
value. In
same manner, a sum of money is no longer a part
of my capital,
sume
but
change
in
to treat
make cakes
to
no part of
it
if I
it
exchange
it
for products
does form part of
for a value
which
is
to
my
which
capital,
I con-
if I
ex-
remain and augment
my hands.
How is capital amassed ?
Capital
is
augmented by
all
that is
withdrawn from
unproductive consumption, and added to a consumption
which
is
Can
reproductive.
capitals that are
Without doubt.
amassed be consumed?

Can
capitals be
Yes,
amassed without being consumed?
capitals, that
may be amassed under
values
is,
one form as well as another, in gold,

chandise, and no part of
are idle capitals,
those profits which

pital
be
mean
we
lent in
is
it.
time do not yield any of
may be
by exchange
or
transferred
by succession
one form as well as
transferred or lent,
of the things transferred or
Thus when
themselves.
on
to Silvan the value for

this
value
is
Ca-
from one
and may
in another, either in the
it
lent,
but
in
hatever
\\
consists in the value
and not
in the things
Paul, a clothier, sells cloth
credit to Silvan, a woollen draper,
although
These
for production.
form of merchandise or of money

form
mer-
shall consider presently.
thus accumulated
to another
used
it
silver, or
which may become jjroductive here-
but which in the
after,
31
he really lends
which he gives him
credit
not lent in money, but in mer-
chandise, and although
it is
to
be returned not
in
way of capital.
It is
mer-
shandise but jn money.

Is land a capital?
Land
is
made use
of in the
an
instrument for which no other can be substituted, and
by means of which we make materials for our

v^
consequently give them a value.

ted or lent (by
differs
but
is
from
way
of lettmg) as
capital as
it
is
not a
by accumulation
and
may be transmitbut it
capital may
It
human
furnished to us by nature, and
increase
use,
like capital.
is
production,
incapable of
24
I comprehend that a capital, which is a mass of values

accumulated by the care which has been taken
to snatch
them successively from improductive, and to devote

to reproductiv e
consumpt ion^ belongs
to
them,
him who has
taken the pains and imposed on himself the privations of
which
it is
the fruit : but why should land, which is given
gratuitously by ?iature, be the property

It is
not the object of political
what may have been the
economy
to inquire
origin of the right to property.
It
shews only
is
susceptible of appropriation, that
that land,
of any one ?
and consequently its products,

is
to say, of be-
coming the exclusive property of such or such; and

that this appropriation
duction
from
it,
for if land,
is
highly favourable to pro-
and the products
did not belong exclusively to
to
be derived
some
one,
no
one would take the pains, nor make the advances necessary, to obtain those products ;
vate and enrich the
soil.
useful that capital and

clusive property
accumulation and
,^
You have said
much
as
it is
it is
its
its
For
much
tlie
less to culti-
same reason
it
is
products should be an ex-
the only
means of inducing
its
productive employment.
from
capital, inas-
not, like the latter, capable
of extension ;
that land differs
but the clearing, the buildings and the enclosures by

increasing
the products, are equivalent to an actual
extension.
The improvements which are values accumulated by

industry on land are a capital, and the profits which

from the whole are the united
result
and
how can we
transfer or lend capital of this kind ?
can only be done by transferring or lending
same time
the land
capital, so
employed,
There
in
is,
many
in the
itself.
is
It is
called an appropriated capital.
same manner, much
manufactories, in
all
house
to live in,
the possession of
selling at the
ings
upon
The
we
capital
the utensils
are
and
in the
more valuable than
capital for a mill, a forge, or a
cannot put ourselves again into
tliat
portion of our capital, without
same time the land
as well as the build-
it.
other capital
is
called circulating capital.
no other difference between them than
terials
locked up
Thus, when we have
the land on which they stand.
exchanged a moveable
at the
for this reason that
buildings which are generally much
is
profits of capital
land.
JBut
It
33
There
that the
ma-
of which these respective capitals are composed,
more conveniently and more
in smaller portions in the
(5)
easily
exchanged,
an^
one case than in the other.
34
CHAPTER
Manner
Ofi the
which the Vahie of Products
in
tablished, ajid
JVE
lue fixed, the
The
them
ed
to
for
the Charges
of
have seen hcnv
have seen tlmt
utility
given
gives them value
after, to
and when
to
things
honv
fray the expenses
which
we
that va-
is
constitutes riches ?
be wanted
this
is es-
of Production.
Avhich things have acquired,
be sought
;
utility is
amount of which
utility
them
VII.
price
causes
a price
is offer-
to de-
is sufficient
their production
would
cost,
ey will be produced.
'^
Of what
are the expenses
ofproduction composed ?
Of whatever must be paid to obtain the co-operation

of the agents of production.
What
They
are the agents ofproduction ^

are the
means indispensably necessary
creation of a product
tal or
human
industry
value which serves for that purpose
viz.
and other natural agents which contribute
To whom
do you give the
to
for the
the capi-
the land
it.
name o/'producers
ON THE VALUE OF PRODUCTS, &C.
To
all
who
possess any of the agents of pro-
A man who exercises an industry,
duction.
<^
those
35
and the
possessor of capital or of land, are producers.
Why
do you call the possessors of capital^ or of land,
producers, even xvhen they do not labour themselves ?
Because the
and the land, concuiTing
capital
formation of products, those

of production contribute to
who
furnish tliese
in the
means
effectually themselves.
it
IVhat do you say of him who employs his own capital

or cultivates his oxvn land?
That he
contributes doubly
first,
by
afterwards as a capitalist or landholder
but although
by one person,
these functions are often filled
when they
convenient to separate them
studied^n order
his industry
to distinguish properly
are
it is
be
to
what belongs
to each species of productive servic e.
JVhat
is
meant by the term, productive service
It is the service
production
rendered by each of the agents of
the service rendered
gcrvice rendered
by
capital
by industry
the
and the service rendered
l3y natural agents.
/ see what is the
cause of the
ment for productive

this
services.
demand and of the pay-
What
is
it
that limits
demand?
The property
use the product.
sire to
to the
of the consumers, or of those
demand
be paid
for.
for
is
de-
There would be no bounds
any useful
There
Mho
thing,
if
it
^vere not to
no other eHective demand than
ON THE VALUE OE PRODUCTS, AND
36
that
which
it is
this price,
its
accompanied by the
which,
same time
at the
to
is
in
offer of a price
and
paying for the product, pays
which were necessary
for the services
production.
What happens when

sufficient to
Then
pay
the
pnce of
the charges
the product
not
is
of production?
the producers will not exchange their pro-
ductive services for the price of the product
and the
production does not take place.
What happens when

than enough
The
pay
to
the price
the clmrges
of the product
ofproduction
of the product to
Can one
which
let
is
cause the price
fall.
when a man
^vill
out or lend productive services?,
paid for
out his capital,
it,
it is
his land, the tenant
more
producers of this kind of product become more
numerous;, and their competition
Yes
is
lets
is
out his industry, the price
called interest.
is
When he lets
When he lets out
called xvages.
called
2i
farmer and
^
the price
is
called rent.
What
do you understand by letting out industry ?
It is to give, for hire,
time, talent,
and labour
to
co-operate in the creation of a product of industr}\
Who
is it
or the land
It is
that hires the labour
of the
of the
one, the capital
others ?
an undertaker of industry
means of production, and who

]^roducts ^vhich result
who
unites
all tliese
finds in the valiie of the
from them, the reêstablishment
THE CHARGES OF PRODUCTION.
SJ
of the entire capital he employs, and the value of the
wages, the
interest^
and the rejit3^hich he pays, as
well as the profitsbelonging to himself.
PFhat happe?is when the vahie of the products he
lias
created, is not sufficient to pay for all t/iat ?
He
loses, if
he has any thing
nothing, those lose
dence.
who Jiaj^
to lose
îyen
or
him
if
he has
their confi-
38
CHAPTER
On
the Profits
of Industry,
isy
WHAT
ital,
is
the source
VIII.
and Land;
Capital,
that
Incojne.
of the profits of industry, cap-
and land?
It is
ill
the price of the products created
co-operation.
pays
The consumer,
the charges of
all
its
in
by
their
buying a product,
production;
that
is,
the
services of the producers (the industrious, the capitalists,
and the
landliolders),
who have
contributed to
its
production.
How
can these profits, paid by a single consumer, he
distributed amojig the different producers ?
By the
to
advances which the producers make of them
one another.
Explain that by an example.
Let us examine how the value of a cloth coat

tributed
is
made.
among
the producers of the stuff of
is dis-
which
it
We see that a farmer who has reared a sheep,
has paid a rent to the landholder
who
let
him
the land
ON THE PROFITS OF INDUSTRY, &C.

on which the sheep was
for
tlie
That
fed.
a profit received
is,
productive service of the land.
have borrowed the
If the
ther profit, received
by a
capitalist, for the
When
service of his capital.
The
means of
already distributed.
and he pay
and
this value,
If his capital
interest for
it,
lent
it
in
woollen draper,
who
is at last
vances and his
profits
by the
the consumer.
Thus
was accomplished,
buted among
its
we
and he
for his ad-
which he makes
the value
had already been
distri-
progress of any product what-
tlie
noran tof the existence of the product
wears the coat
producers,
to
time the sale of the cloth
shall find that its value is scattered
one of the
is
by the
among
crowd of producers, many of whom, perhaps, are
that
is
different producers.
In thus tracing
ever,
which
profits,
reimbursed
sale
by
advance the
him
to
reimbursed the whole, together with his
at the
also the
be a borrowed one,
he pays also
who
profits of the capitalist
productive
clothier, in his turn,
advances
his capital,
i^Jgio-
reimburses
it,
the rent and interest he has paid,
of his industry.
it,
the farmer has sold his
wool, the price which he receives for
profits
farmer
capital necessary for the cultivation
of his farm, the interest which he pays for
him
39
so that the
capitalists,
ig-
man
perhaps, without suspecting
is,
who have
it,
and consequently one of the
contributed to
its
formation.
Is not soaety then divided into producers and con-
sumers ?
ON THE PROFITS OF INDUSTRY.
40
Every body consumes, and almost every body

For, not to be a producer,
duces.
it is
pro-
necessary
neither to exercise any industry, nor any talent, nor

to possess either the smallest portion of land or of
productive capital.
JVhat do the
profits^ distributed
among
society^ be-
come ?
They compose
the incomes of
compose the
What
is
It is the
the income of each individual
all
the individuals
income of
total
is
sum
of
all
Are
the
The
sum of all
that nation is
i7icomes
Some
of
income received
annual income of a whole
the portions of
by
income
receiv-
the individuals of
all
composed*
paid at fixed periods ?
them
lets his land,
who
that nation.
the portions of
ed, in the course of a year,
which
nation,
called anmial income ?
in the course of a year.
nation,
which form a
are so
some not.
a capitalist
who
A landholder who
lends his capital, and
thus gives up to another the profits which
result
and
may
from these agents of production, generally
sti-
pulate the condition of receiving the rent or interest,
which forms their income,

man, who
lets
at fixed periods.
The work-
out his industrious talent, receives the
wages which form

or every fortnight.
his
income by portions, every week
But
the grocer,
and coffee, receives on each ounce
who
that
he
sells
sells,
sugar
a small
CAPITAL AND LAND.

portion of his profit: and
all
41
these united profits form
his income.
Are
incomes, or portions
of income, always paid
in
money ?
The manner
do with
in
which they are
The com,
the subject.
paid, has nothing to
vegetables, milk, and
which a farmer consumes
butter,
form part of
his income.
If
provisions, these provisions
The
of the landlord.
Whether
this
he that owes
in order to
ance.
in his
own
family,
he pay part of his rent
ui
form part of the income
essential thing
is
the value paid.
value be paid in provisions, or whether
exchange these provisions for money,
it,
pay the value
It is the
in
money,
is
of no import-
value acquired, under whatever form,
for a productive service, that constitutes income.
As
the incomes
of
individuals are so
much
considerable as their profits are greater,
when
profits are greater
better paid,
it
appears
to
the
more
and as
their
their productive services are
me
that the dearer tliese pro-
ducfive services are, the greater the total income
of
that nation must he.
Yes
so
ai-e
but
when
the productive services are dearer,
the products
and when the price of the pro-
ducts augments in the same proportion as the
comes, the augmentation of the income

nal.
we
When
is
in-
only nomi-
the charges of production have doubled,
can, witli an
income nominally double, only pur-
chase the same quantity of products. That alone reallv
(6)
ON THE PROFITS OF INDUSTRY, &C.
42
increases the ease of individuals and of nations,
which
lowers the vaUie of products without decreasing
in-
comes.
In what circumstances
is this
advantage experien-
ced?
It is
when, by a better employment of the means
of production, the products are multiplied, without

increasing the charges of production.
ducts
fall,
Then
the pro-
and incomes remain the same. This
takes place
when
been brought
new and
into use,
is
what
ingenious machine has
such as the stocking frame
and the cotton spinning machines
and when a new
canal has been cut, which, without increasing the
charge, permits the transport of ten times, or a hun-
4red times, more merchandise, &c.
43
CHAPTER
On Wages,
WHAT do
interest
Interest,
and Rent.
you observe on the wages
oj" workmen,
of capital, and rent of land?
That he who
lets
out his industry, his capital, or
his land, renounces the profits
from
IX.
he might have drawn
He
renounces them
undertaker of industry,
who hires them,
their productive services.
in favour of an
and who draws, from these means of production, a

profit
which
is
what he pays
What
either superior, or equal, or inferior, to
for them.
causes raise the rate
The abundance
of capital and land compared with
^the number of workmen
above
all,
Why
is
for there
capital, in order to
it
of wages ?
must be
land, and,
employ workmen.
that xuages scarcely ever exceed
necessary to maintain a
cording to the custom
workman and
of the place
Because wages, by
wfmt
is
his family, ac-
rising higher,
encourage an
in-
ON WAGES, INTEREST,
44
crease of
more
workmen
this occasions
offered in proportion to the
Works, which
such services to be
demand
for
them.
require rare and distinguished talents,
are exceptions to this rule
because such talents can-
not always be increased according to the
demand
for
them.
What
The
causes injiiience the rate
of
interest ?
interest of capital lent, although
expressed by
one price only, a certain per centage on the capital

lent,
ought
Explain
really to
this
If you lend a
rower for an
be distinguished into two
by an example.
sum of money, and agree with
interest of six per cent,
is in this rate,
the bor-
per annum, there
four per cent, (more or less), to pay for
the productive service of the capital, and
(more or
parts.
less) to
two per
cent,
cover the risk that you run of never
getting your capital back.
On what
On this,
do you found this presumption ?

that if
you were enabled
capital Avith perfect security,
you would lend

surplus
which
you
is
is
it
at four
to lend the
on a very
same
mortgage,
safe
per cent, more or
less.
The
then a species of premium of insurance
paid to you to indemnify you for the risk that
run.
Setting aside the premium ofinsurance, which varies

according to the greater or less solidity
of
the parties,
xvhat are the causes which vary the rate
of interest,
properly so called?
AND RENT.
The
rate of interest rises
4f5
when
those
who borrow
have numerous, ready, and kicrative employments

capital
because then
many
imdertakers of industry
are desirous of participating in the profits
employments of
more
the
capital offer;
likely to use
demand
which
is
and
capitalists are also
and diminishes the amount
offered for employment.
The
rate of interest
when, from whatever cause^ the mass of
disposable capital, that
is,
of capitals requiring to be
employed, has been diminished.*

stances lower the rate of interest
circumstances
which these
them themselves, which augments
for capital,
increases also,
for
may
Contrary circum-
and one of these
so balance the other, that the rate
of interest will remain at the same point, because the
one tends to heighten, precisely as
much
as the other
to lower, the rate.
When you
say that the mass of disposable capital
creases or diminishes J do you
mean by
in-
that the quantity
of money ?
By no means
mean
values destitied
sessors to r^roductive consumption,
by
their pos-
and which are
not so engaged that they cannot be withdrawn in order

to use
them
differently.
Explain that by an example ?
liV.
See some striking examples

ii.
chap.
8.
in
my
Treatise on Political Ecoiionvi,
ON WAGES, INTEREST,
46
Suppose you have

dition of his paying
them back
months notice
three
you
thing, that
lent funds to a
or,
to
merchant on con-
you on giving him
which comes
same
to the
are in the habit of discounting bills of
exchange, can you not easily employ these fimds in a

different
way,
you
if
find any one
more convenient
to
you?
Without doubt.
Then
these funds are a disposable capital.
are so, too,
they be in the form of a merchandise
if
you can exchange them
easily sold, since
readily for
any other value.
They
they be in specie.
But you must understand
si\m of
all
are
still
more disposable
these disposable capitals
thing from the
They
sum
is
if
that the
a very different
of coined money, and that
it
may
be much more considerable.
/ understand so.
Well!
it is
sum
the
of these capitals which influen-
ces the rate of interest, and not the
sums of money
imder Avhich form these values temporarily present

themselves
hand
when
to another.
form of a certain
for
they are about to pass from one
mstance
which
is in
disposable capital
may be
in the
sort of merchandise, a sack of p-uineas
but
if
the quantity of this merchandise
circulation,
have no influence on the
rate
of interest, the abundance or the scarcity of the gold
has no influence on
it
either.
AND RENT.
It
is
47
of money
not then really the hire
that one pays
when one pays an interest ?
By no
means.
Why is
it
From very inaccurate

fiature
and use of
What
It is
is
to
formed of the
are
legal interest ?
by the law
not been fixed by the parties
minor
which
ideas
capital.
the rate fixed
capital has
of money
called the interest
enjoyed
whom he
it
is
in cases
as
in the place of
bound
it
has
the holder of a
an absentee, or a
to account.
Cannot public authority fix a
which individuals may agree upon

It cannot,
when
where
limit to the interest
without violating the freedom of transac-
tions.
What
causes influence the rent
The demand
the
'
'S
number
be
to
subject, that the
ber to be
/fhese
is
let
for the hire of

let.
of land?
farms compared with
may be
It
observed on
this
demand commonly exceeds the num-
because
in all countries the
necessarily limited
of capitals, which
may be
not necessarily so
number
while that of farmers and
applied to
tliis
industry, are
so that in those places, where there
are not stronger motives to a contrary effect, rent
rather above than
of
below the
What have you more
to
real profit
soy on
is
of land.
this subject ?
That rent tends nevertheless to get do^^n
to the pro-
ON WAGES, INTEREST, AND RENT.
48
fit
of land
is
obhged
for
to
when
it
exceeds that
pay the excess,
profit, the
farmer
either out of the profits
of his industry, or the interest of his capital
and
is
no
of
longer completely indemnified for the employment
those
means of production.
49
CHAPTER
On Incomes /bunded on
What
They
is
X.
immaterial Products,
meant by immaterial products ?
express a
utility
produced, but which
is
not
Attached to any material.
Explain
When
this
by an example.
a physician
visits
a sick person, and pre-
scribes a remedy, or a regimen,
renders himself useful to him.
sum
The
of money in exchange for this
the utility
may be
It is
which cures him, he
is
physician receives
utility
but here
not attached to any merchandise where
it
preserved for a time, and exchanged again.
a product truly immaterial, in exchange for which
the physician receives a fee which constitutes his in-
come.
The
industry of the physician
is
that of every undertaker of an industry.

to the
analogous to
He
applies
wants of men the medical knowledge which he
has collected.
(7)
ON IMMATERIAL PRODUCTS.
50
JVhat other professionsfound their incomes on immaterial
products ?
There
are a great
number of them.
They
include
the most elevated as well as the most abject situations

in society.
The
public functionaries, from the chiefs
of the government
judges and the
down
to the lowest officer, the
priests, receive in
exchange for
their
usefulness to the public, fees paid at the expense of

the public.
What
As
causes influence the amount
of these fees ?
these fees are never the result of a free agree-
ment, but depend on
political circumstances,
seldom proportioned with exactness
they are
to the utility pro-
duced.
Give me some other examples of industry productive
of immaterial products.
An
advocate, an actor, a musician, a soldier, a do-
mestic, render services of
which the value may be
measured by the price which they receive.
What do you obseiDe

That they
respecting immaterial products?
are necessarily
instant tliey are produced.

ly,
consumed
at the
same
Their value, consequent-
cannot be reserved for consumption at any other
4/^time, or to be employed as capital, because they are

not attached to any material by means of which they
can be preserved.
What consequence
That
do you
draw from that?
in multiplying the services
rendered by these
the consumption of
different classes,
pHed
that
it
51
them
is
multi-
hinders these kinds of works from con-
tributing to the increase of the
mass of
wealtli.
It
follows from this, that in multiplying, for example,
placemen, lawyers,
soldiers,
whatever
try is not increased,

'
&c. the wealth of a coun-
may
otherwise be the
of these different professions.
utility
they render exist no longer thaa the
The
services
moment they
are
performed.
They
live then
They
live
on the incomes of other producers?
no more on the incomes of other pro-
ducers than a wine merchant lives on the income of a
woollen draper,
who buys wine which he
pays for
with part of his income, and afterwards consumes.

actor
is
commodity, pays
sumes
amusement
a dealer in
it
for
the instant
it
it is
An
a spectator buys his
out of his income, and con-
The
delivered to him.
pro-
ducts furnished by the actor and by the wine merchant,

are equally lost; but
when
îven to them for
has been freely paid,
change, like
the
all
same nature
it,
the price
others, followed
as
all
which has been

it is
an ex-
by a consumption of
improductive consumptions.
Are immaterial products
the fruit
of industry
alone ?
Yes, when nothing has been advanced

the talent of which they are the fruit : but
talent
to acquire
when
this
has required long and expensive studies, they
52
are the result of an appropriated capital^* that

say, of advances
One part
of
tlie
pay
ficient to
fees then serves to
When the
exercised.
to
pay the life
pay
for the service of these
price increases until the
of that product
Are
sult
there
interest
for the industry
fees, or gratuities, are
production, their product becomes

its
to
which have been made of industry.
and another
in this capital,
is
not suf-
two agents of
more
and
scarce,
moment when
the quantity
rendered equal to the demand.
is
any immaterial products which are the
re-
of capital alone?
Yes,
if
moveable
considered as capital, and

original value.
(household furniture) be
effects
When
if
they be kept
up
to their
kept up, be-
their value is not
sides the use of the capital, a part of the capital itself

is
consumed.
The
plate
which
is
used
in
a family forms part of
the capital and riches of that family.

ductive, since
it
not impro-
It is
renders a daily service
but
it
does
not produce any value which can afterwards be
changed
for
any other thing.
material product
consumed
This service
at the
moment.
family consumes the interest of this part of
It
must be remembered, that an appropnated
to
be applied
to another
employment.
an im-
The
its capital.
capital is a capital
cannot be withdrawn from the employment to which
is
it
ej:-
which
has been applied,
Are
53
any immaterial products which
result from
there
land?
Yes
den,
is
capital
the enjoyment received from a pleasure gar-
a product of the land of this garden and the
devoted to
its
exchangeable product.
arrangement.
It
has no other
54
CHAPTER
On Consumption
WE home already
the dervelopment
It
seen
ofits
in general.
what
consiitnption is
must be remembered
stroy the matter, than

to destroy
to,
exists
The
we can
create
it.
not to
de-
To consume
it,
of be-
or of satisfying the wants of man.
Then
which
in
utility
which had been given
it
to
had been demanded, was deceased, the value, which
proportion to the demand, ceases also.
thing thus consumed, that
stroyed,
is
we can no more
by destroying its
value
The demand having
always
consume
that to
by de-
the quality for

stroyed.
finish
its
sti'oying the quality
ing useful
effects.
destroy the matter of a product
is
XI.
though the material
is,
is
whose value
not,
de-
is
no longer forms
any portion of wealth.
A product may be
consumed
rapidl}^, as
food
or
ON CONSUMPTION IN CF.NERAL.
slowly, as a house.
It
may be consumed
55
in part, as
which, having been worn for some months,
coat,
sumption takes place, the

destruction of value
sumption
is
still
In whatever manner the con-
a certain value.
retains
effect is the
same
and as value makes
it is
riches, con-
a destruction of wealth.
JVIiat is the object ofconsumption ?
To
or a
procure to the consumer either an enjoyment
new
sumed
profit.
value, in general superior to the value con-
otherwise the consumer would not obtain any
In the
first
case,
it is
an improductive,
diud in the
second a repi'oductwe consumption.

JV/mt would that consimiption be which hadfor its object neither to procure an enjoyment^ nor to create a
new
product ?
That would be a
sacrifice witliout
compensation
folly.
What must be thought

of which
is,
then
of a system^
to consu77iefor the sole
the tendency
purpose offavour-
ing production?
That which must be thought of a system \vhich

should propose to
bum down
city,
for the
purpose
of benefiting the builders, by employing them to restore
it.
Develope what
relates to reproductive consumption.
Every thing which has been

serves for that purpose.
said
on production,
ON CONSUMPTION IN CENERAl,.
56
0'^hat have
you
to
say on the subject ofimproductivc
conswnption ?
Improductive consumption, which

ter, for
into
shall hereaf-
brevity, call simply consumption, divides itself
kinds, private and public*
tv^'ô
What
do you understand by private consumption ?
That which has

individuals
What
for
its
object to satisfy the wants of
and of families.
do you mean by public consumption ?
That which has

of
we
men whose
for
its
object to supply the wants
association forms a
community, a pro-
vince, or a nation.
Are
tlwse
two sorts of consumption of the same na-
ture?
They
effects are the
consumption
other
that
same
are entirely of the
One
same.
nature,
set of persons
and
their
cause the
one case, and other persons in the
in
is all
What is meant
the difference.
by the words, annual consumption of
a nation ?
It is tlie
sum
of
tlie
values
a year, whether for the
a\
consumed by a
nation in
ants of individuals or of the
public.
Do
these ivords coinprehend reproductive consumption
as well as the others ?
Yes
so
for
many
we may say that France consumes annually
quintals of soda or of indigo, although the
ON CONSUMPTION.
57
indigo and the soda can only be consumed reproduc-
they cannot satisfy directly any want: and
tively, as
as they can be
employed only
in the arts, they serve
necessarily for reproduction.
Do
you comprehend^
in the
consumption of a nation^
the merchandise she exports to other countries ?
Yes and
;
comprehend
receives in return
hend
in its
in the
in its products
same manner
tliat I
the value of the cloth
which
nation consume all
and
results
tliat it
Yes, with very few exceptions
it
compre-
consumption the value of the wool
for the manufacture of cloth,
Does a
whatever
uses
it
in its productions
from
it.
produces ?
for
not to create products unless they are
it is
our interest
demanded and
:
they are never demanded but to be consumed.

nation consumes the total
If a
The
it
values,
capital,
which serve the purposes of
capital,
it
accumidate values,
may be consumed
in the
it
form
produces, hoxv can
and maintain
of the values which
perpetually, yet are never lost
same proportion
as they are
for
consumed, they are
reproduced under new forms, by the action of industry.
This reproduction, once accomplished,
if
the
value reproduced be found superior to the value con-
sumed, there has been an augmentation of

in the contrary case, a
(8)
diminution of capital.
cai:!ital
If the
ON CONSUMPTION,
58
reproduction have simply equalled the consumption,

the capital has been merely kept up.^
Shew me
the application
of
these truths by
exam-
ples.
Take,
for instance, a farmer, or a manufacturer, or
Suppose that he employs
even a merchant.
in his
enterprize a capital of twenty thousand pounds, that

is
to say,
suppose that
his enterprize
on the
sum
value to a
all
first
the values that he has in
day of a year, are equal
of twenty thousand pounds.
in
In the
course of his operations, these values change their
forms perpetually
and although
his capital does not
exceed twenty thousand pounds, yet

that if all the values
we may suppose,
which he has consumed
in the
course of the year, were added together, they would
amount
to sixty
destroyed
thousand pounds
because a value
may ha^ê been reproduced, destroyed
again
a second and a third time, before the year revolves.
We may suppose also,

in the
all
same year were added
amount
that if
to a
sum
the values produced
together, they
might
of sixty-four thousand pounds.
In the amount of reproductive consumjjtion, the profits of
all
If
the
industries employed, even that of the undertaker, must always be included.
When
and the
all
the charges of production, (the profits included), are paid,
capital
is
not completely re-established in
sumption exceeds the reproduction
there
is
its full
loss.
value, the con-
ON CONSUMPTION.
59
then this undertaker of industry has had consumption

for sixty thousand pounds,
and productions
for sixty-
four thousand pounds, he ought to have at the end of

the year vahies amounting to four thousand pounds
more than he had

That appears
Let us go on.
in the
same
at the beginning.
clear.
If he
have expended improductively
year, to satisfy the wants of his family,
four thousand pounds, he will have

fits
and
at the
he take his inventory, he
if
end of the year, with a
sand pounds only, as he had

year.
consumed his pro-
But
if,
tively, for the
will find himself,
capital of
at the
instead of having
twenty thou-
beginning of the
expended improduc-
support of his family, four thousand
pounds, he had only expended two thousand, unless
he has hid two thousand pounds, he
will find that this
value of two thousand pounds, which has not been
expended improductively,
ductively,
and that
it a\ ill
will
have been
laid out pro-
appear in his inventory
in
augmentation of capital under some form or other,

either
under that of provisions, of goods
in
process of
manufacture, or even of advances capable of being

recovered.
/ conceive that.
You perceive then,
capital
that although the value of tlie
has not been more
tlian
twenty tiiousand
ON CONSUMPTION.
60
pounds, the
may have
total
been
value of the products for the year
much more
considerable ?
Yes.
That
form of products, whatever
this
may have been
entirely
consumed; and
may
be,
that, never-
may have been
theless, the capital of this individual
augmented
it
Yes.
Well, then, multiply
pened
in
your mind what has hap-
to a single individual,
thing to have happened to
same nation
and suppose the same
all
the individuals of the
or at least suppose that the consequent
ces that have happened to some, balanced
which have happened to

ral result
you
others, have
by those
produced a gene-
analogous to the preceding example
will find,
which had
by a second example,
at the
commencement
of a hundred millions,
and
that a nation
of the year, a capital
may have consumed
three hundred millions
in
a year
producing three
of values,
hundred and twenty millions of values, of which she

has consumed reproductively three hundred millions,
and improductively
twênty millions
or rather repro-
ductively three hundred and ten millions, and impro-
ductively ten millions.
/ grant
it.
In this
last
supposition, this
little
nation,
which
ON CONSUMPTION.
will
have consumed
theless,
values,
which
will
productions, will, never-
be found distributed under
among those
their affairs
nomy.
its
be enriched during the year ten millions of
ent forms
ed
all
61
individuals
who have
diifer-
conduct-
with the greatest intelligence and eco-
62
CHAPTER
On
XIL
private Consumption.
WHAT difference
is
there between the words,
Ex-
pense and Consumption ?
Expense
and
to
is
the purchase of a thing to be
people only buy what they intend
as, in general,
consume, the words expense and consumption are
often used for one another.
remark, that
A'alue
in
consumed
It is,
when we buy a
however, proper to
product,
we are willing to give up for one
want
we exchange the
of which
the value of a cro^vn, for instance, for the
value of a handkerchief.
We are
still
form of a crown.
this value until

it is
only
when
we
We
we
only
we
before
do not begin
to lose
possess in the form of a handkerchief what

in the
when we
as rich
have made the purchase as we were before
had
we are
begin to use the handkerchief: and
the consumption
poorer by a crown.
It is
is
finished, that
we
are
not then in buying, but in
consuming, that wt. dissipate our property.
That
is
ON PRIVATE CONSUMPTION.
why,
the reason
ter
in the
and economical
middle ranks of
talents of the
life,
63
the charac-
woman, who
directs
the greater part of the consumption of the family, assists materially to
What
preserve fortunes.
do you understand by economical talents ?
It is the talent
may be
sumption
of deciding judiciously what conpermitted, and what
bited, in that state of fortune in
and according
What
to the
must be
which we
prohi-
are placed,
income we have.
do you understand by avarice ?
We are
avaricious
when we
deprive ourselves, or
those dependent upon us, of those consumptions which
we might
Is
it
pennit according
avaricious not to
lo
our incomes.
expend the whole of one'' s
in-
come ?
No
for
it
is
only by the savings which are
from improductive consumption,
that
made
we can hope
to
enjoy repose in our old days, and to procure an esta-
blishment for our families.
Do we
do any wrong
to society
by thus amassi?ig a
productive capital^ for the sake of enjoying oursehesy or

suffering those belonging to us to enjoy , the profits
it
will
produce?
On
duals,
the contrary, capitals accumulated
add so much
indivi-
to the total capital of society
as a capital placed, that

is
by
is,
and
employed reproductively,
indispensably necessaiy to give activity to industry,
every person
who spares from his revenue to add
to his
64
number of persons who
capital, procures, to a certain
have nothing but
their industry, the
means of deriving
a revenue from their talents.
Are
not some
consumptions better managed than
others ?
Yes
they are those which procure greater
in proportion to the sacrifice
faction,
which
tliey
which
satisfy
occasion.
Wholesome
ings, are
Such
satis-
of the values
are the consumptions
the real, rather than fictitious, Avants.
food, decent clothing, convenient lodg-
consumptions more
fitting
and better regula-
ted tlian luxurious food, foppish clothing, and stately
Mure
habitations.
than the
first
What
true satisfaction results
from the
last.
do you consider^ besides, as well regulated con-
sumptions ?
The consumption of products. of

every
sort,
although they
For what reason do you
may
the best quality of
cost more.
consider them as well regula-
ted consumptions ?
Because the workmanship employed on a bad
be more quickly consumed than that on a good
will
one.
the
article
When
work of
same time as
sumed
a pair of shoes
the shoemaker,
months, which
made
which
w'lih.
is
bad
leather,
used up
shoes, does not cost less, and
tlie
in fifteen
been good.
is
in the
is
con-
days, instead of lasting two or three
it
The
would have done

carriage of
if
the leather had
bad merchandise
costs
as
much
ous.
as that of good,
which
is
65
more advantage-
Poor nations have, consequently, beside the
disadvantage of consuming less perfect productions,

that of paying dearer for
What
them
in proportion.
consumptions do you consider as the
ivoi'st re-
gulated ?
Those which procure more chagrin and mischief

than satisfaction
such as the excess of intemperance,
and expenses which excite contempt, or are followed
by punishment.
(9)
66
CHAPTER
On
If
HAT do
sembled
in
Public Consumptions.
you
Those which
call public
made
are
utility,
What
consumptions?
for the service of
men,
communities, provinces, or nations.
the purchase of services
public
XIII.
which
asIt is
and products, consumed
for
constitutes the public expenses.
are the principal objects of public expenses ?
The payment
of the administrators of the govern-
ment, the judges, soldiers, and professors in the public institutions
the providing for the
army and navy,
and maintaining the public establishments,
edifices,
roads, canals, ports, hospitals, &c.
What
lic
do you observe generally with respect
to pub-
expenses ?
That
the public
is
never so cheaply served as indi-
viduals.
What
are the reasons?
There
ar^ three. First, that political cii'cumstances
ON PUBLIC CONSUMPTIONS.
number and
fix the
and
salaries of the
pubhc functionaries,
that their services are consequently not
The
free competition.
The
be.
that
third,
ed by personal
it
direct
than individuals
works executed
public, are easily superintended,
to a
them money which
not their own, are less sparing of
would
open
who
second, that those
the public expenses, devoting to

is
67
for the
and are never watch-
interest.
/ atn inclined to
believe that public consumptions,
by
returning to society the money which has been drawn
from
it,
do not impoverish
They do
impoverish
it.
it
the
same as
private con-
sumptions, by the whole amount of the values con-
sumed.
Hoxv do you explain
The money
without
But when
is
wrested from the people without
A value
equivalent.
nity,
is
its
tliis
is
taken away from the
money
is
returned to the community,
It is in virtue
things which have a value.
bution,
and
same
The commimity has twice
amount of
the
values, the
one
is
destroyed.
at all
it is
that contribution.
returned by the pur-
chase which the govorument has
is
agents,
merchandize, which the govern-
ment has bought with
never returned
its
value. It has delivered the contri-
also the
Of these two
it
of a purchase in
the seller delivers to government, or
delivered the
commu-
receiving any other value in return.
not gratuitously.
which
this ?
made
consumed,
that
the other
is
to say,
it
is
68
by an example ?
Illustrate this
We will
suppose that a community pays
a hundred thousand pounds
there
in
money
a value equal to
is
one hundred thousand pounds draAMi from the com-
The
munity.
agents of
sum, purchase clothes
government, with
tlie
for the
army
this is
this
another
value equal to one hundred thousand pounds drawn
from the community. The government,

clothier, restores the
had
raised
one hundred thousand pounds
by contribution
hundred thousand poimds

and
will
his revenue in
but the value of the one
It is the
lost.
man who draws from
money, and returns
his expenditure
who
but
it
in clothes is not restored,
be consumed and
with that of a
paying the
in
it
the
same case
community
back by means of
does not return the provi-
which
sions he has purchased with his revenue, and
he has consumed.
But
tvhen a government constructs buildings, and
with the amount of the contributions pays the xvorkmen,

does
it
not then restore to society the values which
has draxvn
from
it
Not an atom more.

last case,
one value
value equal to
it
it
It
draws from society,
in contribution,
in services
purchase of the services
is
which
it
in this
and then another

consumes.
The
not a restitution, but an
exchange.
Is not this a mere distinction of words, and
purchase of services equivalent
to
is
a restitution ?
not the
Not
When
in the least.
workmen,
wages a
it
receives from
real value,
the government employs
them
which
in
exchange
is their labour
founded on the products which are

labour
69
to result
for their
a value
from
this
a value, which being consumed by the go-
vernment, cannot be consumed in any other design,

nor with any other
The workmen
result.
thus employed would have perhaps
been without work ?
Why ?
The government by
this operation
has not
multiplied the values appropriated to the payment of
workmen.
If
distribute
it
away from
takes
workmen
the one hand,
it
on the
other, the
either directly
by employ-
the contributor
power of distributing them,

ing the
them on
himself, or indirectly,
by means of
his consumptions.
When
same
a government consumes.,
situation
stands then in the
it
with any other consumer ?
Almost ahvays. The exceptions

rare to
be worth
What
to this rule are too
noticing:.
consequences do you draw from
That the consumptions,
or, if
you
is
never indemnified for
die product which results from
What do you mean
it,
will, the
of government, are always a sacrifice
which
it
expenses
made by
society,
otherwise than by
it.
by a product resulting from public
expenditure ?
When
the government constructs a bridge, the ser-
ON PUBLIC CONSUMPTIONS,
70
vice which die public derive from
it,
repays, and often
with very great advantage, the sacrifice of vakies which

the bridge has cost.
IFhen apart of the

construction
of monuments
public utility^ there
fee
contributions is
is
employed in the
or buildings^ which have no
then on the part
ofsociety a
sacri-
witout compensation ?
Precisely
it is
for that reasnn that a
good govern-
ment makes no expenditure which has not a

sult.
The economy
of nations
with that of individuals.
is
useful re-
exactly the
same
71
CHAPTER
On
XIV.
Public Property and Taxes.
FROM whence
are the vahies derived which serve
for the public consumptions ?
They
pert)'
are derived either from the revenues of pro-
belonging to the pubHc, or from taxes.
tVhat constitutes the revenues of public property?
These
perty
properties are either, capital or freehold pro-
but most generally, freehold property, land,
houses, &c. which the government
nue of which
public.
When
felling
when
last
case
Who
The
is
it
consumes
it
consists of forests,
capital,
very
is it
it
for the
lends
it
let,
and the reve-
advantage of the
it
sells tlie
at interest
annual
but thi%
rare.
that
pays the taxes ?
individuals
whom,
in this respect,
we call
con-
tributors.
Where
they
pay
They
do the contributors get the values with which

the taxes ?
take these values from the products which
QN PUBLIC PROPERTY.
72
belong to them,
which comes
or,
same
to the
thing,
from the money which they procure by the exchange

of these products.
Are these products
the fruit
They are sometimes the
ofthe annualproductions ?
products of the year, which
form part of the income of individuals, and sometimes

former products, which they employ as productive
capitals.
In -what case do the contributors take from
pay
the taxes ?
their
incomes are not
capitals to
When
up one of
case, the taxes dry
me an example
in
in this
the sources of revenue,
and one of the means of the industry of

Give
And
sufficient.
their
society.
which the faxes are
dis-
charged with a portion of capital.
man whose
If a
laconic
is
absorbed by the ordinary
contributions, together with the maintenance of his

family,
bound
come
to
fore
an heritance, and, as an
pay impost,
heritance.
.
to
The
it
must be taken out of
capital in the
&c. In
tiibiitor, is
all
tion,
is
w as
at law,
in the
so
his in-
tlie
bonds, secu-
by
the con-
mass of capital usefully
much capital
and actually disappears.
hands
may be made
these cases, the tax paid
withdi*awn from
employed, and
it
Similar observations
on the expenses of proceedings

rities,
he be
hands of the heir is there-
no longer so considerable as
of the deceased.
heir,
devoted to consump-
This happens also
in
cases where the profits are small and the impost con-
AND TAXES.
many
siderable;
contiibutors
cannot
that
in
case
discharge the taxes without breaking in uDon their

capitals.
The major part of the taxes are however taken from

incomes?
Yes
for if the taxes
diy up too completely the
sources of production, they
more every day
^\
ould diminish more and
the products \\V^\ Avhich alone they
could be paid.
If there
be some
of them
of individuals^ how happens
xvhich break into the capital

it
that the
tion are not destroyed in the long
Because
at the
break into their
by
same time
means ofproduc-
run ?
that
some
individuals
capitals, those of others are increased
saving.
Do
not the taxes sewe^ on the other haud^ to multi-
ply products by compelling the contributors

in order to be able to
pay them
The hope of enjoying

is
much
to
the products one has created
stronger incitement to production than the
idea of satisfying
tlie
tax gatherer.
But
if
the impost
should excite the desire of producing more,

not afford the means.
it is
produce
it
does
In order to extend production,
necessary to increase capital, which
is
the
more
impossible, as the necessity of paying the tax prevents
the saving, which alone creates capital.
In short,
if
the necessity of paying the taxes should excite efforts
which augment production, there
(lb)
^vill
not result from
ON PUBLIC PROPERTY.
74
it
any increase of the general riches
raised
by
the impost,
to increase
is
since
what
is
consumed, and does not serve
Thus
any saving.
it
may be
seen, that
great taxes are destructive of pubhc prosperity instead
of being favourable to
Which
this
it.
are the principal kinds of taxes levied for
purpose ?
Sometimes they
at so
much
are exacted
from the contributors
per head, as in the capitation tax. Some^
times, as in the land tax, they take a part of the reve-
nue
arising
from the lands
which
are valued, eitlier
after the actual rent or after the extent
the
and
fertility
of
Sometimes the rent of a house, the number
soil.
of its doors and windows, and of the servants and horses
kept by the contributor, serve as a basis for the amount

of his contribution.
Sometimes, his
profits are
according to the industry he carries on
valued
from hence
the impost on licences [patentes.) All these contributions bear
tlie
demanded,
Are
name of
direct taxeSy
because they are
directly ^ of the contributor in person.
not all taxes
demanded directly from the
contrir>
hutor ?
They are sometimes demanded,
not from the payer,
but are included in the price of the merchandize on
which the impost
is
laid,
knowing even the name of
and without the receiver

the contributor.
For
this
yeason they are called indirect taxes.
When
and
chandize ?
in tvhat
manner are taxes levied o?i mer-
AND TAXES.
They
7S
which
are sometimes levied at the instant in
they are produced, hke the saU in France, or the gold
and
mines
silver
in
A portion of
Mexico.
of these merchandizes
is
levied at the
moment
Sometimes a duty is levied
extraction.
die value
at the
of their
moment
of their transportstion from one place to another, as

in the instance of import duties
which
is
and
in the
" Octroi,"
paid in France at the entrance of towns
sometimes
at
the
moment
of consumption, as for
stamps and admissions to the theatres.
Does
the atnount
of those who pay
No
at the expense
they endeavour to reimburse themselves at
least in part
from those who purchase the products
the creation of
Do
it
of the impost remain
which the contributors have
in
assisted.
the contributors always succeed in thus shifting
the burden
from themsehes ?
They seldom succeed
completely; because they can-
not do so without raismg the price of their products
and a
rise
of price always diminishes the consump-
tion of a product
of
its
by putting
consumers.
it
out of the reach of some
The demand
duct then diminishes, and
its
for this sort of pro-
price
falls.
The
price
not then affording so liberal a remuneration for the
productive services devoted to this object, the quantity
of
on
it is
lessened.
Thus when an import duty
cotton, the manufacturers of cottons,
and
is
laid
tlie tirades-
ON PUBLIC PROPERTY
76
men who
sell
to recover
pose
it
them, camiot raise the price so high as
back the amount of the taxes
would be necessary,
that the
same quantity of
demanded and
cotton goods should be
for that pur-
and that
sold,
the society should devote to the purchase of this particular article
voted to
it,
more values than
which
become dearer
had heretofore de-
it
The
not possible.
is
their
cotton goods
producers gain less
and
this
kind of production declines.

consequence do you draw
TVJmt
That
whose
the impost
profits,
i.
is
from
paid partly by the producers,
whose incomes
e.
this ?
lessens
it
by those consumers who continue
partly
and
purchase
to
notwithstanding the deaniess, since they pay more for

a product, which, in point of fact,
What
That
is
making
more valuable.
draw from
other consequence do you

the impost, in
not
the products dearer,
does not augment even nominally the

productions;
for
total
in price.
this effect take place
with respect
merchandize than that on which the impost

It
takes place on
contributor
sells.
ducts dearer
at the
all
tax
is
laid
any other
is
levied ?
which the
sell their
pro-
on the wood or coals
A tax on meat and other eatables,
gates of a city, renders
products dearer.
to
the merchandize
Brewers and bakers
when a
which they bum.
value of
the products diminish in quantity
more than they augment

Does
it?
all
its
manufactured
AND TAXES.
77
make the constmiers bear a
Ca7i all producers
of the imposts which they are compelled
of luxury bears only on those
article
If a tax
it.
be
laid
on
account
for
sell
portion of the tax he
In order not
is
make
So long
compelled to pay.*
rentof land,
who
to
the effect
of
it is
it
at the ex-
are unable to evade or shift
it
from
The producers and consumers pay
as tlie tax
market and
does not absorb the whole of
worth while to cultivate
tliis is
tlic
the
net profit, or
consequently the impost
it:
territorial
products which
When the
never a cause of dearness.
come
impost
is
to
ex-
surpasses the net produce of the worst lands, and hinders the
improvement of others.
Thus
territorial
products
become more
rare
circumstance does not raise the price in adiu-able manner; because
the population
rial
as
them ?
to consider
does not diminish the quantity of tlie
this
A land-
consumers bear any
This destruction takes place
themselves.
jitiU
lace.
witli
a cause of the destruction of part of the products
pense of those
cessive,
his
to deceive ourselves
how ought we
of society.
wine dearer on diat
whose w ife does not wear
holder cannot in general
As
his
he could not maintain a competition
his neighbour
taxes,
who consume
wine merchant whose
lace, t]ie
wife wears lace, cannot
pay ?
to
An impost laid on
There are producers who cannot.

an
portion
products;
is
not long before
if less
veloped here.
much.
gets
down
to the level of the territo-
are offered, less arc wanted.
those countries which produce

that produce
it
It is
little
corn,
it is
For
this reason, in
not dearer than in those
even cheaper, for reasons whicli cannot be de-
ON PUBLIC PROPERTY
78
value of the products thus destroyed
the
first,
in not
selling their products at a price sufficient to cover the
taxes
the second, in paying
more for them tlian they

which vary with every
are worth, but in proportions

article
and every
class of individuals.
We may also consider the impost as an augmentation of the charges of production.
sustained
while
it
by
the producers and consumers
but which,
renders the products dearer, does not augment
the incomes of the producers, as
vided
an expense
It is
among them.
its
amount
is
not di-
Their expenses augment as con-
sumers without their incomes increasing as producers

they are not so rich.
What is
By
understood by a subject of taxation ?
to be
those words,
which serves as a
sense,
ties
sion
is
is
often meant, the
basis for the tax.
Brandy, in
this
a " subject of taxation," by means of the du-
^vhich are levied on this liquor.

is
merchandize
not correct. Brandy
mand of a value
only a basis for
is
is,
in this case, the
subject of taxation increases,

their source, are
Wlmt do you
de-
The
true subject
income of the individuals
who manufacture and consume
whatever be
tlie
a merchandize which the government
uses as a means of raising money.
of taxation
But the expres-
the brandy.
when
these incomes,
augmented.
concludefrom that ?
Thus the
AND TAXES.
That every thing which tends
79
to increase the riches
of a nation, extends and miUtipUes the subject of taxation.
It is
from
this cause, tliat as a
amount of th taxes
the
the rate of
Are we
them
country prospers,
increases, without increasing
and diminishes, when
justified
i?i
declines*
it
considering the amount
taxes as part of the income of a
They have formed
viduals,
Has
the
natiofi ?
Never, for they are values not created but

red.
of
ti'ansfer-
a part of the incomes of indi-
which they have not consumed.
not the government other sources
of revenue ?
Sometimes the government retains the exclusive exand causes
ercise of a certain industry,
for
beyond
its
value
it
to
be paid
as the carriage of letters. In this
case, the tax does not
amount
to the
whole of the
charge for postage, but only to that part which exceeds what
it
would cost
if this
service
was
left
open
to free competition.
The
profits
which government sometimes makes on
lotteries is of the
able on
many
same kind
accounts.
but
is
much
less justifi-
80
CHAPTER
On Public
XV.
Loans.
JFITHwfmt vieiv do governments borr&w money?
To
provide for extraordinary expenses which the
ordinary revenues are not sufficient to discharge.
How
do they pay the interest of the loans they con-
tract ?
They pay
either
it
by laying on a new
tax, or
economising, from the ordinary expenses, a

ficient to
pay the annual
sum
by
suf-
interest.
Loans, then, are a means of consuming a principal, of
which the
interest is
paid by a portion of the taxes ?
Yes.
Who
are the lenders ?
Individuals
who have
capitals at their' disposal.
Since government represents the society, and society

is
composed of individuals,
lends to itself?
it is
then the society which
ON PUBLIC LOANS.
Yes
it is
a part of the individuals
whole bf the individuals

or to
What
The
them
that
is
who
lend to the
to say, to the society
government.
its
effect is
Do
riches P
81
produced by public loans on the public
they augment or diminish them?
loan in itself neither increases nor diminishes

it is
a value which passes from the hands of
individuals to the hands of the government, a simple
But
transfer.
as the principle of the loan, or,
generally
will, tlie capital lent, is
quence of
consumed
this transfer, public loans
you
if
in conse-
produce an impro-
ductive consumption, a destruction of capital.
Would not a
capital thus lent have been equally con-
sumed if it had remained
No
lay
it
the individuals
out, not to
to government,
in the
who
consume
it
it
lent the capital, ^vished to
it.
had not been
lent
lent to tliose
who
or they ^vould have
em-
If
it
would have been
would have made use of

ployed
hands of individuals ?
it
themsehes; thus the
capital wôuld
have
been consumed reproductively instead of improductively.
Is the total income of a nation increased or diminished
by public loans ?
It is
diminished; because
consumed,
carries with
it
all
tlie
capital
the income
aa
hich
which
it
is
would
otherwise ha\ e gained.
But
in this case,
(11)
the individual
who
lends^
does not
ON PUBLIC LOANS.
82
lose
any income,
since the
government pays him
for his capital; and if he does not
Those who
who
lose,
interest
does ?
who pay
lose are the contributors
the
pubhc
creditor is paid
if the creditor receives on the one
hand an income
increased taxes, with which the

his interest.
But
which the contributor pays on the other,

that there
no portion ofincome
is
appears
it
and
lost,
to
me
that the state
has profited by the principal of the loan which
it
has
consumed.
You
will
are in an error
how
examine
and
to convince
you of it, we
this operation is effected.
An
dividual lends to the state a thousand pounds.

sequently, he draws this value
which
it
was
engaged.
already, or in
have afforded
five
to the creditor
this
per cent, there
pounds taken from the
it
is it
would have been
is
an income of
paid ?
own purpose
these
government takes from him
to
fifty
At the expense of
who would have
pounds which the
pay the
stead of two incomes which there
fifty
nevertheless paid
is
a contributor; of a landed proprietor,

lised for his
in
employment would
societ)\ It
but how
Con-
from an employment
which
Supposing that
in-
was
creditor.
In-
in society, tliat
of the thousand pounds lent to government (which

either
had been, or might have been, placed elsewhere)
and the income of the funds, which had produced

the landholder the
fifty
to
pounds of contribution, which
ON PUBLIC L04NS.
he has been compelled
to
pay
83
to satisfy the creditor.
In lieu of these two incomes, there remains but one,
namely, the
last,
which
is
transferred
from the
conti'i-
butor to the creditor.
TVhy
there
there only one income
is
ofjifty pounds^ where
had been formerly two ?
Because there had been, beside the funds of the

contributor, another fund of one
producing
fifty
thousand pounds^
pounds, which has been lent and con-
sumed, and which, consequently, produces nothing.*
What
are the principalforms under which a govern-
ment pays the
Sometimes
tal lent,
interest
pays a perpetual interest on the capi
it
which
of its loons?
it
does not bind
ing their capital, than to
who
viduals,
repay
itself to
lenders have in this case no other

sell their
the
means of recover-
debt to other indi-
desire to place themselves in the situation
of the former.
Sometimes
the lender a
it
certain
borrows, by
way
it
borrows on condition of repayment,
stipulates a pure
number of
and simple repayment,
years,
by instalments
bursement of the principal sum

sometimes determined by
See
in
my
of annuity, and pays
life interest.
Sometimes
and
it
in a
or a reim-
at periods
which are
lot.
Treatise of Political Economy,
Synoptical table of the progress of these values.
2d
edit,
book
iii.
9.
ON PUBLIC LOANS.
84
Sometimes
negociates
it
The
receivers of contributions.
by discount
on
bills
loss
agents, the
its
which
suffers
it
represents the interest on the advances
it
receives.
Sometimes
it
interest for the
public offices, and thus pays
sells
money
furnished.
The incumbent can
never get back his principal Avithout selling his
The
price of offices
is
often paid under the
office.
name of
security.
All these
modes
of borrowing have the effect of
withdra^ving from productiA e
which
are
Has
consumed
employment
in the public service.
not the government the
even those of which
dehtSy
capitals
means of paying
its
pay
the
it
has promised
is
called a sinking
to
interest perpetually ?
Yes
by means of Avhat
What
is
Wlien
a sinking fund
a tax
is
interest of a loan,
laid
it
is
upon
what are
little
this
heavier than
excess
called commissioners for the
of the sinking fund^ and vAvo employ
buy up
at the
pay the
the people to
laid a
necessary to pay this interest

to
fund?
it
is
confided
management
e\êry year to
market price a part of the
or annuities paid
by
die state.
As
the
is
same
interest
interest
always continues to be paid, the sinking fund devotes

in the
year following, to the purchase of these interests,
not only the portion of the tax which
is
devoted to
ON PUBLIC LOANS.
this
use
which
in tlie
it
first
the
increasing action,
from
if
pubhc debt by
its
would extinguish
it
and
if
a perpetual addition of
buys up.
This manner of
progressively
with
sufficient
these sinking funds were never diverted
this object,
ly into the
but also the interest
has ah'eady bought up.
extinguishing
rapidity
instance,
85
the debts were not kept
new loans, which
market more
up by
bring annual-
interest than the sinking
fund
S6
CHAPTER
On
XVI.
Property, and the Nature ofRiches^
CAN riches exist where there

No
things which
the value of ijjie
we possess, there can be no
no things are possessed

Into
no property ?
composed of
for riches being
is
how many
that
is,
riches
where
no property.
classes can thi?igs possessed be ar-
ranged ?
Into two grand classes that which constitutes stock,
:
and
that
which constitutes income.
JVhat do you observe relative

stitute
to the riches
which con-
income ?
That having been created without affectmg our
may be consumed without encroaching

and that if we do not consume them impro-
stock, they
upon
it
ductively, they will increase our stock.
Do younot sub-divide that which constitutes our stock?
ON PROPERTY AND RICHES.

Yes
Of land and
1st.
i\re
may
our stock
87
consist,
other natural agents, of which
we
acknowledged proprietors
Of capital,
2nd.
which we de-
or values produced,
vote to reproduction
Of faculties,
3rd.
which we employ
What
or talents, natural and acquired,
for the
same purpose.
do you observe relatively to the riches which
constitute our stock ?
That we can
alienate the property of the first
two
kinds of stock (our lands and our capitals) but not that
of the third kind (our industrious talents).
can
let
out to use
life
property,
is
What
all
the three kinds.
which perishes widi
have you further
That not being
That we
That the
last
us.
to observe respecting
them?
applicable to the satisfying of our
wants, or of procuring enjoyments, because tiiey are

appropriated to reproduction, they are of no value, except for the faculty which they have of contributing to
some other consumable
the production of
demand which
which
tal,
is
The
there exists for consumable values, that
for products, establishes a
is,
values.
demand
capable of producing, that
and industrious
and
their value
of those to
whom
this
Why have not a
talents
value
this
is,
for tlie stock

for land, capi-
demand
makes a
establishes
part of the riches
they belong.
great number of natural agents ne-
88
cessary to production^ as the heat of the sim, the air

the atmosphere
why have
Because there
faculties
and
tliere is
when these faculties

and are accessible
not these a value ?
no demand
is
for their productive
no demand
for
them, because
exceed
are present they
wants,
all
mankind and when they
to all
of
are
not present, no person can provide them, because no
one can appropriate them.

fVhat results from
this
in 7'elation to the value
fact
of products ?
That ^vhen nature
lends, gratuitously, her po^\êrs
to the creation of products, the charges are less than
when we must pay
for assistance
and
that
we
consequently, products at a cheaper rate.
much
as those of the north,
It is for
do not cost
that reason that the grapes of the south
so
obtain
which are raised
in hot-
houses.
You have said that
riches are proportioned to the value
of the things we possess,
t/rnt is,
the greater as the values
we possess
you any thing

Riches
ai'e
to
add to
t/mt they are so
are greater
much
have
this subject ?
proportioned to the values
we
or rather are only those values themselves
possess,
but these
values are great or small in comparison with the price
of the things which

other words,
and
in
if
income,
may be
with a certain
I
obtained for them.
sum
In
in land, in capital,
can obtain the thmgs
am
in
want

of at half the price
that alone,
Thus
value
my
89
have hitherto obtained them, by
riches are doubled.
a nation that does
not possess in nominal
more than one half what another nation possesses,
will nevertheless
be as
products of which she

other nation
The
is
rich, if she
can procure
all
the
want, at half the price the
is in
obliged to pay.
very height of riches, however few values one
might possess, would be

nothing
all
the objects
to
be able
we wished
to
to procure for
consume.
We should be at the lowest ebb of poverty, however

immense might be
of the things
the values
we possessed,
if
the value
we wanted to consume exceeded the price
which we were able
to
pay
for them.
In what does the clearness and cheapness of

consist ?
We will examine
12)
that in the next chapter.
thing's
90
CHAPTER
071 the
GIVE
Real and Nominal Price,
me some
you wish
XVIL
just ideas on the price of things.

this subject,
you
must never confoimd the nominal price with the
real
If
to
form just ideas on
price of things.
What
The
price
What
The
do you call the nominal price of things ?
we pay for
do you call
value
Give
me an
A potter
sell
price ?
a vase which
is
obliged, in order to obtain
worth a
to sell
shillings,
two vases
is real.
it,
to
and
if
the potter
in order to obtain these
which he must pay
dearness of the bread
sells
If the price of
shilling.
the loaf should rise to two shillings
two
money with
given to obtain the
want of a loaf of bread, which

is
be obliged
in coin.
this thing,
he
money or
example.
is in
for a shilling
its real
we have
which we purchase
a thing in
for
the loaf, the
If the potter can obtaiq
ON THE REAL AND NOMINAL PRICE.

two
these
by the
shillings
deamess of the bread
sale of a single vase, the
only nominal
is
91
He
has
both
in
cases exchanged only one vase against one loaf, what-
ever
may have been
the denomination of the interme-
money which
diate value. It is the value of the
preciated
that of the bread has
from
lands xvhich are
terest^ ivhen the
No
that
the
his
fall
man wlwse income
or
from a
which
is
to
two
shillings?
which
real is the depreciation
is
in the value of the
income
arises
capital lent at in-
loafhas risen from one
has taken place
which
let,
stipulated to
He who
of the money.
de-
remained the same.
to
Is it not a real clearness
is
merchandise in
be paid
that
is,
pays the income, by
acquiring this merchandise at less expense, gains

this case
what the other
You have said

shillings to
lings,
when I am
I be
obliged to give two
able to obtain these
on the same tei'ms that
I before
loaf has not become dearer ; but if

lings, that is, the price
loses.
that if
buy a loaf
in
two
shil-
obtained one, the
to obtain
two
of one loaf I be obliged
to
shil-
give
two vases instead of one, then the bread will luive really
become dearer ?
No
not
if
the vases, as wêll as the
money, have
fallen to half their value.
How can I tell whether they

value or
riot
have fallen
to
half their
They have fallen,
if
they can be obtained for half the
expenses of production
that
is,
if
means have been
ON THE REAL AND
92
found to
create, at the
we know,
(which consists, as
interest of capital,
It
is
same charge of production
and
profit)
of the workmanship,
two vases instead of one.
then the loxvering the charges
which causes the real fall
in the price
ofproducts ?
Then whatever may be
Just so.
of production
the value witli
which a product
is
purchased, this product, which has
one
is
obtained for one half less expense
fallen
half,
of production.
Explain
If,
this
by an example.
by means of a
knitting frame, I can
make
a pair
of stockings for three shillings, instead of expending

six shillings
on them, he who
raises wheat,
can obtain
a pair of stockings for one half the quantity of wheat
which he had before been accustomed

them. That ts,
six
if
he were before obliged
pounds of wheat
ings, he
would now
in order to obtain
sell
we
a pair of stock-
his part only one half the
expenses of production which
It is the
to sell thirty-
but eighteen. But the eighteen
pounds have required on
would have
to give for
tlie
thirty-six
pounds
required.
same whatever is the production with which
are occupied.
It
may be
said, that
cle really falls in price, not only those
but every body
else, obtains
it
when an
arti-
who produce
it,
at the price of the re-
duced charge of production.

You have
saidy besides, that the riches
composedofthe sum
total of the values
of society are
which it possesses:
NOMINAL PRICE.
it
appears tome
93
tofollow ^ that thefall ofa product , stock-
higs^for example y by diminishi?ig the
sum of the
belonging to society, diminishes the mass
The sum of the riches of society

account.
of its
does not
values
riches.
on
fall
tliat
Two pairs of stockings are produced instead
of one; and two pairs, at three shillings, are worth as
much
The income
as one pair at six shillings.
ciety remains the
on two
same
for the
maker gains
pairs, at three shillings, as
as
of so-
much
he did on one pair
at six shillings.
But,
"
when
products
same
fall
the income remains the same, and the

tlie
fail,
society
take^wplace on
is
all
really enriched.
If
tlie
products at once, ^vhich
not absolutely impossible, society by obtaining
all
is
the
objects of its consumption at half price, without having

lost
any part of
rich as before,
its
income, would really be twice as
and could buy twice as many
This does not generally happen but

:
to a great
it
has happened
number of products, which have
the price they were formerly
at,
some a
fourth, a half, three-fourtlis, as silver
greater proportion, as sUks,
things.
fallen
tenth,
from
some a
and even
and probably many
in
otlier
articles.
To what
cause
is this to
To many causes
^
intelligence
owe,
but principally to the progress of
and industry.
botli the
be attributed ?
It is to tlieir
discovery of countries
progress that we
in
which there
greater abundance of products, and also a
is
means of
ON THE REAL AND
94
transporting
To
cal.
cesses
them
less
hazardous and more economi-
that progress also
we
more simple and more
machinery, and
are indebted for pro-
expeditious, the use of
of the
in general a better adaptation
productive faculties of nature.
Are
there any products which have really become
dearer ?
There are some
but very few ; and only those the
demand for which has
increased in consequence of the
progress of civilization, without the means of produc-
having increased
tion
as butcher's
ful
meat and
in the
same proportion
poultry,
and almost
all
such
the use-
animals which are raised at less^pense in less
civilized countries.
Ai'e there not variations in the value^
the consequence
The
errors,
which are not
of the charges of production?

the fears, or the passions of
men, or
unforeseen events, cause disorder and confusion in

values which are merely relative
merchandise
rises or falls
that
Late
when any
with respect to others,
consequence of circumstances foreign

tion.
is,
to
its
in
produc-
frosts increase the price of the last year's
wines, whatever
may have been
the charges of their
production.
Does such a dearness
No:
for in
exchanging another product for one
which has become

ceive less: he
precisely as
increase the jiational wealth ^
dearer, one
who
much
must give more^
to re-
buys,,Jasea on his merchandise,
as.tlie s eller
ga ins on his goods.
NOMINAL PRICE.
When
^
the wine doubles
chase a cask of wine
wheat instead of
a cask of wine,
is
three,
is
its
95
price, he,
obHged
who,
to pur-
to sell six bushels
of
which should have purchased
poorer by
all
that the
wine merchant
is richer.
Thus
these kinds of variation,
which sometimes
overturn private fortunes, do not affect the general

'
riches.*
The changes
In values
he did not deserve

gain
gains
it
to another,
who
did not deserve to
are nevertheless mischievous to the general prosperity.
it,
inflict
which take from a man that property which
to lose, to give
more
evil
on him who
loses,
They
than they confer benefit on him
who
they disapjWInt the wisest calculations they discourage the most

:
useful speculations
activity,
&c. &c.
they divert capitals which were
in full
productive
96
CHAPTER
XVIII.
On Money.
IF money
silver
be nothing but merchandise-why
is
coined
silver
of greater value than the same weight of
uncoined?
For the same reasons
more than
the
Thefashion
is
then
that a silver tea-pot is
same weight of silver
worth
in an ingot.
that the mint-master gives to the silver,
of the same kind as
that given by the silver-
smith?
Precisely of the
What
utility
same kind.
does the fashion of the tnint-master give
to the silver ?
The
impression on the
and quality of the coin
money announces the weight

;
that
is,
the quantity of line
metal and of alloy therein; consequently,

tliose
who
saying
it.
receive
it
it
saves
the expense of weighing and as-
ON MONEY.
TVhy do governments
97
reserve to themselves the ex-
of coining money ?
chisive right
In order to prevent the abuses which individuals
might create
the
same
fineness
And
indicates.
manufacture, by not making
in this
of
it
and weight which the impression
sometimes they reserve that
order to obtain the profit of
right, in
which makes part of
it,
their revenue.
Cannot the government, by virtue of

privilege
of
this exchisive
cohiing money, raise the value
much beyond
the expenses
of manufacturing
of money
this
mer-
chandise ?
It
can do
^),
by reducing
pieces coined, or the
gi'eatly the quantity
amount of
What would happen
the
of
money.
then ?
The money-merchandise becoming more
scarce in
proportion to the quantity of other merchandise in

circulation, that
to
buy
demand relatively to
give less
in other
money
in
all
other merchandise.
exchange
words, goods would
Should
arising
which we are disposed
we
from
to sell or
money-merchandise would be more
this
is,
not feel in
the scarcity
for
We should
more of other goods
fall in
price.
commerce some inconvenience
of money?
If that effect took place, the inconvenience
not be lasting
money would
not be diminished by
(13)
in
because the
total
would
real value of the

it.
There would
ON MONEY.
98
be fewer pieces; but each of the pieces would be
worth more
nominally
in other
or,
fall in
price,
words, other goods would
and
their
sum
total
would
sum
bear exactly the same proportion with the
still
total
of the money.
JVhat inconveniejice would be felt
The
ingots
and
utensils of gold
of the same material, would
portion beUveen these metals in
fall in
into
and
being a
money, which
price like
money and
There would be a considerable gain
feit
silver,
would make a great
other merchandise. This
them
case?
kind of merchandise from money, although
different
made
and
in this
is
in
all
dispro-
in ingots.
converting
an inducement to counter-
money.
fabricate false
You htwe just sheivn
in
what case money -merclmn'
disc rises in value with respect to other merchandise

in
what case does
it
fall with respect to such merclmn-
dise ?
When
money
the quantity of the
is
latively to all other merchandise, then
offered for less merchandise

in other
words, the
otlier
the
augmented
re-
more money
money would
is
fall
merchandise would become
nominally dearer.
You say nominally

not the
name of
actually give
The
the
but
is
it
money which
not really,
is
when
changed^ and
it is
we
a greater weight of metal?
value of the metal
is,
in this case, really less
ON MONEY.
99
but the value of the other merchandise, not having

really changed, the variation of their price
Witli the same quantity of corn,
minal.
same quantity of
the
stuff.
A bushel
of being worth six shillings,
is
thus, to
obliged to
sell
buy
but a
shillings, costs
we
are
still
com as befigre and a bushel

;
of corn, though worth double the

is still
purchase
worth twelve
three yards of stuff,
a bushel of
we
only no-
of com, instead
yard of cotton, instead of costing two

four
is
quantit}'-
of money,
only equal to the value of the same quantity of
stuff.
This
is
what happened when the discovery of the
mines of South America threw
immense quantity of gold and

what there had been
much
before.
To
silver
as
before the
an
comparison to
silver, in
obtain the
com, we must now give nearly
quantity of
as
into circulation
same
three times
discovery of
these
mines.
America has then thrown

as
much
into circulation three times
silver as there xvas before ?
She has circulated much more.

population,
and
riches,
But commerce,
having greatly augmented
since this discovery, the necessity for gold

as well for the purposes of
/
ornaments, has
gi'eatly
money
augmented
and
silver,
as for furniture
also
and
and has pre-
vented the precious metals from suffering a depreciation in proportion to their abundance.
They have
ON MONEY.
100
produced
^'been
in ten times the quantity
been three times more
What
in
demand.
happens xvhen, under the same denomination
of money a guinea, yor example,

y
less
metal than
The
but have
it
the government gives
gave before?
value of the money, which had fallen really
with respect to other merchandise, then
xplauf
When
this
4y
aft
falls
nomi-
example.
the piece, called six livres tournois, does
not contain more silver than that which was before

called three livres tournois,
livres
we do
not obtain for six
mre merchandise than we before obtained
three livres ; that

costs the
the
is,
same quantity of merchandise
same weight of
silver.
The
value of the
ingot of silver has scarcely varied from the year

to the present time
buy
the
setier of
nois:
same quantity of those goods, whose value
com
sold
and the same
livres;
commonly
for twelve livres tour-
setier sold in
silver,
1789
for
twenty -four
than in 1636 there was
t^velve livres.*
The
but twenty-four livres in 1789, did not contain
a greater weight of
,
1636
we can
with an ounce of silver
appears to have undergone the least variation.

,
for
The marc
JUL
iii
^^l^'
of silver, of the standard of the mint (of Paris), was worth
about twenty -five hvres in 1636; in 1789,
fifty livreg tournois.
In Englan45
ON MONEY.
What
effect does this
101
produce on the interests of
in-
dividuals ?
With respect
government,
worth
less,
to debts contracted previously
if it
it
pay them
becomes banki'upt by
less in the value of the
the old
it
With
new money,
similar to
is
in
change
in the
no inconvenience.
The
to the real value of the
Does a
?iatio7i,
money,
this
authorizes
it
its
made by
regard to the bargains
after the
own.
individuals
change produces
bargains are
made according
new money.
whose money
countries, lose in consequence

for the individuals
that there
all
authorizes individuals to discharge
commit a bankruptcy
to
No
really
new, than there had been
former debts in the
them
is
money.
And when
their
money which
in
by the
is
carried into other
of this operation?
who
send
it,
take care to
obtain at least an equal value in return.
Does
the nation gain by such an exportation ?
Ves
when she
where no
sJteration
had been made
in the
scarcely any variation took place in
tlie
seven years previous to 1636, was about

previous to 1790, was
5s.
money
takes care not to coin
gra-
weight or fineness of the money,

price of corn
6s. 1 3.4d;
10 3-4d. per bushel.
Tr.
the average of
and for seven years
ON MONEY.
102
tuitously,
and never
chandise, unless she
employment of her
manufacture
to
kind of mer-
this
sufficiently indemnified for the
is
capital,
and the wages of her
in-
dustry.
TVhat relation
there between the value
is
of gold and
silver ?
Their
vary continually, and in
relative values
ferent places,
the relative values of any other
like
The
merchandise whatever.
value of the gold
raised in regard to that of silver,
manded
silver
the
same
variation exist between copper
and
monies ?
;
money pure, nor
that of
called billon^ at the rate of
in
consequence of the
facility
me
in copper,
be
for five francs,
them, whenever
it
which
it
hundred sous, which
because
worth no more
me,
am
that I re-
sure to get
a piece of five francs?
But when copper money becomes

and we can no longer obtain
but
affords for ob-
signify to
I please,
silver, which
intrinsic value,
intrinsically
than four francs, what does
them
its
If a
taining a piece of silver.

are paid
not receive copper
copper mixt with
is
for
are obliged
purchase of gold coin with
Not commonly because we do
ceive
we
money.
Does
silver
for the
is
gold be more de-
if
or less offered ; hence the agio
sometimes to pay
dif-
for
it
too
abundant,
at pleasure the
ON MONEY.
quantity of silver that
ed,
and
it
Repeat
relate to
it
105
represents,
its
value
is
can be.no longer disposed of without

to
alter-
loss.
me summarily the essentialprinciples which
money.
The numerous
exchanges, and other transactions
which cannot be dispensed with
in a
populous and
ci-
viHzed society, render absolutely necessary the use of
an intermediate Aiej^handise, which
This merchandise
is
commonly
is
money.
of silver, manufac-
tured for that pupose.
The
value of this merchandise
is
establised, like all
other metals, in direct proportion to the

or to the necessity
we have
for
it;
and
demand for
it,
in inverse pro-
portion to the quantity offered, or to the quantity which

is
actually in circulation.
The
totally
metal coined into
i value
ît
is
is
a merchandise,
from the metal fashioned
different
odier thing.
money
An
ounce of metal
two ounces of metal
in
in
into
money may
an ingot
any
equal
because
not in the power of every body to convert the
/ingot into
money
but an ounce of metal in an ingot
ânnot be worth much more than an ounce of metal

în money, because any body can convert
^nto an
money
ingot.
Whatever be
ney, whether
is
tlie
the
it is
name given
to
any piece of mo-
called tliree livres or six livres,
not really worth, as
it
it
regards other merchandise,
ON MONEY.
104
more than
the value of the metal and the fashion
this fashion
may be
paid for too dearly, as
clusive,
and as government keeps
coining
money.*
It
was not
possible, in an elementary
it is
but
ex-
to itself the right of
work Uke
this,
to include any
but the most important principles, and which were essential to the interest of the public.
Political
Economy.
The
subject
is
treated at^Jle|^ in the Treatise on
105
CHAPTER XIXo
On
Signs representing Money,
WHY do you not
call
money a
sign representative
of
merchandises ?
Because
it is
no more a sign representative of mer-
.chandise, than any one merchandise
other.
cloth merchant
cloth in his
,
warehouse
bread and meat
is
the sign of an-
might as well
the sign
say, that the
which represents
because, after an exchange or two,
he might get bread and meat
for his cloth.
What
do you call signs representative of money ?
Titles,
documents, or vouchers, which have no
value,
trinsic
to a certain quantity of
as bills of exchange, bonds,
What do
1.
till
the
end of a
nishes their value

(
14
by
money
such
bank notes, &c.
you observe^ respecting
That they do not give
money
in-
but which acquire one by the right
which they give
of
is
bills
ofexchange ?
the right to receive a
certain term,
all tlie
amount of
sum
which dimithe interest
ON SIGNS REPRESENTING MONEY.
106
and of
paid
which the bearer runs, of not
risk
tlie
when
they
On
become due.
cannot be generally sold for the
them
full
amount
this foreign
:
it is
exchange.
money must be valued
this valuation
which
The exchange
of fine gold or
bill
on
discount
are sometimes payable abroad,
consequently in foreign money. In order
ney
that they
is lost.
That they
2.
they
this account,
Commonly the
give the right to receive.
being-
these metals,
is
them,
in the national
mo-
called the course
par^
when
of
the quantity
paid for the purchase of a foreign
silver,
of exchange,
is at
is
tl|;4ifell
and
precisely equal to the quantity of
which the
bill
of exchange gives the
right of receiving abroad.
What
do you observe respecting bank notes ?
That they
circulate
among the
value which they represent,
means of the
public for the entire
when we
are certain,
note, to receive that value
by
whenever we
think proper.
What assurance has the public that the notes ofa bank
will be punctually paid?
A well-administered bank never issues a note without receiving for

is
it
a value in exchange.
commonly money,
That
This value
or ingots, or bills of exchange.
part of the deposit,
which
is in
money,
is at all
times ready to discharge them. That part which

ingots, requires only the time necessary to sell
That part which
is
is
in
them.
in bills of exchange, only requires
'

one to wait,
at the worst,
that, if the bills
of exchange bear the names of
solvent persons, and
other risk than a
if these
^n
of exchange be paid when
ifistead
Bank
n$tes can then supply the place
for they are
*^ôney
open
to
exchange them
no longer worth the
instant they cease to
full
for
mo-
sum
be exchangeable
of
for
at pleasure.
What
It is
of money ?
but only in places where
to a certain point ;
office is constantly
by
due.,
of money
those notes are in fact discharged.
money, the
payment are not
Then
vf^Y
j/ijl
the times of
if
many
trifling delay.
bills
of the bank
^ Yes,
So
a distance, the bearers of the notes run no
at too great
notes
become due, before
can be used to discharge the notes.
their value
But
they
till
107
is
pt^p^r money ?
which gives no
title
right to
any
real reim-
bursement, but to which public authority attributes a

certain value
in the
title
which
is
received at that value
payments which are made
and which
ment
it
to the
government,
authorizes individuals to give
pay-
discharge of engagements which they
for the
have contracted with each other.
What
is it
that keeps
up the value ofpaper money ?
Sometimes rigorous measures taken against those
who
refuse to
sell for
paper
money
uses to which the government admits

'
sometimes the
it,
such as the
payment of taxes, and of debts previously contracted.
108
sometimes, and almost always,

other money-merchandise
the absence of
it is
all
so that the public, which
has nothing else to substitute for the ordinary use of
money,
is
obliged to apply to
necessity there
it is all
from the absolute
it
these things united
which give any
paper money. These means would ever give

considerable value,
multiplying
bring
it
it
if
the facility
it
a very
did not always, sooner or
at will,
then^
Aâlue to
which there
into disrepute.
One cannot
Often
for this kind of merchandise.
is
is
of
later,
by multiplying paper money y mul-
tiply at will the riches
of a country
No.
Explain
to
me
xvhy.
Because the paper money can only replace a part of

the riches of a country, that part tvttcl* consists of
coin
and the money
itself,
were
it
even gold or
silver,
forms but a small part of the riches of any country
when compared with
the value of
all
the things in
it
land, houses, furniture, buildings of every kind, mer-
chandise, and even industrious talents.

,j
You
say^
^ne, that
in
were
it
even gold or
augjnenting the mass
silver y the real riches
The
silver.
It appears to
of jnoney of gold or
of a country are
increased.
quantity of sales and purchases in a country,
require a certain monetary value devoted to that circulation.
When
the quantity of
money
is
increased,
without being necessary for the circulation of a coun-

the real ^âlue of the
try,
may be
as
it
nominal value
its
money
and losing
increases in quantity,
greater.
much
in value as
money were
If the quantity of silver
whatever
the total riches are
doubled,
we
silver for
what we before bought
to
no
be
should be obliged to pay two ounces of
one
for
two millions of nominal money
ly,
declines,
109
consequent-
would not
in silver
be of more value than one million was formerly.

It is the
same with paper money.
money had been
this
If the quantity of
increased tenfold,
we
could not
^X)btain with tep notes of an hundred pounds
^'than had been before obtained with one note.

ever
name
the whole
is
given to this sum,
more than a
money iarmsid^,
is
may be
What-
can never have in
certain value
truly effective, whatever
the
it
more
and
this value,
the material of which
always determined by the wants
of the circulation, and the state of civilization, of

riches,
and of industry,
in a country.
110
CHAPTER
XX.
On Markets,
WHAT do
you mean by markets?
Before answering this question, I beg you to re#
mark, that those who engage
in production, are
occupied with more than one product, or

small
number of
A tanner
products.
duces nothing but leather

in wine
one cultivator
raises the vine
most a
at
generally pro-
a clothier, cloth ; one
merchant deals
seldom
another imports foreign goods

;
another
com
a third,
cattle.
What
consequences do you draw
That none of them can enjoy
from
that ?
the greatest part of
the various articles for which he has occasion, except
by means of exchanging
the greater part of his
own
productions for those which he desires to consume

so that
tlie
greater part of the consumptions of society
take place only in consequence of an exchange.
But when we
are able easily to
exchange our own
ON MARKETS.
we
productions for those which
have found ready markets
On what
Ill
want,
we
are said to
our products.
for
of any particular article
does the ready sale
depend?
On
the vivacity of the
On what
does the vivacity
On two motives,
product, that
it
demand for it.

of the demand depend?
which are
The
1st.
consumer has
the necessity the
is,
2d. The quantity of other
utihty of the
products he
for
able to
is
give in exchange.
I conceive
pears
to
me
the first motive.

that
* buyer possesses ,
That
is
As
to the second, if
which induces him
also true
of money
the quantity
it is
to
buy or
but the quantit}^ of
ap-
that the
not.
money which
he has, depends on the quaoiity of product with which
he has been able able
to
buy
this
money.
Could he ?jot obtain the money otherwise, than by having acquired
it
by products ?
No.
If he had received the moneyfrom

His tenants had received
the products to
frii
the sale of part of
the interest
of a
capital len t
undertaker w^ho employed that
j/ceived the
which the earth had contributed.
If he had received
The
it
his tenants
money which he
paid,
caj)ital
on
tlie
had
?
re-
sale of a
part of the products to which his capital had con-
cuiTed.
ON MARKETS.
112
If the purchaser had obtained this money by gift

inheritance
The
it,
had
giver, or
it
in
or
he from
exchange
whom the
for
had obtained
giver
some product.
In every case, the money, with which any product

is
purchased, must have been produced by the sale of
another product
asanexchange
in
and the purchase
may be
considered
which the purchaser gives that which
hejiasu produced, (or that which another has pro-
duced
for him,)
and
in
which he
receives the thing
bought.
IV hat
That
do you conclude from this ?
the
more the purchasers produce, the more
they have to purchase witji
and
that the productions
of the one procure purchgjsa-s to the other.

It appears to me^ that if the buyers only purchased
by means of their productSj they have generally more

products them money
to offh- iripaijrr}ent.
Every producer asks
for
money
in
exchange
for his
products, only for the purpose of employing that
neyjLgain Jig^diaifiJ^
ducts
for
we do
ii^
^^
\i\o-
purchase of other pro-
not consume
money
sought after in ordinary casesjo conceal
it
and iHsnot'
:
thus,
when
a producer desires to exchange his product for money,
he
may
be considered as already asking for the mer-
chandise which he proposes to buy with this money.

It is
thus that the producers, though they have
them
the air of
demanding money
all
for their goods,
of
do
H3
ON MARKETS.
in reality
demand merchandise
merchan-
for their
dise.
Then
more merchandise there
the
produced, the
is
more animated is the demandJbr merchandise ?
Without doubt.
which are but
and those
It is for this
Httle civihzed,
for products
but
reason, that countries,
present few markets,
Httle varied;
and productive
lous, industrious,
while in popu-
districts, the sales
are repeated and considerable.

It
is
not necessary then^ in order that markets should
be extended and midtiplied, to look for them in foreign

countries I
No
it is
sufficient tliat other
multiplied in our
What
The
is it
own
products should be
country.
that multiplies foreign markets ?
riches of neighbouring nations,
and the
activi-
ty of their production.
fVhat consequence do you draw from
That each of them

his neighbour,
all
"^
others
for
is
interested in the prosperity of
and every nation

it is
only those
or,
which comes
give you the value of
What
That
that
them
in
to the
in
in the prosperity
of
who produce much that
can readily give you any thing

products
this ?
exchange
same
for
your
thing, that can
money.
other consequencefollows from this ?
riches are not exclusive
that, so
which another man, or another people
a loss to you,
(15)
tlieir
from
far
gains, being
gains are faA'ourable to you
that
114
it is
ON MARKETS.
only necessary for you to produce, not that which
they produce easier than you, but that which they

cannot
fail
products
will
to
demand from you by means of
and
appear so
tliat
wars entered
much
better informed.
the
more
into for
senseless as
their
commerce,
we become
115
CHAPTER
On
XXI.
Regulations or Restraijits of Industry,
PFHAT regulations
are commonly
made
relating to
industry ?
The
laws and regulations
this subject,
made by governments on
for their object either to determine
have
on what products we may or

selves
may
not employ our-
or to prescribe die manner in which the ope-
rations of industry shall be carried on.
What examples
of the manner
are there
in xvhieh
government determines the nature of the products
which
in
we may engage ?
In agriculture,
ture, as
tobacco
couragement
to
when
or
such as
silks
such as cottons.
prohibits a particular cul-
it
when
it
gives extraordinary en-
our crops, such as com.
when
In manufactures,
tures,
it
favours certain manufac-
and prohibits or
restrains odiers,
116
RESTRAINTS
O.V
In commerce,
when
favours
it
nications witli certain countries,
others
JVhat
is
and
treaties,
commu-
interdicts
it
with
gives privileges to trade in certain
it
and prohibits
articles,
To
when
or
by
the effect
it
in others.
of such regulations?
direct the efforts of industry towards
tions less suitable to the
produc-
wants of the nation, and
less
lucrative to their producers.
On what
evidence do you suppose that the favoured
productions are less suitable to the wants of the nation,
and
less lucrative ?
By
alone, that these productions are not suffi-
tliis
ciently paid for to
be able
to
support themselves with-
out such encouragement.
In what
hi
way do governments
which products ought
to be
interfere in the
manner
created?
In manufactures, public authority sometimes prescribes the

in
number of those who
are to be
employed
them, and the conditions they must comply with, as
when
it
panies
establishes corporations, freedoms,
or
when
it
fixes the material
and com-
which must be
employed, the number of threads which the warp and

weft of a stuff must contain, and subjects them to particular
marks. In commerce,
the route
port at
sometimes prescribes
by which the merchandise must
which
What
it
is
it
pass, the
must be landed, &c.
the object
of corporations and freedoms?
OF INDUSTRY.
117
It is to prevent incapable or inexpert
deceiving
ticle
consumers by delivering
tlie
of inferior quality to that which
Inwhat cases are

to prevent
it
workmen from
to
them an
ar-
represents.
the precautions taken by government
such abuses, really useful ?
When the
verification
difficult to the
caries' drugs.
purchasers
The
impossible, or at least very
is
as in the case of apothe-
care which a government takes to
ascertain the capacity
and honesty of apothecaries, and
even of physicians,
then incontestibly useful.
same may be
stamp on
What
doms
is
said of that control
all articles
is
of gold or
the inconvenience
by which
it
The
puts a
silver.
of corporations andfree-
The
establishment, in favour of producers united in
corporations, of a monopoly, that
what they produce
trade in
workmen on
is,
the exclusive
monopoly of which the
the one hand, and the consumers on the
other, are the victims.
JFhy
the
workmen ?
Because the corporation,
in limiting the
number of
undertakers, and in subjecting them to certain formalities,
limits the free competition of those
who might
employ the ^vorkmen.
But if the workmen

demand certain wages
It is
then the
on their parts agree together to

?
workmen
wlio form an unautliorized
ON RESTRAINTS
118
corporation, just as prejudicial as those
which are au-
thorised.
How do corporations establish
a monopoly against the
consumers ?
The
of
all
production not being open to the competition
producers without distinction, the products are
not permitted to
fall
have been afforded by the charges
which
which they might
to the rate at
are comprised, as
production
of
in
we know,
the profits of the
from
the profits being
different producers.
What
incorwenience arises
raised beyond wfiat they would have been, if left to free
competition? These profits forming part
of the
nation., is
of the income
not the income augmented by this mo-
nopoly ?
That which the producers gain beyond

free competition,
sumer,
at the
ducer.
It is
is
an excess of price
same time
that
is
it
lost
the rate of
by
the con-
gained by the pro-
not a value created, but displaced.
It is
a portion of riches which goes out of one purse into

another
and which diminishes the general riches on
the one hand, as
much
as
it
increases
them on the
other.
But
this loss is trivial to the
consumer, while
it is
of
imp07'tance to the producer.

It is little
repeated on
on each individual purchase.

all
the articles
we
purchase,
But when
it
becomes
OF INDUSTRY.
119
considerable at the end of the year.
And
the ex-
penses of individuals being thus greater in proportion

to their incomes,
were
less
it is
the
same
as
if their
with respect to their consumption.
are poorer.
incomes
They
120
CHAPTER
On
Importations, Duties,
XXII.
and
Prohibitions,
WHAT does the word importation
signify ?
The purchasing abroad and introducing
into a coun-
try foreign merchandise.
What
do you mean by prohibitions ^
Forbidding certain merchandise to be introduced
Sometimes without prohibiting them
into a country.
entirely,
they are
made
to
pay duties on importation,
which diminish the quantity imported.
What
results from
An absolute
an absohite prohibition ?
prohibition forces the capital
and
in-
dustry which would have been devoted to this kind of
commercial production, to apply
itself to
some
pro-
duction less advantageous.
Why
less
advantageous ?
Because we should not engage
in
it
but for the im-
possibility of directing our industry in the other
mode.
ON IMPORTATIONS, DUTIES, &C.
The
would be superfluous,
prohibition
if
121
the prohibit-
ed production* were not the most advantageous.
WJmt
happens^ xvhen^ instead of an absolute prohibi-
a duty
tion^
The
onlijlaidon the product imported?
is
then only
evil is
partial,
and consists
The consumer
ness equal to the amoimt of the duty.
pays for
What
any
does
it
signify if the consumer pay dearei' for
producer does not
more, goes
to every
body
in
;
worth.
it is
thing, since the producer gains
The
for
product more than
tlie
in a dear-
profit
by
by
it
for
what
sells
it
charges of production which are lost
consumed
or in contributions
for the
service of the state.
TFhij do you say that the charges
every body ? It appears
lost to
to
of production are
me, that such of these
charges as are composed ofthe profits paid to producers,

are not charges
lost,
since the producers profit
by
them.
The
producers are people
their land, their capital
It
must not be forgotten,
and
that,
who
sell
the service of
their industrious talents,
by the word production, we under-
stand the action of commercial as well as of
all
other industry. Rice
France or England, a product of commercial industry as

is
a product of
16
its
agricultural industry.
much
as
is,
to
wheat
ON IMPORTATIONS, DUTIES,
122
whose gains
are not the gi-eater
aiFord a product less
When
when all these
services
abundant but dearer.
any regulations render
it
necessary, in order
a pound of sugar, to employ more of the ser-
to create
vices of the land, capital, and industry, the sugar
is
dearer without the producers being greater gainers.

If they receive
more values
fiu'nished
Do
more values
payment, they have also
in services.
not the prohibitions
the creation
in
of a product
and the
duties,
in the interior
create the profits xvhich are
made
in
by compelling
of a country,
such a produc-
tion ?
They
only cause the profits which would have been
made on
a commercial production, to be replaced
other profits, probably less lucrative,
by
made on a manu-
factured production.
Is not
ed
in
that
tJiat
a good? Are not our capitals better employ-
putting into activity our
nation,
make
^^'e
pay dearer
port a greater
if
national industry than
offoreigners ?
Yes but when
as
own
the consumers, that
is,
the
for certain products, simply to sup-
number
of national producers,
it is
just
a part of the nation were compelled to devote a
portion of
its
income
to maintain
workshops of charity.
truly desirable but that, which
Perhaps no population
is
industry, left to
can naturally support.
itself,
You have just considered the import
duties in their in-
AND PROHIBITIONS.
123
jiuence on the incotne, on the riches of a
7iatioJi :
and
you have proved, that without augmenting the income of

a nation, they cause
it
pay
to
consumes ; xvhich is equivalent

income.
But if the
state be in
dearer for the objects

to
it
a real diminution of its
want of
these duties for
the public expenses, are they more mischievous than any
other kind
No
of impost ?
they are an impost on commercial production
which procures us products from without

tax
is
as the land
an impost on the products which come to us
from the earth; as the personal contributions and
The
licences are imposts on the interior manufactures.

eJHect
of all these imposts
is
to increase the price of all
products without augmenting the income of those
consume them.
They
are
the public expenses, from

vantage.-
augment
But
tliey
all
who
useful in providing for
which the nation derives ad-
never encourage production, nor
the income of a countiy.
Hoivever favourable the suppression of the taxes

be,
would
The
laws,
which bear on industry and consumers might

it
not be attended with some danger ?
Yes, when the suppression
is
sudden.
and, in general, the whole legislation of a country, have
long since induced
tlie
particular
tain capitals in the productions in

ally
employment of
which they are actu-
engaged, and from which they cannot be
drawn without lofuig a great
cer-
part,
^îth-
and sometimes
ON IMPORTATIONS, DUTIES,
124
For example,
nearly the whole, of their value.

the faith of
from laws which had
securit}'^
if
on
for a long
time prohibited cotton goods, the manufacturers had

laid out large
sums
ture of cotton
goods only
in
cottons might
all at
rate
though
this law,
of a countrj^, smce
machinery
and
if
for the
fit
manufac-
by a new law, foreign
once be introduced
at a
cheaper
income
in fact favourable to the
it is
enabled to procure the same
products at less expense, would be unfavourable to

capitals
because
pitals actually
it
would reduce the value of the
engaged
ca-
the production of cotton
in
STOods.
Besides, a part of the capital engaged in any kind of
production
employed
composed of the
is
in this
production
talents of the persons
for the
apprenticeships require are a capital

is lost
from the moment
comes
useless.
new
new
that
is,
this
kind of capital
capital
the working class,
bear
is
and
this capital
that the apprenticeship be-
apprenticeship
must be
in
is
painful
general, are
necessary
The
laid out.
more
the
who,
advances which
as
it
loss of
falls
little
on
able to
it.
And
even
legislation
in
those cases in which a change in the
does not cause a
always produces some
rangement and
total
evil,
its situation,_is
kind of industry.
It loses part
loss of capital,
A building,
by
its
it
ar-
convenient for a certain

of its advantages,
if its
ON PRODUCTIONS.
destination
The
must be changed.
125
simple change
of"
the habitudes, the dependencies, and the connexions
of producers, exposes them to serious losses.
with great circumspection, that even the

ameliorations ought to be introduced
are in danger of overturning
stroying the happiness of
many
many
It is
only
most desirable
otherwise
fortunes,
families.
we
and de-
126
CHAPTER XXIIL
On
Exportation.
WHAT does the -word exportation signify ?

selling
It signifies tlie
and sending the indigenous
productions of a counti^y to foreign countries.

Is
it
beneficial to a country to sell
abroad
indigen-
its
ous products ?
No doubt it
is
for that multiplies
lucrative relations,
also
which
own
its
and
we may
country, or which
would
much more.
Does
than
and
are always beneficial
procures in return merchandise which
it
seek for in vain in our

cost
its affairs,
not a nation gain more by selling to strangers
to its
No
an mtemal market, when
profits as
nation,
own people ?
an external one,
and
is
is
it
produces the same
quite as valuable to the
a better sign of increasing prosperity
than exportation
itself.
In
fact, if
your fellow coimtr}-
ON EXPORTATION.
men buy your
goods,
it is
127
a proof that they produce
something with which they can pay
When
a stranger travels
for
them.
into another country, atid
spends his money there, does not that country gain all
the
money he
The
leaves behind ?
country gains, in that case, the value of the
money which
/'
it
has received from the U'aveller less
than 'the value of the things which have been delivered

to
him
what
in
exchange for his money
given to
is
him is
for the value of
as real as the value of the
mo-
ney received. The expenditure of a stranger produces

an
effect similar to
which
is
The
an exportation of merchandise
paid for in money.
profits
made on
this
production are gained, and
these profits are generally advantageous

traveller
him
because a
cannot dispute the prices of what
as rigorously as the foreign merchant
sold to
is
who
pur-
chases the merchandise of a country.

Is
it
benejicial to
expend money
in order to
attract
foreigners ?
What is spent with this view diminishes by so much

the profit of the sales which are
ly as the
'
to
them exact-
premiums and rewards which
encourage exportation, are so

profits
made
which
result
from
it,
much
are given to
taken from the
and sometimes even ex-
ceed them.
TVhy do most
nations
and most governments [which
act in this case agreeably to the desires
of those
nations)
ON EXPORTATION.
128
endeavour by every means
to
increase the quantity
merchandise which they export

limit the quantity
and
to strangers^
those which they purchase
of
of
to
from
them ?
It is
because they are unacquainted with the true
source of riches.
What
according to them^ the source
is^
The mines
in
of gold and silver
of riches ?
and, as these are not
our country, they think that they cannot become
rich without selling to foreigners merchandise of their
own
production, and compelling them to pay for them
in the precious metals.
On what
On
do theyfoimd this opinion ?
a merchant not gaining any thing on his mer-
chandise until
it
is
time he exchanges
Why does a
from
sent out of his warehouse, at

it
for gold or silver
nation^ in
regard
which
money.
to other nations^ differ-
a merchant in regard to his customers?
A merchant like a nation,
sells his
products only to
repurchase others, which are either necessary for his
consumption, or
fit
for the
continuation of his com-
merce. But a merchant does not find

precisely the
man who
in his
customer,
can furnish him with the goods
or materials which he wants, and at the most advan-
tageous price.
that
It is
only with the
money of the buyer
he can himself buy what he wants, and
in
the
quantities that are convenient to him.

It is
not the
same between one nation and
another.
ON EXPORTATION.
The
merchants,
by
cation,
tions, are
who
are the agents of this
enabled to bring back in return for what they

if not
useful to the deal-
whose products they have exported,
some
so to
The
other.
will at least
paying for
last, in
vide the means of paying the
The
communi-
the variety and the faciHty of their opera-
send out, merchandise, which,

er,
129
be
will pro-
it,
first.
interest of merchants, in all these operations, is
to obtain in return
mand, because
Would it
it
not be
such merchandise as
is
most
in de-
will sell the best.

still
better that a neighbouring nation
should pay us in money rather than in goods ?
You do
not desire this money, but in order to use
it
purchase of goods of which you are in want.
in the
That
liberty to
is
true
employ
but
when I have
it in
the purchase
the
money
I am
at
ofwhatever I think
proper.
A foreign
gives
nation which pays
you only such merchandise
receive
for
you
you
as
in
merchandise,
you
are willing to
are at liberty to purchase in return
whatever you please.
But when she pays us in merchandise, this merchandise

is
consumed, and we lose the value of it ; a
loss
which we
should not have suffered, if she had paid us in money.
The loss you

tation,
suffer
does not arise from the impor-
but from the consumption, of the merchandise.
If at the close of an external
there be a value
(1")
commercial operation,
consumed under
the
form of cham-
ON EXPORTATION.
130
paign, the loss
not gi'eater than when, at the close
is
of an internal commercial operation, the same value
has been consumed in
The
cider
would at
cider.
least
have been a product of the
national industry.
The
foreign goods are equally products of the na-
since they are products of
tional industry,
its
com-
merce.
Horw doesforeign commerce procure new
of equal value
to that
which they give us ?
An example will make you understand this.

chant sends stuffs to Brazil.
try, in
exchange
gave for them
by
He
A mer-
obtains in that coun-
for his stuifs, a greater value than
in
the carriage.
he
Europe, because they have gained
This value which he has gained, he
there exchanges for cotton, which he brings
Europe, the value of which

carriage.
new
must always give foreigners a merchan-
riches, since xve
dise
values,
is
also
back
to
augmented by the
When these operations are finished, although
the merchant has exchanged, in each place, his mer-
chandise at the current price ; that

still,
is,
value for value
as the value of die different products has increa-
sed while they were in his hands, he has, without rob-
bing the stranger of any value, brought back to his
own
country a value superior to that which he had ex-
ported
country.
which
is
equivalent to a value created in the
ON EXPORTATION.
Every augmentation ofriches^ even
merce^
then the.fruit
is
of an
131
in
external com-
internal production F
Yes, with the exception of plunder, in exchange for
which nothing
is
given.
criminal, because
it is
But besides spohation being
contrary to justice,
it is
odious,
and consequently dangerous, and the advantages which

it
procures are uncertain, temporary, and scarcely ever
profitable.
fr/iT/
do you say, scarcely ever profitable ?
Because when we seize upon goods created by

others,
we rob them
continuing to create
them
for once, as
little
profit
when wanted,
tage, but
may be
or
cut
down
a tree to get at
thus obtained are, besides, of
because they are seldom obtained
when
they could be used to advan-
must be taken when they can be
carried off
only enjoy
when we
same time of the means of
new ones and we can
The goods
its fruit.
every
at the
but the carnage
got.
They
itself constitutes
a great part, and sometimes the whole of their value.
They
are
consumed
of them, on the spot
and generally the greater part

;
tliey are
wasted rather than
used, and their consumption often creates
than good.
more
evil
132
CHAPTER
XXIV.
Oti Population.
ff^HAT
are the causes which increase or diminish
fhe population
of a country
In general a country
as
it
so
much the more populous
produces more values or riches for the mainte-
nance of
it
is
inhabitants
its
produces
and so much the
less so, as
less riches.
Why do not you
say more of the commodities proper
for the food of men ?
Because there are commodities, which, without being alimentary, are necessary to
life,
as clothes
and
lodging; and because with those which are not alimentary,
we can
procure,
by means of commerce and ex-
change, those which are.

to
It is sufficient for
produce values to enable
it
to exist.
The
a country
nature of
ON POPULATION.
accommodate
the values will immediately
wants
for the
commodities of which
good price they
which
itself to its
stands in the
it
will
pay best and
will then obtain will
cause them to
greatest need, are those for
the
133
it
become abundant.
But when war

of the
ticles
for
or bad laws prevent the anival of ar-
which serve
Jirst necessity, such as those
subsistence, will not the population suffer greatly ?
the
It will suffer
same
as
when
crops
fail
in
bad
years.
Without supposing any scourge on the part of men

or
nature, if the
of
number of births exceed wlmt the
products of a nation can nourish, what will be the consequence ?

It will necessarily follow, that part
of those bom, will
perish of want, either in childhood or at a riper age.
This
evil exists at all times,
human
species,
like
more means of
Want
all
die for the
for
want of medicine
for
want of rest
for
for
kill
it
has of maintenance.
but
it
gradually wastes.
want of food, but

sufficiently
for
want of
wholesome
in illness; for want of cleanliness
want of dry and warm lodging
want of those
attentions
without in infirmity and old age.

that
the
other organised beings, has
food sufficiently abundant or
and
increase than
does not instantly
Few people
more or less because
which we cannot do
From
tlie
moment
any one of these objects becomes necessary
to
ON POPULATION.
134
them, and they cannot obtain
they languish for a
it,
greater or less period, and sink at the
Who first feel the

The
want of the
the reach,
first
it.
It
of the most indigent
who
suffer
from
JOo not wars^ epidemics^
its
means of
and
of life ?
ex-
thus gets out of
and dearness increase, the greater
of those
shock.
necessaries
scarcity of one or other of these
istence, first raises the price of
city
first
is
as
tlie
the
scar-
number
privation.
ajid, in general,
those plagues
which cut off great numbers of men, enable those who

are left
to
enjoy a greater quantity of those commodities
ofxvhich they are in want ?
The
scourges, in destroying men, destroy at the
same time the means of production.
And we do
not
see that, in countries thinly populated, the wants of

the inhabitants are
more
easily satisfied.
It is
the
abundance of productions, and not the scarcity of consumers, which procures a plentiful supply of whatever
our necessities require

tries are in
What
and the most populous coun-
general the best supplied.
is it
that induces
men
to
assemble together in
villages, tow?Js, or cities ?
The
nature of their occupations.
vate the earth, spread themselves

in order to
all
Those who
culti-
over the country,
be near their employment, and
to
have a
small distance to carry their crops at harvest time.
Those who carry on manufactories, place themselves
ON POPULATION.
in towns,
sils,
where they
and the
find at
artisans of
in
selves either in the sea-ports,

arrives
more
tributed
easily, or
the materials, uten-
which they are frequently
Those who engage
want.
hand
135
commerce
in
place them-
where the merchandise
on the roads by which
through various provinces
or
it is
dis-
countries.
Those who produce by means of their lands, but without employing them themselves, being able to expend
their
incomes
in
any place whatever,
please, but generally in cities,
where they
live
where they find greater
resources and amusements of every kind.
same with those whose

rial
products
tlierefore
profits are
which, not being transportable, are
consumed
we meet with
chiefly in places
so
many
where a number
It is for this
reason,
physicians, advocates, and
public functionaries in great
Are
the
founded on immate-
of persons are collected together.

that
It is
cities.
not great cities a burden to a nation, since they
must be provisioned by the country ?
By no means
for the inhabitants of cities
comes equally real widi
They do
have
in-
the inhabitants of the country.
not live at the expense of
tlie latter
as they
do not receive from them any value without giving
them another value
in
exchange.
And
the country
cannot have markets more certain or more extensive

than the
cities, to
which they present
in
their tiu'n.
ON POPULATION.
136
when
well cultivated and they are able to purchase
much, important markets

tm-e and
commerce.
for the products of
Thus
tain indication of the riches
country, than
there
is
manufac-
not a more cer-
and great revenues of a
numerous and extensive
cities.
137
CHAPTER XXV.
On
fVHAT do you mean
Colonies.
by Colonies ?
Establishments which the inhabitants of one country
form
in another land, in order to live there
more
at ease.
Are
there different kinds
They may
either
the metropolis.
be dependent or independent of
The
metropolis
which the colony went
TVhat
of colonies
is
tlie
nation from
forth.
do you mean by colonies dependent on the me-
tropolisy or
mother country ?
I imderstand those
which are subject
govenuTient, and governed
to the
by laws which
it
same
imposes
on them.
TFImt
of the
effect
colonies
That
Ims this dependence on the relative riches
and the metropolis
the metropolis can compel the colony to pur-
chase from her every thing

(
18)
it
may have
occasion for i
ON COLONIES.
138
monopoly, or
that this
this exchisive privilege, enables
make
the producers of the metropolis to
pay more
for the
merchandise than
The metropolis^
then.,
it is
the colonists
worth.
gains morefrom the colony than
if she xvere independent ?
Yes
but
all
the metropolis
that the tradesmen
sell
too dear,
colonial consumers. It
is
and merchants of
paid for too dear
by the
a value which has gone from
is
the purse of one individual to that of another, both
zens or subjects of the same country.
These values
appear a great deal in the hands of those
them, because they are but few
who pay tjiem, because they are

individuals: but the loss
which
Are
so
is
much
is
gain
to those
divided amongst
many
not the less to the colony,
the poorer
not the colonies
who
and small
citi-
by
it.
i?ide??inijied in
some other manner
for the usurious gains which are madefrom them ?
They make
in their turn
an usurious gain on the
consumptions of the metropolis, which
is
not permit-
ted to purchase from any other than them, the colonial
On the
product of which
it
on the
a combination, or conspiracy of the
other,
it is
is in
want.
one side and
producers against the consumers.
Are
tJiere
any other inconveniences attending
de-
pendent colonies ?
Their administration
pensive, because
distance
it is
is
generally corrupt and ex-
superintended from too great a
and the metropolis
is
obliged to keep up
ON COLONIES.
and naval
forces, either to en-
to hold, or to defend them.
And these expenses
garrisons,
able
it
139
and
military
increase the burdens, either of the people of the colo-
ny, or of tliose of the metropolis, without taking into
account the wars which are always brought on by
such an order of things.
Do
these evils take place -when the colonies are inde-
pendent ?
Never. They establish a government for themselves
which
costs
them very
the metropolis
polis
little.
They
and the one and the
are
no expense to
other, the metro-
and the colony, enjoy the advantages which two
civilized nations derive
from
nications.
FliXIS.
their reciprocal
commu-
INDEX,
ACTORS,
50, 51.
Agents of production, 23, 34, 35.

,
Agriculture
Natui-al, 13, 34, 35, 88,
See Industry,
Anticipation, 84.
Artisan, 18.
Avai-ice, 63.
Bank
Notes, 105, 106, 107.
Mllon, 102.
Bond (Loan)
83.
BuUdings, Public, 68, 69, 70.

Capital, 24, 25, 26, 27, 30, 31, 32, 33, 34, 35, 42, 43, 44, 45, 50, 52, 57,
58, 59, 60, 61, 63, 72, 73, 81, 84,
,
circulating
87124.
and <^sposable, 33, 45, 46,
Idle, 31.
Appropriated, 32, 33, 52, 124.
Formation and Augmentation
Diminution of 45, 57, 72, 73.
of,
80.
25, 27, 30, 57, 61, 63.
Capitalists, 35, 39, 40, 135.
Charges of Production,
,
13, 34, 38, 41, 58, 78, 92, 121.
Public See Taxes.
Cities, Great, 134, 135.
Colonies, 137.
Independent, 138, 139.
Combinations, 116, 117, 137, 138.
Commerce
.
See
,
-,
Industry'.
Retail, 19, 40.
Internal, 126, 130.
External, 126, 129.
Competition, 67, 77, 117, 118.
Consume, to,
28.
Consumer, 13, 35, 39, 76, 77, 78, 117, 121, 134
INDEX.
141
Consumption, 27, 28, 29, 30, 50, 54, 55, 56, 57, 58, 59, 62, 63, 64, 65, 68,
69, 74, 81, 131
,
Productive, 28, 29, 45, 55, 36, 57, 58.
Unproductive, 28, 30, 50, 55, 56, 59, 67, 68, 81, 131.
Private, 56, 62, 63,
Public, 56, 66, 67, 68, 69, 70, 71, 74, 80, 81.
Annual, of a Nation, 56, 60.
64-,
65, 131.
Contributions, 67, 68, 82, 121.
Contributors, 71, 72, 73, 74, 82.
Corporations, 116, 117.

Cultivators, 17, 134.
Dearness, 41, 75, 76, 90, 91, 94, 138.
Demand,
13, 34, 35, 36, 54, 75, 88, 97, 111, 113,
Discount, 84, 106.

Distribution, 38, 39, 40, 61.
Duties, Import, 75, 120, 121, 122.
Economy,
63, 64, 70.
Exchange,
10, 110.
Mediiun
Bills of, 105, 106.
Coui'se of, 106.
Par
Expenses, 62
of, 10.
of, 106.
See Charges and Consumption.
Expenditure, Public, 66, 67, 68, 69, 70.

Exportation, 57, 113, 126.
Fail of Price,
Farmer,
93.
36.
Fees, 50.
Fisliing, 16.
Functionary, Public, 50, 66.
Fund, Sinking,
Gold
86.
See Metals.
See Fees.
Gratuities
Habits and Customs,
22, 43.
Immaterial Products, 49,
50, 51, 52, 53.
Importation, 57, 75, 120.
Impost
See Tax.
Income, 38, 40, 49, 72, 73, 76, 78, 82, 86, 91, 93, 134.
,
Augmentation
of,
41, 123.
INDEX.
142
Income, Diminution
,
of,
81, 82, 83.
Annual, of a Nation, 40, 72, 79, 81.
Industrious, 23, 35.
Industry, 14, 16, 17, 18, 19, 20, 21, 22, 23, 28, 34, 36, 51, 74, 78, 115, 122.
Agricultural, 16, 115.
Commercial, 18, 19, 29, 74, 116, 122, 123, 128, 129, 130.
Manufacturing, 17, 22, 29, 39, 74, 115, 122, 123.
Restraints on, 79, 97, 115, 116, 117, 118.
Operations
common to all,
21.
Interest, 36, 43, 44, 45, 46, 47.

,
Legal, 47.
on Public Loans, 80, 83.
Inventory, 26, 59.
Judges, 50, 66.
Land,
9, 24, 25, 31, 32, 34, 35, 38, 47, S3, 74, 77, BY.
Laws, Moral, 21, 22.

,
Physical, 21.
Learned Men,
23.
Loans, Public, 80, 81, 82, 83, 84, 85.
Machines, 42, 43,
94.
Manufacturer, 18, 20, 21, 23, 134.
See Industry.
Manufactures.
Markets, 110, 135.
Medium,
External, 113, 126, 129.
Internal, 126, 130, 135.
Circulating, 10, 103, 108.
Merchandise,
9, 10, 29, 31, 57, 74, 113, 128, 129.

,
faU of Price of, 75, 91, 82, 93, 97, 98.
rise
nominal and real Price
of Price
of,
41, 75, 76, 94, 118, 123.

of, 41, 90.
Merchant, 18, 29, 51, 128, 130, 134.

Metals, Precious, 9, 11, 98, 99, 102.
Metropolis, 137, 139.
Mining,
16.
Money,
9, 10, 11, 14, 24, 41, 46, 91, 96. 97, 100, 101, 102, 108, 128, 129.
Aheration
of,
Exportation
98, 100, 101, 109.
of, 101.
-,
Paper, 105, 107, 109.
-,
Signs representing, 11, 105.
Offeh.
Papfr.
See Demand and Price.
Monet.
See Money.
INDEX.
X43
Physician, 49.
See Rapine.
Plunder.
Population, 122, 132.
Poverty, 89.
Premium,
115,
127".
Price, offer of, 13, 34, 36.

,
nominal, 90, 98, 100.
real, 90.
fall of,
,
75, 91, 93, 97, 98.
rise of, 41, 75, 94, 109, 123.
Priests, 50, 51.
Produce,
to, 12, 15, 16.
Producers, 13, 35, 36, 39, 76, 77, 78, 112, 121.
Product, 13, 14, 34, 36, 42, 49, 52, 53, 60, 69, 76, 87, 88, 89, 111
Production, 16, 27, 41, 42, 58, 73, 121, 122, 123.
'
Annual, 72.
Annual of a Nation,
60.
ProHts, 13, 26, 37, 38, 40, 41, 60, 121, 130, 131.
Prohibitions, 115, 116, 120, 121, 122, 123, 124, 125.
Property, 32, 35, 86.

,
Public, 71.
Proprietor, landed, 35, 40, 77, 134.

Prosperity, Taxes destructive of, 74, 77.
Provisions, 41, 132, 133.
Ramne,
131.
See Industry.
Restraint.
Rent, 36, 41, 43, 47.
Revenue, Public, 71,

Riches.
79.
See Wealtli.
Riches, height
of, 89.
Riches, supposed Source
of, 128.
Risk, 44, 106.
Sale of Offices,
84.
Savings, 25, 63, 73.

Services, Productive, 23, 35, 41, 44, 52, 7S.
SheUs, 11.
Signs of Money, 11, 105.

Silver.
See Metals and Money.
Soldiers, 51, 66.
Stock, 86, 87.
Talents, 24, 27, 63, 87.

Taxation, Subjects
of, 78.
INDEX.
144
Taxes, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 121, 122, 123.
not the income of a Nation, 79,
direct, 74, 77.
'
indirect, 74, 75, 76.
impoverish a Nation, 74, 77.
suppression
See
of,
123.
duties.
Travellers, 11, 127.
Undehtakeh,
21, 22, 23, 24, 29, 36, 39, 43, 49, 59.
Utensils, 24, 25, 29.
UtUity, 13, 14, 16, 19, 27, 28, 34, 54, 70, 96, 111.
Vawe,
9, 10, 13, 19, 20, 25, 45, 87, 88.
variations in, 92, 93, 94, 95.
of Money, 91, 96, 97, 100, 101.

Vanity, 15, 22.
Wages,
36, 40, 43.
Wants, 15, 22, 49, 54, 56, 64,
War,
87, 133.
133, 134.
Wealth,
9, 14, 15, 20, 51, 52, 55, 61, 79, 81, 86, 88, 89, 92, 108, 113.
Workmen,
18,23, 29, 40, 43,68, 69, 70, 117.
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Jean Baptsite Say - Catechism of Political Economy (1817) PDF

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Jean Baptsite Say - Catechism of Political Economy (1817) PDF

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THE LIBRARY

Digitized by the Internet Arciiive

PRODUCED, DISTRIBUTED, AND CONSUMED

TUE " ATHENEE ROYAl" OP PAUIS

TRANSLATED FROM THE FRENCH

THIS work does

not pretend to fiirnish

Wealth cannot be pro-

duced from nothing but a clock may be made

men may be taught to

Many men have the materials within their

who have them

they are to be found, and

Some men may

be better able than others

venture to assert, that there

not derive from

has been asked,

did not pubhsh

Catechism, as being more elementary, be-

" Traite d^Econojnie Politique. ^"^

had not previously

only the exposition of what

the facts are so intimately

connected together, that

has become easy

to refer to their causes, and to deduce

every thing must

have been taken upon

But when truths are not

promulgated under the sanction of an ac-

not only necessa-

ry to be in the right, but to prove that

could these proofs have been

established in so small a compass,

same time have been rendered

as the proofs of every thing,

which might ap-

pear to be mere assertion, are to be found in

more extensive work, which has been adopt-

ed by foreigners as well as the French, and

Europe, in the practice as well

as the theory of Values.

Those who posses the most elevated minds

what a happy influence the true prin-

are capable of exerting on the lot of

and perhaps they

will judge, that

spread them are not unworthy of

the Composition of Wealth, and

On Wages, Interest, and Rent

the Profits of Industry, Capital,

On Capital and Land

On the Utihty and Value of Products

Importations, Duties, and Prohi-

WHAT do you understand by the word, wealth?

One himdred and

ter than the merchandise ?

But, where the value

silver preferable to other

ON THE COMPOSITION OF WEALTH,

generally established of using