they barter with each other. Exchange in the family was organized when Adam delved and Eve spun.

To effect an exchange requires two products, two producers, and that the latter should be brought into association. What is really exchanged is a service given on the one side against a service given on the other. The one party may render a service by his present labour; as, when the blacksmith fastens a shoe upon the horse of the traveller, who stops at his door for the purpose, the other may render the service by past labour, embodied in a material form; as if, in the case supposed, the traveller were a pedlar, and should pay for his horse-shoeing with a tin pan. That which enters into the estimation of value on both sides is the service received-the amount of labour avoided by each in availing himself of the labour of the other. It is only for the sake of simplifying the discussion by dropping the human agents from consideration, that we speak of exchange as being the barter, of commodities. The tin pan represents portions of the labour of various individuals: that of the miner, of the artizan who made the miner's tools, of the sailors and wagoners who transported the tin from the mines to the shop where it was made up into utensils, as well as that of the tinsmith, were all essential to its manufacture. Indeed, if we endeavour to trace the constituents of its value to their elements, we shall find that minute fragments of the labour of a host of men, of different generations, extending over long tracts of space and time, have contributed to the production of any article we may select. Each possessor of it, in the various stages of its formation, has obtained it by remunerating the labour of all his predecessors. Its ultimate labourcost is the summation of an infinite series of fractions, decreasing as we recede into the past, as it is of another infinite series, each term of which will dwindle through a protracted future. The labour of a man who makes a hammer to-day, may be regarded as entering into every stroke of that hammer for all coming time; and the value of the hammer will thus be diffused among all the articles it shall aid to construct, and be mingled with values derived directly and indirectly from the labour of thousands. A vast multitude will share in the service which the hammer-maker is rendering to-day, who are as unregarded by him as he will be unknown to them.

He

looks to have his service paid once for all, by an equivalent service, or what he esteems such, received from the individual with whom he exchanges the hammer for something else. If he could construct that something else for himself with as little privation and trouble as the hammer cost him, there would be no motive for parting with it; certainly none for making hammers with the express view of parting with them. So, on the other hand, no person wanting a hammer would make something else for the purpose of getting it, if he could as easily make the hammer by his own direct exertions. Each exchange implies a double profit-an advantage on both sides; and that advantage consists in the time and labour which each saves, and which can be devoted to further production, in consequence of his confining himself to that kind of industry in which he possesses special skill and efficiency. Value, it is true, is a matter of estimation, and it is this which controls in Exchange. Each party may suppose himself to have received a greater value than he has parted with; but, whether true or not, this cannot affect the interests of the community of which both are members. The general stock of commodities in the society is no larger the moment after the exchange than the moment before; and no general advantage can be derived from exchange unless it occasions an increase of material production.

We have said that exchange requires the association of producers. The truth of this is sufficiently obvious in the case where personal services are bartered as in the most intimate form of association, the family, or in the natural good offices of neighbourhood, as when farmers assist each other in getting in their harvests. There are a great many forms of co-operation, in which the persons who associate are brought face to face, and the advantage is palpable; because they are able to accomplish works by their united exertions in a very brief period, which are plainly impossible to a single individual, unaided by machinery, in any length of time. Every house-raising and logging-bee furnishes an example. In the exchange of services embodied in material products, there is ordinarily very much to obscure our perception of the fact. The actual producers are seldom brought into personal communication, and the products which they exchange are rarely compared directly with each other. A farmer of the town of Hamburgh brings a cheese to market, sells it for

money, and with that purchases cloth, made in Oneida county from cotton grown in Tennessee, and a stove, made from Clinton county iron, melted by the aid of Pennsylvania coal. The production of the cheese was a necessary condition of the sale of the coal, iron, and cotton; and that of the coal, iron, and cotton, of the sale of the cheese. The production of the one depended upon the production of the other, since none of them were produced for the immediate use of those whose labour brought them to the market. If the cheese, in point of fact, never reaches the miners, cotton-growers, and manufacturers, for whose labour it has been exchanged, it nevertheless replaces other commodities which have been transferred to them; and until it does replace them, the cloth and stove remain clogs and incumbrances in the market, obstacles to the further production of the raw material of which they are made, and to the employment of labour in working them up into fabrics, like those which have yet to wait for the purchaser with his cheese.

The point of essential importance is, that those who furnish a market for commodities, and thereby occasion their production, are not the persons who transport the commodities from place to place, and traffic in them, but the persons who finally employ them for the satisfaction of their own wants, and who produce other commodities or services to offer in exchange. It is labour which creates the demand for labour; but labour employed in production, not labour employed in effecting exchanges. The latter only adds value to products, without increasing their quantity.

Mr. J. S. Mill states it as a fundamental theorem in respect to capital, "that what supports and employs productive labour is the capital expended in setting it to work, and not the demand of purchasers for the produce of the labour when completed. Demand for commodities," he adds, "is not demand for labour. The demand for commodities determines in what particular branch of labour and production the labour and capital shall be employed; it determines the direction of the labour; but not the more or less of the labour itself, or of the maintenance and payment of the labour. That depends on the amount of the capital or other funds, directly devoted to the sustenance and remuneration of labour." This proposition he declares is, to common apprehension, a paradox; and that even

among political writers of reputation, hardly any except Mr. Ricardo and Mr. Say can be pointed out, who have kept it constantly and steadily in view. Mr. Mill illustrates the principle for which he contends in this way. He remarks that a consumer may either expend a part of his income in hiring journeymen bricklayers to build a house, or, instead of this, he may employ the same value in buying velvets and laces. In the latter case,

"He buys the finished commodity, which has been produced by labour and capital-the labour not being paid, nor the capital furnished by him, but pre-existing. Suppose that he had been in the habit of expending this portion of his income in hiring journeymen bricklayers, who laid out the amount of their wages in food and clothing, which were also produced by labour and capital. He, however, determines to prefer velvet, for which he thus creates an extra demand. This demand, however, cannot be satisfied without an extra supply, nor can the supply be produced without an extra capital. Where then is the capital to come from? There is nothing in the consumer's change of purpose which makes the capital of the country greater than it otherwise was. It appears then that the increased demand for velvet could not for the present be supplied, were it not that the very circumstance which gave rise to it has set at liberty a capital of the exact amount required. The very sum which the consumer now employs in buying velvet, formerly passed into the hands of journeymen bricklayers, who expended it in food and necessaries, which they now either go without, or squeeze by their competition from the shares of other labourers. The labour and capital, therefore, which formerly produced necessaries for the use of these bricklayers, are deprived of their market, and must look out for other employment; and they find it in making velvet for the new demand. I do not mean that the very same labour and capital which produced the necessaries turn themselves to producing the velvet; but in some one or other of a hundred modes, they take the place of that which does. There was capital in existence to do one of two things-to make the velvet or produce the necessaries for the journeymen bricklayers-but not to do both. It was at the option of the consumer which of the two should happen; and if he chooses the velvet, they go without the necessaries. * * * * * * * * * The detriment to the labourers would have been the same if the consumer had persisted in building a house, but instead of engaging labourers and paying them himself, had given an order to a builder, and settled the account after the work was finished. For, in this manner of proceeding, the consumer no longer himself maintains the labour, but attracts the capital of another person from some other place or occupation to do it; and, therefore, does not open a new employment for labour, but merely changes the course of an existing employment. Thus, in whatever manner the question is stated, we are brought back to the conclusion, that a demand delayed until the work is completed, and furnishing no advances, but only reimbursing advances made by others, contributes nothing to the demand for labour; and that what is so expended, is, in all its effects, so far as regards the employment of the labouring class, a mere nullity; it does not and cannot create any employment except at the expense of other employment which existed before." - Political Economy, vol. 1, pages 102-104: Boston edition.

The gist of this extraordinary passage is in the notion that the capital of a country is a fixed, unvarying quantity, and that all employments of it are equally productive. The object of it, and of the proposition it is intended to support, is to lay a foundation for the doctrine, that it is of no consequence in regard to its effect in furnishing employment to the industry of his countrymen, in what manner a consumer spends money for the satisfaction of his personal wants-whether in the purchase of the products of domestic labour or of foreign. The passage we have marked with italics is flagrantly inconsistent with the main proposition. It concedes that the demand for the labour of bricklayers had created a demand for the labour which produced necessaries for their use, although the persou who employed the bricklayers made no advance to support the labour expended in producing the necessaries for their use, but only reimbursed, and that after at least two removes the first to the bricklayers themselves, the second from them to the persons of whom they bought their bread and potatoes - advances made by others. Mr. Mill himself states an exception, which is quite as broad as his rule. There is a case, he observes, in which a demand for commodities may create an employment for labour: namely, when the labourer is already fed without being sufficiently employed. There is no country in the world, however, which has not a vast number of labourers, actual or potential, insufficiently employed, and who, certainly, are fed, since they continue to exist. Enforced idleness exists, to a greater or less extent, everywhere-idleness arising from no lack of the disposition and physical ability to work. Such is that of thousands, who in England are pent in the poor-houses, with a gloomy look, says Carlyle, which seems to say, "An earth all lying round, crying, 'Come and till me, come and reap me;' yet here we sit enchanted. The sun shines, and the earth calls; and by the governing Powers and Impotences of this England we are forbidden to obey." Such idlers are the operatives in the factories, as yet endeavouring to earn their bread, but working half time. Such are all those in all countries, who, pretending to work, lack the stimulus that would lead to work in downright earnest, and saunter through intermitted and inefficient labour. Where is the region to be found, after every deduction has been made for the persons who are inde