longer his original capital of two thousand quarters disposable for the purpose. One thousand of them are lost and gone-consumed in making the improvement. If he is to employ as many labourers as before, and pay them as highly, he must borrow, or obtain from some other source, a thousand quarters to supply the deficit. But these thousand quarters already maintained, or were destined to maintain, an equivalent quantity of labour. They are not a fresh creation; their destination is only changed from one productive employment to another; and though the agriculturist has made up the deficiency in his own circulating capital, the breach in the circulating capital of the community remains unrepaired.

I cannot assent to the argument relied on by most of those who contend that machinery can never be injurious to the labouring class, namely, that by cheapening production it creates such an increased demand for the commodity, as enables, ere long, a greater number of persons than ever to find employment in producing it. The fact, though too broadly stated, is, no doubt, often true. The copyists who were thrown out of employment by the invention of printing, were doubtless soon outnumbered by the compositors and pressmen who took their place and the number of labouring persons now occupied in the cotton manufacture is many times greater than were so occupied previously to the inventions of Hargreaves and Arkwright, which shows that besides the enormous fixed capital now embarked in the manufacture, it also employs a far larger circulating capital than at any former time. But if this capital was drawn from other employments; if the funds which took the place of the capital sunk in costly machinery, were supplied not by an additional saving consequent on the improvements, but by drafts on the general capital of the community; what better are the labouring classes for the mere transfer? In what manner is the loss they sustained by the conversion of circulating into fixed capital, made up to them by a mere shifting of part of the remainder of the circulating capital from its old employments to a new one?

All attempts to make out that the labouring classes as a collective body cannot suffer by the introduction of machinery, or by the sinking of capital in permanent improvements, are, I conceive, necessarily fallacious. That they would suffer in the particular department of industry to which the change applies, is generally admitted, and obvious to common sense; but it is often said, that though employment is withdrawn from labour in one department, an exactly equivalent employment is opened for it in others, because what the consumers save in the increased cheapness of one particular article enables them to augment their consumption of others, thereby increasing the demand for other kinds of labour. This is plausible, but, as we saw in the last chapter, involves a fallacy; demand for commodities being a totally different thing from demand for labour. It is true, the consumers have now additional money to buy other things, but this will not create the other things, unless there is capital to produce them; and the improvement has not set at liberty any capital, if even it has not absorbed some from other employments. The supposed increase of production and of employment for labour in other departments therefore will not take place; and the increased demand for commodities by some consumers, will be balanced by a cessation of demand on the part of others, namely, the labourers who were superseded by the improvement, and who will now be maintained, if at all, by sharing, either in the

way of competition or of charity, in what was previously consumed by other people.

§ 3. Nevertheless, I do not believe that as things are actually transacted, improvements in production are often, if ever, injurious, even temporarily, to the labouring classes in the aggregate. They would be so if they took place suddenly to a great amount, because much of the capital sunk must necessarily in that case be provided from funds already employed as circulating capital. But improvements are always introduced very gradually, and are seldom or never made by withdrawing circulating capital from actual production, but are made by the employment of the annual increase. I doubt if there would be found a single example of a great increase of fixed capital, at a time and place where circulating capital was not rapidly increasing likewise. It is not in poor or backward countries that great and costly improvements in production are made. To sink capital in land for a permanent return-to introduce expensive machinery—are acts involving immediate sacrifice for distant objects; and indicate, in the first place, tolerably complete security of property; in the second, a considerable activity of industrial enterprise; and in the third, a high standard of what has been called the 'effective desire of accumulation: which three things are the elements of a society rapidly progressive in its amount of capital. Although, therefore, the labouring classes must suffer, not only if the increase of fixed capital takes place at the expense of circulating, but even if it is so large and rapid as to retard that ordinary increase to which the growth of population has habitually adapted itself; yet, in point of fact, this is very unlikely to happen, since there is probably no country whose fixed capital increases in a ratio more than proportional to its circulating. If the whole of the railways which have lately obtained the sanction of Parlia ment were constructed in the times fixed for the completion of each, this improbable contingency would, most likely, be realized; but this very case is even now affording an example of the difficulties which oppose the diversion into new channels of any considerable portion of the capital that supplies the old difficulties generally much more than sufficient to prevent enterprises that involve the sinking of capital from extending themselves with such rapidity as to impair the sources of the existing employment for labour.

To these considerations must be added, that even if improvements did for a time decrease the aggregate produce and the circulating capital of the community, they would not the less tend in the long run to augment both. They increase the return to capital; and of this increase the benefit must necessarily accrue either to the capitalist in greater profits, or to the consumer in diminished prices; affording, in either case, an augmented fund from which accumulation may be made, while enlarged profits also hold out an increased inducement to accumulation. In the case we before selected, in which the immediate result of the improvement was to diminish the gross produce from two thousand four hundred quarters to one thousand five hundred, yet the profit of the capitalist being now five hundred quarters instead of four hundred, the extra one hundred quarters, if regularly saved, will in a few years replace the one thousand quarters subtracted from his circulating capital. Now the extension of business which almost certainly follows in any department in which an improvement has been made, affords a strong inducement to those engaged in it to add to their capital; and hence, at the slow pace

at which improvements are usually introduced, a great part of the capital which the improvement ultimately absorbs is drawn from the increased profits and increased savings which it has itself called forth.

This tendency of improvements in production to cause increased accumulation, and thereby ultimately to increase the gross produce, even if temporarily diminishing it, will assume a still more decided character if it should appear that there are assignable limits both to the accumulation of capital, and to the increase of production from the land, which limits once attained, all further increase of produce must stop; but that improvements in production, whatever may be their other effects, tend to throw one or both of these limits farther off. Now, these are truths which will appear in the clearest light in a subsequent stage of our investigation. It will be seen, that the quantity of capital which will, or even which can, be accumulated in any country, and the amount of gross produce which will, or even which can, be raised, bear a proportion to the state of the arts of production there existing; and that every improvement, even if for the time it diminish the circulating capital and the gross produce, ultimately makes room for a larger amount of both, than could possibly have existed otherwise. It is this which is the conclusive answer to the objections against machinery; and the proof thence arising of the ultimate benefit of mechanical inventions to the human race, will hereafter be seen to be conclusive. But this does not discharge governments from the obligation of alleviating, and if possible preventing, the evils of which this source of ultimate benefit is or may be productive to an existing generation. If the sinking or fixing of capital in machinery or useful works, were ever to proceed at such a pace as to impair materially the funds for the maintenance of labour, it would be incumbent on legislators to take measures for moderating its rapidity: and since improvements which do not diminish employment on the whole, almost always throw some particular class of labourers out of it, there cannot be a more legitimate object of the legislator's care than the interests of those who are thus sacrificed to the gains of their fellow-citizens and of posterity.

To return to the theoretical distinction between fixed and circulating capital. Since all wealth which is destined to be employed for reproduction comes within the designation of capital, there are parts of capital which do not agree with the definition of either species of it; for instance, the stock of finished goods which a manufacturer or dealer at any time possesses unsold in his warehouses. But this, though capital as to its destination, is not yet capital in actual exercise: it is not engaged in production, but has first to be sold or exchanged, that is, converted into an equivalent value of some other commodities; and therefore is not yet either fixed or circulating capital, but will become either one or the other, or be eventually divided between them. With the proceeds of his finished goods, a manufacturer will partly pay his workpeople, partly replenish his stock of the materials of his manufacture, and partly provide new buildings and machinery, or repair the old; but how much will be devoted to one purpose, and how much to another, depends on the nature of the manufacture, and the requirements of the particular moment.

It should be observed further, that the portion of capital which is consumed in the form of seed or material, although, unlike fixed capital, it requires to be at once replaced from the gross produce, stands yet in the

* Infra, book iv. chap. v.

same relation to the employment of labour as fixed capital does. What is expended in materials is as much withdrawn from the maintenance and remuneration of labourers, as what is fixed in machinery; and if capital now expended in wages were diverted to the providing of materials, the effect on the labourers would be as prejudicial as if it were converted into fixed capital. This, however, is a kind of change which never takes place. The tendency of improvements in production is always to economize never to increase, the expenditure of seed or material for a given produce, and the interest of the labourers has no detriment to apprehend from this

source.

CHAPTER VII.

ON WHAT DEPENDS THE DEGREE OF PRODUCTIVENESS OF

PRODUCTIVE AGENTS.

§ 1. WE have concluded our general survey of the requisites of produc tion. We have found that they may be reduced to three: labour, capital, and the materials and motive forces afforded by nature. Of these, labour and the raw material of the globe are primary and indispensable. Natural motive powers may be called in to the assistance of labour, and are a help, but not an essential, of production. The remaining requisite, capital, is itself the product of labour: its instrumentality in production is therefore, in reality, that of labour in an indirect shape. It does not the less require to be specified separately. A previous application of labour to produce the capital required for consumption during the work, is no less essential than the application of labour to the work itself. Of capital, again, one, and by far the largest portion, conduces to production only by sustaining in existence the labour which produces: the remainder, namely, the instruments and materials, contribute to it directly, in the same manner with natural agents, and the materials supplied by nature.

We now advance to the second great question in political economy; on what the degree of productiveness of these agents depends. For it is evident that their productive efficacy varies greatly at various times and places. With the same population and extent of territory, some countries have a much larger amount of production than others, and the same country at one time a greater amount than itself at another. Compare England either with a similar extent of territory in Russia, or with an equal population of Russians. Compare England now with England in the middle ages; Sicily, Northern Africa, or Syria at present, with the same countries in the time of their greatest prosperity, before the Roman conquest. Some of the causes which contribute to this difference of productiveness are obvious; others not so much so. We proceed to specify several of them.

§ 2. The most evident cause of superior productiveness is what are called natural advantages. These are various. Fertility of soil is one of the principal. In this there are great varieties, from the deserts of Arabia to the alluvial plains of the Ganges, the Niger, and the Mississippi. A favourable climate is even more important than a rich soil. There are countries capable of being inhabited, but too cold to be compatible with agriculture. Their inhabitants cannot pass beyond the nomadic state; they must live, like the Laplanders, by the domestication of the rein-deer, if not by hunting or fishing, like the miserable Esquimaux. There are

Countries where oats will ripen, but not wheat, such as the North of Scotland; others where wheat can be grown, but from excess of moisture, and want of sunshine, affords but a precarious crop; as in parts of Ireland. With each advance towards the south, or, in the European temperate region, towards the east, some new branch of agriculture becomes first possible, then advantageous; the vine, maize, figs, olives, silk, rice, dates, successively present themselves, until we come to the sugar, coffee, cotton, spices, etc., of climates which also afford, of the more common agricultural products, and with only a slight degree of cultivation, two or even three harvests in a year. Nor is it in agriculture alone that differences of climate are important. Their influence is felt in many other branches of production in the durability of all work which is exposed to the air; of buildings, for example. If the temples of Karnac and Luxor had not been injured by men, they might have subsisted in their original perfection almost for ever, for the inscriptions on some of them, though anterior to all authentic history, are fresher than is in our climate an inscription fifty years old: while at St. Petersburg, the most massive works, solidly executed in granite hardly a generation ago, are already, as travellers tell us, almost in a state to require reconstruction, from alternate exposure to summer heat and intense frost. The superiority of the woven fabrics of Southern Europe over those of England in the richness and clearness of many of their colours, is ascribed to the superior quality of the atmosphere, for which neither the knowledge of chemists nor the skill of dyers has been able to provide, in our hazy and damp climate, a complete equivalent.

Another part of the influence of climate consists in lessening the physical requirements of the producers. In hot regions, mankind can exist in comfort with less perfect housing, less clothing; fuel, that essential necessary of life in cold climates, they can almost dispense with, except for industrial uses. They also require less aliment; as experience had proved, long before theory had accounted for it by ascertaining that most of what we consume as food is not required for the actual nutrition of the organs, but for keeping up the animal heat, and for supplying the necessary stimulus to the vital functions, which in hot climates is almost sufficiently supplied by air and sunshine. Much, therefore, of the labour elsewhere expended to procure the mere necessaries of life, not being required, more remains disposable for its higher uses and its enjoyments; if the character of the inhabitants does not rather induce them to use up these advantages in over-population, or in the indulgence of repose.

Among natural advantages, besides soil and climate, must be mentioned abundance of mineral productions, in convenient situations, and capable of being worked with moderate labour. Such are the coal-fields of Great Britain, which do so much to compensate its inhabitants for the disadvantages of climate; and the scarcely inferior resources possessed by this country and the United States, in a copious supply of an easily reduced iron ore, at no great depth below the earth's surface, and in close proximity to coal deposits available for working it. In mountain and hill districts, the abundance of natural water-power makes considerable amends for the usually inferior fertility of those regions. But perhaps a greater advantage than all these is a maritime situation, especially when accompanied with good natural harbours; and, next to it, great navigable rivers. These advantages consist indeed wholly in saving of cost of carriage. But few who have not considered the subject, have any adequate